China National Accord Medicines Corporation Ltd.
Semi-Annual Report 2020
August 2020
1
Section I. Important Notice, Contents and Interpretation
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, Gu Guolin, person in charger of
accounting works and Wang Ying, person in charge of accounting organ
(accounting principal) hereby confirm that the Financial Report of Semi-
Annual Report 2020 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
Lian Wanyong Director Official business Li Dongjiu
The Company plans not to pay cash dividends, bonus and carry out capitalizing
of common reserves.
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Contents
Semi-Annual Report 2020..................................................................................................................2
Section I Important Notice, Contents and Interpretation.............................................................. 2
Section II Company Profile and Main Financial Indexes...............................................................5
Section III Summary of Company Business.................................................................................... 9
Section IV Discussion and Analysis of the Operation................................................................... 13
Section V Important Events............................................................................................................ 33
Section VI Changes in shares and particular about shareholders............................................... 61
Section VII Preferred Stock.............................................................................................................66
section VIII Convertible Bonds.......................................................................................................67
Section IX Particulars about Directors, Supervisors and Senior Executives ........................... 68
Section X Corporate bond............................................................................................................... 69
Section XI Financial Report............................................................................................................ 70
Section XII Documents available for reference........................................................................... 315
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Interpretation
Items Refers to Contents
Listed Company, Company, the Company,
Refers to China National Accord Medicines Corporation Ltd.
Sinopharm Accord, the Group
SINOPHARM Refers to China National Pharmaceutical Group Corporation
Sinopharm Holding Refers to Sinopharm Group Co., Ltd, Controlling shareholder of the Company
Company Law Refers to Company Law of the People’s Republic of China
Securities Law Refers to Securities Law of the People’s Republic of China
Yuan, 10 thousand Yuan, 100 million Yuan Refers to RMB, RMB 10 thousand, RMB 100 million
Terminology: Refers to
SPD hospital logistics supply chain extension business, IVD diagnostic
4D business Refers to reagent business, CSSD disinfection service, and MWD equipment life
cycle management business
GPO Refers to Group purchasing organizations
Abbreviation: Refers to
Sinopharm Holding Guangzhou Refers to Sinopharm Holding Guangzhou Co., Ltd.
Guoda Drugstore Refers to Sinopharm Holding Guoda Drugstore Co., Ltd.
Sinopharm Holding Guangxi Refers to Sinopharm Holding Guangxi Co., Ltd.
Foshan Nanhai Refers to Foshan Nanhai Pharmaceutical Group Co., Ltd.
Nanfang Pharmaceutical Foreign Trade Refers to Guangdong Nanfang Pharmaceutical Foreign Trade Co., Ltd.
China National Zhijun, Zhijun
Refers to China National Zhijun (Shenzhen) Pharmaceutical Co., Ltd.
Pharmaceutical
Zhijun Pharmacy Trade Refers to Shenzhen Zhijun Pharmacy Trade Co., Ltd.
Zhijun Pingshan, Pingshan Pharmaceutical Refers to China National Zhijun (Shenzhen) Pingshan Pharmaceutical Co., Ltd.
Main Luck Pharmaceuticals Refers to Shenzhen Main Luck Pharmaceuticals Inc.
Shanghai Dingqun Refers to Shanghai Dingqun Enterprise Management Consulting Co., Ltd.
Jilin Tianhe Refers to Sinopharm Holding Tianhe Jilin Pharmaceutical Co., Ltd.
Yanghetang Refers to Shanghai Yanghetang Pharmaceutical Chain Management Co., Ltd.
Pudong Medicine Refers to Pudong New Area of Shanghai Pharmaceutical Medicine Ltd.
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Section II. Company Profile and Main Financial Indexes
I. Company profile
Short form of the stock Sinopharm Accord, Accord B Stock code 000028, 200028
Stock exchange for listing Shenzhen Stock Exchange
Name of the Company (in
国药集团一致药业股份有限公司
Chinese)
Short form of the Company
国药一致
(in Chinese if applicable)
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
II. Person/Way to contact
Secretary of the Board Representative of security affairs
Name Chen Changbing Wang Zhaoyu
Accord Pharm. Bldg., No. 15, Ba Gua Si Accord Pharm. Bldg., No. 15, Ba Gua Si
Contact add. Road, Futian District, Shenzhen, Road, Futian District, Shenzhen,
Guangdong Province Guangdong Province
Tel. +(86)755 25875195 +(86)755 25875222
Fax. +(86)755 25195435 +(86)755 25195435
E-mail gyyzinvestor@sinopharm.com gyyz0028@sinopharm.com
III. Others
1. Way of contact
Whether registrations address, offices address and codes as well as website and email of the Company changed in reporting period or
not
□ Applicable √ Not applicable
Registrations address, offices address and codes as well as website and email of the Company has no change in reporting period,
found more details in Annual Report 2019.
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2. Information disclosure and preparation place
Whether information disclosure and preparation place changed in reporting period or not
□ Applicable √ Not applicable
The newspaper appointed for information disclosure, website for semi-annual report publish appointed by CSRC and preparation
place for semi-annual report have no change in reporting period, found more details in Annual Report 2019
IV. Main accounting data and financial indexes
Whether it has retroactive adjustment or re-statement on previous accounting data
√ Yes □No
Cause of retroactive adjustment or restatement
Enterprises combined under the same control
Increase/decrease in
Same period of last year
Current period this report y-o-y (+,-)
Before adjustment After adjustment After adjustment
Operating revenue (RMB) 27,169,940,188.52 25,228,147,377.43 25,599,198,815.30 6.14%
Net profit attributable to shareholders of the
643,451,580.59 650,833,360.40 649,154,414.55 -0.88%
listed Company (RMB)(note 1)
Net profit attributable to shareholders of the
listed Company after deducting 627,017,019.45 639,700,447.95 639,700,447.95 -1.98%
non-recurring gains and losses (RMB)
Net cash flow arising from operating
1,438,204,043.35 1,163,757,581.35 1,139,154,120.89 26.25%
activities (RMB)
Basic earnings per share (RMB/Share) (note
1.50 1.52 1.52 -1.32%
1)
Diluted earnings per share (RMB/Share) 1.50 1.52 1.52 -1.32%
Decline 0.47
Weighted average ROE (note 1) 4.91% 5.44% 5.38%
percentage points
Increase/decrease in
this report-end over
End of current End of last period
that of last
period
period-end (+,-)
Before adjustment After adjustment After adjustment
Total assets (RMB) 37,669,850,203.30 33,539,598,682.94 34,028,843,214.20 10.70%
Net assets attributable to shareholder of
13,199,983,119.01 12,140,439,917.48 12,911,140,435.88 2.24%
listed Company (RMB)
Note: The Group acquired 75.00% equity of Pudong New Area of Shanghai Pharmaceutical Medicine Ltd. under the same control in
the current year. When preparing the comparative statement of the 2020 semi-annual consolidated statement, it is deemed that the
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parties involved in the merger already exist in the current state when the ultimate controlling party begins to exercise control, and
adjust the previous comparative statement.
Note 1: Net profit attributable to shareholders of listed companies decreased by 0.88% from the same period of last year, mainly due
to the impact of the novel coronavirus pneumonia epidemic, the sales growth of the Group slowed down. At the same time, changes
in industry policies have also led to a narrowing of profit margins, as a result, the basic earnings per share earnings fell by 1.32%, and
the weighted average return on equity fell by 0.47%.
V. 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 both IAS (International Accounting
Standards) and Chinese GAAP (Generally Accepted Accounting Principles)
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 both foreign accounting rules and
Chinese GAAP (Generally Accepted Accounting Principles)
VI. Items and amounts of extraordinary profit (gains)/loss
√ Applicable □ Not applicable
In RMB
Item Amount Note
Gains/losses from the disposal of non-current asset (including the Mainly probability of gain and
3,933,705.37
write-off that accrued for impairment of assets) losses from the end of lease .
Governmental subsidy calculated into current gains and
Mainly probability of special
losses(while closely related with the normal business of the
28,001,035.78 subsidies received in the period
Company, excluding the fixed-amount or fixed-proportion
and tax reduction & exemption
governmental subsidy according to the unified national standard)
Reversal of impairment reserve for account receivable with
362,078.91
separate impairment testing
Consigning fee received for consigned operation 961,488.75
Other non-operating income and expenditure except for the
1,233,502.85
aforementioned items
Other gains/losses satisfy a definition of extraordinary 819,788.51
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gains/losses
Less: impact on income tax 8,198,319.82
Influenced amount of minority shareholders’ equity (after
10,678,719.21
tax)
Total 16,434,561.14 --
Concerning the extraordinary profit (gain)/loss defined by Q&A Announcement No.1 on Information Disclosure for Companies
Offering Their Securities to the Public --- Extraordinary Profit/loss, and the items defined as recurring profit (gain)/loss according to
the lists of extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their
Securities to the Public --- Extraordinary Profit/loss, explain reasons
□ Applicable √ Not applicable
In reporting period, the Company has no particular about items defined as recurring profit (gain)/loss according to the lists of
extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their Securities to
the Public --- Extraordinary Profit/loss
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Section III. Summary of Company Business
I. Main businesses of the company in the reporting period
The Company complies with the disclosure requirement of Information Disclosure Guidelines for the Shenzhen Stock Exchange No.
8- Listing Company Engaged in Retailing Industry
In the reporting period, the main business of Sinopharm Accord includes pharmaceutical distribution and
pharmaceutical retail, specifically as follows:
(i) In the pharmaceutical distribution field, the company continues to integrate the distribution and logistics
business, deeply penetrates into the end markets, improves the stepped distribution network, creates intelligent
supply chain, and devotes to become a provider for pharmaceutical and health care products and services with the
strongest influence, the highest share, the most complete variety, the best service, and the fastest delivery in south
district of China.
1. The Company’s pharmaceutical distribution business is established in Guangdong and Guangxi with its network
extents to the county-level region and realizes the whole network operation. The network further expanded in
2020 which including: as of 30 June 2020, there are 975 second- and third-tier medical institutions, 6,319
primary-level medical customers, and 4,881 retail terminal customers (chain pharmacies, single stores, and
self-paying pharmacies in hospitals).
2. The Company’s pharmaceutical distribution business has achieved the first scale in Guangdong and Guangxi
and the leading position in market segment of Guangdong and Guangxi, and has obtained the relatively leading
position in vaccine, instrument, and e-commerce industries.
(ii) In the pharmaceutical retail field, Guoda Drugstore is a pharmaceutical retail enterprise that ranks the first in
the sales volume throughout the country, and is one of the few enterprises in China with national direct sales drug
retail network.
As of 30 June 2020, Guoda Drugstore has operated 5,838 stores, covering 22 provinces, autonomous regions and
municipalities, entering nearly 75 large and medium sized cities, which has formed a drugstore networks covering
eastern and northern China, southern coastal cities, and gradually expanded into northeast, central plains and
inland cities, ranking the first within industry; Guoda drugstore, the business of which were mainly relying on
modern retail drugstores, has been putting great attention on the development of professional service system with
medical resources as core competitiveness, building a group of stores with professional commercial activities,
which are able to provide retails and therapy services that integrating medical service and health-care products
sales and cooperate with hospitals; at the same time, the Company has been vigorously developing new business,
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exploring and expanding new sales channels, improving professional services, being dedicated to transit from a
traditional medical retail into an innovative service enterprise. By means of conventional products retail
management, improving major brands and exploring business cooperation with supplier, accelerating the
establishment and improvement of DTP business and continuation of health care service system, Guoda has built
industry-leading professional service ability.
II. Major changes in main assets
1. Major changes in main assets
Major assets Note of major changes
Increased 37.0472 million yuan over that of period-begin with 1.67% rata of change, there are no major
Equity assets
changes during the reporting period.
Increased 8.8469 million yuan over that of period-begin with 1.25% rata of change, there are no major changes
Fixed assets
during the reporting period.
Increased 233.2735 million yuan over that of period-begin with 62.24% rata of change, the new sells network,
Intangible assets trademarks and brand rights are recognized due to the acquisition of Shanghai Dingqun Enterprise
Management Consulting Co., Ltd in the Period.
Decreased 2.582 million yuan over that of period-begin with -8.18% rata of change, mainly because the
Construction in
completion of ERP software installation are transfer to intangible assets and the supply chain extension project
progress
transfer to fixed assets.
Decreased 390.6618 million yuan over that of period-begin with -49.25% rata of change, mainly because
Note receivable affected by GPO policy, purchasing mode of hospital customers changes, and the settlement mode change
accordingly.
Increased 3179.7116 million yuan over that of period-begin with 29.68% rata of change, mainly because due to
Account receivable the COVID-19 epidemic and market environment, collection of account receivables is affected. and receivable
increased at end of the period for newly combined in the Company.
Increased 554.8737 million yuan over that of period-begin with 54.93% rata of change, mainly resulted by the
Goodwill acquisition of Shanghai Dingqun Enterprise Management Consulting Co., Ltd by subsidiary-Guoda Drugstore
in the Period.
Increased 256.6312 million yuan over that of period-begin with 331.76% rata of change, mainly caused by the
Other non-current
purchase of special emergency supplies at the request of the government for the prevention and control of
assets
COVID-19.
2. Main overseas assets
□ Applicable √ Not applicable
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III. Core competitiveness analysis
1. Strong network coverage and layout
Relying on comprehensive distribution networks and variety resources, Sinopharm Accord has continued to
optimize the efficiency of the supply chain by promoting the integration of wholesale and retail resources in
recent years. The company has complete pharmaceutical distribution networks in Guangdong and Guangxi,
covering the second and third-tier medical institutions and retail chain terminals in Guangdong and Guangxi, and
continuously promotes the extension of channels to the retail side. In the first half of 2020, the sales volume of the
company's retail direct sales, small-scale social medical services, etc. have achieved rapid growth.
Sinopharm Accord has retail network leading in scale and covering the whole country, Guoda Drugstore has retail
chain network spreading over 22 provinces, autonomous regions and municipalities directly under the Central
Government, covering 75 large and medium-sized cities nationwide.
2. Abundant variety resources
In the pharmaceutical distribution, the company has established extensive cooperative relations with thousands of
domestic manufacturers and commercial enterprises and established stable business relationships with hundreds of
import and joint venture manufacturers, and has rich variety resources.
Guoda Drugstore operates nearly 120,000 merchandises. With its relatively comprehensive purchasing network
and years of experience in commodity management, Guoda Drug Store has established a merchandise system with
wide coverage, high professionalization, and rich varieties.
3. Complete logistics and distribution system
Sinopharm Accord distribution adopts supply chain management and warehouse management solutions system, it
has built large-scale first-grade logistics centers in Guangzhou, Nanning, Shenzhen and other places and
established distribution centers in Guangdong and Guangxi which has formed ladder logistics and distribution
networks, it is the first enterprise in Guangdong and Guangxi that has achieved the third-party logistics
qualification and has the professional pharmaceutical logistics capabilities with the largest scale, the most
extensive network, and the most complete modes in southern China.
Guoda Drugstore has a nationwide modern logistics and distribution system, and the logistics warehouses are
located in 17 provinces, has 30 large-and-small logistics warehouses, covering an area of about 113,800 square
meters in total.
The company conducts scientific planning for the logistics network in Guangdong and Guangxi, which adapts to
the wholesale and retail integration strategy of Sinopharm Accord, supports the construction of the national
emergency material guarantee system; the company modernizes the original warehouses, and uses robots and
other automation technologies to improve productivity.
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4. The advantages of medical insurance resources
Regarding medicine retails, the subsidiaries of Guoda Drugstore have featured generally higher medical insurance
acquiring ability, with higher medical insurance sales ratio and steady operation.
5. The advantages of Compliance
In the process of operation and management, the company always emphasizes and strictly requires legal
compliance, which has a great advantage in the face of current situation of tighter policy supervision.
6. Unique-influence Sinopharm brand
Brand of the Company and distribution, industry child-brand and controlling shareholder and actual controller’s
brand come down in one continuous line, depending on powerful force of central enterprises, the Company’s
popularity and influence are prominent day by day in the industry.
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Section IV. Discussion and Analysis of Business
I. Introduction
In the first half of 2020, in the face of the sudden novel coronavirus pneumonia epidemic, all employees of
Sinopharm Accord fully implemented the original intention and mission of the pharmaceutical central enterprise
and gave full play to the role of the national team and main force of the pharmaceutical central enterprise.
Affected by the novel coronavirus epidemic, on the one hand, public medical institutions were directly affected
during the epidemic, mainly reflected in the general decrease in outpatients, the sharp decline in hospitalization
and surgery, the sharp decline in hospital operating income, and the sharp decline in the purchase of drugs and
instruments; on the one hand, the epidemic brought about changes in consumer habits, people reduced the
frequency of going out, and the flow of people reduced, the sales volume of prescription drugs in hospitals and
pharmacies decreased significantly. At the same time, citizens have generally tried e-commerce online business,
and online retail pharmaceutical sales have shown a rapid growth trend. Under the overall operating pressure, in
the first half of 2020, the company completed a total of 27.17 billion yuan in operating revenue, a year-on-year
increase of 6.14%; realized operating profit of 1.014 billion yuan, a year-on-year increase of 5.94%; net profit
attributable to shareholders of listed companies was 643 million yuan, a year-on-year decrease of 0.88%.
Among them, the distribution business of Sinopharm Accord cumulatively completed operating revenue of 18.982
billion yuan, a decrease of 2.54% on a year-on-year basis, and realized a net profit of 405 million yuan, an
increase of 0.38% on a year-on-year basis.
Guoda Drugstore cumulatively completed a total of 8.613 billion yuan in operating revenue, a year-on-year
increase of 32.94%, and realized a net profit of 248 million yuan, a year-on-year increase of 33.96%. Guoda
Drugstore’s cumulative net profit attributable to the parent company was 180 million yuan, a year-on-year
increase of 21.96%.
The company's accumulated investment income in associates was 134 million yuan, a year-on-year decrease of
21.01%.
(i) The performance of key tasks in the first half of the year
1. Seized opportunities for investment, mergers and acquisitions, and promoted nationwide distribution in
many ways
(1) Deepened the distribution network layout: further completed the distribution of blank areas in Guangdong and
Guangxi, and implemented secondary distribution in key regions and county markets.
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(2) National distribution of the retail network: Guoda Drugstore fully undertook prescription outflows, quickly
covered key areas through mergers and acquisitions, and connected medical insurance policies and outpatient
specific items and outpatient designated chronic disease qualifications.
As of the disclosure date, Guoda Drugstore has delisted and acquired 100% equity of Chengda Fangyuan
Pharmaceutical Group Co., Ltd. ("Chengda Fangyuan" for short), and completed the industrial and commercial
change registration on July 30, 2020. As of the end of 2019, Chengda Fangyuan had more than 1,500 stores in 5
provinces and 19 cities, covering some key cities in Liaoning, Jilin, Inner Mongolia, Shandong and Hebei.
2. Completed the optimization of information organization structure and implemented the digital
transformation project
The company established an information technology center to simulate "demutualization" operation and
management, and promoted the transformation and upgrading of the supply chain through a clear digital
implementation path:
(1) Deepened integrated management and control: achieved unification through standardization and obtained the
best order, thereby reduced costs and improved efficiency.
(2) Improved visualization experience: realized business visibility, accuracy and traceability through the Internet
of Things, big data and other technological information methods.
(3) Promoted digital transformation: strengthened capabilities in business decision-making, business operation,
marketing design, and risk management and control through data analysis.
3. Promoted the integration of supply chain, integrated national logistics resources to improve efficiency
(1) Guoda Drugstore completed the collection of the address list of some network nodes, including the warehouse
address information of more than 30 logistics centers in the country, and the address information of more than
5000 stores nationwide of Guoda Drugstore; completed the flow direction and flow analysis of some nodes in the
national multi-warehouse model, including the flow direction and flow analysis report on the centralized
procurement at the Guoda Headquarters, and planned the national logistics network around the strategic goal of
the integration of wholesale and retail to realize the linkage of multiple warehouses across the country.
(2) Actively promoted logistics optimization projects and management improvement
Completed the supply chain ex-warehouse visualization of 10 logistics/distribution centers including Guangzhou
warehouse, Foshan warehouse, and Shenzhen warehouse.
4. Distribution business: rapidly responded, improved quality and efficiency, and promoted the business
deployment of one body with two wings
During the epidemic, the company's distribution business deployment of one body with highlighted its anti-risk
capabilities. Among them, retail direct sales, retail diagnosis and treatment, and devices consumables businesses
maintained a growth higher than the overall average growth rate. In the first half of 2020, hospital direct sales
revenue was 11.516 billion yuan, a year-on-year decrease of 7.6%; primary medical sales revenue was 974 million
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yuan, a year-on-year decrease of 8.1%; retail direct sales revenue was 3.412 billion yuan, a year-on-year increase
of 17.0%; retail clinic sales revenue was 770 million yuan, a year-on-year increase 24.4%; sales revenue of
devices consumables was 2.179 billion yuan, a year-on-year increase of 40.4%.
(1) Actively responded to policy changes
Consortium Centralized Procurement (4+7 expansion): In Guangdong region, the point distribution ratio of the
company was 100%; the second batch of national centralized procurement: the point distribution ratio of the
company was 97.87%; national negotiations: the point distribution ratio of the company was 99.15%.
In Guangxi region, the point distribution ratio of the company was 80%; the second batch of national centralized
procurement:the point distribution ratio of the company was 63%; the first batch of GPO in Guangxi , the point
distribution ratio of the company was 76%.
(2) Retail direct sales: The number of single stores in the province reaches 6,613, with an increase of 1,800, the
opened member stores total 628 , and there are 279 stores near the hospitals. During the epidemic, retail direct
medical e-commerce grew rapidly, with sales of 644 million yuan, a year-on-year increase of 28%.
(3) Retail diagnosis and treatment: There are 83 stores in Guangdong and Guangxi, including 62 in Guangdong
and 21 in Guangxi.
Retail diagnosis and treatment explored the strategic layout of multi-modal prescription circulation projects,
consolidated first-mover advantages through departmental linkage, and cooperated with more than 10 platforms.
Retail diagnosis and treatment explored different levels of medical insurance designated qualifications: obtained
medical insurance coordinating designated qualifications for the "outpatient specific disease outsourcing +
outpatient chronic disease drug outsourcing" in 9 cities in Guangdong and Guangdong, and actively explored
access to related characteristic models through "Internet + medical insurance co-ordination". Became the
designated point of commercial supplementary medical insurance outsourcing in Zhuhai, Shenzhen, Foshan and
other places, and developed the first insurance file system in the province.
Retail diagnosis and treatment innovated online live broadcast of patient education, and launched 25 online live
broadcasts of patient education, including 5 broadcasts on the independent platform.
(4) Devices consumables: Realized business informatization, realized the promotion of the new consignment
model across the whole province; completed the promotion of the consignment closed-loop management mode of
2 pilot hospitals; realized the interface interconnection of the provincial platform consumable network, and helped
the consumable business to develop and accelerate the promotion of SPD in a number of hospitals in Guangzhou,
Shenzhen and in the province, and advanced the implementation of SPD in 6 hospitals in Guangdong Province in
the first half of the year.
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5. Guoda Drugstore: seized opportunities, strengthened innovative business layout, and consolidated basic
capabilities for high-quality development
As of June 30, 2020, the number of total stores of Guoda Drugstore reached 5,838, of which 4,516 were directly
operated and 1,322 were franchised. During the epidemic, the performance of Guoda Drugstore showed a steady
growth trend, and policies such as prescription outflow brought revenue growth to retail pharmacies. Various
business types have been developing steadily, among them, direct sales revenue was 5.10 billion yuan, a
year-on-year increase of 32.78%, DTP sales revenue was 972million yuan, a year-on-year increase of 19.34%,
OTO sales revenue was 115 million yuan, a year-on-year increase of233.53%, franchise business sales revenue
was 634 million yuan, a year-on-year increase of 14.13%.
(1) Comprehensive development of e-commerce business in multiple formats
Self-operated e-commerce platform: realized sales of 17.04 million in the first half of the year, an increase of
731% on a year-on-year basis. During the epidemic, the importance of the platform became prominent, the
company reorganized the positioning of the platform, introduced products suitable for self-operated e-commerce
sales, launched mask reservation service, and increased the number of fans on the official account by millions.
Third-party O2O platform: sales reached 115 million in the first half of the year, an increase of 262% on a
year-on-year basis, daily order quantity exceeded 20,000, and prescription drug sales accounted for 20%. The
number of online stores on third-party platforms (Meituan, Eleme, JD Daojia, and AliHealth) has reached 4,000,
and 180 night sales stores have been opened. At the same time, third-party O2O channels such as platform
haoyisheng and JD Health have been introduced.
Category: key cooperative suppliers carried out O2O business linkage, formulated exclusive regional hot-selling
product catalogs for all regional companies across the country, created online core hot items, and used hot items to
achieve drainage.
(2)Professional service ability improvement
Chronic disease management: Guoda Drugstore continued to strengthen chronic disease management and
professional service improvement, developed a chronic disease core product catalog, and tracked the selection,
stocking, and sales of chronic disease core products of various companies; developed gout, hyperlipidemia, and
coronary heart disease projects for Healthy Communities, formulated relevant catalogs and set up return visits;
gradually improved the ability of pharmaceutical services by improving the quality of specialist cases.
Member management: Guoda Drugstore analyzed member data, carried out store basic service improvement and
customer satisfaction surveys, and improved professional services; newly added chronic disease projects for
Healthy Communities; promoted the establishment of member management platform, and Enterprise WeChat and
member platforms have been connected ( It has been piloted in Jiangmen and Guangxi).
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The Company complies with the disclosure requirement of “Information Disclosure Guidelines for the Shenzhen
Stock Exchange No. 8- Listing Company Engaged in Retailing Industry”
(ii) The entity business operations and the business condition of the stores during the reporting period:
1. As of the end of June 2020, Guoda Drugstore had 4,516 direct-operated stores, with sales revenue of 6.22
billion Yuan(tax excluded); 1322 franchise stores with distribution revenue of 625 million Yuan(tax excluded).
Region Direct-sale store Franchised outlet
Sales revenue Y-o-y changes Numbers Distribution revenue Y-o-y changes (+,-)
Numbers (in 10 thousand (+,-) (in 10 thousand
Yuan) Yuan)
North 2,444 340,601.16 33.63% 464 25,759.82 19.72%
East China 944 127,857.82 19.54% 596 28,721.64 8.23%
South China 565 85,374.96 29.11% 142 4,683.08 13.31%
Central China 291 32,087.48 29.55% 120 3,299.93 27.61%
Northwest 272 36,069.32 44.25% - - -
Total 4,516 621,990.74 30.20% 1,322 62,464.47 14.04%
Note:
North: Liaoning, Shanxi, Inner Mongolia, Beijing, Tianjin, Hebei, Jilin;
East China: Shanghai, Jiangsu, Anhui, Shandong, Fujian, Zhejiang;
South China: Guangdong, Guangxi, Yunnan;
Central China: Henan, Hunan;
Northwest: Ningxia, Xinjiang.
(1) Top 10 stores in sales:
Year for starting Business Actual operating Property
Serial Region Name Operating mode
2
business activity area (in M ) belonging
1 Inner Mongolia HQ 2003 Direct-sale 5+X 1,689.26 Rental
Guangdong Shenzhen Modern
2 2006 Direct-sale 260.00 Rental
Exhibition Hall pharmacy
Jiangsu Modern
3 Jiangsu Baiyulan 1991 Direct-sale 970.00 Rental
pharmacy
4 Shanxi Er Yuan Branch 2011 Direct-sale 5+X 629.90 Rental
5 Hebei Le Ren Tang HQ 2010 Direct-sale TCM diagnosis 1,206.00 Rental
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shops
6 Shanxi Zhongli Branch 2002 Direct-sale 5+X 821.80 Rental
Modern
7 Beijing Xidan Jinxiang 1997 Direct-sale 773.16 Rental
pharmacy
Fujian Xiamen New Modern
8 2005 Direct-sale 132.90 Rental
Special Medicine pharmacy
Modern
9 Shanxi Kangweier Branch 2003 Direct-sale 106.80 Rental
pharmacy
Zhongxin Store of
Sinopharm
Modern
10 Henan Holding Guoda 2002 Direct-sale 830.00 Rental
pharmacy
Durgstore Henan
Chain Co., Ltd.
(2) In first half of 2020, 207 new direct-sale stores opened and 87 stores shut down, net increase of 120 stores.
Direct-sale store Franchised outlet
Region Number of store Number of stores Number of store Number of stores shut
Total area(in M2)
increased shut down increased down
North 154 19,585.75 -35 15 -11
East China 13 4,553.63 -28 4 -13
South China 22 3,760.37 -14 19 -2
Central China 6 1,354.00 -7 4 -
Northwest 12 1,913.24 -3 - -
Total 207 31,166.99 -87 42 -26
(3) Medical insurance qualification of the stores
As of 30 June 2020, the Company has 4,516 chain stores with directly selling, and 3,874 pharmacy stores obtained
the qualification of “Designated retail pharmacies of medical insurance”, representing 86% of the total pharmacies
of the Company.
Stores obtained the qualification Ratio in total pharmacies
Region Number of stores of “Designated retail
pharmacies of medical
18
insurance”
2444 2198 90%
North
East China 944 704 75%
South China 565 483 85%
Central China 291 245 84%
Northwest 272 244 90%
Total 4516 3874 86%
(4) Change of main selling index
Per customer Proportion of Proportion of medical Proportion of the Proportion of transaction
Period transaction (RMB) prescription drugs insurance sales in
direct-sale stores direct member sales times of direct members
First half year 77 53% 38% 66% 55%
of 2019
First half year 83 51% 37% 65% 55%
of 2020
(5) Operating efficiency of direct-sale stores in reporting period:
Number of Operating area of the stores Daily average efficiency
Region (tax-included, Yuan/Square Rental efficiency (tax-included)
stores (square meters) Meters)
2,444 297,260 78 15
North
East China 944 117,870 91 14
South China 565 62,687 88 17
Central China 291 34,692 65 14
Northwest 272 32,746 69 23
Note: Daily average efficiency=Average daily operating income/Operating area of the stores;
19
Average daily operating revenue=Operating revenue (tax-included) of the store in the Year/Operating days of store
in the Year.
Rental efficiency= Sales volume/Rental
(6) Structure of the category at retail terminal
Category First half of 2020 First half of 2019
Health food 5.15% 6.49%
Convenience food 0.93% 0.93%
Rx Drug 51.13% 52.94%
OTC 24.30% 27.23%
Personal care 4.49% 5.71%
Home convenience 1.50% 1.21%
Household health products 0.49% 0.27%
Chinese Herbal Medicine 9.71% 4.97%
Proportion of other categories 2.30% 0.25%
2. In first half of 2020, online sales developed in a steady pace, the sale amount in B2C amounted as 132 million
yuan (tax excluded) in total, and total sales in O2O business was 115 million yuan(tax excluded). Details are:
In 10 thousand Yuan
Cooperation platform Sales amount (tax excluded)
B2C 13,275.22
O2O 11,526.55
Total 24,801.77
3. Procurement, inventory and supplier from the headquarter: top 5 suppliers in first half of 2020:
In 10 thousand Yuan
Ranking Procurement amount (tax included) Purchase ratio
No. 1 11,854 14%
No. 2 6,381 8%
20
No. 3 6,357 8%
No. 4 5,016 6%
No. 5 4,375 5%
4. Warehousing and logistics:
As of 30 June 2020, Guoda Drugstore has 30 large and small sized logistic warehouses in total, covering more
than 113,800 square meters, spreading out across 19 provinces.
Province Region Warehouse area (M2) Management ownership
Liaoning Shenyang 18,821 Self-management
Guangzhou
Guangdong Shenzhen / Delegation
Jiangmen
Shanxi Wanmin 10,919 Self-management
Shanxi
Shanxi Yiyuan / Delegation
Dadesheng 4,869 Self-management
Jiangsu Nanjing 2,200 Self-management
Liyang 1,920 Self-management
Fujian 5,628 Self-management
Fujian
Quanzhou 1,096 Self-management
Hebei Hebei / Delegation
Shandong Shandong 4,800 Self-management
Ningxia Ningxia 3,000 Self-management
Hunan Hunan 4,717 Self-management
Henan 3,610 Self-management
Henan
Zhengzhou / Delegation
Inner Mongolia Inner Mongolia 5,236 Self-management
Guangxi Guangxi 1,950 Self-management
Beijing Guoda
Beijing / Delegation
Beijing Jinxiang
Tianjin Tianjin / Delegation
Anhui Anhui 1,000 Self-management
Xinjiang Xinjiang 3,517 Self-management
Shanghai Shanghai Fumei 20,000 Self-management
21
Shanghai Guoda
Zhejiang Hangzhou 974 Self-management
HQ of Guoda HQ / Delegation
Jilin Yihe Jilin Yihe / Delegation
Pu’er Songmao Pu’er Songmao 1,895 Self-management
Pudong Medicine Pudong Medicine 17,680 Self-management
Total 113,832
5. Goods suppliers of Guoda Drugstore are mainly external suppliers and assist affiliated enterprise of
SINOPHARM and private brands. As of first half year of 2020, sales information are as:
In 10 thousand Yuan
Self-brand Nature Type Sales amount (tax included) Proportion
a In OEM Health food 1,074 0.16%
b In OEM Children 12 0.00%
c In OEM Gynaecology 11 0.00%
d In OEM Household health 4,311 0.63%
e In OEM Anti-infection 25 0.00%
f In OEM Anti-allergy & anti-vertigo 4 0.00%
g In OEM Endocrine 2 0.00%
h In OEM Clearing away heat & toxic 244 0.04%
materials
i In OEM Drugs for external use 208 0.03%
j In OEM ENT dept. 134 0.02%
k In OEM Chinese Herbal Medicine 1,586 0.23%
Total 7,611 1.11%
6. Member management and service business
As of June 30, 2020, the company's membership sales accounted for 65%, a decrease of 1 percentage point
compared with the membership sales of 66% in 2019. At the same time, the number of member transactions in
2020 has increased by 26% on a year-on-year basis. The proportion of member transactions in total transactions
increased from 54.8% in 2018 to 55.3% in 2020. The number of member transactions has maintained a steady
annual growth during the continuous improvement of sales, which played a key supporting role in the steady
improvement of the company's performance.
The company has improved its operating efficiency by optimizing the product structure. In the first half of 2020,
the unit price of company members was 119 yuan, which was 1.13 times higher than that of non-member
customers of 56 yuan.
22
II. Main business analysis
Found more in I. Introduction in Discussion and Analysis of Business
Y-o-y changes of main financial data
In RMB
Y-o-y
Current period Same period of last year increase/decr Reasons for changes
ease
Operating revenue 27,169,940,188.52 25,599,198,815.30 6.14% No major changes
Operating costs 23,971,029,719.44 22,712,876,604.19 5.54% No major changes
Selling expenses 1,728,738,818.60 1,541,285,047.94 12.16% No major changes
Administration expenses 443,287,144.92 391,848,337.91 13.13% No major changes
Finance expenses 65,313,829.62 64,987,758.92 0.50% No major changes
Income tax expenses 210,106,764.35 192,124,358.84 9.36% No major changes
Net cash flow arising
1,438,204,043.35 1,139,154,120.89 26.25% No major changes
from operating activities
Decreased 531.51% on a y-o-y basis,
mainly due to the cash paid for
Net cash flow arising acquisition of Shanghai Dingqun
from investment -666,346,816.87 -105,516,061.35 -531.51% Enterprise Management Consulting
activities Co., Ltd.by subsidiary Guoda
Drugstore, and there was no such
event in the same period of last year.
Decreased 34.08% on a y-o-y basis,
mainly because number of stores
increased during the Period, and rent
payment increased accordingly; and
Net cash flow arising
-1,197,318,438.51 -893,012,855.18 -34.08% the investment amount paid for
from financing activities
subsidiary(Pudong New Area of
Shanghai Pharmaceutical Medicine
Ltd) combined under the same
control by Guoda Drugstore
Decreased 402.96% on a y-o-y basis,
mainly due to the acquisition amount
Net increase of cash and
-425,509,148.00 140,448,637.11 -402.96% paid in the period from Guoda
cash equivalent
Drugstore, there was no such event
in the same period of last year.
Major changes on profit composition or profit resources in reporting period
□ Applicable √ Not applicable
23
No major changes on profit composition or profit resources occurred in reporting period.
Constitution of operation revenue
In RMB
Current period Same period last year
Increase/decrease
Ratio in operation Ratio in operation
Amount Amount y-o-y
revenue revenue
Total of operation
27,169,940,188.52 100% 25,599,198,815.30 100% 6.14%
revenue
According to industries
Pharmaceutical
19,185,884,075.68 70.61% 19,232,044,967.89 75.13% -0.24%
distribution
Retail pharmacy 7,876,117,404.69 28.99% 6,278,130,158.65 24.52% 25.45%
Other 107,938,708.15 0.40% 89,023,688.76 0.35% 21.25%
According to products
Pharmaceuticals 24,375,725,625.65 89.72% 23,743,125,701.29 92.75% 2.66%
Medical devices and
2,185,440,182.47 8.04% 1,320,195,827.34 5.16% 65.54%
disposables
Diagnostic reagent 335,716,038.17 1.24% 347,786,617.78 1.36% -3.47%
Medical equipments 165,119,634.08 0.61% 99,066,980.13 0.39% 66.67%
Other 107,938,708.15 0.39% 89,023,688.76 0.34% 21.25%
According to region
China 27,169,940,188.52 100.00% 25,599,198,815.30 100.00% 6.14%
About the industries, products, or regions accounting for over 10% of the company’s operating income or operating profit
√Applicable □ Not applicable
In RMB
Increase/decrease Increase/decrease Increase/decrease
Gross profit
Operating revenue Operating cost of operating of operating cost of gross profit
ratio
revenue y-o-y y-o-y ratio y-o-y
According to industries
Pharmaceutical
19,185,884,075.68 18,023,920,190.08 6.06% -0.24% -0.17% -0.06%
distribution
Retail pharmacy 7,876,117,404.69 5,921,911,082.38 24.81% 25.45% 27.76% -1.36%
According to products
Pharmaceuticals 24,375,725,625.65 21,528,380,814.97 11.68% 2.66% 2.01% 0.57%
According to region
24
China 27,169,940,188.52 23,971,029,719.44 11.77% 6.14% 5.54% 0.49%
Under circumstances of adjustment in reporting period for statistic scope of main business data, adjusted main business based on
latest one year’s scope of period-end
□Applicable √Not applicable
Reasons for the above 30% changes in relevant data on a y-o-y basis
√Applicable □Not applicable
In this period, Medical devices and disposablesand Medical equipments increased by 65.54% and 66.67% respectively over the same
period of the previous year, mainly due to the implementation of the company's development strategy, adjustment of business
structure transformation, and vigorous promotion of innovative business development.
III. Analysis of the non-main business
□ Applicable √ Not applicable
IV.Analysis of assets and liabilities
1. Major changes of assets composition
In RMB
End of current period End of last period
Ratio
Ratio in total Ratio in total Notes of major changes
Amount Amount changes
assets assets
Cash and bank
8,239,840,227.80 21.87% 8,092,738,303.99 23.75% -1.88% No major changes
balances
Accounts
13,892,695,134.41 36.88% 11,926,115,915.38 35.00% 1.88% No major changes
receivable
Inventories 5,344,906,740.17 14.19% 5,008,443,509.60 14.70% -0.51% No major changes
Investment
130,090,605.82 0.35% 140,319,140.00 0.41% -0.06% No major changes
properties
Long-term equity
2,142,161,636.01 5.69% 2,077,811,395.30 6.10% -0.41% No major changes
investment
Fix assets 716,847,033.81 1.90% 694,088,419.39 2.04% -0.14% No major changes
Construction in
29,000,528.39 0.08% 38,138,362.71 0.11% -0.03% No major changes
process
Short-term
3,710,647,467.19 9.85% 3,290,877,595.23 9.66% 0.19% No major changes
borrowings
25
2. Assets and liability measured by fair value
√Applicable □Not applicable
In RMB
Cumulative
Gain/loss of changes of Impairment Amount
Opening Amount sold Other Ending
Item changes in fair value accrual in the purchased in
amount in the Period changes amount
fair value reckoned into Period the Period
equity
Financial
assets
Other equity
116,021,000.0 102,335,240. 116,021,000
instrument
0 00 .00
investment
Other
non-current 140,000,000.0 -19,027,649 120,972,350
financial 0 .76 .24
assets
Receivable 446,342,588.4 -46,452,938 399,889,650
financing 6 .45 .01
702,363,588.4 102,335,240. -65,480,588 636,883,000
Total of above
6 00 .21 .25
Financial
0.00 0.00
liability
Content of other changes
1. Other non-current financial assets were the fair value of the shares of Sinopharm Zhongjin Medical Industry Fund (hereinafter
referred to as "Industry Fund") subscribed by the Company. Other changes were the withdrawal of fund investment projects, and part
of the investment cost of the withdrawal of projects was returned according to the agreement.
2. In the financing of receivables, other changes were caused by changes in bank acceptance bills held in the current period.
Whether the measurement attribute for main assets of the Company have changed significantly in the reporting period
26
□Yes √No
3. Assets right restriction till end of reporting period
Nil
V. Investment
1. Overall situation
√Applicable □ Not applicable
During the reporting period, the company paid cash to acquire the equity of Shanghai Dingqun Enterprise
Management Consulting Co., Ltd. (100%) and Beijing Jinxiang Guoxing Pharmaceutical Co., Ltd. (100%),
realizing the business combination not under the same control of these two companies, and paying cash for the
acquisition of equity (85%) of Pudong New Area of Shanghai Pharmaceutical Medicine Ltd., and achieved
business combination under the same control. The company newly established subsidiaries Guoda Drugstore
(Rizhao) Co., Ltd. (100%) and Liaoning Guoda Health Pharmacy Co., Ltd. (100%).
During the reporting period, the company paid cash to acquire the business assets of 43 directly-operated stores
and the operating rights of 11 clinics of Liaoning Xianzhen Pharmaceutical Chain Co., Ltd.
During the reporting period, the company increased capital (100%) to Sinopharm Holding Maoming Co., Ltd..
After the capital increase was completed, the shareholding ratio remained unchanged.
For specific investment, please refer to note (VIII) and (IX) of the financial report.
2. The major equity investment obtained in the reporting period
□ Applicable √ Not applicable
3. The major non-equity investment doing in the reporting period
□ Applicable √ Not applicable
4.Financial assets measured by fair value
√Applicable □Not applicable
In RMB
Gain/loss of Cumulative Amount Amount Cumulative
Initial Capital
Type changes in changes of fair purchased in sold in the investment Ending amount
investment cost source
fair value value reckoned the Period Period income
27
into equity
Other 13,685,760.00 0.00 102,335,240.00 0.00 0.00 4,397,810.94 116,021,000.00 Own funds
Other 140,000,000.00 0.00 0.00 0.00 0.00 4,109,881.90 120,972,350.24 Own funds
Total 153,685,760.00 0.00 102,335,240.00 0.00 0.00 8,507,692.84 236,993,350.24 --
5. 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
VI. Sales of major assets and equity
1. Sales of major assets
□ Applicable √ Not applicable
There are no major assets sell in the period
2. Sales of major equity
□ Applicable √ Not applicable
VII. Analysis of main holding Company and stock-jointly companies
√Applicable □ Not applicable
Particular about main subsidiaries and stock-jointly companies net profit over 10%
In RMB
Company Register Operating Operating
Type Main business Total assets Net assets Net profit
name capital revenue profit
"Sales of drugs,
medical apparatus
Sinopharm
and instruments,
Holding Subsidiar 3,553,249,39 14,636,844,2 4,343,453,76 14,023,972,0 369,200,26
freightage, 273,272,949.71
Guangzhou y 3.17 88.53 4.32 75.91 7.47
storage, loading
Co., Ltd.
and unloading,
glass wares,
28
cosmetics and
daily merchandise;
other business
services, other
professional
consultation,
various goods
agency and for
self-operation,
import & export of
technology, houses
leasing"
"Chinese
traditional patent
medicine,
chemical
preparations,
antibiotics,
bio-chemical
medicine,
biological
medicine,
diagnosis
medicine,
Sinopharm biological
Holding medicine with
Subsidiar 1,683,333,33 13,495,579,7 5,356,093,65 8,613,020,30 330,188,74
Guoda features of 248,037,573.90
y 3.00 32.65 2.12 9.15 7.31
Drugstore treatment and
Co., Ltd. diagnosis,
shaped packing
food, chemical
products, and
various
commodity
and technique
hold by
self-support
and agency as
well as import
& export of
technology"
Sinopharm Subsidiar "Retail and 521,407,965. 4,232,763,65 1,070,797,35 3,009,322,42 99,295,363
85,991,211.39
Holding y distribution in 79 8.66 8.69 7.21 .01
29
Guangxi Co., respect of
Ltd. pharmaceutical
products and
medical apparatus
and instruments,
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
subsidiaries during the report period performance
Expand the layout of wholesale and retail
Shanghai Dingqun Enterprise Management
Acquisition business, and without major influence on
Consulting Co., Ltd.
performance of the Company
Expand local medicine retail business
Beijing Jinxiang Guoxing Pharmaceutical
Acquisition layout, and without major influence on
Co., Ltd.
performance of the Company
Expand the layout of wholesale and retail
Pudong New Area of Shanghai
Acquisition business, and without major influence on
Pharmaceutical Medicine Ltd.
performance of the Company
Expand local medicine retail business
Guoda Drugstore (Rizhao) Co., Ltd. Establishment layout, and without major influence on
performance of the Company
Expand local medicine retail business
Liaoning Guoda Health Pharmacy Co.,
Establishment layout, and without major influence on
Ltd.
performance of the Company
Notes of main holding Company and stock-jointly companies
VIII. Structured vehicle controlled by the Company
□ Applicable √ Not applicable
IX. Prediction of business performance from January – September 2020
Estimation on accumulative net profit from the beginning of the year to the end of next report period to be loss probably or the
warning of its material change compared with the corresponding period of the last year and explanation on reason
□ Applicable √ Not applicable
30
X. Risks and countermeasures
1.Risks of changes in industry policy
With the continuous deepening of new medical reform, the pharmaceutical industry frequently releases policies,
and the operating environment of the industry has major changes, affected by the “4 + 7” centralized procurement
linkage and expansion, the GPO in Guangdong and Guangxi provinces, and the continuous expansion of the
national talks, and other policies, the drug price has continued to drop sharply, and the company’s profit margin is
facing the risk of further compression. The supervision has been continuously upgraded, the introduction of the
new Drug Administration Law and the implementation of the “four strictest” put forward higher requirements for
the compliance operation of pharmaceutical enterprises, the pharmaceutical circulation industry faces increased
risks of uncertain compliance. The company will respond to the impacts of industry policies by transforming and
upgrading its business structure, exploring new profit models, and improving its risk management and control
capabilities.
2. Management risks of the continuous expansion of marketing network of Guoda Drugstore
Through the continuous opening of new stores and extended M & A, the marketing network of Guoda Drugstore
has maintained a steady growth trend in recent years. The expansions of the sales areas and the increase in the
number of stores have put pressure on the store location, distribution, cash management, marketing and human
resource management of Guoda Drugstore. The company will strengthen management and construction in the
commodity procurement, logistics and delivery, sales and other links, and formulate corresponding management
measures in each link to ensure unified standards and management quality for store expansion, and at the same
time strengthen integration and control of new merged stores.
3. Risks of intensifying market competition
As the country continues to introduce corresponding policies to encourage the integration of pharmaceutical retail
industry, the major pharmaceutical retail enterprises in the industry have accelerated the pace of mergers and
acquisitions, and continued to expand the marketing networks, improve the logistics center constructions, and
innovate the business and profit models so that the sales scale and comprehensive strength continuously
strengthen. At the same time, with the upgrading of consumption and the gradual opening of market, the foreign
pharmaceutical distribution enterprises with powerful strength are entering the domestic pharmaceutical
distribution markets through a variety of ways, so the industry competition is further intensifying. In addition, the
cross-border competitors with internet genes have quickly penetrated into the company’s traditional business
fields, which brought certain challenges to the company’s business model.
The company will continue to integrate existing resources, deepen the strategic development initiatives with
wholesale-retail integration as the core, and deeply give play to the synergies, directly face the terminal patients
and consumers through complementary varieties, capital collaboration, supply chain collaboration, and
international promotion, and continuously increase investment in scientific and technological innovation, and
actively respond to cross-border competition.
31
4. Risks of facing the horizontal competition
In the pharmaceutical retail field, Sinopharm Holding’s affiliated distribution subsidiaries have also opened some
social retail pharmacies, which constitute a certain degree of horizontal competition with the subordinate Guoda
Drugstore. Sinopharm Holding and SINOPHARM have pledged to take effective measures to resolve the possible
horizontal competition.
5. The risk of goodwill impairments
On 30 June 2020, the book value of goodwill in consolidate financial statement listed as 1,564,931,605.00 Yuan,
and distributed to the assets group of distribution business and retail business. In accordance with the Accounting
Standards for Business Enterprises, the Company carried out annual impairment test for the goodwill.
Impairment of goodwill will released on the Note V.-32 and Note VII-28 listed under the Financial Statement
32
国药集团一致药业股份有限公司 2020 年半年度报告全文
Section V. Important Events
I. In the report period, the Company held annual shareholders’ general meeting and
extraordinary shareholders’ general meeting
1. Shareholders’ General Meeting in the report period
Ratio of investor
Session of meeting Type Date Date of disclosure Index of disclosure
participation
Juchao
Website—(http://ww
Annual General w.cninfo.com.cn)
AGM 66.62% 2019-05-15 2019-05-16
Meeting of 2019 "Resolution Notice
of AGM of 2019
No.: 2020-17
2. Request for extraordinary general meeting by preferred stockholders whose voting rights restore
□ Applicable √ Not applicable
II. Profit distribution plan and capitalizing of common reserves plan for the Period
□ Applicable √ Not applicable
The Company has no plans of cash dividend distributed, no bonus shares and has no share converted from capital reserve either for
the semi-annual year.
III. 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
Comm
Type of Commitment Implementatio
Commitments Promise Content of commitments itment
commitments term n
date
"Sinopharm Group and Sinopharm
Sinopharm Group
Foreign Trade made commitments in
Co., Ltd;China
Commitments Commitment the Report about China National
National 2016-
in assets on restricted Accord Medicines Corporation Ltd. 36 months Completed
Pharmaceutical 05-31
reorganization shares Purchasing Assets and Raising
Foreign Trade
Supporting Funds and Related
Corporation
Transactions by Asset Sale, Stock
33
国药集团一致药业股份有限公司 2020 年半年度报告全文
Issuance and Cash Payment that the
non-public offering of shares of
Sinopharm Accord obtained from
this transaction shall not be
transferred within 36 months since
the finish date of issuance and shall
be unlocked after 36 months since
the date of listing. Within 6 months
after the completion of this
transaction, if the closing price of the
stock of Sinopharm Accord is less
than the issue price in continuous 20
trading days, or the closing price at
the end of 6 months after the
completion of this transaction is less
than the issue price, the lockup
period of the stock of Sinopharm
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."
"Ping An Asset Management Co.,
Ltd. made commitments in the
Report about China National Accord
Medicines Corporation Ltd.
Purchasing Assets and Raising
Supporting Funds and Related
Ping’an Assets Commitment Transactions by Asset Sale, Stock
2016-
Management Co., on restricted Issuance and Cash Payment that the 36 months Completed
05-31
Ltd shares non-public offering of shares of
Sinopharm Accord obtained from
this transaction shall not be
transferred within 36 months since
the finish date of issuance and shall
be unlocked after 36 months since
the date of listing. After placement
34
国药集团一致药业股份有限公司 2020 年半年度报告全文
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.
Completed on
Y
time (Y/N)
IV. Appointment and non-reappointment (dismissal) of CPA
Financial report has been audit or not
□ Yes √ No
Not been audited.
V. Explanation from Board of Directors, Supervisory Committee for "Qualified Opinion"
that issued by CPA
□ Applicable √ Not applicable
VI. Explanation from the Board for "Qualified Opinion" of last year’s
□ Applicable √ Not applicable
VII. Bankruptcy reorganization
□ Applicable √ Not applicable
No bankruptcy reorganization for the Company in Period.
VIII. Lawsuits
Material lawsuits and arbitration
□ Applicable √ Not applicable
No significant lawsuits and arbitration occurred in the reporting period.
Other lawsuits
As of June 30, 2020, the Company has 17 cases of contract disputes in the daily operation, with total amount of 22,335,300 yuan
involved; 4 cases of intellectual property infringement disputes, with total amount of 15.381 million yuan involved; 3 cases of equity
transfer disputes, with amount of 91.9546 million yuan involved; 1 case of medical product liability dispute, with amount of 21.5888
million yuan involved; 2 cases of lease contract disputes, with amount of 497,100 yuan involved; 3 cases of labor disputes, with
amount of 362,100 yuan involved; 1 case of noise pollution dispute, with amount of 31,800 yuan involved.
The total amount involved in the above 31 cases was 152,151,000 yuan, which neither formed the expected liabilities, nor had an
effect on normal operation and management of the Company.
35
国药集团一致药业股份有限公司 2020 年半年度报告全文
IX. Media questioning
□Applicable √Not applicable
During the reporting period, the company had no media generally questioned matters.
X. Penalty and rectification
□ Applicable √ Not applicable
No penalty and rectification for the Company in Period.
XI. 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.
XII. Implementation of the Company’s stock incentive plan, employee stock ownership plan
or other employee incentives
□ Applicable √ Not applicable
The Company has no equity incentive plan, employee stock ownership plans or other employee incentives in Period.
XIII. Major related transaction
1. Related transaction with routine operation concerned
(1) Related transaction with routine operation concerned can be found in "12. Related party and related transaction" carried in
Section XI. Financial Report;
(2) The related transactions are settled in cash and by notes, according to the "Proposal of Expected Routine Related Transactions
with Subordinate Enterprise for Year of 2020" was deliberated and approved by 15th session of 8th BOD held on 20 April 2020 and
"Announcement on Expected Routine Related Transaction for Year of 2020" (Notice No.: 2020-10) released on 22 April 2020, in the
reporting period, related sales takes 35.89% in total expected amount for the whole year, and related procurement takes 41.14% in
total expected amount for the whole year.
2. Related transactions by assets acquisition and sold
□ Applicable √ Not applicable
No related transactions by assets acquisition and sold for the Company in reporting period.
3. Related transactions of mutual investment outside
□ Applicable √ Not applicable
No main related transactions of mutual investment outside for the Company in reporting period.
36
国药集团一致药业股份有限公司 2020 年半年度报告全文
4. Contact of related credit and debt
□ Applicable √ Not applicable
The Company had no contact of related credit and debt in the period.
5. Other related transactions
□ Applicable √ Not applicable
The Company had no other related transaction in the period.
XIV. 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.
XV. Significant contract and implementations
1. Trusteeship, contract and leasing
(1) Trusteeship
□ Applicable √ Not applicable
No trusteeship for the Company 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
The company and its subsidiaries' external guarantees (Barring the guarantee for subsidiaries)
Name of the Related Guarantee Actual date of Actual Guarantee Guarantee
limit happening guarantee limit type term Implemen Guarante
Company Announce
37
国药集团一致药业股份有限公司 2020 年半年度报告全文
guaranteed ment ted (Y/N) e for
disclosure
date related
party
(Y/N)
The total amount of external
Total amount of external
guarantees actually occurred
guarantee approved during the
during the reporting period
reporting period (A1)
(A2)
The total amount of external Total balance of actual
guarantees approved at the end external guarantees at the end
of the reporting period (A3) of the reporting period (A4)
The company's guarantees to subsidiaries
Guarante
Related
e for
Name of the Announce Implemen
Guarantee Actual date of Actual Guarantee Guarantee
Company ment related
limit happening guarantee limit type term ted (Y/N)
guaranteed disclosure
party
date
(Y/N)
Sinopharm
Holding Joint liability 2020.05.20-2
2020-04-22 33,000 2020-05-20 10,095.91 N Y
Guangzhou Co., assurance 021.05.20
Ltd.
Sinopharm
Holding Joint liability 2020.05.20-2
2020-04-22 60,000 2020-05-20 60,000 N Y
Guangzhou Co., assurance 021.05.19
Ltd.
Sinopharm
Holding Joint liability 2019.11.29-2
2019-08-24 60,000 2019-11-29 23,311.11 N Y
Guangzhou Co., assurance 020.11.27
Ltd.
Sinopharm
Holding Joint liability 2020.03.31-2
2019-08-24 25,000 2020-03-31 17,462.56 N Y
Guangzhou Co., assurance 021.03.30
Ltd.
Sinopharm
Holding Joint liability 2019.08.07-2
2019-04-25 15,000 2019-08-07 N Y
Guangzhou Co., assurance 020.08.06
Ltd.
Sinopharm
Joint liability 2020.05.20-2
Holding 2020-04-22 80,000 2020-05-20 47,119.27 N Y
assurance 021.05.19
Guangzhou Co.,
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国药集团一致药业股份有限公司 2020 年半年度报告全文
Ltd.
Sinopharm
Holding Joint liability 2020.01.15-2
2019-08-24 15,000 2020-01-15 10,700.22 N Y
Guangzhou Co., assurance 021.01.14
Ltd.
Sinopharm
Holding Joint liability 2019.10.15-2
2019-08-24 35,000 2019-10-15 1,119.38 N Y
Guangzhou Co., assurance 020.10.14
Ltd.
Sinopharm
Holding Joint liability 2019.07.26-2
2019-04-25 52,000 2019-07-26 46,951.66 N Y
Guangzhou Co., assurance 020.07.25
Ltd.
Sinopharm
Holding Joint liability 2019.08.13-2
2019-04-25 10,000 2019-08-13 N Y
Guangzhou Co., assurance 020.08.12
Ltd.
Sinopharm
Holding Joint liability 2019.08.06-2
2019-04-25 60,000 2019-08-06 N Y
Guangzhou Co., assurance 020.08.05
Ltd.
Sinopharm
Holding Joint liability 2020.06.11-2
2020-04-22 5,000 2020-06-11 581.74 N Y
Guangzhou Co., assurance 021.05.18
Ltd.
Sinopharm
Holding Joint liability 2020.05.20-2
2020-04-22 5,000 2020-05-20 1,193.23 N Y
Guangdong assurance 021.05.20
Yuexing Co., Ltd.
Sinopharm
Holding Joint liability 2019.10.15-2
2019-08-24 15,000 2019-10-15 3,829.26 N Y
Guangdong assurance 020.10.14
Yuexing Co., Ltd.
Sinopharm
Holding Joint liability 2019.12.25-2
2019-08-24 10,000 2019-12-25 4,474.81 N Y
Guangdong assurance 020.12.24
Yuexing Co., Ltd.
Sinopharm
Holding Joint liability 2019.08.06-2
2019-04-25 5,000 2019-08-06 N Y
Guangdong assurance 020.08.05
Yuexing Co., Ltd.
39
国药集团一致药业股份有限公司 2020 年半年度报告全文
Sinopharm
Holding Joint liability 2019.09.26-2
2019-08-24 5,000 2019-09-26 1,827.02 N Y
Guangdong assurance 020.09.25
Yuexing Co., Ltd.
Sinopharm
Holding Joint liability 2019.11.28-2
2019-08-24 10,000 2019-11-28 6,979.79 N Y
Guangdong assurance 020.10.18
Hengxing Co., Ltd.
Sinopharm
Holding Joint liability 2019.11.26-2
2019-08-24 3,000 2019-11-26 2,667.16 N Y
Guangdong assurance 020.11.25
Hengxing Co., Ltd.
Sinopharm
Joint liability 2019.10.15-2
Holding Foshan 2019-08-24 3,000 2019-10-15 N Y
assurance 020.10.14
Co., Ltd.
Sinopharm
Joint liability 2020.05.27-2
Holding Foshan 2020-04-22 3,000 2020-05-27 52.05 N Y
assurance 021.03.21
Co., Ltd.
Sinopharm
Joint liability 2019.11.07-2
Holding Foshan 2019-08-24 2,500 2019-11-07 128.88 N Y
assurance 020.11.06
Co., Ltd.
Sinopharm
Joint liability 2019.10.15-2
Holding Zhaoqing 2019-08-24 2,000 2019-10-15 1,757.42 N Y
assurance 020.10.14
Co., Ltd.
Sinopharm
Joint liability 2019.12.23-2
Holding Zhaoqing 2019-08-24 2,000 2019-12-23 1,915.14 N Y
assurance 020.12.22
Co., Ltd.
Sinopharm
Joint liability 2020.06.05-2
Holding Zhaoqing 2020-04-22 2,000 2020-06-05 745.8 N Y
assurance 021.05.18
Co., Ltd.
Guangdong
Nanfang
Joint liability 2019.07.01-2
Pharmaceutical 2019-04-25 15,000 2019-07-01 11,335.32 N Y
assurance 020.06.30
Foreign Trade Co.,
Ltd.
Guangdong
Nanfang
Joint liability 2019.09.24-2
Pharmaceutical 2019-08-24 10,000 2019-09-24 2,886.33 N Y
assurance 020.09.23
Foreign Trade Co.,
Ltd.
40
国药集团一致药业股份有限公司 2020 年半年度报告全文
Guangdong
Nanfang
Joint liability 2019.11.08-2
Pharmaceutical 2019-08-24 20,000 2019-11-08 15,377.95 N Y
assurance 020.09.30
Foreign Trade Co.,
Ltd.
Guangdong
Nanfang
Joint liability 2019.08.30-2
Pharmaceutical 2019-08-24 10,000 2019-08-30 N Y
assurance 020.08.13
Foreign Trade Co.,
Ltd.
Guangdong
Nanfang
Joint liability 2019.10.15-2
Pharmaceutical 2019-08-24 3,000 2019-10-15 N Y
assurance 020.10.14
Foreign Trade Co.,
Ltd.
Guangdong
Nanfang
Joint liability 2020.04.07-2
Pharmaceutical 2019-08-24 10,000 2020-04-07 5,774.59 N Y
assurance 020.10.22
Foreign Trade Co.,
Ltd.
Guangdong
Nanfang
Joint liability 2020.06.03-2
Pharmaceutical 2020-04-22 10,000 2020-06-03 N Y
assurance 021.05.18
Foreign Trade Co.,
Ltd.
Foshan Nanhai
Joint liability 2019.10.15-2
Pharmaceutical 2019-08-24 5,000 2019-10-15 494.47 N Y
assurance 020.10.14
Co., Ltd.
Foshan Nanhai
Joint liability 2020.05.27-2
Pharmaceutical 2020-04-22 10,000 2020-05-27 1,979.57 N Y
assurance 021.03.21
Co., Ltd.
Foshan Nanhai
Joint liability 2019.11.07-2
Pharmaceutical 2019-08-24 7,000 2019-11-07 3,031.14 N Y
assurance 020.11.06
Co., Ltd.
Foshan Nanhai
Joint liability 2020.04.16-2
Pharmaceutical 2019-08-24 2,500 2020-04-16 N Y
assurance 020.12.23
Co., Ltd.
Foshan Nanhai
Uptodate & Joint liability 2019.10.15-2
2019-08-24 6,000 2019-10-15 N Y
Special Medicines assurance 020.10.14
Co. Ltd.
41
国药集团一致药业股份有限公司 2020 年半年度报告全文
Foshan Nanhai
Uptodate & Joint liability 2020.05.27-2
2020-04-22 10,000 2020-05-27 8,307.23 N Y
Special Medicines assurance 021.03.21
Co. Ltd.
Foshan Nanhai
Uptodate & Joint liability 2019.11.07-2
2019-08-24 7,000 2019-11-07 1,631.03 N Y
Special Medicines assurance 020.11.06
Co. Ltd.
Foshan Nanhai
Uptodate & Joint liability 2019.11.20-2
2019-08-24 3,000 2019-11-20 1,989.28 N Y
Special Medicines assurance 020.11.19
Co. Ltd.
Foshan Nanhai
Uptodate & Joint liability 2020.04.16-2
2019-08-24 2,500 2020-04-16 N Y
Special Medicines assurance 020.12.23
Co. Ltd.
Sinopharm
Holding Joint liability 2019.10.15-2
2019-08-24 1,000 2019-10-15 999 N Y
(Jiangmen) Co., assurance 020.10.14
Ltd.
Sinopharm
Holding Joint liability 2020.05.26-2
2020-04-22 3,000 2020-05-26 2,999.47 N Y
(Jiangmen) Co., assurance 021.05.18
Ltd.
Sinopharm
Holding Joint liability 2019.12.13-2
2019-08-24 1,000 2019-12-13 520.67 N Y
(Jiangmen) Co., assurance 020.12.12
Ltd.
Sinopharm
Joint liability 2019.10.15-2
Holding Meizhou 2019-08-24 1,000 2019-10-15 1,000 N Y
assurance 020.10.14
Co., Ltd.
Sinopharm
Joint liability 2020.06.29-2
Holding Meizhou 2020-04-22 4,000 2020-06-29 2,063.45 N Y
assurance 021.06.28
Co., Ltd.
Sinopharm
Joint liability 2020.05.22-2
Holding Meizhou 2020-04-22 5,000 2020-05-22 4,523.76 N Y
assurance 021.05.18
Co., Ltd.
Sinopharm
Joint liability 2020.06.10-2
Holding Meizhou 2020-04-22 3,000 2020-06-10 N Y
assurance 021.05.31
Co., Ltd.
42
国药集团一致药业股份有限公司 2020 年半年度报告全文
Sinopharm
Holding Joint liability 2019.10.15-2
2019-08-24 1,000 2019-10-15 773.9 N Y
Zhongshan Co., assurance 020.10.14
Ltd.
Sinopharm
Holding Joint liability 2019.09.24-2
2019-08-24 2,000 2019-09-24 1,974.35 N Y
Zhongshan Co., assurance 020.09.23
Ltd.
Sinopharm
Joint liability 2019.10.15-2
Holding Shantou 2019-08-24 500 2019-10-15 500 N Y
assurance 020.10.14
Co., Ltd.
Sinopharm
Joint liability 2019.12.23-2
Holding Shantou 2019-08-24 1,000 2019-12-23 1,000 N Y
assurance 020.12.22
Co., Ltd.
Sinopharm
Joint liability 2020.06.01-2
Holding Shantou 2020-04-22 2,000 2020-06-01 1,500 N Y
assurance 021.05.31
Co., Ltd.
Sinopharm
Joint liability 2019.10.15-2
Holding Huizhou 2019-08-24 1,000 2019-10-15 569.97 N Y
assurance 020.10.14
Co., Ltd.
Sinopharm
Joint liability 2019.12.17-2
Holding Huizhou 2019-08-24 1,000 2019-12-17 N Y
assurance 020.12.16
Co., Ltd.
Sinopharm
Joint liability 2019.12.10-2
Holding Huizhou 2019-08-24 3,000 2019-12-10 2,002.27 N Y
assurance 020.12.09
Co., Ltd.
Sinopharm
Joint liability 2019.10.15-2
Holding Zhanjiang 2019-08-24 1,000 2019-10-15 1,000 N Y
assurance 020.10.14
Co., Ltd.
Sinopharm
Joint liability 2020.1.15-20
Holding Zhanjiang 2019-08-24 2,000 2020-01-15 2,000 N Y
assurance 20.12.19
Co., Ltd.
Sinopharm
Joint liability 2020.06.03-2
Holding Zhanjiang 2020-04-22 3,000 2020-06-03 N Y
assurance 021.05.20
Co., Ltd.
Sinopharm
Joint liability 2019.10.15-2
Holding Zhuhai 2019-08-24 1,000 2019-10-15 996.34 N Y
assurance 020.10.14
Co., Ltd.
Sinopharm Joint liability 2019.09.24-2
2019-08-24 2,000 2019-09-24 1,995.99 N Y
Holding Zhuhai assurance 020.09.23
43
国药集团一致药业股份有限公司 2020 年半年度报告全文
Co., Ltd.
Sinopharm
Joint liability 2020.05.15-2
Holding Zhuhai 2020-04-22 2,000 2020-05-15 863.65 N Y
assurance 021.05.15
Co., Ltd.
Sinopharm
Joint liability 2020.05.29-2
Holding Dongguan 2020-04-22 5,000 2020-05-29 1,000 N Y
assurance 021.05.18
Co., Ltd.
Sinopharm
Joint liability 2019.10.15-2
Holding Dongguan 2019-08-24 2,000 2019-10-15 N Y
assurance 020.10.14
Co., Ltd.
Sinopharm
Joint liability 2019.08.06-2
Holding Dongguan 2019-04-25 2,000 2019-08-06 N Y
assurance 020.08.05
Co., Ltd.
Sinopharm
Joint liability 2020.06.24-2
Holding Dongguan 2020-04-22 3,000 2020-06-24 506.94 N Y
assurance 021.06.23
Co., Ltd.
Sinopharm
Joint liability 2020.05.06-2
Holding Dongguan 2020-04-22 3,000 2020-05-06 N Y
assurance 021.02.27
Co., Ltd.
Guangdong
Dongfang New Joint liability 2020.05.11-2
2020-04-22 10,000 2020-05-11 2,517.14 N Y
Special Medicine assurance 021.05.10
Co., Ltd
Guangdong
Dongfang New Joint liability 2020.05.20-2
2020-04-22 5,000 2020-05-20 3,294.15 N Y
Special Medicine assurance 021.04.10
Co., Ltd
Guangdong
Dongfang New Joint liability 2020.04.09-2
2019-08-24 3,000 2020-04-09 1,707.8 N Y
Special Medicine assurance 021.03.16
Co., Ltd
Guangdong
Dongfang New Joint liability 2019.10.17-2
2019-08-24 9,000 2019-10-17 7,096.43 N Y
Special Medicine assurance 020.10.16
Co., Ltd
Guangdong
Dongfang New Joint liability 2019.10.15-2
2019-08-24 4,000 2019-10-15 3,839.13 N Y
Special Medicine assurance 020.10.14
Co., Ltd
Guangdong 2019-08-24 2,500 2020-04-16 Joint liability 2020.04.16-2 N Y
44
国药集团一致药业股份有限公司 2020 年半年度报告全文
Dongfang New assurance 020.12.23
Special Medicine
Co., Ltd
Sinopharm
Joint liability 2020.1.15-20
Holding Shaoguan 2019-08-24 3,000 2020-01-15 1,379.09 N Y
assurance 20.12.31
Co., Ltd.
Sinopharm
Joint liability 2020.05.29-2
Holding Shaoguan 2020-04-22 3,000 2020-05-29 2,994.21 N Y
assurance 021.05.18
Co., Ltd.
Sinopharm
Joint liability 2020.05.26-2
Holding Maoming 2020-04-22 5,000 2020-05-26 1,817.49 N Y
assurance 021.05.18
Co., Ltd.
Sinopharm
Holding Joint liability 2019.07.23-2
2019-04-25 2,500 2019-07-23 1,927.58 N Y
Guangzhou Huadu assurance 020.07.22
Co., Ltd.
Sinopharm
Holding Joint liability 2020.06.08-2
2020-04-22 2,000 2020-06-08 1,611.75 N Y
Guangzhou Huadu assurance 021.06.07
Co., Ltd.
Sinopharm
Holding Joint liability 2019.12.09-2
2019-08-24 1,500 2019-12-09 1,408.91 N Y
Guangzhou Huadu assurance 020.09.30
Co., Ltd.
Sinopharm
Joint liability 2019.12.18-2
Holding Heyuan 2019-08-24 2,000 2019-12-18 840 N Y
assurance 020.12.17
Co., Ltd.
Sinopharm
Joint liability 2020.05.21-2
Holding Heyuan 2020-04-22 5,000 2020-05-21 1,900 N Y
assurance 021.05.18
Co., Ltd.
Sinopharm
Holding Foshan
Medical Joint liability 2019.11.07-2
2019-08-24 1,000 2019-11-07 3.59 N Y
Consumables assurance 020.11.06
Supply Chain Co.,
Ltd.
Sinopharm Accord
(Guangzhou) Joint liability 2020.06.17-2
2020-04-22 1,000 2020-06-17 N Y
Medicines Co., assurance 021.05.18
Ltd.
Sinopharm 2020-04-22 30,000 2020-06-28 11,142.5 Joint liability 2020.06.28-2 N Y
45
国药集团一致药业股份有限公司 2020 年半年度报告全文
Holding Guangxi assurance 021.04.20
Co., Ltd.
Sinopharm
Joint liability 2019.10.15-2
Holding Guangxi 2019-08-24 28,000 2019-10-15 5,233.67 N Y
assurance 020.10.14
Co., Ltd.
Sinopharm
Joint liability 2020.02.17-2
Holding Guangxi 2019-08-24 25,000 2020-02-17 10,803.63 N Y
assurance 021.02.21
Co., Ltd.
Sinopharm
Joint liability 2020.06.16-2
Holding Guangxi 2020-04-22 20,000 2020-06-16 15,659.68 N Y
assurance 021.06.15
Co., Ltd.
Sinopharm
Joint liability 2020.05.28-2
Holding Guangxi 2020-04-22 10,000 2020-05-28 1,637.34 N Y
assurance 021.05.28
Co., Ltd.
Sinopharm
Joint liability 2019.12.25-2
Holding Guangxi 2019-08-24 25,000 2019-12-25 14,957.4 N Y
assurance 020.12.25
Co., Ltd.
Sinopharm
Joint liability 2019.07.26-2
Holding Guangxi 2019-04-25 5,000 2019-07-26 3,999.51 N Y
assurance 020.07.25
Co., Ltd.
Sinopharm
Joint liability 2020.05.20-2
Holding Guangxi 2020-04-22 20,000 2020-05-20 8,151.82 N Y
assurance 021.05.19
Co., Ltd.
Sinopharm
Joint liability 2019.07.03-2
Holding Guangxi 2019-04-25 20,000 2019-07-03 670 N Y
assurance 020.07.03
Co., Ltd.
Sinopharm
Joint liability 2020.05.29-2
Holding Guangxi 2020-04-22 12,000 2020-05-29 7,423.84 N Y
assurance 021.05.18
Co., Ltd.
Sinopharm
Joint liability 2019.10.15-2
Holding Liuzhou 2019-08-24 9,000 2019-10-15 3,139.5 N Y
assurance 020.10.14
Co., Ltd.
Sinopharm
Joint liability 2020.06.21-2
Holding Liuzhou 2020-04-22 10,000 2020-06-21 7,041.9 N Y
assurance 021.06.20
Co., Ltd.
Sinopharm
Joint liability 2020.02.21-2
Holding Liuzhou 2019-08-24 10,000 2020-02-21 13.37 N Y
assurance 021.02.20
Co., Ltd.
Sinopharm Joint liability 2019.07.09-2
2019-04-25 5,000 2019-07-09 4,988.93 N Y
Holding Liuzhou assurance 020.07.08
46
国药集团一致药业股份有限公司 2020 年半年度报告全文
Co., Ltd.
Sinopharm
Joint liability 2019.10.29-2
Holding Liuzhou 2019-08-24 9,000 2019-10-29 N Y
assurance 020.10.28
Co., Ltd.
Sinopharm
Joint liability 2019.12.20-2
Holding Liuzhou 2019-08-24 10,000 2019-12-20 4,999.64 N Y
assurance 020.12.19
Co., Ltd.
Sinopharm
Holding Medical
Joint liability 2019.10.08-2
Supply Chain 2019-08-24 1,059 2019-10-08 621.28 N Y
assurance 020.10.07
Services (Guangxi)
Co., Ltd.
Sinopharm
Joint liability 2019.10.15-2
Holding Wuzhou 2019-08-24 2,500 2019-10-15 N Y
assurance 020.10.14
Co., Ltd.
Sinopharm
Joint liability 2019.10.15-2
Holding Guilin 2019-08-24 1,500 2019-10-15 N Y
assurance 020.10.14
Co., Ltd
Sinopharm
Joint liability 2019.10.15-2
Holding Beihai 2019-08-24 3,000 2019-10-15 N Y
assurance 020.10.14
Co., Ltd
Sinopharm
Joint liability 2019.10.15-2
Holding Baise Co., 2019-08-24 2,500 2019-10-15 N Y
assurance 020.10.14
Ltd
Sinopharm
Joint liability 2019.10.15-2
Holding Guigang 2019-08-24 2,000 2019-10-15 N Y
assurance 020.10.14
Co., Ltd
Sinopharm
Joint liability 2019.10.15-2
Holding Yulin Co., 2019-08-24 1,500 2019-10-15 N Y
assurance 020.10.14
Ltd
Sinopharm
Joint liability 2019.10.15-2
Holding Shenzhen 2019-08-24 2,000 2019-10-15 1,028.6 N Y
assurance 020.10.14
Jianmin Co., Ltd.
Sinopharm
Joint liability 2020.02.17-2
Holding Shenzhen 2019-08-24 2,000 2020-02-17 600 N Y
assurance 021.02.17
Jianmin Co., Ltd.
Sinopharm
Joint liability 2019.10.15-2
Holding Shenzhen 2019-08-24 1,000 2019-10-15 314.64 N Y
assurance 020.10.14
Medicine Co., Ltd
Sinopharm 2019-08-24 12,000 2019-10-15 3,922.33 Joint liability 2019.10.15-2 N Y
47
国药集团一致药业股份有限公司 2020 年半年度报告全文
Holding Shenzhen assurance 020.10.14
Yanfeng Co., Ltd.
Sinopharm
Joint liability 2020.05.28-2
Holding Shenzhen 2020-04-22 8,000 2020-05-28 2,941.7 N Y
assurance 021.05.28
Yanfeng Co., Ltd.
Sinopharm
Joint liability 2019.08.06-2
Holding Shenzhen 2019-04-25 7,000 2019-08-06 N Y
assurance 020.08.05
Yanfeng Co., Ltd.
Sinopharm
Joint liability 2019.09.03-2
Holding Shenzhen 2019-08-24 5,000 2019-09-03 4,000 N Y
assurance 020.09.03
Yanfeng Co., Ltd.
Sinopharm
Joint liability 2020.05.25-2
Holding Shenzhen 2020-04-22 10,000 2020-05-25 3,000 N Y
assurance 021.05.18
Yanfeng Co., Ltd.
Sinopharm Accord
Medicines Supply Joint liability 2020.06.18-2
2020-04-22 5,000 2020-06-18 N Y
Chain (Shenzhen) assurance 021.05.18
Co., Ltd.
Total amount of actual
Total amount of approving
occurred guarantee for
guarantee for subsidiaries in 407,000 794,876.17
subsidiaries in report period
report period (B1)
(B2)
Total balance of actual
Total amount of approved
guarantee for subsidiaries at
guarantee for subsidiaries at the 1,077,559 473,137.63
the end of reporting period
end of reporting period (B3)
(B4)
Guarantees of subsidiaries to subsidiaries
Guarante
Related
e for
Name of the Announce Implemen
Guarantee Actual date of Actual Guarantee Guarantee
Company ment related
limit happening guarantee limit type term ted (Y/N)
guaranteed disclosure
party
date
(Y/N)
Sinopharm
Holding Guoda
Drugstore Joint liability 2019.10.10-2
2019-08-24 1,200 2019-10-10 992.48 N Y
Yangzhou assurance 020.10.09
Dadesheng Chain
Co., Ltd.
Fujian Guoda
Joint liability 2020.05.17-2
Drugstore Chain 2020-04-22 1,800 2020-05-17 1,093.79 N Y
assurance 021.05.17
Co., Ltd.
48
国药集团一致药业股份有限公司 2020 年半年度报告全文
Sinopharm
Holding Guoda
Joint liability 2020.06.29-2
Fumei Drugstore 2020-04-22 1,800 2020-06-29 0 N Y
assurance 021.06.28
Shanghai Chain
Co., Ltd.
Sinopharm
Holding Guoda
Joint liability 2019.10.10-2
Drugstore 2019-08-24 4,800 2019-10-10 3,551.46 N Y
assurance 020.10.09
Guangdong Co.,
Ltd.
Sinopharm
Holding Guoda
Joint liability 2019.12.18-2
Drugstore 2019-08-24 1,800 2019-12-18 0 N Y
assurance 020.12.17
Guangdong Co.,
Ltd.
Sinopharm
Holding Guoda
Joint liability 2020.03.19-2
Drugstore 2019-08-24 1,800 2020-03-19 1,454.06 N Y
assurance 021.03.18
Guangdong Co.,
Ltd.
Taishan Sinopharm
Holding Guoda
Joint liability 2019.06.02-2
Qunkang 2019-04-25 300 2019-06-02 86.06 N Y
assurance 020.06.01
Drugstore Chain
Co., Ltd.
Taishan Sinopharm
Holding Guoda
Joint liability 2019.10.10-2
Qunkang 2019-08-24 300 2019-10-10 232.96 N Y
assurance 020.10.09
Drugstore Chain
Co., Ltd.
Sinopharm
Holding Guoda Joint liability 2019.10.10-2
2019-08-24 1,800 2019-10-10 371.51 N Y
Drugstore Guangxi assurance 020.10.09
Chain Co., Ltd.
Sinopharm
Holding Guoda Joint liability 2020.03.19-2
2019-08-24 1,200 2020-03-19 128.47 N Y
Drugstore Guangxi assurance 021.03.18
Chain Co., Ltd.
China National
Joint liability 2019.10.10-2
Hebei Lerentang 2019-08-24 1,800 2019-10-10 1,714.5 N Y
assurance 020.10.09
Medicine Chain
49
国药集团一致药业股份有限公司 2020 年半年度报告全文
Co., Ltd.
China National
Hebei Lerentang Joint liability 2020.06.03-2
2020-04-22 9,000 2020-06-03 2,211.86 N Y
Medicine Chain assurance 021.05.14
Co., Ltd.
Sinopharm
Holding Guoda Joint liability 2019.12.06-2
2019-08-24 1,800 2019-12-06 0 N Y
Drugstore Henan assurance 020.12.05
Chain Co., Ltd.
Hunan Guoda
Minshentang Joint liability 2019.10.10-2
2019-08-24 1,800 2019-10-10 853.19 N Y
Drugstore Chain assurance 020.10.09
Co., Ltd.
Sinopharm
Holding Guoda
Joint liability 2019.10.10-2
Drugstore 2019-08-24 1,800 2019-10-10 1,194.75 N Y
assurance 020.10.09
Jiangmen Chain
Co., Ltd.
Sinopharm
Holding Guoda
Joint liability 2020.04.01-2
Drugstore 2019-08-24 1,200 2020-04-01 436.33 N Y
assurance 021.04.01
Jiangmen Chain
Co., Ltd.
Sinopharm
Holding Guoda
Joint liability 2020.03.19-2
Drugstore 2019-08-24 1,200 2020-03-19 860.29 N Y
assurance 021.03.18
Jiangmen Chain
Co., Ltd.
Beijing Jinxiang
Drugstore Joint liability 2020.03.19-2
2019-08-24 4,200 2020-03-19 1,832.02 N Y
Medicine Chain assurance 021.03.18
Co., Ltd
Sinopharm
Holding Guoda Joint liability 2020.03.19-2
2019-08-24 600 2020-03-19 536.49 N Y
Drugstore Nanjing assurance 021.03.18
Chain Co., Ltd.
Sinopharm
Holding Guoda Joint liability 2019.10.18-2
2019-08-24 1,800 2019-10-18 0 N Y
Drugstore Inner assurance 020.10.17
Mongolia Co., Ltd.
Sinopharm 2020-04-22 1,800 2020-04-30 1,214.15 Joint liability 2020.04.30-2 N Y
50
国药集团一致药业股份有限公司 2020 年半年度报告全文
Holding Guoda assurance 021.04.29
Drugstore Inner
Mongolia Co., Ltd.
Sinopharm
Holding Guoda Joint liability 2019.10.10-2
2019-08-24 5,700 2019-10-10 4,039.35 N Y
Drugstore Inner assurance 020.10.09
Mongolia Co., Ltd.
Sinopharm
Holding Guoda Joint liability 2020.05.19-2
2020-04-22 600 2020-05-19 457.65 N Y
Drugstore Bayan assurance 021.05.14
Nur Co., Ltd.
Sinopharm
Holding Guoda Joint liability 2020.03.19-2
2019-08-24 4,800 2020-03-19 1,358.76 N Y
Drugstore Inner assurance 021.03.18
Mongolia Co., Ltd.
Sinopharm
Holding Guoda Joint liability 2020.05.18-2
2020-04-22 600 2020-05-18 592.85 N Y
Drugstore Hulun assurance 021.05.14
Buir Co., Ltd.
Sinopharm
Holding Guoda Joint liability 2020.06.15-2
2020-04-22 600 2020-06-15 128.51 N Y
Drugstore Ulanqab assurance 021.05.14
Co., Ltd.
Ningxia Guoda
Joint liability 2019.08.29-2
Drugstore Chain 2019-08-24 2,400 2019-08-29 1,200 N Y
assurance 020.08.28
Co., Ltd.
Sinopharm
Holding Guoda Joint liability 2019.10.14-2
2019-08-24 2,400 2019-10-14 1,096.65 N Y
Drugstore assurance 020.10.13
Shandong Co., Ltd.
Shanxi Guoda
Joint liability 2019.11.08-2
Wanmin Drugstore 2019-08-24 3,000 2019-11-08 0 N Y
assurance 020.11.07
Chain Co., Ltd.
Shanxi Guoda
Joint liability 2019.06.13-2
Wanmin Drugstore 2019-04-25 3,600 2019-06-13 1,080 N Y
assurance 020.06.12
Chain Co., Ltd.
Shanxi Guoda
Joint liability 2020.01.18-2
Wanmin Drugstore 2019-08-24 2,520 2020-01-18 1,512 N Y
assurance 021.01.17
Chain Co., Ltd.
Shanxi Guoda Joint liability 2020.05.22-2
2020-04-22 15,000 2020-05-22 6,900 N Y
Wanmin Drugstore assurance 021.05.14
51
国药集团一致药业股份有限公司 2020 年半年度报告全文
Chain Co., Ltd.
Shanxi Guoda
Joint liability 2019.10.10-2
Wanmin Drugstore 2019-08-24 3,600 2019-10-10 3,600 N Y
assurance 020.10.09
Chain Co., Ltd.
Sinopharm
Holding Guoda Joint liability 2020.05.21-2
2020-04-22 15,000 2020-05-21 10,835.42 N Y
Shanxi Medicines assurance 021.05.14
Co., Ltd.
Sinopharm
Holding Guoda
Joint liability 2019.12.10-2
Drugstore 2019-08-24 3,000 2019-12-10 1,619.59 N Y
assurance 020.12.09
Shanghai Chain
Co., Ltd.
Sinopharm
Holding Guoda
Joint liability 2019.10.25-2
Drugstore 2019-08-24 2,400 2019-10-25 0 N Y
assurance 020.10.24
Shanghai Chain
Co., Ltd.
Sinopharm
Holding Guoda
Joint liability 2019.10.10-2
Drugstore 2019-08-24 2,400 2019-10-10 1,420.9 N Y
assurance 020.10.09
Shanghai Chain
Co., Ltd.
Sinopharm
Holding Guoda
Joint liability 2020.06.29-2
Drugstore 2020-04-22 3,000 2020-06-29 0 N Y
assurance 021.06.28
Shanghai Chain
Co., Ltd.
Sinopharm
Holding Guoda
Joint liability 2019.09.11-2
Drugstore 2019-08-24 6,000 2019-09-11 4,410.81 N Y
assurance 020.09.10
Shenyang Chain
Co., Ltd.
Sinopharm
Holding Guoda
Joint liability 2019.10.28-2
Drugstore 2019-08-24 2,400 2019-10-28 0 N Y
assurance 020.10.27
Shenyang Chain
Co., Ltd.
Sinopharm
Joint liability 2019.10.10-2
Holding Guoda 2019-08-24 15,000 2019-10-10 9,192.14 N Y
assurance 020.10.09
Drugstore
52
国药集团一致药业股份有限公司 2020 年半年度报告全文
Shenyang Chain
Co., Ltd.
Sinopharm
Holding Guoda
Joint liability 2020.06.05-2
Drugstore 2020-04-22 13,800 2020-06-05 12,086.2 N Y
assurance 021.05.14
Shenyang Chain
Co., Ltd.
Sinopharm
Holding Guoda
Drugstore Xinjiang Joint liability 2019.10.21-2
2019-08-24 3,000 2019-10-21 2,019.18 N Y
New Special assurance 020.10.21
Medicine Chain
Co., Ltd
Sinopharm
Holding Guoda
Drugstore Xinjiang Joint liability 2020.01.26-2
2019-08-24 3,000 2020-01-26 1,057.5 N Y
New Special assurance 020.10.29
Medicine Chain
Co., Ltd
Sinopharm
Holding Guoda
Joint liability 2020.05.02-2
Drugstore Shanxi 2020-04-22 4,200 2020-05-02 0 N Y
assurance 021.05.01
Yiyuan Chain Co.,
Ltd.
Sinopharm
Holding Guoda
Joint liability 2019.06.14-2
Drugstore Shanxi 2019-04-25 3,360 2019-06-14 61.74 N Y
assurance 020.06.13
Yiyuan Chain Co.,
Ltd.
Sinopharm
Holding Guoda
Joint liability 2019.10.10-2
Drugstore Shanxi 2019-08-24 9,000 2019-10-10 7,723.02 N Y
assurance 020.10.09
Yiyuan Chain Co.,
Ltd.
Sinopharm
Holding Guoda
Joint liability 2020.01.17-2
Drugstore 2019-08-24 300 2020-01-17 164.4 N Y
assurance 020.11.26
Zhengzhou Chain
Co., Ltd.
Inner Mongolia
Joint liability 2020.06.03-2
Guoda Drugstore 2020-04-22 2,400 2020-06-03 1,869.45 N Y
assurance 021.05.14
Co., Ltd.
53
国药集团一致药业股份有限公司 2020 年半年度报告全文
Sinopharm
Holding Tianhe Joint liability 2020.4.22-20
2020-04-22 5,100 2020-04-22 4,776.1 N Y
Jilin Medicines assurance 20.11.11
Co., Ltd.
Guoda Yihe
Joint liability 2020.4.22-20
Drugstore Jilin 2020-04-22 2,550 2020-04-22 2,550 N Y
assurance 20.11.11
Co., Ltd.
Guoda Yihe
Joint liability 2020.4.22-20
Drugstore Jilin 2020-04-22 4,080 2020-04-22 3,948.77 N Y
assurance 20.11.11
Co., Ltd.
Hunan Guoda
Minshengtang Joint liability 2020.01.17-2
2019-08-24 1,200 2020-01-17 554.47 N Y
Drugstore Chain assurance 020.11.26
Co., Ltd.
Tianjin Guoda
Joint liability 2020.02.26-2
Drugstore Chain 2019-08-24 300 2020-02-26 240.59 N Y
assurance 020.11.26
Co., Ltd.
Sinopharm
Holding Guoda Joint liability 2020.01.17-2
2019-08-24 1,200 2020-01-17 469.74 N Y
Drugstore assurance 020.11.26
Shandong Co., Ltd.
Sinopharm
Holding Guoda Joint liability 2020.01.16-2
2019-08-24 1,200 2020-01-16 543.81 N Y
Drugstore Henan assurance 020.11.26
Co., Ltd.
Shanxi Guoda
Joint liability 2020.01.25-2
Wanmin Drugstore 2019-08-24 3,000 2020-01-25 600 N Y
assurance 020.06.24
Chain Co., Ltd.
Sinopharm
Holding Guoda
Joint liability 2020.01.15-2
Drugstore 2019-08-24 1,800 2020-01-15 594.91 N Y
assurance 020.11.26
(Shenzhen) Chain
Co., Ltd.
Sinopharm
Holding Guoda
Drugstore Joint liability 2020.01.15-2
2019-08-24 1,200 2020-01-15 792.62 N Y
Yangzhou assurance 020.11.26
Dadesheng Chain
Co., Ltd.
Beijing Guoda Joint liability 2020.01.16-2
2019-08-24 1,800 2019-11-27 0 N Y
Drugstore Chain assurance 020.11.26
54
国药集团一致药业股份有限公司 2020 年半年度报告全文
Co., Ltd.
Sinopharm
Holding Guoda Joint liability 2020.06.05-2
2020-04-22 1,800 2020-06-05 881.84 N Y
Drugstore Inner assurance 021.05.14
Mongolia Co., Ltd.
Sinopharm
Holding Guoda
Joint liability 2020.05.26-2
Drugstore Shanxi 2020-04-22 3,000 2020-05-26 199.61 N Y
assurance 021.05.25
Yiyuan Chain Co.,
Ltd.
Sinopharm
Holding Guoda
Drugstore Xinjiang Joint liability 2020.06.29-2
2020-04-22 1,800 2020-06-29 0 N Y
New Special assurance 021.05.14
Medicine Chain
Co., Ltd
Sinopharm
Holding Guoda Joint liability 2020.06.11-2
2020-04-22 1,800 2020-06-11 0 N Y
Drugstore Henan assurance 021.05.14
Chain Co., Ltd.
Taishan Sinopharm
Holding Guoda
Joint liability 2020.06.16-2
Qunkang 2020-04-22 600 2020-06-16 0 N Y
assurance 021.05.14
Drugstore Chain
Co., Ltd.
Guoda Drugstore
Joint liability 2020.06.15-2
(Pu'er) Songmao 2020-04-22 1,200 2020-06-15 0 N Y
assurance 021.05.14
Co., Ltd.
Liaoning Guoda
Joint liability 2020.06.29-2
Medicines Co., 2020-04-22 3,000 2020-06-29 0 N Y
assurance 021.05.14
Ltd.
Yanji Xianghe
Joint liability 2020.06.17-2
Medicines Co., 2020-04-22 1,800 2020-06-17 0 N Y
assurance 021.05.14
Ltd.
Sinopharm
Holding Guoda
Joint liability 2020.05.21-2
Drugstore Shanxi 2020-04-22 4,200 2020-05-21 0 N Y
assurance 021.05.14
Yiyuan Chain Co.,
Ltd.
Total amount of approving Total amount of actual
100,530 115,209.2
guarantee for subsidiaries in occurred guarantee for
55
国药集团一致药业股份有限公司 2020 年半年度报告全文
report period (C1) subsidiaries in report period
(C2)
Total balance of actual
Total amount of approved
guarantee for subsidiaries at
guarantee for subsidiaries at the 219,510 109,342.95
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 507,530 occurred guarantee in report 910,085.37
(A1+B1+C1) period (A2+B2+C2)
Total amount of approved Total balance of actual
guarantee at the end of report 1,297,069 guarantee at the end of report 582,480.58
period (A3+B3+C3) period (A4+B4+C4)
The proportion of the total amount of actually guarantee in the
44.13%
net assets of the Company (that is A4+ B4+C4)
Including:
Amount of guarantee for shareholders, actual controller and its
0
related parties (D)
The debts guarantee amount provided for the guaranteed
parties whose assets-liability ratio exceed 70% directly or 0
indirectly (E)
Proportion of total amount of guarantee in net assets of the
0
Company exceed 50% (F)
Total amount of the aforesaid three guarantees (D+E+F) 0
Explanations on possibly bearing joint and several liquidating
N/A
responsibilities for undue guarantees (if applicable)
Explanations on external guarantee against regulated
N/A
procedures (if applicable)
(2) Guarantee outside against the regulation
□ Applicable √ Not applicable
No guarantee outside against the regulation in Period.
3. Trust financing
□ Applicable √ Not applicable
The Company had no trust financing in the reporting period.
56
国药集团一致药业股份有限公司 2020 年半年度报告全文
4. Other material contracts
□ Applicable √ Not applicable
No other material contracts for the Company in reporting period.
XVI. Social responsibility
1. Major environment protection
The listed Company and its subsidiary whether belong to the key sewage units released from environmental protection department
voluntary disclosure
Name of
Major Distribution Executed
Quantity of Emission Approved
Company Pollutants Emission of Pollutant Total Excessive
Discharge Concentr Total
/subsidiary and Method Discharge Discharge Emissions Discharge
Outlet ation Emissions
Particular Outlet Standards
Pollutants
Discharge
China
Tube Outlet of 23.75mg/ 7.306
National COD 1 0.738 ton N/A
Discharge Waste L “Water ton/year
Zhijun
Water Pollutant
Discharge Discharge
China
Ammonia Tube Outlet of 1.0835m Limit Value 0.812
National 1 0.034 ton N/A
Nitrogen Discharge Waste g/L -DB44/26-200 ton/year
Zhijun
Water 1”(before 8
May 2020);
Discharge
China “Discharge
Tube Outlet of 0.0325m 0.041
National Phosphate 1 Standards for 0.001 ton N/A
Discharge Waste g/L ton/year
Zhijun Water
Water
Pollutants in
Discharge
the
Zhijun Tube Outlet of 12.67mg/ 2.16
COD 1 Pharmaceutica 0.4118 ton N/A
Pingshan Discharge Waste L ton/year
l Industry of
Water
Mixed
Discharge Preparations-G
Zhijun Ammonia Tube Outlet of 0.243mg/ B 0.144
1 0.0079 ton N/A
Pingshan Nitrogen Discharge Waste L 21908-2008” ton/year
Water (after 8 May
Discharge 2020)
Zhijun Total Tube Outlet of 0.09mg/ 0.0216
1 0.0029 ton N/A
Pingshan phosphorus Discharge Waste L ton/year
Water
Main Luck COD Tube 1 Discharge 12mg/L DB44/26-2001 0.005 ton 0.041 N/A
57
国药集团一致药业股份有限公司 2020 年半年度报告全文
Pharmaceuti Discharge Outlet of LEVEL 1 ton/year
cals Waste STANDARD
Water FOR THE
SECOND
Discharge
Main Luck PERIOD
Ammonia Tube Outlet of 0.005
Pharmaceuti 1 0.5mg/L 0.0002 ton N/A
Nitrogen Discharge Waste ton/year
cals
Water
Discharge
Main Luck
Tube Outlet of 0.0002
Pharmaceuti Phosphate 1 0.04mg/l 0.00002 ton N/A
Discharge Waste ton/year
cals
Water
Discharge
Main Luck
Tube Outlet of 0.009
Pharmaceuti BOD 1 4mg/L 0.002 ton N/A
Discharge Waste ton/year
cals
Water
Discharge
Main Luck
Tube Outlet of 0.027
Pharmaceuti SS 1 10mg/L 0.005 ton N/A
Discharge Waste ton/year
cals
Water
Construction and operation of pollution prevention and control facilities
At present, the above-mentioned environmental pollution key monitoring units in which the Company has a
shareholding have established pollution prevention and control facilities for waste water. In the daily management
process, enterprises establish management procedures and operating instructions for environmental protection
facilities, and ensure the normal and compliant operation of anti-pollution facilities through system
implementation and responsibility implementation. All enterprises are continuously investing funds and stepping
up the transformation and improvement of pollution prevention and control facilities to ensure the stable operation
of pollution prevention facilities and improve the disposal capacity of environmental protection facilities.
Environmental impact assessment of construction projects and other environmental protection administrative
licenses
At present, the projects of all key monitoring units have carried out environmental impact assessments and
obtained approvals. The projects to be built also carry out the relevant administrative review procedures according
to the "three simultaneous" requirements of the environmental protection facilities of the construction project.
Emergency plan for environmental emergencies
At present, the above-mentioned environmental pollution key monitoring units in which the Company has a
shareholding have formulated the Emergency Plan for Environmental Emergencies and reported them according
to the regulatory requirements of the local regulatory authorities. According to the management requirements of
58
国药集团一致药业股份有限公司 2020 年半年度报告全文
the emergency plan, the key units regularly carry out emergency plan drills to further provide the enterprises’
emergency response capability.
Environmental self-monitoring scheme
At present, the above-mentioned environmental pollution key monitoring units in which the Company has a
shareholding have established environmental self-detection scheme and plan, and implemented self-inspection,
third-party detection and other monitoring methods according to the government requirements. Relevant
monitoring data and reports have been archived and saved.
Other environmental information that should be disclosed
The above two companies are joint stock companies of the Company. The Company and its holding subsidiaries
are not listed as key pollutant discharge units announced by the environmental protection department.
Relevant information on environment protection
Nil
2. Execution of social responsibility of targeted poverty alleviation
The Company temporarily not to carry out a targeted poverty alleviation in the period, and there are no follow-up plans either.
XVII. Explanation on other significant events
√Applicable □ Not applicable
On July 20, 2020, Sinopharm Accord convened the eighteenth session of the eighth board of directors, and
reviewed and approved the Proposal on the Proposed Delisting of Guoda Drugstore to Acquire 100% Equity of
Chengda Fangyuan Pharmaceutical Group Co., Ltd., and agreed with the entry and delisting matters of Guoda
Drugstore.
On July 24, 2020, Guoda Drugstore succeeded in delisting the 100% equity transfer project of Chengda Fangyuan,
with a transaction price of 1860 million yuan. On the same day, Guoda Drugstore and Liaoning Chengda signed
the Equity Transaction Contract.
On July 30, 2020, Guoda Drugstore received the Notice of Approval of Change of Registration (Liaoning)
SJHBTNZ [2020] No. 2020000380 from Liaoning Administration for Market Regulation, the registration
procedures for the industrial and commercial change registration of 100% equity of Chengda Fangyuan
Pharmaceutical Group Co., Ltd. through public delisting of Guoda Drugstore were completed on July 30, 2020.
For details of the above content, please refer to the Announcement of Sinopharm Accord on the Public Delisting
and Transfer of 100% Equity of Chengda Fangyuan Pharmaceutical Group Co., Ltd. (Announcement No.:
59
国药集团一致药业股份有限公司 2020 年半年度报告全文
2020-21), Announcement on the Progress of Sinopharm Accord on the Public Delisting and Transfer of 100%
Equity of Chengda Fangyuan Pharmaceutical Group Co., Ltd. (Announcement No.: 2020-22), and Announcement
on the Progress of Sinopharm Accord on the Public Delisting and Transfer of 100% Equity of Chengda Fangyuan
Pharmaceutical Group Co., Ltd. (Announcement No.: 2020-23) disclosed by the company on July 21, July 25, and
July 31, 2020.
XVIII. Significant event of subsidiary of the Company
√Applicable □ Not applicable
Please see XVII. Explanation of Other Important Matters
60
国药集团一致药业股份有限公司 2020 年半年度报告全文
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
Bon
New Capitalizatio
Proportio us Proportio
Amount shares n of public Others Subtotal Amount
n shar n
issued reserve
es
I. Restricted shares 65,498,153 15.30% -59,989,270 -59,989,270 5,508,883 1.29%
2. State-owned legal
60,380,743 14.10% -54,874,973 -54,874,973 5,505,770 1.29%
person’s shares
3. Other domestic
5,117,410 1.20% -5,114,297 -5,114,297 3,113 0.00%
shareholding
Including: Domestic legal
5,114,297 1.19% -5,114,297 -5,114,297 0 0.00%
person’s shares
Domestic nature
3,113 0.00% 3,113 0.00%
person shares
II. Unrestricted shares 362,628,830 84.70% 59,989,270 59,989,270 422,618,100 98.71%
1. RMB Ordinary shares 307,744,355 71.88% 59,989,270 59,989,270 367,733,625 85.89%
2. Domestically listed
54,884,475 12.82% 54,884,475 12.82%
foreign shares
III. Total shares 428,126,983 100.00% 428,126,983 100.00%
Reasons for share changed
√Applicable □ Not applicable
When the company issued shares to purchase assets and raised matching funds in 2016, the non-publicly issued
shares with restrictions on sales were lifted from sales restrictions on January 6, 2020, and the number of shares
released from sales restrictions was 59,989,270 shares.
Approval of share changed
□Applicable √Not applicable
Ownership transfer of share changed
□ Applicable √ Not applicable
Progress of shares buy-back
61
国药集团一致药业股份有限公司 2020 年半年度报告全文
□Applicable √Not applicable
Implementation progress of the reduction of repurchases shares by centralized bidding
□Applicable √Not applicable
Influence on the basic EPS and diluted EPS as well as other financial indexes of net assets per share attributable to common
shareholders of Company in latest year and period
□ Applicable √ Not applicable
Other information necessary to disclose for the Company or need to disclosed under requirement from security regulators
□ Applicable √ Not applicable
2. Changes of restricted shares
√Applicable □ Not applicable
In Share
Restricted
shares
Opening shares increased Shares released in Ending shares Restricted
Shareholders Date for released
restricted in Period restricted reasons
the
Period
Sinopharm Group Non-public
55,057,700 49,551,930 0 5,505,770 2020-1-6
Co., Ltd offering share
China National
Pharmaceutical Non-public
5,323,043 5,323,043 0 0 2020-1-6
Foreign Trade offering share
Corp.
Ping An
Asset-ICBM
-Ping An Asset
Non-public
Xinxiang No. 7 2,557,148 2,557,148 0 0 2020-1-6
offering share
Insurance Asset
Management
Product
Ping An
Asset-ICBM -
Xinxiang No. 3 Non-public
2,557,149 2,557,149 0 0 2020-1-6
Asset offering share
Management
Product
Total 65,495,040 59,989,270 0 5,505,770 -- --
62
国药集团一致药业股份有限公司 2020 年半年度报告全文
II. Securities issuance and listing
□ Applicable √ Not applicable
III. Number of shareholders and share-holding
In Share
Total preference shareholders
Total common shareholders at with voting rights recovered at
34,260 0
period-end end of reporting period (if
applicable) (see Note 8)
Particulars about shares held above 5% by common shareholders or top ten common shareholders
Number Number of share
Amount
of pledged/frozen
of Amount of
Proportion common Changes in
Nature of restricted un-restricted
Shareholders of shares shares reporting
shareholder common common State of
held held at period Amount
shares shares held share
period-en
held
d
Sinopharm State-owned 239,999,9
56.06% 5,505,770 234,494,221
Group Co., Ltd. corporate 91
Hong Kong
Securities 11,635,95
Overseas corporate 2.72% 11,635,950
Clearing 0
Company Ltd.
HTHK/CMG
FSGUFP-CMG
11,469,64
FIRST STATE Overseas corporate 2.68% 11,469,644
4
CHINA
GROWTH FD
Shanghai Gaoyi
Asset
Management
Partnership Domestic non
10,000,00
(Limited state-owned 2.34% 10,000,000
0
Partnership)-Ga corporate
oyi Linshan No.
1 Yuanwang
Fund
National Social Domestic non
Security Fund state-owned 1.82% 7,774,799 7,774,799
118 Portfolio corporate
63
国药集团一致药业股份有限公司 2020 年半年度报告全文
China National
Pharmaceutical State-owned
1.24% 5,323,043 5,323,043
Foreign Trade corporate
Corp.
Central Huijin State-owned
0.89% 3,804,400 3,804,400
Investment Ltd. corporate
Fidelity
Investment
Management
Overseas corporate 0.79% 3,391,337 3,391,337
(Hong Kong)
Limited -
Client’s fund
BBH BOS S/A
FIDELITY FD -
Overseas corporate 0.78% 3,358,761 3,358,761
CHINA
FOCUS FD
National Social Domestic non
Security Fund state-owned 0.65% 2,799,865 2,799,865
103 Portfolio corporate
Sinopharm Group Co., Ltd. and China National Pharmaceutical Foreign Trade Corporation
Explanation on associated have the same actual controller, which is China National Pharmaceutical Group Corporation.
relationship among the aforesaid It is unknown that there exists no associated relationship or belongs to the consistent actionist
shareholders among the other tradable shareholders regulated by the Management Measure of Information
Disclosure on Change of Shareholding for Listed Companies.
Particular about top ten common shareholders with un-restrict shares held
Amount of un-restrict common shares held at Type of shares
Shareholders
period-end Type Amount
RMB ordinary
Sinopharm Group Co., Ltd. 234,494,221 234,494,221
shares
Hong Kong Securities Clearing RMB ordinary
11,635,950 11,635,950
Company Ltd. shares
HTHK/CMG FSGUFP-CMG Domestically
FIRST STATE CHINA GROWTH 11,469,644 listed foreign 11,469,644
FD shares
Shanghai Gaoyi Asset Management
Partnership (Limited RMB ordinary
10,000,000 10,000,000
Partnership)-Gaoyi Linshan No. 1 shares
Yuanwang Fund
National Social Security Fund 118 RMB ordinary
7,774,799 7,774,799
Portfolio shares
64
国药集团一致药业股份有限公司 2020 年半年度报告全文
China National Pharmaceutical RMB ordinary
5,323,043 5,323,043
Foreign Trade Corp. shares
RMB ordinary
Central Huijin Investment Ltd. 3,804,400 3,804,400
shares
Fidelity Investment Management
RMB ordinary
(Hong Kong) Limited - Client’s 3,391,337 3,391,337
shares
fund
Domestically
BBH BOS S/A FIDELITY FD -
3,358,761 listed foreign 3,358,761
CHINA FOCUS FD
shares
National Social Security Fund 103 RMB ordinary
2,799,865 2,799,865
Portfolio shares
Expiation on associated relationship
Sinopharm Group Co., Ltd. and China National Pharmaceutical Foreign Trade Corporation
or consistent actors within the top
have the same actual controller, which is China National Pharmaceutical Group Corporation.
10 un-restrict shareholders and
It is unknown that there exists no associated relationship or belongs to the consistent actionist
between top 10 un-restrict
among the other tradable shareholders regulated by the Management Measure of Information
shareholders and top 10
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.
IV. Changes of controlling shareholders or actual controller
Changes of controlling shareholders in reporting period
□ Applicable √ Not applicable
Changes of controlling shareholders had no change in reporting period.
Changes of actual controller in reporting period
□ Applicable √ Not applicable
Changes of actual controller in reporting period had no change in reporting period.
65
国药集团一致药业股份有限公司 2020 年半年度报告全文
Section VII. Preferred Stock
□ Applicable √ Not applicable
The Company has no preferred stock in reporting period.
66
国药集团一致药业股份有限公司 2020 年半年度报告全文
Section VIII. Convertible Bonds
□ Applicable √ Not applicable
The Company had no convertible bonds in the Period.
67
国药集团一致药业股份有限公司 2020 年半年度报告全文
Section IX. Directors, Supervisors and Senior Executives
I. Changes of shares held by directors, supervisors and senior executives
□ Applicable √ Not applicable
Shares held by directors, supervisors and senior executives have no changes in reporting period, found more details in Annual Report
2019.
II. Resignation and dismissal of directors, supervisors and senior executives
√ Applicable □ Not applicable
Name Title Type Date Reasons
Chief Financial Job changes and no longer serves as the chief financial
Wei Pingxiao Dismissal 2020-05-28
Officer officer.
Chief Financial The 8th Board of Directors appointed the Chief
Gu Guolin Appoint 2020-05-28
Officer Financial Officer.
Ma Zhanjun Vice Chairman Leave office 2020-07-31 Resigned due to reaching the legal retirement age.
68
国药集团一致药业股份有限公司 2020 年半年度报告全文
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
semi-annual report approved for released or fail to cash in full on due
No
69
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
CONSOLIDATED BALANCE SHEET
As at 30 June 2020
(Expressed in Renminbi Yuan)
Section XI. Financial Report
I. Audit reports
Whether the semi-annual report was audited or not
□ Yes √ No
The financial report of this semi-annual report was unaudited.
II. Financial Statement
Statement in Financial Notes are carried in RMB/CNY
70
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
CONSOLIDATED BALANCE SHEET
As at 30 June 2020
(Expressed in Renminbi Yuan)
ASSETS Note V 30 June 2020 31 December 2019
Current assets
Cash and bank balances 1 8,239,840,227.80 8,885,729,250.47
Notes receivable 2 402,639,901.74 793,301,688.64
Accounts receivable 3 13,892,695,134.41 10,712,983,544.18
Receivable financing 4 399,889,650.01 446,342,588.46
Advances to suppliers 5 415,037,472.63 389,828,785.54
Other receivables 6 613,031,947.42 501,958,841.43
Incl: Dividend receivable - 834,914.61
Inventories 7 5,344,906,740.17 5,063,274,143.26
Other current assets 8 84,049,888.58 102,207,498.20
Total current assets 29,392,090,962.76 26,895,626,340.18
Non-current assets
Long-term equity investments 9 2,142,161,636.01 2,105,114,410.88
Other equity instrument investment 10 116,021,000.00 116,021,000.00
Other non-current financial assets 11 120,972,350.24 140,000,000.00
Investment properties 12 130,090,605.82 138,900,358.30
Fixed assets 13 716,847,033.81 708,000,172.63
Construction in progress 14 29,000,528.39 31,582,575.84
Right-of-use assets 15 2,072,151,887.64 1,994,757,862.07
Intangible assets 16 608,062,260.25 374,788,799.48
Goodwill 17 1,564,931,605.00 1,010,057,927.17
Long-term prepaid expenses 18 356,074,254.02 373,527,968.14
Deferred tax assets 19 87,459,888.93 63,110,829.12
Other non-current assets 20 333,986,190.43 77,354,970.39
Total non-current assets 8,277,759,240.54 7,133,216,874.02
Total assets 37,669,850,203.30 34,028,843,214.20
The accompanying notes form an integral part of these financial statements
71
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
CONSOLIDATED BALANCE SHEET (Continued)
As at 30 June 2020
(Expressed in Renminbi Yuan)
LIABILITIES Note V 30 June 2020 31 December 2019
Current liabilities
Short-term borrowings 21 3,710,647,467.19 1,453,018,300.01
Notes payable 22 4,691,825,761.98 5,555,697,557.53
Accounts payable 23 8,077,705,277.54 6,703,967,826.54
Contract liabilities 24 287,186,619.13 303,194,940.70
Employee benefits payable 25 221,834,256.19 259,640,813.10
Tax payable 26 293,029,278.65 253,379,524.34
Other payables 27 1,794,827,639.44 1,822,364,637.62
Incl: Interest payable 16,242,505.92 23,632,632.90
Dividend payable 11,831,814.95 6,389,320.96
Non-current liabilities due within one year 28 616,449,909.74 611,917,847.37
Other current liabilities 29 836,086.14 749,710.19
Total current liabilities 19,694,342,296.00 16,963,931,157.40
Non-current liabilities
Long-term borrowings 30 - -
Lease liabilities 31 1,216,076,164.93 1,208,453,029.51
Long-term payables 32 800,000.00 800,000.00
Long-term employee benefits payable 33 1,390,000.00 1,433,000.00
Deferred income 34 85,995,054.01 88,704,272.88
Deferred tax liabilities 19 180,948,720.64 118,284,962.77
Other non-current liabilities 35 472,489,632.40 73,256,514.93
Total non-current liabilities 1,957,699,571.98 1,490,931,780.09
Total liabilities 21,652,041,867.98 18,454,862,937.49
The accompanying notes form an integral part of these financial statements
72
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
CONSOLIDATED BALANCE SHEET (Continued)
As at 30 June 2020
(Expressed in Renminbi Yuan)
SHAREHOLDERS’ EQUITY Note V 30 June 2020 31 December 2019
Shareholders’ equity
Share capital 36 428,126,983.00 428,126,983.00
Capital surplus 37 4,372,912,064.89 4,470,766,959.44
Other comprehensive income 38 46,039,529.66 45,917,342.77
Surplus reserve 39 214,063,491.50 214,063,491.50
Retained earnings 40 8,138,841,049.96 7,752,265,659.17
Shareholders’ equity attributable to
shareholders of the parent 13,199,983,119.01 12,911,140,435.88
Non-controlling interests 2,817,825,216.31 2,662,839,840.83
Total shareholders’ equity 16,017,808,335.32 15,573,980,276.71
Total liabilities and shareholders’
equity 37,669,850,203.30 34,028,843,214.20
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:
73
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
CONSOLIDATED INCOME STATEMENT (Continued)
For the six months ended 30 June 2020
(Expressed in Renminbi Yuan)
Note V For the six months ended For the six months ended
30 June 2020 30 June 2019
Operating revenue 41 27,169,940,188.52 25,599,198,815.30
Less: Operating costs 41 23,971,029,719.44 22,712,876,604.19
Taxes and surcharges 42 69,505,309.32 62,711,394.37
Selling expenses 43 1,728,738,818.60 1,541,285,047.94
Administrative expenses 44 443,287,144.92 391,848,337.91
Finance costs 45 65,313,829.62 64,987,758.92
Incling: Interest cost 133,350,510.68 134,795,237.41
Interest income 65,512,550.22 60,641,102.49
Add: Other incomes 46 35,855,298.32 16,490,919.02
Investment income 47 105,206,349.26 126,873,486.44
Incling: Investment income from
associates 133,604,904.16 169,142,289.99
Income from the derecognition of
financial assets measured at
amortised cost
(33,507,102.64) (42,268,803.55)
Credit impairment losses 48 (21,580,231.52) (11,434,101.13)
Impairment losses 49 (1,743,888.30) (125,554.34)
Gain on disposal of assets 50 4,305,324.80 (29,725.44)
Operating profits 1,014,108,219.18 957,264,696.52
Add: Non-operating income 51 5,219,980.22 3,673,692.45
Less: Non-operating expenses 52 3,008,892.52 1,749,450.08
Total profit 1,016,319,306.88 959,188,938.89
Less: Income tax expenses 53 210,106,764.35 192,124,358.84
Net profit 806,212,542.53 767,064,580.05
Net Profit from continuing operations 806,212,542.53 767,064,580.05
Net profit attributable to owners of the parent 643,451,580.59 649,154,414.55
Profit or loss of non-controlling interests 162,760,961.94 117,910,165.50
74
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
CONSOLIDATED INCOME STATEMENT (Continued)
For the six months ended 30 June 2020
(Expressed in Renminbi Yuan)
Note V For the six months ended For the six months ended
30 June 2020 30 June 2019
Other comprehensive income, net of tax 122,186.89 -
Other comprehensive income, net of tax,
attributable to owners of the parent 122,186.89 -
Other comprehensive income that will be
reclassified to profit or loss 122,186.89 -
Other comprehensive income using the equity
method that will be reclassified to profit or loss
122,186.89 -
Total comprehensive income 806,334,729,42 767,064,580,05
Incl: Total comprehensive income
643,573,767.48 649,154,414.55
attributable to owners of the parent
Total comprehensive income
162,760,961.94 117,910,165.50
attributable to non-controlling interests
Earnings per share
Basic earnings per share 1.50 1.52
Diluted earnings per share 1.50 1.52
The accompanying notes form an integral part of these financial statements
75
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
For the six months ended 30 June 2020
(Expressed in Renminbi Yuan)
For the six months ended 30 Shareholders’ equity attributable to shareholders of the parent Non-controlling Total equity
June 2020 interests
Other comprehensive
Share capital Capital surplus income Surplus reserve Retained earnings Subtotal
Closing balance of the preceding year 428,126,983.00 4,363,007,511.57 45,917,342.77 214,063,491.50 7,755,295,537.08 12,806,410,865.92 2,553,426,974.31 15,359,837,840.23
Business combination involving
enterprises under common control - 107,759,447.87 - - (3,029,877.91) 104,729,569.96 109,412,866.52 214,142,436.48
Opening balance of the current year 428,126,983.00 4,470,766,959.44 45,917,342.77 214,063,491.50 7,752,265,659.17 12,911,140,435.88 2,662,839,840.83 15,573,980,276.71
Movements in the current year - (97,854,894.55) 122,186.89 - 386,575,390.79 288,842,683.13 154,985,375.48 443,828,058.61
(1) Total comprehensive income - - 122,186.89 - 643,451,580.59 643,573,767.48 162,760,961.94 806,334,729.42
(2) Capital paid and reduced by
- (97,854,894.55) - - - (97,854,894.55) 10,931,276.73 (86,923,617.82)
owners
1.Others - (97,854,894.55) - - - (97,854,894.55) 10,931,276.73 (86,923,617.82)
(3) Profit distribution - - - - (256,876,189.80) (256,876,189.80) (18,706,863.19) (275,583,052.99)
1.Distribution to equity owners - - - - (256,876,189.80) (256,876,189.80 ) (18,706,863.19) (275,583,052.99)
Closing balance of the current year 428,126,983.00 4,372,912,064.89 46,039,529.66 214,063,491.50 8,138,841,049.96 13,199,983,119.01 2,817,825,216.31 16,017,808,335.32
The accompanying notes form an integral part of these financial statements
76
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY(Continued)
For the six months ended 30 June 2020
(Expressed in Renminbi Yuan)
For the six months ended 30 Shareholders’ equity attributable to shareholders of the parent Non-controlling Total equity
June 2019 interests
Share capital Capital surplus Surplus reserve Retained earnings Subtotal
Closing balance of the preceding year 428,126,983.00 4,320,984,981.51 214,063,491.50 6,655,257,147.27 11,618,432,603.28 2,287,343,889.77 13,905,776,493.05
Business combination involving
enterprises under common control - 107,759,447.87 - 328,013.78 108,087,461.65 110,114,216.72 218,201,678.37
Opening balance of the current year 428,126,983.00 4,428,744,429.38 214,063,491.50 6,655,585,161.05 11,726,520,064.93 2,397,458,106.49 14,123,978,171.42
Movements in the current year - 42,424,747.00 - 477,903,621.35 520,328,368.35 131,363,406.60 651,691,774.95
(1) Total comprehensive income - - - 649,154,414.55 649,154,414.55 117,910,165.50 767,064,580.05
(2) Capital paid and reduced by
- 42,424,747.00 - - 42,424,747.00 14,780,000.00 57,204,747.00
owners
1.Capital injection by owners - - - - - 14,780,000.00 14,780,000.00
2.Others - 42,424,747.00 - - 42,424,747.00 - 42,424,747.00
(3) Profit distribution - - - (171,250,793.20) (171,250,793.20) (1,326,758.90) (172,577,552.10)
1.Distribution to equity owners - - - (171,250,793.20) (171,250,793.20) (1,326,758.90) (172,577,552.10)
Closing balance of the current year 428,126,983.00 4,471,169,176.38 214,063,491.50 7,133,488,782.40 12,246,848,433.28 2,528,821,513.09 14,775,669,946.37
The accompanying notes form an integral part of these financial statements
77
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
CONSOLIDATED CASH FLOW STATEMENT
For the six months ended 30 June 2020
(Expressed in Renminbi Yuan)
Note V For the six months ended For the six months ended
30 June 2020 30 June 2019
1.CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from sales of good and the
rendering of services 27,735,103,033.02 26,078,970,809.97
Receipts of taxes and surcharges refunds 8,145,306.66 2,721,287.63
Cash receipts related to other operating activities 54 707,202,110.00 309,460,457.97
Total cash inflows from operating activities 28,450,450,449.68 26,391,152,555.57
Cash payments for goods and services 24,305,374,637.56 22,943,691,763.40
Cash payments to and on behalf of employees 1,278,474,969.40 1,145,240,067.80
Cash paid for all types of taxes 724,722,540.88 640,484,280.01
Cash payments relating to other operating 54 703,674,258.49 522,582,323.47
activities
Total cash outflows from operating activities 27,012,246,406.33 25,251,998,434.68
Net cash flows from operating activities 55 1,438,204,043.35 1,139,154,120.89
2.CASH FLOWS FROM INVESTING ACTIVITIES
Cash receipts from returns of investments 19,027,649.76 -
Cash receipts from returns on investments 84,166,102.10 20,129,463.78
Net cash received from disposal of fixed
assets, intangible assets and other long-term
assets 4,352,536.98 807,205.52
Cash receipts related to other investing activities 54 22,040,000.00 260,600,000.00
Total cash inflows from investing activities 129,586,288.84 281,536,669.30
The accompanying notes form an integral part of these financial statements
78
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
CONSOLIDATED CASH FLOW STATEMENT (Continued)
For the six months ended 30 June 2020
(Expressed in Renminbi Yuan)
For the six months ended For the six months ended
Note V
30 June 2020 30 June 2019
2.CASH FLOWS FROM INVESTING ACTIVITIES (Continued)
Cash payments for acquisition of fixed assets,
intangible assets and other long-term assets 116,186,214.91 114,284,920.35
Cash payments for investments 20,545,399.15 43,674,685.30
Net cash payments for acquisition of subsidiaries
and other business units 659,201,491.65 -
Cash payments relating to other investing activities 54 - 229,093,125.00
Total cash outflows from investing activities 795,933,105.71 387,052,730.65
Net cash flows from investing activities (666,346,816.87) (105,516,061.35)
3.CASH FLOWS FROM FINANCING ACTIVITIES
Cash proceeds from investments by others - 14,780,000.00
Incl: Cash receipts from capital contributions from
non-controlling interests of subsidiaries - 14,780,000.00
Cash receipts from borrowings 589,920,037.57 104,700,000.00
Cash receipts relating to other financing
54 334,349,840.06 3,512,659.71
activities
Total cash inflows from financing activities 924,269,877.63 122,992,659.71
Cash repayments for debts 284,200,000.00 161,261,634.53
Cash payments for distribution of dividends or
profit and interest expenses 432,276,651.88 344,581,712.62
Incl: Dividends or profit paid to non-controlling
shareholders of subsidiaries 10,890,773.58 1,326,758.90
Cash payments relating to other financing
54 1,405,111,664.26 510,162,167.74
activities
Total cash outflows from financing activities 2,121,588,316.14 1,016,005,514.89
Net cash flows from financing activities (1,197,318,438.51) (893,012,855.18)
The accompanying notes form an integral part of these financial statements
79
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
CONSOLIDATED CASH FLOW STATEMENT (Continued)
For the six months ended 30 June 2020
(Expressed in Renminbi Yuan)
Note V For the six months For the six months
ended 30 June 2020 ended 30 June 2019
4.EFFECT OF FOREIGN EXCHANGE RATE CHANGES
ON CASH AND CASH EQUIVALENTS (47,935.97) (176,567.25)
5.NET INCREASE IN CASH AND CASH EQUIVALENTS 55 (425,509,148.00) 140,448,637.11
Add: Cash and cash equivalents at beginning of the year 8,426,071,170.16 7,634,936,037.30
6.CASH AND CASH EQUIVALENTS AT END OF YEAR 55
8,000,562,022.16 7,775,384,674.41
The accompanying notes form an integral part of these financial statements
80
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
COMPANY BALANCE SHEET
As at 30 June 2020
(Expressed in Renminbi Yuan)
ASSETS Note XIV 30 June 2020 31 December 2019
Current assets
Cash and bank balances 3,783,035,653.60 2,909,417,289.71
Notes receivable - 14,900,068.42
Accounts receivable 1 640,874,941.28 571,544,784.65
Receivables financing 14,618,645.61 30,194,682.11
Advances to suppliers 1,620,450.15 7,996,243.28
Other receivables 2 1,669,369,213.60 1,928,941,595.38
Incl: Dividend receivable 5,664,636.60 834,914.61
Inventories 163,941,874.00 169,422,075.78
Other current assets 39,482.38 39,482.38
Total current assets 6,273,500,260.62 5,632,456,221.71
Non-current assets
Long-term equity investments 3 7,729,748,342.18 7,698,756,525.83
Other non-current financial assets 120,972,350.24 140,000,000.00
Investment properties 1,468,165.30 1,484,198.56
Fixed assets 13,758,603.80 14,763,656.62
Right-of-use assets 5,713,745.04 6,217,504.50
Intangible assets 5,338,870.03 5,838,737.17
Long-term deferred expenses 5,154,262.50 6,130,534.55
Deferred tax assets 9,236,448.42 9,327,850.53
Other non-current assets 14,160,535.79 9,000,000.00
Total non-current assets 7,905,551,323.30 7,891,519,007.76
Total assets 14,179,051,583.92 13,523,975,229.47
The accompanying notes form an integral part of these financial statements
81
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
COMPANY BALANCE SHEET (Continued)
As at 30 June 2020
(Expressed in Renminbi Yuan)
LIABILITIES 30 June 2020 31 December 2019
Current liabilities
Short-term borrowings 367,293,866.62 121,350,644.36
Notes payable 433,478,121.14 751,577,900.22
Accounts payable 420,416,081.88 322,436,681.01
Contract liabilities 11,170,128.91 7,293,184.46
Employee benefits payable 27,706,738.19 30,469,777.88
Tax payables 19,296,823.49 22,909,124.90
Other payables 2,145,057,270.41 2,120,794,765.05
Incl: Interest payable 743,724.90 861,110.53
Non-current liabilities due within one year 1,033,492.62 32,640,325.77
Other current liabilities 251,426.46 338,196.81
Total current liabilities 3,425,703,949.72 3,409,810,600.46
Non-current liabilities
Lease liabilities 4,988,812.95 5,461,257.38
Long-term payables 800,000.00 800,000.00
Long-term employee benefits payable 21,000.00 -
Deferred income 1,052,178.42 1,276,698.66
Other non-current liabilities 107,507,794.94 -
Total non-current liabilities 114,369,786.31 7,537,956.04
Total liabilities 3,540,073,736.03 3,417,348,556.50
The accompanying notes form an integral part of these financial statements
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
COMPANY BALANCE SHEET (Continued)
As at 30 June 2020
(Expressed in Renminbi Yuan)
SHAREHOLDERS’ EQUITY 30 June 2020 31 December 2019
Shareholders’ equity
Share capital 428,126,983.00 428,126,983.00
Capital surplus 4,468,399,442.76 4,468,385,307.32
Other comprehensive income (11,179.30) (133,366.19)
Surplus reserve 214,063,491.50 214,063,491.50
Retained earnings 5,528,399,109.93 4,996,184,257.34
Total shareholders’ equity 10,638,977,847.89 10,106,626,672.97
Total liabilities and shareholders’ equity 14,179,051,583.92 13,523,975,229.47
The accompanying notes form an integral part of these financial statements
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
COMPANY INCOME STATEMENT
For the six months ended 30 June 2020
(Expressed in Renminbi Yuan)
For the six months For the six months
Note XIV
ended 30 June 2020 ended 30 June 2019
Operating revenue 4 1,772,487,363.56 2,008,004,563.30
Less: Operating costs 4 1,689,564,062.24 1,921,272,394.76
Taxes and surcharges 2,582,640.86 2,519,247.99
Selling expenses 31,376,377.04 31,052,044.81
Administrative expenses 43,060,479.75 38,056,806.31
Finance costs (43,838,117.34) (30,577,119.28)
Incl: Interest cost 21,928,061.34 21,387,846.09
Interest income 66,569,319.85 52,479,722.42
Add: Other incomes 629,921.47 332,764.13
Investment income 5 749,633,760.78 606,109,545.19
Incl: Investment income from
133,549,495.38 181,280,533.11
associates
Income from the derecognition of financial
(1,526,968.25) (2,178,875.28)
assets measured at amortised cost
Credit impairment losses (976,022.96) (2,365,765.08)
Impairment losses (242,731.87) (102,112.84)
Gain on disposal of assets - (26,074.52)
Operating profits 798,786,848.43 649,629,545.59
Add: Non-operating income 1,596.77 46,069.40
Less: Non-operating expenses 52,122.72 -
Total profit 798,736,322.48 649,675,614.99
Less: Income tax expenses 9,645,280.09 8,999,224.52
Net profit 789,091,042.39 640,676,390.47
Net Profit from continuing operations 789,091,042.39 640,676,390.47
Other comprehensive income, net of tax 122,186.89 -
Other comprehensive income that will be reclassified
122,186.89 -
to profit or loss
Other comprehensive income using the equity
122,186.89 -
method that will be reclassified to profit or loss
Total comprehensive income 789,213,229.28 640,676,390.47
The accompanying notes form an integral part of these financial statements
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
COMPANY STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
For the six months ended 30 June 2020
(Expressed in Renminbi Yuan)
Other comprehensive
For the six months ended 30 June 2020 Share capital Capital surplus Surplus reserve Retained earnings Total equity
income
Closing balance of the preceding year 428,126,983.00 4,468,385,307.32 (133,366.19) 214,063,491.50 4,996,184,257.34 10,106,626,672.97
Opening balance of the current year 428,126,983.00 4,468,385,307.32 (133,366.19) 214,063,491.50 4,996,184,257.34 10,106,626,672.97
Movements in the current year - 14,135.44 122,186.89 - 532,214,852.59 532,351,174.92
(1) Total comprehensive income - - 122,186.89 - 789,091,042.39 789,213,229.28
(2) Capital paid and reduced by owners - 14,135.44 - - - 14,135.44
1.Others - 14,135.44 - - - 14,135.44
(3) Profit distribution - - - - (256,876,189.80) (256,876,189.80)
1.Distribution to equity owners - - - - (256,876,189.80) (256,876,189.80)
Closing balance of the current year 428,126,983.00 4,468,399,442.76 (11,179.30) 214,063,491.50 5,528,399,109.93 10,638,977,847.89
The accompanying notes form an integral part of these financial statements
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
COMPANY STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (Continued)
For the six months ended 30 June 2020
(Expressed in Renminbi Yuan)
For the six months ended 30 June 2019 Share capital Capital surplus Surplus reserve Retained earnings Total equity
Closing balance of the preceding year 428,126,983.00 4,426,362,777.26 214,063,491.50 3,956,556,754.02 9,025,110,005.78
Opening balance of the current year 428,126,983.00 4,426,362,777.26 214,063,491.50 3,956,556,754.02 9,025,110,005.78
Movements in the current year - 42,424,747.00 - 469,425,597.27 511,850,344.27
(1) Total comprehensive income - - - 640,676,390.47 640,676,390.47
(2) Capital paid and reduced by owners - 42,424,747.00 - - 42,424,747.00
1.Others - 42,424,747.00 - - 42,424,747.00
(3) Profit distribution - - - (171,250,793.20) (171,250,793.20)
1.Distribution to equity owners - - - (171,250,793.20) (171,250,793.20)
Closing balance of the current year 428,126,983.00 4,468,787,524.26 214,063,491.50 4,425,982,351.29 9,536,960,350.05
The accompanying notes form an integral part of these financial statements
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
COMPANY CASH FLOW STATEMENT
For the six months ended 30 June 2020
(Expressed in Renminbi Yuan)
For the six months For the six months
ended 30 June 2020 ended 30 June 2019
1.CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from sales of good and the
rendering of services 1,959,922,054.30 2,136,424,520.77
Cash receipts related to other operating activities 56,400,693.21 18,658,823.82
Total cash inflows from operating activities 2,016,322,747.51 2,155,083,344.59
Cash payments for goods and services 1,808,113,785.36 1,905,147,658.61
Cash payments to and on behalf of employees 56,731,764.12 48,424,818.87
Cash paid for all types of taxes 34,728,524.87 27,913,893.13
Cash payments relating to other operating
activities 36,411,653.42 17,265,038.12
Total cash outflows from operating activities 1,935,985,727.77 1,998,751,408.73
Net cash flows from operating activities 80,337,019.74 156,331,935.86
2. CASH FLOWS FROM INVESTING ACTIVITIES
Cash receipts from returns of investments 32,664,096.76 -
Cash receipts from returns on investments 252,042,116.93 55,106,832.79
Net cash received from disposal of fixed assets,
intangible assets and other long-term assets - 119,000.00
Cash receipts related to other investing activities 1,575,127,297.73 996,340,000.00
Total cash inflows from investing activities 1,859,833,511.42 1,051,565,832.79
Cash payments for acquisition of fixed
assets, intangible assets and other long-term
assets 10,386,641.64 5,983,680.11
Cash payments for investments
Cash payments relating to other investing
activities 1,309,671,874.11 1,200,340,000.00
Total cash outflows from investing activities 1,320,058,515.75 1,206,323,680.11
Net cash flows from investing activities 539,774,995.67 -154,757,847.32
The accompanying notes form an integral part of these financial statements
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
For the six months For the six months
ended 30 June 2020 ended 30 June 2019
3. CASH FLOWS FROM FINANCING ACTIVITIES
Cash receipts from borrowings 32,264,821.52 10,000,000.00
Cash receipts relating to other financing activities 16,113,679,647.75 11,037,461,719.13
Total cash inflows from financing activities 16,145,944,469.27 11,047,461,719.13
Cash repayments for debts 43,700,000.00 10,000,000.00
Cash payments for distribution of dividends or
profit and interest expenses 272,655,694.83 182,679,899.11
Cash payments relating to other financing
activities 15,582,101,156.66 10,463,180,682.33
Total cash outflows from financing activities 15,898,456,851.49 10,655,860,581.44
Net cash flows from financing activities 247,487,617.78 391,601,137.69
4.EFFECT OF FOREIGN EXCHANGE RATE
CHANGES ON CASH AND CASH
EQUIVALENTS (47,935.97) (176,567.25)
5. NET INCREASE IN CASH AND CASH
EQUIVALENTS 867,551,697.22 392,998,658.98
Add: Cash and cash equivalents at beginning of the
year 2,894,333,956.38 1,817,654,598.01
6. CASH AND CASH EQUIVALENTS
AT END OF YEAR 3,761,885,653.60 2,210,653,256.99
The accompanying notes form an integral part of these financial statements
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
III. Profile of the Company
(1) Historical development and basic information
As approved by the People’s Government of Shenzhen (SFBF (1993) No.356), China National Accord
Medicines Corporation Ltd. (hereinafter referred to as the “the Company”), formerly known as Shenzhen
Health Mineral Water Corp., Ltd., was registered as a joint stock liability limited company on 1 February
1993 through stock transformation. In March 1993, with the approval from the Shenzhen Branch of the
People’s Bank of China, the Company issued 30 million A shares (including 16.5 million public shares, 3.5
million employee shares and 10 million corporation shares) and 20 million B shares. After this issuance,
the Company’s share capital was RMB105 million. Through convert capital surplus into share capital,
bonus issues and issuance of shares for years, the share capital of the Company increased to
RMB428.13 million as at 30 June 2019.
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 Management
Company’s 100% equity interests in 11 pharmaceutical companies and certain properties as well as 51%
equity interests in Shenzhen Tefa Modern Computer Co., Ltd. The above asset exchange proposal was
approved by shareholders in the Second Extraordinary General Meeting on December 29, 2000. The
transaction was completed on 8 January 2001.
On 18 February 2004, the Company’s original major shareholder, Shenzhen Investment Management
Company, entered into a Stock Transfer Agreement with Sinopharm Group Co., Ltd. (hereinafter referred
to as “Sinopharm Group”) to transfer its 43.33% shares in the Company to Sinopharm Group. The legal
procedures of the above equity transfer were completed on 9 December 2004. At the same time, as
approved by the State-owned Assets Supervision and Administration Commission of the State Council
(GZCQ (2004) No.525) and the China Securities Regulatory Commission (ZJGSZ (2004) No.94), the
nature of these shares was changed from state-owned stock to state-owned legal entity stock and
Sinopharm Group became the largest shareholder of the Company.
On 14 April 2006, the Company’s proposal on reformation of segregated stocks was approved. To gain
liquidity for the restricted stocks of the Company, the holders of the restricted stocks of the Company
agreed to pay the following consideration: based on the stock registration as of 27 April 2006, the
Company issued bonus shares on 28 April 2006 at the ratio of 3 shares to every 10 A shares to liquidated
A-shareholders which went public on the same day. After this bonus issue, the total number of shares of
the Company remained unchanged with corresponding changes in the composition of shareholdings.
On March 14 2014, the company issued 74,482,543 ordinary shares (A shares) through the non-public
offering. Par value per share is RMB1.00. The shares shall not be transferred within 36 months since the
issue day. The total number of shares of the Company was 362,631,943 since the date of issue.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
III. Profile of the Company (Continued)
(1) Historical development and basic information (Continued)
As of 31 October 2016, the company issued RMB65.50 million ordinary shares (A shares) through the
non-public offering. Par value per share is RMB1.00. Through the non-public offering, 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.
As of 30 June 2020, the total share capital was RMB428.13 million.
The Company is registered with Shenzhen Administration for Industry & Commerce. Its Uniform Social
Credit Code is 91440300192186267U. The operation period of the Company is from 2 August 1986 to
the long term. The registered capital of the Company is RMB428.13 million. The legal representative of
the Company is Lin Zhaoxiong.
The approved scope of business of the Company and its subsidiaries (together “the Group”) includes:
the wholesale of 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; trading 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 leasing of self-owned
properties; pharmacovigilance and medical information consulting; parking operation; logistics and
related services; package agency business; logistic design; import and export services (excluding
projects that are prohibited by the country; and limited projects has to be approved before operating).
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
III. Profile of the Company (Continued)
(2) The Group’s parent and ultimate parent companies are Sinopharm Group and China National
Pharmaceutical Group Corporation (“CNPGC”) , respectively.
(3) These financial statements were authorized for issue by the board of directors of the Company
on 29 August 2020.
(4) Subsidiaries consolidated in the financial statements for the current period and change in the
consolidation scope are shown in Note VIII.
IV. Basis of preparation
The financial statements were prepared in accordance with the Basic Standard and specific standards of
Accounting Standards for Business Enterprises issued by the Ministry of Finance and the specific
accounting standards, application guidance, interpretation and other relevant regulations issued or
amended thereafter (hereafter collectively referred to as “Accounting Standards for Business
Enterprises” or “CAS”). Except for certain financial instruments, the financial statements have been
prepared using the historical cost as the principle of measurement. Where assets are impaired,
provisions for asset impairment are made in accordance with the relevant requirements.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
V. Summary of significant accounting policies and accounting estimates
The Group determines the specific accounting policies and estimates based on its features of production
and operation, primarily comprising the methods of provision for expected credit losses on receivables,
valuation of inventories, depreciation of fixed assets and amortisation of intangible assets, the
measurement model of investment properties, recognition and measurement of revenue, etc.
(1) Statement of compliance with the Accounting Standards for Business Enterprises
The financial statements of the Company for the year ended 30 June 2020 are in compliance with
Accounting Standards for Business Enterprises, and truly and completely present the financial position
of the Group and the Company as of 30 June 2020 and the operating results, cash flows and other
information for the six months ended 30 June 2020 of the Group and the Company.
(2) Accounting year
The Company’s accounting year begins on 1 January and ends on 31 December.
(3) Functional currency
The Group’s functional and presentation currency is Renminbi (RMB). The currency unit is RMB
Yuan unless otherwise stated.
(4) Business combinations
Business combinations are classified into business combinations involving enterprises under common
control and business combinations not involving enterprises under common control.
(a) Business combinations involving enterprises under common control
A business combination involving enterprises under common control is a business combination in which
all of the combining enterprises are ultimately controlled by the same party or parties both before and
after the combination, and that control is not transitory. In a business combination involving enterprises
under common control, the enterprise that, at the combination date, obtains control of another combining
enterprise is the absorbing enterprise, while that other combining enterprise is the enterprise being
absorbed. The combination date is the date on which the absorbing enterprise effectively obtains
control on the enterprise being absorbed.
The assets and liabilities (including goodwill arising from the ultimate controlling party’s acquisition of the
enterprise being absorbed) that are obtained by the absorbing enterprise in a business combination
involving enterprises under common control shall be measured on the basis of their carrying amounts in
the financial statements of the ultimate controlling party at the combination date. 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 capital premium under capital reserves and the balance transferred from capital reserves
under the old accounting system. If the capital premium is not sufficient to absorb the difference, any
excess shall be adjusted against retained earnings.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(4) Business combinations (Continued)
(b) Business combinations involving enterprises not under common control
A business combination not involving enterprises under common control is a business combination in
which all of the combining enterprises are not ultimately controlled by the same party or parties both
before and after the combination. In a business combination not involving enterprises under common
control, the enterprise that, on the acquisition date, obtains control of another combining enterprise is the
acquirer, while that other combining enterprise is the acquiree. The acquisition date is the date on
which the acquirer effectively obtains control of the acquiree.
The acquirer shall measure the acquiree’s identifiable assets, liabilities and contingent liabilities acquired
in the business combination at their fair values on the acquisition date.
Goodwill is initially recognised and measured at cost, being the excess of the aggregate of the fair value
of the consideration transferred (or the fair value of the equity securities issued) and any fair value of the
Group’s previously held equity interest in the acquiree over the Group’s interest in the fair value of the
acquiree’s net identifiable assets. After initial recognition, goodwill is measured at cost less any
accumulated impairment losses. Where the aggregate of the fair value of the consideration transferred
(or the fair value of the equity securities issued) and any fair value of the Group’s previously held equity
interest in the acquiree is lower than the Group’s interest in the fair value of the acquiree’s net identifiable
assets, the Group reassesses the measurement of the fair value of the acquiree’s identifiable assets,
liabilities and contingent liabilities and the fair value of the consideration transferred (or the fair value of
the equity securities issued), together with the fair value of the Group’s previously held equity interest in
the acquiree. If after that reassessment, the aggregate of the fair value of the consideration transferred
(or the fair value of the equity securities issued) and the Group’s previously held equity interest in the
acquiree is still lower than the Group’s interest in the fair value of the acquiree’s net identifiable assets,
the Group recognises the remaining difference in profit or loss.
Where the business combination not involving enterprises under common control is achieved in stages,
the acquirer’s previously held equity interests in the acquiree are remeasured at the fair value on the
acquisition date, with the difference between the fair value and carrying amount recognised as
investment income for the current period. If the acquirer’s previously held equity interests of the acquiree
involve other comprehensive income (“OCI”) under the equity method, the accounting treatment is
conducted on the same basis as would have been required if the investee had directly disposed of the
related assets or liabilities, and the changes in shareholders’ equity other than net profit or loss, OCI and
profit distributions are charged to profit or loss for the current period on the acquisition date. For financial
assets at fair value through OCI held before the acquisition date, changes in fair value that were
accumulated through OCI will transfer to retained earnings.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(5) Preparation of consolidated financial statements
The scope of the consolidated financial statements, which include the financial statements of the
Company and all of its subsidiaries, is determined on the basis of control. A subsidiary is an entity that
is controlled by the Company (such as an enterprise, a deemed separate entity, or a structured entity
controlled by the Company).
In the preparation of the consolidated financial statements, the financial statements of subsidiaries are
prepared for the same accounting year as the Company, using consistent accounting policies. All
intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions
between members of the Group are eliminated in full on consolidation.
Where the loss for the current period attributable to non-controlling interests of a subsidiary exceeds the
non-controlling interests of the opening balance of equity of the subsidiary, the excess shall still be
allocated against the non-controlling interests.
For subsidiaries acquired through business combinations not involving entities under common control,
the financial performance and cash flows of the acquiree shall be consolidated from the date on which
the Group obtains control, and continue to be consolidated until the date such control ceases. While
preparing the consolidated financial statements, the Group shall adjust the subsidiary’s financial
statements, on the basis of the fair values of the identifiable assets, liabilities and contingent liabilities
recognised on the acquisition date.
For subsidiaries acquired through business combinations involving entities under common control, the
financial performance and cash flows of the entity being absorbed shall be consolidated from the
beginning of the period in which the combination occurs. While preparing the comparative financial
statements, adjustments are made to related items in the financial statements for the prior period as if
the reporting entity after the combination has been in existence since the date the ultimate controlling
party first obtained the control.
The Group reassesses whether or not it controls an investee if any change in facts and circumstances
indicates that there are changes to one or more of the three elements of control.
When the Group loses control of a subsidiary in multiple transactions in which it disposes of its long-term
equity investment in the subsidiary in stages, if each of the multiple transactions does not form part of a
bundled transaction, the transactions conducted before the loss of control of the subsidiary are
accounted for in accordance with the accounting policy for partial disposal of the equity investment in
subsidiaries where control is retained. If each of the multiple transactions forms part of a bundled
transaction which eventually results in the loss of control in the subsidiary, these multiple transactions
are accounted for as a single transaction. In the consolidated financial statements, the difference
between the consideration received and the corresponding proportion of the subsidiary’s net assets
(calculated continuously from the acquisition date) in each transaction prior to the loss of control shall be
recognised in other comprehensive income and transferred to profit or loss when the parent eventually
loses control of the subsidiary.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(6) Cash and cash equivalents
Cash comprises the Group’s cash on hand and bank deposits that can be readily withdrawn on demand.
Cash equivalents are short-term, highly liquid investments that are readily convertible into known
amounts of cash, and are subject to an insignificant risk of changes in value.
(7) Foreign currency transactions and foreign currency translation
The Group translates foreign currency transactions into its functional currency.
At the balance sheet date, monetary items denominated in foreign currencies are translated into RMB
using the spot exchange rates on the balance sheet date. Exchange differences arising from these
translations are recognised in profit or loss for the current period, except for those attributable to foreign
currency borrowings that have been taken out specifically for the acquisition or construction of qualifying
assets, which are capitalized as part of the cost of those assets. Non-monetary items denominated in
foreign currencies that are measured at historical cost are translated at the balance sheet date using the
spot exchange rates at the dates of the transactions.
Foreign currency cash flows are translated using the spot exchange rates prevailing on the dates of cash
flows. The effect of exchange rate changes on cash is presented separately in the cash flow statement.
(8) Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial
liability or equity instrument of another entity.
Recognition and derecognition
The Group recognises a financial asset or a financial liability when it becomes a party to the contractual
provisions of a financial instrument.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(8) Financial instruments (Continued)
Recognition and derecognition (Continued)
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial
assets) is primarily derecognised (i.e., removed from the Group’s consolidated balance sheet) when:
(1) the rights to receive cash flows from the financial asset have expired; or
(2) the Group has transferred its rights to receive cash flows from the financial asset, or has
assumed an obligation to pay the received cash flows in full without material delay to a third
party under a “pass-through” arrangement; and either (i) has transferred substantially all the
risks and rewards of the financial asset, or (ii) has neither transferred nor retained substantially
all the risks and rewards of the asset, but has transferred control of the financial asset.
A financial liability is derecognised when the obligation under the liability is discharged or cancelled, or
expires. When an existing financial liability is replaced by another from the same lender on
substantially different terms, or the terms of an existing liability are substantially modified, such an
exchange or modification is treated as a derecognition of the original liability and a recognition of a new
liability, and the difference between the respective carrying amounts is recognised in profit or loss.
Regular way purchases and sales of financial assets are recognised and derecognised using trade date
accounting. Regular way purchases or sales are purchases or sales of financial assets that require
delivery within the period generally established by regulation or convention in the marketplace. The
trade date is the date that the Group committed to purchase or sell a financial asset.
Classification and measurement of financial assets
The classification of financial assets at initial recognition depends on the financial asset’s contractual
cash flow characteristics and the Group’s business model for managing them: financial assets at fair
value through profit or loss, financial assets at amortised cost and financial assets at fair value through
other comprehensive income. All affected related financial assets will be reclassified only if the Group
changes its business model for managing financial assets.
Financial assets are measured at fair value on initial recognition, but accounts receivable or notes
receivable arising from the sale of goods or rendering of services that do not contain significant financing
components or for which the Group has applied the practical expedient of not adjusting the effect of a
significant financing component due within one year, are initially measured at the transaction price.
For financial assets at fair value through profit or loss, relevant transaction costs are directly recognised
in profit or loss, and transaction costs relating to other financial assets are included in the initial
recognition amounts.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(8) Financial instruments (Continued)
Classification and measurement of financial assets (Continued)
The subsequent measurement of financial assets depends on their classification as follows:
Debt investments measured at amortised cost
The Group measures financial assets at amortised cost if both of the following conditions are met: the
financial asset is held within a business model with the objective to hold financial assets in order to
collect contractual cash flows; the contractual terms of the financial asset give rise on specified dates to
cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets at amortised cost are subsequently measured using the effective interest method and
are subject to impairment. Gains and losses are recognised in profit or loss when the asset is
derecognised, modified or impaired.
Debt investments at fair value through other comprehensive income
The Group measures debt investments at fair value through other comprehensive income if both of the
following conditions are met: the financial asset is held within a business model with the objective of both
holding to collect contractual cash flows and selling; the contractual terms of the financial asset give rise
on specified dates to cash flows that are solely payments of principal and interest on the principal
amount outstanding. Interest income is recognised using the effective interest method. The interest
income, impairment losses and foreign exchange revaluation are recognised in profit or loss. The
remaining fair value changes are recognised in other comprehensive income. Upon derecognition, the
cumulative fair value change recognised in other comprehensive income is recycled to profit or loss.
Equity investments at fair value through other comprehensive income
The Group can elect to classify irrevocably its equity investments which are not held for trading as equity
investments designated at fair value through other comprehensive income. Only the relevant dividend
income (excluding the dividend income explicitly recovered as part of the investment cost) is recognised
in profit or loss. Subsequent changes in the fair value are included in other comprehensive income,
and no provision for impairment is made. When the financial asset is derecognised, the accumulated
gains or losses previously included in other comprehensive income are transferred from other
comprehensive income to retained earnings.
Financial assets at fair value through profit or loss
The financial assets other than the above financial assets measured at amortised cost and financial
assets at fair value through other comprehensive income are classified as financial assets at fair value
through profit or loss. Such financial assets are subsequently measured at fair value with net changes in
fair value recognised in profit or loss except for the derivatives designated as hedging instruments in an
effective hedge.
Only when an accounting mismatch is eliminated or significantly decreased, financial assets are
designated as financial assets at fair value through profit or loss at initial recognition.
97
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(8) Financial instruments (Continued)
Classification and measurement of financial assets (Continued)
When an enterprise initially designates a financial asset as a financial asset at fair value through profit or
loss, it cannot be reclassified to other financial assets; and other financial assets cannot be
re-designated after initial recognition as financial assets measured at fair value through profit or loss.
Classification and measurement of financial liabilities
The Group’s financial liabilities are, on initial recognition, classified into financial liabilities at fair value
through profit or loss, other financial liabilities or derivatives designated as effective hedging instruments.
For financial liabilities at fair value through profit or loss, relevant transaction costs are directly
recognised in profit or loss, and transaction costs relating to other financial liabilities are included in the
initial recognition amounts.
The subsequent measurement of financial liabilities depends on their classification as follows:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading (including
derivative instruments attributable to financial liabilities) and financial liabilities designated upon initial
recognition as at fair value through profit or loss. Financial liabilities held for trading (including
derivative instruments attributable to financial liabilities) are subsequently measured at fair value. All
changes in fair value of such financial liabilities are recognised in profit or loss except for the derivatives
designated as hedging instruments in an effective hedge. Financial liabilities designated at fair value
through profit or loss are subsequently measured at fair value and gains or losses are recognised in
profit or loss, except for the gains or losses arising from the Group’s own credit risk which are presented
in other comprehensive income. If gains or losses arising from the Group’s own credit risk which are
presented in other comprehensive income will lead to or expand accounting mismatch in profit or loss,
the Group will include all the changes in fair value (including the amount affected by changes in the
Group’s own credit risk) of such financial liabilities in profit or loss.
Only if one of the following conditions is met can financial liabilities be designated as financial liabilities at
fair value through profit or loss on initial recognition:
(1) It can eliminate or significantly reduce the accounting mismatch.
(2) The formal written document of the risk management or investment strategy has stated that the
portfolio of financial instruments is managed, evaluated and reported to key managers on the
basis of fair value.
(3) The financial liability is a hybrid instrument that contains one or more embedded derivatives,
unless the embedded derivatives have no significant change in the cash flows of the hybrid
instrument, or the embedded derivatives should obviously not be separated from the related
hybrid instruments.
(4) Mixed instruments contain embedded derivatives that need to be split but cannot be measured
separately at the time of acquisition or on subsequent balance sheet days.
When an enterprise designates a financial liability as a financial liability at fair value through profit or loss,
it cannot be reclassified as other financial liabilities; nor can other financial liabilities be re-designated as
financial liabilities at fair value through profit or loss after initial recognition.
98
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(8) Financial instruments (Continued)
Classification and measurement of financial liabilities (Continued)
Other financial liabilities
After initial recognition, such financial liabilities are measured at amortised cost using the effective
interest method.
Impairment of financial assets
Based on the expected credit losses (“ECLs”), the Group recognises an allowance for ECLs for the
financial assets measured at amortised cost, debt investments at fair value through other
comprehensive income, and contract assets.
For trade receivables and contract assets that do not contain a significant financing component, the
Group applies the simplified approach to recognise a loss allowance based on lifetime ECLs.
For trade receivables and contract assets that contain a significant financing component, the Group
chooses to adopt the simplified approach to recognise a loss allowance based on lifetime ECLs.
Except for financial assets which apply the simplified approach as mentioned above and other financial
assets, the Group assesses whether the credit risk has increased significantly since initial recognition at
each balance sheet date. If the credit risk has not increased significantly since initial recognition (stage
1), the loss allowance is measured at an amount equal to 12-month ECLs by the Group and the interest
income is calculated according to the carrying amount and the effective interest rate; if the credit risk has
increased significantly since initial recognition but are not credit-impaired (stage 2), the loss allowance is
measured at an amount equal to lifetime ECLs by the Group and the interest income is calculated
according to the carrying amount and the effective interest rate; if such financial assets are
credit-impaired after initial recognition (stage 3), the loss allowance is measured at an amount equal to
lifetime ECLs by the Group and the interest income is calculated according to the amortised cost and the
effective interest rate. If the credit risk of financial instruments is low at the balance sheet date, the Group
assumes that the credit risk has not increased significantly since initial recognition.
The Group evaluates the expected credit losses on financial instruments on a single and combined basis.
Taking into account the credit risk characteristics of different customers, the Group evaluates the
expected credit losses on accounts receivable based on the aging portfolio.
Refer to Note X (3) for the disclosure of the Group's criteria for judging the significant increase in credit
risk, the definition of assets with impaired credit losses, and the assumption of measuring expected
credit losses.
When the Group no longer reasonably expects to be able to recover all or part of the contract cash flows
of the financial assets, the Group directly writes down the carrying amount of the financial asset.
99
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(8) Financial instruments (Continued)
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if
there is a currently enforceable legal right to offset the recognised amounts; and there is an intention to
settle on a net basis, or to realise the assets and settle the liabilities simultaneously.
Transfer of financial assets
A financial asset is derecognised when the Group has transferred substantially all the risks and rewards
of the asset to the transferee. A financial asset is not derecognised when the Group retains
substantially all the risks and rewards of the financial asset.
When the Group has neither transferred nor retained substantially all the risks and rewards of the
financial asset, it either (i) derecognises the financial asset and recognises the assets and liabilities
created in the transfer when it has not retained control of the asset; or (ii) continues to recognise the
transferred asset to the extent of the Group's continuing involvement, in which case, the Group also
recognises 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 financial asset and the guarantee amount.
The guarantee amount is the maximum amount of consideration that the Group could be required to
repay.
(9) Notes receivables
For details of the method for determining the expected credit loss of notes receivable, please refer to
Note V (10) “Financial instruments - Impairment of financial instruments”.
(10) Accounts receivables
For details of the method for determining the expected credit loss of accounts receivable, please refer to
Note V (10) “Financial instruments - Impairment of financial instruments”.
(11) Receivable financing
It includes notes receivable and accounts receivables designated at fair value through other
comprehensive income as at balance sheet date.
For details of the method for determining the expected credit loss of receivables financing, please refer
to Note V (10) “Financial instruments - Impairment of financial instruments”.
(12) Other receivables
For details of the method for determining the expected credit losses of other receivables, please refer to
100
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
Note V (10) “Financial instruments - Impairment of financial instruments”.
III Summary of significant accounting policies and accounting estimates (Continued)
(13) Inventories
Inventories include raw materials, work in progress, finished goods, delegate processing supplies and
turnover materials, and are measured at the lower of cost and net realizable value.
Inventories are initially carried at cost. Cost of inventories comprises all costs of purchase, costs of
conversion and other costs. Cost is determined on the weighted average basis. Turnover materials
include low value consumables and packing materials, which are on the immediate write-off basis.
The Group adopts the perpetual inventory system.
At the balance sheet date, inventories are stated at the lower of cost and net realisable value. The
inventories are written down below cost to net realisable value and the write-down is recognised in profit
or loss if the cost is higher than the net realisable value. When the circumstances that previously
caused the inventories to be written down below cost no longer exist, in which case the net realisable
value of inventories becomes higher than the carrying amount, the amount of the write-down is reversed.
The reversal is limited to the amount of the original write-down, and is recognised in profit or loss.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated
costs of completion and the estimated costs necessary to make the sale and relevant taxes. Finished
goods are written down item by item.
(14) Contract assets
The Group presents contract assets or contract liabilities depending on the relationship between the
satisfaction of its performance obligations and the customer’s payment in the balance sheet. The
Group offsets the contract assets and contract liabilities under the same contract and presents the net
amount.
A contract asset is the right to consideration in exchange for goods or services that the Group has
transferred to a customer, and that right is conditioned on something other than the passage of time.
For details of how the Group measures and accounts for the ECLs of a contract asset, refer to Note V
(10) “Financial instruments - Impairment of financial instruments”.
(15) Assets relating to contract cost
The Group’s contract cost assets include the costs to obtain and fulfil a contract and are classified as
inventories, other current assets and other non-current assets by liquidity.
The Group recognises as an asset the incremental costs of obtaining a contract with a customer if the
Group expects to recover those costs, unless the amortisation period of the asset is one year or less.
101
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(15) Assets relating to contract cost (Continued)
Other than the costs which are capitalised as inventories, fixed assets and intangible assets, etc., costs
incurred to fulfil a contract with a customer are capitalised as an asset if all of the following criteria are
met:
(1) the costs relate directly to a contract or to an anticipated contract, including direct labour, direct
materials, overheads (or similar expenses), costs that are explicitly chargeable to the customer
and other costs that are incurred only because an entity entered into the contract;
(2) the costs generate or enhance resources of the Group that will be used in satisfying
performance obligations in the future; and
(3) the costs are expected to be recovered.
The contract cost asset is amortised and charged to profit or loss on a systematic basis that is consistent
with the pattern of the revenue to which the asset related is recognised.
The Group accrues provisions for impairment and recognises impairment losses to the extent that the
carrying amount of a contract cost asset exceeds:
(1) the remaining amount of consideration that the entity expects to receive in exchange for the
goods or services to which the asset relates; less
(2) the costs that are expected to be incurred to transfer those related goods or services.
The Group recognises in profit or loss a reversal of the impairment loss previously recognised to the
extent that the difference between (1) and (2) exceeds the carrying amount of the asset due to the
subsequent changes of the factors causing asset impairment in previous periods, but the carrying
amount after the reversal does not exceed the carrying amount of the asset at the reversal date if no
impairment loss is otherwise recognised.
(16) Long-term equity investments
Long-term equity investments include equity investments in subsidiaries, joint ventures and associates.
102
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(16) Long-term equity investments (Continued)
A long-term equity investment is initially measured at its initial investment cost on acquisition. For
long-term equity investments arising from business combination involving enterprises under common
control, the initial investment cost shall be the share of the carrying amount of equity of the acquiree in
the consolidated financial statements of the ultimate controlling party as at the combination date. The
difference between the initial investment cost and book value of consideration of combination is adjusted
to capital reserves, and to retained earnings if capital reserves is insufficient. Other comprehensive
income recognised before the combination date is accounted for on the same basis as would have been
required if the investee had directly disposed of the related assets or liabilities. Equity previously
recognised resulting from the investee’s equity changes other than profit or loss, other comprehensive
income and profit distribution is reclassified to profit or loss. Equity which still involves a long-term
investment after disposal is reclassified to profit or loss on a pro-rata basis and equity which swiches to a
financial instrument after disposal is fully reclassified to profit or loss. For long-term equity investments
arising from business combination involving enterprises not under common control, the investment cost
shall be the combination cost. (For a business combination achieved in stages, the initial investment cost
is determined as the sum of the carrying amount of equity of the acquiree and the additional investment
costs on the combination date.) The combination cost involves the assets paid by the acquirer, liabilities
incurred and the fair value of equity securities. Other comprehensive incomes recognised using the
equity method before the combination date is accounted for on the same basis as would have been
required if the investee had directly disposed of the related assets or liabilities. Equity previously
recognised resulting from the investee’s equity changes other than profit or loss, other comprehensive
income and profit distribution is reclassified to profit or loss. Equity which still involves a long-term
investment after disposal is reclassified to profit or loss on a pro-rata basis and equity which swiches to a
financial instrument after disposal is fully reclassified to profit or loss. The accumulated changes in the
fair value of financial assets at fair value through other comprehensive income is reclassified to retained
earnings when adopting the cost method. Depending on the way of acquisition of long-term equity
investments, the initial investment cost is determined as follows: For long-term equity investments
acquired by way of cash payment, the initial investment cost includes all directly associated expenses,
applicable taxes and fees, and other necessary expenses. For long-term equity investments acquired by
way of issuing equity securities, the initial investment cost includes the fair value of equity securities. For
long-term equity investments acquired by way of the swap of non-monetary assets, the initial investment
cost shall be determined in accordance with “ASBE No. 7 — Swap of Non-monetary Assets.” For
long-term equity investments acquired by way of debt restructuring, the initial investment cost shall be
determined in accordance with “ASBE No. 12 — Debt Restructuring.”
For a long-term equity investment where the Company can exercise control over the investee, the
long-term investment is accounted for using the cost method in the Company’s individual financial
statements. Control is achieved when the Group is exposed, or has rights, to variable returns from its
involvement with the investee and has the ability to affect those returns through its power over the
investee.
Under the cost method, the long-term equity investment is measured at its initial investment cost.
When additional investment is made or the investment is recouped, the cost of long-term equity
investment is adjusted accordingly. Cash dividends or profit distributions declared by the investee are
recognised as investment income in profit or loss.
103
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(16) Long-term equity investments (Continued)
The equity method is adopted when the Group has joint control, or exercises significant influence over
the investee. Joint control is the contractually agreed sharing of control of an arrangement, which
exists only when decisions about the relevant activities require the unanimous consent of the parties
sharing control. Significant influence is the power to participate in the financial and operating policy
decisions of the investee, but is not control or joint control with other parties over those policies.
Under the equity method, where the initial investment cost of a long-term equity investment exceeds the
Group’s interest in the fair value of the investee’s identifiable net assets at the acquisition date, no
adjustment is made to the initial investment cost. Where the initial investment cost is less than the
Group’s interest in the fair values of the investee’s identifiable net assets at the acquisition date, the
difference is charged to profit or loss, and the cost of the long-term equity investment is adjusted
accordingly.
Under the equity method, after it has acquired a long-term equity investment, the Group recognises its
share of the investee’s profit or loss, as well as its share of the investee’s other comprehensive income,
as investment income or loss and other comprehensive income, and adjusts the carrying amount of the
investment accordingly. The Group recognises its share of the investee’s profit or loss after making
appropriate adjustments to the investee’s profit or loss based on the fair value of the investee’s
identifiable assets at the acquisition date, using the Group’s accounting policies and periods.
Unrealised profits and losses from transactions with its joint ventures and associates are eliminated to
the extent of the Group’s investments in the associates or joint ventures (except for assets that constitute
a business) (However, any loss arising from such transactions which are attributable to an impairment
loss shall be recognised at its entirety). The carrying amount of the investment is reduced based on the
Group’s share of any profit distributions or cash dividends declared by the investee. The Group’s share
of net losses of the investee is recognised to the extent that the carrying amount of the investment
together with any long-term interests that in substance form part of its net investment in the investee is
reduced to zero, except that the Group has the obligations to assume further losses. The Group’s
owner’s equity changes, other than those arising from the investee’s profit or loss, other comprehensive
income or profit distribution, is recognised in the Group’s equity, and the carrying amount of the
long-term equity investment is adjusted accordingly.
Upon disposal of a long-term equity investment, the difference between the proceeds actually received
and the carrying amount is recognised in profit or loss. For a long-term equity investment accounted for
using the equity method, when the Group discontinues using the equity method due to disposal, all
amounts previously recognised in other comprehensive income are accounted for on the same basis as
would have been required if the investee had directly disposed of the related assets or liabilities. Equity
previously recognised resulting from the owner’s equity changes other than profit or loss, other
comprehensive income and profit distribution is reclassified to profit or loss in its entirety. When the
Group continues to use the equity method, the amounts previously recognised in other comprehensive
income are accounted for on the same basis as would have been required if the investee had directly
disposed of the related assets or liabilities and reclassified to profit or loss on a pro-rata basis. Equity
previously recognised resulting from the investee’s equity changes other than profit or loss, other
comprehensive income and profit distribution is reclassified to profit or loss on a pro-rata basis.
104
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(17) Investment properties
Investment properties are properties held to earn rental income and/or for capital appreciation.
Investment properties include land use rights leased out, land use rights held for transfer upon capital
appreciation, and buildings leased out.
An investment property is measured initially at cost. If the economic benefits relating to an investment
property will probably flow in and the cost can be reliably measured, subsequent costs incurred for the
property are included in the cost of the investment property. Otherwise, subsequent costs are
recognised in profit or loss as incurred.
The Group adopts the cost model for subsequent measurement of investment properties. Buildings and
land use rights are depreciated or amortized to their estimated net residual values over their estimated
useful lives. The estimated useful lives, the estimated net residual values that are expressed as a
percentage of cost and the annual depreciation (amortization) rates of investment properties are as
follows:
Estimated useful lives Estimated residual value Annual depreciation
(amortization) rates
Buildings 12-35 years 0-5% 2.71-7.92%
Land use rights 30-50 years - 2.00-3.33%
When an investment property is transferred to owner-occupied property, it is reclassified as a fixed asset
or intangible asset at the date of transfer. When an owner-occupied property is transferred out for
earning rentals or for capital appreciation, the fixed asset or intangible asset is reclassified as an
investment property at its carrying amount at the date of transfer.
The investment properties’ useful life, net residual value and depreciation (amortization) method applied
are reviewed and adjusted as appropriate at the end of each year.
(18) Fixed assets
Recognition criteria
A fixed asset is recognised only when the economic benefits associated with the asset will probably flow
into the Group and the cost of the asset can be measured reliably. Subsequent expenditures incurred
for a fixed asset that meets the recognition criteria shall be included in the cost of the fixed asset, and the
carrying amount of the component of the fixed asset that is replaced shall be derecognised. Otherwise,
such expenditures are recognised in profit or loss as incurred. Fixed assets are initially measured at
cost, by taking into account the effect of any asset retirement obligations. The cost of a purchased fixed
asset comprises the purchase price, relevant taxes and any directly attributable expenditure for bringing
the asset to working condition for its intended use. The Group reviews the useful life and estimated net
residual value of a fixed asset and the depreciation method applied at least at each year end, and make
adjustments if necessary.
105
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(18) Fixed assets (Continued)
Depreciation method
Estimated useful Estimated residual Annual depreciation
lives value rates
Buildings 20-35years 0-5% 2.71-5.00%
Machineries 5-14years 3-6% 6.79-19.40%
Motor vehicles 3-10years 0-5% 9.50-33.33%
Office equipments 3-10years 0-5% 9.50-33.33%
Electronic equipments within 5 years 0% 20% and above
(19) Construction in progress
The cost of construction in progress is determined according to the actual expenditures incurred for the
construction, including all necessary construction expenditures incurred during the construction period,
borrowing costs that shall be capitalised before the construction is ready for its intended use, and other
relevant expenditures.
An item of construction in progress is transferred to fixed assets when the asset is ready for its intended
use.
(20) Borrowing costs
Borrowing costs are interest and other costs incurred by the Group in connection with the borrowing of
the funds. Borrowing costs include interest, amortisation of discounts or premiums related to
borrowings, ancillary costs incurred in connection with the arrangement of borrowings, and exchange
differences arising from foreign currency borrowings.
The borrowing costs that are directly attributable to the acquisition, construction or production of a
qualifying asset are capitalised. The amounts of other borrowing costs incurred are recognised as an
expense in the period in which they are incurred. Qualifying assets are assets (fixed assets, investment
properties, inventories, etc.) that necessarily take a substantial period of time of acquisition, construction
or production to get ready for their intended use or sale.
The capitalisation of borrowing costs commences only when all of the following conditions are satisfied:
(1) expenditures for the asset have been incurred;
(2) borrowing costs have been incurred; and
(3) activities that are necessary to acquire, construct or produce the asset for its intended use or
sale have been undertaken.
Capitalisation of borrowing costs ceases when the qualifying asset being acquired, constructed or
produced gets ready for its intended use or sale. Any borrowing costs subsequently incurred are
recognised in profit or loss.
106
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(20) Borrowing costs (Continued)
During the capitalisation period, the amount of interest eligible for capitalisation for each accounting
period shall be determined as follows:
(1) where funds are borrowed specifically for the purpose of obtaining a qualifying asset, the
amount of interest eligible for capitalisation is the actual interest costs incurred on that borrowing
for the period less any bank interest earned from depositing the borrowed funds before being
used on the asset or any investment income on the temporary investment of those funds; or
(2) where funds are borrowed generally for the purpose of obtaining a qualifying asset, the amount
of interest eligible for capitalisation is determined by applying a weighted average interest rate
on the general borrowings to the weighted average of the excess of the cumulative expenditures
on the asset over the expenditures on the asset funded by the specific borrowings.
Capitalisation of borrowing costs is suspended during periods in which the acquisition, construction or
production of a qualifying asset is suspended abnormally by activities other than those necessary to get
the asset ready for its intended use or sale, when the suspension is for a continuous period of more than
3 months. Borrowing costs incurred during these periods are recognised as an expense in profit or loss
until the acquisition, construction or production is resumed.
(21) Right-of-use assets
The right-of-use assets of the Group mainly include buildings, machinery, vehicles, office equipments
and other equipments (such as land use right).
At the commencement date of the lease, the Group recognises a right-of-use asset. The cost of the
right-of-use asset comprises: (i) the amount of the initial measurement of the lease liability; (ii) any lease
payments made at or before the commencement date of the lease less any lease incentives received;
(iii) any initial direct cost incurred; and (iv) an estimate of costs incurred by the lessee in dismantling and
removing the underlying asset, restoring the site on which it is located or restoring the underlying asset
to the condition required by the terms and conditions of the lease. The right-of-use assets are
depreciated on a straight-line basis subsequently by the Group. If the Group is reasonably certain that
the ownership of the underlying asset will be transferred to the Group at the end of the lease term, the
Group depreciates the asset from the commencement date to the end of the useful life of the asset.
Otherwise, the Group depreciates the assets from the commencement date to the earlier of the end of
the useful life of the asset or the end of the lease term.
The Group remeasures the lease liability at the present value of the changed lease payments and
adjusts the carrying amount of the right-of-use assets accordingly, when the carrying amount of the
right-of-use asset is reduced to zero, and there is a further reduction in the measurement of the lease
liability, the Group recognises the remaining amount of the remeasurement in profit or loss.
107
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(22) Intangible assets
An intangible asset shall be recognised only when it is probable that the economic benefits associated
with the asset will flow to the Group and the cost of the asset can be measured reliably. Intangible
assets are measured initially at cost. However, intangible assets acquired in a business combination
not involving entities under common control with a fair value that can be measured reliably are
recognised separately as intangible assets and initially measured at the fair value at the date of
acquisition.
The useful life of an intangible asset is determined according to the period over which it is expected to
generate economic benefits for the Group. An intangible asset is regarded as having an indefinite
useful life when there is no foreseeable limit to the period over which the asset is expected to generate
economic benefits for the Group.
The useful lives of the intangible assets are as follows:
Categories Useful lives
Land use rights Between the approved useful period and the
Company’s operating period
Software 3-5 years
Trademarks 5-10 years
Technology patents 5 years
Distribution network 20 years
Franchising rights 10 years
Favorable leases 17-20 years
Land use rights that are purchased by the Group are accounted for as intangible assets. Buildings, such
as plants that are developed and constructed by the Group, and relevant land use rights are accounted
for as fixed assets and intangible assets, respectively. Payments for the land and buildings purchased
are allocated between the land use rights and the buildings; they are accounted for as fixed assets if they
cannot be reasonably allocated.
An intangible asset with a finite useful life is amortised using the straight-line method over its useful life.
For an intangible asset with a finite useful life, the Group reviews the useful life and amortisation method
at least at each year end and makes adjustment if necessary.
Land use rights allocated by the State are regarded as an intangible asset with an indefinite useful life
due to an uncertain useful life. The impairment test should be conducted for the intangible assets with
the indefinite service life every year to determine whether the impairment exists. The intangible assets
with the indefinite service life shall not be amortized, and the Company shall make the review of the
service life of the intangible assets during every accounting period. If evidence prove that useful lives are
finite, the Group accounts for the intangible assets in accordance with intangible assets with a finite
useful life.
108
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(22) Intangible assets (Continued)
Internal research and development project
The Group classifies the expenses for internal research and development as research costs and
development costs. All research costs are charged to the current profit or loss as incurred. Expenditure
incurred on projects to develop new products is capitalised and deferred only when the Group can
demonstrate the technical feasibility of completing the intangible asset so that it will be available for use
or sale, its intention to complete and its ability to use or sell the asset, how the asset will generate future
economic benefits (including demonstration that the product derived from the intangible asset or the
intangible asset itself will be marketable or, in the case of internal use, the usefulness of the intangible
asset as such), the availability of technical and financial resources to complete the project and procure
the use or sale of the intangible asset, and the ability to measure reliably the expenditure during the
development. Product development expenditure which does not meet these criteria is expensed when
incurred.
Expenditure for investigation, evaluation and selection of production process and new drug researches
is recognised 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:
(1) development of the production process and new drugs has been fully demonstrated by the
technical team;
(2) management has approved the budget of drug production development and new drugs;
(3) market research analysis suggests that the products produced by the new production
technology are able to be promoted;
(4) adequate technical, financial and other resources to complete the development and the
ability to use or sell the intangible asset;
(5) the expenditure attributable to the intangible asset during its development phase can be
reliably measured.
Other development costs that do not meet the conditions above are recognised in profit or loss in the
period in which they are incurred. Development costs previously recognised as expenses are not
recognised as an asset in a subsequent period. 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.
109
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(23) 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 recognised 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.
(24) Impairment of long-term assets
The Group determines the impairment of assets, other than the impairment of inventories, investment
properties measured using the fair value model, deferred tax assets, financial assets and assets
classified as held for sale, using the following methods:
The Group assesses at the balance sheet date whether there is any indication that an asset may be
impaired. If any indication exists that an asset may be impaired, the Group estimates the recoverable
amount of the asset and performs impairment testing. Goodwill arising from a business combination
and an intangible asset with an indefinite useful life are tested for impairment at least at each year end,
irrespective of whether there is any indication that the asset may be impaired. Intangible assets that
have not been ready for their intended use are tested for impairment each year.
The recoverable amount of an asset is the higher of its fair value less costs to sell and the present value
of the future cash flows expected to be derived from the asset. The Group estimates the recoverable
amount on an individual basis unless it is not possible to estimate the recoverable amount of the
individual asset, in which case the recoverable amount is determined for the asset group to which the
asset belongs. Identification of an asset group is based on whether major cash inflows generated by
the asset group are largely independent of the cash inflows from other assets or asset groups.
When the recoverable amount of an asset or asset group is less than its carrying amount, the carrying
amount is reduced to the recoverable amount by the Group. The reduction in the carrying amount is
treated as an impairment loss and recognised in profit or loss. A provision for impairment loss of the
asset is recognised accordingly.
For the purpose of impairment testing, the carrying amount of goodwill acquired in a business
combination is allocated from the acquisition date on a reasonable basis, to each of the related asset
groups unless it is impossible to allocate to the related asset groups, in which case it is allocated to each
of the related sets of asset groups. Each of the related asset groups or sets of asset groups is an asset
group or a set of asset groups that is expected to benefit from the synergies of the business combination
and shall not be larger than a reportable segment determined by the Group.
110
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(24) Impairment of long-term assets (Continued)
When testing an asset group (a set of asset groups) to which goodwill has been allocated for
impairment, if there is any indication of impairment, the Group firstly tests the asset group (set of asset
groups), excluding the amount of goodwill allocated, for impairment, i.e., the Group determines and
compares the recoverable amount with the related carrying amount and recognises any impairment loss.
After that, the Group tests the asset group (set of asset groups), including goodwill, for impairment, the
carrying amount of the related asset group (set of asset groups) is compared to its recoverable amount.
If the carrying amount of the asset group (set of asset groups) is higher than its recoverable amount, the
amount of the impairment loss is firstly used to reduce the carrying amount of the goodwill allocated to
the asset group (set of asset groups), and then used to reduce the carrying amount of other assets
(other than the goodwill) within the asset group (set of asset groups), on a pro-rata basis of the carrying
amount of each asset.
Once the above impairment loss is recognised, it cannot be reversed in subsequent accounting periods.
(25) Contract liabilities
The Group presents contract assets or contract liabilities depending on the relationship between the
satisfaction of its performance obligations and the customer’s payment in the balance sheet. The
Group offsets the contract assets and contract liabilities under the same contract and presents the net
amount.
A contract liability is the obligation to transfer goods or services to a customer for which the Group has
received consideration or an amount of consideration is due from the customer, such as an amount of
consideration that an entity has received before the transfer of the promised goods or services.
(26) Employee benefits
Employee benefits refer to all forms of consideration or compensation other than share-based payments
given by the Group in exchange for services rendered by employees or for termination of employment.
Employee benefits include short-term employee benefits, post-employment benefits, termination
benefits and other long-term employee benefits. Benefits given by the Group to an employee’s spouse,
children and dependents.
Short-term employee benefits
The actual occurred short-term employee benefits are recognized as liabilities during the accounting
period in which the service has been rendered by the employees and as costs of assets or expenses to
whichever the employee service is attributable.
Post-employment benefits (defined contribution plans)
The employees of the Group participate in a pension scheme and unemployment insurance managed by
the local government, and an enterprise pension fund, the corresponding expenses shall be included in
the cost of related assets or profit or loss.
111
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(26) Employee benefits (Continued)
Post-employment benefits (defined benefit plans)
The Group operates a defined benefit pension plan which requires contributions to be made to a
separately administered fund. The benefits are unfunded. The cost of providing benefits under the
defined benefit plan is determined using the projected unit credit method.
Remeasurements arising from the defined benefit pension plan, comprising actuarial gains and losses,
the effect of the asset ceiling (excluding amounts included in net interest on the net defined benefit
liability) and the return on plan assets (excluding amounts included in net interest on the net defined
benefit liability), are recognised immediately in the balance sheet with a corresponding debit or credit to
equity through other comprehensive income in the period in which they occur. Remeasurements are
not reclassified to profit or loss in subsequent periods.
Past service costs are recognised in profit or loss at the earlier of the date of the plan amendment and
the date that the Group recognises restructuring-related costs or termination benefits.
Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The
Group recognises the following changes in the net defined benefit obligation under administrative
expenses and finance expenses in the income statement: service costs comprising current service
costs, past service costs, gains and losses on settlements; net interest comprising interest income on
plan assets, interest costs on the defined benefit obligation and interest on the effect of the asset ceiling.
Termination benefits
The Group provides termination benefits to employees and recognises an employee benefits liability for
termination benefits, with a corresponding charge to profit or loss, at the earlier of when the Group can
no longer withdraw the offer of those benefits resulting from an employment termination plan or a
curtailment proposal and when the Group recognise costs involving the payment of termination benefits.
The Group offers termination benefits to the employees who accept internal retirement arrangements.
Termination benefits refers to salaries and social securities paid to the employees who voluntarily retire
and approved by the management before the legal retirement age. The Group pays termination benefits
from the date of the starting of internal retirement arrangements to legal retirement age. When meeting
the recognition criteria, termination benefits are recognised as liabilities from the date on which the
employees stop offering services to the legal retirement date and recognised in profit or loss as incurred.
The change of termination benefits’ actuarial assumptions and difference incurred by the adjustment of
welfare standards are recognised in profit or loss as incurred.
The termination benefits expected to be settled within one year since the balance sheet date are
classified as current liabilities.
112
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(26) Employee benefits (Continued)
Other long term employee benefits
Other long-term employee’ benefits provided to employees shall be recognised and measured as net
liabilities or net assets where provisions regarding post-employment benefits are applicable, provided
that changes shall be included in the current profit and loss or related asset costs.
(27) Lease liability
At the commencement date of the lease, the Group measures the lease liability at the present value of
the lease payments that are not paid at that date, except for short-term leases and leases of low-value
assets. In calculating the present value of the lease payments, the Group uses the interest rate implicit in
the lease as the discount rate. If that rate cannot be readily determined, the Group uses the lessee’s
incremental borrowing rate. The Group calculates the interest expenses of the lease liability in each
period during the lease term using the constant periodic rate of interest, and recognises such interest
expenses in profit or loss, except those in the costs of the related asset as required. Variable lease
payments that are not included in the measurement of the lease liabilities are recognised in profit or loss
as incurred, except those in the costs of the related asset as required.
After the commencement date of the lease, the Group remeasures lease liabilities with changed present
value of the lease payments when fixed payment, expected unguaranteed residual value payable, the
interest rate implicit in the lease as the discount rate, purchase options, options to extend the lease or
determination of the lease term change.
(28) Provisions
An obligation related to a contingency shall be recognised by the Group as a provision when all of the
following conditions are satisfied, except for contingent considerations and contingent liabilities assumed
in a business combination not involving entities 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) a reliable estimate can be made of the amount of the obligation.
A provision is 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. Provisions are reviewed at each 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.
A contingent liability recognised in a business combination not involving entities under common control is
initially measured at fair value. Subsequently, it is measured at the higher of: (i) the amount that would
be recognised in accordance with the general policy for provisions above; and (ii) the amount initially
recognised less cumulative amortisation recognised in accordance with the policy for revenue
recognition.
113
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(29) Share-based payments
A share-based payment is classified as either an equity-settled share-based payment or a cash-settled
share-based payment. An equity-settled share-based payment is a transaction in which the Group
receives services and uses shares or other equity instruments as consideration for settlement.
An equity-settled share-based payment in exchange for services received from employees is measured
at the fair value of the equity instruments granted to the employees. If such equity-settled share-based
payment could vest immediately, related costs or expenses at an amount equal to the fair value on the
grant date are recognised, with a corresponding increase in capital reserves; if such equity-settled
share-based payment could not vest until the completion of services for a vesting period, or until the
achievement of a specified performance condition, the Group at each balance sheet date during the
vesting period recognises the services received for the current period as related costs and expenses,
with a corresponding increase in capital reserves, at an amount equal to the fair value of the equity
instruments at the grant date, based on the best estimate of the number of equity instruments expected
to vest, which is made on the basis of the latest available information such as the changes in the number
of covered employees and whether specified performance conditions have been met. The fair value is
determined using the binomial model.
The cost of equity-settled transactions is recognised, together with a corresponding increase in capital
reserves, over the period in which the specified performance or service conditions are fulfilled. The
cumulative expense recognised for equity-settled transactions at each balance sheet date until the
vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of
the number of equity instruments that will ultimately vest.
For awards that do not ultimately vest because non-market performance and/or service conditions have
not been met, no expense is recognised. Where awards include a market or non-vesting condition, the
transactions are treated as vesting irrespective of whether the market or non-vesting condition is
satisfied, provided that all other performance and/or service conditions are satisfied.
Where the terms of an equity-settled share-based award are modified, as a minimum an expense is
recognised as if the terms had not been modified. In addition, an expense is recognised for any
modification that increases the total fair value of the share-based payments, or is otherwise beneficial to
the employee as measured at the date of modification.
Where an equity-settled share-based award is cancelled, it is treated as if it had vested on the date of
cancellation, and any expense not yet recognised for the award is recognised immediately. This
includes any award where non-vesting conditions within the control of either the Group or the employee
are not met. However, if a new award is substituted for the cancelled award, and is designated as a
replacement on the date that it is granted, the cancelled and new awards are treated as if they were a
modification of the original award.
114
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(29) Share-based payments (Continued)
The cost of cash-settled transactions is measured at the fair value of the liability which is determined on
the basis of shares or other equity instruments of the Group. It is initially recognised at the fair value on
the grant date using binomial model together with the consideration of terms and conditions on which the
equity instruments are granted. If the rights under a cash-settled share-based payment could vest
immediately, related costs or expenses at an amount equal to the fair value on the grant date are
recognised, with a corresponding increase in liability. If the rights under a cash-settled share-based
payment could not vest until the completion of services for a vesting period, or until achievement of a
specified performance condition, the Group at each balance sheet date during the vesting period
recognises the services received for the current period as related costs and expenses, with a
corresponding increase in liability, at an amount equal to the fair value of the liability based on the best
estimate of the outcome of vesting. The liability is measured at each balance sheet date up to and
including the settlement date, with changes in fair value recognised in profit or loss.
(30) Revenue recognition
Revenue from contracts with customers is recognised when the Group has fulfilled its performance
obligations in the contracts, that is, when the customer obtains control of relevant goods or services.
Control of relevant goods or services refers to the ability to direct the use of the goods, or the provision of
the services, and obtain substantially all of the remaining benefits from the goods or services.
Contracts for sale of goods
The contracts for the sale of goods between the Group and its customer usually only contain the
performance obligations for the transfer of goods. The Group generally recognizes revenue at the point
of transferring the control of goods on the basis of a combination of the following factors: the current right
to collect the goods, the transfer of major risks and benefits in the ownership of the goods, and the
transfer of the legal ownership of the goods, the transfer of physical assets of the goods and that the
customers have accepted the goods.
Service Contracts
The service contracts between the Group and its customers usually consist of performance obligations
such as storage and logistics and so on. As the Group's performance of contracts is at the same time
when the customer obtains and consumes the economic benefits of the performance of the Group, and
the Group has the right to collect receivables from the performance of contacts that has been completed
to date, the Group regards it as a contract obligation over a period of time, except that the progress of
performance cannot be reasonably determined. The Group determines the progress of the performance
of contracts in accordance with the input method. If the progress of performance of contracts cannot be
reasonably determined and the cost incurred by the Group is expected to be compensated, the revenue
is recognised on the basis of the incurred costs until the progress of performance of contacts can be
reasonably measured.
115
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(30) Revenue recognition (Continued)
Variable consideration
Some of the Group's contracts with customers including arrangements of sales rebates (list items in
accordance with the customer’s actual conditions, such as early completion awards or others) result in
variable consideration. The Group determines the best estimate of variable consideration by using the
expected value method or the most likely amount method. However, the transaction price including
variable consideration is only to the extent that it is highly probable that a significant reversal in the
amount of cumulative revenue recognised will not occur when the uncertainty associated with the
variable consideration is subsequently resolved.
Consideration payable to customers
Where consideration is payable by the Group to a customer, such consideration payable shall be
deducted against the transaction price, and against current revenue upon the recognition of revenue or
the payment of (or the commitment to pay) the consideration to the customer (whichever is later), save
for consideration payable to the customer for the purpose of acquiring from the customer other clearly
separable products.
Return clauses
In connection with sales with a return clause, revenue is recognised according to the amount of
consideration it expects to be entitled to for the transfer to a customer when the customer acquires
control of the relevant products. Amounts expected to be refunded for the return of sales are recognised
as liabilities. At the same time, the balance of the carrying value of the product expected to be returned
upon transfer less expected costs for the recall of such product (including an impairment loss of the
recalled product) shall be recognised as an asset (i.e. cost of return receivables), and the net amount of
the carrying value of the transferred product upon the transfer less the aforesaid asset cost shall be
transferred to cost. At each balance sheet date, the Group reassesses the future return of sales and
remeasures the above assets and liabilities.
Significant financing component
Where a contract contains a significant financing component, the Group determines transaction prices
based on amounts payable assumed to be settled in cash by customers immediately upon the
acquisition of control over the products. The difference between such transaction price and contract
consideration is amortised over the contract period using the effective interest rate method based on a
ratio that discounts the nominal contractual consideration to the current selling price of the products.
The Group shall not give consideration to any significant financing component in a contract if the gap
between the customer’s acquisition of control over the products and payment of consideration is
expected to be less than 1 year.
116
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(30) Revenue recognition (Continued)
Warranty clauses
The Group provides quality assurance for products sold and assets built in accordance with contract
terms and laws and regulations. The accounting treatment of quality assurance in the form of warranty
assuring customers products sold are in compliance with required standards is set out in Note V.36.
Where the Group provides a service warranty for a standalone service in addition to the assurance of
compliance of products with required standards, such warranty is treated as a stand-alone contractual
performance obligation, and a portion of the transaction price shall be allocated to the service warranty
based on a percentage of the stand-alone price for the provision of the product and service warranty.
When assessing whether a warranty is rendering a stand-alone service in addition to providing
guarantee to customers that all sold goods are in compliance with required standards, the Group will
consider whether or not such warranty is a statutory requirement, the term of the warranty and the nature
of the Group’s undertaking to perform its obligations.
Reward points program
The Group grants reward points to customers when selling goods. Customers can use reward points to
redeem free or discounted goods provided by the Group. This reward points program provides
significant rights to customers, and the Group considers it as an individual performance obligation, and
apportions part of the transaction prices to reward points based on pricing of goods or services with
warranty clauses. Revenue is recognised when customers obtain goods redeemed or when reward
points expire.
Principal responsible person/proxy
For goods or other assets obtained from a third party which were transferred later to customers, the
Group has the right to decide, independently, the pricing of goods. This means that the Group has
obtained control over related goods before transferring to customers. Therefore, the Group is the
principal responsible person, and revenue is recognised based on the total amount of consideration
received or receivable. Otherwise, the Group is proxy, and revenue is recognised based on expected
commission. This amount should be the total amount of consideration received or receivable net of the
amount payable to other parties, or based on the fixed amount or percentage.
(31) Government grants
Government grants are recognised when all attaching conditions will be complied with and the grants will
be received. If a government grant is in the form of a transfer of a monetary asset, it is measured at the
amount received or receivable. If a government grant is in the form of a transfer of a non-monetary
asset, it is measured at fair value; if fair value is not reliably determinable, it is measured at a nominal
amount.
Government grants related to assets refer to government assets which are granted to enterprises for the
long-term assets formed by acquisition, construction or in other manners. Government grants related to
income refer to government grants other than those related to assets.
117
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(31) Government grants (Continued)
A government grant related to income is accounted for as follows: (i) if the grant is a compensation for
related expenses or losses to be incurred in subsequent periods, the grant is recognised as deferred
income, and released in profit or loss or offset against related expenses over the periods in which the
related costs are recognised; or (ii) if the grant is a compensation for related expenses or losses already
incurred, it is recognised immediately in profit or loss or offset against relevant expenses.
A government grant relating to an asset shall be offset against the carrying amounts of relevant assets,
or recognised as deferred income and amortised in profit or loss over the useful life of the related asset
by annual instalments in a systematic and rational way (however, a government grant measured at a
nominal amount is recognised directly in profit or loss). Where the assets are sold, transferred, retired
or damaged before the end of their useful lives, the rest of the remaining deferred income is released to
profit or loss for the period in which the relevant assets are disposed of.
(32) Income tax
Income tax comprises current and deferred tax. Income tax is recognised as income or expense in
profit or loss, or recognised directly in equity if it arises from a business combination or relates to a
transaction or event which is recognised directly in equity.
Current tax liabilities or assets arising from the current and prior periods at the amount expected to be
paid by the Group or returned by the tax authority calculated according to related tax laws.
Deferred tax is provided using the balance sheet liability method, on all temporary differences at the
balance sheet date between the tax bases of assets and liabilities and their carrying amounts, and
temporary differences between the tax bases and the carrying amounts of the items, which have a tax
base according to related tax laws but are not recognised as assets and liabilities.
Deferred tax liabilities are recognised for all taxable temporary differences, except:
(1) when the taxable temporary difference arises from the initial recognition of goodwill, or an asset
or liability in a transaction that is not a business combination and, at the time of transaction,
affects neither accounting profit nor taxable profit or loss; and
(2) in respect of taxable temporary differences associated with investments in subsidiaries,
associates and joint ventures, when the timing of the reversal of the temporary differences can
be controlled and it is probable that the temporary differences will not be reversed in the
foreseeable future.
118
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(32) Income tax (Continued)
Deferred tax assets are recognised for all deductible temporary differences, and the carryforward of
unused tax losses and any unused tax credits. Deferred tax assets are recognised to the extent that it
is probable that taxable profit will be available against which the deductible temporary differences, the
carryforward of unused tax losses and unused tax credits can be utilised, except:
(1) when the deductible temporary difference arises from the initial recognition of an asset or liability
in a transaction that is not a business combination and, at the time of the transaction, affects
neither the accounting profit nor taxable profit or loss; and
(2) in respect of the deductible temporary differences associated with investments in subsidiaries,
associates and joint ventures, deferred tax assets are only recognised to the extent that it is
probable that the temporary differences will be reversed in the foreseeable future and taxable
profit will be available against which the temporary differences can be utilised in the future.
At the balance sheet date, deferred tax assets and liabilities are measured at the tax rates that are
expected to apply to the period when the asset is realised or the liability is settled, in accordance with the
requirements of tax laws. The measurement of deferred tax assets and deferred tax liabilities reflects
the tax consequences that would follow from the manner in which the Group expects, at the balance
sheet date, to recover the assets or settle the liabilities.
The carrying amount of deferred tax assets is reviewed at the balance sheet date and reduced to the
extent that it is no longer probable that sufficient taxable profit will be available in future periods to allow
the deferred tax assets to be utilised. Unrecognised deferred tax assets are reassessed at the balance
sheet date and are recognised to the extent that it has become probable that sufficient taxable profit will
be available to allow all or part of the deferred tax asset to be recovered.
Deferred tax assets and deferred tax liabilities are offset if and only if the Group has a legally enforceable
right to set off current tax assets and current tax liabilities, and the deferred tax assets and deferred tax
liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or
different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to
realise the assets and settle the liabilities simultaneously, in each future period in which significant
amounts of deferred tax liabilities or assets are expected to be settled or recovered.
(33) Other significant accounting judgements and estimates
Identification of leases
At inception of a contract, the Group assesses whether the contract is, or contains, a lease. A contract
is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a
period of time in exchange for consideration. To assess whether a contract conveys the right to control
the use of an identified asset for a period of time, the Group assesses whether, throughout the period of
use, the customer has both of the right to obtain substantially all of the economic benefits from use of the
identified asset and the right to direct the use of the identified asset.
119
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(33) Other significant accounting judgements and estimates (Continued)
Identification of separate lease components
For a contract that contains multiple separate lease components, the Group separates the components
of the contract and accounts for each separate lease component. The right to use an underlying asset
is a separate lease component if both:
(1) the lessee can benefit from use of the underlying asset either on its own or together with other
resources that are readily available to the lessee; and
(2) the underlying asset is neither highly dependent on, nor highly interrelated with, the other
underlying assets in the contract.
Separating lease components and non-lease components
For a contract that contains lease components and non-lease components, the Group accounts for lease
components and non-lease components separately as a lessor or a lessee.
Assessment of the lease term
The lease term is the non-cancellable period of a lease for which the Group has the right to use an
underlying asset. If the Group has an option to extend the lease, that is, the Group has the right to
extend the lease, and is reasonably certain to exercise that option, the lease term also includes periods
covered by an option to extend the lease. If the Group has an option to terminate the lease, that is, the
Group has the right to terminate the lease, but is reasonably certain not to exercise that option, the lease
term includes periods covered by an option to terminate the lease. The Group reassesses whether it is
reasonably certain to exercise an extension option, purchase option, or not to exercise a termination
option, upon the occurrence of either a significant event or a significant change in the circumstances that
is within the control of the Group and affects whether the Group is reasonably certain to exercise an
option not previously included in its determination of the lease term.
As leasee
The accounting treatment of the Group as lease please refer to Note.III.29 and Note III.35.
Lease modifications
Lease modification is a change in the scope of a lease, or the consideration for a lease, that was not part
of the original terms and conditions of the lease, for example, adding or terminating the right to use one
or more underlying assets, or extending or shortening the contractual lease term.
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CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(33) Other significant accounting judgements and estimates (Continued)
Lease modifications (Continued)
The Group accounts for a lease modification as a separate lease if both:
(1) the modification increases the scope of the lease by adding the right to use one or more
underlying assets; and
(2) the consideration for the lease increases by an amount commensurate with the stand-alone
price for the increase in scope and any appropriate adjustments to that stand-alone price to
reflect the circumstances of the particular contract.
For a lease modification that is not accounted for as a separate lease, at the effective date of the lease
modification the Group remeasures the lease liability by discounting the revised lease payments using a
revised discount rate. The revised discount rate is determined as the interest rate implicit in the lease
for the remainder of the lease term, or the lessee’s incremental borrowing rate at the effective date of the
modification, if the interest rate implicit in the lease cannot be readily determined.
For a lease modification that is not accounted for as a separate lease, the Group accounts for the
remeasurement of the lease liability by:
(1) decreasing the carrying amount of the right-of-use asset to reflect the partial or full termination of
the lease for lease modifications that decrease the scope of the lease, and recognising the gain
or loss relating to the partial or full termination of the lease in profit or loss; or
(2) making a corresponding adjustment to the right-of-use asset for all other lease modifications.
Short-term leases and leases of low-value assets
The Group considers a lease that, at the commencement date of the lease, has a lease term of 12
months or less, and does not contains any purchase option as a short-term lease; and a lease for which
the value of the individual underlying asset is not more than RMB40,000 when it is new as a lease of
low-value assets. If the Group subleases an asset, or expects to sublease an asset, the head lease
does not qualify as a lease of a low-value asset. The Group does not recognise the right-of-use assets
and lease liabilities for short-term leases and low-value assets. The Group recognises lease payments
on short-term leases and leases of low-value assets in the costs of the related asset or profit or loss on a
straight-line basis over the lease term.
As lessor
A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to
ownership of an underlying asset, except that a lease is classified as an operating lease at the inception
date. The Group, as an intermediate lessor, classifies the sublease by reference to the right-of-use
asset arising from the head lease.
121
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(33) Other significant accounting judgements and estimates (Continued)
As lessor of an operating lease
Rent income under an operating lease is recognised on a straight-line basis over the lease term, through
profit or loss. Variable lease payments that are not included in the measurement of lease receivables
are charged to profit or loss as incurred.
The Group accounts for a modification to an operating lease as a new lease from the effective date of the
modification, considering any prepaid or accrued lease payments relating to the original lease as part of
the lease payments for the new lease.
(34) Others
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 and Guangdong Province, the Company, Sinopharm Holding Guangxi Co., Ltd.
(“Sinopharm Guangxi”) and Sinopharm Holding Guangzhou Co., Ltd. (“Sinopharm Guangzhou”) are
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 and Guangdong Province. In accordance with the regulation of CNPGC, being the
enterprise which bears the obligation for specially approved medical reserving materials, the medical
reserve funds received from the PRC Government or local government are recognised as other
non-current liabilities. The Group reserves the specially approved medical reserving materials according
to the reserve program (by category and by quantity), applies dynamic management and recognizes
them as other non-current assets.
Dividend distribution
Cash dividend distribution is recognised as a liability in the period in which it is approved by shareholders
at the annual shareholders’ meeting.
Fair value measurement
At each balance sheet date, the Group measures the fair value of equity instrument investments. Fair
value means the price receivable from the disposal of an asset or required to be paid for the transfer of a
liability in an orderly transaction incurred by market participants on the measurement date. The Group
measures assets or liabilities at fair value with the assumption that the orderly transaction of asset
disposal or the transfer of liabilities takes place in the major market for the relevant assets or liabilities.
Where there is no major market, the Group assumes that such transaction takes place in the most
favourable market for the relevant assets or liabilities. The major market (or most favourable market) is a
trading market which the Group has access to on the measurement date. The Group adopts
assumptions used by market participants when they price the asset or liability with the aim of maximising
its economic benefits.
122
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(34) Others (Continued)
Fair value measurement (Continued)
The measurement of non-financial assets measured at fair value should take into account the ability of
market participants to utilise the asset in the best way for generating economic benefits, or the ability to
dispose of such asset to other market participants who are able to utilise the asset in the best way for
generating economic benefits.
The Group adopts valuation techniques that are appropriate in the current circumstances and supported
by sufficient usable data and other information. Observable input will be used first and foremost.
Unobservable input will only be used when it is not possible or practicable to obtain observable input.
The fair value hierarchy in which an asset or liability is measured or disclosed in the financial statements
at fair value will be determined on the basis of the lowest level of input which is significant for the fair
value measurement as a whole. Input at the first level represents unadjusted quoted prices in an active
market for the acquisition of the same asset or liability on the measurement date. Input at the second
level represents directly or indirectly observable assets or liabilities apart from input at the first level.
Input at the third level represents unobservable input for the asset or liability.
At each balance sheet date, the Group reassesses assets and liabilities measured at fair value on an
ongoing basis recognised in the financial statements to determine whether the level of fair value
measurement should be changed.
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) the component’s
operating results are regularly reviewed by the Group’s management to make decisions about resources
to be allocated to the segment and to assess its performance, and (3) for which the information on
financial position, operating results and cash flows is available to the Group. If two or more operating
segments have similar economic characteristics and satisfy certain conditions, they are aggregated into
one single operating segment.
Significant accounting judgements and estimates
The preparation of the financial statements requires management to make judgements, estimates and
assumptions that affect the reported amounts of revenue, expenses, assets and liabilities, and their
accompanying disclosures, and the disclosure of contingent liabilities at the balance sheet date.
Uncertainty about these assumptions and estimates could result in outcomes that could require a
material adjustment to the carrying amounts of the assets or liabilities affected in the future.
123
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(34) Others (Continued)
Significant accounting judgements and estimates (Continued)
Judgements
In the process of applying the Group's accounting policies, management has made the following
judgements which have a significant effect on the amounts recognised in the financial statements:
Operating leases - the Group as lessor
The Group has entered into lease agreements on its investment property portfolio. The Group has
determined these leases to be operating leases, based on an evaluation of the terms and conditions of
the agreements, that it retains substantially all the significant risks and rewards of ownership of these
properties.
Business models
The classification of financial assets at initial recognition depends on the Group's business model for
managing financial assets. When determining the business model, the Group considers the methods to
include evaluation and report financial asset performance to key management, the risks affecting the
performance of financial assets and the risk management, and the manner in which the relevant
management receives remuneration. When assessing whether the objective is to collect contractual
cash flows, the Group needs to analyse and judge the reason, timing, frequency and value of the sale
before the maturity date of the financial assets.
Contractual cash flow characteristics
The classification of financial assets at initial recognition depends on the financial asset’s contractual
cash flow characteristics, and the judgements on whether the contractual cash flows are solely
payments of principal and interest on the principal amount outstanding, including when assessing the
modification of the time value of money, the judgement on whether there is any significant difference
from the benchmark cash flow and whether the fair value of the prepayment features is insignificant for
financial assets with prepayment features, etc.
Estimation uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the
balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts
of assets and liabilities within the future accounting periods, are described below.
124
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(34) Others (Continued)
Significant accounting judgements and estimates (Continued)
Judgements (Continued)
Estimation uncertainty (Continued)
Impairment of financial instruments
The Group uses the expected credit loss model to assess the impairment of financial. The Group is
required to perform significant judgement and estimation and take into account all reasonable and
supportable information, including forward-looking information. When making such judgements and
estimates, the Group infers the expected changes in the debtor's credit risk based on historical
repayment data combined with economic policies, macroeconomic indicators, industry risks and other
factors. The different estimates may impact the impairment assessment, and the provision for
impairment may also not be representative of the actual impairment loss in the future.
Impairment of non-current assets other than financial assets (other than goodwill)
The Group assesses whether there are any indications of impairment for all non-current assets other
than financial assets at the balance sheet date. Intangible assets with indefinite useful lives are tested
for impairment annually and at other times when such an indication exists. Other non-current assets
other than financial assets are tested for impairment when there are indications that the carrying
amounts may not be recoverable. An impairment exists when the carrying amount of an asset or asset
group exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and the
present value of the future cash flows expected to be derived from it. The calculation of the fair value
less costs of disposal based on available data from binding sales transactions in an arm’s length
transaction of similar assets or observable market prices less incremental costs for disposing of the
assets. When the calculations of the present value of the future cash flows expected to be derived from
an asset or asset group are undertaken, management must estimate the expected future cash flows
from the asset or asset group and choose a suitable discount rate in order to calculate the present value
of those cash flows. Further details are included in Note V.12/13/14/15/16.
Impairment of goodwill
The Group determines whether goodwill is impaired at least on an annual basis. This requires an
estimation of the present value of the future cash flows expected to be derived from the asset groups
(sets of asset groups) to which the goodwill is allocated. Estimating the present value requires the
Group to make an estimate of the expected future cash flows from the asset groups (sets of asset
groups) and also to choose a suitable discount rate in order to calculate the present value of those cash
flows. Further details are included in Note V.17.
Deferred tax assets
Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable
profit will be available against which the losses can be utilised. Significant management judgement is
required to determine the amount of deferred tax assets that can be recognised, based upon the likely
timing and level of future taxable profits together with future tax planning strategies.
125
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(34) Others (Continued)
Significant accounting judgements and estimates (Continued)
Judgements (Continued)
Estimation uncertainty (Continued)
Fair value of unlisted equity investments
The unlisted equity investments have been valued based on the expected cash flows discounted at
current rates applicable for items with similar terms and risk characteristics. This valuation requires the
Group to make estimates about expected future cash flows, credit risk, volatility and discount rates, and
hence they are subject to uncertainty.
Loyalty points
The Group makes reasonable estimate of the stand-alone selling price of the loyalty points by taking into
account all relevant information, such as the stand-alone selling prices for the customer to acquire
additional free goods or services or the discounts enjoyed by the customer using the loyalty points and
the possibility for the customer to exercise the redemption right. The Group considers the likelihood for
the customer to exercise the redemption right based on the historical data of point redemption, the
current point redemption and the future changes for the customer, the future trend of the market and
other factors. The Group re-evaluates the stand-alone selling price of loyalty points at least on each
balance sheet date and determines the transaction price to be allocated to the loyalty points based on
the stand-alone selling price of the re-evaluated loyalty points.
Sales with a right of return
The Group makes reasonable estimate of a group of contracts with similar characteristics according to
the sales return historical data, the current sales return situation, as well as customer changes, market
changes and other relevant information. Estimates of the expected return rate may not be
representative of the actual returns in the future. The Group re-evaluates the return rate at least on
each balance sheet date and updates the measurement of the refund liabilities and the right-of-return
assets based on the re-evaluated return rate.
Warranties
The Group makes reasonable estimate of the warranty rate of a group of contracts with similar
characteristics based on historical warranty data, current warranty, as well as all relevant information
such as product improvements, market changes, etc. Estimates of the expected warranty rate may not
be representative of the actual warranty rate in the future. The Group re-evaluates the warranty rate at
least on each balance sheet date and updates the measurement of the provisions based on the
re-evaluated warranty rate.
126
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(34) Others (Continued)
Significant accounting judgements and estimates (Continued)
Judgements (Continued)
Estimation uncertainty (Continued)
Assessment of constrains on variable consideration
The Group estimates, within a reasonable quantity, the amount of variable consideration that may occur
and the likelihood by taking into account all reasonably available information, including historical
information, current information, and predictive information. The Group includes in the transaction price
some or all of an amount of variable consideration estimated only to the extent that it is highly probable
that a significant reversal in the amount of cumulative revenue recognised will not occur when the
uncertainty associated with the variable consideration is subsequently resolved. In assessing whether
it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not
occur once the uncertainty related to the variable consideration is subsequently resolved, the Group
considers both the likelihood and the magnitude of the revenue reversal. On each balance sheet date,
the Group updates the estimated transaction price (including updating its assessment of whether an
estimate of variable consideration is constrained) to reflect the circumstances present at the end of the
reporting period and the changes in circumstances during the reporting period.
Lessee’s incremental borrowing rate
If the interest rate implicit in the lease cannot be readily determined, the Group measures the lease
liability at the present value of the lease payments discounted using the lessee’s incremental borrowing
rate. According to the economic environment, the Group takes the observable interest rate as the
reference basis for determining the incremental borrowing rate, then adjusts the observable interest rate
based on its own circumstances, underlying assets, lease terms and amounts of lease liabilities to
determine the applicable incremental borrowing rate.
127
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
VI. Taxation
1. Main categories and rates of taxes:
Categories Tax base Tax rate
Taxable value added amount (Tax
payable is calculated by using the
taxable sales amount multiplied by
the effective tax rate less
Value added tax deductible VAT input of the current
(“VAT”) period) 0%, 1%, 3%, 5%, 6%, 9%, 13%
City maintenance and
construction tax Amount of VAT 5% or 7%
Corporate income tax
(“CIT”) Taxable income 15%, 20% or 25%
Educational surcharge Amount of VAT 3%
Local educational
surcharge Amount of VAT 2%
2. Tax preferences
(a) In 2011, the Urumqi Head Office, Changji Branch and Karamay Branch of Sinopharm Holding
Xinjiang New & Special Medicines Chain Store Co., Ltd. (“Xinjiang New & Special Medicines”),
subsidiaries of the group, shall pay tax payable at a rate of 15% by jurisdictions. According to the
Circular of the Ministry of Finance, the State Administration of Taxation, the General Administration
of Customs on Issues Concerning Tax Policies for the Further Development of the Western Regions
(Cai shui [2011] No.58), enterprises from encouraged industries in the Western Regions, could
enjoy a reduced CIT rate of 15% from 1 January 2011 to 31 December 2020.
In 2014, the Group’s subsidiary Sinopharm Holding Guangxi Logistics Co., Ltd. (“Sinopharm
Guangxi Logistics”) was approved by the Guangxi Local Tax Bureau to enjoy a tax discount
applicable to corporations in the region of Western Development to pay income tax at a tax rate of
15%.
In 2015, eight subsidiaries 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 of 15%. 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.
128
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
IV Taxation (Continued)
2. Tax preferences (Continued)
In 2019, the Group's subsidiary Sinopharm Holding National Pharmacy (Pu‘er) Songmao Co., Ltd., in
accordance with the provisions of Caishui [2011] No. 58 Document, met the conditions for the
enjoyment of corporate income tax benefits in the Western Development, and obtained the
confirmation letter of Pu 'er City Development and Reform Commission that the relevant business of
Pu 'er Song Maoji Antang Pharmaceutical Co., LTD was the encouraged industry of the country. The
enterprise income tax was paid at a preferential tax rate of 15% from 2019 to 2020.
According to the "Notice on Implementing the Inclusive Tax Deduction Policy for Small and Micro
Enterprises" (Cai Shui [2019] No. 13): the Group's subsidiary which met the requirements of small
and meager profit enterprises paid corporate income tax at a rate of 20% and reduced the taxable
income by 25% if the annual taxable was less than RMB 1 million. And if the annual taxable was
between RMB 1 million and 3 million, the Group's subsidiary reduced the taxable income by 50%
from 1 January 2019 to 31 December 2020.
129
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
VII. Notes to the consolidated financial statements
1. Cash and bank balances
30 June 2020 31 December 2019
Cash on hand 13,254,761.42 5,333,515.38
Cash at banks (Note 1) 8,008,457,260.74 8,437,723,437.66
Other cash balances (Note 2) 218,128,205.64 442,672,297.43
8,239,840,227.80 8,885,729,250.47
Note 1: 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 the deposits 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 the deposits earn interest at the respective deposit rates. Balance of cash and cash
equivalents in cash at banks is RMB7,987,307,260.74 (31 December 2019: RMB8,420,737,654.78). Balance of interest
receivable from cash at banks not yet due at the end of the period is RMB21,150,000.00 (31 December 2019:
RMB16,985,782.88)
Note 2: Other monetary funds as at 30 June 2020 include: bank acceptance bills guarantee of RMB 217,953,399.64
(31 December 2019: RMB442,547,491.43) as well as deposit of the letter of guarantee of RMB174,806.00 (31
December 2019: RMB124,806.00).
2. Notes receivable
(1) The notes receivable by category
30 June 2020 31 December 2019
Commercial acceptance bills 402,639,901.74 793,301,688.64
402,639,901.74 793,301,688.64
(2) At the end of the period, the company transferred the acceptance notes to accounts receivable due to the drawer's
failure to perform the contract:
Amount transferred to
accounts receivable
at the end of the period
Commercial acceptance bills 728,020.99
130
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
VII. Notes to the consolidated financial statements (Continued)
3. Accounts receivable
(1) The accounts receivable by category
30 June 2020 31 December 2019
Gross carrying amount Provision for bad debt Gross carrying value Gross carrying amount Provision for bad debt Gross carrying value
Amount Proportion Amount Proportion Amount Proportion Amount Proportion
Items for which provision
for bad debt is recognized
separately 791,162,699.66 5.66% 18,189,265.80 2.30% 772,973,433.86 586,321,444.68 5.45% 18,329,609.15 3.13% 567,991,835.53
Items for which provision
for bad debt is recognized
by group 13,179,058,766.79 94.34% 59,337,066.24 0.45% 13,119,721,700.55 10,172,578,829.97 94.55% 27,587,121.32 0.27% 10,144,991,708.65
13,970,221,466.45 100.00% 77,526,332.04 0.55% 13,892,695,134.41 10,758,900,274.65 100.00% 45,916,730.47 0.43% 10,712,983,544.18
131
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
VII. Notes to the consolidated financial statements (Continued)
3. Accounts receivable (Continued)
(1) The accounts receivable by category (Continued)
Accounts receivable that are individually assessed for provisions
Bad debt
Carrying amount provision Proportion Assessment for impairment
Receivable of medical The receivable of medical insurance has
insurance 576,508,029.76 - 0.00% lower-tier default risk.
Debtor had irregular operations of
subject to serious financial difficulties
and related to multiple lawsuits, is with
Client A 11,559,178.29 11,559,178.29 100.00% lower-tier recoverability.
Debtor had irregular operations of
subject to serious financial difficulties,
and has been placed on a national list of
defaulters, with highly risk of going
Client B 2,447,976.74 2,447,976.74 100.00% bankruptcy or financial restructuring.
Debtor had irregular operations of
subject to serious financial difficulties,
and has been placed on a national list of
defaulters, with highly risk of going
Client C 2,365,253.03 2,365,253.03 100.00% bankruptcy or financial restructuring.
Part of the receivable takes longer than
usual to recover, and has risk of
Others 198,282,261.84 1,816,857.74 0.92% recoverability.
791,162,699.66 18,189,265.80 -
Provision for bad debts of accounts receivable according to the general model of expected credit loss
30 June 2020
Estimated default amount Expected credit loss in entire Expected credit loss rate
lifetime
Within 1 year 12,948,463,247.57 38,221,387.67 0.30%
1 to 2 years 218,440,449.79 18,054,393.73 8.27%
2 to 3 years 8,678,368.49 1,985,006.57 22.87%
Over 3 years 3,476,700.94 1,076,278.27 30.96%
13,179,058,766.79 59,337,066.24
132
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
VII. Notes to the consolidated financial statements (Continued)
3. Accounts receivable (Continued)
(1) The accounts receivable by category (Continued)
The aging analysis of accounts receivables:
30 June 2020
Within 1 year 13,721,343,683.59
1 to 2 years 224,065,055.60
2 to 3 years 8,678,368.49
Over 3 years 16,134,358.77
13,970,221,466.45
(2) Changes in bad debt provision, recovery or reverse
Bad debt provision for the current period
Amount changes in current period
Opening balance Reversal of Closing balance
Increases in
Increases Reversal write-off in
merger
previous years
Accounts
receivable bad
debt provision 45,916,730.47 24,586,368.81 (4,407,868.49) 11,263,303.38 167,797.87 77,526,332.04
(3) The top five accounts receivable by customer
% of the total accounts Bad debt provision
Amount receivable amount
The top five accounts receivable in total 870,584,683.17 6.26% 4,023,082.69
(4) Accounts receivable derecognized due to the financial assets transferred
From January to June 2020, the Group factored a small portion of accounts receivable at amortised cost to financial
institutions. The amount of accounts receivable derecognised was RMB2,756,648,565.22 (January to June 2019:
RMB2,707,165,636.40), and the amount of loss recognised through Investment income was RMB33,507,102.64 (January to
June 2019: RMB42,268,803.55).
133
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
VII. Notes to the consolidated financial statements (Continued)
4. Receivable financing
30 June 2020 31 December 2019
Bank acceptance bills 399,889,650.01 446,342,588.46
Receivable financing endorsed or discounted by the Group to other parties which were not yet due at 30 June 2020
30 June 2020
Derecognised Not Derecognised
Bank acceptance bills 2,305,328,560.58 -
5. Advances to suppliers
(1) The aging of advances to suppliers
30 June 2020 31 December 2019
Amount % of total balance Amount % of total balance
Within 1 year 409,588,936.38 98.69% 388,572,636.93 99.68%
1 to 2 years 5,231,662.72 1.26% 244,213.07 0.06%
2 to 3 years 83,222.53 0.02% 815,319.09 0.21%
Above 3 years 133,651.00 0.03% 196,616.45 0.05%
415,037,472.63 - 389,828,785.54 -
The illustration of the reasons why advance payments with a more than one-year aging while the amounts are significant
not settled in time:
On 30 June 2020, advance payments with a more than one-year aging are mainly prepaid equipments and prepaid rents.
(2) The top five advances to suppliers by customer on 30 June 2020
Amount Proportion of total balance
Total amount of top five advances to suppliers 147,282,145.54 35.49%
134
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
VII. Notes to the consolidated financial statements (Continued)
6. Other receivables
30 June 2020 31 December 2019
Dividends receivable - 834,914.61
Other receivables 613,031,947.42 501,123,926.82
613,031,947.42 501,958,841.43
(1) Dividends receivable
30 June 2020 31 December 2019
Shanghai Dingqun Enterprise Management
Consulting Co., Ltd. - 834,914.61
(2) Other receivables
(a) Category of other receivables by nature
30 June 2020 31 December 2019
Deposits 325,055,837.65 275,364,596.97
Receivable of price reduction compensation
and purchasing rebates 109,165,508.43 67,585,688.47
Receivable of the pharmaceutical electronic
trading platform 52,855,538.34 49,597,763.58
Entrusted borrowings 46,334,222.24 45,360,333.35
Petty cash advance to employees 18,865,088.01 11,606,921.79
Receivable of equity transactions 8,980,000.00 8,980,000.00
Receivable due from related parties 1,950,270.73 25,786,279.26
Others 116,635,565.91 81,032,902.12
679,842,031.31 565,314,485.54
135
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
VII. Notes to the consolidated financial statements (Continued)
6. Other receivables (Continued)
(b) Changes in bad debt provision
Stage 1 Stage 2 Stage 3
Entire lifetime Entire lifetime Total
Expected expected credit expected credit
Bad debt credit losses losses(No credit losses(Credit
over the next impairment impairment
12 months occurred) occurred)
Balance at 1 January 2020 - 7,107,131.41 57,083,427.31 64,190,558.72
Balance at 1 January 2020 during the period
Provisions during the period - 1,033,302.06 1,385,884.43 2,419,186.49
Reversal during the period - (1,017,455.29) - (1,017,455.29)
Write-off during the period - (124,000.00) - (124,000.00)
Other Changes - 1,341,793.97 - 1,341,793.97
Balance at 30 June 2020 - 8,340,772.15 58,469,311.74 66,810,083.89
The aging analysis of other receivables was as follows:
30 June 2020
Within 1 year 542,153,839.37
1 to 2 years 26,056,296.78
2 to 3 years 50,957,128.63
Over 3 years 60,674,766.53
679,842,031.31
(c) Changes in bad debt provision, recovery or reverse
The bad debt provision amount of other receivables in current period was RMB2,419,186.49, with the recovered or reversed
amount of RMB1,017,455.29. The write-off amount of other receivables in current period was RMB124,000.00.
Guoda Pharmacy, a subsidiary of the Group, acquired Shanghai Dingqun which led the bad debt provision amount of other
receivables in current period increased RMB1,341,793.97.
136
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
VII. Notes to the consolidated financial statements (Continued)
6. Other receivables (Continued)
(d) The top 5 parties that owed the largest amounts of other receivable balances
% of
Provision of bad
Nature Amount Age total
debt
amount
Guangdong Pharmaceutical Pharmaceutical trading
electronic trading platform platform repayment not
yet cleared 52,491,794.34 Within 1 year 7.72% -
Sinopharm Group Zhijun (Suzhou
Pharmaceutical Co., Ltd. (Note) Entrusted borrowings 46,334,222.24 2 to 3 years 6.82% 46,334,222.24
Jilin Oilfield General Hospital Deposits 30,000,000.00 Within 1 year 4.41% -
TCM-Integrated Cancer Center of Deposit of logistics
Southern Medical University extension services project 20,000,000.00 3 to 4 years 2.94% -
Shenyang Medical Insurance Amount due from medical
Management Service Center insurance 19,676,195.95 Within 1 year 2.89% -
168,502,212.53 24.79% 46,334,222.24
Note: With bad operation, declining solvency and increasing credit risk of Zhijun Suzhou in 2019, the Group accrued the total
amount RMB45,360,333.35 of the entrusted borrowings of Zhijun Suzhou for bad debt provision. Including: the balance at the
end of the period increased by RMB973,888.89 compared with that at the beginning of the period, which was caused by the
failure of the drawer – Zhijun Suzhou to perform the payment when the commercial acceptance bill was due, and the Company
transferred those amount into other accounts receivable.
137
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
VII. Notes to the consolidated financial statements (Continued)
7. Inventories
(1) Inventories by category
30 June 2020 31 December 2019
Book value Provision for Net book value Book value Provision for Net book value
declines in value declines in
of inventories value of
and impairment inventories or
of contract impairment of
performance contract
costs performance
costs
Raw materials 955,930.73 - 955,930.73 645,627.66 - 645,627.66
Work in progress 178,002.50 - 178,002.50 140,458.20 - 140,458.20
Finished goods 5,351,309,550.74 10,411,125.72 5,340,898,425.02 5,067,666,999.13 8,902,200.40 5,058,764,798.73
Low cost consumables 2,874,381.92 - 2,874,381.92 3,723,258.67 - 3,723,258.67
5,355,317,865.89 10,411,125.72 5,344,906,740.17 5,072,176,343.66 8,902,200.40 5,063,274,143.26
(2) Provision for declines in value of inventories and impairment of contract performance costs
Increases Decreases
31 December 2019 Addition due to Reversal or 30 June 2020
Provision Others
combination write-off
Finished goods 8,902,200.40 3,457,289.05 362,553.37 2,310,917.10 - 10,411,125.72
8. Other current assets
30 June 2020 31 December 2019
Input VAT to be credited 81,207,754.10 101,376,702.28
Corporate income tax to be deducted 2,433,581.63 513,305.14
Others 408,552.85 317,490.78
84,049,888.58 102,207,498.20
138
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
VII. Notes to the consolidated financial statements (Continued)
9. Long‐term equity investments
Changes in current period
Cash dividend Provision for
Investee 31 December 2019 Additional Negative Profit of loss under Other comprehensive Other changes 30 June 2020
declared by impairment
Investment investment equity method income adjustment in equity
investee
Associates
Shenzhen Main Luck Pharmaceutical Inc. (“Main Luck
Pharmaceutical”) 294,469,367.27 - - 34,556,440.58 - - (63,342,000.00) 265,683,807.85 -
Shanghai Beiyi Guoda Pharmaceutical Co. Ltd.
(“Shanghai Beiyi”) 9,887,944.98 - - 549,217.13 - - - 10,437,162.11 -
Shanghai Liyi Pharmacy Co., Ltd. (“Shanghai Liyi”) 1,039,039.88 - - - - - - 1,039,039.88 -
Shanghai Renbei Pharmacy Co., Ltd. (“Shanghai
Renbei”) 1,800,000.00 - - - - - - 1,800,000.00 -
Dongyuan Accord Pharmaceutical Chain Co., Ltd.
(“Dongyuan Accord”) - - - - - - - - 396,638.32
Sinopharm Jienuo Medical Treatment Service
Guangdong Co., Ltd. (“Guangdong Jienuo”) 6,453,679.96 - - (639,160.54) - - - 5,814,519.42 -
Guangdong Jianhui Construction Investment
Management Co., Ltd. (“Guangdong Jianhui”) 1,854,647.81 6,000,000.00 - 145,352.19 - - - 8,000,000.00 -
Zhijun Suzhou - -- - - - - - 0.00 1,857,279.52
Sinopharm Group Zhijun (Shenzhen) Pharmaceutical Co.,
Ltd. (“Zhijun Medicine”) 400,578,574.68 - - 17,400,995.09 - - - 417,979,569.77 -
Shenzhen Zhijun Pharmaceutical Trade Co., Ltd. (“Zhijun
Trade”) 10,275,257.61 - - 757,325.01 - - - 11,032,582.62 -
Sinopharm Group Zhijun (Shenzhen) PingShan
Pharmaceutical Co., Ltd. (“Zhijun Pingshan”) 120,878,018.74 - - 27,665,891.90 - - - 148,543,910.64 -
Shanghai Shyndec Pharmaceutical Co.,Ltd, (“Shyndec
Pharma”) 1,235,240,098.79 - - 53,168,842.80 122,186.89 14,135.44 (16,714,220.20) 1,271,831,043.72 -
Shanghai Dingqun Enterprise Management Consulting
Co., Ltd. (“Shanghai Dingqun”) 22,637,781.16 - (22,637,781.16) - - - - - -
2,105,114,410.88 6,000,000.00 (22,637,781.16) 133,604,904.16 122,186.89 14,135.44 (80,056,220.20) 2,142,161,636.01 2,253,917.84
139
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
VII. Notes to the consolidated financial statements (Continued)
10. Other equity instrument investment
30 June 2020 31 December 2019
Sinopharm Health Online Co., Ltd. 96,748,000.00 96,748,000.00
Shanghai Guoda Shuguang Pharmacy Co., Ltd. 8,365,000.00 8,365,000.00
Shanghai Guoren Pharmacy Co., Ltd. 5,704,000.00 5,704,000.00
Sinopharm Guoda Hubei Co., Ltd. 4,751,000.00 4,751,000.00
Hunan Zhongbai Pharmaceutical Investment Co., Ltd. 453,000.00 453,000.00
116,021,000.00 116,021,000.00
11. Other non‐current financial assets
30 June 2020 31 December 2019
Financial asset measured at fair value
through current profit or loss 120,972,350.24 140,000,000.00
On June 30, 2020, the balance of other non-current financial assets was the fair value of the share of Sinopharm CICC
Medical Industry Fund (referred to as “the Industry Fund”) subscribed by the Company. The Group's 21st meeting of the
7th Board of Directors held on January 6, 2017 reviewed and approved the proposal of the Company to subscribe for the
industry fund and related party transactions. As a limited partner of the Industry Fund, the Company plans to invest
RMB200 million to subscribe for the share of the Industrial Fund, which will be paid in three phases.The Industrial Fund
obtained the relevant licenses as well as approvals and started operating in 2018. As of December 31, 2019, the Company
had paid a total of RMB 140 million. The Company received the withdraw fund of this project’s principal of
RMB19,027,649.76 from Qirui Port Investment Center LP of Ningbo Meishan Bonded Port. Since the cash flow obtained
by the Company from the investment of the Industry Fund includes both the contractual cash flow generated by the
underlying assets during the investment period and the cash flow of the disposal of the underlying assets, the contractual
cash flow that does not satisfy the financial assets generated on a specific date is only the payment of interest on the basis
of the outstanding principal amount, therefore, the Company classifies the investment of the Industry Fund into financial
assets measured at fair value through profit or loss and presented as other non-current financial assets.
.
140
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
VII. Notes to the consolidated financial statements (Continued)
12. Investment properties
Subsequent measurement under the cost model:
Buildings and Land use right Construction in Total
constructions progress
Original cost
Opening balance 243,610,633.09 22,719,102.03 - 266,329,735.12
Increase amount in current period 202,865.73 - - 202,865.73
Purchase 2,865.73 - - 2,865.73
Transfer from inventories\fixed
assets\construction in progress 200,000.00 - - 200,000.00
Decrease amount in current period 11,562,525.28 1,730,283.59 - 13,292,808.87
Disposal or retirement 2,720,126.63 - - 226.63
Transfer to intangible assets - 1,730,283.59 - 1,730,283.59
Transfer to fixed assets 8,842,398.65 - - 8,842,398.65
Closing balance 232,250,973.54 20,988,818.44 - 253,239,791.98
Accumulated depreciation and amortization
Opening balance 117,940,803.43 8,188,573.39 - 126,129,376.82
Increase amount in current period 2,999,424.16 114,228.44 - 3,113,652.60
Provision 2,933,025.28 114,228.44 - 353.72
Transfer from fixed assets 66,398.88 - - 66,398.88
Decrease amount in current period 6,942,885.60 450,957.66 - 7,393,843.26
Disposal or retirement 1,830,106.44 - - 1,830,106.44
Transfer to intangible assets - 450,957.66 - 450,957.66
Transfer to fixed assets 5,112,779.16 - - 5,112,779.16
Closing balance 113,997,341.99 7,851,844.17 - 121,849,186.16
Provision for impairment
Opening balance and Closing balance 1,300,000.00 - - 1,300,000.00
Carrying amount
At end of the period 116,953,631.55 13,136,974.27 - 130,090,605.82
At beginning of the period 124,369,829.66 14,530,528.64 - 138,900,358.30
141
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
VII. Notes to the consolidated financial statements (Continued)
13. Fixed assets
30 June 2020 31 December 2019
Fixed assets 716,847,033.81 708,000,172.63
(1) Condition of fixed assets
Buildings Machinery and Motor vehicles Office equipments Electronic Total
equipment equipments
Original cost
Opening balance 603,848,760.59 239,741,250.34 90,023,564.89 322,298,724.55 90,133,289.24 1,346,045,589.61
Increase amount in current period 8,842,398.65 29,686,043.50 6,103,974.09 18,584,722.03 17,834,413.27 81,051,551.54
Purchase - 26,587,842.12 5,271,101.19 13,435,072.46 17,298,530.99 62,592,546.76
Transfer from construction in progress - 2,762,433.88 - - - 2,762,433.88
Business combinations - 335,767.50 832,872.90 5,149,649.57 535,882.28 6,854,172.25
Transfer from Investment properties 8,842,398.65 - - - - 8,842,398.65
Decrease amount in current period 200,000.00 2,948,811.58 2,033,850.94 5,403,408.46 6,839,844.04 17,425,915.02
Disposal or retirement - 2,948,811.58 2,033,850.94 5,403,408.46 6,839,844.04 17,225,915.02
Transfer to investment properties 200,000.00 200,000.00
Closing balance 612,491,159.24 266,478,482.26 94,093,688.04 335,480,038.12 101,127,858.47 1,409,671,226.13
142
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
VII. Notes to the consolidated financial statements (Continued)
13. Fixed assets (Continued)
(1) Condition of fixed assets (Continued)
Buildings Machinery and Motor vehicles Office equipments Electronic Total
equipment equipments
Accumulated depreciation
Opening balance 210,725,255.48 114,086,892.23 58,060,958.31 195,644,163.28 59,528,147.68 638,045,416.98
Increase amount in current period 14,128,973.18 19,823,458.34 4,080,452.14 15,648,096.19 12,579,646.47 66,260,626.32
Provision 9,016,194.02 19,823,458.34 4,080,452.14 15,648,096.19 12,579,646.47 61,147,847.16
Transfer from Investment properties 5,112,779.16 - - - - 5,112,779.16
Decrease amount in current period 66,398.88 2,144,599.72 1,919,607.20 2,965,344.14 4,385,901.04 11,481,850.98
Disposal or retirement - 2,144,599.72 1,919,607.20 2,965,344.14 4,385,901.04 11,415,452.10
Transfer to investment properties 66,398.88 - - - - 66,398.88
Closing balance 224,787,829.78 131,765,750.85 60,221,803.25 208,326,915.33 67,721,893.11 692,824,192.32
Carrying amount
At end of period 387,703,329.46 134,712,731.41 33,871,884.79 127,153,122.79 33,405,965.36 716,847,033.81
At beginning of the period 393,123,505.11 125,654,358.11 31,962,606.58 126,654,561.27 30,605,141.56 708,000,172.63
143
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
VII. Notes to the consolidated financial statements (Continued)
13. Fixed assets (Continued)
(2) Condition of Fixed assets falling to accomplish certification of title
Book value Reason for not obtaining certification of title
As at 30 June 2020, the Company has not yet obtained the certification
of title for No.13 Jingxing North Street, Tiexi District, Shenyang. The
Houses and buildings 25,912,957.40 transferor, the State-owned Assets Supervision and Administration
Commission, was still processing the case and had provided a relevant
notification.
14. Construction in progress
30 June 2020 31 December 2019
Construction in progress 29,000,528.39 31,582,575.84
(1) Condition of construction in progress
30 June 2020 31 December 2019
Carrying Impairment Carrying Carrying Impairment Carrying
balance amount balance amount
Warehouse improvement project 3,146,431.51 - 3,146,431.51 1,232,957.94 - 1,232,957.94
New office building project 96,609.62 - 96,609.62 110,090.53 - 110,090.53
Supply chain extension project 6,188,066.46 - 6,188,066.46 8,081,340.80 - 8,081,340.80
Software project 10,768,504.76 - 10,768,504.76 13,197,683.52 - 13,197,683.52
Other construction projects 8,800,916.04 - 8,800,916.04 8,960,503.05 - 8,960,503.05
29,000,528.39 - 29,000,528.39 31,582,575.84 - 31,582,575.84
144
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
VII. Notes to the consolidated financial statements (Continued)
14. Construction in progress (Continued)
(2) Changes of significant construction in progress in current period
Proportion of
Project Source of
Decrease Closing balance investment
progress funds
Project name Budget Opening balance Increase to budget
Transferred to
Others
fixed assets
Warehouse improvement project 13,281,971.98 1,232,957.94 3,892,668.96 842,610.88 1,136,584.51 3,146,431.51 38.59 % 38.59 % Own capital
New office building Project 500,000.00 110,090.53 - - 13,480.91 96,609.62 22.02% 22.02% Own capital
Supply chain extension project 15,695,768.25 8,081,340.80 26,548.66 1,919,823.00 - 6,188,066.46 51.66% 51.66% Own capital
Software project 30,000,000.00 13,197,683.52 10,768,504.76 - 13,197,683.52 10,768,504.76 79.89% 79.89% Own capital
Other construction projects 205,059,930.48 8,960,503.05 45,261.93 - 204,848.94 8,800,916.04 4.39% 4.39% Own capital
264,537,670.71 31,582,575.84 14,732,984.31 2,762,433.88 14,552,597.88 29,000,528.39
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
VII. Notes to the consolidated financial statements (Continued)
15. Right‐of‐use assets
Houses and buildings Machinery, transport
Others Total
and office equipment
Original cost
Opening balance 2,634,697,656.23 14,470,094.95 2,418,809.35 2,651,586,560.53
Increase amount in current period 486,014,886.43 - - 486,014,886.43
Incl: Business combinations not under common control 139,301,280.63 - - 139,301,280.63
Decrease amount in current period 202,597,928.71 - - 202,597,928.71
Disposal 202,597,928.71 - - 202,597,928.71
Closing balance 3,057,415,894.58 14,470,094.95 2,418,809.35 3,074,304,798.88
146
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
VII. Notes to the consolidated financial statements (Continued)
15. Right-of-use assets (Continued)
Machinery, transport
Houses and buildings and office equipment Others Total
Accumulated depreciation
Opening balance 652,657,513.16 4,075,450.60 95,734.70 656,828,698.46
Increase amount in current period 386,116,427.19 2,044,641.59 47,736.21 388,208,804.99
Depreciation 386,116,427.19 2,044,641.59 47,736.21 388,208,804.99
Incl: Business combinations not under common control 38,641,408.12 - - 38,641,408.12
Decrease amount in current period 81,526,000.33 - - 81,526,000.33
Disposal 81,526,000.33 - - 81,526,000.33
Closing balance 995,889,348.14 6,120,092.19 143,470.91 1,002,152,911.24
Carrying amount
At end of the period 2,061,526,546.44 8,350,002.76 2,275,338.44 2,072,151,887.64
At beginning of the period 1,982,040,143.07 10,394,644.35 2,323,074.65 1,994,757,862.07
147
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
VII. Notes to the consolidated financial statements (Continued)
16. Intangible assets
Land use rights Software Trademarks Favorable leases Distribution network Franchise Total
Original cost
Opening balance 62,083,143.97 175,625,594.44 92,349,850.00 127,486,000.00 112,117,142.86 710,000.00 570,371,731.27
Increase amount in current period 1,730,283.59 18,027,371.70 73,007,075.12 - 163,000,000.00 - 255,764,730.41
Purchases - 2,839,548.43 - - - - 2,839,548.43
Business combinations not under common
control - 1,990,139.75 73,007,075.12 - 163,000,000.00 - 237,997,214.87
Transfer from investment properties 1,730,283.59 - - - - - 1,730,283.59
Transfer from construction in progress - 13,197,683.52 - - - - 13,197,683.52
Closing balance 63,813,427.56 193,652,966.14 165,356,925.12 127,486,000.00 275,117,142.86 710,000.00 826,136,461.68
Accumulated amortization
Opening balance 28,858,577.16 88,726,743.09 196,850.16 30,792,570.91 46,298,190.47 710,000.00 195,582,931.79
Increase amount in current period 955,036.92 11,114,376.17 950.04 3,542,977.94 6,877,928.57 - 22,491,269.64
Provision 504,079.26 11,114,376.17 950.04 3,542,977.94 6,877,928.57 - 22,040,311.98
Transfer from investment properties 450,957.66 - - - - - 450,957.66
Closing balance 29,813,614.08 99,841,119.26 197,800.20 34,335,548.85 53,176,119.04 710,000.00 218,074,201.43
148
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
VII. Notes to the consolidated financial statements (Continued)
16. Intangible assets (Continued)
Land use rights Software Trademarks Favorable leases Distribution network Franchise Total
Provision for impairment
Opening balance - - - - - - -
Closing balance - - - - - - -
Carrying amount
At end of the year 33,999,813.48 93,811,846.88 165,159,124.92 93,150,451.15 221,941,023.82 - 608,062,260.25
At beginning of the year 33,224,566.81 86,898,851.35 92,152,999.84 96,693,429.09 65,818,952.39 - 374,788,799.48
149
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
VII. Notes to the consolidated financial statements (Continued)
17. Goodwill
(1) Original Book Value of goodwill
Decrease
during this
Increase during this period period
Closing
Names of the investee or matters of forming goodwill Opening balance Merger of Business
holdings not combinations balance
under not under
common common control
control
Sinopharm Holding (Jiangmen) 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 Zhuhai Co., Ltd.(“Sinopharm
Zhuhai”) 6,772,561.47 6,772,561.47
Sinopharm Holding Maoming Co., Ltd.(“Sinopharm
Maoming”) 66,417.07 - - - 66,417.07
Sinopharm Holding Guoda ForMe Medicines (Shanghai)
Co., Ltd. (“ForMe Medicines’’) 3,033,547.53 - - - 3,033,547.53
Sinopharm Hebei Lerentang Pharmacy Chain Store Co.,
Ltd.(“Hebei Lerentang”) 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.
(“Shanxi Wanmin”) 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
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
150
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
VII. Notes to the consolidated financial statements (Continued)
17. Goodwill (Continued)
(1) Original Book Value of goodwill (Continued)
Decrease
during this
Increase during this period period
Names of the investee or matters of Closing
Opening balance Merger of Business
forming goodwill balance
holdings not combinations
under common not under
control common control
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. (“Guoda Shenyang”) 41,047,958.08 - - - 41,047,958.08
Liyang Guoda People Pharmacy Chain Store Co., Ltd. 107,275,095.74 - - - 107,275,095.74
Sinopharm Holding Hunan Guoda Minshengtang
Pharmacy Chain Co., Ltd. 41,165,574.64 - - - 41,165,574.64
Quanzhou Guoda Pharmacy Chain Store Co., Ltd.
(“Guoda Quanzhou”) 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
Guoda Neimenggu 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. ‘s
Store Acquisition 13,420,000.00 - - - 13,420,000.00
Beijing Golden Elephant Pharmacy Medicine Chain
Company Limited 64,140,124.36 - - - 64,140,124.36
Guoda Taishan 26,826,120.55 - - - 26,826,120.55
Taiyuan Tongxinli Pharmacy Co., Ltd. (“Taiyuan
Tongxinli”) 2,818,647.85 - - - 2,818,647.85
Sinopharm Holding Guoda Yongxingtang Pharmacy
Chain Store (Chaoyang) Co., Ltd (“Chaoyang
Yongxingtang”) 25,973,399.17 - - - 25,973,399.17
Sinopharm Holding Guoda Bayannur Co., Ltd. 13,494,000.00 - - - 13,494,000.00
Guoda Pu’er 71,064,684.79 - - - 71,064,684.79
Shanghai Dingqun Enterprise Management Consulting
Co., Ltd. - 520,836,246.17 - - 520,836,246.17
Liaoning Xianzhen Pharmaceutical Chain Co., Ltd. - - 34,037,431.66 - 34,037,431.66
1,035,057,927.17 520,836,246.17 34,037,431.66 - 1,589,931,605.00
(2) Provision of impairment loss
Names of the investee or matters of
forming goodwill Opening balance Increase Decrease Closing balance
Quanzhou Guoda Pharmacy
Chain Store Co., Ltd. 25,000,000.00 - - 25,000,000.00
Relevant information of asset group or combination of asset groups in which goodwill is located
151
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
VII. Notes to the consolidated financial statements (Continued)
17. Goodwill (Continued)
(2) Provision of impairment loss (Continued)
Explain the process of goodwill impairment test, key parameters (such as the growth rate in the forecast
period, the growth rate in the stable period, the profit rate, the discount rate, the forecast period, etc.) and
the recognition method of goodwill impairment loss:
The carrying value of goodwill is apportioned according to the proportion of each asset group or
combination of asset groups at fair value of the total amount of goodwill at fair value. It is shown as
follows:
30 June 2020 31 December 2019
Pharmaceutical distribution 152,865,497.03 152,865,497.03
Pharmaceutical retail 1,412,066,107.97 857,192,430.14
1,564,931,605.00 1,010,057,927.17
The recoverable amount of asset group and combination of asset groups is calculated based on the
five-year period budget approved by the management while using the cash flow forecast method. 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
asset group and combination of asset groups consisting of pharmaceutical distribution and
pharmaceutical retail as of 30 June 2020. Key assumptions made by management on projections of
cash flows used in impairment testing are described as follows:
Pharmaceutical Pharmaceutical retail
distribution
Revenue growth rate in the budget period 2.00%-40.00% 0.86%-35.00%
Sustainable growth rate 3.00% 3.00%
Gross margin 3.70%-6.94% 18.80%-41.22%
Discount rate 12.40%-15.00% 13.00%-15.00%
The budgeted gross margin and the revenue growth rate in the budget period are 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.
152
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
Impact of goodwill impairment test
VII. Notes to the consolidated financial statements (Continued)
17. Goodwill (Continued)
(2) Provision of impairment loss (Continued)
Other declarations
The Group had acquired Shanghai Dingqun Enterprise Management Consulting Co., Ltd. in January
2020, which formed goodwill amounting to RMB520,836,246.17. Refer to Note VIII (1) for the calculative
process.
The Group had acquired 43 directly-operated stores and 11 clinics of Liaoning Xianzhen Pharmaceutical
Chain Co., Ltd. in January 2020, which formed goodwill amounting to RMB34,037,431.66. Refer to Note
VIII (6) for the calculative process.
18. Long‐term prepaid expenses
Opening balance Additions Amortization Other decrease Closing balance
Fixed asset improvement
277,430,842.46 32,090,618.69 46,186,637.44 574,966.71 262,759,857.00
expenditure
Acquisition expenditure to
67,134,884.98 10,234,469.22 8,563,697.31 - 68,805,656.89
obtain the right to operate
Others 28,962,240.70 390,900.59 4,844,401.16 - 24,508,740.13
373,527,968.14 42,715,988.50 59,594,735.91 574,966.71 356,074,254.02
153
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
VII. Notes to the consolidated financial statements (Continued)
19. Deferred tax assets/liabilities
(1) Deferred tax assets before offseting
30 June 2020 31 December 2019
Deductible temporary Deferred tax Deductible temporary Deferred tax
differences assets differences assets
Provision for
154,608,453.64 37,042,164.04 119,337,381.49 28,279,430.24
impairment of assets
Accrued expenses 79,114,804.56 19,537,676.82 101,057,882.46 24,536,658.05
Deferred Income 36,901,990.37 8,911,273.37 32,719,558.79 7,996,709.35
Deductible tax loss 30,884,711.16 7,893,514.29 30,789,517.62 7,536,230.76
Accrued payroll 9,176,816.17 1,861,880.58 11,868,705.75 2,454,711.04
Others 146,351,742.65 34,786,664.66 78,831,333.02 17,989,763.45
457,038,518.55 110,033,173.76 374,604,379.13 88,793,502.89
(2) Deferred tax liabilities before offseting
30 June 2020 31 December 2019
Taxable temporary Deferred tax Taxable temporary Deferred tax
differences liabilities differences liabilities
Fair value adjustment
for business
combination not
involving enterprises
under common
control 596,762,261.00 144,013,564.34 354,297,299.88 88,574,324.96
Changes in fair value
of financial assets
through other
comprehensive
income 102,335,240.00 25,583,810.00 102,335,240.00 25,583,810.00
Others 140,375,102.86 33,924,631.13 124,248,282.00 29,809,501.58
839,472,603.86 203,522,005.47 580,880,821.88 143,967,636.54
(3) Deferred tax assets and liabilities are presented after being offset against each other:
30 June 2020 31 December 2019
Deferred tax Temporary Deferred tax Temporary
assets/liabilities differences assets/liabilities - differences
154
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
-Net after set-off Net after set-off
Deferred tax assets 22,573,284.83 87,459,888.93 25,682,673.77 63,110,829.12
Deferred tax liabilities 22,573,284.83 180,948,720.64 25,682,673.77 118,284,962.77
155
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
VII. Notes to the consolidated financial statements (Continued)
19. Deferred tax assets/liabilities (Continued)
(4) The deductible temporary differences and deductible losses that were not recognized as
deferred tax assets are presented as follows:
30 June 2020 31 December 2019
Deductible temporary differences 3,873,005.85 (4,654,442.98)
Deductible loss 41,606,495.83 49,106,535.92
45,479,501.68 44,452,092.94
(5) The aforesaid unrecognized deductible losses will due:
30 June 2020 31 December 2019
2020 4,725,707.87 4,725,707.87
2021 2,563,056.08 2,563,056.08
2022 7,261,117.97 7,261,117.97
2023 11,977,477.56 11,977,477.56
2024 22,579,176.44 22,579,176.44
49,106,535.92 49,106,535.92
156
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
VII. Notes to the consolidated financial statements (Continued)
20. Other non‐current assets
30 June 2020 31 December 2019
Carrying Carrying Carrying Carrying
balance Impairment amount balance Impairment amount
Physical assets reserve
specifically
authorized 204,600,543.73 - 204,600,543.73 55,550,834.89 - 55,550,834.89
Security deposit 98,860,000.00 - 98,860,000.00 - - -
Prepayment for project
and equipment 30,525,646.70 - 30,525,646.70 21,713,763.10 - 21,713,763.10
Prepayment for rental
fee - - - 90,372.40 - 90,372.40
333,986,190.43 - 333,986,190.43 77,354,970.39 - 77,354,970.39
21. Short‐term borrowings
30 June 2020 31 December 2019
Credit borrowings 3,710,647,467.19 1,388,979,951.89
Discounted notes - 64,038,348.12
3,710,647,467.19 1,453,018,300.01
At 30 June 2020, the annual interest rate for the above borrowings was 3.98% (31 December 2019: 4.44%).
At 30 June 2020 and December 31 2019, there were no short-term borrowings of the Group that were overdue but not
yet paid.
157
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
VII. Notes to the consolidated financial statements (Continued)
22. Notes payable
30 June 2020 31 December 2019
Commercial acceptance bills 27,478,678.61 40,343,723.78
Bank acceptance bills 4,664,347,083.37 5,515,353,833.75
4,691,825,761.98 5,555,697,557.53
At 30 June 2020, the total amount of notes payable that were due but not yet paid was nil (31 December 2019: nil).
23. Accounts payable
30 June 2020 31 December 2019
Payment for goods 8,077,705,277.54 6,703,967,826.54
At 30 June 2020, significant accounts payable aged over one year was analyzed below:
30 June 2020 Reason
Payment for goods 411,112,452.26 Not yet settled
At 30 June 2020, accounts payable aged over one year, mainly the unsettled payment for goods, was RMB411,112,452.26
(31 December 2019: RMB331,837,741.84).
24. Contract liabilities
30 June 2020 31 December 2019
Contract liabilities 287,186,619.13 303,194,940.70
158
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
VII. Notes to the consolidated financial statements (Continued)
25. Employee benefits payable
31 December 2019 Increase Decrease 30 June 2020
Short-term employee benefits (1) 254,250,943.71 1,182,689,350.81 1,230,281,170.97 206,659,123.55
Post-employment benefits
(defined contribution plan) (2) 5,057,047.69 51,315,317.37 41,513,011.89 14,859,353.17
Termination benefits 332,821.70 661,707.33 678,749.56 315,779.47
259,640,813.10 1,234,666,375.51 1,272,472,932.42 221,834,256.19
(1) Short-term employee benefits
31 December
Increase Decrease 30 June 2020
2019
Salaries, bonuses, allowances and grants 240,039,850.54 1,051,177,293.05 1,101,589,900.12 189,627,243.47
Staff welfare 1,390,324.53 29,067,766.74 29,296,335.09 1,161,756.18
Social security contribution 1,749,787.15 39,494,596.49 38,189,199.17 3,055,184.47
Incl: Medical insurance 1,488,183.67 35,996,281.26 35,121,968.13 2,362,496.80
Work injury insurance 34,813.39 1,032,214.29 851,069.33 215,958.35
Maternity insurance 226,790.09 2,466,100.94 2,216,161.71 476,729.32
Housing funds 1,461,572.85 41,848,007.31 41,545,943.42 1,763,636.74
Labor union funds and employee
8,550,047.84 18,536,769.22 17,424,875.17 9,661,941.89
education funds
Other short-term benefits 1,059,360.80 2,564,918.00 2,234,918.00 1,389,360.80
254,250,943.71 1,182,689,350.81 1,230,281,170.97 206,659,123.55
(2) Defined contribution plan
31 December 2019 Increase Decrease 30 June 2020
Basic pension
insurance 1,971,797.54 48,143,186.16 38,656,748.31 11,458,235.39
Unemployment
insurance 107,237.57 1,832,179.77 1,494,194.44 445,222.90
Contribution to
pension fund 2,978,012.58 1,339,951.44 1,362,069.14 2,955,894.88
5,057,047.69 51,315,317.37 41,513,011.89 14,859,353.17
159
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
Note：For the half year of 2020, the Group provided other termination benefits for severing labor relations of RMB155,676.56
For the half year of 2019, the Group provided other termination benefits for severing labor relations of RMB153,286.50. For
the half year of 2020 and 2019, other termination benefits that were reversed for there was no need to pay for severing labor
relations were nil.
160
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the six months ended 30 June 2020
(All amounts in Renminbi “RMB” unless otherwise stated)
VII. Notes to the consolidated financial statements (Continued)
26. Tax payable
30 June 2020 31 December 2019
Value-added tax 108,825,512.97 88,904,599.66
Corporate Income taxes 143,919,371.54 127,697,970.77
Individual income tax 9,783,502.58 4,532,506.64
City maintenance and con
