China National Accord Medicines Corporation Ltd.
Annual Report 2018
April 2019
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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 2018 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
Li Zhiming director Official business Liu Yong
Jiang Xiuchang director Official business Liu Yong
Affected by various risk factors, the company’s business operations are facing
risks in terms of changes in industry policies and intensified market competition.
The company has made a specific statement on the “Future Development
Prospects” of the fourth section “Discussion and Analysis of the Operation” in
this annual report, and all investors should pay attention to it.
The profit distribution plan that deliberated and approved by the Board is:
based on total stock issued 428,126,983 shares, distributed 4.00 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...............................................................5
Section III Summary of Company Business.................................................................................... 9
Section IV Discussion and Analysis of the Operation................................................................... 13
Section V Important Events............................................................................................................ 37
Section VI Changes in shares and particular about shareholders...............................................67
Section VII Preferred Stock............................................................................................................ 75
Section VIII Particulars about Directors, Supervisors, Senior Executives and Employees......76
Section IX Corporate Governance..................................................................................................89
Section X Corporate bond............................................................................................................... 97
Section XI Financial Report............................................................................................................ 98
Section XII Documents available for reference........................................................................... 351
2
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,
Refers to RMB, RMB 10 thousand, RMB 100 million
100 million Yuan
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
Certification of quality management standards for pharmaceutical
GSP authentication Refers to
trading
Supply Chain Refers to The CMS, an information system for processing work flow and
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Management System purchasing, inventory and sales documents
Abbreviation: Refers to
Sinopharm Holding
Refers to Sinopharm Holding Guangzhou Co., Ltd.
Guangzhou
Guoda Drugstore Refers to Sinopharm Holding Guoda Drugstore Co., Ltd.
Sinopharm Holding
Refers to Sinopharm Holding Guangxi Co., Ltd.
Guangxi
Foshan Nanhai Refers to Foshan Nanhai Pharmaceutical Group Co., Ltd.
Nanfang Pharmaceutical
Refers to Guangdong Nanfang Pharmaceutical Foreign Trade Co., Ltd.
Foreign Trade
China National Zhijun,
Refers to China National Zhijun (Shenzhen) Pharmaceutical Co., Ltd.
Zhijun Pharmaceutical
Zhijun Pharmacy Trade Refers to Shenzhen Zhijun Pharmacy Trade Co., Ltd.
Zhijun Pingshan,
Refers to China National Zhijun (Shenzhen) Pingshan Pharmaceutical Co., Ltd.
Pingshan Pharmaceutical
Main Luck
Refers to Shenzhen Main Luck Pharmaceuticals Inc.
Pharmaceuticals
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Section II Company Profile and Main Financial Indexes
I. Company profile
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
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 Securities affairs representative
Name Chen Changbing Wang Zhaoyu
Accord Pharm. Bldg., No. 15, Ba Gua Si
Accord Pharm. Bldg., No. 15, Ba Gua Si
Contact add. Road, Futian District, Shenzhen, Road, Futian District, Shenzhen,
Guangdong Province Guangdong Province
Tel. +(86)755 25875195 +(86)755 25875222
Fax. +(86)755 25195435 +(86)755 25195435
E-mail gyyzinvestor@sinopharm.com gyyz0028@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
IV. Registration changes of the Company
Organization code 19218626-7
Changes of main business since listing (if
No change.
applicable)
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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
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 adviser 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
2018 2017 Changes over last year 2016
Operating income (RMB) 43,122,385,521.23 41,263,393,427.41 4.51% 41,248,341,665.46
Net profit attributable to
shareholders of the listed company 1,210,742,435.78 1,057,791,930.67 14.46% 1,186,539,201.93
(RMB)
Net profit attributable to
shareholders of the listed company
1,175,971,967.39 1,035,461,581.00 13.57% 834,359,349.80
after deducting non-recurring gains
and losses (RMB)
Net cash flow arising from
1,322,606,352.27 1,285,291,911.82 2.90% 1,472,342,476.16
operating activities (RMB)
Basic earnings per share
2.83 2.47 14.57% 2.80
(RMB/Share)
Diluted earnings per share
2.83 2.47 14.57% 2.80
(RMB/Share)
Weighted ROE 11.56% 11.91% -0.35% 15.05%
Changes over end of
End of 2018 End of 2017 End of 2016
last year
Total assets (RMB) 28,930,300,519.97 22,343,643,527.77 29.48% 21,316,548,247.95
Net assets attributable to
shareholder of listed company 11,618,432,603.28 9,396,572,345.88 23.65% 8,452,426,863.52
(RMB)
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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
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 10,256,566,731.51 10,522,599,968.16 10,987,540,368.77 11,355,678,452.79
Net profit attributable to
292,731,685.33 348,995,349.60 285,244,535.54 283,770,865.31
shareholders of the listed company
Net profit attributable to
shareholders of the listed company
284,982,162.39 338,314,176.95 282,319,350.57 270,356,277.48
after deducting non-recurring gains
and losses
Net cash flow arising from
-864,716,289.96 1,090,073,999.16 338,633,586.16 758,615,056.91
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 2018 2017 2016 Note
Gains/losses from the disposal of non-
The gains from fixed
current asset (including the write-off that 7,048,337.10 -203,279.86 11,931,729.24
assets disposal .
accrued for impairment of assets)
Governmental subsidy reckoned into current Mainly for receiving
30,098,383.86 26,854,027.03 34,000,702.25
gains/losses (not including the subsidy of all kinds of special
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enjoyed in quota or ration according to subsidies and fiscal
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 729.29 58,022.12 from subsidiary
identifiable net assets from invested acquisition.
enterprise which should be enjoined
Current net gain/losses of the subsidiary
merger under the same control from -1,096.00 260,423,077.82
beginning of the period to combination date
Switch back of provision for depreciation of
account receivable which was singly taken Not applicable 1,642,360.26 5,952,565.52
depreciation test
Switch back of provision for depreciation of
account receivable and contract assets which 5,301,091.66 Not applicable Not applicable
were singly taken depreciation test
The gains obtained
from offering entrust
Gains and losses on foreign entrusted loans 3,246,925.69 1,907,519.89 2,880,583.33 loans to China
National Zhijun
(Suzhou).
Consigning fee received for consigned
516,929.44 393,081.77
operation
Other non-operating income and expenditure
5,069,438.37 377,281.07 6,300,281.94
except for the aforementioned items
Other gains/losses satisfy a definition of
1,445,926.01 134,740.70 121,754,182.26
extraordinary gains/losses
Less: Impact on income tax 12,137,071.11 6,690,220.38 28,392,824.03
Impact on minority shareholders’
5,820,221.92 1,749,005.16 63,063,527.97
equity (post-tax)
Total 34,770,468.39 22,330,349.67 352,179,852.13 --
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
□ 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 Sinopharm Accord includes pharmaceutical distribution and
pharmaceutical retail, 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 stepped distribution network, creates intelligent
supply chain, and devotes to become a provider for pharmaceutical and health care 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; in 2014, we accelerating the integration of three-tier companies and the Company achieved
an operation all over the network in 2015; moreover, the distribution network has further expansion in 2018 and
main development direction is retail terminals, including: 982 secondary and tertiary medical institutions, 4996
primary medical customers and 1947 retail terminal customers (chain drugstores and single store).
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 2018, Guoda Drugstore has operated 4275 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 drugstore,
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
Increased 223.1634 million Yuan over that of period-begin with 13.81% rate of change, mainly because
Equity assets
the investment income from joint ventures increased in the period.
Increased 56.2234 million Yuan over that of period-begin with 10.19% rate of change, mainly because
Fixed assets office building purchased by subsidiary and office & machinery equipment purchased for medical
cooperation projects
Decreased 6.5443 million Yuan over that of period-begin with 2.01% rate of change, no major changes in
Intangible assets
reporting period.
Increased 13.4654 million Yuan over that of period-begin with 58.68% rate of change, mainly because
Construction in progress
more investment in ERP system construction and supply chain extension project
Increased 3898.1259 million Yuan over that of period-begin with 93.00% rate of change, mainly because
Monetary fund
received an addition funds investment from strategic investors to subsidiary in the period
Other non-current Increased 140 million Yuan over that of period-begin with 100% rate of change, mainly due to the
financial assets investment of China National Zhongjin Medical Industry Fund
Decreased 69.6566 million Yuan over that of period-begin with 49.05% rate of change, mainly because
Other non current assets
the account paid in advance for investment and engineering and equipment declined
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
Yes
Retailing industry
1. Strong network coverage and layout
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Do a good job in resource sharing of wholesale and retail integration by relying on the perfect distribution
network and variety resources:
Establish the leading and perfect distribution networks in Guangdong and Guangxi: The company has complete
pharmaceutical distribution networks in Guangdong and Guangxi provinces, comprehensively covering the
Grade-III and Grade-II medical institutions and retail chain terminals in Guangdong and Guangxi. In recent years,
it has seized the opportunity to develop retail customers, and has vigorously expanded its distribution retail
pharmacies and small social medicals and other related businesses, of which the sales has achieved rapid growth.
Take the lead in scale and cover the countrywide retail network: Guoda Drugstore is a pharmaceutical retail
enterprise with sales volume ranking first 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.
2. Abundant variety resources
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.
Guoda Drugstore 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.
3. Complete logistics and distribution system
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.
Guoda Drugstore 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.
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
brand come down in one continuous line, depending on powerful force of central enterprises, the Company’s
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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 2018, Sinopharm Accord sought breakthroughs in development and change. With the implementation of
medical reform, Sinopharm Accord took the initiative to meet the changes, and conscientiously implemented the
working policy of “breaking the situation, saving the strength, and financing” of Sinopharm Group, fully
cooperated with the implementation of the government’s medical reform policy, and actively grasped the market
and policy opportunities, and focused on the objectives made at the beginning of the year to further promote
development through transformation and upgrading, resolved various unfavorable factors, and seized
opportunities. In 2018, the company took the pace of internationalization and achieved better and smoother
development on the basis of consolidating business advantages and improving service capabilities.
(i)The business condition of the Company in 2018
As of end of 2018, Sinopharm Accord achieved an operation revenue of 43,122 million Yuan, with year-on-year
growth of 4.51 percent; operation profits amounted as 1,671 million Yuan, a 14.15 percent from a year earlier; the
net profit attributable to shareholder of listed company amounted as 1,211 million Yuan, a 14.46 percent up on a
y-o-y basis.
Ended as 2018, the distribution business of Sinopharm Accord has gained revenue of 32,757 million Yuan in
operation, with year-on-year growth of 3.92 percent; net profit amounted as 716 million Yuan, a 11.89 percent up
from a year earlier; Guoda Drugstore achieved an operation revenue of 108.78 million Yuan, a 8.45 percent
growth on a y-o-y basis; net profit gains 302 million Yuan, with y-o-y growth of 15.1 percent.
(II) Overview of the main work of the company in 2018
1. Continue to promote the “wholesale and retail integration” strategy
After the completion of major asset restructuring, the company actively promoted the “wholesale and retail
integration” strategy, made full use of the commercial platform with mature distribution and the terminal
advantageous network with wide retail sales to extend the commodity to the retail terminal through effective
resource integration means and give play to the scale effect so as to achieve the synergistic interaction between
distribution and retail, enhance the competitive advantage of brand, service and profitability, and establish an
integrated business model. It integrated resources through the implementation of wholesale and retail procurement
synergy, investment and M&A integration, prescription complementation, membership management sharing,
brand image classification, logistics integration systemization, information system integration and other means,
after two years of development, wholesale and retail synergy has achieved initial success, and the retail scale and
synergy continued to break through, in 2018, the sales revenue of wholesale and retail synergy was 590 million
yuan, a year-on-year increase of 75%, at the same time, it created the new model of distribution-Guoda wholesale
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and retail “member store”, and gave play to the advantages of commercial distribution center in variety,
background connection, and delivery, combined with Guangdong Guoda retail network, developed member stores
in Guangdong and Guangxi, and the members increased to 86 stores throughout the year. We also integrated the
distribution and retail strategy varieties, carried out category planning and resource sharing, and already have had
more than 100 cooperative manufacturers in the catalogue of wholesale and retail integration varieties, and over
600 cooperative product specifications, and promoted more than 1,000 prescription drugs to open retail channels.
2. Invest in mergers and acquisitions and self-open stores, and expand network layout
The company has formed strong business networks in the southern area of China, its business has covered more
than 4,000 medical institutions in Guangdong and Guangxi provinces, which basically achieved full coverage in
Guangdong and Guangxi. On this basis, in 2018, the distribution business layout continued, through investment in
mergers and acquisitions and new establishments, Sinopharm Holding Guangxi Hezhou Co., Ltd., Sinopharm
Holding Guangxi Qinzhou Co., Ltd., Sinopharm Holding Guangxi Hechi Co., Ltd., Sinopharm Holding Guorun
Medical Supply Chain Service (Guangxi) Co., Ltd., and Sinopharm Holding Baiyi Pharmacy Guangxi Co., Ltd.
have been established.
Based on the retail business developed in nearly 70 cities in 19 provinces and autonomous regions, Guoda
Drugstore expanded their retail scale advantage with the “self-opening + M&A” model, at the end of 2018, the
total number reached 4,275 stores, including a net increase of 441 stores, meanwhile, it completed the investment
in newly establishing Fujian Guoda Medicine Co., Ltd., newly establishing Shanghai Guoda Ruijing Pharmacy
Co., Ltd., newly establishing Sinopharm Holding Guoda Drugstore Zhengzhou Chain Co., Ltd., newly
establishing Inner Mongolia Guoda Drugstore Pharmaceutical Co., Ltd., and the acquisition of 100% equity of
Shanxi Zhongao Pharmaceutical Co., Ltd., the acquisition of relevant retail business and assets of Inner Mongolia
Tongren Pharmacy Chain Co., Ltd., and the acquisition of 100% equity of Shanxi Yixintang Pharmacy Co., Ltd.
3. The transformation and innovation of distribution business strongly develop in four directions
Promoted the transformation of traditional distribution business, explored advanced supply chain management
mode and informatization means, realized the traceable management of hospital medical materials circulation,
improved the drug supply chain management efficiency and reduced operating costs. At the same time, relied on
the network layout of distribution, and accelerated the optimization of terminal network construction. In 2018,
according to changes in the market environment, the company actively expanded its business development areas,
clearly focused on the development of four business directions including retail direct sales, equipment
consumables, retail diagnosis and treatment, and primary care, and achieved effective breakthroughs: retail direct
sales increased by 34% on a year-on-year basis, and equipment consumables increased by 29% on a year-on-year
basis, retail diagnosis and treatment increased by 49% on a year-on-year basis, and primary care increased by 17%
on a year-on-year basis.
(1) Solidly completed the traditional business. Quickly adjusted strategies for changes in industry rules such as
bidding, GPO, two-vote system, and anti-cancer drug tax reform, pooled the resources, and completed the variety
development and strategy response.
Sinopharm Guangzhou was awarded the centralized bargaining qualification of the pharmaceutical business
enterprises commissioned by Guangzhou GPO Medical Institutions; supported the GPO multi-platform operation
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mode in other regions of Guangdong, and signed strategic cooperation framework agreements with prefecture-
level municipal governments such as Heyuan and Maoming.
After promoting the implementation of 131 key cooperation projects of two vote system, the income of
Guangdong’s pure sales business increased by 958 million yuan. At the same time, improved the efficiency of the
supply chain through the establishment of invoice management system, the optimization of purchase tax refund
process, the inventory management of multi-warehouse operation and other means, and further improved the
operation process specifications of prepayment and cash deposit, and ensured fast switching of the two-vote
system.
Integrated the upstream resources and expanded the primary care networks. Explored the overall solution of direct
delivery for community service for home care of elderly community health care pharmacy and the model of
“community health care + Guoda
Drugstore”, created a health archive information platform, provided community service for home care of elderly
and family doctors door-to-door service, promoted health consultation with integrated traditional Chinese and
Western medicine, and provided nearby medicine taking and door-to-door delivery services.
(2) Increased retail direct sales coverage. By expanding the terminal network, platform construction and
background driving, accelerated the sinking of network and enhanced the competitiveness of business, and
operated 49 top one hundred chain stores. Completed the B2B background upgrade, the Hengxing station APP has
been online, and achieved 1425 terminal customers through online marketing.
(3) Built the core competitiveness of retail diagnosis and treatment. Accelerated the stationing of distribution and
retail, there were 61 open drugstores throughout the year, including 23 drugstores newly opened in 2018 (12
cooperative drugstores in the hospitals, 6 drugstores near the hospitals, and 5 DTP pharmacies), the quality of the
drugstores was gradually improved, and the sales revenue increased by 36% on a year-on-year basis. Built
distinctive service models, brand recognition and industry influence were promoted, Foyi Drugstore has obtained
the qualification of medical insurance for major illnesses, Foshan Drugstore and Foyi Drugstore have obtained the
qualifications of the designated pharmacies for out-patient outsourcing medicine for special diseases, and 2
pharmacies in Huizhou have become the national negotiation drug agreement pharmacies; introduced the health
testing all-in-one machine, drug-seeking robots, and other intelligent devices to create smart professional
pharmacies. Undertook prescription outflows and explore new models, created a prescription transfer docking
system, linked the cloud hospital, the provincial internet hospital and other platforms to explore prescriptions
undertaking.
(4) Fully developed the equipment consumables business. Vigorously developed SPD equipment consumables
business, assisted hospitals to improve consumables management level and reduce hospital costs. A number of
hospitals have launched SPD and ‘smart chain’ (ISC) integrated management solutions, and have become “Top
Ten Pharmaceutical Supply Chain Service Innovation Cases” and “Excellent Cases of Pharmaceutical Supply
Chains” in the pharmaceutical distribution industry in 2018. The reagent business has established a model of the
top three hospitals, the equipment maintenance business has established a medical treatment alliance mode in
Haizhu District of Guangzhou, and the disinfection supply business has been officially put into operation. The
company is driving a transformation of services centering on consumers and end patients.
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4. Open up the process of internationalization and build a “new Guoda”
In July 2018, Guoda Drugstore completed the introduction of Walgreens Boots Alliance, the world’s largest
drugstore chain, and became a Sino-foreign joint venture after the equity transfer. Through the cooperation with
Walgreens Boots Alliance, the company will introduce internationally advanced management concepts,
information technology, and product supply chain management to bring about all-round improvement for Guoda
Drugstore in operational efficiency, pharmaceutical service capabilities and diversified category management
capabilities, hoping to lead the development of China’s pharmaceutical retail industry, to meet the differentiated
needs of customers, and to create new features for China’s pharmaceutical retail. The new session of board of
directors of Guoda Drugstore has defined the strategic plan for the retail business for the next 3-5 years and has
formed specific strategic measures, and it has launched multiple projects for strategic measures, such as
development strategies and paths, merger and acquisition strategies, retail terminal operational capacity
enhancement, organizational structure design, and new store model pilot, digital innovation and new channels,
category optimization, private brand strategy, centralized procurement, information technology and so on.
By the end of 2018, Guoda Drugstore has a total number of 4275 drugstores, with a year-on-year increase of 441
stores compared with 2017. Among them, there are 361 hospital-side stores, increased 58 new ones; 1213 national
chronic disease stores, a year-on-year increase of 33%; 2670 medical insurance stores of direct sales.
(1) Optimized and improved basic management, and promoted the front-desk marketing management. Established
a retail price control system by strengthening management, teaching methods, and grasping promotions, and
carried out the loss management through project system management. In 2018, the sales revenue of direct
comparable stores was 6.23 billion yuan, a year-on-year increase of 3.7%; the loss management was improved,
and 121 stores stopped losses in 2018.
(2) Integrated the wholesale and retail integration resources, effectively managed the commodity procurement and
category planning, and centralized purchasing and sales has a year-on-year growth of 20%; strengthened the
capacity improvement of pharmaceutical service, and continued to optimize in member management, pharmacist
training, job skills training, and commissioner’s business capabilities, the total number of members for the year
reached 19.76 million;
(3) Continued to advance the innovative business. Built and promoted the OTO self-operated platform, third-party
OTO (Meituan, Jingdong Daojia, etc.), the instant distribution reached a total sales of 14.04 million, a year-on-
year increase of 167%; commercial insurance card business increased by 17%; the stored value card business
increased by 16%; the electronic prescription platform had a total prescription of more than 500,000 orders.
5. Build new organizational capabilities
To match strategy and control needs, the company improved organizational effectiveness by optimizing corporate
governance, ownership structure, and organizational structure. Sinopharm Accord headquarters took “defining
strategy, controlling risks, and allocating resources” as its core positioning, optimized management and control
mechanism, improved organizational platform and service efficiency; optimized the financial control system by
improving investment platform and matching investment with resources, operated full-process management,
controlled risk and fully supervised, and built assets, safety, legal system, and platform management; took
business-oriented, strengthened the construction of talent team, built a diversified human resource management
16
system and incentive mechanism, and stimulated organizational vitality; took special governance as the starting
point, optimized resource allocation, focused on operational improvement, improved organizational efficiency,
strengthened integrated operational management capabilities, and improved strategic development execution
efficiency and business operation efficiency.
6. Promote technological transformation, and promote business informationization and intelligent logistics
The company strengthened the construction of scientific and technological talents, strengthened the advantages of
information technology, optimized basic management, built a financial sharing platform, and the integrated first
marketing platform, cloud platform, intelligent logistics platform, and integrated new technologies promoted the
implementation of four major businesses of distribution. Introduced AI intelligence, launched the AGV robot
project in Dongguan, and launched 20 automatic drug sales machines in Shenzhen and Inner Mongolia, and
promoted intelligent unmanned drug sales projects.
7. Prevent risks all round, and ensure compliance
The company formed a comprehensive risk prevention and control system by improving the compliance system,
fostering the employees’ compliance awareness, strengthening risk supervision, and giving full play to the
supervisory role of discipline inspection + finance + risk operation + legal + internal audit. On the one hand, we
improved risk prevention and control system, and strengthened risk supervision; on the other hand, we took
measures to strengthen pressure control to “receivables and de-stocking” and internal audit, supervised the whole
process of major projects, strictly abided by the quality bottom line, Sinopharm Accord and its subordinate
enterprises passed the Good Supply Practice Certification for Pharmaceutical Products, and passed 2008 review of
ISO9001 with zero defect, and no major quality accidents occurred.
8. Grasp the grassroots and consolidate the party building
Sinopharm Accord has consistently adhered to political responsibility, after the headquarters took the lead in
completing the work of party building into the charter, in 2018, the general requirements for party building into
the charter have been fully completed at the subsidiary level. By consolidating the grassroots foundation, we
carried out the specific action of “party building strengthening foundation”, strictly implemented the inner-party
system, established templates and guidelines, and enhanced grassroots organizational strength; highlighted
political leadership, and organized various inner-party learning and training to temper party spirit and firm ideals
and beliefs; implemented “two responsibilities”, strengthened annual inspections, and played the role of “swords”;
deepened the construction of incorruptible culture, and provided discipline guarantee for the company’s
compliance operations and high-quality development.
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 2018, Guoda Drugstore has opened up 3202 direct-sale stores, with total revenue up to 10.02 billion
Yuan, increased by 9.87 percent from a year earlier, it also has 1073 franchised stores, which has earned 1.183
billion Yuan of distribution revenue, with year-on-year growth of 6.25 percent.
17
Direct-sale store Franchised outlet
Region Numbers of Sales income Y-o-y Numbers Dispatching income Y-o-y
the store (in 10 thousand Yuan) changes of the store (10 thousand Yuan) changes
North 1,510 523,851.89 12.28% 322 47,602.24 13.66%
East China 793 233,009.72 5.40% 578 56,150.58 -0.42%
South China 409 139,736.67 8.06% 67 9,021.40 14.71%
Central China 267 52,345.43 12.10% 106 5,477.87 6.10%
Northwest 223 53,174.48 9.76% - - 0.00%
Total 3,202 1,002,118.21 9.87% 1,073 118,252.09 6.25%
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
Opening Operatin Business Actual operating Property
Serial Region Store name
year g mode format area(M2) ownership
1 Shanxi Zhongli Branch in Yiyuan 2002
Direct- 5+X 820.00 Property rental
sale
2 Inner
Headquarter 2003 Direct- 5+X 1,689.26 Property rental
Mongolian sale
3 Guangdo Exhibition hall branch 2006 Direct- Modern 260.00 Property rental
ng of Guoda Drugstore sale Pharmacy
4 Shanxi Eryuan Branch in Yiyuan 2011 Direct- 5+X 600.00 Property rental
sale
5 1997 Direct- Modern 773.16 Property rental
Beijing Xidan Jinxiang sale Pharmacy
6 Pharmaceutical market 1991 Direct- Modern 620.00 Property rental
Jiangsu sale
in Yangzhou Baiyulan Pharmacy
7 2010 Direct- Traditional 1,206.00 Property rental
sale Chinese
Hebei Le Ren Tang Headquarter
Medicine
outpatient store
8 Xiamen New Special 2005 Direct- Modern 132.90 Property rental
Fujian sale
Medicine Pharmacy
9 2000 Direct- Traditional 280.00 Property rental
Kangning store of Le sale Chinese
Hebei
Ren Tang Medicine
outpatient store
10 Guangdo Zhenxing Branch of 2002 Direct- Modern 200.00 Property rental
ng Guoda Drugstore sale Pharmacy
(2) In 2018, the Company has opened 474 new direct-sale stores and closed 75 stores, with a net increase of 399
stores
Direct-sale store Franchised outlet
Region Number of store Number of stores Number of store Number of stores
Total area
increased shut down increased shut down
North 263 33,151.88 -31 46 -9
18
East China 80 8,774.95 -20 25 -41
South China 55 5,732.05 -12 15 -7
Central China 39 4,452.47 -6 25 -14
Northwest 37 4,606.04 -6 - -
Total 474 56,717.39 -75 111 -71
2. In 2018, the online sales were steadily carried out, and overall e-commerce revenue growth slowed down, and
O2O platform sales totaled 255 million yuan, an increase of 3.1% on a year-on-year basis; among them, Daojia
services grew rapidly and achieved sales of 14.04 million yuan in 2018, an increase of 167% on a year-on-year
basis. Details were as follows:
In 10 thousand Yuan
Cooperation platform Operation revenue
China National Health On-line 20,174.84
800FANG.CN
247.14
(www.800pharm.com)
Yaofangwang (www.yaofangwang.com) 1,457.40
Yiyaowang (www.111.com.cn) 157.99
Other B2C online retailers 1,304.43
JD daojia (http://daojia.jd.com) 673.18
Ali Health 73.94
Yao Dao Jia 1.20
Wanda Online Retailer 2.49
Baidu Takeaway 18.26
ele.me
906.18
(www.ele.me/home)
Meituan Waimai
254.80
(waimai.meituan.com)
Baheal Pharmaceutical 49.19
Wechat Mall 212.03
Total 25,533.06
3. Purchasing inventory and suppliers:
Top 5 suppliers for year of 2018:
In 10 thousand Yuan
Suppliers Purchase amount (tax included) Procurement ratio
No.1 20,352 13%
No.2 15,756 10%
No.3 11,778 8%
No.4 9,499 6%
No.5 9,364 6%
4. The status of warehousing logistics:
In 2018, Guoda Drugstore has 27 large and small sized logistic warehouses in total, covering more than 120,000
square meters, spreading out across 17 provinces.
Logistic charge
Province Region Warehouse area (M2) Management ownership Rate
(in 10 thousand
19
Yuan)
Liaoning Shenyang 18,821 Self-management 1449.37 1.00%
Guangzhou Guangzhou Hengchang
6,950
Logistic entrusted
684.70 0.87%
Guangdong Shanzhen
Jiangmen 5,072 Self-management 486.24 1.73%
Shanxi Wanmin 10,919 Self-management 1020.74 1.09%
Shanxi
Shanxi Yiyuan 8,860 Self-management 752.91 0.70%
Dadesheng 4,869 Self-management 275.31 0.92%
Jiangsu Nanjing 2,200 Self-management 225.79 2.02%
Liyang 1,920 Self-management 147.95 0.86%
Fujian 2,395 Self-management 253.71 0.93%
Fujian
Quanzhou 1,096 Self-management 54.91 0.83%
Hebei Hebei 4,300 Self-management 391.82 0.83%
Shandong Shandong 5,800 Self-management 418.72 1.19%
Ningxia Ningxia 3,300 Self-management 291.54 1.33%
Hunan Hunan 3,600 Self-management 334.03 1.32%
Henan Henan 3,610 Self-management 340.76 1.35%
Inner Mongolia Inner Mongolia 2,314 Self-management 421.33 0.98%
Guangxi Guangxi 1,950 Self-management 233.65 1.17%
Beijing Guoda
Beijing 4,389 Self-management 795.40 1.59%
Beijing Jinxiang
Tianjin Tianjin 1,200 Self-management 158.00 1.78%
Anhui Anhui 1,000 Self-management 91.30 2.12%
Xinjiang Xinjiang 3,517 Self-management 297.69 1.23%
Shanghai Fumei
20,000 Self-management 2671.88 1.49%
Shanghai Shanghai Guoda
Hangzhou 974 Self-management 105.49 2.68%
Sinopharm Logistic
Guoda Headquarter Headquarter 8,000 1291.27 1.03%
entrusted
Total 127,055 13,194.52 1.27%
5. Most of commodity suppliers of Guoda Drugstore are from external, with some relative enterprises and private
own brand of Sinopharm Group as auxiliary. The sales of 2018 were as below:
In 10 thousand Yuan
Sales amount (tax
Own brand Nature Category Ratio
included)
a Group-buying OEM Health food 3,368 0.336%
b Group-buying OEM Children 46 0.005%
c Group-buying OEM Gynaecology 33 0.003%
d Group-buying OEM Cold 47 0.005%
e Group-buying OEM Personal care 12 0.001%
20
f Group-buying OEM Family health 3,096 0.309%
g Group-buying OEM Anti-infection 175 0.018%
h Group-buying OEM Anti-allergy & anti-vertigo 68 0.007%
i Group-buying OEM Clearing heat & toxic material 259 0.026%
j Group-buying OEM Drugs for external use 270 0.027%
k Group-buying OEM Otorhinolaryngology 295 0.029%
l Group-buying OEM TCM decoction pieces 3,459 0.345%
Total - - 11,129.07 1.11%
II. Main business analysis
1. Overview
Found more in I. Introduction in Discussion and Analysis of Business
2. Revenue and cost
(1) Constitute of operation revenue
In RMB
2018 2017
Increase/decrease y-
Ratio in operation Ratio in operation
Amount Amount o-y
revenue revenue
Total of operation
43,122,385,521.23 100% 41,263,393,427.41 100% 4.51%
revenue
According to industries
Medicine wholesale 31,866,749,848.53 73.90% 31,022,967,423.15 75.18% 2.72%
Medicine retail 10,873,162,895.62 25.21% 9,892,835,784.75 23.97% 9.91%
Logistic & storage
26,109,809.27 0.06% 29,568,712.15 0.07% -11.70%
service
Lease and other 356,362,967.81 0.83% 318,021,507.36 0.78% 12.06%
According to products
Medicine 41,115,048,626.41 95.35% 39,683,832,010.20 96.17% 3.61%
Apparatus 1,340,837,068.09 3.11% 1,125,368,079.05 2.73% 19.15%
Other 666,499,826.73 1.54% 454,193,338.16 1.10% 46.74%
According to region
Domestic revenue 43,122,385,521.23 100.00% 41,263,393,427.41 100.00% 4.51%
Foreign revenue 0 0 0 0 0
21
(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
Yes
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 31,866,749,848.53 29,606,073,176.14 7.09% 2.72% 0.99% 1.58%
wholesale
Medicine 10,873,162,895.62 8,368,907,348.19 23.03% 9.91% 12.23% -1.59%
retail
According to products
Medicine 41,115,048,626.41 36,456,947,511.65 11.33% 3.61% 2.32% 1.11%
According to region
Domestic
43,122,385,521.23 38,024,108,631.15 11.82% 4.51% 3.27% 1.05%
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
(5) Constitute of operation cost
In RMB
2018 2017
Increase/decr
Industries Item Ratio in operation Ratio in operation
Amount Amount ease y-o-y
cost cost
Medicine
Sales cost 29,606,073,176.14 77.87% 29,315,028,286.33 79.62% 0.99%
wholesale
Medicine retail Sales cost 8,368,907,348.19 22.01% 7,457,091,704.13 20.25% 12.23%
Logistic & Transportation &
13,025,190.40 0.03% 11,065,889.25 0.03% 17.71%
storage service storage cost
Lease and other Service cost 36,102,916.42 0.09% 36,367,036.09 0.10% -0.73%
22
(6) Whether the changes in the scope of consolidation in Reporting Period
√Yes □ No
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) 2,461,206,643.89
Proportion in total annual sales volume for top five clients 5.75%
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 amount (RMB) Proportion in total annual sales
1 No. 1 653,110,735.98 1.53%
2 No. 2 495,339,192.61 1.16%
3 No. 3 484,534,000.41 1.13%
4 No. 4 415,202,332.84 0.97%
5 No. 5 413,020,382.05 0.97%
Total -- 2,461,206,643.89 5.75%
Other situation of main clients
□ Applicable √ Not applicable
Main suppliers of the Company
Total purchase amount from top five suppliers (RMB) 5,079,663,728.26
Proportion in total annual purchase amount for top five
16.24%
suppliers
Ratio of related parties in annual total sales among the top
2.94%
five suppliers
Information of top five suppliers of the Company
Serial Suppliers Purchase amount (RMB) Proportion in total annual purchases
1 No. 1 2,315,361,149.80 7.40%
2 No. 2 918,094,680.06 2.94%
3 No. 3 724,064,793.44 2.32%
4 No. 4 565,948,629.46 1.81%
5 No. 5 556,194,475.50 1.78%
Total -- 5,079,663,728.26 16.24%
Other notes of main suppliers of the Company
□ Applicable √ Not applicable
3. Expenses
In RMB
Increase/decrease
2018 2017 Note of major changes
y-o-y
Sales expense 2,762,789,885.77 2,305,909,071.71 19.81% No major changes occurred
Management expense 783,338,308.19 735,953,967.13 6.44% No major changes occurred
23
Financial expense 112,862,739.12 110,360,539.56 2.27% No major changes occurred
4. R&D expenses
□ Applicable √ Not applicable
5. Cash flow
In RMB
Item 2018 2017 Y-o-y changes
Subtotal of cash in-flow from
47,475,381,467.60 46,751,355,521.20 1.55%
operation activity
Subtotal of cash out-flow from
46,152,775,115.33 45,466,063,609.38 1.51%
operation activity
Net cash flow from operation
1,322,606,352.27 1,285,291,911.82 2.90%
activity
Subtotal of cash in-flow from
238,641,593.44 138,275,319.85 72.58%
investment activity
Subtotal of cash out-flow from
461,099,860.32 424,456,513.79 8.63%
investment activity
Net cash flow from investment
-222,458,266.88 -286,181,193.94 -22.27%
activity
Subtotal of cash in-flow from
3,363,461,854.03 514,921,208.46 553.20%
financing activity
Subtotal of cash out-flow from
504,680,787.88 991,944,325.18 -49.12%
financing activity
Net cash flow from financing
2,858,781,066.15 -477,023,116.72 -699.30%
activity
Net increased amount of cash and
3,958,618,329.29 522,583,265.99 657.51%
cash equivalent
Main reasons for y-o-y major changes in aspect of relevant data
√Applicable □ Not applicable
(1) Subtotal of cash in-flow from investment activity: has 72.58% up from a year earlier, mainly because bonus received from
associated enterprise increased on a y-o-y growth in the period;
(2) Subtotal of cash in-flow from financing activity: has 553.20% up from a year earlier, mainly because received a capital increase
for subsidiary Guoda Drugstore in the period from strategic investor;
(3) Subtotal of cash out-flow from financing activity: has 49.12% down from a year earlier, mainly because the cash paid for debts
are declined on a y-o-y basis due to the change of documentary bill from the bank in the period;
(4) Net cash flow from financing activity: has 699.30% down from a year earlier, mainly because received a capital increase for
subsidiary Guoda Drugstore in the period from strategic investor;
(5) Net increased amount of cash and cash equivalent : has 657.51% up from a year earlier, mainly because received a capital
increase for subsidiary Guoda Drugstore in the period from strategic investor;
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
24
IV. Assets and liability
1. Major changes of assets composition
In RMB
Year-end of 2018 Year-begin of 2018
Ratio
Ratio in Ratio in Notes of major changes
Amount Amount changes
total assets total assets
Mainly because received a capital
increase for subsidiary Guoda
Monetary fund 8,089,781,304.56 27.96% 4,191,655,438.51 18.76% 9.20%
Drugstore in the period from strategic
investor
Account
9,336,861,647.92 32.27% 7,589,412,679.88 33.97% -1.70% No major changes occurred 。
receivable
Inventory 4,389,335,942.19 15.17% 3,781,858,238.12 16.93% -1.76% No major changes occurred 。
Investment real
144,894,495.97 0.50% 153,678,339.11 0.69% -0.19% No major changes occurred 。
estate
Long-term
equity 1,880,393,786.10 6.50% 1,650,619,373.09 7.39% -0.89% No major changes occurred 。
investment
Fix assets 607,933,827.67 2.10% 551,710,434.02 2.47% -0.37% No major changes occurred 。
Mainly because more investment in
Construction in
36,412,614.61 0.13% 22,947,258.99 0.10% 0.03% ERP system construction and supply
progress
chain extension project
Affected by the more financing for
Short-term loans 2,597,652,702.43 8.98% 1,561,354,521.64 6.99% 1.99%
supply chain
Long-term loans 31,600,000.00 0.11% 31,600,000.00 0.14% -0.03% No major changes occurred 。
2. Assets and liability measured by fair value
√Applicable □ Not applicable
1. Assets and liability measured by fair value
Year of 2018
Input value used for fair value measurement
Important un- Total
Active market Important observable
observable input
quotation input value
value
(1st Level) (2nd Level) (3rd Level )
Continuous fair value
measurement
Note receivable - 567,775,275.40 - 567,775,275.40
Other equity instrument -- -
investment 13,685,760.00 13,685,760.00
Other non-current financial - 140,000,000.00 140,000,000.00
25
assets
- 581,461,035.40 140,000,000.00 721,461,035.40
Year of 2017
Input value used for fair value measurement
Important un- Total
Active market Important observable
observable input
quotation input value
value
(1 Level)
st
(2nd Level) (3rd Level )
Continuous fair value
measurement
Financial assets available for
sale - 13,685,760.00 - 13,685,760.00
2. Assets and liability released by fair value
Year of 2018
Input value used for fair value measurement
Important un- Total
Active market Important observable
observable input
quotation input value
value
(1st Level) (2nd Level) (3rd Level )
Long-term loans - 31,600,000.00 - 31,600,000.00
Year of 2017
Input value used for fair value measurement
Important un- Total
Active market Important observable
observable input
quotation input value
value
(1st Level) (2nd Level) (3rd Level )
Long-term loans - 31,600,000.00 - 31,600,000.00
3. Assets right restriction till end of reporting period
Nil
V. Investment
1. Overall situation
During the reporting period, the Company achieved an enterprise combined under the different control for the
follow three enterprises by cash acquisition of Taiyuan Tongxinli Guoda Drugstore Co., Ltd (100%), Shanxi
Zhongao Pharmaceutical Co., Ltd (100%) and Sinopharm Holding Guangzhou Huadu Co., Ltd (70%). The new
subsidiaries established in the period including: Sinopharm Holding Foshan Medical Supplies Supply Chain Co.,
Ltd.(70%), Sinopharm Holding Medicine Supply Chain Service (Guangxi )Co., Ltd. (30.6%), Sinopharm Holding
26
Baiyi Pharmacy Guangxi Co., Ltd(51%), Sinopharm Holding Hezhou Co., Ltd(100%), Sinopharm Holding Guoda
Drugstore Zhengzhou Chain Co., Ltd(60%), Fujian Guoda Medicine Co., Ltd(100%), Sinopharm Holding
Qinzhou Co., Ltd (100%), Sinopharm Holding Hechi Co., Ltd (100%), China National Shanghai Guoda Ruijing
Pharmacy Co., Ltd(55%) and Shanghai Guoda Haohai Pharmacy Co., Ltd.(51%) . Meanwhile, the Company has
2.53% equity participated in Shanghai Dingqun Enterprise Management Consulting Co., Ltd. For more
investment details, see the Note (vi) and Note (vii) in Financial Report
2. The major equity investment obtained in the reporting period
□ Applicable √ Not applicable
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 had no derivative investment in the reporting 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 Total raised Total Raised
capitals raised raised
raise raised accumulati capital has accumulati capitals
has capitals capitals
Year Way d capital ve raised purpose of ve raised idle for
purpose of has and what
capit used capitals uses capitals more than
uses purpose of is expected
als in Period used changed in unused two years
changed in uses to invested
Period
total changed with those
capitals
Non-public offering 27,36 Deposit
2016 5,472.4 22,469.34 0 0 0.00% 4,892.15 0
of shares 1.49 bank
27
27,36
Total -- 5,472.4 22,469.34 0 0 0.00% 4,892.15 -- 0
1.49
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 2018 disclosed on 25 April 2019
(2) Situation of committed project of raised proceeds
√Applicable □ Not applicable
In 10 thousand Yuan
Amount of
Committed Projects Project
Total Total accumulateInvestment
investment projects changed or Amount Reach the feasibility
committed investment d program till Predicted Realized
and capital invested not invested in predicted was
investment after investment the period-useable date interests
in areas with fund (including report interest or changed
of raised adjustment till the end of project in Period
raising out of the changed period not hugely or
capitals (1) period-end (3)=(2)/(1)
plan partially) not
(2)
Committed investment projects
Cash consideration
of 49% equity of
Guangdong Not
Nanfang N 26,781.67 26,781.67 5,472.4 21,889.52 81.73% 0 applicabl N
Pharmaceutical e
Foreign Trade Co.,
Ltd. paid
Not
Payment of issuance
N 579.82 579.82 0 579.82 100.00% 0 applicabl N
cost
e
Subtotal of
committed -- 27,361.49 27,361.49 5,472.4 22,469.34 -- -- 0 -- --
investment projects
Capital invested in areas with fund raising out of the plan
Not applicable
Total -- 27,361.49 27,361.49 5,472.4 22,469.34 -- -- 0 -- --
Situation about not
coming up to
schemed progress or
Not applicable
expected revenue
and the reason(In
specific project)
Explanation on
major changes on Not applicable
project feasibility
28
Amount, usage and
progress of using for
Not applicable
fund raising out of
the plan
Change of
implementation
place of investment Not applicable
project of raised
capitals
Regulation of
implementation
ways of investment Not applicable
project of raised
capitals
Preliminary
investment and
replacement of Not applicable
investment project
of raised capitals
Temporarily
supplement for the
Not applicable
current capitals with
idle raised capitals
Amount and reason
for surplus of raised
capitals when Not applicable
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 of the fund raised are strictly execute in line with the tri-party supervision agreement for fund raised, and
use of fund raised no related issues or other conditions been found
and disclosure
(3) The changed project of raised proceeds
□ Applicable √ Not applicable
The Company has no project of raised proceeds changed in the Period.
29
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
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
medicine, diagnosis
Sinopharm medicine, biological
Holding medicine with features
Subsidia 1,683,333,333 9,035,418,2 4,976,217,2 10,878,025,717. 407,069,332.3 301,751,569.6
Guoda of treatment and
ry .00 75.87 59.05 94 1 9
Drugstore diagnosis, shaped
Co., Ltd. packing food, chemical
products, and various
commodity and
technique hold by self-
support and agency as
well as import & export
of technology
Sales of drugs, medical
apparatus and
instruments, freight
transportation, storage,
loading and unloading,
Sinopharm glass wares, cosmetics
Holding Subsidia and daily merchandise; 3,553,249,393 12,614,084, 4,250,640,1 23,650,912,944. 635,435,707.4 472,276,993.7
Guangzho ry other business services, .17 814.56 06.09 66 3 7
u Co., Ltd. other professional
consultation, various
goods agency and for
self-operation, import &
export of technology,
houses leasing
Retail and distribution
in respect of
Sinopharm
pharmaceutical products
Holding Subsidia 521,407,965.7 3,483,436,2 1,035,466,0 5,232,538,175.1 194,700,860.1 169,313,898.6
and medical apparatus
Guangxi ry 9 84.46 26.91 1 6 3
and instruments,
Co., Ltd.
wholesale and retails of
health products
Particular about subsidiaries obtained or disposed in report period
√Applicable □ Not applicable
30
The method of
obtaining and
handling
Company Name The influence to the whole production and performance
subsidiaries
during the
report period
Further consolidated the pharmaceutical distribution business in
Sinopharm Holding Foshan Medical Supplies
Establishment Guangxi & Guangdong and without major influence on performance
Supply Chain Co., Ltd.
of the Company
Further consolidated the pharmaceutical distribution business in
Sinopharm Holding Medical Supply Chain
Establishment Guangxi & Guangdong and without major influence on performance
Service Co., Ltd.
of the Company
Expand local medicine retail business layout, and without major
Shanghai Guoda Haohai Pharmacy Co., Ltd. Establishment
influence on performance of the Company
Sinopharm Holding Baiyi Pharmacy Guangxi Expand local medicine retail business layout, and without major
Establishment
Co., Ltd influence on performance of the Company
Further consolidated the pharmaceutical distribution business in
Sinopharm Holding Hezhou Co., Ltd Establishment Guangxi & Guangdong and without major influence on performance
of the Company
Sinopharm Holding Guoda Drugstore Expand local medicine retail business layout, and without major
Establishment
Zhengzhou Chain Co., Ltd influence on performance of the Company
Expand local medicine retail business layout, and without major
Shanghai Guoda Ruijing Pharmacy Co., Ltd Establishment
influence on performance of the Company
Expand local medicine retail business layout, and without major
Fujian Guoda Medicine Co., Ltd Establishment
influence on performance of the Company
Further consolidated the pharmaceutical distribution business in
Sinopharm Holding Qinzhou Co., Ltd Establishment Guangxi & Guangdong and without major influence on performance
of the Company
Further consolidated the pharmaceutical distribution business in
Sinopharm Holding Hechi Co., Ltd Establishment Guangxi & Guangdong and without major influence on performance
of the Company
Further consolidated the pharmaceutical distribution business in
Sinopharm Holding Guangzhou Huadu Co.,
Acquisition Guangxi & Guangdong and without major influence on performance
Ltd
of the Company
Expand local medicine retail business layout, and without major
Shanxi Zhongao Pharmaceutical Co., Ltd Acquisition
influence on performance of the Company
Expand local medicine retail business layout, and without major
Taiyuan Tongxinli Guoda Drugstore Co., Ltd Acquisition
influence on performance of the Company
VIII. Structured vehicle controlled by the Company
□ Applicable √ Not applicable
31
IX. Future Development Prospects
(i)The analysis on industry environment
The overall scale of China’s pharmaceutical market continues to grow, but due to the impacts of slowdown in
growth in macroeconomic and medical insurance expenditure, medical insurance control fees and other industrial
policies, the growth rate of the pharmaceutical industry is slowing down, and the growth rate of the
pharmaceutical circulation industry also slows down together with the overall pharmaceutical industry. In recent
years, the policies for various links of the pharmaceutical industry have been frequently issued, which profoundly
affected the industry pattern and promoted the industrial transformation and upgrading, and the pattern of China’s
pharmaceutical circulation industry and the upstream and downstream environment has been undergoing far-
reaching structural changes. Under the guidance of policies and social capital, the medical and health industry
continues to flourish, the penetration and influence of the accelerated iteration of new technologies and the
Internet + and multi-dimensional cross-border development on traditional drug circulation industry is far-reaching,
and competition is intensifying.
Market opportunities come out while the growth rate of the pharmaceutical industry is slowing down. First, in the
next few years, medical insurance control fees are still the main trend in the development of pharmaceutical
industry, so the commercial leaders with fund strength are expected to maintain their core advantages. Second, the
pharmaceutical circulation cycle will continue to bear pressure, and the market concentration brought about by the
two-vote system will continue to be promoted, the channel networks of commercial leaders accelerate to put
together , and the market share is expected to further increase. Third, with the advancement of separation of
hospitals and medicine, the outflow of prescriptions is expected to accelerate, and the value of retail terminal
networks will increase, under the influence of policies such as “4+7” procurement, the growth of retail market is
expected to accelerate, and the concentration of chain pharmacies is expected to continue to increase. From the
perspective of medical insurance support, the “Guiding Opinions on the Pilot Classification Management of Retail
Pharmacies (public comment draft)” proposes that “the local medical insurance management department can refer
to the grading results of retail pharmacy in terms of medical insurance designated pharmacy settings, medical
insurance fund management, etc.”, “Priority is given to policy support”. From the perspective of manufacturer
cooperation, the channel value of retail pharmacies has been valued by upstream industrial enterprises, foreign
companies and domestic first-line leaders have begun to switch from natural sales to establishing pharmacy sales
teams. Fourth, with the promotion of policies such as grading diagnosis and treatment, the grassroots have made
expansion, and the primary medical market will become a fast-growing market. Fifth, the medical apparatus and
instruments (consumables) industry is developing rapidly, and the industry concentration is low and has large
market potential, or it will become important market growth points. Sixth, with the rapid development of new
technologies such as big data, Internet of Things, cloud computing, etc., new opportunities for innovating business
models and upgrading service models have been brought about for traditional pharmaceutical businesses.
(ii) Key work in 2019:
Sinopharm Accord is committed to “building a leading international medicine and health service platform to
enable people to enjoy a happy and healthy life”. Under the impetus of the industry environment and new
32
technologies and new applications, Sinopharm Accord has proposed the development direction of “taking
wholesale and retail integration as the core, upgrading service model through technology empowerment and
customer value driving, providing full-service solutions for upstream and downstream industry chains, and
transforming from a pharmaceutical distributor to a pharmaceutical business service solution provider”.
In 2019, the company will continue to promote the strategic direction of taking wholesale and retail integration as
the core, grasp the three themes of “consolidating foundation, making transformation and innovation, and
ensuring development”, and focus on the following work:
1. Deepen the strategy of wholesale and retail integration
Through technology empowerment, form the all-channel service networks for wholesale and retail integration,
create a three-dimensional retail system with reform of medicine, medical treatment and medical insurance and
high integration of online and offline. By getting through the “three links” platform (retail channels and medical
treatment channels, retail business and wholesale business, online business and offline business) between
distribution and retail, increase the variety introduction of distribution and retail products, promote the sharing of
wholesale and retail logistics, and enhance the admittance to hospital of retail grafting distribution and the
professional service capabilities to achieve the integration of distribution and retail terminal services.
2. Distribution business: focus on the four business directions for transformation and innovation
Focus on the four business directions of retail direct sales, equipment consumables, retail diagnosis and treatment,
and primary care, consolidate the integrated operation foundation, give play to the integrated benefits, improve the
efficiency of logistics operations, and rapidly develop with transformation and innovation to build new
competitive advantages. Deeply develop and upgrade the traditional businesses, sink channels, integrate
professional marketing platforms, thoroughly boost the primary care business, help to solve the current situation
of lack of doctors and medicines at the grassroots level; give play to the advantages of wholesale and retail
integration, build a retail direct sales network, promote the regional distribution sinking; accelerate the network
layout of retail diagnosis and treatment, build DTP professional pharmacy brand image; grasp the development
trend of equipment industry, and take value-added services of hospitals as the starting point to accelerate business
layout.
Improve efficiency and promote supply chain upgrade: comprehensively promote institutional process
optimization projects; optimize and improve the integrated management and control; promote information and
logistics service levels through technology empowerment, center on the performance improvement of supply
chain, accelerate the development and optimization of system functions, and enhance the internal and external
supply chain efficiency such as quality, operation, order processing, bill processing, financial processing, etc.,
revolve around the distribution business structure, replan the logistics centers, highlight the four capacity
buildings of the logistics center, and comprehensively improve the service efficiency of the logistics supply chain.
3. Guoda Drugstore: create a professional pharmaceutical retail ecosystem
Promote the implementation of key strategic projects, including retail terminal operational capacity improvement,
store new model pilot, digital innovation and new channels, information technology and so on, create a “New
Guoda”, deeply dig professional capabilities, create a new professional pharmaceutical retail ecosystem, increase
the expansion of terminal stores, continue to promote wholesale and retail integration, strengthen the management
33
and service functions of the headquarters, promote the construction of provincial platforms, integrate regional
resources, and strengthen regional advantages.
Reform the IT architecture and upgrade the big data system to empower the business assurance technology;
remodel the organizational structure and optimize the human resources system to empower the echelon
construction; improve the pharmaceutical affairs service capabilities to empower the professionalization pharmacy
services; accelerate the investment project and regional expansion, it’s targeted to expand 600 stores, develop
advantageous business circle, focus on breaking through the stores near the hospitals, develop urban and rural
integration stores, set up franchise management team, open franchise channels, break through franchise bottleneck;
break through the new business model of e-commerce members; upgrade the brand, enrich resources, quickly
deploy the blank areas of the country, emphasize the standardization management, create model areas, and
empower the scale development.
4. Continue to advance the internationalization process
By virtue of the cooperation opportunity with Walgreens Boots Alliance, strengthen the construction of the
company’s management and control platform and information platform, promote the company’s management
internationalization and talent internationalization, and actively search for global high-quality resources, and
promote the product internationalization through investment and shareholding; track the global industry’s leading
trends, continue to expand international horizons, and enhance international cooperation capabilities.
5. Production and financing double drive, enhance scale advantages
In the face of fierce competition, actively grasp the opportunities of organic growth and cooperative mergers and
acquisitions, further accelerate the integration of industry resources around the main business, and carry out multi-
capital cooperation methods by taking mergers and acquisitions as the principle, and taking share holding,
alliances and strategic cooperation as the auxiliary, continue to deepen the network coverage, increase the mergers
and acquisitions, and enhance scale advantages. At the same time, control risks, ensure compliance, operate
steadily, strengthen risk prevention, concentrate efforts on solid foundation, ensure compliance operations, and
comprehensively prevent and control operational risks.
6. Technology leads and reinforces service upgrades and model innovation
The company will continue to explore new technologies such as the application internet, big data, and cloud
computing, and explore and build a intelligent pharmaceutical business service system by customer-oriented and
value-driven. Strengthen the overall planning and technology investment of information technology, implant
informatization thinking, explore advanced informatization operation and management mode, ensure information
investment, and optimize the architecture system; build hospital supply chain management information platform
and retail professional supply chain management information platform, integrate WBA technical resources,
optimize Guoda IT architecture, upgrade big data systems, and accelerate the construction of information
technology talent teams.
(iii) Possible risks
1. The management risks in sustainable expansion of marketing network of Guoda Drugstore
34
The marketing network of Guoda Drugstore 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 Drugstore. 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 for Prescription Products and
Some Opinions on Further Reform and Improvement of Drug Production, Circulation and Use Policy, 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, with the promotion and implementation of the new medical
reform, the state has implemented the essential medicine system, public hospital reform, drug centralized
procurement bidding system and tax reduction policy for anticancer drugs 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 Drugstore may have to face
some challenges.
4. Risks of facing the horizontal competition
In the pharmaceutical retail field, Sinopharm Holding’s affiliated distribution subsidiaries have also opened some
social retail pharmacies, which constitute a certain degree of horizontal competition with the subordinate Guoda
35
Drugstore. Sinopharm Holding and SINOPHARM have pledged to take effective measures to resolve the possible
horizontal competition.
5. The risk of goodwill impairments
On 31 December 2018, the book value of goodwill in consolidate financial statement listed as 833,547,800.60
Yuan, and distributed to the assets group of distribution business and retail business. In accordance with the
Accounting Standards for Business Enterprises, the Company carried out annual impairment test for the goodwill.
Impairment of goodwill will released on the Note V.-16 and Note III-20 & 30 listed under the Financial Statement
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
17 Apr. 2018 Field research Institute Notice of Resolution of AGM 2017
Reception (times) 1
Number of hospitality 80
Number of individual reception 5
Number of other reception 0
Disclosed, released or let out major undisclosed information No disclosed, released or let out major undisclosed information
36
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 17 April 2018, the profit distribution plan for year of 2017 was deliberated and approved by annual general
meeting of 2017, that is taking total 428,126,983 shares as base, distributed RMB 3.00 (tax included) for each 10
shares in cash. The announcement of 2017 interest distribution implementation was released on 6 June 2018 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 2017 was completed, and dividend for
public shares was distributed to the account of shareholders dated 13 June 2018 (A-share) and 15 June 2018 (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
N
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 2016
Taking the total 428,126,983 shares as base, 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.
(2) Profit distribution plan for year of 2017
Taking the total 428,126,983 shares as base, 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.
(3) Profit distribution plan for year of 2018
Taking the total 428,126,983 shares as base, cash bonus of RMB 4.00 (before tax) each 10 shares will be
distributed to the whole shareholders. This profit distribution did not convert capital reserve into share capital.
37
Cash dividend of common stock in latest three years (including the reporting period)
In RMB
Ratio of the
Ratio of the
total cash
Ratio of the cash cash bonus by
Net profit bonus (other
bonus in net Proportion other ways in
attributable to ways included)
profit attributable for cash net profit
common stock Total cash in net profit
Year for Amount for cash to common stock bonus by attributable to
shareholders of bonus attributable to
bonus bonus (tax shareholders of other common stock
listed company in (including common stock
shares included) listed company ways(i.e. shareholders of
consolidation other ways) shareholders of
contained in share buy- listed company
statement for bonus listed company
consolidation backs) contained in
year contained in
statement consolidation
consolidation
statement
statement
2018 171,250,793.20 1,210,742,435.78 14.14% 0.00 0.00% 171,250,793.20 14.14%
2017 128,438,094.90 1,057,791,930.67 12.14% 0.00 0.00% 128,438,094.90 12.14%
2016 141,281,904.39 1,186,539,201.93 11.91% 0.00 0.00% 141,281,904.39 11.91%
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
4.00
included)
Equity base of distribution plan (Share) 428,126,983
Cash dividend(RMB) (Tax included) 171,250,793.20
Proportion for cash bonus by other ways(i.e. share
0.00
buy-backs)
Total cash bonus (including other ways) 171,250,793.20
Distributable profits (RMB) 3,956,556,754.02
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
38
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 of Comm Comm
Commitm Impleme
Promise commitme Content of commitments itment itment
ents ntation
nts date term
Commitm
ents 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 transfer of shares of Sinopharm
Commitm
Holding Guangzhou it held to Sinopharm Accord, “1. it will not
ents in Commitm Long-
newly-establish or broaden within Guangdong any business operation 21 Normally
report of Sinopharm ent of term
that actually compete with that of Sinopharm Accord, or set up any June implemen
acquisition Holding shareholde effecti
new subsidiaries or subordinate enterprises who engage in such 2005 ting
or equity rs ve
business. 2. It will enter into business delineation with Sinopharm
change
Accord and 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 Sinopharm
Accord in the production and R&D of pharmaceutical products.”
“Sinopharm Holding and Sinopharm Foreign Trade made
Sinopharm commitments in the Report about China National Accord Medicines
Group Corporation Ltd. Purchasing Assets and Raising Supporting Funds
Co., and Related Transactions by Asset Sale, Stock Issuance and Cash
Commitm Ltd;China Payment that the non-public offering of shares of Sinopharm Accord
Commitm
ents in National obtained from this transaction shall not be transferred within 36 31 36 Normally
ent on
assets Pharmace months since the finish date of issuance and shall be unlocked after May month implemen
restricted
reorganiza utical 36 months since the date of listing. Within 6 months after the 2016 s ting
shares
tion Foreign completion of this transaction, if the closing price of the stock of
Trade Sinopharm Accord is less than the issue price in continuous 20
Corporatio trading days, or the closing price at the end of 6 months after the
n completion of this transaction is less than the issue price, the lockup
period of the stock of Sinopharm Group and Sinopharm Foreign
39
Trade obtained from Sinopharm Accord by this transaction will
automatically prolong at least 6 months. 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.”
"Ping An Asset Management Co., Ltd. made commitments in the
Report about China National Accord Medicines Corporation Ltd.
Purchasing Assets and Raising Supporting Funds and Related
Ping’an Transactions by Asset Sale, Stock Issuance and Cash Payment that
Commitm
Assets the non-public offering of shares of Sinopharm Accord obtained from 31 36 Normally
ent on
Managem this transaction shall not be transferred within 36 months since the May month implemen
restricted
ent Co., finish date of issuance and shall be unlocked after 36 months since 2016 s ting
shares
Ltd. the date of listing. After placement 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 Holding 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, Guangdong Uptodate & Special Medicines and
Guoda Drugstore should respectively be no less than RMB
47,385,600.00, RMB 19,167,000.00, and RMB 98,466,100.00, while
Performan
the 2017 annual net profits should respectively be no less than RMB
ce
Sinopharm 49,394,500.00, RMB 20,209,700.00, and RMB 110,998,90.00, and 31
commitme 2018- Complete
Group the 2018 annual net profits should respectively be no less than RMB May
nt and 12-31 d
Co., Ltd 51,148,200.00, RMB 21,330,100.00, and RMB 131,275,500.00. Net 2016
compensat
profit refers to the lower one between the after-tax net profit
ion
attributable to the owners of parent company planning to invest in the
target company and the net profit attributable to the owners of parent
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.”
China Performan "Sinopharm Foreign Trade made commitments in the Report about
National ce China National Accord Medicines Corporation Ltd. Purchasing
Pharmace commitme Assets and Raising Supporting Funds and Related Transactions by
31
utical nt and Asset Sale, Stock Issuance and Cash Payment that the 2016 annual 2018- Complete
May
Foreign compensat net profits of Nanfang Pharmaceutical Foreign Trade should be no 12-31 d
2016
Trade ion less than RMB 39,880,700, while the 2017 annual net profits should
Corporatio arrangeme be no less than RMB 47,323,200, and should not less than RMB
n nt 55,364,600 in 2018. Net profit refers to the lower one between the
40
after-tax net profit attributable to the owners of parent company
planning to invest in the target company and the net profit attributable
to the owners of parent company after deducting the non-recurring
gains and losses. If the actual net profit of the Nanfang
Pharmaceutical Foreign 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 and other 10 natural person made commitments in the
Fu Yuequn
Report about China National Accord Medicines Corporation Ltd.
Gu
Purchasing Assets and Raising Supporting Funds and Related
Chaoqun;
Transactions by Asset Sale, Stock Issuance and Cash Payment that
Guo
Performan the 2016 annual net profits of Nanfang Pharmaceutical Foreign Trade
Shu’er;
ce should be no less than RMB 39,880,700, while the 2017 annual net
Huang
commitme profits should be no less than RMB 47,323,200, and should not less
Qiufang; 31
nt and than RMB 55,364,600 in 2018. Net profit refers to the lower one 2018- Complete
Li May
compensat between the after-tax net profit attributable to the owners of parent 12-31 d
Hongbing; 2016
ion company planning to invest in the target company and the net profit
Liao Zhi;
arrangeme attributable to the owners of parent company after deducting the non-
Lin
nt recurring gains and losses. If the actual net profit of the Nanfang
Wanqun;
Pharmaceutical Foreign Trade doesn’t reach the committed net profit,
SunWei;
Fu Yuequn and other 10 natural person will need to compensate
Zhang
according to the stipulations of the "Profit Forecast Compensation
Zhaohua;
Agreement for the Stock Issuance and 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
Performan
and losses committed by Zhijun Pharmaceutical in 2016, 2017 and
China ce
2018 should be respectively no less than RMB 222,671,700.00, RMB
National commitme
232,561,600.00, and RMB 241,878,700.00; the net profits 31
Accord nt and 2018- Impleme
attributable to the owners of parent company after deducting the non- May
Medicines compensat 12-31 nting
recurring gains and losses committed by Zhijun Pharmacy Trade in 2016
Corporatio ion
2016, 2017 and 2018 should be respectively no less than RMB
n Ltd. arrangeme
2,379,600.00, RMB 2,335,100.00, and RMB 2,345,600.00; the net
nt
profits attributable to the owners of parent company after deducting
the non-recurring gains and losses committed by Pingshan
Pharmaceutical in 2016, 2017 and 2018 should be respectively no
less than RMB 39,716,300.00, RMB 43,033,500.00, and RMB
50,325,500.00. If the actual net profits attributable to the owners of
41
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 Agreement for
the Stock Issuance and Assets Purchase.”
China
“The listed company, controlling shareholders, the actual controllers
National
made commitments in the Report about China National Accord
Accord
Medicines Corporation Ltd. Purchasing Assets and Raising
Medicines
Supporting Funds and Related Transactions by Asset Sale, Stock Long-
Corporatio Other 31 Normally
Issuance and Cash Payment that the Company shall not violate the term
n Ltd.; commitme May implemen
relevant regulations of Article 16 in Securities Issuance and effecti
Sinopharm nts 2016 ting
Underwriting Management Approach, and directly or indirectly ve
Group
providing financial assistance or compensation for the subscription
Co., Ltd;
objects and its shareholders / partners / clients (if any) of this non-
SINOPHA
public offering does not exist and will not occur in the future.”
RM
“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 restructuring process, and has the ability to
Ping’an
subscribe the shares, the relevant capital sources are legitimate, there Long-
Assets Other 24 Normally
is no hierarchical income and other structured arrangements, and term
Managem commitme March implemen
there is no use of leveraged funds. The unit does not receive financial effecti
ent Co., nts 2016 ting
assistance or compensation from Sinopharm Accord and its ve
Ltd.
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.”
“Sinopharm made commitments in the Report about China National
Three
Accord Medicines Corporation Ltd. Purchasing Assets and Raising
years
Supporting Funds and Related Transactions by Asset Sale, Stock
from There is
Issuance and Cash Payment that 1. if the stock intraday price of
the no need
Increase Sinopharm Accord on any trading day of the 30 trading days after the
end of for actual
SINOPHA holding listing of newly increased shares in this transaction is less than the 6 Jan.
increas controller
RM commitme issue price of newly increased shares in this transaction, Sinopharm 2017
e s to
nt will accumulatively invest no more than RMB 150 million in these 30
holdin increase
trading days to increase the holding by the stock trading system of the
g (if holdings
Shenzhen Stock Exchange (this increase of holding) until the earlier
applic
one of below two situations occurs: (1) the above-mentioned funds
able)
are use up; (2) the intraday price of Sinopharm Accord is no less than
42
the issue price of newly increased shares in this transaction. 2.
Sinopharm shall not sell the shares obtained from this increase of
holding within 3 years after the end of this increase of holding.”
“Sinopharm Holding 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
controlling shareholder 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 following irrevocable
commitments and promises:1, after the completion of this
reorganization, as for the social retail drugstore assets except for
Commitm
Sinopharm Holding Guoda Drugstore Co., Ltd. and its subsidiaries
ents on
and branches owned or controlled by the Company, the Company
horizontal Long-
Sinopharm promised to take appropriate measures to solve the horizontal 28 Normally
competitio term
Group competition problem in the pharmaceutical retail business between Dec. implemen
n, relation effecti
Co., Ltd the Company and Sinopharm Accord within 5 years since the 2016 ting
transaction ve
completion date of this reorganization. 2. The Company's way of
and capital
resolving horizontal competition problems includes and is not limited
occupation
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
43
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 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
Commitm
assets reorganization (hereinafter referred to as “this reorganization”),
ents on
Sinopharm Accord shall no longer hold shares or operate relevant
horizontal Long-
businesses of pharmaceutical industry, the main business will become 28 Normally
SINOPHA competitio term
the national pharmaceutical retail and pharmaceutical distribution Dec. implemen
RM n, relation effecti
business in Guangdong and Guangxi. In order to support the business 2016 ting
transaction ve
development of Sinopharm Accord and avoid horizontal competition
and capital
with Sinopharm Accord and its controlling enterprises, the Company
occupation
made following irrevocable commitments and promises:1, after 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
44
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. 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.”
Commitm Sinopharm Holding made commitments in the Commitment Letter Controlli
ents make Commitm About Sinopharm Group Co., Ltd. to Avoid Horizontal Competition: Long- ng
in initial Sinopharm ent of “First, the Company and the Company’s wholly-owned, controlling 5 Sept. term sharehold
public Holding shareholde or other enterprises with actual control (in addition to Sinopharm 2013 effecti er is
offering or rs Accord and its controlling enterprises, hereinafter the same) don’t ve implemen
re- have businesses and operations constituting the substantial horizontal t in real
45
financing competition to Sinopharm Accord and its controlling enterprises. earnest,
Second, the Company and the Company’s wholly-owned, controlling Sinophar
or other enterprises with actual control shall not engage, participate in m Accord
or do businesses and activities in Guangdong and Guangxi which will
constitute substantial competition to Sinopharm Accord and actively
pharmaceutical business services. Third, the Company and the urged the
Company’s wholly-owned, controlling or other enterprises with controllin
actual control shall not engage, participate in or do businesses and g
activities which constitute substantial competition to Sinopharm sharehold
Accord and pharmaceutical industry businesses. Fourth, the Company er and
shall not take advantage of the control to Sinopharm Accord to actual
damage the legitimate rights and interests of Sinopharm Accord and controller
other shareholders (especially medium and small shareholders). This to fulfill
commitment letter takes effect from the issue date, and remains in commitm
effect for the entire period when the Company acts as the controlling ents
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 Holding made commitments in the Commitment Letter
About Sinopharm Group Co., Ltd. to Regulate the Related
Transactions with China National Accord Medicines Corporation Controlli
Ltd.: “First, when the Company is controlling Sinopharm Accord, the ng
Company and the companies and enterprises directly and indirectly sharehold
controlled by the Company (“related party” for short) will strictly er is
regulate the related transactions with Sinopharm Accord and its implemen
controlling enterprises. Second, for the related transactions that can t in real
not be avoided nor have reasonable reasons to occur, the Company earnest,
and related party shall sign normative related transaction agreement Sinophar
in accordance with relevant laws with Sinopharm Accord. Sinopharm m Accord
Commitm Long-
Accord implements the approval procedures and fulfills the will
Sinopharm ent of 5 Sept. term
information disclosure obligations of the related transactions actively
Holding shareholde 2013 effecti
according to relevant laws, regulations, rules, other normative urged the
rs ve
documents and the constitutions of Sinopharm Accord. Third, for the controllin
related transactions that can not be avoided or have reasonable g
reasons to occur, the Company and related party shall abide by the sharehold
open, fair and just market principles and confirm the price of related er and
transactions in accordance with the price that the independent third actual
party without association sets for the same and similar transactions, controller
and ensure the fairness of the price of the related transactions. Fourth, to fulfill
when the board of directors and the general meeting of stockholders commitm
of Sinopharm Accord vote on the related transactions involving the ents
Company and other enterprises controlled by the Company, the
Company shall fulfill the necessary obligations that the associated
46
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 National Pharmaceutical Group Corporation to Avoid Actual
Horizontal Competition with China National Accord Medicines Controlle
Corporation Ltd.: “First, in the next five years, Sinopharm plans to r is
take appropriate measures (including assets replacement or implemen
acquisition, equity reorganization, etc.) to resolve the horizontal t in real
competition between Sinopharm Weiqida and Sinopharm Accord. earnest,
Second, in addition to the past matters and matters disclosed in this Sinophar
commitment letter, the Company and the Company’s wholly-owned, m Accord
Commitm controlling or other enterprises with actual control rights (except for Long- will
16
SINOPHA ent of Sinopharm Accord and its controlling enterprises, the same as below) term actively
Oct.
RM actual shall not directly engaged in, participate in or do the businesses an effecti urged the
2013
controller activities constituting actual competition to the production and ve controllin
operation of Sinopharm Accord in China. The relevant commitments g
about avoiding horizontal competition that the Company made in the sharehold
past still remain in effect. Third, the Company shall not take er and
advantage of the control relationship to Sinopharm Accord to damage actual
the legitimate rights and interests of Sinopharm Accord and its controller
shareholders (especially the medium and small shareholders). Fourth, to fulfill
this commitment letter comes into force from the issue date and commitm
remains in effect for the entire period when the Company acts as the ents
controlling shareholder or its related party of Sinopharm Accord.”
Commitm "SINOPHARM made commitments in the Commitment Letter About Long- Actual
22
SINOPHA ent of Sinopharm Group Co., Ltd. to Regulate the Related Transactions with term Controlle
Sept.
RM actual China National Accord Medicines Corporation Ltd.: “First, when the effecti r is
2013
controller Company is controlling Sinopharm Accord, the Company and the ve implemen
47
companies and enterprises directly and indirectly controlled by the t in real
Company (“related party” for short) will strictly regulate the related earnest,
transactions with Sinopharm Accord and its controlling enterprises. Sinophar
Second, for the related transactions that can not be avoided or have m Accord
reasonable reasons to occur, the Company and related party shall sign will
normative related transaction agreement in accordance with relevant actively
laws with Sinopharm Accord. Sinopharm Accord implements the urged the
approval procedures and fulfills the information disclosure controllin
obligations of the related transactions according to relevant laws, g
regulations, rules, other normative documents and the constitutions of sharehold
Sinopharm Accord. Third, for the related transactions that can not be er and
avoided or have reasonable reasons to occur, the Company and actual
related party shall abide by the open, fair and just market principles controller
and confirm the price of related transactions in accordance with the to fulfill
price that the independent third party without association sets for the commitm
same and similar transactions, and ensure the fairness of the price of ents
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
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 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
commitme
nt
Other
commitme
nts for
medium
and small
shareholde
rs
Completed Y
48
on time
(Y/N)
2. Concerning assets 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
forecast (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 5,114.82 5,390.17 Not applicable 31 May 2016
Shares and
Profit Forecast
Compensation
Agreement” on
Juchao website
”Sinopharm
Accord:
Acquiring
Guangdong Assets by
Uptodate & Offering
2016-01-01 2018-12-31 2,133.01 2,146.93 Not applicable 31 May 2016
Special Shares and
Medicines Profit Forecast
Compensation
Agreement” on
Juchao website
”Sinopharm
Accord:
Acquiring
Assets by
Offering
Guoda Drugstore 2016-01-01 2018-12-31 13,127.55 21,683.72 Not applicable 31 May 2016
Shares and
Profit Forecast
Compensation
Agreement” on
Juchao website
Nanfang 2016-01-01 2018-12-31 5,536.46 5,866.83 Not applicable 31 May 2016 ”Sinopharm
49
Pharmaceutical Accord:
Foreign Trade 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
Zhijun
2016-01-01 2018-12-31 24,187.87 22,991.98 operation 31 May 2016 of Acquiring
Pharmaceutical
environment Assets by
and market Offering
Shares and
Profit Forecast
Compensation
Agreement” on
Juchao website
”Sinopharm
Accord:
Shanghai
Shyndec
Pharmaceutical
Co., Ltd.. and
the Company
Pingshan
2016-01-01 2018-12-31 5,032.55 5,195.56 Not applicable 31 May 2016 of Acquiring
Pharmaceutical
Assets by
Offering
Shares and
Profit Forecast
Compensation
Agreement” on
Juchao website
”Sinopharm
Accord:
Zhijun Pharmacy
2016-01-01 2018-12-31 234.56 322.54 Not applicable 31 May 2016 Shanghai
Trade
Shyndec
Pharmaceutical
50
Co., Ltd.. and
the Company
of Acquiring
Assets by
Offering
Shares and
Profit Forecast
Compensation
Agreement” on
Juchao website
Commitment made by shareholders of the Company and counter party in annual operation performance
□ Applicable √ Not applicable
Completion of the performance commitment and influence on impairment test of goodwill
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.
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 July 5, 2017, the Ministry of Finance issued the revised “Accounting Standards for Business Enterprises No.
14 – Income”, enterprises listed at home and abroad at the same time should implement the new income standards
from January 1, 2018, and other listed enterprises in China should implement from January 1, 2020. The company
has implemented the new standards on January 1, 2018. According to the stipulation of converting and linking the
new and old standards, the enterprise should adjust the retained earnings at the beginning of the period and the
amount of other related items in the financial statements according to the cumulative impact of the first
implementation of the standard, and the information for the comparable period will not be adjusted. The
implementation of the standard will not lead to major changes in the company’s income recognition method, nor
have a significant impact on the company’s current and prior period net profit, total assets and net assets.
On March 31, 2017, the Ministry of Finance issued the revised “Accounting Standards for Business Enterprises
No. 22 - Recognition and Measurement of Financial Instruments”, “Accounting Standards for Business
Enterprises No. 23 - Transfer of Financial Assets” and “Accounting Standards for Business Enterprises No. 24 -
Hedge Accounting”, on May 2, the Ministry of Finance issued the revised “Accounting Standards for Business
Enterprises No. 37 - Presentation of Financial Instruments” (collectively referred to as “New Financial
51
Instruments Series Standards”), enterprises listed at home and abroad at the same time should implement from
January 1, 2018, and other listed enterprises in China should implement from January 1, 2019. (1) Sinopharm
Holding Guoda Drugstore Co., Ltd., a subsidiary of the Company, holds a stake in Shanghai Guoda Shuguang
Drugstore Co., Ltd., Shanghai Guoren Drugstore Co., Ltd., Sinopharm Holding Hubei Guoda Drugstore Co., Ltd.,
Hunan Zhongbai Pharmaceutical Investment Co., Ltd. and China National Health Online Co., Ltd., with voting
rights ratio of 25%, 10%, 10%, 6.31% and 8.06% respectively, but the directors and key management personnel of
the above five companies are not appointed by the Group, and the Group has not participated in or affected the
finance and operational decisions or daily business activities of the above companies in other ways, so that the
Group does not have significant influence on the above five companies, and it is originally accounted for as an
available-for-sale equity instrument and its business accounting is based on book value. After adopting the newly
revised financial instrument standards, the company decides to designate it as a financial asset measured at fair
value and its changes are included in other comprehensive income after considering the characteristics of its
contractual cash flow and its business model, which will be subsequently measured at fair value and its changes
are included in other comprehensive income . When the financial assets are derecognized, the accumulated gains
or losses previously included in other comprehensive income shall be transferred from other comprehensive
income and included in retained earnings. There is also no need for retrospective adjustments. During the
reporting period, “other equity instrument investments” increased by 13,685,760.00 yuan, and “available for sale
financial assets” decreased by 13,685,760.00 yuan. The above-mentioned changes in accounting policies related
to financial instruments have no significant impact on the Company’s retained earnings and other comprehensive
income at the beginning of 2018. (2) The new financial instrument standards requires that the measurement of
impairment of financial assets be changed from “Incurred Loss Model” to “Expected Credit Loss Model”. The
company judges that the adoption of new financial instrument standards would not have a material impact on
company’s financial report. .
On June 15, 2018, the Ministry of Finance revised and issued the “Notice of the Ministry of Finance on Revising
and Issuing the Financial Statements Format for General Enterprises”, which revised the financial statements
format of general enterprises and is applied to the financial statements for the year 2018 and beyond. The Group
has implemented the requirements of the above-mentioned standards and has prepared the company’s financial
statements in accordance with the financial statements format of general enterprises (Applicable for enterprises
that have implemented new financial standards or new income standards), and the comparative data has been
adjusted accordingly. The names and amounts of the affected statements items are as follows:
In balance sheet, the “Note receivable” and “Account receivable” are merger shown as “Note receivable and
account receivable”, amount at period-end accounted as 9,336,861,647.92 yuan while 7,589,412,679.88 yuan at
beginning of the period; ”Interest receivable” and “Dividend receivable” are merger shown as “Other account
receivable”, ending amount of “Other account receivable” adjusted and increased 8,223,327.64 yuan while
61,441.11 yuan at beginning of the period; the “Disposal of fixed assets” merge into “Fixed assets”, which has no
impact on the amount of “fixed assets” at begging and ending of the period; “Engineering material” merge into
“Construction in progress”, which has no impact on the amount of “Construction in progress” at begging and
ending of the period; ”Note payable” and “Account payable” are merger shown as “Note payable and account
payable”, ending amount was 9,885,291,642.97 yuan while 8,876,658,828.52 yuan at beginning of the
period; ”Interest payable” and “Dividend payable” are merger shown as “Other account payable”, ending amount
52
of “Other account payable” adjusted and increased 28,295,981.59 yuan while 19,201,262.76 yuan at beginning of
the period; ”Special account payable” merger into “Long-term account payable”, ending amount of “Long-term
account payable” adjusted and increased 800,000.00 yuan while 800,000.00 yuan at beginning of the period.
Newly increase “R&D Expenses” item to the income statement, and reclassify the R&D expenses in the original
“Management Expenses” into “R&D Expenses” for separate presentation, and the comparative data is adjusted
accordingly, the Group has sorted out the relevant business, as no related business was involved in 2017 and 2018,
this change had no significant impact on the Group’s operating results. Under the financial expenses in the income
statement, the items “of which: interest expenses” and “interest income” are newly added, and the comparative
data is adjusted accordingly.
In the statement of changes in owner’s equity, the item “variation of defined benefit plans carrying over to
retained earnings” and “other comprehensive income carrying over to retained earnings” are newly added. The
Group has sorted out related business, since it does not involve related business, the change has no significant
impact on the Group’s operating results.
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 thousand
332.78
Yuan)
Continuous life of auditing service for domestic accounting firm 3- year
Name of domestic CPA Li Jianguang, Yan Ping
Continuous life of CPA from the domestic accounting firm for
3-year
auditing service
Name of foreign accounting firm (if applicable) N/A
Continuous life of auditing service for foreign accounting firm (if
N/A
applicable)
Name of foreign CPA (if applicable) N/A
Continuous life of CPA from the foreign accounting firm for
N/A
auditing service (if applicable)
Re-appointed accounting firms in this period
53
□ Yes √ No
Appointment of internal control auditing accounting firm, financial consultant or sponsor
√Applicable □ Not applicable
The Company engaged Ernst & Young CPA (Special General partnership) as the audit body for internal control, and auditing charge
for internal control amounting as 826,000 yuan.
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 arbitration of the Company
□ Applicable √ Not applicable
No significant lawsuits and arbitration 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
In reporting period, controlling shareholder and actual controller of the Company has a sound integrity , and there are no cases of
failure to implement the effective judgement of the court and the large amount of debt due and unliquidated
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.
54
XVI. Major related transaction
1. Related transaction with routine operation concerned
(1) Related transaction with routine operation concerned can be found in “X. Related party and related transaction” carried in Section
XI. Financial Report;
(2) The related transactions are settled in cash and by notes, according to the Proposal of Expected Routine Related Transactions
with Subordinate Enterprise for Year of 2018 deliberated and approved by 30th session of 7th BOD held on 21 March 2018 and
Notice on Expected Routine Related Transaction for Year of 2018 (Notice No.: 2018-8) released on 23 March 2018, the related sales
takes 48.39% in total expected amount for the whole year, and related procurement takes 80.45% in total expected amount for the
whole 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.
55
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)
Guarant
Related Imple
Actual ee for
Name of the Company Announcemen Guarantee Actual date of Guarantee mente
guarantee Guarantee type related
guaranteed t disclosure limit happening term d
limit party
date (Y/N)
(Y/N)
Guarantee between the Company and the subsidiaries
Guarant
Related Imple
Actual ee for
Name of the Company Announcemen Guarantee Actual date of Guarantee mente
guarantee Guarantee type related
guaranteed t disclosure limit happening term d
limit party
date (Y/N)
(Y/N)
Sinopharm Holding Shenzhen Joint liability 2018-10-15-
22 Mar. 2018 500 15 Oct. 2018 379.11 N N
Jianmin Co., Ltd. assurance 2019-10-14
Sinopharm Holding Shenzhen Joint liability 2018-12-24-
19 Sept. 2018 1,000 24 Dec. 2018 540 N N
Jianmin Co., Ltd. assurance 2019-12-24
56
Sinopharm Holding Shenzhen Joint liability 2018-10-15-
22 Mar. 2018 500 15 Oct. 2018 256.54 N N
Medicinal Materials Co., Ltd. assurance 2019-10-14
China National Accord Joint liability 2018-7-13-
22 Mar. 2018 25,000 13 Jul. 2018 5,100 N N
Medicines Corporation Ltd. assurance 2018-9-30
China National Accord 14,037.8 Joint liability 2018-12-3-
19 Sept. 2018 20,000 3 Dec. 2018 N N
Medicines Corporation Ltd. 4 assurance 2019-11-27
Sinopharm Holding Joint liability 2018.5.20-
22 Mar. 2018 35,000 20 May 2018 3,091.75 N N
Guangzhou Co., Ltd. assurance 2019.5.20
Sinopharm Holding Joint liability 2018.11.28-
19 Sept. 2018 30,000 28 Nov. 2018 30,000 N N
Guangzhou Co., Ltd. assurance 2019.10.31
Sinopharm Holding Joint liability 2018.12.20-
19 Sept. 2018 60,000 20 Dec. 2018 42,113.3 N N
Guangzhou Co., Ltd. assurance 2019.12.19
Sinopharm Holding Joint liability 2018.8.7-
22 Mar. 2018 15,000 7 Aug. 2018 N N
Guangzhou Co., Ltd. assurance 2019.8.5
Sinopharm Holding Joint liability 2018.5.29-
22 Mar. 2018 50,000 29 May 2018 45,452.03 N N
Guangzhou Co., Ltd. assurance 2019.5.29
Sinopharm Holding Joint liability 2018.10.15-
19 Sept. 2018 35,000 15 Oct. 2018 N N
Guangzhou Co., Ltd. assurance 2019.10.14
Sinopharm Holding Joint liability 2018.6.5-
22 Mar. 2018 40,000 5 Jun. 2018 39,986.77 N N
Guangzhou Co., Ltd. assurance 2019.6.4
Sinopharm Holding Joint liability 2018.5.9-
22 Mar. 2018 40,000 9 May 2018 N N
Guangzhou Co., Ltd. assurance 2019.5.8
Sinopharm Holding Joint liability 2018.6.22-
22 Mar. 2018 20,000 22 Jun. 2018 19,084.6 N N
Guangzhou Co., Ltd. assurance 2019.6.21
Sinopharm Holding Joint liability 2018.7.5-
22 Mar. 2018 20,000 5 Jul. 2018 4,718.14 N N
Guangzhou Co., Ltd. assurance 2019.7.4
Sinopharm Holding Joint liability 2018.6.13-
22 Mar. 2018 60,000 13 Jun. 2018 24,041.24 N N
Guangzhou Co., Ltd. assurance 2019.6.12
Sinopharm Holding Joint liability 2018.4.19-
22 Mar. 2018 80,000 19 Apr. 2018 1,509.28 N N
Guangzhou Co., Ltd. assurance 2019.3.31
Sinopharm Holding Joint liability 2018.5.20-
22 Mar. 2018 5,000 20 May 2018 1,767.15 N N
Guangdong Yuexing Co., Ltd assurance 2019.5.20
Sinopharm Holding Joint liability 2018.10.15-
19 Sept. 2018 5,000 15 Oct. 2018 3,933.06 N N
Guangdong Yuexing Co., Ltd assurance 2019.10.14
Sinopharm Holding Joint liability 2018.1.5-
19 Apr. 2017 5,000 5 Jan. 2018 3,293.97 N N
Guangdong Yuexing Co., Ltd assurance 2019.1.4
Sinopharm Holding Guangdong Joint liability 2018.6.22-
22 Mar. 2018 5,000 22 Jun. 2018 N N
Yuexing Co., Ltd assurance 2019.6.21
SinopharmHoliding Jointliability
2018.7.12-
Guangdong Yuexing Co., Ltd 22 Mar. 2018 5,000 12 Jul. 2018 4,938.49 assurance N N
2019.6.12
Sinopharm Holding
Joint liability 2018.11.16-
Guangdong Hengxing Co., 19 Sept. 2018 3,000 9 Nov. 2018 2,381.56 N N
assurance 2019.10.31
Ltd
57
Sinopharm Holding
Joint liability 2018.6.6-
Guangdong Hengxing Co., 22 Mar. 2018 5,000 6 Jun. 2018 792.14 N N
assurance 2019.6.5
Ltd
Guangdong Dongfang New Joint liability 2018.08.20-
22 Mar. 2018 4,000 20 Aug. 2018 3,992.38 N N
Special Medicine Co., Ltd assurance 2019.08.19
Sinopharm Holding Huizhou Joint liability 2018.10.12-
19 Sept. 2018 1,000 12 Oct. 2018 298.52 N N
Co., Ltd assurance 2019.10.11
Sinopharm Holding Huizhou Joint liability 2018.09.18-
22 Mar. 2018 3,000 18 Sept. 2018 N N
Co., Ltd assurance 2019.09.17
Sinopharm Holding Jiangmen Joint liability 2018.10.15-
19 Sept. 2018 1,000 15 Oct. 2018 N N
Renren Co., Ltd. assurance 2019.10.14
Sinopharm Holding Shantou Joint liability 2018.10.15-
19 Sept. 2018 500 12 Oct. 2018 500 N N
Co., Ltd. assurance 2019.10.14
Sinopharm Holding Zhaoqing Joint liability 2018.10.15-
19 Sept. 2018 2,000 15 Oct. 2018 883.02 N N
Co., Ltd. assurance 2019.10.14
Sinopharm Holding Joint liability 2018.10.15-
19 Sept. 2018 1,000 15 Oct. 2018 N N
Zhongshan Co., Ltd. assurance 2019.10.14
Sinopharm Holding Joint liability 2018.06.14-
22 Mar. 2018 1,000 9 May 2018 N N
Zhongshan Co., Ltd. assurance 2019.06.13
Sinopharm Holding Zhuhai Joint liability 2018.10.15-
19 Sept. 2018 1,000 15 Oct. 2018 166.26 N N
Co., Ltd. assurance 2019.10.14
Sinopharm Holding Joint liability 2018.10.15-
19 Sept. 2018 2,000 15 Oct. 2018 N N
Dongguan Co., Ltd. assurance 2019.10.14
Sinopharm Holding Meizhou Joint liability 2018.10.15-
19 Sept. 2018 1,000 15 Oct. 2018 500 N N
Co., Ltd. assurance 2019.10.14
Guangdong Nanfang
Joint liability 2018.7.1-
Pharmaceutical Foreign Trade 22 Mar. 2018 15,000 1 July 2018 11,268.74 N N
assurance 2019.6.30
Co., Ltd.
Guangdong Nanfang
Joint liability 2018.7.19-
Pharmaceutical Foreign Trade 22 Mar. 2018 5,000 19 Jul. 2018 3,335.85 N N
assurance 2019.10.31
Co., Ltd.
Guangdong Nanfang
Joint liability 2018.7.2-
Pharmaceutical Foreign Trade 22 Mar. 2018 10,000 2 Jul. 2018 2,479.14 N N
assurance 2019.6.26
Co., Ltd.
Guangdong Nanfang
Joint liability 2018.9.7-
Pharmaceutical Foreign Trade 22 Mar. 2018 10,000 7 Sept. 2018 6,885.71 N N
assurance 2019.9.6
Co., Ltd.
Guangdong Nanfang
Pharmaceutical Foreign Trade Joint liability 2018.10.15-
19 Sept. 2018 3,000 15 Oct. 2018 N N
Co., Ltd. assurance 2019.10.14
Guangdong Nanfang
Joint liability 2018.4.17-
Pharmaceutical Foreign Trade 22 Mar. 2018 2,500 17 Apr. 2018 38.2 N N
assurance 2018.12.31
Co., Ltd.
58
Foshan Nanhai Medicine Co., Joint liability 2018.7.31-
22 Mar. 2018 5,000 31 Jul. 2018 N N
Ltd. assurance 2019.7.31
Foshan Nanhai Medicine Co., Joint liability 2018.10.15-
19 Sept. 2018 5,000 15 Oct. 2018 1,912.65 N N
Ltd. assurance 2019.10.14
Foshan Nanhai Medicine Co., Joint liability 2018.11.20-
19 Sept. 2018 5,000 20 Nov. 2018 3,987 N N
Ltd. assurance 2019.10.31
Foshan Nanhai Medicine Co., Joint liability 2018.11.20-
19 Sept. 2018 3,000 20 Nov. 2018 126.25 N N
Ltd. assurance 2019.11.19
Foshan Nanhai Uptodate & Joint liability 2018.5.23-
22 Mar. 2018 5,000 23 May 2018 N N
Special Medicines Co. Ltd. assurance 2019.5.22
Foshan Nanhai Uptodate & Joint liability 2018.7.31-
22 Mar. 2018 5,000 31 Jul. 2018 N N
Special Medicines Co. Ltd. assurance 2019.7.31
Foshan Nanhai Uptodate & Joint liability 2018.10.15-
19 Sept. 2018 6,000 15 Oct. 2018 1,013.53 N N
Special Medicines Co. Ltd. assurance 2019.10.14
Foshan Nanhai Uptodate & Joint liability 2018.11.16-
19 Sept. 2018 5,000 16 Nov. 2018 4,235.47 N N
Special Medicines Co. Ltd. assurance 2019.10.31
Foshan Nanhai Uptodate & Joint liability 2018.11.20-
19 Sept. 2018 3,000 20 Nov. 2018 130.14 N N
Special Medicines Co. Ltd. assurance 2019.11.19
Sinopharm Holding Foshan Joint liability 2018.10.15-
19 Sept. 2018 1,500 15 Oct. 2018 631.98 N N
Co., Ltd assurance 2019.10.14
Sinopharm Holding Foshan Joint liability 2018.11.20-
19 Sept. 2018 1,000 20 Nov. 2018 543.42 N N
Co., Ltd assurance 2019.11.19
Sinopharm Holding Joint liability 2018.11.21-
19 Sept. 2018 3,000 21 Nov. 2018 N N
Zhanjiang Co., Ltd assurance 2019.11.20
Sinopharm Holding Joint liability 2018.10.15-
19 Sept. 2018 1,000 15 Oct. 2018 1,000 N N
Zhanjiang Co., Ltd assurance 2019.10.14
Sinopharm Holding Guangxi Joint liability 2018.11.26-
19 Sept. 2018 20,000 26 Nov. 2018 13,311.03 N N
Co., Ltd. assurance 2019.11.26
Sinopharm Holding Guangxi Joint liability 2018.10.15-
22 Mar. 2018 28,000 15 Oct. 2018 207.32 N N
Co., Ltd. assurance 2019.10.14
Sinopharm Holding Guangxi Joint liability 2018.11.15-
19 Sept. 2018 25,000 15 Nov. 2018 12,740.59 N N
Co., Ltd. assurance 2019.11.7
Sinopharm Holding Guangxi Joint liability 2018.12.13-
19 Sept. 2018 15,000 13 Dec. 2018 11,992.28 N N
Co., Ltd. assurance 2019.11.27
Sinopharm Holding Guangxi Joint liability 2018.6.20-
22 Mar. 2018 10,000 20 Jun. 2018 1,708.2 N N
Co., Ltd. assurance 2019.6.20
Sinopharm Holding Guangxi Joint liability 2018.6.5-
22 Mar. 2018 5,000 5 Jun. 2018 N N
Co., Ltd. assurance 2019.6.5
Sinopharm Holding Guangxi Joint liability 2018.6.5-
22 Mar. 2018 5,000 5 Jun. 2018 2,989.87 N N
Co., Ltd. assurance 2019.6.5
Sinopharm Holding Guangxi
Joint liability 2018.6.22-
Co., Ltd. 22 Mar. 2018 5,000 22 Jun. 2018 4,967.52 N N
assurance 2019.6.21
59
Sinopharm Holding Liuzhou Joint liability 2018.10.15-
19 Sept. 2018 9,000 15 Oct. 2018 2,935.26 N N
Co., Ltd assurance 2019.10.14
Sinopharm Holding Liuzhou Joint liability 2018.6.21-
22 Mar. 2018 5,000 21 Jun. 2018 4,559.55 N N
Co., Ltd assurance 2019.6.20
Sinopharm Holding Liuzhou Joint liability 2018.3.14-
19 Apr. 2017 6,000 14 Mar. 2018 5,845.69 N N
Co., Ltd assurance 2019.1.2
Sinopharm Holding Liuzhou Joint liability 2018.11.12-
19 Sept. 2018 5,000 12 Nov. 2018 4,999.57 N N
Co., Ltd assurance 2019.4.18
Sinopharm Holding Liuzhou Joint liability 2018.9.7-
22 Mar. 2018 9,000 7 Sept. 2018 N N
Co., Ltd assurance 2019.9.5
Sinopharm Holding Shenzhen Joint liability 2018.10.15-
19 Sept. 2018 9,000 15 Oct. 2018 1,600 N N
Yanfeng Co., Ltd assurance 2019.10.14
Sinopharm Holding Shenzhen Joint liability 2018.12.03-
19 Sept. 2018 5,000 3 Dec. 2018 2,700 N N
Yanfeng Co., Ltd assurance 2019.11.27
Sinopharm Holding Shenzhen Joint liability 2018.06.13-
22 Mar. 2018 7,000 13 Jun. 2018 4,500 N N
Yanfeng Co., Ltd assurance 2019.06.12
Total amount of actual
Total amount of approving guarantee for occurred guarantee for
833,500 1,110,735.72
subsidiaries in report period (B1) subsidiaries in report period
(B2)
Total balance of actual
Total amount of approved guarantee for
guarantee for subsidiaries at
subsidiaries at the end of reporting period 844,500 366,402.11
the end of reporting period
(B3)
(B4)
Guarantee between the subsidiaries and the subsidiaries
Guarant
Related Imple
Actual ee for
Name of the Company Announcemen Guarantee Actual date of Guarantee mente
guarantee Guarantee type related
guaranteed t disclosure limit happening term d
limit party
date (Y/N)
(Y/N)
Fujian Guoda Drugstore Joint liability 2018.4.20-
22 Mar.2018 2,275 20 Apr. 2018 350.51 N N
Chain Co., Ltd assurance 2019.4.19
Sinopharm Holding Guoda
Joint liability 2018.10.10-
Drugstore Guangdong Co., 19 Sept.2018 8,000 10 Oct. 2018 6,541.44 N N
assurance 2019.10.9
Ltd
Sinopharm Holding Guoda
Joint liability 2018.12.20-
Drugstore Guangdong Co., 19 Sept.2018 2,400 20 Dec. 2018 N N
assurance 2019.12.19
Ltd
Sinopharm Holding Guoda
Joint liability 2018.10.10-
Drugstore Guangxi Chain 19 Sept. 2018 3,000 10 Oct. 2018 2,064.44 N N
assurance 2019.10.9
Co., Ltd
Sinopharm Holding Guoda
Joint liability 2018.10.10-
Drugstore Jiangmen Chain 19 Sept. 2018 3,000 10 Oct. 2018 157.63 N N
assurance 2019.10.9
Co., Ltd
60
Sinopharm Holding Guoda
Joint liability 2018.7.3-
Drugstore Inner Mongolia 22 Mar. 2018 3,000 3 Jul. 2018 1,189.94 N N
assurance 2019.7.2
Co., Ltd
Sinopharm Holding Guoda
Joint liability 2018.4.25-
Drugstore Inner Mongolia 22 Mar. 2018 3,000 25 Apr. 2018 12.00 N N
assurance 2019.4.24
Co., Ltd
Sinopharm Holding Guoda
Joint liability 2018.10.10-
Drugstore Inner Mongolia 19 Sept. 2018 8,000 10 Oct. 2018 6,699.92 N N
assurance 2019.10.9
Co., Ltd
Shanxi Guoda Wanmin Joint liability 2018.10.16-
19 Sept. 2018 5,000 16 Oct. 2018 4,025.00 N N
Drugstore Chain Co.,Ltd assurance 2019.10.15
Shanxi Guoda Wanmin Joint liability 2018.5.16-
22 Mar. 2018 5,000 16 May 2018 3,500.00 N N
Drugstore Chain Co.,Ltd assurance 2019.5.15
Shanxi Guoda Wanmin Joint liability 2018.6.28-
22 Mar. 2018 3,000 28 Jun. 2018 N N
Drugstore Chain Co.,Ltd assurance 2019.6.27
Sinopharm Holding Guoda
Joint liability 2018.11.28-
Drugstore Shenyang Chain 19 Sept. 2018 5,000 28 Nov. 2018 2,684.93 N N
assurance 2019.11.27
Co., ltd
Sinopharm Holding Guoda
Joint liability 2018.4.23-
Drugstore Shenyang Chain 22 Mar. 2018 10,000 23 Apr. 2018 9,040.50 N N
assurance 2019.4.22
Co., ltd
Sinopharm Holding Guoda
Joint liability 2018.10.15-
Drugstore Shenyang Chain 19 Sept. 2018 6,000 15 Oct. 2018 579.44 N N
assurance 2019.10.14
Co., ltd
Sinopharm Holding Guoda
Joint liability 2018.11.17-
Drugstore Shenyang Chain 19 Sept. 2018 6,000 17 Oct. 2018 5,434.44 N N
assurance 2019.11.16
Co., ltd
Sinopharm Holding Guoda
Joint liability 2018.10.10-
Drugstore Shenyang Chain 19 Sept. 2018 15,000 10 Oct. 2018 12,942.75 N N
assurance 2019.10.9
Co., ltd
Sinopharm Holding Guoda
Drugstore Shanxi Yiyuan Joint liability 2018.5.21-
22 Mar. 2018 6,000 21 May 2018 5,272.74 N N
Chain Co., ltd assurance 2019.5.20
Sinopharm Holding Guoda
Drugstore Shanxi Yiyuan Joint liability 2017.8.30-
19 Apr. 2017 4,000 30 Aug. 2017 471.8 N N
Chain Co., ltd assurance 2018.8.29
Sinopharm Holding Guoda
Joint liability 2018.11.21-
Drugstore Shanxi Yiyuan 19 Sept. 2018 4,900 21 Nov. 2018 2,531.06 N N
assurance 2019.11.20
Chain Co., ltd
Sinopharm Holding Guoda
Joint liability 2018.2.5-
Drugstore Shanxi Yiyuan 19 Apr. 2017 2,800 5 Feb. 2018 2,161.57 N N
assurance 2019.2.4
Chain Co., ltd
61
Sinopharm Holding Guoda
Joint liability 2018.6.28-
Drugstore Shanxi Yiyuan 22 Mar. 2018 4,000 28 Jun. 2018 3,995.20 N N
assurance 2019.6.27
Chain Co., ltd
Hunan Guoda Minshengtang Joint liability 2018.10.10-
22 Mar. 2018 3,000 10 Oct. 2018 2,094.22 N N
Drugstore Chain Co., Ltd assurance 2019.10.9
Ningxia Guoda Drugstore Joint liability 2018.10.16-
22 Mar. 2018 4,000 16 Oct. 2018 2,034.00 N N
Chain Co., Ltd assurance 2019.10.16
Sinopharm Holding Guoda
Joint liability 2018.10.10-
Drugstore Yangzhou 19 Sept. 2018 2,000 10 Oct. 2018 1,897.96 N N
assurance 2019.10.9
Dadengsheng Chain Co., Ltd
Sinopharm Holding Guoda
Joint liability 2018.4.1-
Drugstore Jiangmen Chain 22 Mar. 2018 2,000 1 Apr. 2018 1,671.88 N N
assurance 2019.4.1
Co., Ltd
Sinopharm Holding Guoda
Joint liability 2018.4.1-
Drugstore Shanghai Chain 22 Mar. 2018 4,000 1 Apr. 2018 2,890.56 N N
assurance 2019.4.1
Co., Ltd
Sinopharm Holding Guoda
Joint liability 2018.5.11-
Drugstore Henan Chain Co., 22 Mar. 2018 3,000 11 May 2018 20.45 N N
assurance 2019.5.10
Ltd
Shanxi Guoda Wanmin Joint liability 2018.4.28-
22 Mar. 2018 5,000 28 Apr. 2018 3,650.40 N N
Drugstore Chain Co.,Ltd assurance 2019.4.27
Sinopharm Holding Guoda
Joint liability 2018.4.23-
Drugstore Shanxi Yiyuan 22 Mar. 2018 3,000 23 Apr. 2018 3,000.00 N N
assurance 2019.4.22
Chain Co., ltd
Sinopharm Holding Guoda
Joint liability 2018.4.24-
Drugstore Inner Mongolia 22 Mar. 2018 2,000 24 Apr. 2018 1,041.84 N N
assurance 2019.4.23
Co., Ltd
China National Hebei
Joint liability 2018.10.10-
LeRenTang Medicine Chain 19 Sept. 2018 3,000 10 Oct. 2018 1,969.11 N N
assurance 2019.10.9
Co., Ltd
Sinopharm Holding Guoda
Joint liability 2018.5.18-
Drugstore Guangdong Co., 22 Mar. 2018 3,000 18 May 2018 2,376.80 N N
assurance 2019.5.17
Ltd
Fujian Guoda Drugstore Joint liability 2018.5.18-
22 Mar. 2018 5,000 18 May 2018 1,724.30 N N
Chain Co., Ltd assurance 2019.5.17
Fujian Guoda Drugstore Joint liability 2018.6.25-
22 Mar. 2018 2,000 25 Jun. 2018 99.04 N N
Chain Co., Ltd assurance 2019.6.24
Sinopharm Holding Guoda
Joint liability 2018.6.24-
Drugstore Henan Chain Co., 22 Mar. 2018 3,000 24 Jun. 2018 443.56 N N
assurance 2019.6.23
Ltd
Sinopharm Holding Guoda
Drugstore Xinjiang New Joint liability 2018.10.11-
22 Mar. 2018 3,000 11 Oct. 2018 1,882.11 N N
Special Medicine Chain Co., assurance 2019.10.10
Ltd
62
Beijing Jinxiang Drugstore Joint liability 2018.9.28-
22 Mar. 2018 4,000 28 Sept. 2018 2,623.48 N N
Medicine Chain Co., Ltd assurance 2019.9.27
Sinopharm Holding Guoda
Joint liability 2018.9.28-
Drugstore Nanjing Chain Co., 22 Mar. 2018 1,000 28 Sept. 2018 665.40 N N
assurance 2019.9.27
Ltd
Sinopharm Holding Guoda
Joint liability 2018.10.10-
Drugstore Shanxi Yiyuan 19 Sept. 2018 5,000 10 Oct. 2018 5,000.00 N N
assurance 2019.10.9
Chain Co., ltd
Sinopharm Holding Guoda
Joint liability 2018.10.10-
Drugstore Shanghai Chain 19 Sept. 2018 4,000 10 Oct. 2018 59.90 N N
assurance 2019.10.9
Co., Ltd
Sinopharm Holding Guoda
Joint liability 2018.9.28-
Drugstore Guangdong Co., 19 Sept. 2018 3,000 28 Sept. 2018 1,032.80 N N
assurance 2019.9.27
Ltd
Sinopharm Holding Guoda Joint liability 2018.11.28-
19 Sept. 2018 4,000 28 Nov. 2018 1,480.06 N N
Drugstore Shandong Co., Ltd assurance 2019.11.27
Sinopharm Holding Guoda
Joint liability 2018.11.15-
Drugstore Shanxi Yiyuan 19 Sept. 2018 3,000 15 Nov. 2018 3,000.00 N N
assurance 2019.11.14
Chain Co., ltd
Taishan China National
Joint liability 2018.6.2-
Guoda Qunkang Drustore 22 Mar. 2018 500 2 Jun. 2018 178.13 N N
assurance 2019.6.1
Chain Co., Ltd
Sinopharm Holding Guoda
Joint liability 2018.9.28-
Drugstore Jiangmen Chain 19 Sept. 2018 2,000 28 Sept. 2018 940.62 N N
assurance 2019.9.27
Co., Ltd
Total amount of approving guarantee Total amount of actual occurred guarantee for
176,075 87,203.3987
for subsidiaries in report period (C1) subsidiaries in report period (C2)
Total amount of approved guarantee
Total balance of actual guarantee for subsidiaries
for subsidiaries at the end of 182,875 111,431.93
at the end of reporting period (C4)
reporting period (C3)
Total amount of guarantee of the Company ( total of three above mentioned guarantee)
Total amount of approving guarantee Total amount of actual occurred guarantee
1,009,575 1,197,939.11
in report period (A1+B1+C1) in report period (A2+B2+C2)
Total amount of approved guarantee
Total balance of actual guarantee at the
at the end of report period 1,027,375 477,834.04
end of report period (A4+B4+C4)
(A3+B3+C3)
The proportion of the total amount
of actually guarantee in the net
41.13%
assets of the Company (that is A4+
B4+C4)
63
(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 2018” can be seen in Juchao website released on the same date
(http://www.cninfo.com.cn)
2. Execution of social responsibility of targeted poverty alleviation
The Company has not carried out targeted poverty alleviation in the reporting period and has no follow-up plan of targeted poverty
alleviation
3. Environment protection
The listed Company and its subsidiary whether belongs to the key sewage units released from environmental protection department
Voluntary disclosure
Name of
Major Distribution Executed
Quantity of Emission Approved
Pollutants Emission of Pollutant Total Excessive
Company Discharge Concentrat Total
/subsidiary and Method Discharge Discharge Emissions Discharge
Outlet ion Emissions
Particular Outlet Standards
Pollutants
64
Discharge
China
Tube Outlet of 1.21 6.64
National COD 1 19.3mg/l N
Discharge Waste ton/year ton/year
Zhijun
Water
Discharge
China
Ammonia Tube Outlet of 0.09
National 1 1.43mg/l 0.7 ton/year N
Nitrogen Discharge Waste ton/year
Zhijun
Water
DB44/26-
Discharge
China 2001 Level 1
Tube Outlet of 0.00188 0.0369
National Phosphate 1 0.03mg/l standard for N
Discharge Waste ton/year ton/year
Zhijun the second
Water
period
Discharge
China
Tube Outlet of 0.19 1.476
National BOD 1 3.01mg/l N
Discharge Waste ton/year ton/year
Zhijun
Water
Discharge
China
Tube Outlet of 0.14 4.428
National SS 1 2.24mg/l N
Discharge Waste ton/year ton/year
Zhijun
Water
Discharge The Class IV
Zhijun Tube Outlet of water 0.7657 2.16
C0D 1 11.91mg/L N
Pingshan Discharge Waste (Ammonia ton/year ton/year
Water Nitrogen up
Discharge to Class V)
Zhijun Ammonia Tube Outlet of Standard in 0.008 0.144
1 0.13mg/L N
Pingshan Nitrogen Discharge Waste “Discharge ton/year ton/year
Water standard of
Discharge water
Zhijun Total Tube Outlet of pollutants in 0.005 0.0216
1 0.08mg/L mixed N
Pingshan phosphorus Discharge Waste ton/year ton/year
Water pharmaceutic
Discharge al
Zhijun Tube Outlet of industry”(G 0.1858 0.432
BOD 1 2.89mg/L B21908- N
Pingshan Discharge Waste ton/year ton/year
Water 2008) and
“Standard of
Surface
Discharge water
Zhijun Suspended Tube Outlet of 1.0171 2.16
1 15.82mg/L enviornment N
Pingshan solids Discharge Waste al ton/year ton/year
Water quality”(GB
3838-2002)
Discharge
Main Luck
Tube Outlet of 0.015 0.09
Pharmaceuti COD 1 15mg/L N
Discharge Waste ton/year ton/year
cals
Water
Discharge
Main Luck
Ammonia Tube Outlet of 0.001 0.01
Pharmaceuti 1 1mg/L N
Nitrogen Discharge Waste ton/year ton/year
cals
Water
DB44/26-
Discharge
Main Luck 2001 Level 1
Tube Outlet of 0.00005 0.0005
Pharmaceuti Phosphate 1 0.05mg/l standard for N
Discharge Waste ton/year ton/year
cals the second
Water
period
Discharge
Main Luck
Tube Outlet of 0.005 0.02
Pharmaceuti BOD 1 5mg/L N
Discharge Waste ton/year ton/year
cals
Water
Discharge
Main Luck
Tube Outlet of 0.008 0.06
Pharmaceuti SS 1 8mg/L N
Discharge Waste ton/year ton/year
cals
Water
Construction and operation of pollution prevention and control facilities
65
At present, the above-mentioned environmental pollution key monitoring units in which the Company has a shareholding have
established pollution prevention and control facilities for waste water. In the daily management process, enterprises establish
management procedures and operating instructions for environmental protection facilities, and ensure the normal and compliant
operation of anti-pollution facilities through system implementation and responsibility implementation. All enterprises are
continuously investing funds and stepping up the transformation and improvement of pollution prevention and control facilities to
ensure the stable operation of pollution prevention facilities and improve the disposal capacity of environmental protection facilities.
Environmental impact assessment of construction projects and other environmental protection administrative licenses
At present, the projects of all key monitoring units have carried out environmental impact assessments and obtained approvals. The
projects to be built also carry out the relevant administrative review procedures according to the “three simultaneous” requirements
of the environmental protection facilities of the construction project.
Emergency plan for environmental emergencies
At present, the above-mentioned environmental pollution key monitoring units in which the Company has a shareholding have
formulated the Emergency Plan for Environmental Emergencies and reported them according to the regulatory requirements of the
local regulatory authorities. According to the management requirements of the emergency plan, the key units regularly carry out
emergency plan drills to further provide the enterprises’ emergency response capability.
Environmental self-monitoring scheme
At present, the above-mentioned environmental pollution key monitoring units in which the Company has a shareholding have
established environmental self-detection scheme and plan, and implemented self-inspection, third-party detection and other
monitoring methods according to the government requirements. Relevant monitoring data and reports have been archived and saved.
Other environmental information that should be disclosed
The above two companies are joint stock companies of the Company. The Company and its holding subsidiaries are not listed as key
pollutant discharge units announced by the environmental protection department.
Relevant information on environment protection
Nil
XIX. Explanation on other significant events
√Applicable □ Not applicable
The proposal on the wholly-owned subsidiary Sinopharm Holding 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
Holding 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. The Company was publicly listed on the Shanghai United Assets and Equity Exchange on
September 20, 2017, and collected an intentional investor, Walgreens Boots Alliance (NASDAQ Code: WBA), as
the actual controller, it subscribed for the equity of Guoda Drugstore by taking its wholly-owned subsidiary
established in Hong Kong, Walgreens Boots Alliance (Hong Kong) Investments Limited (hereinafter referred to
as “WBAHKIL”), as the capital increase entity to subscribe the equity of Guoda Drugstore with the capital
increase amount of RMB 2,766,700,000. It holds 40% equity of Guoda Drugstore after the capital increase. At the
beginning of December 2017, in accordance with the equity transaction rules, the Company, Guoda Drugstore and
WBAHKIL jointly signed the Registration Capital Increase and Subscription Agreement.
66
On March 23, 2018, the Company received the Written Decision on Nonperformance of Further Review
(SFLCSH [2018] No. 104) issued by the Ministry of Commerce of the People’s Republic of China, which was
transferred from Walgreens Boots Alliance Investment Luxembourg Co., Ltd.
At the end of June 2018, Guoda Drugstore obtained the registration receipt for the establishment of a foreign-
invested enterprise from the Commerce Commission of Jing’an District, Shanghai Municipality, and completed
the industrial and commercial registration on June 28, 2018.
XX. Significant event of subsidiary of the Company
√Applicable □ Not applicable
See “XIX. Explanation on other significant events
67
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
Capitaliza
New
Proportio Bonus tion of Subtota Proportio
Amount shares Others Amount
n shares public l n
issued
reserve
I. Restricted shares 65,497,028 15.30% 65,497,028 15.30%
2. State-owned legal
60,380,743 14.10% 60,380,743 14.10%
person’s shares
3. Other domestic
5,116,285 1.20% 5,116,285 1.20%
shareholding
Including: Domestic
5,114,297 1.19% 5,114,297 1.19%
legal person’s shares
Domestic nature
1,988 0.00% 1,988 0.00%
person shares
II. Unrestricted shares 362,629,955 84.70% 362,629,955 84.70%
1. RMB Ordinary shares 307,744,355 71.88% 307,744,355 71.88%
2. Domestically listed
54,885,600 12.82% 54,885,600 12.82%
foreign shares
III. Total shares 428,126,983 100.00% 428,126,983 100.00%
Reasons for share changed
□Applicable √Not applicable
Approval of share changed
□Applicable √Not applicable
Ownership transfer of share changed
□ Applicable √ Not applicable
Progress of shares buy-back
□Applicable √Not applicable
Implementation progress of the reduction of repurchases shares by centralized bidding
□Applicable √Not applicable
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 for the Company or need to disclosed under requirement from security regulators
□ Applicable √ Not applicable
2. Changes of restricted shares
□ Applicable √ Not applicable
68
II. Securities issuance and listing
1. Security offering (without preferred stock) in Reporting Period
□Applicable √Not applicable
2. Changes of total shares and shareholders structure as well as explanation on changes of assets and
liability structure
□Applicable √Not applicable
3. Current internal staff shares
□ Applicable √ Not applicable
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 18,101 17,550 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 note 8)
applicable)
(found in note 8)
Particulars about shares held above 5% by shareholders or top ten shareholders
Total Number of share pledged/frozen
Amount Amount
Proportio sharehold
Changes of 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 Group State-owned 239,999,9 55,057,70 184,942,2
56.06%
Co., Ltd Corporation 91 0 91
HTHK/CMG
FSGUFP-CMG
Foreign 11,469,64 11,469,64
FIRST STATE 2.68% 0
Corporation 4 4
CHINA GROWTH
FD
69
China United
Property Insurance Domestic non
Company Limited state-owned 1.73% 7,400,422 0 7,400,422
- Traditional Corporation
insurance products
China National
Pharmaceutical State-owned
1.24% 5,323,043 5,323,043 0
Foreign Trade Corporation
Corp.
China Life
Insurance Co., Ltd. Domestic non
– tradition –general state-owned 1.17% 5,013,800 0 5,013,800
insurance products Corporation
-005L-CT001 Shen
GUOTAI JUNAN
SECURITIES(HO Foreign
0.99% 4,245,498 0 4,245,498
NGKONG) Corporation
LIMITED
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
Management Co., Domestic nature
0.96% 4,118,716 0 4,118,716
Ltd. – Haoqing person
Value Stable No.8
Investment Fund
Central Huijin State-owned
0.89% 3,804,400 0 3,804,400
Investment Ltd. Corporation
Bank of China-
Harvest Shanghai- Domestic non
H.K.-Shenzhen state-owned 0.83% 3,554,700 0 3,554,700
Selected Securities Corporation
Investment Fund
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 person acting in concert 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
70
Type of shares
Shareholders’ name Amount of un-restrict shares held at Period-end
Type Amount
RMB ordinary
Sinopharm Group Co., Ltd 184,942,291 184,942,291
shares
HTHK/CMG FSGUFP-CMG FIRST Domestic listed
11,469,644 11,469,644
STATE CHINA GROWTH FD foreign shares
China United Property Insurance
RMB ordinary
Company Limited - Traditional 7,400,422 7,400,422
shares
insurance products
China Life Insurance Co., Ltd. –
RMB ordinary
tradition –general insurance products - 5,013,800 5,013,800
shares
005L-CT001 Shen
GUOTAI JUNAN
Domestic listed
SECURITIES(HONGKONG) 4,245,498 4,245,498
foreign shares
LIMITED
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 4,118,716 4,118,716
shares
Value Stable No.8 Investment Fund
RMB ordinary
Central Huijin Investment Ltd. 3,804,400 3,804,400
shares
Bank of China- Harvest Shanghai-
RMB ordinary
H.K.-Shenzhen Selected Securities 3,554,700 3,554,700
shares
Investment Fund
Hong Kong Securities Clearing RMB ordinary
3,416,987 3,416,987
Company Ltd 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 person
restrict shareholders and between top acting in concert among the other tradable shareholders regulated by the Management
10 un-restrict shareholders and top 10 Measure of 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 4,118,716 shares in total.
shares held (if applicable) (see note 4)
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.
71
2. Controlling shareholder of the Company
Nature of controlling shareholders: central state-owned holding
Type of controlling shareholders: legal person
Legal
person/person Organization
Controlling shareholders Date of foundation Main operation business
in charge of code
the unit
Industrial investment holding; management and
assets 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 &
Sinopharm Group Co., dressings, medical polymer materials and products,
Li Zhiming 2003-01-08 74618434-4
Ltd 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 55.29 percent equity of China National Medicines Corporation Ltd
controlling shareholder (Stock code: 600511) up to the end of Period.
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.
72
3. Actual controller of the Company and persons acting in concert
Nature of actual controller: central state-owned assets management
Type of actual controller: legal person
Legal
Actual controlling shareholders person/person in Date of foundation Organization code Main operation business
charge of the unit
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 12 May 2020); mandatory
for pharmaceutical enterprise,
China National Pharmaceutical asset reorganization; consulting
She Lulin 1987-03-26 10000588-8
Group Corporation service of medicine 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
Proportion of
Name company with held (10 thousand
shares held
shares held shares)
SINOPHARM Jianmin Group 132.35 0.86%
Equity of domestic/oversea
listed company control by Sinopharm
SINOPHARM 20,728.95 6.98%
actual controller in report period Holding
Sinopharm
Holding
Sinopharm
Industrial 157,155.60 52.88%
Holding
Investment
Co., Ltd.
73
Sinopharm Sinopharm
42,261.77 55.29%
Holding Holding
Sinopharm Sinopharm
24,000.00 56.06%
Holding Accord
Sinopharm Lianhuan
375.21 1.31%
Holding Pharmaceutical
Shyndec
SIPS 23,951.26 22.68%
Pharmaceutical
China National
Pharmaceutical Hengrui
16,310.11 4.43%
Investment Medicine
Co., Ltd.
China National
Biotec Group BTBP 43,523.36 49.96%
Co., Ltd.
SINOPHARM
China TCM 161,431.36 32.06%
H.K. 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:
Actual controller controlling the Company by entrust or other assets management
74
□ 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
75
Section VII. Preferred Stock
□ Applicable √ Not applicable
The Company had no preferred stock in the Period.
76
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
End of shares of shares
Start dated held at Other held at
Working date 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)
Chen Deputy GM,
Currently in
Changbi Secretary of M 51 13 Jan. 2015 2,651 0 0 2,651
office
n 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
Office
Independent leaving
Xiong Chuxiong 17 Apr. 2018 Expiration of term of 7th BOD
Director while term is
due
Office
Independent leaving
Xiao Shengfang 17 Apr. 2018 Expiration of term of 7th BOD
Director while term is
due
Office
leaving
Wang Huaiqin Staff supervisor 17 Apr. 2018 Expiration of term of 7th Supervisory Committee
while term is
due
Appointment
Lian Wanyong Director 17 Apr. 2018 New Director of 8th BOD
and removal
Appointment
Li Dongjiu Director 17 Apr. 2018 New Director of 8th BOD
and removal
Independent Appointment
Ou Yongliang 17 Apr. 2018 New Independent Director of 8th BOD
Director and removal
Independent Appointment
Chen Shengqun 17 Apr. 2018 New Independent Director of 8th BOD
Director and removal
Appointment
Lang Baochun Staff supervisor 17 Apr. 2018 New Staff supervisor of 8th Supervisory Committee
and removal
Lang Baochun Staff supervisor Office 8 Aug. 2018 Resign from staff supervisor for job arrangement
77
leaving
Appointment
Lang Baochun General counsel 22 Aug. 2018 New General counsel
and removal
Appointment
Chen Guojing Staff supervisor 8 Aug. 2018 New Staff supervisor of 8th Supervisory Committee
and removal
Appointment
Liu Tianrao Deputy GM 11 Jan. 2019 New Deputy GM
and removal
Appointment
Ma Zhanjun Director 24 Jan.2019 New Director of 8th BOD
and removal
Deputy Appointment
Ma Zhanjun 31 Jan.2019 New Deputy Chairman of 8th BOD
Chairman and removal
Independent Appointment
Su Weiwei 24 Jan.2019 New Independent Director of 8th BOD
Director and removal
III. Post-holding
Professional background, major working experience and present main responsibilities in Company of directors,
supervisors and senior executive at the present
1. Members of the Board
Mr. Liu Yong, joined Sinopharm Group Co., Ltd in January 2003 and serves as executive director and president
of Sinopharm Holding since November 2017 and acts as deputy party secretary of Sinopharm Holding since
January 2018; Mr. Liu own over 26 years of working experience, among which, over 23 years are related to
management experience in medicine and health care products industry. 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 China
National Pharmaceutical Group Corporation and Shanghai Guoda Drugstore Chain Company Limited from July
1999 to April 2003. Mr. Liu served as GM and party secretary of the Sinopharm Holding Shenyang Co., Ltd from
April 2003 to November 2009; a deputy president of Sinopharm Holding from January 2009 to November 2017;
the Secretary of the Board of Sinopharm Holding from October 2016 to November 2017 and General Counsel of
Sinopharm Holding from January 2014 to December 2017. Currently, he also acts as the Director of
SINOPHARM, Sinopharm Holding Guoda Drugstore Co., Ltd., China National Scientific Instruments &
Materials Co., Ltd and China National Medical Equipment Co., Ltd.; and Director and GM of Sinopharm Holding
H.K. Co., Ltd. Mr. Liu serves as Director of the 7th BOD of the Company since January 2017 and Chairman of the
7th and 8th BOD of the Company since October 2017.
Mr. Ma Zhanjun served as president of Wuhan Ruipu Pharmaceutical Co., Ltd. from December 2000 to December
2003, from January 2004 to April 2005, he served as general manager of Sinopharm Group Pharmaceutical
Holding Wuhan Co., Ltd., from April 2005 to December 2005, he served as executive deputy general manager of
Sinopharm Holding Hubei Co., Ltd., and he served as general manager of Sinopharm Group Hubei Co., Ltd. from
January 2006 to December 2014, from January 2015 to October 2018, he served as president of Sinopharm
78
Holding Hubei Co., Ltd., since November 2018, he has concurrently been serving as vice president of Sinopharm
Holding Hubei Co., Ltd. Since January 2019, he has been serving as vice president of the eighth board of directors
of the Company.
Mr. Li Zhiming, chairman of the board and the deputy Party Secretary of Sinopharm Group Co., Ltd, he joined the
Sinopharm Holding in May 2010 as deputy president, served as executive director and president of Sinopharm
Holding from November 2013 to March 2017; He serves as chairman of Sinopharm Holding since November
2017 and he is the deputy party secretary of Sinopharm Holding since November 2018. Mr. Li held the position
of General counsel, Secretary of Committee for Discipline Inspection, chairman of the labor union, deputy Party
Secretary and party secretary of Sinopharm Holding from October 2012 to March 2017. He owns more than 36
years of working experience, among which, 32 years are related to management experience in medicine and health
care products industry. 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 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 general
manager, Deputy Chairman of the board, chairman of the board and party secretary. Currently, he also serves as
Director of China National Xinjiang Medicine Co., Ltd, Sinpharm Holding Senyi Tech. (Shanghai) Co., Ltd,
China National Pharmaceutical Co., Ltd and Sinopharm Holding Guoda Drugstore Co., Ltd.; the deputy chairman
of Shanghai Shyndec Pharmaceutical Co., Ltd and Chairman of Sinopharm Holding H.K. Co., Ltd, Sinopharm
Holding (China) Finance Leasing Co., Ltd, China National Zhongjin (Shanghai) Medical Health Investment
Management Co., Ltd and Sinopharm Holding Medicine Investment Co., Ltd; He served as Chairman of the
Company from February 2014 to August 2016 and acts as Director of the 7th and 8th BOD of the Company since
August 2016.
Mr. Jiang Xiuchang, entered into Sinopharm Holding as the CFO in May 2010, and he has also acted as vice
president of Sinopharm Holding since July 2013. Mr. Jiang owns over 31 years of working experiences, among
which, 20 years of management experiences are related to medicine and health-care industries. He 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. Currently, Mr. Jiang serves as
Chairman of Sinopharm Holding Jiangxi Co., Ltd, Sinopharm Holding Shanxi Co., ltd, Sinopharm Holding Inner
Mongolia Co., ltd, Sinopharm Holding Tianjin Co., ltd, SINOPHARM Shanxi Co., ltd and China National
79
Medicines Corporation Ltd; Director of Sinopharm Holding H.K. Co., ltd and China National Finance
Corporation Ltd; and executive Director of Beijing Sinopharm Taiyuan Property Management Co., Ltd and
SINOPHARM Shanghai Co., Ltd; he serves as Director of the 6th ,7th and 8th BOD of the Company since March
2011.
Mr. Lian Wanyong is vice president of Sinopharm Group Co., Ltd. He joined China National
Pharmaceutical Group Corporation Guangzhou Company in 1996 and successively served as product
director of Yuexing Pharmaceutical Co., Ltd. and senior product manager of Hong Kong Tianjian
International Co., Ltd. From August 2002 to January 2004, he served as deputy manager of the
financial department of Barr laboratories, Inc., USA. From January 2004 to April 2014, he was
appointed as manager of operational audit department, deputy director of financial asset
management department and director of investment management department of China Medicinal
Materials Group Company. From December 2010 to February 2014, he served as deputy general
manager of Beijing Sinopharm Asset Management Center, from April 2014 to January 2018, he
served as deputy director of the Policy Research Office of China National Pharmaceutical Group Corporation.
Since January 2018, he has been serving as vice president of Sinopharm Group Co., Ltd., and Mr. Lian is
concurrently serving as director of China National Medicines Corporation Ltd., director of China National
Zhongjin (Shanghai) Medical Health Investment Management Co., Ltd, and director of West China Dental Co.,
Ltd. He serves as Director of 8th BOD of the Company since April 2018.
Mr. Li Dongjiu is vice president and general counsel of Sinopharm Group Co., Ltd. From April 1997 to January
2002, he served as deputy general manager of North China Pharmaceutical Huasheng Co., Ltd., from January
2002 to December 2009, he served as deputy general manager of North China Pharmaceutical Co., Ltd., and
concurrently served as general manager of North China Pharmaceutical Group Sales Company, and property
representative of North China Pharmaceutical Group Southern Company (concurrently), from December 2009 to
June 2010, he served as executive president of Shanghai Fosun Pharmaceutical Industry Development Co., Ltd.,
and from June 2010 to September 2011, he was appointed as vice president of Shanghai Fosun Pharmaceutical
(Group) Limited and director of the Pharmaceutical Management Committee, and president of Shanghai Fosun
Pharmaceutical Industry Development Co., Ltd., from September 2011 to January 2018, he served as senior vice
president of Shanghai Fosun Pharmaceutical (Group) Limited, and concurrently served as director of
pharmaceutical business and consumer goods management committee and chairman, president of Shanghai Fosun
Pharmaceutical Industry Development Co., Ltd. and concurrently vice-president of pharmaceutical industry
management committee, responsible for strategy, investment, operation and management of pharmaceutical
business and consumer product. Since January 2018, he has been serving as vice president of Sinopharm Group
Co., Ltd. Mr. Li is concurrently director of China National Medicines Corporation Ltd. and Sinopharm Chemical
Reagent Co., Ltd., and president of Sinopharm Holding Fujian Co., Ltd., Sinopharm Holding Fuzhou Co., Ltd.,
Sinopharm Holding Guizhou Co., Ltd. Sinopharm Holding Yunnan Co., Ltd., Sinopharm Xingsha
80
Pharmaceuticals (Xiamen) Co., Ltd., Sinopharm Holding Hainan Co., Ltd., China National Health Online Co.,
Ltd., Sinopharm Chemical Reagent Co., Ltd. And Sinopharm Holding Hutchison Whampoa Medicine Co., Ltd.
He serves as Director of 8th BOD of the Company since April 2018.
Mr. Lin Zhaoxiong: Director and GM of Sinopharm Accord. 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; 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; Mr Lin serves
as the chairman of Sinopharm Holding Guoda Drugstore Co.,Ltd since October 2017; and GM of the Company
since March 2016, Director of the 7th and 8th BOD of the Company since April 2016.
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, currently Mr. Chen serves as deputy chairman of the
GDISR, independent director of Cabbeen Fashion Co., Ltd and Guangzhou Grandbuy Co., Ltd. He serves as
independent director of the 7th and 8th BOD of the Company since March 2017.
Mr. Ou Yongliang is a Chinese practicing lawyer, vice chairman of All China Lawyers Association, vice
chairman of Guangdong Province Law Society, president of the 9th and 10th Session of Guangdong Lawyers
Association, director of Guangdong Hopesun Law Firm, member of the 12th Session of Guangdong Provincial
Committee of the CPPCC, expert advisor of the 11th Party Congress of Guangdong Provincial Party Committee of
the Communist Party of China, legislative consultant of the 12th Session of Standing Committee of Guangdong
Provincial People’s Congress, specially invited member of the 11th Session of Guangdong Provincial Committee
of the CPPCC, member of the Guangdong Provincial Judge and Prosecutor Selection Committee, legal adviser of
Hunan Provincial Party Committee and Provincial Government, representative of the 9th Congress of Guangzhou
Municipality of the Communist Party of China, legal adviser of Guangzhou Municipal People’s Government,
supervisory judicial behavior supervisor of Guangdong Provincial Procuratorate, supervisor of service window of
Guangdong Higher People’s Court, legal adviser of the Criminal Investigation Bureau of Guangdong Provincial
Public Security Department, arbitrator of China International Economic and Trade Arbitration Commission,
arbitrator of South China International Arbitration Commission, arbitrator of Shanghai International Arbitration
Commission, and arbitrator of Guangzhou Arbitration Commission. He serves as independent director of the 8th
BOD of the Company since April 2018.
81
Mr. Chen Shengqun is an associate researcher and senior accountant, he has been teaching at the Shanghai
National Accounting Institute since 2013. Mr. Chen came out of the postdoctoral research station of Shanghai
University of Finance and Economics in 1998 as the first postdoctoral fellow in management accounting. He was
employed as a senior researcher at the CAFR Center of the Hong Kong Polytechnic University and is currently a
visiting professor of EDP curriculum at the Xiamen University. Since 1998, Mr. Chen has served as director of
the finance division of China Pacific Insurance Co., Ltd., in 2002, he was transferred to serve as deputy general
manager of the financing plan department of China Pacific Insurance Co., Ltd. (presiding work), at the end of
2003, he joined China Reinsurance Group and successively served as general manager of the fund application
department of China Continent Insurance (concurrently general manager of the strategic development department,
and general manager assistant of China Re Asset Management Company. He serves as independent director of the
8th BOD of the Company since April 2018.
Ms. Su Weiwei: Doctor of pharmacy, professor of School of Life Sciences of Sun Yat-Sen University and a
doctoral supervisor. She worked in Guangdong pharmaceutical University from July 1987 to April 2000, and
successively served as a teaching assistant, lecturers, associate professor and professor, she serves as a professor
in Sun Yat-Sen University since May 2000. Ms. Su Weiwei have devoted herself to the research and development
of innovative drugs for many years, and achieved two chemical clinical permission for first-type new drugs and
one clinical permission for the fifth-type new drugs of TCM (traditional Chinese medicine) which have
independent intellectual property rights.
2. Members of supervisors:
Mr. Wu Yijian: Director and Secretary of the Board of Sinopharm Group Co., Ltd. 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. Wu served as deputy president of the Shanghai Yuyuan Tourist Mart Co.,
Ltd. from 2014 to 2015. He served as non-executive director of Sinopharm Holding from June 2016 to September
2017; and serves as non-executive director of Sinopharm Holding again since March 2018; Acts as secretary of
the Board of Sinopharm Holding since January 2019. Currently, Mr. Wu serves as the assistant president, director
of Business Administration Committee and joint GM of human resources department of Fosun Pharma, and
Director of Sinopharm Industry Investment Co., Ltd. He serves as Chairman of the 7th and 8th supervisory
committee of the Company since September 2016.
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
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management dept. and Director of ministry of finance and credit management. She serves as supervisor of the 7th
and 8th supervisory committee of the Company since September 2016.
Ms. Chen Guojing: she worked in Shenzhen Accord Medicinal Materials Company in December 1999, now she
serves as the office director and director of security department in the Company. Ms. Chen served as the financial
manager and deputy chief of Finance and Funds Department of the Company from June 2005 to December 2013,
she is the member of trade union federations of the Company and chairman of the first trade union since March
2009; she served as chief (part-time) of the auditing department of the Company from January 2013 to August
2017, and chief (part-time) of the risk and operation management of the Company from January 2014 to May
2016. She serves as staff supervisor of the 8th supervisory committee of the Company since August 2018
3. Senior executive
Mr. Lin Zhaoxiong, found in aforesaid previous work experience
Mr. Lin Min: Deputy GM of the Company. worked in China Pharmaceutical (Group) Guangzhou Co.,Ltd 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; the city medical sales
director of Sinopharm Holding Guangzhou Co., Ltd. From November 2003 to January 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. Zhao Xiaochuan: Deputy GM of the Company. He 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 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. Liu Tianyao is deputy general manager of the Company. From August 2002 to April 2009, he served as senior
director of human resources department of China National Pharmaceutical Group Corporation. From April 2009
to May 2017, he successively served as deputy director of human resources department, director of talent
development department, director of human resources department, and director of retail medical business
development department of Sinopharm Group Co., Ltd., from December 2013 to July 2016, he concurrently
served as general manager of Shanghai Management Consulting Branch, from July 2016 to May 2017, he
concurrently served as general manager of Sinopharm Holding Medical Management (Shanghai) Co., Ltd., since
May 2017, he has been serving as director of human resources and director of human resources department of
Sinopharm Group Co., Ltd and he serves as Deputy GM of the Company since January 2019.
Mr. Lin Xinyang: Deputy GM of the Company.He took the turns of deputy GM of Nanfang Pharm. Co., deputy
GM of China Pharmaceutical (Group) Guangzhou Company Yuexing Company, general supervisor of PD of
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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. Lang Baochun is deputy secretary of the party committee, secretary of the disciplinary committee, chairman
of the labor union and general counsel of the Company. From September 2007 to March 2008, he served as
deputy director of general office of Sinopharm Group Co., Ltd., from March 2008 to December 2009, he served as
general manager of Shanghai Chuanghui Investment Co., Ltd., from January 2010 to May 2010, he served as
director of the research office of Shanghai Shibei Hi-Tech (Group) Co., Ltd., from June 2010 to September 2011,
he served as deputy director of the president’s office of Sinopharm Group Co., Ltd., from October 2011 to
December 2015, he served as director of the strategic planning department of Sinopharm Group Co., Ltd., from
January 2016 to June 2017, he served as secretary of the party committee of Sinopharm Guoda Drugstore Co.,
Ltd., from March 2016 to February 2018, he served as deputy secretary of the party committee and secretary of
the disciplinary committee of the Company. Since March 2018, he has been serving as deputy secretary of the
party committee, secretary of the disciplinary committee, and chairman of the labor union of the Company. He
serves as General Counsel of the Company since August 2018
Mr. Wei Pingxiao: CFO of the Company. He 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. Chen Changbin: Deputy GM of the Company, and Secretary of the Board. He 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
Position in shareholder’s Start dated of office
Name Name of shareholder’s unit
unit n term
Executive Director ,
Liu Yong Sinopharm Group Co., Ltd 2017-11-21
President
Liu Yong Sinopharm Group Co., Ltd Deputy party secretary 2018-01-02
Li Zhiming Sinopharm Group Co., Ltd Chairman 2017-11-21
Li Zhiming Sinopharm Group Co., Ltd Deputy party secretary 2018-11-02
Jiang Xiuchang Sinopharm Group Co., Ltd CFO 2010-05-09
Jiang Xiuchang Sinopharm Group Co., Ltd Deputy President 2013-07-10
Lian Wanyong Sinopharm Group Co., Ltd Deputy President 2018-01-26
84
Li Dongjiu Sinopharm Group Co., Ltd Deputy President 2018-01-26
Li Dongjiu Sinopharm Group Co., Ltd General counsel 2018-01-26
Director of ministry of
finance and credit
Liu Jingyun Sinopharm Group Co., Ltd management, director of the 2016-07-01
financial & assets
management dept.
Post-holding in other unit
√ Applicable □ Not applicable
Position in other unit Start dated of office
Name Name of other units
n term
China National Medicines
Liu Yong Director 3 Nov. 2017
Corporation Ltd
Sinopharm Holding Guoda
Liu Yong Director 10 Oct. 2017
Drugstore Co., Ltd.
China National Scientific
Liu Yong Instruments & Materials Director 10 Dec. 2018
Co., Ltd
China National Medical
Liu Yong Equipment Co., Ltd. Director 10 Dec. 2018
Sinopharm Holding H.K. Co.,
Liu Yong Director, GM 10 May 2018
ltd
Sinpharm Holding Senyi
Li Zhiming Director
Tech. (Shanghai) Co., Ltd
China National Xinjiang
Li Zhiming Director 5 Jun. 2017
Medicine Co., Ltd
China National Medicines
Li Zhiming Director 1 May 2016
Corporation Ltd
Sinopharm Holding Guoda
Li Zhiming Director 1 Jul. 2014
Drugstore Co., Ltd.
Shanghai Shyndec
Li Zhiming Deputy Chairman 1 Nov. 2016
Pharmaceutical Co., Ltd
Sinopharm Holding H.K. Co.,
Li Zhiming Chairman 1 Apr. 2017
ltd
Sinopharm Holding
Li Zhiming (China) Finance Leasing Chairman 1 Nov. 2014
Co., Ltd
China National Zhongjin
(Shanghai) Medical
Li Zhiming Chairman 1 Sept. 2016
Health Investment
Management Co., Ltd
Sinopharm Holding
Li Zhiming Medicine Investment Co., Chairman 15 Oct. 2017
Ltd
Sinopharm Holding Jiangxi
Jiang Xiuchang Chairman 1 Jun. 2013
Co., Ltd
Sinopharm Holding Shanxi
Jiang Xiuchang Chairman 1 Dec. 2013
Co., ltd
Sinopharm Holding Inner
Jiang Xiuchang Chairman 1 Dec. 2013
Mongolia Co., ltd
Sinopharm Holding Tianjin
Jiang Xiuchang Chairman 1 Dec. 2013
Co., ltd
Jiang Xiuchang SINOPHARM Shanxi Co., ltd Chairman 1 Jul. 2014
China National Medicines
Jiang Xiuchang Chairman 1 Nov. 2017
Corporation Ltd
Sinopharm Holding H.K.
Jiang Xiuchang Director 1 Nov. 2011
Co., ltd
China National Finance
Jiang Xiuchang Director 1 Nov. 2011
Corporation Ltd
85
Beijing Sinopharm Taiyuan
Jiang Xiuchang Executive Director 1 Dec. 2017
Property Management Co., Ltd
SINOPHARM Shanghai
Jiang Xiuchang Executive Director 1 Nov. 2017
Co., Ltd
Sinopharm Holding Hubei Co.,
Ma Zhanjun Deputy Chairman 1 Nov. 2018
Ltd.
China National Medicines
Lian Wanyong Director 1 Dec. 2017
Corporation Ltd
China National Zhongjin
(Shanghai) Medical Health
Lian Wanyong Director 1 July 2018
Investment Management Co.,
Ltd
Lian Wanyong West China Dental Co., Ltd Director 3 Jan. 2019
China National Medicines
Li Dongjiu Director 5 Dec. 2016
Corporation Ltd
Sinopharm Holding Fujian
Li Dongjiu Chairman 1 Feb. 2018
Co., Ltd
Sinopharm Holding Fuzhou
Li Dongjiu Chairman 1 Feb. 2018
Co., Ltd
Sinopharm Holding Guizhou
Li Dongjiu Chairman 1 Feb. 2018
Co., Ltd
Sinopharm Holding Yuannan
Li Dongjiu Chairman 1 Feb. 2018
Co., Ltd
Sinopharm Xingsha
Li Dongjiu Pharmaceuticals (Xiamen) Chairman 1 Feb. 2018
Co., Ltd.
Sinopharm Holding Hainan
Li Dongjiu Chairman 1 Feb. 2018
Co., Ltd.
China National Health Online
Li Dongjiu Chairman 1 Feb. 2018
Co., Ltd.
SINOPHARM Chemical
Li Dongjiu Chairman 1 Dec. 2018
Reagent Co., Ltd.
Sinopharm Holding Hutchison
Li Dongjiu Chairman 1 Dec. 2018
Whampoa Medicine Co., Ltd
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 2018 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)
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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 (F/M) Age before tax from related party
status
obtained from the of the Company
Company (Y/N)
Currently in
Liu Yong Chairman M 49 Y
office
Currently in
Ma Zhanjun Deputy Chairman M 58 37.5 Y
office
Currently in
Li Zhiming Director M 55 Y
office
Currently in
Jiang Xiuchang Director M 55 Y
office
Currently in
Lian Wanyong Director M 48 Y
office
Currently in
Li Dongjiu Director M 53 Y
office
Currently in
Lin Zhaoxiong Director, GM M 51 225 N
office
Independent Currently in
Chen Honghui M 47 12 N
Director office
Independent Currently in
Ou Yongliang M 49 8.46 N
Director office
Independent Currently in
Chen Shengqun M 56 8.46 N
Director office
Independent Currently in
Su Weiwei F 59 N
Director office
Independent
Xiong Chuxiong M 63 Office leaving 3.55 N
Director
Independent
Xiao Shengfang M 49 Office leaving 3.55 N
Director
Chairman of
Currently in
Wu Yijian supervisory M 48 Y
office
committee
Currently in
Liu Jingyun Supervisor F 42 Y
office
Currently in
Chen Guojing Staff supervisor F 48 62.9 N
office
Wang Huaiqin Staff supervisor M 61 Office leaving 8.02 N
Party secretary, Currently in
Lin Min M 54 202.5 N
Deputy GM office
Currently in
Zhao Xiaochuan Deputy GM M 55 180 N
office
Currently in
Liu Tianrao Deputy GM M 39 N
office
Currently in
Lin Xinyang Deputy GM M 54 157.5 N
office
Deputy party
secretary,
Secretary of
Currently in
Lang Baochun Committee for M 55 135 N
office
Discipline
Inspection,
General counsel
Wei Pingxiao CFO M 55 Currently in 157.5 N
87
office
Deputy GM,
Currently in
Chen Changbin Secretary of the M 51 135 N
office
Board
Total -- -- -- -- 1,336.94 --
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) 117
The number of current employees of main subsidiaries (people) 24,704
Total number of current employees (people) 24,821
The total number of employees in payroll (people) 24,821
The total number of retired staff and workers that the parent
2,012
company and main subsidiaries need to bear the costs (people)
Professional composition
Category of professional composition Number of professional composition (people)
Production staff 35
Salesman 17,539
Technical staff 161
Financial staff 572
Administrative staff 156
Other 6,358
Total 24,821
Education background
Category of education Number (people)
Post-graduate qualification and above 155
Undergraduate 3,458
Junior college 9,153
Junior college below 12,055
Total 24,821
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
ability assessment; at the same time, performance bonuses and performance closely link together, and realize win-
88
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 2018, the
input in the training for the headquarter of Sinopharm Accord Corporation, distribution operation and Guoda
Drugstore was seen at 1.93 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
22,394 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) 540,792
Total remuneration paid of labor outsourcing (RMB) 26,521,871.34
89
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, legal
compliance committee, general manager and secretary of the 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 “Articles of Association” and “Rules of Procedures of the Board of Directors”
were revised in accordance with regulatory requirements and governance needs. At the same time, in order to
promote the company’s legal construction and ensure the company’s standard operation, the company newly
established the Legal Compliance Committee of the Board of Directors and formulated the relevant working
system in accordance with laws and regulations and the relevant provisions of the Articles of Association and
combined with the actual situation of the company. 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. Independence 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
90
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.
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
Work
Name of Nature of
schedule and
Type controlling controlling Reason Solution measure
follow-up
shareholder shareholder
plan
In March 2016, Sinopharm
Distribution subsidiary of
Holding issued a commitment
Sinopharm Holding
letter of avoiding horizontal
established some social retail
competition with Sinopharm
pharmacy, which might has
Horizontal Sinopharm Accord, and promise to solve the Normally
SASAC horizontal competition with
competition Holding horizontal competition in respect implementing
the Guoda Drugstore, the
of pharmaceutical retail business
subordinate enterprise of the
in an appropriate way within five
listed company after
years since the date when
restructuring
reorganization completed
In March 2016, SINOPHARM
Distribution subsidiary of
issued a commitment letter of
Sinopharm Holding
avoiding horizontal competition
established some social retail
with Sinopharm Accord, and
pharmacy, which might has
Horizontal promise to solve the horizontal Normally
SINOPHARM SASAC horizontal competition with
competition competition in respect of implementing
the Guoda Drugstore, the
pharmaceutical retail business in
subordinate enterprise of the
an appropriate way within five
listed company after
years since the date when
restructuring
reorganization completed
91
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
om.cn) “ Notice of
Annual General
AGM 63.00% 17 Apr. 2018 18 April 2018 Resolution of AGM
Meeting of 2017
of 2017” No.: 2018-
22
Juchao Website—
(http://www.cninfo.c
First extraordinary om.cn) “ Notice of
Extraordinary
general meeting of 62.98% 15 June 2018 16 June 2018 Resolution of First
general meeting
2018 extraordinary
general meeting of
2018” No.: 2018-29
Juchao Website—
(http://www.cninfo.c
Second om.cn) “ Notice of
extraordinary Extraordinary Resolution of
61.88% 19 Oct. 2018 20 Oct. 2018
general meeting of general meeting Second
2018 extraordinary
general meeting of
2018” No.: 2018-45
Juchao Website—
(http://www.cninfo.c
Third extraordinary om.cn) “ Notice of
Extraordinary
general meeting of 62.19% 26 Nov. 2018 27 Nov. 2018 Resolution of Third
general meeting
2018 extraordinary
general meeting of
2018” No.: 2018-49
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 shareholders general meeting
The attending of independent directors to Board Meeting & shareholders general meeting
Times of Absent the Times
Times of
Name of Board meeting Times of Meeting for attending the
Times of attending by Times of
independent supposed to entrusted the second shareholders
Presence communicatio Absence
director attend in the presence time in a row general
n
report period (Y/N) meeting
Chen Honghui 11 1 10 0 N 1
Ou Yongliang 8 0 8 0 N 0
Chen Shengqun 8 1 7 0 N 1
Xiong Chuxiong 3 1 2 0 N 1
Xiao Shengfang 3 0 2 1 N 0
Explanation of absent the Board Meeting for the second time in a row
92
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
√ 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 three
independent 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;
93
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 2018, 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
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 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 2018, the remuneration and appraisal committee carried out the performance evaluation of executives
according to the 2017 Annual operation standard and performance.
2. It proposed the "2019 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 2018 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 2018 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
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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.
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
25 April 2019
control evaluation report
Disclosure index of full internal ”Self-evaluation report of internal control for 2018” in Juchao website (www.cninfo.com.cn)
control evaluation report 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 98.94%
company's consolidated financial
statements
The ratio of the operating income of
units included in the scope of
evaluation accounting for the 99.13%
operating income on the 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 judged
and decided by the degree of influence and and decided by the degree of influence and the
the likelihood of occurrence to the likelihood of occurrence of defects to the
misstatements of financial reports caused by validity of business process. (1) Significant
Qualitative criteria defects. (1) Significant defects: a combination defects: a combination of one or multiple
of one or multiple internal control defects that internal control defects that may cause the
exists in internal control and may cause the enterprise’s serious deviation to internal
material misstatements in financial statements control objectives; (2) Major defects: a
cannot be prevented, found or corrected in combination of one or multiple internal control
95
time; (2) Major defects: a combination of one defects whose severity level and economic
or multiple internal control defects that exists consequences are lower than significant
in internal control and has lower severity level defects but still may cause the enterprise’s
than significant defects but still should be deviation to internal control objectives; (3)
concerned by the superintendents of Common defects: other defects except for
enterprise financial reports; (3) Common significant and major defects.
defects: other defects except for significant
and major defects.
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 officially disclosed and caused
A quantitative criterion determines the degree negative effects to periodic report disclosure of
of importance of misstatements (including the joint-stock companies; (2) Major defects:
missing reports) in the consolidated the amount of direct property loss is between 5
Quantitative standard statements of listed companies based on the million and 10 million Yuan, or has been
consolidated statement data. (1) Significant punished by the national government
defects: equal to or greater than 5% of profit departments but has not caused negative
before tax effects to periodic report disclosure of the
joint-stock 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
0
financial reports
Amount of significant defects in
0
non-financial reports
Amount of important defects in
0
financial reports
Amount of important defects in
0
non-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 2018
96
Disclosure details of audit
Disclosed
report of internal control
Disclosure date of audit report
25 April 2019
of internal control (full-text)
Audit Report of Internal Control under the name of China National Accord
Index of audit report of
Medicines Corporation Ltd. released on Juchao Website
internal control (full-text)
(http://www.cninfo.com.cn)
Opinion type of auditing
Standard unqualified
report of IC
Whether the non-financial
No
report 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
97
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
98
Section XI. Financial Report
98
AUDITOR’S REPORT
Ernst & Young Hua Ming (2019) 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 2018,
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 2018, 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.
100
AUDITOR’S REPORT (Continued)
Ernst & Young Hua Ming (2019) 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 The procedures performed in order to address
RMB833,547,800.60 as at 31 December 2018 this matter are as follows:
and was allocated to the Company’s cash- 1) We invited internal evaluation experts to
generating units (“CGUs”) of pharmaceutical assist in evaluating the goodwill impairment
distribution and retail pharmacy. method used and forecasted figures used in
Under ASBEs, the Company is required to the impairment test, especially the discount
annually perform the impairment test for rate and perpetual growth rate.
goodwill. The impairment test is based on the 2) We assessed the rationality of the forecasts
recoverable amount of the respective CGUs to used with respect to future revenues and
which the goodwill is allocated. The operating results, also compared the forecasts
recoverable amount of the CGUs is with the historical performance of the
determined by the higher of the present value respective CGUs and the industry trends. In
of the forecasted future cash flow and the fair particular, we re-examined the future revenue
value of the asset net of its disposal cost. growth rate, projected gross rate, related
Assumptions such as the forecasted future expenses and so on.
cash flows and discount rate are set up by 3) We also re-examined the sufficiency of
applying estimates and significant judgements disclosure regarding goodwill.
by management. Therefore, we consider this
to be a key audit matter.
The Company’s disclosures about impairment
of goodwill are included in note III (18, 34) and
note V (15) to the financial statements.
101
AUDITOR’S REPORT (Continued)
Ernst & Young Hua Ming (2019) 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
Major clients of the Company are medical The procedures performed in order to address
establishments, pharmacy chain stores, this matter are as follows:
monomer drugstores, community medical 1) We re-examined management’s internal
service centers, downstream distribution control that relates to impairment of trade
companies, etc. As at 31 December 2018, the receivables.
Company had net trade receivables of 2) We discussed the bad debt policy with
RMB9,336,861,647.92, 32.27% of the Group’s management and evaluated the sufficiency of
total assets. bad debt provision including the adequacy of
According to ASBE 22 – Recognition and the bad debt provision assessment method.
measurement of Financial Instruments, 3) We discussed with management regarding
management utilizes the expected credit loss the recoverability of individually significant
model to measure the impairment of financial trade receivables for which provision for bad
assets. Management’s estimation of the debt is recognized separately.
expected credit loss model is based on the 4) We tested the aging of trade receivables,
historical default rate of the Group and other including a test of information system
specific factors including types of client, aging automatic controls related to information
of the ending balance, collection history, write- system automatically generated aging
offs, the migration rate and estimated weighted analysis, carrying out analytical reviewing
financing cost. At the same time, management procedures for the aging analysis in order to
also takes into consideration forward-looking confirm the accuracy of basic data used by
information including whether disputes exist, management for trade receivable bad debt
expected macro-economic environment, etc. provision.
During the year, significant management 5) We reviewed the credit profile and carried
judgement and estimates were involved during out background check for significant clients.
the classification of the credit exposure 6) We reviewed and evaluated the sufficiency
portfolio and assessment of the expected of the Group’s disclosure related to trade
credit loss and therefore we consider this to be receivables.
a key audit matter.
The Company’s disclosures about impairment
of trade receivables are included in note III (8,
34) and note V (2) to the financial statements.
102
AUDITOR’S REPORT (Continued)
Ernst & Young Hua Ming (2019) 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 to be free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, 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 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.
103
AUDITOR’S REPORT (Continued)
Ernst & Young Hua Ming (2019) 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 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.
104
AUDITOR’S REPORT (Continued)
Ernst & Young Hua Ming (2019) 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 23 April 2019
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.
105
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
CONSOLIDATED BALANCE SHEET
As at 31 December 2018
(Expressed in Renminbi Yuan)
ASSETS Note V 31 December 2018 31 December 2017
Current assets
Cash and bank balances 1 8,089,781,304.56 4,191,655,438.51
Notes receivable and trade 2
receivables 10,694,173,577.55 9,093,607,443.96
Advances to suppliers 3 583,484,515.95 516,778,117.47
Other receivables 4 643,493,359.32 657,932,499.65
Inventories 5 4,389,335,942.19 3,781,858,238.12
Other current assets 6 95,347,629.18 78,947,644.62
Total current assets 24,495,616,328.75 18,320,779,382.33
Non-current assets
Financial assets available-for-sale 7 - 13,685,760.00
Long-term equity investments 8 1,880,393,786.10 1,650,619,373.09
Other equity instrument
investment 9 13,685,760.00 -
Other non-current financial assets 10 140,000,000.00 -
Investment properties 11 144,894,495.97 153,678,339.11
Fixed assets 12 607,933,827.67 551,710,434.02
Construction in progress 13 36,412,614.61 22,947,258.99
Intangible assets 14 319,207,126.15 325,751,430.88
Goodwill 15 833,547,800.60 830,729,152.75
Long-term prepaid expenses 16 311,328,706.46 252,247,050.79
Deferred tax assets 17 74,914,209.95 79,472,883.06
Other non-current assets 18 72,365,863.71 142,022,462.75
Total non-current assets 4,434,684,191.22 4,022,864,145.44
Total assets 28,930,300,519.97 22,343,643,527.77
The accompanying notes form an integral part of these financial statements.
106
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
CONSOLIDATED BALANCE SHEET (Continued)
As at 31 December 2018
(Expressed in Renminbi Yuan)
LIABILITIES AND SHAREHOLDERS’
Note V 31 December 2018 31 December 2017
EQUITY
Current liabilities
Short-term borrowings 20 2,597,652,702.43 1,561,354,521.64
Notes payable and trade payables 21 9,885,291,642.97 8,876,658,828.52
Advances from customers 22 - 216,938,239.32
Contract liabilities 23 255,590,612.37 -
Employee benefits payable 24 231,866,407.40 215,656,526.54
Tax payable 25 241,980,412.72 223,752,900.24
Other payables 26 1,539,436,971.93 1,030,329,660.02
Non-current liabilities due within one year 27 5,861,324.37 5,434,770.70
Other current liabilities 28 292,465.75 112,817.65
Total current liabilities 14,757,972,539.94 12,130,238,264.63
Non-current liabilities
Long-term borrowings 29 31,600,000.00 31,600,000.00
Long-term payables 30 4,563,978.52 10,132,537.14
Long-term employee benefits payable 31 2,050,000.00 1,777,000.00
Deferred income 32 91,491,170.40 125,082,372.53
Deferred tax liabilities 17 67,605,161.88 71,883,253.02
Other non-current liabilities 33 69,241,176.18 45,427,343.31
Total non-current liabilities 266,551,486.98 285,902,506.00
Total liabilities 15,024,524,026.92 12,416,140,770.63
The accompanying notes form an integral part of these financial statements.
107
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
CONSOLIDATED BALANCE SHEET (Continued)
As at 31 December 2018
(Expressed in Renminbi Yuan)
LIABILITIES AND Note V 31 December 2018 31 December 2017
SHAREHOLDERS’ EQUITY
Shareholders’ equity
Share capital 34 428,126,983.00 428,126,983.00
Capital surplus 35 4,320,984,981.51 3,181,429,064.99
Surplus reserve 36 214,063,491.50 214,063,491.50
Retained earnings 37 6,655,257,147.27 5,572,952,806.39
Shareholders’ equity attributable to
shareholders of the parent 11,618,432,603.28 9,396,572,345.88
Non-controlling interests 2,287,343,889.77 530,930,411.26
Total shareholders’ equity 13,905,776,493.05 9,927,502,757.14
Total liabilities and shareholders’
equity 28,930,300,519.97 22,343,643,527.77
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:
108
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
CONSOLIDATED INCOME STATEMENT
For the Year ended 31 December 2018
(Expressed in Renminbi Yuan)
Note V 2018 2017
Operating revenue 38 43,122,385,521.23 41,263,393,427.41
Less: Operating costs 38 38,024,108,631.15 36,819,552,915.80
Tax and surcharges 39 121,012,139.02 119,920,418.18
Selling expenses 40 2,762,789,885.77 2,305,909,071.71
Administrative expenses 41 783,338,308.19 735,953,967.13
Finance costs 42 112,862,739.12 110,360,539.56
- Interest expense 195,256,226.47 135,832,879.33
- Interest income 81,119,506.63 35,012,199.48
Impairment loss 43 2,744,605.36 (2,470,696.74)
Impairment losses on financial
assets 44 298,479.55 -
Add: Other incomes 45 28,458,401.31 24,391,309.91
Investment income 46 319,897,172.23 264,540,020.24
Incl: Investment income from
associates 319,903,890.47 263,825,834.56
Gain on disposal of assets 47 7,392,547.56 792,138.38
Operating profits 1,670,978,854.17 1,463,890,680.30
Add: Non-operating income 48 12,715,353.51 11,412,488.21
Less: Non-operating expenses 49 4,764,850.15 9,274,194.70
Total profit 1,678,929,357.53 1,466,028,973.81
Less: Income taxes 51 330,498,245.68 309,290,127.72
Net profit 1,348,431,111.85 1,156,738,846.09
Incl: Net profit of an acquiree before
business combinations involving
enterprises under common control - (1,096.00)
Profit or loss from continuing operation 1,348,431,111.85 1,156,738,846.09
Attributable to:
Owners of the parent 1,210,742,435.78 1,057,791,930.67
Non-controlling interests 137,688,676.07 98,946,915.42
Total comprehensive income 1,348,431,111.85 1,156,738,846.09
Incl: Total comprehensive income for the year
attributable to shareholders of the parent 1,210,742,435.78 1,057,791,930.67
Total comprehensive income for the year
attributable to non-controlling interests 137,688,676.07 98,946,915.42
Earnings per share 52
Basic earnings per share 2.83 2.47
Diluted earnings per share 2.83 2.47
The accompanying notes form an integral part of these financial statements.
109
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
For the Year ended 31 December 2018
(Expressed in Renminbi Yuan)
Shareholders’ equity attributable to shareholders of the parent
2018
Share capital Capital surplus Surplus reserve Retained earnings Subtotal Non-controlling interests Total equity
Opening 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
Movements in the current year - 1,139,555,916.52 - 1,082,304,340.88 2,221,860,257.40 1,756,413,478.51 3,978,273,735.91
(1) Total comprehensive income - - - 1,210,742,435.78 1,210,742,435.78 137,688,676.07 1,348,431,111.85
(2) Capital paid and reduced by
owners - 1,139,555,916.52 - - 1,139,555,916.52 1,679,926,889.17 2,819,482,805.69
1.Capital injection by owners - 1,120,284,623.39 - - 1,120,284,623.39 2,793,191,200.00 3,913,475,823.39
2.Others - 19,271,293.13 - - 19,271,293.13 (1,113,264,310.83) (1,093,993,017.70)
(3) Profit distribution - - - (128,438,094.90) (128,438,094.90) (61,202,086.73) (189,640,181.63)
1.Distribution to equity owners - - - (128,438,094.90) (128,438,094.90) (61,202,086.73) (189,640,181.63)
Closing balance of the current year 428,126,983.00 4,320,984,981.51 214,063,491.50 6,655,257,147.27 11,618,432,603.28 2,287,343,889.77 13,905,776,493.05
The accompanying notes form an integral part of these financial statements.
110
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (Continued)
For the Year ended 31 December 2018
(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. Transferred from 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.
111
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
CONSOLIDATED CASH FLOW STATEMENT
For the Year ended 31 December 2018
(Expressed in Renminbi Yuan)
Note V 31 December 2018 31 December 2017
1.CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from sales of goods or rendering
of services 46,794,007,122.39 46,403,001,555.00
Tax refunds 1,777,623.17 7,687,909.30
Cash receipts related to other operating activities 53 679,596,722.04 340,666,056.90
Sub-total of cash inflows from operating activities 47,475,381,467.60 46,751,355,521.20
Cash paid for goods and services 41,436,895,750.53 41,242,898,835.78
Cash paid to and on behalf of employees 1,893,939,719.20 1,684,046,853.72
Cash paid for all types of taxes 1,096,228,714.78 1,092,685,949.27
Cash payments related to other operating
activities 53 1,725,710,930.82 1,446,431,970.61
Sub-total of cash outflows from operating
activities 46,152,775,115.33 45,466,063,609.38
Net cash flows from operating activities 54 1,322,606,352.27 1,285,291,911.82
2.CASH FLOWS FROM INVESTING ACTIVITIES
Cash received from returns on investments 131,401,264.72 61,204,993.30
Net cash received from disposal of fixed assets,
intangible assets and other long-term assets 5,978,720.99 1,811,126.55
Cash received from recovery of investments 54 2,468,522.33 -
Cash receipts related to other investing activities 98,793,085.40 75,259,200.00
53
Sub-total of cash inflows from investing activities 238,641,593.44 138,275,319.85
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)
For the Year ended 31 December 2018
(Expressed in Renminbi Yuan)
Note V 2018 2017
2.CASH FLOWS FROM INVESTING ACTIVITIES (Continued)
Cash paid for acquisition of fixed assets
intangible assets and other long-term assets 255,481,604.79 204,345,540.74
Cash paid for acquisition of investments 124,575,351.00 73,950,980.00
Net cash paid for acquisition of subsidiaries and
54
other business units - 53,356,516.15
Cash payments related to other investing activities 53 81,042,904.53 92,803,476.90
Sub-total of cash outflows from investing activities 461,099,860.32 424,456,513.79
Net cash flows from investing activities (222,458,266.88) (286,181,193.94)
3.CASH FLOWS FROM FINANCING ACTIVITIES
Cash proceeds from investments by others 2,793,191,200.00 14,873,000.00
Incl: Cash proceeds from subsidiary investments by non-
controlling shareholders 2,793,191,200.00 14,873,000.00
Cash received from borrowings 86,231,834.83 261,571,499.94
Cash receipts related to other financing activities 53 484,038,819.20 238,476,708.52
Sub-total of cash inflows from financing activities 3,363,461,854.03 514,921,208.46
Cash repayments for debts 79,670,200.30 445,758,196.23
Cash payments for distribution of dividends or profit and
interest expenses 340,534,805.52 295,787,225.16
Incl: Profit and dividends paid to non-controlling
shareholders of subsidiaries 66,702,208.88 49,621,410.48
Cash payments related to other financing activities 53 84,475,782.06 250,398,903.79
Sub-total of cash outflows from financing activities 504,680,787.88 991,944,325.18
Net cash flows from financing activities 2,858,781,066.15 (477,023,116.72)
4.EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON
CASH AND CASH EQUIVALENTS (310,822.25) 495,664.83
5.NET INCREASE IN CASH AND CASH EQUIVALENTS 3,958,618,329.29 522,583,265.99
Add: Cash and cash equivalents at beginning of the year 3,673,498,691.48 3,150,915,425.49
6.CASH AND CASH EQUIVALENTS AT END OF YEAR 54
7,632,117,020.77 3,673,498,691.48
The accompanying notes form an integral part of these financial statements.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
COMPANY BALANCE SHEET
As at 31 December 2018
(Expressed in Renminbi Yuan)
ASSETS Note XIV 31 December 2018 31 December 2017
Current assets
Cash and bank balances 1,817,654,598.01 1,776,696,342.87
Notes receivable and trade
1
receivables 695,107,574.33 545,267,378.99
Advances to suppliers 4,760,182.00 1,138,312.26
Other receivables 2 1,541,980,883.50 1,517,882,239.81
Inventories 158,166,185.65 172,022,676.96
Other current assets 39,482.38 788,964.90
Total current assets 4,217,708,905.87 4,013,795,915.79
Non-current assets
Long-term equity investments 3 7,432,906,692.24 7,180,306,084.56
Debt investments at fair value through
current year profit or loss 140,000,000.00 -
Investment properties 1,955,854.46 2,763,831.92
Fixed assets 21,362,422.03 13,831,103.54
Intangible assets 2,452,222.51 1,287,775.78
Long-term deferred expenses 7,481,809.53 5,543,217.86
Deferred tax assets - 2,764,724.75
Other non-current assets 7,000,000.00 71,808,611.00
Total non-current assets 7,613,159,000.77 7,278,305,349.41
Total assets 11,830,867,906.64 11,292,101,265.20
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 2018
(Expressed in Renminbi Yuan)
LIABILITIES AND SHAREHOLDERS’
31 December 2018 31 December 2017
EQUITY
Current liabilities
Short-term borrowings 539,000,000.00 707,000,000.00
Notes payable and trade payables 694,367,042.00 674,450,646.65
Advances from customers - 1,912,503.90
Contract liabilities 4,182,083.40 -
Employee benefits payable 36,233,563.12 33,592,851.93
Tax payables 13,426,601.90 42,386,907.00
Other payables 1,481,817,856.56 1,415,723,188.96
Other current liabilities 226,427.99 112,817.65
Total current liabilities 2,769,253,574.97 2,875,178,916.09
Non-current liabilities
Long-term borrowings 31,600,000.00 31,600,000.00
Payables for specific projects 800,000.00 800,000.00
Long-term employee benefits payable 118,000.00 -
Deferred income 1,687,899.50 2,054,250.00
Deferred tax liabilities 2,298,426.39 3,773,319.00
Total non-current liabilities 36,504,325.89 38,227,569.00
Total liabilities 2,805,757,900.86 2,913,406,485.09
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 2018
(Expressed in Renminbi Yuan)
LIABILITIES AND SHAREHOLDERS’
31 December 2018 31 December 2017
EQUITY
Shareholders’ equity
Share capital 428,126,983.00 428,126,983.00
Capital surplus 4,426,362,777.26 4,407,091,484.13
Surplus reserves 214,063,491.50 214,063,491.50
Retained earnings 3,956,556,754.02 3,329,412,821.48
Total shareholders’ equity 9,025,110,005.78 8,378,694,780.11
Total liabilities and shareholders’ equity 11,830,867,906.64 11,292,101,265.20
The accompanying notes form an integral part of these financial statements.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
COMPANY INCOME STATEMENT
For the Year ended 31 December 2018
(Expressed in Renminbi Yuan)
Note XIV 2018 2017
Operating revenue 4 3,481,446,876.93 3,346,827,141.08
Less: Operating costs 4 3,317,568,640.99 3,211,668,647.02
Tax and surcharge 4,618,925.42 10,375,051.96
Selling expenses 61,120,258.01 51,050,354.52
Administrative expenses 77,784,120.97 70,636,774.06
Finance costs (42,814,941.43) (54,129,294.66)
Incl: Interest expense 42,706,716.57 16,422,254.07
Incl: Interest income 86,569,728.06 71,381,149.52
Impairment loss 466,647.08 (72,116.23)
Impairment losses on financial assets (983,688.72) -
Add: Other income 4,916,458.17 4,184,607.04
Investment income 5 704,244,539.45 640,957,400.23
Incl: Investment income from
associates 342,730,085.14 286,535,212.21
Gain on disposal of assets 11,116.50 884.46
Operating profits 772,859,028.73 702,440,616.14
Add: Non-operating income 46,446.88 39,253.56
Less: Non-operating expenses 183,374.99 1,861,760.18
Total profit 772,722,100.62 700,618,109.52
Less: Income taxes 17,140,073.18 26,999,590.73
Net profit 755,582,027.44 673,618,518.79
Profit or loss from continuing operations 755,582,027.44 673,618,518.79
Total comprehensive income 755,582,027.44 673,618,518.79
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
For the Year ended 31 December 2018
(Expressed in Renminbi Yuan)
2018 Share capital Capital surplus Surplus reserve Retained earnings Total equity
Opening 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
Movements in the current year - 19,271,293.13 - 627,143,932.54 646,415,225.67
(1) Total comprehensive income - - - 755,582,027.44 755,582,027.44
(2) Capital paid and reduced by owners - 19,271,293.13 - - 19,271,293.13
1.Others - 19,271,293.13 - - 19,271,293.13
(3) Profit distribution - - - (128,438,094.90) (128,438,094.90)
1. 1.Distribution to equity owners - - - (128,438,094.90) (128,438,094.90)
Closing balance of the current year 428,126,983.00 4,426,362,777.26 214,063,491.50 3,956,556,754.02 9,025,110,005.78
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)
For the Year ended 31 December 2018
(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 equity owners - - - - (141,281,904.39) (141,281,904.39)
2. Transferred from surplus reserve - - - 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 CASH FLOW STATEMENT
For the Year ended 31 December 2018
(Expressed in Renminbi Yuan)
2018 2017
1.CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from sales of goods or rendering
of services 3,650,605,970.28 3,618,686,142.56
Cash receipts related to other operating
activities 107,373,506.99 42,311,981.52
Sub-total of cash inflows from operating
activities 3,757,979,477.27 3,660,998,124.08
Cash paid for goods and services 3,406,447,268.87 3,317,975,162.52
Cash paid to and on behalf of employees 79,402,008.01 74,008,955.58
Cash paid for all types of taxes 36,195,123.57 45,705,409.43
Cash payments related to other operating
activities 55,863,168.11 45,906,623.45
Sub-total of cash outflows from operating
activities 3,577,907,568.56 3,483,596,150.98
Net cash flows from operating activities 180,071,908.71 177,401,973.10
2. CASH FLOWS FROM INVESTING ACTIVITIES
Cash received from returns of investments 525,074,396.36 456,706,957.70
Net cash received from disposal of fixed assets,
intangible assets and other long-term assets 44,700.00 -
Cash receipts related to other investing activities 1,574,115,586.01 2,219,069,200.00
Sub-total of cash inflows from investing activities 2,099,234,682.37 2,675,776,157.70
Cash paid for acquisition of fixed assets,
intangible assets and other long-term assets 11,649,093.77 37,669,557.28
Cash paid for investment 90,000,000.00 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 1,749,321,606.82 2,067,489,918.90
Sub-total of cash outflows from investing
activities 1,850,970,700.59 3,169,359,476.18
Net cash flows from investing activities 248,263,981.78 (493,583,318.48)
The accompanying notes form an integral part of these financial statements.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
COMPANY CASH FLOW STATEMENT (Continued)
For the Year ended 31 December 2018
(Expressed in Renminbi Yuan)
2018 2017
3. CASH FLOWS FROM FINANCING ACTIVITIES
Cash received from borrowings 10,000,000.00 41,600,000.00
Cash receipts related to other financing
activities 17,388,748,779.90 16,514,221,231.02
Sub-total of cash inflows from financing
activities 17,398,748,779.90 16,555,821,231.02
Cash repayments for debts 10,000,000.00 41,600,000.00
Cash payments for distribution of dividends,
profit or interest expenses 161,361,930.89 150,643,594.49
Cash payments related to other financing
activities 17,614,453,662.11 15,613,029,417.64
Sub-total cash outflows from financing activities 17,785,815,593.00 15,805,273,012.13
Net cash flows from financing activities (387,066,813.10) 750,548,218.89
4.EFFECT OF FOREIGN EXCHANGE RATE
CHANGES ON CASH AND CASH
EQUIVALENTS (310,822.25) 288,059.50
5. NET INCREASE IN CASH AND CASH
EQUIVALENTS 40,958,255.14 434,654,933.01
Add: Cash and cash equivalents at beginning of
the year 1,776,696,342.87 1,342,041,409.86
6. CASH AND CASH EQUIVALENTS
AT END OF YEAR 1,817,654,598.01 1,776,696,342.87
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 2018
(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 2018.
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 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.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(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”) and 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. 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 2018, the total share capital was 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 slices, 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 supplements; industrial
investment holding; domestic trade; material supply and the 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; the 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 companies are Sinopharm Group and China National
Pharmaceutical Group Corporation (“CNPGC”) , respectively.
These financial statements were authorized for issue by the board of directors of the Company
on 23 April 2019.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(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
and the specific accounting standards, application guidance, interpretation and other relevant
regulations issued or amended thereafter (hereafter collectively referred to as “Accounting
Standards for Business Enterprises” or “CAS”).
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.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary 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 2018 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 2018 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 the 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 a business combination are recognized at the initial recognition amount of
equity securities or debt securities.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary of significant accounting policies and accounting estimates (Continued)
4.Business combinations (Continued)
(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.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 the 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. For financial assets at fair value through OCI held before the
acquisition date, changes in fair value that was accumulated through OCI will transfer to retained
earnings.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary of significant accounting policies and accounting estimates (Continued)
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. The unrealized gain or loss from selling assets to subsidiaries fully offsets the net
income attributable to equity holders of the Company. The 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. The unrealized gain or loss from a 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 which are set up, there is an adjustment for the
transaction from the Group’s perspective.
When the Group loses control of a subsidiary in multiple transactions in which it disposes of its
long-term equity investment in the subsidiary in stages, if each of the multiple transactions does
not form part of a bundled transaction, the transactions conducted before the loss of control of
the subsidiary are accounted for in accordance with the accounting policy for partial disposal of
the equity investment in subsidiaries where control is retained. If each of the multiple
transactions forms part of a bundled transaction which eventually results in the loss of control in
the subsidiary, these multiple transactions are accounted for as a single transaction. In the
consolidated financial statements, the difference between the consideration received and the
corresponding proportion of the subsidiary’s net assets (calculated continuously from the
acquisition date) in each transaction prior to the loss of control shall be recognized in other
comprehensive income and transferred to profit or loss when the parent eventually loses control
of the subsidiary.
127
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary of significant accounting policies and accounting estimates (Continued)
6. 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.
7. 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.
8.Financial instruments (applicable from 1 January 2018)
Financial instruments are the contracts that formed the financial assets of one entity, and at the
same time formed the financial liabilities or equity instruments of other entities.
Recognition and derecognition of financial instruments
Financial assets and financial liabilities are recognised when the Group becomes a party to the
contractual provisions of the instrument.
The Group derecognises a financial asset, part of a financial asset or group of financial assets,
i.e., offset from the accounts and statement of financial position, if either of the following
conditions is satisfied:
(1)The contractual rights to the cash flows from the financial asset expire; or
(2) The contractual rights to the cash flows from the financial asset are transferred out, or obligated
to transfer out all generated cash flows on receipt; and (a) substantially all the risks and rewards
of ownership of the financial asset are transferred to the transferee; or (b) the Group neither
transfers nor retains substantially all the risks and rewards of ownership of the financial asset,
but has not retained control of the financial asset.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary of significant accounting policies and accounting estimates (Continued)
8.Financial instruments (applicable from 1 January 2018) (Continued)
Recognition and derecognition of financial instruments (Continued)
The Group derecognises a financial liability only when the underlying present obligation is
settled, discharged or expired. An agreement to replace the original financial liability with a new
financial liability with substantially different terms, or to modify the original financial liability’s
terms substantially, is accounted for as an extinguishment of the original financial liability and the
recognition of a new financial liability. The difference between the carrying amount of the
financial liability Derecognized and the new financial liability should be recognised in profit or
loss for the current period.
All regular means of purchases or sales of financial assets are recognised and Derecognized on
a trade date basis. Regular means of purchases or sales are purchases or sales of financial
assets that require delivery of assets within the period generally established by regulation or
convention in the marketplace. Trade date is the date that the Group commits to purchase or sell
the financial asset.
Classification and measurement of financial assets
At initial recognition, the Group classifies its financial assets into: financial assets at fair value
through profit or loss, financial assets at amortised cost, or financial assets at fair value through
other comprehensive income, according to the Group’s business model for managing financial
assets and the contract cash flow characteristics of the financial assets. Financial assets are
measured at fair value at initial recognition, provided that trade receivables or bills receivable not
containing significant financing components or for which financing components of not more than
1 year are not taken into consideration shall be measured at their transaction prices at initial
recognition.
For financial assets at fair value through profit or loss, the relevant transaction costs are directly
recognised in profit or loss; for other financial assets, the relevant transaction costs are
recognised in their initial recognition amount.
Subsequent measurement depends on the classification of the financial assets:
Financial assets measured at amortised cost (debt instruments)
The Group measures financial assets at amortized cost if both of the following conditions are
met: The financial asset is held within a business model with the objective to hold financial
assets in order to collect contractual cash flows; The contractual terms of the financial asset give
rise on specified dates to cash flows that are solely payments of principal and interest on the
principal amount outstanding. Interest income of this kind of financial assets is recognized using
the effective interest method. Gains and losses are recognized in the income statement when
the asset is derecognized, modified or impaired. These financial assets mainly include cash and
cash equivalents, bills receivable and trade receivables, other receivables, debt investment and
long-term receivables. Debt investments and long-term receivables due within one year from the
balance sheet date are reported by the Group as current portion of non-current assets, and debt
investments due within one year from the original maturity date are reported as other current
assets.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary of significant accounting policies and accounting estimates (Continued)
8.Financial instruments (applicable from 1 January 2018) (Continued)
Classification and measurement of financial assets (Continued)
Financial assets at fair value through other comprehensive income (debt instruments)
The Group measures debt investments at fair value through other comprehensive income if both
of the following conditions are met: The financial asset is held within a business model with the
objective of both holding to collect contractual cash flows and selling; The contractual terms of
the financial asset give rise on specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding. Changes in fair values are recognized in other
comprehensive income except that interest income, impairment losses and exchange
differences are recognized in current profit or loss. Upon derecognition, the cumulative fair value
change recognised in other comprehensive income is transferred to profit or loss. Such financial
assets are reported as other debt investment. Other debt investment due within one year from
the balance sheet date is reported as a current portion of non-current assets and other debt
investment due within one year from the original maturity date is reported as an item of other
current assets.
Financial assets designated at fair value through other comprehensive income (equity
investments)
The Group irrevocably chooses to designate some non-tradable equity instrument investments
as financial assets at fair value through other comprehensive income. Only relevant dividend
income (excluding dividend income explicitly recovered as part of investment cost) is recognized
in profit or loss, and subsequent changes in fair value are included in other comprehensive
income without provision for impairment. When financial assets are derecognized, the
accumulated gains or losses previously recognized in other comprehensive gains are transferred
from other comprehensive income and recognized in retained earnings. Such financial assets
are reported as other equity investment.
If one of the following conditions is met, it is a held-for-trading financial asset: the acquisition of
the relevant financial asset is intended primarily for sale or repurchase in the near future; it is a
part of the portfolio of identifiable financial instruments under centralized management, and there
is objective evidence that the short-term profit model is adopted in the near future; it is a
derivative, except for a derivative that is designated as a valid hedging instrument, other than a
derivative that complies with a financial guarantee contract.
Financial assets at fair value through profit or loss
Financial assets other than the above-mentioned financial assets at amortised cost and financial
assets at fair value through other comprehensive income are classified as financial assets at fair
value through profit or loss. For such financial assets, fair value is used for subsequent
measurement, and all changes in fair value are recognised in profit or loss. Such financial assets
are presented as held-for-trading financial assets and are presented as other non-current
financial assets if they expire after more than one year from the balance sheet date or expected
to be held more than one year from the balance sheet date.
Only when an accounting mismatch is eliminated or significantly decreased, financial assets are
designated as financial assets at fair value through profit or loss at initial recognition.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary of significant accounting policies and accounting estimates (Continued)
8.Financial instruments (applicable from 1 January 2018) (Continued)
Classification and measurement of financial assets (Continued)
When an enterprise initially designates a financial asset as a financial asset at fair value through
profit or loss, it cannot be reclassified to other financial assets; other financial assets cannot be
re-designated after initial recognition as financial assets measured at fair value through profit or
loss.
When and only when the Group changes its business model of managing financial assets, it
reclassifies all relevant financial assets affected.
Classification and measurement of financial liabilities
On initial recognition of financial liabilities of the Group are classified as financial liabilities at fair
value through profit or loss, other financial liabilities and derivatives designated as effective
hedging instruments. For financial liabilities at fair value through profit or loss, the relevant
transaction costs are directly recognized in profit or loss, and the related transaction costs of
other financial liabilities are recognized in their initial amount.
Subsequent measurement of financial liabilities is determined by its classification:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss consist of held for trading financial liabilities
(including derivatives belonging to financial liabilities) and financial liabilities designated on initial
recognition as financial liabilities at fair value through profit or loss.
Financial liabilities are held-for-trading financial liabilities if one of the following conditions are
met: the purpose of assuming related financial liabilities is mainly to sell or repurchase in the
near future; they are part of a centrally managed identifiable portfolio of financial instruments,
and there is objective evidence that enterprises have adopted a short-term profitability model in
the near future; they are derivatives, excluding derivatives that are designated as effective
hedging instruments and derivatives that meet the financial guarantee contract. Held-for-trading
financial liabilities (including derivatives belonging to financial liabilities) are subsequently
measured at fair value. Except for hedging accounting, all changes in fair value are recognized
in profit or loss.
Only if one of the following conditions is met can financial liabilities be designated as financial
liabilities at fair value through profit or loss on initial recognition: (1) It can eliminate or
significantly reduce the accounting mismatch. (2) The formal written document of risk
management or investment strategy has stated that the portfolio of financial instruments is
managed, evaluated and reported to key managers on the basis of fair value. (3) The financial
liability is a hybrid instrument that contains one or more embedded derivatives, unless the
embedded derivatives have no significant change in the cash flows of the hybrid instrument, or
the embedded derivatives should obviously not be separated from the related hybrid instruments.
(4) Mixed instruments contain embedded derivatives that need to be split but cannot be
measured separately at the time of acquisition or on subsequent balance sheet days.
131
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary of significant accounting policies and accounting estimates (Continued)
8.Financial instruments (applicable from 1 January 2018) (Continued)
Classification and measurement of financial liabilities (Continued)
For such financial liabilities, subsequent measurements are made at fair value. Changes in fair
value caused by changes in the Group’s own credit risk are recognized in other comprehensive
income, while other changes in fair value are recognized in profit or loss. Unless changes in fair
value caused by changes in the Group's own credit risk recognized in other comprehensive
income may result in or expand accounting mismatches in profit or loss, the Group shall
recognize all changes in fair value (including the amount of impact of changes in its own credit
risk) in profit or loss.When an enterprise designates a financial liability as a financial liability at
fair value through profit or loss, it cannot be reclassified as other financial liabilities; nor can
other financial liabilities be re-designated as financial liabilities at fair value through profit or loss
after initial recognition.
Other financial liabilities
For such financial liabilities, subsequent measurement is made at amortized cost using the
effective interest rate method.
Impairment of financial assets
Based on expected credit losses, the Group undertakes impairment treatment and confirms loss
provisions of financial assets at amortized cost, debt instrument investments at fair value
through other comprehensive income and financial guarantee contracts.
Credit loss refers to the difference between the cash flows of all contracts discounted at the
original effective interest rate and the expected cash flows of all contracts receivable, i.e. the
present value of all cash shortages. Among them, the financial assets purchased by or
originated from the Group to which credit impairment has occurred shall be discounted at the
effective interest rate adjusted by the credit of the financial assets.
For trade receivables and contractual assets that do not contain significant financing
components, the Group uses a simplified measurement method to measure loss provisions in
accordance with the amount of expected credit losses equivalent to the entire life cycle.
For trade receivables and contractual assets with significant financing components, the Group
uses a simplified measurement method to measure loss provisions in accordance with the
amount of the expected credit loss equivalent to the entire lifetime.
132
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary of significant accounting policies and accounting estimates (Continued)
8.Financial instruments (applicable from 1 January 2018) (Continued)
Impairment of financial assets (Continued)
For financial assets other than those measured with simplified valuation methods, the Group
evaluates at each balance sheet date whether its credit risk has significantly increased since
initial recognition. The period during which credit risk has not significantly increased since initial
recognition is considered the first stage, at which the Group shall measure the loss provision
based on the amount of the expected credit loss for the next 12 months and shall compute
interest income according to the book balance and effective interest rate; the period during
which credit risk has significantly increased since initial recognition although no credit
impairment has occurred is considered the second stage, at which the Group shall measure the
loss provision based on the amount of the expected credit loss for the entire valid period and
shall compute interest income according to the book balance and effective interest rate; The
period during which credit impairment has occurred after initial recognition is considered the third
stage, at which the Group shall measure the loss provision based on the amount of the expected
credit loss for the entire period and shall compute interest income according to the amortised
cost and effective interest rate. For financial instruments with relatively low credit risk at the
balance sheet date, the Group assumes that its credit risk has not significantly increases since
initial recognition.
The Group evaluates the expected credit losses of financial instruments on a single and
combined basis. Taking into account the credit risk characteristics of different customers, the
Group evaluates the expected credit losses of trade receivables based on the aging portfolio.
In assessing expected credit losses, the Group takes into account reasonable and valid
information on past events, current conditions and future economic forecasts.
Refer to Notes VIII.3 for the disclosure of the Group's criteria for judging the significant increase
in credit risk, the definition of assets with impaired credit losses, and the assumption of
measuring expected credit losses.
When the Group no longer reasonably expects to be able to recover all or part of the contract
cash flows of the financial assets, the Group will write off the book value of the financial assets
directly.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the
statement of financial position if there is a currently enforceable legal right to offset the
recognised amounts and there is an intention to settle on a net basis, or to realize the financial
assets and settle the financial liabilities simultaneously.
133
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary of significant accounting policies and accounting estimates (Continued)
8.Financial instruments (applicable from 1 January 2018) (Continued)
Modification of financial assets
Where the Group modifies or renegotiates the contract with its counterparty and does not result
in the derecognition of financial assets, but results in a change in the cash flow of the contract,
the Group recalculates the book value of the financial asset on the basis of the renegotiated or
modified contract cash flows at the discounted value of the original effective interest rate (or
credit-adjusted effective rate of interest) of the financial asset, and the related gains or losses
are recognized in profit or loss. The revised cost or expense of the financial assets adjust the
book value of the financial assets and are amortized within the remaining period of the modified
financial assets.
Transfer of financial assets
The Group derecognises a financial asset when it has transferred substantially all the risks and
rewards of ownership of the financial asset to the transferee; the Group does not derecognize
those financial assets when it retains substantially all the risks and rewards of the ownership.
If the Group neither transfers nor retains substantially all the risks and rewards of ownership of
financial assets, the related accounting treatments of such financial assets are as follows: the
Group derecognises financial assets when it retains no control on them, and associated assets
and liabilities are recognised at the same time. If the Group retains control of the financial asset,
it recognizes the financial asset to the extent of its continuing involvement in the transferred
financial asset and recognizes an associated liability.
Continuing involvement that takes the form of a financial guarantee over the transferred asset is
measured at the lower of the original carrying amount of the asset and the financial guarantee.
The amount of the financial guarantee is the maximum amount of consideration that the Group
could be required to repay.
9.Financial instruments (applicable in 2017)
Financial instruments are the contracts that formed the financial assets of one entity, and at the
same time formed the financial liabilities or equity instruments of other entities.
Recognition and derecognition of financial instruments
Financial assets and financial liabilities are recognised when the Group becomes a party to the
contractual provisions of the instrument.
134
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary of significant accounting policies and accounting estimates (Continued)
9.Financial instruments (applicable in 2017) (Continued)
Recognition and derecognition of financial instruments (Continued)
The Group derecognises a financial asset, part of a financial asset or group of financial assets,
i.e., offset from the accounts and statement of financial position, if either of the following
conditions is satisfied:
(1) The contractual rights to the cash flows from the financial asset expire; or
(2) The contractual rights to the cash flows from the financial asset are transferred out, or obligated
to transfer out all generated cash flows on receipt; and (a) substantially all the risks and rewards
of ownership of the financial asset are transferred to the transferee; or (b) the Group neither
transfers nor retains substantially all the risks and rewards of ownership of the financial asset,
but has not retained control of the financial asset.
The Group derecognises a financial liability only when the underlying present obligation is
settled, discharged or expired. An agreement to replace the original financial liability with a new
financial liability with substantially different terms, or to modify the original financial liability’s
terms substantially, is accounted for as an extinguishment of the original financial liability and the
recognition of a new financial liability. The difference between the carrying amount of the
financial liability Derecognized and the new financial liability should be recognised in profit or
loss for the current period.
All regular means of purchases or sales of financial assets are recognised and Derecognized on
a trade date basis. Regular means of purchases or sales are purchases or sales of financial
assets that require delivery of assets within the period generally established by regulation or
convention in the marketplace. Trade date is the date that the Group commits to purchase or sell
the financial asset.
135
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary of significant accounting policies and accounting estimates (Continued)
9.Financial instruments (applicable in 2017) (Continued)
Classification and measurement of financial assets
On initial recognition, the Group’s financial assets are classified into one of the categories
including: financial assets at fair value through profit or loss, held-to-maturity investments, loans
and receivables, available-for-sale investments, and derivatives designated as effective hedging
instruments. Financial assets are initially measured at fair value. For financial assets at fair value
through profit or loss, transaction costs are immediately recognised in profit or loss for the
current period. For other financial assets, transaction costs are included in their initial recognised
amounts.
Subsequent measurement of financial assets is determined by its classification:
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments
that are not quoted in an active market. Loans and receivables are subsequently measured at
amortised cost using the effective interest method. Gains or losses arising from impairment or
amortization are recognised in profit or loss for the current period.
Available-for-sale investments
Available-for-sale investments include non-derivative financial assets that are designated on
initial recognition as available for sale, and financial assets that are not classified as financial
assets at FVTPL, loans and receivables or held-to-maturity investments. Available-for-sale
investments are subsequently measured at fair value. The discounted or premium amount of
available-for-sale investments is amortised using the effective interest method and the
amortization is recognised as an interest income or expense. Except for impairment losses and
exchange differences arising from foreign currency monetary financial assets which are
recognised as profit or loss for the current period, available-for-sale investments are
subsequently measured at fair value, and gains or losses arising from changes in the fair value
are recognised as other comprehensive income. Accumulated gains or losses arising from
changes in the fair value are classified as profit or loss on derecognition or when impairment
arises. Dividends and interest earned from available-for-sale investments are recognised in profit
or loss for the current period.
An equity investment instrument without a quoted price in an active market, whose fair value
cannot be reliably measured, is recognised and subsequently measured at cost.
Classification and measurement of financial liabilities
On initial recognition, financial liabilities of the Group are classified into financial liabilities at
FVTPL and other financial liabilities. For financial liabilities at FVTPL, transaction costs are
immediately recognised in profit or loss. For other financial liabilities, transaction costs are
included at their initial recognised amounts.
Subsequent measurement of financial liabilities is determined by the classification:
Other financial liabilities
Payables, including notes payable, trade payables and other payables, are recognized initially at
fair value and subsequently measured at amortized cost using the effective interest method.
136
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary of significant accounting policies and accounting estimates (Continued)
9.Financial instruments (applicable in 2017) (Continued)
Classification and measurement of financial liabilities (Continued)
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.
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.
Impairment of financial assets
The Group assesses the carrying amount of financial assets at each date of Balance sheet. If
there is objective evidence that a financial asset is impaired, the Group determines the amount
of any impairment loss. Objective evidence that a financial asset is impaired is an evidence that,
arising from one or more events that occurred after the initial recognition of the asset, the
estimated future cash flows of the financial asset, which can be reliably measured, have been
affected. Objective evidence of impairment may include indications that a debtor or a group of
debtors is experiencing significant financial difficulty, a debtor or debtor breach (es) contracts
(i.e. default or delinquency in interest or principal payments, etc.), that it is very probable that
they will enter bankruptcy or other financial reorganization and observable data which indicates
that there is a measurable decrease in the estimated future cash flows.
Financial assets measured at amortised cost
If a financial asset measured at amortised cost is impaired, the carrying amount of the financial
asset is reduced through the use of an allowance account to the present value of estimated
future cash flows (excluding future credit losses that have not been incurred). The reduced
amount is recognised in profit or loss for the current period. The present value of the estimated
future cash flows is discounted at the financial asset’s original effective interest rate (the
effective interest rate upon initial recognition), and the value of the relevant guarantee should
also be taken into account. Interest income continues to be accrued on the reduced carrying
amount and is accrued using the rate of interest used to discount the future cash flows for the
purpose of measuring the impairment loss. Loans and receivables together with any associated
allowance are written off when there is no realistic prospect of future recovery and all collateral
has been realised or has been transferred to the Group.
137
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary of significant accounting policies and accounting estimates (Continued)
9.Financial instruments (applicable in 2017) (Continued)
Impairment of financial assets (Continued)
For a financial asset that is individually significant, the Group assesses the asset individually for
impairment. If any objective evidence indicates that it has been impaired, the impairment losses
are recognised in profit or loss for the current period. For a financial asset that is not individually
significant, the Group assesses the asset individually for impairment or includes the asset in a
group of financial assets with similar credit risk characteristics and collectively assesses them for
impairment. If the Group determines that no objective evidence of impairment exists for an
individually assessed financial asset (whether significant or not), it includes the asset in a group
of financial assets with similar credit risk characteristics and collectively reassesses them for
impairment. Assets for which an impairment loss is individually recognised are not included in a
collective assessment of impairment.
If, subsequent to the recognition of an impairment loss on financial assets carried at amortised
cost, there is objective evidence of a recovery in value of the financial assets which can be
related objectively to an event occurring after the impairment is recognised, the previously
recognised impairment loss is reversed and recognised in profit or loss for the current period.
However, the reversal is made to the extent that the carrying amount of the financial asset at the
date the impairment reversed does not exceed what the amortised cost would have been when
the impairment has not been recognised.
Available-for-sale investments
If there is objective evidence that an available-for-sale investment is impaired, the cumulative
loss arising from decline in fair value previously recognised directly in other comprehensive
income is reclassified from other comprehensive income to profit or loss. The amount of the
cumulative loss that is reclassified from other comprehensive income to profit or loss is the
difference between the acquisition cost (net of any principal repayment and amortization) and
the current fair value, less any impairment losses on that financial asset previously recognised in
profit or loss.
Objective evidence that an available-for-sale equity instrument investment is impaired includes
the significant or prolonged decline in the fair value below its cost. “Significant” is evaluated
against the original cost of the investment and “prolonged” against the length of period in which
the fair value has been below its original cost. Where there is evidence of impairment, the
cumulative loss measured is the difference between the acquisition cost and the current fair
value, less any impairment loss on that investment previously recognised in the income
statement. Impairment losses on equity instruments classified as available-for-sale are not
reversed through the income statement. Increases in their fair value after impairment are
recognised directly in other comprehensive income.
The determination of what is “significant” or “prolonged” requires judgement. In making this
judgement, the Group evaluates, among other factors, the duration or extent to which the fair
value of an investment is less than its cost.
138
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary of significant accounting policies and accounting estimates (Continued)
9.Financial instruments (applicable in 2017) (Continued)
Impairment of financial assets (Continued)
In the case of debt instruments classified as available-for-sale, impairment is assessed based on
the same criteria as financial assets measured at amortised cost. However, the amount recorded
for impairment is the cumulative loss measured as the difference between the amortised cost
and the current fair value, less any impairment loss on that investment previously recognised in
the income statement. Future interest income continues to be accrued based on the reduced
carrying amount of the asset and is accrued using the rate of interest used to discount the future
cash flows for the purpose of measuring the impairment loss.
If, subsequent to the recognition of an impairment loss on an available-for-sale debt instrument,
there is objective evidence of a recovery in the fair value of the financial asset which can be
related objectively to an event occurred after the impairment is recognised, the previously
recognised impairment loss is reversed and recognised in profit or loss for the current period.
Financial assets measured at cost
If there is objective evidence that an impairment loss has been incurred on a financial asset
measured at cost, the carrying amount of the financial asset is reduced to the present value of
estimated future cash flows discounted at the current market rate of return for a similar financial
asset. The amount of reduction is recognised as an impairment loss in profit or loss for the
current period. The impairment losses on such financial assets are not reversed once they are
recognised.
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.
139
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary of significant accounting policies and accounting estimates (Continued)
10.Receivables
The recognition criteria and accrual methods of bad debt provision for the Group's receivables in
2017 are as follows:
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.
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 trade Provision ratios used for
receivables 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%
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.
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.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary of significant accounting policies and accounting estimates (Continued)
10.Receivables (Continued)
When the Group transfers the trade receivables 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.
For the recognition criteria and accrual method of the Group's bad debt provision for trade
receivables from 1 January, 2018, please refer to Note III.8.
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 decline 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 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary 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. For long-term
equity investments acquired by way of the swap of non-monetary assets, the initial investment
cost shall be determined in accordance with “ASBE No. 7 — Swap of Non-monetary Assets.”
For long-term equity investments acquired by way of debt restructuring, the initial investment
cost shall be determined in accordance with “ASBE No. 12 — Debt Restructuring.”
(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.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary 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 a 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.
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 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary 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’ 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.
14. Fixed assets
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. 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.
Fixed assets are initially measured at cost and the effect of any expected costs of abandoning
the asset at the end of its use is considered. The cost of a fixed asset is the aggregate cost of
purchase price, related taxes and any directly attributable expenditure for bringing the asset to
its working condition for its intended use.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary of significant accounting policies and accounting estimates (Continued)
14. Fixed assets (Continued)
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.
Estimated useful lives Estimated residual values Annual depreciation rates
Buildings 20-35 years 0-5% 2.71-5.00%
Machinery 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
Fixed assets held under finance leases are depreciated under the same depreciation method as
other fixed assets. The assets are depreciated over their estimated useful lives where ownership
of the assets can be reasonably estimated to be gained when lease periods end; otherwise, the
leased assets are depreciated over the shorter of the lease terms and the estimated useful lives
of the assets.
The Group reviews the useful life, estimated net residual value of a fixed asset and the
depreciation method applied at least once at each financial year end, and adjusts for any change
when necessary.
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 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary of significant accounting policies and accounting estimates (Continued)
15.Construction in progress
Construction in progress is measured at its actual cost. The actual cost includes various
necessary construction expenditures during the construction period, borrowing costs capitalised
before it is ready for intended use and other relevant costs.
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
differences 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 in 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 a specific loan by deducting interest
income of the loan capital deposit in the bank or investment income obtained from a temporary
investment.
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.
146
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary of significant accounting policies and accounting estimates (Continued)
16.Borrowing costs (Continued)
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 are recognised and measured on initial recognition at cost only if the related
economic benefits will probably flow into the Group and their costs can be measured reliably.
However, the intangible assets acquired through a business combination not involving
enterprises under common control should be measured at fair value separately as intangible
assets when their fair values can be reliably measured.
The useful life of the intangible assets shall be assessed according to the estimated beneficial
period expected to generate economic benefits for the Group. An intangible asset shall be
regarded as having an indefinite useful life when there is no foreseeable limit to the period over
which the asset is expected to generate economic benefits for the Group.
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
Land use rights obtained by the Group are usually accounted for as intangible assets. As for the
construction of plants, factories and other buildings of the Group, the related land use rights and
other buildings were accounted for as intangible assets and fixed assets, respectively. Purchase
costs of land use rights and buildings were allocated to intangible assets and fixed assets
separately. Purchase costs were recognised as cost of fixed assets, only if the separation was
impracticable.
Intangible assets with a finite useful life are amortised over their estimated useful lives using the
straight-line method or other reasonable systematic methods. For an intangible asset with a
finite useful life, the Group reviews the useful life and amortization method at least once at each
financial year end, and makes adjustments when necessary.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.
147
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary 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 drug
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 Group classifies the expenses for internal research and development as research costs and
development costs. All research costs are charged to the current profit or loss as incurred.
Expenditure incurred on projects to develop new products is capitalised and deferred only when
the Group can demonstrate the technical feasibility of completing the intangible asset so that it
will be available for use or sale, its intention to complete and its ability to use or sell the asset,
how the asset will generate future economic benefits (including demonstration that the product
derived from the intangible asset or the intangible asset itself will be marketable or, in the case
of internal use, the usefulness of the intangible asset as such), the availability of technical and
financial resources to complete the project and procure the use or sale of the intangible asset,
and the ability to measure reliably the expenditure during the development. Product
development expenditure which does not meet these criteria is expensed when incurred.
148
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary of significant accounting policies and accounting estimates (Continued)
18.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 a 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.
149
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary of significant accounting policies and accounting estimates (Continued)
19.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.
20.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.
150
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary 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.
Short-term employee benefits
The actual occurred short-term employee benefits are recognizes as liabilities during 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.
Post-employment benefits (defined contribution plans)
The employees in the Group participate in social insurance and unemployment insurance
schemes administrated by the local governments, and the related expenditures are recorded in
cost of related assets or profit or loss in the period when they incurred.
Post-employment benefits (defined benefit plans)
The Group operates a defined benefit pension scheme. No funds have been injected into the
scheme. The cost of benefits provided under the defined benefit scheme is calculated using the
expected benefit accrual unit approach.
Remeasurement arising from defined benefit pension schemes, including actuarial gains or
losses, changes in the asset cap effect (deducting amounts included in net interest) and returns
on scheme assets (deducting amounts included in net interest) are instantly recognised in the
balance sheet and charged to shareholders’ equity through other comprehensive income for the
period during which it is incurred. It will not be reversed to profit and loss in subsequent periods.
Previous service costs are recognised as current expenses when: the defined benefit scheme is
revised, or relevant restructuring costs or termination benefits are recognised by the Group,
whichever earlier.
Net interest is arrived at by multiplying net liabilities or net assets of defined benefits with a
discount rate. Changes in net obligations of defined benefits are recognised as operating costs
and administration expenses in the income statement. Service costs included current services
costs, past service costs and settlement of profit or loss. Net interest included interest income
from scheme assets, interest expenses for scheme obligations and interest of the asset cap
effect.
Termination benefits
The Group recognizes a liability for termination benefits and charges to profit or loss at the
earlier of the following dates: a) when the Group can no longer withdraw from the termination
plan or the redundancy offer; and b) when the Group recognizes costs or expense for a
restructuring plan which involves the payment of termination benefits.
151
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary of significant accounting policies and accounting estimates (Continued)
21.Employee benefits (Continued)
Other long term employee benefits
Other long-term employees’ benefits provided to employees shall be recognised and measured
as net liabilities or net assets where provisions regarding post-employment benefits are
applicable, provided that changes shall be included in current profit and loss or related capital
costs.
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.
For business combinations not under common control, 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.
152
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary of significant accounting policies and accounting estimates (Continued)
23.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 the granted employee, the content of prescribed performance and other conditions.
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 equity 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.
153
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary of significant accounting policies and accounting estimates (Continued)
23.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.
24.Revenue recognition (applicable from 1 January 2018)
The group recognizes revenue when it has fulfilled its obligations under the contract, i, e. when
the customer acquires control relevant goods or services. Acquiring control over the goods or
services refers to the ability to dominate the use of the goods or the portion of services and to
derive almost all the economic benefits therefrom.
Contracts for sale of goods
The contracts for the sale of goods between the Group and its customer usually only contain the
performance obligations for the transfer of goods. The Group generally recognizes revenue at
the point of transferring the control of goods on the basis of a combination of the following
factors: the current right to collect the goods, the transfer of major risks and benefits in the
ownership of the goods, and the transfer of the legal ownership of the goods, the transfer of
physical assets of the goods and that the customers have accepted the goods.
Service Contracts
The service contracts between the Group and its customers usually consist of performance
obligations such as engineering construction management, engineering design consulting and
so on. As the Group's performance of contracts is at the same time when the customer obtains
and consumes the economic benefits of the performance of the Group, and the Group has the
right to collect receivables from the performance of contacts that has been completed to date,
the Group regards it as a contact obligation over a period of time, except that the progress of
performance cannot be reasonably determined. The Group determines the progress of the
performance of contracts in accordance with the input method. If the progress of performance of
contracts cannot be reasonably determined and the cost incurred by the Group are expected to
be compensated, the revenue is recognized on the basis of the incurred costs until the progress
of performance of contacts can be reasonably measured.
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Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary of significant accounting policies and accounting estimates (Continued)
24.Revenue recognition (applicable from 1 January 2018) (Continued)
Variable consideration
Certain contracts between the Group and its customers contain cash discounts and price
guarantee clauses which will give rise to variable consideration. Where a contract contains
variable consideration, the Group determines the best estimates on the variable consideration
based on expected values or the most probable amount, provided that transaction prices
including variable consideration shall not exceed the cumulative amount of recognised revenue
upon the removal of relevant uncertainties in connection with which a significant reversal is
highly unlikely.
Consideration payable to customers
Where consideration is payable by the Group to a customer, such consideration payable shall be
deducted against the transaction price, and against current revenue upon the recognition of
revenue or the payment of (or the commitment to pay) the consideration to the customer
(whichever is later), save for consideration payable to the customer for the purpose of acquiring
from the customer other clearly separable products.
Return clauses
In connection with sales with a return clause, revenue is recognised according to the amount of
consideration it expects to be entitled to for the transfer to a customer when the customer
acquires control of the relevant. Amounts expected to be refunded for the return of sales are
recognised as liabilities. At the same time, the balance of the carrying value of the product
expected to be returned upon transfer less expected costs for the recall of such product
(including an impairment loss of the recalled product) shall be recognised as an asset (i.e. cost
of return receivables), and the net amount of the carrying value of the transferred product upon
the transfer less the aforesaid asset cost shall be transferred to cost. At each balance sheet
date, the Group reassesses the future return of sales and remeasures the above assets and
liabilities.
Significant financing component
Where a contract contains a significant financing component, the Group determines transaction
prices based on amounts payable assumed to be settled in cash by customers immediately
upon the acquisition of control over the products. The difference between such transaction price
and contract consideration is amortised over the contract period using the effective interest rate
method based on a ratio that discounts the nominal contractual consideration to the current
selling price of the products.
The Group shall not give consideration to any significant financing component in a contract if the
gap between the customer’s acquisition of control over the products and payment of
consideration is expected to be less than 1 year.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary of significant accounting policies and accounting estimates (Continued)
24.Revenue recognition (applicable from 1 January 2018) (Continued)
Warranty clauses
The Group provides quality assurance for products sold and assets built in accordance with
contract terms and laws and regulations. The accounting treatment of quality assurance in the
form of warranty assuring customers products sold are in compliance with required standards is
set out in Note III.22. Where the Group provides a service warranty for a standalone service in
addition to the assurance of compliance of products with required standards, such warranty is
treated as a standalone contractual performance obligation, and a portion of the transaction
price shall be allocated to the service warranty based on a percentage of the standalone price
for the provision of product and service warranty. When assessing whether a warranty is
rendering a standalone service in addition to providing guarantee to customers that all sold
goods are in compliance with required standards, the Group will consider whether or not such
warranty is a statutory requirement, the term of the warranty and the nature of the Group’s
undertaking to perform its obligations.
Reward points program
The Group grants reward points to customers when selling goods. Customers can use reward
points to redeem free or discounted goods provided by the Group. This reward points program
provides significant rights to customers, the Group consider it as an individual performance
obligation, and an apportion part of the transaction price to reward points based on pricing of
goods or services with warranty clauses. Revenue is recognised when customers obtain goods
redeemed or when reward points expire.
Principal responsible person/proxy
For goods or other assets obtained from a third party which were transferred later to customers,
the Group has the right to decide independently, pricing of goods. This means that the Group
has obtained control over related goods before transferring to customers. Therefore, the Group
is the principal responsible person, and revenue is recognised based on total amount of
consideration received or receivable. Otherwise, the Group is proxy, and revenue is recognised
based on expected commission. This amount should be the total amount of consideration
received or receivable net of the amount payable to other parties, or based on the fixed amount
or percentage.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary of significant accounting policies and accounting estimates (Continued)
25.Revenue recognition (applicable in 2017)
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:
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.
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.
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.
26.Contract assets and contract liabilities (applicable from 1 January 2018)
The Group presents contract assets or contract liabilities on the balance sheet according to the
relationship between contractual performance obligations and customer payments.
Contract assets
The unconditional (namely, dependent only on the passage of time) right to receive
consideration from customers owned by the Group shall be presented as amounts receivable.
The right to receive consideration following the transfer of products to customers which is
dependent on factors other than the passage of time is presented as contract assets.
For details of the Group’s determination and accounting treatment of expected credit losses from
contract assets, please refer to Note III.8.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary of significant accounting policies and accounting estimates (Continued)
26.Contract assets and contract liabilities (applicable from 1 January 2018) (Continued)
Contract liabilities
The obligation to pass products to customers in connection with customer consideration
received or receivable is presented as contract liabilities, for example, amounts received prior to
the transfer of the promised products.
Contract assets and contract liabilities under the same contract are presented on a net basis
after set-off.
27.Assets relating to contract cost (applicable from 1 January 2018)
The Group’s assets relating to contract costs include the contract acquisition costs and contract
performance costs, presented respectively under inventories, other current assets and other
non-current assets.
Where the Group expects the incremental costs for acquiring a contract to be recoverable, such
contract acquisition costs are recognised as an asset (unless the amortisation period of the
asset is not more than 1 year).
Costs incurred by the Group for the performance of a contract are recognised as an asset as
contract performance costs if they do not fall under the scope of the relevant standards for
inventories, fixed assets or intangible assets but meet all the following conditions:
(1)They are directly related to a current or anticipated contract, including direct labour, direct
materials, manufacturing expenses (or similar expenses), to be borne by customers as
specifically stipulated, and otherwise incurred solely in connection with the contract;
(2)they will increase the resources to be utilised in the Company’s future performance of its
contractual obligations; and
(3)they are expected to be recoverable.
The Group amortises assets relating contract costs on the same basis as that for the recognition
of revenue relating to such assets and recognises the amortised assets in current profit or loss.
For assets relating to contract costs whose carrying value is higher than the difference between
the following two items, the Group makes provision for impairment for the excess to be
recognised as asset impairment losses:
(1) The remaining consideration expected to be obtained as a result of the transfer of goods relating
to such assets;
(2)Estimated costs to be incurred in connection with the transfer of relevant goods
In the event that the difference between (1) and (2) becomes higher than the carrying value of
such assets as a result of changes in the factors of impairment for previous periods, previous
provisions for asset impairment losses should be written back and included in current profit or
loss, provided that the carrying asset value following the write-back shall not exceed the carrying
value that such assets would have on the date of write-back were there no provision for
impairment.
IIISummary of significant accounting policies and accounting estimates (Continued)
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
28.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 or 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 a nominal amount shall be directly charged to the current profit or 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.
29.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
authorites 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). A 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, 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.
IIISummary of significant accounting policies and accounting estimates (Continued)
29.Income tax（Continued）
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
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.
30.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.
As lessee of operating leases
Rental expenses under operating leases are recognised as relevant asset costs or in current
profit or loss on the straight-line basis over the lease term. Contingent rental is charged to
current profit or loss when incurred.
As lesser of operating leases
Rental income under operating leases are recognised as profit/loss for the current period on a
straight-line basis over the lease term. Contingent rental is charged to current profit or loss when
incurred.
As lessee under finance leases
An asset held under finance leases is initially recognised at the lower between the leased
assets’ fair value and the present value of minimum lease payments on the lease
commencement date. The amount of long-term payables will be recognised as minimum lease
payments accordingly, and the differences between the leased assets’ fair value and the present
value of minimum lease payments will be recorded as unrecognised financing costs which will
be amortised using the effective interest method over the term of the relevant lease. Contingent
rentals will be recognised in profit or loss for the period when they are actually incurred.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary of significant accounting policies and accounting estimates (Continued)
31.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.
32.Fair value measurement
At each balance sheet date, the Group measures the fair value of other debt investments and
equity instrument investments. Fair value means the price receivable from the disposal of an
asset or required to be paid for the transfer of a liability in an orderly transaction incurred by
market participants on the measurement date. The Group measures assets or liabilities at fair
value with the assumption that the orderly transaction of asset disposal or the transfer of
liabilities takes place in the major market for the relevant assets or liabilities. Where there is no
major market, the Group assumes that such transaction takes place in the most favourable
market for the relevant assets or liabilities. The major market (or most favourable market) is a
trading market which the Group has access to on the measurement date. The Group adopts
assumptions used by market participants when they price the asset or liability with the aim of
maximising its economic benefits.
The measurement of non-financial assets measured at fair value should take into account the
ability of market participants to utilise the asset in the best way for generating economic benefits,
or the ability to dispose of such asset to other market participants who are able to utilise the
asset in the best way for generating economic benefits.
The Group adopts valuation techniques that are appropriate in the current circumstances and
supported by sufficient usable data and other information. Observable input will be used first and
foremost. Unobservable input will only be used when it is not possible or practicable to obtain
observable input.
The fair value hierarchy to which an asset or liability measured or disclosed in the financial
statements at fair value will be determined on the basis of the lowest level of input which is
significant for the fair value measurement as a whole. Input at the first level represents
unadjusted quoted prices in an active market for the acquisition of the same asset or liability on
the measurement date. Input at the second level represents directly or indirectly observable
assets or liabilities apart from input at the first level. Input at the third level represents
unobservable input for the asset or liability.
At each balance sheet date, the Group reassesses assets and liabilities measured at fair value
on an ongoing basis recognised in the financial statements to determine whether the level of fair
value measurement should be changed.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary of significant accounting policies and accounting estimates (Continued)
33.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.
34.Significant accounting judgements and 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.
Significant accounting judgements and estimates
In the process of applying the Group’s accounting policies, management has made the following
judgements, which have the most significant effect on the amounts recognised in the financial
statements
Operating leases – as lesser
The Group signed lease contracts for investment properties. The Group considers these leases
as operating leases because according to the lease contract terms, the Group reserves all
significant risks and rewards of ownership of the properties.
Operating leases – as lessee
The Group signed lease contracts for buildings. The Group considers these leases as operating
leases because all significant risks and rewards of buildings are not transferred to the Group.
Business model
The classification of financial assets at initial recognition is dependent on the Group’s business
model for managing the assets. Factors considered by the Group in judging the business model
include enterprise valuation, the method of reporting the results of financial assets to key
management members, risks affecting the results of financial assets and the method for
managing such risks, as well as the form of remuneration received by the management
personnel of the businesses concerned. In assessing whether the business model is aimed at
receiving contract cash flows, the Group is required to analyse and exercise judgment in respect
of the reasons, timing, frequency and values of any disposals prior to maturity.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary of significant accounting policies and accounting estimates (Continued)
34.Significant accounting judgements and estimates (Continued)
Characteristics of contract cash flow
The classification of financial assets at initial recognition is dependent on the characteristics of
the contract cash flows of such type of financial assets. Judgement is required to determine
whether the contract cash flows represent interest payment in relation to principal amounts
based on outstanding principal amounts only, including judgement of whether it is significantly
different from the benchmark cash flow when assessing modifications to the time value of
currencies.
Estimation uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at
the end of the reporting period that may cause material adjustment to the carrying amounts of
assets and liabilities are discussed below.
Impairment of available-for-sale investments
Before 1 January 2018, the Group classified certain assets as available-for-sale investments and
directly recognized movements of their fair value in other comprehensive income. When the fair
value declined, management made assumption about the decline in value to determine whether
there is any impairment loss that should be recognised in the income statement.
Impairment of financial instruments
The Group has adopted the expected credit loss model to value the impairment of financial
instruments. The application of the expected credit loss model requires significant judgement
and estimates and the consideration of all reasonable and soundly based information, including
forward-looking information. In making such judgement and estimates, the Group estimates the
projected movements of the debtor’s credit risk according to past repayment records, economic
policies, macro-economic indicators and industry risks.
Impairment of non-current assets other than financial assets (excluding goodwill)
The Group assesses whether there are any indicators of impairment for non-current assets other
than financial assets at the date of statement of financial position. Intangible assets with
indefinite useful lives are tested for impairment annually and at other times when such an
indicator exists. Other non-current assets other than financial assets are tested for impairment
when there are indicators that the carrying amounts may not be recoverable. An impairment
exists when the carrying value of an asset or asset group exceeds its recoverable amount, which
is the higher of its fair value less costs to sell and its present value of future cash flows. The
calculation of the fair value less costs to sell is based on available data from binding sales
transactions in an arm’s length transaction of similar assets or observable market prices less
incremental costs for disposing of the asset. When value-in-use calculations are undertaken,
management must estimate the expected future cash flows from the asset or asset group and
choose a suitable discount rate in order to calculate the present value of those cash flows. Refer
to Note V. 11,12,13,14.
Impairment of goodwill
Goodwill is tested for impairment at least at the end of each year. For the purpose of impairment
testing, the present value of future cash flows, which are generated from asset groups or sets of
asset groups considered together with allocated goodwill, is estimated. The Group estimates the
present value of future cash flows from asset groups or sets of asset groups by forecasting the
related cash flows and selecting a suitable discount rate. Refer to Note V.15.
IIISummary of significant accounting policies and accounting estimates (Continued)
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
34.Significant accounting judgements and estimates (Continued)
Deferred tax assets
To the extent that it is probable that there are sufficient taxable profits to offset the deductible
losses, deferred tax assets shall be recognised for all unused deductible losses. Substantial
management’s judgements regarding the timing and amount of future taxable profit are needed
when estimating the amount of deferred tax assets.
Fair value of non-listed equity investment
Non-listed equity investments are valued as expected future cash flows based on the current
discount rate of other financial instruments with similar contractual terms and risk characteristics.
This requires the Group to estimate future cash flows, credit risks, fluctuations and discount
rates and is therefore uncertain.
Reward points
The Group considers the observable separate selling price of the redeemable free or discounted
goods, the probability of redeeming and all the related information, after which estimates a
reasonable reward points separate selling price. When estimating the probability of redeeming,
the Group bases on historical data, current data and takes into consideration future change of
the client, also market trends and other factors. The Group re-evaluates the separate selling
price of reward points at least once every balance sheet date, and allocates it to reward points
transaction price based on the result.
Return clauses
The Group reasonably estimates the return rate for contract groups with similar characteristics
according to the historical return rate, current conditions of return, the change of customers and
markets. The Group at least reassesses the return rate at every balance sheet date and
determines return payables and cost of return receivables.
Warranty
The Group makes reasonable estimates on warranty fee rates in respect of contract groups with
similar characteristics based on the historical data and current conditions of warranty, taking into
consideration all relevant information such as product improvements and market changes,
among others. The Group reassesses the warranty fee rates at least annually at each balance
sheet date and determines its estimated liabilities based on the reassessed warranty fee rates.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary of significant accounting policies and accounting estimates (Continued)
34.Significant accounting judgements and estimates (Continued)
Evaluating limitations of variable consideration
When estimating variable consideration, the Group considers all the reasonable information
obtained, including historical information, current information and forecasted information, and
also estimates all the possible consideration amount and possibility within a reasonable range.
For contracts that is likely to have multiple different outcomes, the Group estimate the
consideration amount based on the expected value method. For contracts with only two possible
outcomes, the Group estimates the consideration amount based on the most likely outcome.
The estimated amount of variable consideration will be included in the transaction price only to
the extent that it is highly probable that a significant reversal in the amount of cumulative
revenue recognized will not occur when the uncertainty associated with the variable
consideration is subsequently resolved. The Group re-evaluates the amount of variable
consideration on every balance sheet date, including re-evaluating whether the estimations used
are limited, to reflect changes which occurred in the financial statement period.
Changes in accounting policies
In 2017, the Ministry of Finance announced amendments to ASBE No. 14 — Revenue” (the
“New ASBE on Revenue”), “ASBE No. 22 — Recognition and Measurement of Financial
Instruments”, “ASBE No. 23 — Transfer of Financial Assets”, “ASBE No. 24 — Hedge
Accounting” and “ASBE No. 37 — Presentation of Financial Instruments” (the “New ASBEs on
Financial Instruments”). The Group has adopted the aforesaid revised accounting standards with
effect from 1 January 2018. In accordance with the convergence provisions, no adjustments
were made to the information of comparative periods. The difference arising from the first day of
implementation of the new ASBE versus the implementation of the existing ASBE is recognised
by adjusting the opening balance of retained earnings or other comprehensive income for the
reporting period.
New ASBE on Revenue
The New ASBE on Revenue has built a new model for revenue recognition to provide for the
accounting treatment of revenue generated from contracts with customers. In accordance with
the New ASBE on Revenue, the method of revenue recognition should reflect the model of the
Company’s transfer of goods or rendering of services to customers, and the amount of revenue
should reflect the amount of consideration expected to be entitled to as a result of the company’s
transfer of such goods and services to customers. At the same time, the New ASBE on Revenue
has also provided for judgements and estimates required by each step in revenue recognition.
The Group has only adjusted the cumulative effect of outstanding contracts at 1 January 2018.
In respect of contract changes which occured prior to 1 January 2018, the Group has adopted a
simplified approach: identifying fulfilled and unfulfilled performance obligations in connection with
all contracts based on the finalised arrangements in contract changes, determining the
transaction price, and allocating the transaction price between fulfilled obligations and unfulfilled
obligations.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary of significant accounting policies and accounting estimates (Continued)
34.Significant accounting judgements and estimates (Continued)
Changes in accounting policies (Continued)
The effect of adopting the New ASBE on items in balance sheets as at 1 January 2018 is set out
as follows:
Consolidated balance sheet
On the face of the Hypothetically in
statement accordance with the Impact
previous ASBE
Advances from customers - 216,938,239.32 (216,938,239.32)
Contract liabilities 216,938,239.32 - 216,938,239.32
Deferred income 96,725,183.34 125,082,372.53 (28,357,189.19)
Other non-current liabilities 28,357,189.19 - 28,357,189.19
The Company’s balance sheet
Hypothetically in
On the face of the accordance with the
statement previous ASBE Impact
Advances from customers - 1,912,503.90 (1,912,503.90)
Contract liabilities 1,912,503.90 1,912,503.90
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary of significant accounting policies and accounting estimates (Continued)
34.Significant accounting judgements and estimates (Continued)
Changes in accounting policies (Continued)
The effect of adopting the New ASBE on Revenue of 2018 financial statements set out as
follows:
Consolidated balance sheet
On the face of the Hypothetically in
statement accordance with the Impact
previous ASBE
Advances from customers - 252,889,957.83 (252,889,957.83)
Non-current liabilities due
within one year - 2,700,654.54 (2,700,654.54)
Contract liabilities 255,590,612.37 - 255,590,612.37
Deferred income 91,491,170.40 115,305,003.27 (23,813,832.87)
Other non-current liabilities 69,241,176.18 45,427,343.31 23,813,832.87
The Company’s balance sheet
On the face of the Hypothetically in
statement accordance with the Impact
previous ASBE
Advances from customers - 4,182,083.40 (4,182,083.40)
Contract liabilities 4,182,083.40 - 4,182,083.40
167
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary of significant accounting policies and accounting estimates (Continued)
34.Significant accounting judgements and estimates (Continued)
Changes in accounting policies (Continued)
New ASBEs on Financial Instruments
The New ASBEs on Financial Instruments has changed the classification and measurement of
financial assets and determined three major measurement types: at amortised cost; at fair value
through other comprehensive income; and at fair value through current profit or loss. A company
is required to consider its own business model and the characteristics of contract cash flows of
its financial assets in the aforesaid classification. Equity investments are required to be
measured at fair value through current profit or loss, provided that the Group may elect at initial
recognition to irrevocably designate investment in non-trading equity instruments as financial
assets at fair value through other comprehensive income.
The New ASBEs on Financial Instruments provides that the model for measuring financial
assets impairment shall be changed from the “model of incurred losses” to the “model of
expected credit losses”, which is applicable to financial assets at amortised cost, financial assets
at fair value through other comprehensive income, a loan commitment, and financial guarantee
contracts.
The earnings of certain wealth financial products held by the Group depend on the rate of return
on the underlying assets. The Group classified it as an available-for-sale financial asset by 1
January 2018. After 1 January 2018, the Group analysed its contract cash flows to not only
represent payments of principal and interests on the basis of outstanding principal. Therefore,
these financial products are reclassified as financial assets at fair value through profit or loss, or
as other non-current financial assets in presentation.
After 1 January 2018, certain equity investments held by the Group have been designated as
financial assets at fair value through other comprehensive income, or as other equity
investments in presentation.
168
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary of significant accounting policies and accounting estimates (Continued)
34.Significant accounting judgements and estimates (Continued)
Changes in accounting policies (Continued)
The result of classification and measurement of financial assets on the day of the first
implementation date in accordance with standards for the classification and measurement of
financial instruments before and after the revision is set out in the following:
The Group
ASBE for recognition and measurement of financial Revised ASBE for recognition and measurement of
instruments prior to amendment financial instruments
Measurement type Carrying value Measurement type Carrying value
Trade Amortised cost
receivables (Loans and receivables) 7,589,412,679.88 Amortised cost 7,589,412,679.88
Notes Amortised cost
receivables (Loans and receivables) 1,504,194,764.08 Amortised cost 919,982,854.86
At fair value through other
comprehensive income 584,211,909.22
At fair value through other
Equity comprehensive income At fair value through other
investment (available for-sale assets) 13,685,760.00 comprehensive income 13,685,760.00
The Company
ASBE for recognition and measurement of financial Revised ASBE for recognition and measurement of
instruments prior to amendment financial instruments
Measurement type Carrying value Measurement type Carrying value
Trade Amortised cost
receivables (Loans and receivables) 480,467,760.92 Amortised cost 480,467,760.92
Notes Amortised cost 47,539,48
receivables (Loans and receivables) 64,799,618.07 Amortised cost 7.69
At fair value through other
comprehensive income 17,260,130.38
169
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary of significant accounting policies and accounting estimates (Continued)
34.Significant accounting judgements and estimates (Continued)
Changes in accounting policies (Continued)
Reconciliation table relating to the adjustment of the original carrying value of financial assets to
the new carrying value of financial assets following classification and measurement in
accordance with the revised ASBE for recognition and measurement of financial instruments on
the first date of implementation:
Carrying value Carrying value
presented under presented under New
Reclassified Remeasured
previous ASBEs on ASBEs on Financial
financial instruments Instruments
31 December 2017 1 January 2018
Financial assets measured at amortised cost
Trade receivables
Balance presented under previous ASBEs on Financial
7,589,412,679.88 - - -
Instruments
Balance presented under New ASBEs on Financial
- - - 7,589,412,679.88
Instruments
Notes receivables
Balance presented under previous ASBEs on Financial
1,504,194,764.08 - - -
Instruments
Less: Transfer to fair value through other
comprehensive income (New ASBEs on Financial - (584,211,909.22) - -
Instruments)
Balance presented under New ASBEs on Financial
- - - 919,982,854.86
Instruments
Total financial assets measured at amortised cost 9,093,607,443.96 (584,211,909.22) - 8,509,395,534.74
Financial assets at fair value through other
comprehensive income
Equity investment – available-for-sale financial asset
Balance presented under previous ASBEs on Financial
13,685,760.00 - - -
Instruments
Less: Transfer to fair value through other
comprehensive income – other equity instruments - (13,685,760.00) - -
(New ASBEs on Financial Instruments)
Balance presented under New ASBE on financial
- - - -
instruments
Equity investment
Balance presented under previous ASBEs on Financial
- - - -
Instruments
IIISummary of significant accounting policies and accounting estimates (Continued)
34.Significant accounting judgements and estimates (Continued)
Changes in accounting policies (Continued)
170
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
Carrying value Carrying value
presented under presented under New
Reclassified Remeasured
previous ASBEs on ASBEs on Financial
financial instruments Instruments
Add: Transfer to fair value through other
comprehensive income – other equity instruments
(New ASBEs on Financial Instruments) - 13,685,760.00 - -
Balance presented under a New ASBE on financial
instruments - - - 13,685,760.00
Note receivables
Balance presented under previous ASBEs on Financial
Instruments - - - -
Add: Transfer to fair value through other
comprehensive income (New ASBEs on Financial
Instruments) - 584,211,909.22 - -
Balance presented under a New ASBE on financial
instruments - - - 584,211,909.22
Total financial asset at fair value through other
comprehensive income 13,685,760.00 584,211,909.22 - 597,897,669.22
Total 9,107,293,203.96 - - 9,107,293,203.96
171
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary of significant accounting policies and accounting estimates (Continued)
34.Significant accounting judgements and estimates (Continued)
Changes in accounting policies (Continued)
Reconciliation table relating to the adjustment of the original amount of financial asset
impairment provision as at 31 December 2017 to the new provision amount in accordance with
the revised ASBEs on Financial Instruments on the first day of implementation:
Loss provision
under previous Loss provision under New
Note V ASBEs on Reclassified Remeasured ASBEs on Financial
Financial Instruments
Instruments
Trade receivables 2 43,925,465.41 - - 43,925,465.41
Other receivables 4 15,111,049.87 - - 15,111,049.87
Available-for-sale financial
instruments (previous
ASBEs on financial
instruments)/ Financial
assets at fair value 7,8 180,000.00 - - 180,000.00
through other
comprehensive income
(new ASBEs on financial
instruments)
Total 59,216,515.28 - - 59,216,515.28
172
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary of significant accounting policies and accounting estimates (Continued)
34.Significant accounting judgements and estimates (Continued)
Changes in accounting policies (Continued)
Change in the reporting format of financial statements
In accordance with “Notice on the Revision and Publication of the 2018 General Corporate
Financial Reporting Format” (Cai Kuai [2018] No. 15), in addition to the changes in presentation
resulting from the implementation of the above-mentioned new financial instruments standards
and new income standards, on the face of the balance sheet, “notes receivable” and “trade
receivables” have been consolidated into the new item of “notes receivable and trade
receivables; “interest receivable” and “dividends receivable” have been consolidated into “other
receivables”, “fixed assets disposal” has been consolidated into “fixed assets”; “construction
materials” has been consolidated into “construction in progress”; “notes payable” and “trade
payables” have been consolidated into the new item of “notes payable and trade payables”; and
“special payables” has been consolidated into “long-term payables” On the face of the income
statement, a breakdown of “research expenses” from “administrative expenses” has been
introduced and a breakdown of “finance cost” into “interest expenses” and “interest income” has
been introduced. A new item of “changes in defined contribution plan transferred to retained
earnings” in the statement of changes in equity has been introduced. Comparable figures have
been adjusted accordingly. This change in accounting policy has had no impact on the amounts
of net profit and shareholders’ equity in the consolidated and the Company’s statements.
173
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary of significant accounting policies and accounting estimates (Continued)
34.Significant accounting judgements and estimates (Continued)
Changes in accounting policies (Continued)
The main impact of the retroactive adjustments resulting from the above changes in accounting
policies on the financial statements are as follows:
The Group
2018
Impact of new
Carrying value Impact of other Carrying value
Impact of new ASBEs on Revenue ASBEs on
presented under financial statement presented under new
Financial
previous ASBEs presentation changes ASBEs
Instruments
31 December 2017 Reclassified Remeasured 1 January 2018
Available-for-sale
13,685,760.00 - - (13,685,760.00) - -
financial assets
Other equity
- - - 13,685,760.00 - 13,685,760.00
investment
Notes receivable 1,504,194,764.08 - - - (1,504,194,764.08) -
Trade receivables 7,589,412,679.88 - - - (7,589,412,679.88) -
Notes receivable
and trade - - - - 9,093,607,443.96 9,093,607,443.96
receivables
Other receivables 657,871,058.54 - - - 61,441.11 657,932,499.65
Interest receivable 61,441.11 - - - (61,441.11)
Notes payable 2,732,437,828.42 - - - (2,732,437,828.42) -
Trade payables 6,144,221,000.10 - - - (6,144,221,000.10) -
Notes payable and
- - - - 8,876,658,828.52 8,876,658,828.52
trade payables
Interest payable 7,311,819.65 - - - (7,311,819.65) -
Dividend payable 11,889,443.11 - - - (11,889,443.11) -
Other payables 1,011,128,397.26 - - - 19,201,262.76 1,030,329,660.02
Advances from
216,938,239.32 (216,938,239.32) - - - -
customers
Contract liabilities - 216,938,239.32 - - - 216,938,239.32
Special accounts
800,000.00 - - - (800,000.00) -
payable
Long term payables 9,332,537.14 - - - 800,000.00 10,132,537.14
174
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary of significant accounting policies and accounting estimates (Continued)
34.Significant accounting judgements and estimates (Continued)
Changes in accounting policies (Continued)
The main impact of the retroactive adjustments resulting from the above changes in accounting
policies on the financial statements are as follows:
The Company
2018
Impact of
Impact of other
Carrying value Impact of new ASBEs on new Carrying value
financial statement
presented under Revenue ASBEs on presented under
presentation
previous ASBEs Financial new ASBEs
changes
Instrument
31 December 2017 Reclassified Remeasured 1 January 2018
Notes receivable 64,799,618.07 - - - (64,799,618.07) -
Trade receivables 480,467,760.92 - - - (480,467,760.92) -
Notes receivable
and trade - - - - 545,267,378.99 545,267,378.99
receivables
Other receivables 1,516,037,945.71 - - - 1,844,294.10 1,517,882,239.81
Interest
1,844,294.10 - - - (1,844,294.10) -
receivable
Notes payable 239,563,961.30 - - - (239,563,961.30) -
Trade payables 434,886,685.35 - - - (434,886,685.35) -
Notes payable
and trade - - - - 674,450,646.65 674,450,646.65
payables
Interest payable 669,533.78 - - - (669,533.78)
Other payables 1,415,053,655.18 - - - 669,533.78 1,415,723,188.96
Advances from
1,912,503.90 (1,912,503.90) - - - -
customers
Contract liabilities - 1,912,503.90 - - - 1,912,503.90
Special accounts
800,000.00 - - - (800,000.00) -
payable
Long term
- - - - 800,000.00 800,000.00
payables
175
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(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 10%,15%,20% or 25%
Taxable value added amount (Tax
payable is calculated using the
taxable sales amount multiplied by the
effective tax rate less deductible VAT 0%,3%,5%,6%,10%,11%,16%
Value-added tax (“VAT”) input of the current period) or 17%
City maintenance and
construction tax Amount of VAT paid 5% or 7%
Educational surcharge Amount of VAT paid 3%
Local educational
surcharge Amount of VAT paid 2%
2. Tax preferences
In 2011, the Urumqi Head Office, Changji Branch and Karamay Branch of Sinopharm Holding
Xinjiang New & Special Medicines Chain Store Co., Ltd. (“Xinjiang New & Special Medicines”),
subsidiaries 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.
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%.
In 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.
In 2016, 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 2017 and 2018.
176
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(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 2017 and 2018, 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., and Sinopharm Holding Guoda Hulunbuir Co., Ltd, subsidiaries of the Group, were 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%.
In 2018, the Group’s subsidiaries Sinopharm Baiyi Pharmacy Guangxi Co., Ltd, (“Baiyi Pharmacy”)
Shanghai ForMe Xuhui Pharmacy Co., Ltd, (“ForMe Xuhui”), Sinopharm Guoda Drug Store Guangxi
Chain 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%.
177
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements
1. Cash and bank balances
31 December 2018 31 December 2017
Cash on hand 5,587,191.18 6,208,674.32
Cash at banks 7,626,529,829.59 3,667,290,017.16
Other cash balances 457,664,283.79 518,156,747.03
- Deposits for letters of credit 4,191,246.00 258,800.00
- Deposits for bank acceptance
notes 453,473,037.79 514,638,979.04
-Term deposits longer than 3
months - 3,258,967.99
8,089,781,304.56 4,191,655,438.51
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 the respective deposit
rates.
2. Notes receivable and trade receivables
31 December 2018 31 December 2017
Notes receivable 1,357,311,929.63 1,504,194,764.08
Trade receivables 9,336,861,647.92 7,589,412,679.88
10,694,173,577.55 9,093,607,443.96
Notes receivable
31 December 2018 31 December 2017
Trade acceptance notes 789,536,654.23 919,982,854.86
Bank acceptance notes 567,775,275.40 584,211,909.22
1,357,311,929.63 1,504,194,764.08
At 31 December 2018 and 2017, there were no notes receivable that were pledged.
178
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
2.Notes receivable and trade receivables (Continued)
Notes receivable endorsed or discounted by the Group to other parties which were not yet due at 31
December 2018 and 31 December 2017 are as follows:
31 December 2018 31 December 2017
Derecognized Not Derecognized Derecognized Not Derecognized
Trade acceptance
notes - 170,314,843.11 - 147,715,527.67
Bank acceptance
notes 1,273,262,524.19 - 1,034,911,970.56 -
1,273,262,524.19 170,314,843.11 1,034,911,970.56 147,715,527.67
As at 31 December 2018 and 31 December 2017, notes that were converted into trade receivables
due to the drawer’s inability to settle the notes on the maturity date are as follows:
31 December 2018 31 December 2017
Trade acceptance notes - -
Bank acceptance notes 50,000.00 1,050,000.00
50,000.00 1,050,000.00
Trade receivables
The credit period for trade receivables normally ranges from 0 to 90 days. Trade receivables are
interest-free.
The aging analysis of trade receivables was as follows:
31 December 2018 31 December 2017
Within 1 year 9,339,491,654.21 7,596,940,582.26
1 to 2 years 15,786,120.79 11,209,568.89
2 to 3 years 4,825,981.07 6,610,561.90
Over 3 years 16,279,326.59 18,577,432.24
Less: Bad debt provision for trade receivables (39,521,434.74) (43,925,465.41)
9,336,861,647.92 7,589,412,679.88
179
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
2.Notes receivable and trade receivables (Continued)
Changes in provision for bad debts are presented as follows:
Reversal of write-
Opening Increases in Reversal in Written off in Increases in Closing
off in previous
balance the year the year the year merger balance
years
2018 43,925,465.41 12,467,357.34 (16,899,781.64) (192,637.72) 221,031.35 - 39,521,434.74
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
The carrying amount of trade receivables that affected the changes in provision this year is as
follows:
31 December 2018
Carrying amount Bad debt provisions
Amount Porportion Amount Porportion
Items for which provision for bad
debt is recognised separately 595,919,487.29 6.36% (16,766,679.23) 2.81%
Items for which provision for bad
debt is recognized by group
(credit risk characteristics) 8,780,463,595.37 93.64% (22,754,755.51) 0.26%
9,376,383,082.66 100.00% (39,521,434.74) 0.42%
31 December 2017
Carrying amount Bad debt provisions
Amount Proportion Amount Proportion
Individually significant items for
which provision for bad debt is
recognised separately 497,346,019.41 6.52% (11,968,509.21) 2.41%
Items for which provision for bad
debt is recognized by group (aging) 7,106,178,799.93 93.09% (26,069,970.29) 0.37%
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%
7,633,338,145.29 100.00% (43,925,465.41) 0.58%
180
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
2. Notes receivable and trade receivables (Continued)
At 31 December 2018, trade receivables that are individually significant and individually assessed for provisions are as
follows:
Expected
Credit Loss
Carrying amount Bad debt provision Rate Assessment for impairment
Part of the medical insurance
Receivable of medical receivable takes longer to
insurance 380,933,117.06 (605,476.95) 0.16% collect, and has risk of default
Disputed receivable with higher
risk of recoverability which is
Client A 11,559,178.29 (11,559,178.29) 100.00% related to a lawsuit
Part of it takes longer than
usual to recover, has risk of
Others 203,427,191.94 (4,602,023.99) 2.26% recoverability
595,919,487.29 (16,766,679.23)
At 31 December 2017, trade receivables that were individually significant and individually assessed for provisions are as
follows:
Carrying amount Bad debt provision Proportion Assessment for impairment
Part of the medical insurance
Receivable of medical receivable takes longer to
insurance 376,673,766.03 (409,330.92) 0.11% collect, and has risk of default
Disputed receivable with higher
risk of recoverability which is
Client A 11,559,178.29 (11,559,178.29) 100.00% related to a lawsuit
Others 109,113,075.09 - 0.00%
497,346,019.41 (11,968,509.21)
181
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
2. Notes receivable and trade receivables (Continued)
The trade receivables for which the Group recognized provision for bad debts using the aging analysis method are
presented as follows:
31 December 2018 31 December 2017
Expected credit
Estimated default Expected loss in entire Bad debt
amount credit loss rate lifetime Carrying amount Proportion provision amount
Within 1 year 8,763,673,896.90 0.25% (21,544,996.66) 7,088,092,789.69 0.34% (24,063,211.70)
1 to 2 years 10,195,222.35 4.83% (492,440.38) 10,321,375.35 6.07% (626,604.64)
2 to 3 years 3,462,472.01 8.53% (295,199.01) 5,727,610.07 11.34% (649,478.42)
Over 3 years 3,132,004.11 13.48% (422,119.46) 2,037,024.82 35.87% (730,675.53)
8,780,463,595.37 (22,754,755.51) 7,106,178,799.93 (26,069,970.29)
The provision for bad debts amounted to RMB12,467,357.34 in 2018 (2017: RMB4,082,799.01), including
RMB16,899,781.64 which was recovered or reversed (2017: RMB7,765,994.96). Important recovered or reversed bad debt
items in 2018 are listed below:
Reason for recoverability or Original assessment for Recovered or Method of
reversal impairment reversed amount recovery
Client A Amount received Uncertainty in recovery 4,083,065.20 Amount received
Client B Amount received Uncertainty in recovery 93,140.50 Amount received
Client C Amount received Uncertainty in recovery 54,698.00 Amount received
Client D Amount received Uncertainty in recovery 54,437.96 Amount received
4,285,341.66
Important recovered or reversed bad debt items in 2017 are listed below:
Reason for recoverability or Original assessment for Recovered or Method of
reversal impairment reversed amount recovery
Client A Amount received Uncertainty in recovery 957,838.00 Amount received
Client B Amount received Uncertainty in recovery 159,730.03 Amount received
Client C Amount received Uncertainty in recovery 155,544.00 Amount received
Client D Amount received Uncertainty in recovery 51,578.76 Amount received
Client E Amount received Uncertainty in recovery 45,662.60 Amount received
Client F Amount received Uncertainty in recovery 23,626.80 Amount received
Client G Amount received Uncertainty in recovery 20,270.88 Amount received
Client H Amount received Uncertainty in recovery 934.68 Amount received
1,415,185.75
182
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
2. Notes receivable and trade receivables (Continued)
Trade receivables written off in 2018 are RMB192,637.72 (2017: RMB2,279,035.42)
Trade receivables written off in 2018 are analysed below:
Nature of the receivable Amount Reason Related party transaction or not
Client A Loan 120,418.94 Non-recoverable No
Client B Loan 43,646.94 Non-recoverable No
Client C Loan 28,571.84 Non-recoverable No
192,637.72
Trade receivables written off in 2017 are analysed below:
Nature of the receivable Amount Reason Related party transaction or not
Client A Loan 842,239.94 Non-recoverable No
Client B Loan 527,602.17 Non-recoverable No
Client C Loan 316,991.77 Non-recoverable No
Client D Loan 240,952.87 Non-recoverable No
Client E Loan 189,718.74 Non-recoverable No
Client F Loan 161,529.93 Non-recoverable No
2,279,035.42
183
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
2. Notes receivable and trade receivables (Continued)
In 2018, the Group factored a small portion of trade receivables at amortised cost to financial
institutions. The amount of trade receivables derecognized was RMB3,665,602,250.53, amount of
loss recognized through financial expense was RMB54,238,639.16.
As at 31 December 2018, the top five trade receivables by customer are summarised below:
Bad debt provision % of the total trade
Amount amount receivables
Top 1 Account receivable 153,684,242.23 (151,473.45) 1.64%
Top 2 Account receivable 150,595,649.56 (1,204,596.60) 1.61%
Top 3 Account receivable 138,844,133.79 (75,576.22) 1.48%
Top 4 Account receivable 136,286,804.49 (265,259.53) 1.45%
Top 5 Account receivable 130,575,790.77 (56,042.86) 1.39%
709,986,620.84 (1,752,948.66) 7.57%
As at 31 December 2017, the top five trade receivables by customer are summarised below:
Bad debt provision % of the total trade
Amount amount receivables
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%
Refer to Note VIII (2) for details of transfer of account receivable.
184
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
3. Advances to suppliers
The aging of advances to suppliers is analyzed below:
31 December 2018 31 December 2017
Amount % of total balance Amount % of total balance
Within 1 year 580,144,340.20 99.43 507,613,407.19 98.23
1 to 2 years 873,351.85 0.15 7,410,774.78 1.43
2 to 3 years 2,466,823.90 0.42 1,753,935.50 0.34
583,484,515.95 100.00 516,778,117.47 100.00
As at 31 December 2018, the top five advances to suppliers by customer are summarized below:
Amount Proportion of total balance
Total amount of top five advances to
suppliers 119,855,873.09 20.54%
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%
185
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
4. Other receivables
31 December 2018 31 December 2017
Interest receivable 8,223,327.64 61,441.11
Other receivables 635,270,031.68 657,871,058.54
643,493,359.32 657,932,499.65
Interest receivable
31 December 2018 31 December 2017
Deposits 6,376,708.68 -
Entrusted borrowings 1,846,618.96 61,441.11
8,223,327.64 61,441.11
There was no interest receivable past due this year.
The aging of other receivables is analysed below:
31 December 2018 31 December 2017
Within 1 year 607,856,882.60 576,668,922.77
1 to 2 years 18,452,286.18 68,108,108.36
2 to 3 years 9,357,373.34 6,007,299.87
Above 3 years 19,525,443.28 22,197,777.41
Less: Bad debt provision for other receivables (19,921,953.72) (15,111,049.87)
635,270,031.68 657,871,058.54
186
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
4. Other receivables (Continued)
The changes in bad debt provision for other receivables based on the entire lifetime expected credit
losses are as follows:
Entire lifetime expected Entire lifetime expected Total
credit losses credit losses
(Individually assessed) (Collectively assessed)
Balance at 1 January 2018 12,328,337.26 2,782,712.61 15,111,049.87
Balance at 1 January 2018 during the period - - -
--Transfer to the Stage 2 - - -
--Transfer to the Stage 3 - - -
--Reverse to the Stage 2 - - -
--Reverse to the Stage 1 - - -
Provisions during the period 5,539,406.43 1,601,047.86 7,140,454.29
Reversal during the period (1,015,750.00) (1,393,800.44) (2,409,550.44)
Write-back during the period - - -
Write-off during the period - - -
Addition due to combination 80,000.00 - 80,000.00
16,931,993.69 2,989,960.03 19,921,953.72
187
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
4. Other receivables (Continued)
Other receivables and related provision for bad debts by category are analyzed below:
31 December 2017
Carrying amount Bad debt provision
Amount Proportion Amount Proportion
Individually significant and subject to separate
impairment assessment 355,636,071.62 52.84% (8,980,000.00) 2.53%
Receivable accounts with similar credit risk 282,169,420.65 41.93% (2,782,712.61) 0.99%
Individually not significant but individually evaluated
for impairment 35,176,616.14 5.23% (3,348,337.26) 9.52%
672,982,108.41 100.00% (15,111,049.87) 2.25%
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
(“Shyndec 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 an 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%
Provisions for impairment of the receivables which are within a similar risk group are analysed below:
31 December 2017
Carrying amount Bad debt provision
Amount Amount Proportion
Within 1 year 278,135,696.76 (2,337,600.82) 0.84%
1 to 2 years 2,996,168.28 (283,981.67) 9.48%
2 to 3 years 540,157.10 (65,650.42) 12.15%
Above 3 years 497,398.51 (95,479.70) 19.20%
282,169,420.65 (2,782,712.61) 0.99%
The bad debt provision of other receivables in 2018 was RMB7,140,454.29 (2017: RMB1,573,179.19), with the recovered
or reversed amount of RMB2,409,550.44 (2017: RMB961,091.24).
There were no other receivables written off in the current year (2017: RMB4,782,641.29).
188
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
4. Other receivables (Continued)
Category of other receivables by nature is as follows:
31 December 2018 31 December 2017
Deposits 278,455,623.30 226,111,186.83
Receivable of the pharmaceutical electronic
trading platform 83,826,127.02 72,165,043.07
Receivable of price reduction compensation for
DTP medicine 81,530,445.19 114,118,962.20
Entrusted borrowings 44,000,000.00 44,000,000.00
Receivable of purchasing rebates 18,138,354.03 14,489,390.94
Petty cash advance to employees 12,439,613.27 13,392,873.34
Receivable of equity transactions 8,980,000.00 8,980,000.00
Receivable due from related parties 8,119,399.79 127,922,489.88
Others 119,702,422.80 51,802,162.15
655,191,985.40 672,982,108.41
Less: Provision for bad debts (19,921,953.72) (15,111,049.87)
635,270,031.68 657,871,058.54
189
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
4. Other receivables (Continued)
As at 31 December 2018, the top 5 parties that owed the largest amounts of other receivable
balances are analysed below:
% of total Provision of
Nature Amount Age amount bad debts
Guangdong Pharmaceutical Pharmaceutical trading
electronic trading platform repayment not
platform yet cleared 83,826,127.02 Within 1 year 12.79% -
Sinopharm Group Zhijun
(Suzhou)
Pharmaceutical Co., Entrusted borrowings
Ltd. (“Zhijun Suzhou”) 44,000,000.00 Within 1 year 6.72% -
TCM-Integrated Cancer Deposit of logistics
Center of Southern extension services
Medical University project 30,000,000.00 Within 2 years 4.58% -
Price reduction
AstraZeneca (Wuxi) Trading compensation for DTP
Co., Ltd. medicine 22,811,275.77 Within 1 year 3.48% -
Taiyuan Medical Insurance
Management Service Medical Insurance
Center Guarantee Deposit 19,681,824.13 Within 1 year 3.00% -
200,319,226.92 30.57% -
As at 31 December 2017, the top 5 parties that owed the largest amounts of other receivable
balances are analysed below:
% of total Provision of
Nature Amount Age amount bad debts
Payment of Pinshan
Shyndec Pharma project 125,181,658.92 Within 2 years 18.60% -
Guangdong Pharmaceutical Pharmaceutical trading
electronic trading platform repayment not
platform yet cleared 72,165,043.07 Within 1 year 10.72% -
Shanghai Roche Price reduction
Pharmaceutical Co., compensation for DTP
Ltd. medicine 61,253,240.02 Within 1 year 9.10% -
Zhijun Suzhou Entrusted borrowings 44,000,000.00 Within 1 year 6.54% -
TCM-Integrated Cancer Deposit of logistics
Center of Southern extension services
Medical University project 30,000,000.00 Within 1 year 4.46% -
332,599,942.01 49.42% -
190
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
5. Inventories
Inventories by category are analyzed below:
31 December 2018 31 December 2017
Book value Provision Net book value Book value Provision Net book value
Raw materials 1,410,012.28 - 1,410,012.28 1,181,095.08 - 1,181,095.08
Finished goods 4,392,144,746.88 (8,313,195.29) 4,383,831,551.59 3,785,146,957.42 (6,840,110.55) 3,778,306,846.87
Work in progress 1,011,007.23 - 1,011,007.23 129,098.02 - 129,098.02
Low cost consumables 3,083,371.09 - 3,083,371.09 2,241,198.15 - 2,241,198.15
4,397,649,137.48 (8,313,195.29) 4,389,335,942.19 3,788,698,348.67 (6,840,110.55) 3,781,858,238.12
Provision for inventories is analysed below:
Decreases
1 January 2018 Increases 31 December 2018
Reversal Charge-off
Finished goods 6,840,110.55 5,422,984.90 (2,678,379.54) (1,271,520.62) 8,313,195.29
Increases Decreases
Increase due to
1 January 2017 Current reorganization 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
6. Other current assets
31 December 2018 31 December 2017
VAT tax credit 94,312,573.34 78,014,460.84
Corporate income tax to be deducted 723,000.46 933,183.78
Other 312,055.38 -
95,347,629.18 78,947,644.62
191
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
7. Financial assets available-for-sale (Only applicable for 2017)
31 December 2017
Available-for-sale equity instruments
---Measured at cost 13,865,760.00
Less: impairment provision (180,000.00)
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 appointed the
directors and key management for those 5 companies, nor involved in or affected 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 shall be 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 the 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 2018 and 31 December 2017, 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
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.
192
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
7. Available-for-sale financial assets (Only applicable for 2017) (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
193
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
8. Long-term equity investments
Associates in 2018
Changes in the year Provision for
31 December 2018
impairment
Investee 1 January 2018 Cash dividend Others
Additional Profit or loss under Other changes in
Investment equity method equity declared by
investee
Shenzhen Main Luck Pharmaceutical Inc. (“Main Luck Pharmaceutical”). (a)
239,046,738.14 - 79,054,915.54 - (52,785,000.00) - 265,316,653.68 -
Shanghai Beiyi Guoda Pharmaceutical Co. Ltd. (“Shanghai Beiyi”) (c) 9,518,694.65 - 1,511,223.45 - - - 11,029,918.10 -
Shanghai Liyi Pharmacy Co., Ltd. (“Shanghai Liyi”) (d) 771,408.05 - 184,020.18 - - - 955,428.23 -
Dongyuan Accord Pharmaceutical Chain Co., Ltd. (“Dongyuan Accord”) (e) 396,638.32 - - - - - - (396,638.32)
Sinopharm Jienuo Medical Treatment Service Guangdong Co., Ltd. (“Guangdong
Jienuo”) (f) 8,502,884.50 - (1,700,728.31) - - - 6,802,156.19 -
Zhijun Suzhou (g) 46,199,728.91 (22,820,709.99) - 23,379,018.92 -
Zhijun Medicine (h) 291,042,921.20 - 122,421,529.52 - (58,111,254.57) - 355,353,196.15
Zhijun Trade (h) 7,676,142.69 - 1,719,647.21 - (664,795.03) - 8,730,994.87 -
Pingshan Medicine (h) 68,686,804.33 - 27,325,603.71 - (9,719,480.71) - 86,292,927.33 -
Shyndec Pharma (h) 979,174,050.62 - 108,241,749.04 19,599,266.75 (8,448,213.90) - 1,098,566,852.51 -
Shanghai Dingqun (i) - 20,000,000.00 3,966,640.12 - - 23,966,640.12 -
1,651,016,011.41 20,000,000.00 319,903,890.47 19,599,266.75 (129,728,744.21) - 1,880,393,786.10 (396,638.32)
194
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
8. Long-term equity investments (Continued)
Associates in 2017
Changes in the year Provision for
31 December 2017
impairment
Investee 1 January 2017 Cash dividend Others
Additional Profit or loss under Other changes in
declared by
Investment equity method equity
investee
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 (c) -
8,980,086.48 - 1,544,808.17 - (1,006,200.00) 9,518,694.65 -
Shanghai Liyi (d) 642,479.69 - 128,928.36 - - - 771,408.05 -
Dongyuan Accord (f) 396,638.32 - - - - - - (396,638.32)
Guangdong Jienuo (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 -
Shyndec 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) 1,650,619,373.09 (396,638.32)
195
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
8. Long-term equity investments (Continued)
(a) On 4 July 1990, the Group jointly established Main Luck Pharmaceutical with Mercian Kabushiki
Kaisha and Main Life Co., Ltd., subscribing 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 a 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.
(c) On 26 July 1994, the Group jointly established Shanghai Beiyi with Shanghai Beiyi (Group) Co.,
Ltd. and eight natural persons including Fuchun Zhu, with the share percentages being 26%, 26%
and 48%, respectively. According to the Articles of Association, the board of directors of Shanghai
Beiyi 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 and
thus it was considered as an associate of the Group.
(d) On 25 November 2003, the Group jointly established Shanghai Liyi with Shanghai Pudong District
Central Hospital and Shanghai Liyi Technology Co., Ltd., with the share percentages being 35%,
35% and 30%, respectively. According to the Articles of Association, the board of directors of
Shanghai Liyi 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 and thus
it was considered as an associate of the Group.
196
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
8. Long-term equity investments (Continued)
(e) In 2007, Dongyuan Accord, 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.
(f) 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.,
with 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 has
significant influence over Guangdong Jienuo, and thus it is considered as an associate of the
Group.
(g) The Group disposed of its 67% equity interest of Zhijun Suzhou in April 2016. After the disposal,
the Group held a 33% equity interest of Zhijun Suzhou. According to the Articles of Association,
the board of directors of Zhijun Suzhou was composed of five directors, one of whom was
appointed by the Group, accounting for 20% of voting rights. As a result, the Group has
significant influence over Zhijun Suzhou, and thus it is considered as an associate of the Group.
(h) The Group subscribed 15.56% of new issued shares of Shyndec Pharma, 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 in 2016, respectively. After the completion of the reorganization, Shyndec Pharma 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 Pharma. Since Shyndec Pharma acquired
the shares of subsidiaries with share-based payment in previous years, as at 31 December 2018,
the Group held 16.28% equity interest of Shyndec Pharma. Shyndec Pharma 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 Pharma. The above three pharmaceutical companies and Shyndec Pharma are
considered as associates of the Group.
(i) On May 2018, the Group jointly established Shanghai Dingqun with Ningbo Meishan bonded port
area Qiling equity investment center LP, subscribing 2.53% and 97.47% shareholdings,
respectively. According to the Articles of Association, the board of directors of Shanghai Dingqun
consisted of three directors and one of them was appointed by our Company. Each director shall
represent one vote on the board’s decisions, which shall be adopted if they are voted for by a
simple majority of all the members of the board. Therefore, the Group has significant influence
over Shanghai Dingqun, and thus it is considered as an associate of the Group.
197
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
9. Other equity instrument investment (Only applicable for 2018)
2018
Costs Accumulated Fair value Dividend income for the current year
changes in fair Equity Equity
value of other instruments instruments
comprehensive terminated held
income in the in the current
current year year
Sinopharm Health -
Online Co., Ltd. 12,000,000.00 - 12,000,000.00 -
Sinopharm Guoda -
Hubei Co., Ltd. 1,000,000.00 - 1,000,000.00 -
Hunan Zhongbai -
Pharmaceutical
Investment Co.,
Ltd. 315,000.00 - 315,000.00 31,500.00
Shanghai Guoda -
Shuguang
Pharmacy Co.,
Ltd 270,760.00 - 270,760.00 50,000.00
Shanghai Guoren -
Pharmacy Co.,
Ltd. 100,000.00 - 100,000.00 437,919.36
Xinxiang Golden
Elephant 180,000.00 - - - -
13,865,760.00 - 13,685,760.00 - 519,419.36
The Group considers to manage the above-said financial asset business model and respective
characteristics of contract cash flows, and designate the above non-trading equity instrument to be
measured at fair value through other comprehensive income.
198
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
10. Other non-current financial assets (Only applicable for 2018)
31 December 2018
Financial asset at fair value through current profit or loss
140,000,000.00
140,000,000.00
As at 31 December 2018, the balance of other non-current financial asset is the fair value for
Sinopharm Zhongjin medical industry fund (“industry fund”) that the Group had subscribed. The
total investment which amounted to RMB200 million, will be paid by 3 payments. In 2017, the
Group made the first payment in the amount of RMB60 million. However, as of 31 December 2017,
the fund had neither obtained all the related licenses and approval documentations, nor started
operating, therefore, the first payment amounting to RMB60 million was designated as other non-
current asset. In 2018, the Group made the second payment in the amount of RMB80 million. As at
31 December 2018, the Group has made payments accumulated to RMB140 million. The total
amount paid this year was 30% of the total investment which was RMB60 million. The industry
fund has obtained all the related licenses and approval documentations in 2018, also started
operating. The Group has reclassified this investment as a financial asset at fair value though profit
or loss, and other non-current financial asset for presentation.
199
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(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:
2018 Buildings and
constructions Land use rights Total
Original cost
Opening balance 245,932,518.64 23,370,084.72 269,302,603.36
Purchase 45,481.13 - 45,481.13
Transfer from fixed assets 5,087,242.78 - 5,087,242.78
Transfer to intangible assets - (650,982.69) (650,982.69)
Transfer to fixed assets (8,510,052.64) - (8,510,052.64)
Closing balance 242,555,189.91 22,719,102.03 265,274,291.94
Accumulated
depreciation and
amortization
Opening balance (106,139,314.25) (8,184,950.00) (114,324,264.25)
Provision (7,035,240.17) (75,098.69) (7,110,338.86)
Transfer from fixed assets (1,480,401.05) - (1,480,401.05)
Transfer to intangible assets - 311,418.93 311,418.93
Transfer to fixed assets 3,523,789.26 - 3,523,789.26
Closing balance (111,131,166.21) (7,948,629.76) (119,079,795.97)
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 130,124,023.70 14,770,472.27 144,894,495.97
At beginning of the year 138,493,204.39 15,185,134.72 153,678,339.11
200
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(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:
2017 Buildings and
constructions Land use rights 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
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
201
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
11. Investment properties (Continued)
During 2018, depreciation of investment properties was RMB7,110,338.86 (2017:
RMB8,733,477.11).
During 2018, properties with a carrying amount of RMB3,606,841.73 (original value:
RMB5,087,242.78, accumulated depreciation: RMB1,480,401.05) was leased out to a third party in
the form of operating lease. Since the date of change in purpose, it was transferred from fixed
asset to investment properties.
During 2018, a property with a carrying amount of RMB4,986,263.38 (original value of a building:
RMB8,510,052.64, accumulated depreciation: RMB3,523,789.26) and land use rights with a
carrying amount of RMB339,563.76 (original value of exclusive distribution rights: RMB650,982.69,
accumulated depreciation: RMB311,418.93) transferred to an owner-occupied property. From the
date of transfer, the property and land use rights were reclassified as fixed assets and intangible
assets.
As at 31 December 2018, there were no investment properties of which the certificates of title have
not been obtained.
202
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
12. Fixed assets
31 December 2018 31 December 2017
Fixed assets 607,933,827.67 551,710,434.02
2018
Machinery and Leasehold
Buildings Motor Vehicles Other equipment Total
equipment improvements
Original cost
Opening 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
Purchase 33,284,634.30 23,347,438.62 10,265,993.33 41,281,602.46 24,790,021.29 132,969,690.00
Transfer from construction in progress 416,909.49 3,060,420.86 - 2,286,152.37 6,595,411.97 12,358,894.69
Transfer from investment properties 8,510,052.64 - - - - 8,510,052.64
Business combination not involving enterprises under common control - - 102,931.29 99,584.93 1,250.05 203,766.27
Transfer to investment properties (5,087,242.78) - - - - (5,087,242.78)
Disposal of subsidiaries - - (151,443.00) - (244,344.76) (395,787.76)
Disposal or retirement (3,624,696.04) (2,705,694.05) (8,603,972.05) (5,656,536.47) (6,591,972.59) (27,182,871.20)
Closing balance 489,661,268.82 207,454,736.57 89,613,300.13 297,292,388.70 54,661,564.43 1,138,683,258.65
Accumulated depreciation
Opening 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)
Provision (15,341,234.41) (22,747,402.07) (7,596,679.69) (23,835,198.48) (15,155,803.18) (84,676,317.83)
Transfer from investment properties (3,523,789.26) - - - - (3,523,789.26)
Transfer to investment properties 1,480,401.05 - - - - 1,480,401.05
- - 151,443.00 3,826.90 235,829.86 391,099.76
Disposal or retirement 2,026,936.72 1,706,685.96 7,143,745.42 4,778,544.36 5,519,585.61 21,175,498.07
Closing balance (164,477,441.12) (94,641,783.44) (59,523,264.14) (173,741,971.45) (38,364,970.83) (530,749,430.98)
203
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
12. Fixed assets (Continued)
2018 (Continued)
Machinery and Leasehold
Buildings Motor Vehicles Other equipment Total
equipment improvements
Provision for impairment
Opening balance - - - - - -
Disposal of subsidiaries - - - - - -
Closing balance - - - - - -
Carrying amount
At end of year 325,183,827.70 112,812,953.13 30,090,035.99 123,550,417.25 16,296,593.60 607,933,827.67
At beginning of the 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
204
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
12. Fixed assets (Continued)
2017
Machinery and Leasehold
Buildings Motor Vehicles Other equipment Total
equipment 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)
205
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
12. Fixed assets (Continued)
2017 (Continued)
Machinery and Leasehold
Buildings Motor Vehicles Other equipment Total
equipment 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
206
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(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:
2018
Original cost Accumulated depreciation Provision for impairment Carrying amount
Machinery 22,010,632.48 (9,556,042.13) - 12,454,590.35
Other equipment 2,716,485.81 (1,305,222.40) - 1,411,263.41
24,727,118.29 (10,861,264.53) - 13,865,853.76
2017
Original cost Accumulated depreciation Provision for impairment Carrying amount
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 an operation lease are presented as follows:
2018 2017
Machinery equipment - 120,700.00
Others - 197,130.80
- 317,830.80
As at 31 December 2018, the fixed asset falling to accomplish certification of title are presented as follows:
Book value Reason for not obtaining certification of title
As at 31 December 2018, the Company has not yet obtained the
certification of title for No.13 Jingxing North Street, Tiexi District,
Houses and buildings 28,356,440.00 Shenyang. The transferor, State-owned Assets Supervision and
Administration Commission was still processing the case and had
provided relevant certification.
As at 31 December 2018, there were no fixed assets that were temporarily idle.
207
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
13. Construction in progress
31 December 2018 31 December 2017
Construction in progress 36,412,614.61 22,947,258.99
31 December 2018 31 December 2017
Carrying balance Impairment Carrying amount Carrying balance Impairment Carrying amount
Warehouse improvement project 806,272.40 - 806,272.40 1,009,314.93 - 1,009,314.93
New office building project 188,251.26 - 188,251.26 765,882.63 - 765,882.63
Supply chain extension project 12,617,953.89 - 12,617,953.89 8,193,935.70 - 8,193,935.70
Software project 12,930,498.53 - 12,930,498.53 3,926,271.33 - 3,926,271.33
Other projects 9,869,638.53 - 9,869,638.53 9,051,854.40 - 9,051,854.40
36,412,614.61 - 36,412,614.61 22,947,258.99 - 22,947,258.99
208
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(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 in 2018 are presented as follows:
Proportion
of
Decrease At end of year Source of funds investment
At beginning of to budget
Project name Increase
the year (%)
Transferred Transferred to
Transferred to to intangible long term
fixed assets assets prepaid expense
Warehouse improvement project 1,009,314.93 9,284,604.35 - - (9,487,646.88) 806,272.40 Self-raised funds 65.94
New office building project 765,882.63 146,970.43 (724,601.80) - - 188,251.26 Self-raised funds 100.00
Supply chain extension project 8,193,935.70 16,374,550.40 (11,634,292.89) (316,239.32) - 12,617,953.89 Self-raised funds 66.56
Software project 3,926,271.33 9,004,227.20 - - - 12,930,498.53 Self-raised funds 54.98
Other construction projects 9,051,854.40 1,508,407.48 - - (690,623.35) 9,869,638.53 Self-raised funds 5.23
22,947,258.99 36,318,759.86 (12,358,894.69) (316,239.32) (10,178,270.23) 36,412,614.61
100
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(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 in 2018 are presented as follows: （Continued）
Incl: interest
Accumulated amount of Capitalization
Project name Budget Progress (%) capitalized in
interest capitalized rate (%)
current year
Warehouse improvement project 15,616,610.85 65.94 - - -
New office building project 1,224,601.80 100.00 - - -
Supply chain extension project 52,673,236.26 65.56 - - -
Software project 12,956,849.38 54.98 - - -
Other construction projects 207,178,844.09 5.23 - - -
- -
210
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(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 in 2017 are presented as follows:
Proportion
of
Decrease At end of year Source of funds investmen
At beginning t to budget
Project name Increase
of the year (%)
Transferred to Transferred to
Transferred to intangible long term
fixed assets assets prepaid expense
Warehouse improvement 14,044,783.6 (19,673,389.62 Self-raised
project 8 6,637,920.87 - - ) 1,009,314.93 funds 76.83
Self-raised
New office building project 7,979,356.35 2,028,688.98 (9,182,660.00) - (59,502.70) 765,882.63 funds 29.04
13,479,958.6 (10,156,764.88 Self-raised
Supply chain extension project 5,209,203.43 9 ) (338,461.54) - 8,193,935.70 funds 51.77
10,889,391.6 (15,592,801.89 Self-raised
Software project 7 8,629,681.55 - ) - 3,926,271.33 funds 30.00
Self-raised
Other construction projects 8,941,133.36 3,711,458.69 (409,363.69) (244,068.38) (2,947,305.58) 9,051,854.40 funds 6.20
47,063,868.4 34,487,708.7 (19,748,788.57 (16,175,331.81 (22,680,197.90 22,947,258.9
9 8 ) ) ) 9
211
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(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 in 2017 are presented as follows: （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 - - -
- - - -
212
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
14. Intangible assets
2018 Land use right Software Trademarks Favorable lease Sales network Franchise Total
Original cost
Opening 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
Purchase 2,160,172.00 16,310,053.09 - - - - 18,470,225.09
Business combination not involving
enterprises under common control - 7,754.51 - - - - 7,754.51
Transfer from construction in progress - 316,239.32 - - - - 316,239.32
Transfer from investment properties 650,982.69 - - - - - 650,982.69
Disposal or retirement (1,210,000.00) - - - - - (1,210,000.00)
Closing balance 62,083,143.97 142,762,856.28 65,977,850.00 93,242,000.00 112,117,142.86 710,000.00 476,892,993.11
Accumulated amortization
Opening 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)
Provision (910,378.56) (13,006,145.82) - (4,945,705.88) (5,605,857.15) - (24,468,087.41)
Transfer from investment properties (311,418.93) - - - - - (311,418.93)
Disposal or retirement - - - - - - -
Closing balance (27,889,638.96) (68,414,221.15) (196,850.16) (19,782,823.36) (40,692,333.33) (710,000.00) (157,685,866.96)
213
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
14. Intangible assets (Continued)
2018 (Continued) Land use right Software Trademarks Favorable lease Sales network Franchise Total
Provision for impairment
Opening balance - - - - - - -
Disposal of subsidiaries - - - - - - -
Closing balance - - - - - - -
Carrying amount
At end of the year 34,193,505.01 74,348,635.13 65,780,999.84 73,459,176.64 71,424,809.53 - 319,207,126.15
At beginning 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
214
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
14. Intangible assets (Continued)
2017 Land use right Software 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)
215
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
14. Intangible assets (Continued)
2017 (Continued) Land use right Software Trademarks Favorable 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
As at 31 December 2018 and 31 December 2017, no intangible assets were formed through internal research and development.
As at 31 December 2018 and 31 December 2017, there were no intangible assets of which the certificates of title have not been obtained.
216
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
15. Goodwill
Decrease
Increase during the year
Opening Closing
31 December 2018 Business combination not Consolidation by Consolidation
balance balance
involving enterprises merger by merger
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 Zhuhai 6,772,561.47 6,772,561.47
Sinopharm Holding Maoming Co., - -
Ltd.(“Sinopharm Maoming”) 66,417.07 - 66,417.07
Sinopharm Holding Guoda ForMe - -
Medicines (Shanghai) Co., Ltd.
( “ForMe Medicines”) 3,033,547.53 - 3,033,547.53
217
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
15. Goodwill (Continued)
Decrease during the
Increase Year
Closing
Opening balance Business combination Consolidation by Consolidation balance
not involving enterprises merger by merger
31 December 2018 (Continued) under common control
Pharmaceutical retail
Shijiazhuang Lerentang Yikang
Pharmacy Chain Store Co., Ltd.
(“Hebei Yikang”) 29,482,149.57 - -29,482,149.57
Sinopharm Hebei Lerentang
Pharmacy Chain Store Co., Ltd. - - 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 1,687,942.92 - - - 1,687,942.92
Pharmacy Chain
Sinopharm Holding Guoda Nanjing
Pharmacy Chain Store Co., Ltd. 11,598,341.12 - - - 11,598,341.12
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. 41,047,958.08 - - - 41,047,958.08
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 - 593,616.55 - 64,140,124.36
Beijing Yangqiao Rongzhi Golden
Elephant Pharmacy Company
Limited 593,616.55 - - -593,616.55 -
218
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
15. Goodwill (Continued)
Decrease during the
Increase Year
Opening balance Business combination Consolidation by Consolidation
not involving enterprises merger by merger Closing balance
31 December 2018 (Continued) under common control
Pharmaceutical retail(Continued)
Guoda Taishan 26,826,120.55 - - - 26,826,120.55
Sinopharm Guoda Taiyuan Tongxinli
Pharmacy Co., Ltd. (“Taiyuan
Tongxinli”) - 2,818,647.85 - - 2,818,647.85
855,729,152.75 2,818,647.85 30,075,766.12 (30,075,766.12) 858,547,800.60
Decrease during the
Increase Year
Business combination Consolidation by Consolidation Closing
31 December 2017 Opening balance
not involving merger by merger balance
enterprises under
common control
Pharmaceutical distribution
Sinopharm Jiangmen 27,392,317.73 - - - 27,392,317.73
Sinopharm Yanfeng 16,868,644.87 - - - 16,868,644.87
Sinopharm Zhaoqing 2,594,341.53 - - - 2,594,341.53
Sinopharm Shaoguan 1,686,496.80 - - - 1,686,496.80
Sinopharm Meizhou 1,610,819.66 - - - 1,610,819.66
Sinopharm Huizhou 923,184.67 - - - 923,184.67
Sinopharm Zhanjiang 282,135.55 - - - 282,135.55
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 Zhuhai - 6,772,561.47 - - 6,772,561.47
Sinopharm Maoming - 66,417.07 - - 66,417.07
ForMe Medicines 3,033,547.53 - - - 3,033,547.53
- -
Pharmaceutical retail - -
Hebei Yikang 29,482,149.57 - - - 29,482,149.57
Xiaoyi Wanmin 15,866,680.00 - - - 15,866,680.00
Shanxi Wanmin 65,025,000.00 - - - 65,025,000.00
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
Sinopharm Holding Guoda
Nanjing Pharmacy Chain
Store Co., Ltd. 11,598,341.12 - - - 11,598,341.12
219
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
15. Goodwill (Continued)
Decrease during the
Increase Year
Opening
31 December 2017 (Continued) Business combination not Consolidation Consolidation Closing balance
balance
involving enterprises by merger by merger
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
Guoda Shenyang Tianyitang Pharmacy Chain 1,687,942.92 - - (1,687,942.92) -
Sinopharm Holding Guoda Shenyang
Pharmacy Chain Store Co., Ltd. 39,360,015.16 - 1,687,942.92 - 41,047,958.08
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 1,687,942.92 (1,687,942.92) 855,729,152.75
220
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
15. Goodwill (Continued)
Changes in provision for impairment of goodwill are presented as follows:
2018 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.
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.
The carrying value of goodwill is apportioned according to the proportion of each CGU or CGU
group at fair value of the total amount of goodwill at fair value. It is shown as follows:
31 December 2018 31 December 2017
Pharmaceutical distribution 152,865,497.03 152,865,497.03
Pharmaceutical retail 680,682,303.57 677,863,655.72
833,547,800.60 830,729,152.75
The Group had acquired Taiyuan Tongxinli in November 2018, which formed goodwill amounting
to RMB2,818,647.85. Refer to Note VI (1) for more details.
221
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
15. Goodwill (Continued)
The recoverable amount of an asset group or a group of asset groups is determined based on a
financial budget approved by management covering a five-year period. 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 2018. Key assumptions made by management on projections of cash flows
used in impairment testing are described as follows:
Pharmaceutical
Pharmaceutical retail
distribution
Revenue growth rate in the budget period 2.00%-16.00% 1.99%-16.30%
Sustainable growth rate 3.00% 3.00%
Gross margin 4.40%-11.75% 16.00%-50.00%
Discount rate 12.80%-15.00% 13.20%-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.
222
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
16. Long-term prepaid expenses
2018 Opening balance Additions Amortization Other decrease Closing balance
Fixed asset improvement
expenditure 199,209,837.80 123,968,928.79 (72,027,492.28) (1,693,012.44) 249,458,261.87
Acquisition expenditure to
obtain the right to operate 49,013,331.48 24,687,711.48 (16,083,876.33) - 57,617,166.63
Others 4,023,881.51 1,973,696.15 (1,744,299.70) - 4,253,277.96
252,247,050.79 150,630,336.42 (89,855,668.31) (1,693,012.44) 311,328,706.46
2017 Opening balance Increase 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
223
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
17. Deferred tax assets/liabilities
Deferred tax assets before offsetting
31 December 2018 31 December 2017
Deductible temporary Deductible temporary
Deferred tax assets differences Deferred tax assets differences
Deductible tax loss 19,311,837.06 77,791,621.20 28,705,915.53 115,556,647.93
Provision for
impairment of
assets 15,676,020.10 68,153,222.07 16,274,860.36 66,273,264.15
Accrued payroll 15,656,015.32 64,598,625.74 14,540,506.81 60,250,524.89
Accrued expenses 22,301,617.95 94,108,769.33 11,141,862.66 47,994,796.55
Deferred revenue 7,547,758.26 30,188,142.13 7,540,824.20 30,837,426.91
Others 1,467,765.00 6,238,492.18 1,268,913.50 5,424,788.24
81,961,013.69 341,078,872.65 79,472,883.06 326,337,448.67
Deferred tax liabilities before offsetting
31 December 2018 31 December 2017
Deferred tax Taxable temporary Taxable temporary
liabilities differences Deferred tax liabilities differences
Fair value adjustment
for a business
combination not
involving enterprises
under common
control 56,975,086.34 227,900,345.39 59,943,324.20 239,773,296.84
Fixed asset less than
RMB5 million
deducted at once 6,691,590.04 26,766,360.08 - -
Changes in asset
valuation due to
change in company
policy 5,464,685.51 21,858,742.02 6,088,777.56 24,355,110.24
Others 5,520,603.73 26,741,840.89 5,851,151.26 28,945,491.07
74,651,965.62 303,267,288.38 71,883,253.02 293,073,898.15
Deferred tax assets and liabilities are presented after being offset against each other:
31 December 2018 31 December 2017
Deferred tax Temporary Deferred tax Temporary
assets/liabilities - differences assets/liabilities - differences
Net after set-off Net after set-off
Deferred tax assets 74,914,209.95 312,891,657.69 79,472,883.06 326,337,448.67
Deferred tax liabilities 67,605,161.88 275,080,073.42 71,883,253.02 293,073,898.15
224
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
17. Deferred tax assets/liabilities (Continued)
The deductible temporary differences and deductible losses that were not recognized as
deferred tax assets are presented as follows:
31 December 2018 31 December 2017
Deductible temporary differences 1,480,000.00 1,480,000.00
Deductible losses (Note) 29,391,422.33 21,759,547.45
30,871,422.33 23,239,547.45
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
RMB29,391,422.33 which are tax deductibles under the tax law.
The aforesaid unrecognized deductible losses will be due in:
31 December 2018 31 December 2017
2018 - 2,970,715.21
2019 2,864,062.85 3,159,690.78
2020 4,725,707.87 4,835,260.23
2021 2,563,056.08 2,641,220.49
2022 7,261,117.97 8,152,660.74
2023 11,977,477.56 -
29,391,422.33 21,759,547.45
225
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
18. Other non-current assets
31 December 2018 31 December 2017
Physical asset reserve specifically
authorized 47,576,273.75 45,074,249.27
Prepayment for a rental fee (i) 14,196,944.60 17,506,780.28
Prepayment for project and equipment 10,592,645.36 19,441,433.20
Prepayment for investment - 60,000,000.00
72,365,863.71 142,022,462.75
(i): The prepayment for a rental fee which is over one year is recognized as other non-current
asset of the Group.
19. Provision for impairment of assets
Reversal of Increases Decreases
write-off in 31 December
1 January 2018 Increase due to
previous Current Reversal Charge-off 2018
reorganization
years
Provision for bad debts 59,036,515.28 221,031.35 19,607,811.63 80,000.00 (19,309,332.08) (192,637.72) 59,443,388.46
Provision for bad debts of
trade receivables 43,925,465.41 221,031.35 12,467,357.34 - (16,899,781.64) (192,637.72) 39,521,434.74
Provision for bad debts of
other receivables 15,111,049.87 - 7,140,454.29 80,000.00 (2,409,550.44) - 19,921,953.72
Inventory provision 6,840,110.55 - 5,422,984.90 - (2,678,379.54) (1,271,520.62) 8,313,195.29
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
92,753,264.15 221,031.35 25,030,796.53 80,000.00 (21,987,711.62) (1,464,158.34) 94,633,222.07
226
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
19. Provision for impairment of assets (Continued)
Reversal of Increases Decreases
write-off in 31 December
1 January 2017 Increase due to
previous Current Reversal Charge-off 2017
reorganization
years
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
trade receivables 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
Inventory 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
20. Short-term borrowings
31 December 2018 31 December 2017
Credit borrowings 2,427,639,275.32 1,413,638,993.97
Discounted notes 170,013,427.11 147,715,527.67
2,597,652,702.43 1,561,354,521.64
Documentary bills borrowing are included in the credit borrowing balance presented above. These
documentary bills borrowings amounted to USD10,585,564.96. According to related contract, currency
exchange will be settled with the applicable sale exchange quotation on the date which repayment is
deducted.
As at 31 December 2018, the annual interest rate for the above borrowings was 4.65% (31 December
2017: 4.34%).
As at 31 December 2018 and 31 December 2017, there were no short-term borrowings of the Group that
were overdue but not yet paid.
227
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
21. Notes payable and trade payables
31 December 2018 31 December 2017
Notes payable 3,416,755,681.80 2,732,437,828.42
Trade payables 6,468,535,961.17 6,144,221,000.10
9,885,291,642.97 8,876,658,828.52
Notes payable
31 December 2018 31 December 2017
Commercial acceptance notes 13,843,479.73 60,129,565.95
Bank acceptance notes 3,402,912,202.07 2,672,308,262.47
3,416,755,681.80 2,732,437,828.42
At 31 December 2018, the total amount of notes payable that were due but not yet paid was nil (31
December 2017: RMB19,900.00).
Trade payables
Trade payables are interest-free and will be paid normally between 1 and 6 months.
31 December 2018 31 December 2017
Trade payables 6,468,535,961.17 6,144,221,000.10
At 31 December 2018, the total amount of trade payables aged over one year was
RMB467,525,486.03 (31 December 2017: RMB269,295,585.18), which were mainly payment for
goods not yet paid to suppliers.
22. Advances from customers
31 December 2018 31 December 2017
Advances from customers - 216,938,239.32
At 31 December 2018, the total amount of trade payables aged over one year was nil (31
December 2017: RMB16,618,324.72).
228
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
23. Contract liabilities
31 December 2018 31 December 2017
Contract liabilities 255,590,612.37 -
Contract liabilities are advance payments received. Contract obligations are normally performed,
and revenue is recognised, within 6 months of receiving such advance payments by customers.
Therefore, advances from customers were reclassified to contract liabilities at year end.
24. Employee benefits payable
At beginning of At end of the
2018 the year Increase Decrease year
Short-term employee
benefits 209,320,163.70 1,759,137,844.89 (1,742,305,599.32) 226,152,409.27
Post-employment
benefits (defined
contribution plan) 5,596,277.12 176,477,341.94 (176,825,472.07) 5,248,146.99
Termination benefits 740,085.72 1,555,451.66 (1,829,686.24) 465,851.14
215,656,526.54 1,937,170,638.49 (1,920,960,757.63) 231,866,407.40
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
229
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
24. Employee benefits payable (Continued)
Short-term employee benefits
At beginning of
2018 year Increase Decrease At end of year
Salaries, bonuses,
allowances and grants 193,078,506.49 1,526,865,265.07 (1,509,219,951.35) 210,723,820.21
Staff welfare 2,602,805.92 51,777,145.01 (52,629,200.04) 1,750,750.89
Social security contribution 1,363,649.32 89,203,979.18 (88,945,357.38) 1,622,271.12
Incl: Medical insurance 1,130,984.41 79,707,594.13 (79,476,427.95) 1,362,150.59
Work injury insurance 10,541.55 3,335,240.34 (3,315,026.20) 30,755.69
Maternity insurance 222,123.36 6,161,144.71 (6,153,903.23) 229,364.84
Housing funds 929,089.33 59,408,331.39 (59,273,427.70) 1,063,993.02
Labor union funds and
employee education funds 10,178,562.87 28,172,099.55 (28,393,890.30) 9,956,772.12
Other short-term benefits 1,167,549.77 3,711,024.69 (3,843,772.55) 1,034,801.91
209,320,163.70 1,759,137,844.89 (1,742,305,599.32) 226,152,409.27
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
230
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
24. Employee benefits payable (Continued)
Defined contribution plan
At beginning of
2018 year Increase Decrease At end of year
Basic pension
insurance 1,739,623.34 166,757,467.61 (166,741,930.79) 1,755,160.16
Contribution to
a pension
fund 221,831.21 4,731,258.82 (4,830,739.38) 122,350.65
Unemployment
insurance 3,634,822.57 4,988,615.51 (5,252,801.90) 3,370,636.18
5,596,277.12 176,477,341.94 (176,825,472.07) 5,248,146.99
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
a pension
fund 106,185.22 4,846,301.44 (4,730,655.45) 221,831.21
Unemployment
insurance 1,961,232.61 4,365,911.23 (2,692,321.27) 3,634,822.57
2,686,932.17 155,924,906.72 (153,015,561.77) 5,596,277.12
231
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
24. Employee benefits payable (Continued)
Termination benefits
At beginning of
2018 year Increase Decrease At end of year
Retirement
benefits
payable – within
1 year (Note
V(31)) 559,065.67 980,356.18 (1,131,364.24) 408,057.61
Other termination
benefits (i) 181,020.05 575,095.48 (698,322.00) 57,793.53
740,085.72 1,555,451.66 (1,829,686.24) 465,851.14
At beginning of
2017 year Increase Decrease At end of year
Retirement
benefits
payable – within
1 year (Note
V(31)) 1,093,992.97 1,200,357.47 (1,735,284.77) 559,065.67
Other termination
benefits (i) 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
(i) For year 2018, the Group provided other termination benefits for severing labor relations of
RMB575,095.48 as at 31 December 2018, and the unpaid balance as at the year end was
RMB57,793.53. (2017: Other termination benefits for severing labor relations of
RMB775,302.45, the unpaid balance at the year end was RMB181,020.05).
232
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
25. Tax payable
31 December 2018 31 December 2017
Corporate Income taxes 115,226,820.39 102,947,883.38
Value-added tax 90,356,534.09 85,843,903.33
City maintenance and construction surtax 6,854,426.95 6,691,713.89
Stamp duty 5,854,355.91 4,166,596.91
Water conservancy fund 5,421,280.43 5,356,119.89
Educational surcharge 4,937,147.17 4,862,588.43
Individual income tax 3,954,139.24 3,921,305.41
Property tax 1,123,276.37 971,268.99
Land use tax 209,179.29 513,790.48
Others 8,043,252.88 8,477,729.53
241,980,412.72 223,752,900.24
26. Other payables
31 December 2018 31 December 2017
Interest payable 21,906,660.63 7,311,819.65
Dividend payable 6,389,320.96 11,889,443.11
Other payables 1,511,140,990.34 1,011,128,397.26
1,539,436,971.93 1,030,329,660.02
Interest payable
31 December 2018 31 December 2017
Interest on short-term borrowings 10,973,397.39 6,078,248.36
Trade receivables’ factoring interest 10,894,278.99 1,194,587.01
Long-term loans’ (With periodic payments
of principal and interest charges) interest 38,984.25 38,984.28
21,906,660.63 7,311,819.65
233
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
26. Other payables (Continued)
Dividend payable
31 December 2018 31 December 2017
Shanghai Fosun Pharmaceutical (Group) Co.,
Ltd. (“Fosun Pharma”) 4,835,511.58 4,835,511.58
Zhang Zhenfang 1,389,639.31 1,389,639.31
Meiluo Pharmaceutical Co., Ltd. 164,170.07 164,170.07
Zhong Luqi - 4,103,188.06
Zhong Lunan - 765,928.44
Zhong Xiangjun - 601,800.92
Bai Ganyin - 29,204.73
Qiao Haiping - -
6,389,320.96 11,889,443.11
As at 31 December 2018, the Group had no significant dividend aged more than one year and not
yet paid (31 December 2017: nil).
Other payables
31 December 2018 31 December 2017
Payables for factoring programs 724,272,060.30 388,729,758.59
Deposits 334,821,325.72 129,662,851.39
Accrued selling and distribution expenses 131,493,977.43 96,065,832.84
Payables for construction in progress and
equipment 79,380,923.99 98,293,860.11
Payables arising from acquisition of
subsidiaries 78,702,980.00 109,445,960.00
Payables for rentals 29,298,835.46 27,766,119.66
Payables to individuals 22,730,210.22 34,316,089.64
Payables for land transfer payments 18,071,000.00 18,071,000.00
Temporary loans 15,800,000.00 15,800,000.00
Equity subscription 10,000,000.00 -
Collection of others 7,525,379.59 8,430,347.08
Payables to related parties 5,436,532.76 15,817,669.33
Others 53,607,764.87 68,728,908.62
1,511,140,990.34 1,011,128,397.26
234
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
26. Other payables (Continued)
At 31 December 2018, significant other payables over 1 year are:
Amount payable Reason for outstanding
Non-controlling interests in South 54,722,980.00 Payment conditions not met
Pharma & Trade Fu Yuequn and
other 11 natural persons
Taishan Qunkang Drugstore Co.,
Ltd. 13,860,000.00 Payment conditions not met
Shenzhen No.1 Construction
Engineering Co., Ltd. 8,605,625.20 Payment conditions not met
Guangxi Zhongding Medicine
Consulting Co., Ltd. 6,612,470.75 Payment conditions not met
83,801,075.95
27. Non-current liabilities due within one year
31 December 2018 31 December 2017
Finance lease payables (Note V (30)) 5,861,324.37 5,434,770.70
28. Other current liabilities
31 December 2018 31 December 2017
Output VAT to be recognized 292,465.75 112,817.65
29. Long-term borrowings
31 December 2018 31 December 2017
Entrusted loans 31,600,000.00 31,600,000.00
At 31 December 2018, 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 2018, the annual interest rate of the above-mentioned borrowings was 4.04%
(31 December 2017: 4.40%).
235
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
30. Long-term payables
Long-term payables
31 December 2018 31 December 2017
Finance lease payables (Note XIII(2)) 9,625,302.89 14,767,307.84
Less: Amount due within one year
(Note V(27)) (5,861,324.37) (5,434,770.70)
3,763,978.52 9,332,537.14
Payable for specific projects
2018
At beginning of year Increase Decrease At end of year
Special funds granted by
government 800,000.00 - - 800,000.00
2017
At beginning of year Increase Decrease At end of year
Special funds granted by
government 800,000.00 - - 800,000.00
Payables for specific projects are research funding granted by the government, which are
designated as payables for specific projects when granted.
236
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
31. Long-term employee benefits payable
31 December 2018 31 December 2017
Early retirement benefits payable 2,458,057.61 2,336,065.67
Less: Retirement benefits payable –
(408,057.61) (559,065.67)
within 1 year (Note V (24))
2,050,000.00 1,777,000.00
The primary actuarial assumptions adopted at the end of the reporting period are presented as
follows:
31 December 2018 31 December 2017
Discount rate 3.50% 4.00%
Growth rate of wages 6.00% 6.00%
The total post-employment benefits recognized in profit or loss of the current year is:
2018 2017
Included in administrative expenses 1,172,356.18 1,182,043.83
Included in financial expenses 81,000.00 101,713.75
1,253,356.18 1,283,757.58
32. Deferred income
2018 Opening balance Increase Decrease Closing balance
Government grants 96,725,183.34 - (5,234,012.94) 91,491,170.40
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
237
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
32. Deferred income (Continued)
As at 31 December 2018, deferred income from government grants is as follows:
Government grants Opening balance Addition in Amount Amount Closing Asset related/
program the year included in included in balance income related
non-operating other incomes
income in the in the year
year
Resettlement
Compensation (Note) 78,253,849.73 - (2,698,408.56) - 75,555,441.17 Asset related
Guangxi Logistics Project 6,949,832.98 - - (496,406.40) 6,453,426.58 Asset related
Logistics standardization
project 3,361,259.39 - - (546,246.84) 2,815,012.55 Asset related
A comprehensive
experimental modern
service industry
subsidies 1,800,000.00 - - (300,000.00) 1,500,000.00 Asset related
Shared Logistics Center
(completed) 270,858.75 - - (18,800.40) 252,058.35 Asset related
Asset/income
Other projects 6,089,382.49 - - (1,174,150.74) 4,915,231.75 related
96,725,183.34 - (2,698,408.56) (2,535,604.38) 91,491,170.40
As at 31 December 2017, deferred income from government grants is as follows:
Government grants Opening balance Addition in Amount Amount Closing Asset related/
program the 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
238
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
32. Deferred income (Continued)
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 to 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, for which the amount
approximates to RMB26.93 million, was recognized in the income statement in 2012.
33. Other non-current liabilities
31 December 2018 31 December 2017
Governmental medical reserve
funds 45,427,343.31 45,427,343.31
Product promotion accumulative
points programme 23,813,832.87 -
69,241,176.18 45,427,343.31
Governmental 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.
Product promotion accumulative points programme refers to those product-originated
accumulative points that remain more than one year surplus before expiration date.
239
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
34. Share capital
2018 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 307,744,355.00 - - - 307,744,355.00
-B shares, listed 54,885,600.00 - - - 54,885,600.00
Listed shares with
restriction of trading: 60,380,743.00 - - - 60,380,743.00
-State-owned legal
person shares 5,114,297.00 - - - 5,114,297.00
-Natural person
shares 1,988.00 - - - 1,988.00
428,126,983.00 - - - 428,126,983.00
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
35. Capital surplus
2018 At beginning of the year Increase Decrease At end of the year
Share premium 2,118,174,787.27 - - 2,118,174,787.27
Others -
Significant reorganization 1,173,907,763.19 - - 1,173,907,763.19
Transfer of capital surplus
recognized under the previous
accounting system 2,650,322.00 - - 2,650,322.00
Other changes in equity of invested
units under the equity method (a) (113,303,807.47) 19,271,293.13 - (94,032,514.34)
Other (b) - 1,120,284,623.39 - 1,120,284,623.39
3,181,429,064.99 1,139,555,916.52 - 4,320,984,981.51
240
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
35. Capital surplus (Continued)
At beginning of
2017 the year Increase Decrease At end of the year
Share premium 2,118,174,787.27 - - 2,118,174,787.27
Others -
Significant reorganization 1,177,337,792.19 - (3,430,029.00) 1,173,907,763.19
Transfer of capital surplus recognized
under the previous accounting system
（c） 2,650,322.00 - - 2,650,322.00
Business combination involving
enterprises under common control (d) 1,200,000.00 - (1,200,000.00) -
Other changes in equity of invested
units under equity method (a) (146,644,876.54) 33,341,069.07 - (113,303,807.47)
3,152,718,024.92 33,341,069.07 (4,630,029.00) 3,181,429,064.99
(a) There was an increase of RMB19,271,293.13 in the current year’s other capital reserves of the
invested entity and this was due to the decrease of the book value of a long-term equity investment of
the Group’s associate company Shyndec Pharma, which resulted in capital surplus of RMB139,312.34.
Since the subsidiary of Shyndec Pharma failed to complete the Valuation Adjustment Mechanism,
Shyndec Pharma’s shares that the Group holds changed, which resulted in an increase of
RMB19,410,605.47 in capital surplus.
There was an increase of RMB33,341,069.07 in 2017’s other capital reserves, which was due to
changes of the book value of long-term equity investment and result in capital surplus of
RMB7,018,386.52. Since the subsidiary of Shyndec Pharma failed to complete the Valuation
Adjustment Mechanism, the Group’s holding of Shyndec Pharma’s shares that the Group holds was
changed, which resulted in an increase of RMB26,322,682.55 in capital surplus.
(b) There was an increase of RMB1,120,284,623.39 in current year’s other capital reserves and this was
due to the introduction of strategic investor Walgreens Boots Alliance (Hong Kong) Investments
Limited (“WBA investor”) from the Group’s subsidiary, Sinopharm Guoda Pharmacy. WBA investor
increased capital by RMB2,766,700,000.00, which resulted in capital premium of
RMB1,120,284,623.39.
(c) Significant reorganization decreased by RMB3,430,029.00 in 2017 when the Group carried out the
reorganization on 31 October 2016. The disposal of Zhijun Medicine, Zhijun Pingshan, Zhijun Trade
and assets of Pingshan base was in exchange for a 15.56% equity interest of Shyndec Pharma. The
Group held a board meeting on 5 February 2018 and agreed to revise the transaction price of assets
of Pingshan base, which resulted in an increase of RMB4,576,743.67 in capital surplus. 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.
(d) 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
(“Shijiazhuang Pharma”), under common control by the Company, on 10 March 2017. At the 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.
241
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
36. Surplus reserve
31 December 2018 31 December 2017
Surplus reserve 214,063,491.50 214,063,491.50
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 share
capital. The accumulated amount of the statutory surplus reserve of the Group has already
reached 50% of the registered capital. According to the Company’s articles of association, the
Group did not extract the surplus reserve anymore.
37. Retained earnings
31 December 2018 31 December 2017
Retained earnings at the end of the prior year 5,572,952,806.39 4,689,189,642.51
A business combination involving enterprises under
common control (a) - 1,076,241.59
Retained earnings at beginning of year after
retrospective adjustment and restatement 5,572,952,806.39 4,690,265,884.10
Add: Net profit attributable to the parent 1,210,742,435.78 1,057,791,930.67
Deduct: Withdrawal form the surplus reserve - (32,747,520.00)
Cash dividends payable for ordinary shares (b) (128,438,094.90) (141,281,904.39)
Business combination involving enterprises under
common control - (1,075,583.99)
Retained earnings at end of year 6,655,257,147.27 5,572,952,806.39
（a） Due to the consolidated scope change resulted from a business combination under common
control in 2017, the beginning balance of profit attributable in 2017 was affected by an amount
of RMB1,076,241.59.
（b） Pursuant to the resolution of the General Meeting of the Shareholders on 17 April 2018, the
Company paid a cash dividend of RMB3.00 for every 10 shares to all shareholders. The cash
dividend was calculated on the basis of 428,126,983 shares in issue, with an aggregate amount
of RMB128,438,094.90.
242
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
38. Operating revenue and cost
2018 2017
Revenue Cost Revenue Cost
Principal
operations 42,778,939,792.90 37,991,076,562.19 40,957,232,334.77 36,789,414,942.07
Other 343,445,728.33 33,032,068.96 306,161,092.64 30,137,973.73
operations
43,122,385,521.23 38,024,108,631.15 41,263,393,427.41 36,819,552,915.80
Revenue and cost of main operations
2018 2017
Revenue of Cost of main Revenue of Cost of main
main operations operations main operations operations
Wholesale of
pharmaceutical 31,866,749,848.53 29,606,073,176.14 31,022,967,423.15 29,315,028,286.33
Retail of
pharmaceutical 10,873,162,895.62 8,368,907,348.19 9,892,835,784.75 7,457,091,704.13
Logistics and freights 26,109,809.27 13,025,190.40 29,568,712.15 11,065,889.25
Rental and other
income 12,917,239.48 3,070,847.46 11,860,414.72 6,229,062.36
42,778,939,792.90 37,991,076,562.19 40,957,232,334.77 36,789,414,942.07
Other operating income and expenses
2018 2017
Other operating Other operating Other operating
income Other operating cost income cost
Rendering of services 251,591,446.56 19,327,747.23 236,641,796.68 15,003,093.78
Rental income 70,082,395.95 10,553,689.07 49,295,774.44 13,027,371.57
Franchise fee income 8,903,896.40 - 12,181,248.58 -
Others 12,867,989.42 3,150,632.66 8,042,272.94 2,107,508.38
343,445,728.33 33,032,068.96 306,161,092.64 30,137,973.73
243
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
38. Operating revenue and cost (Continued)
Breakdown of operating revenue and cost by type of product:
2018 2017
Revenue Cost Revenue Cost
Medicines 41,115,048,626.41 36,456,947,511.65 39,683,832,010.20 35,629,437,791.07
Medical appliance 1,340,837,068.09 1,250,336,501.31 1,125,368,079.05 1,040,629,765.23
Other 666,499,826.73 316,824,618.19 454,193,338.16 149,485,359.50
43,122,385,521.23 38,024,108,631.15 41,263,393,427.41 36,819,552,915.80
All sales revenue were domestic for the year 2018.
Breakdown of operating revenue:
2018
Timing of revenue recognition
Revenue recognised at a point in time
Sales of goods 42,739,912,744.15
Revenue recognised within a time period
Providing services 274,845,863.52
Rental income 81,517,104.29
Storage and logistics 26,109,809.27
43,122,385,521.23
In 2018, the Group has recognised contract liabilities in total of RMB255,590,612.37 through the
sale of goods and provision of services. Information about the Group’s obligations is as follows:
The Group recognises revenue when goods are delivered, and will receive payment within 30-210
days.
The Group recognises revenue after providing services, and will receive payment within 30-210
days. The expected revenue recognition time for the Group’s contract obligations above is in year
2019.
244
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
39. Tax and surcharges
2018 2017
City maintenance and construction tax 47,477,033.41 47,942,856.07
Educational surcharge 32,650,733.37 34,378,808.90
Stamp duty 32,467,464.05 28,674,034.69
Property tax 6,961,154.31 6,725,155.08
Land tax 830,516.37 804,774.72
Vehicle and vessel use tax 159,260.61 524,224.57
Others 465,976.90 870,564.15
121,012,139.02 119,920,418.18
40. Selling expenses
2018 2017
Employees payroll and welfare benefits 1,388,569,241.35 1,218,875,166.16
Rental expenses 693,711,084.99 595,655,664.30
Technical service fee 122,040,418.95 15,681,068.73
Transportation charges 72,790,376.76 62,383,495.59
Amortization of long-term deferred expenses 79,264,643.73 61,757,421.69
Utility fees 58,460,806.07 53,104,248.07
Depreciation expenses 57,211,707.70 49,141,321.86
Promotion and marketing expenses 44,772,075.33 41,054,355.22
Storage expenses 26,735,260.77 34,503,559.49
Office allowances 37,866,925.91 34,125,183.91
Entertainment expenses 28,339,849.02 27,525,997.74
Repairing fees 12,410,974.80 10,676,340.89
Travel allowances 9,659,289.87 8,680,420.02
Conference expenses 9,254,374.47 10,484,976.55
Market development fees 7,741,076.04 1,081,752.10
Others 113,961,780.01 81,178,099.39
2,762,789,885.77 2,305,909,071.71
245
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
41. Administrative expenses
2018 2017
Employees payroll and welfare benefits 540,166,368.56 512,141,139.52
Rental expenses 38,446,106.99 33,667,526.23
Office allowances 25,785,743.03 29,796,762.42
Depreciation expenses 25,989,962.32 23,860,275.81
Amortization of intangible assets 16,833,469.40 18,027,511.52
Entertainment expenses 15,124,722.99 14,034,565.91
Agency service fees 19,335,780.45 12,473,242.98
Technical service fees 17,309,623.25 12,148,374.10
Travel allowances 11,970,208.11 9,160,614.98
Amortization of long-term deferred
expenses 9,609,145.68 9,347,654.01
Vehicle management expenses 9,508,891.07 9,162,933.83
Utilities 5,740,238.76 7,206,977.34
Taxations 2,542,633.31 6,530,342.04
Repairing fees 4,726,047.17 4,596,365.92
Promotion and marketing expenses 9,239,323.28 3,284,160.48
Others 31,010,043.82 30,515,520.04
783,338,308.19 735,953,967.13
42. Finance costs
2018 2017
Interest expenses 195,256,226.47 135,832,879.33
Less: Interest income (81,119,506.63) (35,012,199.48)
Cash discount from purchase (42,424,361.51) (28,158,611.39)
Exchanges loss/ (gain) 325,611.60 (495,664.83)
Others 40,824,769.19 38,194,135.93
112,862,739.12 110,360,539.56
Breakdown for interest income is as follows:
2018 2017
Cash (81,119,506.63) (35,012,199.48)
246
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
43. Impairment loss
2018 2017
Inventory provision 2,744,605.36 600,411.26
Bad debt allowance (Only applicable for 2017) - (3,071,108.00)
2,744,605.36 (2,470,696.74)
44. Impairment losses on financial assets (Only applicable for 2018)
2018 2017
Impairment loss of notes and trade receivables (4,432,424.30) -
Impairment loss of other receivables 4,730,903.85 -
298,479.55 -
45. Other incomes
2018 2017
Government grants related to daily operating activities 27,012,475.30 24,155,618.47
Taxation service charge refund 1,445,926.01 235,691.44
28,458,401.31 24,391,309.91
Government grants relevant to daily operation：
2018 2017 Related to asset/income
Logistics standardization project 546,246.84 546,246.84 Related to asset
Guangxi Logistics Project 496,406.40 496,406.40 Related to asset
Subsidy for a comprehensive
experimental unit of the modern
service industry 300,000.00 300,000.00 Related to asset
Third party medicine modern logistics
public information platform 18,800.40 18,800.40 Related to asset
Transferred in from deferred income 1,174,150.74 1,278,335.31 Related to asset
2,535,604.38 2,639,788.95
Tax return 9,153,184.19 1,335,908.17 Income related
Government grants for medicine reserve
expenses 3,220,625.00 3,210,000.00 Income related
Government support funding 2,632,800.00 8,394,375.00 Income related
Enterprise economy award 1,535,325.00 2,400,000.00 Income related
Economic contribution award 150,000.00 641,300.00 Income related
Others 7,784,936.73 5,534,246.35 Income related
24,476,870.92 21,515,829.52
27,012,475.30 24,155,618.47
247
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
46. Investment income
2018 2017
Investment income from long-term equity investments
under the equity method (Note V(8)) 319,903,890.47 263,825,834.56
Investment income from disposal of subsidiaries (526,137.60) -
Investment income from available-for-sale financial
assets - 579,444.98
Gain on remeasurement of fair value of a remaining
equity interest upon loss of control 519,419.36 -
Remeasurement of the original ownership based on fair
value during step-by-step acquisition to recognize
investment income - 134,740.70
319,897,172.23 264,540,020.24
47. Gain on disposal of assets
2018 2017
Gain on disposal of intangible assets 3,892,019.91 -
Gain on disposal of fixed assets 3,500,527.65 792,663.68
Gain on disposal of other non-current assets - (525.30)
7,392,547.56 792,138.38
48. Non-operating income
2018 2017
Gain from writing off the unnecessary payment 5,000,021.34 3,385,203.85
Government grants irrelevant to daily operation 2,698,408.56 2,698,408.56
Others 5,016,923.61 5,328,875.80
12,715,353.51 11,412,488.21
248
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
48. Non-operating income (Continued)
Government grants are as follow：
2018 2017 Related to asset/income
Resettlement Compensation of Guangxi
Logistics
2,698,408.56 2,698,408.56 Asset related
49. Non-operating expenses
2018 2017
Penalty expenses 1,097,787.61 4,808,339.15
Donation expenses 449,466.05 123,600.00
Loss on disposal of a non-current asset 345,180.28 1,184,152.43
Others 2,872,416.21 3,158,103.12
4,764,850.15 9,274,194.70
50. Expenses by nature
The cost of operations, selling and distribution expenses, administrative expenses are classified
by nature and listed as follows:
2018 2017
Inventories of finished and work-in-progress
goods/Cost of inventories 38,010,404,118.17 36,740,876,853.01
Employees payroll and welfare benefits 1,937,354,409.70 1,740,090,218.21
Rental expenses 732,157,191.98 631,327,946.24
Depreciation and amortization 206,110,412.41 179,809,422.71
Technical service fees 139,350,042.20 28,753,897.58
Transportation charges 72,790,376.76 65,173,013.85
Utilities 66,988,900.15 115,159,397.61
Office telecom and internet expenses 63,652,668.94 63,921,946.33
Promotion and marketing expenses 61,752,474.65 45,420,267.80
Entertainment expenses 43,464,572.01 41,560,563.65
Travel allowances 29,081,374.94 24,316,505.13
Storage expenses 26,735,260.77 34,503,559.49
Agency service fees 19,335,780.45 12,473,242.98
Repairing fees 17,137,021.97 15,542,580.93
Conference expenses 12,927,363.12 13,027,031.26
Taxation 2,542,633.31 6,530,342.04
Others 128,452,223.58 102,929,165.82
41,570,236,825.11 39,861,415,954.64
249
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
51. Income taxes
2018 2017
Current income tax 330,119,712.81 320,134,496.02
Deferred income tax 378,532.87 (10,844,368.30)
330,498,245.68 309,290,127.72
The reconciliation of income tax calculated based on applicable tax rates and total profit
presented in the consolidated financial statements to the income taxes is shown below:
2018 2017
Total profit 1,678,929,357.53 1,466,028,973.81
Income taxes calculated at applicable tax rates 419,732,339.38 366,507,243.45
Lower tax rates enacted by local authorities (26,400,897.47) (23,029,239.44)
Income not subject to tax (80,379,054.34) (66,135,005.06)
Expenses not deductible for tax 12,549,148.66 16,141,202.89
Deductible loss on unconfirmed deferred tax
assets at end of the year 2,994,369.39 2,038,165.18
Utilization of previously unrecognized tax losses 752,138.09 422,558.70
Impact of the temporary discrepancy on
unconfirmed deductible deferred tax assets at
end of the year - 60,680.50
Adjustment of income tax expense of previous
years 1,250,201.97 13,284,521.50
Income tax 330,498,245.68 309,290,127.72
52. Earnings per share
2018 2017
RMB/Share RMB/Share
Basic earnings per share
Continuing operations 2.83 2.47
Diluted earnings per share
Continuing operations 2.83 2.47
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 2018, the Company had no potential dilutive ordinary shares, and the diluted earnings per share was
the same as the basic earnings per share.
250
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
52. Earnings per share (Continued)
The calculation of basic and diluted earnings per share is as follows:
2018 2017
Earnings 1,210,742,435.78 1,057,791,930.67
Consolidated net profit attributable to the
shareholders of the parent 1,210,742,435.78 1,057,791,930.67
Net profit attributable to the calculation of EPS 1,210,742,435.78 1,057,791,930.67
Shares
Adjusted weighted average number of ordinary
shares outstanding 428,126,983.00 428,126,983.00
Basic and diluted earnings per share 2.83 2.47
53. Notes to items in the cash flow statement
Cash receipts related to other operating activities
2018 2017
Interest income 79,501,556.12 34,998,333.34
Rent income 70,082,395.95 49,295,774.44
Government grants except tax return 15,323,686.73 20,679,921.35
Others 514,689,083.24 235,692,027.77
679,596,722.04 340,666,056.90
Cash paid relating to other operating activities
2018 2017
Rental expenses 732,157,191.98 631,327,946.24
Advertising expenses 61,752,474.65 45,420,267.80
Office expenses 49,240,163.51 47,689,164.33
Entertainment expenses 43,464,572.01 41,560,563.65
Bank charges 39,831,488.02 37,287,542.07
Travel expenses 29,081,374.94 24,316,505.13
Conference expenses 12,927,363.12 13,027,031.26
Others 757,256,302.59 605,802,950.13
1,725,710,930.82 1,446,431,970.61
251
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
53. Notes to items in the cash flow statement (Continued)
Cash received relating to other investing activities
2018 2017
Received reorganized-consideration from
Shyndec Pharma 51,695,586.01 -
Received entrusted loan payments 44,000,000.00 -
Deposit collected from Shyndec Pharma - 75,259,200.00
Others 3,097,499.39 -
98,793,085.40 75,259,200.00
Cash paid relating to other investing activities
2018 2017
Entrusted borrowings paid to Zhijun Suzhou 44,000,000.00 44,000,000.00
Others 37,042,904.53 48,803,476.90
81,042,904.53 92,803,476.90
Other cash receipts relating to financing activities
2018 2017
Factoring payable received 335,542,301.71 237,539,708.52
Financing restricted monetary funds received 135,678,166.90 -
Other 12,818,350.59 937,000.00
484,038,819.20 238,476,708.52
Cash payments relating to other financing activities
2018 2017
Purchase of equity of minority shareholders 54,722,980.00 158,996,642.00
Others 29,752,802.06 91,402,261.79
84,475,782.06 250,398,903.79
252
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
54. Supplementary information of the cash flow statement
Reconciliation of net profit to cash flows from operating activities
2018 2017
Net profit 1,348,431,111.85 1,156,738,846.09
Adjustments: Provisions for expected credit losses 298,479.55 -
Provision for asset impairment 2,744,605.36 (2,470,696.74)
Depreciation of fixed assets and investment
91,786,656.69 82,437,451.62
properties
Amortization of intangible assets 24,468,087.41 25,334,120.64
Amortization of long-term prepaid expenses 89,855,668.31 72,037,850.45
Gains on disposal of fixed assets, and other
(7,047,367.28) 203,279.86
non-current assets
Finance costs 143,120,104.31 70,005,833.78
Investment income (319,897,172.24) (264,540,020.24)
Increase in deferred tax assets (2,488,130.63) (6,558,160.76)
(Increase)/decrease in deferred tax liabilities 2,768,712.60 (4,652,450.99)
(Increase)/decrease in inventories (608,950,788.81) 266,979,628.18
Increase in operating receivables items (1,663,980,387.42) (23,111,709.56)
(Decrease)/increase in operating payable
2,296,682,476.23 (11,649,824.85)
items
Increase in restricted operating cash with (75,185,703.66) (75,462,235.66)
restriction
Net cash generated from operating activities 1,322,606,352.27 1,285,291,911.82
Movement of cash
2018 2017
Cash at the end of year 7,632,117,020.77 3,673,498,691.48
Less: Cash at the beginning of year 3,673,498,691.48 3,150,915,425.49
Net increase in cash 3,958,618,329.29 522,583,265.99
253
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
54. Supplementary information of the cash flow statement (Continued)
Acquisition of subsidiaries and operating units
2018 2017
Cash and cash equivalents paid for acquisitions of
subsidiaries and other business units 19,920,651.60 33,495,020.00
Incl: Sinopharm Guoda Taishan Qunkang Pharmacy Chain
Store Co., Ltd. (“Guoda Taishan”) 16,380,000.00 -
Shanxi Zhongao Co., Ltd. (“Shanxi
Zhongao”) 450,651.60 -
Taiyuan Tongxinli 3,090,000.00 -
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 22,389,173.93 24,805,649.18
Incl: Guoda Taishan 21,146,145.15 -
Shanxi Zhongao 1,160,397.85 -
Taiyuan Tongxinli 82,630.93 -
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 (2,468,522.33) 53,356,516.15
Cash
2018 2017
Cash on hand 5,587,191.18 6,208,674.32
Bank deposits on demand 7,626,529,829.59 3,667,290,017.16
Cash 7,632,117,020.77 3,673,498,691.48
254
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
55. Assets under restricted ownership or right to use
2018 2017 Note
Cash and cash equivalents 457,664,283.79 518,156,747.03 Note 1
Notes receivable that were
Note 2
discounted 170,013,427.11 147,715,527.67
Notes receivable that were
301,416.00 - Note 3
endorsed
627,979,126.90 665,872,274.70
Note 1: At 31 December 2018, the Group had deposits of bank acceptance notes, deposits of pledged
borrowings and time deposits with maturities over 3 months amounting to RMB457,664,283.79
(31 December 2017: RMB518,156,747.03) (Note V(1)).
Note 2: At 31 December 2018, the Group had otes receivable of RMB170,013,427.11, discounted but
not due (31 December 2017: RMB147,715,527.67) (Note V (2)).
Note 3: At 31 December 2018, the Group had notes receivable of RMB301,416.00, endorsed but not
due (31 December 2017: nil) (Note V (2)).
56. Foreign monetary items
31 December 2018 31 December 2017
Original Equivalent to Original ExDollar Equivalent
Exchange rate
currency RMB currency (Notes) rate to RMB
Short-term
borrowings - - - - - -
United States
dollar 10,585,564.96 6.9579 73,653,234.88 - - -
73,653,234.88 -
Note: According to a related contract, currency exchange will be settled with the applicable sale exchange
quotation on the date which repayment is deducted.
255
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
VI Changes in the scope of consolidation
1. Business combinations not involving enterprises under common control
1.1 Acquiring Taiyuan Tongxinli
The Group has acquired 100% equity in Taiyuan Tongxinli for RMB3.09million from Beijing equity
exchange in November 2018, which forms business combination not involving enterprises under common
control. Afterwards, Taiyuan Tongxinli becomes a wholly owned subsidiary by the Group. This acquisition
was completed on 20 November 2018, Taiyuan Tongxinli is now within the consolidation scope.
The fair values and carrying amounts of identifiable assets and liabilities and contingent liabilities of
Taiyuan Tongxinli on the acquisition date are presented as follows:
30 November 2018 30 November 2018
Fair value Carrying amount
Cash and bank balances 82,630.93 82,630.93
Notes receivable and trade receivables 1,279,653.52 1,279,653.52
Other receivables 970,570.20 970,570.20
Inventories 1,148,040.63 1,148,040.63
Fixed assets 99,584.93 99,584.93
Long-term prepaid expenses 99,353.78 99,353.78
Trade payables 3,230,117.28 3,230,117.28
Contract liabilities 119,067.79 119,067.79
Employee benefits payable 3,437.82 3,437.82
Tax payables 55,858.95 55,858.95
Net assets 271,352.15 271,352.15
Net assets acquired 271,352.15 271,352.15
Goodwill arising from acquisition 2,818,647.85
3,090,000.00 (Note)
Note:
The amount refers to the cash payment of RMB3,090,000.00 the Group paid in acquisition.
Operating results and cash flows of Taiyuan Tongxinli for the period from the acquisition date to the end of
the year are presented as follows:
Period from 30 November 2018 to
31 December 2018
Operating revenue 440,319.27
Net profit (95,586.30)
Net cash flows 32,914.21
256
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
VI Changes in scope of consolidation (Continued)
1. Business combinations not involving enterprises under common control (Continued)
1.2 Acquiring Shanxi Zhongao
In September 2018, the Group acquired a 100% stake in Shanxi Zhongao for RMB450,651.60 to
constitute a business combination involving enterprises not under common control. The acquisition was
completed on 6th September 2018 and included in the consolidation scope of the Company.
The fair values and carrying amounts of identifiable assets and liabilities and contingent liabilities of
Shanxi Zhongao on the acquisition date are presented as follows:
31 August 2018 31 August 2018
Fair value Carrying amount
Cash and bank balances 1,160,397.85 1,160,397.85
Advances to suppliers 23,333.33 23,333.33
Fixed assets 104,181.34 104,181.34
Employee benefits payable 4,790.97 4,790.97
Tax payables 832,469.95 832,469.95
Net assets 450,651.60 450,651.60
Net assets acquired 450,651.60 450,651.60
Goodwill arising from acquisition -
450,651.60 (Note)
Note:
The amount refers to the cash payment of RMB450,651.60 that the Group paid in acquisition.
Operating results and cash flows of Shanxi Zhongao for the period from the acquisition date to the end of
the year are presented as follows:
Period from 31 August 2018 to
31 December 2018
Operating revenue 311,169,796.47
Net profit 621,839.99
Net cash flows 116,488.79
257
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
VIChanges in scope of consolidation (Continued)
1.Business combinations not involving enterprises under common control (Continued)
1.3 Acquiring Sinopharm Huadu
In April 2018, the Group acquired a 70% stake in Sinopharm Huadu for RMB16,380,000.00 to constitute a
business combination involving enterprises not under common control. The acquisition was completed on
30 April 2018 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 Huadu on the acquisition date are presented as follows:
30 April 2018 30 April 2018
Fair value Carrying amount
Cash and bank balances 16,466,145.15 16,466,145.15
Notes receivables and trade receivables 8,213,283.42 8,213,283.42
Other receivables 6,432,549.05 6,432,549.05
Advances to suppliers 2,140,000.00 2,140,000.00
Deferred tax assets 97,950.90 97,950.90
Notes payables and trade payables 248,440.00 248,440.00
Contract liabilities 101,822.00 101,822.00
Tax payables 1,391,359.22 1,391,359.22
Other payable 8,207,265.45 8,207,265.45
Net assets 23,401,041.85 23,401,041.85
Less: Non-controlling interests (7,020,312.56) (7,020,312.56)
16,380,729.29 16,380,729.29
Amount exceeding the cost of merger recognized
as profit or loss in the current period (729.29)
16,380,000.00 (Note)
Note:
The amount refers to the cash payment of RMB16,380,000.00 the Group paid in acquisition.
Operating results and cash flows of Sinopharm Huadu for the period from the acquisition date to the end
of the year are presented as follows:
Period from 31 October 2018 to 31
December 2018
Operating revenue 23,654,780.05
Net profit (210,588.98)
Net cash flows (9,943,258.16)
258
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
VIChanges in scope of consolidation (Continued)
2.Establishment of subsidiaries
31 December
2018 2018
Net assets Net profit
Sinopharm Holding Foshan Medical Consumables Supply Chain Co., Ltd.
（a） 7,479,616.59 (520,383.41)
Sinopharm Holding Medical Supply Chain Service (Guangxi) Co., Ltd.（b） 20,967,020.47 967,020.47
Sinopharm Guoda Shanghai Haohai Pharmacy Co., Ltd. (“Guoda Haohai”)
（c） 392,000.00 -
Baiyi Pharmacy（d） 1,628,377.27 (371,622.73)
Sinopharm Holding Hezhou Co., Ltd. (“Sinopharm Hezhou”)（e） 2,548,118.97 (451,881.03)
Sinopharm Holding Guoda Pharmacy Zhengzhou Chain Co., Ltd. (“Guoda
Zhengzhou”)（f） 14,638,869.24 (361,130.76)
Sinopharm Guoda Shanghai Ruijing Pharmacy Co., Ltd. (“Guoda Ruijing”)
（g） 711,846.26 (88,153.74)
Sinopharm Guoda Fujian Medicine Co., Ltd. (“Guoda Fujian”)（h） 15,005,961.19 5,961.19
Sinopharm Holding Qinzhou Co., Ltd. (“Sinopharm Qinzhou”)（i） 1,253,916.44 (246,083.56)
Sinopharm Holding Hechi Co., Ltd. (“Sinopharm Hechi”)（j） 1,301,113.92 (198,886.08)
（a） On 30 January 2018, the Group and Shenzhen Qingniu Medical Investment Co., Ltd. accumulatively invested
RMB5,600,000.00 and RMB2,400,000 to set up Sinopharm Holding Foshan Medical Consumables Supply Chain Co.,
Ltd., respectivly.
（b） On 4 January 2018, the Group, Guorun Medical Supply Chain Service (Shanghai) Co., Ltd. (“Guorun Medical”) and
Guangxi Deyiyuan Medical Investment Center (Limited partnership) jointly established Sinopharm Holding Medical
Supply Chain Service (Guangxi) Co., Ltd., accumulatively invested RMB6,120,000.00, RMB5,880,000.00 and
RMB8,000,000.00, respectively. Guorun medical entrusted the Group with its voting rights, the Group now holds 60%
voting rights of Sinopharm Holding medical supply chain service (Guangxi) Co., Ltd.
（c） On 18 January 2018, the Group and Shanghai Linhong Medical instrument Co., Ltd. jointly established Guoda Haohai,
accumulatively invested RMB408,000.00 and RMB392,000.00, respectively. As of the end of 2018, Shanghai Linhong
Medical Instrument Co., Ltd. has invested RMB392,000.00, and the Group completed the payment transaction on 15
February 2019.
（d） On 24 April 2018, the Group and Baise Jianan Pharmaceutical Chain Co., Ltd. accumulatively invested
RMB1,020,000.00 and RMB980,000 to set up Baiyi Pharmacy, respectivly.. After the establishment, the Group held
51% of equity interest in Baiyi Pharmacy.
（e） On 23 April 2018, the Group invested RMB10,000,000.00 to set up Sinopharm Holding Hezhou Co., Ltd. As at the end
of 2018, the Group invested RMB3,000,000.00.
（f） On 12 August 2018, the Group and Henan Wanxitang Pharmacy Co., Ltd. (“Henan Wanxitang”) accumulatively
invested RMB12,000,000.00 and RMB8,000,000.00, respectively, to set up Guoda Zhengzhou. By the end of 2018, the
Group invested RMB12,000,000.00 and Henan Wanxitang invested RMB3,000,000.00.
（g） On 21 September 2019, the Group and Shanghai Runjian Technology Co., Ltd. jointly established Sinopharm Guoda
Shanghai Ruijing Pharmacy Co., Ltd., accumulatively invested RMB440,000.00 and RMB360,000.00, respectivly. After
establishment, the Group holds 55% of its equity. By the end of 2018, payment has been completed.
（h） On 8 August 2018, the Group invested RMB15,000,000.00 to set up Guoda Fujian. After the establishment, the
Company held 100% of equity interest in Guoda Fujian.
（i） On 16 March 2018, the Group established Sinopharm Qinzhou and the subscription of registered capital is
RMB10,000,000.00. By the end of 2018, RMB1,500,000 has been paid.
（j） On 28 Feburary 2018, the Group established Sinopharm Hechi and the subscription of registered capital is
RMB10,000,000.00. By the end of 2018, RMB1,500,000 has been paid.
259
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
VIChanges in scope of consolidation (Continued)
3. 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
Tangshan
Lerentang
Pharmacy Chain Cancellation
Store Co., Ltd. Tangshan Tangshan 300 Commercial - 100.00 of company
Datong Guoda
Wanmin
Pharmacy Chain Cancellation
Store Co., Ltd. Datong Datong 615 Commercial - 100.00 of company
Shanghai
Guoda Changxin
Pharmacy Co., Cancellation
Ltd. Shanghai Shanghai 30 Commercial - 100.00 of company
Hebei Yikang Cancellation
（a） Shijiazhuang Shijiazhuang 500 Commercial - 100.00 of company
Beijing Yangqiao
Rongzhi Golden
Elephant
Pharmacy
Company Cancellation
Limited Beiiing Beiiing 126 Commercial - 50.79 of company
(a) As at December 2018, Hebei Yikang’s cancellation was approved, and was cancelled on 21
January 2019.
260
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
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
Sinopharm Holding
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., entities under
Ltd. (“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 355,325 100.00% - 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
261
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
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 capital(RMB Ways of acquisition
establishment 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 52,141 100.00% - 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
under common control
Sinopharm Dongguan Dongguan Dongguan Commercial 7,300 - 100.00% 100.00%
Business combinations
involving entities not
under common control
Sinopharm Zhanjiang Zhanjiang Zhanjiang Commercial 13,100 - 100.00% 100.00%
Business combinations
involving entities not
under common control
Sinopharm Yanfeng Shenzhen Shenzhen Commercial 3,000 51.00% - 51.00%
Business combinations
involving entities not
Sinopharm Meizhou Meizhou Meizhou Commercial 4,800 - 100.00% 100.00% under common control
262
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
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 capital Voting
Subsidiaries place of Ways of acquisition
establishment business (RMB‘0,000) Direct Indirect proportion
business
Business combinations
involving entities not
under common control
Sinopharm Huizhou Huizhou Huizhou Commercial 3,800 - 100.00% 100.00%
Business combinations
involving entities not
under common control
Sinopharm Zhaoqing Zhaoqing Zhaoqing Commercial 4,000 - 100.00% 100.00%
Business combinations
Sinopharm Jiangmen involving entities not
under common control
（a） Jiangmen Jiangmen Commercial 6,000 - 100.00% 100.00%
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” 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
Business combinations
Zhuhai Co., Ltd.
involving entities not
(“Sinopharm
under common control
Zhuhai") Zhuhai Zhuhai Commercial 3,000 - 100.00% 100.00%
Sinopharm Holding
Business combinations
Maoming Co., Ltd.
involving entities not
(“Sinopharm
under common control
Maoming") Maoming Maoming Commercial 200 - 100.00% 100.00%
Sinopharm Holding GZ
Medical Technology
Co., Ltd. Guangzhou Guangzhou Commercial 588 - 51.00% 51.00% Establishment
Sinopharm Holding GZ
Medical Supply
Chain Service Co.,
Ltd. Guangzhou Guangzhou Commercial 320 - 51.00% 51.00% Establishment
Sinopharm Holding
Heyuan Co., Ltd. Business combinations
(“Sinopharm involving entities not
Heyuan") Heyuan Heyuan Commercial 1,340 - 70.00% 70.00% under common control
Sinopharm Holding Business combinations
Guoda Pharmacy involving entities under
Co., Ltd.（b） Shanghai Shanghai Commercial 168,333 60.00% - 60.00% 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
263
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
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
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. Xiamen Xiamen Commercial 3,750 - 100.00% 100.00% common control
264
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
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 proportion
(RMB‘0,000)
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 involving entities under
Chain 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
265
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
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
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 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
266
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
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 proportion acquisition
(RMB‘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
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
Sinopharm Holding Guoda involving entities
Pharmacy Hulun Buir Co., under common
Ltd. Hulun Buir Hulun Buir Commercial 1000 - 51.00% 51.00% 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% 51% 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
involving entities
Sinopharm Lerentang under common
Shijiazhuang Pharmaceutical Shijiazhuang Shijiazhuang Commercial 200 - 100.00% 100.00% control
267
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
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 capital Shareholding Voting Ways of
of business establishment business (RMB‘0,000) proportion acquisition
Direct Indirect
Sinopharm Holding Guoda Drug
Store Manchuria Co., Ltd. Manchuria Manchuria Commercial 50 - 51.00% 51.00% Establishment
Sinopharm Guoda Drug Store
Anshan Chain Co., Ltd. Anshan Anshan Commercial 600 - 51.00% 51.00% Establishment
Sinopharm Holding Guoda
Yongsheng Drug Store
（Shanghai） Co., Ltd. Shanghai Shanghai Commercial 80 - 55.00% 55.00% Establishment
Sanhe Lixin Golden Elephant
Langfang Langfang
Drugstore Co., Ltd. Commercial 1 - 100.00% 100.00% Establishment
Sinopharm Holding Foshan
Medical Consumables Foshan Foshan
Supply Chain Co., Ltd.（c） Commercial 800 - 70.00% 70.00% Establishment
Sinopharm Holding Medical
Supply Chain Service Nanning Nanning
(Guangxi) Co., Ltd.（d） Commercial 2000 - 30.60% 30.60% Establishment
Guoda Haohai（e） Shanghai Shanghai
Commercial 80 - 51.00% 51.00% Establishment
Baiyi Pharmacy（f） Nanning Nanning
Commercial 200 - 51.00% 51.00% Establishment
Sinopharm Hezhou（g） Hezhou Hezhou
Commercial 1000 - 100.00% 100.00% Establishment
Guoda Zhengzhou （h） Zhengzhou Zhengzhou
Commercial 2000 - 60.00% 60.00% Establishment
Guoda Ruijing（i） Shanghai Shanghai
Commercial 80 - 55.00% 55.00% Establishment
Guoda Fujian（j） Xiamen Xiamen
Commercial 1500 - 100.00% 100.00% Establishment
Sinopharm Qinzhou （k） Qinzhou Qinzhou
Commercial 1000 - 100.00% 100.00% Establishment
Sinopharm Hechi （l） Hechi Hechi
Commercial 1000 - 100.00% 100.00% Establishment
Business
combinations
Sinopharm Huadu （m） Guangzhou Guangzhou Commercial 1000 - 70.00% 70.00% involving
entities not
under common
control
Business
combinations
Shanxi Zhongao（n） Taiyuan Taiyuan Commercial 1000 - 100.00% 100.00% involving
entities not
under common
control
Business
combinations
Taiyuan Tongxinli （o） Taiyuan Taiyuan Commercial 560 - 100.00% 100.00% involving
entities not
under common
control
268
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
VII Interests in other entities (Continued)
1． Interests in subsidiaries (Continued)
(1) The composition of the Group (Continued)
（a） On 13 March 2019, Sinopharm Jiangmen was renamed as “Sinopharm Holding (Jiangmen) Co., Ltd.”
（b） Sinopharm Guoda brought in WBA investor in the form of increasing capital of RMB2.77 billion. Sinopharm
Guoda had become an enterprise with foreign investor. Industrial and commercial registration was
changed on 28 June 2018. Registered capital of Sinopharm Guoda is RMB1,680,000,000.00, which
includes 60% equity amounting to RMB1,010,000,000.00 contributed by the Company, and a 40% equity
amounting to RMB670,000,000.00 contributed by WBA investor. The delivery procedures were completed
on 4 July 2018. By 16 July 2018, all the additional funds were received. According to the agreement, the
Company still has controlling interest in Sinopharm Guoda, and WBA investor became a non-controlling
shareholder.
（c） On 30 January 2018, the Group and Shenzhen Qingniu Medical Investment Co., Ltd. accumulatively
invested RMB5,600,000.00 and RMB2,400,000, respectively, to set up Sinopharm Holding Foshan
Medical Consumables Supply Chain Co., Ltd.
（d） On 4 January 2018, the Group, Guorun Medical Supply Chain Service (Shanghai) Co., Ltd. (“Guorun
medical”) and Guangxi Deyiyuan Medical Investment Center (Limited partnership) jointly established
Sinopharm Holding Medical Supply Chain Service (Guangxi) Co., Ltd., and accumulatively invested
RMB6,120,000.00, RMB5,880,000.00 and RMB8,000,000.00, respectively. Guorun medical entrusted the
Group with its voting rights, the Group now holds 60% voting rights of Sinopharm Holding Medical Supply
Chain Service (Guangxi) Co., Ltd.
（e） On 18 January 2018, the Group and Shanghai Linhong Medical instrument Co., Ltd. jointly established
Guoda Haohai, accumulatively invested RMB408,000.00 and RMB392,000.00, respectively. As of the end
of 2018, Shanghai Linhong Medical instrument Co., Ltd. has invested RMB392,000.00, and the Group
completed the payment transaction on 15 Feburary 2019.
（f） On 24 April 2018, the Group and Baise Jianan Pharmaceutical Chain Co., Ltd. accumulatively invested
RMB1,020,000.00 and RMB980,000, respectively, to set up Baiyi Pharmacy. After the establishment, the
Group held 51% of equity interest in Baiyi Pharmacy.
（g） On 23 April 2018, the Group invested RMB10,000,000.00 to set up Sinopharm Holding Hezhou Co., Ltd.
As at the end of 2018, the Group invested RMB3,000,000.00.
（h） On 12 August 2018, the Group and Henan Wanxitang Pharmacy Co., Ltd. (“Henan Wanxitang”)
accumulatively invested RMB12,000,000.00 and RMB8,000,000.00, respectively to set up Guoda
Zhengzhou. By the end of 2018, the Group invested RMB12,000,000.00 and Henan Wanxitang invested
RMB3,000,000.00.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
VII Interests in other entities (Continued)
1． Interests in subsidiaries (Continued)
(1) The composition of the Group (Continued)
（i） On 21 September 2019, the Group and Shanghai Runjian Technology Co., Ltd. jointly established
Sinopharm Guoda Shanghai Ruijing Pharmacy Co., Ltd., and accumulatively invested RMB440,000.00
and RMB360,000.00, respectively. After establishment, the Group holds 55% of its equity. By the end of
2018, payment has been completed.
（j） On 8 August 2018, the Group invested RMB15,000,000.00 to set up Guoda Fujian. After the
establishment, the Company held 100% of equity interest in Guoda Fujian.
（k） On 16 March 2018, the Group established Sinopharm Qinzhou, and the subscription of registered capital
is RMB10,000,000.00. By the end of 2018, RMB1,500,000 has been paid.
（l） On 28 Feburary 2018, the Group established Sinopharm Hechi, and the subscription of registered capital
is RMB10,000,000.00. By the end of 2018, RMB1,500,000 has been paid.
（m） In April 2018, the Group acquired a 70% stake in Guangzhou Suihuahong Medicine Co., Ltd. for
RMB16,380,000.00 to constitute a business combination involving enterprises not under common control.
Afterwards, Guangzhou Suihuahong Medicine Co., Ltd. changed its name to Sinopharm Huadu. The
acquisition was completed on 30 April 2018 and included in the consolidation scope of the Company.
（n） In September 2018, the Group acquired a 100% stake in Shanxi Zhongao from Qiao Sanjiang and Li Huili
for RMB450,651.60 to constitute a business combination involving enterprises not under common control.
The acquisition was completed on 6th September 2018 and included in the consolidation scope of the
Company.
（o） The Group has acquired a 100% equity in Taiyuan Tongxinli for RMB3.39million from Beijing equity
exchange in November 2018, which forms a business combination not involving enterprises under
common control. Afterwards, Taiyuan Tongxinli becomes a wholly-owned subsidiary by the Group. This
acquisition was completed on 20 November 2018, Taiyuan Tongxinli is now within the consolidation scope.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
VII Interests in other entities (Continued)
1． Interests in subsidiaries (Continued)
Details of the Group’s subsidiaries that have material non-controlling interests are set out below:
2018
Percentage of Profit/(Loss) Accumulated balances
equity interest for this year Dividend paid to of
held by attributable to non-controlling non-controlling interests
non-controlling non-controlling shareholders at the date of the
shareholders shareholders balance sheet
(RMB) (RMB) (RMB)
Sinopharm
Guoda 40.00% 37,217,681.23 - 1,683,633,057.85
The major financial information of the subsidiaries in the table above is stated below. These amounts are
before elimination:
Sinopharm Guoda
2018
Current assets 7,467,662,962.46
Non-current assets 1,567,755,313.41
Total assets 9,035,418,275.87
Current liabilities 3,994,471,884.62
Non-current liabilities 64,729,132.20
Total liabilities 4,059,201,016.82
Operating revenue 10,878,025,717.94
Net profit 301,751,569.69
Total comprehensive income 301,751,569.69
Net cash flows from operating activities 469,094,341.78
2. Transaction resulting in changes in proportion of owners’ equity but without an impact on
the control of a subsidiary
In 2018, Sinopharm Guoda brought in WBA investor in the form of increasing capital of RMB2.77 billion.
According to the agreement, the Group is still in control and WBA investor becomes non-controlling
shareholder.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
VIIInterests in other entities (Continued)
3. 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
Shyndec Pharma Shanghai Shanghai Manufacturing 16.28 - Equity
Shanghai Dingqun Shanghai Shanghai 2.53 - 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. Guangzhou Guangzhou Commercial - 29.00 Equity
Dongyuan accord
pharmaceutical chain
Co., Ltd. Heyuan Heyuan Commercial - 45.00 Equity
Shyndec Pharma 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.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
VII Interests in other entities (Continued)
3. Interests in associates (Continued)
The following table illustrates the summarised financial information in respect of Shyndec Pharma:
2018 2017
Current assets 8,470,191,403.19 6,919,923,607.58
Non-current assets 7,993,673,189.70 8,250,667,440.18
Total assets 16,463,864,592.89 15,170,591,047.76
Current liabilities 6,568,480,863.79 5,390,426,266.96
Non-current liabilities 1,452,099,931.65 2,132,391,027.26
Total liabilities 8,020,580,795.44 7,522,817,294.22
Non-controlling interests 1,637,029,480.44 1,474,395,375.11
Shareholders’ equity attributable to
shareholders of the parent
company 6,806,254,317.01 6,173,378,378.43
Group’s share of net assets by
proportion of ownership interests 1,098,566,852.51 979,174,050.62
Carrying amount of the investment 1,098,566,852.51 979,174,050.62
Operating revenue 11,320,781,393.69 8,517,753,726.31
Income taxes 223,956,645.87 135,212,306.15
Net profit 1,069,979,572.65 818,572,126.27
Total comprehensive income 1,069,979,572.65 818,572,126.27
Dividend received 8,448,213.90 22,468,818.31
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
VII Interests in other entities (Continued)
3. Interests in associates (Continued)
The following table illustrates the summarised financial information in respect of Zhijun Medicine:
2018 2017
Current assets 1,111,485,098.64 932,859,067.11
Non-current assets 298,610,691.12 313,204,003.03
Total assets 1,410,095,789.76 1,246,063,070.14
Current liabilities 659,931,220.07 623,252,398.32
Non-current liabilities 24,953,965.28 28,845,526.50
Total liabilities 684,885,185.35 652,097,924.82
Shareholders’ equity attributable to
shareholders of the parent company 725,210,604.41 593,965,145.32
Group’s share of net assets by proportion
of ownership interests 355,353,196.15 291,042,921.20
Carrying amount of the investment 355,353,196.15 291,042,921.20
Operating revenue 1,762,587,352.62 1,244,330,047.58
Income taxes 36,760,959.44 35,301,145.94
Net profit 249,839,856.17 237,188,794.15
Total comprehensive income 249,839,856.17 237,188,794.15
Dividend received 58,111,254.57 -
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
VIII Risks related to financial instruments
1. Classification of financial instruments
The carrying amounts of each category of financial instruments as at the date of financial
position are as follows:
2018
Financial assets at Financial assets at fair value through
fair value Financial assets at other comprehensive income
Financial assets through profit or Total
amortised cost
loss
Mandatorily Mandatorily
Designated
required required
Cash and cash
equivalents - 8,089,781,304.56 - - 8,089,781,304.56
Notes receivable
and trade
receivables - 10,126,398,302.15 567,775,275.40 - 10,694,173,577.55
Other receivables - 643,493,359.32 - - 643,493,359.32
Other non-current
financial assets 140,000,000.00 - - - 140,000,000.00
Equity investments
designated at
fair value
through other
comprehensive
income - - - 13,685,760.00 13,685,760.00
140,000,000.00 18,859,672,966.03 567,775,275.40 13,685,760.00 19,581,134,001.43
Financial liabilities Financial liabilities at amortised cost
Short-term borrowings 2,597,652,702.43
Notes payables and trade payables 9,885,291,642.97
Other payables 1,539,436,971.93
Current portion of non-current liabilities 5,861,324.37
Long-term borrowings 31,600,000.00
Long-term payables 3,763,978.52
14,063,606,620.22
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
VIII Risks related to financial instruments (Continued)
1. Classification of financial instruments (Continued)
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 and trade
receivables 9,093,607,443.96 - 9,093,607,443.96
Other receivables 657,932,499.65 - 657,932,499.65
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
Financial liabilities Other financial liabilities
Short-term borrowings 1,561,354,521.64
Notes payable and trade payables 8,876,658,828.52
Other payables 1,030,329,660.02
Current portion of non-current liabilities 5,434,770.70
Long-term borrowings 31,600,000.00
Long-term payables 9,332,537.14
11,514,710,318.02
2. Transfer of financial assets
Transferred financial assets that are not derecognized in their entirety
As at 31 December 2018, the Group had endorsed commercial bills receivable (the "Endorsed
Bills") to certain of its suppliers in order to settle trade payables due to such suppliers of RMB
301,416.00 (31 December 2017: nil). During the year, the Group operated a number of
discounting business through several banks in China. At 31 December 2018, the carrying value
thereof was RMB170,013,427.11 (31 December 2017: RMB147,715,527.67). 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 trade payables settled. Subsequent to the
Endorsement, the Group did not retain any rights of 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
2018, the carrying value of trade payables settled by the Group totalled RMB170,314,843.11
(31 December 2017: RMB147,715,527.67).
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
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 2018, the Group had endorsed commercial bills receivable (the "Endorsed
Bills") to certain of its suppliers in order to settle trade payables due to such suppliers of
RMB568,118,674.84 (31 December 2017: RMB667,900,939.97). During the year, the Group
operated a number of discounting business through several banks in China. At 31 December
2018, the carrying value thereof was RMB705,143,849.35 (31 December 2017:
RMB367,011,030.59). 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 trade
payables. 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.
During 2018, the Group has not recognized any gain or loss on the date of transfer. No gain or
loss was recognized from derecognized financial assets in which the Continuing Involvement
exists, both during the year or cumulatively.
During 2018, 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.
As part of its normal business, the Group entered into an trade receivable factoring
arrangement (the “Arrangement”) without recourse and transferred certain trade receivables 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 trade receivables. The original carrying value of the derecognized trade
receivables transferred under the Arrangement that have not been settled as at 31 December
2018 amounted to RMB827,745,640.19 (31 December 2017: RMB525,614,331.67).
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
VIII Risks related to financial instruments (Continued)
3. Risks of financial instruments
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 trade receivables
and trade payables, which arise directly from its operations.
The Company’s board of directors are responsible for planning and establishing the risk
management framework of the Group, formulating risk management policies and related
guidelines of the Group and supervising the implementation of risk management measures. The
Group has already developed risk management policies to identify and analyse the risks faced
by the Group, which have clearly identified specific risks, covering a lot of aspects such as
market risk, credit risk and liquidity risk management. The Group regularly assesses the market
environment and changes in the Group’s business activities to determine whether or not to
update the risk management policies and systems. The risk management of the Group shall be
conducted by the operations and management department according to the policy approved by
the Company’s management. The operations and management department identifies, evaluates
and avoids related risks by means of close cooperation with other business units of the Group.
To avoid the risk concentrating on a single industry, a specific area or a specific counterparty, the
Group spreads financial instruments risk with diversified investments and business portfolio.
Credit risk
The Group only trades with recognised and creditworthy third parties. It is the Group’s policy that
all customers who wish to trade on credit terms are subject to credit verification procedures. In
addition, receivable balances are monitored on an ongoing basis and the Group’s exposure to
bad debts is not significant. For transactions that are not denominated in the functional currency
of the relevant operating unit, the Group does not offer credit terms without the special approval
of the credit control department of the Group.
Since cash and bank balances, bank acceptance bills receivable and derivative financial
instruments are placed in the well-established banks with high credit ratings, the credit risk of
these financial instruments is lower.
The other financial instruments of the Group include cash and bank and other receivables. The
credit risk of these financial assets result from default of counterparty. The maximum credit
exposure equals to the book value of these instruments.
278
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
VIII Risks related to financial instruments (Continued)
3. Risks of financial instruments
Credit risk (Continued)
The Group applies standard credit clause for sale of goods to customers, at the same time
purchase other goods from some of the major customers. Disclosures regarding maximum credit
exposure on trade receivables are as follows:
2018 2017
Trade receivable book value 10,733,695,012.29 9,137,532,909.37
Less: Bad debt provision (39,521,434.74) (43,925,465.41)
Carrying value 10,694,173,577.55 9,093,607,443.96
Amount payable to customer
The Group has agreement with customers stating that only in the circumstances of default in
payment from the customer, can the Group use the payable balance of the same customer to
offset receivables. Therefore, at every balance sheet date, the maximum credit risk exposure of
the Group is the total amount of trade receivables less bad debt provision. Since payables cannot
be offset within the balance sheet, the maximum credit risk exposure is without deducting the
customer payable balance.
Since the Group trades only with recognised and creditworthy third parties, there is no requirement
for collateral. Credit risks are managed by customer/counterparty, by geographical region and by
industry sector. There are no significant concentrations of credit risk within the Group as the
customer bases of the Group’s trade receivables are widely dispersed in different sectors and
industries. The Group does not hold any collateral or other credit enhancements over its trade
receivable balances.
279
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
VIII Risks related to financial instruments (Continued)
4. Risks of financial instruments
Credit risk (Continued)
Determination of significant increase in credit risk
At each reporting date, the group determines whether the credit risk of a financial asset has
increased significantly since initial recognition. When determining whether the credit risk of a
financial asset has increased significantly since initial recognition, the Group considers reasonable
and supportable information that is relevant and available without undue cost or effort. This
includes both quantitative and qualitative information analysis, based on the Group’s historical
experience and informed credit assessment and including forward-looking information. In order to
determine the change of expected default risk during the financial instrument’s entire lifetime, the
Group compares the default risk of financial instrument on the balance sheet date and on the
initial recognition date base on a single financial instrument or financial instrument portfolio with
similar default risk.
The Group determines that the credit risk tof financial assets has significantly increased when one
or more quantitative or qualitative criteria are met:
- quantitative criteria are mainly probability of default increasing more than a given % since
initial recognition;
- qualitative criteria are mainly significant detrimental changes in the borrower’s operating or
financial conditions and early warning customer lists.
- The upper criteria is 30 days the borrowers default.
Definition of credit-impaired financial assets
In assessing whether a financial asset is credit-impaired, the Group considers both quantitative
and qualitative information in line with internal credit risk management. The Group assesses
whether a financial asset is credit-impaired by considering the following factors:
- significant financial difficulty of the borrower or issuer;
- a breach of contract such as a default or past due event;
- the lender(s) of the borrower, for economic or contractual reasons relating to the borrower’s
financial difficulty, having granted to the borrower concession(s) that the lender(s) would not
otherwise consider;
- it is becoming probable that the borrower will enter bankruptcy or other financial
reorganisation;
- the disappearance of an active market for security because of financial difficulties;
- financial assets purchased or sourced at large discounts indicating that credit losses have
occurred.
280
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
VIII Risks related to financial instruments (Continued)
5. Risks of financial instruments
Credit risk (Continued)
The impairment of financial assets may not be necessarily due to a single disparate event. The
combined effects of multiple events may result in financial assets being credit-impaired.
Parameter of the expected credit loss model
Based on whether there is a significant increase in credit risk and whether the financial assets
are credit-impaired, the Group recognizes impairment allowance for different assets using either
12-month expected credit losses or lifetime expected credit losses. The measurement of the ECL
model is a function of the probability of default, the loss given default (i.e. the magnitude of the
loss if there is a default) and the exposure at default. The Group establishes the model by
considering the quantitative analysis of historical statistics such as counterparty rating, the
guarantee method, collateral category, repayment method, and also forward-looking information.
Definitions:
- The probability of default is the probability that the debtor will not be able to meet its
repayment obligations within the following 12 months or throughout the remaining duration.
To reflect the macro-economic environment conditions, the Group’s assessment of the
probability of default is based on the calculation of the ECL model adjusted by forward-
looking information.
- The loss given default (i.e. the magnitude of the loss if there is a default) refers to the
Group's expectation of the extent of the loss of default risk exposure. The loss given default
varies depending on the type of counterparty, the way and priority of recourse, and the type
of collateral. The loss given default is the percentage of the risk exposure loss at the time of
default, calculated on the basis of the next 12 months or the entire duration.
- The exposure at default refers to the amount that the Group should be repaid in the event of
default in the next 12 months or throughout the remaining period.
Forward-looking information
The assessment of a significant increase in credit risk and the calculation of the ECL both involve
forward-looking information. The Group recognizes key economic ratios that influence credit risk
and ECL by historical data analysis.
As at December 31 2018, there was no evidence of significant increase in credit risk (31
December 2017: nil).
281
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
VIII Risks related to financial instruments (Continued)
3. Risks of financial instruments (Continued)
Liquidity risk
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 2018
Within 1 year 1 to 2 years 2 to 5 years Above 5 years Total
Short-term borrowings 2,630,711,888.42 - - - 2,630,711,888.42
Notes and trade receivables 9,885,291,642.97 - - - 9,885,291,642.97
Other payables 1,539,436,971.93 - - - 1,539,436,971.93
Current portion of non-current
abilities 8,597,768.02 - - - 8,597,768.02
Long-term payables - 4,424,279.85 563,159.02 - 4,987,438.87
Long-term borrowings - 32,043,003.47 - 32,043,003.47
14,064,038,271.34 36,467,283.32 563,159.02 - 14,101,068,713.68
282
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(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 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 and trade receivables 8,876,658,828.52 - - - 8,876,658,828.52
Other payables 1,030,329,660.02 - - - 1,030,329,660.02
Current portion of non-current - - -
liabilities 8,597,768.02 8,597,768.02
Long-term payables - 7,304,197.88 4,987,438.87 - 12,291,636.75
Long-term borrowings - 1,293,570.14 32,043,003.47 33,336,573.61
11,489,819,271.62 8,597,768.02 37,030,442.34 - 11,535,447,481.98
283
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
284
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
VIII Risks related to financial instruments (Continued)
6. 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 2018, if the floating interest rates of the long-term interest-bearing
borrowings increase or decrease by 50 base points, while other factors do not change, the Group’s
net income will decrease or increase by RMB118,500.00 (31 December 2017: if the floating interest
rates of the long-term interest-bearing borrowings increase or decrease by 50 base points, while
other factors do not change, the Group’s net income will increase or decrease by RMB118,500.00).
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
headquarters 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 2018 and 2017, the Group did not
enter into any interest rate swap agreements.
For the year ended 31 December 2018, the Group had long-term interest-bearing borrowings with
floating interest rates amounting to RMB31,600,000.00 (31 December 2017: RMB31,600,000.00).
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 headquarters 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.
285
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
VIII Risks related to financial instruments (Continued)
7. 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:
2018 2017
Gearing ratio 51.93% 55.57%
286
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IX Disclosure of fair value
1. Assets and liabilities at fair value
2018
Input applied in the measurement of fair value
Quoted Significant Significant Total
prices in observable unobservable
active inputs inputs
markets
Level 1 Level 2 Level 3
Continuous measurement of
fair value
Notes receivable - 567,775,275.40 - 567,775,275.40
Other investment in equity - -
instruments 13,685,760.00 13,685,760.00
Other non-current financial
assets - 140,000,000.00 140,000,000.00
- 581,461,035.40 140,000,000.00 721,461,035.40
2017
Input applied in the measurement of fair value
Quoted Significant Significant Total
prices in observable unobservable
active inputs inputs
markets
Level 1 Level 2 Level 3
Continuous measurement of fair
value
Available-for-sale financial 13,685,760.00
assets - - 13,685,760.00
2. Assets and liabilities disclosed at fair value
2018
Input applied in the measurement of fair value
Quoted Significant Significant Total
prices in observable unobservable
active inputs inputs
markets
Level 1 Level 2 Level 3
Long-term borrowings - 31,600,000.00 - 31,600,000.00
287
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IX Disclosure of fair value (Continued)
2. Assets and liabilities disclosed at fair value (Continued)
2017
Input applied in the measurement of fair value
Quoted prices in Significant Significant Total
active markets observable inputs unobservable
inputs
Level 1 Level 2 Level 3
Long-term borrowings - 31,600,000.00 - 31,600,000.00
3. Estimation of fair value
The following are book value and fair value of financial instruments of the Group excluding those that has
immaterial different in book value and fair value:
31 December 2018 1 January 2018 31 December 2917
Book value Fair value Book value Fair value Book value Fair value
Financial liabilities
Long-term borrowings 31,600,000.00 31,600,000.00 31,600,000.00 31,600,000.00 31,600,000.00 31,600,000.00
Management has assessed that the fair values of cash and cash equivalents, notes receivable, trade
receivables, other receivables, short-term borrowings, notes payable, trade payables, other payables, and
other current assets and liabilities, and current liabilities approximate to their carrying amounts largely due to
the short remaining maturities of these instruments.
The financial controller of the Group takes the responsibility to formulate policies and procedures related to
financial instrument fair value measurements and directly reports to the CFO and the audit committee. On
each balance sheet date, the financial department analyses the variation of the fair vule of financial
instruments and determines the inputs applicable to valuation. The valuation is required to be approved by the
CFO.
The fair values of financial assets and liabilities are the amount at which the instrument could be exchanged
or debts could be settled in an arm’s length transaction between knowledgeable and willing parties, other than
in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values.
The fair values of short-term and long-term borrowings, and long-term payables have been calculated by
discounting the expected future cash flows using market rates of return currently available for other financial
instruments with similar terms, credit risk and remaining maturities. As at 31 December 2018, the Group’s
own non-performance risk for short-term and long-term borrowings was assessed to be insignificant.
For an equity instrument of listed entities, the market price is used to determine fair value. For an equity
instrument of non-listed entities, the market comparable company model is used to estimate fair value. The
Group believes that estimated fair value by the valuation method is rational, and also the most sufficient value
at the balance sheet date.
4. Unobservable inputs
A financial instrument that is measured at fair value with measurement of level 3 is insensitive to reasonable
fluctuation of the unobservable inputs.
288
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IX Disclosure of fair value (Continued)
5． Transfers between levels of fair value measurement
During the year, there were no transfers of fair value measurements between Level 1 and Level 2.
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. 297,165.62 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
Sinopharm Shantou Jinshi Pharmaceutical Co., Ltd. Controlled by CNPGC
Huayi Pharmaceutical Co., Ltd. Controlled by CNPGC
Beijing Huamiao Pharmaceutical Co., Ltd. Controlled by CNPGC
Sichuan Jiangyouzhongbafuzi Technology Development Co., Ltd. Controlled by CNPGC
Guizhou Tongjitang Pharmaceutical Co., Ltd. Controlled by CNPGC
Anhui Jingfang Pharmaceutical Co., Ltd. Controlled by CNPGC
Guangdong Medi-World Pharmaceutical Co., Ltd. Controlled by CNPGC
Sinopharm Fengliaoxing (Foshan) Medicines Co., Ltd. Controlled by CNPGC
Shandong Lu Ya Pharmaceutical Co., Ltd. Controlled by CNPGC
Foshan Fengliaoxing Pharmaceutical Co., Ltd. Controlled by CNPGC
Winteam Pharmaceutical Group Ltd. Controlled by CNPGC
Chengdu Rongsheng Pharmacy Co., Ltd. Controlled by CNPGC
Lanzhou Institute of Biological Products Co., Ltd. Controlled by CNPGC
Lanzhou Biotechnology Development Co., Ltd. Controlled by CNPGC
Shanghai Shangsheng Biological Products Co., Ltd. Controlled by CNPGC
Shantou Jinshi Powder Injection Co., Ltd. Controlled by CNPGC
289
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(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
Chengdu Institute of Biological Products Co.,Ltd. Controlled by CNPGC
China National Pharmaceutical Industry Co., Ltd. Controlled by CNPGC
Sinopharm Weiqida Pharmaceutical Co., Ltd. Controlled by CNPGC
Sinopharm Xinjiang Pharmaceutical Co., Ltd. Controlled by CNPGC
Shanghai Modern Hasen (Shangqiu) Pharmaceutical Co., Ltd. Controlled by CNPGC
Shanghai Shyndec Pharmaceutical Marketing Co., Ltd. Controlled by CNPGC
Sinopharm Group Rongsheng Pharmaceutical Co., Ltd. Controlled by CNPGC
Wuhan Zhonglian Pharmaceutical Group Co., Ltd. Controlled by CNPGC
The Fourth Pharmaceutical Co., Ltd. of Zhonglian Group Controlled by CNPGC
Sinopharm Chuan Kang Pharmaceutical Co., Ltd. Controlled by CNPGC
China National Pharmaceutical Foreign Trade Corporation Controlled by CNPGC
Sinopharm Group Yibin Pharmaceuticals Co., Ltd. Controlled by CNPGC
Sinopharm Yixin Pharmaceutical Co., Ltd. Controlled by CNPGC
Sinopharm Holding Sanyi Medicine (Wuhu) Co., Ltd. Controlled by CNPGC
Sinopharm Wuhan blood products Co., Ltd. Controlled by CNPGC
Fujian Chentian Jinling Pharmaceutical Co., Ltd. Controlled by CNPGC
Beijing Huasheng Pharmaceutical Biotechnology Development Co., Ltd. Controlled by CNPGC
Sinopharm Group Chengdu Xinlibang Biological Products Co., Ltd. Controlled by CNPGC
Foshan Dezhong Pharmaceutical Co., Ltd. Controlled by CNPGC
Guizhou Longlife Pharmaceutical Co., Ltd. Controlled by CNPGC
Sinopharm Fengliaoxing Medical Hospital Co., Ltd. Controlled by CNPGC
Sinopharm Group Fengliaoxing Traditional Chinese Medical Center Foshan
Nanhai Co., Ltd. Controlled by CNPGC
Beijing Institute of Biological Products Co., Ltd. Controlled by CNPGC
Group Financial Co. Controlled by CNPGC
Sinopharm Group Guizhou Blood Products Co., Ltd. Controlled by CNPGC
China National of Traditional&Herbal Medicine Co., Ltd. Controlled by CNPGC
Sinopharm Chongqing Pharmaceutical and Medical Industry Design Institute Controlled by CNPGC
Sinopharm ShanXi Ruifulai Pharmaceutical Co., Ltd. Associate of CNPGC
China Otsuka Pharmaceutical Co., Ltd. Associate of CNPGC
Fresenius Kabi Huarui Pharmaceuticals Co., Ltd. Associate of CNPGC
290
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(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
Qinghai Pharmaceutical Factory Co., Ltd. Associate of CNPGC
Jingfukang Pharmaceutical Group Co., Ltd. Associate of CNPGC
Shanghai SinoMed Medicine Co., Ltd. Associate of CNPGC
Changchun Changsheng Gene Pharmaceutical Co., Ltd. Associate of CNPGC
Sinopharm Holding Shanxi Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Shanxi Instrument Branch Co., Ltd. Controlled by Sinopharm Group
Sinopharm Group Southwest Medicine Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Tianjin Co., Ltd. Controlled by Sinopharm Group
Sinopharm Group (Tianjin) Eastern Bokang Pharmaceutical Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Biopharmaceutical (Tianjin) Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Zhihuiminsheng (Tianjin) Pharmaceutical Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Shenyang Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Dalian Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Jinzhou Co., Ltd. Controlled by Sinopharm Group
Sinopharm Group Shanxi Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Shanxi Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Shanxi Lvliang Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Shanxi Jinzhong Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Shanxi Jincheng Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Shanxi Mingdikang Medicine Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Shanxi Zhidekang Medicine Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Hunan Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Yongzhou Co., Ltd. Controlled by Sinopharm Group
China National Medicines Co., Ltd. Controlled by Sinopharm Group
Sinopharm Group Guorui Medicine Co., Ltd. Controlled by Sinopharm Group
Sinopharm Prospect Dentech (Beijing) Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Beijing Kangchen Bio-Pharmaceutical Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Beijing Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Beijing Tianxing Puxin Biological Medical Co., Ltd. Controlled by Sinopharm Group
291
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(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 holdings Beijing huahong co., Ltd Controlled by Sinopharm Group
Sinopharm Holding Zhejiang Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Jinhua Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Sub Marketing Center Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Henan Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Pingdingshan Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Anhui Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Fuzhou Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Shandong Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Yantai Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Lunan Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Rizhao Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Jinan Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Dezhou Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Hainan Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Hainan Hongyi Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Fujian Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Putian Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Zhangzhou Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Quanzhou Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Xiamen Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Ningxia Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Guizhou Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Inner Mongolia Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Tongliao Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Ulanqab Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Hulun Buir Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Ordos Co., Ltd. Controlled by Sinopharm Group
Sinopharm Group Xinjiang Special Drugs National Pharmaceutical Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Xinjiang Xinte Karamay Pharmaceutical Co., Ltd. Controlled by Sinopharm Group
292
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(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 Xinjiang Special Drugs Kashgar Pharmaceutical Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Xinjiang Special Drugs Western Pharmaceutical Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Shanghai Likang Pharmaceutical Co., Ltd. Controlled by Sinopharm Group
Shanghai Meitai Medical Instruments Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Jiangsu Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Yangzhou Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Yangzhou Biological Products Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Taizhou Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Yangzhou Medical Treatment Equipment Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Suzhou Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Wuxi Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Lianyungang Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Nanjing Wende Pharmaceutical Co.,Ltd. Controlled by Sinopharm Group
Sinopharm Holding Changzhou Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Changzhou Medical Logistics Center Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Yancheng Co., Ltd. Controlled by Sinopharm Group
Sinopharm Lingyun Biopharmaceutical (Shanghai) Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Heilongjiang Co., Ltd. Controlled by Sinopharm Group
Sinopharm Le-Ren-Tang Medicine Co., Ltd. Controlled by Sinopharm Group
Sinopharm Lerentang Hebei Medical Instrument Trade Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Lerentang Pharmaceutical 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 Holding Donghong Medical (Shanghai) Co., Ltd. Controlled by Sinopharm Group
Shanghai Merro Pharmaceutical Co., Ltd. Controlled by Sinopharm Group
Sinopharm Xingsha Pharmaceuticals (Xiamen) Co., Ltd. Controlled by Sinopharm Group
Sinopharm Sichuan Pharmaceutical Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Dalian Hecheng Co., Ltd. Controlled by Sinopharm Group
293
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(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 Changsha Co., Ltd. Controlled by Sinopharm Group
Pudong New Area of Shanghai Pharmaceutical Medicine Ltd. Controlled by Sinopharm Group
Sinopharm (Guangzhou) Medical Equipment Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Tianjin Distribution Center Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Chengdu Co., Ltd. Controlled by Sinopharm Group
Sinopharm Fujian Medical Examination Co., Ltd. Controlled by Sinopharm Group
China National Scientific Instruments & Materials Imp/Exp Shenzhen 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
Beijing Tongyu Information Technology Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Jiangxi Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Xinjiang New & Special Gingsen Antler Medical Co., Ltd. Controlled by Sinopharm Group
Sinopharm Group Chemical Reagent Co., Ltd. Controlled by Sinopharm Group
Sinopharm Hebei Medical Instrument Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Tianjin North Medicine Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Nanping Newforce Co., Ltd. Controlled by Sinopharm Group
Sinopharm Group Shanghai Medicine Device Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Chongqing Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Tianjin Binhai Pharmaceutical Co., Ltd. Controlled by Sinopharm Group
Sinopharm Group Medicine Logistic Co., Ltd. Controlled by Sinopharm Group
Sinopharm Group Medicine Logistic Co., Ltd. Guangzhou Branch Controlled by Sinopharm Group
China National Pharmaceutical Logistics Co., Ltd. Controlled by Sinopharm Group
Shanghai Tongyu Information Technology Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Huangshi Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Hubei Hongyuan Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Jiaozuo Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Xinxiang Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Wuhu Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Lu'an Co., Ltd. Controlled by Sinopharm Group
294
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(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 Suzhou Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Jining Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Liaocheng Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Yunnan Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Honghe Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Chuxiong Co., Ltd. Controlled by Sinopharm Group
Yuxi Sinopharm Medicine Co., Ltd. Controlled by Sinopharm Group
Sinopharm Guanai Yuankang Pharmacy (Haikou) Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Gansu Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Longyan Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Ningde Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Nanchang Chain Store Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Tongren Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Zunyi Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Guizhou Medical Equiment Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Jilin Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Jilin Chain Store Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Siping Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Wenzhou Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Nantong Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Huaian Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Xuzhou Co., Ltd. Controlled by Sinopharm Group
Sinopharm Lerentang Hengshui Medicine Co., Ltd. Controlled by Sinopharm Group
Sinopharm Lerentang Baoding Medicine Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Qinghai Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Hongrun Medical Business Service (Shanghai) Co., Ltd. Controlled by Sinopharm Group
Sinopharm Medical Instrument Guizhou Qiannan Co., Ltd. Controlled by Sinopharm Group
Sinopharm Group Guangdong Medicine Device Co., Ltd. Controlled by Sinopharm Group
Sinopharm Zhuhai Medical Instrument Co., Ltd. Controlled by Sinopharm Group
295
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(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 Medical Instrument Foshan Co., Ltd. Controlled by Sinopharm Group
Fujian Sinopharm Medical Instrument Co., Ltd. Controlled by Sinopharm Group
Sinopharm Nanping Medical Instrument Co., Ltd. Controlled by Sinopharm Group
Sinopharm Group Guangxi Medical Equipment Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Ganzhou Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Xiangyang Co., Ltd. Controlled by Sinopharm Group
Sinopharm Xinxiang Chain Store Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Chongqing Ruimin Pharmaceutical Co., Ltd. Controlled by Sinopharm Group
Sinopharm Lerentang Zhangjiakou Medicine Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Pingliang Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Deyang Co., Ltd. Controlled by Sinopharm Group
Sinopharm Guangdong Medical Examination Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Hunan Weian Pharmacy Medicine Chain Company Limited Controlled by Sinopharm Group
Sinopharm Group Shanghai Co., Ltd. Controlled by Sinopharm Group
Beijing Sinopharm Tianyuan Real Estate & Property Management Co., Ltd. Controlled by Sinopharm Group
Xinjiang Baitong Property Service Co., Ltd. Controlled by Sinopharm Group
Sinopharm Group Xinjiang Pharmaceutical Co., Ltd. Controlled by Sinopharm Group
Guorun medical Controlled by Sinopharm Group
Sinopharm Xinjiang Korla Pharmaceutical Co., Ltd. Controlled by Sinopharm Group
Sinopharm Holding Huaideju Pharmaceutical (Xiamen) Co., Ltd. Controlled by Sinopharm Group
Yichang Humanwell Pharmaceutical Co., Ltd. Associate of Sinopharm Group
Hutchison Whampoa Sinopharm Pharmaceuticals (Shanghai) Co., Ltd. Associate of Sinopharm Group
Jiangsu Lianhuan Pharmaceutical Co.,Ltd. Associate of Sinopharm Group
Sinopharm Health Online Co., Ltd. Associate of Sinopharm Group
Shanghai Guoda Lingyun Pharmacy Co., Ltd. Associate of Sinopharm Group
Hubei Medical Group Co., Ltd. Associate of Sinopharm Group
Sichuan Kang Daxin Pharmaceutical Co., Ltd. Associate of Sinopharm Group
Ningbo Meishan bonded port area Qiling equity investment center LP Associate of Sinopharm Group
Sinopharm Holding Financing Lease Co., Ltd. Associate of Sinopharm Group
Subsidiary of Main Luck
Shenzhen Wanwei Medicine Trading Co., Ltd. Pharmaceutical
Chongqing Yaoyou Pharmaceutical Co., Ltd. Subsidiary of Fosun Pharm
Sichuan Hexin Pharmaceutical Co., Ltd. Subsidiary of Fosun Pharm
Guilin South pharmaceutical Co., Ltd. Subsidiary of Fosun Pharm
296
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(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 Chaohui Pharmaceutical Co., Ltd. Subsidiary of Fosun Pharm
Tibet Yaoyou Medicines Co.,Ltd. Subsidiary of Fosun Pharm
Shenyang Hongqi Pharmaceutical Co., Ltd. Subsidiary of Fosun Pharm
Jiangsu Wanbang Pharmacy Marketing Co., Ltd. Subsidiary of Fosun Pharm
Chongqing Haisiman Pharmaceutical Co., Ltd. Subsidiary of Fosun Pharm
Jinzhou AoHong Pharmaceuticals Co., Ltd. Subsidiary of Fosun Pharm
Hunan Dongting Pharmaceutical Co., Ltd. Subsidiary of Fosun Pharm
Jiangsu Huanghe Pharmaceutical Co., Ltd. Subsidiary of Fosun Pharm
Suzhou Erye Pharmaceutical Limited Company Subsidiary of Fosun Pharm
Jiangsu Fuxing Pharmaceutical Trading Co., Ltd Subsidiary of Fosun Pharm
Jiangxi Erye Medicine Marketing Co., Ltd. Subsidiary of Fosun Pharm
Shanghai Transfusion Technology 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
Foshan Chancheng Pharmaceutical Co., Ltd. Subsidiary of Fosun Pharm
Shenzhen Qianda Medical Beauty Clinic Subsidiary of Fosun Pharm
Shenzhen Heng Sheng Hosital Subsidiary of Fosun Pharm
Foshan Shunde District Lecong Supply and Marketing group
Shunketang Medicine Co., Ltd. Subsidiary of Fosun Pharm
Beijing Golden Elephant Fosun Pharmaceutical Co., Ltd. Non-controlling interest of a subsidiary
Henan Wanxitang Non-controlling interest of a subsidiary
Shenyang Pharmaceutical Co., Ltd. Non-controlling interest of a subsidiary
Lerentang Investment Group Co., Ltd. Non-controlling interest of a subsidiary
Pingdingshan Pusheng Pharmaceutical Co., Ltd. Non-controlling interest of a subsidiary
Hunan Minshengtang Investment Co., Ltd. Non-controlling interest of a subsidiary
Linyi Medical Group Co., Ltd. Non-controlling interest of a subsidiary
Guangdong Jiyuantang Development Co., Ltd. Non-controlling interest of a subsidiary
Zhang Zhenfang Non-controlling interest of a subsidiary
Hangzhou Xihu Business Group Corporation Non-controlling interest of a subsidiary
Shenzhen Jiufeng Investment Co., Ltd. Non-controlling interest of a subsidiary
Taishan Qunkang Pharmacy Co., Ltd. Non-controlling interest of a subsidiary
Heyuan Mairui Trading Co., Ltd. Non-controlling interest of a subsidiary
Controlled by non-controlling interest of a
Nanjing Yuanguang Trading Co., Ltd. subsidiary
Shaoguan Wujiang District Muyang Medicine Information Consultant Controlled by non-controlling interest of a
Co., Ltd. subsidiary
Controlled by non-controlling interest of a
Taishan Xiangranhui Trade Co., Ltd subsidiary
Family member of the non-controlling
Gu Jinhua shareholder of a subsidiary
Gu Haiqun Non-controlling interest of a subsidiary
Controller of non-controlling interest of a
Wang Yang subsidiary
297
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(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
2018 2017
(RMB’0,000) (RMB’0,000)
Sinopharm Holding Sub Marketing Center Co., Ltd. 102,842.49 101,744.54
China National Medicines Co., Ltd. 47,447.25 38,102.01
Sinopharm Holding Shanxi Co., Ltd. 30,206.49 22,720.93
Sinopharm Holding Shanxi Co., Ltd. 17,803.27 15,849.65
Sinopharm Lingyun Biopharmaceutical (Shanghai) Co., Ltd. 17,772.72 21,237.87
Sinopharm Le-Ren-Tang Medicine Co., Ltd. 15,730.42 15,540.66
Sinopharm Group Co., Ltd. 15,674.01 47,891.45
Fresenius Kabi Huarui Pharmaceuticals Co., Ltd. 13,492.91 16,178.69
Sinopharm Holding Shenyang Co., Ltd. 12,615.36 10,902.50
Jiangsu Wanbang Pharmacy Marketing Co., Ltd. 10,590.47 7,288.02
Lanzhou Institute of Biological Products Co., Ltd. 8,556.00 6,978.00
Sinopharm Group Xinjiang Special Drugs National Pharmaceutical Co., Ltd. 7,968.25 6,890.74
Sinopharm Holding Lunan Co., Ltd. 7,867.79 5,007.91
Chongqing Yaoyou Pharmaceutical Co., Ltd. 5,425.64 3,529.40
Sinopharm Holding Yangzhou Co., Ltd. 5,080.96 4,561.71
Jinzhou AoHong Pharmaceuticals Co., Ltd. 4,655.26 -
Sinopharm Holding Beijing Co., Ltd. 4,166.01 4,502.72
Sinopharm Holding Inner Mongolia Co., Ltd. 3,765.52 3,428.82
Shenzhen Main Luck Pharmaceutical Co., Ltd. 3,664.44 3,815.55
Winteam Pharmaceutical Group Ltd. 3,425.51 2,037.17
Sinopharm Holding Lerentang Pharmaceutical Co., Ltd. 3,425.05 2,865.65
Sinopharm Holding Pingdingshan Co., Ltd. 2,966.11 3,494.08
Sinopharm Holding Hunan Co., Ltd. 2,753.14 1,859.99
Sinopharm Holding Jiangsu Co., Ltd. 2,478.08 2,774.47
Shenzhen Wanwei Medicine Trading Co., Ltd. 2,360.76 2,617.88
Sinopharm Holding Fujian Co., Ltd. 2,235.91 2,748.83
Suzhou Erye Pharmaceutical Limited Company 2,097.57 -
Sinopharm Lerentang Shijiazhuang Medicine Co., Ltd. 1,927.59 2,274.90
Tibet Yaoyou Medicines Co.,Ltd. 1,863.03 -
X. Related party relationships and transactions (Continued)
298
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
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)
2018 2017
(RMB’0,000) (RMB’0,000)
Sinopharm (Guangzhou) Medical Equipment Co., Ltd. 1,732.81 -
Sinopharm Holding Xiamen Co., Ltd. 1,641.68 2,566.00
Sinopharm Group (Shenzhen) Pharmaceutical Co., Ltd. 1,550.59 458.11
Chengdu Rongsheng Pharmacy Co., Ltd. 1,544.99 2,515.11
Sinopharm Holding Shanxi Instrument Branch Co., Ltd. 1,523.54 906.15
Sinopharm Group Zhijun (Shenzhen) PingShan Pharmaceutical Co., Ltd. 1,485.99 809.83
Lanzhou Biological Technology Development Co., Ltd. 1,380.00 -
China National Pharmaceutical Foreign Trade Corporation 1,376.71 613.18
Sinopharm Group Medicine Logistic Co., Ltd. 1,374.70 1,511.51
Sinopharm Holding Henan Co., Ltd. 1,345.69 643.91
Sinopharm Holding Ningxia Co., Ltd. 1,303.98 1,260.94
Sinopharm Health Online Co., Ltd. 1,269.85 952.00
Shanghai Shangsheng Biological Products Co., Ltd. 1,225.55 885.46
Sinopharm Holding Suzhou Co., Ltd. 1,123.00 972.81
Sinopharm Holding Changzhou Medical Logistics Center Co., Ltd. 1,094.70 1,252.80
Sinopharm Chuan Kang Pharmaceutical Co., Ltd. 1,063.26 243.68
Yichang Humanwell Pharmaceutical Co., Ltd. 988.76 881.03
Sinopharm Holding Xinjiang Special Drugs Western Pharmaceutical Co., Ltd. 961.00 790.45
Sinopharm Xingsha Pharmaceuticals (Xiamen) Co., Ltd. 958.22 186.16
Sinopharm Holding Fuzhou Co., Ltd. 843.89 942.42
Sinopharm Group Guorui Medicine Co., Ltd. 815.71 82.70
China Otsuka Pharmaceutical Co., Ltd. 809.96 571.64
Sichuan Hexin Pharmaceutical Co., Ltd. 808.33 (0.03)
Sinopharm Holding Beijing Huahong Co., Ltd. 650.29 879.99
Jiangxi Erye Medicine Marketing Co., Ltd. 636.00 -
Sinopharm Holding Jinan Co., Ltd. 618.89 404.98
299
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(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)
2018 2017
(RMB’0,000) (RMB’0,000)
Sinopharm Holding Shanghai Likang Pharmaceutical Co., Ltd.
575.07 370.93
Shyndec Pharma
545.56 86.51
Sinopharm Yixin Pharmaceutical Co., Ltd.
542.65 -
Jiangsu Lianhuan Pharmaceutical Co.,Ltd.
538.61 -
Sinopharm Holding Changzhou Co., Ltd.
519.14 877.84
Sinopharm Holding Wuxi Co., Ltd.
501.02 365.10
Sinopharm Holding Beijing Kangchen Bio-Pharmaceutical Co., Ltd.
492.19 864.11
Pudong New Area of Shanghai Pharmaceutical Medicine Ltd.
459.70 372.16
Sinopharm Group Rongsheng Pharmaceutical Co., Ltd.
399.79 78.21
Sinopharm Holding Jinzhou Co., Ltd. 386.83 260.33
Sinopharm Holding Shandong Co., Ltd.
382.90 -
Shantou Jinshi Powder Injection Co., Ltd.
374.45 0.25
Shenyang Hongqi Pharmaceutical Co., Ltd.
356.58 173.38
Sinopharm Lerentang Hebei Medical Instrument Trade Co., Ltd.
353.38 403.31
Sinopharm Holding Xinjiang Xinte Karamay Pharmaceutical Co., Ltd.
344.11 221.06
Guizhou Tongjitang Pharmaceutical Co., Ltd.
324.11 252.37
Foshan Fengliaoxing Pharmaceutical Co., Ltd.
295.73 170.25
Shandong Lu Ya Pharmaceutical Co., Ltd.
290.93 741.87
Beijing Golden Elephant Fosun Pharmaceutical Co., Ltd.
289.84 360.29
Shanghai Merro Pharmaceutical Co., Ltd.
265.31 1,098.20
Shanghai Beiyi Guoda pharmaceutical Co. Ltd.
249.14 273.26
Sinopharm Holding Yancheng Co., Ltd.
248.87 248.55
Sinopharm Holding Heilongjiang Co., Ltd. 220.67 -
Shanghai Chaohui Pharmaceutical Co., Ltd.
216.02 -
Sinopharm Group (Tianjin) Eastern Bokang Pharmaceutical Co., Ltd.
205.84 291.59
Hutchison Whampoa Sinopharm Pharmaceuticals (Shanghai) Co., Ltd.
204.05 104.40
Shanghai Shyndec Pharmaceutical Marketing Co., Ltd.
179.93 227.57
Sinopharm Holding Shanxi Jinzhong Co., Ltd.
179.83 -
300
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(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)
2018 2017
(RMB’0,000) (RMB’0,000)
Sinopharm Holding Putian Co., Ltd. 173.77 212.86
Sinopharm Holding Tongliao Co., Ltd. 172.34 87.00
Shanghai Meitai Medical Instruments Co., Ltd. 166.41 -
Sinopharm Holding Tianjin Co., Ltd. 163.00 799.37
Guangdong Medi-World Pharmaceutical Co., Ltd. 160.50 39.88
Huayi Pharmaceutical Co., Ltd. 159.06 -
Sinopharm Holding Zhihuiminsheng (Tianjin) Pharmaceutical Co., Ltd. 153.65 -
Sinopharm Holding Dalian Co., Ltd. 146.37 238.38
Jingfukang Pharmaceutical Group Co., Ltd. 144.26 -
Shanghai Tongyu Information Technology Co., Ltd. 142.34 174.25
Jiangsu Fuxing Pharmaceutical Trading Co., Ltd 134.98 17.76
Sinopharm Holding Hulun Buir Co., Ltd. 134.06 2,552.36
Sinopharm Holding Yantai Co., Ltd. 130.34 -
Sinopharm Holding Anhui Co., Ltd. 125.53 59.02
Shanghai Modern Hasen (Shangqiu) Pharmaceutical Co., Ltd. 118.51 -
Sinopharm Group Southwest Medicine Co., Ltd. 116.31 5.08
Sinopharm Holding Donghong Medical (Shanghai) Co., Ltd. 115.92 198.58
Sinopharm Holding Kashi New & Special Drugs Co., Ltd. 113.90 91.65
Wuhan Zhonglian Pharmaceutical Group Co., Ltd. 107.89 136.59
China National Pharmaceutical Industry Co., Ltd. 107.14 37.39
Sinopharm Holding Lianyungang Co., Ltd. 98.55 -
Anhui Jingfang Pharmaceutical Co., Ltd. 92.62 103.19
Sinopharm Lerentang Qinhuangdao Medicine Co., Ltd. 91.62 94.47
Hunan Dongting Pharmaceutical Co., Ltd. 91.25 41.31
Sinopharm Weiqida Pharmaceutical Co., Ltd. 89.28 -
Sinopharm Group Yibin Pharmaceuticals Co., Ltd. 81.80 1.22
Sinopharm Holding Quanzhou Co., Ltd. 79.67 152.62
Sinopharm Holding Changsha Co., Ltd. 73.39 50.72
301
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(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)
2018 2017
(RMB’0,000) (RMB’0,000)
Chengdu Institute of Biological Products Co.,Ltd. 66.32 -
Guilin South pharmaceutical Co., Ltd. 61.69 -
Fujian Chentian Jinling Pharmaceutical Co., Ltd. 60.62 -
Sinopharm Shantou Jinshi Pharmaceutical Co., Ltd. 57.34 6.21
Sinopharm Holding Zhejiang Co., Ltd. 44.13 -
Sinopharm Holding Beijing Tianxing Puxin Biological Medical Co., Ltd. 42.10 16.28
Sinopharm Holding Dezhou Co., Ltd. 36.03 44.25
Sinopharm Holding Ulanqab Co., Ltd. 35.33 32.21
Sinopharm Xinjiang Pharmaceutical Co., Ltd. 34.82 7.38
Sinopharm Holding Yangzhou Biological Products Co., Ltd. 33.60 -
Sinopharm Holding Biopharmaceutical (Tianjin) Co., Ltd. 33.25 5.04
Sinopharm Holding Dalian Hecheng Co., Ltd. 33.17 3.29
Sinopharm Group Shanxi Co., Ltd. 32.67 118.75
Shanghai SinoMed Medicine Co., Ltd. 31.93 -
Jiangsu Huanghe Pharmaceutical Co., Ltd. 28.64 -
Sinopharm Holding Rizhao Co., Ltd. 24.76 267.85
Sinopharm Holding Hainan Co., Ltd. 24.14 -
Sichuan Jiangyouzhongbafuzi Technology Development Co., Ltd. 17.44 5.62
Sinopharm Wuhan blood products Co., Ltd. 17.04 -
Sinopharm Holding Taizhou Co., Ltd. 16.31 16.76
Sinopharm Holding Nanjing Wende Pharmaceutical Co.,Ltd. 15.28 -
Henan Wanxitang 13.03 -
Sinopharm Holding Shanxi Zhidekang Medicine Co., Ltd. 12.86 -
Qinghai Pharmaceutical Factory Co., Ltd. 12.51 -
The Fourth Pharmaceutical Co., Ltd. of Zhonglian Group 11.88 21.35
China National Pharmaceutical Logistics Co., Ltd. 9.08 6.71
Sinopharm Holding Sanyi Medicine (Wuhu) Co., Ltd. 8.20 25.23
Sinopharm Holding Guizhou Co., Ltd. 7.37 -
302
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(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)
2018 2017
(RMB’0,000) (RMB’0,000)
Sinopharm Holding Shanxi Lvliang Co., Ltd.
5.76 -
Sinopharm ShanXi Ruifulai Pharmaceutical Co., Ltd.
5.32 5.39
Sinopharm Holding Yangzhou Medical Treatment Equipment Co., Ltd.
5.23 -
Sinopharm Lerentang Tangshan Medicine Co., Ltd.
4.76 5.23
Sinopharm Holding Yongzhou Co., Ltd.
3.72 3.84
Chongqing Haisiman Pharmaceutical Co., Ltd. 3.29 3,157.33
Sinopharm Holding Hainan Hongyi Co., Ltd.
3.15 -
Sinopharm Fengliaoxing (Foshan) Medicines Co., Ltd.
2.86 -
Sinopharm Holding Shanxi Mingdikang Medicine Co., Ltd.
2.72 -
Sinopharm Holding Shanxi Jincheng Co., Ltd.
2.42 -
Sinopharm Group Medicine Logistic Co., Ltd. Guangzhou Branch
1.61 -
Sinopharm Holding Zhangzhou Co., Ltd.
1.20 -
Sinopharm Prospect Dentech (Beijing) Co., Ltd.
1.04 0.56
Sinopharm Holding Tianjin Binhai Pharmaceutical Co., Ltd.
0.71 -
Zhijun Suzhou
0.30 0.14
Beijing Huamiao Traditional Chinese Medicine Technology and Project
Development Centre 0.26 -
Sinopharm Group Sichuan Medicines Co., Ltd. 0.24 -
Shenzhen Zhijun Pharmaceutical Trade Co., Ltd. 0.03 -
Sinopharm Holding Tianjin Distribution Center Co., Ltd. - 145.06
Sinopharm Holding Chengdu Co., Ltd. - 124.80
Sinopharm Fujian Medical Examination Co., Ltd. - 68.04
Guizhou Longlife Pharmaceutical Co., Ltd. - 64.81
China National Scientific Instruments & Materials Imp/Exp Shenzhen Co., Ltd. - 57.42
Beijing Huasheng Pharmaceutical Biotechnology Development Co., Ltd. - 40.04
Sinopharm Holding Hubei New & Special Medicines Co., Ltd. - 34.38
303
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(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)
2018 2017
(RMB’0,000) (RMB’0,000)
Sinopharm Holding Hubei Co., Ltd.
- 27.50
Shanghai Transfusion Technology Co., Ltd.
- 21.50
Beijing Tongyu Information Technology Co., Ltd.
- 17.54
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
Sinopharm Hebei Medical Instrument Co., Ltd.
- 4.72
Sinopharm Holding Tianjin North Medicine Co., Ltd.
- 4.67
Sinopharm Holding Nanping Newforce Co., Ltd.
- 3.61
Foshan Dezhong Pharmaceutical Co., Ltd.
- 3.46
Sinopharm Group Shanghai Medicine Device Co., Ltd.
- 3.14
Sinopharm Holding Jinhua Co., Ltd.
- 3.09
Sinopharm Holding Chongqing Co., Ltd.
- 0.92
Sinopharm Holding Ordos Co., Ltd.
(1.38) 4.76
405,277.59 394,534.98
304
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(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
2018 2017
(RMB’0,000) (RMB’0,000)
Sinopharm Group Co., Ltd.
13,127.67 2,920.98
Shanghai Beiyi Guoda pharmaceutical Co. Ltd.
9,917.50 12,310.89
Foshan Chancheng Pharmaceutical Co., Ltd.
8,713.35 6,961.50
Sinopharm Holding Hainan Co., Ltd.
6,157.07 6,641.94
Sinopharm Holding Hainan Hongyi Co., Ltd.
4,734.71 5,221.78
Sinopharm Holding Sub Marketing Center Co., Ltd.
2,234.24 2,311.90
Sinopharm Group Xinjiang Special Drugs National Pharmaceutical Co., Ltd.
2,222.76 2,998.11
Beijing Golden Elephant Fosun Pharmaceutical Co., Ltd.
2,069.07 2,441.19
Sinopharm Holding Wenzhou Co., Ltd.
2,052.01 2,801.62
Pudong New Area of Shanghai Pharmaceutical Medicine Ltd.
1,952.87 1,909.51
Sinopharm Holding Beijing Huahong Co., Ltd.
1,921.41 2,599.43
Sinopharm Lingyun Biopharmaceutical (Shanghai) Co., Ltd.
1,903.16 467.21
Sinopharm Zhuhai Medical Instrument Co., Ltd.
1,736.10 1.14
Shenzhen Heng Sheng Hosital
1,711.70 -
Sinopharm Holding Henan Co., Ltd.
1,684.79 2,707.85
Sinopharm Group Southwest Medicine Co., Ltd.
1,657.77 1,975.09
Sinopharm Holding Nantong Co., Ltd.
1,608.96 2,274.99
Sinopharm Le-Ren-Tang Medicine Co., Ltd.
1,596.99 4,070.87
Sinopharm Sichuan Pharmaceutical Co., Ltd.
1,545.73 4,466.51
Sinopharm Holding Beijing Co., Ltd.
1,441.53 4,672.13
Sinopharm Group (Tianjin) Eastern Bokang Pharmaceutical Co., Ltd.
1,225.58 3,978.45
Sinopharm Holding Shandong Co., Ltd.
1,078.15 5,315.11
China National Medicines Co., Ltd.
1,023.03 1,269.66
Foshan Chancheng District Central Hospital
947.72 777.97
Sinopharm Holding Yunnan Co., Ltd.
770.29 2,396.95
Sinopharm Holding Xinjiang Special Drugs Western Pharmaceutical Co., Ltd.
740.10 447.12
Sinopharm Holding Yangzhou Co., Ltd.
725.68 988.43
Sinopharm Holding Shanxi Co., Ltd.
580.44 343.72
Sinopharm Holding Hubei Co., Ltd.
518.05 5,641.21
Foshan Chanyixing Medicine Development Co Ltd.
432.38 287.00
Sinopharm Holding Jilin Co., Ltd.
432.10 420.33
Sinopharm Holding Shanghai Likang Pharmaceutical Co., Ltd.
411.91 12.45
X. Related party relationships and transactions (Continued)
5. Major transactions between the Group and its related parties (Continued)
305
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
(1) Related party transactions – goods and services (Continued)
Sale of goods and rendering of services
2018 2017
(RMB’0,000) (RMB’0,000)
Shanghai Liyi Drug Store Co., Ltd 343.80 225.13
Shanghai Merro Pharmaceutical Co., Ltd.
323.19 529.23
Sinopharm Holding Fujian Co., Ltd.
302.61 469.70
Sinopharm Holding Anhui Co., Ltd.
255.38 120.77
Sinopharm Holding Hunan Co., Ltd.
253.22 391.75
Sinopharm Holding Dalian Co., Ltd.
242.63 218.46
Sinopharm Holding Guizhou Co., Ltd.
236.34 708.51
Sinopharm Holding Gansu Co., Ltd.
214.52 455.43
Sinopharm Holding Tianjin Co., Ltd.
208.79 1,146.02
Sinopharm Holding Shanxi Co., Ltd.
190.23 774.50
Sinopharm Group Zhijun(Shenzhen) Pharmaceutical Co., Ltd.
186.77 65.11
Yuxi Sinopharm Medicine Co., Ltd.
157.01 24.96
Sinopharm Holding Chengdu Co., Ltd.
97.59 171.42
Sinopharm Holding Zhejiang Co., Ltd.
92.13 899.68
Shanghai Guoda Lingyun Pharmacy Co., Ltd.
85.74 163.77
Sinopharm Holding Wuxi Co., Ltd.
84.68 53.75
Sinopharm Holding Shenyang Co., Ltd.
79.41 415.35
Sinopharm Holding Dalian Hecheng Co., Ltd.
77.07 106.35
Sinopharm Group Shanxi Co., Ltd.
72.08 102.04
Sinopharm Holding Ningxia Co., Ltd.
71.31 1,031.39
Sinopharm Holding Jiangxi Co., Ltd.
69.07 123.41
Sinopharm Holding Donghong Medical (Shanghai) Co., Ltd.
68.89 47.12
Sinopharm Group Medicine Logistic Co., Ltd.
65.21 156.84
Shenzhen Zhijun Pharmaceutical Trade Co., Ltd.
57.14 1.96
Sinopharm Group Zhijun (Shenzhen) PingShan Pharmaceutical
Co., Ltd. 45.82 26.29
Sinopharm Holding Changzhou Co., Ltd.
43.58 191.15
Sinopharm Holding Qinghai Co., Ltd.
41.59 194.00
306
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(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
2018 2017
(RMB’0,000) (RMB’0,000)
Sinopharm Holding Changzhou Medical Logistics Center Co., Ltd. 40.59 44.11
Sinopharm Holding Wuhu Co., Ltd.
40.22 10.80
Sinopharm Holding Zunyi Co., Ltd.
35.43 -
Sinopharm Holding Heilongjiang Co., Ltd.
35.21 341.74
Sinopharm Holding Inner Mongolia Co., Ltd.
29.70 72.68
Sinopharm Holding Yongzhou Co., Ltd.
28.54 25.71
Sinopharm Holding Chongqing Co., Ltd.
28.21 23.62
Sinopharm Holding Ulanqab Co., Ltd.
27.10 9.29
Sinopharm Holding Tianjin North Medicine Co., Ltd.
26.69 -
Sinopharm Holding Jiaozuo Co., Ltd.
24.79 -
Sinopharm Holding Ningde Co., Ltd.
23.88 50.41
Sinopharm Holding Guizhou Medical Equiment Co., Ltd.
19.15 -
Sinopharm Holding Hubei Hongyuan Co., Ltd.
18.54 -
Sinopharm Holding Jilin Chain Store Co., Ltd.
18.32 -
Shenzhen Qianda Medical Beauty Clinic
17.73 -
Sinopharm Holding Nanping Newforce Co., Ltd.
16.91 38.97
Sinopharm Holding Tongren Co., Ltd.
16.66 -
Sinopharm Holding Putian Co., Ltd.
15.06 92.30
Sinopharm Holding Honghe Co., Ltd.
13.47 -
Sinopharm Holding Huaian Co., Ltd.
12.87 67.17
Sinopharm Holding Suzhou Co., Ltd.
12.84 2.44
Sinopharm Holding Lu'an Co., Ltd.
12.84 4.87
Sinopharm Fengliaoxing Medical Hospital Co., Ltd.
10.65 7.36
Sinopharm Jienuo Medical Treatment Service Guangdong Co., Ltd.
10.38 3.30
Sinopharm Holding Longyan Co., Ltd.
9.09 18.30
Fresenius Kabi Huarui Pharmaceuticals Co., Ltd.
8.01 12.31
307
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(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
2018 2017
(RMB’0,000) (RMB’0,000)
Sinopharm Holding Xinxiang Co., Ltd.
7.76 -
Sinopharm Medical Instrument Guizhou Qiannan Co., Ltd.
6.65 -
Sinopharm Holding Siping Co., Ltd.
5.65 -
Sinopharm Holding Fuzhou Co., Ltd.
5.08 1,108.68
Sinopharm Holding Huangshi Co., Ltd.
4.52 13.51
Sinopharm Holding Chuxiong Co., Ltd.
3.84 -
Sinopharm Holding Hulun Buir Co., Ltd.
3.79 722.69
Sinopharm Holding Xuzhou Co., Ltd.
3.39 -
Sinopharm Group Guangxi Medical Equipment Co., Ltd.
3.16 -
Sinopharm Holding Liaocheng Co., Ltd.
2.60 -
Sinopharm Holding Hongrun Medical Business Service
(Shanghai) Co., Ltd. 2.26 -
Sinopharm Holding Jining Co., Ltd.
1.90 -
Fujian Sinopharm Medical Instrument Co., Ltd.
1.84 -
Sinopharm Lerentang Baoding Medicine Co., Ltd.
1.30 -
Sinopharm Guanai Yuankang Pharmacy (Haikou) Co., Ltd.
1.24 -
Sinopharm Lerentang Hengshui Medicine Co., Ltd.
1.21 -
Foshan Shunde District Lecong Supply and Marketing group
Shunketang Medicine Co., Ltd. 1.14 -
Guizhou Tongjitang Pharmaceutical Co., Ltd.
1.12 -
Sinopharm Holding Fengliaoxing (Foshan) Traditional & Herbal
Medicine Co., Ltd. 1.07 -
Sinopharm Medical Instrument Foshan Co., Ltd.
1.03 -
Sinopharm Group Guangdong Medicine Device Co., Ltd.
0.97 73.42
Sinopharm Nanping Medical Instrument Co., Ltd.
0.93 -
China National Scientific Instruments & Materials Imp/Exp
Shenzhen Co., Ltd. 0.63 12.18
Sinopharm Holding Nanchang Chain Store Co., Ltd.
0.54 -
Winteam Pharmaceutical Group Ltd.
0.20 0.71
Sinopharm Group Fengliaoxing Traditional Chinese Medical
Center Foshan Nanhai Co., Ltd. 0.15 -
308
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(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
2018 2017
(RMB’0,000) (RMB’0,000)
Sinopharm Holding Shanxi Instrument Branch Co., Ltd. 0.11 2.28
Jiangsu Wanbang Pharmaceutical Marketing & Distribution Co., Ltd.
0.09 -
Sinopharm Holding Biopharmaceutical (Tianjin) Co., Ltd.
0.01 -
Sinopharm (Guangzhou) Medical Equipment Co., Ltd.
- 22,418.89
Sinopharm Holding Beijing Tianxing Puxin Biological Medical Co., Ltd.
- 118.89
Hubei Medical Group Co., Ltd.
- 59.46
Sinopharm Holding Zhangzhou Co., Ltd.
- 57.47
Sinopharm Holding Changsha Co., Ltd.
- 28.32
China Otsuka Pharmaceutical Co., Ltd.
- 15.38
Sinopharm Holding Ganzhou Co., Ltd.
- 14.67
Sinopharm Holding Xiangyang Co., Ltd.
- 11.87
Sinopharm Xinxiang Chain Store Co., Ltd.
- 11.72
Shenzhen Wanwei Medicine Trading Co., Ltd.
- 3.88
Sichuan Kang Daxin Pharmaceutical Co., Ltd.
- 3.32
China National Pharmaceutical Group Corporation
- 1.90
Shenzhen Main Luck Pharmaceutical Co., Ltd.
- 1.83
Sinopharm Holding Chongqing Ruimin Pharmaceutical Co., Ltd.
- 1.69
Sinopharm Lerentang Zhangjiakou Medicine Co., Ltd.
- 1.23
Sinopharm Health Online Co., Ltd.
- 1.07
Beijing Beishengyan Biological Products Co., Ltd.
- 0.77
Sinopharm Holding Pingliang Co., Ltd.
- 0.65
Sinopharm Holding Deyang Co., Ltd.
- 0.62
Sinopharm Holding Xiamen Co., Ltd.
- 0.19
Sinopharm Guangdong Medical Examination Co., Ltd.
- 0.08
Sinopharm Holding Quanzhou Co., Ltd.
(0.86) 217.20
Hutchison Whampoa Sinopharm Pharmaceuticals (Shanghai) Co., Ltd.
(1.44) 37.94
Sinopharm Holding Lunan Co., Ltd. (12.68) 95.09
83,442.70 126,310.11
309
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(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 asset trusteeship
2018
Beginning Trusteeship
Type of an asset under date of Ending date of Pricing basis for income
trusteeship trusteeship trusteeship trusteeship income recognized
(RMB‘0,000)
Ningbo Meishan
bonded port area
Qiling equity Other asset under 15 June 31 December Trusteeship
investment center LP trusteeship 2018 2020 agreement 51.69
(3) Related party transactions - leases
As the lessor
Type of
Income from leases in Income from leases in
assets under
2018 (RMB‘0,000) 2017 (RMB‘0,000)
leases
Sinopharm Group Zhijun (Shenzhen) Building
Pharmaceutical Co., Ltd. 120.76 98.86
Shenzhen Zhijun Pharmaceutical Trade Co., Ltd. Building
57.14 31.62
Sinopharm Holding Hunan Weian Pharmacy Building
Medicine Chain Company Limited. 17.01 -
China National Medicines Co., Ltd. Building
4.57 4.57
Sinopharm Group Medicine Logistic Co., Ltd. Equipment
- 15.40
Sinopharm Holding Sub Marketing Center Co., Ltd. Building - 4.57
199.48 155.02
As the lessee
Type of
Expenses from leases Expenses from leases
assets under
in 2018 (RMB‘0,000) in 2017 (RMB‘0,000)
leases
Beijing Golden Elephant Fosun Pharmaceutical Co., Building
Ltd. 1,092.38 909.64
Building
Shenyang Pharmaceutical Co., Ltd. 762.69 616.14
Sinopharm Group Medicine Logistic Co., Ltd. Equipment 750.00 778.86
China National Pharmaceutical Group Shanghai Building
Co., Ltd. 747.27 671.06
Sinopharm Group Xinjiang Special Drugs National Building
Pharmaceutical Co., Ltd. 732.78 853.74
Building
Sinopharm Group Medicine Logistic Co., Ltd. 708.00 708.00
Building
Lerentang Investment Group Co., Ltd. 540.00 511.19
Building
Pingdingshan Pusheng Pharmaceutical Co., Ltd. 481.11 479.75
310
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(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 - leases
As the lessee (continued)
Expenses from Expenses from
Type of assets leases in 2018 leases in 2017
under leases (RMB‘0,000) (RMB‘0,000)
Hunan Minshengtang Investment Co., Ltd. Building 453.25 309.67
Linyi Medical Group Co., Ltd. Building 384.50 406.10
Sinopharm Holding Yangzhou Co., Ltd. Building 372.57 372.57
Guangdong Jiyuantang Pharmaceutical Co., Ltd. Building 193.15 120.59
Nanjing Yuanguang Trading Co., Ltd. Building 169.97 157.72
Shaoguan Wujiang District Muyang Medicine
Information Consultant Co., Ltd. Building 94.03 94.03
Taishan Xiangranhui Trade Co., Ltd. Building 91.13 85.04
Zhang Zhenfang Building 80.50 80.50
Sinopharm Holding Shanxi Co., Ltd. Building 62.74 59.84
Wang Yang Building 52.57 52.57
Sinopharm Holding Beijing Co., Ltd. Building 52.46 45.32
Sinopharm Holding Kashi New & Special Drugs Co.,
Ltd. Building 46.94 46.94
Sinopharm Holding Xinjiang Xinte Karamay
Pharmaceutical Co., Ltd. Building 36.85 36.85
Gu Jinhua Building 35.76 35.76
Beijing Sinopharm Tianyuan Real Estate & Property
Management Co., Ltd. Building 30.84 50.09
China National Medicines Co., Ltd. Building 30.38 35.71
Hangzhou Xihu Business Group Corporation Building 26.56 25.30
Shenzhen Jiufeng Investment Co., Ltd. Building 25.59 21.00
Sinopharm Xinjiang Pharmaceutical Co., Ltd. Building 24.71 25.52
Gu Haiqun Building 17.45 -
Sinopharm Guoda Taishan Qunkang Pharmacy
Chain Store Co., Ltd. Equipment 14.85 -
Xinjiang Baitong Property Service Co., Ltd. Building 10.82 7.82
Sinopharm Group Co., Ltd. Building 6.54 51.98
Sinopharm Holding Fujian Co., Ltd. Building 1.31 0.48
Taishan Qunkang Pharmacy Co., Ltd. Building - 15.74
Sinopharm Group Xinjiang Pharmaceutical Co., Ltd. Building - 2.70
8,129.70 7,668.22
311
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(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)
(4) Related party transactions - guarantees
The Group has no related party guarantees not yet fulfilled this year and in 2017.
(5) Related party transactions – borrowings and lendings
Borrowings
Amount
2018 Category （RMB‘0,000） Inception Maturity
Discount on commercial 6 February 2018-21
Group Financial Co. acceptance notes 56,552.71 December 2018 25 March 2018-31 May 2019
Discount on bank 23 May 2018-29
Group Financial Co. acceptance notes 12,435.12 November 2018 12 June 2018-12 May 2019
China National
Pharmaceutical Group
Corporation Long-term borrowings 3,160.00 24 May 2017 24 May 2020
Guorun medical Short-term borrowings 320.00 27 June 2018 18 October 2018
72,467.83
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
312
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(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)
(5) Related party transactions – borrowings and lendings (Continued)
Lendings
Fund lending
Amount
2018 Category （RMB‘0,000） Inception Maturity
Zhijun Suzhou Entrusted Loan 4,400.00 26 January 2018 25 January 2019
Fund lending
Amount
2017 Category （RMB‘0,000） Inception Maturity
Zhijun Suzhou Entrusted Loan 4,400.00 4 January 2017 4 January 2018
(6) Related party asset transfer
2018 2017
Type of transaction
(RMB‘0,000) (RMB‘0,000)
Sinopharm Holding Tianjin Binhai Pharmaceutical Co., Ltd. Purchase of a fixed asset 43.07 397.39
Shanghai Tongyu Information Technology Co., Ltd. Purchase of a intangible asset 28.30 77.13
Sinopharm Holding Tianjin Binhai Pharmaceutical Co., Ltd. Purchase of construction in progress - 33.42
71.37 507.94
313
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(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)
(7) Other related party transactions
Remuneration for key management personnel
2018 2017
(RMB‘0,000) (RMB‘0,000)
1,211.25 1,182.00
Interest expense
2018 2017
Related party Category RMB‘0,000 RMB‘0,000
Payment of notes
Group Financial Co. discount interest 649.32 722.46
Payment of financing
Sinopharm Holding Financing Lease Co., Ltd. lease interest 114.13 158.23
Accounts receivable
factoring interest
Sinopharm Holding Financing Lease Co., Ltd. payable 273.04 -
China National Pharmaceutical Group
Corporation Payment of loan interest 129.36 132.97
Interest on short-term
Guorun medical borrowings 5.07 -
Group Financial Co. Payment of loan interest - 68.86
1,170.92 1,082.52
Interest income
2018 2017
Related party Category RMB‘0,000 RMB‘0,000
Sinopharm Group Zhijun (Shenzhen)
Pharmaceutical Co., Ltd. Entrusted loan interest 324.69 190.75
Group Financial Co. Deposit interest 57.27 49.36
Interest income of land
Shyndec Pharma deposit - 4.76
381.96 244.87
Accounts receivable factoring
2018 2017
RMB‘0,000 RMB‘0,000
Sinopharm Holding Financing Lease Co., Ltd. 21,436.14 -
314
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(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
RMB402,230.16 (2017: RMB391,610.70).
(b) During the current year, the related parties rendered services to the Group at the market price amounting to
RMB3,047.43 (2017: RMB2,924.28).
(c) During the current year, the Group sold goods to related parties at the market price amounting to RMB
82,255.02 (2017: RMB124,942.19).
(d) During the current year, the Group rendered services to related parties at the market price amounting to
RMB1,187.68 (2017: RMB1,367.92).
(2) Asset trusteeship
In 2018, the Group invested in Jinlin Tianhe Medicine Technology Co., Ltd. through trusteeship with Ningbo
Meishan bonded port area Qiling equity investment center LP, and according to the management right
trusteeship agreement, the Group recognized trusteeship revenue of RMB51.69 (2017: nil).
(3) Related party transactions - leases
(a) During the current year, the Group leased buildings and equipment to related parties and recognized income
of RMB199.48 (2017: RMB155.02) according to the agreements.
(b) During the current year, the Group leased buildings and equipment from related parties and an expense of
RMB 8,129.70 (2017: RMB7,668.22) was incurred according to the lease.
(4) Related party transactions - guarantees
(a) During the current year, the Group had no related party guarantees that are not yet completed.
(5) Related party transactions - borrowings
(a) During the current year, the Group borrowed RMB72,467.83 at annual interest rates ranging from 3.70% to
5.40% from related parties (2017: RMB73,984.96 at rates ranging from 3.90% to 5.30%).
(b) During the current year, the Group lent RMB4,400 to related parties at an annual interest rate of 8.00% (2017:
RMB4,400 to related parties at an annual interest rate of 4.57%).
(6) 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 RMB71.37 (2017: RMB 507.94).
(b) During the current year, the Group has not sold any long-term assets to related parties (2017: nil).
(7) 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 RMB 1,211.25 (2017: RMB 1,182.00 ).
(b) During the current year, the Group has paid borrowing interest, entrusted loan interest, etc. to related parties
in the amount of RMB1,170.92 (2017: RMB1,082.52 )
(c) During the current year, the Group has received deposit interest from related parties in the amount of RMB
381.96 (2017: RMB244.87 ).
315
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
6. Commitments between the Group and related parties
2018 2017
RMB‘0,000 RMB‘0,000
As lessee
China National Pharmaceutical Group Shanghai Co., Ltd. 4,552.56 4,032.80
Shenyang Pharmaceutical Co., Ltd. 3,250.00 700.00
Beijing Golden Elephant Fosun Pharmaceutical Co., Ltd. 1,433.00 2,580.00
Linyi Medical Group Co., Ltd. 880.35 429.97
Guangdong Jiyuantang Development Co., Ltd. 854.72 -
Sinopharm Holding Yangzhou Co., Ltd. 782.40 1,173.60
Hunan Minshengtang Investment Co., Ltd. 699.98 841.86
Lerentang Investment Group Co., Ltd. 677.00 527.00
Pingdingshan Pusheng Pharmaceutical Co., Ltd. 505.16 162.11
Nanjing Yuanguang Trading Co., Ltd. 297.00 463.09
Taishan Xiangranhui Trade Co., Ltd 270.41 527.54
Gu Jinhua 257.05 289.06
Sinopharm Group Xinjiang Special Drugs National Pharmaceutical Co., Ltd. 234.47 877.80
Shaoguan Wujiang District Muyang Medicine Information Consultant Co., Ltd. 161.25 263.09
Sinopharm Group Co., Ltd. 121.29 173.28
Sinopharm Holding Beijing Co., Ltd. 120.00 166.42
Gu Haiqun 87.81 -
Zhang Zhenfang 80.50 80.50
Beijing Sinopharm Tianyuan Real Estate & Property Management Co., Ltd. 71.22 -
China National Medicines Co., Ltd. 63.00 94.50
Hangzhou Xihu Business Group Corporation 60.04 87.93
Wang Yang 55.20 110.40
Shenzhen Jiufeng Investment Co., Ltd. 55.00 78.00
Sinopharm Holding Xinjiang Xinte Karamay Pharmaceutical Co., Ltd. 48.44 45.31
Taishan Qunkang Pharmacy Co., Ltd. 43.42 53.36
Sinopharm Holding Kashi New & Special Drugs Co., Ltd. 41.23 52.89
Sinopharm Xinjiang Pharmaceutical Co., Ltd. 13.78 40.69
Xinjiang Baitong Property Service Co., Ltd. 9.66 -
Sinopharm Holding Fujian Co., Ltd. 1.38 2.65
Sinopharm Holding Shanxi Co., Ltd. - 49.14
15,727.32 13,902.99
316
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
6. Commitments between the Group and related parties (Continued)
2018 2017
RMB‘0,000 RMB‘0,000
As lessor
Zhijun Medicine
111.67 35.14
Sinopharm Holding Hunan Weian Pharmacy
Medicine Chain Company Limited. 56.08 -
Zhijun Trade
28.57 28.57
Sinopharm Group Medicine Logistic Co., Ltd.
- 16.94
196.32 80.65
317
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
7. Amounts due from related parties
2018 2017
RMB‘0,000 RMB‘0,000
Amount Provision for bad Amount Provision for
Trade receivables debts bad debts
Foshan Chancheng Pharmaceutical Co.,
Ltd. 3,988.81 23.50 2,193.41 17.54
Sinopharm Group Co., Ltd.
3,226.31 - 1,536.95 -
Shanghai Beiyi Guoda pharmaceutical Co.
Ltd. 1,196.65 - 1,789.72 -
Sinopharm Holding Hainan Co., Ltd.
660.76 - 1,421.52 -
Sinopharm Health Online Co., Ltd.
654.36 - 942.23 -
Beijing Golden Elephant Fosun
Pharmaceutical Co., Ltd. 537.29 - 880.99 -
Sinopharm Holding Hainan Hongyi Co., Ltd.
537.01 - 809.20 -
Sinopharm Group Southwest Medicine Co.,
Ltd. 509.09 - 1.66 -
Sinopharm Holding Beijing Huahong Co.,
Ltd. 400.96 - 50.68 -
Sinopharm Lingyun Biopharmaceutical
(Shanghai) Co., Ltd. 398.65 - 215.80 -
Pudong New Area of Shanghai
Pharmaceutical Medicine Ltd. 383.93 - 737.09 -
Sinopharm Le-Ren-Tang Medicine Co., Ltd.
314.32 - 363.73 -
Shenzhen Heng Sheng Hosital
267.49 - - -
Foshan Chancheng District Central Hospital
244.04 1.28 252.92 1.27
Foshan Chanyixing Medicine Development
Co Ltd. 174.38 0.94 67.37 0.24
Sinopharm Holding Xinjiang Special Drugs
Western Pharmaceutical Co., Ltd. 170.43 - 38.06 -
Sinopharm Holding Jilin Co., Ltd.
149.97 - 56.57 -
China National Medicines Co., Ltd.
145.42 - 267.63 -
Sinopharm Holding Wenzhou Co., Ltd.
126.16 - 115.83 -
Sinopharm Holding Shanghai Likang
Pharmaceutical Co., Ltd. 117.86 - 13.07 -
Sinopharm Sichuan Pharmaceutical Co.,
Ltd. 108.19 - 66.30 -
Sinopharm Holding Henan Co., Ltd.
103.63 - 115.48 -
Sinopharm Holding Shanxi Co., Ltd.
102.87 - 120.09 -
Sinopharm Group (Tianjin) Eastern Bokang
Pharmaceutical Co., Ltd. 98.65 - 100.57 -
Sinopharm Holding Beijing Co., Ltd.
88.88 - 9.00 -
Shanghai Merro Pharmaceutical Co., Ltd.
88.45 - 61.27 -
Sinopharm Group Xinjiang Special Drugs
National Pharmaceutical Co., Ltd. 77.25 - 432.31 -
Sinopharm Holding Hunan Co., Ltd.
56.93 - 4.40 -
Sinopharm Holding Yangzhou Co., Ltd.
54.03 - 129.61 -
318
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
7. Amounts due from related parties (Continued)
2018 2017
RMB‘0,000 RMB‘0,000
Amount Provision for bad Amount Provision for bad
Trade receivables (continued) debts debts
Sinopharm Holding Anhui Co., Ltd.
22.14 - 3.36 -
Sinopharm Holding Shandong Co., Ltd.
21.10 - 58.81 -
Sinopharm Holding Tianjin Co., Ltd.
20.04 - 13.56 -
Yuxi Sinopharm Medicine Co., Ltd.
18.25 - 14.60 -
Sinopharm Holding Gansu Co., Ltd.
17.69 - - -
Sinopharm Holding Donghong Medical
(Shanghai) Co., Ltd. 16.46 - 12.50 -
Sinopharm Holding Wuxi Co., Ltd.
15.76 - 6.12 -
Sinopharm Holding Changzhou Medical
Logistics Center Co., Ltd. 14.46 - 6.77 -
Sinopharm Holding Dalian Co., Ltd.
14.43 - 54.15 -
Sinopharm Group Medicine Logistic Co., Ltd.
13.97 - 18.92 -
Sinopharm Holding Dalian Hecheng Co., Ltd.
12.67 - 16.89 -
Sinopharm Holding Shenyang Co., Ltd.
12.31 - - -
Guangdong Jie Nuo
12.04 - - -
Sinopharm Holding Qinghai Co., Ltd. 9.63 - 2.73 -
Sinopharm Group Tianjin North Co., Ltd.
9.14 - - -
Sinopharm Holding Inner Mongolia Co., Ltd.
9.02 - - -
Shanghai Liyi Drug Store Co., Ltd
7.64 - 3.56 -
Sinopharm Holding Shanxi Co., Ltd.
6.84 - 3.65 -
Sinopharm Holding Hubei Co., Ltd.
6.83 - 274.90 -
Sinopharm Holding Nantong Co., Ltd.
6.65 - 170.41 -
Hubei Medical Group Co., Ltd.
6.20 - 11.37 -
Sinopharm Group Shanxi Co., Ltd.
5.85 - 12.75 -
Sinopharm Holding Heilongjiang Co., Ltd.
5.00 - 5.00 -
Sinopharm Group Zhijun (Shenzhen)
PingShan Pharmaceutical Co., Ltd. 3.96 - 2.00 -
Sinopharm Holding Xuzhou Co., Ltd.
3.49 - - -
Sinopharm Holding Yunnan Co., Ltd.
2.77 - 103.54 -
Shanghai Guoda Lingyun Pharmacy Co., Ltd.
1.75 - 27.02 -
Sinopharm Fengliaoxing Medical Hospital Co.,
Ltd. 1.68 0.01 0.46 -
319
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
7. Amounts due from related parties (Continued)
2018 2017
RMB‘0,000 RMB‘0,000
Amount Provision for bad Amount Provision for bad
Trade receivables (continued)
debts debts
Sinopharm Holding Guizhou Co., Ltd.
1.60 - 17.10 -
Sinopharm Medical Instrument Foshan Co., Ltd. 1.19 - - -
Sinopharm Xinxiang Chain Store Co., Ltd.
0.21 - 2.01 -
Sinopharm Guanai Yuankang Pharmacy
(Haikou) Co., Ltd. 0.15 - - -
Sinopharm Holding Hongrun Medical Business
Service (Shanghai) Co., Ltd. 0.13 - - -
Sinopharm Group Zhijun (Shenzhen)
Pharmaceutical Co., Ltd. 0.11 - 0.68 -
Sinopharm Group Fengliaoxing Traditional
Chinese Medical Center Foshan Nanhai Co.,
Ltd. 0.07 - - -
Sinopharm Holding Sub Marketing Center Co.,
Ltd. - - 280.45 -
Sinopharm Holding Ningxia Co., Ltd.
- - 110.50 -
Sinopharm Holding Hulun Buir Co., Ltd.
- - 98.28 -
Sinopharm Holding Zhejiang Co., Ltd.
- - 71.64 -
Sinopharm Holding Changzhou Co., Ltd.
- - 48.33 -
Sinopharm Holding Fujian Co., Ltd.
- - 18.01 -
Sinopharm Holding Beijing Tianxing Puxin
Biological Medical Co., Ltd. - - 15.55 -
Sinopharm Holding Chengdu Co., Ltd.
- - 14.48 -
Sinopharm Holding Jiangxi Co., Ltd.
- - 12.96 -
Hutchison Whampoa Sinopharm
Pharmaceuticals (Shanghai) Co., Ltd. - - 7.30 -
Linyi Medical Group Co., Ltd.
- - 0.25 -
China National Pharmaceutical Foreign Trade
Corporation - - 0.13 -
15,284.00 25.73 14,314.20 19.05
320
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
7. Amounts due from related parties (Continued)
2018 2017
RMB‘0,000 RMB‘0,000
Amount Provision for bad Amount Provision for bad
Notes receivable debts debts
Sinopharm Holding Financing Lease Co., Ltd. 20,245.61 - - -
Sinopharm Holding Hainan Co., Ltd.
1,203.54 - 365.09 -
Sinopharm Holding Hainan Hongyi Co., Ltd.
1023.45 - - -
Sinopharm Holding Sub Marketing Center Co.,
Ltd. 314.44 - - -
Sinopharm Holding Shandong Co., Ltd.
124.17 - - -
Sinopharm Holding Lerentang Pharmaceutical
Co., Ltd. 114.84 - - -
Sinopharm Group Shanxi Co., Ltd.
107.79 - - -
Sinopharm Holding Henan Co., Ltd.
103.26 - 150.00 -
Sinopharm Holding Shenyang Co., Ltd.
42.25 - - -
Sinopharm Holding Fujian Co., Ltd.
40.00 - - -
Sinopharm Holding Anhuii Co., Ltd.
39.01 - - -
Sinopharm Holding Shanxi Co., Ltd.
35.95 - 50.00 -
Sinopharm Holding Jilin Co., Ltd.
27.41 - - -
Sinopharm Holding Chengdu Co., Ltd.
20.13 - - -
Sinopharm Holding Ningxia Co., Ltd.
17.66 - - -
Sinopharm Holding Gansu Co., Ltd.
16.32 - - -
Foshan Chancheng Pharmaceutical Co., Ltd.
- - 814.96 -
Sinopharm Holding Nantong Co., Ltd.
- - 224.00 -
Sinopharm Group (Tianjin) Eastern Bokang
Pharmaceutical Co., Ltd. - - 16.16 -
Sinopharm Holding Inner Mongolia Co., Ltd.
- - 13.62 -
Sinopharm Holding Dalian Hecheng Co., Ltd.
- - 11.69 -
23,475.83 - 1,645.52 -
321
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
7. Amounts due from related parties (Continued)
2018 2017
RMB‘0,000 RMB‘0,000
Amount Provision for Amount Provision for
Other receivables bad debts bad debts
Sinopharm Group Zhijun (Suzhou)
Pharmaceutical Co., Ltd. 4,400.00 - 4,400.00 -
Shyndec Pharma 791.34 - 12,518.17 -
Sinopharm Group Medicine Logistic Co., Ltd. 249.42 - 139.88 -
Henan Wanxitang 109.90 - - -
Sinopharm Group Zhijun (Shenzhen)
Pharmaceutical Co., Ltd. 10.98 0.06 1.71 0.03
Sinopharm Group Xinjiang Special Drugs
National Pharmaceutical Co., Ltd. 10.00 - 10.00 -
Sinopharm Health Online Co., Ltd. 8.18 - 107.14 -
Sinopharm Lerentang Hebei Medical
Instrument Trade Co., Ltd. 4.85 - 4.85 -
Sinopharm Holding Jiaozuo Co., Ltd.
3.02 - - -
Sinopharm Group Medicine Logistic Co., Ltd.
Guangzhou Branch 1.87 - - -
Sinopharm Holding Fujian Co., Ltd.
0.55 - - -
Wuhan Zhonglian Pharmaceutical Group Co.,
Ltd. 0.50 0.10 0.50 0.05
Sinopharm Holding Shanxi Co., Ltd. - - 10.00 -
5,590.61 0.16 17,192.25 0.08
Interest receivable
2018 2017
RMB‘0,000 RMB‘0,000
Zhijun Suzhou 184.66 6.14
2018 2017
RMB‘0,000 RMB‘0,000
Provision for Provision for
Amount bad debts Amount bad debts
Advances to suppliers
Sinopharm Holding Shanxi Co., Ltd.
389.10 - 550.24 -
Hunan Minshengtang Investment Co., Ltd. 334.93 - 267.04 -
Sinopharm Holding Shanxi Co., Ltd. 333.03 - 28.80 -
Sinopharm Group Co., Ltd. 230.83 - 196.35 -
Sinopharm Group Xinjiang Special Drugs
National Pharmaceutical Co., Ltd. 164.33 - 202.50 -
Chengdu Rongsheng Pharmacy Co., Ltd. 141.66 - 0.06 -
Chongqing Yaoyou Pharmaceutical Co., Ltd. 93.13 - - -
Linyi Medical Group Co., Ltd. 77.54 - - -
Jiangxi Erye Medicine Marketing Co., Ltd. 72.98 - - -
322
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
7. Amounts due from related parties (Continued)
2018 2017
RMB‘0,000 RMB‘0,000
Amount Provision for bad Amount Provision for bad
Advances to suppliers (continued) debts debts
Sinopharm Holding Shanxi Lvliang Co., Ltd. 66.00 - - -
Pharmaceutical Marketing Co., Ltd. 60.94 - - -
Sinopharm Group Guizhou Blood Products Co., Ltd. 53.60 - - -
Sinopharm Group Chuankang Pharmaceutical Co., Ltd. 34.68 - - -
Sinopharm Xinjiang Korla Pharmaceutical Co., Ltd. 28.25 - 26.44 -
Shenyang Hongqi Pharmaceutical Co., Ltd. 23.72 - - -
Guizhou Tongjitang Pharmaceutical Co., Ltd. 22.72 - - -
Nanjing Yuanguang Trading Co., Ltd. 16.97 - 16.82 -
Zhijun Medicine 13.94 - - -
Sinopharm Holding Beijing Co., Ltd. 12.38 - 11.75 -
Shanghai Modern Hasen (Shangqiu) Pharmaceutical Co., Ltd. 10.35 - - -
Beijing Sinopharm Tianyuan Real Estate & Property
Management Co., Ltd. 7.89 - - -
China National Medicines Co., Ltd. 7.88 - 18.30 -
Shyndec Pharma 5.78 - - -
Chengdu Institute of Biological Products Co.,Ltd. 4.87 - - -
Anhui Jingfang Pharmaceutical Co., Ltd. 4.56 - - -
Sinopharm Xinjiang Pharmaceutical Co., Ltd. 4.54 - 4.27 -
Taishan Xiangranhui Trade Co., Ltd. 3.95 - - -
Xinjiang Baitong Property Service Co., Ltd. 1.69 - 1.09 -
Jinzhou AoHong Pharmaceuticals Co., Ltd. 1.65 - 2,013.70 -
Sinopharm Group Yibin Pharmaceuticals Co., Ltd. 1.57 - - -
Guilin South pharmaceutical Co., Ltd. 1.10 - 2.00 -
Winteam Pharmaceutical Group Ltd. 0.93 - 1.92 -
Sinopharm Xingsha Pharmaceuticals (Xiamen) Co., Ltd. 0.18 - - -
Sinopharm Group Luya (Shandong) Pharmaceutical Co., Ltd. 0.14 - - -
Fresenius Kabi Huarui Pharmaceuticals Co., Ltd. 0.12 - - -
Sinopharm Holding Fujian Co., Ltd. 0.02 - 0.55 -
Jiangsu Fuxing Pharmaceutical Trading Co., Ltd 0.01 - - -
- - 133.49 -
Sinopharm Holding Shenyang Co., Ltd.
Shanghai Shangsheng Biological Products Co., Ltd. - - 127.13 -
Sinopharm Group Guorui Medicine Co., Ltd. - - 27.91 -
Gu Jinhua - - 7.84 -
Sinopharm Holding Kashi New & Special Drugs Co., Ltd. - - 2.52 -
Sinopharm Holding Suzhou Co., Ltd. - - 0.77 -
323
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
7. Amounts due from related parties (Continued)
2018 2017
RMB‘0,000 RMB‘0,000
Amount Provision for bad Amount Provision for bad
Advances to suppliers (continued) debts debts
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 -
Sinopharm Group Zhijun (Shenzhen) PingShan
Pharmaceutical Co., Ltd. - - 0.02 -
2,227.96 - 3,642.50 -
Other non-current assets 2018 2017
RMB‘0,000 RMB‘0,000
Hunan Minshengtang Investment Co., Ltd. 351.92 -
Amounts due from related parties are interest-free, unsecured with no fixed term on repayment, except that notes
receivable from related parties have fixed terms of repayment.
324
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
8. Amounts due to related parties
2018 2017
RMB‘0,000 RMB‘0,000
Trade payables
Sinopharm Holding Sub Marketing Center Co., Ltd.
10,426.28 14,390.85
China National Medicines Co., Ltd.
4,835.29 2,836.25
Sinopharm Group Xinjiang Special Drugs National Pharmaceutical Co., Ltd.
1,825.99 1,974.28
Jiangsu Wanbang Pharmacy Marketing Co., Ltd.
1,503.86 1,000.33
Sinopharm Group Co., Ltd.
1,373.23 4,520.40
Fresenius Kabi Huarui Pharmaceuticals Co., Ltd.
1,047.00 1,600.39
Shenzhen Main Luck Pharmaceutical Co., Ltd.
856.57 652.05
Sinopharm Holding Lerentang Pharmaceutical Co., Ltd.
840.23 779.69
Tibet Yaoyou Medicines Co.,Ltd.
834.66 -
Sinopharm Holding Yangzhou Co., Ltd.
763.04 598.71
Sinopharm Holding Beijing Co., Ltd.
747.80 114.89
Sinopharm Holding Jiangsu Co., Ltd.
674.53 773.08
Sinopharm Holding Shanxi Instrument Branch Co., Ltd.
630.92 408.96
Winteam Pharmaceutical Group Ltd.
629.45 129.10
Sinopharm Holding Fujian Co., Ltd.
448.46 371.76
Shenzhen Wanwei Medicine Trading Co., Ltd.
421.91 424.01
Sinopharm Holding Shenyang Co., Ltd.
401.60 -
Sinopharm Holding Pingdingshan Co., Ltd.
360.33 817.83
Sinopharm Group Zhijun (Shenzhen) PingShan Pharmaceutical Co., Ltd.
355.05 135.06
Chongqing Yaoyou Pharmaceutical Co., Ltd.
350.68 545.00
Sinopharm Holding Changzhou Medical Logistics Center Co., Ltd.
308.04 279.27
Sinopharm Holding Ningxia Co., Ltd.
300.77 280.94
Sinopharm Group Zhijun(Shenzhen) Pharmaceutical Co., Ltd.
292.21 114.17
Jinzhou AoHong Pharmaceuticals Co., Ltd.
242.29 -
Sinopharm Holding Inner Mongolia Co., Ltd.
222.59 266.45
Henan Wanxitang
205.36 -
Chengdu Rongsheng Pharmacy Co., Ltd.
194.73 -
Yichang Humanwell Pharmaceutical Co., Ltd.
193.61 262.01
Sinopharm Holding Suzhou Co., Ltd.
187.18 65.70
Sinopharm Holding Shanghai Likang Pharmaceutical Co., Ltd.
175.52 49.50
Sinopharm Holding Xiamen Co., Ltd.
171.08 400.65
China Otsuka Pharmaceutical Co., Ltd.
157.17 107.38
Sinopharm Lerentang Hebei Medical Instrument Trade Co., Ltd.
151.90 170.81
Sinopharm Holding Beijing Huahong Co., Ltd.
149.86 127.75
325
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
8. Amounts due to related parties (Continued)
2018 2017
RMB‘0,000 RMB‘0,000
Trade payables (continued)
Sinopharm Holding Changzhou Co., Ltd.
148.46 15.63
Sinopharm Holding Henan Co., Ltd.
144.12 152.65
Jiangsu Lianhuan Pharmaceutical Co.,Ltd.
132.13 -
Foshan Fengliaoxing Pharmaceutical Co., Ltd.
125.43 138.01
Shenyang Hongqi Pharmaceutical Co., Ltd.
119.18 39.48
Sinopharm Holding Xinjiang Xinte Karamay Pharmaceutical Co., Ltd.
113.38 48.24
Sinopharm Group Guorui Medicine Co., Ltd.
105.71 3.46
Beijing Golden Elephant Fosun Pharmaceutical Co., Ltd.
105.07 15.03
Sinopharm Xingsha Pharmaceuticals (Xiamen) Co., Ltd.
96.69 80.36
Huayi Pharmaceutical Co., Ltd.
96.14 -
Sinopharm Holding Shanxi Co., Ltd.
94.51 24.45
Sinopharm Holding Heilongjiang Co., Ltd.
92.21 -
Sinopharm Holding Beijing Kangchen Bio-Pharmaceutical Co., Ltd.
91.72 109.58
Sinopharm Holding Tongliao Co., Ltd.
87.26 44.09
Sinopharm Holding Xinjiang Special Drugs Western Pharmaceutical Co., Ltd.
79.54 32.18
Wuhan Zhonglian Pharmaceutical Group Co., Ltd.
56.05 52.68
Jiangsu Fuxing Pharmaceutical Trading Co., Ltd
54.91 18.38
Sinopharm Holding Jinzhou Co., Ltd.
53.10 52.02
Shyndec Pharma
51.15 1.28
Fujian Chentian Jinling Pharmaceutical Co., Ltd.
50.56 -
Sinopharm Holding Wuxi Co., Ltd.
49.27 23.49
Sinopharm Xinjiang Korla Pharmaceutical Co., Ltd.
47.25 -
Sichuan Hexin Medicine Co., Ltd.
45.45 -
Sinopharm Group Rongsheng Pharmaceutical Co., Ltd.
39.89 19.73
Beijing Huamiao Pharmaceutical Co., Ltd.
37.21 33.99
Chengdu Institute of Biological Products Co.,Ltd.
37.08 -
Sinopharm Holding Hulun Buir Co., Ltd.
36.44 290.22
China National Pharmaceutical Industry Co., Ltd.
36.38 5.23
Shanghai Transfusion Technology Co., Ltd.
35.21 25.15
Sinopharm Holding Kashi New & Special Drugs Co., Ltd.
35.07 15.55
Guizhou Tongjitang Pharmaceutical Co., Ltd.
34.28 55.75
Sinopharm Holding Fuzhou Co., Ltd.
32.87 99.60
Shanghai Chaohui Pharmaceutical Co., Ltd.
31.18 0.89
Guangdong Medi-World Pharmaceutical Co., Ltd.
29.76 24.88
326
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
8. Amounts due to related parties (Continued)
2018 2017
RMB‘0,000 RMB‘0,000
Trade payables (continued)
Suzhou Erye Pharmaceutical Limited Company 27.83 -
Sinopharm Holding Lianyungang Co., Ltd. 27.61 -
Hunan Dongting Pharmaceutical Co., Ltd. 26.54 11.01
Jiangxi Erye Medicine Marketing Co., Ltd. 26.26 -
Jiangsu Huanghe Pharmaceutical Co., Ltd. 26.12 5.33
Hutchison Whampoa Sinopharm Pharmaceuticals (Shanghai) Co., Ltd. 25.51 36.39
Shantou Jinshi Powder Injection Co., Ltd. 24.54 -
Sinopharm Holding Dezhou Co., Ltd. 23.36 23.94
Sinopharm Holding Donghong Medical (Shanghai) Co., Ltd. 21.30 4.61
Sinopharm Group Southwest Medicine Co., Ltd. 19.50 -
Sinopharm Holding Yancheng Co., Ltd. 19.02 0.10
Sinopharm Holding Jinan Co., Ltd. 18.93 7.17
Jingfukang Pharmaceutical Group Co., Ltd. 18.44 -
Sinopharm Lerentang Shijiazhuang Medicine Co., Ltd. 18.37 210.66
Sinopharm Holding Dalian Co., Ltd. 18.25 8.02
Lanzhou Institute of Biological Products Co., Ltd. 18.00 -
Sinopharm Yixin Pharmaceutical Co., Ltd. 17.59 -
Sinopharm Wuhan blood products Co., Ltd. 17.04 -
Sinopharm Lingyun Biopharmaceutical (Shanghai) Co., Ltd. 16.55 3,750.48
Anhui Jingfang Pharmaceutical Co., Ltd. 16.52 27.53
Sinopharm Group Yibin Pharmaceuticals Co., Ltd. 15.00 2.30
Sinopharm Holding Shanxi Zhidekang Medicine Co., Ltd. 14.00 -
China National Pharmaceutical Foreign Trade Corporation 12.29 203.51
Sinopharm Shantou Jinshi Pharmaceutical Co., Ltd. 10.27 5.53
Sinopharm Holding Nanjing Wende Pharmaceutical Co.,Ltd. 10.24 -
Sinopharm Holding Taizhou Co., Ltd. 9.95 9.50
Foshan Dezhong Pharmaceutical Co., Ltd. 9.88 9.88
The Fourth Pharmaceutical Co., Ltd. of Zhonglian Group 9.71 7.71
Shanghai SinoMed Medicine Co., Ltd. 9.26 -
Pudong New Area of Shanghai Pharmaceutical Medicine Ltd. 9.15 79.84
Shanghai Merro Pharmaceutical Co., Ltd. 9.03 31.16
327
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
8. Amounts due to related parties (Continued)
2018 2017
RMB‘0,000 RMB‘0,000
Trade payables (continued)
Sinopharm Holding Beijing Tianxing Puxin Biological Medical Co., Ltd. 8.45 4.24
Sichuan Jiangyouzhongbafuzi Technology Development Co., Ltd. 8.00 0.86
Sinopharm Holding Hainan Co., Ltd. 7.27 -
Sinopharm Holding Lunan Co., Ltd. 7.16 15.29
Sinopharm ShanXi Ruifulai Pharmaceutical Co., Ltd. 6.31 6.31
Sinopharm Holding Quanzhou Co., Ltd. 6.29 10.70
Sinopharm Holding Ulanqab Co., Ltd. 6.12 13.36
Sinopharm Holding Zhejiang Co., Ltd. 5.85 5.55
Shanghai Modern Hasen (Shangqiu) Pharmaceutical Co., Ltd. 5.71 3.09
Sinopharm Holding Yangzhou Medical Treatment Equipment Co., Ltd. 5.59 -
Shandong Lu Ya Pharmaceutical Co., Ltd. 5.28 150.75
Sinopharm Holding Yangzhou Biological Products Co., Ltd. 5.02 2.49
Qinghai Pharmaceutical Factory Co., Ltd. 3.30 -
Sinopharm Holding Shanxi Mingdikang Medicine Co., Ltd. 2.72 -
Sinopharm Holding Sanyi Medicine (Wuhu) Co., Ltd. 2.55 7.44
Sinopharm Holding Biopharmaceutical (Tianjin) Co., Ltd. 2.05 2.05
Sinopharm Holding Yongzhou Co., Ltd. 1.99 3.02
Sinopharm Holding Anhui Co., Ltd. 1.86 -
Sinopharm Group Shanghai Medicine Device Co., Ltd. 1.66 1.66
Sinopharm Holding Liaocheng Co., Ltd. 1.62 1.62
Sinopharm Holding Tianjin Co., Ltd. 1.56 8.86
Sinopharm Holding Shandong Co., Ltd. 1.09 -
Sinopharm Holding Rizhao Co., Ltd. 1.02 -
Sinopharm Xinjiang Pharmaceutical Co., Ltd. 0.97 2.77
Sinopharm Holding Hunan Co., Ltd. 0.77 14.86
Sinopharm Holding Putian Co., Ltd. 0.71 14.98
Sinopharm Holding Zhangzhou Co., Ltd. 0.55 -
Sinopharm Holding Shanxi Jincheng Co., Ltd. 0.38 -
Sinopharm Group Sichuan Medicines Co., Ltd. 0.27 -
Sinopharm Holding Ordos Co., Ltd. 0.18 5.56
328
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
8. Amounts due to related parties (Continued)
2018 2017
RMB‘0,000 RMB‘0,000
Trade payables (continued)
Changchun Changsheng Gene Pharmaceutical Co., Ltd. 0.15 1.42
Sinopharm Prospect Dentech (Beijing) Co., Ltd. 0.15 0.12
Guilin South pharmaceutical Co., Ltd. 0.12 0.12
Sinopharm Holding Huaideju Pharmaceutical (Xiamen) Co., Ltd. 0.11 0.11
Beijing Huasheng Pharmaceutical Biotechnology Development Co., Ltd. 0.06 0.06
Shenzhen Zhijun Pharmaceutical Trade Co., Ltd. 0.05 0.05
Shanghai Shyndec Pharmaceutical Marketing Co., Ltd. 0.01 56.64
Chongqing Haisiman Pharmaceutical Co., Ltd. 0.01 43.84
Sinopharm Fengliaoxing (Foshan) Medicines Co., Ltd. 0.01 0.01
Sinopharm Holding Chengdu Co., Ltd. - 10.41
Guizhou Longlife Pharmaceutical Co., Ltd. - 10.36
Sinopharm Holding Jiangxi Co., Ltd. - 3.04
Sinopharm Holding Tianjin North Medicine Co., Ltd. - 1.93
Sinopharm Hebei Medical Instrument Co., Ltd. - 0.36
Sinopharm Holding Chongqing Co., Ltd. - 0.01
35,352.88 40,457.88
2018 2017
RMB‘0,000 RMB‘0,000
Notes payable
Sinopharm Holding Sub Marketing Center Co., Ltd. 23,006.74 9,132.03
Sinopharm Holding Shenyang Co., Ltd. 7,689.40 4,021.54
Sinopharm Holding Shanxi Co., Ltd. 6,792.66 9,682.92
China National Medicines Co., Ltd. 2,665.46 822.34
Sinopharm Le-Ren-Tang Medicine Co., Ltd. 2,207.62 2,037.61
Sinopharm Holding Inner Mongolia Co., Ltd. 2,045.98 -
Sinopharm Holding Shanxi Co., Ltd. 1,834.00 2,993.17
Sinopharm Holding Lerentang Pharmaceutical Co., Ltd. 1,465.05 266.94
Sinopharm Group Xinjiang Special Drugs National Pharmaceutical Co., Ltd. 1,388.77 -
Sinopharm Holding Lunan Co., Ltd. 859.63 -
Sinopharm Lerentang Shijiazhuang Medicine Co., Ltd. 814.83 418.00
Sinopharm Holding Fujian Co., Ltd. 701.10 629.45
Lanzhou Institute of Biological Products Co., Ltd. 623.62 2,160.00
Chongqing Yaoyou Pharmaceutical Co., Ltd. 553.83 672.23
Sinopharm Holding Xiamen Co., Ltd. 536.20 857.37
329
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
8. Amounts due to related parties (Continued)
2018 2017
RMB‘0,000 RMB‘0,000
Notes payable (continued)
Jiangsu Wanbang Pharmacy Marketing Co., Ltd. 481.74 220.77
Sinopharm Holding Hunan Co., Ltd. 311.41 -
Lanzhou Biological Technology Development Co., Ltd. 300.00 -
Main Luck Pharmaceutical 287.74 -
Chengdu Rongsheng Pharmacy Co., Ltd. 267.35 176.00
Shenzhen Wanwei Medicine Trading Co., Ltd. 240.24 149.57
Sinopharm Holding Shanxi Instrument Branch Co., Ltd. 198.12 205.14
Sinopharm Holding Jinan Co., Ltd. 188.00 24.00
China OTSUKA Pharmaceutical Co., Ltd. 179.36 -
Sinopharm Holding Jinzhou Co., Ltd. 161.13 64.74
Sinopharm Holding Ningxia Co., Ltd. 141.38 170.00
Sinopharm Group Co., Ltd. 118.36 6,068.19
Sinopharm Holding Changzhou Medical Logistics Center Co., Ltd. 100.00 -
Sinopharm Holding Dalian Co., Ltd. 95.02 29.51
Sinopharm Holding Yangzhou Co., Ltd. 62.65 -
Sinopharm Holding Putian Co., Ltd. 61.45 59.41
Shenyang Hongqi Pharmaceutical Co., Ltd. 60.22 78.00
Sinopharm Group Guizhou Blood Products Co., Ltd. 53.60 -
Jiangsu Lianhuan Pharmaceutical Co.,Ltd. 52.21 -
Shanghai Blood Transfusion Technology Co., Ltd. 50.30 -
Shyndec Pharma 47.58 -
Sinopharm Yixin Pharmaceutical Co., Ltd. 39.41 -
Sinopharm Xingsha Pharmaceuticals (Xiamen) Co., Ltd. 35.66 -
Sinopharm Group Zhijun(Shenzhen) Pharmaceutical Co., Ltd. 32.57 12.33
Sinopharm Holding Fengliaoxing (Foshan) Traditional & Herbal Medicine Co.,
Ltd. 32.03 -
Chongqing Haisiman Pharmaceutical Co., Ltd. 27.57 355.69
Sinopharm Group Rongsheng Pharmaceutical Co., Ltd. 22.33 17.01
Sinopharm Holding Quanzhou Co., Ltd. 17.09 45.70
Jingfukang Pharmaceutical Group Co., Ltd. 15.11 -
Winteam Pharmaceutical Group Ltd. 11.13 6.85
Fujian Chentian Jinling Pharmaceutical Co., Ltd. 10.06 -
Sinopharm Holding Heilongjiang Co., Ltd. 3.13 -
Guizhou Tongjitang Pharmaceutical Co., Ltd. - 98.03
Anhui Jingfang Pharmaceutical Co., Ltd. - 34.83
Sinopharm Group Zhijun (Shenzhen) PingShan Pharmaceutical Co., Ltd. - 15.78
56,888.84 41,525.15
330
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
8. Amounts due to related parties (Continued)
2018 2017
RMB‘0,000 RMB‘0,000
Other payables
Shanghai Dingqun 1,000.00 -
Sinopharm Chongqing Pharmaceutical and Medical Industry Design Institute 594.30 -
Sinopharm Holding Financing Lease Co., Ltd. 442.50 -
Shenyang Pharmaceutical Co., Ltd. 441.92 609.25
Sinopharm Group Co., Ltd. 370.64 58.40
Zhang Zhenfang 231.00 150.50
Sinopharm Group Medicine Logistic Co., Ltd. 227.83 412.88
Sinopharm Group Shanghai Co., Ltd. 166.04 -
China National of Traditional&Herbal Medicine Co., Ltd. 130.00 130.00
Pingdingshan Pusheng Pharmaceutical Co., Ltd. 124.64 123.58
Heyuan Mairui Trading Co., Ltd. 67.24 -
Shanghai Beiyi Guoda pharmaceutical Co. Ltd. 56.62 49.67
Sinopharm Holding Tianjin Binhai Pharmaceutical Co., Ltd. 33.98 113.73
Shyndec Pharma 32.80 50.35
Linyi Medical Group Co., Ltd. 5.14 86.21
Sinopharm Group Xinjiang Special Drugs National Pharmaceutical Co., Ltd. 4.18 46.64
Sinopharm Holding Sub Marketing Center Co., Ltd. 3.78 3.78
Sinopharm Holding Hunan Weian Pharmacy Medicine Chain Company Limited 3.00 0.69
Sinopharm Group Medicine Logistic Co., Ltd. Guangzhou Branch 1.87 -
China National Pharmaceutical Logistics Co., Ltd. 1.03 0.74
Lerentang Investment Group Co., Ltd. - 302.78
Beijing Golden Elephant Fosun Pharmaceutical Co., Ltd. - 20.00
Shenzhen Jiufeng Investment Co., Ltd. - 18.00
China National Scientific Instruments & Materials Imp/Exp Shenzhen Co., Ltd. - 3.75
3,938.51 2,180.95
331
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
8. Amounts due to related parties (Continued)
2018 2017
RMB‘0,000 RMB‘0,000
Advances from customers
Sinopharm Sichuan Pharmaceutical Co., Ltd. 112.31 73.96
Sinopharm Health Online Co., Ltd. 41.61 -
Sinopharm Holding Nantong Co., Ltd. 14.32 -
Sinopharm Holding Hunan Co., Ltd. 8.78 7.74
Sinopharm Holding Hunan Weian Pharmacy Medicine Chain Company Ltimited. 6.73 -
Sinopharm Holding Jiangxi Co., Ltd. 3.43 -
Sinopharm Holding Inner Mongolia Co., Ltd. 2.30 -
Sinopharm Hulunbuir Co., Ltd. 2.12 -
Sinopharm Holding Yunnan Co., Ltd. 1.19 -
Sinopharm Holding Quanzhou Co., Ltd. 1.01 -
Sinopharm Zhuhai Medical Instrument Co., Ltd. 0.37 1.15
Sinopharm Group Guangdong Medicine Device Co., Ltd. 0.16 -
China National Pharmaceutical Foreign Trade Corporation 0.15 1,250.54
Sinopharm Holding Chengdu Co., Ltd. 0.09 0.13
Sinopharm Holding Chongqing Co., Ltd. 0.08 0.08
Sinopharm Medical Instrument Guizhou Qiannan Co., Ltd. 0.01 -
Sinopharm Group Southwest Medicine Co., Ltd. - 67.67
Sinopharm Holding Nanping Newforce Co., Ltd. - 29.58
Sinopharm Holding Shenyang Co., Ltd. - 1.01
Sinopharm Holding Suzhou Co., Ltd. - 0.77
Sinopharm Group Co., Ltd. - 2.13
Sinopharm Holding Gansu Co., Ltd. - 2.89
Sinopharm Holding Qinghai Co., Ltd. - 0.35
Sinopharm Holding Beijing Co., Ltd. - 234.91
Sinopharm Holding Shandong Co., Ltd. - 251.57
Sinopharm Holding Lunan Co., Ltd. - 6.28
194.66 1,930.76
332
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
8. Amounts due to related parties (Continued)
2018 2017
RMB‘0,000 RMB‘0,000
Interest payable
China National Pharmaceutical Group Corporation 3.90 3.90
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. 12,242.64 14,771.55
Other non-current liabilities
Sinopharm Group 3,506.17 3,506.17
Current portion of long-term borrowings
Sinopharm Holding Financing Lease Co., Ltd. 586.13 543.48
Long-term payables
Sinopharm Holding Financing Lease Co., Ltd. 376.40 933.25
Amounts due to related parties were interest-free and unsecured, with no fixed terms of repayment.
9. Cash deposit with a related party
2018 2017
RMB‘0,000 RMB‘0,000
Group Financial Co. 212.54 15,674.09
In years 2018 and 2017, the interest rates for the deposit ranged from 0.35% to 1.15% above the
benchmark interest rate.
333
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(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 2018 31 December 2017
RMB‘0,000 RMB‘0,000
Capital commitments 42.16 600.45
Investment commitments (Note) 6,000.00 14,000.00
6,042.16 14,600.45
Note: According to the Sinopharm Holding document [Sinopharm Zongtou[2017]No.97], the Company
can subscribe fund shares from Ningbo Meishan bonded port area Qiling equity investment
center LP with RMB200 million to indirectly subscribe to the industry fund. 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 years. 30% was paid in 2017, amounting to RMB60 million, and 40% was paid in
2018, amounting to RMB80 million. The remaining payment amount is RMB60 million.
(2) Operating lease commitments
The future minimum lease payments due under the signed irrevocable operating lease contracts
are summarized as follows:
31 December 2018 31 December 2017
RMB‘0,000 RMB‘0,000
Within one year 43,365.94 49,860.66
Between 1 and 2 years 37,635.38 39,575.48
Between 2 and 3 years 31,071.82 29,537.37
Over 3 years 37,142.17 51,138.78
149,215.31 170,112.29
2. Contingencies
As of the balance sheet date, there were no contingencies that the Group was required to
disclose.
334
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
XII. Events after the balance sheet date
Pursuant to the resolution of the General Meeting of the Shareholders on 23 April 2019, the
Company paid a cash dividend of RMB4.00 for every 10 shares to all shareholders. Calculated
on the basis of 428,126,983 shares in issue, with an aggregate amount of RMB171,250,793.20.
This resolution had yet to be approved by the shareholders’ meeting.
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 three reportable operating segments as follows:
a) The Head Office, which is mainly engaged in the 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;
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.
335
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(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 2018 is as follows:
Head Office Pharmaceutical distribution Retail Pharmacy Elimination between segments Total
Operating revenue 9,273,843.07 32,757,389,882.07 10,878,025,717.94 (522,303,921.85) 43,122,385,521.23
Incl: Revenue from external
customers 7,639,065.85 32,237,174,455.73 10,877,571,999.65 - 43,122,385,521.23
Revenue from inter-segment
transactions 1,634,777.22 520,215,426.34 453,718.29 (522,303,921.85) -
Interest income 86,156,915.62 36,903,104.11 42,112,312.72 (84,052,825.82) 81,119,506.63
Interest expense (24,418,425.35) (254,353,316.36) (537,310.58) 84,052,825.82 (195,256,226.47)
Share of profits of associates 319,909,375.15 (1,700,728.31) 1,695,243.63 - 319,903,890.47
Asset impairment - (2,029,159.28) (715,446.08) - (2,744,605.36)
Credit impairment losses 3,348.72 903,349.81 (1,205,178.08) - (298,479.55)
Depreciation and amortization (1,214,260.43) (70,320,317.76) (134,575,834.22) - (206,110,412.41)
Gross profit 693,877,930.80 935,088,852.44 410,585,068.82 (360,622,494.53) 1,678,929,357.53
Income taxes (2,797,055.83) (218,867,690.72) (108,833,499.13) - (330,498,245.68)
Net profit 691,080,874.97 716,221,161.72 301,751,569.69 (360,622,494.53) 1,348,431,111.85
Total assets 11,206,677,509.70 18,246,104,939.73 9,035,418,275.87 (9,557,900,205.33) 28,930,300,519.97
Total liabilities (2,203,816,484.92) (12,743,275,454.62) (4,059,201,016.82) 3,981,768,929.44 (15,024,524,026.92)
Long-term equity investments in
associates 1,861,606,283.58 6,802,156.19 11,985,346.33 - 1,880,393,786.10
Accrual of other non-current assets
except long-term equity
investments 78,652,882.95 34,828,145.45 68,564,604.37 - 182,045,632.77
336
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(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 Pharmacy Elimination between segments Total
Operating revenue 8,375,742.95 31,521,345,695.17 10,030,768,869.22 (297,096,879.93) 41,263,393,427.41
Incl: Revenue from external customers 7,021,273.74 31,225,603,284.45 10,030,768,869.22 - 41,263,393,427.41
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
Accrual of other non-current assets except
long-term equity investments 61,523,479.15 19,193,113.59 76,785,603.09 - 157,502,195.83
337
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
XIII Other significant events (Continued)
2. Leases
As the lessor
Refer to Note V (12) for details of fixed assets leased out as operation leases.
As the lessee
Finance leases: At 31 December 2018, the balance of the unrecognized finance charge was
RMB 840,006.58 (2017: RMB1,981,269.40), 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:
2018 2017
Less than 1 year (Including 1 year) 7,304,197.88 7,304,197.93
1 to 2 years (Including 2 years) 4,424,279.85 7,304,197.93
2 to 3 years (Including 3 years) 563,159.02 4,575,859.90
Over 3 years - 411,578.82
12,291,636.75 19,595,834.58
Fixed assets under finance leases, see Note V (12).
338
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
XIV Notes to key items of the company financial statements
1. Notes receivable and trade receivables
31 December 2018 31 December 2017
Notes receivable 63,870,980.39 64,799,618.07
Trade receivables 631,236,593.94 480,467,760.92
695,107,574.33 545,267,378.99
Notes receivable
31 December 2018 31 December 2017
Trade acceptance notes 34,154,774.75 47,539,487.69
Bank acceptance notes 29,716,205.64 17,260,130.38
63,870,980.39 64,799,618.07
31 December 2018 31 December 2017
Derecognized Not Derecognized Derecognized Not Derecognized
Trade acceptance notes - - - -
Bank acceptance notes 47,235,156.38 - - -
47,235,156.38 - - -
As at 31 December 2018 and 31 December 2017, no notes were converted into accounts receivable due to the
drawer’s inability to settle the notes on the maturity date.
Trade receivables
The credit period for trade receivables normally ranges from 0 to 90 days. Trade receivables are interest-free.
The aging of trade receivables and the related provision for bad debts is analyzed below:
31 December 2018 31 December 2017
Amount Provision for bad debts Amount Provision for bad debts
Within 1 year 631,236,593.94 - 480,467,760.92 -
1 to 2 years - - - -
2 to 3 years - - 117,320.70 (117,320.70)
631,236,593.94 - 480,585,081.62 (117,320.70)
Changes in provision for bad debts are presented as follows:
Opening balance Written off in the year Closing balance
2018 117,320.70 (117,320.70) -
2017 117,320.70 - 117,320.70
339
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
XIV Notes to key items of the company financial statements (Continued)
1. Notes receivable and trade receivables (Continued)
Trade receivables (Continued)
Carrying amount of trade receivables that affected the changes in provision this year is as follows:
31 December 2018
Carrying amount Bad debt provisions
Amount Porportion Amount Porportion
Items for which provision for bad debt
is recognized by group (credit risk
characteristics) 613,389,652.64 97.17% - 0.00%
Items for which provision for bad debt
is recognised separately 17,846,941.30 2.83% - 0.00%
631,236,593.94 100.00% - 0.00%
31 December 2017
Carrying amount Bad debt provisions
Amount Proportion Amount Proportion
Items for which provision for bad
debt is recognized by group (aging) 480,467,760.92 99.98% - -
Not individually significant Items for
which provision for bad debt is
recognized separately 117,320.70 0.02% (117,320.70) 100.00%
480,585,081.62 100.00% (117,320.70) 0.02%
31 December 2018 31 December 2017
Expected
Estimated Expected credit loss in
default amount credit loss rate entire lifetime Amount Proportion Provision for bad debts
Within 1 year 613,389,652.64 0.00% - 480,467,760.92 0.00% -
340
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
XIV Notes to key items of the company financial statements (Continued)
1. Notes receivable and trade receivables (Continued)
Trade receivables (Continued)
The actual write-off trade receivables in 2018 are analyzed as follows
Occured by
transactions between
Nature Amount Reason related partry
Client A Payment for goods 116,855.40 Non-recoverable No
Client B Payment for goods 465.30 Non-recoverable No
117,320.70
In 2018, the Company factored a small portion of trade receivables at amortised cost to financial
insititutions. The amount of trade receivables derecognized is RMB145,129,500.06, amount of loss
recognised through financial expense is RMB1,527,611.20.
As at 31 December 2018, the top five trade receivables by customer are as follows:
Bad debt provision % of the total trade
Amount amount receivables
Top 1 Account receivable 56,790,226.23 - 9.00%
Top 2 Account receivable 49,842,887.24 - 7.90%
Top 3 Account receivable 48,119,276.57 - 7.62%
Top 4 Account receivable 39,009,115.37 - 6.18%
Top 5 Account receivable 25,049,643.33 - 3.97%
218,811,148.74 - 34.67%
As at 31 December 2017, the top five trade receivables by customer are as follows:
Bad debt provision % of the total trade
Amount amount receivables
Top 1 Account receivable 24,643,967.32 - 5.13%
Top 2 Account receivable 21,996,337.82 - 4.58%
Top 3 Account receivable 19,000,801.45 - 3.95%
Top 4 Account receivable 16,314,089.41 - 3.40%
Top 5 Account receivable 14,585,666.08 - 3.03%
96,540,862.08 - 20.09%
341
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
XIV Notes to key items of the company financial statements (Continued)
2. Other receivables
31 December 2018 31 December 2017
Interest receivable 7,550,877.07 1,844,294.10
Other receivables 1,534,430,006.43 1,516,037,945.71
1,541,980,883.50 1,517,882,239.81
Interest receivable
31 December 2018 31 December 2017
Deposits 3,697,083.33 -
Entrusted borrowings 3,853,793.74 1,844,294.10
7,550,877.07 1,844,294.10
There was no interest receivable past due this year.
Other receivable
The other receivables by category are listed below:
31 December 2018 31 December 2017
Amounts due from subsidiaries 1,469,192,387.91 1,324,203,206.47
Receivable from equity transaction 8,980,000.00 8,980,000.00
Deposit 1,449,978.94 1,864,394.68
Others 63,817,941.16 190,984,334.86
1,543,440,308.01 1.526.031.936.01
Less: provision for bad debts (9,010,301.58) (9,993,990.30)
1,534,430,006.43 1,516,037,945.71
The aging of other receivables and related provision for bad debts is analyzed below:
31 December 2018 31 December 2017
Within 1 year 1,526,170,858.55 1,460,168,464.26
1 to 2 years 8,167,507.65 55,703,411.59
2 to 3 years 67,906.60 168,407.25
Over 3 years 9,034,035.21 9,991,652.91
1,543,440,308.01 1,526,031,936.01
342
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
XIV Notes to key items of the company financial statements (Continued)
2. Other receivables (Continued)
The changes in bad debt provision for other receivables based on the entire lifetime expected credit
losses are as follows:
Entire lifetime expected credit Entire lifetime expected
losses credit losses Total
(Individually assessed) (Collectively assessed)
Balance at 1 January 2018 9,973,703.95 20,286.35 9,993,990.30
Balance at 1 January 2018 during the period - - -
--Transfer to the Stage 2 - - -
--Transfer to the Stage 3 - - -
--Reverse to the Stage 2 - - -
--Reverse to the Stage 1 - - -
Provisions during the period - 14,505.33 14,505.33
Reversal during the period (993,703.95) (4,490.10) (998,194.05)
Write-back during the period - - -
Write-off during the period - - -
Other - - -
8,980,000.00 30,301.58 9,010,301.58
31 December 2017
Carrying amount Bad debt provision
Amount % Amount %
Individually significant and subject to separate
impairment assessment 134,161,658.92 8.79% (8,980,000.00) 6.69%
Receivable accounts with similar credit risk 1,390,860,253.14 91.14% (20,286.35) 0.00%
Individually not significant but individually evaluated
for impairment 1,010,023.95 0.07% (993,703.95) 98.38%
1,526,031,936.01 100.00% (9,993,990.30) 0.65%
343
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
XIV Notes to key items of the company financial statements (Continued)
2. Other receivables (Continued)
As at 31 December 2017, impairment provision for other receivables which are individually significant is
analyzed as follows:
Bad debt Assessment for
Amount provision Rate impairment
Other receivable
from a related
party, no
uncertainty in
Mordern Pharma 125,181,658.92 - - recoverability
Shenzhen Yinghai Technology Uncertainty in
Investment Co., Ltd. 8,980,000.00 (8,980,000.00) 100.00% recoverability
134,161,658.92 (8,980,000.00) 6.69%
Provisions for impairment of the receivables which have similar credit risk are analyzed below:
31 December 2017
Carrying amount Bad debt provision
Amount Amount Rate
Within 1 year 1,390,627,820.33 - -
1 to 2 years 62,396.60 3,119.83 5.00%
2 to 3 years 168,407.25 16,840.73 10.00%
Over 3 years 1,628.96 325.79 20.00%
1,390,860,253.14 20,286.35 0.00%
344
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
XIV Notes to key items of the company financial statements (Continued)
2. Other receivabls (Continued)
As at 31 December 2018, the accumulated top five other receivables by analysis by customer
are analysed below:
% of the
total
other Bad debt
Nature Amount Aging receivable provision
Sinopharm Guangxi Entrusted loans 201,000,000.00 Within 1 year 13.02% -
Sinopharm Yuexing Entrusted loans 190,700,000.00 Within 1 year 12.36% -
Sinopharm Dongguan Entrusted loans 131,000,000.00 Within 1 year 8.49% -
Sinopharm Zhangjiang Entrusted loans 124,000,000.00 Within 1 year 8.03% -
Sinopharm Meizhou Entrusted loans 76,700,000.00 Within 1 year 4.97% -
723,400,000,00 46.87% -
As at 31 December 2017, the accumulated top five other receivables by analysis by customer
are analysed below:
% of the total
other Bad debt
Nature Amount Aging receivables provision
Sinopharm Yuexing Entrusted loans 162,700,000.00 Within 1 year 10.66% -
Sinopharm Within 1 year
Zhangjiang Entrusted loans 157,000,000.00 10.29% -
South Pharm & Trade Entrusted loans 150,000,000.00 Within 1 year 9.83% -
Pingshan Within 2 year
Base
Modern Pharma Project fund 125,181,658.92 8.20% -
Sinopharm Dongguan Entrusted loans 121,000,000.00 Within 1 year 7.93% -
715,881,658.92 46.91% -
3. Long-term equity investments
31 December 2018 31 December 2017
Investments in subsidiaries (a) 5,594,679,427.58 5,594,679,427.58
Investments in associates (b) 1,878,157,264.66 1,625,556,656.98
7,472,836,692.24 7,220,236,084.56
Less: Provision for impairment of
long-term equity investments (39,930,000.00) (39,930,000.00)
7,432,906,692.24 7,180,306,084.56
345
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(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
Original Increases in Equity interest Voting rights
1-Jan-18 31-Dec-18
investment cost investment cost held (%) held (%)
Sinopharm Jianming 45,054,911.04 60,054,911.04 - 60,054,911.04 100 100
Sinopharm Shenzhen Material 5,400,000.00 15,450,875.93 - 15,450,875.93 100 100
Shenzhen Logistics 900,000.00 5,019,062.68 - 5,019,062.68 100 100
Sinopharm Guangzhou 58,283,114.68 1,565,440,323.63 2,023,249,393.17 3,588,689,716.80 100 100
Sinopharm Hengxing 8,421,544.08 91,763,288.00 -91,763,288.00 - 100 100
Sinopharm Liuzhou 21,407,965.79 21,407,965.79 -21,407,965.79 - 51 51
Sinopharm Dongguan 2,742,000.00 72,942,000.00 -72,942,000.00 - 100 100
Huixin Investment 109,416,937.72 64,416,937.72 -64,416,937.72 - 100 100
Guangdong Logistics 1,269,502.30 13,596,006.21 -13,596,006.21 - 100 100
-
Sinopharm Yuexing 16,459,326.27 243,459,326.27 - 100 100
243,459,326.27
Sinopharm Foshan 6,995,065.51 45,995,065.51 -45,995,065.51 - 100 100
Sinopharm Guangxi 33,048,985.28 504,048,985.28 21,407,965.79 525,456,951.07 100 100
-
Sinopharm Zhanjiang 1,369,864.65 131,769,864.65 - 100 100
131,769,864.65
Sinopharm Yanfeng 38,207,800.00 38,207,800.00 - 38,207,800.00 51 51
Sinopharm Meizhou 4,481,900.00 51,281,900.00 -51,281,900.00 - 100 100
Sinopharm Huizhou 20,939,177.19 36,644,200.00 -36,644,200.00 - 100 100
Sinopharm Zhaoqing 5,060,000.00 43,060,000.00 -43,060,000.00 - 100 100
-
Sinopharm Jiangmen 56,000,000.00 106,000,000.00 - 100 100
106,000,000.00
Sinopharm Zhongshan 10,000,000.00 30,000,000.00 -30,000,000.00 - 100 100
Sinopharm Shaoguan 13,580,000.00 13,580,000.00 -13,580,000.00 - 70 70
Sinopharm Shantou 7,490,000.00 23,990,000.00 -23,990,000.00 - 100 100
Guangdong South Pharmaceutical -
401,922,976.68 401,922,987.18 - 100 100
Foreign Trade Co., Ltd. 401,922,987.18
Guangdong Uptodate & Special -
144,682,822.34 144,682,822.34 - 100 100
Medicines 144,682,822.34
Guoda Pharmacy 1,361,800,110.06 1,361,800,110.06 - 1,361,800,110.06 100 100
-
Foshan Nanhai Medicine Co., Ltd. - 100 100
462,682,298.01 462,682,298.01 462,682,298.01
Sinopharm Maoming - 100 100
8,300,000.00 8,300,000.00 -8,300,000.00
Sinopharm Zhuhai - 100 100
10,362,740.00 37,162,697.28 -37,162,697.28
5,594,679,427.58 5,594,679,427.58 -
346
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)
(b) Associates
Movement
Profit or loss
Other
At beginning of the under the Dividend Provision for
Investment changes in At end of the year
year equity declared impairment
equity
method
at end of the
(Carrying amount) (Book value)
year
Note XVI(5)
Main Luck
239,046,738.14 - 79,054,915.54 -52,785,000.00 - 265,316,653.68 -
Pharmaceutical
Zhijun Suzhou 39,930,000.00 - - - - - -39,930,000.00
Zhijun Medicine 291,042,921.20 - 122,421,529.52 -58,111,254.57 - 355,353,196.15 -
Zhijun Trade 7,676,142.69 - 1,719,647.21 -664,795.03 - 8,730,994.87 -
Pingshan -
68,686,804.33 - 27,325,603.71 - 86,292,927.33 -
Medicine 9,719,480.71
-
Shyndec Pharma 979,174,050.62 - 108,241,749.04 19,599,266.75 1,098,566,852.51 -
8,448,213.90
Shanghai
- 20,000,000.00 3,966,640.12 - - 23,966,640.12 -
Dingqun(i)
1,625,556,656.98 20,000,000.00 342,730,085.14 -129,728,744.2119,599,266.75 1,838,227,264.66 -39,930,000.00
347
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)
Notes:
（i） On May 2018, the Company jointly established Shanghai Dingqun with Ningbo Meishan
bonded port area Qiling equity investment center LP, subscribing 2.53% and 97.47%
shareholdings, respectively. According to the Articles of Association, the board of directors of
Shanghai Dingqun consisted of three directors and one of them was appointed by our
Company. Each director shall represent one vote on the board’s decisions, which shall be
adopted if they are voted for by a simple majority of all the members of the board. Therefore,
the Company has significant influence over Shanghai Dingqun, and thus it is considered as an
associate of the Company.
4. Sales and cost of sales
2018 2017
Revenue Cost Revenue Cost
Main operations 3,462,663,349.53 3,306,117,780.86 3,334,525,451.83 3,205,231,939.72
Other operating 18,783,527.40 11,450,860.13 12,301,689.25 6,436,707.30
3,481,446,876.93 3,317,568,640.99 3,346,827,141.08 3,211,668,647.02
Revenue from and cost of main operations
Revenue from and cost of main operations analyzed by industry are set out below:
2018 2017
Revenue from Cost of main Revenue from Cost of main
main operations operations main operations operations
Medical wholesale
and retail 3,462,663,349.53 3,306,117,780.86 3,334,525,451.83 3,205,231,939.72
Other operating income and expenses
Other operating income and expenses analyzed by industry are set out below:
2018 2017
Other operating Other operating Other operating Other operating
income cost income cost
Rental income 8,866,469.65 1,873,143.18 6,626,331.17 807,977.46
Rendering of
services 8,798,227.83 8,131,512.38 4,616,650.60 4,529,535.37
Others 1,118,829.92 1,446,204.57 1,058,707.48 1,099,194.47
18,783,527.40 11,450,860.13 12,301,689.25 6,436,707.30
348
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 (Continued)
Breakdown of operating revenue and cost by type of product:
2018 2017
Revenue Cost Revenue Cost
Medicines 3,368,695,671.79 3,218,415,198.43 3,260,604,951.00 69,473,875.85
Medical appliance 93,967,677.74 87,702,582.43 73,920,500.83 1,040,629,765.23
Other 18,783,527.40 11,450,860.13 12,301,689.25 2,101,565,005.94
3,481,446,876.93 3,317,568,640.99 3,346,827,141.08 3,211,668,647.02
All sales revenue was domestic for the year 2018.
Revenue and cost of main operations
2018
Timing of revenue recognition
Revenue recognised at a point in time
Sales of goods 3,462,663,349.53
Revenue recognised within a time period
Providing services 9,917,057.75
Rental income 8,866,469.65
3,481,446,876.93
In 2018, the Company has recognised contract liabilities in total of RMB4,182,083.40 through the sale of
goods and provision of services. Information about the Company’s obligations are as follows:
The Company recognises revenue when goods are delivered, and will receive payment within 30-210
days.
The Company recognises revenue after providing services, and will receive payment within 30-210 days.
The expected revenue recognition time for the Company’s contract obligations above is 2019.
5. Investment income
2018 2017
Gain on long-term equity investments
under the cost method 361,514,454.31 354,422,188.02
Gain on long-term equity investments
under the equity method (Note
XIV(3)(b)) 342,730,085.14 286,535,212.21
704,244,539.45 640,957,400.23
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Supplementary information to financial statements
1. Schedule of non-recurring profit or loss
Amount for 2018
Gains and losses on disposal of non-current assets,
including write-off of an accrued asset impairment 7,048,337.10
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 30,098,383.86
The investment cost of an enterprise to acquire a subsidiary, an associate and a joint venture,
which is less than profits derived from the fair value of the identifiable net assets of the
invested unit when investing 729.29
Reversal of bad debt provision for trade receivables that were tested for
impairment individually 5,301,091.66
Profit or loss from outward entrusted loans 3,246,925.69
Revenue from a trustee operation 516,929.44
Non-operating income and expenses other than the aforesaid items 5,069,438.37
Other 1,445,926.01
52,727,761.42
Impact on income tax (12,137,071.11)
Impact on non-controlling interests after tax (5,820,221.92)
34,770,468.39
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 the 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.
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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)
2018
Net profit attributable to the ordinary shareholders of the parent
11.56 2.83
Net profit after deducting non-recurring profit or loss attributable
to the Company’s ordinary shareholders of the parent
11.22 2.75
2017
Net profit attributable to the ordinary shareholders of the parent 11.91 2.47
Net profit after deducting non-recurring profit or loss attributable
to the ordinary shareholders of the parent
11.66 2.42
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 2018 (2017:
Nil) and hence no presentation of diluted EPS were provided.
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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 report 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. Original text of the annual report with signature of the Chairman;
5. The Place Where the document placed: Office of Secretariat of the Board of Directors, Sinopharm Accord
Bldg., No. 15, Ba Gua Si Road, Futian District, Shenzhen
China National Accord Medicines Corporation Ltd
Legal representative: Lin Zhaoxiong
25 April 2019
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