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深圳一致药业股份有限公司
Shenzhen Accord Pharmaceutical Co., Ltd.
二〇一一年半年度报告
Semi-Annual Report 2011
August 2011
1
Contents
Section I. Important Notes------------------------------------------------------------------02
Section II. Company Profile----------------------------------------------------------------03
Section III. Changes in Share Capital and Particulars about Shares held by Main
Shareholders----------------------------------------------------------------------------------06
Section IV. Particulars about Directors, Supervisors and Senior Executives--------07
Section V. Discussion and Analysis of the Management-------------------------------08
Section VI. Significant Events-------------------------------------------------------------14
Section VII. Financial Report(Unaudited)------------------------------------------------25
Section VIII. Documents Available for Reference---------------------------------------124
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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. All directors attend the 2nd Meeting of 6th Session of the Board on auditing the semi-annual report.
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.
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 Internet Website: http://www.szaccord.com.cn
E-mail: 0028@szaccord.com.cn
(4) Legal Representative: Shi Jinming
General Manager: Yan Zhigang
(5) Secretary of the Board: Chen Changbing
Contact Address: Accord Pharm. Bldg., No. 15, Ba Gua Si Road, Futian District, Shenzhen,
Guangdong Province
Tel.: + (86) 755 25875195
Fax: + (86) 755 25875147
E-mail: investor@szaccord.com.cn
(6)Newspapers Chosen for Disclosing the Information of the Company:
Securities Times and Hong Kong Commercial Daily
Internet Website Appointed by CSRC: http://www.szse.cn
http://www.cninfo.com.cn
The Place Where the Semi-Annual Report Is Prepared: Secretariat of the Board of Directors
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II. Major financial data and indexes
Major accounting data and financial indexes
Increase/decrease
at the end of this
At the end of this report period
At the period-end of last year
report period compared with
that in period-end
of last year (%)
Before adjustment After adjustment After adjustment
Total assets(RMB) 6,968,069,535.70 6,306,793,005.81 6,306,793,005.81 10.49%
Total equity attributable to
equity 1,184,758,825.37 1,052,370,309.53 1,052,370,309.53 12.58%
holders of the Company (RMB)
Share capital(Share) 288,149,400.00 288,149,400.00 288,149,400.00 0.00%
Net assets per share attributable
to shareholders of the listed 4.11 3.65 3.65 12.60%
company(RMB/Share)
Increase/decrease
This report period in this report
The same period of last year
(Jan. to Jun.) period
year-on-year (%)
Before adjustment After adjustment After adjustment
Sales (RMB) 7,195,372,417.76 6,216,124,135.23 6,236,827,518.97 15.37%
Operating profit (RMB) 202,919,619.93 159,064,173.16 156,424,281.18 29.72%
Total profit(RMB) 217,717,835.44 166,519,142.54 164,285,250.56 32.52%
Net profit attributable to
shareholders of the listed 165,136,443.84 121,620,988.36 119,387,096.38 38.32%
company(RMB)
Net profit attributable to equity
holders of the Company after
151,667,708.17 113,266,697.99 113,266,697.99 33.90%
deducting non-recurring gains
and losses(RMB)
Basic earnings per share
0.57 0.42 0.41 39.02%
(RMB/Share)
Diluted earnings per share
0.57 0.42 0.41 39.02%
(RMB/Share)
Weighted average ROE (%) 14.55% 13.77% 13.16% 1.39%
Weighted average ROE after
deducting non-recurring 13.36% 12.82% 12.49% 0.87%
gains/losses (%)
Net cash flow arising from
107,677,081.76 216,358,926.82 210,160,566.50 -48.76%
operating activities(RMB)
Net cash flow per share arising
from operating activities 0.37 0.75 0.73 -49.32%
(RMB/Share)
[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
631,360.46
asset
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Governmental subsidy calculated into current gains
and losses, while closely related with the business of
the Company, excluding the fixed-amount or 6,984,323.81
fixed-proportion governmental subsidy according to
the unified national standard
Reversal of impairment provision of account
3,398,226.89
receivable that impairment testing individually
Other non-operating income and expenditure beside
6,775,621.56
for the aforementioned items
Impact on income tax -3,272,949.78
Influenced amount of minority shareholders’ equity -1,047,847.27
Total 13,468,735.67 -
(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 equity
165,136,443.84 165,136,443.84
holders of the Company
Total equity attributable to equity
1,184,758,825.37 1,184,758,825.37
holders of the Company
[Note]: There remained no differences in net profit attributable to the equity holders of the Company in
this period and equities attributable to the owners of parent company at the end of this period
calculated based on the Accounting System for Business Enterprises and the International Accounting
Standards.
(III) Supplemental profit statement
Profit in the report Weighted average ROE EPS (RMB)
period (%) Basic EPS Diluted EPS
Net profit attributable to
common shareholders of the 14.55% 0.57 0.57
Company
Net profit attributable to
common shareholders of the
13.36% 0.53 0.53
Company deducting
non-recurring gains and losses
[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 (2010 Revised) of Regulations on
the Information Disclosure of Companies Publicly Issuing Shares released by CSRC.
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Section III. Changes in Share Capital and Shareholdings of Major
Shareholders
I. Particulars about change in share capital
1. In the report period, the Company’s total shares remained unchanged.
2. Statement of changes in shares :None.
II. Particular about shareholders
1. Ended June 30, 2011, the Company had totally 17,012 shareholders, including 12,132 shareholders
of A-share and 4,880 shareholders of B-share.
2. Particulars about shares held by the top ten shareholders (ended as June 30, 2011)
Unit: Share
Total shareholder 17,012
Particulars about shares held by the top ten shareholders
Amount of
Proportion Total Amount of
Nature of shares
Full Name of shareholder of shares amount of restricted
shareholders pledged or
held shares held shares held
frozen
SINOPHARM GROUP State-owned 110,459,74
38.33% 0 0
CO., LTD. legal person 8
ICBC－GF Jufeng Stock Domestic
Securities Investment non-state-owne 3.77% 10,861,558 0
Fund d legal person
ICBC－Harvest Theme
Domestic
New Engine Stock
non-state-owne 3.57% 10,290,292 0
Securities Investment
d legal person
Fund
Domestic
ABC－Greatwall Anxin
non-state-owne 2.78% 8,000,000 0
Return Mixed Fund d legal person
HTHK/CMG
FSGUFP-CMG FIRST Oversea legal
2.44% 7,032,720 0
STATE CHINA person
GROWTH FD
Domestic
ICBC－GF Strategy
non-state-owne 1.46% 4,207,399 0
Selected Mixed Fund
d legal person
Domestic
ICBC－Harvest Strategy
non-state-owne 1.44% 4,158,959 0
Growth Mixed Fund
d legal person
ICBC－Universal Health Domestic
Care Stock Securities non-state-owne 1.20% 3,454,500 0
Investment Fund d legal person
ICBC－Bank of China
Domestic
Keep Growing Stock
non-state-owne 1.20% 3,443,546 0
Securities Investment
d legal person
Fund
CCB--Greatwall
Domestic
Consumption Value-added
non-state-owne 1.14% 3,292,879 0
Stock Securities
d legal person
Investment Fund
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Particulars about the shares held by the top ten unrestricted shareholders
Amount of unrestricted
Full Name of shareholder Type of shares
shares held
SINOPHARM GROUP CO., LTD. 110,459,748 RMB common share
ICBC－GF Jufeng Stock Securities Investment
10,861,558 RMB common share
Fund
ICBC－Harvest Theme New Engine Stock
10,290,292 RMB common share
Securities Investment Fund
ABC－Greatwall Anxin Return Mixed Fund 8,000,000 RMB common share
HTHK/CMG FSGUFP-CMG FIRST STATE Domestically listed
7,032,720
CHINA GROWTH FD foreign shares
ICBC－GF Strategy Selected Mixed Fund 4,207,399 RMB common share
ICBC－Harvest Strategy Growth Mixed Fund 4,158,959 RMB common share
ICBC－Universal Health Care Stock Securities
3,454,500 RMB common share
Investment Fund
ICBC－Bank of China Keep Growing Stock
3,443,546 RMB common share
Securities Investment Fund
CCB-- Greatwall Consumption Value-added
3,292,879 RMB common share
Stock Securities Investment Fund
ICBC－GF Jufeng Stock Securities Investment Fund and ICBC－GF
Strategy Selected Mixed Fund shares the same fund manager—GF Fund
Management Co., Ltd.; ICBC－Harvest Theme New Engine Stock Securities
Explanation on
associated Investment Fund and ICBC－Harvest Strategy Growth Mixed Fund shares
relationship or the same fund manager – Harvest Fund Management Co., Ltd. while ABC－
accordant action Greatwall Anxin Return Mixed Fund and CCB-- Greatwall Consumption
among the aforesaid Value-added Stock Securities Investment Fund shares the same fund
shareholders manager of Greatwall Fund Manager Co., Ltd. It is unknown whether
associated relationship exists 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 Group 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:
Nil
II. Alteration in directors, supervisors and senior executives of the Company in the report period:
1. On 18th March of 2011, the 23rd Meeting of 5th Session of the Board was deliberated and approved
the “Proposal of Election at Expiration of Office Term for the Board”. The General Shareholders’
Meeting of 2010 was elected Shi Jinming, Lu Jun, Wu Aimin, Ma Wangjun, Jiang Xiuchang and Yan
Zhigang as the directors of 6th Session of the Board while He Zhiyi, Xiong Chuxiong and Xiao
Shengfang were elected as the independent directors of the 6th Session of the Board by accumulative
votes dated 28th April 2011.
2. On 18th March of 2011, the 20th Meeting of 5th Session of the Board was deliberated and approved
the “Proposal of Election at Expiration of Office Term for the Supervisory”. The General Shareholders’
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Meeting of 2010 was elected Tian Weixing and Guan Xiaohui as the supervisors of 6th Session of the
Supervisory by accumulative votes dated 28th April 2011. Furthermore, Wang Huiqin was elected as
the staff supervisor for 6th Session of Supervisory at joint meeting of staff representative’s.
3. On 28th April of 2011, the 1st Extraordinary Meeting of 6th Session of the Board fullfiled the
followed engagements for the Company as: Mr. Shi Jinming appointed as Chariman of 6th Session of
the Board, Mr. Yan Zhigang appointed as Gneral Manager of the Company, Mr. Lin Zhaoxiong, Mr.
Tan Guoshu, Ms. Liu Jun, Mr. Lin Min, Mr. Lin Xinyang and Mr. Deng Baojun was appointed as
Deputy GM of the Company, Mr. Wei Pingxiao appointed as CFO of the Company while Mr. Chen
Changbin appointed as Secretary of the Board for the Company.
4. On 28th April of 2011, the 1st Meeting of 6th Session of the Supervisory elected Ms. Tian Weixing as
the convener of 6th Session of Supervisory.
Section V. Discussion and Analysis of the Management
I. Particualr about general operating management of the Company in report period
Year of 2011 is the beginning of “Twelve Five-year” plan for the Company, and also is the integration
year for chasing innovation, promiting transformation and adjustmenting structure. Health care reform
continuously carried out by the state, supervise in industries comes more and more strict-ness.
Operating group of the Company positively leads all staffs tackle with situationsof unfavorable markts
and industrial supervise by strictly surrounding annual operating theme of “innovation, scientific,
health operating and development rapidly”. Under the indevorus of innovated operation mode,
value-added service and technology standards and greately promoted headquarters’ function and
management mode transformation, the Company organized a structure of headquarters with refining
efficiency and business division with professional co-opeartion. Together with all staff’s efforts, the
Company continuously enlarges its leadership advantages and its influence which lay out a foundation
for achieving every business indexes for all year and for realizing the ambitious goals for “welve
Five-year” plan.
In the first half year, the Company realized main business income of RMB 7.163 billion, total profit of
RMB 0.218 billion and basic earning per share of RMB 0.57. Here come the tasks accomplished by
various departments in the first half year ended June 30th: pharmaceutical business department realized
income in main business of RMB 0.945 billion, profit of RMB 0.108 billion and operational net cash
flow of RMB88.69 million; distribution business department realized income in main business of
RMB6.234 billion, total profit of RMB0.133 billion and operational net cash flow of RMB 21.73
million.
Main works that completed in first half year of 2011:
(I) Stick to new strategic orientation, the Company promoted function transformation for headquarters,
highlight key function and core functions; strengthen function of strategy control, standard regulation
and resources allocation for headquarters; continuously upgrade the service quality for headquarters in
business development; achieving specialization and highly efficieny synergy by guiding business
divisions efficiently and promoted general development for Company.
1. Prepared the sub-plan of “Twelve Five-year”, handling strategy targets efficiently.
2. Implemented the construction for internal control and self-evaluation, higher the ability of risk
prevention.
3. Promoted function transformation and perfected the structure, strengthen core function of the
headquarters.
In first hald year, around by new function orientation, the Company actively changed the mind of
controlling in aspect of financial management, strengthen professional value for financial of
headquarters through formulating rules and planning guildlins as a whole; conducting inspections in
internal control and performance evaluation to lower the fiancial risks, promoting the
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calculation-oriented type transfer to value creation-oriented.
In aspect of HR, the Company keep core responsibility of headquarters’ in order, classified control
access of the headquarters’, furthermore, perfected the system construction for HR by means of
comprehensive training and performance evaluation, and highlight the management for those core
intelligence.
(II) Distribution division lay out the targets for chasing model enterprises. Emphasized the
development project of integration for supplying chain, intergrated distribution and logistic projects
efficiency; speed up net works’ layout for creating more value-add services; perfected the mode of
management and control in subsidiaries, promoted unification operating for higher the profitability and
market’s competitiveness.
1. Rapid the layout for distribution networks, intensified influence of the market. According to general
deployment of Twelve Five-Year plan, rapid up mergers & acquisition, make sure that networks will
coverage in all key zones at end of 2011.
2. Further promote the adjustment on structures, higher profitability. In order to seized the market
opportunity bringing from health care reform, the Company changing concepts to adjust its business
situation, variaties and client structure for seizing early opportunity.
3. Perfected organize structures, unified its operating mode, strengthen the management in
subsidiaries.
4. Promoted the integration on supplying chains and project of value-add service, higher
competiveness in market.
5. Improved network construction for logistics, created the service standards for logistics.
(III) Pharmaceitial divisions actively changed their role orientation, implementd new-structureed
operating modes, display function of supervise, co-ordination and control completely. The division
effiency to integrated excellent resources, promoting the co-ordiantion and labor division between
every enterprises, current operating and future development obtained a new breakthrought in the
division.
1. Implementd new-structureed operating modes, industrial control system becoming more and more
perfect.
2. Integrated R&D and marketing, the platformof dumbbell pharmacy was formulated initially. In
aspect of R&D, put R&D resources into order, promoted labor division and co-operation within
enterprises on the products’ R&D. In aspect of marketing, promoted the implementation on re-forming
for the marketing system of Shenzhen Chinese traditional medicine through integrated marketing
resourse and actively explore integrity mode for marketing of preparation products.
3. Industial chains’ unification has a new development stage. For purpose of make use of the advantage
of industrial chain and deppen unification works on industrial chain, pharmaceutical division set an
annual target of 80% average matching rate for key varieties. Under the means of improving products’
quality, enlargeing the capacity and perfecting management on supplying chain, improved the internal
matching rates for those key varieties.
4. Globalizaiton achieved a breakthrough progress. After 3 years of delicated preparation, the
warehouse of cephalosporin power of Zhijun Pharmaceutical was passed the EU Certification in May
of 2011, the first preparation produced enterprise of cephalosporin power that passed the EU
Certification with self-brand registration in China.
5. Speed up basic construction for production and lay out a foundation for future development. Under
the order organization from pharmaceutical division, three major constructions are in an order progress.
Guanlan Phase II of Zhijun Pharmaceutical completed the bidding for stereoscopic warehouse and
finished the planning of capacity expansion for solic warehouse 2# while comprehensive buildings
were promoted smoothly; Accord Pingshan project completed the EIA projects and preparing the
report of EIA. Furthermore, Chongqing Medicine Desine Institution was organized for planning design;
Zhijun Phase III project achieved a general planning idea basically while follow-up technology
reformation and matching works of phase II were promoted.
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II. Analysis on the main operating results and financial status
(I)The scope of main operations was R&D and production of pharmaceuticals, wholesales of Chinese
and western patent medicine, Chinese traditional medicine, biological products, bio-chemical medicine,
health care products and medical apparatus and instruments.
(II) Formation of income from main operations
1. Main operations classified according to industries and products
Unit: RMB’0000
Main operations classified according to industries
Increase/dec Increase/dec
Increase/decr
Classified rease in rease in
ease in gross
according to Operating Operating Gross profit operating operating
profit ratio
industries or income cost ratio (%) income cost
year-on-year
products year-on-year year-on-year
(%)
(%) (%)
Industry －
92,576.01 65,175.22 29.60% 16.70% 11.80% 3.09%
medicine
Commerce －
medicine 618,848.99 581,906.09 5.97% 15.42% 15.24% 0.15%
wholesales
Commerce －
3,329.91 2,938.25 11.76% 92.44% 95.33% -1.31%
medicine retail
Non-medicine
1,078.23 793.53 26.40% 6.17% 30.38% -13.67%
trade
Lease 514.20 174.19 66.12% 15.84% 13.12% 0.82%
Total 716,347.34 650,987.28 9.12% 15.79% 15.11% 0.53%
Main operations classified according to products
Respiratory
antitussive 12,400.05 2,849.17 77.02% 39.21% 36.78% 0.41%
medicines
Cef- series
80,048.84 58,579.99 26.82% 15.69% 5.24% 7.26%
products
Including: the
amount of related 5,774.22 4,543.72 21.31% 173.36% 254.96% -18.09%
transaction
2. Income from main operations classified according to areas
Unit: RMB’0000
Increase/decrease in
Area operating income operating income
year-on-year (%)
Domestic sales 715,874.32 15.78%
Oversea sales 473.02 21.75%
Total 716,347.34 15.79%
(III)Operation of the main wholly-owned subsidiaries of the Company
1. Shenzhen Zhijun Pharmaceutical Co., Ltd(Zhijun Pharm): 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, 2011, the total assets of the company amounted to RMB 965.91 million. It realized
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main business income of RMB 758.31million and net profit of RMB 87.32 million in the first half year
of 2011.
2. Sinopharm Medicine Holding Guangzhou Co., Ltd. (Sinopharm Guangzhou).: wholly-owned
subsidiary of the 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, 2011, the total assets of the company amounted to RMB 3137.41 million. It realized main business
income of RMB 3780.89 million and net profit of RMB 56.36 million in the first half year of 2011.
3. S Sinopharm Medicine Holding Nanning Co., Ltd. (Sinopharm Nanning):.: wholly-owned
subsidiary of the Company with registered capital amounting to RMB 100 million. It mainly deals with
operation of Chinese patent medicine, chemical preparation, diagnostic drugs, biological products of
diagnostic biology treatments, as well as self-operation and delegated varies products and
import-export of technology. Ended June 30, 2011, the total assets of the company amounted to RMB
692.35 million. It realized main business income of RMB 748.17 million and net profit of RMB 18.46
million in the first half year of 2011.
(IV)Operation of share-join Company
Unit: RMB’0000
Net Investment
Proportion of
profit of income
investment
share-joi distributed from
Operation scope income in net
Name n share-join
profit of listed
compan company in this
company
y period
Shenzhen
Wanle Mainly engaged in the
Medical development, research and
4,144 1,281 7.64%
Co., Ltd. production of anticancer agent
(Wanle and famotidine injection, etc.
Medical)
(V) Brief analysis on financial status
1. Changes of main financial indexes in the report period
Unit: RMB
Amount in the Change of
Amount in the
Items same period of last increase/decre
period
year ase %
Income from main operations 7,163,473,393.19 6,186,858,123.55 15.79%
Profit from main operations 638,001,587.81 522,809,733.42 22.03%
Net profit attributable to owners
165,136,443.84 119,387,096.38 38.32%
of parent company
Change of
Amount at Amount at
Items increase/decre
period-end year-begin
ase %
Total assets 6,968,069,535.70 6,306,793,005.81 10.49%
Total equity attributable to equity
1,184,758,825.37 1,052,370,309.53 12.58%
holders of the Company
Note:
(1) Income from main operations: There is an increase of RMB 976,615, 300 with, 15.79% higher
when comparing with the same period of last year, which is mainly attributed to enlarged sales in
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pharmaceutical distribution as well as properity in industrial pharmacy.
(2) Profit from main operations: an increase of RMB 115,191,900 with, 22.03% higher when
comparing with the same period of last year, which is in line with the increase in revenue
(3) Net profit attributable to equity holders of the Company: The effective cost management, enhanced
profitability lead to an increase of RMB 45,749,300 with 38.32% up, This mainly due to the
improvement of integrity profits that benefit from the favorable sales condition, soaring sales gross
rate and reasonable cost controlling. .
(4) Total assets: total assets at period-end increase RMB 661,276,500 over that of year-beginning with
10.49% up. This mainly due to the expansion of assets scale that benefit from favorable condition of
growing sales and profit.
(5) Total equity attributable to equity holders of the Company: 12.58% equity attributable to owners’ of
parent company at period-end increase RMB 132,388,500 over that of year-beginning.Reasons for
growth mainly for two aspects: one is the profitability that increased RMB 165,136,400 in total equity
attributable to equity holders of the Company; the equity purchased amount RMB 1.83 million of
Sinopharm TCM Co., Ltd. was cleared by China National Group; the other one is the share distribution
reduced RMB 34,577,900.
2. Changes in profit constitution over that period of last year
Unit: RMB
Amount for the same
Amount of this period Change in
period of last year proportion
Item
Proportion Proportion taken in total
Amount (RMB) taken in Amount (RMB) taken in profit (%)
total profit total profit
Main business
profit 638,001,587.81 293.04% 522,809,733.42 318.23% -25.19%
Other business
profit 22,031,512.32 10.12% 29,437,812.27 17.92% -7.80%
Period expenses
-464,048,118.31 -213.14% -391,816,346.84 -238.50% 25.36%
Assets
impairment
losses -5,875,651.19 -2.70% -15,311,631.56 -9.32% 6.62%
Investment
income 12,810,289.30 5.88% 11,304,713.89 6.88% -1.00%
Net
non-operating
income and
expenses 14,798,215.51 6.80% 7,860,969.38 4.78% 2.01%
Total profit
217,717,835.44 100.00% 164,285,250.56 100.00% 0.00%
[Note]:
(1) Other business profit earned RMB 22.0315 million in this period with a y-o-y RMB7.4063 million
decreased, a y-o-y 7.80 percent down in proprortion of toal profit.Decreased mainly resulted from the
consultancy fee that decreased by Sinopharm Guangzhou Company, subordinate subsidiary of the
Company.
(2) Periodic expenses: periodic expenses incurred RMB 464.0481 million in this period with a y-o-y
72.2318 million yuan increased, a y-o-y 25.36 percent down in proprortion of toal profit. In report
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period, the Company has a good control in cost and the absolute value increased mainly due to: HR
expenses gains a y-o-y growth for the increase of personnel; along with the further implementation on
project of Zhijun Present of Zhijun Pharmaceutical, subordinate subsidiary of the Company and
deepen exploitation on third terminal market, development expenses for markets obtained a y-o-y
growth; transportation expenses reached a y-o-y increased for the influence by soaring sales and
transport cost that around the country; affected by financial environment of the County, interest
expenses obtained a y-o-y rise.
(3) Assets impairment losses: RMB 5.8756 million was accrued as assets impairment losses in this
period, a y-o-y 6.63 percent down in proportion of total profits.
(4) Investment income: an investment income of RMB 12.8103 million gaisned a 12.8103 million
yuan in this period which increased by RMB 1.5056 million increased.Main reaon was that the Main
Luck Pharmecutical, affiliated company that invested by the Company obtained growth net profit.
(5) Net non-operating income and expenses: net non-operating income and expenses earned RMB
14.7982 million in this period with a y-o-y increase of RMB 6.9372 million yuan increased, and a
y-o-y 2.01 percent up in proprortion of toal profit.Main reason was that part of the account payable
that charge to the account for long period has been clear out.
(VI)There was no other operation business which influenced greatly upon net profit in the report
period
(VII)Main working plan for 2nd half year
1. By core of service function upgrade, basis of strengthen internal control construction and means of
perfection the resources allocation, the headquarters will continuously promoted rooling adjustment
towards planning and intergrate brand resources as well as transformed function of the headquarters
etc, perfected and ordering the 2 degree mode of controlling and management for establishing a
refining and highly efficiency headquarters.
(1) Implemented rooling adjustment for planning, guarantee a sustainable for plan implementation (2)
Improved the brand construction, higher the influence of brands (3) Continously promoted the project
of internal standardization, perfected the system of risk prevention (4) Improved the ability of
obtaining and allocation for resources based on strategy targets (5) Integrated enterprise’ cultures lay
out a solid foundation for corporation development.
2. Distribution divisions will speed up the layout for networks; make sure that networks will coverage
in all key zones at end of 2011. Created new value-add services, carried out an intelligent supllying
chains, strengthen control and management in subsidiaries for better operational risk minimized:
(1) Rapid up network’s layout, fulfilled the covage in all key zones (2) strengthen executions, higher
the standards in internal management (3) Deepen project of supplying chain integration, improved
standards of value-add services (4) Deepen adjustment on products and industrial constructures, higher
profitability and ability of anti-risk (5) Implemented biddings on net and biddings for distribution of
basic medicines etc.
3. Under the four dimension constructions from pharmaceutical division, perfected current industrial
platform fully, rapid up structure adjustment, put more efforts in internal management; furthermore,
lay out a foundation for future development while in a good operation situation:
(1) Strengthen four-dimension constructions and makes the industrial platform came true (2) Deepen
structure management, actively code with the variation of market’s (3) put more efforts in management
foundation, promoted sustainable development (4) enhanced rapidly development by motion of
marketing and R&D (5) prepared fully for future development of the Company.
III. Investment of the Company
(I)Main equity investment
No enternal investment occurred in this period from the Company.
14
(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 perfected with a standardized operation, and legal person
governance structure is perfect, which accorded with the requirement of normal document on listed
company issued by CSRC. Within the period, as one of the 26 pilot enterprises for internal control
implementation in Shenzhen areas, Accord Pharmaceutical stick to requirement from CSRC together
with needs from self-development and management, the Company perfomed the standardization for
internal control totally. Document of management regulations and manual of self-evaluation of the
Company were revised by systermatically placing potential risks in operating. Under the guidance
from professional consultancy, the Company completed a simulation assessment on 1779 controlling
points for internal control within five companies of Shenzhen Accord(the Company), Sinopharm
Guangzhou, Zhijun Pharmaceutical, Sinipharm Nanning and Zhijun Wangqing in June. In process of
assessment, problems that have been found were been perfected and improved. The optimization and
perfection on system procedures/system documents for internal control together with the construction
for self-evaluation system guarantee a stable and efficiency quality in operating while higher the
ability of risk prevention.
II. Profit Distribution Plan and Its Implementation
The Distribution Plan for 2010 was deliberated and approved by Genral Shareholders’ Meeting of
2010 dated 28th April 2011. Calculated on total 288,149,400 shares of the Company issued, distributed
cash dividend of 1.20 yuan (before tax) for every 10 shares to all shareholders. The profit distribution
was completed on 20 June 2011 with cash dividend of 34,577,928.00 yuan distributed actually in
totall.
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
Amount in this Amount in the same period
Name of related parties
period of last year
SINOPHARM GROUP CO., LTD. 482,405,743.00 410,542,658.60
China National Medicines Corporation Ltd. 85,103,173.12 66,174,479.55
15
Amount in this Amount in the same period
Name of related parties
period of last year
Sinopharm Distribution Center Co., Ltd. 44,704,255.95 91,574,957.49
Sino-Swed Pharmaceutical Corp. Ltd. 32,848,388.57 29,383,554.14
Wanle Medical 16,929,822.33 12,323,967.67
Guangdong South China National Pharmaceutical
12,431,866.06 47,307,288.33
Foreign Trade Co., Ltd.
Shanxi Weiqida Pharmaceutical Co., Ltd. 10,059,829.05 -
Foshan Nanhai New Drugs &Special Drugs Co.,
7,678,827.22 -
Ltd.
Jiangsu Wanbang Medicine Marketing Co., Ltd. 6,577,760.52 4,363,649.57
Chengdu Rongsheng Pharmaceuticals Limited
6,165,564.15 69,743.59
Liability Co.,
Qinghai Pharmaceutical Group Co., Ltd. 6,075,384.62 4,050,256.43
Union China National Medical Equipment Corp. 3,320,995.53 2,040,268.75
Chongqing Haysman Pharmaceutical Limited
1,415,116.59
Liability Co., 2,871,577.04
Chongqing Yaoyou Pharmaceutical Limited
2,035,925.47 1,695,838.48
Liability Co.,
Sinopharm Beijing Co., Ltd. 1,988,649.55 3,297,802.44
Sinopharm Guizhou Co., Ltd. 1,712,877.82 -
Guangxi Zhuang Autonomous Region Huahong
-
Pharmaceutical Co., Ltd. 1,482,203.77
Sinopharm Fujian Co., Ltd. 1,013,784.92 -
Sinopharm Anhui Co., Ltd. 970,025.22 -
Guangdong Dongfang Uptodate & Special
822,378.11 4,953,338.18
Medicines Co., Ltd.
Shanghai Zhaohui Pharmaceutical Co., Ltd. 570,811.00
381,896.24
Sinopharm Logistics Co., Ltd. 493,143.14 449,463.19
Yunnan TCM Co., Ltd. 382,300.88 -
Guilin Nanyao Pharmaceutical Co., Ltd. 361,945.48
117,018.76
Sinopharm Chemical Reagent Suzhou Co., Ltd. 246,401.71 436,932.92
Guilin Huagui Sinopharm Associated Co., 231,858.48
Sinopharm Merro (Dalian) Co., Ltd. 219,469.22 -
Sinopharm Chemical Reagent Co., Ltd. 201,043.42 175,864.10
Sinopharm Zhangzhou Co., Ltd. 150,769.24 -
Shanghai Sailun Bio-technology Co., Ltd. -
139,957.41
Guangxi Zhuang Autonomous Region Huahong Pharmaceutical Co.,
Ltd.
133,485.82 15,932.65
Handan Moluodan Pharmaceutical Co., Ltd. 100,366.66 31,241.68
Shanghai Shyndec Pharmaceutical Co., Ltd. 93,090.96
Guangxi Wuzhou Huawu TCM Co., Ltd. 49,600.00 -
16
Amount in this Amount in the same period
Name of related parties
period of last year
Sinopharm Hainan Co., Ltd. 40,361.56 -
Foshan Nanhai Medicine Co., Ltd. 21,290.36 -
Shenyang Hongqi Pharmaceutical Co., Ltd. 19,371.37
China National Medical Corporation Equipment
14,973.85 19,748.37
Co., Ltd.
China Otsuka Pharmaceutical Co., Ltd. 14,112.83
Yichang Humanwell Pharmaceutical Co., Ltd. 9,398.29 8,528.21
China National Pharmaceutical Foreign Trade
9,371.68 5,382.42
Corp.
Sichuan Jiangyou Zhongbafuzi Technology
9,241.23 190,924.77
Development.Co., Ltd.
China National Medicines Guorui Pharmaceutical
4,717.96 -
Co., Ltd.
Sinopharm Hunan Co., Ltd. 4,358.97 -
Shanghai Institure of Pharmaceutical Industry Co., Ltd. 2,564.10 427.35
China National Pharmaceutical Industry Corp. 1.37 360,035.85
Sinopharm Beijing Kang Chen Biological Pharmacutical Co.,
- 214,358.97
Ltd.
Sino TCM - 2,635,870.94
Sinopharm Qianjing Oral Technology (Beijing)
- 8,923.08
Co., Ltd.
China National Uptodate & Special Medicines Co.,
- 22,222.22
Ltd.
China National Baida Pharmaceutical Co, Ltd. - 1,500,598.30
China National SouthwestPharmaceutical Co., Ltd. -15.50 546,489.34
Sinopharm Tianjing Co., Ltd. -44.90 -
Guangdong Accord Pharmaceutical Co., Ltd. -420.51 480,111.43
Guangdong Tianliang Medicine Co., Ltd. -1,021.13 -2,824.62
Sinopharm Jiangsu Co., Ltd. -3,661.53 -
Sinopharm Beijing Huahong Co., Ltd. -9,241.23 -
Total 730,708,634.21 686,792,065.98
[Note]: The selling price is confirmed according to the market price. Till Jun. 30, 2011, the total
amount that the Company sold to its related parties took 40.59% of the limits granted by the general
shareholders’ meeting held at year begin.
3. Goods sold to related parties:
Unit: RMB
Amount in this Amount in the same period
Name of related parties
period of last year
Sinopharm Hunan Co., Ltd. 50,878,689.48 39,832,046.00
Sinopharm Hubei Co., Ltd. 45,530,710.17 45,165,657.00
Chongqing Yaoyou Pharmaceutical Limited 43,459,829.31 32,463,247.77
17
Amount in this Amount in the same period
Name of related parties
period of last year
Liability Co.,
Guangdong Accord Drug Store Co., Ltd. 43,181,782.60 50,470,054.22
Sinopharm Beijing Co., Ltd. 37,163,184.52 34,258,978.62
Foshan Nanhai New Drugs &Special Drugs Co.,
32,371,341.13 -
Ltd.
China National SouthwestPharmaceutical Co., Ltd. 31,872,690.08 36,560,858.55
Sinopharm Shenyang Co., Ltd. 31,119,263.02 76,992,166.34
Zhejiang Yingte Pharmaceutical Limited Liability
29,799,524.36 33,193,256.53
Co.,
Sinophar (Tianjing) Oriental Bokang Medicine Co.,
29,392,545.35 14,720,203.42
Ltd.
Sinopharm Tianjing Co., Ltd. 27,550,346.55 29,335,468.07
Sinopharm Group Co., Ltd 25,671,318.45 12,288,478.50
Sinopharm Hebei Medicine Co., Ltd. 22,796,569.41 439,666.67
Guangxi Accord Pharmaceutical Chain Co.,Ltd. 21,509,468.96 13,233,931.76
Sinopharm Beijing Huahong Co., Ltd. 21,242,420.68 12,014,611.13
China National Xinjiang Uptodate&Special
16,107,057.43 14,533,884.80
Medicines Co., ltd.
Sinopharm Hainan Co., Ltd. 14,573,642.20 17,435,235.51
Foshan Nanhai Medicine Co., Ltd. 13,885,143.27 11,410.26
Sinopharm Yunnan Co., Ltd 13,666,728.60 9,694,300.25
Sinopharm Zhejiang Co., Ltd 12,279,765.03 2,658,191.60
Xinjiang Uptodate&Special West Medicine
12,222,576.15 10,169,660.19
sLimited Liability Co.,
Sinopharm Ningxia Co., Ltd 10,159,836.64 4,810,646.30
Guangdong Dongfang New Drugs& Special Drugs
9,552,984.65 5,023,571.69
Co.,
Sinopharm Jiangsu Co., Ltd 8,617,821.93 6,222,219.03
Sinopharm Henan Co., Ltd 8,457,904.34 9,390,207.07
Sinopharm Fujian Co., Ltd 7,036,241.86 8,798,711.08
Sinopharm Gangsu Co., Ltd 6,790,236.57 559,063.76
Sinopharm Shangxi Co., Ltd 6,550,615.82 4,117,163.66
Sinopharm Guizhou Co., Ltd 6,007,586.31 279,551.28
Sinopharm Shanxi Co., Ltd 5,883,448.75 5,264,302.90
Wenzhou Biological Medicine Equipment
4,749,817.53 -
Supplying Co., ltd.
Guangzhou Accord Pharmaceutical Chain Co., Ltd. 4,743,001.07 2,590,559.61
Sinopharm Shandong Co., Ltd 4,574,001.01 3,389,699.08
Shanxi Weiqida Pharmaceutical Co., ltd. 4,306,666.67 -
18
Amount in this Amount in the same period
Name of related parties
period of last year
Sinopharm Logistics Co., Ltd. 3,328,759.17 2,159,612.95
Sinopharm Chongqing Co., Ltd 3,133,951.05 -
Sichuan Hexin Pharmaceutical Limited Liability
2,492,731.63 2,274,890.60
Co.,
Sinopharm Inner Mongolia Co., Ltd 2,400,974.22 809,438.82
Sinopharm Fuzhou Co., Ltd 2,314,222.39 126,078.12
Sinopharm Mianzhou Co., Ltd 2,295,682.66 -
China National Medicines Corporation Ltd. 2,281,895.47 4,302,247.12
Sinopharm Jiling Co., Ltd 2,119,265.94 -
Sinopharm Guoda Drug Stores Co., Ltd. 1,597,271.88 1,741,789.32
Jiangsu Rundong Medicine Co., ltd. 1,515,730.05 302,118.80
Sinopharm Suzhou Co., Ltd 1,370,447.69 924,023.93
Guangdong South China National Pharmaceutical
1,145,944.66 787,588.06
Foreign Trade Co., Ltd.
Sinopharm Wuxi Co., Ltd 1,104,686.00 -
Chinese and Western Medicine Branch of
1,102,883.74 -
Sinopharm Jiangsu Co., ltd.
Sinopharm Heilongjiang Co., Ltd 1,096,112.21 -
Sinopharm Zhangzhou Co., Ltd 1,000,504.05 -
Sinopharm Tianjing North Medicine Co., Ltd 855,842.80 264,148.72
Sinopharm Jiangxi Co., Ltd 749,689.48 745,219.17
Trade Branch of Sinopharm Lerentang
609,978.82 -
Phrmaceutical Co., Ltd.
Shanghai Zhaohui Pharmaceutical Co., Ltd. 453,846.15 17,094.02
Sinopharm Anhui Co., Ltd 2,187,163.80
450,586.51
Sinopharm Xinyu Co., Ltd 354,523.08 -
Sinopharm Taizhou Co., Ltd 340,002.46 -
Sinopharm Merro (Dalian) Co., Ltd 329,954.46 -
Dalian Branch of Sinopharm Shenyang Co., Ltd 304,504.27 813,863.24
Zhejiang Wenling Medicine Materials Co.,Ltd. 294,027.09 253,213.68
Sinopharm Nanjing Co., Ltd 288,944.65 91,897.44
Sinopharm Merro (Dalian) Co., Ltd 215,381.05 -
Tanshang Branch of Sinopharm Hebei Co,Ltd. 146,504.49 -
Sinopharm Yancheng Co., Ltd 139,829.06 -
Sinopharm Linyi Co., Ltd 134,974.36 -
Sinopharm Longyan Co., Ltd 120,546.39 -
Guangxi Wuzhou Huawu TCM Co., Ltd.广 92,461.03 40,160.09
19
Amount in this Amount in the same period
Name of related parties
period of last year
Fujian Huiyuan Pharmaceutical Co., Ltd. 53,101.54 -
Sinopharm Putian Co., Ltd 43,954.07 -
Sinopharm Lishui Co., Ltd 36,883.98 37,005.13
Sinopharm Anqing Co., Ltd 29,804.95 29,504.27
Sinopharm Zhenjiang Co., Ltd 10,721.02 -
Sinopharm Yantai Co., Ltd 8,617.95 -
Sinopharm Suzhou Bo’ai Medicine Co, ltd 5,487.18 -
Guilin Huagui Sinopharm Associated Co., 5,102.57
Sinopharm Jinzhou Co., Ltd 2,358.98 -
Sinopharm Hebei Co., Ltd - 2,014,432.48
Inner Mongolia Branch of Sinopharm Tianjing Co.,
- 1,215,387.54
Ltd.
Sino TCM 370,461.54
Shenzhen Accord Medicine Chain Co., Ltd. - 1,509,727.40
Ningxia Guoda Drug Store Chain Co., Ltd. - 12,393.18
Changchun Branch of Sinopharm Shenyang Co.,
12,000.00
Ltd.
Shanghai Sinopharm TCM Co., Ltd. - 797,102.56
Sinopharm Hubei Yibao Co., Ltd - 3,461,335.95
China National Medicines Guorui Pharmaceutical
- 631,470.09
Co., Ltd.
China National Baida Pharmaceutical Co, Ltd. - 23,504.27
Guangxi Guoda Drug Store Chain Co., Ltd. - 6,035,750.12
Total 700,083,451.11 569,907,625.07
[Note]: The selling price is confirmed according to the market price. Till June 30, 2011, the total
amount that the Company sold to its related parties took 46.67% of the limits granted by the
shareholders’ general meeting held at year begin.
V. Significant contract and its implementation
(I) Events of entrusted, contract and leasing
In the Period, there was no substantive entrust, contract or lease of other companys’ assets by the
Company or otherwise and no the abovementioned events that last from previously period to this
reprot perood.
(II) Significant guarantees
Unit: RMB’0000
Particulars about the external guarantee of the Company (Barring the guarantee for the controlling
subsidiaries)
Name of the Related Guarant Date of Actuall Guarant Complete Guarant
Guarantee term
Company Announcem ee limit happenin y ee type implementat ee for
20
guaranteed ent g (Date guarant ion or not related
disclosure of ee party
day and No. signing amount (Yes or
of the agreeme no)
guarantee nt)
amount.
Shenzhen
Accord
2010-3-23 37,500. 2010-06- 13,002. Guarant 2010.06.21-2011.
Pharmaceut Not Yes
2010-07 00 21 62 ee 06.21
ical Co.,
Ltd.
Shenzhen
Accord
2011-3-22 10,000. 2011-06- 3,100.5 Guarant 2011.06.02-2012.
Pharmaceut Not Yes
2011-05 00 02 0 ee 06.01
ical Co.,
Ltd.
Shenzhen
Accord
2010-8-18 15,000. 2011-01- Guarant 2011.01.10-2012.
Pharmaceut 962.45 Not Yes
2010-22 00 10 ee 01.10
ical Co.,
Ltd.
Shenzhen
Accord
2010-8-18 10,000. 2011-02- 5,603.3 Guarant 2011.02.21-2012.
Pharmaceut Not Yes
2010-22 00 21 1 ee 02.21
ical Co.,
Ltd.
Shenzhen
Zhijun
2010-3-23 3,250.0 2010-08- Guarant 2010.08.25-2011.
Pharmaceut 0.00 Not Yes
2010-07 0 25 ee 08.24
ical Trade
Co., Ltd.
Shenzhen
Zhijun
2010-8-18 2,500.0 2010-09- Guarant 2010.09.16-2011.
Pharmaceut 961.87 Not Yes
2010-22 0 16 ee 09.16
ical Trade
Co., Ltd.
Total actual external
Total external guarantee
guarantee amount
amount approved in 35,000.00 29,756.26
approved in reporting
reporting period(A1)
period(A2)
Total actual balance of
Total external guarantee external guarantee
amount approved at the end 78,250.00 amount approved at the 23,630.75
of reporting period(A3) end of reporting
period(A4)
Guarantee of the Company for its subsidiaries
Related Date of
Guarant
Announcem happenin Actuall
ee for
Name of the ent g (Date y Complete
Guarant Guarant related
Company disclosure of guarant Guarantee term implementat
ee limit ee type party
guaranteed day and No. signing ee ion or not
(Yes
of the agreeme amount
/No)
guarantee nt)
21
amount
Shenzhen
Zhijun
2010-8-18 10,000. 2011-02- 6,698.8 Guarant 2011.2.21-2012.2.
Pharmaceut Not Yes
2010-22 00 21 2 ee 21
ical Co.,
Ltd.
Shenzhen
Zhijun
2011-3-22 5,000.0 2011-05- 3,831.3 Guarant 2011.5.23-2012.2.
Pharmaceut Not Yes
2011-05 0 23 3 ee 21
ical Co.,
Ltd.
Shenzhen
Zhijun
2011-3-22 10,000. 2011-06- 2,872.7 Guarant 2011.6.02-2012.6.
Pharmaceut Not Yes
2011-05 00 02 5 ee 01
ical Co.,
Ltd.
Shenzhen
Zhijun
2011-3-22 8,000.0 2011-06- Guarant 2011.6.22-2012.3.
Pharmaceut 301.73 Not Yes
2011-05 0 22 ee 21
ical Co.,
Ltd.
Suzhou
Zhijun
Wanqing 2010-3-23 6,000.0 2010-04- 6,000.0 Guarant 2010.04.23-2011.
Not Yes
Pharmaceut 2010-07 0 23 0 ee 04.22
ical Co.,
Ltd.
Suzhou
Zhijun
Wanqing 2010-8-18 5,000.0 2011-02- Guarant 2011.02.21-2012.
0.00 Not Yes
Pharmaceut 2010-22 0 21 ee 02.21
ical Co.,
Ltd.
Suzhou
Zhijun
Wanqing 2010-3-23 6,000.0 2010-07- 6,000.0 Guarant 2010.07.19-2011.
Not Yes
Pharmaceut 2010-07 0 19 0 ee 12.31
ical Co.,
Ltd.
Suzhou
Zhijun
Wanqing 2010-3-23 6,000.0 2010-08- 6,000.0 Guarant 2010.08.01-2013.
Not Yes
Pharmaceut 2010-07 0 01 0 ee 08.01
ical Co.,
Ltd.
Suzhou
Zhijun
Wanqing 2011-3-22 10,000. 2011-05- 4,459.0 Guarant 2011.05.06-2012.
Not Yes
Pharmaceut 2011-05 00 06 0 ee 05.06
ical Co.,
Ltd.
Shenzhen 2010-7-20 3,000.0 2010-07- 1,500.0 Guarant 2010.7.27-2011.7.
Not Yes
Yanfeng 2010-18 0 27 0 ee 27
22
Medical
ical Co.,
Ltd.
Shenzhen
Yanfeng
2011-3-22 2,000.0 2011-06- 1,024.0 Guarant 2011.6.22-2012.6.
Medical Not Yes
2011-05 0 22 0 ee 06
ical Co.,
Ltd.
Sinopharm
2011-3-22 32,500. 2011-04- 20,773. Guarant 2011.4.28-2012.4.
Guangzhou Not Yes
2011-05 00 28 00 ee 28
Co., Ltd.
Guangdong
Yuexin 2011-3-22 3,500.0 2011-04- 1,878.0 Guarant 2011.4.28-2012.4.
Not Yes
Medicine 2011-05 0 28 0 ee 28
Co., Ltd.
Sinopharm
2010-3-18 10,000. 2010-09- 7,808.0 Guarant 2010.9.17-2011.9.
Guangzhou Not Yes
2010-22 00 17 0 ee 16
Co., Ltd.
Sinopharm
2011-3-22 25,000. 2011-04- 24,510. Guarant 2011.4.28-2012.4.
Guangzhou Not Yes
2011-05 00 28 00 ee 28
Co., Ltd.
Sinopharm
2010-8-18 10,000. 2010-11- Guarant 2010.11.23-2011.1
Guangzhou 0.00 Not Yes
2010-22 00 23 ee 1.22
Co., Ltd.
Sinopharm
2010-3-18 10,000. 2010-11- 3,878.0 Guarant 2010.11.5-2011.11
Guangzhou Not Yes
2010-22 00 05 0 ee .4
Co., Ltd.
Sinopharm
2011-3-22 60,000. 2011-04- 32,196. Guarant 2011.4.28-2012.3.
Guangzhou Not Yes
2011-05 00 28 00 ee 8
Co., Ltd.
Sinopharm
2011-3-22 10,000. 2011-05- 8,998.0 Guarant 2011.5.27-2012.5.
Guangzhou Not Yes
2011-05 00 27 0 ee 27
Co., Ltd.
Sinopharm
2010-8-18 5,000.0 2010-10- Guarant 2010.10.26-2011.
Guangzhou 250.00 Not Yes
2010-22 0 26 ee 10.25
Co., Ltd.
Guangxi
Sinopharm 2010-12-09 10,000. 2011-01- 3,384.3 Guarant 2011.1.17-2014.1.
Not Yes
Logistic 2010-35 00 17 1 ee 17
Co., Ltd.
Sinopharm
2010-8-18 5,000.0 2011-02- 3,399.1 Guarant 2011.2.21-2012.2.
Nanning Not Yes
2010-22 0 21 7 ee 21
Co., Ltd.
Sinopharm
2011-3-22 10,000. 2011-04- 9,579.5 Guarant 2011.4.28-2012.4.
Nanning Not Yes
2011-05 00 28 0 ee 28
Co., Ltd.
Sinopharm
2010-8-18 2,650.0 2011-01- 2,641.6 Guarant 2011.1.17-2012.1.
Nanning Not Yes
2010-22 0 17 8 ee 17
Co., Ltd.
Sinopharm
2010-8-18 5,000.0 2011-02- 3,495.3 Guarant 2011-2-21-2012-2
Liuzhou Not Yes
2010-22 0 21 8 ee -21
Co., Ltd.
23
Sinopharm
2010-12-09 5,000.0 2011-01- 2,132.9 Guarant 2011-1-1-2012-1-
Liuzhou Not Yes
2010-35 0 01 4 ee 1
Co., Ltd.
Total of actual
Total of guarantee for
guarantee for
subsidiaries approved in the 218,650.00 259,408.89
subsidiaries in the
Period (B1)
Period (B2)
Total of actual
Total of guarantee for
guarantee for
subsidiaries approved at 274,650.00 163,611.61
subsidiaries at
Period-end (B3)
Period-end (B4)
Total of Company’s guarantee(namely total of the large two aforementioned)
Total of actual
Total of guarantee approved
253,650.00 guarantee in the Period 289,165.15
in the Period (A1+B1)
(A2+B2)
Total of guarantee approved Total of actual
at Period-end 352,900.00 guarantee at Period-end 187,242.36
(A3+B3) (A4+B4)
The proportion of the total amount of actually
guarantee in the net assets of the Company(that is 158.04%
A4+ B4)
Including:
Amount of guarantee for shareholders, actual
0.00
controller and its associated parties(C)
The debts guarantee amount provided for the
guaranteed parties whose assets-liability ratio 147,382.98
exceed 70% directly or indirectly(D)
Proportion of total amount of guarantee in net
123,921.22
assets of the Company exceed 50%(E)
Total guarantee amount of the abovementioned
271,304.20
guarantees(C+D+E)
Explanations on possibly bearing joint and
several liquidating responsibilities for undue N/A
guarantees
(III) Related financial claims and liabilities
Unit: RMB’0000
Funds offered to the listed
Funds offered to related parties
company by related parties
Related parties
Amount Amount
Balance Balance
occurred occurred
Notes receivable (debt) 19,778.33 1,726.40 - -
Accounts receivable (debt) 79,185.63 24,596.24 - -
Other accounts receivable
121.50 - -
(debt)
Account paid in
15,172.91 1,961.29 - -
advance(debt)
Notes payable(credit) - - 40,336.61 19,533.99
Account payable(credit) - - 172,133.28 26,001.91
24
Other account
- - 1.23 841.34
payable(credic)
Account received in
- - 7.24 -
advance(credit)
Total 114,136.87 28,405.43 212,478.36 46,377.24
(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.
VI. Certified Public Accountants engaged by the Company
The 23rd Meeting of 5th Session of the Bord re-appointed Pricewaterhouse Zhongtian CPA Company
Limited as the auditing institurion for 2011 of the Company dated 18th March 2011. The
re-appointment event has been approved by voting from the General Shareholders’ Meeting of 2010
dated 28th April 2011.
VII. Registration form for receiving research, communication and interview in the report period.
Information discussed
Date Place Way Subject received
and provided
China Zheshang
Securities, Little dolphin
investment, Toyo
Knowing about the
Accord Spot Securities, Hang Seng
reform development on
2011-5-19 Pharm investigati Investment, Zenda
medical industry without
building on Investment, Cowin
profile provided
Investment, Huatai
Investment and Yuanhao
Investment
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 recently, 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
25
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. “Notice of Credit Application and Gaurantee Offered to Ping’An Bank” was released on 19
Feburary 2011;
2. The “Resolution of 23rd Meeting of 5th Session of the Board”, “Resolution of 20th Meeting of 5th
Session of Supervisory”,’Auditing Report for 2010”, “Notice of Convening the Genral Shareholders’
Meeting of 2010”, “Daily Related Transactions with Related Parties from the Company and its
Subordinated Enterprises”, “Aplication of Comprehensive Credit Limit and Arrangement of
Guarantees to Bank for 2011”,”Implementation Plan for ‘Basic Regulations of Internal Control for
Enterprise’”, “Summary of Annual Report 2010”, “Social Responsibility Report for Enterprises 2010”,
“Specific Report on Capital Occupation from Controlling Shareholdres and Other Related Parties” and
“Self-Evaluation Report for Internal Control 2010” were released on 22 March 2011;
3. The “Resolution of Genral Shareholdres’ Meeting of 2010”, “Law Opinions on Genral Shareholders’
Meeting of 2010”, “First Quarterly Report of 2011”, “Resolution of 1st Meeting of 6th Session of the
Board”, “Resolution of 1st Meeting of 6th Session Supervisory” and “ Election of Staff Supervisor for
6th Session of Supervisory” were released on 29 April 2011;
4. The “Production of Sterile Cephalosporin Formulation Obtained EU GMP Certificate by Shenzhen
Zhijun Pharmaceutical Co., Ltd.” was released on 13 May 2011;
5. The “Bonus Distribution for 2010” was released on 9 June 2011.
Section VII. Financial Report (Un-audited)
Balance Sheet
Prepared by: Shenzhen Accord Pharmaceutical Co., Ltd. 30 June 2011 Unit: RMB
Amount at period-end Amount at year-begin
Items Merger Parent Company Merger Parent Company
Current assets:
Monetary funds 897,418,214.29 239,018,666.86 711,789,775.66 135,498,819.87
Settlement
provisions
Capital lent
Transaction finance
asset
Notes receivable 403,711,972.28 1,521,625.83 369,169,030.47 5,038,459.89
Accounts receivable 3,269,832,618.47 269,208,987.83 2,866,825,102.78 282,597,465.23
Accounts paid in
81,612,485.56 1,015,137.01 101,806,030.92 3,798,560.90
advance
Insurance receivable
Reinsurance
receivables
Contract reserve of
reinsurance receivable
Interest receivable
Dividend receivable
Other receivables 38,981,013.19 575,075,263.73 43,110,999.74 557,324,957.67
Purchase restituted
finance asset
26
Inventories 1,189,106,704.59 117,229,773.10 1,156,329,658.80 117,829,120.30
Non-current asset
due within one year
Other current assets
Total current assets 5,880,663,008.38 1,203,069,454.36 5,249,030,598.37 1,102,087,383.86
Non-current assets:
Granted loans and
advances
Finance asset
available for sales
Held-to-maturity
investment
Long-term account
receivable
Long-term equity
80,490,540.36 1,317,217,954.45 85,275,251.06 1,272,402,665.15
investment
Investment property 84,086,807.90 11,312,185.46 87,293,333.76 12,033,619.61
Fixed assets 487,026,796.41 34,083,364.25 492,557,743.43 35,677,614.01
Construction in
152,426,305.53 253,886.24 108,301,338.12 253,886.24
progress
Engineering
material
Disposal of fixed
asset
Productive
biological asset
Oil and gas asset
Intangible assets 121,390,186.96 28,286,592.40 129,175,366.09 28,837,698.02
Expense on
Research and 2,859,318.40 2,580,662.85
Development
Goodwill 53,555,677.09 53,555,677.09
Long-term expenses
22,294,306.46 9,288,440.60 19,811,611.24 9,161,222.49
to be apportioned
Deferred income tax
32,987,218.17 3,293,617.54 31,083,592.24 2,958,699.75
asset
Other non-current
50,289,370.04 48,127,831.56 0.00
asset
Total non-current asset 1,087,406,527.32 1,403,736,040.94 1,057,762,407.44 1,361,325,405.27
Total assets 6,968,069,535.70 2,606,805,495.30 6,306,793,005.81 2,463,412,789.13
Current liabilities:
Short-term loans 1,398,097,986.10 449,135,820.68 975,475,884.21 349,183,556.07
Loan from central
bank
Absorbing deposit
and interbank deposit
Capital borrowed
Transaction
financial liabilities
Notes payable 1,145,184,513.55 113,133,409.97 1,448,622,490.72 227,394,114.09
Accounts payable 2,315,122,567.54 307,090,211.20 2,003,566,517.62 238,636,669.29
Accounts received 70,303,352.64 157,930.54 100,322,387.21 48,490.62
27
in advance
Selling financial
asset of repurchase
Commission charge
and commission payable
Wage payable 115,421,824.26 23,540,448.53 127,191,717.25 22,612,110.63
Taxes payable 58,157,034.36 4,677,931.82 39,720,311.72 2,957,612.62
Interest payable 6,281,609.97 727,533.83 2,122,314.90 596,047.97
Dividend payable
Other accounts
404,953,733.21 763,937,077.21 345,011,293.80 874,380,433.82
payable
Reinsurance
payables
Insurance contract
reserve
Security trading of
agency
Security sales of
agency
Non-current
liabilities due within 1
year
Other current
liabilities
Total current liabilities 5,513,522,621.63 1,662,400,363.78 5,042,032,917.43 1,715,809,035.11
Non-current liabilities:
Long-term loans 78,842,900.00 30,000,000.00
Bonds payable
Long-term account
38,157.00 40,777.80
payable
Special accounts
4,755,000.00 1,320,000.00 4,755,000.00 1,320,000.00
payable
Projected liabilities
Deferred income tax
21,582,302.16 3,773,319.00 22,709,093.70 3,773,319.00
liabilities
Other non-current
82,905,678.43 75,809,855.74
liabilities
Total non-current
188,124,037.59 5,093,319.00 133,314,727.24 5,093,319.00
liabilities
Total liabilities 5,701,646,659.22 1,667,493,682.78 5,175,347,644.67 1,720,902,354.11
Owner’s equity (or
shareholders’ equity):
Paid-in capital (or share
288,149,400.00 288,149,400.00 288,149,400.00 288,149,400.00
capital)
Capital public
5,030,338.57 13,828,726.93 5,030,338.57 13,828,726.93
reserve
Less: Inventory
shares
Reasonable reserve
Surplus public
39,981,268.55 39,981,268.55 39,981,268.55 39,981,268.55
reserve
Provision of general
28
risk
Retained profit 851,597,818.25 597,352,417.04 719,209,302.41 400,551,039.54
Balance difference
of foreign currency
translation
Total owner’s equity
attributable to parent 1,184,758,825.37 939,311,812.52 1,052,370,309.53 742,510,435.02
company
Minority interests 81,664,051.11 79,075,051.61
Total owner’s equity 1,266,422,876.48 939,311,812.52 1,131,445,361.14 742,510,435.02
Total liabilities and
6,968,069,535.70 2,606,805,495.30 6,306,793,005.81 2,463,412,789.13
owner’s equity
Profit Statement
Prepared by: Shenzhen Accord Pharmaceutical Co., Ltd. January-June 2011 Unit: RMB
Amount in this period Amount in last period
Items Parent Parent
Merger Merger
Company Company
I. Total operating income 7,195,372,417.76 946,753,432.44 6,236,827,518.97 878,820,036.10
Including: Operating
7,195,372,417.76 946,753,432.44 6,236,827,518.97 878,820,036.10
income
Interest income
Insurance gained
Commission charge
and commission income
II. Total operating cost 7,005,263,087.13 964,426,740.52 6,091,707,951.68 893,063,499.98
Including: Operating cost 6,519,740,305.91 901,521,599.01 5,675,835,391.28 837,870,829.36
Interest expense
Commission charge
and commission expense
Cash surrender
value
Net amount of
expense of compensation
Net amount of
withdrawal of insurance
contract reserve
Bonus expense of
guarantee slip
Reinsurance
expense
Operating tax and
15,599,011.72 1,912,151.45 8,744,582.00 510,783.37
extras
Sales expenses 239,802,366.07 24,588,975.59 209,616,985.00 24,267,048.59
29
Administration
162,839,045.95 19,332,279.73 144,846,050.40 23,236,060.60
expenses
Financial expenses 61,406,706.29 16,818,820.34 37,353,311.44 9,264,750.17
Losses of
5,875,651.19 252,914.40 15,311,631.56 -2,085,972.11
devaluation of asset
Add: Changing
income of fair value(Loss
is listed with “-”)
Investment income
12,810,289.30 247,870,767.97 11,304,713.89 227,429,131.22
(Loss is listed with “-”)
Including:
Investment income on
12,810,289.30 12,810,289.30 11,263,472.59 9,251,229.08
affiliated company and
joint venture
Exchange income
(Loss is listed with “-”)
III. Operating profit
202,919,619.93 230,197,459.89 156,424,281.18 213,185,667.34
(Loss is listed with “-”)
Add: Non-operating
15,015,410.03 2,582,378.11 8,708,512.00 904,633.10
income
Less: Non-operating
217,194.52 847,542.62 1,800.00
expense
Including: Disposal
70,253.22 471,610.41
loss of non-current asset
IV. Total Profit (Loss is
217,717,835.44 232,779,838.00 164,285,250.56 214,088,500.44
listed with “-”)
Less: Income tax
49,992,392.10 3,230,532.50 41,320,797.05 1,638,783.46
expense
V. Net profit (Net loss is
167,725,443.34 229,549,305.50 122,964,453.51 212,449,716.98
listed with “-”)
Net profit
attributable to owner’s of 165,136,443.84 229,549,305.50 119,387,096.38 212,449,716.98
parent company
Minority shareholders’
2,588,999.50 3,577,357.13
gains and losses
VI. Earnings per share:
i. Basic earnings per
0.57 0.41
share
ii. Diluted earnings per
0.57 0.41
share
VII. Other consolidated
income
VIII. Total consolidated
167,725,443.34 229,549,305.50 122,964,453.51 212,449,716.98
income
Total consolidated
income attributable to
165,136,443.84 229,549,305.50 119,387,096.38 212,449,716.98
owners of parent
company
Total consolidated
income attributable to 2,588,999.50 3,577,357.13
minority shareholders
The merger realized net profit RMB 0.00 before consolidation during enterprises consolidation under a
30
same control.
Cash Flow Statement
Prepared by: Shenzhen Accord Pharmaceutical Co., Ltd. January-June 2011 Unit: RMB
Amount in this period Amount in last period
Items
Merger Parent Company Merger Parent Company
I. Cash flows arising
from operating activities:
Cash received from
selling commodities and 7,001,828,479.57 1,054,596,424.06 6,253,528,825.97 950,771,563.38
providing labor services
Net increase of
customer deposit and
interbank deposit
Net increase of loan
from central bank
Net increase of capital
borrowed from other
financial institution
Cash received from
original insurance contract
fee
Net cash received from
reinsurance business
Net increase of insured
savings and investment
Net increase of disposal
of transaction financial asset
Cash received from
interest, commission charge
and commission
Net increase of capital
borrowed
Net increase of returned
business capital
Write-back of tax
738,150.65 687,076.01
received
Other cash received
concerning operating 56,445,783.26 9,195,945.98 94,922,570.21 19,063,545.41
activities
Subtotal of cash inflow
arising from operating 7,059,012,413.48 1,063,792,370.04 6,349,138,472.19 969,835,108.79
activities
Cash paid for
purchasing commodities and 6,399,334,127.53 1,039,422,432.86 5,605,184,676.87 794,080,168.78
receiving labor service
Net increase of
customer loans and advances
Net increase of deposits
in central bank and interbank
Cash paid for original
insurance contract
compensation
Cash paid for interest,
commission charge and
commission
Cash paid for bonus of
guarantee slip
31
Cash paid to/for staff
220,938,322.53 23,901,254.31 193,531,166.23 16,118,524.94
and workers
Taxes paid 176,188,320.99 14,283,145.46 139,116,438.02 12,587,965.84
Other cash paid
concerning operating 154,874,560.67 26,247,197.21 201,145,624.57 45,606,788.37
activities
Subtotal of cash outflow
arising from operating 6,951,335,331.72 1,103,854,029.84 6,138,977,905.69 868,393,447.93
activities
Net cash flows arising
107,677,081.76 -40,061,659.80 210,160,566.50 101,441,660.86
from operating activities
II. Cash flows arising from
investing activities:
Cash received from
1,830,000.00 1,830,000.00 45,000,000.00
recovering investment
Cash received from
17,595,000.00 88,424,879.20 32,048,822.01
investment income
Net cash received from
disposal of fixed, intangible 2,118,542.70 1,338,000.00 5,434,321.08 800.00
and other long-term assets
Net cash received from
disposal of subsidiaries and 325,415.00
other units
Other cash received
concerning investing 2,095,500.00 171,500,000.00 5,000,000.00 1,611,038.60
activities
Subtotal of cash inflow
23,639,042.70 263,092,879.20 10,759,736.08 78,660,660.61
from investing activities
Cash paid for
purchasing fixed, intangible 83,934,660.07 3,043,716.52 85,746,142.82 467,045.37
and other long-term assets
Cash paid for
3,151,909.31 52,751,909.31 10,200,000.00 593,660,000.00
investment
Net increase of
mortgaged loans
Net cash received from
13,693,496.50 36,186,250.63
subsidiaries and other units
Other cash paid
concerning investing 9,698,496.42 186,500,000.00 64,330,110.00 481,252.34
activities
Subtotal of cash outflow
96,785,065.80 242,295,625.83 173,969,749.32 630,794,548.34
from investing activities
Net cash flows arising
-73,146,023.10 20,797,253.37 -163,210,013.24 -552,133,887.73
from investing activities
III. Cash flows arising from
financing activities
Cash received from
absorbing investment
Including: Cash
received from absorbing
minority shareholders’
investment by subsidiaries
Cash received from
576,342,900.00 330,000,000.00 1,062,035,652.93 690,000,000.00
loans
Cash received from
issuing bonds
Other cash received
concerning financing 253,511,273.99 520,373,122.79 1,130,772,148.98
activities
Subtotal of cash inflow 829,854,173.99 850,373,122.79 1,062,035,652.93 1,820,772,148.98
32
from financing activities
Cash paid for settling
324,940,493.30 210,000,000.00 1,027,077,912.57 727,023,220.37
debts
Cash paid for dividend
and profit distributing or 72,179,366.31 63,353,770.36 56,018,809.98 39,053,285.95
interest paying
Including: Dividend and
profit of minority
shareholder paid by
subsidiaries
Other cash paid
concerning financing 258,530,267.94 454,235,099.01 14,562,551.78 611,035,671.52
activities
Subtotal of cash outflow
655,650,127.55 727,588,869.37 1,097,659,274.33 1,377,112,177.84
from financing activities
Net cash flows arising
174,204,046.44 122,784,253.42 -35,623,621.40 443,659,971.14
from financing activities
IV. Influence on cash and
cash equivalents due to -546.91 -1,709.33 -1,606.51
fluctuation in exchange rate
V. Net increase of cash and
208,734,558.19 103,519,846.99 11,325,222.53 -7,033,862.24
cash equivalents
Add: Balance of cash
and cash equivalents at the 682,875,873.18 135,498,819.87 588,405,672.15 125,541,203.80
period -begin
VI. Balance of cash and cash
891,610,431.37 239,018,666.86 599,730,894.68 118,507,341.56
equivalents at the period -end
33
Consolidated Statement on Changes of Owners' Equity
Prepared by: Shenzhen Accord Pharmaceutical Co., Ltd. Semi-Annual of 2011 Unit: RMB
Amount in this report period Amount in last year
Owners' equity attributable to the parent company Owners' equity attributable to the parent company
Paid- Paid-
up Total up Total
Reas Gene Mino Reas Gene Mino
capit Capit Less: Surpl owne capit Capit Less: Surpl owne
Items onabl ral Retai rity’s onabl ral Retai rity’s
al al Treas us Other rs’ al al Treas us Other rs’
e risk ned equit e risk ned equit
(Shar reser ury reser s equit (Shar reser ury reser s equit
reser provi profit y reser provi profit y
e ves Stock ves y e ves Stock ves y
ve sion ve sion
capit capit
al) al)
1,131
288,1 5,030 39,98 719,2 79,07 288,1 31,56 17,57 509,9 55,46 902,6
I. Balance at the end ,445,
49,40 ,338. 1,268 09,30 5,051 49,40 8,488 3,057 18,94 4,963 74,85
of last year 361.1
0.00 57 .55 2.41 .61 0.00 .40 .11 7.32 .74 6.57
4
Add: Changes of
accounting policy
Error correction of the
last period
Others
1,131
288,1 5,030 39,98 719,2 79,07 288,1 31,56 17,57 509,9 55,46 902,6
II. Balance at the ,445,
49,40 ,338. 1,268 09,30 5,051 49,40 8,488 3,057 18,94 4,963 74,85
beginning of this year 361.1
0.00 57 .55 2.41 .61 0.00 .40 .11 7.32 .74 6.57
4
III. Increase/
132,3 2,588 134,9 -26,5 22,40 209,2 23,61 228,7
Decrease in this year
88,51 ,999. 77,51 38,14 8,211 90,35 0,087 70,50
(Decrease is listed
5.84 50 5.34 9.83 .44 5.09 .87 4.57
with'"-")
(I) Net profit 165,1 2,588 167,7 261,1 3,107 264,2
34
36,44 ,999. 25,44 16,65 ,762. 24,41
3.84 50 3.34 6.70 36 9.06
(II) Other integrated
income
165,1 2,588 167,7 261,1 3,107 264,2
Subtotal of (I) and (II) 36,44 ,999. 25,44 16,65 ,762. 24,41
3.84 50 3.34 6.70 36 9.06
1,830 1,830 -26,5 -603, 20,50 -6,63
(III) Owners' devoted
,000. ,000. 38,14 150.1 2,325 8,974
and decreased capital
00 00 9.83 7 .51 .49
20,50 20,50
1. Owners' devoted
2,325 2,325
capital
.51 .51
2. Amount calculated
into owners' equity
paid in shares
1,830 1,830 -26,5 -603, -27,1
3. Others ,000. ,000. 38,14 150.1 41,30
00 00 9.83 7 0.00
-34,5 -34,5 22,40 -51,2 -28,8
(IV) Profit
77,92 77,92 8,211 23,15 14,94
distribution
8.00 8.00 .44 1.44 0.00
22,40 -22,4
1. Withdrawal of
8,211 08,21
surplus reserves
.44 1.44
2. Withdrawal of
general risk
provisions
-34,5 -34,5 -28,8 -28,8
3. Distribution for
77,92 77,92 14,94 14,94
owners (shareholders)
8.00 8.00 0.00 0.00
35
4. Others
(V) Carrying forward
internal owners'
equity
1. Capital reserves
conversed to capital
(share capital)
2. Surplus reserves
conversed to capital
(share capital)
3. Remedying loss
with surplus reserve
4. Others
(VI) Reasonable
reserve
1. Withdrawal in the
report period
2. Usage in the report
period
(VII) Other
1,266 1,131
288,1 5,030 39,98 851,5 81,66 288,1 5,030 39,98 719,2 79,07
IV. Balance at the end ,422, ,445,
49,40 ,338. 1,268 97,81 4,051 49,40 ,338. 1,268 09,30 5,051
of the report period 876.4 361.1
0.00 57 .55 8.25 .11 0.00 57 .55 2.41 .61
8 4
36
Statement on Changes of Owners' Equity of Parent Company
Prepared by: Shenzhen Accord Pharmaceutical Co., Ltd. Semi-Annual of 2011 Unit: RMB
Amount in this report period Amount in last year
Paid-u Paid-u
Less: Surplu Provisi Less: Surplu Provisi
p Capital Reason Retain Total p Capital Reason Retain Total
Treasu s on of Treasu s on of
Items capital reserve able ed owners capital reserve able ed owners
ry reserve general ry reserve general
(Share s reserve profit ’ equity (Share s reserve profit ’ equity
Stock s risk Stock s risk
capital) capital)
288,14 400,55 742,51 288,14 234,90 554,45
I. Balance at the end 13,828, 39,981, 13,828, 17,573,
9,400.0 1,039.5 0,435.0 9,400.0 1,348.5 2,532.6
of last year 726.93 268.55 726.93 057.11
0 4 2 0 7 1
Add: Changes of
accounting policy
Error correction of the
last period
Others
288,14 400,55 742,51 288,14 234,90 554,45
II. Balance at the 13,828, 39,981, 13,828, 17,573,
9,400.0 1,039.5 0,435.0 9,400.0 1,348.5 2,532.6
beginning of this year 726.93 268.55 726.93 057.11
0 4 2 0 7 1
III. Increase/
196,80 196,80 165,64 188,05
Decrease in this year 22,408,
1,377.5 1,377.5 9,690.9 7,902.4
(Decrease is listed 211.44
0 0 7 1
with'"-")
229,54 229,54 224,08 224,08
(I) Net profit 9,305.5 9,305.5 2,114.4 2,114.4
0 0 1 1
(II) Other integrated
37
income
229,54 229,54 224,08 224,08
Subtotal of (I)and (II) 9,305.5 9,305.5 2,114.4 2,114.4
0 0 1 1
(III) Owners' devoted 1,830,0 1,830,0 -7,209, -7,209,
and decreased capital 00.00 00.00 272.00 272.00
1. Owners' devoted
capital
2. Amount calculated
into owners' equity
paid in shares
1,830,0 1,830,0 -7,209, -7,209,
3. Others
00.00 00.00 272.00 272.00
-34,57 -34,57 -51,22 -28,81
(IV) Profit 22,408,
7,928.0 7,928.0 3,151.4 4,940.0
distribution 211.44
0 0 4 0
-22,40
1. Withdrawal of 22,408,
8,211.4
surplus reserves 211.44
4
2.Withdrawal of
general risk provision
-34,57 -34,57 -28,81 -28,81
3. Distribution for
7,928.0 7,928.0 4,940.0 4,940.0
owners (shareholders)
0 0 0 0
4. Others
(V) Carrying forward
internal owners'
equity
1. Capital reserves
conversed to capital
(share capital)
38
2. Surplus reserves
conversed to capital
(share capital)
3. Remedying loss
with surplus
reserves
4. Others
(VI) Reasonable
reserve
1. Withdrawal in the
report period
2. Usage in the report
period
(VII) Other
288,14 597,35 939,31 288,14 400,55 742,51
IV. Balance at the end 13,828, 39,981, 13,828, 39,981,
9,400.0 2,417.0 1,812.5 9,400.0 1,039.5 0,435.0
of the report period 726.93 268.55 726.93 268.55
0 4 2 0 4 2
39
I 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, 2010. 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, 2011, 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.
40
I General information (continued)
The approved scope of business of the Company and its subsidiaries (together “the Group”)
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 by laws,
administrative regulations, or the State Council. The restricted items can only be traded after
obtaining a license).
II Summary of significant accounting policies and accounting estimates
(1) Basis of preparation
The Group 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”). The rules of Compilation Rules for
Information Disclosures by Companies That Offer Securities to the Public No.15 - General
Provisions for Financial Reports(2010 revised edition) promulgated by China Securities
Regulatory Commission has adopted as well.
(2) Statement of compliance with the Accounting Standards for Business Enterprises
The financial statements of the Company for the period ended 30 June 2011 are in compliance
with the Accounting Standards for Business Enterprises, and truly and completely present the
financial position as of 30 June 2011 and the operating results, cash flows and other
information for the period then ended of the Group and the Company.
(3) Accounting period
The Company’s accounting year starts on 1 January and ends on 31 December.
(4) Recording currency
The recording currency is RMB.
41
II Summary of significant accounting policies and accounting estimates (continued)
(5) Business combinations
(a) Business combinations involving enterprises under common control
The consideration paid and net assets obtained by the absorbing party in a business
combination are measured at the carrying amount. The difference between the carrying
amount of the net assets obtained and the carrying amount of the consideration paid for the
combination is treated as an adjustment to capital surplus (capital premium). If the capital
surplus (capital premium) is not sufficient to be offset, the remaining balance is adjusted
against retained earnings.
Costs directly attributable to the combination are included in profit or loss in the period in which
they are incurred.
(b) Business combinations involving enterprises not under common control
The cost of combination and identifiable net assets obtained by the acquirer in a business
combination are measured at fair value at the acquisition date. Where the cost of the
combination exceeds the acquirer’s interest in the fair value of the acquiree’s identifiable net
assets, the difference is recognised as goodwill; where the cost of combination is lower than
the acquirer’s interest in the fair value of the acquiree’s identifiable net assets, the difference is
recognised in profit or loss for the current period.
Costs directly attributable to the combination are included in profit or loss in the period in which
they are incurred.
(6) Preparation of consolidated financial statements
The consolidated financial statements comprise the financial statements of the Company and
all of its subsidiaries.
Subsidiaries are consolidated from the date on which the Group obtains control and are
de-consolidated from the date that such control ceases. For a subsidiary that is acquired in a
business combination involving enterprises under common control, it is included in the
consolidated financial statements from the date when it, together with the Company, come
under common control of the ultimate controlling party. The portion of the net profits realised
before the combination date is presented separately in the consolidated income statement.
In preparing the consolidated financial statements, where the accounting policies and the
accounting periods are inconsistent between the Company and subsidiaries, the financial
statements of subsidiaries are adjusted in accordance with the accounting policies and
accounting period of the Company. For subsidiaries acquired from a business combination
involving enterprises not under common control, the individual financial statements of the
subsidiaries are adjusted based on the fair value of the identifiable net assets at the acquisition
date.
All significant inter-group balances, transactions and unrealised profits are eliminated in the
consolidated financial statements. The portion of a subsidiary’s equity and the portion of a
subsidiary’s net profits and losses for the period not attributable to Company are recognised as
minority interests and presented separately in the consolidated financial statements within
equity and net profits respectively.
42
II Summary of significant accounting policies and accounting estimates (continued)
(7) Cash and cash equivalents
For the purpose of the cash flow statement, cash and cash equivalents comprise cash on hand, call
deposits with banks and short-term and highly liquid investments that are readily convertible to
known amounts of cash and which are subject to an insignificant risk of changes in value.
(8) Foreign currency translation
Foreign currency transactions are translated into RMB using the exchange rates prevailing at the
dates of the transactions.
At the balance sheet date, monetary items denominated in foreign currencies are translated into
RMB using the spot exchange rates on the balance sheet date. Exchange differences arising from
these translations are recognised in profit or loss for the current period, except for those attributable
to foreign currency borrowings that have been taken out specifically for the acquisition or
construction of qualifying assets, which are capitalised as part of the cost of those assets.
Non-monetary items denominated in foreign currencies that are measured at historical costs are
translated at the balance sheet date using the spot exchange rates at the date of the transactions.
The effect of exchange rate changes on cash is presented separately in the cash flow statement.
(9) Financial Instruments
(a) Financial assets
(i) Classification
Financial assets are classified into the following categories at initial recognition: financial assets at
fair value through profit or loss, receivables, available-for-sale financial assets and held-to-maturity
investments. The classification of financial assets depends on the Group’s intention and ability to
hold the financial assets. The Group currently holds the financial assets including receivables.
Receivables, including notes receivables, accounts receivable and other receivables, are
non-derivative financial assets with fixed or determinable payments that are not quoted in an active
market
(ii) Recognition and measurement
Financial assets are recognised at fair value on the balance sheet when the Group becomes a
party to the contractual provisions of the financial instrument. Receivables are measured at
amortised cost using the effective interest method.
(iii) Impairment of financial assets
The Group assesses the carrying amounts of receivables at each balance sheet date. If there is
objective evidence that a financial asset is impaired, the Group shall determine the amount of
impairment loss. If there is objective evidence that the value of the financial asset recovered and
the recovery is related objectively to an event occurring after the impairment was recognised, the
previously recognised impairment loss is reversed and the amount of reversal is recognised in
profit or loss.
(iv) Derecognition of financial assets
Financial assets are derecognised when: i) the contractual rights to receive the cash flows from the
financial assets have expired; or ii) all substantial risks and rewards of ownership of the financial
assets have been transferred; or iii) the control over the financial asset has been waived even if the
Group does not transfer or retain nearly all of the risks and rewards relating to the ownership of a
financial asset.
43
II Summary of significant accounting policies and accounting estimates (continued)
(9) Financial Instruments (continued)
(a) Financial assets(continued)
(iv) Derecognition of financial assets(continued)
On derecognition of a financial asset, the difference between the carrying amount and the
aggregate of consideration received, is recognised in the income statement.
(b) Financial liabilities
Financial liabilities are classified into the following categories at initial recognition: the financial
liabilities at fair value through profit or loss and other financial liabilities. The financial liabilities in the
Group mainly comprise of other financial liabilities, including payables and borrowings.
Payables comprise notes payable, accounts payable and other payables, which are recognised
initially at fair value and measured subsequently at amortised cost using the effective interest
method.
Borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently
carried at amortised costs using the effective interest method.
Other financial liabilities are classified as the short-term borrowings if they mature within one year
(one year included); others are classified as non-current liabilities; Non-current liabilities due for
repayment within one year since the balance sheet day are classified as current portion of
non-current liabilities.
A financial liability (or a part of financial liability) is derecognised when and only when the obligation
specified in the contract is discharged or cancelled. The difference between the carrying amount of a
financial liability (or a part of financial liability) extinguished and the consideration paid is recognised
in the income statement.
(10) Receivables
Receivables comprise notes receivable, accounts receivable and other receivables. Accounts
receivable arising from sale of goods or rendering of services are initially recognised at fair value of
the contractual payments from the buyers or service recipients.
(a) Receivables with significant amount are subject to separate impairment assessment
Receivables that are individually significant are subject to separate impairment assessment. If
there is objective evidence that the Group will not be able to collect the full amount under the
original terms, a provision for impairment of that receivable is established at the difference between
the carrying amount of that receivable and the present value of its estimated future cash flows.
Debtors with significant balance refer to those with individual amount over RMB 5 million.
A provision on receivable accounts with significant amount is established at the difference between
the carrying amount of that receivable and the present value of its estimated future cash flows.
44
II Summary of significant accounting policies and accounting estimates (continued)
(10) Receivables (continued)
(b) Recognition and provision of bad debt provision on receivable accounts within similar credit risk
group
Receivables that are not individually significant and those receivables that have been individually
evaluated for impairment and have been found not impaired are combined into certain groups
based on their credit risk characteristics. The impairment losses are determined based on the
historical loss experience for the groups of receivables with the similar credit risk characteristics
and taking into consideration of the current circumstances.
The basis of similar credit risk group: the ageing of receivables
A provision for impairment of the receivables is made based on the ageing of receivables at the
following percentage:
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%
(c) Receivables that are not individually significant but subject to separate impairment assessment
If there is objective evidence that the Group will not be able to collect the full amount under the
original terms, then the Group would separately assess the provision of the receivables.
A provision for impairment of that receivable is established at the difference between the carrying
amount of that receivable and the present value of its estimated future cash flows.
(d) When the Group transfers the accounts receivable to financial institutions without recourse, the
net amount of proceeds received from the transaction after the carrying amounts of the
accounts receivable and related taxes is recognised in profit or loss for the current period.
(11) Inventories
(a) Classification
Inventories include raw materials, work in progress, finished goods and turnover materials,
and are presented at the lower of cost and net realisable value.
45
II Summary of significant accounting policies and accounting estimates (continued)
(11) Inventories (continued)
(b) Determination of cost
Cost is determined on the weighted average method. The cost of finished goods and work in
progress comprises raw materials, direct labour and an allocation of all production overhead
expenditures incurred based on normal operating capacity.
(c) The determination of net realisable value and the method of provisions for impairment of
inventories
Provisions for declines in the value of inventories are determined at the excess amount of the
carrying value of the inventories over their net realisable value. Net realisable value is
determined based on the estimated selling price in the ordinary course of business, less the
estimated costs to completion and estimated costs necessary to make the sale and related
taxes.
(d) The Group adopts the perpetual inventory system.
(e) Amortization method for low cost consumables and packaging materials
Turnover materials include low cost consumables and packaging materials, which are
expensed when issued.
(12) Long-term equity investments
Long-term equity investments comprise the Group’s long-term equity investments in its
associates and the Company’s long-term equity investments in its subsidiaries.
Subsidiaries are all entities over which the Company is able to control. Associates are all
entities over which the Group has significant influence, but not control, on their financial and
operating policies.
Investments in subsidiaries are measured using the cost method in the Company’s financial
statements, and adjusted by using the equity method when preparing the consolidated
financial statements. Interests in associates are accounted for using the equity method.
(a) Initial recognition
Long-term equity investments accounted for using the cost method are measured at the initial
investment costs. Investments in associates are accounted for using the equity method.
Where the initial investment cost exceeds the Group’s share of the fair value of the investee’s
identifiable net assets at the time of acquisition, the investment is initially measured at cost.
Where the initial investment cost is less than the Group’s share of the fair value of the
investee’s identifiable net assets at the time of acquisition, the difference is included in profit or
loss for the current period and the cost of the long-term equity investment is adjusted upwards
accordingly.
46
II Summary of significant accounting policies and accounting estimates (continued)
(12) Long-term equity investments (continued)
(b) Subsequent measurement
Long-term equity investments accounted for using the cost method are measured at the initial
investment costs. Investment income is recognised in profit or loss for the cash dividends or
profit distribution declared by the investees.
Under the equity method of accounting, the Group recognises the investment income
according to its share of net profit or loss of the investee. The Group discontinues recognising
its share of net losses of an investee after the carrying amount of the long-term equity
investment together with any long-term interests that, in substance, form part of the investor’s
net investment in the investee are reduced to zero. However, if the Group has obligations for
additional losses and the criteria with respect to recognition of provisions under the accounting
standards on contingencies are satisfied, the Group continues recognising the investment
losses and the provisions. For changes in owners’ equity of the investee other than those
arising from its net profit or loss, the Group records its proportionate share directly into capital
surplus, provided that the Group’s proportion of shareholding in the investee remains
unchanged. The carrying amount of the investment is reduced by the Group’s share of the
profit distribution or cash dividends declared by an investee. The unrealised profits or losses
arising from the intra-group transactions amongst the Group and its investees are eliminated in
proportion to the Group’s equity interest in the investees, and then based which the investment
gain or losses are recognised. The loss on the intra-group transaction amongst the Group and
its investees, of which the nature is asset impairment, is recognised in full, and the related
unrealised loss is not eliminated.
(c) Definition of control and significant influence over the investees
Controlling power means the power over the firm’s financial and operational decision-making,
and can obtain profit from the operation of such firm. At considering of substantial control or
major influence of a firm, the potential voting right factors such as current convertible bonds or
executable subscription options have been considered.
Major influence means the power to participate in decision-making but cannot control or
collectively control the same.
(d) Impairment of long-term equity investments
The carrying amount of long-term equity investments in subsidiaries and associates is reduced
to the recoverable amount when the recoverable amount is less than the carrying amount.
(13) Investment properties
Investment properties, including land use rights that have already been leased out buildings
that are held for the purpose of lease and buildings that is being constructed or developed for
future use for leasing, are measured initially at cost. Subsequent expenditures incurred in
relation to an investment property is included in the cost of the investment property when it is
probable that the associated economic benefits will flow to the Group and its cost can be
reliably measured; otherwise, the expenditures are recognised in profit or loss in the period in
which they are incurred.
47
II Summary of significant accounting policies and accounting estimates (continued)
(13) Investment properties (continued)
The Group adopts the cost model for subsequent measurement of the investment properties.
Buildings and land use rights are depreciated or amortised to their estimated net residual
values over their estimated useful lives. The estimated useful lives, the estimated net residual
values expressed as a percentage of cost and the annual depreciation (amortisation) rates of
the investment properties are as follows:
Estimated useful Estimated residual Annual
lives value depreciation
(amortisation) rate
Buildings 20-35 years 5% 2.71% to 4.75%
Land use rights 30-50 years - 2.00% to 3.33%
When an investment property is transferred to an owner-occupied property, it is reclassified as
fixed asset or intangible asset at the date of the transfer. When an owner-occupied property is
transferred for earning rentals or for capital appreciation, the fixed asset or intangible asset is
reclassified as investment property at its carrying amount at the date of the transfer.
The estimated useful life, net residual value of the investment property and the depreciation
(amortisation) method applied are reviewed and adjusted as appropriate at each year-end.
An investment property is derecognised on disposal or when the investment property is
permanently withdrawn from use and no future economic benefits are expected from its
disposal. The net amount of proceeds from sale, transfer, retirement or damage of an
investment property after its carrying amount and related taxes and expenses is recognised in
profit or loss for the current period.
The carrying amount of investment properties is reduced to the recoverable amount when the
recoverable amount is less than the carrying amount.
(14) Fixed assets
(a) Recognition
Fixed assets comprise buildings, machinery and equipment, motor vehicles, computer and electronic
equipment, office equipment and leasehold improvements.
Fixed asset is recognised when it is probable that the economic benefits associated with the fixed
asset will flow to the Group and its cost can be reliably measured. Fixed assets purchased or
constructed by the Group are initially measured at cost at the time of acquisition. Fixed assets
contributed by state-owned shareholders during the company reorganisation were recorded based
on the valuation amount approved by the state-owned assets supervision and management
department.
Subsequent expenditures incurred for a fixed asset are included in the cost of the fixed asset when it
is probable that the associated economic benefits will flow to the Group and the related cost can be
reliably measured. The carrying amount of the replaced part is derecognised. All the other
subsequent expenditures are recognised in profit or loss in the period in which they are incurred.
48
II Summary of significant accounting policies and accounting estimates (continued)
(14) Fixed assets (continued)
(b) Depreciation
Fixed assets are depreciated using the straight-line method to allocate the cost of the assets to their
estimated residual values over their estimated useful lives. For the fixed assets that have been
provided for impairment loss, the related depreciation charge is prospectively determined based upon
the adjusted carrying amounts over their remaining useful lives.
The estimated useful lives, the estimated residual values expressed as a percentage of cost and the
annual depreciation rates are as follows:
Estimated useful Estimated Annual
lives residual value depreciation rate
Buildings 20-35 years 5% 2.71% to 4.75%
Machinery and equipment 10-14 years 5% 6.79% to 9.5%
Motor vehicles 5-10 years 5% 9.5% to 19%
Other 5-10 years 5% 9.5% to 19%
Leasehold improvements Within 5 years - Above 20%
The estimated useful life, the estimated net residual value of a fixed asset and the depreciation
method applied to the asset are reviewed, and adjusted as appropriate at least at each year-end.
(c) The carrying amount of fixed assets is reduced to the recoverable amount when the recoverable
amount is less than the carrying amount.
(d) Disposal
A fixed asset is derecognised on disposal or when no future economic benefits are expected from its
use or disposal. The amount of proceeds from disposal on sale, transfer, retirement or damage of a
fixed asset net of its carrying amount and related taxes and expenses is recognised in profit or loss
for the current period.
(15) Construction in progress
Construction in progress is measured at actual cost. Actual cost comprises construction costs,
installation costs, borrowing costs that are eligible for capitalisation and other costs necessary to
bring the fixed assets ready for their intended use. Construction in progress is transferred to fixed
assets when the assets are ready for their intended use, and depreciation begins from the following
month. The carrying amount of construction in progress is reduced to the recoverable amount when
the recoverable amount is less than the carrying amount (Note II (20)).
The borrowing costs that are directly attributable to the acquisition and construction of a fixed asset
that needs a substantially long period of time of acquisition and construction for its intended use
commence to be capitalised and recorded as part of the cost of the asset when expenditures for the
asset and borrowing costs have been incurred, and the activities relating to the acquisition and
construction that are necessary to prepare the asset for its intended use have commenced. The
capitalisation of borrowing costs ceases when the asset under acquisition or construction becomes
ready for its intended use, the borrowing costs incurred thereafter are recognised in profit or loss for
the current period. Capitalisation of borrowing costs is suspended during periods in which the
acquisition or construction of a fixed asset is interrupted abnormally and the interruption lasts for
more than 3 months, until the acquisition or construction is resumed.
49
II Summary of significant accounting policies and accounting estimates (continued)
(16) Borrowing costs
For a borrowing specific for the acquisition, construction or production activities for preparing an asset
eligible for capitalisation, the to-be-capitalised borrowing costs shall be determined according to the
actual borrowing costs incurred less any income earned on the unused borrowing fund as a deposit in
the bank or as a temporary investment.
For the other borrowings related to acquisition, construction and production of a qualifying asset, the
amount of to-be-capitalised borrowing costs shall be the lower of the actual borrowing costs incurred
and the amount of qualifying asset not financed by specific borrowings multifying capitalisation rate.
The capitalisation rate is the weighted average interest rate of these borrowings.
(17) Intangible assets
Intangible assets include land use rights, computer softwares, technology patents and trademarks,
which initially recognised at cost. Intangible assets contributed by state-owned shareholders during
the company reorganisation were recorded based on the valuation amount approved by the
state-owned assets supervision and management department.
(a) Land use rights
A land use right granted by government with a infinite useful life would not be amortised. Other land
use rights are amortised on the straight-line basis over their approved useful period of 30 to 50
years.If the purchase costs of land use rights and the buildings located thereon cannot be reliably
allocated between the land use rights and the buildings, all of the purchase costs are recognised as
fixed assets.
(b) Computer softwares
Computer softwares purchased by the Group are initially measured at cost, which are amortised on
the straight-line basis over their approved useful period of 3 to 5 years.
(c) Trademarks and proprietary technology
Trademarks are amortised on the straight-line basis over their effective periods as stipulated by law
of 5 to 10 years. Proprietary technology are amortised on the straight-line basis over their effective
useful period of 5 years.
(d) Periodical review of useful life and amortisation method
For an intangible asset with a finite useful life, review and adjustment on its useful life and
amortisation method are performed at each year-end.
For an intangible asset without a definite useful life, review and adjustment on its useful life are
performed at each year-end.
50
II Summary of significant accounting policies and accounting estimates (continued)
(17) Intangible assets (continued)
(e) Research and development
The expenditure on an internal research and development project is classified into expenditure on the
research phase and expenditure on the development phase based on its nature and whether there is
material uncertainty that the research and development activities can form an intangible asset at end
of the project.
Expenditure on the research phase is recognised in profit or loss in the period in which it is incurred.
Expenditure on the development phase is capitalised only if all of the following conditions are
satisfied:
it is technically feasible to complete the intangible asset so that it will be available for use;
management intends to complete the intangible asset, and use or sell it;
it can be demonstrated how the intangible asset will generate economic benefits;
adequate technical, financial and other resources to complete the development and the ability to
use or sell the intangible asset; and
the expenditure attributable to the intangible asset during its development phase can be reliably
measured.
Other development expenditures that do not meet the conditions above are recognised in profit or
loss in the period in which they are incurred. Development costs previously recognised as expenses
are not recognised as an asset in a subsequent period. Capitalised expenditure on the development
phase is presented as development costs in the balance sheet and transferred to intangible assets at
the date that the asset is ready for its intended use.
(f) Impairment
The carrying amount of intangible assets is reduced to the recoverable amount when the recoverable
amount is less than the carrying amount (Note II (20)).
(18) Long-term prepaid expenses
Long-term prepaid expenses include the expenditure for improvements to fixed assets under
operating leases, and other expenditures that have been made but should be recgonised as
expenses over more than one year in the current and subsequent periods. Long-term prepaid
expenses are amortised on the straight-line basis over the expected beneficial period and are
presented at actual expenditure net of accumulated amortisation.
(19) Governmental medical reserve funds and specially approved reserving materials
Appointed by the PRC Government, China National Pharmaceutical Group Corporation (“CNPGC")
is responsible for purchasing, allocating and providing the governmental medical reserves, which
include the medical products, traditional Chinese medicine and medical appliances for nation-wide
emergency rescue and disaster relief. Appointed by the Government of Guangxi Province,
Sinopharm Medicine Holding Nanning Co., Ltd. (“Sinopharm Nanning”), a subsidiary of the Group, is
responsible for purchasing, allocating and providing the medical reserves, which include the medical
products needed for common disease and emergencies triggered by major disasters, epidemics and
other situations in Guangxi Province. In accordance with the regulation of CNPGC, as being the
enterprise who bears the obligation for specially approved medical reserving materials, the medical
reserve funds received from the PRC Government or local government are recognised in other
Non-current liabilities. The Group reserves the specially approved medical reserving materials
according to the reserve program (by category and by quantity), applies dynamic management and
recognises in other non-current assets.
51
II Summary of significant accounting policies and accounting estimates (continued)
(20) Impairment of long-term assets
Fixed assets, construction in progress, intangible assets with finite useful lives, Long-term prepaid
expenses and investment properties measured using the cost model and long-term equity
investments in subsidiaries, joint ventures and associates 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 recognised 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. Provision for asset impairment is determined and recognised on the individual asset basis. If it
is not possible to estimate the recoverable amount of an individual asset, the recoverable amount of a
group of assets to which the asset belongs is determined. A group of assets is the smallest group of
assets that is able to generate independent cash inflows.
Goodwill that is separately presented in the financial statements and intangible assets with infinite
useful lives are tested at least annually for impairment, irrespective of whether there is any indication
that it may be impaired. In conducting the test, the carrying value of goodwill is allocated to the related
asset groups or groups of asset groups which are expected to benefit from the synergies of the
business combination. If the result of the test indicates that the recoverable amount of an asset group
or group of asset groups, including the goodwill allocated, is lower than its carrying amount, the
corresponding impairment loss is recognised. The impairment loss is first deducted from the carrying
amount of goodwill that is allocated to the asset group or group of asset groups, and then deducted
from the carrying amounts of other assets within the asset groups or groups of asset groups in
proportion to the carrying amounts of other assets.
Once the above asset impairment loss is recognised, it will not be reversed for the value
recovered in the subsequent periods.
(21) Employee benefits
Employee benefits mainly include wages or salaries, bonuses, allowances and subsidies, staff
welfare, social security contributions, housing funds, labour union funds, employee education funds
and other expenditures incurred in exchange for service rendered by employees.
If the Group terminates the labor relationship with an employee prior to the expiration of the relevant
labor contract or makes a severance package proposal with the purpose of encouraging voluntary
redundency, and provided that the Group has drafted a formal plan for the termination of labour
relationships or has put forward a proposal for voluntary layoffs and intends to execute it forthwith,
and the Group may not retract plans for termination of labour relationships or layoff proposals ex
parte, the Group shall recognise the liabilities to be incurred due to severance pay, and shall at the
same time record them in the income statement.
Except for compensation paid for termination of employment, employee benefits are recognised as
salaries and wages payable in the accounting period in which an employee has rendered service, as
costs of assets or expenses to whichever the employee service is attributable.
(22) Profit distribution
Cash dividends distribution is recognised as a liability in the period in which it is approved by the
annual shareholders’ meeting.
52
II Summary of significant accounting policies and accounting estimates (continued)
(23) Revenue recognition
The amount of revenue is determined in accordance with the fair value of the consideration received
or receivable for the sale of goods and services in the ordinary course of the Group’s activities.
Revenue is shown net of value-added tax, rebates, discounts and returns.
Revenue is recognised when the economic benefits associated with the transaction will flow to the
Group, the related revenue can be reliably measured, and the specific revenue recognition criteria
have been met for each type of the Group’s activities as described below:
(a) Sale of goods
Revenue from the sale of goods is recognized when significant risks and rewards of ownership of the
goods are transferred to the buyer, the Company retains neither continuing managerial involvement
to the degree usually associated with ownership nor effective control over the goods sold, and it is
probable that the economic benefit associated with the transaction will flow to the Company and the
relevant revenue and costs can be measured reliably.
(b) Rendering of services
The Group provides freight service and storage service to external parties. The freights are
recognized as revenue right after the goods are transported to the place of delivery according to
contracts or agreements, received and confirmed by the purchasers. The storage charges are
recognized as revenue on the basis of services provided during the storage period.
(c) Transfer of asset use rights
Interest income is recognised on a time-proportion basis using the effective interest method.
Income from an operating lease is recognised on a straight-line basis over the period of the lease.
(24) Government grants
Government grants are the monetary asset the Group receives from the government for free,
including tax refund, government subsidies, etc.
Grants from the government are recognised when there is a reasonable assurance that the grants
will be received and the Group will comply with all attached conditions. Government grants are
measured at the amounts received or receivable.
Government grants relating to assets are recognised as deferred income and are credited to the
income statement on a straight-line basis over the expected lives of the related assets.
Government grants relating to income, which is used to compensate the expenses/costs incurred in
future, are recognised as deferred income and then credited to the income statement over the period
necessary to match them with the expenses that they are intended to compensate. Government
grants relating to income, which is used to compensate the expenses/costs incurred in the past, are
credited to the income statement directly.
53
II Summary of significant accounting policies and accounting estimates (continued)
(25) Deferred tax assets and deferred tax liabilities
Deferred tax assets and deferred tax liabilities are calculated and recognised based on the
differences arising between the tax bases of assets and liabilities and their carrying amounts
(temporary differences). Deferred tax asset is recognised for the deductible losses that can be carried
forward to subsequent years for deduction of the taxable profit in accordance with the tax laws. No
deferred tax liability is recognised for a temporary difference arising from the initial recognition of
goodwill. No deferred tax asset or deferred tax liability is recognised for the temporary differences
resulting from the initial recognition of assets or liabilities due to a transaction other than a business
combination, which affects neither accounting profit nor taxable profit (or deductible loss). At the
balance sheet date, deferred tax assets and deferred tax liabilities are measured at the tax rates that
are expected to apply to the period when the asset is realised or the liability is settled.
Deferred tax assets are only recognised for deductible temporary differences, deductible losses and
tax credits to the extent that it is probable that taxable profit will be available in the future against
which the deductible temporary differences, deductible losses and tax credits can be utilised.
Deferred tax assets and liabilities are offset when:
the deferred taxes are related to the same tax payer within the Group and the same taxation
authority; and,
that tax payer has a legally enforceable right to offset current tax assets against current tax liabilities.
Deferred tax liabilities are recognised for temporary differences arising from investments in
subsidiaries and associates, except where the Group is able to control the timing of the reversal of
the temporary difference, and it is probable that the temporary difference will not reverse in the
foreseeable future. When it is probable that the temporary differences arising from investments in
subsidiaries, joint ventures and associates will be reversed in the foreseeable future and that the
taxable profit will be available in the future against which the temporary differences can be utilised,
the corresponding deferred tax assets are recognised.
(26) Operating leases
Leases where a significant portion of the risks and rewards of ownership are retained by the
leaser are classified as operating leases. Lease payments under an operating lease are
recognised on a straight-line basis over the period of the lease, and are either capitalised as
part of the cost of related assets or charged as an expense.
(27) Segment information
The Group identifies operating segments based on the internal organisation structure, management
requirements and internal reporting system, and discloses segment information of reportable
segments which is determined on the basis of operating segments.
An operating segment is a component of the Group that satisfies all of the following conditions: (1) the
component is able to earn revenues and incur expenses from its ordinary activities; (2) whose
operating results are regularly reviewed by the Group’s management to make decisions about
resources to be allocated to the segment and to assess its performance, and (3) for which the
information on financial position, operating results and cash flows is available to the Group. If two or
more operating segments have similar economic characteristics and satisfy certain conditions, they
are aggregated into one single operating segment.
54
II Summary of significant accounting policies and accounting estimates (continued)
(28) Changes in significant accounting policies
The Group has no changes in significant accounting policies in this reporting period.
(29) Critical accounting estimates and judgments
The Group continually evaluates the critical accounting estimates and key judgments applied based
on historical experience and other factors, including expectations of future events that are believed to
be reasonable.
(a) Critical accounting estimates and key assumptions
The critical accounting estimates and key assumptions that have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities within the next financial year are
outlined below:
(i) Accounting estimates on impairment of goodwill
The Group tests annually whether goodwill has suffered any impairment. The recoverable amount of
asset groups and groups of asset groups is the present value of the future cash flows expected to be
derived from them. These calculations require use of estimates (Note V (14)).
If management revises the gross margin that is used in the calculation of the future cash flows of
asset groups and groups of asset groups, and the revised gross margin is lower than the one
currently used, the Group would need to recognise further impairment against goodwill and fixed
assets.
If management revises the pre-tax discount rate applied to the discounted cash flows, and the revised
pre-tax discount rate is higher than the one currently applied, the Group would need to recognise
further impairment against goodwill and fixed assets.
If the actual gross margin/pre-tax discount rate is higher/lower than management’s estimates, the
impairment loss of goodwill previously provided for is not allowed to be reversed by the Group.
(ii) Income taxes
The Group is subject to income taxes in numerous jurisdictions. There are many transactions and
events for which the ultimate tax determination is uncertain during the ordinary course of business.
Significant judgment is required from the Group in determining the provision for income taxes in each
of these jurisdictions. The Group recognises income taxes in each jurisdiction based on estimates.
Where the final tax outcome of these matters is different from the amounts that were initially
recorded, such differences will impact the income tax and deferred tax provisions in the period in
which such determination is made.
55
II Summary of significant accounting policies and accounting estimates (continued)
(29) Critical accounting estimates and judgments (continued)
(iii) Accounting estimates on impairment of accounts receivable
In accordance with the Group’s accounting policy (note II (10)), the Group’s management tests
annually whether receivables have suffered any impairment, Impairment of receivables has
been assessed by taking into account the customers’ credit history and financial position
together with the current market conditions. Even if the Group’s management has made bad
debt provision for the expected loss at its best estimate, there is a possibility that changes in
customers’ financial position or market conditions will alter the result.
(iv) Accounting estimates on impairment of inventories
In accordance with the Group’s accounting policy (Note II (11) (c)), the Group’s management
estimates the net realizable value of the inventory. Net realisable value is determined based
on the estimated selling price in the ordinary course of business, less the estimated costs to
completion and estimated costs necessary to make the sale and related taxes. Even if the
Group’s management has made stock provision for the expected impairment at its best
estimate, there is a possibility that changes in market conditions will alter the result.
(v) Accounting estimates on impairment of long-term assets
In accordance with the Group’s accounting policy (note II (20)), the Group’s management tests
annually whether long term assets with an indication of impairment have suffered any
impairment, including fixed assets, construction in progress, intangible assets with finite useful
lives, Long-term prepaid expenses and investment properties measured using the cost model
and long-term equity investments in subsidiaries and associates. The calculation of present
value of projection cash flows of these long-term assets requires the use of accounting
estimate which is similar to the impairment test of goodwill.
It is reasonably possible that outcomes based on current experience within the next financial
year would be significantly different, which will result in a significant impact on the carrying
amount of those long-term assets described above.
56
III Taxation
(1) The types and rates of taxes applicable to the Group are set out below:
Type Taxable base Tax rate
Enterprise income Taxable income 15%、24% or 25%
tax(“EIT”)
Value added tax Taxable value added amount (Tax 0%、3%、13% or 17%
(“VAT”) payable is calculated using the
taxable sales amount multiplied by
the effective tax rate less deductible
VAT input of current period)
Business tax Rental income, storage income and 5%
etc.
Business tax Freight income 3%
City maintenance and VAT and business tax 7%
construction tax
Education surcharge VAT and business tax 3% or 4%
(2) Tax preferences
The company, Shenzhen Zhijun Pharmaceutical Trade Co., Ltd. (‘Zhijun Trade’), Shenzhen
Accord Pharmaceutical Materials Co., Ltd. (‘Accord Material’), Shenzhen Jianmin
Pharmaceutical Co., Ltd. (‘Jianmin Pharm’), Shenzhen Accord Pharmaceutical Logistics Co.,
Ltd. (‘Accord Logistics’), Shenzhen Yanfeng Medical Co., Ltd. (’Yanfeng Medical’)and
Sinopharm Shenzhen Medicine Co., Ltd (‘Shenzhen Medicine’), qualify as foreign
investment manufacturing enterprises established in a special economic zone. As approved by
the tax authorities, the aforesaid companies’ original applicable enterprise income tax rates are
15%. Under relevant requirements of the Corporate Income Tax Law and Guo Fa [2007]39,
the enterprise income tax rate applicable to those companies will increase gradually to 25%
within 5 years from 2008 to 2012. Their applicable income tax rate for this reporting period is
24%.
In 2008, Shenzhen Zhijun Pharmaceutical Co., Ltd. (‘Zhijun Pharm’) and Suzhou Zhijun
Wanqing Pharmaceutical Co., Ltd. (‘Suzhou Wanqin’), subsidiaries of the Company, separately
obtained the certificate of High and New Technology Enterprises with effective period of 3
years. Under the relevant regulations of article 28 of the Corporate Income Tax Law, the
applicable tax rates for Zhijun Pharm and Suzhou Wanqin in this reporting period is 15%.
57
IV Business combinations and consolidated financial statements
(1) Subsidiaries
(a) Subsidiaries acquired under common control
Registered Legal
The holding type Place of Nature of capital Enterprise Repres-en
of investment registration business ( Rmb’0000) Principal activities Type tative
Zhijun Pharm Direct Shenzhen Manufacturing 20,000.0 Original chemical medicine manufacture, Chinese patent Limited Yan
medicine processing, chemical raw material of medicine, company Zhigang
the imports and exports business which transacted
according to examined and approved certificate
Jianmin Pharm Direct Shenzhen Commercial 500.0 Wholesale of chemical agent, antibiotics agent, chemical Limited Lin
and biological agent, blood products, raw material of company Xinyang
chemical product, Chinese medicine and diagnosis
products
Shenzhen Medicine Trade Co., Direct Shenzhen Commercial 188.0 Wholesale and retail of drugs and textiles - -
Ltd. (Shenzhen Trade’) (i)
Accord Material Direct Shenzhen Commercial 600.0 Chinese patent medicine, western medicine, medicine Limited Zhao
treatment apparatus company Yuhe
Zhijun Trade Direct Shenzhen Commercial 189.0 Purchase and sale of Chinese traditional Limited Deng
medicinal materials, Chinese patent medicine, company Baojun
chemical raw material for medical treatment,
antibiotic preparation, chemical medicine
preparation etc.
Accord Logistics Direct Shenzhen Service 100.0 Storage service, convey, liquidation of cargo external Limited Ma
package and common transportation of road company Jiancong
58
IV Business combinations and consolidated financial statements (continued)
(1) Subsidiaries (continued)
(a) Subsidiaries acquired under common control(continued)
Registered Legal
The holding type Place of Nature of capital Enterprise Repres-en
of investment registration business ( Rmb’0000) Principal activities Type tative
Guangdong Accord Direct Shenzhen Service 3.0 Training service Non-Enterpri Tan
Pharmaceutical Vocational se Guoshu
Skills Training Center
(’Training Center’)
Sinopharm Medicine Holding Direct Guangzhou Commercial 40,000.0 Chinese patent medicine, chemical medicine Limited Shi
Guangzhou Co., Ltd. preparation, antibiotics, biochemical medicine, biological company Jinming
(’Sinopharm Guangzhou’) 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
.
Guangdong Accord Hengxing Direct Guangzhou Commercial 4,000.0 Drugs, medical apparatus sales Limited Lin
Pharmaceutical Co., Ltd. company Zhaoxiong
(Hengxing Pharm')
Guangxi Accord Direct Nanning Commercial 500.0 Drug sales Limited Zhou Ruili
Pharmaceutical Co., company
Ltd.(’Guangxi Accord’)
Sinopharm Medicine Holding Direct Liuzhou Commercial 2,053.1 Chinese traditional medicinal materials, Chinese patent Limited Lin
Liuzhou Co., Ltd. medicine, Chinese traditional medicine in pieces, company Zhaoxiong
(’Sinopharm Liuzhou’) 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)
59
IV Business combinations and consolidated financial statements (continued)
(1) Subsidiaries (continued)
(a) Subsidiaries acquired under common control(continued)
The
holding Registered Legal
type of Place of Nature of capital Enterprise Repres-ent
investment registration business (Rmb’0000) Principal activities Type ative
Guangxi Accord Chinese Herbal Indirect Liuzhou Manufacturing 200.0 Manufacturing and sales of Chinese herbal pieces Limited Zhu
Pieces Co., Ltd. (’Guangxi Chinese company Wenhui
Herbal Pieces’) (ii)
Guangdong Huixin Investment Co., Direct Guangzhou Service 500.0 Project investment, property management and leasing, Limited Shi
Ltd. (’Huixin Investment’) medical information consultancy, car park company Jinming
management
Sinopharm Medicine Holding Foshan Direct Foshan Commercial 1,000.0 Drug sales Limited Lin
Co., Ltd. (’Sinopharm Foshan’) company Xinyang
Guangdong Yuexing Pharmaceutical Direct Guangzhou Commercial 3,000.0 Sales of medicine and medical treatment apparatus Limited Luo Qin
Co., Ltd. (‘Yuexing Pharm’) company
Guangdong Hengchang Logistics Co., Direct Guangzhou Service 500.0 Storage loading and unloading Limited Lin Min
Ltd. (’Hengchang Logistics’) company
Sinopharm Nanning Direct Nanning Commercial 10,000.0 Drug sales Limited Lin
company Zhaoxio
ng
Guangxi Sinopharm Logistics Co., Indirect Nanning Service 710.0 Storage loading and unloading, consultation service Limited Lin
Ltd. (’Guangxi Logistics’) company Zhaoxio
ng
Shenzhen Medicine Direct Shenzhen Manufacturing 5,000.0 Manufacturing of granules, lotion, tablet, capsule, oral Limited Deng
liquid and mixture, and syrup; manufacturing and company Baojun
sale of hair products, bath foam and cosmetics, and
detergent (antibiosis washing liquid); manufacturing
of plastic bottle; manufacturing and sale of health
food.
60
IV Business combinations and consolidated financial statements (continued)
(1) Subsidiaries (continued)
(a) Subsidiaries acquired under common control(continued)
Period-End Other assets constitute Equity interest Voting rights Consolidated or Minority interests Loss shared by minority
balance of investment in held (%) held (%) not (Rmb’0000) interests
investment substance
(Rmb’0000)
Zhijun Pharm 23,706.2 - 100 100 Yes - -
Jianmin Pharm 5,348.3 - 100 100 Yes - -
Shenzhen Trade(i) 847.9 - 100 100 Yes - -
Accord Material 816.7 - 100 100 Yes - -
Zhijun Trade 373.4 - 100 100 Yes - -
Accord Logistics 101.9 - 100 100 Yes - -
Training Center 3.0 - 100 100 Yes - -
Sinopharm Guangzhou 48,388.8 - 100 100 Yes - -
Hengxing Pharm 3,174.2 - 100 100 Yes - -
Guangxi Accord 498.8 - 100 100 Yes - -
Sinopharm Liuzhou 2,220.6 - 51 51 Yes 2,469.29 -
Guangxi Chinese
Herbal Pieces (ii) - - 51 100 Yes - -
Huixin Investment 6,441.7 - 100 100 Yes - -
Sinopharm Foshan 1,499.5 - 100 100 Yes - -
Yuexing Pharm 4,345.9 - 100 100 Yes - -
Hengchang Logistics 559.6 - 100 100 Yes - -
Sinopharm Nanning 10,404.9 - 100 100 Yes - -
Guangxi Logistics(iii) - - 100 100 Yes - -
Shenzhen Medicine 4,808.1 - 100 100 Yes - -
(i) Shenzhen Trade ceased its operation in 2003.
(ii) Guangxi Chinese Herbal Pieces, a wholly owned subsidiary of Sinopharm Liuzhou, is indirectly held of 51% in equity by the Company.
(iii) Guangxi Logistics, a wholly owned subsidiary of Sinopharm Nanning, is indirectly held of 100% in equity by the Company.
61
IV Business combinations and consolidated financial statements (continued)
(1) Subsidiaries (continued)
(b) Subsidiaries acquired not under common control
The holding type Place of Nature of Registered Principal activities Enterprise Legal
of investment registration business capital Type Repres-entati
(Rmb’0000) ve
Suzhou Wanqin Direct Suzhou Manufacturing 8,000.00 Production and sales of general raw materials of medicine, Limited Shi Jinming
raw medicine and preparation of cephalosporin; do export company
business of production and technology of the Company
Dongguan Accord Direct Dongguan Commercial 1,000.00 Wholesales of Chinese traditional medicinal materials, Limited Lin Xinyang
Pharmaceutical Co., Ltd. Chinese patent medicine, Chinese traditional medicine in company
(’Dongguan Accord’) pieces, chemical raw material; sales of daily general
merchandise and heath protection food
Sinopharm Medicine Holding Direct Zhanjiang Commercial 1,500.00 sales of Chinese traditional medicinal materials, Chinese Limited Lin Xinyang
Zhanjiang Co., Ltd. patent medicine, Chinese traditional medicine in pieces, company
(’Sinopharm Zhanjiang’) chemical raw material and agent, anti-biotic.
Yanfeng Medical Direct Shenzhen Commercial 3,000.00 Sales of Chinese patent medicine, Chemical raw material Limited Lin Zhaoxiong
and agent, Anti-biotic agent, Biochemical drug, Medical company
device and Health protection food
Sinopharm Medicine Holding Direct Meizhou Commercial 120.00 Wholesales of Chinese traditional medicinal materials, Limited Yang Yan
Meizhou Co., Ltd. Chinese patent medicine, Chemical raw material and agent, company
(’Sinopharm Meizhou’) Anti-biotic;
Sinopharm Medicine Holding Direct Huizhou Commercial 700.00 Sales of medicine and medical device Limited Yang Yan
Huizhou Co., Ltd. company
(’Sinopharm Huizhou’)
Period-end Other assets constitute Equity interest Voting rights Consolidated Minority interests Loss shared by minority
balance of investment in held (%) held (%) or not (Rmb’0000) interests
investment substance
( Rmb’0000)
Suzhou Wanqin 13,425.0 - 75 75 Yes 3,425.58 -
Dongguan Accord 994.20 - 100 100 Yes - -
Sinopharm Zhanjiang 1,577.0 - 100 100 Yes - -
Yanfeng Medical 3,504.85 - 51 51 Yes 2,271.53 -
Sinopharm Meizhou 313.7 - 100 100 Yes - -
Sinopharm Huizhou 444.4 - 100 100 Yes - -
62
V Notes to the consolidated financial statements
(1) Cash at bank and on hand
30 June 2011 31 December 2010
Cash on hand
81,181.61 146,710.56
Cash at bank 849,954,455.17 682,729,162.62
Other cash balances 47,382,577.51 28,913,902.48
897,418,214.29 711,789,775.66
As at 30 June 2011, except a deposit of USD which was equivalent to RMB17,576.18, all other
cash at bank and on hand are in RMB. Other cash balances of RMB47,252,609.95 represents
deposits of the Group for the purpose of applying for bank acceptance notes.
(2) Notes receivable
30 June 2011 31 December 2010
Trade acceptance notes 256,561,313.30 212,196,387.14
Bank acceptance notes 147,150,658.98 156,972,643.33
403,711,972.28 369,169,030.47
(a) Pledged notes receivable
As at 30 June 2011, no notes receivable has been pledged.
(b) Endorsed undue notes receivable
As at 30 June 2011, the Group endorsed the undue notes receivable of RMB384,183,758.33.
The top five notes receivable are analysed as below.
Issuer Issue date Expiry date Amount
Shangdong Luoxin Pharmacy Co., Ltd. 21 February 2011 21 August 2011 10,800,000.00
General Hospital of Guangzhou Millitary
Command of PLA 22 June 2011 22 September 2011 8,482,909.99
Harbin Pharmaceutical Group Co., Ltd.
General Pharm.Factory 7 March 2011 6 September 2011 7,920,000.00
General Hospital of Guangzhou Millitary 20 April 2011 20 July 2011
Command of PLA 7,462,738.33
General Hospital of Guangzhou Millitary 18 May 2011 18 August 2011
Command of PLA 7,120,693.52
41,786,341.84
63
V Notes to the consolidated financial statements (continued)
(2) Notes receivable (continued)
(c) Discounted undue notes receivable
As at 30 June 2011, notes receivable including undue trade acceptance notes of
RMB123,393,841.56, and undue bank acceptance notes of RMB193,718,860.90 have been
discounted.
(d) The Group has no notes receivable which need to be reclassified as accounts receivable.
(3) Accounts receivable
30 June 2011 31 December
2010
Accounts receivable 3,306,648,999.17 2,901,694,647.44
Less: provision for bad debts (36,816,380.70) (34,869,544.66)
3,269,832,618.47 2,866,825,102.78
(a) The ageing of accounts receivable and related provision for bad debts are analysed as below:
30 June 2011 31 December 2010
Provision for Provision for
Amount bad debts Amount bad debts
Within 1 year 3,270,592,000.8 2,868,265,213.0
9 (5,630,873.41) 9 (3,649,047.87)
1 to 2 years 18,481,220.12 (13,609,868.85) 18,451,303.03 (16,242,365.47)
2 to 3 years 2,656,646.84 (2,656,507.12) - -
Over 3 year (14,919,131.32 (14,978,131.32
14,919,131.32 ) 14,978,131.32 )
3,306,648,999.1 2,901,694,647.4
7 (36,816,380.70) 4 (34,869,544.66)
(b) The accounts receivable and related provision for bad debts by category are analysed as
below:
30 June 2011 31 December 2010
Carrying amount Bad debt provision Carrying amount Bad debt provision
% of total % of total
amount balance amount rate amount balance amount rate
individually
significant are
subject to
separate
impairment
assessment 37,407,617.88 1.13% (22,127,055.44) 59.15% 53,290,932.84 1.84% (23,655,876.26) 44.39%
receivable
accounts within
similar credit risk
group 3,244,541,474.90 98.12% (156,082.81) 0.01% 2,833,143,282.43 97.64% (111,099.82) 0.01%
individually not
significant but
individually
evaluated for
impairment 24,699,906.39 0.75% (14,533,242.45) 58.84% 15,260,432.17 0.52% (11,102,568.58) 72.75%
3,306,648,999.17 100% (36,816,380.70) 1.11% 2,901,694,647.44 100% (34,869,544.66) 1.20%
64
V Notes to the consolidated financial statements (continued)
(3) Accounts receivable (continued)
(c) As at 30 June 2011, impairment provision for accounts receivable individually significant are
analysed as below.
Carrying amount Bad debt provision Rate Assessment for impairment
Guangdong Liyuan
Pharmaceutical Co. Disputed receivable with higher risk of
Ltd. 15,686,460.93 (15,686,460.93) 100.00% recoverability.
LiuZhou Municipal LiuTie Disputed receivable with higher risk of
Central Hospital 8,292,249.03 (210,838.78) 2.54% recoverability.
NanNing Second People's Disputed receivable with higher risk of
Hospital 7,978,886.62 (779,734.43) 9.77% recoverability.
NanNing Medicine
Wholesale Center 5,450,021.30 (5,450,021.30) 100.00% Ageing over 5 years.
37,407,617.88 (22,127,055.44)
(d) Provisions for impairment of the receivables which have a similar risk group are analysed as
below:
30 June 2011 31 December 2010
Carrying amount Bad debt provision Carrying amount Bad debt provision
% of total % of total
amount balance amount rate amount balance amount rate
Within 1 year 3,241,884,967.78 99.92% - - 2,830,921,285.80 99.92% - -
1 to 2 years 2,656,507.12 0.08% (156,082.81) 5.88% 2,221,996.63 0.08% (111,099.82) 5.00%
3,244,541,474.90 100% (156,082.81) 0.005% 2,833,143,282.43 100.00% (111,099.82) 0.004%
(e) As at 30 June 2011, accounts receivable individually not significant but individually evaluated
for impairment are analysed as below:
Carrying Bad debt
amount provision Rate Assessment for impairment
nd
Shenzhen People’s 2 Hospital 4,608,823.05 (1,434,789.46) 31.13% Uncertainty in recoverability
Beijing University Shenzhen Hospital 3,935,690.80 (670,476.15) 17.04% Uncertainty in recoverability
ShenZhen Ophthalmology Hospital 2,314,619.82 (169,434.82) 7.32% Uncertainty in recoverability
ShenZhen Bao'An District GuanLan
Hospital 1,038,517.49 (64,973.00) 6.26% Uncertainty in recoverability
ShenZhen NanShan District SheKou
Hospital 558,274.98 (250,000.00) 44.78% Uncertainty in recoverability
Gansu Longshi Pharmacy Co., Ltd. 1,664,122.00 (1,617,775.28) 97.21% Uncertainty in recoverability
Shenzhen Maternity and Child
Healthycare Hospital 667,056.11 (412,992.00) 61.91% Uncertainty in recoverability
HuiZhou QuanYi Pharmaceutical
Franchise Co. Ltd. 443,692.12 (443,692.12) 100.00% Uncertainty in recoverability
GuangXi JiaZhao Pharmaceutical Co.
Ltd.etc. 9,469,110.02 (9,469,110.02) 100.00% Ageing is above 3 years.
24,699,906.39 (14,533,242.45)
65
V Notes to the consolidated financial statements (continued)
(3) Accounts receivable (continued)
(f) Accounts receivable, which have been fully or partly made impairment provision already,
recovered in current period is listed below:
Reason for Original assessment for Recovered bad Recovered
recoverability providing impairment debt provisions amount
JiangYin KaiHong Pharmaceutical
Co. Ltd. Amount received Uncertainty in recoverability 354,600.00 354,600.00
AnHui Province FuYang KangTai
Pharmaceutical Co. Ltd. Amount received Uncertainty in recoverability 93,687.19 730,851.19
AnHui BoYang Medicine supplied
center Co. Ltd. Amount received Uncertainty in recoverability 71,760.00 307,777.68
SuZhou KangXin Pharmaceutical
Co. Ltd. Amount received Uncertainty in recoverability 15,480.00 23,580.00
JiangSu WeiKang
Pharmaceutical Co. Ltd. Amount received Uncertainty in recoverability 7,380.00 19,200.00
HeBei AiPu
Herbs&Pharmaceutical Co. Ltd. Amount received Uncertainty in recoverability 4,800.00 4,800.00
547,707.19 1,440,808.87
(g) No accounts receivable has been written off as at 30 June 2011.
(h) Accounts receivable due from shareholders with more than 5% (including 5%) of the
Company’s equity interest are analysed as below:
30 June 2011 31 December 2010
Sinopharm Group 8,745,155.12 6,085,670.42
(i) As at 30 June 2011, the top five accounts receivable by customer are analysed as below:
% of the total
Relationship accounts
with the Group Amount Ageing receivable
Centre for Disease Control and
Prevention of Guangdong Province Third party 84,197,720.00 Within 1 year 2.55%
GuangDong Province People's
Hospital Third party 42,800,918.36 Within 1 year 1.29%
The Third Affiliated Hospital of
ZhongShan University Third party 41,931,833.30 Within 1 year 1.27%
GuangZhou First People's Hospital Third party 40,231,848.05 Within 1 year 1.22%
Affiliated Hospital of Guangdong
Medical faculty Third party 38,781,752.94 Within 1 year 1.17%
247,944,072.65 7.50%
(j) Accounts receivable due from related party
As at 30 June 2011, there are accounts receivable of RMB245,962,436.76 due from related
party, which is 7.41% of the total accounts receivable.
66
V Notes to the consolidated financial statements (continued)
(4) Advances to suppliers
(a) The ageing of advances to suppliers is analysed below:
30 June 2011 31 December 2010
% of total % of total
amount balance amount balance
Within 1 year 78,034,041.21 95.62% 98,067,411.72 96.33%
1 to 2 years - - 202,384.25 0.20%
2 to 3 years 49,009.40 0.06% 3,536,234.95 3.47%
Above 3 years 3,529,434.95 4.32% - -
81,612,485.56 100.00% 101,806,030.92 100.00%
As at 30 June 2011, advances to suppliers of RMB3,578,444.35 with ageing over 1 years, mainly
represented prepayment for patent.
(b) As at 30 June 2011, the top five advances to suppliers by customer are analysed below:
Relationship
with the Reason for
Group Amount Proportion Ageing unsettlement
Sinopharm Group
Distribution Centre Advances for
Corporate Limited Third party 16,561,312.56 20.29% Within 1 year procurement
Beijing Materials
Handing
Engineering&Research Advances for
Institute Third party 4,945,000.00 6.06% Within 1 year device
Guangxit Construction & Advances for
st
Engineering 1 Co., logistics
Ltd. Third party 4,885,319.67 5.99% Within 3 months project
Advances for
Shanghai Tongqiang device and
Engineering Co., Ltd. Third party 3,699,000.00 4.53% Within 1 year construction
Beijing Jingwei Guokang Advances for
Medical Co., Ltd. Third party 3,600,000.00 4.41% Within 3 months procurement
33,690,632.23 41.28%
(c) Advances due from related party
As at 30 June 2011, there are advances of RMB19,612,928.84 due from related party, which is
20.08% of the total advances to suppliers, and no bad debt provision was provided. There is no
advance due from supplies who hold 5% or over 5% voting rights of the Group.
67
V Notes to the consolidated financial statements (continued)
(5) Other receivables
30 June 2011 31 December 2010
Deposit 6,713,598.30 10,238,481.87
Purchase rebate 4,028,636.23 9,502,788.69
Receivable of equity transaction 8,980,000.00 8,980,000.00
Petty cash advance to employees 9,386,801.55 7,195,539.52
Receivable due from related party 1,215,000.00 2,136,200.00
Others 26,883,507.81 22,847,234.41
57,207,543.89 60,900,244.49
Less: provision for bad debts (18,226,530.70) (17,789,244.75)
38,981,013.19 43,110,999.74
(a) The ageing of other receivables and related provision for bad debts are analysed below:
30 June 2011 31 December 2010
Within 1 year
36,337,132.78 41,876,178.36
1 to 2 years
2,966,298.40 1,179,247.56
2 to 3 years
1,137,009.82 1,052,432.85
Over 3 years
16,767,102.89 16,792,385.72
57,207,543.89 60,900,244.49
(b) Other receivables and related provision for bad debts by category are analysed below:
30 June 2011 31 December 2010
Carrying amount Bad debt provision Carrying amount Bad debt provision
% of total % of total
amount amount amount rate amount amount amount rate
Individually
significant are
subject to
separate
impairment
assessment 8,980,000.00 15.70% (8,980,000.00) 100.00% 8,980,000.00 14.75% (8,980,000.00) 100.00%
Receivable
accounts
within similar
credit risk
group 37,558,343.99 65.65% (63,542.85) 0.17% 43,215,849.71 70.96% (104,849.97) 0.24%
Individually not
significant but
individually
evaluated for
impairment 10,669,199.90 18.65% (9,182,987.85) 86.07% 8,704,394.78 14.29% (8,704,394.78) 100.00%
57,207,543.89 100.00% (18,226,530.70) 31.86% 60,900,244.49 100.00% (17,789,244.75) 29.21%
68
V Notes to the consolidated financial statements (continued)
(5) Other receivables (continued)
(c) As at 30 June 2011, impairment provision for other receivables individually significant are
analysed as below.
Bad debt Assessment for
Amount provision Rate impairment
Shenzhen Yinghai
Technology investment Uncertainty in
Co., Ltd. 8,980,000.00 (8,980,000.00) 100% recoverability
(d) Provisions for impairment of the receivables which have a similar risk group are analysed
below:
30 June 2011 31 December 2010
Carrying amount Bad debt provision Carrying amount Bad debt provision
% of total % of total
amount amount amount rate amount amount amount rate
Within 1 year 35,269,647.43 93.91% - 0.00% 41,876,178.36 96.90% - 0.00%
1 to 2 years 1,937,924.70 5.16% (41,712.18) 2.15% 1,015,347.60 2.35% (50,767.38) 5.00%
2 to 3 years 321,309.86 0.85% (15,937.87) 4.96% 107,821.60 0.25% (10,782.16) 10.00%
Over 3 year 29,462.00 0.08% (5,892.80) 20.00% 216,502.15 0.50% (43,300.43) 20.00%
37,558,343.99 100.00% (63,542.85) 0.17% 43,215,849.71 100.00% (104,849.97) 0.24%
(e) As at 30 June 2011, other receivables individually not significant but individually evaluated for
impairment are analysed below:
Bad debt Assessment for
Amount provision Rate impairment
Uncertainty in
ShenZhen Health Food I&E Co. Ltd. 1,157,860.00 1,157,860.00 100% recoverability
GuangXi Autonomous Region People's Aged over 3 years, high
Hospital 800,000.00 800,000.00 100% risk in recoverability
Nanning medicine purchasing and Uncertainty in
selling Centre 764,829.29 764,829.29 100% recoverability
The Guangxi Zhuang Autonomous
Region Housing policy innovation Uncertainty in
office 3,071,522.04 1,585,309.99 51.61% recoverability
Uncertainty in
YiZhouShi People's Hospital etc. 4,874,988.57 4,874,988.57 100% recoverability
10,669,199.90 9,182,987.85
69
V Notes to the consolidated financial statements (continued)
(5) Other receivables (continued)
(f) Other receivables written off in current period are analysed as below:
Related party
Nature Amount Reason for written off transaction or not
China Medical Group Shanghai Withdrawal for
Chemical Reagent Store the procurement 5,146.35 Rrights cannot recognised Yes
China Medical Industry Co., Ltd. Withdrawal for
Guangzhou Affliate the procurement 16,100.00 Rrights cannot recognised Yes
Sinopharm Chemical Reagent Withdrawal for
Co., Ltd. the procurement 5,366.81 Rrights cannot recognised Yes
(g) As at 30 June 2011, the top five other receivables by customer are analysed below:
Relationship with % of the total
the Group Amount Ageing other receivable
ShenZhenShi YingHai
Technology&Investment Co. Ltd. Third party 8,980,000.00 Over 5 years 15.70%
Sino-American Shanghai Squibb
Pharmaceuticals Ltd. Third party 3,588,986.00 Within 1 year 6.27%
Yuxi Aosen Biological Co., Ltd.
Third party 2,651,862.00 Within 1 year 4.64%
Weicai (China) Pharm Corporate
Limited Third party 2,650,000.02 Within 1 year 4.63%
LiuZhouShi Housing Provident Fund
Management Center- Specific
Account for Housing Fund Third party 1,991,298.98 Over 5 years 3.48%
19,862,147.00 34.72%
(h) Other receivables due from related party
As at 30 June 2011, there are other receivables of RMB1,215,000.00 due from related party,
which is 2.12% of the total other receivables, without any bad debt provided. There is no other
receivables from entity holding 5% or over 5% voting rights of the Group.
70
V Notes to the consolidated financial statements (continued)
(6) Inventories
(a) Inventories by category are analysed as below:
30 June 2011 31 December 2010
Book value Provision Net book value Book value Provision Net book value
Raw materials 125,597,444.66 (4,318,292.47) 121,279,152.19 165,679,203.91 (3,358,112.02) 162,321,091.89
Packaging
materials 736,547.16 - 736,547.16 655,633.83 - 655,633.83
Consigned
processing
materials 6,050,557.72 - 6,050,557.72 1,366,855.16 - 1,366,855.16
Finished goods 1,018,957,949.89 (8,664,078.90) 1,010,293,870.99 877,562,151.03 (4,961,799.59) 872,600,351.44
Goods in transition 13,911,626.02 (467,938.98) 13,443,687.04 75,453,155.42 (2,006,680.46) 73,446,474.96
Work in progress 36,478,100.92 - 36,478,100.92 45,068,088.99 - 45,068,088.99
Low cost
consumables 824,788.57 - 824,788.57 871,162.53 - 871,162.53
1,202,557,014.94 (13,450,310.35) 1,189,106,704.59 1,166,656,250.87 (10,326,592.07) 1,156,329,658.80
(b) Provision for declines in value of inventories is analysed as below:
31 December Decreases
2010 Increases Reversal Written off 30 June 2011
Raw materials 3,358,112.02 2,104,184.56 1,077,422.32 66,581.79 4,318,292.47
Finished goods 4,961,799.59 5,272,542.70 1,215,611.42 354,651.97 8,664,078.90
Goods in transition 2,006,680.46 - 1,538,741.48 - 467,938.98
10,326,592.07 7,376,727.26 3,831,775.22 421,233.76 13,450,310.35
(7) Long-term equity investments
30 June 2011 31 December
2010
Associates - Without quoted price
80,490,540.36 85,275,251.06
The Group has no liquidity restriction on its long-term equity investments.
71
V Notes to the consolidated financial statements (continued)
(7) Long-term equity investments (continued)
(a) Associates
Increases/(Decreases)
Profit/Cash Equity
Original Additional dividends Other interes Voting Explanation for the inconsistence
Accounting investment 31 December investment Share of profit of declared by changes in t held rights held between equity interest held and
method cost 2010 cost associate associate equity 30 June 2011 (%) (%) voting rights held
Board of the directors is the highest
decision making organization, which
is formed by 3 shareholders of
Wanle Medical evenly, each
Equity shareholder appoints 2 directors set
Wanle Medical method 4,457,400.00 85,275,251.06 - 12,810,289.30 (17,595,000.00) - 80,490,540.36 35.19 33.33 up the borad.
(b) Investment in associates
Equity interest held Voting rights held 30 June 2011 For six months ended 30 June 2011
(%) (%) Total assets Total liabilities Net assets Revenues Net profit
Wanle Medical 35.19 33.33 479,264,581.69 258,664,814.94 220,599,766.75 251,738,473.05 41,438,823.90
72
V Notes to the consolidated financial statements (continued)
(8) Investment properties
31 December Current 30 June 2011
2010 Current period period
additions disposals
165,914,762.4
Cost
6 - - 165,914,762.46
150,496,208.9
Buildings
0 - - 150,496,208.90
Land use rights 15,418,553.56 - - 15,418,553.56
Accumulated
depreciation/ (78,621,428.70 (81,827,954.56
amortisation ) (3,206,525.86) - )
(77,082,150.15 (80,190,395.09
Buildings
) (3,108,244.94) - )
Land use rights (1,539,278.55) (98,280.92) - (1,637,559.47)
Net book value 87,293,333.76 (3,206,525.86) - 84,086,807.90
Buildings 73,414,058.75 (3,108,244.94) - 70,305,813.81
Land use rights 13,879,275.01 (98,280.92) - 13,780,994.09
For the six months ended 30 June 2011, the amount of depreciation expense and amortization
were RMB3,206,525.86, and no provision for impairment was provided.
73
V Notes to the consolidated financial statements (continued)
(9) Fixed assets
31 December
2010 Current period additions Current period disposals 30 June 2011
Cost 783,341,813.81 29,765,509.29 6,892,153.47 806,215,169.31
Buildings 292,290,735.22 19,748,917.92 190,011.51 311,849,641.63
Machinery and
equipment 291,068,102.35 12,740,332.67 694,546.77 303,113,888.25
Motor vehicles 53,346,433.87 3,978,863.23 5,574,169.65 51,751,127.45
Others 120,041,142.06 3,942,155.49 433,425.54 123,549,872.01
Leasehold
improvements 26,595,400.31 (10,644,760.02) - 15,950,640.29
Current period depreciation Current period disposals
Accumulated
depreciation (289,484,070.38) (33,831,090.95) 5,426,788.11 (317,888,372.90)
Buildings (81,695,473.45) (8,425,317.97) 14,685.54 (90,106,105.88)
Machinery and
equipment (110,057,627.37) (13,558,446.15) 686,169.50 (122,929,904.02)
Motor vehicles (22,479,927.68) (3,046,925.90) 4,318,862.72 (21,207,990.86)
Others (65,382,814.67) (9,163,772.14) 407,070.35 (74,139,516.46)
Leasehold
improvements (9,868,227.21) 363,371.21 - (9,504,856.00)
Carrying value 493,857,743.43 488,326,796.41
Buildings 210,595,261.77 221,743,535.75
Machinery and
equipment 181,010,474.98 180,183,984.23
Motor vehicles 30,866,506.19 30,543,136.59
Other 54,658,327.39 49,410,355.55
Leasehold
improvements 16,727,173.10 6,445,784.29
Provision for
impairment loss (1,300,000.00) (1,300,000.00)
Buildings (1,300,000.00) (1,300,000.00)
Machinery and
equipment - -
Motor vehicles - -
Others - -
Leasehold
improvements - -
Net book value 492,557,743.43 487,026,796.41
Buildings 209,295,261.77 220,443,535.75
Machinery and
equipment 181,010,474.98 180,183,984.23
Motor vehicles 30,866,506.19 30,543,136.59
Others 54,658,327.39 49,410,355.55
Leasehold
improvements 16,727,173.10 6,445,784.29
74
V Notes to the consolidated financial statements (continued)
(9) Fixed assets (continued)
For the six months ended 30 June 2011, details of the amount of depreciation expense
charged is below:
Six months ended
30 June 2011
Cost of goods sold 18,900,075.72
Selling expenses 2,317,050.15
General and administrative expenses 10,591,626.02
Research and development expenses 2,022,339.06
33,831,090.95
For the six months ended 30 June 2011, fixed assets transferred from construction in progress
were RMB9,138,540.62.
(10) Construction in progress
30 June 2011 31 December 2010
Asepsis Materials Plant Project 20,828,473.64 20,828,473.64
Nanning Logistics Center Project 45,002,433.91 14,507,130.59
Menstruum Recycling Plant Project 17,349,178.80 12,773,423.00
Power Station Improvement Project 10,155,071.71 9,625,754.12
Cefoxitin Plant Improvement Project 8,781,473.16 8,055,862.00
Chebei Project 6,915,595.20 6,915,595.20
Multifunctional Warehouse project 3,799,366.61 6,847,719.64
Peinan Project 12,432,065.97 8,084,242.40
Zhijun Zhiyao Guanglan Stage II Project 3,914,271.01 1,441,384.55
Reconstruction of Wastewater Treatment
Project and others 18,539,700.40 14,513,077.86
Greening Design Programme and others 4,708,675.12 4,708,675.12
152,426,305.53 108,301,338.12
75
V Notes to the consolidated financial statements (continued)
(10) Construction in progress (continued)
Changes of construction in progress during the six monthes monthe ended 30 June 2011 are below:
Borrowing
Accumulated cost Weighted
Current Transfer to fixed Cost up to capitalised capitalised average
Budget of 31 December period assets during date out of Construction borrowing in current interest Financed
Name of project project 2010 additions current period 30 June 2011 budget (%) progress (%) cost period rate (%) by
Asepsis Materials Plant Working capital and
Project 59,340,000.00 20,828,473.64 - - 20,828,473.64 99% 99% - - - loans
Nanning Logistics Working capital and loans
Center Project 147,000,000.00 14,507,130.59 30,495,303.32 - 45,002,433.91 31% 31% 2,301,896.92 1,563,117.25 6.67%
Menstruum Recycling Working capital and loans
Plant Project 17,440,000.00 12,773,423.00 4,604,601.95 (28,846.15) 17,349,178.80 99% 99% - - -
Power Station Working capital and loans
Improvement Project 14,700,000.00 9,625,754.12 529,317.59 10,155,071.71 69% 69% - - -
Cefoxitin Plant Working capital and loans
Improvement Project 9,000,000.00 8,055,862.00 725,611.16 8,781,473.16 98% 98% - - -
Chebei Project Working capital and loans
11,810,000.00 6,915,595.20 - - 6,915,595.20 59% 59% - - -
Multifunctional Working capital and loans
Warehouse Project 11,370,000.00 6,847,719.64 2,336,705.61 (5,385,058.64) 3,799,366.61 81% 81% - - -
Peinan Project Working capital and loans
40,000,000.00 8,084,242.40 4,347,823.57 12,432,065.97 31% 31% - - -
Zhijun Zhiyao Guanglan Working capital and loans
Stage II Project 250,000,000.00 1,441,384.55 2,472,886.46 - 3,914,271.01 1.56% 1.56% - - -
Reconstruction of Working capital and loans
Wastewater
Treatment Project
and others 24,606,541.20 14,513,077.86 7,751,258.37 (3,724,635.83) 18,539,700.40 90% 90% - - -
Greening Design
Programme and
others - 4,708,675.12 - - 4,708,675.12 - - - - - Working capital
583,626,541.20 108,301,338.12 53,263,508.03 (9,138,540.62) - 152,426,305.53
76
V Notes to the consolidated financial statements (continued)
(11) Intangible assets
Current
31 December Current period period 30 June
2010 additions decreases 2011
Cost 195,327,775.54 621,072.88 - 195,948,848.42
Land use rights 129,845,384.04 - - 129,845,384.04
Computer
software 12,201,608.17 621,072.88 - 12,822,681.05
Proprietary
technology 53,083,933.33 - - 53,083,933.33
Trademarks 196,850.00 - - 196,850.00
Accumulated
amortization (66,152,409.45) (8,406,252.01) - (74,558,661.46)
(26,448,777.36
Land use rights
(25,105,998.71) (1,342,778.65) - )
Computer
software (8,110,179.92) (993,912.11) - (9,104,092.03)
Proprietary
technology (32,791,536.96) (6,052,524.15) - (38,844,061.11)
Trademarks (144,693.86) (17,037.10) - (161,730.96)
Net book value 129,175,366.09 121,390,186.96
Land use rights 104,739,385.33 103,396,606.68
Computer
software 4,091,428.25 3,718,589.02
Proprietary
technology 20,292,396.37 14,239,872.22
Trademarks 52,156.14 35,119.04
For the six months ended 30 June 2011, the amount of amortization expense was
RMB8,406,252.01.
As at 30 June 2011, the carrying amount of land use right located on Ping Shan of Longgang
district was RMB26,468,109.27 (initial cost : RMB30,020,106.63). The land is still pending for
development due to the change of functional planning of the industrial park by the government.
As a result, the Bureau of Planning, Land and Resources of Shenzhen Municipality has
recognised it as vacant land. The Company is in the process of applying administrative
re-examination and appeals the bureau to withhold the title of vacant land. According to the
Company’s plan, the land will be developed as Shenzhen Accord Ping Shan pharmaceutical
centre specializing in manufacturing and R&D.
Expenditures on research and development incurred for the six months ended 30 June 2011
are listed as below:
Current period
31 December 2010 additions 30 June 2011
Development costs 2,580,662.85 278,655.55 2,859,318.40
The development costs accounted for 1.38% of the total expenditures on research and
development incurred in the six months ended 30 June 2011. Not expenditures on on research
and development is recognised as intangible assets.
77
V Notes to the consolidated financial statements (continued)
(12) Goodwill
Current
period
31 December 2010 additions 30 June 2011
Goodwill 53,555,677.09 - 53,555,677.09
Less: provision for impairment (a) - - -
53,555,677.09 - 53,555,677.09
(a) Impairment
The goodwill allocated to the asset groups and groups of asset groups are summarised by
operating segments as follows:
30 June 2011 31 December 2010
Pharmaceutical distribution
Yanfeng Medical 16,868,644.87 16,868,644.87
Sinopharm Meizhou 1,610,819.66 1,610,819.66
Sinopharm Huizhou 923,184.67 923,184.67
Sinopharm Zhanjiang 282,135.55 282,135.55
Dongguan Accord 1,499.02 1,499.02
Pharmaceutical manufacturing
Suzhou Wanqin 33,869,393.32 33,869,393.32
53,555,677.09 53,555,677.09
The recoverable amount of asset groups and groups of asset groups is calculated using the
estimated cash flows determined according to the five-years budget approved by management.
The cash flows beyond the five-years period are calculated based on the following estimated
growth rates.
As at 30 June 2011, management of the Group considered there was no impairment to
goodwill recognised after the impairment assessment.
78
V Notes to the consolidated financial statements (continued)
(13) Long-term prepaid expenses
31 December Current period Current period
2010 additions amortisation 30 June 2011
Leasehold
improvements 18,609,920.17 5,164,897.16 2,771,613.92 21,003,203.41
Others 1,201,691.07 600,037.60 510,625.62 1,291,103.05
19,811,611.24 5,764,934.76 3,282,239.54 22,294,306.46
(14) Deferred income tax assets and deferred income tax liabilities
(a) Deferred income tax assets
30 June 2011 31 December 2010
Deferred Deductible Deferred Deductible
income tax temporary income tax temporary
assets differences assets differences
Provision for
accounts
receivable 5,053,337.37 20,213,349.47 4,745,194.38 19,246,624.26
Provision for other
receivables 2,665,191.83 12,550,597.58 2,739,278.52 12,089,435.27
Provision for
declines in value of
inventories 2,343,868.46 11,344,162.50 1,711,016.77 10,089,072.64
Provision for fixed
assets impairment 171,181.93 684,727.72 174,571.68 698,286.70
Accrued expenses 6,099,951.63 33,180,594.21 5,541,124.17 31,872,047.07
Accrued payroll 10,836,752.66 45,833,472.55 10,948,931.14 53,300,710.61
Deferred revenue 4,888,981.05 29,729,951.32 4,722,984.13 28,751,822.73
Others 927,953.24 4,301,812.99 500,491.45 2,723,589.31
158,771,588.5
32,987,218.17 157,838,668.34 31,083,592.24 9
(b) Deferred income tax liabilities
30 June 2011 31 December 2010
Deferred Deductible Deferred Deductible
income tax temporary income tax temporary
liabilities differences liabilities differences
Business
combination
involving entities
not under
common control 4,039,851.03 26,932,340.23 4,817,694.42 32,117,962.85
Changes in fair
value 13,614,195.45 54,456,781.8 14,118,080.28 56,472,321.11
Others 3,928,255.68 16,126,187.20 3,773,319.00 15,093,276.00
103,683,559.9
21,582,302.16 97,515,309.23 22,709,093.70 6
79
V Notes to the consolidated financial statements (continued)
(15) Provision for asset impairment
Decreases
31 December
2010 Increases Reversal Written off 30 June 2011
Bad debt provision 52,658,789.41 5,950,476.53 3,539,741.38 26,613.16 55,042,911.40
Including:
Provision for
accounts receivable 34,869,544.66 5,455,640.06 3,508,804.02 36,816,380.70
Provision for other
receivables 17,789,244.75 494,836.47 30,937.36 26,613.16 18,226,530.70
Provision for declines in
value of inventories 10,326,592.07 7,376,727.26 3,831,775.22 421,233.76 13,450,310.35
Provision for fixed
assets impairment 1,300,000.00 - - - 1,300,000.00
64,285,381.48 13,327,203.79 7,371,516.60 447,846.92 69,793,221.75
(16) Other non-current assets
30 June 2011 31 December 2010
Medical reserve fund 50,289,370.04 48,127,831.56
(17) Short-term loans
(a) Category
Currency 30 June 2011 31 December 2010
Entrusted loans RMB 400,000,000.00 300,000,000.00
Guaranteed loans RMB - 118,348,996.25
Unsecured loans RMB 874,704,144.54 442,266,992.42
Pledged loans RMB - 30,247,557.88
Discounted notes RMB 123,393,841.56 84,612,337.66
1,398,097,986.10 975,475,884.21
(b) As at 30 June 2011, there were no expired bank loans
(18) Notes payable
30 June 2011 31 December 2010
Trade acceptance
notes 217,154,125.46 336,739,137.60
Bank acceptance notes 928,030,388.09 1,111,883,353.12
1,145,184,513.55 1,448,622,490.72
As at 30 June 2011, notes payable of RMB1,145,184,513.55 would be expired within 1 year
80
V Notes to the consolidated financial statements (continued)
(19) Accounts payable
30 June 2011 31 December 2010
Accounts payable 2,315,122,567.54 2,003,566,517.62
(a) Accounts payable due from shareholders with more than 5% (including 5%) of the Group’s
equity interest are analysed as below:
30 June 2011 31 December 2010
Sinopharm Group 164,616,686.29 109,598,841.49
(20) Advances from customers
30 June 2011 31 December 2010
Advances from customers 70,303,352.64 100,322,387.21
There is no advance from customers who hold 5% or over 5% voting rights of the Group.
81
V Notes to the consolidated financial statements (continued)
(21) Employee benefits payable
31 December Current period Current period
2010 additions reductions 30 June 2011
Wages and salaries,
bonuses, allowances and
subsidies 103,312,473.14 167,117,134.92 177,335,129.09 93,094,478.97
Staff welfare 172,176.00 11,632,766.58 11,804,942.58 -
Social security contributions 1,425,939.05 19,477,039.28 19,196,681.75 1,706,296.58
Including:
Medical insurance 161,987.29 4,762,890.27 4,750,729.03 174,148.53
Basic pensions, 983,887.47 12,270,144.55 12,408,727.75 845,304.27
Supplemental pensions, 175,580.00 790,280.00 419,860.00 546,000.00
Unemployment insurance 79,813.62 874,061.71 834,078.90 119,796.43
Work injury insurance 8,791.87 375,047.33 381,041.34 2,797.86
Maternity insurance 15,878.80 404,615.42 402,244.73 18,249.49
Housing funds 381,788.16 6,734,286.23 6,957,092.14 158,982.25
Labor union funds and
employee education
funds 9,273,557.01 3,667,830.46 4,975,369.68 7,966,017.79
Compensation for employee
dismission 3,477,747.06 915,233.90 1,176,013.90 3,216,967.06
Early retirement benefits 6,729,257.59 971,698.16 774,173.38 6,926,782.37
Others 2,418,779.24 438,070.45 504,550.45 2,352,299.24
127,191,717.25 210,954,059.98 222,723,952.97 115,421,824.26
(22) Taxes payable
30 June 2011 31 December 2010
Enterprise income tax payable 36,255,132.81 35,944,942.69
Value-added-tax payable 11,505,653.84 (5,010,377.31)
Business tax payable 1,663,132.61 1,380,716.94
City maintenance and construction tax payable 593,204.55 537,550.82
Real estate tax payable 550,095.88 399,097.44
Stamp duty tax payable 422,742.05 1,094,469.16
Land use rights tax payable 202,729.07 83,178.55
Individual income tax payable 3,853,060.06 2,411,409.52
Educational surcharge payable 288,403.06 235,523.80
Rivers management fee 2,203,562.80 2,152,879.39
Anti-flood fund 195,277.47 469,902.57
Others 424,040.16 21,018.15
58,157,034.36 39,720,311.72
82
V Notes to the consolidated financial statements (continued)
(23) Interests payable
30 June 2011 31 December 2010
Interests payable 6,281,609.97 2,122,314.90
(24) Other payables
30 June 2011 31 December 2010
Other payables 404,953,733.21 345,011,293.80
(a) Other payables due to shareholders with more than 5% (including 5%) of the Group’s equity
interest are analysed as below:
30 June 2011 31 December 2010
Sinopharm Group 3,893,939.65 3,893,939.65
(b) Other payables due to related party
As at 30 June 2011, there are other payables of RMB8,413,481.84 due to related party, which
accounts for 2.08% of the total other payables.
(c) As at 30 June 2011, other payables of RMB52,207,138.04 were aged over 1 year, which were
mainly for accrued selling expenses.
83
V Notes to the consolidated financial statements (continued)
(25) Long-term loans
Currenc 30 June 2011 31 December 2010
y
Unsecured loans RMB 78,842,900.00 30,000,000.00
(a) Details for top five long-term loans are as followings.
Interest rate
Borrowing Repayment per annum 31 December
date date Currency (%) 30 June 2011 2010
6 September 5 September
Agricultural Bank of China 2010 2013 RMB 5.265 10,000,000.00 10,000,000.00
13 October 5 September
Agricultural Bank of China 2010 2013 RMB 5.265 10,000,000.00 10,000,000.00
16 December 5 September
Agricultural Bank of China 2010 2013 RMB 5.265 10,000,000.00 10,000,000.00
28 January 28 November
Agricultural Bank of China 2011 2012 RMB 5.265 10,000,000.00 -
31
March 20 December
Bank of Communications 2011 2015 RMB 6.65 7,000,000.00 -
47,000,000.00 30,000,000.00
84
V Notes to the consolidated financial statements (continued)
(26) Payables for specific projects
31 December
2010 Addition Reclassification 30 June 2011
Industrial technology funds 3,000,000.00 - - 3,000,000.00
Government grants for ERP
system construction 955,000.00 - - 955,000.00
Others 800,000.00 - - 800,000.00
4,755,000.00 - - 4,755,000.00
(27) Other non-current liabilities
30 June 2011 31 December 2010
Deferred income(Note a) 37,478,335.12 30,382,512.43
Medical reserve funds (Note b) 45,427,343.31 45,427,343.31
82,905,678.43 75,809,855.74
(a) Deferred income
30 June 2011 31 December 2010
Government grants related to assets
- R&D library (in progress) 5,000,000.00 5,000,000.00
- Medical R&D center II (in progress) 5,000,000.00 5,000,000.00
- Shared logistics center(completed) 4,294,883.44 4,102,107.25
- Other projects(in progress) 3,185,003.14 2,277,489.70
Promotion rewards program 18,090,448.54 14,002,915.48
Construction Supporting Fund 1,908,000.00 -
37,478,335.12 30,382,512.43
(b) Certain medical reserves funds were received by the Group from the PRC government for it to
purchase medical products (including medicines) required to respond to major disasters,
epidemics and other emergencies.
85
V Notes to the consolidated financial statements (continued)
(28) Share capital
Movement
Capitalisation 30 June 2011
Bonus of surplus
31 December 2010 New issue issue reserve Others Total
Listed shares without
restriction of trading:
A shares, listed 233,263,800.00 -- - - - - 233,263,800.00
B shares, listed 54,885,600.00 - - - - - 54,885,600.00
288,149,400.00 - - - - - 288,149,400.00
Movement
Capitalisation 31 December
Bonus of surplus 2010
31 December 2009 New issue issue reserve Others Total
Listed shares without
restriction of trading:
A shares, listed 233,263,800.00 - - - - - 233,263,800.00
B shares, listed 54,885,600.00 - - - - - 54,885,600.00
288,149,400.00 - - - - - 288,149,400.00
Listed shares with
restriction of trading:
A shares held by the
State - - - - - - -
288,149,400.00 - - - - - 288,149,400.00
86
V Notes to the consolidated financial statements (continued)
(29) Capital surplus
31 December Current period 30 June
2010 additions/reductions 2011
(Note IV (3)(a))
Share premium - - -
Business combination under
common control - - -
Other Capital surplus
Share of changes in equity other
than profits of investees 2,380,016.57 - 2,380,016.57
Transfer of capital surplus
recognised under the previous
accounting system 2,650,322.00 - 2,650,322.00
5,030,338.57 5,030,338.57
(30) Surplus reserve
31 December Current period Current period 30 June
2010 additions reductions 2011
Statutory surplus reserve 39,981,268.55 - - 39,981,268.55
87
V Notes to the consolidated financial statements (continued)
(31) Undistributed profits
Current period 2010
Amount Appropriation Amount Appropriation
rate rate
Opening balance of retained
earnings(before adjusted) 719,209,302.41 511,913,342.00
Changes from business combination
under common control (a) - (1,994,394.68)
Opening balance of retained
earnings(after adjusted) 719,209,302.41 509,918,947.32
Add:net profit attributable to the
shareholders of the company 165,136,443.84 261,116,656.70
Less: appropriation of statutory surplus
reserve (Note V(33)) (22,408,211.44) 10%
Dividends (d) (34,577,928.00) (28,814,940.00)
Other outflow (b) (603,150.17)
Add: other inflow (c) 1,830,000.00 -
Ending balance of retained earnings 851,597,818.25 719,209,302.41
(a) During the reporting period, CMPGC, the former shareholder of Shenzhen Medicine, agreed
to undertake the transitional period losses of Shenzhen Medicine with amount of RMB1.83
million according to the percentage of shareholding. The Company received the compensation
on 12 May 2011.
(32) Minority Interest
Minority interests are analysed as below:
30 June 2011 31 December 2010
Sinopharm Liuzhou 24,692,921.25 23,073,890.87
Suzhou Wanqin 34,255,812.58 34,455,044.53
Yanfeng Medical 22,715,317.28 21,546,116.21
81,664,051.11 79,075,051.61
88
V Notes to the consolidated financial statements (continued)
(33) Sales and cost of sales
Six months ended 30 June
2011 2010
Revenue of main operations 7,163,473,393.19 6,186,858,123.55
Other operating income 31,899,024.57 49,969,395.42
7,195,372,417.76 6,236,827,518.97
Six months ended 30 June
2011 2010
Cost of main operations 6,509,872,793.66 5,655,303,808.13
Other operating expenses 9,867,512.25 20,531,583.15
6,519,740,305.91 5,675,835,391.28
(a) Revenue and cost of main operations
Revenue and cost of main operations analysed by industries are set out below:
Six months ended 30 June 2011 Six months ended 30 June 2010
Revenue of Cost of main Revenue of Cost of main
main operations operations main operations operations
Pharmaceutical
manufacturing 925,760,135.84 651,752,176.74 793,279,106.05 582,962,100.29
Pharmaceutical
distribution 6,188,489,912.61 5,819,060,942.06 5,361,680,838.99 5,049,673,137.02
Retail pharmacy 33,299,118.36 29,382,536.04 17,303,351.77 15,042,291.10
Logistics and freights 10,782,275.27 7,935,256.43 10,156,106.84 6,086,418.27
Rental and other
income 5,141,951.11 1,741,882.39 4,438,719.90 1,539,861.45
7,163,473,393.19 6,509,872,793.66 6,186,858,123.55 5,655,303,808.13
(b) Top five customers are analysed as follows:
The sales to top five customers of the Group for the six months ended 30 June 2011
amounted to RMB483,432,748.01, which accounted for 6.72% of the total revenue from main
operations. Details are set out below:
% of total sales of
Sales the Group
GuangDong Province People's Hospital 131,595,846.53 1.83%
The First Affiliated Hospital of GuangXi Medical
University 100,744,819.81 1.40%
The Guangxi Zhuang Autonomous People’s
Hospital 97,057,053.12 1.35%
Southern Hospital of southern medical university 80,131,609.19 1.11%
Shenzhen People's Hospital 73,903,419.36 1.03%
483,432,748.01 6.72%
89
V Notes to the consolidated financial statements (continued)
(34) Tax and surcharges
Six months ended 30 June
2011 2010
Business tax 4,419,234.31 2,607,804.12
City maintenance and construction tax 7,198,610.61 3,744,651.15
Educational surcharge 3,668,614.72 2,227,067.89
Others 312,552.08 165,058.84
15,599,011.72 8,744,582.00
(35) Selling and distribution expenses
Six months ended 30 June
2011 2010
Employees payroll and welfare benefits 78,168,571.54 68,741,843.21
Transportation charges 39,544,945.32 31,853,761.25
Promotion and marketing expenses 56,774,204.78 43,942,725.16
Travel allowances 7,581,702.20 7,303,737.86
Advertising expenses 7,983,056.09 6,191,219.45
Storage expenses 7,290,000.00 7,155,518.21
Tendering expenses 2,772,241.10 4,288,289.20
Depreciation expenses 2,317,050.15 2,026,221.71
Others 37,370,594.89 38,113,668.95
239,802,366.07 209,616,985.00
(36) Governance and administrative expense
Six months ended 30 June
2011 2010
Employees payroll and welfare benefits 73,321,000.50 63,144,946.86
Research and development expenses 27,706,175.10 24,808,809.78
Depreciation expenses 10,591,626.02 9,600,579.55
Taxations 7,844,363.86 7,098,172.06
Amortisation of intangible assets 8,406,252.01 7,881,650.44
Entertainment expenses 4,025,159.61 3,820,519.59
Office allowances 4,682,783.49 4,054,522.62
Conference expenses 1,216,375.99 1,861,815.85
Vehicle management expenses 2,354,220.93 2,626,288.18
Maintenance and other charges 2,027,400.03 2,232,100.71
Travel allowances 1,571,716.76 1,847,248.31
Utilities 1,916,632.80 1,639,936.29
Consulting fees 2,145,339.57 805,968.91
Rental expenses 2,241,707.04 3,096,605.95
Others 12,788,292.24 10,326,885.30
162,839,045.95 144,846,050.4
90
V Notes to the consolidated financial statements (continued)
(37) Financial expenses - net
Six months ended 30 June
2011 2010
Interest expenses 58,659,926.32 36,029,531.10
Interest income (2,590,683.92) (2,362,978.87)
Exchange gains (751,969.30) (32,170.23)
Others 6,089,433.19 3,718,929.44
61,406,706.29 37,353,311.44
(38) Assets impairment losses
Six months ended 30 June
2011 2010
Bad debts 2,330,699.15 14,273,360.36
Declines in values of inventories 3,544,952.04 1,038,271.20
5,875,651.19 15,311,631.56
(39) Investment income
Six months ended 30 June
2011 2010
Share of profit of investees under equity method
(Note a) 12,810,289.30 11,263,472.59
Income from disposal of long-term equity
investments - 41,241.30
12,810,289.30 11,304,713.89
The investment income from long-term investment under equity method represented the profit
from Wanle Medical. The increase was due to improved business performance of that
associate.
There is no significant restriction on the remittance of investment income to the Group.
91
V Notes to the consolidated financial statements (continued)
(40) Non-operating income
Six months ended 30 June
2011 2010
Gain on disposal of fixed assets
701,613.68 2,247,523.93
Government grants 7,391,233.49 5,892,547.15
Others 6,922,562.86 568,440.92
15,015,410.03 8,708,512.00
Non-operating income is wholly classified as non-recurring profit and loss.
(a) Government grants
Six months ended 30 June
2011 2010
Government grants for medicine reserve
expenses 406,909.68 -
Government grants for technical improvement 1,521,000.00
Government grants for R&D expenses 4,750,000.00 20,000.00
Industry technology improvement fund - 2,750,000.00
Others 713,323.81 3,122,547.15
7,391,233.49 5,892,547.15
(41) Non-operating expenses
Six months ended 30 June
2011 2010
Losses on disposal of fixed assets 70,253.22 471,610.41
Donation - 268,786.00
Others 146,941.30 107,146.21
217,194.52 847,542.62
Non-operating cost is wholly classified as non-recurring profit and loss.
(42) Income taxes expenses
Six months ended 30 June
2011 2010
Current income tax 46,961,974.63 42,068,324.85
Deferred income tax 3,030,417.47 (747,527.80)
49,992,392.10 41,320,797.05
92
V Notes to the consolidated financial statements (continued)
(43) Earnings per share
(a) Basic earnings per share
Basic earnings per share is calculated by consolidated net profit attributable to shareholders of
the Company dividing by the weighted average number of ordinary shares in issue:
Six months ended 30 June
2011 2010
Consolidated net profit attributable to
shareholders of the Company 165,136,443.84 119,387,096.38
Weighted average number of ordinary shares in
issue 288,149,400.00 288,149,400.00
Basic earnings per share 0.57 0.41
Including:
From continued operations 0.57 0.41
(b) Diluted earnings per share
Diluted earnings per share is calculated by dividing the consolidated net profit attributable to
shareholders of the Company by the weighted average number of ordinary shares in issue,
which both should be adjusted for the effects of all potential dilutive factors. The Company has
no potential outstanding ordinary shares (2010: nil), the diluted earnings per share equals the
basic earnings per share.
93
V Notes to the consolidated financial statements (continued)
(44) Cash received relating to other operating activities
(a) Cash received relating to other operating activities
Six months ended 30 June
2011 2010
Government grants 6,895,023.12 5,892,547.10
Interest income 2,590,683.92 2,362,978.87
Others 46,960,076.22 86,667,044.24
56,445,783.26 94,922,570.21
(b) Cash paid relating to other operating activities
Six months ended 30 June
2011 2010
Storage and transportation expenses 15,840,797.94 10,201,107.60
Entertainment expenses 9,381,809.65 7,879,698.48
Rental expenses 3,310,119.12 3,200,483.92
Advertising expenses 6,781,673.04 5,316,852.15
Bank charges 5,866,234.42 5,037,982.90
Others 155,268,721.09 169,509,499.52
196,449,355.26 201,145,624.57
(c) Cash paid relating to other investing activities
Six months ended 30 June
2011 2010
Payment for acquisition of minority interests - 64,330,110.00
Others 9,698,496.42 -
9,698,496.42 64,330,110.00
(d) Cash received relating to other financing activities
Six months ended 30 June
2011 2010
Entrusted loans borrowed from Sinopharm 150,000,000.00 -
Factoring 103,511,273.99 -
253,511,273.99 -
(e) Cash payments relating to other financing activities
Six months ended 30 June
2011 2010
Repayment of entrusted loans lent by Sinopharm 258,517,647.94 -
Repayment of the loan from Sinopharm Group Logistics
Company’s Guangzhou subsidiary - 800,000.00
Dividends to ordinary shareholders - 13,762,551.78
Others 12,620.00 -
258,530,267.94 14,562,551.78
94
V Notes to the consolidated financial statements (continued)
(45) Supplementary information of cash flow statements
(a) Supplementary information of cash flow statements
Reconciliation of net profit to cash flows from operating activities
Six months ended 30 June
2011 2010
Net profit 167,725,443.34 122,964,453.51
Add:
Provision for assets impairment 5,875,651.19 15,311,631.56
Depreciation of fixed assets and investment
37,037,616.81 33,755,674.83
properties
Amortisation of intangible assets 8,406,252.01 7,881,650.44
Amortisation of long-term prepaid expenses 3,282,239.54 1,477,997.02
Gains on disposal of fixed assets, intangible
assets and other non-current assets (701,613.68) (4,763,820.79)
Losses on scrapped fixed assets 70,253.22 (15,406.07)
Financial expenses 32,690,661.36 24,883,939.31
Investment income (12,810,289.30) (11,304,713.89)
Increase of deferred tax assents (1,903,625.93) 657,082.14
Decrease of deferred tax liabilities (1,126,791.54) (1,404,609.94)
Increase of inventory (35,900,764.07) (41,963,694.71)
Increase in operating receivables (429,302,367.94) (332,867,705.15)
Increase in operating payables 334,334,416.75 395,548,088.24
Net cash flow from operating activities 107,677,081.76 210,160,566.50
Movement of cash
Six months ended 30 June
2011 2010
Cash at end of period 891,610,431.37 599,730,894.68
Less: cash at beginning of period (682,875,873.18) (588,405,672.15)
Net increase in cash 208,734,558.19 11,325,222.53
95
V Notes to the consolidated financial statements (continued)
(45) Supplementary information of cash flow statements (continued)
(b) Cash and cash equivalents
30 June 2011 31 December 2010
Cash at end of period 891,610,431.37 682,875,873.18
Including:
Cash in hand 81,181.61 146,710.56
Call deposits with banks 849,954,455.17 682,729,162.62
Other cash and cash equivalents 41,574,794.59 -
Restricted cash
5,807,782.92 28,913,902.48
Cash at bank and on hand
897,418,214.29 711,789,775.66
VI Segment information
The reportable segments of the Group are the business units that provide different products or
service, or operate in the different areas. Different businesses or areas require different
technologies and marketing strategies, the Group, therefore, separately manages the
production and operation of each reportable segment and evaluates their operating results
respectively, in order to make decisions about resources to be allocated to these segments
and to assess their performance.
The Group identified 2 reportable segments as follows:
- Pharmaceutical distribution, which is mainly engaged in distribution of medicine and
pharmaceutical products to customers, including hospitals, other distributors, retail drug
stores and clinics;
- Pharmaceutical manufacturing, which is mainly engaged in the manufacture and sale of
medicine.
Inter-segment transfers are measured by reference to sales to third parties.
The assets and liabilities are allocated based on the operations of the segment and the
physical location of the asset. The liabilities are allocated based on the operations of the
segment. Expenses indirectly attributable to each segment are allocated to the segments
based on the proportion of each segment’s revenue.
96
VI Segment information (continued)
(a) Segment information as at and for the six months ended 30 June 2011 is as follows:
Pharmaceutical distribution Pharmaceutical Elimination Total
manufacturing
Total Revenue 6,251,221,850.17 957,461,909.32 (13,311,341.73) 7,195,372,417.76
Revenue from external
customers 6,250,694,791.03 944,677,626.73 - 7,195,372,417.76
Inter-segment revenue 527,059.14 12,784,282.59 (13,311,341.73) -
Interest income 1,904,404.39 5,303,064.85 (4,697,785.32) 2,509,683.92
Interest expense (59,676,758.56) (3,680,953.08) 4,697,785.32 (58,659,926.32)
Share of profit of associates 12,810,289.30 - - 12,810,289.30
Impairment 1,305,503.68 4,570,147.51 - 5,875,651.19
Depreciation and amortisation 16,835,511.50 31,890,596.86 - 48,726,108.36
Gross profit 227,854,233.52 102,150,658.93 (112,287,057.01) 217,717,835.44
Income taxes 31,749,848.37 18,242,543.73 - 49,992,392.10
Net profit 196,104,385.15 83,908,115.20 (112,287,057.01) 167,725,443.34
Total assets 5,971,854,480.00 1,557,621,268.33 (561,406,212.63) 6,968,069,535.70
Total liabilities (4,836,865,467.30) (1,046,176,422.88) 181,395,230.96 (5,701,646,659.22)
Long-term equity investment in
associates 80,490,540.36 - - 80,490,540.36
Additions to non-current assets
other than long-term equity
investments 28,070,200.67 6,358,629.91 - 34,428,830.58
97
VI Segment information (continued)
(b) Segment information as at and for the six months ended 30 June 2010 is as follows:
Pharmaceutical Pharmaceutical Elimination Total
distribution manufacturing
Total Revenue 5,430,966,603.70 816,239,275.87 (10,378,360.60) 6,236,827,518.97
Revenue from external
customers 5,409,263,089.00 806,057,673.97 - 6,236,827,518.97
Inter-segment revenue
196,758.70 10,181,601.90 (10,378,360.60) -
Interest income 1,855,375.85 2,673,678.02 (2,166,075.00) 2,362,978.87
Interest expense (36,630,513.46) (1,565,092.64) 2,166,075.00 (36,029,531.10)
Share of profit of associates 11,263,472.59 - - 11,263,472.59
Impairment 12,209,841.20 3,101,790.36 - 15,311,631.56
Depreciation and amortisation 15,349,257.23 27,766,065.06 - 43,115,322.29
Gross profit 175,613,044.67 70,984,979.50 (82,312,773.61) 164,285,250.56
Income taxes 29,890,752.52 11,430,044.53 - 41,320,797.05
Net profit 145,722,292.15 59,554,934.97 (82,312,773.61) 122,964,453.51
Total assets 5,023,651,217.56 1,307,953,139.03 (562,035,645.69) 5,769,568,710.90
Total liabilities (4,132,744,237.45) (819,320,884.75) 199,823,106.89 (4,752,242,015.31)
Long-term equity investment in
associates 69,314,139.84 - 69,314,139.84
Additions to non-current assets
other than long-term equity
investments 37,055,739.30 19,917,046.96 - 56,972,786.26
98
VII Related party relationships and significant related party transactions
(1) The parent company
(a) General information of the parent company:
Enterprise Type Place of registration Legal representative Principal business
Distribution and retail
Company limited of medicines and
Sinopharm Group by shares Shanghai She Lulin pharmaceutical products to
The Company’s ultimate controlling equity holder is CNPGC.
(b) Registered capital and changes in registered capital of the parent company
31 December 2010 Addition Decrease 30 June 2011
(Rmb’0,000) (Rmb’0000) (Rmb’0000) (Rmb’0000)
Sinopharm Group 226,456.84 - - 226,456.84
(c) The proportions of equity interests and voting rights in the Company held by the parent
company:
30 June 2011 31 December 2010
% interest held % voting rights % interest held % voting
rights
Sinopharm Group 38.33 38.33 38.33 38.33
(2) Subsidiaries of the Company
The general background and other related information of the subsidiaries is set out in Note IV.
(3) Associates
Enterprise Place of Legal Principal Register % interest % voting
Type registration representative business capital held rights
Wanle Foreign Medicine
Medical capital Shenzhen Yan Zhigang manufacture USD 5 million 35.19% 33.33%
(4) Other related parties
Relationship with the Company
Sinopharm Group Parent company
Xinjiang Special Drugs Western Pharmaceutical Co.,Ltd. Controlled by Sinopharm Group
Wenzhou Biomedicin-appliances supplies co., Ltd Controlled by Sinopharm Group
Jiangsu Rundong Medicine Co., Ltd. Controlled by Sinopharm Group
Sinopharm Yixin Pharmacy Co., Ltd. Controlled by Sinopharm Group
Sinopharm Lerentang Co., Ltd. Trading Branch Controlled by Sinopharm Group
Sinopharm Holding Chongqing Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Zhenjiang Co., Ltd. Controlled by Sinopharm Group
99
VII Related party relationships and significant related party transactions (continued)
(4) Other related parties (continued)
Relationship with the Company
Sinopharm Holding Zhejiang Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Zhangzhou Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Yunnan Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Yancheng Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Xinyu Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Xiangtan Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Wuxi Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Tianjing Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Tianjing Northern Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Taizhou Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Suzhou Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Suzhou Bo’ai Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Shijiazhuang Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Shenyang Co., Ltd. Dalian subsidiary Controlled by Sinopharm Group
Sinopharm Holding Shenyang Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Shanxi Co., Ltd. (Shaanxi) Controlled by Sinopharm Group
Sinopharm Holding Shanxi Co., Ltd. (Shanxi) Controlled by Sinopharm Group
Sinopharm Holding Shandong Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Putian Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Ningxia Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Nanjing Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Neimenggu Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Meiluo (Dalian) Co., Ltd Controlled by Sinopharm Group
Sinopharm Holding Longyan Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Linxi Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Lishui Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Jingzhou Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Jinzhou Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Jiangxi Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Jiangsu Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Jiangsu Co., Ltd. Zhongxiyao subsidiary Controlled by Sinopharm Group
Sinopharm Holding Jilin Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Hunan Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Hubei Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Heilongjiang Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding He’nan Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Hebei Co., Ltd. Tangshan subsidiary Controlled by Sinopharm Group
Sinopharm Holding Hebei Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Hainan Co., Ltd. Controlled by Sinopharm Group
Sinopharm National Pharmacy Co.,Ltd. Controlled by Sinopharm Group
Sinopharm Holding Guizhou Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Gansu Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Fuzhou Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Fujian Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Distribution Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Beijing Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Beijing Huahong Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Anqing Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Anhui Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding (Tianjing ) Eastern Bokang Pharmacy Co., Ltd. Controlled by Sinopharm Group
Sinopharm Group Logistics Co., Ltd. Controlled by Sinopharm Group
Sinopharm Group Medical Holding Co., Ltd. Controlled by Sinopharm Group
China National Medicines Co., Ltd. Controlled by Sinopharm Group
Sinopharm Group Xinjiang Uptodate & Special Medicines Co.,Ltd. Controlled by Sinopharm Group
Sinopharm Group Western-South Co., Ltd. Controlled by Sinopharm Group
Sinopharm Group Chemical Reagent Suzhou Co., Ltd. Controlled by Sinopharm Group
100
VII Related party relationships and significant related party transactions (continued)
(4) Other related parties (continued)
Relationship with the Company
Sinopharm Group Guorui Pharmaceutical Co., Ltd. Controlled by Sinopharm Group
Guangzhou Accord Chain Pharnacy Co. Ltd., Controlled by Sinopharm Group
Guangxi Accord Chain Pharnacy Co. Ltd., Controlled by Sinopharm Group
Guangxi Wuzhou Huawu Medicinal Material Co. Ltd., Controlled by Sinopharm Group
Guangxi National Chain Pharmacy Co. Ltd., Controlled by Sinopharm Group
Guanddong Accord Pharmacy Co. Ltd., Controlled by Sinopharm Group
Guangdong East Uptodate & Special Medicines Co.,Ltd. Controlled by Sinopharm Group
Guangdong East Uptodate & Special Medicines Company Controlled by Sinopharm Group
Fujian Huiyuan Medicine Co., Ltd. Controlled by Sinopharm Group
Foshan Nanhai Medicine Co., Ltd. Controlled by Sinopharm Group
Foshan Nanhai Uptodate & Special Medicines Co.,Ltd. Controlled by Sinopharm Group
Zhejiang Intmedical Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Yantai Co., Ltd. Controlled by Sinopharm Group
Shenzhen AccordChain Pharnacy Co.. Ltd. Controlled by Sinopharm Group
Ningxia Chain Pharnacy Co.,Ltd. Controlled by Sinopharm Group
Sinopharm Holding Hubei Yibao Co., Ltd. Controlled by Sinopharm Group
Zhejiang Wenlin Medicine Co., Ltd. Controlled by Sinopharm Group
Shanghai Medical Industry investigation institution Controlled by CNPGC
Reed Sinopharm Exhibitions Co.,Ltd. Controlled by CNPGC
China Medical Industry Co. Ltd., Controlled by CNPGC
China Medicine Trading Co. Ltd., Controlled by CNPGC
China Medicinal Material Co. Controlled by CNPGC
Yunnan Medicinal Material Co. Ltd., Controlled by CNPGC
Sichuan Jiang You Zhong Ba Science and Technology
Development Co.,Ltd. Controlled by CNPGC
Shanghai Shyndec Pharmaceutical Co., Ltd. Controlled by CNPGC
Shanghai Sinopharm Medical Meterials Co.,Ltd. Controlled by CNPGC
Shanxi Weiqi Pharmacy Co., Ltd. Controlled by CNPGC
Sinopharm Group Shanghai Medicine Device Co., Ltd. Controlled by CNPGC
Sinopharm Group United Medicine Device Co., Ltd. Controlled by CNPGC
Sinopharm Group Beijing Medicine Device Co., Ltd. Controlled by CNPGC
Sinopharm Group Baida Pharmaceutical Co., Ltd. Controlled by CNPGC
Guangdong Tianliang Medicine Co., Ltd. Controlled by CNPGC
Guang dong South National Pharmaceutical Foreign Trade Co.,Ltd. Controlled by CNPGC
Chengdu Rongsheng Pharmacy Co., Ltd. Controlled by CNPGC
Guilin Huagui Sinopharm Associated Co. Controlled by CNPGC
Wanglei Controlled by CNPGC
Shenzhen Kaijiefeng industrial Co., Ltd Minority interest of subsidiary
The Guangxi Zhuang Autonomous Region Huahong
Pharmaceutical Co. Ltd., Subsidiary of Fosun Pharm
Chongqing Yaoyou Pharmaceutical Co.,Ltd. Subsidiary of Fosun Pharm
Chongqing Haisiman Pharmaceutical Co.,Ltd. Subsidiary of Fosun Pharm
Shanghai Fuxing Pharmaceutical Co. Ltd., Subsidiary of Fosun Pharm
Shanghai Chaohui Pharmecurical Co., Ltd. Subsidiary of Fosun Pharm
Jiangsu Wanbang Pharmacy Marketing Co., Ltd. Subsidiary of Fosun Pharm
Guilin Pharmaceutical Works Subsidiary of Fosun Pharm
Handan Moluodan Pharmaceutical Co., Ltd. Subsidiary of Fosun Pharm
Sichuan Hexin Pharmaceutical Co.,Ltd. Subsidiary of Fosun Pharm
Shenyang Hongqi pharmaceutical Co.,Ltd Subsidiary of Fosun Pharm
Yichang Humanwell Pharmaceutical Co.,Ltd. Associate of Sinopharm Group
Shanghai Sailun Biological Technology Co.,Ltd. Associate of Sinopharm Group
Qinghai Pharmaceitical (Group) Co.,Ltd. Associate of Sinopharm Group
Sinopharm Qianjing Dental Technology (Beijing) Co.,Ltd. Associate of Sinopharm Group
Shenzhen Wanle Co. Ltd., Aossicate
China National Pharmaceutical Industry Corporation Lts.
Guangzhou Association Company Associate of CNPGC
China Otsuka Pharmaceutical Co.,Ltd. Associate of CNPGC
Huarui Pharmacy Co. Ltd., Associate of CNPGC
101
VII Related party relationships and significant related party transactions (continued)
(5) Related party transactions
(a) Purchase of goods
Six months ended 2011 Six months ended 2010
Pricing % of same % of same
Related party policies Amount transaction Amount transaction
7.23%
Sinopharm Group Market price 48,240.57 7.61% 41,054.27
China National Medicines Co., Ltd. Market price 8,510.32 1.34% 6,617.45 1.17%
Sinopharm Holding Sub Marketing Center Co., Ltd. Market price 4,470.43 0.71% 9,157.50 1.61%
Sino-Swed Pharmaceutical Corp.Ltd. Market price 3,284.84 0.52% 2,938.36 0.52%
Shenzhen Wanle Co. Ltd., Market price 1,692.98 0.27% 1,232.40 0.22%
Guang dong South National Pharmaceutical Foreign
4,730.73 0.83%
Trade Co.,Ltd. Market price 1,243.19 0.20%
Shanxi Weiqi Pharmacy Co., Ltd. Market price 1,005.98 0.16% - -
Foshan Nanhai Uptodate & Special Medicines Co.,Ltd. Market price 767.88 0.12% - -
Jiangsu Wanbang Pharmacy Marketing Co., Ltd. Market price 657.78 0.10% 436.36 0.08%
Chengdu Rongsheng Pharmacy Co., Ltd. Market price 616.56 0.10% 6.97 0.00%
Qinghai Pharmaceitical (Group) Co.,Ltd. Market price 607.54 0.10% 405.03 0.07%
Sinopharm Group United Medicine Device Co., Ltd. Market price 332.10 0.05% 204.03 0.04%
Chongqing Haisiman Pharmaceutical Co.,Ltd. Market price 287.16 0.05% 141.51 0.02%
Chongqing Yaoyou Pharmaceutical Co.,Ltd. Market price 203.59 0.03% 169.58 0.03%
Sinopharm Holding Beijing Co., Ltd. Market price 198.86 0.03% 329.78 0.06%
-
Sinopharm Holding Guizhou Co., Ltd. Market price 171.29 0.03% -
The Guangxi Zhuang Autonomous Region Huahong
148.22 0.02% -
Pharmaceutical Co. Ltd., Market price -
-
Sinopharm Holding Fujian Co., Ltd. Market price 101.38 0.02% -
Sinopharm Holding Anhui Co., Ltd. Market price 97.00 0.02% - -
Guangdong East Uptodate & Special Medicines
0.09%
Co.,Ltd. Market price 82.24 0.01% 495.33
Shanghai Chaohui Pharmecurical Co., Ltd. Market price 57.08 0.01% 38.19 0.01%
Sinopharm Group Medicine Logistic Co., Ltd. Market price 49.31 0.01% 44.95 0.01%
Yunnan Medicinal Material Co. Ltd., Market price 38.23 0.01% - -
Guilin Nanyao Pharmaceutical Co., Ltd. Market price 36.19 0.01% 11.70 0.00%
Sinopharm Group Chemical Reagent Suzhou Co., Ltd. Market price 24.64 0.00% 43.69 0.01%
Guilin Huagui Sinopharm Associated Co Market price 23.19 0.00% - -
Sinopharm Holding Meiluo (Dalian) Co., Ltd Market price 21.95 0.00% - -
Sinopharm Group Chemical Reagent Co., Ltd. Market price 20.10 0.00% 17.59 0.00%
Sinopharm Holding Zhangzhou Co., Ltd. Market price 15.08 0.00% - -
Shanghai Sailun Bio-technology Co., Ltd Market price 14.00 0.00% - -
Guangxi Zhuang Autonomous Region Huahong
0.00%
Pharmaceutical Co., Ltd. Market price 13.35 0.00% 1.59
Handan Moluodan Pharmaceutical Co., Ltd. Market price 10.04 0.00% - -
Shanghai Shyndec Pharmaceutical Co., Ltd. Market price 9.31 0.00% 3.12 0.00%
Guangxi Wuzhou Hua Wu Traditional & Herbal Co.,Ltd. Market price 4.96 0.00% - -
Sinopharm Holding Hainan Co., Ltd. Market price 4.04 0.00% - -
Foshan Nanhai Medicine Co., Ltd. Market price 2.13 0.00% - -
Shenyang Hongqi Pharmaceutical Co., Ltd. Market price 1.94 0.00% - -
China National Medical Corporation Equipment Co.,
0.00%
Ltd. Market price 1.50 0.00% 1.97
China Otsuka Pharmaceutical Co., Ltd. Market price 1.41 0.00% - -
0.00%
Yichang Humanwell Pharmaceutical Co.,Ltd. Market price 0.94 0.00% 0.85
Sichuan Jiangyou Zhongbafuzi Technology
0.00%
Development.Co., Ltd. Market price 0.94 0.00% 19.09
0.00%
China National Pharmaceutical Foreign Trade Corp. Market price 0.92 0.00% 0.54
Sinopharm Group Guorui Pharmaceutical Co., Ltd. Market price 0.47 0.00% - -
Sinopharm Holding Hunan Co., Ltd. Market price 0.44 0.00% - -
0.00%
Shanghai Institure of Pharmaceutical Industry Co., Ltd. Market price 0.26 0.00% 0.04
To next page 73,072.30 11.53% 68,102.63 11.99%
102
VII Related party relationships and significant related party transactions (continued)
(5) Related party transactions (continued)
(a) Purchase of goods (continued)
Six months ended 2011 Six months ended 2010
Pricing % of same % of same
Related party policies Amount transaction Amount transaction
continued 73,072.30 11.53% 68,102.63 11.99%
China National Pharmaceutical Industry Corp. Market price 0.00 0.00% 36.00 0.01%
Sinopharm Beijing Kang Chen Biological
- 0.00%
Pharmacutical Co., Ltd. Market price - 21.44
Sino TCM Market price - - 263.59 0.05%
Sinopharm Qianjing Oral Technology (Beijing) Co.,
- 0.00%
Ltd. Market price - 0.89
China National Uptodate & Special Medicines Co.,
- 0.00%
Ltd. Market price - 2.22
China National Baida Pharmaceutical Co, Ltd. Market price - - 150.06 0.03%
China National SouthwestPharmaceutical Co., Ltd. Market price -0.00 0.00% 54.65 0.01%
Sinopharm Tianjing Co., Ltd. Market price -0.00 0.00% - -
Guangdong Accord Pharmaceutical Co., Ltd. Market price -0.04 0.00% 48.01 0.01%
Guangdong Tianliang Medicine Co., Ltd. Market price -0.10 0.00% -0.28 0.00%
Sinopharm Jiangsu Co., Ltd. Market price -0.37 0.00% - -
Sinopharm Beijing Huahong Co., Ltd. Market price -0.92 0.00% - -
Total 73,070.86 11.45% 68,679.21 12.09%
(b) Sales of goods
Six months ended 2011 Six months ended 2010
Pricing % of same % of same
Related party policies Amount transaction Amount transaction
Sinopharm Holding Hunan Co., Ltd. Market price 5,087.87 0.71% 3,983.20 0.64%
Sinopharm Holding Hubei Co., Ltd. Market price 4,553.07 0.64% 4,516.57 0.73%
Chongqing Yaoyou Pharmaceutical Co.,Ltd. Market price 4,345.98 0.61% 3,246.32 0.52%
Guanddong Accord Pharmacy Co. Ltd., Market price 4,318.18 0.60% 5,047.01 0.82%
Sinopharm Holding Beijing Co., Ltd. Market price 3,716.32 0.52% 3,425.90 0.55%
Foshan Nanhai Uptodate & Special Medicines
Co.,Ltd. Market price 3,237.13 0.45% - 0.00%
Sinopharm Group Western-South Co., Ltd. Market price 3,187.27 0.44% 3,656.09 0.59%
Sinopharm Holding Shenyang Co., Ltd. Market price 3,111.93 0.43% 7,699.22 1.24%
Zhejiang Intmedical Co., Ltd. Market price 2,979.95 0.42% 3,319.33 0.54%
Sinopharm Holding (Tianjing ) Eastern Bokang
Pharmacy Co., Ltd. Market price 2,939.25 0.41% 1,472.02 0.24%
Sinopharm Holding Tianjing Co., Ltd. Market price 2,755.03 0.38% 2,933.55 0.47%
Sinopharm Group Market price 2,567.13 0.36% 1,228.85 0.20%
Sinopharm Holding Hebei Co., Ltd. Market price 2,279.66 0.32% 43.97 0.01%
Guangxi Accord Chain Pharnacy Co. Ltd., Market price 2,150.95 0.30% 1,323.39 0.21%
Sinopharm Holding Beijing Huahong Co., Ltd. Market price 2,124.24 0.30% 1,201.46 0.19%
Sinopharm Group Xinjiang Uptodate & Special
Medicines Co.,Ltd. Market price 1,610.71 0.22% 1,453.39 0.23%
Sinopharm Holding Hainan Co., Ltd. Market price 1,457.36 0.20% 1,743.52 0.28%
Foshan Nanhai Medicine Co., Ltd. Market price 1,388.51 0.19% 1.14 0.00%
Sinopharm Holding Yunnan Co., Ltd. Market price 1,366.67 0.19% 969.43 0.16%
Sinopharm Holding Zhejiang Co., Ltd. Market price 1,227.98 0.17% 265.82 0.04%
Xinjiang Special Drugs Western Pharmaceutical
Co.,Ltd. Market price 1,222.26 0.17% 1,016.97 0.16%
Sinopharm Holding Ningxia Co., Ltd. Market price 1,015.98 0.14% 481.06 0.08%
Guangdong East Uptodate & Special Medicines
Co.,Ltd. Market price 955.30 0.13% 502.36 0.08%
Sinopharm Holding Jiangsu Co., Ltd. Market price 861.78 0.12% 622.22 0.10%
Sinopharm Holding He’nan Co., Ltd. Market price 845.79 0.12% 939.02 0.15%
Sinopharm Holding Fujian Co., Ltd. Market price 703.62 0.10% 879.87 0.14%
Sinopharm Holding Gansu Co., Ltd. Market price 679.02 0.09% 55.91 0.01%
Sinopharm Holding Shanxi Co., Ltd. (Shanxi) Market price 655.06 0.09% 411.72 0.07%
Sinopharm Holding Guizhou Co., Ltd. Market price 600.76 0.08% 27.96 0.00%
To next page 63,944.78 8.90% 52,467.24 8.45%
103
VII Related party relationships and significant related party transactions (continued)
(5) Related party transactions (continued)
(b) Sales of goods (continued)
Six months ended 2011 Six months ended 2010
Pricing % of same % of same
Related party policies Amount transaction Amount transaction
continued 63,944.78 8.90% 52,467.24 8.45%
Sinopharm Shanxi Co., Ltd Market price 588.34 0.08% 526.43 0.09%
Wenzhou Biomedicin-appliances Supplies co., Ltd. Market price 474.98 0.07% - 0.00%
Guangzhou Accord Chain Pharnacy Co. Ltd., Market price 474.30 0.07% 259.06 0.04%
Sinopharm Holding Shandong Co., Ltd. Market price 457.40 0.06% 338.97 0.05%
Shanxi Weiqi Pharmacy Co., Ltd. Market price 430.67 0.06% - 0.00%
Sinopharm Group Medicine Logistic Co., Ltd. Market price 332.88 0.05% 215.96 0.03%
Sinopharm Holding Chongqing Co., Ltd. Market price 313.40 0.04% - 0.00%
Sichuan Hexin Pharmaceutical Co.,Ltd. Market price 249.27 0.03% 227.49 0.04%
Sinopharm Holding Neimenggu Co., Ltd. Market price 240.10 0.03% 80.94 0.01%
Sinopharm Holding Fuzhou Co., Ltd. Market price 231.42 0.03% 12.61 0.00%
Sinopharm Holding Jinzhou Co., Ltd. Market price 229.57 0.03% - 0.00%
China National Medicines Co., Ltd. Market price 228.19 0.03% 430.22 0.07%
Sinopharm Holding Jilin Co., Ltd. Market price 211.93 0.03% - 0.00%
Sinopharm National Pharmacy Co.,Ltd. Market price 159.73 0.02% 174.18 0.03%
Jiangsu Rundong Medicine Co., Ltd. Market price 151.57 0.02% 30.21 0.00%
Sinopharm Holding Suzhou Co., Ltd. Market price 137.04 0.02% 92.40 0.01%
Guang dong South National Pharmaceutical Foreign
Trade Co.,Ltd. Market price 114.59 0.02% 78.76 0.01%
Sinopharm Holding Wuxi Co., Ltd. Market price 110.47 0.02% - 0.00%
Sinopharm Holding Jiangsu Co., Ltd. Zhongxiyao
subsidiary Market price 110.29 0.02% - 0.00%
Sinopharm Holding Heilongjiang Co., Ltd. Market price 109.61 0.02% - 0.00%
Sinopharm Holding Zhangzhou Co., Ltd. Market price 100.05 0.01% - 0.00%
Sinopharm Holding Tianjing Northern Co., Ltd. Market price 85.58 0.01% 26.41 0.00%
Sinopharm Holding Jiangxi Co., Ltd. Market price 74.97 0.01% 74.52 0.01%
Sinopharm Lerentang Co., Ltd. Trading Branch Market price 61.00 0.01% - 0.00%
Shanghai Chaohui Pharmecurical Co., Ltd. Market price 45.38 0.01% 1.71 0.00%
Sinopharm Holding Anqing Co., Ltd. Market price 45.06 0.01% 218.72 0.04%
Sinopharm Holding Xinyu Co., Ltd. Market price 35.45 0.00% - 0.00%
Sinopharm Holding Taizhou Co., Ltd. Market price 34.00 0.00% - 0.00%
Sinopharm Holding Meiluo (Dalian) Co., Ltd Market price 33.00 0.00% - 0.00%
Sinopharm Holding Shenyang Co., Ltd. Dalian
subsidiary Market price 30.45 0.00% 81.39 0.01%
Zhejiang Wenlin Medicine Co., Ltd. Market price 29.40 0.00% 25.32 0.00%
Sinopharm Holding Nanjing Co., Ltd. Market price 28.89 0.00% 9.19 0.00%
Sinopharm Holding Meiluo (Dalian) Co., Ltd Market price 21.54 0.00% - 0.00%
Sinopharm Holding Hebei Co., Ltd. Tangshan
subsidiary Market price 14.65 0.00% - 0.00%
Sinopharm Holding Yancheng Co., Ltd. Market price 13.98 0.00% - 0.00%
Sinopharm Holding Linxi Co., Ltd. Market price 13.50 0.00% - 0.00%
Sinopharm Holding Longyan Co., Ltd. Market price 12.05 0.00% - 0.00%
Guangxi Wuzhou Huawu Medicinal Material Co. Ltd., Market price 9.25 0.00% 4.02 0.00%
Fujian Huiyuan Medicine Co., Ltd. Market price 5.31 0.00% - 0.00%
Sinopharm Holding Putian Co., Ltd. Market price 4.40 0.00% - 0.00%
Sinopharm Holding Lishui Co., Ltd. Market price 3.69 0.00% 3.70 0.00%
Sinopharm Holding Anqing Co., Ltd. Market price 2.98 0.00% 2.95 0.00%
Sinopharm Holding Zhenjiang Co., Ltd. Market price 1.07 0.00% - -
Sinopharm Holding Yantai Co., Ltd. Market price 0.86 0.00% - -
Sinopharm Holding Suzhou Bo’ai Co., Ltd. Market price 0.55 0.00% - -
Guilin Huagui Sinopharm Associated Co Market price 0.51 0.00%
Sinopharm Holding Jingzhou Co., Ltd. Market price 0.24 0.00% - -
To next page 70,008.35 9.71% 55,382.41 8.89%
104
VII Related party relationships and significant related party transactions (continued)
(5) Related party transactions (continued)
(b) Sales of goods (continued)
Six months ended 2011 Six months ended 2010
Pricing % of same % of same
Related party policies Amount transaction Amount transaction
continued 70,008.35 9.71% 55,382.41 8.89%
China Medicinal Material Co. Market price - - 37.05 0.01%
Shenzhen AccordChain Pharnacy Co., Ltd. Market price - - 150.97 0.02%
Ningxia Chain Pharnacy Co.,Ltd. Market price - - 1.24 0.00%
Sinopharm Holding Hubei Yibao Co., Ltd. Market price - - 346.13 0.06%
Sinopharm Holding Hebei Co., Ltd. Market price - - 201.44 0.03%
Sinopharm Holding Tianjing Co., Ltd. Neimeng Branch Market price - - 121.54 0.02%
Sinopharm Holding Shenyang Co., Ltd. Changchun Market price
Branch
- - 1.20 0.00%
Sinopharm Shanghai Medicine Co., Ltd. Market price - - 79.71 0.01%
Sinopharm Group Guorui Pharmaceutical Co., Ltd. Market price - - 63.15 0.01%
Sinopharm Group Baida Pharmaceutical Co., Ltd. Market price - - 2.35 0.00%
Guangxi National Chain Pharmacy Co. Ltd., Market price - - 603.58 0.10%
Total 70,008.35 9.71% 56,990.76 9.15%
(c) Lease
The Group as leaser:
Type of
assets Contract Contract Rental income
Leasers Lessees use for beginning date terminated date (RMB’0,000)
Guangzhou Accord Drug Store
Huixin Investment Chain Co., Ltd. Building 1 January 2010 31 December 2011 23.80
Sinopharm Group United
Huixin Investment Medicine Device Co., Ltd. Building 1 August 2010 30 June 2011 8.76
Shenzhen Accord
Pharmaceutical Chain Co.,
The Company Ltd Building 1 June 2009 31 December 2012 4.80
Guangdong Accord Drug Store
The Company Co., Ltd. Building 1 June 2009 30 June 2011 18.65
Guangxi Accord Drug Store
Guangxi Logistics Chain Co., Ltd. Building 1 July 2009 31 December 2012 14.02
Guangxi Accord Drug Store
Sinopharm Liuzhou Chain Co., Ltd. Building 1 July 2009 31 December 2012 57.11
127.14
Rental income received from related parties is negotiated by both parties involved in the lease
and by making reference to the market price.
The Group as lessee:
Type of assets Contract Contract Lease
Lessees Leasers use for beginning date terminated date expenses
Sinopharm Sinopharm Group Medicine
Guangzhou Logistic Co., Ltd. Building 1 June 2010 31 December 2011 354.00
Sinopharm Sinopharm Group Medicine
Guangzhou Logistic Co., Ltd. Equipment 1 June 2010 31 December 2011 375.00
Yanfeng Medicine Mr. Wang Yang Building 1 July 2009 30 June 2011 19.00
748.00
Lease charges paid to related parties are negotiated by both parties involved in the lease and
by making reference to the market price.
105
VII Related party relationships and significant related party transactions (continued)
(5) Related party transactions (continued)
(d) Guarantees provided
Guarantee
Beginning date of Maturity date of obligation
Guarantor Guarantee Amount guarantee contract guarantee contract expired
The Company Sinopharm Liuzhou 5,000.00 21 February 2011 21 February 2012 No
The Company Sinopharm Liuzhou 5,000.00 01 January 2011 01 January 2012 No
The Company Yanfeng Medicine 3,000.00 27 July 2010 27 July 2011 No
The Company Yanfeng Medicine 2,000.00 22 June 2011 06 June 2012 No
The Company Sinopharm Nanning 5,000.00 21 February 2011 21 February 2012 No
The Company Sinopharm Nanning 10,000.00 28 April 2011 28 April 2012 No
The Company Sinopharm Nanning 2,650.00 17 January 2011 17 January 2012 No
The Company Sinopharm Logistics 10,000.00 17 January 2011 17 January 2014 No
Zhijun Pharm ,
Sinopharm Guangzhou The Company 37,500.00 21 June 2010 21 June 2011 No
Zhijun Pharm The Company 10,000.00 02 June 2011 01 June 2012 No
Sinopharm Group The Company, Zhijun Pharm 15,000.00 18 September 2010 18 September 2011 No
The Company, Zhijun
Pharm The Company, Zhijun Pharm 15,000.00 10 January 2011 10 January 2012 No
Zhijun Pharm The Company 10,000.00 21 February 2011 21 February 2012 No
The Company Suzhou Wanqin 6,000.00 23 April 2010 22 April 2011 No
The Company Suzhou Wanqin 6,000.00 19 July 2010 31 December 2011 No
The Company Suzhou Wanqin 6,000.00 01 August 2010 01 August 2013 No
The Company Suzhou Wanqin 5,000.00 21 February 2011 21 February 2012 No
The Company Suzhou Wanqin 10,000.00 06 May 2011 06 May 2012 No
The Company Zhijun Pharm 10,000.00 02 June 2011 01 June 2012 No
The Company Zhijun Pharm 10,000.00 21 February 2011 21 February 2012 No
The Company Zhijun Pharm 5,000.00 23 May 2011 21 February 2012 No
The Company Zhijun Pharm 8,000.00 22 June 2011 21 March 2012 No
Zhijun Pharm Zhijun USD500.00 25 August 2010 24 August 2011 No
Zhijun Pharm Zhijun 2,500.00 16 September 2010 16 September 2011 No
The Company Sinopharm Guangzhou 32,500.00 28 April 2011 28 April 2012 No
The Company Yuexing Medicine 3,500.00 28 April 2011 28 April 2012 No
The Company Sinopharm Guangzhou 10,000.00 17 September 2010 16 September 2011 No
The Company Sinopharm Guangzhou 25,000.00 28 April 2011 28 April 2012 No
The Company Sinopharm Guangzhou 10,000.00 23 November 2010 22 November 2011 No
The Company Sinopharm Guangzhou 10,000.00 05 November 2010 04 November 2011 No
The Company Sinopharm Guangzhou 60,000.00 28 April 2011 08 March 2012 No
The Company Sinopharm Guangzhou 10,000.00 27 May 2011 27 May 2012 No
The Company Sinopharm Guangzhou 5,000.00 26 October 2010 25 October 2011 No
Sinopharm Group Sinopharm Guangzhou 11,000.00 17 September 2010 28 September 2011 No
Sinopharm Group Sinopharm Guangzhou 15,000.00 10 September 2010 10 September 2011 No
106
VII Related party relationships and significant related party transactions (continued)
(5) Related party transactions (continued)
(e) Financing
Amount Effective date Maturity date
(RMB’0,000)
Six months ended 30 June
2011
Borrowing from-
Sinopharm Group 5,000.00 1 February 2011 29 July 2011
17 November
Sinopharm Group 10,000.00 18 May 2011 2011
22 November
Sinopharm Group 10,000.00 23 May 2011 2011
Sinopharm Group 5,000.00 9 March 2011 8 March 2012
30,000.00
(f) Interest expenses
Six months Six months
Related party Type of transaction ended 2011 ended 2010
(Rmb’0,000) (Rmb’0,000)
Interest paid for the
The Company Sinopharm Group entrusted loans 447.05 402.04
Sinopharm Interest paid for the
Guangzhou Sinopharm Group entrusted loans 409.00 300.11
Sinopharm Charges of discounted
Guangzhou Sinopharm Group notes payable 468.00 324.28
Sinopharm Sinopharm Holding Sub Marketing Charges of discounted
Guangzhou Center Co., Ltd. notes payable 72.00 230.82
Sinopharm China National Medicines Charges of discounted
Guangzhou Co., Ltd. notes payable 12.89
Sinopharm
Guangzhou Sinopharm Group Interests for factoring 156.00 -
1,552.05 1,270.14
107
VII Related party relationships and significant related party transactions (continued)
(5) Related party transactions (continued)
(g) Rendering of service
Six months Six months
Related party Type of transaction ended 2011 ended 2010
(Rmb’0,000) (Rmb’0,000)
Hengchang Sinopharm Group Medicine Dispatching and
Logistics Logistic Co., Ltd. transportation charges 332.88 216.00
Hengchang China National Medicines Dispatching and
Logistics Co., Ltd. transportation charges 68.14 75.00
Hengchang Guangdong Accord Drug Store Dispatching and
Logistics Co., Ltd. transportation charges 129.43 133.00
Hengchang Guangzhou Accord Drug Store Dispatching and
Logistics Chain Co., Ltd. transportation charges 23.16 -
Guangdong Accord Drug Store Dispatching and
Accord Logistics Co., Ltd. transportation charges 30.12 42.68
583.73 466.68
(h) Payment for service
Six months Six months
Related party Type of transaction ended 2011 ended 2010
(Rmb’0,000) (Rmb’0,000)
Reed Sinopharm Exhibitions
Suzhou Wanqin Co.,Ltd. Exhibition charges 1.60 2.28
Shanghai Tongyu Information
Suzhou Wanqin Technology Co., Ltd. Examination charges 1.00 -
China National Pharmaceutical
Suzhou Wanqin Industry Corporation Ltd. Exhibition charges - 7.70
2.60 9.98
(6) Accounts receivable from and payables to related parties
30 June 2011 31 December 2010
(Rmb’0,000) (Rmb’0,000)
Notes receivable Chongqing Yaoyou Pharmaceutical Co.,Ltd. 894.40 1,136.00
Sinopharm Holding Hunan Co., Ltd. 568.25 406.29
Sinopharm Holding Tianjin Co., Ltd. 129.96 244.94
Sinopharm Holding Gansu Co., Ltd. 49.86 -
Sinopharm Holding Henan Co., Ltd. 32.48 50.00
Sinopharm Holding Fuzhou Co., Ltd. 27.14 32.57
Sinopharm Holding Shengyang Co., Ltd. 15.14 7.73
Sinopharm Holding Anhui Co., Ltd. 9.17 6.91
Sinopharm Holding Chongqin Co., Ltd. - 24.24
Sinopharm Holding Jiangxi Co., Ltd. - 20.26
Sinopharm Holding Shangdong Co., Ltd. - 1.20
Sinopharm Holding Hubei Co., Ltd. - 698.86
Sinopharm Holding Hainan Co., Ltd. - 47.47
Sinopharm National Chain Co., Ltd. - -
Sinopharm Holding Guizhou Co., Ltd. - 684.00
Total 1,726.40 3,360.47
108
VII Related party relationships and significant related party transactions (continued)
(6) Accounts receivable from and payables to related parties (continued)
30 June 2011 31 December 2010
(Rmb’0,000) (Rmb’0,000)
Accounts receivable Sinopharm Holding Hunan Co., Ltd. 1,872.68 1,865.21
Sinopharm Group Southwest Pharmacy Co., Ltd. 1,629.36 1,758.29
Sinopharm Holding Hubei Co., Ltd. 1,591.66 835.00
Foshan Nanhai Uptodate & Special Medicines
Co.,Ltd. 1,509.23 514.57
Sinopharm Holding Beijing Co., Ltd. 1,421.01 2,042.52
Chongqing Yaoyou Pharmaceutical Co.,Ltd. 1,238.40 1,872.00
Zhejiang Intmedical Co., Ltd. 1,075.86 783.31
Guangdong Accord Drug Store Co., Ltd. 1,010.60 1,338.14
Sinopharm Holding (Tianjing ) Eastern Bokang
Pharmacy Co., Ltd. 912.21 694.27
Guangxi Accord Drug Store Chain Co., Ltd. 894.10 904.29
Sinopharm Group 874.52 608.57
Foshan Nanhai Medicine Co., Ltd. 803.03 22.84
Sinopharm Holding Shengyang Co., Ltd. 776.98 328.27
Sinopharm Holding Tianjin Co., Ltd. 727.20 510.59
Sinopharm Holding Beijing Huahong Co., Ltd. 707.49 943.07
Sinopharm Group Xinjiang Uptodate & Special
Medicines Co.,Ltd. 544.29 376.82
Sinopharm Holding Hainan Co., Ltd. 534.74 577.00
Sinopharm Holding Yunnan Co., Ltd. 482.83 379.56
Sinopharm Holding Zhejiang Co., Ltd. 446.08 510.79
Guangdong East Uptodate & Special Medicines
Co.,Ltd. 383.20 279.14
Sinopharm Holding Hebei Co., Ltd. 369.60 -
Xinjiang Special Drugs Western Pharmaceutical
Co.,Ltd. 367.99 215.52
Sinopharm Holding Shijiazhuang Co., Ltd. 284.02 495.02
Sinopharm Holding Gansu Co., Ltd. 276.23 59.56
Sinopharm Holding Fujian Co., Ltd. 269.67 205.78
Sinopharm Holding Jiangsu Co., Ltd. 260.56 148.85
Sinopharm Holding Shanxi Co., Ltd. (Shaanxi) 255.18 141.98
Sinopharm Holding Ningxia Co., Ltd. 254.12 241.60
Sinopharm Holding Jinzhou Co., Ltd. 218.60 -
To next page 21,991.44 18,652.56
109
VII Related party relationships and significant related party transactions (continued)
(6) Accounts receivable from and payables to related parties (continued)
30 June 2011 31 December 2010
(Rmb’0,000) (Rmb’0,000)
Accounts receivable Continued 21,991.44 18,652.56
Sinopharm Group Medicine Logistic Co., Ltd. 216.24 48.63
Guangzhou Accord Drug Store Chain Co., Ltd. 195.79 103.14
Shanxi Weiqi Pharmacy Co., Ltd. 185.86 -
Sinopharm Holding Chongqin Co., Ltd. 167.96 28.77
Sinopharm Holding Shangdong Co., Ltd. 162.15 33.71
Sinopharm Holding Shanxi Co., Ltd. 154.08 170.26
Sinopharm Holding Inner Mongolia Co., Ltd. 144.79 24.57
Sinopharm Group Northwest Co., Ltd. 141.98 40.70
Sinopharm Holding Jiangsu Co., Ltd.
Zhongxiyao subsidiary 129.04 -
Sinopharm Holding Henan Co., Ltd. 125.65 225.91
Sinopharm Holding Zhangzhou Co., Ltd. 116.02 -
Sinopharm Lerentang Co., Ltd. Trading Branch 78.77 -
Shanghai Sinopharm TCM Co., Ltd. 69.32 -
Wenzhou Biomedicin-appliances Supplies co.,
Ltd 67.65 108.15
Sinopharm Holding Guizhou Co., Ltd. 65.83 183.64
Sinopharm National Pharmacy Co.,Ltd. 62.64 74.95
China National Medicines Co., Ltd. 58.31 151.90
Sinopharm Holding Taizhou Co., Ltd. 48.59 3.08
Sinopharm Holding Suzhou Co., Ltd. 40.82 23.53
Sinopharm Holding Fuzhou Co., Ltd. 40.01 16.95
Guang dong South National Pharmaceutical
Foreign Trade Co.,Ltd. 39.11 46.34
Sinopharm Holding Heilongjiang Co., Ltd. 37.16 41.38
Sinopharm Holding Tianjing Northern Co., Ltd. 35.60 44.00
Jiangsu Rundong Medicine Co., Ltd. 31.70 5.41
Sinopharm Holding Meiluo (Dalian) Co., Ltd. 30.82 30.24
Sinopharm Holding Wuxi Co., Ltd. 30.09 9.31
Sinopharm Holding Jilin Co., Ltd. 29.93 6.42
Sinopharm Holding Jiangxi Co., Ltd. 28.27 50.95
Sinopharm Holding Anhui Co., Ltd. 17.62 0.09
Sinopharm Holding Shenyang Co., Ltd. Dalian
Branch 14.29 19.14
Sinopharm Holding Hebei Co., Ltd. Tangshan
Branch 12.26 -
Sinopharm Holding Yancheng Co., Ltd. 8.10 -
Fujian Huiyuan Medicine Co., Ltd. 4.63 -
Sinopharm Holding Longyan Co., Ltd. 3.97 -
Sinopharm Holding Putian Co., Ltd. 2.31 -
Sinopharm Holding Nanjing Co., Ltd. 2.10 -
Sinopharm Holding Anqing Co., Ltd. 2.08 -
Sinopharm Holding Zhenjiang Co., Ltd. 1.47 -
Sinopharm Holding Lishui Co., Ltd. 1.14 1.14
Guilin Huagui Sinopharm Associated Co. 0.60
Shanghai Chaohui Pharmecurical Co., Ltd. 0.05 37.64
China Medicinal Material Co. - 25.92
Guangxi Wuzhou Hua Wu Traditional & Herbal
Co.,Ltd. - 0.60
Total 24,596.24 20,209.03
110
VII Related party relationships and significant related party transactions (continued)
(6) Accounts receivable from and payables to related parties (continued)
30 June 2011 31 December 2010
(Rmb’0,000) (Rmb’0,000)
Other receivables Sinopharm Group Medicine Logistic Co., Ltd. 121.50 121.50
Wang Lei - 90.51
China National Pharmaceutical Industry
Corporation Lts. Guangzhou Association
Company - 1.61
Total 121.50 213.62
Sinopharm Holding Sub Marketing Center Co.,
Advances to suppliers Ltd. 1,656.13 -
Guang dong South National Pharmaceutical
Foreign Trade Co.,Ltd. 166.00 261.68
Sinopharm Group United Medicine Device Co.,
Ltd. 86.54 243.56
Sinopharm Group Chemical Reagent Suzhou
Co., Ltd. 51.43 -
Chengdu Rongsheng Pharmacy Co., Ltd. 1.19 -
Shanghai Sailun Biological Technology Co.,Ltd. - 0.03
Qinghai Pharmaceitical (Group) Co.,Ltd. - 540.84
Total 1,961.29 1,046.11
Notes payable Sinopharm Group 16,359.95 21,009.56
China National Medicines Co., Ltd. - 1,240.95
Sinopharm Holding Sub Marketing Center Co., Ltd. 2,782.10 531.22
Sinopharm Holding Fujian Co., Ltd. - 503.61
Jiangsu Wanbang Pharmacy Marketing Co., Ltd. 188.31 224.08
Chongqing Haisiman Pharmaceutical Co.,Ltd. 141.87 53.32
Wanle Medical 39.41 38.84
Sinopharm Group Baida Pharmaceutical Co., Ltd. - 34.89
Guilin Pharmaceutical Works 9.07 13.65
Guilin Pharmaceutical Co., Ltd. - 2.58
Chongqing Yaoyou Pharmaceutical Co.,Ltd. 9.69 -
Sinopharm Group Chemical Reagent Suzhou Co.,
Ltd. 1.45 -
Shanghai Shyndec Pharmaceutical Co., Ltd 2.14 -
Total 19,533.99 23,652.70
Accounts payable Sinopharm Group 16,461.67 10,959.88
Sinopharm Holding Sub Marketing Center Co., Ltd. 3,414.29 2,345.66
China National Medicines Co., Ltd. 2,073.58 1,165.01
Guang dong South National Pharmaceutical
Foreign Trade Co.,Ltd. 1,016.10 1,026.77
Sino-Swed Pharmaceutical Corp.Ltd. 914.45 971.60
Foshan Nanhai Uptodate & Special Medicines
Co.,Ltd. 761.74 -
Shenzhen Wanle Co. Ltd., 450.25 421.56
Chongqing Haisiman Pharmaceutical Co.,Ltd. 134.47 92.77
Jiangsu Wanbang Pharmacy Marketing Co., Ltd. 125.79 208.32
Chongqing Yaoyou Pharmaceutical Co.,Ltd. 95.23 100.62
The Guangxi Zhuang Autonomous Region
Huahong Pharmaceutical Co. Ltd., 94.75 -
Guilin Huagui Sinopharm Associated Co. 72.60
Sinopharm Holding Anhui Co., Ltd. 64.90 0.31
Sinopharm Holding Guizhou Co., Ltd. 61.31 35.88
China National Group Corporation of Traditional &
Hebal Medical 45.92 105.05
Sinopharm Group United Medicine Device Co., Ltd. 39.73 96.37
Shanghai Chaohui Pharmecurical Co., Ltd. 36.46 34.59
Sinopharm Holding Beijing Co., Ltd. 27.54 72.92
To next page 25,890.78 17,637.31
111
VII Related party relationships and significant related party transactions (continued)
(6) Accounts receivable from and payables to related parties (continued)
30 June 2011 31 December 2010
(Rmb’0,000) (Rmb’0,000)
Accounts payable Continued 25,890.78 17,637.31
Guangdong East Uptodate & Special Medicines Company 24.09 51.09
Sinopharm Group Chemical Reagent Suzhou Co., Ltd. 20.31 1.45
Guilin Pharmaceutical Works 14.87 5.25
Sinopharm Holding Fujian Co., Ltd. 13.39 7.01
China National Pharmaceutical Industry CorporationLtd.
Beijing sales branch 10.15 11.99
Handan Moluodan Pharmaceutical Co., Ltd 6.81
Shanghai Shyndec Pharmaceutical Co., Ltd. 6.27 -
Sinopharm Group Medicine Logistic Co., Ltd. 2.88 12.82
Sinopharm Group Shanghai Medicine Device Co., Ltd. 2.30 1.84
Yichang Humanwell Pharmaceutical Co.,Ltd. 1.89 3.34
China Otsuka Pharmaceutical Co., Ltd. 1.86 -
Shanghai Sailun Biological Technology Co.,Ltd. 1.67 5.04
Sinopharm Group Beijing Medicine Device Co., Ltd. 0.88 0.88
Shenyang Hongqi Pharmaceutical Co., Ltd. 0.78 1.86
Foshan Nanhai Medicine Co., Ltd. 0.71 -
Guangdong Tianliang Medicine Co., Ltd. 0.56 0.68
Sinopharm Group Guorui Pharmaceutical Co., Ltd. 0.55 -
Sinopharm Holding Hunan Co., Ltd. 0.51 -
Shanghai Institure of Pharmaceutical Industry Co., Ltd. 0.28
China National Pharmaceutical Industry Corporation Lts.
Guangzhou Association Company 0.13 0.13
China Sinopharm Foreign Trade Co.,Ltd. 0.09 (0.98)
Sichuan Jiang You Zhong Ba Science and Technology
Development Co.,Ltd. 0.04 34.13
Guangdong Accord Drug Store Co., Ltd. 0.03 0.10
Shanghai Fosun Pharmaceutical Co., Ltd. 0.02 0.02
Shanxi Weiqi Pharmacy Co., Ltd. 0.02
Sinopharm Group Chemical Reagent Co., Ltd. 0.02 0.51
Sinopharm Qianjing Dental Technology (Beijing) Co.,Ltd. 0.02 0.01
Sinopharm Holding Meiluo (Dalian) Co., Ltd - 10.75
Sinopharm Group Western-South Co., Ltd. - 3.81
China National Pharmaceutical Industry Corporation Ltd. - 2.87
Guangxi Wuzhou Hua Wu Traditional & Herbal Co.,Ltd. - 0.38
Sinopharm Holding Hainan Co., Ltd. - 5.17
Sinopharm Yixin Pharmacy Co., Ltd. - 2.95
Guilin Pharmaceutical Co., Ltd. - 0.68
Sinopharm Holding Suzhou Co., Ltd. - 12.01
Jiangsu Wanbang Bio-Chemical Medicine Co., Ltd. - 1.49
Shanghai Fosun Long March Medical Science Co., Ltd. - 0.18
Sinopharm Holding Jiangsu Co., Ltd. - 0.37
Total 26,001.91 17,815.34
Other payables Sinopharm Group Medical Holding Co., Ltd. 166.04 166.04
Sinopharm Group 389.39 389.39
Shanghai Chaohui Pharmecurical Co., Ltd. 0.01 0.01
Shenzhen Kaijiefeng industrial Co., Ltd 285.90 481.09
Total 841.34 1,036.54
Advance from customers Sinopharm Holding Guizhou Co., Ltd. - 537.00
Interest payable Sinopharm Group - 22.00
Entrusted loans Sinopharm Group 30,000.00 30,000.00
Other non-current assets Sinopharm Group - 3,506.18
112
VII Related party relationships and significant related party transactions (continued)
(7) Commitment with related parties
Undertaking contracted for at the balance sheet date but not recognised in balance sheet are
anaylsed as follows:
30 June 2011 31 December 2010
(Rmb’0,000) (Rmb’0,000)
Lease
-As a lessee
Sinopharm Group Medicine
Logistic Co., Ltd. 729.00 2,308.50
Mr. Wang Yang 19.00 18.90
748.00 2,327.40
-As a leaser
Guangzhou Accord Drug Store
Chain Co., Ltd. - 22.22
Shenzhen Accord Pharmaceutical
Chain Co., Ltd. - 93.91
Guangxi Accord Drug Store Chain
Co., Ltd. - 64.14
- 180.27
Guarantee
- Guaranteed by related party
Sinopharm Group 11,749.06 14,816.10
113
VIII Contingencies
As at 30 June 2011, there is no material contingency of the Group.
IX Commitments
(1) Capital commitments
Capital expenditures contracted for at the balance sheet date but not recognised in balance
sheet are anaylsed as follows:
30 June 2011 31 December 2010
(Rmb’0,000) (Rmb’0,000)
Buildings, machinery and equipment 5,775.74 8,346.19
(2) Operating lease commitments
The future minimum lease payments due under the signed irrevocable operating leases
contracts are summarised as follows:
30 June 2011 31 December 2010
(Rmb’0,000) (Rmb’0,000)
Within one year 878.48 2,564.83
Between 1 and 2 years 703.33 1,057.76
Between 2 and 3 years 579.64 883.51
Over 3 years 3,911.61 7,750.23
6,073.06 12,256.33
(3) Execution of commitments of prior period
The Group has fulfilled the commitments as of 30 June 2011 according to the relevant
contracts.
114
X Notes to the main items of financial statement of the Company
(1) Accounts receivable
30 June 2011 31 December 2010
Accounts receivable 270,378,073.76 283,766,551.16
Less: provision for bad debts (1,169,085.93) (1,169,085.93)
269,208,987.83 282,597,465.23
(a) The ageing of accounts receivable is analysed below:
30 June 2011 31 December 2010
Within 1 year 269,208,987.83 282,597,465.23
1 to 2 years 1,169,085.93 1,169,085.93
270,378,073.76 283,766,551.16
(b) The accounts receivable and related provision for bad debts by category are analysed below:
30 June 2011 31 December 2010
Carrying amount Bad debt provisions Carrying amount Bad debt provisions
% of total % of total
amount balance amount rate amount balance amount rate
Receivable
accounts within
similar credit
risk group 269,208,987.83 99.57% - - 282,597,465.23 99.59% - -
Individually not
significant but
individually
evaluated for
impairment 1,169,085.93 0.43% (1,169,085.93) 100% 1,169,085.93 0.41% (1,169,085.93) 100%
270,378,073.76 100% (1,169,085.93) 0.43% 283,766,551.16 100% (1,169,085.93) 0.41%
(c) As at 30 June 2011, there are no receivables individually significant which subject to separate
impairment assessment.
(d) Provisions for impairment of the receivables which have a similar risk group are analysed
below:
30 June 2011 31 December 2010
Carrying amount Bad debt provision Carrying amount Bad debt provision
% of total % of total
amount balance amount rate amount balance amount rate
Within 1 year 269,208,987.83 100% - - 282,597,465.23 100% - -
115
XIII Notes to the main items of financial statement of the Company (continued)
(1) Accounts receivable (continued)
(e) As at 30 June 2011, accounts receivable individually not significant but individually evaluated
for impairment are analysed below:
Bad debt % of Reason
Per book provisions provision
Guangdong Liyuan
Pharmaceutical Co. (1,169,085.93 Uncertainty in
Ltd. 1,169,085.93 ) 100.00% recoverability
(f) As at 30 June 2011, there is no accounts receivable due from shareholders who holds more
than 5% (including 5%) shares of the Company (31 December 2010: nil).
(g) As at 30 June 2011, the top five accounts receivable by customer are analysed as below:
% of the
Relationship total
with the accounts
Company Amount Ageing receivable
Shenzhen Nanshan
District People’s
Hospital Thethirdparty 15,253,579.59 Within 1 year 5.64%
Shenzhen Traditional
Chinese Medicine
Hospital Thethirdparty 9,922,809.00 Within 1 year 3.67%
Shenzhen People’s
Hospital Thethirdparty 8,650,251.89 Within 1 year 3.20%
Peking University
Shenzhen Hospital Thethirdparty 8,237,661.07 Within 1 year 3.05%
Shenzhen Longgang
Center Hospital Thethirdparty 7,209,083.65 Within 1 year 2.67%
49,273,385.20 18.22%
(h) Accounts receivable due from related party
As at 30 June 2010, there are accounts receivable of RMB20,118,600.32 due from related
party, which is 7.44% of the total accounts receivable, without any bad debt provided.
(2) Other receivables
30 June 2011 31 December 2010
Amounts due from subsidiaries (note
h) 569,838,385.84 554,781,312.21
Receivable from equity transaction 8,980,000.00 8,980,000.00
Compensation receivables 1,157,860.00 1,157,860.00
Borrowings due from employees 2,211,439.82 2,095,749.56
Others 3,096,922.67 528,280.50
585,284,608.33 567,543,202.27
Less: provision for bad debts (10,209,344.60) (10,218,244.60)
575,075,263.73 557,324,957.67
116
XIII Notes to the main items of financial statement of the Company (continued)
(2) Other receivables (continued)
(a) The ageing of other receivables is analysed as follows:
30 June 2011 31 December 2010
Within 1 year 575,049,987.90 557,121,075.32
1 to 2 years 23,600.00 214,613.00
2 to 3 years 73,160.43 69,653.95
Over 3 years 10,137,860.00 10,137,860.00
585,284,608.33 567,543,202.27
(b) Other receivables and related provision for bad debts by category are analysed below:
30 June 2011 31 December 2010
Carrying amount Bad debt provision Carrying amount Bad debt provision
% of % of
total total
amount amount amount rate amount amount amount rate
Individually significant
are subject to
separate impairment
assessment 8,980,000.00 1.53% (8,980,000.00) 100% 8,980,000.00 1.58% (8,980,000.00) 100.00%
Receivable accounts
within similar credit
risk group 575,073,587.90 98.26% (1,830.65) 0.00% 557,335,688.32 98.20% (10,730.65) 0.00%
Individually not
significant but
individually evaluated
for impairment 1,231,020.43 0.21% (1,227,513.95) 100% 1,227,513.95 0.22% (1,227,513.95) 100.00%
585,284,608.33 100.00% (10,209,344.60) 1.74% 567,543,202.27 100.00% (10,218,244.60) 1.80%
(c) As at 30 June 2011, impairment provision for other receivables individually significant is
analysed as below.
Bad debt Assessment for
Amount provision Rate impairment
Shenzhen Yinghai Technology Uncertainty in
Investment Co., Ltd. 8,980,000.00 (8,980,000.00) 100% recoverability
(d) Provisions for impairment of the receivables which have a similar risk group are analysed
below:
30 June 2011 31 December 2010
Carrying amount Bad debt provision Carrying amount Bad debt provision
% of total % of total
amount amount amount rate amount amount amount rate
Within 1 year 575,049,987.90 99.99% - - 557,121,075.32 99.96% - -
1 to 2 years 23,600.00 0.01% (1,830.65) 7.75% 214,613.00 0.04% (10,730.65) 5.00%
575,073,587.90 100% (1,830.55) 0.00% 557,335,688.32 100% (10,730.65) 0.00%
117
XIII Notes to the main items of financial statement of the Company (continued)
(2) Other receivables (continued)
(e) As at 30 June 2011, other receivables individually not significant but individually evaluated for
impairment are analysed below:
Assessment for
Amount Bad debt provision Rate impairment
ShenZhen Health Food I&E Co. Uncertainty in
Ltd. 1,157,860.00 (1,157,860.00) 100% recoverability
Aged over 3 years, high
Others 73,160.43 (69,653.95) 95% risk in recoverability
1,227,513.95 (1,227,513.95)
(f) As at 30 June 2011, there is no amount due from shareholders who holds more than 5%
(including 5%) shares of the Company (31 December 2010: nil).
(g) As at 30 June 2011, the top five other receivables by customers are analysed below:
Relationship % of the total
with the other
Company Amount Ageing receivable
Within 1
YuexingMedicine Subsidiary 126,148,469.66 year 21.55%
Within 1
SinopharmZhanjiang Subsidiary 104,710,116.60 year 17.89%
Within 1
SinopharmNanning Subsidiary 88,000,000.16 year 15.04%
Within 1
HengxingMedicine Subsidiary 53,478,000.09 year 9.14%
Within 1
GuangxiLogistics Subsidiary 46,928,739.45 year 8.02%
419,265,325.96 71.63%
(h) Other receivables due from related parties are analysed as below:
As at 30 June 2011, there are other receivables of RMB569,838,385.84 due from related party,
which is 97.36% of the total other receivables, without any bad debt provided.
(3) Long-term equity investments
30 June 2011 31 December 2010
Investments in subsidiaries (note a) 1,244,416,640.78 1,194,816,640.78
Investments in associates (note b) 80,490,540.36 85,275,251.06
1,324,907,181.14 1,280,091,891.84
Less: provision for impairment of
long-term equity investments (note c) (7,689,226.69) (7,689,226.69)
1,317,217,954.45 1,272,402,665.15
The long-term equity investments of the Company are not subject to restriction on conversion
into cash.
118
XIII Notes to the main items of financial statement of the Company (continued)
(3) Long-term equity investments (continued)
(a) Subsidiaries
Increases/(decreases) Equity interest Voting rights
Accounting method Original investment cost 31 December 2010 in investment cost 30 June 2011 held (%) held (%)
Zhijun Pharm Cost method 73,903,284.87 204,903,284.87 - 204,903,284.87 100 100
Jianmin Pharm Cost method 45,054,911.04 45,054,911.04 - 45,054,911.04 100 100
Accord Material Cost method 5,400,000.00 6,450,875.93 - 6,450,875.93 100 100
Accord Logistics Cost method 900,000.00 1,019,062.68 - 1,019,062.68 100 100
Sinopharm
Guangzhou Cost method 58,283,114.68 435,440,323.63 - 435,440,323.63 100 100
Zhijun Trade Cost method 3,006,866.42 3,006,866.42 - 3,006,866.42 100 100
Guangdong Hengxing' Cost method 8,421,544.08 15,763,288.00 20,000,000.00 35,763,288.00 100 100
Training center Cost method 30,000.00 30,000.00 - 30,000.00 100 100
Guangxi Accord Cost method 4,987,919.71 4,987,919.71 - 4,987,919.71 100 100
Sinopharm Liuzhou Cost method 21,407,965.79 21,407,965.79 - 21,407,965.79 51 51
Dongguan Accord Cost method 2,742,000.00 2,742,000.00 7,200,000.00 9,942,000.00 100 100
Huixin Investment Cost method 109,416,937.720 64,416,937.72 - 64,416,937.72 100 100
Hengchang Logistics Cost method 1,269,502.30 5,596,006.21 - 5,596,006.21 100 100
Yuexing Medicine Cost method 16,459,326.27 43,459,326.27 - 43,459,326.27 100 100
Sinopharm Foshan Cost method 6,995,065.51 6,995,065.51 8,000,000.00 14,995,065.51 100 100
Suzhou Wanqin Cost method 134,250,000.00 134,250,000.00 - 134,250,000.00 75 75
Sinopharm Nanning Cost method 33,048,985.28 104,048,985.28 - 104,048,985.28 100 100
Sinopharm Zhanjiang Cost method 1,369,864.65 1,369,864.65 14,400,000.00 15,769,864.65 100 100
Yanfeng Medical Cost method 38,207,800.00 38,207,800.00 - 38,207,800.00 51 51
Sinopharm Meizhou Cost method 4,481,900.00 4,481,900.00 - 4,481,900.00 100 100
Sinopharm Huizhou Cost method 5,644,200.00 5,644,200.00 - 5,644,200.00 100 100
Shenzhen Trade Cost method 7,689,226.69 7,689,226.69 - 7,689,226.69 100 100
Shenzhen Medicine Cost method 37,850,830.38 37,850,830.38 - 37,850,830.38 100 100
1,194,816,640.78 49,600,000.00 1,244,416,640.78
119
XIII Notes to the main items of financial statement of the Company (continued)
(3) Long-term equity investments (continued)
(b) Associates
Movement
Explanation for the
Addition or Equity inconsistence between
Accounting Initial investment 31 December Decrease in Share of profit or Dividend Other interest Voting rights equity interest held and
method cost 2010 investment loss declared movement 30 June 2011 held (%) held (%) voting rights held
Board of the directors is
the highest decision
making organization,
which is formed by 3
shareholders of Wanle
Medical evenly,and
each shareholder
Wanle appoints 2 directors to
Medical Equity method 4,457,400.00 85,275,251.06 - 12,810,289.30 (17,595,000.00) - 80,490,540.36 35.19 33.33 set up the board
85,275,251.06 - 12,810,289.30 (17,595,000.00) - 80,490,540.36
120
XIII Notes to the main items of financial statement of the Company (continued)
(3) Long-term equity investments (continued)
(c) Provision for impairment of long-term equity investments
Current Current
31 December period period 30 June 201
2010 additions disposals 1
Subsidiary
Shenzhen Trade 7,689,226.69 - - 7,689,226.69
(4) Sales and cost of sales
Six months ended 30 June
2011 2010
Revenue of main operations 943,364,252.68 876,932,409.59
Other operating income 3,389,179.76 1,887,626.51
946,753,432.44 878,820,036.10
Six months ended 30 June
2011 2010
Cost of main operations 900,549,886.73 837,353,345.51
Other operating expenses 971,712.28 517,483.85
901,521,599.01 837,870,829.36
(a) Revenue and cost of main operations
Analysed by industry:
Six months ended 30 June 2011 Six months ended 30 June 2010
Revenue of main Cost of main Revenue of Cost of main
operations operations main operations operations
Pharmaceutical
distribution 943,364,252.68 900,549,886.73 876,932,409.59 837,353,345.51
(b) Other operating income and expenses
Six months ended 30 June 2011 Six months ended 30 June 2010
Other operating Other operating Other operating Other operating
income expenses income expenses
Rental income 2,314,077.20 721,434.15 1,756,979.13 441,789.17
Rendering of
services 1,075,102.56 250,278.13 130,647 .38 75,694.68
3,389,179.76 971,712.28 1,887,626.51 517,483.85
121
XIII Notes to the main items of financial statement of the Company (continued)
(4) Sales and cost of sales (continued)
(c) Top five customers are analysed as follows:
The sales to the top five customers of the Company totaling to RMB208,964,366.60, which accounted for
22.07% of the total revenue from main operations. Details are set out below:
% of total revenue from
Sales main operations
Shenzhen People’s Hospital 53,974,007.75 5.70%
Shenzhen Second People’s Hospital 47,946,386.06 5.06%
Peking University Shenzhen Hospital 44,214,951.50 4.67%
Shenzhen Nanshan District People’s Hospital 32,145,262.18 3.40%
Guangdong Accord Drug Store Co., Ltd 30,683,759.11 3.24%
208,964,366.60 22.07%
(5) Investment income
Six months ended 30 June
2011 2010
Cash dividends declared by subsidiaries (a) 235,060,478.67 218,177,902.14
Share of profit in an associated company (b) 12,810,289.30 9,251,229.08
247,870,767.97 227,429,131.22
There is no significant restriction on the investment income remittance to the Company.
(a) Cash dividends declared by subsidiaries
Investment income from the top five investees are analysed as below:
Six months ended 30 June
2011 2010 Reason of Fluctuation
Profit increased result in investment
Zhijun Pharm 112,085,162.99 81,419,952.44 income increase
Profit decreased result in investme
Sinopharm Guangzhou 81,249,558.61 120,225,327.94 nt income decrease
Profit increased result in investment
Sinopharm Nanning 25,801,204.12 3,442,647.29 income increase
Profit decreased result in investme
Yuexing Medicine 5,900,495.08 6,098,357.24 nt income decrease
Profit decreased result in investme
Huixin Investment 2,709,832.32 3,997,155.94 nt income decrease
227,746,253.12 215,183,440.85
(b) Share of profit in an associated company
Six months ended Six months
30 June 2011 ended
30 June 2010 Reason of Fluctuation
Profit increased result in investment
Wanle Medical 12,810,289.30 9,251,229.08 income increase
122
XIII Notes to the main items of financial statement of the Company (continued)
(6) Notes to cash flow statement
(a) Reconciliation of net profit to cash flows from operating activities
Six months ended 30 June
2011 2010
Net profit 229,549,305.50 212,449,716.98
Add:
Provision for assets impairment 252,914.40 (2,085,972.11)
Depreciation of fixed assets 3,651,348.56 2,893,418.84
Amortisation of intangible assets 877,635.24 737,655.76
Amortisation of long-term prepaid expenses 424,564.89 16,515.36
Losses on disposal of fixed assets, intangible
250,055.35
assets and other long-term assets 800.00
Financial expenses 16,818,820.34 16,654,752.69
Investment income (247,870,767.97) (227,429,131.22)
Increase in deferred income tax assets (334,917.79) -
Decrease in inventories 337,532.80 4,357,441.13
Decrease in operating receivables 6,266,631.47 (41,879,871.99)
Decrease in operating payables (50,284,782.59) 135,726,335.42
Net cash flows from operating activities (40,061,659.80) 101,441,660.86
(b) Net increase in cash
Six months ended 30 June
2011 2010
Cash at end of period 239,018,666.86 118,507,341.56
Less: cash at beginning of period (135,498,819.87) (125,541,203.80)
Net increase in cash and cash equivalents 103,519,846.99 (7,033,862.24)
(c) Cash and cash equivalents
30 June 2011 31 December
2010
Cash at bank and on hand 239,018,666.86 135,498,819.87
Less: restricted other cash balance - -
Cash at end of period 239,018,666.86 135,498,819.87
123
I Non-routine items
Six months ended 30 June
2011 2010
Gains on disposal of non-current assets 631,360.46 1,817,154.82
Government grants 6,984,323.81 5,239,721.55
Net profit gained for the period from beginning of period
to the date of combination under common control - (2,233,891.98)
Receivables impairment reversal by individual
assessment 3,398,226.89 4,145,110.10
Other non-operating income/(expenses), net 6,775.621.56 (7,491.30)
17,789,532.72 8,960,603.19
Tax impact of above non-routine items (3,272,949.78) (2,104,620.40)
Share of minority interests of above non-routine items
after tax (1,047,847.27) (735,584.40)
13,468,735.67 6,120,398.39
Basis of preparation
According to the “Information Disclosures Requirement Interpretation for Listed Companies No.1 - non-routine
gain and loss”, non-routine gain and loss represent those gain or loss that are not related to the daily operation
of the Group or even if being related to the daily operation, separate disclosure of these items will help a better
understanding of results and profitability of the Group’s operation by considering their nature and frequency.
II Return on equity and earnings per share
Weighted average return on Earnings per share
equity (%) Basic earnings per share Diluted earnings per share
Six months Six month
ended Six months Six months Six months s ended 3 Six months
30 June 201 ended 30 ended 30 ended 30 0 June 20 ended 30
1 June 2010 June 2011 June 2010 11 June 2010
Consolidated net profit
attributable to the
shareholders of the
Company 14.55 13.16 0.57 0.41 0.57 0.41
Consolidated net profit
attributable to the
shareholders of the
Company, excluding
non-routine items 13.36 12.49 0.53 0.39 0.53 0.39
ⅩⅣ The authorisation of issuing the financial reports
Issuing the financial reports are authorised by all directors of the Group in August 18 2011.
Shenzhen Accord Pharmaceutical Company Limited by shares
18/08/2011
124
Section VIII. Documents Available for Reference
1. Accounting Statements carrying the signatures and seals of the legal representative, CFO
and person in charge of accounting;
2. Original all documents and notifications of the Company that disclosed in the report
period in Securities Times and Hong Kong Commercial Daily designated by CSRC;
3. Original 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, 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.
18 August 2011
