China National Accord Medicines Corporation Ltd.

Annual Report 2019

April 2020

Section I. Important Notice Contents and Interpretation

Board of Directors Supervisory Committee all directors supervisors and senior

executives of China National Accord Medicines Corporation Ltd. (hereinafter

referred to as the Company) hereby confirm that there are no any fictitious

statements misleading statements or important omissions carried in this report

and shall take all responsibilities individual and/or joint for the reality

accuracy and completion of the whole contents.Lin Zhaoxiong Principal of the Company Wei Pingxiao person in charger of

accounting works and Wang Ying person in charge of accounting organ

(accounting principal) hereby confirm that the Financial Report of 2019 Annual

Report is authentic accurate and complete.

All directors are attended the Board Meeting for report deliberation.

Affected by various risk factors the company’s business operations are facing

risks in terms of changes in industry policies and intensified market competition.The company has made a specific statement on the “Future DevelopmentProspects” of the fourth section “Discussion and Analysis of the Operation” inthis annual report and all investors should pay attention to it.The profit distribution plan that deliberated and approved by the Board is:

based on total stock issued 428126983 shares distributed 6 Yuan (tax included)

bonus in cash for every 10-share hold by all shareholders 0 shares bonus issued

(tax included) and no capitalizing of common reserves carried out.

Contents

Section I. Important Notice Contents and Interpretation............................................................. 1

Section II Company Profile and Main Financial Indexes...............................................................4

Section III. Summary of Company Business................................................................................... 8

Section IV. Discussion and Analysis of Business........................................................................... 11

Section V. Important Events........................................................................................................... 37

Section VI. Changes in Shares and Particulars about Shareholders...........................................65

Section VII. Preferred Stock........................................................................................................... 73

Section VIII. Convertible Bonds..................................................................................................... 74

Section IX. Particulars about Directors Supervisors Senior Executives and Employees........75

Section X. Corporate Governance.................................................................................................. 87

Section XI. Corporate Bond............................................................................................................ 96

Section XII. Financial Report..........................................................................................................97

Section XIII. Documents Available for Reference...................................................................... 366

Interpretation

Items Refers to Contents

Listed Company Company the Company

Sinopharm Accord the Group

Refers to China National Accord Medicines Corporation Ltd.SINOPHARM Refers to China National Pharmaceutical Group Corporation

Sinopharm Holding Refers to

Sinopharm Group Co. Ltd Controlling shareholder of the

Company

Company Law Refers to Company Law of the People’s Republic of China

Securities Law Refers to Securities Law of the People’s Republic of China

Yuan 10 thousand Yuan 100 million Yuan Refers to RMB RMB 10 thousand RMB 100 million

Terminology: Refers to

4D business Refers to

SPD hospital logistics supply chain extension business IVD

diagnostic reagent business CSSD disinfection service and MED

equipment life cycle management business

GPO Refers to Group purchasing organizations

Abbreviation: Refers to

Sinopharm Holding Guangzhou Refers to Sinopharm Holding Guangzhou Co. Ltd.Guoda Drugstore Refers to Sinopharm Holding Guoda Drugstore Co. Ltd.Sinopharm Holding Guangxi Refers to Sinopharm Holding Guangxi Co. Ltd.

Foshan Nanhai Refers to Foshan Nanhai Pharmaceutical Group Co. Ltd.

Nanfang Pharmaceutical Foreign Trade Refers to Guangdong Nanfang Pharmaceutical Foreign Trade Co. Ltd.

China National Zhijun Zhijun Pharmaceutical Refers to China National Zhijun (Shenzhen) Pharmaceutical Co. Ltd.

Zhijun Pharmacy Trade Refers to Shenzhen Zhijun Pharmacy Trade Co. Ltd.Zhijun Pingshan Pingshan Pharmaceutical Refers to

China National Zhijun (Shenzhen) Pingshan Pharmaceutical Co.

Ltd.Main Luck Pharmaceuticals Refers to Shenzhen Main Luck Pharmaceuticals Inc.Section II Company Profile and Main Financial Indexes

I. Company profile

Short form of the stock Sinopharm Accord Accord B Stock code 000028 200028

Stock exchange for listing Shenzhen Stock Exchange

Name of the Company (in

Chinese) 国药集团一致药业股份有限公司

Short form of the Company

(in Chinese) 国药一致

Foreign name of the Company

(if applicable) China National Accord Medicines Corporation Ltd.Short form of foreign name of

the Company (if applicable) Sinopharm Accord

Legal representative Lin Zhaoxiong

Registrations add. Accord Pharm. Bldg No. 15 Ba Gua Si Road Futian District Shenzhen Guangdong Province

Code for registrations add 518029

Offices add. Accord Pharm. Bldg No. 15 Ba Gua Si Road Futian District Shenzhen Guangdong Province

Codes for office add. 518029

Company’s Internet Web Site http://www.szaccord.com.cn

E-mail gyyz0028@sinopharm.com

II. Person/Way to contact

Secretary of the Board Securities affairs representative

Name Chen Changbing Wang Zhaoyu

Contact add.

Accord Pharm. Bldg. No. 15 Ba Gua Si

Road Futian District Shenzhen

Guangdong Province

Accord Pharm. Bldg. No. 15 Ba Gua Si

Road Futian District Shenzhen

Guangdong Province

Tel. +(86)755 25875195 +(86)755 25875222

Fax. +(86)755 25195435 +(86)755 25195435

E-mail gyyzinvestor@sinopharm.com gyyz0028@sinopharm.com

III. Information disclosure and preparation place

Newspaper appointed for information disclosure

Securities Times; China Securities Journal; Hong Kong Commercial

Daily

Website for annual report publish appointed by CSRC http://www.szse.cn ; http://www.cninfo.com.cn

Preparation place for annual report Secretariat of the Board of Directors

IV. Registration changes of the Company

Organization code 91440300192186267U

Changes of main business since listing (if applicable) No change.

Previous changes for controlling shareholders (if

applicable)

No change.V. Other relevant information

CPA engaged by the Company

Name of CPA Ernst & Young CPA (Special General partnership)

Offices add. for CPA 21/F China Resources Building No. 5001 Shennan East Road Luohu District Shenzhen

Signing accountant Li Jianguang Li Yuanfen

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

VI. Main accounting data and financial indexes

Whether it has retroactive adjustment or re-statement on previous accounting data

□Yes √No

2019 2018 Changes over last year 2017

Operating income (RMB) 52045764143.21 43122385521.23 20.69% 41263393427.41

Net profit attributable to

shareholders of the listed company

(RMB)

1271289183.01 1210742435.78 5.00% 1057791930.67

Net profit attributable to

shareholders of the listed company

after deducting non-recurring gains

and losses (RMB)

1226765271.97 1175971967.39 4.32% 1035461581.00

Net cash flow arising from

operating activities (RMB)

2000352083.20 1322606352.27 51.24% 1285291911.82

Basic earnings per share

(RMB/Share)

2.97 2.83 4.95% 2.47

Diluted earnings per share

(RMB/Share)

2.97 2.83 4.95% 2.47

Weighted average ROE 10.43% 11.56%

1.13 percentage points

down

11.91%

End of 2019 End of 2018

Changes over end of

last year

End of 2017

Total assets (RMB) 33520609123.67 28930300519.97 15.87% 22343643527.77

Net assets attributable to

shareholder of listed company

(RMB)

12806410865.92 11618432603.28 10.22% 9396572345.88

Note: Weighted average ROE was down by 1.13 percentage points from a year earlier mainly due to the impact of the industry

policy gross margin decline in the period and profit margin narrowing.VII. Difference of the accounting data under accounting rules in and out of China

1. Difference of the net profit and net assets disclosed in financial report under both IAS (International

Accounting Standards) and Chinese GAAP (Generally Accepted Accounting Principles)

□ Applicable √ Not applicable

The Company had no difference of the net profit or net assets disclosed in financial report under either IAS (International

Accounting Standards) or Chinese GAAP (Generally Accepted Accounting Principles) in the period.

2. Difference of the net profit and net assets disclosed in financial report under both foreign accounting

rules and Chinese GAAP (Generally Accepted Accounting Principles)

□ Applicable √ Not applicable

The Company had no difference of the net profit or net assets disclosed in financial report under either foreign accounting rules or

Chinese GAAP (Generally Accepted Accounting Principles) in the period.

VIII. Quarterly main financial index

In RMB

First quarter Second quarter Third quarter Fourth quarter

Operating income 11879309078.82 13348838298.61 13647793431.64 13169823334.14

Net profit attributable to shareholders

of the listed company

300149012.08 350684348.32 311310706.52 309145116.09

Net profit attributable to shareholders

of the listed company after deducting

non-recurring gains and losses

297420355.99 342280091.96 303365280.52 283699543.50

Net cash flow arising from operating

activities

-759367352.29 1923124933.64 -90795420.13 927389921.98

Whether there are significant differences between the above-mentioned financial index or its total number and the relevant financial

index disclosed in the company’s quarterly report and semi-annual report

□ Yes √ No

IX. Items and amounts of extraordinary profit (gains)/loss

√Applicable □ Not applicable

In RMB

Item 2019 2018 2017 Note

Gains/losses from the disposal of non-current

asset (including the write-off that accrued for

impairment of assets)

2340925.97 7048337.10 -203279.86

The gains from fixed

assets disposal .Governmental subsidy reckoned into current

gains/losses (not including the subsidy enjoyed

in quota or ration according to national

standards which are closely relevant to

enterprise’s business)

49299242.48 30098383.86 26854027.03

Mainly for receiving of

all kinds of special

subsidies and fiscal

interest discount in the

period.Investment costs while acquiring subsidiaries

joint ventures and associated enterprise less

than fair value of the identifiable net assets

from invested enterprise which should be

enjoined

14.65 729.29 58022.12

Negative goodwill from

subsidiary acquisition.

Current net gain/losses of the subsidiary merger

under the same control from beginning of the

period to combination date

-1096.00

Switch back of provision for depreciation of

account receivable and contract assets that are

individually tested for impairment

1310345.38 5301091.66 1642360.26

Gains and losses from external entrusted loans 3460037.16 3246925.69 1907519.89

The gains obtained from

offering entrust loans to

China National Zhijun

(Suzhou).

Consigning fee received for consigned

operation

516929.44

Other non-operating income and expenditure

except for the aforementioned items

17179002.78 5069438.37 377281.07

The non-operating

income recognized for

written off the unpaid

payments

Other gains/losses satisfy a definition of

extraordinary gains/losses

508168.93 1445926.01 134740.70

Less: Impact on income tax 17317723.70 12137071.11 6690220.38

Impact on minority shareholders’ equity

(post-tax)

12256102.61 5820221.92 1749005.16

Total 44523911.04 34770468.39 22330349.67 --

Concerning the extraordinary profit (gain)/loss defined by Q&A Announcement No.1 on Information Disclosure for Companies

Offering Their Securities to the Public --- Extraordinary Profit/loss and the items defined as recurring profit (gain)/loss according to

the lists of extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their

Securities to the Public --- Extraordinary Profit/loss explain reasons

□ Applicable √ Not applicable

In reporting period the Company has no particular about items defined as recurring profit (gain)/loss according to the lists of

extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their Securities to

the Public --- Extraordinary Profit/loss

Section III. Summary of Company Business

I. Main businesses of the company in the reporting period

The Company complies with the disclosure requirement of Information Disclosure Guidelines for the Shenzhen

Stock Exchange No. 8- Listing Company Engaged in Retailing Industry

In the reporting period the main business of Sinopharm Accord includes pharmaceutical distribution and

pharmaceutical retail specifically as follows:

(i) In the pharmaceutical distribution field the company continues to integrate the distribution and logistics

business deeply penetrates into the end markets improves the stepped distribution network creates intelligent

supply chain and devotes to become a provider for pharmaceutical and health care products and services with the

strongest influence the highest share the most complete variety the best service and the fastest delivery in south

district of China.

1. The Company’s pharmaceutical distribution business is established in Guangdong and Guangxi the company

has completed the network construction of Guangdong and Guangxi in 2013 and the business has extended to the

county-level regions; in 2014 we accelerating the integration of three-tier companies and the Company achieved

an operation all over the network in 2015. The network further expanded in 2019 and main development

direction is retail terminals which includes: After optimizing and adjusting the types of customers in 2019 there

are 959 second- and third-tier medical institutions 6807 primary-level medical customers and 4479 retail

terminal customers (chain pharmacies single stores and self-paying pharmacies in hospitals).

2. The Company’s pharmaceutical distribution business has achieved the first scale in Guangdong and Guangxi

and the leading position in market segment of Guangdong and Guangxi and has obtained the relatively leading

position in vaccine instrument and e-commerce industries.(ii) In the pharmaceutical retail field Guoda Drugstore is a pharmaceutical retail enterprise that ranks the first in

the sales volume throughout the country and is one of the few enterprises in China with national direct sales drug

retail network.

By the end of 2019 Guoda Drugstore has operated 5021 stores covering 20 provinces autonomous regions and

municipalities entering nearly 71 large and medium sized cities which has formed a drugstore networks covering

eastern and northern China southern coastal cities and gradually expanded into northeast central plains and

inland cities the sales scale of which has exceeded 10 billions ranking the first within industry; Guoda drugstore

the business of which were mainly relying on modern retail drugstores has been putting great attention on the

development of professional service system with medical resources as core competitiveness building a group of

stores with professional commercial activities which are able to provide retails and therapy services that

integrating medical service and health-care products sales and cooperate with hospitals; at the same time the

Company has been vigorously developing new business exploring and expanding new sales channels improving

professional services being dedicated to transit from a traditional medical retail into an innovative service

enterprise. By means of conventional products retail management improving major brands and exploring business

cooperation with supplier accelerating the establishment and improvement of DTP business and continuation of

health care service system Guoda has built industry-leading professional service ability.II. Major changes in main assets

1. Major changes in main assets

Major assets Note of major changes

Equity assets

Increased 327.0559 million Yuan over that of period-begin with 17.27% rate of change

mainly because the investment income from joint ventures increased and change of the

fair value of other equity instrument investment.

Fixed assets

Increased 4.6661 million Yuan over that of period-begin with 0.77% rate of change no

major changes in the reporting period.Intangible assets

Increased 739600 Yuan over that of period-begin with 0.23% rate of change no major

changes in the reporting period.

Construction in progress

Decreased 4.83 million Yuan over that of period-begin with -13.26% rate of change

mainly because the ERP system construction was transferred to intangible assets for

completion and the supply chain extension project transferred to fixed assets in the

period .Right-of-use assets

Increased 1955.4611 million Yuan over that of period-begin with 100% rate of change

mainly due to the implementation of new lease standards in the period.

2. Main overseas assets

□ Applicable √ Not applicable

III. Core competitiveness analysis

1. Strong network coverage and layout

Relying on the perfect distribution network and variety resources Sinopharm Accord has unified the wholesale

and retail resources. The company has a complete drug distribution network in the Guangdong and Guangxi

regions comprehensively covering the second- and third-tier medical institutions and retail chain terminals of

Guangdong and Guangxi provinces in recent years it has seized the opportunity of developing retail customers

and vigorously expanded distribution-related retail pharmacies small-scale social medical services and other

related formats of which the business sales have achieved rapid growth.Sinopharm Accord has retail network leading in scale and covering the whole country Guoda Drugstore has retail

chain network spreading over 20 provinces municipalities and autonomous regions covering nearly 71 cities

nationwide.

2. Abundant variety resources

In the pharmaceutical distribution the company has established extensive cooperative relations with thousands of

domestic manufacturers and commercial enterprises and established stable business relationships with hundreds of

import and joint venture manufacturers and has rich variety resources.Guoda Drugstore operates nearly 120000 merchandises. With its relatively comprehensive purchasing network

and years of experience in commodity management Guoda Drug Store has established a merchandise system with

wide coverage high professionalization and rich varieties.

3. Complete logistics and distribution system

Sinopharm Accord distribution adopts supply chain management and warehouse management solutions system it

has built large-scale first-grade logistics centers in Guangzhou Nanning Shenzhen and other places and

established distribution centers in Guangdong and Guangxi which has formed ladder logistics and distribution

networks it is the first enterprise in Guangdong and Guangxi that has achieved the third-party logistics

qualification and has the professional pharmaceutical logistics capabilities with the largest scale the most

extensive network and the most complete modes in southern China.Guoda Drugstore has a nationwide modern logistics and distribution system and the logistics warehouses are

located in 17 provinces has 27 large-and-small logistics warehouses covering an area of about 100000 square

meters in total.

4. The advantages of medical insurance resources

Regarding medicine retails the subsidiaries of Guoda Drugstore have featured generally higher medical insurance

acquiring ability with higher medical insurance sales ratio and steady operation.

5. The advantages of Compliance

The Company had a big lead under an increasingly stringent regulatory environment for the reason that it has kept

emphasizing legalization and compliance in the process of operation and management.

6. Unique-influence Sinopharm brand

Brand of the Company and distribution industry child-brand and controlling shareholder and actual controller’s

brand come down in one continuous line depending on powerful force of central enterprises the Company’s

popularity and influence are prominent day by day in the industry.Section IV. Discussion and Analysis of Business

1. Introduction

In 2019 the country continued to deepen medical reform policies were intensively introduced and the pace of

reform in the medical field was accelerated. The three-medical reform linkage mechanism is becoming more

mature with the centralized purchase and use of medicines as the breakthrough the fee control of medical

insurance has achieved initial results and the purchase amount policy is becoming more normal and the industrial

structure of driving supply end has undergone in-depth reforms the adjustment of the product structure at the

payment end has accelerated and the concentration at the circulation end has accelerated while bearing pressure

the business model transaction form and industry pattern have continued to change. Sinopharm Accord has

seized opportunities in the change closely centered on Sinopharm Holding’s “3 + 2” strategic guidance andcontinuously promoted the strategic measures with “technology empowerment service upgrade wholesale-retailintegration and production-financing dual drive” as the core and grasped the three themes of “solid foundationtransformation and innovation and ensuring development” focused on market share and supply chain

performance improvement and achieved stable growth in scale and overall operating efficiency.

In 2019 the operating income of the Company accumulated to 52.046 billion yuan with a y-o-y of 20.69% up;

operation profit amounted to 1.836 billion yuan a 9.85% growth from a year earlier; the net profit attributable to

shareholders of listed company amounted to 1.271 billion yuan a y-o-y growth of 5.00%.

In 2019 the operating income from distribution business of the Company accumulated to 40.014 billion yuan

with a y-o-y growth of 22.15% all types of the business have achieved rapid growth by further expanding and

consolidating the advantages of direct selling business enhancing the coverage of grassroots medical institutions

in breadth and depth. Of which: hospital direct selling has a growth of 21.84% on a y-o-y basis direct selling

from other medical institutions have growth of 31.64% on a y-o-y basis direct selling from retail achieved a

32.94% up from a year earlier equipment consumables business have 47.65% growth on a y-o-y basis retail

diagnosis and treatment business have 63.05% growth on a y-o-y basis and the distribution business of Sinopharm

Accord achieved a net profit of 846 million yuan for year of 2019 a y-o-y growth of 18.19%.

The operating income from Guoda Drugstore accumulated to 12.754 billion yuan with a y-o-y growth of 17.24%

in 2019. All business have developed steadily of which the direct operation has a y-o-y growth of 12.97% DTP

growth 32.10% on a y-o-y basis OTO has a y-o-y growth of 33.11% wholesale business have a y-o-y growth of

64% and the franchise business growth rate was 6.00%. Guoda Drugstore achieved net profit of 312 million yuan

in 2019 a 3.37% up from a year earlier and the cumulative net profit attributable to parent company amounted as

246million yuan with a y-o-y growth of 5.95%.

In 2019 the investment income to associated enterprise accumulated as 331 million yuan a y-o-y growth of

3.52%.

(i)Work overview for year of 2019

1. Continued to promote the core strategy of wholesale-retail integration and enhanced the synergy of

business formats

Deeply implemented the development strategy of wholesale-retail integration and promoted the wholesale-retail

integration within distribution companies and the wholesale-retail integration of distribution companies and

Guoda. On the basis of network linkage coordinated the effective allocation and circulation of resources among

various formats and regions enhanced coordination and complementarity formed synergy and explored the

formation of organizational integration model business integration model equity integration model and member

store model coordinated logistics supply chain information and other background systems gave full play to

scale and sharing effects simplified the operation process and realized the interoperability of supply chain

management systems.

2. Speeded up mergers and acquisitions continued to optimize network layout and constantly expanded

strategic layout

Actively promoted investment projects and achieved breakthroughs in outbound mergers and acquisitions. During

the reporting period the company initiated the acquisition of Shanghai Dingqun Enterprise Management

Consulting Co. Ltd. (indirectly purchased Sinopharm Holding Tianhe Jilin Pharmaceutical Co. Ltd.) Pudong

New Area of Shanghai Pharmaceutical Medicine Ltd. Pu’er Songmao Ji’antang Pharmaceutical Co. Ltd. and

Guoda Drugstore (Chaoyang) Renai Pharmacy Co. Ltd. the retail layout strategy has advanced into Jilin

Province and Yunnan Province; completed investment in the establishment of Sinopharm Accord Pharmaceutical

Supply Chain (Shenzhen) Co. Ltd. Sinopharm Holding Guozhi Drug Store (Heyuan) Co. Ltd. Liaoning Guoda

Pharmaceutical Co. Ltd. Sinopharm Holding Guoda Drugstore Yongxingtang Chain (Chaoyang) Co. Ltd. and

Sinopharm Holding Guangyi Health Management (Zhanjiang) Co. Ltd.

As of the end of 2019 the number of holding subsidiaries of Sinopharm Accord has increased to 110 and the

stores of Guoda Drugstore reached 5021 (excluding new mergers and acquisitions of Jilin Tianhe and

Yanghetang Jilin Tianhe and Pudong New Area of Shanghai Pharmaceutical Medicine completed the industry

and commerce changes in January 2020 which are not included in the scope of consolidated financial statement

for 2019) a total of 83 retail stores.

3. Technology energized promoted digital transformation and improved supply chain efficiency

Started digital transformation upgraded service capabilities and built digital management and control platforms

such as supply chain services omni-channel membership services and new business services. Externally

improved the external supply chain docking system expanded the whole medicine network GPO provincial

platform medical insurance interface functions and the upstream and downstream customer information

interconnection independently developed FYCMS system and AVG intelligent conveyor line and other

automated equipment docking system and upgraded C-end users experience; internally upgraded the internal

supply chain systems including retail system upgrades distribution system upgrades logistics visualization

upgrades and collaborative sharing and expansion.

4. In distribution business segment maintained strategic strength focused on service transformation and

upgrading and continued to enhance business advantages

(1) Took the initiative to seize policy opportunities such as “4 + 7” GPO national talks etc. and effectively

gained market share under the general trend of drug price reduction. The leading position in Guangdong and

Guangxi provinces continued to be stable Guangzhou and Shenzhen have achieved a good start in 4 + 7

centralized procurement and expansion and obtained 25 varieties of distribution rights including 5 exclusive

varieties and the gross profit margin of the winning variety increased by 1.75% over the previous year. In terms

of GPO many subsidiaries overcame the difficulties and drove the market share increase when facing multi-

platform parallel; at the same time each subsidiary responded quickly and carried out an “ice-breaking action”

against the original trustee hospitals to increase the hospitals’ market shares.

(2) Continued to promote the four major business directions and push the transformation and upgrading of

business structure

The traditional business was further enlarged and strengthened the market share continuously increased and the

leading advantage was constantly consolidated. The direct sales format increased by 23% on a year-on-year basis

and the four major business directions of retail direct sales retail diagnosis and treatment primary medical care

and equipment consumables have maintained double-digit growth.

1) Retail diagnosis and treatment: the retail network layout of Guangdong and Guangxi has been further improved

as of the end of the reporting period a total of 83 retail pharmacies have been opened. In 2019 the company

opened 15 new pharmacies completed the positioning in 20 cities in Guangdong and Guangdong and carried out

the second stage of in-depth deployment in Guangdong Province; integrated medical insurance and realized 20

prescription hospitals; accelerated development of key products introduced 27 new DTP products; increased 4

new areas with medical insurance qualification; created a patient-centered professional pharmacy management

service system to achieve brand specialization management and control refinement and high-quality service.

2) Retail direct sales: the sales scale of the top 100 national chain customers has maintained rapid growth and the

channel gathering strength of wholesale-retail integration projects has been continuously intensified; the terminal

network coverage of Guangzhou and Shenzhen has exceeded 35% and cooperated with the subsidiaries in various

regions to maximize resources; upgraded and improved the B2B platform operation function module PC online

payment APP Hengxing member area mobile terminal application capabilities have been significantly improved;

expanded 320 member stores empowered terminals and improved member store management and service models.

3) Instrument consumables: SPD medical consumables comprehensive service platform version 2.0 was

developed and launched to realize the upgrade of information such as the orthopedics management module of the

new consignment model; gradually established comprehensive service solution provider brands with industry

influence by creating model hospital projects and copying and promoting among which 8 projects including

“multi-warehousing integrated smart supply chain” “Fine Management of Medical Consumables of GuangzhouWomen and Children’s Medical Center” and so on were awarded the “Best Practice Case of PharmaceuticalSupply Chain in 2019” and “Top Ten Pharmaceutical Supply Chain Service Innovation Cases” by China

Association of Pharmaceutical Commerce.

4) 4D business: the reagent business has established the top three hospital model and sales and gross profit

margins have continued to increase; equipment maintenance business has completed the signing of contract for 24

projects; disinfection supply business has achieved cooperation with 21 medical institutions.

(3) Continued to promote the advantages of integrated operations and empower the entire business chain

Gave full play to the “management and guide” advantages of the integrated management platform energized the

operation integration of subsidiaries in Guangdong Province and stimulated the transformation and innovation of

the subsidiaries; promoted the distribution integration platform construction of Guangxi launched full integration

comprehensive integration from the aspects of organizational structure construction procurement logistics

functions etc.; carried out integrated docking and comprehensive budget system construction for new merging

companies.

5. In retail business segment continued to deepen the network layout focused on brand building and

explored new business models

(1) Continued to promote the rapid expansion of stores and improve the quantity and quality of store

expansion

At the end of 2019 the total number of stores of Guoda Drugstore was 5021 of which 3744 were direct-operated

stores; the net increase in the number of stores was 746 of which 608 were newly opened direct-operated stores

and franchised stores and a net increase of 138 mergers and acquisitions (excluding Jilin Tianhe Yanghetang);

the expansion of stores around the hospitals continued to grow with a net increase of 74 in 2019. The retail layout

strategy has advanced into Jilin and Yunnan newly developed seven cities in the existing provinces continued to

expand the advantageous regions such as Shenyang Inner Mongolia Wanmin and Yiyuan achieved new

breakthroughs in the expansion in Guangdong Shandong Xinjiang Guangxi and Quanzhou and the enterprise

scale and market share have further increased.

(2) WBA cooperation was further promoted and brand and service were continuously optimized

Since WBA increased its capital to enter Guoda Drugstore in 2018 after nearly two years of running-in the two

sides have formed a good project team cooperation mechanism. Learned the advanced methodology of WBA

connected and repeatedly discussed with the WBA professional team sorted out and optimized the existing

products determined the localized brand promotion strategy and specific path vigorously developed new varieties

and cultivated potential varieties. In January 2019 Guoda Drugstore and WBA launched the “new concept” pilot

pharmacy in Shanghai which achieved good results and summarized the experience to facilitate the replication

and promotion of the model.

(3) Accelerated the layout of innovative business and comprehensively developed multiple formats of e-

commerce business

E-commerce business increased by 29.7% on a year-on-year basis e-commerce O2O business covered more than

2800 stores with an average daily order volume of 12000 orders. B2C business developed yaofang.com 1

Drugstore pinduoduo and other channels. With the advantages of existing networks products shop assistants etc.

improved self-operated O2O platforms such as WeChat Mall and APP realized value-added services realized

seamless connection of member center + mall + healthy community system; realized home delivery of drugs

online drug search and online and offline consumption records.

(4) Optimized member management mechanism and built a professional pharmacy system with chronic

disease as the core

Continued to promote the customer health management system increased customer stickiness through member

management online health community APP and patient education. Developed member management applets to

achieve online and offline integration of members integrated member center micro mall healthy community

POS system consumption data interflow and increased 2.26 million new active members during the year. In order

to continuously strengthen the team of pharmacists and continue to optimize pharmaceutical services more than

1000 offline pharmacy professional trainings and more than 3600 patient educations were conducted in 2019 the

internal licensed pharmacist training has achieved remarkable results and more than 1700 diabetes specialists and

more than 1500 hypertension specialists have been trained to realize the normalization of chronic disease training.

(5) Promoted the construction of provincial-level platforms and strengthened regional network cultivation

Established and implemented provincial-level platform areas explored provincial-level platform construction

schemes from corporate governance business architecture platform characteristics etc. determined business

structure and positioning combined different regional policies and promoted the development of multiple models

based on business characteristics. The Inner Mongolia Guoda provincial-level platforms the Fujian Guoda

provincial-level platforms and the Shenyang Guoda provincial-level platforms have been established; the

provincial-level platforms of Jiangsu Beijing Guangdong and Anhui are under construction.The Company complies with the disclosure requirement of “Information Disclosure Guidelines for the Shenzhen Stock Exchange No.

8- Listing Company Engaged in Retailing Industry”

(ii)Operation of the retail stores in reporting period:

1. By the end of 2019 Guoda Drugstore has 3744 direct-sale stores sales revenue (tax-free) amounted to 9.956

billion yuan; and has 1277 franchised stores the distribution revenue (tax-free) amounted as 1.101 billion yuan.Region Direct-sale store Franchised outlet

Numbers Sales revenue (in 10 thousand Yuan) Numbers

Distribution

revenue (in

10

thousand

Yuan)

North 1798 526177.54 449 43460.03

East China 858 219119.99 589 52956.27

South China 543 142588.33 123 8307.84

Central

China

285 51799.48 116 5354.30

Northwest 260 55898.78 - -

Total 3744 995584.12 1277 110078.44

Note: North: Liaoning Shanxi Inner Mongolia Beijing Tianjin Hebei

East China: Shanghai Jiangsu Anhui Shandong Fujian Zhejiang

South China: Guangdong Guangxi

Central China: Henan Hunan

Northwest: Ningxia Xinjiang

(1)Top ten stores in sales:

Serial Region Store name Openingyear

Operating

mode

Business

format Actual operating area(M

2) Propertyownership

1 Shanxi Zhongli Branch 2002 Direct-sale 5+X 821.80 Property rental

2 Guangdong

Shenzhen

exhibition hall

2006 Direct-sale

Modern

Pharmacy

260.00 Property rental

3 Shaanxi Eryuan Branch 2011 Direct-sale 5+X 629.90 Property rental

4 Yangzhou Jiangsu Baiyulan 1991 Direct-sale

Modern

Pharmacy

970.00 Property rental

5 Inner

Mongolian Headquarter

2003 Direct-sale 5+X store 1689.26 Property rental

6 Beijing Xidan Jinxiang 1997 Direct-sale

Modern

Pharmacy

773.16 Property rental

7 Fujian Xiamen NewSpecial Medicine

2005 Direct-sale

Modern

Pharmacy

132.90 Property rental

8 Beijing

Yongdingmen

store

2009 Direct-sale

Modern

Pharmacy

100.00 Property rental

9 Hebei

Le Ren Tang

Headquarter

2010 Direct-sale

Traditional

Chinese

Medicine

outpatient store

1206.00 Property rental

10 Guangdong

Shenzhen Lianhua

North

2003 Direct-sale

Modern

Pharmacy

120.33 Property rental

(2) In 2019 the Company has 777 new stores and closed 169 stores with a net increase of 608 stores

Region

Direct-sale store Franchised outlet

Number of

store

increased

Total area (square

meters)

Number of stores shut down

Number

of store

increased

Number

of

stores

shut

down

North 307 33361.38 -59 133 -6

East China 98 14767.67 -33 34 -23

South China 48 4493.89 -12 65 -9

Central China 25 2734.38 -7 14 -4

Northwest 53 5290.50 -16 - -

Total 531 60647.81 -127 246 -42

(3) Medical insurance qualification of the stores

As of 31 December 2019 the Company has 3744 chain stores with directly selling and 3201 pharmacy stores

obtained the qualification of “Designated retail pharmacies of medical insurance” representing 85% of the total

pharmacies of the Company.Region Number of stores

Stores obtained the qualification of

“Designated retail pharmacies of medicalinsurance”

Ratio in total pharmacies in

regions

North 1798 1599 89%

East China 858 648 76%

South China 543 478 88%

Central China 285 246 86%

Northwest 260 230 88%

Total 3744 3201 85%

2.Change of main selling index

Year

Per customer

transaction (RMB)

Proportion of

prescription drugs

Proportion of medical

insurance sales in

direct-sale stores

Proportion of the

direct member sales

Proportion of

transaction times of

direct members

2018 74 51% 39% 67% 55%

2019 86 53% 38% 67% 57%

(1) Classify according to region

Region

Amount of sales growth (tax-free in 10 thousand

yuan)

Gross margin Net profit ratio

North 108839 25% 3%

East China 35780 24% 3%

South China 24457 25% 2%

Central China 6927 30% 1%

Northwest 10137 31% 3%

(2) Operating efficiency of direct-sale stores in reporting period

Region Number of stores

Operating area of the stores

(square meters)

Daily average efficiency (tax-

included Yuan/Square

Meters)

Rental efficiency (tax-included

annual sales volume/rental)

North 1798 231659 72 16

East China 858 109032 62 15

South China 543 60006 72 15

Central China 285 34093 47 12

Northwest 260 32371 53 19

Note: Daily average efficiency=Average daily operating income/Operating area of the stores;

Average daily operating revenue=Operating revenue (tax-included) of the store in the Year/Operating days of

store in the Year.Rental efficiency=Annual sales volume/Rental

3.Structure of the category at retail terminal

Category 2019 2018

Health food 5.54% 6.62%

Convenience food 0.82% 1.01%

Rx Drug 53.00% 50.71%

OTC 25.97% 26.56%

Personal care 1.07% 1.25%

Home convenience 0.21% 0.24%

Household health products 4.37% 4.35%

Chinese Herbal Medicine 4.44% 5.10%

Proportion of other categories 4.59% 4.16%

4. Purchasing and supplies:

Goods suppliers of Guoda Drugstore are mainly external suppliers and assist affiliated enterprise of

SINOPHARM and private brands. Top five suppliers for year of 2019:

Suppliers Purchase amount (tax included) Procurement ratio

No.1 190416568 13%

No.2 156099814 10%

No.3 117609986 8%

No.4 111068408 7%

No.5 94709145 6%

5. Warehousing logistics:

In 2019 Guoda Drugstore has 27 large and small sized logistic warehouses in total covering more than 100000

square meters spreading out across 17 provinces.Province Region Warehouse area (M2) Management ownership

Liaoning Shenyang 18821 Self-management

Guangdong

Guangzhou

/ Delegation

Shenzhen

Jiangmen / Delegation

Shanxi

Shanxi Wanmin 10919 Self-management

Shanxi Yiyuan / Delegation

Jiangsu

Dadesheng 4869 Self-management

Nanjing 2200 Self-management

Liyang 1920 Self-management

Fujian

Fujian 5688 Self-management

Quanzhou 1096 Self-management

Hebei Hebei 4300 Self-management

Shandong Shandong 4800 Self-management

Ningxia Ningxia 3300 Self-management

Hunan Hunan 3600 Self-management

Henan Henan 3610 Self-management

Inner Mongolia Inner Mongolia 5236 Self-management

Guangxi Guangxi 1950 Self-management

Beijing

Beijing Guoda

/ Delegation

Beijing Jinxiang

Tianjin Tianjin / Delegation

Anhui Anhui 1000 Self-management

Xinjiang Xinjiang 3517 Self-management

Shanghai Shanghai Fumei 20000 Self-management

Shanghai Guoda

Hangzhou 974 Self-management

Guoda Headquarter Headquarter / Delegation

Total 97799

II. Main business analysis

1. Overview

Found more in I. Introduction in Discussion and Analysis of Business

2. Revenue and cost

(1) Constitute of operation revenue

In RMB

2019 2018

Increase/decrease y-

o-yAmount

Ratio in operation

revenue

Amount

Ratio in operation

revenue

Total of operation

revenue 52045764143.21 100% 43122385521.23 100% 20.69%

According to industries

Pharmaceutical

distribution 38886408981.79 74.72% 31866749848.53 73.90% 22.03%

Retail pharmacy 13000514605.28 24.98% 11110718685.75 25.77% 17.01%

Others 158840556.14 0.30% 144916986.95 0.33% 9.61%

According to products

Pharmaceuticals 48181069748.36 92.57% 40634670075.31 94.23% 18.57%

Medical devices and

disposables 2756591633.83 5.30% 1589598645.85 3.69% 73.41%

Diagnostic reagents 692370435.53 1.33% 548790740.10 1.27% 26.16%

Medical equipments 256891769.35 0.49% 204409073.02 0.47% 25.68%

Others 158840556.14 0.31% 144916986.95 0.34% 9.61%

According to region

Domestic revenue 52045764143.21 100.00% 43122385521.23 100.00% 20.69%

(2) About the industries products or regions accounting for over 10% of the company’s operating income

or operating profit

√Applicable □ Not applicable

In RMB

Operating revenue Operating cost Gross profitratio

Increase/decre

ase of

operating

revenue y-o-y

Increase/decre

ase of

operating cost

y-o-y

Increase/decrease

of gross profit

ratio y-o-y

According to industries

Pharmaceutical

distribution 38886408981.79 36461461480.13 6.24% 22.03% 22.67% -0.49%

Retail pharmacy 13000514605.28 9783657583.20 24.74% 17.01% 18.45% -0.92%

According to products

Pharmaceuticals 48181069748.36 42826247612.34 11.11% 18.57% 19.65% -0.80%

According to region

Domestic revenue 52045764143.21 46292408840.53 11.05% 20.69% 21.74% -0.77%

Under circumstances of adjustment in reporting period for statistic scope of main business data adjusted main business based on

latest one year’s scope of period-end

□Applicable √Not applicable

(3) Income from physical sales larger than income from labors

Yes

(4) Fulfillment of the company’s signed significant sales contracts up to this reporting period

□Applicable √Not applicable

(5) Constitute of operation cost

In RMB

Industries Item

2019 2018 Increase/decrease

y-o-yAmount Ratio inoperation cost Amount

Ratio in

operation cost

Pharmaceutical

distribution Sales cost 36461461480.13 78.77% 29722775504.05 78.17% 22.67%

Retail pharmacy Sales cost 9783657583.20 21.13% 8259946674.34 21.72% 18.45%

Others Other cost 47289777.20 0.10% 41386452.76 0.11% 14.26%

(6) Whether the changes in the scope of consolidation in Reporting Period

√Yes □ No

Details of the changes in the scope of consolidation in reporting Period can be seen in Note VI of Financial Report.

(7) Major changes or adjustment in business product or service of the Company in Reporting Period

□Applicable √ Not applicable

(8) Major sales and main suppliers

Major sales client of the Company

Total top five clients in sales (RMB) 2343009103.83

Proportion in total annual sales volume for top five clients 4.50%

Ratio of related parties in annual total sales among the top

five clients 0.00%

Information of top five clients of the Company

Serial Name Sales amount (RMB) Proportion in total annual sales

1 No. 1 584218124.68 1.12%

2 No. 2 542230388.31 1.04%

3 No. 3 449040746.73 0.86%

4 No. 4 395485398.09 0.76%

5 No. 5 372034446.02 0.72%

Total -- 2343009103.83 4.50%

Other situation of main clients

□ Applicable √ Not applicable

Main suppliers of the Company

Total purchase amount from top five suppliers (RMB) 7333904753.96

Proportion in total annual purchase amount for top five

suppliers 19.27%

Ratio of related parties in annual total sales among the top

five suppliers 2.79%

Information of top five suppliers of the Company

Serial Suppliers Purchase amount (RMB) Proportion in total annual purchases

1 No. 1 3759825072.02 9.88%

2 No. 2 1072847935.86 2.82%

3 No. 3 1061854652.99 2.79%

4 No. 4 727478368.72 1.91%

5 No. 5 711898724.37 1.87%

Total -- 7333904753.96 19.27%

Other notes of main suppliers of the Company

□ Applicable √ Not applicable

3. Expenses

In RMB

2019 2018 Increase/decreasey-o-y Note of major changes

Sales expense 3055403668.16 2762789885.77 10.59% No major changes occurred

Management expense 842014983.53 783338308.19 7.49% No major changes occurred

Financial expense 119972954.79 51490020.59 133.00%

Mainly due to the implementation of

new lease standards int he period the

interest expenses of the lease liability is

calculated according to the discount

rate during each period of the lease

term while there was no such matter

occurred in same period of last year

4. R&D expenses

□Applicable √ Not applicable

5. Cash flow

In RMB

Item 2019 2018 Y-o-y changes

Subtotal of cash in-flow from

operation activity 56559206916.41 47475381467.60 19.13%

Subtotal of cash out-flow from

operation activity 54558854833.21 46152775115.33 18.21%

Net cash flow from operation

activity 2000352083.20 1322606352.27 51.24%

Subtotal of cash in-flow from

investment activity 161121607.20 238641593.44 -32.48%

Subtotal of cash out-flow from

investment activity 401568622.84 461099860.32 -12.91%

Net cash flow from investment

activity -240447015.64 -222458266.88 -8.09%

Subtotal of cash in-flow from

financing activity 379185917.92 3363461854.03 -88.73%

Subtotal of cash out-flow from

financing activity 1348355547.51 504680787.88 167.17%

Net cash flow from financing

activity -969169629.59 2858781066.15 -133.90%

Net increased amount of cash

and cash equivalent 790559744.71 3958618329.29 -80.03%

Main reasons for y-o-y major changes in aspect of relevant data

√Applicable □ Not applicable

(1) Net cash flow from operation activity: has 51.24% up from a year earlier mainly because sales of growth in the period was

better than that of the previous year the cash received from sales of goods and service providing are increased accordingly; and due

to the implementation of new lease standards the payment of rental was recorded in item of

Payment of Other Cash Related to Financing Activities while no such matter occurred in the same period last year;

(2) Subtotal of cash in-flow from investment activity: has 32.48% down from a year earlier mainly because at same period last year

received payment for plant and equipment of modern pharmaceutical Pingshan base and the repayment of entrusted loans from

associated enterprise Zhijun Suzhou and no such matter occurred in the period;

(3) Subtotal of cash in-flow from financing activity: has 88.73% down from a year earlier mainly because at same period last year

received a capital increase for subsidiary Guoda Drugstore from strategic investor while no such matter occurred in the period;

(4) Subtotal of cash out-flow from financing activity: has 167.17% up from a year earlier mainly due to the implementation of new

lease standards in the Period the payment of rental was recorded in item of Payment of Other Cash Related to Financing Activities

and increase of the distribution dividend;

(5) Net cash flow from financing activity: has 133.90% down from a year earlier mainly because at same period last year received

a capital increase for subsidiary Guoda Drugstore from strategic investor while no such matter occurred in the period;

(6) Net increased amount of cash and cash equivalent : has 80.03% down from a year earlier mainly because at same period last

year received a capital increase for subsidiary Guoda Drugstore from strategic investor while no such matter occurred in the period.Reasons of major difference between the cash flow of operation activity in report period and net profit of the Company

□Applicable √Not applicable

III. Analysis of the non-main business

□Applicable √ Not applicable

IV. Assets and liability

1. Major changes of assets composition

The Company initially implemented the new financial instrument standard new revenue standard or new lease

standards since 2019 and relevant items of the financial statement at year-beginning of the implementation year

were adjusted

√Applicable □Not applicable

In RMB

Year-end of 2019 Year-begin of 2019 Ratio

changes

Notes of major changesAmount

Ratio in

total assets

Amount

Ratio in total

assets

Cash and bank

balances 8882334845.79 26.50% 8096158013.24 26.49% 0.01% No major changes occurred

Accounts receivable 10617981893.52 31.68% 9336861647.92 30.55% 1.13% No major changes occurred

Inventories 4947424591.53 14.76% 4389335942.19 14.36% 0.40% No major changes occurred

Investment properties 138900358.30 0.41% 144894495.97 0.47% -0.06% No major changes occurred

Long-term equity

investment 2105114410.88 6.28% 1880393786.10 6.15% 0.13% No major changes occurred

Fix assets 612599944.11 1.83% 594067973.91 1.94% -0.11% No major changes occurred

Construction in

progress 31582575.84 0.09% 36412614.61 0.12% -0.03%

Mainly because the ERP

system construction was

transferred to intangible

assets for completion and

the supply chain extension

project transferred to fixed

assets in the period .Short-term borrowings 1453018300.01 4.33% 2608626099.82 8.53% -4.20% Mainly due to the decreaseof supply chain financing.Long-term borrowings 31638984.25 0.10% -0.10%

Mainly because the long-

term loans are re-classified

as non-recurrent liability

due within one year

2. Assets and liability measured by fair value

√Applicable □ Not applicable

1. Assets and liabilities at fair value

2019

Input applied in the measurement of fair value

Quoted

prices in

active

markets

Significant

observable

inputs

Significant

unobservable

inputs

Total

Level 1 Level 2 Level 3

Continuous measurement of

fair value

Receivable financing - 446342588.46 - 446342588.46

Other investment in equity

instruments - 116021000.00 - 116021000.00

Other non-current financial

assets - - 140000000.00 140000000.00

- 562363588.46 140000000.00 702363588.46

2018

Input applied in the measurement of fair value

Quoted

prices in

active

markets

Significant

observable

inputs

Significant

unobservable

inputs

Total

Level 1 Level 2 Level 3

Continuous measurement of

fair value

Receivable financing - 567775275.40 - 567775275.40

Other investment in equity

instruments

-

13685760.00

-

13685760.00

Other non-current financial

assets - 140000000.00 140000000.00

- 581461035.40 140000000.00 721461035.40

2. Assets and liabilities disclosed at fair value

2018

Input applied in the measurement of fair value

Quoted

prices in

active

markets

Significant

observable

inputs

Significant

unobservable

inputs

Total

Level 1 Level 2 Level 3

Long-term borrowings - 31638984.25 - 31638984.25

Other changes

Whether the measurement attribute for main assets of the Company have changed significantly in the reporting

period

□Yes √No

3. Assets right restriction till end of reporting period

Nil

V. Investment

1. Overall situation

√ Applicable □ Not applicable

During the reporting period the Company achieved the enterprises combined under the different control for the

follow three enterprises by cash acquisition of Sinopharm Accord (Guangzhou) Pharmaceutical Co. Ltd. (70%)

Guoda Drugstore (Chaoyang) Renai Pharmacy Co. Ltd. (51%) and Guoda Drugstore ( Pu’er) Song Mao Co. Ltd.

(60%) The new subsidiaries including Liaoning Guoda Pharmaceutical Co. Ltd. (100%) Sinopharm Holding

Guoda Drugstore Yongxingtang Chain (Chaoyang) Co. Ltd. (51%) Sinopharm Accord Medical Supply Chain

(Shenzhen) Co. Ltd. (60%) Sinopharm Holding Guozhi Pharmacy (Heyuan) Co. Ltd. (70%) and Sinopharm

Holding Guangyi Health Management (Zhanjiang) Co. Ltd. (60%) were established in the period including.

During the reporting period the fund contribution was completed for the Sinopharm Holding Guoda Drugstore

Bayabbaoer Co. Ltd. (80%) and Inner Mongolia Guoda Medicine Co. Ltd. (100%) and completed the capital

increased to Sinopharm Holding Guangzhou Medical Supply Chain Service Co. Ltd. (51%) after capital

increased the shareholding ratio remains unchanged.The Company has 30% equity participated in Shanghai Renbei Pharmacy Co. Ltd and 10% equity participated in

Guangdong Jianhui Construction Investment Management Co. Ltd in the reporting period; and completed the

capital increased (29%) to associated enterprise - Sinopharm Jienuo Medical Service Guangdong Co. Ltd after

capital increased the shareholding ratio remains unchanged.

For more investment details see the Note (vi) and Note (vii) in Financial Report

2. The major equity investment obtained in the reporting period

□ Applicable √ Not applicable

3. The major non-equity investment doing in the reporting period

□ Applicable √ Not applicable

4. Financial assets investment

(1) Securities investment

□ Applicable √ Not applicable

The company had no securities investment in the reporting period.

(2)Derivative investment

□ Applicable √ Not applicable

The company had no derivative investment in the reporting period.

5. Application of raised proceeds

√ Applicable □ Not applicable

(1) Overall application of raised proceeds

√ Applicable □ Not applicable

In 10 thousand Yuan

Year Way

Total raised

capitals

Total

raised

capital

used

in Period

Total

accumulative

raised

capitals used

Total

raised

capital

has

purpose

of uses

changed

in

Period

Cumulativ

e raised

capitals

has

purpose of

uses

changed in

total

Ratio of

cumulative

raised

capitals

has

purpose of

uses

changed

Total

accumulati

ve raised

capitals

unused

Usage of

the

retained

raised

capitals

and what

is expected

to invested

with those

capitals

Raised

capitals

idle for

more than

two years

2016

Non-

public

offering of

shares

27361.49 0 22469.34 0 0 0.00% 4892.15

Deposit

bank

0

Total -- 27361.49 0 22469.34 0 0 0.00% 4892.15 -- 0

Explanation on General usage of raised capital

More details of the use of raised capitals can be seen in Special report on the storage and the actual use of raised capitals of

Sinopharm Accord in 2019 disclosed on 22 April 2020

(2) Situation of committed project of raised proceeds

√ Applicable □ Not applicable

In 10 thousand Yuan

Committed investment

projects and capital

invested in areas with

fund raising out of the

plan

Projects

changed

or not

(includin

g

changed

partially)

Total

committed

investment of

raised capitals

Total investment

after adjustment

(1)

Amoun

t

investe

d in

report

period

Amount of

accumulated

investment till

the period-end

(2)

Investment

program

till the

period-end

(3)=(2)/(1)

The date

when the

project

reaches

its

intended

availabilit

y

Reali

zed

intere

sts in

Perio

d

Reach the

predicted

interest or

not

Project

feasibility

was

changed

hugely or

not

Committed investment projects

Cash consideration of

49% equity of

Guangdong Nanfang

Pharmaceutical

Foreign Trade Co. Ltd.

paid

N 26781.67 26781.67 0 21889.52 81.73% 0

Not

applicabl

e

N

Payment of issuance

cost

N 579.82 579.82 0 579.82 100.00% 0

Not

applicabl

e

N

Subtotal of committed

investment projects

-- 27361.49 27361.49 0 22469.34 -- -- 0 -- --

Capital invested in areas with fund raising out of the plan

Not applicable

Total -- 27361.49 27361.49 0 22469.34 -- -- 0 -- --

Situation about not

coming up to schemed

progress or expected

revenue and the

reason(In specific

project)

Not applicable

Explanation on major

changes on project

feasibility

Not applicable

Amount usage and

progress of using for

fund raising out of the

plan

Not applicable

Change of

implementation place

of investment project

of raised capitals

Not applicable

Regulation of

implementation ways

of investment project

of raised capitals

Not applicable

Preliminary investment

and replacement of

investment project of

raised capitals

Not applicable

Temporarily

supplement for the

current capitals with

idle raised capitals

Not applicable

Amount and reason for

surplus of raised

capitals when

implementing projects

Not applicable

Usage of the retained

raised fund and what is

expected to invested

with those fund

Deposited in a special account for raised funds purpose of the raised funds have not been changed

Issues or other

conditions found in use

of fund raised and

disclosure

Use of the fund raised are strictly execute in line with the tri-party supervision agreement for fund raised

and no related issues or other conditions been found

(3) The changed project of raised proceeds

□ Applicable √ Not applicable

The Company has no project of raised proceeds changed in the Period.VI. Sales of major assets and equity

1. Sales of major assets

□Applicable √ Not applicable

The Company has no sales of major assets in the Period.

2. Sales of major equity

□Applicable √ Not applicable

VII. Analysis of main holding company and stock-jointly companies

√ Applicable □ Not applicable

Subsidiary and joint-stock enterprise with an impact of more than 10% on the Company’s net profit

In RMB

Company

name

Type Main business

Register

capital

Total assets Net Assets

Operating

revenue

Operating

profit

Net profit

Sinopharm

Holding

Guangzho

u Co. Ltd.

Subsidia

ry

Sales of drugs medical

apparatus and

instruments freight

transportation storage

loading and unloading

glass wares cosmetics

and daily merchandise;

other business services

other professional

consultation various

goods agency and for

self-operation import &

export of technology

houses leasing

3553249

393.17

13903583691.99

4533117185.3

6

29348890454.

01

746082755.8

1

560749042.9

9

Sinopharm

Holding

Guoda

Drugstore

Co. Ltd.

Subsidia

ry

Chinese traditional

patent medicine

chemical preparations

antibiotics bio-chemical

medicine biological

medicine diagnosis

medicine biological

medicine with features

of treatment and

diagnosis shaped

packing food chemical

products and various

commodity and

technique hold by self-

support and agency as

well as import & export

of technology

1683333

333.00

11173757597.94

4993009760.2

8

12753608498.

70

422228850.7

4

311908115.1

6

Sinopharm

Holding

Guangxi

Co. Ltd.

Subsidia

ry

Retail and distribution

in respect of

pharmaceutical products

and medical apparatus

and instruments

wholesale and retails of

health products

5214079

65.79

4006269159.15

1108937908.7

3

6170121266.8

5

220472710.3

4

193137920.0

8

Particular about subsidiaries obtained or disposed in report period

√ Applicable □ Not applicable

Company Name

The method of obtaining

and handling subsidiaries

during the report period

The influence to the whole production and performance

Sinopharm Accord (Guangzhou)

Pharmaceutical Co. Ltd. Acquisition

Further consolidated the pharmaceutical distribution

business in Guangxi & Guangdong and without major

influence on performance of the Company

Guoda Drugstore (Chaoyang) Renai Pharmacy

Co. Ltd. Acquisition

Expand local medicine retail business layout and without

major influence on performance of the Company

Guoda Drugstore ( Pu’er) Song Mao Co. Ltd. Acquisition Expand local medicine retail business layout and withoutmajor influence on performance of the Company

Sinopharm Holding Guoda Drugstore

Yongxingtang Chain (Chaoyang) Co. Ltd. Establishment

Expand local medicine retail business layout and without

major influence on performance of the Company

Sinopharm Accord Medical Supply Chain

(Shenzhen) Co. Ltd. Establishment

Further consolidated the pharmaceutical distribution

business in Guangxi & Guangdong and without major

influence on performance of the Company

Sinopharm Holding Guozhi Pharmacy

(Heyuan) Co. Ltd. Establishment

Expand local medicine retail business layout and without

major influence on performance of the Company

Liaoning Guoda Pharmaceutical Co. Ltd. Establishment Expand local medicine retail business layout and withoutmajor influence on performance of the Company

Sinopharm Holding Guangyi Health

Management (Zhanjiang) Co. Ltd. Establishment

Further consolidated the pharmaceutical distribution

business in Guangxi & Guangdong and without major

influence on performance of the Company

Qinghuangdao Guoda Drugstore Chain Co.Ltd. Transfer No major influence.VIII. Structured vehicle controlled by the Company

□Applicable √ Not applicable

IX. Future Development Prospects

(i) Industry environment and its impact on the company

Under the goal of “Healthy China” the linkage of medicine medical care and medical insurance continues to

accelerate and a large number of interlocking major policies are changing and will change the entire medicine and

medical ecosystem. The overall growth rate of the industry is showing a slowing trend and the profit space is

constantly reduced and the shuffling is intensified. In addition the sudden novel coronavirus pneumonia

epidemic in early 2020 has a great impact on the domestic and foreign economies the slowdown in GDP growth

may have a short-term negative impact on medical expenditures resulting in increased downward pressure on

drug prices and the operation and capital chain of various enterprises face heavy pressure and test the industrial

structure has accelerated to rebuild. However the long-term development trend of the pharmaceuticals industry

has not changed policy and environmental changes have also driven the continuous improvement of the

concentration of the pharmaceutical circulation industry and the core competitive advantages of leading

enterprises have been continuously enhanced.The epidemic will promote national and social investment in disease prevention and control accelerate the

construction of national emergency supply system and comprehensive supervision system increase investment in

technological innovation and accelerate the popularization of LiveApp of digital technology and management.

Faced with the new environment at home and abroad changes in industrial policies and competition patterns of

new phase and new model the company will fully explore new profit growth points upgrade service capabilities

improve operating quality and actively respond to challenges and opportunities through continuous technological

innovation and exploration of new ideas.(ii) Company business plan

1. Strengthen the responsibility of central enterprises and strengthen development confidence

Firstly as the designated medical equipment reserve units of governments at all levels we continue to undertake

the procurement storage and distribution of epidemic emergency supplies actively obtain the distribution rights

of drugs in the epidemic diagnosis and treatment scheme and shortage of drugs and adopt various methods to

assist in the admission of medicines; summarize the experience of epidemic prevention and control and actively

participate in the construction of government and community public health systems;

Secondly pay attention to market changes quickly adjust the structure promote new business models achieve

wider coverage and deeper sinking of sales and channel resources prepare for graded diagnosis and treatment;

accelerate the promotion of online to offline integrated pharmaceutical new retail C-end B-end multi-channel

services.

2. Continue to promote the strategy of wholesale-retail integration improve the efficiency of supply chain

integration

Summarize the experience of the typical model of wholesale-retail integration establish a nationwide work

mechanism for wholesale-retail integration; comprehensively promote the “member store” and coordinate the

management of the brand of the member store; accelerate the transformation of retail direct sales customers of the

distribution companies and the wholesale-retail jointly expand local small and medium-sized chain pharmacies.

Collaborate procurement resources to form a “unified negotiation and separate procurement” distribution model of

upstream manufacturers + distribution + retail tripartite linkage promote logistics planning and information

construction and enhance the local market shares and competitiveness of retail formats.Integrate the national logistics resources plan the national logistics network and realize the national multi-

warehouse linkage; establish a national logistics center supply chain and logistics operation monitoring system

unify the standardized index system and improve the overall operation efficiency and service quality.

3. Make every effort to accelerate digital transformation and empower new business models with

technology

Build a digital management platform to empower management control and services including financial sharing

platform remuneration evaluation digital platform property rental management digital platform risk management

and control digital platform and security management digital platform etc.It is planned to establish an information technology center to simulate “corporate” operation and management

accelerate the digital transformation of business management and control and use new technologies to build a

hospital supply chain management information platform and a retail professional supply chain management

information platform to support the deepening of the online to offline supply chain of the business and improve

the responsiveness of providing solutions to different entities in the upstream and downstream of the supply chain.

4. Invest in mergers and acquisitions to seize opportunities and accelerate the nationwide deployment and

multi-field layout

Deepen the distribution network layout accelerate the completion of the layout of the blank areas in Guangdong

and Guangxi and carry out the secondary layout of regional and county markets and key regions; expand the

investment cooperation of innovative businesses around the upstream and downstream of the supply chain and

take value-added demand as the starting point; accelerate the expansion of the national retail network make full

use of the “direct sales + franchise + mergers and acquisitions” troika to improve the efficiency of store expansion

and speed up the opening of stores.

5. In distribution business segment promote the deployment of “one body and two wings” business and

accelerate the development of efficiencyOne body refers to the traditional business and two wings refer to “retail direct sales + retail diagnosis andtreatment” and “innovative service products”.

(1) Focus on market share and strengthen traditional business: follow the trend adjust product structure lay

out in advance and go all out to grab new products; on the basis of logistics and delivery services customize

according to customer needs and extend a series of services to form product service packages and solutions.

(2) Retail direct sales + retail diagnosis and treatment: accelerate the development of distribution and retail

business and strengthen terminal control. Carry out network construction around the top three hospitals prioritize

the layout of medical insurance and prescription circulation project intention cities build the patient-centric full-

chain service system develop remote diagnosis and treatment cooperation platforms and improve its own remote

review system; retail direct sales continue to develop resources and carry out terminal networks construction

increase the retail market share quickly copy and promote the membership store model and establish a new profit

model.

(3) Innovative service products: use integrated platforms to share resources and enrich service products around

the upstream and downstream of the supply chain; promote the rapid expansion of innovative businesses to

subsidiaries make key layout in each region comprehensive output promote scale development and income

increase and promote the profit contributions of innovative service products.

6. Guoda Drugstore: continue to accelerate network layout and accelerate innovation and development

(1) Continue to promote network expansion and sinking and accelerate the store layout through “directsales + franchise”: strengthen resource integration in the areas already entered and enhance regional market

influence. In terms of the expansion of direct stores it quickly seized the advantageous business districts around

the hospital and further settled the distribution points; encourage all subsidiaries to vigorously develop franchise

business; promote the construction of provincial-level platforms by classification and grading integrate new M &

A enterprises and control risks and play synergy effects.

(2) Actively promote the digital transformation of retail formats and promote the Internet + service model:

land CRM systems upgrade member management and assessment mechanisms and establish an innovative

member model based on big data; make full use of existing network products and store staff advantages and

establish its own e-commerce platform.

(3) Improve OEM brand planning and promote the development of private brand business: improve brand

planning and system construction establish product planning and evaluation system establish quality

management system improve marketing strategy system enhance product quality and service awareness and

enhance brand influence.

(4) Continue to integrate WBA resources: continue to strengthen comprehensive project cooperation in

information technology retail terminal operation category optimization private brand new store model etc.optimize retail service system and business model and improve management level.(iii) Possible risks

1.Risks of changes in industry policy

With the continuous deepening of new medical reform the pharmaceutical industry frequently releases policies

and the operating environment of the industry has major changes affected by the “4 + 7” centralized procurement

linkage and expansion the GPO in Guangdong and Guangxi provinces and the continuous expansion of the

national talks and other policies the drug price has continued to drop sharply and the company’s profit margin is

facing the risk of further compression. The supervision has been continuously upgraded the introduction of the

new Drug Administration Law and the implementation of the “four strictest” put forward higher requirements for

the compliance operation of pharmaceutical enterprises the pharmaceutical circulation industry faces increased

risks of uncertain compliance. The company will respond to the impacts of industry policies by transforming and

upgrading its business structure exploring new profit models and improving its risk management and control

capabilities.

2. Management risks of the continuous expansion of marketing network of Guoda Drugstore

Through the continuous opening of new stores and extended M & A the marketing network of Guoda Drugstore

has maintained a steady growth trend in recent years. The expansions of the sales areas and the increase in the

number of stores have put pressure on the store location distribution cash management marketing and human

resource management of Guoda Drugstore. The company will strengthen management and construction in the

commodity procurement logistics and delivery sales and other links and formulate corresponding management

measures in each link to ensure unified standards and management quality for store expansion and at the same

time strengthen integration and control of new merged stores.

3. Risks of intensifying market competition

As the country continues to introduce corresponding policies to encourage the integration of pharmaceutical retail

industry the major pharmaceutical retail enterprises in the industry have accelerated the pace of mergers and

acquisitions and continued to expand the marketing networks improve the logistics center constructions and

innovate the business and profit models so that the sales scale and comprehensive strength continuously

strengthen. At the same time with the upgrading of consumption and the gradual opening of market the foreign

pharmaceutical distribution enterprises with powerful strength are entering the domestic pharmaceutical

distribution markets through a variety of ways so the industry competition is further intensifying. In addition the

cross-border competitors with internet genes have quickly penetrated into the company’s traditional business

fields which brought certain challenges to the company’s business model.The company will continue to integrate existing resources deepen the strategic development initiatives with

wholesale-retail integration as the core and deeply give play to the synergies directly face the terminal patients

and consumers through complementary varieties capital collaboration supply chain collaboration and

international promotion at the same time it will realize brand globalization by capital operation and continuously

increase investment in scientific and technological innovation and actively respond to cross-border competition.

4. Risks of facing the horizontal competition

In the pharmaceutical retail field Sinopharm Holding’s affiliated distribution subsidiaries have also opened some

social retail pharmacies which constitute a certain degree of horizontal competition with the subordinate Guoda

Drugstore. Sinopharm Holding and SINOPHARM have pledged to take effective measures to resolve the possible

horizontal competition.

5. The risk of goodwill impairments

On 31 December 2019 the book value of goodwill in consolidate financial statement listed as 944079884.56

Yuan and distributed to the assets group of distribution business and retail business. In accordance with the

Accounting Standards for Business Enterprises the Company carried out annual impairment test for the goodwill.

Impairment of goodwill will released on the Note V.-17 and Note III-17 & 34 listed under the Financial Statement

X. Reception of research communication and interview

1. In the report period reception of research communication and interview

√Applicable □ Not applicable

Time Way Type Basic situation index of investigation

17 May 2019 Field research Institute Resolution of Annual General Meeting2018 (Notice No.: 2019-26)

13 November 2019 Field research Institute

Resolution of Third Extraordinary

Shareholders’ General Meeting of 2019

(Notice No.: 2019-45)

Reception (times) 2

Number of hospitality 65

Number of individual reception 5

Number of other reception 0

Disclosed released or let out major undisclosed

information No disclosed released or let out major undisclosed information

Section V. Important Events

I. Profit distribution plan of common stock and capitalizing of common reserves plan

Formulation Implementation and Adjustment of common stock Profit Distribution Policy Especially Cash Dividend policy during

the Reporting Period

√Applicable □ Not applicable

On 17 May 2019 the profit distribution plan for year of 2018 was deliberated and approved by annual general

meeting of 2018 that is taking total 428126983 shares as base distributed 4.00 yuan (tax included) for each 10

shares in cash. The announcement of 2018 interest distribution implementation was released on 11 June 2019 by

the Board (published in Securities Times China Securities Journal Hong Kong Commercial Daily and Juchao

Website http://www.cninfo.com.cn) the profit distribution plan for year of 2018 was completed and dividend for

public shares was distributed to the account of shareholders dated 19 June 2019 (A-share) and 21 June 2019 (B-

share) respectively.Special explanation on cash dividend policy

Satisfy regulations of General Meeting or requirement of Article of Association

(Y/N):

Y

Well-defined and clearly dividend standards and proportion (Y/N): Y

Completed relevant decision-making process and mechanism (Y/N): Y

Independent directors perform duties completely and play a proper role (Y/N): Y

Minority shareholders have opportunity to express opinions and demands totally

and their legal rights are fully protected (Y/N):

Y

Condition and procedures are compliance and transparent while the cash bonus

policy adjusted or changed (Y/N):

Not applicable

Profit distribution plan (pre-plan) of common stock and capitalizing of common reserves plan (pre-plan) in latest three years

(including the reporting period)

(1) Profit distribution plan for year of 2017

Taking the total 428126983 shares as base cash bonus of 3.00 yuan (before tax) each 10 shares will be

distributed to the whole shareholders. This profit distribution did not convert capital reserve into share capital.

(2) Profit distribution plan for year of 2018

Taking the total 428126983 shares as base cash bonus of 4.00 yuan (before tax) each 10 shares will be

distributed to the whole shareholders. This profit distribution did not convert capital reserve into share capital.

(3) Profit distribution plan for year of 2019

Taking the total 428126983 shares as base cash bonus of 6.00 yuan (before tax) each 10 shares will be

distributed to the whole shareholders. This profit distribution did not convert capital reserve into share capital.

Cash dividend of common stock in latest three years (including the reporting period)

In RMB

Year for bonus

shares

Amount for cash

bonus (tax

included)

Net profit

attributable to

common stock

shareholders of

listed company in

consolidation

statement for bonus

year

Ratio of

the cash

bonus in

net profit

attributabl

e to

common

stock

shareholde

rs of listed

company

contained

in

consolidati

on

statement

Proportion

for cash

bonus by

other

ways(i.e.share buy-

backs)

Ratio of the

cash bonus by

other ways in

net profit

attributable to

common stock

shareholders of

listed company

contained in

consolidation

statement

Total cash bonus

(including other

ways)

Ratio of the

total cash

bonus

(other ways

included) in

net profit

attributable

to common

stock

shareholder

s of listed

company

contained

in

consolidati

on

statement

2019 256876189.80 1271289183.01 20.21% 0.00 0.00% 256876189.80 20.21%

2018 171250793.20 1210742435.78 14.14% 0.00 0.00% 171250793.20 14.14%

2017 128438094.90 1057791930.67 12.14% 0.00 0.00% 128438094.90 12.14%

The Company gains profits in reporting period and the retained profit of common stock shareholders provided by parent company is

positive but no plan of cash dividend proposed of common stock

□ Applicable √ Not applicable

II. Profit distribution plan and capitalizing of common reserves plan for the Period

√Applicable □ Not applicable

Bonus shares for every 10-share (Share) 0

Dividends for every 10-share (RMB) (Tax included) 6

Increments per 10 shares (Share) 0

Equity base of the distribution plan (Share) 428126983

Amount of cash dividend(RMB) (Tax included) 256876189.80

Amount of cash dividend in other ways(i.e. share repurchase)(RMB) 0.00

Total cash dividend (including other way) (RMB) 256876189.80

Profit available for distribution (RMB) 4996184257.34

Proportion of total cash dividend (including other ways) to total profit

distribution

20.21%

Cash dividend situation

If the company’s development is at the growth stage with significant capital expenditures the minimum proportion of cash

dividend in the profit distribution should reach 40%.III. Implementation of commitment

1. Commitments completed in Period and those without completed till end of the Period from actual

controller shareholders related parties purchaser and companies

√Applicable □ Not applicable

Commitme

nts

Promise

Type of

commitme

nts

Content of commitments

Commitmen

t date

Commitme

nt term

Impleme

ntation

Commitme

nts for

share

merger

reform

Commitme

nts in report

of

acquisition

or equity

change

Sinopharm

Holding

Commitm

ent of

shareholde

rs

"As a large pharmaceutical commercial enterprise whose business

involves pharmaceutical wholesale and retail Sinopharm Holding

may overlap with the Company in geographical segmentation

during its future business development. To avoid the potential peer

competition brought by such geographical overlap Sinopharm

Holding undertakes that upon the transfer of shares of SinopharmHolding Guangzhou it held to Sinopharm Accord “1. it will notnewly-establish or broaden within Guangdong any business

operation that actually compete with that of Sinopharm Accord or

set up any new subsidiaries or subordinate enterprises who engage

in such business. 2. It will enter into business delineation with

Sinopharm Accord and Sinopharm Holding Guangzhou thereby

giving the three parties clear geographical areas to carry out

pharmaceutical wholesale and retail businesses so as to avoid

potential peer competition. Apart from above Sinopharm Holding

will no longer newly-establish any enterprise that may compete

with Sinopharm Accord in the production and R&D ofpharmaceutical products.”

21 June

2005

Long-term

effective

Normally

impleme

nting

Commitme

nts in assets

reorganizati

on

Sinopharm

Group Co.Ltd;China

National

Pharmaceutic

al Foreign

Trade

Corporation

Commitm

ent on

restricted

shares“Sinopharm Holding and Sinopharm Foreign Trade madecommitments in the Report about China National Accord

Medicines Corporation Ltd. Purchasing Assets and Raising

Supporting Funds and Related Transactions by Asset Sale Stock

Issuance and Cash Payment that the non-public offering of shares

of Sinopharm Accord obtained from this transaction shall not be

transferred within 36 months since the finish date of issuance and

shall be unlocked after 36 months since the date of listing. Within 6

months after the completion of this transaction if the closing price

of the stock of Sinopharm Accord is less than the issue price in

continuous 20 trading days or the closing price at the end of 6

months after the completion of this transaction is less than the issue

price the lockup period of the stock of Sinopharm Group and

Sinopharm Foreign Trade obtained from Sinopharm Accord by this

transaction will automatically prolong at least 6 months. The shares

derived from stock dividends allocation and capital reserve increase

transferring of Sinopharm Accord based on the non-public offering

of shares of Sinopharm Accord obtained by this transaction shouldalso abide by the above stock restricted arrangements.”

31 May

2016

36 months

Normally

impleme

nting

Ping’an

Assets

Management

Co. Ltd.

Commitm

ent on

restricted

shares

"Ping An Asset Management Co. Ltd. made commitments in the

Report about China National Accord Medicines Corporation Ltd.Purchasing Assets and Raising Supporting Funds and Related

Transactions by Asset Sale Stock Issuance and Cash Payment that

the non-public offering of shares of Sinopharm Accord obtained

from this transaction shall not be transferred within 36 months

since the finish date of issuance and shall be unlocked after 36

months since the date of listing. After placement completed the

shares of the listed company increased due to bonus shares and

turning to increase capital should pursuit to the restriction

arrangement the above mentioned.

31 May

2016

36 months

Normally

impleme

nting

Sinopharm

Group Co.Ltd

Commitm

ents on

horizontal

competitio

n relation

transaction

and capital

occupation“Sinopharm Holding made commitments in the Report about ChinaNational Accord Medicines Corporation Ltd. Purchasing Assets and

Raising Supporting Funds and Related Transactions by Asset Sale

Stock Issuance and Cash Payment that the Company shall be the

controlling shareholder of China National Accord Medicines

Corporation Ltd. (hereinafter referred to as Sinopharm Accord) up

to the issue date of this commitment letter after the completion ofthis major assets reorganization (hereinafter referred to as “thisreorganization”) Sinopharm Accord shall no longer hold shares or

operate relevant businesses of pharmaceutical industry the main

business will become the national pharmaceutical retail and

pharmaceutical distribution business in Guangdong and Guangxi.In order to support the business development of Sinopharm Accord

and avoid horizontal competition with Sinopharm Accord and its

controlling enterprises the Company made following irrevocable

commitments and promises:1 after the completion of this

reorganization as for the social retail drugstore assets except for

Sinopharm Holding Guoda Drugstore Co. Ltd. and its subsidiaries

and branches owned or controlled by the Company the Company

promised to take appropriate measures to solve the horizontal

competition problem in the pharmaceutical retail business between

the Company and Sinopharm Accord within 5 years since the

completion date of this reorganization. 2. The Company's way of

resolving horizontal competition problems includes and is not

limited to purchasing the social retail drugstore assets subordinated

to the Company by Sinopharm Accord taking the entrusted

operation leasing or contracting operation by Sinopharm Accord

and its controlling enterprises in accordance with the methods

permitted to national laws to hold or control the social retail

drugstore assets or transferring the controlling stake of the social

retail drugstore assets by the Company. 3. If the shareholders of the

social retail drugstore assets (hereinafter referred to as "the third

party") of the Company or the enterprises controlled by the

Company have or are going to perform the preemptive rights under

the same conditions in accordance with relevant laws and

corresponding Articles of Association then the above commitment

will not be applicable but in this case the Company should try its

utmost to urge the third party to waive its preemptive rights. If the

Company is unable to urge the third party to give up the preemptive

rights the Company will urge the enterprises controlled by the

Company to transfer the social retail drugstore assets to the third

party to solve the horizontal competition problem. 4. The

pharmaceutical distribution assets currently owned or controlled by

the Company are distributed outside Guangdong and Guangxi

regions there is no horizontal competition with Sinopharm Accord

the Company will not engage in the same or similar operation

businesses to Sinopharm Accord in Guangdong and Guangxi in the

future if the Company and its holding enterprises obtain the new

business opportunities constituting substantial horizontal

competition (hereinafter referred to as competitive new business)

28 Dec.

2016

Long-term

effective

Normally

impleme

nting

SINOPHAR

M

Commitm

ents on

horizontal

competitio

n relation

transaction

and capital

occupation“SINOPHARM made commitments in the Report about ChinaNational Accord Medicines Corporation Ltd. Purchasing Assets and

Raising Supporting Funds and Related Transactions by Asset Sale

Stock Issuance and Cash Payment that the Company shall be the

actual controller of China National Accord Medicines Corporation

Ltd. (hereinafter referred to as Sinopharm Accord) up to the issue

date of this commitment letter after the completion of this majorassets reorganization (hereinafter referred to as “thisreorganization”) Sinopharm Accord shall no longer hold shares or

operate relevant businesses of pharmaceutical industry the main

business will become the national pharmaceutical retail and

pharmaceutical distribution business in Guangdong and Guangxi.In order to support the business development of Sinopharm Accord

and avoid horizontal competition with Sinopharm Accord and its

controlling enterprises the Company made following irrevocable

commitments and promises:1 after the completion of this

reorganization as for the social retail drugstore assets except for

Sinopharm Group Guoda Drugstore Co. Ltd. and its subsidiaries

and branches owned or controlled by the Company the Company

promised to take appropriate measures to solve the horizontal

competition problem in the pharmaceutical retail business between

the Company and Sinopharm Accord within 5 years since the

completion date of this reorganization. 2. The Company's way of

resolving horizontal competition problems includes and is not

limited to purchasing the social retail drugstore assets subordinated

to the Company by Sinopharm Accord taking the entrusted

operation leasing or contracting operation by Sinopharm Accord

and its controlling enterprises in accordance with the methods

permitted to national laws to hold or control the social retail

drugstore assets or transferring the controlling stake of the social

retail drugstore assets by the Company. 3. If the shareholders of the

social retail drugstore assets (hereinafter referred to as "the third

party") of the Company or the enterprises controlled by the

Company have or are going to perform the preemptive rights under

the same conditions in accordance with relevant laws and

corresponding Articles of Association then the above commitment

will not be applicable but in this case the Company should try its

utmost to urge the third party to waive its preemptive rights. If the

Company is unable to urge the third party to give up the preemptive

rights the Company will urge the enterprises controlled by the

Company to transfer the social retail drugstore assets to the third

party to solve the horizontal competition problem. 4. The

pharmaceutical distribution assets currently owned or controlled by

the Company are distributed outside Guangdong and Guangxi

regions there is no horizontal competition with Sinopharm Accord

the Company will not engage in the same or similar operation

businesses to Sinopharm Accord in Guangdong and Guangxi in the

future if the Company and its holding enterprises obtain the new

business opportunities constituting substantial horizontal

competition (hereinafter referred to as competitive new business)

28 Dec.

2016

Long-term

effective

Normally

impleme

nting

Commitme

nts make in

initial

public

offering or

re-

financing

Sinopharm

Holding

Commitm

ent of

shareholde

rs

Sinopharm Holding made commitments in the Commitment Letter

About Sinopharm Group Co. Ltd. to Avoid Horizontal

Competition: “First the Company and the Company’s wholly-owned controlling or other enterprises with actual control (in

addition to Sinopharm Accord and its controlling enterprises

hereinafter the same) don’t have businesses and operations

constituting the substantial horizontal competition to Sinopharm

Accord and its controlling enterprises. Second the Company and

the Company’s wholly-owned controlling or other enterprises with

actual control shall not engage participate in or do businesses and

activities in Guangdong and Guangxi which constitute substantial

competition to Sinopharm Accord and pharmaceutical business

services. Third the Company and the Company’s wholly-owned

controlling or other enterprises with actual control shall not engage

participate in or do businesses and activities which constitute

substantial competition to Sinopharm Accord and pharmaceutical

industry businesses. Fourth the Company shall not take advantage

of the control to Sinopharm Accord to damage the legitimate rights

and interests of Sinopharm Accord and other shareholders

(especially medium and small shareholders). This commitment

letter takes effect from the issue date and remains in effect for the

entire period when the Company acts as the controlling shareholder

or its related party of Sinopharm Accord. Within the effective

period of the commitment if the Company violates this

commitment and causes a loss to Sinopharm Accord the Companywill timely make full compensation for Sinopharm Accord.”

5 Sept.

2013

Long-term

effective

Controlli

ng

sharehol

der is

impleme

nt in real

earnest

Sinophar

m

Accord

will

actively

urged the

controlli

ng

sharehol

der and

actual

controlle

r to

fulfill

commitm

ents

Sinopharm

Holding

Commitm

ent of

shareholde

rs

Sinopharm Holding made commitments in the Commitment Letter

About Sinopharm Group Co. Ltd. to Regulate the Related

Transactions with China National Accord Medicines CorporationLtd.: “First when the Company is controlling Sinopharm Accordthe Company and the companies and enterprises directly and

indirectly controlled by the Company (“related party” for short)

will strictly regulate the related transactions with Sinopharm

Accord and its controlling enterprises. Second for the related

transactions that can not be avoided nor have reasonable reasons to

occur the Company and related party shall sign normative related

transaction agreement in accordance with relevant laws with

Sinopharm Accord. Sinopharm Accord implements the approval

procedures and fulfills the information disclosure obligations of the

related transactions according to relevant laws regulations rules

other normative documents and the constitutions of Sinopharm

Accord. Third for the related transactions that can not be avoided

or have reasonable reasons to occur the Company and related party

shall abide by the open fair and just market principles and confirm

the price of related transactions in accordance with the price that

the independent third party without association sets for the same

and similar transactions and ensure the fairness of the price of the

related transactions. Fourth when the board of directors and the

general meeting of stockholders of Sinopharm Accord vote on the

related transactions involving the Company and other enterprises

controlled by the Company the Company shall fulfill the necessary

obligations that the associated directors and associated shareholders

abstain from voting in accordance with the relevant provisions and

abide by the legal procedures for approving related transactions and

the information disclosure obligations. Fifth the Company

guarantees to participate in the shareholders' general meeting

equally exercise the corresponding rights and take the

corresponding obligations in accordance with the constitutions of

SinopharmAccord not to take advantage of controlling shareholder

status to seek improper benefits or utilize related transactions to

illegally transfer the funds and profits of Sinopharm Accord and

not to damage the legitimate rights and interests of other

shareholders (especially the medium and small shareholders) of

Sinopharm Accord. Sixth this commitment letter comes into force

from the issue date and remains in effect for the entire period when

the Company acts as the controlling shareholder or its related party

of Sinopharm Accord. Within the effective period of the

commitment if the Company violates this commitment and causes

a loss to Sinopharm Accord the Company will timely make fullcompensation for Sinopharm Accord.”

5 Sept.

2013

Long-term

effective

Controlli

ng

sharehol

der is

impleme

nt in real

earnest

Sinophar

m

Accord

will

actively

urged the

controlli

ng

sharehol

der and

actual

controlle

r to

fulfill

commitm

ents

SINOPHAR

M

Commitm

ent of

actual

controller

"SINOPHARM made commitments in the Commitment Letter

About China National Pharmaceutical Group Corporation to Avoid

Horizontal Competition with China National Accord Medicines

Corporation Ltd.: “First in the next five years Sinopharm plans totake appropriate measures (including assets replacement or

acquisition equity reorganization etc.) to resolve the horizontal

competition between Sinopharm Weiqida and Sinopharm Accord.Second in addition to the past matters and matters disclosed in this

commitment letter the Company and the Company’s wholly-

owned controlling or other enterprises with actual control rights

(except for Sinopharm Accord and its controlling enterprises the

same as below) shall not directly engaged in participate in or do

the businesses an activities constituting actual competition to the

production and operation of Sinopharm Accord in China. The

relevant commitments about avoiding horizontal competition that

the Company made in the past still remain in effect. Third the

Company shall not take advantage of the control relationship to

Sinopharm Accord to damage the legitimate rights and interests of

Sinopharm Accord and its shareholders (especially the medium and

small shareholders). Fourth this commitment letter comes into

force from the issue date and remains in effect for the entire period

when the Company acts as the controlling shareholder or its relatedparty of Sinopharm Accord.”

16 Oct.

2013

Long-term

effective

Actual

Controlle

r is

impleme

nt in real

earnest

Sinophar

m

Accord

will

actively

urged the

controlli

ng

sharehol

der and

actual

controlle

r to

fulfill

commitm

ents

SINOPHAR

M

Commitm

ent of

actual

controller

"SINOPHARM made commitments in the Commitment Letter

About Sinopharm Group Co. Ltd. to Regulate the Related

Transactions with China National Accord Medicines CorporationLtd.: “First when the Company is controlling Sinopharm Accordthe Company and the companies and enterprises directly and

indirectly controlled by the Company (“related party” for short)

will strictly regulate the related transactions with Sinopharm

Accord and its controlling enterprises. Second for the related

transactions that can not be avoided or have reasonable reasons to

occur the Company and related party shall sign normative related

transaction agreement in accordance with relevant laws with

Sinopharm Accord. Sinopharm Accord implements the approval

procedures and fulfills the information disclosure obligations of the

related transactions according to relevant laws regulations rules

other normative documents and the constitutions of Sinopharm

Accord. Third for the related transactions that can not be avoided

or have reasonable reasons to occur the Company and related party

shall abide by the open fair and just market principles and confirm

the price of related transactions in accordance with the price that

the independent third party without association sets for the same

and similar transactions and ensure the fairness of the price of the

related transactions. Fourth when the board of directors and the

general meeting of stockholders of Sinopharm Accord vote on the

related transactions involving the Company and other enterprises

controlled by the Company the Company shall fulfill the necessary

obligations that the associated directors and associated shareholders

abstain from voting in accordance with the relevant provisions and

abide by the legal procedures for approving related transactions and

the information disclosure obligations. Fifth the Company

guarantees not to take advantage of actual controller status to seek

improper benefits or utilize related transactions to illegally transfer

the funds and profits of Sinopharm Accord and not to damage the

legitimate rights and interests of other shareholders (especially the

medium and small shareholders) of Sinopharm Accord. Sixth this

commitment letter comes into force from the issue date and

remains in effect for the entire period when the Company acts as

the actual controller or its related party of SinopharmAccord.

22 Sept.

2013

Long-term

effective

Actual

Controlle

r is

impleme

nt in real

earnest

Sinophar

m

Accord

will

actively

urged the

controlli

ng

sharehol

der and

actual

controlle

r to

fulfill

commitm

ents

Completed

on time

(Y/N)

Y

2. Concerning assets or project of the Company which has profit forecast and reporting period still in

forecasting period explain reasons of reaching the original profit forecast

□ Applicable √ Not applicable

IV. Non-operational fund occupation from controlling shareholders and its related party

□Applicable √ Not applicable

No non-operational fund occupation from controlling shareholders and its related party in period.

V. Explanation from Board of Directors Supervisory Committee and Independent Directors

(if applicable) for “Qualified Opinion” that issued by CPA

□Applicable √ Not applicable

VI. Particulars about the changes in aspect of accounting policy estimates and calculation

method compared with the financial report of last year

√Applicable □Not applicable

(i)New lease standard:

In 2018 the Ministry of Finance issued the revised Accounting Standards for Business Enterprises No. 21 -

Leases (referred to as “new lease standard”). The new lease standards adopt a single model similar to the current

accounting treatment of financial leases requiring the lessee to affirm the right-of-use assets and lease liabilities

of all leases other than short-term leases and low-value asset leases and respectively affirm the depreciation and

interest expenses. Since January 1 2019 the Group has carried out accounting treatment in accordance with the

revised new lease standards for the contracts existing before the first execution date it chooses not to re-evaluate

whether they are leases or include leases and according to the connection regulations no adjustments are made to

the information in the comparable period and the difference between the new lease standards on the first

execution date and the current lease standards are adjusted retroactively for retained earnings at the beginning of

2019.

(ii) Changes in the presentation mode of financial statementsIn accordance with the requirements of the “Notice on the Revision and Issuance of the Format of General

Enterprise Financial Statements for 2019” (CK [2019] No. 6) and the “Notice on the Revision and Issuance of the

Format of Consolidated Financial Statements (2019 Version)” (CK [2019] No. 16) in the balance sheet the “billsreceivable and accounts receivable” items are split into “bills receivable” and “accounts receivable” and the “billspayable and accounts payable” items are split into “bills payable” and “accounts payable” bills and receivablesthat were originally included in “other current assets” item and measured at fair value and whose changes are

included in other comprehensive income are separately listed in the “receivables financing” item the “interestreceivables” in the “other receivables” item is changed to only reflect the interests of relevant financialinstruments that have been due and should be received but not yet received on the balance sheet date (interests of

financial instruments accrued based on the effectively interest rate method are included in the book balance of the

corresponding financial instruments) the “interest payable” in the “other payables” item is changed to only reflect

the interests of relevant financial instruments that have been due and should be paid but not yet paid on the

balance sheet date (interests of financial instruments accrued based on the effectively interest rate method areincluded in the book balance of the corresponding financial instruments). The “derecognized gains of financialassets measured at amortized cost” item in the “investment income” item reflects the gains and losses arising fromderecognition of financial assets measured at amortized cost due to transfers and other circumstances. The Group

has retrospectively adjusted the comparative data accordingly. This accounting policy change has no impact on

the merger and the company’s net profit and owner’s equity.

Found more on 35. Change of accounting policy and accounting estimate carry in Note III. Important accounting

policy and estimate

VII. Major accounting errors within reporting period that needs retrospective restatement

□Applicable √ Not applicable

No major accounting errors within reporting period that needs retrospective restatement for the Company in the period.VIII. Compare with last year’s financial report; explain changes in consolidation statement’s

scope

√Applicable □ Not applicable

Details of changes in consolidation statement’s scope can be seen in Note VI of Financial Report.

IX. Appointment and non-reappointment (dismissal) of CPA

Accounting firm appointed

Name of domestic accounting firm Ernst & Young CPA (Special General partnership)

Remuneration for domestic accounting firm (in 10 thousand

Yuan)

396.81

Continuous life of auditing service for domestic accounting firm 4

Name of domestic CPA Li Jianguang Li Yuanfen

Continuous life of CPA from the domestic accounting firm for

auditing service

4

Name of foreign accounting firm (if applicable) N/A

Continuous life of auditing service for foreign accounting firm (if

applicable)

N/A

Name of foreign CPA (if applicable) N/A

Continuous life of CPA from the foreign accounting firm for

auditing service (if applicable)

N/A

Re-appointed accounting firms in this period

□ Yes √ No

Appointment of internal control auditing accounting firm financial consultant or sponsor

√Applicable □ Not applicable

In the Period the Company engaged Ernst & Young CPA (Special General partnership) as the audit body for internal control and

auditing charge for internal control amounting as 871900 yuan.X. Particular about suspended and delisting after annual report disclosed

□Applicable √ Not applicable

XI. Bankruptcy reorganization

□Applicable √ Not applicable

No bankruptcy reorganization for the Company in reporting period.XII. Significant litigations and arbitration of the Company

□Applicable √ Not applicable

No significant litigations and arbitration occurred in the reporting period.XIII. Penalty and rectification

□Applicable √ Not applicable

No penalty and rectification for the Company in reporting period.XIV. Integrity of the company and its controlling shareholders and actual controllers

√Applicable □Not applicable

In reporting period controlling shareholder and actual controller of the Company has a sound integrity and there are no cases of

failure to implement the effective judgement of the court and the large amount of debt due and unliquidated

XV. Implementation of the company’s stock incentive plan employee stock ownership plan or

other employee incentives

□Applicable √ Not applicable

During the reporting period the company has no stock incentive plan employee stock ownership plan or other employee incentives

that have not been implemented.XVI. Major related transaction

1. Related transaction with routine operation concerned

√ Applicable □ Not applicable

(1) Related transaction with routine operation concerned can be found in “X. Related party and related transaction” carried in Section

XII. Financial Report;

(2) The related transactions are settled in cash and by notes according to the Proposal of Expected Routine Related Transactions

with Subordinate Enterprise for Year of 2019 deliberated and approved by 10th session of 8th BOD held on 23 April 2019 and AGM

of 2018 held on 17 May 2019 as well as the Notice on Expected Routine Related Transaction for Year of 2019 (Notice No.: 2019-18)

released on 25 April 2019 the related sales takes 68.47% in total expected amount for the whole year and related procurement takes

82.33% in total expected amount for the whole year.

2. Related transactions by assets acquisition and sold

□Applicable √ Not applicable

3. Main related transactions of mutual investment outside

□Applicable √ Not applicable

No main related transactions of mutual investment outside for the Company in reporting period.

4. Contact of related credit and debt

√Applicable □ Not applicable

Whether the Company had non-operating contact of related credit and debt

□Yes √ No

The Company had no non-operating contact of related credit and debt in the reporting period.

5. Other related transactions

√ Applicable □ Not applicable

In reporting period the Proposal on 100% Equity of Shanghai Dingqun Enterprise Management Consulting Co.Ltd. Acquisition by Sinopharm Holding Guoda Drugstore Co. Ltd and Proposal on 75% Equity of Pudong New

Area of Shanghai Pharmaceutical Medicine Ltd. Acquisition by Sinopharm Holding Guoda Drugstore Co. Ltd

were deliberated and approved by 13th session of 8th BOD and Third Extraordinary Shareholders’ General

Meeting of 2019. The above mentioned target enterprises completed the delivery in January 2020 and has no

impact on the results of the Company for 2019 therefore.Relevant queries on the website of interim notices of major related party transaction disclosed

Interim Notice Date for disclosed Website for notice released

Sinopharm Accord: 75% Equity of Pudong

New Area of Shanghai Pharmaceutical

Medicine Ltd. Acquisition by Sinopharm

Holding Guoda Drugstore Co. Ltd-controlling

subsidiary of the Company and Related Party

Transaction

29 October 2019 Juchao Website http://www.cninfo.com.cn

Sinopharm Accord: 100% Equity of Shanghai

Dingqun Enterprise Management Consulting

Co. Ltd. Acquisition by Sinopharm Holding

Guoda Drugstore Co. Ltd-controlling

subsidiary of the Company and Related Party

Transaction of the 85% Equity Acquisition of

Sinopharm Holding Tianhe Jiling Medical

Co. Ltd.

29 October 2019 Juchao Website http://www.cninfo.com.cn

XVII. Significant contract and implementations

1. Trusteeship contract and leasing

(1) Trusteeship

□Applicable √ Not applicable

The Company had no trusteeship in the reporting period.

(2) Contract

□Applicable √ Not applicable

No contract for the Company in reporting period.

(3) Leasing

□Applicable √ Not applicable

No leasing for the Company in reporting period.

2. Major guarantees

√Applicable □ Not applicable

(1) Guarantees

In 10 thousand Yuan

Particulars about the external guarantee of the Company and the subsidiaries (Barring the guarantee for subsidiaries)

Name of the Company

guaranteed

Related

Announce

ment

disclosure

date

Guarantee

limit

Actual date of

happening

Actual

guarantee

limit

Guarantee

type

Guarantee

term

Implemen

ted (Y/N)

Guarante

e for

related

party

(Y/N)

Guarantee between the Company and the subsidiaries

Name of the Company

guaranteed

Related

Announce

ment

disclosure

date

Guarantee

limit

Actual date of

happening

Actual

guarantee

limit

Guarantee

type

Guarantee

term

Implemen

ted (Y/N)

Guarante

e for

related

party

(Y/N)

Sinopharm Holding

Guangzhou Co. Ltd.

24 Aug.

2019

35000 24 Sept. 2019 18642.78

Joint liability

assurance

2019.9.24-

2020.8.21

N Y

Sinopharm Holding

Guangzhou Co. Ltd.

24 Aug.

2019

60000 25 Dec. 2019 54390.28

Joint liability

assurance

2019.12.25-

2020.12.24

N Y

Sinopharm Holding

Guangzhou Co. Ltd.

24 Aug.

2019

60000 29 Nov. 2019 51367.85

Joint liability

assurance

2019.11.29-

2020.11.27

N Y

Sinopharm Holding

Guangzhou Co. Ltd.

19 Sept.

2019

25000 18 Jan. 2019 4910.64

Joint liability

assurance

2019.1.18-

2020.1.17

N Y

Sinopharm Holding

Guangzhou Co. Ltd.

25 Apr.

2019

15000 7 Aug. 2019

Joint liability

assurance

2019.8.7-

2020.8.6

N Y

Sinopharm Holding

Guangzhou Co. Ltd.

25 Apr.

2019

70000 20 May 2019 52011.39

Joint liability

assurance

2019.5.20-

2020.5.19

N Y

Sinopharm Holding

Guangzhou Co. Ltd.

19 Sept.

2019

5000 25 Jan. 2019

Joint liability

assurance

2019.1.25-

2020.1.24

N Y

Sinopharm Holding

Guangzhou Co. Ltd.

24 Aug.

2019

35000 15 Oct. 2019

Joint liability

assurance

2019.10.15-

2020.10.14

N Y

Sinopharm Holding

Guangzhou Co. Ltd.

25 Apr.

2019

52000 26 Jul. 2019 30200.11

Joint liability

assurance

2019.7.26-

2020.7.25

N Y

Sinopharm Holding

Guangzhou Co. Ltd.

25 Apr.

2019

10000 13 Aug. 2019 1705.82

Joint liability

assurance

2019.8.13-

2020.8.12

N Y

Sinopharm Holding

Guangzhou Co. Ltd.

25 Apr.

2019

60000 6 Aug. 2019

Joint liability

assurance

2019.8.6-

2020.8.5

N Y

Sinopharm Holding

Guangdong Yuexing

Co. Ltd.

24 Aug.

2019

5000 24 Sept. 2019 1723.37

Joint liability

assurance

2019.9.24-

2020.8.21

N Y

Sinopharm Holding

Guangdong Yuexing

Co. Ltd.

24 Aug.

2019

15000 15 Oct. 2019 8118.82

Joint liability

assurance

2019.10.15-

2020.10.14

N Y

Sinopharm Holding

Guangdong Yuexing

Co. Ltd.

24 Aug.

2019

10000 25 Dec. 2019 4320.53

Joint liability

assurance

2019.12.25-

2020.12.24

N Y

Sinopharm Holding

Guangdong Yuexing

Co. Ltd.

25 Apr.

2019

5000 6 Aug. 2019

Joint liability

assurance

2019.8.6-

2020.8.5

N Y

Sinopharm Holding

Guangdong Yuexing

Co. Ltd.

24 Aug.

2019

5000 26 Sept. 2019

Joint liability

assurance

2019.9.26-

2020.9.25

N Y

Sinopharm Holding

Guangdong Hengxing

Co. Ltd.

24 Aug.

2019

10000 28 Nov. 2019 4648.94

Joint liability

assurance

2019.11.28-

2020.10.18

N Y

Sinopharm Holding

Guangdong Hengxing

Co. Ltd.

24 Aug.

2019

3000 26 Nov. 2019

Joint liability

assurance

2019.11.26-

2020.11.25

N Y

Sinopharm Holding

Foshan Co. Ltd.

24 Aug.

2019

3000 15 Oct. 2019

Joint liability

assurance

2019.10.15-

2020.10.14

N Y

Sinopharm Holding

Foshan Co. Ltd.

24 Aug.

2019

2500 7 Nov. 2019 138.97

Joint liability

assurance

2019.11.7-

2020.11.6

N Y

Sinopharm Holding

Foshan Co. Ltd.

25 Apr.

2019

3000 31 May 2019 68.49

Joint liability

assurance

2019.5.31-

2020.5.30

N Y

Sinopharm Holding

Zhaoqing Co. Ltd.

24 Aug.

2019

2000 15 Oct. 2019 1943.64

Joint liability

assurance

2019.10.15-

2020.10.14

N Y

Sinopharm Holding

Zhaoqing Co. Ltd.

24 Aug.

2019

2000 23 Dec. 2019 1998.98

Joint liability

assurance

2019.12.23-

2020.12.22

N Y

Guangdong Nanfang

Pharmaceutical

Foreign Trade Co.

Ltd.

25 Apr.

2019

15000 1 Jul. 2019 11123.22

Joint liability

assurance

2019.7.1-

2020.6.30

N Y

Guangdong Nanfang

Pharmaceutical

Foreign Trade Co.

Ltd.

24 Aug.

2019

10000 24 Sept. 2019 6331.19

Joint liability

assurance

2019.9.24-

2020.9.23

N Y

Guangdong Nanfang

Pharmaceutical

Foreign Trade Co.

Ltd.

24 Aug.

2019

20000 8 Nov. 2019 20000

Joint liability

assurance

2019.11.8-

2020.9.30

N Y

Guangdong Nanfang

Pharmaceutical

Foreign Trade Co.

Ltd.

24 Aug.

2019

10000 30 Aug. 2019 1597.25

Joint liability

assurance

2019.8.30-

2020.8.13

N Y

Guangdong Nanfang

Pharmaceutical

Foreign Trade Co.

Ltd.

24 Aug.

2019

3000 15 Oct. 2019

Joint liability

assurance

2019.10.15-

2020.10.14

N Y

Guangdong Nanfang

Pharmaceutical

Foreign Trade Co.

Ltd.

24 Aug.

2019

10000 8 Nov. 2019 1

Joint liability

assurance

2019.11.8-

2020.10.22

N Y

Foshan Nanhai

Medicine Co. Ltd.

24 Aug.

2019

5000 15 Oct. 2019 295.31

Joint liability

assurance

2019.10.15-

2020.10.14

N Y

Foshan Nanhai

Medicine Co. Ltd.

25 Apr.

2019

10000 31 May 2019 1843.58

Joint liability

assurance

2019.5.31-

2020.5.30

N Y

Foshan Nanhai

Medicine Co. Ltd.

24 Aug.

2019

7000 7 Nov. 2019 1913.94

Joint liability

assurance

2019.11.7-

2020.11.6

N Y

Foshan Nanhai

Uptodate & Special

Medicines Co. Ltd.

24 Aug.

2019

6000 15 Oct. 2019

Joint liability

assurance

2019.10.15-

2020.10.14

N Y

Foshan Nanhai

Uptodate & Special

Medicines Co. Ltd.

25 Apr.

2019

10000 31 May 2019 5262.56

Joint liability

assurance

2019.5.31-

2020.5.30

N Y

Foshan Nanhai

Uptodate & Special

Medicines Co. Ltd.

24 Aug.

2019

7000 7 Nov. 2019 1789.35

Joint liability

assurance

2019.11.7-

2020.11.6

N Y

Foshan Nanhai

Uptodate & Special

Medicines Co. Ltd.

24 Aug.

2019

3000 20 Nov. 2019 847.95

Joint liability

assurance

2019.11.20-

2020.11.19

N Y

Sinopharm Holding

(Jiangmen) Co. Ltd.

24 Aug.

2019

1000 15 Oct. 2019 492.66

Joint liability

assurance

2019.10.15-

2020.10.14

N Y

Sinopharm Holding

(Jiangmen) Co. Ltd.

24 Aug.

2019

1000 13 Dec. 2019 999.52

Joint liability

assurance

2019.12.13-

2020.12.12

N Y

Sinopharm Holding

Meizhou Co. Ltd.

24 Aug.

2019

1000 15 Oct. 2019 1000

Joint liability

assurance

2019.10.15-

2020.10.14

N Y

Sinopharm Holding

Meizhou Co. Ltd.

25 Apr.

2019

2000 29 Jul. 2019 2000

Joint liability

assurance

2019.7.29-

2020.7.28

N Y

Sinopharm Holding

Zhongshan Co. Ltd.

24 Aug.

2019

1000 15 Oct. 2019 927

Joint liability

assurance

2019.10.15-

2020.10.14

N Y

Sinopharm Holding

Zhongshan Co. Ltd.

24 Aug.

2019

2000 24 Sept. 2019 627.44

Joint liability

assurance

2019.9.24-

2020.9.23

N Y

Sinopharm Holding

Shantou Co. Ltd.

24 Aug.

2019

500 15 Oct. 2019 500

Joint liability

assurance

2019.10.15-

2020.10.14

N Y

Sinopharm Holding

Shantou Co. Ltd.

24 Aug.

2019

1000 23 Dec. 2019 1000

Joint liability

assurance

2019.12.23-

2020.12.22

N Y

Sinopharm Holding

Huizhou Co. Ltd.

24 Aug.

2019

1000 15 Oct. 2019 501.51

Joint liability

assurance

2019.10.15-

2020.10.14

N Y

Sinopharm Holding

Huizhou Co. Ltd.

24 Aug.

2019

1000 18 Sept. 2019

Joint liability

assurance

2019.9.18-

2020.9.17

N Y

Sinopharm Holding

Huizhou Co. Ltd.

24 Aug.

2019

3000 10 Dec. 2019 505.34

Joint liability

assurance

2019.12.10-

2020.12.9

N Y

Sinopharm Holding

Zhanjiang Co. Ltd.

24 Aug.

2019

1000 15 Oct. 2019 1000

Joint liability

assurance

2019.10.15-

2020.10.14

N Y

Sinopharm Holding

Zhuhai Co. Ltd.

24 Aug.

2019

1000 15 Oct. 2019 993.92

Joint liability

assurance

2019.10.15-

2020.10.14

N Y

Sinopharm Holding

Zhuhai Co. Ltd.

24 Aug.

2019

2000 24 Sept. 2019 1830.16

Joint liability

assurance

2019.9.24-

2020.9.23

N Y

Sinopharm Holding

Dongguan Co. Ltd.

24 Aug.

2019

2000 15 Oct. 2019 2000

Joint liability

assurance

2019.10.15-

2020.10.14

N Y

Sinopharm Holding

Dongguan Co. Ltd.

25 Apr.

2019

2000 6 Aug. 2019

Joint liability

assurance

2019.8.6-

2020.8.5

N Y

Sinopharm Holding

Dongguan Co. Ltd.

24 Aug.

2019

3000 6 Sept. 2019 2000

Joint liability

assurance

2019.9.6-

2020.9.5

N Y

Guangdong Dongfang

New Special Medicine

Co. Ltd

19 Sept.

2019

5000 10 Jan. 2019 4997.89

Joint liability

assurance

2019.1.10-

2020.1.9

N Y

Guangdong Dongfang

New Special Medicine

Co. Ltd

25 Apr.

2019

2000 14 Jun. 2019

Joint liability

assurance

2019.6.14-

2020.6.13

N Y

Guangdong Dongfang

New Special Medicine

Co. Ltd

25 Apr.

2019

5000 31 May 2019 2705.64

Joint liability

assurance

2019.5.31-

2020.5.30

N Y

Guangdong Dongfang

New Special Medicine

Co. Ltd

25 Apr.

2019

3000 15 Jul. 2019 2770.25

Joint liability

assurance

2019.7.15-

2020.1.14

N Y

Guangdong Dongfang

New Special Medicine

Co. Ltd

24 Aug.

2019

9000 17 Oct. 2019 2273.51

Joint liability

assurance

2019.10.17-

2020.10.16

N Y

Guangdong Dongfang

New Special Medicine

Co. Ltd

24 Aug.

2019

4000 15 Oct. 2019 3313.53

Joint liability

assurance

2019.10.15-

2020.10.14

N Y

Sinopharm Holding

Maoming Co. Ltd.

25 Apr.

2019

2000 16 Aug. 2019 1214.62

Joint liability

assurance

2019.8.16-

2020.8.15

N Y

Sinopharm Holding

Guangzhou Huadu

Co. Ltd.

25 Apr.

2019

1000 23 Jul. 2019 713.88

Joint liability

assurance

2019.5.17-

2020.5.16

N Y

Sinopharm Holding

Guangzhou Huadu

Co. Ltd.

25 Apr.

2019

2500 23 Jul. 2019 2243.87

Joint liability

assurance

2019.7.23-

2020.7.22

N Y

Sinopharm Holding

Guangzhou Huadu

Co. Ltd.

24 Aug.

2019

1500 9 Dec. 2019

Joint liability

assurance

2019.12.9-

2020.9.30

N Y

Sinopharm Holding

Heyuan Co. Ltd.

24 Aug.

2019

2000 18 Dec. 2019 2000

Joint liability

assurance

2019.12.18-

2020.12.17

N Y

Sinopharm Holding

Foshan Medical

Supplies Supply Chain

Co. Ltd.

24 Aug.

2019

1000 7 Nov. 2019 4.49

Joint liability

assurance

2019.11.7-

2020.11.6

N Y

Sinopharm Holding

Guangxi Co. Ltd.

24 Aug.

2019

30000 3 Sept. 2019 23962.77

Joint liability

assurance

2019.9.3-

2020.9.2

N Y

Sinopharm Holding

Guangxi Co. Ltd.

24 Aug.

2019

28000 15 Oct. 2019 15765.44

Joint liability

assurance

2019.10.15-

2020.10.14

N Y

Sinopharm Holding

Guangxi Co. Ltd.

19 Sept.

2019

25000 15 Nov. 2018 1025.47

Joint liability

assurance

2018.11.15-

2019.11.7

N Y

Sinopharm Holding

Guangxi Co. Ltd.

25 Apr.

2019

10000 9 Aug. 2019 8079.53

Joint liability

assurance

2019.8.9-

2020.8.8

N Y

Sinopharm Holding

Guangxi Co. Ltd.

19 Sept.

2019

15000 13 Dec. 2018 2583.76

Joint liability

assurance

2018.12.13-

2019.11.27

N Y

Sinopharm Holding

Guangxi Co. Ltd.

24 Aug.

2019

25000 25 Dec. 2019

Joint liability

assurance

2019.12.25-

2020.12.25

N Y

Sinopharm Holding

Guangxi Co. Ltd.

25 Apr.

2019

5000 26 Jul. 2019 4499.79

Joint liability

assurance

2019.7.26-

2020.7.25

N Y

Sinopharm Holding

Guangxi Co. Ltd.

25 Apr.

2019

10000 18 Jun. 2019 9933.32

Joint liability

assurance

2019.6.18-

2020.6.18

N Y

Sinopharm Holding

Guangxi Co. Ltd.

25 Apr.

2019

20000 3 Jul. 2019 337.07

Joint liability

assurance

2019.7.3-

2020.7.3

N Y

Sinopharm Holding

Liuzhou Co. Ltd

24 Aug.

2019

9000 15 Oct. 2019 2000

Joint liability

assurance

2019.10.15-

2020.10.14

N Y

Sinopharm Holding

Liuzhou Co. Ltd

25 Apr.

2019

10000 21 Jun. 2019 6472.69

Joint liability

assurance

2019.6.21-

2020.6.20

N Y

Sinopharm Holding

Liuzhou Co. Ltd

19 Sept.

2019

6000 27 Feb. 2019 1263.46

Joint liability

assurance

2019.2.27-

2020.2.26

N Y

Sinopharm Holding

Liuzhou Co. Ltd

25 Apr.

2019

5000 9 Jul. 2019 3696.72

Joint liability

assurance

2019.7.9-

2020.7.8

N Y

Sinopharm Holding

Liuzhou Co. Ltd

24 Aug.

2019

9000 29 Oct. 2019 2100

Joint liability

assurance

2019.10.29-

2020.10.28

N Y

Sinopharm Holding

Liuzhou Co. Ltd

24 Aug.

2019

10000 20 Dec. 2019 7958.78

Joint liability

assurance

2019.12.20-

2020.12.19

N Y

Sinopharm Holding

Medicine Supply

Chain Service

(Guangxi) Co. Ltd.

24 Aug.

2019

1059 8 Oct. 2019

Joint liability

assurance

2019.10.8-

2020.10.7

N Y

Sinopharm Holding

Wuzhou Co. Ltd.

24 Aug.

2019

3000 15 Oct. 2019

Joint liability

assurance

2019.10.15-

2020.10.14

N Y

Sinopharm Holding

Guilin Co. Ltd.

24 Aug.

2019

2000 15 Oct. 2019

Joint liability

assurance

2019.10.15-

2020.10.14

N Y

Sinopharm Holding

Beihai Co. Ltd.

24 Aug.

2019

4000 15 Oct. 2019

Joint liability

assurance

2019.10.15-

2020.10.14

N Y

Sinopharm Holding

Baise Co. Ltd.

24 Aug.

2019

3000 15 Oct. 2019

Joint liability

assurance

2019.10.15-

2020.10.14

N Y

Sinopharm Holding

Guigang Co. Ltd.

24 Aug.

2019

2500 15 Oct. 2019

Joint liability

assurance

2019.10.15-

2020.10.14

N Y

Sinopharm Holding

Guigang Co. Ltd.

19 Sept.

2019

3000 19 Feb. 2019

Joint liability

assurance

2019.2.19-

2020.2.18

N Y

Sinopharm Holding

Yulin Co. ltd.

24 Aug.

2019

2000 15 Oct. 2019

Joint liability

assurance

2019.10.15-

2020.10.14

N Y

Sinopharm Holding

Shenzhen Jianmin

Co. ltd.

19 Sept.

2019

1000 24 Dec. 2018 915.61

Joint liability

assurance

2018.12.24-

2019.12.24

N Y

Sinopharm Holding

Shenzhen Jianmin

Co. ltd.

24 Aug.

2019

2000 15 Oct. 2019 1978.52

Joint liability

assurance

2019.10.15-

2020.10.14

N Y

Sinopharm Holding

Shenzhen Medicinal

Materials Co. Ltd.

24 Aug.

2019

1000 15 Oct. 2019 654.55

Joint liability

assurance

2019.10.15-

2020.10.14

N Y

China National

Accord Medicines

Corporation Ltd.

24 Aug.

2019

10000 28 Nov. 2019 7634.04

Joint liability

assurance

2019.11.28-

2020.5.28

N Y

Sinopharm Holding

Shenzhen Yanfeng

Co. Ltd.

24 Aug.

2019

12000 15 Oct. 2019 5935.15

Joint liability

assurance

2019.10.15-

2020.10.14

N Y

Sinopharm Holding

Shenzhen Yanfeng

Co. Ltd.

24 Aug.

2019

5000 28 Nov. 2019 3380

Joint liability

assurance

2019.11.28-

2020.5.28

N Y

Sinopharm Holding

Shenzhen Yanfeng

Co. Ltd.

25 Apr.

2019

7000 6 Aug. 2019

Joint liability

assurance

2019.8.6-

2020.8.6

N Y

Sinopharm Holding

Shenzhen Yanfeng

Co. Ltd.

24 Aug.

2019

5000 3 Sept. 2019 4199

Joint liability

assurance

2019.9.3-

2020.9.3

N Y

Total amount of approving

guarantee for subsidiaries in report

period (B1)

911559

Total amount of actual

occurred guarantee for

subsidiaries in report period

(B2)

1482452.67

Total amount of approved

guarantee for subsidiaries at the

end of reporting period (B3)

952559

Total balance of actual

guarantee for subsidiaries at

the end of reporting period

(B4)

440186.86

Guarantee between the subsidiaries and the subsidiaries

Name of the Company

guaranteed

Related

Announce

ment

disclosure

date

Guarantee

limit

Actual date of

happening

Actual

guarantee

limit

Guarantee

type

Guarantee

term

Implemen

ted (Y/N)

Guarante

e for

related

party

(Y/N)

Sinopharm Holding

Guoda Drugstore

Yangzhou Dadesheng

Chain Co. Ltd.

24 Aug.

2019

2000 10 Oct. 2019 1717.75

Joint liability

assurance

2019.10.10-

2020.10.09

N Y

Fujian Guoda

Drugstore Chain Co.

Ltd.

25 Apr.

2019

5000 18 May 2019 2562.47

Joint liability

assurance

2019.05.18-

2020.05.17

N Y

Fujian Guoda

Drugstore Chain Co.

Ltd.

25 Apr.

2019

2000 10 May 2019 251.58

Joint liability

assurance

2019.05.10-

2020.05.09

N Y

Sinopharm Holding

Guoda Drugstore

Guangdong Co. Ltd.

24 Aug.

2019

8000 10 Oct. 2019 5634.2

Joint liability

assurance

2019.10.10-

2020.10.09

N Y

Sinopharm Holding

Guoda Drugstore

Guangdong Co. Ltd.

24 Aug.

2019

3000 18 Dec. 2019 2375.33

Joint liability

assurance

2019.12.18-

2020.12.17

N Y

Sinopharm Holding

Guoda Drugstore

Guangdong Co. Ltd.

19 Sept.

2019

3000 28 Sept. 2018 385.8

Joint liability

assurance

2018.09.28-

2019.09.27

N Y

Taishan Sinopharm

Holding Daqun

Kangda Drugstore

Chain Co. Ltd.

25 Apr.

2019

500 2 Jun. 2019 314.6

Joint liability

assurance

2019.06.02-

2020.06.01

N Y

Sinopharm Holding

Guoda Drugstore

Guangxi Chain Co.Ltd.

24 Aug.

2019

3000 10 Oct. 2019 1919.38

Joint liability

assurance

2019.10.10-

2020.10.09

N Y

Sinopharm Hebei

Lerentang Medicine

Chain Co. ltd.

24 Aug.

2019

3000 10 Oct. 2019 3000

Joint liability

assurance

2019.10.10-

2020.10.09

N Y

Sinopharm Holding

Guoda Drugstore

Henan Chain Co. Ltd.

24 Aug.

2019

3000 6 Dec. 2019 630.13

Joint liability

assurance

2019.12.06-

2020.12.05

N Y

Hunan Guoda

Minshengtang

Drugstore Chain Co.

Ltd.

24 Aug.

2019

3000 10 Oct. 2019 3000

Joint liability

assurance

2019.10.10-

2020.10.09

N Y

Sinopharm Holding

Guoda Drugstore

Jiangmen Chain Co.Ltd.

24 Aug.

2019

3000 10 Oct. 2019 2624.19

Joint liability

assurance

2019.10.10-

2020.10.09

N Y

Sinopharm Holding

Guoda Drugstore

Jiangmen Chain Co.Ltd.

19 Sept.

2019

2000 1 Apr. 2019 1909.57

Joint liability

assurance

2019.04.01-

2020.04.01

N Y

Sinopharm Holding

Guoda Drugstore

Jiangmen Chain Co.Ltd.

19 Sept.

2019

2000 28 Sept. 2018 665.19

Joint liability

assurance

2018.09.28-

2019.09.27

N Y

Beijing Jinxiang

Drugstore Medicine

Chain Co. ltd.

19 Sept.

2019

4000 28 Sept. 2018 2780.46

Joint liability

assurance

2018.09.28-

2019.09.27

N Y

Sinopharm Holding

Guoda Drugstore

Nanjing Chain Co.Ltd.

19 Sept.

2019

1000 28 Sept. 2018 872.91

Joint liability

assurance

2018.09.28-

2019.09.27

N Y

Sinopharm Holding

Guoda Drugstore

Inner Mongolia Co.Ltd.

24 Aug.

2019

3000 18 Oct. 2019 2049.59

Joint liability

assurance

2019.10.18-

2020.10.17

N Y

Sinopharm Holding

Guoda Drugstore

Inner Mongolia Co.Ltd.

25 Apr.

2019

3000 30 Apr. 2019 0

Joint liability

assurance

2019.04.30-

2020.04.29

N Y

Sinopharm Holding

Guoda Drugstore

Inner Mongolia Co.Ltd.

24 Aug.

2019

9500 10 Oct. 2019 6188.81

Joint liability

assurance

2019.10.10-

2020.10.09

N Y

Ningxia Guoda

Drugstore Chain Co.

Ltd.

24 Aug.

2019

4000 29 Aug. 2019 2855

Joint liability

assurance

2019.08.29-

2020.08.28

N Y

Sinopharm Holding

Guoda Drugstore

Shandong Co. ltd.

24 Aug.

2019

4000 14 Oct. 2019 3849.71

Joint liability

assurance

2019.10.14-

2020.10.13

N Y

Shanxi Guoda

Wanmin Drugstore

Chain Co.Ltd

24 Aug.

2019

5000 8 Nov. 2019 4560

Joint liability

assurance

2019.11.08-

2020.11.07

N Y

Shanxi Guoda

Wanmin Drugstore

Chain Co.Ltd

25 Apr.

2019

6000 13 Jun. 2019 4171.8

Joint liability

assurance

2019.06.13-

2020.06.12

N Y

ShanxSinopharm

Holding Guoda

Drugstore Shanghai

Chain Co. Ltd.

24 Aug.

2019

5000 10 Dec. 2019 1487.98

Joint liability

assurance

2019.12.10-

2020.12.09

N Y

ShanxSinopharm

Holding Guoda

Drugstore Shanghai

Chain Co. Ltd.

24 Aug.

2019

4000 25 Oct. 2019 779.28

Joint liability

assurance

2019.10.25-

2020.10.24

N Y

ShanxSinopharm

Holding Guoda

Drugstore Shanghai

Chain Co. Ltd.

24 Aug.

2019

4000 10 Oct. 2019 0

Joint liability

assurance

2019.10.10-

2020.10.09

N Y

Sinopharm Holding

Guoda Drugstore

Shenyang Chain Co.Ltd.

19 Sept.

2019

5000 28 Nov. 2018 4986.04

Joint liability

assurance

2018.11.28-

2019.11.27

N Y

Sinopharm Holding

Guoda Drugstore

Shenyang Chain Co.Ltd.

24 Aug.

2019

10000 11 Sept. 2019 9225.33

Joint liability

assurance

2019.09.11-

2020.09.10

N Y

Sinopharm Holding

Guoda Drugstore

Shenyang Chain Co.Ltd.

24 Aug.

2019

4000 28 Oct. 2019 614.61

Joint liability

assurance

2019.10.28-

2020.10.27

N Y

Sinopharm Holding

Guoda Drugstore

Shenyang Chain Co.Ltd.

19 Sept.

2019

6000 17 Nov. 2018 2457.33

Joint liability

assurance

2018.11.17-

2019.11.16

N Y

Sinopharm Holding

Guoda Drugstore

Shenyang Chain Co.Ltd.

24 Aug.

2019

25000 10 Oct. 2019 14776.62

Joint liability

assurance

2019.10.10-

2020.10.09

N Y

Sinopharm Holding

Guoda Drugstore

Xinjiang New Special

Medicine Chain Co.Ltd

24 Aug.

2019

5000 29 Oct. 2019 2693.6

Joint liability

assurance

2019.10.29-

2020.10.28

N Y

Sinopharm Holding

Guoda Drugstore

Shanxi Yiyuan Chain

Co. ltd

25 Apr.

2019

6000 21 Jun. 2019 0

Joint liability

assurance

2019.06.21-

2020.06.20

N Y

Sinopharm Holding

Guoda Drugstore

Shanxi Yiyuan Chain

Co. ltd

19 Sept.

2019

7000 2 Apr. 2019 4828.27

Joint liability

assurance

2019.04.02-

2020.04.01

N Y

Sinopharm Holding

Guoda Drugstore

Shanxi Yiyuan Chain

Co. ltd

25 Apr.

2019

5600 14 Jun. 2019 4567.64

Joint liability

assurance

2019.06.14-

2020.06.13

N Y

Sinopharm Holding

Guoda Drugstore

Shanxi Yiyuan Chain

Co. ltd

25 Apr.

2019

5000 28 Jun. 2019 2426.81

Joint liability

assurance

2019.06.28-

2020.06.27

N Y

Sinopharm Holding

Guoda Drugstore

Shanxi Yiyuan Chain

Co. ltd

25 Apr.

2019

3000 25 Jun. 2019 0

Joint liability

assurance

2019.06.25-

2020.06.24

N Y

Sinopharm Holding

Guoda Drugstore

Shanxi Yiyuan Chain

Co. ltd

24 Aug.

2019

15000 10 Oct. 2019 14994.91

Joint liability

assurance

2019.10.10-

2020.10.09

N Y

Sinopharm Holding

Guoda Drugstore

Shenyang Chain Co.Ltd.

19 Sept.

2019

10500 9 Jan. 2019 2167.31

Joint liability

assurance

2019.01.09-

2020.01.08

N Y

Sinopharm Holding

Guoda Drugstore

Xinjiang New Special

Medicine Chain Co.Ltd

24 Aug.

2019

5000 30 Oct. 2019 1752.74

Joint liability

assurance

2019.10.30-

2020.10.29

N Y

Shanxi Guoda

Wanmin Drugstore

Chain Co.Ltd

19 Sept.

2019

6000 18 Jan. 2019 0

Joint liability

assurance

2019.01.18-

2020.01.17

N Y

Shanxi Guoda

Wanmin Drugstore

Chain Co.Ltd

19 Sept.

2019

4000 19 Feb. 2019 750

Joint liability

assurance

2019.02.19-

2020.02.19

N Y

Sinopharm Holding

Guoda Drugstore

Inner Mongolia Co.Ltd.

19 Sept.

2019

8000 2 Apr. 2019 4175.78

Joint liability

assurance

2019.04.02-

2020.04.01

N Y

ShanxSinopharm

Holding Guoda

Drugstore Shanghai

Chain Co. Ltd.

25 Apr.

2019

5000 24 Jun. 2019 4326.2

Joint liability

assurance

2019.06.24-

2020.06.23

N Y

Sinopharm Holding

Guoda Drugstore

Shanxi Yiyuan Chain

Co. ltd

25 Apr.

2019

5000 13 Jun. 2019 3620.17

Joint liability

assurance

2019.06.13-

2020.06.12

N Y

Sinopharm Holding

Guoda Fumei

Drugstore Shanghai

Chain Co. Ltd.

25 Apr.

2019

3000 24 Jun. 2019 1085.58

Joint liability

assurance

2019.06.24-

2020.06.23

N Y

Shanxi Guoda

Wanmin Drugstore

Chain Co.Ltd

24 Aug.

2019

6000 10 Oct. 2019 6000

Joint liability

assurance

2019.10.10-

2020.10.09

N Y

Taishan Sinopharm

Holding Daqun

Kangda Drugstore

Chain Co. Ltd.

24 Aug.

2019

500 10 Oct. 2019 14

Joint liability

assurance

2019.10.10-

2020.10.09

N Y

Total amount of approving guarantee

for subsidiaries in report period (C1)

223600

Total amount of actual

occurred guarantee for

subsidiaries in report period

(C2)

378052.26

Total amount of approved

guarantee for subsidiaries at the

end of reporting period (C3)

244600

Total balance of actual

guarantee for subsidiaries at

the end of reporting period

(C4)

142048.67

Total amount of guarantee of the Company ( total of three above mentioned guarantee)

Total amount of approving

guarantee in report period

(A1+B1+C1)

1135159

Total amount of actual

occurred guarantee in report

period (A2+B2+C2)

1860504.93

Total amount of approved

guarantee at the end of report

period (A3+B3+C3)

1197159

Total balance of actual

guarantee at the end of

report period (A4+B4+C4)

582235.53

The proportion of the total amount of actually guarantee in the net

assets of the Company (that is A4+ B4+C4)

45.46%

(2) Guarantee outside against the regulation

□Applicable √ Not applicable

No guarantee outside against the regulation in Period.

3. Entrust others to cash asset management

(1) Trust financing

□Applicable √ Not applicable

The Company had no trust financing in the reporting period.

(2) Entrusted loans

□Applicable √ Not applicable

The company had no entrusted loans in the reporting period.

4. Other material contracts

□Applicable √ Not applicable

No other material contracts for the Company in reporting period.XVIII. Social responsibility

1. Execution of social responsibility

“Social Responsibility Report of Sinopharm Accord in 2019” can be seen in Juchao website released on the same date

(http://www.cninfo.com.cn)

2. Execution of social responsibility of targeted poverty alleviation

The Company has not carried out targeted poverty alleviation in the reporting period and has no follow-up plan of targeted poverty

alleviation

3. Environment protection

The listed Company and its subsidiary whether belongs to the key sewage units released from environmental protection department

Company

/subsidiary

Name of

Major

Pollutants

and

Particular

Pollutants

Emission

Method

Quantity of

Discharge

Outlet

Distribution

of

Discharge

Outlet

Emission

Concentrati

on

Executed

Pollutant

Discharge

Standards

Total

Emissions

Approved

Total

Emissions

Excessive

Discharge

China

National

Zhijun

COD Nanotubesemissions 1

Discharge

Outlet of

Waste

Water

17.87mg/L

Landmark

A-level of

2nd Time

Period

1.248

ton/year

7.306

ton/year N/A

China

National

Zhijun

Ammonia

Nitrogen

Nanotubes

emissions 1

Discharge

Outlet of

Waste

Water

0.69mg/L

Landmark

A-level of

2nd Time

Period

0.048

ton/year

0.812

ton/year N/A

China

National

Zhijun

Phosphate Nanotubesemissions 1

Discharge

Outlet of

Waste

Water

0.034mg/L

Landmark

A-level of

2nd Time

Period

0.002

ton/year

0.041

ton/year N/A

Zhijun

Pingshan COD

Nanotubes

emissions 1

Discharge

Outlet of

Waste

Water

16.64mg/L

Discharge

Standards

of Water

Pollutants

for

Pharmaceuti

cal industry

Mixing/Co

mpounding

and

Formulation

Category

(GB21908-

2008)

1.1467

ton/year

2.16

ton/year N/A

Zhijun

Pingshan

Total

phosphorus

Nanotubes

emissions 1

Discharge

Outlet of

Waste

Water

0.01mg/L

Discharge

Standards

of Water

Pollutants

for

Pharmaceuti

cal industry

Mixing/Co

mpounding

and

Formulation

Category

(GB21908-

2008)

0.0069

ton/year

0.0216

ton/year N/A

Zhijun

Pingshan

Ammonia

Nitrogen

Nanotubes

emissions 1

Discharge

Outlet of

Waste

Water

0.768mg/L

Class IV

water

(Ammonia

Nitrogen up

to Class V)

standard in

Environmen

tal Quality

Standard for

Surface

Water

(GB3838-

2002)

0.0529

ton/year

0.144

ton/year N/A

Main Luck

Pharmaceuti

cals

COD Nanotubesemissions 1

Discharge

Outlet of

Waste

Water

15mg/L

DB44/26-

2001- A-

level of 2nd

Time Period

0.018

ton/year

0.108

ton/year N/A

Main Luck

Pharmaceuti

cals

Ammonia

Nitrogen

Nanotubes

emissions 1

Discharge

Outlet of

Waste

Water

0．5mg/L

DB44/26-

2001- A-

level of 2nd

Time Period

0.0006

ton/year

0.012

ton/year N/A

Main Luck

Pharmaceuti

cals

Phosphate Nanotubesemissions 1

Discharge

Outlet of

Waste

Water

0.05mg/l

DB44/26-

2001- A-

level of 2nd

Time Period

0.00006

ton/year

0.0006

ton/year N/A

Main Luck

Pharmaceuti

cals

BOD Nanotubesemissions 1

Discharge

Outlet of

Waste

Water

10mg/L

DB44/26-

2001- A-

level of 2nd

Time Period

0.012

ton/year

0.024

ton/year N/A

Main Luck

Pharmaceuti

cals

SS Nanotubesemissions 1

Discharge

Outlet of

Waste

Water

2mg/L

DB44/26-

2001- A-

level of 2nd

Time Period

0.0024

ton/year

0.072

ton/year N/A

Construction and operation of pollution prevention and control facilities

At present the above-mentioned environmental pollution key monitoring units in which the Company has a shareholding have

established pollution prevention and control facilities for waste water. In the daily management process enterprises establish

management procedures and operating instructions for environmental protection facilities and ensure the normal and compliant

operation of anti-pollution facilities through system implementation and responsibility implementation. All enterprises are

continuously investing funds and stepping up the transformation and improvement of pollution prevention and control facilities to

ensure the stable operation of pollution prevention facilities and improve the disposal capacity of environmental protection facilities.

Environmental impact assessment of construction projects and other environmental protection administrative licenses

At present the projects of all key monitoring units have carried out environmental impact assessments and obtained approvals. The

projects to be built also carry out the relevant administrative review procedures according to the “three simultaneous” requirements

of the environmental protection facilities of the construction project.

Emergency plan for environmental emergencies

At present the above-mentioned environmental pollution key monitoring units in which the Company has a shareholding have

formulated the Emergency Plan for Environmental Emergencies and reported them according to the regulatory requirements of the

local regulatory authorities. According to the management requirements of the emergency plan the key units regularly carry out

emergency plan drills to further provide the enterprises’ emergency response capability.

Environmental self-monitoring scheme

At present the above-mentioned environmental pollution key monitoring units in which the Company has a shareholding have

established environmental self-detection scheme and plan and implemented self-inspection third-party detection and other

monitoring methods according to the government requirements. Relevant monitoring data and reports have been archived and saved.Other environmental information that should be disclosed

The above two companies are joint stock companies of the Company. The Company and its holding subsidiaries are not listed as key

pollutant discharge units announced by the environmental protection department.Relevant information on environment protection

Nil

XIX. Explanation on other significant events

□ Applicable √ Not applicable

No other significant events need to explain in the reporting period.XX. Significant event of subsidiary of the Company

□ Applicable √ Not applicable

65

Section VI. Changes in Shares and Particulars about Shareholders

I. Changes in Share Capital

1. Changes in Share Capital

In Share

Before the Change Increase/Decrease in the Change (+ -) After the Change

Amount Proportion

New

share

s

issue

d

Bonus

shares

Capitaliza

tion of

public

reserve

Others Subtotal Amount Proportion

I. Restricted shares 65498153 15.30% 65498153 15.30%

2. State-owned legal person’s

shares 60380743 14.10% 60380743 14.10%

3. Other domestic

shareholding 5117410 1.20% 5117410 1.20%

Including: Domestic legal

person’s shares 5114297 1.19% 5114297 1.19%

Domestic nature person

shares 3113 0.00% 3113 0.00%

II. Unrestricted shares 362628830 84.70% 362628830 84.70%

1. RMB Ordinary shares 307744355 71.88% 307744355 71.88%

2. Domestically listed foreign

shares 54884475 12.82% 54884475 12.82%

III. Total shares 428126983 100.00% 428126983 100.00%

Reasons for share changed

□Applicable √Not applicable

Approval of share changed

□Applicable √Not applicable

Ownership transfer of share changed

□ Applicable √ Not applicable

Progress of shares buy-back

□Applicable √Not applicable

Implementation progress of the reduction of repurchases shares by centralized bidding

□Applicable √Not applicable

Influence on the basic EPS and diluted EPS as well as other financial indexes of net assets per share attributable to

common shareholders of Company in latest year and period

□ Applicable √ Not applicable

Other information necessary to disclose for the Company or need to disclosed under requirement from security

regulators

√ Applicable □ Not applicable

The major assets reorganization non-public offering of shares for year of 2016 were lifted on 6 Jan. 2020

59989270 shares are released for trading representing 14.01% of the total share capital of the Company.

2. Changes of restricted shares

√ Applicable □ Not applicable

In Share

Shareholders Opening sharesrestricted

Restricted

shares

increased

in

the

Period

Shares released

in Period

Ending shares

restricted

Restricted

reasons Date for released

Sinopharm Group

Co. Ltd 55057700 0 0 55057700

Non-public

offering share

On January 6 2020

49551930 shares

were released for sale

and 5505770 lock-up

shares.

China National

Pharmaceutical

Foreign Trade Corp.

5323043 0 0 5323043 Non-publicoffering share

The 5323043 shares

has been lifted on

January 6 2020.Ping An Asset-ICBM

-Ping An Asset

Xinxiang No. 7

Insurance Asset

Management Product

2557148 0 0 2557148 Non-publicoffering share

The 2557148 shares

has been lifted on

January 6 2020.Ping An Asset-ICBM

- Xinxiang No. 3

Asset Management

Product

2557149 0 0 2557149 Non-publicoffering share

The 2557149 shares

has been lifted on

January 6 2020.Total 65495040 0 0 65495040 -- --

II. Securities issuance and listing

1. Security offering (without preferred stock) in Reporting Period

□Applicable √Not applicable

2. Changes of total shares and shareholders structure as well as explanation on changes of assets and

liability structure

□Applicable √Not applicable

3. Current internal staff shares

□ Applicable √ Not applicable

III. Particulars about shareholder and actual controller of the Company

1. Amount of shareholders of the Company and particulars about shares holding

In Share

Total common

stock

shareholders in

reporting

period-end

20191

Total common

stock

shareholders at

end of last month

before annual

report disclosed

26399

Total preference

shareholders with

voting rights

recovered at end of

reporting period (if

applicable) (found

in note 8)

0

Total preference

shareholders

with voting

rights recovered

at end of last

month before

annual report

disclosed (if

applicable)

(found in note 8)

0

Particulars about shares held above 5% by shareholders or top ten shareholders

Full name of

Shareholders

Nature of

shareholder

Proportio

n of

shares

held

Total

shareholders

at the end of

report period

Chang

es in

report

period

Amount of

lock-up

shares held

Amount of

un-restricted

shares held

Number of share

pledged/frozen

State of

share Amount

Sinopharm Group

Co. Ltd

State-owned

Corporation 56.06% 239999991 55057700 184942291

Hong Kong

Securities Clearing

Company Ltd

Foreign

Corporation 5.13% 21952787 21952787

HTHK/CMG

FSGUFP-CMG

FIRST STATE

CHINA GROWTH

FD

Foreign

Corporation 2.68% 11469644 11469644

China National

Pharmaceutical

Foreign Trade

Corp.

State-owned

Corporation 1.24% 5323043 5323043 0

Fidelity Investment

Management

(Hong Kong)

Limited - Client’s

fund

Foreign

Corporation 1.13% 4825907 4825907

Central Huijin

Investment Ltd.State-owned

Corporation 0.89% 3804400 3804400

BBH BOS S/A

FIDELITY FD -

CHINA FOCUS

FD

Foreign

Corporation 0.78% 3358761 3358761

Bank of China –

Harvest Medical

Care Securities

Investment Fund

Domestic non

state-owned

Corporation

0.71% 3028525 3028525

Basic endowment

insurance fund-

portfolio 1003

Domestic non

state-owned

Corporation

0.69% 2933056 2933056

VALUE

PARTNERS

CLASSIC FUND

Foreign

Corporation 0.64% 2747418 2747418

Explanation on associated relationship

among the aforesaid shareholders

Sinopharm Group Co. Ltd. and China National Pharmaceutical Foreign Trade Corporation

have the same actual controller which is China National Pharmaceutical Group

Corporation. It is unknown that there exists no associated relationship or belongs to the

consistent person acting in concert among the other tradable shareholders regulated by the

Management Measure of Information Disclosure on Change of Shareholding for Listed

Companies.

Particular about top ten shareholders with un-restrict shares held

Shareholders’ name Amount of un-restrict shares held at Period-end Type of sharesType Amount

Sinopharm Group Co. Ltd 239999991 RMB ordinaryshares 239999991

Hong Kong Securities Clearing

Company Ltd 21952787

RMB ordinary

shares 21952787

HTHK/CMG FSGUFP-CMG FIRST

STATE CHINA GROWTH FD 11469644

Domestic listed

foreign shares 11469644

Fidelity Investment Management

(Hong Kong) Limited - Client’s fund 4825907

RMB ordinary

shares 4825907

Central Huijin Investment Ltd. 3804400 RMB ordinaryshares 3804400

BBH BOS S/A FIDELITY FD -

CHINA FOCUS FD 3358761

Domestic listed

foreign shares 3358761

Bank of China – Harvest Medical Care

Securities Investment Fund 3028525

RMB ordinary

shares 3028525

Basic endowment insurance fund-

portfolio 1003 2933056

RMB ordinary

shares 2933056

VALUE PARTNERS CLASSIC

FUND 2747418

Domestic listed

foreign shares 2747418

National Social Security Fund-

portfolio 413 2550024

RMB ordinary

shares 2550024

Expiation on associated relationship or

consistent actors within the top 10 un-

restrict shareholders and between top

10 un-restrict shareholders and top 10

shareholders

It is unknown that there exists no associated relationship or belongs to the consistent person

acting in concert among the other tradable shareholders regulated by the Management

Measure of Information Disclosure on Change of Shareholding for Listed Companies.Whether top ten common stock shareholders or top ten common stock shareholders with un-restrict shares held

have a buy-back agreement dealing in reporting period

□Yes √ No

The top ten common stock shareholders or top ten common stock shareholders with un-restrict shares held of the

Company have no buy-back agreement dealing in reporting period.

2. Controlling shareholder of the Company

Nature of controlling shareholders: central state-owned holding

Type of controlling shareholders: legal person

Controlling

shareholders

Legal person/person

in charge of the unit

Date of foundation

Organization

code

Main operation business

Sinopharm Group

Co. Ltd

Li Zhiming 2003-01-08 74618434-4

Industrial investment holding; management and assets

reorganization entrusted by pharmaceutical enterprise;

Chinese medicine Chinese medicine tablets chemical

medicine preparations chemical raw materials

antibiotics biochemical drugs biological products

narcotic drugs psychotropic substances toxic drugs

for medical use (compatible with the business scope)

medicine IVD Reagents vaccine anabolic agents

peptide hormone medical device management food

sales management (non-physical method) technology

development technology transfer technical

consultation technical service in the field of medical

technology chemical raw materials and products

(except hazardous chemicals monitoring chemicals

fireworks and firecrackers flammables and

explosives explosives for civilian use) business

management consulting business consulting market

information consulting and investigation (no social

surveys social investigation opinion surveys or

opinion polls) data processing services e-commerce

(no value-added telecommunications financial

services) sales design production agency publishing

various domestic and foreign advertisements of

disinfection products daily necessities textiles and

knitwear sporting goods household appliances

electronic products furniture toys edible agricultural

products cosmetics and cultural and sports goods

domestic trade (except special license) 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. If

an enterprise’s operation involves an administrative

license it shall be operated on the basis of the license.

Equity of other

domestic/oversea

listed company

control by

controlling

shareholder as well

as stock-joint in

report period

Sinopharm Group Co. Ltd. hold 54.72 percent equity of China National Medicines Corporation Ltd (Stock code:

600511) up to the end of Period.

Changes of controlling shareholders in reporting period

□ Applicable √ Not applicable

The Company had no changes of controlling shareholders in reporting period.

3. Actual controller of the Company and persons acting in concert

Nature of actual controller: central state-owned assets management

Type of actual controller: legal person

Actual controlling shareholders

Legal

person/person in

charge of the unit

Date of foundation

Organization

code

Main operation business

China National Pharmaceutical

Group Corporation

Liu Jingzhen 1987-03-26 10000588-8

Chinese patent drug traditional Chinese

medicines prepared in ready-to-use forms

traditional Chinese medicinal materials

chemical API chemical medicine

preparation antibiotics biochemical drug

and biologic pharmacy (License for

pharmaceutical trading runs until 12 May

2020); mandatory for pharmaceutical

enterprise asset reorganization; consulting

service of medicine industrial investment;

exhibition of medical devices; consulting

services with main business concerned. (the

enterprise has independent choices on

operation items for business; in right of

exequatur to run if refers to permission

operation ; operation activity that prohibited

or restricted by the City Government are not

allowed)

Equity of domestic/oversea

listed company control by

actual controller in report period

Name

Name of listed

company with

shares held

Total shareholders

held (10 thousand

shares)

Proportion of

shares held

SINOPHARM Jianmin Group 132.35 0.86%

SINOPHARM SinopharmHolding 20728.95 6.64%

Sinopharm

Holding

Industrial

Investment

Co. Ltd.

Sinopharm

Holding 157155.60 50.36%

Sinopharm

Holding

Sinopharm

Holding 41284.17 54.72%

Sinopharm

Holding

Sinopharm

Accord 24000.00 56.06%

Sinopharm

Holding

Lianhuan

Pharmaceutical 375.21 1.30%

SIPS ShyndecPharmaceutical 23951.26 22.68%

China National

Pharmaceutical

Investment

Co. Ltd.

Hengrui

Medicine 18511.94 4.16%

China National

Biotec Group

Co. Ltd.

BTBP 52228.04 49.96%

SINOPHARM

H.K. Co. Ltd. China TCM 163468.56 32.46%

Changes of actual controller in reporting period

□ Applicable √ Not applicable

No changes of actual controllers for the Company in reporting period.Property right and controlling relationship between the actual controller and the Company is as follow:

Actual controller controlling the Company by entrust or other assets management

□ Applicable √ Not applicable

4. Particulars about other legal person shareholders with over 10% shares held

□ Applicable √ Not applicable

5. Limitation and reducing the holdings of shares of controlling shareholders actual controllers

restructuring side and other commitment subjects

□ Applicable √ Not applicable

Section VII. Preferred Stock

□ Applicable √ Not applicable

The Company had no preferred stock in the Period.Section VIII. Convertible Bonds

□ Applicable √ Not applicable

The Company had no convertible bonds in the Period

Section IX. Particulars about Directors Supervisors Senior

Executives and Employees

I. Changes of shares held by directors supervisors and senior executives

Name Title

Working

status Sex Age

Start dated of

office term

End

date of

office

term

Shares

held at

period-

begin

(Share)

Amount

of shares

increased

in this

period

(Share)

Amount

of shares

decreased

in this

period

(Share)

Other

changes

(share)

Shares

held at

period-

end

(Share)

Chen

Shengqun

Independ

ent

director

Currently

in office M 57 2018-04-17 1500 0 0 0 1500

Chen

Changbin

Deputy

GM

Secretary

of the

Board

Currently

in office M 52 2015-01-13 2651 0 0 0 2651

Total -- -- -- -- -- -- 4151 0 0 0 4151

II. Changes of directors supervisors and senior executives

√Applicable □ Not applicable

Name Title Type Date Reasons

Liu Tianrao Deputy GM Appointment andremoval 2019-01-11 New Deputy GM

Ma Zhanjun Director Appointment andremoval 2019-01-24 New Director of 8th BOD

Ma Zhanjun DeputyChairman

Appointment and

removal 2019-01-31 New Deputy Chairman of 8

th BOD

Su Weiwei IndependentDirector

Appointment and

removal 2019-01-24 New Independent Director of 8

th BOD

Wu Yijian

Chairman of the

board of

supervisors

supervisor

Office leaving 2019-05-17 Resign from chairman of the board of supervisorssupervisor for job arrangement

Wen Deyong Supervisor Appointment andremoval 2019-05-17 New Supervisor of 8

th Board of supervisors

Wen Deyong

Chairman of the

board of

supervisors

Appointment and

removal 2019-07-10

New Chairman of the board of supervisors of 8th Board of

supervisors

III. Post-holding

Professional background major working experience and present main responsibilities in Company of directors

supervisors and senior executive at the present

1. Members of BOD

Mr. Liu Yong joined Sinopharm Group Co. Ltd in January 2003 and serves as executive director and president

of Sinopharm Holding since November 2017 and acts as deputy party secretary of Sinopharm Holding since

January 2018; Mr. Liu own over 26 years of working experience among which over 23 years are related to

management experience in medicine and health care products industry. He is a pharmacist-in-charge and licensed

pharmacist. During the period from July 1992 to July 1999 Mr. Liu worked in the Shanghai Pharma and

successively served as deputy general manager of the marketing department of Shanghai Branch of China

National Pharmaceutical Group Corporation and Shanghai Guoda Drugstore Chain Company Limited from July

1999 to April 2003. Mr. Liu served as GM and party secretary of the Sinopharm Holding Shenyang Co. Ltd from

April 2003 to November 2009; a deputy president of Sinopharm Holding from January 2009 to November 2017;

the Secretary of the Board of Sinopharm Holding from October 2016 to November 2017 and General Counsel of

Sinopharm Holding from January 2014 to December 2017. Currently he also acts as the Director of

SINOPHARM Sinopharm Holding Guoda Drugstore Co. Ltd. China National Scientific Instruments &

Materials Co. Ltd and China National Medical Equipment Co. Ltd.; and Director and GM of Sinopharm Holding

H.K. Co. Ltd. Mr. Liu serves as Director of the 7th BOD of the Company since January 2017 and Chairman of the

7th and 8th BOD of the Company since October 2017.

Mr. Ma Zhanjun served as president of Wuhan Ruipu Pharmaceutical Co. Ltd. from December 2000 to December

2003 from January 2004 to April 2005 he served as general manager of Sinopharm Group Pharmaceutical

Holding Wuhan Co. Ltd. from April 2005 to December 2005 he served as executive deputy general manager of

Sinopharm Holding Hubei Co. Ltd. and he served as general manager of Sinopharm Group Hubei Co. Ltd. from

January 2006 to December 2014 from January 2015 to October 2018 he served as president of Sinopharm

Holding Hubei Co. Ltd. since November 2018 he has concurrently been serving as vice president of Sinopharm

Holding Hubei Co. Ltd. Since January 2019 he has been serving as vice president of the eighth board of directors

of the Company.Mr. Li Zhiming chairman of the board and the deputy Party Secretary of Sinopharm Group Co. Ltd he joined the

Sinopharm Holding in May 2010 as deputy president served as executive director and president of Sinopharm

Holding from November 2013 to March 2017; He serves as chairman of Sinopharm Holding since November

2017 and he is the deputy party secretary of Sinopharm Holding since November 2018. Mr. Li held the position

of General counsel Secretary of Committee for Discipline Inspection chairman of the labor union deputy Party

Secretary and party secretary of Sinopharm Holding from October 2012 to March 2017. He owns more than 37

years of working experience among which 33 years are related to management experience in medicine and health

care products industry. He is a senior economist and pharmacist-in-charge. During the period from July 1985 to

July 1996 Mr. Li successively served as deputy director of the financing department of Xinjiang Xinte

Nationality Pharmacy Company Limited deputy general manager and chief accountant of Xinjiang

Pharmaceutical Industry and Trading Corporation deputy general manager and chief accountant of Xinjiang Xinte

Nationality Pharmacy Corporation and deputy director of the preparation office of Xinjiang Autonomous Region

Medicine Administration Bureau. From July 1996 to February 2016 Mr. Li worked in Xinjiang Xinte Nationality

Pharmacy Corporation as general manager chairman of the board and party secretary and worked in Xinjiang

Pharmaceutical Group Corporation (currently known as Sinopharm Group (Xinjiang) Co. Ltd.) as its general

manager Deputy Chairman of the board chairman of the board and party secretary. Currently he also serves as

Director of China National Xinjiang Medicine Co. Ltd Sinpharm Holding Senyi Tech. (Shanghai) Co. Ltd

China National Pharmaceutical Co. Ltd and Sinopharm Holding Guoda Drugstore Co. Ltd.; the deputy chairman

of Shanghai Shyndec Pharmaceutical Co. Ltd and Chairman of Sinopharm Holding H.K. Co. Ltd Sinopharm

Holding (China) Finance Leasing Co. Ltd China National Zhongjin (Shanghai) Medical Health Investment

Management Co. Ltd and Sinopharm Holding Medicine Investment Co. Ltd; He served as Chairman of the

Company from February 2014 to August 2016 and acts as Director of the 7th and 8th BOD of the Company since

August 2016.

Mr. Jiang Xiuchang entered into Sinopharm Holding as the CFO in May 2010 and he has also acted as vice

president of Sinopharm Holding since July 2013. Mr. Jiang owns over 31 years of working experiences among

which 20 years of management experiences are related to medicine and health-care industries. He is a senior

economist and senior accountant. Mr. Jiang has worked as deputy director of information department deputy

director of restructuring office deputy director of financial department as well as deputy director of

pharmaceutical department in China National Pharmaceutical Group Corporation from July 1986 to March 2002;

he has also served as deputy director director of financial department and chief financial officer of China National

Medicines Corporation Ltd. in succession from March 2002 to May 2010. Currently Mr. Jiang serves as

Chairman of Sinopharm Holding Jiangxi Co. Ltd Sinopharm Holding Shanxi Co. ltd Sinopharm Holding

Tianjin Co. ltd. and China National Medicines Corporation Ltd; Director of Sinopharm Holding H.K. Co. ltd and

China National Finance Corporation Ltd; and executive Director of Beijing Sinopharm Taiyuan Property

Management Co. Ltd and SINOPHARM Shanghai Co. Ltd; he serves as Director of the 6th 7th and 8th BOD of

the Company since March 2011.Mr. Lian Wanyong is vice president of Sinopharm Group Co. Ltd. He joined China National Pharmaceutical

(Group) Corporation Guangzhou Company in 1996 and successively served as product director of Yuexing

Pharmaceutical Co. Ltd. and senior product manager of Hong Kong Tianjian International Co. Ltd. From August

2002 to January 2004 he served as deputy manager of the financial department of Barr laboratories Inc. USA.

From January 2004 to June 2005 he was appointed as manager of operational audit department of China

Medicinal Materials Group Company. From July 2005 to January 2008 he was appointed as deputy director of

financial asset management department and director of investment management department of China National

Pharmaceutical (Group) Corporation. From December 2010 to February 2014 he served as deputy general

manager of Beijing Sinopharm Asset Management Center from April 2014 to January 2018 he served as deputy

director of the Policy Research Office of China National Pharmaceutical Group Corporation.Since January 2018 he has been serving as vice president of Sinopharm Group Co. Ltd. and Mr. Lian is

concurrently serving as chairman of Sinopharm Holding Anhui Co. Ltd. Sinopharm Holding Hubei Co. Ltd.and Sinopharm Holding Changsha Co. Ltd. and director of China National Medicines Corporation Ltd. director

of China National Zhongjin (Shanghai) Medical Health Investment Management Co. Ltd and director of West

China Dental Co. Ltd. He serves as Director of 8th BOD of the Company since April 2018.

Mr. Li Dongjiu is vice president and general counsel of Sinopharm Group Co. Ltd. From April 1997 to January

2002 he served as deputy general manager of North China Pharmaceutical Huasheng Co. Ltd. from January

2002 to December 2009 he served as deputy general manager of North China Pharmaceutical Co. Ltd. and

concurrently served as general manager of North China Pharmaceutical Group Sales Company and property

representative of North China Pharmaceutical Group Southern Company (concurrently) from December 2009 to

June 2010 he served as executive president of Shanghai Fosun Pharmaceutical Industry Development Co. Ltd.and from June 2010 to September 2011 he was appointed as vice president of Shanghai Fosun Pharmaceutical

(Group) Limited and director of the Pharmaceutical Management Committee and president of Shanghai Fosun

Pharmaceutical Industry Development Co. Ltd. from September 2011 to January 2018 he served as senior vice

president of Shanghai Fosun Pharmaceutical (Group) Limited and concurrently served as director of

pharmaceutical business and consumer goods management committee and chairman president of Shanghai Fosun

Pharmaceutical Industry Development Co. Ltd. and concurrently vice-president of pharmaceutical industry

management committee responsible for strategy investment operation and management of pharmaceutical

business and consumer product. Since January 2018 he has been serving as vice president of Sinopharm Group

Co. Ltd. Mr. Li is concurrently director of China National Medicines Corporation Ltd. and chairman of

Sinopharm Holding Fujian Co. Ltd. Sinopharm Holding Fuzhou Co. Ltd. Sinopharm Holding Guizhou Co.Ltd. Sinopharm Holding Yunnan Co. Ltd. Sinopharm Xingsha Pharmaceuticals (Xiamen) Co. Ltd. Sinopharm

Holding Hainan Co. Ltd. China National Health Online Co. Ltd. Sinopharm Chemical Reagent Co. Ltd. and

Sinopharm Holding Hutchison Whampoa Medicine Co. Ltd. Sinopharm Holding Shanxi Co. Ltd. and

Sinopharm Holding Gansu Co. Ltd. He serves as Director of 8th BOD of the Company since April 2018.Mr. Lin Zhaoxiong: Director and GM of Sinopharm Accord. Has served as deputy manager and manager of

pharmaceutical department manager of Pharmaceutical corporations and director of operation and management

department during his work in China Pharmaceutical (Group) Guangzhou Co.Ltd from January 1999 to

December 2003 in succession; He has acted as the deputy general manager of Sinopharm Holding Guangzhou

Co.Ltd; the general manager of Sinopharm Holding Guangzhou Co.Ltd from December 2006 to December 2008;

He has served as the deputy general manager of the Company from December 2008 to March 2016; Mr Lin

serves as the chairman of Sinopharm Holding Guoda Drugstore Co.Ltd since October 2017; and GM of the

Company since March 2016 Director of the 7th and 8th BOD of the Company since April 2016.

Mr. Chen Honghui professor of Lingnan (University) College of Sun Yat-Sen University a doctoral supervisor of

management. He worked in school of management Wuhan University of Science & Technology from July 1993

to June 2003 and successively acted as a tutor and instructor; he works in Lingnan (University) College of Sun

Yat-Sen University since July 2003 and also served as deputy professor and professor; vice president of the

Lingnan (University) College of Sun Yat-Sen University from 2007 to 2012; the director of department of

business administration in Lingnan College from 2008 to 2019 the director of Corporate Social Responsibility

Research Centerin Lingnan College since 2018 currently Mr. Chen serves as deputy chairman of the GDISR

independent director of Cabbeen Fashion Co. Ltd and Guangzhou Grandbuy Co. Ltd. He serves as independent

director of the 7th and 8th BOD of the Company since March 2017.Mr. Ou Yongliang is a Chinese practicing lawyer vice chairman of All China Lawyers Association vice

chairman of Guangdong Province Law Society president of the 9th and 10th Session of Guangdong Lawyers

Association director of Guangdong Hopesun Law Firm member of the 12th Session of Guangdong Provincial

Committee of the CPPCC expert advisor of the 11th Party Congress of Guangdong Provincial Party Committee of

the Communist Party of China legislative consultant of the 12th Session of Standing Committee of Guangdong

Provincial People’s Congress specially invited member of the 11th Session of Guangdong Provincial Committee

of the CPPCC member of the Guangdong Provincial Judge and Prosecutor Selection Committee representative

of the 9th Congress of Guangzhou Municipality of the Communist Party of China arbitrator of China International

Economic and Trade Arbitration Commission arbitrator of Shenzhen International Arbitration Commission

arbitrator of Shanghai International Arbitration Commission and arbitrator of Guangzhou Arbitration

Commission. He serves as independent director of the 8th BOD of the Company since April 2018.

Mr. Chen Shengqun is an associate researcher and senior accountant he has been teaching at the Shanghai

National Accounting Institute since 2013. Mr. Chen came out of the postdoctoral research station of Shanghai

University of Finance and Economics in 1998 as the first postdoctoral fellow in management accounting. He was

employed as a senior researcher at the CAFR Center of the Hong Kong Polytechnic University and is currently a

visiting professor of EDP curriculum at the Xiamen University. Since 1998 Mr. Chen has served as director of

the finance division of China Pacific Insurance Co. Ltd. in 2002 he was transferred to serve as deputy general

manager of the financing plan department of China Pacific Insurance Co. Ltd. (presiding work) at the end of

2003 he joined China Reinsurance Group and successively served as general manager of the fund application

department of China Continent Insurance (concurrently general manager of the strategic development department

and general manager assistant of China Re Asset Management Company. He serves as independent director of the

8th BOD of the Company since April 2018.

Ms. Su Weiwei: Doctor of pharmacy professor of School of Life Sciences of Sun Yat-Sen University and a

doctoral supervisor. She worked in Guangdong pharmaceutical University from July 1987 to April 2000 and

successively served as a teaching assistant lecturers associate professor and professor she serves as a professor

in Sun Yat-Sen University since May 2000. Ms. Su Weiwei have devoted herself to the research and development

of innovative drugs for many years and achieved two chemical clinical permission for first-type new drugs and

one clinical permission for the fifth-type new drugs of TCM (traditional Chinese medicine) which have

independent intellectual property rights.

2. Members of BOS:

Mr. Wen Deyong joined Sinopharm Group Co. Ltd. in September 2017 and has been serving as a non-executive

director of Sinopharm Group Co. Ltd. to this day. From September 1995 to May 2016 Mr. Wen served as a

technician in the hydro-acupuncture workshop of Chongqing No. 6 Pharmaceutical Factory field salesman of

sales department of Chongqing YaoPharma sales director of Chongqing YaoPharma Co. Ltd. general manager

of sales department 2 of Chongqing YaoPharma Co. Ltd. general manager of Northern Company of Chongqing

Haisiman Pharmaceutical Co. Ltd. vice president of Chongqing YaoPharma president of Chongqing YaoPharma

currently serves as vice president of Shanghai Fosun Pharmaceutical (Group) Co. Ltd. director of pharmaceutical

business management committee general manager of centralized procurement and procurement management

department and executive vice president of Shanghai Fosun Pharmaceutical Industry Development Co. Ltd. He

has been the chairman of the board of supervisors of the eighth board of supervisors of the Company since July

2019.

Ms. Liu Jingyun postgraduate background. Currently she serves as the director of financial and asset management

and director of assets and credit management dept. in Sinopharm Group Co. Ltd. and he successively hold a

teaching post in Nanjing Radio and Television University works in Sinopharm Group Co. Ltd. since November

2003 and serves as deputy director of assets management department director of the financial & assets

management dept. and Director of ministry of finance and credit management. She serves as supervisor of the 7th

and 8th supervisory committee of the Company since September 2016.Ms. Chen Guojing: she worked in Shenzhen Accord Medicinal Materials Company in December 1999 now she

serves as the office director and director of security department in the Company. Ms. Chen served as the financial

manager and deputy chief of Finance and Funds Department of the Company from June 2005 to December 2013

she is the member of trade union federations of the Company and chairman of the first trade union since March

2009; she served as chief (part-time) of the auditing department of the Company from January 2013 to August

2017 and chief (part-time) of the risk and operation management of the Company from January 2014 to May

2016. She serves as staff supervisor of the 8th supervisory committee of the Company since August 2018

3. Senior executive

Mr. Lin Zhaoxiong found in aforesaid previous work experience

Mr. Lin Min: Deputy GM of the Company. worked in China Pharmaceutical (Group) Guangzhou Co.Ltd with

successively taking the posts of assistant to manager deputy general manager of Pharmacy Department and

deputy general manager of purchasing in Pharmaceutical Company from Jan. 2001 to Nov. 2003; the city medical

sales director of Sinopharm Holding Guangzhou Co. Ltd. From November 2003 to January 2005; took deputy

general manager of Sinopharm Holding Guangzhou Co. Ltd from Jan. 2005 to Dec. 2008; he also acting as the

GM of distribution business dept. of the Sinopharm Accord and Sinopharm Holding Guangzhou Co. Ltd. he

serves as deputy GM of the Company since December 2008.Mr. Zhao Xiaochuan: Deputy GM of the Company. He has served as the general manager of Liaoning Accord

Chain Co. Ltd from December 2001 to April 2008; served as the general manager of Sinopharm Holding Guoda

Tian Yi Tang Drugstore Chain (Shenyang) Co. Ltd and Sinopharm Holding Guoda Shenyang Chain Co. Ltd

from May 2008 to June 2015; he has acted as general manager of Sinopharm Holding Guoda Drugstore Co. Ltd

since June 2015; He has worked as the deputy general mange of the Company since July 2017.Mr. Liu Tianyao is deputy general manager of the Company. From August 2002 to April 2009 he served as senior

director of human resources department of China National Pharmaceutical Group Corporation. From April 2009

to May 2017 he successively served as deputy director of human resources department director of talent

development department director of human resources department and director of retail medical business

development department of Sinopharm Group Co. Ltd. from December 2013 to July 2016 he concurrently

served as general manager of Shanghai Management Consulting Branch from July 2016 to May 2017 he

concurrently served as general manager of Sinopharm Holding Medical Management (Shanghai) Co. Ltd. from

May 2017 to January 2019 he has been serving as director of human resources and director of human resources

department of Sinopharm Group Co. Ltd and he serves as Deputy GM of the Company since January 2019.Mr. Lin Xinyang: Deputy GM of the Company.He took the turns of deputy GM of Nanfang Pharm. Co. deputy

GM of China Pharmaceutical (Group) Guangzhou Company Yuexing Company general supervisor of PD of

Sinopharm Holding Guangzhou Company successively since January 1996; took the post of deputy GM of

Sinopharm Holding Guangzhou Company from Jan. to Dec. 2004; serves as deputy GM of the Company since

January 2005.Mr. Lang Baochun is deputy secretary of the party committee secretary of the disciplinary committee chairman

of the labor union and general counsel of the Company. From September 2007 to March 2008 he served as

deputy director of general office of Sinopharm Group Co. Ltd. from March 2008 to December 2009 he served as

general manager of Shanghai Chuanghui Investment Co. Ltd. from January 2010 to May 2010 he served as

director of the research office of Shanghai Shibei Hi-Tech (Group) Co. Ltd. from June 2010 to September 2011

he served as deputy director of the president’s office of Sinopharm Group Co. Ltd. from October 2011 to

December 2015 he served as director of the strategic planning department of Sinopharm Group Co. Ltd. from

January 2016 to June 2017 he served as secretary of the party committee of Sinopharm Guoda Drugstore Co.Ltd. from March 2016 to February 2018 he served as deputy secretary of the party committee and secretary of

the disciplinary committee of the Company. Since March 2018 he has been serving as deputy secretary of the

party committee secretary of the disciplinary committee and chairman of the labor union of the Company. He

serves as General Counsel of the Company since August 2018

Mr. Wei Pingxiao: CFO of the Company. He took the turns of deputy section chief of financial department of

China Electronic Information Industry Group financial director of AMOI section chief of planning financial

department of China Electronic Finance Leasing Company Deputy GM of AMOI Beijing branch financial

charger of AMOI and director of its subsidiary since April 1993; and he hold the post of CFO of the Company

since December 2004.Mr. Chen Changbin: Deputy GM of the Company and Secretary of the Board. He has served as secretary of board

of directors of the Company since December 2000; he has also worked as the director of planning investment

management department of the Company as well as assistant general manager in charge of strategic planning

investment and mergers and acquisitions capital operation affairs related to three major meetings and

international co-operation. He has acted as the deputy general manager of the Company since April 2017.Post-holding in shareholder’s unit

√ Applicable □ Not applicable

Name Name of shareholder’s unit Position in shareholder’s unit n Start dated of office term

Liu Yong Sinopharm Group Co. Ltd Executive Director President November 2017

Liu Yong Sinopharm Group Co. Ltd Deputy party secretary January 2018

Li Zhiming Sinopharm Group Co. Ltd Chairman November 2017

Li Zhiming Sinopharm Group Co. Ltd Deputy party secretary November 2018

Jiang Xiuchang Sinopharm Group Co. Ltd CFO May 2010

Jiang Xiuchang Sinopharm Group Co. Ltd Deputy President July 2013

Lian Wanyong Sinopharm Group Co. Ltd Deputy President January 2018

Li Dongjiu Sinopharm Group Co. Ltd Deputy President January 2018

Li Dongjiu Sinopharm Group Co. Ltd General counsel January 2018

Liu Jingyun Sinopharm Group Co. Ltd

Director of ministry of finance and credit

management director of the financial &

assets management dept.July 2016

Post-holding in other unit

√ Applicable □ Not applicable

Name Name of other units Position in other unit n Start dated of office term

Liu Yong China National Medicines Corporation Ltd Director November 2017

Liu Yong Sinopharm Holding Guoda Drugstore Co. Ltd. Director October 2017

Liu Yong China National Scientific Instruments & MaterialsCo. Ltd Director December 2018

Liu Yong China National Medical Equipment Co. Ltd. Director December 2018

Liu Yong Sinopharm Holding H.K. Co. ltd Director GM May 2018

Li Zhiming China National Xinjiang Medicine Co. Ltd Director June 2017

Li Zhiming China National Medicines Corporation Ltd Director May 2016

Li Zhiming Sinopharm Holding Guoda Drugstore Co. Ltd. Director July 2014

Li Zhiming Shanghai Shyndec Pharmaceutical Co. Ltd Vice Chairman November 2016

Li Zhiming Sinopharm Holding H.K. Co. ltd Chairman April 2017

Li Zhiming Sinopharm Holding (China) Finance Leasing Co. Ltd Chairman November 2014

Li Zhiming China National Zhongjin (Shanghai) Medical HealthInvestment Management Co. Ltd Chairman September 2016

Li Zhiming Sinopharm Holding Medicine Investment Co. Ltd Chairman October 2017

Jiang Xiuchang Sinopharm Holding Jiangxi Co. Ltd Chairman June 2013

Jiang Xiuchang Sinopharm Holding Shanxi Co. ltd Chairman December 2013

Jiang Xiuchang Sinopharm Holding Tianjin Co. ltd Chairman December 2013

Jiang Xiuchang China National Medicines Corporation Ltd Chairman November 2017

Jiang Xiuchang Sinopharm Holding H.K. Co. ltd Director November 2011

Jiang Xiuchang China National Finance Corporation Ltd Director November 2011

Jiang Xiuchang Beijing Sinopharm Taiyuan Property ManagementCo. Ltd Executive Director December 2017

Jiang Xiuchang SINOPHARM Shanghai Co. Ltd Executive Director November 2017

Ma Zhanjun Sinopharm Holding Hubei Co. Ltd. Vice Chairman November 2018

Lian Wanyong China National Medicines Corporation Ltd Director December 2017

Lian Wanyong China National Zhongjin (Shanghai) Medical HealthInvestment Management Co. Ltd Director July 2018

Lian Wanyong West China Dental Co. Ltd Director January 2019

Lian Wanyong Sinopharm Holding Anhui Co. Ltd. Chairman January 2019

Lian Wanyong Sinopharm Holding Anhui Medicine Co. Ltd. Chairman June 2019

Lian Wanyong Sinopharm Holding Changsha Co. Ltd. Chairman June 2019

Lian Wanyong Sinopharm Holding Hubei Co. Ltd. Chairman January 2020

Li Dongjiu China National Medicines Corporation Ltd Director December 2016

Li Dongjiu Sinopharm Holding Fujian Co. Ltd Chairman February 2018

Li Dongjiu Sinopharm Holding Fuzhou Co. Ltd Chairman February 2018

Li Dongjiu Sinopharm Holding Guizhou Co. Ltd Chairman February 2018

Li Dongjiu Sinopharm Holding Yuannan Co. Ltd Chairman February 2018

Li Dongjiu Sinopharm Xingsha Pharmaceuticals (Xiamen) Co.Ltd. Chairman February 2018

Li Dongjiu Sinopharm Holding Hainan Co. Ltd. Chairman February 2018

Li Dongjiu China National Health Online Co. Ltd. Chairman February 2018

Li Dongjiu SINOPHARM Chemical Reagent Co. Ltd. Chairman December 2018

Li Dongjiu Sinopharm Holding Hutchison Whampoa MedicineCo. Ltd Chairman December 2018

Li Dongjiu Sinopharm Holding Shanxi Co. Ltd. Chairman January 2020

Li Dongjiu Sinopharm Holding Gansu Co. Ltd. Chairman January 2020

Punishment of securities regulatory authority in recent three years to the company’s current and outgoing directors

supervisors and senior management during the reporting period

□ Applicable √ Not applicable

IV. Remuneration for directors supervisors and senior executives

Decision-making procedures recognition basis and payment for directors supervisors and senior executives

(i) Remuneration decision procedure of directors supervisors senior management:

The Company implemented the annual salary system for senior executives based on the 2019 annual performance

appraisal (scheme) on management staff paid annual salary remuneration according to the appraisal results.Remuneration and appraisal committee of the company's board of directors is responsible for the formulation and

examination of salary plan and program as well as formulation and examination of salary plan and assessment

standards of directors (not including the independent directors) supervisors and senior executives. They also

evaluate the performance assessment of directors supervisors and senior officers in accordance with the

assessment criteria compensation scheme.(ii) Remuneration determining basis

The main principles of making standard of compensation are: (1) the company's overall business and the profit

level; (2) the overall salary level and dynamic index over past years; (3) difference in position and duty; (4)

relative importance and risks of position; (5) related post salary level in the same industry; (6) individual

professional ability.(iii) Actual payment

Executives get monthly basic salary and annual salary after the issuance of annual examination.

Remuneration for directors supervisors and senior executives in reporting period

In 10 thousand Yuan

Name Title Sex (F/M) Age Post-holdingstatus

Total

remuneration

before tax

obtained from the

Company

Received

remuneration

from related party

of the Company

(Y/N)

Liu Yong Chairman M 50 Currently inoffice Y

Ma Zhanjun Deputy Chairman M 59 Currently inoffice 250 Y

Li Zhiming Director M 56 Currently inoffice Y

Jiang Xiuchang Director M 56 Currently inoffice Y

Lian Wanyong Director M 49 Currently inoffice Y

Li Dongjiu Director M 54 Currently inoffice Y

Lin Zhaoxiong Director GM M 52 Currently inoffice 250 N

Chen Honghui IndependentDirector M 48

Currently in

office 12 N

Ou Yongliang IndependentDirector M 50

Currently in

office 12 N

Chen Shengqun IndependentDirector M 57

Currently in

office 12 N

Su Weiwei IndependentDirector F 60

Currently in

office 11.3 N

Wen Deyong

Chairman of

supervisory

committee

M 47 Currently inoffice Y

Wu Yijian

Chairman of

supervisory

committee

M 49 Office leaving Y

Liu Jingyun Supervisor F 43 Currently inoffice Y

Chen Guojing Staff supervisor F 49 Currently inoffice 72.02 N

Lin Min Party secretaryDeputy GM M 55

Currently in

office 225 N

Zhao Xiaochuan Deputy GM M 56 Currently inoffice 200 N

Liu Tianrao Deputy GM M 40 Currently inoffice 175 N

Lin Xinyang Deputy GM M 55 Currently inoffice 175 N

Lang Baochun

Deputy party

secretary

Secretary of

Committee for

Discipline

Inspection

General counsel

M 56 Currently inoffice 162.5 N

Wei Pingxiao CFO M 56 Currently inoffice 175 N

Chen Changbin

Deputy GM

Secretary of the

Board

M 52 Currently inoffice 150 N

Total -- -- -- -- 1881.82 --

Delegated equity incentive for directors and senior executives in reporting period

□ Applicable √ Not applicable

V. Particulars of workforce

1. Number of staff professional composition and education background

The number of current employees of parent company (people) 119

The number of current employees of main subsidiaries (people) 27128

Total number of current employees (people) 27247

The total number of employees in payroll (people) 27247

The total number of retired staff and workers that the parent company and

main subsidiaries need to bear the costs (people)

1914

Professional composition

Category of professional composition Number of professional composition (people)

Production staff 38

Salesman 19030

Technical staff 201

Financial staff 635

Administrative staff 182

Other 7161

Total 27247

Education background

Category of education Number (people)

Post-graduate qualification and above 163

Undergraduate 4109

Junior college 10090

Junior college below 12885

Total 27247

2. Remuneration policy

Sinopharm Accord and the subordinate enterprises provide perfect compensation and benefits for the staff

the compensation level is closely combined with organization (total amount of labor compensation strategy

job value) staff (capacity development performance results) and market (market level talent competition). The

company adjusts the remuneration for staff having abilities and contributions every year by the responsibility

sorting position evaluation target remuneration range positioning and the staff annual work performance and

ability assessment; at the same time performance bonuses and performance closely link together and realize win-

win of the interests of company and the interests of employees. Pay attention to the income growth requirements

of low-income groups develop annual wage growth program and implement after the deliberation and approval

of the workers' congress.

3. Training programs

Sinopharm Accord and its subordinate companies attach great importance to building learning organizations

invest training resources every year to train and develop employees at all levels and constantly improve the

company’s training and cultivating system.

Firstly optimize the training management system revise the training system management system the employee

training management system the internal trainer management system the employee continuing education

management system the intern management system the internal lecturer management system and the training

integral management system optimize internal trainers management process annual training needs and plan

management process and training implementation process.Secondly the headquarters operation headquarters and key subsidiaries all set up full-time training posts to assist

managers at all levels to carry out employee training. The company has promoted a three-level training model

throughout the company and conducted outstanding learning organizations learning projects excellent internal

trainers and excellent training managers on Teachers’ Day.Thirdly vigorously promote online training and use the online learning platform to organize online learning and

online assessment for all employees. The per capital online learning hours for all employees exceed 30 hours

covering more than 3000 people.

Fourthly the types of training include training for new recruits vocational training for employees leadership

training for managers and internal trainer training. Courses include management courses general quality courses

and vocational skills classes the courses also include group coaching of action learning outcomes conducted by

managers to employees.

Fifthly as of the end of 2019 the training expenses of the headquarters and distribution operation headquarters of

Sinopharm Accord and the headquarters of Guoda Drugstore were about 1.85 million yuan and the per capital

period reached more than 50 hours. In 2019 it won the Excellent Learning Project Award of the “Training”

magazine and the Excellent Learning Case Award of Sinopharm.

4. Labor outsourcing

√ Applicable □ Not applicable

Total number of working hours of labor outsourcing (Hour) 799704

Total remuneration paid of labor outsourcing (RMB) 30726586.84

Section X. Corporate Governance

I. Corporate governance of the Company

During the reporting period the company strictly followed the requirements of the Company Law Securities Law

Government Guidelines for Listed Companies and the relevant laws and regulations of the China Securities

Regulatory Commission and Shenzhen Stock Exchange continuously improved the company’s corporate

governance structure and established and improved the company’s internal control. The general meeting of

shareholders the board of directors and the board of supervisors have standardized operations independent

directors and special committees of the board of directors have performed their respective duties continuously

strengthened company management controlled and prevented risks standardized company operations and

improved operational efficiency. The company gradually formed a governance mechanism with clear powers and

responsibilities standardized operations mutual coordination and mutual checks and balances among power

institutions decision-making institutions supervisory institutions and managers.

During the reporting period the company strengthened internal coordination and communication revised and

improved internal control related systems and sorted out various work processes and further improved the

company’s management quality and operational efficiency. At the same time it continuously strengthened the

management of inside information further improved the process systems of inside information management

strengthened the disclosure of information improved the management of investor relations strengthened and

improved the management of affiliated companies so that the company’s standard operation level has been

further improved. In the future the company will continue to strictly implement the specific requirements of the

regulatory agencies strengthen the implementation improve the evaluation mechanism and improve the

corporate governance structure at the same time strengthen supervision and strive to promote governance to a

higher level.Is there any difference between the actual condition of corporate governance and relevant regulations about

corporate governance for listed company from CSRC?

□Yes √ No

There are no differences between the actual condition of corporate governance and relevant regulations about

corporate governance for listed company from CSRC.II. Independence of the Company relative to controlling shareholders’ in aspect of businesses

personnel assets organization and finance

The Company totally separates from the controlling shareholders in business personnel assets institutions

financial and other aspects with independent and complete self-management ability.

1. The business: the Company was independent from controlling shareholders having a complete business system

and self-managing ability; the company has independent procurement and sales system thus all procurement and

sales of drugs and raw materials is in charge of the purchasing department and subordinate subsidiary branch and

production enterprises; production supply marketing and R & D separate from each other; the Company is a

legal market person with independent operation.

2. Personnel: procedures of the controlling shareholder nominating directors and general and deputy general

manager are legal; no intervene on the appointment and removal of personnel made by the board of directors and

shareholders’ meeting happened; the Company set up independent human resource department responsible for

assessment training and salary review on staff making rules and regulations and handbook the employees should

abide by. Labor personnel wages and pension medical insurance and other insurance are independently managed.

3. Institution: production and operation mechanism and administrative management is completely independent

from the controlling shareholder or actual controller; offices and sites of business operation separate from the

controlling shareholder; the Company established corporate governance structure where the board of directors

board of supervisors and managers carry out their duties and exercise their respective duties in accordance with

relevant provisions of the articles of association.

4. Asset: property and rights relationship between the Company and the controlling shareholder is clear with

independent operations; the company has independent production system auxiliary production system and

supporting system; industrial property rights trademarks non-patented technology and other intangible assets

owned by the Company and its subsidiary.

5. Financial aspects: the Company established independent financial departments and independent financial

accounting system; the Company opened a bank account independently; the financial staff is independent without

taking part-time and receiving remuneration in the controlling shareholder; the Company pays tax independently.III. Horizontal competition

√ Applicable □ Not applicable

Type

Name of

controlling

shareholder

Nature of

controlling

shareholder

Reason Solution measure

Work schedule

and follow-up

plan

Horizontal

competition

Sinopharm Holding

State-owned

control

Distribution subsidiary

of Sinopharm Holding

established some social

retail pharmacy which

might have horizontal

competition with the

Guoda Drugstore the

subordinate enterprise

of the listed company

after restructuring

In December 2016 Sinopharm

Holding issued a commitment

letter of avoiding horizontal

competition with Sinopharm

Accord and promise to solve

the horizontal competition in

respect of pharmaceutical retail

business in an appropriate way

within five years since the date

when reorganization completed

Normally

implementing

Horizontal

competition

SINOPHARM

State-owned

control

Distribution subsidiary

of SINOPHARM

established some social

retail pharmacy which

might have horizontal

competition with the

Guoda Drugstore the

subordinate enterprise

of the listed company

after restructuring

In December 2016

SINOPHARM issued a

commitment letter of avoiding

horizontal competition with

Sinopharm Accord and promise

to solve the horizontal

competition in respect of

pharmaceutical retail business in

an appropriate way within five

years since the date when

reorganization completed

Normally

implementing

IV. AGM (Annual General Meeting) and extraordinary shareholders’ general meeting held in

the Period

1. AGM

Session of meeting Type

Ratio of

investor

participation

Date Date ofdisclosure Index of disclosure

First extraordinary

general meeting of

2019

Extraordinary

general meeting 62.79% 2019-01-24 2019-01-25

Juchao Website—(http://www.cninfo.com.cn) “Notice ofResolution of First extraordinary generalmeeting of 2019” No.: 2019-07

Annual General

Meeting of 2018 AGM 65.67% 2019-05-17 2019-05-18

Juchao Website—(http://www.cninfo.com.cn) “Notice ofResolution of AGM of 2018” No.: 2019-

26

Second

extraordinary

general meeting of

2019

Extraordinary

general meeting 66.21% 2019-09-12 2019-09-13

Juchao Website—(http://www.cninfo.com.cn) “Notice ofResolution of Second extraordinarygeneral meeting of 2019” No.: 2019-38

Third extraordinary

general meeting of

2019

Extraordinary

general meeting 68.52% 2019-11-13 2019-11-14

Juchao Website—(http://www.cninfo.com.cn) “Notice ofResolution of Third extraordinary generalmeeting of 2019” No.: 2019-45

2. Request for extraordinary general meeting by preferred stockholders whose voting rights restore

□ Applicable √ Not applicable

V. Responsibility performance of independent directors

1. The attending of independent directors to Board meetings and shareholders general meeting

The attending of independent directors to Board Meeting & shareholders general meeting

Name of

independent

director

Times of

Board meeting

supposed to

attend in the

report period

Times of

Presence

Times of

attending by

communicatio

n

Times of

entrusted

presence

Times of

Absence

Absent the

Meeting for

the second

time in a row

(Y/N)

Times

attending the

shareholders

general

meeting

Chen Honghui 8 1 7 0 0 N 1

Ou Yongliang 8 1 7 0 0 N 1

Su Weiwei 7 1 6 0 0 N 1

Chen Shengqun 8 1 7 0 0 N 1

Explanation of absent the Board Meeting for the second time in a row

2. Objection for relevant events from independent directors

Independent directors come up with objection about Company’s relevant matters

□Yes √No

Independent directors have no objections for relevant events in reporting period

3. Other explanation about responsibility performance of independent directors

The opinions from independent directors have been adopted

√ Yes □ No

Explanation on advice that accepted/not accepted from independent directors

During the reporting period the independent directors performed their duties in a careful diligent dedicated

attitude in accordance with requirements of the "Working System of Independent Director" offered some useful

suggestions and opinions on business decision-making legal affairs financial management and other aspects;

carefully examined important matters those needed opinions of independent directors made independent

judgments and issued a written independent opinion on major related transactions daily related transactions

accountancy hiring and other matters playing a positive role in safeguarding the legitimate rights and interests of

small shareholders. Besides independent directors played an important role in operation of special committee. At

the same time the Company can guarantee independent directors and other directors of the same right to know.

During the reporting period the independent directors have no objection on the related issues of the Company.

VI. Duty performance of the special committees under the board during the reporting period

(i) Duties fulfillment of the board of directors and audit committee on internal control over risk

Internal control on risk and Audit Committee of the board of directors of the company comprises three

independent directors and three directors including the convener (professional accountant) is an independent

director. In accordance with relevant provisions of China Securities Regulatory Commission and Shenzhen Stock

Exchange and working system Internal control on risk and Audit Committee of the board of directors seriously

performed duties in a dedicated attitude. In the annual financial report audit they acted as supervisors maintained

individuality of audit and issued a series of notices such as the Written Opinion on Financial Accounting

Statements Issued by the Company before CPA of Annual Examination Entered the Written Opinion on Financial

Accounting Statements after Preliminary Audit Issued by CPA of Annual Examination the Summary Report of

Internal Risk Control and Audit Committee on the Annual Audit Work of CPA as well as the Resolution on

Rehire the Audit Institution. Its main duties comprise the following:

1. Risk internal control and audit committee is responsible for determining the audit work schedule negotiating

with CPA who engages in audit;

2. Before CPA enters audit committee should review the financial statements prepared by the Company and issue

written opinions;

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 2019 approved proposal of financial accounting report summary

report of annual audit work of CPA and rehiring Ernst & Young CPA (Special General Partnership) as the audit

institution and then formed a resolution to submit to board of directors for approval.(ii) Duties fulfillment of Remuneration and Appraisal Committee

As special working mechanism of the board of directors the remuneration and appraisal committee are

responsible for approving the assessment standard of directors and senior executives formulating and reviewing

compensation policies and programs of directors and executive. And they take charge in examining according to

the standard and policies. The remuneration and appraisal committee is composed of three independent directors;

convener is Chen Honghui an independent director.

During the reporting period remuneration and assessment committee actively performed duty; clearly defined

their responsibilities; did serious research and appraisal on the remuneration and appraisal system especially

salary assessment system and program over directors supervisors and senior executive. According to working

rules of the remuneration and appraisal committee they have rights to check regular reports meetings records

business planning and other materials by telephone interviews and other methods to learn the performance of

directors executives. And they’re required to submit problems existing in implementation of system to the Board

of Directors and raise up suggestion on them. Their contents are as follows:

1. In 2019 the remuneration and appraisal committee carried out the performance evaluation of executives

according to the 2018 Annual operation standard and performance.

2. It proposed the "2020 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 2019 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 2019 annual

report about personnel salary of the directors supervisors and senior management is real and accurate.VII. Works from Supervisory Committee

The Company has risks in reporting period that found in supervisory activity from supervisory committee

□ Yes √ No

Supervisory committee has no objection about supervision events in reporting period

VIII. Examination and incentives of senior management

Senior executives of the Company took responsibility for the board of directors in the reporting period the board

of directors implemented the performance checking mechanism that the remuneration of senior executives related

with their performance checking with achievement as direction and made relevant reward and punishment

according to target completion. The Company’s relevant incentive and restriction mechanism gradually in order to

further exert the enthusiasm and creativity of senior executives urge the senior executives to perform the

obligations of being honest and diligent. The Company had no incentive mechanism for senior executives such as

stock option purchase of management team and equity held by owner.IX. Internal Control

1. Details of major defects in IC appraisal report that found in reporting period

□Yes √ No

2. Appraisal Report of Internal Control

Disclosure date of full internal control

evaluation report

22 April 2020

Disclosure index of full internal control

evaluation report

” Self-evaluation report of internal control for 2019” in Juchao website

(www.cninfo.com.cn) appointed by Shenzhen Stock Exchange

The ratio of the total assets of units

included in the scope of evaluation

accounting for the total assets on the

company's consolidated financial

statements

98.90%

The ratio of the operating income of units

included in the scope of evaluation

accounting for the operating income on the

company's consolidated financial

statements

99.75%

Defects Evaluation Standards

Category Financial Reports Non-financial Reports

Qualitative criteria

Financial report defects are mainly judged

and decided by the degree of influence and

the likelihood of occurrence to the

misstatements of financial reports caused by

defects. (1) Significant defects: a

combination of one or multiple internal

control defects that exists in internal control

and may cause the material misstatements in

financial statements cannot be prevented

found or corrected in time; (2) Major

defects: a combination of one or multiple

internal control defects that exists in internal

control and has lower severity level than

significant defects but still should be

concerned by the superintendents of

enterprise financial reports; (3) Common

defects: other defects except for significant

and major defects.Non-financial report defects are mainly

judged and decided by the degree of

influence and the likelihood of

occurrence of defects to the validity of

business process. (1) Significant defects:

a combination of one or multiple internal

control defects that may cause the

enterprise’s serious deviation to internal

control objectives; (2) Major defects: a

combination of one or multiple internal

control defects whose severity level and

economic consequences are lower than

significant defects but still may cause the

enterprise’s deviation to internal control

objectives; (3) Common defects: other

defects except for significant and major

defects.Quantitative standard

A quantitative criterion determines the

degree of importance of misstatements

(including missing reports) in the

consolidated statements of listed companies

based on the consolidated statement data. (1)

Significant defects: equal to or greater than

5% of profit before tax; (2) Major defects:

Between 1% and 5% of profit before tax; (3)

Common defects: Less than or equal to 1%

of profit before tax

Quantitative standard: A quantitative

criterion determines the degree of

importance of the company’s defects

based on the amount of direct loss and

the degree of significant influence to the

company. (1) Significant defects: the

amount of direct property loss is or more

than 10 million Yuan or has been

officially disclosed and caused negative

effects to periodic report disclosure of

the joint-stock companies; (2) Major

defects: the amount of direct property

loss is between 5 million and 10 million

Yuan or has been punished by the

national government departments but has

not caused negative effects to periodic

report disclosure of the joint-stock

companies;(3) Common defects: the

amount of direct property loss is between

0.1 million and 5 million Yuan or has

been punished by the provincial or sub-

provincial government departments but

has not caused negative effects to

periodic report disclosure of the joint-

stock companies.

Amount of significant defects in financial

reports

0

Amount of significant defects in non-

financial reports

0

Amount of important defects in financial

reports

0

Amount of important defects in non-

financial reports

0

X. Auditing report of internal control

√ Applicable □ Not applicable

Deliberations in Internal Control Audit Report

According to relevant regulations and “Basic Rules of Internal Control for Enterprises” China National Accord Medicines

Corporation Ltd. in all major aspects keeps an efficiency of internal control of financial report dated 31 December 2019

Disclosure details of audit report of

internal control

Disclosed

Disclosure date of audit report of

internal control (full-text)

22 April 2020

Index of audit report of internal

control (full-text)

Audit Report of Internal Control under the name of China National Accord Medicines

Corporation Ltd. released on Juchao Website (http://www.cninfo.com.cn)

Opinion type of auditing report of

IC

Standard unqualified

Whether the non-financial report

had major defects

No

Carried out modified opinion for internal control audit report from CPA

□Yes √ No

The internal control audit report issued by CPA has concerted opinion with self-evaluation report issued from

the Board

√ Yes □ No

Section XI. Corporate Bond

Whether the Company has a corporation bonds that issuance publicly and listed on stock exchange and

without due on the date when annual report approved for released or fail to cash in full on due

No

Section XII. Financial Report

AUDITOR’S REPORT

Ernst & Young Hua Ming (2020) Shen Zi No. 61295118_H01

China National Accord Medicines Corporation Ltd.

To the shareholders of China National Accord Medicines Corporation Ltd.(I)Opinion

We have audited the financial statements of China National Accord Medicines Corporation Ltd. (the

“Company”) which comprise the consolidated and the Company’s balance sheets as at 31 December 2019

and the consolidated and the Company’s income statements the consolidated and the Company’s

statements of changes in equity and the consolidated and the Company’s statements of cash flows for the

year then ended and notes to the financial statements.In our opinion the accompanying financial statements present fairly in all material respects the consolidated

and the Company’s financial position as at 31 December 2019 and the consolidated and the Company’s

financial performance and cash flows for the year then ended in accordance with Accounting Standards for

Business Enterprises (“ASBEs”).

(II)Basis for opinion

We conducted our audit in accordance with China Standards on Auditing (“CSAs”). Our responsibilities under

those standards are further described in the Auditor’s responsibilities for the audit of the financial statements

section of our report. We are independent of the Company in accordance with China Code of Ethics for

Certified Public Accountants (the “Code”) and we have fulfilled our other ethical responsibilities in accordance

with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a

basis for our opinion.(III)Key audit matters

Key audit matters are those matters that in our professional judgement were of most significance in our audit

of the financial statements of the current period. These matters were addressed in the context of our audit of

the financial statements as a whole and in forming our opinion thereon and we do not provide a separate

opinion on these matters. For each matter below our description of how our audit addressed the matter is

provided in that context.We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the financial

statements section of our report including in relation to these matters. Accordingly our audit included the

performance of procedures designed to respond to our assessment of the risks of material misstatement of

the financial statements. The results of our audit procedures including the procedures performed to address

the matters below provide the basis for our audit opinion on the accompanying financial statements.

AUDITOR’S REPORT (Continued)

Ernst & Young Hua Ming (2020) Shen Zi No. 61295118_H01

China National Accord Medicines Corporation Ltd.

(III)Key audit matters (continued)

Key audit matter How our audit addressed the key audit

matter

Impairment of goodwill

The carrying value of goodwill amounted to

RMB944079884.56 as at 31 December 2019

and was allocated to the Company’s cash-

generating units (“CGUs”) of pharmaceutical

distribution and retail pharmacy.Under ASBEs the Company is required to

annually perform the impairment test for

goodwill. The impairment test is based on the

recoverable amount of the respective CGUs to

which the goodwill is allocated. The

recoverable amount of the CGUs is

determined by the higher of the present value

of the forecasted future cash flows and the fair

value of the asset net of its disposal cost.

Assumptions such as the forecasted future

cash flows and discount rate are set up by

applying estimates and significant judgements

by management. Therefore we considered

this to be a key audit matter.The Company’s disclosures about impairment

of goodwill are included in Note III (17 34) and

Note V (17) to the financial statements.The procedures performed in order to address

this matter are as follows:

1) We invited internal evaluation experts to

assist in evaluating the goodwill impairment

method used and forecasted figures used in

the impairment test especially the discount

rate and perpetual growth rate.

2) We assessed the rationality of the forecasts

used with respect to future revenues and

operating results also compared the

forecasts with the historical performance of

the respective CGUs and the industry

trends. In particular we re-examined the

future revenue growth rate projected gross

rate related expenses and so on.

3) We also re-examined the sufficiency of

disclosure regarding goodwill.

AUDITOR’S REPORT (Continued)

Ernst & Young Hua Ming (2020) Shen Zi No. 61295118_H01

China National Accord Medicines Corporation Ltd.

(III) Key audit matters (continued)

Key audit matter How our audit addressed the key audit

matter

Impairment of accounts receivable

Major clients of the Company are medical

establishments pharmacy chain stores

monomer drugstores community medical

service centers downstream distribution

companies etc. As at 31 December 2019 the

Company had net accounts receivable of

RMB10617981893.52 representing 31.68%

of the Group’s total assets.

According to ASBE 22 – Recognition and

measurement of Financial Instruments

management utilizes the expected credit loss

model to measure the impairment of financial

assets. Management’s estimation of the

expected credit loss model is based on the

historical default rate of the Group and other

specific factors including types of client aging

of the ending balance collection history write-

offs the migration rate and estimated weighted

financing cost. At the same time management

also takes into consideration forward-looking

information including whether disputes exist

the expected macro-economic environment

etc. During the year significant management

judgement and estimates were involved during

the classification of the credit exposure

portfolio and assessment of the expected

credit loss and therefore we considered this

to be a key audit matter.The Company’s disclosures about impairment

of accounts receivable are included in Note III

(8 34) and Note V (3) to the financial

statements.The procedures performed in order to address

this matter are as follows:

1) We re-examined management’s internal

control that relates to impairment of

accounts receivable.

2) We discussed the bad debt policy with

management and evaluated the sufficiency

of bad debt provision including the adequacy

of the bad debt provision assessment

method.

3) We discussed with management regarding

the recoverability of individually significant

accounts receivable for which provision for

bad debts is recognised separately.

4) We tested the aging of accounts receivable

including a test of information system

automatic controls related to information

system automatically-generated aging

analysis and carried out analytical reviewing

procedures for the aging analysis in order to

confirm the accuracy of basic data used by

management for bad debt provision for

accounts receivable.

5) We reviewed the credit profile and carried

out background check for significant clients.

6) We reviewed and evaluated the sufficiency

of the Group’s disclosure related to accounts

receivable.

AUDITOR’S REPORT (Continued)

Ernst & Young Hua Ming (2020) Shen Zi No. 61295118_H01

China National Accord Medicines Corporation Ltd.

(IV)Other information

The management of the Company is responsible for the other information. The other information comprises

the information included in the annual report other than the financial statements and our auditor’s report

thereon.Our opinion on the financial statements does not cover the other information and we do not express any form

of assurance conclusion thereon.In connection with our audit of the financial statements our responsibility is to read the other information and

in doing so consider whether the other information is materially inconsistent with the financial statements or

our knowledge obtained in the audit or otherwise appears to be materially misstated.If based on the work we have performed we conclude that there is a material misstatement of this other

information we are required to report that fact. We have nothing to report in this regard.(V)Responsibilities of the management and those charged with governance for the financial

statements

The management of the Company is responsible for the preparation and fair presentation of the financial

statements in accordance with ASBEs and for designing implementing and maintaining such internal control

as the management determines is necessary to enable the preparation of financial statements to be free from

material misstatement whether due to fraud or error.In preparing the financial statements management is responsible for assessing the Company’s ability to

continue as a going concern disclosing as applicable matters related to going concern and using the going

concern basis of accounting unless management either intends to liquidate the Company or to cease

operations or has no realistic alternative but to do so.Those charged with governance are responsible for overseeing the Company’s financial reporting process.

AUDITOR’S REPORT (Continued)

Ernst & Young Hua Ming (2020) Shen Zi No. 61295118_H01

China National Accord Medicines Corporation Ltd.

(VI)Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free

from material misstatement whether due to fraud or error and to issue an auditor’s report that includes our

opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in

accordance with CSAs will always detect a material misstatement when it exists. Misstatements can arise

from fraud or error and are generally considered material if individually or in the aggregate they could

reasonably be expected to influence the economic decisions of users taken on the basis of these financial

statements.

As part of an audit in accordance with CSAs we exercise professional judgement and maintain professional

scepticism throughout the audit. We also:

(1) Identify and assess the risks of material misstatement of the financial statements whether due to fraud

or error design and perform audit procedures responsive to those risks and obtain audit evidence that

is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material

misstatement resulting from fraud is higher than for one resulting from error as fraud may involve

collusion forgery intentional omissions misrepresentations or the override of internal control.

(2) Obtain an understanding of internal control relevant to the audit in order to design audit procedures

that are appropriate in the circumstances.

(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting

estimates and related disclosures made by the management.

(4) Conclude on the appropriateness of management’s use of the going concern basis of accounting and

based on the audit evidence obtained whether a material uncertainty exists related to events or

conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If

we conclude that a material uncertainty exists we are required to draw attention in our auditor’s report

to the related disclosures in the financial statements or if such disclosures are inadequate to modify

our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s

report. However future events or conditions may cause the Company to cease to continue as a going

concern.

(5) Evaluate the overall presentation structure and content of the financial statements including the

disclosures and whether the financial statements represent the underlying transactions and events in

a manner that achieves fair presentation.

(6) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or

business activities within the Company to express an opinion on the financial statements. We are

responsible for the direction supervision and performance of the group audit. We remain solely

responsible for our audit opinion.

AUDITOR’S REPORT (Continued)

Ernst & Young Hua Ming (2020) Shen Zi No. 61295118_H01

China National Accord Medicines Corporation Ltd.

(VI)Auditor’s responsibilities for the audit of the financial statements (continued)

We communicate with those charged with governance regarding among other matters the planned scope

and timing of the audit and significant audit findings including any significant deficiencies in internal control

that we identify during our audit.We also provide those charged with governance with a statement that we have complied with relevant ethical

requirements regarding independence and to communicate with them all relationships and other matters that

may reasonably be thought to bear on our independence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine those matters that were

of most significance in the audit of the financial statements of the current period and are therefore the key

audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public

disclosure about the matter or when in extremely rare circumstances we determine that a matter should not

be communicated in our report because the adverse consequences of doing so would reasonably be

expected to outweigh the public interest benefits of such communication.

Ernst & Young Hua Ming LLP Chinese Certified Public Accountant: Li Jian Guang

(Engagement partner)

Chinese Certified Public Accountant: Li Yuan Fen

Beijing the People’s Republic of China 20 April 2020

Important Notice

This auditor’s report is an English translation of the auditor’s report for the audit engagements which adopt CSAs.In case the English version does not conform to the Chinese version the Chinese version prevails.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

CONSOLIDATED BALANCE SHEET

31 December 2019 Expressed in Renminbi Yuan

ASSETS Note V 31 December 2019 31 December 2018

Current assets

Cash and bank balances 1 8882334845.79 8096158013.24

Notes receivable 2 793301688.64 789536654.23

Accounts receivable 3 10617981893.52 9336861647.92

Receivables financing 4 446342588.46 567775275.40

Advances to suppliers 5 384882547.24 583484515.95

Other receivables 6 477988244.98 637116650.64

Inventories 7 4947424591.53 4389335942.19

Other current assets 8 102198564.38 95347629.18

Total current assets 26652454964.54 24495616328.75

Non-current assets

Long-term equity investments 9 2105114410.88 1880393786.10

Other equity instrument investment 10 116021000.00 13685760.00

Other non-current financial assets 11 140000000.00 140000000.00

Investment properties 12 138900358.30 144894495.97

Fixed assets 13 612599944.11 607933827.67

Construction in progress 14 31582575.84 36412614.61

Right-of-use assets 15 1955461133.01 -

Intangible assets 16 319946727.04 319207126.15

Goodwill 17 944079884.56 833547800.60

Long-term prepaid expenses 18 366462139.01 311328706.46

Deferred tax assets 19 60631015.99 74914209.95

Other non-current assets 20 77354970.39 72365863.71

Total non-current assets 6868154159.13 4434684191.22

Total assets 33520609123.67 28930300519.97

The accompanying notes form an integral part of these financial statements.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

CONSOLIDATED BALANCE SHEET (CONTINUED)

31 December 2019 Expressed in Renminbi Yuan

LIABILITIES AND SHAREHOLDERS’

EQUITY Note V 31 December 2019 31 December 2018

Current liabilities

Short-term borrowings 22 1453018300.01 2608626099.82

Notes payable 23 5555697557.53 3416755681.80

Accounts payable 24 6554105124.13 6468535961.17

Contract liabilities 25 302650567.97 255590612.37

Employee benefits payable 26 255827721.66 231866407.40

Tax payable 27 250118388.14 241980412.72

Other payables 28 1756858461.02 1528424590.29

Non-current liabilities due within one year 29 601427093.62 5861324.37

Other current liabilities 30 749710.19 292465.75

Total current liabilities 16730452924.27 14757933555.69

Non-current liabilities

Long-term borrowings 31 - 31638984.25

Lease liabilities 32 1182407085.08 -

Long-term payables 33 800000.00 4563978.52

Long-term employee benefits payable 34 1433000.00 2050000.00

Deferred income 35 88704272.88 91491170.40

Deferred tax liabilities 19 83717486.28 67605161.88

Other non-current liabilities 36 73256514.93 69241176.18

Total non-current liabilities 1430318359.17 266590471.23

Total liabilities 18160771283.44 15024524026.92

The accompanying notes form an integral part of these financial statements.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

CONSOLIDATED BALANCE SHEET (CONTINUED)

31 December 2019 Expressed in Renminbi Yuan

LIABILITIES AND

SHAREHOLDERS’ EQUITY Note V 31 December 2019 31 December 2018

Shareholders’ equity

Share capital 37 428126983.00 428126983.00

Capital surplus 38 4363007511.57 4320984981.51

Other comprehensive income 39 45917342.77 -

Surplus reserves 40 214063491.50 214063491.50

Retained earnings 41 7755295537.08 6655257147.27

Shareholders’ equity attributable to

shareholders of the parent 12806410865.92 11618432603.28

Non-controlling interests 2553426974.31 2287343889.77

Total shareholders’ equity 15359837840.23 13905776493.05

Total liabilities and shareholders’

equity 33520609123.67

28930300519.97

The accompanying notes form an integral part of these financial statements.The financial statements have been signed by:

Legal representative: Financial controller: Head of Accounting Department:

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

CONSOLIDATED INCOME STATEMENT

Year ended 31 December 2019 Expressed in Renminbi Yuan

Note V 2019 2018

Operating revenue 42 52045764143.21 43122385521.23

Less: Operating costs 42 46292408840.53 38024108631.15

Taxes and surcharges 43 136293695.54 121012139.02

Selling expenses 44 3055403668.16 2762789885.77

Administrative expenses 45 842014983.53 783338308.19

Finance costs 46 119972954.79 51490020.59

Including: Interest expense 271718934.85 140315267.43

Interest income 139842489.11 81119506.63

Add: Other income 47 43413430.42 28458401.31

Investment income 48 246185242.97 258524453.70

Including: Investment income from associates 331171902.87 319903890.47

Income from the derecognition of financial

assets measured at amortised cost (86377492.55) (61372718.53)

Credit impairment losses 49 (53163490.61) (298479.55)

Impairment losses 50 (3108889.20) (2744605.36)

Gain on disposal of assets 51 2551175.02 7392547.56

Operating profits 1835547469.26 1670978854.17

Add: Non-operating income 52 25586916.14 12715353.51

Less: Non-operating expenses 53 4476248.90 4764850.15

Total profit 1856658136.50 1678929357.53

Less: Income tax expenses 56 372439441.37 330498245.68

Net profit 1484218695.13 1348431111.85

Net profit classified by continuing operations

Profit or loss from continuing operations 1484218695.13 1348431111.85

Net profit classified by attribution of ownership

Net profit attributable to owners of the parent 1271289183.01 1210742435.78

Non-controlling interests 212929512.12 137688676.07

Other comprehensive income net of tax 76618063.81 -

Other comprehensive income net of tax attributable to owners of

the parent 39 45917342.77 -

Other comprehensive income that will not be reclassified to profit or

loss

Change in the fair value of other equity investments 46050708.96 -

Other comprehensive income that may be reclassified to profit or

loss

Other comprehensive income using the equity method that may

be reclassified to profit or loss (133366.19) -

Other comprehensive income net of tax attributable to non-

controlling interests 39 30700721.04 -

Total comprehensive income 1560836758.94 1348431111.85

The accompanying notes form an integral part of these financial statements.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

CONSOLIDATED INCOME STATEMENT (CONTINUED)

Year ended 31 December 2019 Expressed in Renminbi Yuan

Note V 2019 2018

Total comprehensive income 1560836758.94 1348431111.85

Including:

Total comprehensive income attributable to

owners of the parent

1317206525.78 1210742435.78

Total comprehensive income attributable to

non-controlling interests

243630233.16 137688676.07

Earnings per share 57

Basic earnings per share 2.97 2.83

Diluted earnings per share 2.97 2.83

The accompanying notes form an integral part of these financial statements.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

For the Year ended 31 December 2018

(Expressed in Renminbi Yuan)

2019

Attributable to owners of the parent

Share capital Capital surplus

Other comprehensive

income Surplus reserves Retained earnings Subtotal

Non-controlling

interests Total equity

Opening balance of the current year 428126983.00 4320984981.51 - 214063491.50 6655257147.27 11618432603.28 2287343889.77 13905776493.05

Movements in the current year - 42022530.06 45917342.77 - 1100038389.81 1187978262.64 266083084.54 1454061347.18

(1) Total comprehensive income - - 45917342.77 - 1271289183.01 1317206525.78 243630233.16 1560836758.94

(2) Capital paid and reduced by

owners - 42022530.06 - - - 42022530.06 62799658.33 104822188.39

1.Capital injection by owners - - - - - - 48136000.00 48136000.00

2.Others - 42022530.06 - - - 42022530.06 14663658.33 56686188.39

(3) Profit distribution - - - - (171250793.20) (171250793.20) (40346806.95) (211597600.15)

1.Distribution to equity owners - - - - (171250793.20) (171250793.20) (40346806.95) (211597600.15)

Closing balance of the current year 428126983.00 4363007511.57 45917342.77 214063491.50 7755295537.08 12806410865.92 2553426974.31 15359837840.23

The accompanying notes form an integral part of these financial statements.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (Continued)

For the Year ended 31 December 2018

(Expressed in Renminbi Yuan)

2018

Attributable to owners of the parent

Share capital Capital surplus Surplus reserves Retained earnings Subtotal

Non-controlling

interests Total equity

Opening balance of the current year 428126983.00 3181429064.99 214063491.50 5572952806.39 9396572345.88 530930411.26 9927502757.14

Movements in the current year - 1139555916.52 - 1082304340.88 2221860257.40 1756413478.51 3978273735.91

(1) Total comprehensive income - - - 1210742435.78 1210742435.78 137688676.07 1348431111.85

(2) Capital paid and reduced by

owners - 1139555916.52 - - 1139555916.52 1679926889.17 2819482805.69

1.Capital injection by owners - 1120284623.39 - - 1120284623.39 2793191200.00 3913475823.39

2.Others - 19271293.13 - - 19271293.13 (1113264310.83) (1093993017.70)

(3) Profit distribution - - - (128438094.90) (128438094.90) (61202086.73) (189640181.63)

1.Distribution to equity owners - - - (128438094.90) (128438094.90) (61202086.73) (189640181.63)

Closing balance of the current year 428126983.00 4320984981.51 214063491.50 6655257147.27 11618432603.28 2287343889.77 13905776493.05

The accompanying notes form an integral part of these financial statements.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

CONSOLIDATED STATEMENT OF CASH FLOWS

Year ended 31 December 2019 Expressed in Renminbi Yuan

Note V 2019 2018

1. CASH FLOWS FROM OPERATING ACTIVITIES

Cash receipts from the sale of goods and the

rendering of services 55803880635.86 46794007122.39

Receipts of taxes and surcharges refunds 14595925.20 1777623.17

Other cash receipts relating to operating

activities 58

740730355.35 679596722.04

Total cash inflows from operating activities 56559206916.41 47475381467.60

Cash payments for goods and services 49939998830.19 41436895750.53

Cash payments to and on behalf of employees 2175588129.28 1893939719.20

Payments of all types of taxes and surcharges 1270243180.50 1096228714.78

Other cash payments relating to operating

activities 58 1173024693.24 1725710930.82

Total cash outflows from operating activities 54558854833.21 46152775115.33

Net cash flows from operating activities 59 2000352083.20 1322606352.27

2. CASH FLOWS FROM INVESTING ACTIVITIES

Cash receipts from returns of investments 151841842.08 131401264.72

Net cash received from disposal of fixed assets

intangible assets and other long-term assets 5299820.29 5978720.99

Net cash received for acquisition of subsidiaries

and other business units 59 - 2468522.33

Net cash receipts from disposal of subsidiaries

and other business units 59 791464.76 -

Other cash receipts relating to investing activities 58 3188480.07 98793085.40

Total cash inflows from investing activities 161121607.20 238641593.44

The accompanying notes form an integral part of these financial statements.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

CONSOLIDATED STATEMENT OF CASH FLOWS

Year ended 31 December 2019 Expressed in Renminbi Yuan

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)

Year ended 31 December 2019 Expressed in Renminbi Yuan

Note V 2019 2018

2. CASH FLOWS FROM INVESTING ACTIVITIES (Continued)

Cash payments to acquire fixed assets intangible assets

and other long-term assets 245167920.77 255481604.79

Cash payments for investments 56001023.17 124575351.00

Net cash payments for acquisition of subsidiaries and

other business units 59 97801928.16 -

Other cash payments relating to investing activities 58 2597750.74 81042904.53

Total cash outflows from investing activities 401568622.84 461099860.32

Net cash flows from investing activities (240447015.64) (222458266.88)

3. CASH FLOWS FROM FINANCING ACTIVITIES

Cash proceeds from investments by others 46093966.84 2793191200.00

Including: Cash receipts from capital contributions from

non-controlling interests of subsidiaries 46093966.84 2793191200.00

Cash receipts from borrowings 83786182.96 86231834.83

Other cash receipts relating to financing activities 58 249305768.12 484038819.20

Total cash inflows from financing activities 379185917.92 3363461854.03

Cash repayments for debts 99846808.49 79670200.30

Cash payments for distribution of dividends or profit and

interest expenses 529835909.14 340534805.52

Including: Dividends or profit paid to non-controlling

shareholders of subsidiaries 39827223.10 66702208.88

Other cash payments relating to financing activities 58 718672829.88 84475782.06

Total cash outflows from financing activities 1348355547.51 504680787.88

Net cash flows from financing activities (969169629.59) 2858781066.15

4. EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON

CASH AND CASH EQUIVALENTS (175693.26) (310822.25)

5. NET INCREASE IN CASH AND CASH EQUIVALENTS 790559744.71 3958618329.29

Add: Cash and cash equivalents at beginning of the year 7632117020.77 3673498691.48

6. CASH AND CASH EQUIVALENTS AT END OF YEAR 59 8422676765.48 7632117020.77

The accompanying notes form an integral part of these financial statements.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

COMPANY BALANCE SHEET

31 December 2019 Expressed in Renminbi Yuan

ASSETS Note XIV 31 December 2019 31 December 2018

Current assets

Cash and bank balances 2909417289.71 1821351681.34

Notes receivable 1 14900068.42 34154774.75

Accounts receivable 2 571544784.65 631236593.94

Receivables financing 3 30194682.11 29716205.64

Advances to suppliers 7996243.28 4760182.00

Other receivables 4 1928941595.38 1538283800.17

Inventories 169422075.78 158166185.65

Other current assets 39482.38 39482.38

Total current assets 5632456221.71 4217708905.87

Non-current assets

Long-term equity investments 5 7698756525.83 7432906692.24

Other non-current financial assets 140000000.00 140000000.00

Investment properties 1484198.56 1955854.46

Fixed assets 14763656.62 21362422.03

Right-of-use assets 6217504.50 -

Intangible assets 5838737.17 2452222.51

Long-term prepaid expenses 6130534.55 7481809.53

Deferred tax assets 9327850.53 -

Other non-current assets 9000000.00 7000000.00

Total non-current assets 7891519007.76 7613159000.77

Total assets 13523975229.47 11830867906.64

The accompanying notes form an integral part of these financial statements.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

COMPANY BALANCE SHEET (CONTINUED)

31 December 2019 Expressed in Renminbi Yuan

LIABILITIES AND SHAREHOLDERS’ EQUITY 31 December 2019 31 December 2018

Current liabilities

Short-term borrowings 121350644.36 539000000.00

Notes payable 751577900.22 252317800.78

Accounts payable 322436681.01 442049241.22

Contract liabilities 7293184.46 4182083.40

Employee benefits payable 30469777.88 36233563.12

Tax payables 22909124.90 13426601.90

Other payables 2120794765.05 1481778872.31

Non-current liabilities due within

one year 32640325.77 -

Other current liabilities 338196.81 226427.99

Total current liabilities 3409810600.46 2769214590.72

Non-current liabilities

Long-term borrowings - 31638984.25

Lease liabilities 5461257.38 -

Long-term payables 800000.00 800000.00

Long-term employee benefits payable - 118000.00

Deferred income 1276698.66 1687899.50

Deferred tax liabilities - 2298426.39

Total non-current liabilities 7537956.04 36543310.14

Total liabilities 3417348556.50 2805757900.86

The accompanying notes form an integral part of these financial statements.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

COMPANY BALANCE SHEET (CONTINUED)

31 December 2019 Expressed in Renminbi Yuan

LIABILITIES AND SHAREHOLDERS’

EQUITY 31 December 2019 31 December 2018

Shareholders’ equity

Share capital 428126983.00 428126983.00

Capital surplus 4468385307.32 4426362777.26

Other comprehensive income (133366.19) -

Surplus reserves 214063491.50 214063491.50

Retained earnings 4996184257.34 3956556754.02

Total shareholders’ equity 10106626672.97 9025110005.78

Total liabilities and shareholders’ equity 13523975229.47 11830867906.64

The accompanying notes form an integral part of these financial statements.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

COMPANY INCOME STATEMENT

Year ended 31 December 2019 Expressed in Renminbi Yuan

Note XIV 2019 2018

Operating revenue 6 4108399019.34 3481446876.93

Less: Operating costs 6 3916035572.52 3317568640.99

Taxes and surcharges 6459864.79 4618925.42

Selling expenses 69400890.32 61120258.01

Administrative expenses 73489681.09 77784120.97

Finance costs (64025013.54) (44503498.58)

Including: Interest expense 46025863.16 41179105.37

Including: Interest income 111805557.75 86569728.06

Add: Other income 4810134.29 4916458.17

Investment income 7 1158737566.83 702555982.30

Including: Investment income from

associates 353856432.16 342730085.14

Income from the

derecognition of

financial assets

measured at amortised

cost

(4379465.57) (1688557.15)

Credit impairment losses (45728840.12) 983688.72

Impairment losses (371833.95) (466647.08)

Gain on disposal of assets 155014.05 11116.50

Operating profits 1224640065.26 772859028.73

Add: Non-operating income 741954.13 46446.88

Less: Non-operating expenses 280.00 183374.99

Total profit 1225381739.39 772722100.62

Less: Income tax expenses 14503442.87 17140073.18

Net profit 1210878296.52 755582027.44

Including: Profit or loss from continuing operations 1210878296.52 755582027.44

Other comprehensive income net of tax (133366.19) -

Other comprehensive income that may be

reclassified to profit or loss

Other comprehensive income using the equity

method that may be reclassified to profit or

loss

(133366.19) -

Total comprehensive income 1210744930.33 755582027.44

The accompanying notes form an integral part of these financial statements.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

COMPANY STATEMENT OF CHANGES IN EQUITY

Year ended 31 December 2019 Expressed in Renminbi Yuan

2019 Share capital Capital surplus Other comprehensiveincome Surplus reserves Retained earnings Total equity

Opening balance of the current year 428126983.00 4426362777.26 - 214063491.50 3956556754.02 9025110005.78

Movements in the current year - 42022530.06 (133366.19) - 1039627503.32 1081516667.19

(1) Total comprehensive income - - (133366.19) - 1210878296.52 1210744930.33

(2) Capital paid and reduced by owners - 42022530.06 - - - 42022530.06

1. Others - 42022530.06 - - - 42022530.06

(3) Profit distribution - - - - (171250793.20) (171250793.20)

1. Distribution to equity owners - - - - (171250793.20) (171250793.20)

Closing balance of the current year 428126983.00 4468385307.32 (133366.19) 214063491.50 4996184257.34 10106626672.97

The accompanying notes form an integral part of these financial statements.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

COMPANY STATEMENT OF CHANGES IN EQUITY (CONTINUED)

Year ended 31 December 2019 Expressed in Renminbi Yuan

2018 Share capital Capital surplus Surplus reserves Retained earnings Total equity

Opening balance of the current year 428126983.00 4407091484.13 214063491.50 3329412821.48 8378694780.11

Movements in the current year - 19271293.13 - 627143932.54 646415225.67

(1) Total comprehensive income - - - 755582027.44 755582027.44

(2) Capital paid and reduced by owners - 19271293.13 - - 19271293.13

1. Others - 19271293.13 - - 19271293.13

(3) Profit distribution - - - (128438094.90) (128438094.90)

1. Distribution to equity owners - - - (128438094.90) (128438094.90)

Closing balance of the current year 428126983.00 4426362777.26 214063491.50 3956556754.02 9025110005.78

The accompanying notes form an integral part of these financial statements.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

COMPANY STATEMENT OF CASH FLOWS

Year ended 31 December 2019 Expressed in Renminbi Yuan

2019 2018

1. CASH FLOWS FROM OPERATING ACTIVITIES

Cash receipts from the sale of goods and the

rendering of services 4484950773.68 3650605970.28

Other cash receipts relating to operating

activities 55105150.55 107373506.99

Total cash inflows from operating activities 4540055924.23 3757979477.27

Cash payments for goods and services 4272419447.94 3406447268.87

Cash payments to and on behalf of employees 90592261.08 79402008.01

Payments of all types of taxes and surcharges 56746556.88 36195123.57

Other cash payments relating to operating

activities 36680891.34 55863168.11

Total cash outflows from operating activities 4456439157.24 3577907568.56

Net cash flows from operating activities 83616766.99 180071908.71

2. CASH FLOWS FROM INVESTING ACTIVITIES

Cash receipts from returns of investments 958057018.50 525074396.36

Net cash receipts from disposal of fixed assets

intangible assets and other long-term assets 3961383.00 44700.00

Other cash receipts relating to investing

activities 2293944952.05 1574115586.01

Total cash inflows from investing activities 3255963353.55 2099234682.37

Cash paid for acquisition of fixed assets

intangible assets and other long-term assets 11264989.90 11649093.77

Cash payments for investments 19998000.00 90000000.00

Other cash payments relating to investing

activities 2669650683.28 1749321606.82

Total cash outflows from investing activities 2700913673.18 1850970700.59

Net cash flows from investing activities 555049680.37 248263981.78

The accompanying notes form an integral part of these financial statements.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

CASH FLOW STATEMENT (Continued)

For the Year ended 31 December 2016

(Expressed in Renminbin Yuan)

2019 2018

3. CASH FLOWS FROM FINANCING ACTIVITIES

Cash receipts from borrowings 10000000.00 10000000.00

Other cash receipts relating to financing

activities 26701067083.61 17388748779.90

Total cash inflows from financing activities 26711067083.61 17398748779.90

Cash repayments for debts 10000000.00 10000000.00

Cash payments for distribution of dividends

profit or interest expenses 210404986.68 161361930.89

Other cash payments relating to financing

activities 26052473492.66 17614453662.11

Total cash outflows from financing activities 26272878479.34 17785815593.00

Net cash flows from financing activities 438188604.27 (387066813.10)

4. EFFECT OF FOREIGN EXCHANGE RATE

CHANGES ON CASH AND CASH

EQUIVALENTS

(175693.26) (310822.25)

5. NET INCREASE IN CASH AND CASH

EQUIVALENTS 1076679358.37 40958255.14

Add: Cash and cash equivalents at beginning of

the year 1817654598.01 1776696342.87

6. CASH AND CASH EQUIVALENTS

AT END OF YEAR

2894333956.38 1817654598.01

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

CASH FLOW STATEMENT (Continued)

For the Year ended 31 December 2016

(Expressed in Renminbin Yuan)

The accompanying notes form an integral part of these financial statements.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

NOTES TO FINANCIAL STATEMENTS

Year ended 31 December 2019 Expressed in Renminbi Yuan

I Profile of the Company

As approved by the People’s Government of Shenzhen (SFBF (1993) No.356) China National

Accord Medicines Corporation Ltd. (hereinafter referred to as the “the Company”) formerly

known as Shenzhen Health Mineral Water Corp. Ltd. was registered as a joint stock liability

limited company on 1 February 1993 through stock transformation. In March 1993 with the

approval from the Shenzhen Branch of the People’s Bank of China the Company issued 30

million A shares (including 16.5 million public shares 3.5 million employee shares and 10 million

corporation shares) and 20 million B shares. After this issuance the Company’s share capital

was RMB105.00 million. Through converting capital surplus into share capital bonus issues and

issuance of shares for years the share capital of the Company increased to 428.13 million as at

31 December 2019.

In November 2000 the Company entered into an Asset Exchange Agreement with Shenzhen

Investment Management Company the original major shareholder of the Company to exchange

all the assets and liabilities of the Company as of 31 August 2000 for Shenzhen Investment

Management Company’s 100% equity interests in 11 pharmaceutical companies and certain

properties as well as 51% equity interests in Shenzhen Tefa Modern Computer Co. Ltd. The

above asset exchange proposal was approved by shareholders in the Second Extraordinary

General Meeting on 29 December 2000. The transaction was completed on 8 January 2001.

On 18 February 2004 the Company’s original major shareholder Shenzhen Investment

Management Company entered into a stock transfer agreement with Sinopharm Group Co. Ltd.(hereinafter referred to as “Sinopharm Group”) to transfer its 43.33% shares in the Company to

Sinopharm Group. The legal procedures of the above equity transfer were completed on 9

December 2004. At the same time as approved by the State-owned Assets Supervision and

Administration Commission of the State Council (GZCQ (2004) No.525) and the China

Securities Regulatory Commission (ZJGSZ (2004) No.94) the nature of these shares changed

from state-owned stock to state-owned legal entity stock and Sinopharm Group became the

largest shareholder of the Company.

On 14 April 2006 the Company’s proposal on reformation of segregated stocks was approved.

To gain liquidity for the restricted stocks of the Company the holders of the restricted stocks of

the Company agreed to pay the following consideration: based on the stock registration as of 27

April 2006 the Company issued bonus shares on 28 April 2006 at the ratio of 3 shares to every

10 A shares to liquidated A-shareholders which went public on the same day. After this bonus

issue the total number of shares of the Company remained unchanged with corresponding

changes in the composition of shareholdings.

On 14 March 2014 the Company issued 74482543 ordinary shares (A shares) through the

non-public offering. The par value per share is RMB1.00 yuan. The shares shall not be

transferred within 36 months since the issue date. The total number of shares of the Company

was 362631943 since the date of issue.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Year ended 31 December 2019 Expressed in Renminbi Yuan

I Profile of the Company (Continued)

The Company acquired the companies under common control including Sinopharm Holding

Guoda Pharmacy Co. Ltd. (“Guoda Pharmacy”) Foshan Nanhai Medicine Group Co. Ltd.

(“Foshan Nanhai”) Guangdong South Pharmaceutical Foreign Trade Co. Ltd. (“South Pharma& Trade”) and Guangdong Dong Fang Uptodate & Special Medicines Co. Ltd. (“GuangdongUptodate & Special Medicines”) by issuing shares and raised supporting funds by issuing shares

to Ping An Asset Management Co. Ltd. to acquire the non-controlling interest of South Pharma

& Trade. The relevant shares were successfully issued and listed on 5 January 2017. Afterwards

the total number of shares of the Company increased to 428126983.

As of 31 December 2019 the total share capital was 428126983.

The Company is registered with Shenzhen Administration for Industry & Commerce. Its Uniform

Social Credit Code is 91440300192186267U. The operation period of the Company is from 2

August 1986 to the long term. The registered capital of the Company is RMB428.13 million. The

legal representative of the Company is Lin Zhaoxiong.The approved scope of business of the Company and its subsidiaries (together “the Group”)

includes: the wholesale of Chinese herbal slices traditional Chinese medicine preparations bulk

pharmaceutical drugs chemical preparations bulk antibiotic drugs antibiotic preparations

biochemical drugs biological products (including vaccines and in vitro diagnostic reagents

psychotropic drugs and preparations narcotic drugs toxic drugs for medical use protein

assimilation preparation and peptide hormones; trading of dietary supplements; industrial

investment holding; domestic trade; material supply and the marketing industry (other than

special licensing); the sale of ambulances; trading of second-class and third-class medical

equipment; project investment; property management and leasing of self-owned properties;

pharmacovigilance and medical information consulting; parking operation; logistics and related

services; the package agency business; logistic design; import and export services (excluding

projects that are prohibited by the country; and limited projects have to be approved before

operating).Subsidiaries consolidated in the financial statements for the current year and change in the

consolidation scope are shown in Note VI.The Group’s parent and ultimate parent companies are Sinopharm Group and China National

Pharmaceutical Group Corporation (“CNPGC”) respectively.These financial statements were authorized for issue by the board of directors of the Company

on 20 April 2020.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Year ended 31 December 2019 Expressed in Renminbi Yuan

IIBasis of preparation

The financial statements were prepared in accordance with the Basic Standard and specific

standards of Accounting Standards for Business Enterprises issued by the Ministry of Finance

and the specific accounting standards application guidance interpretation and other relevantregulations issued or amended thereafter (hereafter collectively referred to as “AccountingStandards for Business Enterprises” or “CAS”).These financial statements are prepared on a going concern basis.

Except for certain financial instruments the financial statements have been prepared using the

historical cost as the principle of measurement. Where assets are impaired provisions for asset

impairment are made in accordance with the relevant requirements.IIISummary of significant accounting policies and accounting estimates

The Group determines the specific accounting policies and estimates based on its features of

production and operation primarily comprising the methods of provision for expected credit

losses on receivables valuation of inventories depreciation of fixed assets and amortisation of

intangible assets the measurement model of investment properties recognition and

measurement of revenue etc.

1.Statement of compliance with Accounting Standards for Business Enterprises

The financial statements present truly and completely the financial positions of the Group and

the Company as at 31 December 2019 and the financial performance and the cash flows for

the year then ended in accordance with Accounting Standards for Business Enterprises.

2.Accounting year

The Group’s accounting year begins on 1 January and ends on 31 December.

3.Functional currency

The functional currency is Renminbi. The Company’s functional and presentation currency is

Renminbi (RMB). The currency unit is RMB Yuan unless otherwise stated.

4.Business combinations

Business combinations are classified into business combinations involving entities under

common control and business combinations not involving entities under common control.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Year ended 31 December 2019 Expressed in Renminbi Yuan

IIISummary of significant accounting policies and accounting estimates (Continued)

4.Business combinations (Continued)

(a)Business combinations involving entities under common control

A business combination involving entities under common control is a business combination in

which all of the combining entities are ultimately controlled by the same party or parties both

before and after the combination and that control is not transitory. In a business combination

involving entities under common control the entity that at the combination date obtains control

of another combining entity is the absorbing entity while that other combining entity is the entity

being absorbed. The combination date is the date on which the absorbing entity effectively

obtains control on the entity being absorbed.

Assets and liabilities (including goodwill arising from the ultimate controlling shareholder’s

acquisition of the party being absorbed) that are obtained by the absorbing party in a business

combination shall be measured at their carrying amounts at the combination date as recorded

by the party being absorbed. The difference between the carrying amount of the net assets

obtained and the carrying amount of the consideration paid for the combination (or the

aggregate face value of shares issued as consideration) shall be adjusted to share premium

under capital surplus. If the capital surplus is not sufficient to absorb the difference any excess

shall be adjusted against retained earnings.

(b)Business combinations involving enterprises not under common control

A business combination not involving entities under common control is a business combination

in which all of the combining entities are not ultimately controlled by the same party or parties

both before and after the combination. In a business combination not involving entities under

common control the entity that on the acquisition date obtains control of another combining

entity is the acquirer while that other combining entity is the acquiree. The acquisition date is

the date on which the acquirer effectively obtains control of the acquiree.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.Goodwill is initially recognised and measured at cost being the excess of the aggregate of the

fair value of the consideration transferred (or the fair value of the equity securities issued) and

any fair value of the Group’s previously held equity interest in the acquiree over the Group’s

interest in the fair value of the acquiree’s net identifiable assets. After initial recognition

goodwill is measured at cost less any accumulated impairment losses. Where the aggregate of

the fair value of the consideration transferred (or the fair value of the equity securities issued)

and any fair value of the Group’s previously held equity interest in the acquiree is lower than the

Group’s interest in the fair value of the acquiree’s net identifiable assets the Group reassesses

the measurement of the fair value of the acquiree’s identifiable assets liabilities and contingent

liabilities and the fair value of the consideration transferred (or the fair value of the equity

securities issued) together with the fair value of the Group’s previously held equity interest in

the acquiree. If after that reassessment the aggregate of the fair value of the consideration

transferred (or the fair value of the equity securities issued) and the Group’s previously held

equity interest in the acquiree is still lower than the Group’s interest in the fair value of the

acquiree’s net identifiable assets the Group recognises the remaining difference in profit or

loss.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Year ended 31 December 2019 Expressed in Renminbi Yuan

IIISummary of significant accounting policies and accounting estimates (Continued)

4.Business combinations (Continued)

(b)Business combinations involving enterprises not under common control (Continued)

Where the business combination not involving enterprises under common control is achieved in

stages the acquirer’s previously held equity interests in the acquiree are remeasured at the fair

value on the acquisition date with the difference between the fair value and carrying amount

recognised as investment income for the current period. If the acquirer’s previously held equity

interests of the acquiree involve other comprehensive income (“OCI”) under the equity method

the accounting treatment is conducted on the same basis as would have been required if the

investee had directly disposed of the related assets or liabilities and the changes in

shareholders’ equity other than net profit or loss OCI and profit distributions are charged to

profit or loss for the current period on the acquisition date. For financial assets at fair value

through OCI held before the acquisition date changes in fair value that were accumulated

through OCI will transfer to retained earnings.

5.Preparation of consolidated financial statements

The scope of the consolidated financial statements which include the financial statements of

the Company and all of its subsidiaries is determined on the basis of control. A subsidiary is

an entity that is controlled by the Company (such as an enterprise a deemed separate entity

or a structured entity controlled by the Company).In the preparation of the consolidated financial statements the financial statements of

subsidiaries are prepared for the same accounting year as the Company using consistent

accounting policies. All intra-group assets and liabilities equity income expenses and cash

flows relating to transactions between members of the Group are eliminated in full on

consolidation.Where the loss for the current period attributable to non-controlling interests of a subsidiary

exceeds the non-controlling interests of the opening balance of equity of the subsidiary the

excess shall still be allocated against the non-controlling interests.

For subsidiaries acquired through business combinations not involving entities under common

control the financial performance and cash flows of the acquiree shall be consolidated from the

date on which the Group obtains control and continue to be consolidated until the date such

control ceases. While preparing the consolidated financial statements the Group shall adjust

the subsidiary’s financial statements on the basis of the fair values of the identifiable assets

liabilities and contingent liabilities recognised on the acquisition date.

For subsidiaries acquired through business combinations involving entities under common

control the financial performance and cash flows of the entity being absorbed shall be

consolidated from the beginning of the period in which the combination occurs. While preparing

the comparative financial statements adjustments are made to related items in the financial

statements for the prior period as if the reporting entity after the combination has been in

existence since the date the ultimate controlling party first obtained the control.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Year ended 31 December 2019 Expressed in Renminbi Yuan

IIISummary of significant accounting policies and accounting estimates (Continued)

5.Preparation of consolidated financial statements (Continued)

The Group reassesses whether or not it controls an investee if any change in facts and

circumstances indicates that there are changes to one or more of the three elements of control.When the Group loses control of a subsidiary in multiple transactions in which it disposes of its

long-term equity investment in the subsidiary in stages if each of the multiple transactions does

not form part of a bundled transaction the transactions conducted before the loss of control of

the subsidiary are accounted for in accordance with the accounting policy for partial disposal of

the equity investment in subsidiaries where control is retained. If each of the multiple

transactions forms part of a bundled transaction which eventually results in the loss of control in

the subsidiary these multiple transactions are accounted for as a single transaction. In the

consolidated financial statements the difference between the consideration received and the

corresponding proportion of the subsidiary’s net assets (calculated continuously from the

acquisition date) in each transaction prior to the loss of control shall be recognised in other

comprehensive income and transferred to profit or loss when the parent eventually loses control

of the subsidiary.

6. Cash and cash equivalents

Cash comprises the Group’s cash on hand and bank deposits that can be readily withdrawn on

demand. Cash equivalents are short-term highly liquid investments that are readily convertible

into known amounts of cash and are subject to an insignificant risk of changes in value.

7. Foreign currency 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 capitalized as part of the cost of those

assets. Non-monetary items denominated in foreign currencies that are measured at historical

cost are translated at the balance sheet date using the spot exchange rates at the dates of the

transactions.

Foreign currency cash flows are translated using the spot exchange rates prevailing on the

dates of cash flows. The effect of exchange rate changes on cash is presented separately in

the cash flow statement.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Year ended 31 December 2019 Expressed in Renminbi Yuan

IIISummary of significant accounting policies and accounting estimates (Continued)

8.Financial instruments

Financial instruments are the contracts that formed the financial assets of one entity and at the

same time formed the financial liabilities or equity instruments of other entities.Recognition and derecognition of financial instruments

Financial assets and financial liabilities are recognised when the Group becomes a party to the

contractual provisions of the instrument.The Group derecognises a financial asset part of a financial asset or group of financial assets

i.e. offset from the accounts and statement of financial position if either of the following

conditions is satisfied:

(1)The contractual rights to the cash flows from the financial asset expire; or

(2) The contractual rights to the cash flows from the financial asset are transferred out or obligated

to transfer out all generated cash flows on receipt; and (a) substantially all the risks and

rewards of ownership of the financial asset are transferred to the transferee; or (b) the Group

neither transfers nor retains substantially all the risks and rewards of ownership of the financial

asset but has not retained control of the financial asset.

A financial liability is derecognised when the obligation under the liability is discharged or

cancelled or expires. When an existing financial liability is replaced by another from the same

lender on substantially different terms or the terms of an existing liability are substantially

modified such an exchange or modification is treated as a derecognition of the original liability

and a recognition of a new liability and the difference between the respective carrying amounts

is recognised in profit or loss.Regular way purchases and sales of financial assets are recognised and derecognised using

trade date accounting. Regular way purchases or sales are purchases or sales of financial

assets that require delivery within the period generally established by regulation or convention

in the marketplace. The trade date is the date that the Group committed to purchase or sell a

financial asset.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Year ended 31 December 2019 Expressed in Renminbi Yuan

IIISummary of significant accounting policies and accounting estimates (Continued)

8.Financial instruments (Continued)

Classification and measurement of financial assets

The classification of financial assets at initial recognition depends on the financial asset’s

contractual cash flow characteristics and the Group’s business model for managing them:

financial assets at fair value through profit or loss financial assets at amortised cost or

financial assets at fair value through other comprehensive income according to the Group’s

business model for managing financial assets and the contract cash flow characteristics of the

financial assets.

Financial assets are measured at fair value at initial recognition provided that accounts

receivable or bills receivable not containing significant financing components or for which

financing components of not more than 1 year are not taken into consideration shall be

measured at their transaction prices at initial recognition.

For financial assets at fair value through profit or loss the relevant transaction costs are directly

recognised in profit or loss; while for other financial assets the relevant transaction costs are

recognised in their initial recognition amount.The subsequent measurement of financial assets depends on their classification as follows:

Debt investments measured at amortised cost

The Group measures financial assets at amortized cost if both of the following conditions are

met: The financial asset is held within a business model with the objective to hold financial

assets in order to collect contractual cash flows; The contractual terms of the financial asset

give rise on specified dates to cash flows that are solely payments of principal and interest on

the principal amount outstanding. Interest income of this kind of financial assets is recognised

using the effective interest method. Gains and losses are recognised in the income statement

when the asset is derecognised modified or impaired.

Debt investments at fair value through other comprehensive income

The Group measures debt investments at fair value through other comprehensive income if

both of the following conditions are met: the financial asset is held within a business model with

the objective of both holding to collect contractual cash flows and selling; the contractual terms

of the financial asset give rise on specified dates to cash flows that are solely payments of

principal and interest on the principal amount outstanding. Changes in fair values are

recognised in other comprehensive income except that interest income impairment losses and

exchange differences are recognised in current profit or loss. Upon derecognition the

cumulative fair value change recognised in other comprehensive income is transferred to profit

or loss.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Year ended 31 December 2019 Expressed in Renminbi Yuan

IIISummary of significant accounting policies and accounting estimates (Continued)

8.Financial instruments (Continued)

Classification and measurement of financial assets (Continued)

Equity investments at fair value through other comprehensive income

The Group irrevocably chooses to designate some non-tradable equity instrument investments

as financial assets at fair value through other comprehensive income. Only the relevant

dividend income (excluding dividend income explicitly recovered as part of investment cost) is

recognised in profit or loss and subsequent changes in fair value are included in other

comprehensive income without provision for impairment. When financial assets are

derecognised the accumulated gains or losses previously recognised in other comprehensive

gains are transferred from other comprehensive income and recognised in retained earnings.

Financial assets at fair value through profit or loss

The financial assets other than the above financial assets measured at amortised cost and

financial assets at fair value through other comprehensive income are classified as financial

assets at fair value through profit or loss. Such financial assets are subsequently measured at

fair value with net changes in fair value recognised in profit or loss except for the derivatives

designated as hedging instruments in an effective hedge.Only when an accounting mismatch is eliminated or significantly decreased financial assets are

designated as financial assets at fair value through profit or loss at initial recognition.When an enterprise initially designates a financial asset as a financial asset at fair value

through profit or loss it cannot be reclassified to other financial assets; and other financial

assets cannot be re-designated after initial recognition as financial assets measured at fair

value through profit or loss.

Classification and measurement of financial liabilities

The Group’s financial liabilities are on initial recognition classified into financial liabilities at fair

value through profit or loss other financial liabilities or derivatives designated as effective

hedging instruments. For financial liabilities at fair value through profit or loss the relevant

transaction costs are directly recognised in profit or loss and the related transaction costs of

other financial liabilities are recognised in their initial amount.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Year ended 31 December 2019 Expressed in Renminbi Yuan

IIISummary of significant accounting policies and accounting estimates (Continued)

8.Financial instruments (Continued)

Classification and measurement of financial liabilities (Continued)

Subsequent measurement of financial liabilities is determined by its classification:

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading

(including derivative instruments attributable to financial liabilities) and financial liabilities

designated upon initial recognition as at fair value through profit or loss. Financial liabilities

held for trading (including derivative instruments attributable to financial liabilities) are

subsequently measured at fair value. All changes in fair value of such financial liabilities are

recognised in profit or loss. Financial liabilities designated at fair value through profit or loss are

subsequently measured at fair value and gains or losses are recognised in profit or loss except

for the gains or losses arising from the Group’s own credit risk which are presented in other

comprehensive income. If gains or losses arising from the Group’s own credit risk which are

presented in other comprehensive income will lead to or expand accounting mismatch in profit

or loss the Group will include all the changes in fair value (including the amount affected by

changes in the Group’s own credit risk) of such financial liabilities in profit or loss.Only if one of the following conditions is met can financial liabilities be designated as financial

liabilities at fair value through profit or loss on initial recognition:

(1) It can eliminate or significantly reduce the accounting mismatch.

(2) The formal written document of the risk management or investment strategy has stated that

the portfolio of financial instruments is managed evaluated and reported to key managers

on the basis of fair value.

(3) The financial liability is a hybrid instrument that contains one or more embedded derivatives

unless the embedded derivatives have no significant change in the cash flows of the hybrid

instrument or the embedded derivatives should obviously not be separated from the related

hybrid instruments.

(4) Mixed instruments contain embedded derivatives that need to be split but cannot be

measured separately at the time of acquisition or on subsequent balance sheet days.When an enterprise designates a financial liability as a financial liability at fair value through

profit or loss it cannot be reclassified as other financial liabilities; nor can other financial

liabilities be re-designated as financial liabilities at fair value through profit or loss after initial

recognition.Other financial liabilities

For such financial liabilities subsequent measurement is made at amortized cost using the

effective interest rate method.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Year ended 31 December 2019 Expressed in Renminbi Yuan

IIISummary of significant accounting policies and accounting estimates (Continued)

8.Financial instruments (Continued)

Impairment of financial assets

Based on the expected credit losses (“ECLs”) the Group recognises an allowance for ECLs for

the financial assets measured at amortised cost debt investments at fair value through other

comprehensive income and contract assets.

For accounts receivable and contract assets that do not contain significant financing

components the Group uses a simplified measurement method to measure loss provisions in

accordance with the amount of expected credit losses equivalent to the entire life cycle.

For accounts receivable and contract assets with significant financing components the Group

uses a simplified measurement method to measure loss provisions in accordance with the

amount of the expected credit loss equivalent to the entire lifetime.

For financial assets other than those measured with simplified valuation methods the Group

evaluates at each balance sheet date whether its credit risk has significantly increased since

initial recognition. The period during which credit risk has not significantly increased since initial

recognition is considered the first stage at which the Group shall measure the loss provision

based on the amount of the expected credit loss for the next 12 months and shall compute

interest income according to the book balance and effective interest rate; the period during

which credit risk has significantly increased since initial recognition although no credit

impairment has occurred is considered the second stage at which the Group shall measure the

loss provision based on the amount of the expected credit loss for the entire valid period and

shall compute interest income according to the book balance and effective interest rate; and the

period during which credit impairment has occurred after initial recognition is considered the

third stage at which the Group shall measure the loss provision based on the amount of the

expected credit loss for the entire period and shall compute interest income according to the

amortised cost and effective interest rate. For financial instruments with relatively low credit risk

at the balance sheet date the Group assumes that its credit risk has not significantly increases

since initial recognition.The Group evaluates the expected credit losses on financial instruments on a single and

combined basis. Taking into account the credit risk characteristics of different customers the

Group evaluates the expected credit losses on accounts receivable based on the aging portfolio.Refer to Note VIII (3) for the disclosure of the Group's criteria for judging the significant increase

in credit risk the definition of assets with impaired credit losses and the assumption of

measuring expected credit losses.When the Group no longer reasonably expects to be able to recover all or part of the contract

cash flows of the financial assets the Group directly writes down the carrying amount of the

financial asset.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Year ended 31 December 2019 Expressed in Renminbi Yuan

IIISummary of significant accounting policies and accounting estimates (Continued)

8.Financial instruments (Continued)

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the balance

sheet if there is a currently enforceable legal right to offset the recognised amounts and there is

an intention to settle on a net basis or to realize the financial assets and settle the financial

liabilities simultaneously.Transfer of financial assets

A financial asset is derecognised when the Group has transferred substantially all the risks and

rewards of the asset to the transferee. A financial asset is not derecognised when the Group

retains substantially all the risks and rewards of the financial asset.If the Group neither transfers nor retains substantially all the risks and rewards of ownership of

financial assets the related accounting treatments of such financial assets are as follows: the

Group derecognises financial assets when it retains no control on them and associated assets

and liabilities are recognised at the same time. If the Group retains control of the financial asset

it recognizes the financial asset to the extent of its continuing involvement in the transferred

financial asset and recognizes an associated liability.

Continuing involvement that takes the form of a financial guarantee over the transferred asset is

measured at the lower of the original carrying amount of the asset and the financial guarantee.The amount of the financial guarantee is the maximum amount of consideration that the Group

could be required to repay.

9.Inventories

Inventories include raw materials work in progress finished goods delegate processing

supplies and turnover materials and are measured at the lower of cost and net realizable

value.Inventories are initially carried at cost. Cost of inventories comprises all costs of purchase

costs of conversion and other costs. Cost is determined on the weighted average basis.Turnover materials include low-value consumables and packing materials which are on the

immediate write-off basis.The Group adopts the perpetual inventory system.

At the balance sheet date inventories are stated at the lower of cost and net realisable value.

The inventories are written down below cost to net realisable value and the write-down is

recognised in profit or loss if the cost is higher than the net realisable value. When the

circumstances that previously caused the inventories to be written down below cost no longer

exist in which case the net realisable value of inventories becomes higher than the carrying

amount the amount of the write-down is reversed. The reversal is limited to the amount of the

original write-down and is recognised in profit or loss.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Year ended 31 December 2019 Expressed in Renminbi Yuan

IIISummary of significant accounting policies and accounting estimates (Continued)

9.Inventories (Continued)

Net realizable value is determined based on the estimated selling price in the ordinary course of

business less the estimated costs to completion and estimated costs necessary to make the

sale and related taxes. Finished goods are written down category by category.

10.Long-term equity investments

Long-term equity investments include equity investments in subsidiaries joint ventures and

associates.

A long-term equity investment is initially measured at its initial investment cost on acquisition.

For long-term equity investments arising from business combination involving enterprises under

common control the initial investment cost shall be the share of the carrying amount of equity

of the acquiree in the consolidated financial statements of the ultimate controlling party as at the

combination date. The difference between the initial investment cost and book value of

consideration of combination is adjusted to capital reserves and to retained earnings if capital

reserves is insufficient. Other comprehensive income recognised before the combination date is

accounted for on the same basis as would have been required if the investee had directly

disposed of the related assets or liabilities. Equity previously recognised resulting from the

investee’s equity changes other than profit or loss other comprehensive income and profit

distribution is reclassified to profit or loss. Equity which still involves a long-term investment

after disposal is reclassified to profit or loss on a pro-rata basis and equity which swiches to a

financial instrument after disposal is fully reclassified to profit or loss. For long-term equity

investments arising from business combination involving enterprises not under common control

the investment cost shall be the combination cost. (For a business combination achieved in

stages the initial investment cost is determined as the sum of the carrying amount of equity of

the acquiree and the additional investment costs on the combination date.) The combination

cost involves the assets paid by the acquirer liabilities incurred and the fair value of equity

securities. Other comprehensive incomes recognised using the equity method before the

combination date is accounted for on the same basis as would have been required if the

investee had directly disposed of the related assets or liabilities. Equity previously recognised

resulting from the investee’s equity changes other than profit or loss other comprehensive

income and profit distribution is reclassified to profit or loss. Equity which still involves a long-

term investment after disposal is reclassified to profit or loss on a pro-rata basis and equity

which swiches to a financial instrument after disposal is fully reclassified to profit or loss. The

accumulated changes in the fair value of financial assets at fair value through other

comprehensive income is reclassified to retained earnings when adopting the cost method.

Depending on the way of acquisition of long-term equity investments the initial investment cost

is determined as follows: For long-term equity investments acquired by way of cash payment

the initial investment cost includes all directly associated expenses applicable taxes and fees

and other necessary expenses. For long-term equity investments acquired by way of issuing

equity securities the initial investment cost includes the fair value of equity securities. For long-

term equity investments acquired by way of the swap of non-monetary assets the initialinvestment cost shall be determined in accordance with “ASBE No. 7 — Swap of Non-monetary

Assets.” For long-term equity investments acquired by way of debt restructuring the initial

investment cost shall be determined in accordance with “ASBE No. 12 — Debt Restructuring.”

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Year ended 31 December 2019 Expressed in Renminbi Yuan

IIISummary of significant accounting policies and accounting estimates (Continued)

10.Long-term equity investments (Continued)

The Company's financial statements using the cost method of accounting for long-term equity

can exercise control over the investee. 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.

For long-term equity investments accounted for using the cost method they are measured at

the initial Investment costs. The cost of long-term equity investments is adjusted with additional

investment or divestment. Cash dividends or profit distribution declared by the investees are

recognised as investment income in profit or loss.The equity method is adopted when the Group has joint control or exercises significant

influence over the investee. Joint control is the contractually agreed sharing of control of an

arrangement which exists only when decisions about the relevant activities require the

unanimous consent of the parties sharing control. Significant influence is the power to

participate in the financial and operating policy decisions of the investee but is not control or

joint control with other parties over those policies.Under the equity method where the initial investment cost of a long-term equity investment

exceeds the Group’s interest in the fair value of the investee’s identifiable net assets at the

acquisition date no adjustment is made to the initial investment cost. Where the initial

investment cost is less than the Group’s interest in the fair values of the investee’s identifiable

net assets at the acquisition date the difference is charged to profit or loss and the cost of the

long-term equity investment is adjusted accordingly.Under the equity method after the Group has acquired a long-term equity investment the

Group recognises its share of the investee’s profit or loss as well as its share of the investee’s

other comprehensive income as investment income or loss and other comprehensive income

and adjusts the carrying amount of the investment accordingly. The Group recognises its share

of the investee’s profit or loss after making appropriate adjustments to the investee’s profit or

loss based on the fair value of the investee’s identifiable assets at the acquisition date using

the Group’s accounting policies and periods. Unrealised profits and losses from transactions

with its joint ventures and associates are eliminated to the extent of the Group’s investments in

the associates or joint ventures (except for assets that constitute a business). The carrying

amount of the investment is reduced based on the Group’s share of any profit distributions or

cash dividends declared by the investee. The Group’s share of net losses of the investee is

recognised to the extent that the carrying amount of the investment together with any long-term

interests that in substance form part of its net investment in the investee is reduced to zero

except that the Group has the obligations to assume further losses. The Group’s share of the

investee’s equity changes other than those arising from the investee’s profit or loss other

comprehensive income or profit distribution is recognised in the Group’s equity and the

carrying amount of the long-term equity investment is adjusted accordingly.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Year ended 31 December 2019 Expressed in Renminbi Yuan

IIISummary of significant accounting policies and accounting estimates (Continued)

10.Long-term equity investments (Continued)

Upon disposal of a long-term equity investment the difference between the proceeds actually

received and the carrying amount is recognised in profit or loss. For a long-term equity

investment accounted for using the equity method when the Group discontinues using the

equity method due to disposal all amounts previously recognised in other comprehensive

income are accounted for on the same basis as would have been required if the investee had

directly disposed of the related assets or liabilities. Equity previously recognised resulting from

the investee’s equity changes other than profit or loss other comprehensive income and profit

distribution is reclassified to profit or loss in its entirety. When the Group continues to use the

equity method the amounts previously recognised in other comprehensive income are

accounted for on the same basis as would have been required if the investee had directly

disposed of the related assets or liabilities and reclassified to profit or loss on a pro-rata basis.

Equity previously recognised resulting from the investee’s equity changes other than profit or

loss other comprehensive income and profit distribution is reclassified to profit or loss on a pro-

rata basis.

11.Investment properties

Investment properties are properties held to earn rental income and/or for capital appreciation.Investment properties include land use rights leased out land use rights held for transfer upon

capital appreciation and buildings leased out.Investment properties are measured initially at cost. Subsequent expenditures incurred in

relation to investment properties are included in the cost of investment properties when it is

probable that the associated economic benefits will flow to the Group and their costs can be

reliably measured; otherwise the expenditures are recognised in profit or loss in the period in

which they are incurred.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Year ended 31 December 2019 Expressed in Renminbi Yuan

IIISummary of significant accounting policies and accounting estimates (Continued)

11.Investment properties (Continued)

The Group adopts the cost model for subsequent measurement of investment properties.

Buildings and land use rights are depreciated or amortized to their estimated net residual

values over their estimated useful lives. The estimated useful lives the estimated net residual

values that are expressed as a percentage of cost and the annual depreciation (amortization)

rates of investment properties are as follows:

Estimated useful lives Estimated residual value Annual depreciation

(amortization) rates

Buildings and constructions 12-35 years 0-5% 2.71-7.92%

Land use rights 30-50 years - 2.00-3.33%

When an investment property is transferred to owner-occupied property it is reclassified as a

fixed asset or intangible asset at the date of transfer. When an owner-occupied property is

transferred out for earning rentals or for capital appreciation the fixed asset or intangible asset

is reclassified as an investment property at its carrying amount at the date of transfer.The investment properties’ useful life net residual value and depreciation (amortization)

method applied are reviewed and adjusted as appropriate at the end of each year.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Year ended 31 December 2019 Expressed in Renminbi Yuan

IIISummary of significant accounting policies and accounting estimates (Continued)

12. Fixed assets

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. 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.

Fixed assets are initially measured at cost and the effect of any expected costs of abandoning

the asset at the end of its use is considered. The cost of a fixed asset is the aggregate cost of

purchase price related taxes and any directly attributable expenditure for bringing the asset to

its working condition for its intended use.

Fixed assets are depreciated using the straight-line method to allocate the cost of the assets to

their estimated residual values over their estimated useful lives. For the fixed assets that have

been provided for impairment loss the related depreciation charge is prospectively determined

based upon the adjusted carrying amounts over their remaining useful lives.

Estimated useful lives Estimated residual values Annual depreciation rates

Buildings and constructions 20-35 years 0-5% 2.71-5.00%

Machinery 5-14 years 3-6% 6.79-19.40%

Motor vehicles 3-10 years 0-5% 9.50-33.33%

Office equipment 3-10 years 0-5% 9.50-33.33%

Electronic equipment within 5 years 0% 20% and above

The Group reviews the useful life estimated net residual value of a fixed asset and the

depreciation method applied at least once at each financial year end and adjusts for any

change when necessary.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Year ended 31 December 2019 Expressed in Renminbi Yuan

IIISummary of significant accounting policies and accounting estimates (Continued)

13.Borrowing costs

Borrowing costs are interest and other costs incurred by the Group in connection with the

borrowing of the funds. Borrowing costs include interest amortisation of discounts or premiums

related to borrowings ancillary costs incurred in connection with the arrangement of borrowings

and exchange differences arising from foreign currency borrowings.The borrowing costs that are directly attributable to the acquisition construction or production of

a qualifying asset are capitalised. The amounts of other borrowing costs incurred are

recognised as an expense in the period in which they are incurred. Qualifying assets are

assets (fixed assets investment properties inventories etc.) that necessarily take a substantial

period of time of acquisition construction or production to get ready for their intended use or

sale.The borrowing costs shall not be capitalized unless they simultaneously meet the following

requirements:

(1) The asset disbursements have already incurred;

(2) The borrowing costs have already incurred; and

(3) The acquisition and construction or production activities which are necessary to prepare the

asset for its intended use or sale have already started.When the qualified asset under acquisition and construction or production is ready for the

intended use or sale the capitalization of the borrowing costs shall be ceased. Borrowing costs

incurred after the intended use or sale shall be recorded in the current profits and losses.

During the period of capitalization the capitalized amount of interest in each accounting period

shall be calculated and determined in the ways below:

(1) The enterprise shall calculate and determine the interest of a specific loan by deducting

interest income of the loan capital deposit in the bank or investment income obtained from a

temporary investment.

(2) The enterprise shall calculate and determine the to-be-capitalized amount of interest on the

general borrowing by multiplying the weighted average asset disbursement of the part of the

accumulative asset disbursements minus the general borrowing by the capitalization rate of

the general borrowing used.

Capitalisation of borrowing costs is suspended during periods in which the acquisition

construction or production of a qualifying asset is suspended abnormally by activities other than

those necessary to get the asset ready for its intended use or sale when the suspension is for

a continuous period of more than 3 months. Borrowing costs incurred during these periods are

recognised as an expense in profit or loss until the acquisition construction or production is

resumed.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Year ended 31 December 2019 Expressed in Renminbi Yuan

IIISummary of significant accounting policies and accounting estimates (Continued)

14.Right-of-use assets (applicable from 1 January 2019)

The right-of-use assets of the Group mainly include buildings machinery vehicles office

equipment and other assets such as land use rights.

At the commencement date of the lease the Group recognises a right-of-use asset. The cost

of the right-of-use asset comprises: (i) the amount of the initial measurement of the lease

liability; (ii) any lease payments made at or before the commencement date of the lease less

any lease incentives received; (iii) any initial direct cost incurred; and (iv) an estimate of costs

incurred by the lessee in dismantling and removing the underlying asset restoring the site on

which it is located or restoring the underlying asset to the condition required by the terms and

conditions of the lease. The right-of-use assets are depreciated on a straight-line basis

subsequently by the Group. If the Group is reasonably certain that the ownership of the

underlying asset will be transferred to the Group at the end of the lease term the Group

depreciates the asset from the commencement date to the end of the useful life of the asset.Otherwise the Group depreciates the assets from the commencement date to the earlier of the

end of the useful life of the asset or the end of the lease term.The Group remeasures the lease liability at the present value of the changed lease payments

and adjusts the carrying amount of the right-of-use assets accordingly when the carrying

amount of the right-of-use asset is reduced to zero and there is a further reduction in the

measurement of the lease liability the Group recognises the remaining amount of the

remeasurement in profit or loss.

15.Construction in progress

The cost of construction in progress is determined according to the actual expenditures

incurred for the construction including all necessary construction expenditures incurred during

the construction period borrowing costs that shall be capitalised before the construction is

ready for its intended use and other relevant expenditures.

An item of construction in progress is transferred to fixed assets when the asset is ready for its

intended use.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Year ended 31 December 2019 Expressed in Renminbi Yuan

IIISummary of significant accounting policies and accounting estimates (Continued)

16.Intangible assets

Intangible assets are recognised and measured on initial recognition at cost only if the related

economic benefits will probably flow into the Group and their costs can be measured reliably.However the intangible assets acquired through a business combination not involving

enterprises under common control should be measured at fair value separately as intangible

assets when their fair values can be reliably measured.The useful life of the intangible assets shall be assessed according to the estimated beneficial

period expected to generate economic benefits for the Group. An intangible asset shall be

regarded as having an indefinite useful life when there is no foreseeable limit to the period over

which the asset is expected to generate economic benefits for the Group.The useful lives of the intangible assets are as follows:

Categories Useful lives

Land use rights Between the approved useful period and the Company’s

operating period

Software 3-5 years

Trademarks 5-10 years

Technology patents 5 years

Distribution network 20 years

Franchis 10 years

Favorable leases 17-20 years

Land use rights obtained by the Group are usually accounted for as intangible assets. As for

the construction of plants factories and other buildings of the Group the related land use rights

and other buildings were accounted for as intangible assets and fixed assets respectively.Purchase costs of land use rights and buildings were allocated to intangible assets and fixed

assets separately. Purchase costs were recognised as cost of fixed assets only if the

separation was impracticable.Intangible assets with a finite useful life are amortised over their estimated useful lives using the

straight-line method. For an intangible asset with a finite useful life the Group reviews the

useful life and amortization method at least once at each financial year end and makes

adjustments when necessary.Land use rights allocated by the State are regarded as an intangible asset with an indefinite

useful life due to an uncertain useful life. The impairment test should be conducted for the

intangible assets with the indefinite service life every year to determine whether the impairment

exists. The intangible assets with the indefinite service life shall not be amortized and the

Company shall make the review of the service life of the intangible assets during every

accounting period. If evidence prove that useful lives are finite the Group accounts for the

intangible assets in accordance with intangible assets with a finite useful life.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Year ended 31 December 2019 Expressed in Renminbi Yuan

IIISummary of significant accounting policies and accounting estimates (Continued)

16.Intangible assets (Continued)

Internal research and development project

The Group classifies the expenses for internal research and development as research costs

and development costs. All research costs are charged to the current profit or loss as incurred.

Expenditure incurred on projects to develop new products is capitalised and deferred only when

the Group can demonstrate the technical feasibility of completing the intangible asset so that it

will be available for use or sale its intention to complete and its ability to use or sell the asset

how the asset will generate future economic benefits (including demonstration that the product

derived from the intangible asset or the intangible asset itself will be marketable or in the case

of internal use the usefulness of the intangible asset as such) the availability of technical and

financial resources to complete the project and procure the use or sale of the intangible asset

and the ability to measure reliably the expenditure during the development. Product

development expenditure which does not meet these criteria is expensed when incurred.

Expenditure for investigation evaluation and selection of production process and new drug

researches is recognised in profit or loss in the period in which it is incurred. Expenditure on the

designation measurement of the final utilization of the production process and new drugs

before mass production is capitalized only if all of the following conditions are satisfied:

(1) development of the production process and new drugs has been fully demonstrated by the

technical team;

(2) management has approved the budget of drug production development and new drugs;

(3) market research analysis suggests that the products produced by the new production

technology are able to be promoted;

(4) adequate technical financial and other resources to complete the development and the

ability to use or sell the intangible asset;

(5) the expenditure attributable to the intangible asset during its development phase can be

reliably measured.Other development costs that do not meet the conditions above are recognised in profit or loss

in the period in which they are incurred. Development costs previously recognised as expenses

are not recognised as an asset in a subsequent period. Capitalized expenditure on the

development phase is presented as development costs in the balance sheet and transferred to

intangible assets at the date that the asset is ready for its intended use.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Year ended 31 December 2019 Expressed in Renminbi Yuan

IIISummary of significant accounting policies and accounting estimates (Continued)

17.Impairment of long-term assets

The Group determines the impairment of assets other than the impairment of inventories

investment properties measured using the fair value model deferred tax assets financial

assets and assets classified as held for sale using the following methods:

The Group assesses at the balance sheet date whether there is any indication that an asset

may be impaired. If any indication exists that an asset may be impaired the Group estimates

the recoverable amount of the asset and performs impairment testing. Goodwill arising from a

business combination and an intangible asset with an indefinite useful life are tested for

impairment at least at each year end irrespective of whether there is any indication that the

asset may be impaired. Intangible assets that have not been ready for their intended use are

tested for impairment each year.The recoverable amount of an asset is the higher of its fair value less costs to sell and the

present value of the future cash flows expected to be derived from the asset. The Group

estimates the recoverable amount on an individual basis unless it is not possible to estimate the

recoverable amount of the individual asset in which case the recoverable amount is determined

for the asset group to which the asset belongs. Identification of an asset group is based on

whether major cash inflows generated by the asset group are largely independent of the cash

inflows from other assets or asset groups.When the recoverable amount of an asset or asset group is less than its carrying amount the

carrying amount is reduced to the recoverable amount by the Group. The reduction in the

carrying amount is treated as an impairment loss and recognised in profit or loss. A provision

for impairment loss of the asset is recognised accordingly.

For the purpose of impairment testing the carrying amount of goodwill acquired in a business

combination is allocated from the acquisition date on a reasonable basis to each of the related

asset groups unless it is impossible to allocate to the related asset groups in which case it is

allocated to each of the related sets of asset groups. Each of the related asset groups or sets

of asset groups is an asset group or a set of asset groups that is expected to benefit from the

synergies of the business combination and shall not be larger than a reportable segment

determined by the Group.When testing an asset group (a set of asset groups) to which goodwill has been allocated for

impairment if there is any indication of impairment the Group firstly tests the asset group (set

of asset groups) excluding the amount of goodwill allocated for impairment i.e. the Group

determines and compares the recoverable amount with the related carrying amount and

recognises any impairment loss. After that the Group tests the asset group (set of asset

groups) including goodwill for impairment the carrying amount of the related asset group (set

of asset groups) is compared to its recoverable amount. If the carrying amount of the asset

group (set of asset groups) is higher than its recoverable amount the amount of the impairment

loss is firstly used to reduce the carrying amount of the goodwill allocated to the asset group

(set of asset groups) and then used to reduce the carrying amount of other assets (other than

the goodwill) within the asset group (set of asset groups) on a pro-rata basis of the carrying

amount of each asset.Once the above impairment loss is recognised it will not be reversed for the value recovered in

the subsequent periods.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Year ended 31 December 2019 Expressed in Renminbi Yuan

IIISummary of significant accounting policies and accounting estimates (Continued)

18.Long-term prepaid expenses

Long-term prepaid expenses include the expenditure for improvements to fixed assets under

operating leases and other expenditures that have been made but should be recognised as

expenses over more than one year in the current and subsequent periods. Long-term prepaid

expenses are amortized on the straight-line basis over the expected beneficial period and are

presented at actual expenditure net of accumulated amortization.

19.Governmental medical reserve funds and specially approved reserving materials

Appointed by the PRC Government CNPGC is responsible for purchasing allocating and

providing the governmental medical reserves which include the medical products traditional

Chinese medicine and medical appliances for nation-wide emergency rescue and disaster

relief. Appointed by the Government of Guangxi Province and Guangdong Province the

Company Sinopharm Medicine Holding Guangxi Co. Ltd. (“Sinopharm Guangxi”) and

Sinopharm Medicine Holding Guangzhou Co. Ltd. (“Sinopharm Guangzhou”) are responsible

for purchasing allocating and providing the medical reserves which include the medical

products needed for serious disasters epidemics and other emergencies as well as endemic

diseases in Guangxi Province and Guangdong Province. In accordance with the regulation of

CNPGC being the enterprise which bears the obligation for specially approved medical

reserving materials the medical reserve funds received from the PRC Government or local

government are recognised as other non-current liabilities. The Group reserves the specially

approved medical reserving materials according to the reserve program (by category and by

quantity) applies dynamic management and recognizes them as other non-current assets.

20.Employee benefits

Employee benefits mainly include short-term employee benefits post-employment benefits

termination benefits and other long-term employee benefits incurred in exchange for service

rendered by employees or various forms of rewards or compensation due to severance of labor

relation.Short-term employee benefits

The actual occurred short-term employee benefits are recognized as liabilities during the

accounting period in which the service has been rendered by the employees and as costs of

assets or expenses to whichever the employee service is attributable.Post-employment benefits (defined contribution plans)

The employees in the Group participate in social insurance and unemployment insurance

schemes administrated by the local governments and the related expenditures are recorded in

cost of related assets or profit or loss in the period when they incurred.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Year ended 31 December 2019 Expressed in Renminbi Yuan

IIISummary of significant accounting policies and accounting estimates (Continued)

20.Employee benefits (Continued)

Post-employment benefits (defined benefit plans)

The Group operates a defined benefit pension scheme. No funds have been injected into the

scheme. The cost of benefits provided under the defined benefit scheme is calculated using the

expected benefit accrual unit approach.Remeasurement arising from defined benefit pension schemes including actuarial gains or

losses changes in the asset cap effect (deducting amounts included in net interest) and returns

on scheme assets (deducting amounts included in net interest) is instantly recognised in the

balance sheet and charged to shareholders’ equity through other comprehensive income for the

period during which it is incurred. It will not be reversed to profit and loss in subsequent periods.Previous service costs are recognised as current expenses when: the defined benefit scheme

is revised or the relevant restructuring costs or termination benefits are recognised by the

Group whichever earlier.Net interest is arrived at by multiplying net liabilities or net assets of defined benefits with a

discount rate. Changes in net obligations of defined benefits are recognised as operating costs

and administration expenses in the income statement. Service costs include current services

costs past service costs and settlement of profit or loss. Net interest include interest income

from scheme assets interest expenses for scheme obligations and interest of the asset cap

effect.Termination benefits

The Group recognizes a liability for termination benefits and charges to profit or loss at the

earlier of the following dates: a) when the Group can no longer withdraw from the termination

plan or the redundancy offer; and b) when the Group recognizes costs or expense for a

restructuring plan which involves the payment of termination benefits.The Group offers termination benefits to the employees who accept internal retirement

arrangements. Termination benefits refers to salaries and social securities paid to the

employees who voluntarily retire and approved by the management before the legal retirement

age. The Group pays termination benefits from the date of the starting of internal retirement

arrangements to legal retirement age. When meeting the recognition criteria termination

benefits are recognised as liabilities from the date on which the employees stop offering

services to the legal retirement date and recognised in profit or loss as incurred. The change of

termination benefits’ actuarial assumptions and difference incurred by the adjustment of welfare

standards are recognised in profit or loss as incurred.The termination benefits expected to be settled within one year since the balance sheet date

are classified as current liabilities.Other long-term employee benefits

Other long-term employee’ benefits provided to employees shall be recognised and measured

as net liabilities or net assets where provisions regarding post-employment benefits are

applicable provided that changes shall be included in the current profit and loss or related

asset costs.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Year ended 31 December 2019 Expressed in Renminbi Yuan

IIISummary of significant accounting policies and accounting estimates (Continued)

21.Lease liabilities (applicable from 1 January 2019)

At the commencement date of the lease the Group measures the lease liability at the present

value of the lease payments that are not paid at that date except for short-term leases and

leases of low-value assets. In calculating the present value of the lease payments the Group

uses the interest rate implicit in the lease as the discount rate. If that rate cannot be readily

determined the Group uses the lessee’s incremental borrowing rate. The Group calculates the

interest expenses of the lease liability in each period during the lease term using the constant

periodic rate of interest and recognises such interest expenses in profit or loss except those in

the costs of the related asset as required. Variable lease payments that are not included in the

measurement of the lease liabilities are recognised in profit or loss as incurred except those in

the costs of the related asset as required.

After the commencement date of the lease the Group remeasures lease liabilities with changed

present value of the lease payments when fixed payment expected unguaranteed residual

value payable the interest rate implicit in the lease as the discount rate purchase options

options to extend the lease or determination of the lease term change.

22. Provisions

An obligation related to a contingency shall be recognised by the Group as a provision when all

of the following conditions are satisfied except for contingent considerations and contingent

liabilities assumed in a business combination not involving enterprises under common control:

(1)The obligation is a present obligation of the Group;

(2)It is probable that an outflow of economic benefits from the Group will be required to settle the

obligation; and

(3)The amount of the obligation can be measured reliably.

The provisions are initially measured at the best estimate of the expenditure required to settle

the related present obligation taking into account factors pertaining to a contingency such as

the risks uncertainties and time value of money as a whole. The carrying amount of provisions

is reviewed at the balance sheet date. Where there is clear evidence that the carrying amount

of a provision does not reflect the current best estimate the carrying amount is adjusted to the

current best estimate.

For business combinations not under common control contingent liabilities of the acquiree

obtained in a business combination shall be measured at fair value in initial recognition. After

initial recognition subsequent measurement is conducted using the higher of the amount

recognised by provisions and the amount of initial recognition deducting the accumulated

amortization amount determined by the principles of revenue recognition.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Year ended 31 December 2019 Expressed in Renminbi Yuan

IIISummary of significant accounting policies and accounting estimates (Continued)

23.Share-based payments

The share-based payments shall consist of equity-settled share-based payments and cash-

settled share-based payments. The term "equity-settled share-based payment" refers to a

transaction in which the group grants shares or other equity instruments as a consideration in

return for services.The equity-settled share-based payment in return for employee services shall be measured at

the fair value of the equity instruments granted to the employees. As to an equity-settled share-

based payment in return for services of employees if the right may be exercised immediately

after the grant the fair value of the equity instruments shall on the date of the grant be

included in the relevant cost or expense and the capital reserves shall be increased

accordingly. As to an equity-settled share-based payment in return for employee services if the

right cannot be exercised until the vesting period comes to an end or until the prescribed

performance conditions are met then on each balance sheet date within the vesting period the

Group shall make the best estimate of the number of vested equity instruments based on the

latest movement of the granted employee the content of prescribed performance and other

conditions. Based on the best estimate the services obtained in the current period shall be

included in the relevant costs or expenses and the capital reserves at the fair value of the

equity instruments on the date of the grant. The fair value of the equity instruments is

determined using the binomial model.The cost of equity-settled transactions is recognised together with a corresponding increase in

capital reserves over the period in which the specified performance or service conditions are

fulfilled. The cumulative expense recognised for equity-settled transactions at each balance

sheet date until the vesting date reflects the extent to which the vesting period has expired and

the Group’s best estimate of the number of equity instruments that will ultimately vest.

For awards that do not ultimately vest because non-market performance and service conditions

have not been met no expense is recognised. Where awards include a market or non-vesting

condition the transactions are treated as vesting irrespective of whether the market or non-

vesting condition is satisfied provided that all other performance and service conditions are

satisfied.Where the terms of an equity-settled award are modified as a minimum an expense is

recognised as if the terms had not been modified if the original terms of the award are met. In

addition an expense is recognised for any modification that increases the total fair value of the

share-based payments or is otherwise beneficial to the employee as measured at the date of

modification.Where an equity-settled award is cancelled it is treated as if it had vested on the date of

cancellation and any expense not yet recognised for the award is recognised immediately. This

includes any award where non-vesting conditions within the control of either the Group or the

employee are not met. However if a new award is substituted for the cancelled award and is

designated as a replacement award on the date that it is granted the cancelled and new

awards are treated as if they were a modification of the original award as described in the

previous paragraph.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Year ended 31 December 2019 Expressed in Renminbi Yuan

IIISummary of significant accounting policies and accounting estimates (Continued)

23.Share-based payments (Continued)

A cash-settled share-based payment shall be measured in accordance with the fair value of the

liability calculated and confirmed based on the shares or other equity instruments undertaken

by an enterprise. As to a cash-settled share-based payment instruments if the right may be

exercised immediately after the grant the fair value of the liability undertaken by the enterprise

shall on the date of the grant be included in the relevant costs or expenses and the liabilities

shall be increased accordingly. As to a cash-settled share-based payment if the right may not

be exercised until the vesting period comes to an end or until the specified performance

conditions are met on each balance sheet date within the vesting period the services obtained

in the current period shall based on the best estimate of the information about the exercisable

right be included in the relevant costs or expenses and the corresponding liabilities at the fair

value of the liability undertaken by the Group. The Group shall on each balance sheet date and

on each account date prior to the settlement of the relevant liabilities re-measure the fair

values of the liabilities and include the changes in the current profits and losses.

24.Revenue from contracts with customers

The group recognizes revenue when it has fulfilled its obligations under the contract i e. when

the customer acquires control relevant goods or services. Acquiring control over the goods or

services refers to the ability to dominate the use of the goods or the portion of services and to

derive almost all the economic benefits therefrom.

Contracts for sale of goods

The contracts for the sale of goods between the Group and its customer usually only contain

the performance obligations for the transfer of goods. The Group generally recognizes revenue

at the point of transferring the control of goods on the basis of a combination of the following

factors: the current right to collect the goods the transfer of major risks and benefits in the

ownership of the goods and the transfer of the legal ownership of the goods the transfer of

physical assets of the goods and that the customers have accepted the goods.Service contracts

The service contracts between the Group and its customers usually consist of performance

obligations such as storage and logistics and so on. As the Group's performance of contracts is

at the same time when the customer obtains and consumes the economic benefits of the

performance of the Group and the Group has the right to collect receivables from the

performance of contacts that has been completed to date the Group regards it as a contract

obligation over a period of time except that the progress of performance cannot be reasonably

determined. The Group determines the progress of the performance of contracts in accordance

with the input method. If the progress of performance of contracts cannot be reasonably

determined and the cost incurred by the Group is expected to be compensated the revenue is

recognised on the basis of the incurred costs until the progress of performance of contacts can

be reasonably measured.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Year ended 31 December 2019 Expressed in Renminbi Yuan

IIISummary of significant accounting policies and accounting estimates (Continued)

24.Revenue from contracts with customers (Continued)

Variable consideration

Some of the Group's contracts with customers including arrangements of sales rebates (list

items in accordance with the customer’s actual conditions such as early completion awards or

others) result in variable consideration. The Group determines the best estimate of variable

consideration by using the expected value method or the most likely amount method. However

the transaction price including variable consideration is only to the extent that it is highly

probable that a significant reversal in the amount of cumulative revenue recognised will not

occur when the uncertainty associated with the variable consideration is subsequently resolved.

Consideration payable to customers

Where consideration is payable by the Group to a customer such consideration payable shall

be deducted against the transaction price and against current revenue upon the recognition of

revenue or the payment of (or the commitment to pay) the consideration to the customer

(whichever is later) save for consideration payable to the customer for the purpose of acquiring

from the customer other clearly separable products.Return clauses

In connection with sales with a return clause revenue is recognised according to the amount of

consideration it expects to be entitled to for the transfer to a customer when the customer

acquires control of the relevant products. Amounts expected to be refunded for the return of

sales are recognised as liabilities. At the same time the balance of the carrying value of the

product expected to be returned upon transfer less expected costs for the recall of such product

(including an impairment loss of the recalled product) shall be recognised as an asset (i.e. cost

of return receivables) and the net amount of the carrying value of the transferred product upon

the transfer less the aforesaid asset cost shall be transferred to cost. At each balance sheet

date the Group reassesses the future return of sales and remeasures the above assets and

liabilities.Significant financing component

Where a contract contains a significant financing component the Group determines transaction

prices based on amounts payable assumed to be settled in cash by customers immediately

upon the acquisition of control over the products. The difference between such transaction price

and contract consideration is amortised over the contract period using the effective interest rate

method based on a ratio that discounts the nominal contractual consideration to the current

selling price of the products.The Group shall not give consideration to any significant financing component in a contract if

the gap between the customer’s acquisition of control over the products and payment of

consideration is expected to be less than 1 year.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Year ended 31 December 2019 Expressed in Renminbi Yuan

IIISummary of significant accounting policies and accounting estimates (Continued)

24.Revenue from contracts with customers (Continued)

Warranty clauses

The Group provides quality assurance for products sold and assets built in accordance with

contract terms and laws and regulations. The accounting treatment of quality assurance in the

form of warranty assuring customers products sold are in compliance with required standards is

set out in Note III (22). Where the Group provides a service warranty for a standalone service in

addition to the assurance of compliance of products with required standards such warranty is

treated as a stand-alone contractual performance obligation and a portion of the transaction

price shall be allocated to the service warranty based on a percentage of the stand-alone price

for the provision of the product and service warranty. When assessing whether a warranty is

rendering a stand-alone service in addition to providing guarantee to customers that all sold

goods are in compliance with required standards the Group will consider whether or not such

warranty is a statutory requirement the term of the warranty and the nature of the Group’s

undertaking to perform its obligations.Reward points program

The Group grants reward points to customers when selling goods. Customers can use reward

points to redeem free or discounted goods provided by the Group. This reward points program

provides significant rights to customers and the Group considers it as an individual

performance obligation and apportions part of the transaction prices to reward points based on

pricing of goods or services with warranty clauses. Revenue is recognised when customers

obtain goods redeemed or when reward points expire.Principal responsible person/proxy

For goods or other assets obtained from a third party which were transferred later to customers

the Group has the right to decide independently the pricing of goods. This means that the

Group has obtained control over related goods before transferring to customers. Therefore the

Group is the principal responsible person and revenue is recognised based on the total amount

of consideration received or receivable. Otherwise the Group is proxy and revenue is

recognised based on expected commission. This amount should be the total amount of

consideration received or receivable net of the amount payable to other parties or based on the

fixed amount or percentage.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Year ended 31 December 2019 Expressed in Renminbi Yuan

IIISummary of significant accounting policies and accounting estimates (Continued)

25.Contract assets and contract liabilities

The Group presents contract assets or contract liabilities on the balance sheet according to the

relationship between contractual performance obligations and customer payments. Contract

assets and contract liabilities under the same contract are presented on a net basis after set-

off.

Contract assets

The right to receive consideration following the transfer of products to customers which is

dependent on factors other than the passage of time is presented as contract assets.

For details of the Group’s determination and accounting treatment of expected credit losses

from contract assets please refer to Note III (8).

Contract liabilities

The obligation to pass products to customers in connection with customer consideration

received or receivable is presented as contract liabilities for example amounts received prior

to the transfer of the promised products.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Year ended 31 December 2019 Expressed in Renminbi Yuan

IIISummary of significant accounting policies and accounting estimates (Continued)

26.Assets relating to contract cost

The Group’s assets relating to contract costs include the contract acquisition costs and contract

performance costs presented respectively under inventories other current assets and other

non-current assets.Where the Group expects the incremental costs for acquiring a contract to be recoverable such

contract acquisition costs are recognised as an asset (unless the amortisation period of the

asset is not more than 1 year).

Costs incurred by the Group for the performance of a contract are recognised as an asset as

contract performance costs if they do not fall under the scope of the relevant standards for

inventories fixed assets or intangible assets but meet all the following conditions:

(1) They are directly related to a current or anticipated contract including direct labour direct

materials manufacturing expenses (or similar expenses) to be borne by customers as

specifically stipulated and otherwise incurred solely in connection with the contract;

(2) they will increase the resources to be utilised in the Company’s future performance of its

contractual obligations; and

(3) they are expected to be recoverable.

The Group amortises assets relating to contract costs on the same basis as that for the

recognition of revenue relating to such assets and recognises the amortised assets in current

profit or loss.

For assets relating to contract costs whose carrying value is higher than the difference between

the following two items the Group makes provision for impairment for the excess to be

recognised as asset impairment losses:

(1) The remaining consideration expected to be obtained as a result of the transfer of goods

relating to such assets;

(2) Estimated costs to be incurred in connection with the transfer of relevant goods

In the event that the difference between (1) and (2) becomes higher than the carrying value of

such assets as a result of changes in the factors of impairment for previous periods previous

provisions for asset impairment losses should be written back and included in current profit or

loss provided that the asset’s carrying value following the write-back shall not exceed the

carrying value that such assets would have on the date of write-back were there no provision

for impairment.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Year ended 31 December 2019 Expressed in Renminbi Yuan

IIISummary of significant accounting policies and accounting estimates (Continued)

27.Government grants

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.Government grants related to assets refer to government assets which are granted to

enterprises for the long-term assets formed by acquisition construction or in other manners.Government grants related to income refer to government grants other than those related to

assets.Government grants related to income to be used as compensation for future expenses or

losses shall be recognised as deferred income and shall be charged to current profit or loss or

be used to write down the relevant loss during the recognition of the relevant cost expenses or

losses; or used as compensation for relevant expenses or losses already incurred by

enterprises shall be directly charged to the profit or loss account in the current period or used to

write down the relevant cost.The government grants related to assets shall be used to write down the book value of the

relevant assets or be recognised as deferred income. The government grants related to assets

recognised as deferred income shall be charged to profit and loss reasonably and

systematically in stages over the useful lives of the relevant assets. The government grants

measured at a nominal amount shall be directly charged to current profit or loss. If any related

asset is sold transferred written off or destroyed before the end of its useful life the balance of

the undistributed deferred income shall be transferred to the current gain or loss on disposal of

the asset.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Year ended 31 December 2019 Expressed in Renminbi Yuan

IIISummary of significant accounting policies and accounting estimates (Continued)

28.Income tax

Income tax comprises current and deferred tax. Income tax is recognised as income or

expense in profit or loss or recognised directly in equity if it arises from a business combination

or relates to a transaction or event which is recognised directly in equity.

Current tax liabilities or assets arising from the current and prior periods at the amount

expected to be paid by the Group or returned by the tax authority are calculated according to

related tax laws.

Deferred tax is provided using the balance sheet liability method on all temporary differences

at the balance sheet date between the tax bases of assets and liabilities and their carrying

amounts and temporary differences between the tax bases and the carrying amounts of the

items which have a tax base according to related tax laws but are not recognised as assets

and liabilities.

Deferred tax liabilities are recognised for all taxable temporary differences except:

(1) when the taxable temporary difference arises from the initial recognition of goodwill or an

asset or liability in a transaction that is not a business combination and at the time of

transaction affects neither accounting profit nor taxable profit or loss; and

(2) in respect of taxable temporary differences associated with investments in subsidiaries

associates and joint ventures when the timing of the reversal of the temporary differences

can be controlled and it is probable that the temporary differences will not be reversed in

the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences and the

carryforward of unused tax losses and any unused tax credits. Deferred tax assets are

recognised to the extent that it is probable that taxable profit will be available against which the

deductible temporary differences the carryforward of unused tax losses and unused tax credits

can be utilised except:

(1) when the deductible temporary difference arises from the initial recognition of an asset or

liability in a transaction that is not a business combination and at the time of the

transaction affects neither the accounting profit nor taxable profit or loss; and

(2) in respect of the deductible temporary differences associated with investments in

subsidiaries associates and joint ventures deferred tax assets are only recognised to the

extent that it is probable that the temporary differences will be reversed in the foreseeable

future and taxable profit will be available against which the temporary differences can be

utilised in the future.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Year ended 31 December 2019 Expressed in Renminbi Yuan

IIISummary of significant accounting policies and accounting estimates (Continued)

28.Income tax (Continued)

At the balance sheet date deferred tax assets and liabilities are measured at the tax rates that

are expected to apply to the period when the asset is realised or the liability is settled in

accordance with the requirements of tax laws. The measurement of deferred tax assets and

deferred tax liabilities reflects the tax consequences that would follow from the manner in which

the Group expects at the balance sheet date to recover the assets or settle the liabilities.The carrying amount of deferred tax assets is reviewed at the balance sheet date and reduced

to the extent that it is no longer probable that sufficient taxable profit will be available in future

periods to allow the deferred tax assets to be utilised. Unrecognised deferred tax assets are

reassessed at the balance sheet date and are recognised to the extent that it has become

probable that sufficient taxable profit will be available to allow all or part of the deferred tax

asset to be recovered.

Deferred tax assets and deferred tax liabilities are offset if and only if the Group has a legally

enforceable right to set off current tax assets and current tax liabilities and the deferred tax

assets and deferred tax liabilities relate to income taxes levied by the same taxation authority

on either the same taxable entity or different taxable entities which intend either to settle current

tax liabilities and assets on a net basis or to realise the assets and settle the liabilities

simultaneously in each future period in which significant amounts of deferred tax liabilities or

assets are expected to be settled or recovered.

29.Leases (applicable from 1 January 2019)

Identification of leases

At inception of a contract the Group assesses whether the contract is or contains a lease. A

contract is or contains a lease if the contract conveys the right to control the use of an

identified asset for a period of time in exchange for consideration. To assess whether a

contract conveys the right to control the use of an identified asset for a period of time the

Group assesses whether throughout the period of use the customer has both of the right to

obtain substantially all of the economic benefits from use of the identified asset and the right to

direct the use of the identified asset.Identification of separate lease components

For a contract that contains multiple separate lease components the Group separates the

components of the contract and accounts for each separate lease component. The right to use

an underlying asset is a separate lease component if both:

(1) the lessee can benefit from use of the underlying asset either on its own or together with

other resources that are readily available to the lessee; and

(2) the underlying asset is neither highly dependent on nor highly interrelated with the other

underlying assets in the contract.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Year ended 31 December 2019 Expressed in Renminbi Yuan

IIISummary of significant accounting policies and accounting estimates (Continued)

29.Leases (applicable from 1 January 2019) (Continued)

Separating lease components and non-lease components

For a contract that contains lease components and non-lease components the Group accounts

for lease components and non-lease components separately as a lessor or a lessee.

Assessment of the lease term

The lease term is the non-cancellable period of a lease for which the Group has the right to use

an underlying asset. If the Group has an option to extend the lease that is the Group has the

right to extend the lease and is reasonably certain to exercise that option the lease term also

includes periods covered by an option to extend the lease. If the Group has an option to

terminate the lease that is the Group has the right to terminate the lease but is reasonably

certain not to exercise that option the lease term includes periods covered by an option to

terminate the lease. The Group reassesses whether it is reasonably certain to exercise an

extension option purchase option or not to exercise a termination option upon the occurrence

of either a significant event or a significant change in the circumstances that is within the control

of the Group and affects whether the Group is reasonably certain to exercise an option not

previously included in its determination of the lease term.

As lessee

The Group accounts as a lessee applying Note III (15) and Note III (21).Lease modifications

Lease modification is a change in the scope of a lease or the consideration for a lease that

was not part of the original terms and conditions of the lease for example adding or

terminating the right to use one or more underlying assets or extending or shortening the

contractual lease term.The Group accounts for a lease modification as a separate lease if both:

(1) the modification increases the scope of the lease by adding the right to use one or more

underlying assets; and

(2) the consideration for the lease increases by an amount commensurate with the stand-

alone price for the increase in scope and any appropriate adjustments to that stand-alone

price to reflect the circumstances of the particular contract.

For a lease modification that is not accounted for as a separate lease at the effective date of

the lease modification the Group remeasures the lease liability by discounting the revised lease

payments using a revised discount rate. The revised discount rate is determined as the interest

rate implicit in the lease for the remainder of the lease term or the lessee’s incremental

borrowing rate at the effective date of the modification if the interest rate implicit in the lease

cannot be readily determined.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Year ended 31 December 2019 Expressed in Renminbi Yuan

IIISummary of significant accounting policies and accounting estimates (Continued)

29.Leases (applicable from 1 January 2019) (Continued)

As lessee (Continued)

Lease modifications (Continued)

For a lease modification that is not accounted for as a separate lease the Group accounts for

the remeasurement of the lease liability by:

(1) decreasing the carrying amount of the right-of-use asset to reflect the partial or full

termination of the lease for lease modifications that decrease the scope of the lease and

recognising the gain or loss relating to the partial or full termination of the lease in profit or

loss; or

(2) making a corresponding adjustment to the right-of-use asset for all other lease

modifications.Short-term leases and leases of low-value assets

The Group considers a lease that at the commencement date of the lease has a lease term of

12 months or less and does not contain any purchase option as a short-term lease; and a

lease for which the value of the individual underlying asset is not more than RMB40000 when it

is new as a lease of low-value assets. If the Group subleases an asset or expects to sublease

an asset the head lease does not qualify as a lease of a low-value asset. The Group does not

recognise the right-of-use assets and lease liabilities for short-term leases and low-value

assets. The Group recognises lease payments on short-term leases and leases of low-value

assets in the costs of the related asset or profit or loss on a straight-line basis over the lease

term.

As lessor

A lease is classified as a finance lease if it transfers substantially all the risks and rewards

incidental to ownership of an underlying asset except that a lease is classified as an operating

lease at the inception date. The Group as an intermediate lessor classifies the sublease by

reference to the right-of-use asset arising from the head lease.

As lessor of an operating lease

Rent income under an operating lease is recognised on a straight-line basis over the lease

term through profit or loss. Variable lease payments that are not included in the measurement

of lease receivables are charged to profit or loss as incurred.The Group accounts for a modification to an operating lease as a new lease from the effective

date of the modification considering any prepaid or accrued lease payments relating to the

original lease as part of the lease payments for the new lease.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Year ended 31 December 2019 Expressed in Renminbi Yuan

IIISummary of significant accounting policies and accounting estimates (Continued)

30.Leases (applicable in 2018)

Finance leases are leases with the whole risks and rewards related to the asset substantially

transferred. The other kinds of leases are nominated operating leases.

As lessee of operating leases

Rental expenses under operating leases are recognised as relevant asset costs or in current

profit or loss on the straight-line basis over the lease term. Contingent rental is charged to

current profit or loss when incurred.

As lessor of operating leases

Rental income under operating leases are recognised as profit/loss for the current period on a

straight-line basis over the lease term. Contingent rental is charged to current profit or loss

when incurred.

As lessee under finance leases

An asset held under finance leases is initially recognised at the lower of the leased assets’ fair

value and the present value of minimum lease payments on the lease commencement date.The amount of long-term payables will be recognised as minimum lease payments accordingly

and the differences between the leased assets’ fair value and the present value of minimum

lease payments will be recorded as unrecognised financing costs which will be amortised using

the effective interest method over the term of the relevant lease. Contingent rentals will be

recognised in profit or loss for the period when they are actually incurred.

Fixed assets that are held under finance leases are depreciated by applying the same policy as

that for the fixed assets owned by the Group. If it can be reasonably determined that the

ownership of the leased asset can be obtained at the end of the lease term the leased asset is

depreciated over its useful life; otherwise the leased asset is depreciated over the shorter of

the lease term and its useful life.

31.Dividend distribution

Cash dividend distribution is recognised as a liability in the period in which it is approved by

shareholders at the annual shareholders’ meeting.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Year ended 31 December 2019 Expressed in Renminbi Yuan

IIISummary of significant accounting policies and accounting estimates (Continued)

32.Fair value measurement

At each balance sheet date the Group measures the fair value of equity instrument

investments. Fair value means the price receivable from the disposal of an asset or required to

be paid for the transfer of a liability in an orderly transaction incurred by market participants on

the measurement date. The Group measures assets or liabilities at fair value with the

assumption that the orderly transaction of asset disposal or the transfer of liabilities takes place

in the major market for the relevant assets or liabilities. Where there is no major market the

Group assumes that such transaction takes place in the most favourable market for the relevant

assets or liabilities. The major market (or most favourable market) is a trading market which the

Group has access to on the measurement date. The Group adopts assumptions used by

market participants when they price the asset or liability with the aim of maximising its

economic benefits.The measurement of non-financial assets measured at fair value should take into account the

ability of market participants to utilise the asset in the best way for generating economic

benefits or the ability to dispose of such asset to other market participants who are able to

utilise the asset in the best way for generating economic benefits.The Group adopts valuation techniques that are appropriate in the current circumstances and

supported by sufficient usable data and other information. Observable input will be used first

and foremost. Unobservable input will only be used when it is not possible or practicable to

obtain observable input.The fair value hierarchy in which an asset or liability is measured or disclosed in the financial

statements at fair value will be determined on the basis of the lowest level of input which is

significant for the fair value measurement as a whole. Input at the first level represents

unadjusted quoted prices in an active market for the acquisition of the same asset or liability on

the measurement date. Input at the second level represents directly or indirectly observable

assets or liabilities apart from input at the first level. Input at the third level represents

unobservable input for the asset or liability.

At each balance sheet date the Group reassesses assets and liabilities measured at fair value

on an ongoing basis recognised in the financial statements to determine whether the level of

fair value measurement should be changed.

33.Segment information

The Group identifies operating segments based on the internal organization structure

management requirements and internal reporting system and discloses segment information of

reportable segments which is determined on the basis of operating segments.

An operating segment is a component of the Group that satisfies all of the following conditions:

(1) the component is able to earn revenues and incur expenses from its ordinary activities; (2)

the component’s operating results are regularly reviewed by the Group’s management to make

decisions about resources to be allocated to the segment and to assess its performance and (3)

for which the information on financial position operating results and cash flows is available to

the Group. If two or more operating segments have similar economic characteristics and satisfy

certain conditions they are aggregated into one single operating segment.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Year ended 31 December 2019 Expressed in Renminbi Yuan

IIISummary of significant accounting policies and accounting estimates (Continued)

34.Significant accounting judgements and estimates

The preparation of the financial statements requires management to make judgements

estimates and assumptions that affect the reported amounts of revenue expenses assets and

liabilities and their accompanying disclosures and the disclosure of contingent liabilities at the

balance sheet date. Uncertainty about these assumptions and estimates could result in

outcomes that could require a material adjustment to the carrying amounts of the assets or

liabilities affected in the future.Judgements

In the process of applying the Group’s accounting policies management has made the

following judgements which have the most significant effect on the amounts recognised in the

financial statements:

Operating leases – as lessor

The Group signed lease contracts for investment properties. The Group considers these leases

as operating leases because according to the lease contract terms the Group reserves all

significant risks and rewards of ownership of the properties.

Business model

The classification of financial assets at initial recognition is dependent on the Group’s business

model for managing the assets. Factors considered by the Group in judging the business model

include enterprise valuation the method of reporting the results of financial assets to key

management members risks affecting the results of financial assets and the method for

managing such risks as well as the form of remuneration received by the management

personnel of the businesses concerned. In assessing whether the business model is aimed at

receiving contract cash flows the Group is required to analyse and exercise judgment in

respect of the reasons timing frequency and values of any disposals prior to maturity.

Contractual cash flow characteristics

The classification of financial assets at initial recognition depends on the financial asset’s

contractual cash flow characteristics and the judgements on whether the contractual cash

flows are solely payments of principal and interest on the principal amount outstanding

including when assessing the modification of the time value of money the judgement on

whether there is any significant difference from the benchmark cash flow and whether the fair

value of the prepayment features is insignificant for financial assets with prepayment features

etc.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Year ended 31 December 2019 Expressed in Renminbi Yuan

IIISummary of significant accounting policies and accounting estimates (Continued)

34.Significant accounting judgements and estimates (Continued)

Estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at

the end of the reporting period that may cause material adjustment to the carrying amounts of

assets and liabilities are discussed below.Impairment of financial instruments

The Group uses the expected credit loss model to assess the impairment of financial

instruments. The Group is required to perform significant judgement and estimation and take

into account all reasonable and supportable information including forward-looking information.When making such judgements and estimates the Group infers the expected changes in the

debtor's credit risk based on historical repayment data combined with economic policies

macroeconomic indicators industry risks and other factors. The different estimates may impact

the impairment assessment and the provision for impairment may also not be representative of

the actual impairment loss in the future.Impairment of non-current assets other than financial assets (excluding goodwill)

The Group assesses whether there are any indicators of impairment for non-current assets

other than financial assets at the date of statement of financial position. Intangible assets with

indefinite useful lives are tested for impairment annually and at other times when such an

indicator exists. Other non-current assets other than financial assets are tested for impairment

when there are indicators that the carrying amounts may not be recoverable. An impairment

exists when the carrying value of an asset or asset group exceeds its recoverable amount

which is the higher of its fair value less costs to sell and its present value of future cash flows.The calculation of the fair value less costs to sell is based on available data from binding sales

transactions in an arm’s length transaction of similar assets or observable market prices less

incremental costs for disposing of the asset. When value-in-use calculations are undertaken

management must estimate the expected future cash flows from the asset or asset group and

choose a suitable discount rate in order to calculate the present value of those cash flows.Refer to Note V (12) (13) (14) (15) (16).Impairment of goodwill

Goodwill is tested for impairment at least at the end of each year. For the purpose of

impairment testing the present value of future cash flows which are generated from asset

groups or sets of asset groups considered together with allocated goodwill is estimated. The

Group estimates the present value of future cash flows from asset groups or sets of asset

groups by forecasting the related cash flows and selecting a suitable discount rate. Refer to

Note V (17).

Deferred tax assets

To the extent that it is probable that there are sufficient taxable profits to offset the deductible

losses deferred tax assets shall be recognised for all unused deductible losses. Substantial

management’s judgements regarding the timing and amount of future taxable profit are needed

when estimating the amount of deferred tax assets.

Fair value of non-listed equity investments

Non-listed equity investments are valued as expected future cash flows based on the current

discount rate of other financial instruments with similar contractual terms and risk

characteristics. This requires the Group to estimate future cash flows credit risks fluctuations

and discount rates and is therefore uncertain.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Year ended 31 December 2019 Expressed in Renminbi Yuan

IIISummary of significant accounting policies and accounting estimates (Continued)

34.Significant accounting judgements and estimates (Continued)

Estimation uncertainty (Continued)

Reward points

The Group considers the observable separate selling price of the redeemable free or

discounted goods the probability of redeeming and all the related information after which

estimates a reasonable reward points separate selling price. When estimating the probability of

redeeming the Group bases on historical data current data and takes into consideration future

change of the client also market trends and other factors. The Group re-evaluates the separate

selling price of reward points at least once every balance sheet date and allocates it to the

reward points transaction price based on the result.Return clauses

The Group reasonably estimates the return rate for contract groups with similar characteristics

according to the historical return rate current conditions of return the change of customers and

markets. The Group at least reassesses the return rate at every balance sheet date and

determines return payables and cost of return receivables.Warranty

The Group makes reasonable estimates on warranty fee rates in respect of contract groups

with similar characteristics based on the historical data and current conditions of warranty

taking into consideration all relevant information such as product improvements and market

changes among others. The Group reassesses the warranty fee rates at least annually at each

balance sheet date and determines its estimated liabilities based on the reassessed warranty

fee rates.

Evaluating limitations of variable consideration

When estimating variable consideration the Group considers all the reasonable information

obtained including historical information current information and forecasted information and

also estimates all the possible consideration amount and possibility within a reasonable range.

For contracts that are likely to have multiple different outcomes the Group estimates the

consideration amount based on the expected value method. For contracts with only two

possible outcomes the Group estimates the consideration amount based on the most likely

outcome. The estimated amount of variable consideration will be included in the transaction

price only to the extent that it is highly probable that a significant reversal in the amount of

cumulative revenue recognised will not occur when the uncertainty associated with the variable

consideration is subsequently resolved. The Group re-evaluates the amount of variable

consideration on every balance sheet date including re-evaluating whether the estimations

used are limited to reflect changes which occurred in the financial statement period.Lessee’s incremental borrowing rate

If the interest rate implicit in the lease cannot be readily determined the Group measures the

lease liability at the present value of the lease payments discounted using the lessee’s

incremental borrowing rate. According to the economic environment the Group takes the

observable interest rate as the reference basis for determining the incremental borrowing rate

then adjusts the observable interest rate based on its own circumstances underlying assets

lease terms and amounts of lease liabilities to determine the applicable incremental borrowing

rate.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Year ended 31 December 2019 Expressed in Renminbi Yuan

IIISummary of significant accounting policies and accounting estimates (Continued)

35.Changes in accounting policies and estimates

Changes in accounting policies

The New Leases Standard

In 2018 the MOF issued revised Accounting Standard for Business Enterprises No. 21 –

Leases (the “New Leases Standard”). The New Leases Standard introduces a single model

similar to the current accounting treatment of finance leases requiring the lessor to recognise

right-of-use assets and lease liabilities for all the leases except for short-term leases and

leases of low-value assets and recognise depreciation and interest expense respectively. The

Group has accounted for leases under the revised leases standard since 1 January 2019. As a

practical expedient the Group did not reassess whether a contract is or contains a lease at

the date of initial application. According to the transitional requirements the Group did not

restate comparative information. Instead the Group recognised the cumulative effect of the

initial application of the New Leases Standard as an adjustment to the opening balance of

retained earnings of 2019 at the date of initial application:

(1) the Group recognised the right-of-use asset and the lease liabilities at the amount of the

carrying amount of the lease asset and lease liability under the original standards

applicable at the date of initial application for leases previously classified as finance

leases;

(2) for leases previously classified as operating leases the Group recognised lease liabilities

based on the present value of the remaining lease payments discounted at the incremental

borrowing rate at the date of initial application and measured right-of-use assets based on

the amount equal to the lease liabilities adjusted for any related prepaid and accrued

lease payments previously recognised; and

(3) the Group applied Note III (17) to perform its impairment test of right-of-use assets and

account for the impairment.

For operating leases of low-value assets and operating leases for which the lease term ends

within 12 months before initial application the Group applied a simplified approach and did not

recognise the right-of-use assets and lease liabilities. For leases previously classified as

operating leases the Group also applied the available practical expedients wherein it:

(1) applied a single discount rate to a portfolio of leases with reasonably similar

characteristics; and excluded the initial direct costs from the measurement of the right-of-

use asset at the date of initial application;

(2) used hindsight in determining the lease term where the contract contained options to

extend or terminate the lease;

(3) relied on its assessment of whether leases are onerous applying Note III (17) immediately

before the date of initial application as an alternative to performing an impairment review

and adjusted the right-of-use assets at the date of initial application by the amount of any

provision for onerous leases recognised in the balance sheet immediately before the date

of initial application; and

(4) accounted for the changes in leases before the date of initial application based on the final

arrangement for such changes.

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Year ended 31 December 2019 Expressed in Renminbi Yuan

IIISummary of significant accounting policies and accounting estimates (Continued)

35.Changes in accounting policies and estimates (Continued)

Changes in accounting policies (Continued)

The New Leases Standard (Continued)

As an intermediate lessor the Group reassessed subleases that were classified as operating

leases before and are ongoing at the date of initial application to determine whether each

sublease should be classified as an operating lease or a finance lease applying the New

Leases Standard. Except for these the Group did not adjust the leases for which it is an

intermediate lessor.The Group reconciled the outstanding minimum lease payments for operating leases with lease

liabilities included in the balance sheet as at 1 January 2019 based on the present value of the

minimum lease payments discounted using the incremental borrowing rate of the Group as the

lessee as at 1 January 2019 as follows:

Minimum lease payments for operating leases as at

31 December 2018 1873246508.02

Less: Practical expedients 81858324.15

Including: Short-term leases 62717394.74

Leases with lease term that ends within 12 months 14646195.26

Leases of low-value assets with lease term that ends in

more than 12 months 4494734.15

Add: Payments for optional extension periods not recognised as at

31 December 2018 -

1791388183.87

Weighted average incremental borrowing rate 4.39%

Discounted operating lease commitments as at 1 January 2019 1636342934.06

Add: Finance lease payables as at 31 December 2018 9625302.89

Add (or less): Other adjustments -

Lease liabilities as at 1 January 2019 1645968236.95

The effect of implementation of the New Leases Standard on the balance sheet as at 1 January

2019 is as follows:

Consolidated balance sheet

Carrying amount

Under the original

standard Effect

Assets

Right-of-use assets 1833958765.93 - 1833958765.93

Advances to suppliers 414434268.91 583484515.95 (169050247.04)

Other non-current assets 58168919.11 72365863.71 (14196944.60)

Fixed assets 594067973.91 607933827.67 (13865853.76)

Intangible assets 318693082.72 319207126.15 (514043.43)

3219323010.58 1582991333.48 1636331677.10

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Year ended 31 December 2019 Expressed in Renminbi Yuan

IIISummary of significant accounting policies and accounting estimates (Continued)

35.Changes in accounting policies and estimates (Continued)

Changes in accounting policies (Continued)

The New Leases Standard (Continued)

The effect of implementation of the New Leases Standard on the balance sheet as at 1 January

2019 is as follows: (Continued)

Consolidated balance sheet (Continued)

Carrying amount

Under the original

standard Effect

Liabilities

Lease liabilities 1107537419.92 - 1107537419.92

Non-current liabilities due

within one year 538430817.03 5861324.37 532569492.66

Other payables 1528413333.33 1528424590.29 (11256.96)

Long-term payables 800000.00 4563978.52 (3763978.52)

3175181570.28 1538849893.18 1636331677.10

The Company’s balance sheet

Carrying amount

Under the original

standard Effect

Assets

Right-of-use assets 6827192.24 - 6827192.24

Advances to suppliers 4757318.65 4760182.00 (2863.35)

11584510.89 4760182.00 6824328.89

Carrying amount

Under the original

standard Effect

Liabilities

Lease liabilities 6038239.60 - 6038239.60

Non-current liabilities due

within one year 786089.29 - 786089.29

6824328.89 - 6824328.89

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Year ended 31 December 2019 Expressed in Renminbi Yuan

IIISummary of significant accounting policies and accounting estimates (Continued)

35.Changes in accounting policies and estimates (Continued)

Changes in accounting policies (Continued)

The New Leases Standard (Continued)

The effect of implementation of the New Leases Standard on the financial statements for the

year ended 31 December 2019 is as follows:

Consolidated balance sheet

Carrying amount

Under the original

standard Effect

Assets

Right-of-use assets 1955461133.01 - 1955461133.01

Advances to suppliers 384882547.24 615222683.69 (230340136.45)

Other non-current assets 77354970.39 100466171.39 (23111201.00)

Fixed assets 612599944.11 622528263.55 (9928319.44)

Intangible assets 319946727.04 320329827.67 (383100.63)

Deferred tax assets 60631015.99 48148235.29 12482780.70

3410876337.78 1706695181.59 1704181156.19

Liabilities

Lease liabilities 1182407085.08 - 1182407085.08

Non-current liabilities due

within one year 601427093.62 35174327.51 566252766.11

Other payables 1756858461.02 1758047509.65 (1189048.63)

Long-term payables 800000.00 1126365.68 (326365.68)

3541492639.72 1794348202.84 1747144436.88

Consolidated income statement

Carrying amount Under the original standard Effect

Operating costs 46292408840.53 46293105089.37 (696248.84)

Selling expenses 3055403668.16 3072829651.71 (17425983.55)

Administrative expenses 842014983.53 843205630.95 (1190647.42)

Finance costs 119972954.79 43351250.41 76621704.38

Gain on disposal of assets

(loss expressed with

positive value) 2551175.02 688411.84 1862763.18

Income taxes 372439441.37 384922222.07 (12482780.70)

50679688713.36 50636725432.67 42963280.69

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Year ended 31 December 2019 Expressed in Renminbi Yuan

IIISummary of significant accounting policies and accounting estimates (Continued)

35.Changes in accounting policies and estimates (Continued)

Changes in accounting policies (Continued)

The New Leases Standard (Continued)

The effect of implementation of the New Leases Standard on the financial statements for the

year ended 31 December 2019 is as follows: (Continued)

The Company’s balance sheet

Carrying amount Under the original standard Effect

Assets

Right-of-use assets 6217504.50 - 6217504.50

Advances to suppliers 7996243.28 8029735.59 (33492.31)

Deferred tax assets 9327850.53 9265861.07 61989.46

23541598.31 17295596.66 6246001.65

Liabilities

Lease liabilities 5461257.38 - 5461257.38

Non-current liabilities

due within one year 32640325.77 31638984.25 1001341.52

38101583.15 31638984.25 6462598.90

The Company’s income statement

Carrying amount Under the original standard Effect

Administrative expenses 73489681.09 73493681.60 (4000.51)

Finance costs (64025013.54) (64307600.76) 282587.22

Income taxes 14503442.87 14565432.33 (61989.46)

23968110.42 23751513.17 216597.25

CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Year ended 31 December 2019 Expressed in Renminbi Yuan

IIISummary of significant accounting policies and accounting estimates (Continued)

35.Changes in accounting policies and estimates (Continued)

Changes in accounting policies (Continued)

The New Leases Standard (Continued)

In addition the cash paid by the Group for repayment of the principal and interest of the lease

liability is included in the statement of cash flows as cash outflows from financing activities and