China National Accord Medicines Corporation Ltd.
Annual Report 2016
April 2017
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 charge of accounting works and Wang Ying, person in charge of accounting organ
(accounting principal) hereby confirm that the Financial Report of 2016 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|Ma Wanjun|

 It is likely to existing risks in aspect of industrial competition,operation& management, market and national policy, and majority investors are advised to exercise caution of investment risks.
The profit distribution plan that deliberated and approved by the Board is: based on total stock issued 428,126,983 shares, distributed 3.30 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.
Contents
Section I Important Notice, Contents andParaphrase………………………………………..2 Section II Company Profile and Main FinanicalIndexes……………………………………..5 Section III Summary of CompanyBusiness………………………………………..…………10 Section IV Discussion and Analysis ofBusiness…………………………………..…………..14 Section V ImportantEvents………………………………………………………....…………41 Section VI Changes in shares and particular aboutshareholders………………….………..69 Section VII PreferredStock……………………………………………………………………78 Section VIII Particulars about Directors, Supervisors, Senior Executives and Employees.79 Section IX CorporateGovernance…………………………………………………………….91 Section X CorporateBond……………………………………………………………………..99 Section XI FinancialReport……………………………………………………………….…100 Section XII Documents available forreference……………………………………………..325
Paraphrase
||||
|-|-|-|
|Items|Refers to|Contents|
|Listed Company, Company, the Company,|||
||Refers to|China National Accord Medicines Corporation Ltd.|
|Sinopharm Accord, the Group|||
|Sinopharm Holding|Refers to|Sinopharm Group Co., Ltd.; Controlling shareholder of the Company|
|“Twelfth Five-Year”|Refers to|Year of 2011 to 2015|
|Company Law|Refers to|Company Law of the People’s Republic of China|
|Securities Law|Refers to|Securities Law of the People’s Republic of China|
|Yuan, 10 thousand Yuan, 100 million Yuan|Refers to|RMB, RMB 10 thousand, RMB 100 million|
|Terminology:|Refers to||
|Direct selling|Refers to|A sales method of selling drug to the hospital directly|
|GMP certificate|Refers to|Good Manufacture Practice of Drugs certificate|
|GSP certificate|Refers to|Good Supply Practice certificate|
|||That is CMS, and information system processing workflow &|
|Supply Chain Management|Refers to||
|||procurement, inventory & sales documents|
|Abbreviation|Refers to||
|Sinopharm|Refers to|China National Pharmaceutical Group Corporation|
|Sinopharm (CNCM LTD)|Refers to|China National Medicines Corporation Ltd.|
|Sinopharm Holding Guangzhou|Refers to|Sinopharm Holding Guangzhou Co., Ltd.|
|Guoda Pharmacy|Refers to|Sinopharm Holding Guoda Pharmacy Co., Ltd.|
|Sinopharm Holding Guangxi|Refers to|Sinopharm Holding Guangxi Co., Ltd.|
|Zhijun Pharmaceutical|Refers to|China National Zhijun (Shenzhen) Pharmaceutical Co., Ltd.|
|Zhijun Pharmacy Trade|Refers to|Shenzhen Zhijun Pharmacy Trade Co., Ltd.|
|Pingshan Pharmaceutical|Refers to|China National Zhijun (Shenzhen) Pingshan Pharmaceutical Co., Ltd.|
|Main Luck Pharmaceutical|Refers to|Shenzhen Main Luck Pharmaceuticals Inc.|
|China National Zhijun (Suzhou)|Refers to|China National Zhijun (Suzhou) Pharmaceutical Co., Ltd.|

Section II Company Profile and Main Finanical Indexes
I. Company information
|||||
|-|-|-|-|
|Short form of the stock|Sinopharm Accord ; Accord B|Stock code|000028, 200028|
|Stock exchange for listing|Shenzhen Stock Exchange|||
|Name of the Company (in|国药集团一致药业股份有限公司|||
|Chinese)||||
|Short form of the Company||||
||国药一致|||
|(in Chinese)||||
|Foreign name of the Company||||
||China National Accord Medicines Corporation Ltd.|||
|(if applicable)||||
|Short form of foreign name of||||
||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|Rep. of security affairs|
|Name|Chen Changbing||
||Accord Pharm. Bldg., No. 15, Ba Gua Si Road, Futian||
|Contact add.|||
||District, Shenzhen, Guangdong Province||
|Tel.|+(86)755 25875195||
|Fax.|+(86)755 25195435||
|E-mail|gyyzinvestor@sinopharm.com；||

III. Information disclosure and preparation place
|||
|-|-|
|Newspaper appointed for information disclosure|Securities Times; China Securities Journal; Hong Kong Commercial Daily|
||HTTP://WWW.SZSE.CN;|
|Website for annual report publish appointed by CSRC||
||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)||
|Previous changes for controlling||
||No change.|
|shareholders (if applicable)||

V. Other relevant information
CPA engaged by the Company
|||
|-|-|
||Ernst & Young CPA (Special General partnership)|
|Name of CPA||
|Offices add. for CPA|21/F, China Resources Building, No. 5001, Shennan East Road, Luohu District, Shenzhen|
|Signing Accountants|Li Jianguang, Zhang Yongkun|

Sponsor engaged by the Company for performing continuous supervision duties in reporting period
□ Applicable√ Not applicable
Financial consultant engaged by the Company for performing continuous supervision duties in reporting period
√Applicable□Not applicable
|||||
|-|-|-|-|
|Name of the financial|Offices add. for the financial|||
|||Financial advisor|Continuous supervision period|
|consultant|consultant|||
||27/F-28/F, Building 2,|||
|China International Capital|International Trade Mansion,|||
|||Zhang Lei, Chen Chao|2017-2018|
|Corporation Limited|No.1 Jianguomen Outer Street,|||
||Beijing|||

VI. Main accounting data and financial indexes
Whether it has retroactive adjustment or re-statement on previous accounting data for accounting policy changed and accounting error correction or not
□ Yes√ No
||||||
|-|-|-|-|-|
||2016|2015|Changes over last year|2014|
|Operating income (RMB)|41,248,429,322.91|37,819,277,959.01|9.07%|33,745,321,295.39|
|Net profit attributable to|1,186,601,899.27|927,610,234.41|||
|shareholders of the listed company|||27.92%|808,392,679.17|
|(RMB)|||||
|Net profit attributable to|||||
|shareholders of the listed company|||||
||834,359,349.80|709,923,823.36|17.53%|529,096,553.54|
|after deducting non-recurring gains|||||
|and losses (RMB)|||||

||||||
|-|-|-|-|-|
|Net cash flow arising from|1,472,545,587.85|1,457,416,143.80|||
||||1.04%|-365,016,206.55|
|operating activities (RMB)|||||
|Basic earnings per share|2.80|2.19|||
||||27.85%|2.00|
|(RMB/Share)|||||
|Diluted earnings per share|2.80|2.19|||
||||27.85%|2.00|
|(RMB/Share)|||||
|Return on Equity|15.06%|13.43%|1.63%|15.11%|
||||Changes over end of||
||End of 2016|End of 2015||End of 2014|
||||last year||
|Total assets (RMB)|21,312,754,511.97|20,313,335,694.54|4.92%|18,231,124,183.27|
|Net assets attributable to|8,450,150,621.93|7,352,924,544.29|||
|shareholder of listed company|||14.92%|6,128,373,728.41|
|(RMB)|||||

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|10,279,365,074.72|10,248,011,483.12|10,544,689,840.15|10,176,362,924.92|
|Net profit attributable to|||||
||246,385,445.06|408,301,295.21|252,031,302.51|279,883,856.49|
|shareholders of the listed company|||||
|Net profit attributable to|||||
||187,445,696.09|217,063,712.32|174,075,812.75|255,774,128.64|
|shareholders of the listed company|||||

||||||
|-|-|-|-|-|
|after deducting non-recurring gains|||||
|and losses|||||
|Net cash flow arising from|||||
||-119,648,923.44|925,231,893.73|-9,018,970.70|675,981,588.26|
|operating activities|||||

Whether there are significant differences between the above-mentioned financial index or its total number and the relevant financial index disclosed in thecompany’s quarterly report and semi-annual report
√Yes□ No
The financial data for enterprise combined merger under the same control, needs to trace from beginning of the period to the delivery date, affected by the reorganization. There are differences between first three quarters and the quarterly report& semi-annual report that have been disclosed.
Note: explain main reasons if the above mentioned financial index and total numbers have major difference with the data disclosed in quarterly and semi-annual report.
IX. Items and amounts of extraordinary profit (gains)/loss
√Applicable□ Not applicable
In RMB
||||||
|-|-|-|-|-|
|Item|2016|2015|2014|Note|
||11,931,729.24|||The revenue receivedfrom assets disposalfrom subsidiaryGuoda Pharmacy andGuangxi Logistic|
|Gains/losses from the disposal of non-|||||
|current asset (including the write-off that||5,863,107.27|2,262,989.96||
|accrued for impairment of assets)|||||
|Governmental subsidy reckoned into current|34,000,702.25|||Mainly for receiving|
|gains/losses (not including the subsidy|||||
|enjoyed in quota or ration according to||34,025,749.62|31,534,869.05|subsidies and fiscal|
|national standards, which are closely||||interest discount in the|
|||||period.|
|relevant to enterprise’s business)|||||
||260,527,573.39|||Current net gain/lossesof the subsidiary fromperiod-begin tocombination date,which is included bymerger under the samecontrol in majorrestructuring|
|Current net gain/losses of the subsidiary|||||
|merger under the same control from||247,889,700.57|238,044,602.29||
|beginning of the period to combination date|||||

||||||
|-|-|-|-|-|
|Switch back of provision for depreciation of|5,952,565.52||||
|account receivable which was singly taken||7,421,904.86|3,518,118.71||
|depreciation test|||||
||2,880,583.33|||Earnings obtainedfrom entrusted loansoffered SinopharmZhijun (Suzhou)|
|Gains and losses on foreign entrusted loans|||||
||393,081.77|||The managed serviceoffering to SinopharmHolding and ChinaNationalPharmaceuticalForeign TradeCorporation|
|Consigning fee received for consigned|||||
|||750,000.00|750,000.00||
|operation|||||
|Other non-operating income and expenditure|6,300,281.94||||
|||19,155,803.67|16,116,561.38||
|except for the aforementioned items|||||
|||||The earrings of the|
|||||residual 33%|
|||||shareholding re-|
|Earnings of the residual shareholding re-|||||
||35,080,116.91|||measured by fair value|
|measured by fair value after losing control|||||
|||||after disposing 67%|
|||||equity of Sinopharm|
|||||Zhijun (Suzhou)|
|||||Investment earnings|
|Investment income from disposal of long||||from disposal of 67%|
||86,674,065.35||||
|term equity investment||||equity of Sinopharm|
|||||Zhijun (Suzhou)|
|Less: Impact on income tax|28,392,824.03|11,848,624.93|11,767,755.13||
|Impact on minority shareholders’|63,105,326.20||||
|||85,571,230.01|1,163,260.63||
|equity (post-tax)|||||
|Total|352,242,549.47|217,686,411.05|279,296,125.63|--|

 Concerning the extraordinary profit (gain)/loss defined byQ&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 inQ&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 inQ&A Announcement No.1 on Information Disclosure for Companies Offering Their Securities to the
Public --- Extraordinary Profit/loss
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
No
In the reporting period, the main business of China National Accord Medicines includes pharmaceutical distribution, pharmaceutical retail and pharmaceutical industry, specifically as follows:
(i) In the pharmaceutical distribution field, the company continues to integrate the distribution and logistics business, deeply penetrates into the end markets, improves the multistep distribution network, creates intelligent supply chain, and devotes to become a provider for pharmaceutical and healthcare products and services with the strongest influence, the highest share, the most complete variety, the best service, and the fastest delivery in south district of China.
1. TheCompany’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, and accelerated the integration of three-level companies in 2014, and realized the entire network operations in 2015. In year of 2016, the network has been further expanded, including: 1660 A-grade hospitals, 3348 community-oriented primary cares and 1447 retail terminal clients.
2. TheCompany’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 based on the full integration of resources.
(ii) In the pharmaceutical retail field, Guoda Pharmacy 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. Up to the date of disclosure, the retail chain network of Guoda Pharmacy spreads over 18 provinces, autonomous regions and municipalities, covers nearly 70 large and medium-sized cities, and manages a total of more than 3,500 retail drugstores.
1. Abundant commodity category system and nationwide procurement network
In accordance with the number of operating goods, Guoda Pharmacy is one of the nationwide pharmaceutical retail chain enterprises with the most abundant commodities. By virtue of the strong procurement network and years of experience in commodity operations, and based on the consumer demands and medication habits, Guoda Pharmacy has established a set of commodity system with wide coverage, high professionalization, and rich varieties. Guoda Pharmacy manages nearly 120,000 kinds of commodities, and its abundant and attractive commodity combinations promote the steady growth of its sales volume.
2. Modern logistics and distribution system
Guoda Pharmacy has a nationwide modern logistics and distribution system, which establishes the logistics and distribution networks including Shanghai National Logistics Center and 23 provincial and municipal distribution centers, and covers all the stores throughout the country. Guoda Pharmacy takes use of the national and provincial and municipal distribution centers to support collective purchasing and regional purchasing model, efficiently
respond to the business needs, and effectively realize the logistics cost minimization.
(iii) In 2016, the company implemented a major asset reorganization, and the pharmaceutical industry enterprises completed the setting out of controlling interests, the company continued to integrate R& D and marketing, took technological innovation as the guide, and became the provider providing the medical& healthcare products and services with quality leadership, core competitive advantages, diversified transverse correlation, complete vertical industry chain, and brand influence in both domestic and overseas markets.
1. The company passed international certifications in the pharmaceutical industry field, improved the quality system, integrated the export and product resources, opened up the mainstream markets in Europe and America, and realized internationalization in technical cooperation, intellectual property protection, talent introduction, and joint venture and cooperation.
2. The company continued to develop cephalosporin series products and the upgrade products of APIs, gradually introduced the cardiovascular, digestive system, respiratory system series products, took APIs and chemical agents as the core business and strategic business, and the traditional Chinese medicine and massive health as the emerging business.
II. Major changes in main assets
1. Major changes in main assets
|||
|-|-|
|Major assets|Note of major changes|
||Increased 1,222,751,500 Yuan over that of period-begin with 642.60% up, mainly due to|
|Equity assets||
||the major assets restructuring in the period|
||Decreased 885.64 million Yuan over that of period-begin with 64.52% down, mainly due|
|Fixed assets||
||to the major assets restructuring in the period|
||Decreased 88.87 million Yuan over that of period-begin with 21.71% down, mainly due|
|Intangible assets||
||to the major assets restructuring in the period|
||Decreased 153,504,900 Yuan over that of period-begin with 76.53% down, mainly due to|
|Construction in progress||
||the major assets restructuring in the period.|
||Increased 11.01 million Yuan over that of period-begin with 411.47% up, mainly because|
|Financial assets available for sale||
||Guoda Pharmacy has new investment in the Period.|

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
No
(I) Distribution core competitiveness of Sinopharm Accord
1. Perfect distribution network
The Company owns an integrated distribution networks for pharmaceutical in Guangdong and Guangxi province, and completely covers second grade class-A or above medical institutions and major chain drugstores in the above two provinces. Furthermore, the Company offering medicine delivery services for the third terminal, represented by many monomer drugstores, community health service network, clinic and new rural cooperative medical system. Sinopharm Accord fully explore advantages of distribution network, provides customers with value-added services and creating client value.
2. Leading edge intelligent supply chain
Distribution of the Company core with an intelligent supply chain, by means of promoting the jointly managed inventory and intellectualized inventory management in hospital pharmacy, supply chain services extends effectively with resources sharing and effective coordination in upstream-and-downstream achieved.
3. High-efficiency management& control integration
The Company continues to promoted an integrated operation system in Guangdong and Guangxi province in aspect of medicine distribution, focus on promoting integration both in procurement and foundation operation in Guangdong and Guangxi province; accelerate the move towards collaboration in business of apparatus, consumables, vaccine etc. within Guangdong and Guangxi, realized a synchronous of management in areas of Guangdong and Guangxi.
4. Rich product resources
In aspect of pharmaceutical distribution, the Company building an extensive cooperation with thousands of venders and commercial enterprise in China, establishing a stable business relationship with hundreds of importers and joint venture companies, owns variety resources of products.
5. Unique-influence Sinopharm brand
Brand of the Company and distribution, industry child-brand and controlling shareholder and actualcontroller’s brand come down in one continuous line, depending on powerful force of central enterprises, theCompany’s popularity and influence are prominent day by day in the industry.
(II) Core-competitiveness of the Guoda Pharmacy
1. A national wide marketing network leads in scale
Guoda Pharmacy 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. Up to end of December 2016, the retail chain network of Guoda Pharmacy spreads over 18 provinces in total including Shanghai, Jiangsu, Shandong, Fujian, Zhejiang, Anhui, Shanxi, Beijing, Hebei, Inner Mongolia, Tianjin, Liaoning, Guangdong,
Guangxi, Hunan, Henan, Ningxia and Xinjiang, autonomous regions and municipalities, covers nearly 70 large&small and medium-sized cities, and manages a total of more than 3,502 retail drugstores.
2. Abundant commodity category system and nationwide procurement network
In accordance with the number of operating goods, Guoda Pharmacy is one of the nationwide pharmaceutical retail chain enterprises with the most abundant commodities. By virtue of the strong procurement network and years of experience in commodity operations, and based on the consumer demands and medication habits, Guoda Pharmacy has established a set of commodity system with wide coverage, high professionalization, and rich varieties. Up to 31st December 2016, Guoda Pharmacy manages nearly 120,000 kinds of commodities, and its abundant and attractive commodity combinations promote the steady growth of its sales volume.
The abundant commodity system of Guoda Pharmacy comes from the nationwide, stable and reliable procurement network. Over the years, Guoda Pharmacy continued to strengthen the sales concentration of quality products, expanded the cooperation scale with key manufacturers, and won trust of the majority partners by the nationwide headquarters centralized purchasing and regional purchasing network system, and the integrative purchasing management. Guoda Pharmacy is the preferred long-term strategic partner for the domestic and international well- known enterprises producing and distributing medical and healthcare products, most suppliers have cooperated with Guoda Pharmacy for many years, and ensured the competitive advantages of Guoda Pharmacy in the purchasing price and quality. At the same time, Guoda Pharmacy established a complete set of strict quality assurance system, implemented a number of quality management measures, strictly followed the national GSP standards for the whole process of commodity purchasing, logistics and sales, and further ensured the product quality safety.
3. Modern logistics and distribution system
Guoda Pharmacy has a nationwide modern logistics and distribution system, which establishes the logistics and distribution networks including Shanghai National Logistics Center and 23 provincial and municipal distribution centers, and covers all the stores throughout the country. Guoda Pharmacy takes use of the national and provincial and municipal distribution centers to support collective purchasing and regional purchasing model, efficiently respond to the business needs, and effectively realize the logistics cost minimization.
With the modern logistics and distribution system, Guoda Pharmacy has achieved the delivery within 48 hours for the stores. In addition, Guoda Pharmacy has greatly enhanced the operational efficiency and delivery accuracy by using the advanced Manhattan warehouse management system (WMS) which supports a variety of operations and optimizes each operation.
Section IV Discussion and Analysis of Business
1. Introduction
2016 was the transformation year of enterprise restructuring and reorganization. Over the past year, under the leadership of the board of directors, Sinopharm Accord adhered to embrace the changes with sunny attitude in the face of changing external policy environment and industry changes, answered the changes with "changes", sought and seized opportunities in the challenges, continued to consolidate the traditional businesses, strove to open up innovative businesses, developed businesses in new transboundary fields, achieved progress in "stability", and successfully completed the key work.
I. The whole business in 2016
In 2016, the Company realized operating income of RMB 41.248 billion, representing a year-on-year increase of9.07%; net profit attributable to shareholders of listed company of RMB 1187 million, representing a year-on-year increase of27.92%. The Company has continued to keep growth, including:
As for distribution, operating income was RMB 31.136 billion, representing a year-on-year increase of9.9%; net profit of RMB 604 million, representing a year-on-year increase of10.15%.
As for retail, operating income was RMB 9.109 billion, representing a year-on-year increase of13.99%; net profit of RMB 223 million, representing a year-on-year increase of60.93%.
As for pharmaceutical, operating income was RMB 1.192 billion from January to October 2016; net profit of RMB 217 million.
II Work overview of the board of directors
(i) Optimize the industrial layout, successfully complete the major assets restructuring projects
Actively cooperate and promote the "platform" strategy of Sinopharm, solve the horizontal competition, and fulfill the relevant commitments, Sinopharm Accord Company delisted and launched the major asset restructuring project on October 21, 2015. This restructuring project included: (1) Sinopharm Accord subscribed the shares newly issued by Shanghai Shyndec Pharmaceutical with51% stock rights of Zhijun Pharmaceutical, and51% stock rights of Zhijun Pharmacy Trade, and51% stock rights of Pingshan Pharmaceutical, and all productive assets of Pingshan base; (2) Sinopharm Accord bought100% stock rights of Guoda Pharmacy,100% stock rights of Foshan Nanhai,100% stock rights of Guangdong Uptodate& Special Medicines from the non-public offering of shares of Sinopharm Group, and51% stock rights of Nanfang Pharmaceutical Trade from the non-public offering of shares of Sinopharm Foreign Trade, and49% stock rights of Nanfang Pharmaceutical Trade by cash from Fu Yuequn and other 10 natural minority shareholders; (3) raised supporting funds to pay the equity cash consideration.
This reorganization was a significant action to deepen the reform of state-owned enterprises and optimize the industrial layout of Sinopharm, Sinopharm Accord has become an independent listing platform for pharmaceutical
retail of Sinopharm through this reorganization, which would enable the pharmaceutical retail business to obtain high-quality financing platform and gain the specialized development, and lay a solid foundation for the foreign merger and acquisition and integration of pharmaceutical retail business, construction of retail network, innovation of business model, and other development strategies; after the completion of reorganization, Sinopharm Accord would hold100% stock rights of Foshan Nanhai, Guangdong Uptodate& Special Medicines, and Nanfang Pharmaceutical Trade, and become the only platform for pharmaceutical distribution in Guangdong and Guangxi provinces under Sinopharm, at the same time, Sinopharm Accord no longer would hold the controlling stakes of Zhijun Pharmaceutical, Zhijun Pharmacy Trade, and Pingshan Pharmaceutical, and all productive assets of Pingshan base, moreover, Sinopharm Accord and its subordinate holding subsidiaries would no longer hold any pharmaceutical industry businesses, which thoroughly solved the horizontal competition in pharmaceutical distribution businesses between the listed company and controlling shareholders and between the actual controller and controlling enterprise and the existing and potential horizontal competition in the pharmaceutical industry field; the pharmaceutical industry stock rights held by the company would also benefit from the research and development, marketing resource synergies brought by the unified integration of pharmaceutical platform of Sinopharm, and share the operating results of professional development of Shanghai Shyndec Pharmaceutical, and help to enhance the overall profitability of listed companies. The transaction would help to promote the professional development of listed companies, enhance the business scale and scope of listed companies, improve the market-oriented operational level and differentiated competitiveness, strengthen the core competitiveness, enhance the profitability of listed companies, return the minority shareholders of listed companies, and achieve the win-win.
The company's sustained profitability will be enhanced trough this transaction:
|||||
|-|-|-|-|
|Item|2015-12-31/2015||Increase (%)|
||Pre-trade (in 10 thousandYuan)|Post-trade (in 10thousand Yuan)||
|Total assets|1,321,834.97|2,142,606.72|62.09%|
|Net assets|556,647.50|919,053.92|65.11%|
|Equity attributable to owners of the parentcompany|545,339.37|877,965.83|60.99%|
|Operation income|2,599,313.93|3,656,790.83|40.68%|
|Operation profit|90,659.32|114,462.14|26.26%|
|Total profit|96,130.79|119,427.26|24.23%|
|Net profit|78,734.79|96,673.86|22.78%|
|Net profit attributable to owners of the parentcompany|76,131.23|88,620.14|16.40%|
|Net profit attributable to owners of the parentcompany after deducting non recurring gainsand losses|71,521.27|84,633.16|18.33%|

[Note: The data in the table derive from the report about asset sales, stock issuance, asset purchase by cash, raised supporting funds
and related transactions of Sinopharm Accord disclosed on September 28, 2016(revision)]
The reorganization involved three listed companies listed in Shenzhen, Shanghai, and Hong Kong, faced with different regulatory requirements, so its complexity was evident. After more than one year of intense and efficient promotion, the company has completed the initial public offering on January 5, 2017, the major assets restructuring has been completed successfully.
(ii) Plan and prepare the new journey for strategic transformation
Combining with the objective changes after the reorganization of Sinopharm Accord and deeply analyzing the macroeconomic situation and industry changes, the company has initially defined to build the nationwide pharmaceutical retail integration platform subordinated to Sinopharm and position the development strategy of "nationwide retail+ Guangdong and Guangxi distribution+ industrial investment", boost "wholesale-retail integration", integrate existing resources, create wholesale-retail integration and two-wheel driving development model, and deeply give play to synergies. Initially boost "wholesale-retail integration" strategy and "internationalization" process, aim to become the pharmaceutical& healthcare products and services provide with international competitiveness, create the leading drug distribution and supply chain service provider in southern district of China for distribution, follow “adhere to two-wheel driving, build one system, promote three changes” to conduct a comprehensive layout, speed up the pace of transformation, improve quality and efficiency, build the new driving forces of development and core competitiveness; create the reliable Chinese pharmaceutical& healthcare retail brand, give play to the capital advantages, improve the network layout, innovate the service products, explore the e-commerce model, enhance the business operation capacity, improve the market influence, and ensure the industry-leading position.
(iii) Actively explore and continue to promote the mixed ownership reforms of state-owned enterprises
As one of the pilot enterprises of Sinopharm, according to the requirements of SASAC, Sinopharm and Sinopharm Group, Sinopharm Accord has actively promoted the company to develop mixed ownership reforms of state-owned enterprises. According to the Company Law and the Securities Law and other laws and regulations, the company has set up leading groups and working groups to actively explore and promote the Company's mixed ownership reforms plan, pay close attention to the capital market dynamics, and actively communicate with regulatory authorities so as to comprehensively guarantee the smooth progress of mixed ownership reforms in the light of the unified arrangements of Sinopharm and Sinopharm Group.
At the beginning of August 2016, the company's controlling shareholder, Sinopharm Group, has formed a restricted stock incentive plan and disclosed and implemented it in respect of the pilot work of mixed ownership reforms. (iv) Elaborate norms, maintain a good reputation in the industry
The board of directors of Sinopharm Accord is rigorous and normative in operations, and is professional and responsible in work. In 2016, the major assets restructuring project of Sinopharm Accord was arduous and complex, the board of directors of the company, on the one hand, complete the restructuring plan making, and communicate and discuss, on the other hand, strictly follow the relevant laws and regulations of capital market, fulfill the information disclosure and investor instructions in accordance with the regulatory requirements of regulatory authorities. In 2016, Sinopharm Accord totally disclosed 4 periodical reports and 98 temporary announcements in
the capital market supervision level, actively cooperated with the regulation, and effectively protected the interests of investors, and gained the compliments from supervisor and investors by virtue of rigorous and efficient work style and pragmatic and progressive professional ethics.
III Work arrangement of the company's board of directors in 2017
In 2017, Sinopharm Accord inside faces the main business adjustment after restructuring, the outside faces the "two-vote system" and sunshine procurement and other more severe and thick market policy changes, establish the "innovation" and "progress" as the main work ideas. On the basis of new platform, establish new strategies, build the nationwide pharmaceutical retail integration platform subordinated to China National Pharmaceutical Group, position the "nationwide retail+ Guangdong and Guangxi distribution+ industrial investment", integrate the existing resources, build wholesale-retail integration and two-wheel driving development patterns, and deeply give play to synergies; march toward the new goal to promote the "wholesale-retail integration" strategy and the "internationalization" process, become the pharmaceutical and healthcare products and services providers with international competitiveness; develop new momentum, adhere to the "strategy-driven culture-leading", complete the management mechanism, accumulate and release new growth momentum; create new models, transform from doing "products" to doing "services", and return to the "user-centered" nature; achieve the leapfrog development by "innovation and transformation", promote the retail treatment business, improve the network layout, set up retail distribution, socialize Guoda Pharmacy merger and acquisition, implement Guangdong and Guangxi distribution network layout, achieve the breakthrough development of internet-based business, and accelerate the international process to expand international business; achieve steady development by "intensive cultivation", strengthen business units, realize industry-leading, give play to the existing network advantages and core competitiveness, actively carry out the regional integration by implementing the internal refined and lean management, ensure the traditional business advantages, increase the profitability, develop new commercial activities and new growth, and all commercial activities accelerate the new business innovation, bloom the vitality, and make characteristics. II Main business analysis
1. Overview
In 2016, Sinopharm Accord went through another important journey in its development history. In this year, the company successfully completed a major asset restructuring, and achieved the main business upgrades. In order to seize the opportunities to meet the challenges, the company continued to promote the organizational change and structural adjustment, continuously optimized the format structure and variety structure, and consolidated the traditional businesses, at the same time, constantly opened up innovative formats, enhanced the company's development; comprehensively strengthened the compliance management, deepened the operations management, and constantly improved the fine management level of enterprise. The main work was as follows:
1. Successfully completed the major assets restructuring project
Actively cooperated to promote the "platform" strategy of Sinopharm, relied on the capital market, added Guoda Pharmacy plate, built Guangdong and Guangxi pharmaceutical distribution and the only nationwide retail platform, and strengthened the strategic objectives of professional development.
2. Reinforced the foundation, and enhanced the control efficiency
Based on the professional, enhanced the control and service capabilities, supported the business development, strengthened the forward-looking and agility of management background, and completed the risk prevention. 3. Transformation innovation promoted the business development
Distribution sector: accelerated the service transformation focusing on the consumers and the terminal patients, optimized and stocked, made bigger increments, and cultivated new formats; the integrated sales scale reached 4.875 billion Yuan, an increase of14.34% on a year-on-year basis; Guangxi distribution integration operation mechanism has been improved, and the operation ability has been promoted; combed the foreground-background operation process, optimized the foreground-background division of labor and collaboration, and improved the operational efficiency; implemented the logistics action charges, and promoted the supply chain collaborative optimization; terminal network has been further expanded, including: 1660 hospitals above class A, 3348 primary medical care customers, and 1447 retail terminal customers; medicine material crude slices business initially established production, quality, management and marketing system; apparatus business created the provincial integrated apparatus purchasing platform, and explored and formed hospital supplies management new model; depth distribution covered more than 1,300 customers across the province; logistics services network construction was further improved, and totally increased 30,000 square meters warehouse. Innovation business: expanded medical services, sped up the medical management services, disinfection center businesses, equipment maintenance businesses, and reagent supplies business innovation and incubation; carried out the network layout for retail diagnoses and treatment in Guangdong and Guangxi, opened 16 DTP drugstores, and set up 17 drugstores within/beside the hospital. The retail management system was further improved and completed the unified and standardized operating guidelines, accelerated the business development, and the profitability of initially showed: sales volume exceeded 409 million, achieved gross margin of10.6%, and comprehensively achieved profitability in Guangdong.
Retail sector: continued to promote the fine management, deepened the potentials, accelerated the layout of retail diagnoses and treatment business, innovation driven provided new growth points; up to now, there were totally 3502 retail stores, 2503 regular chain stores, and 999 franchised outlets; in 2016, there was an increase of 422 retail stores on a year-on-year basis, a net increase of 374 regular chain stores, and a net increase of 48 franchised outlets; 5+ X retail diagnoses and treatment stores: an increase of 20 stores; opened 31 new stores around the hospitals, a total of 138; in 2016, there were 15 suppliers for unified collection, of which the income reached 33.4 million Yuan. In the innovation business, actively expanded the store multi-channel businesses, achieved the links of multiple O2O applications, achieved business connection with many operators such as Sinopharm Online, Tmall, Jingdong, etc., and opened multiple payment channels; promoted the member development work, the total number of members reached 17.99 million, valid members reached 8.7 million, and gradually enhanced the member quality; actively carried out the chronic disease management projects, achieved sales volume of 370 million Yuan, and built the professional competitiveness of Guoda Pharmacy; developed various measures simultaneously, and actively carried out the regional governance of losses; focused on the operation special projects, established the national inventory control program, and optimized the inventory: the valid inventory accounted for0.7%, a decrease of0.1% on a year- on-year basis. The inventory of invalid goods has been completely cleared; refined the management, strengthened the corporate governance and quality management, optimized the logistics and distribution, and improved the
information system; optimized the staff structure and organizational structure, adjusted the organizational structure of headquarters, and achieved the upper and lower linkage between the headquarters and the regions.
Industry sector: adjusted the organizational structure, promoted the transformation of marketing model and the node work of research and development, ensured the smooth transition of Shenzhen industry; completed the optimization to the integration, specialization, and gradient organizational structure of Shenzhen industry; optimized the incentive program, established the performance view, improved the personnel efficiency and organizational performance; took fine marketing as the basis, and market policy as the guide, and promoted the transformation of marketing model; boosted the "generic drug consistency evaluation" work to lay a solid foundation for the company's future development; promoted the internationalization, and signed a strategy Cooperation agreement with German company, and discussed the three-party strategic cooperation with Indonesia and Hong Kong; the sales volume of industrial investment subordinate enterprises - Sinopharm Zhijun, Sinopharm Zhijun Pingshan, Zhijun Pharmacy Trade, Zhijun Suzhou nearly reached 1.2 billion, a total of five varieties over a hundred million; the sales volume of Main Luck Pharmaceuticals was close to 800 million, a total of three varieties over a hundred million.
4. Cultural upgrading led the strategic transformation
Started from the enterprise's current environment and strategic needs, inherited the culture accumulation, enriched the open and inclusive cultural connotation, and stimulated the transformation kinetic energy.
5.Organizational change promoted the atmosphere change
Started from the professional point of view, optimized the structure, reconstructed the mechanism, remolded the concept, and enhanced the organizational atmosphere at headquarters.
6. Personnel training strengthened the team building
Took stock of human resources, built a manpower mechanism to promote strategic transformation, tapped the potential of human resources, stimulated the talent vitality, and completed the talent echelon building.
7. Strengthened the party building to provide the ideological guarantee for transformation
Strengthened the organization construction, discipline construction and system construction, and gave full play to the advantages of party building.
2. Revenue and cost
(1) Constitute of operation revenue
In RMB
|||||||
|-|-|-|-|-|-|
||2016||2015|||
||||||Increase/decrease y-|
|||Ratio in operation||Ratio in operation||
||Amount||Amount||o-y|
|||revenue||revenue||
|Total of operation|41,248,429,322.91||37,819,277,959.01|||
|||100%||100%|9.07%|
|revenue||||||
|According to industries||||||
|Medicine wholesale|30,982,482,620.75|75.11%|28,452,153,683.28|75.22%|8.89%|
|Medicine retail|8,761,101,587.23|21.24%|7,382,199,442.63|19.52%|18.68%|

|||||||
|-|-|-|-|-|-|
|Pharmaceutical||||||
||1,174,241,370.22|2.85%|1,628,474,289.30|4.31%|-27.89%|
|manufacturing||||||
|Logistic & storage||||||
||20,551,062.91|0.05%|17,678,920.37|0.05%|16.25%|
|service||||||
|Lease and other||||||
||310,052,681.80|0.75%|338,771,623.43|0.90%|-8.48%|
|income||||||
|According to products||||||
|Medicine|40,238,426,935.37|97.55%|37,165,380,598.79|98.27%|8.27%|
|Apparatus|678,860,843.04|1.65%|538,085,402.20|1.42%|26.16%|
|Other|331,141,544.50|0.80%|115,811,958.02|0.31%|185.93%|
|According to region||||||
|Domestic revenue|41,194,040,337.33|99.87%|37,743,479,000.46|99.80%|9.14%|
|Foreign revenue|54,388,985.58|0.13%|75,798,958.55|0.20%|-28.25%|

 (2) About the industries, products, or regions accounting for over10% of thecompany’s operating income or operating profit
√Applicable□ Not applicable
Whether the company needs to comply with the disclosure requirements of the particular industry
No
In RMB
||||||||
|-|-|-|-|-|-|-|
|||||Increase/decrease|Increase/decrease|Increase/decrease|
||Operating||||||
|||Operating cost|Gross profit ratio|of operating|of operating cost|of gross profit|
||revenue||||||
|||||revenue y-o-y|y-o-y|ratio y-o-y|
|According to industries|||||||
|Medicine|30,982,482,620.7||||||
|||29,319,997,756.0|5.37%|8.89%|8.99%|-0.08%|
|wholesale|5||||||
|||2|||||
|Medicine retail|8,761,101,587.23||24.61%|18.68%|19.89%|-0.76%|
|||6,605,050,729.00|||||
|According to products|||||||
||40,238,426,935.3|35,971,239,209.4|||||
|Medicine|||10.60%|8.27%|9.45%|-0.97%|
||7|1|||||
|According to region|||||||
||41,194,040,337.3|36,605,759,113.4|||||
|Domestic revenue|||11.14%|9.14%|9.69%|-0.44%|
||3|1|||||

Under circumstances of adjustment in reporting period for statistic scope of main business data, adjusted main business based on latest
oneyear’s scope of period-end
□ Applicable√ Not applicable
(3) Income from physical sales larger than income from labors
√Yes□ No
|||||||
|-|-|-|-|-|-|
||||||Increase/decrease y-|
|Industries|Item|Unit|Jan.-Oct. 2016|2015||
||||||o-y|
|||10 thousand||||
||Sales volume||32,551|42,914|-24.15%|
|||branches/box||||
|||10 thousand||||
|Chemical|Output||28,980|44,324|-34.62%|
|||branches/box||||
|||10 thousand||||
||Storage||6,575|9,543|-31.10%|
|||branches/box||||
|Chemical API|Sales volume|KG|0|132,211|-100.00%|
|(Active|Output|KG|0|163,622|-100.00%|
|Pharmaceutical||||||
||Storage|KG|0|45,981|-100.00%|
|Ingredient)||||||
|||10 thousand||||
||Sales volume||917|1,208|-24.09%|
|||branches/box||||
|||10 thousand||||
|Chinese patent drug|Output||856|1,378|-37.88%|
|||branches/box||||
|||10 thousand||||
||Storage||191|318|-39.94%|
|||branches/box||||
|||10 thousand||||
||Sales volume||148.53|8.36|1,676.67%|
|||branches/box||||
|||10 thousand||||
|Massive health|Output||141.15|8.84|1,496.72%|
|||branches/box||||
|||10 thousand||||
||Storage||49.95|3.88|1,187.37%|
|||branches/box||||
|||10 thousand||||
||Sales volume||2,135|2,207|-3.26%|
|||branches/box||||
|||10 thousand||||
|International trade|Output||2,093|2,161|-3.15%|
|||branches/box||||
|||10 thousand||||
||Storage||187|241|-22.41%|
|||branches/box||||

Reasons for y-o-y relevant data with over30% changes
√Applicable□ Not applicable
Chemical output: mainly because (i)Zhijun Suzhou exclude in the consolidation scope in the Period,(ii) and part of the production line for powder preparation was out of service in 2016 for GMP certification and workshop reconstruction; furthermore (iii) the period for counting has two months shorter than same period of last year.
Chemical storage: mainly because (i) Zhijun Suzhou exclude in the consolidation scope in the Period, (ii) and
secondary affected by the sharply decline in output (iii) furthermore, the period for counting has two months shorter
than same period of last year.
Chemical API: no chemical API in the Period, mainly because Zhijun Suzhou exclude in the consolidation scope in the Period.
Chinese patent drug output: mainly because (i) the period for counting has two months shorter than same period of last year (ii) part of the products needs to preparing due to the Bagualing Plant removal at end of 2015.
Chinese patent drug storage: mainly because (i) the period for counting has two months shorter than same period of last year (ii) part of the products needs to preparing due to the Bagualing Plant removal at end of 2015.
Massive health sales volume: developed new business in the period, adjusted sales structure and the new product of National Soap has rapidly growth in sales.
Massive health output: new business module, optimized production structures, new products National Soap has major output in the Period.
Massive health storage: mainly because new products National Soap has major output in the Period.
(4) Fulfillment of thecompany’s signed significant sales contracts up to this reporting period
□ Applicable√ Not applicable
(5) Constitute of operation cost
Industry classification
In RMB
||||||||
|-|-|-|-|-|-|-|
|||2016||2015|||
|||||||Increase/decrease|
|Industries|Item||Ratio in operation||Ratio in operation||
|||Amount||Amount||y-o-y|
||||cost||cost||
|Medicine||||26,901,734,940.5|||
||Sales cost|29,319,997,756.0|80.00%||80.46%|8.99%|
|wholesale||||6|||
|||2|||||
|Medicine retail|Sales cost||18.02%|5,509,074,867.30|16.48%|19.89%|
|||6,605,050,729.00|||||
|Pharmaceutical|||||||
||Sales cost|677,553,586.23|1.85%|951,255,881.90|2.85%|-28.77%|
|manufacturing|||||||
|Logistic &|Transportation &||||||
|||13,271,551.53|0.04%|12,984,126.10|0.04%|2.21%|
|storage service|storage cost||||||
|Lease and other|||||||
||Service cost|32,363,280.78|0.09%|57,798,028.73|0.17%|-44.01%|
|income|||||||

Note:
1. Sales cost for pharmaceutical manufacturing takes a declined of28.77% in operation costs, mainly because affected by reorganization,
the costs of pharmaceutical manufacturing in the above table refers to the data in industrial plate from January to October while the
contrast period is the data from whole year.
2. Costs for lease and other income takes a declined of44.01% in operation costs, mainly because67% equity of the subsidiary
Sinopharm Zhijun (Suzhou) was disposed in the Period, other business costs from Zhijun (Suzhou) refers to the data from January to April while the contrast period is the data from whole year.
(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 Audit Report.
(7) Major changes or adjustment in business, product or service of the Company in ReportingPeriod【net profit attributable to parentcompany】
√Applicable□ Not applicable
In RMB
|||||
|-|-|-|-|
|Enterprise placement:|Operation income|Total profit|Net profit attributable toshareholders of the parentcompany|
|Sinopharm Holding Guoda PharmacyCo., Ltd.|9,109,459,900.42|306,427,433.40|165,044,047.22|
|Foshan Nanhai Pharmaceutical GroupCo., Ltd.|1,854,458,730.12|66,400,682.62|49,450,875.41|
|Guangdong Dong Fang Uptodate &Special Medicines Co. Ltd.|981,042,251.37|25,705,701.48|19,232,071.83|
|Guangdong Nanfang PharmaceuticalForeign Trade Co., Ltd.|2,112,809,945.67|54,411,210.13|40,178,338.91|

|||||
|-|-|-|-|
|Enterprise replaced:|Operation income|Total profit|Net profit attributable toshareholders of the parentcompany|
|China National Zhijun (Shenzhen)Pharmaceutical Co., Ltd.|909,620,950.55|220,547,065.08|189,221,408.06|
|China National Zhijun (Shenzhen) PingshanPharmaceutical Co., Ltd.|206,174,817.60|47,937,658.52|35,976,818.41|
|Shenzhen Zhijun Pharmacy Trade Co., Ltd.|63,813,161.13|3,287,738.62|2,801,747.02|

 Note: During the reporting period, the company implemented a major asset restructuring, before the reorganization, the main business of Sinopharm Accord included pharmaceutical distribution and pharmaceutical industry. Among them, the operations of pharmaceutical distribution business mainly concentrated in Guangdong and Guangxi, the market shares of Guangdong and Guangxi ranked first, and took the lead in the market segment of Guangdong and Guangxi; pharmaceutical industry business mainly produced
and developed cephalosporin series products and the upgrade products of APIs, cardiovascular, digestive system, respiratory system
series products.
After completed the reorganization, the original pharmaceutical industry-related assets of Sinopharm Accord would be taken out of the listed company, Sinopharm Accord would no longer hold the pharmaceutical industry-related assets, which would help the company to actively and steadily promote the main business adjustment work, and focus on the pharmaceutical business. At the same time, the company would inject the national pharmaceutical retail assets and the pharmaceutical distribution assets of Guangdong and Guangxi so as to realize the connection between the state-owned pharmaceutical retail leading enterprise - Guoda Pharmacy and the capital market, further consolidate and enhance the competitive advantage of pharmaceutical distribution in Guangdong and Guangxi, greatly expand thecompany’s business scale and scope, effectively enhance the company's sustainable development capacity and comprehensive competitiveness, and enhance the profitability of listed companies.
Up to the date of disclosure, all underlying assets of the company's major assets reorganization had transferred ownership.
In addition, the company completed the transfer of67% stock rights of Sinopharm Zhijun (Suzhou) Pharmaceutical Co., Ltd. during the reporting period (See details on the announcement at www.cninfo.co.com on June 2, 2016, Sinopharm Accord: Notice on the Public Listing of the Transfer of67% Stock Rights of Sinopharm Zhijun (Suzhou) Pharmaceutical Co., Ltd.).
Up to the date of disclosure, the Company no longer held the above pharmaceutical industry company.
(8) Major sales and main suppliers
Major sales client of the Company
|||
|-|-|
|Total top five clients in sales (RMB)|1,970,021,480.66|
|Proportion in total annual sales volume for top five clients|4.81%|
|Ratio of related parties in annual total sales among the top||
||0.00%|
|five clients||

Information of top five clients of the Company
|||||
|-|-|-|-|
|Serial|Name|Sales (RMB)|Proportion in total annual sales|
|1|First|456,523,283.78|1.11%|
|2|Second|432,870,347.95|1.06%|
|3|Third|426,817,994.86|1.04%|
|4|Fourth|355,523,259.20|0.87%|
|5|Fifth|298,286,594.87|0.73%|
|Total|--|1,970,021,480.66|4.81%|

 Other situation of main clients
□ Applicable√ Not applicable
Main suppliers of the Company
|||
|-|-|
|Total purchase amount from top five suppliers (RMB)|4,970,130,155.53|
|Proportion in total annual purchase amount for top five||
||10.10%|
|suppliers||
|Ratio of related parties in annual total sales among the top||
||2.42%|
|five suppliers||

Information of top five suppliers of the Company
|||||
|-|-|-|-|
|Serial|Name|Purchases (RMB)|Proportion in total annual purchases|
|1|First|1,246,866,571.86|2.53%|
|2|Second|1,192,663,035.08|2.42%|
|3|Third|992,806,191.25|2.02%|
|4|Fourth|790,850,691.31|1.61%|
|5|Fifth|746,943,666.03|1.52%|
|Total|--|4,970,130,155.53|10.10%|

 Other notes of main suppliers of the Company
□ Applicable√ Not applicable
3. Expenses
In RMB
||||||
|-|-|-|-|-|
||||Increase/decrease||
||2016|2015||Note of major changes|
||||y-o-y||
|Sales expense|2,198,203,437.27|2,039,829,217.72|7.76%|No major change.|
|Management expense|859,720,679.17|880,634,356.47|-2.37%|No major change.|
|Financial expense|101,855,104.66|128,651,208.50|-20.83%|No major change.|

4.R&D expenses
√Applicable□ Not applicable
In 2016, in accordance with the relevant policy requirements that the state actively promoted the consistency evaluation of generic drug, Sinopharm Zhijun rapidly responded, quickly carried out the project selection and evaluation of consistency evaluation, based on the principle of large varieties priority, adopted the phased orderly promotion way and determined nine varieties, a total of 11 products as the first batch of varieties to develop the consistency evaluation, concentrated the superior resources, quickly started the project, and actively carried out the in vitro pharmacy comparative study, in vivo bioequivalence pre-research. Under the premise of ensuring the progress and quality of the generic drug consistency evaluation project, Sinopharm Zhijun also actively carried out the research on new products to ensure the sustainable competitiveness of the enterprise. In 2016, the company launched three new product projects by combing and reevaluating the established new product projects, and would carry our the research in 2017.
The consistency evaluation of generic drugs is related to the continuity of enterprises in the production of large varieties, new products affect the future market competitiveness of enterprises, and only actively carrying out the consistency evaluation of varieties in production and the research of new products can guarantee the sustainable
development of enterprises.
R&D investment of the Company
|||||
|-|-|-|-|
||Jan.- Oct. 2016|2015|Change ratio|
|Number of R&D (people)|221|240|-7.92%|
|Ratio of number of R&D|13.90%|15.10%|-1.20%|
|R&D investment (Yuan)|43,731,710.16|73,150,395.26|-40.22%|
|R&D investment accounted for||||
||0.11%|0.19%|-0.08%|
|R&D income||||
|R&D investment capitalization||||
||0.00|0.00|0.00%|
|(Yuan)||||
|Capitalization R&D investment||||
||0.00%|0.00%|0.00%|
|accounted for R&D investment||||

The reason of great changes in the proportion of totalR&D investment accounted for operation income than last year
√Applicable□ Not applicable
Affected by the reform of drug registration policy, the project in research needs evaluation again,R&D investment has slow progress as a result.
Reason for the great change inR&D investment capitalization rate and rational description
□ Applicable√ Not applicable
5. Cash flow
In RMB
|||||
|-|-|-|-|
|Item|2016|2015|Y-o-y changes|
|Subtotal of cash in-flow from|45,588,958,626.59|44,773,015,854.73||
||||1.82%|
|operation activity||||
|Subtotal of cash out-flow from|44,116,413,038.74|43,315,599,710.93||
||||1.85%|
|operation activity||||
|Net cash flow from operation|1,472,545,587.85|1,457,416,143.80||
||||1.04%|
|activity||||
|Subtotal of cash in-flow from|1,670,147,707.67|6,168,078,398.09|-72.92%|
|investment activity||||
|Subtotal of cash out-flow from|1,679,286,473.62|6,720,021,850.83|-75.01%|
|investment activity||||
|Net cash flow from investment|-9,138,765.95|-551,943,452.74||
||||98.34%|
|activity||||
|Subtotal of cash in-flow from|1,037,266,668.95|1,459,468,047.42||
||||-28.93%|
|financing activity||||

|||||
|-|-|-|-|
|Subtotal of cash out-flow from|1,513,509,387.78|1,478,973,844.93||
||||2.34%|
|financing activity||||
|Net cash flow from financing|-476,242,718.83|-19,505,797.51||
||||-2,341.54%|
|activity||||
|Net increased amount of cash|986,601,066.49|885,869,137.50||
||||11.37%|
|and 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: a72.92% declined from a year earlier, mainly because the subsidiary Guoda Pharmacy, replaced for reorganization, has a y-o-y decrease of business in cash pooling with its former parent company;
(2) Subtotal of cash out-flow from investment activity: a75.01% declined from a year earlier, mainly because the subsidiary Guoda Pharmacy, replaced for reorganization, has a y-o-y decrease of business in cash pooling with its former parent company;
(3) Net cash flow from investment activity: a98.34% up from a year earlier, mainly because the subsidiary Guoda Pharmacy, replaced for reorganization, has a y-o-y decrease of business in cash pooling with its former parent company;
(4) Net cash flow from financing activity: a2,341.54% declined from a year earlier, mainly because the subsidiary Guoda Pharmacy, replaced for reorganization, received a capital increment from its former parent company with 410 million Yuan in last period, while no such amount occurred in the period.
Reasons of major difference between the cash flow of operation activity in report period and net profit of the Company
√Applicable□ Not applicable
The Company has 1,472,545,587.85 Yuan achieved in the period for net cash flow from operation activity, net profit amounting to 1,186,601,899.27 Yuan, the main reasons for major difference is that, the fund collection accelerated in the period, than the operational cash in-flow increased on a y-o-y basis.
III. Analysis of the non-main business
□ Applicable√ Not applicable
IV. Assets and liability
1. Major changes of assets composition
In RMB
||||||||
|-|-|-|-|-|-|-|
||End of 2016||End of 2015||||
||||||Ratio||
|||Ratio in||Ratio in total||Notes of major changes|
||Amount||Amount||changes||
|||total assets||assets|||
|Monetary fund|3,519,955,564.98|16.52%|2,654,931,479.88|13.07%|3.45%|No major change.|
|Account|7,654,225,510.89||7,827,466,715.32||||
|||35.91%||38.53%|-2.62%|No major change.|
|receivable|||||||

||||||||
|-|-|-|-|-|-|-|
|Inventory|4,049,482,529.71|19.00%|4,165,157,673.06|20.50%|-1.50%|No major change.|
|Investment|166,715,848.80||162,653,174.74||||
|||0.78%||0.80%|-0.02%|No major change.|
|property|||||||
|Long-term equity|1,413,034,165.56||190,282,629.14|||Caused by the material asset|
|||6.63%||0.94%|5.69%||
|investment||||||reorganization in the period|
||487,009,600.10||1,372,649,567.99|||Caused by the material asset|
|Fix assets||2.29%||6.76%|-4.47%||
|||||||reorganization in the period|
|Construction in|47,063,868.49||200,568,804.08|||Caused by the material asset|
|||0.22%||0.99%|-0.77%||
|process||||||reorganization in the period|
|Short-term loans|1,512,713,629.95|7.10%|1,633,231,960.35|8.04%|-0.94%|No major change.|
||-||72,495,172.30|||Mainly because the Company|
|||||||return loans in the Period, and|
|||||||the long-term loans almost to|
|Long-term loans||-||0.36%|-0.36%||
|||||||due was re-classified as non-|
|||||||current liability due within one|
|||||||year.|

2. Assets and liability measured by fair value
□ Applicable√ Not applicable
3. Assets right restriction till end of reporting period
Nil
V. Investment
1. Overall situation
During the reporting period, the company implemented material asset reorganization: the shares placement and cash paid for assets amounting to 3504 million Yuan(including100% equity of Guoda Pharmacy,100% equity of Foshan Nanhai,100% equity of Guangdong Uptodate& Special Medicines and100% equity of Nanfang Pharmaceutical Trade). At the same time, the Company acquired29% equity (9.86 million Yuan) of Sinopharm Steri Guard Medical Service Guangdong Co., Ltd. and30% equity (3.5 million Yuan) of Sinopharm Holding Shantou Co., Ltd in the Period, an increased of 3516 million Yuan from a year earlier.
2. The major equity investment obtained in the reporting period
Relevant material asset reorganization proposals have been deliberated and approved by 13th session of 7th BOD,
16th session of 7th BOD, 17th session of 7th BOD and the third extraordinary shareholders general meeting of 2016,
the Company acquired100% equity of Guoda Pharmacy,100% equity of Foshan Nanhai and100% equity of
Guangdong Uptodate& Special Medicines by privately placement to Sinopharm. Acquired51% equity of Nanfang Pharmaceutical Trade with private placement to Sinopharm Foreign Trade and acquired another49% equity of Nanfang Pharmaceutical Trade from 11 minority shareholder including Fu Yuqun, with cash. The above mentioned object equities have concluded in the consolidation statement in October 2016. More are as:
||||
|-|-|-|
|Name ofinvestedcompany|Main business|Equity ratio ininvesteeenterprise|
|GuodaPharmacy|Investment and management of pharmaceuticals industry; domestic trading (special licenseexcluded), wholesale of Chinese patent drug, traditional Chinese medicines prepared in ready-to-use forms, chemical medicine preparation, antibiotic, biochemical drug, biological,anabolic agents and peptide hormone; sales of chemical products (toxic and dangerous goodsprohibit), medical apparatus and instruments (found in license), glassware, generalmerchandise, household appliances and edible agricultural products (pig products excluded);food distribution (engaged in business before obtained a permit), management consulting;development and sales of the software and network projects.[In right of exequatur to run if refers to permission operation ]|100%|
|Foshan Nanhai|Investment and management in respect of medical, armarium, medical apparatus andinstruments, hospital, hygiene material, health foods and cosmetics industry and paid services(operates pursuit to the laws and regulations, permission required for the projects restrictedby laws and regulations); general cargo warehousing services; own property leasing; sales ofdomestic appliances, general merchandise, ironware, construction material, arts and crafts(gold and silver exclude), disinfection products and health products.(In right of exequatur to run if refers to permission operation)|100%|
|GuangdongUptodate &SpecialMedicines|Wholesale of the Chinese patent drug, chemical API, chemical medicine preparation,antibiotic APT, antibiotic preparation, biochemical drugs, biological (vaccines and IVDreagents included), 2nd species psychotropic drugs (preparation), medicinal toxic drug(western medicine), anabolic agent, peptide hormone and health foods; sales of medicalapparatus and instruments (the above mentioned items operates in line with the valid license),ironware, electric material, chemical products and raw materials (hazardous chemicalsexclude), general merchandise and antiseptic; import and export of goods (excluded the itemsprohibited by laws and regulations; permission required for the projects restricted by laws andregulations ), information consulting service for the above mentioned items.(In right of exequatur to run if refers to permission operation)|100%|
|SouthernMedical Trade|Import and export of goods, as well as technology(excluded the items prohibited by laws andregulations; permission required for the projects restricted by laws and regulations ); medicalinformation consultation and exhibition. wholesale of Chinese patent drug, chemical API,chemical medicine preparation, antibiotic APT, antibiotic preparation, biochemical drugs,biological (vaccines excluded), 2nd species psychotropic drugs (preparation), anabolic agentsand peptide hormone; sales of 2nd and 3rd species medical apparatus and instruments;wholesale and retail of pre-packaged food (including alcoholic beverages), dairy product(including infant formula milk powder, operates in valid license); sales of cosmetics, generalmerchandise, cloths, shoes and hats, storage and logistic services.(In right of exequatur to run if refers to permission operation)|100%|

3. The major non-equity investment doing in the reporting period
□ Applicable√ Not applicable
4. Financial assets investment
(1) Securities investment
□ Applicable√ Not applicable
The company had no securities investment in the reporting period.
(2) Derivative investment
□ Applicable√ Not applicable
The Company has no derivatives investment in the Period
5. Application of raised proceeds
√Applicable□ Not applicable
(1)Overall application of raised proceeds
√Applicable□ Not applicable
In 10 thousand Yuan
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
||||||||||Usage of||
|||||||Cumulativ|Ratio of||the||
||||||Total||||||
|||||||e raised|cumulative||retained||
||||Total|Total|raised|||Total||Raised|
|||||||capitals|raised||raised||
|||Total|raised|accumulati|capital has|||accumulati||capitals|
|||||||has|capitals||capitals||
|Year|Way|raised|capital|ve raised|purpose of|||ve raised||idle for|
|||||||purpose of|has||and what||
|||capitals|used|capitals|uses|||capitals||more than|
|||||||uses|purpose of||is expected||
||||in Period|used|changed in|||unused||two years|
|||||||changed in|uses||to invested||
||||||Period||||||
|||||||total|changed||with those||
||||||||||capitals||
||Non-||||||||||
||public||||||||Deposit||
|2016||27,361.49|579.82|579.82|0|0|0.00%|26,781.67||0|
||offering of||||||||bank||
||shares||||||||||
|Total|--|27,361.49|579.82|579.82|0|0|0.00%|26,781.67|--|0|

||
|-|
|Explanation on General usage of raised capital|
|More details of the use of raised capitals can be seen in “Special report on the storage and the actual use of raised capitals of|

 Sinopharm Accord in 2016” disclosed on 19 April 2017.
(2) Situation of committed project of raised proceeds
√Applicable□ Not applicable
In 10 thousand Yuan
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
||Projects||||Amount of||||||
|||||||||||Project|
|Committed investment|changed|Total|Total||accumulate|Investment|||||
|||||Amount|||||Reach the|feasibility|
|projects and capital|or not|committed|investment||d|program til|l Predicted|Realized|||
|||||invested in|||||predicted|was|
|invested in areas with|(includin|investment|after||investment|the period-|useable dat|e interests|||
|||||report|||||interest or|changed|
|fund raising out of the|g|of raised|adjustment||till the|end|of project|in Period|||
|||||period|||||not|hugely or|
|plan|changed|capitals|(1)||period-end|(3)=(2)/(1)|||||
|||||||||||not|
||partially)||||(2)||||||
|Committed investment projects|||||||||||
|Cash consideration of|||||||||||
|49% equity of|||||||||||
||||||||Not|Not|Not||
|Guangdong Nanfang|||||||||||
||No|26,781.67|26,781.67|0|0|0.00%|applicabl|applicabl|applicabl|No|
|Pharmaceutical|||||||||||
||||||||e|e|e||
|Foreign Trade Co., Ltd.|||||||||||
|paid|||||||||||
||||||||Not|Not|Not||
|Payment of issuance|||||||||||
||No|579.82|579.82|579.82|579.82|100.00%|applicabl|applicabl|applicabl|No|
|cost|||||||||||
||||||||e|e|e||
|Subtotal of committed|||||||||||
||--|27,361.49|27,361.49|579.82|579.82|--|--||--|--|
|investment projects|||||||||||
|Capital invested in areas with fund raising out of the plan|||||||||||
|Not applicable|||||||||||
|Total|--|27,361.49|27,361.49|579.82|579.82|--|--|0|--|--|
|Situation about not|||||||||||
|coming up to schemed|||||||||||
|progress or expected|||||||||||
||Not applicable||||||||||
|revenue and the|||||||||||
|reason(In specific|||||||||||
|project)|||||||||||
|Explanation on major|||||||||||
|changes on project|Not applicable||||||||||
|feasibility|||||||||||
|Amount, usage and|Not applicable||||||||||
|progress of using for|||||||||||

|||
|-|-|
|fund raising out of the||
|plan||
|Change of|Not applicable|
|implementation place||
|of investment project||
|of raised capitals||
|Regulation of|Not applicable|
|implementation ways||
|of investment project||
|of raised capitals||
|Preliminary investment|Not applicable|
|and replacement of||
|investment project of||
|raised capitals||
|Temporarily|Not applicable|
|supplement for the||
|current capitals with||
|idle raised capitals||
|Amount and reason for|Not applicable|
|surplus of raised||
|capitals when||
|implementing projects||
|Usage of the retained||
|raised fund and what is||
||Not applicable|
|expected to invested||
|with those fund||
|Issues or other||
|conditions found in use|Use of the fund raised are strictly execute in line with the “tri-party supervision agreement for fund raised”,|
|of fund raised and|and no related issues or other conditions been found|
|disclosure||

(3) The changed project of raised proceeds
□ Applicable√ Not applicable
The Company has no project of raised proceeds changed in the Period
VI. Sales of major assets and equity
1. Sales of major assets
On 28 September 2016, the “Notice of assets on sale, shares offering, acquiring assets in cash and raising supporting funds and related transactions” was released on jucharo website, Sinopharm Accord subscribed the shares newly issued by Shanghai Shyndec Pharmaceutical with 567,621,500 Yuan, all productive assets of Pingshan base. Till end of the disclosure date, all productive assets of Pingshan base have transferred to Shyndec Pharmaceutical.
2. Sales of major equity
√Applicable□ Not applicable
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|||||The net||||||||||
|||||profits||||||||||
|||||contribu||The||||||||
|||||ted to||proporti|||||Whether|||
|||||the||on of|||||the equity|||
|||||listed||the net||||The|sales on|||
|||||compan||profits||||ownersh|plan or|||
||||Transact|y by the||that the||Related|The|ip of|not,|||
||||ion|equity|Impact|equity||transacti|associati|equity|explain|Date||
||||||||Pricing|||||||
|Counter|Assets|The date|price (in|from the|on the|for sale||on|on with|that|the|of||
||||||||principl||||||Index of disclosure|
|party|for sale|of sale|10|beginni|Compan|contribu||confirm|the|involve|reasons|disclo||
||||||||e|||||||
||||thousan|ng of|y|ted to||ed|counter|d has|and|sure||
||||d Yuan)|current||the||(Y/N)|party|transferr|counterme|||
|||||period||listed||||ed|asure|||
|||||to the||compan||||totally|taken by|||
|||||date of||y in|||||the|||
|||||sale(in||total|||||Company|||
|||||10||profits||||||||
|||||thousan||||||||||
|||||d Yuan)||||||||||
||||||||||||||“Notice of assets on|
|Shangha|||||||Based||||||sale, shares offering,|
||51%||||Impact|||||||||
|i|||||||on the||||||acquiring assets in|
||equity||||0Yuan||||The|||||
|Shyndec|||||||results||||||cash and raising|
||of|2016-|154,327|18,922.|on||||same|||2016-||
|Pharma||||||0.00%|of the|Yes||Yes|Yes||supporting funds and|
||Zhijun|10-31|.18|14|current||||controll|||05-31||
|ceutical|||||||evaluati||||||related transactions”|
||Pharma||||net||||er|||||
|Co.,|||||||on||||||on Juchao website|
||ceutical||||profit|||||||||
|Ltd.|||||||report||||||dated 28 September|
||||||||||||||2016|
|Shangha|51%|2016-|||Impact||Based||The|||2016-|“Notice of assets on|
||||812.53|280.17||0.00%||Yes||Yes|Yes|||
|i|equity|10-31|||0Yuan||on the||same|||05-31|sale, shares offering,|

|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Shyndec|of||||on||results||controll||||acquiring assets in|
|Pharma|Zhijun||||current||of the||er||||cash and raising|
|ceutical|Pharma||||net||evaluati||||||supporting funds and|
|Co.,|ceutical||||profit||on||||||related transactions”|
|Ltd.|||||||report||||||on Juchao website|
||||||||||||||dated 28 September|
||||||||||||||2016|
||||||||||||||“Notice of assets on|
|Shangha|51%||||||Based||||||sale, shares offering,|
||||||Impact|||||||||
|i|equity||||||on the||||||acquiring assets in|
||||||0Yuan||||The|||||
|Shyndec|of||||||results||||||cash and raising|
|||2016-|39,230.|3,597.6|on||||same|||2016-||
|Pharma|Pingsha|||||0.00%|of the|Yes||Yes|Yes||supporting funds and|
|||10-31|39|8|current||||controll|||05-31||
|ceutical|n||||||evaluati||||||related transactions”|
||||||net||||er|||||
|Co.,|Pharma||||||on||||||on Juchao website|
||||||profit|||||||||
|Ltd.|ceutical||||||report||||||dated 28 September|
||||||||||||||2016|
|Xinyu||||||||||||||
|Boda||||||||||||||
|Hengka||||||||||||||
|ng|67%||||Impact||Based||||||”Resolution Notice|
|Investm|equity||||121,754||on the||||||of the 12th session of|
|ent|of||||,200||results||||||7th BOD” (Notice|
|||2016-||-|||||Unrelate|||2016-||
|Manage|Sinopha||15,780||Yuan on|9.50%|of the|No||Yes|Yes||No. 2015-56)|
|||04-26||1,116.99|||||d party|||06-02||
|ment|rm||||current||evaluati||||||released on jucharo|
|Center|Zhijun||||net||on||||||website dated 31|
|(Limite|Suzhou||||profit||report||||||December 2015|
|d||||||||||||||
|Partners||||||||||||||
|hip)||||||||||||||

VII. Analysis of main holding company and stock-jointly companies
√Applicable□ Not applicable
Particular about main subsidiaries and stock-jointly companies net profit over10%
In RMB
||||||||||
|-|-|-|-|-|-|-|-|-|
|Company|||Register|||Operating|Operating||
||Type|Main business||Total assets|Net Assets|||Net profit|
|name|||capital|||revenue|profit||
|||Chinese traditional|||||||
|Sinopharm|||||||||
|||patent medicine,|||||||
|Holding|Subsidi||1,000,000,0|6,201,439,75|1,269,663,03|15,715,341,5|215,474,944.|159,964,487.|
|||chemical preparations,|||||||
|Guangzhou|ary||00.00|5.87|9.25|54.78|65|88|
|||antibiotics, bio-|||||||
|Co., Ltd.|||||||||
|||chemical medicine,|||||||

||||||||||
|-|-|-|-|-|-|-|-|-|
|||biological medicine,|||||||
|||diagnosis medicine,|||||||
|||biological medicine|||||||
|||with features of|||||||
|||treatment and|||||||
|||diagnosis, shaped|||||||
|||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,|||||||
|||freightage, storage,|||||||
|||loading and|||||||
|||unloading, glass|||||||
|||wares, cosmetics and|||||||
|Sinopharm|||||||||
|||daily merchandise;|||||||
|Holding|Subsidi||500,000,00|1,855,599,51|675,838,320.|3,813,794,63|125,365,234.|110,569,992.|
|||other business|||||||
|Guangxi Co.,|ary||0.00|0.84|67|9.30|54|08|
|||services, other|||||||
|Ltd.|||||||||
|||professional|||||||
|||consultation, various|||||||
|||goods agency and for|||||||
|||self-operation, import|||||||
|||& export of|||||||
|||technology, houses|||||||
|||leasing|||||||
|||Retail and distribution|||||||
|||in respect of|||||||
|Sinopharm|||||||||
|||pharmaceutical|||||||
|Holding|||||||||
||Subsidi|products and medical|1,010,000,0|4,941,581,20|1,733,724,84|9,109,459,90|290,299,955.|223,107,979.|
|Guoda|||||||||
||ary|apparatus and|00.00|4.36|9.58|0.42|53|90|
|Pharmacy|||||||||
|||instruments,|||||||
|Co., Ltd.|||||||||
|||wholesale and retails|||||||
|||of health products|||||||

Particular about subsidiaries obtained or disposed in report period
√Applicable□ Not applicable
||||
|-|-|-|
||The method of obtaining and handling|The influence to the whole production and|
|Company Name|||
||subsidiaries during the report period|performance|
|||The company will achieve the connection|
|||between the state-owned pharmaceutical|
|||retail leading enterprise - Guoda Pharmacy|
|||and the capital market through the injection|
|||of national pharmaceutical retail assets,|
|Sinopharm Holding Guoda Pharmacy Co.,|||
||Acquisition|substantially expand the company's|
|Ltd.|||
|||business scale and scope, effectively|
|||enhance the company's sustainable|
|||development capacity and comprehensive|
|||competitiveness, and promote the|
|||profitability of listed company.|
|||Further to consolidate the pharmaceutical|
|Foshan Nanhai Pharmaceutical Group Co.,|||
||Acquisition|distribution business in Guangxi &|
|Ltd.|||
|||Guangdong|
|||Further to consolidate the pharmaceutical|
|Guangdong Dong Fang Uptodate &|||
||Acquisition|distribution business in Guangxi &|
|Special Medicines Co. Ltd.|||
|||Guangdong|
|||Further to consolidate the pharmaceutical|
|Guangdong Nanfang Pharmaceutical|||
||Acquisition|distribution business in Guangxi &|
|Foreign Trade Co., Ltd.|||
|||Guangdong|
|||Transformation focus on pharmaceutical|
|||business and retail business, not|
|Sinopharm Holding Suzhou Co., Ltd.|Transfer||
|||controlling relevant asses of health care|
|||industry any more|
|||Transformation focus on pharmaceutical|
|China National Zhijun (Shenzhen)||business and retail business, not|
||Transfer||
|Pharmaceutical Co., Ltd.||controlling relevant asses of health care|
|||industry any more|
|||Transformation focus on pharmaceutical|
|||business and retail business, not|
|Shenzhen Zhijun Pharmacy Trade Co., Ltd.|Transfer||
|||controlling relevant asses of health care|
|||industry any more|
|||Transformation focus on pharmaceutical|
|China National Zhijun (Shenzhen)||business and retail business, not|
||Transfer||
|Pingshan Pharmaceutical Co., Ltd.||controlling relevant asses of health care|
|||industry any more|

VIII. Structured vehicle controlled by the Company
□ Applicable√ Not applicable
IX. Future Development Prospects
(i) Industry environment analysis
1. Recent policy analysis
With the continuous promotion of a new round of medical reform thinking, i.e. “hospital, medical insurance, and medical reform linkage, reducing drug prices, and vacating cage to change bird”, the concentration ratio of pharmaceutical business and pharmaceutical industry continues to increase, the outflow of hospital prescriptions intensifies, and the corresponding increase in the retail market accelerates; drive the circulation enterprises to transform to intelligent pharmaceutical service provider, and become a large-scale drug circulation enterprise with annual sales exceeding 500 billion in 2020.
The country supports to separate the clinic and pharmacy once again, and will carry out the "two-vote system" across the country in 2018, the policy trends of production and circulation push the exit of backward enterprises, large-scale enterprises increase scale and promote the scale, standardization and intensive development of drug circulation enterprises, and encourage the strong social logistics enterprises with modern logistics base to enter the pharmaceutical logistics field.
2. Pharmaceutical market analysis
China’s pharmaceutical market development trends: growth, optimization, integration, and supervision. In 2016,China’s pharmaceutical market was adjusted in the policies, in 2017, the pharmaceutical industry will complete more qualified growth. The sales terminal transfers to grassroots markets, with the deepening of medical reform, the first terminal pharmaceutical market share will be squeezed. The drugstore market will achieve rapid growth by service extension and system management. The broad market based on grass-roots medical will usher in faster growth in the future.
3. Changes in the pharmaceutical market pattern
Motivating factors: the masses have more requirements in health (from treatment to prevention), rigid demands increase (urbanization, aging, etc.), payment ability improves (health insurance coverage reaches95%, the masses raise health awareness).
Risk factors: intense competition in the subdivision field (logistics, pharmacies, services, etc.); industry standards and regulatory become strict, product costs increase; pharmaceutical procurement and drug price management mechanism put pressure on the market.
Drug sales growth will further slow down to innovate and develop, impacted by the price limit of tendering, the cancellation of drug price addition in public hospitals, and the strict control to medicine fee growth, the drug terminal sales growth will slow down year by year. In the uncertain environment,it’s required to tap the internal potential, positively innovate and develop, and constantly make up their deficiencies mutually based on the international vision.
4. Competitive dynamics
The strong pharmaceutical enterprises continue to innovate and lay out in the industrial chain integration, service and cooperation extension and other aspects. In 2016, drug retail springs up everywhere, influenced by the concern of capital, the promotion of policy trends, and the industrial structure of current industry, the merger and acquisition
will continue. With the changes in industry policy, the business model will also have huge changes, create the wholesale- retail integrated control and operating model, fully integrate the distribution and retail resources to build new core competitiveness.
(ii) The company's development strategy
1. Focus on the wholesale- retail integration strategy, reconstruct the organizational structure, and enhance the foreground-background synergies
Achieve the dual headquarters control of strategic investment headquarters and business operations headquarters in the future, of which:
(1) Strategic investment headquarters: strengthen the strategic control, resource allocation, investment, and risk controls, etc.; build mechanism, allocate resources, promote the business layout by strategy; possess the customer orientation, professional degree and forward looking.
(2) Business operations headquarters: undertake the strategy implementation; focus on operation control, quality management, and efficiency improvement, etc.; build the profit model of all business units; sensitive and fast market response, strong execution; strengthen the business background construction and resource integration capabilities.
Face to the market, create a strong management service background, reconstruct the core competitiveness such as the operations decision-making, strategy promotion and new business promotion, etc., and support the business development.
2. Strengthen the headquarters building, enhance the business unit services and resource allocation capabilities Establish the wholesale-retail integrated management system with special competitiveness: establish the integrated procurement management system for integrated distribution and retail procurement resources; establish the financial management system suitable for wholesale-retail integrated development, resources and platform sharing; establish the human resources management system dynamically and rapidly matches with the business diversification development.
3. Distribute the two-wheel drive, refine and vitalize, bloom together, and take the lead in various commercial activities
Focus on building the intelligent supply chain, deepen the integration operations.
(1) Refine and vitalize the traditional businesses
1. Improve quality and efficiency
Promote the network layout in Guangdong and Guangxi and the terminal network construction of subsidiaries; refactor the business network: from the "big business" to "small business", clinics, single store, complete the risk control and information exchange; consolidate the basic management, accomplish the management improvement; find benefits from the management; purchase and sale linkage, enhance the integrated operation capabilities. 2. Dig the potential and new advantages
Chinese medicine pieces and equipment require new breakthroughs, create new profit growth points for distribution; Logistics: focus on the intelligent supply chain construction, and establish the distribution system for service terminal consumers.
(2) Innovative businesses bloom together
Adept in integrating resources and highlighting the profession, and build the multilayer, differentiated service product system.
(3) Vigorously expand the retail and clinics
Integrate the distribution and procurement resources, integrate the retail procurement resources, give full play to the wholesale-retail integrated benefits; orderly promote the network layout to open drugstores in Guangdong and Guangxi; establish the business model of distribution opening retail .
4. Guoda Pharmacy intensively cultivates, optimizes and innovates, and the terminal generates power to achieve new breakthroughs
1. Focus on the "wholesale-retail integration", and establish an integrated business operating system
Strengthen the control functions of the headquarters; establish the provincial platform; create the strong background and sensitive foreground.
2. Improve quality and efficiency, and strengthen the stock business
Focus on promoting mergers and acquisitions and network layout; classify commercial activities management and store-type management for retail to
improve quality and efficiency; eliminate the enterprises running a deficit, reduce the stores having losses; further rationalize the ownership structure of subsidiaries.
3. Integrate resources, and innovate the business model
Retail should be based on building and implementing the professional service system; integrate the distribution and retail procurement resources; innovate the business model.
X. Reception of research, communication and interview
1. In the report period, reception of research, communication and interview
√Applicable□ Not applicable
||||||
|-|-|-|-|-|
|Time|Way||Type|Basic situation index of investigation|
|||||Found more in “record chart of investor|
|||||relations activities dated 13 January|
|2016-01-13|Field research||Institute||
|||||2016 ” uploaded to interactive easy of|
|||||Shenzhen Stock Exchange|
|2016-04-22|Field research||Institute|Resolution Notice of AGM of 2015|
|||||Resolution Notice of Third Extraordinary|
|2016-06-16|Field research||Institute||
|||||Shareholders General Meeting of 2016|
|||3|||
|Reception (times)|||||
|||60|||
|Number of hospitality|||||
|||4|||
|Number of individual reception|||||
|||0|||
|Number of other reception|||||

|||
|-|-|
|Disclosed, released or let out major undisclosed||
||No disclosed, released or let out major undisclosed information|
|information||

Section V Iimportant 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 22 April 2016, the profit distribution plan for year of 2015 was deliberated and approved by annual general meeting of 2014, that is taking total 362,631,943 shares as the radix, distributed RMB 3.00 (tax included) for each 10 shares in cash. The announcement of 2015 interest distribution implementation was released on 24 May 2016 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 2015 was completed, and dividend for public shares was distributed to the account of shareholders dated 30 May 2016 (A-share) and 1 June 2016 (B-share) respectively.
|||
|-|-|
|Special explanation on cash dividend policy||
|Satisfy regulations of General Meeting or requirement of Article||
||Y|
|of Association (Y/N):||
|Well-defined and clearly dividend standards and proportion||
||Y|
|(Y/N):||
|Completed relevant decision-making process and mechanism||
||Y|
|(Y/N):||
|Independent directors perform duties completely and play a||
||Y|
|proper role (Y/N):||
|Minority shareholders have opportunity to express opinions and||
||Y|
|demands totally and their legal rights are fully protected (Y/N):||
|Condition and procedures are compliance and transparent while||
||Not applicable|
|the cash bonus policy adjusted or changed (Y/N):||

Profit distribution plan (pre-plan) of common stock and capitalizing of common reserves plan (pre-plan) in latest three years (including the reporting period)
(1) Profit distribution plan for year of 2014
Taking the total 362,631,943 shares as of 31 December 2014 as the radix, cash bonus of RMB 2.00 (before tax) each 10 shares will be distributed to the whole shareholders. This profit distribution did not convert capital reserve
into share capital.
(2) Profit distribution plan for year of 2015
Taking the total 362,631,943 shares as of 31 December 2015 as the radix, cash bonus of RMB 3.00 (before tax) each 10 shares will be distributed to the whole shareholders. This profit distribution did not convert capital reserve into share capital.
(3) Profit distribution plan for year of 2016
Taking the total 428,126,983 shares as the radix, cash bonus of RMB 3.30 (before tax) each 10 shares will be distributed to the whole shareholders. This profit distribution did not convert capital reserve into share capital. Cash dividend of common stock in latest three years (including the reporting period)
In RMB
|||||||
|-|-|-|-|-|-|
|||Net profit|Ratio in net profit|||
|||attributable to|attributable to|||
|||common stock|common stock|||
|Year for bonus|Amount for cash|shareholders of|shareholders of|Amount for cash|Proportion for cash|
|shares|bonus (tax included)|listed company in|listed company|bonus by other ways|bonus by other ways|
|||consolidation|contained in|||
|||statement for bonus|consolidation|||
|||year|statement|||
|2016|141,281,904.39|1,186,601,899.27|11.91%|0.00|0.00%|
|2015|108,789,582.90|761,312,261.06|14.29%|0.00|0.00%|
|2014|72,526,388.60|652,497,176.03|11.12%|0.00|0.00%|

 The Company gains profits in reporting period and the retained profit of common stock shareholders provided by parent company is positive but no plan of cash dividend proposed of common stock
□ Applicable√ Not applicable
II. Profit distribution plan and capitalizing of common reserves plan for the Period
√Applicable□ Not applicable
|||
|-|-|
|Bonus shares for every 10-share (Share)|0|
|Dividends for every 10-share (RMB) (Tax||
||3.30|
|included)||
|Equity base of distribution plan (Share)|428,126,983|
|Total cash dividend(RMB) (Tax included)|141,281,904.39|
|Distributable profits (RMB)|2,829,823,727.08|
|Ratio of cash dividend in total profit distribution|100.00%|
|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
III. Implementation of commitment
1. Commitments completed in Period and those without completed till end of the Period from actual controller, shareholders, related parties, purchaser and companies
√Applicable□ Not applicable
||||||||
|-|-|-|-|-|-|-|
|||Type|||||
|||||Comm|Commit||
|Commitmen||of||||Implementat|
||Promise||Content of commitments|itment|ment||
|ts||commi||||ion|
|||||date|term||
|||tments|||||
|Commitmen|||||||
|ts for|||||||
|share merger|||||||
|reform|||||||
||||As a large pharmaceutical commercial enterprise whose business involves||||
||||pharmaceutical wholesale and retail, Sinopharm Holding may overlap with||||
||||the Company in geographical segmentation during its future business||||
||||development. To avoid the potential peer competition brought by such||||
||||geographical overlap, Sinopharm Holding undertakes that, upon the transfer||||
|Commitmen|||||||
|||Comm|of shares of Sinopharm Holding Guangzhou it held to Accord Pharma, “1. it||||
|ts in report||||||Normally|
|||itment|will not newly-establish or broaden within Guangdong any business||Long-||
|of|Sinopharm|||2005-||implementin|
|||of|operation that actually compete with that of Accord Pharma, or set up any||term||
|acquisition|Holding|||06-21||g|
|||shareh|new subsidiaries or subordinate enterprises who engage in such business. 2.||effective||
|or equity|||||||
|||olders|It will enter into business delineation with Accord Pharma and Sinopharm||||
|change|||||||
||||Holding Guangzhou, thereby giving the three parties clear geographical||||
||||areas to carry out pharmaceutical wholesale and retail businesses, so as to||||
||||avoid potential peer competition. Apart from above, Sinopharm Holding will||||
||||no longer newly-establish any enterprise that may compete with Accord||||
||||Pharma in the production and R&D of pharmaceutical products.”||||
||||“Sinopharm Holding and Sinopharm Foreign Trade made commitments in||||
||Sinopharm||||||
||||the Report about China National Accord Medicines Corporation Ltd.||||
||Group||||||
||||Purchasing Assets and Raising Supporting Funds and Related Transactions||||
||Co., Ltd.;||||||
|||Comm|by Asset Sale, Stock Issuance and Cash Payment that the non-public offering||||
||China||||||
|Commitmen||itment|of shares of Sinopharm Accord obtained from this transaction shall not be||||
||National|||||Normally|
|ts in assets||on|transferred within 36 months since the finish date of issuance and shall be|2016-|36||
||Pharmace|||||implementin|
|reorganizati||restrict|unlocked after 36 months since the date of listing. Within 6 months after the|05-31|months||
||utical|||||g|
|on||ed|completion of this transaction, if the closing price of the stock of Sinopharm||||
||Foreign||||||
|||shares|Accord is less than the issue price in continuous 20 trading days, or the||||
||Trade||||||
||||closing price at the end of 6 months after the completion of this transaction||||
||Corporatio||||||
||||is less than the issue price, the lockup period of the stock of Sinopharm||||
||n||||||
||||Group and Sinopharm Foreign 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.”||||
|||"China Ping An Asset Management Co., Ltd. made commitments in the||||
|||Report about China National Accord Medicines Corporation Ltd.||||
||Comm|Purchasing Assets and Raising Supporting Funds and Related Transactions||||
|Ping’an||||||
||itment|by Asset Sale, Stock Issuance and Cash Payment that the non-public||||
|Assets|||||Normally|
||on|offering of shares of Sinopharm Accord obtained from this transaction shall|2016-|36||
|Managem|||||implementin|
||restrict|not be transferred within 36 months since the finish date of issuance and|05-31|months||
|ent Co.,|||||g|
||ed|shall be unlocked after 36 months since the date of listing. After placement||||
|Ltd.||||||
||shares|completed, the shares of the listed company increased due to bonus shares||||
|||and turning to increase capital should pursuit to the restriction arrangement||||
|||the above mentioned.||||
|||“Sinopharm Group made commitments in the Report about China National||||
|||Accord Medicines Corporation Ltd. Purchasing Assets and Raising||||
|||Supporting Funds and Related Transactions by Asset Sale, Stock Issuance||||
|||and Cash Payment that the 2016 annual net profits of Foshan Nanhai,||||
||Perfor|||||
|||Guangdong Uptodate & Special Medicines and Guoda Pharmacy should||||
||mance|||||
|||respectively be no less than RMB 47,385,600.00, RMB 19,167,000.00, and||||
||commi|||||
|||RMB 98,466,100.00, while the 2017 annual net profits should respectively||||
||tment|||||
|Sinopharm||be no less than RMB 49,394,500.00, RMB 20,209,700.00, and RMB|||Normally|
||and||2016-|2018-||
|Group||110,998,90.00, and the 2018 annual net profits should respectively be no less|||implementin|
||compe||05-31|12-31||
|Co., Ltd.||than RMB 51,148,200.00, RMB 21,330,100.00, and RMB 131,275,500.00.|||g|
||nsatio|||||
|||Net profit refers to the lower one between the after-tax net profit attributable||||
||n|||||
|||to the owners of parent company planning to invest in the target company||||
||arrang|||||
|||and the net profit attributable to the owners of parent company after||||
||ement|||||
|||deducting the non-recurring gains and losses. If the actual net profit of the||||
|||target company doesn’t reach the committed net profit, Sinopharm Group||||
|||will need to compensate according to the stipulations of the "Profit Forecast||||
|||Compensation Agreement for the Stock Issuance and Assets Purchase.”||||
|||Sinopharm Foreign Trade made commitments in the Report about China||||
||Perfor|National Accord Medicines Corporation Ltd. Purchasing Assets and Raising||||
|China|mance|Supporting Funds and Related Transactions by Asset Sale, Stock Issuance||||
|National|commi|and Cash Payment that the 2016 annual net profits of Southern Medical||||
|Pharmace|tment|Trade should be no less than RMB 39880700, while the 2017 annual net||||
||||||Normally|
|utical|and|profits should be no less than RMB 47323200, and should not less than RMB|2016-|2018-||
||||||implementin|
|Foreign|compe|55364600 in 2018. Net profit refers to the lower one between the after-tax|05-31|12-31||
||||||g|
|Trade|nsatio|net profit attributable to the owners of parent company planning to invest in||||
|Corporatio|n|the target company and the net profit attributable to the owners of parent||||
|n|arrang|company after deducting the non-recurring gains and losses. If the actual net||||
||ement|profit of the Southern Medical Trade doesn’t reach the committed net profit,||||
|||Sinopharm Foreign Trade will need to compensate according to the||||

|||||||
|-|-|-|-|-|-|
|||stipulations of the "Profit Forecast Compensation Agreement for the Stock||||
|||Issuance and Assets Purchase.”||||
|Fu||||||
|Jiancheng;||||||
|Fu Yuequn||||||
|||“Fu Yueling and other 10 natural person made commitments in the Report||||
|Gu||||||
|||about China National Accord Medicines Corporation Ltd. Purchasing Assets||||
|Chaoqun;||||||
||Perfor|and Raising Supporting Funds and Related Transactions by Asset Sale, Stock||||
|Guo||||||
||mance|Issuance and Cash Payment that the 2016 annual net profits of Southern||||
|Shu’er;||||||
||commi|Medical Trade should be no less than RMB 39,880,700, while the 2017||||
|Huang||||||
||tment|annual net profits should be no less than RMB 47,323,200, and should not||||
|Qiufang;|||||Normally|
||and|less than RMB 55,364,600 in 2018. Net profit refers to the lower one|2016-|2018-||
|Li|||||implementin|
||compe|between the after-tax net profit attributable to the owners of parent company|05-31|12-31||
|Hongbing;|||||g|
||nsatio|planning to invest in the target company and the net profit attributable to the||||
|Liao Zhi;||||||
||n|owners of parent company after deducting the non-recurring gains and||||
|Lin||||||
||arrang|losses. If the actual net profit of the Southern Medical Trade doesn’t reach||||
|Wanqun;||||||
||ement|the committed net profit, Fu Yuequn and other 10 natural person will need to||||
|SunWei;||||||
|||compensate according to the stipulations of the "Profit Forecast||||
|Zhang||||||
|||Compensation Agreement for the Stock Issuance and Assets Purchase.”||||
|Zhaohua;||||||
|Zhang||||||
|Zhaotang||||||
|||"“Sinopharm Accord made commitments in the Report about China National||||
|||Accord Medicines Corporation Ltd. Purchasing Assets and Raising||||
|||Supporting Funds and Related Transactions by Asset Sale, Stock Issuance||||
|||and Cash Payment that the net profits attributable to the owners of parent||||
|||company after deducting the non-recurring gains and losses committed by||||
|||Zhijun Pharmaceutical in 2016, 2017 and 2018 should be respectively no less||||
||Perfor|than RMB 222,671,700.00, RMB 232,561,600.00, and RMB||||
||mance|241,878,700.00; the net profits attributable to the owners of parent company||||
|China|commi|after deducting the non-recurring gains and losses committed by Zhijun||||
|National|tment|Pharmacy Trade in 2016, 2017 and 2018 should be respectively no less than||||
||||||Normally|
|Accord|and|RMB 2,379,600.00, RMB 2,335,100.00, and RMB 2,345,600.00; the net|2016-|2018-||
||||||implementin|
|Medicines|compe|profits attributable to the owners of parent company after deducting the non-|05-31|12-31||
||||||g|
|Corporatio|nsatio|recurring gains and losses committed by Pingshan Pharmaceutical in 2016,||||
|n Ltd.|n|2017 and 2018 should be respectively no less than RMB 39,716,300.00,||||
||arrang|RMB 43,033,500.00, and RMB 50,325,500.00. If the actual net profits||||
||ement|attributable to the owners of parent company after deducting the non-||||
|||recurring gains and losses of Zhijun Pharmaceutical / Zhijun Pharmacy||||
|||Trade / Pingshan Pharmaceutical don’t reach the committed net profits||||
|||attributable to the owners of parent company after deducting the non-||||
|||recurring gains and losses, Sinopharm Accord should compensate in||||
|||accordance with the stipulations of the Profit Forecast Compensation||||
|||Agreement for the Stock Issuance and Assets Purchase.”||||

|||||||
|-|-|-|-|-|-|
|China||||||
|National||||||
|Accord||||||
|Medicines||||||
|||“The listed company, controlling shareholders, the actual controllers made||||
|Corporatio||||||
|||commitments in the Report about China National Accord Medicines||||
|n Ltd.;||||||
|||Corporation Ltd. Purchasing Assets and Raising Supporting Funds and||||
|Sinopharm||||||
||Other|Related Transactions by Asset Sale, Stock Issuance and Cash Payment that||Long-|Normally|
|Group|||2016-|||
||commi|the Company shall not violate the relevant regulations of Article 16 in||term|implementin|
|Co.,|||05-31|||
||tments|Securities Issuance and Underwriting Management Approach, and directly||effective|g|
|Ltd.;China||||||
|||or indirectly providing financial assistance or compensation for the||||
|National||||||
|||subscription objects and its shareholders / partners / clients (if any) of this||||
|Pharmace||||||
|||non-public offering does not exist and will not occur in the future.”||||
|utical||||||
|Group||||||
|Corporatio||||||
|n||||||
|||“Ping An Asset Management Co., Ltd. Promises that the unit intends to||||
|||utilize Ping An Asset Xinxiang No.3 asset management product and Ping An||||
|||Asset Xinxiang No.7 asset management product to fund and subscribe some||||
|||non-public offering of shares of Sinopharm Accord in this major asset||||
|Ping’an||restructuring process, and has the ability to subscribe the shares, the relevant||||
|Assets|Other|capital sources are legitimate, there is no hierarchical income and other||Long-|Normally|
||||2016-|||
|Managem|commi|structured arrangements, and there is no use of leveraged funds. The unit||term|implementin|
||||03-24|||
|ent Co.,|tments|does not receive financial assistance or compensation from Sinopharm||effective|g|
|Ltd.||Accord and its controlling shareholders, or the actual controllers. The||||
|||investors’ structure of above - mentioned products do not change from the||||
|||issue date of the commitment letter to the end date of the lockup period of||||
|||the stock that the unit subscribes from Sinopharm Accord.”||||
|||“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 1. if the stock intraday price of Sinopharm Accord on any||||
|China||||||
||Increa|trading day of the 30 trading days after the listing of newly increased shares||||
|National||||||
||se|in this transaction is less than the issue price of newly increased shares in this||||
|Pharmace|||||Normally|
||holdin|transaction, Sinopharm will accumulatively invest no more than RMB 150|2017-|2017-||
|utical|||||implementin|
||g|million in these 30 trading days to increase the holding by the stock trading|01-06|02-24||
|Group|||||g|
||commi|system of the Shenzhen Stock Exchange (this increase of holding) until the||||
|Corporatio||||||
||tment|earlier one of below two situations occurs: (1) the above-mentioned funds||||
|n||||||
|||are use up; (2) the intraday price of Sinopharm Accord is no less than 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 Group made commitments in the Report about China National||||
|||Accord Medicines Corporation Ltd. Purchasing Assets and Raising||||
|||Supporting Funds and Related Transactions by Asset Sale, Stock Issuance||||
|||and Cash Payment that the 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||||
||Comm|||||
|||except for Sinopharm Group Guoda Pharmacy Co., Ltd. and its subsidiaries||||
||itment|||||
|||and branches owned or controlled by the Company, the Company promised||||
||s on|||||
|||to take appropriate measures to solve the horizontal competition problem in||||
||horizo|||||
|||the pharmaceutical retail business between the Company and Sinopharm||||
||ntal|||||
|||Accord within 5 years since the completion date of this reorganization. 2.||||
||compe|||||
|||The Company's way of resolving horizontal competition problems includes||||
|Sinopharm|tition,|||Long-|Normally|
|||and is not limited to purchasing the social retail drugstore assets subordinated|2016-|||
|Group|relatio|||term|implementin|
|||to the Company by Sinopharm Accord, taking the entrusted operation,|12-28|||
|Co., Ltd.|n|||effective|g|
|||leasing or contracting operation by Sinopharm Accord and its controlling||||
||transac|||||
|||enterprises in accordance with the methods permitted to national laws to hold||||
||tion|||||
|||or control the social retail drugstore assets, or transferring the controlling||||
||and|||||
|||stake of the social retail drugstore assets by the Company. 3. If the||||
||capital|||||
|||shareholders of the social retail drugstore assets (hereinafter referred to as||||
||occupa|||||
|||"the third party") of the Company or the enterprises controlled by the||||
||tion|||||
|||Company have or are going to perform the preemptive rights under the same||||
|||conditions in accordance with relevant laws and corresponding Articles of||||
|||Association, then the above commitment will not be applicable, but in this||||
|||case, the Company should try its utmost to urge the third party to waive its||||
|||preemptive rights. If the Company is unable to urge the third party to give up||||
|||the preemptive rights, the Company will urge the enterprises controlled by||||
|||the Company to transfer the social retail drugstore assets to the third party to||||
|||solve the horizontal competition problem. 4. The pharmaceutical distribution||||
|||assets currently owned or controlled by the Company are distributed outside||||
|||Guangdong and Guangxi regions, there is no horizontal competition with||||
|||Sinopharm Accord, the Company will not engage in the same or similar||||
|||operation businesses to Sinopharm Accord in Guangdong and Guangxi in the||||
|||future, if the Company and its holding enterprises obtain the new business||||
|||opportunities constituting substantial horizontal competition (hereinafter||||
|||referred to as competitive new business) within the pharmaceutical||||

|||||||
|-|-|-|-|-|-|
|||distribution business scope of Sinopharm Accord in Guangdong and||||
|||Guangxi, the Company will send written notice to Sinopharm Accord and try||||
|||its utmost to firstly provide the new business opportunities to Sinopharm||||
|||Accord or its holding enterprises according to the reasonable and fair terms||||
|||and conditions so as to avoid the horizontal competition with Sinopharm||||
|||Accord and its holding enterprises. 5. Since the issue date of this||||
|||commitment letter, the Company promises to indemnify Sinopharm Accord||||
|||for all actual losses, damages and expenses caused by the Company in||||
|||violation of any commitments under this commitment letter. 6. This||||
|||commitment letter terminates when following circumstances occur (subject||||
|||to the earlier one): (1) the Company is no longer the controlling shareholder||||
|||of Sinopharm Accord; or (2) the shares of Sinopharm Accord terminate the||||
|||listing at the stock exchange.”||||
|||“Sinopharm made commitments in the Report about China National Accord||||
|||Medicines Corporation Ltd. Purchasing Assets and Raising Supporting||||
|||Funds and Related Transactions by Asset Sale, Stock Issuance and Cash||||
|||Payment that the Company shall be the actual controller of China National||||
|||Accord Medicines Corporation Ltd. (hereinafter referred to as Sinopharm||||
|||Accord) up to the issue date of this commitment letter, after the completion||||
|||of this major assets reorganization (hereinafter referred to as “this||||
|||reorganization”), Sinopharm Accord shall no longer hold shares or operate||||
||Comm|||||
|||relevant businesses of pharmaceutical industry, the main business will||||
||itment|||||
|||become the national pharmaceutical retail and pharmaceutical distribution||||
||s on|||||
|||business in Guangdong and Guangxi. In order to support the business||||
||horizo|||||
|||development of Sinopharm Accord and avoid horizontal competition with||||
|China|ntal|||||
|||Sinopharm Accord and its controlling enterprises, the Company made||||
|National|compe|||||
|||following irrevocable commitments and promises:1, after the completion of||||
|Pharmace|tition,|||Long-|Normally|
|||this reorganization, as for the social retail drugstore assets except for|2016-|||
|utical|relatio|||term|implementin|
|||Sinopharm Group Guoda Pharmacy Co., Ltd. and its subsidiaries and|12-28|||
|Group|n|||effective|g|
|||branches owned or controlled by the Company, the Company promised to||||
|Corporatio|transac|||||
|||take appropriate measures to solve the horizontal competition problem in the||||
|n|tion|||||
|||pharmaceutical retail business between the Company and Sinopharm Accord||||
||and|||||
|||within 5 years since the completion date of this reorganization. 2. The||||
||capital|||||
|||Company's way of resolving horizontal competition problems includes and||||
||occupa|||||
|||is not limited to purchasing the social retail drugstore assets subordinated to||||
||tion|||||
|||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 bu 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.”||||
||||" Sinopharm Holding made commitments in the Commitment Letter About||||
||||Sinopharm Group Co., Ltd. to Avoid Horizontal Competition: “First, the||||
||||Company and the Company’s wholly-owned, controlling or other enterprises|||Controlling|
||||with actual control (in addition to Sinopharm Accord and its controlling|||shareholder|
||||enterprises, hereinafter the same) don’t have businesses and operations|||is implement|
||||constituting the substantial horizontal competition to Sinopharm Accord and|||in real|
||||its controlling enterprises. Second, the Company and the Company’s wholly-|||earnest,|
||||owned, controlling or other enterprises with actual control shall not engage,|||Sinopharm|
|Commitmen||Comm|||||
||||participate in or do businesses and activities in Guangdong and Guangxi|||Accord will|
|ts make in||itment|||Long-||
||Sinopharm||which constitute substantial competition to Sinopharm Accord and|2013-||actively|
|initial public||of|||term||
||Holding||pharmaceutical business services. Third, the Company and the Company’s|09-05||urged the|
|offering or||shareh|||effective||
||||wholly-owned, controlling or other enterprises with actual control shall not|||controlling|
|re-financing||olders|||||
||||engage, participate in or do businesses and activities which constitute|||shareholder|
||||substantial competition to Sinopharm Accord and pharmaceutical industry|||and actual|
||||businesses. Fourth, the Company shall not take advantage of the control to|||controller to|
||||Sinopharm Accord to damage the legitimate rights and interests of|||fulfill|
||||Sinopharm Accord and other shareholders (especially medium and small|||commitment|
||||shareholders). This commitment letter takes effect from the issue date, and|||s|
||||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 Holding made commitments in the Commitment Letter About||||
|||Sinopharm Group Co., Ltd. to Regulate the Related Transactions with China||||
|||National Accord Medicines Corporation Ltd.: “First, when the Company is||||
|||controlling Sinopharm Accord, the Company and the companies and||||
|||enterprises directly and indirectly controlled by the Company (“related||||
|||party” for short) will strictly regulate the related transactions with Sinopharm||||
|||Accord and its controlling enterprises. Second, for the related transactions||||
|||that can not be avoided or have reasonable reasons to occur, the Company||||
|||and related party shall sign normative related transaction agreement in||||
|||accordance with relevant laws with Sinopharm Accord. Sinopharm Accord||||
|||implements the approval procedures and fulfills the information disclosure||||
|||obligations of the related transactions according to relevant laws, regulations,||||
||||||Controlling|
|||rules, other normative documents and the constitutions of Sinopharm||||
||||||shareholder|
|||Accord. Third, for the related transactions that can not be avoided or have||||
||||||is implement|
|||reasonable reasons to occur, the Company and related party shall abide by||||
||||||in real|
|||the open, fair and just market principles and confirm the price of related||||
||||||earnest,|
|||transactions in accordance with the price that the independent third party||||
||||||Sinopharm|
||Comm|without association sets for the same and similar transactions, and ensure the||||
||||||Accord will|
||itment|fairness of the price of the related transactions. Fourth, when the board of||Long-||
|Sinopharm|||2013-||actively|
||of|directors and the general meeting of stockholders of Sinopharm Accord vote||term||
|Holding|||09-05||urged the|
||shareh|on the related transactions involving the Company and other enterprises||effective||
||||||controlling|
||olders|controlled by the Company, the Company shall fulfill the necessary||||
||||||shareholder|
|||obligations that the associated directors and associated shareholders abstain||||
||||||and actual|
|||from voting in accordance with the relevant provisions, and abide by the||||
||||||controller to|
|||legal procedures for approving related transactions and the information||||
||||||fulfill|
|||disclosure obligations. Fifth, the Company guarantees to participate in the||||
||||||commitment|
|||shareholders' general meeting, equally exercise the corresponding rights and||||
||||||s|
|||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 Horizontal||||
|||Competition with China National Accord Medicines Corporation Ltd.:||||
|||“First, in the next five years, Sinopharm plans to take appropriate measures|||Controlling|
|||(including assets replacement or acquisition, equity reorganization, etc.) to|||shareholder|
|||resolve the horizontal competition between Sinopharm Weiqida and|||is implement|
|||Sinopharm Accord. Second, in addition to the past matters and matters|||in real|
|||disclosed in this commitment letter, the Company and the Company’s|||earnest,|
||Comm|wholly-owned, controlling or other enterprises with actual control rights|||Sinopharm|
||itment|(except for Sinopharm Accord and its controlling enterprises, the same as|||Accord will|
|||||Long-||
|Sinopharm|of|below) shall not directly engaged in, participate in or do the businesses an|2013-||actively|
|||||term||
|Group|actual|activities constituting actual competition to the production and operation of|10-16||urged the|
|||||effective||
||control|Sinopharm Accord in China. The relevant commitments about avoiding|||controlling|
||ler|horizontal competition that the Company made in the past still remain in|||shareholder|
|||effect. Third, the Company shall not take advantage of the control|||and actual|
|||relationship to Sinopharm Accord to damage the legitimate rights and|||controller to|
|||interests of Sinopharm Accord and its shareholders (especially the medium|||fulfill|
|||and small shareholders). Fourth, this commitment letter comes into force|||commitment|
|||from the issue date and remains in effect for the entire period when the|||s|
|||Company acts as the controlling shareholder or its related party of Sinopharm||||
|||Accord.”||||
|||Sinopharm Group made commitments in the Commitment Letter About||||
|||Sinopharm Group Co., Ltd. to Regulate the Related Transactions with||||
|||China National Accord Medicines Corporation Ltd.: “First, when the||||
|||Company is controlling Sinopharm Accord, the Company and the|||Controlling|
|||companies and enterprises directly and indirectly controlled by the|||shareholder|
|||Company (“related party” for short) will strictly regulate the related|||is implement|
|||transactions with Sinopharm Accord and its controlling enterprises. Second,|||in real|
|||for the related transactions that can not be avoided or have reasonable|||earnest,|
||Comm|reasons to occur, the Company and related party shall sign normative|||Sinopharm|
||itment|related transaction agreement in accordance with relevant laws with|||Accord will|
|||||Long-||
|Sinopharm|of|Sinopharm Accord. Sinopharm Accord implements the approval procedures|2013-||actively|
|||||term||
|Group|actual|and fulfills the information disclosure obligations of the related transactions|09-22||urged the|
|||||effective||
||control|according to relevant laws, regulations, rules, other normative documents|||controlling|
||ler|and the constitutions of Sinopharm Accord. Third, for the related|||shareholder|
|||transactions that can not be avoided or have reasonable reasons to occur,|||and actual|
|||the Company and related party shall abide by the open, fair and just market|||controller to|
|||principles and confirm the price of related transactions in accordance with|||fulfill|
|||the price that the independent third party without association sets for the|||commitment|
|||same and similar transactions, and ensure the fairness of the price of the|||s|
|||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|||
|commitment|||
|Other|||
|commitment|||
|s for|||
|medium and|||
|small|||
|shareholders|||
|Completed|||
|on time|Yes||
|(Y/N)|||

2. Concerning assts or project of the Company, which has profit forecast, and reporting period still in forecasting period, explain reasons of reaching the original profit forecast
√Applicable□ Not applicable
|||||||||
|-|-|-|-|-|-|-|-|
||||||Reasons of|||
||||Current|Current||||
||||||fails to|||
|Assets or project|||forecast|actually||Disclosure date||
||||||achieved the|||
|with profit|Starting time|Terminal time|performance|performance||for former|Index|
||||||forecast|||
|forecasted|||(in 10 thousand|(in 10 thousand||prediction||
||||||number (if|||
||||Yuan)|Yuan)||||
||||||applicable)|||
||||||||”Sinopharm Accord:|
||||||||Acquiring Assets by|
||||||||Offering Shares and Profit|
|Foshan Nanhai|2016-01-01|2018-12-31|4,738.56|4,930.7|Not applicable|2016-05-31||
||||||||Forecast Compensation|
||||||||Agreement” on Juchao|
||||||||website|
|Guangdong|||||||“Sinopharm Accord:|
||2016-01-01|2018-12-31|1,916.7|1,923.21|Not applicable|2016-05-31||
|Uptodate &|||||||Acquiring Assets by|

|||||||||
|-|-|-|-|-|-|-|-|
|Special|||||||Offering Shares and Profit|
|Medicines|||||||Forecast Compensation|
||||||||Agreement” on Juchao|
||||||||website|
||||||||“Sinopharm Accord:|
||||||||Acquiring Assets by|
||||||||Offering Shares and Profit|
|Guoda Pharmacy|2016-01-01|2018-12-31|9,846.61|15,278.82|Not applicable|2016-05-31||
||||||||Forecast Compensation|
||||||||Agreement” on Juchao|
||||||||website|
||||||||“Sinopharm Accord:|
||||||||Acquiring Assets by|
|Southern|||||||Offering Shares and Profit|
||2016-01-01|2018-12-31|3,988.07|3,993.33|Not applicable|2016-05-31||
|Medical Trade|||||||Forecast Compensation|
||||||||Agreement” on Juchao|
||||||||website|
||||||||”Sinopharm Accord:|
||||||||Shanghai Shyndec|
||||||||Pharmaceutical Co., Ltd.|
||||||||and the Company of|
|Zhijun||||||||
||2016-01-01|2018-12-31|22,267.17|22,408.57|Not applicable|2016-05-31|Acquiring Assets by|
|Pharmaceutical||||||||
||||||||Offering Shares and Profit|
||||||||Forecast Compensation|
||||||||Agreement” on Juchao|
||||||||website|
||||||||”Sinopharm Accord:|
||||||||Shanghai Shyndec|
||||||||Pharmaceutical Co.,|
||||||||Ltd.and the Company of|
|Zhijun Pharmacy||||||||
||2016-01-01|2018-12-31|237.96|260.44|Not applicable|2016-05-31|Acquiring Assets by|
|Trade||||||||
||||||||Offering Shares and Profit|
||||||||Forecast Compensation|
||||||||Agreement” on Juchao|
||||||||website|
||||||||”Sinopharm Accord:|
||||||||Shanghai Shyndec|
||||||||Pharmaceutical Co.,|
||||||||Ltd..and the Company of|
|Pingshan||||||||
||2016-01-01|2018-12-31|3,971.63|4,157.16|Not applicable|2016-05-31|Acquiring Assets by|
|Pharmaceutical||||||||
||||||||Offering Shares and Profit|
||||||||Forecast Compensation|
||||||||Agreement” on Juchao|
||||||||website|

Commitment made by shareholders of the Company and counterparty in annual operation performance
□ Applicable√ Not applicable
IV. Non-operational fund occupation from controlling shareholders and its related party□ Applicable√ Not applicable
No non-operational fund occupation from controlling shareholders and its related party in period.
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
No particulars about the changes in aspect of accounting policy, estimates or calculation method in Period.
√Applicable□Not applicable
According to the requriement of Regulation of the Accounting Treatmetns on Value-Added Tax (Cai Kuai[2016] No.22), in year of 2016, the item of “Business tax and surcharge” listed in profit statement is adjust to item of “Taxes and surcharge”; as for the relevant taxes occurring since 1 May 2016 from operation activities, such as house duty, land holding tax, vehicle and vessel usage tax as well as stamp tax are listed under the item of “Taxes and surcharge” instead of “Administration expenses”; while the taxes (except the house duty and land holding tax with investment property concerned reckoned in “Business tax and surcharge”) occurred before 1 May 2016 still in item of “Administration expenses”. The debited balance of sub-item as “Payable VAT”, “Unpaid VAT”, “Pending deduct VAT on purchase”, “Certified purchase duty” and “VAT retained”under “Taxes payable”, are re-classified to “other current assets” and “other non-current assets” instead of the “payable taxes” in balance sheet at end of 2016; while the above mentioned items are listed in original item at end of 2015. The credit balance of sub-itm as “substituted money on VAT” under “Taxes payable” are re-classifed to “Other current liability” and “Other non-current liability” instead of the “payable taxes” in balance sheet at end of 2016 while the above mentioned items are listed in original item at end of 2015. Due to the above requriements, the follow items are have difference among “taxes and surcharge” and “administration expenses” for year of 2016 and year of 2015, the items of “taxes payable”, “other current assets”, “other receivable”, “other non-current assets”, “other current liability” and “other non-current liability” for year ended as 2016 and ended as 2015. however, the consolidate net profit and net profit of the Company as well as theshareholders’ euqity of the Company and consolidateshareholers’ euqity for year of 2016 and 2015 have no influences. Due to theinfluence，the taxes and surcharges increased RMB28,560,596.90, administrative expenses decreased RMB28,560,596.90; the current liability increased RMB123,294.77, taxes payable decreased RMB123,294.77.
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 lastyear’s financial report; explain changes in consolidationstatement’s scope
√Applicable□ Not applicable
Details of changes in consolidationstatement’s scope can be seen in Note VI of Audit 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||
||292 (excluding the auditing charge for internal control)|
|thousand Yuan)||
|Continuous life of auditing service for domestic||
||One year|
|accounting firm||
|Name of domestic CPA|Li Jianguang, Zhang Yongkun|
|Name of foreign accounting firm (if applicable)|N/A|
|Remuneration for foreign accounting firm (10||
||0|
|thousand Yuan) (if applicable)||
|Continuous life of auditing service for foreign||
||0|
|accounting firm (if applicable)||
|Name of foreign CPA (if applicable)|N/A|

Re-appointed accounting firms in this period
√Yes□ No
Whether change the CPA in auditing period or not
□Yes√ No
Performing approval procedures while change the CPA
√Yes□ No
Explanation on re-engagement and changes of the CPA
Thecompany’s controlling shareholder, Sinopharm Group, proceeded with the bidding work of accounting firms
for 2016 annual financial final account audit in accordance with the relevant provisions of SASAC to audit
intermediary organizational management, Sinopharm Group engaged Ernst& Young as the audit institution for thecompany’s financial final account audit. In order to engage the same audit institution as the controlling shareholder Sinopharm Group for thecompany’s financial final account audit to improve the efficiency of thecompany’s financial work and audit work, and avoid the repeated audit, and the audit team of thecompany’s original audit institution, Price Waterhouse Coopers, has been providing the audit services for more than 5 years, the risk internal control and audit committeecompany’s board of directors, the 18th meeting of thecompany’s 7th board of directors and 12th session of thecompany’s 7th board of supervisors, and thecompany’s 4th extraordinary general meeting in 2016 deliberated and agreed to engage Ernst& Young to provide the audit services for 2016 annual audit and internal controls of financial reports. The independent directors made agreed independent opinions on this matter. 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 RMB 0.247 million.
The Company engaged China International Capital Corporation Limited as the finance consultant for material asset reorganization and privately placement. The finance consultation charge was 16,536,000 Yuan (tax included) and consignment inward costs 5,798,200 Yuan (tax included).
X. Particular about suspended and delisting after annual report disclosed
□ Applicable√ Not applicable
XI. Bankruptcy reorganization
□ Applicable√ Not applicable
No bankruptcy reorganization for the Company in reporting period
XII. Significant lawsuits and arbitrations of the Company
□ Applicable√ Not applicable
No significant lawsuits and arbitrations occurred in the reporting period
Other lawsuits
Till end of the disclosure date, the Company has 20 contract disputes in routine operations, 37,104,428 Yuan involved in total; one infringement dispute with 2,518,408 Yuan concerned; one labor dispute with 1,044,000 Yuan involved and four equity transfer disputes with 2,507,300 Yuan involved.
Totally 26 disputes in the above mentioned with 43,173,822 Yuan involved. There are no accrual liability resulted, and has no impact
on normal operation management of the Company.
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 the reporting period, integrity of the company and its controlling shareholders and actual controllers is good and they do not have a relatively large amount of due existing debt with court's effective judgments.
XV. Implementation of thecompany’s stock incentive plan, employee stock ownership plan or other employee incentives
□ Applicable√ Not applicable
During the reporting period, the company has no stock incentive plan, employee stock ownership plan or other employee incentives that have not been implemented.
XVI. Major related transaction
1. Related transaction with routine operation concerned
(1) The related transaction with routine operations concerned found more in the “X. Related parties and related transaction” in “Section XI. Financial Report”;
(2) The related transactions are settled by cash and notes, disclosed on 27 March 2016, and disclosure on Juchao Website with Notice No.: 2016-032;
(3) In accordance with the “Forecast for Routine Related Transactions for year of 2016” approved by 14th session of 7th BOD on 26 March 2016 and the AGM of 2015 held on 22 April 2016, during the reporting period, the sales from related parties takes77.91% in total amount predicted while purchasing with related parties takes146.36% (actual amount occurred from related parties including the amount in all year place-in the Company from merger under the same control, for material asset reorganization in the period. After deducted the data of the enterprise place-in from period-begin to delivery date of reorganization, purchasing with related parties takes93.86% without aboving the quota ); the loan principal& interest from related parties takes16.96% in total amount predicted for whole year; note buyer discount interest from related parties takes103.04% in total amount predicted for whole year(has 36500 Yuan over the quota and did not qualify the disclosure standards); finance lease interest from related parties takes29.16% in total amount predicted for whole year; purchasing fixed assets and long-term assets from related parties takes5.47% in total amount predicted for whole year; leasing revenue from related parties takes9.96% in total amount predicted for whole year and house and equipment leasing costs from related parties takes471.52% in total amount predicted for whole year(actual amount occurred from related parties including the amount in all year place-in the Company from mergering under the same control, for material asset reorganization in the period. After deducted the data of the enterprise place-in from period-begin to delivery date of reorganization, house and equipment leasing costs from related parties amounted as 26,870,700 Yuan, a157.14% in total amount predicted for whole year with 9,770,700 Yuan over the
quota, a0.18% in the audited net assets from latest period without qualify the disclosure standards. Mainly because the Guoda Pharmacy-place in from reorganization, has more business from house leasing); revenue from providing service from related parties takes46.89% in total amount predicted for whole year while received services from related parties takes59.45% in total amount predicted for 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
During the reporting period, the company implemented major asset reorganization:
Sinopharm Accord subscribed the shares newly issued by Shanghai Shyndec Pharmaceutical with51% stock rights of Zhijun Pharmaceutical, and51% stock rights of Zhijun Pharmacy Trade, and51% stock rights of Pingshan Pharmaceutical, and all productive assets of Pingshan base; at the same time, Sinopharm Accord bought100% stock rights of Guoda Drugstore,100% stock rights of Foshan Nanhai,100% stock rights of Guangdong Uptodate& Special Medicines from the non-public offering of shares of Sinopharm Holding, and bought51% stock rights of Nanfang Pharmaceutical Trade from the non-public offering of shares of Sinopharm Foreign Trade, and bought49% stock rights of Nanfang Pharmaceutical Trade by cash from Fu Yuequn and other 10 natural minority shareholders. Except for buying49% stock rights of Nanfang Pharmaceutical Trade by cash from Fu Yuequn and other 10 natural minority shareholders, this assets sale and share issuance and asset purchase all involved the transactions between the company and controlling shareholders or other enterprises controlled by actual controllers, therefore, the above
transactions constituted related transactions.
Up to the date of disclosure, all subjects of this major assets reorganization have completed the transfer.
Disclosure information for major related transaction temporary disclosed
||||
|-|-|-|
|Temporary notice|Dated disclosed|Website for disclosure|
|Sinopharm Accord: Notice of Purchasing Assets and RaisingSupporting Funds and Related Transactions by Asset Sale,Stock Issuance and Cash Payment|||
||2016-03-10|Juchao Website: http://www.cninfo.com.cn|
|Sinopharm Accord: Notice of Plans of Purchasing Assets andRaising Supporting Funds and Related Transactions by AssetSale, Stock Issuance and Cash Payment|||
||2016-03-25|Juchao Website: http://www.cninfo.com.cn|
|Sinopharm Accord: Supplement Notice of Purchasing Assetsand Raising Supporting Funds and Related Transactions byAsset Sale, Stock Issuance and Cash Payment|||
||2016-05-31|Juchao Website: http://www.cninfo.com.cn|
|Sinopharm Accord: Report of Purchasing Assets and RaisingSupporting Funds and Related Transactions by Asset Sale,Stock Issuance and Cash Payment (draft) (Revised)|||
||2016-06-14|Juchao Website: http://www.cninfo.com.cn|
|Sinopharm Accord: Report of Purchasing Assets and RaisingSupporting Funds and Related Transactions by Asset Sale,Stock Issuance and Cash Payment (draft) (3rd Revised)|||
||2016-08-18|Juchao Website: http://www.cninfo.com.cn|
|Sinopharm Accord: Report of Purchasing Assets and RaisingSupporting Funds and Related Transactions by Asset Sale,Stock Issuance and Cash Payment (Revised)|||
||2016-09-28|Juchao Website: http://www.cninfo.com.cn|
|Sinopharm Accord: Notice of the Target Assets’ OwnershipTransfer for Purchasing Assets and Raising SupportingFunds and Related Transactions by Asset Sale, StockIssuance and Cash Payment|||
||2016-12-13|Juchao Website: http://www.cninfo.com.cn|

XVII. Significant contract and implementations
1. Trusteeship, contract and leasing
(1) Trusteeship
√Applicable□ Not applicable
Explanation on trust
1. Foshan Nanhai Pharmaceutical Co., Ltd. and Guangdong Dong Fang Uptodate& Special Medicines Co., Ltd. were subordinate enterprises of major shareholders, their operation businesses were pharmaceutical distribution,
and business scope was in Guangdong region, and there were some overlaps with the Company's pharmaceutical
distribution businesses and regions, which constituted the horizontal competition, in July 2013, in order to
effectively solve the horizontal competition, the major shareholders handed over these two companies to Sinopharm Accord for trusteeship, and Sinopharm Accord also agreed to accept the entrust and manage the subject companies. Up to July 2016, trusteeship has ended.
2. Guangdong Nanfang Pharmaceutical Foreign Trade Co., Ltd. was the subordinate enterprise of actual controllers, its operation business was pharmaceutical distribution, and business scope was in Guangdong region, and there were some overlaps with the Company's pharmaceutical distribution businesses and regions, which constituted the horizontal competition, in September 2013, in order to effectively solve the horizontal competition, the actual controllers of Sinopharm handed it over to Sinopharm Accord for trusteeship, and Sinopharm Accord also agreed to accept the entrust and manage the subject company. Up to June 2016, trusteeship has ended.
The above three companies have become theCompany’s wholly owned subsidiaries by the company's major asset reorganization and acquisition of assets.
Items generated over10% gains/losses in total profit in reporting period for the Company
□ Applicable√ Not applicable
The Company had no trust items generated over10% gains/losses in total profit in reporting period
(2) Contract
□ Applicable√ Not applicable
No contract for the Company in reporting period
(3) Leasing
□ Applicable√ Not applicable
No leasing for the Company in reporting period
2. Major guarantees
√Applicable□ Not applicable
(1) Guarantees
In 10 thousand Yuan Particulars about the external guarantee of the Company and the subsidiaries (Barring the guarantee for subsidiaries)
||||||||||
|-|-|-|-|-|-|-|-|-|
||Related|||||||Guarante|
||||Actual date of||||||
||Announce|||Actual||||e for|
|Name of the Company||Guarantee|happening (Date||Guarantee|Guarantee|Implemen||
||ment|||guarantee||||related|
|guaranteed||limit|of signing||type|term|ted (Y/N)||
||disclosure|||limit||||party|
||||agreement)||||||
||date|||||||(Y/N)|
|||||Total actual occurred|||||
|Total approving external guarantee|||||||||
|||-||external guarantee in report||-|||
|in report period (A1)|||||||||
|||||period (A2)|||||
|||||Total actual balance of|||||
|Total approved external guarantee|||||||||
|||-||external guarantee at the||-|||
|at the end of report period (A3)|||||||||
|||||end of report period (A4)|||||
|Guarantee between the Company and the subsidiaries|||||||||
||Related|||||||Guarante|
||||Actual date of||||||
||Announce|||Actual||||e for|
|Name of the Company||Guarantee|happening (Date||Guarantee|Guarantee|Implemen||
||ment|||guarantee||||related|
|guaranteed||limit|of signing||type|term|ted (Y/N)||
||disclosure|||limit||||party|
||||agreement)||||||
||date|||||||(Y/N)|
|China National|||||||||
||||||General|2016.5.25-|||
|Accord Medicines|2016-03-26|25,000|2016-05-25|10,708.05|||No|Yes|
||||||assurance|2017.5.25|||
|Corporation Ltd.|||||||||
|China National|||||||||
||||||General|2016.11.23-|||
|Accord Medicines|2016-03-26|20,000|2016-11-23|12,018.46|||No|Yes|
||||||assurance|2017.11.22|||
|Corporation Ltd.|||||||||
|Sinopharm Holding|||||General|2016.5.20-|||
||2016-03-26|35,000|2016-05-18|19,005.33|||No|Yes|
|Guangzhou Co., Ltd.|||||assurance|2017.5.20|||
|Sinopharm Holding|||||General|2016.10.19-|||
||2016-03-26|10,000|2016-10-19|9,606.54|||No|Yes|
|Guangzhou Co., Ltd.|||||assurance|2017.10.18|||
|Sinopharm Holding|||||General|2016.9.22-|||
||2016-03-26|21,000|2016-09-22|10,483.85|||No|Yes|
|Guangzhou Co., Ltd.|||||assurance|2017.9.21|||
|Sinopharm Holding|||||General|2015.12.21-|||
||2015-08-20|20,000|2015-12-21|10,963.07|||No|Yes|
|Guangzhou Co., Ltd.|||||assurance|2016.12.20|||
|Sinopharm Holding|||||General|2016.6.29-|||
||2016-03-26|40,000|2016-06-29|36,212.26|||No|Yes|
|Guangzhou Co., Ltd.|||||assurance|2017.6.28|||
|Sinopharm Holding|||||General|2016.9.20-|||
||2016-03-26|40,000|2016-09-20|7,664.25|||No|Yes|
|Guangzhou Co., Ltd.|||||assurance|2017.9.19|||
|Sinopharm Holding|||||General|2016.9.26-|||
||2016-03-26|35,000|2016-09-26|1,501.54|||No|Yes|
|Guangzhou Co., Ltd.|||||assurance|2017.9.25|||
|Sinopharm Holding|||||General|2016.7.6-|||
||2016-03-26|30,000|2016-07-06|21,155.83|||No|Yes|
|Guangzhou Co., Ltd.|||||assurance|2017.4.30|||
|Sinopharm Holding|2016-03-26|35,000|2016-05-09|17,968.82|General|2016.5.9-|No|Yes|

||||||||||
|-|-|-|-|-|-|-|-|-|
|Guangzhou Co., Ltd.|||||assurance|2017.4.28|||
|Sinopharm Holding|||||General|2015.10.23-|||
||2015-03-21|10,000|2015-10-23|6,656.75|||No|Yes|
|Guangzhou Co., Ltd.|||||assurance|2016.10.31|||
|Sinopharm Holding|||||General|2016.6.30-|||
||2016-03-26|50,000|2016-06-30|35,615.73|||No|Yes|
|Guangzhou Co., Ltd.|||||assurance|2017.6.30|||
|Sinopharm Holding|||||General|2016.5.10-|||
||2016-03-26|20,000|2016-05-10|5,767.02|||No|Yes|
|Guangzhou Co., Ltd.|||||assurance|2017.5.9|||
|Sinopharm Holding|||||General|2016.6.28-|||
||2016-03-26|30,000|2016-06-28|1,149.16|||No|Yes|
|Guangzhou Co., Ltd.|||||assurance|2017.4.28|||
|Sinopharm Holding|||||General|2016.4.1-|||
||2016-03-26|126,000|2016-04-01|35,247.99|||No|Yes|
|Guangzhou Co., Ltd.|||||assurance|2017.3.31|||
|Sinopharm Holding|||||||||
||||||General|2016.5.20-|||
|Guangdong Yuexing|2016-03-26|3,500|2016-05-20||||No|Yes|
||||||assurance|2017.5.20|||
|Co., Ltd.|||||||||
|Sinopharm Holding|||||||||
||||||General|2016.9.26-|||
|Guangdong Yuexing|2016-03-26|5,000|2016-09-26|4,422.88|||No|Yes|
||||||assurance|2017.9.25|||
|Co., Ltd.|||||||||
|Sinopharm Holding|||||||||
||||||General|2016.9.18-|||
|Guangdong Yuexing|2016-03-26|3,000|2016-09-18|1,737.31|||No|Yes|
||||||assurance|2017.9.17|||
|Co., Ltd.|||||||||
|Sinopharm Holding|||||General|2016.9.14-|||
||2016-03-26|5,000|2016-09-14|60.39|||No|Yes|
|Guangxi Co., Ltd.|||||assurance|2016.9.13|||
|Sinopharm Holding|||||General|2016.11.2-|||
||2016-03-26|20,000|2016-11-02|7,404.01|||No|Yes|
|Guangxi Co., Ltd.|||||assurance|2017.11.2|||
|Sinopharm Holding|||||General|2016.9.26-|||
||2016-03-26|25,000|2016-09-26|11,669.04|||No|Yes|
|Guangxi Co., Ltd.|||||assurance|2017.9.25|||
|Sinopharm Holding|||||General|2016.9.24-|||
||2016-03-26|20,000|2016-09-24||||No|Yes|
|Guangxi Co., Ltd.|||||assurance|2017.9.24|||
|Sinopharm Holding|||||General|2016.9.30-|||
||2016-03-26|20,000|2016-09-30|13,832.28|||No|Yes|
|Guangxi Co., Ltd.|||||assurance|2017.9.30|||
|Sinopharm Holding|||||||||
||||||General|2016.12.23-|||
|Jiangmen Renren Co.,|2016-03-26|2,000|2016-12-23|1,999.6|||No|Yes|
||||||assurance|2017.9.25|||
|Ltd.|||||||||
|Sinopharm Holding|||||General|2016.9.26-|||
||2016-03-26|9,000|2016-09-26|4,919.55|||No|Yes|
|Liuzhou Co., Ltd.|||||assurance|2017.9.25|||
|Sinopharm Holding|||||General|2016.6.20-|||
||2016-03-26|5,000|2016-06-20|3,096.98|||No|Yes|
|Liuzhou Co., Ltd.|||||assurance|2017.6.19|||
|Sinopharm Holding|||||General|2015.11.24-|||
||2015-08-20|6,000|2015-11-24|1,143.18|||No|Yes|
|Liuzhou Co., Ltd.|||||assurance|2016.11.23|||

||||||||||
|-|-|-|-|-|-|-|-|-|
|Sinopharm Holding|||||||||
||||||General|2016.07.04-|||
|Shenzhen Yanfeng|2016-03-26|2,000|2016-07-04||||No|Yes|
||||||assurance|2017.07.04|||
|Co., Ltd.|||||||||
|Sinopharm Holding|||||||||
||||||General|2016.09.26-|||
|Shenzhen Yanfeng|2016-03-26|7,000|2016-09-26|4,598.92|||No|Yes|
||||||assurance|2017.09.25|||
|Co., Ltd.|||||||||
|Sinopharm Holding|||||||||
||||||General|2016.11.23-|||
|Shenzhen Yanfeng|2016-03-26|2,000|2016-11-23|2,000|||No|Yes|
||||||assurance|2017.11.22|||
|Co., Ltd.|||||||||
|Sinopharm Holding|||||||||
||||||General|2016.6.28-|||
|Shenzhen Yanfeng|2016-03-26|3,000|2016-04-29|1,800|||No|Yes|
||||||assurance|2017.04.28|||
|Co., Ltd.|||||||||
|Sinopharm Holding|||||General|2015.9.26-|||
||2016-03-26|1,500|2016-09-26||||No|Yes|
|Zhanjiang Co., Ltd.|||||assurance|2016.9.25|||
|Sinopharm Holding|||||General|2016.12.20-|||
||2016-03-26|2,000|2016-09-26|2,000|||No|Yes|
|Zhaoqing Co., Ltd.|||||assurance|2017.9.25|||
|Sinopharm Holding|||||General|2016.9.26-|||
||2016-03-26|1,000|2016-09-26|877.41|||No|Yes|
|Foshan Co., Ltd.|||||assurance|2017.9.25|||
|Sinopharm Holding|||||||||
||||||General|2016.9.26-|||
|Shenzhen Medicine|2016-03-26|1,000|2016-09-26|908.5|||No|Yes|
||||||assurance|2017.9.25|||
|Co., Ltd.|||||||||
|||||Total amount of actual|||||
|Total amount of approving|||||||||
|||||occurred guarantee for|||||
|guarantee for subsidiaries in report||654,000||||1,087,619.35|||
|||||subsidiaries in report period|||||
|period (B1)|||||||||
|||||(B2)|||||
|||||Total balance of actual|||||
|Total amount of approved|||||||||
|||||guarantee for subsidiaries at|||||
|guarantee for subsidiaries at the||690,000||||304,194.7|||
|||||the end of reporting period|||||
|end of reporting period (B3)|||||||||
|||||(B4)|||||
|Guarantee between the subsidiaries and the subsidiaries|||||||||
||Related|||||||Guarante|
||||Actual date of||||||
||Announce|||Actual||||e for|
|Name of the Company||Guarantee|happening (Date||Guarantee|Guarantee|Implemen||
||ment|||guarantee||||related|
|guaranteed||limit|of signing||type|term|ted (Y/N)||
||disclosure|||limit||||party|
||||agreement)||||||
||date|||||||(Y/N)|
|Sinopharm Holding|||||||||
|Guoda Pharmacy|||||General|2016.3.1-|||
||2016-12-30|5,600|2016-03-01|4,072|||No|Yes|
|Shenyang Chain|||||assurance|2017.3.1|||
|Co.,Ltd|||||||||
|Sinopharm Holding|||||General|2016.3.1-|||
||2016-12-30|4,500|2016-03-01|4,255|||No|Yes|
|Guoda Pharmacy|||||assurance|2017.3.1|||

||||||||||
|-|-|-|-|-|-|-|-|-|
|Shenyang Chain|||||||||
|Co.,Ltd|||||||||
|Sinopharm Holding|||||||||
|Guoda Pharmacy|||||General|2016.6.1-|||
||2016-12-30|5,000|2016-06-01|4,963|||No|Yes|
|Shenyang Chain|||||assurance|2017.6.1|||
|Co.,Ltd|||||||||
|Sinopharm Holding|||||||||
|Guoda Pharmacy|||||General|2016.2.1-|||
||2016-12-30|6,000|2016-02-01|1,411|||No|Yes|
|Shenyang Chain|||||assurance|2017.2.1|||
|Co.,Ltd|||||||||
|Sinopharm Holding|||||||||
|Guoda Pharmacy|||||General|2016.11.1-|||
||2016-12-30|6,000|2016-11-01|2,452|||No|Yes|
|Shenyang Chain|||||assurance|2017.11.1|||
|Co.,Ltd|||||||||
|Fujian Guoda|||||||||
||||||General|2016.3.1-|||
|Pharmacy Chain|2016-12-30|2,000|2016-03-01||||No|Yes|
||||||assurance|2017.3.1|||
|Co.,Ltd|||||||||
|Fujian Guoda|||||||||
||||||General|2016.5.1-|||
|Pharmacy Chain|2016-12-30|3,000|2016-05-01|1,560|||No|Yes|
||||||assurance|2017.5.1|||
|Co.,Ltd|||||||||
|Sinopharm Holding|||||||||
|Guoda Pharmacy|||||General|2016.2.1-|||
||2016-12-30|4,000|2016-02-01|4,000|||No|Yes|
|Shanxi Yiyuan Chain|||||assurance|2017.1.1|||
|Co.,Ltd|||||||||
|Sinopharm Holding|||||||||
|Guoda Pharmacy|||||General|2016.2.1-|||
||2016-12-30|3,000|2016-02-01|2,037|||No|Yes|
|Shanxi Yiyuan Chain|||||assurance|2017.1.1|||
|Co.,Ltd|||||||||
|Sinopharm Holding|||||||||
|Guoda Pharmacy|||||General|2016.7.1-|||
||2016-12-30|4,000|2016-07-01|3,132|||No|Yes|
|Shanxi Yiyuan Chain|||||assurance|2017.7.1|||
|Co.,Ltd|||||||||
|Sinopharm Holding|||||||||
|Guoda Pharmacy|||||General|2016.10.1-|||
||2016-12-30|2,800|2016-10-01|550|||No|Yes|
|Shanxi Yiyuan Chain|||||assurance|2017.10.1|||
|Co.,Ltd|||||||||
|Sinopharm Holding|||||||||
|Guoda Pharmacy|||||General|2016.9.1-|||
||2016-12-30|1,500|2016-09-01|1,385|||No|Yes|
|Shanxi Yiyuan Chain|||||assurance|2017.12.1|||
|Co.,Ltd|||||||||
|Sinopharm Holding|2016-12-30|1,960|2016-10-01|1,960|General|2016.10.1-|No|Yes|

||||||||||
|-|-|-|-|-|-|-|-|-|
|Guoda Pharmacy|||||assurance|2017.10.1|||
|Shanxi Yiyuan Chain|||||||||
|Co.,Ltd|||||||||
|Sinopharm Holding|||||||||
|Guoda Pharmacy|||||General|2016.4.1-|||
||2016-12-30|3,000|2016-04-01|2,143|||No|Yes|
|Inner Mongolia|||||assurance|2017.4.1|||
|Co.,Ltd|||||||||
|Sinopharm Holding|||||||||
|Guoda Pharmacy|||||General|2016.4.1-|||
||2016-12-30|5,000|2016-04-01|1,635|||No|Yes|
|Inner Mongolia|||||assurance|2017.4.1|||
|Co.,Ltd|||||||||
|Sinopharm Holding|||||||||
|Guoda Fumei|||||General|2015.12.1-|||
||2016-12-30|6,000|2015-12-01|2,772|||No|Yes|
|Pharmaceutical|||||assurance|2016.12.1|||
|(Shanghai) Co., Ltd.|||||||||
|Shanxi Guoda|||||||||
||||||General|2015.12.1-|||
|Wanmin Drugstore|2016-12-30|980|2015-12-01|938|||No|Yes|
||||||assurance|2016.12.1|||
|Chain Co.,Ltd|||||||||
|Shanxi Guoda|||||||||
||||||General|2016.3.1-|||
|Wanmin Drugstore|2016-12-30|5,000|2016-03-01|3,143|||No|Yes|
||||||assurance|2017.2.1|||
|Chain Co.,Ltd|||||||||
|Sinopharm Holding|||||||||
|Guoda Pharmacy|||||General|2015.5.1-|||
||2016-12-30|1,500|2015-05-01|1,299|||No|Yes|
|Guangxi Chain|||||assurance|2016.12.1|||
|Co.,Ltd|||||||||
|Sinopharm Holding|||||||||
||||||General|2016.3.1-|||
|Guoda Pharmacy|2016-12-30|2,000|2016-03-01|1,996|||No|Yes|
||||||assurance|2017.2.1|||
|Guangdong Co.,Ltd|||||||||
|Tianjin Guoda|||||||||
||||||General|2016.4.1-|||
|Pharmacy Chain|2016-12-30|1,000|2016-04-01|555|||No|Yes|
||||||assurance|2017.3.1|||
|Co.,Ltd|||||||||
|Sinopharm Holding|||||||||
|Guoda Pharmacy|||||General|2016.9.1-|||
||2016-12-30|1,000|2016-09-01|512|||No|Yes|
|Yangzhou Dadesheng|||||assurance|2017.9.1|||
|Chain Co.,Ltd|||||||||
|Shanxi Tongfeng|||||General|2016.11.1-|||
||2016-12-30|2,100|2016-11-01|1,800|||No|Yes|
|Logistics Co., Ltd.|||||assurance|2017.11.1|||
|||||Total amount of actual|||||
|Total amount of approving|||||||||
|||||occurred guarantee for|||||
|guarantee for subsidiaries in report||76,940||||50,682|||
|||||subsidiaries in report period|||||
|period (C1)|||||||||
|||||(C2)|||||

|||||
|-|-|-|-|
|||Total balance of actual||
|Total amount of approved||||
|||guarantee for subsidiaries at||
|guarantee for subsidiaries at the|76,940||48,570|
|||the end of reporting period||
|end of reporting period (C3)||||
|||(C4)||
|Total amount of guarantee of the Company( total of three abovementioned guarantee)||||
|Total amount of approving||Total amount of actual||
|guarantee in report period|730,940|occurred guarantee in report|1,138,301.35|
|(A1+B1+C1)||period (A2+B2+C2)||
|Total amount of approved||Total balance of actual||
|guarantee at the end of report|766,940|guarantee at the end of|352,764.7|
|period (A3+B3+C3)||report period (A4+B4+C4)||
|The proportion of the total amount of actually guarantee in the net||||
|||41.75%||
|assets of the Company (that is A4+ B4+C4)||||
|Including:||||

Note:
Before deliverydate of the material asset reorganization, Guoda Pharmacy and its subordinate subsidiary entered into relevant guarantee agreement (Sinopharm Holding provide a guaranty) before the reorganizataion. After delivery date, as the “Adjustment on General Credit Limit Application to the Bank for year of 2016 and Guarantee Arrangement” was deliberated and approved by the 20th session of 7th BOD of Sinopharm Accord held on 29 December 2016 and First Extraordinary Shareholders General Meeting of Sinopharm Accord for year of 2017 dated 18 January 2017, Sinopharm Accord act as the guarantor for Guoda Pharmacy and its subsidiary to re- signing relevant guarantee agreement. Found more in the “Sinopharm Accord: Notice of Adjustment on General Credit Limit Application to the Bank for year of 2016 and Guarantee Arrangement” (Notice No.:2016-96) released on 30 December 2016 and “Sinopharm Accord: Resolution Notice of First Extraordinary Shareholders General Meeting for year of 2017” (Notice No.:2017-05) dated 18 January 2017 published on Juchao website
(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 of targeted poverty alleviation
□ Applicable√ Not applicable
2. Execution of other social responsibility
“Social Responsibility Report of Sinopharm Accord in 2016” can be seen in Juchao website dated 19 April 2017 (HTTP://WWW.CNINFO.COM.CN)
Listed company and its subsidiary belongs to the key pollution enterprise listed by Department of Environmental Protection No
Whether the social responsibility report released
√Yes□ No
|||||||
|-|-|-|-|-|-|
|CSR report||||||
||||Whether containedthe corporategovernanceinformation|Disclosure standards||
||Whether contained|Whether contained||||
|Nature of the||||||
||the environment|the social||||
|corporate||||Domestic standards|Foreign standards|
||information|information||||
|State-owned||||||
||Yes|Yes|Yes|Yes||
|enterprise||||||

Note
|||
|-|-|
|1. Whether the company has the EnvironmentManagement System Certification (ISO14001)||
||Yes|
|2. Amount the company annually invested and paid forenvironmental protection (Yuan)||
||328.98|
|3. The company’s emission reduction performance ofwaste gas, waste water, and waste residue|According to the group's energy-saving and environmental protection|
||objectives and requirements, establish the industry environmental|
||protection and energy saving working group, supervise and urge|

|||
|-|-|
||enterprises to implement the policies and guidelines, laws and regulations|
||relevant to environmental protection and energy saving issued by the state|
||and superior companies; at the same time, actively implement the|
||technology improvement for environmental protection and energy saving,|
||continue to upgrade and optimize the sewage treatment system according|
||to the changes in production capacity, and hand over to the professional|
||environmental protection company for operation and maintenance, the|
||daily operation process is normal, no operational accident occurs. In|
||addition, strictly classify, unify to collect and hand over the wastes|
||generated in the production process to the qualified professional|
||companies for treatment as required. Through the above series of|
||measures, ensure that the waste disposal of enterprises’ three wastes is|
||legal and environmentally friendly, and obtain the government's approval|
||and recognition. Among which, Zhijun Guanlan sewage treatment|
||upgrade and renovation project declares the cyclic economy, and energy-|
||saving and emission reduction special funds of Shenzhen City, and gains|
||subsidy of 1.22 million Yuan, and has passed the energy management|
||system certification in 2016.|
|4. Investment the company made for enhancing the||
|employees’ individual knowledge and skills so as to|659|
|improve employees’ career development ability (Yuan)||
|5. Amount of the company’s social charitable donations||
|(funds, goods and materials, free professional services)|70|
|(Yuan)||

XIX. Explanation on other significant events
√Applicable□ Not applicable
During the Period, relevant progress with material asset reorganization concerned has promoted in a steady way: the “Plan of Sinopharm Accord Purchasing Assets and Raising Supporting Funds and Related Transactions by Asset Sale, Stock Issuance and Cash Payment” was published respectively on 10 March 2016 and 25 March, and respectively released the “Report of Purchasing Assets and Raising Supporting Funds and Related Transactions by Asset Sale, Stock Issuance and Cash Payment (draft)” on 31 May 2016 and on 14 June; on 28 September 2016, we released the “Official Reply on Sinopharm Accord Purchasing Assets and Raising Supporting Funds and Related Transactions by Asset Sale, Stock Issuance and Cash Payment from CSRC” and “Report of Purchasing Assets and Raising Supporting Funds and Related Transactions by Asset Sale, Stock Issuance and Cash Payment (Revised)”; and released the “Sinopharm Accord: Notice of the TargetAssets’ Ownership Transfer for Purchasing Assets and Raising Supporting Funds and Related Transactions by Asset Sale, Stock Issuance and Cash Payment” on 13 December 2016. Till end of the Report released, target assets in the material asset reorganization have completed
transfer of ownership.
XX. Significant event of subsidiary of the Company
□ Applicable√ Not applicable
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|||||||
|||Proporti||Bonus|tion of||Subtota||Proportio|
||Amount||shares|||Others||Amount||
|||on||shares|public||l||n|
||||issued|||||||
||||||reserve|||||
|I. Restricted shares|74,484,531|20.54%||||||74,484,531|20.54%|
|2. State-owned legal person’s||||||||||
||74,482,543|20.54%||||||74,482,543|20.54%|
|shares||||||||||
|3. Other domestic||||||||||
||1,988|0.00%||||||1,988|0.00%|
|shareholding||||||||||
|Including: Domestic nature||||||||||
||1,988|0.00%||||||1,988|0.00%|
|person shares||||||||||
|II. Unrestricted shares|288,147,412|79.46%||||||288,147,412|79.46%|
|1. RMB Ordinary shares|233,261,812|64.32%||||||233,261,812|64.32%|
|2. Domestically listed foreign||||||||||
||54,885,600|15.14%||||||54,885,600|15.14%|
|shares||||||||||
|III. Total shares|362,631,943|100.00%||||||362,631,943|100.00%|

 Reasons for share changed
□ Applicable√ Not applicable
Approval of share changed
□ Applicable√ Not applicable
Ownership transfer of share changes
□ 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 or need to disclosed under requirement from security regulators
√Applicable□ Not applicable
Numbers of private placement for purchasing assets with shares issue in material asset reorganization amounting to 65,495,040 shares (circulated shares with restriction condition), the stocks have listed on 5 January 2017. after shares increased for listing, total shares of the Company comes to 428,126,983 shares.
2. Changes of restricted shares
□ Applicable√ Not applicable
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. Existing 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 common||Total preference||Total preference||
|Total common||||||||
|||stock||shareholders with||shareholders||
|stock|13,506||11,789||0||0|
|||shareholders at||voting rights||with voting||
|shareholders in||||||||
|||end of last month||recovered at end of||rights recovered||

|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|reporting||before annual||||reporting period (if||||at end of last||
|period-end||report disclosed||||applicable) (found||||month before||
|||||||in note8)||||annual report||
|||||||||||disclosed (if||
|||||||||||applicable)||
|||||||||||(found in note8)||
|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||||||||
|SinopharmHolding Co., Ltd.|State-ownedCorporation||51.00%|184,942,291|||74,482,543|110,459,748||||
|HTHK/CMGFSGUFP-CMGFIRST STATECHINA GROWTHFD|ForeignCorporation||2.28%|8,255,056||||||||
|TARGET VALUEFUND|ForeignCorporation||1.32%|4,791,914||||||||
|GUOTAI JUNANSECURITIES(HONGKONG)LIMITED|ForeignCorporation||1.25%|4,526,392||||||||
|China Securities|State-ownedCorporation||1.24%|4,495,815||||||||
|China LifeInsurance Co., Ltd.– tradition –generalinsurance products-005L-CT001 Shen|Domestic nonstate-ownedCorporation||1.16%|4,216,998||||||||
|CITIC SecuritiesCo., Ltd.|Domestic nonstate-ownedCorporation||1.16%|4,212,630||||||||
|New China LifeInsurance Co., Ltd.– Bonus –Individual bonuses- -018L-FH002Shen|Domestic nonstate-ownedCorporation||1.16%|4,199,772||||||||

|||||||
|-|-|-|-|-|-|
|VALUEPARTNERSCLASSIC FUND|ForeignCorporation|1.05%|3,808,966|||
|Central Huijin|State-ownedCorporation|1.05%|3,804,400|||
|||It is unknown that there exists no associated relationship or belongs to the consistent||||
|Explanation on associated relationship||||||
|||actionist among the other tradable shareholders regulated by the Management Measure of||||
|among the aforesaid shareholders||||||
|||Information Disclosure on Change of Shareholding for Listed Companies.||||
|Particular about top ten shareholders with un-restrict shares held||||||
|||||Type of shares||
|Shareholders’ name||Amount of un-restrict shares held at Period-end||||
|||||Type|Amount|
|Sinopharm Holding Co., Ltd.||110,459,748||RMB ordinary||
||||||110,459,748|
|||||shares||
|HTHK/CMG FSGUFP-CMG FIRSTSTATE CHINA GROWTH FD||8,255,056||Domestic listed||
||||||8,255,056|
|||||foreign shares||
|TARGET VALUE FUND||4,791,914||Domestic listed||
||||||4,791,914|
|||||foreign shares||
|GUOTAI JUNANSECURITIES(HONGKONG)LIMITED||4,526,392||||
|||||Domestic listed||
||||||4,526,392|
|||||foreign shares||
|China Securities Finance Co., Ltd.||4,495,815||RMB ordinary||
||||||4,495,815|
|||||shares||
|China Life Insurance Co., Ltd. –tradition –general insurance products -005L-CT001 Shen||4,216,998||||
|||||RMB ordinary||
||||||4,216,998|
|||||shares||
|CITIC Securities Co., Ltd.||4,212,630||RMB ordinary||
||||||4,212,630|
|||||shares||
|New China Life Insurance Co., Ltd. –Bonus – Individual bonuses - -018L-FH002 Shen||4,199,772||||
|||||RMB ordinary||
||||||4,199,772|
|||||shares||
|VALUE PARTNERS CLASSICFUND||3,808,966||Domestic listed||
||||||3,808,966|
|||||foreign shares||
|Central Huijin Investment Ltd.||3,804,400||RMB ordinary||
|||||shares||
|Expiation on associated relationship or||||||
|consistent actors within the top 10 un-||It is unknown that there exists no associated relationship or belongs to the consistent||||
|restrict shareholders and between top||actionist among the other tradable shareholders regulated by the Management Measure of||||
|10 un-restrict shareholders and top 10||Information Disclosure on Change of Shareholding for Listed Companies.||||
|shareholders||||||

Whether top ten common stock shareholders or top ten common stock shareholders with un-restrict shares held have a buy-back
agreement dealing in reporting period
□Yes√ No
The top ten common stock shareholders or top ten common stock shareholders with un-restrict shares held of the Company have no buy-back agreement dealing in reporting period.
2. Controlling shareholder of the Company
Nature of controlling shareholders: central state-owned holding
Type of controlling shareholders: legal person
||||||
|-|-|-|-|-|
||Legal||||
|Controlling|person/person||Organization||
|||Date of foundation||Main operation business|
|shareholders|in charge of||code||
||the unit||||
|||||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 & dressings,|
|Sinopharm Holding|||||
||Li Zhiming|2003-01-08|74618434-4|medical polymer materials and products, categories II:|
|Co., Ltd.|||||
|||||medical X-ray ancillary equipment and components; food|
|||||marketing management (non-physical way), and domestic|
|||||trade (other than special licensing), logistics and other|
|||||consulting services, cosmetics, stationeries and related|
|||||consulting services, operating various types of goods and|
|||||import and export of technology (not attached directory|
|||||of import and export commodities), but excluded the|
|||||import and export of goods and technology the State|
|||||limits or prohibit the company. [In right of exequatur to|
|||||run if refers to permission operation].|
|Equity of other|||||
|domestic/oversea|||||
|listed company|||||
|control by|Sinopharm Group Co., Ltd. hold 44.01 percent equity of China National Medicines Corporation Ltd (Stock||||
|controlling|code: 600511) up to the end of Period.||||
|shareholder as well|||||
|as stock-joint in|||||
|report period|||||

Changes of controlling shareholders in reporting period
□ Applicable√ Not applicable
The Company had no changes of controlling shareholders in reporting period
3. Actual controller of the Company
Nature of actual controller: central state-owned assets management
Type of actual controller: legal person
||||||||||
|-|-|-|-|-|-|-|-|-|
||Legal||||||||
|Actual controlling|person/person in|Date of|||Organizatio||||
|||||||Main operation business|||
|shareholders|charge of the|foundation|||n code||||
||unit||||||||
|||||||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|||
|China National||||||May 2020); mandatory for pharmaceutical enterprise, asset|||
|Pharmaceutical Group|She Lulin|198-03-26|||10000588-8|reorganization; consulting service of medicine industrial|||
|Corporation||||||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|||Name of listed||Total shareholders(10 thousandshares)|Proportion of shares held||
|||||company with|||||
|||||shares held|||||
||Sinopharm Group|||Jianmin Group||132.35||0.86%|
||Sinopharm Group|||Sinopharm||272.84|0.10%||
|Equity of|||||||||
|||||Holding|||||
|domestic/oversea listed|Sinopharm Holding||SinopharmHolding|||157,155.60|56.79%||
|company control by|Industrial Investment||||||||
|actual controller in|Co., Ltd.||||||||
|report period|Sinopharm Holding|||Sinopharm||21,070.15||44.01%|
||Sinopharm Holding|||Sinopharm||18,494.23|51%||
|||||Accord|||||
||Sinopharm|||JLPC||321.93||2.12%|
||Shanghai Institute of|||Modern||11,975.63|41.62%||
||Pharmaceutical Industry|||Pharmaceutical|||||

||||||
|-|-|-|-|-|
|Chinese Medicine||Hengrui|10,621.86|4.52%|
|Industry Co., Ltd.||Medicine|||
|Biosino||Tiantan|27,472.50|53.30%|
|||Biological|||
|Sinopharm Group H.K.|China TCM||161,431.36|36.43%|
|Co., Ltd.|||||

The State-owned Assets Supervision& Administration Commission of the State Council
100%
National Council for Social China National Pharmaceutical
Shanghai Fosun Pharmaceutical Security Fund&public Group Corporation
(Group) Co., Ltd. shareholder
49% 51% 43.11%
Sinopharm Industry
Investment Co., Ltd.
0.10%
56.79%
Sinopharm Holding Co., Ltd.
51%
China National Accord Medicines Corporation Ltd.
Actual controller controlling the Company by entrust or other assets management
□ Applicable√ Not applicable
4. Particulars about other legal person shareholders with over10% 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
Section VII. Preferred Stock
□ Applicable√ Not applicable
The Company had no preferred stock in the Period.
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|
|||||||||of shares|of shares|||
|||||||End date|held at|||Other|held at|
|||Working|||Start dated of office|||increased|decreased|||
||Title||Sex|Age||of office|period-|||changes|period-|
|Name||status|||term|||in this|in this|||
|||||||term|begin|||(share)|end|
|||||||||period|period|||
||||||||(Share)||||(Share)|
|||||||||(Share)|(Share)|||
|Chen||||||||||||
||Secretary of|Currently||||||||||
|Changbi|||M|48|2015-01-13||2,651|0|0||2,651|
||the Board|in office||||||||||
|ng||||||||||||
|Total|--|--|--|--|--|--|2,651|0|0||2,651|

 II. Changes of directors, supervisors and senior executives
||||||
|-|-|-|-|-|
|Name|Title|Type|Date|Reasons|
|||Appoint||Mr. Yan Zhigang resign from director and specialized committee of|
|Yan||ment||the Company and step down from GM of the Company; BOD|
||Deputy GM||2016-03-09||
|Zhigang||and||agreed to appointed Mr. Yan Zhigang as deputy GM of the|
|||removal||Company.|
|||Appoint||According to work arrangement, BOD appointed Mr. Lin Zhaoxiong|
|Lin|||||
|||ment||as the GM (legal representative)of the Company; and nominated as|
|Zhaoxio|GM||2016-03-09||
|||and||additional director candidate by the recommendation from|
|ng|||||
|||removal||Sinopharm Holding-controlling shareholders of the Company|
|||Appoint|||
|Lin|||||
|||ment||Mr. Lin ZhaoXiong elected as director of the 7th BOD of the|
|Zhaoxio|Director||2016-04-06||
|||and||Company in 2nd extraordinary shareholders general meeting of 2016|
|ng|||||
|||removal|||
|Yan||Dismiss|||
||N/A||2016-05-23|Resign from deputy GM due to individual reasons.|
|Zhigang||al|||
|Li||Office||Li Zhiming step down from the chairman of 7th BOD of Sinopharm|
||Director||2016-08-16||
|Zhiming||leaving||Accord by the recommendation from controlling shareholder|
|||Appoint|||
|Ma||ment||Ma Wanjun serves as Chairman of 7th BOD of the Sinopharm|
||Chairman||2016-08-16||
|Wanjun||and||Accord by the recommendation from controlling shareholder|
|||removal|||
|Feng|N/A|Office|2016-08-12|Feng Yifeng request to resign from chairman of supervisory|

||||||
|-|-|-|-|-|
|Yifeng||leaving||committee of 7th supervisor committee of the Company due to|
|||||individual reasons|
|Guang||Office||Guang Xiaohui request to resign from supervisor of the 7th|
||N/A||2016-08-16||
|Xiaohui||leaving||supervisory committee of the Company due to career moves|
|||Appoint|||
|||||Wu Yijian elected as Supervisor of the 7th Supervisor Committee of|
|Wu||ment|||
||Supervisor||2016-09-02|the Company in 4th extraordinary shareholders general meeting of|
|Yijian||and|||
|||||2016|
|||removal|||
|||Appoint|||
|||||Liu Jingyun elected as Supervisor of the 7th Supervisor Committee|
|Liu||ment|||
||Supervisor||2016-09-02|of the Company in 4th extraordinary shareholders general meeting of|
|Jingyun||and|||
|||||2016|
|||removal|||
|||Appoint|||
||Chairman of|||Mr. Wu Yijian elected as Chairman of 7th supervisory committee of|
|Wu||ment|||
||supervisory||2016-09-27|the Company in 2nd extraordinary meeting of 7th supervisory|
|Yijian||and|||
||committee|||committee|
|||removal|||
|||||Deng Baojun resign from former deputy GM of the Company due to|
|Deng||Dismiss|||
||N/A||2016-11-17|the work adjustment after integration of China National|
|Baojun||al|||
|||||Pharmaceutical Industry Corporation Ltd.|
|||||Cui Dieling resign from former director, deputy chairman and|
|||||specialized committee due to the work adjustment after integration|
|Cui||Office||of China National Pharmaceutical Industry Corporation Ltd;|
||N/A||2016-12-29||
|Dieling||leaving||nominated Mr. Liu Yong as additional director candidate by|
|||||recommendation from Sinopharm Holding-controlling shareholder|
|||||of the Company|
|||Appoint|||
|Liu||ment||Liu Yong elected as director of 7th BOD of the Company in 1st|
||Director||2017-01-18||
|Yong||and||extraordinary shareholders general meeting of 2017|
|||removal|||
|||Office|||
|||leaving|||
|||||Resign from Independent Director of the Company due to term of|
|He Zhiyi|N/A|while|2017-02-14||
|||||office has run out|
|||term is|||
|||due|||
|||Appoint|||
|Chen|Independent|ment||Elected as Independent Director of 7th BOD of the Company in 2nd|
||||2017-03-14||
|Honghui|Director|and||extraordinary shareholders general meeting of 2017|
|||removal|||
|Pan||Dismiss|||
||N/A||2017-02-22|Resign from Deputy GM of the Company due to individual reasons|
|Rangren||al|||
|Wei|Director|Office|2017-03-25|Not in post of director of the Company for statutory retirement age|

||||
|-|-|-|
|Yulin|leaving|come|

III. Post-holding
Professional background, major working experience and present main responsibilities in Company of directors, supervisors and senior executive at the present in latest five years
1. Members of the Board
Chairman-- Mr. Ma Wanjun, EMBA. He served as the follow post in latest 5 years: deputy GM of Operation Center of Sinopharm Group Co., Ltd. from December 2009 to September 2010; Director of Sinopharm Holding Shenyang Co., Ltd from January 2010 to November 2011; he serves as Chairman of Guangdong Dong Fang Uptodate& Special Medicines Co., Ltd. since March 2010; Director of Sinopharm Holding Suzhou Co., Ltd from May 2010 to November 2011; Chairman of Sinopharm Holding Jiangsu Co., Ltd from May 2010 to November 2011; Director of Wenzhou Biomedicine-Appliances Supplies Co., Ltd. from July 2010 to November 2011; deputy President of Sinopharm Group Co., Ltd. since September 2010; Chairman of Sinopharm Holding Henan Co., Ltd from October 2010 to January 2013; Director of Sinopharm Holding Changzhou Co., Ltd from December 2010 to November 2011; Director of Shanghai Bionuo Enterprise Management Co., Ltd. from December 2010 to November 2011; general counsel of Sinopharm Group Co., Ltd. from May 2011 to October 2012; he serves as Director of Sinopharm Le-Ren-Tang Medicine Co., Ltd. since April 2011; Director of Sinopharm Group Shaanxi Co., Ltd. from April 2011 to September 2011; Director of China National Medicines Corporation Ltd since October 2011; Director of Yujia Medicine Service Co., Ltd. since November 2011; Chairman of Sinopharm Health Industry (Shanghai) Co., Ltd. since November 2011; Director of 6th and 7th Session of the Board for the Company since March 2011; Chairman of Sinopharm Holding Health Development (Shanghai ) Co., ltd since May 2012; Chairman of Sinopharm Holding Fujian Co., Ltd and Sinopharm Holding Fuzhou Co., Ltd since August 2012; he serves as executive Director of Sinopharm Holding Henan Co., Ltd. since January 2013 and executive Director of Shanghai Tongyu Information Technology Co., Ltd. since April 2013 and serves as chairman of the Company since August 2016.
Director -- Mr. Li Zhiming, college graduation, a senior economist, and he served as the follow post in latest 5 years: chairman, GM and party secretary of Sinopharm Group Xinjiang Pharmaceutical Co., Ltd. from February 2009 to May 2013; deputy president of Sinopharm Group Co., Ltd. from May 2020 to November 2013; he hold a concurrent post of General Counsel of Sinopharm Group Co., Ltd. from October 2012 to January 2014; a deputy party secretary, discipline inspection commission secretary and labor union chairman of Sinopharm Group Co., Ltd. from November 2012 to November 2013; president of Sinopharm Group Co., Ltd. since November 2013; meanwhile, served as Chairman of China National Medicines Corporation Ltd from August 2010 to October 2011; chairman of Sinopharm Holding Tianjin Co., Ltd. from August 2010 to December 2013; chairman of Sinopharm Holding Heilongjiang Co., Ltd. from November 2010 to April 2013; chairman of Sinopharm Holding Shenyang Co., Ltd. from October 2011 to April 2013; chairman of Sinopharm Holding Jilin Co., Ltd. from October 2011 to April 2013;
chairman of Sinopharm Holding Inner Mongolia Co., Ltd. from March 2011 to December 2013; serves as chairman
of Sinopharm Holding Ningxia Co., Ltd. since June 2011; chairman of Sinopharm Holding Shaanxi Co., Ltd. since
October 2011; chairman of Sinopharm Holding Gansu Co., Ltd. since October 2011; he had a concurrent post of
chairman of Sinopharm Holding Shanxi Co., Ltd. from October 2011 to December 2013; serves as chairman of Sinopharm Holding Qinghai Co., Ltd. since October 2011; he took post of chairman of Sinopharm Holding Mudan River Co., Ltd. from October 2011 to April 2013; serves as chairman of Sinopharm Group Shanxi Co., Ltd. since March 2012; chairman and party secretary of Sinopharm Group Xinjiang Pharmaceutical Co., Ltd. since May 2013; president of Sinopharm Group Co., Ltd. since November 2013; Director of Sinopharm Group Hong Kong Co., Ltd. since January 2014 and chairman of China National Medicines Corporation Ltd since February 2014; he serves as executive director of Sinopharm Holding Sub Marketing Center Co., Ltd. since January 2014 and serves as chairman of 6th and 7th session of the Board for the Company since February 2014 and serves as director of the Company since August 2016.
Director -- Mr. Jiang Xiuchang, a university background, senior economists and senior accountant. He served as the follow post in latest 5 years: CFO of Sinopharm Group Co., Ltd. since May 2010; he acts as deputy President of Sinopharm Group Co., Ltd. since July 2013 and hold concurrent post of Supervisor of Sinopharm Holding Guoda Pharmacy Co., Ltd since June 2010; Supervisor of Yujia Medicine Co., Ltd. since September 2010; Director of China National Medicines Corporation Ltd since February 2011; Director of Sinopharm Le-Ren-Tang Medicine Co., Ltd since April 2011; Director of Sinopharm Holding H.K. Co., Ltd since November 2011; Director of Sinopharm Group Financial Co., Ltd since November 2011; Director of Sinopharm Group Shaanxi Co., Ltd. from April 2011 to September 2011; Supervisor of Sinopharm Sub Marketing Center Co., Ltd. since April 2011; Supervisor of Sinopharm Holding Beijing Co., Ltd. and Director of Sinopharm Group Financial Co., Ltd since November 2011; he serves as Director of 6th and 7th session of the Board for the Company since March 2011, Chairman of Sinopharm Holding Jiangxi Co., Ltd. since June 2013; Chairman of Sinopharm Holding Shanxi Co., Ltd., deputy Chairman of Sinopharm Group Shanxi Co., Ltd., Chairman of Sinopharm Holding Tianjin Co., Ltd. and Chairman of Sinopharm Holding Inner Mongolia Co., Ltd. since December 2013.
Director -- Mr. Liu Yong, a doctor degree, pharmacist-in-charge and licensed pharmacist. He successively acting as deputy GM of marketing department in China National Pharmaceutical Group Corporation since July 1999, deputy GM of Shanghai Guoda Drugstore Chain Co., Ltd., the GM and secretary of the party committee and chairman in Sinopharm Holding Shengyang Co., Ltd., chairman of Sinopharm Holding Shandong Co., Ltd.; Chairman of Sinopharm Holding Henan Co., Ltd., executive director of Shanghai Huyong Medicine Co., Ltd., executive director of Sinopharm Group Medicine Logistic Co., Ltd., the chairman of Sinopharm Group Chemical Reagent Co., Ltd. and Sinopharm Group Shanghai Likang Pharmaceutical Co., Ltd.; Chairman of Sinopharm Holding Anhui Co., Ltd., GM, secretary of the party committee and Chairman of Sinopharm Holding Beijing Co.,Ltd, Chairman of Sinopharm Holding Jiling Co., Ltd., Chairman of Sinopharm Holding Beijing Kangchen Bio- Pharmaceutical Co., Ltd., Director of Sinopharm Group Shanxi Co., Ltd., Director and Chairman of the China National Medicines Corporation Ltd., Chairman of Sinopharm Holding Chongqing Co., Ltd., Chairman of Sinopharm Holding Hunan Co., Ltd., Chairman of Sinopharm Holding Chongqing Taimin Pharmaceutical Co., Ltd., Chairman of Sinopharm Holding Xinan Co., Ltd., GM of Beijing Sinopharm Tianyuan Property Management Co., Ltd. and Director of Sichuan Medicine Co., Ltd.; now he acting as Director of China National Medicines
Corporation Ltd., Chairman of Sinopharm Holding Beijing Tianxing Puxin Biological Medical Co.,Ltd, Chairman of Sinopharm Holding Guoda Drugstore Co., Ltd., Chairman of Sinopharm Holding Beijing Huahong Biological Medicine Co.Ltd and Sinopharm Holding Guizhou Co., Ltd., Chairman of Sinopharm Holding Yunnan Co., Ltd., Director of Sinopharm Guohua Network Technology Co., Ltd. and Chairman of Sinopharm Health On-line Co., Ltd.; he serves as Deputy president of Sinopharm Group Co., Ltd. since January 2009; General counsel of Sinopharm Group Co., Ltd. since January 2014, the Secretary of the Board of Sinopharm Group Co., Ltd.since October 2016 and acting as director of the 7th BOD of the Company since January 2017.
Director -- Mr. Lin Zhaoxiong, executive MBA and pharmacist in-charge. He worked in China Medicine (Group) Guangzhou Company from January 1999 to December 2003, and successively served as deputy manager and manager of the pharmaceutical department, manager in pharmaceutical company and chief in operation management department; served as Deputy GM of Sinopharm Holding Guangzhou Co., Ltd. from January 2004 to December 2006; serves as GM of Sinopharm Holding Guangzhou Co., Ltd. since December 2006 and deputy GM of the Company from December 2008 to 9 March 2016; he serves as GM of the Company since 9 March 2016 and director of 7th BOD of the Company since April 2016.
Independent Director -- Mr.Xiong Chuxiong, a doctor degree, professor and a CPA. He graduated from Accounting Dept. of Southwestern University of Finance& Economics and Accounting Dept. of Xiamen University successively. After obtained the PhD. Economics in Xiamen University in 1992, he was assigned to teach in accounting majors of Shenzhen University. He used to be a visiting scholar in University of Manchester, U.K. currently; he works as professor in Shenzhen University. He serves as Independent Director of the 6th and 7th Session of the Board for the Company since April 2011.
Independent Director -- Mr. Xiao Shengfang, civil and commercial law graduate in Renmin University of China, MBA of Jinan University, and lawyer. He acts as director of Sino-Win Law Firm, whose social functions include vice director of Labor and Social Security Law Committee of All China Lawyers Association, president of Guangdong Lawyers Association, legal adviser of Guangzhou MunicpalPeople’s Government, counselor of CPPCC Guangzhou Committee, legal consultant of thePeople’s Government of Guangzhou Baiyun District, adjunct professor at Lawyer College of Renmin University of China, adjunct professor at School of Law of South China Normal University, executive vice president of MBA sodality in Ji'nan University, arbitrator at South China International Economic and Trade Arbitration Commission, arbitrator at Guangzhou Arbitration Commission, and mediation expert at South China International Economic and Trade Arbitration Commission. He has acted as the independent director for theCompany’s sixth and seventh board of director since April 2011.
Independent Director -- Mr. Chen Honghui, professor of Lingnan (University) College of Sun Yat-Sen University, a doctoral supervisor of management. He worked in school of management, Wuhan University of Science& Technology from July 1993 to June 2003 and successively acted as a tutor and instructor; he works in Lingnan (University) College of Sun Yat-Sen University since July 2003 and also served as deputy professor and professor; vice president of the Lingnan (University) College of Sun Yat-Sen University from 2007 to 2012; the director of department of business administration in Lingnan College since 2008 and deputy chairman of the GDISR. he serves as independent director of Cabbeen Fashion Co., Ltd. since October 2013 and Guangzhou Grandbuy Co., Ltd. since
September 2016. Serves as independent director of 7th BOD of the Company since March 2017.
2. Members of supervisors:
Chairman of supervisory committee-- Mr. Wu Yijian, a postgraduate background. He currently serves as the assistant president of Shanghai Fosun Pharmaceutical Group Co., Ltd. and director of pharmaceutical business management committee. He worked in Sanjiu Enterprise Group since July 1993, and successively served as the sales director of Sanjiu Medical Trading Co., Ltd., COO of Sanjiu Medical Chain Co., Ltd. and deputy GM of Shanghai Sanjiu Technology Development Co., Ltd. He also works in Fosun Pharma Group since June 2004 and successively took post of Gm of the Shanghai Fosun Pharmaceutical Investment Co., Ltd., GM of Shanghai Fosun Pharmaceutical Co., Ltd. and GM of Shanghai Fumei Drugstore Co., Ltd. Mr. Wu served as deputy president of the Shanghai Yuyuan Tourist Mart Co., Ltd. from 2014 to 2015. now he serves as the chairman of supervisory committee of the Company since September 2016.
Supervisor -- Ms. Liu Jingyun, postgraduate background. Currently she serves as the director of financial and asset management 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 and Director of ministry of finance and credit management. She serves as supervisor of the 7th supervisory committee of the Company since September 2016.
Staff Supervisor -- Mr. Wang Huaiqin, junior college background, a polical engineer and assistant accountant. He served as first union chairman from September 2005 to March 2009; and serves as member of the party committee, deputy secretary and union chairman of the Company since September 2008; and serves as the staff supervisor of 5th, 6th and 7th supervisory of the Company since September 2007.
3. Senior executive
Deputy GM-- Mr. Lin Zhaoxiong, found in aforesaid previous work experience
Deputy GM-- Mr. Lin Min, senior MBA, Pharmaceutical Engineer, Licensed Pharmacist, worked in China National Pharmaceutical Group Guangzhou Corporation with successively taking the posts of assistant to manager, deputy general manger of Pharmacy Department and deputy general manger of purchasing in Pharmaceutical Company from Jan. 2001 to Nov. 2003; supervisor of Guangzhou pharmacy sales of Sinopharm Holding Guangzhou Co., Ltd from Nov. 2003 to Jan. 2005; general manager of Sinopharm Holding Liuzhou Co., Ltd from March 2006 to Nov. 2007; took deputy general manager of Sinopharm Holding Guangzhou Co., Ltd from Jan. 2005 to Dec. 2008; serves as deputy GM of the Company since December 2008.
Deputy GM-- Mr. Lin Xinyang, MBA, Licensed Pharmacist, he took the turns of deputy GM of Nanfang Pharm. Co., deputy GM of China Medicine Group (Guangzhou) Company Yuexing Company, general supervisor of PD of Sinopharm Holding Guangzhou Company successively since January 1996; took the post of deputy GM of Sinopharm Holding Guangzhou Company from Jan. to Dec. 2004; serves as deputy GM of the Company since January 2005.
CFO-- Mr. Wei Pingxiao, MBA, an accountant, took the turns of Financial department of State-owned Beijing Electronic Tube Plant, Modern Electronic Shenzhen Industrial Company, China Electronic Industrial Headquarter
since August 1985; and took the turns of deputy section chief of financial department of China Electronic Information Industry Group, financial director of AMOI, section chief of planning financial department of China Electronic Finance Leasing Company, Deputy GM of AMOI Beijing branch, financial charger of AMOI and director of its subsidiary since April 1993; and he hold the post of CFO of the Company since December 2004. Secretary of the Board-- Mr. Chen Changbing, Master Degree. He serves as secretary of the Board since December 2000; and serves as assistant GM and Chief of planning investment management department since November 2015 Post-holding inshareholder’s unit
√ Applicable□ Not applicable
|||||||
|-|-|-|-|-|-|
||||||Received|
|||||End|remunerati|
||||Start dated of office|date of|on from|
|Name|Name of shareholder’s unit|Position in shareholder’s unit n||||
||||term|office|shareholde|
|||||term|r’s unit|
||||||(Y/N)|
|Ma||Deputy president, General counsel||||
||Sinopharm Group Co., Ltd.||2011-05-01||Y|
|Wanjun||Secretary of the Board||||
|||Chairman, Executive Director,||||
|Wei Yulin|Sinopharm Group Co., Ltd.||2013-11-01||Y|
|||secretary of the party committee||||
|Li||||||
||Sinopharm Group Co., Ltd.|President|2013-11-01||Y|
|Zhiming||||||
|Jiang||||||
||Sinopharm Group Co., Ltd.|CFO|2010-06-01||Y|
|Xiuchang||||||
|||Deputy president, Secretary of the||||
|Liu Yong|Sinopharm Group Co., Ltd.||2009-01-01||Y|
|||Board, General counsel||||
|Liu||Director of ministry of finance and||||
||Sinopharm Group Co., Ltd.||2003-11-1||Y|
|Jingyun||credit management||||

Post-holding in other unit
√ Applicable□ Not applicable
|||||||
|-|-|-|-|-|-|
||||||Received|
|||Position in|Start dated of office|End date of|remuneration|
|Name|Name of other units|||||
|||other unit n|term|office term|from other unit|
||||||(Y/N)|
||Guangdong Dong Fang Uptodate & Special|||||
|Ma Wanjun||Chairman|2010-03-01||N|
||Medicines Co. Ltd.|||||
|Ma Wanjun|Sinopharm Holding Henan Co., Ltd.|Chairman|2010-10-01||N|
|||Executive||||
|Ma Wanjun|Sinopharm Holding Henan Co., Ltd.||2013-01-01||N|
|||Director||||

||||||
|-|-|-|-|-|
|Ma Wanjun|Sinopharm Holding Changzhou Co., Ltd.|Director|2010-12-01|N|
|Ma Wanjun|Shanghai Bionuo Industrial Co., Ltd.|Director|2010-12-01|N|
||Sinopharm Le -Ren-Tang Medicine Co.,||||
|Ma Wanjun||Director|2011-04-01|N|
||Ltd.||||
|Ma Wanjun|Sinopharm Group Shanxi Co., Ltd.|Director|2011-04-01|N|
|Ma Wanjun|China National Medicines Corporation Ltd.|Director|2011-10-01|N|
|Ma Wanjun|Yujia Medical Service Co., Ltd.|Director|2011-11-01|N|
||Sinopharm Health Industry (Shanghai) Co.,||||
|Ma Wanjun||Chairman|2011-11-01|N|
||Ltd.||||
||Sinopharm Holding Health Development||||
|Ma Wanjun||Chairman|2012-05-01|N|
||(Shanghai) Co., Ltd.||||
|Ma Wanjun|Sinopharm Holding Fujian Co., Ltd.|Chairman|2012-08-01|N|
|Ma Wanjun|Sinopharm Holding Fuzhou Co., Ltd.|Chairman|2012-08-01|N|
|Wei Yulin|Sinopharm Holding Hong Kong Co.,Ltd|Chairman|2011-01-01|N|
||Sinopharm Group Chemical Reagent||||
|Wei Yulin||Chairman|2011-12-01|N|
||Co.,Ltd||||
||Sinopharm Le -Ren-Tang Medicine Co.,||||
|Wei Yulin||Chairman|2011-04-01|N|
||Ltd.||||
||Sinopharm Holding Guoda Drugstore Co.,||||
|Wei Yulin||Director|2012-08-01|N|
||Ltd.||||
||Sinopharm Xinjiang Pharmaceutical Co.,||||
|Li Zhiming||Chairman|2013-05-01|N|
||Ltd.||||
|Li Zhiming|Sinopharm Holding Ningxia Co., Ltd|Chairman|2011-06-01|N|
|Li Zhiming|Sinopharm Holding Shaanxi Co., Ltd|Chairman|2011-10-01|N|
|Li Zhiming|Sinopharm Holding Gangsu Co., Ltd|Chairman|2011-10-01|N|
|Li Zhiming|Sinopharm Holding Qinghai Co., Ltd|Chairman|2011-10-01|N|
|Li Zhiming|China National Medicines Corporation Ltd.|Chairman|2011-10-01|N|
|Li Zhiming|Sinopharm Holding Hong Kong Co.,Ltd|Director|2014-01-01|N|
||Sinopharm Holding Sub Marketing Center|Executive|||
|Li Zhiming|||2014-01-01|N|
||Co., Ltd.|Director|||
||Sinopharm Holding Guoda Drugstore Co.,||||
|Jiang Xiuchang||Supervisor|2010-06-01|N|
||Ltd.||||
|Jiang Xiuchang|Yujia Medical Co., Ltd.|Supervisor|2010-09-01|N|
|Jiang Xiuchang|China National Medicines Corporation Ltd.|Director|2011-02-01|N|
||Sinopharm Le -Ren-Tang Medicine Co.,||||
|Jiang Xiuchang||Director|2011-04-01|N|
||Ltd.||||

||||||
|-|-|-|-|-|
|Jiang Xiuchang|Sinopharm Holding Hong Kong Co.,Ltd|Director|2011-11-01|N|
|Jiang Xiuchang|Sinopharm Group Financial Co.,Ltd|Director|2011-11-01|N|
|Jiang Xiuchang|Sinopharm Group Shanxi Co., Ltd.|Director|2011-04-01|N|
||Sinopharm Holding Sub Marketing Center||||
|Jiang Xiuchang||Supervisor|2011-04-01|N|
||Co., Ltd.||||
|Jiang Xiuchang|Sinopharm Holding Beijing Co.,Ltd|Supervisor|2011-11-01|N|
|Liu Yong|Sinopharm Holding Beijing Co.,Ltd|Chairman|2010-08-02|N|
||Sinopharm Holding Beijing Kangchen Bio-||||
|Liu Yong||Chairman|2010-07-01|N|
||Pharmaceutical Co., Ltd.||||
|Liu Yong|China National Medicines Corporation Ltd.|Director|2014-01-01|N|
||Sinopharm Holding Beijing Tianxing Puxin||||
|Liu Yong||Chairman|2011-10-10|N|
||Biological Medical Co.,Ltd||||
||Sinopharm Holding Guoda Drugstore Co.,||||
|Liu Yong||Chairman|2011-11-01|N|
||Ltd.||||
||Sinopharm Holding Beijing Huahong||||
|Liu Yong||Chairman|2013-09-02|N|
||Biological Medicine Co.Ltd||||
|Liu Yong|Sinopharm Holding Guizhou Co., Ltd.|Chairman|2014-01-06|N|
|Liu Yong|Sinopharm Holding Yunnan Co., Ltd.|Chairman|2014-01-06|N|
||Sinopharm Guohua Network Technology||||
|Liu Yong||Director|2015-04-01|N|
||Co., Ltd.||||
|Liu Yong|Sinopharm Health On-line Co., Ltd.|Chairman|2015-07-02|N|

Punishment of securities regulatory authority in recent three years to thecompany’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 2016 annual performance appraisal (scheme) on management staff, paid annual salary remuneration according to the appraisal results. Remuneration and appraisal committee of the company's board of directors is responsible for the formulation and examination of salary plan and program as well as formulation and examination of salary plan and assessment standards of directors (not including the independent directors), supervisors and senior executives. They also
evaluate the performance assessment of directors, supervisors and senior officers in accordance with the assessment
criteria, compensation scheme.
(ii) Remuneration determining basis
The main principles of making standard of compensation are: (1) the company's overall business and the profit level; (2) the overall salary level and dynamic index over past years; (3) difference in position and duty; (4) relative importance and risks of position; (5) related post salary level in the same industry; (6) individual professional ability. (iii) Actual payment
Executives get monthly basic salary and annual salary after the issuance of annual examination.
Remuneration for directors, supervisors and senior executives in reporting period
In 10 thousand Yuan
||||||||
|-|-|-|-|-|-|-|
||||||Total|Received|
||||||remuneration|remuneration|
|||||Post-holding|||
|Name|Title|Sex|Age||before tax|from related party|
|||||status|||
||||||obtained from the|of the|
||||||Company|Company(Y/N)|
|||||Currently in|||
|Ma Wanjun|Chairman|M|47||0|Y|
|||||office|||
|||||Currently in|||
|Wei Yulin|Director|M|59||0|Y|
|||||office|||
|||||Currently in|||
|Li Zhiming|Director|M|53||0|Y|
|||||office|||
|||||Currently in|||
|Jiang Xiuchang|Director|M|53||0|Y|
|||||office|||
|||||Currently in|||
|Liu Yong|Director|M|47||0|Y|
|||||office|||
|Cui Dieling|Deputy Chairman|F|51|Office leaving|0|Y|
|||||Currently in|||
|Lin Zhaoxiong|Director, GM|M|49||184|N|
|||||office|||
|Yan Zhigang|Director, GM|M|57|Office leaving|65|N|
||Independent||||||
|He Zhiyi||M|61|Office leaving|8|N|
||Director||||||
||Independent|||Currently in|||
|Xiong Chuxiong||M|61||8|N|
||Director|||office|||
||Independent|||Currently in|||
|Xiao Shengfang||M|47||8|N|
||Director|||office|||
||Independent|||Currently in|||
|Chen Honghui||M|45||0|N|
||Director|||office|||
||Chairman of|||Currently in|||
|Wu Yijian||M|46||0|Y|
||supervisory|||office|||

||||||||
|-|-|-|-|-|-|-|
||committee||||||
|||||Currently in|||
|Liu Jingyun|Supervisor|F|40||0|Y|
|||||office|||
|||||Currently in|||
|Wang Huaiqin|Supervisor|M|59||63|N|
|||||office|||
|||||Currently in|||
|Lin Min|Deputy GM|M|52||162|N|
|||||office|||
|||||Currently in|||
|Lin Xinyang|Deputy GM|M|52||133|N|
|||||office|||
|Deng Baojun|Deputy GM|M|55|Office leaving|134|N|
|Pan Rangren|Deputy GM|M|52|Office leaving|133|N|
|||||Currently in|||
|Wei Pingxiao|CFO|M|53||133|N|
|||||office|||
||Secretary of the|||Currently in|||
|Chen Changbing||M|49||95|N|
||Board|||office|||
|Total|--|--|--|--|1,126|--|

 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)|95|
|The number of current employees of main subsidiaries (people)|21,097|
|Total number of current employees (people)|21,192|
|The total number of employees in payroll (people)|21,192|
|The total number of retired staff and workers that the parent company||
||1,836|
|and main subsidiaries need to bear the costs (people)||
|Professional composition||
|Category of professional composition|Number of professional composition (people)|
|Production staff|0|
|Salesman|16,534|
|Technical staff|0|
|Financial staff|540|
|Administrative staff|2,339|
|Logistics Staff|1,779|

|||
|-|-|
|Total|21,192|
|Education background||
|Category of education|Number (people)|
|Post-graduate qualification and above|125|
|Undergraduate|2,721|
|Junior college|7,377|
|Secondary technical school and below|10,969|
|Total|21,192|

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-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
Based on the company's strategic direction and combined with the training needs, the human resources department develops annual training plan and monthly implements in accordance with established plans. Develop the induction training to new employees, carry out the targeted job skills training to on-the-job staff, implement the leadership promotion projects to middle& senior management, establish the talent team adapting to theenterprises’ production and management development, and ensure the healthy and sustainable development of enterprises.
4. Labor outsourcing
√ Applicable□ Not applicable
|||
|-|-|
|Total number of working hours of labor outsourcing (Hour)|448,920|
|Total remuneration paid of labor outsourcing (RMB)|22,424,512.06|

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 forshareholders’ meeting, board and board of supervisors, working system of strategy committee, nomination committee, internal risk control and audit committee, remuneration and evaluation committee, general manager and secretary to board, corporate governance system regarding information disclosure, connected transactions, fund raising, performance of social responsibilities, inside information and informant management, investor relation management, engagement of accounting firm and prevention of occupation by major shareholders and connected parties of capital of listing companies are also established.
During the Reporting Period, the Article of Association has been revised according to regulatory requirements and governance needs. The effective implementation of corporate governance system ensures the effective performance of duties and responsibilities of respective committees, thereby facilitating the board of supervisors to play a supervisory role and offering help for the board to make scientific decisions.
Is there any difference between the actual condition of corporate governance and relevant regulations about corporate governance for listed company from CSRC?
□Yes√ No
There are no differences between the actual condition of corporate governance and relevant regulations about corporate governance for listed company from CSRC.
II. Independency of the Company relative to controllingshareholders’ in aspect of businesses, personnel, assets, organization and finance
The Company totally separates from the controlling shareholders in business, personnel, assets, institutions, financial and other aspects, with independent and complete self-management ability.
1. The business: the Company was independent from controlling shareholders, having a complete business system and self-managing ability; the company has independent procurement and sales system thus all procurement and sales of drugs and raw materials is in charge of the purchasing department and subordinate subsidiary, branch and production enterprises; production, supply, marketing and R& D separate from each other; the Company is a legal market person with independent operation.
2. Personnel: procedures of the controlling shareholder nominating directors and general and deputy general manager are legal; no intervene on the appointment and removal of personnel made by the board of directors andshareholders’ 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
|||||||
|-|-|-|-|-|-|
|||Nature of|||Work schedule|
||Name of controlling|||||
|Type||controlling|Reason|Solution measure|and follow-up|
||shareholder|||||
|||shareholder|||plan|
||||Distribution|||
||||subsidiary of|In March 2016, Sinopharm||
||||Sinopharm Holding|Holding issued a commitment||
||||established some|letter of avoiding horizontal||
||||social retail|competition with Sinopharm||
||||pharmacy, which|Accord, and promise to solve||
|Horizontal|||||Normally|
||Sinopharm Holding|SASAC|might has horizontal|the horizontal competition in||
|competition|||||performing|
||||competition with the|respect of pharmaceutical||
||||Guoda Drugstore,|retail business in an||
||||the subordinate|appropriate way within five||
||||enterprise of the|years since the date when||
||||listed company after|reorganization completed||
||||restructuring|||
||||Distribution|||
||||subsidiary of|In March 2016, Sinopharm||
||||Sinopharm Holding|Holding issued a commitment||
||||established some|letter of avoiding horizontal||
||||social retail|competition with Sinopharm||
||||pharmacy, which|Accord, and promise to solve||
|Horizontal|||||Normally|
||Sinopharm Group|SASAC|might has horizontal|the horizontal competition in||
|competition|||||performing|
||||competition with the|respect of pharmaceutical||
||||Guoda Drugstore,|retail business in an||
||||the subordinate|appropriate way within five||
||||enterprise of the|years since the date when||
||||listed company after|reorganization completed||
||||restructuring|||

IV. AGM (Annual General Meeting) and extraordinaryshareholders’ 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.com.c|
|First extraordinary||||||
||Extraordinary||||n) “Resolution Notice of|
|general meeting of||68.61%|2016-01-19|2016-01-20||
||general meeting||||First extraordinary|
|2016||||||
||||||general meeting of 2016”|
||||||No.: 2016-10|
||||||Juchao Website—|
|Second|||||(http://www.cninfo.com.c|
|extraordinary|Extraordinary||||n) “Resolution Notice of|
|||58.89%|2016-04-06|2016-04-07||
|general meeting of|general meeting||||Second extraordinary|
|2016|||||general meeting of 2016”|
||||||No.: 2016-39|
||||||Juchao Website—|
||||||(http://www.cninfo.com.c|
|Annual general||||||
||AGM|61.78%|2016-04-22|2016-04-23|n) “Resolution Notice of|
|meeting 2015||||||
||||||AGM of 2015” No.:|
||||||2016-45|
||||||Juchao Website—|
||||||(http://www.cninfo.com.c|
|Third extraordinary||||||
||Extraordinary||||n) “Resolution Notice of|
|general meeting of||69.77%|2016-06-16|2016-06-17||
||general meeting||||Third extraordinary|
|2016||||||
||||||general meeting of 2016”|
||||||No.: 2016-62|
||||||Juchao Website—|
||||||(http://www.cninfo.com.c|
|Fourth extraordinary||||||
||||||n) “Resolution Notice of|
|general meeting of|AGM|55.22%|2016-09-02|2016-09-03||
||||||Fourth extraordinary|
|2016||||||
||||||general meeting of 2016”|
||||||No.: 2016-81|

 2. Request for extraordinary general meeting by preferred stockholders whose voting rights restore
□ Applicable√ Not applicable
V. Responsibility performance of independent directors
1. The attending of independent directors to Board meetings and general meeting
||||||||
|-|-|-|-|-|-|-|
|The attending of independent directors to Board Meeting|||||||
||Times of Board||||||
|||||||Absent the|
||meeting||Times of|Times of|||
|Name of independent||Times of|||Times of|Meeting for the|
||supposed to||attending by|entrusted|||
|director||Presence|||Absence|second time in a|
||attend in the||communication|presence|||
|||||||row (Y/N)|
||report period||||||
|He Zhiyi|10|1|9|0|0|N|
|Xiong Chuxiong|10|4|6|0|0|N|
|Xiao Shengfang|10|2|8|0|0|N|
|Times for attending general meeting|||||||
|||3|||||
|from independent directors|||||||

Explanation of absent the Board Meeting for the second time in a row
2. Objection for relevant events from independent directors
Independent directors come up with objection aboutCompany’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 3 independent
non-executive directors and three directors, including the convener (professional accountant) is an independent
director. In accordance with relevant provisions of China Securities Regulatory Commission and Shenzhen Stock Exchange and working system, Internal control on risk and Audit Committee of the board of directors seriously performed duties in a dedicated attitude. In the annual financial report audit, they acted as supervisors, maintained individuality of audit and issued a series of notices such as the Written Opinion on Financial Accounting Statements Issued by the Company before CPA of Annual Examination Entered, the Written Opinion on Financial Accounting Statements after Preliminary Audit Issued by CPA of Annual Examination, the Summary Report of Internal Risk Control and Audit Committee on the Annual Audit Work of CPA as well as the Resolution on Rehire the Audit Institution. Its main duties comprise the following:
1. Risk internal control and audit committee is responsible for determining the audit work schedule, negotiating with CPA who engages in audit;
2. Before CPA enters, audit committee should review the financial statements prepared by the Company and issue written opinions;
3. Strengthen communication with the CPA, and urge them to submit audit report within stipulated time with urgency letter;
4. Review again the financial statements after the CPA issues preliminary opinion, and issue written opinions; 5. The Committee held annual work conference 2016, 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 directors, including two independent directors; convener is He Zhiyi, 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. Andthey’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 2016, the remuneration and appraisal committee carried out the performance evaluation of executives according to the 2015 Annual operation standard and performance.
2. It proposed the "2017 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 2016 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 2016 annual report about personnel salary of the directors, supervisors and senior management is real and accurate.
VII. Works from Supervisory Committee
The Company has risks in reporting period that found in supervisory activity from supervisory committee
□ Yes√ No
Supervisory committee has no objection about supervision events in reporting period
VIII. Examination and incentives of senior management
Senior executives of the Company took responsibility for the board of directors, in the reporting period, the board of directors implemented the performance checking mechanism that the remuneration of senior executives related with their performance checking, with achievement as direction, and made relevant reward and punishment according to target completion. TheCompany’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 control||
||2017-03-23|
|evaluation report||
|Disclosure index of full internal control|”Self-evaluation report of internal control for 2016” in Juchao website|
|evaluation report|(www.cninfo.com.cn) appointed by Shenzhen Stock Exchange|
|The ratio of the total assets of units||
|included in the scope of evaluation||
|accounting for the total assets on the|66.53%|
|company's consolidated financial||
|statements||
|The ratio of the operating income of units||
|included in the scope of evaluation||
|accounting for the operating income on the|65.92%|
|company's consolidated financial||
|statements||
|Defects Evaluation Standards||

||||
|-|-|-|
|Category|Financial Reports|Non-financial Reports|
||Financial report defects are mainly judged|Non-financial report defects are mainly|
||and decided by the degree of influence and|judged and decided by the degree of|
||the likelihood of occurrence to the|influence and the likelihood of occurrence|
||misstatements of financial reports caused by|of defects to the validity of business|
||defects. (1) Significant defects: a combination|process. (1) Significant defects: a|
||of one or multiple internal control defects that|combination of one or multiple internal|
||exists in internal control and may cause the|control defects that may cause the|
||material misstatements in financial|enterprise’s serious deviation to internal|
|Qualitative criteria|statements cannot be prevented, found or|control objectives; (2) Major defects: a|
||corrected in time; (2) Major defects: a|combination of one or multiple internal|
||combination of one or multiple internal|control defects whose severity level and|
||control defects that exists in internal control|economic consequences are lower than|
||and has lower severity level than significant|significant defects but still may cause the|
||defects but still should be concerned by the|enterprise’s deviation to internal control|
||superintendents of enterprise financial|objectives; (3) Common defects: other|
||reports; (3) Common defects: other defects|defects except for significant and major|
||except for significant and major defects.|defects.|
|||Quantitative criteria: a quantitative|
|||criterion determines the degree of|
|||importance of the company’s defects|
|||based on the amount of direct loss and the|
|||degree of significant influence to the|
|||company. (1) Significant defects: the|
|||amount of direct property loss is or more|
|||than 10 million Yuan, or has been|
||Quantitative criteria: a quantitative criterion||
|||officially disclosed and caused negative|
||determines the degree of importance of||
|||effects to periodic report disclosure of the|
||misstatements (including missing reports) in||
|||joint-stock companies; (2) Major defects:|
||the consolidated statements of listed||
|||the amount of direct property loss is|
||companies based on the consolidated||
|Quantitative standard||between 5 million and 10 million Yuan,|
||statement data. (1) Significant defects: equal||
|||or has been punished by the national|
||to or greater than 5% of profit before tax (2)||
|||government departments but has not|
||Major defects: between 1% and 5% of profit||
|||caused negative effects to periodic report|
||before tax; (3) Common defects: less than or||
|||disclosure of the joint-stock|
||equal to 1% of profit before tax.||
|||companies;(3) Common defects: the|
|||amount of direct property loss is between|
|||0.1 million and 5 million Yuan, or has|
|||been punished by the provincial or sub-|
|||provincial government departments but|
|||has not caused negative effects to periodic|
|||report disclosure of the joint-stock|
|||companies.|

|||
|-|-|
|Amount of significant defects in financial||
||0|
|reports||
|Amount of significant defects in non-||
||0|
|financial reports||
|Amount of important defects in financial||
||0|
|reports||
|Amount of important defects in non-||
||0|
|financial reports||

X. Auditing report of internal control
√ Applicable□ Not applicable
|||
|-|-|
|Deliberations in Internal Control Audit Report||
|According to relevant regulations and “Basic Rules of Internal Control for Enterprises”, China National Accord Medicines||
|Corporation Ltd. in all major aspects, keeps an efficiency of internal control of financial report dated 31 December 2016.||
|Disclosure details of audit report of||
||Disclosed|
|internal control||
|Disclosure date of audit report of||
||2017-04-19|
|internal control (full-text)||
|Index of audit report of internal|Audit Report of Internal Control under the name of China National Accord Medicines|
|control (full-text)|Corporation Ltd. released on Juchao Website (http://www.cninfo.com.cn)|
|Opinion type of auditing report of||
||Standard unqualified|
|IC||
|Whether the non-financial report||
||No|
|had major defects||

Carried out modified opinion for internal control audit report from CPA
□Yes√ No
The internal control audit report, issued by CPA, has concerted opinion with self-evaluation report, issued from the Board
√ Yes□ No
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
Section XI. Financial Report
Auditor’s report
Ernst& Young Hua Ming (2017) Shen Zi No.61295118_H01 To the Shareholders of China National Accord Medicines Corporation Ltd.
We have audited the accompanying financial statements of China National Accord Medicines Corporation Ltd. (hereinafter the “Company”) and its subsidiaries (“the Group”), which comprise the consolidated and company balance sheets as at 31 December 2016, the consolidated and company income statements, the consolidated and company statements of changes inshareholders’ equity and the consolidated and company cash flow statements for the year then ended, and the notes to the financial statements.
Management’s Responsibility for the Financial Statements
Management of China National Accord Medicines Corporation Ltd. is responsible for the preparation and fair presentation of these financial statements. This responsibility includes: (1) preparing and fairly presenting the financial statements in accordance with Accounting Standards for Business Enterprises; (2) designing, implementing and maintaining internal control as management determines is necessary to enable the preparation of the financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with China Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on theauditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to theentity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Auditor’s report (Continued)
Ernst& Young Hua Ming (2017) Shen Zi No.61295118_H01 Opinion
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company and the Group as at 31 December 2016, and their financial performance and cash flows of the Company and the Group for the year then ended in accordance with the requirements of Accounting Standards for Business Enterprises.
Ernst& Young Hua Ming LLP Chinese Certified Public Accountant: Li Jian Guang
Beijing, thePeople’s Republic of China Chinese Certified Public Accountant: Zhang Yong Kun 17 April 2017
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
CONSOLIDATED BALANCE SHEET
As at 31 December 2016
(Expressed in Renminbi Yuan)
ASSETS Note V 31 December 2016 31 December 2015 Current assets
Cash and bank balances 1 3,519,955,564.98 2,654,931,479.88 Notes receivable 2 1,504,000,909.21 912,341,423.78 Accounts receivable 3 7,654,225,510.89 7,827,466,715.32 Advances to suppliers 4 424,867,581.80 635,602,648.17 Interest receivable 5 450,722.67 197,875.00 Dividends receivable 6 - 964,600.00 Other receivables 7 474,787,643.28 498,631,612.04 Inventories 8 4,049,482,529.71 4,165,157,673.06 Assets classified as held-for-sale - 2,456,876.83 Other current assets 9 57,207,307.35 53,955,160.61 Total current assets 17,684,977,769.89 16,751,706,064.69 Non-current assets
Financial assets available-for-sale 10 13,685,760.00 2,675,760.00 Long-term equity investments 11 1,413,034,165.56 190,282,629.14 Investment properties 12 166,715,848.80 162,653,174.74 Fixed assets 13 487,009,600.10 1,372,649,567.99 Construction in progress 14 47,063,868.49 200,568,804.08 Intangible assets 15 320,435,400.89 409,306,586.01 Development costs 16 - 5,619,315.47 Goodwill 17 823,890,174.21 825,083,446.98 Long-term prepaid expenses 18 188,377,725.64 141,662,520.11 Deferred tax assets 19 72,914,722.30 134,785,070.05 Other non-current assets 20 94,649,476.09 116,342,755.28 Total non-current assets 3,627,776,742.08 3,561,629,629.85 Total assets 21,312,754,511.97 20,313,335,694.54 The accompanying notes form an integral part of these financial statements
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
CONSOLIDATED BALANCE SHEET (Continued)
For the Year ended 31 December 2016
(Expressed in Renminbi Yuan)
LIABILITIES Note V 31 December 2016 31 December 2015 Current liabilities
Short-term borrowings 22 1,512,713,629.95 1,633,231,960.35 Notes payable 23 2,406,642,582.86 2,528,499,859.34 Accounts payable 24 6,701,558,514.10 6,011,673,284.50 Advances from customers 25 163,450,365.92 247,426,363.39 Employee benefits payable 26 195,138,079.85 249,760,884.00 Tax payable 27 187,043,717.52 144,411,878.93 Interest payable 28 6,956,463.02 7,297,682.23 Dividends payable 29 8,483,370.21 36,517,259.20 Other payables 30 917,193,911.34 1,155,395,354.95 Non-current liabilities due within one year 31 36,411,339.96 7,754,878.16 Other current liabilities 32 123,294.77 - Total current liabilities 12,135,715,269.50 12,021,969,405.05 Non-current liabilities
Long-term borrowings 33 - 72,495,172.30 Long-term payables 34 14,616,598.34 13,785,657.94 Payable for specific projects 35 800,000.00 1,287,000.00 Provision 36 - 3,936,157.67 Deferred income 37 123,953,462.81 195,505,543.33 Long-term employee benefits payable 38 1,722,599.89 3,523,100.00 Deferred tax liabilities 19 76,535,704.01 83,695,072.39 Other non-current liabilities 39 45,427,343.31 45,427,343.31 Total non-current liabilities 263,055,708.36 419,655,046.94 Total liabilities 12,398,770,977.86 12,441,624,451.99 The accompanying notes form an integral part of these financial statements
Note V 31 December 2016 31 December 2015
SHAREHOLDERS’ EQUITY
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
CONSOLIDATED BALANCE SHEET (Continued)
For the Year ended 31 December 2016
(Expressed in Renminbi Yuan)
Shareholders’ equity
Share capital 40 362,631,943.00 362,631,943.00 Capital surplus 41 3,151,518,024.92 3,197,599,303.65 Other equity instruments 42 65,495,040.00 - Surplus reserve 43 181,315,971.50 181,315,971.50 Retained earnings 44 4,689,189,642.51 3,611,377,326.14Shareholders’ equity attributable
to shareholders of the parent 8,450,150,621.93 7,352,924,544.29 Non-controlling interests 45 463,832,912.18 518,786,698.26 Totalshareholders’ equity 8,913,983,534.11 7,871,711,242.55 Total liabilities andshareholders’
equity 21,312,754,511.97 20,313,335,694.54 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:
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
CONSOLIDATED INCOME STATEMENT
For the Year ended 31 December 2016
(Expressed in Renminbi Yuan)
Note V 2016 2015 Operating revenue 46 41,248,429,322.91 37,819,277,959.01 Less: Operating costs 46 36,648,236,903.56 33,432,847,844.59 Tax and surcharge 47 124,271,433.05 99,159,941.59 Selling expenses 48 2,198,203,437.27 2,039,829,217.72 Administrative expenses 49 859,720,679.17 880,634,356.47 Finance costs 50 101,855,104.66 128,651,208.50 Impairment loss 51 (8,548,825.97) 59,537,034.70 Add: Investment income 52 223,467,928.58 56,212,724.93 Incl: Investment income from
97,075,494.40 58,544,653.18 associates
Operating profits 1,548,158,519.75 1,234,831,080.37 Add: Non-operating income 53 58,941,395.37 68,076,926.28 Incl: Gain from disposal of non-current
10,501,930.08 2,518,092.37 assets
Less: Non-operating expenses 54 6,842,790.86 5,402,071.03 Incl: Loss from disposal of non-current
1,326,826.43 1,162,517.88 assets
Total profit 1,600,257,124.26 1,297,505,935.62 Less: Income taxes 56 318,376,817.78 267,557,184.01 Net profit 1,281,880,306.48 1,029,948,751.61 Incl: Net profit of acquiree before business
combinations involving enterprises under
common control 260,527,573.39 247,889,700.57 Net profit attributable to shareholders of the parent
1,186,601,899.27 927,610,234.41 Profit or loss of non-controlling interests
95,278,407.21 102,338,517.20 Total comprehensive income 1,281,880,306.48 1,029,948,751.61 Incl: Total comprehensive income for the year
1,186,601,899.27 927,610,234.41 attributable to owners of the parent
Total comprehensive income for the year 95,278,407.21 102,338,517.20 attributable to non-controlling interests
Earnings per share 57
Basic earnings per share 2.80 2.19 Diluted earnings per share 2.80 2.19 The accompanying notes form an integral part of these financial statements
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
CONSOLIDATED STATEMENT OF CHANGES INSHAREHOLDERS’ EQUITY
For the Year ended 31 December 2016
(Expressed in Renminbi Yuan)
Shareholders’ equity attributable to shareholders of the parent
Non-controlling
2016
Other equity interests
Total equity Share capital instrument Capital surplus Surplus reserve Retained earnings Subtotal
Closing balance of the preceding year 362,631,943.00 - 1,863,894,533.34 181,315,971.50 3,045,551,246.71 5,453,393,694.55 113,081,262.72 5,566,474,957.27 Business combination involving
enterprises under common control - - 1,333,704,770.31 - 565,826,079.43 1,899,530,849.74 405,705,435.54 2,305,236,285.28 Opening balance of the current year 362,631,943.00 - 3,197,599,303.65 181,315,971.50 3,611,377,326.14 7,352,924,544.29 518,786,698.26 7,871,711,242.55 Movements in the current year - 65,495,040.00 (46,081,278.73) - 1,077,812,316.37 1,097,226,077.64 (54,953,786.08) 1,042,272,291.56 (1) Total comprehensive income - - - - 1,186,601,899.27 1,186,601,899.27 95,278,407.21 1,281,880,306.48 (2) Capital paid and reduced by
owners - 65,495,040.00 (46,081,278.73) - - 19,413,761.27 (117,965,822.18) (98,552,060.91) 1.Capital injection by owners - 5,114,297.00 263,030,592.50 - - 268,144,889.50 - 268,144,889.50
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|2.Significant reorganization||-|60,380,743.00|(156,366,978.12)|-|-|(95,986,235.12)|-|(95,986,235.12)|
||2.Significant reorganization|||||||||
||3. Acquisition of non-controlling|-|-|(152,385,126.76)|-|-|(152,385,126.76)|(124,729,773.24)|(277,114,900.00 )|
||interests|||||||||
|4.Others||-|-|(359,766.35)|-|-|(359,766.35)|6,763,951.06|6,404,184.71|

 (3) Profit distribution - - - - (108,789,582.90) (108,789,582.90) (32,266,371.11) (141,055,954.01) 1.Distribution to equity owners - - - - (108,789,582.90) (108,789,582.90) (32,266,371.11) (141,055,954.01) Closing balance of the current 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 The accompanying notes form an integral part of these financial statements
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
CONSOLIDATED STATEMENT OF CHANGES INSHAREHOLDERS’ EQUITY
For the Year ended 31 December 2015
(Expressed in Renminbi Yuan)
Shareholders’ equity attributable to shareholders of the parent Non-controlling
2015 Total equity Share capital Capital surplus Surplus reserve Retained earnings Subtotal interests
Closing balance of the preceding year 362,631,943.00 1,863,894,533.34 181,315,971.50 2,356,765,374.25 4,764,607,822.09 86,607,614.56 4,851,215,436.65 Business combination involving enterprises under
common control - 923,704,770.31 - 440,061,136.01 1,363,765,906.32 316,556,724.02 1,680,322,630.34 Opening balance of the current year 362,631,943.00 2,787,599,303.65 181,315,971.50 2,796,826,510.26 6,128,373,728.41 403,164,338.58 6,531,538,066.99 Movements in the current year - 410,000,000.00 - 814,550,815.88 1,224,550,815.88 115,622,359.68 1,340,173,175.56 (1) Total comprehensive income - - - 927,610,234.41 927,610,234.41 102,338,517.20 1,029,948,751.61 (2) Capital paid and reduced by owners - 410,000,000.00 - (25,233,029.93) 384,766,970.07 79,912,773.09 464,679,743.16 1.Capital injection by owners - - - - - 1,470,000.00 1,470,000.00 2.Capital contribution by non-controlling
shareholders of subsidiaries - 410,000,000.00 - - 410,000,000.00 2,470,000.00 412,470,000.00 3.Acquisition of non-controlling interests - from
business combination involving enterprises
under common control - - - (25,233,029.93) (25,233,029.93) (20,065,970.07) (45,299,000.00) 4.Acquisition of subsidiaries - from business
combination involving enterprises under
common control - - - - - 96,038,743.16 96,038,743.16 (3) Profit distribution - - - (87,826,388.60) (87,826,388.60) (66,628,930.61) (154,455,319.21) 1.Distribution to owners - - - (72,526,388.60) (72,526,388.60) (1,032,000.00) (73,558,388.60) 2.Distribution to Guoda Pharmacy - business
combination involving enterprises under
common control - - - - - (50,896,930.61) (50,896,930.61) 3.Distribution to South Pharma& Trade -
business combination involving enterprises
under common control - - - (15,300,000.00) (15,300,000.00) (14,700,000.00) (30,000,000.00) Closing balance of the current year
362,631,943.00 3,197,599,303.65 181,315,971.50 3,611,377,326.14 7,352,924,544.29 518,786,698.26 7,871,711,242.55 The accompanying notes form an integral part of these financial statements
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
CONSOLIDATED CASH FLOW STATEMENT
For the Year ended 31 December 2016
(Expressed in Renminbi Yuan)
Note V 31 December 2016 31 December 2015 1.CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from sales of good or rendering of
services 45,257,448,760.86 44,506,946,623.95 Tax refunds 16,985,904.86 10,573,860.85 Cash receipts related to other operating activities 58 314,523,960.87 255,495,369.93 Sub-total of cash inflows from operating activities 45,588,958,626.59 44,773,015,854.73 Cash paid for goods and services 39,904,501,683.58 39,360,953,053.57 Cash paid to and on behalf of employees 1,794,695,502.08 1,636,966,579.52 Cash paid for all types of taxes 1,124,648,508.06 1,093,677,245.33 Cash payments related to other operating
activities 58 1,292,567,345.02 1,224,002,832.51 Sub-total of cash outflows from operating
activities 44,116,413,038.74 43,315,599,710.93 Net cash flows from operating activities 59 1,472,545,587.85 1,457,416,143.80 2.CASH FLOWS FROM INVESTING ACTIVITIES
Cash received from recovery of investments 226,000.00 2,385,000.00 Cash received from returns on investments 41,420,278.36 41,849,691.77 Net cash received from disposal of fixed assets,
intangible assets and other long-term assets 23,568,618.35 11,550,816.84 Cash receipts related to other investing activities
58 1,604,932,810.96 6,112,292,889.48 Sub-total of cash inflows from investing activities 1,670,147,707.67 6,168,078,398.09 The accompanying notes form an integral part of these financial statements
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
CONSOLIDATED CASH FLOW STATEMENT (Continued)
For the Year ended 31 December 2016
(Expressed in Renminbi Yuan)
Note V 2016 2015 2.CASH FLOWS FROM INVESTING ACTIVITIES(Continued)
Cash paid for acquisition of fixed assets,
265,885,799.28 300,373,202.53 intangible assets and other long-term assets
Cash paid for acquisition of investments 21,860,000.00 7,870,000.00 Net cash paid for acquisition of subsidiaries and
59 11,639,196.11 95,524,807.48 other business units
Net cash paid from disposal of subsidiaries and other
59 105,527,131.30 - business units
Cash payments related to other investing activities 58 1,274,374,346.93 6,316,253,840.82 Sub-total of cash outflows from investing activities 1,679,286,473.62 6,720,021,850.83 Net cash flows from investing activities (9,138,765.95) (551,943,452.74) 3.CASH FLOWS FROM FINANCING ACTIVITIES
Cash proceeds from investments by others 271,286,689.50 413,940,000.00 Incl: Cash received from capital contributions from
3,470,000.00 2,470,000.00 non-controlling shareholders of subsidiaries
Cash received from borrowings 467,980,655.24 754,980,434.42 Cash receipts related to other financing activities 58 297,999,324.21 290,547,613.00 Sub-total of cash inflows from financing activities 1,037,266,668.95 1,459,468,047.42 Cash repayments for debts 787,922,055.10 870,239,116.16 Cash payments for distribution of dividends or profit and
254,987,476.35 259,255,184.14 interest expenses
Incl: Profit and dividends paid to non-controlling
8,287,977.64 37,722,183.44 shareholders of subsidiaries
Cash payments related to other financing activities 58 470,599,856.33 349,479,544.63 Sub-total of cash outflows from financing activities 1,513,509,387.78 1,478,973,844.93 Net cash flows from financing activities (476,242,718.83) (19,505,797.51) The accompanying notes form an integral part of these financial statements
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
CONSOLIDATED CASH FLOW STATEMENT (Continued)
For the Year ended 31 December 2016
(Expressed in Renminbi Yuan)
Note V 2016 2015 4.EFFECT OF FOREIGN EXCHANGE RATE CHANGES
(563,036.58) (97,756.05) ON CASH AND CASH EQUIVALENTS
5.NET INCREASE IN CASH AND CASH EQUIVALENTS 59 986,601,066.49 885,869,137.50 Add: Cash and cash equivalents at beginning of the year 2,164,308,359.05 1,278,439,221.55 6.CASH AND CASH EQUIVALENTS AT END OF YEAR 59 3,150,909,425.54 2,164,308,359.05 The accompanying notes form an integral part of these financial statements
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
COMPANY BALANCE SHEET
For the Year ended 31 December 2016
(Expressed in Renminbi Yuan)
ASSETS Note XIV 31 December 2016 31 December 2015 Current assets
Cash and bank balances 1,342,041,409.86 429,437,078.35 Notes receivable 79,868,867.49 43,896,287.87 Accounts receivable 1 397,351,577.24 381,093,808.53 Advances to suppliers 2,135,439.82 5,452,046.55 Interest receivable 2,029,125.06 2,053,659.27 Other receivables 2 1,801,567,851.50 1,613,862,656.17 Inventories 184,708,273.76 182,659,794.51 Other current assets 6,937,946.90 39,482.38 Total current assets 3,816,640,491.63 2,658,494,813.63 Non-current assets
Long-term equity investments 3 5,914,542,602.10 2,795,231,208.93 Investment properties 3,571,809.38 4,379,786.84 Fixed assets 16,555,996.92 391,937,393.50 Construction in progress - 129,851,067.29 Intangible assets 1,534,730.15 35,678,610.77 Long-term deferred expenses 6,645,211.13 7,417,691.74 Deferred tax assets 2,869,931.88 2,906,189.80 Other non-current assets 9,859,840.00 34,856,698.50 Total non-current assets 5,955,580,121.56 3,402,258,647.37 Total assets 9,772,220,613.19 6,060,753,461.00 The accompanying notes form an integral part of these financial statements
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
COMPANY BALANCE SHEET (Continued)
For the Year ended 31 December 2016
(Expressed in Renminbi Yuan)
LIABILITIES 31 December 2016 31 December 2015 Current liabilities
Short-term borrowings 50,000,000.00 106,000,000.00 Notes payable 334,383,191.54 285,394,838.22 Accounts payable 391,726,381.93 292,794,309.39 Advances from customers 2,997,964.16 5,841,769.74 Employee benefits payable 30,618,183.84 22,441,125.24 Tax payables 3,308,582.29 10,770,924.28 Interest payable 37,801.50 354,492.17 Other payables 1,100,143,593.55 680,741,770.79 Non-current liabilities due within one
31,600,000.00 - year
Other current liabilities 123,294.77 - Total current liabilities 1,944,938,993.58 1,404,339,229.83 Non-current liabilities
Long-term borrowings - 72,495,172.30 Payables for specific projects 800,000.00 800,000.00 Deferred income 1,570,000.00 5,074,999.99 Long-term employee benefits payable 26,000.00 72,000.00 Deferred tax liabilities 3,773,319.00 3,773,319.00 Total non-current liabilities 6,169,319.00 82,215,491.29 Total liabilities 1,951,108,312.58 1,486,554,721.12 The accompanying notes form an integral part of these financial statements
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
COMPANY BALANCE SHEET (Continued)
For the Year ended 31 December 2016
(Expressed in Renminbi Yuan)
SHAREHOLDERS’ EQUITY 31 December 2016 31 December 2015Shareholders’ equity
Share capital 362,631,943.00 362,631,943.00 Capital surplus 4,381,845,619.03 1,869,692,921.70 Surplus reserves 181,315,971.50 181,315,971.50 Other equity instruments 65,495,040.00 - Retained earnings 2,829,823,727.08 2,160,557,903.68 Totalshareholders’ equity 7,821,112,300.61 4,574,198,739.88 Total liabilities andshareholders’ equity 9,772,220,613.19 6,060,753,461.00 The accompanying notes form an integral part of these financial statements
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
COMPANY INCOME STATEMENT
For the Year ended 31 December 2016
(Expressed in Renminbi Yuan)
Note XIV 2016 2015 Operating revenue 4 3,138,854,618.97 2,863,660,401.47 Less: Operating costs 4 3,004,349,631.69 2,737,910,097.84 Tax and surcharge 7,524,958.43 6,075,183.19 Selling expenses 50,852,431.61 46,270,636.71 Administrative expenses 86,328,173.16 55,216,452.28 Finance costs (60,205,031.57) (66,168,235.86) Impairment loss 337,659.11 487,293.37 Add: Investment income 5 588,945,025.76 571,927,007.23 Incl: Investment income from associates 209,757,868.18 57,413,887.70 Operating profits 638,611,822.30 655,795,981.17 Add: Non-operating income 13,669,692.02 6,114,684.26 Incl: Gain from disposal of
non-current assets 49,837.86
Less: Non-operating expenses 698,639.61 - Incl: Loss from disposal of
non-current assets 324,736.85 - Total profit 651,582,874.71 661,910,665.43 Less: Income taxes 12,348,207.78 23,664,542.54 Net profit
639,234,666.93 638,246,122.89 Total comprehensive income
639,234,666.93 638,246,122.89 The accompanying notes form an integral part of these financial statements
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
COMPANY STATEMENT OF CHANGES INSHAREHOLDERS’ EQUITY
For the Year ended 31 December 2016
(Expressed in Renminbi Yuan)
Other equity
2016 Share capital Capital surplus Surplus reserve Retained earnings Total equity instruments
Closing balance of the preceding year 362,631,943.00 - 1,869,692,921.70 181,315,971.50 2,160,557,903.68 4,574,198,739.88 Others - - - - 138,820,739.37 138,820,739.37 Opening balance of the current year 362,631,943.00 - 1,869,692,921.70 181,315,971.50 2,299,378,643.05 4,713,019,479.25 Movements in the current year - 65,495,040.00 2,512,152,697.33 - 530,445,084.03 3,108,092,821.36 (1) Total comprehensive income - - - - 639,234,666.93 639,234,666.93 (2) Capital paid and reduced by
- 65,495,040.00 2,512,152,697.33 - - 2,577,647,737.33 owners
1. Capital injection by owners - 5,114,297.00 263,030,592.50 - - 268,144,889.50 2. Significant reorganization - 60,380,743.00 2,249,481,871.18 - - 2,309,862,614.18 3. Others - - (359,766.35) - - (359,766.35) (3) Profit distribution - - - - (108,789,582.90) (108,789,582.90) 1. Distribution to owners - - - - (108,789,582.90) (108,789,582.90) Closing balance of the current year 362,631,943.00 65,495,040.00 4,381,845,619.03 181,315,971.50 2,829,823,727.08 7,821,112,300.61 The accompanying notes form an integral part of these financial statements
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
COMPANY STATEMENT OF CHANGES INSHAREHOLDERS’ EQUITY (Continued)
For the Year ended 31 December 2015
(Expressed in Renminbi Yuan)
2015 Share capital Capital surplus Surplus reserve Retained earnings Total equity Closing balance of the preceding year and
362,631,943.00 1,869,692,921.70 181,315,971.50 1,594,838,169.39 4,008,479,005.59 opening balance of the current year
Movements in the current year - - - 565,719,734.29 565,719,734.29 (1) Total comprehensive income - - - 638,246,122.89 638,246,122.89 (2) Profit distribution - - - (72,526,388.60) (72,526,388.60) 1. Distribution to owners - - - (72,526,388.60) (72,526,388.60) Closing balance of the current year 362,631,943.00 1,869,692,921.70 181,315,971.50 2,160,557,903.68 4,574,198,739.88 The accompanying notes form an integral part of these financial statements
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
COMPANY CASH FLOW STATEMENT
For the Year ended 31 December 2016
(Expressed in Renminbi Yuan)
2016 2015 1.CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from sales of good or rendering of
services 3,401,302,572.88 3,285,822,755.42 Cash receipts related to other operating activities 51,854,505.86 22,129,617.81 Sub-total of cash inflows from operating activities 3,453,157,078.74 3,307,952,373.23 Cash paid for goods and services 3,186,087,599.05 3,192,267,206.67 Cash paid to and on behalf of employees 64,460,810.25 54,576,026.24 Cash paid for all types of taxes 41,496,603.39 47,163,193.25 Cash payments related to other operating
activities 24,972,169.45 26,759,541.81 Sub-total of cash outflows from operating
activities 3,317,017,182.14 3,320,765,967.97 Net cash flows from operating activities 136,139,896.60 (12,813,594.74) 2. CASH FLOWS FROM INVESTING ACTIVITIES
Cash received from returns of investments 418,909,426.90 616,517,083.38 Net cash received from disposal of fixed assets,
intangible assets and other long-term assets 5,580.00 - Net cash paid from disposal of subsidiaries and
other business 156,111,000.00 - Cash receipts related to other investing activities 1,857,919,415.00 2,604,319,315.47 Sub-total of cash inflows from investing activities 2,432,945,421.90 3,220,836,398.85 Cash paid for acquisition of fixed assets,
intangible assets and other long-term assets 46,855,153.72 145,095,042.98 Net cash paid for purchasing subsidiaries and
other business - 9,452,000.00 Cash payments related to other investing
activities 2,005,548,023.10 3,081,753,248.70 Sub-total of cash outflows from investing
activities 2,052,403,176.82 3,236,300,291.68 Net cash flows from investing activities 380,542,245.08 (15,463,892.83) The accompanying notes form an integral part of these financial statements
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
COMPANY CASH FLOW STATEMENT (Continued)
For the Year ended 31 December 2016
(Expressed in Renminbi Yuan)
2016 2015 3. CASH FLOWS FROM FINANCING ACTIVITIES
Cash proceeds from investments by others 267,816,689.50 - Cash received from borrowings 80,100,000.00 112,799,724.30 Cash receipts related to other financing activities 9,255,846,037.96 220,661,123.28 Sub-total of cash inflows from financing activities 9,603,762,727.46 333,460,847.58 Cash repayments for debts 189,800,218.30 10,000,000.00 Cash payments for distribution of dividends or
116,941,247.37 85,759,595.29 profit and interest expenses
Cash payments related to other financing
8,901,099,071.96 37,160,001.18 activities
Sub-total cash outflows from financing activities 9,207,840,537.63 132,919,596.47 Net cash flows from financing activities 395,922,189.83 200,541,251.11 4. NET INCREASE IN CASH AND CASH
912,604,331.51 172,263,763.54 EQUIVALENTS
Add: Cash and cash equivalents at beginning of the
429,437,078.35 257,173,314.81 year
5. CASH AND CASH EQUIVALENTS
1,342,041,409.86 429,437,078.35 AT END OF YEAR
The accompanying notes form an integral part of these financial statements
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
I Profile of the Company
(1) Historical development and basic information
As approved by thePeople’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 thePeople’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, theCompany’s share capital was RMB105 million. Through convert capital surplus into share capital, bonus issues and issuance of shares for years, the share capital of the Company increased to RMB362,631,943 as at 31 December 2016.
In November 2000, the Company entered into an Assets 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 ManagementCompany’s100% equity interests in 11 pharmaceutical companies and certain properties as well as51% equity interests in Shenzhen Tefa Modern Computer Co., Ltd. The above assets exchange proposal was approved by shareholders in the Second Extraordinary General Meeting on December 29, 2000. The transaction was completed on 8 January 2001.
On 18 February 2004, theCompany’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 its43.33% shares in the Company to Sinopharm Group. The legal procedures of the above equity transfer were completed on 9 December 2004. At the same time, as approved by the State-owned Assets Supervision and Administration Commission of the State Council (GZCQ (2004) No.525) and the China Securities Regulatory Commission (ZJGSZ (2004) No.94), the nature of these shares was changed from state-owned stock to state-owned legal entity stock and Sinopharm Group became the largest shareholder of the Company.
On 14 April 2006, theCompany’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 March 14 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 issued day. The total number of shares of the Company was 362,631,943 since the date of issue. As of 31 December 2016, the total share capital was RMB362,631,943.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
I Profile of the Company (Continued)
(1) Historical development and basic information (Continued)
As of 31 December 2016, the total other equity instruments amounted to RMB65,495,040.00. The Company acquired the companies under common control, including Sinopharm Holding Guoda Pharmacy Co., Ltd. (“Guoda Pharmacy”), Foshan Nanhai Medicine Group Co., Ltd.(“Foshan Nanhai”),Guangdong South Pharmaceutical Foreign Trade Co., Ltd. (“South Pharma& Trade), Guangdong Dong Fang Uptodate& Special Medicines Co., Ltd. (“ Guangdong Uptodate& Special Medicines”) by issuing shares and raised supporting funds by issuing shares to Ping An Asset Management Co., Ltd.(“Ping An Asset Management”) to acquire non-controlling interest of South Pharma& Trade. The relevant shares were successfully issued and listed on 5 January 2017.
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 RMB362,631,943. 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 traditional Chinese medicine preparations, bulk pharmaceutical drugs, chemical preparations, bulk antibiotic drugs, antibiotic preparations, biochemical drugs, biological products (including vaccines and in vitro diagnostic reagents psychotropic drugs and preparations, narcotic drugs, toxic drugs for medical use, protein assimilation preparation and peptide hormones; trade of dietary supplement; research, development and consultation services of pharmaceutical packaging materials and pharmaceutical industry products; industrial investment holding; domestic trade; material supply and marketing industry (other than special licensing); sale of ambulances; trade of second-class and third- class medical equipment; project investment; property management and lease of self-owned properties; pharmacovigilance and medical information consulting; parking operation; logistics and related services; package agency business; logistic design; import and export services (excluding projects that are prohibited by the country; limited projects has to be approved before operating).
(2) Change in the consolidation scope and the significant reorganization in the current year
Subsidiaries consolidated in the financial statements for the current year and change in the consolidation scope are shown in Note VI.
On 9 March 2016, the Board of the Company approved the reorganization plan regarding the commercial and manufacturing business with related parties as follows:
1) The Company purchases100% of the equity of Guoda Pharmacy, Foshan Nanhai, Guangdong Uptodate& Special Medicines and51% of the equity of South Pharma& Trade from the parent company, Sinopharm Holding, and the related party, China National Pharmaceutical Foreign Trade Co., Ltd.(“China Pharma& Trade”), respectively, with consideration of non-public issuance of A share. Meanwhile, the Company purchased49% of the equity in South Pharm& Trade from its non-controlling shareholders, eleven natural persons with cash.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
I Profile of the Company (Continued)
(2) Change in the consolidation scope and the significant reorganization in the current year (Continued)
2) The Company sold Pingshan pharmaceutical research& development manufacturing base (“Pingshan base”) and51% of the equity in 3 subsidiaries, including Sinopharm Group Zhijun (Shenzhen) Pharmaceutical Co., Ltd. (“Zhijun Medicine”), Zhijun Pharmaceutical Trade Co., Ltd. (“Zhijun Trade”), and Sinopharm Group Zhijun (Shenzhen) Pingshan Pharmaceutical Co., Ltd. (“Pingshan Medicine”) and subscribe the new shares of Shanghai Shyndec Pharmaceutical Co., Ltd (“Shyndec Pharmaceutical”).
3) TheGroup’s parent and ultimate parent company is Sinopharm Group and China National Pharmaceutical Group Corporation respectively.
4) These financial statements were authorized for issue by the board of directors of the Company on 17 April 2017.
II Basis of preparation
The financial statements were prepared in accordance with the Basic Standard and specific standards of the Accounting Standards for Business Enterprises issued by the Ministry of Finance on 15 February 2006 and the specific accounting standards and the relevant regulations issued thereafter (hereafter collectively referred to as the “Accounting Standards for Business Enterprises” or “CAS”), and the disclosure requirements in the Preparation Convention of Information Disclosure by Companies Offering Securities to the Public No.15– General Rules on Financial Reporting issued by the China Securities Regulatory Commission.
These financial statements are prepared on a going concern basis.
Except for certain financial instruments, the financial statements have been prepared using historical cost as the principle of measurement. Where assets are impaired, provisions for asset impairment are made in accordance with the relevant requirements.
The Group has made accounting policies and accounting estimates according to its own operation and production characteristics, which are mainly reflected in the bad debt provision for account receivables(NoteⅢ(10)), inventory costing methods(NoteⅢ(11)), depreciation methods for fixed assets and amortization method for intangible assets(NoteⅢ(15),Note III(18)), judgement basis for capitalization of development costs(NoteⅢ(18)) , impairment of long-term assets(NoteⅢ(21)), revenue recognition (NoteⅢ(25)).
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates
(1) Statement of compliance with the Accounting Standards for Business Enterprises
The financial statements of the Company for the year ended 31 December 2016 are in compliance with the Accounting Standards for Business Enterprises, and truly and completely present the financial position of the Group and the Company as of 31 December 2016 and the operating results, cash flows and other information of the Group and the Company for the year then ended.
(2) Accounting year
TheCompany’s accounting year starts on 1 January and ends on 31 December.
(3) Functional currency
The functional currency is Renminbi (RMB).
(4) Business combinations
(a) Business combinations involving entities under common control
Assets and liabilities (including goodwill arising from ultimate controllingshareholder’s acquisition of the party being absorbed) that are obtained by the absorbing party in a business combination shall be measured at their carrying amounts at the combination date as recorded by the party being absorbed. The difference between the carrying amount of the net assets obtained and the carrying amount of the consideration paid for the combination (or the aggregate face value of shares issued as consideration) shall be adjusted to share premium under capital surplus. If the capital surplus is not sufficient to absorb the difference, any excess shall be adjusted against retained earnings. The transaction costs of issuing equity securities or debt securities for business combination are recognized at the initial recognition amount of equity securities or debt securities.
(b) Business combinations involving enterprises not under common control
The cost of combination and identifiable net assets obtained by the acquirer in a business combination are measured at fair value at the acquisition date. Where the cost of the combination exceeds theacquirer’s interest in the fair value of theacquirer’s identifiable net assets, the difference is recognized as goodwill; where the cost of combination is lower than theacquirer’s interest in the fair value of theacquirer’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.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(4) Business combinations (Continued)
Where the business combination not involving enterprises under common control which is achieved in stages, theacquirer’s previously held equity interests in the acquiree are remeasured at the fair value on the acquisition date, with the difference between fair value and carrying amount recognized as investment income for the current period. If theacquirer’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 inshareholders’ equity other than net profit or loss, OCI and profit distributions are charged to profit or loss for the current period on the acquisition date.
(5) Preparation of consolidated financial statements
The consolidated financial statements comprise the financial statements of the Company and all of its subsidiaries.
Subsidiaries are consolidated from the date on which the Group obtains control and are de-consolidated from the date that such control ceases. For a subsidiary that is acquired in a business combination involving enterprises under common control, it is included in the consolidated financial statements from the date when it, together with the Company, comes under common control of the ultimate controlling party. The portion of the net profits realized before the combination date is presented separately in the consolidated income statement.
In preparing the consolidated financial statements, where the accounting policies and the accounting periods of the Company and subsidiaries are inconsistent, the financial statements of the subsidiaries are adjusted in accordance with the accounting policies and the accounting period of the Company. For subsidiaries acquired from business combinations involving enterprises not under common control, the individual financial statements of the subsidiaries are adjusted based on the fair value of the identifiable net assets at the acquisition date.
All significant intra-group balances, transactions and unrealized profits are eliminated in the consolidated financial statements. The portion of asubsidiary’s equity and the portion of asubsidiary’s net profits, losses and comprehensive income for the period not attributable to the Company are recognized as non- controlling interests and presented separately in the consolidated financial statements within equity, net profits and total comprehensive income respectively. Unrealized gain or loss from selling assets to subsidiaries fully offsets the net income attributable to equity holders of the company. Unrealized gain or loss from purchasing assets from subsidiaries offsets the net income attributable to equity holders of the company and attributable to the non-controlling interest by the distribution proportion regarding the Company and the subsidiary. Unrealized gain or loss from transaction between subsidiaries offsets the net income attributable to equity holders of the company and attributable to the non-controlling interest by the distribution proportion regarding the Company and the selling side of the subsidiaries. If different recognition perspectives for the same transaction arise within different accounting identities setup, there is an adjustment for the transaction from theGroup’s perspective.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(6) Acquisition of non-controlling interests in controlled subsidiaries
The Company acquires equity from the minority shareholders after taking control of the subsidiary, in the consolidated financial statements, thesubsidiary’s assets, liabilities should be measured from the combination or acquisition date. The difference between the carrying amount of acquisition of non- controlling interest and the net assets proportion calculated by the original share percentage since the acquisition date should be recognized in capital surplus. If the capital surplus is insufficient to dilute, the retained earnings shall be adjusted.
(7) Cash and cash equivalents
Cash and cash equivalent comprise cash on hand, deposits that can be readily drawn on demand, and short-term and highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value.
(8) Foreign currency translation
Foreign currency transact 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 costs are translated at the balance sheet date using the spot exchange rates at the date of the transactions. The effect of exchange rate changes on cash is presented separately in the cash flow statement.
(9) Financial instruments
(a) Financial assets
(i) Classification of financial assets
Financial assets are classified into the following categories at initial recognition: financial assets at fair value through profit or loss, receivables, available-for-sale financial assets and held-to-maturity investments. The classification of financial assets depends on theGroup’s intention and ability to hold the financial assets. The Group currently holds the financial assets including receivables and available-for- sale financial assets. Receivables, including notes receivables, accounts receivable and other receivables, are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Available-for-sale financial assets are those non-derivative financial assets that are designated as available for sale at initial recognition or are not classified as financial assets at fair value through profit or loss, held-to-maturity investments or borrowings and receivables.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(9) Financial instruments (Continued)
(a) Financial assets (Continued)
(ii) Recognition and measurement
Financial assets are recognized at fair value on the balance sheet when the Group becomes a party to the contractual provisions of the financial instrument. The transaction expenses are included inreceivables’ original book value, which is measured at amortized cost using the effective interest method. After initial recognition, financial assets available-for-sale are measured at fair value.
The premium/discount is amortized using the effective interest method and recognized as interest income or expense. A gain or loss arising from a change in the fair value of an available-for-sale financial asset is recognized as other comprehensive income, except for impairment losses and foreign exchange gains and losses resulted from monetary financial assets which are recognized in profit or loss, until the financial asset is derecognized or determined to be impaired, at which time the accumulated gain or loss previously recognized is transferred to profit or loss of the current period. Interests and dividends relating to an available-for-sale financial asset are recognized in profit or loss of the current period. Investments in equity instruments, which do not have quoted prices in an active market and whose fair values cannot be reliably measured, are measured at cost.
(iii) Impairment of financial assets
The Group assesses the carrying amounts of receivables other than those at fair value through profit or loss at each balance sheet date. If there is objective evidence that a financial asset is impaired, an impairment loss is provided for.
Objective evidence refers to matters that occur after the financial assets have been recognized, affect the estimated future cash flow and could be measured accurately by the Group.
When an impairment loss on a financial asset carried at amortized cost has occurred, the amount of loss is provided for at the difference between theasset’s carrying amount and the present value of its estimated future cash flows (excluding future credit losses that have not been incurred). If there is objective evidence that the value of the financial asset recovered and the recovery is related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed and the amount of reversal is recognized in profit or loss.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(9) Financial instruments (Continued)
(a) Financial assets (Continued)
(iii) Impairment of financial assets (Continued)
Where there is objective evidence of impairment of available for sale financial assets, the cumulative loss which results from a decline in fair value and is previously recognized in other comprehensive income is removed from other comprehensive income and recognized in profit or loss. The cumulative loss removed is measured as the difference between the acquisition cost and the current fair value, less any retrieved costs, amortization and impairment loss previously recognized in profit or loss. In the case of equity investments classified as available for sale, objective evidence of impairment would include a significant or prolonged decline in the fair value of an investment below its cost. “Significant” is evaluated against the original cost of the investment and “prolonged” against the period in which the fair value has been below its original cost. Where there is evidence of impairment, the cumulative loss removed is measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that investment previously recognized in profit or loss. Impairment losses on equity instruments classified as available for sale are not reversed through profit or loss. Increases in their fair value after impairment are recognized directly in other comprehensive income.
The determination of what is “significant” or “prolonged” requires 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.
(iv) Derecognition of financial assets
A financial asset is derecognized when any of the following criteria is met: (i) the contractual rights to receive the cash flows from the financial asset expire; (ii) the financial asset has been transferred and the Group transfers substantially all the risks and rewards of ownership of the financial asset to the transferee; or (iii) the financial asset has been transferred and the Group has not retained control of the financial asset, although the Group neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset.
On derecognition of a financial asset, the difference between the carrying amount and the sum of the consideration received and the cumulative changes in fair value that had been recognized directly in equity is recognized in profit or loss.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(9) Financial instruments (Continued)
(b) Financial liabilities
Financial liabilities are classified into the following categories at initial recognition: financial liabilities at fair value through profit or loss and other financial liabilities. The financial liabilities of the Group mainly comprise other financial liabilities, including payables and borrowings
Payables, including notes payable, accounts payable and other payables, are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method.
Borrowings are recognized initially at fair value, net of transaction costs incurred, and subsequently carried at amortized costs using the effective interest method.
Other financial liabilities with maturities no more than one year are classified as current liabilities. Other financial liabilities with maturities over one year but are due within one year at the balance sheet date are classified as the current portion of non-current liabilities. Others are classified as non-current liabilities. A financial liability is derecognized or partly derecognized when the current obligation is discharged or partly discharged. The difference between the carrying amount of the financial liability or the derecognized part of the financial liability and the consideration paid is recognized in profit or loss.
(c) Offset of financial instruments
A financial asset and a financial liability shall be offset and the net amount presented in the balance sheet when both of the following conditions are satisfied: 1) the enterprise has a legal right to set off the recognized amounts and the legal right is currently enforceable; 2) the enterprise intends either to settle on a net basis or to realize the financial asset and settle the financial liability simultaneously.
(d) Transfer of financial assets
A financial asset is derecognized when the Group has transferred substantially all the risks and rewards of the asset to the referee. A financial asset is not derecognized when the Group retains substantially all the risks and rewards of the asset.
When the Group has neither transferred nor retained substantially all the risks and rewards of the asset, it either i) derecognizes the transferred asset when it has transferred control of the asset; or ii) continues to recognize the transferred asset to the extent of the Group's continuing involvement, in which case, the Group also recognizes an associated liability.
Continuing involvement that takes the form of a guarantee over the transferred financial asset is measured at the lower of the original carrying amount of the asset and the guarantee amount. The guarantee amount is the maximum amount of consideration that the Group could be required to repay.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(10) Receivables
Receivables comprise notes receivable, accounts receivable and other receivables. Accounts receivable arising from the sale of goods or rendering of services are initially recognized at fair value of the contractual payments from the buyers or service recipients.
(a) Receivables with amounts that are individually significant and subject to separate assessment for provision for bad debts
Receivables with amounts that are individually significant are subject to assessment for impairment on the individual basis. If there exists 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 expected to be derived from the receivable below its carrying amount.
(b) Receivables that are subject to provision for bad debts on the grouping basis
Receivables with amounts that are not individually significant and those receivables that have been individually assessed for impairment and have not been found impaired are classified into certain groupings based on their credit risk characteristics. The provision for bad debts is determined based on the historical loss experience for the groupings of receivables with similar credit risk characteristics, taking into consideration of the current circumstances.
A provision for impairment of the receivables is made based on the ageing of receivables at the following percentage:
Provision ratios used for accounts Provision ratios used for receivable other receivables Within 1 year 0-5% 0-5% 1 to 2 years 5-10% 5-10% 2 to 3 years 10-30% 10-30% 3 to 4 years 20-50% 20-50% 4 to 5 years 20-80% 20-80% More than 5 years 20-100% 20-100% (c) Receivables with amounts that are not individually significant but subject to separate assessment for provision for bad debts
The reason for making separate assessment for provision for bad debts is that there exists objective evidence that the Group will not be able to collect the amount under the original terms of the receivable.
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.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(10) Receivables (Continued)
(d) When the Group transfers the accounts receivable to the financial institutions without recourse, the difference between the proceeds received from the transaction and their carrying amounts and the related taxes is recognized in profit or loss for the current period.
(11) Inventories
(a) Classification
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.
(b) Costing of inventories
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.
(c) Basis for determining net realizable values of inventories and method for making provisions for decline in the value of inventories
Provisions for declines in the value of inventories are determined at the excess amount of the carrying value of the inventories over their net realizable value. Net realizable value is determined based on the estimated selling price in the ordinary course of business, less the estimated costs to completion and estimated costs necessary to make the sale and related taxes.
(d) The Group adopts the perpetual inventory system.
(e) Amortization methods of low value consumables and packaging materials
Turnover materials include low value consumables and packaging materials, which are expensed when issued.
(12) Assets classified as held for sale
Non-current assets or disposal group satisfying the following conditions will be classified as assets held for sale: (i) the non-current assets or disposal group are instantly ready for sale under the custom terms; (ii)the resolution regarding the disposal of the non-current assets or disposal group has been appropriately approved. (iii)Company has signed an irrevocable agreement. (iv)The disposal will be accomplished within 1 year.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(12) Assets classified as held for sale (Continued)
Non-current assets which meet the conditions of assets classified as held for sale, excluding financial assets, investment properties measured by the fair value method, and deferred income tax assets could be appraised as the lower number of the book value and fair value minus disposal cost. The difference between the fair value minus disposal cost and the book value should be recognized as an Impairment loss.
Assets and liabilities among the non-current assets or disposal group that are classified as assets classified as held for sale should be classified as current assets and current liabilities respectively, and should be individually presented on the balance sheet.
(13) Long-term equity investments
Long-term equity investments comprise theCompany’s long-term equity investments in its subsidiaries and theGroup’s long-term equity investments in its associates.
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 theCompany’s financial statements, and adjusted by using the equity method when preparing the consolidated financial statements. Interests in associates are accounted for using the equity method.
(a) Determination of investment cost
For long-term equity investments acquired through a business combination: for long-term equity investments acquired through a business combination involving enterprises under common control, the investment cost shall be the absorbingparty’s share of the carrying amount ofshareholders’ 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 theGroup’s share of the fair value of theinvestee’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 theGroup’s share of the fair value of theinvestee’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.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(13) 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 recognizing 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 theinvestor’s net investment in the investee are reduced to zero. However, if the Group has obligations for additional losses and the criteria with respect to recognition of provisions under the accounting standards on contingencies are satisfied, the Group continues recognizing the investment losses and the provisions. For changes inshareholders’ equity of the investee other than those arising from its net profit or loss, other comprehensive income, and profit distribution, the Group adjusts the book value of the investment and records capital surplus accordingly. The carrying amount of the investment is reduced by theGroup’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 theGroup’s equity interest in the investees, and then based on which the investment gains or losses are recognized. For the loss on the intra-group transaction amongst the Group and its investees attributable to asset impairment, any unrealized loss is not eliminated. (c) Basis for determining existence of control, joint control or significant influence over investees Control is the power to govern the financial and operating policies of the investee so as to obtain benefits from its operating activities. In determining whether the Company is able to exercise control over the investee, the effect of potential voting rights over the investee is considered, such as convertible debts and warrants currently exercisable.
Significant influence is the power to participate in the financial and operating policy decisions of the investee, but is not control or joint control over those policies.
(d) Impairment of long-term equity investments
The carrying amount of long-term equity investments in subsidiaries and associates is reduced to the recoverable amount when the recoverable amount is less than the carrying amount (Note III (21)).
(14) 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 an Investment properties are included in the cost of the 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.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(14) 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 life 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 properties is transferred to owner-occupied properties, it is reclassified as a fixed asset or intangible asset at the date of the 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 the transfer.
The Investmentproperties’ estimated useful life, net residual value and depreciation (amortization) method applied are reviewed and adjusted as appropriate at each end of year.
An Investment properties is derecognized on disposal or when the Investment properties 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 properties after its carrying amount and related taxes and expenses is recognized in profit or loss for the current period.
The carrying amount of an Investment properties is reduced to the recoverable amount if the recoverable amount is below the carrying amount (Note III (21)).
(15) Fixed assets
(a) Recognition and initial measurement of fixed assets
Fixed assets comprise buildings, machinery and equipment, motor vehicles, other equipment and leasehold improvements.
Fixed assets are recognized when it is probable that the related economic benefits will flow to the Group and the costs can be reliably measured. Fixed assets purchased or constructed by the Group are initially measured at cost at the acquisition date. The fixed assets contributed by the State shareholders at the reorganization of the Company into a corporation entity are recognized based on the revaluated amounts approved by the State-owned Assets Administration Department.
Subsequent expenditures incurred for a fixed asset are included in the cost of the fixed asset when it is probable that the associated economic benefits will flow to the Group and the related cost can be reliably measured. The carrying amount of the replaced part is derecognized. All the other subsequent expenditures are recognized in profit or loss in the period in which they are incurred.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(15) Fixed assets (Continued)
(b) Depreciation methods of fixed assets
Fixed assets are depreciated using the straight-line method to allocate the cost of the assets to their estimated residual values over their estimated useful lives. For the fixed assets that have been provided for impairment loss, the related depreciation charge is prospectively determined based upon the adjusted carrying amounts over their remaining useful lives.
The estimated useful lives, the estimated residual values expressed as a percentage of cost and the annual depreciation rates are as follows:
Estimated useful lives Estimated residual value Annual depreciation rates Buildings 20-35 years 0-5% 2.71-5.00% Machinery and equipment 5-14 years 3-6% 6.79-19.40% Motor vehicles 3-10 years 0-5% 9.50-33.33% Other equipment 3-10 years 0-5% 9.50-33.33% Leasehold improvements within 5 years 0% 20% and above The estimated useful life, the estimated net residual value of a fixed asset and the depreciation method applied to the asset are reviewed, and adjusted as appropriate at least at each end of year.
(c) The carrying amount of fixed assets is reduced to the recoverable amount when the recoverable amount is less than the carrying amount (Note III (21)).
(d) Recognition basis and measurement method for financing leased fixed assets.
Finance leases are leases with the whole risks and rewards related to the asset substantially transferred. Fixed assets leased under finance lease are recognized with at smaller value of the fair value and minimum lease payments. The difference between the book value and the minimum lease payments should be recognized as unrecognized financing charges (Note III (28) (b)).
Fixed assets leased under finance lease are depreciated using the same policy as that those fixed assets owned by the company. For those leased assets that the ownership of the assets can be ascertained by the expiration date, the assets should be depreciated within estimated useful lives. Otherwise, the assets should be depreciated within the shorter period of the leasing period and estimated useful lives.
(e) Disposal of fixed assets
A fixed asset is derecognized on disposal or when no future economic benefits are expected from its use or disposal. The amount of proceeds from disposal on sale, transfer, retirement or damage of a fixed asset net of its carrying amount and related taxes and expenses is recognized in profit or loss for the current period.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(16) Construction in progress
Construction in progress is measured at actual cost. Actual cost comprises construction costs, installation costs, borrowing costs that are eligible for capitalization and other costs necessary to bring the fixed assets ready for their intended use. Construction in progress is transferred to fixed assets when the assets are ready for their intended use, and depreciation begins from the following month. The carrying amount of construction in progress is reduced to the recoverable amount when the recoverable amount is less than the carrying amount (Note III (21)).
(17) Borrowing costs
The borrowing costs that are directly attributable to the acquisition and construction of a fixed asset that needs a substantially long period of time for its intended use commence to be capitalized and recorded as part of the cost of the asset when expenditures for the asset and borrowing costs have been incurred, and the activities relating to the acquisition and construction that are necessary to prepare the asset for its intended use have commenced. The capitalization of borrowing costs ceases when the asset under acquisition or construction becomes ready for its intended use and the borrowing costs incurred thereafter are recognized in profit or loss for the current period. Capitalization of borrowing costs is suspended during periods in which the acquisition or construction of a fixed asset is interrupted abnormally and the interruption lasts for more than 3 months, until the acquisition or construction is resumed.
For the specific borrowings obtained for the acquisition or construction of a fixed asset qualifying for capitalization, the amount of borrowing costs eligible for capitalization is determined by deducting any interest income earned from depositing the unused specific borrowings in the banks or any investment income arising on the temporary investment of those borrowings during the capitalization period.
For the general borrowings obtained for the acquisition or construction of a fixed asset qualifying for capitalization, the amount of borrowing costs eligible for capitalization is determined by applying the weighted average effective interest rate of general borrowings, to the weighted average of the excess amount of cumulative expenditures on the asset over the amount of specific borrowings. The effective interest rate is the rate at which the estimated future cash flows during the period of expected duration of the borrowings or an applicable shorter period are discounted to the initial amount of the borrowings. (18) Intangible assets
Intangible assets include land use rights, computer software, technology patents, trademarks and distribution network, which are initially recognized at cost. Intangible assets contributed by state-owned shareholders during the Company reorganization were recorded based on the valuation amount approved by the State-owned Assets Supervision and Management Department.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(18) Intangible assets (Continued)
Categories Useful lives Land use rights Between the approved useful period and theCompany’s operating period Software 3-5 years Trademarks 5-10 years Technology patents 5 years Distribution network 20 years Franchising rights 10 years Favorable leases 17-20 years A land use right granted by government with an infinite useful life would not be amortized. Other land use rights are amortized on the straight-line basis over their approved useful period. If the acquisition costs of land use rights and the buildings located thereon cannot be reliably allocated between the land use rights and the buildings, all of the acquisition costs are recognized as fixed assets.
For an intangible asset with a finite useful life, review of its useful life and amortization method is performed at each end of year, with adjustments made as appropriate. For an intangible asset without a definite useful life, review of its useful life is performed at each end of year.
The expenditure on an internal research and development project is classified into expenditure on the research phase and expenditure on the development phase based on its nature and whether there is material uncertainty that the research and development activities can form an intangible asset at end of the project.
Expenditure for investigation, evaluation and selection of production process and new drugs researches is recognized in profit or loss in the period in which it is incurred. Expenditure on the designation, measurement of the final utilization of the production process and new drugs before mass production, is capitalized only if all of the following conditions are satisfied:
• development of the production process and new drugs has been fully demonstrated by the technical team;
• management has approved the budget of drug production development and new drugs;
• market research analysis suggests that the products produced by the new production technology are able to be promoted;
• adequate technical, financial and other resources to complete the development and the ability to use or sell the intangible asset;
• the expenditure attributable to the intangible asset during its development phase can be reliably measured.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(18) Intangible assets (Continued)
Other development costs that do not meet the conditions above are recognized in profit or loss in the period in which they are incurred. Development costs previously recognized as expenses are not recognized as an asset in a subsequent period. Capitalized expenditure on the development phase is presented as development costs in the balance sheet and transferred to intangible assets at the date that the asset is ready for its intended use.
The carrying amount of intangible assets is reduced to the recoverable amount when the recoverable amount is less than the carrying amount (Note III (21)).
(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, as being the enterprise who bears the obligation for specially approved medical reserving materials, the medical reserve funds received from the PRC Government or local government are 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 as other non-current assets.
(21) 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 theasset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of anasset’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.
III Summary of significant accounting policies and accounting estimates (Continued)
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
(21) Impairment of long-term assets (Continued)
Goodwill that is separately presented in the financialstatements，intangible assets with infinite useful lives and capitalized development costs are tested at least annually for impairment, irrespective of whether there is any indication that it may be impaired. In conducting the test, the carrying value of goodwill is allocated to the related asset groups or groups of asset groups which are expected to benefit from the synergies of the business combination. If the result of the test indicates that the recoverable amount of an asset group or group of asset groups, including the goodwill allocated, is lower than its carrying amount, the corresponding impairment loss is recognized. The impairment loss is first deducted from the carrying amount of goodwill that is allocated to the asset group or group of asset groups, and then deducted from the carrying amount of other assets within the asset groups or groups of asset groups in proportion to the carrying amount of other assets.
Once the above Impairment loss is recognized, it will not be reversed for the value recovered in the subsequent periods.
(22) Employee benefits
Employee benefits mainly include short-term employee benefits, post-employment benefits, termination benefits and other long-term employee benefits incurred in exchange for service rendered by employees or various forms of rewards or compensation due to severance of labor relation.
(a) Short-term employee benefits
Short-term employee benefits include wages or salaries, bonuses, allowances and subsidies, staff welfare, medical insurance, work injury insurance, maternity insurance, housing funds, and labor union funds and employee education funds. The employee benefits are recognized in the accounting period in which the service has been rendered by the employees, and as costs of assets or expenses to whichever the employee service is attributable.
(b) Post-employment benefits (defined contribution plans)
The Company classifies post-employment benefit plans into either defined contribution plans or defined benefit plans. Defined contribution plans are post-employment benefit plans under which the Company pays fixed contributions into a separate fund and will have no obligation to pay further contributions; and defined benefit plans are post-employment benefit plans other than defined contribution plans. During the reporting period, the Company's post-employment benefits mainly include basic pensions, unemployment insurance and enterprise annuity, both of which belong to the defined contribution plans.
Basic pensions
TheCompany’s employees participate in the defined basic pension insurance plan set up and administered by local labor and social protection authorities. Basic pensions are provided monthly according to stipulated bases and proportions to local labor and social security contribution. When employees retire, local labor and social security institutions have a duty to pay the basic pension insurance to them. The amounts payable are recognized as liabilities based on the above provisions in the accounting period in which the service has been rendered by the employees, and as costs of assets or expenses to whichever the employee service is attributable.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(22) Employee benefits (Continued)
(c) Termination benefits
The Group recognizes the debt and the gain or loss, when offering compensation for terminating the labor contract before the due date, or encouraging the staff to resign voluntarily, at the earlier of when the Group cannot unilaterally withdraw the labor relation plan and when the Group recognizes the cost relating to recombinant involving the payment of termination benefits.
(d) Retirement benefits
The Group provides retirement benefits to employees who accept the internal retirement arrangements. Retirement benefits refer to the salary and social security contribution provided to those staff who voluntarily quit the job with approval from the management team, before the retirement age.
The group offers retirement benefits from the date when the arrangement begins, to the date when the staff reaches the retirement age. The liability including salary and security contribution funds is recognized when conditions for recognition are meet, regarding to the period from the staff leaves the position to the normal retirement date. Difference arising from the changes in actuarial assumptions for retirement benefits and adjustments in welfare standard, will be accounted for in the current profits and losses. Retirement benefits that are expected to be paid within one year from the balance sheet date are disclosed as current liabilities.
(23) Provisions
An obligation related to a contingency shall be recognized by the Group as a provision when all of the following conditions are satisfied, except contingent considerations and contingent liabilities assumed in a business combination not involving enterprises under common control:
(1) The obligation is a present obligation of the Group;
(2) It is probable that an outflow of economic benefits from the Group will be required to settle the obligation; and
(3) The amount of the obligation can be measured reliably.
The provisions are initially measured at the best estimate of the expenditure required to settle the related present obligation, taking into account factors pertaining to a contingency such as the risks, uncertainties and time value of money as a whole. The carrying amount of provisions is reviewed at the balance sheet date. Where there is clear evidence that the carrying amount of a provision does not reflect the current best estimate, the carrying amount is adjusted to the current best estimate.
Contingent liabilities of the acquiree obtained in a business combination shall be measured at fair value in initial recognition. After initial recognition, subsequent measurement is conducted using the higher of the amount recognized by provisions and the amount of initial recognition deducting the accumulated amortization amount determined by the principles of revenue recognition.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(24) Dividend distribution
Cash dividend distribution is recognized as a liability in the period in which it is approved by shareholder at the annualshareholders’ meeting.
(25) Revenue recognition
The amount of revenue is determined in accordance with the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of theGroup’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 reliably measured, and the following recognition conditions are met: (a) Sale of goods
Revenue from the sale of goods is recognized when significant risks and rewards of ownership of the goods are transferred to the buyer, the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold, and it is probable that the economic benefit associated with the transaction will flow to the Company and the relevant revenue and costs can be measured reliably.
(b) Rendering of services
The Group provides freight, storage and other services to external parties. The freights are recognized as revenue right after the goods are transported to the place of delivery according to contracts or agreements, received and confirmed by the purchasers. Other revenue is determined in accordance with the amount provided in the service period stipulated in the contract.
(c) Customer loyalty programme
The Group, offers a customer loyalty programme where points earned through the purchase of goods can only be redeemed for goods provided by Sinopharm Group Zhijun (Shenzhen) Pharmaceutical Co., Ltd. or other free goods. The fair value of the consideration received or receivable in respect of the initial sale is allocated between the award credits and the other components of the sale. Fair value of award points is measured on the basis of the value of the awards (that is, goods or services) for which they could be redeemed, the fair value of the award credits should take account of expected forfeitures as well as the discounts or incentives that would otherwise be offered to customers who have not earned award credits from an initial sale.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(26) Government grants
Government grants are transfers of monetary or non-monetary assets from the government to the Group at nil consideration, including refund of taxes and financial subsidies, etc.
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.
A government grant related to an asset is a grant received aimed to create a long-term asset by contracting or other methods. A government grant related to income is any grant other than government grants related to assets.
A government grant related to an asset is recognized as deferred income, and evenly amortized to profit or loss over the useful life of the related asset. Government grants measured at nominal amounts are recognized immediately in profit or loss for the current period.
For government grants related to income, where the grant is a compensation for related expenses or losses to be incurred by the Group in the subsequent periods, the grant is recognized as deferred income, and included in profit or loss over the periods in which the related costs are recognized; where the grant is a compensation for related expenses or losses already incurred by the Group, the grant is recognized immediately in profit or loss for the current period.
(27) Income tax
Income tax comprises current and deferred tax. Income tax is recognized as income or an expense in profit or loss of the current period, or recognized directly inshareholders’ equity if it arises from a business combination or relates to a transaction or event which is recognized directly inshareholders’ equity. The Group measures a current tax asset or liability arising from the current and prior period based on the amount of income tax expected to be paid by the Group or returned by tax authority calculated according to related tax laws.
Deferred tax assets and deferred tax liabilities are calculated and recognized based on the differences arising between the tax bases of assets and liabilities and their carrying amounts (temporary differences). Deferred tax asset is recognized for the deductible losses that can be carried forward to subsequent years for deduction of the taxable profit in accordance with the tax laws. No deferred tax liability is recognized for a temporary difference arising from the initial recognition of goodwill. No deferred tax asset or deferred tax liability is recognized for the temporary differences resulting from the initial recognition of assets or liabilities due to a transaction other than a business combination, which affects neither accounting profit nor taxable profit (or deductible loss). At the balance sheet date, 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.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(27) Incometax（Continued）
Deferred tax assets are only recognized for deductible temporary differences, deductible losses and tax credits to the extent that it is probable that taxable profit will be available in the future against which the deductible temporary differences, deductible losses and tax credits can be utilized.
Deferred tax assets and liabilities are offset when:
 the deferred taxes are related to the same tax payer within the Group and the same taxation authority; and,
 that tax payer has a legally enforceable right to offset current tax assets against current tax liabilities. Deferred tax liabilities are recognized for temporary differences arising from investments in subsidiaries and associates, except where the Group is able to control the timing of the reversal of the temporary difference, and it is probable that the temporary difference will not reverse in the foreseeable future. When it is probable that the temporary differences arising from investments in subsidiaries, and associates will be reversed in the foreseeable future and that the taxable profit will be available in the future against which the temporary differences can be utilized, the corresponding deferred tax assets are recognized.
(28) Leases
Finance leases are leases with the whole risks and rewards related to the asset substantially transferred. The other kinds of leases are nominated operating leases.
(a) Operating leases
Lease payments under an operating lease are recognized on a straight-line basis over the period of the lease, and are either capitalized as part of the cost of related assets or charged as an expense for the current period.
Lease income under an operating lease is recognized on a straight-line basis over the period of the lease. (b) Finance leases
Fixed assets leased under finance leases are recognized at the smaller value of the fair value and present value of the minimum lease payments. The difference between the book value and the minimum lease payments should be recognized as unrecognized financing charges, and amortized within the leasing period. The minimum lease payments net off the unrecognized financing charges should be classified as long-term payables.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(29) Discontinued operations
A discontinued operation is a component of an enterprise that either has been disposed of or is classified as held for sale, and is separately identifiable operationally and for financial reporting purpose, and satisfies one of the following conditions:
(1) Represents a separate major line of business or geographical area of operations;
(2) Is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operation;
(3) Is a subsidiary acquired exclusively with a view to resale.
(30) 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 theGroup’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.
(31) Critical accounting estimates
The Group continually evaluates the critical accounting estimates and key judgments applied based on historical experience and other factors, including expectations of future events that are believed to be reasonable.
(a) Critical accounting estimates and key assumptions
The critical accounting estimates and key assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next accounting year are outlined below:
(i) Accounting estimates on impairment of goodwill
The Group tests annually whether goodwill has suffered any impairment. The recoverable amount of asset groups and groups of asset groups is the present value of the future cash flows expected to be derived from them. These calculations require the use of estimates (Note V (17)).
If management revises the gross margin that is used in the calculation of the future cash flows of asset groups and groups of asset groups, and the revised gross margin is lower than the one currently used, the Group would need to recognize further impairment against goodwill and fixed assets.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(a) Critical accounting estimates and key assumptions (Continued)
(i) Accounting estimates on impairment of goodwill (Continued)
If management revises the pre-tax discount rate applied to the discounted cash flows, and the revised pre- tax discount rate is higher than the one currently applied, the Group would need to recognize further impairment against goodwill and fixed assets.
If the actual gross margin/pre-tax discount rate is higher/lower thanmanagement’s estimates, the impairment loss of goodwill previously provided for is not allowed to be reversed by the Group.
(ii) Accounting estimates on impairment of accounts receivable
In accordance with theGroup’s accounting policy (Note III (10)), theGroup’s management tests annually whether receivables have suffered any impairment. Impairment of receivables has been assessed by taking into account thecustomers’ credit history and financial position together with the current market conditions. Even if theGroup’s management has made bad debt provision for the expected loss at its best estimate, there is a possibility that changes incustomers’ financial position or market conditions will alter the result.
(iii) Accounting estimates on impairment of inventories
In accordance with theGroup’s accounting policy (Note III (11) (c)), theGroup’s management estimates the net realizable value of the inventory. Net realizable value is determined based on the estimated selling price in the ordinary course of business, less the estimated costs to completion and estimated costs necessary to make the sale and related taxes. Even if theGroup’s management has made stock provision for the expected impairment at its best estimate, there is a possibility that changes in market conditions will alter the result.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
IV Taxation
1. Main categories and rates of taxes:
Categories Tax base Tax rate Corporate income tax (“CIT”) Taxable income 15%,20% or25% Taxable value added amount (Tax payable is calculated
using the taxable sales amount multiplied by the effective
Value added tax (“VAT”) tax rate less deductible VAT input of the current period) 0%,3%,6%,11%,13% or17% Revenue from rental income, interest income and etc.
Business tax (from 1 January 2016 to 30 April 2016) 5% City maintenance and
construction tax Amount of VAT and business tax paid 5% or7% Educational surcharge Amount of VAT and business tax paid 3% Local educational surcharge Amount of VAT and business tax paid 2% 2. Tax preferences
(a) In 2014, Zhijun Medicine obtained the Certificate of High-Tech Corporation issued by the Shenzhen Bureau of Technology& Information, Bureau of Finance, National Tax Bureau and Local Tax Bureau. The Certificate is valid from 2014 to 2016.
According to the 28th rule of the Corporation Income Tax Law ofPeople’s Republic of China, corporations which obtained the Certificate of High-Tech Corporation can obtained a tax deduction and pay tax at a tax rate of15%. The tax rate that is applicable to Zhijun Medicine is15% (2015:15%).
(b) In 2014, theGroup’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 of15%. Due to the real estate relocation income, the operatingrevenue’s proportion is below70%, which does not meet the requirements of the preferential tax rate, so Sinopharm Guangxi Logistics was subject to a corporate income tax rate of25% during the year. (2015:15%).
From May to December of 2015, eight subsidiaries in Guangxi Province of the Group, 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 of15%. The applicable period for Sinopharm Guangxi, Sinopharm Liuzhou and Sinopharm Beihai is 1 January 2014 to 31 December 2020, and that for the other 5 subsidiaries is 1 January 2015 to 31 December 2020.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
IV Taxation (Continued)
2. Tax preferences (Continued)
(c) The Urumqi Head Office, Changji Branch and Karamay Branch of Sinopharm Holding Xinjiang New& Special Medicines Chain Store Co., Ltd. (“Xinjiang New& Special Medicines”), a subsidiary of the Group, shall pay tax at a rate of15% 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 of15% from 1 January 2011 to 31 December 2020. According to the reply to Registration Form for Items Enjoying Preferential Treatments in Corporate Income Tax by local tax authorities, in 2015 and 2016, the Urumqi Head Office, Changji Branch and Karamay Branch of Xinjiang New& Special Medicines were subject to a reduced CIT rate of15%.
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 2015 and 2016, the company was exempt from the local retained portion of the corporate income tax(40%), and therefore subject to a CIT rate of15%.
According to Cai shui[2011] No.58 and Notices on Tax Reduction and Exemption (Hu shi hui guo shui deng zi[2014] No. 37), Sinopharm Holding Guoda Neimenggu Pharmacy Chain Store Co., Ltd., a subsidiary of the Group, was entitled to the preferential tax rate for the further development of the Western Regions. Therefore the company is entitled to a preferential CIT rate of15%.
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 on 21 May 2015, which approved that the company was subject to a CIT rate of15% in 2015 and 2016.
(d) The Corporate Income Tax Law of the People's Republic of China stipulates in Article 28 that, small low-profit enterprises are subject to corporate income tax at a rate of20%. The Implementation Rules for the Corporate Income Tax Law of the People's Republic of China stipulate in Article 92 that, small low-profit enterprises refer to enterprises operating in industries not restricted or prohibited by the State and satisfying following conditions: 1. For industrial enterprises, the annual taxable income does not exceed RMB300,000; the number of employees does not exceed 100 and the total assets does not exceed RMB30 million; 2. for other industries, the annual taxable income does not exceed RMB300,000; the number of employees does not exceed 80 and the total assets does not exceed RMB10 million.
In addition, according to the Circular on Issues Concerning the Preferential Policies for Corporate Income Tax for Small Low-profit Enterprises (Cai shui[2015] No. 34), Announcement of the State Administration of Taxation on Issues concerning the Implementation of the Further Expansion of the Scope of Small Low-profit Enterprises (Cai shui[2015] No.99), small low-profit enterprises with annual taxable income of RMB300,000 or less enjoy a tax reduction of50% of the income and pays income tax at a rate of20%. That is, the applicable corporate income tax rate is10%.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
IV Taxation (Continued)
2. Tax preferences (Continued)
In 2016, theGroup’s subsidiary Zhejiang Intlmedicine Pharmacy Dongshan Co., Ltd., Xinjiang New& Special Medicines , Sinopharm Holding Guoda Pharmacy Hulun Buir Co., Ltd., the Shule Branch and Kashgar Branch of Sinopharm Holding Xinjiang New& Special Medicines Chain Store Co., Ltd. were qualified for the definition of small low-profit enterprise and the requirements under Cai shui[2014] No. 34. Therefore, these companies enjoyed tax reduction of50% of the income and paid income tax at a rate of20%. That is, the applicable corporate income tax rate was10%. In 2015, Sinopharm Holding Guangzhou Medical Treatment Management Co., Ltd, a subsidiary of the Group, was qualified for small low-profit enterprise. Therefore, the company enjoyed tax reduction of50% of the income and paid income tax at a rate of20%. However, in 2016, the company was not entitled to the preferential tax rate for small small-profit enterprises.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements
1. Cash and bank balances
31 December 2016 31 December 2015 Cash on hand 6,164,382.85 2,846,748.55 Cash at banks 3,144,745,042.69 2,161,461,610.50 Other cash balances 369,046,139.44 490,623,120.83 - deposits for letters of credit 58,800.00 2,523,516.15 - deposits for bank acceptance
notes 333,961,620.45 360,316,626.32 -Cash deposit for pledged loan 31,255,582.91 127,782,978.36 -Term deposits longer than 3
3,770,136.08 - months
3,519,955,564.98 2,654,931,479.88 Current deposits earn interest at the rate based on current deposit interest rates. Maturities of short- term time deposits range from 1 month to 6 months depending on the fund arrangements of the Group, and earn interest at the respective deposit rates. The maturities of bank notice deposits are 7 days depending on the fund arrangement of the Group, and earn interest at respective deposit rates. 2. Notes receivable
31 December 2016 31 December 2015 Trade acceptance notes 594,546,810.36 383,605,635.52 Bank acceptance notes 909,454,098.85 528,735,788.26 1,504,000,909.21 912,341,423.78 At 31 December 2016, there were no notes receivable that were pledged (At 31 December 2015: notes receivables that were pledged were RMB20,490,279.00). The notes receivable that were pledged were guaranteed for bank acceptance notes.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
2. Notes receivable (Continued)
Notes receivable endorsed or discounted by the Group to other parties which were not yet due at 31 December 2016 and 31 December 2015 are as follows:
31 December 2016 31 December 2015
Derecognized Not derecognized Derecognized Not derecognized Trade acceptance
notes - 159,504,195.71 - 88,924,715.00 Bank acceptance
notes 844,012,721.90 - 993,628,187.92 - 844,012,721.90 159,504,195.71 993,628,187.92 88,924,715.00 As at 31 December 2016 and 31 December 2015, notes that were converted into accounts
receivable due to thedrawer’s inability to settle the note on maturity date are as follows:
31 December 2016 31 December 2015 Trade acceptance notes 148,322.25 - 3. Accounts receivable
31 December 2016 31 December 2015 Accounts receivable 7,703,120,162.25 7,901,159,744.78 Less: provision for bad debt (48,894,651.36) (73,693,029.46) 7,654,225,510.89 7,827,466,715.32 An aging analysis of accounts receivable is presented as follows:
31 December 2016 31 December 2015
Provision for bad Provision for bad Carrying amount debts Carrying amount debts Within 1 year 7,665,576,478.81 (26,371,938.74) 7,840,443,420.41 (33,586,945.38) 1 to 2 years 12,790,380.58 (1,297,920.86) 38,363,854.47 (20,435,791.30) 2 to 3 years 21,704,712.84 (19,101,203.39) 3,123,715.69 (2,089,361.64) Over 3 years 3,048,590.02 (2,123,588.37) 19,228,754.21 (17,580,931.14) 7,703,120,162.25 (48,894,651.36) 7,901,159,744.78 (73,693,029.46)
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
3. Accounts receivable (Continued)
Changes in provision for bad debts are presented as follows:
Reversal of
Increases
Opening Reversal in Written off in written off Decreased in Increased in Closing in the
balance the year the year in previous reorganization merge balance year
year
2016 73,693,029.46 1,786,013.00 (12,022,290.90) (14,517,375.00) 23,638.80 (68,364.00) - 48,894,651.36 2015 57,865,871.25 22,783,276.61 (10,395,957.75) (37,181.36) 28,377.60 - 3,448,643.11 73,693,029.46 The accounts receivable by category are analyzed below:
31 December 2016 31 December 2015
Gross carrying amount Provision for bad debt Gross carrying amount Provision for bad debt Amount Proportion Amount Proportion Amount Proportion Amount Proportion Individually
significant
items for
which
provision for
bad debt is
recognized
separately 445,672,816.82 5.79% (11,559,178.29) 2.59% 343,642,906.844.35% (27,604,373.29) 8.03% Items for
which
provision for
bad debt is
recognized
by group 7,236,776,975.66 93.95% (27,546,435.58) 0.38% 7,499,917,577.0994.92% (31,445,629.72) 0.42% Not
individually
significant
Items for
which
provision for
bad debt is
recognized
separately 20,670,369.77 0.26% (9,789,037.49) 47.36% 57,599,260.850.73% (14,643,026.45) 25.42% 7,703,120,162.25 100.00% (48,894,651.36) 0.63% 7,901,159,744.78100.00% (73,693,029.46) 0.93%
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
3. Accounts receivable (Continued)
At 31 December 2016, accounts receivable that are individually significant and individually assessed for provisions are as follows:
Bad debt Assessment for Carrying amount provision Age Rate impairment Receivable of Receivable of medical medical Within 1 insurance with no risk of insurance 335,724,923.69 - year - recoverability Receivable of franchises Receivable of Within 1 within 1 year with no risk franchises 23,722,754.02 - year - of recoverability Sinopharm
Holding Receivable due from a Heilongjiang Within 1 related party with no risk Co., Ltd. 22,466,769.60 - year - of recoverability Sinopharm Receivable due from a Health Online Within 1 related party with no risk Co., Ltd. 15,534,183.30 - year - of recoverability Receivable of Credit Receivable of Within 1 cards with no risk of credit card 14,046,943.02 - year - recoverability Disputed receivable with Hubei Xianning higher risk of Pharmaceutic 2 to 3 recoverability which is al Co., Ltd. 11,559,178.29 (11,559,178.29) years100.00% related to a lawsuit Sinopharm
Holding Receivable due from a Hulunbuir Co., Within 1 related party with no risk Ltd. 6,373,883.21 - year - of recoverability Receivable of E- Receivable of E- Within 1 Business with no risk of Business 5,624,876.37 - year - recoverability Sinopharm Receivable due from a Group Co., Within 1 related party with no risk Ltd. 5,478,768.04 - year - of recoverability Receivable of shopping Receivable of Within 1 cards with no risk of shopping card 5,140,537.28 - year - recoverability Total
445,672,816.82 (11,559,178.29)
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
3. Accounts receivable (Continued)
At 31 December 2015, accounts receivable that are individually significant and individually assessed for provisions are as follows:
Carrying amount Bad debt provision Age Rate Assessment for impairment Receivable of Within 1 Receivable of Medical Insurance with no medical insurance 271,724,677.19 - year - risk of recoverability Guangdong
Liyuan
Pharmaceutical Over 5 Disputed receivable with higher risk of Co., Ltd. 14,517,375.00 (14,517,375.00) years 100% recoverability which has filed a lawsuit Receivables of
Within 1 Receivable of retail stores with no risk of retail stores
12,269,113.38 - year - recoverability Receivables of
Within 1 Receivables of credit card with no risk of credit cards
12,156,111.47 - year - recoverability Hubei Xianning
Pharmaceutical 1 to 2 years Disputed receivable with higher risk of Co., Ltd. 11,563,498.29 (11,563,498.29) 100% recoverability which has filed a lawsuit The First Affiliated
Hospital of Sun Within 1
Yat-sen year
University 8,835,000.00 (883,500.00) 10% The probability of recovery is90%. Nanning Second
People’s Within 1
Hospital 6,400,000.00 (640,000.00) year 10% The probability of recovery is90%. Receivable of
Within 1 Receivable of Shopping Card with no shopping card
6,177,131.51 - year - risk of recoverability Total
343,642,906.84 (27,604,373.29)
The accounts receivable for which the Group recognized provision for bad debt using the aging analysis method are presented as follows
31 December 2016 31 December 2015
Carrying amount Bad debt provision Carrying amount Bad debt provision Amount Amount Proportion Amount Amount Proportion Within 1 year 7,221,261,344.66 (25,898,202.34) 0.36% 7,479,036,688.79 (29,381,260.34) 0.39% 1 to 2 years 12,391,828.46 (954,110.33) 7.70% 18,640,056.59 (1,230,628.11) 6.60% 2 to 3 years 2,483,834.48 (374,438.91) 15.08% 1,426,049.71 (426,350.27) 29.90% Over 3 years 639,968.06 (319,684.00) 49.95% 814,782.00 (407,391.00) 50.00% 7,236,776,975.66 (27,546,435.58) 0.38% 7,499,917,577.09 (31,445,629.72) 0.42%
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
3. Accounts receivable (Continued)
The provision for bad debt was RMB1,786,013.00 in 2016, including RMB12,022,290.90 recovered or reversed. Important recovered or reversed bad debt items are listed below:
Reason for
recoverability or Original assessment for Recovered or Way of reversal providing impairment reversed amount recovery The First Affiliated Hospital of Sun Yat-sen Amount University Amount received Uncertainty in recovery 883,500.00 received Amount Hainan Xinshitong Pharmaceutical Co., Ltd. Amount received Uncertainty in recovery 700,440.00 received Amount Nanning SecondPeople’s Hospital Amount received Uncertainty in recovery 640,000.00 received Amount Qinzhou SecondaryPeople’s Hospital Amount received Uncertainty in recovery 567,015.38 received AmountPeople’s Hospital of Qinzhou City Qinbei District Amount received Uncertainty in recovery 388,203.85 received Amount Chaozhou Central Hospital Amount received Uncertainty in recovery 384,690.40 received Amount Health Centre of Zengcheng City Shitan Town Amount received Uncertainty in recovery 316,174.17 received Amount Chinese Medical Hospital of Hechi City Amount received Uncertainty in recovery 292,582.86 received Amount Health Centre of Conghua City Jiangpu Street Amount received Uncertainty in recovery 256,982.00 received Amount Health Centre of Conghua City Aotou Town Amount received Uncertainty in recovery 235,875.71 received Health Centre of Guangzhou City Zengcheng Amount District Yongning Street Amount received Uncertainty in recovery 178,219.92 received Amount Health Centre of Enping City Juntang Town Amount received Uncertainty in recovery 159,420.07 received Amount Chinese Medical Hospital of Lipu County Amount received Uncertainty in recovery 145,139.80 received Amount Health Centre of Luoding City Jiayi Town Amount received Uncertainty in recovery 127,629.77 received Zhongxin Hospital of Guangzhou City Zengcheng Amount District Amount received Uncertainty in recovery 126,283.08 received Center for Disease Control and Prevention of Amount Wengyuan County Amount received Uncertainty in recovery 124,000.00 received Amount Guangzhou Konzern Medicine Co., Ltd. Amount received Uncertainty in recovery 116,400.00 received Amount Huarun Guokang(Guangdong) Medicine Co., Ltd. Amount received Uncertainty in recovery 114,994.84 received Amount Health Centre of Conghua City Taiping Town Amount received Uncertainty in recovery 112,654.38 received Amount Huizhou ForthPeople’s Hospital Amount received Uncertainty in recovery 95,199.37 received AmountPeople’s Hospital of Zhongshan Town Amount received Uncertainty in recovery 84,001.24 received Maternal and Child Health Hospital of Heshan Amount City Amount received Uncertainty in recovery 83,678.54 received Amount Mental Hospital of Yuancheng District Amount received Uncertainty in recovery 80,000.00 received Amount Health Centre of Dianbai County Magang Town Amount received Uncertainty in recovery 75,867.34 received Amount Health Centre of Xinyi City Zhusha Town Amount received Uncertainty in recovery 74,981.26 received Amount Health Centre of Conghua City Lvtian Town Amount received Uncertainty in recovery 68,920.55 received Amount Health Centre of Zengcheng City Xiancun Town Amount received Uncertainty in recovery 64,122.66 received
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
3. Accounts receivable (Continued)
Reason for
recoverability or Original assessment for Recovered or Way of reversal providing impairment reversed amount recovery Ruikang Hospital of Guangxi University of Amount Chinese Medicine Amount received Uncertainty in recovery 62,330.47 received Amount Liuzhou Municipal Liutie Central Hospital Amount received Uncertainty in recovery 59,969.34 received Amount Chinese Medical Hospital of Xuwen County Amount received Uncertainty in recovery 52,827.42 received Amount Others Amount received Uncertainty in recovery 746,796.59 received 7,418,901.01
The provision for bad debt was made at RMB22,783,276.61 in 2015, including RMB10,395,957.75 recovered or reversed. Important recovered or reversed bad debt items are listed below:
Reason for
recoverability or Original assessment for Recovered or Way of reversal providing impairment reversed amount recovery Tibet Naqu Kang Hui Pharmaceutical Co., Amount Ltd. Amount received Uncertainty in recovery 3,197,352.50 received Amount Beihai Hepu Psychiatric Hospital Amount received Uncertainty in recovery 857,874.76 received Affiliated Chencun Hospital of Foshan City Amount Shunde District FirstPeople’s Hospital Amount received Uncertainty in recovery 670,145.84 received Amount Qinzhou SecondaryPeople’s Hospital Amount received Uncertainty in recovery 500,000.00 received Ruikang Hospital of Guangxi University of Amount Chinese Medicine Amount received Uncertainty in recovery 350,000.00 received Amount Chinese Medical Hospital of Hechi City Amount received Uncertainty in recovery 300,000.00 received Amount Foshan FirstPeople’s Hospital Amount received Uncertainty in recovery 198,188.34 received Xinhua Hospital of Guangzhou City Huadu Amount District Amount received Uncertainty in recovery 191,597.75 received Health Centre of Guangzhou City Huadu Amount District Tanbu Town Amount received Uncertainty in recovery 172,722.58 received Amount Affiliated Hospital of Youjiang Medical College Amount received Uncertainty in recovery 160,000.00 received Health Centre of Guangzhou City Zengcheng Amount District Yongning Street Amount received Uncertainty in recovery 147,088.08 received Zhongxin Hospital of Guangzhou City Amount Zengcheng District Amount received Uncertainty in recovery 128,327.74 received Amount Foshan Chancheng District Central Hospital Amount received Uncertainty in recovery 114,834.68 received Amount Mental Hospital of Yuancheng District Amount received Uncertainty in recovery 103,938.40 received Amount Others Amount received Uncertainty in recovery 1,687,166.73 received 8,779,237.40
Accounts receivable written off in 2016 are analysed below:
Nature of the Related party transaction receivable Amount Reason or not Guangdong Liyuan
Pharmaceutical Co., Ltd. Loan
14,517,375.00
Non-recoverable No
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
3. Accounts receivable (Continued)
Accounts receivable written off in 2015 are analysed below:
Nature of the Related party receivable Amount Reason transaction or not Beijing Huayuan Renji Disputes won but client has no
Pharmaceutical Co., Ltd. (i) Loan 31,691.36 property to implement No Recoverability in significant doubt
Others (i) Loan 5,490.00 due to long age No 37,181.36
(i) They were written off in the current year after being approved by the board of directors. As at 31 December 2016, the top five accounts receivable by customer are summarised below: Bad debt provision% of the total accounts Amount amount receivable Top 1 Account receivable
152,479,008.73 (516,738.27) 1.98% Top 2 Account receivable 136,646,805.83 (473,935.95) 1.77% Top 3 Account receivable 130,842,086.73 (985,351.62) 1.70% Top 4 Account receivable 103,132,401.51 - 1.34% Top 5 Account receivable 85,227,222.06 (186,185.24) 1.11% 608,327,524.86 (2,162,211.08) 7.90% As at 31 December 2015, the top five accounts receivable by customer are summarised below: Bad debt provision% of the total accounts Amount amount receivable Top 1 Account receivable
149,343,916.00 (217,538.40) 1.89% Top 2 Account receivable 144,907,927.18 (504,492.86) 1.83% Top 3 Account receivable 132,730,819.09 (482,430.64) 1.68% Top 4 Account receivable 111,477,310.47 - 1.41% Top 5 Account receivable 109,919,843.73 (923,038.14) 1.39% 648,379,816.47 (2,127,500.04) 8.21% Analysis of accounts receivable of which the recognition was terminated due to a financial asset transfer is as follows:
In 2016, accounts receivable of RMB1,687,263,359.73 have been factored to a financial institute (2015: RMB605,173,250.60).
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
4. Advances to suppliers
(a) The aging of advances to suppliers is analyzed below:
31 December 2016 31 December 2015
Amount % of total balance Amount % of total balance Within 1 year 411,644,193.52 96.89% 621,910,670.22 97.85% 1 to 2 years 11,793,388.28 2.77% 10,497,718.47 1.65% 2 to 3 years 800,000.00 0.19% 3,184,544.96 0.50% Above 3 years 630,000.00 0.15% 9,714.52 0.00% 424,867,581.80 100.00% 635,602,648.17 100.00% The prepayment aged for more than a year is mainly the advance made by South Pharma& Trade to suppliers for equipment to be resold to the hospitals amounting to RMB12,927,024.58 (31 December 2015: RMB13,277,220.08) as the hospital equipment procurement is a large project and takes a long time to complete.
(b) As at 31 December 2016, the top five advances to suppliers by customer are summarized below:
Amount Proportion of total balance Total amount of top five advances to suppliers
91,769,873.47 21.60% 5. Interest receivable
31 December 2016 31 December 2015 Fixed deposits 450,722.67 197,875.00 6. Dividend receivable
31 December 2016 31 December 2015 Shanghai Beiyi Guoda pharmaceutical
Co. Ltd. - 964,600.00
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
7. Other receivables
31 December 2016 31 December 2015 192,975,588.52 149,875,716.95 Deposits
8,980,000.00 8,980,000.00 Receivable of equity transactions
14,926,087.80 11,952,517.51 Petty cash advance to employees
141,523,200.48 270,696,858.20 Receivable due from related parties
135,585,385.78 76,243,603.59 Others
493,990,262.58 517,748,696.25 (19,202,619.30) (19,117,084.21) Less: provision for bad debts
474,787,643.28 498,631,612.04 (a) The ageing of other receivables is analyzed below:
31 December 2016 31 December 2015 Within 1 year
446,187,889.37 480,857,880.71 15,346,020.98 10,089,531.80 1 to 2 years
6,037,372.86 1,934,242.47 2 to 3 years
Above 3 years
26,418,979.37 24,867,041.27 493,990,262.58 517,748,696.25 (b) Changes of related provision for bad debts are analyzed below:
Balance at the Balance at the
Increases Reversal in
beginning of Written off in Decreased in end of the
in the year the year
the year the year reorganization year
2016
19,117,084.21 181,998.77 (57,164.51) (3,692.31) (35,606.86) 19,202,619.30
2015
19,889,436.87 548,703.09 (1,291,055.75) (30,000.00) - 19,117,084.21
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
7. Other receivables (Continued)
(c) Other receivables and related provision for bad debts by category are analyzed below:
31 December 2016 31 December 2015
Bad debt Carrying amount Bad debt provision Carrying amount provision Amount % Amount % Amount % Amount % Individually
significant
and subject to
separate
impairment
assessment 184,418,573.8037.33% (9,315,472.11)5.05% 390,903,981.4675.50% (8,980,000.00)2.30% Receivable
accounts with
similar credit
risk 286,923,888.7558.08% (2,655,875.78)0.93% 79,469,817.6615.35% (2,616,590.99)3.29% Individually not
significant
but
individually
evaluated for
impairment 22,647,800.034.59% (7,231,271.41)31.93% 47,374,897.139.15% (7,520,493.22)15.87% 493,990,262.58100.00% ( 19,202,619.30) 3.89% 517,748,696.25100.00% (19,117,084.21)3.69% (d) As at 31 December 2016, impairment provision for other receivables individually significant are analyzed as below:
Bad debt
Amount provision Rate Assessment for impairment Cash deposit, no risk of recoverable, no Deposit 169,946,811.59 0.00 0.00% provision Staff temporary borrowings, partially Staff temporary borrowings 5,491,762.21 (335,472.11) 6.11% unrecoverable Shenzhen Yinghai
Technology
Investment Co., Ltd. 8,980,000.00 (8,980,000.00) 100.00% Uncertainty in recoverability 184,418,573.80 (9,315,472.11) 5.05%
As at 31 December 2015, impairment provision for other receivables which were individually significant is analyzed as below:
Bad debt
Amount provision Rate Assessment for impairment Cash pool receivables from a related party, no risk of recoverable, and no Sinopharm Group Co., Ltd. 264,174,065.35 - 0.00% provision Health insurance and rent deposits receivable, no risk of recovering, no Deposit 117,749,916.11 - 0.00% provision Shenzhen Yinghai Technology
Investment Co., Ltd. 8,980,000.00 (8,980,000.00) 100.00% Uncertainty in recoverability 390,903,981.46 (8,980,000.00) 2.30%
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
7. Other receivables (Continued)
(e) Provisions for impairment of the receivables which are within a similar risk group are analyzed below:
31 December 2016 31 December 2015
Carrying amount Bad debt provision Carrying amount Bad debt provision amount Amount Rate Amount Amount Rate Within 1 year 283,705,612.68 (2,340,716.26) 0.83% 75,773,358.42 (2,181,983.35) 2.88% 1 to 2 years 1,922,485.83 (92,014.77) 4.79% 2,467,748.49 (178,494.46) 7.23% 2 to 3 years 367,037.96 (36,703.80) 10.00% 232,359.80 (23,235.98) 10.00% Above 3 years 928,752.28 (186,440.95) 20.07% 996,350.95 (232,877.20) 23.37% 286,923,888.75 (2,655,875.78) 0.93% 79,469,817.66 (2,616,590.99) 3.29% (f) Bad debt provision of other receivables in 2016 was RMB181,998.77 (2015: RMB548,703.09), with the recovered or reversed amount of RMB57,164.51 (2015: RMB1,291,055.75).
(g) Other receivables written off in the current year were RMB3,692.31 (2015: RMB30,000.00). (h) As at 31 December2016，the top 5 parties that owed the largest amounts of other receivable balances are analyzed below:
Nature Amount Age % of total amount Provision of bad debt Cash deposit relating to significant
Shanghai Shyndec corporate restructuring and money Within 1
Pharmaceutical Co., Ltd. advanced for construction project 137,191,103.76 year 27.77% - Guangdong Pharmaceutical Pharmaceutical trading platform Within 1
electronic trading platform payments not yet cleared 73,358,155.83 year 14.85% - Shenyang Tiexi State Owned
Assets Supervision and Within 1
Administration Bureau Cash deposit 15,000,000.00 year 3.04% - Taiyuan Medical Insurance Within 1
Management Center Medical insurance deposit 12,776,150.89 year 2.59% - Shenyang Social Security Within 1
Administration Medical insurance deposit 11,335,599.41 year 2.29% - 249,661,009.89 50.54% - As at 31 December2015，the top 5 parties that owed the largest amounts of other receivable balances are analyzed below:
% of total Provision of bad Nature Amount Age amount debt Shenyang Social Security
Within
Administration Medical insurance deposit 32,291,211.79 1year 6.24% - Taiyuan Medical insurance
Within 1
management center Medical insurance deposit 11,370,505.75 year 2.20% - Shenzhen Yinghai Technology
More than
Investment Co., Ltd. Receivable for share transfer 8,980,000.00 5 years 1.73% (8,980,000.00) Shenzhen social insurance fund
Within 1
administration Medical insurance deposit 8,459,492.39 year 1.63% - Liyang medical insurance fund
Within 1
administration Medical insurance deposit 8,378,677.60
year
1.61% - 69,479,887.53 13.41% (8,980,000.00)
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
8. Inventories
(a) Inventories by category are analyzed below:
31 December 2016 31 December 2015
Book value Provision Net book value Book value Provision Net book value Raw materials 463,493.71 - 463,493.71 119,787,461.99 (2,825,858.08) 116,961,603.91 Consigned processing
materials - - - 1,959,239.89 - 1,959,239.89 Finished goods 4,061,265,347.64 (14,930,813.47) 4,046,334,534.17 4,047,532,872.49 (26,596,837.25) 4,020,936,035.24 Work in progress 277,528.67 - 277,528.67 23,461,516.85 (6,773,872.30) 16,687,644.55 Low cost consumables 2,406,973.16 - 2,406,973.16 8,636,151.35 (23,001.88) 8,613,149.47 4,064,413,343.18 (14,930,813.47) 4,049,482,529.71 4,201,377,242.57 (36,219,569.51) 4,165,157,673.06 (b) Provision for declines in value of inventories is analysed below:
Decreases
1 January 2016 Increases Decreased in 31 December 2016 Reversal Written off
reorganization
Raw materials 2,825,858.08 10,933.12 - -（2,836,791.20） - Finished goods 26,596,837.25 7,736,615.11 (6,271,860.18) (2,777,174.55) (10,353,604.16) 14,930,813.47 Work in progress 6,773,872.30 86,929.62 - - (6,860,801.92) - Low cost consumables 23,001.88 - - - (23,001.88) - 36,219,569.51 7,834,477.85 (6,271,860.18)（2,777,174.55) (20,074,199.160 14,930,813.47 Increases in Decreases
1 January 2015 Increases 31 December 2015 merge Reversal Written off
Raw materials 3,596,085.79 - 648,943.01 (57,403.07) (1,361,767.65) 2,825,858.08 Finished goods 16,631,436.72 584,091.82 24,739,290.39 (4,231,699.97) (11,126,281.71) 26,596,837.25 Work in progress 6,537,971.20 - 654,047.39 (418,146.29) - 6,773,872.30 Low cost consumables 19,254.66 - 21,919.76 (5,770.71) (12,401.83) 23,001.88 26,784,748.37 584,091.82 26,064,200.55 (4,713,020.04) (12,500,451.19) 36,219,569.51 (c) Provision of inventories is determined according to the gap between the net realizable value and the inventory book value.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
9. Other current assets
31 December 2016 31 December 2015 VAT tax credit 54,641,868.38 51,084,243.99 Corporate income tax to be deducted 520,764.03 2,577,454.90 Other 2,044,674.94 293,461.72 57,207,307.35 53,955,160.61 10. Available-for-sale financial assets
31 December 2016 31 December 2015 Available-for-sale equity instruments
- Measured at cost 13,865,760.00 2,855,760.00 Impairment provision
180,000.00 180,000.00 13,685,760.00 2,675,760.00 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. are25%,10%,10%,7% and10%, respectively. However, the Group neither appoint the directors and key management for those 5 companies, nor involve in or affect the financial or operating decision- making process or ordinary course of business of those companies. Therefore, the Group had no significant influence over the above companies and recognized its investments in those companies as available-for-sale equity instruments.
The group has18% voting rights in Xinxiang Golden Elephant Technology Co., Ltd. (“Xinxiang Golden Elephant”), the amount of investment is RMB180,000. However, none of the directors or any key members of the management team were appointed by the group. The group has neither participated in nor had any impact on Xinxiang GoldenElephant’s financial affairs, operating decisions, or operating activities. Therefore, the Group had no significant impact on Xinxiang Golden Elephant and was considered as available for sale equity instruments. As at 31 December 2016 and 31 December 2015, full impairment provision for investment in Xinxiang Golden Elephant was accrued.
As at 31 December 2016, the carrying value of unlisted equity investment was RMB13,685,760.00 (31 December 2015: RMB2,675,760.00) and presented at net cost, because the reasonable fair value was unavailable and the Group considered that its fair value cannot be measured reasonably.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
10. Available-for-sale financial assets (Continued)
2016：
Carrying amount Impairment provision
Investee
Opening Increase Decrease Closing Opening Increase Decrease Closing Shareholding(%) received for the year Sinopharm Health Online Co.,
Ltd. - 12,000,000.00 - 12,000,000.00 - - - - 10.00 - Sinopharm Holding Hubei
Guoda Pharmacy Co., Ltd. 1,000,000.00 - - 1,000,000.00 - - - - 10.00 - Sinopharm Guoda Taishan
Qunkang Pharmacy Chain
Store Co., Ltd. (“Guoda
Taishan”) 990,000.00 - (990,000.00) - - - - - - - Hunan Zhongbai
pharmaceutical investment
Co., Ltd. 315,000.00 - 315,000.00 - - - 7.00 - Shanghai Guoda Shuguang
Pharmacy Co., Ltd. 270,760.00 - - 270,760.00 - - - - 25.00 50,000.00 Xinxiang Golden Elephant. 180,000.00 - - 180,000.00 (180,000.00) - - (180,000.00) 18.00 - Shanghai Guoren Pharmacy
Co., Ltd. 100,000.00 - - 100,000.00 - - - - 10.00 426,094.35 2,855,760.00 12,000,000.00 (990,000.00) 13,865,760.00 (180,000.00) - - (180,000.00) - 476,094.35 162
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
10. Available-for-sale financial assets (Continued)
2015：
Carrying amount Impairment provision Shareholding
Investee
Opening Increase Decrease Closing Opening Increase Decrease Closing (%) received for the year Sinopharm Holding Hubei
Guoda Pharmacy Co., Ltd. 1,000,000.00 - - 1,000,000.00 - - - - 10.00 - Guoda Taishan - 990,000.00 - 990,000.00 - - - - 10.00 - Hunan Zhongbai pharmaceutical
investment Co., Ltd. 1,050,000.00 - (735,000.00) 315,000.00 - - - - 7.00 - Shanghai Guoda Shuguang
Pharmacy Co., Ltd. 270,760.00 - - 270,760.00 - - - - 25.00 50,000.00 Xinxiang Golden Elephant. 180,000.00 - - 180,000.00 (180,000.00) - - (180,000.00) 18.00 - Shanghai Guoren Pharmacy
Co., Ltd. 100,000.00 - - 100,000.00 - - - - 10.00 393,835.19 2,600,760.00 990,000.00 (735,000.00) 2,855,760 (180,000.00) - - (180,000.00) - 443,835.19 163
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
11. Long-term equity investments
Associates in 2016
Changes in the year
Provision for Investee 1 January 2016
Additional Investments gained Profit of loss under Other changes Cash dividend
31 December 2016 impairment Investment under other method equity method in equity declared by investee
Associates
Shenzhen Main Luck Pharmaceutical Inc. (“Main Luck
179,567,519.13 - - 62,881,567.77 - (35,190,000.00) 207,259,086.90 - Pharmaceutical”). (a)
Sinopharm Holding Zhuhai Co., Ltd (“Sinopharm
1,264,195.42 - - 155,944.54 - - 1,420,139.96 - Zhuhai”)”.(b)
Shanghai Beiyi Guoda Pharmaceutical Co. Ltd. (c) 8,824,803.91 - - 1,119,551.58 - (964,269.01) 8,980,086.48 - Shanghai Liyi Pharmacy Co., Ltd. (d) 626,110.68 - - 16,369.01 - - 642,479.69 - Sinopharm Holding Guoda Jilin Yongxin Pharmacy Chain
- - - - - - - - Co., Ltd. (Guoda Jilin Yongxin) (e)
Dongyuan Accord Pharmaceutical Chain Co., Ltd. (f) 396,638.32 - - - - - 396,638.32 396,638.32 Sinopharm Jienuo Medical Treatment Service Guangdong
- 9,860,000.00 - (417,258.39) - - 9,442,741.61 - Co., Ltd. (“Guangdong Jie nuo”) (g)
Zhijun Suzhou (h) - - 77,722,387.95 (8,079,401.97) - - 69,642,985.98 - Zhijun Medicine. (i) - - 370,773,608.48 20,707,823.70 - (216,661,020.11) 174,820,412.07 - Zhijun Trade. (i) - - 7,319,933.88 84,193.03 - (1,205,306.51) 6,198,820.40 - Pingshan Medicine (i) - - 42,585,612.04 4,502,346.27 - - 47,087,958.31 - Shyndec Pharmaceutical.(i) - 871,794,861.65 - 16,104,358.86 (359,766.35) - 887,539,454.16 - 190,679,267.46 881,654,861.65 498,401,542.35 97,075,494.40 (359,766.35) (254,020,595.63) 1,413,430,803.88 396,638.32 164
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
11. Long-term equity investments (Continued)
Associates in 2015
Changes in the year
Investee 1 January 2015 Cash dividend 31 December 2015 Provision for Additional Profit of loss under Other changes in impairment declared by Other
investment the equity method equity
investee
Associates
Main Luck Pharmaceutical (a) 157,604,846.85 - 57,152,672.28 - (35,190,000.00) - 179,567,519.13 - Sinopharm Zhuhai (b) - 1,002,980.00 261,215.42 - - - 1,264,195.42 - Shanghai Beiyi Guoda pharmaceutical Co.
8,718,203.91 - 1,071,200.00 - (964,600.00) - 8,824,803.91 - Ltd. (c)
Shanghai Liyi Pharmacy Co., Ltd. (d) - - 59,565.48 - - 566,545.20 626,110.68 - Guoda Jilin Yongxin (e) - - - - - - - - Dongyuan accord pharmaceutical chain
396,638.32 - - - - - 396,638.32 396,638.32 Co., Ltd. (f)
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
11. Long-term equity investments (Continued)
(a) On 4 July 1990, the Group jointly established Main Luck Pharmaceutical with Mercian Kabushiki Kaisha and Wanlian Co., Ltd., subscribe35.19%,34.15% and30.66% shareholding, 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 for33.33% 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 a10% equity interest of Sinopharm Zhuhai, SinopharmZhuhai’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.
(c) On 26 July 1994, the Group jointly established Shanghai Beiyi Guoda Pharmaceutical Co. Ltd with Shanghai Beiyi (Group) Co., Ltd. and eight natural persons including Fuchun Zhu, the share percentage being26%,26% and48%, respectively. According to the Articles of Association, the board of directors of Shanghai Beiyi Guoda Pharmaceutical Co. Ltd. consisted of seven directors, in which two were appointed by the Group, accounting for28.57% of voting rights. Therefore, the Group had significant influence over Shanghai Beiyi Guoda Pharmaceutical Co. Ltd., and thus it was considered as an associate of the Group.
(d) On 25 November 2003, the Group jointly established Shanghai Liyi Pharmacy Co., Ltd. with Shanghai Pudong District Central Hospital and Shanghai Liyi Technology Co., Ltd., the share percentage being35%,35% and30%, respectively. According to the Articles of Association, the board of directors of Shanghai Liyi Pharmacy Co., Ltd consisted of five directors, in which two were appointed by the Group, accounting for40.00% of voting rights. Therefore, the Group had significant influence over Shanghai Liyi Pharmacy Co., Ltd, and thus it was considered as an associate of the Group.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
11. Long-term equity investments (Continued)
(e) The Group entered a joint venture agreement with Jilin Province Yuzhenkemao Co., Ltd. in respect of funding and establishing Sinopharm Holding Guoda Jilin Yongxin Pharmacy Chain Co., Ltd. (“Jilin Yongxin”) with a registered capital of RMB6,670,000.00, the share percentage being10% and90%, respectively. The Group could exercise significant influence over Jilin Yongxin as it appointed one of the three directors and one of the two supervisors as well as the Financial Controller of Jilin Yongxin, even though it held less than20% voting rights of Jilin Yongxin. Therefore, Jilin Yongxin was considered as an associate of the Group.
Pursuant to the agreement, Jilin Province Yuzhenkemao Co., Ltd. was responsible for transferring all the businesses to the new entity; and when the newentity’s monthly actual sales reached RMB6,500,000, theGroup’s statutory equity ratio would be increased from10% to70%, and both parties would agree to enter into the Equity Transfer Agreement. The transition period of the transaction would be the period between the establishment date of the entity and the date on which the equity transfer procedure was officially completed. The profit and loss occurred during this period would be recognized by the Group and Jilin Province Yuzhenkemao Co., Ltd. in the proportion of shareholding after the equity transfer was completed. As at 31 December 2015, Jilin Yongxin incurred a net liability due to continuous loss. The carrying value of long-term equity investment was written down to zero when recognizing the shared net loss. According to the agreement, the Group also provide provisions for those additional loss required to be born by the Group according to the agreement, and recognized investment loss in year 2015. As at 31 December 2016, the Group had transferred the10% equity interest to Jilin Province Yuzhenkemao Co., Ltd. with a consideration of RMB226,000.00. The agreement also requires Jilin province Yuzhenkemao Co., Ltd. to share the profit or loss occurred before the equity transfer completed in the proportion of shareholding after the equity transfer completed. Hence the Group was able to reverse the recorded provisions and recognized an investment income in 2016 based on the reversal of provision as well as the equity transfer consideration received (Note V (36), (NoteⅤ (52)).
(f) In 2007, Dongyuan Accord Pharmaceutical Chain Co., Ltd., an associate of the Group, operated in poor conditions and its future operation would be significantly uncertain, so the Group made a full provision for impairment of the long-term equity investment on it.
(g) On 23 February 2016, the Group jointly established Guangdong Jienuo with Sinopharm Jienuo Medical Treatment Service Co., Ltd. and Guangzhou Jinluo Investment Development Co., Ltd., the share percentage being29%,51% and20%, respectively. According to the Articles of Association, the board of directors of Guangdong Jienuo was composed of five directors, one of whom were appointed by the Group, accounting for20% of voting rights. Therefore, the Group had significant influence over Guangdong Jienuo and thus it was considered as an associate of the Group.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
11. Long-term equity investments (Continued)
(h) The Group disposed its67% equity interest of Zhijun Suzhou on 26 April 2016. After the disposal, the Group held33% equity interest of Zhijun Suzhou (NoteⅥ (2)). As a result, the Group had significant influence over Zhijun Suzhou and thus it was considered as an associate of the Group. (i) The Group subscribed15.56% of new issued shares of Shyndec Pharmaceutical, a related party, by the transferring of the productive assets in Pingshan base and its51% equity interest of three pharmaceutical companies of the Group respectively in 2016. After the completion of the reorganization, Shyndec Pharmaceutical holds a51% equity interest of each of the three pharmaceutical companies, and the Group holds a49% 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 a15.56% equity interest of Shyndec Pharmaceutical. Shyndec Pharmaceutical set up a board of directors that was responsible for the shareholders' meeting, with a total of nine members, in which one was appointed by the Group. Each director shall represent one vote for resolutions of the board, accounting for11.11% of the voting rights. The Group has significant influence over Shyndec Pharmaceutical. The above three pharmaceutical companies and Shyndec Pharmaceutical are considered as associates of the Group.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
12. Investment properties
Subsequent measurement under the cost model:
2016 Buildings and
constructions Land use right Total Original cost
Opening balance 249,200,861.95 24,477,650.62 273,678,512.57 Transfer from fixed assets 20,378,781.43 - 20,378,781.43 Transfer from intangible assets - 62,726.06 62,726.06 Disposal of subsidiaries (16,981,059.62) - ( 1 6 , 9 8 1 , 0 5 9 . 6 2) Transfer to intangible assets - (706,386.41) (706,386.41) Transfer to fixed assets (7,149,582.01) - ( 7 , 1 4 9 , 5 8 2 . 01) Disposal and retirement (190,274.72) - (190,274.72) Closing balance
245,258,727.03 23,833,990.27 269,092,717.30 Accumulated
depreciation and
amortization
Opening balance (102,045,177.72) (7,680,160.11) (109,725,337.83) Provision (6,630,617.36) (752,896.61) (7,383,513.97) Transfer from fixed assets (2,516,240.39) - ( 2 , 5 16,240.39) Transfer from intangible assets (2,299.92) (2,299.92) Disposal of subsidiaries 16,941,566.58 - 16,941,566.58 Transfer to intangible assets - 387,144.02 387,144.02 Transfer to fixed assets 1,076,244.11 - 1,076,244.11 Disposal or retirement 145,568.90 - 145,568.90 Closing balance (93,028,655.88) (8,048,212.62) (101,076,868.50) Provision for
impairment
Opening balance (1,300,000.00) - (1,300,000.00) Closing balance (1,300,000.00) - (1,300,000.00) Carrying amount
At end of year 150,930,071.15 15,785,777.65 166,715,848.80 At beginning of the year 145,855,684.23 16,797,490.51 1 62,653,174.74
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
12. Investment properties (Continued)
Subsequent measurement under the cost model (Continued):
2015 Buildings and
constructions Land use right Total Original cost
Opening balance 168,479,306.84 26,189,883.39 194,669,190.23 Purchase 70,153,819.76 - 70,153,819.76 Transfer from fixed assets 18,296,353.26 - 18,296,353.26 Transfer from intangible assets - 1,133,863.36 1,133,863.36 Transfer to intangible assets - (1,094,896.13) (1,094,896.13) Transfer to intangible assets (3,959,294.92) - (3,959,294.92) Disposal and retirement (3,769,322.99) (1,751,200.00) (5,520,522.99) Closing balance 249,200,861.95 24,477,650.62 273,678,512.57 Accumulated
depreciation and
amortization
Opening balance (99,290,478.09) (7,405,111.62) (106,695,589.71) Provision (6,019,521.15) (295,417.22) (6,314,938.37) Transfer from fixed assets (1,701,527.59) - (1,701,527.59) Transfer from intangible assets - (128,524.56) (128,524.56) Transfer to intangible assets - 148,893.29 148,893.29 Transfer to intangible assets 1,891,217.07 - 1,891,217.07 Disposal and retirement 3,075,132.04 - 3,075,132.04 Closing balance (102,045,177.72) (7,680,160.11) (109,725,337.83) 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 145,855,684.23 16,797,490.51 162,653,174.74 At beginning of the year 67,888,828.75 18,784,771.77 86,673,600.52
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
12. Investment properties (Continued)
Subsequent measurement under the cost model (Continued):
During 2016, depreciation of investment property was RMB7,383,513.97(2015：RMB6,314,938.37)。
During 2016, properties with a carrying amount of RMB17,862,541.04 (original value: RMB20,378,781.43, accumulated depreciation: RMB2,516,240.39) and land use rights with a carrying amount of RMB60,426.14 (original value of land use rights:RMB62,726.06, accumulated depreciation: RMB2,299.92) were leased. From the date of transfer, the transfer property and land use rights were reclassified as Investment properties.
During 2016, the disposal of subsidiaries caused a decrease in net book value of investment properties amounting to RMB39,493.04 (original value: RMB16,981,059.62, accumulated depreciation: RMB16,941,566.58).
During 2016, a property with a carrying amount of RMB6,073,337.90 (original value of a buildings: RMB7,149,582.01, accumulated depreciation: RMB1,076,244.11) and land use rights with a carrying amount of RMB319,242.39 (original value of exclusive distribution rights: RMB706,386.41, accumulated depreciation: RMB387,144.02) transferred to owner-occupied property. From the date of transfer, the property and land use rights were reclassified as fixed assets and intangible assets.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
13. Fixed assets
2016
Fixed asset
Buildings Machinery Vehicles Other equipment Total improvements
Original cost
Opening balance 1,083,130,279.82 574,763,347.43 98,645,685.13 376,767,380.65 37,402,811.81 2,190,642,821.84 Purchase 9,432,887.03 10,613,251.29 8,285,220.62 29,250,205.80 14,554,923.63 72,136,488.37 Transfer from construction in progress 62,850,281.34 71,727,554.65 - 1,649,017.21 11,099,018.87 147,325,872.07 Transfer from Investment properties 7,149,582.01 - - - - 7,149,582.01 Business combination not involving enterprises under
- - 214,439.69 838,535.63 316,712.48 1,369,687.80 common control
Transfer to Investment properties (20,378,781.43) - - - - (20,378,781.43) Disposal of subsidiaries (354,119,994.82) (374,915,985.66) (6,849,716.43) (162,503,087.71) (35,503,049.13) (933,891,833.75) Disposal or retirement (371,194,019.41) (145,520,314.63) (9,582,161.05) (5,474,339.97) (5,496,702.77) (537,267,537.83) Closing balance 416,870,234.54 136,667,853.08 90,713,467.96 240,527,711.61 22,373,714.89 907,152,982.08 Accumulated depreciation
Opening balance (205,438,438.54) (260,314,953.03) (61,342,652.40) (234,967,814.19) (20,580,071.74) (782,643,929.90) Provision (44,567,606.50) (36,813,001.26) (9,801,608.84) (25,058,794.30) (16,396,435.53) (132,637,446.43) Transfer from Investment properties (1,076,244.11) - - - - (1,076,244.11) Transfer to Investment properties 2,516,240.39 - - - - 2,516,240.39 Disposal of subsidiaries 92,687,153.26 218,544,767.02 6,078,685.58 114,149,497.01 13,528,652.34 444,988,755.21 Disposal or retirement 15,924,645.43 20,972,414.47 5,928,802.35 3,279,645.28 2,603,735.33 48,709,242.86 Closing balance (139,954,250.07) (57,610,772.80) (59,136,773.31) (142,597,466.20) (20,844,119.60) (420,143,381.98) 172
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
13. Fixed assets (Continued)
2016(Continued)
Fixed asset
Buildings Machinery Vehicles Other equipment Total improvements
Provision for impairment
Opening balance (2,449,498.76) (12,493,558.67) - (106,511.27) (366,438.25) (15,416,006.95) Disposal of subsidiaries 2,449,498.76 12,493,558.67 - 106,511.27 366,438.25 15,416,006.95 Closing balance - - - - - - Carrying amount
At end of year 276,915,984.47 79,057,080.28 31,576,694.65 97,930,245.41 1,529,595.29 487,009,600.10 At beginning of the year 875,242,342.52 301,954,835.73 37,303,032.73 141,693,055.19 16,456,301.82 1,372,649,567.99 173
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
13. Fixed assets (Continued)
2015
Fixed asset
Buildings Machinery Vehicles Other equipment
improvements Total Original cost
Opening balance 757,462,411.08 497,280,605.36 97,863,983.71 327,587,091.95 30,798,145.75 1,710,992,237.85 Purchase 9,263,127.45 12,422,758.41 6,885,522.87 39,318,942.20 1,019,222.79 68,909,573.72 Transfer from construction in progress 306,488,589.42 95,855,566.83 - 10,397,926.65 8,486,568.38 421,228,651.28 Transfer from Investment properties 3,959,294.92 - - - - 3,959,294.92 Business combination not involving
enterprises under common control 24,603,719.75 85,669.04 3,507,946.08 9,571,347.97 - 37,768,682.84 Transfer to Investment properties (18,296,353.26) - - - - (18,296,353.26) Disposal or retirement (350,509.54) (30,881,252.21) (9,611,767.53) (10,107,928.12) (2,901,125.11) (53,852,582.51) Closing balance
1,083,130,279.82 574,763,347.43 98,645,685.13 376,767,380.65 37,402,811.81 2,170,709,504.84 Accumulated depreciation
Opening balance (174,397,975.96) (239,314,138.54) (57,790,379.94) (201,262,159.10) (18,665,819.09) (691,430,472.63) Provision (31,084,257.49) (41,034,680.67) (11,401,183.98) (42,787,965.24) (4,726,964.30) (131,035,051.68) Transfer from Investment properties (1,891,217.07) - - - - (1,891,217.07) Transfer to Investment properties 1,701,527.59 - - - - 1,701,527.59 Disposal or retirement 233,484.39 20,033,866.18 7,848,911.52 9,082,310.15 2,812,711.65 40,011,283.89 Closing balance
(205,438,438.54) (260,314,953.03) (61,342,652.40) (234,967,814.19) (20,580,071.74) (782,643,929.90) 174
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
13. Fixed assets (Continued)
2015(Continued)
Buildings Machinery Vehicles Other equipment Fixed asset improvements Total Provision for impairment
Opening balance (2,449,969.17) (20,855,885.66) - (2,873.43) (7,758.64) (23,316,486.90) Provision (81,588.55) (994,108.56) - (106,511.27) (358,679.61) (1,540,887.99) Disposal of subsidiaries 82,058.96 9,356,435.55 - 2,873.43 - 9,441,367.94 Ending balance
(2,449,498.76) (12,493,558.67) - (106,511.27) (366,438.25) (15,416,006.95) Carrying amount
At end of year
875,242,342.52 301,954,835.73 37,303,032.73 141,693,055.19 16,456,301.82 1,372,649,567.99 At beginning of the year
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
13. Fixed assets (Continued)
(a) Fixed assets held under finance leases are presented as follows:
2016
Accumulated Provision for
Original cost Carrying amount depreciation impairment
Machinery 21,312,957.86 (2,747,553.98) - 18,565,403.88 Other equipment 2,154,468.72 (281,867.26) - 1,872,601.46 23,467,426.58 (3,029,421.24) - 20,438,005.34 (b) As at 31 December 2016 and 31 December 2015, there were no fixed assets for which certificates of title have not been obtained.
(c) As at 31 December 2016 and 31 December 2015, there were no fixed assets that were leased under operating leases.
(d) As at 31 December 2016 and 31 December 2015, there were no fixed assets that were temporarily idle.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
14. Construction in progress
31 December 2016 31 December 2015
Carrying Provision for Provision for
balance impairment Carrying amount Carrying balance impairment Carrying amount Warehouse improvement project 14,044,783.68 - 14,044,783.68 5,341,796.63 - 5,341,796.63 New office building project 7,979,356.35 - 7,979,356.35 7,682,660.00 - 7,682,660.00 Supply chain extension project 5,209,203.43 - 5,209,203.43 12,620,204.41 - 12,620,204.41 Software project 10,889,391.67 - 10,889,391.67 8,767,497.12 - 8,767,497.12 Pingshan pharmaceutical research&
development manufacturing base - - - 129,597,181.05 - 129,597,181.05 Zhijun production workshop technological
transformation project - - - 12,468,050.72 - 12,468,050.72 Zhijun(Suzhou) production workshop
technological transformation project - - - 5,388,239.70 - 5,388,239.70 Other projects 8,941,133.36 - 8,941,133.36 20,203,174.45 (1,500,000.00) 18,703,174.45 47,063,868.49 - 47,063,868.49 202,068,804.08 (1,500,000.00) 200,568,804.08 177
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
14. Construction in progress (Continued)
(a) Changes of significant construction in progress
Changes of significant construction in progress in 2016 are presented as follows:
Decrease
Proportion of Project name Budget
At begi tn hn ein yg
e
ao rf
Increase
Transferred to fixed Transferred to
Tra tn es rf mer
p
t ro
e
l po an ig
d
s
D ui bs sp ido is aa rl
i
eo sf
Tra tn es rf mer
p
t ro
e
l po an ig
d
At end of year
Sour fc ue n do sf inv be us dtm gee tn (t% to ) assets intangible assets expense expense
Warehouse improvement
Working capital project 26,179,291.74 5,341,796.63 17,520,163.36 (407,170.12) - (8,410,006.19) - - 14,044,783.68 91.85 New office building Project 38,182,660.00 7,682,660.00 584,503.35 - - (287,807.00) - - 7,979,356.35
Working capital 70.00 Working capital Supply chain extension and financing project 21,619,775.70 12,620,204.41 6,924,554.03 (14,061,970.11) (273,584.90) - - - 5,209,203.43 lease 97.93 Software project 69,690,403.27 8,767,497.12 10,889,391.67 - (8,741,856.09) - - (25,641.03) 10,889,391.67 Working capital 80.00 Pingshan pharmaceutical
research& development - manufacturing Base 881,370,000.00 129,597,181.05 57,890,421.61 (120,948,278.13) - - - (66,539,324.53) - - Zhijun production workshop
technological transformation - project 105,810,000.00 12,468,050.72 20,107,191.57 (10,954,642.81) - - (21,620,599.48) - - - Zhijun(Suzhou) production
workshop technological - transformation project 49,938,000.00 5,388,239.70 (886,370.90) - - (4,501,868.80) - - - Other construction projects 253,713,768.90 18,703,174.45 1,128,590.10 (67,440.00) - (8,670,838.15) (1,898,466.80) (253,886.24) 8,941,133.36 Working capital 5.78 200,568,804.08 115,044,815.69 (147,325,872.07) (9,015,440.99) (17,368,651.34) (28,020,935.08) (66,818,851.80) 47,063,868.49
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
14. Construction in progress (Continued)
(a) Changes of significant construction inprogress（Continued）
Incl: interest
Accumulated amount of Capitalization Project name Budget Progress（%） capitalized in
interest capitalized rate(%) current year
Warehouse improvement project 26,179,291.74 91.85 - - - New office building project 38,182,660.00 70.00 - - - Supply chain extension project 21,619,775.70 97.93
- - - Software project 69,690,403.27 80.00 - - - Pingshan pharmaceutical research& 881,370,000.00
- 21,839,808.16 2,054,260.93 8.40 development Manufacturing base
Zhijun production workshop technological 105,810,000.00
- - - - transformation project
Zhijun(Suzhou) production workshop 49,938,000.00
- 29,774.20 - - technological transformation project
Other construction projects
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
14. Construction in progress (Continued)
(a) Changes of significant construction in progress (Continued)
Changes of significant construction in progress in 2015 are presented as follows:
Increase Decrease
Acquisition of Transferred to Transferred to Transfer to long term Proportion of investment Project name Budget At beginning of the year subsidiaries Input fixed assets intangible assets prepaid expense At end of year Source of funds to budget(%) Warehouse improvement project 19,787,622.53 224,000.00 - 8,008,392.47 - - (2,890,595.84) 5,341,796.63 Working capital 41.6 New office building project 7,682,660.00 7,682,660.00 - - - - - 7,682,660.00 Working capital 100.00 Working capital and Supply chain extension project 29,600,826.62 - - 28,421,405.62 (15,801,201.21) - - 12,620,204.41 financing Lease 94.00 Software project 52,400,464.01 10,372,001.31 - 8,879,011.65 - (10,483,515.84) - 8,767,497.12 Working capita 99.00 Pingshan pharmaceutical research& Working capital and development manufacturing base 881,370,000.00 298,665,439.18 - 209,425,992.51 (378,494,250.64) - - 129,597,181.05 borrowings 53.00 Zhijun production workshop technological
transformation project 105,810,000.00 14,214,138.81 - 15,462,849.61 (17,208,937.70) - - 12,468,050.72 Working capita 46.66 Zhijun(Suzhou) production workshop Working capital and technological transformation project 49,938,000.00 - - 6,035,537.55 (647,297.85) - - 5,388,239.70 borrowings 12.00 Other constructions projects 277,475,759.46 20,193,473.87 677,883.51 13,633,296.76 (9,076,963.88) - (6,724,515.81) 18,703,174.45 Working capital 12.00 351,351,713.17 677,883.51 289,866,486.17 (421,228,651.28) (10,483,515.84) (9,615,111.65) 200,568,804.08
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
14. Construction in progress (Continued)
(a) Changes of significant construction inprogress（Continued）
Accumulated amount of Incl: interest capitalized Capitalization Project name Budget Progress（%）
interest capitalized in the year rate(%) Warehouse improvement project 19,787,622.53 41.60 - - - New office building project 7,682,660.00 100.00 - - - Supply chain extension project 29,600,826.62 94.00 - - - Software project 52,400,464.01 99.00 - - - Pingshan pharmaceutical research& development
881,370,000.00 85.00 19,785,547.23 11,321,691.09 5.06 manufacturing base
Zhijun production workshop technological
105,810,000.00 59.49 - - - transformation project
Zhijun(Suzhou) production workshop technological
49,938,000.00 11.00 29,774.20 29,774.20 4.22 transformation project
Other constructions 277,475,759.46 - - - - 1,424,065,332.62 100.00 19,815,321.43 11,351,465.29 (b) As of 31 December 2016, construction in progress with a carrying amount of RMB1,924,502.57 was leased under finance leases (31 December 2015: RMB4,231,000.00).
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
15. Intangible assets
2016 Land use right Software Patent Trademarks Favorable lease Sales network Franchise Total Original cost
Opening balance 166,814,085.35 94,967,477.32 53,901,204.72 65,977,850.00 93,242,000.00 112,117,142.86 710,000.00 587,729,760.25 Purchase - 5,898,548.00 - - - - - 5,898,548.00 Transfer from construction in
progress - 9,015,440.99 - - - - - 9,015,440.99 Transfer from investment
properties 706,386.41 - - - - - - 706,386.41 Disposal of subsidiaries (69,513,050.95) (7,395,189.01) (53,901,204.72) - - - - (130,809,444.68) Transfer to investment properties (62,726.06) - - - - - - (62,726.06) Disposal or retirement (41,926,611.02) (1,883,399.57) - - - - - (43,810,010.59) Closing balance
56,018,083.73 100,602,877.73 - 65,977,850.00 93,242,000.00 112,117,142.86 710,000.00 428,667,954.32 Accumulated amortization
Opening balance (56,014,659.97) (39,146,125.02) (50,276,036.19) (196,850.00) (4,945,705.80) (23,874,761.90) (704,083.17) (175,158,222.05) Provision (3,645,604.77) (11,465,033.77) (133,647.80) (0.16) (4,945,705.80) (5,605,857.14) (5,916.83) (25,801,766.27) Transfer from investment
properties (387,144.02) - - - - - - (387,144.02) Disposal of subsidiaries 28,466,915.70 5,285,980.03 50,409,683.99 - - - - 84,162,579.72 Transfer to investment properties 2,299.92 - - - - - - 2,299.92 Disposal or retirement 8,416,374.68 533,324.59 - - - - - 8,949,699.27 Closing balance
(23,161,818.46) (44,791,854.17) - (196,850.16) (9,891,411.60) (29,480,619.04) (710,000.00) (108,232,553.43) 182
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
15. Intangible assets (Continued)
Favorable
2016 (Continued) Land use right Software Patent Trademarks lease Sales network Franchise Total Provision for impairment
Opening balance - (264,952.19) (3,000,000.00) - - - - (3,264,952.19) Disposal of subsidiaries - 264,952.19 3,000,000.00 - - - - 3,264,952.19 Closing balance
- - - - - - - - Carrying amount
At end 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 At beginning of the year
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
15. Intangible assets (Continued)
2015 Land use right Software Patent Trademarks Favorable lease Sales network Franchise Total Original cost
Opening balance 166,853,052.58 75,573,269.68 53,901,204.72 196,850.00 - 103,117,142.86 710,000.00 400,351,519.84 Purchase - 9,014,997.62 - - - - - 9,014,997.62 Business combination not
involving enterprises under
common control - - - 65,781,000.00 93,242,000.00 9,000,000.00 - 168,023,000.00 Transfer from construction in
progress - 10,483,515.84 - - - - - 10,483,515.84 Transfer from investment
properties 1,094,896.13 - - - - - - 1,094,896.13 Transfer to investment properties (1,133,863.36) - - - - - - (1,133,863.36) Disposal or retirement - (104,305.82) - - - - - (104,305.82) Closing balance
166,814,085.35 94,967,477.32 53,901,204.72 65,977,850.00 93,242,000.00 112,117,142.86 710,000.00 587,729,760.25 Accumulated amortization
Opening balance (49,863,542.73) (25,813,481.96) (49,952,578.71) (196,850.00) - (18,268,904.76) (633,083.17) (144,728,441.33) Provision (6,130,748.51) (13,434,225.65) (323,457.48) - (4,945,705.80) (5,605,857.14) (71,000.00) (30,510,994.58) Transfer from investment
properties (148,893.29) - - - - - - (148,893.29) Transfer to investment properties 128,524.56 - - - - - - 128,524.56 Disposal or retirement - 101,582.59 - - - - - 101,582.59 Closing balance
(56,014,659.97) (39,146,125.02) (50,276,036.19) (196,850.00) (4,945,705.80) (23,874,761.90) (704,083.17) (175,158,222.05) V Notes to the consolidated financial statements (Continued)
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
15. Intangible assets (Continued)
2015 (Continued) Land use right Software Patent Trademarks Favorable lease Sales network Franchise Total Provision for
impairment
Opening balance - (264,952.19) (3,000,000.00) - - - - (3,264,952.19) Closing balance
- (264,952.19) (3,000,000.00) - - - - (3,264,952.19) Carrying amount
At end of year
110,799,425.38 55,556,400.11 625,168.53 65,781,000.00 88,296,294.20 88,242,380.96 5,916.83 409,306,586.01 At beginning of the
year
116,989,509.85 49,494,835.53 948,626.01 - - 84,848,238.10 76,916.83 252,358,126.32 As at 31 December 2016, there were no intangible assets arising from internal research and development (31 December 2015: none)
As at 31 December 2016, there were no intangible assets of which the certificates of title have not been obtained.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
16. Development costs
2016 At beginning of year Increase Decrease At end of year Internal Recognized in pr Disposal of
development ofit or loss subsidiaries
Projects of antibiotics preparation and
powder injection projects - 12,698,143.68 (12,698,143.68) - - Projects of cardiovascular and
cerebrovascular diseases
treatment - 487,956.61 (487,956.61) - - Projects of Dajiankang related
products - 4,547,253.86 (4,547,253.86) - - Projects of respiratory system
diseases treatment 18,117.29 - - (18,117.29) - Projects of bulk antibiotics etc. 5,357,691.17 - - (5,357,691.17) - Other projects 243,507.01 25,998,356.01 ( 2 5 , 9 9 8 ,356.01) (243,507.01) - 5,619,315.47 43,731,710.16 ( 4 3 , 7 3 1 , 7 10.16) (5,619,315.47) - 2015 At beginning of year Increase Decrease At end of year Internal Recognized in profit or
development loss
Projects of antibiotics preparation
and powder injection projects
subtotal - 19,254,969.71 (19,254,969.71) - Projects of cardiovascular and
cerebrovascular diseases
treatment subtotal - 17,994,927.58 (17,994,927.58) - Projects of Dajiankang related
products - 6,767,534.31 (6,767,534.31) - Projects of digestive system
diseases treatment etc. - 3,496,648.92 (3,496,648.92) - Projects of respiratory system
diseases treatment subtotal 18,117.29 3,413,291.67 (3,413,291.67) 18,117.29 Projects of chinese patent
medicine - 3,182,594.31 (3,182,594.31) - Projects of bulk anitibiotic drug 5,357,691.17 1,859,965.14 (1,859,965.14) 5,357,691.17 Other projects 243,507.01 17,180,463.62 (17,180,463.62) 243,507.01 Total
5,619,315.47 73,150,395.26 (73,150,395.26) 5,619,315.47 Expenditures on research and development incurred in 2016 amounted to RMB25,998,356.01 (2015: RMB73,150,395.26), the total amount is recognized in profit or loss for the current period. No research and development costs are capitalized as intangible assets.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
17. Goodwill
Increase Decrease
31 December 2016 Opening balance Business combination not Closing balance involving enterprises under
common control Disposal
Pharmaceutical distribution
Jiangmen Renren Medical Co., Ltd.
(“Sinopharm Jiangmen”) 27,392,317.73 - - 27,392,317.73 Sinopharm Holding Shenzhen
Yanfeng Co., Ltd. (“Sinopharm
Yanfeng”) 16,868,644.87 - - 16,868,644.87 Sinopharm Holding Zhaoqing Co.,
Ltd. (“Sinopharm Zhaoqing”) 2,594,341.53 - - 2,594,341.53 Sinopharm Holding Shaoguan Co.,
Ltd. (“Sinopharm Shaoguan”) 1,686,496.80 - - 1,686,496.80 Sinopharm Holding Meizhou Co., Ltd.
(“Sinopharm Meizhou”) 1,610,819.66 - - 1,610,819.66 Sinopharm Holding Huizhou Co., Ltd.
(“Sinopharm Huizhou”) 923,184.67 - - 923,184.67 Sinopharm Holding Zhanjiang Co.,
Ltd. (“Sinopharm Zhanjiang”) 282,135.55 - - 282,135.55 Sinopharm Holding Dongguan Co.,
Ltd. (“Sinopharm Dongguan”) 1,499.02 - - 1,499.02 South Pharma& Trade 2,755,680.62 - - 2,755,680.62 Foshan Nanhai 88,877,850.51 - - 88,877,850.51 Sinopharm Holding Guoda ForMe
Medicines (Shanghai) Co., Ltd.
( “ForMe Medicines”) 3,033,547.53 - - 3,033,547.53 Pharmaceutical manufacturing
Zhijun Suzhou 33,869,393.32 - (33,869,393.32) - Pharmaceutical retail
Shijiazhuang Lerentang Yikang
Pharmacy Chain Store Co., Ltd.
(“Hebei Yikang”) 29,482,149.57 - - 29,482,149.57 Xiaoyi Guoda Wanmin Baicaotang
Pharmacy Chain Store Co., Ltd.
(“Xiaoyi Wanmin”) 15,866,680.00 - - 15,866,680.00 Shanxi Guoda Wanmin Pharmacy
Chain Store Co., Ltd. 65,025,000.00 - - 65,025,000.00 Sinopharm Holding Guoda ForMe
Pharmacy Chain Store Co., Ltd.
(“ForMe Pharmacy Chain Store”) 19,405,450.23 - - 19,405,450.23 Sinopharm Holding Guoda Pharmacy
Chain Store Shanghai Co., Ltd. 5,028,638.00 - - 5,028,638.00 Sinopharm Holding Guoda Yangzhou
Dadesheng Pharmacy Chain
Store Co., Ltd. 7,979,000.00 - - 7,979,000.00 Zhejiang Guoda Pharmacy Co., Ltd. 3,045,183.85 - - 3,045,183.85 Guoda Shenyang Tianyitang
Pharmacy Chain 1,687,942.92 - - 1,687,942.92 Sinopharm Holding Guoda Nanjing
Pharmacy Chain Store Co., Ltd. 11,598,341.12 - - 11,598,341.12
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
17. Goodwill (Continued)
Increase Decrease
31 December 2016 (Continued) Opening balance Business combination not Closing balance involving enterprises under
common control Disposal
Pharmaceutical retail (Continued)
Fujian Guoda Pharmacy Chain Store
Co., Ltd. 1,567,250.76 - - 1,567,250.76 Sinopharm Holding Guoda Shandong
Pharmacy Chain Store Co., Ltd. 29,110,409.46 - - 29,110,409.46 Sinopharm Holding Guoda Shenyang
Pharmacy Chain Store Co., Ltd. 39,360,015.16 - - 39,360,015.16 Liyang Guoda People Pharmacy
Chain Store Co., Ltd. 107,275,095.74 - - 107,275,095.74 Sinopharm Holding Hunan Guoda
Minshengtang Pharmacy Chain Co.,
Ltd. 41,165,574.64 - - 41,165,574.64 Quanzhou Guoda Pharmacy Chain
Store Co., Ltd. 41,298,622.59 - - 41,298,622.59 Sinopharm Holding Guoda Henan
Pharmacy Chain Store Co., Ltd. 22,666,179.77 - - 22,666,179.77 Sinopharm Holding Guoda
Neimenggu Pharmacy Chain Store
Co., Ltd. 70,485,777.00 - - 70,485,777.00 Sinopharm Guoda Pharmacy
Jiangmen Chain Co., Ltd. 77,350,000.00 - - 77,350,000.00 Sinopharm Holding Guoda Shanxi
Yiyuan Pharmacy Chain Store Co.,
Ltd. 9,080,100.00 - - 9,080,100.00 Shenzhen Guanganli Pharmacy
Chain Store Co., Ltd. store
acquisition 13,420,000.00 - - 13,420,000.00 Beijing Golden Elephant Pharmacy
Medicine Chain Company Limited
(“Beijing Golden Elephant”) 63,546,507.81 - - 63,546,507.81 Beijing Yangqiao Rongzhi Golden
Elephant Pharmacy Company
Limited 593,616.55 - - 593,616.55 Guoda Taishan - 26,826,120.55 - 26,826,120.55 855,933,446.98 26,826,120.55 (33,869,393.32) 848,890,174.21
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
17. Goodwill (Continued)
31 December 2015 Opening balance Increase Decrease Closing balance Business combination Disposal
not involving 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 ForMe Medicines - 3,033,547.53 - 3,033,547.53 Pharmaceutical
manufacturing
Suzhou Zhijun 33,869,393.32 - - 33,869,393.32 Pharmaceutical retail
Hebei Yikang - 29,482,149.57 - 29,482,149.57 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 ForMe Pharmacy Chain Store - 19,405,450.23 - 19,405,450.23 Sinopharm Holding Guoda
Pharmacy Chain Store
Shanghai Co., Ltd. 5,028,638.00 - - 5,028,638.00 Sinopharm Holding Guoda
Yangzhou Dadesheng
Pharmacy Chain Store Co.,
Ltd. 7,979,000.00 - - 7,979,000.00 Zhejiang Guoda Pharmacy
Co., Ltd. 3,045,183.85 - - 3,045,183.85 Guoda Shenyang Tianyitang
Pharmacy Chain 1,687,942.92 - - 1,687,942.92 Sinopharm Holding Guoda
Nanjing Pharmacy Chain
Store Co., Ltd. 11,598,341.12 - - 11,598,341.12 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
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
17. Goodwill (Continued)
31 December 2015 (Continued) Opening Increase Decrease Closing balance balance
Business combination not Disposal
involving enterprises
under common control
Pharmaceutical retail (Continued)
Sinopharm Holding Guoda
Shenyang Pharmacy Chain
Store Co., Ltd. 39,360,015.16 - - 39,360,015.16 Liyang Guoda People
Pharmacy Chain Store Co.,
Ltd. 107,275,095.74 - - 107,275,095.74 Sinopharm Holding Hunan
Guoda Minshengtang
Pharmacy Chain Co., Ltd. 41,165,574.64 - - 41,165,574.64 Quanzhou Guoda Pharmacy
Chain Store Co., Ltd. 41,298,622.59 - - 41,298,622.59 Sinopharm Holding Guoda
Henan Pharmacy Chain
Store Co., Ltd. 22,666,179.77 - - 22,666,179.77 Sinopharm Holding Guoda
Neimenggu Pharmacy Chain
Store Co., Ltd. 70,485,777.00 - - 70,485,777.00 Sinopharm Guoda Pharmacy
Jiangmen Chain Co., Ltd. 77,350,000.00 - - 77,350,000.00 Sinopharm Holding Guoda
Shanxi Yiyuan Pharmacy
Chain Store Co., Ltd. 9,080,100.00 - - 9,080,100.00 Shenzhen Guanganli
Pharmacy Chain Store Co.,
Ltd. store acquisition 13,420,000.00 - - 13,420,000.00 Beijing Golden Elephant - 63,546,507.81 - 63,546,507.81 Beijing Yangqiao Rongzhi
Golden Elephant Pharmacy
Company Limited - 593,616.55 - 593,616.55 724,005,495.29 131,927,951.69 - 855,933,446.98
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
17. Goodwill (Continued)
Changes in provision for impairment of goodwill are presented as follows:
Increase Decrease
2016 Opening balance Closing balance Provision Disposal
Pharmaceutical
manufacturing
Zhijun Suzhou 5,850,000.00 - 5,850,000.00 - Pharmaceutical retail
Quanzhou Guoda Pharmacy
25,000,000.00 - - 25,000,000.00 Chain Store Co., Ltd.
30,850,000.00 - 5,850,000.00 25,000,000.00 Opening Increase Decrease Closing 2015 balance balance Provision Disposal
Pharmaceutical
manufacturing
Zhijun Suzhou 5,850,000.00 - - 5,850,000.00 Pharmaceutical retail
Quanzhou Guoda Pharmacy
- 25,000,000.00 - 25,000,000.00 Chain Store Co., Ltd.
5,850,000.00 25,000,000.00 - 30,850,000.00 Note1: The carrying amount of goodwill was allocated to each asset group as follows:
31 December 2016 31 December 2015 Pharmaceutical distribution 146,026,518.49 146,026,518.49 Pharmaceutical manufacturing - 28,019,393.32 Pharmaceutical retail 677,863,655.72 651,037,535.17 823,890,174.21 825,083,446.98 The Group acquired Guoda Taishan in March 2016, and goodwill of RMB26,826,120.55 thus arose. Refer to Item 1 under Note VI for its calculation process.
The Group sold Zhijun Suzhou in April 2016, and goodwill of RMB28,019,393.32 thus decreased. Refer to Item 2 under Note VI for details.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
17. Goodwill (Continued)
The recoverable amount of an asset group or a group of asset groups is determined based on financial budget approved by management covering a five-year period cash flow. The cash flows beyond the five-year period are extrapolated using the inflation rate.
Key assumptions were used for the calculation of the present values of future cash flow projections of the asset group consisting of pharmaceutical distribution and pharmaceutical retail as of 31 December 2016. Key assumptions made by management on projections of cash flow used in impairment testing are described as follows:
Pharmaceutical
Pharmaceutical retail distribution
Revenue growth rate in the budget period 3.00%-23.00% 4.00%-19.20% Sustainable growth rate 3.00% 3.00% Gross margin 3.70%-6.90% 12.40%-34.50% Discount rate 13.00%-15.00% 13.40%-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.
18. Long-term prepaid expenses
2016 Opening balance Additions Amortization Other decrease Closing balance Fixed asset improvement
expenditure 122,552,974.97 84,325,901.30 (47,019,280.78) (1,376,334.55) 158,483,260.94 Acquisition expenditure to
obtain the right to operate 16,208,162.42 17,972,927.71 (5,687,496.50) - 28,493,593.63 Others 2,901,382.72 143,960.28 (1,094,033.67) (550,438.26) 1,400,871.07 141,662,520.11 102,442,789.29 (53,800,810.95) (1,926,772.81) 188,377,725.64 2015 Opening balance Increase Amortization Other decrease Closing balance Fixed asset improvement
expenditure 95,332,099.14 79,718,207.43 (51,898,193.79) (599,137.81) 122,552,974.97 Acquisition expenditure to
obtain the right to operate 11,471,719.68 10,875,390.68 (3,623,554.67) (2,515,393.27) 16,208,162.42 Others 2,063,951.88 1,997,956.00 (1,160,525.16) - 2,901,382.72 108,867,770.70 92,591,554.11 (56,682,273.62) (3,114,531.08) 141,662,520.11
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
19. Deferred tax assets/liabilities
(a) Deferred tax assets before offseting
31 December 2016 31 December 2015
Deferred tax Deductible temporary Deductible temporary assets differences Deferred tax assets differences Provision for
impairment of assets 19,118,314.97 83,604,722.45 33,648,740.15 143,253,973.95 Accrued expenses 11,524,213.88 48,767,983.92 19,195,263.09 96,941,062.64 Accrued payroll 14,668,802.63 60,272,948.20 17,515,511.33 73,914,805.70 Deferred revenue 6,196,507.49 25,425,419.68 16,869,230.40 94,122,629.19 Deductible tax loss 21,393,844.91 85,575,379.60 45,819,918.08 186,483,564.80 Others 445,778.06 2,065,022.05 2,390,776.98 10,319,078.58 73,347,461.94 305,711,475.90 135,439,440.03 605,035,114.86 (b) Deferred tax liabilities before offseting
31 December 2016 31 December 2015
Deferred tax Taxable temporary Taxable temporary liabilities differences Deferred tax liabilities differences Fair value adjustment
for business
combination not
involving enterprises
under common
control 63,557,328.29 254,229,313.19 69,440,104.70 277,760,418.81 Changes in fair value 8,734,282.98 35,313,052.96 9,733,983.44 40,156,878.68 Others 4,676,832.38 18,707,329.48 5,175,354.23 20,701,416.91 76,968,443.65 308,249,695.63 84,349,442.37 338,618,714.40 (c) The deductible temporary differences and deductible losses that were not recognized as deferred tax assets are presented as follows:
31 December 2016 31 December 2015 Deductible temporary differences 1,300,000.00 7,833,306.69 Deductible loss (i) 20,729,807.46 29,229,602.39 22,029,807.46 37,062,909.08 (i) For those loss-making subsidiaries, as it is not considered probable that taxable profit 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 RMB20,729,807.46 which are tax deductible under the tax law.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
19. Deferred tax assets/liabilities (Continued)
The aforesaid unrecognized deductible losses will due:
31 December 2016 31 December 2015 2016 -
6,972,796.36 2017 6,047,670.28
3,409,507.88 2018 5,630,816.89
5,630,816.89 2019 3,324,752.13
3,371,135.07 2020 4,075,875.54
9,845,346.19 2021 1,650,692.62 - 20,729,807.46 29,229,602.39 (d) Deferred tax assets and liabilities offsetting amount is as follows:
31 December 2016 31 December 2015 Deferred tax assets/liabilities
432,739.64 654,369.98 Deferred tax assets and liabilities are presented after being offset against each other:
31 December 2016 31 December 2015
Deferred tax Temporary Deferred tax Temporary assets/liabilities - differences assets/liabilities - differences Net after set-off Net after set-off Deferred tax assets
72,914,722.30 303,980,517.34 134,785,070.05 602,417,634.94 Deferred tax liabilities
76,535,704.01 306,518,737.07 83,695,072.39 336,001,234.48
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
20. Other non-current assets
31 December 2016 31 December 2015 Medical reserve fund 43,605,016.10 42,855,240.33 Prepayment for project and equipment 27,155,022.78 46,742,781.48 Prepayment for a rental fee (Note) 17,021,937.21 20,864,733.47 Prepayment for apartments 6,867,500.00 - Investment deposit - 5,880,000.00 94,649,476.09 116,342,755.28 Note: The prepayment for a rental fee which is over one year is recognized at other non-current assets for the Group.
21. Provision for impairment of assets
Reversal of
Reductions
1 January written off in 31 December 2016 previous
Additions
Decreased in 2016 Reversal Write-off
year reorganization
Provision for bad debt 92,810,113.67 23,638.80 1,968,011.77 (12,079,455.41) (14,521,067.31) (103,970.86) 68,097,270.66 Provision for bad debt of
accounts receivable 73,693,029.46 23,638.80 1,786,013.00 (12,022,290.90) (14,517,375.00) (68,364.00) 48,894,651.36 Provision for bad debt of
other receivables 19,117,084.21 - 181,998.77 (57,164.51) (3,692.31) (35,606.86) 19,202,619.30 Inventories provision 36,219,569.51 - 7,834,477.85 (6,271,860.18) (2,777,174.55) (20,074,199.16) 14,930,813.47 Impairment of available-
for-sale financial assets 180,000.00 - - - - - 180 ,000.00 Impairment of fixed assets 15,416,006.95 - - - - (15,416,006.95) - Impairment of construction
in progress 1,500,000.00 (1,500,000.00) - Impairment of Investment
properties 1,300,000.00 - - - - - 1,300,000.00 Impairment of intangible
assets 3,264,952.19 - - - - (3,264,952.19) - Impairment of goodwill 30,850,000.00 - - - (5,850,000.00) - 25,000,000.00 Impairment of long-term
equity investments 396,638.32 - - - - 396,638.32 181,937,280.64 23,638.80 9,802,489.62 (18,351,315.59) (23,148,241.86) (40,359,129.16) 109,904,722.45
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
21. Provision for impairment of assets (Continued)
Reversal of
Additions Reductions
1 January written off in 31 December 2015 previous Increase due to Decreased in 2015 Provision Reversal Write-off
year merger reorganization
Provision for
bad debt 77,755,308.12 28,377.60 23,331,979.70 3,448,643.11 (11,687,013.50) (67,181.36) - 92,810,113.67 Provision for
bad debt of
accounts
receivable
57,865,871.25 28,377.60 22,783,276.61 3,448,643.11 (10,395,957.75) (37,181.36) - 73,693,029.46 Provision for
bad debt of
other
receivables 19,889,436.87 - 548,703.09 - (1,291,055.75) (30,000.00) - 19,117,084.21 Inventories
provision 26,784,748.37 - 26,064,200.55 584,091.82 (4,713,020.04) (12,500,451.19) - 36,219,569.51 Impairment of
available-
for-sale
financial
assets 180,000.00 - - - - - - 180,000.00 Impairment of
fixed assets 23,316,486.90 - 1,540,887.99 - - - (9,441,367.94) 15,416,006.95 Impairment of
construction
in progress 1,500,000.00 - - - - - - 1,500,000.00 Impairment of
investment
properties 1,300,000.00 - - - - - - 1,300,000.00 Impairment of
intangible
assets 3,264,952.19 - - - - - - 3,264,952.19 Impairment of
goodwill 5,850,000.00 - 25,000,000.00 - - - - 30,850,000.00 Impairment of
long-term
equity
investments 396,638.32 - - - - - - 396,638.32 140,348,133.90 28,377.60 75,937,068.24 4,032,734.93 (16,400,033.54) (12,567,632.55) (9,441,367.94) 181,937,280.64
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
22. Short-term borrowings
31 December 2016 31 December 2015 Credit borrowings (Note a) 1,276,073,615.32 925,215,867.79 Guaranteed borrowings (Note b) 50,915,736.83 491,348,204.16 Discounted notes (Note c) 154,468,694.89 88,924,715.00 Pledged borrowings 31,255,582.91 127,743,173.40 1,512,713,629.95 1,633,231,960.35 (a) As at 31 December 2016, credit borrowings of RMB832,710,742.83 were guaranteed by the Company and its subsidiaries (31 December 2015: credit borrowings of RMB767,769,852.39 were guaranteed by the Company and its subsidiaries.). Credit borrowings of RMB108,663,470.63 (31 December 2015: RMB107,026,016.66) was borrowed from Sinopharm Group Finance Co., Ltd. (“Group Financial Co.”).
(b) As at 31 December 2016, guaranteed borrowings of RMB50,915,736.83 (31 December 2015: RMB491,348,204.16) were guaranteed by Sinopharm Group.
(c) As at 31 December 2016, commercial acceptance bills that were discounted but not decognized amounted to RMB154,468,694.89 (2015:RMB88,924,715.00).
(d) As at 31 December 2016, the annual interest rate for the above borrowings was4.13% (31 December 2015:5.10%).
(e) As at 31 December 2016 and at 31 December 2015, there were no short-term borrowings of the group that were overdue but not yet paid.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
23. Notes payable
31 December 2016 31 December 2015 Commercial acceptance notes 117,104,256.84 523,550,747.26 Bank acceptance notes 2,289,538,326.02 2,004,949,112.08 2,406,642,582.86 2,528,499,859.34 24. Accounts payable
31 December 2016 31 December 2015 Trade payables 6,701,558,514.10 6,011,673,284.50 At 31 December 2016, the total amount of accounts payable aged over one year was RMB263,362,685.91 (31 December 2015: RMB292,263,370.08), and the payment has not yet been cleared.
25. Advances from customers
31 December 2016 31 December 2015 Sales received in advance 163,450,365.92 247,426,363.39 At 31 December 2016, the total amount of accounts payable aged over one year was RMB10,366,456.25 (31 December 2015: RMB22,237,012.50).
26. Employee benefits payable
At beginning of At end of the 2016 the year Increase Decrease year Short-term employee
benefits (a) 238,425,904.07 1,575,547,633.96 (1,622,815,866.62) 191,157,671.41 Post-employment
benefits (defined
contribution plan)(b) 9,235,911.18 155,632,448.76 (162,181,427.77) 2,686,932.17 Termination benefits (c) 2,099,068.75 3,489,110.36 (4,294,702.84) 1,293,476.27 249,760,884.00 1,734,669,193.08 (1,789,291,997.23) 195,138,079.85
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
26. Employee benefits payable (Continued)
2015 At beginning of year Increase Decrease At end of year Short-term employee
benefits (a) 232,718,950.59 1,495,783,334.41 (1,490,076,380.93) 238,425,904.07 Post-employment
benefits (defined
contribution plan)(b) 7,525,688.88 151,991,203.84 (150,280,981.54) 9,235,911.18 Termination benefits (c) 2,452,339.04 3,574,055.15 (3,927,325.44) 2,099,068.75 242,696,978.51 1,651,348,593.40 (1,644,284,687.91) 249,760,884.00 (a) Short-term employee benefits
At beginning of
2016 year Increase Decrease At end of year Salaries, bonuses,
allowances and grants 210,324,955.24 1,351,793,519.43 (1,386,969,827.86) 175,148,646.81 Staff welfare 2,753,637.03 63,103,820.05 (64,380,431.10) 1,477,025.98 Social security contribution 1,439,600.25 76,502,865.10 (76,372,100.21) 1,570,365.14 Incl: Medical insurance 1,089,455.97 67,635,376.23 (67,394,842.93) 1,329,989.27 Work injury insurance 49,078.75 3,747,018.14 (3,775,388.66) 20,708.23 Maternity insurance 301,065.53 5,120,470.73 (5,201,868.62) 219,667.64 Housing funds 636,732.75 53,588,736.16 (53,898,251.70) 327,217.21 Labor union funds and
employee education funds 22,398,907.79 26,439,636.55 (37,073,410.18) 11,765,134.16 Other short-term benefits 872,071.01 4,119,056.67 (4,121,845.57) 869,282.11 238,425,904.07 1,575,547,633.96 (1,622,815,866.62) 191,157,671.41 At beginning of
2015 year Increase Decrease At end of year Salaries, bonuses,
allowances and grants 209,050,007.41 1,287,263,657.16 (1,285,988,709.33) 210,324,955.24 Staff welfare 1,177,827.84 54,536,379.63 (52,960,570.44) 2,753,637.03 Social security contribution 806,705.57 72,089,926.58 (71,457,031.90) 1,439,600.25 Incl: Medical insurance 571,975.29 61,632,506.28 (61,115,025.60) 1,089,455.97 Work injury insurance (223.90) 4,036,911.77 (3,987,609.12) 49,078.75 Maternity insurance 234,954.18 6,420,508.53 (6,354,397.18) 301,065.53 Housing funds 766,277.60 48,980,220.49 (49,109,765.34) 636,732.75 Labor union funds and
employee education funds 20,048,634.59 29,562,190.91 (27,211,917.71) 22,398,907.79 Other short-term benefits 869,497.58 3,350,959.64 (3,348,386.21) 872,071.01 232,718,950.59 1,495,783,334.41 (1,490,076,380.93) 238,425,904.07
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
26. Employee benefits payable (Continued)
(b) Defined contribution plan
At beginning of
2016 year Increase Decrease At end of year Basic pension
insurance 6,947,723.42 144,673,254.38 (151,001,463.46) 619,514.34 Contribution to
pension fund 2,013,748.53 4,852,647.63 (4,905,163.55) 1,961,232.61 Unemployment
insurance 274,439.23 6,106,546.75 (6,274,800.76) 106,185.22 9,235,911.18 155,632,448.76 (162,181,427.77) 2,686,932.17 At beginning of
2015 year Increase Decrease At end of year Basic pension
insurance 5,607,696.63 138,366,876.60 (137,026,849.81) 6,947,723.42 Contribution to
pension fund 1,700,871.21 4,549,936.03 (4,237,058.71) 2,013,748.53 Unemployment
insurance 217,121.04 9,074,391.21 (9,017,073.02) 274,439.23 7,525,688.88 151,991,203.84 (150,280,981.54) 9,235,911.18
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
26. Employee benefits payable (Continued)
(c) Termination benefits
At beginning of
2016 year Increase Decrease At end of year Retirement
benefits payable
– within 1 year
(Note V(26)) 1,693,455.41 2,528,921.47 (3,128,383.91) 1,093,992.97 Other termination
benefits (i) 405,613.34 960,188.89 (1,166,318.93) 199,483.30 2,099,068.75 3,489,110.36 (4,294,702.84) 1,293,476.27 At beginning of
2015 year Increase Decrease At end of year Retirement
benefits
payable– within
1 year (Note
V(26)) 1,821,000.00 2,446,924.08 (2,574,468.67) 1,693,455.41 Other termination
benefits (i) 631,339.04 1,127,131.07 (1,352,856.77) 405,613.34 2,452,339.04 3,574,055.15 (3,927,325.44) 2,099,068.75 (i) For year 2016, the Group provided other termination benefits for severing labor relations of RMB960,188.89, as at 31 December 2016, and the unpaid balance as at the year end was RMB199,483.30. (2015: Other termination benefits for severing labor relations of RMB651,382.79, unpaid balance at year end was RMB100,000.00).
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
27. Tax payable
31 December 2016 31 December 2015 Corporate Income taxes 90,177,731.06 73,458,365.97 Value-added tax 61,767,738.60 45,441,043.41 Land appreciation tax 6,600,717.72 - Stamp duty 5,449,224.41 1,545,259.80 Individual income tax payable 5,028,775.01 5,026,681.94 Water conservancy fund payable 4,880,965.03 6,145,162.29 City maintenance and construction surtax 4,844,305.96 3,904,255.53 Educational surcharge payable 3,499,732.78 2,756,979.87 Property tax 1,102,254.64 1,181,623.99 Land use tax payable 341,494.13 208,040.56 Business tax - 2,709,919.20 Others 3,350,778.18 2,034,546.37 187,043,717.52 144,411,878.93 28. Interest payable
31 December 2016 31 December 2015 Interest payable
- interest on short-term borrowings 6,918,661.52 7,239,899.79 - interest on long-term borrowings 37,801.50 57,782.44 6,956,463.02 7,297,682.23 29. Dividend payable
31 December 2016 31 December 2015 Shanghai Fosun Pharmaceutical (Group) Co., Ltd. 4,835,511.58 4,835,511.58 Haiping Qiao 2,094,049.25 2,094,049.25 Zhenfang Zhang 1,389,639.31 1,389,639.31 Meiluo Pharmaceutical Co., Ltd. 164,170.07 164,170.07 Shenzhen Jiufeng Investment Co., Ltd. - 8,033,888.99 China Pharma& Trade - 20,000,000.00 8,483,370.21 36,517,259.20
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
30. Other payables
31 December 2016 31 December 2015 Payables arising from acquisition of
subsidiaries(a) 273,914,900.00 - Payables for factoring programs 146,008,376.21 40,122,035.95 Payables for construction in progress and
equipment 99,860,228.96 121,887,725.36 Accrued selling and distribution expenses 82,576,148.19 236,093,000.94 Deposit 56,640,346.01 85,448,993.08 Payables to related parties 33,804,087.79 457,739,551.99 Payables for rentals 25,866,767.64 17,547,462.84 Payables to individuals 19,297,062.31 5,563,943.54 Temparary loan 19,230,000.00 17,550,000.00 Collection of others 16,980,734.50 26,705,590.59 Others 143,015,259.73 129,957,050.66 917,193,911.34 1,155,395,354.95 At 31 December 2016, other payables due within 1 year amounted to RMB 123,866,395.59 (31
December 2015: RMB 184,863,055.03). It is mainly consisted of construction cost payable, company borrowings payable, deposits and etc.
31. Non-current liabilities due within 1 year
31 December 2016 31 December 2015 Long-term borrowings due within 1 year (Note V
(33)) 31,600,000.00 - Sales promotion points due within 1 year - 3,510,000.00 Finance lease payables (Note V (34)) 4,811,339.96 4,244,878.16 36,411,339.96 7,754,878.16 32. Other current liabilities
31 December 2016 31 December 2015 Output VAT to be recognized
123,294.77 -
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
33. Long-term borrowings
31 December 2016 31 December 2015 Credit borrowings - 40,895,172.30 Entrusted borrowings (a) - 31,600,000.00 - 72,495,172.30 (a) At 31 December 2015, the entrusted borrowings of RMB31,600,000.00 were provided by Sinopharm Group through Group Financial Co. The entrusted borrowings are due within 1 year.
At 31 December 2016, the annual interest rate of above-mentioned borrowings was0.82% (31 December 2015:4.82%).
34. Long-term payables
31 December 2016 31 December 2015 Finance lease payables (Note XIII(3)) 19,427,938.30 18,030,536.10 Less: due within one year (Note V (37)) (4,811,339.96) (4,244,878.16) 14,616,598.34 13,785,657.94 35. Payable for specific projects
2016
At beginning of year Increase Decrease At end of year Special funds granted by
government 852,000.00 - (52,000.00) 800,000.00 Government grants for ERP
system construction 435,000.00 - (435,000.00) - 1,287,000.00 - (487,000.00) 800,000.00 2015
At beginning of year Increase Decrease At end of year Special funds granted by
government 852,000.00 - - 852,000.00 Government grants for ERP
system construction 435,000.00 - - 435,000.00 1,287,000.00 - - 1,287,000.00
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
36. Provision
2016 Opening balance Increase Decrease Closing balance Provision for additional
loss obligation on the
investees (Note V (11),
(Note V (52))
3,936,157.67 - (3,936,157.67) - 2015 Opening balance Increase Decrease Closing balance Provision for additional
loss obligation on the
investees (Note V (11),
(Note V (52))
1,160,394.23 2,775,763.44 - 3,936,157.67 37. Deferred income
2016 Opening balance Increase Decrease Closing balance Government grants 155,936,441.64 5,383,200.00 (59,756,260.79) 101,563,380.85 Promotion Rewards Program 43,079,101.69 3,532,678.95 (24,221,698.68) 22,390,081.96 199,015,543.33 123,953,462.81 Less: Product promotion points
redeemed within one year (Note
V(31)) (3,510,000.00) - 195,505,543.33 123,953,462.81 2015 Opening balance Increase Decrease Closing balance Government grants 153,119,166.83 15,566,000.00 (12,748,725.19) 155,936,441.64 Promotion
Rewards Program 44,143,465.53 20,785,004.76 (21,849,368.60) 43,079,101.69 197,262,632.36 199,015,543.33 Less: Product promotion points
redeemed within one year (Note
V(31)) (4,000,000.00) (3,510,000.00) 193,262,632.36 195,505,543.33
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
37. Deferred income (Continued)
As at 31 December 2016, deferred income from government grants are as follow:
Government grants Opening balance Addition in the Amount Disposal of Closing Asset related/ program year included in subsidiaries balance income related non-operating
income in the
year
Resettlement
Compensation (i) 83,650,666.85 (2,698,408.56) - 80,952,258.29 Asset related Cephalosporin Solid
Preparations
Development Project 11,742,379.25 (1,958,895.80) (9,783,483.45) - Asset related Cardiovascular system
targeted drug
development programs 10,392,533.33 (611,079.08) (9,781,454.25) - Asset related Guangxi Logistics Project 7,942,645.78 (496,406.40) - 7,446,239.38 Asset related Stomach medicine
domestic clinical
research and
development project 5,000,000.00 - (5,000,000.00) - Asset related Pingshan pharmaceutical
R&D base engineering 4,874,999.99 (4,874,999.99) - - Asset related Logistics standardization
project 4,300,000.02 500,000.00 (892,493.79) - 3,907,506.23 Asset related Cephalosporin Powder
Injection Passing EU-
GMP Authentication 3,815,792.34 (603,305.45) (3,212,486.89) - Asset related MedicalR&D Center II (in
progress) 3,056,300.89 (684,433.30) (2,371,867.59) - Asset related New CephalosporinR&D
Project 3,046,340.57 (763,370.50) (2,282,970.07) - Asset related Enteric coated pellets
industry research and
development project 2,436,037.10 (396,008.90) (2,040,028.20) - Asset related A comprehensive
experimental modern
service industry
subsidies 2,400,000.00 (300,000.00) - 2,100,000.00 Asset related Cefpirome SulfateR&D
Project 1,853,960.95 (105,600.24) (1,748,360.71) - Asset related The laval shaaban raw
materials and tablets
project 1,500,000.00 (640,000.00) (860,000.00) - Asset related New CephalosporinR&D
Project 608,900.38 (508,744.60) (100,155.78) - Asset related Shared Logistics Center
(completed) 407,433.53 (117,774.38) - 289,659.15 Asset related Asset/income Other projects 8,908,450.66 4,883,200.00 (1,417,597.18) (5,506,335.68) 6,867,717.80 related 155,936,441.64 5,383,200.00 (17,069,118.17) (42,687,142.62) 101,563,380.85
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
37. Deferred income (Continued)
As at 31 December 2015, deferred income from government grants are as follow.
Government grants Opening balance Addition in Amount included in Closing balance Asset related/ program the year non-operating income income in the year related Resettlement
Compensation(i) 86,349,075.41 - (2,698,408.56) 83,650,666.85 Asset related Cephalosporin Solid
Preparations
Development Project 13,845,923.14 - (2,103,543.89) 11,742,379.25 Asset related Cardiovascular system
targeted drug
development
programs 3,000,000.00 7,500,000.00 (107,466.67) 10,392,533.33 Asset related Guangxi Logistics
Project 8,084,052.18 300,000.00 (441,406.40) 7,942,645.78 Asset related Stomach medicine
domestic clinical
research and
development project 5,000,000.00 - - 5,000,000.00 Asset related Pingshan
pharmaceuticalR& D
base engineering 5,000,000.00 - (125,000.01) 4,874,999.99 Asset related Logistics
standardization
project - 4,500,000.00 (199,999.98) 4,300,000.02 Asset related Cephalosporin Powder
Injection Passing EU-
GMP Authentication 4,505,783.82 - (689,991.48) 3,815,792.34 Asset related MedicalR&D Center II
(in progress) 3,877,620.85 - (821,319.96) 3,056,300.89 Asset related New Cephalosporin
R&D Project 3,962,385.17 - (916,044.60) 3,046,340.57 Asset related Enteric coated pellets
industry research and
development project 2,508,837.40 - (72,800.30) 2,436,037.10 Asset related A comprehensive
experimental modern
service industry
subsidies 2,700,000.00 - (300,000.00) 2,400,000.00 Asset related Cefpirome SulfateR&D
Project 2,386,456.55 - (532,495.60) 1,853,960.95 Asset related The laval shaaban raw
materials and tablets
project - 1,500,000.00 - 1,500,000.00 Asset related New Cephalosporin
R&D Project 1,219,393.90 - (610,493.52) 608,900.38 Asset related Shared Logistics
Center(completed) 1,225,468.70 - (818,035.17) 407,433.53 Asset related Asset/income Other projects 9,454,169.71 1,766,000.00 (2,311,719.05) 8,908,450.66 related 153,119,166.83 15,566,000.00 (12,748,725.19) 155,936,441.64
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
37. Deferred income (Continued)
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 property in constructing equaling a value of RMB70,250,000.00. Cash compensation of RMB 50,000,000.00 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 (Note V (12)).
The compensation relating the capital expenditure in the reconstruction of the new logistic center in another place, amounting to RMB93.32 million was recognized as deferred revenue, and would be amortized and recognized in the income statement within the expected useful lives using the straight line method (Note V(53)), and the other cash compensation, which amount approximates to RMB26.93 million, was recognized in the income statement in 2012.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
38. Long-term employee benefits payable
31 December 2016 31 December 2015 Early retirement benefits payable 2,816,592.86 5,216,555.41 Less: Retirement benefits payable–
(1,093,992.97) (1,693,455.41) within 1 year (Note V (26)(c))
1,722,599.89 3,523,100.00 The primary actuarial assumptions adopted at the end of the reporting period are presented as follows:
31 December 2016 31 December 2015 Discount rate 3.25% 3.00% Growth rate of wages 6.00% 4.00%-6.00% The total post-employment benefits recognized in profit or loss of current year is:
2016 2015 Included in administrative 595,286.36 1,509,086.58 expenses
Included in financial expenses 133,135.00 226,937.50 728,421.36 1,736,024.08 39. Other non-current liabilities
31 December 2016 31 December 2015 Governmental medical reserve
funds
45,427,343.31 45,427,343.31 Certain medical reserves 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.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
40. Share capital
31 December 2016 31 December 2015 Listed shares without restriction of trading:
-A shares, listed 233,261,812.00 233,261,812.00 -B shares, listed 54,885,600.00 54,885,600.00 Listed shares with restriction of trading:
-State owned legal person shares 74,482,543.00 74,482,543.00 -Natural person shares 1,988.00 1,988.00 362,631,943.00 362,631,943.00 41. Capital surplus
2016 At beginning of year Increase Decrease At end of year Share premium (a) 1,855,144,194.77 263,030,592.50 - 2,118,174,787.27 Others - - - - - Significant reorganization (b) 1,333,704,770.31 - (156,366,978.12) 1,177,337,792.19 Transition reserves from investment
in associates reclassified from
capital surplus to other
comprehensive income (c) 2,380,016.57 - (359,766.35) 2,020,250.22 Transfer of capital surplus
recognized under the previous
accounting system 2,650,322.00 - - 2,650,322.00 Others (d) 3,720,000.00 600,990.46 (152,986,117.22) (148,665,126.76) 3,197,599,303.65 263,631,582.96 (309,712,861.69) 3,151,518,024.92 At beginning of
2015 year Increase Decrease At end of year Share premium 1,855,144,194.77 - - 1,855,144,194.77 Others -
Business combination involving
enterprises under common control 923,704,770.31 410,000,000.00 - 1,333,704,770.31 Transition reserves from investments in
associates reclassified from capital
surplus to other comprehensive
income 2,380,016.57 - - 2,380,016.57 Transfer of capital surplus recognized
under the previous accounting system 2,650,322.00 - - 2,650,322.00 Others 3,720,000.00 - - 3,720,000.00 2,787,599,303.65 410,000,000.00 - 3,197,599,303.65
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
41. Capital surplus (Continued)
（a） Share premium increased by RMB263,030,592.50 when raising supporting funds by issuing 5,114,297.00 shares at the par value of RMB53.5 each to Ping An Asset Management for acquiring the non-controlling interest of South Pharma& Trade. The raised funds totaled RMB273,614,889.50, after deducting the issuance cost of RMB5,470,000.00, resulting in a premium of RMB263,030,592.50.
（b） Capital reserve-significant reorganization decreased by RMB156,366,978.12 when the Group carried out reorganization in October 2016. The Group acquried the entities under common control, including Guoda Pharmacy, Foshan Nanhai, South Pharma& Trade and Guangdong Uptodate& Special Medicines by issuing shares, resulted in a reduction of the capital reserve by RMB73,320,792.34; and the disposal of Zhijun Medicine, Zhijun Pingshan, Zhijun Trade and assets of Pingshan base in exchange for15.56% equity interest of Shyndec Pharmaceutical resulted in a reduction of the account of capital reserve by RMB83,046,185.78.
（c） Capital reserve - Changes in other equity interest of the investee calculated under the equity method decreased by RMB359,766.35.This was due to the changes in other capital reserve of Shyndec Pharmaceutical, which became a new associate of the Company since October 2016.
（d） Capital reserve - Other capital reserve increased by RMB600,990.46, due to the purchase of30% non-controlling interests of Sinopharm Shantou at a discount in November 2016; Capital reserve - Other capital reserve decreased by RMB152,986,117.22 after acquiring a49% non-controlling interest of South Pharma& Trade at a premium in October 2016.
42. Other equity instruments
At beginning of year Increase Decrease At end of year
Shares Amounts Shares Amounts Shares Amounts Shares Amounts Unlisted
- - 65,495,040.00 65,495,040.00 - - 65,495,040.00 65,495,040.00 shares
In October 2016, the Group issued 65,495,040 number of ordinary shares (A shares) to acquire entities under common control, including Guoda Pharmacy, Foshan Nanhai, South Pharma& Trade and Guangdong Uptodate& Special Medicines by issuing shares and raised supporting funds by issuing shares to Ping An Asset Management to acquire the non-controlling interest of South Pharma& Trade. The relevant shares were successfully issued and listed on 5 January 2017.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
43. Surplus reserve
31 December 2016 31 December 2015 Surplus reserve 181,315,971.50 181,315,971.50 According to the provisions of Company Law and theCompany’s articles of association, the Company appropriates statutory surplus reserves at10% of the net profit. Where the accumulated amount of surplus reserves reaches50% or more of theCompany’s registered capital, additional appropriation is not needed. After the appropriation of statutory surplus reserves, the Company may appropriate discretionary surplus reserves. When approved, the discretionary surplus reserves can be used to recover accumulated losses or increase the share capital. As of 31 December 2016, the accumulated amount of the statutory surplus reserve of the Group has already reached50% of registered capital. According toCompany’s articles of association, the Group did not extract surplus reserve any more.
44. Retained earnings
31 December 2016 31 December 2015 Retained earnings at the end of the prior year 3,045,551,246.71 2,356,765,374.25 A business combination involving enterprises under common
565,826,079.43 4 4 0 , 0 61,136.01 control (a)
Retained earnings at beginning of year after
3,611,377,326.14 2,796,826,510.26 retrospective adjustment and restatement
Add: Net profit attributable to the parent 1,186,601,899.27 927,610,234.41 Deduct: Ordinary share cash dividends payable (b) (108,789,582.90) (72,526,388.60) Others - ( 4 0 , 5 33,029.93) Retained earnings at end of year 4,689,189,642.51 3,611,377,326.14（a） Due to the business combination involving enterprises under common control, retained earnings at end of the prior year increased by RMB565,826,079.43 (2015: RMB440,061,136.01).
（b） Pursuant to the resolution of the General meeting on 22 April 2016, cash dividends of RMB108,789,582.90 (RMB3.0 per 10 shares) were paid based on the issued shares of 362,631,943.
（c） Pursuant to the resolution of the board of directors of the Company on 17 April 2017, cash dividends of RMB141,281,904.39 (RMB3.30 per 10 shares) were proposed based on the issued shares of 428,126,983 after non-public offering. This proposed dividend is subject to the approval of the forthcoming general meeting.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
45. Non-controlling interests
31 December 31 December Full Name Short Name 2016 2015 Sinopharm Holding Shenzhen Yanfeng Co., Ltd. Sinopharm Yanfeng 32,564,575.46 31,734,359.03 Sinopharm Holding Liuzhou Co., Ltd. Sinopharm Liuzhou 84,524,667.81 7 0,503,148.99 Sinopharm Holding Shaoguan Co., Ltd. Sinopharm Shaoguan 6,054,572.50 5,872,494.43 Sinopharm Holding Shantou Co., Ltd. Sinopharm Shantou 3 , 4 8 5 , 8 8 6 . 0 0 Sinopharm Holding Guangzhou Medical Treatment
Management Co., Ltd. Guangzhou Medical 2,025,730.34 1,475,443.73 Sinopharm Holding Wuzhou Co., Ltd. Sinopharm Wuzhou 14,190.87 9,930.54 Guangdong South
Guangdong South Pharmaceutical Foreign Trade Co., Pharmaceutical Foreign
Ltd. Trade Co., Ltd. - 1 0 7 , 9 0 5 , 7 5 0 . 64 Sinopharm Holding Guoda Yangzhou Dadesheng
Pharmacy Chain Store Co., Ltd. Jiangsu Dadesheng 2,911,806.60 2,719,517.13 Sinopharm Holding Guoda Shandong Pharmacy Chain
Store Co., Ltd. Shandong Guoda 19,196,795.07 21,271,714.64 Quanzhou Guoda Pharmacy Chain Store Co., Ltd. Quanzhou Guoda 8,840,478.97 10,242,209.02 Sinopharm Holding Hunan Guoda Minshengtang
Pharmacy Chain Co., Ltd. Hunan Guoda 15,333,230.29 14,751,120.85 Liyang Guoda People Pharmacy Chain Store Co., Ltd. Liyang Guoda 9,149,939.79 8,806,666.89 Sinopharm Holding Guoda Henan Pharmacy Chain
Store Co., Ltd. Henan Guoda 9,343,359.62 9,691,204.65 Sinopharm Guoda Pharmacy Jiangmen Chain Co., Ltd. Jiangmen Guoda 13,997,715.11 12,974,113.13 Tianjin Guoda Pharmacy Chain Store Co., Ltd. Tianjin Guoda 557,493.64 (408,190.32) Guoda Shenyang Tianyitang Pharmacy Chain Tianyitang 26,128,579.33 15,548,070.43 Sinopharm Holding Guoda Nanjing Pharmacy Chain
Store Co., Ltd. Nanjing Guoda 6,635,776.95 5,557,259.49 Anhui Guoda Pharmacy Chain Store Co., Ltd. Anhui Guoda (6,254,914.31) (5,571,840.47) Sinopharm Holding Guoda Neimenggu Pharmacy Chain
Store Co., Ltd. Neimenggu Guoda (504,677.45) 1,888,973.21 Sinopharm Hebei Lerentang Pharmacy Chain Store
Co., Ltd. Hebei Lerentang 20,944,225.10 20,223,981.95 Ningxia Guoda Pharmacy Chain Store Co., Ltd. Ningxia Guoda 41,791,854.71 38,420,885.83 Sinopharm Holding Guoda Shenyang Pharmacy Chain
Store Co., Ltd. Shenyang Guoda 41,218,628.06 24,545,382.41 Shanxi Guoda Wanmin Pharmacy Chain Store Co., Ltd. Shanxi Wanmin 1,834,899.73 107,794.78 Sinopharm Holding Xinjiang New& Special Medicines
Chain Store Co., Ltd. Xinjiang Guoda 8,868,434.44 8,633,911.55 Sinopharm Holding Guoda Shanxi Yiyuan Pharmacy
Chain Store Co., Ltd. Shanxi Yiyuan 9,468,023.84 6,441,210.69 Sinopharm Holding Guoda ForMe Pharmacy Chain ForMe Pharmacy Chain
Store Co., Ltd. Store 351,768.74 342,637.49 Sinopharm Holding Guoda ForMe Medicines
(Shanghai) Co., Ltd. ForMe Medicines 3,392,624.17 3,154,108.68 Beijing Golden Elephant Pharmacy Medicine Chain
Company Limited Beijing Golden Elephant 89,058,368.88 90,028,081.15
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
45. Non-controlling interests (Continued)
Full Name Short Name 31 December 2016 31 December 2015 Changzhi Guoda Wanmin Pharmacy
Chain Store Co., Ltd. Shanxi Wanmin Changzhi 1,822,125.55 1,815,633.26 Xiaoyi Guoda Wanmin Baicaotang
Pharmacy Chain Store Co., Ltd. Shanxi Wanmin Xiaoyi 3,631,478.93 2,465,369.82 Sinopharm Holding Guoda Pharmacy
Ulanqab Co., Ltd. Neimeng Guoda-Ulanqab 1,967,902.49 - Sinopharm Holding Guoda Pharmacy
Hulun Buir Co., Ltd. Neimeng Guoda-Hulun Buir 1,679,199.53 1,533,581.95 Shanghai Guoda Shanghong Qibao
Pharmacy Co., Ltd. Qibao 2,579,125.70 2,378,700.05 Zhejiang Intlmedicine Pharmacy
Dongshan Co., Ltd. Zhejiang Guoda 296,939.98 293,595.25 Beijing Golden Elephant Fuxing Beijing Golden Elephant
Technology Co., Ltd. Fosun (293,640.30) (265,740.33) Beijing Yangqiao Rongzhi Golden Beijing Golden Elephant
Elephant Pharmacy Company Limited Rongzhi 85,987.40 209,731.72 Sinopharm Guoda Taishan Qunkang
Pharmacy Chain Store Co., Ltd. Guoda Taishan 3,634,795.21 - Sinopharm Guoda Pharmacy
Qinhuangdao Chain Co., Ltd. Qinhuangdao Guoda 980,849.43 - 463,832,912.18 518,786,698.26 46. Operating revenue and cost
2016 2015 Revenue of main operations 40,950,627,418.40 37,492,586,746.47 Other operating income 297,801,904.51 326,691,212.54 41,248,429,322.91 37,819,277,959.01 2016 2015 Cost of main operations 36,621,362,598.71 33,379,575,174.90 Other operating expenses 26,874,304.85 53,272,669.69 36,648,236,903.56 33,432,847,844.59
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
46. Operating revenue and cost (Continued)
(a) Revenue and cost of main operations
Revenue and cost of main operations analyzed by industries are set out below:
2016 2015
Revenue of Cost of main Revenue of Cost of main main operations operations main operations operations Wholesale of
pharmaceutical 30,982,482,620.75 29,319,997,756.02 28,452,153,683.28 26,901,734,940.56 Retail of
pharmaceutical 8,761,101,587.23 6,605,050,729.00 7,382,199,442.63 5,509,074,867.30 Pharmaceutical
manufacturing 1,174,241,370.22 677,553,586.23 1,628,474,289.30 951,255,881.90 Logistics and
freights 20,551,062.91 13,271,551.53 17,678,920.37 12,984,126.10 Rental and other
income 12,250,777.29 5,488,975.93 12,080,410.89 4,525,359.04 40,950,627,418.40 36,621,362,598.71 37,492,586,746.47 33,379,575,174.90 (b) Other operating income and expenses
2016 2015
Other operating Other operating
income Other operating cost income Other operating cost Rendering of
services 217,419,431.74 9,566,833.75 226,816,835.86 13,630,079.68 Rental income 51,510,163.93 9,526,998.12 52,669,686.01 15,009,361.64 Franchise fee
income 12,466,449.10 69,252.02 10,411,176.60 2,800.00 The income of
disposal the
investment
real estate 7,667,470.67 2,426,744.64 4,330,048.35 - Sales of raw
materials 1,980,407.43 691,010.60 24,957,643.99 24,443,931.50 Others 6,757,981.64 4,593,465.72 7,505,821.73 186,496.87 297,801,904.51 26,874,304.85 326,691,212.54 53,272,669.69
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
47. Tax and surcharges
2016 2015 City maintenance and construction tax 47,875,547.04 46,747,095.39 Educational surcharge 34,378,369.51 33,458,033.68 Stamp duty 23,183,175.33 - Property tax 6,280,014.82 2,706,056.86 Business tax 5,237,509.80 14,982,597.98 Water conservancy fund payable 4,982,862.48 - Land tax 1,368,870.31 466,354.54 Vehicle and vessel use tax 128,932.95 - Others 836,150.81 799,803.14 124,271,433.05 99,159,941.59 48. Selling expenses
2016 2015 Employees payroll and welfare benefits 1,127,962,184.89 1,009,609,487.89 Rental expenses 542,204,017.06 458,568,664.93 Transportation charges 78,970,351.97 103,749,345.66 Utility fees 48,407,210.56 43,713,141.83 Amortization of long-term deferred expenses 43,394,735.87 43,149,189.40 Promotion and marketing expenses 42,377,994.57 40,741,729.61 Storage expenses 40,718,215.96 37,495,458.08 Depreciation expenses 39,431,250.60 31,657,833.79 Office allowances 36,483,538.89 41,431,226.17 Entertainment expenses 35,855,595.79 33,709,926.77 Travel allowances 17,548,088.82 26,560,353.70 Medical cooperation project fees 13,030,006.63 9,239,249.51 Repairing fees 11,419,421.05 12,630,288.89 Conference expenses 8,758,475.01 13,471,053.95 Market development fees 3,731,023.44 29,245,200.53 Others 107,911,326.16 104,857,067.01 2,198,203,437.27 2,039,829,217.72
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
49. Administrative expenses
2016 2015 Employees payroll and welfare benefits 530,882,424.95 495,381,856.07 Research and development expenses 43,731,710.17 73,150,395.26 Depreciation expenses 36,971,425.20 45,666,878.89 Agency service fees 32,970,956.21 11,224,520.34 Rental expenses 30,369,873.36 26,369,635.71 Office allowances 29,046,348.45 34,285,140.13 Amortization of intangible assets 21,653,455.23 23,354,745.72 Taxations 13,595,999.15 30,710,982.72 Entertainment expenses 12,710,489.90 17,409,794.99 Travel allowances 10,147,753.39 10,815,984.38 Technical service fees 10,144,510.68 9,379,852.11 Utilities 9,907,096.21 8,810,269.93 Amortization of long-term deferred
expenses 9,587,280.65 12,172,402.55 Vehicle management expenses 9,208,714.11 13,002,438.56 Promotion and marketing expenses 7,579,873.98 8,909,557.32 Repairing fees 4,993,442.67 5,147,048.52 Others 46,219,324.86 54,842,853.27 859,720,679.17 880,634,356.47 50. Finance costs
2016 2015 Interest expenses 133,781,778.31 153,847,428.55 Less: Interest income (30,140,036.85) (18,581,615.63) Cash discount (35,617,404.69) (31,865,471.49) Exchanges loss/(gain) 469,079.01 (1,224,644.06) Others 33,361,688.88 26,475,511.13 101,855,104.66 128,651,208.50
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
51. Impairment loss
2016 2015 Inventories provision 1,562,617.67 21,351,180.51 Bad debt allowance (10,111,443.64) 11,644,966.20 Impairment in fixed assets - 1,540,887.99 Impairment in goodwill - 25,000,000.00 (8,548,825.97) 59,537,034.70 52. Investment income
2016 2015 Investment income from long-term equity investments
97,075,494.40 58,544,653.18 under the equity method
Investment income from disposal of subsidiaries 86,674,065.35 - Investment income from disposal of long-term equity
investments (Note V(11), V(36)) 4,162,157.57 - Investment income from available-for-sale financial
476,094.35 443,835.19 assets
Gain from remeasurement of fair value of remaining
equity interest upon loss of control 35,080,116.91 - Predicted investment loss (Note V(36)) - (2,775,763.44) 223,467,928.58 56,212,724.93 53. Non-operating income
2016 2015 Government grants (Note a) 35,645,895.50 38,952,581.42 Gain on disposal of non-current assets 10,501,930.08 2,518,092.37 Incl: Gain on disposal of fixed assets 10,421,763.20 2,381,093.71 Gain on disposal of other non-current assets 80,166.88 136,998.66 Gain from compensation for breach of contracts 3,370,000.00 227,265.90 Gain from writing off the unnecessary payment 2,879,312.96 11,179,171.33 Gain arising from donation - 17,306.70 Others 6,544,256.83 15,182,508.56 58,941,395.37 68,076,926.28 All non-operating income was wholly classified as non-recurring profit or loss in 2016.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
53. Non-operating income (Continued)
(a) Government grants
2016 2015 Note - Government grants related to assets
Special funds granted for Shenzhen Transfer from the Biological Industries Development amortization of deferred 4,874,999.99 125,000.01 income Resettlement Compensation of Guangxi Transfer from the Logistics amortization of deferred 2,698,408.56 2,698,408.56 income Cephalosporin Solid Preparations Transfer from the Development Project amortization of deferred 1,958,895.80 2,103,543.89 income Transfer from other deferred Transfer from the amortization income amortization of deferred 7,536,813.82 7,821,772.73 income 17,069,118.17 12,748,725.19
- Government grants related to income
Strategic Emerging Industries Funding of Strategic Emerging 2016 4,452,000.00 - Industries Funding Government grants for medicine reserve Government grants for expenses 3,210,285.43 3,347,500.00 medicine reserve expenses Tax return 1,978,691.91 9,117,750.98 Tax return Economic contribution Economic contribution award 2,361,700.00 2,654,400.00 award Government-funded Government-funded interest discount 420,005.49 1,773,795.84 interest discount Others Subsidy for 6,154,094.50 9,310,409.41 contribution, etc. 18,576,777.33 26,203,856.23
35,645,895.50 38,952,581.42
54. Non-operating expenses
2016 2015 Penalty expenses 2,139,975.89 1,494,218.87 Lawsuit expenses 1,798,546.83 572,890.38 Losses on disposal of non-current assets 1,326,826.43 1,162,517.88 Incl: Losses on disposal of fixed assets 986,274.72 1,162,517.88 Losses on disposal of intangible assets 4,117.37 - Losses on disposal of other non-current assets 336,434.34 - Expenses on compensation for breach of contracts 141,519.09 1,399,863.62 Donation expenses 144,093.77 300,393.62 Others 1,291,828.85 472,186.66 6,842,790.86 5,402,071.03 Non-operating cost was wholly classified as non-recurring profit or loss in 2016.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
55. Expenses by nature
The cost of operations, selling and distribution expenses, administrative expenses are
classified by nature and listed as follows:
2016 2015 Inventories of finished and work in progress
goods 35,959,030,423.27 32,455,398,889.32 Employees payroll and welfare benefits 1,732,735,557.97 1,650,410,755.90 Rental expenses 580,007,329.89 488,433,233.29 Consumed raw materials and low value
consumables, etc. 497,914,187.65 704,885,478.94 Depreciation and amortization 212,843,144.88 217,138,135.72 Utilities 83,232,077.64 86,806,547.19 Transportation charges 81,908,414.89 107,032,878.30 Telecom and internet 65,584,889.96 75,745,253.85 Promotion and marketing expenses 53,688,891.99 78,896,487.46 Entertainment expenses 48,566,085.69 51,119,721.76 Research and development expenses 43,731,710.17 73,150,395.26 Storage expenses 40,718,215.96 37,495,458.08 Travel allowances 36,415,567.02 48,396,645.08 Agency service fees 32,970,956.21 11,224,520.34 Repairing fees 20,573,923.14 20,668,769.94 Taxation 13,595,999.15 30,710,982.72 Medical cooperation projects fees 13,030,006.63 9,239,249.51 Office allowances 12,314,057.40 16,779,145.56 Technical service fees 10,144,510.68 9,379,852.11 Others 167,155,069.81 180,399,018.45 39,706,161,020.00 36,353,311,418.78 56. Income taxes
2016 2015 Current income tax 309,340,914.04 279,076,851.14 Deferred income tax 9,035,903.74 (11,519,667.13) 318,376,817.78 267,557,184.01
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
56. Income taxes (Continued)
The reconciliation from income tax calculated based on applicable tax rates and total profit presented in the consolidated financial statements to the income taxes is listed below:
2016 2015 Total profit 1,600,257,124.26 1,297,505,935.62 Income taxes calculated at applicable tax
rates 400,064,281.07 324,376,483.91 Lower tax rates enacted by local authorities (40,990,086.30) (48,472,689.60) Income not subject to tax (58,557,903.55) (14,884,083.38) Expenses not deductible for tax 19,528,230.77 17,327,347.56 Tax losses not recognized 1,650,692.62 6,020,461.22 Utilization of previously unrecognized tax
losses - (546,763.32) Additional deduction for development cost (4,907,807.98) (5,865,441.09) Gain on deferred tax of beginning of the
year from the changes of tax rate (237,247.82) (9,255,185.51) Adjustment of income tax expense of
previous year 1,826,658.97 (1,142,945.78) Income tax 318,376,817.78 267,557,184.01
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
57. Earnings per share
The basic earnings per share is calculated by dividing the consolidated net profit of the current year attributable to the ordinary shareholders of the Company by the adjusted weighted average number of ordinary shares outstanding.
In year 2016, the Company had no potential dilutive ordinary shares, and the diluted earnings per share equaled to the basic earnings per share.
The calculation of basic and diluted earnings per share is listed below:
2016 2015 Earnings
Consolidated net profit attributable to the
shareholders of the parent 1,186,601,899.27 927,610,234.41 Net profit attributable to calculation of EPS 1,186,601,899.27 927,610,234.41 Shares
Adjusted weighted average number of
ordinary shares outstanding (Note)
423,865,068.83 423,012,686.00 Basic and diluted earnings per share
2.80 2.19
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
57. Earnings per share (Continued)
Note: Adjusted weighted average number of ordinary shares outstanding includes ordinary shares outstanding and other equity instruments. The calculation is as below:
2016 2015 Weight Note
At 31 December 2014, ordinary shares
Ordinary shares 362,631,943.00 362,631,943.00 1.00
outstanding are 362,631,943.
1. In October 2016, the Company completed the reorganization and issued shares to Sinopharm Group and China Pharma& Trade Other equity to acquire four commercial companies under instruments - common control, which are included in other Business equity instruments as they have not been combinations 60,380,743.00 60,380,743.00 1.00 issued publicly.
involving 2. The assets and liabilities related to
entities under business combination under common control common control have been retrospectively included since the beginning of the comparative period, so it shall be considered that the shares already existed as of 1 January 2015.
1. The Company issued shares to Ping An Asset Management to raise funds for
acquiring non-controlling interest. The related Other equity
5,114,297.00 - 2/12 transactions were completed in October instrument
2016. Such shares are included in other equity instruments as they have not been issued publicly.
Weighted average
number of 423,865,068.83 423,012,686.00
ordinary shares
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
58. Notes to items in the cash flow statement
(a) Cash receipts related to other operating activities
2016 2015 Government grants except tax return 26,130,389.77 22,013,057.71 Rent income 51,510,163.93 52,669,686.01 Operational restricted bank deposits received 28,819,722.02 11,869,442.55 Interest income 27,790,677.04 15,182,553.70 Others 180,273,008.11 153,760,629.96 314,523,960.87 255,495,369.93 (b) Cash paid relating to other operating activities
2016 2015 Rental expenses 580,007,329.89 488,433,233.29 Entertainment expenses 48,566,085.69 51,119,721.76 Research and development expenses 43,731,710.17 73,150,395.26 Travel expenses 36,415,567.02 48,396,645.08 Conference expenses 12,314,057.40 16,779,145.56 Office expenses 58,136,994.12 64,785,971.89 Advertising expenses 53,688,891.99 78,896,487.46 Bank charges 33,643,347.19 27,446,840.23 Others
426,063,361.55 374,994,391.98 1,292,567,345.02 1,224,002,832.51 (c) Cash received relating to other investing activities
2016 2015 Received funds pool money returned by
1,398,519,242.56 5,908,020,000.00 Sinopharm
Retention - 20,000,000.00 Received Entrusted loan payments 177,949,000.00 - Others 28,464,568.40 184,272,889.48 1,604,932,810.96 6,112,292,889.48
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
58. Notes to items in cash flow statement (Continued)
(d) Cash paid relating to other investing activities
2016 2015 Deposit money in funds pool of Sinopharm 1,134,349,654.83 5,993,124,536.97 Purchased of equity sincerity Margin 95,259,200.00 - Others 44,765,492.10 323,129,303.85 1,274,374,346.93 6,316,253,840.82 (e) Cash received relating to other financing activities
2016 2015 Received borrowings from Sinopharm Group 94,000,000.00 103,770,000.00 Received bank factoring money 105,886,340.26 - Received security deposit of pledged borrowings 96,527,395.45 110,737,613.00 Others 1,585,588.50 76,040,000.00 297,999,324.21 290,547,613.00 (f) Cash payments relating to other financing activities
2016 2015 Repayment of entrusted borrowings provided by
369,331,500.00 122,581,000.00 Sinopharm Group
Purchased of cash of equity purchase 10,859,800.00 37,939,200.00 Others 90,408,556.33 188,959,344.63 470,599,856.33 349,479,544.63
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
59. Supplementary information of cash flow statement (Continued)
(a) Reconciliation of net profit to cash flows from operating activities
2016 2015 Net profit 1,281,880,306.48 1,029,948,751.61 Adjustments: Provision for asset impairment (8,548,825.97) 59,537,034.70 Depreciation of fixed assets and investment
140,020,960.39 137,349,990.05 properties
Amortization of intangible assets 25,801,766.27 30,510,994.58 Amortization of long-term prepaid expenses 53,800,810.95 56,682,273.62 Gains on disposal of fixed assets, and other
(14,415,829.68) (1,355,574.49) non-current assets
Financial expenses 59,819,773.12 80,895,215.75 Investment income (223,467,928.58) (56,212,724.93) Decrease/(increase) of deferred tax assets 61,870,347.75 (7,334,973.86) Decrease of deferred tax liabilities (7,159,368.38) (2,421,740.55) Decrease/(increase) of inventory 134,186,724.84 (472,855,209.01) (Increase)/decrease in operating receivables
(827,550,144.27) 697,126,863.05 items
Increase/(decrease) in operating payables
767,487,272.91 (106,324,199.27) items
Decrease in restricted operating cash with
28,819,722.02 11,869,442.55 restriction
Net cash generated from operating activities 1,472,545,587.85 1,457,416,143.80
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
59. Supplementary information of cashflow statement (Continued)
(b) Significant non-cash investing activities
2016 2015 Fixed assets under finance leases 6,018,400.00 19,983,504.62 Properties constructed with endorsed notes
898,290.60 16,981,204.57 receivable
Purchasing non-controlling interests of
273,614,900.00 - subsidiaries
280,531,590.60 36,964,709.19 (c) Movement of cash
2016 2015 Cash at end of year 3,150,909,425.54 2,164,308,359.05 Less: cash at beginning of year (2,164,308,359.05) (1,278,439,221.55) Net increase in cash
986,601,066.49 885,869,137.50
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
59. Supplementary information of cashflow statement (Continued)
(d) Acquisition of subsidiaries and operating units
2016 2015 Cash and cash equivalents paid for acquisitions
of subsidiaries and other business units 12,870,000.00 8,279,941.31 Incl: Sinopharm Zhuhai - 252,000.00 Sinopharm Guoda Taishan Qunkang
Pharmacy Chain Store Co., Ltd. (“Guoda
Taishan”) 12,870,000.00 - ForMe Xuhui - 405,721.31 Xiaoyi Wanmin - 622,220.00 Hebei Yikang - 7,000,000.00 Add: Consideration of previous acquisition paid
in current period - 299,246,300.00 Incl: Sinopharm Jiangmen - 9,200,000.00 ForMe Medicines - 69,087,100.00 ForMe Pharmacy Chain Store - 104,459,200.00 Beijing Golden Elephant - 116,500,000.00 Less: Cash held by subsidiaries at the
acquisition date 1,230,803.89 212,001,433.83 Incl: Guoda Taishan 1,230,803.89 - ForMe Medicines - 21,643,632.83 ForMe Pharmacy Chain Store - 59,169,944.04 Beijing Golden Elephant - 128,738,616.42 ForMe Xuhui - 44,422.76 Xiaoyi Wanmin - 2,002,440.76 Hebei Yikang - 402,377.02 Net cash outflow on acquisition of the
subsidiaries and business units
11,639,196.11 95,524,807.48
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
59. Supplementary information of cash flow statement (Continued)
(e) Disposal of subsidiaries and operating units
2016 2015 Cash and cash equivalents received from disposals
of subsidiaries and other business units 157,800,000.00 - Incl: Zhijun Suzhou 157,800,000.00 - Cash and cash equivalents received from disposals
of subsidiaries and other business units 156,111,000.00 - Less: Amount of cash and cash equivalents in the
subsidiaries or business units disposed of 261,638,131.30 - Incl: Zhijun Suzhou 27,265,118.87 - Zhijun Medicine 160,575,763.61 - Zhijun Trade 22,707,838.32 - Zhijun Pingshan 51,089,410.50 - Net amount of cash received from disposals of
subsidiaries and other business units
105,527,131.30 - (f) Cash
31 December 2016 31 December 2015 Cash on hand 6,164,382.85 2,846,748.55 Bank deposits on demand 3,144,745,042.69 2,161,461,610.50 Cash
3,150,909,425.54 2,164,308,359.05
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
60. Assets under restricted ownership or right to use
2016 2015 Note Cash and cash equivalents 369,046,139.44 490,623,120.83 Note 1 Notes receivables that were
5,035,500.82 - Note 2 endorsed
Notes receivables that were
154,468,694.89 88,924,715.00 Note 3 discounted
Notes receivables that were
- 20,490,279.00 Note 4 pledged
528,550,335.15 600,038,114.83
Note 1: At 31 December 2016, the Group had deposits of bank acceptance notes, deposits of pledged borrowings and time deposits with maturities over 3 months amounting to RMB369,046,139.44 (31 December 2015: RMB490,623,120.83)(Note V(1)).
Note 2: At 31 December 2016, the Group had notes receivable endorsed but not due of RMB5,035,500.82 (31 December 2015: Nil) (Note V (2)).
Note 3: At 31 December 2016, the Group had notes receivable discounted but not due of RMB154,468,694.89 (31 December 2015: RMB88,924,715.00) (Note V (2)).
Note 4: At 31 December 2016, the Group had no pledged notes receivable. At 31 December2015，the Group had pledged notes receivable of RMB20,490,279.00 (Note V(2)).
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
61. Foreign monetary items
31 December 2016 31 December 2015
Original Exchange Equivalent to Original Exchange Equivalent to currency rate RMB currency rate RMB Short-term
borrowings
US dollar 2,606,374.92 6.9370 18,080,422.84 10,135,280.39 6.4936 65,814,456.74 Hong Kong
14,728,913.11 0.89451 13,175,160.07 41,988,385.33 0.83778 35,177,029.46 dollar
Accounts
receivable
US dollar - - - 3,972,772.00 6.4936 25,797,592.27 Hong Kong
- - - 139,504.55 0.83778 116,874.12 dollar
GBP - - - 19,396.80 9.6159 186,517.69 Accounts
payable
US dollar - - - 309,660.00 6.4936 2,010,808.18 31,255,582.91 129,103,278.46
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
VI. Changes in the scope of consolidation
1. Business combination not involving enterprises under common control
In 2016, the Company acquired a70% equity interest of Guoda Taishan from Taishan Qunkang Pharmacy Co., Ltd. for RMB34,650,000 to constitute business combination involving enterprises not under common control. The acquisition was completed on 31 March 2016 and included in the consolidation scope of the Company.
The fair value and carrying amount of identifiable assets and liabilities and contingent liabilities of Guoda Taishan on acquisition date are presented as follows:
31 March 2016 31 March 2016 Fair value Carrying amount Cash and bank balances 1,230,803.89 1,230,803.89 Accounts receivable 354,240.70 354,240.70 Other receivables 6,425,134.34 6,425,134.34 Inventories 12,478,339.82 12,478,339.82 Other current assets 482,224.20 482,224.20 Fixed assets 1,369,687.80 1,369,687.80 Intangible assets 57,834.76 57,834.76 Accounts payable 8,366,105.84 8,366,105.84 Advance from customers 123,920.11 123,920.11 Employee benefits payable 825,591.00 825,591.00 Tax payables 457,486.80 457,486.80 Dividends payable 837,993.67 837,993.67 Other payable 807,331.24 807,331.24 Net assets 10,979,836.85 10,979,836.85 Less: Non-controlling interests (3,293,951.05)
Net assets obtained 7,685,885.80
Consideration 34,650,000.00
Less: declared but unpaid dividend 137,993.65
Investment cost 34,512,006.35
Goodwill arising from acquisition 26,826,120.55
Operating results and cash flows of Guoda Taishan from the acquisition date to the end of year are presented as follows:
Period from 1 April 2016 to 31 December 2016 Operating revenue 47,699,779.02 Net profit 3,637,725.66 Net cash flows
2,829,366.14
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
VI. Changes in scope of consolidation (Continued)
2. Disposal of subsidiaries
Total share Total voting right Reason for no Place of Nature of
proportion of proportion of the longer being a incorporation business
the Group Group subsidiary Zhijun Suzhou Suzhou Manufacturing 100% 100% Note 1 Note 1: The Group disposed of its67% equity interest of Zhijun Suzhou on 26 April 2016. After the disposal, the Group held a33% equity interest of Zhijun Suzhou, which was accounted for as an associate.
Relevant financial information of Zhijun Suzhou is presented as follows:
30 April 2016 31 December 2015 Fair value Carrying amount Current assets 136,462,063.45 163,859,621.09 Non-current assets 248,468,214.40 254,812,353.18 Current liabilities 295,899,391.93 318,311,028.96 Non-current liabilities 4,971,073.39 5,131,187.25 Net assets
84,059,812.53 95,229,758.06 Goodwill 28,019,393.32
112,079,205.85
Less: Fair value of remaining equity 77,722,388.00
Less: Proceeds from disposal 156,111,000.00
233,833,388.00
Gain from disposal
121,754,182.15
The difference between the total amount of consideration received from transaction that resulted in the loss of control plus the fair value of33% equity right and the total amount of the net asset of Zhijun Suzhou calculated continuously from the acquisition date and the goodwill related to this entity was recognized as the investment income for the year amounting to RMB121,754,182.15. The fair value of the remaining33% equity interest of Zhijun Suzhou held by the Group after the disposal was RMB77,722,388.00 and a remeasurement gain of fair value of RMB35,080,116.91 was recorded.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
VI. Changes in scope of consolidation (Continued)
3. Significant reorganization
In 2016, the Group carried out significant reorganization which consisted of two specific transactions. Please refer to (I) Profile of the Company, (2) Change in the consolidation scope and the completed significant reorganization for the current year.
The accounting principles for the above two transactions: (1) for the arrangement of acquiring the four subsidiaries in Transaction 1, as eachparty’s ultimate controlling party was CNPGC before and after the reorganization and the control was not transitory, the business combination under common control should be recorded at the carrying value of the ultimate controllingparty’s consolidated financial statements and deemed as being consolidated at the beginning of the comparative period of the financial statement; the arrangement of acquiring the49.00% equity interest of South Pharma& Trade with cash of RMB274,000,000 should be accounted for as acquiring a non-controlling interest; and (2)51% equity interest of three pharmaceutical subsidiaries and the non-current assets of Pingshan base were sold for acquiring a15.56% equity interest of Shyndec Pharmaceutical in Transaction 2 and such transaction formed part of the bundled transaction of the reorganization, so it should be recorded at the carrying value.
In the above reorganization arrangement, the parties disposing of the related equity and assets made commitments to the acquirer in regard to profitability forecast compensation. The Company believes that, as the performance stipulated in the compensation agreement is based on the reasonable forecast of underlying assets in the ordinary course of business and the actual results are expected to be consistent with the commitments, the Company concludes that the fair value of the related contingent consideration is not significant.
The consideration of the above significant reorganization and the carrying amount of the net assets obtained are as follows:
Transaction 1:
Carrying amount of the net assets obtained
Guoda Pharmacy -100% equity 1,361,800,110.06 Foshan Nanhai -100% equity 462,682,298.01 Guangdong Uptodate& Special Medicines -
144,682,822.34100% equity
South Pharma& Trade -51% equity 128,308,087.19 Subtotal 2,097,473,317.60 Less: Par value of shares 60,380,743.00 Difference recognized in capital surplus 2,037,092,574.60
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
VI. Changes in scope of consolidation (Continued)
3. Significant reorganization (Continued)
Transaction 2:
Carrying amount of the net assets obtained
- Shyndec Pharmaceutical15.56% equity 871,794,861.65 Less: Carrying amount of investments in three
pharmaceutical companies
Zhijun Medicine51% equity 104,227,135.88 Zhijun Pingshan51% equity 19,577,462.90 Zhijun Trade51% equity 5,669,601.87 Productive assets of Pingshanbase* 529,931,364.42 Subtotal: 659,405,565.07 Difference recognized in capital surplus: 212,389,296.58 The significant reorganization had an impact on capital surplus of RMB2,249,481,871.18.
* As at 31 December 2016, the related land and building were in the process of transfer.
3.1 Business combination under common control
Operating results and cash flows of Guoda Pharmacy from 1 January 2016 to the acquisition date and the last accounting period are presented as follows:
Period from 1 January 2016
to 31 October 2015 Operating revenue 7,387,361,362.35 7,991,735,833.29 Net profit 177,223,174.46 138,637,534.56 Net cash flows
161,021,801.86 173,438,825.13
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
VI. Changes in scope of consolidation (Continued)
3.1 Business combination under common control (continued)
The carrying amounts of assets and liabilities of Guoda Pharmacy at the combination date and at the balance sheet date of the last accounting period are presented as follows: 31 October 2016 31 December 2015 Cash and bank balances 840,581,745.37 704,326,972.68 Notes receivable 1,200,000.00 11,696,740.00 Accounts receivable 690,135,002.05 566,923,645.52 Advances to suppliers 295,379,025.98 190,839,238.22 Interest receivable 450,660.74 197,875.00 Dividends receivable 964,600.00 964,600.00 Other receivables 254,192,370.04 385,812,558.26 Inventories 1,413,598,727.39 1,205,569,222.66 Other current assets 6,176,508.56 22,576,307.15 Available-for-sale financial assets 13,685,760.00 2,675,760.00 Long-term equity investments 10,695,981.95 9,450,914.59 Investment properties 8,976,606.99 13,182,258.66 Fixed assets 272,278,275.02 274,272,883.88 Construction in progress 26,679,572.48 24,472,017.50 Fixed assets pending for disposal 89,255.67 - Intangible assets 205,357,905.77 214,059,373.39 Goodwill 680,897,203.25 654,071,082.70 Long-term deferred expenses 128,201,686.85 101,157,661.18 Deferred tax assets 37,647,208.66 37,404,537.76 Other non-current assets 16,816,027.95 36,089,749.59 Short-term borrowings 120,000,000.00 140,000,000.00 Notes payable 833,644,859.70 791,625,264.33 Accounts payable 1,667,850,365.79 1,193,846,938.88 Advance from customers 94,220,564.43 111,703,639.79 Employee benefits payable 88,147,352.33 77,164,412.49 Tax payables 34,110,413.22 58,994,840.42 Interest payables 765,438.42 - Dividends payable 8,483,370.21 16,517,259.20 Other payables 298,614,164.13 465,255,542.58 Long-term employee benefits payable 649,000.00 1,024,000.00 Provision - 3,936,157.67 Deferred income 23,226,084.84 22,406,519.35 Deferred tax liabilities 44,026,811.08 45,437,511.96 1,690,265,700.57 1,527,831,312.07 Less: Non-controlling interests 328,465,590.51 297,799,684.90 Net assets obtained
1,361,800,110.06 1,230,031,627.17
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
VI. Changes in scope of consolidation (Continued)
3.1 Business combination under common control (Continued)
Operating results and cash flows of Foshan Nanhai from 1 January 2016 to the acquisition date and the last accounting period are presented as follows:
Period form 1 January
2015 2016 to 31 October
Operating revenue 1,533,797,118.71 1,713,182,853.23 Net profit 41,442,287.13 46,469,535.74 Net cash flows
(9,833,222.44) 31,316,097.05 The carrying amounts of assets and liabilities of Foshan Nanhai at the combination date and at the balance sheet date of the last accounting period are presented as follows:
31 October 2016 31 December 2015 Cash and bank balances 67,901,007.30 84,760,196.37 Notes receivable 126,663.80 700,234.10 Accounts receivable 698,055,339.33 526,585,133.37 Advances to suppliers 3,289,143.82 1,082,580.96 Other receivables 6,955,646.92 50,125,437.41 Inventories 124,805,341.44 141,851,310.50 Other current assets 8,354,154.34 7,123,289.28 Investment properties 4,127,379.21 4,368,597.31 Fixed assets 12,551,060.13 14,852,735.05 Construction in progress 666,666.67 - Intangible assets 52,258,546.88 57,527,056.07 Goodwill 88,877,850.51 88,877,850.51 Deferred tax assets 2,312,684.54 2,411,372.14 Short-term borrowings 116,568,890.11 85,083,503.81 Notes payable 40,877,634.38 43,575,784.71 Accounts payable 373,800,991.97 340,653,274.81 Advance from customers 17,336.03 16,803.53 Employee benefits payable 2,788,369.17 3,562,052.02 Tax payables 6,592,841.78 7,181,190.16 Interest payables 595,109.07 518,430.79 Other payables 45,532,730.40 50,715,755.97 Non-current liabilities due within one year 805,110.20 2,310,019.32 Long-term payables 5,878,814.67 5,391,098.89 Deferred tax liabilities 14,141,359.10 15,610,486.37 Net assets obtained 462,682,298.01 425,647,392.69
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
VI. Changes in scope of consolidation (Continued)
3.1 Business combination under common control (Continued)
Operating results and cash flows of Guangdong Uptodate& Special Medicines from 1 January 2016 to the acquisition date and the last accounting period are presented as follows:
Period form 1 January
2015 2016 to 31 October
Operating revenue 737,006,838.29 988,461,769.15 Net profit 15,896,740.08 18,290,323.84 Net cash flows
5,551,501.86 (7,169,725.29) The carrying amounts of assets and liabilities of Guangdong Uptodate& Special Medicines at the combination date and at the balance sheet date of the last accounting period are presented as follows:
31 October 2016 31 December 2015 Cash and bank balances 54,870,966.56 95,653,425.82 Notes receivable 40,468,264.96 38,174,638.00 Accounts receivable 230,174,057.51 231,124,489.63 Advances to suppliers 16,354,377.09 46,795,172.18 Other receivables 5,774,347.70 16,653,219.01 Inventories 74,157,910.36 79,908,147.97 Other current assets - 2,995,119.15 Fixed assets 2,055,486.10 2,694,634.51 Deferred tax assets 654,875.42 800,981.09 Short-term borrowings 22,800,000.00 43,900,000.00 Notes payable 166,424,147.48 258,049,233.49 Accounts payable 60,203,762.07 66,985,382.71 Advance from customers - 902,224.04 Tax payables 4,865,809.22 1,360,587.40 Other payables 25,533,744.59 14,816,317.46 Net assets obtained 144,682,822.34 128,786,082.26
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
VI. Changes in scope of consolidation (Continued)
3.1 Business combination under common control (Continued)
Operating results and cash flows of South Pharma& Trade from 1 January 2016 to the
acquisition date and the last accounting period are presented as follows:
Period form 1 January
2015 2016 to 31 October
Operating revenue 1,786,244,467.97 1,931,614,638.45 Net profit 25,965,371.72 44,492,306.43 Net cash flows
7,190,126.19 (26,730,356.91) The carrying amounts of assets and liabilities of South Pharma& Trade at the combination date and at the balance sheet date of the last accounting period are presented as follows:
31 October 2016 31 October 2015 Cash and bank balances 54,088,212.33 199,483,914.50 Notes receivable 52,534,123.14 48,670,104.01 Accounts receivable 348,249,504.55 422,544,481.30 Advances to suppliers 144,594,751.25 324,844,394.97 Other receivables 6,130,172.03 7,864,512.90 Inventories 223,245,258.60 204,668,233.65 Other current assets - 1,803,529.45 Investment properties 843,291.96 - Fixed assets 863,045.63 1,416,877.02 Goodwill 2,755,680.62 2,755,680.62 Long-term deferred expenses 3,940,091.98 40,295.00 Deferred tax assets 4,667,008.43 5,958,116.62 Other non-current assets 2,582,875.00 4,694,817.27 Short-term borrowings 174,500,849.21 151,289,188.80 Notes payable 37,725,000.00 140,681,260.00 Accounts payable 309,490,682.17 446,819,446.21 Advance from customers 35,317,299.26 77,860,528.63 Employee benefits payable 1,216,982.12 4,718,485.32 Tax payables 7,583,529.01 4,011,780.75 Interest payables 436,191.78 235,184.25 Dividends payable - 20,000,000.00 Other payables 29,286,612.00 156,157,585.10 248,936,869.97 222,971,498.25 Less: Non-controlling interests 120,628,782.78 107,905,750.64 Net assets obtained 128,308,087.19 115,065,747.61
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
VI. Changes in scope of consolidation (Continued)
3.1 Business combination under common control (Continued)
Pursuant to the Profit Forecast Compensation Agreement for the Stock Issuance and Asset Purchase signed on 30 May 2016, Sinopharm Group committed that, the net profit of Foshan Nanhai, Guangdong Uptodate& Special Medicines and Guoda Pharmacy (“target company”) would be no less than RMB47,385,600, RMB19,167,000 and RMB98,466,100, respectively in 2016; no less than RMB49,394,500, RMB20,209,700 and RMB110,998,900, respectively in 2017; and no less than RMB51,148,200, RMB21,330,100 and RMB131,275,500, respectively in 2018. China Pharma& Trade and eleven natural persons including Fu Yuequn committed that the net profit of South Pharma& Trade would be no less than RMB39,880,700 in 2016, no less than RMB47,323,200 in 2017 and no less than RMB55,364,600 in 2018. If the actual profit of the target company does not reach the committed net profit, Sinopharm Group, China Pharma& Trade and eleven natural persons including Fu Yuequn will need to compensate the Company by shares or cash according to the stipulation on calculating the number of share compensation and the amount of cash compensation. The Company concludes that the fair value of the contingent consideration is not significant.
3.2 Disposal of subsidiaries
Relevant financial information of Zhijun Medicine is presented as follows:
31 October 2016 31 December 2015 Carrying amount Carrying amount Current assets 529,986,480.82 857,455,706.32 Non-current assets 337,450,716.91 362,103,259.33 Current liabilities (280,789,509.35) (584,878,125.35) (46,627,874.85) (62,954,554.78) Non-current liabilities
The operating revenue, operating cost and net profit from the beginning of the year to the date of disposal of Zhijun Medicine is presented as follows:
Period from 1 January 2016 to 31 October Carrying amount Operating revenue 909,620,950.55 Operating cost 529,112,455.32 Net profit
189,221,408.06
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
VI. Changes in scope of consolidation (Continued)
3.2 Disposal of subsidiaries (Continued)
Relevant financial information of Zhijun Pingshan is presented as follows:
31 October 2016 31 December 2015 Carrying amount Carrying amount Current assets 159,356,327.91 113,781,755.58 Non-current assets 9,762,415.04 10,624,259.84 Current liabilities (81,632,440.63) (77,633,281.45) Non-current liabilities
(577,000.00) (107,000.00) The operating revenue, operating cost and net profit from the beginning of the year to the date of disposal of Zhijun Pingshan is presented as follows:
Period from 1 January 2016 to 31 October Carrying amount Operating revenue 206,174,817.60 Operating cost 102,432,403.39 Net profit
35,976,818.41 Relevant financial information of Zhijun Trade is presented as follows:
31 October 2016 31 December 2015 Carrying amount Carrying amount Current assets 38,888,195.60 45,859,235.52 Non-current assets 859,135.98 1,251,932.59 Current liabilities (26,013,997.53) (34,974,274.57) Non-current liabilities
- - The operating revenue, operating cost and net profit from the beginning of the year to the date of disposal of Zhijun Trade is presented as follows:
Period from 1 January 2016 to 31 October Carrying amount Operating revenue 63,813,161.13 Operating cost 48,846,655.81 Net profit
2,801,747.02
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
VI. Changes in scope of consolidation (Continued)
4. Establishment of subsidiaries
31 December 2016 2016
Net assets Net loss Remarks Sinopharm Holding Guoda
Pharmacy Ulanqab Co., Ltd. 4,919,756.23 (80,243.77) Establishment Sinopharm Guoda Pharmacy
Qinhuangdao Chain Co., Ltd. 2,001,733.54 (998,266.46) Establishment 5. Cancellation of subsidiaries
Registered Reason for Principal capital no longer place of Place of (RMB Nature of being a business incorporation ‘0,000) business Shareholding(%) subsidiary Direct Indirect
Sinopharm
Holding
Chinese
Herbal Slice Pharmaceutical
Co., Ltd. Liuzhou Liuzhou 200 manufacturing - 51.00% Cancellation Ningxia Guoda
Pharmacy
Chain Store
Co., Ltd. Ningxia Ningxia 100 Commercial - 70.00% Cancellation Jinzhong
Guoda
Wanmin
Pharmacy
Chain Store Absorption Co., Ltd. (a) Jinzhong Jinzhong 170 Commercial - 100.00% merger Jincheng
Guoda
Wanmin
Pharmacy
Chain Store Absorption Co., Ltd. (a) Jincheng Jincheng 256 Commercial - 100.00% merger Beijing Golden
Elephant
Ailefang
Trading Co.,
Ltd. Beijing Beijing 200 Commercial - 100.00% Cancellation (a) In April and December 2016, Jincheng Guoda Wanmin Pharmacy Chain Store Co., Ltd. and Jinzhong Guoda Wanmin Pharmacy Chain Store Co., Ltd. transferred all their stores to their parent company, Shanxi Guoda Wanmin Pharmacy Chain Store Co.,Ltd.’s Jincheng Branch and Shanxi Guoda Wanmin Pharmacy Chain Store Co.,Ltd.’s Jinzhong Branch. In March and December 2016, the relevant procedures were completed and the legal entities were cancelled.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
VII Interests in other entities
1． Interests in subsidiaries
(1) The composition of the Group:
Principal
Registered Shareholding
Place of Nature of capital Voting Ways of Subsidiaries place of
business
incorporation business (RMB
Direct Indirect
proportion acquisition 0.000)
Sinopharm Guilin Guilin Guilin Commercial 1,000 - 100.00% 100.00% Establishment Sinopharm Baise Baise Baise Commercial 1,000 - 100.00% 100.00% Establishment Sinopharm Holding
Zhongshan Co.,
Ltd. (“Sinopharm
Zhongshan") Zhongshan Zhongshan Commercial 1,000 100.00% - 100.00% Establishment Sinopharm Guigang Guigang Guigang Commercial 1,000 - 100.00% 100.00% Establishment Sinopharm Beihai Beihai Beihai Commercial 500 - 100.00% 100.00% Establishment Guangzhou Medical
Treatment Guangzhou Guangzhou Commercial 300 - 51.00% 51.00% Establishment Business Shenzhen Jianmin combinations Pharmaceutical involving Co., Ltd. entities under (“Sinopharm common Jianmin") Shenzhen Shenzhen Commercial 2,000 100.00% - 100.00% control Sinopharm Holding
Shenzhen
Traditional& Business Herbal Medicine combinations Co., Ltd. involving (“Sinopharm entities under Traditional& common Herbal Medicine") Shenzhen Shenzhen Commercial 1,500 100.00% - 100.00% control Business Sinopharm Holding combinations Shenzhen involving Logistics Co., Ltd. entities under (“Shenzhen common Logistics") Shenzhen Shenzhen Services 500 100.00% - 100.00% control Business combinations Sinopharm Holding involving Guangzhou Co., entities under Ltd. (“Sinopharm common Guangzhou") Guangzhou Guangzhou Commercial 100,000 100.00% - 100.00% control Business Sinopharm Holding combinations Guangdong involving Hengxing Co., entities under Ltd. (“Sinopharm common Hengxing") Guangzhou Guangzhou Commercial 5,000 100.00% - 100.00% control Business combinations involving entities under common Sinopharm Yulin Yulin Yulin Commercial 500 - 100.00% 100.00% control
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(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 Place of
Nature of
Registered Shareholding Voting
Subsidiaries place of incorporatio capital(RM proportio Ways of acquisition business n
business
B 0.000) Direct Indirect n
Business combinations involving entities Sinopharm Liuzhou Liuzhou Liuzhou Commercial 2,053.0651.00% - 51.00% under common control Business Guangdong Huixin combinations Investment Co., Ltd. involving entities (“Huixin Investment”) Guangzhou Guangzhou Service 500100.00% -100.00% under common control Business Sinopharm Holding Foshan combinations Co., Ltd. (“Sinopharm involving entities Foshan") Foshan Foshan Commercial 1,500100.00% -100.00% under common control Sinopharm Holding Business Guangdong Yuexing combinations Co., Ltd. (“Sinopharm involving entities Yuexing”) Guangzhou Guangzhou Commercial 10,000100.00% -100.00% under common control Sinopharm Holding Business Guangdong Logistics combinations Co., Ltd. (“Guangdong involving entities Logistic”) Guangzhou Guangzhou Service 1,000100.00% -100.00% under common control Business combinations involving entities Sinopharm Guangxi Nanning Nanning Commercial 50,000100.00% -100.00% under common control Business combinations involving entities Guangxi Logistic Nanning Nanning Service 710.07 -100.00%100.00% under common control Business combinations involving entities Sinopharm Wuzhou Wuzhou Wuzhou Commercial 1,000 -99.90%99.90% under common control Sinopharm Holding Business Dongguan Co., Ltd. combinations (“Sinopharm involving entities not Dongguan") Dongguan Dongguan Commercial 1,800100.00% -100.00% under common control Sinopharm Holding Business Zhanjiang Co., Ltd. combinations (“Sinopharm involving entities not Zhanjiang") Zhanjiang Zhanjiang Commercial 7,000100.00% -100.00% under common control Business Sinopharm Holding combinations Yanfeng Co., Ltd. involving entities not (“Sinopharm Yanfeng ") Shenzhen Shenzhen Commercial 3,00051.00% - 51.00% under common control Business Sinopharm Holding combinations Meizhou Co., Ltd. involving entities not (“Sinopharm Meizhou") Meizhou Meizhou Commercial 1,800100.00% -100.00% under common control
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(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 Voting
Place of Nature of capital
Subsidiaries place of proportio Ways of acquisition business
incorporation business (RMB
Direct Indirect n
0.000)
Sinopharm Holding
Huizhou Co., Business combinations Ltd.("Sinophar involving entities not m Huizhou") Huizhou Huizhou Commercial 1,800100.00% -100.00% under common control Sinopharm Holding
Zhaoqing Co., Business combinations Ltd.("Sinophar involving entities not m Zhaoqing") Zhaoqing Zhaoqing Commercial 1,500100.00% -100.00% under common control Sinopharm Holding
Jiangmeng
Renren Medical
Co., Business combinations Ltd.(“Sinophar involving entities not m Jiangmen”) Jiangmen Jiangmen Commercial 6,000100.00% -100.00% under common control Sinopharm Holding
Shaoguan Co., Business combinations Ltd.("Sinophar involving entities not m Shaoguan") Shaoguan Shaoguan Commercial 36070.00% - 70.00% under common control Business combinations Sinopharm involving entities not Shantou(a) Shantou Shantou Commercial 800100.00% -100.00% under common control Foshan Nanhai Business combinations Medicine Co., involving entities under Ltd. Foshan Foshan Commercial 7,000100.00% -100.00% common control Foshan Nanhai
Uptodate&
Special Business combinations Medicines Co., involving entities under Ltd. Foshan Foshan Commercial 4,000 -100.00%100.00% common control Foshan Nanhai Business combinations Medicine Co., involving entities under Ltd. Foshan Foshan Commercial 4,000 -100.00%100.00% common control Guangdong
Uptodate& Business combinations Special involving entities under Medicines Guangzhou Guangzhou Commercial 5,000100.00% -100.00% common control Guangdong South
Pharmaceutical Business combinations Foreign Trade involving entities under Co., Ltd. Guangzhou Guangzhou Commercial 3,000100.00% -100.00% common control Sinopharm Holding
Guoda Business combinations Pharmacy Co., involving entities under Ltd. Shanghai Shanghai Commercial 101,000100.00% -100.00% common control Sinopharm Holding
Guoda
Pharmacy
Chain Store Business combinations Shanghai Co., involving entities under Ltd. Shanghai Shanghai Commercial 3,000 -100.00%100.00% common control
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(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 incorporation business capital proportion
business (RMB‘0,000 Direct Indirect
)
Beijing Guoda Business combinations Pharmacy Chain involving entities under Store Co., Ltd. Beijing Beijing Commercial 1,000 -100.00% 100.00% common control Tianjin Guoda Business combinations Pharmacy Chain involving entities under Store Co., Ltd. Tianjin Tianjin Commercial 1,000 - 80.00% 80.00% common control Guangxi Guoda
Pharmacy Business combinations Consulting Chain involving entities under Store Co., Ltd. Nanning Nanning Commercial 300 -100.00% 100.00% common control Sinopharm Holding
Guoda Pharmacy Business combinations Guangdong Co., involving entities under Ltd. Shenzhen Shenzhen Commercial 5,000 -100.00% 100.00% common control Sinopharm Guoda
Pharmacy Business combinations Guangxi Chain involving entities under Co., Ltd. Liuzhou Liuzhou Commercial 200 -100.00% 100.00% common control Zhejiang Guoda Business combinations Pharmacy Co., involving entities under Ltd. Hangzhou Hangzhou Commercial 1,500 -100.00% 100.00% common control Sinopharm Holding
Guoda Yangzhou
Dadesheng Business combinations Pharmacy Chain involving entities under Store Co., Ltd. Yangzhou Yangzhou Commercial 4,400 - 93.68% 93.68% common control Guoda Shenyang Business combinations Tianyitang involving entities under Pharmacy Chain Shenyang Shenyang Commercial 1,000 - 51.00% 51.00% common control Ningxia Guoda Business combinations Pharmacy Chain involving entities under Store Co., Ltd. Yinchuan Yinchuan Commercial 7,000 - 70.00% 70.00% common control Sinopharm Holding
Guoda Nanjing Business combinations Pharmacy Chain involving entities under Store Co., Ltd. Nanjing Nanjing Commercial 800 - 60.00% 60.00% common control Sinopharm Holding
Guoda Shandong Business combinations Pharmacy Chain involving entities under Store Co., Ltd. Linyi Linyi Commercial 2,900 - 55.00% 55.00% common control Sinopharm Holding
Guoda Shenyang Business combinations Pharmacy Chain involving entities under Store Co., Ltd. Shenyang Shenyang Commercial 800 - 51.00% 51.00% common control Fujian Guoda Business combinations Pharmacy Chain involving entities under Store Co., Ltd. Shamen Shamen Commercial 3,750 -100.00% 100.00% common control
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(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 incorporation business capital proportion
business (RMB‘0,00
Direct Indirect
0)
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 Pingdingsh involving entities under Chain Store Co., Ltd. an Pingdingshan Commercial 1,500 -60.00% 60.00% common control Sinopharm Holding Guoda Business combinations Neimenggu Pharmacy involving entities under Chain Store Co., Ltd. Hohhot Hohhot Commercial 2,000 -96.70% 96.70% common control Sinopharm Hebei Business combinations Lerentang Pharmacy Shijiazhua involving entities under Chain Store Co., Ltd. ng 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
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(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 incorporati business capital proportion
business on (RMB‘0,00
Direct Indirect
0)
Beijing Golden
Elephant Pharmacy Business combinations Medicine Chain involving entities under Company Limited Beijing Beijing Commercial 4,222.22 - 53.13% 53.13% common control Shanxi Tongfeng Business combinations Pharmacy Logistics involving entities under Co., Ltd. Taiyuan Taiyuan Commercial 500 - 100.00% 100.00% common control Datong Guoda
Wanmin Pharmacy Business combinations Chain Store Co., involving entities under Ltd. Datong Datong Commercial 615 - 100.00% 100.00% common control Changzhi Guoda
Wanmin Pharmacy Business combinations Chain Store Co., involving entities under Ltd. Changzhi Changzhi Commercial 320 - 51.00% 51.00% common control Shanxi Guoda Wanmin Business combinations Clinic Management Medical involving entities under Chain Co., Ltd. Taiyuan Taiyuan services 120 - 100.00% 100.00% common control Shanghai Guoda Business combinations Shanghong Qibao involving entities under Pharmacy Co., Ltd. Shanghai Shanghai Commercial 100 - 51.00% 51.00% common control Zhejiang Intlmedicine Business combinations Pharmacy involving entities under Dongshan Co., Ltd. Hangzhou Hangzhou Commercial 50 - 51.00% 51.00% common control Shanghai Guoda Business combinations Dongsheng involving entities under Pharmacy Co., Ltd. Shanghai Shanghai Commercial 50 - 100.00% 100.00% common control Sinopharm Guoda
Drug Store Business combinations (Shenzhen) Chain involving entities under Co., Ltd. Shenzhen Shenzhen Commercial 1,080 - 100.00% 100.00% common control Sinopharm Holding
Guoda Pharmacy Business combinations Guangzhou Chain involving entities under Co., Ltd. Guangzhou Guangzhou Commercial 200 - 100.00% 100.00% common control Shanghai Guoda Business combinations Changxin involving entities under Pharmacy Co., Ltd. Shanghai Shanghai Commercial 30 - 100.00% 100.00% common control Shanghai Guodong
Chinese Traditional Business combinations Medicine Clinic involving entities under Co., Ltd. Shanghai Shanghai Medical clinic 20 - 100.00% 100.00% common control Shanghai Guoda
Dongxin Pharmacy Business combinations Chain Store Co., involving entities under Ltd. Shanghai Shanghai Commercial 30 - 100.00% 100.00% common control
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(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 incorporation business capital(RM proportion
business B‘0,000)
Direct Indirect
Shanghai Yutaitang Business Chinese combinations Traditional involving entities Medicine Clinic under common Co., Ltd. Shanghai Shanghai Commercial 100 -100.00%100.00% control Beijing Yangqiao Business Rongzhi Golden combinations Elephant involving entities Pharmacy under common Company Limited Beijing Beijing Commercial 126 - 50.79% 50.79% control Business Sanhe Liyang Golden combinations Elephant involving entities Pharmacy Co., under common Ltd. Langfang Langfang Commercial 1 -100.00%100.00% control Business Xiaoyi Guoda Wanmin combinations Baicaotang involving entities Pharmacy Chain under common Store Co., Ltd. Xiaoyi Xiaoyi Commercial 6,22.22 - 70.00% 70.00% control Business Sinopharm Holding combinations Guoda Pharmacy involving entities Hulun Buir Co., under common Ltd. Hulun Buir Hulun Buir Commercial 300 - 51.00% 51.00% control Business Shijiazhuang combinations Lerentang Yikang involving entities Pharmacy Chain under common Store Co., Ltd. Shijiazhuang Shijiazhuang Commercial 500 -100.00%100.00% control Business Sinopharm Tangshan combinations Lerentang involving entities Pharmacy Chain under common Store Co., Ltd. Tangshan Tangshan Commercial 300 -100.00%100.00% control Business combinations Shanghai ForMe involving entities Pharmacy Co., under common Ltd. Shanghai Shanghai Commercial 25 -100.00%100.00% control Sinopharm Holding
Ulanqab Co.,
Ltd.(ii) Ulanqab Ulanqab Commercial 500 - 60.00% 60.00% Establishment Business Sinopharm Guoda combinations Pharmacy involving entities Qinhuangdao under common Chain Co., Ltd. (iii) Qinhuangdao Qinhuangdao Commercial 300 - 51.00% 51.00% control Taishan Sinopharm Business Holding Guoda combinations Qunkang involving entities Pharmacy Chain under common Store Co., Ltd. (iv) Taishan Taishan Commercial 990 - 70.00% 70.00% control Business Beijing Golden combinations Elephant Fuxing involving entities Technology Co., under common Ltd. Beijing Beijing Commercial 100 - 80.00% 80.00% control
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(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. In December 2016, China National Accord Medicines Corporation Ltd. completed the acquisition of30% non-controlling interest of Sinopharm Holding Shantou Co., Ltd. As of the end of 2016, Sinopharm Holding Shantou Co., Ltd. has already been wholly owned by China National Accord Medicines Corporation Ltd.
ii. On 29 November2016，Sinopharm Holding Guoda Neimenggu Pharmacy Chain Store Co., Ltd. and Shen Yanhong (a natural person) accumulatively invested RMB3,000,000.00 and RMB2,000,000.00 respectively to set up Sinopharm Holding Guoda Ulanchap Pharmacy Chain Store Co., Ltd.
iii. On 21 March 2016, Sinopharm Hebei Lerentang Pharmacy Chain Store Co., Ltd. and He Wengong (natural person) accumulatively invested RMB1,530,000.00 and RMB1,470,000.00 respectively to set up Sinopharm Guoda Pharmacy Qinhuangdao Chain Co., Ltd.
iv. On 9 February 2015, Sinopharm Holding Guoda Pharmacy Guangdong Co., Ltd. signed an equity transfer agreement with Taishan Qunkang Pharmacy Co., Ltd., acquiring70% equity of Taishan Sinopharm Holding Guoda Qunkang Pharmacy Chain Store Co., Ltd. at the consideration of RMB34,650,000.00. which was completed on 31 March 2016. There was no subsidiary that had significant non-controlling interests in the Group.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
VII. Interests in other entities (Continued)
2. Interests in associates
Principal place Place of Nature of
Shareholding(%)
of business incorporation business Accounting Direct Indirect
Associates
Shenzhen Main Luck
Pharmaceutical Co., Ltd.
("Main Luck
Pharmaceutical ") Shenzhen Shenzhen Manufacturing 35.19 - Equity Sinopharm Holding Zhuhai
Co., Ltd. ("Sinopharm
Zhuhai") Zhuhai Zhuhai Commercial 10.00 - Equity Sinopharm Group
Zhijun(Suzhou)
Pharmaceutical Co., Ltd. Suzhou Suzhou Manufacturing 33.00 - Equity Sinopharm Group
Zhijun(Shenzhen)
Pharmaceutical Co., Ltd. Shenzhen Shenzhen Manufacturing 49.00 - Equity Shenzhen Zhijun
Pharmaceutical Trade Co.,
Ltd. Shenzhen Shenzhen Commercial 49.00 - Equity Sinopharm Group
Zhijun(Shenzhen) Pingshan
Pharmaceutical Co., Ltd. Shenzhen Shenzhen Manufacturing 49.00 - Equity Shanghai Shyndec
Pharmaceutical Co., Ltd.
(“Shyndec
Pharmaceutical”) Shanghai Shanghai Manufacturing 15.56 - Equity Shanghai Beiyi Guoda
pharmaceutical Co. Ltd. Shanghai Shanghai Commercial - 26.00 Equity Shanghai Liyi Pharmacy
Co., Ltd Shanghai Shanghai Commercial - 35.00 Equity Sinopharm Jienuo Medical
Treatment Service
Guangdong Co., Ltd. (g) Guangzhou Guangzhou Commercial - 29.00 Equity Dongyuan accord
pharmaceutical chain
Co., Ltd. (f) Heyuan Heyuan Commercial - 45.00 Equity Shyndec Pharmaceutical is an important associate as it is a strategic partner of the Group and is engaged in the production and sale of pharmaceutical product, and the Group adopted equity method of accounting.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
VII. Interests in other entities (Continued)
2. Interests in associates (Continued)
The following table illustrated the summariesd financial information in respect of Shyndec
Pharmaceutical:
2016 2015 Current assets 6,337,023,883.28 5,538,850,630.20 Incl: Cash and bank balances 1,483,591,810.82 967,719,000.15 Non-current assets 8,678,049,960.17 8,412,988,922.76 Total assets 15,015,073,843.45 13,951,839,552.96 Current liabilities 4,711,258,061.30 4,679,997,617.18 Non-current liabilities 3,365,333,778.30 3,485,332,149.46 Total liabilities 8,076,591,839.60 8,165,329,766.64 Non-controlling interests 1,234,500,935.98 1,907,534,653.63Shareholders’ equity attributable to
shareholders of the parent
company 5,703,981,067.87 3,878,975,132.69Group’s share of net assets by
proportion of ownership interests 887,539,454.16 - Carrying amount of the investment
887,539,454.16 - Operating revenue 9,125,774,773.35 8,987,612,304.14 Financial expenses– interest
income 17,229,742.84 20,655,734.73 Financial expenses– interest
expenses 291,452,802.70 329,963,003.01 Income taxes 182,481,479.60 166,909,922.78 Net profit 854,031,531.27 890,257,551.32 Other comprehensive income - - Total comprehensive income 854,031,531.27 890,257,551.32 Dividend received
- -
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
VIII Risks related to financial instruments
1. Classification of financial instruments
The fair values of each category of financial instruments reasonably approximate to their
carrying amounts at the end of the reporting period as follows:
31 December 2016
Borrowings and Available-for-sale
Financial assets Total receivables financial assets
Cash and cash equivalents 3,519,955,564.98 - 3,519,955,564.98 Notes receivable 1,504,000,909.21 - 1,504,000,909.21 Accounts receivable 7,654,225,510.89 - 7,654,225,510.89 Interest receivables 450,722.67 - 450,722.67 Other receivables 474,787,643.28 - 474,787,643.28 Available-for-sale financial
- 13,685,760.00 13,685,760.00 assets
13,153,420,351.03 13,685,760.00 13,167,106,111.03 31 December 2015
Borrowings and Available-for-sale
Other financial assets Total receivables financial assets
Cash and cash equivalents 2,654,931,479.88 - 2,654,931,479.88 Notes receivable 912,341,423.78 - 912,341,423.78 Accounts receivable 7,827,466,715.32 - 7,827,466,715.32 Interest receivables 197,875.00 - 197,875.00 Dividend receivables 964,600.00 - 964,600.00 Other receivables 498,631,612.04 - 498,631,612.04 Available-for-sale financial
- 2,675,760.00 2,675,760.00 assets
11,894,533,706.02 2,675,760.00 11,897,209,466.02
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
VIII Risks related to financial instruments (Continued)
1. Classification of financial instruments (Continued)
Financial liabilities 31 December 2016 31 December 2015 Short-term borrowings 1,512,713,629.95 1,633,231,960.35 Notes payable 2,406,642,582.86 2,528,499,859.34 Accounts payable 6,701,558,514.10 6,011,673,284.50 Dividend payable 8,483,370.21 36,517,259.20 Other payables 917,193,911.34 1,155,395,354.95 Current portion of non-current
36,411,339.96 4,244,878.16 liabilities
Interest payables 6,956,463.02 7,297,682.23 Long-term borrowings - 72,495,172.30 Long-term payables 14,616,598.34 13,785,657.94 11,604,576,409.78 11,463,141,108.97 2. Transfer of financial assets
Transferred financial assets that are not derecognized in their entirety
As at 31 December 2016, the Group had endorsed commercial bills receivable (the "Endorsed Bills") to certain of its suppliers in order to settle accounts payable due to such suppliers of RMB5,035,500.82 (31 December 2015: Nil).During the year, the Group operated a number of discounting business through several banks in China. At 31 December 2016, the carrying value thereof was RMB154,468,694.89 (31 December 2015: RMB88,924,715.00). In the opinion of the directors, the Group has retained the substantial risks and rewards, which include default risks relating to such Endorsed Bills, and accordingly, it continued to recognize the full carrying amounts of the Endorsed Bills and the associated accounts payable settled. Subsequent to the Endorsement, the Group did not retain any rights on the use of the Endorsed Bills, including the sale, transfer or pledge of the Endorsed Bills to any other third parties. As at 31 December, 2016, the carrying value of accounts payable settled by the Group totaled RMB159,504,195.71 (31 December 2015: RMB88,924,715.00).
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(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 2016, the Group had endorsed commercial bills receivable (the "Endorsed Bills") to certain of its suppliers in order to settle accounts payable due to such suppliers of RMB599,814,991.55 (31 December 2015: RMB635,470,258.14). During the year, the Group operated a number of discounting business through several banks in China. At 31 December 2016, the carrying value thereof is RMB244,197,730.35 (31 December 2015: RMB358,157,929.78). The Derecognized Bills had a maturity of one 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 account 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 theGroup’s Continuing Involvement in the Derecognized Bills are not significant.
As part of its normal business, the Group entered into an account receivable factoring arrangement (the “Arrangement”) without recourse and transferred certain accounts receivable to a bank. In the opinion of the directors, the Group has transferred substantially all risks and rewards under the arrangement. Accordingly, it has derecognized the full carrying amounts of the associated accounts receivable. The original carrying value of the derecognized accounts receivable transferred under the Arrangement that have not been settled as at 31 December , 2016 amounted to RMB488,352,191.18 (31 December , 2015: RMB476,358,644.24).
During 2016, 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.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
VIII Risks related to financial instruments (Continued)
3. Risks of financial instruments
The main purpose and policies of financial risk management
The Group's principal financial instruments comprise bank borrowings and cash and short term deposits. The main purpose of these financial instruments is to raise finance for the Group's operations. The Group has various other financial assets and liabilities such as accounts receivable and accounts payable, which arise directly from its operations.
The main risks arising from the Group's financial instruments are interest rate risk, liquidity risk, currency risk and credit risk.
Credit risk
Credit risk is managed on the basis of the Group. Credit risk mainly arises from cash at banks and on hand, accounts receivable, other receivables and notes receivable, etc.
The Group expects that there is no significant credit risk associated with cash at banks since they are deposited at state-owned banks and other medium or large size listed banks. Management does not expect that there will be any significant losses from non-performance by these counterparties.
In addition, the Group has policies to limit the credit exposure on accounts receivable, other receivables and notes receivable. The Group assesses the credit quality of and sets credit limits on its customers by taking into account their financial position, the availability of guarantees from third parties, their credit history and other factors such as current market conditions. The Group will confirm the balances with its clients regarding the accounts receivable semi-annually, and assess the recoverability of each account receivable, by using individual evaluation and similar credit risk group methods. The credit history of the customers is regularly monitored by the Group. In respect of customers with a poor credit history, the Group will use written payment reminders, or shorten or cancel credit periods, to ensure the overall credit risk of the Group is limited to a controllable extent.
Liquidity risk
Cash flow forecasting is performed by each subsidiary of the Group and aggregated by theGroup’s finance department in its headquarters. TheGroup’s finance department at its headquarters monitors rolling forecasts of the Group's short-term and long-term liquidity requirements to ensure it has sufficient cash and securities that are readily convertible to cash to meet operational needs. In the meanwhile, the Group continually monitor the terms of the debt covenants in the loan agreements, ensuring that the sufficient unutilized commitment from the major financial institution, in order to meet the short-term and long-term and long-term liquidity requirements.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
VIII Risks related to financial instruments (Continued)
3. Risks of financial instruments (Continued)
Liquidity risk (Continued)
The maturity analysis of the Group's financial liabilities as at the end of the reporting period, based on the contractual undiscounted cash flows, is as follows:
31 December 2016
Within 1 year 1 to 2 years 2 to 5 years Above 5 years Total Short-term borrowings 1,528,507,827.41 - - - 1,528,507,827.41 Notes payable 2,406,642,582.86 - - - 2,406,642,582.86 Accounts payable 6,701,558,514.10 - - - 6,701,558,514.10 Interest payables 6,956,463.02 - - - 6,956,463.02 Dividend payables 8,483,370.21 - - - 8,483,370.21 Other payables 917,193,911.34 - - - 917,193,911.34 Current portion of non-current
liabilities 39,425,596.96 - - - 39,425,596.96 Long-term payables - 7,309,963.96 12,300,286.12 - 19,610,250.08 11,608,768,265.90 7,309,963.96 12,300,286.12 - 11,628,378,515.98 257
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(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 2015
Within 1 year 1 to 2 years 2 to 5 years Above 5 years Total Short-term borrowings 1,651,128,181.63 - - - 1,651,128,181.63 Notes payable 2,528,499,859.34 - - - 2,528,499,859.34 Accounts payable 6,011,673,284.50 - - - 6,011,673,284.50 Interest payables 7,297,682.23 - - - 7,297,682.23 Dividend payables 36,517,259.20 - - - 36,517,259.20 Other payables 1,155,395,354.95 - - - 1,155,395,354.95 Current portion of non-current liabilities 5,787,868.00 - - - 5,787,868.00 Long-term payables - 5,787,868.00 14,470,270.00 - 20,258,138.00 Long-term borrowings 3,490,767.13 34,084,860.13 5,907,681.40 43,345,766.07 86,829,074.73 11,399,790,256.98 39,872,728.13 20,377,951.40 43,345,766.07 11,503,386,702.58 258
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
VIII Risks related to financial instruments (Continued)
4. Market risk
Interest rate risk
The Group's interest rate risk arises from long-term borrowings from banks. Financial liabilities issued at floating rates expose the Group to cash flow interest rate risk. Financial liabilities issued at fixed rates expose the Group to fair value interest rate risk. The Group determines the relative proportions of its fixed rate and floating rate contracts depending on the prevailing market conditions. As at 31 December 2016, the Group had no long-term interest bearing borrowings with floating interest rates (31 December 2015: RMB72,495,172.30).
Increases in interest rates will increase the cost of new borrowings and the interest expenses with respect to theGroup’s outstanding floating rate borrowings, and therefore could have a material adverse effect on theGroup’s financial position. TheGroup’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 2016 and 2015, the Group did not enter into any interest rate swap agreements.
For the Year ended 31 December 2016, the Group had no material long-term interest bearing borrowings with floating interest rates. Therefore, the Group believes that interest rate risk is not material.
Currency risk
TheGroup’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 US dollars and HK dollars. TheGroup’s finance department at its headquarters is responsible for monitoring the amount of assets and liabilities, and transactions denominated in foreign currencies. The Group may consider entering into forward exchange contracts or currency swap contracts to mitigate the foreign exchange risk.
As at 31 December 2016, if the currency had weakened/strengthened by5% against the USD while all other variables had been held constant, theGroup’s net profit for the year would increase/decrease of approximate RMB678,015.86 (2015: RMB1,576,037.72).
As at 31 December 2016, if the currency had weakened/strengthened by5% against the HKD while all other variables had been held constant, theGroup’s net profit for the year would increase/decrease of approximate RMB494,068.50 (2015: RMB1,314,755.83).
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
VIII Risks related to financial instruments (Continued)
5. Capital management
TheCompany’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, maximizeshareholders’ value and benefit related parties. Management also aims to maintain a capital structure that ensures lowest cost of capital available to the entity.
Management is adjusting the capital structure through adjusting dividend payments to shareholders, returning capital to shareholders, issueing new shares or selling assets to reduce debts.
TheGroup’s total capital is the totalshareholders’ 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:
2016 2015 Gearing ratio
58.18% 61.25% IX Disclosure of fair value
The results of fair value measurement are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a
whole:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;
Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly; and
Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data.
(1) Assets that are measured at fair value on a recurring basis
The Group has no assets that are measured at fair value on a recurring basis.
(2) Assets that are measured at fair value on a non-recurring basis
The Group has no assets that are measured at fair value on a non-recurring basis.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
1. Parent
Proportion of Proportion Share ownership of voting Registered capital interest in the power in the address Nature of business(RMB’0,000) Company Company Industrial investment holding, trustee of a
pharmaceutical enterprise, assets
Sinopharm reorganization, distribution and retail of
Group Shanghai medicines and pharmaceutical products, etc. 276,709.51 51.00% 51.00% 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 (Shanghai) E-Health Co., Ltd. Associate of CNPGC Sinopharm Holding Huangshan Health Industry Co., Ltd. Associate of CNPGC Sino-Swed Pharmaceutical Corporation Ltd. Associate of CNPGC Qinghai Pharmaceutical Factory Co., Ltd. Associate of CNPGC Shanghai Huayu Pharmaceutical Co., Ltd. Associate of CNPGC Shanghai Sailun Biological Technology Co., Ltd. Associate of CNPGC Changchun Changsheng Gene Pharmaceutical Co., Ltd. Associate of CNPGC China Otsuka Pharmaceutical Co., Ltd. Associate of CNPGC Subsidiary of Main Luck Shenzhen Wanwei Medicine Trading Co., Ltd. Pharmaceutical Shanghai Nutraceuticals (Shanghai) Co., Ltd. Associate of Sinopharm Group Sinopharm Health Online Co., Ltd. Associate of Sinopharm Group Hutchison Whampoa Sinopharm Pharmaceuticals (Shanghai) Co., Ltd. Associate of Sinopharm Group Shanghai Guoda Lingyun Pharmacy Co., Ltd. Associate of Sinopharm Group Shanghai Guoren Pharmacy Co., Ltd. Associate of Sinopharm Group Sichuan Kang Daxin Pharmaceutical Co., Ltd. Associate of Sinopharm Group Yichang Humanwell Pharmaceutical Co., Ltd. Associate of Sinopharm Group Shareholder who has significant Shanghai Fosun Pharmaceutical (Group) Co., Ltd. ("Fosun Pharm") influence over Sinopharm Group
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(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 Beijing Jianyu Golden Elephant Pharmacy Co., Ltd. Subsidiary of Fosun Pharm Foshan Chancheng Pharmaceutical Co., Ltd. Subsidiary of Fosun Pharm Foshan Chancheng District Central Hospital Subsidiary of Fosun Pharm Foshan Chanyixing Medicine Development Co Ltd. Subsidiary of Fosun Pharm Guilin South pharmaceutical Co., Ltd. Subsidiary of Fosun Pharm Handan Pharmaceutical Co., Ltd. Subsidiary of Fosun Pharm Hunan Dongting Pharmaceutical Co., Ltd. Subsidiary of Fosun Pharm Jiangsu Huanghe Pharmaceutical Co., Ltd. Subsidiary of Fosun Pharm Jiangsu Wanbang Pharmacy Marketing Co., Ltd. Subsidiary of Fosun Pharm Shanghai Chaohui Pharmaceutical Co., Ltd. Subsidiary of Fosun Pharm Shenyang Hongqi Pharmaceutical Co., Ltd. Subsidiary of Fosun Pharm Sichuan Hexin Pharmaceutical Co., Ltd. Subsidiary of Fosun Pharm Suzhou Erye Pharmaceutical Limited Company Subsidiary of Fosun Pharm Tianjin Qidong Elephant Pharmacy Medicine Chain Company Limited Subsidiary of Fosun Pharm Chongqing Haisiman Pharmaceutical Co., Ltd. Subsidiary of Fosun Pharm Chongqing Yaoyou Pharmaceutical Co., Ltd. Subsidiary of Fosun Pharm Beijing Fusheng Tiandi Property Management Ltd. Controlled by CNPGC Beijing Huamiao Traditional Chinese Medicine Technology and Project
Development Centre Controlled by CNPGC Beijing Huasheng Pharmaceutical Biotechnology Development Co., Ltd. Controlled by CNPGC Beijing Tiantan Biological Products Co., Ltd. Controlled by CNPGC Chengdu Rongsheng Pharmacy Co., Ltd. Controlled by CNPGC Winteam Pharmaceutical Group Ltd. Controlled by CNPGC Sinopharm (Tianjin) Northern Medical Equipment Co., Ltd. Controlled by CNPGC Sinopharm Anhui Medical Instrument Co., Ltd. Controlled by CNPGC Group Financial Co. Controlled by CNPGC Foshan Dezhong Pharmaceutical Co., Ltd. Controlled by CNPGC Foshan Fengliaoxing Pharmaceutical Co., Ltd. Controlled by CNPGC Sinopharm Fengliaoxing (Foshan) Medicines Co., Ltd. Controlled by CNPGC Sinopharm Fengliaoxing Medical Hospital Co., Ltd. Controlled by CNPGC
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(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 China National Pharmaceutical Industry Co., Ltd. Controlled by CNPGC Guangdong Medi-World Pharmaceutical Co., Ltd. Controlled by CNPGC Sinopharm Group Guangdong Medicine Device Co., Ltd. Controlled by CNPGC Sinopharm Guangdong Medical Examination Co., Ltd. Controlled by CNPGC Sinopharm Hebei Medical Instrument Co., Ltd. Controlled by CNPGC Anhui Jingfang Pharmaceutical Co., Ltd. Controlled by CNPGC Sinopharm United Medical Device Co., Ltd. Controlled by CNPGC Sinopharm Holding (Liaoning Province) Medical Instruments Co., Ltd. Controlled by CNPGC Shandong Lu Ya Pharmaceutical Co., Ltd. Controlled by CNPGC Sinopharm Group Rongsheng Pharmaceutical Co., Ltd. Controlled by CNPGC Sinopharm Holding Sanyi Medicine (Wuhu) Co., Ltd. Controlled by CNPGC Sinopharm ShanXi Ruifulai Pharmaceutical Co., Ltd. Controlled by CNPGC Sinopharm Shantou Jinshi Pharmaceutical Co., Ltd. Controlled by CNPGC Sinopharm Group Shanghai Medicine Device Co., Ltd. Controlled by CNPGC Guizhou Tongjitang Pharmaceutical Co., Ltd. Controlled by CNPGC Sinopharm Group Weiqida Medicine Co., Ltd. Controlled by CNPGC The Fourth Pharmaceutical Co., Ltd. of Zhonglian Group Controlled by CNPGC Sinopharm Xinjiang Pharmaceutical Co., Ltd. Controlled by CNPGC Sinopharm Changsha Medical Instrument Co., Ltd. Controlled by CNPGC China National Scientific Instruments& Materials Imp/Exp Shenzhen Co., Ltd. Controlled by CNPGC Wuhan Zhonglian Pharmaceutical Group Co., Ltd. Controlled by CNPGC Sinopharm Jiayuan International Trading Co., Ltd. Controlled by CNPGC Sinopharm Jiayun International Trading Co., Ltd. Controlled by CNPGC Reed Sinopharm Exhibitions Co., Ltd. Controlled by CNPGC Heilongjiang Sinopharm Medical Herbs Co., Ltd. Controlled by CNPGC Lanzhou Institute of Biological Products Co., Ltd. Controlled by CNPGC Qinghai Medical Pharmaceutical Material Co., Ltd. Controlled by CNPGC Qinghai Pharmaceutical (Group) Co., Ltd. Controlled by CNPGC Shanghai Shangsheng Biological Products Co., Ltd. Controlled by CNPGC
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(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 Modern Hasen (Shangqiu) Pharmaceutical Co., Ltd. Controlled by CNPGC Shanghai Shyndec Pharmaceutical Marketing Co., Ltd. Controlled by CNPGC Shanghai Xinshengyuan Pharmaceutical Co., Ltd. Controlled by CNPGC Shanghai Institute of Pharmaceutical Industry Controlled by CNPGC Sichuan Jiangyouzhongbafuzi Technology Development Co., Ltd. Controlled by CNPGC Wuliangye Group of Sichuan YiBin Pharmaceuticals Co., Ltd. Controlled by CNPGC Wuhan Institute of Biological Products Co., Ltd. Controlled by CNPGC China Sinopharm International Corporation Controlled by CNPGC Chinese Science Equipment Co., Ltd. Controlled by CNPGC China Medical Instrument Co., Ltd. Controlled by CNPGC China National Pharmaceutical Foreign Trade Co., Ltd. Controlled by CNPGC China State Institute of Pharmaceutical Industry Controlled by CNPGC Sinopharm United Engineering Corporation Controlled by CNPGC Sinopharm Chongqing Pharmaceutical and Medical Industry Design Institute Controlled by CNPGC China Medical Investment Co., Ltd. Controlled by CNPGC China Traditional Chinese Medicine Co. Controlled by CNPGC Beijing Sinopharm Tianyuan Real Estate& Property Management Co., Ltd. Controlled by Sinopharm Group Beijing Tongyu Information Technology Co., Ltd. Controlled by Sinopharm Group Sinopharm Group Shanghai Management Consulting Branch Co., Ltd. Controlled by Sinopharm Group Sinopharm Group Guorui Medicine Co., Ltd. Controlled by Sinopharm Group Sinopharm Group Chemical Reagent Suzhou Co., Ltd. Controlled by Sinopharm Group Sinopharm Group Chemical Reagent Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Shanxi Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Shanxi Instrument Branch Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Shanghai Likang Pharmaceutical Co., Ltd. Controlled by Sinopharm Group Sinopharm Group Southwest Medicine Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Xinjiang Xinte Karamay Pharmaceutical Co., Ltd. Controlled by Sinopharm Group Sinopharm Group Xinjiang Special Drugs National Pharmaceutical Co., Ltd. Controlled by Sinopharm Group Sinopharm Group Xinjiang Pharmaceutical Co., Ltd. Controlled by Sinopharm Group
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(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 China National Medicines Co., Ltd. Controlled by Sinopharm Group Sinopharm Group Medicine Logistic Co., Ltd. Controlled by Sinopharm Group Sinopharm Pharmaceutical Logistics Guangzhou Branch Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding (Shanghai) Imported Goods Direct Sales Center Co., Ltd. Controlled by Sinopharm Group Sinopharm Group (Tianjin) Eastern Bokang Pharmaceutical Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Tianjin Binhai Pharmaceutical Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Financing Lease Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Anhui Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Anqing Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Anyang Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Beijing Huahong Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Beijing Kangchen Bio-Pharmaceutical Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Beijing Tianxing Puxin Biological Medical Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Beijing Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Changde Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Changzhou Medical Logistics Center Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Changzhou Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Chenzhou Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Chengdu Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding ChiFeng Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Dalian Hecheng Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Dalian Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Dezhou Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Donghong Medical (Shanghai) Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Sub Marketing Center Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Fujian Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Fuzhou Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Gansu Co., Ltd. Controlled by Sinopharm Group
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(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 Guizhou Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Hainan Hongyi Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Hainan Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Hebei Pharmaceutical Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Henan Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Heilongjiang Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Hulun Buir Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Hubei Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Hunan Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Huzhou Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Huaideju Pharmaceutical (Xiamen) Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Huaian Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Jilin Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Jinan Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Jiling Co., Ltd. Controlled by Sinopharm Group Sinopharm Health Solutions (Shanghai) Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Jiangsu Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Jiangxi Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Jinhua Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Jinzhou Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Liaocheng Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Linqu Co., Ltd. Controlled by Sinopharm Group Sinopharm Lingyun Biopharmaceutical (Shanghai) Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Longyan Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Lunan Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Luoyang Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Macheng Co., Ltd. Controlled by Sinopharm Group Shanghai Meitai Medical Instruments Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Nanping Newforce Co., Ltd. Controlled by Sinopharm Group
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(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 Nantong Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Inner Mongolia Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Ningde Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Ningxia Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Pingdingshan Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Putian Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Puyang Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Qianxinan Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Qingdao Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Qinghai Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Quanzhou Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Sanming Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Xiamen Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Shandong Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Shanxi Linfen Co., Ltd Controlled by Sinopharm Group Sinopharm Holding Shanxi Co., Ltd. Controlled by Sinopharm Group Sinopharm Group Shanxi Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Shangqiu Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Shenyang Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Biopharmaceutical (Tianjin) Co., Ltd. Controlled by Sinopharm Group Sinopharm Sichuan Pharmaceutical Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Suzhou Kangmin Pharmaceutical Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Suzhou Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Taizhou Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Tianjin North Medicine Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Tianjin Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Tianjin Distribution Center Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Tongliao Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Wenzhou Co., Ltd. Controlled by Sinopharm Group
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(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 Ulanqab Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Wuxi Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Wuhu Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Tibet Pharmaceutical Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Hong Kong International Co., Ltd Controlled by Sinopharm Group Sinopharm Holding Xiangtan Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Xiangxi Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Xiangyang Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Kashi New& Special Drugs Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Xinjiang Special Drugs Western Pharmaceutical Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Xinxiang Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Xinyu Co., Ltd. Controlled by Sinopharm Group Sinopharm Xingsha Pharmaceuticals (Xiamen) Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Xuzhou Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Yantai Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Yancheng Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Yangzhou Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding (Yangzhou) Chinese Western Medicine Branch Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Yunnan Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Zhangzhou Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Zhejiang Biological Product Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Zhejiang Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Chongqing Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Zhoukou Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Zhumadian Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Zunyi Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Lerentang Pharmaceutical Co., Ltd. Controlled by Sinopharm Group Sinopharm Lerentang Hebei Medical Instrument Trade Co., Ltd. Controlled by Sinopharm Group Sinopharm Lerentang Qinhuangdao Medicine Co., Ltd. Controlled by Sinopharm Group Sinopharm Lerentang Shijiazhuang Medicine Co., Ltd. Controlled by Sinopharm Group
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
4. Other related parties (Continued)
Company Name Related party relationships Sinopharm Lerentang Tangshan Medicine Co., Ltd. Controlled by Sinopharm Group Sinopharm Le-Ren-Tang Medicine Co., Ltd. Controlled by Sinopharm Group Sinopharm Prospect Dentech (Beijing) Co., Ltd. Controlled by Sinopharm Group China National Pharmaceutical Logistics Co., Ltd. Controlled by Sinopharm Group Sinopharm Xinjiang Korla Pharmaceutical Co., Ltd. Controlled by Sinopharm Group Sinopharm Xinxiang Chain Store Co., Ltd. Controlled by Sinopharm Group Hetian Region Ankang Chain Controlled by Sinopharm Group Huzhou Muhanzhuai Pharmacy Chain Store Co., Ltd. Controlled by Sinopharm Group Shanxi Guoyi Pharmacy Co., Ltd. Controlled by Sinopharm Group Shanghai Merro Pharmaceutical Co., Ltd. Controlled by Sinopharm Group Shanghai Yunnuo Marketing Consulting Co., Ltd. Controlled by Sinopharm Group Shanghai Tongyu Information Technology Co., Ltd. Controlled by Sinopharm Group Xinjiang Baitong Property Service Co., Ltd. Controlled by Sinopharm Group Yangzhou Weikang Pharmaceutical Co., Ltd. Controlled by Sinopharm Group China National Pharmaceutical Group Shanghai Co., Ltd. Controlled by Sinopharm Group Anhui Tianjian Medical Investment Co., Ltd. Non-controlling interest of a subsidiary Beijing Huafang Investment Co., Ltd. Non-controlling interest of a subsidiary Beijing Golden Elephant Fosun Pharmaceutical Co., Ltd. Non-controlling interest of a subsidiary Beijing Electromechanical Device Group Corporation Non-controlling interest of a subsidiary Guangdong Jiyuantang Development Co., Ltd. Non-controlling interest of a subsidiary Guangdong Jiyuantang Pharmaceutical Co., Ltd. Non-controlling interest of a subsidiary Guangdong Overseas Chinese Medical Investment Co., Ltd. Non-controlling interest of a subsidiary Hangzhou Xihu Business Group Corporation Non-controlling interest of a subsidiary Hunan Minshengtang Investment Co., Ltd. Non-controlling interest of a subsidiary Huang Lijin Non-controlling interest of a subsidiary Lerentang Investment Group Co., Ltd. Non-controlling interest of a subsidiary Linyi Medical Group Co., Ltd. Non-controlling interest of a subsidiary Nanjing Guoheng Trade Co., Ltd. Non-controlling interest of a subsidiary Pingdingshan Pusheng Pharmaceutical Co., Ltd. Non-controlling interest of a subsidiary Qiao Haiping Non-controlling interest of a subsidiary Quanzhou Xintai Biotech Co., Ltd. Non-controlling interest of a subsidiary Shenyang Pharmaceutical Co., Ltd. Non-controlling interest of a subsidiary Shi Peijun Non-controlling interest of a subsidiary Taishan Qunkang Pharmacy Co., Ltd. Non-controlling interest of a subsidiary Wei Ningjuan Non-controlling interest of a subsidiary Xiaoyi Baicaotang Pharmacy Chain Store Co., Ltd. Non-controlling interest of a subsidiary Zhang Zhenfang Non-controlling interest of a subsidiary Family member of the non-controlling Wang Yang shareholder of a subsidiary Controller of non-controlling interest of a Gu Jinfang subsidiary Jiang Meng Renren Medical instrument Co., Ltd. Controlled by subsidiary's key management Shaoguan Wujiang District Muyang Medicine Information Controlled by non-controlling interest of a Consultant Co., Ltd. subsidiary Shenzhen Jiufeng Investment Co., Ltd. Controlled by non-controlling interest of a subsidiary
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(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
2016 2015(RMB’0,000) (RMB’0,000) Sinopharm Holding Sub Marketing Center Co., Ltd. 127,734.29 119,249.23 Sinopharm Group Co., Ltd. 48,852.08 63,614.04 China National Medicines Co., Ltd. 47,680.18 49,999.78 Sinopharm Lingyun Biopharmaceutical (Shanghai) Co., Ltd. 20,614.13 13,851.42 Sinopharm Le-Ren-Tang Medicine Co., Ltd. 14,207.29 11,678.71 Sinopharm Holding Shenyang Co., Ltd. 10,969.67 7,436.59 Sinopharm Holding Shanxi Co., Ltd. 10,584.81 10,149.46 Sino-Swed Pharmaceutical Co., Ltd. 9,085.16 8,779.94 Sinopharm Holding Shanxi Co., Ltd. 7,830.68 6,077.48 Sinopharm Group Xinjiang Special Drugs National Pharmaceutical Co., Ltd. 7,606.26 6,551.21 Jiangsu Wanbang Pharmacy Marketing Co., Ltd. 6,335.75 4,843.41 Main Luck Pharmaceutical 4,624.10 1,752.22 Lanzhou Institute of Biological Products Co., Ltd. 4,203.47 2,476.90 Sinopharm Holding Yangzhou Co., Ltd. 3,999.69 3,128.72 Sinopharm Holding Beijing Co., Ltd. 3,746.40 4,391.67 Sinopharm Holding Pingdingshan Co., Ltd. 3,552.47 3,269.12 Sinopharm Holding Lerentang Pharmaceutical Co., Ltd. 3,441.44 1,694.09 Sinopharm Holding Xiamen Co., Ltd. 3,430.20 3,840.81 Chongqing Yaoyou Pharmaceutical Co., Ltd. 3,418.41 2,790.61 Sinopharm Holding Lunan Co., Ltd. 3,309.92 2,826.75 Sinopharm Holding Suzhou Co., Ltd. 3,087.21 1,514.27 Sinopharm Holding Jiangsu Co., Ltd. 2,949.60 2,224.42 Sinopharm Holding Hulun Buir Co., Ltd. 2,910.60 1,861.29 China National Scientific Instruments& Materials Imp/Exp Shenzhen Co., Ltd. 2,688.37 4,421.84 Sinopharm Lerentang Shijiazhuang Medicine Co., Ltd. 2,679.30 2,486.45
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(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)
2016 2015(RMB’0,000) (RMB’0,000) Shenzhen Wanwei Medicine Trading Co., Ltd. 2,649.07 5,687.86 Sinopharm Holding Inner Mongolia Co., Ltd. 2,447.73 2,425.96 Shanghai Merro Pharmaceutical Co., Ltd. 2,273.27 3,327.44 Chengdu Rongsheng Pharmacy Co., Ltd. 2,265.23 1,495.16 Sinopharm Holding Hunan Co., Ltd. 2,160.50 2,261.61 Suzhou Zhijun 2,121.84 - Sinopharm Group Medicine Logistic Co., Ltd. 1,958.77 1,909.99 Chongqing Haisiman Pharmaceutical Co., Ltd. 1,855.83 357.29 Sinopharm Holding Ningxia Co., Ltd. 1,632.76 1,541.63 Sinopharm Holding Fujian Co., Ltd. 1,417.51 1,590.38 Sinopharm Holding Changzhou Medical Logistics Center Co., Ltd. 884.21 1,196.22Sinopharm（Tianjin）Northern Medical Equipment Co., Ltd 881.88 - Sinopharm Holding Changzhou Co., Ltd. 871.15 393.93 Sinopharm Holding Tianjin Distribution Center Co., Ltd. 850.50 848.40 Winteam Pharmaceutical Group Ltd. 846.52 2,689.60 China National Pharmaceutical Foreign Trade Co., Ltd. 813.13 201.41 Sinopharm Holding Xinjiang Special Drugs Western
Pharmaceutical Co., Ltd. 738.52 623.81 Sinopharm Holding Beijing Kangchen Bio-Pharmaceutical Co.,
Ltd. 709.79 425.82 Sinopharm Holding Shanxi Instrument Branch Co., Ltd.
667.54 491.64 Sinopharm Group (Tianjin) Eastern Bokang Pharmaceutical Co., Ltd. 667.51 282.51 Sichuan Hexin Pharmaceutical Co., Ltd. 566.30 247.82 Sinopharm Holding Beijing Huahong Co., Ltd. 503.31 401.53 Sinopharm Holding Dalian Co., Ltd. 420.93 540.37 Sinopharm Holding Donghong Medical (Shanghai) Co., Ltd. 413.21 710.24 Beijing Golden Elephant Fosun Pharmaceutical Co., Ltd. 411.80 212.99
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(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)
2016 2015(RMB’0,000) (RMB’0,000) Sinopharm Health Online Co., Ltd. 368.28 - Sinopharm Group Shanxi Co., Ltd. 362.38 249.54 Sinopharm Holding Yancheng Co., Ltd. 359.36 292.52 Shanghai Shyndec Pharmaceutical Marketing Co., Ltd. 347.62 85.01 Yichang Humanwell Pharmaceutical Co., Ltd. 340.75 53.11 Sinopharm Lerentang Hebei Medical Instrument Trade Co., Ltd. 336.85 559.20 Sinopharm Holding Shanghai Likang Pharmaceutical Co., Ltd. 304.50 275.47 Sinopharm Xingsha Pharmaceutical (Xiamen) Co., Ltd. 281.13 92.76 Sinopharm Holding Putian Co., Ltd. 273.20 167.79 Sinopharm Holding Quanzhou Co., Ltd. 267.53 56.01 Sinopharm Holding Wuxi Co., Ltd. 258.17 269.01 Sinopharm Holding Fuzhou Co., Ltd. 248.46 35.55 China Otsuka Pharmaceutical Co., Ltd. 247.11 126.48 Sinopharm Holding Henan Co., Ltd. 236.60 198.72 Shanghai Beiyi Guoda Pharmaceutical Co. Ltd. 234.17 - Sinopharm Group Zhijun (Shenzhen) Pingshan Pharmaceutical Co., Ltd. 199.68 - Sinopharm Holding Jinzhou Co., Ltd. 192.38 222.02 Sinopharm Group Zhijun (Shenzhen) Pharmaceutical Co., Ltd. 190.01 - Sinopharm Holding Xinjiang Xinte Karamay Pharmaceutical Co., Ltd. 189.51 269.94 Guizhou Tongjitang Pharmaceutical Co., Ltd. 182.28 309.96 Sinopharm Holding Kashi New& Special Drugs Co., Ltd. 141.52 201.63 Wuhan Zhonglian Pharmaceutical Group Co., Ltd. 121.51 108.21 Sinopharm Holding Chengdu Co., Ltd. 120.78 88.82 Wuhan Institute of Biological Products Co., Ltd. 118.52 964.42 Shanghai Shangsheng Biological Products Co., Ltd. 115.33 427.52
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(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)
2016 2015(RMB’0,000) (RMB’0,000) Foshan Fengliaoxing Pharmaceutical Co., Ltd. 114.68 82.70 Shanghai Tongyu Information Technology Co., Ltd. 103.03 150.89 Sinopharm Group Rongsheng Pharmaceutical Co., Ltd. 93.75 131.08 Sinopharm Holding Zhuhai Co., Ltd. 83.53 60.57 Sinopharm Holding Jinan Co., Ltd. 76.23 - Hutchison Whampoa Sinopharm Pharmaceuticals (Shanghai) Co., Ltd. 74.56 72.10 Hunan Dongting Pharmaceutical Co., Ltd. 63.22 104.70 Anhui Jingfang Pharmaceutical Co., Ltd. 60.13 104.67 Sinopharm Group Chemical Reagent Co., Ltd. 58.65 79.32 Sinopharm Holding Sanyi Medicine (Wuhu) Co., Ltd. 56.11 68.70 Wuhan Zhonglian Pharmaceutical Group Co., Ltd. 47.05 27.58 Sinopharm Holding Shandong Co., Ltd. 40.22 3.03 Shenyang Hongqi Pharmaceutical Co., Ltd. 36.89 31.13 Sinopharm Group Guorui Medicine Co., Ltd. 32.02 34.59 Sinopharm Holding Dezhou Co., Ltd. 28.99 27.26 Sinopharm Holding Anhui Co., Ltd. 25.90 240.55 Sinopharm Lerentang Qinhuangdao Medicine Co., Ltd. 25.28 - China National Pharmaceutical Industry Co., Ltd. 23.11 18.40 Sinopharm Holding Zhejiang Co., Ltd. 22.41 8.47 Sinopharm Holding Beijing Tianxing Puxin Biological Medical Co., Ltd. 19.02 358.29 Sinopharm Holding Tianjin Binhai Pharmaceutical Co., Ltd. 18.21 - Sinopharm Holding Guizhou Co., Ltd. 17.57 1,791.32 Sinopharm Shantou Jinshi Pharmaceutical Co., Ltd. 16.53 - Beijing Huamiao Traditional Chinese Medicine Technology and Project
Development Centre 12.02 33.35 Sinopharm Holding Hubei Co., Ltd. 11.64 252.29 Sinopharm Holding (Shanghai) Imported Goods Direct Sales Center Co., Ltd. 11.09 7.80
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(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)
2016 2015(RMB’0,000) (RMB’0,000) Sinopharm Holding Zhangzhou Co., Ltd. 10.17 3.39 Sinopharm Hebei Medical Instrument Co., Ltd. 7.96 8.15 Sinopharm Holding Biopharmaceutical(Tianjin)Co., Ltd. 7.43 1.10 Sinopharm Holding Hainan Co., Ltd. 7.38 4.44 Sichuan Jiangyouzhongbafuzi Technology Development Co., Ltd. 6.37 12.74 China National Pharmaceutical Logistics Co., Ltd. 6.22 3.32 Wuliangye Group of Sichuan YiBin Pharmaceuticals Co., Ltd. 5.88 - Shanghai Institute of Pharmaceutical Industry 5.85 34.06 Sinopharm Holding Huangshan Health Industry Co., Ltd. 5.77 2.69 Suzhou Erye Pharmaceutical Limited Company 5.08 9.54 Yangzhou Weikang Pharmaceutical Co., Ltd. 3.91 5.32 Guilin South Pharmaceutical Co., Ltd. 3.05 46.55 Reed Sinopharm Exhibitions Co., Ltd. 2.83 8.15 Sinopharm Holding Jinhua Co., Ltd. 1.70 3.90 Sinopharm Prospect Dentech (Beijing) Co., Ltd. 1.53 2.72 Sinopharm Health Solutions (Shanghai) Co., Ltd. 1.43 - Sinopharm Holding Ulanqab Co., Ltd. 1.05 - Sinopharm Group Southwest Medicine Co., Ltd. 0.39 30.51 Sinopharm Holding (Liaoning Province) Medical Instruments Co., Ltd. 0.35 - Sinopharm Group Shanghai Management Consulting Branch Co., Ltd. 0.10 - Sinopharm Chongqing Pharmaceutical and Medical Industry Design Institute - 8,235.60 Sinopharm Holding (Yangzhou) Chinese Western Medicine Branch Co., Ltd. - 3,699.32 Sinopharm Group Weiqida Medicine Co., Ltd. - 1,589.74 Qinghai Pharmaceutical Factory Co., Ltd. - 451.44 Beijing Huasheng Pharmaceutical Biotechnology Development Co., Ltd. - 116.59
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(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)
2016 2015(RMB’0,000) (RMB’0,000) Shanghai Sailun Biological Technology Co., Ltd. - 77.00 China Sinopharm International Corporation - 68.44 Handan Pharmaceutical Co., Ltd. - 21.03 Chinese Science Equipment Co., Ltd. - 19.25 Sinopharm Group Chemical Reagent Suzhou Co., Ltd. - 18.03 Sinopharm Group Shanghai Medicine Device Co., Ltd. - 14.10 Shanghai Modern Hasen (Shangqiu) Pharmaceutical Co., Ltd. - 10.87 Sinopharm Holding Luoyang Co., Ltd. - 9.71 Shanghai Nutraceuticals (Shanghai) Co., Ltd. - 8.59 Sinopharm Jiayuan International Trading Co., Ltd. - 6.13 Sinopharm Anhui Medical Instrument Co., Ltd. - 1.61 Sinopharm Pharmaceutical Logistics Guangzhou Branch Co., Ltd. - 0.70 Sinopharm Holding Hainan Hongyi Co., Ltd. - 0.59 Beijing Tongyu Information Technology Co., Ltd - 0.50 Sinopharm Holding Hebei Pharmaceutical Co., Ltd. - 0.48 Sinopharm Guangdong Medical Examination Co., Ltd. - 0.06 Sinopharm Holding Macheng Co., Ltd. - (0.02) Guangdong Medi-World Pharmaceutical Co., Ltd. - (0.04) Shandong Lu Ya Pharmaceutical Co., Ltd. - (0.06) Shanghai Shyndec Pharmaceutical Co., Ltd. (0.13) 133.55 397,864.08 394,176.31
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(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
2016 2015(RMB’0,000) (RMB’0,000) Sinopharm Holding Hunan Co., Ltd. 11,281.79 13,394.25 Sinopharm Holding Shandong Co., Ltd. 11,156.36 9,288.90 Shanghai Beiyi Guoda Pharmaceutical Co. Ltd. 10,384.50 8,185.24 Sinopharm Sichuan Pharmaceutical Co., Ltd. 10,130.06 9,165.03 Sinopharm Holding Beijing Co., Ltd. 7,628.40 8,418.03 Sinopharm Holding Hubei Co., Ltd. 7,210.45 5,846.21 Foshan Chancheng Pharmaceutical Co., Ltd. 6,615.77 5,305.08 Sinopharm Group (Tianjin) Eastern Bokang Pharmaceutical Co., Ltd. 6,407.35 7,839.12 Sinopharm Group Xinjiang Special Drugs National Pharmaceutical Co., Ltd. 5,720.62 6,222.85 Sinopharm Holding Hainan Co., Ltd. 5,688.98 7,264.88 Sinopharm Le-Ren-Tang Medicine Co., Ltd. 5,354.65 6,009.13 Sinopharm Holding Hainan Hongyi Co., Ltd. 4,270.75 2,900.46 Sinopharm Holding Sub Marketing Center Co., Ltd. 4,136.11 3,034.21 Sinopharm Holding Beijing Huahong Co., Ltd. 3,195.62 4,848.83 Sinopharm Group Southwest Medicine Co., Ltd. 3,163.28 2,894.13 Sinopharm Holding Wenzhou Co., Ltd. 3,137.23 2,902.64 Sinopharm Holding Fujian Co., Ltd. 2,962.93 605.36 Sinopharm Holding Nantong Co., Ltd. 2,795.77 2,517.77 Sinopharm Holding Yunnan Co., Ltd. 2,692.11 2,353.35 Sinopharm Holding Henan Co., Ltd. 2,647.79 1,629.17 Sinopharm Holding Heilongjiang Co., Ltd. 2,472.64 646.18 Sinopharm Holding Xinjiang Special Drugs Western Pharmaceutical Co., Ltd. 2,471.29 2,288.36 Sinopharm Holding Tianjin Co., Ltd. 2,388.38 2,662.59 Sinopharm Holding Ningxia Co., Ltd. 1,814.42 4,409.05 Sinopharm Group Co., Ltd. 1,782.65 2,477.89 Sinopharm Holding Shenyang Co., Ltd. 1,768.44 1,324.94
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(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
2016 2015(RMB’0,000) (RMB’0,000) Sinopharm Holding Jinzhou Co., Ltd. 1,469.42 1,766.68 Sinopharm Holding Shanxi Co., Ltd. 1,310.69 1,003.59 China National Medicines Co., Ltd. 1,270.90 1,281.86 Sinopharm Holding Guizhou Co., Ltd. 1,197.96 947.88 Sinopharm Holding Hulun Buir Co., Ltd. 1,161.50 271.16 Shanghai Merro Pharmaceutical Co., Ltd. 1,089.17 589.05 Sinopharm Holding Shanxi Co., Ltd. 1,037.07 1,212.58 Sinopharm Holding Zhejiang Co., Ltd. 1,032.54 1,188.61 Sinopharm Holding Quanzhou Co., Ltd. 924.73 160.75 Sinopharm Holding Yangzhou Co., Ltd. 907.76 761.82 Foshan Chancheng District Central Hospital 729.18 1,473.96 Sinopharm Holding Fuzhou Co., Ltd. 707.38 1,565.59 Sinopharm Holding Dalian Co., Ltd. 662.65 175.86 Sinopharm Holding Gansu Co., Ltd. 589.38 495.90 Sinopharm Holding Jilin Co., Ltd. 535.65 359.22 Sinopharm Holding Lunan Co., Ltd. 370.33 308.64 Shanghai Guoda Lingyun Pharmacy Co., Ltd. 368.08 982.48 Sinopharm Holding Zhangzhou Co., Ltd. 342.74 3.85 Sinopharm Holding Qinghai Co., Ltd. 309.44 380.15 Sinopharm Holding Ningde Co., Ltd. 308.24 79.35 Sinopharm Group Medicine Logistic Co., Ltd. 291.71 371.32 Foshan Chanyixing Medicine Development Co., Ltd. 280.69 100.56 Sinopharm Holding Putian Co., Ltd. 280.31 76.29 Sinopharm Holding Zhuhai Co., Ltd. 233.79 143.93 Sinopharm Holding Yancheng Co., Ltd. 226.95 383.77 Sinopharm Holding Chengdu Co., Ltd 192.03 749.80
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(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
2016 2015(RMB’0,000) (RMB’0,000) Sinopharm Holding Xuzhou Co., Ltd. 181.23 261.08 Sinopharm Holding Wuxi Co., Ltd. 156.80 294.55 Sinopharm Holding Taizhou Co., Ltd. 136.33 224.62 Sinopharm Holding Chongqing Co., Ltd. 117.92 145.16 Sinopharm Holding Longyan Co., Ltd. 105.08 126.10 Sinopharm Group Guangdong Medicine Device Co., Ltd. 104.38 100.94 Sinopharm Holding Suzhou Kangmin Pharmaceutical Co., Ltd. 102.02 221.66 Sinopharm Holding Donghong Medical (Shanghai) Co., Ltd. 98.77 35.57 Beijing Golden Elephant Fosun Pharmaceutical Co., Ltd. 92.93 - Sinopharm Holding Inner Mongolia Co., Ltd. 90.22 171.94 Sinopharm Holding Changzhou Medical Logistics Center Co., Ltd. 83.18 195.94 Sinopharm Holding Beijing Tianxing Puxin Biological Medical Co., Ltd. 76.12 (880.07) Sinopharm Holding Jiangxi Co., Ltd. 67.84 30.87 Sinopharm Group Shanxi Co., Ltd. 59.86 89.71 Sinopharm Holding Sanming Co., Ltd. 53.37 56.73 Sinopharm Lerentang Tangshan Medicine Co., Ltd. 49.84 133.20 Sinopharm Holding Changzhou Co., Ltd. 48.76 1.11 Sinopharm Holding Dalian Hecheng Co., Ltd. 48.07 - Sinopharm Holding Tianjin Distribution Center Co., Ltd. 46.73 - Hutchison Whampoa Sinopharm Pharmaceuticals (Shanghai) Co., Ltd. 40.29 57.94 Sinopharm Holding Anhui Co., Ltd. 38.69 35.16 Sinopharm Holding Tibet Pharmaceutical Co., Ltd. 36.95 6.13 Sinopharm Holding Linqu Co., Ltd. 30.93 - China National Scientific Instruments& Materials Imp/Exp Shenzhen Co., Ltd. 28.43 24.37 Sinopharm Holding Suzhou Co., Ltd. 24.71 11.40 Sinopharm Holding Anqing Co., Ltd. 20.91 46.58
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(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
2016 2015(RMB’0,000) (RMB’0,000) Sinopharm Holding Shanghai Likang Pharmaceutical Co., Ltd. 19.77 7.81 Shenzhen Wanwei Medicine Trading Co., Ltd. 18.14 18.37 Sinopharm Guangdong Medical Examination Co., Ltd. 17.13 - Sinopharm Holding Xiangyang Co., Ltd. 16.89 30.73 Jiang Meng Renren Medical Instrument Co., Ltd. 16.80 34.95 Sinopharm Xinxiang Chain Store Co., Ltd. 14.14 14.69 Sinopharm Holding Tianjin North Medicine Co., Ltd. 13.03 78.43 China National Pharmaceutical Foreign Trade Co., Ltd. 12.60 31.48 Sinopharm Holding Ulanqab Co., Ltd. 12.26 1.77 Sinopharm Holding Lerentang Pharmaceutical Co., Ltd. 10.71 0.01 Sinopharm Holding Yantai Co., Ltd. 7.18 28.14 Main Luck Pharmaceutical 7.07 5.13 Sichuan Kang Daxin Pharmaceutical Co., Ltd. 6.23 4.15 Beijing Tiantan Biological Products Co., Ltd. 6.07 1.02 Sinopharm Holding Jiling Co., Ltd. 5.56 1.74 Beijing Fusheng Tiandi Property Management Ltd. 5.40 6.44 Sinopharm Holding Wuhu Co., Ltd. 5.13 5.13 Sinopharm Holding Jiangsu Co., Ltd. 4.72 49.78 China Sinopharm International Corporation 4.49 140.75 Sinopharm Holding Puyang Co., Ltd. 4.45 0.03 Shanxi Guoyi Pharmacy Co., Ltd. 4.28 5.42 Sinopharm Holding Shanxi Instrument Branch Co., Ltd. 3.87 - Sinopharm Holding Huaian Co., Ltd. 2.19 41.85 China National Pharmaceutical Group Corporation 1.52 5.31 Sinopharm Holding Huzhou Co., Ltd. 1.43 5.65 Sinopharm Holding Qingdao Co., Ltd. 1.42 195.87
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(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
2016 2015(RMB’0,000) (RMB’0,000) Sinopharm Group Zhijun (Shenzhen) Pharmaceutical Co., Ltd. 1.23 - Sinopharm Holding Qianxinan Co., Ltd. 1.20 1.44 Heilongjiang Sinopharm Medical Herbs Co., Ltd. 1.15 1.36 Winteam Pharmaceutical Group Ltd. 1.01 - Sinopharm Holding Changde Co., Ltd. 0.95 33.61 Sinopharm Holding Zhoukou Co., Ltd. 0.93 2.01 Sinopharm Fengliaoxing Medical Hospital Co., Ltd. 0.74 - Sinopharm Lerentang Qinhuangdao Medicine Co., Ltd. 0.59 34.51 Sinopharm Holding Beijing Kangchen Bio-Pharmaceutical Co., Ltd. 0.57 1.06 Sinopharm Holding Xiangxi Co., Ltd. 0.49 - Sinopharm Holding Chenzhou Co., Ltd. 0.47 0.37 Sinopharm Holding Shangqiu Co., Ltd. 0.42 0.65 Sinopharm Health Online Co., Ltd. 0.23 176.54 Sinopharm United Engineering Corporation 0.18 - Sinopharm Holding Nanping Newforce Co., Ltd. 0.15 0.37 Group Financial Co. 0.13 - Sinopharm Holding Xiangtan Co., Ltd. 0.05 - Beijing Jianyu Golden Elephant Pharmacy Co., Ltd. - 4,243.38 Tianjin Qidong Elephant Pharmacy Medicine Chain Company Limited - 380.46 Suzhou Erye Pharmaceutical Limited Company - 117.39 Chongqing Yaoyou Pharmaceutical Co., Ltd. - 79.49 Sinopharm Holding ChiFeng Co., Ltd. - 36.61 Qinghai Medical Pharmaceutical Material Co., Ltd. - 14.33 Sinopharm Group Guorui Medicine Co., Ltd. - 13.46 Sinopharm Holding Hongkong International Co., Ltd. - 11.94 Hetian Region Ankang Chain - 9.22 Guizhou Tongjitang Pharmaceutical Co., Ltd. - 4.99
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(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
2016 2015(RMB’0,000) (RMB’0,000) Huzhou Muhanzhuai Pharmacy Chain Store Co., Ltd. - 3.73 Sinopharm Health Solutions (Shanghai) Co., Ltd. - 3.63 Sinopharm Holding Anyang Co., Ltd. - 2.98 Sinopharm Holding Xinjiang Xinte Karamay
Pharmaceutical Co., Ltd. - 2.79 Sinopharm Holding Zhumadian Co., Ltd. - 1.47 Sinopharm Holding Dezhou Co., Ltd. - 1.29 Sinopharm Holding (Yangzhou) Chinese Western
Medicine Branch Co., Ltd. - 1.07 Anhui Jingfang Pharmaceutical Co., Ltd. - 1.05 Sinopharm Holding Xinyu Co., Ltd. - 0.65 Sinopharm Fortuneway Company - 0.32 Sinopharm Holding Shanxi Linfen Co., Ltd. - 0.19 Sinopharm (Shanghai) E-Health Co., Ltd. - 0.18 Sinopharm Holding Xinxiang Co., Ltd. - 0.09 Sinopharm Changsha Medical Instrument Co., Ltd. - 0.01 Sinopharm Holding Tongliao Co., Ltd. - (0.08) Shanghai Yunnuo Marketing Consulting Co., Ltd. - (15.60) Sinopharm Holding Zunyi Co., Ltd. (0.45) 1.58 149,281.51 148,542.18
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
5. Major transactions between the Group and its related parties (Continued)
(2) Related party transactions - leases
(a) As the lessor
Type of assets Income from leases in Income from leases in under leases 2016(RMB‘0,000) 2015(RMB‘0,000) Sinopharm Group Zhijun (Shenzhen) Building
21.24 - Pharmaceutical Co., Ltd.
Foshan Fengliaoxing Pharmaceutical Co., Ltd.
Building
6.12 73.44 China National Medicines Co., Ltd.
Building
4.32 4.32 Sinopharm Holding Sub Marketing Center Co., Building
4.17 3.24 Ltd.
Sinopharm Group Guangdong Medicine Device Building
- 26.02 Co., Ltd.
35.85 107.02 (b) As the lessee
Type of assets Expenses from leases Expenses from leases under leases in 2016(RMB‘0,000) in 2015(RMB‘0,000) Beijing Golden Elephant Fosun Pharmaceutical Building
955.00 940.00 Co., Ltd.
Sinopharm Group Xinjiang Special Drugs Building
884.46 744.79 National Pharmaceutical Co., Ltd.
Linyi Medical Group Co., Ltd.
Building
810.33 302.31 Sinopharm Group Medicine Logistic Co., Ltd.
Equipment 750.00 750.00 Sinopharm Group Medicine Logistic Co., Ltd.
Building
719.80 708.00 Shenyang Pharmaceutical Co., Ltd.
Building
685.43 668.00 Lerentang Investment Group Co., Ltd.
Building
640.00 270.00 China National Pharmaceutical Group Shanghai Building
614.10 637.79 Co., Ltd.
Pingdingshan Pusheng Pharmaceutical Co., Ltd.
Building
454.87 418.45 Sinopharm Holding Yangzhou Co., Ltd.
Building
381.89 294.83 Hunan Minshengtang Investment Co., Ltd.
Building
281.31 113.29 Guangdong Jiyuantang Pharmaceutical Co., Ltd.
Building
132.43 122.54
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
5. Major transactions between the Group and its related parties (Continued)
(2) Related party transactions - leases
(b) As the lessee (continued)
Expenses from Expenses from Type of assets leases in 2016 leases in 2015 under leases (RMB‘0,000) (RMB‘0,000) Huang Lijin Building 125.00 115.00 Shaoguan Wujiang District Muyang
Medicine Information Consultant Co., Ltd. Building 95.60 97.71 Zhang Zhenfang Building 70.00 70.00 Sinopharm Holding Shanxi Co., Ltd. Building 63.86 61.53 Wang Yang Building 53.89 55.20 Beijing Sinopharm Tianyuan Real Estate&
Property Management Co., Ltd. Building 47.64 46.04 Sinopharm Holding Beijing Co., Ltd. Building 46.00 42.75 Sinopharm Holding Kashi New& Special
Drugs Co., Ltd. Building 44.46 44.87 Sinopharm Holding Xinjiang Xinte Karamay
Pharmaceutical Co., Ltd. Building 35.06 32.88 Xiaoyi Baicaotang Pharmacy Chain Store
Co., Ltd. Building 31.55 109.85 China National Medicines Co., Ltd. Building 30.75 25.00 Gu Jinfang Building 26.82 - Hangzhou Xihu Business Group Corporation Building 24.70 14.39 Sinopharm Xinjiang Pharmaceutical Co.,
Ltd. Building 18.33 15.00 Sinopharm Group Xinjiang Pharmaceutical
Co., Ltd. Building 18.21 25.22 Taishan Qunkang Pharmacy Co., Ltd. Building 12.16 - Xinjiang Baitong Property Service Co., Ltd. Building 5.99 - Shenzhen Jiufeng Investment Co., Ltd. Building 3.00 - Sinopharm Holding Fujian Co., Ltd. Building 0.41 0.42 8,063.05 6,725.86
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
5. Major transactions between the Group and its related parties (Continued)
(3) Related party transactions - guarantees
Guarantees received from related parties
Amount of
Termination of Whether the guarantee is 2016 guarantee Inception of guarantee
guarantee fulfilled（RMB‘0,000）
16 February 2016– 16 February 2017–
Sinopharm Group Co., Ltd. 13,154.46 1 September 2016 1 September 2017 No Amount of
Termination of Whether the guarantee is 2015 guarantee Inception of guarantee
guarantee fulfilled（RMB‘0,000）
15 January 2015– 15 January 2016–
Sinopharm Group Co., Ltd. 58,943.40 1 September 2015 1 September 2016 No (4) Related party transactions– borrowings
Amount
2016 Category （RMB‘0,000） Inception Maturity Discount on commercial 27 May 2016– 30 June 2016– Group Financial Co. acceptance notes 30,774.27 29 November 2016 5 March 2017 3 March 2016– 28 October 2016– Group Financial Co. Short-term borrowings 14,000.00 8 November 2016 8 November 2017 Discount on bank 28 February 2017– Group Financial Co. acceptance notes 1,187.78 27 December 2016 15 June 2017 4 January 2016– 4 July 2016– Group Financial Co. Entrusted borrowings 21,554.00 14 July 2016 14 January 2017 28 January 2016– 28 July 2016– Group Financial Co. Short-term borrowings 9,000.00 1 October 2016 29 December 2016 76,516.05
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(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– borrowings (Continued)
Amount
2015 Category （RMB‘0,000） Inception Maturity 28 February 2015– 28 February 2016– Group Financial Co. Short-term borrowings 8,500.00 14 October 2015 14 October 2016 Discount on
commercial acceptance 9 January 2016– Group Financial Co. notes 2,202.60 30 October 2015 9 February 2016 Discount on bank 15 December 2015– 22 January 2016– Group Financial Co. acceptance notes 3,990.36 17 December 2015 2 June 2016 Group Financial Co. Short-term borrowings 7,600.00 28 April 2015 27 April 2016 12 January 2015– 12 January 2016– Group Financial Co. Entrusted borrowings 4,777.00 20 May 2015 20 May 2016 27,069.96
(5) Related party asset transfer
2016 2015 Type of transaction
(RMB‘0,000) (RMB‘0,000) Sale of Pingshan base
Shanghai Shyndec Pharmaceutical Co., Ltd. assets 52,993.14 - Purchase of intangible
Shanghai Tongyu Information Technology Co., Ltd. asset 38.49 - Sinopharm Holding Financing Lease Co., Ltd. Purchase of fixed asset 469.05 1,575.25 Purchase of construction
Sinopharm Holding Financing Lease Co., Ltd. in progress 70.78 423.10 Sinopharm Holding Tianjin Binhai Pharmaceutical Co.,
Ltd. Purchase of fixed asset 62.01 - Sinopharm Holding Tianjin Binhai Pharmaceutical Co., Purchase of construction
Ltd. in progress - 206.63 Sinopharm Group Chemical Reagent Suzhou Co., Ltd. Purchase of fixed asset - 98.06 Beijing Tongyu Information Technology Co., Ltd. Purchase of fixed asset 56.57 - Sinopharm Chongqing Pharmaceutical and Medical
Industry Design Institute Purchase of fixed asset - 24.98
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(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 asset transfer (Continued)
During the current year, the Group had related party transactions of selling assets, issuing equity, cash purchase of assets as well as raising funds; the disposal of Zhijun Medicines, Zhijun Pingshan, Zhijun Trade and Pingshan base assets in exchange for15.56% equity in Shanghai Shyndec Pharmaceutical Co., Ltd; issuing shares in order to purchase Guoda Pharmacy, Foshan Nanhai, Guangdong Uptodate& Special Medicines, which are enterprises under common control, from Sinopharm Group; issuing shares to China Pharma& Trade in order to purchase51% equity in South Pharma& Trade; issuing shares to Ping An Asset Management in order to raise funds for the purchase of non-controlling interests in South Pharma& Trade, of Fu Yuequn Fu and other 11 natural person. Refer to Item 3 under Note VI for details.
(6) Other related party transactions
2016 2015(RMB‘0,000) (RMB‘0,000) (a) Remuneration for key management personnel
1 , 0 5 6 . 0 0 1,106.00 (b) Interest expense
2016 2015 Related party Category RMB‘0,000 RMB‘0,000 Payment of interest on
Sinopharm Group borrowings to related parties 506.78 352.27 Sinopharm Group Payment of loan interest 399.29 522.67 Payment of buyer notes
Sinopharm Group discount interest 33.60 61.08 Group Financial Co. Payment of loan interest 277.65 227.75 Payment of notes discount
Group Financial Co. interest 231.80 65.79 Sinopharm Holding Financing Lease Payment of financing lease
Co., Ltd. interest 177.85 52.05 China National Pharmaceutical Foreign Payment of interest on
Trade Co., Ltd. borrowings to related parties 137.05 4.83 China National Pharmaceutical Group
Corporation Payment of loan interest 135.44 161.10 Sinopharm Holding Sub Marketing Payment of buyer notes
Center Co., Ltd. discount interest 90.05 44.11 1,989.51 1,491.65 (c) Interest income
2016 2015 Related party Category RMB‘0,000 RMB‘0,000 Group Financial Co. Deposit interest
35.24 3.98
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(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 RMB395,165.19 (2015: RMB383,337.84).
(b) During the current year, the related parties rendered services to the Group at the market price amounting to RMB2,698.89 (2015: RMB10,838.47).
(c) During the current year, the Group sold goods to related parties at the market price amounting to RMB148,034.25 (2015: RMB147,095.60).
(d) During the current year, the Group rendered services to related parties at the market price amounting to RMB1,247.26 (2015: RMB1,446.58).
(2) Related party transactions - leases
(a) During the current year, the Group leased buildings to related parties and recognized income of RMB35.85 (2015: RMB107.02) according to the agreements.
(b) During the current year, the Group leased buildings and equipment from related parties and an expense of RMB8,063.05 (2015: RMB6,725.86) was incurred according to the lease.
(3) Related party transactions - guarantees
(a) During the current year, Sinopharm Group Co., Ltd. provided guarantee for borrowings of the Group with an amount of RMB13,154.46 (2015: RMB58,943.40).
(4) Related party transactions - borrowings
(a) During the current year, the Group borrowed RMB76,516.05 at an annual interest rate of3.16% to4.13% from related parties (2015: RMB27,069.96 at3.1% to5.4%).
(5) Related party transactions - asset transfer
(a) During the current year, the Group purchased long-term assets from related parties at the negotiated price amounted to RMB696.90 (2015: RMB2,328.02).
(b) During the current year, the Group sold long-term assets to related parties at the negotiated price amounted to RMB52,993.14 (2015: none).
(6) Other major related party transactions
(a) During the current year, the Group incurred emoluments (Including those paid in cash, in kind and in other forms) for key management personnel with an amount of RMB1,056.00 (2015: RMB1,106.00).
(b) During the current year, the Group has paid borrowing interests, entrusted loan interests etc. to related parties in the amount of RMB1,989.51 (2015 RMB1,491.65)
(c) During the current year, the Group has received deposit interest from related parties in the amount of RMB35.24 (2015 RMB3.98).
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
6. Commitments between the Group and related parties
2016 2015RMB‘0,000 RMB‘0,000 Leases
Pingdingshan Pusheng Pharmaceutical Co., Ltd. 2,749.92 - Sinopharm Holding Yangzhou Co., Ltd. 1,564.80 - Lerentang Investment Group Co., Ltd. 1,180.00 - Sinopharm Group Xinjiang Special Drugs National
Pharmaceutical Co., Ltd. 1,044.00 2,306.01 Shenyang Pharmaceutical Co., Ltd. 1,044.00 - China National Pharmaceutical Group Shanghai Co., Ltd. 676.90 - Shaoguan Wujiang District Muyang Medicine Information
Consultant Co., Ltd. 360.38 457.01 Gu Jinfang 324.82 - Wang Yang 157.71 220.80 Sinopharm Xinjiang Korla Pharmaceutical Co., Ltd. 105.74 158.62 Beijing Sinopharm Tianyuan Real Estate& Property
Management Co., Ltd. 100.53 100.53 Shenzhen Jiufeng Investment Co., Ltd. 91.00 - Taishan Qunkang Pharmacy Co., Ltd. 77.66 - Guangdong Jiyuantang Pharmaceutical Co., Ltd. 69.58 - Sinopharm Holding Shanxi Co., Ltd. 64.00 64.00 Guangdong Jiyuantang Development Co., Ltd. - 3,127.26 Beijing Huafang Investment Co., Ltd. - 1,855.00 Beijing Golden Elephant Fosun Pharmaceutical Co., Ltd. - 1,062.01 Wei Ningjuan - 997.88 Qiao Haiping - 811.33 Sinopharm Holding Jiangsu Co., Ltd. - 294.00 Anhui Tianjian Medical Investment Co., Ltd. - 141.00 Linyi Medical Group Co., Ltd. - 91.00 Beijing Electromechanical Device Group Corporation - 33.89 China National Medicines Co., Ltd. - 30.75 Sinopharm Group Xinjiang Pharmaceutical Co., Ltd. - 29.04 Shi Peijun - 26.82
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
6. Commitments between the Group and related parties (Continued)
2016 2015RMB‘0,000 RMB‘0,000 Lease (continued)
Huang Lijin - 25.30 Nanjing Guoheng Trade Co., Ltd. - 12.16 Sinopharm Holding Beijing Co., Ltd. - 10.75 Sinopharm Xinjiang Pharmaceutical Co.,
Ltd. - 2.40 9,611.04 11,857.56 Lease out
Sinopharm Group Zhijun (Shenzhen)
Pharmaceutical Co., Ltd.
63.71 -
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
7. Amounts due from related parties
2016 2015RMB‘0,000 RMB‘0,000 Accounts receivable
Shanghai Beiyi Guoda Pharmaceutical Co., Ltd. 2,715.69 2,289.83 Foshan Chancheng Pharmaceutical Co., Ltd. 2,666.51 2,566.61 Sinopharm Holding Heilongjiang Co., Ltd. 2,246.68 63.52 Sinopharm Holding Hunan Co., Ltd. 1,597.64 1,180.08 Sinopharm Health Online Co., Ltd. 1,553.42 94.54 Sinopharm Sichuan Pharmaceutical Co., Ltd. 1,365.97 1,305.21 Sinopharm Holding Shandong Co., Ltd. 1,205.91 280.62 Sinopharm Group Southwest Medicine Co., Ltd. 921.60 589.91 Sinopharm Holding Hulun Buir Co., Ltd. 637.39 191.40 Sinopharm Le-Ren-Tang Medicine Co., Ltd. 627.65 727.64 Sinopharm Holding Hubei Co., Ltd. 583.72 163.72 Sinopharm Holding Hainan Co., Ltd. 575.18 867.51 Sinopharm Group Co., Ltd. 567.26 122.62 Sinopharm Holding Hainan Hongyi Co., Ltd. 551.04 512.07 Sinopharm Group Xinjiang Special Drugs National
Pharmaceutical Co., Ltd. 429.34 490.38 Sinopharm Holding Sub Marketing Center Co., Ltd. 363.61 72.44 Sinopharm Holding Xinjiang Special Drugs Western
Pharmaceutical Co., Ltd. 351.97 208.73 Sinopharm Holding Beijing Co., Ltd. 345.39 488.91 Sinopharm Holding Beijing Huahong Co., Ltd. 328.88 429.43 Foshan Chancheng District Central Hospital 324.83 267.08 China National Medicines Co., Ltd. 301.74 223.87 Sinopharm Holding Yunnan Co., Ltd. 233.12 46.97 Sinopharm Holding Guizhou Co., Ltd. 229.65 157.89 Sinopharm Holding Tianjin Co., Ltd. 226.12 418.24 Sinopharm Holding Wenzhou Co., Ltd. 213.63 449.70 Sinopharm Holding Shanxi Co., Ltd. 190.66 182.30 Sinopharm Holding Ningxia Co., Ltd. 108.67 762.35 Sinopharm Holding Fujian Co., Ltd. 99.87 89.57 Sinopharm Holding Shanxi Co., Ltd. 99.34 223.20
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
7. Amounts due from related parties (Continued)
2016 2015RMB‘0,000 RMB‘0,000 Accounts receivable (continued)
Sinopharm Holding Yangzhou Co., Ltd. 96.27 66.19 Shanghai Merro Pharmaceutical Co., Ltd. 93.18 56.99 Sinopharm Group Medicine Logistic Co., Ltd. 87.33 47.22 Foshan Chanyixing Medicine Development Co., Ltd. 80.55 69.07 Sinopharm Group (Tianjin) Eastern Bokang Pharmaceutical Co., Ltd. 74.85 1.01 Sinopharm Holding Zhejiang Co., Ltd. 72.64 18.23 Sinopharm Holding Qinghai Co., Ltd. 47.18 32.41 Shanghai Guoda Lingyun Pharmacy Co., Ltd. 46.61 277.71 Sinopharm Holding Lunan Co., Ltd. 42.74 85.84 Beijing Golden Elephant Fosun Pharmaceutical Co., Ltd. 30.86 - Sinopharm Holding Inner Mongolia Co., Ltd. 18.16 - Sinopharm Holding Beijing Tianxing Puxin Biological Medical Co., Ltd. 18.14 - Sinopharm Group Shanxi Co., Ltd. 16.09 5.91 Sinopharm Holding Changzhou Medical Logistics Center Co., Ltd. 14.80 32.53 Sinopharm Holding Jiangxi Co., Ltd. 14.60 4.61 Hutchison Whampoa Sinopharm Pharmaceuticals (Shanghai) Co., Ltd. 12.49 12.80 Sinopharm Holding Donghong Medical (Shanghai) Co., Ltd. 12.25 8.85 Sinopharm Holding Huaian Co., Ltd. 11.85 4.41 Sinopharm Holding Nantong Co., Ltd. 10.63 22.28 Sinopharm Holding Dalian Hecheng Co., Ltd. 10.35 - Sinopharm Holding Chengdu Co., Ltd. 7.59 23.97 Beijing Tiantan Biological Products Co., Ltd. 7.10 - Sinopharm Xinxiang Chain Store Co., Ltd. 4.65 0.04 Sinopharm Holding Wuxi Co., Ltd. 3.72 63.74 Sinopharm Guangdong Medical Examination Co., Ltd. 3.25 - Sinopharm Holding Zhuhai Co., Ltd. 3.06 1.31 Sinopharm Holding Xiangyang Co., Ltd. 2.95 1.32 Sinopharm Holding Dalian Co., Ltd. 1.88 22.01 China National Pharmaceutical Group Corporation 1.78 -
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
7. Amounts due from related parties (Continued)
2016 2015RMB‘0,000 RMB‘0,000 Accounts receivable (continued)
0.50 5.06 Sinopharm Holding Shanghai Likang Pharmaceutical Co., Ltd.
China National Pharmaceutical Foreign Trade Co., Ltd.
0.50 0.29 Sinopharm Holding Jilin Co., Ltd.
0.41 67.36 Shenyang Pharmaceutical Co., Ltd.
0.30 - Beijing Jianyu Golden Elephant Pharmacy Co., Ltd.
- 393.36 Sinopharm Holding Henan Co., Ltd.
- 262.25 Sinopharm Holding Shenyang Co., Ltd.
- 207.86 Sinopharm Holding Yancheng Co., Ltd.
- 156.06 Sinopharm Holding Jinzhou Co., Ltd.
- 152.10 Suzhou Erye Pharmaceutical Limited Company
- 137.35 Sinopharm Holding Xuzhou Co., Ltd.
- 116.76 Sinopharm Holding Suzhou Kangmin Pharmaceutical Co., Ltd.
- 99.26 Sinopharm Holding Taizhou Co., Ltd.
- 91.59 Sinopharm Holding Fuzhou Co., Ltd.
- 41.11 China Sinopharm International Corporation
- 37.78 Sinopharm Holding Chongqing Co., Ltd.
- 28.54 Sinopharm Lingyun Biopharmaceutical (Shanghai) Co., Ltd.
- 25.39 Sinopharm Holding Putian Co., Ltd.
- 23.80 Sinopharm Holding Longyan Co., Ltd.
- 20.50 Sinopharm Holding Quanzhou Co., Ltd.
- 13.94 Sinopharm Holding Gansu Co., Ltd.
- 11.20 Sinopharm Holding Ningde Co., Ltd.
- 10.24 Tianjin Qidong Elephant Pharmacy Medicine Chain Company Limited
- 9.11 Sinopharm Holding Qingdao Co., Ltd.
- 9.07 Sinopharm Lerentang Tangshan Medicine Co., Ltd.
- 8.74 Sinopharm Holding Jiangsu Co., Ltd.
- 6.06 Sinopharm Holding Yantai Co., Ltd.
- 5.59 Jiang Meng Renren Medical Instrument Co., Ltd.
- 4.92 Sinopharm Holding Anhui Co., Ltd. - 3.13
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
7. Amounts due from related parties (Continued)
2016 2015RMB‘0,000 RMB‘0,000 Accounts receivable (continued)
Sinopharm Holding Changde Co., Ltd. - 1.88 Sinopharm Holding Ulanqab Co., Ltd. - 1.86 Sinopharm Holding Huzhou Co., Ltd. - 1.61 Sinopharm Holding Zunyi Co., Ltd. - 1.55 Sinopharm Holding Suzhou Co., Ltd. - 1.35 Sinopharm Holding Anqing Co., Ltd. - 1.05 Huzhou Muhanzhuai Pharmacy Chain Store Co., Ltd. - 0.87 Sinopharm Holding Tianjin North Medicine Co., Ltd. - 0.81 Sinopharm Health Solutions (Shanghai) Co., Ltd. - 0.76 Sinopharm Holding Sanming Co., Ltd. - 0.63 China Medical Instrument Co., Ltd. - 0.60 Sinopharm Holding Puyang Co., Ltd. - 0.04 22,511.74 18,286.22 2016 2015RMB‘0,000 RMB‘0,000 Notes receivable
Sinopharm Holding Shandong Co., Ltd. 2,193.52 675.01 Sinopharm Sichuan Pharmaceutical Co., Ltd. 1,688.99 450.68 Sinopharm Holding Hunan Co., Ltd. 886.78 323.57 Sinopharm Holding Beijing Co., Ltd. 684.99 544.57 Sinopharm Holding Henan Co., Ltd. 473.43 - Sinopharm Holding Nantong Co., Ltd. 416.00 283.00 Sinopharm Group (Tianjin) Eastern Bokang
Pharmaceutical Co., Ltd. 413.80 1,856.71 Sinopharm Holding Hubei Co., Ltd. 394.82 794.13 Sinopharm Holding Fujian Co., Ltd. 369.33 - Sinopharm Holding Yunnan Co., Ltd. 258.53 - Sinopharm Holding Shanxi Co., Ltd. 225.04 -
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
7. Amounts due from related parties (Continued)
2016 2015RMB‘0,000 RMB‘0,000 Notes receivable (Continued)
Sinopharm Holding Zhejiang Co., Ltd. 210.66 8.23 Sinopharm Holding Ningxia Co., Ltd. 200.53 - Sinopharm Holding Shenyang Co., Ltd. 154.64 131.72 Sinopharm Holding Sub Marketing Center Co., Ltd. 139.47 458.90 Sinopharm Holding Gansu Co., Ltd. 129.48 58.14 Sinopharm Holding Quanzhou Co., Ltd. 121.92 - Sinopharm Holding Fuzhou Co., Ltd. 109.16 88.31 Sinopharm Holding Beijing Huahong Co., Ltd. 100.00 16.89 Sinopharm Holding Heilongjiang Co., Ltd. 89.20 10.33 Sinopharm Holding Jilin Co., Ltd. 38.16 - Sinopharm Holding Inner Mongolia Co., Ltd. 9.00 - Sinopharm Holding Hainan Co., Ltd. 3.47 481.37 Sinopharm Le-Ren-Tang Medicine Co., Ltd. - 523.37 Sinopharm Holding Tianjin Co., Ltd. - 375.89 Sinopharm Group Xinjiang Special Drugs National Pharmaceutical
Co., Ltd. - 240.00 Sinopharm Holding Jinzhou Co., Ltd. - 140.88 Sinopharm Holding Xinjiang Special Drugs Western
Pharmaceutical Co., Ltd. - 100.00 China National Medicines Co., Ltd. - 47.78 Sinopharm Holding Chongqing Co., Ltd. - 37.36 Sinopharm Holding Yancheng Co., Ltd. - 34.20 Sinopharm Holding Suzhou Kangmin Pharmaceutical Co., Ltd. - 20.00 Sinopharm Holding Wuxi Co., Ltd. - 15.00 Sinopharm Holding Chengdu Co., Ltd. - 13.27 Sinopharm Holding Qingdao Co., Ltd. - 10.00 Sinopharm Holding Changde Co., Ltd. - 6.00 Sinopharm Holding Changzhou Medical Logistics Center Co., Ltd. - 3.00 9,310.92 7,748.31
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
7. Amounts due from related parties (Continued)
2016 2015RMB‘0,000 RMB‘0,000 Other receivables
Shanghai Shyndec Pharmaceutical Co., Ltd. 13,719.11 - Sinopharm Group Medicine Logistic Co., Ltd. 315.87 254.88 Sinopharm Health Online Co., Ltd. 68.3 176.54 Sinopharm Holding Shanxi Co., Ltd. 10.00 10.00 Sinopharm Group Xinjiang Special Drugs National
Pharmaceutical Co., Ltd. 10.00 10.00 Sinopharm Holding Fuzhou Co., Ltd. 7.26 - Sinopharm Group Zhijun (Shenzhen) Pharmaceutical Co., Ltd. 5.64 - Sinopharm Lerentang Hebei Medical Instrument Trade Co., Ltd. 4.85 4.85 Shanghai Guoren Pharmacy Co., Ltd. 3.78 5.37 Beijing Electromechanical Device Group Corporation 3.00 - Shenzhen Zhijun Pharmaceutical Trade Co., Ltd. 2.15 - Sinopharm Holding Henan Co., Ltd. 1.01 - Sinopharm Holding Huangshan Health Industry Co., Ltd. 0.94 11.40 Sinopharm Group Co., Ltd. 0.40 21,442.41 China National Pharmaceutical Foreign Trade Co., Ltd. - 25.00 Guizhou Tongjitang Pharmaceutical Co., Ltd. - 1.47 China National Medicines Co., Ltd. - 0.05 14,152.31 21,941.97 2016 2015RMB‘0,000 RMB‘0,000 Advances to suppliers
Hunan Minshengtang Investment Co., Ltd. 1,194.11 - Sinopharm Holding Shanxi Co., Ltd. 302.78 343.14 Sinopharm Chongqing Pharmaceutical and Medical Industry
Design Institute 265.22 265.22 Sinopharm Holding Shanxi Co., Ltd. 195.91 90.77 Sinopharm Group Xinjiang Special Drugs National
Pharmaceutical Co., Ltd. 193.46 96.64 Chengdu Rongsheng Pharmacy Co., Ltd. 44.83 42.43
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
7. Amounts due from related parties (Continued)
2016 2015RMB‘0,000 RMB‘0,000 Advances to suppliers (continued)
Shanghai Meitai Medical Instruments Co., Ltd. 28.29 58.41 Shenzhen Jiufeng Investment Co., Ltd. 15.00 - Hangzhou Xihu Business Group Corporation 12.65 - Sinopharm Group Co., Ltd. 11.72 - Sinopharm Holding Beijing Co., Ltd. 9.66 0.16 China National Medicines Co., Ltd. 4.94 9.97 Sinopharm Xinjiang Pharmaceutical Co., Ltd. 4.17 10.00 Beijing Tongyu Information Technology Co., Ltd. 4.04 - Xiaoyi Baicaotang Pharmacy Chain Store Co., Ltd. 3.50 - Sinopharm Holding Kashi New& Special Drugs Co., Ltd. 2.52 - Xinjiang Baitong Property Service Co., Ltd. 0.63 0.76 Winteam Pharmaceutical Group Ltd. 0.46 0.47 Sinopharm Holding Suzhou Co., Ltd. 0.37 - Sinopharm Group Xinjiang Pharmaceutical Co., Ltd. 0.34 11.80 Sichuan Hexin Pharmaceutical Co., Ltd. 0.20 346.59 Sinopharm Group Zhijun (Shenzhen) Pingshan
Pharmaceutical Co., Ltd. 0.02 - Jiangsu Wanbang Pharmacy Marketing Co., Ltd. 0.02 - Wuhan Institute of Biological Products Co., Ltd. - 49.32 Sinopharm Holding Guizhou Co., Ltd. - 17.71 Sinopharm Group Guorui Medicine Co., Ltd. - 14.00 Sinopharm Holding Sub Marketing Center Co., Ltd. - 7.28 Sinopharm Group Chemical Reagent Co., Ltd. - 1.58 Sinopharm Holding Jinhua Co., Ltd. - 0.66 Shanghai Modern Hasen (Shangqiu) Pharmaceutical Co., Ltd. - 0.01 2,294.84 1,366.92 Amounts due from related parties were interest-free and unsecured, with no fixed terms of repayment.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
8. Amounts due to related parties
2016 2015RMB‘0,000 RMB‘0,000 Accounts payable
Sinopharm Holding Sub Marketing Center Co., Ltd.
11,346.16 25,501.82 Sinopharm Group Co., Ltd.
6,936.35 9,100.78 China National Medicines Co., Ltd.
3,523.37 4,811.90 Sinopharm Le-Ren-Tang Medicine Co., Ltd.
2,676.36 2,390.38 Sinopharm Group Xinjiang Special Drugs National Pharmaceutical Co., Ltd.
1,905.41 1,322.02 Sinopharm Lingyun Biopharmaceutical (Shanghai) Co., Ltd.
1,834.62 2,087.75 Sino-Swed Pharmaceutical Co., Ltd.
1,317.92 779.51 Jiangsu Wanbang Pharmacy Marketing Co., Ltd.
1,119.81 881.63 Sinopharm Holding Lerentang Pharmaceutical Co., Ltd.
839.01 431.72 Chongqing Yaoyou Pharmaceutical Co., Ltd.
770.08 712.89 Sinopharm Holding Pingdingshan Co., Ltd.
732.91 822.40 Lanzhou Institute of Biological Products Co., Ltd.
678.00 558.00 Sinopharm Holding Shenyang Co., Ltd.
631.15 136.76 Sinopharm Holding Hulun Buir Co., Ltd.
629.33 383.62 Main Luck Pharmaceutical
580.79 708.56 Shenzhen Wanwei Medicine Trading Co., Ltd.
563.83 438.65 Chongqing Haisiman Pharmaceutical Co., Ltd.
530.35 25.24 Sinopharm Holding Xiamen Co., Ltd.
511.63 321.86 Shanghai Merro Pharmaceutical Co., Ltd.
489.59 579.98 Sinopharm Holding Jiangsu Co., Ltd.
485.92 323.29 Sinopharm Holding Shanxi Co., Ltd.
423.72 441.04 Sinopharm Holding Suzhou Co., Ltd.
419.86 90.30 Sinopharm Holding Ningxia Co., Ltd.
357.99 300.49 Sinopharm Holding Fujian Co., Ltd.
326.26 147.79 Sinopharm Holding Shanxi Instrument Branch Co., Ltd.
308.99 228.58 Sinopharm Holding Beijing Co., Ltd.
279.32 353.48 Sinopharm (Tianjin) Northern Medical Equipment Co., Ltd.
234.02 - Winteam Pharmaceutical Group Ltd.
208.77 123.18
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
8. Amounts due to related parties (Continued)
2016 2015RMB‘0,000 RMB‘0,000 Accounts payable (Continued)
Yichang Humanwell Pharmaceutical Co., Ltd.
195.74 18.40 Sinopharm Holding Changzhou Co., Ltd.
166.70 61.33 China National Pharmaceutical Foreign Trade Co., Ltd.
165.12 18.32 Sinopharm Holding Beijing Kangchen Bio-Pharmaceutical Co., Ltd.
113.68 30.72 Sinopharm Holding Changzhou Medical Logistics Center Co., Ltd.
112.02 381.71 Sinopharm Holding Beijing Huahong Co., Ltd.
105.54 39.39 Sinopharm Holding Inner Mongolia Co., Ltd.
80.40 58.88 Sinopharm Group Shanxi Co., Ltd.
70.74 6.48 Shanghai Shyndec Pharmaceutical Marketing Co., Ltd.
69.67 40.74 Sinopharm Group Medicine Logistic Co., Ltd.
69.48 102.09 Sinopharm Holding Donghong Medical (Shanghai) Co., Ltd.
63.23 70.77 China National Scientific Instruments& Materials Imp/Exp Shenzhen
59.93 - Co., Ltd.
Sinopharm Holding Xinjiang Special Drugs Western Pharmaceutical Co.,
48.62 53.66 Ltd.
Wuhan Zhonglian Pharmaceutical Group Co., Ltd.
45.13 49.46 Chengdu Rongsheng Pharmacy Co., Ltd.
44.88 0.08 China Otsuka Pharmaceutical Co., Ltd.
43.80 21.45 Sinopharm Holding Xinjiang Xinte Karamay Pharmaceutical Co., Ltd.
40.35 12.14 Foshan Fengliaoxing Pharmaceutical Co., Ltd.
35.70 72.00 Beijing Huamiao Traditional Chinese Medicine Technology and Project
35.27 20.41 Development Centre
Sinopharm Group Zhijun (Shenzhen) Pingshan Pharmaceutical Co., Ltd.
35.11 13.20 Sinopharm Holding Shanghai Likang Pharmaceutical Co., Ltd.
30.14 36.32 Sinopharm Group Zhijun (Shenzhen) Pharmaceutical Co., Ltd.
23.76 19.75 Sinopharm Holding Jinzhou Co., Ltd.
23.40 - Sinopharm Holding Tianjin Distribution Center Co., Ltd.
23.31 2.39 Sinopharm Holding Kashi New& Special Drugs Co., Ltd.
22.37 22.10 Anhui Jingfang Pharmaceutical Co., Ltd.
20.11 4.54 Sinopharm Holding Jinan Co., Ltd.
19.37 - Sinopharm Holding Dezhou Co., Ltd.
15.82 25.26
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
8. Amounts due to related parties (Continued)
2016 2015RMB‘0,000 RMB‘0,000 Accounts payable (Continued)
Sinopharm Group Rongsheng Pharmaceutical Co., Ltd.
15.39 22.96 Sinopharm Holding Yangzhou Co., Ltd.
15.36 297.55 Shenyang Hongqi Pharmaceutical Co., Ltd.
15.06 0.21 Sinopharm Holding Sanyi Medicine (Wuhu) Co., Ltd.
14.99 0.26 Guizhou Tongjitang Pharmaceutical Co., Ltd.
12.54 19.16 Sinopharm Holding Quanzhou Co., Ltd.
10.02 14.05 Sinopharm Holding Wuxi Co., Ltd.
9.76 23.01 Sinopharm Holding Dalian Co., Ltd.
8.36 58.33 Sinopharm Holding Fuzhou Co., Ltd.
8.11 3.95 Hutchison Whampoa Sinopharm Pharmaceuticals (Shanghai) Co., Ltd.
7.97 7.76 Sinopharm Shantou Jinshi Pharmaceutical Co., Ltd.
7.84 1.86 Beijing Golden Elephant Fosun Pharmaceutical Co., Ltd.
6.80 - Sinopharm Holding Putian Co., Ltd.
6.67 12.32 Wuliangye Group of Sichuan YiBin Pharmaceuticals Co., Ltd.
6.49 - Sinopharm Holding Huangshan Health Industry Co., Ltd.
6.19 - Hunan Dongting Pharmaceutical Co., Ltd.
6.09 3.41 Foshan Dezhong Pharmaceutical Co., Ltd.
5.83 768.81 Jiangsu Huanghe Pharmaceutical Co., Ltd
5.47 3.61 Shandong Lu Ya Pharmaceutical Co., Ltd.
5.28 5.28 Sinopharm Holding Zhuhai Co., Ltd.
5.02 9.33 Sinopharm Group Guorui Medicine Co., Ltd.
4.54 0.54 Sinopharm Lerentang Shijiazhuang Medicine Co., Ltd.
4.28 225.55 Sinopharm Lerentang Qinhuangdao Medicine Co., Ltd.
3.94 - Shanghai Modern Hasen (Shangqiu) Pharmaceutical Co., Ltd.
3.09 3.07 Sinopharm Holding Hubei Co., Ltd.
3.02 - Guangdong Medi-World Pharmaceutical Co., Ltd.
2.66 2.99 Sinopharm Holding Biopharmaceutical (Tianjin) Co., Ltd.
2.52 2.52 Sinopharm Holding (Liaoning Province) Medical Instruments Co., Ltd.
2.49 2.14
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
8. Amounts due to related parties (Continued)
2016 2015RMB‘0,000 RMB‘0,000 Accounts payable (Continued)
China National Pharmaceutical Industry Co., Ltd.
2.35 4.95 Yangzhou Weikang Pharmaceutical Co., Ltd.
2.33 2.92 Sinopharm Holding Shanxi Co., Ltd.
1.75 19.81 Sinopharm Xingsha Pharmaceuticals (Xiamen) Co., Ltd.
1.68 26.83 Sinopharm Group Shanghai Medicine Device Co., Ltd.
1.66 1.66 Sinopharm Holding Henan Co., Ltd.
1.64 15.27 Sinopharm Holding Liaocheng Co., Ltd.
1.62 1.62 Sinopharm ShanXi Ruifulai Pharmaceutical Co., Ltd.
1.59 1.59 Shanghai Shyndec Pharmaceutical Co., Ltd.
1.42 40.00 Changchun Changsheng Gene Pharmaceutical Co., Ltd.
1.42 1.42 Guilin South Pharmaceutical Co., Ltd.
1.17 3.64 Sinopharm Holding Ulanqab Co., Ltd.
0.95 - Sinopharm Holding Tianjin Co., Ltd.
0.89 0.89 Shanghai Chaohui Pharmaceutical Co., Ltd.
0.89 0.89 Wuhan Zhonglian Pharmaceutical Group Co., Ltd.
0.88 12.80 Sinopharm Jiayuan International Trading Co., Ltd.
0.40 3.61 Sinopharm Prospect Dentech (Beijing) Co., Ltd.
0.34 0.46 Sinopharm Holding Huaideju Pharmaceutical (Xiamen) Co., Ltd.
0.11 0.57 Beijing Huasheng Pharmaceutical Biotechnology Development Co., Ltd.
0.06 0.06 Shenzhen Zhijun Pharmaceutical Trade Co., Ltd.
0.05 2.00 Foshan Fengliaoxing Pharmaceutical Co., Ltd.
0.01 0.39 China Medical Investment Co., Ltd.
0.01 0.01 Sichuan Hexin Pharmaceutical Co., Ltd.
- 203.68 Shanghai Huayu Pharmaceutical Co., Ltd.
- 37.21 Handan Pharmaceutical Co., Ltd.
- 27.40 Sinopharm Holding Hunan Co., Ltd.
- 22.45 Qinghai Pharmaceutical (Group) Co., Ltd.
- 13.85 Shanghai Nutraceuticals (Shanghai) Co., Ltd.
- 8.09
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
8. Amounts due to related parties (Continued)
2016 2015RMB‘0,000 RMB‘0,000 Accounts payable (Continued)
Sinopharm Holding Beijing Tianxing Puxin Biological Medical Co., Ltd.
- 5.14 Sinopharm Holding Hainan Co., Ltd.
- 4.44 Sinopharm United Medical Device Co., Ltd.
- 3.47 Suzhou Erye Pharmaceutical Limited Company
- 2.72 Sinopharm Holding Guizhou Co., Ltd.
- 1.79 Sinopharm Group Chemical Reagent Co., Ltd.
- 1.66 Sinopharm Holding Yancheng Co., Ltd.
- 0.76 Sinopharm Group Chemical Reagent Suzhou Co., Ltd.
- 0.53 Sinopharm Holding Xinyu Co., Ltd.
- 0.38 Shanghai Xinshengyuan Pharmaceutical Co., Ltd.
- 0.30 Shanghai Sailun Biological Technology Co., Ltd.
- 0.29 Sinopharm Anhui Medical Instrument Co., Ltd.
- 0.18 Sinopharm Holding Lunan Co., Ltd.
- 0.11 - 0.01 Sinopharm Holding Huaian Co., Ltd.
42,669.91 57,149.73 2016 2015RMB‘0,000 RMB‘0,000 Notes payable
Sinopharm Holding Sub Marketing Center Co., Ltd.
26,806.54 2,062.97 Sinopharm Holding Shanxi Co., Ltd.
7,569.51 4,861.99 Sinopharm Group Co., Ltd.
3,978.13 8,662.47 Sinopharm Holding Shanxi Co., Ltd.
2,098.17 2,918.07 China National Medicines Co., Ltd.
2,051.22 830.86 Sinopharm Holding Xiamen Co., Ltd.
994.40 947.12 Chongqing Haisiman Pharmaceutical Co., Ltd.
551.75 44.20 China National Pharmaceutical Foreign Trade Co., Ltd.
484.50 - Sinopharm Lerentang Shijiazhuang Medicine Co., Ltd.
413.05 200.00
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
8. Amounts due to related parties (Continued)
2016 2015RMB‘0,000 RMB‘0,000 Notes payable (Continued)
Sinopharm Holding Fujian Co., Ltd.
375.57 232.36 Lanzhou Institute of Biological Products Co., Ltd.
360.00 180.00 Sinopharm Holding Tianjin Distribution Center Co., Ltd.
326.37 - Sinopharm Group (Tianjin) Eastern Bokang Pharmaceutical Co., Ltd.
236.33 86.75 Sinopharm Holding Hunan Co., Ltd.
220.51 1,005.78 Sinopharm Holding Ningxia Co., Ltd.
150.00 150.00 Main Luck Pharmaceutical
146.70 112.79 Sinopharm Holding Pingdingshan Co., Ltd.
129.87 - Sinopharm Holding Lerentang Pharmaceutical Co., Ltd
126.88 240.61 Chongqing Yaoyou Pharmaceutical Co., Ltd.
119.98 289.95 Shenzhen Wanwei Medicine trading Co., Ltd.
116.40 76.13 Sinopharm Holding Putian Co., Ltd.
102.75 73.59 Sinopharm Holding Shanxi Instrument Branch Co., Ltd.
102.52 102.44 Shanghai Shyndec Pharmaceutical Marketing Co., Ltd
46.93 26.98 Sinopharm Group Zhijun (Shenzhen) Pingshan Pharmaceutical Co., Ltd.
45.59 - Sinopharm Group Zhijun (Shenzhen) Pharmaceutical Co., Ltd.
42.71 - Winteam Pharmaceutical Group Ltd.
39.03 618.02 Guizhou Tongjitang Pharmaceutical Co., Ltd.
31.61 36.35 Sinopharm Group Rongsheng Pharmaceutical Co., Ltd.
22.87 10.20 Shenyang Hongqi Pharmaceutical Co., Ltd.
21.71 9.57 Anhui Jingfang Pharmaceutical Co., Ltd.
5.61 66.02 Jiangsu Wanbang Pharmacy Marketing Co., Ltd.
- 214.32 Sinopharm Lerentang Hebei Medical Instrument Trade Co., Ltd.
- 77.90 Guilin South pharmaceutical Co., Ltd.
- 9.63 - 2.40 Hunan Dongting Pharmaceutical Co., Ltd.
47,717.21 24,149.47
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
8. Amounts due to related parties (Continued)
2016 2015RMB‘0,000 RMB‘0,000 Other payables
China National Pharmaceutical Foreign Trade Co., Ltd.
3,058.32 12,860.00 Sinopharm Health Online Co., Ltd.
514.42 - Shenyang Pharmaceutical Co., Ltd.
511.25 408.25 Sinopharm Holding Lunan Co., Ltd.
500.00 - Guangdong Overseas Chinese Medical Investment Co., Ltd.
343.00 - Sinopharm Group Medicine Logistic Co., Ltd.
271.14 490.34 Sinopharm Group Co., Ltd.
262.22 25,805.84 China National Pharmaceutical Group Shanghai Co., Ltd.
166.04 470.62 Zhang Zhenfang
133.97 254.17 China Traditional Chinese Medicine Co.
130.00 130.00 Pingdingshan Pusheng Pharmaceutical Co., Ltd.
123.78 47.92 Lerentang Investment Group Co., Ltd.
100.00 - Sinopharm Le-Ren-Tang Medicine Co., Ltd.
73.99 39.42 Shanghai Beiyi Guoda Pharmaceutical Co. Ltd.
49.66 18.38 Beijing Golden Elephant Fosun Pharmaceutical Co., Ltd.
23.80 20.00 Sinopharm Holding Tianjin Binhai Pharmaceutical Co., Ltd.
17.23 2.49 Sinopharm Holding Sub Marketing Center Co., Ltd.
3.78 4.28 China National Scientific Instruments& Materials Imp/Exp
3.75 - Shenzhen Co., Ltd.
Quanzhou Xintai Biotech Co., Ltd.
3.56 3.56 Sinopharm Group Xinjiang Special Drugs National
2.40 - Pharmaceutical Co., Ltd.
Xinjiang Baitong Property Service Co., Ltd.
1.45 - China National Pharmaceutical Logistics Co., Ltd.
0.52 0.28 Beijing Tongyu Information Technology Co., Ltd.
0.44 - China National Medicines Co., Ltd.
0.04 0.04 China State Institute of Pharmaceutical Industry
- 1,369.00 Main Luck Pharmaceutical
- 50.00 Sinopharm Group Chemical Reagent Suzhou Co., Ltd.
- 30.00 Sinopharm Group Chemical Reagent Co., Ltd.
- 22.00
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
8. Amounts due to related parties (Continued)
2016 2015RMB‘0,000 RMB‘0,000 Other payables
Sinopharm Holding Hainan Hongyi Co., Ltd.
- 2.00 Sinopharm Holding Shanxi Co., Ltd.
- 1.00 Sinopharm Holding Tianjin Co., Ltd.
- 1.00 Sinopharm Group (Tianjin) Eastern Bokang
- 1.00 Pharmaceutical Co., Ltd.
Sinopharm Holding Fujian Co., Ltd.
- 0.54 Sinopharm Group Southwest Medicine Co., Ltd.
- 0.50 Sinopharm Holding Hubei Co., Ltd.
- 0.50 Sinopharm Holding Wuxi Co., Ltd.
- 0.50 Sinopharm Holding (Yangzhou) Chinese Western
- 0.50 Medicine Branch Co., Ltd.
Sinopharm Holding Suzhou Kangmin Pharmaceutical
- 0.50 Co., Ltd.
Sinopharm Zhuhai
- 0.30 - 0.12 Sinopharm Health Solutions (Shanghai) Co., Ltd.
6,294.76 42,035.05 2016 2015RMB‘0,000 RMB‘0,000 Advances from customers
Sinopharm Holding Gansu Co., Ltd.
15.38 0.20 Sinopharm Holding Tibet Pharmaceutical Co., Ltd.
15.05 - Sinopharm Holding Shenyang Co., Ltd.
5.42 - Sinopharm Guangdong Medical Examination Co., Ltd.
3.41 - Sinopharm Holding Heilongjiang Co., Ltd.
1.51 - Shanghai Merro Pharmaceutical Co., Ltd.
0.83 - Sinopharm Zhuhai
0.33 1.68 Sinopharm Holding Chengdu Co., Ltd.
0.21 0.15 Sinopharm Holding Chongqing Co., Ltd.
0.08 0.08 Sinopharm Sichuan Pharmaceutical Co., Ltd.
0.01 0.01 Sinopharm Holding Yunnan Co., Ltd.
- 14.44
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
8. Amounts due to related parties (Continued)
2016 2015RMB‘0,000 RMB‘0,000 Advances from customers (Continued)
Sinopharm Holding Jiangsu Co., Ltd.
- 0.80 Sinopharm Holding Xuzhou Co., Ltd.
- 0.57 Sichuan Kang Daxin Pharmaceutical Co., Ltd.
- 0.49 Sinopharm Holding Dezhou Co., Ltd.
- 0.47 Sinopharm Holding Suzhou Kangmin Pharmaceutical Co., Ltd.
- 0.32 Sinopharm Group Southwest Medicine Co., Ltd.
- 0.28 Sinopharm Holding Wenzhou Co., Ltd.
- 0.13 Winteam Pharmaceutical Group Ltd.
- 0.12 Sinopharm Holding Zhejiang Biological Product Co., Ltd.
- 0.05 - 0.01 Sinopharm Holding Hongkong International Co., Ltd.
42.23 19.80 2016 2015RMB‘0,000 RMB‘0,000 Interest payable
China National Pharmaceutical Group Corporation 3.78 5.02 Group Financial Co.
- 10.15 Sinopharm Group
- 9.63 - 4.83 China National Pharmaceutical Foreign Trade Co., Ltd.
3.78 29.63 Entrusted borrowings
China National Pharmaceutical Group Corporation 3,160.00 3,160.00 Sinopharm Group - 1,477.00 3,160.00 4,637.00
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
X. Related party relationships and transactions (Continued)
8. Amounts due to related parties (Continued)
2016 2015RMB‘0,000 RMB‘0,000 Short-term borrowings
Group Financial Co. 10,866.35 10,702.60 Other non-current liabilities
Sinopharm Group 3,506.17 3,506.17 Current portion of long-term borrowings
Sinopharm Holding Financing Lease Co., Ltd. 481.13 424.49 Long-term payables
Sinopharm Holding Financing Lease Co., Ltd. 1,461.66 1,378.57 Amounts due to related parties were interest-free and unsecured, with no fixed terms of repayment.
9. Cash deposit at related parties
2016 2015RMB‘0,000 RMB‘0,000 Group Financial Co. 3,782.94 1,557.27 In years 2016 and 2015, the interest rate for the deposit was30% above the benchmark interest rate.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(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 balance sheet are analyzed as follows:
31 December 2016 31 December 2015RMB‘0,000 RMB‘0,000 Buildings, machinery and equipment 23.37 4,346.58 (2) Operating lease commitments
The future minimum lease payments due under the signed irrevocable operating leases contracts are summarized as follows:
31 December 2016 31 December 2015RMB‘0,000 RMB‘0,000 Within one year 43,114.45 36,480.57 Between 1 and 2 years 32,506.44 26,315.44 Between 2 and 3 years 28,045.89 19,781.49 Over 3 years 53,853.64 44,402.97 157,520.42 126,980.47 2. Contingencies
As of the balance sheet date, there were no contingencies that the Group was required to disclose.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
XII Events after the balance sheet date
On 5 January 2017, the Group issued 5,323,043, 55,057,700 and 5,114,297 shares to China Pharma& Trade, Sinopharm Holding and Ping An Asset Management, respectively. After the issuance of shares, theGroup’s total number of shares became 428,126,983, and the shareholding held by Sinopharm Holding, China Pharma& Trade and Ping An Asset Management were56.06%,1.24% and1.19%, respectively. In February 2017, the Group has completed the transfer procedures of Pingshanbase’s land and property, which were disposed by the end of October 2016.
XIII Other significant events
1. Discontinued operations
The Group disposed Zhijun Suzhou in April 2016, and disposed its three pharmaceutical companies (Zhijun Medicine, Zhijun Trade and Zhijun Pingshan) in October 2016. Eventually, the Group discontinued the operation of pharmaceutical manufacturing segment.
Operating results in the whole reporting period and comparative period of the discontinued operations are as follows:
2016 2015
Operating revenue 1,191,942,579.54 1,677,317,417.22
Operating cost (688,856,485.91) (990,189,133.99)
Operating expense (253,005,011.65) (402,871,798.68)
Impairment loss (3,702,846.80) (7,291,966.85)
Non-operating income and expense 12,980,853.00 15,841,874.39
Total profit 259,359,088.18 292,806,392.09
Income taxes (42,529,060.22) (38,469,970.10)
Net profit 216,830,027.96 254,336,421.99
Incl: Net profit attributable to shareholders of
the parent 216,830,027.96 254,336,421.99
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
XIII Other significant events (Continued)
2. Segment reporting
Operating segments
For management purpose, the Group is organized into business units based on its product and service and has four reportable operating segments as follows:
a) The Head Office, which is mainly engaged in investing and managing business; 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 managing the operation of Guoda Pharmacy;
d) Pharmaceutical manufacturing segment, which is mainly engaged in the manufacturing of medicines.
Management monitors the results of theGroup’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 measure of adjusted profit before tax. The adjusted profit before tax is measured consistently with theGroup’s profit before tax except that finance costs, dividend income, non-operating income, non-operating expense, investment income, as well as 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.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
XIII Other significant events (Continued)
2. Segment reporting (Continued)
Operating segments (Continued)
Operating segment information as at and for the year ended 31 December 2016 is as follows:
Pharmaceutical Elimination between
Head Office Pharmaceutical distribution Retail Total manufacturing segments
Operating revenue 24,211,225.24 31,136,237,193.94 9,109,459,900.42 1,191,942,579.54 (213,421,576.23) 41,248,429,322.91 Incl: Revenue from external customers 7,729,535.27 30,949,800,259.34 9,109,220,322.96 1,181,679,205.34 - 41,248,429,322.91 Revenue from inter-segment
16,481,689.97 186,436,934.60 239,577.46 10,263,374.20 (213,421,576.23) - transactions
Interest income
82,204,766.73 9,864,397.65 10,294,488.10 1,467,660.54 (73,691,276.17) 30,140,036.85 Interest expense
(5,449,844.00) (189,754,274.32) (9,181,977.41) (3,086,958.75) 73,691,276.17 (133,781,778.31) Share of profits of associates
96,356,832.20 - 718,662.20 - - 97,075,494.40 Asset impairment
(111,289.35) 12,236,160.49 126,801.63 (3,702,846.80) - 8,548,825.97 Depreciation and amortization (6,438,712.76) (50,810,725.44) (95,747,764.24) (66,626,335.18) - (219,623,537.62) Gross profit
606,763,957.10 795,837,881.08 306,427,433.40 259,359,088.18 (368,131,235.50) 1,600,257,124.26 Income taxes
(652,486.15) (191,875,817.91) (83,319,453.50) (42,529,060.22) - (318,376,817.78) Net profit
606,111,470.95 603,962,063.17 223,107,979.90 216,830,027.96 (368,131,235.50) 1,281,880,306.48 - - Total assets 9,236,694,225.39 13,826,553,868.94 4,941,581,204.36 - (6,692,074,786.72) 21,312,754,511.97 Total liabilities (1,559,296,939.55) (9,733,475,750.45) (3,207,856,354.78) - 2,101,858,066.92 (12,398,770,977.86) Long-term equity investments in
1,393,968,857.78 - 19,065,307.78 - - 1,413,034,165.56 associates
Capital expenditure 1,352,998.47 232,119,650.42 153,297,144.17 72,028,283.04 - 458,798,076.10 310
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
XIII Other significant events (Continued)
2. Segment reporting (Continued)
Operating segments (Continued)
Operating segment information as at and for the year ended 31 December 2015 is as follows:
Pharmaceutical Pharmaceutical Elimination between
Head Office Retail Total distribution manufacturing segments
Operating revenue 12,316,571.20 28,331,471,498.73 7,991,735,833.29 1,677,317,417.22 (193,563,361.43) 37,819,277,959.01 Incl: Revenue from external
7,138,037.42 28,162,583,308.20 7,991,735,833.29 1,657,820,780.10 - 37,819,277,959.01 customers
Revenue from inter-segment
5,178,533.78 168,888,190.53 - 19,496,637.12 (193,563,361.43) - transactions
Interest income 80,709,236.38 7,180,784.57 10,121,998.18 1,866,561.42 (81,296,964.92) 18,581,615.63 Interest expense (7,814,558.58) (203,036,565.76) (11,976,142.09) (12,317,127.04) 81,296,964.92 (153,847,428.55) Share of profits of associates 57,413,887.70 - 1,130,765.48 - - 58,544,653.18 Asset impairment (743.90) (27,797,606.15) (24,446,717.80) (7,291,966.85) - (59,537,034.70) Depreciation and amortization (3,340,915.24) (53,611,776.49) (96,445,867.87) (71,144,698.65) - (224,543,258.25) Gross profit 621,786,776.69 705,778,320.16 196,936,874.39 292,806,392.09 (519,802,427.71) 1,297,505,935.62 Income taxes (13,299,365.55) (157,488,508.53) (58,299,339.83) (38,469,970.10) - (267,557,184.01) Net profit 608,487,411.14 548,289,811.63 138,637,534.56 254,336,421.99 (519,802,427.71) 1,029,948,751.61 Total assets 4,946,455,986.64 10,813,096,646.08 4,455,743,398.74 2,329,671,348.37 (2,231,631,685.29) 20,313,335,694.54 Total liabilities (829,482,043.08) (9,546,613,927.07) (2,927,912,086.67) (1,188,416,365.91) 2,050,799,970.74 (12,441,624,451.99) Long-term equity investments in
180,831,714.55 - 9,450,914.59 - - 190,282,629.14 associates
Capital expenditure 923,459.43 64,143,632.45 105,441,062.82 247,773,272.61 - 418,281,427.31 311
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
XIII Other significant events (Continued)
3. Leases
As the lessee
Finance Leases: At 31 December 2016, the balance of the unrecognized finance charge was RMB3,580,691.95 (2015: RMB4,231,008.72), which was amortized using the effective interest rate method over each 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: 2016 2015 Less than 1 year (Including 1 year) 7,309,963.96 5,787,868.00 1 to 2 years (Including 2 years) 7,309,963.96 5,787,868.00 2 to 3 years (Including 3 years) 7,309,963.96 5,787,868.00 Over 3 years 4,990,322.16 8,682,402.00 26,920,214.04 26,046,006.00 4. Comparative figures
As further explained in Note VI (3) to the financial statements, in current year, the Company obtained100% equity of Guoda Pharmacy, Foshan Nanhai, Guangdong Uptodate& Special Medicines entities under the common control of the parent company and51% equity of South Pharma& Trade, entity controlled by China Pharma& Trade (controlled by the same ultimate controlling party) from, Sinopharm Holding and China Pharma and Trade. Meanwhile, the Company purchases49% equity of South Pharma& Trade from eleven natural persons, its non-controlling shareholders with cash.
The comparative consolidated financial statements were prepared as if the combining entities which underwent the reorganization had been combined from the date when the combining entities first came under the control of the ultimate controlling party, and the comparative amounts of the consolidated financial statements of the Group shall be restated accordingly. Accordingly, certain prior year adjustments have been made, certain comparative amounts have been reclassified and restated. Because of the above business combination under the common control, theshareholders’ equity at the beginning of the year increased by RMB2,305,236,285.28, among which theshareholders’ equity attributable to the parent increased by RMB1,899,530,849.74, and the non-controlling interests increased by RMB405,705,435.54.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
XIV Notes to key items of the company financial statements
1. Accounts receivable
31 December 2016 31 December 2015 Accounts receivable 397,468,897.94 381,211,129.23 Less: Bad debt provision (117,320.70) (117,320.70) 397,351,577.24 381,093,808.53 (a) The aging of accounts receivable and the related provision for bad debts is analyzed below:
31 December 2016 31 December 2015
Amount Provision for bad debts Amount Provision for bad debts Within 1 year 397,351,577.24 - 381,211,129.23 (117,320.70) 1 to 2 years 117,320.70 (117,320.70) - - 397,468,897.94 (117,320.70) 381,211,129.23 (117,320.70) (b) There were no increase, no reversal and no write-off of provision for bad debt during the year 2016.
(c) The accounts receivable and related provision for bad debts by category are analyzed below:
31 December 2016 31 December 2015
Amount Provision for bad debts Amount Provision for bad debts% of total % of total
amount rate amount rate amount balance balance amount
Accounts
receivable
with similar
credit risk 397,351,577.2499.97% - - 381,093,808.5399.97% - - individually not
significant but
individually
evaluated for
impairment 117,320.70 0.03% (117,320.70)100.00% 117,320.70 0.03% (117,320.70)100.00% 397,468,897.94100.00% (117,320.70) 0.03% 381,211,129.23100.00% (117,320.70) 0.03% As at 31 December2016，there were no accounts receivable which were individually significant and for which the provision for bad debt was separately recognized.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
XIV Notes to key items of the company financial statements (Continued)
1. Accounts receivable (Continued)
(d) Provisions for impairment of the receivables which have a similar risk level are analyzed below:
31 December 2016 31 December 2015
Amount Provision for bad debts Amount Provision for bad debts amount% of total amount rate amount % of total amount rate balance balance
Within 1
year 397,351,577.24100.00% - - 381,093,808.53 100.00% - - 397,351,577.24100.00% - - 381,093,808.53 100.00% - - (e) As at 31 December 2016, the top five accounts receivable by customer are as follows:
Bad debt provision
Amount amount % of the total accounts receivable The Second People's Hospital of
Shenzhen 28,801,293.24 - 7.25% Shenzhen Nanshan District People's
Hospital 19,606,334.99 - 4.93% The University of Hong Kong -Shenzhen
Hospital 15,471,758.73 - 3.89% Shenzhen People's Hospital of Shenzhen
(Inpatient Department) 15,358,985.01 - 3.86% Peking University Shenzhen Hospital 11,734,383.49 - 2.95% 90,972,755.46 - 22.89% As at 31 December 2015, the top five accounts receivable by customer are as follows:
Bad debt provision
Amount amount % of the total accounts receivable Shenzhen Baoan District People's
Hospital 25,114,345.88 - 6.59% Shenzhen Longgang District Central
Hospital 18,877,632.52 - 4.95% Shenzhen People's Hospital of Shenzhen
(Inpatient Department) 15,109,152.28 - 3.96% The University of Hong Kong -Shenzhen
Hospital 13,600,725.92 - 3.57% The Second People's Hospital of
Shenzhen 12,488,965.99 - 3.28% 85,190,822.59 - 22.35% (f) Analysis of accounts receivable of which the recognition was terminated due to financial asset transfer is as follows:
In 2016, accounts receivable of RMB239,583,402.90 have been factored to financial institutes (2015: RMB80,000,587.29).
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
XIV Notes to key items of the company financial statements (Continued)
2. Other receivables
(a) The other receivables by category are listed below:
31 December 2016 31 December 2015 Amounts due from subsidiaries 1,648,231,739.31 1,609,726,719.07 Receivable from equity transaction 8,980,000.00 8,980,000.00 Deposit 76,622,091.41 2,024,119.45 Others 77,865,449.94 3,310,395.05 1,811,699,280.66 1,624,041,233.57 Less: provision for bad debts (10,131,429.16) (10,178,577.40) 1,801,567,851.50 1,613,862,656.17 (b) The ageing of other receivables and related provision for bad debts is analyzed below:
31 December 2016 31 December 2015 Within 1 year
1,800,748,688.50 1,613,089,025.61 1 to 2 years 977,989.25 814,347.96 2 to 3 years 2,978.96 - Over 3 years 9,969,623.95 10,137,860.00 1,811,699,280.66 1,624,041,233.57 (c) Changes in provision for bad debts are presented as follows:
Opening balance Reversal Closing balance
2016 10,178,577.40 (47,148.24) 10,131,429.16 2015 10,179,321.30 (743.90) 10,178,577.40
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
XIV Notes to key items of the company financial statements (Continued)
2. Other receivables (Continued)
(d) Other receivables and related provision for bad debts by category are analyzed below:
31 December 2016 31 December 2015
Carrying amount Bad debt provision Carrying amount Bad debt provision% of % of
total total
amount amount amount rate amount amount amount rate Individually
significant and
subject to
separate
impairment
assessment 8,980,000.000.50% (8,980,000.00)100.00% 8,980,000.000.55% (8,980,000.00)100.00% Receivable
accounts with
similar credit
risk 1,800,978,937.7199.40% (11,661.41)0.01% 1,613,903,373.5799.38% (40,717.40)0.00% Individually not
significant but
individually
evaluated for
impairment 1,740,342.950.10% (1,139,767.75)65.49% 1,157,860.000.07% (1,157,860.00)100.00% 1,811,699,280.66100.00% (10,131,429.16)0.56% 1,624,041,233.57100.00% (10,178,577.40)0.63% (e) As at 31 December 2016, impairment provision for other receivables individually significant is analyzed as follows:
Assessment for Amount Bad debt provision Rate impairment Shenzhen Yinghai Technology Uncertainty in Investment Co., Ltd.
8,980,000.00 (8,980,000.00) 100.00%
recoverability As at 31 December 2015, impairment provision for other receivables individually significant is analyzed as follows:
Assessment for Amount Bad debt provision Rate impairment Shenzhen Yinghai Technology Uncertainty in Investment Co., Ltd.
8,980,000.00 (8,980,000.00) 100.00%
recoverability (f) Provisions for impairment of the receivables which has similar credit risk are analyzed below:
31 December 2016 31 December 2015
Carrying amount Bad debt provision Carrying amount Bad debt provision Amount Amount Rate Amount Amount Rate Within 1
year 1,800,748,688.50 1,613,089,025.61 - - 1 to 2 years 227,270.25 (11,363.51) 5.00% 814,347.96 (40,717.40) 5.00% 2 to 3 years 2,978.96 (297.90) 10.00% - - - 1,800,978,937.71 (11,661.41) 0.00% 1,613,903,373.57 (40,717.40) 0.00%
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
XIV Notes to key items of the company financial statements (Continued)
2. Other receivables (Continued)
(g) As at 31 December 2016, the accumulated top five other receivables by customer are analysed below:
% of the total Bad debt Nature Amount Aging other receivable provision Entrusted Within 1 year
Sinopharm Guangzhou borrowings 447,000,000.00 24.67% - Entrusted Within 1 year
Sinopharm Yuexing borrowings 252,700,000.00 13.95% - Entrusted Within 1 year
Sinopharm Zhanjiang borrowings 138,000,000.00 7.62% - Entrusted Within 1 year
Sinopharm Dongguan borrowings 96,000,000.00 5.30% - Dong Fang Uptodate& Entrusted Within 1 year
Special Medicines Co., borrowings
Ltd. 91,400,000.00 5.04%
1,025,100,000.00 56.58%
- As at 31 December 2015, the accumulated top five other receivables by customer are analysed below:
% of the total Bad debt Nature Amount Aging other receivable provision Entrusted Within 1 year
Sinopharm Guangzhou borrowings 340,010,536.19 20.94% - Entrusted Within 1 year
Sinopharm Yuexing borrowings 209,700,000.00 12.91% - Entrusted Within 1 year
Suzhou Zhijun borrowings 177,949,000.00 10.96% - Entrusted Within 1 year
Sinopharm Zhanjiang borrowings 138,000,000.00 8.50% - Entrusted Within 1 year
Sinopharm Dongguan borrowings 86,000,000.00 5.30% - 951,659,536.19 58.61%
- 3. Long-term equity investments
31 December 2016 31 December 2015 Investments in subsidiaries (a) 4,590,216,730.30 2,735,399,494.38 Investments in associates (b) 1,364,255,871.80 180,831,714.55 5,954,472,602.10 2,916,231,208.93 Less: provision for impairment of long -
term equity investments (39,930,000.00) (121,000,000.00) 5,914,542,602.10 2,795,231,208.93 The long-term equity investments of the Company are not subject to restriction on conversion into cash.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(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 investment Increases Equity interest held Voting rights held cost 31 December 2015 in in vestment cost 31 December 2016 (%) (%) Zhijun Medicine
73,903,284.87 204,366,933.09 (204,366,933.09) - 0 0 Sinopharm Jianming
45,054,911.04 60,054,911.04 - 60,054,911.04 100 100 Sinopharm Shenzhen
5,400,000.00 15,450,875.93 - 15,450,875.93 100 100 Material
Shenzhen Logistics
900,000.00 5,019,062.68 - 5,019,062.68 100 100 Sinopharm Guangzhou
58,283,114.68 1,035,440,323.63 - 1,035,440,323.63 100 100 Zhijun Trade
3,006,866.42 11,116,866.42 (11,116,866.42) - 0 0 Sinopharm Hengxing
8,421,544.08 45,763,288.00 - 45,763,288.00 100 100 Sinopharm Liuzhou
21,407,965.79 21,407,965.79 - 21,407,965.79 51 51 Sinopharm Dongguan
2,742,000.00 17,942,000.00 - 17,942,000.00 100 100 Huixin Investment
109,416,937.72 64,416,937.72 - 64,416,937.72 100 100 Guangdong Logistics
1,269,502.30 10,596,006.21 - 10,596,006.21 100 100 Sinopharm Yuexing
16,459,326.27 113,459,326.27 - 113,459,326.27
100 100 Sinopharm Foshan 6,995,065.51 19,995,065.51 - 19,995,065.51 100 100 Zhijun Suzhou 134,250,000.00 265,900,000.00 (265,900,000.00) - 0 0 Sinopharm Guangxi 33,048,985.28 504,048,985.28 - 504,048,985.28 100 100 Sinopharm Zhanjiang 1,369,864.65 70,769,864.65 - 70,769,864.65 100 100 Sinopharm Yanfeng 38,207,800.00 38,207,800.00 - 38,207,800.00 51 51 Sinopharm Meizhou 4,481,900.00 21,281,900.00 - 21,281,900.00 100 100 Pingshan Medicine 37,850,830.38 38,387,182.16 (38,387,182.16) - 0 0 Sinopharm Huizhou 20,939,177.19 16,644,200.00 - 16,644,200.00 100 100 Sinopharm Zhaoqing 5,060,000.00 18,060,000.00 - 18,060,000.00 100 100 Sinopharm Jiangmen 56,000,000.00 106,000,000.00 - 106,000,000.00 100 100 Sinopharm Zhongshan 10,000,000.00 10,000,000.00 - 10,000,000.00 100 100 Sinopharm Shaoguan 13,580,000.00 13,580,000.00 - 13,580,000.00 70 70
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
XIV Notes to key items of the company financial statements (Continued)
3. Long-term equity investments (Continued)
(a) Subsidiaries (Continued)
Increases Equity interest Voting rights Original investment cost 31 December 2015 in investment cost 31 December 2016 held(%) held(%) Sinopharm Shantou 7,490,000.00 7,490,000.00 3,500,000.00 10,990,000.00 100 100 Guangdong South
Pharmaceutical Foreign
Trade Co., Ltd.(i) 401,922,976.68 - 401,922,987.18 401,922,987.18 100 100 Guangdong Uptodate&
Special Medicines(i) 144,682,822.34 - 144,682,822.34 144,682,822.34 100 100 Guoda Pharmacy(i) 1,361,800,110.06 - 1,361,800,110.06 1,361,800,110.06 100 100 Foshan Nanhai Medicine Co.,
Ltd.(i) 462,682,298.01 - 462,682,298.01 462,682,298.01 100 100 2,735,399,494.38 1,854,817,235.92 4,590,216,730.30 100 100 (i) The Company purchased100% of the equity of Guoda Pharmacy, Foshan Nanhai, Guangdong Uptodate& Special Medicines and51% of the equity of South Pharm& Trade from the parent company, Sinopharm Holding, and the related party, Sinopharm Trade respectively, with consideration of non-public issuance of 55,060,000 common shares (A shares). Meanwhile, the Company purchased49% of the equity South Pharm& Trade from 11 natural person minority shareholders with cash. After the significant reorganization, the Company holds100% equity interests of these four companies (note VI (3.1)).
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(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)
(c) Associates
Movement
Equity Voting
31 December Profit or loss under Provision of interest rights Explanation for the inconsistence between 2015 Investment the equity method Dividend declared Other 31 December 2016 impairment held(%) held(%) equity interest held and voting rights held Note V(52)
Board of the directors is the highest decision making organization, which is formed by 2 Main Luck shareholders of Main Luck Pharmaceutical Pharmaceutical 179,5 67,519.13 62,881,567.77 (35,190,000.00) 207,259,086.90 - 35.19 33.33 evenly Sinopharm Zhuhai
(i) 1,2 64,195.42 155,944.54 - 1,420,139.96 - 10.00 10.00 N/A Zhijun Suzhou (ii) - (6,398,353.00) - 46,328,353.00 39,930,000.00 39,930,000.00 33.00 33.00 N/A Zhijun Medicine(iii) - 113,426,313.65 (216,661,020.11) 278,055,118.53 174,820,412.07 - 49.00 49.00 N/A Zhijun Trade (iii) - 1,457,049.07 (1,205,306.51) 5,947,077.84 6,198,820.40 - 49.00 49.00 N/A Pingshan Medicine - 22,130,987.29 - 24,956,971.02 47,087,958.31 - 49.00 49.00 N/A Shanghai Shyndec
Pharmaceutical
Co., Ltd. - 871,794,861.65 16,104,358.86 - (359,766.35) 887,539,454.16 - 15.56 15.56 N/A 180,8 31,714.55 871,794,861.65 209,757,868.18 (253,056,326.62) 354,927,754.04 1,364,255,871.80 39,930,000.00
(i) The highest authority of Sinopharm Zhuhai is the shareholders' committee, and the shareholders exercise their voting rights according to their investment proportion. Meanwhile, Sinopharm Zhuhai has set up the board of directors which is responsible to the shareholders, with three members in total, and the Company delegates one member. Each member has one voting right, and all of the resolutions of the board of directors should be passed by at least half of the directors.
(ii) The Group disposed its67% equity interest of Zhijun Suzhou on 26 April 2016. After the disposal, the Group held33% equity interest of Zhijun Medicine (NoteⅥ (2)). Pursuant to the Articles of Association, the Board of Directors of Zhijun Suzhou consisted of five directors, in which one was appointed by the Group, accounting for33.33% of the voting rights. As a result, the Group had significant influence over Zhijun Suzhou and thus it was considered as an associate of the Group.
(iii) The Group subscribed15.56% of new issued shares of Shyndec Pharmaceutical, a related party, by the transferring of the productive assets in Pingshan base and its51% equity interest of three pharmaceutical companies of the Group respectively in 2016. After the completion of the reorganization, Shyndec Pharmaceutical holds a51% equity interest of each of the three pharmaceutical companies, and the Group holds a49% equity interest of each of the three pharmaceutical companies, which has significant influence over the three pharmaceutical companies.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(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
2016 2015 Revenue of main operations 3,111,734,107.06 2,848,396,914.05 Other operating income 27,120,511.91 15,263,487.42 3,138,854,618.97 2,863,660,401.47 2016 2015 Cost of main operations 2,981,861,246.08 2,728,942,557.82 Other operating expenses 22,488,385.61 8,967,540.02 3,004,349,631.69 2,737,910,097.84 Revenue and cost of main operation
Revenue and cost of main operations analyzed by industries are set out below:
2016 2015
Revenue of main Cost of main Revenue of main Cost of main operations operations operations operations Medical wholesale
and retail 3,111,734,107.06 2,981,861,246.08 2,848,396,914.05 2,728,942,557.82 Other operating income and expenses
Other operating income and expenses analyzed by industries are set out below:
2016 2015
Other operating Other operating Other operating Other operating income cost income cost Rental income 22,341,100.64 18,099,321.43 9,790,090.30 4,398,831.68 Rendering of
services 4,779,411.27 4,389,064.18 5,473,397.12 4,568,708.34 27,120,511.91 22,488,385.61 15,263,487.42 8,967,540.02
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
XIV Notes to key items of the company financial statements (Continued)
5. Investment income
2016 2015 Gain on long-term equity investment
under cost method 315,836,157.58 514,513,119.53 Gain on long-term equity investment
under equity method (Note
XIV(3)(b)) 209,757,868.18 57,413,887.70 Investment income from disposal of
other long-term equity investments 63,351,000.00 - 588,945,025.76 571,927,007.23 There is no major restriction on the collection of the gains on investments.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Supplementary information to financial statements
For the Year ended 31 December 2016
(All amounts in Renminbi “RMB” unless otherwise stated)
Supplementary information to financial statements
1. Schedule of non-recurring profit or loss
Amount for 2016 Gains and losses from disposal of non-current assets,
including write off of accrued asset impairment 11,931,729.24 Government grants recognized in 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 34,000,702.25 Net profit and loss arising from the subsidiaries acquired in the business combinations
involving enterprises under common control for the period from the beginning of the
reporting period to the combination date 260,527,573.39 Reversal of bad debt provision for accounts receivable that were tested for
impairment individually 5,952,565.52 Profit or loss from outward entrusted borrowings 2,880,583.33 Income from entrusted management services 393,081.77 Non-operating income and expenses other than afore said items 6,300,281.94 Investment income from disposal of other long-term equity investments 86,674,065.35 Gain on revaluation of remaining equity at fair value after losing control 35,080,116.91 443,740,699.70 Impact on income tax (28,392,824.03) Impact on non-controlling interests after tax (63,247,899.78) 352,242,549.47 Basis for preparation of detailed list of non-recurring profit or loss items:
Under the requirements in Explanatory announcement No. 1 on information disclosure by companies offering securities to the public– non-recurring profit or loss (2008) (“Explanatory announcement No.1”) from CSRC, nonrecurring profit or loss refer 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 judgments on the performance and profitability of an enterprise.
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) 2016
Net profit attributable to ordinary shareholders of the parent 15.06 2.80 Net profit after deducting non-recurring profit or loss attributable
13.26 2.23 to theCompany’s ordinary shareholders of the parent
2015
Net profit attributable to the ordinary shareholders of the parent 13.43 2.19 Net profit after deducting non-recurring profit or loss attributable
13.70 1.96 to the ordinary shareholders of the parent
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 2016 (2015: Nil) hence no presentation of diluted EPS were provided.
Section XII. Documents available for Reference
1. Accounting Statement carrying the signatures and seals of the legal representative, financial chief and person in charge of accounting;
2. Original ofAuditors’ Report carrying the seals of Certified Public Accountants, and signatures and seals of the CPAs;
3. Originals of all the documents and notifications of the Company ever disclosed in the report period in Securities Times, China Securities Journal and Hong Kong Commercial Daily designated by CSRC; 4. Original of the Annual Report carrying the signature of the Chairman of the Board.
5. The Place Where the document placed: Office of Secretariat of the Board of Directors, Accord Pharm Bldg., No. 15, Ba Gua Si Road, Futian District, Shenzhen.