Stock Code: 000028/200028 Notice No.: 2020-28Short Form of the Stock: Sinopharm Accord /Accord B
China National Accord Medicines Corporation Ltd.
Summary of Semi-Annual Report 2020I. Important NoticeThe summary of semi-annual report is excerpted from the full text of the semi-annual report. For the details, investors shouldcarefully read the full text of the semi-annual report published on Juchao Information website (www.cninfo.com.cn) and ShenzhenStock Exchange Website etc., appointed by CSRC.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 |
Prompt of modified auditing opinion
□ Applicable √ Not applicable
Profit distribution pre-plan of common stock or capitalizing of common reserves pre-plan deliberated by the Board in the reportingperiod
□ Applicable √ Not applicable
The Company plans not to carry out cash dividend and bonus distribution and capitalizing of common reservesProfit distribution pre-plan of preferred stock deliberated and approved by the Board in the reporting period
□ Applicable √ Not applicable
II. Basic information of the company
1. Company profile
| Short form of the stock | Sinopharm Accord, Accord B | Stock code | 000028, 200028 | |
| Stock exchange for listing | Shenzhen Stock Exchange | |||
| Person/Way to contact | Secretary of the Board | Rep. of security affairs | ||
| Name | Chen Changbing | Wang Zhaoyu | ||
| Office add. | Accord Pharm. Bldg., No. 15, Ba Gua Si Road, Futian District, Shenzhen, Guangdong Province | Accord Pharm. Bldg., No. 15, Ba Gua Si Road, Futian District, Shenzhen, Guangdong Province | ||
| Tel. | +(86)755 25875195 | +(86)755 25875222 | ||
| gyyzinvestor@sinopharm.com | gyyz0028@sinopharm.com | |||
2. Main financial data and index
Whether it has retroactive adjustment or re-statement on previous accounting data
√ Yes □No
Cause of retroactive adjustment or restatementEnterprises combined under the same control
| Current Period | Same period of last year | Increase/decrease in 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 listed Company (RMB)(note 1) | 643,451,580.59 | 650,833,360.40 | 649,154,414.55 | -0.88% |
| Net profit attributable to shareholders of the listed Company after deducting non-recurring gains and losses (RMB) | 627,017,019.45 | 639,700,447.95 | 639,700,447.95 | -1.98% |
| Net cash flow arising from operating activities (RMB) | 1,438,204,043.35 | 1,163,757,581.35 | 1,139,154,120.89 | 26.25% |
| Basic earnings per share (RMB/Share) (note 1) | 1.50 | 1.52 | 1.52 | -1.32% |
| Diluted earnings per share (RMB/Share) | 1.50 | 1.52 | 1.52 | -1.32% |
| Weighted average ROE (note 1) | 4.91% | 5.44% | 5.38% | Decline 0.47 percentage points |
| End of current period | End of last period | Increase/decrease in this report-end over that of last 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 listed Company (RMB) | 13,199,983,119.01 | 12,140,439,917.48 | 12,911,140,435.88 | 2.24% |
Note: The Group acquired 75.00% equity of Pudong New Area of Shanghai Pharmaceutical Medicine Ltd. under the same control inthe current year. When preparing the comparative statement of the 2020 semi-annual consolidated statement, it is deemed that theparties involved in the merger already exist in the current state when the ultimate controlling party begins to exercise control, andadjust 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 dueto the impact of the novel coronavirus pneumonia epidemic, the sales growth of the Group slowed down. At the same time, changesin industry policies have also led to a narrowing of profit margins, as a result, the basic earnings per share earnings fell by 1.32%, andthe weighted average return on equity fell by 0.47%.
3. Number of shareholders and share-holding
In Share
| Total common shareholders at period-end | 34,260 | Total preference shareholders with voting rights recovered at end of | 0 |
| reporting period (if applicable) | ||||||||
| Top ten shareholders | ||||||||
| Full name of Shareholders | Nature of shareholder | Proportion of shares held | Amount of shares held | Amount of restricted shares held | Shares pledged/frozen | |||
| State of share | Amount | |||||||
| Sinopharm Group Co., Ltd. | State-owned corporate | 56.06% | 239,999,991 | 5,505,770 | ||||
| Hong Kong Securities Clearing Company Ltd. | Overseas corporate | 2.72% | 11,635,950 | |||||
| HTHK/CMG FSGUFP-CMG FIRST STATE CHINA GROWTH FD | Overseas corporate | 2.68% | 11,469,644 | |||||
| Shanghai Gaoyi Asset Management Partnership (Limited Partnership)-Gaoyi Linshan No. 1 Yuanwang Fund | Domestic non state-owned corporate | 2.34% | 10,000,000 | |||||
| National Social Security Fund 118 Portfolio | Domestic non state-owned corporate | 1.82% | 7,774,799 | |||||
| China National Pharmaceutical Foreign Trade Corp. | State-owned corporate | 1.24% | 5,323,043 | |||||
| Central Huijin Investment Ltd. | State-owned corporate | 0.89% | 3,804,400 | |||||
| Fidelity Investment Management (Hong Kong) Limited - Client’s fund | Overseas corporate | 0.79% | 3,391,337 | |||||
| BBH BOS S/A FIDELITY | Overseas | 0.78% | 3,358,761 | |||||
| FD - CHINA FOCUS FD | corporate | |||||
| National Social Security Fund 103 Portfolio | Domestic non state-owned corporate | 0.65% | 2,799,865 | |||
| Explanation on associated relationship among the aforesaid shareholders | Sinopharm Group Co., Ltd. and China National Pharmaceutical Foreign Trade Corporation have the same actual controller, which is China National Pharmaceutical Group Corporation. It is unknown that there exists no associated relationship or belongs to the consistent actionist among the other tradable shareholders regulated by the Management Measure of Information Disclosure on Change of Shareholding for Listed Companies. | |||||
4. 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.
5. Total preferred stock shareholders of the Company and shares held by top ten shareholders withpreferred stock held
□ Applicable √ Not applicable
The Company had no shareholders with preferred stock held in the reporting.
6. Corporate bonds
Whether the Company has a corporation bonds that issuance publicly and listed on stock exchange and without due on the date whensemi-annual report approved for released or fail to cash in full on dueNoIII. Discussion and analysis by the Management Team
1. Introduction of operation in the reporting period
Whether the Company needs to comply with the disclosure requirements of the particular industry
In the first half of 2020, in the face of the sudden novel coronavirus pneumonia epidemic, all employees ofSinopharm Accord fully implemented the original intention and mission of the pharmaceutical central enterpriseand 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 affectedduring the epidemic, mainly reflected in the general decrease in outpatients, the sharp decline in hospitalizationand 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 thefrequency of going out, and the flow of people reduced, the sales volume of prescription drugs in hospitals andpharmacies 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, inthe first half of 2020, the company completed a total of 27.17 billion yuan in operating revenue, a year-on-yearincrease of 6.14%; realized operating profit of 1.014 billion yuan, a year-on-year increase of 5.94%; net profitattributable 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 18.982billion yuan, a decrease of 2.54% on a year-on-year basis, and realized a net profit of 405 million yuan, anincrease 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-yearincrease of 32.94%, and realized a net profit of 248 million yuan, a year-on-year increase of 33.96%. GuodaDrugstore’s cumulative net profit attributable to the parent company was 180 million yuan, a year-on-yearincrease 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 inmany ways
(1) Deepened the distribution network layout: further completed the distribution of blank areas in Guangdong andGuangxi, and implemented secondary distribution in key regions and county markets.
(2) National distribution of the retail network: Guoda Drugstore fully undertook prescription outflows, quicklycovered key areas through mergers and acquisitions, and connected medical insurance policies and outpatientspecific items and outpatient designated chronic disease qualifications.As of the disclosure date, Guoda Drugstore has delisted and acquired 100% equity of Chengda FangyuanPharmaceutical Group Co., Ltd. ("Chengda Fangyuan" for short), and completed the industrial and commercialchange registration on July 30, 2020. As of the end of 2019, Chengda Fangyuan had more than 1,500 stores in 5provinces 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 digitaltransformation projectThe company established an information technology center to simulate "demutualization" operation andmanagement, and promoted the transformation and upgrading of the supply chain through a clear digitalimplementation path:
(1) Deepened integrated management and control: achieved unification through standardization and obtained thebest order, thereby reduced costs and improved efficiency.
(2) Improved visualization experience: realized business visibility, accuracy and traceability through the Internetof 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 warehouseaddress information of more than 30 logistics centers in the country, and the address information of more than5000 stores nationwide of Guoda Drugstore; completed the flow direction and flow analysis of some nodes in thenational multi-warehouse model, including the flow direction and flow analysis report on the centralizedprocurement at the Guoda Headquarters, and planned the national logistics network around the strategic goal ofthe integration of wholesale and retail to realize the linkage of multiple warehouses across the country.
(2) Actively promoted logistics optimization projects and management improvementCompleted the supply chain ex-warehouse visualization of 10 logistics/distribution centers including Guangzhouwarehouse, Foshan warehouse, and Shenzhen warehouse.
4. Distribution business: rapidly responded, improved quality and efficiency, and promoted the businessdeployment of one body with two wingsDuring the epidemic, the company's distribution business deployment of one body with highlighted its anti-riskcapabilities. Among them, retail direct sales, retail diagnosis and treatment, and devices consumables businessesmaintained a growth higher than the overall average growth rate. In the first half of 2020, hospital direct salesrevenue was 11.516 billion yuan, a year-on-year decrease of 7.6%; primary medical sales revenue was 974 millionyuan, a year-on-year decrease of 8.1%; retail direct sales revenue was 3.412 billion yuan, a year-on-year increaseof 17.0%; retail clinic sales revenue was 770 million yuan, a year-on-year increase 24.4%; sales revenue ofdevices 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 thecompany was 100%; the second batch of national centralized procurement: the point distribution ratio of thecompany 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 centralizedprocurement:the point distribution ratio of the company was 63%; the first batch of GPO in Guangxi , the pointdistribution 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, theopened member stores total 628, and there are 279 stores near the hospitals. During the epidemic, retail directmedical 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 Guangdongand 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: obtainedmedical 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 thedesignated point of commercial supplementary medical insurance outsourcing in Zhuhai, Shenzhen, Foshan andother 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 livebroadcasts of patient education, including 5 broadcasts on the independent platform.
(4) Devices consumables: Realized business informatization, realized the promotion of the new consignmentmodel across the whole province; completed the promotion of the consignment closed-loop management mode of2 pilot hospitals; realized the interface interconnection of the provincial platform consumable network, and helpedthe 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 inthe first half of the year.
5. Guoda Drugstore: seized opportunities, strengthened innovative business layout, and consolidated basiccapabilities for high-quality developmentAs of June 30, 2020, the number of total stores of Guoda Drugstore reached 5,838, of which 4,516 were directlyoperated and 1,322 were franchised. During the epidemic, the performance of Guoda Drugstore showed a steadygrowth trend, and policies such as prescription outflow brought revenue growth to retail pharmacies. Variousbusiness types have been developing steadily, among them, direct sales revenue was 5.10 billion yuan, ayear-on-year increase of 32.78%, DTP sales revenue was 972 million 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 revenuewas 631 million yuan, a year-on-year increase of 14.13%.
(1) Comprehensive development of e-commerce business in multiple formatsSelf-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 companyreorganized 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 ayear-on-year basis, daily order quantity exceeded 20,000, and prescription drug sales accounted for 20%. Thenumber 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 platformhaoyisheng and JD Health have been introduced.Category: key cooperative suppliers carried out O2O business linkage, formulated exclusive regional hot-sellingproduct catalogs for all regional companies across the country, created online core hot items, and used hot items toachieve drainage.
(2)Professional service ability improvement
Chronic disease management: Guoda Drugstore continued to strengthen chronic disease management andprofessional 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, andcoronary 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 andcustomer satisfaction surveys, and improved professional services; newly added chronic disease projects forHealthy Communities; promoted the establishment of member management platform, and Enterprise WeChat andmember platforms have been connected ( It has been piloted in Jiangmen and Guangxi).
2. Matters relevant to financial report
(1) Particulars about the changes in aspect of accounting policy, estimates and calculation methodcompared with the accounting period of last year
□ Applicable √ Not applicable
No particulars about the changes in aspect of accounting policy, estimates or calculation method in Period.
(2) Particulars about retroactive restatement on major correction for accounting errors in reporting period
□ Applicable √ Not applicable
There is no particular about retroactive restatement on major correction for accounting errors in reporting period
(3) Particulars about the change of consolidation range compared with the accounting report of last year
√Applicable □ Not applicable
Particulars about the change of consolidation range see Financial Report Note-VIII.
China National Accord Medicines Corporation Ltd.
Legal representative: Lin Zhaoxiong29 August 2020