China National Accord Medicines Corporation Ltd. Annual Report 2012
China National Accord Medicines Corporation Ltd. Annual Report 2012 March 2013
1 China National Accord Medicines Corporation Ltd. Annual Report 2012
Section I. Important Notice, Contents and Paraphrase
Board of Directors, Supervisory Committee, all directors, supervisors and senior executives of Chengde Nanjiang Co., 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.
Yan Zhigang, Principal of the Company, Wei Pingxiao, person in charger of accounting works and Chi Guoguang, person in charge of accounting organ (accounting principal) hereby confirm that the Financial Report of 2012 Annual Report is authentic, accurate and complete.
Other directors attending the Meeting for annual report deliberation except for the followed:
Name of director absent Title for absent director Reasons for absent Attorney He Zhiyi Independent director Official business Xiong Chuxiong
The Preplan Profit Distribution of the Company deliberated and approved by The Board is: taking the total shares as of Dec. 31, 2011 as the radix, sending cash dividends of RMB 1.8(tax included) per every 10 shares to its all shareholders, and not converting capital reserve into share capital.
Concerning the forward-looking statements with future planning involved in the Report, they do not constitute a substantial commitment for investors. Investors should be cautious with investment risks.
2 China National Accord Medicines Corporation Ltd. Annual Report 2012
Contents Annual Report 2012 ...... 1 Section I Important Notice, Contents and Paraphrase ...... 2 Section II Company Profile ...... 6 Section III Accounting data and summary of finnaical indexes ...... 8 Section IV Report of the Board of Directors ...... 10 Section V Important Events ...... 28 Section VI Changes in shares and particular about shareholders ...... 57 Section VII Particulars about Directors, Supervisors,Senior Executives and Employees ...... 63 Section VIII Administrative Structure ...... 72 Section IX Internal Control ...... 80 Section X Financial Report ...... 82 Section XI Documents available for reference ...... 197
3 China National Accord Medicines Corporation Ltd. Annual Report 2012
Paraphrase
Items Refers to Contents Listed Company,Company,The Company, the Geoup, Sinopharm Refers to China National Accord Medicines Corporation Ltd. Accord Sinopharm Group Co.,Ltd.;Controlling shareholder of Sinopharm Holding Refers to 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 Refers to RMB, RMB 10 thousand, RMB 100 million Yuan
4 China National Accord Medicines Corporation Ltd. Annual Report 2012
Major Risk Warning
It is likely to existing risks in aspect of industrial competition, operation& management, market and national policy, and majority investors are advised to exercise caution of investment risks.
5 China National Accord Medicines Corporation Ltd. Annual Report 2012
Section II Company profile
I. Company information
Short form of the stock Sinopharm Accord ; Accord B Stock code 000028、200028 Stock exchange for listing Shenzhen Stock Exchange Name of the Company (in 国药集团一致药业股份有限公司 Chinese) Short form of the Company 国药一致 (in Chinese) Foreign name of the China National Accord Medicines Corporation Ltd. Company(if applicable) Short form of foreign name of the Company(if Sinopharm Accord applicable) Legal representative Yan Zhigang Accord Pharm. Bldg., No. 15, Ba Gua Si Road, Futian District, Shenzhen, Registrations add. Guangdong Province Code for registrations add 518029 Accord Pharm. Bldg., No. 15, Ba Gua Si Road, Futian District, Shenzhen, Offices add. Guangdong Province Codes for office add. 518029 Company’s Internet Web http://www.szaccord.com.cn Site E-mail [email protected]
II. Person/Way to contact
Secretary of the Board Name Chen Changbing Accord Pharm. Bldg., No. 15, Ba Gua Si Road, Futian District, Shenzhen, Contact add. Guangdong Province Tel. +(86)755 25875195 Fax. +(86)755 25875147 E-mail [email protected]
III. Information disclosure and preparation place
Newspaper appointed for information Securities Times; China Securities Journal; Hong Kong disclosure Commercial Daily Website for annual report publish http://www.szse.cn; http://www.cninfo.com.cn appointed by CSRC Preparation place for annual report Secretariat of the Board of Directors
IV. Registration changes of the Company
Registration NO. Date for Place for No. of taxation Organization for enterprise legal registration registration registration code license Initial registration 1986-08-02 Shenzhen,P.R.C 4403011001677 440301192186267 19218626-7 Registration at end of 2012-11-06 Shenzhen,P.R.C 440301103040048 440301192186267 19218626-7 report period
6 China National Accord Medicines Corporation Ltd. Annual Report 2012
V. Other relevant information
CPA engaged by the Company
Name of CPA Pricewaterhouse Coopers Zhongtian CPA Limited Company 11/Floor,PWC Center, Building 2#, Corporate Avenue, No.202 Hubin Rd., Offices add. for CPA Luwan District, Shanghai, P.R.C Signing Accountants Chen Yuntao,Tang Zhenfeng
Sponsor engaged by the Company for performing continuous supervision duties in reporting period
□ Applicable √ Not applicable
Financial consultant engaged by the Company for performing continuous supervision duties in reporting period
□ Applicable √ Not applicable
7 China National Accord Medicines Corporation Ltd. Annual Report 2012
Section III. Accounting data and summary of financial indexes
I. Main accounting data and financial indexes
Whether it has retroactive adjustment or re-statement on previous accounting data for accounting policy changed and accounting error correction or not
√ Yes □ No
Changes over last 2011 2010 2012 year (%) Pre-adjustment Post-adjustment Post-adjustment Pre-adjustment Post-adjustment Operating income 18,011,759,178.26 15,130,338,571.64 15,150,128,554.59 18.89% 13,064,428,148.69 13,099,692,346.51 (RMB) Net profit attributable to shareholders of the 475,792,491.12 330,307,489.82 328,323,616.75 44.92% 261,116,656.70 261,203,158.74 listed company(RMB) Net profit attributable to shareholders of the listed company after 448,238,374.59 311,837,082.85 311,849,021.90 43.74% 245,647,806.23 245,647,285.65 deducting non-recurring gains and losses(RMB) Net cash flow arising from operating 323,955,332.76 227,316,131.98 230,104,293.35 40.79% 428,159,420.65 428,064,719.54 activities(RMB) Basic earnings per 1.65 1.15 1.14 44.74% 0.91 0.91 share (RMB/Share) Diluted earnings per 1.65 1.15 1.14 44.74% 0.91 0.91 share (RMB/Share) Return on Equity (%) 30.51% 27.52% 27.47% 3.04% 27.17% 27.25% Total assets (RMB) 9,295,839,939.64 7,665,759,761.04 7,679,312,771.78 21.05% 6,306,793,005.81 6,325,430,916.21 Net assets attributable to shareholder of listed company (Owners’ equity 1,775,943,028.96 1,350,217,871.35 1,350,093,276.86 31.54% 1,052,370,309.53 1,054,229,588.11 attributable to shareholder of listed company ) (RMB)
8 China National Accord Medicines Corporation Ltd. Annual Report 2012
II. Items and amounts of extraordinary profit (gains)/loss Unit: RMB Item Amount in 2012 Amount in 2011 Amount in 2010 Note In this period, the Gains/losses from the disposal of subsidiary moved non-current asset (including the because of urban -8,347,047.73 1,540,031.87 1,969,629.82 write-off that accrued for renewal. And it losses impairment of assets) RMB 8, 830,000 for the housing disposal In this period, the subsidiary got the compensation RMB Governmental subsidy reckoned 28,500,000 by into current gains/losses (not dismantling and including the subsidy enjoyed in settling, tax return quota or ration according to 57,227,812.33 13,577,864.38 8,221,739.90 RMB 10, 700, 000, national standards, which are bonus of enterprise closely relevant to enterprise’s progress RMB business) 4,940,000 and other Government Subsidies5,000,000 Current net gains/losses of the For the influence of the subsidiaries from period-begin to acquisition of consolidated date occurred from -240,695.14 -1,989,842.59 -4,520,587.64 Sinopharm Holding enterprise merger under the Wuzhou Co., Ltd under common control the common control For the taking back the special bed debts RMB Switch back of provision for 780,000 from Nanning depreciation of account receivable Second People’s 1,815,099.41 1,977,108.01 6,926,932.01 which was singly taken Hospital, RMB 480,000 depreciation test from Zhenshen Second People’s Hospital In this period, RMB 17,600,000 Other non-operating income and compensation was expenditure except for the -17,026,479.08 7,098,221.98 6,374,202.97 paid for the termination aforementioned items of contract of the subsidiary. Impact on income tax 5,790,568.53 5,108,324.05 3,132,301.17 Impact on minority shareholders’ 84,004.73 620,464.75 283,742.80 equity (post-tax) Total 27,554,116.53 16,474,594.85 15,555,873.09 --
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
9 China National Accord Medicines Corporation Ltd. Annual Report 2012
Section IV. Report of the Board of Directors
I. Introduction
Year of 2012 is a crucial year as a connecting link between the preceding and the following for strategy development plan of “12th five-year plan” of the Company; also it is a key year of speed up the transformation and upgrading as well as achieved the scientific development for the Company. Along with opportunity and challenge, the gradually implementation of new medical reform and universal health care, the pharmaceuticals industry has been promoted rapidly; meanwhile, concerning the public hospital reform, zero-price, basic medicine bidding, two-invoice system, use restriction for antibiotic and other policies carried out in succession, pharmaceuticals enterprise has a major challenge in operation and developing amidst twists and turns.
In 2012, strictly around with the annual operation theme “steady growth, structure adjustment and transformation promotion”, the Company completed annual budget index and vary targets in an all-around way thought concentrating strength and overcoming difficult. In whole year, operation income realized RMB 18.012 billion with a y-o-y growth of 18.89%; net profit attributable to shareholder of listed company amounting to RMB 476 million with 44.92% up y-o-y, achieved a real greatest and fastest development; thus Sinopharm Accord honor the “10th Anniversary Golden Achievement Award of Sinopharm Holding” (ranking first).
(I) Works of headquarter for year of 2012
Headquarter of the Company further promoting the function transformation and resources integration, enhanced management efficiency and operating efficiency thought intensified the cooperation and division of labor between headquarter and business division; vary office of the headquarter continues to improve service standards for business division while strengthen the core competency and operation management control implemented.
1. Being reasonable authorized to business division and efficiency supervises, tow-level control mode of the Company shows more and more perfection in daily operation. 2. Seize opportunity of management upgrading, promoted basic management standard in all aspects, re-built Company’s core competition advantage. 3. Continues to improve the risk internal control mechanism, combined with vary specific examination and on-site audit, to lower risk in operation availably. 4. Implemented strategy transition according to the change of environment, confirmed the development orientation and strategy targets in the coming three years for the Company. 5. Implemented an overall consideration of tax by using diversified financing methods, help the enterprise growth rapidly thought specialized financial management.
(II) Works of distribution division for year of 2012
In 2012, distribution division centered on “smart supply chain creation”, business mode innovation, deepening organizational change in order to perfecting operation platform with integration of Guangzhou and Guangdong; and gains significant achievements in aspect of deepening smart supply chain, improving distribution network layout, benchmark surpass and implementing service transformation. Scale promotion benefit a lot from the network layout. According to merge caliber, distribution division gains RMB16.108 billion in sales income for year of 2012 with 20.59% up y-o-y, a 90.03% in main business structure of the Company; net profit realized RMB 253 million with 20.47% up y-o-y, a 52.35% in net profit structure of the Company.
1. Being originated in mode of supply chain integration in China, created an onstage and backstage system, smart supply chain gains a remarkable achievement. Set up a supply chain department by means of business mode creation, focus on promotion of establishment of smart supply chain, and strive to forge”one onstage (business onstage) and one backstage (management + service backstage)”; realized the re-built of business procedures, effective integrate logistic, information flow and capital flow, and shaping a layout of interdependence and mutual promotion of onstage and backstage.
10 China National Accord Medicines Corporation Ltd. Annual Report 2012
2. Continues to spread the distribution network of distribution, improved logistic network, strengthen core competition advantage by means of the network coverage. By merger and newly-built in 2012, distribution division completed stationing 9 subsidiaries and branches in Zhaoqing, Jiangmen, Shaoguan, Zhongshan, Baise, Guilin, Yulin, Wuzhou and Beihai successively. 3. Integrating unify management and localized management, reinforce continuity and support with subsidiaries in aspect of category, capital and management, focus to enhancing profitability of subsidiary; top three regions ranked in whole year almost reached 20, realized the greatest network and strongest branch in real. 4. Bring forth new ideas to business mode, developing new business, rapid up transition from distribution to supplier of medicine health product service. 5. The logistic center has a significantly improvement in profitability, transition from cost-oriented to profit-oriented gains a good start.
(III) Production & Management of pharmaceutical division for year of 2012
In 2012, pharmaceutical division further speeding up structural adjustment and internationalization, completed equity optimization for Zhijun Wanqing successful, integrated industrial platform shaped increasingly. Furthermore, achieve a remarkable performance in aspect of excellent performance management, product structure adjustment and new business development. Under circumstances of slump in antibiotic industry, stabilized the market situation. Based on merge caliber, pharmaceutical division realized sales income of RMB 1784 million with 2.33% up y-o-y in 2012, a 9.97% in main business of the Company; net profit amounting as RMB 228 million with 50.73% up y-o-y, a 47.19% in net profit structure of the Company.
1. Leading daily management of the Company with guideline of excellent performance idea, standardize operation of the Company while rapid up development higering efficiency. 2. Strengthen integration of resources and integrated operation; intensify two major central functions, creating a dumbbell-shaped pharmaceutical enterprise. In aspect of R&D, setting R&D strategy of “generics, great variety and differentiation”, achieved 11 production approval documents and one Clinical Permission in total for the year. In aspect of marketing, established a professional sales platform for Zhijun Medicine & Trade, deepening integration of marketing resources, realized 7 products with over 100 million varieties, further to consolidated the place in market. 3. Under circumstance of a slump in sales of antibiotic industry, Zhijun Pharmaceutical gains a remarkable effect in product structure adjustment, profitability increased substantially, and forwarding to the transition of quality-leading and benefit-oriented enterprise. Zhijun Wanqing and Shenzhen Chinese Medicine has a further optimized in product structures, shows a remarkable achievement in reducing losses and making up deficit. 4. Rapid up industrial internationalization in an all-round way, starts smoothly in health business, and gains more new growth points for industry. After passed EU certification for Zhijun Pharmaceutical, starting raw material international certification for Zhijun Wanqing, implementing Cephalosporins solid preparation international certification for Zhijun Pharmaceutical, the pharmaceutical sector promoted deeply towards internationalization. 5. Purchasing remain 25% equity of Zhijun Wanqing successful, synergy Cephalosporins industrial chain for industrial sector has a new turning point came. 6. The establishment of comprehensive base, new version GMP certification and workshop technically improvement, are solving production capacity bottleneck efficiently gradually.
11 China National Accord Medicines Corporation Ltd. Annual Report 2012
II. Main business analysis
1. Introduction
Changes of main business: Uit: RMB Amount in same period Items Amount in this period of last year Change ratio (%) Main business income 17,871,974,928.79 15,079,379,556.73 18.52% Main business cost 16,316,986,605.55 13,786,435,899.39 18.36% Sales expenses 448,595,419.15 431,289,974.80 4.01% Administrative expenses 392,232,990.09 351,445,745.31 11.61% Incl: R&D expenses 79,362,874.40 63,517,327.42 24.95% Financial expenses 162,118,150.33 136,890,070.53 18.43% Net profit attributable to owners 475,792,491.12 328,323,616.75 44.92% of parent company Net cash flow from operation activity 323,955,332.76 230,104,293.35 40.79% Net cash flow from investment activity -189,823,321.97 -211,363,508.42 -10.19% Net cash flow from financing activity -121,276,170.42 204,402,541.23 -159.33%
Reviewing the progress of development strategy and operation planning in reporting period that disclosed in previous period
In reporting period, for the strategy and operation planning disclosed in previous period, please found more in (I) Operation of Sinopharm Accord for year of 2012 in “I. Introduction” in this Section.
Reasons for difference of actual operation performance has 20% lower or higher than profit forecast of the Year disclosed
□ Applicable √ Not applicable
2. Revenue
Explanation:
Sinopharm Accord realized 18.52% growth in sales, shows a posture of rapidly growth of “stabilize rebound, steady development ”; network layout of distribution business division boosting the scales; under circumstances of slump in antibiotic industry, pharmaceutical business division stabilize the market situation and achieved minor growth.
Material orders in hands
□ Applicable √ Not applicable
Material changes or adjustment for products or services of the Company in reporting period
□ Applicable √ Not applicable
Major sales of the Company
Total top five clients in sales (RMB) 1,157,240,569.85 Proportion in total annual sales volume for top five 6.42% clients (%)
12 China National Accord Medicines Corporation Ltd. Annual Report 2012
Information of top five clients of the Company
√Applicable □Not applicable
Serial Name Sales (RMB) Proportion in total annual sales (%) 1 Guangdong General Hospital 323,162,104.86 1.79% Centre for Disease Control and 2 222,001,281.73 1.23% Prevention of Guangdong Province The First Affiliated Hospital of 3 219,219,970.29 1.22% Guangxi Medical University 4 Nanfang Hospital 213,142,580.36 1.18% First Affiliated Hospital of Sun 5 179,714,632.61 1% Yat-senUniversity Total —— 1,157,240,569.85 6.42%
3. Cost
Industry classification Unit: RMB 2012 2011 Industry Ratio in Ratio in Y-o-y changes Item classification Amount operation Amount operation cost (%) cost (%) (%) Pharmaceutical Product cost 1,099,955,200.59 6.74% 1,201,356,729.33 8.71% -8.44% manufacturing Medicine Commodity cost 15,191,216,947.07 93.0% 12,562,309,953.01 91.13% 20.93% commerce Logistic & Transportation& 21,466,438.05 0.13% 16,943,572.31 0.12% 26.69% storage service storage cost Income from leasing& Service cost 4,348,019.84 0.03% 5,825,644.74 0.04% -25.36% training service Total 16,316,986,605.55 100% 13,786,435,899.39 100% 18.36%
Product classification
Unit: RMB 2012 2011 Product Ratio in Ratio in Y-o-y changes Item classification Amount operation Amount operation (%) cost (%) cost (%) Respiratory antitussive Product cost 93,718,721.73 0.57% 56,188,146.24 0.41% 66.79% medicines Cef-series Product cost 1,016,062,089.63 6.23% 1,237,535,400.00 8.98% -17.9% products Commodity Other 15,207,205,794.19 93.2% 2,492,712,399.39 90.61% 21.73% cost Total 16,316,986,605.55 100% 3,786,435,899.39 100% 18.36%
Note
Nil
Main suppliers of the Company
Total purchase amount from top five suppliers (RMB) 5,233,442,813.04 Proportion in total annual purchase amount for top five suppliers (%) 26.53%
13 China National Accord Medicines Corporation Ltd. Annual Report 2012
Information of top five suppliers of the Company
√□Applicable □Not applicable
Amount of Proportion in the annual total Serial Name of suppliers purchase(Yuan) amount of purchase (%) 1 NO.1. 1,714,317,211.62 8.69% 2 NO.2. 1,095,131,935.42 5.55% 3 NO.3. 859,927,392.35 4.36% 4 NO.4. 798,272,965.28 4.05% 5 NO.5. 765,793,308.37 3.88% Total —— 5,233,442,813.04 26.53%
4. Expenses
Sales expenses: a y-o-y growth of RMB 17.31 million with 4.01% up; mainly due to the expansion in sales scale and more workers increased after company acquisition as well as relevant reasons;
Administrative expenses: a y-o-y grwoth of RMB 40.79 with 11.61% up; mainly due to R&D expenses, taxation and more workers increased after company acquisition ect.;
Financial expenses: a y-o-y growth of RMB 25.23 million with 18.43% up; mainly because capital growth from the expansion of sales in this period, capital cost soaring correspondingly.
5. Expenses of R&D
In the period, the company expenditures of R&D amounted to RMB 80,366,881.98 (RMB 64,935,098.26 in 2011), taking up 4.37% in net capital of this period and 0.45% in operating revenue. And RMB 79,362,874.40 (RMB 63,517,327.42 in 2011) was accounted in profit and loss in current period; RMB 1,004,007.58 (RMB 1,417,770.84 in 2011) was confirmed as expenses of R&D. No expense of R&D was confirmed as intangible asset.
(1) Overall investment in R&D
Subordinate industry enterprise of pharmaceutical division of Sinopharm Accord continues to input science and technology for purpose of improving technology innovation ability. R&D expenses in this period amounting to RMB 80,366,881.98 (RMB 64,935,098.26 in year of 2011), a 4.37% and 0.45% in net assets and opration income of the period respectively. Whereby RMB 79,362,874.40 ( RMB 63,517,327.42 in year of 2011) reckoned into gains/losses currently, RMB 1,004,007.58 ( RMB 1,417,770.84 in year of 2011) was recognized as R&D expenses currently, no R&D expenses recognized as intangible assets.
(2) Independent innovation
Strategic innovation: under the leadership of science & technology committee of Sinopharm Accord, continues to implemented plan of science & technology strategy of “12th five-year”. Meanwhile, based on the industry development strategy of Sinopharm Accord, adjusted the science & technology development plan of R&D center reasonably. In 2012, pharmaceutical division of Sinopharm Accord established a development strategy of “123”: setting up one industry platform of unified brand, creating a dumbbell-shaped enterprise with two centers (R&D center and Marketing center), and constructing three bases (Suzhou—raw material production base, Guanglan—preparation production base, Pingshan—integrated preparation base).
In the opportunity of maturity for international pattent drugs concentrated, established a R&D strategy of “generic drug, great variety and differentiataion”, further well-defined the pattern and orientation for independent innovation.
14 China National Accord Medicines Corporation Ltd. Annual Report 2012
Management innovation: Sinopharm Accord established a unified control for R&D center in 2012, established an organization structure of “two department and three institute”, that is development department, comprehensive department, preparation research institution, synthesisi institution and research institution of Chinese medicine; further to strengthen the integration advantage of R&D industrial chain of raw material-prepartion, optimized resource allocation of R&D.
New drug application: R&D center actively implement the R&D strategy, carry forward R&D works; totally 14 applications have proposed in 2012, and 9 have been approved, totally 7 new projects have initiating, which mainly concentrated on special durgs filed and differentiation development of antibiotics varieties. Pharmaceutical division obtained 10 production approval documents for new products in whole year of 2012, one clinical permission, and 8 projects for production declaration and 7 for clinical declaration.
7 items filing patents domestically, including 6 items of patent for invention; 13 patent has obtained including 6 items of patent for invention; totally 4 projects applied the government grant in 2012 with grant amounting to RMB 35.4 million, and RMB 20.1 million to the account in 2012.
Technical improvement: three industry enterprises guiding with production cost, introduce new technology, the technical improvement has a successful grogress; totally 8 technologies have been improved in 2012, craft has standardized, production cost reduced and quality improved.
Progress of main technical innovation in divisions of vary enterprise for year of 2012
Innovation project Prospective earnings Progress in 2012 and results
Zhijun Change of prescription process Product quality and prodcution efficiency improved Completed declaration for Pharmaceutical for Diclofenac sodium production Zhijun Wanqing Quality promotion for cefoxitin Product quality improved Completed quality improvement sodium for products Technical innovation for Lower costs, higher quality Completed research of technical cefpirome sulfate innovation Enhancing quality of Product quality improved Completed research of quality secondary development for improved for products cefamandole nafate Industrialized mass production Realized industrialized mass production Completed trial production for xitin synthesis by enzymic method Shenzhen Chinese Sterilization process reform for Product quality and prodcution efficiency improved Applied to production Medicine children anti-tussive syrup (large size) Sterilization process reform for Product quality and prodcution efficiency improved Completed small scale research Bai’an lotion Process reform for Standardized process and applied to production Completed process research and Guanxindanshen Capsules ready for production, and (wet granulation) exercise pilot scale test
Commercialization of research findings: industrialization is always to be the core advantage for R&D center. In 2012, a research group of industrialization was set up, speed and quality for industrialization has step forward to a new stage. The 9 new products, which obtained approvals, have realized industrialization in 2012.
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6. Cash flow Unit: RMB Item 2012 2011 Y-o-y changes (%) Subtotal of cash in-flow 17,833,363,395.20 14,884,323,825.26 19.81% from operation activity Subtotal of cash out-flow 17,509,408,062.44 14,654,219,531.91 19.48% from operation activity Net cash flow from 323,955,332.76 230,104,293.35 40.79% operation activity Subtotal of cash in-flow 65,900,022.09 23,822,864.69 176.63% from investment activity Subtotal of cash out-flow 255,723,344.06 235,186,373.11 8.73% from investment activity Net cash flow from -189,823,321.97 -211,363,508.42 -10.19% investment activity Subtotal of cash in-flow 1,861,735,663.73 1,463,106,535.01 27.25% from financing activity Subtotal of cash out-flow 1,983,011,834.15 1,258,703,993.78 57.54% from financing activity Net cash flow from -121,276,170.42 204,402,541.23 -159.33% financing activity Net increased amount of 12,863,881.39 223,119,292.30 -94.23% cash and cash equivalent
Reasons for y-o-y relevant data with over 30% changes
√□Applicable □Not applicable
1. Net cash flow from operation activities increased 40.79% y-o-y, which mainly because sale returned money increased. 2. Subtotal of cash in-flow from investment activity increased 176.63% y-o-y, which mainly because the subsidiary got the government subsidies by moving and rebuilding to the government implement urban renewal. 3. Subtotal of cash out-flows from financing activity increased 57.54% y-o-y, which mainly because the loan size increased with the development of business and the debt repayment and the repayment interest increased. 4. Net cash flow from financing activity increased -159.33% y-o-y, which mainly because the debt repayment increased. 5. Net increased amount of cash and cash equivalent increased -94.23% y-o-y, which mainly because the cash paid for the investment and debt increased.
Reasons of major difference between the cash flow of operation activity in report period and net profit of the Company
√□Applicable □Not applicable
By the influence of operating environment, accounts receivable turnover slowed down, and accounts payable turnover sped up, which caused that net cash flow from operation activities and net profit existed difference.
16 China National Accord Medicines Corporation Ltd. Annual Report 2012
III. Composition of main business Unit: RMB Increase/decreas Increase/decreas Increase/decrease Operating Gross profit ratio Operating cost e of operating e of operating cost of gross profit ratio revenue (%) revenue y-o-y (%) y-o-y (%) y-o-y (%) By industries Pharmaceutical 1,764,407,339.41 1,099,955,200.59 37.66% 1.84% -8.44% 7% manufacturing Medicine 16,066,518,752.13 15,191,216,947.07 5.45% 20.7% 20.93% -0.18% commerce Logistic & storage 30,557,165.18 21,466,438.05 29.75% 26.74% 26.69% 0.03% service Income from leasing& training 10,491,672.07 4,348,019.84 58.56% -5.91% -25.36% 10.8% service By products Respiratory antitussive 185,033,934.75 93,718,721.73 49.35% -21.06% 66.79% -26.68% medicines Cef- series 1,522,169,202.32 1,016,062,089.63 33.25% -3.71% -17.9% 11.54% products Others 16,164,771,791.72 15,207,205,794.19 5.92% 21.87% 21.73% 0.11% By region Domestic sales 17,835,154,196.24 16,285,569,353.86 8.69% 18.33% 18.19% 0.11% Oversea sales 36,820,732.55 31,417,251.69 14.68% 160.7% 308.27% -30.84%
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
17 China National Accord Medicines Corporation Ltd. Annual Report 2012
IV. Assets and liability analysis
1. Major changes of assets Unit: RMB End of 2012 End of 2011 Ratio Ratio in Ratio in changes Notes of major changes Amount total assets Amount total assets (%) (%) (%) Increased 0.11% y-o-y, mainly because net cash in-flow from operation activities Monetary fund 953,992,070.61 10.26% 952,950,167.56 12.41% -2.15% subtracted cash out-flow from investment&financing activities and it caused the increase of remaining amount Account Increased 22.74% y-o-y, mainly because 4,393,325,300.66 47.26% 3,579,242,836.76 46.61% 0.65% receivable of the expansion of sale size Increased 32.09% y-o-y, mainly because Inventory 1,734,679,063.78 18.66% 1,313,213,414.68 17.1% 1.56% of the expansion of sale size and the increase of stock & purchase Increased 2.50% y-o-y with minor Investment real 88,315,429.63 0.95% 86,164,929.70 1.12% -0.17% change, and below the increase of gross estate assets Increased 26.33% y-o-y, mainly because affiliates business Main Luck Long-term equity 121,019,845.50 1.3% 95,799,627.42 1.25% 0.05% Pharmaceuticals operated well and investment increased the investment income of the company Increased 14.66% y-o-y, mainly because some projects under construction were Fix assets 690,487,633.12 7.43% 602,205,927.87 7.84% -0.41% completed, changing in fixed assets and acquiring corporations. Increased -20.67% y-o-y, mainly because Construction in 103,955,350.80 1.12% 131,042,772.59 1.71% -0.59% some projects under construction were progress completed, changing in fixed assets. Increased 35.92% y-o-y, mainly because Accounts paid in subsidiaries of the company increased 89,512,381.34 0.96% 65,857,961.31 0.86% 0.1% advance the support strength of purchase and advance purchase loans increased. Increased 59.14% y-o-y, mainly because the three new acquired companies Sinopharm Medicine Holding Zhaoqing Goodwill 85,228,833.15 0.92% 53,555,677.09 0.7% 0.22% Co., Ltd, Sinopharm Medicine Holding Jiangmen Co., Ltd and Sinopharm Medicine Holding Shaoguan Co., Ltd were not under the common control.
Increased 183.03% y-o-y, mainly Other non-current including that the subsidiary got the 113,987,724.53 1.23% 40,273,842.92 0.52% 0.71% asset object subsidies by moving and rebuilding to the government implement urban renewal.
18 China National Accord Medicines Corporation Ltd. Annual Report 2012
2. Major changes of liability Unit: RMB 2012 2011 Ratio Ratio in Ratio in changes Notes of major changes Amount total assets Amount total assets (%) (%) (%) Increased -8.26% y-o-y, mainly because Short-term loans 1,687,810,294.37 18.16% 1,839,838,065.68 23.96% -5.8% short-term financing bond issue of this annual paid back some short-term loans. Increased -11.69% y-o-y, mainly because Long-term loans 82,205,562.71 0.88% 93,082,967.96 1.21% -0.33% some long-term loans changed to non-current liabilities due within 1 year. Accounts received Increased -40.38% y-o-y, mainly because 35,002,695.02 0.38% 58,705,230.49 0.76% -0.38% in advance loans received in advance decreased. Non-current Increased 196.86% y-o-y, mainly liabilities due 71,127,275.00 0.77% 23,960,000.00 0.31% 0.46% because long-term loans due within 1 within 1 year year of subsidiary companies. Increased RMB 399,010,000 y-o-y, Other current 399,014,838.05 4.29% 0.00 0% 4.29% mainly because of short-term financing liabilities bond issue in this annual.
Increased 33.76% y-o-y, mainly because Deferred income 26,619,273.68 0.29% 19,900,787.30 0.26% 0.03% acquiring the company under the tax liabilities common control value-added confirmed deferred income tax liabilities. Increased 126.65% y-o-y, mainly because that the subsidiary got the Other non-current 213,607,504.21 2.3% 94,245,023.54 1.23% 1.07% subsidies by moving for the government liabilities implementing urban renewal and it accounted in deferred income.
V. Analysis of core competitiveness
The sustainability of Sinopharm Accord mainly sources from core competitiveness within the enterprise, including:
1 Competitiveness of management level
The top management staffs of the company graduated with master degree, of which 5 have senior titles, with an average age of 50.7 years and an average of more than 16 years of experience. They all have rich working experience in the pharmaceutical industry. Under guidance of efficient management team, pragmatic middle management team, and owing to team stability and good communication and coordination, active innovation ability as well as excellent ability of organization, various decisions can be executed effectively, laying a solid foundation for enterprise's sustainable development.
2. Competence of employee
The Company has loyal and dedicated staffs that are brave enough to face challenge, to transcend limitation of them with high sense of responsibility. Average age of them is 32.4 years old. Ones with bachelor degree or above accounted for 36.65%. Ones with senior title accounted for 46. And among them 124 are pharmacists. Staffs endured hardship and fight vigorously.
3 Process competitiveness
In recent years, the company constantly optimized and improved various processes system, intensified its implementation, improved the positive promotion of systematic process on enterprise normal operation and risk control. Processes (internal control) system of the Company has been normalized with 7 types of systems covering headquarter and pharmaceutical distribution as well as pharmaceutical industry. Basically we have implemented these systems comprehensively in our working field even every spot and stage.
19 China National Accord Medicines Corporation Ltd. Annual Report 2012
4. Products competitiveness
Pharmaceutical industry of the Company focusing on R&D, production and sales of anti-infection drugs, respiratory system-used and digestive system-used drugs as well as health care products, it owes a modern pharmaceutical R&D base which satisfy international standards, and has many production line for crude drugs, powder-injection and oral solid preparation; and it is the first production enterprise in China with self-brand products passed European GMP certification for cephalosporins booster injection preparation. The pharmaceutical industry of the Company created many brand-name products in top of the list in market quota for its serious quality management and control system.
5 Channel competitiveness
On one hand, pharmaceutical industry established a nationwide marketing network and service system focusing on the customers, formed a marketing model dragged head by dealers, medical institutions, supermarkets, pharmacies shops. The Company greatly satisfied the market needs and expectations through the "Fine Investment" and "Full Service". At the same time in the international market, we gradually established partnerships with local import agents, sold our products into local market with the help of local import agents. Currently our products have been sold far away to Philippines, Thailand, Vietnam, and Guinea, Hong Kong, Macao and other countries and regions. The subsidiary Shenzhen Zhijun Pharm further opened up the international mainstream markets after getting EUGMP certification granted by EU. By the end of 2011 it has won in British government bidding for three consecutive years. And products have been officially exported abroad to Britain, Germany, Romania, Cyprus and other mainstream countries.
On the other hand, Accord distribution have perfect variety resources network around the country. We established extensive cooperative relationship with more than 1600 business enterprises in autonomous regions and 29 provinces, as well as with 350 import and joint venture companies. Through consistent penetration in Guangdong and Guangxi, we have built a strong sales channels network, including 11 subsidiaries in Guangdong and 7 in Guangxi. Now we’ve covered more than 1000 pharmaceutical commercial enterprises in Guangdong and Guangxi; as for the direct sales network, we covered 100% of pharmaceutical institutions titled above grade 2 in these two provinces as well as key large-scale hospitals in other provinces. 100% of hospitals in Guangzhou, Shenzhen, Nanning and Liuzhou were covered. As for network of retail chain, we covered 100% of large pharmacy chain in Guangdong and Guangxi. And we offered delivery services for 2000 mono-drugstores. The third terminal network of over 4000 community medical care, small clinics and medical representative were covered.
6. Brand competitiveness
According to strategic planning of the "Twelfth Five-Year Plan", the company actively promoted new brand strategy of Sinopharm Accord, and boosted subordinate brand building. Currently subsidiary of distribution division has basically been renamed and renaming of members of distribution division is being in preparation. Through public praise and propaganda carrier, brand visibility and influence of the company is increasing.
20 China National Accord Medicines Corporation Ltd. Annual Report 2012
VI.Investment analysis
1. Situation of investment
(1) Situation of investment
Situation of investment Investment in 2012 (RMB) Investment in 2011 (RMB) Range of changing 110,790,000.00 0.00 100% Situation of the invested company Equity proportion in invested Name Main business company for Listed company (%) Chinese medicinal materials, Chinese patent medicine, Chinese cut crude drug, chemical drug substances and its Sinopharm Holding Wuzhou Co., formulation,antibiotics,biochemical 99.7% Ltd. drugs, biological products, toxic drugs for medical, protein anabolic preparation, peptide hormone drugs and so on. Wholesale of Chinese patent medicine, chemical drug substances, antibiotics formulation, Sinopharm Holding Zhaoqing Co., biochemical drugs, biological 100% Ltd products (including in-vitro diagnostic reagent, besides vaccines), and medical device and so on. Chinese medicinal materials, Chinese patent medicine, Chinese cut crude drug, chemical drug substances and its Sinopharm Holding Jiangmen formulation,antibiotics,biochemical 100% Renren Co., Ltd drugs, biological products(besides vaccines),psychotropics,narcotics,t oxic drugs for medical, protein anabolic preparation, peptide hormone drugs and so on. Wholesale of Chinese medicinal materials, Chinese cut crude drug, Sinopharm Holding Shaoguan Co., chemical drug substances and its 70% Ltd formulation and so on. Sale three kinds of medical device and so on. Product and sale common drug 25% equity of Suzhou Zhijun substance, cephalosporins drug 100% Wanqing Pharmaceutical Co., Ltd substance and its formulation.
21 China National Accord Medicines Corporation Ltd. Annual Report 2012 3. Main subsidiaries and stock-jointly companies
Particular about main subsidiaries and stock-jointly companies
Company Register Operating revenue Operating profit Type Industries Main products or service Total assets (RMB) Net Assets (RMB) Net profit (RMB) name capital (RMB) (RMB) Production for raw medicine of chemical products, Shenzhen processing for Chinese traditional patent medicine, Zhijun RMB Subsidiary Manufacture production of chemical material of medicine; 1,125,873,036.83 503,788,231.17 1,311,394,446.63 263,564,204.86 231,370,512.55 Pharmaceut 200,000,000 Import and export trade ical Co., Ltd. are treated by authorized certificates. Chinese traditional patent medicine, chemical preparations, antibiotics, bio-chemical medicine, Sinopharm biological medicine, diagnosis medicine, biological Holding RMB Subsidiary Commerce medicine with features of treatment and diagnosis, 3,830,690,393.17 576,736,332.69 9,788,536,557.43 167,026,165.36 124,059,914.89 Guangzhou 400,000,000 shaped packing food, chemical products, and various Co., Ltd. commodity and technique hold by self-support and agency as well as import & export of technology Chinese traditional patent medicine, chemical Sinopharm preparations, diagnosis medicine, biological medicine Holding RMB Subsidiary Commerce with features of treatment and diagnosis, and various 1,095,754,985.17 141,418,566.77 2,095,153,551.39 41,008,935.94 38,396,195.29 Guangxi 100,000,000 commodity and technique hold by self-support and Co., Ltd. agency as well as import & export of technology Shenzhen Main Luck stock-jointly Develop, research, product and operate anticancer Manufacture $19,544,550 745,992,674.05 343,904,079.27 655,747,670.02 134,605,496.69 119,366,015.30 Pharmaceut company medicine preparations, famotidine injection etc. icals INC.
22 China National Accord Medicines Corporation Ltd. Annual Report 2012
Notes of main subsidiaries and stock-jointly companies
Nil.
Particular about subsidiaries obtained or disposed in report period
√ Applicable□ Not applicable
Purpose of getting and The way of getting and Influence on overall Name of company treating subsidiary in the treating subsidiary in the product and performance reporting reporting To promote the strategic layout of major cities in Guangxi and Guangdong, No significant influence on Sinopharm Holding and make the business of Acquisition of stock overall product or Wuzhou Co., Ltd Pharmaceutical performance. Wholesale bigger and stronger by the network spreading To promote the strategic layout of major cities in Guangxi and Guangdong, No significant influence on Sinopharm Holding and make the business of Acquisition of stock overall product or Zhaoqing Co., Ltd Pharmaceutical performance. Wholesale bigger and stronger by the network spreading To promote the strategic layout of major cities in Guangxi and Guangdong, No significant influence on Sinopharm Holding and make the business of Acquisition of stock overall product or Jiangmen Renren Co., Ltd Pharmaceutical performance. Wholesale bigger and stronger by the network spreading To promote the strategic layout of major cities in Guangxi and Guangdong, No significant influence on Sinopharm Holding and make the business of Acquisition of stock overall product or Shaoguan Co., Ltd Pharmaceutical performance. Wholesale bigger and stronger by the network spreading Exerting synergy further is 25% equity of Suzhou beneficial to integration No significant influence on Zhijun Wanqing and management of the Acquisition of stock overall product or Pharmaceutical Co., Ltd company’s industry performance. integration.
23 China National Accord Medicines Corporation Ltd. Annual Report 2012
4. The significant progress of non-raised proceeds investment In 10 thousand yuan Accumulation of Total Investment actual Name of the Progress of investment amount investment Earnings of the project project the project amount in the annual amount ended of the period-end Expanded two workshops of cephalosporin solid, The 2nd phase increasing 1 billion project of pieces of annual Guanlan Base of 25,000 9,410.58 14,352.34 75% productivity; Newly built Zhijun a production line of Pharmaceutical aseptic injection, increasing 0.2 billion annual productivity. It was predicted that the annual operating value realized RMB 6 billion and 0.15 million storage amount after completion and operation of the first Nanning Logistic phase, and total storage 15,466.76 917.45 15,009.98 100% Center Project amount 0.17 million after the completion of the second phase. After construction of projects, logistics transfer hub of modern logistic system was formed. Composite powerhouse, composite logistics warehouse and utility system were newly-built. Annual production capability was: 1. oral solid:1,200,000,000 The 1st phase of tablets;600,000,000 construction capsules;200,000,000 35,000 1,320.11 1,320.11 0% project of particles;2.oral Pingshan solution:60,000,000 bottles of Chinese medicine preparation(100ml);75,0 00,000 bottles of lotions(10ml);50,000,000 bottles of chemistry preparations(100ml). Total 75,466.76 11,648.14 30,682.43 -- -- statement of the significant progress of non-raised proceeds investment Nil
24 China National Accord Medicines Corporation Ltd. Annual Report 2012
VII. Prospect of future development
In 2013, Sinopharm Accord will continue to hold the keynote of “making progress while ensuring stability”, take accelerating the transformation of development mode as the principle line, strengthen the structure optimization and transformation and upgrading, keep a foothold on the overall situation, stress the key point, and develop various work by centering on the annual management theme of “Clear thinking, Scientific development, Health operation, and staying ahead”.
Upon clear thinking, highlight “clear”, keep clear thinking, abide by the development law, innovate the development concept, transform the development mode, and resolve the development problems;
Upon scientific development, highlight “solid”, solidly advance the structural adjustment and transforming and upgrading, accelerate the transformation of development mode, and realize the balance between scale and benefits;
Upon healthy operation, highlight “elaborate”, persistently advance the elaboration of operating management, push forward the legal operation via solid basic management and elaborate risk control, and grasp the balance among growth, benefits and risks.
Upon sustainable leading, highlight “fine”, refine the competitive index of the Company, detailed study the competitors, subtly analyze the market, continue to consolidate and enlarge the leading superiority of distribution, act as the benchmark in Guangdong and Guangxi provinces, play the intensive advantages in industry, and act as the benchmark in cephalosporin field.
First, continue to perfect the two-stage management and control mode of headquarters and business units, thoroughly implement the concept of value management & control and value service, integrate the internal resources, and strive to maximize the management efficiency of the Company; Second, thoroughly advance the construction of intelligent supply chain, consecutively optimize the background functions, fully promote the market response speed and operation efficiency, and form the systematic advantages of distribution business; With the concept of scale and benefits, continue to optimize the commercial activities and breed structure, innovate the business mode and value-added services, and realize the transformation to the suppliers of medical and healthy products and services. Third, completely implement “1,2,3”strategy of industrial plate (One platform: Industrial platform under the unified planning, brand, and management and control; two centers； R&D center and marketing center; three bases: Zhijun Guanlan, Zhijun Suzhou and Zhijun Pingshan), fast realize the strategy transformation from scale growth to leading quality and benefit via structure optimization and industrial upgrading; take the opportunity of the consistency assessment of generic drug and the new GMP certificate, accelerate the construction of three bases, continuously perfect the quality management system, and shape the core competitiveness of pharmaceutical plate.
VIII.Explanation on “Qualified Opinion” from the Certified Public Accountants in the report period by the Board of Directors
Nil
IX. Explanation on changes on accounting policies, accounting estimation and calculation compare with last year’s financial report
Nil
X. Particular about major accounting errors correction that needs retroactive re-statement in reporting period
Nil
25 China National Accord Medicines Corporation Ltd. Annual Report 2012
XI. Explanation on changes of consolidation range compare with last year’s financial report
In this period the new acquiring firms are Sinopharm Holding Zhaoqing Co., Ltd, Sinopharm Holding Jiangmen Renren Co., Ltd, Sinopharm Holding Wuzhou Co., Ltd, and Sinopharm Holding Shaoguan Co., Ltd. The subsidiary companies newly-established are Sinopharm Holding Baise Co., Ltd, Sinopharm Holding Guilin Co., Ltd, and Sinopharm Holding Zhongshan Co., Ltd.
XII. Profit and dividend distribution
Formulation, execution or adjustment for profit distribution policy in reporting period, cash bonus policy in particular
According to the spirit of the instructions and provisions of the articles of association of the company and other relevant documents, such as the "Notice On Further Implement Related Matters of Cash Dividends of Listed Corporation " issued by China Securities Regulatory Commission and the "Notice On Serious Implementation of Related Requirements from the
In accordance with relevant provisions of the Articles of Association, the company made 2012 annual profit distribution plan. And independent directors expressed independent opinion. The bill has been passed in the sixth meeting of the sixteenth Board of Directors, being required to submit to 2012 annual shareholders' meeting for discussion.
Profit distribution plan and capitalizing of common reserves plan in reporting period are complying with relevant regulations of Article of Association.
Profit distribution plan and capitalizing of common reserves plan in latest three years (including the reporting period)
(1)The 2010 Preplan Profit Distribution
Taking the total 288,149,400 shares as of Dec. 31, 2010 as the radix, cash bonus of RMB 1.20(before tax) each 10 shares will be distributed to the whole shareholders. This profit distribution did not convert capital reserve into share capital.
(2)The 2011 Preplan Profit Distribution
Taking the total 288,149,400 shares as of Dec. 31, 2011 as the radix, cash bonus of RMB 1.30(before tax) each 10 shares will be distributed to the whole shareholders. This profit distribution did not convert capital reserve into share capital.
(3)The 2012 Preplan Profit Distribution
Taking the total 288,149,400 shares as of Dec. 31, 2012 as the radix, cash bonus of RMB 1.80(before tax) each 10 shares will be distributed to the whole shareholders. This profit distribution did not convert capital reserve into share capital.
26 China National Accord Medicines Corporation Ltd. Annual Report 2012
Cash dividend in latest three years Unit: RMB Ratio in net profit Net profit attributable to attributable to Amount for cash bonus shareholders of listed shareholders of listed Year for bonus shares (tax included) company in consolidation company contained in statement for bonus year consolidation statement (%) 2012 51,866,892.00 475,792,491.12 10.9% 2011 37,459,422.00 328,323,616.75 11.41% 2010 34,577,928.00 261,203,158.74 13.24%
The Company gains profits in reporting period and the retained profit of parent company is positive but no plan of cash dividend proposed
□ Applicable √ Not applicable
XIII. Social responsibility
The social responsibility report 2012 has been deliberated and approved in 16th meeting of 6th session of the Board, more details found in “social responsibility report 2012 for China National Accord Medicines Corporation Ltd.” disclosed on Juchao Website (http://www.cninfo.com.cn).
XIV. In the report period, reception of research, communication and interview
Contents discussed Time Place Way Type Reception and material provided Chongqing Visited the company Finance and knew the influence Institute, China of medical reform Accord Pharm. 2012-05-17 Investigation Institution Securities,E policy to the Bldg. Fund, Elegant development of the Investment,Guo industry. No material du Securities provided. Visited the company and knew the influence of medical reform Accord Pharm. 2012-06-01 Investigation Institution J.P.Morgan policy to the Bldg. development of the industry. No material provided. Visited the company and knew the influence Invesco Great of medical reform Accord Pharm. 2012-07-05 Investigation Institution Wall,Guotai policy to the Bldg. Junan. development of the industry. No material provided. Visited the company and knew the influence of medical reform Accord Pharm. Manulife 2012-11-26 Investigation Institution policy to the Bldg. Teda,CMS development of the industry. No material provided.
27 China National Accord Medicines Corporation Ltd. Annual Report 2012 Section V. Important Events
I. Significant lawsuits and arbitrations of the Company
□ Applicable √ Not applicable
No lawsuit or arbitration of the company in the annual.
Questioned from media
□ Applicable √ Not applicable
No media questioned for the Company in reporting period
II.Transaction of assets
1. Purchase of assets
Net profit contributed to the Net profit contributed to the listed listed company from the The related Purchase company from the purchase date Ratio of net profit The other party of begin to the end of the Related relationship(ap price(10 The progress to the end of the report period( 10 contributed to Date of Index of transaction or final Assets purchased report period( 10 thousand transaction plicable for thousand Situation thousand yuan) (applicable for listed company in disclosure disclosure controller yuan) (applicable for or not related yuan) enterprise merger under the total net profit (%) enterprise merger under transaction) uncommon control) the common control) Purchased 99.7% The same Sinopharm Holding Purchase was equity of the 450 0 13.57 0.03% Yes controlling 2011-11-06 Wuzhou Co., Ltd completed. company shareholder Purchased 100% Sinopharm Holding Purchase was equity of the 506 4.68 0 0.01% No 2011-12-06 Zhaoqing Co., Ltd completed. company Sinopharm Holding Purchased 100% Purchase was Jiangmen Renren equity of the 5,600 425.85 0 0.9% No 2012-03-31 completed. Co., Ltd company Purchased 100% Sinopharm Holding Purchase was equity of the 1,358 67.48 0 0.14% No 2012-07-17 Shaoguan Co., Ltd completed. company 25% equity of Suzhou Zhijun Purchased 25% Original Purchase was Wanqing equity of the 3,165 53.50 0.1% Yes minority 2012-07-17 completed. Pharmaceutical Co., company shareholders Ltd
28 China National Accord Medicines Corporation Ltd. Annual Report 2012
Statement of assets purchased
1. Sinopharm Holding Wuzhou Co., Ltd.: the acquisition does not adversely affect business continuity and stability of management layer; the acquisition was implemented according to plan, and has been completed. The total assets of this company at this reporting period-end reached 22,868,900 Yuan; 135,700 Yuan of net profit was attributed to parent company, accounted for more than 0.03%;
2. Sinopharm Holding Zhaoqing Co., Ltd.: the acquisition does not adversely affect business continuity and stability of management layer; the acquisition was implemented according to plan, and has been completed. The total assets of this company at this reporting period-end reached 22,504,300 Yuan; 46,800 Yuan of net profit was attributed to parent company, accounted for more than 0.01%;
3. Sinopharm Holding Jiangmen Renren Co., Ltd.: the acquisition does not adversely affect business continuity and stability of management layer; the acquisition was implemented according to plan, and has been completed. The total assets of this company at this reporting period-end reached 197,921,700 Yuan; 4,258,500 Yuan of net profit was attributed to parent company, accounted for more than 0.90%;
4. Sinopharm Holding Shaoguan Co., Ltd.: the acquisition does not adversely affect business continuity and stability of management layer; the acquisition was implemented according to plan, and has been completed. The total assets of this company at this reporting period-end reached 82,221,200 Yuan; ,674,800 Yuan of net profit was attributed to parent company, accounted for more than 0.14%;
5. Suzhou Zhijun Wanqing Co., Ltd.: the acquisition does not adversely affect business continuity and stability of management layer; the acquisition was implemented according to plan, and has been completed. The total assets of this company at this reporting period-end reached 591,698,300 Yuan; 535,000 Yuan of net profit was attributed to parent company, accounted for more than 0.10%
III. Implementation and its influence of equity incentive plan
Nil
29 China National Accord Medicines Corporation Ltd. Annual Report 2012 IV. Significant related transaction
1. Related transaction with daily operation concerned
Proportion to Settlement Content of Pricing principles Price of related Amount of related amount of Related Type of related method of Market Disclosure Related party related of related transaction transaction (10 transaction or Index of disclosure relationship transaction related price date transaction transaction (RMB) thousand yuan) the same type transaction (%) Same Sinopharm Hunan Cash March controlling Sales of goods Sales of goods Market price 11,090.04 11,090.04 0.62% 11,090.04 2012-5 Co., Ltd. settlement 16,2012 shareholder Foshan Nanhai Same New Medicine & Cash March controlling Sales of goods Sales of goods Market price 10,780.95 10,780.95 0.6% 10,780.95 2012-5 Special Medicine settlement 16,2012 shareholder Co., Ltd. Chongqing Yaoyou Subsidiary of Cash March Pharmaceutical FOSUN Sales of goods Sales of goods Market price 8,355.28 8,355.28 0.47% 8,355.28 2012-5 settlement 16,2012 Co., Ltd. Medicines China National Same Cash March South-west controlling Sales of goods Sales of goods Market price 7,699.48 7,699.48 0.43% 7,699.48 2012-5 settlement 16,2012 Medicine Co., Ltd. shareholder Sinopharm Same Holding Sub Purchasing Cash March controlling Purchasing goods Market price 89,649.87 89,649.87 4.54% 89,649.87 2012-5 Marketing Center goods settlement 16,2012 shareholder Co., Ltd. Parent Purchasing Cash March Sinopharm Holding Purchasing goods Market price 32,857.29 32,857.29 1.67% 32,857.29 2012-5 Company goods settlement 16,2012 China National Same Purchasing Cash March Medicines controlling Purchasing goods Market price 22,065.01 22,065.01 1.12% 22,065.01 2012-5 goods settlement 16,2012 Corporation Ltd shareholder Associated Sino-Swed company of Purchasing Cash March Pharmaceutical Purchasing goods Market price 7,653.40 7,653.4 0.39% 7,653.40 2012-5 controlling goods settlement 16,2012 Corp. Ltd shareholders Total -- -- 190,151.32 9.84% ------Details of major sold-goods return N/A Necessity and sustainable of related transaction as well as reasons of There have been continuous related transaction between the company and each related company due to the need of production and related transaction with related parties(not with other marketing dealers) operation, and it will exist in a longer period of time. Influence on independence of listed company from related transaction No influence on the independence of listed company from the above related transactions. Dependence on related parties by Company as well as relevant solutions It is indispensable of the related transaction between the company and the above related company, and it is also necessary for the (If applicable) normal production and operation, so it belongs to normal continuous related transaction. According to “daily related transaction between the company and its subordinate and the related parties in 2012” , deliberated and Report the actual implementation of the normal related transactions which approved in shareholders’ general meeting on April 27, 2012 and “more predicted amount for daily related transaction for year of were projected about their total amount by types during the reporting 2012”, deliberated and approved by the Board Meeting dated 26 December 2012, the sales and purchase of major related parties period(if applicable) accounted for 22.99% and 66.19% of its total estimated amount of the whole year respectively during the reporting period Reasons for major difference between trading price and market reference N/A price
30 China National Accord Medicines Corporation Ltd. Annual Report 2012
2. Related transaction incurred by purchase or sales of assets
Book value of Assessment value Transfer Clearing Content of Market fair value Income from Related Type of related assets transfer of assets transfer price (10 form for Disclosure Index of Relationship related Pricing principle (10 thousand assets transfer (10 party transaction (10 thousand (10 thousand thousand related date disclosure transaction yuan) thousand yuan) yuan) yuan) yuan) transaction Purchasing 99.7% equity Guangdong of Sinopharm Assessed Dong Fang Wuzhou Co., reference to the Same Uptodate & Purchasing of Ltd. held by book value of Cash controlling -20.54 451.33 451.33 450 0 2011-11-06 N/A Special equity Guangdong balance sheet settlement shareholder Medicines Dong Fang dated 30 June Co., Uptodate & 2011 Special Medicines Co., Reason of major difference between the transfer price and N/A book value or assessed value Influence on the operation results and financial status of the Sinopharm Wuzhou, from Jan. to December in 2012, has net profit of RMB 135,694.25 attributable to shareholders of listed company and has Company owners equity RMB 11,099.76 attributable to shareholder of listed company at same period the afore said
31 China National Accord Medicines Corporation Ltd. Annual Report 2012
3. Significant related transaction from jointly investment outside
Main Register Total assets of Net assets of Net profit of Same Pricing Enterprise business of capital of invested invested invested Relationship investors principle invested invested invested enterprise(10 enterprise(10 enterprise(10 enterprise enterprise thousand yuan) thousand yuan) thousand yuan) N/A Progress of major construction in progress of N/A invested enterprise (if applicable)
4. Credits and liability of related party
Whether have non-operation related liabilities and debts relations or not
□Yes √No
Whether has Balance at Amount in this Balance at non-operation Reasons for period-begin period(10 period-end (10 Related party Relationship Type fund occurring (10 thousand thousand thousand occupation or yuan) yuan) yuan) not Normal No Foshan Nanhai New Same Receivable purchase&sale Medicine & Special controlling from related 1,372.41 455.22 1,827.63 and labor Medicine Co., Ltd. shareholder party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 2,172.86 -452.83 1,720.03 Hunan Co., Ltd. and labor shareholder party service activity Normal No China National Same Receivable purchase&sale South-west Medicine controlling from related 1,387.1 64 1,451.1 and labor Co., Ltd. shareholder party service activity Normal No China National Xinjiang Same Receivable purchase&sale New & Special Western controlling from related 881.03 442.41 1,323.44 and labor Medicine Co., Ltd. shareholder party service activity Normal No Sinopharm Holding Same Receivable purchase&sale GuoDa Pharmacy controlling from related 1,267.81 -248.71 1,019.1 and labor Guangdong Co., Ltd. shareholder party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 1,686.26 -735.39 950.87 Beijing Co., Ltd. and labor shareholder party service activity Normal No Sinopharm Holding Same Receivable purchase&sale Beijing Huahong Co., controlling from related 706.92 235.38 942.3 and labor Ltd. shareholder party service activity Normal No Chongqing Yaoyou Subsidiary of Receivable purchase&sale Pharmaceutical Co., FOSUN from related 1,968 -1,057.92 910.08 and labor Ltd. Medicines party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 698.13 162.78 860.91 Hainan Co., Ltd. and labor shareholder party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 44.82 762.46 807.28 Chongqing Co., Ltd. and labor shareholder party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 1,487.16 -789.16 698 Hubei Co., Ltd. and labor shareholder party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 559.1 133.33 692.43 Zhejiang Co., Ltd. and labor shareholder party service activity
32 China National Accord Medicines Corporation Ltd. Annual Report 2012
Whether has Balance at Amount in this Balance at non-operation Reasons for period-begin period(10 period-end (10 Related party Relationship Type fund occurring (10 thousand thousand thousand occupation or yuan) yuan) yuan) not Sinopharm Holding Normal No Same Receivable GuoDa Pharmacy purchase&sale controlling from related 911.43 -223.07 688.36 Guangxi Chain Co., and labor shareholder party Ltd. service activity Sinopharm Holding Normal No Same Receivable (Tianjin) Oriental purchase&sale controlling from related 614.38 12.37 626.75 Bookcom Medicine and labor shareholder party Co., Ltd. service activity Normal No Same Receivable Sinopharm Le Ren purchase&sale controlling from related 684.93 -79.99 604.94 Tang Medicine Co., Ltd and labor shareholder party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 656.59 -104.13 552.46 Tianjin Co., Ltd. and labor shareholder party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 163.55 318.61 482.16 Ningxia Co., Ltd. and labor shareholder party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 1,209.68 -730.13 479.55 Shenyang Co., Ltd. and labor shareholder party service activity Normal No Same Receivable Foshan Nanhai purchase&sale controlling from related 275.87 171.54 447.41 Medicine Co., Ltd. and labor shareholder party service activity Normal No China National Same Receivable purchase&sale Medicine Logistic Co., controlling from related 191.49 254.47 445.96 and labor ltd. shareholder party service activity Normal No Sinopharm Holding Same Receivable purchase&sale Sub Marketing Center controlling from related 266.4 171.98 438.38 and labor Co., Ltd. shareholder party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 431.6 -36.49 395.11 Hainan Yihong Co., Ltd. and labor shareholder party service activity Sinopharm Holding No Normal Xinjiang Uptodate & Same Receivable purchase&sale Special Western controlling from related 355.3 39.71 395.01 and labor Pharmaceutical Co., shareholder party service activity Ltd. Normal No Guangdong Dong Fang Same Receivable purchase&sale Uptodate & Special controlling from related 315.04 50.41 365.45 and labor Medicines Co., shareholder party service activity Normal No Receivable Sinopharm Holding Parent purchase&sale from related 1,334.11 -1,047.8 286.31 Co., Ltd. Company and labor party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 54.73 222.58 277.31 Gansu Co., Ltd. and labor shareholder party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 215.72 52.34 268.06 Jinzhou Co., Ltd. and labor shareholder party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 272.86 -5.51 267.35 Shandong Co., Ltd. and labor shareholder party service activity
33 China National Accord Medicines Corporation Ltd. Annual Report 2012
Whether has Balance at Amount in this Balance at non-operation Reasons for period-begin period(10 period-end (10 Related party Relationship Type fund occurring (10 thousand thousand thousand occupation or yuan) yuan) yuan) not Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 0 250.37 250.37 Nantong Co., Ltd. and labor shareholder party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 578.88 -366.03 212.85 Yunnan Co., Ltd. and labor shareholder party service activity Normal No Same ultimate Receivable Sinopharm Holding purchase&sale controlling from related 131.42 72.94 204.36 Wenzhou Co., Ltd. and labor shareholder party service activity Normal No China National Same Receivable purchase&sale Medicines Corporation controlling from related 124.77 23.8 148.57 and labor Ltd shareholder party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 84.84 59.05 143.89 Shan’xi Co., Ltd. and labor shareholder party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 120.53 17.48 138.01 Jiangsu Co., Ltd. and labor shareholder party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 73.17 60.33 133.5 Fuzhou Co., Ltd. and labor shareholder party service activity Normal No Same Receivable China National Shan’xi purchase&sale controlling from related 0 128.53 128.53 Co., ltd. and labor shareholder party service activity Normal No Same ultimate Receivable Sinopharm Group Wei purchase&sale controlling from related 8.61 96.2 104.81 qida Medicine Co., Ltd.. and labor shareholder party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 76.74 8.95 85.69 Henan Co., Ltd. and labor shareholder party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 37.76 35.36 73.12 Heilongjiang Co., Ltd. and labor shareholder party service activity Normal No Guangdong South Same ultimate Receivable purchase&sale Pharmaceutical controlling from related 40.84 21.08 61.92 and labor Foreign Trade Co., ltd. shareholder party service activity Normal No Sinopharm Holding Same Receivable purchase&sale Inner Mongolia Co., controlling from related 61.14 -2.35 58.79 and labor Ltd. shareholder party service activity Normal No Sinopharm Holding Same Receivable purchase&sale Hebei Medicine Co., controlling from related 362.82 -306.33 56.49 and labor Ltd. shareholder party service activity Normal No Shanghai Zhaohui Subsidiary of Receivable purchase&sale Pharmaceutical Co., FOSUN from related 47.98 7.35 55.33 and labor Ltd. Medicines party service activity Normal No Sinopharm Holding Same Receivable purchase&sale GuoDa Pharmacy Co., controlling from related 89.85 -37.39 52.46 and labor Ltd. shareholder party service activity
34 China National Accord Medicines Corporation Ltd. Annual Report 2012
Whether has Balance at Amount in this Balance at non-operation Reasons for period-begin period(10 period-end (10 Related party Relationship Type fund occurring (10 thousand thousand thousand occupation or yuan) yuan) yuan) not Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 21.96 26.38 48.34 Dalian Co., Ltd. and labor shareholder party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 147.98 -101.04 46.94 Shan’xi Co., Ltd. and labor shareholder party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 37.61 5.92 43.53 Suzhou Co., Ltd. and labor shareholder party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 27.81 12.64 40.45 Guizhou Co., Ltd. and labor shareholder party service activity Normal No Sinopharm Holding Same Receivable purchase&sale Tianjin Northern controlling from related 77.23 -42.46 34.77 and labor Medicine Co., Ltd. shareholder party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 25.12 8.56 33.68 Wuxi Co., Ltd. and labor shareholder party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 27.04 4.71 31.75 Xuzhou Co., Ltd. and labor shareholder party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 9.53 22.19 31.72 Yancheng Co., Ltd. and labor shareholder party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 592.51 -565.09 27.42 Fujian Co., Ltd. and labor shareholder party service activity Normal No Same Receivable Sinopharm Holding Jilin purchase&sale controlling from related 51.15 -28.24 22.91 Co., Ltd. and labor shareholder party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 13.92 7.91 21.83 Nanjing Co., Ltd. and labor shareholder party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 28.95 -8.55 20.4 Taizhou Co., Ltd. and labor shareholder party service activity Chinese & Western Normal No Same Receivable Medicine branch of purchase&sale controlling from related 0 19.24 19.24 Sinopharm Holding and labor shareholder party Jiangsu Co., Ltd. service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 45.07 -26.09 18.98 Longyan Co., Ltd. and labor shareholder party service activity Sinopharm Holding Normal No Same Receivable Changzhou Medicine purchase&sale controlling from related 2.88 16.07 18.95 Logistic Center Co., and labor shareholder party Ltd. service activity Normal No China National Same Receivable purchase&sale Shanghai Likang controlling from related 0 15.96 15.96 and labor Medicine Co., Ltd. shareholder party service activity
35 China National Accord Medicines Corporation Ltd. Annual Report 2012
Whether has Balance at Amount in this Balance at non-operation Reasons for period-begin period(10 period-end (10 Related party Relationship Type fund occurring (10 thousand thousand thousand occupation or yuan) yuan) yuan) not Normal No Same Receivable Guangzhou Accord purchase&sale controlling from related 23.03 -8.77 14.26 Pharm Chain Co., Ltd. and labor shareholder party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 0 14.03 14.03 Qinghai Co., Ltd. and labor shareholder party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 0 12.53 12.53 Yantai Co., Ltd. and labor shareholder party service activity Normal No Sinopharm Holding Same Receivable purchase&sale Hunan Deyuan controlling from related 0 11.71 11.71 and labor Medicine Co., Ltd. shareholder party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 4.32 7.38 11.7 Ningde Co., Ltd. and labor shareholder party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 0 6.2 6.2 Putian Co., Ltd. and labor shareholder party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 0 6.05 6.05 Jinan Co., Ltd. and labor shareholder party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 3.4 1.86 5.26 Changzhou Co., Ltd. and labor shareholder party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 0 4.89 4.89 Hong Kong Co., Ltd. and labor shareholder party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 0 4.76 4.76 Huai’an Co., Ltd. and labor shareholder party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 0 4.25 4.25 Anqing Co., Ltd. and labor shareholder party service activity Sinopharm Holding No Normal Xinjiang Uptodate & Same Receivable purchase&sale Special Kashgar controlling from related 0 2.78 2.78 and labor Pharmaceutical Co., shareholder party service activity Ltd. Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 0 1.28 1.28 Shangluo Co., Ltd. and labor shareholder party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 0 1.13 1.13 Shiyan Co., Ltd. and labor shareholder party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 0.95 -0.36 0.59 Jiangxi Co., Ltd. and labor shareholder party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 0.26 0.26 0.52 Sanming Co., Ltd. and labor shareholder party service activity
36 China National Accord Medicines Corporation Ltd. Annual Report 2012
Whether has Balance at Amount in this Balance at non-operation Reasons for period-begin period(10 period-end (10 Related party Relationship Type fund occurring (10 thousand thousand thousand occupation or yuan) yuan) yuan) not Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 1.49 -0.99 0.5 Lishui Co., Ltd. and labor shareholder party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 0.03 -0.03 0 Qujing Co., Ltd. and labor shareholder party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 3.56 -3.56 0 Anshun Co., Ltd. and labor shareholder party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 20 -20 0 Zhangzhou Co., Ltd. and labor shareholder party service activity Normal No Guilin Huagui Same ultimate Receivable purchase&sale Sinopharm Affiliated controlling from related 1.08 -1.08 0 and labor Co., shareholder party service activity Normal No Dalian branch of Same Receivable purchase&sale Sinopharm Holding controlling from related 36.9 -36.9 0 and labor Shenyang Co., Ltd. shareholder party service activity Normal No Same ultimate Receivable Zhongkeqi Imp & Exp purchase&sale controlling from related 0.24 -0.24 0 Shenzhen Co., ltd. and labor shareholder party service activity Deposit of No China National Same Receivable warehouse Medicine Logistic Co., controlling from related 121.5 0 121.5 and equipment ltd. shareholder party leasing Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 0 736.42 736.42 Henan Co., Ltd. and labor shareholder party service activity Normal No Same Receivable Sinopharm Hunan Co., purchase&sale controlling from related 670.2 -330.87 339.33 Ltd. and labor shareholder party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 474.74 -286.6 188.14 Tianjin Co., Ltd. and labor shareholder party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 0 163.34 163.34 Gansu Co., Ltd. and labor shareholder party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 0 160.21 160.21 Guizhou Co., Ltd. and labor shareholder party service activity Sinopharm Holding Normal No Same Receivable GuoDa Pharmacy purchase&sale controlling from related 47.46 98.6 146.06 Guangxi Chain Co., and labor shareholder party Ltd. service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 256.62 -114.46 142.16 Hubei Co., Ltd. and labor shareholder party service activity Normal No Sinopharm Holding Same Receivable purchase&sale GuoDa Pharmacy controlling from related 185.41 -54.69 130.72 and labor Guangdong Co., Ltd. shareholder party service activity
37 China National Accord Medicines Corporation Ltd. Annual Report 2012
Whether has Balance at Amount in this Balance at non-operation Reasons for period-begin period(10 period-end (10 Related party Relationship Type fund occurring (10 thousand thousand thousand occupation or yuan) yuan) yuan) not Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 0 108.77 108.77 Zhangzhou Co., Ltd. and labor shareholder party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 0 97.58 97.58 Shan’xi Co., Ltd. and labor shareholder party service activity Sinopharm Holding Normal No Same Receivable (Tianjin) Oriental purchase&sale controlling from related 0 89.72 89.72 Bookcom Medicine and labor shareholder party Co., Ltd service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 44.33 19.02 63.35 Chongqing Co., Ltd. and labor shareholder party service activity Normal No Sinopharm Holding Same Receivable purchase&sale Beijing Huahong Co., controlling from related 0 46.31 46.31 and labor Ltd. shareholder party service activity Normal No Sinopharm Holding Same Receivable purchase&sale Hunan Deyuan controlling from related 0 46 46 and labor Medicine Co., Ltd. shareholder party service activity Sinopharm Holding Normal No Same Receivable Beijing Tianxing Puxin purchase&sale controlling from related 0 18.85 18.85 Biopharmaceutical Co., and labor shareholder party Ltd. service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 0 10.88 10.88 Qingyang Co., Ltd. and labor shareholder party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 10.09 -0.09 10 Yancheng Co., Ltd. and labor shareholder party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 25.44 -15.44 10 Xuzhou Co., Ltd. and labor shareholder party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 203.57 -194.88 8.69 Hainan Co., Ltd. and labor shareholder party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 0 7.17 7.17 Wuhu Co., Ltd. and labor shareholder party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 0 6.32 6.32 Heilongjiang Co., Ltd. and labor shareholder party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 0 6 6 Longyan Co., Ltd. and labor shareholder party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 0 4.37 4.37 Taizhou Co., Ltd. and labor shareholder party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 0 3.91 3.91 Huai’an Co., Ltd. and labor shareholder party service activity
38 China National Accord Medicines Corporation Ltd. Annual Report 2012
Whether has Balance at Amount in this Balance at non-operation Reasons for period-begin period(10 period-end (10 Related party Relationship Type fund occurring (10 thousand thousand thousand occupation or yuan) yuan) yuan) not Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 4.02 -1.18 2.84 Shenyang Co., Ltd. and labor shareholder party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 2.28 -0.48 1.8 Yantai Co., Ltd. and labor shareholder party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 10.86 -10.86 0 Fuzhou Co., Ltd. and labor shareholder party service activity Normal No China National Same Receivable purchase&sale South-west Medicine controlling from related 144.1 -144.1 0 and labor Co., Ltd. shareholder party service activity Sinopharm Holding Normal No Same ultimate Receivable GuoDa Pharmacy purchase&sale controlling from related 6.83 -6.83 0 Shenyang Chain Co., and labor shareholder party Ltd. service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 30 -30 0 Jiangsu Co., Ltd. and labor shareholder party service activity Normal No Chongqing Yaoyou Subsidiary of Receivable purchase&sale Pharmaceutical Co., FOSUN from related 2,164.8 -2,164.8 0 and labor Ltd. Medicines party service activity Normal No Chengdu Rongsheng Same ultimate Receivable purchase&sale Pharmaceutical Co., controlling from related 0 383.4 383.4 and labor ltd. shareholder party service activity Normal No Wuhan Institute of Same ultimate Receivable purchase&sale Biological Products controlling from related 0 235.5 235.5 and labor Co., Ltd shareholder party service activity Sinopharm Chongqing Normal No Same ultimate Receivable Pharmaceutical and purchase&sale controlling from related 0 125 125 Medical Industry and labor shareholder party Design Institute service activity Normal No Qinghai Same ultimate Receivable purchase&sale Pharmaceutical Factory controlling from related 305.36 -230.37 74.99 and labor Co., Ltd. shareholder party service activity Normal No Same ultimate Receivable Zhongkeqi Imp & Exp purchase&sale controlling from related 0 8.46 8.46 Shenzhen Co., ltd. and labor shareholder party service activity Normal No Sinopharm Sub Same Receivable purchase&sale Marketing Center Co., controlling from related 0 3.99 3.99 and labor Ltd. shareholder party service activity Normal No Sinopharm Holding MTi Same Receivable purchase&sale Medical Equipment controlling from related 0 0.18 0.18 and labor (Shanghai) Co., Ltd. shareholder party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 0.95 -0.95 0 Suzhou Co., Ltd. and labor shareholder party service activity Normal No Same Receivable Sinopharm Holding purchase&sale controlling from related 0.35 -0.35 0 Zhangzhou Co., Ltd. and labor shareholder party service activity
39 China National Accord Medicines Corporation Ltd. Annual Report 2012
Whether has Balance at Amount in this Balance at non-operation Reasons for period-begin period(10 period-end (10 Related party Relationship Type fund occurring (10 thousand thousand thousand occupation or yuan) yuan) yuan) not Normal No China National Ultimate Receivable purchase&sale Pharmaceutical Group controlling from related 5 -5 0 and labor Corp. shareholder party service activity Normal No Shenzhen Accord Same Receivable purchase&sale Pharmacy Chain Co., controlling from related 0.58 -0.58 0 and labor ltd. shareholder party service activity Normal No Handan Moluo Subsidiary of Receivable purchase&sale Pharmaceutical Co., FOSUN from related 1.11 -1.11 0 and labor ltd. Medicines party service activity Affiliated Normal No Yichang Humanwell Receivable company of purchase&sale Pharmaceutical Co., from related 0.21 -0.21 0 controlling and labor Ltd. party shareholders service activity Normal No Receivable Sinopharm Holding Parent purchase&sale from related 0 0.07 0.07 Co., Ltd. Company and labor party service activity Affiliated Normal No Sino-Swed Receivable company of purchase&sale Pharmaceutical Corp. from related 0.01 -0.01 0 controlling and labor Ltd party shareholders service activity Normal No Sinopharm Sub Same Debts payable purchase&sale Marketing Center Co., controlling 12,376.63 9,690.06 22,066.69 to related party and labor Ltd. shareholder service activity Normal No Sinopharm Holding Parent Debts payable purchase&sale 7,462.69 -1,875.78 5,586.91 Co., Ltd. Company to related party and labor service activity Normal No China National Same Debts payable purchase&sale Medicines Corporation controlling 2,301.39 202.65 2,504.04 to related party and labor Ltd shareholder service activity Normal No China National Same ultimate Debts payable purchase&sale Pharmaceutical controlling 0.09 1,173.67 1,173.76 to related party and labor Foreign Trade Corp. shareholder service activity Affiliated Normal No Sino-Swed company of Debts payable purchase&sale Pharmaceutical Corp. 507.24 457.4 964.64 controlling to related party and labor Ltd shareholders service activity Normal No Shenzhen Main Luck Affiliated Debts payable purchase&sale 594.08 80.74 674.82 Pharmaceuticals Inc. company to related party and labor service activity Normal No Guangdong South Same ultimate Debts payable purchase&sale Pharmaceutical controlling 153.63 314.03 467.66 to related party and labor Foreign Trade Co., ltd. shareholder service activity Normal No Jiangsu Wanban Subsidiary of Debts payable purchase&sale Medicines Marketing FOSUN 262.77 47.01 309.78 to related party and labor Co., ltd. Medicines service activity Normal No Subsidiary of Chongqing Haisiman Debts payable purchase&sale FOSUN 188.45 107.48 295.93 Pharmaceutical LTD to related party and labor Medicines service activity Subsidiary of Normal No Shenzhen Wanwei Main Luck Debts payable purchase&sale Medicines Trading Co., 209.06 67.81 276.87 Pharmaceutic to related party and labor Ltd. als service activity
40 China National Accord Medicines Corporation Ltd. Annual Report 2012
Whether has Balance at Amount in this Balance at non-operation Reasons for period-begin period(10 period-end (10 Related party Relationship Type fund occurring (10 thousand thousand thousand occupation or yuan) yuan) yuan) not Normal No Same Sinopharm Holding Debts payable purchase&sale controlling 5.24 255.66 260.9 Fujian Co., Ltd. to related party and labor shareholder service activity Normal No Chongqing Yaoyou Subsidiary of Debts payable purchase&sale Pharmaceutical Co., FOSUN 246.21 -79.09 167.12 to related party and labor Ltd. Medicines service activity Normal No Same ultimate Sinopharm Group Wei Debts payable purchase&sale controlling 278.31 -125.65 152.66 qida Medicine Co., Ltd.. to related party and labor shareholder service activity Normal No Same Sinopharm Holding Debts payable purchase&sale controlling 181.38 -39.11 142.27 Guizhou Co., Ltd. to related party and labor shareholder service activity Normal No Guilin Huagui Same ultimate Debts payable purchase&sale Sinopharm Affiliated controlling 61.1 -4.31 56.79 to related party and labor Co., shareholder service activity Normal No Sinopharm A-Think Same Debts payable purchase&sale Pharmaceutical Co., controlling 0 40.24 40.24 to related party and labor Ltd. shareholder service activity Normal No Same Sinopharm Holding Debts payable purchase&sale controlling 0 36.5 36.5 Suzhou Co., Ltd. to related party and labor shareholder service activity Normal No Guangdong Dong Fang Same Debts payable purchase&sale Uptodate & Special controlling 173.4 -141.63 31.77 to related party and labor Medicines Co., shareholder service activity Normal No China National Same Debts payable purchase&sale Medicine Logistic Co., controlling 12.88 17.17 30.05 to related party and labor ltd. shareholder service activity Normal No Same ultimate Shanghai Modern Debts payable purchase&sale controlling 11.58 13.02 24.6 Pharmaceutical Ltd. to related party and labor shareholder service activity Affiliated Normal No China Otsuka company of Debts payable purchase&sale Pharmaceutical Co., 0.75 14.49 15.24 controlling to related party and labor Ltd. shareholders service activity Normal No Subsidiary of Guilin Pharmaceutical Debts payable purchase&sale FOSUN 7.75 3.49 11.24 Co., Ltd. to related party and labor Medicines service activity Normal No Same Sinopharm Beijing Co., Debts payable purchase&sale controlling 53.63 -43.08 10.55 Ltd. to related party and labor shareholder service activity Normal No Same Sinopharm Holding Debts payable purchase&sale controlling 0 10 10 Hubei Co., Ltd. to related party and labor shareholder service activity Normal No Same Sinopharm Holding Debts payable purchase&sale controlling 0 9.05 9.05 Hainan Co., Ltd. to related party and labor shareholder service activity Normal No Foshan Nanhai New Same Debts payable purchase&sale Medicine & Special controlling 17.81 -12.22 5.59 to related party and labor Medicine Co., Ltd. shareholder service activity
41 China National Accord Medicines Corporation Ltd. Annual Report 2012
Whether has Balance at Amount in this Balance at non-operation Reasons for period-begin period(10 period-end (10 Related party Relationship Type fund occurring (10 thousand thousand thousand occupation or yuan) yuan) yuan) not Normal No Same Foshan Nanhai Debts payable purchase&sale controlling 8.63 -4.75 3.88 Medicine Co., Ltd. to related party and labor shareholder service activity Affiliated Normal No Yichang Humanwell company of Debts payable purchase&sale Pharmaceutical Co., 2.62 1.07 3.69 controlling to related party and labor Ltd. shareholders service activity Normal No Handan Moluo Subsidiary of Debts payable purchase&sale Pharmaceutical Co., FOSUN 4.25 -0.85 3.4 to related party and labor ltd. Medicines service activity China Pharmaceutical Normal No Same ultimate Group Shanghai Debts payable purchase&sale controlling 4.06 -0.9 3.16 Medical Instrument to related party and labor shareholder Co., ltd. service activity Normal No Wuhan Zhonglian Same ultimate Debts payable purchase&sale Pharmaceutical Group controlling 0 2.7 2.7 to related party and labor Co., ltd. shareholder service activity Normal No Sinopharm Holding Same Debts payable purchase&sale GuoDa Pharmacy controlling 43.35 -43.35 0 to related party and labor Guangdong Co., Ltd. shareholder service activity Normal No Chengdu Rongsheng Same ultimate Debts payable purchase&sale Pharmaceutical Co., controlling 0 1.84 1.84 to related party and labor ltd. shareholder service activity Ultimate No Changchun Normal affiliated ChangSheng Gene Debts payable purchase&sale company of 0 1.79 1.79 Pharmaceutical Co., to related party and labor controlling ltd. service activity shareholders Sichuan Jiangyou Normal No Same ultimate Zhongbafuzi Debts payable purchase&sale controlling 0.21 1.44 1.65 Technology to related party and labor shareholder Development Co., Ltd. service activity Normal No Shenyang Hongqi Sub-subsidiary Debts payable purchase&sale Pharmaceutical Co., of FOSUN 2.98 -1.72 1.26 to related party and labor ltd. Medicines service activity Shanghai Modern Normal No Same ultimate Hasen (Shangqiu) Debts payable purchase&sale controlling 0 0.99 0.99 Pharmaceutical Co., to related party and labor shareholder Ltd. service activity Normal No Shanghai Zhaohui Subsidiary of Debts payable purchase&sale Pharmaceutical Co., FOSUN 2.41 -1.66 0.75 to related party and labor Ltd. Medicines service activity China National Normal No Same Medicines Guorui Debts payable purchase&sale controlling 0.49 0.23 0.72 Pharmaceutical Co., to related party and labor shareholder Ltd. service activity Normal No Shenzhen Accord Same Debts payable purchase&sale Pharmacy Chain Co., controlling 0 0.39 0.39 to related party and labor ltd. shareholder service activity Affiliated Normal No Shanghai Serum company of Debts payable purchase&sale 1.07 -0.78 0.29 Biotechnology Co., Ltd. controlling to related party and labor shareholders service activity Normal No Wuhan Zhonglian Same ultimate Debts payable purchase&sale Siyao Pharmaceutical controlling 0 0.26 0.26 to related party and labor Co., Ld. shareholder service activity
42 China National Accord Medicines Corporation Ltd. Annual Report 2012
Whether has Balance at Amount in this Balance at non-operation Reasons for period-begin period(10 period-end (10 Related party Relationship Type fund occurring (10 thousand thousand thousand occupation or yuan) yuan) yuan) not Subsidiary of No Xiamen Xingsha Normal affiliated Huideju Debts payable purchase&sale company of 0 0.11 0.11 Pharmaceutical Co., to related party and labor controlling Ltd. service activity shareholders Normal No Same Sinopharm Chemical Debts payable purchase&sale controlling 0 0.08 0.08 Reagent Co., Ltd. to related party and labor shareholder service activity Normal No Shanghai FOSUN Subsidiary of Debts payable purchase&sale Pharmaceutical Co., FOSUN 0 0.02 0.02 to related party and labor Ld. Medicines service activity Normal No Shanghai Yigongyuan Same ultimate Debts payable purchase&sale Pharmaceutical Co., controlling 0.37 -0.37 0 to related party and labor Ltd. shareholder service activity Normal No Sinopharm Chemical Same Debts payable purchase&sale Reagent Suzhou Co., controlling 2.32 -2.32 0 to related party and labor Ltd. shareholder service activity Normal No Shanghai Fosun Long Subsidiary of Debts payable purchase&sale March Medical Science FOSUN 0.18 -0.18 0 to related party and labor Co., Ltd Medicines service activity Normal No Jiangsu Wanban Subsidiary of Debts payable purchase&sale Bio-Chemical Medicine FOSUN 1.49 -1.49 0 to related party and labor Co., Ltd. Medicines service activity Normal No China National Beijing Same ultimate Debts payable purchase&sale Medical Instrument controlling 0.88 0 0.88 to related party and labor Suzhou Co., Ltd. shareholder service activity National Medicines Affiliated Normal No Prospect Dentech company of Debts payable purchase&sale 0.01 -0.01 0 Technology (Beijing) controlling to related party and labor Co., Ltd. shareholders service activity Normal No China National Union Same ultimate Debts payable purchase&sale Medical Instrument controlling 0.16 -0.16 0 to related party and labor Co., Ltd. shareholder service activity Normal No China National Corp. of Same ultimate Debts payable purchase&sale Traditional & Herbal controlling 20.1 -20.1 0 to related party and labor Medicine shareholder service activity Normal No Sinopharm Sub Same Debts payable purchase&sale Marketing Center Co., controlling 2,772.58 14,803.18 17,575.76 to related party and labor Ltd. shareholder service activity Normal No Sinopharm Holding Parent Debts payable purchase&sale 10,615.09 -7,371.68 3,243.41 Co., Ltd. Company to related party and labor service activity Normal No Subsidiary of Chongqing Haisiman Debts payable purchase&sale FOSUN 171.34 69.9 241.24 Pharmaceutical LTD to related party and labor Medicines service activity Normal No Same ultimate Sinopharm Group Wei Debts payable purchase&sale controlling 150 15.57 165.57 qida Medicine Co., Ltd.. to related party and labor shareholder service activity Normal No Chongqing Yaoyou Subsidiary of Debts payable purchase&sale Pharmaceutical Co., FOSUN 89.55 19.63 109.18 to related party and labor Ltd. Medicines service activity
43 China National Accord Medicines Corporation Ltd. Annual Report 2012
Whether has Balance at Amount in this Balance at non-operation Reasons for period-begin period(10 period-end (10 Related party Relationship Type fund occurring (10 thousand thousand thousand occupation or yuan) yuan) yuan) not Normal No Shenzhen Main Luck Affiliated Debts payable purchase&sale 119.79 -32.59 87.2 Pharmaceuticals Inc. company to related party and labor service activity Normal No Sinopharm Chemical Same Debts payable purchase&sale Reagent Suzhou Co., controlling 33.26 -15.5 17.76 to related party and labor Ltd. shareholder service activity China National Normal No Same ultimate Rongsheng Debts payable purchase&sale controlling 0 17.69 17.69 Pharmaceutical Co., to related party and labor shareholder Ltd. service activity Normal No Same ultimate Shanghai Modern Debts payable purchase&sale controlling 3.37 7.4 10.77 Pharmaceutical Ltd. to related party and labor shareholder service activity Normal No China National Same Debts payable purchase&sale Medicines Corporation controlling 1,635.15 -1,635.15 0 to related party and labor Ltd shareholder service activity Normal No Same Sinopharm Holding Debts payable purchase&sale controlling 6.2 -6.2 0 Fujian Co., Ltd. to related party and labor shareholder service activity Normal No Jiangsu Wanban Subsidiary of Debts payable purchase&sale Medicines Marketing FOSUN 307.2 -307.2 0 to related party and labor Co., ltd. Medicines service activity Normal No Subsidiary of Guilin Pharmaceutical Debts payable purchase&sale FOSUN 11.22 -11.22 0 Co., Ltd. to related party and labor Medicines service activity Acquisition of No profit payable to former shareholder Sinopharm Holding Parent Debts payable and product 373.07 20 393.07 Co., Ltd. Company to related party development fund from Sinopharm Group Nanjing Acquisition of No equity transfer amount payable to Minority Debts payable former Yang Wenjie shareholder of 0 203.7 203.7 to related party shareholder subsidiary from Sinopharm Holding Shaoguan Operation No current China National Corp. of Same ultimate Debts payable account and Traditional & Herbal controlling 130 20 150 to related party product Medicine shareholder development fund Acquisition of No equity transfer amount payable to Guangdong Dong Fang Same Debts payable former Uptodate & Special controlling 0 56.76 56.76 to related party shareholder Medicines Co., shareholder from Sinopharm Holding Wuzhou
44 China National Accord Medicines Corporation Ltd. Annual Report 2012
Whether has Balance at Amount in this Balance at non-operation Reasons for period-begin period(10 period-end (10 Related party Relationship Type fund occurring (10 thousand thousand thousand occupation or yuan) yuan) yuan) not Guangdong Dong Fang Same Debt payable Operational Uptodate & Special controlling to related No 490 -490 0 contact Medicines Co., shareholder party 务 Shanghai Institute of Same ultimate No Debts payable Pharmaceutical controlling Order deposit 0 75 75 to related party Industry shareholder Acquisition of No equity transfer amount payable to Minority Debts payable former Tan Min shareholder of 0 40.74 40.74 to related party shareholder subsidiary from Sinopharm Holding Shaoguan Acquisition of No equity transfer amount payable to Minority Debts payable former Jiang Jianmin shareholder of 0 40.74 40.74 to related party shareholder subsidiary from Sinopharm Holding Shaoguan Acquisition of No equity transfer amount payable to Minority Debts payable former Zhou Weilin shareholder of 0 40.74 40.74 to related party shareholder subsidiary from Sinopharm Holding Shaoguan Acquisition of No equity transfer amount payable to Minority Debts payable former Fang Zhongqin shareholder of 0 40.74 40.74 to related party shareholder subsidiary from Sinopharm Holding Shaoguan Acquisition of No equity transfer amount payable to Minority Debts payable former Kang Liting shareholder of 0 40.74 40.74 to related party shareholder subsidiary from Sinopharm Holding Shaoguan Sinopharm United Same ultimate No Debts payable Design fee of Engineering controlling 60 -44 16 to related party logistic project Corporation shareholder China National Same Transport No Debts payable Medicines Corporation controlling service 0 14.49 14.49 to related party Ltd shareholder provide Same ultimate No Zhongkeqi Imp & Exp Debts payable Equipment controlling 0 10.1 10.1 Shenzhen Co., ltd. to related party warranty shareholder
45 China National Accord Medicines Corporation Ltd. Annual Report 2012
Whether has Balance at Amount in this Balance at non-operation Reasons for period-begin period(10 period-end (10 Related party Relationship Type fund occurring (10 thousand thousand thousand occupation or yuan) yuan) yuan) not China Pharmaceutical No Same ultimate Group Shanghai Debts payable Deposit of controlling 0 3 3 Medical Instrument to related party house leasing shareholder Co., ltd. Same No Sinopharm Holding Debts payable controlling Order deposit 0 1.5 1.5 Shan’xi Co., Ltd. to related party shareholder Same No Sinopharm Holding Debts payable controlling Order deposit 0 1 1 Tianjin Co., Ltd. to related party shareholder Sinopharm Holding No Same (Tianjin) Oriental Debts payable controlling Order deposit 0 1 1 Bookcom Medicine to related party shareholder Co., Ltd China National Same No Debts payable South-west Medicine controlling Order deposit 0 0.5 0.5 to related party Co., Ltd. shareholder Same No Sinopharm Holding Debts payable controlling Order deposit 0 0.5 0.5 Hubei Co., Ltd. to related party shareholder Chinese & Western No Same Medicine branch of Debts payable controlling Order deposit 0 0.5 0.5 Sinopharm Holding to related party shareholder Jiangsu Co., Ltd. Same No Sinopharm Holding Debts payable controlling Order deposit 0 0.5 0.5 Taizhou Co., Ltd. to related party shareholder Sinopharm Sub Same No Debts payable Marketing Center Co., controlling Order deposit 20 -19.5 0.5 to related party Ltd. shareholder Same No Sinopharm Holding Debts payable controlling Order deposit 0 0.5 0.5 Wuxi Co., Ltd. to related party shareholder Same No Sinopharm Le Ren Debts payable controlling Order deposit 0 0.5 0.5 Tang Medicine Co., Ltd to related party shareholder Sinopharm Chemical Same No Debts payable Purchase of Reagent Suzhou Co., controlling 16 -16 0 to related party fixed assets Ltd. shareholder Acquisition of No profit payable to former China National Same Debts payable shareholder Pharmaceutical Group controlling 166.04 0 166.04 to related party from Shanghai Company shareholder Sinopharm Holding Nanning Normal No Guangdong Dong Fang Same Debts payable purchase&sale Uptodate & Special controlling 0 30.27 30.27 to related party and labor Medicines Co., shareholder service activity Normal No Sinopharm Guoda Same Debts payable purchase&sale Drug Store Guangxi controlling 0 9.47 9.47 to related party and labor Chain Co., ltd. shareholder service activity Normal No Same Sinopharm Holding Debts payable purchase&sale controlling 0 3.08 3.08 Zhangzhou Co., Ltd. to related party and labor shareholder service activity Normal No Same Sinopharm Le Ren Debts payable purchase&sale controlling 0 1.34 1.34 Tang Medicine Co., Ltd to related party and labor shareholder service activity
46 China National Accord Medicines Corporation Ltd. Annual Report 2012
Whether has Balance at Amount in this Balance at non-operation Reasons for period-begin period(10 period-end (10 Related party Relationship Type fund occurring (10 thousand thousand thousand occupation or yuan) yuan) yuan) not Normal No Same Sinopharm Holding Debts payable purchase&sale controlling 0 0.63 0.63 Henan Co., Ltd. to related party and labor shareholder service activity Normal No Same Sinopharm Holding Debts payable purchase&sale controlling 0.78 -0.49 0.29 Nanjing Co., Ltd. to related party and labor shareholder service activity Normal No Same Sinopharm Hunan Co., Debts payable purchase&sale controlling 0.04 -0.04 0 Ltd. to related party and labor shareholder service activity Sinopharm Holding Parent Debts payable Interest of No 69.78 -69.78 0 Co., Ltd. Company to related party loans accrual Same ultimate No China National Debts payable Interest of controlling 0 47.12 47.12 Financial Co., Ltd. to related party loans accrual shareholder Sinopharm Holding Parent Debts payable Entrusted No 33,737 -33,737 0 Co., Ltd. Company to related party loans Physical No Sinopharm Holding Parent Debts payable assets reserve 3,506.18 0 3,506.18 Co., Ltd. Company to related party specifically authorized Same ultimate No China National Debts payable controlling Loans 0 26,200 26,200 Financial Co., Ltd. to related party shareholder Same ultimate Monetary fund China National Debts payable controlling save in related No 0 12.38 12.38 Financial Co., Ltd. to related party shareholder party Effect on Company’s operation results and financial status from related liability No bad influence on operation results and financial status from related liability and debts and debts
47 China National Accord Medicines Corporation Ltd. Annual Report 2012
5. Other significant related transactions
1. Leasing of related parties
Renting of the Company
Lessor Lessee Type of leasing Starting date Date ended Pricing basis for Leasing earnings asset leasing earnings confirmed in this period (RMB) Sinopharm Sinopharm Houses 2009-07-01 2015-12-31 Refer to market 980,729.00 Holding Lizhou Holding GuoDa price Pharmacy Guangxi Chain Co., Ltd. The Company Shenzhen Accord Houses 2009-06-01 2012-12-31 Refer to market 376,320.00 Pharmacy Chain price Co., ltd. Guangdong Huixin Guangzhou Houses 2012-01-01 2012-12-31 Refer to market 333,264.00 Accord Pharm price Chain Co., Ltd. Guangxi Logistic Sinopharm Houses 2009-07-01 2015-12-31 Refer to market 276,062.70 Holding GuoDa price Pharmacy Guangxi Chain Co., Ltd. Guangdong Huixin China Houses 2012-01-01 2013-12-31 Refer to market 192,744.00 Pharmaceutical price Group Shanghai Medical Instrument Co., ltd. Guangdong Huixin Guangzhou Houses 2012-01-01 2012-12-31 Refer to market 169,914.00 Accord Pharm price Chain Co., Ltd. Sinopharm Sinopharm Houses 2009-07-01 2012-12-31 Refer to market 54,110.00 Holding Lizhou Holding GuoDa price Pharmacy Guangxi Chain Co., Ltd. Sinopharm Sinopharm Houses 2011-03-10 2015-12-31 Refer to market 59,256.00 Holding Lizhou Holding GuoDa price Pharmacy Guangxi Chain Co., Ltd. Sinipharm Holding Shenzhen Accord Houses 2011-01-01 2012-12-31 Refer to market 54,000.00 Materials Pharmacy Chain price Co., ltd.
48 China National Accord Medicines Corporation Ltd. Annual Report 2012
Leasing of the Company
Lessor Lessee Type of leasing Starting date Date ended Pricing basis for Leasing earnings asset leasing earnings confirmed in this period (RMB) China National Sinopharm Houses 2012-01-01 2012-12-31 Refer to market 7,080,000.00 Medicine Logistic Holding price Co., ltd. Guangzhou China National Sinopharm Equipment 2009-06-01 2012-12-31 Refer to market 7,500,000.00 Medicine Logistic Holding price Co., ltd. Guangzhou Shaoguan Wujiang Sinopharm Houses 2012-8-1 2020-7-31 Refer to market Muyang Drugs Holding Shaoguan price 274,553.28 Information Consultant Co., Ltd Wang Yang Sinopharm Houses 2012-01-01 2012-12-31 Refer to market 439,500.00 Holding Yanfeng price 2. Guarantee of related parties
Guarantor Guarantee party Amount guarantee Starting date Dated ended Whether implemented guarantee or not Sinopharm Holding The Company 400,000,000.002012-08-10 2013-08-10 No The Company Sinopharm Holding 343,093,233.202012-10-16 2013-10-16 No Guangzhou The Company Sinopharm Holding 198,853,932.012012-08-17 2013-06-28 No Guangzhou The Company Sinopharm Holding 198,177,776.702012-10-17 2013-10-17 No Guangzhou Sinopharm Holding Sinopharm Holding 150,000,000.002011-08-12 2013-08-12 No Guangzhou The Company Sinopharm Holding 145,102,664.662012-05-21 2013-04-24 No Guangzhou The Company Sinopharm Holding 119,990,330.642012-08-17 2013-06-28 No Guangxi Sinopharm Holding Sinopharm Holding 100,000,000.002012-05-02 2013-08-12 No Guangzhou The Company Sinopharm Holding 99,825,365.392012-09-25 2013-06-28 No Guangzhou The Company Sinopharm Holding 99,108,040.192012-01-18 2013-01-18 No Guangzhou The Company Sinopharm Holding 92,450,897.072012-04-28 2013-04-28 No Guangzhou The Company Zhijun 92,139,297.322012-06-20 2013-06-20 No Pharmaceutical Zhijun The Company 90,004,475.382012-05-18 2013-05-13 No Pharmaceutical The Company Zhijun Wanqing 82,000,000.002012-09-18 2013-09-18 No The Company Sinopharm Holding 81,714,950.002012-05-16 2013-05-16 No Guangxi The Company Guangxi Logistic 66,908,487.712011-01-16 2014-01-16 No Zhijun The Company 58,876,390.332012-06-08 2013-03-08 No Pharmaceutical Sinopharm Holding Sinopharm Holding 50,000,000.002011-10-10 2013-08-12 No Guangzhou The Company Zhijun Wanqing 50,000,000.002012-01-17 2013-01-05 No The Company Zhijun 47,628,131.202011-09-30 2016-09-30 No Pharmaceutical The Company China National Lizhou 45,000,000.002012-09-25 2013-06-28 No The Company Sinopharm Holding 39,200,449.892012-02-10 2013-02-09 No Guangzhou The Company China National Lizhou 38,166,592.502012-09-17 2013-09-16 No Sinopharm Holding Sinopharm Holding 34,446,860.012012-10-31 2013-10-31 No Guangzhou The Company Zhijun Wanqing 32,000,000.002012-08-27 2013-08-26 No The Company Zhijun Wanqing 30,000,000.002010-08-01 2013-08-01 No
49 China National Accord Medicines Corporation Ltd. Annual Report 2012
Guarantor Guarantee party Amount guarantee Starting date Dated ended Whether implemented guarantee or not The Company Sinopharm Holding 29,921,607.182012-08-17 2013-06-28 No Yanfeng The Company Sinopharm Holding 29,270,092.862012-04-28 2013-04-28 No Yexing The Company Zhijun 28,569,346.252012-08-17 2013-06-28 No Pharmaceutical The Company Sinopharm Holding 24,775,844.152012-09-25 2013-06-28 No Guangxi The Company Sinopharm Holding 20,049,541.192012-12-05 2013-12-04 No Yexing Sinopharm Holding The Company 20,000,000.002012-11-30 2013-10-31 No Zhijun The Company 20,000,000.002012-07-31 2013-01-20 No Pharmaceutical The Company Zhijun Wanqing 20,000,000.002012-06-14 2013-06-14 No The Company Sinopharm Holding 18,453,097.462012-03-26 2013-03-26 No Guangxi The Company Sinopharm Holding 14,945,253.872012-11-09 2013-11-08 No Guangzhou Sinopharm Holding Sinopharm Holding 12,513,702.212012-10-30 2013-08-12 No Guangzhou Zhijun The Company 10,000,000.002012-12-05 2013-12-04 No Pharmaceutical and Sinopharm Holding Guangzhou Zhijun The Company 10,000,000.002011-12-06 2012-12-06 No Pharmaceutical The Company Sinopharm Holding 6,500,000.002012-05-15 2013-05-15 No Guangxi Zhijun The Company 5,000,000.002012-03-22 2013-03-22 No Pharmaceutical The Company Zhijun Wanqing 3,000,000.002012-07-25 2013-07-24 No The Company Zhijun Medicine 1,777,545.002011-12-14 2012-11-13 No Trade The Company Sinopharm Holding 79,088.422011-11-20 2012-11-20 No Lizhou
3. Financing of related parties
Related party Borrowed funds Starting date Date ended Note Borrowing Sinopharm Holding 50,000,000.002012-01-12 2012-07-11 Entrused loans Sinopharm Holding 8,010,000.002012-05-22 2012-11-21 Entrused loans Sinopharm Holding 41,990,000.002012-05-22 2012-11-21 Entrused loans Sinopharm 20,000,000.002012-08-23 2013-02-22 Entrused loans Holding(note i) Sinopharm Holding 50,000,000.002012-03-07 2012-09-06 Entrused loans Sinopharm Holding 42,630,000.002012-01-09 2012-07-08 Entrused loans Sinopharm Holding 40,000,000.002012-03-14 2012-09-13 Entrused loans Sinopharm Group 40,000,000.002012-12-26 2013-06-26 Financial Co., loans Financial Co., Ltd. Sinopharm Group 40,000,000.002012-10-22 2013-04-22 Financial Co., loans Financial Co., Ltd. Sinopharm Group 34,000,000.002012-10-23 2013-04-23 Financial Co., loans Financial Co., Ltd. Sinopharm Group 30,000,000.002012-09-18 2013-09-18 Financial Co., loans Financial Co., Ltd. Sinopharm Group 30,000,000.002012-10-15 2013-04-15 Financial Co., loans Financial Co., Ltd(note ii).
50 China National Accord Medicines Corporation Ltd. Annual Report 2012
Sinopharm Group 30,000,000.002012-10-12 2013-04-12 Financial Co., loans Financial Co., Ltd(note iii). Sinopharm Group 30,000,000.002012-10-11 2013-04-11 Financial Co., loans Financial Co., Ltd. Sinopharm Group 30,000,000.002012-09-21 2013-03-21 Financial Co., loans Financial Co., Ltd. Sinopharm Group 5,000,000.002012-12-06 2013-06-06 Financial Co., loans Financial Co., Ltd. Sinopharm Group 10,000,000.002012-12-06 2013-06-06 Financial Co., loans Financial Co., Ltd. Sinopharm Group 12,000,000.002012-11-22 2013-05-22 Financial Co., loans Financial Co., Ltd. Sinopharm Group 11,000,000.002012-11-22 2012-05-22 Financial Co., loans Financial Co., Ltd. Sinopharm Group 10,000,000.002012-11-23 2013-05-23 Financial Co., loans Financial Co., Ltd. Sinopharm Group 10,000,000.002012-11-23 2013-05-23 Financial Co., loans Financial Co., Ltd. Sinopharm Group 1,518,170.002012-09-26 2013-01-23 Notes discounted Financial Co., Ltd. Sinopharm Group 2,000,000.002012-09-26 2013-02-16 Notes discounted Financial Co., Ltd. Sinopharm Group 2,637,875.002012-09-26 2013-02-16 Notes discounted Financial Co., Ltd. Sinopharm Group 2,000,000.002012-09-26 2013-02-16 Notes discounted Financial Co., Ltd. Sinopharm Group 1,200,000.002012-09-26 2013-01-25 Notes discounted Financial Co., Ltd. Sinopharm Group 594,498.002012-09-26 2013-02-28 Notes discounted Financial Co., Ltd. Sinopharm Group 2,000,000.002012-10-18 2012-11-28 Notes discounted Financial Co., Ltd. Sinopharm Group 2,500,000.002012-10-18 2013-01-03 Notes discounted Financial Co., Ltd. Sinopharm Group 2,500,000.002012-10-18 2013-01-03 Notes discounted Financial Co., Ltd. Sinopharm Group 1,050,000.002012-10-18 2013-01-03 Notes discounted Financial Co., Ltd. Sinopharm Group 500,000.002012-10-18 2013-01-03 Notes discounted Financial Co., Ltd. Sinopharm Group 500,000.002012-10-18 2013-01-03 Notes discounted Financial Co., Ltd. Sinopharm Group 500,000.002012-10-18 2012-12-25 Notes discounted Financial Co., Ltd. Sinopharm Group 500,000.002012-10-18 2012-12-25 Notes discounted Financial Co., Ltd. Sinopharm Group 2,000,000.002012-10-18 2012-12-27 Notes discounted Financial Co., Ltd. Sinopharm Group 2,000,000.002012-10-18 2012-12-27 Notes discounted Financial Co., Ltd. Sinopharm Group 2,945,708.512012-10-18 2012-12-27 Notes discounted Financial Co., Ltd. (i) the loans have been paid dated 29 October 2012 in advance (ii) the loans have been paid dated 25 December 2012 in advance (iii) the loans have been paid dated 20 November 2012 in advance
51 China National Accord Medicines Corporation Ltd. Annual Report 2012
4. Other related transactions
Interest expenses
unit of the related party type of related transaction Group 2,012.00 2,011.00 (RMB) (RMB) The Interest paid for entrusted Company Sinopharm Holding loan 6,114,228.88 9,123,987.31 Sinopharm Interest paid for entrusted Guangzhou Sinopharm Holding loan 4,953,456.68 8,904,000.00 Sinopharm Sinopharm Holding Sub Buyer discount paid for Guangzhou Marketing Center Co., Ltd. note 4,739,317.33 541,949.48 The Loan interest paid for Company Financial Company Finacnial Co., 2,860,900.00 Sinopharm Buyer discount paid for Guangzhou Sinopharm Holding note 1,596,976.86 7,740,217.04 Sinopharm Interest paid for entrusted Liuzhou Sinopharm Holding loan 1,080,947.78 505,120.00 Suzhou Discount charge paid for Wanqing Financial Company note 194,038.51 Sinopharm Discount charge paid for Guangxi Financial Company note 181,088.73 Guangdong Dong Fang Sinopharm Update & Special Medicine Loan interest paid for Wuzhou Co., related party 126,433.07 280,893.07
21,847,387.84 27,096,166.90
Interest income from saving
unit of the related party type of related transaction Group 2,012.00 2,011.00 (RMB) (RMB) The Group Group financial Co., Interest income from saving 6,370.19 -
Inquiry of disclosure website for relevant interim reports of material related transaction
Notice name Dated for disclosed Website for interim report disclosed Daily Related transaction for year of 2012-03-16 Juchao Website 2012
Related transaction announcement of financial service provided from China 2012-08-18 Juchao Website National Medicines Corp. Ltd
Estimated amount increased for daily 2012-12-28 Juchao Website related transaction for year of 2012
52 China National Accord Medicines Corporation Ltd. Annual Report 2012
V. Significant contracts and its implementation
1. Guarantees In ten thousand yuan Particulars about the external guarantee of the Company (Barring the guarantee for the controlling subsidiaries) Related Actual date of Complete Guarantee Announcem Name of the Guarantee happening Actual Guarantee Guarantee implement for related ent Company guaranteed limit (Date of signing guarantee limit type term ation or party (Yes disclosure agreement) not or no) date China National General 2012.12.05-2 Accord Medicines 2012-08-18 30,000 2012-12-05 1,000 No Yes assurance 013.12.04 Corporation Ltd. China National General 2012.3.22-20 Accord Medicines 2012-03-16 7,000 2012-03-22 500 No Yes assurance 13.3.22 Corporation Ltd. China National No Yes General 2012.6.5-201 Accord Medicines 2012-03-16 10,000 2012-06-05 0 assurance 3.6.4 Corporation Ltd. China National No Yes General 2012.06.08-2 Accord Medicines 2012-03-16 15,000 2012-06-08 5,887.64 assurance 013.03.08 Corporation Ltd. China National No Yes General 2011.12.6-20 Accord Medicines 2011-10-22 6,000 2011-12-06 1,000 assurance 12.12.6 Corporation Ltd. China National No Yes General 2012.5.18-20 Accord Medicines 2012-03-16 10,000 2012-05-18 9,000.45 assurance 13.5.13 Corporation Ltd. China National No Yes General 2012.7.31-20 Accord Medicines 2012-03-16 2,800 2012-07-31 2,000 assurance 13.1.20 Corporation Ltd. Shenzhen Zhijun No Yes General 2012.12.26-2 Medicine Trading 2012-03-16 3,150 2012-12-26 0 assurance 013.12.25 Co., Ltd. Shenzhen Zhijun No Yes General 2012.3.8-201 Medicine Trading 2011-08-18 2,000 2012-03-08 0 assurance 3.3.8 Co., Ltd. Total approving external guarantee Total actual occurred external 77,950 63,912.57 in report period (A1) guarantee in report period (A2) Total actual balance of external Total approved external guarantee 85,950 guarantee at the end of report 19,388.09 at the end of report period ( A3) period (A4)
53 China National Accord Medicines Corporation Ltd. Annual Report 2012
Guarantee of the Company for the subsidiaries Related Actual date of Complete Guarantee Announcem Name of the Guarantee happening Actual Guarantee Guarantee implement for related ent Company guaranteed limit (Date of signing guarantee limit type term ation or party (Yes disclosure agreement) not or no) date Sinopharm Holding General 2012.9.25-20 2012-08-18 5,000 2012-09-25 4,500 No Yes Liuzhou Co., Ltd. assurance 13.6.28 Sinopharm Holding General 2012.9.17-20 No Yes 2012-08-18 6,000 2012-09-17 3,816.66 Liuzhou Co., Ltd. assurance 13.9.16 Sinopharm Holding General 2011.11.20-2 No Yes 2011-08-18 5,000 2011-11-20 7.91 Liuzhou Co., Ltd. assurance 012.11.20 Sinopharm Holding No Yes General 2012.2.28-20 Shenzhen Yanfeng 2011-03-22 3,000 2012-02-28 0 assurance 13.2.27 Co., Ltd. Sinopharm Holding No Yes General 2012.8.17-20 Shenzhen Yanfeng 2012-03-16 3,000 2012-08-17 2,992.16 assurance 13.6.28 Co., Ltd. Shenzhen Zhijun No Yes General 2012.6.20-20 Pharmaceutical Co., 2012-03-16 20,000 2012-06-20 9,213.93 assurance 13.6.20 Ltd Shenzhen Zhijun No Yes General 2012.6.1-201 Pharmaceutical Co., 2012-03-16 6,000 2012-06-01 0 assurance 3.5.30 Ltd Shenzhen Zhijun No Yes General 2012.8.17-20 Pharmaceutical Co., 2012-03-16 8,000 2012-08-17 2,856.93 assurance 13.6.28 Ltd Shenzhen Zhijun No Yes General 2011.9.30-20 Pharmaceutical Co., 2010-08-18 17,500 2011-08-25 4,762.81 assurance 16.9.30 Ltd Shenzhen Zhijun No Yes General 2011.12.14-2 Medicine Trading 2011-08-18 1,500 2011-12-14 177.75 assurance 012.11.13 Co., Ltd. Sinopharm Holding General 2012.5.15-20 No Yes 2012-03-16 10,000 2012-05-15 650 Guangxi Co., Ltd. assurance 13.5.15 Sinopharm Holding General 2012.5.16-20 No Yes 2012-03-16 10,000 2012-05-16 8,171.5 Guangxi Co., Ltd. assurance 13.5.16 Sinopharm Holding General 2012.8.17-20 No Yes 2012-03-16 12,000 2012-08-17 11,999.03 Guangxi Co., Ltd. assurance 13.6.28 Sinopharm Holding General 2012.9.25-20 No Yes 2012-08-18 3,000 2012-09-25 2,477.58 Guangxi Co., Ltd. assurance 13.6.28 Sinopharm Holding General 2012.3.26-20 No Yes 2012-03-16 4,000 2012-03-26 1,845.31 Guangxi Co., Ltd. assurance 13.3.26 Sinopharm Holding No Yes General 2012.4.28-20 Guangdong Yuexing 2012-03-16 3,500 2012-04-28 2,927.01 assurance 13.4.28 Co., Ltd. Sinopharm Holding No Yes General 2012.12.05-2 Guangdong Yuexing 2012-08-18 3,000 2012-12-05 2,004.95 assurance 013.12.04 Co., Ltd. Sinopharm Holding General 2012.4.28-20 No Yes 2012-03-16 32,500 2012-04-28 9,245.09 Guangzhou Co., Ltd. assurance 13.4.28 Sinopharm Holding General 2012.5.21-20 No Yes 2012-03-16 60,000 2012-05-21 14,510.27 Guangzhou Co., Ltd. assurance 13.4.24 Sinopharm Holding General 2012.1.18-20 No Yes 2011-08-18 15,000 2012-01-18 9,910.8 Guangzhou Co., Ltd. assurance 13.1.18 Sinopharm Holding General 2012.2.10-20 No Yes 2011-08-18 10,000 2012-02-10 3,920.04 Guangzhou Co., Ltd. assurance 13.2.9 Sinopharm Holding General 2012.10.16-2 No Yes 2012-03-16 35,000 2012-10-16 34,309.32 Guangzhou Co., Ltd. assurance 013.10.16 Sinopharm Holding General 2012.8.17-20 No Yes 2012-03-16 20,000 2012-08-17 19,885.39 Guangzhou Co., Ltd. assurance 13.6.28 Sinopharm Holding General 2012.9.25-20 No Yes 2012-08-18 10,000 2012-09-25 9,982.54 Guangzhou Co., Ltd. assurance 13.6.28 Sinopharm Holding General 2012.10.17-2 No Yes 2012-08-18 20,000 2012-10-17 19,817.78 Guangzhou Co., Ltd. assurance 013.10.17 Sinopharm Holding General 2012.11.9-20 No Yes 2012-03-16 5,000 2012-11-09 1,494.53 Guangzhou Co., Ltd. assurance 13.11.8 Sinopharm Holding General 2012.10.31-2 No Yes 2012-08-18 10,000 2012-10-31 0 Guangzhou Co., Ltd. assurance 013.10.31
54 China National Accord Medicines Corporation Ltd. Annual Report 2012
Guarantee of the Company for the subsidiaries Related Actual date of Complete Guarantee Announcem Name of the Guarantee happening Actual Guarantee Guarantee implement for related ent Company guaranteed limit (Date of signing guarantee limit type term ation or party (Yes disclosure agreement) not or no) date Suzhou Zhijun No Yes Wanqing General 2012.8.27-20 2012-08-18 8,000 2012-08-27 3,200 Pharmaceutical Co., assurance 13.8.26 Ltd Suzhou Zhijun No Yes Wanqing General 2010.8.1-201 2010-03-23 6,000 2010-08-01 3,000 Pharmaceutical Co., assurance 3.8.1 Ltd Suzhou Zhijun No Yes Wanqing General 2012.1.17-20 2011-08-18 5,000 2012-01-17 5,000 Pharmaceutical Co., assurance 13.1.5 Ltd Suzhou Zhijun No Yes Wanqing General 2012.9.18-20 2012-03-16 10,000 2012-09-18 8,200 Pharmaceutical Co., assurance 13.9.18 Ltd Suzhou Zhijun No Yes Wanqing General 2012.6.14-20 2012-03-16 5,000 2012-06-14 2,000 Pharmaceutical Co., assurance 13.6.14 Ltd Suzhou Zhijun No Yes Wanqing General 2012.7.25-20 2012-03-16 4,000 2012-07-25 300 Pharmaceutical Co., assurance 13.7.24 Ltd Sinopharm Holding No Yes General 2011.1.16-20 Guangxi Logistic Co., 2010-12-09 10,000 2011-01-17 6,690.85 assurance 14.1.16 Ltd. Total amount of approving Total amount of actual occurred guarantee for subsidiaries in report 313,000 guarantee for subsidiaries in 681,625.35 period (B1) report period (B2) Total amount of approved Total balance of actual guarantee for subsidiaries at the 386,000 guarantee for subsidiaries at 209,870.14 end of reporting period (B3) the end of reporting period (B4) Total amount of guarantee of the Company( total of two abovementioned guarantee) Total amount of actual occurred Total amount of approving 390,950 guarantee in report period 745,537.92 guarantee in report period (A1+B1) (A2+B2) Total amount of approved Total balance of actual guarantee at the end of report 471,950 guarantee at the end of report 229,258.23 period (A3+B3) period (A4+B4) The proportion of the total amount of actually guarantee in the net 129.09% assets of the Company(that is A4+ B4) Including: Amount of guarantee for shareholders, actual controller and its 0 related parties(C) The debts guarantee amount provided for the guaranteed parties 190,044.31 whose assets-liability ratio exceed 70% directly or indirectly(D) Proportion of total amount of guarantee in net assets of the 140,461.08 Company exceed 50%(E) Total amount of the aforesaid three guarantees(C+D+E) 330,505.39 Explanations on possibly bearing joint and several liquidating N/A responsibilities for undue guarantees Explanations on external guarantee against regulated procedures N/A
Explanation on guarantee with composite way
Nil
55 China National Accord Medicines Corporation Ltd. Annual Report 2012
VII. Appointment and non-reappointment (dismissal) of CPA
Accounting firm appointed
Name of domestic accounting firm PricewaterhouseCoopers Zhong Tian CPAs Limited Company Remuneration for domestic accounting firm 190 (10 thousand Yuan) Continuous life of auditing service for 3 domestic accounting firm Name of domestic CPA Chen Yuntao, Tang Zhenfeng Name of foreign accounting firm (if N/A applicable) Remuneration for foreign accounting firm 0 (10 thousand Yuan) (if applicable) Continuous life of auditing service for 0 foreign accounting firm (if applicable) Name of foreign CPA (if applicable) N/A
Whether re-appointed accounting firms in this period or not
□ Yes √ No
Appointment of internal control auditing accounting firm, financial consultant or sponsor
√ Yes □ No
The Company engaged Pricewaterhouse Coopers Zhongtian CPA as the audit body for internal control, and auditing charge for internal control and for the year totally amounting as RMB 1.9 million.
VIII. Explanation from the Board and Supervisory Committee (if applicable) for “Qualified Opinion” from the CPA
Nil
IX. Penalty and rectification
Type of Conclusion (if Disclosure Index of Name Type Reasons investigation applicable) date disclosure
Explanation on rectification
Nil
Particular about directors, supervisors, senior executives and shareholders with over 5% shares held suspected illegal dealings of the stock of the Company and earnings of illegal dealings taken back by the Company that disclosed
□Applicable √ Not applicable
X. Other material events
Nil.
XI. Significant events of the subsidiaries
Nil.
XII. Offering of corporate bonds
56 China National Accord Medicines Corporation Ltd. Annual Report 2012
Section VI. Changes in Shares and Particulars about Shareholders
I. Changes in Share Capital
Before the Change Increase/Decrease in the Change (+, -) After the Change Capitalizati New Proportion Bonus on of Proportion Amount shares Others Subtotal Amount (%) shares public (%) issued reserve I. Restricted shares 4,714 0% -1,179 -1,179 3,535 0% 3. Other domestic shares 4,714 0% -1,179 -1,179 3,535 0% Domestic natural 4,714 0% -1,179 -1,179 3,535 0% person’s shares II. Unrestricted shares 288,144,686 100% 1,179 1,179 288,145,865 100% 1. RMB Ordinary shares 233,259,086 80.95% 1,179 1,179 233,260,265 80.95% 2. Domestically listed 54,885,600 19.05% 54,885,600 19.05% foreign shares III. Total shares 288,149,400 100% 0 0 288,149,400 100%
Reasons for share changed
Share reduction of compliance from senior executives
Approval of share changed
□ 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
II. Securities issue and listing
1. All previous security issue in latest three years ended as reporting period
Stock and Offering price Number Issuance Termination of derivative Offering dated (or interest Listing date approval for number trading security rate) listing Stock Convertible corporate bonds, separably-traded convertible bond and corporate bond Warrant
Explanation on security offering in previous three years
The previous three years ended as the report period, the Company has no new shares issued and allotment as well as stock offering and listing.
2. Changes of total shares and shareholders structure as well as explanation on changes of assets and liability structure
Changes of the shares structures of the Company: Nil
3. Existing internal staff shares
Offering date of internal Offering price (RMB) Offering number (Share) staff shares
57 China National Accord Medicines Corporation Ltd. Annual Report 2012
III. Particulars about shareholder and actual controller of the Company
1. Amount of shareholders of the Company and particulars about shares holding Unit: share Total shareholders ended as the 5th trading day before Total shareholders in reporting period 11,339 13,292 annual report disclosed Particulars about shares held above 5% by shareholders Total Number of share Proportion Changes in Shares of Shares of Full name of Nature of shareholders pledged/frozen of shares report restricted unrestricted Shareholders shareholder at the end of State of held (%) period shares held shares held Amount report period share Sinopharm State-owned 38.33% 110,459,748 0 0 110,459,748 Holding Co., Ltd. Corporation ABC—Invesco Greatwall Domestic non Domestic state-owned 2.89% 8,348,918 Demand Growth II Corporation stock securities investment fund HTHK/CMG FSGUFP-CMG Foreign l FIRST STATE 2.44% 7,032,720 Corporation CHINA GROWTH FD VALUE Foreign l PARTNERS 2.36% 6,792,122 Corporation CLASSIC FUND CCB—China Advantage Domestic non Growth stock state-owned 2.08% 5,982,588 securities Corporation investment fund ICBC—UBS Core Domestic non Enterprise stock state-owned 2.06% 5,938,566 securities Corporation investment fund ABC—Invesco Greatwall Domestic Domestic non Demand Growth state-owned 2% 5,765,650 open-end Corporation securities investment fund CCB—China International Domestic non Alpha stock state-owned 1.96% 5,645,634 securities Corporation investment fund ABC－Greatwall Domestic non Anxin Return state-owned 1.95% 5,631,947 Mixed securities Corporation investment fund ICBC—Harvest Theme New Domestic non Power stock state-owned 1.91% 5,492,215 securities Corporation investment fund ABC—Invesco Greatwall Domestic Demand Growth II stock securities investment fund and ABC—Invesco Greatwall Domestic Demand Growth open-end securities investment fund has the same fund manager of Invesco Great Wall Fund Management Co., Ltd.; as an investment manager, VALUE PARTNERS is in charging of 19 funds and entrusted accounts in total, ended as Explanation on associated 31 December 2012, totally shares 14,407,515 are hold, and has the same holding as simple relationship among the aforesaid equity change report that disclosed. VALUE PARTNERS CLASSIC FUND, one of the top ten shareholders shareholders, is one of the VALUE PARTNERS; 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.
58 China National Accord Medicines Corporation Ltd. Annual Report 2012
Particular about top ten shareholders with un-restrict shares held Type of shares Shareholders’ name Unrestricted shares held at year-end (Note 4) Type Amount RMB common Sinopharm Holding Co., Ltd. 110,459,748 110,459,748 shares ABC—Invesco Greatwall Domestic RMB common Demand Growth II stock securities 8,348,918 8,348,918 shares investment fund Domestically HTHK/CMG FSGUFP-CMG FIRST 7,032,720 listed foreign 7,032,720 STATE CHINA GROWTH FD shares Domestically VALUE PARTNERS CLASSIC FUND 6,792,122 listed foreign 6,792,122 shares CCB—China Advantage Growth RMB common 5,982,588 5,982,588 stock securities investment fund shares ICBC—UBS Core Enterprise stock RMB common 5,938,566 5,938,566 securities investment fund shares ABC—Invesco Greatwall Domestic RMB common Demand Growth open-end securities 5,765,650 5,765,650 shares investment fund CCB—China International Alpha RMB common 5,645,634 5,645,634 stock securities investment fund shares ABC－Greatwall Anxin Return Mixed RMB common 5,631,947 5,631,947 securities investment fund shares ICBC—Harvest Theme New Power RMB common 5,492,215 5,492,215 stock securities investment fund shares ABC—Invesco Greatwall Domestic Demand Growth II stock securities investment fund and ABC—Invesco Greatwall Domestic Demand Growth open-end securities investment fund has the same fund manager of Invesco Great Wall Fund Management Co., Ltd.; as an investment Expiation on associated relationship manager, VALUE PARTNERS is in charging of 19 funds and entrusted accounts in total, ended as or consistent actors within the top 10 31 December 2012, totally shares 14,407,515 are hold, and has the same holding as simple un-restrict shareholders and between equity change report that disclosed. VALUE PARTNERS CLASSIC FUND, one of the top ten top 10 un-restrict shareholders and shareholders, is one of the VALUE PARTNERS; it is unknown that there exists no associated top 10 shareholders 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.
2. Particulars about controlling shareholder of the Company
Legal person
Legal Controlling person/person Date of Organization Register Main operation business shareholders in charge of foundation code capital the unit Industrial investment holding; management and assets reorganization entrusted by pharmaceutical enterprise; Chinese medicine, Chinese medicine tablets, chemical medicine preparations, chemical raw materials, antibiotics, biochemical drugs, biological products, narcotic drugs, psychotropic substances, toxic drugs for medical use (compatible with the business scope), vaccines wholesale, categories III: injection puncture instruments, hygienic materials & dressings, Sinopharm RMB medical polymer materials and products, Wei Yulin 2003-01-08 74618434-4 Holding Co., Ltd. 2,402,625,299 categories II: medical X-ray ancillary equipment and components; food marketing management (non-physical way), and domestic trade (other than special licensing), logistics and related consulting services, operating various types of goods and import and export of technology (not attached directory of import and export commodities), but excluded the import and export of goods and technology the State limits or prohibit the company. [In right of exequatur to run if refers to permission operation]
59 China National Accord Medicines Corporation Ltd. Annual Report 2012
Operation 1. Operation results: Sinopharm Holding Co., Ltd. is the core enterprise of China National Pharmaceutical Group, results, financial and led the list for the 7th straight year since 2005 in sales of China Pharmaceutical Commerce enterprise; and status, cash flow honor the first enterprise of “one hundred billion enterprise of medicine circulation business” in China in 2011; and future further more, in 2011 become the first medicine circulation enterprise of one hundred billion in sales in the Country development and topped the sales list of China Pharmaceutical Commerce enterprise in a long-term; stay ahead in market of the strategy biggest distributor for medicines and health care products and advance supply chain supplier. 2. Financial status: ended as 30 September 2012, Sinopharm Holding achieved RMB 100,987.96 million in operation earnings, net profit attributable to parent company amounting as RMB 1467.35 million 3. Cash flow: ended as 30 September 2012, net cash from operation activity of Sinopharm Holding amounting as RMB 669.19 million 4. Future development strategy: (1) deepening network layout, seize opportunity from the new medical innovation;；(2) continues to create a strong background of Sinopharm Holding, strengthening headquarters’ function for vary business, intensive study the collaboration between diversify business; (3) continues to promote sustainable development of vary business, create a profitability advantage for industry chain; (4) reinforced study on relevant new medical innovation, upgrading the coping capacity, seize opportunity to improve the integrity service ability; established a new mode of operational creation and service creation for retail business, promoted the mixed up development for retail industry With the held of medicine innovation, Sinopharm Holding will seize opportunity to upgrade its strategy target in along with adhering to three core strategy, operation-driving, capital-driving and innovation-driving, plans to be the No. 1 supplier of medicine and health in Asia with integrity service and international competitive owed Equity of other domestic/oversea listed company control by Ended as reporting period, 44.01% equity of China National Medicines Corporation Ltd. (stock code: 600511) were controlling held by Sinopharm Holding Co., Ltd. shareholder as well as stock-joint in report period
Changes of controlling shareholders in reporting period
□Applicable √ Not applicable
3. Particulars about actual controller of the Company
Legal person
Legal Actual controlling person/pers Date of Organization Register Main operation business shareholders on in charge foundation code capital of the unit Entrusted management and assets reorganization of pharmaceutical enterprises, consultant service of medicine industry investment project, holding exhibition and fair China National of surgical appliance, the wholesale of Chinese Pharmaceutical RMB She Lulin 1987-03-26 10000588-8 medicine, Chinese patent medicines, Chinese Group 8,971,480,000 medicine herb in pieces, chemical material Corporation medicine, a chemical agent, antibiotics, biochemical, biological(operation period runs in right of exequatur).
60 China National Accord Medicines Corporation Ltd. Annual Report 2012
Operation results, 1. Operation results: China National Pharmaceutical Group Corporation is the biggest and greatest financial status, comprehensive medicine health industry group managed directly by SASAC with the integrity industry chain cash flow and owed. Chian National is an enterprise mainly cored with the distribution, retails, research & production of future health-concerned products of preventive treatment and diagnosis nursing, and is the only medicine health industry development group in China with over 100 billion yuan strategy 2. Financial status: ended as 30 September 2012, China National realized operation income of RMB 121,201,135,600, total profit amounting as RMB 4,864,655,800 (unaudited number in consolidation statement) ; 3. Cash flow: ended as 30 September 2012, net cash flow arisng from operation activity for China National amounting as RMB-467,038,900; 4. Future development strategy: China National will develop the top five platform of the Group with all its strength, that is integration operation platform of modern logistic distribution, integration technological innovation platform of industry-university-research, integration platform of international operation, platform of medicine and health industry and integration platform of combination of efficient control and cooperation; creating five national networks—network of distribution and sales and delivery for medicines, network of medicine retail chain, network of narcotic delivery, network of marketing and cold chain delivery for biological products and network of consumable products of medical devices; promoting the all-round development of 11 business of the Group – medicine modern logistic distribution, medicine retails, biological products, chemical pharmaceutical, modern Chinese medicine, diagnostic reagent & chemical reagent, scientific apparatus & medicine devices, medical research institutes & engineering design, medicine international operation & oversea industrial, medicine exhibition & medial and medicine health industry, established an innovation enterprise with competitive core of medicine health industry. China National aims at establishing a great medicine health industry group in “twelve 5-year plan”, covers all industry chain of medicine with industrial-leading and international competitive owed, becoming the first medicine health industry in China in Global 500 Name Name of listed company Shares held ended as 31 Ratio with shares held December 2012 (10 thousand shares)
China National Pharmaceutical Group Wuhan Jianmin 132.35 0.86% Corporation China National Pharmaceutical Group Sinopharm Holding 272.84 0.11% Corporation Sinopharm Holding Industrial Investment Sinopharm Holding 157,155.60 65.41% Co., Ltd.
Equity of Sinopharm Holding Co., Ltd. Sinopharm 21,070.15 44.01% domestic/oversea listed company control by actual Sinopharm Holding Co., Ltd. Sinopharm Accord 11,045.97 38.33% controller in report period China National Medicines Corp. Ltd. JLPC 321.93 2.12%
Shanghai Institute of Pharmaceutical Modern Pharmaceutical 11,975.63 41.62% Industry Chinese Medicine Industry Co., Ltd. Hengrui Medicine 6585.57 5.34%
Chinese Medicine Industry Co., Ltd. ST Tianrun 890.61 7.52%
China National Corp. of Traditional & Wuhan Jianmin 276.44 1.80% Herbal Medicine China National Corp. of Traditional & UGC 810.45 3.63% Herbal Medicine
Changes of actual controllers in reporting period
Property right and controlling relationship between the actual controller and the Company is as follow:
61 China National Accord Medicines Corporation Ltd. Annual Report 2012
The State-owned Assets Supervision & Administration Commission of the State Council
100%
National Council for Social China National Pharmaceutical Security Fund &public Shanghai Fosun Pharmaceutical Group Corporation shareholder (Group) Co., Ltd.
100%
Shanghai Qishen Investment Management Co., Ltd.
49% 51% 34.37%
Sinopharm Industry
Investment Co., Ltd. 0.11%
65.52%
Sinopharm Holding Co., Ltd.
38.33%
China National Accord Medicines Corporation Ltd.
Actual controller controlling the Company by entrust or other assets management
□Applicable √Not applicable
4. Particulars about other legal person shareholders with over 10% shares held
Not applicable
IV. Increase of shares held plan propose or implemented by shareholders of the Company and concerted action people in reporting period
Not applicable
Other explanation
62 China National Accord Medicines Corporation Ltd. Annual Report 2012
Section VII. Particulars about Directors, Supervisors and Senior Executives and Employees
I. Changes of shares held by directors, supervisors and senior executives
Increasing Decreasing Shares Shares held Start dated shares shares Working End date of held at at Title Sex Age of office held in this held in this Name status office term period-begi period-end term period period n (Share) (Share) (Share) (Share) Secretary Chen Currently in 2014-04-2 of the M 45 2011-04-28 4,714 0 1,179 3,535 Changbin office 8 Board Total ------4,714 0 1,179 3,535
II. Post-holding
Major working experience of directors, supervisors and senior executive at the present in latest five years
1. Members of the Board
Chairman—Mr.WeiYulin, MBA, senior economist and Licensed Pharmacist. He served as the follow post in latest 5 years: standing deputy GM of Sinopharm Holding Co., Ltd. from March 2006 to December 2009, moreover, he served as Chairman respectively of Sinopharm Holding Shenyang Co., Ltd, Sinopharm Holding Outer Gaoqiao Co., Ltd, Sinopharm Holding Shanxi Co., Ltd, Sinopharm Holding South West Medicine Co., Ltd and Sinopharm Holding Hunan Co., Ltd; served as Director of China National Accord Medicines Corporation Ltd, Chairman of Sinopharm Holding Zhejiang Co., Ltd, Sinopharm Holding Henan Co., Ltd and China National Medicine Logistic Co., Ltd respectively and Director of Sinopharm Holding Xinjiang Medicines Co., Ltd.; he took post of Chairman of Sinopharm Holding Beijing Huahong Co., Ltd. from August 2008 to November 2011; serves as President and Secretary of Party Committee of Sinopharm Holding Co., Ltd. since December 2009; served as Chairman of Beijing Tianxingpuxin Bio-Med Co., Ltd. from April 2010 to November 2011; Chairman of Yujia Medical Consultancy Co., Ltd. from September 2010 to November 2011; serves as Chairman of Sinopharm Holding H.K. Co., Ltd since January 2011; serves Chairman of Sinopharm Le-Ren-Tang Medicine Co., Ltd. since April 2011; serves as Chairman of Sinopharm Chemical Reagents Co., Ltd. since December 2011 and Chairman of the 6th Session of the Board of the Company since October 2011. Serves as Director of Sinopharm Holding GuoDa Pharmacy Co., Ltd. since August 2012.
Director——Mr. Shi Jinming, EMBA of Zhongshan University. He served as the follow post in latest 5 years: GM of the Company and Chairman of Sinopharm Holding Guangzhou Branch from December 2006 to December 2008; serves deputy President of Sinopharm Holding Co., Ltd. since January 2009, and served as Chairman of Sinopharm Holding South West Medicine Co., Ltd and Sinopharm Holding Hubei Co., Ltd respectively; and respectively served as Director of Sinopharm Holding H.K. Co., Ltd. as well as Chairman of Sinopharm Holding Hunan Co., Ltd, Sinopharm Holding Yunnan Co., Ltd, Sinopharm Holding Hainan Co., Ltd, Sinopharm Holding Jiangxi Co., Ltd, Sinopharm Holding Guizhou Co., Ltd respectively and served as executive Director of Sinopharm Sub Marketing Center Co., Ltd.; he served as Chairman of Sinopharm Holding Chongqing Co., Ltd. ; serves as Chairman of Sinopharm A-Think Pharmaceutical Co., Ltd. from June 2010 to November 2011; Chairman of Sinopharm Holding Fuzhou Co., Ltd. from October 2009 to August 2012 and serves as Director of Sinopharm Holding Fujian Co., Ltd., and Chairman of the Company from January 2009 to November 2011; serves as Director of 6th Session of the Board for the Company since November 2011.
63 China National Accord Medicines Corporation Ltd. Annual Report 2012
Director——Mr. Ma Wanjun, EMBA. He served as the follow post in latest 5 years: GM of Shanghai Sinopharm Gaoqiao Medicine Co., Ltd. from October 2006 to December 2009; deputy GM of Transport Center of Sinopharm Holding Co., Ltd. from December 2009 to September 2010; Director of Sinopharm Holding Shenyang Co., Ltd from January 2010 to November 2011; Chairman of Guangdong Dong Fang Uptodate & Special Medicines Co., Ltd. since March 2010; Director of Sinopharm Holding Suzhou Co., Ltd from May 2010 to November 2011; Chairman of Sinopharm Holding Jiangsu Co., Ltd from May 2010 to November 2011; Director of Wenzhou Biomedicin-Appliances Supplies Co., Ltd. from July 2010 to November 2011; deputy President of Sinopharm Holding Co., Ltd. since September 2010; Chairman of Sinopharm Holding Henan Co., Ltd from October 2010 to January 2013; Director of Sinopharm Holding Changzhou Co., Ltd from December 2010 to November 2011; Director of Shanghai Bionuo Enterprise Management Co., Ltd. from December 2010 to November 2011; Chief laws advisor of Sinopharm Holding Co., Ltd. since May 2011; Director of Sinopharm Le-Ren-Tang Medicine Co., Ltd. since April 2011; Director of China National Shanxi Co., Ltd. from April 2011 to September 2011; Director of China National Medicines Corporation Ltd since October 2011; Director of Yujia Medicine Service Co., Ltd. since November 2011; Chairman of Sinopharm Health Industry (Shanghai) Co., Ltd. since November 2011 and Director of 6th Session of the Board for the Company since March 2011; and serves as Chairman of Sinopharm Holding Health Development (Shanghai ) Co., ltd since May 2012; Chairman of Sinopharm Holding Fujian Co., Ltd. and Sinopharm Holding Fuzhou Co., Ltd. respectively since August 2012 as well as executive Director of Sinopharm Holding Henan Co., Ltd. since January 2013.
Director – Mr. Jiang Xiuchang, a university background, senior economists and senior accountant. He served as the follow post in latest 5 years: CFO of China National Medicines Corp. Ltd. from December 2006 to May 2010; CFO of Sinopharm Holding Co., Ltd. since May of 2010; Supervisor of Sinopharm Holding Guoda Pharmacy Co., Ltd. since June 2010; Supervisor of Yujia Medicine Co., Ltd. since September 2010; Director of China National Medicines Corp. Ltd since February 2011; Director of Sinopharm Le-Ren-Tang Medicine Co., Ltd since April 2011; Director of Sinopharm Holding H.K. Co., Ltd since November 2011; Director of China National Finance Co., Ltd since November 2011; Director of China National Medicines Shanxi Co., Ltd. from April 2011 to September 2011; Supervisor of Sinopharm Sub Marketing Center Co., Ltd. since April 2011; Supervisor of Sinopharm Holding Beijing Co., Ltd. since November 2011 and Director of 6th Session of the Board for the Company since March of 2011.
Director--- Ms. Cui Yiling, MBA, an engineer. She served as the follow post in latest 5 years: Chairman of Sino-American Shanghai Squibb Pharmaceuticals Ltd. from October 2005 to December 2008; GM of Business Division of Shanghai Parma Group Antibiotic , GM of Shanghai Asia Pioneer pharmacy Co., Ltd. and Chairman of Shanghai Xinya Pharmacy Co., Ltd. from December 2008 to December 2010; Chairman of HSDRUG from December 2010 to March 2011; Chief of Industrial Development and Management Center of Sinopharm Holding Co., Ltd. since March 2011; Chairman of Sinopharm A-Think Pharmaceutical Co., Ltd. since October 2011; Chairman of Xingsha Pharmacy (Xiamen) Co., Ltd. since December 2011 and serves as Chairman of 6th Session of Supervisory Committee for the Company from October 2011 to August 2012; Director of 6th session of the Board since August 2012 and Chariman of China National Sanyi Pharmaceutical (Wuhu) Co., Ltd. since July 2012
Director—Mr.Yan Zhigang, MBA, senior engineers and Licensed Pharmacist. He served as the follow post in latest 5 years: Deputy GM of the Company from January 2005 to December 2008; Director of Sichuan Industrial Institute of Antibiotics since October 2007. GM of the Company since December 2008; Director of the 5th and 6th Session of the Board for the Company since February 2009.
I
64 China National Accord Medicines Corporation Ltd. Annual Report 2012 ndependent Director --- Mr. He Zhiyi, Doctor Degree of Fudan University, Post doctorate of Beijing University, Professor and PH.D adviser. Currently, he works as the vice Dean of Antai College of Economics& Business Administration of SJTU; Worked as the professor, PH.D adviser and Dean Assistant of Guanghua Administration College of Beijing University and Office Director of Administration Case Research of Beijing University before; He use to took advance study and visiting scholar in Sweden IMD, GM school of Management and Kellogg school of Management, Northwestern University of USA. He also worked as the deputy dean of Development& Research of Poverty-zone of Beijing University, executive director of Chinese Enterprise Research Center of Beijing University, executive editor of Business Comments of Beijing University magazine, vice-chairman and secretary of the Chinese Federation for Corporate Social Responsibility, vice-chairman and secretary of CNEMA and Director of IFSAM etc. Mr. He Zhiyi owes rich experience, and also served as position in government, GM in State-owned enterprises, Chairman of joint-stock enterprises, President of Beijing University Xiaochang Business Co., Ltd and Director of Office of Industrial Management, funded by school. He serves as Independent Director of 5th and 6th Session of the Board for the Company since June 2010.
Independent Director --- Mr.Xiong Chuxiong, a doctor degree, professor and a CPA. He graduated from Accounting Dept. of Southwestern University of Finance & Economics and Accounting Dept. of Xiamen University successively. After obtained the PhD. Economics in Xiamen University in 1992, he was assigned to teach in accounting majors of Shenzhen University. He used to be a visiting scholar in University of Manchester, U.K. currently; he works as professor in Shenzhen University and vice chairman of Shenzhen Accounting Association. He published many works and articles successively and shows certain influence in China due to his academic achievements. He serves as Independent Director of the 6th Session of the Board for the Company since April 2011.
Independent Director—Mr. Xiao Shengfang, attorney, a postgraduate of Civil & Commercial Law of Renmin University of China and MBA of Jinan University. Currently serves as director of Guangdong Sino-Win Law Firm, and served social position of: Director of Guangdong Lawyers Association, Standing director of Guangzhou Lawyers Association, legal consultant of People’s Government of Guangzhou City; member of lawyers advisory group of organizing committee of 16th Asian Games, Guangzhou, vice director of professional committee of Labor Law & Social Security Law, China Lawyers Association. Lawyer Xiao Shengfang gains a solid legal theory and rich experience in aspect of Corporate Law, Civil & Commercial Law as well as Labor Law. He serves as Independent Director of 6th Session of the Board for the Company since April 2011.
2. Members of supervisors:
Chairman of Supervisory Committee--- Mr. Feng Yifeng, University background, a CPA and ACCA. He served as auditor in audit dept. of Arthur Andersen Huaqiang CPA from August 2001 to June 2002; a senior manager of PWC Zhongtian CPA from July 2002 to June 2010; and he serves as director of financial manage dept. of Sinopharm Holding Co., Ltd. and Director of Sinopharm Holding Fujian Co., Ltd., subordinate of Sinopharm Holding, Sinopharm Holding A-Think Pharmaceutical Co., ltd. and Sinopharm Holding Hainan Co., Ltd.; serves as supervisor of Sinopharm Chemical Reagent Co., Ltd. , Sinopharm Holding Henan Co., Ltd., Sinopharm Holding Changzhou Co., Ltd., Sinopharm Holding Wuxi Co., Ltd., Sinopharm Holding Gansu Co., Ltd. and China National Sanyi Pharmaceutical (Wuhu) Co., Ltd. He serves as chairman of supervisory committee of the Company since August 2012. Supervisor——Ms. Guan Xiaohui, Master of Accounting, Certified Public Accountant and Economist. She served as the follow post in latest 5 years: vice CFO of Shanghai Fosun Pharmaceutical (Group) Co., Ltd. since November 2004; serves as supervisor of 5th and 6th Session of Supervisory Committee of the Company since September 2007.
Employee Supervisor——Mr. Wang Huaiqin, 3-years regular college graduate, political commissar, assistant accountant. He served as the follow post in latest 5 years: Chairman of First Union since September 2005 to March 2009; member of Party Committee, deputy secretary of discipline & inspection committee and chairman of Union of the Company since September 2008; serves as employee supervisor of 5th and 6th Session of Supervisory Committee of the Company since September 2007.
65 China National Accord Medicines Corporation Ltd. Annual Report 2012
3. Senior executives:
General Manager——Mr. Yan Zhigang, referring to the aforesaid introduction of members of directors for details.
Deputy General Manger——Mr. Lin Zhaoxiong, senior MBA, Pharmacist-in-charge. He began to work in Guangzhou Medicine Industry Research Institute in July 1990; worked in Hangzhou MSD Pharmaceutical Co., Ltd from Jan. 1993 to Oct. 1997; Guangdong Huajian Pharmaceutical Co., Ltd from Nov. 1997 to Dec. 1998; worked in Sinopharm Holding Guangzhou Co., Ltd. with successively taking the posts of deputy general manger and manager of Pharmacy Department, and manger of Pharmaceutical Company and majordomo of Operation Management Department from Jan. 1999 to Dec. 2003; deputy general manager of Sinopharm Holding Guangzhou Co., Ltd from Jan. 2004 to Dec. 2006; serves as GM of Sinopharm Holding Guangzhou Co., Ltd. since December 2006 and deputy GM of the Company since December 2008.
Deputy General Manger——Mr. Tan Guoshu, on-study postgraduate, assistant economist and political commissar, ever took the post of deputy director of Gongxiaoshe, Dalonghua, Fengshun County, manager of affiliated corporation, deputy GM of Labor Service Company, Labor Bureau, Fengshun, GM of Labor Service Company, Boned Zone, Shatoujiao District, Shenzhen, deputy GM of Shenzhen Best Machinery Electronic Company, organization charger of Labor Service Company of Shenzhen Food Headquarter, and so on; from Apr. 1996 took the post of deputy director, minister of personnel minister and GM associate, etc. of supervision administration office of Shenzhen Medicine Produce & Supply Headquarter, and concurrently GM of Shenzhen Xiannuo Medicine Company, manager of Shatoujiao Medicine Company and manager of Nanshan Medicine Company, etc. during that time; held the position of minister of talents resources department of the Company and later concurrently vice secretary of DSC of the Company from Jan. 2001, and deputy GM and later concurrently vice secretary of Party Committee of the Company from Jun. 2003.
Deputy General Manger——Ms. Liu Jun, college degree, Economist, began to work in 1974; ever worked in China National Pharmaceutical Group Guangzhou Corporation with successively taking the posts of deputy dean and dean of Manager Office, deputy general manager, vice party secretary, general party secretary and chairman of Labor Union from June 1976 till now; from Oct. 2003 to Dec. 2008, she took the posts of general party secretary, deputy general manager and chairman of Labor Union of Sinopharm Holding Guangzhou Co., Ltd; and serves as deputy GM of the Company since December 2008.
Deputy General Manger——Mr. Lin Min, senior MBA, Pharmaceutical Engineer, Licensed Pharmacist, worked in GuangDong Medical College from July 1986 to April 1992; took the posts of marketing minister, assistant to general manager of Guangdong Global Pharmaceutical Company Ltd. from April 1992 to Dec. 1997; deputy factory director of Manufacturing Factory of Guangdong Pharmaceutical University from Jan. 1998 to Dec. 2000; ever worked in China National Pharmaceutical Group Guangzhou Corporation with successively taking the posts of assistant to manager, deputy general manger of Pharmacy Department and deputy general manger of purchasing in Pharmaceutical Company from Jan. 2001 to Nov. 2003; supervisor of Guangzhou pharmacy sales of Sinopharm Holding Guangzhou Co., Ltd from Nov. 2003 to Jan. 2005; general manager of Sinopharm Holding Liuzhou Co., Ltd from March 2006 to Nov. 2007; from Jan. 2005 to Dec. 2008, deputy general manager of Sinopharm Holding Guangzhou Co., Ltd; serves as deputy GM of the Company since December 2008.
Deputy General Manger——Mr. Lin Xinyang, MBA, Licensed Pharmacist, from Jan. 1996 took the turns of deputy GM of Nanfang Pharm. Co., deputy GM of China Medicine Group (Guangzhou) Company Yuexing Company, general supervisor of PD of Sinopharm Holding Guangzhou Company; took the post of deputy GM of Sinopharm Holding Guangzhou Company from Jan. to Dec. 2004; serves as deputy GM of the Company since January 2005.
66 China National Accord Medicines Corporation Ltd. Annual Report 2012
Deputy General Manger——Mr. Deng Baojun, an MBA, senior engineer and Licensed Pharmacist, worked as the doctor in Hospital of Personnel of 8-Bureau of Water-Electricity from July 1983 to July 1988; worked as the development personnel in Shenzhen Pharmaceutical Plant from September 1991 to May 1996; took the position of vice minister and minister of the market department and sales department respectively in Shenzhen Pharmaceutical Plant from May 1996 to September 2000; took the position of assistant of factory manager and sales majordomo in Shenzhen Pharmaceutical from September 2000 to August 2003; took the position of deputy general manager of Shenzhen Zhijun Pharmaceutical Co., Ltd. from August 2003 to December 2008; took the position as General Manager of Shenzhen Zhijun Pharmaceutical Co., Ltd. from December 2008 till now; took the position of general manager of pharmaceutical business department of Shenzhen Accord Pharmaceutical Co., Ltd. since from December 2010.
Chief Financial Officer——Mr. Wei Pingxiao, MBA, an accountant, took the turns of Financial department of State-owned Beijing Electronic Tube Plant, Modern Electronic Shenzhen Industrial Company, China Electronic Industrial Headquarter from Aug. 1985; and took the turns of deputy section chief of financial department of China Electronic Information Industry Group, financial director of AMOI, section chief of planning financial department of China Electronic Finance Leasing Company, Deputy GM of AMOI Beijing branch, financial charger of AMOI and director of its subsidiary from Apr. 1993; and hold the post of CFO of the Company since Dec. 2004.
Secretary of the Board——Mr. Chen Changbing, Master Degree. He served as secretary of the Board of 3rd and 4th Session of the Board for the Company since December 2000; and serves as Chief of Planning Investment Management Dept. and Secretary of the Board of 5th and 6th Session of the Board for the Company since September 2007.
Post-holding in shareholder’s unit
√Applicable □Not applicable
Weather receiving Start date of End date of Name Name of shareholder’s units Position remuneration from office term office term shareholder’s units President Wei Yulin Sinopharm Holding Co., Ltd. Executive director 2009-12-01 2014-09- 20 Yes CPC secretary Shi Jinming Sinopharm Holding Co., Ltd. Deputy president 2009-01-01 2014-09-20 Yes Deputy president Yes Ma Wanjun Sinopharm Holding Co., Ltd. general Counsel 2011-05-01 2014-09-20 Secretary of the Board Jiang Xiuchang Sinopharm Holding Co., Ltd. CFO 2010-06-01 2014- 09-20 Yes Assistant president Yes director of Industry Cui Yiling Sinopharm Holding Co., Ltd. 2011-03-01 2014-09-20 development&management center Director of financial Yes Feng Yifeng Sinopharm Holding Co., Ltd. 2010-06-01 2014-12-31 management dept.
67 China National Accord Medicines Corporation Ltd. Annual Report 2012
Post-holding in other unit
√Applicable □Not applicable
Start date of End date of office Weather receiving Name Name of shareholder’s unit Position office term term remuneration from other units(Yes/No) Sinopharm Holding Hong Kong Co., Ltd. Chairman Jan. 2011 Sinopharm Chemical Reagent Co., Ltd. Chairman Dec. 2011 April Wei Yulin Sinopharm Le Ren Tang Medicine Co., Ltd No Chairman 2011 Sinopharm Holding GuoDa Pharmacy Co., Director August 2012 Ltd. Sinopharm Holding South-West Chairman Feb. 2009 Pharmaceutical Co., ltd. Chairman Feb. 2009 Sinopharm Holding Hubei Co., Ltd. Director Jan. 2009 Sinopharm Holding Fujian Co., Ltd. Director Feb. 2009 Aug. 2012 Sinopharm Holding Hong Kong Co., Ltd. Chairman Feb. 2009 Sinopharm Hunan Co., Ltd. Chairman Nov. 2009 Shi Jinming Sinopharm Holding Yunnan Co., Ltd. Chairman No Dec. 2009 Aug. 2012 Sinopharm Holding Fuzhou Co., Ltd. Chairman Dec. 2009 Sinopharm Holding Hainan Co., Ltd. Chairman March 2010 Sinopharm Holding Jiangxi Co., Ltd. Chairman March 2010 Sinopharm Holding Guizhou Co., Ltd. Executive May 2010 Sinopharm Sub Marketing Center Co., Ltd. Director Nov. 2011 Sinopharm Holding Chongqing Co., Ltd. Chairman Guangdong Dong Fang Updated & Special Medicine Co., ltd. Chairman Sinopharm Holding Henan Co., Ltd. Chairman March 2010 Sinopharm Holding Henan Co., Ltd. Executive Oct. 2010 Jan. 2013 Sinopharm Holding Changzhou Co., Ltd. Director Jan. 2013 Shanghai Bionuo Enterprise Management Director Dec. 2010 Nov. 2011 Co., ltd. Director Dec. 2010 April Nov. 2011 Sinopharm Le Ren Tang Medicine Co., Ltd Director 2011 April 2011 Sep.2011 Ma Wanjun China National Shan’xi Co., ltd. No Director Oct. 2011 China National Medicines Corporation Ltd Director Nov. 2011 Yujia Medical Service Co., ltd. Director Nov. 2011 Sinopharm Health Industry (Shanghai) Co., Chairman May 2012 ltd. Chairman Aug. 2012 Sinopharm Holding Health Development Chairman Aug. 2012 (Shanghai) Co., ltd. Chairman Sinopharm Holding Fujian Co., Ltd. Sinopharm Holding Fuzhou Co., Ltd. Sinopharm Holding GuoDa Pharmacy Co., Supervisor June 2010 Ltd. Supervisor Sep. 2010 Yujia Medical Service Co., ltd. Director Feb. 2011 China National Medicines Corporation Ltd Director April 2011 Nov. Sinopharm Le Ren Tang Medicine Co., Ltd Jiang Xiuchang Director 2011 No Sinopharm Holding Hong Kong Co., Ltd Director Nov. 2011 China National Financial Co., Ltd. Director April 2011 April Sep. 2011 China National Shan’xi Co., ltd. Supervisor 2011 Sinopharm Sub Marketing Center Co., Ltd. Supervisor Nov. 2011 Sinopharm Beijing Co., Ltd. Sinopharm A-Think Pharmaceutical Co., Ltd. Chairman Oct. 2011 Sinopharm Holding Xingsha Pharmaceutical Cui Yiling Chairman Dec. 2011 No (Xiamen) Co., ltd Chairman July 2012 China National Sanyi Pharmaceutical (Wuhu) Co., Ltd Sinopharm Holding Fujian Co., Ltd. Sinopharm A-Think Pharmaceutical Co., Director April 2012 May Ltd. Director 2012 Sinopharm Holding Hainan Co., Ltd. Director May 2012 Sinopharm Chemical Reagent Co., Ltd. Supervisor May 2012 Sinopharm Holding Henan Co., Ltd. Supervisor June 2012 Feng Yifeng Sinopharm Holding Changzhou Co., Ltd. No Supervisor Dec. 2010 Sinopharm Holding Wuxi Co., Ltd. Supervisor Dec. 2012 Sinopharm Holding Gansu Co., Ltd. Supervisor May 2012 Sinopharm Holding Health Development Supervisor May 2012 (Shanghai) Co., ltd. Supervisor July 2012 China National Sanyi Pharmaceutical (Wuhu) Co., Ltd
68 China National Accord Medicines Corporation Ltd. Annual Report 2012
III. Remuneration for directors, supervisors and senior executives
Decision-making procedures, recognition basis and payment for directors, supervisors and senior executives (I) Remuneration decision procedure of directors, supervisors, senior management: The Company implemented the annual salary system for senior executives based on the 2012 annual performance appraisal (scheme) on management staff, paid annual salary remuneration according to the appraisal results.
Remuneration and appraisal committee of the company's board of directors is responsible for the formulation and examination of salary plan and program as well as formulation and examination of salary plan and assessment standards of directors (not including the independent directors), supervisors and senior executives. They also evaluate the performance assessment of directors, supervisors and senior officers in accordance with the assessment criteria, compensation scheme.
(II) Remuneration determining basis of the directors, supervisors, senior management:
The main principles of making standard of compensation are: (1) the company's overall business and the profit level; (2) the overall salary level and dynamic index over past years; (3) difference in position and duty; (4) relative importance and risks of position; (5) related post salary level in the same industry; (6) individual professional ability.
(III) Actual payment of board of directors, supervisors and senior management:
Executives get monthly basic salary, and annual salary after the issuance of annual examination. Remuneration for directors, supervisors and senior executives in reporting period
Total remuneration Remuneration Post-holding Name Title Sex Age obtained from the actually obtained status Company at period-end Wei Yulin Chairman M 55 Currently in office 0.00 Shi Jinming Director M 45 Currently in office 0.00 Wu Ai’ming Director M 43 Office leaving 0.00 Ma Wanjun Director M 43 Currently in office 0.00 Jiang Xiuchang Director M 49 Currently in office 0.00 Cui Yiling Director F 47 Currently in office 0.00 Yan Zhigang GM M 53 Currently in office 1,565,500 1,565,500 Independent M He Zhiyi 57 Currently in office 80,000 80,000 director Independent M Xiong Chuxiong 57 Currently in office 80,000 80,000 director Independent M Xiao Shengfang 43 Currently in office 80,000 80,000 director Chairman of M Feng Yifeng supervisory 34 Currently in office 0.00 0.00 committee Guan Xiaohui Supervisor F 42 Currently in office 0.00 0.00 Wang Huiqin Supervisor M 55 Currently in office 430,100 430,100 Lin Zhaoxiong Deputy GM M 45 Currently in office 1,277,000 1,277,000 Tan Guoshu Deputy GM M 58 Currently in office 1,017,700 1,017,700
Liu Jun Deputy GM F 55 Office leaving 1,017,700 1,017,700
Lin Min Deputy GM M 48 Currently in office 1,097,900 1,097,900 Lin Xinyang Deputy GM M 48 Currently in office 1,017,700 1,017,700 Deng Baojun Deputy GM M 51 Currently in office 1,277,000 1,277,000 Wei Pingxiao CFO M 49 Currently in office 1,017,700 1,017,700 Secretary of the M Chen Changbin 45 Currently in office 495,400 495,400 Board Total ------10,453,700 10,453,700
Delegated equity incentive for directors, supervisors and senior executives in reporting period
□ Applicable √ Not applicable
69 China National Accord Medicines Corporation Ltd. Annual Report 2012
IV. Post-leaving and dismissals for directors, supervisors and senior executives
Name Title Type Date Reasons Wu Ai’ming Director Demission 2012-08-17 Demission Demission Deputy GM Ms. Liu Jun has retired for aged qualified, she’s Liu Jun Deputy GM 2012-12-31 office ended as 31 December 2012
V. Changes of core technology team or key technicians in reporting period (not including directors, supervisors and senior executives)
Nil.
VI. Particulars of workforce
The Company has 4174 practitiioners totally in 2012, and 520 people labordispatching from subordinate two enteprise (Zhijun Pharmaceutical, Guangdong Logistic), total working hours amounting to 1.1 million, laboring remuneration paid amounting as RMB 24.26 million in total, there are 587 people in retired who enjoy the partial expenses paid from the Company
Professional structure for year of 2012; Category Number Ratio Production personnel 1128 27.04% Sales persons 1192 28.58% Logistic persons 591 14.17% Technical personnel 95 2.28% Financing personnel 202 4.84% Administrative and 963 23.09% other personnel Total 4171 100%
70 China National Accord Medicines Corporation Ltd. Annual Report 2012
Education background for year of 2012:
Education Number Ratio Master degree or 126 3.02% above Bachelor degree 1180 28.29% 3-years regular 1035 24.81% college graduate Polytechnic school 706 16.93% graduate Senior high school 1124 26.95% graduate or below Total 4171 100%
The Company provides the perfect salary and welfare for employees. Salary level closely linked with organization (total amount of artificial, compensation strategy, position value), employees (capacity development, performance results), market (market level, the competition for talent). Each year we regulate remuneration of those capable staff through duty carding, job evaluation, salary interval mapping, annual assessment on performance and ability. At the same time, bonus and performance are closely linked, thus achieve a win-win interests and benefits between the Company and employees.
In 2012, the Company continued to deepen propaganda of annuity plan, further to implement this welfare policy in place, to repeatedly explain for participates meeting the conditions, to be on new application procedures in time, to take the initiative to assist with retirement payment procedures. So that employees receive timely retirement security. As the end of 2012, staff eligible to participate in the enterprise annuity plan reached more than 20%.
The Company and subordinate enterprises attach great importance on staff training and development according to different characteristics and training needs of the management, the core business backbone, and front-line staff. We established course series for new management, marketing, professional technology, new recruits and targeted training with hierarchical, classification, sub-regional. As the end of 2012, the cost of training investment reached about 2,680,000 Yuan. We regularly held all kinds of general quality, professional quality, management quality training, job skills training and continuing education of occupation qualification. A total of 32,037 people received training and continuing education, covering the top, grass-roots management personnel, professional and technical personnel and workers, 17 hours per person.
71 China National Accord Medicines Corporation Ltd. Annual Report 2012
Section VIII. Administrative Structure
I. Basic situation of corporate governance
During the reporting period, the company strengthened the system construction, improved governance structure, established effective internal management system, and regulated the operations of the company strictly in accordance with the "Company Law", "Securities Law" and related normative documents about listing corporation governance issued by China Securities Regulatory Commission and Shenzhen Stock Exchange.
As for governance, we made the "Articles of Association" and made governance rules for general meeting of shareholders, board of directors, board of supervisors and others according to the articles of association, formulated working system for strategy committee, nomination committee, risk control and audit committee, remuneration and appraisal committee, general manager, Secretary of the board of directors, established management and control system for information disclosure, related transaction, raise funds, social responsibilities fulfillment, insider information and insider control, investor relations management, accounting firms hiring, preventing big shareholders and related parties from occupying the funds of the listing Corporation. During the reporting period we added the “Emergency Management System of Emergency News Disposal" according to the regulatory requirements and corporate governance needs. And we revised and improved the company's articles of association, rule of board of directors meetings and information disclosure system. The systems have been disclosed in the Juchao website.
1. Shareholders and shareholders' general meeting:
The company held a general meeting of shareholders in strict accordance with the "Opinions on Normalizing the General Meeting of Shareholders" promulgated by China Securities Regulatory Commission. An attorney presented and witnessed: the company and shareholders maintained effective communication to ensure that all shareholders fully exercise their rights of equality.
2. Relationship between the controlling shareholders and the company:
The business, personnel, assets, institutions and finance are separately operated between the Company and the controlling shareholder. The Company has independent and complete service system and independent operating capability while the controlling shareholders strictly regulate their own behavior, being as legal investors. There is no situation on controlling shareholder and its related parties of occupying the funds or assets of the Company.
3. The Board of Directors and Directors:
The composition of the board of directors was in accordance with the regulations and the actual requirements of the Company. Directors have professional knowledge structure, and members have knowledge, skills and qualities necessary for performing their duties. They can seriously, faithfully, diligently perform the "Articles of Association". Convening and holding of board of directors were processed in strict accordance with relevant provisions of the “Articles of Association”. Board of Directors set up four specialized committees such as strategy, risk control and audit, nomination, remuneration and appraisal committee. They performed their functions properly.
4. The supervisors and the board of supervisors:
The number and composition of the board of supervisors is legal and compliance. It supervise corporate finance and legitimacy when directors and senior management personnel perform their duties, thus safeguard the legitimate rights and interests of the Company and shareholders; convening and holding of the board of supervisors was in strict accordance with the "Articles of Association".
5. The performance evaluation and incentive and restraint mechanisms:
The standards and procedures of performance evaluation for directors, supervisors and senior management personnel have been established in a fair and transparent system. Appointment of management personnel is open, transparent, in accordance with laws and regulations.
72 China National Accord Medicines Corporation Ltd. Annual Report 2012
6. Related stakeholders:
The Companies fully respected and protected the legitimate rights and interests of banks and other creditors, employees, consumers and other stakeholders. We actively cooperated with stakeholders, jointly promoted the sustainable, healthy development.
7. Affiliated transaction:
The correlation trades of the Company were fair and reasonable. And decision procedure is legal and compliance. The transaction price is in accordance with the market price and basis for pricing was fully disclosed.
8. Information disclosure and transparency:
In order to strengthen the administration of information disclosure, improve the quality and transparency of information disclosure, the Company developed the "Management System for Information Disclosure", "Major Error Responsibility System For Information Disclosure", thus normalized the standards, audit procedure, division of responsibilities and accountability mechanism of information disclosure. During the reporting period, the company timely and fairly disclosed information in accordance with relevant laws and regulations thus ensured that the disclosure of information is true, accurate, and complete.
Is there any difference between the corporate government, the Company Laws and relevant regulations from CSRC
√ Yes □ No
Explanation on difference existed among the corporate governance, Corporation Law and related regulations of China Securities Regulatory Commission
As a state-holding listed enterprise, the Company executed relevant regulations of state-owned assets management by controlling shareholder and actual controller. Details are as:
Serial Information Relationship with the Type Basis for submitted Submitted cycle submitted object listed company 1 Sinopharm Holding First largest shareholder Financial Needs of consolidated statement of Regular Co., Ltd. statement largest shareholder 2 China National Actual controller Assets Management method of state-owned Temporary Pharmaceutical Evalution property right transfer and equity Group Corp. Report ect. investment management of China National Pharmaceutical Group Corp.
According to requirements of the "Notice on Strengthening Supervision on Condition that Listing Corporation Offering Undisclosed Information to Shareholders and Actual Controllers" and the "Appending Notice on Strengthening Supervision and Governance on Non-normative Behavior such as Listing Corporation Offering Undisclosed Information to Shareholders and Actual Controllers issued by the Shenzhen securities regulatory bureau, in September of 2007, the company's board of directors and board of supervisors approved the "Bill on Implementing Staff Report of Insider Trading Information and Governance on Non-standard Special Information Disclosure" which agreed that the Company implements enforcement of secrecy and staff report system for insider trading information when conducting relevant provisions of the management of state-owned assets, regularly submitting the financial statements to major shareholders and reporting to the major shareholder about state-owned assets disposal. From September of 2007, the company reports the "Statistics about Unpublished Information Offered to Major Shareholders and Actual Controllers” to the Shenzhen securities regulatory bureau.
(I) The company received the "Notice on Publicity of Listing Corporation Investor Protection" issued by Shenzhen Securities Regulatory Bureau. And then we actively carry out activities on investor protection from Sep. to end of Nov. in 2012, combining with the "Management Approach on Investor Relations", including:
73 China National Accord Medicines Corporation Ltd. Annual Report 2012
1. The Companies newly set up the "Special Program on Investor Protection" under the "Investor Relations" column in the internet homepage, and actively reproduced commonweal advertisement piece about Investor Protection made by China Securities, contents about investor protection agency answering reporters and other 50 recent hot points which investors concerned about, thus led investors to develop habit of rational investment and long-term investment, creating harmony and stable capital market environment.
2. Through methods of company website, interaction platform of Shenzhen stock exchange, investor’s calls, investors with mail and investors visit and others, the Company found that investors prefer to learn about the company by Shenzhen interaction easy platform and call way. We devoted more resources in the corresponding communication channels, giving a positive reply to serious concern from investors in fairness disclosure principle.
3. Through investor protection activities, the Company summed up the experience, namely maintaining the basic information with high quality while through various channels keeping communication with investors, suggesting that investors pay attention to investment risk and concern about fundamentals, guiding the investors to take long-term investment and obtain reasonable return on investment.
(II) The Company organized part of directors, supervisors and senior executives to attend the "Education Exhibition of Warning on Insider Trading" held by Shenzhen securities regulatory bureau in October of 2012. For those who didn’t attend, secretary office of the board of directors reproduced the Notice on Studying Contents of Education Exhibition of Warning on Insider Trading issued by Shenzhen securities regulatory bureau with mail, and required them to learn. During the reporting period, the company held the "Education Exhibition of Warning on Insider Trading" internally, and took train prevention and control of insider trading on directors, supervisors, managers and key personnel probably contacting the insider information. When personnel change happens in directors, supervisors, managers and key staff probably contacting the insider information, the Secretary office of the Company conveys laws and regulations about inside trading and market control quoted from the "Securities Law", "Criminal Law", " Management Approach on Information Disclosure of Listing Corporation" by mail and OA forms. And we passed training documents such as the "Advice of Law on Combating and Preventing Insider Trading of Capital Market" issued by China Securities Regulatory Commission and five ministries as well as relevant notice made by Shenzhen securities regulatory bureau, the "Management System on Insider Information and Insider of Sinopharm Accord" and the "Management System on Information Disclosure of Sinopharm Accord" included. Through the organization, study and implementation, especially the case presentation, relevant personnel will have a more profound understanding of hazards of insider information and insider trading. It mainly includes the following contents:
1. Preaching related standards of insider trading and strengthening the prevention measures. One is to deepen understanding of secrecy system involving insider information, clear the scope of insider information, transfer procedures, secrecy measurement and accountability requirements, and charge the agencies and personnel. Two is to strengthen the implementation of insider registration system, require knowledge of insider information to sign confidentiality agreements and register, implement security responsibilities and obligations of related personnel. Three is to be a timely reminder of being strictly confidential for the controlling shareholders, actual controllers in planning related to merger and reorganization of listing corporation, capital operation, financing and other important matters, preventing the insider information leakage and occurrence of insider trading.
2. Combine with the specific case and strengthen the legal liability and standard consciousness. The Company combines the previous typical cases issued by Shenzhen securities regulatory bureau and the Shenzhen Stock Exchange, takes the relevant requirements of insider trading control as key training, takes in-depth analysis of the typical cases and harm of insider dealing, refines management requirements of insider information and supervision measures of regulators on insider trading behavior, emphasizes corresponding legal responsibility of insiders, thus further strengthen legal awareness and consciousness of the Company and relevant insiders, and further promote the management level of the information and information disclosure.
74 China National Accord Medicines Corporation Ltd. Annual Report 2012
(III) Develop and constantly improve system preventing illegal acts about insider trading.
With increased requirements of the regulatory departments on strict control on illegal activities about insider trading, the above related system (the "Management System of Sinopharm Accord on Insider Information and Insider” and the “Management System of Sinopharm Accord on Information Disclosure ") is perfected and revised continuously, and approved by the board of directors before implementation. Directors, supervisors, managers and other insiders tried to minimize the scale of insiders before the information is disclosed. Designate special persons to submit and keep important information file. Through self-examination, there were no behaviors like using inside information to deal stocks before important sensitive information that can affect stock price was disclosed.
II. In the report period, the Company held annual shareholders’ general meeting and extraordinary shareholders’ general meeting
1. Annual Shareholders’ General Meeting in the report period
Session of Date of Index of Date Name of meeting motion Situation meeting disclosure disclosure 1. “Report of the Board for year of 2011”; 2. “Report of Supervisory Committee for year of 2011” 3. “Annual Report and Summary of 2011” Juchao 4.. “Profit Distribution Plan for year Website—(Sinop Annual of 2011” ; harm Accord) ; shareholders’ 5. “Application of Comprehensive “Resolution 2012-04-27 All pass 2012-04-28 general meeting Credit Line Limit and Guarantee Notice of Annual 2011 Arrangement for the year of 2012 ”; Shareholders 6.”Daily related transaction with General Meeting related party from the Company and 2011” its subordinate enterprise”; 7. “Re-engagement of CPA”; 8. “Amendment of Discussion Rules for the Board of China National Accord Medicines Corporation Ltd”
2. Extraordinary shareholders’ general meeting in the report period
Session of Date of Index of Date Name of meeting motion Situation meeting disclosure disclosure 1. “Shareholder returns plan for the Juchao Website: Resolution of coming three years” ; Resolution First 2. “Amendment of Article of Notice of First extraordinary Association”; 3. extraordinary 2012-08-17 All pass 2012-08-18 shareholders’ “Adjustment for Part of the shareholders’ general meeting Directors”; general meeting of 2012 4. “Adjustment for Part of the of 2012 Supervisors” (2012-18) Juchao Website:
Resolution of Resolution 1. ‘Adjustment of Bank Credit Second Notice of Second Limited and Guarantee extraordinary extraordinary 2012-09-07 Arrangement for year of 2012”; 2. All pass 2012-09-08 shareholders’ shareholders’ “Financial service offering from general meeting general meeting China National Financial Co., for the of 2012 of 2012 Company” (2012-26)
75 China National Accord Medicines Corporation Ltd. Annual Report 2012
III. Responsibility performance of independent directors in report period
1. The attending of independent directors to Board meetings and shareholders’ general meeting
The attending of independent directors Times of Whether Board Times of absent the Name of Times of meeting Times of attending by Times of Meeting for independent entrusted supposed to Presence communicatio Absence the second director presence attend in the n time in a row report period or not He Zhiyi 9 2 6 1 0 No Xiong Chuxiong 9 3 6 0 0 No Xiao Shengfang 9 3 6 0 0 No Times of the attending of independent directors to 3 shareholders’ general meeting
Explanation of absent the Board Meeting for the second time in a row
Inapplicable
2. Objection for relevant events from independent directors
Whether independent directors come up with objection about company’s relevant matters or not
□ Yes √ No
Independent directors has no objections for relevant events in reporting period
3. Other explanation about responsibility performance of independent directors
Whether the opinions from independent directors have been adopted or not
√Yes □ No
Explanation of independent directors on accepted or unaccepted suggestions
During the reporting period, the independent directors performed their duties in a careful, diligent, dedicated attitude in accordance with requirements of the "Working System of Independent Director", offered some useful suggestions and opinions on business decision-making, legal affairs, financial management and other aspects; carefully examined important matters those needed opinions of independent directors, made independent judgments and issued a written independent opinion on major related transactions, daily related transactions, accountancy hiring and other matters, playing a positive role in safeguarding the legitimate rights and interests of small shareholders. Besides, independent directors played an important role in operation of special committee. At the same time, the Company can guarantee independent directors and other directors of the same right to know. During the reporting period, the independent directors have no objection on the related issues of the Company
76 China National Accord Medicines Corporation Ltd. Annual Report 2012
IV. Responsibility performance of subordinate special committee of the Board in report period
(I) Duties fulfillment of the board of directors and audit committee on internal control over risk
Internal control on risk and Audit Committee of the board of directors of the company comprises 3 independent non-executive directors and 3 directors, including the convener (professional accountant) is an independent director. In accordance with relevant provisions of China Securities Regulatory Commission and Shenzhen Stock Exchange and working system, Internal control on risk and Audit Committee of the board of directors seriously performed duties in a dedicated attitude. In the annual financial report audit, they acted as supervisors, maintained individuality of audit and issued a series of notices such as the Written Opinion on Financial Accounting Statements Issued by the Company before CPA of Annual Examination Entered, the Written Opinion on Financial Accounting Statements after Preliminary Audit Issued by CPA of Annual Examination, the Summary Report of Internal Risk Control and Audit Committee on the Annual Audit Work of CPA as well as the Resolution on Rehire the Audit Institution. Its main duties comprise the following:
1. Risk internal control and audit committee is responsible for determining the audit work schedule, negotiating with CPA who engages in audit;
2. Before CPA enters, audit committee should review the financial statements prepared by the Company and issue written opinions;
3. Strengthen communication with the CPA, and urge them to submit audit report within stipulated time with urgency letter;
4. Review again the financial statements after the CPA issues preliminary opinion, and issue written opinions;
5. The Committee held annual work conference 2012, approved proposal of financial accounting report, summary report of annual audit work of CPA and rehiring PWC Zhongtian CPA as the audit institution, and then formed a resolution to submit to board of directors for approval.
(II) Duties fulfillment of Remuneration and Appraisal Committee
As special working mechanism of the board of directors, the remuneration and appraisal committee is responsible for approving the assessment standard of directors and senior executives, formulating and reviewing compensation policies and programs of directors and executive. And they take charge in examining according to the standard and policies. The remuneration and appraisal committee is composed of 3 directors, including 2 independent directors; convener is He Zhiyi, an independent director. During the reporting period, remuneration and assessment committee actively performed duty; clearly defined their responsibilities; did serious research and appraisal on the remuneration and appraisal system, especially salary, assessment system and program over directors, supervisors and senior executive. According to working rules of the remuneration and appraisal committee, they have rights to check regular reports, meetings records, business planning and other materials by telephone, interviews and other methods to learn the performance of directors, executives. And they’re required to submit problems existing in implementation of system to the Board of Directors and raise up suggestion on them. Their contents are as follows:
1. In 2012, the remuneration and appraisal committee carried out the performance evaluation of executives according to the 2011 Annual operation standard and performance.
2. It proposed the "2013 Evaluation Scheme of Operating Performance", and submitted it to the board of directors for approval.
3. The remuneration and appraisal committee approved salary of directors, supervisors and senior executives disclosed in 2012 annual report. And it issued the following opinions: Compensation decision procedures of directors, supervisors and senior management personnel was in accordance with the provisions; the standard was in accordance with the remuneration system; the disclosure of 2012 annual report about personnel salary of the directors, supervisors and senior management is real and accurate.
77 China National Accord Medicines Corporation Ltd. Annual Report 2012
V. Works from Supervisory Committee
Whether the Company has risks or not in reporting period that found in supervisory activity from supervisory committee
□ Yes √ No
Supervisory committee has no objection about supervision events in reporting period
VI. Independency of the Company relative to controlling shareholders’ in aspect of businesses, personnel, assets, organization and finance
The Company totally separates from the controlling shareholders in business, personnel, assets, institutions, financial and other aspects, with independent and complete self-management ability. 1. The business: in the business, the Company was independent from controlling shareholders, having a complete business system and self-managing ability; the company has independent procurement and sales system thus all procurement and sales of drugs and raw materials is in charge of the purchasing department and subordinate subsidiary, branch and production enterprises; production, supply, marketing and R & D separate from each other; the Company is a legal market person with independent operation. 2. Personnel: procedures of the controlling shareholder nominating directors and general and deputy general manager are legal; no intervene on the appointment and removal of personnel made by the board of directors and shareholders’ meeting happened; the Company set up independent human resource department, responsible for assessment, training and salary review on staff, making rules and regulations and handbook the employees should abide by. Labor, personnel, wages and pension, medical insurance and other insurance are independently managed. 3. Institution: production and operation mechanism and administrative management is completely independent from the controlling shareholder or actual controller; offices and sites of business operation separate from the controlling shareholder; the Company established corporate governance structure where the board of directors, board of supervisors and managers carry out their duties and exercise their respective duties in accordance with relevant provisions of the articles of association. 4. Asset: property and rights relationship between the Company and the controlling shareholder is clear, with independent operations; the company has independent production system, auxiliary production system and supporting system; industrial property rights, trademarks, non-patented technology and other intangible assets owned by the Company and its subsidiary. 5. Financial aspects: the Company established independent financial departments and independent financial accounting system; the Company opened a bank account independently; there is no funds having been saved in financial companies or settlement account controlled by large shareholders or other related parties; the financial staff is independent without taking part-time and receiving remuneration in the controlling shareholder; the Company pays tax independently.
VII. Horizontal Competition
Horizontal competition between the Company and its controlling shareholder and actual controller:
1. Foshan Nanhai Medicine Co., Ltd. and Guangdong Dong Fang Uptodate & Special Medicines Co., Ltd. was the enterprise obtained by merger from largest shareholders, now it is the subordinated enterprise of the largest shareholder; operation business are all engaged in medicine distribution in Guangdong region, which consider as horizontal competition for the same medicine distribution business in Guangdong region as the Company does;
2. Guangdong South Pharmaceutical Foreign Trade Co., ltd. is the subordinated enterprise of actual controller of the Company, operation business mainly is medicine distribution in Guangdong region, which consider as horizontal competition for the same medicine distribution business in Guangdong region as the Company does;
3. Sinopharm Group Wei qida Medicine Co., Ltd.. . is the subordinated pharmaceutical enterprise of actual controller of the Company, and consider as horizontal competition for same pharmaceutical industry products as the Company does. For the above mentioned horizontal competition, no solving measures so far.
78 China National Accord Medicines Corporation Ltd. Annual Report 2012
VII. Appraisal and incentive mechanism for senior executives
Senior executives of the Company took responsibility for the board of directors, in the report period, the board of directors implemented the performance checking mechanism that the remuneration of senior executives related with their performance checking, with achievement as direction, and made relevant reward and punishment according to target completion. The Company’s relevant incentive and restriction mechanism gradually in order to further exert the enthusiasm and creativity of senior executives, urge the senior executives to perform the obligations of being honest and diligent. The Company had no incentive mechanism for senior executives such as stock option, purchase of management team and equity held by owner.
79 China National Accord Medicines Corporation Ltd. Annual Report 2012
Section IX. Internal control I. Internal control construction
During the reporting period, strictly in accordance with relevant laws and regulations such as the "Company Law", "Securities Law", "Management Standards of Listing Corporation" and the "Basic Norms of Internal Control" jointly issued by ministry of finance and Securities Regulatory Commission as well as other departments and "Guidelines of Internal Control for Listing Corporation" issued by Shenzhen Stock Exchange, the Company constantly improved the corporate governance structure and a sound internal management. Currently the Company has established more complete internal control system, including management control, financial control, production management, basically covering all operations. At the same time, according to the change of organizational structure, responsibilities, business environment and market environment, the Company constantly revises and perfects the internal control system annually, evaluation; through daily self-audit, site check, special audit, quality audit and other methods the Company takes supervision and inspection, and through various system (OA office \NC financial, budget \CMS distribution \WMS distribution. Wave pharmaceutical), the Company solids the process and toughs authorization and approval control, thus ensure the effective implementation of the internal control system, laying a good foundation for the normal operation of the Company. (1) During the reporting period of management control, in the aspect of governance, the Company added the "Management System of News Disposal on Emergency" in needs of governance and regulatory requirements, and took revision on the Articles of Association, business rules of board meetings and the information disclosure management system. In the management level we improved and revised the human audit, employee dismissal, external donations, retiring and other systems as well as security system, process management, IT management, certificate management, OA office, manpower planning, employee turnover, employee discipline and continuing education systems. (2) During the reporting period of financial control, the Company perfected and revised the person in charge of finance and financial management of infrastructure projects according to the accounting law, tax law, economic law and other relevant laws and regulations of the state and the enterprise accounting standards, and focused on the revision on the monetary funds, financial budget, financial and accounting reports, assets management of debts dismissal and other systems. (3) During the reporting period of control on production and operation, the Company timely revised and covered the development, procurement, sales, production, quality, safety, warehousing, customer service and other management systems or standards in accordance with requirement of the national "Management Standards of Drug Production Quality", "Management Standards of Drug Operation Quality" and "Management Standards of Chinese Drug Production Quality".
II. Declaration of board of directors on internal control responsibilities
The establishment, completion and effective implementation of internal control is task of the board of directors. Internal control was made for legal compliance of operation, ensuring the security and integrity of assets, ensuring timeliness, authenticity, accuracy and integrity of the accounting information, and guarding against all kinds of risks as well as promoting the implementation of development strategy. The board of directors effectively and comprehensively evaluated design and implementation of the company’s internal control system, they think: the company's existing internal control was in accordance with the relevant state laws and regulations, playing a role in major risk, fraud and serious errors management in aspects of control and protection. The current management of the Company is normalized, orderly and controllable, effectively improving the efficiency and effectiveness of operation.
III. Basis of establishing internal control over financial reporting
According to the "Basic Norms of Internal Control", "Accounting Law", "Accounting Standards for Business Enterprises" and relevant normative documents of regulatory authorities, the Company established internal control system of the financial report
IV. Self-evaluation report of internal control
Details of major defects in self-evaluation report that found in reporting period No major defect has been found in the report period. Date of self-evaluation report 2013-03-21 of internal control disclosed Index of self-evaluation Juchao Website: (http://www.cninfo.com.cn); ”Self-evaluation Report of report of internal control Internal Control of China National Accord Medicines Corporation Ltd for year disclosed of 2012”
80 China National Accord Medicines Corporation Ltd. Annual Report 2012
V. Auditing report of internal control
√ Applicable □ Not applicable
Auditing comments section in audit report of internal control ”Pricewaterhouse Coopers Zhongtian CPA Co., Ltd auditing relevant internal control’s effectiveness for the financial report of the Company, and carried out report stated: “China National Company maintains an effective internal control of financial report in all major aspects, based on relevant regulations and Basic Standard of Internal Control for Enterprise dated 31 December 2012 ” Date of audit report of internal control (full-text) 2013-03-21 disclosed Index of audit report of Juchao Website: (http://www.cninfo.com.cn); ”Audit report of Internal Control internal control (full-text) for China National Accord Medicines Corporation Ltd” disclosed
Whether CPA carries out qualified opinion for audit report of internal control or not
□Yes √No
Whether the opinions are consistent in audit report of internal control carrying out by CPA and the self-evaluation report of the Board
√Yes □ No
VI. Establishment and enforcement of Accountability Mechanism for Major Errors in Annual Report
The “Accountability Mechanism for Major Errors in Annual Report Disclosure” was deliberated and approved on 15th Meeting of 5th Session of the Board dated 20 March 2010, and has been published and implemented. No major errors are found in the Company during reporting period.
81
Section X. Financial Report
[English Translation for Reference Only]
Report of the Auditors
PwC ZT Shen Zi (2013) No. 10022 (Page 1 of 2)
To the Shareholders of China National Accord Medicines Co., Ltd,
We have audited the accompanying financial statements of China National Accord Medicines Co., Ltd. (hereinafter “National Accord”), which comprise the consolidated and company balance sheets as at 31 December 2012, and the consolidated and company income statements, the consolidated and company statements of changes in shareholder’s equity and the consolidated and company cash flow statements for the year then ended, and the notes to the financial statements.
Management’s Responsibility for the Financial Statements
Management of National Accord is responsible for the preparation and fair presentation of these financial statements in accordance with the requirements of Accounting Standards for Business Enterprises, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with China Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
普华永道中天会计师事务所有限公司 PricewaterhouseCoopers Zhong Tian CPAs Limited Company, 11/F PricewaterhouseCoopers Center 2 Corporate Avenue, 202 Hu Bin Road, Huangpu District, Shanghai 200021, PRC T: +86 (21) 2323 8888, F: +86 (21) 2323 8800, www.pwccn.com
PwC ZT Shen Zi (2013) No. 10022 (Page 2 of 2)
Opinion
In our opinion, the accompanying financial statements present fairly, in all material respects, the consolidated and company’s financial position of National Accord as at 31 December 2012, and their financial performance and cash flows for the year then ended in accordance with the requirements of Accounting Standards for Business Enterprises.
PricewaterhouseCoopers Zhong Tian CPAs Limited Company Shanghai , the People’s Republic of China
19 March 2013
- 2 - China National Accord Medicines Corporation Ltd. Annual Report 2012
ASSETS Note Consolidated Company 31 December 31 December 31 December 31 December 2012 2011 2012 2011 Current assets Cash at bank and on hand V(1) 953,992,070.61 952,950,167.56 160,633,355.13 164,840,499.86 Notes receivable V(2) 650,860,240.37 534,922,741.30 376,521.35 8,718,971.96 Accounts receivable V(3), XIII(1) 4,393,325,300.66 3,579,242,836.76 364,688,936.84 295,227,856.20 Advances to suppliers V(4) 89,512,381.34 65,857,961.31 2,944,282.55 3,148,580.55 Other receivables V(5), XIII(2) 32,985,425.60 28,656,020.58 971,859,991.32 704,287,016.32 Inventories V(6) 1,734,679,063.78 1,313,213,414.68 130,552,057.09 125,157,825.01 Other current assets V(7) 8,080,607.66 7,653,736.21 262,096.80 39,482.38 Total current assets 7,863,435,090.02 6,482,496,878.40 1,631,317,241.08 1,301,420,232.28
Non-current assets Long-term equity investments V(8),XIII(3) 121,019,845.50 95,799,627.42 1,469,049,339.88 1,332,527,041.51 Investment properties V(10) 88,315,429.63 86,164,929.70 7,392,314.49 8,841,071.50 Fixed assets V(11) 690,487,633.12 602,205,927.87 27,728,901.07 32,866,561.06 Construction in progress V(12) 103,955,350.80 131,042,772.59 545,247.24 253,886.24 Intangible assets V(13) 155,155,071.20 119,601,478.86 37,903,901.08 27,426,551.44 Development costs V(13) 5,002,441.273,998,433.69 - - Goodwill V(14) 85,228,833.15 53,555,677.09 - - Long-term prepaid expenses V(15) 19,742,990.45 20,103,138.99 7,893,858.54 9,030,726.77 Deferred income tax assets V(16) 49,509,529.97 44,070,064.25 2,929,885.67 5,335,693.52 Other non-current assets V(18) 113,987,724.53 40,273,842.92 8,350,000.00 7,000,000.00 Total non-current assets 1,432,404,849.62 1,196,815,893.38 1,561,793,447.97 1,423,281,532.04
TOTAL ASSETS 9,295,839,939.64 7,679,312,771.78 3,193,110,689.05 2,724,701,764.32
- 3 - China National Accord Medicines Corporation Ltd. Annual Report 2012
LIABILITIES AND OWNER’S EQUITY Note Consolidated Company 31 December 31 December 31 December 31 December 2012 2011 2012 2011 Current liabilities Short-term borrowings V(19) 1,687,810,294.37 1,839,838,065.68 452,004,475.38 417,648,980.60 Notes payable V(20) 1,105,275,538.24 1,059,426,952.84 176,012,796.90 120,293,155.72 Accounts payable V(21) 3,197,354,275.46 2,495,491,846.36 282,426,136.11 343,946,734.72 Advances from customers V(22) 35,002,695.02 58,705,230.49 477,717.18 249,535.25 Employee benefits payable V(23) 155,994,408.20 142,414,446.06 28,849,468.43 24,966,511.90 Taxes payable V(24) 51,390,674.43 63,600,830.11 715,642.50 1,640,177.39 Interests payable V(25) 13,035,821.07 10,451,229.03 7,091,864.58 868,585.17 Other payables V(26) 413,831,307.40 346,965,182.34 575,130,189.97 865,237,491.48 Current portion of long-term Borrowings V(27) 71,127,275.00 23,960,000.00 - - Other current liabilities V(28) 399,014,838.05 - 399,014,838.05 - Total current liabilities 7,129,837,127.24 6,040,853,782.91 1,921,723,129.10 1,774,851,172.23
Non-current liabilities Long-term borrowings V(29) 82,205,562.71 93,082,967.96 - - Long-term payables 32,259.60 35,536.20 - - Payables for specific projects V(30) 4,487,000.00 4,519,000.00 1,000,000.00 1,032,000.00 Deferred income tax liabilities V(16) 26,619,273.68 19,900,787.30 3,773,319.00 3,773,319.00 Other non-current liabilities V(31) 213,607,504.21 94,245,023.54 - - Total non-current liabilities 326,951,600.20 211,783,315.00 4,773,319.00 4,805,319.00
Total liabilities 7,456,788,727.44 6,252,637,097.91 1,926,496,448.10 1,779,656,491.23
OWNERS’ EQUITY Share capital V(32) 288,149,400.00 288,149,400.00 288,149,400.00 288,149,400.00 Capital surplus V(33) 5,550,338.57 8,735,305.04 14,348,726.93 14,116,726.93 Surplus reserve V(34) 99,360,384.15 63,480,745.16 99,360,384.15 63,480,745.16 Undistributed profits V(35) 1,382,882,906.24 989,727,826.66 864,755,729.87 579,298,401.00
Total equity attributable to equity holders of the Company 1,775,943,028.96 1,350,093,276.86 1,266,614,240.95 945,045,273.09 Minority interest V(36) 63,108,183.24 76,582,397.01 - - Total owners' equity 1,839,051,212.20 1,426,675,673.87 1,266,614,240.95 945,045,273.09
TOTAL LIABILITIES AND OWNERS’ EQUITY 9,295,839,939.64 7,679,312,771.78 3,193,110,689.05 2,724,701,764.32
The accompanying notes form an integral part of these financial statements.
Legal Principal in charge Head of accounting representative: of accounting : department:
- 4 - China National Accord Medicines Corporation Ltd. Annual Report 2012
Consolidated Company Item Note 2012 2011 2012 2011
Sales V(37) ,XIII(4) 18,011,759,178.26 15,150,128,554.59 2,147,556,432.06 1,966,838,173.80 Less: Cost of sales V(37),XIII(4) (16,408,719,921.19) (13,813,696,729.85) (2,044,635,214.38) (1,871,580,082.60) Taxes and surcharges V(38) (46,174,700.06) (38,699,005.50) (4,882,214.24) (4,016,237.63) Selling and distribution expenses V(39) (448,595,419.15) (431,289,974.80) (43,326,298.64) (45,980,760.59)
Administration expenses V(40) (392,232,990.09) (351,445,745.31) (37,786,919.53) (52,274,907.84) Financial expenses – net V(41) (162,118,150.33) (136,890,070.53) (17,722,941.70) (32,569,894.50) Asset impairment losses V(42) (21,194,171.49) (21,091,528.26) (46,806.15) 178,122.58 Add: Investment income V(43),XIII(5) 38,740,679.55 28,119,376.36 358,010,583.42 263,179,855.03 Including:Share of profits of associates 38,740,679.55 28,119,376.36 38,740,679.55 28,119,376.36
Operating profit 571,464,505.50 385,134,876.70 357,166,620.84 223,774,268.25 Add: Non-operating income V(44) 60,039,015.85 24,004,986.66 4,327,227.13 8,848,505.49 Less: Non-operating expenses V(45) (28,186,730.33) (1,848,197.80) (291,650.26) (5,001.44) Including: Loss on disposal ofnon-current assets (9,104,166.55) (1,566,414.63) (78,534.03) -
Total profit 603,316,791.02 407,291,665.56 361,202,197.71 232,617,772.30 Less: Income taxes expenses V(46) (119,634,955.50) (81,466,298.02) (2,405,807.85) 2,376,993.77
Net profit 483,681,835.52 325,825,367.54 358,796,389.86 234,994,766.07 Including: Net losses of the acquire entity in a business combination involving enterprises under common control before the combination date (240,695.14) (1,989,842.59) - -
Attributable to equity holders of the Company 475,792,491.12 328,323,616.75 358,796,389.86 234,994,766.07 Minority interest 7,889,344.40 (2,498,249.21) - -
Earnings per share V(47) Basic earnings per share 1.65 1.14 N/A N/A Diluted earnings per share 1.65 1.14 N/A N/A
Other comprehensive income --- -
Total comprehensive income 483,681,835.52 325,825,367.54 358,796,389.86 234,994,766.07
Attributable to equity holders of the Company 475,792,491.12 328,323,616.75 358,796,389.86 234,994,766.07 Minority interest 7,889,344.40 (2,498,249.21) - -
The accompanying notes form an integral part of these financial statements.
Legal Principal in charge Head of accounting representative: of accounting : department:
- 5 - China National Accord Medicines Corporation Ltd. Annual Report 2012
Consolidated Company Item Note 2012 2011 2012 2011
I. Cash flows from operating activities: Cash received from sales of goods or rendering of services 17,722,401,123.78 14,826,224,884.66 2,269,887,274.51 2,134,085,832.14 Refund of taxes and surcharges 12,958,157.91 1,192,302.16 - - Cash received relating to other operating activities V(48)(a) 98,004,113.51 56,906,638.44 15,838,615.72 15,579,948.91 Sub-total of cash inflows 17,833,363,395.20 14,884,323,825.26 2,285,725,890.23 2,149,665,781.05 Cash paid for goods and services (16,254,350,304.84) (13,601,191,827.65) (2,208,712,936.78) (2,088,437,796.01) Cash paid to and on behalf of employees (451,772,578.57) (406,745,110.51) (42,916,969.26) (39,756,494.45) Payments of taxes and surcharges (474,305,269.77) (351,311,235.89) (23,556,020.56) (22,545,530.25) Cash paid relating to other operating activities V(48)(b) (328,979,909.26) (294,971,357.86) (32,352,826.84) (62,083,286.28) Sub-total of cash outflows (17,509,408,062.44) (14,654,219,531.91) (2,307,538,753.44) (2,212,823,106.99) Net cash flows from operating V(49)(a) activities XIII(6)(a) 323,955,332.76 230,104,293.35 (21,812,863.21) (63,157,325.94)
II. Cash flows from investing activities Cash received from disposal of investments - 1,830,000.00 - 1,830,000.00 Cash received from returns on investments 13,520,461.47 17,595,000.00 383,466,230.79 279,930,485.40 Net cash received from disposal of fixed assets, intangible assets and other long-term assets 2,379,560.62 4,397,864.69 204,373.93 3,239,648.92 Cash received from disposal of subsidiaries and other business units - - 5,424,600.00 - Cash received relating to other investing activities V(48)(c) 50,000,000.00 - 424,483,271.97 406,989,281.47 Sub-total of cash inflows 65,900,022.09 23,822,864.69 813,578,476.69 691,989,415.79 Cash paid to acquire fixed assets, intangible assets and other long-term assets (193,571,581.84) (199,102,994.92) (14,986,981.93) (4,277,944.45) Cash paid to acquire Investments (38,350,000.00) (20,000,000.00) (41,650,000.00) (49,600,000.00) Net cash paid to acquire subsidiaries and other business units V(49)(b) (23,801,762.22) (16,083,378.19) (53,948,000.00) (6,126,470.00) Cash paid relating to other investing activities - - (936,980,000.00) (549,544,100.00) Sub-total of cash outflows (255,723,344.06) (235,186,373.11) (1,047,564,981.93) (609,548,514.45) Net cash flows from investing activities (189,823,321.97) (211,363,508.42) (233,986,505.24) 82,440,901.34
- 6 - China National Accord Medicines Corporation Ltd. Annual Report 2012
Consolidated Company Item Note 2012 2011 2012 2011
III. Cash flows from financing activities
Cash received from borrowings 1,168,194,502.63 875,736,535.01 422,000,000.00 290,000,000.00 Cash received from issuance of debentures V(28) 398,400,000.00 - 398,400,000.00 - Cash received relating to other financing Activities V(48)(d) 295,141,161.10 587,370,000.00 641,653,852.39 764,602,739.79
Sub-total of cash inflows 1,861,735,663.73 1,463,106,535.01 1,462,053,852.39 1,054,602,739.79
Cash repayments of borrowings (1,201,083,961.04) (568,006,701.18) (250,299,459.99) (220,000,000.00) Cash payments for interest expenses and distribution of dividends or profits (187,027,873.11) (140,594,792.60) (92,362,168.68) (96,544,576.47) Including:Cash payments for dividends or profit to minority Shareholders of subsidiaries (3,026,090.85) (1,651,617.12) - - Cash payments relating to other financing activities V(48)(e) (594,900,000.00) (550,102,500.00) (867,800,000.00) (728,000,058.73)
Sub-total of cash outflows (1,983,011,834.15) (1,258,703,993.78) (1,210,461,628.67) (1,044,544,635.20) Net cash flows from financing activities (121,276,170.42) 204,402,541.23 251,592,223.72 10,058,104.59
IV. Effect of foreign exchange rate changes on cash 8,041.02 (24,033.86) - -
V. Net increase/(decrease) in cash 12,863,881.39 223,119,292.30 (4,207,144.73) 29,341,679.99
Add: Cash at beginning of year 907,884,162.14 684,764,869.84 164,840,499.86 135,498,819.87 V(49)(c) VI. Cash at end of year XIII(6)(c) 920,748,043.53 907,884,162.14 160,633,355.13 164,840,499.86
The accompanying notes form an integral part of these financial statements.
Legal Principal in charge Head of accounting representative: of accounting : department:
- 7 - China National Accord Medicines Corporation Ltd. Annual Report 2012
Attributable to the shareholders of the Company Total Item Note Minority interest Capital Surplus Undistributed owners’ equity Paid-in capital surplus reserves profits
Balance at 31 December 2010 288,149,400.00 5,030,338.57 39,981,268.55 719,209,302.41 79,075,051.61 1,131,445,361.14 Business combination under common control IV(3)(d) - 3,416,966.47 - (1,557,687.89) 5,594.61 1,864,873.19 Balance at 1 January 2011 288,149,400.00 8,447,305.04 39,981,268.55 717,651,614.52 79,080,646.22 1,133,310,234.33 Movements for the year ended 31 December 2011 Net profit - - - 328,323,616.75 (2,498,249.21) 325,825,367.54 Other comprehensive income ------Capital contribution by owners and withdrawals - Others - 288,000.00 - 1,830,000.00 - 2,118,000.00 Profit distribution - Appropriation to surplus reserves V(34) - - 23,499,476.61 (23,499,476.61) - - - Profit distribution to equity owners V(35) - - - (34,577,928.00) - (34,577,928.00) Balance at 31 December 2011 288,149,400.00 8,735,305.04 63,480,745.16 989,727,826.66 76,582,397.01 1,426,675,673.87
- 8 - China National Accord Medicines Corporation Ltd. Annual Report 2012
Attributable to the shareholders of the Company Total Item Note Minority interest Capital Surplus Undistributed owners’ equity Paid-in capital surplus reserves profits
Balance at 31 December 2011 288,149,400.00 5,318,338.57 63,480,745.16 993,269,387.62 76,582,771.92 1,426,800,643.27 Business combination under common control IV(3)(d) - 3,416,966.47 - (3,541,560.96) (374.91) (124,969.40) Balance at 1 January 2012 288,149,400.00 8,735,305.04 63,480,745.16 989,727,826.66 76,582,397.01 1,426,675,673.87 Movements for the year ended 31 December 2012 Net profit - - - 475,792,491.12 7,889,344.40 483,681,835.52 Other comprehensive income ------Capital contribution by owners and withdrawals - Capital contribution by owners - - - - 5,097,215.66 5,097,215.66 - Business combination under common control - (3,416,966.47) - (1,083,033.53) - (4,500,000.00) - Acquisition of minority interest - - - (8,215,317.02) (23,434,682.98) (31,650,000.00) - Others - 232,000.00 - - - 232,000.00 Profit distribution - Appropriation to surplus reserves V(34) - - 35,879,638.99 (35,879,638.99) - - - Profit distribution to equity owners V(35) - - - (37,459,422.00) (3,026,090.85) (40,485,512.85) Balance at 31 December 2012 288,149,400.00 5,550,338.57 99,360,384.15 1,382,882,906.24 63,108,183.24 1,839,051,212.20
The accompanying notes form an integral part of these financial statements.
Legal Principal in charge Head of accounting representative: of accounting : department:
- 9 - China National Accord Medicines Corporation Ltd. Annual Report 2012
Surplus Undistributed Total Items Paid-in capital Capital surplus reserves profits owners’ equity
Balance at 1 January 2011 288,149,400.00 13,828,726.93 39,981,268.55 400,551,039.54 742,510,435.02 Movements for the year ended 31 December 2011
Net profit - - - 234,994,766.07 234,994,766.07
Other comprehensive income --- -- Capital contribution by owners and withdrawals
- Others - 288,000.00 - 1,830,000.00 2,118,000.00
Profit distribution - Appropriation to surplus reserves - - 23,499,476.61 (23,499,476.61) -
- Profit distribution to equity owners - - - (34,577,928.00) (34,577,928.00)
Balance at 31 December 2011 288,149,400.00 14,116,726.93 63,480,745.16 579,298,401.00 945,045,273.09
Balance at 1 January 2012 288,149,400.00 14,116,726.93 63,480,745.16 579,298,401.00 945,045,273.09 Movements for the year ended 31 December 2012
Net profit - - - 358,796,389.86 358,796,389.86
Other comprehensive income --- -- Capital contribution by owners and withdrawals - Others - 232,000.00 - - 232,000.00
Profit distribution
- Appropriation to surplus reserves - - 35,879,638.99 (35,879,638.99) -
- Profit distribution to equity owners - - - (37,459,422.00) (37,459,422.00)
Balance at 31 December 2012 288,149,400.00 14,348,726.93 99,360,384.15 864,755,729.87 1,266,614,240.95
The accompanying notes form an integral part of these financial statements.
. Legal Principal in charge Head of accounting representative: of accounting : department:
- 10 - China National Accord Medicines Corporation Ltd. Annual Report 2012
I Profile of company
China National Accord Medicines Co., Ltd. (formerly known as Shenzhen Accord Pharmaceutical Co.,Ltd, ‘the Company’), formerly known as Shenzhen Health Mineral Water Co., Ltd., was approved by the People’s Government of Shenzhen with SFBF (1993) No.356 document to establish on February 1, 1993 through stock restructure as a company limited by shares. 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 transfer of capital surplus to share capital and bonus issues for years, the share capital of the Company increased to RMB288,149,400 up to December 31, 2012. The employee shares, domestic public shares and foreign public shares have all been listed on the Shenzhen Stock Exchange.
In November 2000, the Company entered into an Assets Exchange Agreement with Shenzhen Investment Management Company, the original main shareholder of the Company, to exchange all the assets and liabilities of the Company as of August 31, 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. On December 29, 2000, the above assets exchange proposal was approved by shareholder’s voting in the second extraordinary general meeting in 2000. The transaction was completed on January 8, 2001. On 8 January, 2001, the Company changed its name to Shenzhen Accord Pharmaceutical Co., Ltd., and belongs to the pharmaceutical manufacturing industry.
On February 18, 2004, the Company’s original main shareholder, Shenzhen Investment Management Company, entered into a Stock Transfer Agreement with Sinopharm Group Co., Ltd. (formerly known as Sinopharm Group Medicine Holding 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 December 9, 2004. At the same time, as approved by GZCQ (2004) No.525 document from the State-owned Assets Supervision and Administration Commission of the State Council and ZJGSZ (2004) No.94 document from the China Securities Regulatory Commission, the nature of these shares was transferred from state-owned stock to state-owned legal entity stock and Sinopharm Group became the top shareholder of the Company.
On April 14, 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 April 27, 2006, the Company issued bonus shares on April 28, 2006 at the ratio of 3 shares to every 10 A-shares to liquidated A-share holders 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 share holdings. The Company issued 288,149,400 shares as at December 31, 2012.
The Company is registered with Shenzhen Administration for Industry & Commerce. Its business license number is 440301103040048 and the serial number of the license is N24657. The operation period of the Company is from August 2, 1986 to August 2, 2036. The registered capital of the Company is RMB288,149,400. The legal representative of the Company is Yan Zhigang.
- 11 - China National Accord Medicines Corporation Ltd. Annual Report 2012
I Profile of company (continued)
The approved scope of business of the Company and its subsidiaries (together “the Group”) includes wholesale of traditional Chinese medicine preparations, bulk pharmaceutical drugs, chemical preparations, bulk antibiotic drugs, antibiotic preparations, biochemical drugs, biological products (including vaccines and in vitro diagnostic reagents), psychotropic drugs and preparations, narcotic drugs, toxic drugs for medical use, protein assimilation preparation and peptide hormones; trade of dietary supplement; research, development and consultation services of pharmaceutical packaging materials and pharmaceutical industry products; industrial investment holding; domestic trade (other than special licensing), sale of ambulances; trade of medical equipment; project investment; property management and lease of self-owned properties; pharmacovigilance and medical information consulting; parking operation; logistics and related services; package agency business; logistic design; operating various types of goods and import and export of technology (not attached directory of import and export commodities), but excluded the import and export of goods and technology the State limits or prohibit the company.
These financial statements were authorized for issue by the board of directors of the Company on 19 March 2013.
II Summary of significant accounting policies and accounting estimates
(1) Basis of preparation
The financial statements were prepared in accordance with the Basic Standard and 38 specific standards of the Accounting Standards for Business Enterprises issued by the Ministry of Finance on 15 February 2006, and the Application Guidance for Accounting Standards for Business Enterprises, Interpretations of Accounting Standards for Business Enterprises and other relevant regulations issued thereafter (hereafter collectively referred to as “the Accounting Standards for Business Enterprises” or “CAS”) and the disclosure requirements in the Preparation Convention of Information Disclosure by Companies Offering Securities to the Public No.15 – General Rules on Financial Reporting (2010 revised) issued by the China Securities Regulatory Commission.
(2) Statement of compliance with the Accounting Standards for Business Enterprises
The financial statements of the Company for the year ended 31 December 2012 are in compliance with the Accounting Standards for Business Enterprises, and truly and completely present the financial position as of 31 December 2012 and the operating results, cash flows and other information for the year then ended of the Group and the Company.
(3) Accounting year
The Company’s accounting year starts on 1 January and ends on 31 December.
(4) Recording currency
The recording currency is Renminbi (RMB).
- 12 - China National Accord Medicines Corporation Ltd. Annual Report 2012
II Summary of significant accounting policies and accounting estimates (continued)
(5) Business combinations
(a) Business combinations involving enterprises under common control
The consideration paid and net assets obtained by the absorbing party in a business combination are measured at the carrying amount. The difference between the carrying amount of the net assets obtained from the combination and the carrying amount of the consideration paid for the combination is treated as an adjustment to capital surplus (share premium). If the capital surplus (share premium) is not sufficient to absorb the difference, the remaining balance is adjusted against retained earnings. Costs directly attributable to the combination are included in profit or loss in the period in which they are incurred. Transaction costs associated with the issue of equity or debt securities for the business combination are included in the initially recognised amounts of the equity or debt securities.
(b) Business combinations involving enterprises not under common control
The cost of combination and identifiable net assets obtained by the acquirer in a business combination are measured at fair value at the acquisition date. Where the cost of the combination exceeds the acquirer’s interest in the fair value of the acquirer’s identifiable net assets, the difference is recognised as goodwill; where the cost of combination is lower than the acquirer’s interest in the fair value of the acquirer’s identifiable net assets, the difference is recognised in profit or loss for the current period. Costs directly attributable to the combination are included in profit or loss in the period in which they are incurred. Transaction costs associated with the issue of equity or debt securities for the business combination are included in the initially recognised amounts of the equity or debt securities.
(6) Preparation of consolidated financial statements
The consolidated financial statements comprise the financial statements of the Company and all of its subsidiaries.
Subsidiaries are consolidated from the date on which the Group obtains control and are de-consolidated from the date that such control ceases. For a subsidiary that is acquired in a business combination involving enterprises under common control, it is included in the consolidated financial statements from the date when it, together with the Company, comes under common control of the ultimate controlling party. The portion of the net profits realised before the combination date is presented separately in the consolidated income statement.
In preparing the consolidated financial statements, where the accounting policies and the accounting periods of the Company and subsidiaries are inconsistent, the financial statements of the subsidiaries are adjusted in accordance with the accounting policies and the accounting period of the Company. For subsidiaries acquired from business combinations involving enterprises not under common control, the individual financial statements of the subsidiaries are adjusted based on the fair value of the identifiable net assets at the acquisition date.
All significant inter-group balances, transactions and unrealised profits are eliminated in the consolidated financial statements. The portion of a subsidiary’s equity and the portion of a subsidiary’s net profits and losses for the period not attributable to Company are recognised as minority interests and presented separately in the consolidated financial statements within equity and net profits respectively.
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II Summary of significant accounting policies and accounting estimates (continued)
(7) Acquisition of minority interest in controlled subsidiaries
The Company acquires equity from the minority shareholders after taking control of the subsidiary, in the consolidated financial statement, the subsidiary’s assets, liabilities should be measured from combination or acquisition date. The difference between the carrying amount of acquisition of minority interst and the net assets proportion calculated by original share percentage since the acquisition date should be recognized in capital surplus. If the capital surplus is insufficient to dilute, the retained earnings shall be adjusted.
(8) Cash
Cash comprise cash on hand, deposits that can be readily drawn on demand, and short-term and highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
(9) Foreign currency translation
Foreign currency transactions are translated into RMB using the exchange rates prevailing at the dates of the transactions.
At the balance sheet date, monetary items denominated in foreign currencies are translated into RMB using the spot exchange rates on the balance sheet date. Exchange differences arising from these translations are 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 capitalised as part of the cost of those assets. Non-monetary items denominated in foreign currencies that are measured at historical costs are translated at the balance sheet date using the spot exchange rates at the date of the transactions. The effect of exchange rate changes on cash is presented separately in the cash flow statement.
(10) Financial Instruments
(a) Financial assets
(i) Classification of financial assets
Financial assets are classified into the following categories at initial recognition: financial assets at fair value through profit or loss, receivables, available-for-sale financial assets and held-to-maturity investments. The classification of financial assets depends on the Group’s intention and ability to hold the financial assets. The Group currently holds the financial assets including receivables. Receivables, including notes receivables, accounts receivable and other receivables, are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.
(ii) Recognition and measurement
Financial assets are recognised at fair value on the balance sheet when the Group becomes a party to the contractual provisions of the financial instrument. Receivables are measured at amortised cost using the effective interest method.
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II Summary of significant accounting policies and accounting estimates (continued)
(10) Financial Instruments(continued)
(a) Financial assets(continued)
(iii) Impairment of financial assets
The Group assesses the carrying amounts of receivables other than those at fair value through profit or loss at each balance sheet date. If there is objective evidence that a financial asset is impaired, an impairment loss is provided for. When an impairment loss on a financial asset carried at amortised cost has occurred, the amount of loss is provided for at the difference between the asset’s carrying amount and the present value of its estimated future cash flows (excluding future credit losses that have not been incurred). If there is objective evidence that the value of the financial asset recovered and the recovery is related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed and the amount of reversal is recognised in profit or loss.
(iv) Derecognition of financial assets
A financial asset is derecognised when any of the below criteria is met: (i) the contractual rights to receive the cash flows from the financial asset expire; (ii) the financial asset has been transferred and the Group transfers substantially all the risks and rewards of ownership of the financial asset to the transferee; or (iii) the financial asset has been transferred and the Group has not retained control of the financial asset, although the Group neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset.
On derecognition of a financial asset, the difference between the carrying amount and the sum of the consideration received and the cumulative changes in fair value that had been recognised directly in equity, is recognised in profit or loss.
(b) Financial liabilities
Financial liabilities are classified into the following categories at initial recognition: financial liabilities at fair value through profit or loss and other financial liabilities. The financial liabilities of the Group mainly comprise other financial liabilities, including payables and borrowings
Payables, including notes payable, accounts payable and other payables, are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
Borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently carried at amortised costs using the effective interest method.
Other financial liabilities with maturities no more than one year are classified as current liabilities. Other financial liabilities with maturities over one year but are due within one year at the balance sheet date are classified as the current portion of non-current liabilities. Others are classified as non-current liabilities.
A financial liability is derecognised or partly derecognised when the current obligation is discharged or partly discharged. The difference between the carrying amount of the financial liability or the derecognised part of the financial liability and the consideration paid is recognised in profit or loss.
(11) Receivables
Receivables comprise notes receivable, accounts receivable and other receivables. Accounts receivable arising from sale of goods or rendering of services are initially recognised at fair value of the contractual payments from the buyers or service recipients.
- 15 - China National Accord Medicines Corporation Ltd. Annual Report 2012
II Summary of significant accounting policies and accounting estimates (continued)
(11) Receivables (continued)
(a) Receivables with amounts that are individually significant and subject to separate assessment for provision for bad debts
Receivables with amounts that are individually significant are subject to assessment for impairment on the individual basis. If there exists objective evidence that the Group will not be able to collect the amount under the original terms, a provision for impairment of that receivable is made.
The criterion for determing “individually significant” amounts is that any individual amount is more than RMB 5 million.
The method of providing for bad debts for those individually significant amounts is as follows: the amount of the present value of the future cash flows expected to be derived from the receivable below its carrying amount.
(b) Receivables that are subject to provision for bad debts on the grouping basis
Receivables with amounts that are not individually significant and those receivables that have been individually assessed for impairment and have not been found impaired are classified into certain groupings based on their credit risk characteristics.The provision for bad debts is determined based on the historical loss experience for the groupings of receivables with similar credit risk characteristics, taking into consideration of the current circumstances.
A provision for impairment of the receivables is made based on the ageing of receivables at the following percentage:
Provision ratios used for Provision ratios used for accounts receivables other receivables
Within 1 year - - 1 to 2 years 5% 5% 2 to 3 years 10% 10% More than 3 years 20% 20%
(c) Receivables with amounts that are not individually significant but subject to separate assessment for provision for bad debts
The reason for making separate assessment for provision for bad debts is that there exists objective evidence that the Group will not be able to collect the amount under the original terms of the receivable.
The provision for bad debts is determined based on the amount of the present value of the future cash flows expected to be derived from the receivable below its carrying amount.
(d) When the Group transfers the accounts receivable to the financial institutions without recourse, the difference between the proceeds received from the transaction and their carrying amounts and the related taxes is recognised in profit or loss for the current period.
- 16 - China National Accord Medicines Corporation Ltd. Annual Report 2012
II Summary of significant accounting policies and accounting estimates (continued)
(12) Inventories
(a) Classification
Inventories include raw materials, work in progress, finished goods and turnover materials, and are measured at the lower of cost and net realisable value.
(b) Costing of inventories
Cost is determined on the weighted average method. The cost of finished goods and work in progress comprises raw materials, direct labour and an allocation of systematically allocated overhead expenditures incurred based on normal operating capacity.
(c) Basis for determining net realisable values of inventories and method for making provision for decline in the value of inventories
Provisions for declines in the value of inventories are determined at the excess amount of the carrying value of the inventories over their net realisable value. Net realisable value is determined based on the estimated selling price in the ordinary course of business, less the estimated costs to completion and estimated costs necessary to make the sale and related taxes.
(d) The Group adopts the perpetual inventory system.
(e) Amortisation methods of low value consumables and packaging materials
Turnover materials include low value consumables and packaging materials, which are expensed when issued.
(13) Long-term equity investments
Long-term equity investments comprise the Company’s long-term equity investments in its subsidiaries and the Group’s long-term equity investments in its associates.
Subsidiaries are the investees over which the Company is able to exercise control. Associates are the investees that the Group has significant influence on their financial and operating policies.
Investments in subsidiaries are measured using the cost method in the Company’s financial statements, and adjusted by using the equity method when preparing the consolidated financial statements. Interests in associates are accounted for using the equity method.
(a) Determination of investment cost
For long-term equity investments acquired through a business combination: for long-term equity investments acquired through a business combination involving enterprises under common control, the investment cost shall be the absorbing party’s share of the carrying amount of owners’ equity of the party being absorbed at the combination date; for long-term equity investment acquired through a business combination involving enterprises not under common control, the investment cost shall be the combination cost.
- 17 - China National Accord Medicines Corporation Ltd. Annual Report 2012
II Summary of significant accounting policies and accounting estimates (continued)
(13) Long-term equity investments (continued)
(b) Subsequent measurement and recognition of related profit and loss
For long-term equity investments accounted for using the cost method, they are measured at the initial investment costs, and cash dividends or profit distribution declared by the investees are recognised as investment income in profit or loss.
For long-term equity investments accounted for using the equity method, where the initial investment cost of a long-term equity investment exceeds the Group’s share of the fair value of the investee’s identifiable net assets at the acquisition date, the long-term equity investment is measured at the initial investment cost; where the initial investment cost is less than the Group’s share of the fair value of the investee’s identifiable net assets at the acquisition date, the difference is included in profit or loss and the cost of the long-term equity investment is adjusted upwards accordingly.
For long-term equity investments accounted for using the equity method, the Group recognises the investment income according to its share of net profit or loss of the investee. The Group discontinues recognising its share of net losses of an investee after the carrying amount of the long-term equity investment together with any long-term interests that, in substance, form part of the investor’s net investment in the investee are reduced to zero. However, if the Group has obligations for additional losses and the criteria with respect to recognition of provisions under the accounting standards on contingencies are satisfied, the Group continues recognising the investment losses and the provisions. For changes in owners’ equity of the investee other than those arising from its net profit or loss, the Group records its proportionate share directly into capital surplus, provided that the Group’s proportion of shareholding in the investee remains unchanged. The carrying amount of the investment is reduced by the Group’s share of the profit distribution or cash dividends declared by an investee. The unrealised profits or losses arising from the intra-group transactions amongst the Group and its investees are eliminated in proportion to the Group’s equity interest in the investees, and then based on which the investment gains or losses are recognised. For the loss on the intra-group transaction amongst the Group and its investees attributable to asset impairment, any unrealised loss is not eliminated.
(c) Basis for determing existence of control, jointly control or significant influence over investees
Control is the power to govern the financial and operating policies of the investee so as to obtain benefits from its operating activities. In determining whether the Company is able to exercise control over the investee, the effect of potential voting rights over the investee is considered, such as convertible debts and warrants currently exercisable, etc.
Significant influence is the power to participate in the financial and operating policy decisions of the investee, but is not control or joint control over those policies.
(d) Impairment of long-term equity investments
The carrying amount of long-term equity investments in subsidiaries and associates is reduced to the recoverable amount when the recoverable amount is less than the carrying amount (Note II (21)).
- 18 - China National Accord Medicines Corporation Ltd. Annual Report 2012
II Summary of significant accounting policies and accounting estimates (continued)
(14) Investment properties
Investment properties, including land use rights that have already been leased out, buildings that are held for the purpose of leasing, and buildings that are being constructed or developed for the purpose of leasing in future, are measured initially at cost. Subsequent expenditures incurred in relation to an investment property are included in the cost of the investment property when it is probable that the associated economic benefits will flow to the Group and their costs can be reliably measured; otherwise, the expenditures are recognised in profit or loss in the period in which they are incurred.
The Group adopts the cost model for subsequent measurement of investment properties. Buildings and land use rights are depreciated or amortised 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 (amortisation) rates of investment properties are as follows:
Estimated useful Estimated Annual lives residual value depreciation (amortisation) rates
Buildings 20-35 years 5% 2.71% to 4.75% Land use rights 30-50 years - 2.00% to 3.33%
When an investment property is transferred to owner-occupied properties, it is reclassified as fixed asset or intangible asset at the date of the transfer. When an owner-occupied property is transferred out for earning rentals or for capital appreciation, the fixed asset or intangible asset is reclassified as investment properties at its carrying amount at the date of the transfer.
The investment property’s estimated useful life, net residual value and depreciation (amortisation) method applied are reviewed and adjusted as appropriate at each year-end.
An investment property is derecognised on disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from its disposal. The net amount of proceeds from sale, transfer, retirement or damage of an investment property after its carrying amount and related taxes and expenses is recognised in profit or loss for the current period.
The carrying amount of an investment property is reduced to the recoverable amount if the recoverable amount is below the carrying amount (Note II (21)).
(15) Fixed assets
(a) Recoginition and initial measurement of fixed assets
Fixed assets comprise buildings, machinery and equipment, motor vehicles, other equipment and leasehold improvements.
Fixed assets are recognised when it is probable that the related economic benefits will flow to the Group and the costs can be reliably measured. Fixed assets purchased or constructed by the Group are initially measured at cost at the acquisition date. The fixed assets contributed by the State shareholders at the reorganisation of the Company into a corporation entity are recognised based on the revaluated amounts approved by the state-owned assets administration department.
Subsequent expenditures incurred for a fixed asset are included in the cost of the fixed asset when it is probable that the associated economic benefits will flow to the Group and the related cost can be reliably measured. The carrying amount of the replaced part is derecognised. All the other subsequent expenditures are recognised in profit or loss in the period in which they are incurred.
- 19 - China National Accord Medicines Corporation Ltd. Annual Report 2012
II Summary of significant accounting policies and accounting estimates (continued)
(15) Fixed assets (continued)
(b) Depreciation methods of fixed assets
Fixed assets are depreciated using the straight-line method to allocate the cost of the assets to their estimated residual values over their estimated useful lives. For the fixed assets that have been provided for impairment loss, the related depreciation charge is prospectively determined based upon the adjusted carrying amounts over their remaining useful lives.
The estimated useful lives, the estimated residual values expressed as a percentage of cost and the annual depreciation rates are as follows:
Estimated useful Estimated Annual lives residual value depreciation rates
Buildings 20-35 years 5% 2.71% to 4.75% Machinery and equipment 10-14 years 5% 6.79% to 9.5% Motor vehicles 5-10 years 5% 9.5% to 19% Other equipment 5-10 years 5% 9.5% to 19% Leasehold improvements Within 5 years - Above 20%
The estimated useful life, the estimated net residual value of a fixed asset and the depreciation method applied to the asset are reviewed, and adjusted as appropriate at least at each year-end.
(c) The carrying amount of fixed assets is reduced to the recoverable amount when the recoverable amount is less than the carrying amount (Note II (21)).
(d) Disposal of fixed assets
A fixed asset is derecognised on disposal or when no future economic benefits are expected from its use or disposal. The amount of proceeds from disposal on sale, transfer, retirement or damage of a fixed asset net of its carrying amount and related taxes and expenses is recognised in profit or loss for the current period.
(16) Construction in progress
Construction in progress is measured at actual cost. Actual cost comprises construction costs, installation costs, borrowing costs that are eligible for capitalisation and other costs necessary to bring the fixed assets ready for their intended use. Construction in progress is transferred to fixed assets when the assets are ready for their intended use, and depreciation begins from the following month. The carrying amount of construction in progress is reduced to the recoverable amount when the recoverable amount is less than the carrying amount (Note II (21)).
(17) Borrowing costs
The borrowing costs that are directly attributable to the acquisition and construction of a fixed asset that needs a substantially long period of time for its intended use commence to be capitalised and recorded as part of the cost of the asset when expenditures for the asset and borrowing costs have been incurred, and the activities relating to the acquisition and construction that are necessary to prepare the asset for its intended use have commenced. The capitalisation of borrowing costs ceases when the asset under acquisition or construction becomes ready for its intended use and the borrowing costs incurred thereafter are recognised in profit or loss for the current period. Capitalisation of borrowing costs is suspended during periods in which the acquisition or construction of a fixed asset is interrupted abnormally and the interruption lasts for more than 3 months, until the acquisition or construction is resumed.
- 20 - China National Accord Medicines Corporation Ltd. Annual Report 2012
II Summary of significant accounting policies and accounting estimates (continued)
(17) Borrowing costs (continued)
For the specific borrowings obtained for the acquisition or construction of a fixed asset qualifying for capitalisation, the amount of borrowing costs eligible for capitalisation is determined by deducting any interest income earned from depositing the unused specific borrowings in the banks or any investment income arising on the temporary investment of those borrowings during the capitalisation period.
For the general borrowings obtained for the acquisition or construction of a fixed asset qualifying for capitalisation, the amount of borrowing costs eligible for capitalisation is determined by applying the weighted average effective interest rate of general borrowings, to the weighted average of the excess amount of cumulative expenditures on the asset over the amount of specific borrowings. The effective interest rate is the rate at which the estimated future cash flows during the period of expected duration of the borrowings or applicable shorter period are discounted to the initial amount of the borrowings.
(18) Intangible assets
Intangible assets include land use rights, computer softwares, technology patents,trademarks and distribution network, which initially recognised at cost. Intangible assets contributed by state-owned shareholders during the company reorganisation were recorded based on the valuation amount approved by the state-owned assets supervision and management department.
(a) Land use rights
A land use right granted by government with a infinite useful life would not be amortised. Other land use rights are amortised on the straight-line basis over their approved useful period. If the acquisition costs of land use rights and the buildings located thereon cannot be reliably allocated between the land use rights and the buildings, all of the acquisition costs are recognised as fixed assets.
(b) Computer softwares
Computer softwares purchased by the Group are initially measured at cost, which are amortised on the straight-line basis over their approved useful period of 3 to 5 years.
(c) Trademarks and Technology Patents
Trademarks are amortised on the straight-line basis over their effective periods as stipulated by law of 5 to 10 years. Technology Patents are amortised on the straight-line basis over their effective useful period of 5 years.
(d) Distribution network
Distribution network includes customer relationships and distribution channels, which is amortised on the straight-line basis over its approved useful lives.
(e) Periodical review of useful life and amortisation method
For an intangible asset with a finite useful life, review of its useful life and amortisation method is performed at each year-end, with adjustment made as appropriate.
For an intangible asset without a definite useful life, review of its useful life are performed at each year-end.
- 21 - China National Accord Medicines Corporation Ltd. Annual Report 2012
II Summary of significant accounting policies and accounting estimates (continued)
(18) Intangible assets (continued)
(f) Research and development
The expenditure on an internal research and development project is classified into expenditure on the research phase and expenditure on the development phase based on its nature and whether there is material uncertainty that the research and development activities can form an intangible asset at end of the project.
Expenditure on the research phase is recognised in profit or loss in the period in which it is incurred. Expenditure on the development phase is capitalised only if all of the following conditions are satisfied:
it is technically feasible to complete the intangible asset so that it will be available for use; management intends to complete the intangible asset, and use or sell it; it can be demonstrated how the intangible asset will generate economic benefits; adequate technical, financial and other resources to complete the development and the ability to use or sell the intangible asset; and the expenditure attributable to the intangible asset during its development phase can be reliably measured.
Other development expenditures 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. Capitalised 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.
(g) Impairment of intangible assets
The carrying amount of intangible assets is reduced to the recoverable amount when the recoverable amount is less than the carrying amount (Note II (21)).
(19) Long-term prepaid expenses
Long-term prepaid expenses include the expenditure for improvements to fixed assets under operating leases, and other expenditures that have been made but should be recgonised as expenses over more than one year in the current and subsequent periods. Long-term prepaid expenses are amortised on the straight-line basis over the expected beneficial period and are presented at actual expenditure net of accumulated amortisation.
(20) Governmental medical reserve funds and specially approved reserving materials
Appointed by the PRC Government, China National Pharmaceutical Group Corporation (“CNPGC") is responsible for purchasing, allocating and providing the governmental medical reserves, which include the medical products, traditional Chinese medicine and medical appliances for nation-wide emergency rescue and disaster relief. Appointed by the Government of Guangxi Province, Sinopharm Medicine Holding Guangxi Co., Ltd. (“Sinopharm Guangxi”), a subsidiary of the Group, is responsible for purchasing, allocating and providing the medical reserves, which include the medical products needed for common disease and emergencies triggered by major disasters, epidemics and other situations in Guangxi Province. In accordance with the regulation of CNPGC, as being the enterprise who bears the obligation for specially approved medical reserving materials, the medical reserve funds received from the PRC Government or local government are recognised in 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 recognises in other non-current assets.
- 22 - China National Accord Medicines Corporation Ltd. Annual Report 2012
II Summary of significant accounting policies and accounting estimates (continued)
(21) Impairment of long-term assets
Fixed assets, construction in progress, intangible assets with finite useful lives, Long-term prepaid expenses and investment properties measured using the cost model and long-term equity investments in subsidiaries, joint ventures and associates are tested for impairment if there is any indication that an asset may be impaired at the balance date. If the result of the impairment test indicates that the recoverable amount of the asset is less than its carrying amount, a provision for impairment and an impairment loss are recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and the present value of the future cash flows expected to be derived from the asset. Provision for asset impairment is determined and recognised on the individual asset basis. If it is not possible to estimate the recoverable amount of an individual asset, the recoverable amount of a group of assets to which the asset belongs is determined. A group of assets is the smallest group of assets that is able to generate independent cash inflows.
Goodwill that is separately presented in the financial statements and intangible assets with infinite useful lives are tested at least annually for impairment, irrespective of whether there is any indication that it may be impaired. In conducting the test, the carrying value of goodwill is allocated to the related asset groups or groups of asset groups which are expected to benefit from the synergies of the business combination. If the result of the test indicates that the recoverable amount of an asset group or group of asset groups, including the goodwill allocated, is lower than its carrying amount, the corresponding impairment loss is recognised. The impairment loss is first deducted from the carrying amount of goodwill that is allocated to the asset group or group of asset groups, and then deducted from the carrying amounts of other assets within the asset groups or groups of asset groups in proportion to the carrying amounts of other assets.
Once the above asset impairment loss is recognised, it will not be reversed for the value recovered in the subsequent periods.
(22) Employee benefits
Employee benefits mainly include wages or salaries, bonuses, allowances and subsidies, staff welfare, annuity, social security contributions, housing funds, labour union funds, employee education funds and other expenditures incurred in exchange for service rendered by employees.
Where the Group terminates the employment relationship with employees before the end of the employment contract or offers compensation for encouraging employees to accept voluntary redundancy, a provision for termination benefits for the compensation arising from termination of the employment relationship with employees is recognised, with a corresponding charge to profit or loss when the Group has made a formal plan for termination of the employment relationship or an offer for voluntary redundancy which will be implemented immediately and cannot be withdrawn by the Group unilaterally.
Except for compensation paid for termination of employment, employee benefits are recognised as salaries and wages payable in the accounting period in which an employee has rendered service, as costs of assets or expenses to whichever the employee service is attributable.
- 23 - China National Accord Medicines Corporation Ltd. Annual Report 2012
II Summary of significant accounting policies and accounting estimates (continued)
(22) Employee benefits (continued)
Certain subsidiaries have the defined benefit plans. The Group recognizes salaries, social insurance premiums, etc., to be paid for the early retired employees, during the period from the date when the employees stop rendering service to the normal retirement date, as employee benefits payable through administrative expenses for the current period, when the above conditions for the recognition of termination benefit plan are satisfied.
The liability recognised in the balance sheet in respect of defined benefit plans is the present value of the defined benefit obligation at the balance sheet date, together with adjustments for unrecognised actuarial gains or losses and past service costs. The defined benefit t obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of the RMB denominated (the currency in which the benefits will be paid) PRC government bonds, and that have terms to maturity approximating to the terms of the related pension liability.
(23) Dividend distribution
Cash dividends distribution is recognised as a liability in the period in which it is approved by the annual shareholders’ meeting.
(24) Revenue recognition
The amount of revenue is determined in accordance with the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the Group’s activities. Revenue is shown net of discounts and returns.
Revenue is recognised when the economic benefits associated with the transaction will flow to the Group, the related revenue can be reliably measured, and the specific revenue recognition criteria have been met for each type of the Group’s activities as described below:
(a) Sale of goods
Revenue from the sale of goods is recognized when significant risks and rewards of ownership of the goods are transferred to the buyer, the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold, and it is probable that the economic benefit associated with the transaction will flow to the Company and the relevant revenue and costs can be measured reliably.
(b) Rendering of services
The Group provides freight service and storage service to external parties. The freights are recognized as revenue right after the goods are transported to the place of delivery according to contracts or agreements, received and confirmed by the purchasers. The storage charges are recognized as revenue on the basis of services provided during the storage period. Other revenue arising from the rendering of services is determined in accordance with the amount stipulated in the contract or agreement signed by the enterprise and the party who receives the services.
- 24 - China National Accord Medicines Corporation Ltd. Annual Report 2012
II Summary of significant accounting policies and accounting estimates (continued)
(24) Revenue recognition (continued)
(c) Transfer of asset use rights
Interest income is determined by using the effective interest method, based on the length of time for which the Group’s cash is used by others.
Income from an operating lease is recognised on a straight-line basis over the period of the lease.
(d) Customer Loyalty Programme
The group, offers loyalty points programmes where points earned through the purchase of goods can only be redeemed for goods provided by Zhijun Pharm or other free goods. The fair value of the consideration received or receivable in respect of the initial sale is allocated between the award credits and the other components of the sale. Fair value of award points is measured on the basis of the value of the awards (that is, goods or services) for which they could be redeemed, the fair value of the award credits should take account of expected forfeitures as well as the discounts or incentives that would otherwise be offered to customers who have not earned award credits from an initial sale.
(25) Government grants
Government grants are transfers of monetary or non-monetary assets from the government to the Group at nil consideration, including refund of taxes and financial subsidies, etc.
A government grant is recognised when the conditions attached to it can be complied with and the government grant can be received. For a government grant in the form of transfer of monetary assets, the grant is measured at the amount received or receivable. For a government grant in the form of transfer of non-monetary assets, it is measured at fair value; if the fair value is not reliably determinable, the grant is measured at nominal amount.
A government grant related to an asset is recognised as deferred income, and evenly amortised to profit or loss over the useful life of the related asset. Government grants measured at nominal amounts are recognised immediately in profit or loss for the current period.
For government grants related to income, where the grant is a compensation for related expenses or losses to be incurred by the Group in the subsequent periods, the grant is recognised as deferred income, and included in profit or loss over the periods in which the related costs are recognised; where the grant is a compensation for related expenses or losses already incurred by the Group, the grant is recognised immediately in profit or loss for the current period.
- 25 - China National Accord Medicines Corporation Ltd. Annual Report 2012
II Summary of significant accounting policies and accounting estimates (continued)
(26) Deferred tax assets and deferred tax liabilities
Deferred tax assets and deferred tax liabilities are calculated and recognised based on the differences arising between the tax bases of assets and liabilities and their carrying amounts (temporary differences). Deferred tax asset is recognised for the deductible losses that can be carried forward to subsequent years for deduction of the taxable profit in accordance with the tax laws. No deferred tax liability is recognised for a temporary difference arising from the initial recognition of goodwill. No deferred tax asset or deferred tax liability is recognised for the temporary differences resulting from the initial recognition of assets or liabilities due to a transaction other than a business combination, which affects neither accounting profit nor taxable profit (or deductible loss). At the balance sheet date, deferred tax assets and deferred tax liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled.
Deferred tax assets are only recognised for deductible temporary differences, deductible losses and tax credits to the extent that it is probable that taxable profit will be available in the future against which the deductible temporary differences, deductible losses and tax credits can be utilised.
Deferred tax assets and liabilities are offset when:
the deferred taxes are related to the same tax payer within the Group and the same taxation authority; and,
that tax payer has a legally enforceable right to offset current tax assets against current tax liabilities.
Deferred tax liabilities are recognised for temporary differences arising from investments in subsidiaries and associates, except where the Group is able to control the timing of the reversal of the temporary difference, and it is probable that the temporary difference will not reverse in the foreseeable future. When it is probable that the temporary differences arising from investments in subsidiaries and associates will be reversed in the foreseeable future and that the taxable profit will be available in the future against which the temporary differences can be utilised, the corresponding deferred tax assets are recognised.
(27) Operating leases
Leases where a significant portion of the risks and rewards of ownership are retained by the leaser are classified as operating leases. Lease payments under an operating lease are recognised on a straight-line basis over the period of the lease, and are either capitalised as part of the cost of related assets or charged as an expense for the current period.
(28) Segment information
The Group identifies operating segments based on the internal organisation structure, management requirements and internal reporting system, and discloses segment information of reportable segments which is determined on the basis of operating segments.
An operating segment is a component of the Group that satisfies all of the following conditions: (1) the component is able to earn revenues and incur expenses from its ordinary activities; (2) whose operating results are regularly reviewed by the Group’s management to make decisions about resources to be allocated to the segment and to assess its performance, and (3) for which the information on financial position, operating results and cash flows is available to the Group. If two or more operating segments have similar economic characteristics and satisfy certain conditions, they are aggregated into one single operating segment.
- 26 - China National Accord Medicines Corporation Ltd. Annual Report 2012
II Summary of significant accounting policies and accounting estimates (continued)
(29) Changes in significant accounting policies
The Group has no changes in significant accounting policies in 2012.
(30) Critical accounting estimates and judgments
The Group continually evaluates the critical accounting estimates and key judgments applied based on historical experience and other factors, including expectations of future events that are believed to be reasonable.
(a) Critical accounting estimates and key assumptions
The critical accounting estimates and key assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next accounting year are outlined below:
(i) Accounting estimates on impairment of goodwill
The Group tests annually whether goodwill has suffered any impairment. The recoverable amount of asset groups and groups of asset groups is the present value of the future cash flows expected to be derived from them. These calculations require use of estimates (Note V (14)).
If management revises the gross margin that is used in the calculation of the future cash flows of asset groups and groups of asset groups, and the revised gross margin is lower than the one currently used, the Group would need to recognise further impairment against goodwill and fixed assets.
If management revises the pre-tax discount rate applied to the discounted cash flows, and the revised pre-tax discount rate is higher than the one currently applied, the Group would need to recognise further impairment against goodwill and fixed assets.
If the actual gross margin/pre-tax discount rate is higher/lower than management’s estimates, the impairment loss of goodwill previously provided for is not allowed to be reversed by the Group.
(ii) Income taxes
The Group is subject to income taxes in numerous jurisdictions. There are many transactions and events for which the ultimate tax determination is uncertain during the ordinary course of business. Significant judgment is required from the Group in determining the provision for income taxes in each of these jurisdictions. The Group recognises income taxes in each jurisdiction based on estimates. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.
- 27 - China National Accord Medicines Corporation Ltd. Annual Report 2012
II Summary of significant accounting policies and accounting estimates (continued)
(30) Critical accounting estimates and judgments (continued)
(iii) Accounting estimates on impairment of accounts receivable
In accordance with the Group’s accounting policy (Note II (11)), the Group’s management tests annually whether receivables have suffered any impairment, Impairment of receivables has been assessed by taking into account the customers’ credit history and financial position together with the current market conditions. Even if the Group’s management has made bad debt provision for the expected loss at its best estimate, there is a possibility that changes in customers’ financial position or market conditions will alter the result.
(iv) Accounting estimates on impairment of inventories
In accordance with the Group’s accounting policy (Note II (12) (c)), the Group’s management estimates the net realizable value of the inventory. Net realisable value is determined based on the estimated selling price in the ordinary course of business, less the estimated costs to completion and estimated costs necessary to make the sale and related taxes. Even if the Group’s management has made stock provision for the expected impairment at its best estimate, there is a possibility that changes in market conditions will alter the result.
(v) Accounting estimates on impairment of long-term assets
In accordance with the Group’s accounting policy (Note II (21)), the Group’s management tests annually whether long term assets with an indication of impairment have suffered any impairment, including fixed assets, construction in progress, intangible assets with finite useful lives, Long-term prepaid expenses and investment properties measured using the cost model and long-term equity investments in subsidiaries and associates. The calculation of present value of projection cash flows of these long-term assets requires the use of accounting estimate which is similar to the impairment test of goodwill.
It is reasonably possible that outcomes based on current experience within the next financial year would be significantly different, which will result in a significant impact on the carrying amount of those long-term assets described above.
- 28 - China National Accord Medicines Corporation Ltd. Annual Report 2012
III Taxation
(1) The types and rates of taxes applicable to the Group are set out below:
Type Taxable base Tax rate
Enterprise income Taxable income tax(“EIT”) 15%、20% or 25% Value added tax (“VAT”) Taxable value added amount (Tax 0%、3%、4%、6%、 payable is calculated using the taxable 11%、13% or 17% sales amount multiplied by the effective tax rate less deductible VAT input of current period) Business tax Rental income, storage income and etc. 3%、5% City maintenance and VAT and business tax construction tax 7% Education surcharge VAT and business tax 3% Regional/Local VAT and business tax education surcharge 2%
According to the Notice of the Ministry of Finance and the State Administration of Taxation on Issuing the Pilot Plan for Levying Value Added Tax in Lieu of Business Tax (No. 110 [2011] of the Ministry of Finance) and the Notice of the Ministry of Finance and the State Administration of Taxation on the Pilot Work of Levying Value-Added Tax in Lieu of Business Tax in the Transportation Industry and Some Modern Service Industries in Beijing and Other Seven Provinces and Cities (No. 71 [2012] of the Ministry of Finance), since November 1, 2012, Value Added Tax in lieu of Business Tax is levied at different tax rates on revenue arising from the following business of the subsidiaries registered in Guangdong province: 17% on tangible property lease; 11% on transportation; 6% on logistics auxiliary business, certification and consultation and information technology. Since October 1,2012, Value Added Tax in lieu of Business Tax is levied at a tax rate of 6% on revenue arising from information technology.
(2) Tax preferences The company, Shenzhen Zhijun Pharmaceutical Trade Co., Ltd. (‘Zhijun Trade’), Sinopharm holding shenzhen Pharmaceutical Materials Co. Ltd. (‘Sinopharm Materials’), Sinopharm holding Jianmin Pharmaceutical Co. Ltd. (‘Sinopharm Jianmin’), Sinopharm holding Shenzhen Logistics Co. Ltd. (‘Shenzhen Logistics’) and Sinopharm holding Shenzhen Yanfeng Medical Co. Ltd (’ Sinopharm Yanfeng’), qualify as manufacturing enterprises established in a special economic zone. As approved by the tax authorities, the aforesaid companies’ original applicable enterprise income tax rates are 15%. Under relevant requirements of the Corporate Income Tax Law and Guo Fa [2007]39, the enterprise income tax rate applicable to those companies will increase gradually to 25% within 5 years from 2008 to 2012. Their applicable income tax rate for the current year is 25% (2011: 24%). Sinopharm holding Guangxi Accord Chinese Herbal Pieces Co. Ltd.. (‘Guangxi Accord Chinese Herbal Pieces’ ) is regarded as a small meagre-profit enterprise with an Enterprise income tax rate of 20% in 2012(2011:20%).
In 2011, Shenzhen Zhijun Pharmaceutical Co. Ltd (‘Zhijun Pharm’) and Suzhou Zhijun Wanqing Pharmaceutical Co. Ltd. (‘Suzhou Zhijun’), subsidiaries of the Company, separately obtained the certificate of High and New Technology Enterprises with effective period of 3 years, 2011 to 2013.
In 2012, Sinopharm holding Shenzhen Medicine Co. Ltd (‘Sinopharm Shenzhen Medicine’) obtained the certificate of High and New Technology Enterprises with effective period of 3 years, 2012 to 2014.
Under the relevant regulations of article 28 of the Corporate Income Tax Law, the applicable tax rates for Zhijun Pharm, Suzhou Wanqing and Sinopharm Shenzhen Medicine in year 2012 are 15% (2011: 15%).
- 29 - China National Accord Medicines Corporation Ltd. Annual Report 2012
IV Business combinations and consolidated financial statements
(1) Subsidiaries
(a) Subsidiaries acquired not under common control
The holding Registered Principal activities Legal type of Place of Nature of capital Enterprise Repres-e investment registration business ( RMB’0000) Type ntative
Sinopharm Holding Guilin Indirect Guilin Comercial 1,000.00 Wholesale of Traditional Chinese medicine, Limited Zhou Co., Ltd. Chinese patent drugs, raw materials for chemical company Ruili (Sinopharm Guilin) ( Note medicine, chemical material drugs, antibiotics, (i)) bio-chemical drugs and biological products (excluding vaccines), narcotic drugs, anabolic agent, Pericarpium Papaveris,etc. Sinopharm Holding Baise Indirect Baise Comercial 1,000.00 Traditional Chinese medicine, Chinese patent Limited Zhou Co., Ltd. drugs, raw materials for chemical medicine, company Ruili (Sinopharm Baise) ( Note chemical material drugs, antibiotics, (i)) bio-chemical drugs and biological products (excluding vaccines), narcotic drugs, anabolic agent. Sinopharm Holding Direct Zhongshan Comercial 1,000.00 Wholesale of Traditional Chinese medicine, Limited Yang Yan Zhongshan Co., Ltd. Chinese patent drugs, raw materials for chemical company (Sinopharm Zhongshan) medicine, chemical material drugs, antibiotics, bio-chemical drugs and biological products (excluding vaccines)
Year-end Other assets constitute Equity Voting rights Consolidated Minority Loss shared by minority balance of investment in interest held (%) or not interests interests investment substance held (%) (RMB’0000) ( RMB’0000) Sinopharm Guilin ( Note (i)) 1,000.00 - 100 100 Yes - - Sinopharm Baise ( Note (i)) 1,000.00 - 100 100 Yes - - Sinopharm Zhongshan 1,000.00 - 100 100 Yes - -
(i) Sinopharm Guilin and Sinopharm Baise are wholly owned subsidiaries of Sinopharm Guangxi, indirectly held of 100% in equity by the Company.
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China National Accord Medicines Corporation Ltd. Annual Report 2012
IV Business combinations and consolidated financial statements
(1) Subsidiaries(continued)
(b) Subsidiaries acquired under common control
The holding Registered Legal type of Place of Nature of capital Enterprise Repres-en investment registration business ( RMB’0000) Principal activities Type tative
Zhijun Pharm Direct Shenzhen Manufacturing 20,000.0 Original chemical medicine manufacture, Chinese patent Limited Yan medicine processing, chemical raw material of company Zhigang medicine, the imports and exports business which transacted according to examined and approved certificate Sinopharm Jianming Direct Shenzhen Commercial 500.0 Wholesale of chemical agent, antibiotics agent, chemical Limited Lin and biological agent, blood products, raw material of company Xinyang chemical product, Chinese medicine and diagnosis products Shenzhen Medicine Trade Co., Direct Shenzhen Commercial 188.0 Wholesale and retail of drugs and textiles - - Ltd. (‘Shenzhen Trade’) (i) Sinopharm Material Direct Shenzhen Commercial 600.0 Chinese patent medicine, western medicine, medicine Limited Zhao treatment apparatus company Yuhe Zhijun Trade Direct Shenzhen Commercial 189.0 Purchase and sale of Chinese traditional,medicinal Limited Deng materials, Chinese patent medicine,chemical raw company Baojun material for medical treatment,antibiotic preparation, chemical medicine preparation etc. Shenzhen Logistics Direct Shenzhen Service 100.0 Storage service, convey, liquidation of cargo external Limited Ma package and common transportation of road company Jiancong
- 31 -
China National Accord Medicines Corporation Ltd. Annual Report 2012
IV Business combinations and consolidated financial statements (continued)
(1) Subsidiaries (continued)
(b) Subsidiaries acquired under common control (continued)
The holding Registered Legal type of Place of Nature of capital Enterprise Repres-entat investment registration business ( RMB’0000) Principal activities Type ive
Guangdong Accord Direct Shenzhen Service 3.0 Non-Enterpri Tan Guoshu Pharmaceutical Vocational se Skills Training Center Training service (’Training Center’)
Sinopharm Holding Direct Guangzhou Commercial 40,000.0 Chinese patent medicine, chemical medicine preparation, Limited Shi Jinming Guangzhou Co., Ltd. antibiotics, biochemical medicine, biological products, company (’Sinopharm Guangzhou’) diagnosis medicine, treatment diagnosis biological products, finalized packing food, chemical products, self-support and surrogate the imports and exports of various merchandise and skills. Sinopharm Holding Direct Guangzhou Commercial 4,000.0 Drugs, medical apparatus sales Limited Lin Guangdong Hengxing company Zhaoxiong Pharmaceutical Co., Ltd. (‘Sinopharm Hengxing ')
Sinopharm Holding Yulin Direct Yulin Commercial 500.0 Drug sales Limited Zhou Ruili Co., Ltd(’Sinopharm company Yulin)(Note iii) Sinopharm Medicine Holding Direct Liuzhou Commercial 2,053.1 Chinese traditional medicinal materials, Chinese patent Limited Lin Liuzhou Co., Ltd. medicine, Chinese traditional medicine in pieces, company Zhaoxiong (’Sinopharm Liuzhou’) chemical raw material, chemical medicine preparation, antibiotics, biochemical drugs, psychotropic drugs, chemical raw material drug and its preparation. (that involving specific examination and approve should be operated based on the scope that checked and ratified by the license)
- 32 -
China National Accord Medicines Corporation Ltd. Annual Report 2012
IV Business combinations and consolidated financial statements (continued)
(1) Subsidiaries (continued)
(b) Subsidiaries acquired under common control (continued)
The holding Place of Nature of Registered Principal activities Enterprise Legal type of registration business capital Type Repres-entative investment (RMB’0000)
Guangxi Accord Chinese Indirect Liuzhou Manufacturing 200.0 Limited Lei Caotian Manufacturing and sales of Chinese herbal pieces Herbal Pieces company Guangdong Huixin Direct Guangzhou Service 500.0 Project investment, property management and leasing, Limited Shi Jinming Investment Co., Ltd. medical information consultancy, car park company (’Huixin Investment’) management
Sinopharm Holding Foshan Direct Foshan Commercial 1,000.0 Drug sales Limited Lin Xinyang Co., Ltd. (’Sinopharm company Foshan’)
Sinopharm Holding Direct Guangzhou Commercial 3,000.0 Sales of medicine and medical treatment apparatus Limited Luo Qin Guangdong Yuexing Co., company Ltd. (’Sinopharm Yuexing’)
Sinopharm Holding Direct Guangzhou Service 500.0 Storage loading and unloading Limited Lin Min Guangdong Logistics Co., company Ltd. (‘Guangdong Logistics’)
Sinopharm Guangxi Direct Nanning Commercial 10,000.0 Drug sales Limited Lin Zhaoxiong company Sinopharm Holding Guangxi Indirect Nanning Service 710.1 Storage loading and unloading, consultation service Limited Lin Zhaoxiong Logistics Co., Ltd. company (‘Guangxi Logistics’)
Sinopharm Shenzhen Direct Shenzhen Manufacturing 5,000.0 Manufacturing of granules, lotion, tablet, capsule, oral Limited Deng Baojun Medicine liquid and mixture, and syrup; manufacturing and sale company of hair products, bath foam and cosmetics, and detergent (antibiosis washing liquid); manufacturing of plastic bottle; manufacturing and sale of health food. Sinopharm Holding Wuzhou Indirect Wuzhou Commercial 330.00 Traditional Chinese medicine, Chinese patent drugs, raw Limited Zhou Co., Ltd. (‘Sinopharm materials for chemical medicine, chemical material company Ruili Wuzhou’) drugs, antibiotics, bio-chemical drugs and biological products, narcotic drugs, anabolic agent, Pericarpium Papaveris,etc.
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China National Accord Medicines Corporation Ltd. Annual Report 2012
IV Business combinations and consolidated financial statements (continued)
(1) Subsidiaries (continued)
(b) Subsidiaries acquired under common control (continued)
Year-End balance Other assets Equity interest Voting rights Consolidated Minority interests Loss shared by of investment constitute held (%) held (%) or not (RMB’0000) minority interests (RMB’0000) investment in substance
Zhijun Pharm 23,706.2 - 100 100 Yes - - Sinopharm Jianmin 5,348.3 - 100 100 Yes - - Shenzhen Trade(ii) 847.9 - 100 100 Yes - - Sinopharm Material 816.7 - 100 100 Yes - - Zhijun Trade 373.4 - 100 100 Yes - - Shenzhen Logistics 101.9 - 100 100 Yes - - Training Center 3.0 - 100 100 Yes - - Sinopharm Guangzhou 48,388.8 - 100 100 Yes - - Sinopharm Hengxing 3,714.2 - 100 100 Yes - - Sinopharm Yulin (iii) 542.5 - 100 100 Yes - - Sinopharm Liuzhou 2,220.6 - 51 51 Yes 3,386.20 - Guangxi Accord Chinese Herbal Pieces (iv) 200.0 51 51 Yes Huixin Investment 6,441.7 - 100 100 Yes - - Sinopharm Foshan 1499.5 - 100 100 Yes - - Sinopharm Yuexing 4,345.9 - 100 100 Yes - - Guangdong Logistics 559.6 - 100 100 Yes - - Sinopharm Guangxi 10,404.9 - 100 100 Yes - - Guangxi Logistics(v) 710.1 - 100 100 Yes - - Sinopharm Shenzhen Medicine 4,808.1 - 100 100 Yes - - Sinopharm Wuzhou 315.0 - 99.70 99.70 Yes 0.003
(ii) Shenzhen Trade ceased its operation in 2003.
(iii) Sinopharm Yulin was originally wholelly held by the Company. On January 6th 2012, 100% of the equity held by the Company in Sinopharm Yulin was transferred to another subsidiary(Sinopharm Guangxi) at the price of RMB 5,424,600
(iv) Guangxi Accord Chinese Herbal Pieces, a wholly owned subsidiary of Sinopharm Liuzhou, is indirectly held of 51% in equity by the Company.
(v) Guangxi Logistics, a wholly owned subsidiary of Sinopharm Guangxi, is indirectly held of 100% in equity by the Company.
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China National Accord Medicines Corporation Ltd. Annual Report 2012
IV Business combinations and consolidated financial statements (continued)
(1) Subsidiaries (continued)
(c) Subsidiaries acquired not under common control
The holding type Place of Nature of Registered Principal activities Enterprise Legal of investment registration business capital Type Repres-entati (RMB’0000) ve
Suzhou Wanqing Direct Suzhou Manufacturing 8,000.00 Production and sales of general raw materials of medicine, Limited Huang Kai raw medicine and preparation of cephalosporin; do company export business of production and technology of the Company Sinopharm holding Dongguan Direct Dongguan Commercial 1,000.00 Wholesales of Chinese traditional medicinal materials, Limited Lin Xinyang Co.Ltd.(’Sinopharm Chinese patent medicine, Chinese traditional medicine in company Dongguan’) pieces, chemical raw material; sales of daily general merchandise and heath protection food Sinopharm Holding Zhanjiang Direct Zhanjiang Commercial 1,500.00 Wholesale of medicine Limited Lin Xinyang Co., Ltd.(’Sinopharm company Zhanjiang’) Sinopharm Yanfeng Direct Shenzhen Commercial 3,000.00 Wholesale of medicine Limited Lin Zhaoxiong company Sinopharm Holding Meizhou Direct Meizhou Commercial 120.00 Wholesale of medicine Limited Yang Yan Co., Ltd.(’Sinopharm company Meizhou’) Sinopharm Holding Huizhou Direct Huizhou Commercial 700.00 Wholesale of medicine Limited Yang Yan Co., Ltd.(’Sinopharm company Huizhou’) Sinopharm Holding Zhaoqing Direct Zhaoqing Commercial 200.00 wholesale of Chinese patent drugs, raw materials for Limited Yang Yan Co., Ltd.(’Sinopharm chemical medicine, chemical material drugs, antibiotics, company Zhaoqing’) bio-chemical drugs and biological products (excluding vaccines), narcotic drugs, toxic drugs for medical use, pericarpium papaveris,anabolic agents Sinopharm Holding Jiangmen Direct Jiangmen Commercial 1,000.00 wholesale of Chinese patent drugs, raw materials for Limited Yang Yan Co., Ltd.(’Sinopharm chemical medicine, chemical material drugs, antibiotics, company Jiangmen’) bio-chemical drugs and biological products (excluding vaccines), narcotic drugs, toxic drugs for medical use, pericarpium papaveris,anabolic agents Sinopharm Holding Shaoguan Direct Shaoguan Commercial 360.00 wholesale of Traditional Chinese medicin, raw materials for Limited Yang Yan Co., Ltd (’Sinopharm chemical medicine and chemical material drugs, ect.; company shaoguan’)
- 35 -
China National Accord Medicines Corporation Ltd. Annual Report 2012
IV Business combinations and consolidated financial statements (continued)
(1) Subsidiaries (continued)
(c) Subsidiaries acquired not under common control(continued)
Year-end Other assets Equity Voting rights Consolidat Minority Loss shared by minority balance of constitute interest held held (%) ed or not interests interests investment investment in (%) (RMB’0000) ( RMB’0000) substance
Suzhou Wanqing 16,590.00 - 100 100 Yes - - Sinopharm Dongguan 994.20 - 100 100 Yes - - Sinopharm Zhanjiang 1,576.99 - 100 100 Yes - - Sinopharm Yanfeng 3,820.78 - 51 51 Yes 2,385.98 - Sinopharm Meizhou 448.19 - 100 100 Yes - - Sinopharm Huizhou 564.42 - 100 100 Yes - - Sinopharm Zhaoqing 354.20 - 100 100 Yes - - Sinopharm Jiangmen 4,090.00 - 100 100 Yes - - Sinopharm Shaoguan 950.60 - 70 70 Yes 538.64 -
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China National Accord Medicines Corporation Ltd. Annual Report 2012
IV Business combinations and consolidated financial statements (continued)
(2) New subsidiaries included in the scope of consolidation in the current year:
Net assets as at Net profit/(loss) after acquisition 31 December 2012
Under common control - Sinopharm Wuzhou (Note 4(3)) 11,133.16 376,797.70 Not under common control - Sinopharm Zhaoqing (Note(4)(a)) 2,512,503.59 46,845.12 - Sinopharm Jiangmen (Note(4)(b)) 32,866,205.69 4,258,523.42 - Sinopharm Shaoguan (Note(4)(c)) 17,954,668.05 963,949.19
(3) Business combination involving entities under common control
Identifying a business combination Common control party
Sinopharm Sinopharm Wuzhou and Sinopharm Guangxi(a subsidiary Sinopharm Group Wuzhou of the company) are controlled by Sinopharm Group both before and after the business combination, and that control is not transitory.
Sinopharm Guangxi, a subsidiary of the Company, and Guangdong Dong Fang Uptodate & Special Medicines Co.(Dong Fang Uptodate & Special Meidicine) are under ultimate common control by Sinopharm Group. Prior to the Combination date Dong Fang Uptodate & Special Medicines held 99.70% equity of Sinopharm Wuzhou; On March 14 2012, Sinopharm Guangxi acquired 99.70% equity of Sinopharm Wuzhou from Dong Fang Uptodate & Special Medicines.
(a) Consideration for the business combinations and book value for the acquired net assets are as follows.
Cost of combination - Cash paid 3,150,000.00 Cash should be paid 1,350,000.00 Consideration in total 4,500,000.00 Add：book value for the acquired net liability(Note b) 364,567.55 Amount adjusted to undistributed profits 4,864,567.55
(b) The carrying amounts of assets and liabilities of Sinopharm Wuzhou at the date of the combination and 31 December 2012 are as follows:
Carrying Amount Date of combination 31 Decemebr 2011
Cash at bank and on hand 923,468.22 284,922.33 Accounts receivable 15,804,805.12 9,958,316.60 Other current assets 2,111,978.53 2,148,662.09 Non-current assets 2,514,436.23 2,549,211.01 Less：Short-term borrowings (2,000,000.00) - Accounts payable (18,547,474.77) (14,246,603.58) Other current liabilities (1,172,877.87) (819,477.85) Net Liabilities (365,664.54) (124,969.40) Add：Minority interest 1,096.99 374.91 Net liabilities acquired (364,567.55) (124,594.49)
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China National Accord Medicines Corporation Ltd. Annual Report 2012
IV Business combinations and consolidated financial statements (continued)
(3) Business combination under common control(continued)
(c) Revenue, net loss and cash flows of Sinpharm Wuzhou for the period from the date of combination and for the year 2011 are as follows: For the period from 1 January 2011 2012 to date of combination
Sales 7,055,650.23 29,115,650.56 Net loss 240,695.14 1,989,842.59 Cash flows from operating activities (1,367,454.11) 2,788,161.37 Net cash flows 638,545.89 (1,604,074.33)
(d) Impact on opening balances
Based on the balances of owners’ equity of Sinopharm Wuzhou as at 1 January 2011, the Group increases its capital surplus with RMB3,416,966.47, decreases undistributed profits with RMB1,557,687.89 and increases minority interest with RMB5,594.61 as at 1 January 2011 respectively. At the consolidation date, the Group reversed its capital surplus RMB3,416,966.47 (note V(33)) and undistributed profits with RMB1,083,033.53 (note V(35)) according to the total consideration of RMB4,500,000.00.
(4) Business combination involving entities not under common control
Calculation of goodwill:
Goodwill is recognized based on the difference of combination cost less the fair value of the identifiable net assets of the acquiree as at the acquisition date.
Details of costs and goodwill recognised are as follows:
Sinopharm Sinopharm Sinopharm Zhaoqing Jiangmen Shaoguan
Cost of combination - Cash paid 3,542,000.00 40,900,000.00 9,506,000.00 Cash payable 1,518,000.00 15,100,000.00 4,074,000.00 Total cost of combination 5,060,000.00 56,000,000.00 13,580,000.00 Less: Fair value of the identifiable net assets acquired (2,465,658.47) (28,607,682.27) (11,893,503.20) Goodwill 2,594,341.53 27,392,317.73 1,686,496.80
(a) Sinopharm Zhaoqing
On 9 January 2012, the Company acquired 100% equity interest of Sinopharm Zhaoqing from Mr. Liang Jianming, Mr. Xu Yaoyuan, Mr. Yang Jian and Mr. Huang Zhaohai. On 9 January 2012, the Company obtained the controlling rights of Sinopharm Zhaoqing in substance.
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China National Accord Medicines Corporation Ltd. Annual Report 2012
IV Business combinations and consolidated financial statements (continued)
(4) Business combination involving entities not under common control (continued)
(a) Sinopharm Zhaoqing (continued)
(i) The carrying amounts of assets and liabilities of Sinopharm Zhaoqing at the date of the combination are as follows:
Acquisition Date Acquisition Date 31 Decemebr 2011 Fair Value Carrying Amount Carrying Amount
Cash at bank and on hand 1,606,092.39 1,606,092.39 1,606,092.39 Accounts receivable 17,753,132.24 17,753,132.24 17,753,132.24 Other current assets 2,744,435.73 2,744,435.73 2,744,435.73 Non-current assets 35,853.84 35,853.84 35,853.84 Less：Accounts payable (18,999,351.84) (18,999,351.84) (18,999,351.84) Other current liabilities (674,503.89) (674,503.89) (674,503.89) Net assets acquired 2,465,658.47 2,465,658.47 2,465,658.47
Consideration paid 3,542,000.00 Less: cash at bank and on hand from acquiree (1,606,092.39) Net cash outflows for the acquisition 1,935,907.61
(ii) Revenue, net profit and cash flows of Sinopharm Zhaoqing for the period from date of combination to 31 December 2012 are as follows:
Sales 27,741,372.67 Net profit 46,845.12 Cash flows from operating activities (1,628,097.38) Net cash flows 874,067.55
(b) Sinopharm Jiangmen
On 23 April 2012, the Company acquired 100% equity interest of Sinopharm Jiangmen from Mr. Peng Jianxiong, Mr. Liu Mengzhou, and Mr. Wu Yong. The effective date of obtaining the controlling rights was 23 April 2012.
(i) The carrying amounts of assets and liabilities of Sinopharm Jiangmen at the date of the combination are as follows:
Acquisition Date Acquisition Date 31 Decemebr 2011 Fair Value Carrying amount Carrying mount
Cash at bank and on hand 21,367,019.37 21,367,019.37 4,806,872.00 Accounts receivable 142,260,342.64 142,260,342.64 119,083,891.12 Other current assets 22,195,784.08 22,195,784.08 14,553,693.67 Intangible assets 24,800,000.00 - - Other non-current assets 625,856.17 625,856.17 1,162,004.97 Less：Short-term borrowings (36,197,007.30) (36,197,007.30) (32,869,881.53) Accounts payable (138,655,864.06) (138,655,864.06) (100,492,439.64) Other current liabilities (1,588,448.63) (1,588,448.63) (90,437.15) Deferred income tax liabilities (6,200,000.00) - - Net assets acquired 28,607,682.27 10,007,682.27 6,153,703.44
Consideration paid 40,900,000.00 Less: cash at bank and on hand from acquiree (21,367,019.37) Net cash outflows for the acquisition 19,532,980.63
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China National Accord Medicines Corporation Ltd. Annual Report 2012
IV Business combinations and consolidated financial statements (continued)
(4) Business combination involving entities not under common control (continued)
(b) Sinopharm Jiangmen (continued)
(ii) Revenue, net profit and cash flows of Sinopharm Jiangmen for the period from the date of combination to 31 December 2012 are as follows
Sales 187,690,209.42 Net profit 4,258,523.42 Cash flows from operating activities (18,033,258.65) Net cash flows (17,356,707.39)
(c) Sinopharm Shaoguan
On 25 July 2012, the Company acquired 70% equity interest of Sinopharm Shaoguan from Mr. Yang Wenjie, Mr. Jiang Jianmin, Mr. Zhou Weilin, Mr. Kang Liting Mr. Fang Zhongqin and Mr. Tan Min. The effective date of obtaining the controlling rights was 25 July 2012.
(i) The carrying amounts of assets and liabilities of Sinopharm Shaoguan at the date of the combination are as follows:
Acquisition Date Acquisition Date 31 Decemebr 2011 Fair Value Carrying amount Carrying mount
Cash at bank and on hand 10,323,126.02 10,323,126.02 1,695,913.78 Accounts receivable 50,749,920.61 50,749,920.61 42,628,823.66 Other current assets 10,214,181.43 10,214,181.43 6,887,359.58 Intangible assets 8,857,142.86 - - Non-current assets 1,414,675.43 1,414,675.43 12,711,130.21 Less：Short-term borrowings (4,995,073.78) (4,995,073.78) (4,037,911.17) Accounts payable (56,298,553.46) (56,298,553.46) (43,819,453.96) Other current liabilities (1,060,414.54) (1,060,414.54) (1,687,820.35) Deferred income tax liabilities (2,214,285.71) - - Other non-current liabilities - - (4,686,666.68) Net assets 16,990,718.86 10,347,861.71 9,691,375.07 Less：Minority interests (5,097,215.66) (3,104,358.51) - Net assets acquired 11,893,503.20 7,243,503.20 9,691,375.07
Consideration paid 9,506,000.00 Less: cash at bank and on hand from acquiree (10,323,126.02) Net cash outflows for the acquisition (817,126.02)
(ii) Revenue, net profit and cash flows of Sinopharm Shaoguan for the period from the date of combination to 31 December 2012 are as follows
Sales 57,191,213.37 Net profit 963,949.19 Cash flows from operating activities (10,947,205.55) Net cash flows (6,508,264.08)
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China National Accord Medicines Corporation Ltd. Annual Report 2012
IV Business combinations and consolidated financial statements (continued)
(5) Business combination involving operating unit not under common control
Goodwill Calculation of goodwill
Guangxi Yixin Medicine Where the cost of the combination Co., Ltd(‘Yixin’)pharm exceeds the acquirer’s interest in the fair Business value of the business acquired’s identifiable net assets, the difference is - recognised as goodwill.
(a) On 18 May 2012, the Group acquired pharm business of Yixin located at Baise and Beihai city. The cost of consideration is recognised on the carrying amount of net assets up to 18 May 2012.
Details of costs and goodwill recognised are as follows
Combination cost - Cash paid - Cash payable 1,482,217.03 Total cost of combination 1,482,217.03 Less: Fair value of the identifiable net assets acquired (1,482,217.03) Goodwill -
(b) The carrying amounts of assets and liabilities of Yixin pharm business at the date of the combination are as follows:
Date of combination Fair value Carrying amount
Accounts receivable 5,502,330.98 5,502,330.98 Less:Accounts payable (4,020,113.95) (4,020,113.95) Net assets acquired 1,482,217.03 1,482,217.03
The Group recognised accounts receivable, other receivables and accounts payable at the amount agreed by all the related party involved. Inventories recognised base on the quantities count and market prices, considering the physical condition as well.
V Notes to the consolidated financial statements
(1) Cash at bank and on hand
31 December 2012 31 December 2011
Cash on hand 73,828.10 48,381.59 Cash at bank 920,674,215.43 907,835,780.55 Other cash balances 33,244,027.08 45,066,005.42 953,992,070.61 952,950,167.56
As at 31 December 2012, except a deposit of USD which was equivalent to RMB80.13 (31 December 2011: RMB59.17), all other cash at bank and on hand are in RMB.Other cash balances represent RMB17,606,346.59 (31 December 2011: RMB25,066,005.42) of deposits for the purpose of applying for bank acceptance notes and depostis for letter of credit RMB8,937,680.49(31 December 2011:Nil) and RMB6,700,000.00 of the temporary capital verification of Sinopharm Wuzhou(31 December 2011:RMB20,000,000.00 of the temporary capital deposites of Sinopharm Nanning for the establishments of new subsidiaries).
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China National Accord Medicines Corporation Ltd. Annual Report 2012
V Notes to the consolidated financial statements (continued)
(2) Notes receivable
31 December 2012 31 December 2011
Trade acceptance notes 293,109,440.31 282,129,281.91 Bank acceptance notes 357,750,800.06 252,793,459.39 650,860,240.37 534,922,741.30
(a) Endorsed undue notes receivable
As at 31 December 2012, the Group endorsed the undue notes receivable of RMB738,797,785.69 (31 December 2011: RMB200,606,571.35). The top five notes receivable are analysed as below.
Issuer Issue date Expiry date Amount
General Hospital of Guangzhou Military Command of PLA 7 November 2012 7 February 2013 11,308,766.80 Guangdong Provincial People's Hospital 29 November 2012 28 February 2013 7,950,627.37 Guangdong Provincial People's Hospital 31 December 2012 15 May 2013 5,059,270.03 Guangdong Provincial People's Hospital 29 November 2012 29 March 2013 4,161,603.96 Guangdong Provincial People's Hospital 24 October 2012 24 January 2013 3,997,670.35 32,477,938.51
(b) Discounted undue notes receivable
As at 31 December 2012, notes receivable including undue trade acceptance notes of RMB39,200,449.89 (31 December 2011: RMB154,597,987.596)(Note(v(19))), and undue bank acceptance notes of RMB161,748,174.98 (31 December 2011: RMB80,801,595.56) have been discounted.
(c) As at 31 December 2012, the Group has no notes receivable which need to be reclassified as accounts receivable.
(3) Accounts receivable
31 December 2012 31 December 2011
Accounts receivable 4,415,763,459.61 3,601,454,874.02 Less: provision for bad debts (note V(17)) (22,438,158.95) (22,212,037.26) 4,393,325,300.66 3,579,242,836.76
(a) The aging of accounts receivable and related provision for bad debts are analysed below:
31 December 2012 31 December 2011 Amount Provision for Amount Provision for bad debts bad debts
Within 1 year 4,383,349,130.24 (733,430.98) 3,578,825,667.13 (2,484,037.75) 1 to 2 years 9,935,593.59 (2,373,495.91) 13,018,300.04 (11,198,442.66) 2 to 3 years 12,223,635.68 (10,467,212.99) 9,610,906.85 (8,529,556.85) Over 3 years 10,255,100.10 (8,864,019.07) - - 4,415,763,459.61 (22,438,158.95) 3,601,454,874.02 (22,212,037.26)
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China National Accord Medicines Corporation Ltd. Annual Report 2012
V Notes to the consolidated financial statements (continued)
(3) Accounts receivable (continued)
(b) The accounts receivable and related provision for bad debts by category are analysed below:
31 December 2012 31 December 2011 Carrying amount Bad debt provision Carrying amount Bad debt provision amount % of total amount rate amount % of total amount rate balance balance
individually significant are subject to separate impairment assessment 32,230,166.51 0.73% (17,332,089.17) 53.78%34,637,925.19 0.96% (16,677,034.14) 48.15% receivable accounts within similar credit risk group 4,371,020,555.42 98.99% (943,122.18) 0.02% 3,551,770,108.67 98.62% (212,211.00) 0.01% individually not significant but individually evaluated for impairment 12,512,737.68 0.28% (4,162,947.60) 33.27%15,046,840.16 0.42% (5,322,792.12) 35.37% 4,415,763,459.61 100.00% (22,438,158.95) 0.51% 3,601,454,874.02 100.00% (22,212,037.26) 0.62%
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China National Accord Medicines Corporation Ltd. Annual Report 2012
V Notes to the consolidated financial statements (continued)
(3) Accounts receivable (continued)
(c) As at 31 December 2012, impairment provision for accounts receivable individually significant are analysed as below.
Carrying Bad debt amount provision Rate Assessment for impairment
Guangdong Liyuan Pharmaceutical Disputed receivable with Co. Ltd. 15,686,460.93 (15,686,460.93) 100.00% higher risk of recoverability. LiuZhou LiuTie Disputed receivable with Central Hospital 10,886,060.95 (210,838.78) 1.94% higher risk of recoverability The Second People's Hospital of Disputed receivable with Shenzhen 5,657,644.63 (1,434,789.46) 25.36% higher risk of recoverability 32,230,166.51 (17,332,089.17)
(d) Provisions for impairment of the receivables which have a similar risk group are analysed below:
31 December 2012 31 December 2011 Carrying amount Bad debt provision Carrying amount Bad debt provision % of rate amount % of total amount rate amount total amount balance balance
Within 1 year 4,359,367,831.85 99.74% - 0.00% 3,548,727,388.93 99.92% - - 1 to 2 years 7,962,291.52 0.18% (400,193.84) 5.03% 1,841,219.74 0.05% (92,061.00) 5.00% 2 to 3 years 1,951,580.77 0.04% (195,158.08) 10.00% 1,201,500.00 0.03% (120,150.00) 10.00% Over 3 years 1,738,851.28 0.04% (347,770.26) 20.00% - - - - 4,371,020,555.42 100.00% (943,122.18) 0.02% 3,551,770,108.67 100.00% (212,211.00) 0.01%
(e) As at 31 December 2012, accounts receivable individually not significant but individually evaluated for impairment are analysed below:
Carrying Bad debt amount provision Rate Assessment for impairment
Difference of balance Peking University Shenzhen Hospital 4,864,380.62 (670,476.15) 13.78% account cannot be verified Difference of balance The First People’s Hospital of Hechi 1,940,555.74 (7,177.72) 0.37% account cannot be verified Difference of balance The Red Cross Hospital of Liuzhou 1,115,835.33 (12,682.17) 1.14% account cannot be verified Shenzhen Maternal and Children Care Difference of balance Service Centre 795,647.16 (412,992.00) 51.91% account cannot be verified Guangzhou Da Shenlin Pharmaceutical Uncertainty in Chain Co., Ltd 773,956.27 (773,956.27) 100.00% recoverability Uncertainty in Shantou Chuangmei Medicine Co.Ltd 621,455.60 (249,407.80) 40.13% recoverability Guangdong Da Shenlin Pharmaceutical Uncertainty in Chain Co.Ltd 506,835.82 (506,835.82) 100.00% recoverability Uncertainty in Foshan Chuangmei Medicine Co Ltd 428,592.80 (151,671.40) 35.39% recoverability Chinese’s People Liberty Army of 62101 Uncertainty in Troops 418,545.80 (418,545.80) 100.00% recoverability HuiZhou QuanYi Pharmaceutical Uncertainty in Franchise Co.,Ltd 443,692.12 (443,692.12) 100.00% recoverability Wuhan General Hospital of Guangzhou Uncertainty in Military Region 337,701.85 (337,701.85) 100.00% recoverability Guangdong Jointown Pharmaceutical Uncertainty in Co.Ltd 137,900.15 (50,170.08) 36.38% recoverability Liuzhou Chengzhong District Wantang Uncertainty in Community Sanitary Service Station 127,638.42 (127,638.42) 100.00% recoverability 12,512,737.68 (4,162,947.60)
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China National Accord Medicines Corporation Ltd. Annual Report 2012
V Notes to the consolidated financial statements (continued)
(3) Accounts receivable (continued)
(f) Accounts receivable, which have been fully or partly made impairment provision, recovered in current year are listed below:
Recovered Reason for Original assessment for bad debt Recovered recoverability providing impairment provisions amount
Verification for Difference of balance The second People’s Diffenerce of account cannot be Hospital of Nanning balance account verified 779,734.43 779,734.43 Verification for Difference of balance The Second People's Diffenerce of account cannot be Hospital of Shenzhen balance account verified 484,407.42 484,407.42 Improved business Guangzhou Bihan performance of Long ageing with higher Medicine Co., Ltd. customer risk in recoverability 215,040.00 215,040.00 Long ageing with higher Other Amount received risk in recoverability 335,917.56 335,917.56 1,815,099.41 1,815,099.41
(g) Accounts receivable written off in current year are analysed as below:
Related party Nature of the transaction or receivable Amount Reason not
Receivables aged over five years and with fully provision Accounts receivable Receivable for are hardly with long aging medicine sold 70,855.35 recoverable No
(h) Accounts receivable due from shareholders with more than 5% (including 5%) of the Company’s equity interest are analysed as below:
31 December 2012 31 December 2011
Sinopharm Group(Note VII(6)) 2,863,144.40 13,341,144.90
(i) As at 31 December 2012, the top five accounts receivable by customer are analysed as below:
% of the total Relationship with accounts the Group Amount Ageing receivable
Center for Disease Control and Prevention of Guangdong Province Third party 134,958,644.00 Within 1 year 3.06% The First Affiliated Hospital of GuangXi Medical University Third party 79,931,872.82 Within 1 year 1.81% The Third Affiliated Hospital of ZhongShan University Third party 76,768,342.95 Within 1 year 1.74% General Hospital of Guangzhou Military Command of PLA Third party 52,189,456.02 Within 1 year 1.18% Zhujiang Hospital of Southern Medical Univesity Third party 43,498,438.34 Within 1 year 0.99% 387,346,754.13 8.78%
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China National Accord Medicines Corporation Ltd. Annual Report 2012
V Notes to the consolidated financial statements (continued)
(3) Accounts receivable (continued)
(j) Accounts receivable due from related party
As at 31 December 2012, there are accounts receivable of RMB227,117,446.69 due from related party (31 December 2011: RMB252,286,539.94), which is 5.14% of the total accounts receivable (31 December 2011: 7.01%) (Note VII(6)).
(k) In 2012, accounts receivable of RMB861,524,125.42 are derecognized given that irrevocable factoring contracts agreed with financial institute(2011: RMB694,226,824.76).
(l) As at 31 December 2012, the Group has totally RMB 34,274,932.13 accounts receivable (31December 2011:Nil) pledged to bank as warrant of gaining short-term loan amounting to RMB34,274,932.13(31 December 2011;Nil)
(m) Accounts receivable denominated in foreign currencies are as follows:
31 December 2012 31 December 2011 Foreign Exchange Foreign Exchange Currency Rate RMB Currency Rate RMB
USD 1,647,256.71 6.2855 10,353,832.05 239,782.55 6.3009 1,510,845.87 EUR 325,000.00 8.3176 2,703,220.00 161,250.00 8.1625 1,316,203.13 GBP 102,600.00 10.1611 1,042,528.86 - - - HKD 60,338.00 0.8108 48,922.05 - - - 14,148,502.96 2,827,049.00
(4) Advances to suppliers
(a) The aging of advances to suppliers is analysed below:
31 December 2012 31 December 2011 amount % of total balance amount % of total balance
Within 1 year 88,614,241.91 99.00% 61,704,597.49 93.69% 1 to 2 years 579,455.00 0.65% 623,928.87 0.95% 2 to 3 years 209,787.70 0.23% - - Above 3 years 108,896.73 0.12% 3,529,434.95 5.36% 89,512,381.34 100.00% 65,857,961.31 100.00%
(b) As at 31 December 2012, the top five advances to suppliers by customer are analysed below:
Relationship with the Reason for Group Amount Proportion Ageing unsettlement
Seiko Eiyo Yakuhin Co. Ltd. Advances for Third party 20,392,466.18 22.78% Within 1 year procurement Wyeth Pharmaceuticals Advances for Company Third party 15,600,262.59 17.43% Within 1 year procurement NovoNordisk(China) Advances for Pharmaceutical Co.Ltd Third party 6,948,314.65 7.76% Within 1 year procurement Abraxis BioseScience，LLC Advances for Third party 5,463,397.41 6.10% Within 1 year procurement Chengdu Ronsen Controlled by Advances for Pharmaceutical Co.Ltd CNPGC 3,834,000.00 4.28% Within 1 year procurement 52,238,440.83 58.35%
(c) Advances due from related party
As at 31 December 2012, there are advances of RMB8,315,884.21 due from related party (31 December 2011: RMB3,135,673.37), which is 9.29% of the total advances to suppliers (31 December 2011: 4.76%), and no bad debt provision was provided (31 December 2011: Nil). (Note VII(6)).
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China National Accord Medicines Corporation Ltd. Annual Report 2012
V Notes to the consolidated financial statements (continued)
(5) Other receivables
31 December 2012 31 December 2011
Deposit 10,436,780.98 5,991,077.47 Receivable of equity transaction(Note (c)) 8,980,000.00 8,980,000.00 Petty cash advance to employees 8,118,858.69 8,608,537.30 Receivable due from related party(Note(h)) 1,215,000.00 1,215,000.00 Others 17,356,156.64 16,269,360.71 46,106,796.31 41,063,975.48 Less: provision for bad debts (Note V(17)) (13,121,370.71) (12,407,954.90) 32,985,425.60 28,656,020.58
(a) The ageing of other receivables and related provision for bad debts are analysed below:
31 December 2012 31 December 2011
Within 1 year 24,400,128.34 21,115,942.40 1 to 2 years 3,598,448.64 5,814,889.75 2 to 3 years 2,594,617.98 1,135,624.31 Over 3 years 15,513,601.35 12,997,519.02 46,106,796.31 41,063,975.48
(b) Other receivables and related provision for bad debts by category are analysed below:
31 December 2012 31 December 2011 Carrying amount Bad debt provision Carrying amount Bad debt provision % of total % of total amount amount amount rate amount amount amount rate
Individually significant are subject to separate impairment assessment 8,980,000.00 19.48% (8,980,000.00) 100.00% 8,980,000.00 21.87% (8,980,000.00) 100.00% Receivable accounts within similar credit risk group 28,877,007.59 62.63% (452,946.84) 1.57% 24,168,535.85 58.85% (74,161.25) 0.31% Individually not significant but individually evaluated for impairment 8,249,788.72 17.89% (3,688,423.87) 44.71% 7,915,439.63 19.28% (3,353,793.65) 42.37% 46,106,796.31 100.00% (13,121,370.71) 28.46% 41,063,975.48 100.00% (12,407,954.90) 30.22%
(c) As at 31 December 2012, impairment provision for other receivables individually significant are analysed as below.
Bad debt Assessment for Amount provision Rate impairment
Shenzhen Yinghai Technology investment Uncertainty in Co., Ltd. 8,980,000.00 (8,980,000.00) 100.00% recoverability
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China National Accord Medicines Corporation Ltd. Annual Report 2012
V Notes to the consolidated financial statements (continued)
(5) Other receivables (continued)
(d) Provisions for impairment of the receivables which have a similar risk group are analysed below:
31 December 2012 31 December 2011 Carrying amount Bad debt provision Carrying amount Bad debt provision % of total % of total amount amount amount rate amount amount amount rate
Within 1 year 24,181,262.27 83.74% - - 20,723,468.05 85.75% - - 1 to 2 years 2,279,422.77 7.89% (113,358.12) 4.97% 3,439,603.80 14.23% (73,068.45) 2.12% 2 to 3 years 1,436,757.98 4.98% (143,675.80) 10.00% - - - - Over 3 years 979,564.57 3.39% (195,912.92) 20.00% 5,464.00 0.02% (1,092.80) 20.00% 28,877,007.59 100.00% (452,946.84) 1.57% 24,168,535.85 100.00% (74,161.25) 0.31%
(e) As at 31 December 2012, other receivables individually not significant but individually evaluated for impairment are analysed below:
Bad debt Assessment for Amount provision Rate impairment
ShenZhen Health Food I&E Co. Uncertainty in Ltd. 1,157,860.00 1,157,860.00 100.00% recoverability Uncertainty in Service fee etc. 7,091,928.72 2,530,563.87 35.68% recoverability 8,249,788.72 3,688,423.87 44.71%
(f) Other receivables written off in current year are analysed as below:
Related party transaction or Nature Amount Reason for written off not
Due to unclear debt Written off of long aging procedures and fully and uncollectable other drawing bad debts, receivables Deposit 159,511.22 the collectability is low No
(g) As at 31 December 2012, there is no other receivables due from shareholders with more than 5% (including 5%) of the Company’s equity interest (31 December 2011: Nil).
(h) As at 31 December 2012, the top five other receivables by customer are analysed below:
Relationship with % of the total the Group Amount Ageing other receivable
ShenZhenShi YingHai Technology&Investment Co. Ltd. Third party 8,980,000.00 Above 5 years 19.48% Receivables of Physical assets specifically approved reserving materials Third party 2,110,695.50 Within 1 year 4.58% GuangXi Autonomous Region Housing system Reformed Department Third party 1,901,707.85 Above 5 years 4.12% LiuZhouShi Housing Provident Fund Management Center- Specific Account for Housing Fund Third party 1,445,352.34 Above 5 years 3.13% Beijing Materials Handling Research 2.68% Institute Third Party 1,233,418.80 1-2 years 15,671,174.49 33.99%
- 48 -
China National Accord Medicines Corporation Ltd. Annual Report 2012
V Notes to the consolidated financial statements (continued)
(5) Other receivables (continued)
(i) Other receivables due from related party
As at 31 December 2012, there are other receivables of RMB1,215,000.00 due from related party (31 December 2011: RMB1,215,000.00), which is 2.64% of the total other receivables(31 December 2011: 2.96%), without bad debt provided (31 December 2011: Nil). (Note VII(6)).
(6) Inventories
(a) Inventories by category are analysed as below:
31 December 2012 31 December 2011 Net book Net book Book value Provision Value Book value Provision Value
Raw materials 118,474,602.02 (3,689,458.00) 114,785,144.02 128,933,630.01 (8,749,136.38) 120,184,493.63 Packaging materials 586,659.80 (1,790.66) 584,869.14 792,913.20 - 792,913.20 Consigned processing materials 665,881.85 - 665,881.85 2,379,345.20 - 2,379,345.20
Finished goods 1,566,791,335.61 (13,043,074.71) 1,553,748,260.90 1,130,907,025.10 (14,444,602.02) 1,116,462,423.08 Goods in transition 36,753,308.93 (572,664.96) 36,180,643.97 40,099,925.25 (157,915.73) 39,942,009.52 Work in progress 28,048,150.68 - 28,048,150.68 32,594,856.82 - 32,594,856.82 Low cost consumables 666,113.22 - 666,113.22 857,373.23 - 857,373.23
1,751,986,052.11 (17,306,988.33) 1,734,679,063.78 1,336,565,068.81 (23,351,654.13) 1,313,213,414.68
(b) Provision for declines in value of inventories is analysed as below:
31 December Decreases 31 December 2011 Acquisition Increases Reversal Written off 2012
Raw materials 8,749,136.38 - 336,623.09 (5,384,488.94) (11,812.53) 3,689,458.00 Finished goods 14,444,602.02 131,785.39 27,024,525.90 (804,733.12) (27,753,105.48) 13,043,074.71 Packaging materials - -70,607.02 - (68,816.36) 1,790.66
Goods in transition 157,915.73 - 900,260.78 - (485,511.55) 572,664.96 23,351,654.13 131,785.39 28,332,016.79 (6,189,222.06) (28,319,245.92) 17,306,988.33
(7) Other non-current assets
31 December 2012 31 December 2011
Corporate income tax to be deducted 226,501.90 1,785,503.23 VAT to be deducted 7,854,105.76 5,868,232.98 8,080,607.66 7,653,736.21
(8) Long-term equity investments
31 December 2012 31 December 2011
Associates - Without quoted price (a) 121,019,845.50 95,799,627.42
The Group has no liquidity restriction on its long-term equity investments.
- 49 -
China National Accord Medicines Corporation Ltd. Annual Report 2012
V Notes to the consolidated financial statements (continued)
(8) Long-term equity investments (continued)
(a) Associates
Increases/(Decreases) Equity Voting Cash dividends interest rights Explanation for the inconsistence Accounting Original investment 31 December Share of profit of declared by 31 December held held between equity interest held and method cost 2011 associate associate 2012 (%) (%) voting rights held Note V(42) Board of the directors is the highest decision making organization, which is formed by 3 shareholders of Wanle Medical evenly, each shareholder Wanle Medical Equity method 4,457,400.00 95,799,627.42 38,740,679.55 (13,520,461.47) 121,019,845.50 35.19 33.33 appoints 2 directors set up the borad
(9) Investment in associates
For the year ended 31 December Equity interest held Voting rights held As at 31 December 2012 2012 Total assets Total liabilities Net assets Revenues Net profit (%) (%)
Wanle Medical 35.19 33.33 745,992,674.05 402,088,594.78 343,904,079.27 655,747,670.02 119,366,015.30
- 50 - China National Accord Medicines Corporation Ltd. Annual Report 2012
V Notes to the consolidated financial statements (continued)
(10) Investment properties
31 December Increase in Decrease in 31 December 2011 Current year Current year 2012
Cost 172,885,351.28 10,923,853.89 (913,538.95) 182,895,666.22 Buildings 152,728,757.27 10,923,853.89 (913,538.95) 162,739,072.21 Land use rights 20,156,594.01 - - 20,156,594.01
Accumulated depreciation/ amortisation (85,420,421.58) (8,709,639.44) 849,824.43 (93,280,236.59) Buildings (83,682,458.72) (8,368,239.32) 849,824.43 (91,200,873.61) Land use rights (1,737,962.86) (341,400.12) - (2,079,362.98)
Net book value 87,464,929.70 89,615,429.63 Buildings 69,046,298.55 71,538,198.60 Land use rights 18,418,631.15 18,077,231.03
Provision fo impairment loss (1,300,000.00) - - (1,300,000.00) Buildings (1,300,000.00) - - (1,300,000.00) Land use rights - - - -
Carrying amount 86,164,929.70 88,315,429.63 Buildings 67,746,298.55 70,238,198.60 Land use rights 18,418,631.15 18,077,231.03
In 2012, the amount of depreciation and amortization were RMB6,736,996.41 (2011: RMB6,091,488.05)
In 2012, the Group changed the use of buildings with a carrying amount of RMB6,944,536.43 (cost of RMB8,917,179.46, accumulated depreciation RMB1,972,643.03) to lease-out properties,and therefore,such assets were transferred from fixed assets to investment properties at the dates of change in use.
- 51 - China National Accord Medicines Corporation Ltd. Annual Report 2012
V Notes to the consolidated financial statements (continued)
(11) Fixed assets
Current year Transfer to 31 December other investment Current year 31 December 2011 Acquisition additions properties disposals 2012
Cost 945,127,066.76 2,636,231.77176,941,781.72 (8,917,179.46) (25,622,119.50) 1,090,165,781.29
Buildings 423,670,934.61 - 30,732,962.87 (8,917,179.46) (14,982,310.07) 430,504,407.95 Machinery and equipment 321,122,580.44 775,506.73 117,169,933.58 - (5,159,203.46) 433,908,817.29
Motor vehicles 54,663,635.74 1,376,582.06 2,205,866.22 - (1,883,404.30) 56,362,679.72 Other 130,056,178.02 484,142.98 17,276,559.87 - (3,522,201.67) 144,294,679.20 Leasehold improvements 15,613,737.95 - 9,556,459.18 - (75,000.00) 25,095,197.13
Transfer to Current year investment Current year Acquisition other additions properties disposals Accumulated depreciation (342,921,138.89) (1,726,992.03) (77,962,716.95) 1,972,643.03 20,960,056.67 (399,678,148.17) Buildings (97,277,640.30) - (16,764,084.56) 1,972,643.03 12,015,919.09 (100,053,162.74) Machinery and equipment (128,933,323.69) (531,041.33) (33,071,372.45) - 4,146,359.61 (158,389,377.86) Motor vehicles (23,122,665.50) (837,947.52) (6,641,629.03) - 1,551,257.59 (29,050,984.46) Other (83,325,003.85) (358,003.18) (19,896,816.16) - 3,180,021.50 (100,399,801.69) Leasehold improvements (10,262,505.55) - (1,588,814.75) - 66,498.88 (11,784,821.42)
Net book value 602,205,927.87 690,487,633.12 Buildings 326,393,294.31 330,451,245.21 Machinery and equipment 192,189,256.75 275,519,439.43 Motor vehicles 31,540,970.24 27,311,695.26 Other 46,731,174.17 43,894,877.51 Leasehold improvements 5,351,232.40 13,310,375.71
Carrying amount 602,205,927.87 690,487,633.12 Buildings 326,393,294.31 330,451,245.21 Machinery and equipment 192,189,256.75 275,519,439.43 Motor vehicles 31,540,970.24 27,311,695.26 Other 46,731,174.17 43,894,877.51 Leasehold improvements 5,351,232.40 13,310,375.71
- 52 - China National Accord Medicines Corporation Ltd. Annual Report 2012
V Notes to the consolidated financial statements (continued)
(11) Fixed assets (continued)
In 2012, details of the depreciation charged arebelow:
31 December 2012 31 December 2011
Cost of goods sold 42,673,062.37 37,076,483.85 Selling expenses 3,907,835.02 4,612,220.07 General and administrative expenses 25,481,039.32 21,755,917.87 Research and development expenses 5,900,780.24 4,869,792.72 77,962,716.95 68,314,414.51
In 2012, fixed assets transferred from construction in progress are RMB102,925,085.72 (2011: RMB144,969,618.27).
(12) Construction in progress
31 December 2012 31 December 2011
Zhijun Zhiyao Guanglan Stage II Project 71,032,092.95 34,454,871.59 Zhijun production workshop Technological transformation project 11,269,919.29 1,856,176.32 Peinan Project 11,438,747.84 11,311,813.32 Chebei Project 8,515,595.20 7,515,595.20 Pingshan Stage I project 291,361.00 - Sewage transformation project etc 570,000.00 15,276,851.20 Asepsis Materials Plant Project - 14,830,665.89 Menstruum Recycling Plant Project - 15,141,346.09 Newly constructed Guangxi Logistics center project - 22,481,720.32 Cefoxitin Plant Improvement Project - 6,189,414.31 Multifunctional Warehouse Project - 1,253,509.03 Other projects 837,634.52 730,809.32 103,955,350.80 131,042,772.59
- 53 - China National Accord Medicines Corporation Ltd. Annual Report 2012
V Notes to the consolidated financial statements (continued)
(12) Construction in progress (continued)
Changes of construction in progress in 2012 are below:
Name of project Cost up to date Borrowing Weighted Transfer out out of Accumulated cost average 31 December Current year during current 31 December budget Construction capitalized capitalized interest Financed Budget of project 2011 additions year 2012 (%) progress (%) borrowing cost in 2010 rate (%) by
Zhijun Zhiyao Working Guanglan Stage II capital and Project 250,000,000.00 34,454,871.59 43,581,130.39 (7,003,909.03) 71,032,092.95 57% 75% 1,149,800.70 1,149,800.70 6.58% borrowings Zhijun production workshop Technological transformation Working project 72,876,000.00 1,856,176.3221,145,422.07 (11,731,679.10) 11,269,919.29 56% 85% - - - capital Working Peinan Project 40,000,000.00 11,311,813.32 126,934.52 - 11,438,747.84 28% 28% - - - capital Working Chebei Project 204,113,000.00 7,515,595.20 1,000,000.00 - 8,515,595.20 4% 4% - - - capital Asepsis Materials Working Plant Project 59,340,000.00 14,830,665.89 22,990.71 (14,853,656.60) - 99% 100% 151,356.86 - - capital Pingshan Stage I Working project 350,000,000.00 - 291,361.00 - 291,361.00 4% - - - - capital Menstruum Recycling Plant Working Project 18,216,000.00 15,141,346.09 - (15,141,346.09) - 99% 100% 1,376,457.93 - - capital Newly constructed Working Guangxi Logistics capital and center project 154,667,633.00 22,481,720.32 9,174,517.37 (31,656,237.69) - 100% 100% 6,307,006.43 819,796.90 6.09% borrowings Cefoxitin Plant Improvement Working Project 9,725,900.00 6,189,414.3120,930.81 (6,210,345.12) - 100% 100% - - - capital Multifunctional Warehouse Working Project 11,520,000.00 1,253,509.03 - (1,253,509.03) - 100% 100% - - - capital Sewage Working transformation capital and project etc 41,740,000.00 15,276,851.20 1,963,420.20 (16,670,271.40) 570,000.00 78% 78% 2,987,521.37 1,641,888.87 5.54% borrowings Working Other Projects - 730,809.32 636,739.73 (529,914.53) 837,634.52 - - - - - capital 1,212,198,533.00 131,042,772.59 77,963,446.80 (105,050,868.59) 103,955,350.80
- 54 - China National Accord Medicines Corporation Ltd. Annual Report 2012
V Notes to the consolidated financial statements (continued)
(13) Intangible assets
31 December Current year Current year 31 December 2011 additions decreases 2012
(6,000,831.00 Cost 204,789,616.11 51,557,321.70 ) 250,346,106.81 (6,000,831.00 Land use rights 138,308,055.67 12,569,536.76 ) 144,876,761.43 Computer software 13,200,777.11 5,330,642.08 - 18,531,419.19 Proprietary technology 53,083,933.33 - - 53,083,933.33 Trademarks 196,850.00 - - 196,850.00 Sales Network - 33,657,142.86 - 33,657,142.86
Accumulated amortization (82,188,137.25) (10,002,898.36) - (92,191,035.61) Land use rights (27,791,450.58) (3,024,380.56) - (30,815,831.14) Computer software (10,023,615.71) (2,189,621.41) - (12,213,237.12) Proprietary technology (44,198,154.30) (3,755,772.57) - (47,953,926.87) Trademarks (174,916.66) (21,933.34) - (196,850.00) Sales Network - (1,011,190.48) - (1,011,190.48)
Net book value 122,601,478.86 158,155,071.20 Land use rights 110,516,605.09 114,060,930.29 Computer software 3,177,161.40 6,318,182.07 Proprietary technology 8,885,779.03 5,130,006.46 Trademarks 21,933.34 - Sales Network - 32,645,952.38
Provision for impairment loss (3,000,000.00) - - (3,000,000.00) Land use rights - - - - Computer software - - - - Proprietary technology (3,000,000.00) - - (3,000,000.00) Trademarks - - - - Sales Network - - - -
Carrying amount 119,601,478.86 155,155,071.20 Land use rights 110,516,605.09 114,060,930.29 Computer software 3,177,161.40 6,318,182.07 Proprietary technology 5,885,779.03 2,130,006.46 Trademarks 21,933.34 - Sales Network - 32,645,952.38
In 2012, amortisation of intangible assets that are recognised in profit or loss for the current period amount to RMB 10,002,898.36 (2011: RMB15,956,153.76).
In 2012, amount of RMB 2,125,782.87 was transferred to intangible assets from construction in progress.
- 55 - China National Accord Medicines Corporation Ltd. Annual Report 2012
V Notes to the consolidated financial statements (continued)
(13) Intangible assets(continued)
Expenditures on research and development incurred in 2012 are listed as below:
Current year 31 December 2011 additions 31 December 2012
Development costs 3,998,433.69 1,004,007.58 5,002,441.27
Expenditures on research and development incurred in 2012 amount to RMB80,366,881.98 (2011: RMB64,935,098.26) in total, of which RMB79,362,874.40 (2011: RMB63,517,327.42) is recognised in profit or loss for the current period, RMB1,004,007.58 (2011: RMB1,417,770.84) is recognised as development costs. No research and development costs are capitialized.
(14) Goodwill
31 December 2012 31 December 2011
Goodwill 85,228,833.15 53,555,677.09 Less: provision for impairment (a) - - 85,228,833.15 53,555,677.09
(a) Impairment
The goodwill allocated to the asset groups and groups of asset groups are summarised by operating segments as follows:
31 December 2012 31 December 2011
Pharmaceutical distribution- Sinopharm Jiangmen 27,392,317.73 - Sinopharm Yanfeng 16,868,644.87 16,868,644.87 Sinopharm Zhaoqing 2,594,341.53 - Sinopharm Shaoguan 1,686,496.80 - Sinopharm Meizhou 1,610,819.66 1,610,819.66 Sinopharm Huizhou 923,184.67 923,184.67 Sinopharm Zhanjiang 282,135.55 282,135.55 Sinopharm Dongguan 1,499.02 1,499.02 Pharmaceutical manufacturing - Suzhou Wanqing 33,869,393.32 33,869,393.32 85,228,833.15 53,555,677.09
The recoverable amount of asset groups and groups of asset groups is calculated using the estimated cash flows determined according to the five-year budget approved by management. The cash flows beyond the five-year period are calculated based on the following estimated growth rates.
- 56 - China National Accord Medicines Corporation Ltd. Annual Report 2012
V Notes to the consolidated financial statements (continued)
(14) Goodwill (continued)
(a) Impairment (continued)
The main assumptions applied in calculating discounted future cash flows are as follows:
Pharmaceutical Pharmaceutical distribution manufacturing
Gross margin 6% 12% Discount rate 14.3% 14.8%
Management determines budgeted gross margin based on historical experience and forecast on market development. The discount rates determined by management are the pre-tax interest rates which reflect the risks specific to the related asset groups and groups of asset groups(Pharmaceutical distribution after-tax discount rate 14.3%, Manufactruing afer-tax discount rate 14.8%) . The above assumptions are used to assess the recoverable amount of each asset group and group of asset groups within the corresponding operating segment. As at 31 December 2012, management of the Group considered there was no impairment to goodwill recognised according to the impairment assessment
(15) Long-term prepaid expenses
31 December Current year Current year 31 December 2011 additions amortisation 2012
Leasehold improvements 19,019,005.23 3,228,343.84 (4,442,932.59) 17,804,416.48 Others 1,084,133.76 1,444,955.87 (590,515.66) 1,938,573.97 20,103,138.99 4,673,299.71 (5,033,448.25) 19,742,990.45
(16) Deferred income tax assets and deferred income tax liabilities
(a) Deferred income tax assets
31 December 2012 31 December 2011 Deferred income Deductible Deferred income Deductible tax assets temporary tax assets temporary differences differences
Provision for accounts receivable 5,546,717.33 22,438,158.95 5,485,770.49 22,077,157.93 Provision for other receivables 3,093,982.75 13,121,370.71 2,862,853.62 12,187,579.91 Provision for declines in value of inventories 2,775,337.75 17,306,988.33 3,735,540.84 23,212,083.12 Provision for fixed assets impairment 161,012.70 644,050.78 167,792.18 671,168.73 Accrued expenses 6,724,770.78 43,761,198.02 5,903,465.72 37,652,168.18 Accrued payroll 12,339,208.94 62,680,920.93 9,558,094.14 46,916,608.47 Deferred revenue 10,590,957.10 70,603,980.67 7,064,337.65 46,562,251.05 Deductible losses 4,523,540.07 29,125,619.28 5,707,702.49 35,323,416.95 Others 3,754,002.55 16,539,607.42 3,584,507.12 17,691,687.07 49,509,529.97 276,221,895.09 44,070,064.25 242,294,121.41
- 57 - China National Accord Medicines Corporation Ltd. Annual Report 2012
V Notes to the consolidated financial statements (continued)
(16) Deferred income tax assets and deferred income tax liabilities (continued)
(b) Deferred income tax liabilities
31 December 2012 31 December 2011 Deferred income Deductible Deferred income Deductible tax liabilities temporary tax liabilities temporary differences differences
Business combination involving entities not under common control 10,275,178.70 46,737,223.16 2,761,423.21 18,409,488.08 Changes in fair value 12,409,124.61 49,636,498.44 13,179,149.48 52,716,597.93 Others 3,934,970.37 16,170,951.78 3,960,214.61 16,339,246.79 26,619,273.68 112,544,673.38 19,900,787.30 87,465,332.80
(c) As at 31 December 2012, the Group has not recognised deferred tax assets in respect of deductible losses and other deductible temporary differences are listed as below.
31 December 2012 31 December 2011
Deductible losses(Note(i)) 30,362,355.73 26,503,144.07 Other deductible temporary differences - 3,975,000.00 30,362,355.73 30,478,144.07
(i) For those loss making subsidiaries, the Group does not recognize deferred tax assets arising from accumulated losses amounting to RMB30,362,355.73 which are tax deductible under the tax law within 2013 to 2017.
As at 31 December 2012, the unrecognised deferred tax assets in respect of deductible losses will be expired as follows:
Year 31 December 2012 31 December 2011
2013 173,556.90 275,795.10 2014 - - 2015 9,050,596.00 9,748,417.56 2016 16,478,931.41 16,478,931.41 2017 4,659,271.42 - 30,362,355.73 26,503,144.07
- 58 - China National Accord Medicines Corporation Ltd. Annual Report 2012
V Notes to the consolidated financial statements (continued)
(17) Provision for asset impairment
Reversal of Decreases 31 December written off 31 December 2011 Acquisitionamount in 2011 Increases Reversal Written off 2012
Bad debt provision 34,619,992.16 1,880,769.50 237,757.81 1,095,744.56 (2,044,367.80) (230,366.57) 35,559,529.66 Including: Provision for ccounts receivable 22,212,037.26 1,123,659.52 237,757.81 962,870.12 (2,027,310.41) (70,855.35) 22,438,158.95 Provision for other receivables 12,407,954.90 757,109.98 - 132,874.44 (17,057.39) (159,511.22) 13,121,370.71 Provision for declines in value of inventories 23,351,654.13 131,785.39 - 28,332,016.79 (6,189,222.06) (28,319,245.92) 17,306,988.33 Provision for investment property impairment 1,300,000.00 - - - - - 1,300,000.00 Provision for intangible assets impairment 3,000,000.00 - - - - - 3,000,000.00
62,271,646.29 2,012,554.89 237,757.81 29,427,761.35 (8,233,589.86) (28,549,612.49) 57,166,517.99
(18) Other non-current assets 31 December 2012 31 December 2011
Medical reserve fund 40,053,062.53 37,163,948.02 Prepayment for equipment 3,684,662.00 3,109,894.90 Non-monetary compensation of resettlement (Note V(31)) 70,250,000.00 - 113,987,724.53 40,273,842.92
(19) Short-term borrowings
(a) Category Currency 31 December 2012 31 December 2011
Unsecured borrowings(Note(i)) RMB 1,281,821,210.14 1,201,815,980.61 Guaranteed borrowings(Note(ii)) RMB 332,513,702.21 146,054,097.48 Pledged borrowings (Note(iii)) RMB 34,274,932.13 - Discounted notes RMB 39,200,449.89 154,597,987.59 Entrusted borrowings (Note VII(6)) RMB - 337,370,000.00 1,687,810,294.37 1,839,838,065.68
(i) As at 31 December 2012, unsecured borrowings of RMB1,019,821,210.14 (31 December 2011: RMB1,201,815,980.61) are guaranteed by the Company and its subsidiaries. Unsecured borrowings of RMB 262,000,000.00(31 December 2011:Nil) are lent by Sinopharm Group Financial Co.,Ltd (‘Group Financial Co.’)
(ii) As at 31 December 2012, bank borrowings of RMB332,513,702.21 (31 December 2011: RMB146,054,097.48) are guaranteed by Sinopharm Group.
(iii) As at 31 December 2012, accounts receivables with an amount of RMB34,274,932.13 are pledged(Note V(3)(1)) as collateral for short-term borrowings of RMB34,274,932.13 (31 December 2011: Nil).
As at 31 December 2012, the weighted average interest rate of short-term borrowings is 5.42% per annum (31 December 2011: 6.98%).
(b) As at 31 December 2012, there were no expired bank borrowings(31 December 2011: Nil).
- 59 - China National Accord Medicines Corporation Ltd. Annual Report 2012
V Notes to the consolidated financial statements (continued)
(20) Notes payable
31 December 2012 31 December 2011
Trade acceptance notes 336,196,648.99 182,966,615.77 Bank acceptance notes 769,078,889.25 876,460,337.07 1,105,275,538.24 1,059,426,952.84
As at 31 December 2012, notes receivable of RMB1,105,275,538.24 would be expired within 1 year (31 December 2011: RMB1,059,426,952.84).
(21) Accounts payable
31 December 2012 31 December 2011
Trade payable 3,197,354,275.46 2,495,491,846.36
(a) Accounts payable due from shareholders with more than 5% (including 5%) of the Company’s equity interest are analysed as below:
31 December 2012 31 December 2011
Sinopharm Group(Note VII(6)) 55,869,134.08 74,626,867.68
(b) Accounts payable due to related party
As at 31 December 2012, there are accounts payable of RMB353,535,340.93 due to related party (31 December 2011: RMB252,016,534.94), which accounts for 11.06% of the total accounts payable(31 December 2011: 10.10%).(Note VII(6)).
(c) As at 31 December 2012, accounts payable of RMB75,430,864.69 (31 December 2011: RMB44,732,970.31) were aged over 1 year, which were mainly for quality deposit. Before the financial statement is approved, no such long aged accounts payable have been settled.
(d) Accounts payable denominated in foreign currency as belows：
31December 2012 31 December 2011 Foreign Exchang RMB Foreign Exchange RMB Currency e rate Currency rate
USD 1,674,700.00 6.2855 10,526,326.85 4,432,425.00 6.3009 27,928,266.68
(22) Advances from customers
31 December 2012 31 December 2011
Sales received in advance 35,002,695.02 58,705,230.49
As at 31 December 2012, there are RMB450,782.23 of advances due to related party (31 December 2011: 8,192.00), which accounts for 1.29% of the total accounts payable(31 December 2011: 0.01%). (Note VII(6)).
As at 31 December 2012, advances from customers of RMB1,687,040.75 (31 December 2011: RMB560,334.18) were aged over 1 year. Before the financial statement is approved, no such long aged advances have been settled.
- 60 - China National Accord Medicines Corporation Ltd. Annual Report 2012
V Notes to the consolidated financial statements (continued)
(23) Employee benefits payable
31 December Current year Current year 31 December 2011 additions reductions 2012
Wages and salaries, bonuses, allowances and subsidies 114,611,695.40 362,038,624.59 (345,785,379.41) 130,864,940.58 Staff welfare 354,584.16 28,589,656.15 (28,801,930.31) 142,310.00 Social security contributions 767,833.16 42,901,561.52 (42,454,666.79) 1,214,727.89 Including: Medical insurance 113,984.87 12,271,850.96 (12,157,470.49) 228,365.34 Basic pensions 550,795.78 26,643,182.49 (26,334,569.47) 859,408.80 Unemployment insurance 84,413.64 1,979,197.20 (1,986,182.89) 77,427.95 Work injury insurance 3,037.29 1,058,337.05 (1,038,136.54) 23,237.80 Maternity insurance 15,601.58 948,993.82 (938,307.40) 26,288.00 Housing funds 497,601.75 13,465,608.45 (13,093,569.75) 869,640.45 Supplemental pensions 2,998,247.13 3,634,541.80 (5,914,269.72) 718,519.21 Labor union funds and employee education funds 10,638,569.27 13,192,635.38 (12,352,115.25) 11,479,089.40 Compensation for employee dismission 4,056,557.06 1,198,284.93 (2,617,768.90) 2,637,073.09 Early retirement benefits 6,590,474.03 979,935.45 (621,282.21) 6,949,127.27 Others 1,898,884.10 1,270,744.53 (2,050,648.32) 1,118,980.31 142,414,446.06 467,271,592.80 (453,691,630.66) 155,994,408.20
As at 31 December 2012, there are no payroll payables in arrears. Most part of the payroll payables would be paid out in the coming year 2013.
(24) Taxes payable 31 December 2012 31 December 2011
Enterprise income tax payable 27,804,706.06 30,342,766.82 Value-added-tax payable 9,283,848.26 21,194,777.26 Business tax payable 1,046,033.24 1,714,936.36 City maintenance and construction tax payable 719,058.90 1,875,216.54 Real estate tax payable 855,659.63 1,042,234.40 Stamp duty tax payable 1,172,199.70 1,368,858.31 Land use tax payable 1,050.20 286,607.27 Individual income tax payable 989,594.53 869,908.61 Educational surcharge payable 518,694.99 1,283,779.92 Rivers management fee payable 423,867.19 2,813,891.79 Anti-flood fund payable 3,793,862.54 552,568.54 Water conservancy fund payable 4,782,099.19 - Others - 255,284.29 51,390,674.43 63,600,830.11
- 61 - China National Accord Medicines Corporation Ltd. Annual Report 2012
V Notes to the consolidated financial statements (continued)
(25) Interests payable
31 December 2012 31 December 2011
Short term borrowing interests payable 6,561,038.88 10,451,229.03 Short-term financing bond interest 6,326,666.69 - Long term borrowing interests payable 148,115.50 - 13,035,821.07 10,451,229.03
(26) Other payables
31 December 2012 31 December 2011
Accrued selling and distribution expenses 159,665,190.99 156,473,454.00 Payables for construction in progress and equipment 33,092,434.64 51,532,375.56 Amount collected on behalf of third party 69,004,759.79 36,761,462.92 Deposit 13,243,877.98 12,555,627.33 Equity transaction payable 23,524,217.03 - Compensation payment for suspension of chebei project(Note(i)) 12,620,000.00 - Others 102,680,826.97 89,642,262.53 413,831,307.40 346,965,182.34
(i) In March, 2010, the Group signed a "Real estate transfer and corporation agreement"(hereinafter referred to as the "agreement") with a Real Estate Development Company, and aimed to develop real estate on the land together which the Group had use right. While the project has not been started then. In June, 2012, the Group determined to terminate the agreement due to the long-term development of the group.
Till the report signing date, the Group has not reached a formal agreement with the real estate company, and according to the oral communication result, the Group made compensation provision amounting to Rmb17.6M with best estimate, Less 4.98M which has been paid for terminated the contact, others is recognised as other payable.
(a) Other payables due to shareholders with more than 5% (including 5%) of the Company’s equity interest are analysed as below:
31 December 2012 31 December 2011
Sinopharm Group(Note VII (6)) 3,930,696.87 3,730,696.87
(b) Other payables due to related party
As at 31 December 2012, there are other payables of RMB12,988,560.64 due to related party (31 December 2011: RMB12,551,128.25), which accounts for 3.14% of the total other payables (31 December 2011: 3.62%). (Note VII(6)).
(c) As at 31 December 2012, other payables of RMB86,616,880.71 (31 December 2011: RMB67,662,626.93) were aged over 1 year, which were mainly for accrued selling expenses. Before the financial statement is approved, other payables of RMB20,500,943.20 have been paid out (Note X(1)).
- 62 - China National Accord Medicines Corporation Ltd. Annual Report 2012
V Notes to the consolidated financial statements (continued)
(27) Current portion of long-term borrowings
31 December 2012 31 December 2011
Promotion rewards program - due within one year 9,000,000.00 8,960,000.00 Current portion of long term borrowings (Note(a)) 62,127,275.00 15,000,000.00 71,127,275.00 23,960,000.00
(a) Current portion of long term borrowings 31 December 2012 31 December 2011
Unsecured borrowings 62,127,275.00 15,000,000.00
Details of current portion of long term borrowings are as below:
Interest rate per 31 December 31 December Borrowing date Repayment date Currency annual(%) 2012 2011
Agricultural Bank 6 September 5 September of China 2010 2013 RMB 5.535% 10,000,000.00 - Agricultural Bank 5 September of China 13 October 2010 2013 RMB 5.535% 10,000,000.00 - Agricultural Bank 16 December 5 September of China 2010 2013 RMB 5.535% 10,000,000.00 - Bank of 28 February 20 December Communications 2012 2013 RMB 6.765% 9,889,765.00 - Bank of China 25 April 28 December 2012 2013 RMB 6.720% 3,490,500.00 - 43,380,265.00 -
(28) Other non-current liabilities 31 December 2012 31 December 2011
Short-term financing bond (Note(a)) 399,014,838.05 -
(a) In Agust 2012, the Company issued short-term bonds with a total face value of RMB 0.4 billion with 1-year terms for working capital purposes. The fixed annual coupon and effective interest rates of these bonds were 4.03% and 4.45%,respectively.
- 63 - China National Accord Medicines Corporation Ltd. Annual Report 2012
V Notes to the consolidated financial statements (continued)
(29) Long-term borrowings
Currency 31 December 2012 31 December 2011
Unsecured borrowings RMB 82,205,562.71 93,082,967.96
As at 31 December 2012, Bank unsecured borrowings of RMB54,781,212.71 (31 December 2011: 63,082,967.96), borrowed by Guangxi Logistic, a subsidiary, are guaranteed by the Company. Interest is paid every month and the principal is due for repayment on 20 December 2015; Bank unsecured borrowings of RMB 27,424,350.00 (31 December 2011: Nil) borrowed by Zhijun Pharm, a subsidiary, are guaranted by the Company. Interest is paid every month and the principle will be repaid with an amount of RMB5,000,000.00 at the end of each quarter since 28 March, 2014.
As at 31 December 2012, the weighted average interest rate of long term borrowings is 6.54% per annum(31 December 2011：6.70%).
(a) Details for top five long-term borrowings are as followings.
Interest rate per Borrowing Repayment annum 31 December 31 December date date Currency (%) 2012 2011
Bank of Communications 20 December Guangxi Branch 31 March 2011 2015 RMB 6.400% 7,000,000.00 7,000,000.00 Bank of Communications 20 December Guangxi Branch 21 June 2011 2015 RMB 6.400% 5,640,882.00 5,640,882.00 Bank of Communications 10 October 20 December Guangxi Branch 20111 2014 RMB 6.400% 5,096,368.60 5,096,368.60 Bank of Communications 28 January 20 December Guangxi Branch 2011 2015 RMB 6.400% 4,000,000.00 4,000,000.00 Bank of Communications 23 February 20 December Guangxi Branch 2011 2015 RMB 6.400% 4,000,000.00 4,000,000.00 25,737,250.60 25,737,250.60
(30) Payables for specific projects
31 December 2011 Addition Reclassification 31 December 2012
Sepecial Funds granted by Government 852,000.00 - - 852,000.00 Government grants for ERP system construction 435,000.00 - - 435,000.00 Industrial technology funds 3,232,000.00 200,000.00 (232,000.00) 3,200,000.00 4,519,000.00 200,000.00 (232,000.00) 4,487,000.00
(31) Other non-current liabilities
31 December 2012 31 December 2011
Deferred income(Note(a)) 168,180,160.90 48,817,680.23 Medical reserve funds (Note(b)) 45,427,343.31 45,427,343.31 213,607,504.21 94,245,023.54
- 64 - China National Accord Medicines Corporation Ltd. Annual Report 2012
V Notes to the consolidated financial statements (continued)
(31) Other non-current liabilities(continued)
(a) Deferred income 31 December 2012 31 December 2011 Government grants related to assets - R&D library (in progress) 5,000,000.00 5,000,000.00 - Medical R&D center II (in progress) 5,000,000.00 5,000,000.00 - Medication for Stomach disease R&D project 5,000,000.00 5,000,000.00 -New Cephalosporin R&D Project 2,440,380.94 3,000,000.00 -Nanning Logistics Project 6,277,100.67 3,908,000.00 -Cefpirome Sulfate R&D Project 2,879,967.43 1,594,835.02 -Shared logistics center(completed) 3,034,277.40 3,275,514.96 -Resettlement compansation(i) 91,745,892.53 - -Cephalosporin solid preparations development project 15,000,000.00 - -Cephalosporin powder injection passing EU-GMP authentication 5,000,000.00 - - Other projects(in progress) 3,993,037.26 5,739,825.58 145,370,656.23 32,518,175.56
Promotion rewards program 22,809,504.67 16,299,504.67 168,180,160.90 48,817,680.23
(i) Because the Nanning Government planned to reconstruction of the old urban area, a subsidiary of the company, Guangxi Logistics, which located in Nanning Longteng Road need to relocated. According to compensation agreement signed in May, 2012, the company obtained RMB120.25M compensation for the demolition carried out by the government, including cash compensation amounted RMB50M and another physical compensation amounted RMB70.25M would be received in year 2015 when completion( Note V(18)). Amounting to Rmb93.32M relating to capital expenditure for reconstruction was recognised as deferred income, which would be amortised to profit or loss over the useful life of the related asset; others was recognised in profit or loss for the current period(Note V(44)).
(b) Certain medical reserves funds were received by the Group from the PRC government for it to purchase medical products (including medicines) required to respond to major disasters, epidemics and other emergencies.
(32) Share capital
31 December 2012 31 December 2011
Listed shares without restriction of trading: A shares, listed 233,263,800.00 233,263,800.00 B shares, listed 54,885,600.00 54,885,600.00 288,149,400.00 288,149,400.00
As at 31 December 2012 and 2011,there is no change with share capital.
- 65 - China National Accord Medicines Corporation Ltd. Annual Report 2012
V Notes to the consolidated financial statements (continued)
(33) Capital surplus
31 December Current year Current year 31 December 2011 addition reductions 2012
Capital surplus- Business combination under common control(a) 3,416,966.47 - (3,416,966.47) - Other Capital surplus Share of changes in equity other than profits of investees 2,380,016.57 - - 2,380,016.57 Transfer of capital surplus recognised under the previous accounting system 2,650,322.00 - - 2,650,322.00 Other 288,000.00 232,000.00 - 520,000.00 8,735,305.04 232,000.00 (3,416,966.47) 5,550,338.57
31 December Current year Current year 31 December 2010 addition reductions 2011
Capital surplus- Business combination under common control 3,416,966.47 - - 3,416,966.47 Other Capital surplus Share of changes in equity other than profits of investees 2,380,016.57 - - 2,380,016.57 Transfer of capital surplus recognised under the previous accounting system 2,650,322.00 - - 2,650,322.00 Other - 288,000.00 - 288,000.00 8,447,305.04288,000.00 - 8,735,305.04
(a) Current year reduction of RMB3,416,966.47 is resulted from the Company acquires Sinopharm Wuzhou in 2012(Note IV(3)), which is business combination under common control.
(34) Surplus reserve
31 December Current year Current year 31 December 2012 2011 additions reductions
Statutory surplus reserve 63,480,745.16 35,879,638.99 - 99,360,384.15
31 December Current year Current year 31 December 2011 2010 additions reductions
Statutory surplus reserve 39,981,268.55 23,499,476.61 - 63,480,745.16
- 66 - China National Accord Medicines Corporation Ltd. Annual Report 2012
V Notes to the consolidated financial statements (continued)
(35) Undistributed profits
2012 2011 Amount Appropriation Amount Appropriation rate rate
Opening balance of retained earnings(after adjusted) 993,269,387.62 719,209,302.41 Adjustment - Business combination under common control(a) (3,541,560.96) (1,557,687.89) Undistributed profits at beginning of year(adjusted) 989,727,826.66 717,651,614.52 Add:net profit attributable to the shareholders of the company 475,792,491.12 328,323,616.75 Less:appropriation of statutory surplus reserve (Note V(33)) (35,879,638.99) 10% (23,499,476.61) 10% Dividends (c) (37,459,422.00) (34,577,928.00) Other outflow (b) (9,298,350.55) - Add: other inflow - 1,830,000.00 Ending balance of retained earnings 1,382,882,906.24 989,727,826.66
(a) As resulted from business combination under common controls, an decrease in undistributed profits at beginning of 2012 is RMB3,541,560.96(2011:RMB1,557,687.89).
(b) In 2012, other outflow includes:
In March, 2012, an decrease in undistributed profit, regared as the difference between combination cost and net asset proportion, is RMB1,083,033.53(Note IV(3)(d)) resulted from business combination under common control.
In July, 2012, the Company acquired an additional 25% equity interest in Suzhou Wanqing at a cash consideration of RMB31,650,000 from Yangqiaoming, an individual shareholder. As a result, the Company’s interest in Suzhou Wanqing increased from 75% to 100%. The difference amounting to Rmb 8,215,317.02 between the carrying amount of minority interest and the carrying amount of the consideration paid, has been adjusted the retained earnings.
(c) Pursuant to the resolution of General Meeting on 27 April 2012, cash dividends of RMB37,459,422.00 (RMB1.3 per 10 shares) was paid based on the issued shares of 288,149,400.
Pursuant to the resolution of board of directors of the company on 19 March 2013, cash dividends of RMB51,866,892.00 (RMB1.8 per 10 shares) was proposed based on the issued shares of 288,149,400. This proposed dividend is subject to the approval of General Meeting (Note X(2)).
(36) Minority Interest
Minority interests are analysed as below:
31 December 2012 31 December 2011
Sinopharm Liuzhou 33,861,951.95 27,914,009.31 Yanfeng Medical 23,859,797.47 23,891,612.66 Sinopharm Shaoguan 5,386,400.42 - Suzhou Wanqing(Notes V(35)(b)) - 24,777,149.95 Sinopharm Wuzhou 33.40 (374.91) 63,108,183.24 76,582,397.01
- 67 - China National Accord Medicines Corporation Ltd. Annual Report 2012
V Notes to the consolidated financial statements (continued)
(37) Sales and cost of sales
2012 2011
Revenue of main operations 17,871,974,928.79 15,079,379,556.73 Other operating income 139,784,249.47 70,748,997.86 18,011,759,178.26 15,150,128,554.59
2012 2011
Cost of main operations (16,316,986,605.55) (13,786,435,899.39) Other operating expenses (91,733,315.64) (27,260,830.46) (16,408,719,921.19) (13,813,696,729.85)
(a) Revenue and cost of main operations
Revenue and cost of main operations analysed by industries are set out below:
2012 2011 Revenue of Cost of main Revenue of Cost of main main operations operations main operations operations
Pharmaceutical distribution 16,066,518,752.13 (15,191,216,947.07) 13,311,533,148.93 (12,562,309,953.01) Pharmaceutical manufacturing 1,764,407,339.41 (1,099,955,200.59) 1,732,586,044.87 (1,201,356,729.33) Logistics and freights 30,557,165.18 (21,466,438.05) 24,109,397.96 (16,943,572.31) Rental and training income 10,491,672.07 (4,348,019.84) 11,150,964.97 (5,825,644.74) 17,871,974,928.79 (16,316,986,605.55) 15,079,379,556.73 (13,786,435,899.39)
(b) Other operating income and expenses
2012 2011 Other operating Other operating Other operating Other operating income expenses income expenses
Sales of raw materials 80,145,178.94 (82,992,360.18) 23,640,586.81 (20,707,380.20) Rental income 19,270,725.92 (3,205,131.47) 17,964,708.78 (2,853,712.79) Rendering of services 40,368,344.61 (5,535,823.99) 29,143,702.27 (3,699,737.47) 139,784,249.47 (91,733,315.64) 70,748,997.86 (27,260,830.46)
(c) Top five customers are analysed as follows:
The sales to top five customers of the Group amounted to RMB1,157,240,569.85, which accounted for 6.42% of the total revenue from main operations. Details are set out below:
Sales % of total sales of the Group
GuangDong Province People's Hospital 323,162,104.86 1.79% Center for Disease Control and Prevention of Guangdong Province 222,001,281.73 1.23% The First Affiliated Hospital of GuangXi Medical University 219,219,970.29 1.22% Nanfang Hospital of Southern Medical University 213,142,580.36 1.18% The First Affiliated Hospital of Sun Yat-Sen University 179,714,632.61 1.00% 1,157,240,569.85 6.42%
- 68 - China National Accord Medicines Corporation Ltd. Annual Report 2012
V Notes to the consolidated financial statements (continued)
(38) Tax and surcharges
2012 2011
Business tax 11,210,887.72 9,256,817.62 City maintenance and construction tax 18,756,982.09 15,513,934.94 Educational surcharge 13,371,191.53 10,488,709.52 Others 2,835,638.72 3,439,543.42 46,174,700.06 38,699,005.50
(39) Selling and distribution expenses
2012 2011
Employees payroll and welfare benefits 167,831,532.51 147,180,608.75 Transportation charges 67,952,768.73 77,346,018.47 Promotion and marketing expenses 56,774,037.20 50,454,889.04 Conference expenses 22,061,115.23 18,643,784.50 Travel allowances 20,168,006.01 18,496,106.52 Entertainment expenses 21,518,039.95 16,780,802.29 Advertising expenses 15,776,012.54 29,671,227.62 Storage expenses 15,230,877.76 14,279,686.15 Office allowances 7,772,539.28 8,102,465.74 Rental expenses 5,511,697.18 5,063,562.45 Depreciation expenses 3,907,835.02 4,612,220.07 Others 44,090,957.74 40,658,603.20 448,595,419.15 431,289,974.80
(40) Governance and administrative expense
2012 2011
Employees payroll and welfare benefits 171,684,570.22 142,547,047.11 Research and development expenses 79,362,874.40 63,517,327.42 Depreciation expenses 25,481,039.32 21,755,917.87 Taxations 25,339,053.10 16,163,679.63 Amortisation of intangible assets 10,002,898.36 15,956,153.76 Entertainment expenses 12,009,913.28 9,646,916.00 Office allowances 10,227,434.25 10,150,454.38 Conference expenses 8,714,661.19 7,016,685.58 Vehicle management expenses 6,720,772.72 6,302,259.03 Maintenance and other charges 4,248,569.14 4,591,059.53 Travel allowances 4,452,499.63 4,130,736.83 Utilities 4,549,703.56 3,812,124.90 Rental expenses 5,974,476.64 4,985,943.33 Others 23,464,524.28 40,869,439.94 392,232,990.09 351,445,745.31
(41) Financial expenses – net 2012 2011
Interest expenses 156,874,380.29 130,898,149.48 Less: interest income (4,003,700.35) (6,355,189.71) Exchange losses/(gains) 324,864.45 (2,876,767.13) Others 8,922,605.94 15,223,877.89 162,118,150.33 136,890,070.53
- 69 - China National Accord Medicines Corporation Ltd. Annual Report 2012
V Notes to the consolidated financial statements (continued)
(42) Assets impairment losses 2012 2011
Bad debts (948,623.24) 2,447,685.60 Declines in values of inventories 22,142,794.73 15,643,842.66 Impairment in intangible assets - 3,000,000.00 21,194,171.49 21,091,528.26
(43) Investment income
2012 2011
Share of profit of investees under equity method (Note a) 38,740,679.55 28,119,376.36
(a) The investment income from long-term investment under equity method represented the profit from Wanle Medical. The increase was due to improved business performance of that associate.
There is no significant restriction on the remittance of investment income to the Group.
(44) Non-operating income
2012 2011
Gain on disposal of fixed assets 757,118.82 3,106,446.50 Government grants (Note a) 57,227,812.33 13,577,864.38 Payment written off 81,267.91 - Others 1,972,816.79 7,320,675.78 60,039,015.85 24,004,986.66
Non-operating income is wholly classified as non-recurring profit and loss.
(a) Government grants
2012 2011 Note
Government grants related to assets Resettlement compensation- Transfer from deferred amortization amortization of assets 1,574,071.66 - income Transfer from deferred amortization Others 3,588,811.86 826,592.29 income
Government grants related to income Resettlement compansation 26,930,035.81 - Resettlement compansation Tax return in Nanning 10,696,855.00 - Tax return in Nanning Government grants for technical Subsidy for technical improvement improvement of high and new technology 4,938,038.00 1,201,000.00 enterprises Government-funded interest discount 5,000,000.00 - Fiscal interest discount Government grants for medicine reserve expenses 3,500,000.00 4,402,162.11 Subsidy for medical reserve Subsidy for Jianer cough mixture research and Subsidy for research and development project 1,000,000.00 - development project Subsidy for R&D expenditure for Government grants for R&D enterprises located in Bao An expenses - 4,572,164.98 district Shenzhen Other - 2,575,945.00 Subsidy for contribution 57,227,812.33 13,577,864.38
- 70 - China National Accord Medicines Corporation Ltd. Annual Report 2012
V Notes to the consolidated financial statements (continued)
(45) Non-operating expenses 2012 2011
Losses on disposal of non-current assets 274,130.74 1,566,414.63 Donation 202,000.00 8,856.40 Compensation payment for suspension of chebei project 17,600,000.00 - Resettlement costs and losses(Note(i)) 9,520,609.61 - Others 589,989.98 272,926.77 28,186,730.33 1,848,197.80
(i) Resettlement costs and losses including disposal of non-current asset amounting to Rmb8,830,035.81 and other related expense amounting to Rmb690,573.80.
Non-operating cost is wholly classified as non-recurring profit and loss.
(46) Income taxes expenses
2012 2011
Current income tax 126,267,081.82 97,261,076.43 Deferred income tax (6,632,126.32) (15,794,778.41) 119,634,955.50 81,466,298.02
The reconciliation from income tax calculated based on applicable tax rates and total profit presented in the consolidated financial statements to the income tax expenses is listed below:
2012 2011
Total profit 603,316,791.02 407,291,665.56
Income tax expenses calculated at applicable tax rates 150,829,197.76 101,822,916.39 Differences in preferential tax rates of certain companies (26,574,499.46) (17,547,262.57) Income not subject to tax (10,078,687.82) (6,748,650.33) Expenses not deductible for tax purposes 6,493,227.63 4,812,131.94 Utilisation of previously unrecognized bad debt losses (694,757.95) (1,062,094.36) Utilisation of previously unrecognized tax losses (382,582.11) (2,438,685.53) Tax losses for which no deferred income tax asset was recognised 1,164,817.86 4,189,423.42 Super deduction for development cost (3,581,197.65) (3,664,428.36) Others 2,459,437.24 2,102,947.42 Income taxes 119,634,955.50 81,466,298.02
(47) Earnings per share
(a) Basic earnings per share
Basic earnings per share is calculated by consolidated net profit attributable to shareholders of the Company dividing by the weighted average number of ordinary shares in issue:
2012 2011
Consolidated net profit attributable to shareholders of the Company 475,792,491.12 328,323,616.75 Weighted average number of ordinary shares in issue 288,149,400.00 288,149,400.00 Basic earnings per share 1.65 1.14 Including: Basic earnings per share on going 1.65 1.14
(b) Diluted earnings per share
Diluted earnings per share is calculated by dividing the consolidated net profit attributable to shareholders of the Company by the weighted average number of ordinary shares in issue, which both should be adjusted for the effects of all potential dilutive factors. The Company has no potential outstanding ordinary shares (2011: nil), the diluted earnings per share equals the basic earnings per share.
- 71 - China National Accord Medicines Corporation Ltd. Annual Report 2012
V Notes to the consolidated financial statements (continued)
(48) Cash received relating to other operating activities
(a) Cash received relating to other operating activities
2012 2011
Government grants 38,133,438.00 22,231,272.09 Repayment of borrowings due from employees 24,357,394.38 985,672.00 Interest income 4,003,700.35 6,345,671.35 Others 31,509,580.78 27,344,023.00 98,004,113.51 56,906,638.44
(b) Cash paid relating to other operating activities
2012 2011
Entertainment expenses 33,527,953.23 26,323,487.90 Rental expenses 11,486,173.82 10,038,905.78 Advertising expenses 15,776,012.54 29,671,227.62 Bank charges 8,922,605.94 15,180,489.90 R&D expenses 79,362,874.40 63,517,327.42 Others 179,904,289.33 150,239,919.24 328,979,909.26 294,971,357.86
(c) Cash received relating to other investing activities
2012 2011
Resettlement compensation (Note V(31)) 50,000,000.00 -
(d) Cash received relating to other financing activities
2012 2011
Entrusted borrowings borrowed from Sinopharm Group 252,630,000.00 587,370,000.00 Other 42,511,161.10 - 295,141,161.10 587,370,000.00
(e) Cash payments relating to other financing activities
2012 2011
Repayment of entrusted borrowings lent by Sinopharm Group 590,000,000.00 550,000,000.00 Repayment of borrowings lent by Dong Fang Uptodate 4,900,000.00 - Others - 102,500.00 594,900,000.00 550,102,500.00
- 72 - China National Accord Medicines Corporation Ltd. Annual Report 2012
V Notes to the consolidated financial statements (continued)
(49) Supplementary information of cash flow statements
(a) Supplementary information of cash flow statements
Reconciliation of net profit to cash flows from operating activities
2012 2011
Net profit 483,681,835.52 325,825,367.54 Add: Provision for assets impairment 21,194,171.49 21,091,528.26 Depreciation of fixed assets and investment properties 84,699,713.36 74,405,902.56 Amortisation of intangible assets 10,002,898.36 15,956,153.76 Amortisation of long-term prepaid expenses 5,033,448.25 5,638,806.05 Losses/(Gains) on disposal of fixed assets, intangible assets and other non-current assets 8,347,047.73 (1,540,031.87) Financial expenses 157,199,244.74 128,045,416.21 Investment income (38,740,679.55) (28,119,376.36) Increase of deferred tax assets (4,936,326.99) (12,986,472.01) Decrease of deferred tax liabilities (1,695,799.33) (2,808,306.40) Increase of inventory (436,773,288.50) (169,863,554.37) Increase in operating receivables (810,442,583.76) (822,910,097.93) Increase in operating payables 827,863,673.10 693,521,060.85 Increase in operating cash with restriction 18,521,978.34 3,847,897.06 Net cash flow from operating activities 323,955,332.76 230,104,293.35
Movement of cash
2012 2011
Cash at end of year 920,748,043.53 907,884,162.14 Less: cash at beginning of year (907,884,162.14) (684,764,869.84) Net increase in cash 12,863,881.39 223,119,292.30
(b) Acquisition of subsidiaries and operating unit
2012 2011
The consideration of acquisition 80,622,217.03 912,820.63
Consideration settled in cash 57,098,000.00 258,411.77 Less: cash and cash equivalents in the subsidiaries and business acquired (33,296,237.78) - Add: cash paid for prior year acquisition - 15,824,966.42 Net cash outflow on acquisition of the subsidiaries and business 23,801,762.22 16,083,378.19
- 73 - China National Accord Medicines Corporation Ltd. Annual Report 2012
V Notes to the consolidated financial statements (continued)
(49) Supplementary information of cash flow statements (continued)
(b) Acquisition of subsidiaries and operating unit (continued)
Net assets acquired from the business combination involving entities and operating unit under non common control
2012 2011
Current assets 284,716,365.49 4,385,262.46 Non-Current assets 35,733,528.30 - Current liabilities (262,489,331.45) (3,472,441.83) Non-Current liabilities (8,414,285.71) - Minority interest (5,097,215.66) - 44,449,060.97 912,820.63
(c) Cash
31 December 2012 31 December 2011
Cash at end of year 920,748,043.53 907,884,162.14 Including: Cash on hand 73,828.10 48,381.59 Call deposits with banks 920,674,215.43 907,835,780.55 Restricted cash 33,244,027.08 45,066,005.42 Cash at bank and on hand 953,992,070.61 952,950,167.56
VI Segment information
The reportable segments of the Group are the business units that provide different products or service, or operate in the different areas. Different businesses or areas require different technologies and marketing strategies, the Group, therefore, separately manages the production and operation of each reportable segment and evaluates their operating results respectively, in order to make decisions about resources to be allocated to these segments and to assess their performance.
The Group identified 3 reportable segments as follows:
- The Group, which is mainly engaged in investing and managing business - Pharmaceutical distribution, which is mainly engaged in distribution of medicine and pharmaceutical products to customers, including hospitals, other distributors, retail drug stores and clinics; - Pharmaceutical manufacturing, which is mainly engaged in the manufacture and sale of medicine.
Inter-segment transfers are measured by reference to sales to third parties.
The assets and liabilities are allocated based on the operations of the segment. Expenses indirectly attributable to each segment are allocated to the segments based on the proportion of each segment’s revenue.
- 74 - China National Accord Medicines Corporation Ltd. Annual Report 2012
VI Segment information (continued)
(a) Segment information as at and for the year ended 31 December 2012 is as follows:
The GroupPharmaceutical Pharmaceutical Elimination Total distribution manufacturing
Revenue from external customers 4,759,376.00 16,155,509,003.28 1,851,490,798.98 - 18,011,759,178.26 Inter-segment revenue 98,400.00 500,561.39 20,078,304.18 (20,677,265.57) - Interest income 47,071,634.01 2,768,886.33 5,566,506.18 (51,403,326.17) 4,003,700.35 Interest expense (50,817,545.74) (147,650,514.66) (9,809,646.06) 51,403,326.17 (156,874,380.29) Share of profit of subsidiaries 318,833,223.58 - - (318,833,223.58) - Share of profit of associates 38,740,679.55 - - - 38,740,679.55 Impairment - 1,575,679.64 (22,769,851.13) - (21,194,171.49) Depreciation and Amortizations (5,706,788.17) (31,522,784.77) (62,506,487.03) - (99,736,059.97) Gross profit 324,060,503.59 335,256,105.09 265,859,496.78 (321,859,314.44) 603,316,791.02 Income taxes - (82,039,460.00) (37,595,495.50) - (119,634,955.50) Net profit 324,060,503.59 253,216,645.09 228,264,001.28 (321,859,314.44) 483,681,835.52
Total Assets 2,504,424,257.73 7,520,238,614.88 1,791,225,072.62 (2,520,048,005.59) 9,295,839,939.64
Total liabilities (1,274,464,456.57) (6,199,236,502.96) (1,155,106,279.12) 1,172,018,511.21 (7,456,788,727.44)
Long-term equity investment in associates 121,019,845.50 - - - 121,019,845.50
Additions to non-current assets other than long-term equity investments 3,383,989.51 130,411,384.23 76,573,364.42 - 210,368,738.16
- 75 - China National Accord Medicines Corporation Ltd. Annual Report 2012
VI Segment information (continued)
(b) Segment information as at and for the year ended 31 December 2011 is as follows:
The Group Pharmaceutical Pharmaceutical Elimination Total distribution manufacturing
Revenue from external customers 4,675,954.40 13,393,830,146.76 1,751,622,453.43 - 15,150,128,554.59 Inter-segment revenue 98,400.00 969,093.25 21,746,779.92 (22,814,273.17) - Interest income 30,284,352.07 5,061,681.48 9,410,793.19 (38,401,637.03) 6,355,189.71 Interest expense (48,073,890.07) (111,823,314.78) (9,402,581.66) 38,401,637.03 (130,898,149.48) Share of profit of subsidiaries 235,060,478.67 - - (235,060,478.67) - Share of profit of associates 28,119,376.36 - - - 28,119,376.36 Impairment 10,080.00 (3,401,109.20) (17,700,499.06) - (21,091,528.26) Depreciation and Amortizations (4,337,509.10) (28,268,332.44) (63,395,020.83) - (96,000,862.37) Gross profit 199,257,917.34 268,200,190.49 174,894,036.40 (235,060,478.67) 407,291,665.56 Income taxes - (58,009,049.85) (23,457,248.17) - (81,466,298.02) Net profit 199,257,917.34 210,191,140.64 151,436,788.23 (235,060,478.67) 325,825,367.54
Total Assets 2,101,491,411.34 5,874,535,457.50 1,636,647,127.95 (1,933,361,225.01) 7,679,312,771.78
Total liabilities (1,190,340,293.03) (4,701,257,006.33) (1,057,673,609.47) 696,633,810.92 (6,252,637,097.91)
Long-term equity investment in associates 95,799,627.42 - - - 95,799,627.42
(Reduction)/Additions to non-current assets other than long-term equity investments (3,221,122.64) 99,342,604.54 29,765,736.76 - 125,887,218.66
- 76 - China National Accord Medicines Corporation Ltd. Annual Report 2012
VII Related party relationships and significant related party transactions
(1) The parent company
(a) General information of the parent company:
Enterprise Type Place of registration Legal representative Principal business Distribution and retail Company limited of medicines and Sinopharm Group by shares Shanghai Wei Yulin pharmaceutical products
The Company’s ultimate controlling equity holder is CNPGC.
(b) Registered capital and changes in registered capital of the parent company
31 December 31 December 2011 Addition Decrease 2012 (RMB’0000) (RMB’0000) (RMB’0000) (RMB’0000)
Sinopharm Group 240,262.53 - - 240,262.53
(c) The proportions of equity interests and voting rights in the Company held by the parent company:
31 December 2012 31 December 2011 % interest held % voting rights % interest held % voting rights
Sinopharm Group 38.33 38.33 38.33 38.33
(2) Subsidiaries of the Company
The general background and other related information of the subsidiaries is set out in Note IV.
(3) Associates
Enterprise Place of Legal Principal Register % interest % voting Type Registration Representative business capital held rights
Wanle Foreign Medicine USD Medical capital Shenzhen Yan Zhigang manufacture 19,544,550 35.19% 33.33%
(4) Other related parties
Relationship with the Company
Sinopharm Xingsha Pharmaceuticals (Xiamen) Co.,Ltd Associate of CNPGC Changchun Changsheng Gene Pharmaceutical Co., Ltd Associate of CNPGC Shenzhen Wanwei Medicine trading Co., Ltd Controlled by Wanle Xiamen Xingsha Huaideju Pharmaceutical Co.,Ltd Subsidiary of Associate of CNPGC Yichang Humanwell Pharmaceutical Co.,Ltd. Associate of Sinopharm Group Sinoparm Qianjing Stomatological Technology (Beijing) Co.,Ltd Associate of Sinopharm Group Wang Yang Family member of Minority interest of subsidiary Shanghai Fosun Pharmaceutical (Group) Co., Ltd.("Fosun Pharm") Shareholders have signigicant influence on Sinopharm Group Chongqing Yaoyou Pharmaceutical Co.,Ltd. Subsdiary of Fosun Pharm Jiangsu Wanbang Pharmacy Marketing Co., Ltd. Subsdiary of Fosun Pharm Shanghai Chaohui Pharmecurical Co., Ltd. Subsdiary of Fosun Pharm Chongqing Haisiman Pharmaceutical Co.,Ltd. Subsdiary of Fosun Pharm
- 77 - China National Accord Medicines Corporation Ltd. Annual Report 2012
VII Related party relationships and significant related party transactions (continued)
(4) Other related parties (continued)
Relationship with the Company
Sichuan Hexin Pharmaceutical Co.,Ltd. Subsdiary of Fosun Pharm Shenyang Hongqi Pharmaceutical Co.,Ltd. Subsdiary of Fosun Pharm Shanghai Fosun Long March Medical Science Co., Ltd. Subsdiary of Fosun Pharm Jiangsu Wanbang Bio-Chemical Medicine Co., Ltd. Subsdiary of Fosun Pharm Guilin South pharmaceutical Co., Ltd Subsdiary of Fosun Pharm Handan Pharmaceutical Co.,Ltd Subsdiary of Fosun Pharm Shanghai Fosun Pharmaceutical Co., Ltd. Subsdiary of Fosun Pharm China National Corp of Traditional and Herbal Medicine Controlled by CNPGC Beijing Huamiao Traditional Medicine Engineering Technology Controlled by CNPGC Development Center Lanzhou Biotechnology Development Co. Ltd Controlled by CNPGC Sinopharm United Engineering Corporation Controlled by CNPGC Sinopharm Group Shanghai Medicine Device Co., Ltd. Controlled by CNPGC Wuhan Zhonglian Pharmaceutical Group Co. LtD Controlled by CNPGC Sinopharm Guoda Drug Store Guangxi Chain Co.,Ltd Controlled by CNPGC Sichuan Jiang You Zhong Ba Science and Technology Development Controlled by CNPGC Co.,Ltd. Sinopharm Group Beijing Medical equipment Co.,Ltd Controlled by CNPGC Shanghai Medicine Hospital Medical Co., Ltd. Controlled by CNPGC China National Medical Equipment & Supplies I/E (Shenzhen) Co.,Ltd. Controlled by CNPGC Sinopharm Chongqing Pharmaceutical and Medical Industry Design Controlled by CNPGC Institute Shanghai Modern Hasen (Shangqiu) Pharmacertical Co.Ltd Controlled by CNPGC Guilin Huagui Sinopharm associate company Controlled by CNPGC Sinopharm Group Rongsheng Pharmaceutical Co.,Ltd Controlled by CNPGC Shanghai Sinopharm Traditional and Herbal Medicine Co.,Ltd Controlled by CNPGC Sinopharm Group United Medical Equipment Co.,Ltd Controlled by CNPGC Guang dong South National Pharmaceutical Foreign Trade Co.,Ltd. Controlled by CNPGC China Pharmaceutical Industry Co.,Ltd Controlled by CNPGC Shanghai Shyndec Pharmaceutical Co., Ltd. Controlled by CNPGC China National Pharmaceutical Foreign Trade Corporation Controlled by CNPGC Chengdu Rongsheng Pharmacy Co., Ltd. Controlled by CNPGC Shanghai Institute of Biological Products Co. Ltd Controlled by CNPGC Wuhan Institute of Biological Products Co. Ltd Controlled by CNPGC Wuhan Zhonglian Pharmaceutical Group Co. LtD Controlled by CNPGC Sinopharm Group Wei qida Medicine Co., Ltd Controlled by CNPGC Reed Sinopharm Exhibitions Co., Ltd. Controlled by CNPGC Shanghai Pharmaceutial Industry Research Institute Controlled by CNPGC Sinopharm Group Financial Co.,Ltd Controlled by CNPGC Qinghai Pharmaceutical Factory Co.,Ltd Controlled by CNPGC China National Scientific Instruments & Materials Corporation Controlled by CNPGC Sinopharm Group United Medicine Device Co., Ltd. Controlled by CNPGC China National Pharmaceutical Group Shanghai Co.,Ltd Controlled by Sinopharm Group Sinopharm Le -Ren-Tang Shijiazhuang Medicine Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Anyang Co.,Ltd Controlled by Sinopharm Group Sinopharm Holding Jinan Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Zhejiang Co.Ltd Controlled by Sinopharm Group Sinopharm Holding Xiangtan Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Xiangxi Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Xinjiang New Kashi Pharmaceutical Co.,Ltd Controlled by Sinopharm Group Heilongjiang Sinopharm Medical Herbs Co.,Ltd. Controlled by Sinopharm Group Sinopharm Holding Shenyang Co., Ltd. Changchun Branch Controlled by Sinopharm Group Sinopharm Holding Shiyan Co.,Ltd Controlled by Sinopharm Group Sinopharm Holding Huaian Co.,Ltd Controlled by Sinopharm Group Sinopharm Holding Guoda Drugstore Shenyang Chain Co.,Ltd Controlled by Sinopharm Group Sinopharm Holding Qingyang Co.,Ltd Controlled by Sinopharm Group Sinopharm Holding Beijing Tianxing Puxin Biological Medical Co.,Ltd Controlled by Sinopharm Group Sinopharm Holding Meitai Medical Equipment (Shanghai) Co.,Ltd Controlled by Sinopharm Group Sichuan Hexin Pharmaceutical Co.,Ltd. Subsdiary of Fosun Pharm
- 78 - China National Accord Medicines Corporation Ltd. Annual Report 2012
VII Related party relationships and significant related party transactions (continued)
(4) Other related parties (continued)
Relationship with the Company
Sinopharm Holding Hubei Yibao Co., Ltd. Controlled by Sinopharm Group Ningxia Guoda Durg Store Chain Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Shanxi Co., Ltd Controlled by Sinopharm Group Sinopharm Holding Jining Co., Ltd Controlled by Sinopharm Group Shanghai Tongyu Information Technology Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Wenzhou Co., Ltd Controlled by Sinopharm Group Sinopharm Holding Kaifeng Co.,Ltd Controlled by Sinopharm Group Sinopharm Holding HongKong Co.,Ltd Controlled by Sinopharm Group Sinopharm Pharmaceutical Logistics Co., Ltd Guangzhou Branch Controlled by Sinopharm Group Sinopharm Holding Beijing Kangchen Bio-Pharmaceutical Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Pingdingshan Limited Co.,Ltd Controlled by Sinopharm Group Sinopharm Holding Shangluo Co.,Ltd Controlled by Sinopharm Group Sinopharm Holding Sub Marketing Center Co., Ltd. Controlled by Sinopharm Group China National Medicines Co.,Ltd. Controlled by Sinopharm Group Foshan Nanhai Uptodate & Special Medicines Co.,Ltd. Controlled by Sinopharm Group Sinopharm Holding Guizhou Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Fujian Co., Ltd. Controlled by Sinopharm Group Guangdong Dong Fang Uptodate & Special Medicines Co. Controlled by Sinopharm Group Sinopharm Group Southwest Medicine Co., Ltd Controlled by Sinopharm Group Sinopharm Holding Anhui Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Suzhou Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Fuzhou Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Hainan Co., Ltd. Controlled by Sinopharm Group Sinopharm Group Xinjiang Special Drugs National Pharmaceutical Controlled by Sinopharm Group Co.,Ltd. Sinopharm Holding Beijing Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Shanxi Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Hunan Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Putian Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Zhangzhou Co., Ltd. Controlled by Sinopharm Group Foshan Nanhai Medicine Co.,Ltd. Controlled by Sinopharm Group Sinopharm Holding Hubei Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding (Jiangsu) Chinese Western Medicine Branch Controlled by Sinopharm Group Company Sinopharm Holding Hainan Hongyi Co., Ltd. Controlled by Sinopharm Group Sinopharm Yixin Medicine Co.,Ltd. Controlled by Sinopharm Group Sinopharm Group (Tianjin) Eastern Bokang Pharmaceutical Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Xinjiang Special Drugs Western Pharmaceutical Controlled by Sinopharm Group Co.,Ltd. Sinopharm Holding Yunnan Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Ningxia Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Tianjin Co., Ltd. Controlled by Sinopharm Group Sinopharm Le -Ren-Tang Medicine Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Henan Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Gansu Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Shandong Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Jiangsu Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Shengyang Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Hebei Medcine Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Shanxi Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Jilin Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Jiangxi Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Inner Mongolia Co., Ltd. Controlled by Sinopharm Group Guangzhou Accord Pharm Chain Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Dalian Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Tianjin North Medicine Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Taizhou Co., Ltd. Controlled by Sinopharm Group
- 79 - China National Accord Medicines Corporation Ltd. Annual Report 2012
VII Related party relationships and significant related party transactions (continued)
(4) Other related parties (continued)
Relationship with the Company
Sinopharm Holding Linyi Co., Ltd Controlled by Sinopharm Group Sinopharm Holding Qujing Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Longyan Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Sanming Co., Ltd Controlled by Sinopharm Group Sinopharm Holding Ningde Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Xinyu Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Anshun Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Chongqing Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Wuxi Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Heilongjiang Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Hunan Deyuan Medicine Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Nanjing Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Qinghai Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Nantong Co., Ltd. Controlled by Sinopharm Group Sinopharm Group Medicine Logistic Co., Ltd. Controlled by Sinopharm Group Sinopharm Group Chemical Reagent Suzhou Co., Ltd. Controlled by Sinopharm Group Sinopharm Group Chemical Reagent Co., Ltd. Controlled by Sinopharm Group Sinopharm Group Guorui Medicine Co.,Ltd. Controlled by Sinopharm Group Sinopharm Holding Jingzhou Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Suzhou Boai Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Xinjiang Special Ginsheng and Pilose Pharmaceutical Controlled by Sinopharm Group Co.,Ltd. Sinopharm Holding Changzhou Medical logistics center Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Xuzhou Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Yancheng Co., Ltd. Controlled by Sinopharm Group Shenzhen Accord Pharmaceutical Chain Co., Ltd Controlled by Sinopharm Group Sinopharm Holding Guoda Pharmacy Co.,Ltd Controlled by Sinopharm Group Sinopharm Holding Jinzhou Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Lishui Co., Ltd Controlled by Sinopharm Group Sinopharm Holding Anqing Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Tianjin Co.,Ltd. Tangshan Branch Controlled by Sinopharm Group Sinopharm Holding Yantai Co., Ltd Controlled by Sinopharm Group Sinopharm Holding Jiangsu Co., Ltd Taizhou Branch Controlled by Sinopharm Group Sinopharm Holding Wuhu Co., Ltd Controlled by Sinopharm Group Sinopharm Holding Xinjiang Xinte Karamay Pharmaceutical Co., Ltd Controlled by Sinopharm Group Sinopharm Xinjiang Korla Pharmaceutical Co.,Ltd Controlled by Sinopharm Group Sinopharm Holding Xinjiang Hami Pharmaceutical Co., Ltd Controlled by Sinopharm Group Sinopharm Holding Xinjiang Yili Tongde Pharmaceutical Co., Ltd Controlled by Sinopharm Group Sinopharm Holding Siping Co., Ltd Controlled by Sinopharm Group Sinopharm Holding Guoda Drug Store Guangdong Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Shenyang Co., Ltd. Dalian Branch Controlled by Sinopharm Group Sinopharm Holding Shanghai Likang Pharmaceutical Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Changzhou Co., Ltd. Controlled by Sinopharm Group Sinopharm Holding Beijing Huahong Co.Ltd Controlled by Sinopharm Group Sino-Swed Pharmaceutical Corp.Ltd. Associate of Sinopharm Group Shanghai Sailun Biological Technology Co.,Ltd. Associate of Sinopharm Group China Otsuka Pharmaceutical Co.,Ltd. Associate of Sinopharm Group Wang Lei Minority interest of subsidiary Yang Wenjie Minority interest of subsidiary Tan Min Minority interest of subsidiary Jiang Jianmin Minority interest of subsidiary Zhou Weilin Minority interest of subsidiary Fang Zhongqing Minority interest of subsidiary Kang Liting Minority interest of subsidiary Shaoguan Wujiang Muyang Medicine information cousulting Co.,Ltd Controlled by Minority interest of subsidiary Jiang Meng Renren Medical instrument Co., ltd Controlled by subsidiary's key management
- 80 - China National Accord Medicines Corporation Ltd. Annual Report 2012
VII Related party relationships and significant related party transactions (continued)
(5) Related party transactions
(a) Purchase of goods
2012 2011 Pricing Amount % of same Amount % of same Related party policies transaction transaction
Sinopharm Holding Sub Marketing Center Co., Ltd. Market price 89,649.87 4.54% 37,300.53 2.72% Sinopharm Group Market price 32,857.29 1.67% 71,638.68 5.22% China National Medicines Co.,Ltd. Market price 22,065.01 1.12% 17,950.08 1.31% Sino-Swed Pharmaceutical Corp.Ltd. Market price 7,653.40 0.39% 6,562.43 0.48% Wanle Medicine Market price 4,301.69 0.22% 3,934.09 0.29% Guang dong South National Pharmaceutical Foreign Trade Co.,Ltd. Market price 2,397.32 0.12% 1,640.16 0.12% Chengdu Rongsheng Pharmacy Co., Ltd. Market price 1,648.50 0.08% 794.84 0.06% Jiangsu Wanbang Pharmacy Marketing Co., Ltd. Market price 1,635.61 0.08% 1,396.29 0.10% Qinghai Pharmaceutical Factory Co.,Ltd Market price 1,577.26 0.08% 1,429.45 0.10% Sinopharm Holding Guizhou Co., Ltd. Market price 1,278.24 0.06% 641.37 0.05% Chongqing Haisiman Pharmaceutical Co.,Ltd. Market price1,172.74 0.06% 759.88 0.06% China National Pharmaceutical Foreign Trade Corporation Market price 1,133.69 0.06% 0.92 0.00% Chongqing Yaoyou Pharmaceutical Co.,Ltd. Market price994.01 0.05% 507.93 0.04% Shenzhen Wanwei Medicine trading Co., Ltd Market price936.18 0.05% 690.88 0.05% Sinopharm Group Wei qida Medicine Co., Ltd Market price900.9 0.05% 1,555.34 0.11% Sinopharm Holding Fujian Co., Ltd. Market price 609.31 0.03% 257.66 0.02% Sinopharm Holding Beijing Co., Ltd. Market price 505.56 0.03% 442 0.03% Guangdong Dong Fang Uptodate & Special Medicines Co. Market price 299.12 0.02% 550.53 0.04% Shanghai Institute of Biological Products Co. Ltd Market price 290.73 0.01% - 0.00% Wuhan Institute of Biological Products Co. Ltd Market price129.11 0.01% - 0.00% Sinopharm Group Rongsheng Pharmaceutical Co.,Ltd Market price 127.7 0.01% - 0.00% Foshan Nanhai Uptodate & Special Medicines Co.,Ltd. Market price 127.34 0.01% 2,303.28 0.17% Sinopharm Group Chemical Reagent Co., Ltd. Market price116.42 0.01% 33.65 0.00% Sinopharm Yixin Medicine Co.,Ltd. Market price 107.16 0.01% - 0.00% Sinopharm Holding Guoda Drug Store Guangdong Co., Ltd. Market price 110.74 0.01% 43.3 0.00% Shanghai Shyndec Pharmaceutical Co., Ltd. Market price86.56 0.00% 32.45 0.00% Sinopharm Holding Hainan Co., Ltd. Market price 82.23 0.00% 5.92 0.00% Sinopharm Holding Putian Co., Ltd. Market price 79.81 0.00% 21.09 0.00% Sinopharm Le -Ren-Tang Shijiazhuang Medicine Co., Ltd. Market price 68.44 0.00% - 0.00% Lanzhou Biotechnology Development Co. Ltd Market price40.5 0.00% - 0.00% Sinopharm Holding Yunnan Co., Ltd. Market price 38.18 0.00% - 0.00% Wuhan Zhonglian Pharmaceutical Group Co. LtD Market price 36.66 0.00% - 0.00% Foshan Nanhai Medicine Co.,Ltd. Market price 36.37 0.00% 20.95 0.00% Sinopharm Holding Hunan Co., Ltd. Market price 33.59 0.00% 26.62 0.00% To next page 173,127.24 8.78% 150,540.32 10.97%
- 81 - China National Accord Medicines Corporation Ltd. Annual Report 2012
VII Related party relationships and significant related party transactions (continued)
(5) Related party transactions
(a) Purchase of goods(continued)
2012 2011 Pricing Amount % of same Amount % of same Related party policies transaction transaction
continued 173,127.24 8.78% 150,540.32 10.97% Guilin South pharmaceutical Co., Ltd Market price 32.48 0.00% 72.09 0.01% Sinopharm Holding Suzhou Co., Ltd. Market price 32.22 0.00% - 0.00% Sinopharm Group Chemical Reagent Suzhou Co., Ltd. Market price 30.78 0.00% 53.42 0.00% Sinopharm Holding (Jiangsu) Chinese Western Medicine Branch Company Market price 29.58 0.00% - 0.00% Guilin Huagui Sinopharm associate company Market price22.38 0.00% 62.51 0.00% China Otsuka Pharmaceutical Co.,Ltd. Market price 21.13 0.00% 1.87 0.00% Shanghai Modern Hasen (Shangqiu) Pharmacertical Co.Ltd Market price 16.09 0.00% - 0.00% Sinopharm Holding Hubei Co., Ltd. Market price 13.98 0.00% - 0.00% Sinopharm Group Shanghai Medicine Device Co., Ltd. Market price 13.36 0.00% 5.41 0.00% Handan Pharmaceutical Co.,Ltd Market price 7.64 0.00% 5.75 0.00% Shenyang Hongqi Pharmaceutical Co.,Ltd. Market price6.47 0.00% 6.45 0.00% Sichuan Jiang You Zhong Ba Science and Technology Development Co.,Ltd. Market price 5.89 0.00% 18.38 0.00% Sinopharm Holding Hainan Hongyi Co., Ltd. Market price5.37 0.00% - 0.00% Yichang Humanwell Pharmaceutical Co.,Ltd. Market price4.75 0.00% 3.12 0.00% Shenzhen Accord Pharmaceutical Chain Co., Ltd Market price 2.13 0.00% 1.79 0.00% Sinopharm Group Guorui Medicine Co.,Ltd. Market price1.67 0.00% 2.63 0.00% Sinopharm Holding Meitai Medical Equipment (Shanghai) Co.,Ltd Market price 1.42 0.00% - 0.00% Sinopharm Holding Zhangzhou Co., Ltd. Market price 0.35 0.00% 85.19 0.01% Shanghai Sailun Biological Technology Co.,Ltd. Market price0.32 0.00% 15.65 0.00% Wuhan Zhonglian Pharmaceutical Group Co. LtD Market price 0.16 0.00% - 0.00% Shanghai Chaohui Pharmecurical Co., Ltd. Market price- 0.00% 69.52 0.01% Sinopharm Holding Anhui Co., Ltd. Market price - 0.00% 97 0.01% Sinopharm Holding Jinan Co., Ltd. Market price - 0.00% 2.8 0.00% Shanghai Medicine Hospital Medical Co., Ltd. Market price- 0.00% 0.32 0.00% China National Corp of Traditional and Herbal Medicine Market price - 0.00% 41.22 0.00% Sinopharm Group United Medicine Device Co., Ltd. Market price - 0.00% 677.63 0.05% Total 173,375.41 8.78% 151,763.07 11.06%
- 82 - China National Accord Medicines Corporation Ltd. Annual Report 2012
VII Related party relationships and significant related party transactions (continued)
(5) Related party transactions (continued)
(b) Sales of goods 2012 2011 Pricing Amount % of same Amount % of same Related party policies transaction transaction
Sinopharm Holding Hunan Co., Ltd. Market price 11,090.04 0.62% 10,843.45 0.72% Foshan Nanhai Uptodate & Special Medicines Co.,Ltd. Market price 10,780.95 0.60% 7,363.23 0.49% Chongqing Yaoyou Pharmaceutical Co.,Ltd. Market price8,355.28 0.47% 8,086.15 0.54% Sinopharm Group Southwest Medicine Co., Ltd Market price 7,699.48 0.43% 6,779.24 0.45% Sinopharm Holding Beijing Co., Ltd. Market price 7,008.10 0.39% 8,136.94 0.54% Sinopharm Holding Guoda Drug Store Guangdong Co., Ltd. Market price 6,974.56 0.39% 9,538.87 0.63% Sinopharm Holding Hubei Co., Ltd. Market price 6,779.93 0.38% 9,458.05 0.63% Sinopharm Holding Beijing Huahong Co.Ltd Market price5,176.99 0.29% 4,160.58 0.28% Sinopharm Group (Tianjin) Eastern Bokang Pharmaceutical Co., Ltd. Market price 5,142.56 0.29% 5,111.76 0.34% Sinopharm Holding Hainan Co., Ltd. Market price 4,345.44 0.24% 3,238.42 0.21% Foshan Nanhai Medicine Co.,Ltd. Market price 3,903.04 0.22% 2,308.73 0.15% Sinopharm Group Xinjiang Special Drugs National Pharmaceutical Co.,Ltd. Market price 3,738.47 0.21% 3,533.02 0.23% Sinopharm Guoda Drug Store Guangxi Chain Co.,Ltd Market price 3,211.84 0.18% 4,048.84 0.27% Sinopharm Holding Zhejiang Co.Ltd Market price 3,058.70 0.17% 2,516.85 0.17% Sinopharm Holding Ningxia Co., Ltd. Market price 3,034.37 0.17% 2,270.69 0.15% Sinopharm Holding Tianjin Co., Ltd. Market price 2,742.23 0.15% 4,766.70 0.32% Sinopharm Holding Sub Marketing Center Co., Ltd. Market price 2,731.61 0.15% 458.43 0.03% Sinopharm Holding Xinjiang Special Drugs Western Pharmaceutical Co.,Ltd. Market price2,713.11 0.15% 2,541.15 0.17% Sinopharm Le -Ren-Tang Medicine Co., Ltd. Market price2,553.42 0.14% 1,442.77 0.10% Sinopharm Holding Shengyang Co., Ltd. Market price 2,395.44 0.13% 5,947.52 0.39% Sinopharm Group Market price 2,213.13 0.12% 4,528.41 0.30% Sinopharm Holding Hainan Hongyi Co., Ltd. Market price2,191.90 0.12% 706.32 0.05% Sinopharm Holding Shandong Co., Ltd. Market price 2,162.90 0.12% 2,471.09 0.16% Sinopharm Holding Chongqing Co., Ltd. Market price 1,887.98 0.11% 653.23 0.04% Sinopharm Holding Yunnan Co., Ltd. Market price 1,815.13 0.10% 2,816.63 0.19% Sinopharm Holding Nantong Co., Ltd. Market price 1,785.99 0.10% - 0.00% Sinopharm Holding Hebei Medcine Co., Ltd. Market price1,736.09 0.10% 3,754.48 0.25% Guangdong Dong Fang Uptodate & Special Medicines Co. Market price 1,641.52 0.09% 1,910.16 0.13% Sinopharm Holding Gansu Co., Ltd. Market price 1,614.56 0.09% 1,366.27 0.09% Sinopharm Holding Shaanxi Co., Ltd. Market price 1,432.12 0.08% 1,495.84 0.10% Sinopharm Holding Wenzhou Co., Ltd Market price 1,406.26 0.08% 1,060.37 0.07% Sinopharm Holding Jinzhou Co., Ltd. Market price 1,107.56 0.06% 852.24 0.06% Sinopharm Holding Jiangsu Co., Ltd. Market price 946.23 0.05% 1,081.62 0.07% Sinopharm Holding Fuzhou Co., Ltd. Market price 908.99 0.05% 395.33 0.03% Sinopharm Holding Shanxi Co., Ltd. Market price 856.11 0.05% 946.60 0.06% China National Medicines Co.,Ltd. Market price 799.98 0.04% 515.01 0.03% Sinopharm Holding Fujian Co., Ltd. Market price 732.65 0.04% 2,107.64 0.14% Sinopharm Holding Henan Co., Ltd. Market price 713.16 0.04% 1,141.54 0.08% Sinopharm Holding Heilongjiang Co., Ltd. Market price 538.97 0.03% 281.78 0.02% Sinopharm Holding Jilin Co., Ltd. Market price 421.55 0.02% 415.97 0.03% Shanghai Chaohui Pharmecurical Co., Ltd. Market price303.42 0.02% 158.85 0.01% Sinopharm Holding Inner Mongolia Co., Ltd. Market price302.69 0.02% 390.40 0.03% Sinopharm Holding (Jiangsu) Chinese Western Medicine Branch Company Market price 285.05 0.02% 306.86 0.02% Guang dong South National Pharmaceutical Foreign Trade Co.,Ltd. Market price260.66 0.01% 254.16 0.02% To next page 131,500.16 7.33% 132,162.19 8.79%
- 83 - China National Accord Medicines Corporation Ltd. Annual Report 2012
VII Related party relationships and significant related party transactions (continued)
(5) Related party transactions (continued)
(b) Sales of goods (continued)
2012 2011 Pricing Amount % of same Amount % of same Related party policies transaction transaction
continued 131,500.16 7.33% 132,162.19 8.79% Sinopharm Holding Xuzhou Co., Ltd. Market price 257.05 0.01% 242.59 0.02% Sinopharm Group Wei qida Medicine Co., Ltd Market price 253.71 0.01% 471.47 0.03% Sinopharm Holding Guizhou Co., Ltd. Market price 238.30 0.01% 1,071.57 0.07% Sinopharm Holding Suzhou Co., Ltd. Market price 232.16 0.01% 165.89 0.01% Sinopharm Holding Guoda Pharmacy Co.,Ltd Market price 219.90 0.01% 213.53 0.01% Sinopharm Holding Wuxi Co., Ltd. Market price 208.49 0.01% 208.79 0.01% Sinopharm Holding Taizhou Co., Ltd. Market price 203.76 0.01% 226.69 0.02% Sinopharm Holding Longyan Co., Ltd. Market price 194.41 0.01% 78.29 0.01% Sinopharm Holding Ningde Co., Ltd. Market price 190.48 0.01% 70.19 0.00% Sinopharm Holding Dalian Co., Ltd. Market price 188.37 0.01% 120.23 0.01% Sichuan Hexin Pharmaceutical Co.,Ltd. Market price 181.78 0.01% 249.27 0.02% Sinopharm Holding Anhui Co., Ltd. Market price 180.36 0.01% 52.69 0.00% Sinopharm Holding Hunan Deyuan Medicine Co., Ltd. Market price 178.39 0.01% 2.12 0.00% Sinopharm Holding Yancheng Co., Ltd. Market price 173.98 0.01% 79.45 0.01% Sinopharm Holding Zhangzhou Co., Ltd. Market price 168.89 0.01% 605.88 0.04% Sinopharm Holding Nanjing Co., Ltd. Market price 166.76 0.01% 47.77 0.00% Sinopharm Holding Shanxi Co., Ltd Market price 159.50 0.01% - 0.00% Guangzhou Accord Pharm Chain Co., Ltd. Market price 80.66 0.00% 525.5 0.03% Sinopharm Holding Shanghai Likang Pharmaceutical Co., Ltd. Market price 77.95 0.00% - 0.00% Sinopharm Holding Jiangxi Co., Ltd. Market price 71.74 0.00% 148.26 0.01% Sinopharm Holding Yantai Co., Ltd Market price 68.77 0.00% 6.22 0.00% Sinopharm Holding Qinghai Co., Ltd. Market price 68.66 0.00% - 0.00% Sinopharm Holding Putian Co., Ltd. Market price 61.05 0.00% 5.41 0.00% Sinopharm Holding Changzhou Medical logistics center Co., Ltd. Market price 54.11 0.00% 3.66 0.00% Jiang Meng Renren Medical instrument Co., ltd Market price52.12 0.00% - 0.00% Sinopharm Holding Wuhu Co., Ltd Market price 43.09 0.00% - 0.00% Sinopharm Holding Anqing Co., Ltd. Market price 38.37 0.00% 3.51 0.00% Sinopharm Holding Xinjiang New Kashi Pharmaceutical Co.,Ltd Market price 29.32 0.00% 16.59 0.00% Sinopharm Holding Jinan Co., Ltd. Market price 22.45 0.00% 30.94 0.00% Heilongjiang Sinopharm Medical Herbs Co.,Ltd. Market price19.15 0.00% 23.93 0.00% Sinopharm Holding Shenyang Co., Ltd. Dalian Branch Market price15.47 0.00% 69.56 0.00% Sinopharm Holding Tianjin North Medicine Co., Ltd. Market price 221.47 0.01% 214.08 0.01% Reed Sinopharm Exhibitions Co., Ltd. Market price15.09 0.00% - 0.00% Sinopharm Holding Changzhou Co., Ltd. Market price 13.34 0.00% 2.9 0.00% China National Scientific Instruments & Market price Materials Corporation 9.52 0.00% 4.01 0.00% Sinopharm Holding Sanming Co., Ltd Market price 5.96 0.00% 20.56 0.00% Sinopharm Holding Huaian Co.,Ltd Market price 5.88 0.00% - 0.00% Sinopharm Holding Xinjiang Hami Market price Pharmaceutical Co., Ltd 5.82 0.00% - 0.00% Sinopharm Holding Xinjiang Special Ginsheng Market price and Pilose Pharmaceutical Co.,Ltd. 5.79 0.00% 14.77 0.00% Sinopharm Holding HongKong Co.,Ltd Market price 4.90 0.00% - 0.00% Sinopharm Holding Lishui Co., Ltd Market price 4.65 0.00% 9.15 0.00% Sinopharm Holding Xinjiang Xinte Karamay Market price Pharmaceutical Co., Ltd 4.53 0.00% - 0.00% Sinopharm Holding Qujing Co., Ltd. Market price 2.86 0.00% 1.87 0.00% Sinopharm United Engineering Corporation Market price 2.58 0.00% - 0.00% Sinopharm Holding Shiyan Co.,Ltd Market price 2.18 0.00% - 0.00% Sinopharm Group Financial Co.,Ltd Market price 2.00 0.00% - 0.00% To next page 135,905.93 7.51% 137,169.53 9.10%
- 84 - China National Accord Medicines Corporation Ltd. Annual Report 2012
VII Related party relationships and significant related party transactions (continued)
(5) Related party transactions (continued)
(b) Sales of goods (continued)
2012 2011 Amount % of same Amount % of same Related party Pricing policies transaction transaction
Continued 135,905.93 7.51% 137,169.53 9.10% Sinopharm Holding Xinjiang Yili Tongde Pharmaceutical Co., Ltd Market price 1.71 0.00% - 0.00% Sinopharm Holding Jingzhou Co., Ltd. Market price 1.42 0.00% 0.47 0.00% Sinopharm Xinjiang Korla Pharmaceutical Co.,Ltd Market price 1.30 0.00% - 0.00% Sinopharm Holding Shangluo Co.,Ltd Market price 1.10 0.00% - 0.00% Sinopharm Holding Anyang Co.,Ltd Market price 0.97 0.00% - 0.00% Sinopharm Holding Kaifeng Co.,Ltd Market price 0.29 0.00% - 0.00% Sinopharm Holding Siping Co., Ltd Market price 0.29 0.00% - 0.00% Sinopharm Xingsha Pharmaceuticals 0.26 0.00% - 0.00% (Xiamen) Co.,Ltd Market price Sinopharm Holding Jiangsu Co., Ltd 0.14 0.00% - 0.00% Taizhou Branch Market price Sinopharm Holding Pingdingshan 0.05 0.00% - 0.00% Limited Co.,Ltd Market price Sinopharm Holding Linyi Co., Ltd Market price - 0.00% 13.50 0.00% Sinopharm Holding Xinyu Co., Ltd. Market price - 0.00% 35.93 0.00% Sinopharm Holding Xiangtan Co., Ltd. Market price - 0.00% 0.86 0.00% Sinopharm Holding Xiangxi Co., Ltd. Market price - 0.00% 1.18 0.00% Sinopharm Holding Tianjin Co.,Ltd. - 0.00% 4.32 0.00% Tangshan Branch Market price Guilin Huagui Sinopharm associate - 0.00% 12.71 0.00% company Market price Sinopharm Holding Anshun Co., Ltd. Market price - 0.00% 6.36 0.00% Sinopharm Holding Suzhou Boai Co., - 0.00% 0.55 0.00% Ltd. Market price Total 135,913.46 7.51% 137,245.41 9.10%
(c) Lease
The Group as leaser:
Type of assets Contract Contract terminated Rental Leasers Lessees use for beginning date date income
Sinopharm liuzhou Sinopharm Guoda Drug Store Guangxi Chain Co. Building 1 July 2009 31 December 2015 98.07 Sinopharm liuzhou Sinopharm Guoda Drug Store Guangxi Chain Co. Building 1 July 2009 31 December 2012 5.41 Sinopharm liuzhou Sinopharm Guoda Drug Store Guangxi Chain Co. Building 10 March 2011 31 December 2015 5.93 The Company Shenzhen Accord Pharmaceutical Chain Co. Building 1 June 2009 31 December 2012 37.63 Huixin Investment Guangzhou Accord Pharm Chain Co. Building 1 January 2012 31 December 2012 33.33 Huixin Investment Sinopharm Group Shanghai Medicine Device Co. Building 1 January 2012 31 December 2013 19.27 Huixin Investment Guangzhou Accord Pharm Chain Co. Building 1 January 2012 31 December 2012 16.99 Guangxi Logistic Sinopharm Guoda Drug Store Guangxi Chain Co. Building 1 July 2009 31 December 2015 27.61 Sinopharm Shenzhen Accord Materials Pharmaceutical Chain Co. Building 1 January 2011 31 December 2012 5.4 249.64
Rental income received from related parties is negotiated by both parties involved in the lease and by making reference to the market price.
- 85 - China National Accord Medicines Corporation Ltd. Annual Report 2012
VII Related party relationships and significant related party transactions (continued)
(5) Related party transactions (continued)
(c) Lease(continued)
The Group as lessee:
Type of assets use Contract Contract terminated Lease Lessees Leasers for beginning date date expenses
Sinopharm Sinopharm Group Medicine Guanghzou Logistic Co., Ltd. Equipment 1 June 2009 31 December 2012 750 Sinopharm Sinopharm Group Medicine Guanghzou Logistic Co., Ltd. Building 1 January 2012 31 December 2012 708 Sinopharm Shaoguan Wujiang Muyang Shaoguan Medicine information Building cousulting Co.,Ltd 1 August 2012 31 July 2020 27.46 Sinopharm Yanfeng Wang Yang Building 1 January 2012 31 December 2012 43.95 1,529.41
Lease charges paid to related parties are negotiated by both parties involved in the lease and by making reference to the market price.
(d) Guarantees provided
Guarantee Amount Beginning date of Maturity date of obligation Guarantor Guarantee (RMB’0,000) guarantee contract guarantee contract expired
Sinopharm Group The Company 40,000.00 10 August 2012 10 August 2013 No The Company Sinopharm Guangzhou 34,309.32 16 October 2012 16 October 2013 No The Company Sinopharm Guangzhou 19,885.39 17 August 2012 28 June 2013 No The Company Sinopharm Guangzhou 19,817.78 17 October 2012 17 October 2013 No Sinopharm Group Sinopharm Guangzhou 15,000.00 12 August 2011 12 August 2013 No The Company Sinopharm Guangzhou 14,510.27 21 May 2012 24 April 2013 No The Company Sinopharm Guangxi 11,999.03 17 August 2012 28 June 2013 No Sinopharm Group Sinopharm Guangzhou 10,000.00 02 May 2012 12 August 2013 No The Company Sinopharm Guangzhou 9,982.54 25 September 2012 28 June 2013 No The Company Sinopharm Guangzhou 9,910.80 18 January 2012 18 January 2013 No The Company Sinopharm Guangzhou 9,245.09 28 April 2012 28 April 2013 No The Company Zhijun Medicine 9,213.93 20 June 2012 20 June 2013 No Zhijun Medicine The Company 9,000.45 18 May 2012 13 May 2013 No The Company Wangqing Suzhou 8,200.00 18 September 2012 18 September 2013 No The Company Sinopharm Guangxi 8,171.50 16 May 2012 16 May 2013 No The Company Guangxi Logistics 6,690.85 16 January 2011 16 January 2014 No Zhijun Medicine The Company 5,887.64 08 June 2012 08 March 2013 No Sinopharm Group Sinopharm Guangzhou 5,000.00 10 October 2011 12 August 2013 No The Company Wangqing Suzhou 5,000.00 17 January 2012 05 January 2013 No The Company Zhijun Medicine 4,762.81 30 September 2011 30 September 2016 No The Company Sinopharm Liuzhou 4,500.00 25 September 2012 28 June 2013 No The Company Sinopharm Guangzhou 3,920.04 10 February 2012 09 February 2013 No The Company Sinopharm Liuzhou 3,816.66 17 September 2012 16 September 2013 No Sinopharm Group Sinopharm Guangzhou 3,444.69 31 October 2012 31 October 2013 No The Company Wangqing Suzhou 3,200.00 27 August 2012 26 August 2013 No The Company Wangqing Suzhou 3,000.00 01 August 2010 01 August 2013 No The Company Yanfeng Medicine 2,992.16 17 August 2012 28 June 2013 No Sinopharm Guangdong The Company Yuexing 2,927.01 28 April 2012 28 April 2013 No The Company Zhijun Medicine 2,856.93 17 August 2012 28 June 2013 No The Company Sinopharm Guangxi 2,477.58 25 September 2012 28 June 2013 No Sinopharm Guangdong The Company Yuexing 2,004.95 05 December 2012 04 December 2013 No 291,727.42
- 86 - China National Accord Medicines Corporation Ltd. Annual Report 2012
VII Related party relationships and significant related party transactions (continued)
(d) Guarantees provided
Guarantee Amount Beginning date of Maturity date of obligation Guarantor Guarantee (RMB’0,000) guarantee contract guarantee contract expired
Continued 291,727.42 Sinopharm Group The Company 2,000.00 30 November 2012 31 October 2013 No Zhijun Medicine The Company 2,000.00 31 July 2012 20 January 2013 No The Company Wangqing Suzhou 2,000.00 14 June 2012 14 June 2013 No The Company Sinopharm Guangxi 1,845.31 26 March 2012 26 March 2013 No The Company Sinopharm Guangzhou 1,494.53 09 November 2012 08 November 2013 No Sinopharm Group Sinopharm Guangzhou 1,251.37 30 October 2012 12 August 2013 No Zhijun Medicine& Sinopharm Guangzhou The Company 1,000.00 05 December 2012 04 December 2013 No Zhijun Medicine The Company 1,000.00 06 December 2011 06 December 2012 No The Company Sinopharm Guangxi 650.00 15 May 2012 15 May 2013 No Zhijun Medicine The Company 500.00 22 March 2012 22 March 2013 No The Company Wangqing Suzhou 300.00 25 July 2012 24 July 2013 No The Company Zhijun Trade 177.75 14 December 2011 13 November 2012 No The Company Sinopharm Liuzhou 7.91 20 November 2011 20 November 2012 No 305,954.29
(e) Financing
Category Amount Effective date Maturity date (RMB’0,000)
2012 Borrowed from- Sinopharm Group Entrusted borrowings 5,000.00 12 January 2012 11 July 2012 Sinopharm Group Entrusted borrowings 801.00 22 May 2012 21 November 2012 Sinopharm Group Entrusted borrowings 4,199.00 22 May 2012 21 November 2012 Sinopharm Group(i) Entrusted borrowings 2,000.00 23 August 2012 22 February 2013 Sinopharm Group Entrusted borrowings 5,000.00 07 March 2012 06 September 2012 Sinopharm Group Entrusted borrowings 4,263.00 09 January 2012 08 July 2012 Sinopharm Group Entrusted borrowings 4,000.00 14 March 2012 13 September 2012 Group Financial Co. Short-term borrowings 4,000.00 26 December 2012 26 June 2013 Group Financial Co. Short-term borrowings 4,000.00 22 October 2012 22 April 2013 Group Financial Co. Short-term borrowings 3,400.00 23 October 2012 23 April 2013 Group Financial Co. Short-term borrowings 3,000.00 18 September 2012 18 September 2013 Group Financial Co.(ii) Short-term borrowings 3,000.00 15 October 2012 15 April 2013 Group Financial Co.(iii) Short-term borrowings 3,000.00 12 October 2012 12 April 2013 Group Financial Co. Short-term borrowings 3,000.00 11 October 2012 11 April 2013 Group Financial Co. Short-term borrowings 3,000.00 21 September 2012 21 March 2013 51,663.00
- 87 - China National Accord Medicines Corporation Ltd. Annual Report 2012
VII Related party relationships and significant related party transactions (continued)
(e) Financing (continued)
Category Amount Effective date Maturity date (RMB’0,000)
Continued 51,163.00 Group Financial Co. Short-term borrowings 500.00 06 December 2012 06 June 2013 Group Financial Co. Short-term borrowings 1,000.00 06 December 2012 06 June 2013 Group Financial Co. Short-term borrowings 1,200.00 22 November 2012 22 May 2013 Group Financial Co. Short-term borrowings 1,100.00 22 November 2012 22 May 2013 Group Financial Co. Short-term borrowings 1,000.00 23 November 2012 23 May 2013 Group Financial Co. Short-term borrowings 1,000.00 23 November 2012 23 May 2013 Group Financial Co. Discount on bank acceptance notes 151.82 26 September 2012 23 January 2013 Group Financial Co. Discount on bank acceptance notes 200.00 26 September 2012 16 February 2013 Group Financial Co. Discount on bank acceptance notes 263.79 26 September 2012 16 February 2013 Group Financial Co. Discount on bank acceptance notes 200.00 26 September 2012 16 February 2013 Group Financial Co. Discount on bank acceptance notes 120.00 26 September 2012 25 January 2013 Group Financial Co. Discount on bank acceptance notes 59.45 26 September 2012 28 February 2013 Group Financial Co. Discount on bank acceptance notes 200.00 18 October 2012 28 November 2012 Group Financial Co. Discount on bank acceptance notes 250.00 18 October 2012 03 January 2013 Group Financial Co. Discount on bank acceptance notes 250.00 18 October 2012 03 January 2013 Group Financial Co. Discount on bank acceptance notes 105.00 18 October 2012 03 January 2013 Group Financial Co. Discount on bank acceptance notes 50.00 18 October 2012 03 January 2013 Group Financial Co. Discount on bank acceptance notes 50.00 18 October 2012 03 January 2013 Group Financial Co. Discount on bank acceptance notes 50.00 18 October 2012 25 December 2012 Group Financial Co. Discount on bank acceptance notes 50.00 18 October 2012 25 December 2012 Group Financial Co. Discount on bank acceptance notes 200.00 18 October 2012 27 December 2012 Group Financial Co. Discount on bank acceptance notes 200.00 18 October 2012 27 December 2012 Group Financial Co. Discount on bank acceptance notes 294.57 18 October 2012 27 December 2012 60,157.63
(i) The borrowing was repaied on 29 October 2012. (ii) The borrowing was repaied on 25 December 2012. (iii) The borrowing was repaied on 20 November 2012.
2011 Borrowed from- Sinopharm Group Entrusted borrowings 5,000.00 9 March 2011 8 March 2012 Sinopharm Group Entrusted borrowings 5,000.00 18 May 2011 17 October 2011 Sinopharm Group Entrusted borrowings 5,000.00 30 May 2011 22 November 2011 Sinopharm Group Entrusted borrowings 4,000.00 15 September 2011 14 September 2012 Sinopharm Group Entrusted borrowings 4,000.00 19 September 2011 19 September 2012 Sinopharm Group Entrusted borrowings 3,737.00 7 November 2011 4 May 2012 Sinopharm Group Entrusted borrowings 5,000.00 1 February 2011 29 July 2011 Sinopharm Group Entrusted borrowings 5,000.00 18 May 2011 17 November 2011 Sinopharm Group Entrusted borrowings 5,000.00 23 May 2011 22 November 2011 Sinopharm Group Entrusted borrowings 5,000.00 1 August 2011 27 January 2012 Sinopharm Group Entrusted borrowings 5,000.00 11 November 2011 10 May 2012 Sinopharm Group Entrusted borrowings 5,000.00 28 November 2011 24 May 2012 Sinopharm Group Entrusted borrowings 2,000.00 22 August 2011 21 August 2012 58,737.00
- 88 - China National Accord Medicines Corporation Ltd. Annual Report 2012
VII Related party relationships and significant related party transactions (continued)
(5) Related party transactions (continued)
(f) Remuneration of key management
2012 2011 (RMB’0,000) (RMB’0,000)
Remuneration of key management 1,045.37 907.56
(g) Interest expenses
2012 2011 Related party Type of transaction (RMB’0,000) (RMB’0,000)
Interest paid for the The Company Sinopharm Group entrusted loans 611.42 912.40 Sinopharm Interest paid for the Guangzhou Sinopharm Group entrusted loans 495.35 890.40 Interest paid for the loans from Group The Company Group Financial Co. Financial Co. 286.09 - Sinopharm Interest paid for the Liuzhou Sinopharm Group entrusted loans 108.09 50.51 Charges of discounted Wanqing Suzhou Group Financial Co. notes payable 19.40 - Sinopharm Charges of discounted Guangxi Group Financial Co. notes payable 18.11 - Sinopharm Sinopharm Holding Sub Charges of discounted Guangzhou Marketing Center Co., Ltd. notes payable 473.93 54.19 Sinopharm Charges of discounted Guangzhou Sinopharm Group notes payable 159.70 774.02 Sinopharm Interest paid for the Wuzhou Dong Fang Uptodate loans from related party 12.64 28.09 2,184.73 2,709.61
(h) Interest income
2012 2011 Related party Type of transaction (RMB’0,000) (RMB’0,000)
The Group Group Financial Co. Deposit interest 0.64 -
(i) Rendering of service
Related party Type of transaction 2012 2011 (RMB’0,000) (RMB’0,000)
Guangdong Sinopharm Group Medicine Dispatching and Logistics Logistic Co., Ltd. transportation charges 1,233.82 810.66 Guangdong China National Medicines Dispatching and Logistics Co., Ltd. transportation charges 290.14 230.77 Guangdong Guangdong Accord Drug Store Dispatching and Logistics Co., Ltd. transportation charges 254.66 288.23 Shenzhen Guangdong Accord Drug Store Dispatching and Logistics Co., Ltd. transportation charges 47.79 58.25 Sinopharm Guangzhou Wanle Medicine Consultation fees 26.08 5.20 Sinopharm Shenzhen Wanwei Medicine Guangzhou trading Co., Ltd Consultation fees 5.57 0.99 Guangdong Foshan Nanhai Medicine Dispatching and Logistics Co.,Ltd. transportation charges 4.91 - Guangdong Foshan Nanhai Uptodate & Dispatching and Logistics Special Medicines Co.,Ltd. transportation charges 3.98 - Guangdong Guangzhou Accord Pharm Dispatching and Logistics Chain Co., Ltd. transportation charges - 36.65 1,866.95 1,430.75
- 89 - China National Accord Medicines Corporation Ltd. Annual Report 2012
VII Related party relationships and significant related party transactions (continued)
(5) Related party transactions (continued)
(j) Other services Related party Type of transaction 2012 2011 (RMB’0,000) (RMB’0,000)
Shanghai Pharmaceutial Research and Zhijun Medicine Industry Research Institute development expenses 281.00 - Sinopharm Shanghai Tongyu Information CMS system Guangzhou Technology Co. maintenance 80.97 83.52 Sinopharm Shanghai Tongyu Information CMS system Liuzhou Technology Co. maintenance 35.00 10.21 Shanghai Tongyu Information CMS system The Company Technology Co. maintenance 17.16 32.69 Shanghai Tongyu Information CMS system Yanfeng Medicine Technology Co. maintenance 4.67 4.43 Sinopharm Shanghai Tongyu Information Guangdong Technology Co. CMS system Hengxing maintenance 15.96 - Sinopharm Shanghai Tongyu Information CMS system Guangxi Technology Co. maintenance 15.00 27.12 Sinopharm Sinopharm Group Medicine CMS system Guangxi Logistic Co., Ltd. maintenance 15.00 Sinopharm Sinopharm Group Medicine CMS system Guangzhou Logistic Co., Ltd. maintenance 10.84 Sinopharm Shanghai Tongyu Information Guangdong Technology Co. CMS system Yuexing maintenance 10.11 5.10 Sinopharm Shanghai Tongyu Information CMS system Jianmin Technology Co. maintenance 6.32 4.59 Sinopharm Group Medicine CMS system The Company Logistic Co., Ltd. maintenance 2.32 Sinopharm Shanghai Tongyu Information CMS system Foshan Technology Co. maintenance 1.99 1.10 Reed Sinopharm Exhibitions Wanqing Suzhou Co., Ltd. Exhibition expenses 1.92 1.60 Sinopharm Shanghai Tongyu Information CMS system Dongguan Technology Co. maintenance 1.58 1.39 Sinopharm CMS system Guangdong Sinopharm Group Medicine maintenance Hengxing Logistic Co., Ltd. 1.23 - Sinopharm Group Medicine CMS system Yanfeng Medicine Logistic Co., Ltd. maintenance 1.23 - Sinopharm CMS system Guangdong Sinopharm Group Medicine maintenance Yuexing Logistic Co., Ltd. 1.16 - Sinopharm Shanghai Tongyu Information CMS system operating Meizhou Technology Co. charge 1.09 0.72 Sinopharm Sinopharm Group Medicine CMS system Jianmin Logistic Co., Ltd. maintenance 0.63 - Sinopharm Shanghai Tongyu Information CMS system operating Jiangmen Technology Co. charge 0.57 - Sinopharm Shanghai Tongyu Information CMS system operating Huizhou Technology Co. charge 0.51 0.49 Sinopharm Reed Sinopharm Exhibitions CMS system Foshan Co., Ltd. maintenance 0.28 - Shanghai Pharmaceutial Wanqing Suzhou Industry Research Institute Exhibition expenses 0.26 1.37 Sinopharm Sinopharm Group Medicine CMS system Jiangmen Logistic Co., Ltd. maintenance 0.25 - Sinopharm Shanghai Tongyu Information CMS system operating Zhaoqing Technology Co. charge 0.23 - Sinopharm Sinopharm Group Medicine CMS system Dongguan Logistic Co., Ltd. maintenance 0.23 - Sinopharm Sinopharm Group Medicine CMS system Meizhou Logistic Co., Ltd. maintenance 0.16 - Sinopharm Sinopharm Group Medicine CMS system Huizhou Logistic Co., Ltd. maintenance 0.13 - Sinopharm Sinopharm Group Medicine CMS system Zhaoqing Logistic Co., Ltd. maintenance 0.10 - National Pharmaceutical Group Sinopharm Wuhan Pharmaceutical Construction design and Guangxi Industry Design Institute management 16.00 60.00 523.90 234.33 - 90 - China National Accord Medicines Corporation Ltd. Annual Report 2012
VII Related party relationships and significant related party transactions (continued)
(6) Accounts receivable from and payables to related parties
31 December 2012 31 December 2011 (RMB’0,000) (RMB’0,000)
Notes receivable Sinopharm Holding Henan Co., Ltd. 736.42 - Sinopharm Holding Hunan Co., Ltd. 339.33 670.2 Sinopharm Holding Tianjin Co., Ltd. 188.14 474.74 Sinopharm Holding Gansu Co., Ltd. 163.34 - Sinopharm Holding Guizhou Co., Ltd. 160.21 - Sinopharm Guoda Drug Store Guangxi 146.06 47.46 Chain Co.,Ltd Sinopharm Holding Hubei Co., Ltd. 142.16 256.62 Sinopharm Holding Guoda Drug Store 130.72 185.41 Guangdong Co., Ltd. Sinopharm Holding Zhangzhou Co., Ltd. 108.77 - Sinopharm Holding Shaanxi Co., Ltd. 97.58 - Sinopharm Group (Tianjin) Eastern 89.72 - Bokang Pharmaceutical Co., Ltd. Sinopharm Holding Chongqing Co., Ltd. 63.35 44.33 Sinopharm Holding Beijing Huahong 46.31 - Co.Ltd Sinopharm Holding Hunan Deyuan 46 - Medicine Co., Ltd. Sinopharm Holding Beijing Tianxing Puxin 18.85 - Biological Medical Co.,Ltd Sinopharm Holding Qingyang Co.,Ltd 10.88 - Sinopharm Holding Yancheng Co., Ltd. 10 10.09 Sinopharm Holding Xuzhou Co., Ltd. 10 25.44 Sinopharm Holding Hainan Co., Ltd. 8.69 203.57 Sinopharm Holding Wuhu Co., Ltd 7.17 - Sinopharm Holding Heilongjiang Co., Ltd. 6.32 - Sinopharm Holding Longyan Co., Ltd. 6 - Sinopharm Holding Taizhou Co., Ltd. 4.37 - Sinopharm Holding Huaian Co.,Ltd 3.91 - Sinopharm Holding Shengyang Co., Ltd. 2.84 4.02 Sinopharm Holding Yantai Co., Ltd 1.8 2.28 Sinopharm Holding Fuzhou Co., Ltd. - 10.86 Sinopharm Group Southwest Medicine - 144.1 Co., Ltd Sinopharm Holding Guoda Drugstore - 6.83 Shenyang Chain Co.,Ltd Sinopharm Holding Jiangsu Co., Ltd. - 30 Chongqing Yaoyou Pharmaceutical - 2,164.80 Co.,Ltd. 2,548.94 4,280.75
31 December 2012 31 December 2011 (RMB’0,000) (RMB’0,000)
Foshan Nanhai Uptodate & Special Accounts receivable Medicines Co.,Ltd. 1,827.63 1,372.41 Sinopharm Holding Hunan Co., Ltd. 1,720.03 2,172.86 Sinopharm Group Southwest Medicine Co., Ltd 1,451.10 1,387.10 Sinopharm Group Xinjiang Special Drugs National Pharmaceutical Co.,Ltd. 1,323.44 881.03 Sinopharm Holding Guoda Drug Store Guangdong Co., Ltd. 1,019.10 1,267.81 Sinopharm Holding Beijing Co., Ltd. 950.87 1,686.26 Sinopharm Holding Beijing Huahong Co.Ltd 942.3 706.92 Chongqing Yaoyou Pharmaceutical Co.,Ltd. 910.08 1,968.00 Sinopharm Holding Hainan Co., Ltd. 860.91 698.13 Sinopharm Holding Chongqing Co., Ltd. 807.28 44.82 Sinopharm Holding Hubei Co., Ltd. 698 1,487.16 Sinopharm Holding Zhejiang Co.Ltd 692.43 559.1 13,203.17 14,231.60
- 91 - China National Accord Medicines Corporation Ltd. Annual Report 2012
VII Related party relationships and significant related party transactions (continued)
(6) Accounts receivable from and payables to related parties (continued)
31 December 2012 31 December 2011 (RMB’0,000) (RMB’0,000)
Accounts receivable Continued 13,203.17 14,231.60 Sinopharm Guoda Drug Store Guangxi 688.36 911.43 Chain Co.,Ltd Sinopharm Group (Tianjin) Eastern Bokang 626.75 614.38 Pharmaceutical Co., Ltd. Sinopharm Le -Ren-Tang Medicine Co., 604.94 684.93 Ltd. Sinopharm Holding Tianjin Co., Ltd. 552.46 656.59 Sinopharm Holding Ningxia Co., Ltd. 482.16 163.55 Sinopharm Holding Shengyang Co., Ltd. 479.55 1,209.68 Foshan Nanhai Medicine Co.,Ltd. 447.41 275.87 Sinopharm Group Medicine Logistic Co., 445.96 191.49 Ltd. Sinopharm Holding Sub Marketing Center 438.38 266.4 Co., Ltd. Sinopharm Holding Hainan Hongyi Co., 395.11 431.6 Ltd. Sinopharm Holding Xinjiang Special Drugs 395.01 355.3 Western Pharmaceutical Co.,Ltd. Guangdong Dong Fang Uptodate & 365.45 315.04 Special Medicines Co. Sinopharm Group 286.31 1,334.11 Sinopharm Holding Gansu Co., Ltd. 277.31 54.73 Sinopharm Holding Jinzhou Co., Ltd. 268.06 215.72 Sinopharm Holding Shandong Co., Ltd. 267.35 272.86 Sinopharm Holding Nantong Co., Ltd. 250.37 - Sinopharm Holding Yunnan Co., Ltd. 212.85 578.88 Sinopharm Holding Wenzhou Co., Ltd 204.36 131.42 China National Medicines Co.,Ltd. 148.57 124.77 Sinopharm Holding Shaanxi Co., Ltd. 143.89 84.84 Sinopharm Holding Jiangsu Co., Ltd. 138.01 120.53 Sinopharm Holding Fuzhou Co., Ltd. 133.5 73.17 Sinopharm Holding Shanxi Co., Ltd 128.53 - Sinopharm Group Wei qida Medicine Co., 104.81 8.61 Ltd Sinopharm Holding Henan Co., Ltd. 85.69 76.74 Sinopharm Holding Heilongjiang Co., Ltd. 73.12 37.76 Guang dong South National 61.92 40.84 Pharmaceutical Foreign Trade Co.,Ltd. Sinopharm Holding Inner Mongolia Co., 58.79 61.14 Ltd. Sinopharm Holding Hebei Medcine Co., 56.49 362.82 Ltd. Shanghai Chaohui Pharmecurical Co., Ltd. 55.33 47.98 Sinopharm Holding Guoda Pharmacy 52.46 89.85 Co.,Ltd Sinopharm Holding Dalian Co., Ltd. 48.34 21.96 Sinopharm Holding Shanxi Co., Ltd. 46.94 147.98 Sinopharm Holding Suzhou Co., Ltd. 43.53 37.61 Sinopharm Holding Guizhou Co., Ltd. 40.45 27.81 Sinopharm Holding Tianjin North Medicine 34.77 77.23 Co., Ltd. Sinopharm Holding Wuxi Co., Ltd. 33.68 25.12 Sinopharm Holding Xuzhou Co., Ltd. 31.75 27.04 Sinopharm Holding Yancheng Co., Ltd. 31.72 9.53 Sinopharm Holding Fujian Co., Ltd. 27.42 592.51 Sinopharm Holding Jilin Co., Ltd. 22.91 51.15 Sinopharm Holding Nanjing Co., Ltd. 21.83 13.92 Sinopharm Holding Taizhou Co., Ltd. 20.4 28.95 Sinopharm Holding (Jiangsu) Chinese Western Medicine Branch Company 19.24 - Sinopharm Holding Longyan Co., Ltd. 18.98 45.07 To next page 22,574.39 25,130.51
- 92 - China National Accord Medicines Corporation Ltd. Annual Report 2012
VII Related party relationships and significant related party transactions (continued)
(6) Accounts receivable from and payables to related parties (continued)
31 December 2012 31 December 2011 (RMB’0,000) (RMB’0,000)
Accounts receivable Continued 22,574.39 25,130.51 Sinopharm Holding Changzhou Medical logistics center Co., Ltd. 18.95 2.88 Sinopharm Holding Shanghai Likang Pharmaceutical Co., Ltd. 15.96 - Guangzhou Accord Pharm Chain Co., Ltd. 14.26 23.03 Sinopharm Holding Qinghai Co., Ltd. 14.03 - Sinopharm Holding Yantai Co., Ltd 12.53 - Sinopharm Holding Hunan Deyuan Medicine Co., Ltd. 11.71 - Sinopharm Holding Ningde Co., Ltd. 11.7 4.32 Sinopharm Holding Putian Co., Ltd. 6.2 - Sinopharm Holding Jinan Co., Ltd. 6.05 - Sinopharm Holding Changzhou Co., Ltd. 5.26 3.4 Sinopharm Holding HongKong Co.,Ltd 4.89 - Sinopharm Holding Huaian Co.,Ltd 4.76 - Sinopharm Holding Anqing Co., Ltd. 4.25 - Sinopharm Holding Xinjiang New Kashi Pharmaceutical Co.,Ltd 2.78 - Sinopharm Holding Shangluo Co.,Ltd 1.28 - Sinopharm Holding Shiyan Co.,Ltd 1.13 - Sinopharm Holding Jiangxi Co., Ltd. 0.59 0.95 Sinopharm Holding Sanming Co., Ltd 0.52 0.26 Sinopharm Holding Lishui Co., Ltd 0.5 1.49 Sinopharm Holding Qujing Co., Ltd. - 0.03 Sinopharm Holding Anshun Co., Ltd. - 3.56 Sinopharm Holding Zhangzhou Co., Ltd. - 20 Guilin Huagui Sinopharm associate company - 1.08 Sinopharm Holding Shenyang Co., Ltd. Dalian Branch - 36.9 China National Scientific Instruments & Materials Corporation - 0.24 Total 22,711.74 25,228.65
- 93 - China National Accord Medicines Corporation Ltd. Annual Report 2012
VII Related party relationships and significant related party transactions (continued)
(6) Accounts receivable from and payables to related parties (continued)
31 December 2012 31 December 2011 (RMB’0,000) (RMB’0,000)
Other receivables Sinopharm Group Medicine Logistic Co., Ltd. 121.50 121.50
31 December 2012 31 December 2011 (RMB’0,000) (RMB’0,000)
Advances to Chengdu Rongsheng Pharmacy Co., Ltd. suppliers 383.40 - Wuhan Institute of Biological Products Co. Ltd 235.50 - Sinopharm Chongqing Pharmaceutical and Medical Industry Design Institute 125.00 - Qinghai Pharmaceutical Factory Co.,Ltd 74.99 305.36 China National Scientific Instruments & Materials Corporation 8.46 - Sinopharm Holding Sub Marketing Center Co., Ltd. 3.99 - Sinopharm Holding Meitai Medical Equipment (Shanghai) Co.,Ltd 0.18 - Sinopharm Group 0.07 - Sinopharm Holding Suzhou Co., Ltd. - 0.95 Sinopharm Holding Zhangzhou Co., Ltd. - 0.35 CNPGC - 5.00 Shenzhen Accord Pharmaceutical Chain Co., Ltd - 0.58 Handan Pharmaceutical Co.,Ltd - 1.11 Yichang Humanwell Pharmaceutical Co.,Ltd. - 0.21 Sino-Swed Pharmaceutical Corp.Ltd. - 0.01 831.59 313.57
Management consider that there is no recoverability risk in related to receivables due from other related party. Therefore, no provision has been made.
31 December 2012 31 December 2011 (RMB’0,000) (RMB’0,000)
Notes payable Sinopharm Holding Sub Marketing Center Co., Ltd. 17,575.76 2,772.58 Sinopharm Group 3,243.41 10,615.09 Chongqing Haisiman Pharmaceutical Co.,Ltd. 241.24 171.34 Sinopharm Group Wei qida Medicine Co., Ltd 165.57 150.00 Chongqing Yaoyou Pharmaceutical Co.,Ltd. 109.18 89.55 Wanle Medicine 87.20 119.79 Sinopharm Group Chemical Reagent Suzhou Co., Ltd. 17.76 33.26 Sinopharm Group Rongsheng Pharmaceutical Co.,Ltd 17.69 - Shanghai Shyndec Pharmaceutical Co., Ltd. 10.77 3.37 China National Medicines Co.,Ltd. - 1,635.15 Sinopharm Holding Fujian Co., Ltd. - 6.20 Jiangsu Wanbang Pharmacy Marketing Co., Ltd. - 307.20 Guilin South pharmaceutical Co., Ltd - 11.22 21,468.58 15,914.75
- 94 - China National Accord Medicines Corporation Ltd. Annual Report 2012
VII Related party relationships and significant related party transactions (continued)
(6) Accounts receivable from and payables to related parties (continued)
31 December 2012 31 December 2011 (RMB’0,000) (RMB’0,000)
Accounts payable Sinopharm Holding Sub Marketing Center Co., Ltd. 22,066.69 12,376.63 Sinopharm Group 5,586.91 7,462.69 China National Medicines Co.,Ltd. 2,504.04 2,301.39 China National Pharmaceutical Foreign Trade Corporation 1,173.76 0.09 Sino-Swed Pharmaceutical Corp.Ltd. 964.64 507.24 Wanle Medicine 674.82 594.08 Guang dong South National Pharmaceutical Foreign Trade Co.,Ltd. 467.66 153.63 Jiangsu Wanbang Pharmacy Marketing Co., Ltd. 309.78 262.77 Chongqing Haisiman Pharmaceutical Co.,Ltd. 295.93 188.45 Shenzhen Wanwei Medicine trading Co., Ltd 276.87 209.06 Sinopharm Holding Fujian Co., Ltd. 260.9 5.24 Chongqing Yaoyou Pharmaceutical Co.,Ltd. 167.12 246.21 Sinopharm Group Wei qida Medicine Co., Ltd 152.66 278.31 Sinopharm Holding Guizhou Co., Ltd. 142.27 181.38 Guilin Huagui Sinopharm associate company 56.79 61.1 Sinopharm Yixin Medicine Co.,Ltd. 40.24 - Sinopharm Holding Suzhou Co., Ltd. 36.5 - Guangdong Dong Fang Uptodate & Special Medicines Co. 31.77 173.4 Sinopharm Group Medicine Logistic Co., Ltd. 30.05 12.88 Shanghai Shyndec Pharmaceutical Co., Ltd. 24.6 11.58 China Otsuka Pharmaceutical Co.,Ltd. 15.24 0.75 Guilin South pharmaceutical Co., Ltd 11.24 7.75 Sinopharm Holding Beijing Co., Ltd. 10.55 53.63 Sinopharm Holding Hubei Co., Ltd. 10 - Sinopharm Holding Hainan Co., Ltd. 9.05 - Foshan Nanhai Uptodate & Special Medicines Co.,Ltd. 5.59 17.81 Foshan Nanhai Medicine Co.,Ltd. 3.88 8.63 Yichang Humanwell Pharmaceutical Co.,Ltd. 3.69 2.62 Handan Pharmaceutical Co.,Ltd 3.4 4.25 Sinopharm Group Shanghai Medicine Device Co., Ltd. 3.16 4.06 Wuhan Zhonglian Pharmaceutical Group Co. LtD 2.7 - Chengdu Rongsheng Pharmacy Co., Ltd. 1.84 - Changchun Changsheng Gene Pharmaceutical Co., Ltd 1.79 - 35,346.13 25,125.63
- 95 - China National Accord Medicines Corporation Ltd. Annual Report 2012
VII Related party relationships and significant related party transactions (continued)
(6) Accounts receivable from and payables to related parties (continued)
31 December 2012 31 December 2011 (RMB’0,000) (RMB’0,000)
Accounts payable Continued 35,346.13 25,125.63 Sichuan Jiang You Zhong Ba Science and Technology Development Co.,Ltd. 1.65 0.21 Shenyang Hongqi Pharmaceutical Co.,Ltd. 1.26 2.98 Shanghai Modern Hasen (Shangqiu) Pharmacertical Co.Ltd 0.99 - Shanghai Chaohui Pharmecurical Co., Ltd. 0.75 2.41 Sinopharm Group Guorui Medicine Co.,Ltd. 0.72 0.49 Shenzhen Accord Pharmaceutical Chain Co., Ltd 0.39 - Shanghai Sailun Biological Technology Co.,Ltd. 0.29 1.07 Wuhan Zhonglian Pharmaceutical Group Co. LtD 0.26 - Xiamen Xingsha Huaideju Pharmaceutical Co.,Ltd 0.11 - Sinopharm Group Chemical Reagent Co., Ltd. 0.08 - Shanghai Fosun Pharmaceutical Co., Ltd. 0.02 - Shanghai Medicine Hospital Medical Co., Ltd. - 0.37 Sinopharm Group Chemical Reagent Suzhou Co., Ltd. - 2.32 Shanghai Fosun Long March Medical Science Co., Ltd. - 0.18 Jiangsu Wanbang Bio-Chemical Medicine Co., Ltd. - 1.49 Sinopharm Group Beijing Medical equipment Co.,Ltd 0.88 0.88 Sinoparm Qianjing Stomatological Technology (Beijing) Co.,Ltd - 0.01 Sinopharm Group United Medical Equipment Co.,Ltd - 0.16 China National Corp of Traditional and Herbal Medicine - 20.1 Sinopharm Holding Guoda Drug Store Guangdong Co., Ltd. - 43.35 35,353.53 25,201.65
- 96 - China National Accord Medicines Corporation Ltd. Annual Report 2012
VII Related party relationships and significant related party transactions (continued)
(6) Accounts receivable from and payables to related parties (continued)
31 December 2012 31 December 2011 (RMB’0,000) (RMB’0,000)
Other payables Sinopharm Group 393.07 373.07 Yang Wenjie 203.7 - China National Pharmaceutical Group Shanghai Co.,Ltd 166.04 166.04 China National Corp of Traditional and Herbal Medicine 150.00 130.00 Guangdong Dong Fang Uptodate & Special Medicines Co. 56.76 490.00 Shanghai Pharmaceutial Industry Research Institute 75 - Tan Min 40.74 - Jiang Jianmin 40.74 - Zhou Weilin 40.74 - Fang Zhongqing 40.74 - Kang Liting 40.74 - Sinopharm United Engineering Corporation 16 60 China National Medicines Co.,Ltd. 14.49 - China National Scientific Instruments & Materials Corporation 10.1 - Sinopharm Group Shanghai Medicine Device Co., Ltd. 3 - Sinopharm Holding Shanxi Co., Ltd. 1.5 - Sinopharm Holding Tianjin Co., Ltd. 1 - Sinopharm Group (Tianjin) Eastern Bokang Pharmaceutical Co., Ltd. 1 - Sinopharm Group Southwest Medicine Co., Ltd 0.5 - Sinopharm Holding Hubei Co., Ltd. 0.5 - Sinopharm Holding (Jiangsu) Chinese Western Medicine Branch Company 0.5 - Sinopharm Holding Taizhou Co., Ltd. 0.5 - Sinopharm Holding Sub Marketing Center Co., Ltd. 0.5 20 Sinopharm Holding Wuxi Co., Ltd. 0.5 - Sinopharm Le -Ren-Tang Medicine Co., Ltd. 0.5 - Sinopharm Group Chemical Reagent Suzhou Co., Ltd. - 16 1,298.86 1,255.11
- 97 - China National Accord Medicines Corporation Ltd. Annual Report 2012
VII Related party relationships and significant related party transactions (continued)
(6) Accounts receivable from and payables to related parties (continued)
31 December 2012 31 December 2011 (RMB’0,000) (RMB’0,000)
Advances from Guangdong Dong Fang Uptodate & customers Special Medicines Co. 30.27 - Sinopharm Guoda Drug Store Guangxi Chain Co.,Ltd 9.47 - Sinopharm Holding Zhangzhou Co., Ltd. 3.08 - Sinopharm Le -Ren-Tang Medicine Co., Ltd. 1.34 - Sinopharm Holding Henan Co., Ltd. 0.63 - Sinopharm Holding Nanjing Co., Ltd. 0.29 0.78 Sinopharm Holding Hunan Co., Ltd. - 0.04 45.08 0.82
31 December 2012 31 December 2011 (RMB’0,000) (RMB’0,000)
Interests payable Sinopharm Group - 69.78 Group Financial Co. 47.12 - 47.12 69.78
31 December 2012 31 December 2011 (RMB’0,000) (RMB’0,000)
Entrusted loans Sinopharm Group - 33,737.00
31 December 2012 31 December 2011 (RMB’0,000) (RMB’0,000)
Other non-current liabilities Sinopharm Group 3,506.18 3,506.18
31 December 2012 31 December 2011 (RMB’0,000) (RMB’0,000)
Short-term loans Group Financial Co. 26,200.00 -
31 December 2012 31 December 2011 (RMB’0,000) (RMB’0,000)
Cash at related party Group Financial Co. 12.38 -
(7) Commitment with related parties
Undertaking contracted for at the balance sheet date but not recognised in balance sheet are anaylsed as follows:
31 December 2012 31 December 2011 (RMB’0,000) (RMB’0,000) Lease -As a lessee Shaoguan Wujiang Distrct Muyang Consulting Co., Ltd. 624.61 - Sinopharm Group Medicine Logistic Co., Ltd. - 1,458.00 Mr. Wang Yang - 37.80 624.61 1,495.80 -As a leaser Sinopharm Guoda Drug Store Guangxi Chain Co.,Ltd 602.62 148.76 Shenzhen Accord Pharmaceutical Chain Co., Ltd. - 46.96 Guangzhou Accord Pharm Chain Co., Ltd. - 33.33 Sinopharm Group Shanghai Medicine Device Co., Ltd. 24.66 - 627.28 229.05
Guarantee - Guaranteed by related party Sinopharm Group 29,303.94 10,206.04
- 98 - China National Accord Medicines Corporation Ltd. Annual Report 2012
VIII Contingencies
As at 31 December 2012, there is no material contingency of the Group.
IX Commitments
(1) Capital commitments
Capital expenditures contracted for at the balance sheet date but not recognised in balance sheet are anaylsed as follows:
31 December 2012 31 December 2011 (RMB’0,000) (RMB’0,000)
Buildings, machinery and equipment 7,129.45 6,310.25
(2) Operating lease commitments
The future minimum lease payments due under the signed irrevocable operating leases contracts are summarised as follows:
31 December 2012 31 December 2011 (RMB’0,000) (RMB’0,000)
Within one year 1,605.68 2,632.81 Between 1 and 2 years 1,389.87 1,015.44 Between 2 and 3 years 1,287.97 952.76 Over 3 years 9,282.60 8,666.20 13,566.12 13,267.21
(3) Execution of commitments of prior years
The Group has fulfilled the commitments as of 31 December 2011 according to the relevant contracts.
X Subsequent events after the balance sheet date
(1) Major subsequent events after the balance sheet date
Item Content Influence to financial performance of the Group
Other payable Imbursement of large imbursement(Note amount other payables Asset and liability reduce RMB V(26)(c)) aging over 1 year 20,500,943.20 simultaneously
(2) Profit appropriation after the balance sheet date Amount
Proposed dividends (a) 51,866,892.00
(a) In accordance with the resolution at the Board of Directors’ meeting dated on 19 March 2013, Board of Directors proposed a dividend in the amount of RMB 51,866,892.00 to the shareholders, which is not recorded as liability in the financial statements for the current year (Note V(35)).
(3) As at January 18, 2013, Sinopharm Wuzhou has received registered capital of Rmb6,700,000 contributed by Sinopharm Guangxi in the from of cash.
- 99 - China National Accord Medicines Corporation Ltd. Annual Report 2012
XI Business combination
Refer to Note IV(2).
XII Financial instrument and risk
The Group's activities expose it to a variety of financial risks: market risk (primarily foreign exchange risk and interest rate risk), credit risk and liquidity risk. The Group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group's financial performance.
(1) Market risk
(a) Foreign exchange risk
The Group’s major operational activities are carried out in Mainland China and a majority of the transactions are denominated in RMB. The Group is exposed to foreign exchange risk arising from the recognized assets and liabilities, and future transactions denominated in foreign currencies, primarily with respect to US dollars. The Group’s finance department at its headquarters is responsible for monitoring the amount of assets and liabilities, and transactions denominated in foreign currencies. The Group may consider entering into forward exchange contracts or currency swap contracts to mitigate the foreign exchange risk. During 2012 and 2011, the Group did not enter into any forward exchange contracts or currency swap contracts.
The following table presents the structure analysis of the Group’s financial assets and financial liabilities by currencies as at 31 December 2012 and 31 December 2011.
31 December 2012 USD Others Total
Financial assets denominated in foreign currency - Cash at bank and on hand 80.13 - 80.13 Accounts Receivables 10,353,832.05 3,794,670.91 14,148,502.96 10,353,912.18 3,794,670.91 14,148,583.09
Financial assets denominated in foreign currency - Accounts Payables 10,526,326.85 - 10,526,326.85
31 December 2011 USDOthers Total
Financial assets denominated in foreign currency - Cash at bank and on hand 59.17 - 59.17 Accounts Receivables 1,510,845.87 1,316,203.13 2,827,049.00 1,510,905.04 1,316,203.13 2,827,108.17
Financial assets denominated in foreign currency - Accounts Payables 27,928,266.68 - 27,928,266.68
As at 31 December 2012, if the currency had weakened/strengthened by 5 % against the USD while all other variables had been held constant, the Group’s net profit for the year would have been approximately RMB6,465.55 (2011: RMB990,651.06) lower/higher for various financial assets and liabilities denominated in USD.
- 100 - China National Accord Medicines Corporation Ltd. Annual Report 2012
XII Financial instrument and risk (continued)
(1) Market risk (continued)
(b) Interest rate risk
The Group's interest rate risk arises from long-term interest bearing borrowings from bank. Financial liabilities issued at floating rates expose the Group to cash flow interest rate risk. Financial liabilities issued at fixed rates expose the Group to fair value interest rate risk. The Group determines the relative proportions of its fixed rate and floating rate contracts depending on the prevailing market conditions. As at 31 December 2012, the Group’s long-term interest bearing borrowings were mainly RMB-denominated with floating rates, amounting to RMB82,205,562.71 (31 December 2011: RMB93,082,967.96).
Increases in interest rates will increase the cost of new borrowing and the interest expenses with respect to the Group’s outstanding floating rate borrowings, and therefore could have a material adverse effect on the Group’s financial position. The Group’s finance department at its headquarters continuously monitors the interest rate position of the Group and makes decisions with reference to the latest market conditions. The Group may enter into interest rate swap agreements to mitigate its exposure to interest rate risk. During 2012 and 2011, the Group did not enter into any interest rate swap agreements.
For the year ended 31 December 2012, if interest rates on the floating rate borrowings had been 5% higher/lower while all other variables had been held constant, the Group’s net profit would have increased/decreased by approximately RMB2,182,145.47 (2011:approximately RMB 2,447,631.51).
(2) Credit risk
Credit risk is managed on a Group basis. Credit risk mainly arises from cash at bank and on hand, accounts receivable, other receivables, notes receivable etc.
The Group expects that there is no significant credit risk associated with cash at bank since they are deposited at state-owned banks and other medium or large size listed banks. Management does not expect that there will be any significant losses from non-performance by these counterparties.
In addition, the Group has policies to limit the credit exposure on accounts receivable, other receivables and notes receivable. The Group assesses the credit quality of and sets credit limits on its customers by taking into account their financial position, the availability of guarantee from third parties, their credit history and other factors such as current market conditions. The credit history of the customers is regularly monitored by the Group. In respect of customers with a poor credit history, the Group will use written payment reminders, or shorten or cancel credit periods, to ensure the overall credit risk of the Group is limited to a controllable extent.
(3) Liquidity risk
Cash flow forecasting is performed by each subsidiary of the Group and aggregated by the Group’s finance department in its headquarters. The Group’s finance department at its headquarters monitors rolling forecasts of the Group's short-term and long-term liquidity requirements to ensure it has sufficient cash and securities that are readily convertible to cash to meet operational needs, while maintaining sufficient headroom on its undrawn committed borrowing facilities from major financial institution so that the Group does not breach borrowing limits or covenants on any of its borrowing facilities to meet the short-term and long-term liquidity requirements.
- 101 - China National Accord Medicines Corporation Ltd. Annual Report 2012
XII Financial instrument and risk (continued)
(3) Liquidity risk (continued)
The financial assets and liabilities of the Group at the balance sheet date are analysed by their maturity date below at their undiscounted contractual cash flows :
31 December 2012 Within 1year 1 to 2 years 2 to 5 years Total Financial assets - Cash at bank and on hand 953,992,070.61 - - 953,992,070.61 Notes receivable 650,860,240.37 - - 650,860,240.37 Accounts receivable 4,393,325,300.66 - - 4,393,325,300.66 Other receivables 32,985,425.60 - - 32,985,425.60 6,031,163,037.24 - - 6,031,163,037.24 Financial liabilities - Short-term loans 1,706,727,868.97 - - 1,706,727,868.97 Notes payable 1,105,275,538.24 - - 1,105,275,538.24 Accounts payable 3,197,354,275.46 - - 3,197,354,275.46 Interests payable 13,035,821.07 - - 13,035,821.07 Other payables 413,831,307.40 - - 413,831,307.40 Current portion of Long-term loans 64,949,772.49 - - 64,949,772.49 Other current liabilities 416,120,000.00 - - 416,120,000.00 Long-term loans 5,378,503.15 41,691,425.23 47,653,581.88 94,723,510.26 6,922,673,086.78 41,691,425.23 47,653,581.88 7,012,018,093.89
31 December 2011 Within 1year 1 to 2 years 2 to 5 years Total Financial assets - Cash at bank and on hand 952,950,167.56 - - 952,950,167.56 Notes receivable 534,922,741.30 - - 534,922,741.30 Accounts receivable 3,579,242,836.76 - - 3,579,242,836.76 Other receivables 28,656,020.58 - - 28,656,020.58 5,095,771,766.20 - - 5,095,771,766.20 Financial liabilities - Short-term loans 1,873,744,247.36 - - 1,873,744,247.36 Notes payable 1,059,426,952.84 - - 1,059,426,952.84 Accounts payable 2,495,491,846.36 - - 2,495,491,846.36 Interests payable 10,451,229.03 - - 10,451,229.03 Other payables 346,965,182.34 - - 346,965,182.34 Current portion of Long-term loans 15,930,244.64 - - 15,930,244.64 Long-term loans 6,234,222.62 36,837,672.38 68,374,927.98 111,446,822.98 5,808,243,925.19 36,837,672.38 68,374,927.98 5,913,456,525.55
(4) Financial instruments not measured at fair value
Financial assets and liabilities not measured at fair value mainly represent receivables, short-term loans, payables and long-term loans. The carrying amount of financial assets and liabilities not measured at fair value is a reasonable approximation of their fair value.
- 102 - China National Accord Medicines Corporation Ltd. Annual Report 2012
XIII Notes to the main items of financial statement of the Company
(1) Accounts receivable
31 December 2012 31 December 2011
Accounts receivable 365,858,022.77 296,396,942.13 Less: provision for bad debts (1,169,085.93) (1,169,085.93) 364,688,936.84 295,227,856.20
(a) The ageing of accounts receivable is analysed below:
31 December 2012 31 December 2011
Within 1 year 364,688,936.84 295,227,856.20 1 to 2 years - - 2 to 3 years - 1,169,085.93 Over 3 years 1,169,085.93 - 365,858,022.77 296,396,942.13
(b) The accounts receivable and related provision for bad debts by category are analysed below:
31 December 2012 31 December 2011 Carrying amount Bad debt provisions Carrying amount Bad debt provisions % of total % of total amount balance amount rate amount balance amount rate Individually significant are subject to separate impairment assessment ------Receivable accounts within similar credit risk group 364,688,936.84 99.68% - - 295,227,856.20 99.61% - - Individually not significant but individually evaluated for impairment 1,169,085.93 0.32% (1,169,085.93) 100.00% 1,169,085.93 0.39% (1,169,085.93) 100.00% 365,858,022.77 100.00% (1,169,085.93) 0.32% 296,396,942.13 100.00% (1,169,085.93) 0.39%
(c) As at 31 December 2012, accounts receivable individually not significant but individually evaluated for impairment are analysed below:
Bad debt % of Reason Per book provisions provision
Guangdong Liyuan Disputed receivables with Pharmaceutical Co., Ltd. 1,169,085.93 (1,169,085.93) 100% uncertainty in recoverability
(d) As at 31 December 2012, there is no accounts receivable due from shareholders who holds more than 5% (including 5%) shares of the Company (31 December 2011: Nil).
- 103 - China National Accord Medicines Corporation Ltd. Annual Report 2012
XIII Notes to the main items of financial statement of the Company (continued)
(1) Accounts receivable (continued)
(e) As at 31 December 2012, the top five accounts receivable by customer are analysed as below:
Relationship % of the total with the accounts Company Amount Ageing receivable
Shenzhen People’s Hospital The third party 21,231,253.68 Within 1 year 5.80% Shenzhen Nanshan Center People’s Hospital The third party 18,772,275.04 Within 1 year 5.13% Shenzhen Traditional Chinese Medicine Hospital The third party 17,761,288.30 Within 1 year 4.85% Shenzhen Second People’s Hospital The third party 17,194,272.26 Within 1 year 4.70% Peking University Shenzhen Hospital The third party 15,211,853.69 Within 1 year 4.16% 90,170,942.97 24.64%
(f) Accounts receivable due from related party
As at 31 December 2012, there are accounts receivable of RMB23,963,914.86 due from related party (31 December 2011: RMB26,723,569.99), which is 6.55% of the total accounts receivable (31 December 2011: 9.02%), without any bad debt provided (31 December 2011: Nil).
(g) In 2012, accounts receivable of RMB189,149,295.62 are derecognized given that irrevocable factoring contracts agreed with financial institute (2011: RMB269,457,339.37).
(2) Other receivables
31 December 2012 31 December 2011
Amounts due from subsidiaries(Note h) 967,467,455.73 699,338,691.98 Receivable from equity transaction 8,980,000.00 8,980,000.00 Borrowings due from employees 144,348.64 2,156,269.14 Others 5,476,351.55 4,020,219.80 982,068,155.92 714,495,180.92 Less: provision for bad debts (10,208,164.60) (10,208,164.60) 971,859,991.32 704,287,016.32
(a) The ageing of other receivables is analysed as follows:
31 December 2012 31 December 2011
Within 1 year 971,856,835.49 704,280,353.95 1 to 2 years 69,953.95 1,164,873.02 2 to 3 years 1,161,366.48 - Over 3 years 8,980,000.00 9,049,953.95 982,068,155.92 714,495,180.92
- 104 - China National Accord Medicines Corporation Ltd. Annual Report 2012
XIII Notes to the main items of financial statement of the Company (continued)
(2) Other receivables (continued)
(b) Other receivables and related provision for bad debts by category are analysed below:
31 December 2012 31 December 2011 Carrying amount Bad debt provision Carrying amount Bad debt provision % of % of total total amount amount amount rate amount amount amount rate
Individually significant are subject to separate impairment assessment 8,980,000.00 0.91% (8,980,000.00) 100.00% 8,980,000.00 1.26% (8,980,000.00) 100.00% Receivable accounts within similar credit risk group 971,860,341.97 98.96% (350.65) 0.00% 704,287,366.97 98.57% (350.65) 0.00% Individually not significant but individually evaluated for impairment 1,227,813.95 0.13% (1,227,813.95) 100.00% 1,227,813.95 0.17% (1,227,813.95) 100.00% 982,068,155.92 100.00% (10,208,164.60) 1.04% 714,495,180.92 100.00% 10,208,164.60) 1.43%
(c) As at 31 December 2012, impairment provision for other receivables individually significant is analysed as below.
Assessment for Amount Bad debt provision Rate impairment
Shenzhen Yinghai Technology Uncertainty in Investment Co., Ltd. 8,980,000.00 (8,980,000.00) 100.00% recoverability
(d) Provisions for impairment of the receivables which have a similar risk group are analysed below:
31 December 2012 31 December 2011 Carrying amount Bad debt provision Carrying amount Bad debt provision % of total % of total amount amount amount rate amount amount amount rate
Within 1 year 971,856,835.49 100.00% - - 704,280,353.95 100.00% - - 1 to 2 years - - - - 7,013.02 0.00% (350.65) 5.00% 2 to 3 years 3,506.48 0.00% (350.65) 10.00% - - - - 971,860,341.97 100.00% (350.65) 0.00% 704,287,366.97 100.00% (350.65) 0.00%
(e) As at 31 December 2012, other receivables individually not significant but individually evaluated for impairment are analysed below:
Assessment for Amount Bad debt provision Rate impairment
Shenzhen Health Food I&E Co. Uncertainty in Ltd. 1,157,860.00 (1,157,860.00) 100.00% recoverability Uncertainty in Other 69,953.95 (69,953.95) 100.00% recoverability 1,227,813.95 (1,227,813.95)
(f) As at 31 December 2012, there is no amount due from shareholders who holds more than 5% (including 5%) shares of the Company (31 December 2011: Nil).
- 105 - China National Accord Medicines Corporation Ltd. Annual Report 2012
XIII Notes to the main items of financial statement of the Company (continued)
(2) Other receivables (continued)
(g) As at 31 December 2012, the top five other receivables by customer are analysed below:
Relationship Amount Ageing % of the total with the other receivable Company
Sinopharm Guangxi Subsidiary 200,211,449.68 Within 1 year 20.39% Sinopharm Guangdong Yuexing Subsidiary 154,940,622.03 Within 1 year 15.78% Sinopharm Zhanjiang Subsidiary 141,214,045.97 Within 1 year 14.38% Suzhou Wanqing Subsidiary 103,361,810.00 Within 1 year 10.52% Sinopharm Guangdong Hengxing Subsidiary 90,121,334.11 Within 1 year 9.18% 689,849,261.79 70.25%
(h) Other receivables due from related parties are analysed as below:
As at 31 December 2012, there are other receivables of RMB967,467,455.73 due from related party (31 December 2011: RMB699,338,691.98), which is 98.51% of the total other receivables (31 December 2011: 97.88%), without any bad debt provided (31 December 2011: Nil).
(3) Long-term equity investments 31 December 2012 31 December 2011
Investments in subsidiaries (a) 1,355,718,721.07 1,244,416,640.78 Investments in associates (b) 121,019,845.50 95,799,627.42 1,476,738,566.57 1,340,216,268.20 Less: provision for impairment of long-term equity investments (c) (7,689,226.69) (7,689,226.69) 1,469,049,339.88 1,332,527,041.51
The long-term equity investments of the Company are not subject to restriction on conversion into cash.
- 106 - China National Accord Medicines Corporation Ltd. Annual Report 2012
XIII Notes to the main items of financial statement of the Company (continued)
(3) Long-term equity investments (continued)
(a) Subsidiaries
Increases/(decreases) Equity interest Voting rights held Accounting method Original investment cost 31 December 2011 in investment cost 31 December 2012 held (%) (%)
Zhijun Pharm Cost method 73,903,284.87 204,903,284.87 - 204,903,284.87 100 100 Sinopharm Jianmin Cost method 45,054,911.04 45,054,911.04 - 45,054,911.04 100 100 Sinopharm Materials Cost method 5,400,000.00 6,450,875.93 - 6,450,875.93 100 100 Shenzhen Logistics Cost method 900,000.00 1,019,062.68 - 1,019,062.68 100 100 Sinopharm Guangzhou Cost method 58,283,114.68 435,440,323.63 - 435,440,323.63 100 100 Zhijun Trade Cost method 3,006,866.42 3,006,866.42 - 3,006,866.42 100 100 Sinopharm Guangdong Cost method Hengxing 8,421,544.08 35,763,288.00 - 35,763,288.00 100 100 Training center Cost method 30,000.00 30,000.00 - 30,000.00 100 100 Sinopharm Yulin Cost method 4,987,919.71 4,987,919.71 (4,987,919.71) - 0 0 Sinopharm Liuzhou Cost method 21,407,965.79 21,407,965.79 - 21,407,965.79 51 51 Dongguan Accord Cost method 2,742,000.00 9,942,000.00 - 9,942,000.00 100 100 Huixin Investment Cost method 109,416,937.72 64,416,937.72 - 64,416,937.72 100 100 Guangdong Logistic Cost method 1,269,502.30 5,596,006.21 - 5,596,006.21 100 100 Sinopharm Guangdong Cost method Yuexing 16,459,326.27 43,459,326.27 - 43,459,326.27 100 100 Sinopharm Foshan Cost method 6,995,065.51 14,995,065.51 - 14,995,065.51 100 100 Suzhou Wanqing Cost method 134,250,000.00 134,250,000.00 31,650,000.00 165,900,000.00 100 100 Sinopharm Guangxi Cost method 33,048,985.28 104,048,985.28 - 104,048,985.28 100 100 Sinopharm Zhanjiang Cost method 1,369,864.65 15,769,864.65 - 15,769,864.65 100 100 Yanfeng Medical Cost method 38,207,800.00 38,207,800.00 - 38,207,800.00 51 51 Sinopharm Meizhou Cost method 4,481,900.00 4,481,900.00 - 4,481,900.00 100 100 Shenzhen Medicine Cost method 37,850,830.38 37,850,830.38 - 37,850,830.38 100 100 Sinopharm Huizhou Cost method 20,939,177.19 5,644,200.00 - 5,644,200.00 100 100 Shenzhen Trade Cost method 7,689,226.69 7,689,226.69 - 7,689,226.69 100 100 Sinopharm Zhaoqing Cost method 5,060,000.00 - 5,060,000.00 5,060,000.00 100 100 Sinopharm Jiangmen Cost method 56,000,000.00 - 56,000,000.00 56,000,000.00 100 100 Sinopharm Zhongshan Cost method 10,000,000.00 - 10,000,000.00 10,000,000.00 100 100 Sinopharm Shaoguan Cost method 13,580,000.00 - 13,580,000.00 13,580,000.00 70 70 1,244,416,640.78 111,302,080.29 1,355,718,721.07
- 107 - China National Accord Medicines Corporation Ltd. Annual Report 2012
XIII Notes to the main items of financial statement of the Company (continued)
(3) Long-term equity investments (continued)
(b) Associates
Movement Equity interest Voting rights held Explanation for the held (%) (%) inconsistence between Accounting Initial investment Share of profit or equity interest held and method cost 31 December 2011 loss Dividend declared 31 December 2012 voting rights held
Board of the directors is the highest decision making organization, which is formed by 3 Wanle shareholder of Wanle Medical Equity method 4,457,400.00 95,799,627.42 38,740,679.55 (13,520,461.47) 121,019,845.50 35.19 33.33 Medical evenly 95,799,627.42 38,740,679.55 (13,520,461.47) 121,019,845.50
- 108 - China National Accord Medicines Corporation Ltd. Annual Report 2012
XIII Notes to the main items of financial statement of the Company (continued)
(3) Long-term equity investments (continued)
(c) Provision for impairment of long-term equity investments
31 December Increase in Decrease in 31 December 2012 Current year Current year 2011 Subsidiary Shenzhen Trade 7,689,226.69 - - 7,689,226.69
(4) Sales and cost of sales
2012 2011
Revenue of main operations 2,139,498,652.77 1,960,004,282.53 Other operating income 8,057,779.29 6,833,891.27 2,147,556,432.06 1,966,838,173.80
2012 2011
Cost of main operations (2,040,826,575.94) (1,868,726,116.77) Other operating expenses (3,808,638.44) (2,853,965.83) (2,044,635,214.38) (1,871,580,082.60)
(a) Revenue and cost of main operations
Analysed by industry:
2012 2011 Revenue of main Cost of main Revenue of main Cost of main operations operations operations operations
Pharmaceutical distribution 2,139,498,652.77 (2,040,826,575.94) 1,960,004,282.53 (1,868,726,116.77)
(b) Other operating income and expenses
2012 2011 Other operating Other operating Other operating Other operating income expenses income expenses
Rental income 4,857,776.00 (1,269,472.01) 4,774,354.40 (1,385,686.63) Rendering of services 3,200,003.29 (2,539,166.43) 2,059,536.87 (1,468,279.20) 8,057,779.29 (3,808,638.44) 6,833,891.27 (2,853,965.83)
China National Accord Medicines Corporation Ltd. Annual Report 2012
XIII Notes to the main items of financial statement of the Company (continued)
(4) Sales and cost of sales (continued)
(c) Top five customers are analysed as follows:
The sales to the top five customers of the Company totaling to RMB755,434,746.02 (2011: RMB718,884,527.67), which accounted for 35.18% (2011: 36.55%) of the total revenue from main operations. Details are set out below:
% of total revenue Sales from main operations
Sinopharm Jianmin 327,270,725.73 15.24% Shenzhen People’s Hospital 128,522,015.26 5.98% Shenzhen Second People’s Hospital 116,169,092.52 5.41% Peking University Shenzhen Hospital 106,456,203.46 4.96% Shenzhen Nanshan Center People’s Hospital 77,016,709.05 3.59% 755,434,746.02 35.18%
(5) Investment income
2012 2011
Cash dividends declared by subsidiaries (a) 318,833,223.58 235,060,478.67 Share of profit in an associated company (b) 38,740,679.55 28,119,376.36 Investment income from disposal of long-term equity investment 436,680.29 - 358,010,583.42 263,179,855.03
There is no significant restriction on the investment income remittance to the Company.
(a) Cash dividends declared by subsidiaries
Investment income from the top five investees are analysed as below:
2012 2011 Reason of Fluctuation
Zhijun Pharm 170,527,785.07 112,085,162.99 Profit increased comparing 2011 Sinopharm Guangzhou 99,439,823.03 81,249,558.61 Profit increased comparing 2011 Sinopharm Guangxi 30,121,638.83 25,801,204.12 Profit increased comparing 2011 Sinopharm Guangdong Yuexing 4,704,136.15 5,900,495.08 Profit decreased comparing 2011 Profits of 2010 and 2011 distributed in Sinopharm Yanfeng 3,149,604.76 - 2012 307,942,987.84 225,036,420.80
(b) Share of profit in an associated company
2012 2011 Reason of Fluctuation
Wanle Medical 38,740,679.55 28,119,376.36 Profit increased comparing 2011
China National Accord Medicines Corporation Ltd. Annual Report 2012
XIII Notes to the main items of financial statement of the Company (continued)
(6) Notes to cash flow statement
(a) Reconciliation of net profit to cash flows from operating activities
2012 2011
Net profit 358,796,389.86 234,994,766.07 Add: Provision for assets impairment reversal /(accrual) 46,806.15 (178,122.58) Depreciation of fixed assets 7,473,528.98 7,392,043.16 Amortisation of intangible assets 1,773,435.37 1,737,676.20 Amortisation of long-term prepaid expenses 1,136,868.23 1,067,055.80 Gains/(losses) on disposal of fixed assets, intangible assets and other long-term assets 32,563.65 (2,366,151.26) Financial expenses 18,551,632.37 32,547,585.51 Investment income (358,010,583.42) (263,179,855.03) Decrease/(increase) in deferred income tax assets 2,405,807.85 (2,376,993.77) Increase in inventories (5,441,038.23) (7,160,662.13) Increase in operating receivables (63,613,193.02) (21,038,395.23) Increase/(Decrease) in operating payables 15,034,919.00 (44,596,272.68) Net cash flows from operating activities (21,812,863.21) (63,157,325.94)
(b) Net increase in cash 2012 2011
Cash at end of year 160,633,355.13 164,840,499.86 Less: cash at beginning of year (164,840,499.86) (135,498,819.87) Net(decrease)/increase in cash and cash equivalents (4,207,144.73) 29,341,679.99
(c) Cash and cash equivalents 2012 2011
Cash at bank and on hand 160,633,355.13 164,840,499.86 Less: restricted other cash balance - - Cash at end of year 160,633,355.13 164,840,499.86
China National Accord Medicines Corporation Ltd. Annual Report 2012
I Non-routine items
2012 2011
(Losses)/gains on disposal of non-current assets (8,347,047.73) 1,540,031.87 Government grants 57,227,812.33 13,577,864.38 Net profit gained for the period from 1 January 2011 to the date of business combination under common control (240,695.14) (1,989,842.59) Receivables impairment reversal by individual assessment 1,815,099.41 1,977,108.01 Other non-operating (expenses)/income, net (17,026,479.08) 7,098,221.98 33,428,689.79 22,203,383.65 Tax impact of above non-routine items (5,790,568.53) (5,108,324.05) Share of minority interests of above non-routine items after tax (84,004.73) (620,464.75) 27,554,116.53 16,474,594.85
Basis of preparation for non-routine items
According to the “Information Disclosures Requirement Interpretation for Listed Companies No.1 - non-routine gain and loss”, non-routine gain and loss represent those gain or loss that are not related to the daily operation of the Group or even if being related to the daily operation, separate disclosure of these items will help a better understanding of results and profitability of the Group’s operation by considering their nature and frequency.
II Return on equity and earnings per share
Weighted average Earnings per share return on equity Basic earnings per Diluted earnings per (%) share share 2012 2011 2012 2011 2012 2011 Consolidated net profit attributable to the shareholders of the Company 30.51% 27.47% 1.65 1.14 1.65 1.14 Consolidated net profit attributable to the shareholders of the Company, excluding non-routine items 29.00% 26.27% 1.55 1.08 1.55 1.08
China National Accord Medicines Corporation Ltd. Annual Report 2012
III Notes for significant fluctuation of major accounts in financial statements
Fluctuation with 30% or above, and balance accounting for 5% or above of total assets or transaction accounting for 10% or above of profit before tax are analysed as below:
(1) Consolidated Balance Sheet
31 December 31 December Notes 2012 2011 Fluctuation % Consolidated Consolidated
Cash at bank and on hand 1.1 953,992,070.61 952,950,167.56 1,041,903.05 0% Notes receivable 1.2 650,860,240.37 534,922,741.30 115,937,499.07 22% Accounts receivable 1.3 4,393,325,300.66 3,579,242,836.76 814,082,463.90 23% Prepayment 1.4 89,512,381.34 65,857,961.31 23,654,420.03 36%
Inventories 1.5 1,734,679,063.78 1,313,213,414.68 421,465,649.10 32% Fixed assets 1.6 690,487,633.12 602,205,927.87 88,281,705.25 15% Intangible assets 1.7 155,155,071.20 119,601,478.86 35,553,592.34 30% Goodwill 1.8 85,228,833.15 53,555,677.09 31,673,156.06 59% Other non-current assets 1.9 113,987,724.53 40,273,842.92 73,713,881.61 183% Short-term borrowings 1.10 1,687,810,294.37 1,839,838,065.68 (152,027,771.31) -8%
Notes payable 1.11 1,105,275,538.24 1,059,426,952.84 45,848,585.40 4%
Accounts payable 1.12 3,197,354,275.46 2,495,491,846.36 701,862,429.10 28% Advances from customers 1.13 35,002,695.02 58,705,230.49 (23,702,535.47) -40% Current portion of non-current liabilities 1.14 71,127,275.00 23,960,000.00 47,167,275.00 197% Other non-current liabilities 1.15 399,014,838.05 - 399,014,838.05 N/A Deferred tax liabilities 1.16 26,619,273.68 19,900,787.30 6,718,486.38 34% Other non-current liabilities 1.17 213,607,504.21 94,245,023.54 119,362,480.67 127% Capital surplus 1.18 5,550,338.57 8,735,305.04 (3,184,966.47) -36% Surplus reserve 1.19 99,360,384.15 63,480,745.16 35,879,638.99 57% Undistributed profits 1.20 1,382,882,906.24 989,727,826.66 393,155,079.58 40%
China National Accord Medicines Corporation Ltd. Annual Report 2012
III Notes for significant fluctuation of major accounts in financial statements (continued)
(1) Consolidated Balance Sheet (continued)
Increase was due to the increase of balance of cash inflow from operating activities minus cash outflow 1.1 from investing and financing activities.
1.2 Increase was mainly due to increase of sales.
1.3 Increase was mainly due to increase of sales.
1.4 Increase was mainly due to the increased purchase.
1.5 Increase was mainly due to the increased sales.
1.6 Increase was mainly because of completion of construction in process.
Increase was mainly because the sales network increased due to business combination involving entities 1.7 not under common control.
Increase was mainly because the cost of the combination exceeds the acquirer’s interest in the fair value of 1.8 the business acquired’s identifiable net assets.
1.9 Increase was mainly because the Company received government grants of non-monetary assets.
1.10 Decrease was mainly because the Company issued short-term bonds to pay back short-term loans.
1.11 Increase was mainly due to the increase of purchase.
1.12 Increase was mainly due to the increase of purchase.
1.13 Decrease was mainly due to the prepayment for goods decreased.
Increase in current portion of long term borrowings was mainly due to repayment in accordance with the 1.14 payment terms.
1.15 Increase was mainly due to the issue of short-term bonds.
Increase was mainly because the deferred tax liabilities are recognised for temporary differences arising 1.16 from business combination involving entities not under common control.
1.17 Increase was mainly because the Company received non-monetary assets from government.
Increase was mainly because the Company purchase Sinopharm Wuzhou under common control, and 1.18 restated the opening balance.
1.19 Increase in surplus reserve resulted from the provision of legal surplus reserve.
1.20 Increase was mainly due to the profit increase.
China National Accord Medicines Corporation Ltd. Annual Report 2012
III Notes for significant fluctuation of major accounts in financial statements (Continued)
(2) Consolidated Income Statement
Notes 2012 2011 Fluctuation % Consolidated Consolidated
18,011,759,178.2 15,150,128,554.5 2,861,630,623. Sales 2.1 6 9 67 19%
16,408,719,921.1 13,813,696,729.8 2,595,023,191. Cost of sales 2.2 9 5 34 19% Selling and distribution expenses 2.3 448,595,419.15 431,289,974.80 17,305,444.35 4% General and Administrative expenses 2.4 392,232,990.09 351,445,745.31 40,787,244.78 12% Financial expenses - net 2.5 162,118,150.33 136,890,070.53 25,228,079.80 18% Investment income 2.6 38,740,679.55 28,119,376.36 10,621,303.19 38% Non-operating income 2.7 60,039,015.85 24,004,986.66 36,034,029.19 150% 1425 Non-operating expenses 2.8 28,186,730.33 1,848,197.80 26,338,532.53 % Income tax expenses 2.9 119,634,955.50 81,466,298.02 38,168,657.48 47%
2.1 Increase in sales was mainly due to the increase in sales volume.
2.2 Increase in cost of sales was mainly due to the increase in sales volume.
Increase in selling and distribution expenses was mainly due to the increase in logistic expenses and marketing expenses which increased in line with sales and the staff expenses increased due to the 2.3 company purchased.
Increase in General and administrative expenses was mainly due to the increase in tax and R&D expenses 2.4 and the staff expenses increased due to the company purchased.
Increase in Financial expenses was mainly because the borrowing increased in line with sales and the cost 2.5 increased.
2.6 Increase in investment income was mainly due to the Wanle profit increased.
2.7 Increase in non-operating income was mainly because the Company received
2.8 Increase in non-operating expenses resulted from compensation for termination of contract.
2.9 Increase in income tax expenses was mainly the profit increased.
China National Accord Medicines Corporation Ltd. Annual Report 2012
Section XI. Documents available for Reference
1. Accounting Statement carrying the signatures and seals of the legal representative, financial chief and person in charge of accounting;
2. Original of Auditors’ Report carrying the seals of Certified Public Accountants, and signatures and seals of the CPAs;
3. Originals of all the documents and notifications of the Company ever disclosed in the report period in Securities Times and Hong Kong Commercial Daily designated by CSRC;
4. Original of the Annual Report carrying the signature of the Chairman of the Board.
5. The Place Where the document placed: Office of Secretariat of the Board of Directors, Accord Pharm Bldg., No. 15, Ba Gua Si Road, Futian District, Shenzhen.