Sinopharm Group Co. Ltd. — Earnings Release 2024

Jan 19, 2025

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

国药集团
SINOPHARM

國藥控股股份有限公司

SINOPHARM GROUP CO. LTD.*

(A joint stock limited company incorporated in the People's Republic of China with limited liability and carrying on business in Hong Kong as 國控股份有限公司)

(Stock Code: 01099)

INSIDE INFORMATION ANNOUNCEMENT

RESULTS ESTIMATE OF SINOPHARM ACCORD
FOR THE YEAR OF 2024

This announcement is made pursuant to Rule 13.09 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and Part XIVA of the Securities and Futures Ordinance (Chapter 571, Laws of Hong Kong).

Reference is made to the results estimate for the year ended 31 December 2024 (the "Reporting Period") published on 17 January 2025 by China National Accord Medicines Corporation Ltd. ("Sinopharm Accord"), a subsidiary of Sinopharm Group Co. Ltd. (the "Company") and whose A shares and B shares are listed on the Shenzhen Stock Exchange (stock code for A shares: 000028; stock code for B shares: 200028).

RESULTS ESTIMATE FOR THE PERIOD

It is estimated that the net profit of Sinopharm Accord will be positive and decrease as compared with the corresponding period:

Currency: RMB

Item	The Reporting Period	Same period of last year
Net profit attributable to shareholders of the listed company	Profit: 561.00 million – 760.00 million	Profit: 1,599.2558 million
	Decrease as compared with the same period of last year: 52.48%-64.92%
Net profit after deducting non-recurring gains and losses	Profit: 497.00 million – 696.00 million	Profit: 1,532.8235 million
	Decrease as compared with the same period of last year: 54.59%-67.58%
Basic earnings per share	Profit: 1.01/per share – 1.37/per share	Profit: 2.87/per share

• The Company is registered as a non-Hong Kong company under the Hong Kong Companies Ordinance under its Chinese name and the English name "Sinopharm Group Co. Ltd."

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REASONS FOR CHANGES IN RESULTS OF SINOPHARM ACCORD AND FINANCIAL IMPACT ON THE COMPANY

(1) Provision for impairment of intangible assets arising from goodwill and allocation of acquisition consideration

As at the end of the Reporting Period, in accordance with the relevant provisions of the Accounting Standards for Business Enterprises and accounting policies of the Company, Sinopharm Accord conducted judgment and impairment test on the impairment indicators for the asset group including goodwill and intangible assets. During the Reporting Period, affected by multiple factors such as changes in industry policy and intensified market competition, there was a large gap between the operation results of the retail segment of Sinopharm Accord and the expectations. Combined with the actual situation of Sinopharm Accord, after the preliminary estimate and calculation by the third-party professional evaluation agency, and based on the principle of prudence, Sinopharm Accord is expected to make provision for impairment of goodwill and intangible assets, and the details are as follows:

During the Reporting Period, the medical reform policies such as the outpatient retail unification had a profound impact on the behavior of the terminal consumers, the passenger flow of pharmaceutical retail stores declined, and the sales and profit of Sinopharm Accord decreased. Meanwhile, due to the intensified competition in the pharmaceutical retail industry and the online diversion of pharmaceutical e-commerce, the industry showed a general downward trend. In combination with the above-mentioned situation and according to the preliminary test results of goodwill impairment test, the impairment of goodwill and intangible assets (brand-use rights and sales network) of approximately RMB876.00 million to RMB1,070.00 million to be provided by Sinopharm Accord is expected to reduce the net profit attributable to shareholders of the listed company by RMB505.00 million to RMB618.00 million during the Reporting Period. The above impairment of goodwill and intangible assets to be provided is a preliminary calculation result determined after communication between Sinopharm Accord and the evaluation agency and audit agency engaged by it, and the final impairment provision amount will be determined after assessment and audit by the evaluation agency and the audit agency engaged by Sinopharm Accord.

(2) Provision for impairment of other assets including receivables and inventories

During the Reporting Period, Sinopharm Accord checked and analyzed various assets including receivables and inventories other than the above-mentioned impairment of goodwill and intangible assets. According to the relevant provisions of the Accounting Standards for Business Enterprises and accounting policies of the Company and based on the principle of prudence, the estimated impairment provision of approximately RMB94.00 million to RMB141.00 million for assets including receivables and inventories other than the above-mentioned impairment of goodwill and intangible assets (the corresponding asset impairment provision of RMB94.5763 million for the same period of 2023) is expected to reduce the net profit attributable to shareholders of the listed company by RMB50.00 million to RMB75.00 million during the

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Reporting Period (the corresponding asset impairment provision for the same period of 2023 resulted in a decrease of RMB51.2761 million in the net profit attributable to shareholders of the listed company). The final impairment provision amount will be determined after audit by the audit agency engaged by Sinopharm Accord.

NEXT PLANS AND MEASURES OF SINOPHARM ACCORD

With the continuous improvement of regulatory policies and the enhancement of industry transparency, as well as the impact of medical insurance fees control and the policy of volume-based procurement, Sinopharm Accord expects that the pharmaceutical retail industry will shift to a development stage of refined quality improvement and efficiency enhancement in the future.

In 2025, in order to actively respond to changes in the industry, the retail segment of Sinopharm Accord will be committed to improving overall performance, flexibly adjusting its layout structure based on strategic planning and operational management needs and fully promoting various positive and comprehensive measures, to improve the operating quality of the retail segment in an all-around way. On the one hand, it will continuously focus on cultivating its advantageous regions, constantly endeavor to become stronger and better, further consolidate the basic management of stores and accurately implement the "one policy for one store", striving to improve the operating quality of each store. On the other hand, it will actively expand cooperation with industry, strive for upstream resource support and effectively reduce costs. Meanwhile, it will thoughtfully optimize the product structure and focus on increasing the sales proportion of own brands and centralized procurement and continuously enhance the competitiveness of products. In addition, Sinopharm Accord will also make every effort to promote digital innovation and transformation, continuously optimize process efficiency, effectively reduce costs and control expenses, injecting momentum into the high-quality development of the retail segment.

THE FINANCIAL IMPACT ON THE COMPANY

As at the date of this announcement, Sinopharm Accord is held as to approximately $56.06\%$ by the Company and a major subsidiary of the Company. In the first three quarters of 2024, the net profit attributable to parent company of Sinopharm Accord represented $20\%$ of the net profit attributable to parent company of the Group. The impairment of goodwill and intangible assets (brand-use rights and sales network) and assets including receivables and inventories to be provided by Sinopharm Accord in the fourth quarter of 2024 totaled approximately RMB970.00 million to RMB1,211.00 million, and such asset impairment is expected to have corresponding impact on the net profit attributable to parent company of the Group for the year of 2024.

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The results estimate of Sinopharm Accord for the Reporting Period as set out in this announcement is only the preliminary estimation by the finance department of Sinopharm Accord and has not been audited by any accounting firm. The specific financial data will be disclosed in detail in the annual report of Sinopharm Accord for the year of 2024. Also, such data is limited to Sinopharm Accord only and does not provide a complete view of the operational or financial status of the Company. Shareholders and potential investors should exercise caution when dealing in securities of the Company.

By order of the Board
Sinopharm Group Co. Ltd.
Zhao Bingxiang
Chairman

Shanghai, the PRC
17 January 2025

As at the date of this announcement, the executive director of the Company is Mr. Lian Wanyong; the non-executive directors of the Company are Mr. Zhao Bingxiang, Mr. Chen Qiyu, Mr. Wen Deyong, Mr. Li Dongjiu and Ms. Feng Rongli; and the independent non-executive directors of the Company are Mr. Chen Fangruo, Mr. Li Peiyu, Mr. Wu Tak Lung, Mr. Yu Weifeng and Mr. Shi Shenghao.

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