China National Accord Medicines Corporation Ltd.
Annual Report 2017
March 2018
Section I. Important Notice, Contents and Paraphrase
Board of Directors, Supervisory Committee, all directors, supervisors and senior
executives of China National Accord Medicines Corporation Ltd. (hereinafter
referred to as the Company) hereby confirm that there are no any fictitious
statements, misleading statements, or important omissions carried in this report,
and shall take all responsibilities, individual and/or joint, for the reality,
accuracy and completion of the whole contents.
Lin Zhaoxiong, Principal of the Company, Wei Pingxiao, person in charger of
accounting works and Wang Ying, person in charge of accounting organ
(accounting principal) hereby confirm that the Financial Report of 2017 Annual
Report is authentic, accurate and complete.
Other directors attending the Meeting for annual report deliberation except for
the followed
Name of director absent Title for absent director Reasons for absent Attorney
Xiao Shengfang Independent director Official business Xiong Chuxiong
Concerning the forward-looking statements with further plans and development
strategy involved in the Report, they do not constitute a substantial commitment
for the investors. Investors are advised to exercise caution of investment risks.
The possible risks and countermeasures are well-described, majority of the
investors please pay attention on review.
1.The management risk from continuous expansion of sales network of GuoDa
Drugstore. In recent years, the sales network of GuoDa Drugstore has been
maintaining a steady growth by means of opening new stores and inorganic
growth. Expansion on sales regions and an increase in the number of retail
stores have put pressure on store site selection, delivery, cash management,
marketing and human resources management. The Company will strengthen the
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management and construction in aspects of merchandise procurement, logistics,
distribution and sales, draw up management methods for each part, ensuring
unified standards and management quality for expanding retail stores. 2.The
growing risk from market competition. At present, the domestic medicine retail
market features relatively low concentration ratio and all the national and
regional medicine retail enterprises have been fiercely competing with each
other in the market. With relative policies issued by the government to
encourage the integration of medicine retail industry, the major medicine retail
enterprises within industry have been accelerating the paces of mergers and
acquisitions, continuing to expand the sales networks, improving the
construction of logistics centers, innovating the business and profit models,
continuously enhancing its sales scale and comprehensive strengths. Meanwhile,
with upgrading of consumption and stepwise development of the market, some
strong foreign capital medicine circulation enterprises have entered into the
domestic medicine circulation market by all means, which have been
intensifying the industry competition. Sinopharm Accord will integrate all
available resources, create a new development model driven by both wholesales
and retails, exert synergistic effects, take measures in respects of category
complementation, capital collaboration, supply chain synergy and international
development, directly face the patients and end users, realize global branding by
capital operation at the same time. 3.Risks from the changes of industry policy.
The development of medicine retail industry has been regulated and influenced
by relative national policies. The government has issued a series of documents
such as Good Supply Practice for Pharmaceutical Products and a trial method
of Classified Control System for Prescription and Non-prescription
Pharmaceuticals, which have proposed specific requirements on industry
operation. As medicine retail industry management standard has been enhanced
year by year in China, all these rules have been continuously revised and
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improved, which putting forward higher demands on enterprise operation.
In addition, with the promotion and implementation of new health-care policy
since 2009, the government has carried out various works in respects of essential
medicine system, public hospital reform and biding system for medicine
centralized procurement, moreover, the government has put forward several
policies to lower the upper limit of medicine retail price so as to reduce the
burden of people's basic drug costs. If policies that restrict the industry
development of retail drugstores, limit the product prices of retail drugstore or
influence the sales of retail drugstores during the implementation of new
medical reform, it is possible that GuoDa Drugstore will suffer a certain
challenge in operation and profitability. 4. Risks from the competition within
the industry. In medicine retail field, the distribution subsidiary of Sinopharm
Group has also opened up some social retail drugstores, competing with GuoDa
Drugstore (subordinate enterprise of the Company) to a extend. Sinopharm
Holding and SINOPHARM have been committed to take effective measures to
cope with every possible competition within industry.
The profit distribution plan that deliberated and approved by the Board is:
based on total stock issued 428,126,983 shares, distributed 3.00 Yuan (tax
included) bonus in cash for every 10-share hold by all shareholders, 0 shares
bonus issued (tax included) and no capitalizing of common reserves carried out.
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Contents
Section I Important Notice, Contents and Paraphrase .................................................................. 1
Section II Company Profile and Main Financial Indexes .............................................................. 7
Section III Summary of Company Business .................................................................................. 13
Section IV Discussion and Analysis of the Operation................................................................... 17
Section V Important Events ............................................................................................................ 42
Section VI Changes in shares and particular about shareholders .............................................. 72
Section VII Preferred Stock ............................................................................................................ 82
Section VIII Particulars about Directors, Supervisors, Senior Executives and Employees ..... 83
Section IX Corporate Governance ................................................................................................. 94
Section X Corporate-bond............................................................................................................. 103
Section XI Financial Report .......................................................................................................... 104
Section XII Documents available for reference ........................................................................... 324
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Paraphrase
Items Refers to Contents
Listed Company, Company, the Company,
Refers to China National Accord Medicines Corporation Ltd.
Sinopharm Accord, the Group
Sinopharm Refers to China National Pharmaceutical Group Corporation
Sinopharm Holding Refers to Sinopharm Group Co., Ltd.; Controlling shareholder of the Company
Company Law Refers to Company Law of the People’s Republic of China
Securities Law Refers to Securities Law of the People’s Republic of China
Yuan, 10 thousand Yuan, 100 million Yuan Refers to RMB, RMB 10 thousand, RMB 100 million
Terminology: Refers to
The first invoice refers to the invoice from the manufacturer to the
distributor, and the second invoice refers to the invoice from the
Two Invoices System Refers to distributor to the medical service provider. By this way, circulation
links have been greatly reduced and the number of distributors for
each medicine category shall not exceed two.
It is a kind of operation activity that the medical organization has
medicine enterprise with strong management ability and larger risk
appetites to operate and manage their drugstores in the form of
contracts with payment, which has clearly stated the relationship of
Pharmacy Trust Refers to right and duty between hospitals and pharmacy owners and operators,
ensuring preservation and appreciation of hospital and pharmacy
property and creating a kind of management activity with
considerable social benefit and economic benefit, under the condition
that there is no change in the ownership of drugstores
GPO Refers to Group purchasing organizations
Direct selling Refers to A sales method of selling drug to the hospital directly
GSP certificate Refers to Good Supply Practice certificate
That is CMS, and information system processing workflow &
Supply Chain Management Refers to
procurement, inventory & sales documents
Abbreviation: Refers to
Sinopharm Holding Guangzhou Refers to Sinopharm Holding Guangzhou Co., Ltd.
Guoda Drugstore Refers to Sinopharm Holding Guoda Drugstore Co., Ltd.
Sinopharm Holding Guangxi Refers to Sinopharm Holding Guangxi Co., Ltd.
Foshan Nanhai Refers to Foshan Nanhai Pharmaceutical Group Co., Ltd.
Nanfang Pharmaceutical Foreign Trade Refers to Guangdong Nanfang Pharmaceutical Foreign Trade Co., Ltd.
5
Main Luck Pharmaceuticals Refers to Shenzhen Main Luck Pharmaceuticals Inc.
6
Section II. Company Profile and Main Finnaical Indexes
I. Company information
Short form of the stock Sinopharm Accord ; Accord B Stock code 000028, 200028
Stock exchange for listing Shenzhen Stock Exchange
Name of the Company (in
国药集团一致药业股份有限公司
Chinese)
Short form of the Company
国药一致
(in Chinese)
Foreign name of the Company
China National Accord Medicines Corporation Ltd.
(if applicable)
Short form of foreign name of
Short form of foreign name of the Company (if applicable) Sinopharm Accord
the Company (if applicable)
Legal representative Lin Zhaoxiong
Registrations add. Accord Pharm. Bldg., No. 15, Ba Gua Si Road, Futian District, Shenzhen, Guangdong Province
Code for registrations add 518029
Offices add. Accord Pharm. Bldg., No. 15, Ba Gua Si Road, Futian District, Shenzhen, Guangdong Province
Codes for office add. 518029
Company’s Internet Web Site http://www.szaccord.com.cn
E-mail gyyz0028@sinopharm.com
II. Person/Way to contact
Secretary of the Board
Name Chen Changbing
Accord Pharm. Bldg., No. 15, Ba Gua Si Road, Futian District, Shenzhen,
Contact add.
Guangdong Province
Tel. +(86)755 25875195；+(86)755 25875222
Fax. +(86)755 25195435
E-mail gyyzinvestor@sinopharm.com
III. Information disclosure and preparation place
Newspaper appointed for information disclosure Securities Times; China Securities Journal; Hong Kong Commercial Daily
Website for annual report publish appointed by CSRC http://www.szse.cn; http://www.cninfo.com.cn
Preparation place for annual report Secretariat of the Board of Directors
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IV. Registration changes of the Company
Organization code 19218626-7
Changes of main business since listing (if
No change.
applicable)
Previous changes for controlling
No change.
shareholders (if applicable)
V. Other relevant information
CPA engaged by the Company
Name of CPA Ernst & Young CPA (Special General partnership)
Offices add. for CPA 21/F, China Resources Building, No. 5001, Shennan East Road, Luohu District, Shenzhen
Signing Accountants Li Jianguang, Yan Ping
Sponsor engaged by the Company for performing continuous supervision duties in reporting period
□ Applicable √ Not applicable
Financial consultant engaged by the Company for performing continuous supervision duties in reporting period
√Applicable □Not applicable
Name of the financial Offices add. for the financial
Financial advisor Continuous supervision period
consultant consultant
27/F-28/F, Building 2,
China International Capital International Trade Mansion,
Zhang Lei, Chen Chao 2017-2018
Corporation Limited No.1 Jianguomen Outer Street,
Beijing
VI. Main accounting data and financial indexes
Whether it has retroactive adjustment or re-statement on previous accounting data
√ Yes □No
Retroactive adjustment or reasons of re-statement
Enterprise merger under the same control
Changes
2016 over last 2015
2017 year
Before the After the After the Before the After the
adjustment adjustment adjustment adjustment adjustment
Operating income
0.04%
(RMB) 41,263,629,118.85 41,248,429,322.91 41,248,341,665.46 37,819,277,959.01 37,830,587,448.53
Net profit attributable
1,057,791,930.67 1,186,601,899.27 1,186,539,201.93 -10.85% 927,610,234.41 929,120,385.13
to shareholders of the
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listed company
(RMB)
Net profit attributable
to shareholders of the
listed company after
1,035,461,581.00 834,359,349.80 834,359,349.80 24.10% 709,923,823.36 709,923,823.36
deducting non-
recurring gains and
losses (RMB)
Net cash flow arising
from operating 1,285,291,911.82 1,472,545,587.85 1,472,342,476.16 -12.70% 1,457,416,143.80 1,628,881,174.94
activities (RMB)
Basic earnings per
2.47 2.80 2.80 -11.79% 2.19 2.20
share (RMB/Share)
Diluted earnings per
2.47 2.80 2.80 -11.79% 2.19 2.20
share (RMB/Share)
Return on Equity 11.91% 15.06% 15.05% -3.14% 13.43% 13.40%
Changes
End of 2016 over end of End of 2015
End of 2017 last year
Before the After the After the Before the After the
adjustment adjustment adjustment adjustment adjustment
Total assets (RMB) 4.82%
22,343,643,527.77 21,312,754,511.97 21,316,548,247.95 20,313,335,694.54 20,362,562,254.72
Net assets attributable
to shareholder of
9,396,572,345.88 8,450,150,621.93 8,452,426,863.52 11.17% 7,352,924,544.29 7,381,133,140.87
listed company
(RMB)
Note: In October 2016, the Group sales the overall operational assets of Pingshan Medical R&D Based and 51%
equity respectively of three subordinate medical industry subsidiaries (including Zhijun Pharmaceutical, Zhijun
Medical Trading and Pingshan Pharmaceutical) by means of shares subscription, that is the 15.56% new shares
issued by related party- Modern Pharmaceutical. Correspondingly, profit statement and cash flow statement under
the name of the above mentioned three industrial companies recorded from January to October of 2016, are
included in the comparative statement in aspect of consolidate profit statement and cash flow statement of the
period.
VII. Difference of the accounting data under accounting rules in and out of China
1. Difference of the net profit and net assets disclosed in financial report, under both IAS (International
Accounting Standards) and Chinese GAAP (Generally Accepted Accounting Principles)
□ Applicable √ Not applicable
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The Company had no difference of the net profit or net assets disclosed in financial report, under either IAS (International
Accounting Standards) or Chinese GAAP (Generally Accepted Accounting Principles) in the period.
2. Difference of the net profit and net assets disclosed in financial report, under both foreign accounting
rules and Chinese GAAP (Generally Accepted Accounting Principles)
□ Applicable √ Not applicable
The Company had no difference of the net profit or net assets disclosed in financial report, under either foreign accounting rules or
Chinese GAAP (Generally Accepted Accounting Principles) in the period.
VIII. Quarterly main financial index
In RMB
First quarter Second quarter Third quarter Fourth quarter
Operating income 10,222,459,812.55 10,302,347,857.02 10,753,911,112.98 9,984,910,336.30
Net profit attributable to
272,564,318.71 283,560,999.48 246,977,990.75 254,688,621.73
shareholders of the listed company
Net profit attributable to
shareholders of the listed company
271,249,398.43 275,003,991.57 244,923,007.75 244,285,183.25
after deducting non-recurring gains
and losses
Net cash flow arising from
-502,263,276.11 730,600,707.51 282,746,006.48 774,208,473.94
operating activities
Whether there are significant differences between the above-mentioned financial index or its total number and the relevant financial
index disclosed in the company’s quarterly report and semi-annual report
□ Yes √ No
IX. Items and amounts of extraordinary profit (gains)/loss
√Applicable □ Not applicable
In RMB
Item 2017 2016 2015 Note
Gains/losses from the disposal of non-
The gains from fixed
current asset (including the write-off that -203,279.86 11,931,729.24 5,863,107.27
assets disposal
accrued for impairment of assets)
Governmental subsidy reckoned into current Mainly for receiving
gains/losses (not including the subsidy 26,854,027.03 34,000,702.25 34,025,749.62 of all kinds of special
enjoyed in quota or ration according to subsidies and fiscal
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national standards, which are closely interest discount in the
relevant to enterprise’s business) period.
Investment costs while acquiring
subsidiaries, joint ventures and associated Negative goodwill
enterprise, less than fair value of the 58,022.12 from subsidiary
identifiable net assets from invested acquisition
enterprise which should be enjoined
The current net
gains/losses (from
period-beginning to
combination date) of
Current net gain/losses of the subsidiary the Sinopharm
merger under the same control from -1,096.00 260,423,077.82 250,406,618.44 Lerentang
beginning of the period to combination date Shijiazhuang
Medicine Co., Ltd.
which purchased by
enterprise combined
under the same control
Switch back of provision for depreciation of
account receivable which was singly taken 1,642,360.26 5,952,565.52 7,421,904.86
depreciation test
The gains obtained
from offering entrust
Gains and losses on foreign entrusted loans 1,907,519.89 2,880,583.33 loans to China
National Zhijun
(Suzhou)
Consigning fee received for consigned
393,081.77 750,000.00
operation
Other non-operating income and expenditure
377,281.07 6,300,281.94 19,155,803.67
except for the aforementioned items
Gains of the remainder re-measured by faire
35,080,116.91
value after losing the right of control
Investment income from long-term equity
86,674,065.35
investment disposal
Remeasurement of original equity under fair
value method to confirm investment income 134,740.70
after step-by-step purchase of subsidiary
Less: Impact on income tax 6,690,220.38 28,392,824.03 11,848,624.93
Impact on minority shareholders’
1,749,005.16 63,063,527.97 86,577,997.16
equity (post-tax)
Total 22,330,349.67 352,179,852.13 219,196,561.77 --
Concerning the extraordinary profit (gain)/loss defined by Q&A Announcement No.1 on Information Disclosure for Companies
Offering Their Securities to the Public --- Extraordinary Profit/loss, and the items defined as recurring profit (gain)/loss according to
the lists of extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their
Securities to the Public --- Extraordinary Profit/loss, explain reasons
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□ Applicable √ Not applicable
In reporting period, the Company has no particular about items defined as recurring profit (gain)/loss according to the lists of
extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their Securities to
the Public --- Extraordinary Profit/loss
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Section III. Summary of Company Business
I. Main businesses of the company in the reporting period
Whether the company needs to comply with the disclosure requirements of the particular industry
Reference disclosure
Retailing industry
The Company complies with the disclosure requirement of “Information Disclosure Guidelines for the Shenzhen Stock Exchange
No. 8- Listing Company Engaged in Retailing Industry”
In the reporting period, the main business of China National Accord Medicines includes pharmaceutical
distribution, pharmaceutical retail and pharmaceutical industry, specifically as follows:
(I) In the pharmaceutical distribution field, the company continues to integrate the distribution and logistics
business, deeply penetrates into the end markets, improves the multistep distribution network, creates intelligent
supply chain, and devotes to become a provider for pharmaceutical and healthcare products and services with the
strongest influence, the highest share, the most complete variety, the best service, and the fastest delivery in south
district of China.
1. The Company’s pharmaceutical distribution business is established in Guangdong and Guangxi, the company
has completed the network construction of Guangdong and Guangxi in 2013, and the business has extended to the
county-level regions; the Company achieved an operation all over the network in 214 and 2015 by speeding up the
integration of regional companies, moreover, the distribution network has further expansion in 2016 and 2017,
including: 1660 A-grade hospitals, 3348 community-oriented primary cares and 1447 retail terminal clients.
2. The Company’s pharmaceutical distribution business has achieved the first scale in Guangdong and Guangxi
and the leading position in market segment of Guangdong and Guangxi, and has obtained the relatively leading
position in vaccine, instrument, and e-commerce industries.
(II) In the pharmaceutical retail field, Guoda Drugstore is a pharmaceutical retail enterprise that ranks the first in
the sales volume throughout the country, and is one of the few enterprises in China with national direct sales drug
retail network. The retail chain network of Guoda Drugstore spreads over 19 provinces, autonomous regions and
municipalities, covers nearly 70 large and medium-sized cities,.
By the end of 2017, Guoda Drugstore has operated 3,834 stores, covering 19 provinces, autonomous regions and
municipalities, entering nearly 70 large and medium sized cities, which has formed a drugstore networks covering
eastern and northern China, southern coastal cities, and gradually expanded into northeast, central plains and
inland cities, the sales scale of which has exceeded 10 billions, ranking the first within industry. Guoda , the
business of which were mainly relying on modern retail drugstores, has been putting great attention on the
development of professional service system with medical resources as core competitiveness, building a group of
stores with professional commercial activities, which are able to provide retails and therapy services that
integrating medical service and health-care products sales and cooperate with hospitals; at the same time, the
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Company has been vigorously developing new business, exploring and expanding new sales channels, improving
professional services, being dedicated to transit from a traditional medical retail into an innovative service
enterprise. By means of conventional products retail management, improving major brands and exploring business
cooperation with supplier, accelerating the establishment of DTP business and continuous health care service
system, Guoda has built industry-leading professional service ability. Besides, the leading scale of Guoda is
regarded as one of the core competitiveness, for the reason that the advantage in scale has reduced its procurement
cost and enhanced its negotiation advantages.
II. Major changes in main assets
1. Major changes in main assets
Major assets Note of major changes
Equity assets Increased 237.5852 million Yuan over that of period-begin with 16.65% rate of change,
mainly the investment income from joint ventures..
Increased 64.7008 million Yuan over that of period-begin with 13.29% rate of change,
Fixed assets mainly because the logistic system transfer to fixed assets and purchasing office building
by the subsidiary
Increased 5.316 million Yuan over that of period-begin with 1.66% rate of change,
Intangible assets mainly because purchasing system software in the period and established B2B E-
commerce platform
Decreased 24.1166 million Yuan over that of period-begin with -51.24% rate of change,
Construction in progress mainly because the ERP project completed and new warehouse transfer-out for
completed the acceptance check
Increased 63.8693 million Yuan over that of period-begin with 33.90% rate of change,
Long-term deferred expenses mainly because the ERP project completed and new warehouse transfer-in for completed
the acceptance check
Increased 47.373 million Yuan over that of period-begin with 50.05% rate of change,
Other non current assets
mainly due to the investment of China National Zhongjin Medical Industry Fund
2. Main overseas assets
□ Applicable √ Not applicable
III. Core competitiveness analysis
Whether the company needs to comply with the disclosure requirements of the particular industry
Reference disclosure
Retailing industry
As an enterprise with both wholesale and retail business, Sinopharm Accord has the following competitive
advantages:
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1. Strong network coverage and layout
Take the lead in scale and cover the countrywide retail network: Guoda Drug Store is a pharmaceutical retail
enterprise with sales volume ranking first for five consecutive years throughout the country, established 28
regional chain enterprises, with retail network spreading over 19 provinces and municipalities and autonomous
regions and covering nearly 70 cities.
Leading layout and complete distribution network in Guangdong and Guangxi: the company has complete
pharmaceutical distribution networks in Guangdong and Guangxi, which comprehensively cover the medical
institutions above second grade and the large-scale chain drugstores in Guangdong and Guangxi, and provide drug
distribution services for numerous drugstores, community health care service networks, clinics and the third
terminals represented by new rural cooperative medical system. The company is a leading provider of drug
distribution and supply chain services in Southern China.
2. Abundant variety resources
Guoda Drug Store operates nearly 120,000 merchandises. With its relatively comprehensive purchasing network
and years of experience in commodity management, Guoda Drug Store has established a merchandise system with
wide coverage, high professionalization, and rich varieties.
In the pharmaceutical distribution, the company has established extensive cooperative relations with thousands of
domestic manufacturers and commercial enterprises and established stable business relationships with hundreds of
import and joint venture manufacturers, and has rich variety resources.
3. Complete logistics and distribution system
Guoda Drug Store has a nationwide modern logistics and distribution system, and has established the logistics and
distribution network covering all the stores throughout the country, including Shanghai National Logistics Center
and 23 provincial and municipal distribution centers.
Accord distribution adopts supply chain management and warehouse management solutions system, it has built
large-scale first-grade logistics centers in Guangzhou, Nanning, Shenzhen and other places and established
distribution centers in Guangdong and Guangxi which has formed ladder logistics and distribution networks, it is
the first enterprise in Guangdong and Guangxi that has achieved the third-party logistics qualification and has the
professional pharmaceutical logistics capabilities with the largest scale, the most extensive network, and the most
complete modes in southern China.
4. The advantages of medical insurance resources
Regarding medicine retails, the subsidiaries of Guoda Drugstore have featured generally higher medical insurance
acquiring ability, with higher medical insurance sales ratio and steady operation.
5. The advantages of Compliance: the Company had a big lead
under an increasingly stringent regulatory environment for the reason that it has kept emphasizing legalization and
compliance in the process of operation and management.
6. Unique-influence Sinopharm brand
Brand of the Company and distribution, industry child-brand and controlling shareholder and actual controller’s
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brand come down in one continuous line, depending on powerful force of central enterprises, the Company’s
popularity and influence are prominent day by day in the industry.
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Section IV. Discussion and Analysis of Business
1. Introduction
In the year of 2017, one of the most challenging years, Sinopharm Accord Corporation Ltd. was faced with a
historical opportunity of strategic restructuring and great reform in medicine industry. On one hand, the Company
has been based on traditional business, growing excellent and strong, seeking for breakthrough with constantly
innovative models. On the other hand, the Company has taken challenges from the market in the form of
organization transformation, business innovation and cultural drive. With the construction and motivation of new
structure, new model and new business, the Company has realized the goal of making progress from innovation
that set at the beginning of the year.
(I) The overview of the development of macro economy and medicine industry
In 2017, the total amount of GDP in China exceeded 82 trillion Yuan, with full-year growth seen at 6.9 percent
(Data source: State Statistics Bureau). The economy of China held up well as a whole and the macro economy has
been transit from high speed growth stage to high quality development stage. Focusing on the medicine industry
where Company was located, it featured acceleration in plate split and co-existence between difficulties and
opportunities:
(1)The health input from the government has been increased ever year. The fiscal budget on national medical and
health-care expenditure of 2017 was seen at 1.4 trillion Yuan (Data source: ministry of finance) , which was 4.4
times as much as that before the start of medical reform in 2008, and the ratio of medical and health-care
spending in total national fiscal expenditure was up to 7.2 percent;
(2)The market featured vast capacity and there were great potential in its segments. By the end of 2016, the
medical and health-care industry market in China had reached approximately 5.6 trillion Yuan (Data source: big
data base of CISource), and the market structure was as below:
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(3)The split in regional business format of medicine industry has been accelerated. During the reporting period,
the general growth of distribution has been slowing down, but it has still been maintaining corresponding growth
with competitors in Guangdong and Guangxi provinces; in retail plat, the Company started a program as
producted an streategy investor (“Walgreens Boots Alliance”) leading international industry, in the future, the
Company will introduce mergers and acquisitions for boosting development.
(4)Constantly issued medicine policies have posed a great challenge for medicine enterprises.
The year of 2017 was one of the most important years for medicine policies. By the end of that year, national and
regional authorities have successively issued over 2,000 medicine and health-care industry related policies and
administrative orders, including “two invoice system”, “pharmacy trust”, implementation of “GPO”, and “bidding
price reduction”. All the above policy factors combined with market factors have brought a great challenge for
enterprise development.
(II)The business condition of the Company in 2017
In 2017, the Company achieved operation revenue of 41.264 billion Yuan with 0.04% growth on a y-o-y basis;
the net profit attributable to shareholder of listed company has 1.058 billion Yuan, a 10.85% down from a year
earlier. Decrease of net profit attributable to parent company mainly caused by the major assts reorganization
occurred in October 2016, the comparative statement has the data (recorded from January to October 2016) under
the name of three industrial companies which have been replace-out. Except the factor, operation revenue has 3.01%
growth on a y-o-y basis and the net profit attributable to parent company has growth of 9.08%. 1. Distribution
business:
During the reporting period, the distribution business of the Company has gained revenue of 31.522 billion Yuan,
with year-on-year growth of 1.24 percent, among which, the net margin was seen at 640 million Yuan, rose 5.99
percent from a year earlier. Affected by the factors as two invoices system, competitive hospital trust, GPO and
depreciation in medicine category, the sales growth of distribution has been slowing down, and total amount of
sales affected in 2017 cumulated was 3.3 billion Yuan, growth range of the business shrink down.
During the reporting period, the income growth of distribution innovation business has enjoyed a sound
momentum, and its year-on-year growth of sales volume increased by 18.33 percent, accounting for 30.95 percent
of its total income, among which, the medical cooperation, medical devices and retail business have contributed a
revenue of 5.3 billion Yuan, with year-on-year growth of 21.43 percent. During the reporting period, the revenue
of distributor-owned drugstores has been up to 574 million Yuan, with year-on-year growth of 34 percent, among
which, there are 24 DTP drugstores, seven in-hospital cooperation drugstores and nine hospital surrounding
drugstores.
2. Retail business:
During the reporting period, Guoda Drugstore have earned a revenue of 10.031 billion Yuan in its retail business,
with year-on-year growth up to 10.11 percent, making a net profit of 262 million Yuan, increased 17.57 percent
from a year earlier. net profit attributable to owners of parent company amounted as 192 million Yuan, a 16.10%
gwoth on a y-o-y basis. Separately in commercial activity, the shares of direct selling and conventional business
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as well as DTP sales have been increased, driving the rising of overall revenue. Among which, the revenue from
direct selling and conventional business has reached 6.43 billion Yuan, with year-on-year growth up to 12.47
percent, with share rising by 1.38 percent; the revenue from DTP sales was seen at 1.22 billion Yuan, with year-
on-year growth of 20.33 percent and share increased by 1.06 percent; the number of regions that developing OTO
business has been increased to thirteen and OTO sales has gained a sales revenue of 210 million Yuan, with year-
on-year growth up to 127.65 percent.
During the reporting period, the Company has made a new record on expanding new stores and the quality of the
stores have been much better than that of the same period.
During the reporting period, Guoda Drugstore has taken active efforts to explore new store type and drastically
improved the quality of the stores. Stores surrounding the hospitals are the bridgehead to seize prescription drain.
By the end of 2017, Guoda Drugstore has opened up 253 stores surrounding hospitals. During the reporting period,
it has opened up 53 new stores surrounding hospitals (28 stores among which supporting medical insurance
business), and 16 stores surrounding hospitals have achieved accumulative profits.
During reporting period, Guoda Drugstore have brought new forth to its business model and strengthened refined
management. E-commercial business has earned a revenue of 247 million Yuan (tax included), with year-on-year
growth up to 118 percent; commercial insurance business has earned a revenue of 135 million Yuan (tax included),
increased by 49 percent from a year earlier, with a gross profit of 40 million Yuan; the sales income from pre-paid
cards has reached 82.98 million Yuan (tax included),with year-on-year growth up to 19 percent; the total amount
of mobile payment was up to 860 million Yuan (tax included), increased by 365 percent from a year earlier.
19
The Company complies with the disclosure requirement of “Information Disclosure Guidelines for the Shenzhen Stock Exchange
No. 8- Listing Company Engaged in Retailing Industry”
1. The business activities of entity management and business condition of stores during the reporting period
By the end of 2017, Guoda Drugstore has opened up 2801 direct-sale stores, with total revenue up to 7.83 billion
Yuan, increased by 15.8 percent from a year earlier, comparable stores increased by 5.0 percent year-on-year and
it also has 1033 franchised stores, which has earned 1.01 billion Yuan of distribution revenue, with year-on-year
growth of 14.1 percent.
Region Direct-sale store Franchised outlet
Numbers of Sales income y-o-y Turnover Numbersof the Dispatching y-o-y
the store (in 10 thousand from one store income
Yuan) square (10 thousand
meter Yuan)
North 1278 399,936 18.4% 2167 286 40,946 25.2%
East China 735 189,669 13.2% 1997 595 48,606 6.3%
South 366 111,675 14.6% 1510 58 7,118 7.5%
China
Central 230 40,277 15.5% 1283 94 4,438 23.7%
China
Northwest 192 41,686 7.5% 1612 - - -
Total 2801 783,243 15.8% 1949 1033 101,109 14.1%
Note: North: Liaoning, Shanxi, Inner Mongolia, Beijing, Tianjin, Hebei
East China: Shanghai, Jiangsu, Anhui, Shandong, Fujian, Zhejiang
South China: Guangdong, Guangxi
Central China: Henan, Hunan
Northwest: Ningxia Xinjiang
(1) Details of top ten sales stores
No Region Store Name Address Opening Operating Business Actual Property
Year Mode Activity Dimension(unit: Belonging
square meters)
1 Inner Headquarter No. 65 Tongdao north street, 2003 Direct-sale 5+X 1,689 Rental
Huimin District, Huhhot (1F,
Mongoli
2F)
an
2 YiYuan Zhongli Opposite of outpatient 2002 Direct-sale 5+X 820 Rental
Branch department, first affiliated
hospital of Shanxi Medical
University, No. 88, Jiefang
South Rd.
3 Hebei Le Ren Tang 1F, No. 57 NanYuan Street 2010 Direct-sale Traditional 1,206 Rental
Chinese
Headquarter
Medicine
outpatient
20
store
4 Jinxiang Xidan Jinxiang No. 114 Beidajie, Xidan, 1997 Direct-sale Modern 773 Rental
Pharmacy
Xicheng District, Beijing
5 Yangzho Jiangsu No. 511 Wenchang Middle Rd. 1991 Direct-sale Modern 620 Rental
Pharmacy
u Baiyulan
6 Shenyan Zhongjie No. 83 Rd, Zhongjie Rd, Shenhe 2002 Direct-sale Traditional 1,300 Rental
Chinese
g district
Medicine
outpatient
store
7 Xiamen Xiamen No.14 store of Zhenhai Garden, 2005 Direct-sale Modern 133 Rental
Xinteyao No. 97 Zhenhai Rd. Pharmacy
8 YiYuan E Yuan Branch On the opposite of second 2011 Direct-sale 5+X 600 Rental
affiliated hospital of Shanxi
Medicine University, No.232
Wuyi Rd.
9 Shanxi TaiYuan No. 255 Jiefang Rd. 2003 Direct-sale 5+X 1,560 Rental
Jiefang TaiYuan(current house number
is No. 89)
10 Jiangme Donghu Center No.12 First Road, Gangkou, 1990 Direct-sale Traditional 570 Rental
n Store Jiangmen Chinese
Medicine
outpatient
store
（2） In 2017, the Company has opened 432 new direct-sale stores and closed 135 stores, with a net increase of
297 stores, 39,989 square meters of opening areas, approximately 200 million Yuan of net sales volume.
Region Direct-sale store Franchised outlet
Number of store Total area Number of Number of store Number of stores
increased stores shut down increased shut down
North 241 32,091 67 81 15
East China 77 7,815 22 11 54
South China 52 5,974 26 8 10
Central China 33 4,814 7 16 2
Northwest 29 3,453 13 - -
Total 432 54,146 135 116 81
2. The on-line sales in 2017 has been carried out steadily. Since the Company has started to establish on-line sales
platform on its own from October, two subsidiaries have been launched and there will be ten subsidiaries
launching in succession in 2018; meanwhile, the third-party platforms have still taken a major share of the on-line
sales, details as below:
In 10 thousand yuan
Cooperation platform Trading Volume Business revenue
T-Mall (Sinopharm On-line) 22,644 2,491
Yaofangwang (www.yaofangwang.com) 911 97
21
Yiyaowang (www.111.com.cn) 389 44
JD daojia (http://daojia.jd.com) 367 120
800FANG.CN 56 11
(www.800pharm.com)
Meituan Waimai 30 13
(waimai.meituan.com)
Yaopin Daojia 11 5
ele.me 2 1
(www.ele.me/home)
3.The condition of procurement and inventory in headquarter and suppliers: in 2017, the total amount of
procurement (tax included) in headquarter was up to 1.351 billion Yuan and the inventory costs reached 103
million Yuan. The details are as below:
In 10 thousand yuan
Category Purchasing Amount (tax included) Inventory Cost Amount in 2017
Health-care food 9,567 915
Convenience food 15 1
kids 3,520 336
Gynecology 1,023 113
Liver and gall 2,123 337
Cold 4,122 302
Personal care 576 92
Orthopedics 1,165 105
Respiratory 1,450 236
Household 19 3
Family health 5,431 554
Antipyretic analgesicss 1,002 71
Anti-infection 2,500 246
Antiallergic and antivertigo 482 74
Genitourinary 6,189 498
Internal secretion 2514 168
Other efficacy 58,960 2,053
Clearing heat and detoxitating 2,021 409
Neurology 1,488 174
Drugs for external use 7,648 1,028
Vitamin-mineral 1,407 236
Drugs for otolaryngology 2,937 313
22
Digestive system 2,891 321
cardiovascular and cerebrovascular 7,737 783
Chinese herbal pieces 3,576 483
Nourishing food 4,755 420
Total 135,118 10,270
Top 5 suppliers:
In 10 thousand yuan
Supplier Purchase amount (tax included) Ratio of the purchase
amount
Shanghai Roche Pharmaceuticals Ltd. 39,905 30%
Shanghai Yi-An Pharmaceutical Co., Ltd. 10,445 8%
Jiangsu Xiansheng Pharmaceutical Co., Ltd. 7,127 5%
China National Medicines Corporation Ltd. 6,718 5%
BY-HEALTH Pharmaceutical Co. Ltd. 6,696 5%
4. The status of warehousing logistics:
In 2017, Guoda Drugstore has 27 large and small sized logistic warehouses in total, covering more than 110,000
square meters, spreading out across 17 provinces. The inventory management of Guoda was in the charge of
commodity department, which has been monitoring the inventory status of headquarters and subsidiaries, and
managing inventory by month, providing reports on inventory analysis and management and giving advice on
optimizing inventory structure, while the operational department has been in charge of tracing the achievement of
inventory circulating index as well as providing business inventory assess data; the procurement department has
been responsible for making reasonable replenishment, ensuring smooth and steady supply channels, and making
an effective control of commodity inventory turnover while ensuring the fill rate of enquiry, and it also had to
handle dead stocks and valid goods every month.
Province Reginal Area (in square Management Load standards Logistic charge in Rate
enterpreise meters) ownership 2017
(in 10 thousand
Yuan)
Liaoning Shenyang 14,200 Self-directed 1,146 0.86%
Guangdong Guangzhou 5,000 Guangzhou 628 0.92%
Hengchang
Shanzhen
Logistic entrusted
Jiangmen 5,432 Self-directed 444 1.84%
Shanxi Shanxi 5,214 Self-directed Full load 751 1.05%
Wanmin
Shanxi Yiyuan 4,350 Self-directed Full load 523 0.75%
Jiangsu Dadesheng 4,840 Self-directed 280 1.03%
23
Nanjing 3,700 Self-directed(rente 224 1.82%
by minority
shareholder )
Liyang 3,840 Self-directed 185 1.08%
Fujian Fujian 2,395 Self-directed Full load 262 0.97%
Quanzhou 1,100 Self-directed 50 0.88%
Hebei Hebei 3,772 Self-directed 400 0.72%
Shandong Shandong 5,800 Self-directed(Rent 383 1.43%
in system)
Ningxia Ningxia 3,330 Self-directed 288 1.34%
Hunan Hunan 3,353 Self-directed 291 1.32%
Henan Henan 3,500 Self-directed(Rent 327 1.44%
in system)
Inner Mongolia Inner Mongolia 1,870 Self-directed 324 0.90%
Guangxi Guangxi 1,950 Self-directed Full load 230 1.15%
Beijing Beijing Guoda 4,943 Self-directed 776 1.29%
Jinxiang
Tianjin Tianjin 1,700 Self-directed 122 1.36%
Anhui Anhui 1,000 Self-directed 91 1.47%
Xinjiang Xinjiang 3,842 Self-directed 243 1.20%
Shanghai Fumei 17,067 Self-directed 2,631 1.49%
Shanghai
Guoda
Hangzhou
HQ 8,000 Sinopharm
Logistic entrusted
Total 110,198 —— 10,599 1.13%
5. Most of commodity suppliers of Guoda Drugstore are from external, with some relative enterprises and private
own brand of Sinopharm Group as auxiliary. At present, the sales of private owned brand of Guoda Drugstore has
been remained in a stage of exploratory and beginning. The sales of 2017 were as below:
In RMB
Private brand Property Category Turnover (tax included) Ratio
a Group-buying OEM Pesonal care 1,297 0.00%
b Group-buying OEM Family health 994,044 0.26%
c Group-buying OEM Refined drink 273,268 0.11%
┈ Total 1,268,609 0.15%
II. Main business analysis
1. Note
Found more in I. Introduction in Discussion and Analysis of Business
24
2. Revenue and cost
(1) Constitute of operation revenue
In RMB
2017 2016
Increase/decrease y-
Ratio in operation Ratio in operation
Amount Amount o-y
revenue revenue
Total of operation
41,263,629,118.85 100% 41,248,341,665.46 100% 0.04%
revenue
According to industries
Medicine wholesale 31,022,967,423.15 75.18% 30,982,394,963.30 75.11% 0.13%
Medicine retail 9,892,835,784.75 23.97% 8,761,101,587.23 21.24% 12.92%
Pharmaceutical
0.00 0.00% 1,174,241,370.22 2.85% -100.00%
manufacturing
Logistic & storage
29,568,712.15 0.07% 20,551,062.91 0.05% 43.88%
service
Lease and other 318,257,198.80 0.78% 310,052,681.80 0.75% 2.65%
According to products
Medicine 39,683,832,010.20 96.17% 40,238,426,935.39 97.55% -1.38%
Apparatus 1,125,368,079.05 2.73% 678,860,843.04 1.65% 65.77%
Other 454,429,029.60 1.10% 331,053,887.03 0.80% 37.27%
According to region
Domestic revenue 41,263,629,118.85 100.00% 41,193,952,679.88 99.87% 0.17%
Foreign revenue 54,388,985.58 0.13% -100.00%
(2) About the industries, products, or regions accounting for over 10% of the company’s operating income
or operating profit
√Applicable □ Not applicable
Whether the company needs to comply with the disclosure requirements of the particular industry
Reference disclosure
Retailing industry
In RMB
Increase/decrease Increase/decrease Increase/decrease
Operating revenue Operating cost Gross profit ratio of operating of operating cost of gross profit
revenue y-o-y y-o-y ratio y-o-y
According to industries
Medicine
31,022,967,423.15 29,315,028,286.33 5.51% 0.13% -0.02% 0.14%
wholesale
25
Medicine
9,892,835,784.75 7,457,091,704.13 24.62% 12.92% 12.90% 0.01%
retail
According to products
Medicine 39,683,832,010.20 35,629,437,791.07 10.22% -1.38% -0.95% -0.38%
According to region
Domestic
41,263,629,118.85 36,819,552,915.80 10.77% 0.17% 0.58% -0.37%
revenue
Under circumstances of adjustment in reporting period for statistic scope of main business data, adjusted main business based on
latest one year’s scope of period-end
□Applicable □Not applicable
(3) Income from physical sales larger than income from labors
Yes
(4) Fulfillment of the company’s signed significant sales contracts up to this reporting period
√Applicable □ Not applicable
Yes
Retailing industry
(5) Constitute of operation cost
In RMB
2017 2016
Increase/decrea
Industries Item Ratio in operation Ratio in
Amount Amount se y-o-y
cost operation cost
Medicine
Sales cost 29,315,028,286.33 79.62% 29,319,921,602.61 80.00% -0.02%
wholesale
Medicine retail Sales cost 7,457,091,704.13 20.25% 6,605,050,729.00 18.02% 12.90%
Pharmaceutical
Sales cost 0.00% 677,553,586.23 1.85% -100.00%
manufacturing
Logistic & Transportation
11,065,889.25 0.03% 13,271,551.53 0.04% -16.62%
storage service & storage cost
Lease and other Service cost 36,367,036.09 0.10% 32,363,280.78 0.09% 12.37%
Sales cost of pharmaceutical manufacture has 100% declined from a year earlier, mainly because affected by
reorganization last period, cost of the pharmaceutical manufacture refers to the data from January to October of
2016 in industrial plate while there was no such data in the period.
(6) Whether the changes in the scope of consolidation in Reporting Period
√Yes □ No
26
Details of the changes in the scope of consolidation in reporting Period can be seen in Note VI of Financial Report.
(7) Major changes or adjustment in business, product or service of the Company in Reporting Period
□ Applicable √ Not applicable
(8) Major sales and main suppliers
Major sales client of the Company
Total top five clients in sales (RMB) 1,999,334,655.25
Proportion in total annual sales volume for top five clients 4.88%
Ratio of related parties in annual total sales among the top
0.00%
five clients
Information of top five clients of the Company
Serial Name Sales (RMB) Proportion in total annual sales
1 First 473,455,201.11 1.16%
2 Second 425,815,771.78 1.04%
3 Third 398,127,297.49 0.97%
4 Fourth 397,764,380.29 0.97%
5 Fifth 304,172,004.58 0.74%
Total -- 1,999,334,655.25 4.88%
Other situation of main clients
□ Applicable √ Not applicable
Main suppliers of the Company
Total purchase amount from top five suppliers (RMB) 4,415,379,019.02
Proportion in total annual purchase amount for top five
8.75%
suppliers
Ratio of related parties in annual total sales among the top
1.88%
five suppliers
Information of top five suppliers of the Company
Serial Name Purchases (RMB) Proportion in total annual purchases
1 First 997,010,837.71 1.98%
2 Second 949,934,468.99 1.88%
3 Third 834,637,962.11 1.65%
4 Fourth 831,049,090.45 1.65%
5 Fifth 802,746,659.76 1.59%
Total -- 4,415,379,019.02 8.75%
27
Other notes of main suppliers of the Company
□ Applicable √ Not applicable
3. Expenses
In RMB
Increase/decrease
2017 2016 Note of major changes
y-o-y
Sales expense 2,305,909,071.71 2,198,243,216.29 4.90% No major change.
Management expense 735,953,967.13 859,773,090.07 -14.40% No major change.
Financial expense 110,360,539.56 101,856,594.98 8.35% No major change.
4. R&D expenses
□ Applicable √ Not applicable
5. Cash flow
In RMB
Item 2017 2016 Y-o-y changes
Subtotal of cash in-flow from
46,751,355,521.20 45,589,048,039.64 2.55%
operation activity
Subtotal of cash out-flow from
45,466,063,609.38 44,116,705,563.48 3.06%
operation activity
Net cash flow from operation
1,285,291,911.82 1,472,342,476.16 -12.70%
activity
Subtotal of cash in-flow from 1,670,220,737.03
138,275,319.85 -91.72%
investment activity
Subtotal of cash out-flow from 1,679,286,473.62
424,456,513.79 -74.72%
investment activity
Net cash flow from investment
-286,181,193.94 -9,065,736.59 -3,056.73%
activity
Subtotal of cash in-flow from
514,921,208.46 1,037,266,668.95 -50.36%
financing activity
Subtotal of cash out-flow from
991,944,325.18 1,513,509,387.78 -34.46%
financing activity
Net cash flow from financing
-477,023,116.72 -476,242,718.83 -0.16%
activity
Net increased amount of cash
522,583,265.99 986,470,984.16 -47.02%
and cash equivalent
Main reasons for y-o-y major changes in aspect of relevant data
28
√Applicable □ Not applicable
(1) Subtotal of cash in-flow from investment activity: a 91.72% declined from a year earlier, mainly because the subsidiary, replaced
for reorganization, has a y-o-y decrease of business in cash pooling with its former parent company;
(2) Subtotal of cash out-flow from investment activity: a 74.72% declined from a year earlier, mainly because the subsidiary,
replaced for reorganization, has a y-o-y decrease of business in cash pooling with its former parent company;
(3) Net cash flow from investment activity: a 3,056.73% down from a year earlier, mainly because the subsidiary, replaced for
reorganization, has a y-o-y decrease of business in cash pooling with its former parent company;
(4) Subtotal of cash in-flow from financing activity: a 50.36% declined from a year earlier, mainly because the restructured equity
funds received at last period while no such amount occurred in the perido;
(5) Subtotal of cash out-flow from financing activity: a 34.46% declined from a year earlier, mainly because the loans paid in the
period has declined over that of last period;
(6) Net increased amount of cash and cash equivalent: a 47.02% declined from a year earlier, mainly because the subsidiary,
replaced for reorganization, has a y-o-y decrease of business in cash pooling with its former parent company.
Reasons of major difference between the cash flow of operation activity in report period and net profit of the Company
□ Applicable √ Not applicable
III. Analysis of the non-main business
□ Applicable √ Not applicable
IV. Assets and liability
1. Major changes of assets composition
In RMB
End of 2017 End of 2016
Ratio
Ratio in total Ratio in total Notes of major changes
Amount Amount changes
assets assets
Monetary fund 4,191,655,438. 3,519,961,564.
18.76% 16.51% 2.25% No major change.
51 93
Account
7,589,412,679. 7,654,225,510.
33.97% 35.91% -1.94% No major change.
receivable 88 89
Inventory 3,781,858,238. 4,049,482,529.
16.93% 19.00% -2.07% No major change.
12 71
Investment
153,678,339.1
0.69% 166,715,848.80 0.78% -0.09% No major change.
property 1
Long-term equity
1,650,619,373. 1,413,034,165.
7.39% 6.63% 0.76% No major change.
investment 09 56
Fix assets 551,710,434.0
2.47% 487,009,600.10 2.28% 0.19% No major change.
2
Construction in 22,947,258.99 0.10% 47,063,868.49 0.22% -0.12% Mainly because some of the ERP
29
process project completed and part of the
reconstruction of logistic warehouse
are transfer-out
Short-term loans 1,561,354,521. 1,512,713,629.
6.99% 7.10% -0.11% No major change.
64 95
Mainly due to the borrowing from
Long-term loans 31,600,000.00 0.14% 0.00% 0.14%
Group Finance Company in the period
2. Assets and liability measured by fair value
□ Applicable √ Not applicable
3. Assets right restriction till end of reporting period
Nil
V. Investment
1. Overall situation
During the reporting period, the Company has acquired Sinopharm Holding Zhuhai Co.,Ltd (90 percent),
Sinopharm Holding Maoming Co.,Ltd.(100 percent) and Sinopharm Holding HeYuan Co.,Ltd (70 percent) with
cash payment, and realized control merger of these three companies not under the same control. The third-level
subsidiary of the Company, Sinopharm Hebei Le Ren Tang Medicine Chain Co.,Ltd. has finally acquired 100
percent of stock rights of Sinopharm Le Ren Tang Shi Jia Zhuang Medicine Co., Ltd with cash payment, which is
the subsidiary under the same control party of Sinopharm Le Ren Tang Co.,Ltd, realized control merger of
Sinopharm Le Ren Tang Shi Jia Zhuang Medicine Co., Ltd under the same control. The Company has set up two
new third-level subsidiaries, Sinopharm Guangzhou Medicine Technology Co., Ltd (51 percent) and Sinopharm
Guangzhou Medicine Supply Chain Service Co., Ltd(51 percent); the Company has also set up four forth-level
subsidiaries, that are Sinopharm Guoda Drugstore Anshan Chain Co., Ltd. (51 percent), Guoda Drugstore
Manzhouli Co., Ltd (51 percent), Sinopharm Guoda Drugstore Yongsheng (Shanghai) Co.,Ltd (55 percent) and
Sanhe city Lixing Jinxiang Drugstore Co.,Ltd (100 percent). See the note(six) in financial report for detailed
investment information.
2. The major equity investment obtained in the reporting period
□ Applicable √ Not applicable
30
3. The major non-equity investment doing in the reporting period
□ Applicable √ Not applicable
4. Financial assets investment
(1) Securities investment
□ Applicable √ Not applicable
The company had no securities investment in the reporting period.
(2) Derivative investment
□ Applicable √ Not applicable
The Company has no derivatives investment in the Period
5. Application of raised proceeds
√Applicable □ Not applicable
(1) Overall application of raised proceeds
√Applicable □ Not applicable
In 10 thousand Yuan
Usage of
Cumulativ Ratio of the
Total
e raised cumulative retained
Total Total raised Total Raised
capitals raised raised
Total raised accumulati capital has accumulati capitals
has capitals capitals
Year Way raised capital ve raised purpose of ve raised idle for
purpose of has and what
capitals used capitals uses capitals more than
uses purpose of is expected
in Period used changed in unused two years
changed in uses to invested
Period
total changed with those
capitals
Non-
public Deposit
2016 27,361.49 16,417.12 16,996.94 10,364.54 0
offering of bank
shares
31
Total -- 27,361.49 16,417.12 16,996.94 0 0 0.00% 10,364.54 -- 0
Explanation on General usage of raised capital
More details of the use of raised capitals can be seen in “Special report on the storage and the actual use of raised capitals of
Sinopharm Accord in 2017” disclosed on 22 March 2018.
(2) Situation of committed project of raised proceeds
√Applicable □ Not applicable
In 10 thousand Yuan
Projects Amount of
Project
Committed investment changed Total Total accumulateInvestment
Amount Reach the feasibility
projects and capital or not committed investment d program till Predicted Realized
invested in predicted was
invested in areas with (includin investment after investmentthe period-useable date interests
report interest or changed
fund raising out of the g of raised adjustment till the end of project in Period
period not hugely or
plan changed capitals (1) period-end (3)=(2)/(1)
not
partially) (2)
Committed investment projects
Cash consideration of
49% equity of
Not
Guangdong Nanfang
267,816,6 267,816,6 164,171,2 164,171,2
No 61.30% 0 applicabl No
Pharmaceutical 89.5 89.5 47.91 47.91
e
Foreign Trade Co., Ltd.
paid
Not
Payment of issuance
No 5,798,200 5,798,200 5,798,200 100.00% 0 applicabl No
cost
e
Subtotal of committed
273,614,8 273,614,8 164,171,2 169,969,4
-- -- -- 0 -- --
investment projects 89.5 89.5 47.91 47.91
Capital invested in areas with fund raising out of the plan
Not applicable
Total 273,614,8 273,614,8 164,171,2 169,969,4
-- -- -- 0 -- --
89.5 89.5 47.91 47.91
Situation about not
coming up to schemed
progress or expected
Not applicable
revenue and the
reason(In specific
project)
Explanation on major
changes on project Not applicable
feasibility
Not applicable
Amount, usage and
32
progress of using for
fund raising out of the
plan
Not applicable
Change of
implementation place
of investment project
of raised capitals
Not applicable
Regulation of
implementation ways
of investment project
of raised capitals
Preliminary investment Not applicable
and replacement of
investment project of
raised capitals
Not applicable
Temporarily
supplement for the
current capitals with
idle raised capitals
Not applicable
Amount and reason for
surplus of raised
capitals when
implementing projects
Usage of the retained
raised fund and what is
Not applicable
expected to invested
with those fund
Issues or other
conditions found in use Use of the fund raised are strictly execute in line with the “tri-party supervision agreement for fund raised”,
of fund raised and and no related issues or other conditions been found
disclosure
(3) The changed project of raised proceeds
□ Applicable √ Not applicable
The Company has no project of raised proceeds changed in the Period.
33
VI. Sales of major assets and equity
1. Sales of major assets
□ Applicable √ Not applicable
The Company has no sales of major assets in the Period.
2. Sales of major equity
□ Applicable √ Not applicable
VII. Analysis of main holding company and stock-jointly companies
√Applicable □ Not applicable
Particular about main subsidiaries and stock-jointly companies net profit over 10%
In RMB
Company Register Operating Operating
Type Main business Total assets Net Assets Net profit
name capital revenue profit
Chinese
traditional patent
medicine,
chemical
preparations,
antibiotics, bio-
chemical
medicine,
biological
Sinopharm
medicine,
Holding
diagnosis 1,953,203,12
Guoda Subsidiary 1,010,000,00 5,468,132,36 10,030,768,8 358,338,470. 262,174,187.
medicine, 0.00 3.83 7.87 69.22 17 16
Drugstore
biological
Co., Ltd.
medicine with
features of
treatment and
diagnosis,
shaped packing
food, chemical
products, and
various
commodity and
34
technique hold
by self-support
and agency as
well as import &
export of
technology
Sales of drugs,
medical
apparatus and
instruments,
freightage,
storage, loading
and unloading,
glass wares,
cosmetics and
Sinopharm
daily
Holding
Subsidiary merchandise; 1,530,000,00 5,721,484,20 1,857,188,00 15,074,320,2 245,449,593. 182,926,405.
Guangzhou 0.00 1.53 3.25 16.77 18 98
other business
Co., Ltd.
services, other
professional
consultation,
various goods
agency and for
self-operation,
import & export
of technology,
houses leasing
Retail and
distribution in
respect of
pharmaceutical
Sinopharm
products and
Holding
Subsidiary medical 500,000,000. 2,255,988,55 721,146,070. 4,074,493,15 135,865,812. 116,745,842.
Guangxi Co., 00 3.24 55 0.80 95 90
apparatus and
Ltd.
instruments,
wholesale and
retails of health
products
Particular about subsidiaries obtained or disposed in report period
√Applicable □ Not applicable
Company Name The method of obtaining and handling The influence to the whole production and
35
subsidiaries during the report period performance
Further consolidated the pharmaceutical
distribution business in Guangxi &
Sinopharm Holding Zhuhai Co., Ltd. Acquisition
Guangdong and without major influence
on performance of the Company
Expand local medicine retail business
China National Lerentang Shijiazhuang
Acquisition layout, and without major influence on
Medicine Co., Ltd.
performance of the Company
Expand local medicine retail business
Guoda Drug Store Manchuria Co., Ltd. Establishment layout, and without major influence on
performance of the Company
Providing value-added services of
Sinopharm Holding Guangzhou Medicine pharmaceutical distribution, and without
Establishment
Technology Co., Ltd. major influence on performance of the
Company
Further consolidated the pharmaceutical
distribution business in Guangxi &
Maoming Yongsheng Medicines Co., Ltd. Acquisition
Guangdong and without major influence
on performance of the Company
Further consolidated the pharmaceutical
distribution business in Guangxi &
Sinopharm Holding Heyuan Co., Ltd. Acquisition
Guangdong and without major influence
on performance of the Company
Providing value-added services of
pharmaceutical distribution, and without
Sinopharm Holding Guangzhou Medical
Establishment
Supply Chain Service Co., Ltd. major influence on performance of the
Company
Expand local medicine retail business
Sinopharm Guoda Yongsheng Drug Store layout, and without major influence on
Establishment
(Shanghai) Co., Ltd.
performance of the Company
Expand local medicine retail business
Sinopharm Guoda Drug Store Anshan layout, and without major influence on
Establishment
Chain Co., Ltd.
performance of the Company
Expand local medicine retail business
Sanhe Lixin Jinxiang Drug Store Co., Ltd. Establishment layout, and without major influence on
performance of the Company
。Consolidating the distribution of local
Sinopharm Guoda Yianyitang Drug Store Absorb and merge to Sinopharm Holding pharmaceutical retail business and no
Chain (Shengyang) Co., Ltd. Guoda Drugstore Shenyang Chain Co.,Ltd major impact on business performance of
the Company
Notes of main holding company and stock-jointly companies
36
VIII. Structured vehicle controlled by the Company
□ Applicable √ Not applicable
IX. Future Development Prospects
(I)The analysis on industry environment
1. Medicine industry has been getting more and more complicated in terms of policy, market and technology.
(1)New policy
With the coordination of medical insurance, medical service and medicine, new medical policies have been issued
in succession, including consistency evaluation on generic drugs, GPO, two invoices system, hierarchical
diagnosis, remove medicine markups, cancel the proportion of drugs in hospital total income and the regulation on
medical insurance expenditure. Public hospitals have been forced by medicine and medical insurance to carry out
reform from the supply and demand terminals.
(2)New technology
Technology innovation has greatly influenced the whole medical industry and hospital information systems have
been gradually upgraded. In addition, internet giants have been engaged in medicine and medical service fields
over information, internet and the cloud, and several artificial intelligence medical products have been launched in
succession.
(3)New model
New models have been emerged one after another. From pharmacy trust, supply chain extension, GPO to medical
treatment combination, the innovation under policy, government and market have become more and more
intensified and all the industry leaders are exploring the most practical model within innovation.
2.The overall medical market has grown steadily and industry differentiation trend has accelerated
The industry has been benefited from the growth of medical insurance coverage and average medical consumption,
aging of population and technology innovation, but it also has to suffer the pressures from medical insurance
expenditure regulation and downward price.
(1)With the implementation of two invoice system, the allocating market scale has been shrunk sharply.
Distribution enterprises directly contact with manufacturers and the channels of all hospitals have been centralized,
which was good for improving the concentration ratio of large enterprises, and forcing them to build a standard
process in terms of retails, logistics and information.
(2)Under the pressures from expenditure regulation, payment by scores and zero-markups, more and more
prescriptions have been drained out from hospital, so how to make an effective connection has become the focus
of the competition among all the medical chain enterprises.
3.Competitors have been making innovation and layout in terms of industry merger and acquisition, industry
chain integration, service and cooperation extension.
Mergers and acquisitions of medicine retails have been uprising. Comprehensively influenced by focus and
concern from the capitals, promotion of policy trend and current industry structure adjustment, the momentum of
37
mergers and acquisition will be continuing. With the changes of industry policies, the business model will have a
huge change; the Company will create a control and operation pattern integrating wholesales and retails, and build
new core competitiveness by taking full advantages of integrating distribution and retail resources.
(II)Major works of the Company in 2018
1. Enhance information and technology capability, inject new technology energy
Technology innovation is the primary force guiding development. Since the technologies represented by internet,
big data and artificial intelligence have been rebuilding and reconstructing all the traditional industries and
traditional models, the Company will continue to build a wisdom medical technology platform with integration of
wholesales and retails as the core.
(1)Increase information input
Change management mode and try to introduce mixed ownership reform mechanism; enrich and cultivate IT
talent teams, inspire information values; create matched salary incentive mechanism.
(2) Build an absolute intelligent and smart platform
Upgrade and introduce IoT(Internet of Things) devices, accelerate logistics efficiency; build a cloud platform and
take full advantages of big data, enhance the management and operation ability of smart supply chain.
2. Implement the strategy of integrating wholesales and retails, expand retails market
(1)Integrate wholesales and retails to exchange and share resources
Integrate market demands and resources of distribution and retails, make a plan for the target supplier and
category of integrating wholesales and retails; strengthen the promotion and extension of integrating wholesales
and retails, satisfy the end demands of national retails of business center and distribution-owned drugstores;
realize the uniform of brand, information and standards, and make efforts to develop marketable varieties suitable
for drugstores.
(2)Integrate wholesales and retails and build provincial platform
Improve the construction of provincial platform and make a good integration of provincial resources; give full
play to synergy and make a good plan and coordination for resources, enhance the ability of business
centralization and organization, take standard operation and well controlled risk, improve the service level and
reduce management cost for end stores; build an integrating operation system so as to achieve the target of
integrating management and control with flexible coordination and high-efficient operation.
3. Focus on strategic direction of the Company and drive the development with two wheels
(1)Distribution business: focus on terminals, transformation and innovation
Accelerate the second merger and acquisition, make a good arrangement on distribution points at the empty areas,
create matched management and incentive mechanism; take full advantages of two invoices system and work hard
to develop retails terminal business; advance distribution retails business in an all-around manner, establish a
business model with core competitiveness; new business network will be completed in a fast way, speed up the
development of B2B,equipment and 4D business at the same time; the procurement and supply chain department
shall accelerate to build high efficient multi-warehouse operation, which will be completed in the first half year
38
and included in performance assessment.
Accelerate the efficiency of opening up new stores. Conform with changes of policies, seize the market
opportunity of prescription drained out and integrate with hospital prescription; realize fast opening of drugstore
surrounding hospital by replication to satisfy various business demands; develop drugstores cooperated with
hospitals in various way and explore the diversity of approaches to cooperation;
Expand new business field of medical devices and seize the high land of SPD strategy. Keep improving internal
management and take advantages of platform resources to promote the plan and development of category;
strengthen the construction of SPD project operation team, take the initiative to bid and follow up; optimize
system and explore new models with all manner of synergy and support.
(2)Guoda Drugstore: innovative models and development of scale
Enhance the management and efficiency of functional departments of headquarter, and make full use of resource
support. Take full advantages of risk control and resources integration of operation headquarter; make the design
of national unified brand and spare no efforts to build brand strengths; create a national and regional centralized
procurement model, build the core competitiveness belonging to Guoda Drugstore itself; reinforce the category
management and sort out all the categories, make a OEM development plan; enhance management ability to
business activities; introduce AI and set up professional drugstores; establish systematic membership management
mechanism.
Accelerate and improve the construction of provincial platform, integrate provincial resources; unify category and
resources and introduce distribution category resources; take full advantages of synergy, make a good planning
and coordination on resources, improve business concentration ability and management ability, work with
standard operation and controlled risk, sink the store to terminals, reduce management cost and improve service
level; by information and supply chain thinking, establish an integrating operation system and achieve the target
of uniform management and control, flexible synergy and high- efficient operation; make a reasonable
configuration of logistics planning and human resources.
Bring forth new ideas to business model. Guide in technology: big data, membership management, enterprise
cloud, IT technical support, back-end support: be proficient in expertise, improve service and configure resources,
escort for business development; build smart medical model with service oriented and form differentiated
competitiveness.
Increase inventory and achieve increments by means of opening new stores and mergers and acquisition, increase
expanding efficiency of the stores; the first-tier cities of Beijing, Shanghai and Guangzhou: concentrate on making
breakthroughs in hospital cooperative stores and hospital surrounding stores; provide guidance in development for
those with relatively weak development ability and encourage them to open stores; explore the experience of
replicating stores, and form reference samples and provide experience sharing; accelerate investment as well as
mergers and acquisitions, improve the efficiency of project approval and cooperation.
(III) Risk
39
1. The management risks in sustainable expansion of marketing network of Guoda Drug Store
The marketing network of Guoda Drug Store has maintained stable growth trend in recent years through newly
opened stores and extended mergers. The expansion of sales area and increase of stores have brought pressure on
the site selection, distribution, cash management, marketing and human resource management of the stores of
Guoda Drug Store. The company will strengthen the management and construction in merchandise procurement,
logistics and distribution, marketing and other links and establish corresponding management methods for each
link so as to ensure the unified standards and management quality for store expansion.
2. Risks of intensifying market competition
At present, the market concentration ratio of domestic pharmaceutical retail market industry is relatively low, and
the national and regional pharmaceutical retail enterprises have fierce market competition. As the country
continues to introduce corresponding policies to encourage the integration of pharmaceutical retail industry, the
major pharmaceutical retail enterprises in the industry have accelerated the pace of mergers and acquisitions, and
continued to expand the marketing networks, improve the logistics center constructions, and innovate the business
and profit models so that the sales scale and comprehensive strength continuously strengthen. At the same time,
with the upgrading of consumption and the gradual opening of market, the foreign pharmaceutical distribution
enterprises with powerful strength are entering the domestic pharmaceutical distribution markets through a variety
of ways, so the industry competition is further intensifying. Sinopharm Accord will integrate the existing
resources, create a two-wheel drive development model with integration of both wholesale and retail, deeply give
full play to synergistic effect, directly face the end patients and consumers by varieties complementation, capital
cooperation, supply chain collaboration, internationalization promotion and other measures, and achieve brand
globalization through capital operation.
3. Risks of changes in industry policy
The development of pharmaceutical retail industry is regulated and influenced by the relevant national policies.
The state has promulgated a series of documents such as Good Supply Practice and Control System for
Prescription Drug and Over-The-Counter Drug (Pilot), which put forward specific requirements to the industry
operation. Along with the gradual increase of management standards for management standard, the regulations are
constantly being revised and improved and put forward higher requirements to the business operations. In addition,
since the promotion and implementation of the new medical reform in 2009, the state has implemented the
essential medicine system, public hospital reform, and drug centralized procurement bidding system throughout
the country, and repeatedly introduced policies to reduce the drug retail price ceiling in order to reduce the burden
of drug use. If the policies introduced in the process of implementing new medical reform impose restrictions on
the industrial development and the product price of retail drug stores, the operation and profitability of Guoda
Drug Store may have to face some challenges.
4. Risks of facing the horizontal competition
In the pharmaceutical retail field, Sinopharm Group’s affiliated distribution subsidiaries have also opened some
social retail pharmacies, which constitute a certain degree of horizontal competition with the subordinate Guoda
40
Drug Store. Sinopharm Group and Sinopharm have pledged to take effective measures to resolve the possible
horizontal competition.
5. The risk of goodwill impairments
Sinopharm Accord Corporation Ltd. has conducted a major asset restructuring in 2016, and the company merged
was under the same control of Sinopharm Accord, therefore this restructuring has not taken any goodwill
impairments and there was no risk of the goodwill impairments caused by this restructuring.
X. Reception of research, communication and interview
1. In the report period, reception of research, communication and interview
√Applicable □ Not applicable
Time Way Type Basic situation index of investigation
Found more in “record chart of investor
relations activities dated 21 April 2017 ”
2017-04-21 Field research Institute
uploaded to interactive easy of Shenzhen
Stock Exchange
2017-05-10 Field research Institute Resolution Notice of AGM of 2016
Resolution Notice of Fourth
2017-12-27 Field research Institute Extraordinary Shareholders General
Meeting of 2017
Reception (times) 3
Number of hospitality 110
Number of individual reception 12
Number of other reception 0
Disclosed, released or let out major undisclosed No disclosed, released or let out major undisclosed information
information
41
Section V. Important Events
I. Profit distribution plan of common stock and capitalizing of common reserves plan
Formulation, Implementation and Adjustment of common stock Profit Distribution Policy Especially Cash Dividend policy during
the Reporting Period
√Applicable □ Not applicable
On 10 May 2017, the profit distribution plan for year of 2016 was deliberated and approved by annual general
meeting of 2016, that is taking total 428,126,983 shares as the radix, distributed RMB 3.30 (tax included) for each
10 shares in cash. The announcement of 2016 interest distribution implementation was released on 14 June 2017
by the Board (published in Securities Times, China Securities Journal, Hong Kong Commercial Daily and Juchao
Website http://www.cninfo.com.cn), the profit distribution plan for year of 2016 was completed, and dividend for
public shares was distributed to the account of shareholders dated 20 June 2017 (A-share) and 22 June 2017 (B-
share) respectively.
Special explanation on cash dividend policy
Satisfy regulations of General Meeting or requirement of Article
Y
of Association (Y/N):
Well-defined and clearly dividend standards and proportion
Y
(Y/N):
Completed relevant decision-making process and mechanism
Y
(Y/N):
Independent directors perform duties completely and play a
Y
proper role (Y/N):
Minority shareholders have opportunity to express opinions and
Y
demands totally and their legal rights are fully protected (Y/N):
Condition and procedures are compliance and transparent while
Not applicable
the cash bonus policy adjusted or changed (Y/N):
Profit distribution plan (pre-plan) of common stock and capitalizing of common reserves plan (pre-plan) in latest three years
(including the reporting period)
(1) Profit distribution plan for year of 2015
Taking the total 362,631,943 shares as of 31 December 2015 as the radix, cash bonus of RMB 3.00 (before tax)
each 10 shares will be distributed to the whole shareholders. This profit distribution did not convert capital reserve
into share capital.
(2) Profit distribution plan for year of 2016
42
Taking the total 428,126,983 shares as the radix, cash bonus of RMB 3.30 (before tax) each 10 shares will be
distributed to the whole shareholders. This profit distribution did not convert capital reserve into share capital.
(3) Profit distribution plan for year of 2017
Taking the total 428,126,983 shares as the radix, cash bonus of RMB 3.00 (before tax) each 10 shares will be
distributed to the whole shareholders. This profit distribution did not convert capital reserve into share capital.
Cash dividend of common stock in latest three years (including the reporting period)
In RMB
Net profit Ratio in net profit
attributable to attributable to
common stock common stock
Year for bonus Amount for cash shareholders of shareholders of Amount for cash Proportion for cash
shares bonus (tax included) listed company in listed company bonus by other ways bonus by other ways
consolidation contained in
statement for bonus consolidation
year statement
2017 128,438,094.90 1,057,791,930.67 12.14% 0.00 0.00%
2016 141,281,904.39 1,186,601,899.27 11.91% 0.00 0.00%
2015 108,789,582.90 761,312,261.06 14.29% 0.00 0.00%
The Company gains profits in reporting period and the retained profit of common stock shareholders provided by parent company is
positive but no plan of cash dividend proposed of common stock
□ Applicable √ Not applicable
II. Profit distribution plan and capitalizing of common reserves plan for the Period
√Applicable □ Not applicable
Bonus shares for every 10-share (Share) 0
Dividends for every 10-share (RMB) (Tax
3.00
included)
Equity base of distribution plan (Share) 428,126,983
Total cash dividend(RMB) (Tax included) 128,438,094.90
Distributable profits (RMB) 3,326,479,555.13
Ratio of cash dividend in total profit distribution 100%
Cash dividend policy:
If the company’s development is at the growth stage with significant capital expenditures, the minimum proportion of cash
dividend in the profit distribution should reach 40%.
Detail explanation on profit distribution or capitalization from capital public reserve
43
III. Implementation of commitment
1. Commitments completed in Period and those without completed till end of the Period from actual
controller, shareholders, related parties, purchaser and companies
√Applicable □ Not applicable
Type
Comm Commit
Commitmen of Implementat
Promise Content of commitments itment ment
ts commi ion
date term
tments
Commitmen
ts for
share merger
reform
As a large pharmaceutical commercial enterprise whose business involves
pharmaceutical wholesale and retail, Sinopharm Holding may overlap with
the Company in geographical segmentation during its future business
development. To avoid the potential peer competition brought by such
geographical overlap, Sinopharm Holding undertakes that, upon the
Commitmen transfer of shares of Sinopharm Holding Guangzhou it held to Accord
Comm
ts in report Pharma, “1. it will not newly-establish or broaden within Guangdong any Normally
itment Long-
of Sinopharm business operation that actually compete with that of Accord Pharma, or set 2005- implementin
of term
acquisition Holding up any new subsidiaries or subordinate enterprises who engage in such 06-21 g
shareh effective
or equity business. 2. It will enter into business delineation with Accord Pharma and
olders
change Sinopharm Holding Guangzhou, thereby giving the three parties clear
geographical areas to carry out pharmaceutical wholesale and retail
businesses, so as to avoid potential peer competition. Apart from above,
Sinopharm Holding will no longer newly-establish any enterprise that may
compete with Accord Pharma in the production and R&D of
pharmaceutical products.”
“Sinopharm Holding and Sinopharm Foreign Trade made commitments in
Sinopharm the Report about China National Accord Medicines Corporation Ltd.
Group Purchasing Assets and Raising Supporting Funds and Related Transactions
Co., Ltd.; by Asset Sale, Stock Issuance and Cash Payment that the non-public
Comm
China offering of shares of Sinopharm Accord obtained from this transaction shall
Commitmen itment
National not be transferred within 36 months since the finish date of issuance and Normally
ts in assets on 2016- 36
Pharmace shall be unlocked after 36 months since the date of listing. Within 6 months implementin
reorganizati restrict 05-31 months
utical after the completion of this transaction, if the closing price of the stock of g
on ed
Foreign Sinopharm Accord is less than the issue price in continuous 20 trading
shares
Trade days, or the closing price at the end of 6 months after the completion of this
Corporatio transaction is less than the issue price, the lockup period of the stock of
n Sinopharm Group and Sinopharm Foreign Trade obtained from Sinopharm
Accord by this transaction will automatically prolong at least 6 months.
44
The shares derived from stock dividends allocation and capital reserve
increase transferring of Sinopharm Accord based on the non-public offering
of shares of Sinopharm Accord obtained by this transaction should also
abide by the above stock restricted arrangements.”
"China Ping An Asset Management Co., Ltd. made commitments in the
Report about China National Accord Medicines Corporation Ltd.
Comm Purchasing Assets and Raising Supporting Funds and Related Transactions
Ping’an
itment by Asset Sale, Stock Issuance and Cash Payment that the non-public
Assets Normally
on offering of shares of Sinopharm Accord obtained from this transaction shall 2016- 36
Managem implementin
restrict not be transferred within 36 months since the finish date of issuance and 05-31 months
ent Co., g
ed shall be unlocked after 36 months since the date of listing. After placement
Ltd.
shares completed, the shares of the listed company increased due to bonus shares
and turning to increase capital should pursuit to the restriction arrangement
the above mentioned.
“Sinopharm Group made commitments in the Report about China National
Accord Medicines Corporation Ltd. Purchasing Assets and Raising
Supporting Funds and Related Transactions by Asset Sale, Stock Issuance
and Cash Payment that the 2016 annual net profits of Foshan Nanhai,
Perfor Guangdong Uptodate & Special Medicines and Guoda Drugstore should
mance respectively be no less than RMB 47,385,600.00, RMB 19,167,000.00, and
commi RMB 98,466,100.00, while the 2017 annual net profits should respectively
tment be no less than RMB 49,394,500.00, RMB 20,209,700.00, and RMB
Sinopharm Normally
and 110,998,90.00, and the 2018 annual net profits should respectively be no 2016- 2018-
Group implementin
compe less than RMB 51,148,200.00, RMB 21,330,100.00, and RMB 05-31 12-31
Co., Ltd. g
nsatio 131,275,500.00. Net profit refers to the lower one between the after-tax net
n profit attributable to the owners of parent company planning to invest in the
arrang target company and the net profit attributable to the owners of parent
ement company after deducting the non-recurring gains and losses. If the actual
net profit of the target company doesn’t reach the committed net profit,
Sinopharm Group will need to compensate according to the stipulations of
the "Profit Forecast Compensation Agreement for the Stock Issuance and
Assets Purchase.”
Sinopharm Foreign Trade made commitments in the Report about China
Perfor
National Accord Medicines Corporation Ltd. Purchasing Assets and
China mance
Raising Supporting Funds and Related Transactions by Asset Sale, Stock
National commi
Issuance and Cash Payment that the 2016 annual net profits of Southern
Pharmace tment
Medical Trade should be no less than RMB 39880700, while the 2017 Normally
utical and 2016- 2018-
annual net profits should be no less than RMB 47323200, and should not implementin
Foreign compe 05-31 12-31
less than RMB 55364600 in 2018. Net profit refers to the lower one g
Trade nsatio
between the after-tax net profit attributable to the owners of parent
Corporatio n
company planning to invest in the target company and the net profit
n arrang
attributable to the owners of parent company after deducting the non-
ement
recurring gains and losses. If the actual net profit of the Southern Medical
45
Trade doesn’t reach the committed net profit, Sinopharm Foreign Trade
will need to compensate according to the stipulations of the "Profit Forecast
Compensation Agreement for the Stock Issuance and Assets Purchase.”
Fu
Jiancheng;
Fu Yuequn “Fu Yuequn and other 10 natural person made commitments in the Report
Gu about China National Accord Medicines Corporation Ltd. Purchasing
Chaoqun; Assets and Raising Supporting Funds and Related Transactions by Asset
Perfor
Guo Sale, Stock Issuance and Cash Payment that the 2016 annual net profits of
mance
Shu’er; Southern Medical Trade should be no less than RMB 39,880,700, while the
commi
Huang 2017 annual net profits should be no less than RMB 47,323,200, and
tment
Qiufang; should not less than RMB 55,364,600 in 2018. Net profit refers to the lower Normally
and 2016- 2018-
Li one between the after-tax net profit attributable to the owners of parent implementin
compe 05-31 12-31
Hongbing; company planning to invest in the target company and the net profit g
nsatio
Liao Zhi; attributable to the owners of parent company after deducting the non-
n
Lin recurring gains and losses. If the actual net profit of the Southern Medical
arrang
Wanqun; Trade doesn’t reach the committed net profit, Fu Yuequn and other 10
ement
SunWei; natural person will need to compensate according to the stipulations of the
Zhang "Profit Forecast Compensation Agreement for the Stock Issuance and
Zhaohua; Assets Purchase.”
Zhang
Zhaotang
"“Sinopharm Accord made commitments in the Report about China
National Accord Medicines Corporation Ltd. Purchasing Assets and
Raising Supporting Funds and Related Transactions by Asset Sale, Stock
Issuance and Cash Payment that the net profits attributable to the owners of
parent company after deducting the non-recurring gains and losses
committed by Zhijun Pharmaceutical in 2016, 2017 and 2018 should be
Perfor
respectively no less than RMB 222,671,700.00, RMB 232,561,600.00, and
mance
RMB 241,878,700.00; the net profits attributable to the owners of parent
China commi
company after deducting the non-recurring gains and losses committed by
National tment
Zhijun Pharmacy Trade in 2016, 2017 and 2018 should be respectively no Normally
Accord and 2016- 2018-
less than RMB 2,379,600.00, RMB 2,335,100.00, and RMB 2,345,600.00; implementin
Medicines compe 05-31 12-31
the net profits attributable to the owners of parent company after deducting g
Corporatio nsatio
the non-recurring gains and losses committed by Pingshan Pharmaceutical
n Ltd. n
in 2016, 2017 and 2018 should be respectively no less than RMB
arrang
39,716,300.00, RMB 43,033,500.00, and RMB 50,325,500.00. If the actual
ement
net profits attributable to the owners of parent company after deducting the
non-recurring gains and losses of Zhijun Pharmaceutical / Zhijun Pharmacy
Trade / Pingshan Pharmaceutical don’t reach the committed net profits
attributable to the owners of parent company after deducting the non-
recurring gains and losses, Sinopharm Accord should compensate in
accordance with the stipulations of the Profit Forecast Compensation
46
Agreement for the Stock Issuance and Assets Purchase.”
China
National
Accord
Medicines
“The listed company, controlling shareholders, the actual controllers made
Corporatio
commitments in the Report about China National Accord Medicines
n Ltd.;
Corporation Ltd. Purchasing Assets and Raising Supporting Funds and
Sinopharm
Other Related Transactions by Asset Sale, Stock Issuance and Cash Payment that Long- Normally
Group 2016-
commi the Company shall not violate the relevant regulations of Article 16 in term implementin
Co., 05-31
tments Securities Issuance and Underwriting Management Approach, and directly effective g
Ltd.;China
or indirectly providing financial assistance or compensation for the
National
subscription objects and its shareholders / partners / clients (if any) of this
Pharmace
non-public offering does not exist and will not occur in the future.”
utical
Group
Corporatio
n
“Ping An Asset Management Co., Ltd. Promises that the unit intends to
utilize Ping An Asset Xinxiang No.3 asset management product and Ping
An Asset Xinxiang No.7 asset management product to fund and subscribe
some non-public offering of shares of Sinopharm Accord in this major asset
Ping’an restructuring process, and has the ability to subscribe the shares, the
Assets Other relevant capital sources are legitimate, there is no hierarchical income and Long- Normally
2016-
Managem commi other structured arrangements, and there is no use of leveraged funds. The term implementin
03-24
ent Co., tments unit does not receive financial assistance or compensation from Sinopharm effective g
Ltd. Accord and its controlling shareholders, or the actual controllers. The
investors’ structure of above - mentioned products do not change from the
issue date of the commitment letter to the end date of the lockup period of
the stock that the unit subscribes from Sinopharm Accord.”
Comm “Sinopharm Group made commitments in the Report about China National
itment Accord Medicines Corporation Ltd. Purchasing Assets and Raising
s on Supporting Funds and Related Transactions by Asset Sale, Stock Issuance
horizo and Cash Payment that the Company shall be the controlling shareholder of
ntal China National Accord Medicines Corporation Ltd. (hereinafter referred to
Sinopharm compe as Sinopharm Accord) up to the issue date of this commitment letter, after Long- Normally
2016-
Group tition, the completion of this major assets reorganization (hereinafter referred to as term implementin
12-28
Co., Ltd. relatio “this reorganization”), Sinopharm Accord shall no longer hold shares or effective g
n operate relevant businesses of pharmaceutical industry, the main business
transac will become the national pharmaceutical retail and pharmaceutical
tion distribution business in Guangdong and Guangxi. In order to support the
and business development of Sinopharm Accord and avoid horizontal
capital competition with Sinopharm Accord and its controlling enterprises, the
47
occupa Company made following irrevocable commitments and promises:1, after
tion the completion of this reorganization, as for the social retail drugstore
assets except for Sinopharm Group Guoda Drugstore Co., Ltd. and its
subsidiaries and branches owned or controlled by the Company, the
Company promised to take appropriate measures to solve the horizontal
competition problem in the pharmaceutical retail business between the
Company and Sinopharm Accord within 5 years since the completion date
of this reorganization. 2. The Company's way of resolving horizontal
competition problems includes and is not limited to purchasing the social
retail drugstore assets subordinated to the Company by Sinopharm Accord,
taking the entrusted operation, leasing or contracting operation by
Sinopharm Accord and its controlling enterprises in accordance with the
methods permitted to national laws to hold or control the social retail
drugstore assets, or transferring the controlling stake of the social retail
drugstore assets by the Company. 3. If the shareholders of the social retail
drugstore assets (hereinafter referred to as "the third party") of the
Company or the enterprises controlled by the Company have or are going
to perform the preemptive rights under the same conditions in accordance
with relevant laws and corresponding Articles of Association, then the
above commitment will not be applicable, but in this case, the Company
should try its utmost to urge the third party to waive its preemptive rights.
If the Company is unable to urge the third party to give up the preemptive
rights, the Company will urge the enterprises controlled by the Company to
transfer the social retail drugstore assets to the third party to solve the
horizontal competition problem. 4. The pharmaceutical distribution assets
currently owned or controlled by the Company are distributed outside
Guangdong and Guangxi regions, there is no horizontal competition with
Sinopharm Accord, the Company will not engage in the same or similar
operation businesses to Sinopharm Accord in Guangdong and Guangxi in
the future, if the Company and its holding enterprises obtain the new
business opportunities constituting substantial horizontal competition
(hereinafter referred to as competitive new business) within the
pharmaceutical distribution business scope of Sinopharm Accord in
Guangdong and Guangxi, the Company will send written notice to
Sinopharm Accord and try its utmost to firstly provide the new business
opportunities to Sinopharm Accord or its holding enterprises according to
the reasonable and fair terms and conditions so as to avoid the horizontal
competition with Sinopharm Accord and its holding enterprises. 5. Since
the issue date of this commitment letter, the Company promises to
indemnify Sinopharm Accord for all actual losses, damages and expenses
caused by the Company in violation of any commitments under this
commitment letter. 6. This commitment letter terminates when following
circumstances occur (subject to the earlier one): (1) the Company is no
48
longer the controlling shareholder of Sinopharm Accord; or (2) the shares
of Sinopharm Accord terminate the listing at the stock exchange.”
“Sinopharm made commitments in the Report about China National Accord
Medicines Corporation Ltd. Purchasing Assets and Raising Supporting
Funds and Related Transactions by Asset Sale, Stock Issuance and Cash
Payment that the Company shall be the actual controller of China National
Accord Medicines Corporation Ltd. (hereinafter referred to as Sinopharm
Accord) up to the issue date of this commitment letter, after the completion
of this major assets reorganization (hereinafter referred to as “this
reorganization”), Sinopharm Accord shall no longer hold shares or operate
relevant businesses of pharmaceutical industry, the main business will
become the national pharmaceutical retail and pharmaceutical distribution
business in Guangdong and Guangxi. In order to support the business
development of Sinopharm Accord and avoid horizontal competition with
Sinopharm Accord and its controlling enterprises, the Company made
Comm
following irrevocable commitments and promises:1, after the completion of
itment
this reorganization, as for the social retail drugstore assets except for
s on
Sinopharm Group Guoda Drugstore Co., Ltd. and its subsidiaries and
horizo
branches owned or controlled by the Company, the Company promised to
China ntal
take appropriate measures to solve the horizontal competition problem in
National compe
the pharmaceutical retail business between the Company and Sinopharm
Pharmace tition, Long- Normally
Accord within 5 years since the completion date of this reorganization. 2. 2016-
utical relatio term implementin
The Company's way of resolving horizontal competition problems includes 12-28
Group n effective g
and is not limited to purchasing the social retail drugstore assets
Corporatio transac
subordinated to the Company by Sinopharm Accord, taking the entrusted
n tion
operation, leasing or contracting operation by Sinopharm Accord and its
and
controlling enterprises in accordance with the methods permitted to
capital
national laws to hold or control the social retail drugstore assets, or
occupa
transferring the controlling stake of the social retail drugstore assets by the
tion
Company. 3. If the shareholders of the social retail drugstore assets
(hereinafter referred to as "the third party") of the Company or the
enterprises controlled by the Company have or are going to perform the
preemptive rights under the same conditions in accordance with relevant
laws and corresponding Articles of Association, then the above
commitment will not be applicable, but in this case, the Company should
try its utmost to urge the third party to waive its preemptive rights. If the
Company is unable to urge the third party to give up the preemptive rights,
the Company will urge the enterprises controlled by the Company to
transfer the social retail drugstore assets to the third party to solve the
horizontal competition problem. 4. The pharmaceutical distribution assets
currently owned or controlled by the Company are distributed outside
Guangdong and Guangxi regions, there is no horizontal competition with
49
Sinopharm Accord, the Company will not engage in the same or similar
operation businesses to Sinopharm Accord in Guangdong and Guangxi in
the future, if the Company and its holding enterprises obtain the new
business opportunities constituting substantial horizontal competition
(hereinafter referred to as competitive new business) within the
pharmaceutical distribution business scope of Sinopharm Accord in
Guangdong and Guangxi, the Company will send written notice to
Sinopharm Accord and try its utmost to firstly provide the new business
opportunities to Sinopharm Accord or its holding enterprises according to
the reasonable and fair terms and conditions so as to avoid the horizontal
competition with Sinopharm Accord and its holding enterprises. 5. This
commitment letter terminates when following circumstances occur (subject
to the earlier one): (1) the Company is no longer the actual controller of
Sinopharm Accord; or (2) the shares of Sinopharm Accord terminate the
listing at the stock exchange.”
" Sinopharm Holding made commitments in the Commitment Letter About
Sinopharm Group Co., Ltd. to Avoid Horizontal Competition: “First, the
Company and the Company’s wholly-owned, controlling or other
enterprises with actual control (in addition to Sinopharm Accord and its
controlling enterprises, hereinafter the same) don’t have businesses and Controlling
operations constituting the substantial horizontal competition to Sinopharm shareholder
Accord and its controlling enterprises. Second, the Company and the is implement
Company’s wholly-owned, controlling or other enterprises with actual in real
control shall not engage, participate in or do businesses and activities in earnest,
Guangdong and Guangxi which constitute substantial competition to Sinopharm
Comm
Sinopharm Accord and pharmaceutical business services. Third, the Accord will
itment Long-
Sinopharm Company and the Company’s wholly-owned, controlling or other 2013- actively
Commitmen of term
Holding enterprises with actual control shall not engage, participate in or do 09-05 urged the
ts make in shareh effective
businesses and activities which constitute substantial competition to controlling
initial public olders
Sinopharm Accord and pharmaceutical industry businesses. Fourth, the shareholder
offering or
Company shall not take advantage of the control to Sinopharm Accord to and actual
re-financing
damage the legitimate rights and interests of Sinopharm Accord and other controller to
shareholders (especially medium and small shareholders). This fulfill
commitment letter takes effect from the issue date, and remains in effect for commitment
the entire period when the Company acts as the controlling shareholder or s
its related party of Sinopharm Accord. Within the effective period of the
commitment, if the Company violates this commitment and causes a loss to
Sinopharm Accord, the Company will timely make full compensation for
Sinopharm Accord.”
Comm Sinopharm Holding made commitments in the Commitment Letter About Controlling
Long-
Sinopharm itment Sinopharm Group Co., Ltd. to Regulate the Related Transactions with 2013- shareholder
term
Holding of China National Accord Medicines Corporation Ltd.: “First, when the 09-05 is implement
effective
shareh Company is controlling Sinopharm Accord, the Company and the in real
50
olders companies and enterprises directly and indirectly controlled by the earnest,
Company (“related party” for short) will strictly regulate the related Sinopharm
transactions with Sinopharm Accord and its controlling enterprises. Second, Accord will
for the related transactions that can not be avoided nor have reasonable actively
reasons to occur, the Company and related party shall sign normative urged the
related transaction agreement in accordance with relevant laws with controlling
Sinopharm Accord. Sinopharm Accord implements the approval procedures shareholder
and fulfills the information disclosure obligations of the related transactions and actual
according to relevant laws, regulations, rules, other normative documents controller to
and the constitutions of Sinopharm Accord. Third, for the related fulfill
transactions that can not be avoided or have reasonable reasons to occur, commitment
the Company and related party shall abide by the open, fair and just market s
principles and confirm the price of related transactions in accordance with
the price that the independent third party without association sets for the
same and similar transactions, and ensure the fairness of the price of the
related transactions. Fourth, when the board of directors and the general
meeting of stockholders of Sinopharm Accord vote on the related
transactions involving the Company and other enterprises controlled by the
Company, the Company shall fulfill the necessary obligations that the
associated directors and associated shareholders abstain from voting in
accordance with the relevant provisions, and abide by the legal procedures
for approving related transactions and the information disclosure
obligations. Fifth, the Company guarantees to participate in the
shareholders' general meeting, equally exercise the corresponding rights
and take the corresponding obligations in accordance with the constitutions
of Sinopharm Accord, not to take advantage of controlling shareholder
status to seek improper benefits or utilize related transactions to illegally
transfer the funds and profits of Sinopharm Accord, and not to damage the
legitimate rights and interests of other shareholders (especially the medium
and small shareholders) of Sinopharm Accord. Sixth, this commitment
letter comes into force from the issue date and remains in effect for the
entire period when the Company acts as the controlling shareholder or its
related party of Sinopharm Accord. Within the effective period of the
commitment, if the Company violates this commitment and causes a loss to
Sinopharm Accord, the Company will timely make full compensation for
Sinopharm Accord.”
Sinopharm made commitments in the Commitment Letter About China Controlling
Comm
National Pharmaceutical Group Corporation to Avoid Horizontal shareholder
itment
Competition with China National Accord Medicines Corporation Ltd.: Long- is implement
Sinopharm of 2013-
“First, in the next five years, Sinopharm plans to take appropriate measures term in real
Group actual 10-16
(including assets replacement or acquisition, equity reorganization, etc.) to effective earnest,
control
resolve the horizontal competition between Sinopharm Weiqida and Sinopharm
ler
Sinopharm Accord. Second, in addition to the past matters and matters Accord will
51
disclosed in this commitment letter, the Company and the Company’s actively
wholly-owned, controlling or other enterprises with actual control rights urged the
(except for Sinopharm Accord and its controlling enterprises, the same as controlling
below) shall not directly engaged in, participate in or do the businesses an shareholder
activities constituting actual competition to the production and operation of and actual
Sinopharm Accord in China. The relevant commitments about avoiding controller to
horizontal competition that the Company made in the past still remain in fulfill
effect. Third, the Company shall not take advantage of the control commitment
relationship to Sinopharm Accord to damage the legitimate rights and s
interests of Sinopharm Accord and its shareholders (especially the medium
and small shareholders). Fourth, this commitment letter comes into force
from the issue date and remains in effect for the entire period when the
Company acts as the controlling shareholder or its related party of
Sinopharm Accord.”
Sinopharm Group made commitments in the Commitment Letter About
Sinopharm Group Co., Ltd. to Regulate the Related Transactions with
China National Accord Medicines Corporation Ltd.: “First, when the
Company is controlling Sinopharm Accord, the Company and the
companies and enterprises directly and indirectly controlled by the
Company (“related party” for short) will strictly regulate the related
transactions with Sinopharm Accord and its controlling enterprises. Second,
Controlling
for the related transactions that can not be avoided or have reasonable
shareholder
reasons to occur, the Company and related party shall sign normative
is implement
related transaction agreement in accordance with relevant laws with
in real
Sinopharm Accord. Sinopharm Accord implements the approval procedures
earnest,
and fulfills the information disclosure obligations of the related transactions
Comm Sinopharm
according to relevant laws, regulations, rules, other normative documents
itment Accord will
and the constitutions of Sinopharm Accord. Third, for the related Long-
Sinopharm of 2013- actively
transactions that can not be avoided or have reasonable reasons to occur, term
Group actual 09-22 urged the
the Company and related party shall abide by the open, fair and just market effective
control controlling
principles and confirm the price of related transactions in accordance with
ler shareholder
the price that the independent third party without association sets for the
and actual
same and similar transactions, and ensure the fairness of the price of the
controller to
related transactions. Fourth, when the board of directors and the general
fulfill
meeting of stockholders of Sinopharm Accord vote on the related
commitment
transactions involving the Company and other enterprises controlled by the
s
Company, the Company shall fulfill the necessary obligations that the
associated directors and associated shareholders abstain from voting in
accordance with the relevant provisions, and abide by the legal procedures
for approving related transactions and the information disclosure
obligations. Fifth, the Company guarantees not to take advantage of actual
controller status to seek improper benefits or utilize related transactions to
illegally transfer the funds and profits of Sinopharm Accord, and not to
52
damage the legitimate rights and interests of other shareholders (especially
the medium and small shareholders) of Sinopharm Accord. Sixth, this
commitment letter comes into force from the issue date and remains in
effect for the entire period when the Company acts as the actual controller
or its related party of Sinopharm Accord.
Equity
incentive
commitment
Other
commitment
s for
medium and
small
shareholders
Completed
on time Yes
(Y/N)
2. Concerning assts or project of the Company, which has profit forecast, and reporting period still in
forecasting period, explain reasons of reaching the original profit forecast
√Applicable □ Not applicable
Reasons of
Current Current
fails to
Assets or project forecast actually Disclosure date
achieved the
with profit Starting time Terminal time performance performance for former Index
forecast
forecasted (in 10 thousand (in 10 thousand prediction
number (if
Yuan) Yuan)
applicable)
”Sinopharm
Accord:
Acquiring
Assets by
Offering
Foshan Nanhai 2016-01-01 2018-12-31 4,939.45 5,010.61 nil 2016-05-31
Shares and
Profit Forecast
Compensation
Agreement” on
Juchao website
Guangdong ”Sinopharm
Uptodate & Accord:
2016-01-01 2018-12-31 2,020.97 2,030.62 nil 2016-05-31
Special Acquiring
Medicines Assets by
53
Offering
Shares and
Profit Forecast
Compensation
Agreement” on
Juchao website
”Sinopharm
Accord:
Acquiring
Assets by
n i l Offering
Guoda Drugstore 2016-01-01 2018-12-31 11,099.89 18,299.08 2016-05-31
Shares and
Profit Forecast
Compensation
Agreement” on
Juchao website
”Sinopharm
Accord:
Acquiring
Assets by
Southern Offering
2016-01-01 2018-12-31 4,732.32 4,744.53 nil 2016-05-31
Medical Trade Shares and
Profit Forecast
Compensation
Agreement” on
Juchao website
”Sinopharm
Accord:
Shanghai
Shyndec
Pharmaceutical
Major changes Co., Ltd..and
in policy, the Company
Zhijun
2016-01-01 2018-12-31 23,256.16 20,572.91 operating 2016-05-31 of Acquiring
Pharmaceutical
environment Assets by
and market. Offering
Shares and
Profit Forecast
Compensation
Agreement” on
Juchao website
Zhijun Pharmacy 2016-01-01 2018-12-31 233.51 267.04 nil 2016-05-31 ”Sinopharm
54
Trade Accord:
Shanghai
Shyndec
Pharmaceutical
Co., Ltd.. and
the Company
of Acquiring
Assets by
Offering
Shares and
Profit Forecast
Compensation
Agreement” on
Juchao website
”Sinopharm
Accord:
Shanghai
Shyndec
Pharmaceutical
Major changes Co., Ltd.. and
in policy, the Company
Pingshan
2016-01-01 2018-12-31 4,303.35 4,214.76 operating 2016-05-31 of Acquiring
Pharmaceutical
environment Assets by
and market. Offering
Shares and
Profit Forecast
Compensation
Agreement” on
Juchao website
Commitment made by shareholders of the Company and counterparty in annual operation performance
□ Applicable √ Not applicable
IV. Non-operational fund occupation from controlling shareholders and its related party
□ Applicable √ Not applicable
No non-operational fund occupation from controlling shareholders and its related party in period.
55
V. Explanation from Board of Directors, Supervisory Committee and Independent Directors
(if applicable) for “Qualified Opinion” that issued by CPA
□ Applicable √ Not applicable
VI. Particulars about the changes in aspect of accounting policy, estimates and calculation
method compared with the financial report of last year
√Applicable □Not applicable
On 10 May 2017, the Notice of the Ministry of Finance on Issuing and Revising the Accounting standards
for Business Enterprise No.16- Government subsidy (Cai Kuai [2017] No.15) was promulgated, and come into
effect since 12 June 2017. The prospective application method shal be adopted by an enterprise for treating the
government subsidy on 1 January 2017, and the new government subsidy occurred during 1 January 2017 to
implementation of the Notice shall be adjusted in line with the Standards. The above mentioned Standards are
come into force since 12 June 2017 by the Group and relevnat accounting policy are changed pursuite to the
Standards. As for the government subsidy since 1 January 2017 with routine activities concerned of the
enterprise, they will re-classify to “Other income” and “Financial expenses” from “Non-operation revenue”. In
the reporting period, amount of “Other income”increased7, 958,493.67 Yuan, the “Financial expenses” has
179,700.00 Yuan declined and “Non-operation revenue” decreased 8,138,193.67 Yuan. Net profit of the
Company and shareholder’ equity has no influence for the above mentioned adjustment, and no retroactive
adjustment involved for the data in comparative period either.
On 28 April 2017, the “Notice of Print and Distribute Accounting Standards for Business Enterprise No.42-
Holding of the non-current assets and dispoal group ready for sale and Discontinued Operation (Cai Kuai [2017]
No.13)” was issued by Ministry of Finance, which was came into effect since 28 May 2017.The Group exercise
the new Notice and change the accounting policy and re-classify relevant business. Owing to the Group has no
relevant business involved in year of 2017, the changes have no significant impact on business performance of the
Group.
On 25 December 2017, ministry of finance revised and issued an Announcement on Revising and Printing
Financial Report Format for General Enterprise, which has revised the financial report format, applying to the
financial reports for the year of 2017 and later. The Group has made relative changes to its related accounting
policies in conformity with the requirements stated in the above guideline, which including: increased items of
“Assets holding for sale” and “Liability holding for sale” in Balance Sheet, and increased items of “Income from
assets disposal”, “(i) Net profit of continuous operation” and ‘(ii) Net profit of discontinued operation” in Profit
Statement. The gains/losses from assets disposal which have listed as “Non-operation revenue” and “Non-
operation costs” in Profit Statement will re-classify to item of “Income from assets disposal”. In the reporting
period, “Income from assets disposal” has 792,138.38 Yuan increased, the “Non-operation revenue” decreased
56
1,195,098.24 Yuan and “Non-operation costs” decreased 402,959.86 Yuan. Change of the above mentioned
accounting policy adopted retrospective application, the “Income from assets disposal” for year of 2016 increased
to 9,175,103.65 Yuan, the “Non-operation revenue” decreased to 10,501,930.08 Yuan and “Non-operation costs”
decreased to 1,326,826.43 Yuan. This change has no material effects on the financial status, business performance
and cash flow of the Group.
VII. Major accounting errors within reporting period that needs retrospective restatement
□ Applicable √ Not applicable
No major accounting errors within reporting period that needs retrospective restatement for the Company in the period.
VIII. Compare with last year’s financial report; explain changes in consolidation statement’s
scope
√Applicable □ Not applicable
Details of changes in consolidation statement’s scope can be seen in Note VI of Financial Report.
IX. Appointment and non-reappointment (dismissal) of CPA
Accounting firm appointed
Name of domestic accounting firm Ernst & Young CPA (Special General partnership)
Remuneration for domestic accounting firm (in 10
307.84
thousand Yuan)
Continuous life of auditing service for domestic
2-year
accounting firm
Name of domestic CPA Li Jianguang, Yan Ping
Name of foreign accounting firm (if applicable) N/A
Remuneration for foreign accounting firm (10
0
thousand Yuan) (if applicable)
Continuous life of auditing service for foreign
0
accounting firm (if applicable)
Name of foreign CPA (if applicable) N/A
Re-appointed accounting firms in this period
□ Yes √ No
Appointment of internal control auditing accounting firm, financial consultant or sponsor
√Applicable □ Not applicable
57
The Company engaged Ernst & Young CPA (Special General partnership) as the audit body for internal control, and auditing charge
for internal control amounting as RMB 0.797 million.
X. Particular about suspended and delisting after annual report disclosed
□ Applicable √ Not applicable
XI. Bankruptcy reorganization
□ Applicable √ Not applicable
No bankruptcy reorganization for the Company in reporting period.
XII. Significant lawsuits and arbitrations of the Company
□ Applicable √ Not applicable
No significant lawsuits and arbitrations occurred in the reporting period.
XIII. Penalty and rectification
□ Applicable √ Not applicable
No penalty and rectification for the Company in reporting period.
XIV. Integrity of the company and its controlling shareholders and actual controllers
□ Applicable √ Not applicable
XV. Implementation of the company’s stock incentive plan, employee stock ownership plan or
other employee incentives
□ Applicable √ Not applicable
During the reporting period, the company has no stock incentive plan, employee stock ownership plan or other employee incentives
that have not been implemented.
XVI. Major related transaction
1. Related transaction with routine operation concerned
√Applicable □ Not applicable
58
(1) Related transaction with routine operation concerned found more in the “X. Related relationship and
transactions” carried in Section XI. Financial Report;
(2) Related transactions are settled in cash and notes etc., relevant items released on 22 April 2017, found more in
“Sinopharm Accord: Notice of Supplementary of Routine Related Transactions Prediction for year of 2017”
(Notice No.: 2017-32)” on Juchao Website;
(3) According to the “Proposal of Routine Related Transaction Prediction with Related Parties for year of 2017”,
deliberated and approved by 22nd session of 7th BOD dated 17 April 2017, and the ”Notice of Supplementary of
Routine Related Transactions Prediction for year of 2017” (Notice No.: 2017-32) released on 22 April 2017, the
sales of related parties takes73.50% in total predicted number for the year in 2017 and purchasement of related
parties takes 78.32% in total predicted number for the year.
2. Related transactions by assets acquisition and sold
□ Applicable √ Not applicable
No related transactions by assets acquisition and sold for the Company in reporting period.
3. Main related transactions of mutual investment outside
□ Applicable √ Not applicable
No main related transactions of mutual investment outside for the Company in reporting period.
4. Contact of related credit and debt
√Applicable □ Not applicable
Whether the Company had non-operating contact of related credit and debt
□Yes √ No
The Company had no non-operating contact of related credit and debt in the reporting period.
5. Other related transactions
□ Applicable √ Not applicable
The Company had no other related transaction in the reporting period.
59
XVII. Significant contract and implementations
1. Trusteeship, contract and leasing
(1) Trusteeship
□ Applicable √ Not applicable
The Company had no trusteeship in the reporting period.
(2) Contract
□ Applicable √ Not applicable
No contract for the Company in reporting period.
(3) Leasing
□ Applicable √ Not applicable
No leasing for the Company in reporting period.
2. Major guarantees
√Applicable □ Not applicable
(1) Guarantees
In 10 thousand Yuan
Particulars about the external guarantee of the Company and the subsidiaries (Barring the guarantee for subsidiaries)
Related Guarante
Actual date of
Announce Actual e for
Name of the Company Guarantee happening (Date Guarantee Guarantee Implemen
ment guarantee related
guaranteed limit of signing type term ted (Y/N)
disclosure limit party
agreement)
date (Y/N)
Guarantee between the Company and the subsidiaries
Related Actual date of Actual Guarante
Name of the Company Guarantee Guarantee Guarantee Implemen
Announce happening (Date guarantee e for
guaranteed limit type term ted (Y/N)
ment of signing limit related
60
disclosure agreement) party
date (Y/N)
China National
General 2017.7.13-
Accord Medicines 2017-04-19 25,000 2017-07-13 23,512.64 N N
assurance 2018.7.13
Corporation Ltd.
China National
General 2017.11.23-
Accord Medicines 2017-04-19 20,000 2017-11-23 11,137.72 N N
assurance 2018.5.22
Corporation Ltd.
Sinopharm Holding
General 2017.10.12-
Shenzhen Medicine 2017-04-19 500 2017-10-12 104.92 N N
assurance 2018.10.11
Co., Ltd.
Sinopharm Holding
General 2017.10.12-
Shenzhen Jianmin 2017-04-19 500 2017-10-12 0 N N
assurance 2018.10.11
Co., Ltd.
Guangdong Nanfang
Pharmaceutical General 2017.6.14-
2017-04-19 15,000 2017-06-14 0 N N
Foreign Trade Co., assurance 2018.6.13
Ltd.
Guangdong Nanfang
Pharmaceutical General 2017.6.5-
2017-04-19 2,500 2017-06-05 292.25 N N
Foreign Trade Co., assurance 2017.12.31
Ltd.
Sinopharm Holding
General 2017.11.6-
Jiangmen Renren Co., 2017-04-19 1,000 2017-11-06 0 N N
assurance 2018.10.11
Ltd.
Sinopharm Holding General 2017.10.16-
2017-04-19 1,500 2017-10-16 755.29 N N
Foshan Co., Ltd. assurance 2018.10.11
Sinopharm Holding
General 2017.12.29-
Guangdong Hengxing 2017-04-19 3,000 2017-12-29 1,830.41 N N
assurance 2018.12.29
Co., Ltd.
Foshan Nanhai
General 2017.1.19-
Uptodate & Special 2016-12-30 5,000 2017-01-19 509.12 N N
assurance 2017.12.30
Medicines Co. Ltd.
Foshan Nanhai
General 2017.7.31-
Uptodate & Special 2017-04-19 5,000 2017-07-31 0 N N
assurance 2018.7.31
Medicines Co. Ltd.
Foshan Nanhai
General 2017.5.15-
Uptodate & Special 2017-04-19 5,000 2017-05-15 0 N N
assurance 2018.5.14
Medicines Co. Ltd.
Foshan Nanhai 2017-04-19 6,000 2017-10-16 1,546.96 General 2017.10.16- N N
61
Uptodate & Special assurance 2018.10.11
Medicines Co. Ltd.
Foshan Nanhai
General 2017.12.1-
Uptodate & Special 2017-04-19 5,000 2017-12-01 699.83 N N
assurance 2018.12.1
Medicines Co. Ltd.
Sinopharm Holding General 2017.10.26..
2017-04-19 2,000 2017-10-26 1,600 N N
Zhaoqing Co., Ltd. assurance 2018.10.11
Sinopharm Holding General 2017.11.15-
2017-04-19 20,000 2017-11-15 13,203 N N
Guangxi Co., Ltd. assurance 2018.11.18
Sinopharm Holding General 2017.10.13-
2017-04-19 28,000 2017-10-13 5,994.44 N N
Guangxi Co., Ltd. assurance 2018.10.11
Sinopharm Holding General 2017.11.9-
2017-04-19 25,000 2017-11-09 9,853.59 N N
Guangxi Co., Ltd. assurance 2018.11.8
Sinopharm Holding General 2016.9.14-
2016-03-26 5,000 2016-09-14 351.36 N N
Guangxi Co., Ltd. assurance 2017.9.13
Sinopharm Holding General 2017.11.23-
2017-04-19 10,000 2017-11-23 4,996 N N
Guangxi Co., Ltd. assurance 2018.5.22
Sinopharm Holding General 2017.9.4-
2017-04-19 10,000 2017-09-04 0 N N
Guangxi Co., Ltd. assurance 2018.9.4
Sinopharm Holding General 2017.8.31-
2017-04-19 10,000 2017-08-31 0 N N
Guangxi Co., Ltd. assurance 2018.8.31
Sinopharm Holding General 2017.5.20-
2017-04-19 35,000 2017-05-20 1,481.16 N N
Guangzhou Co., Ltd. assurance 2018.5.20
Sinopharm Holding General 2017.11.28-
2017-04-19 30,000 2017-11-28 5,040.94 N N
Guangzhou Co., Ltd. assurance 2018.11.27
Sinopharm Holding General 2017.7.24-
2017-04-19 25,000 2017-07-24 9,437.28 N N
Guangzhou Co., Ltd. assurance 2018.7.23
Sinopharm Holding General 2017.10.23-
2017-04-19 40,000 2017-10-23 27,562.16 N N
Guangzhou Co., Ltd. assurance 2018.9.24
Sinopharm Holding General 2017.3.3-
2016-03-26 15,000 2017-03-01 0 N N
Guangzhou Co., Ltd. assurance 2018.3.2
Sinopharm Holding General 2017.10.13-
2017-04-19 35,000 2017-10-11 0 N N
Guangzhou Co., Ltd. assurance 2018.10.11
Sinopharm Holding General 2017.8.31-
2017-04-19 30,000 2017-08-31 26,287.09 N N
Guangzhou Co., Ltd. assurance 2018.8.30
Sinopharm Holding General 2017.5.15-
2017-04-19 40,000 2017-05-15 21,878.29 N N
Guangzhou Co., Ltd. assurance 2018.5.14
Sinopharm Holding 2017-04-19 10,000 2017-10-27 9,840.15 General 2017.10.27- N N
62
Guangzhou Co., Ltd. assurance 2018.2.28
Sinopharm Holding General 2017.7.1-
2017-04-19 60,000 2017-07-01 30,357.18 N N
Guangzhou Co., Ltd. assurance 2018.6.30
Sinopharm Holding General 2017.5.10-
2017-04-19 20,000 2017-05-10 3,695.7 N N
Guangzhou Co., Ltd. assurance 2018.5.9
Sinopharm Holding General 2017.8.18-
2017-04-19 30,000 2017-08-18 7,856.97 N N
Guangzhou Co., Ltd. assurance 2018.8.17
Sinopharm Holding General 2017.4.19-
2017-04-19 85,000 2017-04-19 5,740.92 N N
Guangzhou Co., Ltd. assurance 2018.3.31
Sinopharm Holding
General 2017.5.20-
Guangdong Yuexing 2017-04-19 3,500 2017-05-20 2,348.5 N N
assurance 2018.5.20
Co., Ltd.
Sinopharm Holding
General 2017.10.13-
Guangdong Yuexing 2017-04-19 5,000 2017-10-12 4,728.84 N N
assurance 2018.10.11
Co., Ltd.
Sinopharm Holding
General 2016.9.18-
Guangdong Yuexing 2016-03-26 3,000 2016-09-18 249.01 N N
assurance 2017.9.17
Co., Ltd.
Sinopharm Holding
General 2017.1.18-
Guangdong Yuexing 2016-12-30 2,000 2017-01-18 1,856.77 N N
assurance 2018.1.17
Co., Ltd.
Sinopharm Holding General 2017.10.13-
2017-04-19 9,000 2017-10-13 0 N N
Liuzhou Co., Ltd. assurance 2018.10.11
Sinopharm Holding General 2017.6.21-
2017-04-19 5,000 2017-06-21 1,592.86 N N
Liuzhou Co., Ltd. assurance 2018.6.20
Sinopharm Holding General 2017.2.15-
2016-12-30 6,000 2017-02-15 1,594.08 N N
Liuzhou Co., Ltd. assurance 2018.1.2
Sinopharm Holding General 2017.10.12-
2017-04-19 1,000 2017-10-12 1,000 N N
Zhanjiang Co., Ltd. assurance 2018.10.11
Foshan Nanhai
General 2017.1.19-
Pharmaceutical Co., 2016-12-30 5,000 2017-01-19 86 N N
assurance 2017.12.30
Ltd.
Foshan Nanhai
General 2017.7.31-
Pharmaceutical Co., 2017-04-19 5,000 2017-07-31 0 N N
assurance 2018.7.31
Ltd.
Foshan Nanhai
General 2017.10.16-
Pharmaceutical Co., 2017-04-19 5,000 2017-10-16 2,954 N N
assurance 2018.10.11
Ltd.
Foshan Nanhai 2017-04-19 5,000 2017-12-01 0 General 2017.12.1- N N
63
Pharmaceutical Co., assurance 2018.12.1
Ltd.
Sinopharm Holding General 2017.10.12-
2017-04-19 500 2017-10-12 500 N N
Shantou Co., Ltd. assurance 2018.10.11
Sinopharm Holding General 2017.10.12-
2017-04-19 1,000 2017-10-12 0 N N
Zhongshan Co., Ltd. assurance 2018.10.11
Sinopharm Holding General 2017.10.12-
2017-04-19 1,000 2017-10-12 0 N N
Zhuhai Co., Ltd. assurance 2018.10.11
Sinopharm Holding General 2017.10.12-
2017-04-19 1,000 2017-10-12 0 N N
Meizhou Co., Ltd. assurance 2018.10.11
Sinopharm Holding General 2017.10.12-
2017-04-19 1,000 2017-10-12 0 N N
Huizhou Co., Ltd. assurance 2018.10.11
Sinopharm Holding General 2017.10.12-
2017-4-19 2,000 2017-10-12 0 N N
Dongguan Co., Ltd. assurance 2018.10.11
Sinopharm Holding
General 2017.10.17-
Shenzhen Yanfeng 2017-04-19 9,000 2017-10-17 1,200 N N
assurance 2018.10.11
Co., Ltd.
Sinopharm Holding
General 2017.11.23-
Shenzhen Yanfeng 2017-04-19 2,000 2017-11-23 2,000 N N
assurance 2018.05.22
Co., Ltd.
Sinopharm Holding
General 2017.08.18-
Shenzhen Yanfeng 2017-04-19 3,000 2017-08-18 3,000 N N
assurance 2018.08.17
Co., Ltd.
694,000 Total amount of actual 1,028,276.09
Total amount of approving
occurred guarantee for
guarantee for subsidiaries in report
subsidiaries in report period
period (B1)
(B2)
735,000 Total balance of actual 248,675.43
Total amount of approved
guarantee for subsidiaries at
guarantee for subsidiaries at the
the end of reporting period
end of reporting period (B3)
(B4)
Guarantee between the subsidiaries and the subsidiaries
Related Guarante
Actual date of
Announce Actual e for
Name of the Company Guarantee happening (Date Guarantee Guarantee Implemen
ment guarantee related
guaranteed limit of signing type term ted (Y/N)
disclosure limit party
agreement)
date (Y/N)
Sinopharm Holding
General 2017.6.9-
Guoda Drugstore 2017-04-19 3,000 2017-06-09 2,843 N N
assurance 2018.6.8
Guangdong Co.,Ltd
64
Sinopharm Holding
General 2017.6.1-
Guoda Drugstore 2017-04-19 3,000 2017-06-01 2,397 N N
assurance 2018.6.1
Guangdong Co.,Ltd
Sinopharm Holding
Guoda Drugstore General 2017.3.21-
2016-12-30 4,500 2017-03-21 1,440 N N
Shenyang Chain assurance 2018.1.24
Co.,Ltd
Sinopharm Holding
Guoda Drugstore General 2017.9.1-
2017-04-19 5,000 2017-09-01 0 N N
Shenyang Chain assurance 2018.9.1
Co.,Ltd
Sinopharm Holding
Guoda Drugstore General 2017.6.1-
2017-04-19 6,000 2017-06-01 5,498 N N
Shenyang Chain assurance 2018.6.1
Co.,Ltd
Sinopharm Holding
Guoda Drugstore General 2017.8.23-
2017-04-19 6,000 2017-06-29 5,921 N N
Shenyang Chain assurance 2018.8.23
Co.,Ltd
Sinopharm Holding
Guoda Drugstore General 2017.6.1-
2017-04-19 3,000 2017-06-01 2,101 N N
Shenyang Chain assurance 2018.6.1
Co.,Ltd
Sinopharm Holding
Guoda Drugstore General 2017.6.28-
2017-04-19 6,000 2017-06-28 5,337 N N
Shenyang Chain assurance 2018.6.28
Co.,Ltd
Sinopharm Holding
Guoda Drugstore General 2017.10.10-
2017-04-19 15,000 2017-10-10 3,955 N N
Shenyang Chain assurance 2018.10.9
Co.,Ltd
Sinopharm Holding
Guoda Drugstore General 2017.7.20-
2017-4-19 4,200 2017-7-20 0 N N
Shenyang Chain assurance 2018.7.19
Co.,Ltd
Fujian Guoda
General 2017.2.1-
Drugstore Chain 2016-12-30 1,950 2017-02-01 1,662 N N
assurance 2018.2.1
Co.,Ltd
Sinopharm Holding General 2017.1.29-
2016-12-30 2,100 2017-01-29 275 N N
Guoda Drugstore assurance 2017.12.31
65
Guangxi Chain
Co.,Ltd
Sinopharm Holding
Guoda Drugstore General 2017.10.10..
2017-04-19 2,000 2017-10-10 993 N N
Guangxi Chain assurance 2018.10.9
Co.,Ltd
Sinopharm Holding
Guoda Drugstore General 2017.4.24-
2017-04-19 3,000 2017-04-24 1,903 N N
Inner Mongolia assurance 2018.4.23
Co.,Ltd
Sinopharm Holding
Guoda Drugstore General 2017.4.23-
2017-04-19 5,000 2017-04-23 1,938 N N
Inner Mongolia assurance 2018.4.22
Co.,Ltd
Sinopharm Holding
Guoda Drugstore General 2017.10.10-
2017-04-19 6,000 2017-10-10 1,967 N N
Inner Mongolia assurance 2018.10.9
Co.,Ltd
Sinopharm Holding
Guoda Drugstore General 2017.5.15-
2017-04-19 6,000 2017-05-01 5,036 N N
Shanxi Yiyuan Chain assurance 2018.4.18
Co.,Ltd
Sinopharm Holding
Guoda Drugstore General 2017.9.19-
2017-04-19 4,000 2017-08-31 3,881 N N
Shanxi Yiyuan Chain assurance 2018.9.18
Co.,Ltd
Sinopharm Holding
Guoda Drugstore General 2017.12.25-
2017-04-19 2,800 2017-10-01 1,704 N N
Shanxi Yiyuan Chain assurance 2018.12.24
Co.,Ltd
Sinopharm Holding
Guoda Drugstore General 2017.4.5-
2017-04-19 8,000 2017-04-05 3,606 N N
Shanxi Yiyuan Chain assurance 2018.4.4
Co.,Ltd
Sinopharm Holding
Guoda Fumei General 2016.12.14-
2016-12-30 9,000 2016-12-14 3,896 N N
Pharmaceutical assurance 2017.12.13
(Shanghai) Co., Ltd.
Shanxi Guoda General 2017.5.1-
2017-04-19 3,000 2017-05-01 3,000 N N
Wanmin Drugstore assurance 2018.5.1
66
Chain Co.,Ltd
Shanxi Guoda
General 2017.4.1-
Wanmin Drugstore 2016-12-30 5,000 2017-04-01 3,600 N N
assurance 2018.4.1
Chain Co.,Ltd
Shanxi Guoda
General 2017.6.1-
Wanmin Drugstore 2017-04-19 3,000 2017-06-01 500 N N
assurance 2018.6.1
Chain Co.,Ltd
Sinopharm Holding
Guoda Drugstore General 2017.11.1-
2017-04-19 1,000 2017-11-01 20 N N
Yangzhou Dadesheng assurance 2018.11.1
Chain Co.,Ltd
Sinopharm Holding
Guoda Drugstore General 2017.10.10-
2017-04-19 2,000 2017-10-10 0 N N
Yangzhou Dadesheng assurance 2018.10.9
Chain Co., Ltd
Hunan Guoda
Minshengtang General 2017.10.16-
2017-04-19 2,400 2017-10-16 0 N N
Drugstore Chain Co., assurance 2018.10.15
Ltd.
Hunan Guoda
Minshengtang General 2017.10.20-
2017-04-19 2,000 2017-10-20 0 N N
Drugstore Chain Co., assurance 2018.10.9
Ltd.
Sinopharm Holding
Guoda Drugstore General 2017.10.10-
2017-04-19 2,000 2017-10-10 1,993 N N
Jiangmen Chain assurance 2018.10.9
Co.,Ltd
Total amount of actual
Total amount of approving
occurred guarantee for
guarantee for subsidiaries in report 103400 122,247.45
subsidiaries in report period
period (C1)
(C2)
Total balance of actual
Total amount of approved
guarantee for subsidiaries at
guarantee for subsidiaries at the 125950 65,466
the end of reporting period
end of reporting period (C3)
(C4)
Total amount of guarantee of the Company ( total of three abovementioned guarantee)
Total amount of approving Total amount of actual
guarantee in report period 797400 occurred guarantee in report 1,150,523.54
(A1+B1+C1) period (A2+B2+C2)
Total amount of approved Total balance of actual
860950 314,141.43
guarantee at the end of report guarantee at the end of
67
period (A3+B3+C3) report period (A4+B4+C4)
The proportion of the total amount of actually guarantee in the net
33.43%
assets of the Company (that is A4+ B4+C4)
Including:
Explanation on guarantee with composite way
(2) Guarantee outside against the regulation
□ Applicable √ Not applicable
No guarantee outside against the regulation in Period.
3. Entrust others to cash asset management
(1) Trust financing
□ Applicable √ Not applicable
The Company had no trust financing in the reporting period.
(2) Entrusted loans
□ Applicable √ Not applicable
The company had no entrusted loans in the reporting period.
4. Other material contracts
□ Applicable √ Not applicable
No other material contracts for the Company in reporting period.
XVIII. Social responsibility
1. Execution of social responsibility
“Social Responsibility Report of Sinopharm Accord in 2017” can be seen in Juchao website dated 22 March 2018.
(http://www.cninfo.com.cn)
68
2. Execution of social responsibility of targeted poverty alleviation
Nil
3. Environment protection
The listed Company and its subsidiary whether belongs to the key sewage units released from environmental protection department
No
Found more in the “Social Responsibility Report of Sinopharm Accord for year of 2017” on Juchao Website
(http://www.cninfo.com.cn) dated 22 March 2018
XIX. Explanation on other significant events
√Applicable □ Not applicable
1.During the reporting period, the Company has successfully completed the related significant asset restructuring;
The Proposal on Asset Sales, Issue of Shares and Cash to Buy Assets and Raise Matching Funds and Related
Party Transaction of Sinopharm Accord. was announced on Mar. 10th and Mar. 25th of 2016 respectively; Asset
sales, Issue of Shares and Cash to Buy Assets and Raise Matching Funds and Related Party Transaction Report
(Draft Version) was released on May31st and Jun. 14th of 2016 respectively; Announcement on the formal Reply
from China Securities Regulatory Commission on Asset Sales, Issue of Shares, Cash to Buy Assets and Raise
Matching Funds and Related Party Transaction of Sinopharm Accord. And Report on Asset Sales, Issue of Shares
and Cash to Buy Assets and Raise Matching Funds and Related Party Transaction of Sinopharm Accord. (Revised
Version) were issued on Sep. 28th , 2016; Sinopharm Accord.: Announcement on the Assets transfer condition
under the Objective of Asset Sales, Issue of Shares and Cash to Buy Assets and Raise Matching Funds and
Related Party Transaction was announced on Dec. 13th , 2016; Sinopharm Accord.: Asset Sales, Issue of Shares
and Cash to Buy Assets and Raise Matching Funds and Related Party Transaction Implementation Condition and
New Stock Shares Listing Announcement was issued on Jan. 4th, 2017; Sinopharm Accord. : Announcement on
the Implementation Status of Significant Assets Restructuring was issued on Feb. 28th , 2017. The Company has
completed the registration procedures on the transfer of names of the real estate on the northern side of Lanzhu
East Road, Biological Medicine Base in Kenzi Street of Pingshan New District under the item of Pingshan base,
and related real estate has been registered under the name of Shanghai Modern Pharmaceutical Co., Ltd.; China
National Accord Corporation Ltd.: Announcement on the Implementation Status of Significant Assets
Restructuring was issued on Mar. 9th, 2017 and Shanghai Modern Pharmaceutical Co., Ltd, as the counter-party of
this assets sale, has completed the registration procedures of the private share placement to the Company.
2. During the reporting period, the wholly-owned subsidiary of the Company, Sinopharm Holding Guoda
Drugstore Co., Ltd., has brought in strategic investors by means of capital increase and share expansion:
69
The proposal on the wholly-owned subsidiary Sinopharm Group Guoda Drugstore Co.,Ltd., Bringing in Strategic
Investors by Means of Capital Increase and Share Expansion was deliberated and approved on the 25th meeting of
the 7th session of Board of Directors On Sep. 4th, 2017, and the wholly-owned subsidiary Sinopharm Group Guoda
Drugstore Co., Ltd (hereinafter referred to as “Guoda Drugstore”) has got the approval of bringing in one
strategic investor by means of capital increase and share expansion, taking assets assessment report as the
reference of pricing. After the completion of capital increase, the Company has a shareholding of 60 percent and
the strategic investor accounts for 40% stake. The project was approved to trade security through the listing
system at the trading floor of state-owned property rights. See announcement No. 2017-45 of the Company on
website: http://www.cninfo.com.cn on Sep. 5th, 2017 for details.
The Proposal on the Wholly-owned Subsidiary Sinopharm Group Guoda Drugstore Co., Ltd. Amassing Strategic
Investors in Public and Proposal on Giving up the Right of Priority of Subscribed Capital Contribution of the
Capital Increase and Share Expansion of the wholly-owned subsidiary Sinopharm Group Guoda Drugstore Co.,
Ltd. were deliberated and approved on Sep. 18th, 2017. See announcements No. 2017-47 and No. 2017-49 of the
Company on the website: http://www.cninfo.com.cn on Sep. 19th, 2017 for details.
The Company has been listed on stock exchanges at Shanghai United Assets and Equity Exchange on Sep. 20th ,
2017, with 40 working days of the term of announcement and the expiry date was Nov. 20th. Until the expiration
of the term of announcement, Guoda Drugstore has amassed an interested investor, that is Walgreens Boots
Alliance (Hong Kong) Investments Limited (hereinafter referred to as “WBAHKIL”) and its qualification of
investment has been examined and approved by Shanghai United Assets and Equity Exchange and it also got the
confirmation of Sinopharm Group Guoda Drugstore Co..Ltd. In line with the rule of property transactions, this
capital increase has been concluded by an agreement. As the actual controller, Walgreens Boots Alliance
(NASDAQ: WBA, hereinafter referred as “Walgreens” or “WBA”) has subscribed the stock rights of Guoda
Drugstore through taking its wholly-owned subsidiary Walgreens Boots Alliance (Hong Kong) Investments
Limited that is based in Hong Kong as the subject of capital increase, with capital increase by 2766.70 million
Yuan, it holds a 40 percent of stake of Guoda Drugstore. The Company has received the Announcement on the
Result of Capital Increase from Shanghai United Assets and Equity Exchange on Nov. 29th , 2017. See the
announcement No. 2017-54 of the Company on the website:http://www.cninfo.com.cn
on Nov. 30th., 2017 for details.
At beginning of the December in 2017,the Company, Sinopharm Group Guoda Drugstore Co.,Ltd. And
Walgreens Boots Alliance (Hong Kong) Investments Limited (the wholly-owned subsidiary of Walgreens in
Hong Kong), had signed up the Registered Capital Increase and Subscription Agreement. See announcement No.
2017-55 of the Company on the website http://www.cninfo.com.cn on Dec. 7th , 2017 for details.
By the end of date of disclosure, this project has not been required to apply for investigation by antitrust bureau of
70
ministry of commerce. The Company will continue to fulfill the obligation of information disclosure according to
the progress of this project.
XX. Significant event of subsidiary of the Company
√Applicable □ Not applicable
See “XIX. Explanation on other significant events”
71
Section VI. Changes in Shares and Particulars about Shareholders
I. Changes in Share Capital
1. Changes in Share Capital
In Share
Before the Change Increase/Decrease in the Change (+, -) After the Change
Capital
ization
Proportio New shares Bonus
Amount of Others Subtotal Amount Proportion
n issued shares
public
reserve
I. Restricted shares 74,484,531 20.54% 65,495,040 -74,482,543 -8,987,503 65,497,028 15.30%
2. State-owned legal -
74,482,543 20.54% 60,380,743 -74,482,543 60,380,743 14.10%
person’s shares 14,101,800
3. Other domestic
1,988 0.00% 5,114,297 5,114,297 5,116,285 1.20%
shareholding
Including: Domestic
0 5,114,297 5,114,297 5,114,297 1.19%
legal person’s shares
Domestic nature
1,988 0.00% 1,988 0.00%
person shares
II. Unrestricted shares 288,147,412 79.46% 74,482,543 74,482,543 362,629,955 84.70%
1. RMB Ordinary shares 233,261,812 64.32% 74,482,543 74,482,543 307,744,355 71.88%
2. Domestically listed
54,885,600 15.14% 54,885,600 12.82%
foreign shares
III. Total shares 362,631,943 100.00% 65,495,040 0 65,495,040 428,126,983 100.00%
Reasons for share changed
√Applicable □ Not applicable
The reasons for the increase of restricted stock: the total amount of non-public offering of stock issued during the
significant assets restructuring of the Company was 65,495,040 shares (circulating stocks with restriction on sales),
which has been listed on Jan. 5th , 2017, among which, the amount of issuing stocks to purchase assets was
60,380,743 shares, the amount of issuing stocks to raise matching fund was 5,114,297 shares. The term of
restriction on sales of the above stocks was 36 months from the date of listing of the new shares. See the Asset
Sales, Issue of Shares and Cash to Buy Assets and Raise Matching Funds and Related Party Transaction
Implementation Condition and New Stock Shares Listing Announcement disclosed on the website:
72
http://www.cninfo.com.cn on Jan. 4th , 2017 for details.
The reasons for the decline of restricted stocks: the Company has offered 74,482,543 of non-public offering of
stock to Sinopharm Group Co., Ltd (hereinafter referred as Sinopharm Group). also the shareholder of the
Company, in March of 2014. The new stock shares has been list in Shenzhen Stock Exchange on Mar. 21st , 2014,
and the property of stock shares was circulating stocks with restriction on sales, and the term of restriction was 36
months from the date of listing of the new shares. The date of listing circulation of the restricted stock shares
released restrictions was Mar. 21st , 2017. See the Suggestive Announcement on Releasing the Restriction of the
Restricted Non-public Offering of Stock (No. : 2017-14) disclosed on website: http://www.cninfo.com.cn on Mar.
17th , 2017.
Approval of share changed
√Applicable □ Not applicable
See the Asset Sales, Issue of Shares and Cash to Buy Assets and Raise Matching Funds and Related Party
Transaction Implementation Condition and New Stock Shares Listing Announcement and Suggestive
Announcement on Releasing the Restriction of the Restricted Non-public Offering of Stock (No. : 2017-14)
respectively disclosed on the website: http://www.cninfo.com.cn on Jan. 4th , 2017 and Mar. 17th, , 2017 for details.
Ownership transfer of share changes
√Applicable □ Not applicable
See the Asset Sales, Issue of Shares and Cash to Buy Assets and Raise Matching Funds and Related Party
Transaction Implementation Condition and New Stock Shares Listing Announcement and Suggestive
Announcement on Releasing the Restriction of the Restricted Non-public Offering of Stock (No. : 2017-14)
respectively disclosed on the website: http://www.cninfo.com.cn on Jan. 4th , 2017 and Mar. 17th, , 2017 for details.
Influence on the basic EPS and diluted EPS as well as other financial indexes of net assets per share attributable to common
shareholders of Company in latest year and period
□ Applicable √ Not applicable
Other information necessary to disclose or need to disclosed under requirement from security regulators
□ Applicable √ Not applicable
2. Changes of restricted shares
√Applicable □ Not applicable
73
In share
Restricted
Shares
Opening shares Shares released Increased Ending shares Restricted
Shareholders Date for released
restricted in Period In restricted reasons
the
Period
Sinopharm Private issuing of
74,482,543 74,482,543 0 0 2017-3-21
Holding Co., Ltd. Stock for 2013
Purchasing the
assets of private
Sinopharm issuing stock
0 0 55,057,700 55,057,700 2020-1-6
Holding Co., Ltd. with shares
issuing for year
of 2017
Purchasing the
China National assets of private
Pharmaceutical issuing stock
0 0 5,323,043 5,323,043 2020-1-6
Foreign Trade with shares
Corp. issuing for year
of 2017
Purchasing the
Ping An Assets-
assets of private
ICBC-Xinxiang
issuing stock
No.3 Assets 0 0 2,557,149 2,557,149 2020-1-6
with shares
Management
issuing for year
Products
of 2017
Ping An Assets-
Purchasing the
ICBC- Ping An
assets of private
Assets Xinxiang
issuing stock
No.7 Insurance 0 0 2,557,148 2,557,148 2020-1-6
with shares
Assets
issuing for year
Management
of 2017
Products
Total 74,482,543 74,482,543 65,495,040 65,495,040 -- --
II. Securities issuance and listing
1. Security offering (without preferred stock) in Reporting Period
√Applicable □ Not applicable
Stock and Issue date Issue price Circulation Listing date Approved Date of termination
74
derivative (interest rate) figures trading volume
securities
Stock
Purchase assets
with restructure 53.50
65,495,040 2017-01-05 60,380,743
privately offering Yuan/share
shares
Explanation on security (Preferred stock excluded) offering in reporting period
The Company had completed the listing of non-public offering of stock for issuing stocks to purchase assets on
Jan. 5th, 2017, and there was a mount of 65,495,040 restricted stocks increased. After the completion of this
transaction, the total amount of stock shares of the Company was up to 428,126,983. See the Asset Sales, Issue of
Shares and Cash to Buy Assets and Raise Matching Funds and Related Party Transaction Implementation
Condition and New Stock Shares Listing Announcement disclosed on the website: http://www.cninfo.com.cn on
Jan. 4th , 2017 for details.
2. Changes of total shares and shareholders structure as well as explanation on changes of assets and
liability structure
√Applicable □ Not applicable
Explaination on total shares and shareholdres structure: the Company issuing shares privately to purchased assets,
65,495,040 shares issued; and after transaction, shares of the Company comes to 428,126,983 shaers, details are:
Issuing object Counterpart assets Number of shares issued Proportion of the total equity
after issurance
100% equity of Guoda Drug Store 40,315,346 9.42%
100% equity of Guangdong New 3,966,947 0.93%
Sinopharm Holding Special Medicine
100% equity of Foshan Nanhai 10,775,407 2.52%
Subtotal 55,057,700 12.87%
Sinopharm Foreign 51% equity of South Medical 5,323,043 1.24%
Trade Trading
Subtotal of assets purchased by shares issuing 60,380,743 14.11%
Ping An Assets Collecting supporting funds 5,114,297 1.19%
Management
Total 65,495,040 15.30%
3. Existing internal staff shares
□ Applicable √ Not applicable
75
III. Particulars about shareholder and actual controller of the Company
1. Amount of shareholders of the Company and particulars about shares holding
In Share
Total preference
shareholders
Total preference
Total common with voting
Total common shareholders with
stock rights recovered
stock voting rights
shareholders at at end of last
shareholders in 18,357 18,122 recovered at end of 0 0
end of last month month before
reporting reporting period (if
before annual annual report
period-end applicable) (found
report disclosed disclosed (if
in note8)
applicable)
(found in note8)
Particulars about shares held above 5% by shareholders or top ten shareholders
Total Number of share pledged/frozen
Amount Amount of
Proportio sharehold
Changes of un-
Full name of Nature of n of ers at the
in report restricted restricted
Shareholders shareholder shares end of State of share Amount
period shares shares
held report
held held
period
Sinopharm State-owned 239,999,9 55,057,70 184,942,2
56.06%
Holding Co., Ltd. Corporation 91 0 91
HTHK/CMG
FSGUFP-CMG
Foreign
FIRST STATE 2.30% 9,867,349 0 9,867,349
Corporation
CHINA GROWTH
FD
China United
Property Insurance Domestic non
Company Limited state-owned 1.42% 6,092,905 0 6,092,905
- Traditional Corporation
insurance products
China Life
Insurance Co., Ltd. Domestic non
– tradition –general state-owned 1.26% 5,409,681 0 5,409,681
insurance products Corporation
-005L-CT001 Shen
China National State-owned
1.24% 5,323,043 5,323,043 0
Pharmaceutical Corporation
76
Foreign Trade
Corp.
GUOTAI JUNAN
SECURITIES(HO Foreign
1.19% 5,115,723 0 5,115,723
NGKONG) Corporation
LIMITED
TARGET VALUE Foreign
1.16% 4,957,162 0 4,957,162
FUND Corporation
New China Life
Insurance Co., Ltd.
Domestic non
– Bonus –
state-owned 0.98% 4,199,772 0 4,199,772
Individual bonuses
Corporation
- -018L-FH002
Shen
Beijing Haoqing
Fortune Investment
Domestic non
Management Co.,
state-owned 0.94% 4,037,516 0 4,037,516
Ltd. – Haoqing
Corporation
Value Stable No.8
Investment Fund
Central Huijin State-owned
0.89% 3,804,400 0 3,804,400
Investment Ltd. Corporation
Sinopharm Group Co., Ltd. and China National Pharmaceutical Foreign Trade Corporation
have the same actual controller, which is China National Pharmaceutical Group
Explanation on associated relationship
Corporation. It is unknown that there exists no associated relationship or belongs to the
among the aforesaid shareholders
consistent actionist among the other tradable shareholders regulated by the Management
Measure of Information Disclosure on Change of Shareholding for Listed Companies.
Particular about top ten shareholders with un-restrict shares held
Type of shares
Shareholders’ name Amount of un-restrict shares held at Period-end
Type Amount
RMB ordinary
Sinopharm Holding Co., Ltd. 184,942,291 184,942,291
shares
HTHK/CMG FSGUFP-CMG FIRST Domestic listed
9,867,349 9,867,349
STATE CHINA GROWTH FD foreign shares
China United Property Insurance
RMB ordinary
Company Limited - Traditional 6,092,905 6,092,905
shares
insurance products
China Life Insurance Co., Ltd. –
RMB ordinary
tradition –general insurance products - 5,409,681 5,409,681
shares
005L-CT001 Shen
GUOTAI JUNAN 5,115,723 Domestic listed 5,115,723
77
SECURITIES(HONGKONG) foreign shares
LIMITED
Domestic listed
TARGET VALUE FUND 4,957,162 4,957,162
foreign shares
New China Life Insurance Co., Ltd. –
RMB ordinary
Bonus – Individual bonuses - -018L- 4,199,772 4,199,772
shares
FH002 Shen
Beijing Haoqing Fortune Investment
RMB ordinary
Management Co., Ltd. – Haoqing 4,037,516 4,037,516
shares
Value Stable No.8 Investment Fund
RMB ordinary
Central Huijin Investment Ltd. 3,804,400 3,804,400
shares
VALUE PARTNERS CLASSIC Domestic listed
3,038,918 3,038,918
FUND foreign shares
Expiation on associated relationship or
consistent actors within the top 10 un- It is unknown that there exists no associated relationship or belongs to the consistent
restrict shareholders and between top actionist among the other tradable shareholders regulated by the Management Measure of
10 un-restrict shareholders and top 10 Information Disclosure on Change of Shareholding for Listed Companies.
shareholders
Explanation on shareholders involving
Beijing Haoqing Fortune Investment Management Co., Ltd. – Haoqing Value Stable No.8
margin business about top ten common
Investment Fund holds shares of the Company through margin trading and negotiable
stock shareholders with un-restrict
securities account that is 4,037,516 shares in total.
shares held (if applicable) (see note4)
Whether top ten common stock shareholders or top ten common stock shareholders with un-restrict shares held have a buy-back
agreement dealing in reporting period
□Yes √ No
The top ten common stock shareholders or top ten common stock shareholders with un-restrict shares held of the Company have no
buy-back agreement dealing in reporting period.
2. Controlling shareholder of the Company
Nature of controlling shareholders: central state-owned holding
Type of controlling shareholders: legal person
Legal
Controlling person/person Organization
Date of foundation Main operation business
shareholders in charge of code
the unit
Sinopharm Holding Li Zhiming 2003-01-08 74618434-4 Industrial investment holding; management and assets
78
Co., Ltd. reorganization entrusted by pharmaceutical enterprise;
Chinese medicine, Chinese medicine tablets, chemical
medicine preparations, chemical raw materials,
antibiotics, biochemical drugs, biological products,
narcotic drugs, psychotropic substances, toxic drugs for
medical use (compatible with the business scope),
medicine IVD Reagents, vaccine, anabolic agents,
Peptide hormone and medical equipment. III: injection
puncture instruments, hygienic materials & dressings,
medical polymer materials and products, categories II:
medical X-ray ancillary equipment and components;
food marketing management (non-physical way), and
domestic trade (other than special licensing), logistics
and other consulting services, cosmetics, stationeries and
related consulting services, operating various types of
goods and import and export of technology (not attached
directory of import and export commodities), but
excluded the import and export of goods and technology
the State limits or prohibit the company. [In right of
exequatur to run if refers to permission operation].
Equity of other
domestic/oversea
listed company
control by Sinopharm Group Co., Ltd. hold 44.01 percent equity of China National Medicines Corporation Ltd (Stock
controlling code: 600511) up to the end of Period.
shareholder as well
as stock-joint in
report period
Changes of controlling shareholders in reporting period
□ Applicable √ Not applicable
The Company had no changes of controlling shareholders in reporting period.
3. Actual controller of the Company
Nature of actual controller: central state-owned assets management
Type of actual controller: legal person
Legal
Actual controlling person/person in Date of Organizatio
Main operation business
shareholders charge of the foundation n code
unit
79
Chinese patent drug, traditional Chinese medicines
prepared in ready-to-use forms, traditional Chinese
medicinal materials, chemical API, chemical medicine
preparation, antibiotics, biochemical drug and biologic
pharmacy (License for pharmaceutical trading runs until
China National 12 May 2020); mandatory for pharmaceutical enterprise,
Pharmaceutical Group She Lulin 1987-03-26 10000588-8 asset reorganization; consulting service of medicine
Corporation industrial investment; exhibition of medical devices;
consulting services with main business concerned. (the
enterprise has independent choices on operation items for
business; in right of exequatur to run if refers to
permission operation ; operation activity that prohibited or
restricted by the City Government are not allowed)
Name of listed Total shareholders
Name company with (10 thousand Proportion of shares held
shares held shares)
Sinopharm Group Jianmin Group 132.35 0.86%
Sinopharm
Sinopharm Group 272.84 0.10%
Holding
Sinopharm Holding
Sinopharm
Industrial Investment 157,155.60 56.79%
Holding
Equity of Co., Ltd.
domestic/oversea listed Sinopharm Holding Sinopharm 21,070.15 44.01%
company control by Sinopharm
Sinopharm Holding 24,000.00 56.06%
actual controller in Accord
report period Sinopharm JLPC 321.93 2.12%
Shanghai Institute of Modern
11,975.63 41.62%
Pharmaceutical Industry Pharmaceutical
Chinese Medicine Hengrui
10,621.86 4.52%
Industry Co., Ltd. Medicine
Tiantan
Biosino 27,472.50 53.30%
Biological
Sinopharm Group H.K.
China TCM 161,431.36 36.43%
Co., Ltd.
Changes of actual controller in reporting period
□ Applicable √ Not applicable
No changes of actual controllers for the Company in reporting period.
Property right and controlling relationship between the actual controller and the Company is as follow:
80
Actual controller controlling the Company by entrust or other assets management
□ Applicable √ Not applicable
4. Particulars about other legal person shareholders with over 10% shares held
□ Applicable √ Not applicable
5. Limitation and reducing the holdings of shares of controlling shareholders, actual controllers,
restructuring side and other commitment subjects
□ Applicable √ Not applicable
81
Section VII. Preferred Stock
□ Applicable √ Not applicable
The Company had no preferred stock in the Period.
82
Section VIII. Particulars about Directors, Supervisors, Senior
Executives and Employees
I. Changes of shares held by directors, supervisors and senior executives
Amount Amount
Shares Shares
Start of shares of shares
End date held at Other held at
Working dated of increased decreased
Title Sex Age of office period- changes period-
Name status office in this in this
term begin (share) end
term period period
(Share) (Share)
(Share) (Share)
Deputy
Chen GM,
Currently
Changbin Secretary M 2015-01-
50 2,651 0 0 2,651
in office 13
g of the
Board
Total -- -- -- -- -- -- 2,651 0 0 2,651
II. Changes of directors, supervisors and senior executives
√Applicable □ Not applicable
Name Title Type Date Reasons
Appointment and Mr. Liu Yong elected as director of the 7th BOD of the
Liu Yong Director 2017-01-18 Company in 1st extraordinary shareholders general
removal
meeting of 2017
Office leaving Resign from Independent Director of the Company due to
He Zhiyi N/A 2017-02-14
while term is due term of office has run out
Resign from Deputy GM of the Company due to
Pan Rangren N/A Dismissal 2017-02-22
individual reasons
Independent Appointment and Mr. Chen Honghui elected as director of the 7th BOD of
Chen Honghui 2017-03-14 the Company in 2nd extraordinary shareholders general
Director removal
meeting of 2017
Not in post of director of the Company for statutory
Wei Yulin Director Office leaving 2017-03-25
retirement age come
Appointment and
Appointed as the deputy GM of the Company, which has
Zhao Xiaochuan Deputy GM 2017-04-17
removal deliberated and approved by 22nd session of 7th BOD
Appointment and
Appointed as the deputy GM of the Company, which has
Chen Changbing Deputy GM 2017-04-17
removal deliberated and approved by 22nd session of 7th BOD
83
Resign from Director of the Company due to individual
Ma Wanjun Director Office leaving 2017-10-26
reasons
III. Post-holding
Professional background, major working experience and present main responsibilities in Company of directors,
supervisors and senior executive at the present in latest five years
1. Members of the Board
Mr. Liu Yong, joined Sinopharm Group Co., Ltd. In January 2003 and acted as the general manager and Party
Secretary of Sinopharm Holdings (Shenyang) Co., Ltd until November 2009. He currently serves as the president,
secretary of the board and chief legal advisor of Sinopharm Group. Mr. Liu own over 24 years of industry
experience, among which, over 21 years are related to management experience in medicine and health care
products industry. Mr. Liu graduated from China Pharmaceutical University in July 1992, where he obtained the
bachelor of science degree majoring in pharmaceutical business management, and obtained his master degree of
business administration from Fudan University in January 2000. He is a pharmacist-in-charge and licensed
pharmacist. During the period from July 1992 to July 1999, Mr. Liu worked in the Shanghai Pharma, and
successively served as deputy general manager of the marketing department of Shanghai Branch of Sinopharm
Group and Shanghai Guoda Drugstore Chain Company Limited from July 1999 to April 2003. currently, Mr. Liu
holds the position of chairman of Sinopharm Holding Guizhou Co., Ltd., Sinopharm Holding Yunnan Co., Ltd.,
Sinopharm Health Online Company, Sinopharm Lerentang Pharmacy Company, Sinopharm Holding Shandong
Co., Ltd., Sinopharm Holdings Shanghai Biological Medicine Co., Ltd. as well as Sinopharm Hainan Co., Ltd.,
and serves as the executive director of Sinopharm Distribution Center Co., Ltd. and Sinopharm Group Medicine
Logistics Company. He has acted as the director of Sinopharm Guoda Drugstore Company Limited from October
2017, director member of the 7th session of the Board of the Company since January 2017 and chairman of the
7th session of the Board of the Company since October 2017.
Mr. Li Zhiming, chairman of the board and the Party Secretary of Sinopharm Group Co., Ltd, joined the
Sinopharm Group in May 2010 as deputy president, served as executive director and president of Sinopharm
Group from November 2013 to March 2017, and has served as chairman of the board and the Party Secretary of
Sinopharm Group since November 2017. during the period from October 2012 to March 2017, Mr. Li held the
position of chief legal advisor, secretary of the discipline committee, chairment of the labor union and deputy
Party Secretary of Sinopharm Group. He owns more than 35 years of working experience, among which, 31 years
are related to management experience in medicine and health care products industry. Mr. Li obtained his associate
degree from Xinjiang Business College in July 1981 majoring in accounting, and the associate degree from
Urumqi Branch of Xi’an Military Academy in July 1997 majoring in economic management. He is a senior
economist and pharmacist-in-charge. During the period from July 1985 to July 1996, Mr. Li successively served
as deputy director of the financing department of Xinjiang Xinte Nationality Pharmacy Company Limited, deputy
general manager and chief accountant of Xinjiang Pharmaceutical Industry and Trading Corporation, deputy
84
general manager and chief accountant of Xinjiang Xinte Nationality Pharmacy Corporation, and deputy director
of the preparation office of Xinjiang Autonomous Region Medicine Administration Bureau. From July 1996 to
February 2016, Mr. Li worked in Xinjiang Xinte Nationality Pharmacy Corporation as general manager, chairman
of the board and party secretary, and worked in Xinjiang Pharmaceutical Group Corporation (currently known as
Sinopharm Group (Xinjiang) Co., Ltd.) as its director, general manager, vice chairman of the board, chairman of
the board and party secretary. Currently, he also serves as the director of China National Medicine Corporation
Ltd. And Sinopharm Guoda Drugstore Co., Ltd., vice chairman of Shanghai Modern Pharmaceutical Co., Ltd. as
well as chairman of Sinopharm Group (HK) Co., Ltd., Sinopharm Lingshang Hospital Management Service
(Shanghai) Co., Ltd., Sinopharm Medicine Equipments Co., Ltd., Sinopharm Medical Investment Management
Co., Ltd., Sinopharm (China) Financing Leasing Co., Ltd. And Sinopharm Zhongjin (Shanghai) Medical Care and
Health Investment Management Co., Ltd. He served as chairman of the Company from February 2014 to August
2016, and designated as director of the Company since August 2016.
Mr. Jiang Xiuchang, entered into Sinopharm Group as the director of Sinopharm Group in May 2010, and he has
also acted as vice president of Sinopharm Group since July 2013. Mr. Jiang owns over 30 years of working
experiences, among which, 19 years of management experiences are related to medicine and health-care industries.
Mr. Jiang obtained a bachelor degree in accounting at Zhongnan University of Economics in July 1986 and
graduated from postgraduate training classes majoring in enterprise management at international institution of
business administration of University of International Business and Economics. Mr. Jiang is a senior economist
and senior accountant. Mr. Jiang has worked as deputy director of information department, deputy director of
restructuring office, deputy director of financial department as well as deputy director of pharmaceutical
department in China National Pharmaceutical Group Corporation from July 1986 to March 2002; he has also
served as deputy director, director of financial department and chief financial officer of China National Medicines
Corporation Ltd. in succession from March 2002 to May 2010. Mr. Jiang currently serves as the chairman of
China National Medicines Corporation Ltd. Sinopharm Holding Jiangxi Co.,Ltd, Sinopharm Holding Tianjin
Co.,Ltd, Sinopharm Holding Shanxi Co.,Ltd, Sinopharm Holding Inner Mongolia Co.,Ltd, China National Group
Shanxi Corporation Ltd., and acted as the director of China National Medicines Corporation Ltd. And China
National Finance Corporation Ltd. as well as the executive director of Beijing Sinopharm Taiyuan Property
Management Co., Ltd and the director and general manger of Sinopharm Group Hong Kong Corporation Ltd; He
has been designated as the director of the Company from March 2011.
Mr. Lin Zhaoxiong, has served as deputy manager and manger of pharmaceutical department, manger of
Pharmaceutical corporations and director of operation and management department during his work in China
Pharmaceutical (Group) Guangzhou Co.,Ltd from January 1999 to December 2003 in succession; He has acted as
the deputy general manger of Sinopharm Holding Guangzhou Co.,Ltd; Mr. Lin has also worked as the general
manager of Sinopharm Holding Guangzhou Co.,Ltd from December 2006 to December 2008; He has served as
the deputy general manger of the Company from December 2008 to March 2016, and has served as the chairman
85
of the board of Sinopharm Holding Guoda Drugstore Co.,Ltd from December 2017 until now; He has acted as the
general manger of the Company since 2016 and designated as the director of the 7th session of board of directors
of the Company from April 2016.
Mr. Xiong Chuxiong, graduated with a doctor’s degree of economies from Xiamen University, has been teaching
in accounting major at Shenzhen University from 1992 and now he works as a professor of Shenzhen University.
Mr. Xiong has been a visiting scholar at University of Manchester in UK. He has acted as the independent director
of the 6th and 7th session of board of directors of the Company since April 2011.
Mr. Xiao Shengfang, he acts as director of Sino-Win Law Firm, whose social functions including national
people’s congress,vice director of Labor and Social Security Law Committee of All China Lawyers Association,
president of Guangdong Lawyers Association, legal adviser of Guangzhou Municipal People’s Government,
counselor of CPPCC Guangzhou Committee, legal consultant of the People’s Government of Guangzhou Baiyun
District, adjunct professor at Lawyer College of Renmin University of China, adjunct professor at School of Law
of South China Normal University, executive vice president of MBA sodality in Jinan University, arbitrator at
South China International Economic and Trade Arbitration Commission, arbitrator at Guangzhou Arbitration
Commission, and mediation expert at South China International Economic and Trade Arbitration Commission. He
has acted as the independent director for the Company’s sixth and seventh board of director since April 2011.
Mr. Chen Honghui, professor of Lingnan (University) College of Sun Yat-Sen University, a doctoral supervisor of
management. He worked in school of management, Wuhan University of Science & Technology from July 1993
to June 2003 and successively acted as a tutor and instructor; he works in Lingnan (University) College of Sun
Yat-Sen University since July 2003 and also served as deputy professor and professor; vice president of the
Lingnan (University) College of Sun Yat-Sen University from 2007 to 2012; the director of department of
business administration in Lingnan College since 2008 and deputy chairman of the GDISR. He serves as
independent director of Cabbeen Fashion Co., Ltd. since October 2013 and Guangzhou Grandbuy Co., Ltd. since
September 2016. Serves as independent director of 7th BOD of the Company since March 2017.
2. Members of supervisors:
Mr. Wu Yijian, a postgraduate background. He currently serves as the assistant president of Shanghai Fosun
Pharmaceutical Group Co., Ltd. and director of pharmaceutical business management committee. He worked in
Sanjiu Enterprise Group since July 1993, and successively served as the sales director of Sanjiu Medical Trading
Co., Ltd., COO of Sanjiu Medical Chain Co., Ltd. and deputy GM of Shanghai Sanjiu Technology Development
Co., Ltd. He also works in Fosun Pharma Group since June 2004 and successively took post of Gm of the
Shanghai Fosun Pharmaceutical Investment Co., Ltd., GM of Shanghai Fosun Pharmaceutical Co., Ltd. and GM
of Shanghai Fumei Drugstore Co., Ltd. Mr. Wu served as deputy president of the Shanghai Yuyuan Tourist Mart
Co., Ltd. from 2014 to 2015. now he serves as the chairman of supervisory committee of the Company since
September 2016.
86
Ms. Liu Jingyun, postgraduate background. Currently she serves as the director of financial and asset management
and director of assets and credit management dept. in Sinopharm Group Co., Ltd. and he successively hold a
teaching post in Nanjing Radio and Television University, works in Sinopharm Group Co., Ltd. since November
2003 and serves as deputy director of assets management department, director of the financial & assets
management dept. and Director of ministry of finance and credit management. She serves as supervisor of the 7th
supervisory committee of the Company since September 2016.
Mr. Wang Huaiqin, he served as first union chairman from September 2005 to March 2009; and serves as member
of the party committee, deputy secretary and union chairman of the Company since September 2008; and serves
as the staff supervisor of 5th, 6th and 7th supervisory of the Company since September 2007.
3. Senior executive
Mr. Lin Zhaoxiong, found in aforesaid previous work experience
Mr. Lin Min, worked in China National Pharmaceutical Group Guangzhou Corporation with successively taking
the posts of assistant to manager, deputy general manger of Pharmacy Department and deputy general manger of
purchasing in Pharmaceutical Company from Jan. 2001 to Nov. 2003; supervisor of Guangzhou pharmacy sales of
Sinopharm Holding Guangzhou Co., Ltd from Nov. 2003 to Jan. 2005; took deputy general manager of
Sinopharm Holding Guangzhou Co., Ltd from Jan. 2005 to Dec. 2008; he also acting as the GM of distribution
business dept. of the Sinopharm Accord and Sinopharm Holding Guangzhou Co., Ltd. he serves as deputy GM of
the Company since December 2008.
Mr. Lin Xinyang, he took the turns of deputy GM of Nanfang Pharm. Co., deputy GM of China Medicine Group
(Guangzhou) Company Yuexing Company, general supervisor of PD of Sinopharm Holding Guangzhou
Company successively since January 1996; took the post of deputy GM of Sinopharm Holding Guangzhou
Company from Jan. to Dec. 2004; serves as deputy GM of the Company since January 2005.
Mr. Wei Pingxiao, took the turns of Financial department of State-owned Beijing Electronic Tube Plant, Modern
Electronic Shenzhen Industrial Company, China Electronic Industrial Headquarter since August 1985; and took
the turns of deputy section chief of financial department of China Electronic Information Industry Group,
financial director of AMOI, section chief of planning financial department of China Electronic Finance Leasing
Company, Deputy GM of AMOI Beijing branch, financial charger of AMOI and director of its subsidiary since
April 1993; and he hold the post of CFO of the Company since December 2004.
Mr. Zhao Xiaochuan, has served as the general manager of Liaoning Accord Chain Co., Ltd from December 2001
to April 2008; served as the general manger of Sinopharm Holding Guoda Tian Yi Tang Drugstore Chain
(Shenyang) Co., Ltd and Sinopharm Holding Guoda Shenyang Chain Co., Ltd from May 2008 to June 2015; he
87
has acted as general manager of Sinopharm Holding Guoda Drugstore Co., Ltd since June 2015; He has worked
as the deputy general mange of the Company since July 2017.
Mr. Chen Changbin, has served as secretary of board of directors of the Company since December 2000; he has
also worked as the director of planning investment management department of the Company as well as assistant
general manager, in charge of strategic planning, investment and mergers and acquisitions, capital operation and
affairs related to three major meetings. He has acted as the deputy general manger of the Company since April
2017.
Post-holding in shareholder’s unit
√ Applicable □ Not applicable
Received
Position in
Start dated of End date of remuneration from
Name Name of shareholder’s unit shareholder’s
office term office term shareholder’s unit
unit n
(Y/N)
Deputy
president,
Secretary of
Liu Yong Sinopharm Group Co., Ltd. 2009-01-09 Y
the Board,
General
counsel
Chairman,
Li Zhiming Sinopharm Group Co., Ltd. 2013-11-08 Y
President
Vice
Jiang Xiuchang Sinopharm Group Co., Ltd. President, 2010-06-01 Y
CFO
Director of
ministry of
finance and
credit
management,
Liu Jingyun Sinopharm Group Co., Ltd. 2016-07-01 Y
director of the
financial &
assets
management
dept.
Post-holding in other unit
√ Applicable □ Not applicable
Name Name of other units Position in Start dated of End date of office Received
88
other unit n office term term remuneration
from other unit
(Y/N)
Sinopharm Xinjiang Pharmaceutical Co.,
Li Zhiming Chairman 2013-05-01 N
Ltd.
Li Zhiming Sinopharm Holding Ningxia Co., Ltd Chairman 2011-06-01 N
Li Zhiming Sinopharm Holding Shaanxi Co., Ltd Chairman 2011-10-01 N
Li Zhiming Sinopharm Holding Gangsu Co., Ltd Chairman 2011-10-01 N
Li Zhiming Sinopharm Holding Qinghai Co., Ltd Chairman 2011-10-01 N
Li Zhiming China National Medicines Corporation Ltd. Chairman 2011-10-01 N
Li Zhiming Sinopharm Holding Hong Kong Co.,Ltd Director 2014-01-01 N
Sinopharm Holding Sub Marketing Center Executive
Li Zhiming 2014-01-01 N
Co., Ltd. Director
Sinopharm Holding Guoda Drugstore Co.,
Jiang Xiuchang Supervisor 2010-06-01 N
Ltd.
Jiang Xiuchang Yujia Medical Co., Ltd. Supervisor 2010-09-01 N
Jiang Xiuchang China National Medicines Corporation Ltd. Director 2011-02-01 N
Sinopharm Le -Ren-Tang Medicine Co.,
Jiang Xiuchang Director 2011-04-01 N
Ltd.
Jiang Xiuchang Sinopharm Holding Hong Kong Co.,Ltd Director 2011-11-01 N
Jiang Xiuchang Sinopharm Group Financial Co.,Ltd Director 2011-11-01 N
Jiang Xiuchang Sinopharm Group Shanxi Co., Ltd. Director 2011-04-01 N
Sinopharm Holding Sub Marketing Center
Jiang Xiuchang Supervisor 2011-04-01 N
Co., Ltd.
Jiang Xiuchang Sinopharm Holding Beijing Co.,Ltd Supervisor 2011-11-01 N
Liu Yong Sinopharm Holding Beijing Co.,Ltd Chairman 2010-08-02 N
Sinopharm Holding Beijing Kangchen Bio-
Liu Yong Chairman 2010-07-01 N
Pharmaceutical Co., Ltd.
Liu Yong China National Medicines Corporation Ltd. Director 2014-01-01 N
Sinopharm Holding Beijing Tianxing Puxin
Liu Yong Chairman 2011-10-10 N
Biological Medical Co.,Ltd
Sinopharm Holding Guoda Drugstore Co.,
Liu Yong Chairman 2011-11-01 N
Ltd.
Sinopharm Holding Beijing Huahong
Liu Yong Chairman 2013-09-02 N
Biological Medicine Co.Ltd
Liu Yong Sinopharm Holding Guizhou Co., Ltd. Chairman 2014-01-06 N
89
Liu Yong Sinopharm Holding Yunnan Co., Ltd. Chairman 2014-01-06 N
Sinopharm Guohua Network Technology
Liu Yong Director 2015-04-01 N
Co., Ltd.
Liu Yong Sinopharm Health On-line Co., Ltd. Chairman 2015-07-02 N
Punishment of securities regulatory authority in recent three years to the company’s current and outgoing directors, supervisors and
senior management during the reporting period
□ Applicable √ Not applicable
IV. Remuneration for directors, supervisors and senior executives
Decision-making procedures, recognition basis and payment for directors, supervisors and senior executives
(I) Remuneration decision procedure of directors, supervisors, senior management:
The Company implemented the annual salary system for senior executives based on the 2017 annual performance
appraisal (scheme) on management staff, paid annual salary remuneration according to the appraisal results.
Remuneration and appraisal committee of the company's board of directors is responsible for the formulation and
examination of salary plan and program as well as formulation and examination of salary plan and assessment
standards of directors (not including the independent directors), supervisors and senior executives. They also
evaluate the performance assessment of directors, supervisors and senior officers in accordance with the
assessment criteria, compensation scheme.
(II) Remuneration determining basis
The main principles of making standard of compensation are: (1) the company's overall business and the profit
level; (2) the overall salary level and dynamic index over past years; (3) difference in position and duty; (4)
relative importance and risks of position; (5) related post salary level in the same industry; (6) individual
professional ability.
(III) Actual payment
Executives get monthly basic salary and annual salary after the issuance of annual examination.
Remuneration for directors, supervisors and senior executives in reporting period
In 10 thousand Yuan
Total Received
remuneration remuneration
Post-holding
Name Title Sex Age before tax from related party
status
obtained from the of the Company
Company (Y/N)
Currently in
Liu Yong Chairman M 48 0Y
office
90
Ma Wanjun Chairman M 48 Office leaving 0Y
Wei Yulin Director M 60 Office leaving 0Y
Currently in
Li Zhiming Director M 54 0Y
office
Currently in
Jiang Xiuchang Director M 54 0Y
office
Cui Dieling Vice Chairman F 52 Office leaving 0Y
Currently in
Lin Zhaoxiong Director, GM M 50 225 N
office
Yan Zhigang Director, GM M 58 Office leaving 0N
Independent
He Zhiyi M 62 Office leaving 1.59 N
Director
Independent Currently in
Xiong Chuxiong M 62 10.64 N
Director office
Independent Currently in
Xiao Shengfang M 48 10.64 N
Director office
Independent Currently in
Chen Honghui M 46 9.08 N
Director office
Chairman of
Currently in
Wu Yijian supervisory M 47 0Y
office
committee
Currently in
Liu Jingyun Supervisor F 41 0Y
office
Currently in
Wang Huaiqin Supervisor M 60 63.75 N
office
Currently in
Lin Min Deputy GM M 53 202.5 N
office
Currently in
Lin Xinyang Deputy GM M 53 157.5 N
office
Deng Baojun Deputy GM M 56 Office leaving 0N
Pan Rangren Deputy GM M 53 Office leaving 22 N
Currently in
Wei Pingxiao CFO M 54 157.5 N
office
Currently in
Zhao Xiaochuan Deputy GM M 54 157.5 N
office
Deputy GM, Currently in
Chen Changbing M 50 125 N
Secretary of the office
91
Board
Total -- -- -- -- 1,142.7 --
Delegated equity incentive for directors and senior executives in reporting period
□ Applicable √ Not applicable
V. Particulars of workforce
1. Number of staff, professional composition and education background
The number of current employees of parent company (people) 107
The number of current employees of main subsidiaries (people) 22,373
Total number of current employees (people) 22,480
The total number of employees in payroll (people) 22,480
The total number of retired staff and workers that the parent
1,934
company and main subsidiaries need to bear the costs (people)
Professional composition
Category of professional composition Number of professional composition (people)
Production staff 24
Salesman 16,272
Technical staff 128
Financial staff 544
Administrative staff 3,863
Logistics Staff 1,649
Total 22,480
Education background
Category of education Number (people)
Post-graduate qualification and above 144
Undergraduate 3,313
Junior college 7,933
Junior college below 11,090
Total 22,480
2. Remuneration policy
Sinopharm Accord and the subordinate enterprises provide perfect compensation and benefits for the staff, the
compensation level is closely combined with organization (total amount of labor, compensation strategy, job
value), staff (capacity development, performance results), and market (market level, talent competition). The
company adjusts the remuneration for staff having abilities and contributions every year by the responsibility
sorting, position evaluation, target remuneration range positioning, and the staff annual work performance and
92
ability assessment; at the same time, performance bonuses and performance closely link together, and realize win-
win of the interests of company and the interests of employees. Pay attention to the income growth requirements
of low-income groups, develop annual wage growth program, and implement after the deliberation and approval
of the workers' congress.
3. Training programs
Sinopharm Accord and its subsidiaries have put great emphasis on the development and cultivation of employee’s
career, built and improved training management system of the Company so as to cultivate the employee in a more
efficient way. The first, a training system has been built and the management system for employee training,
employee continuing education, interns and intern trainers have been promoted and conducted. The second, the
leadership of the Company has made a plan on the organization of training, and a specific position posted in
human resources department was dedicated for assisting the management at all levels to conduct employee
training. The third, regarding the category and curriculum of the training, the category included new employee
training, employee on-post training and leadership development training; the curriculum consisted of management
curriculum, genetic competency curriculum as well as professional skills curriculum. In addition, one-to-one on-
post coaching from the management to employee was also included. The forth, As to the assessment of training,
assessment methods at all levels were made to ensure the effects of employee training. By the end of 2017, the
input in the training for the headquarter of Sinopharm Accord Corporation, distribution operation and Guoda
Drugstore was seen at 1.75 million Yuan, by conducting various training on generic competency, professional
quality and management, on-post skills and continuing education of vocational qualification. A total number of
19,362 person-times of training and continuing education have been conducted, covering the middle and senior
management, junior management, specialty technical staffs as well as operators, with average learning time up to
more than 50 hours.
4. Labor outsourcing
√ Applicable □ Not applicable
Total number of working hours of labor outsourcing (Hour) 584,640
Total remuneration paid of labor outsourcing (RMB) 33,774,261.84
93
Section IX. Corporate Governance
I. Corporate governance of the Company
Articles of Association are formulated at governance level. In compliance with requirements of Articles, rules of
procedures for shareholders’ meeting, board and board of supervisors, working system of strategy committee,
nomination committee, internal risk control and audit committee, remuneration and evaluation committee, general
manager and secretary to board, corporate governance system regarding information disclosure, connected
transactions, fund raising, performance of social responsibilities, inside information and informant management,
investor relation management, engagement of accounting firm and prevention of occupation by major
shareholders and connected parties of capital of listing companies are also established.
During the Reporting Period, the Article of Association has been revised according to regulatory requirements and
governance needs. The effective implementation of corporate governance system ensures the effective
performance of duties and responsibilities of respective committees, thereby facilitating the board of supervisors
to play a supervisory role and offering help for the board to make scientific decisions.
Is there any difference between the actual condition of corporate governance and relevant regulations about corporate governance for
listed company from CSRC?
□Yes √ No
There are no differences between the actual condition of corporate governance and relevant regulations about corporate governance
for listed company from CSRC.
II. Independency of the Company relative to controlling shareholders’ in aspect of businesses,
personnel, assets, organization and finance
The Company totally separates from the controlling shareholders in business, personnel, assets, institutions,
financial and other aspects, with independent and complete self-management ability.
1. The business: the Company was independent from controlling shareholders, having a complete business system
and self-managing ability; the company has independent procurement and sales system thus all procurement and
sales of drugs and raw materials is in charge of the purchasing department and subordinate subsidiary, branch and
production enterprises; production, supply, marketing and R & D separate from each other; the Company is a
legal market person with independent operation.
2. Personnel: procedures of the controlling shareholder nominating directors and general and deputy general
manager are legal; no intervene on the appointment and removal of personnel made by the board of directors and
shareholders’ meeting happened; the Company set up independent human resource department, responsible for
assessment, training and salary review on staff, making rules and regulations and handbook the employees should
abide by. Labor, personnel, wages and pension, medical insurance and other insurance are independently managed.
94
3. Institution: production and operation mechanism and administrative management is completely independent
from the controlling shareholder or actual controller; offices and sites of business operation separate from the
controlling shareholder; the Company established corporate governance structure where the board of directors,
board of supervisors and managers carry out their duties and exercise their respective duties in accordance with
relevant provisions of the articles of association.
4. Asset: property and rights relationship between the Company and the controlling shareholder is clear, with
independent operations; the company has independent production system, auxiliary production system and
supporting system; industrial property rights, trademarks, non-patented technology and other intangible assets
owned by the Company and its subsidiary.
5. Financial aspects: the Company established independent financial departments and independent financial
accounting system; the Company opened a bank account independently; the financial staff is independent without
taking part-time and receiving remuneration in the controlling shareholder; the Company pays tax independently.
III. Horizontal competition
√ Applicable □ Not applicable
Name of controlling Nature of controlling Work schedule and
Type Reason Solution measure
shareholder shareholder follow-up plan
In March 2016,
Sinopharm Holding
issued a commitment
Distribution
letter of avoiding
subsidiary of
horizontal
Sinopharm Holding
competition with
established some
Sinopharm Accord,
social retail
and promise to solve
pharmacy, which
Horizontal the horizontal Normally
Sinopharm Holding SASAC might has horizontal
competition competition in performing
competition with the
respect of
Guoda Drugstore,
pharmaceutical retail
the subordinate
business in an
enterprise of the
appropriate way
listed company after
within five years
restructuring
since the date when
reorganization
completed
Distribution In March 2016,
subsidiary of Sinopharm Holding
Horizontal Normally
Sinopharm Group SASAC Sinopharm Holding issued a commitment
competition performing
established some letter of avoiding
social retail horizontal
95
pharmacy, which competition with
might has horizontal Sinopharm Accord,
competition with the and promise to solve
Guoda Drugstore, the horizontal
the subordinate competition in
enterprise of the respect of
listed company after pharmaceutical retail
restructuring business in an
appropriate way
within five years
since the date when
reorganization
completed
IV. AGM (Annual General Meeting) and extraordinary shareholders’ general meeting held in
the Period
1. AGM
Ratio of investor
Session of meeting Type Date Date of disclosure Index of disclosure
participation
Juchao Website—
(http://www.cninfo.c
First extraordinary om.cn) “Resolution
Extraordinary
general meeting of 60.77% 2017-01-18 2017-01-19 Notice of First
general meeting
2017 extraordinary
general meeting of
2017” No.: 2017-05
Juchao Website—
(http://www.cninfo.c
Second
om.cn) “Resolution
extraordinary Extraordinary
61.05% 2017-03-14 2017-03-15 Notice of Second
general meeting of general meeting
extraordinary
2017
general meeting of
2017” No.: 2017-13
Juchao Website—
(http://www.cninfo.c
Annual general
AGM 61.37% 2017-05-10 2017-05-11 om.cn) “Resolution
meeting 2016
Notice of AGM of
2016” No.: 2017-36
Third extraordinary Extraordinary Juchao Website—
60.70% 2017-07-14 2017-07-15
general meeting of general meeting (http://www.cninfo.c
96
2017 om.cn) “Resolution
Notice of Third
extraordinary
general meeting of
2017” No.: 2017-40
Juchao Website—
(http://www.cninfo.c
Fourth extraordinary om.cn) “Resolution
Extraordinary
general meeting of 62.97% 2017-12-27 2017-12-28 Notice of Fourth
general meeting
2017 extraordinary
general meeting of
2017” No.: 2017-61
2. Request for extraordinary general meeting by preferred stockholders whose voting rights restore
□ Applicable √ Not applicable
V. Responsibility performance of independent directors
1. The attending of independent directors to Board meetings and general meeting
The attending of independent directors to Board Meeting
Times of Absent the
Times of
Name of Board meeting Times of Meeting for Times
Times of attending by Times of
independent supposed to entrusted the second attending the
Presence communicatio Absence shareholders
director attend in the presence time in a row meeting
n
report period (Y/N)
Xiong Chuxiong 12 1 11 0 N 1
Xiao Shengfang 12 1 11 0 N 0
Chen Honghui 10 1 9 0 N 1
He Zhiyi 2 0 2 0 N 0
Explanation of absent the Board Meeting for the second time in a row
2. Objection for relevant events from independent directors
Independent directors come up with objection about Company’s relevant matters
□Yes √No
Independent directors has no objections for relevant events in reporting period
3. Other explanation about responsibility performance of independent directors
The opinions from independent directors have been adopted
97
√ Yes □ No
Explanation on advice that accepted/not accepted from independent directors
During the reporting period, the independent directors performed their duties in a careful, diligent, dedicated
attitude in accordance with requirements of the "Working System of Independent Director", offered some useful
suggestions and opinions on business decision-making, legal affairs, financial management and other aspects;
carefully examined important matters those needed opinions of independent directors, made independent
judgments and issued a written independent opinion on major related transactions, daily related transactions,
accountancy hiring and other matters, playing a positive role in safeguarding the legitimate rights and interests of
small shareholders. Besides, independent directors played an important role in operation of special committee. At
the same time, the Company can guarantee independent directors and other directors of the same right to know.
During the reporting period, the independent directors have no objection on the related issues of the Company.
VI. Duty performance of the special committees under the board during the reporting period
(I) Duties fulfillment of the board of directors and audit committee on internal control over risk
Internal control on risk and Audit Committee of the board of directors of the company comprises 3 independent
non-executive directors and three directors, including the convener (professional accountant) is an independent
director. In accordance with relevant provisions of China Securities Regulatory Commission and Shenzhen Stock
Exchange and working system, Internal control on risk and Audit Committee of the board of directors seriously
performed duties in a dedicated attitude. In the annual financial report audit, they acted as supervisors, maintained
individuality of audit and issued a series of notices such as the Written Opinion on Financial Accounting
Statements Issued by the Company before CPA of Annual Examination Entered, the Written Opinion on Financial
Accounting Statements after Preliminary Audit Issued by CPA of Annual Examination, the Summary Report of
Internal Risk Control and Audit Committee on the Annual Audit Work of CPA as well as the Resolution on
Rehire the Audit Institution. Its main duties comprise the following:
1. Risk internal control and audit committee is responsible for determining the audit work schedule, negotiating
with CPA who engages in audit;
2. Before CPA enters, audit committee should review the financial statements prepared by the Company and issue
written opinions;
3. Strengthen communication with the CPA, and urge them to submit audit report within stipulated time with
urgency letter;
4. Review again the financial statements after the CPA issues preliminary opinion, and issue written opinions;
5. The Committee held annual work conference 2017, approved proposal of financial accounting report, summary
report of annual audit work of CPA and rehiring Ernst & Young CPA (Special General Partnership) as the audit
institution, and then formed a resolution to submit to board of directors for approval.
(II) Duties fulfillment of Remuneration and Appraisal Committee
As special working mechanism of the board of directors, the remuneration and appraisal committee is responsible
for approving the assessment standard of directors and senior executives, formulating and reviewing
98
compensation policies and programs of directors and executive. And they take charge in examining according to
the standard and policies. The remuneration and appraisal committee is composed of three directors, including
two independent directors; convener is Chen Honghui, an independent director.
During the reporting period, remuneration and assessment committee actively performed duty; clearly defined
their responsibilities; did serious research and appraisal on the remuneration and appraisal system, especially
salary, assessment system and program over directors, supervisors and senior executive. According to working
rules of the remuneration and appraisal committee, they have rights to check regular reports, meetings records,
business planning and other materials by telephone, interviews and other methods to learn the performance of
directors, executives. And they’re required to submit problems existing in implementation of system to the Board
of Directors and raise up suggestion on them. Their contents are as follows:
1. In 2017, the remuneration and appraisal committee carried out the performance evaluation of executives
according to the 2016 Annual operation standard and performance.
2. It proposed the "2018 Evaluation Scheme of Operating Performance", and submitted it to the board of directors
for approval.
3. The remuneration and appraisal committee approved salary of directors, supervisors and senior executives
disclosed in 2017 annual report. And it issued the following opinions:
Compensation decision procedures of directors, supervisors and senior management personnel was in accordance
with the provisions; the standard was in accordance with the remuneration system; the disclosure of 2017 annual
report about personnel salary of the directors, supervisors and senior management is real and accurate.
VII. Works from Supervisory Committee
The Company has risks in reporting period that found in supervisory activity from supervisory committee
□ Yes √ No
Supervisory committee has no objection about supervision events in reporting period
VIII. Examination and incentives of senior management
Senior executives of the Company took responsibility for the board of directors, in the reporting period, the board
of directors implemented the performance checking mechanism that the remuneration of senior executives related
with their performance checking, with achievement as direction, and made relevant reward and punishment
according to target completion. The Company’s relevant incentive and restriction mechanism gradually in order to
further exert the enthusiasm and creativity of senior executives, urge the senior executives to perform the
obligations of being honest and diligent. The Company had no incentive mechanism for senior executives such as
stock option, purchase of management team and equity held by owner.
99
IX. Internal Control
1. Details of major defects in IC appraisal report that found in reporting period
□Yes √ No
2. Appraisal Report of Internal Control
Disclosure date of full internal control
2018-03-22
evaluation report
Disclosure index of full internal control ”Self-evaluation report of internal control for 2017” in Juchao website
evaluation report (www.cninfo.com.cn) appointed by Shenzhen Stock Exchange
The ratio of the total assets of units
included in the scope of evaluation
accounting for the total assets on the 100.00%
company's consolidated financial
statements
The ratio of the operating income of units
included in the scope of evaluation
accounting for the operating income on the 100.00%
company's consolidated financial
statements
Defects Evaluation Standards
Category Financial Reports Non-financial Reports
Financial report defects are mainly judged
Non-financial report defects are mainly
and decided by the degree of influence and
judged and decided by the degree of
the likelihood of occurrence to the
influence and the likelihood of
misstatements of financial reports caused by
occurrence of defects to the validity of
defects. (1) Significant defects: a
business process. (1) Significant defects:
combination of one or multiple internal
a combination of one or multiple internal
control defects that exists in internal control
control defects that may cause the
and may cause the material misstatements in
enterprise’s serious deviation to internal
financial statements cannot be prevented,
Qualitative criteria control objectives; (2) Major defects: a
found or corrected in time; (2) Major
combination of one or multiple internal
defects: a combination of one or multiple
control defects whose severity level and
internal control defects that exists in internal
economic consequences are lower than
control and has lower severity level than
significant defects but still may cause the
significant defects but still should be
enterprise’s deviation to internal control
concerned by the superintendents of
objectives; (3) Common defects: other
enterprise financial reports; (3) Common
defects except for significant and major
defects: other defects except for significant
defects.
and major defects.
100
Quantitative criteria: a quantitative
criterion determines the degree of
importance of the company’s defects
based on the amount of direct loss and
the degree of significant influence to the
company. (1) Significant defects: the
amount of direct property loss is or more
than 10 million Yuan, or has been
Quantitative criteria: a quantitative criterion
officially disclosed and caused negative
determines the degree of importance of
effects to periodic report disclosure of
misstatements (including missing reports) in
the joint-stock companies; (2) Major
the consolidated statements of listed
defects: the amount of direct property
companies based on the consolidated
Quantitative standard loss is between 5 million and 10 million
statement data. (1) Significant defects: equal
Yuan, or has been punished by the
to or greater than 5% of profit before tax (2)
national government departments but has
Major defects: between 1% and 5% of profit
not caused negative effects to periodic
before tax; (3) Common defects: less than or
report disclosure of the joint-stock
equal to 1% of profit before tax.
companies;(3) Common defects: the
amount of direct property loss is between
0.1 million and 5 million Yuan, or has
been punished by the provincial or sub-
provincial government departments but
has not caused negative effects to
periodic report disclosure of the joint-
stock companies.
Amount of significant defects in financial
0
reports
Amount of significant defects in non-
0
financial reports
Amount of important defects in financial
0
reports
Amount of important defects in non-
0
financial reports
X. Auditing report of internal control
√ Applicable □ Not applicable
Deliberations in Internal Control Audit Report
According to relevant regulations and “Basic Rules of Internal Control for Enterprises”, China National Accord Medicines
Corporation Ltd. in all major aspects, keeps an efficiency of internal control of financial report dated 31 December 2017.
Disclosure details of audit report of
Disclosed
internal control
101
Disclosure date of audit report of
2018-03-22
internal control (full-text)
Index of audit report of internal Audit Report of Internal Control under the name of China National Accord Medicines
control (full-text) Corporation Ltd. released on Juchao Website (http://www.cninfo.com.cn)
Opinion type of auditing report of
Standard unqualified
IC
Whether the non-financial report
No
had major defects
Carried out modified opinion for internal control audit report from CPA
□Yes √ No
The internal control audit report, issued by CPA, has concerted opinion with self-evaluation report, issued from the Board
√ Yes □ No
102
Section X. Corporate Bond
Whether the Company has a corporation bonds that issuance publicly and listed on stock exchange and without due on the date when
annual report approved for released or fail to cash in full on due
No
103
Section XI. Financial Report
104
AUDITOR’S REPORT
Ernst & Young Hua Ming (2018) Shen Zi No. 61295118_H01
China National Accord Medicines Corporation Ltd.
To the shareholders of China National Accord Medicines Corporation Ltd.
(I) Opinion
We have audited the financial statements of China National Accord Medicines Corporation Ltd. (the
“Company”), which comprise the consolidated and the Company’s balance sheets as at 31 December 2017,
and the consolidated and the Company’s income statements, the consolidated and the Company’s
statements of changes in equity and the consolidated and the Company’s statements of cash flows for the
year then ended, and notes to the financial statements.
In our opinion, the accompanying financial statements present fairly, in all material respects, the consolidated
and the Company’s financial position as at 31 December 2017, and the consolidated and the Company’s
financial performance and cash flows for the year then ended in accordance with Accounting Standards for
Business Enterprises (“ASBEs”).
(II) Basis for opinion
We conducted our audit in accordance with China Standards on Auditing (“CSAs”). Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial statements
section of our report. We are independent of the Company in accordance with China Code of Ethics for
Certified Public Accountants (the “Code”), and we have fulfilled our other ethical responsibilities in accordance
with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
(III) Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit
of the financial statements of the current period. These matters were addressed in the context of our audit of
the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters. For each matter below, our description of how our audit addressed the matter is
provided in that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the financial
statements section of our report, including in relation to these matters. Accordingly, our audit included the
performance of procedures designed to respond to our assessment of the risks of material misstatement of
the financial statements. The results of our audit procedures, including the procedures performed to address
the matters below, provide the basis for our audit opinion on the accompanying financial statements.
105
AUDITOR’S REPORT (Continued)
Ernst & Young Hua Ming (2018) Shen Zi No. 61295118_H01
China National Accord Medicines Corporation Ltd.
(III) Key audit matters (continued)
Key audit matter How our audit addressed the key audit
matter
Impairment of goodwill
The carrying value of goodwill amounted to Our audit procedures included, involving our
RMB830,729,152.75 as at 31 December 2017 valuation specialists to assist us in evaluating
and was allocated to the Company’s cash- the assumptions and methodologies used by
generating units (“CGUs”) of pharmaceutical the Company, in particular, the discount rate
distribution, retail pharmacy. Under ASBEs, and the long term growth rate. We assessed
the Company is required to annually perform the forecasts used with respect to future
the impairment test for goodwill. The revenues and operating results by comparing
impairment test is based on the recoverable the forecasts with the historical performance of
amount of the respective CGUs to which the the respective CGUs and the business
goodwill is allocated. Management performed development plan. We also read and assessed
the impairment test using the value in use the Company’s disclosures of goodwill.
calculation based on the discounted cash flow
method. Assumptions such as the discount
rate and the growth rate are set up applying
estimates and significant judgements by
management.
The Company’s disclosures about impairment
of goodwill are included in note III (20, 30) and
note V (16) to the financial statements, which
specifically explains the key assumptions that
management used for value-in-use
calculations.
106
AUDITOR’S REPORT (Continued)
Ernst & Young Hua Ming (2018) Shen Zi No. 61295118_H01
China National Accord Medicines Corporation Ltd.
(III) Key audit matters (continued)
Key audit matter How our audit addressed the key audit
matter
Impairment of trade receivables
At as 31 December 2017, the Company had Our audit procedures included, evaluating the
trade receivables of RMB7,589,412,679.88, analysis prepared by management for the
total current assets of RMB18,320,779,382.33, impairment assessment.
total assets of RMB22,343,643,527.77, ratio of
accounts receivable over current asset and In assessing the overall provision for
total asset is 41.43% and 33.97%, impairment, we assessed management’s
respectively. The assessment of impairment policy for recognizing provisions.
involves management’s judgement and
estimates. Specific factors management We selected samples of individually significant
considers include the age of the balance, trade receivable balances where a provision
location of customers, existence of disputes, for impairment of trade receivables was
recent historical payment patterns and any recognised and obtained an understanding of
other available information concerning the the rationale behind management’s judgement.
creditworthiness of counterparties. We reviewed the overdue analysis, the
Management uses this information customer’s historical payment patterns and
to determine whether a provision for subsequent payments.
impairment is required either individually or
collectively. We focused on this area because We assessed the ageing reports of trade
it requires significant management’s receivables, by tracing to the invoice dates on
judgement and estimates. a sample basis.
The Company’s disclosures about impairment We also read and assessed the relevant
of trade receivables are included in note III disclosures made in the financial statements,
(10) and note V (3) to the financial statements. including disclosures of the basis for this
estimation.
107
AUDITOR’S REPORT (Continued)
Ernst & Young Hua Ming (2018) Shen Zi No. 61295118_H01
China National Accord Medicines Corporation Ltd.
(IV) Other information
The management of the Company is responsible for the other information. The other information comprises
the information included in the annual report, other than the financial statements and our auditor’s report
thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form
of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial statements or
our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
(V) Responsibilities of the management and those charged with governance for the financial
statements
The management of the Company is responsible for the preparation and fair presentation of the financial
statements in accordance with ASBEs, and for designing, implementing and maintaining such internal control
as the management determines is necessary to enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the financial statements, the management is responsible for assessing the Company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting, unless the management either intends to liquidate the Company or to cease
operations or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
108
AUDITOR’S REPORT (Continued)
Ernst & Young Hua Ming (2018) Shen Zi No. 61295118_H01
China National Accord Medicines Corporation Ltd.
(VI) Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with CSAs will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are generally considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of these financial
statements.
As part of an audit in accordance with CSAs, we exercise professional judgement and maintain professional
scepticism throughout the audit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that
is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
(2) Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances.
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the management.
(4) Conclude on the appropriateness of the management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report
to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify
our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s
report. However, future events or conditions may cause the Company to cease to continue as a going
concern.
(5) Evaluate the overall presentation, structure and content of the financial statements, including the
disclosures, and whether the financial statements represent the underlying transactions and events in
a manner that achieves fair presentation.
(6) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Company to express an opinion on the financial statements. We are
responsible for the direction, supervision and performance of the group audit. We remain solely
responsible for our audit opinion.
109
AUDITOR’S REPORT (Continued)
Ernst & Young Hua Ming (2018) Shen Zi No. 61295118_H01
China National Accord Medicines Corporation Ltd.
(VI) Auditor’s responsibilities for the audit of the financial statements (continued)
We communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical
requirements regarding independence and to communicate with them all relationships and other matters that
may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were
of most significance in the audit of the financial statements of the current period and are therefore the key
audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not
be communicated in our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
Ernst & Young Hua Ming LLP Chinese Certified Public Accountant: Li Jian Guang
(Engagement partner)
Chinese Certified Public Accountant: Yan Ping
Beijing, the People’s Republic of China 21 March 2018
Important Notice
This auditor’s report is an English translation of the auditor’s report for the audit engagements which adopt CSAs.
In case the English version does not conform to the Chinese version, the Chinese version prevails.
110
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
CONSOLIDATED BALANCE SHEET
As at 31 December 2017
(Expressed in Renminbi Yuan)
ASSETS Note V 31 December 2017 31 December 2016
Current assets
Cash and bank balances 1 4,191,655,438.51 3,519,961,564.93
Notes receivable 2 1,504,194,764.08 1,504,000,909.21
Accounts receivable 3 7,589,412,679.88 7,654,225,510.89
Advances to suppliers 4 516,778,117.47 424,867,581.80
Interest receivable 5 61,441.11 450,722.67
Other receivables 6 657,871,058.54 478,573,423.62
Inventories 7 3,781,858,238.12 4,049,482,529.71
Other current assets 8 78,947,644.62 57,209,263.04
Total current assets 18,320,779,382.33 17,688,771,505.87
Non-current assets
Financial assets available-for-sale 9 13,685,760.00 13,685,760.00
Long-term equity investments 10 1,650,619,373.09 1,413,034,165.56
Investment properties 11 153,678,339.11 166,715,848.80
Fixed assets 12 551,710,434.02 487,009,600.10
Construction in progress 13 22,947,258.99 47,063,868.49
Intangible assets 14 325,751,430.88 320,435,400.89
Development costs 15 - -
Goodwill 16 830,729,152.75 823,890,174.21
Long-term prepaid expenses 17 252,247,050.79 188,377,725.64
Deferred tax assets 18 79,472,883.06 72,914,722.30
Other non-current assets 19 142,022,462.75 94,649,476.09
Total non-current assets 4,022,864,145.44 3,627,776,742.08
Total assets 22,343,643,527.77 21,316,548,247.95
The accompanying notes form an integral part of these financial statements.
111
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
CONSOLIDATED BALANCE SHEET (Continued)
As at 31 December 2017
(Expressed in Renminbi Yuan)
LIABILITIES AND SHAREHOLDERS’
Note V 31 December 2017 31 December 2016
EQUITY
Current liabilities
Short-term borrowings 21 1,561,354,521.64 1,512,713,629.95
Notes payable 22 2,732,437,828.42 2,406,642,582.86
Accounts payable 23 6,144,221,000.10 6,701,558,514.10
Advances from customers 24 216,938,239.32 163,450,365.92
Employee benefits payable 25 215,656,526.54 195,138,079.85
Tax payable 26 223,752,900.24 187,043,717.52
Interest payable 27 7,311,819.65 6,956,463.02
Dividends payable 28 11,889,443.11 8,483,370.21
Other payables 29 1,011,128,397.26 917,193,911.34
Non-current liabilities due within one year 30 5,434,770.70 36,411,339.96
Other current liabilities 31 112,817.65 123,294.77
Total current liabilities 12,130,238,264.63 12,135,715,269.50
Non-current liabilities
Long-term borrowings 32 31,600,000.00 -
Long-term payables 33 9,332,537.14 14,616,598.34
Payable for specific projects 34 800,000.00 800,000.00
Provision 35 - -
Deferred income 36 125,082,372.53 123,953,462.81
Long-term employee benefits payable 37 1,777,000.00 1,722,599.89
Deferred tax liabilities 18 71,883,253.02 76,535,704.01
Other non-current liabilities 38 45,427,343.31 45,427,343.31
Total non-current liabilities 285,902,506.00 263,055,708.36
Total liabilities 12,416,140,770.63 12,398,770,977.86
The accompanying notes form an integral part of these financial statements.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
CONSOLIDATED BALANCE SHEET (Continued)
As at 31 December 2017
(Expressed in Renminbi Yuan)
LIABILITIES AND Note V 31 December 2017 31 December 2016
SHAREHOLDERS’ EQUITY
Shareholders’ equity
Share capital 39 428,126,983.00 362,631,943.00
Capital surplus 40 3,181,429,064.99 3,152,718,024.92
Other equity instruments 41 - 65,495,040.00
Surplus reserve 42 214,063,491.50 181,315,971.50
Retained earnings 43 5,572,952,806.39 4,690,265,884.10
Shareholders’ equity attributable
to shareholders of the parent 9,396,572,345.88 8,452,426,863.52
Non-controlling interests 530,930,411.26 465,350,406.57
Total shareholders’ equity 9,927,502,757.14 8,917,777,270.09
Total liabilities and shareholders’
equity 22,343,643,527.77 21,316,548,247.95
The accompanying notes form an integral part of these financial statements.
The financial statements have been signed by:
Legal representative: Financial controller: Head of Accounting Department:
113
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
CONSOLIDATED INCOME STATEMENT
As at 31 December 2017
(Expressed in Renminbi Yuan)
Note V 2017 2016
Operating revenue 44 41,263,629,118.85 41,248,341,665.46
Less: Operating costs 44 36,819,552,915.80 36,648,160,750.15
Tax and surcharge 45 119,920,418.18 124,271,433.05
Selling expenses 46 2,305,909,071.71 2,198,243,216.29
Administrative expenses 47 735,953,967.13 859,773,090.07
Finance costs 48 110,360,539.56 101,856,594.98
Impairment loss 49 (2,470,696.74) (8,549,989.81)
Add: Investment income 50 264,540,020.24 223,467,928.58
Incl: Investment income from
associates 263,825,834.56 97,075,494.40
Gain on disposal of assets 51 792,138.38 9,175,103.65
Other incomes 52 24,155,618.47 -
Operating profits 1,463,890,680.30 1,557,229,602.96
Add: Non-operating income 53 11,412,488.21 48,439,465.29
Less: Non-operating expenses 54 9,274,194.70 5,515,964.43
Total profit 1,466,028,973.81 1,600,153,103.82
Less: Income taxes 56 309,290,127.72 318,377,292.91
Net profit 1,156,738,846.09 1,281,775,810.91
Incl: Net profit of acquiree before business
combinations involving enterprises under
common control (1,096.00) 260,423,077.82
Net profit attributable to shareholders of the parent 1,057,791,930.67 1,186,539,201.93
Profit or loss of non-controlling interests 98,946,915.42 95,236,608.98
Total comprehensive income 1,156,738,846.09 1,281,775,810.91
Incl: Total comprehensive income for the year
attributable to owners of the parent 1,057,791,930.67 1,186,539,201.93
Total comprehensive income for the year
attributable to non-controlling interests 98,946,915.42 95,236,608.98
Earnings per share 57
Basic earnings per share 2.47 2.80
Diluted earnings per share 2.47 2.80
The accompanying notes form an integral part of these financial statements.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
As at 31 December 2017
(Expressed in Renminbi Yuan)
Shareholders’ equity attributable to shareholders of the parent
2017 Non-controlling interests Total equity
Other equity
Share capital instruments Capital surplus Surplus reserve Retained earnings Subtotal
Closing balance of the preceding year 362,631,943.00 65,495,040.00 3,151,518,024.92 181,315,971.50 4,689,189,642.51 8,450,150,621.93 463,832,912.18 8,913,983,534.11
Business combination involving enterprises
under common control - - 1,200,000.00 - 1,076,241.59 2,276,241.59 1,517,494.39 3,793,735.98
Opening balance of the current year 362,631,943.00 65,495,040.00 3,152,718,024.92 181,315,971.50 4,690,265,884.10 8,452,426,863.52 465,350,406.57 8,917,777,270.09
Movements in the current year 65,495,040.00 (65,495,040.00) 28,711,040.07 32,747,520.00 882,686,922.29 944,145,482.36 65,580,004.69 1,009,725,487.05
(1) Total comprehensive income - - - - 1,057,791,930.67 1,057,791,930.67 98,946,915.42 1,156,738,846.09
(2) Capital paid and reduced by owners 65,495,040.00 (65,495,040.00) 28,711,040.07 - (1,075,583.99) 27,635,456.08 20,214,810.63 47,850,266.71
1.Capital injection by owners 5,114,297.00 (5,114,297.00) - - - - 14,873,000.00 14,873,000.00
2.Significant reorganization 60,380,743.00 (60,380,743.00) (3,430,029.00) - - (3,430,029.00) - (3,430,029.00)
3.Business combination involving
enterprises under common control - - (1,200,000.00) - (1,075,583.99) (2,275,583.99) (1,517,055.99) (3,792,639.98)
4.Business combination not involving
enterprises under common control - - - - - - 6,858,866.62 6,858,866.62
5.Others - - 33,341,069.07 - - 33,341,069.07 - 33,341,069.07
(3) Profit distribution - - - 32,747,520.00 (174,029,424.39) (141,281,904.39) (53,581,721.36) (194,863,625.75)
1. Withdrawal of statutory surplus
reserve - - - 32,747,520.00 (32,747,520.00) - - -
2.Distribution to equity owners - - - - (141,281,904.39) (141,281,904.39) (53,581,721.36) (194,863,625.75)
Closing balance of the current year 428,126,983.00 - 3,181,429,064.99 214,063,491.50 5,572,952,806.39 9,396,572,345.88 530,930,411.26 9,927,502,757.14
The accompanying notes form an integral part of these financial statements.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
As at 31 December 2016
(Expressed in Renminbi Yuan)
Shareholders’ equity attributable to shareholders of the parent
2016 Non-controlling interests Total equity
Other equity
Share capital instruments Capital surplus Surplus reserve Retained earnings Subtotal
Closing balance of the preceding year 362,631,943.00 - 1,863,894,533.34 181,315,971.50 3,045,551,246.71 5,453,393,694.55 113,081,262.72 5,566,474,957.27
Business combination involving enterprises
under common control - - 1,334,904,770.31 - 592,834,676.01 1,927,739,446.32 424,511,166.59 2,352,250,612.91
Opening balance of the current year 362,631,943.00 - 3,198,799,303.65 181,315,971.50 3,638,385,922.72 7,381,133,140.87 537,592,429.31 7,918,725,570.18
Movements in the current year - 65,495,040.00 (46,081,278.73) - 1,051,879,961.38 1,071,293,722.65 (72,242,022.74) 999,051,699.91
(1) Total comprehensive income - - - - 1,186,539,201.93 1,186,539,201.93 95,236,608.98 1,281,775,810.91
(2) Capital paid and reduced by owners - 65,495,040.00 (46,081,278.73) - - 19,413,761.27 (117,965,822.18) (98,552,060.91)
1.Capital injection by owners - 5,114,297.00 263,030,592.50 - - 268,144,889.50 - 268,144,889.50
2.Significant reorganization - 60,380,743.00 (156,366,978.12) - - (95,986,235.12) - (95,986,235.12)
3. Acquisition of non-controlling
interests - - (152,385,126.76) - - (152,385,126.76) (124,729,773.24) (277,114,900.00 )
4.Others - - (359,766.35) - - (359,766.35) 6,763,951.06 6,404,184.71
(3) Profit distribution - - - - (134,659,240.55) (134,659,240.55) (49,512,809.54) (184,172,050.09)
1.Distribution to equity owners - - - - (108,789,582.90) (108,789,582.90) (32,266,371.11) (141,055,954.01)
2. Business combination involving
enterprises under common control - - - - (25,869,657.65) (25,869,657.65) (17,246,438.43) (43,116,096.08)
Closing balance of the current year 362,631,943.00 65,495,040.00 3,152,718,024.92 181,315,971.50 4,690,265,884.10 8,452,426,863.52 465,350,406.57 8,917,777,270.09
The accompanying notes form an integral part of these financial statements.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
CONSOLIDATED CASH FLOW STATEMENT
As at 31 December 2017
(Expressed in Renminbi Yuan)
Note V 31 December 2017 31 December 2016
1.CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from sales of good or rendering of
services 46,403,001,555.00 45,257,537,860.36
Tax refunds 7,687,909.30 16,985,904.86
Cash receipts related to other operating activities 58 340,666,056.90 314,524,274.42
Sub-total of cash inflows from operating activities 46,751,355,521.20 45,589,048,039.64
Cash paid for goods and services 41,242,898,835.78 39,904,604,242.81
Cash paid to and on behalf of employees 1,684,046,853.72 1,794,695,502.08
Cash paid for all types of taxes 1,092,685,949.27 1,124,836,669.70
Cash payments related to other operating
activities 58 1,446,431,970.61 1,292,569,148.89
Sub-total of cash outflows from operating
activities 45,466,063,609.38 44,116,705,563.48
Net cash flows from operating activities 59 1,285,291,911.82 1,472,342,476.16
2.CASH FLOWS FROM INVESTING ACTIVITIES
Cash received from recovery of investments - 226,000.00
Cash received from returns on investments 61,204,993.30 41,420,278.36
Net cash received from disposal of fixed assets,
intangible assets and other long-term assets 1,811,126.55 23,568,618.35
Cash receipts related to other investing activities 75,259,200.00 1,605,005,840.32
58
Sub-total of cash inflows from investing activities 138,275,319.85 1,670,220,737.03
The accompanying notes form an integral part of these financial statements.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
CONSOLIDATED CASH FLOW STATEMENT (Continued)
As at 31 December 2017
(Expressed in Renminbi Yuan)
Note V 2017 2016
2.CASH FLOWS FROM INVESTING ACTIVITIES (Continued)
Cash paid for acquisition of fixed assets,
intangible assets and other long-term assets 204,345,540.74 265,885,799.28
Cash paid for acquisition of investments 73,950,980.00 21,860,000.00
Net cash paid for acquisition of subsidiaries and
59
other business units 53,356,516.15 11,639,196.11
Net cash paid from disposal of subsidiaries and other
59
business units - 105,527,131.30
Cash payments related to other investing activities 58 92,803,476.90 1,274,374,346.93
Sub-total of cash outflows from investing activities 424,456,513.79 1,679,286,473.62
Net cash flows from investing activities (286,181,193.94) (9,065,736.59)
3.CASH FLOWS FROM FINANCING ACTIVITIES
Cash proceeds from investments by others 14,873,000.00 271,286,689.50
Incl: Cash received from capital contributions from
non-controlling shareholders of subsidiaries 14,873,000.00 3,470,000.00
Cash received from borrowings 261,571,499.94 467,980,655.24
Cash receipts related to other financing activities 58 238,476,708.52 297,999,324.21
Sub-total of cash inflows from financing activities 514,921,208.46 1,037,266,668.95
Cash repayments for debts 445,758,196.23 787,922,055.10
Cash payments for distribution of dividends or profit and
interest expenses 295,787,225.16 254,987,476.35
Incl: Profit and dividends paid to non-controlling
shareholders of subsidiaries 49,621,410.48 39,738,435.69
Cash payments related to other financing activities 58 250,398,903.79 470,599,856.33
Sub-total of cash outflows from financing activities 991,944,325.18 1,513,509,387.78
Net cash flows from financing activities (477,023,116.72) (476,242,718.83 )
The accompanying notes form an integral part of these financial statements.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
CONSOLIDATED CASH FLOW STATEMENT (Continued)
As at 31 December 2017
(Expressed in Renminbi Yuan)
Note V 2017 2016
4.EFFECT OF FOREIGN EXCHANGE RATE CHANGES
59
ON CASH AND CASH EQUIVALENTS 495,664.83 (563,036.58)
5.NET INCREASE IN CASH AND CASH EQUIVALENTS 59 522,583,265.99 986,470,984.16
Add: Cash and cash equivalents at beginning of the
year 3,150,915,425.49 2,164,444,441.33
6.CASH AND CASH EQUIVALENTS AT END OF YEAR 59
3,673,498,691.48 3,150,915,425.49
The accompanying notes form an integral part of these financial statements.
119
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
COMPANY BALANCE SHEET
As at 31 December 2017
(Expressed in Renminbi Yuan)
ASSETS Note XIV 31 December 2017 31 December 2016
Current assets
Cash and bank balances 1,776,696,342.87 1,342,041,409.86
Notes receivable 64,799,618.07 79,868,867.49
Accounts receivable 1 480,467,760.92 397,351,577.24
Advances to suppliers 1,138,312.26 2,135,439.82
Interest receivable 1,844,294.10 2,029,125.06
Other receivables 2 1,516,037,945.71 1,801,567,851.50
Inventories 172,022,676.96 184,708,273.76
Other current assets 788,964.90 6,937,946.90
Total current assets 4,013,795,915.79 3,816,640,491.63
Non-current assets
Long-term equity investments 3 7,180,306,084.56 5,914,542,602.10
Investment properties 2,763,831.92 3,571,809.38
Fixed assets 13,831,103.54 16,555,996.92
Intangible assets 1,287,775.78 1,534,730.15
Long-term deferred expenses 5,543,217.86 6,645,211.13
Deferred tax assets 2,764,724.75 2,869,931.88
Other non-current assets 71,808,611.00 9,859,840.00
Total non-current assets 7,278,305,349.41 5,955,580,121.56
Total assets 11,292,101,265.20 9,772,220,613.19
The accompanying notes form an integral part of these financial statements.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
COMPANY BALANCE SHEET (Continued)
As at 31 December 2017
(Expressed in Renminbi Yuan)
LIABILITIES AND SHAREHOLDERS’
31 December 2017 31 December 2016
EQUITY
Current liabilities
Short-term borrowings 707,000,000.00 50,000,000.00
Notes payable 239,563,961.30 334,383,191.54
Accounts payable 434,886,685.35 391,726,381.93
Advances from customers 1,912,503.90 2,997,964.16
Employee benefits payable 33,592,851.93 30,618,183.84
Tax payables 42,386,907.00 3,308,582.29
Interest payable 669,533.78 37,801.50
Other payables 1,415,053,655.18 1,100,143,593.55
Non-current liabilities due within one
year - 31,600,000.00
Other current liabilities 112,817.65 123,294.77
Total current liabilities 2,875,178,916.09 1,944,938,993.58
Non-current liabilities
Long-term borrowings 31,600,000.00 -
Payables for specific projects 800,000.00 800,000.00
Deferred income 2,054,250.00 1,570,000.00
Long-term employee benefits payable - 26,000.00
Deferred tax liabilities 3,773,319.00 3,773,319.00
Total non-current liabilities 38,227,569.00 6,169,319.00
Total liabilities 2,913,406,485.09 1,951,108,312.58
The accompanying notes form an integral part of these financial statements.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
COMPANY BALANCE SHEET (Continued)
As at 31 December 2017
(Expressed in Renminbi Yuan)
LIABILITIES AND SHAREHOLDERS’
31 December 2017 31 December 2016
EQUITY
Shareholders’ equity
Share capital 428,126,983.00 362,631,943.00
Capital surplus 4,407,091,484.13 4,381,845,619.03
Surplus reserves 214,063,491.50 181,315,971.50
Other equity instruments - 65,495,040.00
Retained earnings 3,329,412,821.48 2,829,823,727.08
Total shareholders’ equity 8,378,694,780.11 7,821,112,300.61
Total liabilities and shareholders’ equity 11,292,101,265.20 9,772,220,613.19
The accompanying notes form an integral part of these financial statements.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
COMPANY INCOME STATEMENT
As at 31 December 2017
(Expressed in Renminbi Yuan)
Note XIV 2017 2016
Operating revenue 4 3,346,941,845.38 3,138,854,618.97
Less: Operating costs 4 3,211,668,647.02 3,004,349,631.69
Tax and surcharge 10,375,051.96 7,524,958.43
Selling expenses 51,050,354.52 50,852,431.61
Administrative expenses 70,636,774.06 86,328,173.16
Finance costs (54,129,294.66) (60,205,031.57)
Impairment loss (72,116.23) 337,659.11
Add: Investment income 5 640,957,400.23 588,945,025.76
Incl: Investment income from associates 286,535,212.21 209,757,868.18
Gain on disposal of assets 884.46 -
Other income 4,069,902.74 -
Operating profits 702,440,616.14 638,611,822.30
Add: Non-operating income 39,253.56 13,669,692.02
Less: Non-operating expenses 1,861,760.18 698,639.61
Total profit 700,618,109.52 651,582,874.71
Less: Income taxes 26,999,590.73 12,348,207.78
Net profit 673,618,518.79 639,234,666.93
Total comprehensive income 673,618,518.79 639,234,666.93
The accompanying notes form an integral part of these financial statements.
123
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
COMPANY STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
As at 31 December 2017
(Expressed in Renminbi Yuan)
Other equity
2017 Share capital Capital surplus Surplus reserve Retained earnings Total equity
instruments
Opening balance of the current year 362,631,943.00 65,495,040.00 4,381,845,619.03 181,315,971.50 2,829,823,727.08 7,821,112,300.61
Movements in the current year 65,495,040.00 (65,495,040.00) 25,245,865.10 32,747,520.00 499,589,094.40 557,582,479.50
(1) Total comprehensive income - - - - 673,618,518.79 673,618,518.79
(2) Capital paid and reduced by owners 65,495,040.00 (65,495,040.00) 25,245,865.10 - - 25,245,865.10
1. Capital injection by owners 5,114,297.00 (5,114,297.00) - - - -
2. Significant reorganization 60,380,743.00 (60,380,743.00) (3,430,029.00) - - (3,430,029.00)
3. Others - - 28,675,894.10 - - 28,675,894.10
(3) Profit distribution - - - 32,747,520.00 (174,029,424.39) (141,281,904.39)
1. Distribution to owners - - - - (141,281,904.39) (141,281,904.39)
2. Withdrawal surplus reserves - - - 32,747,520.00 (32,747,520.00) -
Closing balance of the current year 428,126,983.00 - 4,407,091,484.13 214,063,491.50 3,329,412,821.48 8,378,694,780.11
The accompanying notes form an integral part of these financial statements.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
COMPANY STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (Continued)
As at 31 December 2017
(Expressed in Renminbi Yuan)
Other equity
2016 Share capital Capital surplus Surplus reserve Retained earnings Total equity
instruments
Closing balance of the preceding year 362,631,943.00 - 1,869,692,921.70 181,315,971.50 2,160,557,903.68 4,574,198,739.88
Others - - - - 138,820,739.37 138,820,739.37
Opening balance of the current year 362,631,943.00 - 1,869,692,921.70 181,315,971.50 2,299,378,643.05 4,713,019,479.25
Movements in the current year - 65,495,040.00 2,512,152,697.33 - 530,445,084.03 3,108,092,821.36
(1) Total comprehensive income - - - - 639,234,666.93 639,234,666.93
(2) Capital paid and reduced by owners - 65,495,040.00 2,512,152,697.33 - - 2,577,647,737.33
1. Capital injection by owners - 5,114,297.00 263,030,592.50 - - 268,144,889.50
2. Significant reorganization - 60,380,743.00 2,249,481,871.18 - - 2,309,862,614.18
3. Others - - (359,766.35) - - (359,766.35)
(3) Profit distribution - - - - (108,789,582.90) (108,789,582.90)
1. Distribution to owners - - - - (108,789,582.90) (108,789,582.90)
Closing balance of the current year 362,631,943.00 65,495,040.00 4,381,845,619.03 181,315,971.50 2,829,823,727.08 7,821,112,300.61
The accompanying notes form an integral part of these financial statements.
125
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
COMPANY CASH FLOW STATEMENT
As at 31 December 2017
(Expressed in Renminbi Yuan)
2017 2016
1.CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from sales of good or rendering
of services 3,618,686,142.56 3,401,302,572.88
Cash receipts related to other operating
activities 42,311,981.52 51,854,505.86
Sub-total of cash inflows from operating
activities 3,660,998,124.08 3,453,157,078.74
Cash paid for goods and services 3,317,975,162.52 3,186,087,599.05
Cash paid to and on behalf of employees 74,008,955.58 64,460,810.25
Cash paid for all types of taxes 45,705,409.43 41,496,603.39
Cash payments related to other operating
activities 45,906,623.45 24,972,169.45
Sub-total of cash outflows from operating
activities 3,483,596,150.98 3,317,017,182.14
Net cash flows from operating activities 177,401,973.10 136,139,896.60
2. CASH FLOWS FROM INVESTING ACTIVITIES
Cash received from returns of investments 456,706,957.70 418,909,426.90
Net cash received from disposal of fixed assets,
intangible assets and other long-term assets - 5,580.00
Net cash paid from disposal of subsidiaries and
other business - 156,111,000.00
Cash receipts related to other investing activities 2,219,069,200.00 1,857,919,415.00
Sub-total of cash inflows from investing activities 2,675,776,157.70 2,432,945,421.90
Cash paid for acquisition of fixed assets,
intangible assets and other long-term assets 37,669,557.28 46,855,153.72
Cash paid for investment 1,046,650,980.00 -
Net cash paid for purchasing subsidiaries and
other business 17,549,020.00 -
Cash payments related to other investing
activities 2,067,489,918.90 2,005,548,023.10
Sub-total of cash outflows from investing
activities 3,169,359,476.18 2,052,403,176.82
Net cash flows from investing activities (493,583,318.48) 380,542,245.08
The accompanying notes form an integral part of these financial statements.
126
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
COMPANY CASH FLOW STATEMENT (Continued)
As at 31 December 2017
(Expressed in Renminbi Yuan)
2017 2016
3. CASH FLOWS FROM FINANCING ACTIVITIES
Cash proceeds from investments by others - 267,816,689.50
Cash received from borrowings 41,600,000.00 80,100,000.00
Cash receipts related to other financing 16,514,221,231.02 9,255,846,037.96
activities
Sub-total of cash inflows from financing 16,555,821,231.02 9,603,762,727.46
activities
Cash repayments for debts 41,600,000.00 189,800,218.30
Cash payments for distribution of dividends,
150,643,594.49 116,941,247.37
profit or interest expenses
Cash payments related to other financing 15,613,029,417.64 8,901,099,071.96
activities
Sub-total cash outflows from financing activities 15,805,273,012.13 9,207,840,537.63
Net cash flows from financing activities 750,548,218.89 395,922,189.83
4.EFFECT OF FOREIGN EXCHANGE RATE
CHANGES ON CASH AND CASH
EQUIVALENTS 288,059.50 -
5. NET INCREASE IN CASH AND CASH
EQUIVALENTS 434,654,933.01 912,604,331.51
Add: Cash and cash equivalents at beginning of
the year 1,342,041,409.86 429,437,078.35
6. CASH AND CASH EQUIVALENTS
AT END OF YEAR 1,776,696,342.87 1,342,041,409.86
The accompanying notes form an integral part of these financial statements.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
I Profile of the Company
As approved by the People’s Government of Shenzhen (SFBF (1993) No.356), China National Accord
Medicines Corporation Ltd. (hereinafter referred to as the “the Company”), formerly known as Shenzhen
Health Mineral Water Corp., Ltd., was registered as a joint stock liability limited company on 1 February
1993 through stock transformation. 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 converting capital surplus into
share capital, bonus issues and issuance of shares for years, the share capital of the Company
increased to 428.13 million as at 31 December 2017.
In November 2000, the Company entered into an Asset Exchange Agreement with Shenzhen Investment
Management Company, the original major shareholder of the Company, to exchange all the assets and
liabilities of the Company as of 31 August 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. The above asset exchange proposal was
approved by shareholders in the Second Extraordinary General Meeting on 29 December 2000. The
transaction was completed on 8 January 2001.
On 18 February 2004, the Company’s original major shareholder, Shenzhen Investment Management
Company, entered into a Stock Transfer Agreement with Sinopharm Group 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 9 December 2004. At the same time, as
approved by the State-owned Assets Supervision and Administration Commission of the State Council
(GZCQ (2004) No.525) and the China Securities Regulatory Commission (ZJGSZ (2004) No.94), the
nature of these shares was changed from state-owned stock to state-owned legal entity stock and
Sinopharm Group became the largest shareholder of the Company.
On 14 April 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 27 April 2006, the
Company issued bonus shares on 28 April 2006 at the ratio of 3 shares to every 10 A shares to
liquidated A-shareholders 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
shareholdings.
On 14 March 2014, the Company issued 74,482,543 ordinary shares (A shares) through the non-public
offering. Par value per share is RMB1 yuan. The shares shall not be transferred within 36 months since
the issue date. The total number of shares of the Company was 362,631,943 since the date of issue.
128
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
I Profile of the Company (Continued)
The Company acquired the companies under common control, including Sinopharm Holding Guoda
Pharmacy Co., Ltd. (“Guoda Pharmacy”), Foshan Nanhai Medicine Group Co., Ltd. (“Foshan Nanhai”),
Guangdong South Pharmaceutical Foreign Trade Co., Ltd. (“South Pharma & Trade) Guangdong Dong
Fang Uptodate & Special Medicines Co., Ltd. (“Guangdong Uptodate & Special Medicines”) by issuing
shares and raised supporting funds by issuing shares to Ping An Asset Management Co., Ltd.(“Ping An
Asset Management”) to acquire the non-controlling interest of South Pharma & Trade. The relevant
shares were successfully issued and listed on 5 January 2017. Afterwards, the total number of shares of
the Company increased to 428,126,983.
As of 31 December 2017, the total share capital is 428,126,983.
The Company is registered with Shenzhen Administration for Industry & Commerce. Its Uniform Social
Credit Code is 91440300192186267U. The operation period of the Company is from 2 August 1986 to
the long term. The registered capital of the Company is RMB428.13 million. The legal representative of
the Company is Lin Zhaoxiong.
The approved scope of business of the Company and its subsidiaries (together “the Group”) includes:
the wholesale of Chinese herbal slice, traditional Chinese medicine preparations, bulk pharmaceutical
drugs, chemical preparations, bulk antibiotic drugs, antibiotic preparations, biochemical drugs, biological
products (including vaccines and in vitro diagnostic reagents psychotropic drugs and preparations,
narcotic drugs, toxic drugs for medical use, protein assimilation preparation and peptide hormones; trade
of dietary supplement; industrial investment holding; domestic trade; material supply and marketing
industry (other than special licensing); sale of ambulances; trading of second-class and third- class
medical equipment; project investment; property management and leasing of self-owned properties;
pharmacovigilance and medical information consulting; parking operation; logistics and related services;
package agency business; logistic design; import and export services (excluding projects that are
prohibited by the country; limited projects have to be approved before operating).
Subsidiaries consolidated in the financial statements for the current year and change in the consolidation
scope are shown in Note VI.
The Group’s parent and ultimate parent company is Sinopharm Group and China National
Pharmaceutical Group Corporation respectively.
These financial statements were authorized for issue by the board of directors of the Company on 21
March 2018.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
II Basis of preparation
The financial statements were prepared in accordance with the Basic Standard and specific standards of
Accounting Standards for Business Enterprises issued by the Ministry of Finance on 15 February 2006
and the specific accounting standards and the relevant regulations issued thereafter (hereafter
collectively referred to as “Accounting Standards for Business Enterprises” or “CAS”), and the disclosure
requirements in the Preparation Convention of Information Disclosure by Companies Offering Securities
to the Public No.15 – General Rules on Financial Reporting issued by the China Securities Regulatory
Commission.
These financial statements are prepared on a going concern basis.
Except for certain financial instruments, the financial statements have been prepared using the historical
cost as the principle of measurement. Where assets are impaired, provisions for asset impairment are
made in accordance with the relevant requirements.
The Group has made accounting policies and accounting estimates according to its own operation and
production characteristics, which are mainly reflected in the bad debt provision for accounts receivable
(Note Ⅲ (10)), inventory costing methods (Note Ⅲ (11)), depreciation methods for fixed assets and
amortization method for intangible assets (NoteⅢ(14) and Note III(17)), impairment of assets (NoteⅢ
(20)) and revenue recognition (NoteⅢ(25)).
130
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates
(1) Statement of compliance with Accounting Standards for Business Enterprises
The financial statements of the Company for the year ended 31 December 2017 are in compliance with
Accounting Standards for Business Enterprises, and truly and completely present the financial position
of the Group and the Company as of 31 December 2017 and the operating results, cash flows and other
information of the Group and the Company for the year then ended.
(2) Accounting year
The Group’s accounting year begins on 1 January and ends on 31 December.
(3) Functional currency
The functional currency is Renminbi (RMB).
(4) Business combinations
(a) Business combinations involving entities under common control
Assets and liabilities (including goodwill arising from ultimate controlling shareholder’s acquisition of the
party being absorbed) that are obtained by the absorbing party in a business combination shall be
measured at their carrying amounts at the combination date as recorded by the party being absorbed.
The difference between the carrying amount of the net assets obtained and the carrying amount of the
consideration paid for the combination (or the aggregate face value of shares issued as consideration)
shall be adjusted to share premium under capital surplus. If the capital surplus is not sufficient to absorb
the difference, any excess shall be adjusted against retained earnings. The transaction costs of issuing
equity securities or debt securities for business combination are recognized at the initial recognition
amount of equity securities or debt securities.
(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 acquirer’s identifiable net assets, the difference is recognized
as goodwill; where the cost of combination is lower than the acquirer’s interest in the fair value of the
acquirer’s identifiable net assets, the difference is recognized 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. Transaction costs associated with the issue of equity or debt securities for the business
combination are included in the initially recognized amounts of the equity or debt securities.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(4) Business combinations (Continued)
Where the business combination not involving enterprises under common control which is achieved in
stages, the acquirer’s previously held equity interests in the acquiree are remeasured at the fair value on
the acquisition date, with the difference between fair value and carrying amount recognized as
investment income for the current period. If the acquirer’s previously held equity interests of the acquiree
involve other comprehensive income (“OCI”) under the equity method, the accounting treatment is
conducted on the same basis as would have been required if the investee had directly disposed of the
related assets or liabilities, and the changes in shareholders’ equity other than net profit or loss, OCI and
profit distributions are charged to profit or loss for the current period on the acquisition date.
(5) 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, comes under common control of the ultimate controlling
party. The portion of the net profits realized 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 of the Company and subsidiaries are inconsistent, the financial statements of the subsidiaries
are adjusted in accordance with the accounting policies and the accounting period of the Company. For
subsidiaries acquired from business combinations 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 intra-group balances, transactions and unrealized profits are eliminated in the consolidated
financial statements. The portion of a subsidiary’s equity and the portion of a subsidiary’s net profits,
losses and comprehensive income for the period not attributable to the Company are recognized as non-
controlling interests and presented separately in the consolidated financial statements within equity, net
profits and total comprehensive income respectively. Unrealized gain or loss from selling assets to
subsidiaries fully offsets the net income attributable to equity holders of the Company. Unrealized gain or
loss from purchasing assets from subsidiaries offsets the net income attributable to equity holders of the
Company and attributable to the non-controlling interest by the distribution proportion regarding the
Company and the subsidiary. Unrealized gain or loss from transaction between subsidiaries offsets the
net income attributable to equity holders of the Company and attributable to the non-controlling interest
by the distribution proportion regarding the Company and the selling side of the subsidiaries. If different
recognition perspectives for the same transaction arise within different accounting identities setup, there
is an adjustment for the transaction from the Group’s perspective.
132
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(6) Acquisition of non-controlling interests in controlled subsidiaries
The Company acquires equity from the minority shareholders after taking control of the subsidiary, in the
consolidated financial statements, the subsidiary’s assets and liabilities should be measured from the
combination or acquisition date. The difference between the carrying amount of acquisition of non-
controlling interest and the net asset proportion calculated by the original share percentage since the
acquisition date should be recognized in capital surplus. If the capital surplus is insufficient to dilute, the
retained earnings shall be adjusted.
(7) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, deposits that can be readily drawn on demand, and
short-term and highly liquid investments that are readily convertible to known amounts of cash and 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 recognized 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 capitalized as part of the cost of those assets. Non-monetary items denominated in
foreign currencies that are measured at historical cost are translated at the balance sheet date using the
spot exchange rates at the dates 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 of financial assets
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 and available-
for-sale financial assets. Receivables, including notes receivable, accounts receivable and other
receivables, are non-derivative financial assets with fixed or determinable payments that are not quoted
in an active market. Available-for-sale financial assets are those non-derivative financial assets that are
designated as available for sale at initial recognition or are not classified as financial assets at fair value
through profit or loss, held-to-maturity investments or borrowings and receivables.
133
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(9) Financial instruments (Continued)
(a) Financial assets (Continued)
(ii) Recognition and measurement
Financial assets are recognized at fair value on the balance sheet when the Group becomes a party to
the contractual provisions of the financial instrument. The transaction expenses are included in
receivables’ original book value, which is measured at amortized cost using the effective interest method.
After initial recognition, financial assets available-for-sale are measured at fair value.
The premium/discount is amortized using the effective interest method and recognized as interest
income or expense. A gain or loss arising from a change in the fair value of an available-for-sale
financial asset is recognized as other comprehensive income, except for impairment losses and foreign
exchange gains and losses resulted from monetary financial assets which are recognized in profit or loss,
until the financial asset is derecognized or determined to be impaired, at which time the accumulated
gain or loss previously recognized is transferred to profit or loss for the current period. Interest and
dividends relating to an available-for-sale financial asset are recognized in profit or loss for the current
period. Investments in equity instruments, which do not have quoted prices in an active market and
whose fair values cannot be reliably measured, are measured at cost.
(iii) Impairment of financial assets
The Group assesses the carrying amounts of receivables other than those at fair value through profit or
loss at each balance sheet date. If there is objective evidence that a financial asset is impaired, an
impairment loss is provided for.
Objective evidence refers to matters that occur after the financial assets have been recognized, affect
the estimated future cash flow and could be measured accurately by the Group.
When an impairment loss on a financial asset carried at amortized cost has occurred, the amount of loss
is provided for at the difference between the asset’s carrying amount and the present value of its
estimated future cash flows (excluding future credit losses that have not been incurred). 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 recognized, the previously recognized impairment loss is
reversed and the amount of reversal is recognized in profit or loss.
134
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(9) Financial instruments (Continued)
(a) Financial assets (Continued)
(iii) Impairment of financial assets (Continued)
Where there is objective evidence of impairment of available-for-sale financial assets, the cumulative
loss which results from a decline in fair value and is previously recognized in other comprehensive
income is removed from other comprehensive income and recognized in profit or loss. The cumulative
loss removed is measured as the difference between the acquisition cost and the current fair value, less
any retrieved costs, amortization and impairment loss previously recognized in profit or loss. In the case
of equity investments classified as available for sale, objective evidence of impairment would include a
significant or prolonged decline in the fair value of an investment below its cost. “Significant” is
evaluated against the original cost of the investment and “prolonged” against the period in which the fair
value has been below its original cost. Where there is evidence of impairment, the cumulative loss
removed is measured as the difference between the acquisition cost and the current fair value, less any
impairment loss on that investment previously recognized in profit or loss. Impairment losses on equity
instruments classified as available for sale are not reversed through profit or loss. Increases in their fair
value after impairment are recognized directly in other comprehensive income.
The determination of what is “significant” or “prolonged” requires judgment. In making this judgment, the
Group evaluates, among other factors, the duration or extent to which the fair value of an investment is
less than its cost.
(iv) Derecognition of financial assets
A financial asset is derecognized when any of the following criteria is met: (i) the contractual rights to
receive the cash flows from the financial asset expire; (ii) the financial asset has been transferred and
the Group transfers substantially all the risks and rewards of ownership of the financial asset to the
transferee; or (iii) the financial asset has been transferred and the Group has not retained control of the
financial asset, although the Group neither transfers nor retains substantially all the risks and rewards of
ownership of the financial asset.
On derecognition of a financial asset, the difference between the carrying amount and the sum of the
consideration received and the cumulative changes in fair value that had been recognized directly in
equity is recognized in profit or loss.
135
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(9) Financial instruments (Continued)
(b) Financial liabilities
Financial liabilities are classified into the following categories at initial recognition: financial liabilities at
fair value through profit or loss and other financial liabilities. The financial liabilities of the Group mainly
comprise other financial liabilities, including payables and borrowings
Payables, including notes payable, accounts payable and other payables, are recognized initially at fair
value and subsequently measured at amortized cost using the effective interest method.
Borrowings are recognized initially at fair value, net of transaction costs incurred, and subsequently
carried at amortized cost using the effective interest method.
Other financial liabilities with maturities no more than one year are classified as current liabilities. Other
financial liabilities with maturities over one year but are due within one year at the balance sheet date
are classified as the current portion of non-current liabilities. Others are classified as non-current
liabilities.
A financial liability is derecognized or partly derecognized when the current obligation is discharged or
partly discharged. The difference between the carrying amount of the financial liability or the
derecognized part of the financial liability and the consideration paid is recognized in profit or loss.
(c) Offsetting of financial instruments
A financial asset and a financial liability shall be offset and the net amount is presented in the balance
sheet when both of the following conditions are satisfied: 1) the enterprise has a legal right to set off the
recognized amounts and the legal right is currently enforceable; 2) the enterprise intends either to settle
on a net basis or to realize the financial asset and settle the financial liability simultaneously.
(d) Transfer of financial assets
A financial asset is derecognized when the Group has transferred substantially all the risks and rewards
of the asset to the referee. A financial asset is not derecognized when the Group retains substantially all
the risks and rewards of the asset.
When the Group has neither transferred nor retained substantially all the risks and rewards of the asset,
it either i) derecognizes the transferred asset when it has transferred control of the asset; or ii) continues
to recognize the transferred asset to the extent of the Group's continuing involvement, in which case, the
Group also recognizes an associated liability.
Continuing involvement that takes the form of a guarantee over the transferred financial asset is
measured at the lower of the original carrying amount of the asset and the guarantee amount. The
guarantee amount is the maximum amount of consideration that the Group could be required to repay.
136
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(10) Receivables
Receivables comprise notes receivable, accounts receivable and other receivables. Accounts receivable
arising from the sale of goods or rendering of services are initially recognized at fair value of the
contractual payments from the buyers or service recipients.
(a) Receivables with amounts that are individually significant and subject to separate assessment
for provision for bad debts
Receivables with amounts that are individually significant are subject to assessment for
impairment on the individual basis. If there is objective evidence that the Group will not be able
to collect the amount under the original terms, a provision for impairment of that receivable is
made.
The criterion for determining individually significant amounts is that any individual amount is
more than RMB5 million.
The method of providing for bad debts for those individually significant amounts is as follows: the
amount of the present value of the future cash flows is expected to be derived from the
receivable below its carrying amount.
(b) Receivables that are subject to provision for bad debts on the grouping basis
Receivables with amounts that are not individually significant and those receivables that have
been individually assessed for impairment and have not been found impaired are classified into
certain groupings based on their credit risk characteristics. The provision for bad debts is
determined based on the historical loss experience for the groupings of receivables with similar
credit risk characteristics, taking into consideration of the current circumstances.
A provision for impairment of the receivables is made based on the ageing of receivables at the
following percentage:
Provision ratios used for accounts Provision ratios used for
receivable other receivables
Within 1 year 0-5% 0-5%
1 to 2 years 5-10% 5-10%
2 to 3 years 10-30% 10-30%
3 to 4 years 20-50% 20-50%
4 to 5 years 20-80% 20-80%
More than 5 years 20-100% 20-100%
(c) Receivables with amounts that are not individually significant but subject to separate
assessment for provision for bad debts
The reason for making separate assessment for provision for bad debts is that there is objective
evidence that the Group will not be able to collect the amount under the original terms of the
receivables.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
The provision for bad debts is determined based on the amount of the present value of the future cash
flows expected to be derived from the receivable below its carrying amount.
138
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(10) Receivables (Continued)
(d) When the Group transfers the accounts receivable to the financial institutions without recourse,
the difference between the proceeds received from the transaction and their carrying amounts
and the related taxes is recognized in profit or loss for the current period.
(11) Inventories
Inventories include raw materials, work in progress, finished goods, delegate processing
supplies and turnover materials, and are measured at the lower of cost and net realizable value.
Cost is determined on the weighted average method. The cost of finished goods and work in
progress comprises raw materials, direct labor and an allocation of systematically allocated
overhead expenditures incurred based on the normal operating capacity.
Basis for determining the net realizable values of inventories and method for making provisions
for decline in the value 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 realizable value. Net realizable 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.
The Group adopts the perpetual inventory system.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(12) Long-term equity investments
Long-term equity investments comprise the Company’s long-term equity investments in its subsidiaries,
joint ventures and associates.
Long-term equity investments are accounted for using the coast method at the time it was acquired. For
long-term equity investments acquired through a business combination involving enterprises under
common control, the investment cost shall be the absorbing party’s share of the carrying amount of
shareholders’ equity of the party being absorbed at the combination date.
Subsidiaries are the investees over which the Company is able to exercise control. Associates are the
investees that the Group has significant influence 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) Determination of investment cost
For long-term equity investments acquired through a business combination: for long-term equity
investments acquired through a business combination involving enterprises under common control, the
investment cost shall be the absorbing party’s share of the carrying amount of shareholders’ equity of
the party being absorbed at the combination date; for long-term equity investments acquired through a
business combination involving enterprises not under common control, the investment cost shall be the
combination cost.
(b) Subsequent measurement and recognition of related profit or loss
For long-term equity investments accounted for using the cost method, they are measured at the initial
investment costs, and cash dividends or profit distribution declared by the investees are recognized as
investment income in profit or loss.
For long-term equity investments accounted for using the equity method, where the initial investment
cost of a long-term equity investment exceeds the Group’s share of the fair value of the investee’s
identifiable net assets at the acquisition date, the long-term equity investment is measured at the initial
investment 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 acquisition date, the difference is included in profit or loss and
the cost of the long-term equity investment is adjusted upwards accordingly.
140
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(12) Long-term equity investments (Continued)
For long-term equity investments accounted for using the equity method, the Group recognizes the
investment income according to its share of net profit or loss of the investee. The Group discontinues to
recognize 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 the recognition of provisions under the accounting standards on
contingencies are satisfied, the Group continues to recognize the investment losses and the provisions.
For changes in shareholders’ equity of the investee other than those arising from its net profit or loss,
other comprehensive income, and profit distribution, the Group adjusts the book value of the investment
and records capital surplus accordingly. 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 unrealized profits or losses arising from the intra-group transactions amongst the Group and its
investees are eliminated in proportion to the Group’s equity interests in the investees, and then based on
which the investment gains or losses are recognized. For the loss on intra-group transactions amongst
the Group and its investees attributable to asset impairment, any unrealized loss is not eliminated.
(c) Basis for determining existence of control, joint control or significant influence over investees
Control is the power to govern the financial and operating policies of the investee so as to obtain benefits
from its operating activities. In determining whether the Company is able to exercise control over the
investee, the effect of potential voting rights over the investee is considered, such as convertible debts
and warrants currently exercisable.
Significant influence is the power to participate in the financial and operating policy decisions of the
investee, but is not control or joint control over those policies.
(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 (Note III (21)).
(13) Investment properties
Investment properties, including land use rights that have already been leased out, buildings that are
held for the purpose of leasing, and buildings that are being constructed or developed for the purpose of
leasing in future, are measured initially at cost. Subsequent expenditures incurred in relation to
investment properties are included in the cost of investment properties when it is probable that the
associated economic benefits will flow to the Group and their costs can be reliably measured; otherwise,
the expenditures are recognized in profit or loss in the period in which they are incurred.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(13) Investment properties (Continued)
The Group adopts the cost model for subsequent measurement of investment properties. Buildings and
land use rights are depreciated or amortized to their estimated net residual values over their estimated
useful lives. The estimated useful lives, the estimated net residual values that are expressed as a
percentage of cost and the annual depreciation (amortization) rates of investment properties are as
follows:
Estimated useful lives Estimated residual value Annual depreciation (amortization)
rates
Buildings 12-35 years 0-5% 2.71-7.92%
Land use rights 30-50 years - 2.00-3.33%
When an investment property is transferred to owner-occupied property, it is reclassified as a fixed asset
or intangible asset at the date of transfer. When an owner-occupied property is transferred out for
earning rentals or for capital appreciation, the fixed asset or intangible asset is reclassified as an
investment property at its carrying amount at the date of transfer.
The investment properties’ estimated useful life, net residual value and depreciation (amortization)
method applied are reviewed and adjusted as appropriate at the end of each year.
An investment property is derecognized 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 recognized in profit or loss for the current period.
The carrying amount of investment properties is reduced to the recoverable amount if the recoverable
amount is below the carrying amount (Note III (20)).
(14) Fixed assets
Recognition and initial measurement of fixed assets
Fixed assets comprise buildings, machinery and equipment, motor vehicles, other equipment and
leasehold improvements.
Fixed assets are recognized when it is probable that the related economic benefits will flow to the Group
and the costs can be reliably measured. Fixed assets purchased or constructed by the Group are initially
measured at cost at the acquisition date. The fixed assets contributed by the State shareholders at the
reorganization of the Company into a corporation entity are recognized based on the revalued amounts
approved by the State-owned Assets Administration 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 derecognized. All the other subsequent
expenditures are recognized in profit or loss in the period in which they are incurred.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(14) Fixed assets (Continued)
Depreciation methods of fixed assets
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 lives Estimated residual values Annual depreciation
rates
Buildings 20-35 years 0-5% 2.71-5.00%
Machinery and equipment 5-14 years 3-6% 6.79-19.40%
Motor vehicles 3-10 years 0-5% 9.50-33.33%
Other equipment 3-10 years 0-5% 9.50-33.33%
Leasehold improvements within 5 years 0% 20% and above
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 the end of each year.
Recognition basis and measurement method for financing leased fixed assets.
Finance leases are leases with the whole risks and rewards related to the asset being substantially
transferred. Fixed assets leased under finance leases are recognized at the lower of the fair value and
minimum lease payments. The difference between the book value and the minimum lease payments
should be recognized as unrecognized financing charges (Note III (28) (b)).
Fixed assets leased under finance leasesare depreciated be applying the same policy as that those fixed
assets are owned by the company. For those leased assets of which the ownership can be ascertained
by the expiration date, the assets should be depreciated within estimated useful lives. Otherwise, the
assets should be depreciated within the shorter period of the leasing period and the estimated useful
lives.
Disposal of fixed assets
A fixed asset is derecognized 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 recognized in profit or loss for the
current period.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(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 capitalization 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 III (20)).
(16) Borrowing costs
Borrowing costs refer to the interest and other relevant cost incurred from borrowing, which include loan
interest, discount or amortization of premiums, auxiliary expenses and exchange difference due to
foreign currency loans, etc.
Where the borrowing costs incurred to the Company can be directly attributable to the
acquisition and construction or production of assets eligible for capitalization, it shall be
capitalized and recorded into the costs of relevant assets. Other borrowing costs shall be
recognized as expenses on the basis of the actual amount incurred, and shall be recorded into
the current profits and losses. The term “assets eligible for capitalization” shall refer to the fixed
assets, investment real estate, inventories and other assets, of which the acquisition and
construction or production may take quite a long time to get ready for its intended use or for
sale.
The borrowing costs shall not be capitalized unless they simultaneously meet the following
requirements:
(1) The asset disbursements have already incurred;
(2) The borrowing costs have already incurred; and
(3) The acquisition and construction or production activities which are necessary to prepare
the asset for its intended use or sale have already started.
When the qualified asset under acquisition and construction or production is ready for the
intended use or sale, the capitalization of the borrowing costs shall be ceased. Borrowing costs
incurred after the intended use or sale shall be recorded into the current profits and losses.
During the period of capitalization, the capitalized amount of interest in each accounting period
shall be calculated and determined in the ways below:
The enterprise shall calculate and determine the interest of specific loan by deducting interest
income of loan capital deposit in the bank or investment income obtained from temporary
investment.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(16) Borrowing costs (Continued)
The enterprise shall calculate and determine the to-be-capitalized amount of interests on the
general borrowing by multiplying the weighted average asset disbursement of the part of the
accumulative asset disbursements minus the general borrowing by the capitalization rate of the
general borrowing used.
Where the acquisition and construction or production of a qualified asset is interrupted
abnormally and the interruption period lasts for more than 3 months, the capitalization of the
borrowing costs shall be suspended. The borrowing costs incurred during such period shall be
recognized as expenses, and shall be recorded into the profits and losses of the current period,
till the acquisition and construction or production of the asset restarts.
(17) Intangible assets
Intangible assets include land use rights, computer software, technology patents, trademarks and
distribution network.
Intangible assets can be recognized and initially measured by cost only when the relevant economic
benefits may flow into the Group and the cost can be measured in a reliable way. Intangible assets
contributed by state-owned shareholders during the Company’s reorganization were recorded based on
the valuation amount approved by the State-owned Assets Supervision and Management Department.
The Group shall analyze and judge if intangible assets can bring economic benefis to the Group and
classify as intangible assets with limited service life and intangible assets with uncertain service life.
Categories Useful lives
Land use rights Between the approved useful period and the Company’s
operating period
Software 3-5 years
Trademarks 5-10 years
Technology patents 5 years
Distribution network 20 years
Franchising rights 10 years
Favorable leases 17-20 years
A land use right granted by the government with an infinite useful life would not be amortized. Other land
use rights are amortized on the straight-line basis over their approved useful period. If the acquisition
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 acquisition costs are recognized as fixed assets.
For an intangible asset with a finite useful life, review of its useful life and amortization method is
performed at each end of year, with adjustments made as appropriate. For an intangible asset without a
definite useful life, review of its useful life is performed at the end of each year.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(17) Intangible assets (Continued)
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 the end
of the project.
Expenditure for investigation, evaluation and selection of production process and new drugs researches
is recognized in profit or loss in the period in which it is incurred. Expenditure on the designation,
measurement of the final utilization of the production process and new drugs before mass production, is
capitalized only if all of the following conditions are satisfied:
development of the production process and new drugs has been fully demonstrated by the
technical team;
management has approved the budget of drug production development and new drugs;
market research analysis suggests that the products produced by the new production technology
are able to be promoted;
adequate technical, financial and other resources to complete the development and the ability to
use or sell the intangible asset;
the expenditure attributable to the intangible asset during its development phase can be reliably
measured.
Other development costs that do not meet the conditions above are recognized in profit or loss in the
period in which they are incurred. Development costs previously recognized as expenses are not
recognized as an asset in a subsequent period. Capitalized 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.
The carrying amount of intangible assets is reduced to the recoverable amount when the recoverable
amount is less than the carrying amount (Note III (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 recognized as expenses over more
than one year in the current and subsequent periods. Long-term prepaid expenses are amortized on the
straight-line basis over the expected beneficial period and are presented at actual expenditure net of
accumulated amortization.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(19) Governmental medical reserve funds and specially approved reserving materials
Appointed by the PRC Government, 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 Guangxi Co., Ltd. (“Sinopharm Guangxi”), a
subsidiary of the Company, is responsible for purchasing, allocating and providing the medical reserves,
which include the medical products needed for serious disasters, epidemics and other emergencies as
well as endemic diseases in Guangxi Province. In accordance with the regulation of CNPGC, 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 recognized as 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 recognizes them
as other non-current assets.
(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 and associates are tested for impairment if there is any indication that an asset may be
impaired at the balance sheet date. If the result of the impairment test indicates that the recoverable
amount of the asset is less than its carrying amount, a provision for impairment and an impairment loss
are recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset’s fair value less costs to sell and the present value of
the future cash flows expected to be derived from the asset. Provision for asset impairment is
determined and recognized 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, intangible assets with infinite useful
lives and capitalized development costs 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 recognized. 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 amount of other assets within the asset groups or groups of asset groups in proportion to
the carrying amount of other assets.
Once the above impairment loss is recognized, it will not be reversed for the value recovered in the
subsequent periods.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(21) Employee benefits
Employee benefits mainly include short-term employee benefits, post-employment benefits, termination
benefits and other long-term employee benefits incurred in exchange for service rendered by employees
or various forms of rewards or compensation due to severance of labor relation.
(a) Short-term employee benefits
Short-term employee benefits include wages or salaries, bonuses, allowances and subsidies, staff
welfare, medical insurance, work injury insurance, maternity insurance, housing funds, and labor union
funds and employee education funds. The employee benefits are recognized in the accounting period in
which the service has been rendered by the employees, and as costs of assets or expenses to
whichever the employee service is attributable.
(b) Post-employment benefits (defined contribution plans)
The Company classifies post-employment benefit plans into either defined contribution plans or defined
benefit plans. Defined contribution plans are post-employment benefit plans under which the Company
pays fixed contributions into a separate fund and will have no obligation to pay further contributions; and
defined benefit plans are post-employment benefit plans other than defined contribution plans. During
the reporting period, the Company's post-employment benefits mainly include basic pensions,
unemployment insurance and enterprise annuity, both of which belong to the defined contribution plans.
Basic pensions
The Company’s employees participate in the defined basic pension insurance plan set up and
administered by local labor and social protection authorities. Basic pensions are provided monthly
according to stipulated bases and proportions to local labor and social security contribution. When
employees retire, local labor and social security institutions have a duty to pay the basic pension
insurance to them. The amounts payable are recognized as liabilities based on the above provisions in
the accounting period in which the service has been rendered by the employees, and as costs of assets
or expenses to whichever the employee service is attributable.
(c) Termination benefits
The Group recognizes the debt and the gain or loss, when offering compensation for terminating the
labor contract before the due date, or encouraging the staff to resign voluntarily, at the earlier of when
the Group cannot unilaterally withdraw the labor relation plan and when the Group recognizes the cost
relating to recombinant involving the payment of termination benefits.
148
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(21) Employee benefits (Continued)
(d) Retirement benefits
The Group provides retirement benefits to employees who accept the internal retirement arrangements.
Retirement benefits refer to the salary and social security contribution provided to those staff who
voluntarily quit the job with approval from the management team, before the retirement age.
The Group offers retirement benefits from the date when the arrangement begins, to the date when the
staff reaches the retirement age. The liability including salary and security contribution funds is
recognized when conditions for recognition are met, with regard to the period from the staff leaving the
position to the normal retirement date. Difference arising from the changes in actuarial assumptions for
retirement benefits and adjustments in welfare standard, will be accounted for in the current profit or
loss.
Retirement benefits that are expected to be paid within one year from the balance sheet date are
disclosed as current liabilities.
(22) Provisions
An obligation related to a contingency shall be recognized by the Group as a provision when all of the
following conditions are satisfied, except contingent considerations and contingent liabilities assumed in
a business combination not involving enterprises under common control:
(1) The obligation is a present obligation of the Group;
(2) It is probable that an outflow of economic benefits from the Group will be required to settle the
obligation; and
(3) The amount of the obligation can be measured reliably.
The provisions are initially measured at the best estimate of the expenditure required to settle the related
present obligation, taking into account factors pertaining to a contingency such as the risks, uncertainties
and time value of money as a whole. The carrying amount of provisions is reviewed at the balance sheet
date. Where there is clear evidence that the carrying amount of a provision does not reflect the current
best estimate, the carrying amount is adjusted to the current best estimate.
Contingent liabilities of the acquiree obtained in a business combination shall be measured at fair value
in initial recognition. After initial recognition, subsequent measurement is conducted using the higher of
the
amount recognized by provisions and the amount of initial recognition deducting the accumulated
amortization amount determined by the principles of revenue recognition.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(23) Dividend distribution
Cash dividend distribution is recognized as a liability in the period in which it is approved by
shareholders at the annual shareholders’ meeting.
(24) Share-based payments
The share-based payments shall consist of equity-settled share-based payments and cash-settled
share-based payments. The term "equity-settled share-based payment" refers to a transaction in which
the group grants shares or other equity instruments as a consideration in return for services.
The equity-settled share-based payment in return for employee services shall be measured at the fair
value of the equity instruments granted to the employees. As to an equity-settled share-based payment
in return for services of employees, if the right may be exercised immediately after the grant, the fair
value of the equity instruments shall, on the date of the grant, be included in the relevant cost or
expense and the capital reserves shall be increased accordingly. As to an equity-settled share-based
payment in return for employee services, if the right cannot be exercised until the vesting period comes
to an end or until the prescribed performance conditions are met, then on each balance sheet date within
the vesting period, the group shall make the best estimate of the number of vested equity instruments
based on the latest movement of granted employee 、the content of prescribed performance and other
condition. Based on the best estimate, the services obtained in the current period shall be included in the
relevant costs or expenses and the capital reserves at the fair value of the equities instruments on the
date of the grant.
For awards that do not ultimately vest because non-market performance and service conditions have not
been met, no expense is recognised. Where awards include a market or non-vesting condition, the
transactions are treated as vesting irrespective of whether the market or non-vesting condition is
satisfied, provided that all other performance and service conditions are satisfied.
Where the terms of an equity-settled award are modified, as a minimum an expense is recognised as if
the terms had not been modified, if the original terms of the award are met. In addition, an expense is
recognised for any modification that increases the total fair value of the share-based payments, or is
otherwise beneficial to the employee as measured at the date of modification.
Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation,
and any expense not yet recognised for the award is recognised immediately. This includes any award
where non-vesting conditions within the control of either the Group or the employee are not met.
However, if a new award is substituted for the cancelled award, and is designated as a replacement
award on the date that it is granted, the cancelled and new awards are treated as if they were a
modification of the original award, as described in the previous paragraph.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(24) Share-based payments (Continued)
A cash-settled share-based payment shall be measured in accordance with the fair value of liability
calculated and confirmed based on the shares or other equity instruments undertaken by an enterprise.
As to a cash-settled share-based payment instruments, if the right may be exercised immediately after
the grant, the fair value of the liability undertaken by the enterprise shall, on the date of the grant, be
included in the relevant costs or expenses, and the liabilities shall be increased accordingly. As to a
cash-settled share-based payment, if the right may not be exercised until the vesting period comes to an
end or until the specified performance conditions are met, on each balance sheet date within the vesting
period, the services obtained in the current period shall, based on the best estimate of the information
about the exercisable right, be included in the relevant costs or expenses and the corresponding
liabilities at the fair value of the liability undertaken by the group. The group shall, on each balance sheet
date and on each account date prior to the settlement of the relevant liabilities, re-measure the fair
values of the liabilities and include the changes in the current profits and losses.
(25) 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 discounts and returns.
Revenue can be recognized on condition that the transaction-related economic interest is expected to be
satisfied, the amount is able to be reliably measured, and the following recognition conditions are met:
(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 the ownership nor effective control over the goods sold, and it is
probable that the economic benefits 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, storage and other services 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. Other revenue is determined in accordance with
the amount provided in the service period stipulated in the contract.
(c) Customer loyalty programme
The Group, offers a customer loyalty programme where points earned through the purchase of goods
can only be redeemed for goods provided by Sinopharm Group Zhijun (Shenzhen) Pharmaceutical Co.,
Ltd. or other free goods. The fair value of the consideration received or receivable in respect of the initial
sale is allocated between the award credits and the other components of the sale. Fair value of award
points is measured on the basis of the value of the awards (that is, goods or services) for which they
could be redeemed, the fair value of the award credits should take account of expected forfeitures as
well as the discounts or incentives that would otherwise be offered to customers who have not earned
award credits from an initial sale.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(26) Government grants
A government grant is recognized when the conditions attached to it can be complied with and the
government grant can be received. For a government grant in the form of transfer of monetary assets,
the grant is measured at the amount received or receivable. For a government grant in the form of
transfer of
non-monetary assets, it is measured at fair value; if the fair value is not reliably determinable, the grant is
measured at nominal amount.
Government grants related to assets refer to government assets which are granted to enterprises for the
long-term assets formed by acquisition, construction or in other manners. Government grants related to
income refer to government grants other than those related to assets.
Government grants related to income to be used as compensation for future expenses or losses shall be
recognized as deferred income and shall be charged to the current profit or loss or be used to write
down the relevant loss, during the recognition of the relevant cost expenses or losses; or used as
compensation for relevant expenses or losses already incurred by enterprises shall be directly charged
to the profit and loss account in the current period or used to write down the relevant cost.
The government grants related to assets shall be used to write down the book value of the relevant
assets or be recognized as deferred income. The government grants related to assets, recognized as
deferred income, shall be charged to the profit and loss reasonably and systematically in stages over the
useful lives of the relevant assets. The government grants measured at nominal amount shall be directly
charged to the current profit and loss.
If any related asset is sold, transferred, written off or destroyed before the end of its useful life, the
balance of the undistributed deferred income shall be transferred to the current gain or loss on disposal
of the asset.
(27) Income tax
Income tax comprises current and deferred tax. Income tax is recognized as income or an expense in
profit or loss of the current period, or recognized directly in shareholders’ equity if it arises from a
business combination or relates to a transaction or event which is recognized directly in shareholders’
equity.
The Group measures a current tax asset or liability arising from the current and prior periods based on
the amount of income tax expected to be paid by the Group or returned by tax authority calculated
according to related tax laws.
Deferred tax assets and deferred tax liabilities are calculated and recognized based on the differences
arising between the tax bases of assets and liabilities and their carrying amounts (temporary
differences). Deferred tax asset is recognized 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 recognized for a temporary difference arising from the initial recognition of goodwill. No
deferred tax asset or deferred tax liability is recognized 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,
152
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
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 realized or the liability is settled.
153
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(27) Income tax（Continued）
Deferred tax assets are only recognized 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 utilized.
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 recognized 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, 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 utilized, the corresponding deferred tax assets are
recognized.
(28) Leases
Finance leases are leases with the whole risks and rewards related to the asset substantially transferred.
The other kinds of leases are nominated operating leases.
(a) Operating leases
Lease payments under an operating lease are recognized on a straight-line basis over the period of the
lease, and are either capitalized as part of the cost of related assets or charged as an expense for the
current period.
Lease income under an operating lease is recognized on a straight-line basis over the period of the
lease.
(b) Finance leases
Fixed assets leased under finance leases are recognized at the lower of the fair value and the present
value of the minimum lease payments. The difference between the book value and the minimum lease
payments should be recognized as unrecognized financing charges, and amortized within the leasing
period. The minimum lease payments net off the unrecognized financing charges should be classified as
long-term payables.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(29) Segment information
The Group identifies operating segments based on the internal organization 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.
(30) Critical accounting estimates
The Group continually evaluates the critical accounting estimates and key judgements 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 accounting 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 the use of estimates .
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 recognize further impairment against goodwill and fixed assets.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(30) Critical accounting estimates (Continued)
(a) Critical accounting estimates and key assumptions (Continued)
(i) Accounting estimates on impairment of goodwill (Continued)
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 recognize 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) Accounting estimates on impairment of accounts receivable
In accordance with the Group’s accounting policy, 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.
(iii) Accounting estimates on impairment of inventories
In accordance with the Group’s accounting policy, the Group’s management estimates the net realizable
value of the inventories. Net realizable 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.
156
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
IV Taxation
1. Main categories and rates of taxes:
Categories Tax base Tax rate
Corporate income tax (“CIT”) Taxable income 15%,20% or 25%
Taxable value added amount (Tax payable is calculated
using the taxable sales amount multiplied by the effective
Value added tax (“VAT”) tax rate less deductible VAT input of the current period) 0%,3%,5%,6%,11%,13% or 17%
City maintenance and
construction tax Amount of VAT and business tax paid 5% or 7%
Educational surcharge Amount of VAT and business tax paid 3%
Local educational surcharge Amount of VAT and business tax paid 2%
2. Tax preferences
(a) In 2014, the Group’s subsidiary Sinopharm Holding Guangxi Logistics Co., Ltd. (“Sinopharm
Guangxi Logistics”) was approved by the Guangxi Local Tax Bureau to enjoy a tax discount
applicable to corporations in the region of Western Development to pay income tax at a tax rate of
15%.
From May to December 2015, eight subsidiaries of the Group in Guangxi Province, including
Sinopharm Guangxi, Sinopharm Holding Liuzhou Co., Ltd. (“Sinopharm Liuzhou”) , Sinopharm
Holding Beihai Co., Ltd (“Sinopharm Beihai”), Sinopharm Holding Guilin Co., Ltd. (“Sinopharm
Guilin”), Sinopharm Holding Guigang Co., Ltd. (“Sinopharm Guigang”), Sinopharm Holding Yulin
Co., Ltd. (“Sinopharm Yulin”), Sinopharm Holding Baise Co., Ltd (“Sinopharm Baise”) and
Sinopharm Holding Wuzhou Co., Ltd. (“Sinopharm Wuzhou”) were all approved by the Guangxi
Local Tax Bureau to enjoy a tax concession of Western Development at a preferential CIT rate of
15%. The applicable period for Sinopharm Guangxi, Sinopharm Liuzhou and Sinopharm Beihai is
from 1 January 2014 to 31 December 2020, and that for the other five subsidiaries is from 1
January 2015 to 31 December 2020.
(b) The Urumqi Head Office, Changji Branch and Karamay Branch of Sinopharm Holding Xinjiang New
& Special Medicines Chain Store Co., Ltd. (“Xinjiang New & Special Medicines”), a subsidiary of the
Group, shall pay tax at a rate of 15% by jurisdictions. According to the Circular of the Ministry of
Finance, the State Administration of Taxation, the General Administration of Customs on Issues
Concerning Tax Policies for the Further Development of the Western Regions (Cai shui [2011]
No.58), enterprises from encouraged industries in the Western Regions, could enjoy a reduced CIT
rate of 15% from 1 January 2011 to 31 December 2020. According to the reply to Registration Form
for Items Enjoying Preferential Treatments in Corporate Income Tax by local tax authorities, in 2016
and 2017, the Urumqi Head Office, Changji Branch and Karamay Branch of Xinjiang New & Special
Medicines were subject to CIT at a preferential rate of 15%.
157
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
IV Taxation (Continued)
2. Tax preferences (Continued)
According to Ning cai (shui) fa [2012] No.957, Ningxia Guoda Pharmacy Chain Store Co., Ltd., a
subsidiary of the Group, was qualified for the enterprise from encouraged industries of Western
Development. Therefore, in 2016 and 2017, the company was exempt from the local retained
portion of the corporate income tax (40%), and therefore subject to CIT at a rate of 15%.
According to Cai shui [2011] No.58 and Notices on Tax Reduction and Exemption (Hu shi hui guo
shui deng zi [2014] No. 37), Sinopharm Holding Guoda Neimenggu Pharmacy Chain Store Co.,
Ltd., a subsidiary of the Group, was entitled to the preferential tax rate for the further development
of the Western Regions. Therefore the company is entitled to a preferential CIT rate of 15%.
According to the tax reduction and exemption conditions under the Circular of Local Taxation
Bureau of the Autonomous Region on Printing and Distributing the Administration and
Implementation Measures for Preferential Corporate Income Tax (Gui di shui fa [2009] No. 150),
Sinopharm Holding Guoda Guangxi Pharmacy Chain Store Co., Ltd., received the Written Decision
on Approval and Confirmation of Preferential Tax from local taxation bureau of Liuzhou city, which
approved that the company was subject to CIT at a rate of 15% in 2016 and 2017.
(c) The Corporate Income Tax Law of the People's Republic of China stipulates in Article 28 that, small
low-profit enterprises are subject to corporate income tax at a rate of 20%. The Implementation
Rules for the Corporate Income Tax Law of the People's Republic of China stipulate in Article 92
that, small low-profit enterprises refer to enterprises operating in industries not restricted or
prohibited by the State and satisfying the following conditions: 1. for industrial enterprises, the
annual taxable income do not exceed RMB300,000; the number of employees does not exceed 100
and the total assets do not exceed RMB30 million; 2. for other industries, the annual taxable income
does not exceed RMB300,000; the number of employees does not exceed 80 and the total assets
does not exceed RMB10 million. In 2017, the annual taxable income tax of Shanghai ForMe Xuhui
Pharmacy Co., Ltd. was less than RMB500,000 and was in compliance with the conditions of small
low-profit enterprises. Therefore, the enterprise is subject to corporate income tax at a rate of 20%.
In addition, according to the Circular on Issues Concerning the Preferential Policies for Corporate
Income Tax for Small Low-profit Enterprises (Cai shui [2015] No. 34) and Announcement of the
State Administration of Taxation on Issues concerning the Implementation of the Further Expansion
of the Scope of Small Low-profit Enterprises (Cai shui [2015] No.99), small low-profit enterprises
with annual taxable income of RMB300,000 or less enjoy a tax reduction of 50% of the income and
pays income tax at a rate of 20%. That is, the applicable corporate income tax rate is 10%.
In 2017, the Group’s subsidiaries Shanghai ForMe Xuhui Pharmacy Co., Ltd,(“ForMe Xuhui”),
Sinopharm Guoda Drug Store Guangxi Chain Co., Ltd., Xinjiang New & Special Medicines,
Sinopharm Holding Guoda Pharmacy Hulun Buir Co., Ltd., the Shule Branch and Kashgar Branch
of Sinopharm Holding Xinjiang New & Special Medicines Chain Store Co., Ltd. were qualified for the
definition of small low-profit enterprises and the requirements under Cai shui [2014] No. 34.
Therefore, these companies enjoyed a tax reduction of 50% of the income and paid income tax at a
rate of 20%.
158
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements
1. Cash and bank balances
31 December 2017 31 December 2016
Cash on hand 6,208,674.32 6,164,382.85
Cash at banks 3,667,290,017.16 3,144,751,042.64
Other cash balances 518,156,747.03 369,046,139.44
- Deposits for letters of credit 258,800.00 58,800.00
- Deposits for bank acceptance
notes 514,638,979.04 333,961,620.45
- Cash deposit for a pledged loan - 31,255,582.91
-Term deposits longer than 3
months 3,258,967.99 3,770,136.08
4,191,655,438.51 3,519,961,564.93
Current deposits earn interest at the rate based on current deposit interest rates. Maturities of short-
term time deposits range from 1 month to 6 months depending on the fund arrangements of the
Group, and earn interest at the respective deposit rates. The maturities of bank notice deposits are
7 days depending on the fund arrangement of the Group, and earn interest at respective deposit
rates.
2. Notes receivable
31 December 2017 31 December 2016
Trade acceptance notes 919,982,854.86 594,546,810.36
Bank acceptance notes 584,211,909.22 909,454,098.85
1,504,194,764.08 1,504,000,909.21
At 31 December 2017 and 2016, there were no notes receivable that were pledged.
159
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
2. Notes receivable (Continued)
Notes receivable endorsed or discounted by the Group to other parties which were not yet due at 31
December 2017 and 31 December 2016 are as follows:
31 December 2017 31 December 2016
Derecognized Not derecognized Derecognized Not derecognized
Trade acceptance
notes - 147,715,527.67 - 159,504,195.71
Bank acceptance
notes 1,034,911,970.56 - 844,012,721.90 -
1,034,911,970.56 147,715,527.67 844,012,721.90 159,504,195.71
As at 31 December 2017 and 31 December 2016, notes that were converted into accounts receivable
due to the drawer’s inability to settle the notes on the maturity date are as follows:
31 December 2017 31 December 2016
Trade acceptance notes - 148,322.25
Bank acceptance notes 1,050,000.00 -
1,050,000.00 148,322.25
3. Accounts receivable
31 December 2017 31 December 2016
Accounts receivable 7,633,338,145.29 7,703,120,162.25
Less: provision for bad debt (43,925,465.41) (48,894,651.36)
7,589,412,679.88 7,654,225,510.89
An aging analysis of accounts receivable is presented as follows:
31 December 2017 31 December 2016
Provision for bad Provision for bad
Carrying amount debts Carrying amount debts
Within 1 year 7,596,940,582.26 (24,467,494.62) 7,665,576,478.81 (26,371,938.74)
1 to 2 years 11,209,568.89 (947,671.54) 12,790,380.58 (1,297,920.86)
2 to 3 years 6,610,561.90 (1,291,671.02) 21,704,712.84 (19,101,203.39)
Over 3 years 18,577,432.24 (17,218,628.23) 3,048,590.02 (2,123,588.37)
7,633,338,145.29 (43,925,465.41) 7,703,120,162.25 (48,894,651.36)
160
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
3. Accounts receivable (Continued)
Changes in provision for bad debts are presented as follows:
Reversal of
Opening Increases Reversal in Written off in write-off in Decreases in Increases in Closing
balance in the year the year the year previous reorganization merger balance
years
2017 48,894,651.36 4,082,799.01 (7,765,994.96) (2,279,035.42) 45,677.60 - 947,367.82 43,925,465.41
2016 73,694,193.30 1,786,013.00 (12,023,454.74) (14,517,375.00) 23,638.80 (68,364.00) - 48,894,651.36
The accounts receivable by category are analyzed below:
31 December 2017 31 December 2016
Gross carrying amount Provision for bad debt Gross carrying amount Provision for bad debt
Amount Proportion Amount Proportion Amount Proportion Amount Proportion
Individually
significant
items for
which
provision for
bad debt is
recognized
separately 497,346,019.41 6.52% (11,968,509.21) 2.41% 445,672,816.82 5.79% (11,559,178.29) 2.59%
Items for
which
provision for
bad debt is
recognized by
group 7,106,178,799.93 93.09% (26,069,970.29) 0.37% 7,236,776,975.66 93.95% (27,546,435.58) 0.38%
Not
individually
significant
Items for
which
provision for
bad debt is
recognized
separately 29,813,325.95 0.39% (5,886,985.91) 19.75% 20,670,369.77 0.26% (9,789,037.49) 47.36%
7,633,338,145.29 100.00% (43,925,465.41) 0.58% 7,703,120,162.25 100.00% (48,894,651.36) 0.63%
161
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
3. Accounts receivable (Continued)
At 31 December 2017, accounts receivable that are individually significant and individually assessed for
provisions are as follows:
Bad debt Assessment for
Carrying amount provision Age Rate impairment
Part of the medical
Receivable of insurance receivable
medical Within 1 takes longer to collect,
insurance 376,673,766.03 (409,330.92) year 0.11% and has risk of default
Receivable of franchises
Receivable of Within 1 within 1 year with low risk
franchises 40,524,166.39 - year - of recoverability
Receivable of credit
Receivable of Within 1 cards with low risk of
credit cards 22,467,724.90 - year - recoverability
Receivable due from a
Within 1 related party with low risk
Sinopharm Group 15,369,464.29 - year - of recoverability
Receivable due from a
fixed cooperative hospital
with no risk of
Daton Xin Jian Within 1 recoverability
Kang Hospital 13,958,565.55 - year -
Disputed receivable with
Hubei Xianning higher risk of
Pharmaceutical 3 to 4 recoverability which is
Co., Ltd. 11,559,178.29 (11,559,178.29) years 100.00% related to a lawsuit
Receivable due from a
Sinopharm Health Within 1 related party with low risk
Online Co., Ltd. 9,422,294.03 - year - of recoverability
Shanghai Pudong Receivable due from a
Pharmaceutical Within 1 related party with low risk
Co., Ltd 7,370,859.93 - year - of recoverability
497,346,019.41 (11,968,509.21)
162
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
3. Accounts receivable (Continued)
At 31 December 2016, accounts receivable that are individually significant and individually assessed for
provisions are as follows:
Bad debt
Carrying amount provision Age Rate Assessment for impairment
Receivable of medical
Receivable of medical Within 1 insurance with no risk of
insurance 335,724,923.69 - year - recoverability
Receivable of franchises
Receivable of Within 1 within 1 year with no risk of
franchises 23,722,754.02 - year - recoverability
Sinopharm Holding Receivable due from a
Heilongjiang Co., Within 1 related party with no risk of
Ltd. 22,466,769.60 - year - recoverability
Receivable due from a
Sinopharm Health Within 1 related party with no risk of
Online Co., Ltd. 15,534,183.30 - year - recoverability
Receivable of credit Within 1 Receivable of credit cards
cards 14,046,943.02 - year - with no risk of recoverability
Hubei Xianning Disputed receivable with
Pharmaceutical Co., 2 to 3 higher risk of recoverability
Ltd. 11,559,178.29 (11,559,178.29) years 100.00% which is related to a lawsuit
Receivable due from a
Sinopharm Holding Within 1 related party with no risk of
Hulunbuir Co., Ltd. 6,373,883.21 - year - recoverability
Receivable of E- Within 1 Receivable of E-Business
Business 5,624,876.37 - year - with no risk of recoverability
Receivable due from a
Sinopharm Group Co., Within 1 related party with no risk of
Ltd. 5,478,768.04 - year - recoverability
Receivable of Within 1 Receivable of shopping cards
shopping card 5,140,537.28 - year - with no risk of recoverability
Total 445,672,816.82 (11,559,178.29)
163
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
3. Accounts receivable (Continued)
The accounts receivable for which the Group recognized provision for bad debts using the aging
analysis method are presented as follows:
31 December 2017 31 December 2016
Carrying amount Bad debt provision Carrying amount Bad debt provision
Amount Amount Proportion Amount Amount Proportion
Within 1 year 7,088,092,789.69 (24,063,211.70) 0.34% 7,221,261,344.66 (25,898,202.34) 0.36%
1 to 2 years 10,321,375.35 (626,604.64) 6.07% 12,391,828.46 (954,110.33) 7.70%
2 to 3 years 5,727,610.07 (649,478.42) 11.34% 2,483,834.48 (374,438.91) 15.08%
Over 3 years 2,037,024.82 (730,675.53) 35.87% 639,968.06 (319,684.00) 49.95%
7,106,178,799.93 (26,069,970.29) 0.37% 7,236,776,975.66 (27,546,435.58) 0.38%
The provision for bad debt amounted to RMB4,082,799.01 in 2017, including RMB7,765,994.96
recovered or reversed. Important recovered or reversed bad debt items are listed below:
Reason for Recovered or
recoverability or Original assessment for reversed Method of
reversal impairment amount recovery
Guangdong Guanghong Pharmaceuticals Amount Amount
Co., Ltd. received Uncertainty in recovery 957,838.00 received
Health Centre of Conghua City Chengjiao Amount Amount
Street received Uncertainty in recovery 159,730.03 received
Amount Amount
Health Centre of Maoming City Shuzai Town received Uncertainty in recovery 155,544.00 received
Amount Amount
Liuzhou Wanantang Pharmacy received Uncertainty in recovery 51,578.76 received
Guangdong Tasly Yue Jian Pharmaceutical Amount Amount
Co., Ltd. received Uncertainty in recovery 45,662.60 received
Health Centre of ZhanjiangCity Huguang Amount Amount
Town received Uncertainty in recovery 23,626.80 received
Qianshan Health Centre of ZhanjiangCity Amount Amount
Xunwen Town received Uncertainty in recovery 20,270.88 received
Health Centre of Zengcheng City Licheng Amount Amount
Street received Uncertainty in recovery 934.68 received
1,415,185.75
164
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
3. Accounts receivable (Continued)
The provision for bad debts amounted to RMB1,786,013.00 in 2016, including RMB12,023,454.74
recovered or reversed. Important recovered or reversed bad debt items are listed below:
Reason for
recoverability or Original assessment for Recovered or Method of
reversal impairment reversed amount recovery
The First Affiliated Hospital of Sun Yat-sen Amount
University Amount received Uncertainty in recovery 883,500.00 received
Amount
Hainan Xinshitong Pharmaceutical Co., Ltd. Amount received Uncertainty in recovery 700,440.00 received
Amount
Nanning Second People’s Hospital Amount received Uncertainty in recovery 640,000.00 received
Amount
Qinzhou Secondary People’s Hospital Amount received Uncertainty in recovery 567,015.38 received
People’s Hospital of Qinzhou City Qinbei Amount
District Amount received Uncertainty in recovery 388,203.85 received
Amount
Chaozhou Central Hospital Amount received Uncertainty in recovery 384,690.40 received
Amount
Health Centre of Zengcheng City Shitan Town Amount received Uncertainty in recovery 316,174.17 received
Amount
Chinese Medical Hospital of Hechi City Amount received Uncertainty in recovery 292,582.86 received
Amount
Health Centre of Conghua City Jiangpu Street Amount received Uncertainty in recovery 256,982.00 received
Amount
Health Centre of Conghua City Aotou Town Amount received Uncertainty in recovery 235,875.71 received
Health Centre of Guangzhou City Zengcheng Amount
District Yongning Street Amount received Uncertainty in recovery 178,219.92 received
Amount
Health Centre of Enping City Juntang Town Amount received Uncertainty in recovery 159,420.07 received
Amount
Chinese Medical Hospital of Lipu County Amount received Uncertainty in recovery 145,139.80 received
Amount
Health Centre of Luoding City Jiayi Town Amount received Uncertainty in recovery 127,629.77 received
Zhongxin Hospital of Guangzhou City Amount
Zengcheng District Amount received Uncertainty in recovery 126,283.08 received
Center for Disease Control and Prevention of Amount
Wengyuan County Amount received Uncertainty in recovery 124,000.00 received
Amount
Guangzhou Konzern Medicine Co., Ltd. Amount received Uncertainty in recovery 116,400.00 received
Huarun Guokang(Guangdong) Medicine Co., Amount
Ltd. Amount received Uncertainty in recovery 114,994.84 received
Amount
Health Centre of Conghua City Taiping Town Amount received Uncertainty in recovery 112,654.38 received
Amount
Huizhou Forth People’s Hospital Amount received Uncertainty in recovery 95,199.37 received
Amount
People’s Hospital of Zhongshan Town Amount received Uncertainty in recovery 84,001.24 received
Maternal and Child Health Hospital of Heshan Amount
City Amount received Uncertainty in recovery 83,678.54 received
Amount
Mental Hospital of Yuancheng District Amount received Uncertainty in recovery 80,000.00 received
Health Centre of Dianbai County Magang Amount
Town Amount received Uncertainty in recovery 75,867.34 received
Amount
Health Centre of Xinyi City Zhusha Town Amount received Uncertainty in recovery 74,981.26 received
Amount
Health Centre of Conghua City Lvtian Town Amount received Uncertainty in recovery 68,920.55 received
Health Centre of Zengcheng City Xiancun Amount
Town Amount received Uncertainty in recovery 64,122.66 received
165
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
3. Accounts receivable (Continued)
Important recovered or reversed bad debt items are listed below (Continued):
Ruikang Hospital of Guangxi University of Amount
Chinese Medicine Amount received Uncertainty in recovery 62,330.47 received
Amount
Liuzhou Municipal Liutie Central Hospital Amount received Uncertainty in recovery 59,969.34 received
Amount
Chinese Medical Hospital of Xuwen County Amount received Uncertainty in recovery 52,827.42 received
Amount
Others Amount received Uncertainty in recovery 746,796.59 received
7,418,901.01
Accounts receivable written off in 2017 are analysed below:
Nature of
the Related party
receivable Amount Reason transaction or not
Shenzhen Shanxia Hospital Loan 842,239.94 Non-recoverable No
Golden Elephant Pharmacy No
of Heping Street Loan 527,602.17 Non-recoverable
Golden Elephant Pharmacy No
of Xizhimenwai Street Loan 316,991.77 Non-recoverable
Golden Elephant Pharmacy No
of Yuanyang Tiandi Loan 240,952.87 Non-recoverable
Golden Elephant Pharmacy No
of Chaoyang Commercial
Building Loan 189,718.74 Non-recoverable
Others Loan 161,529.93 Non-recoverable No
2,279,035.42
Accounts receivable written off in 2016 are analysed below:
Nature of the Related party transaction
receivable Amount Reason or not
Guangdong Liyuan
Pharmaceutical Co., Ltd. Loan 14,517,375.00 Non-recoverable No
Accounts receivable written off has been approved by the board of directors.
166
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
3. Accounts receivable (Continued)
(i) They were written off in the current year after being approved by the board of directors.
As at 31 December 2017, the top five accounts receivable by customer are summarised
below:
Bad debt provision % of the total accounts
Amount amount receivable
Top 1 Account receivable 139,053,219.26 (174,267.65) 1.82%
Top 2 Account receivable 108,982,517.25 (807,190.06) 1.43%
Top 3 Account receivable 107,566,639.68 (285,161.26) 1.41%
Top 4 Account receivable 93,396,643.08 (61,282.92) 1.22%
Top 5 Account receivable 82,456,534.87 (149,751.54) 1.08%
531,455,554.14 (1,477,653.43) 6.96%
As at 31 December 2016, the top five accounts receivable by customer are summarised below:
Bad debt provision % of the total accounts
Amount amount receivable
Top 1 Account receivable 152,479,008.73 (516,738.27) 1.98%
Top 2 Account receivable 136,646,805.83 (473,935.95) 1.77%
Top 3 Account receivable 130,842,086.73 (985,351.62) 1.70%
Top 4 Account receivable 103,132,401.51 - 1.34%
Top 5 Account receivable 85,227,222.06 (186,185.24) 1.11%
608,327,524.86 (2,162,211.08) 7.90%
Analysis of accounts receivable of which the recognition was terminated due to a financial asset transfer is as
follows:
In 2017, accounts receivable of RMB2,775,254,650.30 have been factored to a financial institution (2016:
RMB1,687,263,359.73).
167
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
4. Advances to suppliers
The aging of advances to suppliers is analyzed below:
31 December 2017 31 December 2016
Amount % of total balance Amount % of total balance
Within 1 year 507,613,407.19 98.23 411,644,193.52 96.89
1 to 2 years 7,410,774.78 1.43 11,793,388.28 2.77
2 to 3 years 1,753,935.50 0.34 800,000.00 0.19
Above 3 years - 0.00 630,000.00 0.15
516,778,117.47 100.00 424,867,581.80 100.00
As at 31 December 2017, the top five advances to suppliers by customer are summarized below:
Amount Proportion of total balance
Total amount of top five advances to suppliers 142,890,492.03 27.65%
5. Interest receivable
31 December 2017 31 December 2016
Fixed deposits - 450,722.67
Entrusted borrowings 61,441.11 -
61,441.11 450,722.67
168
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
6. Other receivables
31 December 2017 31 December 2016
Deposits 226,111,186.83 192,975,588.52
Receivable due from related parties 127,922,489.88 145,308,980.82
Entrusted borrowings 44,000,000.00 -
Petty cash advance to employees 13,392,873.34 14,926,087.80
Receivable of equity transactions 8,980,000.00 8,980,000.00
Others 252,575,558.36 135,585,385.78
672,982,108.41 497,776,042.92
Less: provision for bad debts (15,111,049.87) (19,202,619.30)
657,871,058.54 478,573,423.62
The ageing of other receivables is analyzed below:
31 December 2017 31 December 2016
576,668,922.77 449,973,669.71
Within 1 year
68,108,108.36 15,346,020.98
1 to 2 years
6,007,299.87 6,037,372.86
2 to 3 years
22,197,777.41 26,418,979.37
Above 3 years
672,982,108.41 497,776,042.92
Changes of related provision for bad debts are analyzed below:
Balance at the Increases Balance at the
Increases in Reversal in
beginning of for Written off in Decreased due end of the
the year the year
the year combination the year to reorganization year
2017 19,202,619.30 78,983.91 1,573,179.19 (961,091.24) (4,782,641.29) - 15,111,049.87
19,117,084.21 - 181,998.77 (57,164.51) (3,692.31) (35,606.86) 19,202,619.30
2016
169
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
6. Other receivables (Continued)
Other receivables and related provision for bad debts by category are analyzed below:
31 December 2017 31 December 2016
Carrying amount Bad debt provision Carrying amount Bad debt provision
Amount % Amount % Amount % Amount %
Individually
significant and
subject to
separate
impairment
assessment 355,636,071.62 52.84 (8,980,000.00) 2.53 184,418,573.80 37.05 (9,315,472.11) 5.05
Receivable
accounts with
similar credit
risk 282,169,420.65 41.93 (2,782,712.61) 0.99 290,709,669.09 58.40 (2,655,875.78) 0.91
Individually not
significant but
individually
evaluated for
impairment 35,176,616.14 5.23 (3,348,337.26) 9.52 22,647,800.03 4.55 (7,231,271.41) 31.93
672,982,108.41 100.00 (15,111,049.87) 2.25 497,776,042.92 100.00 (19,202,619.30) 3.86
As at 31 December 2017, impairment provision for other receivables individually significant are analyzed as
follows:
Bad debt
Amount provision Rate Assessment for impairment
Cash deposit, no risk of recoverable, no
Deposit 152,178,106.11 - - provision
Shanghai Shyndec
Pharmaceutical Co., Ltd. Receivable due from a related party with no
(“Morden Pharma”) 125,181,658.92 - - risk of recoverability, no provision
Receivable of price reduction Receivable due from a related party with no
compensation 61,868,684.71 - - risk of recoverability, no provision
Shenzhen Yinghai Technology Receiviable due from equity transaction,
Investment Co., Ltd. 8,980,000.00 (8,980,000.00) 100.00% uncertainty in recoverability
Receivable of purchasing Receivable of purchasing rebates with no
rebates 7,427,621.88 - - risk of recoverability, no provision
355,636,071.62 (8,980,000.00) 2.53%
As at 31 December 2016, impairment provision for other receivables which were individually significant is
analyzed as follows:
Bad debt
Amount provision Rate Assessment for impairment
Cash deposit, no risk of recoverable, no
Deposit 169,946,811.59 - - provision
Shenzhen Yinghai Technology Receiviable due from equity transaction,
Investment Co., Ltd. 8,980,000.00 (8,980,000.00) 100.00% uncertainty in recoverability
Staff temporary borrowings, partially
Staff temporary borrowings 5,491,762.21 (335,472.11) 6.11% unrecoverable
184,418,573.80 (9,315,472.11) 5.05%
V Notes to the consolidated financial statements (Continued)
170
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
6. Other receivables (Continued)
Provisions for impairment of the receivables which are within a similar risk group are analyzed below:
31 December 2017 31 December 2016
Carrying amount Bad debt provision Carrying amount Bad debt provision
amount Amount Rate Amount Amount Rate
Within 1 year 278,135,696.76 (2,337,600.82) 0.84% 287,491,393.02 (2,340,716.26) 0.81%
1 to 2 years 2,996,168.28 (283,981.67) 9.48% 1,922,485.83 (92,014.77) 4.79%
2 to 3 years 540,157.10 (65,650.42) 12.15% 367,037.96 (36,703.80) 10.00%
Above 3 years 497,398.51 (95,479.70) 19.20% 928,752.28 (186,440.95) 20.07%
282,169,420.65 (2,782,712.61) 0.99% 290,709,669.09 (2,655,875.78) 0.91%
Bad debt provision of other receivables in 2017 was RMB1,573,179.19 (2016: RMB181,998.77), with the recovered or
reversed amount of RMB961,091.24 (2015: RMB57,164.51).
Other receivables written off in the current year were RMB4,782,641.29 (2016: RMB3,692.31).
As at 31 December 2017, the top 5 parties that owed the largest amounts of other receivable balances are analyzed below:
% of total Provision of bad
Nature Amount Age amount debt
Within 2
Morden Pharma Payment of Pinshan project 125,181,658.92 years 18.60% -
Pharmaceutical trading
Guangdong Pharmaceutical platform repayment not yet Within 1
electronic trading platform cleared 72,165,043.07 year 10.72% -
Shanghai Roche Pharmaceutical Price reduction compensation Within 1
Co., Ltd. for DTP medicine 61,253,240.02 year 9.10% -
Sinopharm Group Zhijun
Entrusted borrowings
(Suzhou) Pharmaceutical Within 1
Co., Ltd. (“Zhijun Suzhou”) 44,000,000.00 year 6.54% -
TCM-Integrated Cancer Center
of Southern Medical Deposit of logistics extension Within 1
University services project 30,000,000.00 year 4.46% -
332,599,942.01 49.42% -
As at 31 December 2016，the top 5 parties that owed the largest amounts of other receivable balances are analyzed
below:
% of total Provision of bad
Nature Amount Age amount debt
Cash deposit relating to
significant corporate restructuring
and money advanced for Within 1
Morden Pharma construction project 137,191,103.76 year 27.56% -
Guangdong Pharmaceutical electronic Pharmaceutical trading platform Within 1
trading platform repayment not yet cleared 73,358,155.83 year 14.74% -
Shenyang Tiexi State Owned Assets Within 1
Supervision and Administration Bureau Cash deposit 15,000,000.00 year 3.01% -
Taiyuan Medical Insurance Within 1
Management Center Medical insurance deposit 12,776,150.89 year 2.57% -
Shenyang Social Security Within 1
Administration Medical insurance deposit 11,335,599.41 year 2.28% -
249,661,009.89 50.16% -
171
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
7. Inventories
Inventories by category are analyzed below:
31 December 2017 31 December 2016
Book value Provision Net book value Book value Provision Net book value
Raw materials 1,181,095.08 - 1,181,095.08 463,493.71 - 463,493.71
Finished goods 3,785,146,957.42 (6,840,110.55) 3,778,306,846.87 4,061,265,347.64 (14,930,813.47) 4,046,334,534.17
Work in progress 129,098.02 - 129,098.02 277,528.67 - 277,528.67
Low cost consumables 2,241,198.15 - 2,241,198.15 2,406,973.16 - 2,406,973.16
3,788,698,348.67 (6,840,110.55) 3,781,858,238.12 4,064,413,343.18 (14,930,813.47) 4,049,482,529.71
Provision for inventories is analysed below:
Increases Decreases
Increases due to
1 January 2017 Increases combination Reversal Charge-off 31 December 2017
Finished goods 14,930,813.47 3,099,135.23 44,252.15 (2,498,723.97) (8,735,366.33) 6,840,110.55
Decreases
Decrease due to
1 January 2016 Increases Reversal Charge-off reorganization 31 December 2016
Raw materials 2,825,858.08 10,933.12 - - (2,836,791.20) -
Finished goods 26,596,837.25 7,736,615.11 (6,271,860.18) (2,777,174.55) (10,353,604.16) 14,930,813.47
Work in progress 6,773,872.30 86,929.62 - - (6,860,801.92) -
Low cost consumables 23,001.88 - - - (23,001.88) -
36,219,569.51 7,834,477.85 (6,271,860.18) (2,777,174.55) (20,074,199.16) 14,930,813.47
Provision for inventories is determined according to the difference between the net realizable value and the inventories’
book value.
8. Other current assets
31 December 2017 31 December 2016
VAT tax credit 78,014,460.84 54,641,868.38
Corporate income tax to be deducted 933,183.78 520,764.03
Other - 2,046,630.63
78,947,644.62 57,209,263.04
172
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
9. Available-for-sale financial assets
31 December 2017 31 December 2016
Available-for-sale equity instruments
- Measured at cost 13,865,760.00 13,865,760.00
Less: impairment provision (180,000.00) (180,000.00)
13,685,760.00 13,685,760.00
The percentages of voting interests held by the Group in Shanghai Guoda Shuguang Pharmacy
Co., Ltd, Shanghai Guoren Pharmacy Co., Ltd., Sinopharm Holding Hubei Guoda Pharmacy Co.,
Ltd., Hunan Zhongbai pharmaceutical investment Co., Ltd. and Sinopharm Health Online Co., Ltd.
are 25%, 10%, 10%, 6.31% and 8.06%, respectively. However, the Group neither appoint the
directors and key management for those 5 companies, nor involve in or affect the financial or
operating decision-making process or ordinary course of business of those companies. Therefore,
the Group had no significant influence over the above companies and recognized its investments
in those companies as available-for-sale equity instruments.
The Group has 18% voting rights in Xinxiang Golden Elephant Technology Co., Ltd. (“Xinxiang
Golden Elephant”), the amount of investment is RMB180,000. However, none of the directors or
any key members of the management team were appointed by the Group. The Group has neither
participated in nor had any impact on Xinxiang Golden Elephant’s financial affairs, operating
decisions, or operating activities. Therefore, the Group had no significant impact on Xinxiang
Golden Elephant which was considered as an available-for-sale equity instrument. As at 31
December 2017 and 31 December 2016, full impairment provision for investment in Xinxiang
Golden Elephant was accrued.
As at 31 December 2017, the carrying value of unlisted equity investment was RMB13,685,760.00
(31 December 2016: RMB13,685,760.00 ) which was presented at net cost, because the
reasonable fair value was unavailable and the Group considered that its fair value cannot be
measured reasonably.
173
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
9. Available-for-sale financial assets (Continued)
2017：
Carrying amount Impairment provision Shareholding
Investee
Opening Increase Decrease Closing Opening Increase Decrease Closing (%) received for the year
Sinopharm Health Online
Co., Ltd. 12,000,000.00 - - 12,000,000.00 - - - - 8.06 -
Sinopharm Holding Hubei
Guoda Pharmacy Co., Ltd. 1,000,000.00 - - 1,000,000.00 - - - - 10.00 -
Hunan Zhongbai
pharmaceutical investment
Co., Ltd. 315,000.00 - - 315,000.00 - - 6.31 -
Shanghai Guoda Shuguang
Pharmacy Co., Ltd. 270,760.00 - - 270,760.00 - - - - 25.00 50,000.00
Xinxiang Golden Elephant. 180,000.00 - - 180,000.00 (180,000.00) - - (180,000.00) 18.00 -
Shanghai Guoren Pharmacy
Co., Ltd. 100,000.00 - - 100,000.00 - - - - 10.00 529,444.97
13,865,760.00 - - 13,865,760.00 (180,000.00) - - (180,000.00) - 579,444.97
174
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
9. Available-for-sale financial assets (Continued)
2016：
Carrying amount Impairment provision Shareholding
Investee
Opening Increase Decrease Closing Opening Increase Decrease Closing (%) received for the year
Sinopharm Health Online Co., Ltd. - 12,000,000.00 - 12,000,000.00 - - - - 10.00 -
Sinopharm Holding Hubei Guoda
Pharmacy Co., Ltd. 1,000,000.00 - - 1,000,000.00 - - - - 10.00 -
Sinopharm Guoda Taishan Qunkang
Pharmacy Chain Store Co., Ltd.
(“Guoda Taishan”) 990,000.00 - (990,000.00) - - - - - - -
Hunan Zhongbai pharmaceutical
investment Co., Ltd. 315,000.00 - 315,000.00 - - - 7.00 -
Shanghai Guoda Shuguang
Pharmacy Co., Ltd. 270,760.00 - - 270,760.00 - - - - 25.00 50,000.00
Xinxiang Golden Elephant 180,000.00 - - 180,000.00 (180,000.00) - - (180,000.00) 18.00 -
Shanghai Guoren Pharmacy Co., Ltd. 100,000.00 - - 100,000.00 - - - - 10.00 426,094.35
2,855,760.00 12,000,000.00 (990,000.00) 13,865,760.00 (180,000.00) - - (180,000.00) - 476,094.35
175
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
10. Long-term equity investments
Associates in 2017
Changes in the year
Others Provision for
Investee 1 January 2017 Investments Cash dividend 31 December 2017
Additional Profit or loss under Other changes in impairment
gained under declared by
Investment equity method equity
other method investee
Shenzhen Main Luck Pharmaceutical Inc. (“Main Luck
Pharmaceutical”). (a) 207,259,086.90 - - 66,977,651.24 - (35,190,000.00) - 239,046,738.14 -
Sinopharm Holding Zhuhai Co., Ltd (“Sinopharm
Zhuhai”)”.(b) 1,420,139.96 - - - - (406,462.68) (1,013,677.28) - -
Shanghai Beiyi Guoda Pharmaceutical Co. Ltd. (c) 8,980,086.48 - - 1,544,808.17 - (1,006,200.00) - 9,518,694.65 -
Shanghai Liyi Pharmacy Co., Ltd. (d) 642,479.69 - - 128,928.36 - - - 771,408.05 -
Dongyuan Accord Pharmaceutical Chain Co., Ltd. (f) 396,638.32 - - - - - - 396,638.32 (396,638.32)
Sinopharm Jienuo Medical Treatment Service
Guangdong Co., Ltd. (“Guangdong Jie nuo”) (g) 9,442,741.61 - - (939,857.11) - - - 8,502,884.50 -
Zhijun Suzhou (h) 69,642,985.98 (23,443,257.07) - 46,199,728.91
Zhijun Medicine (i) 174,820,412.07 - - 116,222,509.13 - - - 291,042,921.20 -
Zhijun Trade (i) 6,198,820.40 - - 1,477,322.29 - - - 7,676,142.69 -
Pingshan Medicine (i) 47,087,958.31 - - 21,598,846.02 - - - 68,686,804.33 -
Morden Pharma (i) 887,539,454.16 - - 80,258,883.53 33,844,531.25 (22,468,818.32) - 979,174,050.62 -
1,413,430,803.88 - - 263,825,834.56 33,844,531.25 (59,071,481.00) (1,013,677.28) 1,651,016,011.41 (396,638.32)
176
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
10. Long-term equity investments (Continued)
Associates in 2016
Changes in the year
Provision for
Investee 1 January 2016 Cash dividend 31 December 2016
Additional Investments gained Profit or loss under Other changes impairment
declared by
Investment under other method equity method in equity
investee
Shenzhen Main Luck Pharmaceutical Inc. (“Main Luck
Pharmaceutical”). (a) 179,567,519.13 - - 62,881,567.77 - (35,190,000.00) 207,259,086.90 -
Sinopharm Holding Zhuhai Co., Ltd (“Sinopharm
Zhuhai”)”.(b) 1,264,195.42 - - 155,944.54 - - 1,420,139.96 -
Shanghai Beiyi Guoda Pharmaceutical Co. Ltd. (c) 8,824,803.91 - - 1,119,551.58 - (964,269.01) 8,980,086.48 -
Shanghai Liyi Pharmacy Co., Ltd. (d) 626,110.68 - - 16,369.01 - - 642,479.69 -
Sinopharm Holding Guoda Jilin Yongxin Pharmacy Chain
Co., Ltd. (Guoda Jilin Yongxin) (e) - - - - - - - -
Dongyuan Accord Pharmaceutical Chain Co., Ltd. (f) 396,638.32 - - - - - 396,638.32 (396,638.32)
Sinopharm Jienuo Medical Treatment Service Guangdong
Co., Ltd. (“Guangdong Jie nuo”) (g) - 9,860,000.00 - (417,258.39) - - 9,442,741.61 -
Zhijun Suzhou (h) - - 77,722,387.95 (8,079,401.97) - - 69,642,985.98 -
Zhijun Medicine (i) - - 370,773,608.48 20,707,823.70 - (216,661,020.11) 174,820,412.07 -
Zhijun Trade (i) - - 7,319,933.88 84,193.03 - (1,205,306.51) 6,198,820.40 -
Pingshan Medicine (i) - - 42,585,612.04 4,502,346.27 - - 47,087,958.31 -
Morden Pharma (i) - 871,794,861.65 - 16,104,358.86 (359,766.35) - 887,539,454.16 -
190,679,267.46 881,654,861.65 498,401,542.35 97,075,494.40 (359,766.35) (254,020,595.63) 1,413,430,803.88 (396,638.32)
177
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
10. Long-term equity investments (Continued)
(a) On 4 July 1990, the Group jointly established Main Luck Pharmaceutical with Mercian Kabushiki
Kaisha and Wanlian Co., Ltd., subscribe 35.19%, 34.15% and 30.66% shareholdings, respectively.
According to the Articles of Association, the board of directors of Main Luck Pharmaceutical
consisted of six directors, in which two were appointed by the Group, accounting for 33.33% of
voting rights. Therefore, the Group had significant influence over Main Luck Pharmaceutical, and
thus it was considered as an associate of the Group.
(b) On 3 March 2015, the Group acquired a 10% equity interest of Sinopharm Zhuhai, Sinopharm
Zhuhai’s highest authority was the shareholders' meeting, and the voting rights shall be exercised
by the shareholders in proportion to capital contribution. Sinopharm Zhuhai has set up a board of
directors that was responsible to the shareholders, with a total of three members, one of whom
was appointed by the Group. Each director shall represent one vote, and all the resolutions of the
board of directors shall be passed by at least half of all the directors. Therefore, the Group had
significant influence over Sinopharm Zhuhai, and thus it was considered as an associate of the
Group.
In January 2017, the Group acquired a 90% equity interest of Sinopharm Zhuhai from the original
shareholder Xianjiang Li for RMB9,249,000 to constitute business combination involving
enterprises not under common control. After the acquisition, Sinopharm Zhuhai became a wholly
owned subsidiary of the Company. The acquisition was completed on 10 January 2017 and
included in the consolidation scope of the Company (Note VI (1.1)).
(c) On 26 July 1994, the Group jointly established Shanghai Beiyi Guoda Pharmaceutical Co. Ltd with
Shanghai Beiyi (Group) Co., Ltd. and eight natural persons including Fuchun Zhu, the share
percentages being 26%, 26% and 48%, respectively. According to the Articles of Association, the
board of directors of Shanghai Beiyi Guoda Pharmaceutical Co. Ltd. consisted of seven directors,
in which two were appointed by the Group, accounting for 28.57% of voting rights. Therefore, the
Group had significant influence over Shanghai Beiyi Guoda Pharmaceutical Co. Ltd., and thus it
was considered as an associate of the Group.
(d) On 25 November 2003, the Group jointly established Shanghai Liyi Pharmacy Co., Ltd. with
Shanghai Pudong District Central Hospital and Shanghai Liyi Technology Co., Ltd., the share
percentages being 35%, 35% and 30%, respectively. According to the Articles of Association, the
board of directors of Shanghai Liyi Pharmacy Co., Ltd consisted of five directors, in which two were
appointed by the Group, accounting for 40.00% of voting rights. Therefore, the Group had
significant influence over Shanghai Liyi Pharmacy Co., Ltd, and thus it was considered as an
associate of the Group.
178
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
10. Long-term equity investments (Continued)
(e) The Group entered into a joint venture agreement with Jilin Province Yuzhenkemao Co., Ltd. in
respect of funding and establishing Sinopharm Holding Guoda Jilin Yongxin Pharmacy Chain Co.,
Ltd. (“Jilin Yongxin”) with a registered capital of RMB6,670,000.00, the share percentage being 10%
and 90%, respectively. The Group could exercise significant influence over Jilin Yongxin as it
appointed one of the three directors and one of the two supervisors as well as the Financial
Controller of Jilin Yongxin, even though it held less than 20% voting rights of Jilin Yongxin.
Therefore, Jilin Yongxin was considered as an associate of the Group.
Pursuant to the agreement, Jilin Province Yuzhenkemao Co., Ltd. was responsible for transferring
all the businesses to the new entity; and when the new entity’s monthly actual sales reached
RMB6,500,000, the Group’s statutory equity ratio would increase from 10% to 70%, and both
parties would agree to enter into the Equity Transfer Agreement. The transition period of the
transaction would be the period between the establishment date of the entity and the date on
which the equity transfer procedure was officially completed. The profit and loss occurred during
this period would be recognized by the Group and Jilin Province Yuzhenkemao Co., Ltd. in the
proportion of shareholding after the equity transfer was completed. As at 31 December 2015, Jilin
Yongxin incurred a net liability due to continuous loss. The carrying value of long-term equity
investment was written down to zero when recognizing the shared net loss. According to the
agreement, the Group also provide provisions for those additional loss required to be borne by the
Group according to the agreement, and recognized investment loss in year 2015. As at 31
December 2016, the Group had transferred the 10% equity interest to Jilin Province
Yuzhenkemao Co., Ltd. with a consideration of RMB226,000.00. The agreement also requires
Jilin province Yuzhenkemao Co., Ltd. to share the profit or loss occurred before the equity transfer
completed in the proportion of shareholding after the equity transfer completed. Hence the Group
was able to reverse the recorded provisions and recognized an investment income in 2016 based
on the reversal of provision as well as the equity transfer consideration received (Note V (35),
(Note Ⅴ (50)).
(f) In 2007, Dongyuan Accord Pharmaceutical Chain Co., Ltd., an associate of the Group, operated
in poor conditions and its future operation would be significantly uncertain, so the Group made a
full provision for impairment of the long-term equity investment on it.
(g) On 23 February 2016, the Group jointly established Guangdong Jienuo with Sinopharm Jienuo
Medical Treatment Service Co., Ltd. and Guangzhou Jinluo Investment Development Co., Ltd.,
the share percentages being 29%, 51% and 20%, respectively. According to the Articles of
Association, the board of directors of Guangdong Jienuo was composed of five directors, one of
whom was appointed by the Group, accounting for 20% of voting rights. Therefore, the Group had
significant influence over Guangdong Jienuo and thus it was considered as an associate of the
Group.
179
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
10. Long-term equity investments (Continued)
(h) The Group disposed of its 67% equity interest of Zhijun Suzhou on 26 April 2016. After the
disposal, the Group held a 33% equity interest of Zhijun Suzhou. As a result, the Group had
significant influence over Zhijun Suzhou and thus it was considered as an associate of the Group.
(i) The Group subscribed 15.56% of new issued shares of Shyndec Pharmaceutical, a related party,
by the transferring of the productive assets in Pingshan base and its 51% equity interest of three
pharmaceutical companies (Zhijun Medicines, Zhijun Pharma & Trade, Zhijun Pingshan) of the
Group respectively in 2016. After the completion of the reorganization, Shyndec Pharmaceutical
holds a 51% equity interest of each of the three pharmaceutical companies, and the Group holds
a 49% equity interest of each of the three pharmaceutical companies, which has significant
influence over the three pharmaceutical companies. At the same time, after the completion of the
reorganization, the Group holds a 15.56% equity interest of Shyndec Pharmaceutical. Shyndec
Pharmaceutical set up a board of directors that was responsible for the shareholders' meeting,
with a total of nine members, in which one was appointed by the Group. Each director shall
represent one vote for resolutions of the board, accounting for 11.11% of the voting rights. The
Group has significant influence over Shyndec Pharmaceutical. The above three pharmaceutical
companies and Shyndec Pharmaceutical are considered as associates of the Group.
180
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
11. Investment properties
Subsequent measurement under the cost model:
2017 Buildings and
constructions Land use right Total
Original cost
Opening balance 245,258,727.03 23,833,990.27 269,092,717.30
Purchase 782,326.95 - 782,326.95
Transfer from fixed assets 11,558,969.36 - 11,558,969.36
Transfer from intangible assets - 302,035.37 302,035.37
Transfer to intangible assets - (765,940.92) (765,940.92)
Transfer to fixed assets (11,633,314.20) - (11,633,314.20)
Disposal and retirement (34,190.50) - (34,190.50)
Closing balance 245,932,518.64 23,370,084.72 269,302,603.36
Accumulated
depreciation and
amortization
Opening balance (93,028,655.88) (8,048,212.62) (101,076,868.50)
Provision (8,483,516.94) (249,960.17) (8,733,477.11)
Transfer from fixed assets (9,760,097.90) - (9,760,097.90)
Transfer from intangible assets - (50,780.51) (50,780.51)
Transfer to intangible assets - 164,003.30 164,003.30
Transfer to fixed assets 5,132,956.47 - 5,132,956.47
Disposal or retirement - - -
Closing balance (106,139,314.25) (8,184,950.00) (114,324,264.25)
Provision for
impairment
Opening balance (1,300,000.00) - (1,300,000.00)
Closing balance (1,300,000.00) - (1,300,000.00)
Carrying amount
At end of year 138,493,204.39 15,185,134.72 153,678,339.11
At beginning of the year 150,930,071.15 15,785,777.65 166,715,848.80
181
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
11. Investment properties (Continued)
Subsequent measurement under the cost model (Continued):
2016 Buildings and
constructions Land use right Total
Original cost
Opening balance 249,200,861.95 24,477,650.62 273,678,512.57
Transfer from fixed assets 20,378,781.43 - 20,378,781.43
Transfer from intangible assets - 62,726.06 62,726.06
Transfer out due to disposal of
subsidairies (16,981,059.62) - (16,981,059.62)
Transfer to intangible assets - (706,386.41) (706,386.41)
Transfer to fixed assets (7,149,582.01) - (7,149,582.01)
Disposal and retirement (190,274.72) - (190,274.72)
Closing balance 245,258,727.03 23,833,990.27 269,092,717.30
Accumulated
depreciation and
amortization
Opening balance (102,045,177.72) (7,680,160.11) (109,725,337.83)
Provision (6,630,617.36) (752,896.61) (7,383,513.97)
Transfer from fixed assets (2,516,240.39) - (2,516,240.39)
Transfer from intangible assets - (2,299.92) (2,299.92)
Transfer out due to acquisition
of subsidairy 16,941,566.58 - 16,941,566.58
Transfer to intangible assets - 387,144.02 387,144.02
Transfer to intangible assets 1,076,244.11 - 1,076,244.11
Disposal and retirement 145,568.90 - 145,568.90
Closing balance (93,028,655.88) (8,048,212.62) (101,076,868.50)
Provision for
impairment
Opening balance (1,300,000.00) - (1,300,000.00)
Closing balance (1,300,000.00) - (1,300,000.00)
Carrying amount
At end of year 150,930,071.15 15,785,777.65 166,715,848.80
At beginning of the year 145,855,684.23 16,797,490.51 162,653,174.74
182
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
11. Investment properties (Continued)
Subsequent measurement under the cost model (Continued):
During 2017, depreciation of investment properties was RMB8,733,477.11(2016:
RMB7,383,513.97).
During 2017, properties with a carrying amount of RMB1,798,871.46 (original value:
RMB11,558,969.36, accumulated depreciation: RMB9,760,097.90) and land use rights with a
carrying amount of RMB251,254.86(original value of land use rights:RMB302,035.37, accumulated
depreciation: RMB50,780.51) were leased. From the date of transfer, the transferred properties
and land use rights were reclassified as investment properties.
During 2017, a property with a carrying amount of RMB6,500,357.73(original value of a building:
RMB11,633,314.20, accumulated depreciation: RMB5,132,956.47) and land use rights with a
carrying amount of RMB 601,937.62(original value of exclusive distribution rights: RMB765,940.92,
accumulated depreciation: RMB164,003.30) transferred to owner-occupied property. From the date
of transfer, the property and land use rights were reclassified as fixed assets and intangible assets.
183
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
12. Fixed assets
2017
Fixed asset
Buildings Machinery Vehicles Other equipment Total
improvements
Original cost
Opening balance 416,870,234.54 136,667,853.08 90,713,467.96 240,527,711.61 22,373,714.89 907,152,982.08
Purchase 30,175,171.83 38,745,865.63 6,504,401.73 28,401,598.18 16,478,943.15 120,305,980.52
Transfer from construction in progress 9,182,660.00 9,333,581.19 - 1,232,547.38 - 19,748,788.57
Transfer from Investment properties 11,633,314.20 - - - - 11,633,314.20
Business combination not involving enterprises under -
common control 103,810.61 123,264.01 14,386.79 111,480.15 352,941.56
Transfer to Investment properties (11,558,969.36) - - - - (11,558,969.36)
Disposal or retirement (140,800.00) (1,098,539.37) (9,341,343.14) (10,894,658.55) (8,852,939.72) (30,328,280.78)
Closing balance 456,161,611.21 183,752,571.14 87,999,790.56 259,281,585.41 30,111,198.47 1,017,306,756.79
Accumulated depreciation
Opening balance (139,954,250.07) (57,610,772.80) (59,136,773.31) (142,597,466.20) (20,844,119.60) (420,143,381.98)
Provision (13,849,882.94) (16,891,198.91) (8,403,944.46) (20,991,723.39) (13,567,224.81) (73,703,974.51)
Transfer from Investment properties (5,132,956.47) - - - - (5,132,956.47)
Transfer to Investment properties 9,760,097.90 - - - - 9,760,097.90
Disposal or retirement 57,236.36 900,904.38 8,318,944.90 8,900,045.36 5,446,761.29 23,623,892.29
Closing balance (149,119,755.22) (73,601,067.33) (59,221,772.87) (154,689,144.23) (28,964,583.12) (465,596,322.77)
184
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
12. Fixed assets (Continued)
2017(Continued)
Fixed asset
Buildings Machinery Vehicles Other equipment Total
improvements
Provision for impairment
Opening balance - - - - - -
Disposal of subsidiaries - - - - - -
Closing balance - - - - - -
Carrying amount
At end of year 307,041,855.99 110,151,503.81 28,778,017.69 104,592,441.18 1,146,615.35 551,710,434.02
At beginning of the year 276,915,984.47 79,057,080.28 31,576,694.65 97,930,245.41 1,529,595.29 487,009,600.10
185
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
12. Fixed assets (Continued)
2016
Fixed asset
Buildings Machinery Vehicles Other equipment
improvements Total
Original cost
Opening balance 1,083,130,279.82 574,763,347.43 98,645,685.13 376,767,380.65 37,402,811.81 2,170,709,504.84
Purchase 9,432,887.03 10,613,251.29 8,285,220.62 29,250,205.80 14,554,923.63 72,136,488.37
Transfer from construction in progress 62,850,281.34 71,727,554.65 - 1,649,017.21 11,099,018.87 147,325,872.07
Transfer from investment properties 7,149,582.01 - - - - 7,149,582.01
Business combination not involving
enterprises under common control - - 214,439.69 838,535.63 316,712.48 1,369,687.80
Transfer to investment properties (20,378,781.43) - - - - (20,378,781.43)
Transfer out due to acquisition of a
subsidiary (354,119,994.82) (374,915,985.66) (6,849,716.43) (162,503,087.71) (35,503,049.13) (933,891,833.75)
Disposal or retirement (371,194,019.41) (145,520,314.63) (9,582,161.05) (5,474,339.97) (5,496,702.77) (537,267,537.83)
Closing balance 416,870,234.54 136,667,853.08 90,713,467.96 240,527,711.61 22,373,714.89 907,152,982.08
Accumulated depreciation
Opening balance (205,438,438.54) (260,314,953.03) (61,342,652.40) (234,967,814.19) (20,580,071.74) (782,643,929.90)
Provision (44,567,606.50) (36,813,001.26) (9,801,608.84) (25,058,794.30) (16,396,435.53) (132,637,446.43)
Transfer from investment properties (1,076,244.11) - - - - (1,076,244.11)
Transfer to investment properties 2,516,240.39 - - - - 2,516,240.39
Transfer out due to acquisition of a
92,687,153.26 218,544,767.02 6,078,685.58 114,149,497.01 13,528,652.34 444,988,755.21
subsidiary
Disposal or retirement 15,924,645.43 20,972,414.47 5,928,802.35 3,279,645.28 2,603,735.33 48,709,242.86
Closing balance (139,954,250.07) (57,610,772.80) (59,136,773.31) (142,597,466.20) (20,844,119.60) (420,143,381.98)
186
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
12. Fixed assets (Continued)
2016(Continued)
Buildings Machinery Vehicles Other equipment Fixed asset improvements Total
Provision for impairment
Opening balance (2,449,498.76) (12,493,558.67) - (106,511.27) (366,438.25) (15,416,006.95)
Disposal of subsidiaries 2,449,498.76 12,493,558.67 - 106,511.27 366,438.25 15,416,006.95
Ending balance - - - - - -
Carrying amount
At end of year 276,915,984.47 79,057,080.28 31,576,694.65 97,930,245.41 1,529,595.29 487,009,600.10
At beginning of the year 875,242,342.52 301,954,835.73 37,303,032.73 141,693,055.19 16,456,301.82 1,372,649,567.99
187
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
12. Fixed assets (Continued)
Fixed assets held under finance leases are presented as follows:
2017
Accumulated
Original cost Carrying amount
depreciation
Machinery 22,010,632.48 (6,114,633.93) 15,895,998.55
Other equipment 2,716,485.81 (789,096.28) 1,927,389.53
24,727,118.29 (6,903,730.21) 17,823,388.08
The book value of fixed assets leased out from operation lease are presented as follows:
2017 2016
Machinery equipment 120,700.00 -
Others 197,130.80 -
317,830.80 -
As at 31 December 2017, the fixed asset falling to accomplish certification of title are presented as follows:
Reason for not obtaining certification
Book value
of title
As at 31 December 2017, the
Company has not yet obtained the
certification of title for No.13 Jingxing
North Street, Tiexi District, Shenyang
Houses and buildings 28,356,440.00 yet. The transferor, State-owned
Assets Supervision and
Administration Commission is still
processing the case and already
provided relevant certification.
As at 31 December 2017, there were no fixed assets that were temporarily idle.
188
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
13. Construction in progress
31 December 2017 31 December 2016
Carrying balance Carrying amount Carrying balance Carrying amount
Warehouse improvement project 1,009,314.93 1,009,314.93 14,044,783.68 14,044,783.68
New office building project 765,882.63 765,882.63 7,979,356.35 7,979,356.35
Supply chain extension project 8,193,935.70 8,193,935.70 5,209,203.43 5,209,203.43
Software project 3,926,271.33 3,926,271.33 10,889,391.67 10,889,391.67
Other projects 9,051,854.40 9,051,854.40 8,941,133.36 8,941,133.36
22,947,258.99 22,947,258.99 47,063,868.49 47,063,868.49
189
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
13. Construction in progress (Continued)
Changes of significant construction in progress
Changes of significant construction in progress in 2017 are presented as follows:
Proportion of
Source of
Decrease At end of year investment to
funds
At beginning of budget (%)
Project name Budget Increase
the year Transferred to
Transferred to fixed Transferred to long term prepaid
assets intangible assets expense
Warehouse improvement Self-raised
project 13,664,095.84 14,044,783.68 6,637,920.87 - - (19,673,389.62) 1,009,314.93 funds 76.83
New office building project 41,434,500.00 7,979,356.35 2,028,688.98 (9,182,660.00) - (59,502.70) 765,882.63 Working capital 29.04
Supply chain extension
Working capital
project 34,983,630.22 5,209,203.43 13,479,958.69 (10,156,764.88) (338,461.54) - 8,193,935.70 51.77
Self-raised
Software project 3,926,271.33 10,889,391.67 8,629,681.55 - (15,592,801.89) - 3,926,271.33 funds 30.00
Other construction projects 209,099,377.58 8,941,133.36 3,711,458.69 (409,363.69) (244,068.38) (2,947,305.58) 9,051,854.40 Working capital 6.20
47,063,868.49 34,487,708.78 (19,748,788.57) (16,175,331.81) (22,680,197.90) 22,947,258.99
190
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
13. Construction in progress (Continued)
Changes of significant construction in progress（Continued）
Incl: interest
Accumulated amount of Capitalization
Project name Budget Progress (%) capitalized in
interest capitalized rate (%)
current year
Warehouse improvement project 13,664,095.84 76.83 - - -
New office building project 41,434,500.00 29.04 - - -
Supply chain extension project 34,983,630.22 51.77 - - -
Software project 3,926,271.33 30.00 - - -
Other construction projects 209,099,377.58 6.20 - - -
- - - -
191
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
13. Construction in progress (Continued)
Changes of significant construction in progress (Continued)
Changes of significant construction in progress in 2016 are presented as follows:
Increase Decrease
Decrease due to Proportion of
At beginning of the Acquisition of Transfer to fixed Transfer to Transfer to long term disposal of Disposal investment to
Project name Budget year subsidiaries assets intangible assets prepaid expense subsidiaries At end of year Source of funds budget (%)
Warehouse improvement project 26,179,291.74 5,341,796.63 17,520,163.36 (407,170.12) - (8,410,006.19) - - 14,044,783.68 Working capital 91.85
New office building project 38,182,660.00 7,682,660.00 584,503.35 - - (287,807.00) - - 7,979,356.35 Working capital 70.00
Working capital and
Supply chain extension project 21,619,775.70 12,620,204.41 6,924,554.03 (14,061,970.11) (273,584.90) - - - 5,209,203.43 financing lease 97.93
Software project 69,690,403.27 8,767,497.12 10,889,391.67 - (8,741,856.09) - - (25,641.03) 10,889,391.67 Working capital 80.00
Pingshan pharmaceutical research &
development manufacturing base 881,370,000.00 129,597,181.05 57,890,421.61 (120,948,278.13) - - - (66,539,324.53) - - -
Zhijun production workshop technological
transformation project 105,810,000.00 12,468,050.72 20,107,191.57 (10,954,642.81) - - (21,620,599.48) - - - -
Zhijun(Suzhou) production workshop
technological transformation project 49,938,000.00 5,388,239.70 - (886,370.90) - - (4,501,868.80) - - - -
Other constructions projects 253,713,768.90 18,703,174.45 1,128,590.10 (67,440.00) - (8,670,838.15) (1,898,466.80) (253,886.24) 8,941,133.36 Working capital 5.78
200,568,804.08 115,044,815.69 (147,325,872.07) (9,015,440.99) (17,368,651.34) (28,020,935.08) (66,818,851.80) 47,063,868.49
192
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
13. Construction in progress (Continued)
Changes of significant construction in progress（Continued）
Accumulated amount of Incl: interest capitalized Capitalization
Project name Budget Progress（%）
interest capitalized in the year rate (%)
Warehouse improvement project 26,179,291.74 91.85 - - -
New office building project 38,182,660.00 70.00 - - -
Supply chain extension project 21,619,775.70 97.93 - - -
Software project 69,690,403.27 80.00 - - -
Pingshan pharmaceutical research & development
manufacturing base 881,370,000.00 - 21,839,808.16 2,054,260.93 8.40
Zhijun production workshop technological
transformation project 105,810,000.00 - - - -
Zhijun(Suzhou) production workshop technological
transformation project 49,938,000.00 - 29,774.20 - -
Other constructions 253,713,768.90 - 10,391.66 10,391.66 0.01
21,879,974.02 2,064,652.59
As of 31 December 2017, construction in progress with a carrying amount of nil was leased under finance leases (31 December 2016: RMB1,924,502.57).
193
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
14. Intangible assets
2017 Land use right Software Patent Trademarks Favorable lease Sales network Franchise Total
Original cost
Opening balance 56,018,083.73 100,602,877.73 - 65,977,850.00 93,242,000.00 112,117,142.86 710,000.00 428,667,954.32
Purchase 4,000,000.00 10,124,136.06 - - - - - 14,124,136.06
Transfer from construction in
progress - 16,175,331.81 - - - - - 16,175,331.81
Transfer from investment
properties 765,940.92 - - - - - - 765,940.92
Disposal of subsidiaries - (773,536.24) - - - - - (773,536.24)
Transfer to investment properties (302,035.37) - - - - - - (302,035.37)
Closing balance 60,481,989.28 126,128,809.36 - 65,977,850.00 93,242,000.00 112,117,142.86 710,000.00 458,657,791.50
Accumulated amortization
Opening balance (23,161,818.46) (44,791,854.17) - (196,850.16) (9,891,411.60) (29,480,619.04) (710,000.00) (108,232,553.43)
Provision (3,392,800.22) (11,389,757.40) - - (4,945,705.88) (5,605,857.14) - (25,334,120.64)
Transfer from investment
properties (164,003.30) - - - - - - (164,003.30)
Disposal of subsidiaries - 773,536.24 - - - - - 773,536.24
Transfer to investment properties 50,780.51 - - - - - - 50,780.51
Closing balance (26,667,841.47) (55,408,075.33) - (196,850.16) (14,837,117.48) (35,086,476.18) (710,000.00) (132,906,360.62)
194
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
14. Intangible assets (Continued)
Favorable
2017 (Continued) Land use right Software Trademarks lease Sales network Franchise Total
Provision for impairment
Opening balance - - - - - - -
Disposal of subsidiaries - - - - - - -
Closing balance - - - - - - -
Carrying amount
At end of the year 33,814,147.81 70,720,734.03 65,780,999.84 78,404,882.52 77,030,666.68 - 325,751,430.88
At beginning of the year 32,856,265.27 55,811,023.56 65,780,999.84 83,350,588.40 82,636,523.82 - 320,435,400.89
195
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
14. Intangible assets (Continued)
2016 Land use right Software Patent Trademarks Favorable lease Sales network Franchise Total
Original cost
Opening balance 166,814,085.35 94,967,477.32 53,901,204.72 65,977,850.00 93,242,000.00 112,117,142.86 710,000.00 587,729,760.25
Purchase - 5,898,548.00 - - - - - 5,898,548.00
Business combination not
involving enterprises under
common control - 9,015,440.99 - - - - - 9,015,440.99
Transfer from construction in
progress 706,386.41 - - - - - - 706,386.41
Transfer from investment
properties (69,513,050.95) (7,395,189.01) (53,901,204.72) - - - - (130,809,444.68)
Transfer to investment properties (62,726.06) - - - - - - (62,726.06)
Disposal or retirement (41,926,611.02) (1,883,399.57) - - - - - (43,810,010.59)
Closing balance 56,018,083.73 100,602,877.73 - 65,977,850.00 93,242,000.00 112,117,142.86 710,000.00 428,667,954.32
Accumulated amortization
Opening balance (56,014,659.97) (39,146,125.02) (50,276,036.19) (196,850.00) (4,945,705.80) (23,874,761.90) (704,083.17) (175,158,222.05)
Provision (3,645,604.77) (11,465,033.77) (133,647.80) (0.16) (4,945,705.80) (5,605,857.14) (5,916.83) (25,801,766.27)
Transfer from investment (387,144.02) - - - - - - (387,144.02)
properties
Transfer out due to disposal of 28,466,915.70 5,285,980.03 50,409,683.99 - - - - 84,162,579.72
subsidiaries
Transfer to investment properties 2,299.92 - - - - - - 2,299.92
Disposal or retirement 8,416,374.68 533,324.59 - - - - - 8,949,699.27
Closing balance (23,161,818.46) (44,791,854.17) - (196,850.16) (9,891,411.60) (29,480,619.04) (710,000.00) (108,232,553.43)
196
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
14. Intangible assets (Continued)
2016 (Continued) Land use right Software Patent Trademarks Favorable lease Sales network Franchise Total
Provision for impairment
Opening balance - (264,952.19) (3,000,000.00) - - - - (3,264,952.19)
Transferred out due to
disposal of subsidiary - 264,952.19 3,000,000.00 - - - - 3,264,952.19
Closing balance - - - - - - - -
Carrying amount
At end of year 32,856,265.27 55,811,023.56 - 65,780,999.84 83,350,588.40 82,636,523.82 - 320,435,400.89
At beginning of the year 110,799,425.38 55,556,400.11 625,168.53 65,781,000.00 88,296,294.20 88,242,380.96 5,916.83 409,306,586.01
As at 31 December 2017, there were no intangible assets arising from internal research and development (31 December 2016: none).
As at 31 December 2017, there were no intangible assets of which the certificates of title have not been obtained (31 December 2016: none).
197
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
15. Development costs
2016 At beginning of year Increase Decrease At end of year
Internal Recognized in Disposal of
development profit or loss subsidiaries
Projects of antibiotics preparation and
powder injection projects - 12,698,143.68 (12,698,143.68) - -
Projects of cardiovascular and
cerebrovascular diseases
treatment - 487,956.61 (487,956.61) - -
Projects of Dajiankang related
products - 4,547,253.86 (4,547,253.86) - -
Projects of respiratory system
diseases treatment 18,117.29 - - (18,117.29) -
Projects of bulk antibiotics etc. 5,357,691.17 - - (5,357,691.17) -
Other projects 243,507.01 25,998,356.01 (25,998,356.01) (243,507.01) -
5,619,315.47 43,731,710.16 (43,731,710.16) (5,619,315.47) -
There were no expenditures on research and development incurred in 2017 (2016: RMB43,731,710.16).
198
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
16. Goodwill
Increase
31 December 2017 Opening balance Business combination not Closing balance
involving enterprises under
common control
Pharmaceutical distribution
Jiangmen Renren Medical Co., Ltd.
(“Sinopharm Jiangmen”) 27,392,317.73 - 27,392,317.73
Sinopharm Holding Shenzhen
Yanfeng Co., Ltd. (“Sinopharm
Yanfeng”) 16,868,644.87 - 16,868,644.87
Sinopharm Holding Zhaoqing Co., Ltd.
(“Sinopharm Zhaoqing”) 2,594,341.53 - 2,594,341.53
Sinopharm Holding Shaoguan Co.,
Ltd. (“Sinopharm Shaoguan”) 1,686,496.80 - 1,686,496.80
Sinopharm Holding Meizhou Co., Ltd.
(“Sinopharm Meizhou”) 1,610,819.66 - 1,610,819.66
Sinopharm Holding Huizhou Co., Ltd.
(“Sinopharm Huizhou”) 923,184.67 - 923,184.67
Sinopharm Holding Zhanjiang Co.,
Ltd. (“Sinopharm Zhanjiang”) 282,135.55 - 282,135.55
Sinopharm Holding Dongguan Co.,
Ltd. (“Sinopharm Dongguan”) 1,499.02 - 1,499.02
South Pharma & Trade 2,755,680.62 - 2,755,680.62
Foshan Nanhai 88,877,850.51 - 88,877,850.51
Sinopharm Holding Guoda ForMe
Medicines (Shanghai) Co., Ltd.
( “ForMe Medicines”) 3,033,547.53 - 3,033,547.53
Sinopharm Holding Zhuhai Co.,
Ltd.(“Sinopharm Zhuhai”) - 6,772,561.47 6,772,561.47
Sinopharm Holding Maoming Co.,
Ltd.(“Sinopharm Maoming”) - 66,417.07 66,417.07
Pharmaceutical retail
Shijiazhuang Lerentang Yikang
Pharmacy Chain Store Co., Ltd.
(“Hebei Yikang”) 29,482,149.57 - 29,482,149.57
Xiaoyi Guoda Wanmin Baicaotang
Pharmacy Chain Store Co., Ltd.
(“Xiaoyi Wanmin”) 15,866,680.00 - 15,866,680.00
Shanxi Guoda Wanmin Pharmacy
Chain Store Co., Ltd. 65,025,000.00 - 65,025,000.00
Sinopharm Holding Guoda ForMe
Pharmacy Chain Store Co., Ltd.
(“ForMe Pharmacy Chain Store”) 19,405,450.23 - 19,405,450.23
Sinopharm Holding Guoda Pharmacy
Chain Store Shanghai Co., Ltd. 5,028,638.00 - 5,028,638.00
Sinopharm Holding Guoda Yangzhou
Dadesheng Pharmacy Chain Store
Co., Ltd. 7,979,000.00 - 7,979,000.00
Zhejiang Guoda Pharmacy Co., Ltd. 3,045,183.85 - 3,045,183.85
Guoda Shenyang Tianyitang
Pharmacy Chain 1,687,942.92 - 1,687,942.92
Sinopharm Holding Guoda Nanjing
Pharmacy Chain Store Co., Ltd. 11,598,341.12 - 11,598,341.12
199
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
16. Goodwill (Continued)
Increase
Opening Closing
31 December 2017 (Continued) Business combination not involving
balance balance
enterprises under common control
Pharmaceutical retail (Continued)
Fujian Guoda Pharmacy Chain Store Co., Ltd. 1,567,250.76 - 1,567,250.76
Sinopharm Holding Guoda Shandong Pharmacy Chain
Store Co., Ltd. 29,110,409.46 - 29,110,409.46
Sinopharm Holding Guoda Shenyang Pharmacy Chain
Store Co., Ltd. 39,360,015.16 - 39,360,015.16
Liyang Guoda People Pharmacy Chain Store Co., Ltd. 107,275,095.74 - 107,275,095.74
Sinopharm Holding Hunan Guoda Minshengtang Pharmacy
Chain Co., Ltd. 41,165,574.64 - 41,165,574.64
Quanzhou Guoda Pharmacy Chain Store Co., Ltd. 41,298,622.59 - 41,298,622.59
Sinopharm Holding Guoda Henan Pharmacy Chain Store
Co., Ltd. 22,666,179.77 - 22,666,179.77
Sinopharm Holding Guoda Neimenggu Pharmacy Chain
Store Co., Ltd. 70,485,777.00 - 70,485,777.00
Sinopharm Guoda Pharmacy Jiangmen Chain Co., Ltd. 77,350,000.00 - 77,350,000.00
Sinopharm Holding Guoda Shanxi Yiyuan Pharmacy Chain
Store Co., Ltd. 9,080,100.00 - 9,080,100.00
Shenzhen Guanganli Pharmacy Chain Store Co., Ltd. store
acquisition 13,420,000.00 - 13,420,000.00
Beijing Golden Elephant Pharmacy Medicine Chain
Company Limited (“Beijing Golden Elephant”) 63,546,507.81 - 63,546,507.81
Beijing Yangqiao Rongzhi Golden Elephant Pharmacy
Company Limited 593,616.55 - 593,616.55
Guoda Taishan 26,826,120.55 - 26,826,120.55
848,890,174.21 6,838,978.54 855,729,152.75
200
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
16. Goodwill (Continued)
Increase Decrease
31 December 2016 Opening balance Business combination not Disposal Closing balance
involving enterprises under
common control
Pharmaceutical distribution
Jiangmen Renren Medical Co., Ltd.
(“Sinopharm Jiangmen”) 27,392,317.73 - - 27,392,317.73
Sinopharm Holding Shenzhen
Yanfeng Co., Ltd. (“Sinopharm
Yanfeng”) 16,868,644.87 - - 16,868,644.87
Sinopharm Holding Zhaoqing Co.,
Ltd. (“Sinopharm Zhaoqing”) 2,594,341.53 - - 2,594,341.53
Sinopharm Holding Shaoguan Co.,
Ltd. (“Sinopharm Shaoguan”) 1,686,496.80 - - 1,686,496.80
Sinopharm Holding Meizhou Co.,
Ltd. (“Sinopharm Meizhou”) 1,610,819.66 - - 1,610,819.66
Sinopharm Holding Huizhou Co.,
Ltd. (“Sinopharm Huizhou”) 923,184.67 - - 923,184.67
Sinopharm Holding Zhanjiang Co.,
Ltd. (“Sinopharm Zhanjiang”) 282,135.55 - - 282,135.55
Sinopharm Holding Dongguan Co.,
Ltd. (“Sinopharm Dongguan”) 1,499.02 - - 1,499.02
South Pharma & Trade 2,755,680.62 - - 2,755,680.62
Foshan Nanhai 88,877,850.51 - - 88,877,850.51
Sinopharm Holding Guoda ForMe
Medicines (Shanghai) Co., Ltd.
( “ForMe Medicines”) 3,033,547.53 - - 3,033,547.53
Pharmaceutical manufacturing
Zhijun Suzhou 33,869,393.32 - (33,869,393.32) -
Pharmaceutical retail
Shijiazhuang Lerentang Yikang
Pharmacy Chain Store Co., Ltd.
(“Hebei Yikang”) 29,482,149.57 - - 29,482,149.57
Xiaoyi Guoda Wanmin Baicaotang
Pharmacy Chain Store Co., Ltd.
(“Xiaoyi Wanmin”) 15,866,680.00 - - 15,866,680.00
Shanxi Guoda Wanmin Pharmacy
Chain Store Co., Ltd. 65,025,000.00 - - 65,025,000.00
Sinopharm Holding Guoda ForMe
Pharmacy Chain Store Co., Ltd.
(“ForMe Pharmacy Chain Store”) 19,405,450.23 - - 19,405,450.23
Sinopharm Holding Guoda
Pharmacy Chain Store Shanghai
Co., Ltd. 5,028,638.00 - - 5,028,638.00
Sinopharm Holding Guoda
Yangzhou Dadesheng Pharmacy
Chain Store Co., Ltd. 7,979,000.00 - - 7,979,000.00
Zhejiang Guoda Pharmacy Co., Ltd. 3,045,183.85 - - 3,045,183.85
Guoda Shenyang Tianyitang
Pharmacy Chain 1,687,942.92 - - 1,687,942.92
Sinopharm Holding Guoda Nanjing
Pharmacy Chain Store Co., Ltd. 11,598,341.12 - - 11,598,341.12
201
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
16. Goodwill (Continued)
Increase Decrease
31 December 2016 (Continued) Opening balance Business combination not Disposal Closing balance
involving enterprises under
common control
Pharmaceutical retail (Continued)
Fujian Guoda Pharmacy Chain Store
Co., Ltd. 1,567,250.76 - - 1,567,250.76
Sinopharm Holding Guoda Shandong
Pharmacy Chain Store Co., Ltd. 29,110,409.46 - - 29,110,409.46
Sinopharm Holding Guoda Shenyang
Pharmacy Chain Store Co., Ltd. 39,360,015.16 - - 39,360,015.16
Liyang Guoda People Pharmacy
Chain Store Co., Ltd. 107,275,095.74 - - 107,275,095.74
Sinopharm Holding Hunan Guoda
Minshengtang Pharmacy Chain Co.,
Ltd. 41,165,574.64 - - 41,165,574.64
Quanzhou Guoda Pharmacy Chain
Store Co., Ltd. 41,298,622.59 - - 41,298,622.59
Sinopharm Holding Guoda Henan
Pharmacy Chain Store Co., Ltd. 22,666,179.77 - - 22,666,179.77
Sinopharm Holding Guoda
Neimenggu Pharmacy Chain Store
Co., Ltd. 70,485,777.00 - - 70,485,777.00
Sinopharm Guoda Pharmacy
Jiangmen Chain Co., Ltd. 77,350,000.00 - - 77,350,000.00
Sinopharm Holding Guoda Shanxi
Yiyuan Pharmacy Chain Store Co.,
Ltd. 9,080,100.00 - - 9,080,100.00
Shenzhen Guanganli Pharmacy
Chain Store Co., Ltd. store
acquisition 13,420,000.00 - - 13,420,000.00
Beijing Golden Elephant Pharmacy
Medicine Chain Company Limited
(“Beijing Golden Elephant”) 63,546,507.81 - - 63,546,507.81
Beijing Yangqiao Rongzhi Golden
Elephant Pharmacy Company
Limited 593,616.55 - - 593,616.55
Guoda Taishan - 26,826,120.55 - 26,826,120.55
855,933,446.98 26,826,120.55 (33,869,393.32) 848,890,174.21
202
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
16. Goodwill (Continued)
Changes in provision for impairment of goodwill are presented as follows:
2017 Opening balance Increase Decrease Closing balance
Provision Disposal
Pharmaceutical retail
Quanzhou Guoda Pharmacy Chain 25,000,000.00 - - 25,000,000.00
Store Co., Ltd.
2016 Opening balance Increase Decrease Closing balance
Provision Disposal
Pharmaceutical manufacturing
Zhijun Suzhou 5,850,000.00 - (5,850,000.00) -
Pharmaceutical retail
Quanzhou Guoda Pharmacy Chain 25,000,000.00 - - 25,000,000.00
Store Co., Ltd.
30,850,000.00 - (5,850,000.00) 25,000,000.00
The carrying amount of goodwill was allocated to each asset group as follows:
31 December 2017 31 December 2016
Pharmaceutical distribution 152,865,497.03 146,026,518.49
Pharmaceutical retail 677,863,655.72 677,863,655.72
830,729,152.75 823,890,174.21
The Group acquired Sinopharm Zhuhai in January 2017 and Sinopharm Maoming in May 2017,
and goodwill of RMB6,772,561.47 and 66,417.07 thus arose. Refer to Item 1 under Note VI (1) for
its calculation process.
203
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
16. Goodwill (Continued)
The recoverable amount of an asset group or a group of asset groups is determined based on
financial budget approved by management covering a five-year period cash flow. The cash flows
beyond the five-year period are extrapolated using the inflation rate.
Key assumptions were used for the calculation of the present values of future cash flow
projections of the asset group consisting of pharmaceutical distribution and pharmaceutical retail
as of 31 December 2017. Key assumptions made by management on projections of cash flow
used in impairment testing are described as follows:
Pharmaceutical
Pharmaceutical retail
distribution
Revenue growth rate in the budget period 1.00%-30.00% 2.00%-30.00%
Sustainable growth rate 3.00% 3.00%
Gross margin 4.8%-12.7% 4.00%-39.9%
Discount rate 13.00%-15.00% 13.30%-15.00%
The budgeted gross margin and the revenue growth rate in the budget period is determined based
on the past performance and expectation for market development. The discount rates used are
pre-tax discount rates after reflecting specific risks of the relevant asset groups. The recoverable
amount of the asset group consisting of pharmaceutical distribution and pharmaceutical retail was
determined according to the key assumptions.
17. Long-term prepaid expenses
2017 Opening balance Additions Amortization Other decrease Closing balance
Fixed asset improvement
expenditure 158,483,260.94 104,416,969.80 (61,265,197.82) (2,425,195.12) 199,209,837.80
Acquisition expenditure to
obtain the right to operate 28,493,593.63 29,453,467.40 (8,933,729.55) - 49,013,331.48
Others 1,400,871.07 4,461,933.52 (1,838,923.08) - 4,023,881.51
188,377,725.64 138,332,370.72 (72,037,850.45) (2,425,195.12) 252,247,050.79
2016 Opening balance Increase Amortization Other decrease Closing balance
Fixed asset improvement
expenditure 122,552,974.97 84,325,901.30 (47,019,280.78) (1,376,334.55) 158,483,260.94
Acquisition expenditure to
obtain the right to operate 16,208,162.42 17,972,927.71 (5,687,496.50) - 28,493,593.63
Others 2,901,382.72 143,960.28 (1,094,033.67) (550,438.26) 1,400,871.07
141,662,520.11 102,442,789.29 (53,800,810.95) (1,926,772.81) 188,377,725.64
204
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
18. Deferred tax assets/liabilities
Deferred tax assets before offsetting
31 December 2017 31 December 2016
Deferred tax Deductible temporary Deductible temporary
assets differences Deferred tax assets differences
Deductible tax loss 28,705,915.53 115,556,647.93 21,393,844.91 85,575,379.60
Provision for
impairment of assets 16,274,860.36 66,273,264.15 19,118,314.97 83,604,722.45
Accrued payroll 14,540,506.81 60,250,524.89 14,668,802.63 60,272,948.20
Accrued expenses 11,141,862.66 47,994,796.55 11,524,213.88 48,767,983.92
Deferred revenue 7,540,824.20 30,837,426.91 6,196,507.49 25,425,419.68
Others 1,268,913.50 5,424,788.24 445,778.06 2,065,022.05
79,472,883.06 326,337.448.67 73,347,461.94 305,711,475.90
Deferred tax liabilities before offsetting
31 December 2017 31 December 2016
Deferred tax Taxable temporary Taxable temporary
liabilities differences Deferred tax liabilities differences
Fair value adjustment
for business
combination not
involving enterprises
under common
control 59,943,324.20 239,773,296.84 63,557,328.29 254,229,313.19
Changes in fair value 6,088,777.56 24,355,110.24 8,734,282.98 35,313,052.96
Others 5,851,151.26 28,945,491.07 4,676,832.38 18,707,329.48
71,883,253.02 293,073,898.15 76,968,443.65 308,249,695.63
The deductible temporary differences and deductible losses that were not recognized as
deferred tax assets are presented as follows:
31 December 2017 31 December 2016
Deductible temporary differences 1,480,000.00 1,300,000.00
Deductible losses (Note) 21,759,547.45 20,729,807.46
23,239,547.45 22,029,807.46
Note: For those loss-making subsidiaries, as it is not considered probable that taxable profits
will be available against which the tax losses can be utilized, the Group has not
recognized deferred tax assets arising from accumulated losses amounting to
RMB21,759,547.45 which are tax deductible under the tax law.
205
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
206
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
18. Deferred tax assets/liabilities (Continued)
The aforesaid unrecognized deductible losses will be due in:
31 December 2017 31 December 2016
2017 - 6,047,670.28
2018 2,970,715.21 5,840,282.75
2019 3,159,690.78 3,370,441.99
2020 4,835,260.23 4,835,260.23
2021 2,641,220.49 2,565,175.00
2022 8,152,660.74 -
21,759,547.45 22,658,830.25
Deferred tax assets and liabilities offsetting amount is as follows:
31 December 2017 31 December 2016
Deferred tax assets/liabilities - 432,739.64
Deferred tax assets and liabilities are presented after being offset against each other:
31 December 2017 31 December 2016
Deferred tax Temporary Deferred tax Temporary
assets/liabilities - differences assets/liabilities - differences
Net after set-off Net after set-off
Deferred tax assets 79,472,883.06 326,337,448.67 72,914,722.30 303,980,517.34
Deferred tax liabilities 71,883,253.02 293,073,898.15 76,535,704.01 306,518,737.07
207
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
19. Other non-current assets
31 December 2017 31 December 2016
Prepayment for investment (Note 1) 60,000,000.00 -
Physical assets reserve specifically
authorized 45,074,249.27 43,605,016.10
Prepayment for project and equipment 19,441,433.20 27,155,022.78
Prepayment for a rental fee (Note 2) 17,506,780.28 17,021,937.21
Prepayment for house purchase - 6,867,500.00
142,022,462.75 94,649,476.09
Note 1: On March 2017, the Group subscribed to Sinopharm Zhongjin medical industry fund, as
its limited partner. The total investment which amounted to RMB200 million, will be paid within 3
years. The total amount paid this year was 30% of the total investment which was RMB60
million.
Note 2: The prepayment for a rental fee which is over one year is recognized as other non-
current asset of the Group.
20. Provision for impairment of assets
Reversal of Additions Reductions
write-off in 31 December
1 January 2017
previous Decreased due to 2017
Reversal Write-off
years reorganization
Provision for bad debts 68,097,270.66 45,677.60 5,655,978.20 1,026,351.73 (8,727,086.20) (7,061,676.71) 59,036,515.28
Provision for bad debts of
accounts receivable 48,894,651.36 45,677.60 4,082,799.01 947,367.82 (7,765,994.96) (2,279,035.42) 43,925,465.41
Provision for bad debts of
other receivables 19,202,619.30 - 1,573,179.19 78,983.91 (961,091.24) (4,782,641.29) 15,111,049.87
Inventories provision 14,930,813.47 - 3,099,135.23 44,252.15 (2,498,723.97) (8,735,366.33) 6,840,110.55
Impairment of available-
for-sale financial
assets 180,000.00 - - - - - 180,000.00
Impairment of investment
properties 1,300,000.00 - - - - - 1,300,000.00
Impairment of goodwill 25,000,000.00 - - - - - 25,000,000.00
Impairment of long-term
equity investments 396,638.32 - - - - - 396,638.32
109,904,722.45 45,677.60 8,755,113.43 1,070,603.88 (11,225,810.17) (15,797,043.04) 92,753,264.15
208
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
20. Provision for impairment of assets (Continued)
Reversal of Reductions
write-off in 31 December
1 January 2016 Additions
Decreased due to
previous 2016
Reversal Write-off
years reorganization
Provision for bad debts 92,811,277.51 23,638.80 1,968,011.77 (12,080,619.25) (14,521,067.31) (103,970.86) 68,097,270.66
Provision for bad debts of
accounts receivable 73,694,193.30 23,638.80 1,786,013.00 (12,023,454.74) (14,517,375.00) (68,364.00) 48,894,651.36
Provision for bad debts of
other receivables 19,117,084.21 - 181,998.77 (57,164.51) (3,692.31) (35,606.86) 19,202,619.30
Inventories provision 36,219,569.51 - 7,834,477.85 (6,271,860.18) (2,777,174.55) (20,074,199.16) 14,930,813.47
Impairment of available-
for-sale financial assets 180,000.00 - - - - - 180,000.00
Impairment of fixed assets 15,416,006.95 - - - - (15,416,006.95) -
Impairment of construction
in progress 1,500,000.00 - - - - (1,500,000.00) -
Impairment of Investment
properties 1,300,000.00 - - - - - 1,300,000.00
Impairment of intangible
assets 3,264,952.19 - - - - (3,264,952.19) -
Impairment of goodwill 30,850,000.00 - - - - (5,850,000.00) 25,000,000.00
Impairment of long-term
equity investments 396,638.32 - - - - - 396,638.32
181,938,444.48 23,638.80 9,802,489.62 (18,352,479.43) (17,298,241.86) (46,209,129.16) 109,904,722.45
21. Short-term borrowings
31 December 2017 31 December 2016
Credit borrowings 1,413,638,993.97 1,276,073,615.32
Guaranteed borrowings - 50,915,736.83
Discounted notes 147,715,527.67 154,468,694.89
Pledged borrowings - 31,255,582.91
1,561,354,521.64 1,512,713,629.95
As at 31 December 2017, the annual interest rate for the above borrowings was 4.34% (31 December
2016: 4.13%).
As at 31 December 2017 and 31 December 2016, there were no short-term borrowings of the Group that
were overdue but not yet paid.
209
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
22. Notes payable
31 December 2017 31 December 2016
Commercial acceptance notes 60,129,565.95 117,104,256.84
Bank acceptance notes 2,672,308,262.47 2,289,538,326.02
2,732,437,828.42 2,406,642,582.86
At 31 December 2017, the total amount of notes payable that were due but not yet paid is
RMB19,900.00 (31 December 2016: RMB8,367,100.00).
23. Accounts payable
31 December 2017 31 December 2016
Trade payables 6,144,221,000.10 6,701,558,514.10
At 31 December 2017, the total amount of accounts payable aged over one year was
RMB269,295,585.18 (31 December 2016: RMB263,362,685.91), and the payment has not yet
been cleared.
24. Advances from customers
31 December 2017 31 December 2016
Advances from customers 216,938,239.32 163,450,365.92
At 31 December 2017, the total amount of accounts payable aged over one year was
RMB16,618,324.72 (31 December 2016: RMB10,366,456.25).
25. Employee benefits payable
At beginning of At end of the
2017 the year Increase Decrease year
Short-term employee
benefits 191,157,671.41 1,582,656,019.65 (1,564,493,527.36) 209,320,163.70
Post-employment
benefits (defined
contribution plan) 2,686,932.17 155,924,906.72 (153,015,561.77) 5,596,277.12
Termination benefits 1,293,476.27 1,975,659.92 (2,529,050.47) 740,085.72
195,138,079.85 1,740,556,586.29 (1,720,038,139.60) 215,656,526.54
210
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
25. Employee benefits payable (Continued)
2016 At beginning of year Increase Decrease At end of year
Short-term employee
benefits 238,425,904.07 1,575,547,633.96 (1,622,815,866.62) 191,157,671.41
Post-employment benefits
(defined contribution
plan) 9,235,911.18 155,632,448.76 (162,181,427.77) 2,686,932.17
Termination benefits 2,099,068.75 3,489,110.36 (4,294,702.84) 1,293,476.27
249,760,884.00 1,734,669,193.08 (1,789,291,997.23) 195,138,079.85
Short-term employee benefits
At beginning of
2017 year Increase Decrease At end of year
Salaries, bonuses,
allowances and grants 175,148,646.81 1,375,631,520.92 (1,357,701,661.24) 193,078,506.49
Staff welfare 1,477,025.98 46,338,154.00 (45,212,374.06) 2,602,805.92
Social security contribution 1,570,365.14 78,785,834.04 (78,992,549.86) 1,363,649.32
Incl: Medical insurance 1,329,989.27 69,594,869.21 (69,793,874.07) 1,130,984.41
Work injury insurance 20,708.23 3,889,950.47 (3,900,117.15) 10,541.55
Maternity insurance 219,667.64 5,301,014.36 (5,298,558.64) 222,123.36
Housing funds 327,217.21 53,752,358.53 (53,150,486.41) 929,089.33
Labor union funds and
employee education funds 11,765,134.16 24,282,431.63 (25,869,002.92) 10,178,562.87
Other short-term benefits 869,282.11 3,865,720.53 (3,567,452.87) 1,167,549.77
191,157,671.41 1,582,656,019.65 (1,564,493,527.36) 209,320,163.70
At beginning of
2016 year Increase Decrease At end of year
Salaries, bonuses,
allowances and grants 210,324,955.24 1,351,793,519.43 (1,386,969,827.86) 175,148,646.81
Staff welfare 2,753,637.03 63,103,820.05 (64,380,431.10) 1,477,025.98
Social security contribution 1,439,600.25 76,502,865.10 (76,372,100.21) 1,570,365.14
Incl: Medical insurance 1,089,455.97 67,635,376.23 (67,394,842.93) 1,329,989.27
Work injury insurance 49,078.75 3,747,018.14 (3,775,388.66) 20,708.23
Maternity insurance 301,065.53 5,120,470.73 (5,201,868.62) 219,667.64
Housing funds 636,732.75 53,588,736.16 (53,898,251.70) 327,217.21
Labor union funds and
employee education funds 22,398,907.79 26,439,636.55 (37,073,410.18) 11,765,134.16
Other short-term benefits 872,071.01 4,119,056.67 (4,121,845.57) 869,282.11
238,425,904.07 1,575,547,633.96 (1,622,815,866.62) 191,157,671.41
211
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
25. Employee benefits payable (Continued)
Defined contribution plan
At beginning of
2017 year Increase Decrease At end of year
Basic pension
insurance 619,514.34 146,712,694.05 (145,592,585.05) 1,739,623.34
Contribution to
pension fund 1,961,232.61 4,365,911.23 (2,692,321.27) 3,634,822.57
Unemployment
insurance 106,185.22 4,846,301.44 (4,730,655.45) 221,831.21
2,686,932.17 155,924,906.72 (153,015,561.77) 5,596,277.12
At beginning of
2016 year Increase Decrease At end of year
Basic pension
insurance 6,947,723.42 144,673,254.38 (151,001,463.46) 619,514.34
Contribution to
pension fund 2,013,748.53 4,852,647.63 (4,905,163.55) 1,961,232.61
Unemployment
insurance 274,439.23 6,106,546.75 (6,274,800.76) 106,185.22
9,235,911.18 155,632,448.76 (162,181,427.77) 2,686,932.17
212
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
25. Employee benefits payable (Continued)
Termination benefits
At beginning of
2017 year Increase Decrease At end of year
Retirement
benefits
payable – within
1 year (Note
V(37)) 1,093,992.97 1,200,357.47 (1,735,284.77) 559,065.67
Other termination
benefits (Note) 199,483.30 775,302.45 (793,765.70) 181,020.05
1,293,476.27 1,975,659.92 (2,529,050.47) 740,085.72
At beginning of
2016 year Increase Decrease At end of year
Retirement
benefits
payable – within
1 year (Note
V(37)) 1,693,455.41 2,528,921.47 (3,128,383.91) 1,093,992.97
Other termination
benefits (Note) 405,613.34 960,188.89 (1,166,318.93) 199,483.30
2,099,068.75 3,489,110.36 (4,294,702.84) 1,293,476.27
(Note) For year 2017, the Group provided other termination benefits for severing labor relations
of RMB775,302.45, as at 31 December 2017, and the unpaid balance as at the year end was
RMB181,020.05. (2016: Other termination benefits for severing labor relations of
RMB960,188.89, the unpaid balance at the year end was RMB199,483.30).
213
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
26. Tax payable
31 December 2017 31 December 2016
Corporate Income taxes 102,947,883.38 90,177,731.06
Value-added tax 85,843,903.33 61,767,738.60
City maintenance and construction surtax 6,691,713.89 4,844,305.96
Water conservancy fund 5,356,119.89 4,880,965.03
Educational surcharge 4,862,588.43 3,499,732.78
Stamp duty 4,166,596.91 5,449,224.41
Individual income tax 3,921,305.41 5,028,775.01
Property tax 971,268.99 1,102,254.64
Land use tax 513,790.48 341,494.13
Land appreciation tax - 6,600,717.72
Others 8,477,729.53 3,350,778.18
223,752,900.24 187,043,717.52
27. Interest payable
31 December 2017 31 December 2016
- Interest on short-term borrowings 7,272,835.37 6,918,661.52
- Interest on long-term borrowings 38,984.28 37,801.50
7,311,819.65 6,956,463.02
28. Dividend payable
31 December 2017 31 December 2016
Shanghai Fosun Pharmaceutical (Group) Co.,
Ltd. (“Fosun Pharma”) 4,835,511.58 4,835,511.58
Zhong Luqi 4,103,188.06 -
Zhong Lunan 765,928.44 -
Zhong Xiangjun 601,800.92 -
Zhang Zhenfang 1,389,639.31 1,389,639.31
Meiluo Pharmaceutical Co., Ltd. 164,170.07 164,170.07
Bai Ganyin 29,204.73 -
Qiao Haiping - 2,094,049.25
11,889,443.11 8,483,370.21
214
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
29. Other payables
31 December 2017 31 December 2016
Payables for factoring programs 388,729,758.59 146,008,376.21
Deposits 129,662,851.39 56,640,346.01
Payables arising from acquisition of
subsidiaries 109,445,960.00 273,914,900.00
Payables for construction in progress and
equipment 98,293,860.11 99,860,228.96
Accrued selling and distribution expenses 96,065,832.84 82,576,148.19
Payables to individuals 34,316,089.64 19,297,062.31
Payables for rentals 27,766,119.66 25,866,767.64
Payables for land transfer payments 18,071,000.00 -
Payables to related parties 15,817,669.33 33,804,087.79
Temporary loans 15,800,000.00 19,230,000.00
Collection of others 8,430,347.08 16,980,734.50
Others 68,728,908.62 143,015,259.73
1,011,128,397.26 917,193,911.34
At 31 December 2017, significant other payables over 1 year are:
Amount payable Reason for outstanding
Shenzhen No.1 Construction
Engineering Co., Ltd. 31,190,781.16 Payment conditions not met
Taishan Qunkang Drugstore Co., Ltd. 13,860,000.00 Payment conditions not met
Shanxi Double Crane Pharmaceutical
Co., Ltd. 9,800,000.00 Payment conditions not met
Shanxi Pharmaceutical Co., Ltd. 6,000,000.00 Payment conditions not met
Sales discount collected for clients Sales discount collected for
from suppliers 5,267,715.54 clients from suppliers
30. Non-current liabilities due within 1 year
31 December 2017 31 December 2016
Long-term borrowings due within 1 year - 31,600,000.00
Finance lease payables (Note V (33)) 5,434,770.70 4,811,339.96
5,434,770.70 36,411,339.96
215
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
31. Other current liabilities
31 December 2017 31 December 2016
Output VAT to be recognized 112,817.65 123,294.77
32. Long-term borrowings
31 December 2017 31 December 2016
Entrusted loans 31,600,000.00 -
At 31 December 2017, the total amount of entrusted loans remaining is RMB31,600,000.00. China National
Pharmaceutical Group Corporation entrusted Group Financial Co. to provide the loan.
At 31 December 2017, the annual interest rate of the above-mentioned borrowings was 4.40% (31 December 2016:
4.82%).
33. Long-term payables
31 December 2017 31 December 2016
Finance lease payables (Note XIII(2)) 14,767,307.84 19,427,938.30
Less: due within one year (Note V (30)) (5,434,770.70) (4,811,339.96)
9,332,537.14 14,616,598.34
34. Payable for specific projects
2017
At beginning of year Increase Decrease At end of year
Special funds granted by
government 800,000.00 - - 800,000.00
2016
At beginning of year Increase Decrease At end of year
Special funds granted by
government 852,000.00 - (52,000.00) 800,000.00
Government grants for ERP
system construction 435,000.00 - (435,000.00) -
1,287,000.00 - (487,000.00) 800,000.00
216
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
35. Provision
2017 Opening balance Increase Decrease Closing balance
Provision for additional
loss obligation on the
investees (Note V (10),
(Note V (50)) - - - -
2016 Opening balance Increase Decrease Closing balance
Provision for additional
loss obligation on the
investees (Note V (10),
(Note V (50)) 3,936,157.67 - (3,936,157.67) -
36. Deferred income
2017 Opening balance Increase Decrease Closing balance
Government grants 101,563,380.85 500,000.00 (5,338,197.51) 96,725,183.34
Promotion Rewards Program 22,390,081.96 6,475,593.10 (508,485.87) 28,357,189.19
123,953,462.81 6,975,593.10 (5,846,683.38) 125,082,372.53
2016 Opening balance Increase Decrease Closing balance
Government grants 155,936,441.64 5,383,200.00 (59,756,260.79) 101,563,380.85
Promotion Rewards Program 43,079,101.69 3,532,678.95 (24,221,698.68) 22,390,081.96
199,015,543.33 8,915,878.95 (83,977,959.47) 123,953,462.81
Less: Product promotion points
redeemed within one year (3,510,000.00) - 3,510,000.00 -
195,505,543.33 8,915,878.95 (80,467,959.47) 123,953,462.81
217
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
36. Deferred income (Continued)
As at 31 December 2017, deferred income from government grants is as follows:
Government grants Opening balance Addition in the Amount Amount Closing Asset related/
program year included in included in balance income related
non-operating other incomes
income in the in the year
year
Resettlement
Compensation (Note) 80,952,258.29 - (2,698,408.56) - 78,253,849.73 Asset related
Guangxi Logistics Project 7,446,239.38 - - (496,406.40) 6,949,832.98 Asset related
Logistics standardization
project 3,907,506.23 - - (546,246.84) 3,361,259.39 Asset related
A comprehensive
experimental modern
service industry
subsidies 2,100,000.00 - - (300,000.00) 1,800,000.00 Asset related
Shared Logistics Center
(completed) 289,659.15 - - (18,800.40) 270,858.75 Asset related
Asset/income
Other projects 6,867,717.80 500,000.00 - (1,278,335.31) 6,089,382.49 related
101,563,380.85 500,000.00 (2,698,408.56) (2,639,788.95) 96,725,183.34
218
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
36. Deferred income (Continued)
As at 31 December 2016, deferred income from government grants is as follows.
Government grants program Opening balance Addition in the year Amount included in non- Disposal of Closing balance Asset related/
operating income in subsidiaries income
the year related
Resettlement Compensation (i) 83,650,666.85 - (2,698,408.56) - 80,952,258.29 Asset related
Cephalosporin Solid Preparations
Development Project 11,742,379.25 - (1,958,895.80) (9,783,483.45) - Asset related
Cardiovascular system targeted drug
development programs 10,392,533.33 - (611,079.08) (9,781,454.25) - Asset related
Guangxi Logistics Project 7,942,645.78 - (496,406.40) - 7,446,239.38 Asset related
Stomach medicine domestic clinical
research and development project 5,000,000.00 - - (5,000,000.00) - Asset related
Pingshan pharmaceutical R&D base
engineering 4,874,999.99 - (4,874,999.99) - - Asset related
Logistics standardization project 4,300,000.02 500,000.00 (892,493.79) - 3,907,506.23 Asset related
Cephalosporin Powder Injection
Passing EU-GMP Authentication 3,815,792.34 - (603,305.45) (3,212,486.89) - Asset related
Medical R&D Center II (in progress) 3,056,300.89 - (684,433.30) (2,371,867.59) - Asset related
New Cephalosporin R&D Project 3,046,340.57 - (763,370.50) (2,282,970.07) - Asset related
Enteric coated pellets industry research
and development project 2,436,037.10 - (396,008.90) (2,040,028.20) - Asset related
A comprehensive experimental modern
service industry subsidies 2,400,000.00 - (300,000.00) - 2,100,000.00 Asset related
Cefpirome Sulfate R&D Project 1,853,960.95 - (105,600.24) (1,748,360.71) - Asset related
The laval shaaban raw materials and
tablets project 1,500,000.00 - (640,000.00) (860,000.00) - Asset related
New Cephalosporin R&D Project 608,900.38 - (508,744.60) (100,155.78) - Asset related
Shared Logistics Center (completed) 407,433.53 - (117,774.38) - 289,659.15 Asset related
Asset/income
Other projects 8,908,450.66 4,883,200.00 (1,417,597.18) (5,506,335.68) 6,867,717.80 related
155,936,441.64 5,383,200.00 (17,069,118.17) (42,687,142.62) 101,563,380.85
Note: Due to the implementation of urban planning for old town reconstruction in Nanning, the operating center of
Guangxi Logistics which was located in Longteng Road District, Nanning City, was to be reconstructed in another
place. According to the agreement signed between Guangxi Logistics and the real estate developer, Guangxi
Logistics would obtain a compensation of RMB120,250,000.00, including cash of RMB50,000,000.00 and a
property in construction equal to a value of RMB70,250,000.00. Cash compensation of RMB50,000,000.00 was
received in May 2012. In year 2015, construction properties with a value of RMB70,250,000.00 were built and
delivered, and had been recognized as investment properties.
The compensation relating the capital expenditure in the reconstruction of the new logistic center in another place,
amounting to RMB93.32 million was recognized as deferred revenue, and would be amortized and recognized in
the income statement within the expected useful lives using the straight-line method, and the other cash
compensation, which amount approximates to RMB26.93 million, was recognized in the income statement in
2012.
219
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
37. Long-term employee benefits payable
31 December 2017 31 December 2016
Early retirement benefits payable 2,336,065.67 2,816,592.86
Less: Retirement benefits payable –
within 1 year (Note V (25)) (559,065.67) (1,093,992.97)
1,777,000.00 1,722,599.89
The primary actuarial assumptions adopted at the end of the reporting period are presented as
follows:
31 December 2017 31 December 2016
Discount rate 4.00% 3.25%
Growth rate of wages 6.00% 6.00%
The total post-employment benefits recognized in profit or loss of the current year is:
2017 2016
Included in administrative
expenses 1,182,043.83 595,286.36
Included in financial expenses 101,713.75 133,135.00
1,283,757.58 728,421.36
38. Other non-current liabilities
31 December 2017 31 December 2016
Governmental medical reserve
funds 45,427,343.31 45,427,343.31
Certain medical reserve funds were received by the Group from the PRC government and local
government for purchasing medical products (including medicines) required to respond to serious
disasters, epidemics and other emergencies.
220
V Notes to the consolidated financial statements (Continued)
39. Share capital
2017 At beginning of Increase during the current year At end of the year
the year
Issue of new share Others Total
Listed shares without
restriction of trading:
-A shares, listed 233,261,812.00 - 74,482,543.00 74,482,543.00 307,744,355.00
-B shares, listed 54,885,600.00 - - - 54,885,600.00
Listed shares with
restriction of trading: 74,482,543.00 60,380,743.00 (74,482,543.00) (14,101,800.00) 60,380,743.00
-State-owned legal
person shares - 5,114,297.00 - 5,114,297.00 5,114,297.00
-Natural person
shares 1,988.00 - - - 1,988.00
362,631,943.00 65,495,040.00 - 65,495,040.00 428,126,983.00
2016 At beginning of Increase during the current year At end of the year
the year
Issue of new share Others Total
Listed shares without
restriction of trading:
-A shares, listed 233,261,812.00 - - - 233,261,812.00
-B shares, listed 54,885,600.00 - - - 54,885,600.00
Listed shares with
restriction of trading:
-State-owned legal
person shares 74,482,543.00 - - - 74,482,543.00
-Natural person
shares 1,988.00 - - - 1,988.00
362,631,943.00 - - - 362,631,943.00
40. Capital surplus
At beginning of the
2017 year Increase Decrease At end of the year
Share premium 2,118,174,787.27 - - 2,118,174,787.27
Others -
Significant reorganization (a) 1,177,337,792.19 - (3,430,029.00) 1,173,907,763.19
Transition reserves from investment
in associates reclassified from
capital surplus to other
comprehensive income 2,020,250.22 - - 2,020,250.22
Transfer of capital surplus
recognized under the previous
accounting system 2,650,322.00 - - 2,650,322.00
Business combination involving
enterprises under common
control(b) 1,200,000.00 - (1,200,000.00) -
Other changes in equity of invested
units under equity method(c) (148,665,126.76) 33,341,069.07 - (115,324,057.69)
3,152,718,024.92 33,341,069.07 (4,630,029.00) 3,181,429,064.99
V Notes to the consolidated financial statements (Continued)
40. Capital surplus (Continued)
At beginning of
2016 the year Increase Decrease At end of the year
Share premium 1,855,144,194.77 263,030,592.50 - 2,118,174,787.27
221
Others -
Significant reorganization 1,333,704,770.31 - (156,366,978.12) 1,177,337,792.19
Transition reserves from investments in
associates reclassified from capital
surplus to other comprehensive
income 2,380,016.57 - (359,766.35) 2,020,250.22
Transfer of capital surplus recognized
under the previous accounting system 2,650,322.00 - - 2,650,322.00
Business combination involving
enterprises under common control(b) 1,200,000.00 - - 1,200,000.00
Others 3,720,000.00 600,990.46 (152,986,117.22) (148,665,126.76)
3,198,799,303.65 263,631,582.96 (309,712,861.69) 3,152,718,024.92
（a） Significant reorganization decreased by RMB3,430,029.00 when the Group carried out the reorganization
in October 2016. The disposal of Zhijun Medicine, Zhijun Pingshan, Zhijun Trade and assets of Pingshan
base was in exchange for 15.56% equity interest of Shyndec Pharmaceutical. Due to the incomplete
valuation of assets on the completion date, the carrying value of the assets as of 31 October 2016 is
estimated temporarily. During the year, the capital reserve of RMB8,006,772.67 was offset by the
difference between the appraisal number and the carrying amount of the delivery date.
（b） Capital reserve - Business combinations under common control resulted in a decrease of
RMB1,200,000.00 due to the acquisition of Sinopharm Lerentang Shijiazhuang Pharmaceutical, under
common control by the Company, on 10 March 2017 (Note VI (2)). At beginning of the year, the capital
reserve of RMB1,200,000.00 was restated and the capital reserve of RMB1,200,000.00 was written off on
the delivery date this year.
（c） The reason there is an increase of RMB33,341,069.07 in current year’s other capital reserves is because
there is an increase of RMB33,341,069.07 in the capital reserves of Modern Pharma due to other changes
in equity.
41. Other equity instruments
At beginning of year Increase Decrease At end of year
Shares Amounts Shares Amounts Shares Amounts Shares Amounts
Unlisted
shares 65,495,040.00 65,495,040.00 - - (65,495,040.00) (65,495,040.00) - -
As at 31 December 2017, the Group issued 65,495,040 ordinary shares (A shares) to acquire entities under
common control, including Guoda Pharmacy, Foshan Nanhai, South Pharma & Trade and Guangdong
Uptodate & Special Medicines by issuing shares and raised supporting funds by issuing shares to Ping An
Asset Management to acquire the non-controlling interest of South Pharma & Trade. The relevant shares
were successfully issued and listed on 5 January 2017.
222
V Notes to the consolidated financial statements (Continued)
42. Surplus reserve
31 December 2017 31 December 2016
Surplus reserve 214,063,491.50 181,315,971.50
According to the provisions of the Company Law and the Company’s articles of association, the
Company appropriates statutory surplus reserves at 10% of the net profit. Where the accumulated
amount of surplus reserves reaches 50% or more of the Company’s registered capital, additional
appropriation is not needed. After the appropriation of statutory surplus reserves, the Company
may appropriate discretionary surplus reserves. When approved, the discretionary surplus
reserves can be used to recover accumulated losses or increase the share capital. After the
Group withdrew surplus reserve of RMB32,747,520.00, the accumulated amount of the statutory
surplus reserve of the Group has already reached 50% of registered capital. According to the
Company’s articles of association, the Group did not extract surplus reserve anymore.
43. Retained earnings
31 December 2017 31 December 2016
Retained earnings at the end of the prior year 4,689,189,642.51 3,045,551,246.71
A business combination involving enterprises under
common control (a) 1,076,241.59 592,834,676.01
Retained earnings at beginning of year after
retrospective adjustment and restatement 4,690,265,884.10 3,638,385,922.72
Add: Net profit attributable to the parent 1,057,791,930.67 1,186,539,201.93
Deduct: Withdrew surplus reserve (32,747,520.00) -
Ordinary share cash dividends payable (b) (141,281,904.39) (134,659,240.55)
Business combination involving enterprises under common
control (1,075,583.99) -
Retained earnings at end of year 5,572,952,806.39 4,690,265,884.10
（a） Due to the business combination involving enterprises under common control, retained
earnings at the end of the prior year increased by RMB1,076,241.59 (2016:
RMB592,834,676.01).
（b） Pursuant to the resolution of the general meeting on 17 April 2017, cash dividends of
RMB3.30 per 10 shares were paid based on the issued shares of 428,126,983 after non-
public offering, amounting to RMB141,281,904.39 in total.
（c） Pursuant to the resolution of the board of directors of the Company on 21 March 2018, cash
dividends of RMB128,438,094.90 (RMB3.00 per 10 shares) were proposed based on the
issued shares of 428,126,983 after non-public offering. This proposed dividend is subject to
the approval of the forthcoming general meeting.
223
V Notes to the consolidated financial statements (Continued)
44. Operating revenue and cost
2017 2016
Revenue of main operations 40,957,232,334.77 40,950,539,760.95
Other operating income 306,396,784.08 297,801,904.51
41,263,629,118.85 41,248,341,665.46
2017 2016
Cost of main operations 36,789,414,942.07 36,621,286,445.30
Other operating expenses 30,137,973.73 26,874,304.85
36,819,552,915.80 36,648,160,750.15
Revenue and cost of main operations
Revenue and cost of main operations analyzed by industry are set out below:
2017 2016
Revenue of Cost of main Revenue of Cost of main
main operations operations main operations operations
Wholesale of
pharmaceutical 31,022,967,423.15 29,315,028,286.33 30,982,394,963.30 29,319,921,602.61
Retail of
pharmaceutical 9,892,835,784.75 7,457,091,704.13 8,761,101,587.23 6,605,050,729.00
Logistics and freights 29,568,712.15 11,065,889.25 20,551,062.91 13,271,551.53
Rental and other
income 11,860,414.72 6,229,062.36 12,250,777.29 5,488,975.93
Pharmaceutical
manufacturing - - 1,174,241,370.22 677,553,586.23
40,957,232,334.77 36,789,414,942.07 40,950,539,760.95 36,621,286,445.30
Other operating income and expenses
2017 2016
Other operating Other operating Other operating
income Other operating cost income cost
Rendering of services 236,641,796.68 15,003,093.78 217,419,431.74 9,566,833.75
Rental income 49,295,774.44 13,027,371.57 51,510,163.93 9,526,998.12
Franchise fee income 12,181,248.58 - 12,466,449.10 69,252.02
The income of disposal
the investment real
estate - - 7,667,470.67 2,426,744.64
Sales of raw materials - - 1,980,407.43 691,010.60
Others 8,277,964.38 2,107,508.38 6,757,981.64 4,593,465.72
306,396,784.08 30,137,973.73 297,801,904.51 26,874,304.85
224
V Notes to the consolidated financial statements (Continued)
45. Tax and surcharges
2017 2016
City maintenance and construction tax 47,942,856.07 47,875,547.04
Educational surcharge 34,378,808.90 34,378,369.51
Stamp duty 28,674,034.69 23,183,175.33
Property tax 6,725,155.08 6,280,014.82
Land tax 804,774.72 1,368,870.31
Vehicle and vessel use tax 524,224.57 128,932.95
Business tax - 5,237,509.80
Others 870,564.15 5,819,013.29
119,920,418.18 124,271,433.05
46. Selling expenses
2017 2016
Employees payroll and welfare benefits 1,218,875,166.16 1,127,962,184.89
Rental expenses 595,655,664.30 542,204,017.06
Transportation charges 62,383,495.59 78,970,351.97
Amortization of long-term deferred expenses 61,757,421.69 43,394,735.87
Utility fees 53,104,248.07 48,407,210.56
Depreciation expenses 49,141,321.86 39,471,029.62
Promotion and marketing expenses 41,054,355.22 42,377,994.57
Storage expenses 34,503,559.49 40,718,215.96
Office allowances 34,125,183.91 36,483,538.89
Entertainment expenses 27,525,997.74 35,855,595.79
Repairing fees 10,676,340.89 11,419,421.05
Conference expenses 10,484,976.55 8,758,475.01
Travel allowances 8,680,420.02 17,548,088.82
Market development fees 1,081,752.10 3,731,023.44
Medical cooperation project fees 97,082.20 13,030,006.63
Others 96,762,085.92 107,911,326.16
2,305,909,071.71 2,198,243,216.29
225
V Notes to the consolidated financial statements (Continued)
47. Administrative expenses
2017 2016
Employees payroll and welfare benefits 512,141,139.52 530,882,424.95
Rental expenses 33,667,526.23 30,369,873.36
Office allowances 29,796,762.42 29,046,348.45
Depreciation expenses 23,860,275.81 36,971,425.20
Amortization of intangible assets 18,027,511.52 21,705,866.13
Entertainment expenses 14,034,565.91 12,710,489.90
Agency service fees 12,473,242.98 32,970,956.21
Technical service fees 12,148,374.10 10,144,510.68
Amortization of long-term deferred
expenses 9,347,654.01 9,587,280.65
Vehicle management expenses 9,162,933.83 9,208,714.11
Travel allowances 9,160,614.98 10,147,753.39
Utilities 7,206,977.34 9,907,096.21
Taxations 6,530,342.04 13,595,999.15
Repairing fees 4,596,365.92 4,993,442.67
Promotion and marketing expenses 3,284,160.48 7,579,873.98
Research and development expenses - 43,731,710.17
Others 30,515,520.04 46,219,324.86
735,953,967.13 859,773,090.07
48. Finance costs
2017 2016
Interest expenses 135,832,879.33 133,781,778.31
Less: Interest income (35,012,199.48) (30,140,350.40)
Purchase cash discount (28,158,611.39) (35,617,404.69)
Exchanges (gain)/loss (495,664.83) 469,079.01
Others 38,194,135.93 33,363,492.75
110,360,539.56 101,856,594.98
226
V Notes to the consolidated financial statements (Continued)
49. Impairment loss
2017 2016
Inventories provision 600,411.26 1,562,617.67
Bad debt allowance (3,071,108.00) (10,112,607.48)
(2,470,696.74) (8,549,989.81)
50. Investment income
2017 2016
Investment income from long-term equity investments
under the equity method (Note V(10)) 263,825,834.56 97,075,494.40
Investment income from disposal of subsidiaries - 86,674,065.35
Investment income from disposal of long-term equity
investments (Note V(10), V(35)) - 4,162,157.57
Investment income from available-for-sale financial
assets 579,444.98 476,094.35
Gain from remeasurement of fair value of remaining
equity interest upon loss of control - 35,080,116.91
Remeasurement of the original ownership based on fair
value during step by step acquisition to recognize
investment income 134,740.70 -
264,540,020.24 223,467,928.58
51. Gain on disposal of assets
2017 2016
Gain on disposal of fixed assets 792,663.68 9,435,488.48
Gain on disposal of intangible assets - (4,117.37)
Gain on disposal of other non-current assets (525.30) (256,267.46)
792,138.38 9,175,103.65
227
V Notes to the consolidated financial statements (Continued)
52. Other income
Government grants relevant to daily operation：
2017 2016 Related to asset/income
Logistics standardization project 546,246.84 - Related to asset
Guangxi Logistics Project 496,406.40 - Related to asset
Subsidy for comprehensive experimental
unit of modern service industry 300,000.00 - Related to asset
Third party medicine modern logistics
public information platform 18,800.40 - Related to asset
Transferred in from deferred income 1,278,335.31 - Related to asset
2,639,788.95 -
Government support funding 8,394,375.00 - Income related
Government grants for medicine reserve
expenses 3,210,000.00 - Income related
Enterprise economy award 2,400,000.00 - Income related
Tax return 1,335,908.17 - Income related
Economic contribution award 641,300.00 - Income related
Others 5,534,246.35 - Income related
21,515,829.52 -
24,155,618.47 -
53. Non-operating income
2017 2016
Gain from writing off the unnecessary payment 3,385,203.85 2,879,312.96
Government grants irrelevant to daily operation 2,698,408.56 2,698,408.56
Government grants relevant to daily operation - 32,947,486.94
Gain from compensation for breach of contracts - 3,370,000.00
Others 5,328,875.80 6,544,256.83
11,412,488.21 48,439,465.29
All non-operating income was wholly classified as non-recurring profit or loss in 2017.
228
V Notes to the consolidated financial statements (Continued)
53. Non-operating income (Continued)
Government grants are as follow：
2017 2016 Related to asset/income
Special funds granted for Shenzhen
Biological Industries Development - 4,874,999.99 Asset related
Resettlement Compensation of Guangxi Asset related
Logistics 2,698,408.56 2,698,408.56
Cephalosporin Solid Preparations Asset related
Development Project - 1,958,895.80
Transferred in from other deferred Asset related
amortization income - 7,536,813.82
2,698,408.56 17,069,118.17
Strategic Emerging Industries Funding of
2016 - 4,452,000.00 Income related
Government grants for medicine reserve Income related
expenses - 3,210,285.43
Tax return - 1,978,691.91 Income related
Economic contribution award - 2,361,700.00 Income related
Government-funded interest discount - 420,005.49 Income related
Others - 6,154,094.50 Income related
- 18,576,777.33
2,698,408.56 35,645,895.50
54. Non-operating expenses
2017 2016
Penalty expenses 4,808,339.15 2,139,975.89
Loss of disposal of non-current asset 1,184,152.43 -
Donation expenses 123,600.00 144,093.77
Lawsuit expenses - 1,798,546.83
Expenses on compensation for breach of contracts - 141,519.09
Others 3,158,103.12 1,291,828.85
9,274,194.70 5,515,964.43
Non-operating cost was wholly classified as non-recurring profit or loss in 2017.
229
V Notes to the consolidated financial statements (Continued)
55. Expenses by nature
The cost of operations, selling and distribution expenses, administrative expenses are classified
by nature and listed as follows:
2017 2016
Inventories of finished and work in progress
goods/Cost of inventories 36,740,876,853.01 35,959,030,423.27
Employees payroll and welfare benefits 1,740,090,218.21 1,732,735,557.97
Rental expenses 631,327,946.24 580,007,329.89
Depreciation and amortization 179,809,422.71 212,843,144.88
Utilities 115,159,397.61 83,232,077.64
Transportation charges 65,173,013.85 81,908,414.89
Office telecom and internet expenses 63,921,946.33 65,584,889.96
Promotion and marketing expenses 45,420,267.80 53,688,891.99
Entertainment expenses 41,560,563.65 48,566,085.69
Storage expenses 34,503,559.49 40,718,215.96
Technical service fees 28,656,815.38 10,144,510.68
Travel allowances 24,316,505.13 36,415,567.02
Repairing fees 15,542,580.93 20,573,923.14
Conference expenses 13,027,031.26 12,314,057.40
Agency service fees 12,473,242.98 32,970,956.21
Taxation 6,530,342.04 13,595,999.15
Consumption of raw materials and low
value consumables 569,170.72 497,914,187.65
Medical cooperation projects fees 97,082.20 13,030,006.63
Research and development expenses - 43,731,710.17
Others 102,359,995.10 167,171,106.32
39,861,415,954.64 39,706,177,056.51
56. Income taxes
2017 2016
Current income tax 320,134,496.02 309,340,914.04
Deferred income tax (10,844,368.30) 9,036,378.87
309,290,127.72 318,377,292.91
230
V Notes to the consolidated financial statements (Continued)
56. Income taxes (Continued)
The reconciliation from income tax calculated based on applicable tax rates and total profit presented in the
consolidated financial statements to the income taxes is shown below:
2017 2016
Total profit 1,466,028,973.81 1,600,153,103.82
Income taxes calculated at applicable tax rates 366,507,243.45 400,038,275.96
Lower tax rates enacted by local authorities (23,029,239.44) (40,990,086.30)
Income not subject to tax (66,135,005.06) (58,531,898.44)
Expenses not deductible for tax 16,141,202.89 19,528,705.90
Deductible loss on unconfirmed deferred tax assets at
end of the year 2,038,165.18 1,650,692.62
Impact of the temporary discrepancy on unconfirmed
deductible deferred tax assets at end of the year 60,680.50 -
Utilization of previously unrecognized tax losses 422,558.70 -
Additional deduction for development costs - (4,907,807.98)
Gain on deferred tax of beginning of the year from the
changes of tax rate - (237,247.82)
Adjustment of income tax expense of previous years 13,284,521.50 1,826,658.97
Income tax 309,290,127.72 318,377,292.91
57. Earnings per share
The basic earnings per share is calculated by dividing the consolidated net profit of the current year
attributable to the ordinary shareholders of the Company by the adjusted weighted average number of
ordinary shares outstanding.
In year 2017, the Company had no potential dilutive ordinary shares, and the diluted earnings per share was
the same as the basic earnings per share.
The calculation of basic and diluted earnings per share is as follows:
2017 2016
Earnings
Consolidated net profit attributable to the
shareholders of the parent 1,057,791,930.67 1,186,539,201.93
Net profit attributable to the calculation of EPS 1,057,791,930.67 1,186,539,201.93
Shares
Adjusted weighted average number of ordinary
shares outstanding 428,126,983.00 423,865,068.83
Basic and diluted earnings per share 2.47 2.80
231
V Notes to the consolidated financial statements (Continued)
58. Notes to items in the cash flow statement
Cash receipts related to other operating activities
2017 2016
Rent income 49,295,774.44 51,510,163.93
Interest income 34,998,333.34 27,790,677.04
Government grants except tax return 20,679,921.35 26,130,389.77
Others 235,692,027.77 209,093,043.68
340,666,056.90 314,524,274.42
Cash paid relating to other operating activities
2017 2016
Rental expenses 631,327,946.24 580,007,329.89
Office expenses 47,689,164.33 58,136,994.12
Advertising expenses 45,420,267.80 53,688,891.99
Entertainment expenses 41,560,563.65 48,566,085.69
Bank charges 37,287,542.07 33,643,347.19
Travel expenses 24,316,505.13 36,415,567.02
Conference expenses 13,027,031.26 12,314,057.40
Research and development expenses - 43,731,710.17
Others 605,802,950.13 426,065,165.42
1,446,431,970.61 1,292,569,148.89
Cash received relating to other investing activities
2017 2016
Deposit collected from Modern Pharma 75,259,200.00 -
Received funds pool money returned by
Sinopharm - 1,398,519,242.56
Received entrusted loan payments - 177,949,000.00
Others - 28,537,597.76
75,259,200.00 1,605,005,840.32
232
V Notes to the consolidated financial statements (Continued)
58. Notes to items in cash flow statement (Continued)
(d) Cash paid relating to other investing activities
2017 2016
Entrusted borrowings paid to Zhijun Suzhou 44,000,000.00 -
Deposit money in funds pool of Sinopharm - 1,134,349,654.83
Purchase of equity sincerity margin - 95,259,200.00
Others 48,803,476.90 44,765,492.10
92,803,476.90 1,274,374,346.93
(e) Cash received relating to other financing activities
2017 2016
Received bank factoring money 237,539,708.52 105,886,340.26
Received security deposit of pledged borrowings - 96,527,395.45
Received borrowings from Sinopharm Group - 94,000,000.00
Others 937,000.00 1,585,588.50
238,476,708.52 297,999,324.21
(f) Cash payments relating to other financing activities
2017 2016
Purchase of equity of minority shareholders 158,996,642.00 10,859,800.00
Repayment of entrusted borrowings provided by - 369,331,500.00
Sinopharm Group
Others 91,402,261.79 90,408,556.33
250,398,903.79 470,599,856.33
233
V Notes to the consolidated financial statements (Continued)
59. Supplementary information of the cash flow statement
Reconciliation of net profit to cash flows from operating activities
2017 2016
Net profit 1,156,738,846.09 1,281,775,810.91
Adjustments: Provision for asset impairment (2,470,696.74) (8,549,989.81)
Depreciation of fixed assets and investment
properties 82,437,451.62 140,060,739.41
Amortization of intangible assets 25,334,120.64 25,854,177.17
Amortization of long-term prepaid expenses 72,037,850.45 53,800,810.95
Gains on disposal of fixed assets, and other
non-current assets 203,279.86 (14,415,829.68)
Finance costs 70,005,833.78 59,819,773.12
Investment income (264,540,020.24) (223,467,928.58)
(Increase)/decrease in deferred tax assets (6,558,160.76) 61,870,822.88
Decrease in deferred tax liabilities (4,652,450.99) (7,159,368.38)
Decrease in inventories 266,979,628.18 134,186,724.84
Increase in operating receivables items (23,111,709.56) (827,552,099.96)
(Decrease)/increase in operating payables
items (11,649,824.85) 767,299,111.27
(Increase)/decrease in restricted operating
cash with restriction (75,462,235.66) 28,819,722.02
Net cash generated from operating activities 1,285,291,911.82 1,472,342,476.16
234
V Notes to the consolidated financial statements (Continued)
59. Supplementary information of the cash flow statement (Continued)
Significant non-cash investing activities
2017 2016
Fixed assets under finance leases - 6,018,400.00
Properties constructed with endorsed notes
receivable - 898,290.60
Purchasing non-controlling interests of
subsidiaries - 273,614,900.00
- 280,531,590.60
Movement of cash
2017 2016
Cash at the end of year 3,673,498,691.48 3,150,915,425.49
Less: cash at the beginning of year 3,150,915,425.49 2,164,444,441.33
Net increase in cash 522,583,265.99 986,470,984.16
235
V Notes to the consolidated financial statements (Continued)
59. Supplementary information of the cash flow statement (Continued)
Acquisition of subsidiaries and operating units
2017 2016
Cash and cash equivalents paid for acquisitions
of subsidiaries and other business units 33,495,020.00 12,870,000.00
Incl: Sinopharm Guoda Taishan Qunkang
Pharmacy Chain Store Co., Ltd. (“Guoda
Taishan”) - 12,870,000.00
Sinopharm Zhuhai 9,249,020.00 -
Sinopharm Maoming 8,300,000.00 -
Sinopharm Heyuan 15,946,000.00 -
Add: Consideration of previous acquisition paid
in the current period 44,667,145.33 -
Incl: Guoda Taishan 6,930,000.00 -
Shanxi Guoda Wanmin Pharmacy Chain
Store Co., Ltd. 13,720,000.00 -
Shijiazhuang Lerentang Yikang Pharmacy
Chain Store Co., Ltd. 24,017,145.33 -
Less: Cash held by subsidiaries at the acquisition
date 24,805,649.18 1,230,803.89
Incl: Guoda Taishan - 1,230,803.89
Sinopharm Zhuhai 8,291,340.47 -
Sinopharm Maoming 309,174.70 -
Sinopharm Heyuan 16,205,134.01 -
Net cash outflow on acquisition of the subsidiaries
and business units 53,356,516.15 11,639,196.11
236
V Notes to the consolidated financial statements (Continued)
59. Supplementary information of the cash flow statement (Continued)
Disposal of subsidiaries and operating units
2017 2016
Cash and cash equivalents received from disposals
of subsidiaries and other business units - 157,800,000.00
Incl: Zhijun Suzhou - 157,800,000.00
Cash and cash equivalents received from disposals
of subsidiaries and other business units - 156,111,000.00
Less: Amount of cash and cash equivalents in the
subsidiaries or business units disposed of - 261,638,131.30
Incl: Zhijun Suzhou - 27,265,118.87
Zhijun Medicine - 160,575,763.61
Zhijun Trade - 22,707,838.32
Zhijun Pingshan - 51,089,410.50
Net amount of cash received from disposals of
subsidiaries and other business units - 105,527,131.30
Cash
2017 2016
Cash on hand 6,208,674.32 6,164,382.85
Bank deposits on demand 3,667,290,017.16 3,144,751,042.64
Cash 3,673,498,691.48 3,150,915,425.49
237
V Notes to the consolidated financial statements (Continued)
60. Assets under restricted ownership or right to use
2017 2016 Note
Cash and cash equivalents 518,156,747.03 369,046,139.44 Note 1
Notes receivable that were
Note 2
endorsed - 5,035,500.82
Notes receivable that were
Note 3
discounted 147,715,527.67 154,468,694.89
Notes receivable that were
- - Note 4
pledged
665,872,274.70 528,550,335.15
Note 1: At 31 December 2017, the Group had deposits of bank acceptance notes, deposits of pledged
borrowings and time deposits with maturities over 3 months amounting to RMB518,156,747.03
(31 December 2016: RMB369,046,139.44)(Note V(1)).
Note 2:At 31 December 2017, the Group had no notes receivable endorsed but not due (31 December
2016: RMB5,035,500.82) (Note V (2)).
Note 3:At 31 December 2017, the Group had notes receivable of RMB147,715,527.67 discounted but
not due(31 December 2016: RMB154,468,694.89) (Note V (2)).
Note 4:At 31 December 2017, the Group had no pledged notes receivable(31 Decemeber 2016: nil)
(Note V(2)).
61. Foreign monetary items
31 December 2017 31 December 2016
Original Exchange Equivalent to Original Exchange Equivalent to
currency rate RMB currency rate RMB
Short-term - - - - - -
borrowings
United States dollar - - - 2,606,374.92 6.9370 18,080,422.84
Hong Kong dollar - - - 14,728,913.11 0.89451 13,175,160.07
Accounts receivable - - - - - -
United States dollar - - - - - -
Hong Kong dollar - - - - - -
GBP - - - - - -
Accounts payable - - - - - -
United States dollar - - - - - -
- 31,255,582.91
VI Changes in the scope of consolidation
1. Business combinations not involving enterprises under common control
1.1 The acquisition of Sinopharm Zhuhai
In 2017, the Company acquired a 90% equity interest of Sinopharm Zhuhai from the original shareholder
Xianjiang Li for RMB9,249,020.00 to constitute a business combination involving enterprises not under
238
common control. After the acquisition, Sinopharm Zhuhai became a wholly-owned subsidiary of the
Company.
The acquisition was completed on 10 January 2017 and included in the consolidation scope of the
Company.
The fair values and carrying amounts of identifiable assets and liabilities and contingent liabilities of
Sinopharm Holding on acquisition date are presented as follows:
1 January 2017 1 January 2017
Fair value Carrying amount
Cash and bank balances 8,291,340.47 8,291,340.47
Accounts receivable 38,352,380.34 38,352,380.34
Advances to suppliers 691,449.73 691,449.73
Other receivables 197,452.75 197,452.75
Inventories 5,631,660.80 5,631,660.80
Other current assets 70,586.25 70,586.25
Fixed assets 231,851.20 231,851.20
Deferred tax assets 18,948.83 18,948.83
Short-term borrowings 5,000,000.00 5,000,000.00
Accounts payable 27,973,921.23 27,973,921.23
Advance from customers 2,890.29 2,890.29
Employee benefits payable 448,052.95 448,052.95
Tax payables 138,132.16 138,132.16
Dividends payable 4,411,606.70 4,411,606.70
Interest payable 6,645.72 6,645.72
Other payable 11,914,242.79 11,914,242.79
Net assets 3,590,178.53 3,590,178.53
3,590,178.53 3,590,178.53
Goodwill arising from acquisition 6,772,561.47
10,362,740.00 (Note)
Note: The amount includes cash of RMB9,249,020.00 paid by the Company in the business combination
and the fair value of RMB1,113,720.00 of the 10% equity interests in Sinopharm Holding Zhuhai held prior
to the acquisition date determined on the basis of the assessment.
Operating results and cash flows of Sinopharm Zhuhai for the period from the acquisition date to the end
of the year are presented as follows:
Period from 1 January 2017 to 31
December 2017
Operating revenue 117,365,818.79
Net profit 2,672,750.56
Net cash flows ( 1,922,474.14)
239
VI. Changes in scope of consolidation (Continued)
1. Business combinations not involving enterprises under common control (Continued)
1.2 The acquisition of Sinopharm Maoming
In May 2017, the Company acquired a 100% equity interest of Sinopharm Maoming from the
former shareholders for RMB8,300,000 to constitute a business combination involving
enterprises not under common control. The acquisition was completed on 31 May 2017 and
included in the consolidation scope of the Company.
The fair values and carrying amounts of identifiable assets and liabilities and contingent
liabilities of Sinopharm Holding Maoming on the acquisition date are presented as follows:
31 May 2017 31 May 2017
Fair value Carrying amount
Cash and bank balances 309,174.70 309,174.70
Accounts receivable 25,291,868.60 25,291,868.60
Advances to suppliers 187,299.70 187,299.70
Other receivables 230,234.20 230,234.20
Inventories 4,591,053.97 4,591,053.97
Other current assets 245,979.65 245,979.65
Fixed assets 70,993.59 70,993.59
Deferred tax assets 94,939.00 94,939.00
Accounts payable 4,372,895.28 4,372,895.28
Tax payables 381,225.91 381,225.91
Dividends payable 18,033,839.29 18,033,839.29
Net assets 8,233,582.93 8,233,582.93
8,233,582.93 8,233,582.93
Goodwill arising from acquisition 66,417.07
8,300,000.00 (Note)
Note: The amount of RMB8,300,000.00 is the cash paid by the Company in the business combination.
Operating results and cash flows of Sinopharm Maomingfor the period from the acquisition date to the end
of the year are presented as follows:
Period from 31 May 2017 to 31 December
2017
Operating revenue 22,550,752.89
Net profit 53,907.26
Net cash flows 5,418,751.04
240
VI. Changes in scope of consolidation (Continued)
1. Business combinations not involving enterprises under common control (Continued)
1.3 The acquisition of Sinopharm Heyuan
In October 2017, the Company increased capital of Sinopharm Heyuan to 70% for RMB15,946,000.00 to
constitute a business combination involving enterprises not under common control. The acquisition was
completed on 31 October 2017 and included in the consolidation scope of the Company.
The fair values and carrying amounts of identifiable assets and liabilities and contingent liabilities of
Sinopharm Holding Heyuan on the acquisition date are presented as follows:
31 October 2017 31 October 2017
Fair value Carrying amount
Cash and bank balances 16,205,134.01 16,205,134.01
Accounts receivable 27,197,357.55 27,197,357.55
Advances to suppliers 1,322,330.43 1,322,330.43
Other receivables 57,151.12 57,151.12
Inventories 4,577,049.22 4,577,049.22
Fixed assets 50,096.77 50,096.77
Deferred tax assets 252,355.62 252,355.62
Accounts payable 4,019,304.07 4,019,304.07
Employee benefits payable 70,384.00 70,384.00
Tax payables 1,441,668.64 1,441,668.64
Dividends payable 672,396.36 672,396.36
Other payable 15,044,832.91 15,044,832.91
Non-current liabilities due within 1 year 3,900,000.00 3,900,000.00
Long-term borrowings 1,650,000.00 1,650,000.00
Net assets 22,862,888.74 22,862,888.74
Less: Non-controlling interests (6,858,866.62) (6,858,866.62)
16,004,022.12 16,004,022.12
Amount exceeding the cost of merger recognized
as profit or loss of the current period ( 58,022.12)
15,946,000.00
Operating results and cash flows of Sinopharm Heyuan for the period from the acquisition date to the end
of the year are presented as follows:
Period from 31 October 2017 to 31
December 2017
Operating revenue 9,870,521.01
Net profit 973,031.33
Net cash flows (8,110,018.63)
241
VI. Changes in scope of consolidation (Continued)
2. Business combination under common control
In 10 March 2017, the Company signed the Sinopharm Lerentang Shijiazhuang Pharmaceutical
Equity Transfer Agreement with Sinopharm Le-Ren-Tang Medicine Co., Ltd. According to the
agreement, Sinopharm Hebei Lerentang Pharmacy Chain Store acquired a 100% equity interest of
Sinopharm Lerentang Shijiazhuang Pharmaceutical from Sinopharm Le-Ren-Tang Medicine for
RMB3,792,639.98. The investment consideration is the net asset value of Sinopharm Lerentang
Shijiazhuang Pharmaceutical at the time of transfer. On 10 March 2017, both parties have completed
the change of business registration.
As both entities of the business combination are controlled by Sinopharm Holding Co., Ltd. before
and after the combination and the control is not temporary, this is a business combination involving
enterprises under common control. The date of combination is 10 March 2017.
Operating results and cash flows of Sinopharm Lerentang Shijiazhuang Pharmaceutical for the
period from the prior accounting period to the acquisition date and for the prior accounting period are
presented as follows:
Period from 1 January 2017
to 28 February 2017 2016
Operating revenue - (87,657.45)
Net profit (1,096.00) (104,495.57)
Net cash flows (1,096.00) (130,082.33)
The carrying amounts of assets and liabilities of Sinopharm Lerentang Shijiazhuang
Pharmaceutical at the combination date and at the balance sheet date of the prior accounting
period are presented as follows:
28 February 2017 31 December 2016
Cash and bank balances 4,903.95 5,999.95
Other receivables 3,785,780.34 3,785,780.34
Other current assets 1,955.69 1,955.69
Net assets 3,792,639.98 3,793,735.98
Consolidation difference(Included in quity) -
Consolidated consideration 3,792,639.98
242
VI. Changes in scope of consolidation (Continued)
3. Establishment of subsidiaries
31 December 2017 2017
Net assets Net profit
Sinopharm Holding GuoDa Pharmacy Chain Store
Anshan Co., Ltd. 9,400,976.25 (365,628.99)
Sinopharm Holding Guoda Drug Store Manchuria Co.,
Ltd. 953,568.69 17,729.90
Sinopharm Holding Guoda Yongsheng Drug Store
（Shanghai） Co., Ltd.(a) - -
Sanhe Lixin Golden Elephant Drugstore Co., Ltd.(b) - -
Sinopharm Holding GZ Medical Supply Chain Service
Co., Ltd. 2,237,488.00 (674,512.00)
Sinopharm Holding GZ Medical Technology Co., Ltd. (143,887.00) (2,364,287.00)
（a） On 31 August 2017, the Group and a natural person Ping Yu set up Sinopharm Holding Guoda
Yongsheng Drug Store （Shanghai） Co., Ltd. Registered capital subscribed RMB 440,000.00 and RMB
360,000.00 respectively. As of 31 December 2017, funding has not yet been completed.
（b） On 30 September 2017, the Group set up Sanhe Lixin Golden Elephant Drugstore Co., Ltd. Subscription
of registered capital of RMB10,000.00. As of the end of 2017, funding has not yet been completed.
4. Cancellation of subsidiary
Registered Reason for
Principal capital no longer
place of Place of (RMB Nature of being a
business establishment ‘0,000) business Shareholding (%) subsidiary
Direct Indirect
Sinopharm
Holding
Guoda
Shenyang Wholesale and
Tianyitang sales of
Pharmacy medicines and
Chain Store health Absorption
Co., Ltd. (a) Shenyang Shenyang 200 products - 51.00% merger
（a） In August 2017, Sinopharm Holding Guoda Shenyang Tianyitang Pharmacy Chain Store Co.,
Ltd.(“Shenyang Tianyitang”) increased capital in Sinopharm Holding GuoDa Shenyang
Pharmacy Chain Store Co., Ltd.(“Shenyang Guoda”) In the form of equity. Shenyang Tianyitang
completed the procedures for the cancellation of business registration on 15 August 2017 and
cancelled the legal entity. Shenyang Tianyitang continues its operation in the form of Shenyang
Guoda.
243
VII Interests in other entities
1． Interests in subsidiaries
(1) The composition of the Group
Registered Shareholding
Principal
Place of Nature of capital Voting Ways of
Subsidiaries place of
incorporation business (RMB Direct Indirect proportion acquisition
business
0.000)
Sinopharm Guilin Guilin Guilin Commercial 2,000 - 100.00% 100.00% Establishment
Sinopharm Baise Baise Baise Commercial 3,500 - 100.00% 100.00% Establishment
Sinopharm Holding
Zhongshan Co.,
Ltd. (“Sinopharm
Zhongshan") Zhongshan Zhongshan Commercial 3,000 100.00% - 100.00% Establishment
Sinopharm Guigang Guigang Guigang Commercial 2,000 - 100.00% 100.00% Establishment
Sinopharm Beihai Beihai Beihai Commercial 1,500 - 100.00% 100.00% Establishment
Guangzhou Medical
Treatment Guangzhou Guangzhou Commercial 2,000 - 51.00% 51.00% Establishment
Business
Shenzhen Jianmin combinations
Pharmaceutical involving
Co., Ltd. entities under
(“Sinopharm common
Jianmin") Shenzhen Shenzhen Commercial 2,000 100.00% - 100.00% control
Sinopharm Holding
Shenzhen
Traditional & Business
Herbal Medicine combinations
Co., Ltd. involving
(“Sinopharm entities under
Traditional & common
Herbal Medicine") Shenzhen Shenzhen Commercial 1,500 100.00% - 100.00% control
Business
Sinopharm Holding combinations
Shenzhen involving
Logistics Co., Ltd. entities under
(“Shenzhen common
Logistics") Shenzhen Shenzhen Services 500 100.00% - 100.00% control
Business
combinations
Sinopharm Holding involving
Guangzhou Co., entities under
Ltd. (“Sinopharm common
Guangzhou") Guangzhou Guangzhou Commercial 153,000 100.00% - 100.00% control
Business
Sinopharm Holding combinations
Guangdong involving
Hengxing Co., entities under
Ltd. (“Sinopharm common
Hengxing") Guangzhou Guangzhou Commercial 9,600 100.00% - 100.00% control
Business
combinations
involving
entities under
common
Sinopharm Yulin Yulin Yulin Commercial 1,000 - 100.00% 100.00% control
244
VII Interests in other entities (Continued)
1. Interests in subsidiaries (Continued)
(1) The composition of the Group (Continued)
Principal Registered Shareholding
Place of Nature of Voting
Subsidiaries place of establishment
capital(RMB Ways of acquisition
business Direct Indirect proportion
business 0.000)
Business combinations
involving entities under
Sinopharm Liuzhou Liuzhou Liuzhou Commercial 2,053.06 51.00% - 51.00% common control
Guangdong Huixin Business combinations
Investment Co., Ltd. involving entities under
(“Huixin Investment”) Guangzhou Guangzhou Service 500 100.00% - 100.00% common control
Sinopharm Holding Foshan Business combinations
Co., Ltd. (“Sinopharm involving entities under
Foshan") Foshan Foshan Commercial 4,100 100.00% - 100.00% common control
Sinopharm Holding
Guangdong Yuexing Business combinations
Co., Ltd. (“Sinopharm involving entities under
Yuexing”) Guangzhou Guangzhou Commercial 23,000 100.00% - 100.00% common control
Sinopharm Holding
Guangdong Logistics Business combinations
Co., Ltd. (“Guangdong involving entities under
Logistic”) Guangzhou Guangzhou Service 1,300 100.00% - 100.00% common control
Business combinations
involving entities under
Sinopharm Guangxi Nanning Nanning Commercial 50,000 100.00% - 100.00% common control
Business combinations
involving entities under
Guangxi Logistic Nanning Nanning Service 710.07 - 100.00% 100.00% common control
Business combinations
involving entities under
Sinopharm Wuzhou Wuzhou Wuzhou Commercial 1,000 - 99.90% 99.90% common control
Business combinations
involving entities not
Sinopharm Dongguan Dongguan Dongguan Commercial 7,300 100.00% - 100.00% under common control
Business combinations
involving entities not
Sinopharm Zhanjiang Zhanjiang Zhanjiang Commercial 13,100 100.00% - 100.00% under common control
Business combinations
involving entities not
Sinopharm Yanfeng Shenzhen Shenzhen Commercial 3,000 51.00% - 51.00% under common control
Business combinations
involving entities not
Sinopharm Meizhou Meizhou Meizhou Commercial 4,800 100.00% - 100.00% under common control
245
VII Interests in other entities (Continued)
1． Interests in subsidiaries (Continued)
(1) The composition of the Group (Continued)
Registered Shareholding
Principal
Place of Nature of capital Voting
Subsidiaries place of Ways of acquisition
establishment business (RMB Direct Indirect proportion
business
0.000)
Business combinations
involving entities not
Sinopharm Huizhou Huizhou Huizhou Commercial 3,800 100.00% - 100.00% under common control
Business combinations
involving entities not
Sinopharm Zhaoqing Zhaoqing Zhaoqing Commercial 4,000 100.00% - 100.00% under common control
Business combinations
involving entities not
Sinopharm Jiangmen Jiangmen Jiangmen Commercial 6,000 100.00% - 100.00% under common control
Business combinations
involving entities not
Sinopharm Shaoguan Shaoguan Shaoguan Commercial 360 70.00% - 70.00% under common control
Sinopharm Holding
Shantou Co., Business combinations
Ltd.("Sinopharm involving entities not
Shantou”(a)) Shantou Shantou Commercial 2,100 100.00% - 100.00% under common control
Business combinations
Foshan Nanhai Medicine involving entities under
Co., Ltd. Foshan Foshan Commercial 7,000 100.00% - 100.00% common control
Foshan Nanhai Uptodate Business combinations
& Special Medicines involving entities under
Co., Ltd. Foshan Foshan Commercial 4,000 - 100.00% 100.00% common control
Business combinations
Foshan Nanhai Medicine involving entities under
Co., Ltd. Foshan Foshan Commercial 4,000 - 100.00% 100.00% common control
Business combinations
Guangdong Uptodate & involving entities under
Special Medicines Guangzhou Guangzhou Commercial 5,000 100.00% - 100.00% common control
Guangdong South
Pharmaceutical Business combinations
Foreign Trade Co., involving entities under
Ltd. Guangzhou Guangzhou Commercial 3,000 100.00% - 100.00% common control
Sinopharm Holding
Zhuhai Co., Ltd. Business combinations
(“Sinopharm Zhuhai") involving entities not
(i) Zhuhai Zhuhai Commercial 3,000 100.00% - 100.00% under common control
Sinopharm Holding
Maoming Co., Ltd. Business combinations
(“Sinopharm involving entities not
Maoming") (ii) Maoming Maoming Commercial 200 - 100.00% 100.00% under common control
Sinopharm Holding GZ
Medical Technology
Co., Ltd. (iii) Guangzhou Guangzhou Commercial 588 - 51.00% 51.00% Establishment
Sinopharm Holding GZ
Medical Supply
Chain Service Co.,
Ltd. (iv) Guangzhou Guangzhou Commercial 320 - 51.00% 51.00% Establishment
Sinopharm Holding
Heyuan Co., Ltd. Business combinations
(“Sinopharm not involving entities
Heyuan") (v) Heyuan Heyuan Commercial 1,340 - 70.00% 70.00% under common control
Sinopharm Holding Business combinations
Guoda Pharmacy involving entities under
Co., Ltd. Shanghai Shanghai Commercial 101,000 100.00% - 100.00% common control
Sinopharm Holding
Guoda Pharmacy Business combinations
Chain Store involving entities under
Shanghai Co., Ltd. Shanghai Shanghai Commercial 3,000 - 100.00% 100.00% common control
246
VII. Interests in other entities (Continued)
1． Interests in subsidiaries (Continued)
(1) The composition of the Group (Continued)
Subsidiaries Principal Place of Nature of Registered Shareholding Voting Ways of acquisition
place of establishment business capital proportion
business (RMB‘0,000) Direct Indirect
Beijing Guoda Business combinations
Pharmacy Chain involving entities under
Store Co., Ltd. Beijing Beijing Commercial 1,000 - 100.00% 100.00% common control
Tianjin Guoda Business combinations
Pharmacy Chain involving entities under
Store Co., Ltd. Tianjin Tianjin Commercial 1,000 - 80.00% 80.00% common control
Guangxi Guoda
Pharmacy Business combinations
Consulting Chain involving entities under
Store Co., Ltd. Nanning Nanning Commercial 300 - 100.00% 100.00% common control
Sinopharm Holding
Guoda Pharmacy Business combinations
Guangdong Co., involving entities under
Ltd. Shenzhen Shenzhen Commercial 5,000 - 100.00% 100.00% common control
Sinopharm Guoda
Pharmacy Business combinations
Guangxi Chain involving entities under
Co., Ltd. Liuzhou Liuzhou Commercial 200 - 100.00% 100.00% common control
Zhejiang Guoda Business combinations
Pharmacy Co., involving entities under
Ltd. Hangzhou Hangzhou Commercial 1,500 - 100.00% 100.00% common control
Sinopharm Holding
Guoda Yangzhou
Dadesheng Business combinations
Pharmacy Chain involving entities under
Store Co., Ltd. Yangzhou Yangzhou Commercial 4,400 - 93.68% 93.68% common control
Guoda Shenyang Business combinations
Tianyitang involving entities under
Pharmacy Chain Shenyang Shenyang Commercial 1,000 - 51.00% 51.00% common control
Ningxia Guoda Business combinations
Pharmacy Chain involving entities under
Store Co., Ltd. Yinchuan Yinchuan Commercial 7,000 - 70.00% 70.00% common control
Sinopharm Holding
Guoda Nanjing Business combinations
Pharmacy Chain involving entities under
Store Co., Ltd. Nanjing Nanjing Commercial 800 - 60.00% 60.00% common control
Sinopharm Holding
Guoda Shandong Business combinations
Pharmacy Chain involving entities under
Store Co., Ltd. Linyi Linyi Commercial 2,900 - 55.00% 55.00% common control
Sinopharm Holding
Guoda Shenyang Business combinations
Pharmacy Chain involving entities under
Store Co., Ltd. Shenyang Shenyang Commercial 1,800 - 51.00% 51.00% common control
Fujian Guoda Business combinations
Pharmacy Chain involving entities under
Store Co., Ltd. Shamen Shamen Commercial 3,750 - 100.00% 100.00% common control
247
VII. Interests in other entities (Continued)
1． Interests in subsidiaries (Continued)
(1) The composition of the Group (Continued)
Subsidiaries Principal place Place of Nature of Registered Shareholding Voting Ways of acquisition
of business establishment business capital proportio
(RMB‘0,000) n
Direct Indirect
Business combinations
Anhui Guoda Pharmacy involving entities under
Chain Store Co., Ltd. Hefei Hefei Commercial 1,000 - 60.00% 60.00% common control
Quanzhou Guoda Business combinations
Pharmacy Chain Store involving entities under
Co., Ltd. Quanzhou Quanzhou Commercial 2,000 - 51.00% 51.00% common control
Shanxi Guoda Wanmin Business combinations
Pharmacy Chain Store involving entities under
Co., Ltd. Taiyuan Taiyuan Commercial 2,000 - 85.00% 85.00% common control
Sinopharm Holding Hunan
Guoda Minshengtang Business combinations
Pharmacy Chain Co., involving entities under
Ltd. Hengyang Hengyang Commercial 2,000 - 51.00% 51.00% common control
Liyang Guoda People Business combinations
Pharmacy Chain Store involving entities under
Co., Ltd. Liyang Liyang Commercial 2,500 - 80.00% 80.00% common control
Sinopharm Holding Guoda Business combinations
Henan Pharmacy Chain involving entities under
Store Co., Ltd. Pingdingshan Pingdingshan Commercial 1,500 - 60.00% 60.00% common control
Sinopharm Holding Guoda
Inner Mengdia Business combinations
Pharmacy Chain Store involving entities under
Co., Ltd. Hohhot Hohhot Commercial 5,000 - 96.70% 96.70% common control
Sinopharm Hebei Business combinations
Lerentang Pharmacy involving entities under
Chain Store Co., Ltd. Shijiazhuang Shijiazhuang Commercial 3,500 - 60.00% 60.00% common control
Sinopharm Guoda Business combinations
Pharmacy Jiangmen involving entities under
Chain Co., Ltd. Jiangmen Jiangmen Commercial 2,400 - 65.00% 65.00% common control
Sinopharm Holding Guoda
Shanxi Yiyuan Business combinations
Pharmacy Chain Store involving entities under
Co., Ltd. Taiyuan Taiyuan Commercial 1,000 - 80.00% 80.00% common control
Sinopharm Holding Xinjiang
New & Special Business combinations
Medicines Chain Store involving entities under
Co., Ltd. Urumqi Urumqi Commercial 612.24 - 51.00% 51.00% common control
Sinopharm Holding Guoda Business combinations
ForMe Medicines involving entities under
(Shanghai) Co., Ltd. Shanghai Shanghai Commercial 6,655 - 97.00% 97.00% common control
Sinopharm Holding Guoda
ForMe Pharmacy Chain
Store Co., Ltd.
(Formerly “Shanghai
ForMe YiXing Business combinations
Pharmacy Chain Store involving entities under
Co., Ltd.”) Shanghai Shanghai Commercial 5,000 - 99.76% 99.76% common control
248
VII. Interests in other entities (Continued)
1． Interests in subsidiaries (Continued)
(1) The composition of the Group (Continued)
Subsidiaries Principal Place of Nature of Registered Shareholding Voting Ways of acquisition
place of establishment business capital proportion
business (RMB‘0,000) Direct Indirect
Beijing Golden
Elephant Pharmacy Business combinations
Medicine Chain involving entities under
Company Limited Beijing Beijing Commercial 4,222.22 - 53.13% 53.13% common control
Shanxi Tongfeng Business combinations
Pharmacy Logistics involving entities under
Co., Ltd. Taiyuan Taiyuan Commercial 500 - 100.00% 100.00% common control
Datong Guoda
Wanmin Pharmacy Business combinations
Chain Store Co., involving entities under
Ltd. Datong Datong Commercial 615 - 100.00% 100.00% common control
Changzhi Guoda
Wanmin Pharmacy Business combinations
Chain Store Co., involving entities under
Ltd. Changzhi Changzhi Commercial 320 - 51.00% 51.00% common control
Shanxi Guoda Wanmin Business combinations
Clinic Management Medical involving entities under
Chain Co., Ltd. Taiyuan Taiyuan services 120 - 100.00% 100.00% common control
Shanghai Guoda Business combinations
Shanghong Qibao involving entities under
Pharmacy Co., Ltd. Shanghai Shanghai Commercial 100 - 51.00% 51.00% common control
Zhejiang Intlmedicine Business combinations
Pharmacy involving entities under
Dongshan Co., Ltd. Hangzhou Hangzhou Commercial 50 - 51.00% 51.00% common control
Shanghai Guoda Business combinations
Dongsheng involving entities under
Pharmacy Co., Ltd. Shanghai Shanghai Commercial 50 - 100.00% 100.00% common control
Sinopharm Guoda
Drug Store Business combinations
(Shenzhen) Chain involving entities under
Co., Ltd. Shenzhen Shenzhen Commercial 1,080 - 100.00% 100.00% common control
Sinopharm Holding
Guoda Pharmacy Business combinations
Guangzhou Chain involving entities under
Co., Ltd. Guangzhou Guangzhou Commercial 200 - 100.00% 100.00% common control
Shanghai Guoda Business combinations
Changxin involving entities under
Pharmacy Co., Ltd. Shanghai Shanghai Commercial 30 - 100.00% 100.00% common control
Shanghai Guodong
Chinese Traditional Business combinations
Medicine Clinic involving entities under
Co., Ltd. Shanghai Shanghai Medical clinic 20 - 100.00% 100.00% common control
Shanghai Guoda
Dongxin Pharmacy Business combinations
Chain Store Co., involving entities under
Ltd. Shanghai Shanghai Commercial 30 - 100.00% 100.00% common control
249
VII. Interests in other entities (Continued)
1． Interests in subsidiaries (Continued)
(1) The composition of the Group (Continued)
Subsidiaries Principal place of Place of Nature of Registered Shareholding Voting Ways of
business establishment business capital(RMB proportion acquisition
‘0,000)
Direct Indirect
Business
combinations
Shanghai Yutaitang Chinese involving entities
Traditional Medicine Clinic under common
Co., Ltd. Shanghai Shanghai Commercial 100 - 100.00% 100.00% control
Business
combinations
Beijing Yangqiao Rongzhi Golden involving entities
Elephant Pharmacy Company under common
Limited Beijing Beijing Commercial 126 - 50.79% 50.79% control
Business
combinations
involving entities
Sanhe Liyang Golden Elephant under common
Pharmacy Co., Ltd. Langfang Langfang Commercial 1 - 100.00% 100.00% control
Business
combinations
Xiaoyi Guoda Wanmin involving entities
Baicaotang Pharmacy Chain under common
Store Co., Ltd. Xiaoyi Xiaoyi Commercial 622.22 - 70.00% 70.00% control
Business
combinations
involving entities
Sinopharm Holding Guoda under common
Pharmacy Hulun Buir Co., Ltd. Hulun Buir Hulun Buir Commercial 300 - 51.00% 51.00% control
Business
combinations
Shijiazhuang Lerentang Yikang involving entities
Pharmacy Chain Store Co., under common
Ltd. Shijiazhuang Shijiazhuang Commercial 500 - 100.00% 100.00% control
Business
combinations
Sinopharm Tangshan Lerentang involving entities
Pharmacy Chain Store Co., under common
Ltd. Tangshan Tangshan Commercial 300 - 100.00% 100.00% control
Business
combinations
involving entities
under common
ForMe Xuhui Shanghai Shanghai Commercial 25 - 100.00% 100.00% control
Sinopharm Holding Ulanqab Co.,
Ltd. Ulanqab Ulanqab Commercial 500 - 60.00% 60.00% Establishment
Business
combinations
involving entities
Sinopharm Guoda Pharmacy under common
Qinhuangdao Chain Co., Ltd. Qinhuangdao Qinhuangdao Commercial 300 - 51.00% 51.00% control
Business
combinations
Taishan Sinopharm Holding involving entities
Guoda Qunkang Pharmacy under common
Chain Store Co., Ltd. Taishan Taishan Commercial 990 - 70.00% 70.00% control
Business
combinations
involving entities
Beijing Golden Elephant Fuxing under common
Technology Co., Ltd. Beijing Beijing Commercial 100 - 80.00% 80.00% control
Business
combinations
Sinopharm Lerentang involving entities
Shijiazhuang Pharmaceutical under common
Co., Ltd. (vi) Shijiazhuang Shijiazhuang Commercial 200 - 100.00% 100.00% control
250
VII. Interests in other entities (Continued)
1． Interests in subsidiaries (Continued)
(1) The composition of the Group (Continued)
Subsidiaries Principal place of Place of Nature of Registered Shareholding Voting Ways of
business establishment business capital(RMB proportion acquisition
‘0,000)
Direct Indirect
Sinopharm Holding Guoda Drug
Store Manchuria Co., Ltd. (vii) Manchuria Manchuria Commercial 50 - 51.00% 51.00% Establishment
Sinopharm Guoda Drug Store
Anshan Chain Co., Ltd. (viii) Anshan Anshan Commercial 600 - 51.00% 51.00% Establishment
Sinopharm Holding Guoda
Yongsheng Drug Store
（Shanghai） Co., Ltd. (ix) Shanghai Shanghai Commercial 80 - 55.00% 55.00% Establishment
Sanhe Lixin Golden Elephant
Langfang Langfang
Drugstore Co., Ltd. (x) Commercial 1 - 100.00% 100.00% Establishment
i. In 3 March 2015, the Company acquired a 10% equity interest of Sinopharm Zhuhai from a
natural person Xianjiang Li at RMB 1,003,000.00.
In January 2017, the Company acquired a further 90% equity interest of Sinopharm Zhuhai
from the natural person Xianjiang Li at RMB9,249,000.00. As a result, the Company wholly
owned Sinopharm Zhuhai to constitute a business combination involving enterprises not under
common control. The acquisition was completed on 10 January 2017 and included in the
consolidation scope of the Company.
ii. In May 2017, the Company acquired a 100% equity interest of Maoming Yongsheng Medicines
Co., Ltd. from Ganyin Bai, Fuyou Bai and Hongmei Lai at RMB8.3 million to constitute a
business combination involving enterprises not under common control. The acquisition was
completed on 31 May 2017 and included in the consolidation scope of the Company.
iii. In April 2017, the Company and Shanghai Ruibo Medical Technology Co., Ltd. accumulatively
invested RMB2,998,800.00 and RMB2,881,200.00 respectively to set up Sinopharm Holding
GZ Medical Technology Co., Ltd. After the establishment, the Company held 51% of equity
interest in Sinopharm Holding GZ Medical Technology Co., Ltd.
iv. In May 2017, the Company, Guorun Medical Supply Chain Services (Shanghai) Co., Ltd. and
Shanghai Runrui Investment Partnership (limited partnership) accumulatively invested
RMB1,632,000.00, RMB1,280,000.00 and RMB288,000.00 respectively to set up Sinopharm
Holding GZ Medical Supply Chain Service Co., Ltd. After the establishment, the Company held
51% of equity interest in Sinopharm Holding GZ Medical Supply Chain Service Co., Ltd.
v. In October 2017, the Company increased capital in Sinopharm Holding Heyuan to 70% for
RMB15,946,000.00 to constitute a business combination involving enterprises not under
common control. The acquisition was completed on 31 October 2017 and included in the
consolidation scope of the Company.
251
VII. Interests in other entities (Continued)
1． Interests in subsidiaries (Continued)
(1) The composition of the Group (Continued)
vi. On 10 March 2017, the Company signed the Sinopharm Lerentang Shijiazhuang
Pharmaceutical Equity Transfer Agreement with Sinopharm Le -Ren-Tang Medicine Co., Ltd.
According to the Agreement, Sinopharm Hebei Lerentang Pharmacy Chain Store acquired a
100% equity interest of Sinopharm Lerentang Shijiazhuang Pharmaceutical From Sinopharm Le
-Ren-Tang Medicine at RMB3,792,639.98. The investment consideration is the net asset value
of Sinopharm Lerentang Shijiazhuang Pharmaceutical at the time of transfer. On 10 March
2017, both parties have completed the change of business registration.
As both entities of the business combination are controlled by Sinopharm Holding Co., Ltd.
before and after the combination and the control is not temporary, is accounted to a business
combination involving enterprises under common control. The date of combination is 10 March
2017.
vii. On 26 June 2017, the Company and Zhang Mengwei (a natural person) accumulatively
invested RMB255,000.00 and RMB245,000.00 respectively to set up Sinopharm Holding
Guoda Drug Store Manchuria Co., Ltd.
viii. On 30 September 2017, the Company and Anshan Kanghua Advisory Services Co., Ltd.
accumulatively invested RMB3,060,000.00 and RMB2,940,000.00 respectively to set up
Sinopharm Holding GuoDa Pharmacy Chain Store Anshan Co., Ltd.
ix. On 31 August 2017, Sinopharm Holding GuoDa Pharmacy Chain Store Shanghai Co., Ltd. and
a natural person Ping Yu set up Sinopharm Holding Guoda Yongsheng Drug Store （Shanghai）
Co., Ltd., respectively. By subscribing for the registered capital of RMB440,000.00 and
RMB360,000.00. As of the end of 2017, funding has not yet been completed.
x. On 30 September 2017, the Company set up Sanhe Lixin Golden Elephant Drugstore Co., Ltd.
By subscribing for registered capital of RMB10,000.00. As of the end of 2017, funding has not
yet been completed.
There was no subsidiary that had significant non-controlling interests in the Group.
252
VII. Interests in other entities (Continued)
2. Interests in associates
Principal place Place of Nature of
Shareholding(%)
of business incorporation business Accounting
Direct Indirect
Associates
Shenzhen Main Luck
Pharmaceutical Co., Ltd.
("Main Luck
Pharmaceutical ") Shenzhen Shenzhen Manufacturing 35.19 - Equity
Sinopharm Group
Zhijun(Suzhou)
Pharmaceutical Co., Ltd. Suzhou Suzhou Manufacturing 33.00 - Equity
Sinopharm Group
Zhijun(Shenzhen)
Pharmaceutical Co., Ltd. Shenzhen Shenzhen Manufacturing 49.00 - Equity
Shenzhen Zhijun
Pharmaceutical Trade Co.,
Ltd. Shenzhen Shenzhen Commercial 49.00 - Equity
Sinopharm Group
Zhijun(Shenzhen) Pingshan
Pharmaceutical Co., Ltd. Shenzhen Shenzhen Manufacturing 49.00 - Equity
Shanghai Shyndec
Pharmaceutical Co., Ltd.
(“Shyndec
Pharmaceutical”) Shanghai Shanghai Manufacturing 15.56 - Equity
Shanghai Beiyi Guoda
pharmaceutical Co. Ltd. Shanghai Shanghai Commercial - 26.00 Equity
Shanghai Liyi Pharmacy
Co., Ltd Shanghai Shanghai Commercial - 35.00 Equity
Sinopharm Jienuo Medical
Treatment Service
Guangdong Co., Ltd. (g) Guangzhou Guangzhou Commercial - 29.00 Equity
Dongyuan accord
pharmaceutical chain
Co., Ltd. (f) Heyuan Heyuan Commercial - 45.00 Equity
Shyndec Pharmaceutical is an important associate as it is a strategic partner of the Group and is
engaged in the production and sale of pharmaceutical products, and the Group adopted the
equity method of accounting.
253
VII. Interests in other entities (Continued)
2. Interests in associates (Continued)
The following table illustrates the summarised financial information in respect of Shyndec
Pharmaceutical:
2017 2016
Current assets 6,919,923,607.58 6,337,023,883.28
Non-current assets 8,250,667,440.18 8,678,049,960.17
Total assets 15,170,591,047.76 15,015,073,843.45
Current liabilities 5,390,426,266.96 4,711,258,061.30
Non-current liabilities 2,132,391,027.26 3,365,333,778.30
Total liabilities 7,522,817,294.22 8,076,591,839.60
Non-controlling interests 1,474,395,375.11 1,234,500,935.98
Shareholders’ equity attributable to
shareholders of the parent
company 6,173,378,378.43 5,703,981,067.87
Group’s share of net assets by
proportion of ownership interests 979,174,050.63 887,539,454.16
Carrying amount of the investment 979,174,050.63 887,539,454.16
Operating revenue 8,517,753,726.31 9,125,774,773.35
Income taxes 135,212,306.15 182,481,479.60
Net profit 818,572,126.27 854,031,531.27
Other comprehensive income - -
Total comprehensive income 818,572,126.27 854,031,531.27
Dividend received 22,468,818.31 -
254
VIII Risks related to financial instruments
1. Classification of financial instruments
The fair values of each category of financial instruments that reasonably approximate to their
carrying amounts at the end of the reporting period are as follows:
31 December 2017
Borrowings and Available-for-sale
Financial assets Total
receivables financial assets
Cash and cash equivalents 4,191,655,438.51 - 4,191,655,438.51
Notes receivable 1,504,194,764.08 - 1,504,194,764.08
Accounts receivable 7,589,412,679.88 - 7,589,412,679.88
Interest receivables 61,441.11 - 61,441.11
Other receivables 657,871,058.54 - 657,871,058.54
Available-for-sale financial
assets - 13,685,760.00 13,685,760.00
13,943,195,382.12 13,685,760.00 13,956,881,142.12
31 December 2016
Borrowings and Available-for-sale
Other financial assets Total
receivables financial assets
Cash and cash equivalents 3,519,961,564.93 - 3,519,961,564.93
Notes receivable 1,504,000,909.21 - 1,504,000,909.21
Accounts receivable 7,654,225,510.89 - 7,654,225,510.89
Interest receivables 450,722.67 - 450,722.67
Other receivables 478,573,423.62 - 478,573,423.62
Available-for-sale financial
assets - 13,685,760.00 13,685,760.00
13,157,212,131.32 13,685,760.00 13,170,897,891.32
255
VIII Risks related to financial instruments (Continued)
1. Classification of financial instruments (Continued)
Financial liabilities 31 December 2017 31 December 2016
Short-term borrowings 1,561,354,521.64 1,512,713,629.95
Notes payable 2,732,437,828.42 2,406,642,582.86
Accounts payable 6,144,221,000.10 6,701,558,514.10
Dividend payable 11,889,443.11 8,483,370.21
Other payables 1,011,128,397.26 917,193,911.34
Current portion of non-current
liabilities 5,434,770.70 36,411,339.96
Interest payables 7,311,819.65 6,956,463.02
Long-term borrowings 31,600,000.00 -
Long-term payables 9,332,537.14 14,616,598.34
11,514,710,318.02 11,604,576,409.78
2. Transfer of financial assets
Transferred financial assets that are not derecognized in their entirety
As at 31 December 2017, the Group had endorsed commercial bills receivable (the "Endorsed
Bills") to certain of its suppliers in order to settle accounts payable due to such suppliers of nil
(31 December 2016: RMB5,035,500.82 ). During the year, the Group operated a number of
discounting business through several banks in China. At 31 December 2017, the carrying value
thereof was RMB147,715,527.67 (31 December 2016: RMB154,468,694.89). In the opinion of
the directors, the Group has retained the substantial risks and rewards, which include default
risks relating to such Endorsed Bills, and accordingly, it continued to recognize the full carrying
amounts of the Endorsed Bills and the associated accounts payable settled. Subsequent to the
Endorsement, the Group did not retain any rights on the use of the Endorsed Bills, including the
sales, transfer or pledge of the Endorsed Bills to any other third parties. As at 31 December,
2017, the carrying value of accounts payable settled by the Group totalled RMB147,715,527.67
(31 December 2016: RMB159,504,195.71).
256
VIII Risks related to financial instruments (Continued)
2. Transfer of financial assets (Continued)
Transferred financial assets that are derecognized in their entirety in which continuing
involvement exists
As at 31 December 2017, the Group had endorsed commercial bills receivable (the "Endorsed
Bills") to certain of its suppliers in order to settle accounts payable due to such suppliers of
RMB667,900,939.97(31 December 2016: RMB599,814,991.55). During the year, the Group
operated a number of discounting business through several banks in China. At 31 December
2017, the carrying value thereof was RMB367,011,030.59 (31 December 2016:
RMB244,197,730.35). The Derecognized Bills had a maturity of 1 to 12 months at the end of
the reporting period. In accordance with the Law of Negotiable Instruments, the holders of the
Derecognized Bills have a right of recourse against the Group if the accepting banks default
(the “Continuing Involvement”). In the opinion of the directors, the Group has transferred
substantially all risks and rewards relating to the Derecognized Bills. Accordingly, it has
derecognized the full carrying amounts of the Derecognized Bills and the associated accounts
payable. The maximum exposure to loss from the Group's Continuing Involvement in the
Derecognized Bills and the undiscounted cash flows to repurchase these Derecognized Bills is
equal to their carrying amounts. In the opinion of the directors, the fair values of the Group’s
Continuing Involvement in the Derecognized Bills are not significant.
As part of its normal business, the Group entered into an accounts receivable factoring
arrangement (the “Arrangement”) without recourse and transferred certain accounts receivable
to a bank. In the opinion of the directors, the Group has transferred substantially all risks and
rewards under the arrangement. Accordingly, it has derecognized the full carrying amounts of
the associated accounts receivable. The original carrying value of the derecognized accounts
receivable transferred under the Arrangement that have not been settled as at 31 December
2017 amounted to RMB525,614,331.67 (31 December 2016: RMB488,352,191.18).
During 2017, the Group has not recognized any gain or loss on the date of transfer. No gain or
loss were recognized from derecognized financial assets in which Continuing Involvement
exists, both during the year or cumulatively.
During 2017, the Group has not recognized any gain or loss on the date of transfer of the
Derecognized Bills. No gains or losses were recognized from the Continuing Involvement, both
during the year or cumulatively.
257
VIII Risks related to financial instruments (Continued)
3. Risks of financial instruments
The main purpose and policies of financial risk management
The Group's principal financial instruments comprise bank borrowings and cash and short term
deposits. The main purpose of these financial instruments is to raise finance for the Group's
operations. The Group has various other financial assets and liabilities such as accounts
receivable and accounts payable, which arise directly from its operations.
The main risks arising from the Group's financial instruments are interest rate risk, liquidity risk,
foreign currency risk and credit risk.
Credit risk
Credit risk is managed on the basis of the Group. Credit risk mainly arises from cash at banks
and on hand, accounts receivable, other receivables and notes receivable, etc.
The Group expects that there is no significant credit risk associated with cash at banks since it is
deposited with state-owned banks and other medium or large sized listed banks. Management
does not expect that there will be any significant losses from non-performance by these
counterparties.
In addition, the Group has policies to limit the credit exposure on accounts receivable, other
receivables and notes receivable. The Group assesses the credit quality of and sets credit limits
on its customers by taking into account their financial position, the availability of guarantees from
third parties, their credit history and other factors such as current market conditions. The Group
will confirm the balances with its clients regarding the accounts receivable semi-annually, and
assess the recoverability of each account receivable, by using individual evaluation and similar
credit risk group methods. The credit history of the customers is regularly monitored by the
Group. In respect of customers with a poor credit history, the Group will use written payment
reminders, or shorten or cancel credit periods, to ensure the overall credit risk of the Group is
limited to a controllable extent.
Liquidity risk
Cash flow forecasting is performed by each subsidiary of the Group and aggregated by the
Group’s finance department in its headquarter. The Group’s finance department at its
headquarter monitors rolling forecasts of the Group's short-term and long-term liquidity
requirements to ensure it has sufficient cash and securities that are readily convertible to cash to
meet operational needs. In the meanwhile, the Group continually monitors the terms of the debt
covenants in the loan agreements, ensuring that sufficient unutilized commitments from major
financial institutions, in order to meet the short-term and long-term liquidity requirements.
258
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
VIII Risks related to financial instruments (Continued)
3. Risks of financial instruments (Continued)
Liquidity risk (Continued)
The maturity analysis of the Group's financial liabilities as at the end of the reporting period, based on the contractual undiscounted cash flows, is as
follows:
31 December 2017
Within 1 year 1 to 2 years 2 to 5 years Above 5 years Total
Short-term borrowings 1,574,233,015.06 - - - 1,574,233,015.06
Notes payable 2,732,437,828.42 - - - 2,732,437,828.42
Accounts payable 6,144,221,000.10 - - - 6,144,221,000.10
Interest payables 7,311,819.65 - - - 7,311,819.65
Dividend payables 11,889,443.11 - - - 11,889,443.11
Other payables 1,011,128,397.26 - - - 1,011,128,397.26
Current portion of non-current
liabilities 7,304,197.88 - - - 7,304,197.88
Long-term payables - 7,304,197.88 4,987,438.87 - 12,291,636.75
Long-term borrowings 1,293,570.14 1,293,570.14 32,043,003.47 34,630,143.75
11,489,819,271.62 8,597,768.02 37,030,442.34 - 11,535,447,481.98
259
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
VIII Risks related to financial instruments (Continued)
3. Risks of financial instruments (Continued)
Liquidity risk (Continued)
The maturity analysis of the Group's financial liabilities as at the end of the reporting period, based on the contractual undiscounted cash flows, is as
follows (Continued):
31 December 2016
Within 1 year 1 to 2 years 2 to 5 years Above 5 years Total
Short-term borrowings 1,528,507,827.41 - - - 1,528,507,827.41
Notes payable 2,406,642,582.86 - - - 2,406,642,582.86
Accounts payable 6,701,558,514.10 - - - 6,701,558,514.10
Interest payables 6,956,463.02 - - - 6,956,463.02
Dividend payables 8,483,370.21 - - - 8,483,370.21
Other payables 917,193,911.34 - - - 917,193,911.34
Current portion of non-current liabilities 39,425,596.96 - - - 39,425,596.96
Long-term payables - 7,309,963.96 12,300,286.12 - 19,610,250.08
11,608,768,265.90 7,309,963.96 12,300,286.12 - 11,628,378,515.98
260
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
VIII Risks related to financial instruments (Continued)
4. Market risk
Interest rate risk
The Group's interest rate risk arises from long-term borrowings from banks. Financial liabilities
issued at floating rates expose the Group to cash flow interest rate risk. Financial liabilities issued
at fixed rates expose the Group to fair value interest rate risk. The Group determines the relative
proportions of its fixed rate and floating rate contracts depending on the prevailing market
conditions. As at 31 December 2017, if the floating interest rates of the long-term interest-bearing
borrowings increases or decreases by 50 base points, while other factors does not change, the
Group’s net income will decrease or increase by RMB118,500 (31 December 2016: Nil).
Increases in interest rates will increase the cost of new borrowings and the interest expenses with
respect to the Group’s outstanding floating rate borrowings, and therefore could have a material
adverse effect on the Group’s financial position. The Group’s finance department at its headquarter
continuously monitors the interest rate position of the Group and makes decisions with reference to
the latest market conditions. The Group may enter into interest rate swap agreements to mitigate its
exposure to interest rate risk. During 2017 and 2016, the Group did not enter into any interest rate
swap agreements.
For the year ended 31 December 2017, the Group has long-term interest-bearing borrowings with
floating interest rates amounted to RMB 31,600,000.00 (31 December 2016: Nil).
Currency risk
The Group’s major operational activities are carried out in Mainland China and a majority of the
transactions are denominated in RMB. The Group is exposed to foreign exchange risk arising from
the recognized assets and liabilities, and future transactions denominated in foreign currencies,
primarily with respect to United States dollars and Hong Kong dollars. The Group’s finance
department at its headquarter is responsible for monitoring the amounts of assets and liabilities,
and transactions denominated in foreign currencies. The Group may consider entering into forward
exchange contracts or currency swap contracts to mitigate the foreign exchange risk.
As at 31 December 2017, if the currency had weakened/strengthened by 5% against the United
States dollar while all other variables had been held constant, the Group’s net profit for the year
would increase/decrease by nil (2016: RMB678,015.86).
As at 31 December 2017, if the currency had weakened/strengthened by 5% against the Hong
Kong Dollar while all other variables had been held constant, the Group’s net profit for the year
would increase/decrease by nil (2016: RMB494,068.50 ).
261
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
VIII Risks related to financial instruments (Continued)
5. Capital management
The Company’s primary objective for managing capital is to ensure that it maintains a strong credit
rating and healthy capital ratio in order to support its business, maximize shareholders’ value and
benefit related parties. Management also aims to maintain a capital structure that ensures the
lowest cost of capital available to the entity.
Management adjusts the capital structure through adjusting dividend payments to shareholders,
returning capital to shareholders, issuing new shares or selling assets to reduce debts.
The Group’s total capital is the total shareholders’ equity in the balance sheet. The Group does not
adopt an asset ratio as a compulsory factor to govern capital investment.
The gearing ratios of the Group as at the end of the reporting periods were as follows:
2017 2016
Gearing ratio 55.57% 58.17%
IX Disclosure of fair value
The results of fair value measurement are categorized within the fair value hierarchy, described as
follows, based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;
Level 2: other techniques for which all inputs which have a significant effect on the recorded fair
value are observable, either directly or indirectly;
Level 3: techniques which use inputs which have a significant effect on the recorded fair value that
are not based on observable market data.
(1) Assets that are measured at fair value on a recurring basis
The Group has no assets that are measured at fair value on a recurring basis.
(2) Assets that are measured at fair value on a non-recurring basis
The Group has no assets that are measured at fair value on a non-recurring basis.
262
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions
1. Parent
Proportion of Proportion of
Share ownership voting power
Registered capital interest in the in the
address Nature of business (RMB’0,000) Company Company
Industrial investment holding, trustee of a
pharmaceutical enterprise, asset
Sinopharm reorganization, distribution and retail of
Group Shanghai medicines and pharmaceutical products, etc. 276,709.51 56.06% 56.06%
The ultimate controlling party of the Company is CNPGC.
2. Subsidiaries
Refer to Note VII (1) for details of subsidiaries.
3. Associates
Refer to Note VII (2) for details of associates.
4. Other related parties
Company name Related party relationships
Beijing Beishengyan Biological Products Co., Ltd. Controlled by CNPGC
Beijing Fusheng Tiandi Property Management Ltd. Controlled by CNPGC
Beijing Huamiao Pharmaceutical Co., Ltd. Controlled by CNPGC
Beijing Huasheng Pharmaceutical Biotechnology Development Co., Ltd. Controlled by CNPGC
Beijing Tiantan Biological Products Co., Ltd. Controlled by CNPGC
Chengdu Rongsheng Pharmacy Co., Ltd. Controlled by CNPGC
Winteam Pharmaceutical Group Ltd. Controlled by CNPGC
Sinopharm (Guangzhou) Medical Equipment Co., Ltd. Controlled by CNPGC
Sinopharm (Tianjin) Northern Medical Equipment Co., Ltd. Controlled by CNPGC
Group Financial Co. Controlled by CNPGC
Sinopharm Group Chengdu Xinlibang Biological Products Co., Ltd. Controlled by CNPGC
Sinopharm Chuan Kang Pharmaceutical Co., Ltd. Controlled by CNPGC
Foshan Dezhong Pharmaceutical Co., Ltd. Controlled by CNPGC
Foshan Fengliaoxing Pharmaceutical Co., Ltd. Controlled by CNPGC
Sinopharm Fengliaoxing (Foshan) Medicines Co., Ltd. Controlled by CNPGC
Sinopharm Fengliaoxing Medical Hospital Co., Ltd. Controlled by CNPGC
263
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
4. Other related parties (Continued)
Company name Related party relationships
Sinopharm Fujian Medical Examination Co., Ltd. Controlled by CNPGC
China National Pharmaceutical Industry Co., Ltd. Controlled by CNPGC
Guangdong Medi-World Pharmaceutical Co., Ltd. Controlled by CNPGC
Sinopharm Group Guangdong Medicine Device Co., Ltd. Controlled by CNPGC
Sinopharm Guangdong Medical Examination Co., Ltd. Controlled by CNPGC
Sinopharm Hebei Medical Instrument Co., Ltd. Controlled by CNPGC
Anhui Jingfang Pharmaceutical Co., Ltd. Controlled by CNPGC
Guizhou Longlife Pharmaceutical Co., Ltd. Controlled by CNPGC
Sinopharm Holding (Liaoning Province) Medical Instruments Co., Ltd. Controlled by CNPGC
Shandong Lu Ya Pharmaceutical Co., Ltd. Controlled by CNPGC
Sinopharm Group Rongsheng Pharmaceutical Co., Ltd. Controlled by CNPGC
Sinopharm Holding Sanyi Medicine (Wuhu) Co., Ltd. Controlled by CNPGC
Sinopharm ShanXi Ruifulai Pharmaceutical Co., Ltd. Controlled by CNPGC
Sinopharm Shantou Jinshi Pharmaceutical Co., Ltd. Controlled by CNPGC
Sinopharm Group Shanghai Medicine Device Co., Ltd. Controlled by CNPGC
Guizhou Tongjitang Pharmaceutical Co., Ltd. Controlled by CNPGC
The Fourth Pharmaceutical Co., Ltd. of Zhonglian Group Controlled by CNPGC
Sinopharm Xinjiang Pharmaceutical Co., Ltd. Controlled by CNPGC
Sinopharm Group Yibin Pharmaceuticals Co., Ltd. Controlled by CNPGC
Shantou Jinshi Powder Injection Co., Ltd. Controlled by CNPGC
China National Scientific Instruments & Materials Imp/Exp Shenzhen Co., Ltd. Controlled by CNPGC
Wuhan Zhonglian Pharmaceutical Group Co., Ltd. Controlled by CNPGC
Sinopharm Zhuhai Medical Instrument Co., Ltd. Controlled by CNPGC
Reed Sinopharm Exhibitions Co., Ltd. Controlled by CNPGC
Heilongjiang Sinopharm Medical Herbs Co., Ltd. Controlled by CNPGC
Lanzhou Institute of Biological Products Co., Ltd. Controlled by CNPGC
Yuxi Sinopharm Medicine Co., Ltd. Controlled by CNPGC
Pudong New Area of Shanghai Pharmaceutical Medicine Ltd. Controlled by CNPGC
Shanghai Shangsheng Biological Products Co., Ltd. Controlled by CNPGC
Shanghai Modern Hasen (Shangqiu) Pharmaceutical Co., Ltd. Controlled by CNPGC
264
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
4. Other related parties (Continued)
Company name Related party relationships
Shanghai Shyndec Pharmaceutical Marketing Co., Ltd. Controlled by CNPGC
Shanghai Institute of Pharmaceutical Industry Controlled by CNPGC
Sichuan Jiangyouzhongbafuzi Technology Development Co., Ltd. Controlled by CNPGC
Wuhan Institute of Biological Products Co., Ltd. Controlled by CNPGC
China Sinopharm International Corporation Controlled by CNPGC
China National Pharmaceutical Foreign Trade Corporation Controlled by CNPGC
Sinopharm United Engineering Corporation Controlled by CNPGC
Sinopharm Chongqing Pharmaceutical and Medical Industry Design Institute Controlled by CNPGC
China Medical Investment Co., Ltd. Controlled by CNPGC
China National of Traditional&Herbal Medicine Co., Ltd. Controlled by CNPGC
Fresenius Kabi Huarui Pharmaceuticals Co., Ltd. Associate of CNPGC
Changchun Changsheng Gene Pharmaceutical Co., Ltd. Associate of CNPGC
China Otsuka Pharmaceutical Co., Ltd. Associate of CNPGC
Sinopharm Group Co., Ltd. Majority Shareholder
Beijing Sinopharm Tianyuan Real Estate & Property Management Co., Ltd. Controlled by Sinopharm Group
Beijing Tongyu Information Technology Co., Ltd. Controlled by Sinopharm Group
Sinopharm Group Guorui Medicine Co., Ltd. Controlled by Sinopharm Group
Sinopharm Group Chemical Reagent Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Shanxi Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Shanxi Instrument Branch Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Shanghai Likang Pharmaceutical Co., Ltd. Controlled by Sinopharm Group
Sinopharm Group Southwest Medicine Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Xinjiang Xinte Karamay Pharmaceutical Co., Ltd. Controlled by Sinopharm Group
Sinopharm Group Xinjiang Special Drugs National Pharmaceutical Co., Ltd. Controlled by Sinopharm Group
Sinopharm Group Xinjiang Pharmaceutical Co., Ltd. Controlled by Sinopharm Group
China National Medicines Co., Ltd. Controlled by Sinopharm Group
Sinopharm Group Medicine Logistic Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding (Shanghai) Imported Goods Direct Sales Center Co., Ltd. Controlled by Sinopharm Group
Sinopharm Group (Tianjin) Eastern Bokang Pharmaceutical Co., Ltd. Controlled by Sinopharm Group
265
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
4. Other related parties (Continued)
Company name Related party relationships
Sinopharm Holding Tianjin Binhai Pharmaceutical Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Anhui Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Anqing Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Beijing Huahong Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Beijing Kangchen Bio-Pharmaceutical Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Beijing Tianxing Puxin Biological Medical Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Beijing Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Changde Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Changzhou Medical Logistics Center Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Changzhou Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Chenzhou Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Chengdu Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Dalian Hecheng Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Dalian Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Deyang Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Dezhou Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Donghong Medical (Shanghai) Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Ordos Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Sub Marketing Center Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Fujian Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Fuzhou Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Gansu Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Ganzhou Co., Ltd. Controlled by Sinopharm Group
Sinopharm Group Shanghai Management Consulting Branch Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Guizhou Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Hainan Hongyi Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Hainan Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Henan Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Heilongjiang Co., Ltd. Controlled by Sinopharm Group
266
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
4. Other related parties (Continued)
Company name Related party relationships
Sinopharm Holding Hulun Buir Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Hubei New & Special Medicines Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Hubei Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Hunan Weian Pharmacy Medicine Chain Company
Limited Controlled by Sinopharm Group
Sinopharm Holding Hunan Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Huzhou Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Huaideju Pharmaceutical (Xiamen) Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Huaian Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Huangshi Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Jilin Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Jinan Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Jining Co., Ltd. Controlled by Sinopharm Group
Sinopharm Health Solutions (Shanghai) Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Jiangsu Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Jiangxi Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Jinhua Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Jinzhou Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Liaocheng Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Linqu Co., Ltd. Controlled by Sinopharm Group
Sinopharm Lingyun Biopharmaceutical (Shanghai) Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Lu'an Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Longyan Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Lunan Co., Ltd. Controlled by Sinopharm Group
Shanghai Meitai Medical Instruments Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Nanping Newforce Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Nantong Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Inner Mongolia Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Ningde Co., Ltd. Controlled by Sinopharm Group
267
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
4. Other related parties (Continued)
Company name Related party relationships
Sinopharm Holding Ningxia Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Pingdingshan Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Pingliang Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Putian Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Puyang Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Qianxinan Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Qingdao Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Qinghai Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Quanzhou Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Rizhao Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Sanming Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Xiamen Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Shandong Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Shanxi Co., Ltd. Controlled by Sinopharm Group
Sinopharm Group Shanxi Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Shangqiu Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Shenyang Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Biopharmaceutical (Tianjin) Co., Ltd. Controlled by Sinopharm Group
Sinopharm Sichuan Pharmaceutical Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Suzhou Kangmin Pharmaceutical Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Suzhou Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Taizhou Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Taizhou Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Tianjin North Medicine Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Tianjin Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Tianjin Distribution Center Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Tongliao Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Wenzhou Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Ulanqab Co., Ltd. Controlled by Sinopharm Group
268
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
4. Other related parties (Continued)
Company name Related party relationships
Sinopharm Holding Wuxi Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Wuhu Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Xiangtan Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Xiangxi Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Xiangyang Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Xinjiang New & Special Gingsen Antler
Medical Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Kashi New & Special Drugs Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Xinjiang Special Drugs Western
Pharmaceutical Co., Ltd. Controlled by Sinopharm Group
Sinopharm Xingsha Pharmaceuticals (Xiamen) Co., Ltd. Controlled by Sinopharm Group
Sinopharm Group Yibin Pharmaceuticals Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Xuzhou Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Yantai Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Yancheng Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Yangzhou Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Yongzhou Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Yunnan Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Zhangzhou Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Changsha Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Zhejiang Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Chongqing Ruimin Pharmaceutical Co.,
Ltd. Controlled by Sinopharm Group
Sinopharm Holding Chongqing Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Zhoukou Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Zunyi Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Lerentang Pharmaceutical Co., Ltd. Controlled by Sinopharm Group
Sinopharm Lerentang Hebei Medical Instrument Trade Co.,
Ltd. Controlled by Sinopharm Group
Sinopharm Lerentang Qinhuangdao Medicine Co., Ltd. Controlled by Sinopharm Group
Sinopharm Lerentang Shijiazhuang Medicine Co., Ltd. Controlled by Sinopharm Group
Sinopharm Lerentang Tangshan Medicine Co., Ltd. Controlled by Sinopharm Group
Sinopharm Le-Ren-Tang Medicine Co., Ltd. Controlled by Sinopharm Group
269
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
4. Other related parties (Continued)
Company name Related party relationships
Sinopharm Lerentang Zhangjiakou Medicine Co., Ltd. Controlled by Sinopharm Group
Sinopharm Prospect Dentech (Beijing) Co., Ltd. Controlled by Sinopharm Group
China National Pharmaceutical Logistics Co., Ltd. Controlled by Sinopharm Group
Sinopharm Xinjiang Korla Pharmaceutical Co., Ltd. Controlled by Sinopharm Group
Sinopharm Xinxiang Chain Store Co., Ltd. Controlled by Sinopharm Group
Shanxi Guoyi Pharmacy Co., Ltd. Controlled by Sinopharm Group
Shanghai Merro Pharmaceutical Co., Ltd. Controlled by Sinopharm Group
Shanghai Tongyu Information Technology Co., Ltd. Controlled by Sinopharm Group
Xinjiang Baitong Property Service Co., Ltd. Controlled by Sinopharm Group
Yangzhou Weikang Pharmaceutical Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Suzhou Co., Ltd. Controlled by Sinopharm Group
China National Pharmaceutical Group Shanghai Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Huangshan Health Industry Co., Ltd. Associate of Sinopharm Group
Sinopharm Health Online Co., Ltd. Associate of Sinopharm Group
Sinopharm Holding Financing Lease Co., Ltd. Associate of Sinopharm Group
Hutchison Whampoa Sinopharm Pharmaceuticals (Shanghai) Co., Ltd. Associate of Sinopharm Group
Hubei Medical Group Co., Ltd. Associate of Sinopharm Group
Shanghai Guoda Lingyun Pharmacy Co., Ltd. Associate of Sinopharm Group
Shanghai Guoren Pharmacy Co., Ltd. Associate of Sinopharm Group
Sichuan Kang Daxin Pharmaceutical Co., Ltd. Associate of Sinopharm Group
Yichang Humanwell Pharmaceutical Co., Ltd. Associate of Sinopharm Group
Shanghai Fosun Pharmaceutical (Group) Co., Ltd. ("Fosun Pharm") Shareholder who has significant
influence over Sinopharm Group
Foshan Chancheng Pharmaceutical Co., Ltd. Subsidiary of Fosun Pharm
Foshan Chancheng District Central Hospital Subsidiary of Fosun Pharm
Foshan Chanyixing Medicine Development Co Ltd. Subsidiary of Fosun Pharm
Guilin South pharmaceutical Co., Ltd. Subsidiary of Fosun Pharm
Hunan Dongting Pharmaceutical Co., Ltd. Subsidiary of Fosun Pharm
Jiangsu Fuxing Pharmaceutical Trading Co., Ltd Subsidiary of Fosun Pharm
Jiangsu Huanghe Pharmaceutical Co., Ltd. Subsidiary of Fosun Pharm
Jiangsu Wanbang Pharmacy Marketing Co., Ltd. Subsidiary of Fosun Pharm
270
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
4. Other related parties (Continued)
Company Name Related party relationships
Jinzhou AoHong Pharmaceuticals Co., Ltd. Subsidiary of Fosun Pharm
Shanghai Chaohui Pharmaceutical Co., Ltd. Subsidiary of Fosun Pharm
Shanghai Transfusion Technology Co., Ltd. Subsidiary of Fosun Pharm
Shenyang Hongqi Pharmaceutical Co., Ltd. Subsidiary of Fosun Pharm
Sichuan Hexin Pharmaceutical Co., Ltd. Subsidiary of Fosun Pharm
Suzhou Erye Pharmaceutical Limited Company Subsidiary of Fosun Pharm
Chongqing Haisiman Pharmaceutical Co., Ltd. Subsidiary of Fosun Pharm
Chongqing Yaoyou Pharmaceutical Co., Ltd. Subsidiary of Fosun Pharm
Shenzhen Wanwei Medicine Trading Co., Ltd. Subsidiary of Main Luck Pharmaceutical
Beijing Golden Elephant Fosun Pharmaceutical Co., Ltd. Non-controlling interest of a subsidiary
Beijing Electromechanical Device Group Corporation Non-controlling interest of a subsidiary
Guangdong Jiyuantang Development Co., Ltd. Non-controlling interest of a subsidiary
Guangdong Overseas Chinese Medical Investment Co., Ltd. Non-controlling interest of a subsidiary
Hangzhou Xihu Business Group Corporation Non-controlling interest of a subsidiary
Hunan Minshengtang Investment Co., Ltd. Non-controlling interest of a subsidiary
Huang Lijin Non-controlling interest of a subsidiary
Lerentang Investment Group Co., Ltd. Non-controlling interest of a subsidiary
Linyi Medical Group Co., Ltd. Non-controlling interest of a subsidiary
Pingdingshan Pusheng Pharmaceutical Co., Ltd. Non-controlling interest of a subsidiary
Quanzhou Xintai Biotech Co., Ltd. Non-controlling interest of a subsidiary
Shenzhen Jiufeng Investment Co., Ltd. Non-controlling interest of a subsidiary
Shenyang Pharmaceutical Co., Ltd. Non-controlling interest of a subsidiary
Taishan Qunkang Pharmacy Co., Ltd. Non-controlling interest of a subsidiary
Xiaoyi Xinran Trading Co., Ltd. Non-controlling interest of a subsidiary
Zhang Zhenfang Non-controlling interest of a subsidiary
Nanjing Yuanguang Trading Co., Ltd. Controlled by non-controlling interest of a
subsidiary
Taishan Xiangranhui Trade Co., Ltd Controlled by non-controlling interest of a
subsidiary
Shaoguan Wujiang District Muyang Medicine Information Controlled by non-controlling interest of a
Consultant Co., Ltd. subsidiary
Wang Yang Family member of the non-controlling
shareholder of a subsidiary
Gu Jinhua Controller of non-controlling interest of a
subsidiary
271
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
5. Major transactions between the Group and its related parties
(1) Related party transactions – goods and services
Purchase of goods and receiving of services from related parties
2017 2016
(RMB’0,000) (RMB’0,000)
Sinopharm Holding Sub Marketing Center Co., Ltd. 101,744.54 127,734.29
Sinopharm Group Co., Ltd. 47,891.45 48,852.08
China National Medicines Co., Ltd. 38,102.01 47,680.18
Sinopharm Holding Shanxi Co., Ltd. 22,720.93 10,584.81
Sinopharm Lingyun Biopharmaceutical (Shanghai) Co., Ltd. 21,237.87 20,614.13
Fresenius Kabi Huarui Pharmaceuticals Co., Ltd. 16,178.69 9,085.16
Sinopharm Holding Shanxi Co., Ltd. 15,849.65 7,830.68
Sinopharm Le-Ren-Tang Medicine Co., Ltd. 15,540.66 14,207.29
Sinopharm Holding Shenyang Co., Ltd. 10,902.50 10,969.67
Jiangsu Wanbang Pharmacy Marketing Co., Ltd. 7,288.02 6,335.75
Lanzhou Institute of Biological Products Co., Ltd. 6,978.00 4,203.47
Sinopharm Group Xinjiang Special Drugs National Pharmaceutical Co., Ltd. 6,890.74 7,606.26
Sinopharm Holding Lunan Co., Ltd. 5,007.91 3,309.92
Sinopharm Holding Yangzhou Co., Ltd. 4,561.71 3,999.69
Sinopharm Holding Beijing Co., Ltd. 4,502.72 3,746.40
Shenzhen Main Luck Pharmaceutical Co., Ltd. 3,815.55 4,624.10
Chongqing Yaoyou Pharmaceutical Co., Ltd. 3,529.40 3,418.41
Sinopharm Holding Pingdingshan Co., Ltd. 3,494.08 3,552.47
Sinopharm Holding Inner Mongolia Co., Ltd. 3,428.82 2,447.73
Chongqing Haisiman Pharmaceutical Co., Ltd. 3,157.33 1,855.83
Sinopharm Holding Lerentang Pharmaceutical Co., Ltd. 2,865.65 3,441.44
Sinopharm Holding Jiangsu Co., Ltd. 2,774.47 2,949.60
Sinopharm Holding Fujian Co., Ltd. 2,748.83 1,417.51
Shenzhen Wanwei Medicine Trading Co., Ltd. 2,617.88 2,649.07
Sinopharm Holding Xiamen Co., Ltd. 2,566.00 3,430.20
Sinopharm Holding Hulun Buir Co., Ltd. 2,552.36 2,910.60
Chengdu Rongsheng Pharmacy Co., Ltd. 2,515.11 2,265.23
Sinopharm Lerentang Shijiazhuang Medicine Co., Ltd. 2,274.90 2,679.30
272
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
5. Major transactions between the Group and its related parties (Continued)
(1) Related party transactions – goods and services (Continued)
Purchase of goods and receiving of services from related parties (Continued)
2017 2016
(RMB’0,000) (RMB’0,000)
Winteam Pharmaceutical Group Ltd.
2,037.17 846.52
Sinopharm Holding Hunan Co., Ltd.
1,859.99 2,160.50
Sinopharm Group Medicine Logistic Co., Ltd.
1,511.51 1,958.77
Sinopharm Holding Ningxia Co., Ltd.
1,260.94 1,632.76
Sinopharm Holding Changzhou Medical Logistics Center Co., Ltd.
1,252.80 884.21
Shanghai Merro Pharmaceutical Co., Ltd.
1,098.20 2,273.27
Sinopharm Holding Suzhou Co., Ltd.
972.81 3,087.21
Sinopharm Health Online Co., Ltd.
952.00 368.28
Sinopharm Holding Fuzhou Co., Ltd.
942.42 248.46
Sinopharm Holding Shanxi Instrument Branch Co., Ltd.
906.15 667.54
Shanghai Shangsheng Biological Products Co., Ltd.
885.46 115.33
Yichang Humanwell Pharmaceutical Co., Ltd.
881.03 340.75
Sinopharm Holding Beijing Huahong Co., Ltd.
879.99 503.31
Sinopharm Holding Changzhou Co., Ltd.
877.84 871.15
Sinopharm Holding Beijing Kangchen Bio-Pharmaceutical Co.,
Ltd. 864.11 709.79
Sinopharm Group Zhijun (Shenzhen) PingShan Pharmaceutical
Co., Ltd. 809.83 199.68
Sinopharm Holding Tianjin Co., Ltd.
799.37 -
Sinopharm Holding Xinjiang Special Drugs Western
Pharmaceutical Co., Ltd. 790.45 738.52
Shandong Lu Ya Pharmaceutical Co., Ltd.
741.87 -
Sinopharm Holding Henan Co., Ltd.
643.91 236.60
China National Pharmaceutical Foreign Trade Corporation
613.18 813.13
China Otsuka Pharmaceutical Co., Ltd.
571.64 247.11
Sinopharm Group Zhijun(Shenzhen) Pharmaceutical Co., Ltd.
458.11 190.01
Sinopharm Holding Jinan Co., Ltd.
404.98 76.23
Sinopharm Lerentang Hebei Medical Instrument Trade Co., Ltd.
403.31 336.85
Pudong New Area of Shanghai Pharmaceutical Medicine Ltd.
372.16 -
273
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
5. Major transactions between the Group and its related parties (Continued)
(1) Related party transactions – goods and services (Continued)
Purchase of goods and receiving of services from related parties (Continued)
2017 2016
(RMB’0,000) (RMB’0,000)
Sinopharm Holding Shanghai Likang Pharmaceutical Co., Ltd.
370.93 304.50
Sinopharm Holding Wuxi Co., Ltd.
365.10 258.17
Beijing Golden Elephant Fosun Pharmaceutical Co., Ltd.
360.29 411.80
Sinopharm Group (Tianjin) Eastern Bokang Pharmaceutical Co., Ltd.
291.59 667.51
Shanghai Beiyi Guoda pharmaceutical Co. Ltd.
273.26 234.17
Sinopharm Holding Rizhao Co., Ltd.
267.85 -
Sinopharm Holding Jinzhou Co., Ltd.
260.33 192.38
Guizhou Tongjitang Pharmaceutical Co., Ltd.
252.37 182.28
Sinopharm Holding Yancheng Co., Ltd.
248.55 359.36
Sinopharm Chuan Kang Pharmaceutical Co., Ltd. 243.68 -
Sinopharm Holding Dalian Co., Ltd.
238.38 420.93
Shanghai Shyndec Pharmaceutical Marketing Co., Ltd.
227.57 347.62
Sinopharm Holding Xinjiang Xinte Karamay Pharmaceutical Co., Ltd.
221.06 189.51
Sinopharm Holding Putian Co., Ltd.
212.86 273.20
Sinopharm Holding Donghong Medical (Shanghai) Co., Ltd.
198.58 413.21
Sinopharm Xingsha Pharmaceuticals (Xiamen) Co., Ltd.
186.16 281.13
Shenyang Hongqi Pharmaceutical Co., Ltd.
173.38 36.89
Shanghai Tongyu Information Technology Co., Ltd.
174.25 103.03
Foshan Fengliaoxing Pharmaceutical Co., Ltd.
170.25 114.68
Sinopharm Holding Quanzhou Co., Ltd.
152.62 267.53
Sinopharm Holding Tianjin Distribution Center Co., Ltd.
145.06 850.50
Wuhan Zhonglian Pharmaceutical Group Co., Ltd.
136.59 121.51
Sinopharm Holding Chengdu Co., Ltd. 124.80 120.78
Sinopharm Group Shanxi Co., Ltd.
118.75 362.38
Hutchison Whampoa Sinopharm Pharmaceuticals (Shanghai) Co., Ltd.
104.40 74.56
Anhui Jingfang Pharmaceutical Co., Ltd.
103.19 60.13
Sinopharm Lerentang Qinhuangdao Medicine Co., Ltd.
94.47 25.28
Sinopharm Holding Kashi New & Special Drugs Co., Ltd.
91.65 141.52
274
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
5. Major transactions between the Group and its related parties (Continued)
(1) Related party transactions – goods and services (Continued)
Purchase of goods and receiving of services from related parties (Continued)
2017 2016
(RMB’0,000) (RMB’0,000)
Sinopharm Holding Tongliao Co., Ltd.
87.00 -
Shanghai Modern Pharmaceutical Co., Ltd. (Modern Pharmaceutical)
86.51 (0.13)
Sinopharm Group Guorui Medicine Co., Ltd.
82.70 32.02
Sinopharm Group Rongsheng Pharmaceutical Co., Ltd.
78.21 93.75
Sinopharm Fujian Medical Examination Co., Ltd.
68.04 -
Guizhou Longlife Pharmaceutical Co., Ltd.
64.81 -
Sinopharm Holding Anhui Co., Ltd.
59.02 25.90
China National Scientific Instruments & Materials Imp/Exp Shenzhen Co., Ltd.
57.42 2,688.37
Sinopharm Holding Changsha Co., Ltd.
50.72 -
Sinopharm Holding Dezhou Co., Ltd.
44.25 28.99
Hunan Dongting Pharmaceutical Co., Ltd.
41.31 63.22
Beijing Huasheng Pharmaceutical Biotechnology Development Co., Ltd.
40.04 -
Guangdong Medi-World Pharmaceutical Co., Ltd.
39.88 -
China National Pharmaceutical Industry Co., Ltd.
37.39 23.11
Sinopharm Holding Hubei New & Special Medicines Co., Ltd.
34.38 -
Sinopharm Holding Ulanqab Co., Ltd.
32.21 1.05
Sinopharm Holding Hubei Co., Ltd.
27.50 11.64
Sinopharm Holding Sanyi Medicine (Wuhu) Co., Ltd.
25.23 56.11
Shanghai Transfusion Technology Co., Ltd.
21.50 -
The Fourth Pharmaceutical Co., Ltd. of Zhonglian Group
21.35 47.05
Beijing Tongyu Information Technology Co., Ltd.
17.54 -
Jiangsu Fuxing Pharmaceutical Trading Co., Ltd
17.76 -
Sinopharm Holding Taizhou Co., Ltd. 16.76 -
Sinopharm Holding Beijing Tianxing Puxin Biological Medical Co., Ltd.
16.28 19.02
Sinopharm Holding Jiangxi Co., Ltd.
15.93 -
Sinopharm Group Chengdu Xinlibang Biological Products Co., Ltd.
10.56 -
Sinopharm Holding Xinjiang New & Special Gingsen Antler Medical Co., Ltd.
10.17 -
Sinopharm Group Chemical Reagent Co., Ltd.
9.23 58.65
275
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
5. Major transactions between the Group and its related parties (Continued)
(1) Related party transactions – goods and services (Continued)
Purchase of goods and receiving of services from related parties (Continued)
2017 2016
(RMB’0,000) (RMB’0,000)
Sinopharm Xinjiang Pharmaceutical Co., Ltd.
7.38 -
China National Pharmaceutical Logistics Co., Ltd.
6.71 6.22
Sinopharm Shantou Jinshi Pharmaceutical Co., Ltd.
6.21 16.53
Sichuan Jiangyouzhongbafuzi Technology Development Co., Ltd.
5.62 6.37
Sinopharm ShanXi Ruifulai Pharmaceutical Co., Ltd.
5.39 -
Sinopharm Lerentang Tangshan Medicine Co., Ltd.
5.23 -
Sinopharm Group Southwest Medicine Co., Ltd.
5.08 0.39
Sinopharm Holding Biopharmaceutical (Tianjin) Co., Ltd.
5.04 7.43
Sinopharm Holding Ordos Co., Ltd.
4.76 -
Sinopharm Hebei Medical Instrument Co., Ltd.
4.72 7.96
Sinopharm Holding Tianjin North Medicine Co., Ltd.
4.67 -
Sinopharm Holding Yongzhou Co., Ltd. 3.84 -
Sinopharm Holding Nanping Newforce Co., Ltd.
3.61 -
Foshan Dezhong Pharmaceutical Co., Ltd.
3.46 -
Sinopharm Holding Dalian Hecheng Co., Ltd.
3.29 -
Sinopharm Group Shanghai Medicine Device Co., Ltd.
3.14 -
Sinopharm Holding Jinhua Co., Ltd.
3.09 1.70
Sinopharm Group Yibin Pharmaceuticals Co., Ltd.
1.22 -
Sinopharm Holding Chongqing Co., Ltd.
0.92 -
Sinopharm Prospect Dentech (Beijing) Co., Ltd.
0.56 1.53
Shantou Jinshi Powder Injection Co., Ltd.
0.25 -
Zhijun Suzhou
0.14 2,121.84
Sinopharm (Tianjin) Northern Medical Equipment Co., Ltd.
- 881.88
Wuhan Institute of Biological Products Co., Ltd.
- 118.52
Sinopharm Zhuhai
- 83.53
Sinopharm Holding Shandong Co., Ltd.
- 40.22
Sinopharm Holding Zhejiang Co., Ltd.
- 22.41
Sinopharm Holding Tianjin Binhai Pharmaceutical Co., Ltd.
- 18.21
276
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
5. Major transactions between the Group and its related parties (Continued)
(1) Related party transactions – goods and services (Continued)
Purchase of goods and receiving of services from related parties (Continued)
2017 2016
(RMB’0,000) (RMB’0,000)
Sinopharm Holding Guizhou Co., Ltd.
- 17.57
Beijing Huamiao Traditional Chinese Medicine Technology and Project
Development Centre - 12.02
Sinopharm Holding (Shanghai) Imported Goods Direct Sales Center Co., Ltd.
- 11.09
Sinopharm Holding Zhangzhou Co., Ltd.
- 10.17
Sinopharm Holding Hainan Co., Ltd.
- 7.38
Wuliangye Group of Sichuan YiBin Pharmaceuticals Co., Ltd.
- 5.88
Shanghai Institute of Pharmaceutical Industry
- 5.85
Sinopharm Holding Huangshan Health Industry Co., Ltd.
- 5.77
Suzhou Erye Pharmaceutical Limited Company
- 5.08
Yangzhou Weikang Pharmaceutical Co., Ltd.
- 3.91
Guilin South pharmaceutical Co., Ltd.
- 3.05
Reed Sinopharm Exhibitions Co., Ltd.
- 2.83
Sinopharm Health Solutions (Shanghai) Co., Ltd.
- 1.43
Sinopharm Holding (Liaoning Province) Medical Instruments Co., Ltd.
- 0.35
Sinopharm Group Shanghai Management Consulting Branch Co., Ltd.
- 0.10
Sichuan Hexin Pharmaceutical Co., Ltd.
(0.03) 566.30
394,534.98 397,864.08
277
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
5. Major transactions between the Group and its related parties (Continued)
(1) Related party transactions – goods and services (Continued)
Sale of goods and rendering of services
2017 2016
(RMB’0,000) (RMB’0,000)
Sinopharm (Guangzhou) Medical Equipment Co., Ltd.
22,418.89 4,273.55
Shanghai Beiyi Guoda pharmaceutical Co. Ltd.
12,310.89 10,384.50
Foshan Chancheng Pharmaceutical Co., Ltd.
6,961.50 6,615.77
Sinopharm Holding Hainan Co., Ltd.
6,641.94 5,688.98
Sinopharm Holding Hubei Co., Ltd.
5,641.21 7,210.45
Sinopharm Holding Shandong Co., Ltd.
5,315.11 11,156.36
Sinopharm Holding Hainan Hongyi Co., Ltd.
5,221.78 4,270.75
Sinopharm Holding Beijing Co., Ltd.
4,672.13 7,628.40
Sinopharm Sichuan Pharmaceutical Co., Ltd.
4,466.51 10,130.06
Sinopharm Le-Ren-Tang Medicine Co., Ltd.
4,070.87 5,354.65
Sinopharm Group (Tianjin) Eastern Bokang Pharmaceutical Co., Ltd.
3,978.45 6,407.35
Sinopharm Group Xinjiang Special Drugs National Pharmaceutical Co., Ltd.
2,998.11 5,720.62
Sinopharm Group Co., Ltd.
2,920.98 1,782.65
Sinopharm Holding Wenzhou Co., Ltd.
2,801.62 3,137.23
Sinopharm Holding Henan Co., Ltd.
2,707.85 2,647.79
Sinopharm Holding Beijing Huahong Co., Ltd.
2,599.43 3,195.62
Beijing Golden Elephant Fosun Pharmaceutical Co., Ltd.
2,441.19 92.93
Sinopharm Holding Yunnan Co., Ltd.
2,396.95 2,692.11
Sinopharm Holding Sub Marketing Center Co., Ltd.
2,311.90 4,136.11
Sinopharm Holding Nantong Co., Ltd.
2,274.99 2,795.77
Sinopharm Group Southwest Medicine Co., Ltd.
1,975.09 3,163.28
Pudong New Area of Shanghai Pharmaceutical Medicine Ltd.
1,909.51 -
China National Medicines Co., Ltd.
1,269.66 1,270.90
Sinopharm Holding Tianjin Co., Ltd.
1,146.02 2,388.38
Sinopharm Holding Fuzhou Co., Ltd.
1,108.68 707.38
Sinopharm Holding Ningxia Co., Ltd.
1,031.39 1,814.42
278
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
5. Major transactions between the Group and its related parties (Continued)
(1) Related party transactions – goods and services (Continued)
Sale of goods and rendering of services
2017 2016
(RMB’0,000) (RMB’0,000)
Sinopharm Holding Yangzhou Co., Ltd. 988.43 907.76
Sinopharm Holding Zhejiang Co., Ltd.
899.68 1,032.54
Foshan Chancheng District Central Hospital
777.97 729.18
Sinopharm Holding Shanxi Co., Ltd.
774.50 1,310.69
Sinopharm Holding Hulun Buir Co., Ltd.
722.69 1,161.50
Sinopharm Holding Guizhou Co., Ltd.
708.51 1,197.96
Shanghai Merro Pharmaceutical Co., Ltd.
529.23 1,089.17
Sinopharm Holding Fujian Co., Ltd.
469.70 2,962.93
Sinopharm Lingyun Biopharmaceutical (Shanghai) Co., Ltd.
467.21 -
Sinopharm Holding Gansu Co., Ltd.
455.43 589.38
Sinopharm Holding Xinjiang Special Drugs Western
Pharmaceutical Co., Ltd. 447.12 2,471.29
Sinopharm Holding Jilin Co., Ltd.
420.33 535.65
Sinopharm Holding Shenyang Co., Ltd.
415.35 1,768.44
Sinopharm Holding Hunan Co., Ltd.
391.75 11,281.79
Sinopharm Holding Shanxi Co., Ltd.
343.72 1,037.07
Sinopharm Holding Heilongjiang Co., Ltd.
341.74 2,472.64
Foshan Chanyixing Medicine Development Co Ltd.
287.00 280.69
Shanghai Liyi Drug Store Co., Ltd
225.13 -
Sinopharm Holding Dalian Co., Ltd.
218.46 662.65
Sinopharm Holding Quanzhou Co., Ltd.
217.20 924.73
Sinopharm Holding Qinghai Co., Ltd.
194.00 309.44
Sinopharm Holding Changzhou Co., Ltd.
191.15 48.76
Sinopharm Holding Chengdu Co., Ltd.
171.42 192.03
Shanghai Guoda Lingyun Pharmacy Co., Ltd.
163.77 368.08
Sinopharm Group Medicine Logistic Co., Ltd.
156.84 291.71
Sinopharm Holding Jiangxi Co., Ltd.
123.41 67.84
279
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
5. Major transactions between the Group and its related parties (Continued)
(1) Related party transactions – goods and services (Continued)
Sale of goods and rendering of services
2017 2016
(RMB’0,000) (RMB’0,000)
Sinopharm Holding Anhui Co., Ltd. 120.77 38.69
Sinopharm Holding Beijing Tianxing Puxin Biological Medical Co., Ltd.
118.89 76.12
Sinopharm Holding Dalian Hecheng Co., Ltd.
106.35 48.07
Sinopharm Group Shanxi Co., Ltd.
102.04 59.86
Sinopharm Holding Lunan Co., Ltd.
95.09 370.33
Sinopharm Holding Putian Co., Ltd.
92.30 280.31
Sinopharm Group Guangdong Medicine Device Co., Ltd.
73.42 104.38
Sinopharm Holding Inner Mongolia Co., Ltd.
72.68 90.22
Sinopharm Holding Huaian Co., Ltd.
67.17 2.19
Sinopharm Group Zhijun(Shenzhen) Pharmaceutical Co., Ltd.
65.11 1.23
Hubei Medical Group Co., Ltd.
59.46 -
Sinopharm Holding Zhangzhou Co., Ltd.
57.47 342.74
Sinopharm Holding Wuxi Co., Ltd.
53.75 156.80
Sinopharm Holding Ningde Co., Ltd.
50.41 308.24
Sinopharm Holding Donghong Medical (Shanghai) Co., Ltd.
47.12 98.77
Sinopharm Holding Changzhou Medical Logistics Center Co., Ltd.
44.11 83.18
Sinopharm Holding Nanping Newforce Co., Ltd.
38.97 0.15
Hutchison Whampoa Sinopharm Pharmaceuticals (Shanghai) Co., Ltd.
37.94 40.29
Sinopharm Holding Changsha Co., Ltd.
28.32 -
Sinopharm Group Zhijun (Shenzhen) PingShan Pharmaceutical Co., Ltd.
26.29 -
Sinopharm Holding Yongzhou Co., Ltd.
25.71 -
Yuxi Sinopharm Medicine Co., Ltd.
24.96 -
Sinopharm Holding Chongqing Co., Ltd.
23.62 117.92
Sinopharm Holding Longyan Co., Ltd.
18.30 105.08
China Otsuka Pharmaceutical Co., Ltd.
15.38 -
Sinopharm Holding Ganzhou Co., Ltd.
14.67 -
280
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
5. Major transactions between the Group and its related parties (Continued)
(1) Related party transactions – goods and services (Continued)
Sale of goods and rendering of services
2017 2016
(RMB’0,000) (RMB’0,000)
Sinopharm Holding Huangshi Co., Ltd.
13.51 -
Sinopharm Holding Shanghai Likang Pharmaceutical Co., Ltd.
12.45 19.77
Fresenius Kabi Huarui Pharmaceuticals Co., Ltd.
12.31 -
China National Scientific Instruments & Materials Imp/Exp
Shenzhen Co., Ltd. 12.18 28.43
Sinopharm Holding Xiangyang Co., Ltd.
11.87 16.89
Sinopharm Xinxiang Chain Store Co., Ltd.
11.72 14.14
Sinopharm Holding Wuhu Co., Ltd.
10.80 5.13
Sinopharm Holding Ulanqab Co., Ltd.
9.29 12.26
Sinopharm Fengliaoxing Medical Hospital Co., Ltd.
7.36 0.74
Sinopharm Holding Lu'an Co., Ltd.
4.87 -
Shenzhen Wanwei Medicine Trading Co., Ltd.
3.88 18.14
Sichuan Kang Daxin Pharmaceutical Co., Ltd.
3.32 6.23
Sinopharm Jienuo Medical Treatment Service Guangdong Co.,
Ltd. 3.30 -
Sinopharm Holding Suzhou Co., Ltd.
2.44 -
Sinopharm Holding Shanxi Instrument Branch Co., Ltd.
2.28 3.87
Shenzhen Zhijun Pharmaceutical Trade Co., Ltd.
1.96 -
China National Pharmaceutical Group Corporation
1.90 1.52
Shenzhen Main Luck Pharmaceutical Co., Ltd.
1.83 7.07
Sinopharm Holding Chongqing Ruimin Pharmaceutical Co., Ltd.
1.69 -
Sinopharm Lerentang Zhangjiakou Medicine Co., Ltd.
1.23 -
Sinopharm Zhuhai
1.14 -
Sinopharm Health Online Co., Ltd.
1.07 0.23
Beijing Beishengyan Biological Products Co., Ltd.
0.77 -
Winteam Pharmaceutical Group Ltd.
0.71 1.01
Sinopharm Holding Pingliang Co., Ltd.
0.65 -
Sinopharm Holding Deyang Co., Ltd.
0.62 -
281
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
5. Major transactions between the Group and its related parties (Continued)
(1) Related party transactions – goods and services (Continued)
Sale of goods and rendering of services
2017 2016
(RMB’0,000) (RMB’0,000)
Sinopharm Holding Xiamen Co., Ltd. 0.19 -
Sinopharm Guangdong Medical Examination Co., Ltd.
0.08 17.13
Sinopharm Holding Jinzhou Co., Ltd.
- 1,469.42
Sinopharm Holding Zhuhai Co., Ltd.
- 233.79
Sinopharm Holding Yancheng Co., Ltd.
- 226.95
Sinopharm Holding Xuzhou Co., Ltd.
- 181.23
Sinopharm Holding Taizhou Co., Ltd.
- 136.33
Sinopharm Holding Suzhou Kangmin Pharmaceutical Co., Ltd.
- 102.02
Sinopharm Holding Sanming Co., Ltd.
- 53.37
Sinopharm Lerentang Tangshan Medicine Co., Ltd.
- 49.84
Sinopharm Holding Tianjin Distribution Center Co., Ltd.
- 46.73
Sinopharm Holding Tibet Pharmaceutical Co., Ltd.
- 36.95
Sinopharm Holding Linqu Co., Ltd.
- 30.93
Sinopharm Holding Suzhou Co., Ltd.
- 24.71
Sinopharm Holding Anqing Co., Ltd.
- 20.91
Jiang Meng Renren Medical instrument Co., Ltd.
- 16.80
Sinopharm Holding Tianjin North Medicine Co., Ltd.
- 13.03
China National Pharmaceutical Foreign Trade Corporation
- 12.60
Sinopharm Holding Lerentang Pharmaceutical Co., Ltd.
- 10.71
Sinopharm Holding Yantai Co., Ltd.
- 7.18
Beijing Tiantan Biological Products Co., Ltd.
- 6.07
Sinopharm Holding Jiling Co., Ltd.
- 5.56
Beijing Fusheng Tiandi Property Management Ltd.
- 5.40
Sinopharm Holding Jiangsu Co., Ltd.
- 4.72
China Sinopharm International Corporation
- 4.49
Sinopharm Holding Puyang Co., Ltd.
- 4.45
Shanxi Guoyi Pharmacy Co., Ltd.
- 4.28
282
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
5. Major transactions between the Group and its related parties (Continued)
(1) Related party transactions – goods and services (Continued)
Sale of goods and rendering of services
2017 2016
(RMB’0,000) (RMB’0,000)
Sinopharm Holding Huzhou Co., Ltd.
- 1.43
Sinopharm Holding Qingdao Co., Ltd.
- 1.42
Sinopharm Holding Qianxinan Co., Ltd.
- 1.20
Heilongjiang Sinopharm Medical Herbs Co., Ltd.
- 1.15
Sinopharm Holding Changde Co., Ltd.
- 0.95
Sinopharm Holding Zhoukou Co., Ltd.
- 0.93
Sinopharm Lerentang Qinhuangdao Medicine Co., Ltd.
- 0.59
Sinopharm Holding Beijing Kangchen Bio-Pharmaceutical Co.,
Ltd. - 0.57
Sinopharm Holding Xiangxi Co., Ltd.
- 0.49
Sinopharm Holding Chenzhou Co., Ltd.
- 0.47
Sinopharm Holding Shangqiu Co., Ltd.
- 0.42
Sinopharm United Engineering Corporation
- 0.18
Group Financial Co.
- 0.13
Sinopharm Holding Xiangtan Co., Ltd.
- 0.05
Sinopharm Holding Zunyi Co., Ltd. - (0.45)
126,310.11 153,555.06
283
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
5. Major transactions between the Group and its related parties (Continued)
(2) Related party transactions - leases
As the lessor
Type of
Income from leases in Income from leases in
assets under
2017 (RMB‘0,000) 2016 (RMB‘0,000)
leases
Sinopharm Group Zhijun(Shenzhen) Building
Pharmaceutical Co., Ltd. 98.86 21.24
Shenzhen Zhijun Pharmaceutical Trade Co., Ltd. Building
31.62 -
Sinopharm Group Medicine Logistic Co., Ltd. Equipment
15.40 -
China National Medicines Co., Ltd. Building
4.57 4.32
Sinopharm Holding Sub Marketing Center Co., Ltd. Building
4.57 4.17
Foshan Fengliaoxing Pharmaceutical Co., Ltd. - 6.12
155.02 35.85
As the lessee
Type of
Expenses from leases Expenses from leases
assets under
in 2017 (RMB‘0,000) in 2016 (RMB‘0,000)
leases
Beijing Golden Elephant Fosun Pharmaceutical Co., Building
Ltd. 909.64 955.00
Sinopharm Group Xinjiang Special Drugs National Building
Pharmaceutical Co., Ltd. 853.74 884.46
Sinopharm Group Medicine Logistic Co., Ltd. Equipment 778.86 750.00
Building
Sinopharm Group Medicine Logistic Co., Ltd. 708.00 719.80
China National Pharmaceutical Group Shanghai Building
Co., Ltd. 671.06 614.10
Building
Shenyang Pharmaceutical Co., Ltd. 616.14 685.43
Building
Lerentang Investment Group Co., Ltd. 511.19 640.00
Building
Pingdingshan Pusheng Pharmaceutical Co., Ltd. 479.75 454.87
Building
Linyi Medical Group Co., Ltd. 406.10 810.33
Building
Sinopharm Holding Yangzhou Co., Ltd. 372.57 381.89
Building
Hunan Minshengtang Investment Co., Ltd. 309.67 281.31
Nanjing Yuanguang Trading Co., Ltd. Building 157.72 -
Building
Guangdong Jiyuantang Pharmaceutical Co., Ltd. 120.59 -
Shaoguan Wujiang District Muyang Medicine Building
Information Consultant Co., Ltd. 94.03 95.60
Building
Taishan Xiangranhui Trade Co., Ltd. 85.04 -
Building
Zhang Zhenfang 80.50 70.00
Building
Sinopharm Holding Shanxi Co., Ltd. 59.84 63.86
Building
Wang Yang 52.57 53.89
284
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
5. Major transactions between the Group and its related parties (Continued)
(2) Related party transactions - leases
As the lessee (continued)
Expenses from Expenses from
Type of assets leases in 2017 leases in 2016
under leases (RMB‘0,000) (RMB‘0,000)
Sinopharm Group Co., Ltd. Building 51.98 -
Beijing Sinopharm Tianyuan Real
Estate & Property Management Co.,
Ltd. Building 50.09 47.64
Sinopharm Holding Kashi New &
Special Drugs Co., Ltd. Building 46.94 44.46
Sinopharm Holding Beijing Co., Ltd. Building 45.32 46.00
Sinopharm Holding Xinjiang Xinte
Karamay Pharmaceutical Co., Ltd. Building 36.85 35.06
Gu Jinhua Building 35.76 26.82
China National Medicines Co., Ltd. Building 35.71 30.75
Sinopharm Xinjiang Pharmaceutical
Co., Ltd. Building 25.52 18.33
Hangzhou Xihu Business Group
Corporation Building 25.30 24.70
Shenzhen Jiufeng Investment Co., Ltd. Building 21.00 3.00
Taishan Qunkang Pharmacy Co., Ltd. Building 15.74 12.16
Xinjiang Baitong Property Service Co.,
Ltd. Building 7.82 5.99
Sinopharm Group Xinjiang
Pharmaceutical Co., Ltd. Building 2.70 18.21
Sinopharm Holding Fujian Co., Ltd. Building 0.48 0.41
Guangdong Jiyuantang Pharmaceutical
Co., Ltd. Building - 132.43
Huang Lijin Building - 125.00
Xiaoyi Xinran Trading Co., Ltd. Building - 31.55
7,668.22 8,063.05
285
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
5. Major transactions between the Group and its related parties (Continued)
(3) Related party transactions - guarantees
Guarantees received from related parties
Amount of
Termination of Whether the guarantee is
2016 guarantee Inception of guarantee
guarantee fulfilled
（RMB‘0,000）
16 February 2016 – 16 February 2017 –
Sinopharm Group Co., Ltd. 13,154.46 1 September 2016 1 September 2017 No
(4) Related party transactions – borrowings
Amount
2017 Category （RMB‘0,000） Inception Maturity
Discount on commercial 19 January 2017-22
Group Financial Co. acceptance notes 48,244.70 December 2017 25 March 2017-30 April 2018
Discount on bank 22 January 2017-21 6 March 2017-31 January
Group Financial Co. acceptance notes 22,580.26 August 2017 2018
China National
Pharmaceutical Group
Corporation Long-term borrowings 3,160.00 24 May 2017 24 May 2020
73,984.96
(4) Related party transactions – borrowings (Continued)
Amount
2016 Category （RMB‘0,000） Inception Maturity
Discount on commercial 27 May 2016-29
Group Financial Co. acceptance notes 30,774.27 November 2016 30 June 2016-5 March 2017
3 March 2016-8 November 28 October 2016-8
Group Financial Co. Short-term borrowings 14,000.00 2016 November 2017
Discount on bank 28 February 2017-15 June
Group Financial Co. acceptance notes 1,187.78 27 December 2016 2017
4 January 2016-14 July
Sinopharm Group Co., Ltd. Entrusted borrowings 21,554.00 2016 4 July 2016-14 January 2017
28 January 2016-1 28 July 2016-29 December
Sinopharm Group Co., Ltd. Short-term borrowings 9,000.00 October 2016 2016
76,516.05
286
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
5. Major transactions between the Group and its related parties (Continued)
Related party transactions – lendings
Fund lending
Amount
2017 Category
（RMB‘0,000） Inception Maturity
Zhijun Suzhou Entrusted Loan 44,00.00 4 January 2017 4 January 2018
(5) Related party asset transfer
2017 2016
Type of transaction
(RMB‘0,000) (RMB‘0,000)
Sinopharm Holding Tianjin Binhai Pharmaceutical Co.,
Ltd. Purchase of fixed asset 397.39 62.01
Sinopharm Holding Tianjin Binhai Pharmaceutical Co., Purchase of construction
Ltd. in progress 33.42 -
Purchase of intangible
Shanghai Tongyu Information Technology Co., Ltd. asset 77.13 38.49
Sale of Pingshan base
Shanghai Shyndec Pharmaceutical Co., Ltd. assets - 52,993.14
Sinopharm Holding Financing Lease Co., Ltd. Purchase of fixed asset - 469.05
Purchase of construction
Sinopharm Holding Financing Lease Co., Ltd. in progress - 70.78
Beijing Tongyu Information Technology Co., Ltd. Purchase of fixed asset - 56.57
During 2016, the Group had related party transactions of selling assets, issuing equity, purchasing assets with
cash as well as raising funds; the disposal of Zhijun Medicines, Zhijun Pingshan, Zhijun Trade and Pingshan
base assets in exchange for 15.56% equity in Shanghai Shyndec Pharmaceutical Co., Ltd; issuing shares in
order to purchase Guoda Pharmacy, Foshan Nanhai, Guangdong Uptodate & Special Medicines, which are
enterprises under common control, from Sinopharm Group; issuing shares to China Pharma & Trade in order
to purchase 51% equity in South Pharma & Trade; issuing shares to Ping An Asset Management in order to
raise funds for the purchase of non-controlling interests in South Pharma & Trade, of Fu Yuequn and other 11
natural persons.
287
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
5. Major transactions between the Group and its related parties (Continued)
(6) Other related party transactions
2017 2016
(RMB‘0,000) (RMB‘0,000)
Remuneration for key management personnel 1,182.00 1,056.00
Interest expense
2017 2016
Related party Category RMB‘0,000 RMB‘0,000
Payment of notes discount
Group Financial Co. interest 722.46 231.80
Sinopharm Holding Financing Lease Payment of financing lease
Co., Ltd. interest 158.23 177.85
China National Pharmaceutical Group
Corporation Payment of loan interest 132.97 135.44
Group Financial Co. Payment of loan interest 68.86 277.65
Sinopharm Holding Sub Marketing Payment of buyer notes discount
Center Co., Ltd. interest - 90.05
Payment of buyer notes discount
Sinopharm Group Co., Ltd. interest - 33.60
Payment of interest on
Sinopharm Group Co., Ltd. borrowings to related parties - 506.78
Payment of entrusted loan
Sinopharm Group Co., Ltd. interest - 399.29
China National Pharmaceutical Payment of interest on
Foreign Trade Corporation borrowings to related parties - 137.05
1,082.52 1,989.51
Interest income
2017 2016
Related party Category RMB‘0,000 RMB‘0,000
Sinopharm Group Zhijun(Shenzhen)
Pharmaceutical Co., Ltd. Entrusted loan interest 190.75 -
Group Financial Co. Deposit interest 49.36 35.24
Shanghai Modern Pharmaceutical Co.,
Ltd. (Modern Pharmaceutical) Interest income of land deposit 4.76 -
244.87 35.24
288
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
5. Major transactions between the Group and its related parties (Continued)
Notes (RMB‘0,000):
(1) Related party transactions - sale of goods and rendering of services
(a) During the current year, the Group purchased goods from related parties at the market price amounting to
RMB391,610.70 (2016: RMB395,165.19).
(b) During the current year, the related parties rendered services to the Group at the market price amounting to
RMB2,924.28 (2016: RMB2,698.89).
(c) During the current year, the Group sold goods to related parties at the market price amounting to
RMB124,942.19 (2016: RMB152,307.80).
(d) During the current year, the Group rendered services to related parties at the market price amounting to
RMB1,367.92 (2016: RMB1,247.26).
(2) Related party transactions - leases
(a) During the current year, the Group leased buildings and equipment to related parties and recognized income
of RMB155.02 (2016: RMB35.85) according to the agreements.
(b) During the current year, the Group leased buildings and equipment from related parties and an expense of
RMB7,668.22 (2016: RMB8,063.05) was incurred according to the lease.
(3) Related party transactions - guarantees
(a) During the current year, the Group has no related party guarantees that are not yet completed (2016:
RMB13,154.46).
(4) Related party transactions - borrowings
(a) During the current year, the Group borrowed RMB73,984.96 at annual interest rates ranging from 3.90% to
5.30% from related parties (2016: RMB76,516.05 at rates ranging from 3.60% to 4.13%).
(b) During the current year, the Group lent RMB4,400 to related parties at an annual interest rate of 4.57% (2016:
none).
(5) Related party transactions - asset transfer
(a) During the current year, the Group purchased long-term assets from related parties at a negotiated price
amounting to RMB507.94 (2016: RMB696.90).
(b) During the current year, the Group has not sold any long-term assets to related parties (2016:
RMB52,993.14).
(6) Other major related party transactions
(a) During the current year, the Group incurred emoluments (including those paid in cash, in kind and in other
forms) for key management personnel with an amount of RMB1,182.00 (2016: RMB1,056.00).
(b) During the current year, the Group has paid borrowing interest, entrusted loan interest and etc. to related
parties in the amount of RMB1,082.52 (2016: RMB1,989.51 )
(c) During the current year, the Group has received deposit interest from related parties in the amount of
RMB244.87 (2016: RMB35.24 ).
289
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
6. Commitments between the Group and related parties
2017 2016
RMB‘0,000 RMB‘0,000
As lessee
China National Pharmaceutical Group Shanghai Co., Ltd. 4,032.80 676.90
Beijing Golden Elephant Fosun Pharmaceutical Co., Ltd. 2,580.00 -
Sinopharm Holding Yangzhou Co., Ltd. 1,173.60 1,564.80
Sinopharm Group Xinjiang Special Drugs National Pharmaceutical Co., Ltd. 877.80 1,044.00
Hunan Minshengtang Investment Co., Ltd. 841.86 -
Shenyang Pharmaceutical Co., Ltd. 700.00 1,044.00
Taishan Xiangranhui Trade Co., Ltd 527.54 -
Lerentang Investment Group Co., Ltd. 527.00 1,180.00
Nanjing Yuanguang Trading Co., Ltd. 463.09 -
Linyi Medical Group Co., Ltd. 429.97 -
Gu Jinhua 289.06 324.82
Shaoguan Wujiang District Muyang Medicine Information Consultant Co., Ltd. 263.09 360.38
Sinopharm Group Co., Ltd. 173.28 -
Sinopharm Holding Beijing Co., Ltd. 166.42 -
Pingdingshan Pusheng Pharmaceutical Co., Ltd. 162.11 2,749.92
Wang Yang 110.40 157.71
China National Medicines Co., Ltd. 94.50 -
Hangzhou Xihu Business Group Corporation 87.93 -
Zhang Zhenfang 80.50 -
Shenzhen Jiufeng Investment Co., Ltd. 78.00 91.00
Taishan Qunkang Pharmacy Co., Ltd. 53.36 77.66
Sinopharm Holding Kashi New & Special Drugs Co., Ltd. 52.89 -
Sinopharm Holding Shanxi Co., Ltd. 49.14 64.00
Sinopharm Holding Xinjiang Xinte Karamay Pharmaceutical Co., Ltd. 45.31 -
Sinopharm Xinjiang Pharmaceutical Co., Ltd. 40.69 -
Sinopharm Holding Fujian Co., Ltd. 2.65 -
Beijing Sinopharm Tianyuan Real Estate & Property Management Co., Ltd. - 100.53
Guangdong Jiyuantang Pharmaceutical Co., Ltd. - 69.58
Sinopharm Xinjiang Korla Pharmaceutical Co., Ltd. - 105.74
13,902.99 9,611.04
290
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
6. Commitments between the Group and related parties (Continued)
2017 2016
RMB‘0,000 RMB‘0,000
As lessor
Zhijun Medicine
35.14 63.71
Zhijun Trade
28.57 -
Sinopharm Group Medicine Logistic Co., Ltd.
16.94 -
80.65 63.71
291
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
7. Amounts due from related parties
2017 2016
RMB‘0,000 RMB‘0,000
Amount Provision for bad Amount Provision for
Accounts receivable debts bad debts
Foshan Chancheng Pharmaceutical Co.,
Ltd. 2,193.41 17.54 2,666.51 -
Shanghai Beiyi Guoda pharmaceutical Co.
Ltd. 1,789.72 - 2,715.69 -
Sinopharm Group Co., Ltd.
1,536.95 - 567.26 -
Sinopharm Holding Hainan Co., Ltd.
1,421.52 - 575.18 -
Sinopharm Health Online Co., Ltd.
942.23 - 1,553.42 -
Beijing Golden Elephant Fosun
Pharmaceutical Co., Ltd. 880.99 - 30.86 -
Sinopharm Holding Hainan Hongyi Co., Ltd.
809.20 - 551.04 -
Pudong New Area of Shanghai
Pharmaceutical Medicine Ltd. 737.09 - - -
Sinopharm Group Xinjiang Special Drugs
National Pharmaceutical Co., Ltd. 432.31 - 429.34 -
Sinopharm Le-Ren-Tang Medicine Co., Ltd.
363.73 - 627.65 -
Sinopharm Holding Sub Marketing Center
Co., Ltd. 280.45 - 363.61 -
Sinopharm Holding Hubei Co., Ltd.
274.90 - 583.72 -
China National Medicines Co., Ltd.
267.63 - 301.74 -
Foshan Chancheng District Central Hospital
252.92 1.27 324.83 -
Sinopharm Lingyun Biopharmaceutical
(Shanghai) Co., Ltd. 215.80 - - -
Sinopharm Holding Nantong Co., Ltd.
170.41 - 10.63 -
Sinopharm Holding Yangzhou Co., Ltd.
129.61 - 96.27 -
Sinopharm Holding Shanxi Co., Ltd.
120.09 - 190.66 -
Sinopharm Holding Wenzhou Co., Ltd.
115.83 - 213.63 -
Sinopharm Holding Henan Co., Ltd.
115.48 - - -
Sinopharm Holding Ningxia Co., Ltd.
110.50 - 108.67 -
Sinopharm Holding Yunnan Co., Ltd.
103.54 - 233.12 -
Sinopharm Group (Tianjin) Eastern Bokang
Pharmaceutical Co., Ltd. 100.57 - 74.85 -
Sinopharm Holding Hulun Buir Co., Ltd.
98.28 - 637.39 -
Sinopharm Holding Zhejiang Co., Ltd.
71.64 - 72.64 -
Foshan Chanyixing Medicine Development
Co Ltd. 67.37 0.24 80.55 -
Sinopharm Sichuan Pharmaceutical Co.,
Ltd. 66.30 - 1,365.97 -
Shanghai Merro Pharmaceutical Co., Ltd.
61.27 - 93.18 -
Sinopharm Holding Shandong Co., Ltd.
58.81 - 1,205.91 -
292
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
7. Amounts due from related parties (Continued)
2017 2016
RMB‘0,000 RMB‘0,000
Amount Provision for bad Amount Provision for bad
Accounts receivable (continued) debts debts
Sinopharm Holding Jilin Co., Ltd.
56.57 - 0.41 -
Sinopharm Holding Dalian Co., Ltd.
54.15 - 1.88 -
Sinopharm Holding Beijing Huahong Co., Ltd.
50.68 - 328.88 -
Sinopharm Holding Changzhou Co., Ltd.
48.33 - - -
Sinopharm Holding Xinjiang Special Drugs
Western Pharmaceutical Co., Ltd. 38.06 - 351.97 -
Shanghai Guoda Lingyun Pharmacy Co., Ltd.
27.02 - 46.61 -
Sinopharm Group Medicine Logistic Co., Ltd.
18.92 - 87.33 -
Sinopharm Holding Fujian Co., Ltd.
18.01 - 99.87 -
Sinopharm Holding Guizhou Co., Ltd.
17.10 - 229.65 -
Sinopharm Holding Dalian Hecheng Co., Ltd.
16.89 - 10.35 -
Sinopharm Holding Beijing Tianxing Puxin
Biological Medical Co., Ltd. 15.55 - 18.14 -
Yuxi Sinopharm Medicine Co., Ltd.
14.60 - - -
Sinopharm Holding Chengdu Co., Ltd.
14.48 - 7.59 -
Sinopharm Holding Tianjin Co., Ltd.
13.56 - 226.12 -
Sinopharm Holding Shanghai Likang
Pharmaceutical Co., Ltd. 13.07 - 0.50 -
Sinopharm Holding Jiangxi Co., Ltd.
12.96 - 14.60 -
Sinopharm Group Shanxi Co., Ltd.
12.75 - 16.09 -
Sinopharm Holding Donghong Medical
(Shanghai) Co., Ltd. 12.50 - 12.25 -
Hubei Medical Group Co., Ltd.
11.37 - - -
Sinopharm Holding Beijing Co., Ltd.
9.00 - 345.39 -
Hutchison Whampoa Sinopharm
Pharmaceuticals (Shanghai) Co., Ltd. 7.30 - 12.49 -
Sinopharm Holding Changzhou Medical
Logistics Center Co., Ltd. 6.77 - 14.80 -
Sinopharm Holding Wuxi Co., Ltd.
6.12 - 3.72 -
Sinopharm Holding Heilongjiang Co., Ltd.
5.00 - 2,246.68 -
Sinopharm Holding Hunan Co., Ltd.
4.40 - 1,597.64 -
Sinopharm Holding Shanxi Co., Ltd.
3.65 - 99.34 -
Shanghai Liyi Drug Store Co., Ltd
3.56 - - -
Sinopharm Holding Anhui Co., Ltd.
3.36 - -
293
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
7. Amounts due from related parties (Continued)
2017 2016
RMB‘0,000 RMB‘0,000
Amount Provision for bad Amount Provision for bad
Accounts receivable (continued)
debts debts
Sinopharm Holding Qinghai Co., Ltd. 2.73 - 47.18 -
Sinopharm Xinxiang Chain Store Co., Ltd. 2.01 - 4.65 -
Sinopharm Group Zhijun (Shenzhen)
PingShan Pharmaceutical Co., Ltd. 2.00 - - -
Sinopharm Group Southwest Medicine Co.,
Ltd. 1.66 - 921.60 -
Sinopharm Group Zhijun(Shenzhen)
Pharmaceutical Co., Ltd. 0.68 - - -
Sinopharm Fengliaoxing Medical Hospital Co.,
Ltd. 0.46 - - -
Linyi Medical Group Co., Ltd. 0.25 - - -
China National Pharmaceutical Foreign Trade
Corporation 0.13 - 0.50 -
Sinopharm Holding Xiangyang Co., Ltd. - - 2.95 -
Sinopharm Holding Lunan Co., Ltd. - - 42.74 -
Sinopharm Holding Inner Mongolia Co., Ltd. - - 18.16 -
Sinopharm Holding Huaian Co., Ltd. - - 11.85 -
China National Pharmaceutical Group
Corporation - - 1.78 -
Sinopharm Guangdong Medical Examination
Co., Ltd. - - 3.25 -
Beijing Tiantan Biological Products Co., Ltd. - - 7.10 -
Shenyang Pharmaceutical Co., Ltd.
- - 0.30 -
Sinopharm Holding Zhuhai Co., Ltd. - - 3.06 -
14,314.20 19.05 22,511.74 -
294
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
7. Amounts due from related parties (Continued)
2017 2016
RMB‘0,000 RMB‘0,000
Amount Provision for bad Amount Provision for bad
Notes receivable debts debts
Foshan Chancheng Pharmaceutical Co., Ltd.
814.96 - - -
Sinopharm Holding Hainan Co., Ltd.
365.09 - 3.47 -
Sinopharm Holding Nantong Co., Ltd.
224.00 - 416.00 -
Sinopharm Holding Henan Co., Ltd.
150.00 - 473.43 -
Sinopharm Holding Shanxi Co., Ltd.
50.00 - 225.04 -
Sinopharm Group (Tianjin) Eastern Bokang
Pharmaceutical Co., Ltd. 16.16 - 413.80 -
Sinopharm Holding Inner Mongolia Co., Ltd.
13.62 - 9.00 -
Sinopharm Holding Dalian Hecheng Co., Ltd.
11.69 - - -
Sinopharm Holding Shenyang Co., Ltd.
- - 154.64 -
Sinopharm Holding Hubei Co., Ltd.
- - 394.82 -
Sinopharm Holding Hunan Co., Ltd.
- - 886.78 -
Sinopharm Holding Beijing Co., Ltd.
- - 684.99 -
Sinopharm Holding Beijing Huahong Co., Ltd.
- - 100.00 -
Sinopharm Holding Zhejiang Co., Ltd.
- - 210.66 -
Sinopharm Holding Sub Marketing Center Co.,
Ltd. - - 139.47 -
Sinopharm Holding Fuzhou Co., Ltd.
- - 109.16 -
Sinopharm Holding Shandong Co., Ltd.
- - 2,193.52 -
Sinopharm Holding Yunnan Co., Ltd.
- - 258.53 -
Sinopharm Holding Gansu Co., Ltd.
- - 129.48 -
Sinopharm Holding Fujian Co., Ltd.
- - 369.33 -
Sinopharm Holding Quanzhou Co., Ltd.
- - 121.92 -
Sinopharm Holding Ningxia Co., Ltd.
- - 200.53 -
Sinopharm Holding Jilin Co., Ltd.
- - 38.16 -
Sinopharm Holding Heilongjiang Co., Ltd.
- - 89.20 -
Sinopharm Sichuan Pharmaceutical Co., Ltd.
- - 1,688.99 -
1,645.52 - 9,310.92 -
295
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
7. Amounts due from related parties (Continued)
2017 2016
RMB‘0,000 RMB‘0,000
Amount Provision for Amount Provision for
Other receivables bad debts bad debts
Shanghai Modern Pharmaceutical Co., Ltd.
(Modern Pharmaceutical) 12,518.17 - 13,719.11 -
Sinopharm Group Zhijun(Suzhou)
Pharmaceutical Co., Ltd. 4,400.00 - - -
Sinopharm Group Medicine Logistic Co., Ltd. 139.88 - 315.87 -
Sinopharm Health Online Co., Ltd. 107.14 - 68.30 -
Sinopharm Holding Shanxi Co., Ltd. 10.00 - 10.00 -
Sinopharm Group Xinjiang Special Drugs
National Pharmaceutical Co., Ltd. 10.00 - 10.00 -
Sinopharm Lerentang Hebei Medical
Instrument Trade Co., Ltd. 4.85 - 4.85 -
Sinopharm Group Zhijun(Shenzhen)
Pharmaceutical Co., Ltd. 1.71 0.03 5.64 -
Wuhan Zhonglian Pharmaceutical Group Co.,
Ltd. 0.50 0.05 - -
Sinopharm Group Co., Ltd. - - 0.40 -
Sinopharm Holding Henan Co., Ltd. - - 1.01 -
Sinopharm Holding Fuzhou Co., Ltd. - - 7.26 -
Sinopharm Holding Huangshan Health
Industry Co., Ltd. - - 0.94 -
Shanghai Guoren Pharmacy Co., Ltd. - - 3.78 -
Beijing Electromechanical Device Group
Corporation - - 3.00 -
Shenzhen Zhijun Pharmaceutical Trade Co.,
Ltd. - - 2.15 -
17,192.25 0.08 14,152.31 -
2017 2016
RMB‘0,000 RMB‘0,000
Amount Provision for Amount Provision for
Advances to suppliers bad debts bad debts
Jinzhou AoHong Pharmaceuticals Co., Ltd. 2,013.70 - - -
Sinopharm Holding Shanxi Co., Ltd.
550.24 - 302.78 -
Hunan Minshengtang Investment Co., Ltd. 267.04 - 1,194.11 -
Sinopharm Group Xinjiang Special Drugs
National Pharmaceutical Co., Ltd. 202.50 - 193.46 -
Sinopharm Group Co., Ltd. 196.35 - 11.72 -
Sinopharm Holding Shenyang Co., Ltd. 133.49 - - -
Shanghai Shangsheng Biological Products
Co., Ltd. 127.13 - - -
296
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
7. Amounts due from related parties (Continued)
2017 2016
RMB‘0,000 RMB‘0,000
Amount Provision for bad Amount Provision for bad
Advances to suppliers (continued) debts debts
Sinopharm Holding Shanxi Co., Ltd.
28.80 - 195.91 -
Sinopharm Group Guorui Medicine Co., Ltd.
27.91 - - -
Sinopharm Xinjiang Korla Pharmaceutical Co., Ltd.
26.44 - - -
China National Medicines Co., Ltd.
18.30 - 4.94 -
Nanjing Yuanguang Trading Co., Ltd.
16.82 - - -
Sinopharm Holding Beijing Co., Ltd.
11.75 - 9.66 -
Gu Jinhua 7.84 - - -
Sinopharm Xinjiang Pharmaceutical Co., Ltd.
4.27 - 4.17 -
Sinopharm Holding Kashi New & Special Drugs Co., Ltd.
2.52 - 2.52 -
Guilin South pharmaceutical Co., Ltd.
2.00 - - -
Winteam Pharmaceutical Group Ltd.
1.92 - 0.46 -
Xinjiang Baitong Property Service Co., Ltd.
1.09 - 0.63 -
Sinopharm Holding Suzhou Co., Ltd.
0.77 - 0.37 -
Sinopharm Holding Fujian Co., Ltd.
0.55 - - -
Sinopharm Holding Yangzhou Co., Ltd.
0.41 - - -
Sinopharm Holding Hunan Co., Ltd.
0.31 - - -
Sinopharm Holding Tianjin Distribution Center Co., Ltd. 0.17 - - -
Sinopharm Holding Sub Marketing Center Co., Ltd.
0.10 - - -
Chengdu Rongsheng Pharmacy Co., Ltd.
0.06 - 44.83 -
Sinopharm Group Zhijun (Shenzhen) PingShan
Pharmaceutical Co., Ltd. 0.02 - 0.02 -
Sinopharm Group Xinjiang Pharmaceutical Co., Ltd.
- - 0.34 -
Sichuan Hexin Pharmaceutical Co., Ltd.
- - 0.20 -
Shenzhen Jiufeng Investment Co., Ltd.
- - 15.00 -
Hangzhou Xihu Business Group Corporation
- - 12.65 -
Xiaoyi Xinran Trading Co., Ltd.
- - 3.50 -
Beijing Tongyu Information Technology Co., Ltd.
- - 4.04 -
Shanghai Meitai Medical Instruments Co., Ltd.
- - 28.29 -
Sinopharm Chongqing Pharmaceutical and Medical Industry
Design Institute - - 265.22 -
Jiangsu Wanbang Pharmacy Marketing Co., Ltd.
- - 0.02 -
3,642.50 - 2,294.84 -
Amounts due from related parties were interest-free and unsecured, with no fixed terms of repayment.
297
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
8. Amounts due to related parties
2017 2016
RMB‘0,000 RMB‘0,000
Accounts payable
Sinopharm Holding Sub Marketing Center Co., Ltd.
14,390.85 11,346.16
Sinopharm Group Co., Ltd.
4,520.40 6,936.35
Sinopharm Lingyun Biopharmaceutical (Shanghai) Co., Ltd.
3,750.48 1,834.62
China National Medicines Co., Ltd.
2,836.25 3,523.37
Sinopharm Group Xinjiang Special Drugs National Pharmaceutical Co., Ltd.
1,974.28 1,905.41
Fresenius Kabi Huarui Pharmaceuticals Co., Ltd.
1,600.39 1,317.92
Jiangsu Wanbang Pharmacy Marketing Co., Ltd.
1,000.33 1,119.81
Sinopharm Holding Pingdingshan Co., Ltd.
817.83 732.91
Sinopharm Holding Lerentang Pharmaceutical Co., Ltd.
779.69 839.01
Sinopharm Holding Jiangsu Co., Ltd.
773.08 485.92
Shenzhen Main Luck Pharmaceutical Co., Ltd.
652.05 580.79
Sinopharm Holding Yangzhou Co., Ltd.
598.71 15.36
Chongqing Yaoyou Pharmaceutical Co., Ltd.
545.00 770.08
Shenzhen Wanwei Medicine Trading Co., Ltd.
424.01 563.83
Sinopharm Holding Shanxi Instrument Branch Co., Ltd.
408.96 308.99
Sinopharm Holding Xiamen Co., Ltd.
400.65 511.63
Sinopharm Holding Fujian Co., Ltd.
371.76 326.26
Sinopharm Holding Hulun Buir Co., Ltd.
290.22 629.33
Sinopharm Holding Ningxia Co., Ltd.
280.94 357.99
Sinopharm Holding Changzhou Medical Logistics Center Co., Ltd.
279.27 112.02
Sinopharm Holding Inner Mongolia Co., Ltd.
266.45 80.40
Yichang Humanwell Pharmaceutical Co., Ltd.
262.01 195.74
Sinopharm Lerentang Shijiazhuang Medicine Co., Ltd.
210.66 4.28
China National Pharmaceutical Foreign Trade Corporation
203.51 165.12
Sinopharm Lerentang Hebei Medical Instrument Trade Co., Ltd.
170.81 -
Sinopharm Holding Henan Co., Ltd.
152.65 1.64
Shandong Lu Ya Pharmaceutical Co., Ltd.
150.75 5.28
Foshan Fengliaoxing Pharmaceutical Co., Ltd.
138.01 35.70
298
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
8. Amounts due to related parties (Continued)
2017 2016
RMB‘0,000 RMB‘0,000
Accounts payable (Continued)
Sinopharm Group Zhijun (Shenzhen) PingShan Pharmaceutical Co., Ltd.
135.06 35.11
Winteam Pharmaceutical Group Ltd.
129.10 208.77
Sinopharm Holding Beijing Huahong Co., Ltd.
127.75 105.54
Sinopharm Holding Beijing Co., Ltd.
114.89 279.32
Sinopharm Group Zhijun(Shenzhen) Pharmaceutical Co., Ltd.
114.17 23.76
Sinopharm Holding Beijing Kangchen Bio-Pharmaceutical Co., Ltd.
109.58 113.68
China Otsuka Pharmaceutical Co., Ltd.
107.38 43.80
Sinopharm Holding Fuzhou Co., Ltd.
99.60 8.11
Sinopharm Xingsha Pharmaceuticals (Xiamen) Co., Ltd.
80.36 1.68
Pudong New Area of Shanghai Pharmaceutical Medicine Ltd.
79.84 -
Sinopharm Holding Suzhou Co., Ltd.
65.70 419.86
Shanghai Shyndec Pharmaceutical Marketing Co., Ltd.
56.64 69.67
Guizhou Tongjitang Pharmaceutical Co., Ltd.
55.75 12.54
Wuhan Zhonglian Pharmaceutical Group Co., Ltd.
52.68 45.13
Sinopharm Holding Jinzhou Co., Ltd.
52.02 23.40
Sinopharm Holding Shanghai Likang Pharmaceutical Co., Ltd.
49.50 30.14
Sinopharm Holding Xinjiang Xinte Karamay Pharmaceutical Co., Ltd.
48.24 40.35
Sinopharm Holding Tongliao Co., Ltd.
44.09 -
Chongqing Haisiman Pharmaceutical Co., Ltd.
43.84 530.35
Shenyang Hongqi Pharmaceutical Co., Ltd.
39.48 15.06
Hutchison Whampoa Sinopharm Pharmaceuticals (Shanghai) Co., Ltd.
36.39 7.97
Beijing Huamiao Pharmaceutical Co., Ltd.
33.99 -
Sinopharm Holding Xinjiang Special Drugs Western Pharmaceutical Co.,
Ltd. 32.18 48.62
Shanghai Merro Pharmaceutical Co., Ltd.
31.16 489.59
Anhui Jingfang Pharmaceutical Co., Ltd.
27.53 20.11
Shanghai Transfusion Technology Co., Ltd.
25.15 -
Guangdong Medi-World Pharmaceutical Co., Ltd.
24.88 2.66
Sinopharm Holding Shanxi Co., Ltd.
24.45 423.72
299
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
8. Amounts due to related parties (Continued)
2017 2016
RMB‘0,000 RMB‘0,000
Accounts payable (Continued)
Sinopharm Holding Dezhou Co., Ltd.
23.94 15.82
Sinopharm Holding Wuxi Co., Ltd.
23.49 9.76
Sinopharm Group Rongsheng Pharmaceutical Co., Ltd.
19.73 15.39
Jiangsu Fuxing Pharmaceutical Trading Co., Ltd
18.38 -
Sinopharm Holding Changzhou Co., Ltd.
15.63 166.70
Sinopharm Holding Kashi New & Special Drugs Co., Ltd.
15.55 22.37
Sinopharm Holding Lunan Co., Ltd.
15.29 -
Beijing Golden Elephant Fosun Pharmaceutical Co., Ltd.
15.03 6.80
Sinopharm Holding Putian Co., Ltd.
14.98 6.67
Sinopharm Holding Hunan Co., Ltd.
14.86 -
Sinopharm Holding Ulanqab Co., Ltd.
13.36 0.95
Hunan Dongting Pharmaceutical Co., Ltd.
11.01 6.09
Sinopharm Holding Quanzhou Co., Ltd.
10.70 10.02
Sinopharm Holding Chengdu Co., Ltd.
10.41 -
Guizhou Longlife Pharmaceutical Co., Ltd.
10.36 -
Foshan Dezhong Pharmaceutical Co., Ltd.
9.88 5.83
Sinopharm Holding Taizhou Co., Ltd.
9.50 -
Sinopharm Holding Tianjin Co., Ltd.
8.86 0.89
Sinopharm Holding Dalian Co., Ltd.
8.02 8.36
The Fourth Pharmaceutical Co., Ltd. of Zhonglian Group
7.71 0.88
Sinopharm Holding Sanyi Medicine (Wuhu) Co., Ltd.
7.44 14.99
Sinopharm Holding Jinan Co., Ltd.
7.17 19.37
Sinopharm ShanXi Ruifulai Pharmaceutical Co., Ltd.
6.31 1.59
Sinopharm Holding Ordos Co., Ltd.
5.56 -
Sinopharm Holding Zhejiang Co., Ltd.
5.55 -
Sinopharm Shantou Jinshi Pharmaceutical Co., Ltd.
5.53 7.84
Jiangsu Huanghe Pharmaceutical Co., Ltd.
5.33 5.47
China National Pharmaceutical Industry Co., Ltd.
5.23 2.35
Sinopharm Holding Donghong Medical (Shanghai) Co., Ltd.
4.61 63.23
Sinopharm Holding Beijing Tianxing Puxin Biological Medical Co., Ltd.
4.24 -
Sinopharm Group Guorui Medicine Co., Ltd.
3.46 4.54
300
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
8. Amounts due to related parties (Continued)
2017 2016
RMB‘0,000 RMB‘0,000
Accounts payable (Continued)
Shanghai Modern Hasen (Shangqiu) Pharmaceutical Co., Ltd.
3.09 3.09
Sinopharm Holding Jiangxi Co., Ltd.
3.04 -
Sinopharm Holding Yongzhou Co., Ltd.
3.02 -
Sinopharm Xinjiang Pharmaceutical Co., Ltd.
2.77 -
Yangzhou Weikang Pharmaceutical Co., Ltd.
2.49 2.33
Sinopharm Group Yibin Pharmaceuticals Co., Ltd.
2.30 -
Sinopharm Holding Biopharmaceutical (Tianjin) Co., Ltd.
2.05 2.52
Sinopharm Holding Tianjin North Medicine Co., Ltd.
1.93 -
Sinopharm Group Shanghai Medicine Device Co., Ltd.
1.66 1.66
Sinopharm Holding Liaocheng Co., Ltd.
1.62 1.62
Changchun Changsheng Gene Pharmaceutical Co., Ltd.
1.42 1.42
Shanghai Modern Pharmaceutical Co., Ltd. (Modern Pharmaceutical)
1.28 1.42
Shanghai Chaohui Pharmaceutical Co., Ltd.
0.89 0.89
Sichuan Jiangyouzhongbafuzi Technology Development Co., Ltd.
0.86 -
Sinopharm Hebei Medical Instrument Co., Ltd.
0.36 -
Sinopharm Prospect Dentech (Beijing) Co., Ltd.
0.12 0.34
Guilin South pharmaceutical Co., Ltd.
0.12 1.17
Sinopharm Holding Huaideju Pharmaceutical (Xiamen) Co., Ltd.
0.11 0.11
Sinopharm Holding Yancheng Co., Ltd.
0.10 -
Beijing Huasheng Pharmaceutical Biotechnology Development Co., Ltd.
0.06 0.06
Shenzhen Zhijun Pharmaceutical Trade Co., Ltd.
0.05 0.05
Sinopharm Fengliaoxing (Foshan) Medicines Co., Ltd.
0.01 0.01
Sinopharm Holding Chongqing Co., Ltd.
0.01 -
Sinopharm Le-Ren-Tang Medicine Co., Ltd.
- 2,676.36
Lanzhou Institute of Biological Products Co., Ltd.
- 678.00
Sinopharm (Tianjin) Northern Medical Equipment Co., Ltd.
- 234.02
Sinopharm Group Shanxi Co., Ltd.
- 70.74
Sinopharm Group Medicine Logistic Co., Ltd.
- 69.48
China National Scientific Instruments & Materials Imp/Exp Shenzhen
Co., Ltd. - 59.93
Chengdu Rongsheng Pharmacy Co., Ltd.
- 44.88
Beijing Huamiao Traditional Chinese Medicine Technology and Project
Development Centre - 35.27
301
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
8. Amounts due to related parties (Continued)
2017 2016
RMB‘0,000 RMB‘0,000
Accounts payable (Continued)
Wuliangye Group of Sichuan YiBin Pharmaceuticals Co., Ltd.
- 6.49
Sinopharm Holding Huangshan Health Industry Co., Ltd.
- 6.19
Sinopharm Holding Zhuhai Co., Ltd.
- 5.02
Sinopharm Lerentang Qinhuangdao Medicine Co., Ltd.
- 3.94
Sinopharm Holding Hubei Co., Ltd.
- 3.02
Sinopharm Holding (Liaoning Province) Medical Instruments Co., Ltd.
- 2.49
Sinopharm Jiayuan International Trading Co., Ltd.
- 0.40
China Medical Investment Co., Ltd.
- 0.01
Sinopharm Holding Tianjin Distribution Center Co., Ltd.
- 23.31
Sinopharm Holding Shanxi Co., Ltd.
- 1.75
Sinopharm Holding Shenyang Co., Ltd. - 631.15
40,457.88 42,669.91
2017 2016
RMB‘0,000 RMB‘0,000
Notes payable
Sinopharm Holding Shanxi Co., Ltd.
9,682.92 7,569.51
Sinopharm Holding Sub Marketing Center Co., Ltd.
9,132.03 26,806.54
Sinopharm Group Co., Ltd.
6,068.19 3,978.13
Sinopharm Holding Shenyang Co., Ltd.
4,021.54 -
Sinopharm Holding Shanxi Co., Ltd.
2,993.17 2,098.17
Lanzhou Institute of Biological Products Co., Ltd.
2,160.00 360.00
Sinopharm Le-Ren-Tang Medicine Co., Ltd.
2,037.61 -
Sinopharm Holding Xiamen Co., Ltd.
857.37 994.40
China National Medicines Co., Ltd.
822.34 2,051.22
Chongqing Yaoyou Pharmaceutical Co., Ltd.
672.23 119.98
Sinopharm Holding Fujian Co., Ltd.
629.45 375.57
Sinopharm Lerentang Shijiazhuang Medicine Co., Ltd.
418.00 413.05
Chongqing Haisiman Pharmaceutical Co., Ltd.
355.69 551.75
Sinopharm Holding Lerentang Pharmaceutical Co., Ltd.
266.94 126.88
Jiangsu Wanbang Pharmacy Marketing Co., Ltd.
220.77 -
Sinopharm Holding Shanxi Instrument Branch Co., Ltd.
205.14 102.52
Chengdu Rongsheng Pharmacy Co., Ltd.
176.00 -
302
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
8. Amounts due to related parties (Continued)
2017 2016
RMB‘0,000 RMB‘0,000
Notes payable (Continued)
Sinopharm Holding Ningxia Co., Ltd.
170.00 150.00
Shenzhen Wanwei Medicine Trading Co., Ltd.
149.57 116.40
Guizhou Tongjitang Pharmaceutical Co., Ltd.
98.03 31.61
Shenyang Hongqi Pharmaceutical Co., Ltd.
78.00 21.71
Sinopharm Holding Jinzhou Co., Ltd.
64.74 -
Sinopharm Holding Putian Co., Ltd.
59.41 102.75
Sinopharm Holding Quanzhou Co., Ltd.
45.70 -
Anhui Jingfang Pharmaceutical Co., Ltd.
34.83 5.61
Sinopharm Holding Dalian Co., Ltd.
29.51 -
Sinopharm Holding Jinan Co., Ltd.
24.00 -
Sinopharm Group Rongsheng Pharmaceutical Co., Ltd.
17.01 22.87
Sinopharm Group Zhijun (Shenzhen) PingShan Pharmaceutical Co.,
Ltd. 15.78 45.59
Sinopharm Group Zhijun(Shenzhen) Pharmaceutical Co., Ltd.
12.33 42.71
Winteam Pharmaceutical Group Ltd.
6.85 39.03
China National Pharmaceutical Foreign Trade Corporation
- 484.50
Sinopharm Holding Tianjin Distribution Center Co., Ltd.
- 326.37
Sinopharm Group (Tianjin) Eastern Bokang Pharmaceutical Co., Ltd.
- 236.33
Sinopharm Holding Hunan Co., Ltd.
- 220.51
Shenzhen Main Luck Pharmaceutical Co., Ltd.
- 146.70
Sinopharm Holding Pingdingshan Co., Ltd.
- 129.87
Shanghai Shyndec Pharmaceutical Marketing Co., Ltd. - 46.93
41,525.15 47,717.21
303
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
8. Amounts due to related parties (Continued)
2017 2016
RMB‘0,000 RMB‘0,000
Other payables
Shenyang Pharmaceutical Co., Ltd.
609.25 511.25
Sinopharm Group Medicine Logistic Co., Ltd.
412.88 271.14
Lerentang Investment Group Co., Ltd.
302.78 100.00
Zhang Zhenfang
150.50 133.97
China National of Traditional&Herbal Medicine Co., Ltd.
130.00 130.00
Pingdingshan Pusheng Pharmaceutical Co., Ltd.
123.58 123.78
Sinopharm Holding Tianjin Binhai Pharmaceutical Co., Ltd.
113.73 17.23
Linyi Medical Group Co., Ltd.
86.21 -
Sinopharm Group Co., Ltd.
58.40 262.22
Mordern Pharma
50.35 -
Shanghai Beiyi Guoda pharmaceutical Co. Ltd.
49.67 49.66
Sinopharm Group Xinjiang Special Drugs National
Pharmaceutical Co., Ltd. 46.64 2.40
Beijing Golden Elephant Fosun Pharmaceutical Co., Ltd.
20.00 23.80
Shenzhen Jiufeng Investment Co., Ltd.
18.00 -
Sinopharm Holding Sub Marketing Center Co., Ltd.
3.78 3.78
China National Scientific Instruments & Materials Imp/Exp
Shenzhen Co., Ltd. 3.75 3.75
China National Pharmaceutical Logistics Co., Ltd.
0.74 0.52
Sinopharm Holding Hunan Weian Pharmacy Medicine Chain
Company Limited 0.69 -
China National Pharmaceutical Foreign Trade Corporation
- 3,058.32
Sinopharm Health Online Co., Ltd.
- 514.42
Sinopharm Holding Lunan Co., Ltd.
- 500.00
Guangdong Overseas Chinese Medical Investment Co., Ltd.
- 343.00
China National Pharmaceutical Group Shanghai Co., Ltd.
- 166.04
Sinopharm Le-Ren-Tang Medicine Co., Ltd.
- 73.99
Quanzhou Xintai Biotech Co., Ltd.
- 3.56
Xinjiang Baitong Property Service Co., Ltd.
- 1.45
Beijing Tongyu Information Technology Co., Ltd.
- 0.44
China National Medicines Co., Ltd. - 0.04
2,180.95 6,294.76
304
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
8. Amounts due to related parties (Continued)
2017 2016
RMB‘0,000 RMB‘0,000
Advances from customers
China National Pharmaceutical Foreign Trade
Corporation 1,250.54 -
Sinopharm Holding Shandong Co., Ltd.
251.57 -
Sinopharm Holding Beijing Co., Ltd.
234.91 -
Sinopharm Sichuan Pharmaceutical Co., Ltd.
73.96 0.01
Sinopharm Group Southwest Medicine Co., Ltd.
67.67 -
Sinopharm Holding Nanping Newforce Co., Ltd.
29.58 -
Sinopharm Holding Hunan Co., Ltd.
7.74 -
Sinopharm Holding Lunan Co., Ltd.
6.28 -
Sinopharm Holding Gansu Co., Ltd.
2.89 15.38
Sinopharm Group Co., Ltd.
2.13 -
Sinopharm Zhuhai Medical Instrument Co., Ltd.
1.15 -
Sinopharm Holding Shenyang Co., Ltd.
1.01 5.42
Sinopharm Holding Suzhou Co., Ltd.
0.77 -
Sinopharm Holding Qinghai Co., Ltd.
0.35 -
Sinopharm Holding Chengdu Co., Ltd.
0.13 0.21
Sinopharm Holding Chongqing Co., Ltd.
0.08 0.08
Sinopharm Holding Tibet Pharmaceutical Co., Ltd.
- 15.05
Sinopharm Guangdong Medical Examination Co., Ltd.
- 3.41
Sinopharm Holding Heilongjiang Co., Ltd.
- 1.51
Shanghai Merro Pharmaceutical Co., Ltd.
- 0.83
Sinopharm Holding Zhuhai Co., Ltd. - 0.33
1,930.76 42.23
305
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
8. Amounts due to related parties (Continued)
2017 2016
RMB‘0,000 RMB‘0,000
Interest payable
China National Pharmaceutical Group Corporation 3.90 3.78
Entrusted borrowings
China National Pharmaceutical Group Corporation (Note) 3,160.00 3,160.00
Note: Sinopharm Group Co. entrusted Group Financial Co. with this borrowing to the Group.
Short-term borrowings
Group Financial Co. 14,771.55 10,866.35
Other non-current liabilities
Sinopharm Group 3,506.17 3,506.17
Current portion of long-term borrowings
Sinopharm Holding Financing Lease Co., Ltd. 543.48 481.13
Long-term payables
Sinopharm Holding Financing Lease Co., Ltd. 933.25 1,461.66
Amounts due to related parties were interest-free and unsecured, with no fixed terms of repayment.
9. Cash deposit with a related party
2017 2016
RMB‘0,000 RMB‘0,000
Group Financial Co. 15,674.09 3,782.94
In years 2017 and 2016, the interest rates for the deposit ranged from 0.35% to 1.15% above the
benchmark interest rate.
306
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
XI Commitments and contingencies
1. Commitments
(1) Capital commitments
Capital expenditures contracted for at the balance sheet date but not recognized in the balance
sheet are analyzed as follows:
31 December 2017 31 December 2016
RMB‘0,000 RMB‘0,000
Capital commitments 600.45 23.37
Investment commitments (Note) 14,000.00 -
14,600.45 23.37
Note: The Group subscribed to Sinopharm Zhongjin medical industry fund as its limited partner,and the
total investment amounted to RMB200 million. The investors contribute year by year in batch.
The fund manager will send out payment notification to investors according to the actual
progress of the project and the investors will commit to complete the payment in 3 year. The
investors have paid 30% of the amount of contribution, namely RMB 60 million, and the rest is
RMB 140 million.
(2) Operating lease commitments
The future minimum lease payments due under the signed irrevocable operating leases contracts
are summarized as follows:
31 December 2017 31 December 2016
RMB‘0,000 RMB‘0,000
Within one year 49,860.66 43,114.45
Between 1 and 2 years 39,575.48 32,506.44
Between 2 and 3 years 29,537.37 28,045.89
Over 3 years 51,138.78 53,853.64
170,112.29 157,520.42
2. Contingencies
As of the balance sheet date, there were no contingencies that the Group was required to
disclose.
307
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
XII Events after the balance sheet date
Capital surplus – significant reorganization caused a decrease of RMB3,430,029. The Group
carried out a significant reorganization on 31 October 2016. The disposal of Zhijun Medicine,
Zhijun Pingshan, Zhijun Trade and assets of Pingshan base in exchange for a 15.56% equity
interest of Shyndec Pharmaceutical. Regarding Pingshan base completion matters in the above
transaction agreement, the Group plans to sign a supplemental agreement to modify the
transaction price, which led to an increase in capital reserve of RMB4,576,743.67. Due to the
incompletion of the financial completion final accounts audit on the completion date, the carrying
value of the assets is estimated temporarily. During the year, the capital reserve of
RMB8,006,772.67 was offset by the difference between the number on the financial completion
final accounts audit report and the carrying amount of the delivery date.
XIII Other significant events
1. Segment reporting
Operating segments
For management purposes, the Group is organized into business units based on its products and
services and has four reportable operating segments as follows:
a) The Head Office, which is mainly engaged in investment and management of businesses;
b) Pharmaceutical distribution segment, which is mainly engaged in the distribution of medicine
and pharmaceutical products to customers;
c) Retail pharmacy segment, which is the management of the operation of Guoda Pharmacy;
d) Pharmaceutical manufacturing segment, which is mainly engaged in the manufacture of
medicines.
Management monitors the results of the Group’s operating segments separately for the purpose of
making decisions about resource allocation and performance assessment. Segment performance
is evaluated based on reportable segment profit, which is a measurement of adjusted profit before
tax. The adjusted profit before tax is measured consistently with the Group’s profit before tax
except that finance costs, dividend income, non-operating income, non-operating expense,
investment income, as well as the Head Office and corporate expenses are excluded from such
measurement.
Inter-segment sales and transfers are transacted with reference to the selling prices used in the
transactions carried out with third parties at the then prevailing market prices.
308
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
XIII Other significant events (Continued)
1. Segment reporting (Continued)
Operating segments (Continued)
Operating segment information as at and for the year ended 31 December 2017 is as follows:
Head Office Pharmaceutical distribution Retail Elimination between segments Total
Operating revenue 8,375,742.95 31,521,581,386.61 10,030,768,869.22 (297,096,879.93) 41,263,629,118.85
Incl: Revenue from external customers 7,021,273.74 31,225,838,975.89 10,030,768,869.22 - 41,263,629,118.85
Revenue from inter-segment transactions 1,354,469.21 295,742,410.72 - (297,096,879.93) -
Interest income 78,376,603.70 18,691,863.52 10,604,984.72 (72,661,252.46) 35,012,199.48
Interest expense (11,006,890.78) (193,254,315.97) (4,232,925.04) 72,661,252.46 (135,832,879.33)
Share of profits of associates 263,091,955.14 (939,857.11) 1,673,736.53 - 263,825,834.56
Asset impairment (146,475.86) (3,552,384.94) 1,228,164.06 - (2,470,696.74)
Depreciation and amortization (1,147,598.64) (64,987,392.18) (113,674,431.89) - (179,809,422.71)
Gross profit 621,606,951.14 837,969,445.75 360,840,066.95 (354,387,490.03) 1,466,028,973.81
Income taxes (12,769,846.38) (197,854,401.55) (98,665,879.79) - (309,290,127.72)
Net profit 608,837,104.76 640,115,044.20 262,174,187.16 (354,387,490.03) 1,156,738,846.09
Total assets 10,764,738,889.92 15,163,227,958.07 5,468,132,363.83 (9,052,455,684.05) 22,343,643,527.77
Total liabilities (2,423,748,087.76) (10,185,768,194.29) (3,514,929,235.96) 3,708,304,747.38 (12,416,140,770.63)
Long-term equity investments in associates 1,631,826,385.89 8,502,884.50 10,290,102.70 - 1,650,619,373.09
Capital expenditure 1,830,129.54 78,205,567.77 91,688,529.57 - 171,724,226.88
309
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
XIII Other significant events (Continued)
1. Segment reporting (Continued)
Operating segments (Continued)
Operating segment information as at and for the year ended 31 December 2016 is as follows:
Pharmaceutical Pharmaceutical Elimination between
Head Office Retail Total
distribution manufacturing segments
Operating revenue 24,211,225.24 31,136,237,193.94 9,109,372,242.97 1,191,942,579.54 (213,421,576.23) 41,248,341,665.46
Incl: Revenue from external
customers 7,729,535.27 30,949,800,259.34 9,109,132,665.51 1,181,679,205.34 - 41,248,341,665.46
Revenue from inter-segment
transactions 16,481,689.97 186,436,934.60 239,577.46 10,263,374.20 (213,421,576.23) -
Interest income 82,204,766.73 9,864,397.65 10,294,801.65 1,467,660.54 (73,691,276.17) 30,140,350.40
Interest expense (5,449,844.00) (189,754,274.32) (9,181,977.41) (3,086,958.75) 73,691,276.17 (133,781,778.31)
Share of profits of associates 96,356,832.20 (417,258.39) 1,135,920.59 - - 97,075,494.40
Asset impairment (111,289.35) 12,236,160.49 127,965.47 (3,702,846.80) - 8,549,989.81
Depreciation and amortization (6,438,712.76) (50,810,725.44) (95,747,764.24) (66,626,335.18) - (219,623,537.62)
Gross profit 606,763,957.10 795,837,881.08 306,323,412.96 259,359,088.18 (368,131,235.50) 1,600,153,103.82
Income taxes (652,486.15) (191,875,817.91) (83,319,928.63) (42,529,060.22) - (318,377,292.91)
Net profit 606,111,470.95 603,962,063.17 223,003,484.33 216,830,027.96 (368,131,235.50) 1,281,775,810.91
Total assets 9,236,694,225.39 13,826,553,868.94 4,945,374,940.34 - (6,692,074,786.72) 21,316,548,247.95
Total liabilities (1,559,296,939.55) (9,733,475,750.45) (3,207,856,354.78) - 2,101,858,066.92 (12,398,770,977.86)
Long-term equity investments in
associates 1,393,968,857.78 9,442,741.61 9,622,566.17 - - 1,413,034,165.56
Capital expenditure 1,352,998.47 232,119,650.42 153,297,144.17 72,028,283.04 - 458,798,076.10
310
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
XIII Other significant events (Continued)
2. Leases
As the lessee
Finance leases: At 31 December 2017, the balance of the unrecognized finance charge was
RMB1,981,269.40 (2016: RMB3,580,691.95), which was amortized using the effective interest
rate method over each reporting period within the lease term. According to the leases entered
into with the lessors, the minimum lease payments under non-cancellable leases are presented
as follows:
2017 2016
Less than 1 year (Including 1 year) 7,304,197.93 7,309,963.96
1 to 2 years (Including 2 years) 7,304,197.93 7,309,963.96
2 to 3 years (Including 3 years) 4,575,859.90 7,309,963.96
Over 3 years 411,578.82 4,990,322.16
19,595,834.58 26,920,214.04
Fixed assets under finance leases, see Note V (12).
3. Comparative figures
As further explained in Note VI (2) to the financial statements, the Company obtained
the 100% equity of Sinopharm Lerentang Shijiazhuang Pharmaceutical under the
common control of the parent company. The comparative consolidated financial
statements were prepared as if the combining entities which underwent the
reorganization had been combined from the date when the combining entities first came
under the control of the ultimate controlling party, and the comparative amounts of the
consolidated financial statements of the Group shall be restated accordingly.
Accordingly, certain prior year adjustments have been made, certain comparative
amounts have been reclassified and restated. Because of the above business
combination under the common control, the shareholders’ equity at the beginning of the
year increased by RMB3,793,735.98, among which the shareholders’ equity attributable
to the parent company increased by RMB2,276,241.59, and the non-controlling interests
increased by RMB1,517,494.39.
311
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
XIV Notes to key items of the company financial statements
1. Accounts receivable
31 December 2017 31 December 2016
Accounts receivable 480,585,081.62 397,468,897.94
Less: Bad debt provision (117,320.70) (117,320.70)
480,467,760.92 397,351,577.24
The aging of accounts receivable and the related provision for bad debts is analyzed below:
31 December 2017 31 December 2016
Amount Provision for bad debts Amount Provision for bad debts
Within 1 year 480,467,760.92 - 397,351,577.24 -
1 to 2 years - - 117,320.70 (117,320.70)
2 to 3 years 117,320.70 (117,320.70) - -
480,585,081.62 (117,320.70) 397,468,897.94 (117,320.70)
There was no increase, reversal or write-off of provision for bad debts during the year 2017.
The accounts receivable and the related provision for bad debts by category are analyzed below:
31 December 2017 31 December 2016
Amount Provision for bad debts Amount Provision for bad debts
% of total % of total
amount rate amount rate
amount balance balance amount
Accounts
receivable
with similar
credit risk 480,467,760.92 99.98% - - 397,351,577.24 99.97% - -
individually not
significant but
individually
evaluated for
impairment 117,320.70 0.02% (117,320.70) 100.00% 117,320.70 0.03% (117,320.70) 100.00%
480,585,081.62 100.00% (117,320.70) 0.02% 397,468,897.94 100.00% (117,320.70) 0.03%
As at 31 December 2017，there were no accounts receivable which were individually significant and for which the provision for bad debts
was separately recognized.
312
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
XIV Notes to key items of the company financial statements (Continued)
1. Accounts receivable (Continued)
Provisions for impairment of the receivables which have a similar risk level are analyzed below:
31 December 2017 31 December 2016
Amount Provision for bad debts Amount Provision for bad debts
amount % of total amount rate amount % of total amount rate
balance balance
Within 1 year 480,467,760.92 100.00% - - 397,351,577.24 100.00% - -
As at 31 December 2017, the top five accounts receivable by customer are as follows:
Bad debt
provision
Amount amount % of the total accounts receivable
Shenzhen Hospital of Southern Medical
University 24,643,967.32 - 5.13%
Peking University Shenzhen Hospital 21,996,337.82 - 4.58%
The Second People's Hospital of
Shenzhen 19,000,801.45 - 3.95%
The Third People's Hospital of Shenzhen 16,314,089.41 - 3.40%
Shenzhen People's Hospital 14,585,666.08 - 3.03%
96,540,862.08 - 20.09%
As at 31 December 2016, the top five accounts receivable by customer are as follows:
Bad debt
provision
Amount amount % of the total accounts receivable
The Second People's Hospital of
Shenzhen 28,801,293.24 - 7.25%
Shenzhen Nanshan District People's
Hospital 19,606,334.99 - 4.93%
The University of Hong Kong -Shenzhen
Hospital 15,471,758.73 - 3.89%
Shenzhen People's Hospital of
Shenzhen (Inpatient Department) 15,358,985.01 - 3.86%
Peking University Shenzhen Hospital 11,734,383.49 - 2.95%
90,972,755.46 - 22.88%
Analysis of accounts receivable of which the recognition was terminated due to financial asset transfer is as follows:
In 2017, accounts receivable of RMB282,800,836.60 have been factored to financial institution (2016: RMB239,583,402.90).
313
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
XIV Notes to key items of the company financial statements (Continued)
2. Other receivables
The other receivables by category are listed below:
31 December 2017 31 December 2016
Amounts due from subsidiaries 1,324,203,206.47 1,648,231,739.31
Receivable from equity transaction 8,980,000.00 8,980,000.00
Deposit 1,864,394.68 76,622,091.41
Others 190,984,334.86 77,865,449.94
1,526,031,936.01 1,811,699,280.66
Less: provision for bad debts (9,993,990.30) (10,131,429.16)
1,516,037,945.71 1,801,567,851.50
The ageing of other receivables and related provision for bad debts is analyzed below:
31 December 2017 31 December 2016
Within 1 year 1,460,168,464.26 1,800,748,688.50
1 to 2 years 55,703,411.59 977,989.25
2 to 3 years 168,407.25 2,978.96
Over 3 years 9,991,652.91 9,969,623.95
1,526,031,936.01 1,811,699,280.66
Changes in provision for bad debts are presented as follows:
Opening balance Increase in the year Reversal Closing balance
2017 10,131,429.16 10,849.94 (148,288.80) 9,993,990.30
2016 10,178,577.40 - (47,148.24) 10,131,429.16
314
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
XIV Notes to key items of the company financial statements (Continued)
2. Other receivables (Continued)
Other receivables and related provision for bad debts by category are analyzed below:
31 December 2017 31 December 2016
Carrying amount Bad debt provision Carrying amount Bad debt provision
% of % of
total total
amount amount amount rate amount amount amount rate
Individually
significant and
subject to
separate
impairment
assessment 134,161,658.92 8.79% (8,980,000.00) 6.69% 8,980,000.00 0.50% (8,980,000.00) 100.00%
Receivable
accounts with
similar credit
risk 1,390,860,253.14 91.14% (20,286.35) 0.00% 1,800,978,937.71 99.40% (11,661.41) 0.01%
Individually not
significant but
individually
evaluated for
impairment 1,010,023.95 0.07% (993,703.95) 100.00% 1,740,342.95 0.10% (1,139,767.75) 65.49%
1,526,031,936.01 100.00% (9,993,990.30) 0.65% 1,811,699,280.66 100.00% (10,131,429.16) 0.56%
As at 31 December 2017, impairment provision for other receivables individually significant is analyzed as follows:
Assessment for
Amount Bad debt provision Rate impairment
Other receivable from
related party, no
uncertainty in
Mordern Pharma 125,181,658.92 - - recoverability
Shenzhen Yinghai Technology Investment Uncertainty in
Co., Ltd. 8,980,000.00 (8,980,000.00) 100.00% recoverability
As at 31 December 2016, impairment provision for other receivables individually significant is analyzed as follows:
Assessment for
Amount Bad debt provision Rate impairment
Shenzhen Yinghai Technology Investment Uncertainty in
Co., Ltd. 8,980,000.00 (8,980,000.00) 100.00% recoverability
Provisions for impairment of the receivables which have similar credit risk are analyzed below:
31 December 2017 31 December 2016
Carrying amount Bad debt provision Carrying amount Bad debt provision
Amount Amount Rate Amount Amount Rate
Within 1 year 1,390,627,820.33 - - 1,800,748,688.50 - -
1 to 2 years 62,396.60 (3,119.83) 5.00% 227,270.25 (11,363.51) 5.00%
2 to 3 years 168,407.25 (16,840.73) 10.00% 2,978.96 (297.90) 10.00%
Over 3 years 1,628.96 (325.79) 20.00% - - -
1,390,860,253.14 (20,286.35) 0.00% 1,800,978,937.71 (11,661.41) 0.00%
315
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
XIV Notes to key items of the company financial statements (Continued)
2. Other receivables (Continued)
(g) As at 31 December 2017, the accumulated top five other receivables by customer are analysed below:
% of the total Bad debt
Nature Amount Aging other receivable provision
Within 1
Sinopharm Yuexing Entrusted loans 162,700,000.00 year 10.66% -
Within 1
Sinopharm Zhanjiang Entrusted loans 157,000,000.00 year 10.29% -
Within 1
South Pharm & Trade Entrusted loans 150,000,000.00 year 9.83% -
Pingshan base Within 2
Modern Pharma project fund 125,181,658.92 years 8.20% -
Sinopharm Within 1
Dongguan Entrusted loans 121,000,000.00 year 7.93% -
715,881,658.92 46.91% -
As at 31 December 2016, the accumulated top five other receivables by customer are analysed below:
% of the total
other Bad debt
Nature Amount Aging receivable provision
Sinopharm Within 1 year
Guangzhou Entrusted borrowings 447,000,000.00 24.67% -
Sinopharm Yuexing Entrusted borrowings 252,700,000.00 Within 1 year 13.95% -
Sinopharm Zhanjiang Entrusted borrowings 138,000,000.00 Within 1 year 7.62% -
Sinopharm Dongguan Entrusted borrowings 96,000,000.00 Within 1 year 5.30% -
Dong Fang Uptodate Within 1 year
& Special Medicines
Co., Ltd. Entrusted borrowings 91,400,000.00 5.04% -
1,025,100,000.00 56.58% -
3. Long-term equity investments
31 December 2017 31 December 2016
Investments in subsidiaries (a) 5,594,679,427.58 4,590,216,730.30
Investments in associates (b) 1,625,556,656.98 1,364,255,871.80
7,220,236,084.56 5,954,472,602.10
Less: provision for impairment of
long-term equity investments (39,930,000.00) (39,930,000.00)
7,180,306,084.56 5,914,542,602.10
316
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
XIV Notes to key items of the company financial statements (Continued)
3. Long-term equity investments (Continued)
(a) Subsidiaries
Increases
Original investment cost 1 January 2017 in investment cost 31 December 2017 Equity interest held (%) Voting rights held (%)
Sinopharm Jianming 45,054,911.04 60,054,911.04 - 60,054,911.04 100.00 100.00
Sinopharm Shenzhen Material 5,400,000.00 15,450,875.93 - 15,450,875.93 100.00 100.00
Shenzhen Logistics 900,000.00 5,019,062.68 - 5,019,062.68 100.00 100.00
Sinopharm Guangzhou 58,283,114.68 1,035,440,323.63 530,000,000.00 1,565,440,323.63 100.00 100.00
Sinopharm Hengxing 8,421,544.08 45,763,288.00 46,000,000.00 91,763,288.00 100.00 100.00
Sinopharm Liuzhou 21,407,965.79 21,407,965.79 - 21,407,965.79 51.00 51.00
Sinopharm Dongguan 2,742,000.00 17,942,000.00 55,000,000.00 72,942,000.00 100.00 100.00
Huixin Investment 109,416,937.72 64,416,937.72 - 64,416,937.72 100.00 100.00
Guangdong Logistics 1,269,502.30 10,596,006.21 3,000,000.00 13,596,006.21 100.00 100.00
Sinopharm Yuexing 16,459,326.27 113,459,326.27 130,000,000.00 243,459,326.27 100.00 100.00
Sinopharm Foshan 6,995,065.51 19,995,065.51 26,000,000.00 45,995,065.51 100.00 100.00
Sinopharm Guangxi 33,048,985.28 504,048,985.28 - 504,048,985.28 100.00 100.00
Sinopharm Zhanjiang 1,369,864.65 70,769,864.65 61,000,000.00 131,769,864.65 100.00 100.00
Sinopharm Yanfeng 38,207,800.00 38,207,800.00 - 38,207,800.00 51.00 51.00
Sinopharm Meizhou 4,481,900.00 21,281,900.00 30,000,000.00 51,281,900.00 100.00 100.00
Sinopharm Huizhou 20,939,177.19 16,644,200.00 20,000,000.00 36,644,200.00 100.00 100.00
Sinopharm Zhaoqing 5,060,000.00 18,060,000.00 25,000,000.00 43,060,000.00 100.00 100.00
Sinopharm Jiangmen 56,000,000.00 106,000,000.00 - 106,000,000.00 100.00 100.00
Sinopharm Zhongshan 10,000,000.00 10,000,000.00 20,000,000.00 30,000,000.00 100.00 100.00
Sinopharm Shaoguan 13,580,000.00 13,580,000.00 - 13,580,000.00 70.00 70.00
317
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
XIV Notes to key items of the company financial statements (Continued)
3. Long-term equity investments (Continued)
(a) Subsidiaries (Continued)
Increases
Original investment cost 1 January 2017 in investment cost 31 December 2017 Equity interest held (%) Voting rights held (%)
Sinopharm Shantou 7,490,000.00 10,990,000.00 13,000,000.00 23,990,000.00 100.00 100.00
Guangdong South Pharmaceutical Foreign
Trade Co., Ltd. 401,922,976.68 401,922,987.18 - 401,922,987.18 100.00 100.00
Guangdong Uptodate & Special Medicines 144,682,822.34 144,682,822.34 - 144,682,822.34 100.00 100.00
Guoda Pharmacy 1,361,800,110.06 1,361,800,110.06 - 1,361,800,110.06 100.00 100.00
Foshan Nanhai Medicine Co., Ltd. 462,682,298.01 462,682,298.01 - 462,682,298.01 100.00 100.00
Sinopharm Maoming(ii) 8,300,000.00 - 8,300,000.00 8,300,000.00 100.00 100.00
Sinopharm Zhuhai(i) 10,362,740.00 - 37,162,697.28 37,162,697.28 100.00 100.00
4,590,216,730.30 1,004,462,697.28 5,594,679,427.58
(b) Associates
Movement
Voting Explanation for the
Provision for Equity rights inconsistence between equity
At beginning of the Profit or loss under Other changes in impairment interest held interest held and voting rights
year Investment the equity method Dividend declared equity Other At end of the year at end of the year held (%) (%) held
Note XVI(5)
Board of the directors is the
highest decision making
organization, which is formed
Main Luck by 2 shareholders of Main
Pharmaceutical 207,259,086.90 - 66,977,651.24 (35,190,000.00) - - 239,046,738.14 - 35.19 33.33 Luck Pharmaceutical evenly
Sinopharm Zhuhai
(i) 1,420,139.96 - - (406,462.68) - (1,013,677.28) - - - - N/A
Zhijun Suzhou 39,930,000.00 - - - - - 39,930,000.00 (39,930,000.00) 33.00 33.00 N/A
Zhijun Medicine 174,820,412.07 - 116,222,509.13 - - - 291,042,921.20 - 49.00 49.00 N/A
Zhijun Trade 6,198,820.40 - 1,477,322.29 - - - 7,676,142.69 - 49.00 49.00 N/A
Pingshan Medicine 47,087,958.31 - 21,598,846.02 - - - 68,686,804.33 - 49.00 49.00 N/A
Shanghai Shyndec
Pharmaceutical
Co., Ltd. 887,539,454.16 - 80,258,883.53 (22,468,818.32) 33,844,531.25 - 979,174,050.62 - 15.56 15.56 N/A
1,364,255,871.80 - 286,535,212.21 (58,065,281.00) 33,844,531.25 (1,013,677.28) 1,625,556,656.98 (39,930,000.00)
318
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
XIV Notes to key items of the company financial statements (Continued)
3. Long-term equity investments (Continued)
(i) In March 2015, the Company acquired a 10% equity interest of Sinopharm Zhuhai for RMB1 million. Sinopharm Zhuhai became the Company’s
associate. The highest authority of Sinopharm Zhuhai is the shareholders' committee, and the shareholders exercise their voting rights according to
their investment proportion. Meanwhile, Sinopharm Zhuhai has set up the board of directors which is responsible to the shareholders, with three
members in total, and the Company delegates one member. Each member has one voting right, and all of the resolutions of the board of directors
should be passed by at least half of the directors.
In January 2017, the Company acquired a 90% equity interest of Sinopharm Holding Zhuhai from a natural person Xianjiang Li for RMB9,249,000. As a
result, the Company wholly owned Sinopharm Zhuhai to constitute business combination involving enterprises not under common control. The
acquisition was completed on 10 January 2017 and included in the consolidation scope of the Company (Note VI (1.1)).
(ii) In May 2017, the Company acquired a 100% equity interest of Maoming Yongsheng Medicines Co., Ltd. from Ganyi Bai, Fuyou Bai and Hongmei Lai
for RMB8,300,000 to constitute a business combination involving enterprises not under common control. The acquisition was completed on 31 May
2017 and included in the consolidation scope of the Company (Note VI (1.2)).
319
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
XIV Notes to key items of the company financial statements (Continued)
4. Sales and cost of sales
2017 2016
Revenue from main operations 3,334,525,451.83 3,111,734,107.06
Other operating income 12,416,393.55 27,120,511.91
3,346,941,845.38 3,138,854,618.97
2017 2016
Cost of main operations 3,205,231,939.72 2,981,861,246.08
Other operating expenses 6,436,707.30 22,488,385.61
3,211,668,647.02 3,004,349,631.69
Revenue from and cost of main operations
Revenue from and cost of main operations analyzed by industry are set out below:
2017 2016
Revenue from Cost of main Revenue from Cost of main
main operations operations main operations operations
Medical wholesale
and retail 3,334,525,451.83 3,205,231,939.72 3,111,734,107.06 2,981,861,246.08
Other operating income and expenses
Other operating income and expenses analyzed by industry are set out below:
2017 2016
Other operating Other operating Other operating Other operating
income cost income cost
Rental income 6,626,331.17 807,977.46 22,341,100.64 18,099,321.43
Rendering of
services 4,616,650.60 4,529,535.37 4,779,411.27 4,389,064.18
Others 1,173,411.78 1,099,194.47 - -
12,416,393.55 6,436,707.30 27,120,511.91 22,488,385.61
320
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
XIV Notes to key items of the company financial statements (Continued)
5. Investment income
2017 2016
Gain on long-term equity investment
under the cost method 354,422,188.02 315,836,157.58
Gain on long-term equity investment
under the equity method (Note
XIV(3)(b)) 286,535,212.21 209,757,868.18
Investment income from disposal of
other long-term equity investments - 63,351,000.00
640,957,400.23 588,945,025.76
321
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
Supplementary information to financial statements
1. Schedule of non-recurring profit or loss
Amount for 2017
Gains and losses from disposal of non-current assets,
including write-off of accrued asset impairment (203,279.86)
Government grants recognized in the income statement for the current year, except for those
closely related to the ordinary operation of the Company which the Group enjoyed
constantly according to the allotment standards or quantitative criteria of the country 26,854,027.03
The investment cost of an enterprise to acquire a subsidiary, an associate and a joint venture
is less than profits derived from the fair value of the identifiable net assets of the invested
unit when investing 58,022.12
Net profit or loss arising from the subsidiaries acquired in the business combinations involving
enterprises under common control for the period from the beginning of the reporting period
to the combination date (1,096.00)
Reversal of bad debt provision for accounts receivable that were tested for
impairment individually 1,642,360.26
Profit or loss from outward entrusted loans 1,907,519.89
Non-operating income and expenses other than the aforesaid items 377,281.07
Remeasurement of original equity under fair value method to confirm investment income after
step-by-step purchase of subsidiary 134,740.70
30,769,575.21
Impact on income tax (6,690,220.38)
Impact on non-controlling interests after tax (1,749,005.16)
22,330,349.67
Basis for preparation of the detailed list of non-recurring profit or loss items:
Under the requirements in Explanatory announcement No. 1 on information disclosure by companies
offering securities to the public – non-recurring profit or loss (2008) (“Explanatory announcement
No.1”) from CSRC, non-recurring profit or loss refers to those arising from transactions and events
that are not directly relevant to ordinary business, or that are relevant to ordinary business, but are so
extraordinary that would have an influence on users of financial statements making proper
judgements on the performance and profitability of an enterprise.
322
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
Supplementary information to financial statements (Continued)
2. Return on equity (“ROE”) and earnings per share (“EPS”)
Weighted
Basic EPS
average ROE
(RMB)
(%)
Basic (Note 1)
2017
Net profit attributable to ordinary shareholders of the parent
11.91 2.47
Net profit after deducting non-recurring profit or loss attributable
to the Company’s ordinary shareholders of the parent
11.66 2.42
2016
Net profit attributable to the ordinary shareholders of the parent 15.05 2.80
Net profit after deducting non-recurring profit or loss attributable
to the ordinary shareholders of the parent
13.26 2.23
The above-mentioned return on net assets and earnings per share were calculated according to the
Information Disclosure and Presentation Rules for Companies Making Public Offering of Securities No.9
– Calculation and Disclosure of Return on Net Assets and Earnings Per Share (revision 2010) issued by
the CSRC.
Note 1: There were no potential dilutive ordinary shares for the year ended 31 December 2017 (2016:
Nil) and hence no presentation of diluted EPS were provided.
323
Section XII. Documents Available for Reference
1. Accounting Statements carried with the signature and seals of legal representative, chief financial officer
and person in charge of accounting;
2.Original auditing reprot with seal of the CPA and signature & seal of the registration accountant;
3. Original text of all documents of the Company as well as manuscript of the announcement disclosed in
reporting period on Securities Times, China Securities Journal and Hong Kong Commercial Daily appointed
by the CSRC;
4. Originl text of the annual reprot with signature of the Chariman;
5. The Place Where the document placed: Office of Secretariat of the Board of Directors, Accord Pharm
Bldg., No. 15, Ba Gua Si Road, Futian District, Shenzhen
China National Accord Medicines Corporation Ltd
Legal representative: Lin Zhaoxiong
22 March 2018
324
