Company code:603939 Company abbreviation: Yifeng Pharmacy
Yifeng Pharmacy Chain Co., Ltd.
2023 Annual Report
Important NotesI. The Board of Directors, Board of Supervisors, directors, supervisors and senior managementof the Company hereby guarantee that the contents are authentic, accurate, and complete,without false records, misleading representations or material omissions in the Annual Report,and shall take all the joint and several legal liabilities.
II. All the directors have attended the meeting of the Board of Directors.
III. Pan-China Certified Public Accountants (special general partnership) has issued a standardunqualified audit report for the Company.
IV. Gao Yi, the Company’s responsible person, Deng Jianqin, responsible person in charge ofaccounting work, and Guan Changfu, the accounting firm’s responsible person (accountingsuperintendent) hereby declare and warrant that the financial report in the Annual Report isauthentic, accurate, and complete.
V. The profit distribution plan or the capital reserve capitalization plan for the ReportingPeriod has been approved by the Board of DirectorsIn 2023, the Company achieved a net profit attributable to the parent company amounting to CN?1,411,985,024.41. After adding the undistributed profit from the beginning of 2023, which was CN?3,717,157,469.99, and deducting the statutory surplus reserve of CN? 66,216,102.98 extracted at the endof the year, along with a dividend payout of CN? 288,681,972.00 for 2023, the profit available fordistribution to shareholders totaled CN? 4,774,244,419.42.The Company plans to distribute a cash dividend of CN? 0.50 per share (tax included) to allshareholders, based on the total share capital as recorded on the equity distribution date of 2023.Additionally, it will increase the share capital by 0.20 shares per share from the capital reserve, withoutissuing any bonus shares. The estimated cash dividend payout amounts to CN? 505,289,898.50 (taxincluded). It is expected that 202,115,959 shares will be issued for capital conversion. After the capitalconversion, the total share capital of the Company will increase to 1,212,695,756 shares. If the totalshare capital of the Company changes due to matters such as share repurchases or cancellations relatedto equity incentives from the date of approval of this plan by the Board of Directors to theimplementation of the equity distribution on the registration date, the Company will maintain thedistribution ratio (capital conversion) per share unchanged and make adjustments to the total distribution(capital conversion) amount. The profit distribution plan above is subject to approval by the Company’sshareholders at the general meeting before implementation.
VI. Risk statement on forward-looking statements"√ Applicable" "□ Not applicable"The forward-looking statements such as future plans and development strategies in the AnnualReport do not constitute a substantive commitment of the Company to investors. Investors shouldtherefore make rational investment based on an awareness of risk factors.
VII. Are there cases of non-operational fund occupancy by the controlling shareholder and other
related partiesNo
VIII. Have there been any breaches of established decision-making procedures in providing
guarantees to external partiesNo
IX. Has there been a situation where more than half of the directors cannot guarantee that the
Annual Report disclosed by the Company is authentic, accurate, and completeNoX. Significant risk warnings
During the Reporting Period, no significant risks had a substantial impact on the Company’sproduction and operation activities. The Company has extensively elaborated on potential risks in thisreport. For more details, please refer to Subsection "Potential Risks" under Section 3 “ManagementDiscussion and Analysis”.XI. Others
"√ Applicable""□ Not applicable"
If there is any discrepancy between the Chinese and English versions, the Chinese version shall prevail.
Contents
Section I. Explanation ......................................................................................................................... 5
Section II. Company Profile and Major Financial Indicators ............................................................... 6
Section III. Management Discussion and Analysis .............................................................................. 13
Section IV. Corporate Governance ...................................................................................................... 48
Section V. Environmental and Social Responsibility ......................................................................... 75
Section VI. Important matters .............................................................................................................. 77
Section VII. Changes in Shares and Shareholders ............................................................................... 127
Section VIII. Preferred Share Related Information............................................................................... 134
Section IX. Relevant Situation of Bonds............................................................................................ 135
Section X. Financial Statements ....................................................................................................... 136
| Contents of Reference File | Accounting statements with the signatures and seals of the Company’s responsible person, the responsible person in charge of accounting work, and the responsible person of the accounting firm (accounting superintendent) |
| The original copies of all documents and announcements publicly disclosed by the Company in the newspapers designated by the China Securities Regulatory Commission (CSRC) during the Reporting Period, including Shanghai Securities News, China Securities Journal, Securities Times, and Securities Daily |
Section I. ExplanationI. ExplanationIn this report, unless stated otherwise, the following terms shall be interpreted as follows:
| Common terms and their definitions | ||
| The Company, Company, and Yifeng Pharmacy | Means | Yifeng Pharmacy Chain Co., Ltd. |
| Houxin | Means | Controlling shareholder of Ningbo Meishan Free Trade Port Area Houxin Venture Capital Partnership (Limited Partnership) |
| Yizhifeng | Means | Ningbo Meishan Free Trade Port Area Yizhifeng Enterprise Management Partnership (Limited Partnership), a shareholder of the Company |
| Yirentang | Means | Ningbo Meishan Free Trade Port Area Yirentang Enterprise Management Partnership (Limited Partnership), a shareholder of the Company |
| CSRC | Means | China Securities Regulatory Commission |
| Company Law | Means | Company Law of the People's Republic of China |
| Securities Law | Means | Securities Law of the People's Republic of China |
| ERP | Means | Enterprise Resource Planning (ERP) is a type of enterprise management software that integrates the management of material resources (material flow), human resources (personnel flow), financial resources (financial flow), and information resources (information flow). |
| O2O | Means | Online To Offline (O2O) integrates offline business opportunities with the Internet, thus effectively making the Internet a platform for offline transactions. |
| B2C | Means | Business To Customer (B2C) is an e-commerce model in which enterprises directly sell their products or services to consumers. This type of e-commerce typically relies on network retail. |
| CRM | Means | Customer Relationship Management (CRM) is a system that enterprises use to manage relationship with their customers. |
| SAP | Means | Systems Applications and Products in Data Processing (SAP) is a software used to manage solutions. |
| WMS | Means | Warehouse Management System (WMS) is a system used for warehouse management. |
| MES | Means | Manufacturing Execution System (MES) is a system used for manufacturing execution. |
| AGV | Means | Automated Guided Vehicle (AGV) refers to a vehicle used for material handling and transportation with automated guide. |
| IQVIA | Means | It is a world-leading company merged by Quintiles and IMS Health, two medical information service companies, and is committed to delivering medical market information, and technical and service solutions. |
| GSP | Means | Good Supply Practice |
| During the Reporting Period and within the Reporting period | Means | January 1, 2023 to December 31, 2023 |
| CN?, CN?10,000 | Means | Chinese Yuan, Chinese Yuan 10,000 |
| Shanghai Stock | Means | www.sse.com.cn |
Exchangewebsite
Section II. Company Profile and Major Financial Indicators
I. Company information
| Chinese name | Yifeng Pharmacy Chain Co., Ltd. |
| Chinese abbreviation | Yifeng Pharmacy |
| English name | Yifeng Pharmacy Chain Co., Ltd. |
| English abbreviation | Yifeng Pharmacy |
| Legal representative | Gao Yi |
II. Contact person and contact information
| Secretary of the Board of Directors | Securities Affairs Representative | |
| Name | Fan Wei | Luo Gongzhao |
| Address | No.68, Jinzhou Avenue, Lugu High-tech Zone, Changsha City, Hunan Province | No.68, Jinzhou Avenue, Lugu High-tech Zone, Changsha City, Hunan Province |
| Tel. | 0731-89953989 | 0731-89953989 |
| Fax | 0731-89953989 | 0731-89953989 |
| ir@yfdyf.com | ir@yfdyf.com |
III. Basic information
| Registered address | No.2638, Renmin Road, Fuqiang Community, Baimahu Subdistrict, Wuling District, Changde City, Hunan Province |
| Alteration of registered address | None |
| Office address | No.68, Jinzhou Avenue, Lugu High-tech Zone, Changsha City, Hunan Province |
| Post code of office address | 410000 |
| Website | www.yfdyf.cn |
| ir@yfdyf.com |
IV. Information disclosure and storage location
| The name and website of the media where the Company discloses the annual report | China Securities Journal, Securities Times, Shanghai Securities News, and Securities Daily |
| Website of the stock exchange to which the Company’s Annual Report is disclosed | http://www.sse.com.cn |
| Place where the Company’s Annual Report is formulated | Office of the Board of Directors |
V. Company stock
| Company stock | ||||
| Stock type | Stock exchange | Stock abbreviation | Stock code | Stock abbreviation before change |
| A share | Shanghai Stock Exchange | Yifeng Pharmacy | 603939 | / |
VI. Other related information
| Accounting firm employed by the Company (domestic) | Name | Pan-China Certified Public Accountants (special general partnership) |
| Office address | Block B, China Resources Building, No.1366, Qianjiang |
| Road, Jianggan District, Hangzhou City, Zhejiang Province | |
| Names of undersigned accountants | Wei Wujun and Jiang Fengfeng |
VII. Main accounting data and financial indicators in recent three years(I). Main accounting data
Unit:CN? Currency:CNY
| Main accounting data | 2023 | 2022 | Increase/ Decrease over the previous year (%) | 2021 | ||
| After adjustment | Before adjustment | After adjustment | Before adjustment | |||
| Operating revenue | 22,588,227,402.22 | 19,886,395,835.95 | 19,886,395,835.95 | 13.59 | 15,326,305,266.09 | 15,326,305,266.09 |
| Net profit attributable to shareholders of the listed company | 1,411,985,024.41 | 1,261,841,039.80 | 1,265,609,879.99 | 11.90 | 888,790,679.99 | 887,884,497.85 |
| Net profit attributable to shareholders of the listed company after deduction of non-recurring profits and losses | 1,361,512,589.23 | 1,227,426,490.98 | 1,230,293,584.85 | 10.92 | 860,353,756.47 | 858,719,649.09 |
| Net cash flow from operating activities | 4,623,740,795.60 | 3,920,267,304.15 | 3,920,267,304.15 | 17.94 | 2,149,969,972.35 | 2,149,969,972.35 |
| At the end of 2023 | At the end of 2022 | Increase/ Decrease over the end of the previous year (%) | At the end of 2021 | |||
| After adjustment | Before adjustment | After adjustment | Before adjustment | |||
| Net assets attributable to shareholders of the listed Company | 9,804,432,476.56 | 8,553,215,869.87 | 8,556,078,527.92 | 14.63 | 7,482,212,247.62 | 7,481,306,065.48 |
| Total assets | 24,136,539,194.64 | 21,036,023,981.99 | 21,038,886,640.04 | 14.74 | 17,052,943,056.72 | 17,052,036,874.58 |
(II). Major financial indicators
| Major financial indicators | 2023 | 2022 | Increase/Decrease over the previous year (%) | 2021 | ||
| After adjustment | Before adjustment | After adjustment | Before adjustment | |||
| Basic earnings per share (CN?/share) | 1.40 | 1.26 | 1.26 | 11.11 | 0.89 | 0.89 |
| Diluted earnings per share (CN?/share) | 1.40 | 1.25 | 1.26 | 12.00 | 0.89 | 0.89 |
| Basic earnings per share with non-recurring profits and losses deducted (CN?/share) | 1.35 | 1.22 | 1.22 | 10.66 | 0.86 | 0.86 |
| Weighted average return on equity (%) | 15.44 | 15.78 | 15.82 | -0.34 | 13.04 | 13.03 |
| Weighted average return on net assets with non-recurring profits and losses deducted (%) | 14.89 | 15.35 | 15.38 | -0.46 | 12.62 | 12.60 |
Description of the Company’s main accounting data and financial indicators for the previous three yearsat the end of the Reporting Period"√ Applicable""□ Not applicable"
Reason for adjustment: Since January 1, 2023, the Company has adhered to the "AccountingTreatment for Deferred Income Taxes Related to Assets and Liabilities Arising from IndividualTransactions that Are Not Subject to Initial Recognition Exemption," as outlined in Interpretation No. 16of the Enterprise Accounting Standards issued by the Ministry of Finance. Accordingly, the financialstatements for the earliest reporting period have been adjusted to reflect this provision for applicableindividual transactions. This adjustment includes lease liabilities and right-of-use assets recognizedduring this period due to these transactions, along with recognized disposal-related obligations andcorresponding assets that generate taxable and deductible temporary differences. The cumulative impactamount has been adjusted in accordance with this provision and the provisions of Accounting Standardsfor Enterprises No. 18—Income Taxes. This affects the retained earnings and other related financialstatement items as of the start of the earliest reporting period.VIII. Differences in accounting data under domestic and foreign accounting standards(I). Differences in net profits and net assets attributable to shareholders of the listed Company inthe financial statements disclosed under international accounting standards and thatdisclosed under domestic accounting standards"□ Applicable" "√ Not applicable"
(II). Differences in net profits and net assets attributable to shareholders of the listed Company in
the financial statements disclosed under overseas accounting standards and that disclosed
under domestic accounting standards"□ Applicable""√ Not applicable"
(III). Explanation of differences in overseas and domestic accounting standards:
"□ Applicable""√ Not applicable"
IX. Quarter-based main financial indicators in 2023
Unit:CN? Currency: CNY
| Quarter 1 (Jan - Mar) | Quarter 2 (Apr - Jun) | Quarter 3 (Jul - Sept) | Quarter 4 (Oct- Dec) | |
| Operating revenue | 5,266,053,201.98 | 5,440,509,806.07 | 5,181,484,438.58 | 6,700,179,955.59 |
| Net profit attributable to shareholders of the listed company | 336,477,177.44 | 368,676,376.22 | 294,030,212.68 | 412,801,258.07 |
| Net profits attributable to shareholders of the listed Company after deduction of non-recurring profits and losses | 321,446,423.67 | 357,321,543.25 | 287,360,171.58 | 395,384,450.73 |
| Net cash flow from operating activities | 1,288,846,164.43 | 118,886,600.05 | 1,474,159,094.77 | 1,741,848,936.35 |
Description of differences between quarterly data and periodic report data disclosed"□ Applicable" "√ Not applicable"
X. Non-recurring profit and loss items and amounts"√ Applicable""□ Not applicable"
Unit: CN? Currency: CNY
| Non-recurring profit and loss items | Amount in 2023 | Note (if applicable) | Amount in 2022 | Amount in 2021 |
| Profit and loss on disposal of non-current assets (including the write-off of provision for impairment of assets) | 29,092,610.09 | 12,763,439.78 | 5,416,507.68 | |
| Governmental subsidies included in the current profits and losses (excluding the governmental subsidies closely relating to the normal business operations of the Company, conforming to national policies and regulations, enjoyed in accordance with a certain standard, | 44,930,209.02 | 32,820,333.05 | 34,050,871.35 |
| and having a lasting impact on the profits and losses of the Company) | ||||
| Profits and losses from changes in fair value arising from financial assets and financial liabilities held by non-financial institutions, and profits and losses from the disposal of financial assets and financial liabilities, except for the effective hedging business related to the normal business operations of the Company | 13,074.67 | |||
| Fund possession cost collected from the non-financial institution and included in the current profits and losses | ||||
| Profits and losses from entrusting others to invest or manage assets | ||||
| Profits and losses from external entrusted loans | ||||
| Losses of various assets made due to force majeure factors, such as natural disasters | ||||
| Reversal of impairment reserves for the receivables under independent impairment test | ||||
| Gains arising from the identifiable net assets at fair value of the investee at the time of acquisition when the cost of acquiring investments in subsidiaries, joint |
| ventures, and associates is less than the investment amount | ||||
| The current net profits and losses of a subsidiary from the beginning of the Reporting Period to the date of consolidation under the same control. | ||||
| Profits and losses from non-monetary asset exchange | ||||
| Profits and losses from debt restructuring | ||||
| Non-recurring expenses incurred by the enterprise due to the cessation of business activities, such as employee relocation expenses | ||||
| One-time impact on the current profits and losses due to the adjustments of tax, accounting, and other laws and regulations | ||||
| Non-recurring share-based payment expenses due to cancellation or modification of equity incentive plan | ||||
| For cash-settled share-based payments, profits and losses arising from changes in fair value of employee compensation payable after the vesting date | ||||
| Profits and losses arising from changes in fair value for investment properties measured using the fair value |
| model for subsequent measurement | ||||
| Profits from transactions where the transaction price has an excess or deficit compared to fair value | ||||
| Profits and losses arising from contingent items unrelated to the Company’s normal business operations | ||||
| Fees earned from entrusted operations | ||||
| Other non-operating revenue and expenditure in addition to those mentioned above | -5,060,038.31 | 2,172,359.49 | 471,195.18 | |
| Other profit and loss items conforming to the definition of non-recurring profits and losses | ||||
| Less: Income tax effect | 16,885,907.38 | 12,124,610.41 | 10,970,197.86 | |
| Amount affected by minority equity (after tax) | 1,617,512.91 | 1,216,973.09 | 531,452.83 | |
| Total | 50,472,435.18 | 34,414,548.82 | 28,436,923.52 |
The Company shall provide explanations for defining profits and losses not listed in the ExplanatoryAnnouncement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public -Non-recurring Profits and Losses as non-recurring profits and losses with significant amounts, anddefining non-recurring profits and losses listed in this document as recurring profits and losses."√ Applicable""□ Not applicable"
Unit：CN? Currency: CNY
| Item | Amount | Reason |
| Investment income | 24,958,558.90 | Related to regular operational activities |
Impact of implementing the Explanatory Announcement No. 1 on Information Disclosure forCompanies Offering Their Securities to the Public - Non-recurring Profits and Losses (2023 Revision)on non-recurring profits and losses for 2022
| Item | Amount |
| Net amount of non-recurring profits and losses attributable to the parent company owners for 2022 | 35,316,295.14 |
| Net amount of non-recurring profits and losses attributable to the parent company owners for 2022 as per Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public - Non-recurring Profits and Losses (2023 Revision) | 34,414,548.82 |
| Difference | -901,746.32 |
Impact of implementing the Explanatory Announcement No. 1 on Information Disclosure forCompanies Offering Their Securities to the Public - Non-recurring Profits and Losses (2023 Revision)on non-recurring profits and losses for 2021
| Item | Amount |
| Net amount of non-recurring profits and losses attributable to the parent company owners for 2021 | 29,164,848.76 |
| Net amount of non-recurring profits and losses attributable to the parent company owners for 2021 as per Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public - Non-recurring Profits and Losses (2023 Revision) | 28,436,923.52 |
| Difference | -727,925.24 |
XI. Items measured by fair value"√ Applicable""□ Not applicable"
Unit: CN? Currency: CNY
| Item name | Opening balance | Closing balance | Current change | Amount of impact on the current profit |
| Investment in other equity instruments | 327,379,600.00 | 432,225,200.00 | 104,845,600.00 | 17,084,000.00 |
| Trading financial assets | 50,045,139.45 | 1,630,720,887.94 | 1,580,675,748.49 | 24,958,558.90 |
| Receivables financing | 1,784,671.86 | 11,889,888.58 | 10,105,216.72 | |
| Total | 379,209,411.31 | 2,074,835,976.52 | 1,695,626,565.21 | 42,042,558.90 |
XII. Others"□ Applicable""√ Not applicable"
Section III. Management Discussion and Analysis
I. Discussion and analysis of the Company’s operations
During the Reporting Period, the gradual implementation of policies that integrated designatedretail pharmacies into outpatient management significantly advanced healthcare reform of medical care,government basical medical insurance (BMI) and pharmaceutical industry. Such integration acceleratedthe separation of prescribing and dispensing while increasing the external flow of hospital prescriptions.This highlighted the channel value of retail pharmacies in the external pharmaceutical market.Concurrently, advancements in internet technology and enhancements in digital operational managementmatured the integrated online-offline model of "new pharmaceutical retail." Moreover, with China'songoing GDP growth and an intensifying aging population, consumer healthcare expenditures anddemand for health management steadily rose, further expanding development opportunities for theindustry.
Over the past year, under the collective efforts of the Board of Directors, management team, and allemployees, the Company adhered to its "regional concentration and steady expansion" strategyestablished at the beginning of the year. Through the "new openings + M&A + franchising" model forstore expansion, the Company achieved a net increase of 2,982 stores. By implementing a focusedproduct strategy and continually advancing the national optimal project, the Company refined itsdifferentiated strategically-focused product system, deepened manufacturer collaborations, andcontinuously improved its supply chain and product category structure. The development of anecological new pharmaceutical retail system based on membership, big data, internet healthcare, andhealth management allowed the Company to swiftly enhance its new media operations and contentmanagement capabilities, bolstering store operations and ensuring stable company performance. Byestablishing comprehensive digital connections from customers to the business, products, operations,and marketing, the Company transitioned from product management to customer value management. Byreconstructing the human resources foundation and optimizing organizational structures, and integratingonline and offline in a differentiated hybrid talent development model, the corporate culture was deeplyembedded into the Company's training programs, continuously boosting organizational managementefficiency and cultural soft power.
1. Steadily growing operating results
During the Reporting Period, the Company maintained a steady increase in operating revenue andoperating profit. The Company generated operating revenue of CN?22,588.2274 million, representing ayear-on-year growth of 13.59%. The net profit attributable to shareholders of the listed Companyreached CN?1,411.9850 million, registering a year-on-year increase of 11.90%. The net profitattributable to shareholders of the listed Company, with non-recurring profits and losses excluded, wasCN?1,361.5126 million, up 10.92% year-on-year growth. The weighted average return on net assets was
15.44%, with earnings per share of CN?1.40. As of December 31, 2023, the Company’s total assetsamounted to CN?24,136.5392 million, representing an increase of 14.74% compared toCN?21,036.0240 million at the end of the previous year. The equity attributable to owners of the parentcompany totaled CN?9,804.4325 million, indicating a 14.63% increase compared to CN?8,553.2159million at the end of the previous year.
2. Basically achieving store expansion targets
During the Reporting Period, the Company pursued its "regional concentration and steadyexpansion" strategy through the "new openings + M&A + franchising" model, deeply cultivating themarkets in South Central, East, and North China, and adding 3,196 stores, including 1,613 self-builtstores, 559 acquisitions, and 1,024 franchises. Additionally, during the Reporting Period, the Companyrelocated 61 stores and closed 153 stores. As of the end of the Reporting Period, the total number of theCompany’s stores is 13,250 (including 2,986 franchise stores), registering a net increase of 2,982 storescompared to the end of the previous period.
3. Continuing to advance the controllable premium strategy, and vigorously introducing productvarieties via centralized purchasing
During the Reporting Period, the Company continually optimized its product structure and supplychain systems through a triple evaluation system assessing product quality and efficacy. By proactivelysubmitting products for inspection, reviewing efficacy, and evaluating cost-effectiveness, the Companyselected high-quality manufacturers as core suppliers. By the end of 2023, the Company had establishedpremium strategic partnerships with nearly 600 manufacturers, selecting over 1,800 varieties forinclusion in the Company's strategically-focused product repository, thus establishing a morecomprehensive strategically-focused product system. The Company closely monitored national bulkpurchasing progress, vigorously introducing nationally procured items through manufacturer cooperation.By the end of 2023, the Company managed over 98% of the items in the national procurement catalog,accumulating more than 2,200 SKUs of nationally procured items.
4. Operating the new pharmaceutical retail system efficiently
During the Reporting Period, the Company continued to develop its ecological new pharmaceuticalretail system based on membership, big data, internet medical services, and health management. Itactively improved digital chronic disease management and online medical services, achieving significantprogress in deep member services. The capabilities in new media operations and content managementwere rapidly enhanced, and the pharmaceutical e-commerce operations were progressively upgraded to agroup-level new pharmaceutical retail system. O2O operations launched direct-sale stores exceeding9,000, with over 600 stores offering 24-hour delivery services. This covered all major cities offline andrapidly extended to acquired and franchised project stores, leading the industry in picking efficiency,delivery timeliness, order fulfillment rate, and personnel efficiency. Supported by the triple-enginestrategy of O2O, B2C and prescription circulation, relying on the Company’s regional concentrationstrategy, intelligent supply chain system, and refined operation, the Company’s O2O and B2C businessachieved sales revenue of CN?1,817.8471 million (tax excluded). It includes sales revenue from O2O(franchise stores excluded) of CN?1,398.7383 million and sales revenue from B2C of CN?419.1092million.
5. Undertaking hospital prescription outflow online and offline
Driven by national policies, the external flow of hospital prescriptions accelerated during theReporting Period. In response, the Company actively explored new models for comprehensivelyreceiving hospital prescription outflows through both online and offline channels.
In the offline domain, the Company has strategically located its stores near hospitals to activelydevelop DTP specialized pharmacies, "dual-channel" BMI designated outlets, and pharmaciesspecializing in chronic diseases and outpatient integrated management. This approach enhancescollaborations with relevant manufacturers and actively incorporates pharmaceuticals covered under thegovernment BMI scheme. As of the end of this Reporting Period, the Company operates 675 storeswithin 100 meters of secondary and higher-level hospitals, 305 DTP specialized pharmacies, of which246 are dual-channel government BMI outlets, and over 4,200 outpatient integrated managementpharmacies. The Company manages over 250 government BMI-negotiated pharmaceuticals and more
than 800 types of medications for external hospital prescriptions and has established deep partnershipswith over 150 specialized prescription drug suppliers.In the online domain, the Company has established its electronic prescription transfer businessusing a digital prescription service platform and a fulfillment delivery system. This system connectspublic health services, government BMI authorities, hospitals, and leading national third-party internethospital platforms, streamlining the entire pharmaceutical production, wholesale, and logistics chain.Leveraging existing hospital-adjacent stores and central warehouses, the Company has created aclosed-loop service system for chronic disease patients, integrating medical, patient, pharmaceutical, andinsurance services. It currently interfaces with more than ten provincial and municipal government BMIand public health prescription transfer platforms, directly or indirectly managing prescription transfersfor over 100 tertiary hospitals and internet hospitals.
6. Making remarkable progress in digital transformation
Centered on the customer, the Company has established a fully digital linkage from customers toindustries involving personnel, medicines, and scenarios across all channels, progressively transitioningfrom a product-oriented to a customer-oriented operation. During the Reporting Period, the Companymade significant digital advancements in areas such as membership, operations, merchandise, new retail,and logistics:
In terms of membership, through refined member operations, channel development, and targetedmarketing activities, the Company has advanced its chronic disease and online medical services,enhancing customer repurchase rates and effectively bolstering customer loyalty and reliance onYifeng's expertise using customer profiling. In terms of operations, by employing new technologies anddata capabilities to transform operations, the Company has deeply cultivated regional markets, enhancedthe in-store customer experience, and improved operational management efficiency. By empoweringfrontline staff with an online applet, the Company achieves comprehensive online management of storeoperations, marketing, data analysis, and salary performance, delivering precise professional services tomembers, including medication inquiries, chronic disease management, and diagnostic testing;
In terms of merchandise, the Company focuses on creating the industry's most efficient and agiledigital merchandising system, achieving comprehensive online, digital, and intelligent transformation ofmerchandise center operations, and significantly improving merchandise fill rate and inventory turnoverefficiency;
In terms of new retail, with an integrated approach, the Company fully supports the strategicupgrade to "new retail + core retail", developing a series of digital products tailored to new retailbusiness scenarios, which have accelerated the digital transformation of its retail operations. TheCompany's online market share has rapidly increased, maintaining industry-leading levels in pickingefficiency, delivery timeliness, order fulfillment, and workforce efficiency;
In terms of human resources, by delving into digitalization in HR, the Company has aligned with itsonline, digital, and intelligent management strategies, achieving breakthroughs in recruitment,contracting, performance, pay, promotion, scheduling, attendance, talent inventory, and development.
In terms of finance, the Company has deeply integrated finance with business operations,establishing a financial system that empowers business capabilities, ensuring high-quality financialservices and control during rapid expansion, and implementing multiple measures to reduce costs andincrease benefits. This integration has been facilitated by the automation and digitization of variousfunctions, including budgeting, cost management, reimbursements, ledger maintenance, salesreconciliations, electronic invoicing, financial management, and leasing.
In terms of logistics, guided by data transparency, the Company has improved specific nodes inwarehouses and upgraded its digital logistics framework to manage all warehouse operations online.Through developing its own TMS system, which includes dispatch management, freight calculation,temperature and humidity monitoring, and turnover box management, the Company has successfullyimplemented a full-process closed-loop management of logistics information, consistently increasingdelivery volumes and efficiency.
7. Enhancing the training system and professional service capabilities continuously
Continuously enhancing professional service capabilities remains a long-term driver of organicgrowth within the Company's stores and a core competitive edge in achieving industry leadership.During the Reporting Period, the Company's training department developed 65 new training modulescovering service philosophy, behavioral habits, professional skills, and pharmaceutical knowledge. Itconducted 132 offline training sessions, with an average of approximately 70 hours per employee.Additionally, the Company prepared over 4,000 employees to participate in the national qualificationexam for licensed pharmacists, thereby building a reservoir of professional talent for future development.Partnerships were established with nearly 30 universities nationwide to create "Yifeng classes" and buildtalent cultivation and employment internship bases. The Company also conducted more than 20corporate visits and employment expansion activities. Throughout the year, nearly 3,000 recentgraduates were recruited, earning recognition as a "Key Employer for University Graduates" by theEducation Department of Hunan Province. Concurrently, by developing and refining standardizedtraining materials and establishing dedicated and part-time lecturer teams at stores, the Company set uptraining bases for new employees and store manager reserves, continuously advancing its "managementtrainee" program and various training models that integrate online and offline approaches with acredit-based assessment system. This initiative has led to continuous improvements in employees'professional service capabilities, customer satisfaction, and repurchase rates, and has steadily advancedits talent development framework.
II. Industry of the Company during the Reporting Period
With the ongoing advancement of the "Healthy China 2030" national strategy and reforms in thehealthcare and pharmaceutical systems, alongside consistent GDP growth, rising disposable incomes,and increasing levels of social consumption, per capita healthcare spending by Chinese residents grewannually, reaching CN? 2,460 in 2023, accounting for 9.2% of per capita consumer spending. Influencedby multiple social factors such as the aging population, the three-child policy, urbanization, and
population migration, the demand for medical resources has continually risen, enhancing the industryexpansion and societal value of retail pharmacies as a critical channel for pharmaceutical sales. Amidmarket and policy influences, the retail pharmacy industry has continually optimized its network layoutand innovated its business models during the Reporting Period. Digital transformation, industryintegration, and the management and service capabilities of retail pharmacies have all seen significantenhancements.
In October 2021, the Ministry of Commerce issued the "Guiding Opinions on Promoting theHigh-Quality Development of the Pharmaceutical Distribution Industry During the 14
th
Five-Year PlanPeriod". The document envisions that (1) five to ten specialized and diversified pharmaceutical retailerswith a revenue of more than CN? 50 billion will be nurtured by 2025; (2) the annual sales of the top 100enterprises in the pharmaceutical retail industry will account for more than 65% of the total market valueof the pharmaceutical retail industry; and (3) pharmaceutical retail chain stores will account for nearly70% of all stores.
In September 2022, the State Administration for Market Regulation released the "Measures for theSupervision and Administration of Online Sale of Medicinal Products," further standardizing onlinepharmaceutical sales and services on pharmaceutical online trading platforms. These regulationsclarified the management of online pharmaceutical sales, platform responsibilities, supervisory measures,and legal liabilities, further standardizing online pharmaceutical circulation and promoting regulateddevelopment and healthy competition within the industry.In February 2023, the National Healthcare Security Administration issued the "Notice on FurtherIntegrating Designated Retail Pharmacies into the Outpatient Management Fund System." Thisnotification emphasized the importance of including designated retail pharmacies in outpatient fundmanagement, using the outpatient fund to expand medical and pharmaceutical service supply, and thusreleasing benefits of the reform of medicine and healthcare system. It urged government BMI authoritiesat all levels to take effective measures to encourage eligible designated retail pharmacies to voluntarilyoffer outpatient management services. The notification also specified improvements to the paymentpolicies for outpatient management at designated retail pharmacies and clarified supporting policies forinclusion.
1. Increasing retail sales, and growing market share
According to statistics, over a decade from 2013 to 2022, the sales from China's three majorpharmaceutical terminals across six markets increased from CN? 1,089.4 billion to CN? 1,793.6 billion,with a compound annual growth rate of 5.6%. The compound growth rates for public hospital terminals,retail pharmacy terminals, and public primary healthcare institution terminals were 4.3%, 8.2%, and
7.4%, respectively. By the end of 2022, the market share of public hospital terminals was 61.8%, retailpharmacy terminals 29%, and public primary healthcare institution terminals 9.2%. The market share ofretail pharmacy terminals has been on rise over the years.
2012-2022 Steadily Increasing Drug Retail Sales
Ratios of Three Major Sales Channels
2. Increasing pharmacy chains and enhancing centralized development
Driven by industrial policies, capital involvement, and competitive dynamics, the rate of chainoperations and industry concentration in the retail pharmacy sector have continuously increased. As ofthe end of 2022, there were a total of 623,300 retail pharmacies in China, with the rate of chainoperations rising to 57.76%. The market shares of the CR10, CR50, and CR100 retail pharmaciesincreased to 30.91%, 44.95%, and 55.83%, respectively. Both national and regional leaders haveaccelerated their integration efforts, positioning chain pharmacies as a mainstream development withinthe industry.
Total Number of Pharmacies in China, and Changes in Pharmacy Chains
Changes in Sales Amounts and Proportions of Top 10, 20, 50, and 100 Pharmacies
| Public hospitalRetail pharmacyPublic primary healthcare institution | ||||
Total drug sales
Total drug sales
amount/CN?100 million
Growthrate
GDP growthrateTotal number ofpharmacies/10,000
| Total number of pharmacies/10,000 | Number of chain | |
pharmacies/10,000
Number of singlepharmacies/10,000Number of chainenterprises
Number of chainenterprises
| Sales amount of top 10 pharmacies/CN?100 million | |
| Sales amount of top 100 pharmacies/CN?100 million | |
| Sales amount of top 50 pharmacies/CN?100 million | |
| Sales amount of top 20 pharmacies/CN?100 million |
| Proportion of top 10 pharmacies |
Proportion of top100 pharmacies
Sales amount of top 50pharmacies/CN?100 million
Changes in Sales Growth Rate of Top 10, 20, 50, and 100 Pharmacies
Additionally, according to data from IQVIA, the chain operation rate for pharmacies in the UnitedStates rose from under 40% in 1990 to 90% in 2021, with the top three chains accounting for nearly 37%of all pharmacies in the U.S. Compared with mature markets such as the U.S. and Japan, China’spharmaceutical retail sector is still at a relatively low level, and there is still much room fordevelopment.
3. Periodic industrial characteristics
The pharmaceutical distribution industry is a critical sector vital to national and public welfare.Since pharmaceutical consumption addresses basic human needs, it remains relatively unaffected bymacroeconomic fluctuations, demonstrating minimal economic cyclicality. Only a select few productsexhibit seasonal variations, primarily due to extreme weather conditions during the summer and wintermonths. Compared to other sectors within general retail, the pharmaceutical retail industry exhibitsweaker economic cyclicality. However, due to the time-sensitivity, convenience, and regional variationsin consumer habits associated with pharmaceuticals, the industry displays distinct regionalcharacteristics. Enterprises boasting extensive store networks, standardized management, and robustsystematic replication capabilities enjoy significant competitive advantages in the market.
4. Position of the Company in the industry
The Company's primary business operations are concentrated in ten provinces and cities: Hunan,Hubei, Shanghai, Jiangsu, Jiangxi, Zhejiang, Guangdong, Hebei, Beijing, and Tianjin. By the end of theReporting Period, it operated 13,250 chain pharmacies, including 2,986 franchise stores, within theseregions. This extensive network has secured significant regional competitive advantages and broadrecognition from investors, the public, and consumers. During this period, the Company received
Proportion of top 20pharmaciesSales growth rate of top 10pharmacies
Sales growth rate of top 10pharmacies
Sales growth rate oftop 50 pharmacies
| Sales growth rate of top 20 pharmacies | |
| Sales growth rate of top 100 pharmacies | |
multiple accolades including "Top 100 Listed Companies on China's Main Board," "2023 Hurun ChinaTop 300," "2022-2023 Top 100 Most Valuable Pharmacies in China," "Top 10 Online PharmaceuticalRetailers of 2023," "Top 100 Private Enterprises in Hunan of 2023," "China’s Most Promising ListedCompanies of 2023," "2023 Pharmaceutical Retail Profit Leader," second place in the "2023 Top 100Competitive Pharmaceutical Retailers in China," and "Top 500 Service Enterprises in China of 2023," inaddition to receiving the "Golden Ginkgo Award" for the Most Socially Responsible Listed Companyand the highest brand value in the national pharmaceutical retail industry on the Hurun Most ValuableChina Brands.
III. Main business of the Company during the Reporting Period
(I) Overview of main businessThe Company is one of the leading chain retail enterprises in the domestic pharmaceutical sector,primarily engaged in the retail of pharmaceuticals, health products, medical devices, and otherhealth-related daily convenience items. Its subsidiary, Yifeng Pharmaceutical, acts as the internalprocurement platform for the Company, managing internal goods distribution, franchise distribution, anda modest amount of external pharmaceutical wholesale. Another subsidiary, HengxiutangPharmaceuticals Company, focuses on the R&D and production of Chinese medicinal slices, mainly tosatisfy the Company's internal needs.
During the Reporting Period, no significant changes occurred in the Company’s main business.(II) Main operating modesThe Company’s main operating modes includes product procurement, logistics distribution,warehouse management, and store sales. It is shown as follows:
1. Procurement mode
| 顾客门店零售各配送中心商品需求客户批发销售配送生产商/批发商益丰医药商品部子公司商品部集采订单地采订单集采门店管理部商品中心子公司商品部执行核定价格集采商品定价地采商品定价质量管理 | |||||||||||||||||||||||||||||
| Customer | |||||||||||||||||||||||||||||
| Retail | |||||||||||||||||||||||||||||
| Execution of approved price | |||||||||||||||||||||||||||||
| Quality management | |||||||||||||||||||||||||||||
| Store | Store Management Department | ||||||||||||||||||||||||||||
| Product demand | Distribution | ||||||||||||||||||||||||||||
| Pricing of products via centralized purchasing | |||||||||||||||||||||||||||||
| Pricing of products via localized purchasing | |||||||||||||||||||||||||||||
| Client | Wholesale | Distribution centers | |||||||||||||||||||||||||||
| Manufacturer/Wholesaler | Product Center | Subsidiary’s Product Department | |||||||||||||||||||||||||||
| Localized procurement order | |||||||||||||||||||||||||||||
| Centralized procurement order | |||||||||||||||||||||||||||||
| Yifeng Pharmacy’s Product Department | Centralized procurement | Subsidiary’s Product Department | |||||||||||||||||||||||||||
The Company has set up a Product Center responsible for aggregating the demand for productspurchased by all the stores in a centralized manner, coordinating subsidiaries’ procurement plans, andformulating category assortment plans. The subsidiary’s Product Department is responsible foraggregating the procurement requirements of all the Company’s stores, submitting centralizedprocurement plans to the Company’s Product Center, managing localized purchasing needs, andexecuting procurement. After understanding the store’s demands, product departments at different levelsperform tasks such as product evaluation, price inquiries, price comparisons, negotiations, and pricedetermination. They also engage in discussions with suppliers to formalize procurement contracts.
The Company’s procurement process is as follows:
2. Warehouse management and logistics distribution
The Company has established the modern logistics centers in Hunan, Hubei, Jiangsu, Shanghai,Jiangxi, Guangdong, and Hebei. Currently, the Company boasts advanced equipment, technologies, andbusiness management models in the logistics industry, including stereoscopic warehouses, automatedconveyor systems, automated sorting systems, AGV for order picking, Miniload for intelligent automaticreplenishment, electronic labeling systems, multi-level shuttles, crossbelts, robotic arms, wireless RFpicking, acceptance systems, and intelligent consolidation systems. These capabilities provide enhancedsupport for digital operations of Yifeng’s supply chain. All products in the stores owned by theCompany are independently distributed by the logistics centers of the Company or its subsidiaries. TheCompany’s robust distribution capabilities provide strong logistical support for its rapid expansion.
The logistics distribution process is as follows:
| 确定采购品类寻找供应商确定供应商非首次供应商供应商谈判签定合同拟定采购计划商品部长审核非首营品种首营品种首营资料首次供应商首品种质管部审核地采品种子公司采购集采品种益丰医药采购非首营品种医药商品部长审核首营品种商品评审商品规划审医药质管部审核首次供应商首营品种非首次供应商供应商谈判签定合同拟定采购计划商品总监审总裁/副总裁审质量总监审 | |||||||||||||||||||||||||||||||||||||||
| Determination of purchased categories | Non-first-purchased category | Non-first-cooperation supplier | |||||||||||||||||||||||||||||||||||||
| Seeking suppliers | Localized procurement by subsidiaries | ||||||||||||||||||||||||||||||||||||||
| Review by the head of Product Department | Negotiation with suppliers | Signing of contract | Formulation of procurement plan | ||||||||||||||||||||||||||||||||||||
| First-purchased category | |||||||||||||||||||||||||||||||||||||||
| First-purchased category of first-cooperation supplier | |||||||||||||||||||||||||||||||||||||||
| First-purchased category information | Review by Quality Control Department | ||||||||||||||||||||||||||||||||||||||
| Determination of suppliers | |||||||||||||||||||||||||||||||||||||||
| Non-first-purchased category | |||||||||||||||||||||||||||||||||||||||
| Non-first-cooperation supplier | |||||||||||||||||||||||||||||||||||||||
| Centralized procurement by Yifeng Pharmacy | Review by the head of Drug Product Department | ||||||||||||||||||||||||||||||||||||||
| Negotiation with suppliers | Signing of contract | Formulation of procurement plan | |||||||||||||||||||||||||||||||||||||
| First-purchased category | First-purchased category of first-cooperation supplier | ||||||||||||||||||||||||||||||||||||||
| Review by Drug Quality Control Department | |||||||||||||||||||||||||||||||||||||||
| Review by product evaluator | Review by president/vice president | ||||||||||||||||||||||||||||||||||||||
| Review by product planner | Review by product supervisor | Review by quality supervisor | |||||||||||||||||||||||||||||||||||||
3. Sales mode
(1) Retail
As of December 31, 2023, the Company owns a total of 13,250 chain drugstores (including 2,986franchise stores) across ten provinces and municipalities in China, including Hunan, Hubei, Shanghai,Jiangsu, Jiangxi, Zhejiang, Guangdong, Hebei, Beijing, and Tianjin. These stores offer customers a widerange of products, including Western and Chinese patent medicine, traditional Chinese medicine herbalpieces, medical devices, health supplements, personal care products, and daily convenience items relatedto health.The Company tailors product assortments for each store, formulating pricing mechanisms andmarketing strategies based on the competitive environment. Products are primarily procured anddistributed by the Company headquarters, with store pricing guided by headquarters directives. TheCompany's operational system manages the entire process from goods procurement to sales andinventory. Customers can pay for their purchases using cash, UnionPay cards, government BMI cards,and various internet payment methods. All sales data are centrally uploaded to the Company's SAPsystem to facilitate sales analysis and meet customer demands.
(2) Franchise distribution and wholesale business
Franchise distribution involves purchasing products from suppliers and then distributing them to thefranchised stores of the Company and its subsidiaries. The wholesale business involves the distributionof entrusted products to third-party entities.
(3) Pharmaceutical e-commerce
To adapt to the rapid e-commerce development, the Company began to engage in e-commercebusiness and established an e-commerce business group in 2013. Empowered by CRM and big data, theCompany has been seeking innovation in Internet healthcare and prescription circulation to create newonline and offline retail business models. The Company's online sales model primarily relies on its
| 供应商发货配送中心验收仓库门店请货POS系统数量校正SAP系统分拣配货WMS系统出库复核装载运输反馈校正收货验收采购入库流程门店配送流程商品中心核对订单商品部商品主配 | |||||||||||||||||||||
| Delivery | |||||||||||||||||||||
| Acceptance of receipt | Feedback on improvement | Outbound review | |||||||||||||||||||
| POS system | SAP system | WMS system | |||||||||||||||||||
| Quantity adjustment | Sorting & distribution | Loading & transportation | |||||||||||||||||||
| Product selection | |||||||||||||||||||||
Procurement andwarehousing process
Procurement andwarehousing processStore distributionprocess
Store distributionprocessOrdercheck
| Order check | Acceptance |
Request forgoods
Request forgoodsSupplier
| Supplier | Product Center | Warehouse |
Store
Store
ProductDepartment
ProductDepartmentDistribution
center
logistics distribution centers and physical stores, operating a system where consumers place ordersonline, with fulfillment handled by either the logistics centers or the physical stores.
IV. Core competitiveness analysis during the Reporting Period"√ Applicable" "□ Not applicable"
1. Development strategy of regional concentration and steady expansion
During the Reporting Period, the Company adhered to the development strategy of “regionalconcentration and steady expansion” and the operational policy of “key penetration and intensivemarketing”. By strategically establishing a reasonable layout of the scope and depth of store networks,fostering a positive brand image, enhancing professional service capabilities, ensuring standardizedoperations, continuously optimizing the supply chain and product portfolio, and upgrading themembership management system, the Company has kept enhancing customer satisfaction and repeatpurchase rates, leading to a sustained growth in store sales revenue. While leveraging regionalcompetitive advantages, the Company has also improved its bargaining power through the growingeconomies of scale and reduced logistics and operational costs. This has ensured the continuous growthof profitability.The strategy of “regional concentration” has enabled the Company to occupy regional marketsrapidly, achieve profits surpassing the industry average, and significantly increase its sales and profits.As of December 31, 2023, the Company owned 13,250 chain drugstores in ten provinces and cities,including Hunan, Hubei, Shanghai, Jiangsu, Jiangxi, Zhejiang, Guangdong, Hebei, Beijing, and Tianjin.During the Reporting Period, the Company added 2,982 new stores, leading to a year-on-year increase of
13.59% in operating revenue and 11.90% in net profit attributable to shareholders of the listed Company.
2. An efficient and agile operating system and outstanding cross-province operations and chainreplication capabilities
The Company is one of the few companies in the industry whose major provincial subsidiaries areall profitable. It presents prominent advantages in cross-regional store control, replication, and culturalheritage. The Company has always prioritized refined, standardized, and systematic operations andmanagement. It has established a digital, connected, and intelligent system management platform thatcovers six core operation systems: new store expansion, store operations, merchandise management,information services, customer satisfaction, and performance assessment. With digital business handlingand the IT-enabled operational process, the Company has created an efficient and agile operating system,which effectively supports it in cross-regional operations, rapid and efficient replication, and industrymerger and acquisition (M&A) and integration.
During the Reporting Period, the Company has witnessed continued improvements in its businessoperations, management efficiency, and profitability through organizational structure optimization,business process innovation, as well as business development empowered by digitalization. At the end ofthe Reporting Period, the Company had a total of 13,250 stores, with a net increase of 2,982 for the year.From 2018 to 2023, the number of the Company’s stores increased at a compound annual growth rate of
29.69%. Rapid and efficient chain replication and industry integration capabilities have rewarded theCompany with an increasingly mature store network and enhanced advantages in industry competition.
3. Mature proprietary brand category model and comprehensive training system
During the Reporting Period, the Company continuously advanced its controlled strategic focus ofcertain products and its national optimal engineering system, enhanced and expanded astrategically-focused product portfolio that includes proprietary brands, exclusive categories, andcategories developed in cooperation with manufacturers. By delivering high-quality, effective,cost-efficient, and channel-controllable strategically-focused products to customers, the Company haveestablished a competitive barrier in the market and achieved differentiated competition compared to itspeers.
By strengthening specialized employee service training and conducting customer satisfactionassessments, the Company has achieved a balance between profit growth and customer satisfaction.Over 95% of the frontline employees in its stores are graduates in medicine and pharmacy. TheCompany has established a robust employee training and talent development system. Throughout theReporting Period, on the foundation of a professional, credit-based curriculum, the Company createdcorporate universities, including a Retail Academy and a Business School. These institutions encompassa broad spectrum from talent cultivation to corporate management research, thus forging a sustainablehuman resources framework. By partnering with educational institutions, the Company has deepened theintegration of industry and academia, standardized training materials, assembled dedicated and part-timeinstructor teams at stores, and established training bases for new employees and prospective storemanagers. This initiative has propelled the "management trainee" program and various training modelsthat blend online and offline elements with a credit-based evaluation system forward. As the Companyrapidly grows, the comprehensive employee training system ensures the ongoing improvement ofemployees’ professional service capabilities and meets its increasing demand for human resources,thereby serving as a long-term driver for endogenous growth.
4. Premium membership service system.
Based on business needs and market trends, the Company continuously upgrades the memberbenefit system with customer-centric approaches. Through refined operations including the classificationand grading of members, the Company has created personalized and intelligent marketing and servicesystems for its members. By leveraging information technology and Internet technology, the Companyhas gradually realized centralized management functions, including efficient and intelligent managementof member information, integrated online and offline marketing, user health record management, andonline pharmacist consultation. By utilizing intelligent robots on the back end, the Company accuratelyassigns specialized member service tasks to employees, aiming to enhance customer satisfaction andimprove word-of-mouth among customers. By offering free health checks and comprehensiveprofessional health services, along with methods such as medical records establishment, follow-ups,tracking, assessment, and reexamination, the Company strives to improve medication adherence formembers with chronic diseases and comprehensive health management services throughout their life
cycle. As of the end of the Reporting Period, the Company had a total of 87.1 million registeredmembers, marking a year-on-year increase of 23.21%, with sales to members constituting 77.4% of totalsales, an increase of 2.89% from the previous year. The Company's official public social media accounthas attracted over 16.87 million followers.
5. “Fleet-type” store layout and unique location selection model
To cater to the population, market demand, and consumer characteristics of different regions, theCompany has established a network of stores covering different cities and business districts, as well asformed a “fleet-type” store layout consisting of flagship stores, regional central stores, medium-sizedcommunity stores, and small-sized community stores. Based on years of site selection experience andbig data analysis, the Company has developed a comprehensive “business district positioning method”for store location selection. This involves analyzing the population, population density, and consumerspending power and habits in new cities, pinpointing potential business districts, determining store typesand location ranges for prospective stores based on specific district characteristics, and employing asophisticated store selection model, a consumer flow testing system and a sales forecasting model tofinalize precise locations. By promoting and implementing the models above, the Company’scapabilities in selecting new store locations and ensuring the quality of these new stores consistentlyimprove, and its brand penetration continues to strengthen.
6. Advanced digital operational management and efficient back-end support system.
The Company has set up a competent digital technology research and development (R&D) andapplication team dedicated to creating customized digital and intelligent systems tailored to itsoperational requirements. Through the use of various digital platforms such as the Yifeng Health App,mini-programs, WeChat stores, WeChat official accounts, and precise member marketing, the Companyhas continuously increased the number of orders and customers for offline stores. Additionally, byoffering convenient services such as Internet hospitals, public and private domains, prescriptionplatforms, remote consultations, and prepaid cards, it has enhanced user loyalty and corporate brand.The online mini-program (Yidianzhang) has been used by frontline staff. The comprehensivedigitalization of frontline store operations management has enhanced operational efficiency and servicequality. Moreover, the implementation of a digitized product management system has enabled preciseand intelligent control of products and the supply chain, resulting in improved coordination efficiency.Lastly, master data governance, big data platform, cloud-native technology platform, and CI/CD systemhave further improved the efficiency of the internal digital transformation process, facilitating theCompany's agile response to market changes.
With the aid of the back-end shared digital infrastructure, the Company has achieved digitalcapabilities, such as financial sharing, asset sharing, IT sharing, human resource sharing, andadministrative sharing, thus significantly improving the efficiency of back-end support collaboration andservice delivery. By enhancing warehouse operational efficiency and guiding precise improvements inwarehouse nodes with data transparency, the Company has refined its digital framework for logisticsoperations. The Company has established and continuously upgraded seven modern logistics centers in
Hunan, Hubei, Jiangsu, Shanghai, Jiangxi, Guangdong, and Hebei. Currently, the Company boastsadvanced equipment and technologies in the logistics industry, including stereoscopic warehouses,automated conveyor systems, automated sorting systems, AGV for order picking, Miniload forintelligent automatic replenishment, electronic labeling systems, multi-level shuttles, crossbelts, roboticarms, wireless RF picking, acceptance systems, and intelligent consolidation systems. These capabilitiesprovide enhanced support for digital operations of Yifeng’s supply chain.
7. Outstanding corporate culture and mentor-based talent team
The Company places significant emphasis on the development of its corporate culture, embeddingit deeply within cooperate training and educational programs to continuously strengthen the Company'scultural soft power. The Company upholds the core values of “customer first, results-oriented,innovative efficiency, diligence & pragmatism, responsibility & cooperation, as well as growth & care”.This fosters a team atmosphere of responsibility, cooperation, and transparent interpersonal relationships.In addition to prioritizing customer value and maintaining a results-oriented approach, the Companyfacilitates the personal career development and positive work experiences of its employees through itsrobust training system and talent echelon construction. As a result, the Company has significantlyimproved its executive capabilities and cohesion. Since its founding, middle-level and seniormanagement were appointed by the headquarters. After a period of mentorship, the Company graduallytransitioned to a localized talent approach, thus ensuring the inheritance and replication of the corporateculture. Through the cultivation of a mentor-based talent team, employee career planning, and acomprehensive training system, the Company has built a powerful talent pool, thereby meeting thehuman resource demands of its rapid growth.
V. Operation status during the Reporting Period
During the Reporting Period, the Company maintained a steady increase in operating revenue andoperating profit. The Company generated operating revenue of CN?22,588.2274 million, representing ayear-on-year growth of 13.59%. The net profit attributable to shareholders of the listed Companyreached CN?1,411.9850 million, registering a year-on-year increase of 11.90%. The net profitattributable to shareholders of the listed Company, with non-recurring profits and losses excluded, wasCN?1,361.5126 million, up 10.92% year-on-year growth. The weighted average return on net assets was
15.44%, with earnings per share of CN?1.40. As of December 31, 2023, the Company’s total assetsamounted to CN?24,136.5392 million, representing an increase of 14.74% compared toCN?21,036.0240 million at the end of the previous year. The equity attributable to owners of the parentcompany totaled CN?9,804.4325 million, indicating a 14.63% increase compared to CN?8,553.2159million at the end of the previous year.(I). Analysis of Main Business
1. Analysis of Changes in Income Statement and Cash Flow Statement Items
Unit: CN? Currency: CNY
| Item | Amount in the current period | Amount in the same period last year | Percentage of change (%) |
| Operating revenue | 22,588,227,402.22 | 19,886,395,835.95 | 13.59 |
| Operating costs | 13,957,598,854.74 | 12,025,564,042.05 | 16.07 |
| Sales expense | 5,487,450,160.02 | 4,878,272,940.17 | 12.49 |
| Management expenses | 962,424,859.48 | 904,060,660.30 | 6.46 |
| Financial expenses | 86,184,603.08 | 104,812,475.83 | -17.77 |
| R&D expenses | 33,549,984.91 | 25,309,639.00 | 32.56 |
| Net cash flow from operating activities | 4,623,740,795.60 | 3,920,267,304.15 | 17.94 |
| Net cash flows from investing activities | -2,980,321,075.21 | -1,274,001,208.50 | -133.93 |
| Net cash flow from financing activities | -2,093,039,229.23 | -1,655,266,933.76 | -26.45 |
Explanation of changes in operating revenue: The first is the year-on-year endogenous growth ofoperating revenue of existing stores. The second is the continued expansion through new store openings,industry M&A, as well as the development of franchise and distribution businesses.Explanation of changes in operating costs: The main reason for the changes in operating costs is theyear-on-year growth in sales revenue.Explanation of changes in sales expenses: This is mainly because the sales expense increased with theoperating revenue during the Reporting Period. In addition, the newly opened and acquired storesexperienced a period of cultivation or integration during which there were higher amortization costs andpromotional expenses. Furthermore, the development of new customers also further increased the salesexpense.Explanation of changes in administrative expenses: First, the administrative expense increased with theoperating revenue during the Reporting Period. Second, there was an increase in amortization of costsassociated with equity incentives during the Reporting Period.Explanation of changes in financial expenses: This is mainly due to increased interest income frominvestments in fixed-rate financial products using idle funds.Explanation of changes in R&D expenses: This is mainly due to the higher amortization amount after thecapitalization of R&D expenditure into intangible assets.Explanation of changes in net cash flows from operating activities: This is mainly due to the increase inthe Company’s sales and the increase in settlement of notes payable.Explanation of changes in net cash flows from investment activities: This is mainly due to the purchaseof more bank wealth management products in the current period.Explanation of changes in net cash flows from financing activities: This is mainly due to higherpayments for store rent and shareholder dividends during the period.
Detailed description of any significant changes in business type, composition of profit or profit source ofthe Company during the current period"□ Applicable" "√ Not applicable"
2. Revenue and cost analysis
"□ Applicable""√ Not applicable"
(1). Main business by industry, product, region, and sales mode
Unit: CN? Currency: CNY
| Main business by industry | ||||||
| By industry | Operating revenue | Operating costs | Gross profit margin (%). | Operating revenue increase/ decrease from the previous year (%) | Operating cost increase/decrease from the previous year (%) | Gross profit margin increase/ decrease from the previous year (%) |
| Retail | 20,185,078,131.34 | 12,193,594,911.77 | 39.59 | 12.00 | 13.60 | -0.85 |
| Wholesale | 1,892,484,367.32 | 1,715,306,468.77 | 9.36 | 39.23 | 39.39 | -0.11 |
| Total | 22,077,562,498.66 | 13,908,901,380.54 | 37.00 | 13.91 | 16.25 | -1.27 |
| Main business by product | ||||||
| By product | Operating revenue | Operating costs | Gross profit margin (%). | Operating revenue increase/ decrease from the previous year (%) | Operating cost increase/decrease from the previous year (%) | Gross profit margin increase/ decrease from the previous year (%) |
| Chinese and Western patent medicine | 17,094,686,214.86 | 11,145,804,284.09 | 34.80 | 15.93 | 16.73 | -0.45 |
| Traditional Chinese medicine | 2,180,366,779.78 | 1,152,773,656.91 | 47.13 | 23.30 | 22.54 | 0.33 |
| Non-drug | 2,802,509,504.03 | 1,610,323,439.54 | 42.54 | -2.30 | 9.14 | -6.02 |
| Total | 22,077,562,498.66 | 13,908,901,380.54 | 37.00 | 13.91 | 16.25 | -1.27 |
| Main business by region | ||||||
| By region | Operating revenue | Operating costs | Gross profit margin (%). | Operating revenue increase/ decrease from the previous year (%) | Operating cost increase/decrease from the previous year (%) | Gross profit margin increase/decrease from the previous year (%) |
| Central and South China | 10,379,720,621.51 | 6,388,491,769.01 | 38.45 | 17.44 | 18.96 | -0.79 |
| East China | 9,227,739,118.05 | 5,887,330,928.57 | 36.20 | 7.29 | 10.27 | -1.72 |
| North China | 2,470,102,759.10 | 1,633,078,682.96 | 33.89 | 27.14 | 30.07 | -1.49 |
| Total | 22,077,562,498.66 | 13,908,901,380.54 | 37.00 | 13.91 | 16.25 | -1.27 |
Explanation of the main business by industry, product, region and sales modeBy industry, the Company's main business is drug retail, which accounts for 91.43% of the revenue.During the Reporting Period, the gross profit margin of the Company’s main business was 37.00%, adecrease of 1.27% compared to the previous year. The primary reasons are an increase in the proportionof wholesale revenue, which has decreased the overall gross profit margin, and a decline in the grossprofit margin of the retail business.
By category, the categories with the fastest-growing income include Chinese and Western patentmedicine and traditional Chinese medicine, with growth rates of 15.93% and 23.30%, respectively.By region, the Central and South China covers Hunan, Hubei, and Guangdong; East China coversJiangsu, Shanghai, Zhejiang, and Jiangxi; and North China covers Hebei, Beijing, and Tianjin.
(2). Production and sales analysis table
"□ Applicable" "√ Not applicable"
(3). Performance of major procurement contracts and major sales contracts"□ Applicable" "√ Not applicable"
(4). Cost analysis table
Unit:CN?
| By industry | |||||||
| By industry | Cost composition items | Amount for the current period | Proportion of the amount for the current period to total cost (%) | Amount for the same period of the previous year | Proportion of the amount of the same period of the previous year to total cost (%) | Percentage of change of the current amount compared to the same period of the previous year | Details Description |
| Retail | Sales cost | 12,193,594,911.77 | 87.67 | 10,733,898,814.90 | 89.71 | 13.60 | |
| Wholesale | Sales cost | 1,715,306,468.77 | 12.33 | 1,230,552,979.27 | 10.29 | 39.39 | |
| Total | Sales cost | 13,908,901,380.54 | 100.00 | 11,964,451,794.17 | 100.00 | 16.25 | |
| By product | |||||||
| By product | Cost composition items | Amount for the current period | Proportion of the amount for the current period to total cost (%) | Amount for the same period of the previous year | Proportion of the amount of the same period of the previous year to total cost (%) | Percentage of change of the current amount compared to the same period of the previous year | Details Description |
| Chinese and Western patent medicine | Sales cost | 11,145,804,284.09 | 80.13 | 9,548,232,660.40 | 79.81 | 16.73 | |
| Traditional Chinese medicine | Sales cost | 1,152,773,656.91 | 8.29 | 940,755,926.55 | 7.86 | 22.54 | |
| Non-drug | Sales cost | 1,610,323,439.54 | 11.58 | 1,475,463,207.22 | 12.33 | 9.14 | |
| Total | Sales cost | 13,908,901,380.54 | 100.00 | 11,964,451,794.17 | 100.00 | 16.25 | |
Explanation of other situations in cost analysisNone
(5). Changes in the equity of major subsidiaries during the Reporting Period arising fromchanges in the scope of consolidation
"□ Applicable" "√ Not applicable"
(6). Significant changes or adjustments to the Company’s business, products or services duringthe reporting period"□ Applicable" "√ Not applicable"
(7). Information regarding major customers and primary suppliers
A. Information regarding major customers"√ Applicable" "□ Not applicable"
The sales amount from the top five customers totaled CN?57,575,000,accounting for 0.25% of the totalannual sales. The sales amount of related parties from the top five customers was CN?19,093,500accounting for 0.08% of the total annual sales.
| S/N | Customer name | Sales amount (CN?10,000) | Percentage of annual sales (%) |
| 1 | Customer A | 1,909.35 | 0.08 |
| 2 | Customer B | 1,221.18 | 0.05 |
| 3 | Customer C | 926.29 | 0.04 |
| 4 | Customer D | 862.30 | 0.04 |
| 5 | Customer E | 838.38 | 0.04 |
| Total | 5,757.50 | 0.25 |
During the Reporting Period, the sales to a single customer accounted for more than 50% of the total,and there were cases where new customers are among the top 5 customers or there was a significantdependence on a small number of customers."□ Applicable" "√ Not applicable"
B. Information regarding primary suppliers"√ Applicable" "□ Not applicable"The procurement amount from the top five suppliers totaled CN?6,028,813,900, accounting for 43.12%of the total annual procurement. The procurement amount from related parties of the top five supplierswas CN?0.00, accounting for0.00% of the total annual procurement.
| S/N | Supplier name | Procurement amount (CN?10,000) | Percentage of annual procurement amount (%) |
| 1 | Supplier A | 194,318.60 | 13.90 |
| 2 | Supplier B | 153,338.21 | 10.97 |
| 3 | Supplier C | 146,731.30 | 10.49 |
| 4 | Supplier D | 64,362.13 | 4.60 |
| 5 | Supplier E | 44,131.15 | 3.16 |
| Total | 602,881.39 | 43.12 |
During the Reporting Period, the sales to a single supplier accounted for more than 50% of the total, andthere were cases where new suppliers are among the top 5 suppliers or there was a significantdependence on a small number of suppliers."□ Applicable" "√ Not applicable"
Other explanationsNone
3. Costs
"√ Applicable""□ Not applicable"
| Item | Amount incurred in the current period (CN?) | Amount incurred for the previous period (CN?) | Percentage of change (%) |
| Sales expense | 5,487,450,160.02 | 4,878,272,940.17 | 12.49 |
| Management expenses | 962,424,859.48 | 904,060,660.30 | 6.46 |
| R&D expenses | 33,549,984.91 | 25,309,639.00 | 32.56 |
| Financial expenses | 86,184,603.08 | 104,812,475.83 | -17.77 |
The reasons for the changes in sales expenses: The increase is mainly due to the rise in selling expenses,proportional to the growth in operating revenue.。The reasons for the changes in administrative expenses: First, the administrative expense increased withthe operating revenue during the Reporting Period. Second, there was an increase in amortization ofcosts associated with equity incentives during the Reporting Period.The reasons for the changes in R&D expenses: This is mainly due to the higher amortization amountafter the capitalization of R&D expenditure into intangible assetsThe reasons for the changes in financial expenses: This is mainly due to increased interest income frominvestments in fixed-rate financial products using idle funds.
4. R & D investment
(1).Details of R&D investment
"√ Applicable" "□ Not applicable"
Unit:CN?
| Expensed R&D investment in the current period | 19,439,582.87 |
| Capitalized R&D investment in the current period | 33,193,214.40 |
| Total R&D investment | 52,632,797.27 |
| Total R&D investment as a percentage of operating revenue (%) | 0.23 |
| Share of capitalized R&D investment (%) | 63.07 |
(2).Details of R&D personnel
"√ Applicable" "□ Not applicable"
| Number of the Company’s R&D Personnel | 340 |
| Number of R&D personnel as a percentage of the Company’s total workforce (%) | 0.86 |
| Educational Background of R&D Personnel | |
| Academic Degree | Number |
| Doctorate degree | 0 |
| Master’s degree | 12 |
| Undergraduate | 216 |
| College degree | 112 |
| High school and below | 0 |
| Age of R&D Personnel | |
| Age Group | Number |
| Under 30 (excluding 30) | 103 |
| 30 – 40 (including 30 but excluding 40) | 195 |
| 40 – 50 (including 40 but excluding 50) | 38 |
| 50 – 60 (including 50 but excluding 60) | 4 |
| 60 and above | 0 |
(3).Description
"□ Applicable" "√ Not applicable"
(4).Reason(s) for major changes in the composition of R&D personnel and their impact on the
Company’s future development"□ Applicable" "√ Not applicable"
5. Cash flow
"√ Applicable""□ Not applicable"
| Item | Amount incurred in the current period (CN?) | Amount incurred for the previous period (CN?) | Percentage of change (%) |
| Net cash flow from operating activities | 4,623,740,795.60 | 3,920,267,304.15 | 17.94 |
| Net cash flows from investing activities | -2,980,321,075.21 | -1,274,001,208.50 | -133.93 |
| Net cash flow from financing activities | -2,093,039,229.23 | -1,655,266,933.76 | -26.45 |
Explanation of changes in net cash flows from operating activities: This is mainly due to the increase inthe Company’s sales and the increase in settlement of notes payable.Explanation of changes in net cash flows from investing activities: This is mainly due to the purchase ofmore bank wealth management products in the current period.Explanation of changes in net cash flows from financing activities: This is mainly due to higherpayments for store rent and shareholder dividends during the period.
(II). Notes on major changes in profits due to non-principal business"□ Applicable""√ Not applicable"
(III). Analysis of assets and liabilities"√ Applicable" "□ Not applicable"
1. Assets and liabilities
Unit:CN?
| Item name | Current Period’s Closing Balance | Current Period’s Closing Balance as a Percentage of Total Assets (%) | Prior Period’s Closing Balance | Prior Period’s Closing Balance as a Percentage of Total Assets (%) | Change in Current Period’s Closing Balance over Prior Period (%) | Description |
| Trading financial assets | 1,630,720,887.94 | 6.76 | 50,045,139.45 | 0.24 | 3,158.50 | Primarily due to an increase in the purchase of bank wealth management products with idle funds in the current period |
| Receivables financing | 11,889,888.58 | 0.05 | 1,784,671.86 | 0.01 | 566.22 | Primarily due to an increase in notes receivable in the current period |
| Prepayments | 141,493,810.64 | 0.59 | 225,472,636.75 | 1.07 | -37.25 | Primarily due to a decrease in prepayments for procurement |
| Debt investments | 154,167,777.78 | 0.64 | 0.00 | 0.00 | 100.00 | Due to the purchase of three-year, high-value fixed deposit |
| certificates | ||||||
| Investment in other equity instruments | 432,225,200.00 | 1.79 | 327,379,600.00 | 1.56 | 32.03 | Due to increased investments in other equity instruments and year-end fair value adjustments |
| Other non-current financial assets | 1,010,000.00 | 0.00 | 1,460,000.00 | 0.01 | -30.82 | Due to disposal of some investments in the current period |
| Other non-current assets | 30,269,025.79 | 0.13 | 7,230,498.45 | 0.03 | 318.63 | Primarily due to an increase in prepaid deposits for equity transfers |
| Advance receipts | 15,959,550.59 | 0.07 | 6,078,020.28 | 0.03 | 162.58 | Primarily due to an increase in advance receipts for subletting properties |
| Contract liabilities | 80,166,931.03 | 0.33 | 60,685,079.13 | 0.29 | 32.10 | Primarily due to increase in advance receipts on pre-paid cards |
| Long-term borrowings | 133,617,147.68 | 0.55 | 228,668,070.87 | 1.09 | -41.57 | Due to repayment of some loans in the current the period |
| Paid-in capital (or share capital) | 1,010,579,797.00 | 4.19 | 721,704,930.00 | 3.43 | 40.03 | Primarily due to conversion of capital reserves to share capital in the current the period |
| Treasury stock | 42,238,481.15 | 0.17 | 77,410,952.00 | 0.37 | -45.44 | Primarily due to unlocking of restricted stock, recovering the initially confirmed repurchase obligations |
| Other comprehensive income | 21,416,709.49 | 0.09 | -17,001,709.05 | -0.08 | 225.97 | Due to year-end fair value changes in other equity instrument investments |
| Surplus reserves | 198,282,150.00 | 0.82 | 132,066,047.02 | 0.63 | 50.14 | Due to an increase in the statutory surplus reserve |
provisionedfrom the netprofit growth ofthe currentperiod
Other explanationsNone
2. Overseas assets
"□ Applicable" "√ Not applicable"
3. Restrictions on major assets as of the end of the Reporting Period"√ Applicable" "□ Not applicable"
| Item | Closing book value | Reason for restriction |
| Monetary funds | 1,096,521,187.18 | Principal and interest of deposit to bills of exchange |
| Monetary funds | 30,283.77 | Deposit to government platforms |
| Monetary funds | 774,128.26 | Judicially frozen funds |
| Debt investments | 102,729,722.22 | Large certificate of deposit pledges |
| Total | 1,200,055,321.43 |
4. Other explanations
"□ Applicable" "√ Not applicable"
(IV). Analysis of industry operational information"□ Applicable" "√ Not applicable"Analysis of operational information about the retail industry
1. Distribution of operating stores as of the end of the Reporting Period
"√ Applicable""□ Not applicable"
| Region | Business Format | Stores in Self-owned Properties | Stores in Leased Properties | ||
| Number of Stores | Floor Area (10,000 m2) | Number of Stores | Floor Area (10,000 m2) | ||
| Central and South China | Pharmaceutical retail chain | 10 | 0.36 | 4,887 | 66.07 |
| East China | Pharmaceutical retail chain | 1 | 0.035 | 3,797 | 57.30 |
| North China | Pharmaceutical retail chain | 2 | 0.065 | 1,567 | 23.74 |
| Total | 13 | 0.46 | 10,251 | 147.11 | |
2. Otherexplanations
"√ Applicable" "□ Not applicable"
(1) The Company’s store network during the Reporting Period
The Company adheres to the development strategy of “regional concentration and steady expansion”and aims its market expansion at “consolidating the share in Central South, East, and North China whileexpanding across the country”. Through the layout of “new openings + M&A + franchising” in the
above regions, it has formed a multi-tiered store network comprising flagship stores, regional centralstores, medium-sized community stores, and small-sized community stores. The Company has beendeeply engaged in the regional market and gained a leading position in the market through refinedoperation and brand penetration. During the Reporting Period, the Company saw 2,982 new stores.
Unit: store
| Region | 2023 | ||||
| Beginning of the Period | Net growth | Closed | Relocated | End of the Period | |
| Central and South China | 5,414 | 1,322 | 79 | 32 | 6,736 |
| East China | 3,795 | 927 | 58 | 26 | 4,722 |
| North China | 1,059 | 733 | 16 | 3 | 1,792 |
| Total | 10,268 | 2,982 | 153 | 61 | 13,250 |
Note: During the Reporting Period, a total of 214 stores were closed or relocated, primarily due to locationoptimization, renovation of old urban areas, and strategic adjustments, among other factors.
(2) Changes in the Company’s store network
As of December 31, 2023, the Company had a net increase of 9,639 stores compared to the end of2018. Over the past five years, the Company’s stores have increased at a compound annual growth rateof 29.69%. Details are as follows:
Unit: store
| Year | At the end of 2018 | At the end of 2019 | At the end of 2020 | At the end of 2021 | At the end of 2022 | At the end of 2023 |
| Central and South China | 1,633 | 2,159 | 2,858 | 3,824 | 5,414 | 6,736 |
| East China | 1,482 | 2,035 | 2,456 | 3,194 | 3,795 | 4,722 |
| North China | 496 | 558 | 677 | 791 | 1,059 | 1,792 |
| Total | 3,611 | 4,752 | 5,991 | 7,809 | 10,268 | 13,250 |
(3) Business of the Company’s direct-sale stores during the Reporting Period
As of December 31, 2023, the Company had 10,264 directly-managed stores. The business of thedirect-sale stores is as follows:
| Store Type | Number of Stores | Store Operating Area | Average Daily Sales per Square Meter |
| (store) | (m2) | (tax included; CN?/m2) | |
| Flagship store | 26 | 17,940 | 146.53 |
| Regional central store | 95 | 33,253 | 70.95 |
| Medium-sized community store | 1,023 | 194,280 | 60.18 |
| Small-sized community store | 9,120 | 815,403 | 60.81 |
| Total | 10,264 | 1,060,875 | 61.06 |
Note: Average daily sales per square meter = Average daily operating revenue/Store operating areaAverage daily operating revenue = Store’s annual operating revenue (tax included)/Store’sbusiness days
Operating area refers to the actual area of the store for business operations.
(4) Stores licensed for government BMI
As of December 31, 2023, 8,970 (87.39%) among the Company’s 10,264 direct-sale chain storeshad been licensed as BMI Designated Retail Pharmacies.
| Region | Number of Stores (store) | BMI Designated Retail Pharmacies (store) | Percentage of Government BMI Pharmacies |
| Central and South China | 4,897 | 4,505 | 92.00% |
| East China | 3,798 | 3,229 | 85.02% |
| North China | 1,569 | 1236 | 78.78% |
| Total | 10,264 | 8,970 | 87.39% |
(5) Online business operation
During the Reporting Period, relying on offline stores and members, the Company proceeded withits new pharmaceutical retail system based on the ecosystems of omni-channel membership, online andoffline medical services, and whole-lifecycle health management. It also continued to empower theM&A system and franchising system. Meanwhile, the new media operation and content operationcapabilities saw rapid improvement.
As of the end of the Reporting Period, the Company’s registered membership totaled 87.1 million,and the Company’s WeChat official account had more than 16.87 million followers. O2O multi-channeland multi-platform online direct-sale stores exceeded 9,000, covering all major cities in the presence ofthe Company. Supported by the dual-engine strategy of O2O and B2C, relying on the Company’sregional concentration strategy, intelligent supply chain system, and refined operation, the Company’sInternet business achieved sales revenue of CN?1,817.8471 million (tax excluded). It includes salesrevenue from O2O (franchise stores excluded) of CN?1,398.7383 million and sales revenue from B2Cof CN?419.1092 million.
(V). Analysis of investment statusOverall analysis of outbound equity investments"√ Applicable" "□ Not applicable"During the Reporting Period, the Company participated in 22 M&A investments within the industry,successfully completing 19 of these transactions. Details are as follows:
(1) In November 2022, the Company’s holding subsidiary, Tangshan Xinxing DeshuntangPharmaceuticals Chain Co., Ltd., entered into the "Equity Transfer Agreement" with Yin Hui and otherindividuals to acquire 100% equity of Tangshan Xinxing Deshengtang Pharmaceutical Co., Ltd. at aprice of CN?113 million, which involved 54 stores and 8 clinics. The project’s equity deliveryprocedures were completed in March 2023.
(2) In October 2022, the Company’s holding subsidiary, Shijiazhuang Xinxing, entered into the"Equity Transfer Agreement" with Shang Yong and other individuals to acquire 70% equity ofQinhuangdao Xinxing Minle Pharmaceuticals Chain Co., Ltd. at a price of CN?63 million, whichinvolved 89 stores. The project’s equity delivery procedures were completed in March 2023.
(3) In December 2022, the Company entered into an asset acquisition framework agreement to beassigned the assets and business of Longshan County Laobaixing New and Special Medicine HealthPharmacy and other 10 pharmacies. The project’s asset delivery procedures were completed in February2023, and the final asset acquisition price was CN?6million.
(4) In February 2023, the Company’s wholly-owned subsidiary, Hubei Yifeng, entered into the"Equity Transfer Agreement" with Li Qionghua and other individuals, to acquire 70% equity ofGuangshui Yifeng Kangji Pharmacy Chain Co., Ltd. at a price of CN?8.54 million, which involved 11stores. The project’s equity delivery procedures were completed in April 2023.
(5) In March 2023, the Company’s wholly-owned subsidiary, Jiangsu Yifeng, entered into an assetacquisition framework agreement to be assigned the assets and business of 37 stores of ChangzhouRenmin Baixing Pharmacy Co., Ltd. The project’s asset delivery procedures were completed in June2023, and the final asset acquisition price was CN?35 million.
(6) In April 2023, the Company’s holding subsidiary, Ganxi Yifeng, entered into the "EquityTransfer Agreement" with Chen Zhilin and other individuals, to acquire 60% equity of Yichun YifengPharmacy Chain Co., Ltd., at a price of CN?24.6 million, which involved 30 stores. The project’s equitydelivery procedures were completed in July 2023.
(7) In May 2023, the Company’s holding subsidiary, Shijiazhuang Xinxing, entered into the"Equity Transfer Agreement" with Wang Yunqiang and other individuals to acquire 80% equity ofHandan Xinxing Baixinkang Pharmaceuticals Chain Co., Ltd. at a price of CN?23.344 million, whichinvolved 58 stores. The project’s equity delivery procedures were completed in August 2023.
(8) In May 2023, the Company’s wholly-owned subsidiary, Hubei Yifeng, entered into an assetacquisition framework agreement to be assigned the assets and business of 64 pharmacies of HubeiZhonglian Pharmacy Co., Ltd. at a price not exceeding CN?20 million. The delivery procedures of 41pharmacies in the project were completed in July 2023, and these pharmacies were re-established upon
renewal of all business approval procedures. Zhonglian has not performed the framework agreementcompletely yet, and both parties are still proceeding with this agreement.
(9) In June 2023, the Company’s holding subsidiary, Shijiazhuang Xinxing, entered into an assetacquisition framework agreement to be assigned the assets and business of 39 stores of Xingtai DongdaPharmaceuticals Chain Co., Ltd. The project’s asset delivery procedures were completed in July 2023,and the final asset acquisition price was CN?26.32 million.
(10) In July 2023, the Company’s holding subsidiary, Shijiazhuang Xinxing, entered into the"Equity Transfer Agreement" with Sun Shuzhi and other individuals to acquire 80% equity of LangfangXinxing Dekunyuan Pharmaceutical Retail Chain Co., Ltd. at a price of CN?27.19 million, whichinvolved 69 stores. The project’s equity delivery procedures were completed in December 2023.
(11) In August 2023, the Company’s wholly-owned subsidiary, Jiangxi Yifeng, entered into the"Equity Transfer Agreement" with Wang Yang and other individuals, to acquire 65% equity of YingtanYifeng Pharmacy Chain Co., Ltd., at a price of CN?19.5 million, which involved 29 stores. Theproject’s equity delivery procedures were completed in October 2023.
(12) In August 2023, the Company’s holding subsidiary, Shijiazhuang Xinxing, entered into the"Equity Transfer Agreement" with Wang Ruimin and other individuals to acquire 70% equity of HandanXinxing Huakang Pharmacy Chain Co., Ltd. at a price of CN?52.5 million, which involved 50 stores.The project’s equity delivery procedures were completed in December 2023.
(13) In September 2023, the Company’s holding subsidiary, Shijiazhuang Xinxing, entered into the"Equity Transfer Agreement" with Zhang Weizhe and other individuals to acquire 70% equity ofChengde Xinxing Baixing Pharmacy Chain Co., Ltd. at a price of CN?30.24 million, which involved 20stores. The project’s equity delivery procedures are still in progress.
(14) In September 2023, the Company’s holding subsidiary, Jingzhou Guangshengtang, enteredinto an asset acquisition framework agreement to be assigned the assets and business of JianglingMiaoyuan Pharmacy and other 9 pharmacies. The project’s asset delivery procedures were completed inOctober 2023, and the final asset acquisition price was CN?6.88 million.
(15) In October 2023, the Company’s holding subsidiary, Shijiazhuang Xinxing, entered into the"Equity Transfer Agreement" with Zhang Zhen and other individuals to acquire 70% equity of ChengdeXinxing Xinyu Pharmacy Chain Co., Ltd. at a price of CN?23.1 million, which involved 31 stores. Theproject’s equity delivery procedures were completed in December 2023.
(16) In October 2023, the Company’s holding subsidiary, Shijiazhuang Xinxing, entered into the"Equity Transfer Agreement" with Ma Limin and other individuals to acquire 70% equity of PingquanXinxing Limin Pharmacy Chain Co., Ltd. at a price of CN?36.96 million, which involved 55 stores. Theproject’s equity delivery procedures were completed in January 2024.
(17) In November 2023, the Company’s holding subsidiary, Shijiazhuang Xinxing, entered into the"Equity Transfer Agreement" with Wang Tao and other individuals to acquire 70% equity of NangongXinxing Huakang Pharmacy Chain Co., Ltd. at a price of CN?22.4 million, which involved 67 stores.The project’s equity delivery procedures were completed in March 2024.
(18) In November 2023, the Company’s holding subsidiary, Wuxi Jiuzhou, entered into an assetacquisition framework agreement to be assigned the assets and business of Wuxi Shenzhou PharmacyCo., Ltd. and other 3 pharmacies. The project’s asset delivery procedures were completed in January2024, and the final asset acquisition price was CN?11.5 million.
(19) In December 2023, the Company’s holding subsidiary, Shijiazhuang Xinxing, entered into the"Equity Transfer Agreement" with Lu Dezhi and other individuals to acquire 70% equity of HandanXinxing Shengde Pharmacy Chain Co., Ltd. at a price of CN?15.4 million, which involved 25 stores.The project’s equity delivery procedures were completed in March 2024.
(20) In December 2023, the Company’s holding subsidiary, Shijiazhuang Xinxing, entered into the"Equity Transfer Agreement" with Yuan Lijuan and other individuals to acquire 70% equity of Handan(Yongnian District) Xinxing Wankang Pharmaceuticals Chain Co., Ltd. at a price of CN?17.50 million,which involved 15 stores. The project’s equity delivery procedures are still in progress.
(21) In December 2023, the Company’s holding subsidiary, Shijiazhuang Xinxing, entered into the"Equity Transfer Agreement" with Qin Wei and other individuals to acquire 70% equity of Jize RenkangXinxing Pharmacy Chain Co., Ltd. at a price of CN?5.39 million, which involved 15 stores. Theproject’s equity delivery procedures were completed in March 2024.
(22) In December 2023, the Company’s holding subsidiary, Shijiazhuang Xinxing, entered into the"Equity Transfer Agreement" with Tan Hong’en and other individuals to acquire 70% equity of HandanXinxing Kangheng Baixing Pharmaceuticals Chain Co., Ltd. at a price of CN?16.1 million, whichinvolved 35 stores. The project’s equity delivery procedures are still in progress.
1. Substantial equity investments
"□ Applicable" "√ Not applicable"
2. Substantial non-equity investments
"□ Applicable" "√ Not applicable"
3. Financial assets measured at fair value
"□ Applicable" "√ Not applicable"
Investments in securities"□ Applicable" "√ Not applicable"
Investments in securities"□ Applicable" "√ Not applicable"
Investments in private equity funds"□ Applicable" "√ Not applicable"
Investments in derivatives"□ Applicable" "√ Not applicable"
4. Progress details of material asset restructuring and consolidation during the ReportingPeriod"□ Applicable" "√ Not applicable"
(VI). Material assets and equity sales"□ Applicable" "√ Not applicable"
(VII). Analysis of major companies controlled or held by the Company"√ Applicable" "□ Not applicable"
| S/N | Subsidiary | Shareholding (%) | Main business | Registered Capital (CN?10,000) | Total assets (CN?10,000) | Net assets (CN?10,000) | Operating Revenue (CN?10,000) | Operating Profit (CN?10,000) | Net Profit (CN?10,000) |
| 1 | Yifeng Pharmaceutical | 100.00 | Pharmaceutical wholesale | 15,000.00 | 555,130.81 | 179,759.40 | 563,521.35 | 62,474.80 | 53,767.15 |
| 2 | Jiangsu Yifeng | 100.00 | Pharmaceutical retail | 15,000.00 | 739,594.91 | 158,370.64 | 559,063.52 | 52,425.02 | 39,094.25 |
Note: The above major companies controlled or held by the Company include subsidiaries whose netprofit accounts for more than 10% of the Company’s total net profit.The Company’s wholly-owned subsidiary, Yifeng Pharmaceuticals, wholly owns HengxiutangPharmaceuticals Company;
The Company’s wholly-owned subsidiary, Jiangsu Yifeng, wholly owns Jiangsu Yifeng Medicine, Nantong YifengOutpatient Clinic, and Wuyi Clinic Company, and controls Wuxi Jiuzhou Pharmaceuticals, Jiuzhou Pharmacy, TaizhouBao’ai, Rudong Yifeng, Wuxi Kangjian, Nanjing Zhilin, Xuzhou Enqi, Dongtai Kaixin Pharmaceuticals, and YuehaiTong’ankang.
(VIII). Structured entities controlled by the Company"□ Applicable" "√ Not applicable"
VI. The Company’s discussion and analysis of its future development(I). Industry landscape and trends"√ Applicable" "□ Not applicable"As policies for the reform of medical care, BMI and pharmaceutical industry are implemented androlled out, the structural adjustment of the pharmaceutical industry is facing substantial changes, andindustry trends are constantly changing, which is affected by multiple factors, such as an agingpopulation, advancement of Internet technology, and capital driving. These activities have contributed tothe continuous expansion of the healthcare and medical industry's overall scale. Moreover, the terminalsales of retail pharmacies has accounted for a bigger share, along with more pharmacy chains. Thepharmaceutical industry has witnessed increasingly centralized development. The medicine retailindustry has ushered in a continuous expansion. Medicine retailing has increasingly distinguished itselfas being standardized, large-scale, specialized, and differentiated. The abilities to deliver professionalmanagement services catering to the diverse health needs of consumers have been enhanced. Digital
transition and upgrading of businesses accelerated integration in the industry, and the service model of“online + offline” whole-lifecycle health management has become new trends of the industry.
(1) Health expenditure has been rising year by year, and the health industry as a whole has beenexpanding. According to the "Report on the Execution of the Central and Local Budgets for 2022 andthe Draft Budgets for 2023" issued by the National People's Congress, the total national general publicbudget expenditure for 2023 is planned to be CN? 27.513 trillion, with health and wellness expendituresaccounting for 8.8%, totaling CN? 2.4211 trillion. According to the "Statistical Communiqué of thePeople's Republic of China on the 2023 National Economic and Social Development" by the NationalBureau of Statistics of China, per capita healthcare expenditure among residents in 2023 was CN? 2,460,accounting for 9.2% of total consumer spending and ranking fifth. By the end of 2023, the total numberof individuals enrolled in BMI nationwide reached 1,333.87 million, with 370.94 million covered underemployee BMI and 962.93 million under urban and rural residents' BMI; 249.07 million were enrolled inmaternity insurance.
(2) The healthcare reform oriented towards “separation of prescribing and dispensing” has broughta new incremental market for the pharmaceutical retail industry. As the reform of medical care, BMI andpharmaceutical industry is being rolled out, policies on public hospital reform, expense control ofgovernment BMI, drug consistency evaluation, volume-based procurement, and Internet + medical carehave been introduced and implemented. The policy of including designated retail pharmacies in theoverall outpatient service management has been carried out widely. Hospital prescription outflow (frompublic hospitals into pharmaceutical retail channel) is speeding up. The separation of prescribing anddispensing starts gaining results, and the pharmaceutical retail industry has ushered in a new incrementalmarket.
(3) The industry is witnessing higher concentration driven by industrial policies and capital. The"Guiding Opinions of the Ministry of Commerce on Promoting the High-Quality Development of thePharmaceutical Distribution Industry During the 14
thFive-Year Plan Period" envisions that (1) five toten specialized and diversified pharmaceutical retailers with a revenue of more than CN?50 billion willbe nurtured by 2025; (2) the annual sales of the top 100 enterprises in the pharmaceutical retail industrywill account for more than 65% of the total market value of the pharmaceutical retail industry; and (3)pharmaceutical retail chain stores will account for nearly 70% of all stores. These Guiding Opinionsprovide strong policy support for increasing concentration in China’s pharmaceutical retail industry.
(4) As the Internet Plus action plan is rolled out and cross-cover integration models are applied,pharmaceutical distribution channels and development models have been continuously improved andinnovated. The new pharmaceutical retail model, which develops both online and offline, is led byoffline physical pharmacies and centered on big data and member management, bringing new vitality tothe industry. Retail pharmacies are actively pursuing specialized, digital, and intelligent transformationpathways, broadening their service offerings to include health check-ups, chronic disease self-testing,pharmaceutical services, and chronic disease management. They provide consultation services and
follow-up visits for patients requiring specialty medications, gradually transitioning from a commoditysales-centered model to a consumer service-centered approach.
(II). The Company’s development strategy"√ Applicable" "□ Not applicable"The Company will carry forward the corporate mission of “enhancing Chinese people’s physicaland mental health” and focus on the core strategies of “professional services, controllable andstrategically focused products, new retail, focused expansion, efficient operation system, talent andculture”. It focuses on Central South, East, and North China, while expanding in the national market. Itseeks new development space through business model innovation and increasing upstream anddownstream channels. The Company continues to improve its core competitiveness through building itsbrand image, enhancing professional services, establishing a system of differentiated andstrategically-focused products, and implementing digital technology innovation. The Company employsnew concepts and new technologies to serve customers and empower stores and employees.Byconsolidating the basic system of human resources and optimizing its organizational structure,itimproves its business efficiency and organizational efficiency. Through constructing a new model ofomni-channel whole-lifecycle health management services, the Company makes more substantialcontributions to people’s physical and mental health, and becomes a choice pharmacy worthy ofcustomers’ trust and confidence.
(III). Business plan"√ Applicable" "□ Not applicable"
1. Store network expansion plan
Under the strategic framework of "regional concentration and steady expansion," the Companycontinues to refine and extend its strategies through the synchronized development of "new openings +M&A + franchising". By leveraging iterative site selection mechanisms (commercial area positioningmethod), customer flow testing systems, and sales forecast models, the Company persistently enhancesthe precision of store locations, improving the efficiency and quality of site selection. This approachdeepens and broadens the store network's coverage, achieving a rational and efficient store networklayout and steadily increasing regional market share and concentration.
2. Innovating the Company’s business model
The Company will continue innovating the online-offline-integrated efficient operating system forexpansion, operations, merchandises, manpower, and IT. The Company will create an industry-leadingnew retail e-commerce business model and supply chain system; build an omni-channel membershipoperation system and private domain operation system that are warm, professional, accurate, andefficient; strengthen the establishment of the direct-sales franchise system; and comprehensivelyinnovate in the new business model of healthcare products and services.
3. Creating efficient merchandise category and supply chain management systems
By establishing a robust national optimal engineering system, the Company will continue tooptimize the structure of product categories, and introduce new products, ultimately establishing acontrollable and strategically focused product selection system that covers all categories, and featuresdifferentiation. It will establish a management system of merchandise-led promotion and strengthen themechanism to remove inferior merchandises. Focusing on the planning system of product varieties, itwill adopt the full-cycle management of products. In addition, it will enhance the merchandise fill rateand reduce inventory turnover to build efficient and intelligent category and supply chain managementsystems.
4. Creating a human resources supply system that can be replicated at scale
To meet the demand of human resources for the Company's rapid development, the Company willpromote the corporate culture in every aspect, integrate cultural orientation in appointment andincentives, and guide employees to be self-motivated. By reconstructing the human resources foundation,optimizing organizational structures, embracing digital drive, and refining the compensation incentivesystem, it will open up career paths for its employees. Through cultivating senior talents and buildingtalent teams, enhancing talent density, and optimizing the ecosystem for talent development, it strives tocreate a human resources supply system that can be replicated at scale.
5. Creating an efficient digital system for quality services
Based on the store service model, the Company will build a digital pharmaceutical online operationmodel that integrates people, merchandises, and venues to create a high-quality service network andimprove work efficiency. By applying digital means in new store expansion, M&A, and franchising, theCompany will complete the digitalization of the business of Yifeng Pharmaceuticals and Hengxiutang.This move will open up the upstream and downstream chains of the pharmaceutical industry, providedigital support for the construction of the pharmaceutical industry network, create an intelligent andefficient e-commerce operation and medical prescription system, improve operational efficiency, andreduce fulfillment costs.
(IV). Potential risks"√ Applicable" "□ Not applicable"
1. Industry policy risk
The development of the pharmaceutical retail industry is regulated and affected by national policies.As China’s administration standards for the pharmaceutical retail industry have been raised year by year,business operations are facing higher requirements. As the new healthcare reform goes deeper, policiessuch as the public hospital reform, public hospital zero drug market-ups, the two-invoice system, BMIpayment methods, and the reform of personal BMI accounts have been rolled out in full swing. At thesame time, industry regulation is increasingly stringent. If the Company’s business management andinternal operation system cannot be promptly adjusted against regulatory and industry policies, theCompany is likely to face business risks.
Responses: The Company will closely monitor changes in national policies and enhance theunderstanding of industry guidelines. It will plan and respond in a forward-looking way. It will seize the
opportunities and rise to the challenges from changes in the industry by (1) adjusting its business andmanagement model, (2) upgrading its internal standardized governance, and (3) promoting professionalservices among employees and innovating in merchandises and the business model.
2. Drug safety risks
Drug safety encompasses all stages of drug production, sales, distribution, and use, with potentialrisks arising at any stage. The procurement of drugs from numerous manufacturers and wholesalerspresents a risk if the Company fails to promptly detect quality or safety issues. This could result inliabilities and adversely affect the Company's brand reputation.Response measures include continuously enhancing and strictly enforcing the Company's inventorymanagement systems and strengthening GSP quality management standards. Through proactive testingand other measures, the Company intensifies the quality assessment and management of suppliers,particularly for newly introduced products. The Company's quality management department consistentlybolsters training, coaching, inspection, and evaluation of store employees.
3. Risk of more intense market competition
China’s pharmaceutical retail industry is characterized by a low market concentration, and theindustry is highly competitive. In particular, in recent years, large-scale pharmacy chains in the industryhave expanded their marketing network to other regions through organic expansion and M&A. Theindustry has seen higher market concentration, and the competition among retail pharmacies has becomefiercer. Some large national and regional chains are emerging. They are growing rapidly on the back oftheir advantages in capital, brand, and supply chain management. At the same time, with the continuousdevelopment of primary-level healthcare institutions, consumer groups that shop most on the Internetand mobile terminals are gradually coming into being. Competition among retailers is becomingincreasingly fierce. Through the years, the Company has accumulated numerous consumers, marketingchannels, and upstream suppliers, gained high brand visibility and reputation, and achieved a leadingedge in the markets of Central South, East, and North China. However, with market changes andintensified competition, it is a new challenge for the Company to further expand its market share andprofitability in its dominant regions.
Responses: First, the Company will continue to strengthen its advantage: refined, systematic anddigital management. Secondly, the Company will accelerate the expansion of its store network andfocused development through “new openings + M&A + franchising”. At the same time, the Companywill embrace market changes and innovate its business model. It will seek development both online andoffline through the trials and promotion of the online-offline-integrated new retail model. It will pilotinitiatives such as developing the new business format of health pharmacy through health managementservices and business extension, so as to continuously improve the Company’s overall competitivestrength and maintain and expand its regional competitive advantages.
4. Risk of rapid expansion affecting short-term performance
The Company’s business is still concentrated in Central South, East, and North China. It may facethe risks of saturated markets and intensified competition in the proposed expansion regions. In
proposed expansion regions that are unsaturated, it may face the risk of declining average store salesrevenue as the regions are remote or have a small market or a poor business environment. In the future,the Company intends to implement the development strategy of “expanding across the country.” Inexpanding its business beyond Central South, East, and North China, it may face challenges in brandpromotion, marketing, store location, merchandise procurement, logistics, and distribution. There isuncertainty as to whether the above business expansion can achieve the expected results. Moreover, inthe early stage of investment, the Company’s expenses in this regard may grow faster than revenue,which may have a negative impact on the Company’s short-term financial performance.Responses: Firstly, the Company will consolidate its basic capabilities to continue to improve itssystematic, standardized, intelligent, and refined management system and to enhance its control andreplication ability in cross-regional operations. Secondly, the Company will continue to improve storeprofitability by optimizing the merchandise structure, reducing procurement costs, and innovating in thebusiness model. At the same time, the Company will develop appropriate business expansion plansbased on the scale of development to balance business expansion and current earnings growth.
5. Risk of acquired stores’ business failing expectations
Against the general trend of M&A in the industry, the Company has developed the expansionstrategy of “new openings + M&A + franchising”. The Company’s previous M&A projects have allachieved performance expectations. Nevertheless, the profitability of M&A projects is affected bymultiple factors such as the policy environment, market demand, and operations. In the event ofsignificant adverse changes in policies, changes in the purchasing habits of consumers, or major adverseevents that cannot be resisted in the future, the acquired stores’ business may fail expectations, resultinga risk of goodwill impairment, which will adversely affect the Company’s performance and cause lossesto all shareholders.
Responses: First, the Company will strengthen the audit and assessment of the M&A targets, andstrictly select M&A targets that present excellent qualifications and complement with the Company inthe market. Secondly, the Company will establish a professional M&A integration team to standardizeand streamline M&A integration and operational management in later stages. In this way, it willseamlessly integrate the M&A target with the Company’s team culture, management system, and supplychain system, and ensure the continuous improvement of the operating performance of the acquiredstores.
6. Risk of dilution of human resources as a result of the Company’s rapid development
A professional management team is one of the core elements of the Company’s sustainable, healthy,and efficient operation. In the course of rapid development, if the Company fails to meet the needs of itsfuture rapid development in talent introduction and personnel training, or if there are failures in talentappointment, pooling, or management leading to a loss of talent, it will adversely affect the Company’sfuture expansion and business operations.
Responses: The Company will intensify its efforts in recruitment, talent pooling, and personneltraining. It will co-host the Yifeng Pharmacy Class with universities and colleges to meet the demand for
frontline professional workers at stores. It will launch the Management Trainee program to meet thedemand for middle and senior managers for the rapid development of the Company. It will improve itsemployee career development channels and equity incentive mechanism to retain and attract experts. Itwill improve the training system and nurture professionals and people with compound capabilities inpharmacy, marketing, information, logistics, and management to meet the demand for human resourcesfor the Company’s rapid development.
(V). Others"□ Applicable" "√ Not applicable"
VII. Information not disclosed by the Company as per the guidelines due to non-applicability of
the guidelines or for special reasons such as state secrets or trade secrets and the reasonsthereof"□ Applicable" "√ Not applicable"
Section IV. Corporate GovernanceI. Overview of corporate governance"√ Applicable" "□ Not applicable"
During the Reporting Period, the Company regulated its operations by continuously improving itscorporate governance structure and internal control system in strict accordance with the Company Law,the Securities Law, the Code of Corporate Governance of Listed Companies, the Rules Governing theListing of Stocks on Shanghai Stock Exchange, and other laws, regulations, and rules. The Company’sGeneral Meeting of Shareholders, Board of Directors, and Board of Supervisors operated againststandards, and its directors, supervisors, and senior management performed their duties diligently.
1. Shareholders and the General Meeting of Shareholders. During the Reporting Period, theCompany held 4 General Meetings of Shareholders, where voting was performed both on site and online.The General Meetings of Shareholders were convened and held in strict accordance with the Articles ofAssociation and the Rules of Procedure for General Meeting of Shareholders, ensuring all shareholders’legitimate rights and interests, in particular, to ensure that minority shareholders enjoy equal status andfully exercise their rights. The Company takes shareholders’ visits and inquiries seriously and providesthem convenient access to information about the Company’s operations.
2. Controlling shareholders and the listed Company. The Company and its controlling shareholdersmaintain independence in terms of personnel, assets, finance, institutions, and business. The Company’sBoard of Directors, Board of Supervisors, and internal control institutions operate independently. Thecontrolling shareholders observe rules and have not intervened directly or indirectly in the Company’sdecision-making or operating activities beyond the General Meeting of Shareholders.
3. Directors and the Board of Directors. The Company’s Board of Directors consists of 9 directors,including 3 independent directors. It comprises an Audit Committee, a Strategy and SustainableDevelopment Committee, a Remuneration and Appraisal Committee, and a Nomination Committee, allof whose members are directors. The Company’s Board of Directors strictly observes the Company Law,
the Articles of Association, and the Rules of Procedure of the Board of Directors. The directors attendthe meetings of the Board of Directors and the General Meetings of Shareholders attentively andresponsibly. They are familiar with relevant laws and regulations; understand directors’ rights,obligations, and responsibilities; and fulfill their duties, giving full play to the key role of directors in theCompany’s operations and management. During the Reporting Period, thirteen meetings of the Board ofDirectors were convened.
4. Supervisors and the Board of Supervisors. The Company’s Board of Supervisors consists of 3supervisors, one of whom is an employee representative supervisor. The Company’s Board ofSupervisors strictly observes the Company Law, the Articles of Association, and the Rules of Procedureof the Board of Supervisors. It conscientiously fulfills its duties, acts responsibly to the shareholders, andsupervises the Company’s day-to-day operations, the directors and senior management’s conduct, thelegal compliance of the Company’s finance. During the Reporting Period, ten meetings of the Board ofSupervisors were convened.
5. Performance appraisal and incentive and restraint mechanism. The Company has established aneffective performance appraisal system and improved it. The Company has also developed acompensation and performance appraisal management system and a fair and transparent incentive andrestraint mechanism for directors, supervisors, and senior management.
6. Information disclosure and investor relations management. The Company has developed anInformation Disclosure Management System and an Investor Relations Management System, and has setup the Securities and Investment Department pursuant to the Rules Governing the Listing of Stocks onShanghai Stock Exchange. It fulfills its information disclosure obligations in accordance with the lawand ensures that its disclosure is timely, accurate, and complete, thus practically safeguarding minorityshareholders’ interests. The Company continuously improves its investor relations management andenhances its communication with investors through various online and offline methods, such asconducting performance briefings, hosting visits to listed companies, receiving shareholder visits, andresponding to shareholder inquiries over the phone.
Presence of significant differences between corporate governance and the law, administrative regulations,and the CSRC’s regulations on the governance of listed companies; if yes, please specify the reason(s)"□ Applicable""√ Not applicable"
II. Specific measures taken by the Company’s controlling shareholder and actual controller to
ensure the independence of the Company’s assets, personnel, finances, institutions, and
business, as well as solutions for the impact on the Company’s independence, their progress,
and subsequent work plans"√ Applicable" "□ Not applicable"
The Company’s controlling shareholder, Ningbo Meishan Free Trade Port Area Houxin VentureCapital Partnership (Limited Partnership), and its actual controller, Gao Yi, fulfill their obligations instrict accordance with the Securities Law and other applicable laws and regulations and maintain theirindependence in terms of assets, personnel, finance, institutions, and business.
(I) Asset independence
The Company possesses a complete operational management system and logistics facilities for itsbusiness operations, legally owns or has the right to use assets related to its business operationsincluding land, properties, and equipment, and has independent merchandise procurement, distribution,and sales systems. The ownership of assets of the Company and its controlling shareholder, actualcontroller, and other related parties is clear. The Company has full control and dominance over all of itsassets. The Company does not have any funds or assets tied up by its shareholders, actual controller, andother companies under their control.
(II) Personnel independence
The Company’s directors, supervisors, and senior management are all elected or appointed in strictaccordance with the procedures set out in the Company Law and the Articles of Association of theCompany. The Company’s President, Vice President, Assistant President, Chief Financial Officer,Secretary of the Board of Directors, and other senior management are all working full-time at theCompany (including its subsidiaries) and receiving remuneration. None of them (1) holds positions otherthan director and supervisor at the Company’s controlling shareholder, actual controller, and othercompanies under their control; (2) receives remuneration from the Company’s controlling shareholder,actual controller, and other companies under their control; or (3) serves at other companies with thesame or similar business as the Company. The Company’s financial personnel do not hold any part-timejobs at the Company’s controlling shareholder, actual controller, and other companies under theircontrol.
The Company has an independent workforce and has established an independent labor relations,personnel, and wage management system. The Company has signed labor contracts with all employees.Its Human Resources Department is independently responsible for employees’ employment, assessment,rewards, and penalties. The Company is independent from its controlling shareholder, actual controller,and other companies under their control in employees’ social insurance and compensation, and managesthem in separate books.
(III) Financial independence
The Company has set up an independent Financial Department with full-time financial staff andestablished an independent financial accounting system. It makes financial decisions independently andhas a standardized financial accounting system and a financial management system for its subsidiaries.The Company pays taxes independently and opens independent bank accounts in accordance with thelaw, and does not mix taxes or share bank accounts with its controlling shareholder, actual controller,and other companies under their control. The Company has not provided guarantees for its controllingshareholder, actual controller, and other companies under their control, and has no funds tied up by itscontrolling shareholder, actual controller, and other companies under their control by way of borrowing,repayment of debts, advancement of funds, or otherwise.
(IV) Institutional independence
The Company has established a complete corporate governance structure comprising the GeneralMeeting of Shareholders, the Board of Directors, the Board of Supervisors, and the management. The
Company has established independent and complete internal management institutions in line with itsstatus and needs in operations and development. It has defined the functions of each institution anddeveloped respective internal management and control systems. These institutions exercise their powersand functions independently in accordance with the Articles of Association and the internal managementsystem. There is no superior-subordinate relationship between them and the Company’s controllingshareholder, actual controller, and other companies under their control and their functional departments,nor is there any institutional confusion or co-location.
(V) Business independenceThe Company has an independent and complete business system, with every segment, includingprocurement, logistics, distribution, and sales, independent from its controlling shareholders, actualcontrollers, and other companies under their control. There is no horizontal competition and unfairconnected transactions.
The Company’s controlling shareholder, actual controller, and other entities under their control engagingin the same or similar business as the Company, as well as the impact of horizontal competition orsignificant changes in such competition on the Company, resolutions taken and their progress, andsubsequent resolving plans"□ Applicable" "√ Not applicable"
III. Overview of the General Meeting of Shareholders
| Session | Date of convening | Query Index on the Designated Publishing Website of the Resolution | Disclosure Date of Resolution Publishing | Resolution of the Meeting |
| 1st Extraordinary General Meeting of Shareholders in 2023 | 2023-3-13 | Notice on the Resolution of the 1st Extraordinary General Meeting of Shareholders in 2023 of Yifeng Pharmacy (2023-012) on the website of the Shanghai Stock Exchange | 2023-3-14 | Details to be found in “Details of the General Meeting of Shareholders” |
| Annual General Meeting of Shareholders for 2022 | 2023-5-18 | Notice on the Resolution of the Annual General Meeting of Shareholders for 2022 of Yifeng Pharmacy (2023-042) on the website of the Shanghai Stock Exchange | 2023-5-19 | Details to be found in “Details of the General Meeting of Shareholders” |
| 2nd Extraordinary General Meeting of Shareholders in 2023 | 2023-7-17 | Notice on the Resolution of the 2nd Extraordinary General Meeting of Shareholders in 2023 of Yifeng Pharmacy (2023-057) on the website of the Shanghai Stock Exchange | 2023-7-18 | Details to be found in “Details of the General Meeting of Shareholders” |
| 3rd Extraordinary General Meeting of Shareholders in 2023 | 2023-9-12 | Notice on the Resolution of the 3rd Extraordinary General Meeting of Shareholders in 2023 of Yifeng Pharmacy (2023-081) on the website of the Shanghai Stock Exchange | 2023-9-13 | Details to be found in “Details of the General Meeting of Shareholders” |
Extraordinary General Meeting of Shareholders requested by preferred shareholders whose voting rightshave been restored"□ Applicable" "√ Not applicable"
Details of the General Meeting of Shareholders"√ Applicable" "□ Not applicable"
1. The Company held the 1st Extraordinary General Meeting of Shareholders in 2023 on March 13,2023. The meeting was attended by 30 shareholders and proxies, who held a total of 495,461,732 votingshares, accounting for 68.6515% of the total number of valid voting shares. At the meeting, 3 proposalswere passed: (1) Proposal on the Feasibility Report on Issuing Convertible Corporate Bonds toUnspecified Recipients, (2) Proposal to Request the General Meeting of Shareholders to Authorize theBoard of Directors to Handle Specific Matters Related to the Issuance of Convertible Corporate Bondsto Unspecified Recipients, and (3) Proposal on Changing the Business Scope and Amending the Articlesof Association. Details can be found in the Notice on the Resolution of the 1
stExtraordinary GeneralMeeting of Shareholders in 2023 (2023-012) disclosed at the Shanghai Stock Exchange on March 14,2023.
2. The Company held the Annual General Meeting of Shareholders for 2021 on May 18, 2023. Themeeting was attended by 36 shareholders and proxies, who held a total of 487,281,753 voting shares,accounting for 67.5181% of the total number of valid voting shares. At the meeting, 11 proposals weredeliberated and passed: (1) the Proposal on the Report of the Board of Directors for Year 2022, (2) theProposal on the Report of the Board of Supervisors for Year 2022, (3) the Proposal on the AnnualReport for Year 2022 and Its Summary, (4) the Proposal on the Report on the Financial Accounts forYear 2022, (5) the Proposal on the Special Report on the UoP from the Company’s PreviousFund-Raising (as of December 31, 2022), (6) the Proposal on Profit Distribution and Capital ReserveCapitalization Plans, (7) the Proposal on Renewing the Current Accounting Firm for Year 2023, (8) theProposal on Renewing the Current Accounting Firm for Year 2022, (9) the Proposal on ProvidingGuarantees for Subsidiaries’ Application for Bank Credits, (10) the Proposal on Revising the Articles ofAssociation, and (11) the Proposal on the Assurance Report on the Company’s Weighted AverageReturns on Net Assets and Non-recurring Profits and Losses in the Last Three Years,. Details can befound in the Notice on the Resolution of the Annual General Meeting of Shareholders for 2022(2023-042) disclosed at the Shanghai Stock Exchange on May 19, 2023.
3. The Company held the 2
nd
Extraordinary General Meeting of Shareholders in 2023 on July 17,2023. The meeting was attended by 30 shareholders and proxies, who held a total of 690,087,865 votingshares, accounting for 68.2993% of the total number of valid voting shares. At the meeting, 1 proposalwas passed: the Proposal on Amending the Articles of Association and Changing the BusinessRegistration. Details can be found in the Notice on the Resolution of the 2
ndExtraordinary GeneralMeeting of Shareholders in 2023 (2023-057) disclosed at the Shanghai Stock Exchange on July 18,2023.
4. The Company held the 3rd Extraordinary General Meeting of Shareholders in 2023 onSeptember 12, 2023. The meeting was attended by 20 shareholders and proxies, who held a total of
683,198,743 voting shares, accounting for 67.6245% of the total number of valid voting shares. At themeeting, 4 proposals were passed: (1) Proposal on Extending the Validity Period of the Plan to IssueConvertible Corporate Bonds to Unspecified Recipients, (2) Proposal to Request the General Meeting ofShareholders to Extend the Authorization for the Board of Directors to Handle Matters Related to theIssuance of Convertible Corporate Bonds to Unspecified Recipients, (3) Proposal on the Special Reporton the UoP from the Company's Previous Fund-Raising (as of June 30, 2023), and (4) Proposal onProviding Guarantee for Subsidiary's Bank Credit Applications. Details can be found in the Notice onthe Resolution of the 3
rdExtraordinary General Meeting of Shareholders in 2023 (2023-081) disclosed atthe Shanghai Stock Exchange on September 13, 2023.
IV. Details of directors, supervisors, and senior management(I). Changes in shareholdings and remuneration of incumbent and outgoing directors, supervisors, and senior management during the Reporting Period"√ Applicable" "□ Not applicable"
Unit: Share
| Name | Position | Gender | Age | Starting Date of Office | Term end date | Number of Shares Held at the Beginning of the Year | Number of Shares Held at the End of the Year | Increase/decrease in Shares During the Year | Reason for the Increase/decrease | Total Pre-tax Remuneration Received from the Company During the Reporting Period (CN? 10,000) | Whether remuneration was obtained from the affiliates of the Company |
| Gao Yi | Chairman and President | Male | 56 | 2021-3-29 | 84,215,040 | 117,901,056 | 33,686,016 | Profit distribution and conversion of capital reserve into equity capital | 287.00 | No | |
| Gao Feng | Director | Male | 53 | 2021-3-29 | 0 | 0 | 0 | 140.00 | No | ||
| Gao Youcheng | Director and Executive President | Male | 56 | 2021-3-29 | 120,000 | 168,000 | 48,000 | Profit distribution and conversion of capital reserve into equity capital | 252.99 | No | |
| Xu Xin | Director | Female | 57 | 2021-3-29 | 0 | 0 | 0 | 0 | No | ||
| Chai Mingang | Director | Male | 55 | 2021-3-29 | 0 | 0 | 0 | 20.00 | No | ||
| Ye Weitao | Director | Male | 51 | 2021-3-29 | 0 | 0 | 0 | 20.00 | No |
| Yan Aimin | Independent Director | Male | 61 | 2021-3-29 | 0 | 0 | 0 | 12.00 | No | ||
| Wang Hongxia | Independent Director | Female | 45 | 2021-3-29 | 0 | 0 | 0 | 12.00 | No | ||
| Yi Languang | Independent Director | Male | 48 | 2021-3-29 | 0 | 0 | 0 | 12.00 | No | ||
| Chen Bin | Chairman of the Board of Supervisors | Male | 58 | 2021-3-29 | 0 | 0 | 0 | 0 | No | ||
| Liu Yi | Supervisor | Male | 51 | 2021-3-29 | 0 | 0 | 0 | 10.00 | No | ||
| Zhang Enbo | Employee Representative Supervisor | Male | 29 | 2021-3-29 | 1,430 | 2,002 | 572 | Profit distribution and conversion of capital reserve into equity capital | 38.44 | No | |
| Wang Fei | Vice President | Male | 39 | 2021-3-29 | 252,900 | 354,060 | 101,160 | Profit distribution and conversion of capital reserve into equity capital | 182.65 | No | |
| Wan Xuemei | Vice President | Female | 51 | 2023-4-26 | 30,000 | 94,850 | 64,850 | Increase in holdings on the secondary market; profit distribution and conversion of capital reserve into equity capital; share incentive grant | 135.97 | No | |
| Zhang | Vice | Male | 43 | 2022-7-2 | 100,000 | 140,000 | 40,000 | Profit | 156.11 | No |
| Jia | President | 1 | distribution and conversion of capital reserve into equity capital | ||||||||
| Wang Yonghui | Vice President | Male | 49 | 2021-3-29 | 358,000 | 501,200 | 143,200 | Profit distribution and conversion of capital reserve into equity capital | 216.62 | No | |
| Zhang Zhaoxu | Vice President | Male | 51 | 2023-3-30 | 0 | 67,500 | 67,500 | Share Incentive Grant | 186.96 | No | |
| Tian Wei | Vice President (off-office) | Male | 42 | 2021-3-29 | 2024-1-29 | 93,490 | 98,286 | 4,796 | Share reduction, profit distribution and conversion of capital reserve into equity capital | 179.16 | No |
| Xiao Zaixiang | Vice President | Male | 67 | 2021-3-29 | 172,750 | 212,300 | 39,550 | Share reduction, profit distribution and conversion of capital reserve into equity capital | 122.07 | No | |
| Yan Jun | Associate President | Male | 42 | 2023-5-18 | 72,000 | 83,000 | 11,000 | Profit distribution and conversion of capital reserve into equity capital; equity incentive grant | 118.30 | No | |
| Hu | Associate | Femal | 43 | 2024-1-2 | - | - | - | - | No |
| Jianxia | President | e | 9 | ||||||||
| Fan Wei | Secretary of the Board of Directors | Male | 43 | 2021-3-29 | 30,000 | 42,000 | 12,000 | Profit distribution and conversion of capital reserve into equity capital | 83.71 | No | |
| Deng Jianqin | Chief Financial Officer | Female | 44 | 2021-3-29 | 85,540 | 119,756 | 34,216 | Profit distribution and conversion of capital reserve into equity capital | 102.04 | No | |
| Total | / | / | / | / | / | 85,531,150 | 119,784,010 | 34,252,860 | / | 2,288.02 | / |
Note: The total pre-tax remuneration received from the Company during the reporting period is the total remuneration received by directors, supervisors, and seniormanagement in their office during the Reporting Period.
| Name | Career Autobiography |
| Gao Yi | Mr. Gao Yi, born in October 1968, is of Chinese nationality and has no permanent residency overseas. He holds a master’s degree in Business Administration. He is a deputy to the 14th People’s Congress of Hunan Province and the founder of Yifeng Pharmacy, and currently serves as Chairman and President of the Company. He previously served as Chairman of the Company’s first, second, and third Boards of Directors. He has been recognized as a Meritorious Figure of China’s 40-Year Reform and Opening Up of the Pharmaceutical Industry, the Most Influential Person in China’s Pharmacies in the Past Decade, one of China’s Top 10 Leaders in Chain Pharmacies, one of the 9th Hunan’s Top 10 Economic Achievers, and one of the 10 Most Trusted Entrepreneurs in Hunan’s Pharmaceutical Industry. |
| Gao Feng | Mr. Gao Feng, born in September 1971, is of Chinese nationality and has no permanent residency overseas. He holds a college degree and the title of pharmacist. He previously served as Director of the Company’s first, second, and third Boards of Directors. He currently serves as General Manager of Hunan Fenggao Industrial Investment Co., Ltd., Hunan Yifeng Pharmaceutical Holding Co., Ltd., and Director of the Company. |
| Gao Youcheng | Mr. Gao Youcheng, born in February 1968, is of Chinese nationality and has no permanent residency overseas. He holds a master’s degree in Business Administration. He previously served as Manager, Deputy Secretary of the company’s CPC Committee, and Executive Deputy General Manager of the Shanghai branch of Changde Native Products Corporation; Manager of Food Procurement at the headquarters and Deputy General Manager of the Shopping Plaza of Better Life Commercial Chain Share Co., Ltd. He previously served as Director of the Company’s first, second, and third Boards of Directors. He currently serves as Director and Executive President of the Company. |
| Xu Xin | Ms. Xu Xin, born in January 1967, is a permanent resident of the Hong Kong SAR, China. She holds a bachelor’s degree. She currently serves as |
| Director of Capital Today Group (HK) Limited, Capital Today River Partners Limited, Capital Today River GenPar, Ltd., and the Company. | |
| Chai Mingang | Mr. Chai Mingang, born in February 1969, is a Chinese national with the right of abode abroad. He holds a bachelor’s Degree in Economics from Fudan University, a master’s degree in International Relations from the University of California, and a master’s degree in Business Administration from the University of Chicago. He previously served as Global Partner and Head of Human Resource Consulting, China, at Towers Perrin; Head of Human Resource Consulting, China, at Towers Watson; and Executive Vice President of Yonghui Superstores. He currently serves as Partner and President of Shanghai Kaijie Enterprise Management Consulting Co., Ltd. and Director of the Company. |
| Ye Weitao | Mr. Ye Weitao, born in January 1973, is a Chinese national with no permanent residency overseas. He graduated from the Pharmaceutical Chemistry Program of Shanghai Medical University and received his EMBA from China Europe International Business School. He previously served as sales manager at the OTC Department and national government affairs manager at Bayer (China) Co., Ltd.; national government affairs manager at Aventis; Director of Government Affairs, Assistant to the President, and Vice President of Marketing of the Antibiotics Division of Shanghai Pharmaceuticals Holding; and Partner of Shanghai Jianxin Healthcare Investment Management Co., Ltd. He currently serves as Vice President of Shanghai Lansheng Resources Co., Ltd., Managing Partner of Shanghai Lize Investment Management Co., Ltd., and Director of the Company. |
| Yan Aimin | Mr. Yan Aimin, born in January 1963, is of Chinese nationality and has no permanent residency overseas. He holds a doctorate degree in Management. He is a professor and doctoral advisor at the Business School of Central South University and Director/Chief Expert of the Human Resources Research Center (National CTTI Think Tank) of Central South University. He previously served as lecturer at the Department of Management Science and Engineering of Central South University of Industry, associate professor at the Business School of Central South University, Independent Director of Hunan Qianjin Pharmaceutical Co., Ltd., and External Director of Hunan Gold Corporation Limited. He currently serves as Level-2 professor and doctoral advisor at the Business School of Central South University, Director/Chief Expert of the Human Resources Research Center (National CTTI Think Tank) of Central South University; Chairman of National Studies Public Welfare Fund, Independent Director of Hunan Matsui New Materials Co., Ltd., Shanghai Hajime Advanced Material Technology Co., Ltd., and Guizhou Ensure Pharmaceutical Co., Ltd.; and Independent Director of the Company. |
| Wang Hongxia | Ms. Wang Hongxia, born in July 1979, is of Chinese nationality and has no permanent residency overseas. She has a doctor's degree and holds the title of lawyer. She currently serves as associate professor and doctoral advisor at Central South University; Independent Director of Zhuzhou Sunte EP & Energy Saving Co., Ltd., Shaoyang Victor Hydraulics Co., Ltd., and Hunan Guangxin Technology Co., Ltd.; and Independent Director of the Company. |
| Yi Languang | Mr. Yi Languang, born in December 1976, is of Chinese nationality and has no permanent residency overseas. He holds a doctorate degree in Management Science and Engineering and the title of senior accountant. He previously served as Financial Director of a subsidiary of SANY Heavy Industry Co., Ltd., Deputy General Manager and Chief Financial Officer of Sinopharm Group Hunan Co., Ltd., and the Head of the Financial Management Headquarters of Jointown Pharmaceutical Group Co., Ltd. He currently serves as Executive Director and General Manager of Hunan Zehua Private Equity Fund Management Co., Ltd. and Independent Director of the Company. |
| Chen Bin | Mr. Chen Bin, born in September 1966, is of Chinese nationality and has no permanent residency overseas. He holds a college degree and the title of pharmacist. He previously served as Director of Western Medicine Operations Department, Head of the Western Medicine Business Unit, and Manager of Shimen County Herb Company in Hunan Province; and Development Director of the Company. He currently serves as Chairman of the Company’s Board of Supervisors. |
| Liu Yi | Mr. Liu Yi, born in October 1973, is of Chinese nationality and has no permanent residency overseas. He holds a doctorate degree in Economics. He currently serves as professor and master’s supervisor at the School of Finance and Statistics of Hunan University, Director of the Big Data Finance Research Center of Hunan University, and Supervisor of the Company. |
| Zhang Enbo | Mr. Zhang Enbo, born in October 1995, is of Chinese nationality and has no permanent residency overseas. He holds a bachelor’s degree. She became a member of the company in July 2017 and currently serve as Deputy Director of Strategic Implementation Management Office and Employee Representative Supervisor. |
| Wang Fei | Mr. Wang Fei, born in August 1985, is of Chinese nationality and has no permanent residency overseas. He holds a bachelor’s degree. He previously served as regional manager and senior regional manager of Procter & Gamble (China) Sales Co., Ltd. and assistant to the Chairman of the Company. He currently serves as Vice President of the Company. |
| Wan Xuemei | Ms. Wan Xuemei, born in December 1973, is of Chinese nationality and has no permanent residency overseas. She holds a bachelor’s degree. She previously served as Head of Quality Management Department and Commodity Department, and Deputy General Manager of Operations of Jiangsu Yifeng Pharmacy Chain Co., Ltd., and General Manager of Jiangsu Yifeng Pharmaceutical Co., Ltd. He currently serves as Vice President of the Company. |
| Zhang Jia | Mr. Zhang Jia, born in November 1981, is of Chinese nationality and has no permanent residency overseas. He received his bachelor’s degree in Electrical Engineering from Wuhan University and his master’s degree in International Marketing from the University of Leeds in the U.K. He previously served as price manager of Walmart China’s Purchasing Department, Director of the Purchasing Department and Head of Skincare Purchasing of Watsons China, CMO of You Sheng Pin Jian (Nanjing) Co., Ltd., and Vice President of Supply Chain of Guangzhou Dora Technology Co., Ltd. (Fordeal). He currently serves as Vice President of the Company. |
| Wang Yonghui | Mr. Wang Yonghui, born in November 1975, is of Chinese nationality and has no permanent residency overseas. He holds a master’s degree in Management Science and Engineering and is a Chartered Global Management Accountant (CGMA). He previously served as internal auditor at the Bank of Guangzhou, Financial Director of ABB (China) Co., Ltd., Financial Manager of ABB Xiamen Low Voltage Equipment Co., Ltd., Financial Director of ABB LV Installation Materials Co., Ltd. Beijing, CFO of Beijing Leader Harvest Electric Technologies Co., Ltd., and Vice President of Finance and Commerce of Joy Global (China) Investment Co., Ltd. He currently serves as Vice President of the Company. |
| Zhang Zhaoxu | Mr. Zhang Zhaoxu, born in August 1973, is of Chinese nationality and has no permanent residency overseas. He holds a master’s degree in Management. He previously served as Director of Human Resources of Consumer Health Products Business in China at GSK CI, General Manager of Human Resources of Urban Development Business Group of China Fortune Land Development Co.,Ltd., Vice President of Human Resources of Inner Mongolia Mengniu Dairy (Group) Co., Ltd., and General Manager of Ruilei Hospital Management (Beijing) Co., Ltd. He currently serves as Vice President of the Company. |
| Xiao Zaixiang | Mr. Xiao Zaixiang, born in January 1957, is of Chinese nationality and has no permanent residency overseas. He holds a master’s degree and is a senior engineer. He previously served as Director of the Security Division, Deputy Director of the Construction Department, Director of the Property Management Department, Director of the Administrative Business Department, and Vice Chairman of the Labor Union of the Changsha Municipal Bureau of Telecommunications; General Manager of Changsha Xinda Real Estate Development Co., Ltd.; Deputy Director of the Security Division of the Hunan Provincial Post Bureau; Deputy General Manager of Hunan Xiangyou Jindun Anti Theft Alarm Network Monitoring Co., Ltd.; and President of Hunan Copote Science Technology Co., Ltd. He currently serves as Vice President of the Company. |
| Yan Jun | Mr. Yan Jun, born in April 1982, is of Chinese nationality and has no permanent residency overseas. He holds a bachelor’s degree in Computer |
| Software. He previously served as a software development engineer of Augmentum, R&D Supervisor of Shanda Network, Supervisor of Quality Control of Dianping.com, partner of Wuxi Otaku Game, Manager of Front-end Product, Manager of E-commerce Business, and Director of Member Center of Kidswant Children Products Co., Ltd., as well as Director of Operation Center and Director of R&D Center of Haoxiangjia Comfortable Intelligent Household Co., Ltd. He currently serves as General Manager of New Retail Business Group, Head of Digital Center, and Associate President of the Company. | |
| Hu Jianxia | Ms. Hu Jianxia, born in December 1981, is of Chinese nationality, and has no permanent residency overseas. She holds a Bachelor's degree in Pharmacy at Southwest University and is a pharmacist-in-charge. She previously served as Store Manager, Regional Manager, Department Manager, Deputy General Manager of Operations, and Director of National Operations of the Company. She currently serves as Associate President, and Head of Operations of National Regions of the Company. |
| Fan Wei | Mr. Fan Wei, born in July 1981, is of Chinese nationality and has no permanent residency overseas. He holds a master’s degree. He previously served as investor relations manager of ZTE Corporation, Director of the Investor Relations Office of Zoomlion Heavy Industry Science & Technology Co., Ltd., machinery industry analyst of Zhongtai Securities Co., Ltd., and Deputy Director of Investor Relations of S.F. Holding Co., Ltd. He currently serves as Secretary of the Board of Directors of the Company. |
| Deng Jianqin | Ms. Deng Jianqin, born in September 1980, is of Chinese nationality and has no permanent residency overseas. She holds a master’s degree. She previously served as consultant, senior consultant, and manager at PricewaterhouseCoopers’ Beijing office; Head of Internal Control, China, at Laureate Education, Inc.; Director of Internal Control and Chairwoman of the Board of Supervisors of Hunan International Economics University, which is indirectly controlled by Laureate Education, Inc. She currently serves as CFO of the Company. |
Other details"□ Applicable""√ Not applicable"
(II). Office of incumbent and outgoing directors, supervisors, and senior management during theReporting Period
1. Situation of work performance in shareholder entity
"□ Applicable""√ Not applicable"
2. Situation of work performance in other entities
"√ Applicable" "□ Not applicable"
| Name | Entity | Position held in other entities | Starting Date of Office | Term end date |
| Gao Yi | Hunan Fenggao Industrial Investment Co., Ltd. | Executive Director | 2016-9-17 | |
| Gao Feng | Hunan Fenggao Industrial Investment Co., Ltd. | General Manager | 2016-9-17 | |
| Hunan Yaqi Hotel Management Co., Ltd. | General Manager | 2021-6-24 | ||
| Xu Xin | Capital Today Group (HK) Limited | Director | 2022-12 | |
| Capital Today China Growth Management, LTD. | Director | 2005-11 | ||
| Capital Today Partners Limited | Director | 2005-05 | ||
| Capital Today China Growth GenPar, LTD. | Director | 2005-11 | 2024-02 | |
| Capital Today China Growth Management II limited | Director | 2020-01 | ||
| CTG GENPAR II, LTD. | Director | 2009-12 | ||
| CTG Evergreen Management Limited | Director | 2020-01 | ||
| Capital Today Evergreen Genpar, Ltd. | Director | 2014-10 | ||
| Capital Today River Management Limited | Director | 2018-10 | ||
| Capital Today River Partner Limited | Director | 2018-10 | ||
| Capital Today River GenPar, Ltd. | Director | 2018-09 | ||
| WeEat Inc | Director | 2019-02 | ||
| Xingsheng Preference Electronic Business Limited | Director | 2018-11 | ||
| Double FS Inc. | Director | 2020-07 | ||
| XYZ ROBOTICS GLOBAL INC. | Director | 2021-07 | ||
| InterFocus Cayman Ltd. | Director | 2021-04 | ||
| Yi Pin Sheng Xian (Cayman) Limited | Director | 2021-09 | ||
| Shanghai Gaussian Automation Technology Development Co., Ltd. | Director | 2021-07 | ||
| Dongguan Hairou Intelligent Technology Limited | Director | 2021-08 | ||
| Shanghai Dr.Cheese Brand Management Co., Ltd. | Director | 2022-01 | ||
| Shanghai Wanxiangheyi Cosmetics Co., Ltd. | Director | 2022-02 | ||
| Nanjing University | Honorary Trustee of the Board of Trustees | 2010 | ||
| China Venture Capital and Private | Director | 2006 |
| Equity Association | ||||
| Chai Mingang | Shanghai Kaijie Enterprise Management Consulting Co., Ltd. | President | 2018-11-01 | |
| Glodon Company Limited | Independent Director | 2020-4-22 | ||
| Ye Weitao | Shanghai Lize Investment Management Co., Ltd. | Executive Director | 2015-05-19 | |
| Shanghai Lansheng Resources Co., Ltd. | Vice President | 2016-10-01 | ||
| Shanghai Shenyue Medical Instrument Co., Ltd. | Supervisor | 2016-11-01 | ||
| Shanghai Jianxin Healthcare Investment Management Co., Ltd. | Director | 2020-08-25 | ||
| Beijing Lidakang Technology Co., Ltd. | Director | 2020-10-27 | ||
| Shaanxi Kanghui Pharmaceutical Co., Ltd. | Independent Director | 2021-04-16 | ||
| Minova Pharmaceuticals Co., Ltd. | Director | 2022-09-29 | ||
| Kunshan Yiteng Medical Technology Co., Ltd. | Director | 2023-03 | ||
| Suzhou Rongsheng Medical Technology Co., Ltd. | Director | 2023-04 | ||
| Shanghai Lize Investment Management Co., Ltd. | Executive Director | 2015-05-19 | ||
| Shanghai Lansheng Resources Co., Ltd. | Vice President | 2016-10-01 | ||
| Shanghai Shenyue Medical Instrument Co., Ltd. | Supervisor | 2016-11-01 | ||
| Yan Aimin | Central South University | Level-2 professor and doctoral advisor | 2008-09-01 | |
| Hunan Matsui New Materials Co., Ltd. | Independent Director | 2021-01-18 | ||
| Shanghai Hajime Advanced Material Technology Co., Ltd. | Independent Director | 2022-06-27 | ||
| Guizhou Ensure Pharmaceutical Co., Ltd. | Independent Director | 2021-12-17 | ||
| Hunan Siase Electrician Industry Co., Ltd. | Director | 2010-9-15 | ||
| Hunan Artec New Material Co., Ltd. | Director | 2018-9-18 | ||
| Wang Hongxia | Central South University | Associate professor | 2010-09-01 | |
| Hunan Guangxin Technology Co., Ltd. | Independent Director | 2020-08-04 | ||
| Yi Languang | Hunan Zehua Jingke Consulting Co., Ltd. | Executive Director and General Manager | 2017-04-01 | |
| Hunan Zehua Private Equity Fund Management Co., Ltd. | Executive Director and General Manager | 2017-04-01 | ||
| Zehua Smart Technology Co., Ltd. | Executive Director and | 2019-5-15 |
| General Manager | ||||
| Liu Yi | Hunan University | Professor | 2000-04-20 | |
| Notes on the office at other entities | None | |||
(III). Remuneration of directors, supervisors, and senior management"√ Applicable" "□ Not applicable"
| Decision-making process for the remuneration of directors, supervisors, and senior management | The Remuneration and Appraisal Committee of the Company’s Board of Directors is the management body to assess and determine the remuneration of directors, supervisors, and senior management. The remuneration packages for directors and supervisors formulated by the Remuneration and Appraisal Committee will be submitted to the General Meeting of Shareholders for approval after being approved by the Board of Directors. The remuneration packages for senior management will be submitted directly to the Company’s Board of Directors for approval. |
| Whether I should be evasive when the directors are discussing my remuneration at the board of directors | Yes |
| The detailed recommendations of Remuneration and Appraisal Committee or special meetings of independent directors on the remuneration of directors, supervisors, and senior management. | The remuneration/allowances of the Company's directors and supervisors, as well as the remuneration of senior management, will be deliberated and approved by the Company's Remuneration and Appraisal Committee. |
| Basis of the remuneration of directors, supervisors, and senior management | The remuneration/allowances of the Company's directors and supervisors will be approved by the shareholders' meeting: 1. Directors holding management positions in the Company will receive remuneration based on their management positions without receiving additional remuneration. The allowance standard for independent directors is CN? 120,000 each year (pre-tax) per person, while the compensation standard for other directors CN? 200,000 each year (pre-tax) per person; 2. Supervisors serving in the Company will have their remuneration standards determined based on their specific titles and positions held in the Company, and will no longer receive remuneration for their supervisory positions; other supervisors will receive a supervisor allowance of CN? 100,000 per person each year. The remuneration of senior management is deliberated and approved by the Company's board of directors: The senior management is based on an annual salary system, with the annual salary linked to their responsibilities, risks, and business performance. 1. The remuneration structure consists of basic annual salary and annual performance salary. 2. The annual basic salary is determined based on the grade, job responsibilities, and ability. It is proposed by the Remuneration and Appraisal Committee of the Board of Directors to the Company’s Board of Directors. 3. The annual performance salary is determined based on the results and grades of an assessment encompassing the annual salary standards, the Company’s performance fulfillment, and the job performance assessment. The assessment consists of composite indicators, including the fulfillment of the Company’s business objectives, |
| work safety, standardized operations, professional ethics, confidentiality provisions, and corporate culture construction. | |
| Actual payment of the remuneration of directors, supervisors, and senior management | Payment has been made as per relevant provisions and systems. |
| Total remuneration actually received by all directors, supervisors, and senior management as of the end of the Reporting Period | CN? 22,880,200 |
(IV). Changes in directors, supervisors and senior management officers of the Company"√ Applicable" "□ Not applicable"
| Name | Position | Change | Reason for Change |
| Zhang Zhaoxu | Vice President | Appointment | Newly appointed |
| Wan Xuemei | Vice President | Appointment | Newly appointed |
| Tian Wei | Vice President | Off-office | Resigned from the position of Vice President due to personal reasons. |
| Yan Jun | Associate President | Appointment | Newly appointed |
| Hu Jianxia | Associate President | Appointment | Newly appointed |
(V). Details of penalties imposed by securities regulators in the past three years"□ Applicable""√ Not applicable"
(VI). Others"□ Applicable" "√ Not applicable"
V. Meetings of the Board of Directors held during the Reporting Period
| Session | Date of convening | Resolution of the Meeting |
| 22nd meeting of the 4th Board of Directors | 2/23/2023 | Please refer to the Announcement of the 22nd Meeting of the 4th Board of Directors (2023-003) disclosed on February 24, 2023 for details |
| 23rd meeting of the 4th Board of Directors | 3/30/2023 | Please refer to the Announcement of the 23rd Meeting of the 4th Board of Directors disclosed on March 31, 2023 (2023-013) for details |
| 24th meeting of the 4th Board of Directors | 4/26/2023 | Please refer to the Announcement of the 24th Meeting of the 4th Board of Directors disclosed on April 28, 2023 (2023-020) for details |
| 25th meeting of the 4th Board of Directors | 2023-5-8 | Please refer to the Announcement of the 25th Meeting of the 4th Board of Directors (2023-037) disclosed on May 9, 2023 for details |
| 26th meeting of the 4th Board of Directors | 2023-5-18 | Please refer to the Announcement of the 26th Meeting of the 4th Board of Directors disclosed on May 19, 2023 (2023-044) for details |
| 27th meeting of the 4th Board of Directors | 2023-6-29 | Please refer to the Announcement of the 27th Meeting of the 4th Board of Directors disclosed on June 30, 2023 (2023-049) for details |
| 28th meeting of the 4th Board of Directors | 2023-7-13 | Please refer to the Announcement of the 28th Meeting of the 4th Board of Directors disclosed on July 15, 2023 (2023-056) for details |
| 29th meeting of the 4th Board of Directors | 2023-8-14 | Please refer to the Announcement of the 29th Meeting of the 4th Board of Directors disclosed on August 15, 2023 (2023-062) for details |
| 30th meeting of the 4th Board of Directors | 2023-8-27 | Please refer to the Announcement of the 30th Meeting of the 4th Board of Directors disclosed on August 28, 2023 (2023-067) for details |
| 31st meeting of the 4th Board of Directors | 2023-8-29 | Please refer to the Announcement of the 31st Meeting of the 4th Board of Directors (2023-071) disclosed on August 30, 2023 for details |
| 32nd meeting of the 4th Board of Directors | 2023-10-17 | Please refer to the Announcement of the 32nd Meeting of the 4th Board of Directors disclosed on October 18, 2023 (2023-087) for details |
| 33rd meeting of the 4th Board of Directors | 2023-10-30 | Please refer to the Announcement of the 33rd Meeting of the 4th Board of Directors disclosed on October 31, 2023 (2023-093) for details |
| 34th meeting of the 4th Board of Directors | 2023-11-9 | Please refer to the Announcement of the 34th Meeting of the 4th Board of Directors disclosed on November 10, 2023 (2023-100) for details |
VI. Performance of duties by directors(I). Attendance of directors to the Board of Directors and the General Meeting of Shareholders
| Director Name | Independent Director | Attendance at the Board of Directors | Attendance at the General Meeting of Shareholders | |||||
| Number of the Board of Directors Meetings Required to Attend During the Year | Session Attended in Person | Session Attended by Correspondence | Session Attended by Proxy | Absence Session | Not Attending in Person for Two Consecutive Sessions | Number of General Meetings of Shareholders Attended | ||
| Gao Yi | No | 13 | 13 | 6 | 0 | 0 | No | 4 |
| Gao Feng | No | 13 | 13 | 6 | 0 | 0 | No | 4 |
| Gao Youcheng | No | 13 | 13 | 6 | 0 | 0 | No | 4 |
| Xu Xin | No | 13 | 13 | 13 | 0 | 0 | No | 4 |
| Chai Mingang | No | 13 | 13 | 12 | 0 | 0 | No | 4 |
| Ye Weitao | No | 13 | 13 | 13 | 0 | 0 | No | 4 |
| Yan Aimin | No | 13 | 13 | 12 | 0 | 0 | No | 4 |
| Wang Hongxia | No | 13 | 13 | 12 | 0 | 0 | No | 4 |
| Yi Languang | No | 13 | 13 | 12 | 0 | 0 | No | 4 |
Explanation for Not Attending in Person for Two Consecutive Sessions"□ Applicable""√ Not applicable"
| Number of the Board of Directors meetings during the year | 13 |
| Among them, number of site meetings | 0 |
| Number of meetings via correspondence | 6 |
| Number of site meetings combined with correspondence | 7 |
(II). Directors’ dissent on the Company’s matters"□ Applicable""√ Not applicable"
(III). Others"□ Applicable" "√ Not applicable"
VII. Specialized committees under the Board of Directors"√ Applicable" "□ Not applicable"(I). Members of specialized committees under the Board of Directors
| Type of committee | Name of member |
| Audit Committee | Yi Languang, Wang Hongxia, and Chai Mingang |
| Nominating Committee | Wang Hongxia, Gao Yi, and Yi Languang |
| Remuneration and Appraisal Committee | Yan Aiming, Gao Yi, and Yi Languang |
| Strategy and Sustainable Development Committee | Gao Yi, Xu Xin, and Yan Aimin |
(II). Three meetings convened by the Audit Committee during the Reporting Period
| Date of convening | Conference content | Important comments and suggestions proposed | Other performance of duties |
| 2023-4-26 | Deliberation of the proposals related to the 2022 Annual Report and the 2023 Q1 Report, etc. | 1、 Opinions on deliberation of the 2022 Annual Report and the 2023 Q1 Report: The preparation and review procedures of the Company's 2022 Annual Report and the 2023 Q1 Report comply with relevant laws, regulations, articles of association, and company rules and regulations; the content and format of the report is consistent with the regulations of China Securities Regulatory Commission and Shanghai Stock Exchange, and the content of the report is authentic, accurate, and complete. 2、 Opinions on deliberation of the renewal of accounting firms: Pan-China Certified | / |
| Public Accountants (special general partnership) has been committed to independent auditing standards and fulfilled the responsibilities and obligations agreed upon by both parties in the process of auditing the financial reports and internal controls of the Company. Pan-China Certified Public Accountants (special general partnership) complies with the relevant regulations of China Securities Regulatory Commission in terms of securities business qualifications, and is able to independently, objectively, fairly, and timely complete various audit services agreed upon with the Company. | |||
| 2023-8-28 | Deliberation of the proposals related to the 2023 Semi-annual Report, etc. | The preparation and review procedures of the Company's 2023 Semi-annual Report comply with relevant laws, regulations, articles of association, and company rules and regulations; the content and format of the report is consistent with the regulations of China Securities Regulatory Commission and Shanghai Stock Exchange, and the content of the report is authentic, accurate, and complete. | / |
| 2023-10-30 | Deliberation of the proposals related to the 2023 Q3 Report, etc. | The preparation and review procedures of the Company's 2023 Q3 Report comply with relevant laws, regulations, articles of association, and company rules and regulations; the content and format of the report is consistent with the regulations of China Securities Regulatory Commission and Shanghai Stock Exchange, and the content of the report is authentic, accurate, and complete. | / |
| 2023-12-29 | Deliberation of the proposals related to the audit plan in the 2023 Annual Report | In-depth discussions were held on the 2023 audit plan and work priorities | / |
(III). Three meetings convened by the Nominating Committee during the Reporting Period
| Date of convening | Conference content | Important comments and suggestions proposed | Other performance of duties |
| 2023-3-30 | Deliberation of the proposal for appointing senior management | The personal resume, educational background, and work experience of the senior management personnel to be appointed, the corresponding knowledge level and management capability, qualification as a senior management personnel in the Company. | / |
| 2023-4-26 | Deliberation of the proposals of the Nominating Committee on the work report in 2022 and recruitment of senior management personnel | The personal resume, educational background, and work experience of the senior management personnel to be appointed, the corresponding knowledge level and management capability, qualification as a senior management | / |
| personnel in the Company. | |||
| 2023-5-18 | Deliberation of the proposal for appointing senior management | The personal resume, educational background, and work experience of the senior management personnel to be appointed, the corresponding knowledge level and management capability, qualification as a senior management personnel in the Company. | / |
(IV). The Remuneration and Appraisal Committee held a meeting during the Reporting Period
| Date of convening | Conference content | Important comments and suggestions proposed | Other performance of duties |
| 2023-4-26 | Deliberation of the proposals of Remuneration and Appraisal Committee on the work report in 2022 and remuneration of senior management for the Year 2022 | Opinions on deliberation of the remuneration of senior management for the year 2022: The remuneration of senior management for the year 2022 complies with the relevant remuneration policies and assessment standards of the Company, and is consistent with the actual conditions of the Company. | / |
(V). One meeting convened by the Strategy Committee during the Reporting Period
| Date of convening | Conference content | Important comments and suggestions proposed | Other performance of duties |
| 2023-4-26 | Proposal on Deliberating the Work Report of the Strategy Committee for 2022 | / | / |
(VI). Dissent on relevant matters"□ Applicable" "√ Not applicable"
VIII. Description of risks identified by the Board of Supervisors"□ Applicable""√ Not applicable"The Board of Supervisors had no objection to the supervision matters during the Reporting Period.
IX. The staff of the parent company and main subsidiaries at the end of the Reporting Period(I). Staff
| Number of on-the-job employees of the parent company | 9,920 |
| Number of on-the-job employees of the main subsidiaries | 29,732 |
| Total number of on-the-job employees | 39,652 |
| Number of retired employees for whom the parent company and main subsidiaries need to bear expenses | 1,670 |
| Specialty composition | |
| Category of specialties | Number of employees of specialties |
| Manufacturing personnel | 254 |
| Sales personnel | 33,751 |
| Technician | 340 |
| Financial personnel | 423 |
| Administrative personnel | 3,470 |
| Distribution personnel | 1,414 |
| Total | 39,652 |
| Educational level | |
| Educational level category | Number of employees |
| Doctorate degree | 2 |
| Master degree | 108 |
| Undergraduate | 5,524 |
| College degree | 17,693 |
| Technical secondary school | 10,315 |
| Others | 6,010 |
| Total | 39,652 |
(II). Remuneration policy"√ Applicable" "□ Not applicable"
The remuneration of the staff includes wages, bonuses, allowances, and five insurances & one fund(endowment insurance, government BMI, unemployment insurance, industrial injury insurance,maternity insurance and housing fund). The Company determines the total amount of remunerationbased on comprehensive factors such as development strategies, annual operation objectives, the ratio ofhuman resource cost to sales, the human resource market, as well as regional and industry salary levels.At the end of each year, the Human Resources Department and the Finance Department jointlyformulate the annual total remuneration plan for the next year based on the staffing and correspondingremuneration standards, as well as the KPI indicator. After preliminary review by the Director of HumanResources and the Chief Financial Officer, it is submitted for review to the Vice President andimplemented upon approval by the President.
(III). Training plan"√ Applicable" "□ Not applicable"
The Company focuses on building a talent team, fostering professional capabilities, and promotingcorporate culture. The Company also aims to build an outstanding team with a strong sense of mission,belonging, and competency. A comprehensive system for talent planning, assessment, training,mentoring, and talent career development has been put in place. By establishing a corporate universityand a layered training performance evaluation system, the Company ensures that all employees careabout and participate in training. Through ongoing improvement of training materials, credit-basedassessments, as well as combination of on-line and off-line training, the Company has comprehensivelyimplemented the training activities, thus effectively enhancing the skills and capabilities of allemployees and the soft power of the enterprise.
(IV). Labor outsourcing"□ Applicable""√ Not applicable"
X. The profit distribution plan or the capital reserve capitalization plan(I). Formulation, implementation, or adjustment of the cash dividend policy"√ Applicable" "□ Not applicable"
1. Formulation and adjustment of the cash dividend policy
During the Reporting Period, the cash dividend policy remained unchanged. Details regarding theprofit distribution policy can be found in the relevant provisions of the Articles of Association. Duringthe Reporting Period, the Company strictly implemented the profit distribution plan in accordance withthe dividend policy. To further plan the profit distribution and matters related to cash dividends, theCompany further refines the decision-making procedures and mechanisms for profit distribution in theArticles of Association. The aim is to reward shareholders and guide them to develop an awareness oflong-term and rational investment.
2. Execution of the cash dividend policy
During the Reporting Period, in accordance with the resolutions of the 2022 Annual GeneralMeeting of Shareholders held on May 18, 2023, the Articles of Association, and relevant regulationssuch as the Regulatory Guidelines for Listed Companies No. 3 - Cash Dividends of Listed Companiesissued by the CSRC, the Company implemented the profit distribution plan for 2022. The Companydistributed profits based on the total share capital registered on the registration date for implementationof the equity distribution in 2022. The Company distributed a cash dividend of CN?0.40 (tax included)to all shareholders per share. Additionally, the Company intends to distribute 0.40 shares per share heldby all shareholders via capital conversion, without offering bonus shares. A total of CN? 288,681,972.00in cash dividends were distributed, with 288,681,972 shares converted.
3. Profit distribution in 2023
The Proposal on Profit Distribution in 2023 was reviewed and approved at the 39
th
meeting of the
thBoard of Directors on April 26, 2024. The Company plans to distribute a cash dividend of CN? 0.50per share (tax included) to all shareholders, based on the total share capital as recorded on the equitydistribution date of 2023. Additionally, it will increase the share capital by 0.20 shares per share fromthe capital reserve, without issuing any bonus shares. Should there be any changes in the Company'stotal share capital between the date the Board approves this proposal and the equity distribution shareregistration date, due to events such as share repurchases and cancellations under the stock incentiveplan, the Company will maintain the unchanged per-share distribution (bonus issue) ratio andaccordingly adjust the total distribution (bonus issue) amount. The proposal complies with the relevantprovisions of the Articles of Association, with clear and unambiguous dividend standards andproportions. The proposal still requires approval at the 2023 Annual General Meeting of Shareholders.
In the process of formulating the 2023 profit distribution plan, the Company communicated withminority shareholders through means such as answering calls from investors, public email, and onlineplatforms. Minority shareholders had sufficient opportunities to express their opinions and demands, andtheir legitimate rights and interests are fully protected.
(II). Special explanation on cash dividend policy"√ Applicable" "□ Not applicable"
| Whether to comply with the provisions of the Articles of Association or the requirements of the general meeting’s resolutions | √Yes "□ No" |
| Whether the dividend criteria and ratio are clear and unambiguous | √Yes "□ No" |
| Whether the relevant decision-making procedures and mechanisms are complete | √Yes "□ No" |
| Whether the independent directors perform their duties and fulfill their due roles | √Yes "□ No" |
| Whether the minority shareholders have the opportunity to fully express their opinions and demands, and whether their legitimate rights and interests are adequately protected | √Yes "□ No" |
(III). If the Company is profitable during the Reporting Period and the parent company has
positive profit available for distribution to shareholders but no cash dividend distributionplan has been proposed, the Company shall disclose in detail the reasons as well as thepurpose and plan for the use of undistributed profits."□ Applicable""√ Not applicable"
(IV). Plan of profit distribution and conversion of capital reserves into share capital during the
Reporting Period"√ Applicable" "□ Not applicable"
Unit: CN? Currency: CNY
| Bonus shares distributed per 10 shares (share) | 0 |
| Dividends per 10 shares (CN?) (tax included) | 5.00 |
| Conversion amount per 10 shares (share) | 2.00 |
| Cash dividend amount (tax included) | 505,289,898.50 |
| Net profit attributable to ordinary shareholders of the listed Company in the consolidated financial statements for the year of distribution | 1,411,985,024.41 |
| Percentage of the net profit attributable to ordinary shareholders of the listed Company in the consolidated financial statements (%) | 35.79 |
| Amount of cash dividends for share repurchases in cash | 0 |
| Total dividend amount (tax included) | 505,289,898.50 |
| Percentage of the total dividend amount to the net profit attributable to ordinary shareholders of the listed Company in the consolidated financial statements (%) | 35.79 |
XI. Implementation and impact of the Company’s equity incentive plans, employee stock
ownership plans, or other employee incentive measures(I). The relevant incentive matters disclosed in interim announcements without further
developments or changes"√ Applicable" "□ Not applicable"
| Item description | Search index |
| On August 29, 2023, the Proposal on the Reservation Grant of Certain Equity to Restricted Stock Incentive Recipients in 2022 was reviewed and approved at the 31st meetings of the 4th Board of Directors and the 26th meetings of the 4th Board of Supervisors. After confirming that the conditions for the reservation grant under the incentive plan have been met, the Company granted a total of 402,165 restricted shares at a price of CN? 18.95 per share on August 30, 2023. Finally, 390,015 shares were granted to 39 incentive recipients, with a registration date of October 25, 2023. | For details, please refer to the Announcement on Granting Incentive Recipients Reserved Certain Equity under the Restricted Share Incentive Plan for 2022 (2023-075) )disclosed on August 30,2023 and the Announcement on the Results of Reservation Granting under the Restricted Share Incentive Plan for 2022 (2023-092) disclosed on October 27, 2023. |
| On October 17, 2023, the Proposal on the Accomplishment of the Conditions for the Release of Restricted Shares for the First Release Period of the First Grant under the | For details, please refer to the Announcement on the Accomplishment of the Conditions for the Release of |
| Restricted Share Incentive Plan for 2022 was reviewed and approved at the 32nd meeting of the 4th Board of Directors and the 27th meeting of the 4th Board of Supervisors. The Company agreed to unlock a portion of the restricted shares granted to 220 incentive recipients for the first time, involving 2,062,480 shares (including the annual equity distribution in 2022, with 4 shares distributed per 10 shares via capital conversion). | Restricted Shares for the First Release Period of the First Grant under the Restricted Share Incentive Plan for 2022 and Listing of Shares (2023-089) disclosed on October 18, 2023 |
(II). Incentives that have not been disclosed in interim announcements or have further
developmentsEquity incentive"□ Applicable""√ Not applicable"
Other explanations"□ Applicable" "√ Not applicable"
Employee stock ownership plan"□ Applicable" "√ Not applicable"
Other incentive measures"□ Applicable" "√ Not applicable"
(III). Equity incentives granted to directors and senior management during the Reporting Period"√ Applicable" "□ Not applicable"
Unit: Share
| Name | Position | Number of restricted shares held at the beginning of the year | Number of restricted shares newly granted during the Reporting Period | Grant price of restricted shares (CN?) | Locked shares | Unlocked shares | Number of restricted shares held at the end of the Reporting Period | Market price at the end of the Reporting Period (CN?) |
| Wan Xuemei | Vice President | 42,000 | 47,250 | 18.95 | 21,000 | 68,250 | 68,250 | 40.04 |
| Zhang Zhaoxu | Vice President | 0 | 67,500 | 18.95 | 0 | 67,500 | 67,500 | 40.04 |
| Yan Jun | Associate President | 56,000 | 27,000 | 18.95 | 28,000 | 55,000 | 55,000 | 40.04 |
| Total | / | 98,000 | 141,750 | / | 49,000 | 190,750 | 190,750 | / |
Note: The number of restricted shares held at the beginning of the year is the number after the profitdistribution of 0.4 shares per share via conversion.(IV). Evaluation mechanism for senior management during the Reporting Period, as well as the
establishment and implementation of incentive mechanisms"√ Applicable" "□ Not applicable"
The Company has established and continuously improved the evaluation mechanism for seniormanagement. The Company has formulated the Management System for the Compensation andPerformance Appraisal of Directors, Supervisors, and Senior Management. The remuneration of seniormanagement is determined according to the following criteria:
(1) The remuneration is based on an annual salary system, with the annual salary linked to theirresponsibilities, risks, and business performance.
(2) The remuneration structure consists of basic annual salary and annual performance salary.
(3) The annual basic salary is determined based on the grade, job responsibilities, and ability. It isproposed by the Remuneration and Appraisal Committee of the Board of Directors to the Company’sBoard of Directors.
(4) The annual performance salary is determined based on the results and grades of an assessmentencompassing the annual salary standards, the Company’s performance fulfillment, and the jobperformance assessment. The assessment consists of composite indicators, including the fulfillment ofthe Company’s business objectives, work safety, standardized operations, professional ethics,confidentiality provisions, and corporate culture construction.
The Remuneration and Appraisal Committee will conduct performance assessments of seniormanagement and formulate an annual compensation assessment plan based on their job performance.
XII. Construction and implementation of the internal control system during the Reporting Period"√ Applicable" "□ Not applicable"During the Reporting Period, the Company established a strict internal control management systemin strict accordance with the requirements of the CSRC, the Shanghai Stock Exchange, the CompanyLaw, the Articles of Association, and other relevant laws and regulations. Taking into account industrycharacteristics and actual business operations, the Company continuously improved and refined itsinternal control system to ensure its effective implementation. This has effectively enhanced theCompany’s standardized operation procedures, improved decision-making efficiency, ensured the legalcompliance of business operations and asset security, as well as facilitated the steady implementation ofthe Company’s strategies.The 2023 Internal Control Evaluation Report was approved at the 39
th meeting of the 4
thBoard ofDirectors. Based on the identification results of significant defects in the Company’s financial reports,there were no significant defects in the internal control of the financial reports as of the benchmark dateof the internal control evaluation report The Company has ensured effective internal control overfinancial reports in all significant aspects in accordance with the internal control standard system andrelevant regulations. Based on the identification results of significant defects in the Company’snon-financial reports, there were no significant defects in the internal control of the non-financial reportsas of the benchmark date of the internal control evaluation report. The full text is available on theShanghai Stock Exchange website (www.sse.com.cn).
Details of significant defects in internal control identified during the Reporting Period"□ Applicable""√ Not applicable"
XIII. Management and control of the subsidiaries during the Reporting Period"√ Applicable" "□ Not applicable"
The Company has established the Subsidiary Management System. And all subsidiaries of theCompany have established a complete set of internal control systems and management mechanisms, soas to ensure that all assets, operations, and strategic planning of the subsidiaries are effectivelymonitored by the Company. The selection, appointment & removal, and assessment of key personnel ineach subsidiary are all managed and supervised by the Company.
XIV. Description of the internal control audit report"√ Applicable" "□ Not applicable"
Details are available in the 2023 Annual Internal Control Audit Report, which is disclosed on thesame day as the 2023 Annual Report on the Shanghai Stock Exchange website (www.sse.com.cn).Whether to disclose the internal control audit report:YesType of internal control audit opinions for report:Standard unqualified opinions
XV. Self-inspection and rectification of issues found in the special campaign for governance of
listed companiesNot applicable
XVI. Others"□ Applicable" "√ Not applicable"
Section V. Environmental and Social Responsibility
I. Major environmental issues
| Whether to build mechanism related to environmental protection | No |
| Investment in environmental protection during the Reporting Period (Unit: CN? 10,000) | 0 |
(I). Environmental measures adopted by the Company and its subsidiaries listed as key pollutantdischarge units published by the environmental protection department"□ Applicable" "√ Not applicable"
(II). Environmental measures adopted by the companies other than key pollutant discharge units"√ Applicable" "□ Not applicable"
1. Administrative penalties due to environmental issues
"□ Applicable" "√ Not applicable"
2. Environmental information disclosed with reference to key pollutant discharge units"√ Applicable" "□ Not applicable"The Company is primarily engaged in drug retail and generates a small amount of pollutants suchas domestic wastewater, waste gases, and solid waste during operations. The Company's operationactivities do not involve high risk or heavy pollution. The main pollutants discharged during theoperations include production domestic wastewater, waste gases, domestic sewage, as well as expired ordamaged drugs and packaging materials The Company has purchased relevant treatment facilities andequipment for the wastewater, gas gases, domestic sewage, and other pollutants generated during dailyproduction and operations.
The Company and its subsidiaries are not listed as key pollutant discharge units published by theenvironmental protection department. During the Reporting Period, the Company and its subsidiariesstrictly implemented the national environmental protection policies, strictly adhered to the nationalenvironmental protection laws and regulations, and did not engage in any environmental violations.Moreover, the Company has not received any administrative penalties related to environmentalprotection. The Company will continue to fulfill its corporate social responsibility and contribute toenvironmental protection efforts.
3. The reason for not disclosing other environmental information
"□ Applicable" "√ Not applicable"
(III). Information regarding environmental protection, pollution control, and fulfillment of
environmental responsibilities"□ Applicable" "√ Not applicable"
(IV). Measures taken to reduce carbon emissions during the reporting period and the effect thereof
| Whether to take measures to reduce carbon emissions | Yes |
| Reduced emissions of carbon dioxide | 1,387 |
| equivalent (unit: ton) | |
| Types of carbon reduction measures (clean energy for power generation, carbon reduction technologies in the production process, and R&D of new products that contribute to carbon reduction, etc.). | To set annual water & power conservation targets for office areas; to improve the utilization rate of new energy vehicles in transportation logistics; to expand coverage of photovoltaic power generation project for distribution and warehousing |
Details"□ Applicable" "√ Not applicable"
II. Social responsibility(I). Whether to disclose a social responsibility report, sustainable development report, or ESG
report"√ Applicable" "□ Not applicable"Details are available in the 2023 Annual ESG Report, which is disclosed on the same day as the2023 Annual Report on the Shanghai Stock Exchange website (www.sse.com.cn).
(II). Social responsibility work"√ Applicable" "□ Not applicable"
| External donations and public welfare programs | Quantity/content | Description |
| Total investment (CN?10,000) | 609.16 | Donation of cash and supplies |
| Including: Funds (CN? 10,000) | 87.00 | Donation of cash |
| Supplies converted into cash (CN? 10,000) | 522.16 | Donation of supplies such as masks and alcohol |
| Number of beneficiaries (person) | - |
Details"□ Applicable" "√ Not applicable"
III. Details on enhancing and expanding the achievements of poverty alleviation and rural
revitalization"□ Applicable" "√ Not applicable"
Details"□ Applicable" "√ Not applicable"
Section VI. Important mattersI. Fulfillment of commitments(I). Commitments fulfilled by the actual controller, shareholders, related parties, buyers, and the Company within the Reporting Period and commitments
not yet fulfilled by the end of the Reporting Period"√ Applicable" "□ Not applicable"
| Commitment background | Commitment Type | Commitment party | Commitment Content | Commitment time | Whether to set a deadline for fulfillment | Commitment period | Whether to strictly fulfill the commitment | Reasons for failing to fulfill the commitment, if any | Actions to be taken after failing to fulfill the commitment |
| Commitments related to significant asset restructuring | Resolution of peer competition | Controlling shareholder Jikang Management (formerly known as Houxin Venture Capital) | As the controlling shareholder of Yifeng Pharmacy, the company irrevocably makes the following commitments (1) As of the signing date of this commitment letter, the company has not made any direct or indirect investments in businesses that are similar or identical to the operations of Yifeng Pharmacy and its subsidiaries. There is no peer competition or potential competition with Yifeng Pharmacy and its subsidiaries. (2) From the signing date of this commitment letter: ① The company shall not directly or indirectly invest in businesses similar or identical to the operations of Yifeng Pharmacy and its subsidiaries. It shall not establish or acquire any | June 21, 2018 | No | Long term | Yes |
| its controlling relationship with Yifeng Pharmacy to conduct any operations that would harm the rights and interests of Yifeng Pharmacy and its shareholders other than the company. (4) In the event of a violation of any of the aforementioned commitments, the company shall take proactive measures to eliminate peer competition and is willing to bear any direct or indirect economic losses, claims, and additional expenditure incurred by Yifeng Pharmacy or its shareholders other than the company. (5) The company confirms that each commitment stated in this commitment letter is independently enforceable. The invalidity or termination of any commitment shall not affect the validity of the other commitments. The aforementioned commitments shall remain effective and shall not be altered or revoked during the period when the company functions as the controlling shareholder of Yifeng Pharmacy and within one year from the date of transferring all shares. This commitment letter shall come into effect from the date of the stamping company’s official seal. | ||||||||
| Resolution of | Controlling | As the controlling | June 21, 2018 | No | Long term | Yes |
| affiliated transactions | shareholder Yifeng Investment (formerly known as Houxin Venture Capital) | shareholder of Yifeng Pharmacy, the company irrevocably makes the following commitments (I) The company and other companies under its control, Yifeng Pharmacy excluded, shall make every effort to avoid engaging in affiliated transactions with Yifeng Pharmacy and its subsidiaries. In cases where such transactions are deemed necessary and unavoidable, they shall be conducted based on the principles of fairness, equity, and equal value. Transaction prices shall be determined based on the fair prices recognized by the market. Transaction approval procedures and information disclosure obligations shall be fulfilled in accordance with relevant laws, regulations, normative documents, and the provisions of the Articles of Association, to effectively protect the interests of Yifeng Pharmacy and its other shareholders. (II) The company guarantees that it and other companies under its control, apart from Yifeng Pharmacy, strictly comply with laws and regulations, as well as the regulatory documents of the CSRC and the stock exchanges, and the provisions |
| of Yifeng Pharmacy’s Articles of Association and the Affiliated Transaction Management Measures. The company shall not leverage its shareholder status to seek undue benefits or engage in affiliated transactions that could harm the interests of Yifeng Pharmacy and its other shareholders. (III) In the event of a violation of the aforementioned commitments and transactions with Yifeng Pharmacy and its subsidiaries resulting in losses to Yifeng Pharmacy and its other shareholders, the company shall bear the responsibility for compensation. | ||||||||
| Others | Controlling shareholder Jikang Management (formerly known as Houxin Venture Capital) | As the controlling shareholder of Yifeng Pharmacy, the company makes the following commitments to ensure the independence of Yifeng Pharmacy: The company guarantees that other companies under its control maintain completely independent operations from Yifeng Pharmacy in terms of assets, personnel, finances, institutions, and businesses. The company shall strictly adhere to the relevant regulations of the CSRC regarding the independence of listed companies and shall not misuse its shareholder | June 21, 2018 | No | Long term | Yes |
| status to violate Yifeng Pharmacy’s standard operating procedures, interfere with Yifeng Pharmacy’s business decisions, or undermine the legitimate rights and interests of Yifeng Pharmacy and its other shareholders. | ||||||||
| Others | Actual company controller Gao Yi | As the actual controller of Yifeng Pharmacy, I irrevocably make the following commitments: (1) As of the signing date of this commitment letter, I have not made any direct or indirect investments in businesses that are similar or identical to the operations of Yifeng Pharmacy and its subsidiaries. There is no peer competition or potential competition with Yifeng Pharmacy and its subsidiaries. (2) From the signing date of this commitment letter: ① I shall not directly or indirectly invest in businesses similar or identical to the operations of Yifeng Pharmacy and its subsidiaries. I shall not establish or acquire any operators directly or indirectly engaged in businesses similar or identical to the operations of Yifeng Pharmacy and its subsidiaries. In addition, I shall not assist any individual | June 21, 2018 | No | Long term | Yes |
| proactive measures to eliminate peer competition and am willing to bear any direct or indirect economic losses, claims, and additional expenditure incurred by Yifeng Pharmacy or its shareholders other than me. (5) I shall confirm that each commitment stated in this commitment letter is independently enforceable. The invalidity or termination of any commitment shall not affect the validity of the other commitments. The aforementioned commitments shall remain effective and shall not be altered or revoked during the period when I function as the actual controller of Yifeng Pharmacy and within one year from the date of transferring all shares | ||||||||
| Resolution of affiliated transactions | Actual company controller Gao Yi | As the actual controller of Yifeng Pharmacy, I irrevocably make the following commitments: (I) I and other companies under my control, Yifeng Pharmacy excluded, shall make every effort to avoid engaging in affiliated transactions with Yifeng Pharmacy and its subsidiaries. In cases where such transactions are deemed necessary and unavoidable, they shall be conducted based on the principles of fairness, | June 21, 2018 | No | Long term | Yes |
| resulting in losses to Yifeng Pharmacy and its other shareholders, I shall bear the responsibility for compensation. | |||||||||
| Others | Actual company controller Gao Yi | As the actual controller of Yifeng Pharmacy, I irrevocably make the following commitments to ensure the independence of Yifeng Pharmacy: I shall guarantee that I and other companies under my control maintain completely independent operations from Yifeng Pharmacy in terms of assets, personnel, finances, institutions, and businesses. We shall strictly adhere to the relevant regulations of the CSRC regarding the independence of listed companies and shall not misuse our shareholder status to violate Yifeng Pharmacy’s standard operating procedures, interfere with Yifeng Pharmacy’s business decisions, or undermine the legitimate rights and interests of Yifeng Pharmacy and its other shareholders. | June 21, 2018 | No | Long term | Yes | |||
| Commitments related to the initial public offering | Resolution of peer competition | Actual controller Gao Yi | To avoid potential peer competition in the future, Gao Yi, as the actual controller of the Company, and Gao Feng and Gao Hongfa, as close relatives of the actual controller, representing themselves and other companies they | From February 17, 2015, it shall be effective in the long term. | No | Long term | Yes |
| when I function as the actual controller of the issuer and within one year from the date of transferring all shares. | ||||||||
| Resolution of affiliated transactions | Actual controller Gao Yi | (I) As of the signing date of this commitment letter, except for those disclosed, there are no other significant affiliated transactions between me and the other companies under my control excluding the issuer and its subsidiaries. (II) I and other companies under my control, the issuer excluded, shall make every effort to avoid engaging in affiliated transactions with the issuer and its subsidiaries. In cases where such transactions are deemed necessary and unavoidable, they shall be conducted based on the principles of fairness, equity, and equal value. Transaction prices shall be determined based on the fair prices recognized by the market. Transaction approval procedures and information disclosure obligations shall be fulfilled in accordance with relevant laws, regulations, normative documents, and the provisions of the Articles of Association, to effectively protect the interests of the issuer and its other shareholders. (III) I shall guarantee that I and other | It shall be effective in the long term. | No | Long term | Yes |
| companies under my control, apart from the issuer, strictly comply with laws and regulations, as well as the regulatory documents of the CSRC and the stock exchanges, and the provisions of the issuer’s Articles of Association and the Affiliated Transaction Management Measures. I shall not leverage the status of actual controller to seek undue benefits or engage in affiliated transactions that could harm the interests of the issuer and its other shareholders. (IV) In the event of a violation of the aforementioned commitments and transactions with the issuer and its subsidiaries resulting in losses to the issuer and its other shareholders, I shall bear the responsibility for compensation. | ||||||||
| Resolution of peer competition | Shareholder Yifeng Investment (formerly known as Houxin Venture Capital) | To avoid potential peer competition in the future, the controlling shareholder of Yifeng Pharmacy, representing the company and other companies that it currently control or may control in the future respectively, has issued the Letter of Commitment to Avoiding Peer Competition. They irrevocably make the following commitments: (1) As of the signing date of this commitment letter, the | From February 17, 2015, it shall be effective in the long term | No | Long term | Yes |
| transferring all shares. | ||||||||
| Resolution of affiliated transactions | Shareholder Yifeng Investment (formerly known as Houxin Venture Capital) | (I) As of the signing date of this commitment letter, except for those disclosed, there are no other significant affiliated transactions between the company and the other companies under its control excluding the issuer and its subsidiaries. (II) The company and other companies under its control, the issuer excluded, shall make every effort to avoid engaging in affiliated transactions with the issuer and its subsidiaries. In cases where such transactions are deemed necessary and unavoidable, they shall be conducted based on the principles of fairness, equity, and equal value. Transaction prices shall be determined based on the fair prices recognized by the market. Transaction approval procedures and information disclosure obligations shall be fulfilled in accordance with relevant laws, regulations, normative documents, and the provisions of the Articles of Association, to effectively protect the interests of the issuer and its other shareholders. (III) The company shall guarantee that the company and other companies under its control, | It shall be effective in the long term. | No | Long term | Yes |
| apart from the issuer, strictly comply with laws and regulations, as well as the regulatory documents of the CSRC and the stock exchanges, and the provisions of the issuer’s Articles of Association and the Affiliated Transaction Management Measures. The company shall not leverage the status of controlling shareholder to seek undue benefits or engage in affiliated transactions that could harm the interests of the issuer and its other shareholders. (IV) In the event of a violation of the aforementioned commitments and transactions with the issuer and its subsidiaries resulting in losses to the issuer and its other shareholders, the company shall bear the responsibility for compensation. | ||||||||
| Others | Actual company controller Gao Yi and Yifeng Investment (formerly known as Houxin Venture Capital) | If the Company and its subsidiaries incur losses due to the failure to register the lease for the property, I shall promptly and fully compensate related companies for the losses incurred. | It shall be effective in the long term. | No | Long term | Yes | ||
| Others | Actual company Controller Gao Yi and Shareholder | If the issuer (including subsidiaries) is required by any competent authority to make up for | It shall be effective in the long term. | No | Long term | Yes |
| Yifeng Investment (formerly known as Houxin Venture Capital) | all or part of the unpaid social insurance premiums, housing provident funds, and/or is subject to any relevant penalties or losses, Jikang and Gao Yi shall bear all the insurance premiums, housing provident funds, penalties, and/or relevant losses. In the event that the issuer (including subsidiaries) must make the initial payment of such expenses, timely and full compensation shall be provided to ensure that the issuer (including subsidiaries) will not suffer any losses. | |||||||
| Restricted shares | Actual controller Gao Yi | Gao Yi, the actual controller of the Company, and his close relatives Gao Hongfa (Gao Yi’s father) and Gao Feng (Gao Yi’s younger brother) have made the following commitments: “Within thirty-six months from the listing date of the Company's stock, I shall not transfer or entrust others to manage the shares of the Company directly or indirectly held by me and issued before public offering, nor shall I allow the Company to repurchase the | Share lock-up period: 36 months from February 17, 2015. Share reduction period: Within two years after the expiration of the lock-up period, the reduction of shares shall not exceed 15% of the Company’s | No | Long term | Yes |
| shares directly or indirectly held by me and issued prior to public offering. If I violate the aforementioned commitments or mandatory legal provisions and reduce my holdings of the Company’s shares, I undertake that the proceeds from the improper reduction of the Company’s shares will belong to the Company. If I fail to surrender the proceeds from the improper reduction to the Company, the Company is entitled to withhold from my cash dividends an amount equivalent to the proceeds from the improper reduction that I should have surrendered to the Company.” Share reduction commitment: Gao Yi, the actual controller of the Company makes the following commitment: “For the shares held by me before the initial public offering of Yifeng Pharmacy Chain Co., Ltd., which are to be reduced within two years after the expiration of the lock-up period, they shall not be sold at a price lower than the issuance price of the initial public offerings. (Due to factors such as cash dividend distribution, bonus issue, capital conversion, or new share issuance, the exclusion | total. |
| from the improper reduction that I should have surrendered to the Company." | ||||||||
| Restricted shares | Controlling shareholder Yifeng Investment (formerly known as Houxin Venture Capital) | Share lock-up commitments: “Within thirty-six months from the listing date of Yifeng’s stock, the company shall not transfer or entrust others to manage Yifeng’s shares directly or indirectly held by the company and issued before public offering, nor shall the company repurchase Yifeng’s shares directly or indirectly held by itself and issued prior to public offering.” Share reduction commitment: “Within two years after the expiration of the lock-up period of Yifeng’s shares held, the cumulative reduction of shares shall not exceed 10% of Yifeng’s total. The price of the reduction shall not be lower than the issuance price of the company’s initial public offering (IPO). (In the event of the company’s dividend distribution, cash dividends, bonus issue, and the conversion of capital reserves into share capital, and other matters related to the exclusion of rights and dividends, the issuance price shall be adjusted proportionally for comparison, collectively referred to as the issuance | Share lock-up period: 36 months from February 17, 2015. Share reduction period: Within two years after the expiration of the lock-up period, the reduction of shares shall not exceed 10% of the Company’s total. | No | Long term | Yes |
| price). If the closing price of the company’s stock remains below the issuance price for 20 consecutive trading days within 6 months after the company’s listing, or the closing price of the stock is lower than the issuance price at the end of the 6-month period after the company’s listing, the lock-up period of the shares held by the company will be automatically extended by 6 months.” During the extended lock-up period, the company shall not transfer or entrust others to manage Yifeng’ shares directly or indirectly held by the company and issued before public offering, nor shall the company repurchase Yifeng’s shares directly or indirectly held by itself and issued prior to public offering. | |||||||||
| Commitment related to refinancing | Others | Actual controller Gao Yi | I hereby undertake not to intervene in the Company’s operational management activities beyond my authority and not to misappropriate the Company‘s interests. I undertake to fulfill the relevant reimbursement measures adopted by the Company and any commitments made by myself in this regard. If I violate these commitments and cause losses to the | From August 10, 2022, it shall be effective in the long term. | No | Long term | Yes |
| Company or investors, I am willing to bear the corresponding legal responsibilities in accordance with the law. | ||||||||
| Others | Controlling shareholder Houxin Venture Capital | The institution hereby undertakes not to intervene in the Company’s operational management activities beyond its authority and not to misappropriate the Company's interests. The institution undertakes to fulfill the relevant reimbursement measures adopted by the Company and any commitments made by the institution in this regard. If the institution violates these commitments and causes losses to the Company or investors, the institution is willing to bear the corresponding legal responsibilities in accordance with the law. | From August 10, 2022, it shall be effective in the long term. | No | Long term | Yes | ||
| Others | All directors and senior management | (1) undertake not to gratuitously or unfairly transfer benefits to other institutions or individuals, nor to use other means to harm the interests of the Company; (2) undertake to restrain any behaviors related to job-related consumption; (3) undertake not to use the Company’s assets for investment or consumption activities unrelated to job duties; (4) undertake that the compensation system | From August 10, 2022, it shall be effective in the long term. | No | Long term | Yes |
| responsibilities to the Company or investors in accordance with the law. | ||||||||
| Others | Controlling shareholder Houxin Ventural Capital and its persons acting in concert Yizhifeng and Yirentang | 1. The company will decide whether to participate in the subscription of the convertible corporate bonds of Yifeng Pharmacy Chain Co., Ltd. based on market conditions and in accordance with relevant laws and regulations. 2. If the company has reduced its holdings of Yifeng’s shares or the issued convertible corporate bonds or has relevant reduction plans within the first six months prior to the first day of the issuance of the convertible bonds (announcement date of the prospectus), the company undertakes not to participate in the subscription of the convertible bonds and will not authorize other entities to participate in the subscription of the convertible bonds. 3. If the company participates in the subscription of Yifeng’s convertible corporate bonds and makes the subscription successfully, the company undertakes to strictly comply with the requirements of relevant laws and regulations on short-term trading. The company also undertakes not to reduce its holdings of Yifeng’s shares or the subscribed convertible | From December 16, 2022, it shall be effective in the long term. | No | Long term | Yes |
| corporate bonds within six months from the first day of the issuance of the convertible corporate bonds (announcement date of the prospectus) until the issuance of the convertible corporate bonds. 4. If the company fails to fulfill the above commitments regarding the issuance of the convertible corporate bonds, any income derived from this will belong to Yifeng Pharmacy Chain Co., Ltd., and the company will bear the legal responsibilities arising therefrom in accordance with the law. | ||||||||
| Others | Directors, supervisors, and senior management (excluding independent directors, Xiao Zaixiang,Wan Xuemei and Yan Jun). | 1. I hereby decide whether to participate in the subscription of the convertible corporate bonds of Yifeng Pharmacy Chain Co., Ltd. based on market conditions and in accordance with relevant laws and regulations. 2. If I have reduced my holdings of Yifeng’s shares or the issued convertible corporate bonds or has relevant reduction plans within the first six months prior to the first day of the issuance of the convertible bonds (announcement date of the prospectus), I undertake not to participate in the subscription of the convertible bonds and will not authorize other entities to | From December 16, 2022, it shall be effective in the long term. | No | Long term | Yes |
| participate in the subscription of the convertible bonds. 3. If I participate in the subscription of Yifeng’s convertible corporate bonds and make the subscription successfully, I undertake to strictly comply with the requirements of relevant laws and regulations on short-term trading. I also undertake not to reduce my holdings of Yifeng’s shares or the subscribed convertible corporate bonds within six months from the first day of the issuance of the convertible corporate bonds (announcement date of the prospectus) until the issuance of the convertible corporate bonds. 4. If I fail to fulfill the above commitments regarding the issuance of the convertible corporate bonds, any proceeds derived from this will belong to the Company, and I will bear the legal responsibilities arising therefrom in accordance with the law. | ||||||||
| Others | Independent Director | 1. I undertake not to participate in the subscription of the convertible corporate bonds issued by Yifeng Pharmacy Chain Co., Ltd., and will not authorize any other entities to participate in the subscription of the convertible corporate bonds. | From December 16, 2022, it shall be effective in the long term. | No | Long term | Yes |
| 2. My waiver of subscription to the issuance of the convertible corporate bonds is a genuine expression of intention. If I fail to fulfill the above commitments regarding the issuance of the convertible bonds, any income derived from this will belong to the Company, and I will bear the legal responsibilities arising therefrom in accordance with the law. | ||||||||
| Others | Senior management Xiao Zaixiang | I am a senior management of Yifeng Pharmacy Chain Co., Ltd. Given that I have reduced my holdings of the Company’s shares or have participated in the issuance of convertible bonds or have relevant reduction plans within the six months before the first day of the issuance of convertible bonds to unspecified entities or individuals (hereinafter referred to as “the Bonds”), I undertake not to participate in the subscription of the Bonds in any form, nor will I authorize any other entity to participate in the subscription of the Bonds. If I fail to fulfill the aforementioned commitments regarding the issuance of the Bonds, any proceeds derived from this will belong to the Company. If this results in losses to the company, I will be liable to | From Tuesday, February 28, 2023, it shall be effective in the long term. | No | Long term | Yes |
| compensate the Company in accordance with the law. | ||||||||
| Others | Senior management personnel Wan Xuemei and Yan Jun | 1. I undertake not to participate in the subscription of the Bonds in any form, nor will I authorize any other entity to participate in the subscription of the Bonds, within 6 months after the latest sale of Yifeng Pharmacy stocks or the issuance of convertible bonds. 2. If the first day of the issuance of the convertible bonds (announcement date of the prospectus) is beyond the 6 months after the latest sale of Yifeng Pharmacy stocks, I hereby decide whether to participate in the subscription of the convertible corporate bonds of Yifeng Pharmacy Chain Co., Ltd. based on market conditions and in accordance with relevant laws and regulations. 3. If I fail to fulfill the aforementioned commitments regarding the issuance of the Bonds, any proceeds derived from this will belong to Yifeng Pharmacy. If this results in losses to Yifeng Pharmacy, I will be liable to compensate the Company in accordance with the law. | From May 15, 2023, it shall be effective in the long term. | No | Long term | Yes | ||
| Others | Senior management personnel Hu Jianxia | 1. I undertake not to participate in the subscription of the Bonds in any form, nor will I authorize any other | From January 29, 2024, it shall be effective in the | No | Long term | Yes |
| entity to participate in the subscription of the Bonds, within 6 months after the latest sale of Yifeng Pharmacy stocks or the issuance of convertible bonds. 2. If the first day of the issuance of the convertible bonds (announcement date of the prospectus) is beyond the 6 months after the latest sale of Yifeng Pharmacy stocks, I hereby decide whether to participate in the subscription of the convertible corporate bonds of Yifeng Pharmacy Chain Co., Ltd. based on market conditions and in accordance with relevant laws and regulations. 3. If I fail to fulfill the aforementioned commitments regarding the issuance of the Bonds, any proceeds derived from this will belong to Yifeng Pharmacy. If this results in losses to Yifeng Pharmacy, I will be liable to compensate the Company in accordance with the law. | long term. |
(II). If there is a profit forecast for the Company's assets or projects, and they are still in the profit
forecast period during the reporting period, the Company shallexplain whether the assets or projects reach the original profit forecast and why."□ Reached" "□ Not reached" "√ Not applicable"
(III). The fulfillment of performance commitments and their impact on impairment test of goodwill"□ Applicable" "√ Not applicable"
II. The listed Company’s non-operating funds occupied by the controlling shareholders and their affiliated parties"□ Applicable" "√ Not applicable"
III. Violation of guarantees"□ Applicable" "√ Not applicable"
IV. Description of the Board of Directors regarding the “Non-standard Opinion Audit Report”
from the accounting firm"□ Applicable""√ Not applicable"
V. The Company’s analysis and description of changes in accounting policies, accounting
estimates or corrections of material accounting errors as well as relevant impacts(I). The Company’s analysis and description of changes in accounting policies, accounting
estimates as well as relevant impacts"√ Applicable" "□ Not applicable"
Since January 1, 2023, the Company has adhered to the "Accounting Treatment for DeferredIncome Taxes Related to Assets and Liabilities Arising from Individual Transactions that Are NotSubject to Initial Recognition Exemption," as outlined in Interpretation No. 16 of the EnterpriseAccounting Standards issued by the Ministry of Finance. Accordingly, the financial statements for theearliest reporting period have been adjusted to reflect this provision for applicable individualtransactions. This adjustment includes lease liabilities and right-of-use assets recognized during thisperiod due to these transactions, along with recognized disposal-related obligations and correspondingassets that generate taxable and deductible temporary differences. The cumulative impact amount hasbeen adjusted in accordance with this provision and the provisions of Accounting Standards forEnterprises No. 18—Income Taxes. This affects the retained earnings and other related financialstatement items as of the start of the earliest reporting period. Details of these adjustments are presentedbelow.
Unit: CN? Currency: CNY
| Content and reasons for changes | Affected financial statement items | Impact amount |
| Detailed in other notes | Balance Sheet as of December 31, 2022 | |
| Detailed in other notes | Deferred income tax assets | -2,862,658.05 |
| Detailed in other notes | Undistributed Profits | -2,862,658.05 |
| Detailed in other notes | Income Statement for 2022 | |
| Detailed in other notes | Income tax expense | -3,768,840.19 |
(II). The Company’s analysis and description of corrections of material accounting errors and
relevant impacts"□ Applicable" "√ Not applicable"
(III). Communication with the former accounting firm"□ Applicable" "√ Not applicable"
(IV). Examination & approval procedures and other information"□ Applicable" "√ Not applicable"
VI. Appointment and dismissal of accounting firms
Unit:CN? Currency: CNY
| Accounting firm currently employed | |
| Name of domestic accounting firm | Pan-China Certified Public Accountants (special general partnership) |
| Remuneration for the domestic accounting firm | 2,450,000.00 |
| Consecutive years for the domestic accounting firm to render audit services | 13 |
| Name of Certified Public Accountants of the domestic accounting firm | Wei Wujun and Jiang Fengfeng |
| Accumulated years for the Certified Public Accountants of domestic accounting firm to render audit services | 2 |
| Name | Remuneration | |
| Accounting firm for internal control auditing | Pan-China Certified Public Accountants (special general partnership) | 550,000.00 |
Appointment and dismissal of accounting firms"√ Applicable" "□ Not applicable"Upon the approval of the 2022 Annual General Meeting of Shareholders, it was agreed to reengagePan-China Certified Public Accountants (special general partnership) as the Company’s auditing agencyfor the fiscal year of 2023.
Explanation of the change of accounting firms during the auditing period"□ Applicable" "√ Not applicable"
Explanation on audit fees decreasing by more than 20% (including 20%) compared to the previous year"□ Applicable" "√ Not applicable"
VII. Delisting risk analysis(I). Reasons for delisting risk warning"□ Applicable" "√ Not applicable"
(II). Countermeasures to be taken by the Company"□ Applicable""√ Not applicable"
(III). Circumstances and reasons for termination of listing"□ Applicable" "√ Not applicable"
VIII. Matters related to bankruptcy and reorganization"□ Applicable""√ Not applicable"
IX. Major litigation and arbitration matters"□ The Company had significant litigation or arbitration matters during the year.""√ The Company had no significant litigation or arbitration matters during the year."
X. Suspected violations, punishment, and rectification of the listed Company, its Directors,Supervisors, Senior Management, Controlling Shareholders and Actual controller"□ Applicable""√ Not applicable"
XI. Integrity status of the Company and its controlling shareholders and actual controller"□ Applicable" "√ Not applicable"
XII. Significant connected transactions(I). Affiliated transactions associated with day-to-day operations
1. Matters disclosed in interim announcements without further developments or changes"□ Applicable""√ Not applicable"
2. Matters disclosed in interim announcements with further developments or changes"□ Applicable" "√ Not applicable"
3. Matters not disclosed in interim announcements
"√ Applicable" "□ Not applicable"
Unit: CN?10,000 Currency: CNY
| Party to affiliated transaction | Transaction relationship | Type of affiliated transaction | Content of affiliated transaction | Pricing principle for affiliated transaction | Price of affiliated transaction | Amount of affiliated transactions | Proportion to the amount of similar transactions (%) | Settlement method of affiliated transaction | Market Price | Reasons for the great difference between the transaction price and the reference price in the market |
| Jiuzhitang and its subsidiaries | Others affiliated persons | Commodity purchased | Commodity and product purchased | Transactions should be conducted based on the principles of fairness and impartiality, and pricing should be determined in accordance with national policies and market principles. In principle, | Market price | 11,324.12 | 0.81 | Bank transfer/Bank acceptance bill | / | / |
| the price should be equivalent to that of similar products purchased or sold by a third party unrelated to the party engaged in the transaction. It should not be significantly higher or lower than the average market price. | ||||||||||
| Jiuzhitang and its subsidiaries | Others affiliated persons | Selling goods | Commodity and product sold | Transactions should be conducted based on the principles of fairness and impartiality, and pricing should be determined in accordance with national policies and market principles. In principle, the price should be equivalent to that of similar | Market price | 1,918.04 | 0.08 | Bank transfer/Bank acceptance bill | / | / |
| products purchased or sold by a third party unrelated to the party engaged in the transaction. It should not be significantly higher or lower than the average market price. | |||||||
| Total | / | / | 13,242.16 | / | / | / | |
| Details regarding the large-scale return of goods | None | ||||||
| Description of affiliated transaction | None | ||||||
(II). Affiliated transactions of acquisition or sales of assets or equity
1. Matters disclosed in interim announcements without further developments or changes"□ Applicable""√ Not applicable"
2. Matters disclosed in interim announcements with further developments or changes"□ Applicable" "√ Not applicable"
3. Matters not disclosed in interim announcements
"□ Applicable""√ Not applicable"
4. If performance commitments are involved, the performance achieved during the Reporting
Period should be disclosed."□ Applicable" "√ Not applicable"
(III). Significant affiliated transactions for joint external investments
1. Matters disclosed in interim announcements without further developments or changes"□ Applicable""√ Not applicable"
2. Matters disclosed in interim announcements with further developments or changes"□ Applicable" "√ Not applicable"
3. Matters not disclosed in interim announcements
"□ Applicable""√ Not applicable"
(IV). Affiliated transactions involving debt and credit
1. Matters disclosed in interim announcements without further developments or changes"□ Applicable""√ Not applicable"
2. Matters disclosed in interim announcements with further developments or changes"□ Applicable" "√ Not applicable"
3. Matters not disclosed in interim announcements
"□ Applicable""√ Not applicable"
(V). Financial transactions between the Company and affiliated financial companies, financialcompanies under the Company’s control, and affiliated parties"□ Applicable" "√ Not applicable"
(VI). Others"□ Applicable" "√ Not applicable"
XIII. Significant contracts and their fulfillment(I). Information about trusteeship, contracting, and lease
1. Trusteeship
"□ Applicable" "√ Not applicable"
2. Contracting
"□ Applicable" "√ Not applicable"
3. Lease
"□ Applicable" "√ Not applicable"
(II). Guarantee"√ Applicable" "□ Not applicable"
Unit: CN?10,000 Currency: CNY
| External guarantees of the Company (excluding guarantees to subsidiaries) | |||||||||||||||
| Guarantor | Relationship between the guarantor and the listed Company | Guaranteed party | Amount of guarantee | Date of occurrence of guarantee (Signing date of agreement) | Guarantee Date of commencement | Guarantee Date of maturity | Type of guarantee | Object of guarantee (if any) | Whether the fulfillment is completed | Whether the guarantee is overdue | Amount of overdue guarantee | Counter-guarantee | Whether the affiliated party is guaranteed | Association Relationship | |
| Total amount of guarantees incurred during the Reporting Period (excluding guarantees to subsidiaries) | 0 | ||||||||||||||
| Total amount of guarantee balance at the end of the Reporting Period (A) (excluding guarantees to subsidiaries) | 0 | ||||||||||||||
| Guarantees of the Company and its subsidiaries to subsidiaries | |||||||||||||||
| Total amount of guarantees incurred to subsidiaries during the Reporting Period | 136,000 | ||||||||||||||
| Total amount of guarantee balance to subsidiaries at the end of the Reporting Period (B) | 120,000 | ||||||||||||||
| Total guarantees of the Company (excluding guarantees to subsidiaries) | |||||||||||||||
| Total amount of guarantees (A+B) | 120,000 | ||||||||||||||
| Ratio of total guarantees to the Company’s net assets (%) | 11.49 | ||||||||||||||
| Incl.: | |||||||||||||||
| Amount of guarantees to shareholders, actual controller, and their affiliated parties (C) | 0 | ||||||||||||||
| The amount of debt guarantee provided directly or indirectly to guaranteed parties with an asset-liability ratio exceeding 70% (D) | 0 | ||||||||||||||
| The amount exceeding 50% of net assets in the total guarantee amount (E) | 0 |
| Total amount of guarantee (C+D+E) | |
| Description of possible joint liability for outstanding guarantees | |
| Description of guarantee |
(III). Entrusting others to execute any cash asset management
1. Entrusted financial management
(1) Overview of entrusted financial management
"√ Applicable" "□ Not applicable"
Unit: CN? 10,000 Currency: CNY
| Type | Source of funds | Amount incurred | Undue amount | Overdue unrecovered amount |
| Wealth management products of bank | Own funds | 162,810 | 162,810 | 0 |
| Wealth management products of securities dealers | Own funds | 40,000 | 0 | 0 |
Others"□ Applicable" "√ Not applicable"
(2) Individual entrusted financial management
"□ Applicable" "√ Not applicable"
Others"□ Applicable" "√ Not applicable"
(3) Impairment provision for entrusted financial management
"□ Applicable" "√ Not applicable"
2. Entrusted loan
(1) Overview of entrusted loan
"□ Applicable" "√ Not applicable"
Others"□ Applicable" "√ Not applicable"
(2) Individual entrusted loan
"□ Applicable" "√ Not applicable"
Others"□ Applicable" "√ Not applicable"
(3) Impairment provision for entrusted loan
"□ Applicable" "√ Not applicable"
3. Others
"□ Applicable" "√ Not applicable"
(IV). Other significant contracts"□ Applicable" "√ Not applicable"
XIV. Description of progress in the use of raised funds"√ Applicable" "□ Not applicable"(I). Overall use of raised funds"√ Applicable" "□ Not applicable"
Unit: CN? 10,000
| Source of raised funds | In-place time of raised funds | Total amount of raised funds | Including: Amount of over-raised funds | Net amount of raised funds after deduction | Total committed investment amount of | Total committed investment amount of | Accumulative total amount of raised funds by the | Accumulated investment progress by the end of | Current year's investment amount | The proportion of investment | Total amount of raised |
| of issuance expenses | raised fund | raised funds after adjustment (1) | end of the Reporting Period (2) | the Reporting Period (3) = (2)/(1) | (4) | amount for this year (%) (5) = (4)/(1) | funds with change of use | ||||
| Issuance of convertible bonds | June 5, 2020 | 158,100.90 | 0 | 156,464.67 | 158,100.90 | 156,464.67 | 156,142.94 | 99.79 | 27,296.91 | 17.45 | 32,663.54 |
(II). Details of projects invested by raised funds"√ Applicable" "□ Not applicable"
Unit: CN? 10,000
| Item name | Nature of project | Whether involves changing the direction of investment | Source of raised funds | In-place time of raised funds | Whether to use over-raised funds | Total committed investment amount of raised funds for the project | Total investment amount of raised funds after adjustment (1) | Investment amount in the current year | Accumulative total amount of raised funds by the end of the Reporting Period (2) | Accumulated investment progress by the end of the Reporting Period (%) (3) = (2)/(1) | The date on which the project is expected to be ready for use | Whether the project has been closed | Whether the investment progress meets the planned schedule | The specific reasons why the investment progress does not meet the plan | Benefits realized this year | The benefits or R&D achievements achieved in this project | Whether there has been a significant change in the feasibility of the project. If so, please give the details | Surplus amount |
| The Jaingsu Yifeng Pharmaceu | Operation & development | No | Issuance of convertible | June 5, 2020 | No | 16,000.00 | 16,000.00 | 16,128.77 | 100.80 | July 31, 2021 | Yes | Yes | Not applicable | Not applicable | Not applicable | No | 0 |
| tical Product Intelligent Sorting & Processing Project | bonds | |||||||||||||||||
| The Shanghai Yifeng Pharmaceutical Product Intelligent Sorting Center Project [Note 1] | Operation & development | Yes | Issuance of convertible bonds | June 5, 2020 | No | 13,000.00 | 21,363.54 | 4,616.22 | 21,629.90 | 101.25 | Jun 30, 2023 | Yes | Yes | Not applicable | Not applicable | Not applicable | No | 0 |
| Jiangxi Yifeng Pharmaceutical Industry Park Project Phase I | Operation & development | No | Issuance of convertible bonds | June 5, 2020 | No | 8,000.00 | 8,000.00 | 8,019.26 | 100.24 | Jun 30, 2022 | Yes | Yes | Not applicable | Not applicable | Not applicable | No | 0 | |
| The New Chain Pharmacy Project | Operation & development | Yes | Issuance of convertible bonds | June 5, 2020 | No | 68,085.00 | 68,085.00 | 22,680.69 | 67,153.20 | 101.45 | Jan 31, 2024 | No | Yes | Not applicable | -4,748.50 | -22,963.41 | No | |
| The Old Store Upgrade and Renovation Project | Operation & development | Yes | Issuance of convertible bonds | June 5, 2020 | No | 10,015.90 | 1,652.36 | 1,824.07 | 110.39 | Jun 30, 2022 | Yes | Yes | Not applicable | Not applicable | Not applicable | No | 0 | |
| The Digital Intelligent Management Platform | R&D | No | Issuance of convertible bonds | June 5, 2020 | No | 4,000.00 | 4,000.00 | 4,002.54 | 100.06 | Mar 31, 2023 | Yes | Yes | Not applicable | Not applicable | Not applicable | No | 0 |
| Project | ||||||||||||||||||
| Replenishment of working capital | Others | No | Issuance of convertible bonds | June 5, 2020 | No | 39,000.00 | 37,363.77 | 37,385.20 | 100.06 | Yes | Yes | Not applicable | Not applicable | Not applicable | No | 0 |
[Note 1]: The Shanghai Yifeng Pharmaceutical Product Intelligent Sorting Center Project has adopted works such as replacement and reinforcement of basement load-bearing due to thecomplex underground structure of the construction site, soft soil in the foundation pit, and increased difficulty in the work of foundation pit retaining piles. Besides, the newly added workshave also extended the project implementation, with an additional investment of CN? 83.9837 million. "As a change in the "Old Store Upgrade and Renovation Project", CN? 83.6354 millionwas invested into the "Shanghai Yifeng Pharmaceutical Product Intelligent Sorting Center Project".[Note 2]: As of the disclosure date of this report, the funds raised from the convertible corporate bonds issued by the Company in 2020 have been fully utilized. All
corresponding investment projects funded by these bonds have been finalized, and the special fundraising account will subsequently be closed. According toGuidelines No. 1 of the Shanghai Stock Exchange for Self-Regulation of Listed Companies - Standard Operation, once all funded projects are completed, if theresidual funds (including interest income) amount to less than CN? 5 million or less than 5% of the total raised funds, the need for procedures such as review byboard of directors, opinions from independent directors, assessments by board of supervisors, and endorsements by sponsoring institutions may be exempted.(III). Changes or termination of projects invested by raised funds during the Reporting Period"□ Applicable" "√ Not applicable"
(IV). Other cases of the use of raised funds during the Reporting Period
1. Advance investment and replacement of projects invested by raised funds"□ Applicable" "√ Not applicable"
2. Temporary replenishment of working capital with idle raised funds
"√ Applicable" "□ Not applicable"The 24
th meeting of the 4
thBoard of Directors was held on April 26, 2023, during which the Company deliberated and approved the Proposal on Using IdleProceeds from Convertible Bonds to Temporarily Supplement Liquidity. It was agreed that the Company should use the total amount of idle raised funds notexceeding CN? 210 million to temporarily supplement working capital. By December 31, 2023, the Company’s balance of temporary supplement of working capitalwith idle raised funds was CN? 50 million.
3. Cash management of idle raised funds and investment in related products"□ Applicable" "√ Not applicable"
4. Permanent replenishment of working capital or repayment of bank loans with over-raised funds"□ Applicable" "√ Not applicable"
5. Others
"□ Applicable" "√ Not applicable"
XV. Description of other significant matters greatly affecting value judgment and investment decisions"□ Applicable""√ Not applicable"
Section VII. Changes in Shares and Shareholders
I. Changes in share capital(I). Share change table
1. Share change table
Unit:Share
| Before this change | Increase or decrease in this change (+, -) | After this change | |||||||
| Quantity: | Percentage (%) | New issue | Bonus issue | Shares converted from reserved funds | Others | Total | Quantity: | Percentage (%) | |
| I. Shares with trading restriction conditions | 3,095,200 | 0.43 | 390,015 | 1,238,080 | -2,259,600 | -631,505 | 2,463,695 | 0.24 | |
| 1. Shares held by the State | |||||||||
| 2. Shares held by state-owned legal person | |||||||||
| 3. Shares held by other domestic capital | 3,095,200 | 0.43 | 390,015 | 1,238,080 | -2,259,600 | -631,505 | 2,463,695 | 0.24 | |
| Including: Shares held by domestic non-state-owned legal person | |||||||||
| Shares held by domestic natural person | 3,095,200 | 0.43 | 390,015 | 1,238,080 | -2,259,600 | -631,505 | 2,463,695 | 0.24 | |
| 4. Shares held by foreign capital | 0 | ||||||||
| Including: Shares held by foreign legal person | 0 | ||||||||
| Shares held by foreign natural person | 0 | ||||||||
| II. Shares without | 718,609,730 | 99.57 | 287,443,892 | 2,062,480 | 289,506,372 | 1,008,116,102 | 99.76 | ||
| trading restriction conditions | |||||||||
| 1. CNY common share | 718,609,730 | 99.57 | 287,443,892 | 2,062,480 | 289,506,372 | 1,008,116,102 | 99.76 | ||
| 2. Domestically listed foreign shares | 0 | ||||||||
| 3. Overseas listed foreign shares | 0 | ||||||||
| 4. Others | 0 | ||||||||
| III. Total number of shares | 721,704,930 | 100 | 390,015 | 288,681,972 | -197,120 | 288,874,867 | 1,010,579,797 | 100 |
2. Description of changes in shares
"√ Applicable" "□ Not applicable"
(1) The Proposal on Profit Distribution and Capital Reserve Capitalization Plans for the Year of2022 was reviewed and approved at the 24
th
meeting of the 4
thBoard of Directors on April 26, 2023, andthe 2022 Annual General Meeting of Shareholders held on May 18, 2023. The capital conversion isbased on the total share capital. The Company intends to distribute 4 shares per 10 shares held by allshareholders via capital conversion. After the distribution, the total share capital of the Company willincrease to 1,010,386,902 shares. The distribution plan was completed on June 7, 2023
(2) The 24
th and 27
th
meetings of the 4
th
Board of Directors, held on April 26, 2023 and June 29,2023, reviewed and approved the Proposal on Repurchase and Cancellation of Certain Restricted Sharesand the Proposal on Adjusting the Quantity and Price of Repurchase and Cancellation of CertainRestricted Shares, canceled the repurchased 104,160 restricted stock shares, and changing the total sharecapital to 1,010,282,742 shares.
(3) The 29
th
meeting of the 4
thBoard of Directors was held on August 14, 2023, during which theCompany deliberated and adopted the Proposal on the Second Repurchase and Cancellation of CertainRestricted Shares under the Restricted Share Incentive Plan in 2022. The Company canceled therepurchased 92,960 restricted stock shares. and changing the total share capital to 1,010,189,782 shares.
(4) The 31
st
meeting of the 4
th
Board of Directors was held on August 29, 2023, during which theCompany deliberated and adopted the Proposal on the Grant of Reserve Equity to under the RestrictedShare Incentive Plan in 2022. After confirming that the conditions for the initial grant have been met, theCompany granted the Incentive Recipients a total of 390,015 restricted shares, changing the total sharecapital to 1,010,579,797 shares.
3. Effect of share changes on financial indicators such as earnings per share and net assets pershare for the latest year and the latest period"√ Applicable" "□ Not applicable"During the Reporting Period, the total number of the Company's shares increased by 288,874,867due to the profit distribution and conversion of capital reserve into equity capital, the repurchase and
cancellation of restricted shares and the granting of restricted shares. At the end of the Reporting Period,the total share capital of the Company was 1,010,579,797 shares, with an earning per share of CN?1.40and a net asset per share of CN?9.70.
4. Other contents deemed necessary by the Company or required to be disclosed by thesecurities regulatory authorities"□ Applicable" "√ Not applicable"
(II). Changes in restricted shares"√ Applicable" "□ Not applicable"
Unit: Share
| Name of shareholder | Number of restricted shares at the beginning of the year | Number of restricted shares lifted in the current year | Number of restricted shares increased in the current year | Number of restricted shares at the end of the year | Reasons for Restriction | Date of lifting |
| The first grant of the restricted share incentive plan in 2022 | 3,095,200 | 2,062,480 | 1,040,960 | 2,073,680 | Lock-up of the first grant of the restricted share incentive plan in 2022 | October 23, 2023 |
| The reservation grant of the restricted share incentive plan in 2022 | 0 | 0 | 390,015 | 390,015 | The reservation grant of the restricted share incentive plan in 2022 | |
| Total | 3,095,200 | 2,062,480 | 1,430,975 | 2,463,695 | / | / |
II. Offering and listing of securities(I). Securities issuance during the Reporting Period"□ Applicable""√ Not applicable"
Description of securities issuance during the Reporting Period (For bonds with different interest ratesduring the tenure, respectively):
"□ Applicable" "√ Not applicable"
(II). Description of changes in the Company’s total number of shares and shareholder structure,
and asset and liability structure"□ Applicable" "√ Not applicable"
(III). Existing internal employee share"□ Applicable""√ Not applicable"
III. Shareholders and actual controller(s)(I). Total number of shareholders
| Total number of common shareholders at the end of the Reporting Period | 14,648 |
| Total number of common shareholders as of the end of the previous month before the disclosure date of the Annual Report | 15,096 |
| Total number of preferred shareholders with restored voting rights at the end of the Reporting Period | 0 |
| Total number of preferred shareholders with restored voting rights at the end of the previous month before the disclosure date of the Annual Report | 0 |
(II). Shareholding of the top 10 shareholders and top 10 shareholders of circulating shares(without trading restriction conditions) at the end of the Reporting Period
Unit: Share
| Shareholding of the top 10 shareholders (not including the lending of shares through refinancing business) | |||||||
| Name of shareholder (Full name) | Increase/Decrease during the Reporting Period | Number of shares held at the end of the Reporting Period | Percentage (%) | Number of shares with trading restriction conditions held | Pledge, tag or freezing | Shareholder feature | |
| Share status | Quantity: | ||||||
| Ningbo Meishan Free Trade Port Area Houxin Venture Capital Partnership (Limited Partnership) | 62,498,280 | 218,743,980 | 21.65 | 0 | None | Others | |
| Hong Kong Securities Clearing Company Limited | 46,087,981 | 167,741,356 | 16.60 | 0 | None | Others | |
| Gao Yi | 33,686,016 | 117,901,056 | 11.67 | 0 | None | Domestic natural person | |
| CAPITAL TODAY INVESTMENT XV （HK） LIMITED | 27,745,536 | 97,109,376 | 9.61 | 0 | None | Foreign legal person | |
| CAPITAL TODAY INVESTMENT XV （HK） LIMITED | 27,588,288 | 96,559,008 | 9.55 | 0 | None | Foreign legal person | |
| Industrial and Commercial Bank of China Limited - Zhong Ou Medical and Health Hybrid Securities Investment Fund | 9,587,277 | 19,602,714 | 1.94 | 0 | None | Others | |
| Ningbo Meishan Free Trade Port Area Yizhifeng Enterprise Management Partnership (Limited Partnership) | 3,022,091 | 10,577,318 | 1.05 | 0 | None | Others | |||
| China Construction Bank Co., Ltd - ICBC Credit Suisse Frontier Medical Equity Securities Investment Fund | 2,726,600 | 6,726,600 | 0.67 | 0 | None | Others | |||
| Hexie Health Insurance Co., Ltd. — Tradition | 6,679,680 | 6,679,680 | 0.66 | 0 | None | Others | |||
| Han Hongchang | 2,465,960 | 5,783,360 | 0.57 | 0 | None | Domestic natural person | |||
| Shareholding of the top 10 shareholders without trading restriction conditions | |||||||||
| Name of shareholder | Number of circulating shares without trading restriction conditions held | Type and quantity of shares | |||||||
| Type | Quantity: | ||||||||
| Ningbo Meishan Free Trade Port Area Houxin Venture Capital Partnership (Limited Partnership) | 218,743,980 | CNY common share | 218,743,980 | ||||||
| Hong Kong Securities Clearing Company Limited | 167,741,356 | CNY common share | 167,741,356 | ||||||
| Gao Yi | 117,901,056 | CNY common share | 117,901,056 | ||||||
| CAPITAL TODAY INVESTMENT XV （HK） LIMITED | 97,109,376 | CNY common share | 97,109,376 | ||||||
| CAPITAL TODAY INVESTMENT XV （HK） LIMITED | 96,559,008 | CNY common share | 96,559,008 | ||||||
| Industrial and Commercial Bank of China Limited - Zhong Ou Medical and Health Hybrid Securities Investment Fund | 19,602,714 | CNY common share | 19,602,714 | ||||||
| Ningbo Meishan Free Trade Port Area Yizhifeng Enterprise Management Partnership (Limited Partnership) | 10,577,318 | CNY common share | 10,577,318 | ||||||
| China Construction Bank Co., Ltd - ICBC Credit Suisse Frontier Medical Equity Securities Investment Fund | 6,726,600 | CNY common share | 6,726,600 |
| Hexie Health Insurance Co., Ltd. — Tradition | 6,679,680 | CNY common share | 6,679,680 |
| Han Hongchang | 5,783,360 | CNY common share | 5,783,360 |
| Description of repurchase accounts among the top 10 shareholders | None | ||
| Description of above-mentioned shareholders’ involvement in entrusting/being entrusted with and waiving voting rights | None | ||
| Description of association or concerted action of the above-mentioned shareholders | Among the aforementioned shareholders, Houxin and Yizhifeng are enterprises controlled by Mr. Gao Yi, the actual controller of the Company. There is an affiliation between Gao Yi, Houxin, and Yizhifeng. CAPITAL TODAY INVESTMENT XV (HK) LIMITED and CAPITAL TODAY INVESTMENT XIV (HK) LIMITED are both controlled by Capital Today River Fund, L.P. There is an affiliation between CAPITAL TODAY INVESTMENT XV (HK) LIMITED and CAPITAL TODAY INVESTMENT XIV (HK) LIMITED. Description of unknown association or concerted action of the above-mentioned shareholders | ||
| Description of preferred shareholders with restored voting rights and number of shares held | None | ||
Description of the top 10 shareholders participating in the lending of shares through refinancing business"□ Applicable" "√ Not applicable"
The top ten shareholders have changed compared to the previous period"□ Applicable" "√ Not applicable"
Number of shares held by the top 10 shareholders with trading restriction conditions and relevantrestriction conditions"□ Applicable" "√ Not applicable"
(III). Situation (if any) where a strategic investor or general legal person becomes one of top 10
shareholders due to placement of new shares"□ Applicable""√ Not applicable"
IV. Controlling shareholders and actual controller(s)(I). Controlling shareholder1 Legal person"√ Applicable" "□ Not applicable"
| Name | Ningbo Meishan Free Trade Port Area Houxin Venture Capital Partnership (Limited Partnership) |
| Peron in charge or legal representative | Changsha Yizhikang Consulting Co., Ltd. (Appointed Representative: Hu Zongliang) |
| Date of establishment | Tuesday, September 12, 2006 |
| Main business | Venture capital (limited to unlisted companies) |
| Equity of other domestic and overseas listed companies via control | None |
| and participation of the shareholder during the Reporting Period | |
| Other descriptions | None |
2 Natural person"□ Applicable""√ Not applicable"
3 Special description of the absence of a controlling shareholder"□ Applicable" "√ Not applicable"
4 Changes in controlling shareholders during the Reporting Period"□ Applicable" "√ Not applicable"
5 Block diagram of the property rights and control relationship between the Company and thecontrolling shareholder"√ Applicable" "□ Not applicable"
(II). Actual controller1 Legal person"□ Applicable""√ Not applicable"
2 Natural person"√ Applicable" "□ Not applicable"
| Name | Gao Yi |
| Nationality | Chinese |
| Whether to obtain residency in other countries or regions | No |
| Occupation and title | Chairman and President |
| Domestically and overseas listed companies controlled over the past 10 years | None |
3 The Company has no actual controllers"□ Applicable" "√ Not applicable"
4 Changes in controlling rights during the Reporting Period"□ Applicable" "√ Not applicable"
Ningbo Meishan Free Trade Port AreaHouxin Venture Capital Partnership(Limited Partnership)Yifeng Pharmacy Chain Co., Ltd.
5 Block diagram of the ownership and control relationship between the Company and the defacto controller"√ Applicable" "□ Not applicable"
6 Control of the Company by the de facto controller through trust or other asset management
means"□ Applicable" "√ Not applicable"
(III). Other information about controlling shareholders and actual controller"□ Applicable" "√ Not applicable"
V. The cumulative number of shares pledged by the controlling shareholder or the largest
shareholder of the Company and its persons acting in concert reached 80% of the number of
shares held by them in the Company."□ Applicable" "√ Not applicable"
VI. Other corporate shareholders holding more than 10% of shares"□ Applicable" "√ Not applicable"
VII. Restrictions on shareholding reduction"□ Applicable""√ Not applicable"
VIII. Specific implementation of share repurchase during the Reporting Period"□ Applicable" "√ Not applicable"
Section VIII. Preferred Share Related Information
"□ Applicable""√ Not applicable"
Gao YiChangsha YizhikangConsulting Co., Ltd.
Changsha YizhikangConsulting Co., Ltd.
Ningbo Meishan Free Trade Port
Area Houxin Venture Capital
Partnership (Limited
Partnership)
| Ningbo Meishan Free Trade Port Area Houxin Venture Capital Partnership (Limited Partnership) | Ningbo Meishan Free Trade Port Area Yizhifeng Enterprise Management Partnership (Limited Partnership) | Ningbo Meishan Free Trade Port Area Yirentang Enterprise Management Partnership (Limited Partnership) | ||
Yifeng Pharmacy Chain Co., Ltd.
Section IX. Relevant Situation of Bonds
I. Corporate bonds, company bonds, and non-financial corporate debt financinginstruments"□ Applicable" "√ Not applicable"
II. Convertible corporate bonds"□ Applicable" "√ Not applicable"
Section X. Financial Statements
I. Audit report? Applicable ? Not Applicable
Auditor’s Report
PCCPAAR [2024] No.2-298
To the Shareholders of Yifeng Pharmacy Chain Co.,Ltd.:
I. Audit OpinionWe have audited the financial statements of Yifeng Pharmacy Chain Co., Ltd. (the“Company”), which comprise the consolidated and parent company balance sheets asat December 31, 2023, the consolidated and parent company income statements,consolidated and parent company cash flow statements, and consolidated and parentcompany statements of changes in equity for the year then ended, as well as notes tofinancial statements.In our opinion, the accompanying financial statements present fairly, in all materialrespects, the financial position of the Company as at December 31, 2023, and itsfinancial performance and its cash flows for the year then ended in accordance withChina Accounting Standards for Business Enterprises.
II. Basis for Audit OpinionWe conducted our audit in accordance with China Standards on Auditing. Ourresponsibilities under those standards are further described in the Certified PublicAccountant’s Responsibilities for the Audit of the Financial Statements section of ourreport. We are independent of the Company in accordance with the China Code ofEthics for Certified Public Accountants, and we have fulfilled other ethicalresponsibilities. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion.
III. Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of mostsignificance in our audit of the financial statements of the current period. Thesematters were addressed in the context of our audit of the financial statements as awhole, and in forming our opinion thereon, and we do not express a separate opinionon these matters.(I) Revenue recognition
1. Key audit matters
Please refer to section III (XXIII), V (II) 1 and XV (I) 2of notes to the financialstatements for details.The Company is mainly engaged in medical sales business. In 2023, the operatingrevenue amounted to 22,588.23 million yuan, of which the operating revenue frommedical sales business was 19,275.05 million yuan, accounting for 85.33% of the totaloperating revenue.As operating revenue is the key performance indicators of the Company, there mightbe inherent risks that the Company’s management (the “Management”) adoptsinappropriate revenue recognition to achieve specific goals or expectations. As theinherent risk of misstatement is high, we have identified revenue recognition as a keyaudit matter.
2. Responsive audit procedures
Our main audit procedures for revenue recognition are as follows:
(1) We obtained understandings of key internal controls related to revenue recognition,assessed the design of these controls, determined whether they had been executed, andtested the effectiveness of the operation;
(2) We checked sales contracts, obtained understandings of main contractual terms orconditions, and assessed whether the revenue recognition method was appropriate;
(3) We performed analysis procedure on operating revenue and gross margin bymonth, product, store, etc., so as to identify whether there are significant or abnormalfluctuations and find out the reason;
(4) For revenue from pharmaceutical wholesale, we checked supporting documentsrelated to selected items, including sales contracts, orders, sales invoices, outbounddelivery orders, delivery notes, shipping documents, delivery receipts, etc.;
(5) We performed rationality analysis procedure on revenue from pharmaceuticalretail, including UPT and ATV, and checked businesses with their sales details,payment records, accounting treatments, etc. to assess whether there are abnormalsales;
(6) We cross-checked the data of information system, including drug retail businessmanagement system and business processes of SAP information system;
(7) We checked bank transaction flows, bank statements, and reconciliation table foroutstanding accounts, and verified sales return records;
(8) We performed confirmation procedures on accounts receivable with large amount(mainly from wholesale customers), revenue from promotional service fees andwholesale business with large amount, and checked sales return records subsequent tothe balance sheet date;
(9) We performed cut-off tests to check whether the revenue was recognized in theappropriate period; and
(10) We checked whether information related to operating revenue had beenpresented appropriately in the financial statements.(II) Impairment of goodwill
1. Key audit matters
Please refer to section III (XVIII) and V (I) 18 of notes to the financial statements fordetails.As of December 31, 2023, the cost of goodwill amounted to 4,612.85 million yuan,with provision for impairment of 2.30 million yuan, and the carrying amountamounted to 4,610.55 million yuan.For asset group or asset group portfolio related to goodwill, the Management willperform impairment test on goodwill together with related asset group or asset groupportfolio, and the recoverable amount of related asset group or asset group portfolio isdetermined based on the estimated present value of future cash flows. As the amount
of goodwill is significant and impairment test involves significant judgment of theManagement, we have identified impairment of goodwill as a key audit matter.
2. Responsive audit procedures
Our main audit procedures for impairment of goodwill are as follows:
(1) We obtained understandings of key internal controls related to impairment ofgoodwill, assessed the design of these controls, determined whether they had beenexecuted, and tested the effectiveness of the operation;
(2) We reviewed the outcome of the Management’s previous estimates on the presentvalue of future cash flows or their subsequent re-estimations;
(3) We assessed the competency, professional quality and objectivity of externalappraisers engaged by the Management;
(4) We assessed the appropriateness and consistency of impairment test methodadopted by the Management;
(5) We assessed the appropriateness of significant assumptions used in impairmenttest and reviewed whether relevant assumptions were consistent with overall economyenvironment, industry condition, management situation, historical experience,operation plan, approved budget, meeting summary, assumptions used in otheraccounting estimates and related assumptions used in other areas of businessactivities;
(6) We assessed the appropriateness, relevance and reliability of data used by theManagement in the impairment test and reviewed the consistency of relatedinformation in the impairment test;
(7) We tested whether the Management’s calculation of present value of estimatedfuture cash flows was accurate;
(8) We checked whether information related to impairment of goodwill had beenpresented appropriately in the financial statements.
IV. Other InformationThe Management is responsible for the other information. The other informationcomprises the information included in the Company’s annual report, but does notinclude the financial statements and our auditor’s report thereon.Our opinion on the financial statements does not cover the other information and wedo not express any form of assurance conclusion thereon.In connection with our audit of the financial statements, our responsibility is to readthe other information and, in doing so, consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated.If, based on the work we have performed, we conclude that there is a materialmisstatement of the other information, we are required to report that fact. We havenothing to report in this regard.
V. Responsibilities of the Management and Those Charged with Governance for the FinancialStatementsThe Management is responsible for preparing and presenting fairly the financialstatements in accordance with China Accounting Standards for Business Enterprises,as well as designing, implementing and maintaining internal control relevant to thepreparation of financial statements that are free from material misstatement, whetherdue to fraud or error.In preparing the financial statements, the Management is responsible for assessing theCompany’s ability to continue as a going concern, disclosing, as applicable, mattersrelated to going concern and using the going concern basis of accounting unless theManagement either intends to liquidate the Company or to cease operations, or has norealistic alternative but to do so.Those charged with governance are responsible for overseeing the Company’sfinancial reporting process.
VI. Certified Public Accountant’s Responsibilities for the Audit of the Financial StatementsOur objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement, whether due to fraud orerror, and to issue an auditor’s report that includes our opinion. Reasonable assuranceis a high level of assurance, but is not a guarantee that an audit conducted inaccordance with China Standards on Auditing will always detect a materialmisstatement when it exists. Misstatements can arise from fraud or error and areconsidered material if, individually or in the aggregate, they could reasonably beexpected to influence the economic decisions of users taken on the basis of thesefinancial statements.We exercise professional judgment and maintain professional skepticism throughoutthe audit performed in accordance with China Standards on Auditing. We also:
(I) Identify and assess the risks of material misstatement of the financial statements,whether due to fraud or error, design and perform audit procedures responsive tothose risks, and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error, as fraud may involve collusion,forgery, intentional omissions, misrepresentations, or the override of internal control.(II) Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances.(III) Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by the Management.(IV) Conclude on the appropriateness of the Management’s use of the going concernbasis of accounting and, based on the audit evidence obtained, whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany’s ability to continue as a going concern. If we conclude that a materialuncertainty exists, we are required to draw attention in our auditor’s report to therelated disclosures in the financial statements or, if such disclosures are inadequate, tomodify our opinion. Our conclusions are based on the audit evidence obtained up tothe date of our auditor’s report. However, future events or conditions may cause theCompany to cease to continue as a going concern.
(V) Evaluate the overall presentation, structure and content of the financial statements,and whether the financial statements represent the underlying transactions and eventsin a manner that achieves fair presentation.(VI) Obtain sufficient and appropriate audit evidence regarding the financialinformation of the entities or business activities within the Company to express anopinion on the financial statements. We are responsible for the direction, supervisionand performance of the group audit. We remain sole responsibility for our auditopinion.We communicate with those charged with governance regarding the planned auditscope, time schedule and significant audit findings, including any deficiencies ininternal control of concern that we identify during our audit.
We also provide those charged with governance with a statement that we havecomplied with relevant ethical requirements regarding independence, and tocommunicate with them all relationships and other matters that may reasonably bethought to bear on our independence, and where applicable, related safeguards.From the matters communicated with those charged with governance, we determinethose matters that were of most significance in the audit of the financial statements ofthe current period and are therefore the key audit matters. We describe these mattersin our auditor’s report unless law or regulation precludes public disclosure about thematter or when, in extremely rare circumstances, we determine that a matter shouldnot be communicated in our report because the adverse consequences of doing sowould reasonably be expected to outweigh the public interest benefits of suchcommunication.
Pan-China Certified Public Accountants LLP Chinese Certified Public Accountant:
(Engagement Partner)Hangzhou · China Chinese Certified Public Accountant:
Date of Report: April, 26, 2024
The auditor’s report and the accompanying financial statements are English translations of the Chinese auditor’sreport and statutory financial statements prepared under accounting principles and practices generally acceptedin the People’s Republic of China. These financial statements are not intended to present the financial positionand financial performance and cash flows in accordance with accounting principles and practices generallyaccepted in other countries and jurisdictions. In case the English version does not conform to the Chinese version,the Chinese version prevails.
II. Financial statement
Consolidated Balance Sheet
December 31, 2023Prepared by: Yifeng Pharmacy Chain Co.,Ltd. Unit: yuan
| Assets | Note No. | December 31, 2023 | December 31, 2022 |
Current assets:
| Current assets: | |||
| Cash and bank balances | VII. 1 | 3,565,905,738.81 | 4,112,519,204.66 |
| Settlement funds | |||
| Loans to other banks | |||
| Held-for-trading financial assets | VII. 2 | 1,630,720,887.94 | 50,045,139.45 |
| Derivative financial assets | VII. 3 | ||
| Notes receivable | VII. 4 | ||
| Accounts receivable | VII. 5 | 2,138,274,319.88 | 1,843,940,879.13 |
Receivables financing
| Receivables financing | VII. 7 | 11,889,888.58 | 1,784,671.86 |
| Advances paid | VII. 8 | 141,493,810.64 | 225,472,636.75 |
| Premiums receivable | |||
| Reinsurance accounts receivable | |||
| Reinsurance reserve receivable | |||
| Other receivables | VII. 9 | 448,538,089.70 | 419,472,054.84 |
| Including: Interests receivable | |||
| Dividends receivable | |||
| Financial assets under reverse repo | |||
| Inventories | VII. 10 | 3,807,963,660.86 | 3,614,549,276.03 |
Contract assets
| Contract assets | VII. 6 | ||
| Assets held for sale | VII. 11 | ||
| Non-current assets due within one year | VII. 12 | ||
| Other current assets | VII. 13 | 384,124,342.84 | 310,439,549.32 |
| Total current assets | 12,128,910,739.25 | 10,578,223,412.04 | |
| Non-current assets: | |||
| Loans and advances | |||
| Debt investments | VII. 14 | 154,167,777.78 | |
| Other debt investments | VII. 15 |
Long-term receivables
| Long-term receivables | VII. 16 | ||
| Long-term equity investments | VII. 17 | 5,565,690.31 | 5,249,115.35 |
| Other equity instrument investments | VII. 18 | 432,225,200.00 | 327,379,600.00 |
| Other non-current financial assets | VII. 19 | 1,010,000.00 | 1,460,000.00 |
| Investment property | VII. 20 | ||
| Fixed assets | VII. 21 | 1,524,048,536.46 | 1,218,512,066.08 |
| Construction in progress | VII. 22 | 175,121,866.79 | 239,848,057.90 |
| Productive biological assets | VII. 23 | ||
| Oil & gas assets | VII. 24 |
| Right-of-use assets | VII. 25 | 3,965,884,425.82 | 3,433,622,232.34 |
| Intangible assets | VII. 26 | 470,972,498.88 | 478,199,532.34 |
| Development expenditures | 3,496,698.64 | 7,251,672.96 | |
| Goodwill | VII. 27 | 4,610,549,279.24 | 4,187,923,745.35 |
| Long-term prepayments | VII. 28 | 495,647,138.93 | 423,440,650.85 |
| Deferred tax assets | VII. 29 | 138,670,316.75 | 127,683,398.33 |
Other non-current assets
| Other non-current assets | VII. 30 | 30,269,025.79 | 7,230,498.45 |
| Total non-current assets | 12,007,628,455.39 | 10,457,800,569.95 | |
| Total assets | 24,136,539,194.64 | 21,036,023,981.99 |
Legal representative: Officer in charge of accounting: Head of accounting department:
Consolidated Balance Sheet (Continued)
December 31, 2023Prepared by: Yifeng Pharmacy Chain Co.,Ltd. Unit: yuan
| Liabilities & Equity | Note No. | December 31, 2023 | December 31, 2022 |
Current liabilities:
| Current liabilities: | |||
| Short-term borrowings | VII. 32 | ||
| Central bank loans | |||
| Loans from other banks | |||
| Held-for-trading financial liabilities | VII. 33 | ||
| Derivative financial liabilities | VII. 34 | ||
| Notes payable | VII. 35 | 6,215,388,292.66 | 5,082,931,546.02 |
| Accounts payable | VII. 36 | 1,955,564,568.05 | 1,677,740,647.28 |
| Advances received | VII. 37 | 15,959,550.59 | 6,078,020.28 |
| Contract liabilities | VII. 38 | 80,166,931.03 | 60,685,079.13 |
Financial liabilities under repo
| Financial liabilities under repo | |||
| Absorbing deposit and interbank deposit | |||
| Deposits for agency security transaction | |||
| Deposits for agency security underwriting | |||
| Employee benefits payable | VII. 39 | 463,733,610.00 | 505,211,513.30 |
| Taxes and rates payable | VII. 40 | 263,088,153.57 | 283,427,593.13 |
| Other payables | VII. 41 | 810,446,678.28 | 760,185,299.36 |
| Handling fees and commissions payable | |||
| Reinsurance accounts payable | |||
| Liabilities held for sale | VII. 42 |
Non-current liabilities due within one year
| Non-current liabilities due within one year | VII. 43 | 1,458,466,797.74 | 1,277,799,825.50 |
| Other current liabilities | VII. 44 | 6,656,678.33 | 5,215,576.73 |
| Total current liabilities | 11,269,471,260.25 | 9,659,275,100.73 | |
| Non-current liabilities: | |||
| Insurance policy reserve | |||
| Long-term borrowings | VII. 45 | 133,617,147.68 | 228,668,070.87 |
| Bonds payable | VII. 46 | ||
| Including: Preferred shares | |||
| Perpetual bonds |
Lease liabilities
| Lease liabilities | VII. 47 | 2,205,510,311.80 | 1,951,076,403.19 |
| Long-term payables | VII. 48 | ||
| Long-term employee benefits payable | VII. 49 | ||
| Provisions | VII. 50 | ||
| Deferred income | VII. 51 | 54,094,246.44 | 54,689,784.63 |
| Deferred tax liabilities | VII. 29 | 26,758,566.63 | 23,710,293.77 |
| Other non-current liabilities | VII. 52 |
| Total non-current liabilities | 2,419,980,272.55 | 2,258,144,552.46 | |
| Total liabilities | 13,689,451,532.80 | 11,917,419,653.19 | |
| Equity: | |||
| Share capital | VII. 53 | 1,010,579,797.00 | 721,704,930.00 |
| Other equity instruments | VII. 54 | ||
| Including: Preferred shares |
Perpetual bonds
| Perpetual bonds | |||
| Capital reserve | VII. 55 | 3,842,147,881.80 | 4,076,700,083.91 |
| Less: Treasury shares | VII. 56 | 42,238,481.15 | 77,410,952.00 |
| Other comprehensive income | VII. 57 | 21,416,709.49 | -17,001,709.05 |
| Special reserve | VII. 58 | ||
| Surplus reserve | VII. 59 | 198,282,150.00 | 132,066,047.02 |
| General risk reserve | |||
| Undistributed profit | VII. 60 | 4,774,244,419.42 | 3,717,157,469.99 |
| Total equity attributable to the parent company | 9,804,432,476.56 | 8,553,215,869.87 |
Non-controlling interest
| Non-controlling interest | 642,655,185.28 | 565,388,458.93 | |
| Total equity | 10,447,087,661.84 | 9,118,604,328.80 | |
| Total liabilities & equity | 24,136,539,194.64 | 21,036,023,981.99 |
Legal representative: Officer in charge of accounting: Head of accounting department:
Balance Sheet of Parent Company
December 31, 2023Prepared by: Yifeng Pharmacy Chain Co.,Ltd. Unit: yuan
| Assets | Note No. | December 31, 2023 | December 31, 2022 |
| Current assets: | |||
| Cash and bank balances | 2,589,345,354.69 | 2,865,759,276.87 |
Held-for-trading financial assets
| Held-for-trading financial assets | 972,143,189.04 | 50,045,139.45 | |
| Derivative financial assets | |||
| Notes receivable | |||
| Accounts receivable | XIX. 1 | 487,341,632.68 | 344,639,433.59 |
| Receivables financing | |||
| Advances paid | 2,212,269,168.23 | 3,303,479,383.69 | |
| Other receivables | XIX. 2 | 1,376,615,421.54 | 816,358,778.99 |
| Including: Interests receivable | 855,724.12 | ||
| Dividends receivable | 581,621,336.22 | 68,563,059.65 | |
| Inventories | 480,579,869.08 | 495,427,259.49 |
Contract assets
| Contract assets | |||
| Assets held for sale | |||
| Non-current assets due within one year | |||
| Other current assets | 128,463,091.48 | 119,888,080.77 | |
| Total current assets | 8,246,757,726.74 | 7,995,597,352.85 | |
| Non-current assets: | |||
| Debt investments | 154,167,777.78 | ||
| Other debt investments | |||
| Long-term receivables | |||
| Long-term equity investments | XIX. 3 | 2,600,755,329.68 | 2,597,255,329.68 |
Other equity instrument investments
| Other equity instrument investments | |||
| Other non-current financial assets | |||
| Investment property | |||
| Fixed assets | 170,678,947.01 | 149,991,447.13 | |
| Construction in progress | |||
| Productive biological assets | |||
| Oil & gas assets | |||
| Right-of-use assets | 869,222,301.66 | 784,552,311.43 | |
| Intangible assets | 142,328,025.69 | 137,318,631.63 | |
| Development expenditures | 3,496,698.64 | 4,626,957.17 |
Goodwill
| Goodwill | 405,394,296.50 | 399,394,296.50 | |
| Long-term prepayments | 114,167,539.56 | 96,782,189.99 | |
| Deferred tax assets | 13,867,342.16 | 14,748,536.60 | |
| Other non-current assets | 2,213,162.21 | 2,903,917.65 | |
| Total non-current assets | 4,476,291,420.89 | 4,187,573,617.78 |
| Total assets | 12,723,049,147.63 | 12,183,170,970.63 |
Legal representative: Officer in charge of accounting: Head of accounting department:
Balance Sheet of Parent Company (Continued)
December 31, 2023Prepared by: Yifeng Pharmacy Chain Co.,Ltd. Unit: yuan
| Liabilities & Equity | Note No. | December 31, 2023 | December 31, 2022 |
| Current liabilities: |
Short-term borrowings
| Short-term borrowings | |||
| Held-for-trading financial liabilities | |||
| Derivative financial liabilities | |||
| Notes payable | 5,387,925,216.92 | 5,043,026,204.10 | |
| Accounts payable | 187,161,288.67 | 555,273.39 | |
| Advances received | 1,155,174.30 | 873,707.70 | |
| Contract liabilities | 10,965,578.24 | 7,783,991.05 | |
| Employee benefits payable | 127,618,574.05 | 137,764,950.28 | |
| Taxes and rates payable | 28,669,793.51 | 39,071,023.95 | |
| Other payables | 455,998,486.77 | 875,799,337.72 |
Liabilities held for sale
| Liabilities held for sale | |||
| Non-current liabilities due within one year | 380,118,769.83 | 344,435,641.85 | |
| Other current liabilities | 552,665.15 | 392,313.15 | |
| Total current liabilities | 6,580,165,547.44 | 6,449,702,443.19 | |
| Non-current liabilities: | |||
| Long-term borrowings | 133,617,147.68 | 228,668,070.87 | |
| Bonds payable | |||
| Including: Preferred shares | |||
| Perpetual bonds | |||
| Lease liabilities | 488,787,821.39 | 438,009,237.81 |
Long-term payables
| Long-term payables | |||
| Long-term employee benefits payable | |||
| Provisions | |||
| Deferred income | 20,892.80 | 23,504.40 | |
| Deferred tax liabilities | |||
| Other non-current liabilities | |||
| Total non-current liabilities | 622,425,861.87 | 666,700,813.08 | |
| Total liabilities | 7,202,591,409.31 | 7,116,403,256.27 | |
| Equity: |
Share capital/Paid-in capital
| Share capital/Paid-in capital | 1,010,579,797.00 | 721,704,930.00 | |
| Other equity instruments | |||
| Including: Preferred shares | |||
| Perpetual bonds | |||
| Capital reserve | 3,840,152,133.25 | 4,083,988,504.95 | |
| Less: Treasury shares | 42,238,481.15 | 77,410,952.00 |
| Other comprehensive income | |||
| Special reserve | |||
| Surplus reserve | 198,282,150.00 | 132,066,047.02 | |
| Undistributed profit | 513,682,139.22 | 206,419,184.39 | |
| Total equity | 5,520,457,738.32 | 5,066,767,714.36 |
Total liabilities & equity
| Total liabilities & equity | 12,723,049,147.63 | 12,183,170,970.63 |
Legal representative: Officer in charge of accounting: Head of accounting department:
Consolidated Income Statement
January to December, 2023Prepared by: Yifeng Pharmacy Chain Co.,Ltd. Unit: yuan
| Items | Note No. | 2023 | 2022 |
I. Total operating revenue
| I. Total operating revenue | 22,588,227,402.22 | 19,886,395,835.95 | |
| Including: Operating revenue | VII. 61 | 22,588,227,402.22 | 19,886,395,835.95 |
| Interest income | |||
| Premiums earned | |||
| Revenue from handling fees and commissions | |||
| II. Total operating cost | 20,616,597,464.58 | 18,008,275,241.10 | |
| Including: Operating cost | VII. 61 | 13,957,598,854.74 | 12,025,564,042.05 |
| Interest expenses | |||
| Handling fees and commissions |
Surrender value
| Surrender value | |||
| Net payment of insurance claims | |||
| Net provision of insurance policy reserve | |||
| Premium bonus expenditures | |||
| Reinsurance expenses | |||
| Taxes and surcharges | VII. 62 | 89,389,002.35 | 70,255,483.75 |
| Selling expenses | VII. 63 | 5,487,450,160.02 | 4,878,272,940.17 |
| Administrative expenses | VII. 64 | 962,424,859.48 | 904,060,660.30 |
| R&D expenses | VII. 65 | 33,549,984.91 | 25,309,639.00 |
| Financial expenses | VII. 66 | 86,184,603.08 | 104,812,475.83 |
Including: Interest expenses
| Including: Interest expenses | 160,528,586.40 | 165,208,532.62 | |
| Interest income | 93,286,397.47 | 73,208,764.18 | |
| Add: Other income | VII. 67 | 76,134,913.66 | 43,861,162.79 |
| Investment income (or less: losses) | VII. 68 | 42,372,208.53 | 6,868,722.97 |
| Including: Investment income from associates and joint ventures | 316,574.96 | -11,413.00 | |
| Gains from derecognition of financial assets at amortized cost | |||
| Gains on foreign exchange (or less: losses) | |||
| Gains on net exposure to hedging risk (or less: losses) | VII. 69 | ||
| Gains on changes in fair value (or less: losses) | VII. 70 | ||
| Credit impairment loss | VII. 71 | -4,537,333.68 | -10,465,943.08 |
Assets impairment loss
| Assets impairment loss | VII. 72 | -72,633,545.68 | -56,018,740.98 |
| Gains on asset disposal (or less: losses) | VII. 73 | 41,818,933.72 | 23,167,141.50 |
| III. Operating profit (or less: losses) | 2,054,785,114.19 | 1,885,532,938.05 | |
| Add: Non-operating revenue | VII. 74 | 12,704,923.41 | 12,241,598.87 |
| Less: Non-operating expenditures | VII. 75 | 29,896,117.67 | 20,287,509.79 |
| IV. Profit before tax (or less: total loss) | 2,037,593,919.93 | 1,877,487,027.13 | |
| Less: Income tax expenses | VII. 76 | 456,662,974.49 | 454,060,994.95 |
| V. Net profit (or less: net loss) | 1,580,930,945.44 | 1,423,426,032.18 |
| (I) Categorized by the continuity of operations | |||
| 1. Net profit from continuing operations (or less: net loss) | 1,580,930,945.44 | 1,423,426,032.18 | |
| 2. Net profit from discontinued operations (or less: net loss) | |||
| (II) Categorized by the portion of equity ownership | |||
| 1. Net profit attributable to owners of parent company (or less: net loss) | 1,411,985,024.41 | 1,261,841,039.80 | |
| 2. Net profit attributable to non-controlling shareholders (or less: net loss) | 168,945,921.03 | 161,584,992.38 |
VI. Other comprehensive income after tax
| VI. Other comprehensive income after tax | VII. 77 | 38,418,418.54 | -17,001,709.05 |
| Items attributable to the owners of the parent company | 38,418,418.54 | -17,001,709.05 | |
| (I) Not to be reclassified subsequently to profit or loss | 38,418,418.54 | -17,001,709.05 | |
| 1. Remeasurements of the net defined benefit plan | |||
| 2. Items under equity method that will not be reclassified to profit or loss | |||
| 3. Changes in fair value of other equity instrument investments | 38,418,418.54 | -17,001,709.05 | |
| 4. Changes in fair value of own credit risk | |||
| 5. Others | |||
| (II) To be reclassified subsequently to profit or loss |
1. Items under equity method that may be reclassified to profit or loss
| 1. Items under equity method that may be reclassified to profit or loss | |||
| 2. Changes in fair value of other debt investments | |||
| 3. Profit or loss from reclassification of financial assets into other comprehensive income | |||
| 4. Provision for credit impairment of other debt investments | |||
| 5. Cash flow hedging reserve | |||
| 6. Translation reserve | |||
| 7. Others | |||
| Items attributable to non-controlling shareholders | |||
| VII. Total comprehensive income | 1,619,349,363.98 | 1,406,424,323.13 | |
| Items attributable to the owners of the parent company | 1,450,403,442.95 | 1,244,839,330.75 |
Items attributable to non-controlling shareholders
| Items attributable to non-controlling shareholders | 168,945,921.03 | 161,584,992.38 | |
| VIII. Earnings per share (EPS): | |||
| (I) Basic EPS (yuan per share) | 1.40 | 1.26 | |
| (II) Diluted EPS (yuan per share) | 1.40 | 1.25 |
Legal representative: Officer in charge of accounting: Head of accounting department:
Income Statement of Parent Company
January to December, 2023Prepared by: Yifeng Pharmacy Chain Co.,Ltd.Unit: yuan
| Items | Note No. | 2023 | 2022 |
I. Operating revenue
| I. Operating revenue | XIX. 4 | 4,842,155,820.34 | 4,518,941,977.59 |
| Less: Operating cost | XIX. 4 | 3,089,767,071.53 | 2,770,356,220.02 |
| Taxes and surcharges | 14,020,761.78 | 11,783,739.38 | |
| Selling expenses | 1,276,782,981.45 | 1,148,350,861.94 | |
| Administrative expenses | 374,674,994.87 | 347,308,810.22 |
R&D expenses
| R&D expenses | 13,982,978.42 | 14,487,756.37 | |
| Financial expenses | -21,125,905.27 | -1,401,909.73 | |
| Including: Interest expenses | 40,682,565.32 | 47,988,472.23 | |
| Interest income | 72,060,729.92 | 54,901,970.99 | |
| Add: Other income | 14,475,454.01 | 10,149,594.62 | |
| Investment income (or less: losses) | XIX. 5 | 600,876,424.57 | 71,027,846.34 |
| Including: Investment income from associates and joint ventures | |||
| Gains from derecognition of financial assets at amortized cost | |||
| Gains on net exposure to hedging risk (or less: losses) | |||
| Gains on changes in fair value (or less: losses) |
Credit impairment loss
| Credit impairment loss | -3,813,565.50 | -3,201,193.20 | |
| Assets impairment loss | -10,494,191.46 | -7,077,019.03 | |
| Gains on asset disposal (or less: losses) | 5,131,144.70 | 2,934,769.69 | |
| II. Operating profit (or less: losses) | 700,228,203.88 | 301,890,497.81 | |
| Add: Non-operating revenue | 1,132,102.04 | 3,150,323.65 | |
| Less: Non-operating expenditures | 10,705,794.40 | 8,408,883.38 | |
| III. Profit before tax (or less: total loss) | 690,654,511.52 | 296,631,938.08 | |
| Less: Income tax expenses | 28,493,481.71 | 60,491,990.43 | |
| IV. Net profit (or less: net loss) | 662,161,029.81 | 236,139,947.65 | |
| (I) Net profit from continuing operations (or less: net loss) | 662,161,029.81 | 236,139,947.65 |
(II) Net profit from discontinued operations (or less: net loss)
| (II) Net profit from discontinued operations (or less: net loss) | |||
| V. Other comprehensive income after tax | |||
| (I) Not to be reclassified subsequently to profit or loss | |||
| 1. Remeasurements of the net defined benefit plan | |||
| 2. Items under equity method that will not be reclassified to profit or loss | |||
| 3. Changes in fair value of other equity instrument investments | |||
| 4. Changes in fair value of own credit risk | |||
| 5. Others | |||
| (II) To be reclassified subsequently to profit or loss | |||
| 1. Items under equity method that may be reclassified to profit or loss |
2. Changes in fair value of other debt investments
| 2. Changes in fair value of other debt investments |
| 3. Profit or loss from reclassification of financial assets into other comprehensive income | |||
| 4. Provision for credit impairment of other debt investments | |||
| 5. Cash flow hedging reserve | |||
| 6. Translation reserve | |||
| 7. Others | |||
| VI. Total comprehensive income | 662,161,029.81 | 236,139,947.65 | |
| VII. Earnings per share (EPS): | |||
| (I) Basic EPS (yuan per share) | |||
| (II) Diluted EPS (yuan per share) |
Legal representative: Officer in charge of accounting: Head of accounting department:
Consolidated Cash Flow Statement
January to December, 2023Prepared by: Yifeng Pharmacy Chain Co.,Ltd.Unit: yuan
| Items | Note No. | 2023 | 2022 |
I. Cash flows from operating activities:
| I. Cash flows from operating activities: | |||
| Cash receipts from sale of goods or rendering of services | 23,683,336,044.51 | 20,516,702,909.97 | |
| Net increase of client deposit and interbank deposit | |||
| Net increase of central bank loans | |||
| Net increase of loans from other financial institutions |
Cash receipts from original insurance contract premium
| Cash receipts from original insurance contract premium | |||
| Net cash receipts from reinsurance | |||
| Net increase of policy-holder deposit and investment | |||
| Cash receipts from interest, handling fees and commissions | |||
| Net increase of loans from others | |||
| Net increase of repurchase | |||
| Net cash receipts from agency security transaction | |||
| Receipts of tax refund | |||
| Other cash receipts related to operating activities | VII. 78 | 450,020,711.44 | 159,890,326.70 |
| Subtotal of cash inflows from operating activities | 24,133,356,755.95 | 20,676,593,236.67 |
Cash payments for goods purchased and services received
| Cash payments for goods purchased and services received | 13,337,334,333.88 | 11,459,225,603.79 | |
| Net increase of loans and advances to clients | |||
| Net increase of central bank deposit and interbank deposit | |||
| Cash payments for insurance indemnities of original insurance contracts | |||
| Net increase of loans to others | |||
| Cash payments for interest, handling fees and commissions | |||
| Cash payments for policy bonus | |||
| Cash paid to and on behalf of employees | 3,661,988,972.50 | 3,089,512,042.29 | |
| Cash payments for taxes and rates | 1,308,087,630.24 | 1,053,051,300.43 | |
| Other cash payments related to operating activities | VII. 78 | 1,202,205,023.73 | 1,154,536,986.01 |
Subtotal of cash outflows from operating activities
| Subtotal of cash outflows from operating activities | 19,509,615,960.35 | 16,756,325,932.52 | |
| Net cash flows from operating activities | 4,623,740,795.60 | 3,920,267,304.15 | |
| II. Cash flows from investing activities: | |||
| Cash receipts from withdrawal of investments | 450,000.00 | ||
| Cash receipts from investment income | 17,084,000.00 | ||
| Net cash receipts from the disposal of fixed assets, intangible assets and other long-term assets | 15,780,909.19 | 9,027,812.92 | |
| Net cash receipts from the disposal of subsidiaries & other business units | |||
| Other cash receipts related to investing activities | VII. 78 | 3,682,480,295.18 | 719,096,406.63 |
| Subtotal of cash inflows from investing activities | 3,715,795,204.37 | 728,124,219.55 | |
| Cash payments for the acquisition of fixed assets, intangible assets and other long-term assets | 739,924,631.96 | 587,505,758.95 | |
| Cash payments for investments | 53,621,041.95 | 350,048,545.40 |
| Items | Note No. | 2023 | 2022 |
| Net increase of pledged borrowings | |||
| Net cash payments for the acquisition of subsidiaries & other business units | 498,820,605.67 | 450,556,053.70 | |
| Other cash payments related to investing activities | VII. 78 | 5,403,750,000.00 | 614,015,070.00 |
| Subtotal of cash outflows from investing activities | 6,696,116,279.58 | 2,002,125,428.05 |
Net cash flows from investing activities
| Net cash flows from investing activities | -2,980,321,075.21 | -1,274,001,208.50 | |
| III. Cash flows from financing activities: | |||
| Cash receipts from absorbing investments | 17,040,791.00 | 77,410,952.00 | |
| Including: Cash received by subsidiaries from non-controlling shareholders as investments | 9,650,000.00 | ||
| Cash receipts from borrowings | 80,000,000.00 | ||
| Other cash receipts related to financing activities | VII. 78 | ||
| Subtotal of cash inflows from financing activities | 17,040,791.00 | 157,410,952.00 | |
| Cash payments for the repayment of borrowings | 84,359,893.40 | 131,693,919.80 | |
| Cash payments for distribution of dividends or profits and for interest expenses | 416,763,539.36 | 316,214,007.36 | |
| Including: Cash paid by subsidiaries to non-controlling shareholders as dividend or profit | 94,880,937.07 | 81,195,720.31 | |
| Other cash payments related to financing activities | VII. 78 | 1,608,956,587.47 | 1,364,769,958.60 |
| Subtotal of cash outflows from financing activities | 2,110,080,020.23 | 1,812,677,885.76 | |
| Net cash flows from financing activities | -2,093,039,229.23 | -1,655,266,933.76 | |
| IV. Effect of foreign exchange rate changes on cash and cash equivalents | |||
| V. Net increase in cash and cash equivalents | -449,619,508.85 | 990,999,161.88 | |
| Add: Opening balance of cash and cash equivalents | 2,918,199,648.45 | 1,927,200,486.57 | |
| VI. Closing balance of cash and cash equivalents | 2,468,580,139.60 | 2,918,199,648.45 |
Legal representative: Officer in charge of accounting: Head of accounting department:
Cash Flow Statement of Parent Company
January to December, 2023Prepared by: Yifeng Pharmacy Chain Co.,Ltd.Unit: yuan
| Items | Note No. | 2023 | 2022 |
| I. Cash flows from operating activities: |
Cash receipts from sale of goods and rendering of services
| Cash receipts from sale of goods and rendering of services | 4,913,634,231.73 | 4,617,075,292.59 | |
| Receipts of tax refund | |||
| Other cash receipts related to operating activities | 311,864,356.44 | 819,463,173.14 | |
| Subtotal of cash inflows from operating activities | 5,225,498,588.17 | 5,436,538,465.73 | |
| Cash payments for goods purchased and services received | 1,589,164,751.18 | 2,546,455,039.86 | |
| Cash paid to and on behalf of employees | 919,703,595.62 | 788,150,846.88 | |
| Cash payments for taxes and rates | 129,163,756.25 | 153,808,163.57 | |
| Other cash payments related to operating activities | 830,703,798.67 | 539,825,433.56 | |
| Subtotal of cash outflows from operating activities | 3,468,735,901.71 | 4,028,239,483.87 |
Net cash flows from operating activities
| Net cash flows from operating activities | 1,756,762,686.46 | 1,408,298,981.86 | |
| II. Cash flows from investing activities: | |||
| Cash receipts from withdrawal of investments | |||
| Cash receipts from investment income | 72,230,797.25 | 21,593,455.34 | |
| Net cash receipts from the disposal of fixed assets, intangible assets and other long-term assets | 4,960,151.28 | 3,744,877.80 | |
| Net cash receipts from the disposal of subsidiaries & other business units | |||
| Other cash receipts related to investing activities | 2,398,465,799.26 | 719,383,062.88 | |
| Subtotal of cash inflows from investing activities | 2,475,656,747.79 | 744,721,396.03 |
Cash payments for the acquisition of fixed assets, intangible assets
and other long-term assets
| Cash payments for the acquisition of fixed assets, intangible assets and other long-term assets | 133,579,184.57 | 120,290,081.83 | |
| Cash payments for investments | 630,000.00 | ||
| Net cash payments for the acquisition of subsidiaries & other business units | 30,346,303.14 | 239,790,000.00 | |
| Other cash payments related to investing activities | 3,460,000,000.00 | 610,000,000.00 | |
| Subtotal of cash outflows from investing activities | 3,623,925,487.71 | 970,710,081.83 | |
| Net cash flows from investing activities | -1,148,268,739.92 | -225,988,685.80 | |
| III. Cash flows from financing activities: |
Cash receipts from absorbing investments
| Cash receipts from absorbing investments | 7,390,791.00 | 77,410,952.00 | |
| Cash receipts from borrowings | 80,000,000.00 | ||
| Other cash receipts related to financing activities | |||
| Subtotal of cash inflows from financing activities | 7,390,791.00 | 157,410,952.00 | |
| Cash payments for the repayment of borrowings | 84,359,893.40 | 128,193,919.80 | |
| Cash payments for distribution of dividends or profits and for interest expenses | 300,267,449.66 | 233,650,614.00 | |
| Other cash payments related to financing activities | 338,759,264.61 | 255,604,135.23 | |
| Subtotal of cash outflows from financing activities | 723,386,607.67 | 617,448,669.03 | |
| Net cash flows from financing activities | -715,995,816.67 | -460,037,717.03 |
| Items | Note No. | 2023 | 2022 |
| IV. Effect of foreign exchange rate changes on cash and cash equivalents | |||
| V. Net increase in cash and cash equivalents | -107,501,870.13 | 722,272,579.02 | |
| Add: Opening balance of cash and cash equivalents | 1,838,707,151.48 | 1,116,434,572.46 | |
| VI. Closing balance of cash and cash equivalents | 1,731,205,281.35 | 1,838,707,151.49 |
Legal representative: Officer in charge of accounting: Head of accounting department:
Consolidated Statement of Changes in Shareholders’ Equity
January to December, 2023Prepared by: Yifeng Pharmacy Chain Co.,Ltd.Unit: yuan
| Items | 2023 | ||||||||||||
| Equity attributable to parent company | Non-controlling interest | Total equity | |||||||||||
| Share capital/ Paid-in capital | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensive income | Special reserve | Surplus reserve | General risk reserve | Undistributed profit | |||||
| Preferred shares | Perpetual bonds | Others | |||||||||||
I. Balance at the end of prior year
| I. Balance at the end of prior year | 721,704,930.00 | 4,076,700,083.91 | 77,410,952.00 | -17,001,709.05 | 132,066,047.02 | 3,717,157,469.99 | 565,388,458.93 | 9,118,604,328.80 | |||||
| Add: Cumulative changes of accounting policies |
Error correction of prior period
| Error correction of prior period | |||||||||||||
| Business combination under common control |
Others
| Others | |||||||||||||
| II. Balance at the beginning of current year | 721,704,930.00 | 4,076,700,083.91 | 77,410,952.00 | -17,001,709.05 | 132,066,047.02 | 3,717,157,469.99 | 565,388,458.93 | 9,118,604,328.80 |
III. Current period increase (or less: decrease)
| III. Current period increase (or less: decrease) | 288,874,867.00 | -234,552,202.11 | -35,172,470.85 | 38,418,418.54 | 66,216,102.98 | 1,057,086,949.43 | 77,266,726.35 | 1,328,483,333.04 | |||||
| (I) Total comprehensive income | 38,418,418.54 | 1,411,985,024.41 | 168,945,921.03 | 1,619,349,363.98 |
(II) Capital contributed or withdrawn by owners
| (II) Capital contributed or withdrawn by owners | 192,895.00 | 44,845,600.30 | -35,172,470.85 | 3,201,742.39 | 83,412,708.54 | ||||||||
| 1. Ordinary shares contributed by owners | 390,015.00 | 7,000,776.00 | 7,390,791.00 | 9,650,000.00 | 9,650,000.00 | ||||||||
| 2. Capital contributed by holders of other equity instruments |
3. Amount of share-based payment included in
equity
| 3. Amount of share-based payment included in equity | 41,169,112.30 | 41,169,112.30 | |||||||||||
| 4. Others | -197,120.00 | -3,324,288.00 | -42,563,261.85 | -6,448,257.61 | 32,593,596.24 |
(III) Profit distribution
| (III) Profit distribution | 9,284,169.59 | 66,216,102.98 | -354,898,074.98 | -94,880,937.07 | -374,278,739.48 | ||||||||
| 1. Appropriation of surplus reserve | 66,216,102.98 | -66,216,102.98 |
2. Appropriation of general risk reserve
| 2. Appropriation of general risk reserve | |||||||||||||
| 3. Appropriation of profit to owners | -288,681,972.00 | -94,880,937.07 | -383,562,909.07 |
4. Others
| 4. Others | 9,284,169.59 | 9,284,169.59 | |||||||||||
| (IV) Internal carry-over within equity | 288,681,972.00 | -288,681,972.00 |
1. Transfer of capital reserve to capital
| 1. Transfer of capital reserve to capital | 288,681,972.00 | -288,681,972.00 | |||||||||||
| 2. Transfer of surplus reserve to capital |
3. Surplus reserve to cover losses
| 3. Surplus reserve to cover losses | |||||||||||||
| 4. Changes in defined benefit plan carried over to retained earnings | |||||||||||||
| 5. Other comprehensive income carried over to retained earnings |
6. Others
| 6. Others | |||||||||||||
| (V) Special reserve |
1. Current period appropriation
| 1. Current period appropriation | |||||||||||||
| 2. Current period use |
(VI) Others
| (VI) Others | |||||||||||||
| IV. Balance at the end of current period | 1,010,579,797.00 | 3,842,147,881.80 | 42,238,481.15 | 21,416,709.49 | 198,282,150.00 | 4,774,244,419.42 | 642,655,185.28 | 10,447,087,661.84 |
Legal representative: Officer in charge of accounting: Head of accounting department:
Consolidated Statement of Changes in Shareholders’ Equity (Continued)
January to December, 2023Prepared by: Yifeng Pharmacy Chain Co.,Ltd.Unit: yuan
| Items | 2022 | ||||||||||||
| Equity attributable to parent company | Non-controlling interest | Total equity | |||||||||||
| Share capital/ Paid-in capital | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensive income | Special reserve | Surplus reserve | General risk reserve | Undistributed profit | |||||
| Preferred shares | Perpetual bonds | Others | |||||||||||
I. Balance at the end of prior year
| I. Balance at the end of prior year | 718,765,340.00 | 3,988,243,959.41 | 27,762,448.00 | 108,480,125.50 | 2,693,579,088.57 | 383,241,933.05 | 7,864,547,998.53 |
Add: Cumulative changes of accounting policies
| Add: Cumulative changes of accounting policies | 906,182.14 | 906,182.14 |
Error correction of prior period
| Error correction of prior period |
Business combination under common control
| Business combination under common control |
Others
| Others |
II. Balance at the beginning of current year
| II. Balance at the beginning of current year | 718,765,340.00 | 3,988,243,959.41 | 27,762,448.00 | 108,480,125.50 | 2,694,485,270.71 | 383,241,933.05 | 7,865,454,180.67 |
III. Current period increase (or less: decrease)
| III. Current period increase (or less: decrease) | 2,939,590.00 | 88,456,124.50 | 49,648,504.00 | -17,001,709.05 | 23,585,921.52 | 1,022,672,199.28 | 182,146,525.88 | 1,253,150,148.13 |
(I) Total comprehensive income
| (I) Total comprehensive income | -17,001,709.05 | 1,261,841,039.80 | 161,584,992.38 | 1,406,424,323.13 |
(II) Capital contributed or withdrawn by owners
| (II) Capital contributed or withdrawn by owners | 2,939,590.00 | 88,456,124.50 | 49,648,504.00 | 101,757,253.82 | 143,504,464.32 |
1. Ordinary shares contributed by owners
| 1. Ordinary shares contributed by owners | 3,095,200.00 | 74,315,752.00 | 77,410,952.00 |
2. Capital contributed by holders of other equity
instruments
| 2. Capital contributed by holders of other equity instruments |
3. Amount of share-based payment included in
equity
| 3. Amount of share-based payment included in equity | 23,159,834.00 | 23,159,834.00 |
4. Others
| 4. Others | -155,610.00 | -9,019,461.50 | -27,762,448.00 | 101,757,253.82 | 120,344,630.32 | ||||||||
| (III) Profit distribution | 23,585,921.52 | -239,168,840.52 | -81,195,720.31 | -296,778,639.31 |
1. Appropriation of surplus reserve
| 1. Appropriation of surplus reserve | 23,585,921.52 | -23,585,921.52 |
2. Appropriation of general risk reserve
| 2. Appropriation of general risk reserve |
3. Appropriation of profit to owners
| 3. Appropriation of profit to owners | -215,582,919.00 | -81,195,720.31 | -296,778,639.31 |
4. Others
| 4. Others |
(IV) Internal carry-over within equity
| (IV) Internal carry-over within equity |
1. Transfer of capital reserve to capital
| 1. Transfer of capital reserve to capital |
2. Transfer of surplus reserve to capital
| 2. Transfer of surplus reserve to capital |
| Items | 2022 | ||||||||||||
| Equity attributable to parent company | Non-controlling interest | Total equity | |||||||||||
| Share capital/ Paid-in capital | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensive income | Special reserve | Surplus reserve | General risk reserve | Undistributed profit | |||||
| Preferred shares | Perpetual bonds | Others | |||||||||||
3. Surplus reserve to cover losses
| 3. Surplus reserve to cover losses |
4. Changes in defined benefit plan carried over to
retained earnings
| 4. Changes in defined benefit plan carried over to retained earnings |
5. Other comprehensive income carried over to
retained earnings
| 5. Other comprehensive income carried over to retained earnings |
6. Others
| 6. Others |
(V) Special reserve
| (V) Special reserve |
1. Current period appropriation
| 1. Current period appropriation |
2. Current period use
| 2. Current period use |
(VI) Others
| (VI) Others | |||||||||||||
| IV. Balance at the end of current period | 721,704,930.00 | 4,076,700,083.91 | 77,410,952.00 | -17,001,709.05 | 132,066,047.02 | 3,717,157,469.99 | 565,388,458.93 | 9,118,604,328.80 |
Legal representative: Officer in charge of accounting: Head of accounting department:
Statement of Changes in Shareholders’ Equity of Parent Company
January to December, 2023Prepared by: Yifeng Pharmacy Chain Co.,Ltd.Unit: yuan
| Items | 2023 | ||||||||||
| Share capital/ Paid-in capital | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensive income | Special reserve | Surplus reserve | Undistributed profit | Total equity | |||
| Preferred shares | Perpetual bonds | Others | |||||||||
| I. Balance at the end of prior year | 721,704,930.00 | 4,083,988,504.95 | 77,410,952.00 | 132,066,047.02 | 206,419,184.39 | 5,066,767,714.36 | |||||
Add: Cumulative changes of accounting policies
| Add: Cumulative changes of accounting policies | |||||||||||
| Error correction of prior period |
Others
| Others |
II. Balance at the beginning of current year
| II. Balance at the beginning of current year | 721,704,930.00 | 4,083,988,504.95 | 77,410,952.00 | 132,066,047.02 | 206,419,184.39 | 5,066,767,714.36 | |||||
| III. Current period increase (or less: decrease) | 288,874,867.00 | -243,836,371.70 | -35,172,470.85 | 66,216,102.98 | 307,262,954.83 | 453,690,023.96 |
(I) Total comprehensive income
| (I) Total comprehensive income | 662,161,029.81 | 662,161,029.81 | |||||||||
| (II) Capital contributed or withdrawn by owners | 192,895.00 | 44,845,600.30 | -35,172,470.85 | 80,210,966.15 |
1. Ordinary shares contributed by owners
| 1. Ordinary shares contributed by owners | 390,015.00 | 7,000,776.00 | 7,390,791.00 | ||||||||
| 2. Capital contributed by holders of other equity instruments | |||||||||||
| 3. Amount of share-based payment included in equity | 41,169,112.30 | 41,169,112.30 |
4. Others
| 4. Others | -197,120.00 | -3,324,288.00 | -42,563,261.85 | 39,041,853.85 |
(III) Profit distribution
| (III) Profit distribution | 66,216,102.98 | -354,898,074.98 | -288,681,972.00 | ||||||||
| 1. Appropriation of surplus reserve | 66,216,102.98 | -66,216,102.98 |
2. Appropriation of profit to owners
| 2. Appropriation of profit to owners | -288,681,972.00 | -288,681,972.00 | |||||||||
| 3. Others |
(IV) Internal carry-over within equity
| (IV) Internal carry-over within equity | 288,681,972.00 | -288,681,972.00 |
1. Transfer of capital reserve to capital
| 1. Transfer of capital reserve to capital | 288,681,972.00 | -288,681,972.00 | |||||||||
| 2. Transfer of surplus reserve to capital |
3. Surplus reserve to cover losses
| 3. Surplus reserve to cover losses | |||||||||||
| 4. Changes in defined benefit plan carried over to retained earnings | |||||||||||
| 5. Other comprehensive income carried over to retained earnings |
6. Others
| 6. Others |
(V) Special reserve
| (V) Special reserve | |||||||||||
| 1. Current period appropriation |
2. Current period use
| 2. Current period use |
(VI) Others
| (VI) Others | |||||||||||
| IV. Balance at the end of current period | 1,010,579,797.00 | 3,840,152,133.25 | 42,238,481.15 | 198,282,150.00 | 513,682,139.22 | 5,520,457,738.32 |
Legal representative: Officer in charge of accounting: Head of accounting department:
Statement of Changes in Shareholders’ Equity of Parent Company (Continued)
January to December, 2023Prepared by: Yifeng Pharmacy Chain Co.,Ltd.Unit: yuan
| Items | Preceding period comparative | ||||||||||
| Share capital/ Paid-in capital | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensive income | Special reserve | Surplus reserve | Undistributed profit | Total equity | |||
| Preferred shares | Perpetual bonds | Others | |||||||||
| I. Balance at the end of prior year | 718,765,340.00 | 3,989,207,574.55 | 27,762,448.00 | 108,480,125.50 | 214,116,856.58 | 5,002,807,448.63 | |||||
Add: Cumulative changes of accounting policies
| Add: Cumulative changes of accounting policies | -4,668,779.32 | -4,668,779.32 | |||||||||
| Error correction of prior period |
Others
| Others |
II. Balance at the beginning of current year
| II. Balance at the beginning of current year | 718,765,340.00 | 3,989,207,574.55 | 27,762,448.00 | 108,480,125.50 | 209,448,077.26 | 4,998,138,669.31 | |||||
| III. Current period increase (or less: decrease) | 2,939,590.00 | 94,780,930.40 | 49,648,504.00 | 23,585,921.52 | -3,028,892.87 | 68,629,045.05 |
(I) Total comprehensive income
| (I) Total comprehensive income | 236,139,947.65 | 236,139,947.65 |
(II) Capital contributed or withdrawn by owners
| (II) Capital contributed or withdrawn by owners | 2,939,590.00 | 94,780,930.40 | 49,648,504.00 | 48,072,016.40 | |||||||
| 1. Ordinary shares contributed by owners | 3,095,200.00 | 74,315,752.00 | 77,410,952.00 |
2. Capital contributed by holders of other equity
instruments
| 2. Capital contributed by holders of other equity instruments | |||||||||||
| 3. Amount of share-based payment included in equity | 23,159,834.00 | 23,159,834.00 |
4. Others
| 4. Others | -155,610.00 | -2,694,655.60 | -27,762,448.00 | 24,912,182.40 | |||||||
| (III) Profit distribution | 23,585,921.52 | -239,168,840.52 | -215,582,919.00 |
1. Appropriation of surplus reserve
| 1. Appropriation of surplus reserve | 23,585,921.52 | -23,585,921.52 |
2. Appropriation of profit to owners
| 2. Appropriation of profit to owners | -215,582,919.00 | -215,582,919.00 | |||||||||
| 3. Others |
(IV) Internal carry-over within equity
| (IV) Internal carry-over within equity | |||||||||||
| 1. Transfer of capital reserve to capital |
2. Transfer of surplus reserve to capital
| 2. Transfer of surplus reserve to capital |
3. Surplus reserve to cover losses
| 3. Surplus reserve to cover losses | |||||||||||
| 4. Changes in defined benefit plan carried over to retained earnings | |||||||||||
| 5. Other comprehensive income carried over to retained earnings |
6. Others
| 6. Others | |||||||||||
| (V) Special reserve |
1. Current period appropriation
| 1. Current period appropriation |
2. Current period use
| 2. Current period use | |||||||||||
| (VI) Others |
IV. Balance at the end of current period
| IV. Balance at the end of current period | 721,704,930.00 | 4,083,988,504.95 | 77,410,952.00 | 132,066,047.02 | 206,419,184.39 | 5,066,767,714.36 |
Legal representative: Officer in charge of accounting: Head of accounting department:
III Basic information of the Company
1. Company profile
? Applicable ? Not ApplicableYifeng Pharmacy Chain Co., Ltd. (the “Company”) was transformed from the former HunanYifeng Pharmacy Pharmaceutical Chain Co., Ltd., which was jointly invested and established byHunan Yifeng Pharmaceutical Investment Management Co., Ltd. and Zhu Rong. Hunan YifengPharmacy Pharmaceutical Chain Co., Ltd. was registered at Changde Administration for Industryand Commerce on June 20, 2008 and headquartered in Changsha City, Hunan Province. TheCompany currently holds a business license with unified social credit code of9143070067558223X2, with registered capital of 1,010,579,797.00 yuan, total share of1,010,579,797 shares (each with par value of one yuan), of which, 2,463,695 shares are restrictedoutstanding A shares, and 1,008,116,102 shares are unrestricted outstanding A shares. TheCompany’s shares were listed on the Shanghai Stock Exchange on February 17, 2015.The Company belongs to pharmaceutical retail industry and is mainly engaged in chain retailbusiness of drugs, health products, medical equipment, health-related convenience items, etc.The financial statements were approved and authorized for issue by the 39
th
meeting of the fourthsession of the Board of Directors dated April 26, 2024.
IV. Preparation basis of the financial statements
1. Preparation basis
The financial statements have been prepared on the basis of going concern.
2. Assessment of the ability to continue as a going concern
? Applicable ? Not ApplicableThe Company has no events or conditions that may cast significant doubts upon the Company’sability to continue as a going concern within the 12 months after the balance sheet date.
V. Significant accounting policies and estimatesImportant note:
? Applicable ? Not ApplicableThe Company has set up accounting policies and estimates on transactions or events such asimpairment of financial instruments, inventories, depreciation of fixed assets, construction inprogress, intangible assets, revenue recognition, etc., based on the Company’s actual productionand operation features.
1. Statement of compliance
The financial statements have been prepared in accordance with the requirements of ChinaAccounting Standards for Business Enterprises (CASBEs), and present truly and completely thefinancial position, financial performance and cash flows of the Company.
2. Accounting period
The accounting year of the Company runs from January 1 to December 31 under the Gregoriancalendar.
3. Operating cycle
? Applicable ? Not ApplicableThe Company has a relatively short operating cycle for its business, an asset or a liability isclassified as current if it is expected to be realized or due within 12 months.
4. Functional currency
The Company’s functional currency is Renminbi (RMB) Yuan.
5. Determination method and basis for selection of materiality
? Applicable ? Not ApplicableThe Company prepares and discloses financial statements in compliance with the principle ofmateriality. The items disclosed in notes to the financial statements involving materialityjudgements, determination method and basis for selection of materiality are as follows:
| Disclosed items involving materiality judgements | Note No. | Determination method and basis for selection of materiality |
| Significant advances paid with age over one year | Advances paid with single amount in excess of 0.3% of total assets are identified as significant advances paid. | |
| Significant other receivables with provision for bad debts made on an individual basis | Other receivables with provision for bad debts made on an individual basis with single amount in excess of 0.3% of total assets are identified as significant other receivables. | |
| Significant debt investments | Debt investments with single amount in excess of 0.3% of total assets are identified as significant debt investments. | |
| Significant construction in progress | VII 22 | Construction in progress with single amount in excess of 0.3% of total assets are identified as significant construction in progress. |
| Significant accounts payable with age over one year | Accounts payable with single amount in excess of 0.3% of total assets are identified as significant accounts payable. | |
| Significant other payables with age over one year | Other payables with single amount in excess of 0.3% of total assets are identified as significant other payables. | |
| Significant advances received with age over one year or overdue | Other payables with single amount in excess of 0.3% of total assets are identified as significant other payables. | |
| Significant contract liabilities with age over one year | Contract liabilities with single amount in excess of 0.3% of total assets are identified |
| Disclosed items involving materiality judgements | Note No. | Determination method and basis for selection of materiality |
| as significant contract liabilities. | ||
| Significant cash flows from investing activities | Cash flows from investing activities with single amount in excess of 5% of total assets are identified as significant cash flows from investing activities. | |
| Significant capitalized R&D projects | Capitalized R&D projects with single amount in excess of 0.3% of total assets are identified as significant capitalized R&D projects | |
| Significant subsidiaries, not wholly-owned subsidiaries | V 1 | Subsidiaries with total assets, total revenue, profit before tax in excess of 10% of the group’s total assets, total revenue, profit before tax in excess of 15% of the group’s revenue are identified as significant subsidiaries and significant not wholly-owned subsidiaries. |
| Significant joint ventures and associates | Joint ventures and associates with investment income (or absolute value of financial loss) in excess of 15% of the net profit attributable to the parent company in the consolidated financial statements, or with the book value of long-term equity investments in associated enterprises accounts in excess of 15% of the total assets in the consolidated financial statements of the company are identified as significant joint ventures and associates. | |
| Significant commitments | XVI 1 | Commitments with single amount in excess of 0.3% of total assets are identified as significant commitments. |
| Significant contingencies | XVII 1 | Contingencies with single amount in excess of 0.3% of total assets are identified as significant contingencies. |
6. Accounting treatments of business combination under and not under common control? Applicable ? Not Applicable
1. Accounting treatment of business combination under common control
Assets and liabilities arising from business combination are measured at carrying amount of thecombined party included in the consolidated financial statements of the ultimate controlling partyat the combination date. Difference between carrying amount of the equity of the combined partyincluded in the consolidated financial statements of the ultimate controlling party and that of thecombination consideration or total par value of shares issued is adjusted to capital reserve, if thebalance of capital reserve is insufficient to offset, any excess is adjusted to retained earnings.
2. Accounting treatment of business combination not under common control
When combination cost is in excess of the fair value of identifiable net assets obtained from theacquiree at the acquisition date, the excess is recognized as goodwill; otherwise, the fair value of
identifiable assets, liabilities and contingent liabilities, and the measurement of the combinationcost are reviewed, then the difference is recognized in profit or loss.
7. Judgement criteria for control and compilation method of consolidated financialstatements? Applicable ? Not Applicable
1. Judgement of control
An investor controls an investee if and only if the investor has all the following: (1) power overthe investee; (2) exposure, or rights, to variable returns from its involvement with the investee;and (3) the ability to use its power over the investee to affect the amount of the investor’s returns.
2. Compilation method of consolidated financial statements
(1) The parent company brings all its controlled subsidiaries into the consolidation scope. Theconsolidated financial statements are compiled by the parent company according to “CASBE 33 –Consolidated Financial Statements”, based on relevant information and the financial statements ofthe parent company and its subsidiaries.
8. Classification of joint arrangements and accounting treatment of joint operations? Applicable ? Not Applicable
1. Joint arrangements include joint operations and joint ventures.
2. When the Company is a joint operator of a joint operation, it recognizes the following items inrelation to its interest in a joint operation:
(1) its assets, including its share of any assets held jointly;
(2) its liabilities, including its share of any liabilities incurred jointly;
(3) its revenue from the sale of its share of the output arising from the joint operation;
(4) its share of the revenue from the sale of the assets by the joint operation; and
(5) its expenses, including its share of any expenses incurred jointly.
9. Recognition criteria of cash and cash equivalents
Cash as presented in cash flow statement refers to cash on hand and deposit on demand forpayment. Cash equivalents refer to short-term, highly liquid investments that can be readilyconverted to cash and that are subject to an insignificant risk of changes in value.
10. Foreign currency translation
? Applicable ? Not ApplicableTransactions denominated in foreign currency are translated into RMB yuan at the spot exchangerate at the transaction date at initial recognition. At the balance sheet date, monetary itemsdenominated in foreign currency are translated at the spot exchange rate at the balance sheet date
with difference, except for those arising from the principal and interest of exclusive borrowingseligible for capitalization, included in profit or loss; non-cash items carried at historical costs aretranslated at the spot exchange rate at the transaction date, with the RMB amounts unchanged;non-cash items carried at fair value in foreign currency are translated at the spot exchange rate atthe date when the fair value was determined, with difference included in profit or loss or othercomprehensive income.
2. Translation of financial statements measured in foreign currency
The assets and liabilities in the balance sheet are translated into RMB at the spot exchange rate atthe balance sheet date; the equity items, other than undistributed profit, are translated at the spotexchange rate at the transaction date; the revenues and expenses in the income statement aretranslated into RMB at the spot exchange rate at the transaction date. The difference arising fromthe aforementioned foreign currency translation is included in other comprehensive income.
11. Financial instruments
? Applicable ? Not Applicable
1. Classification of financial assets and financial liabilities
Financial assets are classified into the following three categories when initially recognized: (1)financial assets at amortized cost; (2) financial assets at fair value through other comprehensiveincome; (3) financial assets at fair value through profit or loss.Financial liabilities are classified into the following four categories when initially recognized: (1)financial liabilities at fair value through profit or loss; (2) financial liabilities that arise when atransfer of a financial asset does not qualify for derecognition or when the continuing involvementapproach applies; (3) financial guarantee contracts not fall within the above categories (1) and (2),and commitments to provide a loan at a below-market interest rate, which do not fall within theabove category (1); (4) financial liabilities at amortized cost.
2. Recognition criteria, measurement method and derecognition condition of financial assets andfinancial liabilities
(1) Recognition criteria and measurement method of financial assets and financial liabilitiesWhen the Company becomes a party to a financial instrument, it is recognized as a financial assetor financial liability. The financial assets and financial liabilities initially recognized by theCompany are measured at fair value; for the financial assets and liabilities at fair value throughprofit or loss, the transaction expenses thereof are directly included in profit or loss; for othercategories of financial assets and financial liabilities, the transaction expenses thereof are includedinto the initially recognized amount. However, at initial recognition, for accounts receivable thatdo not contain a significant financing component or in circumstances where the Company does notconsider the financing components in contracts within one year, they are measured at thetransaction price in accordance with “CASBE 14 – Revenues”.
(2) Subsequent measurement of financial assets
1) Financial assets measured at amortized cost
The Company measures its financial assets at the amortized costs using effective interest method.Gains or losses on financial assets that are measured at amortized cost and are not part of hedgingrelationships shall be included into profit or loss when the financial assets are derecognized,reclassified, amortized using effective interest method or recognized with impairment loss.
2) Debt instrument investments at fair value through other comprehensive incomeThe Company measures its debt instrument investments at fair value. Interests, impairment gainsor losses, and gains and losses on foreign exchange that calculated using effective interest methodshall be included into profit or loss, while other gains or losses are included into othercomprehensive income. Accumulated gains or losses that initially recognized as othercomprehensive income should be transferred out into profit or loss when the financial assets arederecognized.
3) Equity instrument investments at fair value through other comprehensive incomeThe Company measures its equity instrument investments at fair value. Dividends obtained (otherthan those as part of investment cost recovery) shall be included into profit or loss, while othergains or losses are included into other comprehensive income. Accumulated gains or losses thatinitially recognized as other comprehensive income should be transferred out into retainedearnings when the financial assets are derecognized.
4) Financial assets at fair value through profit or loss
The Company measures its financial assets at fair value. Gains or losses arising from changes infair value (including interests and dividends) shall be included into profit or loss, except forfinancial assets that are part of hedging relationships.
(3) Subsequent measurement of financial liabilities
1) Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include held-for-trading financial liabilities(including derivatives that are liabilities) and financial liabilities designated as at fair valuethrough profit or loss. The Company measures such kind of liabilities at fair value. The amount ofchanges in the fair value of the financial liabilities that are attributable to changes in theCompany’s own credit risk shall be included into other comprehensive income, unless suchtreatment would create or enlarge accounting mismatches in profit or loss. Other gains or losses onthose financial liabilities (including interests, changes in fair value that are attributable to reasonsother than changes in the Company’s own credit risk) shall be included into profit or loss, exceptfor financial liabilities that are part of hedging relationships. Accumulated gains or losses thatoriginally recognized as other comprehensive income should be transferred out into retainedearnings when the financial liabilities are derecognized.
2) Financial liabilities that arise when a transfer of a financial asset does not qualify forderecognition or when the continuing involvement approach appliesThe Company measures its financial liabilities in accordance with “CASBE 23 – Transfer ofFinancial Assets”.
3) Financial guarantee contracts not fall within the above categories 1) and 2), and commitmentsto provide a loan at a below-market interest rate, which do not fall within the above category 1)The Company measures its financial liabilities at the higher of: a. the amount of loss allowances inaccordance with impairment requirements of financial instruments; b. the amount initiallyrecognized less the amount of accumulated amortization recognized in accordance with “CASBE14 – Revenues”.
4) Financial liabilities at amortized cost
The Company measures its financial liabilities at amortized cost using effective interest method.Gains or losses on financial liabilities that are measured at amortized cost and are not part ofhedging relationships shall be included into profit or loss when the financial liabilities arederecognized and amortized using effective interest method.
(4) Derecognition of financial assets and financial liabilities
1) Financial assets are derecognized when:
a. the contractual rights to the cash flows from the financial assets expire; orb. the financial assets have been transferred and the transfer qualifies for derecognition inaccordance with “CASBE 23 – Transfer of Financial Assets”.
2) Only when the underlying present obligations of a financial liability are relieved totally orpartly may the financial liability be derecognized accordingly.
3. Recognition criteria and measurement method of financial assets transfer
Where the Company has transferred substantially all of the risks and rewards related to theownership of the financial asset, it derecognizes the financial asset, and any right or liabilityarising from such transfer is recognized independently as an asset or a liability. If it retainedsubstantially all of the risks and rewards related to the ownership of the financial asset, itcontinues recognizing the financial asset. Where the Company does not transfer or retainsubstantially all of the risks and rewards related to the ownership of a financial asset, it is dealtwith according to the circumstances as follows respectively: (1) if the Company does not retain itscontrol over the financial asset, it derecognizes the financial asset, and any right or liability arisingfrom such transfer is recognized independently as an asset or a liability; (2) if the Company retainsits control over the financial asset, according to the extent of its continuing involvement in thetransferred financial asset, it recognizes the related financial asset and recognizes the relevantliability accordingly.
If the transfer of an entire financial asset satisfies the conditions for derecognition, the differencebetween the amounts of the following two items is included in profit or loss: (1) the carryingamount of the transferred financial asset as of the date of derecognition; (2) the sum ofconsideration received from the transfer of the financial asset, and the accumulative amount of thechanges of the fair value originally included in other comprehensive income proportionate to thetransferred financial asset (financial assets transferred refer to debt instrument investments at fairvalue through other comprehensive income). If the transfer of financial asset partially satisfies theconditions to derecognition, the entire carrying amount of the transferred financial asset is,between the portion which is derecognized and the portion which is not, apportioned according totheir respective relative fair value, and the difference between the amounts of the following twoitems is included into profit or loss: (1) the carrying amount of the portion which is derecognized;
(2) the sum of consideration of the portion which is derecognized, and the portion of theaccumulative amount of the changes in the fair value originally included in other comprehensiveincome which is corresponding to the portion which is derecognized (financial assets transferredrefer to debt instrument investments at fair value through other comprehensive income).
4. Fair value determination method of financial assets and liabilities
The Company uses valuation techniques that are appropriate in the circumstances and for whichsufficient data and information are available to measure fair value. The inputs to valuationtechniques used to measure fair value are arranged in the following hierarchy and usedaccordingly:
(1) Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilitiesthat the Company can access at the measurement date;
(2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observablefor the asset or liability, either directly or indirectly. Level 2 inputs include: quoted prices forsimilar assets or liabilities in active markets; quoted prices for identical or similar assets orliabilities in markets that are not active; inputs other than quoted prices that are observable for theasset or liability, for example, interest rates and yield curves observable at commonly quotedintervals; market-corroborated inputs;
(3) Level 3 inputs are unobservable inputs for the asset or liability. Level 3 inputs include interestrate that is not observable and cannot be corroborated by observable market data at commonlyquoted intervals, historical volatility, future cash flows to be paid to fulfill the disposal obligationassumed in business combination, financial forecast developed using the Company’s own data,etc.
5. Impairment of financial instruments
The Company, on the basis of expected credit loss, recognizes loss allowances of financial assetsat amortized cost, debt instrument investments at fair value through other comprehensive income,contract assets, leases receivable, loan commitments other than financial liabilities at fair value
through profit or loss, financial guarantee contracts not belong to financial liabilities at fair valuethrough profit or loss or financial liabilities that arise when a transfer of a financial asset does notqualify for derecognition or when the continuing involvement approach applies.Expected credit losses refer to the weighted average of credit losses with the respective risks of adefault occurring as the weights. Credit loss refers to the difference between all contractual cashflows that are due to the Company in accordance with the contract and all the cash flows that theCompany expects to receive (i.e. all cash shortfalls), discounted at the original effective interestrate. Among which, purchased or originated credit-impaired financial assets are discounted at thecredit-adjusted effective interest rate.At the balance sheet date, the Company shall only recognize the cumulative changes in thelifetime expected credit losses since initial recognition as a loss allowance for purchased ororiginated credit-impaired financial assets.For leases receivable, and accounts receivable and contract assets resulting from transactionsregulated in “CASBE 14 – Revenues”, the Company chooses simplified approach to measure theloss allowance at an amount equal to lifetime expected credit losses.For accounts receivable and contract assets resulting from transactions regulated in “CASBE 14 –Revenues”, the Company chooses simplified approach to measure the loss allowance at an amountequal to lifetime expected credit losses.For financial assets other than the above, on each balance sheet date, the Company shall assesswhether the credit risk on the financial instrument has increased significantly since initialrecognition. The Company shall measure the loss allowance for the financial instrument at anamount equal to the lifetime expected credit losses if the credit risk on that financial instrumenthas increased significantly since initial recognition; otherwise, the Company shall measure theloss allowance for that financial instrument at an amount equal to 12-month expected credit loss.Considering reasonable and supportable forward-looking information, the Company compares therisk of a default occurring on the financial instrument as at the balance sheet date with the risk of adefault occurring on the financial instrument as at the date of initial recognition, so as to assesswhether the credit risk on the financial instrument has increased significantly since initialrecognition.The Company may assume that the credit risk on a financial instrument has not increasedsignificantly since initial recognition if the financial instrument is determined to have relativelylow credit risk at the balance sheet date.The Company shall estimate expected credit risk and measure expected credit losses on anindividual or a collective basis. When the Company adopts the collective basis, financialinstruments are grouped with similar credit risk features.
The Company shall remeasure expected credit loss on each balance sheet date, and increased orreversed amounts of loss allowance arising therefrom shall be included into profit or loss asimpairment losses or gains. For a financial asset measured at amortized cost, the loss allowancereduces the carrying amount of such financial asset presented in the balance sheet; for a debtinvestment measured at fair value through other comprehensive income, the loss allowance shallbe recognized in other comprehensive income and shall not reduce the carrying amount of suchfinancial asset.
6. Offsetting financial assets and financial liabilities
Financial assets and financial liabilities are presented separately in the balance sheet and are notoffset. However, the Company offsets a financial asset and a financial liability and presents the netamount in the balance sheet when, and only when, the Company: (1) currently has a legallyenforceable right to set off the recognized amounts; and (2) intends either to settle on a net basis,or to realize the asset and settle the liability simultaneously.For a transfer of a financial asset that does not qualify for derecognition, the Company does notoffset the transferred asset and the associated liability.
12. Notes receivable
? Applicable ? Not ApplicableRecognition method and accounting treatment method for expected credit losses of notesreceivable? Applicable ? Not ApplicablePlease refer to Note X, 11 “Financial instruments - Impairment of Financial Instruments”.Categories and recognition method based on the credit risk characteristics? Applicable ? Not Applicable
| Items | Basis for determination of portfolio | Method for measuring expected credit loss |
| Bank acceptance receivable | Type of notes | Based on historical credit loss experience, the current situation and the forecast of future economic conditions, the Company calculates expected credit loss through exposure at default and lifetime expected credit loss rate. |
| Trade acceptance receivable | ||
| Accounts receivable – Portfolio grouped with medical insurance payments | Medical insurance payments with age within 12 months | |
| Accounts receivable – Portfolio grouped with balances due from related parties within the consolidation scope | Related parties brought into the consolidation scope | |
| Accounts receivable – Portfolio grouped with ages | Ages | Based on historical credit loss experience, the current situation and the forecast of future economic conditions, the Company prepares the comparison table of ages |
| Items | Basis for determination of portfolio | Method for measuring expected credit loss |
| and lifetime expected credit loss rate of accounts receivable, so as to calculate expected credit loss. | ||
| Other receivables – Portfolio grouped with security deposits receivable | Security deposits for operating and pretty cash excluding store petty cash | Based on historical credit loss experience, the current situation and the forecast of future economic conditions, the Company calculates expected credit loss through exposure at default and lifetime expected credit loss rate. |
| Other receivables – Portfolio grouped with medical insurance payments | Medical insurance reserves with age within 12 months | |
| Other receivables – Portfolio grouped with store petty cash receivable | Store petty cash | |
| Other receivables – Portfolio grouped with balances due from related parties within the consolidation scope | Related parties brought into the consolidation scope | |
| Other receivables – Portfolio grouped with ages | Other receivables excluding pretty cash, security deposits, medical insurance reserves, and balances due from related parties within the consolidation scope | Based on historical credit loss experience, the current situation and the forecast of future economic conditions, the Company calculates expected credit loss through exposure at default and 12-month or lifetime expected credit loss rate. |
Calculation method of aging based on the combination of credit risk characteristicsgrouped with ages? Applicable ? Not Applicable
| Ages | Expected credit loss rate of accounts receivable (%) | Expected credit loss rate of other receivables (%) |
| Within 1 year (inclusive, the same hereinafter) | 5.00 | 5.00 |
| 1-2 years | 10.00 | 10.00 |
| 2-3 years | 20.00 | 20.00 |
| 3-4 years | 30.00 | 30.00 |
| 4-5 years | 50.00 | 50.00 |
| Over 5 years | 100.00 | 100.00 |
Recognition criteria with expected credit losses measured on an individual basis? Applicable ? Not ApplicableFor receivables and contract assets whose credit risk is significantly different from that ofportfolios, the Company accrues expected credit losses on an individual basis.
13. Accounts receivable
? Applicable ? Not Applicable
Recognition method and accounting treatment method for expected credit losses of accountsreceivable? Applicable ? Not ApplicablePlease refer to Note X, 11 “Financial instruments - Impairment of Financial Instruments”.Categories and recognition method based on the credit risk characteristics? Applicable ? Not ApplicablePlease refer to Note X, 12 “Notes receivable”.Calculation method of aging based on the combination of credit risk characteristicsgrouped with ages? Applicable ? Not ApplicablePlease refer to Note X, 12 “Notes receivable”.Recognition criteria with expected credit losses measured on an individual basis? Applicable ? Not ApplicablePlease refer to Note X, 12 “Notes receivable”.
14. Receivables financing
? Applicable ? Not ApplicableRecognition method and accounting treatment method for expected credit losses ofreceivables financing? Applicable ? Not ApplicablePlease refer to Note X, 11 “Financial instruments - Impairment of Financial Instruments”.Categories and recognition method based on the credit risk characteristics? Applicable ? Not ApplicablePlease refer to Note X, 12 “Notes receivable”.Calculation method of aging based on the combination of credit risk characteristicsgrouped with ages? Applicable ? Not ApplicablePlease refer to Note X, 12 “Notes receivable”.Recognition criteria with expected credit losses measured on an individual basis? Applicable ? Not ApplicablePlease refer to Note X, 12 “Notes receivable”.
15. Other receivables
? Applicable ? Not ApplicableRecognition method and accounting treatment method for expected credit losses of otherreceivables
? Applicable ? Not ApplicablePlease refer to Note X, 11 “Financial instruments - Impairment of Financial Instruments”.Categories and recognition method based on the credit risk characteristics? Applicable ? Not ApplicablePlease refer to Note X, 12 “Notes receivable”.Calculation method of aging based on the combination of credit risk characteristicsgrouped with ages? Applicable ? Not ApplicablePlease refer to Note X, 12 “Notes receivable”.Recognition criteria with expected credit losses measured on an individual basis? Applicable ? Not ApplicablePlease refer to Note X, 12 “Notes receivable”.
16. Inventories
? Applicable ? Not ApplicableClassification of inventories, accounting method for dispatching inventories, inventorysystem, and amortization method of low-value consumables and packages? Applicable ? Not Applicable
1. Classification of inventories
Inventories include finished goods or goods held for sale in the ordinary course of business, workin process in the process of production, materials, supplies etc. to be consumed in the productionprocess or in the rendering of services.
2. Accounting method for dispatching inventories:
Inventories dispatched from storage are accounted for with moving weighted average method.
3. Inventory system
Perpetual inventory method is adopted.
4. Amortization method of low-value consumables and packages
Low-value consumables are amortized with one-off method.Basis for determining inventory depreciation reserves? Applicable ? Not ApplicableAt the balance sheet date, inventories are measured at the lower of cost and net realizable value;provisions for inventory write-down are made on the excess of its cost over the net realizablevalue. The net realizable value of inventories held for sale is determined based on the amount ofthe estimated selling price less the estimated selling expenses and relevant taxes and surcharges inthe ordinary course of business; the net realizable value of inventories to be processed is
determined based on the amount of the estimated selling price less the estimated costs ofcompletion, selling expenses and relevant taxes and surcharges in the ordinary course of business;at the balance sheet date, when only part of the same item of inventories have agreed price, theirnet realizable value are determined separately and are compared with their costs to set theprovision for inventory write-down to be made or reversed.Categories and basis for determination of portfolios with provision for inventory write-downmade on a collective basis and determination basis of net realizable value? Applicable ? Not ApplicableCalculation method and determination basis for net realizable value under portfoliogrouped with ages? Applicable ? Not Applicable
17. Contract assets
? Applicable ? Not ApplicableRecognition method and criteria for contract assets? Applicable ? Not ApplicableThe Company presents contract assets or contract liabilities in the balance sheet based on therelationship between its performance obligations and customers’ payments. Contract assets andcontract liabilities under the same contract shall offset each other and be presented on a net basis.The Company presents an unconditional right to consideration (i.e., only the passage of time isrequired before the consideration is due) as a receivable, and presents a right to consideration inexchange for goods that it has transferred to a customer (which is conditional on something otherthan the passage of time) as a contract asset.Recognition method and accounting treatment method for expected credit losses of contractassets? Applicable ? Not ApplicableCategories and recognition method based on the credit risk characteristics? Applicable ? Not ApplicableCalculation method of aging based on the combination of credit risk characteristicsgrouped with ages? Applicable ? Not ApplicableRecognition criteria with expected credit losses measured on an individual basis? Applicable ? Not Applicable
18. Non-current assets or disposal groups held for sale
? Applicable ? Not Applicable
Recognition criteria and accounting treatment of non-current assets or disposal groups heldfor sale? Applicable ? Not ApplicableRecognition criteria and presentation method of discontinued operations? Applicable ? Not Applicable
19. Long-term equity investments
? Applicable ? Not Applicable
1. Judgment of joint control and significant influence
Joint control is the contractually agreed sharing of control of an arrangement, which exists onlywhen decisions about the relevant activities require the unanimous consent of the parties sharingcontrol. Significant influence is the power to participate in the financial and operating policydecisions of the investee but is not control or joint control of these policies.
2. Determination of investment cost
(1) For business combination under common control, if the consideration of the combining partyis that it makes payment in cash, transfers non-cash assets, assumes its liabilities or issues equitysecurities, on the date of combination, it regards the share of the carrying amount of the equity ofthe combined party included in the consolidated financial statements of the ultimate controllingparty as the initial cost of the investment. The difference between the initial cost of the long-termequity investments and the carrying amount of the combination consideration paid or the par valueof shares issued offsets capital reserve; if the balance of capital reserve is insufficient to offset,any excess is adjusted to retained earnings.When long-term equity investments are obtained through business combination under commoncontrol achieved in stages, the Company determines whether it is a “bundled transaction”. If it is a“bundled transaction”, stages as a whole are considered as one transaction in accounting treatment.If it is not a “bundled transaction”, on the date of combination, investment cost is initiallyrecognized at the share of the carrying amount of net assets of the combined party included theconsolidated financial statements of the ultimate controlling party. The difference between theinitial investment cost of long-term equity investments at the acquisition date and the carryingamount of the previously held long-term equity investments plus the carrying amount of theconsideration paid for the newly acquired equity is adjusted to capital reserve; if the balance ofcapital reserve is insufficient to offset, any excess is adjusted to retained earnings.
(2) For business combination not under common control, investment cost is initially recognized atthe acquisition-date fair value of considerations paid.When long-term equity investments are obtained through business combination not undercommon control achieved in stages, the Company determined whether they are stand-alonefinancial statements or consolidated financial statements in accounting treatment:
1) In the case of stand-alone financial statements, investment cost is initially recognized at thecarrying amount of the previously held long-term equity investments plus the carrying amount ofthe consideration paid for the newly acquired equity.
2) In the case of consolidated financial statements, the Company determines whether it is a“bundled transaction”. If it is a “bundled transaction”, stages as a whole are considered as onetransaction in accounting treatment. If it is not a “bundled transaction”, the carrying amount of theacquirer’s previously held equity interest in the acquiree is remeasured at the acquisition-date fairvalue, and the difference between the fair value and the carrying amount is recognized ininvestment income; when the acquirer’s previously held equity interest in the acquiree involvesother comprehensive income under equity method, the related other comprehensive income isreclassified as income for the acquisition period, excluding other comprehensive income arisingfrom changes in net liabilities or assets from remeasurement of defined benefit plan of theacquiree.
(3) Long-term equity investments obtained through ways other than business combination: theinitial cost of a long-term equity investment obtained by making payment in cash is the purchasecost which is actually paid; that obtained on the basis of issuing equity securities is the fair valueof the equity securities issued; that obtained through debt restructuring is determined according to“CASBE 12 – Debt Restructuring”; and that obtained through non-cash assets exchange isdetermined according to “CASBE 7 – Non-cash Assets Exchange”.
3. Subsequent measurement and recognition method of profit or loss
For a long-term equity investment with control relationship, it is accounted for with cost method;for a long-term equity investment with joint control or significant influence relationship, it isaccounted for with equity method.
4. Disposal of a subsidiary in stages resulting in the Company’s loss of control
(1) Judgement principles of “bundled transaction”
For disposal of a subsidiary in stages resulting in the Company’s loss of control, the Companydetermines whether it is a “bundled transaction” based on the agreement terms for each stage,disposal consideration obtained separately, object of the equity sold, disposal method, disposaltime point, etc. If the terms, conditions and economic effect of each transaction meet one or moreof the following conditions, these transactions are usually considered as a “bundled transaction”:
1) these transactions are entered into at the same time or in contemplation of each other;
2) these transactions form a single transaction designed to achieve an overall commercial effect;
3) the occurrence of one transaction is dependent on the occurrence of at least one othertransaction; and
4) one transaction considered on its own is not economically justified, but it is economicallyjustified when considered together with other transactions.
(2) Accounting treatments of non-bundled transactions
1) Stand-alone financial statements
The difference between the carrying amount of the disposed equity and the consideration obtainedthereof is recognized in profit or loss. If the disposal does not result in the Company’s loss ofsignificant influence or joint control, the remained equity is accounted for with equity method;however, if the disposal results in the Company’s loss of control, joint control, or significantinfluence, the remained equity is accounted for according to “CASBE 22 – Financial Instruments:
Recognition and Measurement”.
2) Consolidated financial statements
Before the Company’s loss of control, the difference between the disposal consideration and theproportionate share of net assets in the disposed subsidiary from acquisition date or combinationdate to the disposal date is adjusted to capital reserve (capital premium), if the balance of capitalreserve is insufficient to offset, any excess is adjusted to retained earnings.When the Company loses control, the remained equity is remeasured at the loss-of-control-datefair value. The aggregated value of disposal consideration and the fair value of the remainedequity, less the share of net assets in the disposed subsidiary held before the disposal from theacquisition date or combination date to the disposal date is recognized in investment income in theperiod when the Company loses control over such subsidiary, and meanwhile goodwill is offsetcorrespondingly. Other comprehensive income related to equity investments in former subsidiaryis reclassified as investment income upon the Company’s loss of control.
(3) Accounting treatment of bundled transaction
1) Stand-alone financial statements
Stages as a whole are considered as one transaction resulting in loss of control in accountingtreatment. However, before the Company loses control over a subsidiary, the difference betweenthe disposal consideration at each stage and the carrying amount of long-term equity investmentscorresponding to the disposed investments is recognized as other comprehensive income at thestand-alone financial statements and reclassified as profit or loss in the period when the Companyloses control over such subsidiary.
2) Consolidated financial statements
Stages as a whole are considered as one transaction resulting in loss of control in accountingtreatment. However, before the Company loses control over a subsidiary, the difference betweenthe disposal consideration at each stage and the proportionate share of net assets in the disposedsubsidiary is recognized as other comprehensive income at the consolidated financial statementsand reclassified as profit or loss in the period when the Company loses control over such
subsidiary.
20. Investment property
? Applicable ? Not Applicable
21. Fixed assets
1. Recognition principles of fixed assets
? Applicable ? Not ApplicableFixed assets are tangible assets held for use in the production of goods or rendering of services, forrental to others, or for administrative purposes, and expected to be used during more than oneaccounting year. Fixed assets are recognized if, and only if, it is probable that future economicbenefits associated with the assets will flow to the Company and the cost of the assets can bemeasured reliably.
2. Depreciation method of different categories of fixed assets
? Applicable ? Not Applicable
| Categories | Depreciation method | Useful life (years) | Residual value proportion (%) | Annual depreciation rate (%) |
| Buildings and structures | Straight-line method | 20-30 | 5 | 3.17-4.75 |
| Machinery | Straight-line method | 10 | 5 | 9.50 |
| Office equipment | Straight-line method | 5 | 5 | 19.00 |
| Electronic equipment | Straight-line method | 3 | 5 | 31.67 |
| Transport facilities | Straight-line method | 10 | 5 | 9.50 |
22. Construction in progress
? Applicable ? Not Applicable
1. Construction in progress is recognized if, and only if, it is probable that future economicbenefits associated with the item will flow to the Company, and the cost of the item can bemeasured reliably. Construction in progress is measured at the actual cost incurred to reach itsdesigned usable conditions.
2. Construction in progress is transferred into fixed assets at its actual cost when it reaches thedesigned usable conditions. When the auditing of the construction in progress was not finishedwhile reaching the designed usable conditions, it is transferred to fixed assets using estimatedvalue first, and then adjusted accordingly when the actual cost is settled, but the accumulateddepreciation is not to be adjusted retrospectively.
23. Borrowing costs
? Applicable ? Not Applicable
1. Recognition principle of borrowing costs capitalization
Where the borrowing costs incurred to the Company can be directly attributable to the acquisitionand construction or production of assets eligible for capitalization, it is capitalized and included inthe costs of relevant assets; other borrowing costs are recognized as expenses on the basis of theactual amount incurred, and are included in profit or loss.
2. Borrowing costs capitalization period
(1) The borrowing costs are not capitalized unless the following requirements are all met: 1) theasset 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 assetfor its intended use or sale have already started.
(2) Suspension of capitalization: where the acquisition and construction or production of aqualified asset is interrupted abnormally and the interruption period lasts for more than 3 months,the capitalization of the borrowing costs is suspended; the borrowing costs incurred during suchperiod are recognized as expenses, and are included in profit or loss, till the acquisition andconstruction or production of the asset restarts.
(3) Ceasing of capitalization: when the qualified asset under acquisition and construction orproduction is ready for the intended use or sale, the capitalization of the borrowing costs is ceased.
3. Capitalization rate and capitalized amount of borrowing costs
For borrowings exclusively for the acquisition and construction or production of assets eligible forcapitalization, the to-be-capitalized amount of interests is determined in light of the actual interestexpenses incurred (including amortization of premium or discount based on effective interestmethod) of the special borrowings in the current period less the interest income on the unusedborrowings as a deposit in the bank or as a temporary investment; where a general borrowing isused for the acquisition and construction or production of assets eligible for capitalization, theCompany calculates and determines the to-be-capitalized amount of interests on the generalborrowing by multiplying the weighted average asset disbursement of the part of the accumulativeasset disbursements less the general borrowing by the capitalization rate of the general borrowingused.
24. Biological assets
? Applicable ? Not Applicable
25. Oil and gas assets
? Applicable ? Not Applicable
26. Intangible assets
(1) Useful life and its determination basis, estimation, amortization method, or reviewprocedures? Applicable ? Not Applicable
1. Intangible assets include land use right, software, trademark, use right of pharmaceuticallicensing qualifications etc. The initial measurement of intangible assets is based on its cost.
2. For intangible assets with finite useful lives, their amortization amounts are amortized withintheir useful lives systematically and reasonably, if it is unable to determine the expectedrealization pattern reliably, intangible assets are amortized by the straight-line method with detailsas follows:
| Items | Amortization period (years) |
| Land use right | 40-50 |
| Software | 5-10 |
| Trademark | 5-10 |
| Use right of pharmaceutical licensing qualifications | 10 |
(2) Permitted scope and accounting treatment of R&D costs
? Applicable ? Not Applicable
(1) Personnel costs
Personnel costs include wages and salaries, basic endowment insurance premiums, basic medicalinsurance premiums, unemployment insurance premiums, occupational injuries premiums,maternity premiums and housing provident funds for the Company’s R&D personnel, as well aslabor costs for external R&D personnel.
(2) Direct input costs
Direct input costs refer to relevant expenses actually incurred by the Company for R&D activities.
(3) Depreciation and long-term prepayments
Depreciation refers to the depreciation of instruments, equipment and in-use buildings used forR&D activities.
(4) Amortization of intangible assets
Amortization of intangible assets refer to the amortization of software, intellectual property, andnon-patented technology (proprietary technology, licenses, design and calculation methods, etc.)used for R&D activities.
(5) Other expenses
Other expenses refer to expenses other than those mentioned above that are directly related toR&D activities.Expenditures on the research phase of an internal project are recognized as profit or loss whenthey are incurred. An intangible asset arising from the development phase of an internal project isrecognized if the Company can demonstrate all of the followings: (1) the technical feasibility ofcompleting the intangible asset so that it will be available for use or sale; (2) its intention to
complete the intangible asset and use or sell it; (3) how the intangible asset will generate probablefuture economic benefits, among other things, the Company can demonstrate the existence of amarket for the output of the intangible asset or the intangible asset itself or, if it is to be usedinternally, the usefulness of the intangible asset; (4) the availability of adequate technical,financial and other resources to complete the development and to use or sell the intangible asset;and (5) its ability to measure reliably the expenditure attributable to the intangible asset during itsdevelopment.
27. Impairment of part of long-term assets
? Applicable ? Not ApplicableFor long-term assets such as long-term equity investments, fixed assets, construction in progress,right-of-use assets, intangible assets with finite useful lives, etc., if at the balance sheet date thereis indication of impairment, the recoverable amount is to be estimated. For goodwill recognized inbusiness combination and intangible assets with indefinite useful lives, no matter whether there isindication of impairment, impairment test is performed annually. Impairment test on goodwill isperformed on related asset group or asset group portfolio.When the recoverable amount of such long-term assets is lower than their carrying amount, thedifference is recognized as provision for assets impairment through profit or loss.
28. Long-term prepayments
? Applicable ? Not ApplicableLong-term prepayments are expenses that have been recognized but with amortization period overone year (excluding one year). They are recorded with actual cost, and evenly amortized withinthe beneficiary period or stipulated period. If items of long-term prepayments fail to be beneficialto the following accounting periods, residual values of such items are included in profit or loss.
29. Contract liabilities
? Applicable ? Not ApplicableThe Company presents an obligation to transfer goods to a customer for which the Company hasreceived consideration (or the amount is due) from the customer as a contract liability.
30. Employee benefits
(1). Accounting treatments of short-term employee benefits
? Applicable ? Not ApplicableThe Company recognizes, in the accounting period in which an employee provides service,short-term employee benefits actually incurred as liabilities, with a corresponding charge to profitor loss or the cost of a relevant asset.
(2). Accounting treatments of post-employment benefits
? Applicable ? Not Applicable
The Company classifies post-employment benefit plans as either defined contribution plans ordefined benefit plans.
(1) The Company recognizes in the accounting period in which an employee provides service thecontribution payable to a defined contribution plan as a liability, with a corresponding charge toprofit or loss or the cost of a relevant asset.
(2) Accounting treatment by the Company for defined benefit plan usually involves the followingsteps:
1) In accordance with the projected unit credit method, using unbiased and mutually compatibleactuarial assumptions to estimate related demographic variables and financial variables, measurethe obligations under the defined benefit plan, and determine the periods to which the obligationsare attributed. Meanwhile, the Company discounts obligations under the defined benefit plan todetermine the present value of the defined benefit plan obligations and the current service cost;
2) When a defined benefit plan has assets, the Company recognizes the deficit or surplus bydeducting the fair value of defined benefit plan assets from the present value of the defined benefitplan obligation as a net defined benefit plan liability or net defined benefit plan asset. When adefined benefit plan has a surplus, the Company measures the net defined benefit plan asset at thelower of the surplus in the defined benefit plan and the asset ceiling;
3) At the end of the period, the Company recognizes the following components of employeebenefits cost arising from defined benefit plan: a. service cost; b. net interest on the net definedbenefit plan liability (asset); and c. changes as a result of remeasurement of the net defined benefitliability (asset). Item a and item b are recognized in profit or loss or the cost of a relevant asset.Item c is recognized in other comprehensive income and is not to be reclassified subsequently toprofit or loss. However, the Company may transfer those amounts recognized in othercomprehensive income within equity.
(3). Accounting treatments of Termination benefits
? Applicable ? Not ApplicableTermination benefits provided to employees are recognized as an employee benefit liability fortermination benefits, with a corresponding charge to profit or loss at the earlier of the followingdates: (1) when the Company cannot unilaterally withdraw the offer of termination benefitsbecause of an employment termination plan or a curtailment proposal; or (2) when the Companyrecognizes cost or expenses related to a restructuring that involves the payment of terminationbenefits.
(4). Accounting treatments of Other long-term employee benefits
? Applicable ? Not ApplicableWhen other long-term employee benefits provided to the employees satisfied the conditions forclassifying as a defined contribution plan, those benefits are accounted for in accordance with the
requirements relating to defined contribution plan, while other benefits are accounted for inaccordance with the requirements relating to defined benefit plan. The Company recognizes thecost of employee benefits arising from other long-term employee benefits as the followings: (1)service cost; (2) net interest on the net liability or net assets of other long-term employee benefits;and (3) changes as a result of remeasurement of the net liability or net assets of other long-termemployee benefits. As a practical expedient, the net total of the aforesaid amounts is recognized inprofit or loss or included in the cost of a relevant asset.
31. Provisions
? Applicable ? Not Applicable
1. Provisions are recognized when fulfilling the present obligations arising from contingenciessuch as providing guarantee for other parties, litigation, products quality guarantee, onerouscontract, etc., may cause the outflow of the economic benefit and such obligations can be reliablymeasured.
2. The initial measurement of provisions is based on the best estimated expenditures required infulfilling the present obligations, and its carrying amount is reviewed at the balance sheet date.
32. Share-based payment
? Applicable ? Not Applicable
1. Types of share-based payment
Share-based payment consists of equity-settled share-based payment and cash-settled share-basedpayment.
2. Accounting treatment for settlements, modifications and cancellations of share-based paymentplans
(1) Equity-settled share-based payment
For equity-settled share-based payment transaction with employees, if the equity instrumentsgranted vest immediately, the fair value of those equity instruments is measured at grant date andrecognized as transaction cost or expense, with a corresponding adjustment in capital reserve; ifthe equity instruments granted do not vest until the counterparty completes a specified period ofservice, at the balance sheet date within the vesting period, the fair value of those equityinstruments measured at grant date based on the best estimate of the number of equity instrumentsexpected to vest is recognized as transaction cost or expense, with a corresponding adjustment incapital reserve.For equity-settled share-based payment transaction with parties other than employees, if the fairvalue of the services received can be measured reliably, the fair value is measured at the date theCompany receives the service; if the fair value of the services received cannot be measuredreliably, but that of equity instruments can be measured reliably, the fair value of the equity
instruments granted measured at the date the Company receives the service is referred to, andrecognized as transaction cost or expense, with a corresponding increase in equity.
(2) Cash-settled share-based payment
For cash-settled share-based payment transactions with employees, if share appreciation rightsvest immediately, the fair value of the liability incurred as the acquisition of services is measuredat grant date and recognized as transaction cost or expense, with a corresponding increase inliabilities; if share appreciation rights do not vest until the employees have completed a specifiedperiod of service, the liability is measured, at each balance sheet date until settled, at the fair valueof the share appreciation rights measured at grant date based on the best estimate of the number ofshare appreciation right expected to vest.
(3) Modifications and cancellations of share-based payment plan
If the modification increases the fair value of the equity instruments granted, the Companyincludes the incremental fair value granted in the measurement of the amount recognized forservices received as consideration for the equity instruments granted; similarly, if the modificationincreases the number of equity instruments granted, the Company includes the fair value of theadditional equity instruments granted, in the measurement of the amount recognized for servicesreceived as consideration for the equity instruments granted; if the Company modifies the vestingconditions in a manner that is beneficial to the employee, the Company takes the modified vestingconditions into account.If the modification reduces the fair value of the equity instruments granted, the Company does nottake into account that decrease in fair value and continue to measure the amount recognized forservices received as consideration for the equity instruments based on the grant date fair value ofthe equity instruments granted; if the modification reduces the number of equity instrumentsgranted to an employee, that reduction is accounted for as a cancellation of that portion of thegrant; if the Company modifies the vesting conditions in a manner that is not beneficial to theemployee, the Company does not take the modified vesting conditions into account.If the Company cancels or settles a grant of equity instruments during the vesting period (otherthan that cancelled when the vesting conditions are not satisfied), the Company accounts for thecancellation or settlement as an acceleration of vesting, and therefore recognizes immediately theamount that otherwise would have been recognized for services received over the remainder of thevesting period.
33. Other financial instruments such as preferred shares and perpetual bonds? Applicable ? Not ApplicablePursuant to CASBEs on financial instruments and “Regulations on Accounting Treatments ofPerpetual Bonds” (Cai Kuai [2019] No. 2) issued by the Ministry of Finance, for financialinstruments such as convertible bonds etc., the Company classifies a financial instrument or its
components at initial recognition as a financial asset or liability or equity instrument, based oncontract terms and economic essence it reveals instead of its legal form, combining with thedefinitions of financial asset, liability and equity instrument.At the balance sheet date, for a financial instrument classified as an equity instrument, its interestexpenditure or dividend distribution is treated as profit distribution, and share repurchase andcancelation are treated as changes in equity; for a financial instrument classified as a financialliability, its interest expenditure or dividend distribution is treated as borrowing expense, and gainor loss on repurchase or redemption is included in profit or loss.
34. Revenue
(1). Disclosure of accounting policies adopted for revenue recognition and measurementbased on business types? Applicable ? Not Applicable
1. Revenue recognition principles
At contract inception, the Company shall assess the contracts and shall identify each performanceobligation in the contracts, and determine whether the performance obligation should be satisfiedover time or at a point in time.The Company satisfies a performance obligation over time if one of the following criteria is met,otherwise, the performance obligation is satisfied at a point in time: (1) the customersimultaneously receives and consumes the economic benefits provided by the Company’sperformance as the Company performs; (2) the customer can control goods as they are created bythe Company’s performance; (3) goods created during the Company’s performance haveirreplaceable uses and the Company has an enforceable right to the payments for performancecompleted to date during the whole contract period.For each performance obligation satisfied over time, the Company shall recognize revenue overtime by measuring the progress towards complete satisfaction of that performance obligation. Inthe circumstance that the progress cannot be measured reasonably, but the costs incurred insatisfying the performance obligation are expected to be recovered, the Company shall recognizerevenue only to the extent of the costs incurred until it can reasonably measure the progress. Foreach performance obligation satisfied at a point in time, the Company shall recognize revenue atthe time point that the customer obtains control of relevant goods or services. To determinewhether the customer has obtained control of goods, the Company shall consider the followingindications: (1) the Company has a present right to payments for the goods, i.e., the customer ispresently obliged to pay for the goods; (2) the Company has transferred the legal title of the goodsto the customer, i.e., the customer has legal title to the goods; (3) the Company has transferredphysical possession of the goods to the customer, i.e., the customer has physically possessed thegoods; (4) the Company has transferred significant risks and rewards of ownership of the goods tothe customer, i.e., the customer has obtained significant risks and rewards of ownership of the
goods; (5) the customer has accepted the goods; (6) other evidence indicating the customer hasobtained control over the goods.
2. Revenue measurement principle
(1) Revenue is measured at the amount of the transaction price that is allocated to eachperformance obligation. The transaction price is the amount of consideration to which theCompany expects to be entitled in exchange for transferring goods or services to a customer,excluding amounts collected on behalf of third parties and those expected to be refunded to thecustomer.
(2) If the consideration promised in a contract includes a variable amount, the Company shallconfirm the best estimate of variable consideration at expected value or the most likely amount.However, the transaction price that includes the amount of variable consideration only to theextent that it is high probable that a significant reversal in the amount of cumulative revenuerecognized will not occur when the uncertainty associated with the variable consideration issubsequently resolved.
(3) In the circumstance that the contract contains a significant financing component, the Companyshall determine the transaction price based on the price that a customer would have paid for if thecustomer had paid cash for obtaining control over those goods or services. The difference betweenthe transaction price and the amount of promised consideration is amortized under effectiveinterest method over contractual period. The effects of a significant financing component shall notbe considered if the Company expects, at the contract inception, that the period between when thecustomer obtains control over goods or services and when the customer pays consideration will beone year or less.
(4) For contracts containing two or more performance obligations, the Company shall determinethe stand-alone selling price at contract inception of the distinct good underlying eachperformance obligation and allocate the transaction price to each performance obligation on arelative stand-alone selling price basis.
3. Revenue recognition method
(1) Retail business
The Company’s pharmaceutical retail business is a performance obligation satisfied at a point intime and revenue is recognized when retail stores sell products to the customers via cash payment(including via bank card) or through medical insurance, and the Company has collected thepayments or has obtained bank receipts or medical insurance receipts.
(2) Wholesale business
Wholesale business is a performance obligation satisfied at a point in time, and main customers ofwholesale business are pharmaceutical commercial companies. Revenue is recognized when theCompany has delivered goods to the buyer as agreed by contract, has obtained delivery notes with
signature of the buyer, and significant risks and rewards of ownership of the goods have beentransferred to the buyer.
(3) Rendering of promotional services
Rendering of promotional services is a performance obligation satisfied over time. Revenue fromrendering of promotional services is recognized when the Company has provided promotionalservices and has obtained or highly probable to receive payments.
(2). Different revenue recognition methods and measurement techniques for similarbusinesses involving different operating models? Applicable ? Not Applicable
35. Costs of obtaining a contract
? Applicable ? Not ApplicableThe Company presents contract assets or contract liabilities in the balance sheet based on therelationship between its performance obligations and customers’ payments. Contract assets andcontract liabilities under the same contract shall offset each other and be presented on a net basis.The Company presents an unconditional right to consideration (i.e., only the passage of time isrequired before the consideration is due) as a receivable, and presents a right to consideration inexchange for goods that it has transferred to a customer (which is conditional on something otherthan the passage of time) as a contract asset.The Company presents an obligation to transfer goods to a customer for which the Company hasreceived consideration (or the amount is due) from the customer as a contract liability.
36. Government grants
? Applicable ? Not Applicable
1. Government grants shall be recognized if, and only if, the following conditions are all met: (1)the Company will comply with the conditions attaching to the grants; (2) the grants will bereceived. Monetary government grants are measured at the amount received or receivable.Non-monetary government grants are measured at fair value, and can be measured at nominalamount in the circumstance that fair value cannot be assessed.
2. Government grants related to assets
Government grants related to assets are government grants with which the Company purchases,constructs or otherwise acquires long-term assets under requirements of government. In thecircumstances that there is no specific government requirement, the Company shall determinebased on the primary condition to acquire the grants, and government grants related to assets aregovernment grants whose primary condition is to construct or otherwise acquire long-term assets.They offset carrying amount of relevant assets, or they are recognized as deferred income. Ifrecognized as deferred income, they are included in profit or loss on a systematic basis over the
useful lives of the relevant assets. Those measured at notional amount are directly included intoprofit or loss. For assets sold, transferred, disposed or damaged within the useful lives, balance ofunamortized deferred income is transferred into profit or loss of the period in which the disposaloccurred.
3. Government grants related to income
Government grants related to income are government grants other than those related to assets. Forgovernment grants that contain both parts related to assets and parts related to income, in whichthose two parts are blurred, they are thus collectively classified as government grants related toincome. For government grants related to income used for compensating the related future cost,expenses or losses, they are recognized as deferred income and included in profit or loss or used tooffset relevant cost during the period in which the relevant cost, expenses or losses are recognized;for government grants related to income used for compensating the related cost, expenses or lossesincurred to the Company, they are directly included in profit or loss or used to offset relevant cost.
4. Government grants related to the ordinary course of business shall be included into otherincome or used to offset relevant cost based on business nature, while those not related to theordinary course of business shall be included into non-operating revenue or expenditures.
37. Deferred tax assets/Deferred tax liabilities
? Applicable ? Not Applicable
1. Deferred tax assets or deferred tax liabilities are calculated and recognized based on thedifference between the carrying amount and tax base of assets and liabilities (and the difference ofthe carrying amount and tax base of items not recognized as assets and liabilities but with their taxbase being able to be determined according to tax laws) and in accordance with the tax rateapplicable to the period during which the assets are expected to be recovered or the liabilities areexpected to be settled.
2. A deferred tax asset is recognized to the extent of the amount of the taxable income, which ismost likely to obtain and which can be deducted from the deductible temporary difference. At thebalance sheet date, if there is any exact evidence that it is probable that future taxable income willbe available against which deductible temporary differences can be utilized, the deferred tax assetsunrecognized in prior periods are recognized.
3. At the balance sheet date, the carrying amount of deferred tax assets is reviewed. The carryingamount of a deferred tax asset is reduced to the extent that it is no longer probable that sufficienttaxable income will be available to allow the benefit of the deferred tax asset to be utilized. Suchreduction is subsequently reversed to the extent that it becomes probable that sufficient taxableincome will be available.
4. The income tax and deferred tax for the period are treated as income tax expenses or incomethrough profit or loss, excluding those arising from the following circumstances: (1) business
combination; and (2) the transactions or items directly recognized in equity.
5. Deferred tax assets and deferred tax liabilities shall offset each other and be presented on a netbasis when the following conditions are all met: (1) the Company has the legal right to settle offcurrent tax assets against current tax liabilities; (2) the deferred tax assets and the deferred taxliabilities relate to income taxes levied by the same tax authority on either: 1) the same taxableentity; or 2) different taxable entities which intend either to settle current tax liabilities and assetson a net basis, or to realize the assets and settle the liabilities simultaneously, in each future periodin which significant amounts of deferred tax assets or liabilities are expected to be recovered orsettled.
38. Leases
? Applicable ? Not ApplicableBasis for judgment and accounting treatment methods for simplified approach of short-termleases and leases of low-value assets as a lessee.? Applicable ? Not Applicable
1. The Company as lessee
At the commencement date, the Company recognizes a lease that has a lease term of 12 months orless as a short-term lease, which shall not contain a purchase option; the Company recognizes alease as a lease of a low-value asset if the underlying asset is of low value when it is new. If theCompany subleases an asset, or expects to sublease an asset, the head lease does not qualify as alease of a low-value asset.For all short-term leases and leases of low-value assets, lease payments are recognized as cost orprofit or loss with straight-line method over the lease term.Apart from the above-mentioned short-term leases and leases of low-value assets with simplifiedapproach, the Company recognizes right-of-use assets and lease liabilities at the commencementdate.
(1) Right-of-use assets
The right-of-use asset is measured at cost and the cost shall comprise: 1) the amount of the initialmeasurement of the lease liabilities; 2) any lease payments made at or before the commencementdate, less any lease incentives received; 3) any initial direct costs incurred by the lessee; and 4) anestimate of costs to be 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 requiredby the terms and conditions of the lease.The Company depreciates the right-of-use asset using the straight-line method. If it is reasonableto be certain that the ownership of the underlying asset can be acquired by the end of the leaseterm, the Company depreciates the right-of-use asset from the commencement date to the end of
the useful life of the underlying asset. Otherwise, the Company depreciates the right-of-use assetfrom the commencement date to the earlier of the end of the useful life of the right-of-use asset orthe end of the lease term.
(2) Lease liabilities
At the commencement date, the Company measures the lease liability at the present value of thelease payments that are not paid at that date, discounted using the interest rate implicit in the lease.If that rate cannot be readily determined, the Company’s incremental borrowing rate shall be used.Unrecognized financing expenses, calculated at the difference between the lease payment and itspresent value, are recognized as interest expenses over the lease term using the discount ratewhich has been used to determine the present value of lease payment and included in profit or loss.Variable lease payments not included in the measurement of lease liabilities are included in profitor loss in the periods in which they are incurred.After the commencement date, if there is a change in the following items: (a) actual fixedpayments; (b) amounts expected to be payable under residual value guarantees; (c) an index or arate used to determine lease payments; (d) assessment result or exercise of purchase option,extension option or termination option, the Company remeasures the lease liability based on thepresent value of lease payments after changes, and adjusts the carrying amount of the right-of-useasset accordingly. If the carrying amount of the right-of-use asset is reduced to zero but there shallbe a further reduction in the lease liability, the remaining amount shall be recognized into profit orloss.Classification criteria and accounting treatment methods for leases as a lessor? Applicable ? Not Applicable
2. The Company as lessor
At the commencement date, the Company classifies a lease as a finance lease if it transferssubstantially all the risks and rewards incidental to ownership of an underlying asset. Otherwise, itis classified as an operating lease.
(1) Operating lease
Lease receipts are recognized as lease income with straight-line method over the lease term. Initialdirect costs incurred shall be capitalized, amortized on the same basis as the recognition of leaseincome, and included into profit or loss by installments. Variable lease payments related tooperating lease which are not included in the lease payment are charged as profit or loss in theperiods in which they are incurred.
(2) Finance lease
At the commencement date, the Company recognizes the finance lease payment receivable basedon the net investment in the lease (sum of the present value of unguaranteed residual value andlease receipts that are not received at the commencement date, discounted by the interest rateimplicit in the lease), and derecognizes assets held under the finance lease. The Companycalculates and recognizes interest income using the interest rate implicit in the lease over the lease
term.Variable lease payments not included in the measurement of the net investment in the lease arecharged as profit or loss in the periods in which they are incurred.
39. Other significant accounting policies and estimates
? Applicable ? Not ApplicableAccounting treatment related to share repurchaseWhen the Company repurchases its shares for the purpose of reducing its registered capital orrewarding its employees, if the purchased shares are to be kept as treasury shares, the treasuryshares are recorded at the cash distributed to existing shareholders for repurchase; if the purchasedshares are to be retired, the difference between the total book value of shares retired and the cashdistributed to existing shareholders for repurchase is to reduce capital reserve, or retained earningswhen the capital reserve is not enough to reduce. If the Company repurchases vested equityinstruments in equity-settled share-based payment transactions with employees, cost of treasuryshares granted to employees and capital reserve (other capital reserve) accumulated within thevesting period are to be written off on the payment made to employees, with a correspondingadjustment in capital reserve (share premium).
40. Significant changes in accounting policies and estimates
(1). Changes in accounting policies
? Applicable ? Not Applicable
| Contexts and reasons of changes in accounting policies | Financial statement items significantly affected | Amounts affected |
| Refer to Other remark | Items of balance sheet as at December 31, 2022 | |
| Refer to Other remark | Deferred tax assets | -2,862,658.05 |
| Refer to Other remark | Undistributed profit | -2,862,658.05 |
| Refer to Other remark | Items of income statement of 2022 | |
| Refer to Other remark | Income tax expenses | -3,768,840.19 |
Other remarkThe Company has adopted the regulations about accounting for deferred tax related to assets andliabilities arising from a single transaction to which the initial recognition exemption does notapply in the “Interpretation of China Accounting Standards for Business Enterprises No. 16”issued by the Ministry of Finance since January 1, 2023, and makes adjustments on such singletransactions occurring between the beginning of the earliest comparative period and the firstadoption date accordingly. For taxable and deductible temporary differences associated with leaseliabilities and right-of-use assets, provisions associated with decommissioning obligations andcorresponding assets arising from such single transactions and presented at the beginning of theearliest comparative period, the cumulative effect of initially applying such regulations shall be
adjusted into retained earnings or other related items at the beginning of the earliest comparativeperiod presented. Details on adjustments refer to the table above.
(2). Changes in accounting estimates
? Applicable ? Not Applicable
(3). Financial statements involving adjustments at the beginning of the year of firstimplementation first implemented new accounting standards or standard interpretationsfrom 2023? Applicable ? Not Applicable
41. Others
? Applicable ? Not Applicable
VI. Taxes
1. Main taxes and tax rates
Main taxes and tax rates? Applicable ? Not Applicable
| Taxes | Tax bases | Tax rates |
| Value-added tax (VAT) | Sales of western medicine and Chinese patent medicine, etc. | 13% |
| Sales of troche of Chinese traditional medicine, etc. | 9%, | |
| Sales of birth control necessities | duty-free | |
| Sales of biologics | 3% | |
| Sublease business | 5% | |
| Taxable services (promotional services, etc.) | 6% | |
| Income of small-scale taxpayers | 3%, duty-free | |
| Housing property tax | For housing property levied on the basis of price, housing property tax is levied at the rate of 1.2% of the balance after deducting 20%—30% of the cost; for housing property levied on the basis of rent, housing property tax is levied at the rate of 12% of lease income. | 1.2%；12% |
| Urban maintenance and construction tax | Turnover tax actually paid | 7%、5%、1% |
| Education surcharge | Turnover tax actually paid | 3% |
| Local education surcharge | Turnover tax actually paid | 2% |
| Enterprise income tax | Taxable income | 25%、20%、15% |
Different enterprise income tax rates applicable to different taxpayers:
? Applicable ? Not Applicable
| Taxpayers | Income tax rate |
| Hainan Yifeng Internet Hospital Co., Ltd. | 15% |
| Taxpayers | Income tax rate |
| Hengxiutang Pharmaceutical Co., Ltd. (the “Hengxiutang Pharmaceutical”) | 15% |
| Eligible small enterprises with meager profit | 20% |
| Taxpayers other than the above-mentioned | 25% |
2. Tax preferential policies
? Applicable ? Not Applicable
1. VAT
(1) Pursuant to the “Announcement of the State Taxation Administration on Clarifying Policies forVAT Reduction and Exemption of Small-scale VAT Taxpayers” (Announcement of the Ministry ofFinance and the State Taxation Administration [2023] No. 1), from January 1, 2023 to December31, 2023, small-scale VAT taxpayers with monthly sales less than 100,000 yuan (inclusive) areexempted from VAT; during the same period, the taxable sales income of small-scale VATtaxpayers applicable to a VAT rate of 3% shall be levied at a reduced rate of 1%; projects withVAT prepaid and applicable to a VAT rate of 3% shall be levied at a reduced rate of 1%. Taxpayersin consumer services industry whose sales from providing consumer services account for morethan 50% of the total sales are allowed to deduct an extra 10% of VAT payable based on theirdeductible input tax for the current period. The Company’s eligible small-scale VAT taxpayersenjoy the above-mentioned VAT preferential policies.
(2) Pursuant to the “Announcement on Tax Policies to Further Support the Entrepreneurship andEmployment of Self-Employed Veterans” (Announcement of the Ministry of Finance, StateTaxation Administration, and Ministry of Veterans Affairs [2023] No. 14), from January 1, 2023 toDecember 31, 2027, enterprises that recruit self-employed veterans, sign labor contracts with themfor a period of more than one year, and pay social insurance premiums in accordance with the law,shall enjoy a deduction within the standard quota for VAT, urban maintenance and construction tax,education surcharge, local education surcharge and enterprise income tax within three years basedon the actual number of employees, starting from the month when the labor contracts are signedand social insurance premiums are paid. The Company’s eligible subsidiaries enjoy theabove-mentioned VAT preferential policies.
(3) Pursuant to the “Announcement on Tax Policies to Further Support the Entrepreneurship andEmployment of Key Groups” (Announcement of the Ministry of Finance, State TaxationAdministration, Ministry of Human Resources and Social Security, and Ministry of Agricultureand Rural Affairs [2023] No. 15), from January 1, 2023 to December 31, 2027, enterprises thatrecruit individuals who have been lifted out of poverty, as well as individuals who have beenregistered as unemployed for more than half a year at public employment service agencies of thehuman resources and social security departments and hold an “Employment and Entrepreneurship
Certificate” or an “Unemployment Registration Certificate” (indicating “enterprise tax incentivepolicy”), sign labor contracts with them for a period of more than one year, and pay socialinsurance premiums in accordance with the law, shall enjoy a deduction within the standard quotafor VAT, urban maintenance and construction tax, education surcharge, local education surcharge,and enterprise income tax within three years based on the actual number of employees, startingfrom the month when the labor contracts are signed and social insurance premiums are paid. TheCompany’s eligible subsidiaries enjoy the above-mentioned VAT preferential policies.
2. Urban maintenance and construction tax, education surcharge and local education surchargeAccording to Article 2 of the “Announcement on Relevant Tax Policies to Further Support theDevelopment of Small Enterprises with Meager Profit and Individually-owned Businesses”(Announcement of the Ministry of Finance and State Taxation Administration [2023] No. 12),from January 1, 2023 to December 31, 2027, the resource tax (excluding water resource tax),urban maintenance and construction tax, housing property tax, urban land use tax, stamp duty(excluding stamp duty of securities transactions), farmland occupation tax, education surchargeand local education surcharge shall be levied by half for small-scale VAT taxpayers, smallenterprises with meager profit and individually-owned businesses. The Company’s eligiblesmall-scale VAT taxpayers and small enterprises with meager profit enjoy the above preferentialpolicies.
3. Enterprise income tax
(1) Pursuant to the “Notice of the Ministry of Finance and the State Taxation Administration onthe Preferential Policies for Enterprise Income Tax in Hainan Free Trade Port” (Cai Shui [2020]No. 31), enterprise income tax of encouraged industries enterprises registered and operatingsubstantively in Hainan Free Trade Port shall be levied at a reduced rate of 15%. Hainan YifengInternet Hospital Co., Ltd., a subsidiary of the Company, belongs to the encouraged industryenterprises and meets the relevant conditions, so it enjoys the above-mentioned preferentialpolicies for enterprise income tax, which was levied at a reduced rate of 15% in the current period.
(2) The Company’s sub-subsidiary, Hengxiutang Pharmaceutical, was accredited as a high-techenterprise by Department of Science and Technology of Hunan Province, Hunan ProvincialDepartment of Finance and Hunan Provincial Tax Service, STA, and obtained the high-techenterprise certificate numbered GR202243001098 on October 18, 2022, with a valid period of 3years (2022-2024). The enterprise income tax of Hengxiutang Pharmaceutical was levied at areduced rate of 15% in the current period.
(3) Pursuant to the “Announcement on the further Implementation of Income Tax PreferentialPolicies for Small Enterprises with Meager Profit and Individually-owned Businesses”(Announcement of the Ministry of Finance and the State Taxation Administration [2023] No. 12),the enterprise income tax of small enterprises with meager profit for the portion of the taxable
income is levied at 20% based on 25% of that portion of income, which will continue to beimplemented until December 31, 2027. The Company’s eligible small enterprises with meagerprofit enjoy the above-mentioned preferential policies for enterprise income tax in the currentperiod.
3. Others
? Applicable ? Not Applicable
VII. Notes to items of consolidated financial statements
1. Cash and bank balances
? Applicable ? Not Applicable
| Items | Closing balance | December 31, 2022 |
| Cash on hand | 232,721.88 | 294,708.93 |
| Cash in bank | 2,469,121,545.98 | 2,917,904,939.52 |
| Other cash and bank balances | 1,096,551,470.95 | 1,194,319,556.21 |
| Funds deposited in finance company | ||
| Total | 3,565,905,738.81 | 4,112,519,204.66 |
| Including: Deposited overseas |
Other remarks:
Please refer to section VII 31 of notes to the financial statements for details on cash and bankbalances with restrictions
2. Held-for-trading financial assets
? Applicable ? Not Applicable
| Items | Closing balance | December 31, 2022 | Reasons and basis for designation |
| Financial assets classified as at fair value through profit or loss | 1,630,720,887.94 | 50,045,139.45 | / |
| Including: | |||
| Wealth management products | 1,630,720,887.94 | 50,045,139.45 | / |
| Financial assets designated as at fair value through profit or loss | |||
| Including: | |||
| Total | 1,630,720,887.94 | 50,045,139.45 | / |
Other remarks? Applicable ? Not Applicable
3. Held-for-trading financial assets
? Applicable ? Not Applicable
4. Notes receivable
(1) Details on categories
? Applicable ? Not Applicable
(2) Pledged notes at the balance sheet date
? Applicable ? Not Applicable
(3) Endorsed or discounted but undue notes at the balance sheet date
? Applicable ? Not Applicable
(4) Details on categories of provision for bad debts
? Applicable ? Not ApplicableNotes receivable with provision made on an individual basis? Applicable ? Not ApplicableNotes receivable with provision for bad debts made on a collective basis? Applicable ? Not ApplicableProvision for bad debts withdrawn based on the general model of expected credit losses? Applicable ? Not ApplicableDivision basis for three stages and proportions of provision for bad debts? Applicable ? Not ApplicableReasons for significant changes in carrying amount of notes receivable in the current period? Applicable ? Not Applicable
(5) Provision for bad debts
? Applicable ? Not ApplicableSignificant provisions collected or reversed? Applicable ? Not ApplicableOther remarksNone
(6) Notes receivable actually written off in the current period
? Applicable ? Not ApplicableSignificant notes receivable written off in the current period? Applicable ? Not ApplicableRemarks on notes receivable written off
? Applicable ? Not ApplicableOther remarks? Applicable ? Not Applicable
5. Accounts receivable
(1) Age analysis
? Applicable ? Not Applicable
| Ages | Closing balance | Opening balance |
| Within 1 year | 2,148,878,038.45 | 1,858,939,147.39 |
| 1-2 years | 9,776,519.62 | 3,903,810.52 |
| 2-3 years | 1,472,003.84 | 755,815.32 |
| 3-4 years | 248,427.57 | 14,445.10 |
| 4-5 years | 14,445.10 | 10.00 |
| Over 5 years | 111,803.48 | 111,793.48 |
| Total | 2,160,501,238.06 | 1,863,725,021.81 |
(2) Details on categories
? Applicable ? Not Applicable
| Categories | Closing balance | ||||
| Book balance | Provision for bad debts | Carrying amount | |||
| Amount | % to total | Amount | Provision proportion (%) | ||
| Receivables with provision made on a collective basis | 2,160,501,238.06 | 100.00 | 22,226,918.18 | 1.03 | 2,138,274,319.88 |
| Total | 2,160,501,238.06 | 100.00 | 22,226,918.18 | 1.03 | 2,138,274,319.88 |
(Continued)
| Categories | December 31, 2022 | ||||
| Book balance | Provision for bad debts | Carrying amount | |||
| Amount | % to total | Amount | Provision proportion (%) | ||
| Receivables with provision made on a collective basis | 1,863,725,021.81 | 100.00 | 19,784,142.68 | 1.06 | 1,843,940,879.13 |
| Total | 1,863,725,021.81 | 100.00 | 19,784,142.68 | 1.06 | 1,843,940,879.13 |
Accounts receivable with provision for bad debts made on an individual basis? Applicable ? Not ApplicableAccounts receivable with provision for bad debts made on a collective basis? Applicable ? Not Applicable
| Items | Closing balance | ||
| Book balance | Provision for bad debts | Provision proportion (%) | |
| Items | Closing balance | ||
| Book balance | Provision for bad debts | Provision proportion (%) | |
| Portfolio grouped Medical insurance payments | 1,733,651,816.08 | ||
| Portfolio grouped with ages | 426,849,421.98 | 22,226,918.18 | 5.21 |
| Subtotal | 2,160,501,238.06 | 22,226,918.18 | 1.03 |
Explanation of provision for bad debts made on a collective basis? Applicable ? Not ApplicableProvision for bad debts withdrawn based on the general model of expected credit losses? Applicable ? Not ApplicableDivision basis for three stages and proportions of provision for bad debtsNoneReasons for significant changes in carrying amount of accounts receivable in the current period? Applicable ? Not Applicable
(3) Changes in provision for bad debts
? Applicable ? Not Applicable
| Items | Opening balance | Changes in provision for bad debts | Closing balance | |||
| Accrual | Reversal | Write-off | Others | |||
| Receivables with provision made on a collective basis | 19,784,142.68 | 2,175,577.90 | 482,802.40 | 750,000.00 | 22,226,918.18 | |
| Total | 19,784,142.68 | 2,175,577.90 | 482,802.40 | 750,000.00 | 22,226,918.18 | |
Significant provisions collected or reversed? Applicable ? Not ApplicableOther remarksNone
(4) Accounts receivable written off in the current period
? Applicable ? Not Applicable
| Items | Amount written off |
| Accounts receivable actually written off | 482,802.40 |
Significant accounts receivable written off in the current period? Applicable ? Not Applicable
Remarks on accounts receivable written off? Applicable ? Not Applicable
(5) Details of the top 5 debtors with largest balances of accounts receivable and contractassets? Applicable ? Not Applicable
| Debtors | Book balance of accounts receivable | Book balance of contract assets | Book balance of Accounts receivable and contract assets | Proportion to the total balance of accounts receivable (%) | Provision for bad debts |
| Wuhan Medical Insurance Center | 171,850,149.76 | 171,850,149.76 | 7.95 | ||
| Wuxi Social Insurance Fund Management Center | 134,629,535.57 | 134,629,535.57 | 6.23 | ||
| Changsha Medical Security Service Center | 113,711,988.43 | 113,711,988.43 | 5.26 | ||
| Ningjing Social Insurance Management Center | 77,745,085.21 | 77,745,085.21 | 3.60 | ||
| Xuzhou Medical Insurance Fund Management Center | 73,549,723.44 | 73,549,723.44 | 3.40 | ||
| Subtotal | 571,486,482.41 | 571,486,482.41 | 26.44 |
Other remarksNoneOther remarks? Applicable ? Not Applicable
6. Contract assets
(1) Details
? Applicable ? Not Applicable
(2) Reasons for significant changes in carrying amount of contract assets
? Applicable ? Not Applicable
(3) Details on provision for impairment
? Applicable ? Not ApplicableContract assets with provision for impairment made on an individual basis? Applicable ? Not ApplicableRemarks on contract assets with provision for impairment made on an individual basis? Applicable ? Not Applicable
Contract assets with provision for impairment made on a collective basis? Applicable ? Not ApplicableProvision for bad debts withdrawn based on the general model of expected credit losses? Applicable ? Not ApplicableDivision basis for stages and proportions of provision for bad debtsNoneReasons for significant changes in carrying amount of contract assets in the current period? Applicable ? Not Applicable
(4) Changes in provision for impairment
? Applicable ? Not ApplicableSignificant provisions collected or reversed? Applicable ? Not ApplicableOther remarksNone
(5) Contract assets actually written off in the current period
? Applicable ? Not ApplicableSignificant contract assets written off in the current period? Applicable ? Not ApplicableRemarks on contract assets written off? Applicable ? Not ApplicableOther remarks? Applicable ? Not Applicable
7. Receivables financing
(1) Details on categories
? Applicable ? Not Applicable
| Items | Closing balance | December 31, 2022 |
| Bank acceptance | 11,889,888.58 | 1,784,671.86 |
| Total | 11,889,888.58 | 1,784,671.86 |
(2) Pledged receivables financing at the balance sheet date
? Applicable ? Not Applicable
(3) Endorsed or discounted but undue notes at the balance sheet date
? Applicable ? Not Applicable
| Items | Closing balance derecognized |
| Bank acceptance | 61,770,400.00 |
| Subtotal | 61,770,400.00 |
Due to the fact that the acceptor of bank acceptance is commercial bank, which is of high creditlevel, there is very little possibility of failure in recoverability when it is due. Based on this fact,the Company derecognized the endorsed or discounted bank acceptance. However, if any bankacceptance is not recoverable when it is due, the Company still holds joint liability on suchacceptance, according to the China Commercial Instrument Law.
(4) Provision for impairment
? Applicable ? Not Applicable
| Categories | Closing balance | ||||
| Cost | Accumulated provision for credit impairment | Carrying amount | |||
| Amount | % to total | Amount | Provision proportion (%) | ||
| Receivables with provision for bad debts made on a collective basis | 11,889,888.58 | 11,889,888.58 | |||
| Including: Bank acceptance | 11,889,888.58 | 11,889,888.58 | |||
| Total | 11,889,888.58 | 11,889,888.58 | |||
(Continued)
| Categories | December 31, 2022 | ||||
| Cost | Accumulated provision for credit impairment | Carrying amount | |||
| Amount | % to total | Amount | Provision proportion (%) | ||
| Receivables with provision for bad debts made on a collective basis | 1,784,671.86 | 1,784,671.86 | |||
| Including: Bank acceptance | 1,784,671.86 | 1,784,671.86 | |||
| Total | 1,784,671.86 | 1,784,671.86 | |||
Receivables financing with provision for bad debts made on an individual basis? Applicable ? Not ApplicableRemarks on receivables financing with provision for bad debts made on an individual basis? Applicable ? Not ApplicableReceivables financing with provision for bad debts made on a collective basis? Applicable ? Not ApplicableProvision for bad debts withdrawn based on the general model of expected credit losses? Applicable ? Not ApplicableDivision basis for stages and proportions of provision for bad debts
NoneReasons for significant changes in carrying amount of receivables financing in the current period? Applicable ? Not Applicable
(5) Changes in provision for credit impairment
? Applicable ? Not ApplicableSignificant provisions collected or reversed? Applicable ? Not ApplicableOther remarksNone
(6) Receivables financing actually written off in the current period
? Applicable ? Not ApplicableSignificant receivables financing written off in the current period? Applicable ? Not ApplicableRemarks on receivables financing written off? Applicable ? Not Applicable
(7) Changes in receivables financing and its fair value
? Applicable ? Not Applicable
(8) Other remarks
? Applicable ? Not Applicable
8. Advances paid
(1) Age analysis
? Applicable ? Not Applicable
| Ages | Closing balance | December 31, 2022 | ||||||
| Book balance | % to total | Provision for impairment | Carrying amount | Book balance | % to total | Provision for impairment | Carrying amount | |
| Within 1 year | 133,181,872.92 | 94.13 | 133,181,872.92 | 220,627,602.76 | 97.85 | 220,627,602.76 | ||
| 1-2 years | 4,728,693.61 | 3.34 | 4,728,693.61 | 4,109,914.33 | 1.82 | 4,109,914.33 | ||
| 2-3 years | 2,848,124.45 | 2.01 | 2,848,124.45 | 518,100.60 | 0.23 | 518,100.60 | ||
| Over 3 years | 735,119.66 | 0.52 | 735,119.66 | 217,019.06 | 0.10 | 217,019.06 | ||
| Total | 141,493,810.64 | 100.00 | 141,493,810.64 | 225,472,636.75 | 100.00 | 225,472,636.75 | ||
Reasons for unsettlement on advances paid with age over one year and significant amountNone
(2) Details of the top 5 debtors with largest balances
? Applicable ? Not Applicable
| Debtors | Book balance | Proportion to the total balance of advances paid (%) |
| Supplier F | 14,964,323.34 | 10.58 |
| Supplier G | 10,404,676.69 | 7.35 |
| Supplier H | 9,400,238.14 | 6.64 |
| Supplier I | 7,142,726.84 | 5.05 |
| Supplier J | 5,867,883.75 | 4.15 |
| Subtotal | 47,779,848.76 | 33.77 |
Other remarks? Applicable ? Not Applicable
9. Other receivables
(1) Details
? Applicable ? Not Applicable
| Items | Closing balance | December 31, 2022 |
| Interest receivable | ||
| Dividend receivable | ||
| Other receivables | 448,538,089.70 | 419,472,054.84 |
| Total | 448,538,089.70 | 419,472,054.84 |
Other remarks? Applicable ? Not ApplicableInterest receivable
(1) Details
? Applicable ? Not Applicable
(2) Significant overdue interest
? Applicable ? Not Applicable
(3) Provision for bad debts
? Applicable ? Not ApplicableProvision for bad debts made on an individual basis? Applicable ? Not ApplicableExplanation of Provision for bad debts made on an individual basis? Applicable ? Not ApplicableProvision for bad debts made on a collective basis? Applicable ? Not Applicable
(4) Provision for bad debts based on the general model of expected credit losses
? Applicable ? Not ApplicableDivision basis for stages and proportions of provision for bad debtsNoneReasons for significant changes in carrying amount of interest receivable in the current period? Applicable ? Not Applicable
(5) Changes in provision for bad debts
? Applicable ? Not ApplicableSignificant provisions collected or reversed? Applicable ? Not ApplicableOther remarksNone
(6) Interest receivable actually written off in the current period
? Applicable ? Not ApplicableSignificant interest receivable written off in the current period? Applicable ? Not ApplicableRemarks on interest receivable written off? Applicable ? Not ApplicableOther remarks? Applicable ? Not ApplicableDividend receivable
(1) Dividend receivable
? Applicable ? Not Applicable
(2) Significant balance with age over one year
? Applicable ? Not Applicable
(3) Provision for bad debts
? Applicable ? Not ApplicableProvision for bad debts made on an individual basis? Applicable ? Not ApplicableExplanation of Provision for bad debts made on an individual basis? Applicable ? Not ApplicableProvision for bad debts made on a collective basis? Applicable ? Not Applicable
(4) Provision for bad debts based on the general model of expected credit losses? Applicable ? Not ApplicableDivision basis for stages and proportions of provision for bad debtsNoneReasons for significant changes in carrying amount of dividend receivable in the current period? Applicable ? Not Applicable
(5) Changes in provision for bad debts
? Applicable ? Not ApplicableSignificant provisions collected or reversed? Applicable ? Not ApplicableOther remarksNone
(6) Dividend receivable actually written off in the current period
? Applicable ? Not ApplicableSignificant dividend receivable written off in the current period? Applicable ? Not ApplicableRemarks on dividend receivable written off? Applicable ? Not ApplicableOther remarks? Applicable ? Not ApplicableOther receivables
(1) Age analysis
? Applicable ? Not Applicable
| Ages | Closing book balance | Book balance on December 31, 2022 |
| Within 1 year | 433,167,493.60 | 410,589,279.04 |
| 1-2 years | 25,656,040.74 | 17,500,690.85 |
| 2-3 years | 2,380,801.36 | 747,230.71 |
| 3-4 years | 57,701.30 | 1,232,408.29 |
| 4-5 years | 167,987.89 | 52,735.99 |
| Over 5 years | 4,830,633.52 | 4,801,002.17 |
| Total | 466,260,658.41 | 434,923,347.05 |
(2) Other receivables categorized by nature
? Applicable ? Not Applicable
| Nature of receivables | Closing book balance | Book balance on December 31, 2022 |
| Petty cash | 10,627,234.05 | 9,787,465.96 |
| Reserved fund of medicare payment | 227,562,930.45 | 226,096,928.31 |
| Security deposits | 153,343,463.92 | 121,624,037.91 |
| others | 74,727,029.99 | 77,414,914.87 |
| Total | 466,260,658.41 | 434,923,347.05 |
(3) Changes in provision for bad debts
? Applicable ? Not Applicable
| Items | Stage 1 | Stage 2 | Stage 3 | Total |
| 12?month expected credit losses | Lifetime expected credit losses (credit not impaired) | Lifetime expected credit losses (credit impaired) | ||
| Opening balance | 9,078,664.86 | 1,099,867.25 | 5,272,760.10 | 15,451,292.21 |
| Opening balance in the current period | —— | —— | —— | |
| --Transferred to stage 2 | -2,565,604.07 | 2,565,604.07 | ||
| --Transferred to stage 3 | -476,160.27 | 476,160.27 | ||
| Provision made in the current period | 3,235,805.72 | -623,706.98 | -250,342.96 | 2,361,755.78 |
| Provision transferred by business combination | ||||
| Provision written off in the current period | 90,479.28 | 90,479.28 | ||
| Closing balance | 9,748,866.51 | 2,565,604.07 | 5,408,098.13 | 17,722,568.71 |
Division basis for stages and proportions of provision for bad debts:
Stage 1 is where credit risk of other receivables has not increased significantly since initialrecognition. Stage 2 is where credit risk of other receivables has increased significantly sinceinitial recognition, but such receivables are not considered credit-impaired. Stage 3 is where otherreceivables are considered credit-impaired since initial recognition.
| Items | Stage 1 | Stage 2 | Stage 3 | Total |
| Provision proportion (%) | 2.25 | 10.00 | 72.72 | 3.80 |
Reasons for significant changes in carrying amount of other receivables in the current period? Applicable ? Not ApplicableDetermination basis for provision for impairment made in the current period and whether creditrisk has increased significantly? Applicable ? Not Applicable
(4) Changes in provision for bad debts
? Applicable ? Not ApplicableSignificant provisions collected or reversed
? Applicable ? Not ApplicableOther remarksNone
(5) Other receivables actually written off in the current period
? Applicable ? Not Applicable
| Items | Amount written off |
| Other receivables actually written off | 90,479.28 |
Significant other receivables written off in the current period? Applicable ? Not ApplicableRemarks on other receivables written off? Applicable ? Not Applicable
(6) Details of the top 5 debtors with largest balances
? Applicable ? Not Applicable
| Debtors | Nature of receivables | Book balance | Ages | Proportion to the total balance of other receivables (%) | Provision for bad debts |
| Wuhan Medical Insurance Center | Medical insurance reserves | 35,014,676.40 | Within 1 year | 7.51 | |
| Wuxi Social Insurance Fund Management Center | Medical insurance reserves | 32,515,153.91 | Within 1 year | 6.97 | |
| Li Zhenguo | Equity transfer payment | 21,407,891.50 | 1-2 years | 4.59 | 2,140,789.15 |
| Ningjing Social Insurance Management Center | Medical insurance reserves | 16,262,431.92 | Within 1 year | 3.49 | |
| Xuzhou Medical Insurance Fund Management Center | Medical insurance reserves | 10,155,599.33 | Within 1 year | 2.18 | |
| Subtotal | 115,355,753.06 | 24.74 | 2,140,789.15 |
(7) Other receivables related to the centralized fund management
? Applicable ? Not ApplicableOther remarks? Applicable ? Not Applicable
10. Inventories
(1) Details
? Applicable ? Not Applicable
| Items | Closing balance | December 31, 2022 | ||||
| Book balance | Provision for write-down/ impairment | Carrying amount | Book balance | Provision for write-down/ impairment | Carrying amount | |
| Goods on hand | 3,728,652,379.58 | 19,185,978.09 | 3,709,466,401.49 | 3,579,370,459.75 | 16,775,948.33 | 3,562,594,511.42 |
| Items | Closing balance | December 31, 2022 | ||||
| Book balance | Provision for write-down/ impairment | Carrying amount | Book balance | Provision for write-down/ impairment | Carrying amount | |
| Low-value consumables | 21,823,998.08 | 21,823,998.08 | 20,429,336.91 | 20,429,336.91 | ||
| Raw materials | 58,267,454.66 | 58,267,454.66 | 24,639,891.30 | 24,639,891.30 | ||
| Work in process | 12,762,808.19 | 12,762,808.19 | 987,864.06 | 987,864.06 | ||
| Packages | 5,642,998.44 | 5,642,998.44 | 5,897,672.34 | 5,897,672.34 | ||
| Costs to fulfill a contract | ||||||
| Total | 3,827,149,638.95 | 19,185,978.09 | 3,807,963,660.86 | 3,631,325,224.36 | 16,775,948.33 | 3,614,549,276.03 |
(2) Provision for inventory write-down/costs to fulfill a contract
? Applicable ? Not Applicable
| Items | Opening balance | Increase | Decrease | Closing balance | ||
| Accrual | Business combination | Reversal or write-off | Others | |||
| Goods on hand | 16,775,948.33 | 72,633,545.68 | 70,223,515.92 | 19,185,978.09 | ||
| Total | 16,775,948.33 | 72,633,545.68 | 70,223,515.92 | 19,185,978.09 | ||
Reasons for the reversal or write-off of provision for inventory write-down? Applicable ? Not ApplicableInventories with provision made on a collective basis? Applicable ? Not ApplicableDetermination basis of inventories with provision made on a collective basis? Applicable ? Not Applicable
(3) Closing capitalized amount of borrowing cost and calculation criteria and basis ofcapitalized amount? Applicable ? Not Applicable
(4) Costs to fulfill a contract
? Applicable ? Not ApplicableOther remarks? Applicable ? Not Applicable
11. Assets held for sale
? Applicable ? Not Applicable
12. Non-current assets due within one year
? Applicable ? Not ApplicableDebt investments due within one year? Applicable ? Not Applicable
Other debt investments due within one year? Applicable ? Not ApplicableOther remarks on non-current assets due within one yearNone
13. Other current assets
? Applicable ? Not Applicable
| Items | Closing balance | Opening balance |
| Book balance | Book balance | |
| Amortized Housing rental tax | 49,206,209.68 | 44,047,274.78 |
| With-holdings on VAT of deducting and certificating | 308,317,783.51 | 237,908,688.73 |
| Security deposits and interests of time deposit | 25,822,578.08 | |
| Others | 26,600,349.65 | 2,661,007.73 |
| Total | 384,124,342.84 | 310,439,549.32 |
Other remarksNone
14. Debt investments
(1) Details
? Applicable ? Not Applicable
| Items | Closing balance | December 31, 2022 | ||||
| Book balance | Provision for impairment | Carrying amount | Book balance | Provision for impairment | Carrying amount | |
| Large-denomination Certificate of Deposit of Agricultural Bank of China | 51,438,055.56 | 51,438,055.56 | ||||
| Large-denomination Certificate of Deposit of Industrial and Commercial Bank of China | 51,438,055.56 | 51,438,055.56 | ||||
| Large-denomination Certificate of Deposit of Agricultural Bank of China | 51,291,666.66 | 51,291,666.66 | ||||
| Total | 154,167,777.78 | 154,167,777.78 | ||||
Changes on provision for impairment of debt investments? Applicable ? Not Applicable
(2) Significant debt investments at the balance sheet date
? Applicable ? Not Applicable
(3) Provision for impairment of debt investments
? Applicable ? Not ApplicableDivision basis for stages and proportions of provision for bad debtsNoneReasons for significant changes in carrying amount of debt investments in the current period? Applicable ? Not ApplicableDetermination basis for provision for impairment made in the current period and whether creditrisk has increased significantly? Applicable ? Not Applicable
(4) Debt investments actually written off in the current period
? Applicable ? Not ApplicableSignificant debt investments written off in the current period? Applicable ? Not ApplicableRemarks on debt investments written off? Applicable ? Not ApplicableOther remarks? Applicable ? Not Applicable
15. Other debt investments
(1) Details
? Applicable ? Not ApplicableChanges on provision for credit impairment of other debt investments? Applicable ? Not Applicable
(2) Significant other debt investments at the balance sheet date
? Applicable ? Not Applicable
(3) Provision for credit impairment of other debt investments
? Applicable ? Not ApplicableDivision basis for stages and proportions of provision for bad debtsNoneReasons for significant changes in carrying amount of other debt investments in the current period? Applicable ? Not ApplicableDetermination basis for provision for impairment made in the current period and whether credit
risk has increased significantly? Applicable ? Not Applicable
(4) Other debt investments actually written off in the current period
? Applicable ? Not ApplicableSignificant other debt investments written off in the current period? Applicable ? Not ApplicableRemarks on other debt investments written off? Applicable ? Not ApplicableOther remarks? Applicable ? Not Applicable
16. Long-term receivables
(1) Details
? Applicable ? Not Applicable
(2) Details on categories of provision for bad debts
? Applicable ? Not ApplicableProvision for bad debts made on an individual basis? Applicable ? Not ApplicableExplanation of Provision for bad debts made on an individual basis? Applicable ? Not ApplicableProvision for bad debts made on a collective basis? Applicable ? Not Applicable
(3) Provision for credit impairment of long-term receivables
? Applicable ? Not ApplicableDivision basis for stages and proportions of provision for bad debtsNoneReasons for significant changes in carrying amount of long-term receivables in the current period? Applicable ? Not ApplicableDetermination basis for provision for impairment made in the current period and whether creditrisk has increased significantly? Applicable ? Not Applicable
(4) Changes in provision for bad debts
? Applicable ? Not Applicable
Significant provisions collected or reversed? Applicable ? Not ApplicableOther remarksNone
(5) Long-term receivables actually written off in the current period
? Applicable ? Not ApplicableSignificant long-term receivables written off in the current period? Applicable ? Not ApplicableRemarks on long-term receivables written off? Applicable ? Not ApplicableOther remarks? Applicable ? Not Applicable
17. Long-term equity investments
(1) Details
? Applicable ? Not Applicable
| Investees | Opening balance | Increase/Decrease | |||
| Investments increased | Investments decreased | Investment income recognized under equity method | Adjustment in other comprehensive income | ||
| Joint ventures | |||||
| Taizhou Yifeng Baixingren Pharmacy Chain Co., Ltd. (the “Taizhou Baixingren ) | 5,249,115.35 | 316,574.96 | |||
| Total | 5,249,115.35 | 316,574.96 | |||
(Continued)
| Investees | Increase/Decrease | Closing balance | Closing balance of provision for impairment | |||
| Changes in other equity | Cash dividend/ Profit declared for distribution | Provision for impairment | Others | |||
| Joint ventures | ||||||
| Taizhou Baixingren | 5,565,690.31 | |||||
| Total | 5,565,690.31 | |||||
(2) Impairment test on long-term equity investments
? Applicable ? Not ApplicableOther remarksNoneRecoverable amount determined based on the fair value less costs of disposal
? Applicable ? Not ApplicableRecoverable amount determined based on the present value of estimated future cash flows? Applicable ? Not ApplicableReasons for the significant inconsistencies between aforementioned information andinformation used in previous impairment tests or external information? Applicable ? Not ApplicableReasons for the significant inconsistencies between information used in previous impairmenttests and actual performance? Applicable ? Not ApplicableOther remarksNone
18. Other equity instrument investments
(1) Details
? Applicable ? Not Applicable
| Items | Opening balance | Increase/Decrease | |||
| Investments increased | Investments decreased | Gains or losses included into other comprehensive income in the current period | Others | ||
| Jiuzhitang Co., Ltd. | 327,379,600.00 | 53,621,041.95 | 51,224,558.05 | ||
| Total | 327,379,600.00 | 53,621,041.95 | 51,224,558.05 | ||
(Continued)
| Items | Closing balance | Dividend income recognized in the current period | Accumulated gains or losses included into other comprehensive income at the end of the period |
| Jiuzhitang Co., Ltd. | 432,225,200.00 | 17,084,000.00 | 28,555,612.65 |
| Total | 432,225,200.00 | 17,084,000.00 | 28,555,612.65 |
Reasons for equity instrument investments designated as at fair value through othercomprehensive income.At the end of the period, the Company held 42,710,000 shares of Jiuzhitang Co., Ltd., with aclosing price of 10.12 yuan per share. As the item is a non-trading equity instrument, it isdesignated as an equity instrument measured at fair value through other comprehensive income.
(2) Other equity instrument investments derecognized in the current period? Applicable ? Not ApplicableOther remarks? Applicable ? Not Applicable
19. Other non-current financial assets
? Applicable ? Not Applicable
| Items | Closing balance | December 31, 2022 |
| Financial assets classified as at fair value through profit or loss | 1,010,000.00 | 1,460,000.00 |
| Including: Equity instrument investments | 1,010,000.00 | 1,460,000.00 |
| Total | 1,010,000.00 | 1,460,000.00 |
Other remarks? Applicable ? Not Applicable
20. Investment property
Measurement Model of Investment property? Applicable ? Not Applicable
(1) Investment property measured at cost
? Applicable ? Not Applicable
21. Fixed assets
(1) Details
? Applicable ? Not Applicable
| Items | Closing balance | December 31, 2022 |
| Fixed assets | 1,524,048,536.46 | 1,218,512,066.08 |
| Disposal of fixed assets | ||
| Total | 1,524,048,536.46 | 1,218,512,066.08 |
Other remarks? Applicable ? Not ApplicableFixed assets
(1) Details
? Applicable ? Not Applicable
| Items | Buildings and structures | Machinery | Electronic equipment | Office equipment | Transport facilities | Total |
| Cost | ||||||
| Opening balance | 1,004,401,988.03 | 75,343,671.86 | 393,703,040.09 | 374,289,190.36 | 19,547,122.83 | 1,867,285,013.17 |
| Increase | 289,063,338.27 | 8,980,002.70 | 127,423,814.03 | 78,777,748.68 | 2,803,190.31 | 507,048,093.99 |
| 1) Acquisition | 13,143,882.13 | 3,575,577.95 | 127,233,400.36 | 77,507,238.25 | 2,803,190.31 | 224,263,289.00 |
| 2) Transferred in from construction in progress | 275,919,456.14 | 5,404,424.75 | 121,103.67 | 1,267,476.99 | 282,712,461.55 | |
| 3) Business combination | 69,310.00 | 3,033.44 | 72,343.44 | |||
| Decrease | 2,914,696.43 | 145,575.26 | 36,502,034.68 | 20,787,426.79 | 914,882.49 | 61,264,615.65 |
| 1) Disposal/ Scrapping | 2,914,696.43 | 145,575.26 | 36,502,034.68 | 20,787,426.79 | 914,882.49 | 61,264,615.65 |
| Closing balance | 1,290,550,629.87 | 84,178,099.30 | 484,624,819.44 | 432,279,512.25 | 21,435,430.65 | 2,313,068,491.51 |
| Items | Buildings and structures | Machinery | Electronic equipment | Office equipment | Transport facilities | Total |
| Accumulated depreciation | ||||||
| Opening balance | 146,816,731.89 | 22,701,017.49 | 258,532,173.21 | 210,824,334.97 | 9,898,689.53 | 648,772,947.09 |
| Increase | 51,048,936.62 | 5,677,220.65 | 76,094,223.32 | 51,370,667.84 | 1,723,953.76 | 185,915,002.19 |
| 1) Accrual | 51,048,936.62 | 5,677,220.65 | 76,094,223.32 | 51,370,667.84 | 1,723,953.76 | 185,915,002.19 |
| 2) Business combination | ||||||
| Decrease | 2,768,961.61 | 103,419.28 | 24,475,257.36 | 17,592,026.35 | 728,329.63 | 45,667,994.23 |
| 1) Disposal/ Scrapping | 2,768,961.61 | 103,419.28 | 24,475,257.36 | 17,592,026.35 | 728,329.63 | 45,667,994.23 |
| Closing balance | 195,096,706.90 | 28,274,818.86 | 310,151,139.17 | 244,602,976.46 | 10,894,313.66 | 789,019,955.05 |
| Carrying amount | ||||||
| Closing balance | 1,095,453,922.97 | 55,903,280.44 | 174,473,680.27 | 187,676,535.79 | 10,541,116.99 | 1,524,048,536.46 |
| Opening balance | 857,585,256.14 | 52,642,654.37 | 135,170,866.88 | 163,464,855.39 | 9,648,433.30 | 1,218,512,066.08 |
(2) Fixed assets temporarily idle
? Applicable ? Not Applicable
(3) Fixed assets leased out under operating leases
? Applicable ? Not Applicable
| Items | Carrying amount |
| Buildings and structures | 989,950.87 |
| Subtotal | 989,950.87 |
(4) Fixed assets with certificate of titles being unsettled
? Applicable ? Not Applicable
| Items | Carrying amount | Reasons for unsettlement |
| Jiangxi Yifeng Pharmaceutical Factory | 93,533,592.91 | In progress |
(5) Impairment test on fixed assets
? Applicable ? Not ApplicableOther remarks? Applicable ? Not ApplicableRecoverable amount determined based on the fair value less costs of disposal? Applicable ? Not ApplicableRecoverable amount determined based on the present value of estimated future cash flows? Applicable ? Not ApplicableReasons for the significant inconsistencies between aforementioned information andinformation used in previous impairment tests or external information? Applicable ? Not Applicable
Reasons for the significant inconsistencies between information used in previous impairmenttests and actual performance? Applicable ? Not ApplicableDisposal of fixed assets? Applicable ? Not Applicable
22. Construction in progress
(1) Details
? Applicable ? Not Applicable
| Items | Closing balance | December 31, 2022 |
| Construction in progress | 175,121,866.79 | 239,848,057.90 |
| Construction materials | ||
| Total | 175,121,866.79 | 239,848,057.90 |
Other remarks? Applicable ? Not ApplicableConstruction in progress
(1) Details
? Applicable ? Not Applicable
| Projects | Closing balance | December 31, 2022 | ||||
| Book balance | Provision for impairment | Carrying amount | Book balance | Provision for impairment | Carrying amount | |
| Yifeng Health City | 7,269,387.33 | 7,269,387.33 | 7,150,484.63 | 7,150,484.63 | ||
| Jiangsu Yifeng Medicine product sorting and processing project (Phase I) | 694,303.96 | 694,303.96 | ||||
| Jiangsu Yifeng Medicine product sorting and processing project (Phase II) | 974,245.05 | 974,245.05 | ||||
| Shanghai Yifeng Medicine Industry Base | 179,823,716.99 | 179,823,716.99 | ||||
| Second headquarters project of Yifeng Pharmacy | 19,680,975.01 | 19,680,975.01 | 10,843,213.07 | 10,843,213.07 | ||
| Hubei Yifeng Medicine product sorting and processing center (Phase I) | 126,910,848.73 | 126,910,848.73 | 41,336,339.25 | 41,336,339.25 | ||
| Expansion project of Hebei Xinxing Medicine warehouse | 19,083,829.78 | 19,083,829.78 | ||||
| Other piecemeal projects | 1,202,580.89 | 1,202,580.89 | ||||
| Total | 175,121,866.79 | 175,121,866.79 | 239,848,057.90 | 239,848,057.90 | ||
(2) Changes in significant projects
? Applicable ? Not Applicable
| Projects | Budgets | Opening balance | Increase | Transferred to fixed assets | Transferred to intangible assets | Closing balance |
| Hubei Yifeng Medicine product sorting and processing center (Phase I) | 350,000,000.00 | 41,336,339.25 | 85,574,509.48 | 126,910,848.73 | ||
| Subtotal | 350,000,000.00 | 41,336,339.25 | 85,574,509.48 | 126,910,848.73 |
(Continued)
| Projects | Accumulated input to budget (%) | Completion percentage (%) | Accumulated amount of borrowing cost capitalization | Amount of borrowing cost capitalization in the current period | Annual capitalization rate (%) | Fund source |
| Hubei Yifeng Medicine product sorting and processing center (Phase I) | 36.26 | 40.00 | Raised funds | |||
| Subtotal | 36.26 | 40.00 |
(3) Changes in provision for impairment
? Applicable ? Not Applicable
(4) Impairment test on construction in progress
? Applicable ? Not ApplicableOther remarks? Applicable ? Not ApplicableRecoverable amount determined based on the fair value less costs of disposal? Applicable ? Not ApplicableRecoverable amount determined based on the present value of estimated future cash flows? Applicable ? Not ApplicableReasons for the significant inconsistencies between aforementioned information andinformation used in previous impairment tests or external information? Applicable ? Not ApplicableReasons for the significant inconsistencies between information used in previous impairmenttests and actual performance? Applicable ? Not ApplicableOther remarks? Applicable ? Not ApplicableConstruction materials
(1) Details
? Applicable ? Not Applicable
23. Productive biological assets
(1) Productive biological assets measured at cost
? Applicable ? Not Applicable
(2) Impairment test on productive biological assets measured at cost
? Applicable ? Not ApplicableRecoverable amount determined based on the fair value less costs of disposal? Applicable ? Not ApplicableRecoverable amount determined based on the present value of estimated future cash flows? Applicable ? Not ApplicableReasons for the significant inconsistencies between aforementioned information andinformation used in previous impairment tests or external information? Applicable ? Not ApplicableReasons for the significant inconsistencies between information used in previous impairmenttests and actual performance? Applicable ? Not Applicable
(3) Productive biological assets based on the fair value
? Applicable ? Not ApplicableOther remarks? Applicable ? Not Applicable
24. Oil and gas assets
(1) Details
? Applicable ? Not Applicable
(2) Impairment test on oil and gas assets
? Applicable ? Not ApplicableOther remarksNoneRecoverable amount determined based on the fair value less costs of disposal? Applicable ? Not ApplicableRecoverable amount determined based on the present value of estimated future cash flows? Applicable ? Not ApplicableReasons for the significant inconsistencies between aforementioned information andinformation used in previous impairment tests or external information? Applicable ? Not ApplicableReasons for the significant inconsistencies between information used in previous impairment
tests and actual performance? Applicable ? Not ApplicableOther remarksNone
25. Right-of-use assets
(1) Details
? Applicable ? Not Applicable
| Items | Buildings and structures | Total |
| Cost | ||
| Opening balance | 5,869,364,521.55 | 5,869,364,521.55 |
| Increase | 2,395,740,453.43 | 2,395,740,453.43 |
| 1) Leased in | 2,395,740,453.43 | 2,395,740,453.43 |
| Decrease | 1,630,001,478.19 | 1,630,001,478.19 |
| 1) Early or Expired Termination | 1,630,001,478.19 | 1,630,001,478.19 |
| Closing balance | 6,635,103,496.79 | 6,635,103,496.79 |
| Accumulated depreciation | ||
| Opening balance | 2,435,742,289.21 | 2,435,742,289.21 |
| Increase | 1,445,848,666.95 | 1,445,848,666.95 |
| 1) Accrual | 1,445,848,666.95 | 1,445,848,666.95 |
| Decrease | 1,212,371,885.19 | 1,212,371,885.19 |
| 1) Early or Expired Termination | 1,212,371,885.19 | 1,212,371,885.19 |
| Closing balance | 2,669,219,070.97 | 2,669,219,070.97 |
| Carrying amount | ||
| Closing balance | 3,965,884,425.82 | 3,965,884,425.82 |
| Opening balance | 3,433,622,232.34 | 3,433,622,232.34 |
(2) Impairment test on right-of-use assets
? Applicable ? Not ApplicableOther remarksNoneRecoverable amount determined based on the fair value less costs of disposal? Applicable ? Not ApplicableRecoverable amount determined based on the present value of estimated future cash flows? Applicable ? Not Applicable
Reasons for the significant inconsistencies between aforementioned information andinformation used in previous impairment tests or external information? Applicable ? Not ApplicableReasons for the significant inconsistencies between information used in previous impairmenttests and actual performance? Applicable ? Not ApplicableOther remarksNone
26. Intangible assets
(1) Details
? Applicable ? Not Applicable
| Items | Land use right | Software | Trademark | Drug Retailing License | Total |
| Cost | |||||
| Opening balance | 373,504,822.85 | 220,570,726.16 | 2,481,185.16 | 5,526,653.13 | 602,083,387.30 |
| Increase | 33,942,902.53 | 237,623.62 | 34,180,526.15 | ||
| 1) Acquisition | 1,788,472.01 | 237,623.62 | 2,026,095.63 | ||
| 2) Internal research and development | 32,154,430.52 | 32,154,430.52 | |||
| Decrease | 16,030,821.54 | 16,030,821.54 | |||
| 1) Disposal | 16,030,821.54 | 16,030,821.54 | |||
| Closing balance | 373,504,822.85 | 238,482,807.15 | 2,718,808.78 | 5,526,653.13 | 620,233,091.91 |
| Accumulated amortization | |||||
| Opening balance | 44,495,690.98 | 75,726,998.78 | 1,547,601.67 | 2,113,563.53 | 123,883,854.96 |
| Increase | 11,363,697.26 | 20,537,356.87 | 139,141.98 | 552,665.32 | 32,592,861.43 |
| 1) Accrual | 11,363,697.26 | 20,537,356.87 | 139,141.98 | 552,665.32 | 32,592,861.43 |
| Decrease | 7,216,123.36 | 7,216,123.36 | |||
| 1) Disposal | 7,216,123.36 | 7,216,123.36 | |||
| Closing balance | 55,859,388.24 | 89,048,232.29 | 1,686,743.65 | 2,666,228.85 | 149,260,593.03 |
| Carrying amount | |||||
| Closing balance | 317,645,434.61 | 149,434,574.86 | 1,032,065.13 | 2,860,424.28 | 470,972,498.88 |
| Opening balance | 329,009,131.87 | 144,843,727.38 | 933,583.49 | 3,413,089.60 | 478,199,532.34 |
At the balance sheet date, intangible assets formed through internal research and developmentaccount for 27.25% of total closing balance of intangible assets.
(2) Land use right with certificate of titles being unsettled
? Applicable ? Not Applicable
(3) Impairment test on intangible assets
? Applicable ? Not ApplicableOther remarks? Applicable ? Not ApplicableRecoverable amount determined based on the fair value less costs of disposal? Applicable ? Not ApplicableRecoverable amount determined based on the present value of estimated future cash flows? Applicable ? Not ApplicableReasons for the significant inconsistencies between aforementioned information andinformation used in previous impairment tests or external information? Applicable ? Not ApplicableReasons for the significant inconsistencies between information used in previous impairmenttests and actual performance? Applicable ? Not ApplicableOther remarks? Applicable ? Not Applicable
27. Goodwill
(1) Details
? Applicable ? Not Applicable
| Investees or events resulting in goodwill | Opening balance | Increase due to business combination in the current period | Decrease due to disposal | Closing balance |
| Xinxing Pharmacy | 1,067,133,311.81 | 1,067,133,311.81 | ||
| Business and assets of Wu’an Kangjian Pharmacy | 34,709,571.04 | 34,709,571.04 | ||
| Business and assets of Xintai Yize Pharmacy | 7,100,799.00 | 7,100,799.00 | ||
| Business and assets of Sunshine Herbal Pharmacy | 5,337,759.80 | 5,337,759.80 | ||
| Business and assets of Cangzhou Yihetang Pharmacy | 1,431,138.00 | 1,431,138.00 | ||
| Business and assets of Shijiazhuang Cihao Pharmacy | 1,371,076.00 | 1,371,076.00 | ||
| Business and assets of Kangyide | 1,297,370.00 | 1,297,370.00 | ||
| Business and assets of Shijiazhuang Zhongjing Pharmacy | 854,870.00 | 854,870.00 | ||
| Business and assets of Tangshan Yuxiangyuan | 564,475.00 | 564,475.00 | ||
| Business and assets of Jishikang Pharmacy | 546,662.00 | 546,662.00 | ||
| Business and assets of Sanhe Herentang | 29,049,874.00 | 29,049,874.00 | ||
| Business and assets of Huabei Weishikang Pharmacy | 3,784,890.00 | 3,784,890.00 |
| Investees or events resulting in goodwill | Opening balance | Increase due to business combination in the current period | Decrease due to disposal | Closing balance |
| Business and assets of Huawei Pharmacy | 556,981.00 | 556,981.00 | ||
| Hengshui Hongda Hengkang Pharmacy | 37,557,835.00 | 37,557,835.00 | ||
| Business and assets of Handan Deyitang Pharmacy | 29,163,341.00 | 29,163,341.00 | ||
| Business and assets of Hebei Kangletang Pharmacy | 764,438.00 | 764,438.00 | ||
| Hengshui Zhongkang Weimin Pharmacy Co., Ltd. | 90,299,576.99 | 90,299,576.99 | ||
| Cangzhou Xinxing Wuzhou Pharmacy Chain Co., Ltd. | 22,200,000.00 | 22,200,000.00 | ||
| Cangzhou Xinxing Jinyangguang Pharmacy Chain Co., Ltd. | 26,910,000.00 | 26,910,000.00 | ||
| Xinxing Hebei | 4,997,579.01 | 4,997,579.01 | ||
| Tianjin Xianhe | 7,900,000.00 | 7,900,000.00 | ||
| Handan Xinxing | 22,950,000.00 | 22,950,000.00 | ||
| Tangshan Xinxing Deshuntang | 107,100,000.00 | 107,100,000.00 | ||
| Jiuzhou Medicine and Jiuzhou Pharmacy | 158,100,000.00 | 158,100,000.00 | ||
| Shanghai Shanghong | 125,494,951.53 | 125,494,951.53 | ||
| Jiangsu Shimin | 125,079,027.86 | 125,079,027.86 | ||
| Jiangxi Tianshun | 39,000,000.00 | 39,000,000.00 | ||
| Xinyu Baihuikang | 28,800,000.00 | 28,800,000.00 | ||
| Taizhou Yifeng | 29,090,846.10 | 29,090,846.10 | ||
| Business and assets of Xinghua Yishantang | 6,500,000.00 | 6,500,000.00 | ||
| Business and assets of Taizhou Baixingren | 53,063,086.35 | 53,063,086.35 | ||
| Business and assets of Jiangsu Yishu Medicine | 1,500,000.00 | 1,500,000.00 | ||
| Rudong Yifeng | 24,058,466.53 | 24,058,466.53 | ||
| Business and assets of Hunan Xinbaikang Medicine Chain Co., Ltd. | 55,000,000.00 | 55,000,000.00 | ||
| Business and assets of Liuyang Tianshun Pharmacy | 34,761,350.00 | 34,761,350.00 | ||
| Business and assets of Hengyang Dazhong Health Pharmacy | 30,000,000.00 | 30,000,000.00 | ||
| Business and assets of Qidong Guoda Health Pharmacy | 14,351,615.00 | 14,351,615.00 | ||
| Guangshengtang | 30,410,738.87 | 30,410,738.87 | ||
| Business and assets of Jingzhou Shashi Xinlianxin Pharmacy | 8,506,023.00 | 8,506,023.00 | ||
| Business and assets of Hubei Zhongjie Medicine | 7,430,000.00 | 7,430,000.00 | ||
| Business and assets of Jianli Tongze Pharmacy | 8,600,000.00 | 8,600,000.00 | ||
| Business and assets of Changsha Qingyuantang Pharmacy | 11,252,750.00 | 11,252,750.00 | ||
| Business and assets of Jiangxi Caisen | 21,568,983.00 | 21,568,983.00 | ||
| Business and assets of Nanxian Shijikang Pharmacy | 2,500,000.00 | 2,500,000.00 |
| Investees or events resulting in goodwill | Opening balance | Increase due to business combination in the current period | Decrease due to disposal | Closing balance |
| Business and assets of Wuhan Houdetang | 13,826,081.00 | 13,826,081.00 | ||
| Wuhan Longtai | 65,216,667.52 | 65,216,667.52 | ||
| Shaoguan Xiangqin | 98,811,598.79 | 98,811,598.79 | ||
| Yili Kangxin | 66,966,216.62 | 66,966,216.62 | ||
| Business and assets of Ningxiang Jiuzhitang | 27,390,000.00 | 27,390,000.00 | ||
| Business and assets of Shuangfeng Yongjitang | 3,660,000.00 | 3,660,000.00 | ||
| Business and assets of Lichuan Tong’an | 18,800,000.00 | 18,800,000.00 | ||
| Business and assets of Xiaogan Tiansheng | 12,380,000.00 | 12,380,000.00 | ||
| Business and assets of Guangfutang | 25,722,500.50 | 25,722,500.50 | ||
| Yangpu Yifeng | 51,772,748.23 | 51,772,748.23 | ||
| Putuo Yifeng | 15,199,355.63 | 15,199,355.63 | ||
| Suzhou Yuehai | 72,409,550.90 | 72,409,550.90 | ||
| Business and assets of Wuzhou Pharmacy | 23,914,105.00 | 23,914,105.00 | ||
| Shanghai Buyi | 24,592,341.70 | 24,592,341.70 | ||
| Hubei Yifeng Pukang Pharmacy Chain Co., Ltd. | 33,477,084.46 | 33,477,084.46 | ||
| Business and assets of Nantong Zhongzhichen Pharmacy | 19,463,435.00 | 19,463,435.00 | ||
| Business and assets of Suqian Dasheng Medicine | 7,988,130.00 | 7,988,130.00 | ||
| Business and assets of Guangyun Kangsheng Pharmacy | 12,182,540.00 | 12,182,540.00 | ||
| Business and assets of Suqian Jiujiu Medicine Supermarket | 46,109,939.00 | 46,109,939.00 | ||
| Business and assets of Suqian Jiahe Medicine | 39,799,860.00 | 39,799,860.00 | ||
| Business and assets of Kaixin Pharmacy | 24,466,578.00 | 24,466,578.00 | ||
| Jiankangren | 60,518,524.51 | 60,518,524.51 | ||
| Baicaotang | 51,523,843.40 | 51,523,843.40 | ||
| Huai’an Jisheng | 39,466,506.83 | 39,466,506.83 | ||
| Longshuntang | 26,330,311.31 | 26,330,311.31 | ||
| Nanjing Yifeng | 29,599,720.61 | 29,599,720.61 | ||
| Yueyang Yifeng | 9,667,622.58 | 9,667,622.58 | ||
| Jiyangtang | 11,056,673.83 | 11,056,673.83 | ||
| Sihong Shidai Medicine | 37,390,726.94 | 37,390,726.94 | ||
| Business and assets of Sihong Yifeng Jizhou Pharmacy | 8,500,000.00 | 8,500,000.00 | ||
| Aierkang | 30,930,301.86 | 30,930,301.86 | ||
| Business and assets of Yueyang Huarong Yikang Pharmacy | 8,300,000.00 | 8,300,000.00 | ||
| Business and assets of Changsha Tailai Senyantang | 10,150,000.00 | 10,150,000.00 |
| Investees or events resulting in goodwill | Opening balance | Increase due to business combination in the current period | Decrease due to disposal | Closing balance |
| Xuzhou Enqi | 23,400,000.00 | 23,400,000.00 | ||
| Rudong Yifeng Bencao | 39,991,285.36 | 39,991,285.36 | ||
| Yuehai Yongxitang | 29,820,868.69 | 29,820,868.69 | ||
| Macheng Yifeng | 15,549,776.06 | 15,549,776.06 | ||
| Yifeng Luoshi Xiehe | 27,950,000.00 | 27,950,000.00 | ||
| Business and assets of Yongzhou Daoxian Renrenkang Pharmacy | 2,190,000.00 | 2,190,000.00 | ||
| Pingjiang Yifeng | 8,437,083.42 | 8,437,083.42 | ||
| Business and assets of Zhuzhou Zhengxiang Pharmacy | 22,380,000.00 | 22,380,000.00 | ||
| Business and assets of Hunan Sinopharm Holdings Jiajiakang Pharmacy | 18,000,000.00 | 18,000,000.00 | ||
| Business and assets of Jianhu Renmin Pharmacy and Jianhu Yuanshengtang Pharmacy | 17,000,000.00 | 17,000,000.00 | ||
| Fengxian Hengyuan | 31,500,000.00 | 31,500,000.00 | ||
| Dongtai Yifeng Kaixin Medicine Co., Ltd. | 22,239,000.00 | 22,239,000.00 | ||
| Business and assets of Jiangsu Wuwu Limin Medicine Chain Store | 15,000,000.00 | 15,000,000.00 | ||
| Suzhou Yifeng Yuehai Tong’ankang Pharmacy Chain Co., Ltd. | 15,615,853.66 | 15,615,853.66 | ||
| Yancheng Jinyuan | 37,634,283.13 | 37,634,283.13 | ||
| Xuzhou Yifeng | 22,985,583.59 | 22,985,583.59 | ||
| Business and assets of Sanhuaitang | 7,000,000.00 | 7,000,000.00 | ||
| Business and assets of Miluo Tianheng Jirengtang Pharmacy | 24,880,000.00 | 24,880,000.00 | ||
| Business and assets of Zhuzhou Shifeng Shunkang Pharmacy | 7,680,000.00 | 7,680,000.00 | ||
| Business and assets of Hunan Zhongxin Pharmacy Retail Chain Co., Ltd. | 13,800,000.00 | 13,800,000.00 | ||
| Business and assets of Xiangtan Sishitang Pharmacy and Chunxiaoyuan Traditional Chinese Medicine Clinic | 1,500,000.00 | 1,500,000.00 | ||
| Business and assets of Hengyang Jianyi, Kangrentang and Shiyitang | 1,700,000.00 | 1,700,000.00 | ||
| Business and assets of Leiyang Siyanjing Pharmacy Co., Ltd. | 37,700,000.00 | 37,700,000.00 | ||
| Business and assets of Hunan Dehai Pharmacy Co., Ltd. | 3,660,000.00 | 3,660,000.00 | ||
| Jiangxi Jianmin | 70,200,000.00 | 70,200,000.00 | ||
| Business and assets of Poyang Hucheng Health Kaixinren Pharmacy | 22,800,000.00 | 22,800,000.00 | ||
| Business and assets of Yushan Baicaotang Pharmacy | 25,000,000.00 | 25,000,000.00 | ||
| Chibi Kanghua | 26,378,913.74 | 26,378,913.74 | ||
| Xishui Yifeng | 25,845,000.00 | 25,845,000.00 |
| Investees or events resulting in goodwill | Opening balance | Increase due to business combination in the current period | Decrease due to disposal | Closing balance |
| Wuhan Jianghan | 28,352,879.88 | 28,352,879.88 | ||
| Yidu Yifeng | 11,576,250.00 | 11,576,250.00 | ||
| Anlu Yifeng | 13,999,970.12 | 13,999,970.12 | ||
| Hubei Aierkang | 3,687,486.07 | 3,687,486.07 | ||
| Business and assets of Badong Guoyaobu | 15,300,000.00 | 15,300,000.00 | ||
| Business and assets of Huanggang Tongjitang Xishui stores | 2,300,000.00 | 2,300,000.00 | ||
| Business and assets of Suizhou Haoyihao Pharmacy | 15,000,000.00 | 15,000,000.00 | ||
| Wuhan Haojiankang | 31,071,780.29 | 31,071,780.29 | ||
| Business and assets of Suizhou Baixing Pharmacy | 1,500,000.00 | 1,500,000.00 | ||
| Business and assets of Hubei Kanghua Pharmacy Chain Co., Ltd. | 1,300,000.00 | 1,300,000.00 | ||
| Jiuzhitang Medicine | 102,064,935.48 | 102,064,935.48 | ||
| Tangshan Xinxing Deshengtang | 101,700,000.00 | 101,700,000.00 | ||
| Qinhuangdao Xinxing Minle | 56,700,000.00 | 56,700,000.00 | ||
| Handan Xinxing Baixinkang | 22,544,000.00 | 22,544,000.00 | ||
| Shijiazhuang Yingqi Medical Service | 1,399,867.03 | 1,399,867.03 | ||
| Handan Xinxing Huakang | 47,250,000.00 | 47,250,000.00 | ||
| Langfang Xinxing Dekunyuan | 24,792,000.00 | 24,792,000.00 | ||
| Chengde Xinxing Xinyu | 21,000,000.00 | 21,000,000.00 | ||
| Suzhou Xinqunzhong Clinic | 4,499,666.86 | 4,499,666.86 | ||
| Yichun Yifeng | 22,500,000.00 | 22,500,000.00 | ||
| Guangshui Yifeng Kangji | 7,840,000.00 | 7,840,000.00 | ||
| Yingtan Yifeng | 18,200,000.00 | 18,200,000.00 | ||
| Business and assets of Xingtai Dongda Pharmaceutical Chain Co., Ltd. | 26,320,000.00 | 26,320,000.00 | ||
| Business and assets of Changzhou Renmin Baixing Pharmacy Co., Ltd. | 35,000,000.00 | 35,000,000.00 | ||
| Business and assets of Jiangling Miaoyuan Pharmacy | 6,880,000.00 | 6,880,000.00 | ||
| Business and assets of Hubei Zhonglian Pharmacy Chain Co., Ltd. | 20,000,000.00 | 20,000,000.00 | ||
| Business and assets of Longshan Laobaixing Xinteyao Health Pharmacy | 6,000,000.00 | 6,000,000.00 | ||
| Total | 4,190,223,299.60 | 422,625,533.89 | 4,612,848,833.49 |
(2) Provision for impairment
? Applicable ? Not Applicable
| Investees or events resulting in goodwill | Opening balance | Accrual | Decrease | Closing balance |
| Shaoguan Xiangqin | 2,299,554.25 | 2,299,554.25 | ||
| Total | 2,299,554.25 | 2,299,554.25 |
(3) Related information of asset groups or asset group portfolios which include goodwill? Applicable ? Not Applicable
| Asset groups or asset group portfolios | Composition of asset groups or asset group portfolios and its basis | Operating segment and its basis | Whether asset groups or asset group portfolios are consistent with those at acquisition date/at goodwill impairment testing date in previous years |
| Jiyangtang | Operating long-term assets | Hubei region | Yes |
| Assets of Hengyang Dazhong Health Pharmacy | Operating long-term assets | Hunan region | Yes |
| Assets of Jianhu Renmin Pharmacy and Jianhu Yuanshengtang Pharmacy | Operating long-term assets | Jiangsu region | Yes |
| Jinzhou Pukang | Operating long-term assets | Hubei region | Yes |
| Jiankangren | Operating long-term assets | Jiangsu region | Yes |
| Assets of Lichuan Tong’an | Operating long-term assets | Hubei region | Yes |
| Pingjiang Yifeng | Operating long-term assets | Hunan region | Yes |
| Assets of Qidong Guoda Health Pharmacy | Operating long-term assets | Hunan region | Yes |
| Macheng Yifeng | Operating long-term assets | Hubei region | Yes |
| Asset groups of Dongtai Yifeng | Operating long-term assets | Jiangsu region | No |
| Aierkang | Operating long-term assets | Hubei region | Yes |
| Assets of Kaixin Pharmacy | Operating long-term assets | Jiangsu region | Yes |
| Assets of Wuhan Houdetang | Operating long-term assets | Hubei region | Yes |
| Wuhan Longtai | Operating long-term assets | Hubei region | Yes |
| Nanjing Yifeng | Operating long-term assets | Jiangsu region | Yes |
| Assets of Xiaogan Tiansheng | Operating long-term assets | Hubei region | Yes |
| Assets of Suqian Jiujiu Medicine Supermarket | Operating long-term assets | Jiangsu region | Yes |
| Assets of Guangfutang | Operating long-term assets | Hubei region | Yes |
| Assets group portfolios of Guangshengtang, Jingzhou Shashi Xinlianxin Pharmacy, Hubei Zhongjie Medicine and Jianli Tongze Pharmacy | Operating long-term assets | Hubei region | No |
| Assets of Huarong Yikang Pharmacy | Operating long-term assets | Hunan region | Yes |
| Yangpu Yifeng | Operating long-term assets | Shanghai region | Yes |
| Assets of Liuyang Tianshun Pharmacy | Operating long-term assets | Hunan region | Yes |
| Asset groups or asset group portfolios | Composition of asset groups or asset group portfolios and its basis | Operating segment and its basis | Whether asset groups or asset group portfolios are consistent with those at acquisition date/at goodwill impairment testing date in previous years |
| Rudong Yifeng Bencao | Operating long-term assets | Jiangsu region | Yes |
| Assets of Nanxian Shijikang Pharmacy | Operating long-term assets | Hunan region | Yes |
| Suzhou Yuehai and Suzhou Xinqunzhong Clinic | Operating long-term assets | Jiangsu region | No |
| Assets of Ningxiang Jiuzhitang | Operating long-term assets | Hunan region | Yes |
| Assets of Shuangfeng Yongjitang | Operating long-term assets | Hunan region | Yes |
| Assets of Sihong Shidai Medicine and Sihong Yifeng Jizhou Pharmacy | Operating long-term assets | Jiangsu region | Yes |
| Assets of Hunan Sinopharm Holdings Jiajiakang Pharmacy | Operating long-term assets | Hunan region | Yes |
| Assets of Xinbaikang Pharmacy | Operating long-term assets | Hunan region | Yes |
| Asset group portfolios of Taizhou Yifeng, Xinghua Yishantang, Taizhou Baixingren and Jiangsu Yishu Medicine | Operating long-term assets | Jiangsu region | Yes |
| Yifeng Luoshi Xiehe and Yongzhou Daoxian Renrenkang Pharmacy | Operating long-term assets | Hunan region | Yes |
| Yueyang Yifeng | Operating long-term assets | Hunan region | Yes |
| Assets of Suqian Jiahe Medicine | Operating long-term assets | Jiangsu region | Yes |
| Assets of Changsha Qingyuantang Pharmacy | Operating long-term assets | Hunan region | Yes |
| Assets of Suqian Dasheng Medicine | Operating long-term assets | Jiangsu region | Yes |
| Assets of Changsha Tailai Senyantang Pharmacy | Operating long-term assets | Hunan region | Yes |
| Jiuzhou Medicine and Jiuzhou Pharmacy | Operating long-term assets | Jiangsu region | Yes |
| Assets of Zhuzhou Zhengxiang Pharmacy | Operating long-term assets | Hunan region | Yes |
| Shaoguan Xiangqin | Operating long-term assets | Guangdong region | No |
| Huai’an Jisheng | Operating long-term assets | Jiangsu region | Yes |
| Jiangsu Shimin | Operating long-term assets | Jiangsu region | Yes |
| Asset group portfolios of Jiangxi Tianshun and Xinyu Baihuikang | Operating long-term assets | Jiangxi region | No |
| Assets of Guangyun Kangsheng Pharmacy | Operating long-term assets | Jiangsu region | Yes |
| Rudong Yifeng | Operating long-term assets | Jiangsu region | Yes |
| Asset groups of Miluo Tianheng | Operating long-term assets | Hunan region | No |
| Assets of Nantong Zhongzhichen | Operating long-term assets | Jiangsu region | Yes |
| Asset groups or asset group portfolios | Composition of asset groups or asset group portfolios and its basis | Operating segment and its basis | Whether asset groups or asset group portfolios are consistent with those at acquisition date/at goodwill impairment testing date in previous years |
| Pharmacy | |||
| Yuehai Yongxitang | Operating long-term assets | Jiangsu region | Yes |
| Longshuntang | Operating long-term assets | Shanghai region | Yes |
| Baicaotang | Operating long-term assets | Jiangsu region | Yes |
| Asset groups of Xinkang Jianmin | Operating long-term assets | Jiangxi region | No |
| Xuzhou Enqi | Operating long-term assets | Jiangsu region | Yes |
| Asset groups of Anlu Yifeng | Operating long-term assets | Hubei region | No |
| Assets of Jiangxi Caisen | Operating long-term assets | Jiangxi region | Yes |
| Shanghai Buyi | Operating long-term assets | Shanghai region | Yes |
| Putuo Yifeng | Operating long-term assets | Shanghai region | Yes |
| Asset groups of Xinxing Chain | Operating long-term assets | Hebei region | No |
| Shanghai Shanghong | Operating long-term assets | Shanghai region | Yes |
| Assets of Wuzhou Pharmacy | Operating long-term assets | Shanghai region | Yes |
| Jiuzhitang Medicine | Operating long-term assets | Hunan region | Yes |
Changes in composition of asset groups or asset group portfolios? Applicable ? Not Applicable
| Asset groups or asset group portfolios | Composition before changes | Composition after changes | Objective facts and basis for changes |
| Asset groups of Dongtai Yifeng | Operating long-term assets of asset groups of Dongtai Yifeng | Operating long-term assets after acquiring Changzhou Renmin | The Company continues to strengthen the regional integration of acquired assets, and newly acquired projects are operated under a unified management structure after the acquisition, with decisions and allocations regarding sales, distribution, and human resources made by the regional headquarters. In 2023, the Jiangsu regional headquarters newly acquired the assets of Changzhou Renmin stores, which, similar to the asset groups such as the former Dongtai Yifeng, are under the unified management of the regional headquarters Jiangsu Yifeng in procurement, distribution, sales and financial accounting. Therefore, based on the management structure and the synergistic effect of business combination, the goodwill is allocated to the benefiting asset groups. Apart from the |
| Asset groups or asset group portfolios | Composition before changes | Composition after changes | Objective facts and basis for changes |
| newly acquired assets, there are no changes in the division of the former asset groups. | |||
| Assets group portfolios of Guangshengtang, Jingzhou Shashi Xinlianxin Pharmacy, Hubei Zhongjie Medicine and Jianli Tongze Pharmacy | Operating long-term assets of asset groups of Guangshengtang | Operating long-term assets of asset groups of Guangshengtang after acquiring Jiangling Miaoyuan | In 2023, Guangshengtang acquired the assets of Jiangling Miaoyuan stores, and carries out unified management in sales, procurement, distribution, human resources, and finance. Therefore, based on the management structure and the synergistic effect of business combination, the goodwill is allocated to the benefiting asset groups. |
| Suzhou Yuehai and Xinqunzhong Clinic | Operating long-term assets of asset groups of Suzhou Yuehai | Operating long-term assets of asset groups of Suzhou Yuehai after acquiring Xinqunzhong Clinic | In 2023, Suzhou Yuehai acquired relevant assets of Xinqunzhong Clinic, relocated the clinic to Yuehai Pharmacy for business operation, and carries out unified management in operations, distribution, and finance. Based on the management structure and the synergistic effect of business combination, the goodwill is allocated to the benefiting asset groups. |
| Shaoguan Xiangqin | Operating long-term assets of asset groups of Shaoguan Xiangqin | Assets and goodwill of Shaoguan Xiangqin and transferred-in former Guangdong Zengcheng Kangxin | Due to the need for integrated management, in 2023, all stores in asset group of Guangdong Zengcheng Kangxin were transferred to Shaoguan Xiangqin, and Shaoguan Xiangqin takes charge of unified management in sales, procurement, distribution, human resources, and finance. The former legal entity of Guangdong Zengcheng Kangxin is planned to be cancelled. Based on the management structure and the synergistic effect of business combination, the goodwill is allocated to the benefiting asset groups. |
| Asset group portfolios of Jiangxi Tianshun and Xinyu Baihuikang | Operating long-term assets of asset groups of Jiangxi Tianshun | Operating long-term assets of asset groups of Jiangxi Tianshun after acquiring Yichun Yifeng | In 2023, Jiangxi Tianshun acquired the equity of Yichun Yifeng, and carries out unified management in sales, procurement, distribution, human resources, and finance. Therefore, based on the management structure and the synergistic effect of business combination, the goodwill is allocated to the benefiting asset groups. |
| Asset groups of Miluo Tianheng | Operating long-term assets of asset groups of Miluo Tianheng | Operating long-term assets after acquiring Longshan Laobaixing | The Company continues to strengthen the regional integration of acquired assets, and newly acquired projects are operated under a unified management structure after the acquisition, with decisions and allocations regarding sales, distribution, and human resources made by the regional headquarters. In 2023, the Hunan regional headquarters newly acquired the |
| Asset groups or asset group portfolios | Composition before changes | Composition after changes | Objective facts and basis for changes |
| assets of Longshan Laobaixing, which, similar to the asset groups such as the former Miluo Tianheng, are under the unified management of the regional headquarters Hunan Yifeng in procurement, distribution, sales and financial accounting. Therefore, based on the management structure and the synergistic effect of business combination, the goodwill is allocated to the benefiting asset groups. Apart from the newly acquired assets, there are no changes in the division of the former asset groups. | |||
| Asset groups of Xinkang Jianmin | Operating long-term assets of asset groups of Xinkang Jianmin | Operating long-term assets after acquiring Yingtan Yifeng | The Company continues to strengthen the regional integration of acquired assets, and newly acquired projects are operated under a unified management structure after the acquisition, with decisions and allocations regarding sales, distribution, and human resources made by the regional headquarters. In 2023, the Jiangxi regional headquarters newly acquired the assets of Yingtan Yifeng, which, similar to the asset groups such as the former Xinkang Jianmin, are under the unified management of the regional headquarters Jiangxi Yifeng in procurement, distribution, sales and financial accounting. Therefore, based on the management structure and the synergistic effect of business combination, the goodwill is allocated to the benefiting asset groups. Apart from the newly acquired assets, there are no changes in the division of the former asset groups. |
| Asset groups of Anlu Yifeng | Operating long-term assets of asset groups of Anlu Yifeng | Operating long-term assets after acquiring Yifeng Kangji, etc. | The Company continues to strengthen the regional integration of acquired assets, and newly acquired projects are operated under a unified management structure after the acquisition, with decisions and allocations regarding sales, distribution, and human resources made by the regional headquarters. In 2023, the Hubei regional headquarters newly acquired the equtiy of Yifeng Kangji and the assets of Hubei Zhonglian, which, similar to the asset groups such as the former Anlu Yifeng, are under the unified management of the regional headquarters Hubei Yifeng in procurement, distribution, sales and financial accounting. Therefore, based on the management structure and the synergistic effect of business combination, the goodwill is allocated to the benefiting |
| Asset groups or asset group portfolios | Composition before changes | Composition after changes | Objective facts and basis for changes |
| asset groups. Apart from the newly acquired assets, there are no changes in the division of the former asset groups. | |||
| Asset groups of Xinxing Chain, etc. | Operating long-term assets of asset groups of Xinxing Chain | Operating long-term assets of assets of Xinxing Chain after acquiring the equity of Qinhuangdao Minle, etc. | In 2023, Xinxing Chain acquired the equity of Deshengtang, Langfang Xinxing, Chengde Xinxing, Handan Huakang, and Qinhuangdao Minle, as well as the assets of Xingtai Dongda stores. Xinxing Chain, as the regional headquarters, takes charge of unified management in sales, procurement, distribution, human resources, and finance. Based on the management structure and the synergistic effect of business combination, the goodwill is allocated to the benefiting asset groups. |
Other remarks? Applicable ? Not Applicable
(4) Specific method for determining recoverable amount
Recoverable amount determined based on the fair value less costs of disposal? Applicable ? Not ApplicableRecoverable amount determined based on the present value of estimated future cash flows? Applicable ? Not Applicable
| Items | Carrying amount of asset groups or asset group portfolios which include goodwill | Recoverable amount | Provision for impairment |
| Jiyangtang | 17,160,059.51 | 42,500,000.00 | |
| Assets of Hengyang Dazhong Health Pharmacy | 30,938,008.64 | 40,000,000.00 | |
| Assets of Jianhu Renmin Pharmacy and Jianhu Yuanshengtang Pharmacy | 17,888,734.02 | 19,000,000.00 | |
| Jinzhou Pukang | 45,126,446.15 | 83,000,000.00 | |
| Jiankangren | 128,665,877.44 | 197,000,000.00 | |
| Assets of Lichuan Tong’an | 19,325,593.89 | 26,800,000.00 | |
| Pingjiang Yifeng | 13,427,945.07 | 15,400,000.00 | |
| Assets of Qidong Guoda Health Pharmacy | 15,214,191.22 | 32,000,000.00 | |
| Macheng Yifeng | 23,688,157.66 | 25,100,000.00 | |
| Asset groups of Dongtai Yifeng | 267,727,753.00 | 369,000,000.00 |
| Items | Carrying amount of asset groups or asset group portfolios which include goodwill | Recoverable amount | Provision for impairment |
| Aierkang | 41,764,423.49 | 122,000,000.00 | |
| Assets of Kaixin Pharmacy | 24,591,879.95 | 39,300,000.00 | |
| Assets of Wuhan Houdetang | 13,918,346.34 | 45,800,000.00 | |
| Wuhan Longtai | 66,581,478.70 | 94,000,000.00 | |
| Nanjing Yifeng | 31,328,909.28 | 65,000,000.00 | |
| Assets of Xiaogan Tiansheng | 12,768,649.40 | 21,300,000.00 | |
| Assets of Suqian Jiujiu Medicine Supermarket | 47,224,137.56 | 83,000,000.00 | |
| Assets of Guangfutang | 26,085,953.66 | 30,300,000.00 | |
| Assets group portfolios of Guangshengtang, Jingzhou Shashi Xinlianxin Pharmacy, Hubei Zhongjie Medicine and Jianli Tongze Pharmacy | 79,938,093.60 | 223,000,000.00 | |
| Assets of Huarong Yikang Pharmacy | 8,452,546.71 | 21,900,000.00 | |
| Yangpu Yifeng | 52,835,493.42 | 54,000,000.00 | |
| Assets of Liuyang Tianshun Pharmacy | 37,183,257.02 | 90,000,000.00 | |
| Rudong Yifeng Bencao | 52,216,948.43 | 54,000,000.00 | |
| Assets of Nanxian Shijikang Pharmacy | 2,567,133.55 | 10,200,000.00 | |
| Suzhou Yuehai and Xinqunzhong Clinic | 79,721,180.74 | 110,000,000.00 | |
| Assets of Ningxiang Jiuzhitang | 28,111,837.60 | 36,200,000.00 | |
| Assets of Shuangfeng Yongjitang | 3,732,264.91 | 4,830,000.00 | |
| Assets of Sihong Shidai Medicine and Sihong Yifeng Jizhou Pharmacy | 79,081,470.13 | 87,000,000.00 | |
| Assets of Hunan Sinopharm Holdings Jiajiakang Pharmacy | 19,592,189.26 | 20,600,000.00 | |
| Assets of Xinbaikang Pharmacy | 55,703,052.78 | 57,000,000.00 | |
| Asset group portfolios of Taizhou Yifeng, Xinghua Yishantang, Taizhou Baixingren and Jiangsu Yishu Medicine | 118,345,458.20 | 201,000,000.00 | |
| Yifeng Luoshi Xiehe and | 50,661,755.44 | 52,200,000.00 |
| Items | Carrying amount of asset groups or asset group portfolios which include goodwill | Recoverable amount | Provision for impairment |
| Yongzhou Daoxian Renrenkang Pharmacy | |||
| Yueyang Yifeng | 16,119,804.37 | 29,500,000.00 | |
| Assets of Suqian Jiahe Medicine | 40,448,874.82 | 41,600,000.00 | |
| Assets of Changsha Qingyuantang Pharmacy | 12,232,130.02 | 24,400,000.00 | |
| Assets of Suqian Dasheng Medicine | 8,340,648.77 | 21,300,000.00 | |
| Assets of Changsha Tailai Senyantang Pharmacy | 10,739,554.04 | 32,300,000.00 | |
| Jiuzhou Medicine and Jiuzhou Pharmacy | 340,503,046.50 | 663,000,000.00 | |
| Assets of Zhuzhou Zhengxiang Pharmacy | 23,637,937.97 | 33,800,000.00 | |
| Shaoguan Xiangqin | 182,315,184.93 | 186,000,000.00 | |
| Huai’an Jisheng | 84,731,153.75 | 91,000,000.00 | |
| Jiangsu Shimin | 242,831,203.39 | 249,000,000.00 | |
| Asset group portfolios of Jiangxi Tianshun and Xinyu Baihuikang | 157,236,364.34 | 165,000,000.00 | |
| Assets of Guangyun Kangsheng Pharmacy | 12,346,550.48 | 17,500,000.00 | |
| Rudong Yifeng | 42,122,712.88 | 128,000,000.00 | |
| Asset groups of Miluo Tianheng | 101,998,090.17 | 129,000,000.00 | |
| Assets of Nantong Zhongzhichen Pharmacy | 19,701,747.35 | 59,000,000.00 | |
| Yuehai Yongxitang | 45,438,513.82 | 94,000,000.00 | |
| Longshuntang | 52,308,403.83 | 53,800,000.00 | |
| Baicaotang | 106,640,013.12 | 213,000,000.00 | |
| Asset groups of Xinkang Jianmin | 197,298,858.47 | 253,000,000.00 | |
| Xuzhou Enqi | 39,081,174.58 | 194,000,000.00 | |
| Asset groups of Anlu Yifeng | 278,833,534.22 | 470,000,000.00 | |
| Assets of Jiangxi Caisen | 35,908,198.17 | 41,400,000.00 | |
| Shanghai Buyi | 24,621,988.15 | 25,100,000.00 | |
| Putuo Yifeng | 15,327,434.96 | 15,600,000.00 | |
| Asset groups of Xinxing Chain | 2,190,001,317.58 | 2,523,000,000.00 |
| Items | Carrying amount of asset groups or asset group portfolios which include goodwill | Recoverable amount | Provision for impairment |
| Shanghai Shanghong | 248,560,723.17 | 253,000,000.00 | |
| Assets of Wuzhou Pharmacy | 24,015,193.78 | 50,500,000.00 | |
| Jiuzhitang Medicine | 324,424,685.42 | 352,000,000.00 | |
| Items | 6,389,334,269.82 | 8,781,230,000.00 |
(Continued)
| Items | Forecast period | Parameters including revenue growth rate and gross margin for forecast period and their determination basis | Parameters including revenue growth rate and gross margin for stable period and their determination basis | Discount rate and its determination basis |
| Jiyangtang | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from 3.19% to 8.47%; the gross margin is expected to range from 34.15% to 34.25%; and the period expense rate is expected to range from 24.17% to 24.81%, which are determined by the Company based on business performance in previous years and expectations for the future development of the market industry. | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to be 34.25%; and the period expense rate is expected to be 24.27%. The Company is expected to achieve a stable operating status by 2028. Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | 13.90%; the weighted average cost of capital (WACC) is determined based on the cost of equity capital and the cost of debt. |
| Assets of Hengyang Dazhong Health Pharmacy | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from 3.00% to 11.61%; the gross margin is expected to range from 28.21% to 28.21%; and the period expense rate is expected to range from 18.68% to 18.81%, which are determined by the Company based on business performance in previous years and expectations for the future development of the market industry. | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to be 28.21%; and the period expense rate is expected to be 18.71%. The Company is expected to achieve a stable operating status by 2028. Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | 13.90%; the weighted average cost of capital (WACC) is determined based on the cost of equity capital and the cost of debt. |
| Assets of Jianhu Renmin Pharmacy and Jianhu Yuanshengtang Pharmacy | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from 3.00% to 10.35%; the gross margin is expected to range from 34.25% to 34.25%; and the period expense rate is expected to range from 24.46% to 24.57%, which are determined by the | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to be 34.25%; and the period expense rate is expected to be 24.50%. The Company is expected to achieve a stable operating status by 2028. | 13.70%; the weighted average cost of capital (WACC) is determined based on the cost of equity capital and the cost of debt. |
| Items | Forecast period | Parameters including revenue growth rate and gross margin for forecast period and their determination basis | Parameters including revenue growth rate and gross margin for stable period and their determination basis | Discount rate and its determination basis |
| Company based on business performance in previous years and expectations for the future development of the market industry. | Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | |||
| Jinzhou Pukang | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from -0.45% to 3.14%; the gross margin is expected to range from 37.77% to 37.78%; and the period expense rate is expected to range from 24.99% to 25.20%, which are determined by the Company based on business performance in previous years and expectations for the future development of the market industry. | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to be 37.77%; and the period expense rate is expected to be 25.14%. The Company is expected to achieve a stable operating status by 2028. Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | 13.90%; the weighted average cost of capital (WACC) is determined based on the cost of equity capital and the cost of debt. |
| Jiankangren | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from 3.18% to 8.91%; the gross margin is expected to range from 39.51% to 39.59%; and the period expense rate is expected to range from 30.22% to 30.88%, which are determined by the Company based on business performance in previous years and expectations for the future development of the market industry. | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to be 39.59%; and the period expense rate is expected to be 30.31%. The Company is expected to achieve a stable operating status by 2028. Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | 13.70%; the weighted average cost of capital (WACC) is determined based on the cost of equity capital and the cost of debt. |
| Assets of Lichuan Tong’an | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from 0.76% to 3.00%; the gross margin is expected to range from 40.57% to 40.57%; and the period expense rate is expected to range from 32.30% to 32.53%, which are determined by the Company based on business performance in previous years and expectations for the future | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to be 40.57%; and the period expense rate is expected to be 32.53%. The Company is expected to achieve a stable operating status by 2028. Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the | 13.90%; the weighted average cost of capital (WACC) is determined based on the cost of equity capital and the cost of debt. |
| Items | Forecast period | Parameters including revenue growth rate and gross margin for forecast period and their determination basis | Parameters including revenue growth rate and gross margin for stable period and their determination basis | Discount rate and its determination basis |
| development of the market industry. | future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | |||
| Pingjiang Yifeng | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from 3.21% to 4.05%; the gross margin is expected to range from 38.12% to 38.20%; and the period expense rate is expected to range from 30.61% to 31.22%, which are determined by the Company based on business performance in previous years and expectations for the future development of the market industry. | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to be 38.20%; and the period expense rate is expected to be 30.71%. The Company is expected to achieve a stable operating status by 2028. Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | 13.90%; the weighted average cost of capital (WACC) is determined based on the cost of equity capital and the cost of debt. |
| Assets of Qidong Guoda Health Pharmacy | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from 3.00% to 4.59%; the gross margin is expected to range from 34.85% to 34.85%; and the period expense rate is expected to range from 23.71% to 23.92%, which are determined by the Company based on business performance in previous years and expectations for the future development of the market industry. | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to be 34.85%; and the period expense rate is expected to be 23.80%. The Company is expected to achieve a stable operating status by 2028. Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | 13.90%; the weighted average cost of capital (WACC) is determined based on the cost of equity capital and the cost of debt. |
| Macheng Yifeng | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from 3.17% to 9.69%; the gross margin is expected to range from 39.83% to 39.87%; and the period expense rate is expected to range from 31.25% to 32.49%, which are determined by the Company based on business performance in previous years and expectations for the future development of the market industry. | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to be 39.83%; and the period expense rate is expected to be 31.40%. The Company is expected to achieve a stable operating status by 2028. Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | 13.90%; the weighted average cost of capital (WACC) is determined based on the cost of equity capital and the cost of debt. |
| Items | Forecast period | Parameters including revenue growth rate and gross margin for forecast period and their determination basis | Parameters including revenue growth rate and gross margin for stable period and their determination basis | Discount rate and its determination basis |
| Asset groups of Dongtai Yifeng | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from 3.29% to 6.79%; the gross margin is expected to range from 33.43% to 33.86%; and the period expense rate is expected to range from 23.93% to 24.80%, which are determined by the Company based on business performance in previous years and expectations for the future development of the market industry. | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to be 33.86%; and the period expense rate is expected to be 24.01%. The Company is expected to achieve a stable operating status by 2028. Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | 13.70%; the weighted average cost of capital (WACC) is determined based on the cost of equity capital and the cost of debt. |
| Aierkang | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from 3.02% to 9.26%; the gross margin is expected to range from 37.21% to 37.23%; and the period expense rate is expected to range from 24.92% to 25.08%, which are determined by the Company based on business performance in previous years and expectations for the future development of the market industry. | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to be 37.23%; and the period expense rate is expected to be 25.08%. The Company is expected to achieve a stable operating status by 2028. Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | 13.90%; the weighted average cost of capital (WACC) is determined based on the cost of equity capital and the cost of debt. |
| Assets of Kaixin Pharmacy | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from 2.76% to 3.00%; the gross margin is expected to range from 32.89% to 32.90%; and the period expense rate is expected to range from 23.73% to 23.87%, which are determined by the Company based on business performance in previous years and expectations for the future development of the market industry. | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to be 32.90%; and the period expense rate is expected to be 23.74%. The Company is expected to achieve a stable operating status by 2028. Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | 13.70%; the weighted average cost of capital (WACC) is determined based on the cost of equity capital and the cost of debt. |
| Assets of Wuhan Houdetang | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from 3.00% to 4.96%; the gross margin is | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to | 13.90%; the weighted average cost of capital (WACC) is |
| Items | Forecast period | Parameters including revenue growth rate and gross margin for forecast period and their determination basis | Parameters including revenue growth rate and gross margin for stable period and their determination basis | Discount rate and its determination basis |
| expected to range from 34.60% to 34.60%; and the period expense rate is expected to range from 21.19% to 21.32%, which are determined by the Company based on business performance in previous years and expectations for the future development of the market industry. | be 34.60%; and the period expense rate is expected to be 21.32%. The Company is expected to achieve a stable operating status by 2028. Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | determined based on the cost of equity capital and the cost of debt. | ||
| Wuhan Longtai | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from 3.02% to 7.85%; the gross margin is expected to range from 32.95% to 33.04%; and the period expense rate is expected to range from 21.96% to 22.09%, which are determined by the Company based on business performance in previous years and expectations for the future development of the market industry. | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to be 32.95%; and the period expense rate is expected to be 21.96%. The Company is expected to achieve a stable operating status by 2028. Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | 13.90%; the weighted average cost of capital (WACC) is determined based on the cost of equity capital and the cost of debt. |
| Nanjing Yifeng | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from 3.02% to 10.13%; the gross margin is expected to range from 34.45% to 34.46%; and the period expense rate is expected to range from 26.95% to 27.07%, which are determined by the Company based on business performance in previous years and expectations for the future development of the market industry. | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to be 34.45%; and the period expense rate is expected to be 27.07%. The Company is expected to achieve a stable operating status by 2028. Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | 13.70%; the weighted average cost of capital (WACC) is determined based on the cost of equity capital and the cost of debt. |
| Assets of Xiaogan Tiansheng | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from 3.00% to 16.25%; the gross margin is expected to range from 26.36% to 26.36%; and the period expense rate is expected to range from 19.41% to | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to be 26.36%; and the period expense rate is expected to be 19.50%. The Company is expected to achieve a | 13.90%; the weighted average cost of capital (WACC) is determined based on the cost of equity capital and the cost of |
| Items | Forecast period | Parameters including revenue growth rate and gross margin for forecast period and their determination basis | Parameters including revenue growth rate and gross margin for stable period and their determination basis | Discount rate and its determination basis |
| 19.62%, which are determined by the Company based on business performance in previous years and expectations for the future development of the market industry. | stable operating status by 2028. Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | debt. | ||
| Assets of Suqian Jiujiu Medicine Supermarket | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from -3.16% to 2.96%; the gross margin is expected to range from 35.51% to 35.51%; and the period expense rate is expected to range from 25.59% to 25.78%, which are determined by the Company based on business performance in previous years and expectations for the future development of the market industry. | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to be 35.51%; and the period expense rate is expected to be 25.71%. The Company is expected to achieve a stable operating status by 2028. Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | 13.70%; the weighted average cost of capital (WACC) is determined based on the cost of equity capital and the cost of debt. |
| Assets of Guangfutang | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from 3.00% to 6.70%; the gross margin is expected to range from 36.08% to 36.08%; and the period expense rate is expected to range from 24.52% to 24.95%, which are determined by the Company based on business performance in previous years and expectations for the future development of the market industry. | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to be 36.08%; and the period expense rate is expected to be 24.64%. The Company is expected to achieve a stable operating status by 2028. Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | 13.90%; the weighted average cost of capital (WACC) is determined based on the cost of equity capital and the cost of debt. |
| Assets group portfolios of Guangshengtang, Jingzhou Shashi Xinlianxin Pharmacy, Hubei Zhongjie Medicine and Jianli Tongze Pharmacy | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from 3.19% to 14.97%; the gross margin is expected to range from 34.17% to 34.20%; and the period expense rate is expected to range from 24.42% to 25.03%, which are determined by the Company based on business performance in previous years and | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to be 34.17%; and the period expense rate is expected to be 24.53%. The Company is expected to achieve a stable operating status by 2028. Therefore, the forecast period ends at the end of 2028, followed by a stable | 13.90%; the weighted average cost of capital (WACC) is determined based on the cost of equity capital and the cost of debt. |
| Items | Forecast period | Parameters including revenue growth rate and gross margin for forecast period and their determination basis | Parameters including revenue growth rate and gross margin for stable period and their determination basis | Discount rate and its determination basis |
| expectations for the future development of the market industry. | period from 2029 onwards into the future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | |||
| Assets of Huarong Yikang Pharmacy | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from -2.25% to 3.02%; the gross margin is expected to range from 36.59% to 36.63%; and the period expense rate is expected to range from 21.52% to 21.68%, which are determined by the Company based on business performance in previous years and expectations for the future development of the market industry. | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to be 36.63%; and the period expense rate is expected to be 21.68%. The Company is expected to achieve a stable operating status by 2028. Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | 13.90%; the weighted average cost of capital (WACC) is determined based on the cost of equity capital and the cost of debt. |
| Yangpu Yifeng | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from 1.46% to 4.94%; the gross margin is expected to range from 32.69% to 32.70%; and the period expense rate is expected to range from 22.39% to 23.28%, which are determined by the Company based on business performance in previous years and expectations for the future development of the market industry. | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to be 32.70%; and the period expense rate is expected to be 22.40%. The Company is expected to achieve a stable operating status by 2028. Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | 13.90%; the weighted average cost of capital (WACC) is determined based on the cost of equity capital and the cost of debt. |
| Assets of Liuyang Tianshun Pharmacy | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from -1.59% to 3.03%; the gross margin is expected to range from 39.11% to 39.17%; and the period expense rate is expected to range from 24.44% to 24.65%, which are determined by the Company based on business performance in previous years and expectations for the future development of the market industry. | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to be 39.17%; and the period expense rate is expected to be 24.58%. The Company is expected to achieve a stable operating status by 2028. Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the future perpetuity, during which the Company’s business performance will | 13.90%; the weighted average cost of capital (WACC) is determined based on the cost of equity capital and the cost of debt. |
| Items | Forecast period | Parameters including revenue growth rate and gross margin for forecast period and their determination basis | Parameters including revenue growth rate and gross margin for stable period and their determination basis | Discount rate and its determination basis |
| maintain a stable level of cash earnings. | ||||
| Rudong Yifeng Bencao | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from 3.05% to 3.33%; the gross margin is expected to range from 37.08% to 37.10%; and the period expense rate is expected to range from 26.97% to 27.21%, which are determined by the Company based on business performance in previous years and expectations for the future development of the market industry. | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to be 37.10%; and the period expense rate is expected to be 27.00%. The Company is expected to achieve a stable operating status by 2028. Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | 13.70%; the weighted average cost of capital (WACC) is determined based on the cost of equity capital and the cost of debt. |
| Assets of Nanxian Shijikang Pharmacy | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from 3.00% to 4.29%; the gross margin is expected to range from 41.30% to 41.30%; and the period expense rate is expected to range from 26.54% to 26.72%, which are determined by the Company based on business performance in previous years and expectations for the future development of the market industry. | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to be 41.30%; and the period expense rate is expected to be 26.72%. The Company is expected to achieve a stable operating status by 2028. Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | 13.90%; the weighted average cost of capital (WACC) is determined based on the cost of equity capital and the cost of debt. |
| Suzhou Yuehai and Xinqunzhong Clinic | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from 0.64% to 4.77%; the gross margin is expected to range from 24.40% to 24.58%; and the period expense rate is expected to range from 12.01% to 12.20%, which are determined by the Company based on business performance in previous years and expectations for the future development of the market industry. | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to be 24.40%; and the period expense rate is expected to be 12.01%. The Company is expected to achieve a stable operating status by 2028. Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | 13.70%, 13.90%; the weighted average cost of capital (WACC) is determined based on the cost of equity capital and the cost of debt. |
| Assets of Ningxiang Jiuzhitang | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from | During the stable period, the sales revenue growth rate is expected to be | 13.90%; the weighted average cost of capital |
| Items | Forecast period | Parameters including revenue growth rate and gross margin for forecast period and their determination basis | Parameters including revenue growth rate and gross margin for stable period and their determination basis | Discount rate and its determination basis |
| -0.73% to 3.07%; the gross margin is expected to range from 34.38% to 35.49%; and the period expense rate is expected to range from 22.08% to 22.26%, which are determined by the Company based on business performance in previous years and expectations for the future development of the market industry. | 2.00%; the gross margin is expected to be 35.49%; and the period expense rate is expected to be 22.26%. The Company is expected to achieve a stable operating status by 2028. Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | (WACC) is determined based on the cost of equity capital and the cost of debt. | ||
| Assets of Shuangfeng Yongjitang | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from -4.15% to 3.00%; the gross margin is expected to range from 31.65% to 31.65%; and the period expense rate is expected to range from 23.55% to 23.77%, which are determined by the Company based on business performance in previous years and expectations for the future development of the market industry. | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to be 31.65%; and the period expense rate is expected to be 23.69%. The Company is expected to achieve a stable operating status by 2028. Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | 13.90%; the weighted average cost of capital (WACC) is determined based on the cost of equity capital and the cost of debt. |
| Assets of Sihong Shidai Medicine and Sihong Yifeng Jizhou Pharmacy | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from 3.24% to 4.17%; the gross margin is expected to range from 38.38% to 38.53%; and the period expense rate is expected to range from 31.17% to 32.03%, which are determined by the Company based on business performance in previous years and expectations for the future development of the market industry. | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to be 38.53%; and the period expense rate is expected to be 31.23%. The Company is expected to achieve a stable operating status by 2028. Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | 13.70%; the weighted average cost of capital (WACC) is determined based on the cost of equity capital and the cost of debt. |
| Assets of Hunan Sinopharm Holdings Jiajiakang Pharmacy | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from -0.10% to 3.00%; the gross margin is expected to range from 43.30% to 43.30%; and the period expense rate | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to be 43.30%; and the period expense rate is expected to be 31.87%. The | 13.90%; the weighted average cost of capital (WACC) is determined based on the cost of equity |
| Items | Forecast period | Parameters including revenue growth rate and gross margin for forecast period and their determination basis | Parameters including revenue growth rate and gross margin for stable period and their determination basis | Discount rate and its determination basis |
| is expected to range from 31.72% to 31.97%, which are determined by the Company based on business performance in previous years and expectations for the future development of the market industry. | Company is expected to achieve a stable operating status by 2028. Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | capital and the cost of debt. | ||
| Assets of Xinbaikang Pharmacy | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from 4.86% to 9.71%; the gross margin is expected to range from 42.24% to 43.90%; and the period expense rate is expected to range from 28.02% to 31.66%, which are determined by the Company based on business performance in previous years and expectations for the future development of the market industry. | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to be 43.82%; and the period expense rate is expected to be 28.02%. The Company is expected to achieve a stable operating status by 2028. Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | 13.90%; the weighted average cost of capital (WACC) is determined based on the cost of equity capital and the cost of debt. |
| Asset group portfolios of Taizhou Yifeng, Xinghua Yishantang, Taizhou Baixingren and Jiangsu Yishu Medicine | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from 3.20% to 4.12%; the gross margin is expected to range from 37.26% to 37.50%; and the period expense rate is expected to range from 28.33% to 28.81%, which are determined by the Company based on business performance in previous years and expectations for the future development of the market industry. | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to be 37.50%; and the period expense rate is expected to be 28.40%. The Company is expected to achieve a stable operating status by 2028. Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | 13.70%; the weighted average cost of capital (WACC) is determined based on the cost of equity capital and the cost of debt. |
| Yifeng Luoshi Xiehe and Yongzhou Daoxian Renrenkang Pharmacy | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from 3.00% to 5.00%; the gross margin is expected to range from 40.66% to 40.85%; and the period expense rate is expected to range from 32.28% to 33.64%, which are determined by the Company based on business | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to be 40.84%; and the period expense rate is expected to be 32.42%. The Company is expected to achieve a stable operating status by 2028. Therefore, the forecast period ends at | 13.90%; the weighted average cost of capital (WACC) is determined based on the cost of equity capital and the cost of debt. |
| Items | Forecast period | Parameters including revenue growth rate and gross margin for forecast period and their determination basis | Parameters including revenue growth rate and gross margin for stable period and their determination basis | Discount rate and its determination basis |
| performance in previous years and expectations for the future development of the market industry. | the end of 2028, followed by a stable period from 2029 onwards into the future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | |||
| Yueyang Yifeng | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from 3.26% to 4.57%; the gross margin is expected to range from 36.81% to 36.87%; and the period expense rate is expected to range from 28.73% to 29.31%, which are determined by the Company based on business performance in previous years and expectations for the future development of the market industry. | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to be 36.87%; and the period expense rate is expected to be 28.84%. The Company is expected to achieve a stable operating status by 2028. Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | 13.90%; the weighted average cost of capital (WACC) is determined based on the cost of equity capital and the cost of debt. |
| Assets of Suqian Jiahe Medicine | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from -0.88% to 3.00%; the gross margin is expected to range from 22.94% to 22.94%; and the period expense rate is expected to range from 18.05% to 18.19%, which are determined by the Company based on business performance in previous years and expectations for the future development of the market industry. | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to be 22.94%; and the period expense rate is expected to be 18.19%. The Company is expected to achieve a stable operating status by 2028. Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | 13.70%; the weighted average cost of capital (WACC) is determined based on the cost of equity capital and the cost of debt. |
| Assets of Changsha Qingyuantang Pharmacy | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from 1.91% to 3.00%; the gross margin is expected to range from 36.10% to 36.10%; and the period expense rate is expected to range from 26.71% to 26.92%, which are determined by the Company based on business performance in previous years and expectations for the future development of the market industry. | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to be 36.10%; and the period expense rate is expected to be 26.92%. The Company is expected to achieve a stable operating status by 2028. Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the future perpetuity, during which the | 13.90%; the weighted average cost of capital (WACC) is determined based on the cost of equity capital and the cost of debt. |
| Items | Forecast period | Parameters including revenue growth rate and gross margin for forecast period and their determination basis | Parameters including revenue growth rate and gross margin for stable period and their determination basis | Discount rate and its determination basis |
| Company’s business performance will maintain a stable level of cash earnings. | ||||
| Assets of Suqian Dasheng Medicine | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from -1.90% to 3.00%; the gross margin is expected to range from 32.72% to 32.72%; and the period expense rate is expected to range from 24.08% to 24.27%, which are determined by the Company based on business performance in previous years and expectations for the future development of the market industry. | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to be 32.72%; and the period expense rate is expected to be 24.16%. The Company is expected to achieve a stable operating status by 2028. Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | 13.70%; the weighted average cost of capital (WACC) is determined based on the cost of equity capital and the cost of debt. |
| Assets of Changsha Tailai Senyantang Pharmacy | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from 3.00% to 5.80%; the gross margin is expected to range from 36.72% to 36.74%; and the period expense rate is expected to range from 24.27% to 24.48%, which are determined by the Company based on business performance in previous years and expectations for the future development of the market industry. | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to be 36.74%; and the period expense rate is expected to be 24.48%. The Company is expected to achieve a stable operating status by 2028. Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | 13.90%; the weighted average cost of capital (WACC) is determined based on the cost of equity capital and the cost of debt. |
| Jiuzhou Medicine and Jiuzhou Pharmacy | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from 2.21% to 3.81%; the gross margin is expected to range from 36.41% to 36.47%; and the period expense rate is expected to range from 26.73% to 27.30%, which are determined by the Company based on business performance in previous years and expectations for the future development of the market industry. | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to be 36.47%; and the period expense rate is expected to be 26.79%. The Company is expected to achieve a stable operating status by 2028. Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | 13.70%; the weighted average cost of capital (WACC) is determined based on the cost of equity capital and the cost of debt. |
| Assets of Zhuzhou | 5 years | From 2024 to 2028, the sales revenue | During the stable period, the sales | 13.90%; the weighted |
| Items | Forecast period | Parameters including revenue growth rate and gross margin for forecast period and their determination basis | Parameters including revenue growth rate and gross margin for stable period and their determination basis | Discount rate and its determination basis |
| Zhengxiang Pharmacy | growth rate is expected to range from -0.74% to 3.00%; the gross margin is expected to range from 33.07% to 33.07%; and the period expense rate is expected to range from 23.18% to 23.34%, which are determined by the Company based on business performance in previous years and expectations for the future development of the market industry. | revenue growth rate is expected to be 2.00%; the gross margin is expected to be 33.07%; and the period expense rate is expected to be 23.34%. The Company is expected to achieve a stable operating status by 2028. Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | average cost of capital (WACC) is determined based on the cost of equity capital and the cost of debt. | |
| Shaoguan Xiangqin | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from 3.12% to 5.19%; the gross margin is expected to range from 37.43% to 37.47%; and the period expense rate is expected to range from 31.62% to 32.50%, which are determined by the Company based on business performance in previous years and expectations for the future development of the market industry. | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to be 37.47%; and the period expense rate is expected to be 31.66%. The Company is expected to achieve a stable operating status by 2028. Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | 14.10%; the weighted average cost of capital (WACC) is determined based on the cost of equity capital and the cost of debt. |
| Huai’an Jisheng | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from 2.81% to 4.05%; the gross margin is expected to range from 38.26% to 38.41%; and the period expense rate is expected to range from 30.21% to 31.40%, which are determined by the Company based on business performance in previous years and expectations for the future development of the market industry. | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to be 38.41%; and the period expense rate is expected to be 30.23%. The Company is expected to achieve a stable operating status by 2028. Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | 13.70%; the weighted average cost of capital (WACC) is determined based on the cost of equity capital and the cost of debt. |
| Jiangsu Shimin | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from -0.76% to 6.91%; the gross margin is expected to range from 34.98% to | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to be 36.62%; and the period expense rate | 13.70%; the weighted average cost of capital (WACC) is determined based on |
| Items | Forecast period | Parameters including revenue growth rate and gross margin for forecast period and their determination basis | Parameters including revenue growth rate and gross margin for stable period and their determination basis | Discount rate and its determination basis |
| 36.62%; and the period expense rate is expected to range from 21.59% to 24.41%, which are determined by the Company based on business performance in previous years and expectations for the future development of the market industry. | is expected to be 21.59%. The Company is expected to achieve a stable operating status by 2028. Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | the cost of equity capital and the cost of debt. | ||
| Asset group portfolios of Jiangxi Tianshun and Xinyu Baihuikang | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from 3.33% to 5.53%; the gross margin is expected to range from 37.30% to 37.40%; and the period expense rate is expected to range from 31.83% to 32.98%, which are determined by the Company based on business performance in previous years and expectations for the future development of the market industry. | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to be 37.34%; and the period expense rate is expected to be 31.86%. The Company is expected to achieve a stable operating status by 2028. Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | 14.00%; the weighted average cost of capital (WACC) is determined based on the cost of equity capital and the cost of debt. |
| Assets of Guangyun Kangsheng Pharmacy | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from 2.85% to 3.00%; the gross margin is expected to range from 37.11% to 37.11%; and the period expense rate is expected to range from 28.39% to 28.64%, which are determined by the Company based on business performance in previous years and expectations for the future development of the market industry. | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to be 37.11%; and the period expense rate is expected to be 28.64%. The Company is expected to achieve a stable operating status by 2028. Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | 13.70%; the weighted average cost of capital (WACC) is determined based on the cost of equity capital and the cost of debt. |
| Rudong Yifeng | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from 3.17% to 7.30%; the gross margin is expected to range from 40.23% to 40.32%; and the period expense rate is expected to range from 27.62% to 28.33%, which are determined by the | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to be 40.32%; and the period expense rate is expected to be 27.62%. The Company is expected to achieve a stable operating status by 2028. | 13.70%; the weighted average cost of capital (WACC) is determined based on the cost of equity capital and the cost of debt. |
| Items | Forecast period | Parameters including revenue growth rate and gross margin for forecast period and their determination basis | Parameters including revenue growth rate and gross margin for stable period and their determination basis | Discount rate and its determination basis |
| Company based on business performance in previous years and expectations for the future development of the market industry. | Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | |||
| Asset groups of Miluo Tianheng | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from 3.01% to 4.63%; the gross margin is expected to range from 37.65% to 37.68%; and the period expense rate is expected to range from 27.07% to 27.51%, which are determined by the Company based on business performance in previous years and expectations for the future development of the market industry. | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to be 37.68%; and the period expense rate is expected to be 27.30%. The Company is expected to achieve a stable operating status by 2028. Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | 14.00%; the weighted average cost of capital (WACC) is determined based on the cost of equity capital and the cost of debt. |
| Assets of Nantong Zhongzhichen Pharmacy | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from 3.00% to 7.66%; the gross margin is expected to range from 30.66% to 30.66%; and the period expense rate is expected to range from 19.49% to 19.68%, which are determined by the Company based on business performance in previous years and expectations for the future development of the market industry. | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to be 30.66%; and the period expense rate is expected to be 19.60%. The Company is expected to achieve a stable operating status by 2028. Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | 13.70%; the weighted average cost of capital (WACC) is determined based on the cost of equity capital and the cost of debt. |
| Yuehai Yongxitang | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from 3.19% to 5.76%; the gross margin is expected to range from 40.69% to 40.71%; and the period expense rate is expected to range from 29.18% to 29.55%, which are determined by the Company based on business performance in previous years and expectations for the future | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to be 40.69%; and the period expense rate is expected to be 29.37%. The Company is expected to achieve a stable operating status by 2028. Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the | 13.70%; the weighted average cost of capital (WACC) is determined based on the cost of equity capital and the cost of debt. |
| Items | Forecast period | Parameters including revenue growth rate and gross margin for forecast period and their determination basis | Parameters including revenue growth rate and gross margin for stable period and their determination basis | Discount rate and its determination basis |
| development of the market industry. | future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | |||
| Longshuntang | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from -1.24% to 8.04%; the gross margin is expected to range from 35.83% to 35.88%; and the period expense rate is expected to range from 23.79% to 25.06%, which are determined by the Company based on business performance in previous years and expectations for the future development of the market industry. | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to be 35.83%; and the period expense rate is expected to be 23.81%. The Company is expected to achieve a stable operating status by 2028. Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | 13.90%; the weighted average cost of capital (WACC) is determined based on the cost of equity capital and the cost of debt. |
| Baicaotang | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from 2.93% to 3.11%; the gross margin is expected to range from 36.18% to 36.23%; and the period expense rate is expected to range from 23.81% to 24.33%, which are determined by the Company based on business performance in previous years and expectations for the future development of the market industry. | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to be 36.23%; and the period expense rate is expected to be 23.86%. The Company is expected to achieve a stable operating status by 2028. Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | 13.70%; the weighted average cost of capital (WACC) is determined based on the cost of equity capital and the cost of debt. |
| Asset groups of Xinkang Jianmin | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from 3.35% to 6.72%; the gross margin is expected to range from 37.03% to 37.18%; and the period expense rate is expected to range from 27.24% to 28.51%, which are determined by the Company based on business performance in previous years and expectations for the future development of the market industry. | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to be 37.18%; and the period expense rate is expected to be 27.38%. The Company is expected to achieve a stable operating status by 2028. Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | 14.10%; the weighted average cost of capital (WACC) is determined based on the cost of equity capital and the cost of debt. |
| Items | Forecast period | Parameters including revenue growth rate and gross margin for forecast period and their determination basis | Parameters including revenue growth rate and gross margin for stable period and their determination basis | Discount rate and its determination basis |
| Xuzhou Enqi | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from 3.07% to 4.01%; the gross margin is expected to range from 38.41% to 38.42%; and the period expense rate is expected to range from 22.36% to 22.58%, which are determined by the Company based on business performance in previous years and expectations for the future development of the market industry. | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to be 38.42%; and the period expense rate is expected to be 22.45%. The Company is expected to achieve a stable operating status by 2028. Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | 13.70%; the weighted average cost of capital (WACC) is determined based on the cost of equity capital and the cost of debt. |
| Asset groups of Anlu Yifeng | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from 3.36% to 16.93%; the gross margin is expected to range from 36.59% to 37.13%; and the period expense rate is expected to range from 26.62% to 29.83%, which are determined by the Company based on business performance in previous years and expectations for the future development of the market industry. | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to be 37.13%; and the period expense rate is expected to be 26.70%. The Company is expected to achieve a stable operating status by 2028. Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | 14.00%; the weighted average cost of capital (WACC) is determined based on the cost of equity capital and the cost of debt. |
| Assets of Jiangxi Caisen | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from -8.11% to 3.00%; the gross margin is expected to range from 36.76% to 36.76%; and the period expense rate is expected to range from 24.31% to 24.75%, which are determined by the Company based on business performance in previous years and expectations for the future development of the market industry. | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to be 36.76%; and the period expense rate is expected to be 24.31%. The Company is expected to achieve a stable operating status by 2028. Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | 14.00%; the weighted average cost of capital (WACC) is determined based on the cost of equity capital and the cost of debt. |
| Shanghai Buyi | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from 3.10% to 13.26%; the gross margin is | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to | 13.90%; the weighted average cost of capital (WACC) is |
| Items | Forecast period | Parameters including revenue growth rate and gross margin for forecast period and their determination basis | Parameters including revenue growth rate and gross margin for stable period and their determination basis | Discount rate and its determination basis |
| expected to range from 39.87% to 39.94%; and the period expense rate is expected to range from 20.99% to 22.67%, which are determined by the Company based on business performance in previous years and expectations for the future development of the market industry. | be 39.90%; and the period expense rate is expected to be 20.99%. The Company is expected to achieve a stable operating status by 2028. Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | determined based on the cost of equity capital and the cost of debt. | ||
| Putuo Yifeng | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from -1.20% to 4.91%; the gross margin is expected to range from 34.76% to 34.76%; and the period expense rate is expected to range from 26.11% to 27.46%, which are determined by the Company based on business performance in previous years and expectations for the future development of the market industry. | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to be 34.76%; and the period expense rate is expected to be 26.11%. The Company is expected to achieve a stable operating status by 2028. Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | 13.90%; the weighted average cost of capital (WACC) is determined based on the cost of equity capital and the cost of debt. |
| Asset groups of Xinxing Chain | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from 3.62% to 7.95%; the gross margin is expected to range from 32.83% to 33.06%; and the period expense rate is expected to range from 23.26% to 24.97%, which are determined by the Company based on business performance in previous years and expectations for the future development of the market industry. | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to be 33.06%; and the period expense rate is expected to be 23.26%. The Company is expected to achieve a stable operating status by 2028. Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | 13.70%; the weighted average cost of capital (WACC) is determined based on the cost of equity capital and the cost of debt. |
| Shanghai Shanghong | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from 3.10% to 5.16%; the gross margin is expected to range from 36.80% to 36.82%; and the period expense rate is expected to range from 25.03% to | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to be 36.81%; and the period expense rate is expected to be 25.03%. The Company is expected to achieve a | 13.90%; the weighted average cost of capital (WACC) is determined based on the cost of equity capital and the cost of |
| Items | Forecast period | Parameters including revenue growth rate and gross margin for forecast period and their determination basis | Parameters including revenue growth rate and gross margin for stable period and their determination basis | Discount rate and its determination basis |
| 25.78%, which are determined by the Company based on business performance in previous years and expectations for the future development of the market industry. | stable operating status by 2028. Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | debt. | ||
| Assets of Wuzhou Pharmacy | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from 1.11% to 4.98%; the gross margin is expected to range from 38.70% to 38.71%; and the period expense rate is expected to range from 22.80% to 23.28%, which are determined by the Company based on business performance in previous years and expectations for the future development of the market industry. | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to be 38.70%; and the period expense rate is expected to be 22.80%. The Company is expected to achieve a stable operating status by 2028. Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | 13.90%; the weighted average cost of capital (WACC) is determined based on the cost of equity capital and the cost of debt. |
| Jiuzhitang Medicine | 5 years | From 2024 to 2028, the sales revenue growth rate is expected to range from 3.45% to 10.62%; the gross margin is expected to range from 26.90% to 27.00%; and the period expense rate is expected to range from 22.18% to 23.11%, which are determined by the Company based on business performance in previous years and expectations for the future development of the market industry. | During the stable period, the sales revenue growth rate is expected to be 2.00%; the gross margin is expected to be 27.00%; and the period expense rate is expected to be 22.18%. The Company is expected to achieve a stable operating status by 2028. Therefore, the forecast period ends at the end of 2028, followed by a stable period from 2029 onwards into the future perpetuity, during which the Company’s business performance will maintain a stable level of cash earnings. | 13.90%; the weighted average cost of capital (WACC) is determined based on the cost of equity capital and the cost of debt. |
Pursuant to the “Assessment Report on the Recoverable Value of Asset Group Portfolios Involvedin the Impairment Test of Goodwill Formed by the Acquisition of Equity and Store AssetsProposed by Yifeng Pharmacy Chain Co., Ltd.” (Dong Zhou Ping Bao Zi [2024] No. 0957) issuedby Shanghai Dongzhou Asset Appraisal Co., Ltd. on April 20, 2024, which is engaged by theCompany, the recoverable amount of the above-mentioned asset groups or asset group portfoliosthat include goodwill is higher than their carrying amount, which suggests that the Company’sgoodwill is not impaired.
Reasons for the significant inconsistencies between aforementioned information and informationused in previous impairment tests or external information? Applicable ? Not ApplicableReasons for the significant inconsistencies between information used in previous impairment testsand actual performance? Applicable ? Not Applicable
(5) Completion of performance commitment and its effect on goodwill impairment testPerformance commitment when goodwill formed and reporting period or previous reportingperiod within performance commitment periods? Applicable ? Not ApplicableOther remarks? Applicable ? Not Applicable
28. Long-term prepayments
? Applicable ? Not Applicable
| Items | Opening balance | Increase | Amortization | Other decreases | Closing balance |
| Renovation costs | 367,847,507.32 | 234,230,466.91 | 156,917,118.18 | 2,467,703.12 | 442,693,152.93 |
| Store transfer fees | 55,593,143.53 | 25,088,097.53 | 26,055,446.73 | 1,671,808.33 | 52,953,986.00 |
| Total | 423,440,650.85 | 259,318,564.44 | 182,972,564.91 | 4,139,511.45 | 495,647,138.93 |
Other remarksNone
29. Deferred tax assets and deferred tax liabilities
(1) Deferred tax assets before offset
? Applicable ? Not Applicable
| Items | Closing balance | December 31, 2022 | ||
| Deductible temporary difference | Deferred tax assets | Deductible temporary difference | Deferred tax assets | |
| Provision for impairment of assets | 59,127,821.57 | 14,685,991.11 | 52,011,383.22 | 12,978,754.52 |
| Unrealized profit from internal transactions | 235,459,783.00 | 58,864,945.75 | 160,690,815.60 | 40,172,703.90 |
| Deductible losses | 29,328,308.08 | 7,332,077.02 | 26,211,434.84 | 6,552,858.71 |
| Share-based payment fees | 23,689,648.30 | 5,922,412.08 | 18,230,904.00 | 4,557,726.00 |
| Lease Liabilities and | 4,173,343,988.97 | 1,043,335,997.25 | 3,664,638,707.73 | 916,159,676.94 |
| Items | Closing balance | December 31, 2022 | ||
| Deductible temporary difference | Deferred tax assets | Deductible temporary difference | Deferred tax assets | |
| Advances paid adjustion | ||||
| Changes in fair value | 22,668,945.40 | 5,667,236.35 | ||
| Total | 4,520,949,549.92 | 1,130,141,423.21 | 3,944,452,190.79 | 986,088,956.42 |
(2) Deferred tax liabilities before offset
? Applicable ? Not Applicable
| Items | Closing balance | December 31, 2022 | ||
| Taxable temporary difference | Deferred tax liabilities | Taxable temporary difference | Deferred tax liabilities | |
| Assets appraisal appreciation due to business combination not under common control | 78,478,653.88 | 19,619,663.47 | 94,841,175.08 | 23,710,293.77 |
| Changes in fair value | 28,555,612.65 | 7,138,903.16 | ||
| Right-of-use assets adjustion | 3,965,884,425.82 | 991,471,106.46 | 3,433,622,232.34 | 858,405,558.09 |
| Total | 4,072,918,692.35 | 1,018,229,673.09 | 3,528,463,407.42 | 882,115,851.86 |
(3) Deferred tax assets or liabilities after offset
? Applicable ? Not Applicable
| Items | Closing balance | December 31, 2022 | ||
| Deferred tax assets offset by deferred tax liabilities | Deferred tax assets/liabilities after offset | Deferred tax assets offset by deferred tax liabilities | Deferred tax assets/liabilities after offset | |
| Deferred tax assets | 991,471,106.46 | 138,670,316.75 | 858,405,558.09 | 127,683,398.33 |
| Deferred tax liabilities | 991,471,106.46 | 26,758,566.63 | 858,405,558.09 | 23,710,293.77 |
(4) Details of unrecognized deferred tax assets
? Applicable ? Not Applicable
| Items | Closing balance | December 31, 2022 |
| Deductible temporary difference | 2,307,197.66 | 2,299,554.25 |
| Deductible losses | 265,106,483.95 | 209,786,601.13 |
| Total | 267,413,681.61 | 212,086,155.38 |
(5) Maturity years of deductible losses of unrecognized deferred tax assets
? Applicable ? Not Applicable
| Maturity years | Closing balance | December 31, 2022 | Remarks |
| Year 2023 | 6,213,160.33 | ||
| Year 2024 | 6,777,279.41 | 15,681,868.13 |
| Maturity years | Closing balance | December 31, 2022 | Remarks |
| Year 2025 | 15,268,901.76 | 16,284,165.83 | |
| Year 2026 | 66,990,035.41 | 69,925,034.79 | |
| Year 2027 | 99,245,366.98 | 101,682,372.05 | |
| Year 2028 | 76,824,900.39 | ||
| Total | 265,106,483.95 | 209,786,601.13 |
Other remarks? Applicable ? Not Applicable
30. Other non-current assets
? Applicable ? Not Applicable
| Items | Closing balance | December 31, 2022 |
| Prepayments for Deposit of equity transfer and Store acquisition | 18,650,000.00 | 4,015,070.00 |
| Prepayments for long-term assets | 11,619,025.79 | 3,215,428.45 |
| Total | 30,269,025.79 | 7,230,498.45 |
Other remarksNone
31. Assets with title or use right restrictions
? Applicable ? Not Applicable
| Items | Closing book balance | Closing carrying amount | Type of restrictions | Reasons for restrictions |
| Cash and bank balances | 1,097,325,599.21 | 1,097,325,599.21 | ||
| Including: Principal of deposits for acceptance bills and its interest | 1,096,521,187.18 | 1,096,521,187.18 | Deposit for acceptance bills | Deposits |
| Deposits for government platforms | 30,283.77 | 30,283.77 | Deposit for government platforms | Deposits |
| Cash in bank | 774,128.26 | 774,128.26 | Judicial frozen funds | Judicial frozen funds |
| Debt investments | 102,729,722.22 | 102,729,722.22 | Pledged certificate of deposits | Pledged and frozen |
| Total | 1,200,055,321.43 | 1,200,055,321.43 |
(Continued)
| Items | Opening book balance | Opening carrying amount | Type of restrictions | Reasons for restrictions |
| Cash and bank balances | 1,194,319,556.21 | 1,194,319,556.21 | ||
| Including: Principal of deposits for acceptance bills | 1,194,319,556.21 | 1,194,319,556.21 | Deposits for acceptance bills | Deposits |
| Total | 1,194,319,556.21 | 1,194,319,556.21 |
Other remarksNone
32. Short-term borrowings
(1) Categories of short-term borrowings
? Applicable ? Not Applicable
(2) Overdue short-term borrowings
? Applicable ? Not ApplicableSignificant overdue short-term borrowings? Applicable ? Not ApplicableOther remarks? Applicable ? Not Applicable
33. Held-for-trading financial liabilities
? Applicable ? Not ApplicableOther remarks? Applicable ? Not Applicable
34. Derivative financial liabilities
? Applicable ? Not Applicable
35. Notes payable
(1) Details
? Applicable ? Not Applicable
| Items | Closing balance | December 31, 2022 |
| Trade acceptance | ||
| Bank acceptance | 6,215,388,292.66 | 5,082,931,546.02 |
| Total | 6,215,388,292.66 | 5,082,931,546.02 |
Notes payable due but unpaid totaled 0 yuan in the current period
36. Accounts payable
(1) Details
? Applicable ? Not Applicable
| Items | Closing balance | December 31, 2022 |
| Payment for goods | 1,955,564,568.05 | 1,677,740,647.28 |
| Total | 1,955,564,568.05 | 1,677,740,647.28 |
(2) Significant accounts payable with age over one year
? Applicable ? Not ApplicableOther remarks? Applicable ? Not Applicable
37. Advances received
(1) Details
? Applicable ? Not Applicable
| Items | Closing balance | December 31, 2022 |
| Rent charge | 15,959,550.59 | 6,078,020.28 |
| Total | 15,959,550.59 | 6,078,020.28 |
(2) Significant advances received overdue or with age over one year
? Applicable ? Not Applicable
(3) Reasons for significant changes in carrying amount of advances received in the currentperiod? Applicable ? Not ApplicableOther remarks? Applicable ? Not Applicable
38. Contract liabilities
(1) Details
? Applicable ? Not Applicable
| Items | Closing balance | December 31, 2022 |
| Payment for goods | 80,166,931.03 | 60,685,079.13 |
| Total | 80,166,931.03 | 60,685,079.13 |
(2) Significant contract liabilities with age over one year
? Applicable ? Not Applicable
(3) Reasons for significant changes in the carrying amount of contract liabilities in thecurrent period? Applicable ? Not ApplicableOther remarks? Applicable ? Not Applicable
39. Employee benefits payable
(1) Details
? Applicable ? Not Applicable
| Items | Opening balance | Increase | Business combination | Decrease | Closing balance |
| Short-term employee benefits | 502,091,494.84 | 3,327,971,439.38 | 19,313.98 | 3,368,974,032.36 | 461,108,215.84 |
| Post-employment benefits - defined contribution plan | 3,120,018.46 | 283,502,661.25 | 283,997,285.55 | 2,625,394.16 | |
| Termination benefits | 2,716,156.41 | 2,716,156.41 |
| Items | Opening balance | Increase | Business combination | Decrease | Closing balance |
| Total | 505,211,513.30 | 3,614,190,257.04 | 19,313.98 | 3,655,687,474.32 | 463,733,610.00 |
(2) Details of short-term employee benefits
? Applicable ? Not Applicable
| Items | Opening balance | Increase | Business combination | Decrease | Closing balance |
| Wage, bonus, allowance and subsidy | 494,085,199.12 | 2,947,962,754.56 | 19,313.98 | 2,987,160,551.48 | 454,906,716.18 |
| Employee welfare fund | 146,934,301.04 | 146,934,301.04 | |||
| Social insurance premium | 1,639,064.95 | 165,448,158.61 | 165,543,969.70 | 1,543,253.86 | |
| Including: Medicare premium | 1,488,209.81 | 151,840,517.30 | 151,940,783.92 | 1,387,943.19 | |
| Occupational injuries premium | 24,409.91 | 7,590,670.71 | 7,586,276.49 | 28,804.13 | |
| Maternity premium | 126,445.23 | 6,016,970.60 | 6,016,909.29 | 126,506.54 | |
| Housing provident fund | 1,218,211.37 | 59,090,778.22 | 59,424,530.27 | 884,459.32 | |
| Trade union fund and employee education fund | 5,149,019.40 | 8,535,446.95 | 9,910,679.87 | 3,773,786.48 | |
| Short-term paid leave | |||||
| Short-term profit sharing plan | |||||
| Subtotal | 502,091,494.84 | 3,327,971,439.38 | 19,313.98 | 3,368,974,032.36 | 461,108,215.84 |
(3) Details of defined contribution plan
? Applicable ? Not Applicable
| Items | Opening balance | Increase | Business combination | Decrease | Closing balance |
| Basic endowment insurance premium | 3,008,715.33 | 272,603,610.19 | 273,097,153.23 | 2,515,172.29 | |
| Unemployment insurance premium | 111,303.13 | 10,899,051.06 | 10,900,132.32 | 110,221.87 | |
| Company annuity payment | |||||
| Subtotal | 3,120,018.46 | 283,502,661.25 | 283,997,285.55 | 2,625,394.16 |
Other remarks? Applicable ? Not Applicable
40. Taxes and rates payable
? Applicable ? Not Applicable
| Items | Closing balance | December 31, 2022 |
| VAT | 69,779,575.85 | 74,241,847.97 |
| Enterprise income tax | 165,759,933.41 | 176,872,984.12 |
| Individual income tax withheld for tax authorities | 11,382,301.79 | 17,702,027.25 |
| Urban maintenance and construction tax | 4,965,948.37 | 5,701,728.68 |
| Stamp duty | 5,419,343.01 | 2,588,532.43 |
| Items | Closing balance | December 31, 2022 |
| Housing property tax | 920,459.64 | 882,378.65 |
| Land use tax | 1,171,426.83 | 1,171,212.38 |
| Education surcharge | 2,208,795.49 | 2,506,587.86 |
| Local education surcharge | 1,337,860.38 | 1,555,132.90 |
| Others | 142,508.80 | 205,160.89 |
| Total | 263,088,153.57 | 283,427,593.13 |
Other remarksNone
41. Other payables
(1) Details
? Applicable ? Not Applicable
| Itemns | Closing balance | December 31, 2022 |
| Dividend payable | 296,927.48 | 7,707,033.01 |
| Other payables | 810,149,750.80 | 752,478,266.35 |
| Total | 810,446,678.28 | 760,185,299.36 |
Other remarks? Applicable ? Not Applicable
(2) Interest payable
Details? Applicable ? Not ApplicableSignificant interest payable overdue but unpaid? Applicable ? Not ApplicableOther remarks? Applicable ? Not Applicable
(3) Dividend payable
Details? Applicable ? Not Applicable
| Items | Closing balance | December 31, 2022 |
| Dividend payable - Xinyu Xianglian Pharmaceutical Enterprise Management Center (LP) | 7,707,033.01 | |
| Dividend payable - Guo Hongwu | 296,927.48 | |
| Subtotal | 296,927.48 | 7,707,033.01 |
Other remarks, including significant dividend payable with age over one year
None
(4) Other payables
Details? Applicable ? Not Applicable
| Items | Closing balance | December 31, 2022 |
| Security deposits and quality guarantee deposits | 109,763,535.31 | 92,653,750.96 |
| Payments for equipment and construction | 37,825,417.59 | 66,015,404.83 |
| Payments for equity transfer and store acquisition | 221,460,641.53 | 256,908,249.80 |
| Repurchase obligation of restricted shares | 42,161,726.90 | 78,022,427.47 |
| House rental fees | 64,754,297.97 | 10,484,218.90 |
| Temporary receipts payable | 12,239,913.96 | 64,232,999.54 |
| Expenses to be paid | 46,225,919.25 | 78,563,606.23 |
| Others | 275,718,298.29 | 105,597,608.62 |
| Subtotal | 810,149,750.80 | 752,478,266.35 |
Significant other payables with age over one year? Applicable ? Not ApplicableOther remarks? Applicable ? Not Applicable
42. Liabilities held for sale
? Applicable ? Not Applicable
43. Non-current liabilities due within one year
? Applicable ? Not Applicable
| Items | Closing balance | December 31, 2022 |
| Long-term borrowings due within one year | 103,484,354.30 | 92,923,245.47 |
| Bonds payable due within one year | ||
| Long-term payables due within one year | ||
| Lease liabilities due within one year | 1,354,982,443.44 | 1,184,876,580.03 |
| Total | 1,458,466,797.74 | 1,277,799,825.50 |
Other remarksNone
44. Other current liabilities
Details? Applicable ? Not Applicable
| Items | Closing balance | December 31, 2022 | |
| Short-term bonds payable | |||
| Payables for returned goods | |||
| Output VAT to be recognized | 6,656,678.33 | 5,215,576.73 | |
| Total | 6,656,678.33 | 5,215,576.73 | |
Current period movements? Applicable ? Not ApplicableOther remarks? Applicable ? Not Applicable
45. Long-term borrowings
(1) Categories of long-term borrowings
? Applicable ? Not Applicable
| Items | Closing balance | December 31, 2022 |
| Pledged borrowings | 133,617,147.68 | 228,668,070.87 |
| Mortgaged borrowings | ||
| Guaranteed borrowings | ||
| Credit borrowings | ||
| Total | 133,617,147.68 | 228,668,070.87 |
Remarks on categories of long-term borrowings:
None
(2) Analysis of long-term borrowings maturity dates
? Applicable ? Not Applicable
| Items | Closing balance | December 31, 2022 |
| Due on demand or within one year | 103,337,093.40 | 92,783,893.40 |
| 1-2 years | 73,429,093.40 | 94,913,093.40 |
| 2-5 years | 36,000,000.00 | 85,429,093.40 |
| Over 5 years | 24,000,000.00 | 48,000,000.00 |
| Interest | 335,315.18 | 465,236.14 |
| Subtotal | 237,101,501.98 | 321,591,316.34 |
| Including: Long-term borrowings due within one year | 103,484,354.30 | 92,923,245.47 |
| Long-term borrowings due more than one year | 133,617,147.68 | 228,668,070.87 |
In 2018, the Company borrowed 784,000,000.00 yuan from China Merchants Bank Co., Ltd.Changsha Branch with a term of 7 years, pledging 91% of its equity in Xinxing Pharmacy asguarantee. The closing balance of the principal is 122,858,186.80 yuan and the interest rate is
4.99%, which was reduced from 5.29% on August 10, 2022. In 2021, the Company borrowed42,120,000.00 yuan from China Merchants Bank Co., Ltd. Changsha Branch with a term of 3years, pledging 65% of equity in Jiangxi Jianmin held by Jiangxi Yifeng Pharmacy Chain Co., Ltd.(the “Jiangxi Yifeng”) for guarantee. The closing balance of the principal is 37,908,000.00 yuanand the interest rate is 4.29%. On August 29, 2022, the Company borrowed 80,000,000.00 yuanfrom China Construction Bank Corporation Changde Branch with a term of 7 years, pledging 51%of its equity in Jiuzhitang Medicine as guarantee. The closing balance of the principal is76,000,000.00 yuan and the interest rate is 4.15%.
46. Bonds payable
(1) Bonds payable
? Applicable ? Not Applicable
(2) Current period movements (not including other financial instruments such as preferredshares/perpetual bonds classified as financial liabilities)? Applicable ? Not Applicable
(3) Remarks on convertible bonds
? Applicable ? Not ApplicableAccounting treatment and judgement basis of convertible bonds? Applicable ? Not Applicable
(4) Other financial instruments classified as financial liabilities
Basic information of other financial instruments such as preferred shares or perpetual bondsoutstanding at the balance sheet date? Applicable ? Not ApplicableCurrent period movements of financial instruments such as preferred shares or perpetual bondsoutstanding at the balance sheet date? Applicable ? Not ApplicableOther remarks on financial instruments classified as financial liabilities? Applicable ? Not ApplicableOther remarks? Applicable ? Not Applicable
47. Lease liabilities
? Applicable ? Not Applicable
| Items | Closing balance | December 31, 2022 |
| Unpaid lease payments | 2,295,870,058.36 | 2,093,005,671.94 |
| Items | Closing balance | December 31, 2022 |
| Unrecognized financing expenses | 90,359,746.56 | 141,929,268.75 |
| Total | 2,205,510,311.80 | 1,951,076,403.19 |
Other remarksNone
48. Long-term payables
Details? Applicable ? Not ApplicableOther remarks? Applicable ? Not ApplicableLong-term payables
(1) Categories of long-term payables
? Applicable ? Not ApplicableSpecial payables
(1) Categories of special payables
? Applicable ? Not Applicable
49. Long-term employee benefits payable
? Applicable ? Not Applicable
(1) Details
? Applicable ? Not Applicable
(2) Movements in defined benefit plan
Present value of obligations in defined benefit plan? Applicable ? Not ApplicablePlan assets? Applicable ? Not ApplicableNet defined benefit liability/asset? Applicable ? Not ApplicableContents and risks of defined benefit plan, and effect on amount, timing and uncertainty of futurecash flows? Applicable ? Not ApplicableSignificant actuarial assumption, reasonableness of the assumption and sensitive analysis ondefined benefit plan? Applicable ? Not Applicable
Other remarks? Applicable ? Not Applicable
50. Provisions
? Applicable ? Not Applicable
51. Deferred income
Details? Applicable ? Not Applicable
| Items | Opening balance | Increase | Business combination | Decrease | Closing balance | Reasons for balance |
| Government grants | 54,666,280.23 | 592,926.59 | 54,073,353.64 | Government grants | ||
| Unrealized gains and losses from leaseback | 23,504.40 | 2,611.60 | 20,892.80 | Finance lease | ||
| Total | 54,689,784.63 | 595,538.19 | 54,094,246.44 |
Other remarks? Applicable ? Not Applicable
52. Other non-current liabilities
? Applicable ? Not Applicable
53. Share capital
? Applicable ? Not Applicable
| Items | Opening balance | Movements | Closing balance | ||||
| Issue of new shares | Bonus shares | Reserve transferred to shares | Others | Subtotal | |||
| Total shares | 721,704,930 | 390,015 | 288,681,972 | -197,120 | 288,874,867 | 1,010,579,797 | |
Other remarksPursuant to the “Plan on Profit Distribution and Conversion of Capital Reserve to Share Capital of2022” deliberated and approved by the 24
thmeeting of the fourth session of the Board of Directorson April 26, 2023, and the resolution of “Proposal of Plan on Profit Distribution and Conversionof Capital Reserve to Share Capital of 2022” approved by the shareholders’ meeting of 2022 onMay 18, 2023, the Company distributed cash dividend of 0.40 yuan (tax inclusive) per share,and increase 0.40 share per share to all shareholders by converting capital reserve, based on thetotal share capital of 721,704,930 shares before the implementation of the plan. In total, cashdividend of 288,681,972.00 yuan has been distributed, and 288,681,972 shares has been converted.After the implementation of the plan, the share capital was increased by 288,681,972.00 yuan, andthe capital reserve (capital premium) was decreased by 288,681,972.00 yuan.Pursuant to the “Proposal on Repurchase and Cancellation of Part of Restricted Shares”
deliberated and approved by the 24
thmeeting of the fourth session of the Board of Directors andthe 21
st
meeting of the fourth session of the Board of Supervisors on April 26, 2023, the Companywas agreed to repurchase and cancel 74,400 shares held by incentive objects who had resigned,been downgraded, or failed to reach performance evaluation standards. Pursuant to the “Proposalon Adjustment of Quantity and Price of Repurchase and Cancellation of Part of Restricted Shares”deliberated and approved by the 27
thmeeting of the fourth session of the Board of Directors andthe 23rd
meeting of the fourth session of the Board of Supervisors on June 29, 2023, the quantityof restricted shares to be repurchased and cancelled was adjusted from 74,400 shares to 104,160shares, and the price was adjusted from 25.01 yuan per share to 17.58 yuan per share. Pursuant tothe “Measures for the Administration of Equity Incentives for Listed Companies” and the“Restricted Share Incentive Plan of Yifeng Pharmacy Chain Co., Ltd. of 2022”, the Company hasrepurchased and canceled a total of 104,160 restricted shares that had been granted but theunlocking conditions have not yet been met, with share capital decreased by 104,160.00 yuan andcapital reserve (share premium) decreased by 1,756,584.00 yuan.Pursuant to the “Proposal on the Second Repurchase and Cancellation of Part of Restricted Sharesin Equity Incentive Plan of 2022” deliberated and approved by the 29
thmeeting of the fourthsession of the Board of Directors and the 24
thmeeting of the fourth session of the Board ofSupervisors on August 14, 2023, the Company was agreed to repurchase and cancel 92,960 sharesheld by incentive objects who had resigned or been downgraded. Pursuant to the “Measures forthe Administration of Equity Incentives for Listed Companies” and the “Restricted ShareIncentive Plan of Yifeng Pharmacy Chain Co., Ltd. of 2022”, the Company has repurchased andcanceled a total of 92,960 restricted shares that had been granted but the unlocking conditionshave not yet been met, with share capital decreased by 92,960.00 yuan and capital reserve (sharepremium) decreased by 1,567,704.00 yuan.Pursuant to the “Proposal on Granting Reserved Equity to the Incentive Objects of RestrictedShares Incentive Plan of 2022” deliberated and approved by the 31st meeting of the fourth sessionof the Board of Directors and the 26th meeting of the fourth session of the Board of Supervisorson August 29, 2023, the Company plans to grant 402,165 ordinary shares (A shares), each withpar value of one yuan, to a total of 42 incentive objects through targeted issuance, with a grantprice of 18.95 yuan per share. Since three incentive objects gave up restricted shares planned to begranted by the Company, the actual number of incentive objects is 39, with a total of 390,015shares being granted, and registered capital increased by 390,015.00 yuan. As of October 16, 2023,the Company has received a total of 7,390,791.00 yuan from 39 incentive objects, among which,390,015.00 yuan was included in share capital and 7,000,776.00 yuan was included in capitalreserve (share premium). The above-mentioned changes in registered capital had been verified byPan-China Certified Public Accountants LLP, and a Capital Verification Report (PCCPACVR[2023] 2-31) was issued thereon.
54. Other equity instruments
(1) Basic information of other financial instruments such as preferred shares or perpetualbonds outstanding as of the balance sheet date? Applicable ? Not Applicable
(2) Current period movements of financial instruments such as preferred shares orperpetual bonds outstanding at the balance sheet date? Applicable ? Not ApplicableInformation and reasons of Current period movements of financial instruments, accountingtreatment and judgement basis? Applicable ? Not ApplicableOther remarks? Applicable ? Not Applicable
55. Capital reserve
? Applicable ? Not Applicable
| Items | Opening balance | Increase | Decrease | Closing balance |
| Share/capital premium | 3,991,354,684.91 | 17,220,485.92 | 292,941,800.33 | 3,715,633,370.50 |
| Other capital reserve | 85,345,399.00 | 41,169,112.30 | 126,514,511.30 | |
| Total | 4,076,700,083.91 | 58,389,598.22 | 292,941,800.33 | 3,842,147,881.80 |
Other remarks, including current period movements and reasons of movement
1) Current increase of share premium: a. 7,000,776.00 yuan was due to grant of restricted shares,please refer to section X(VII) of notes to the financial statements for details; b. 6,435,727.26 yuanwas due to the disposal of non-controlling interest of subsidiaries, please refer to section X(X)2
(2)of notes to the financial statements for details; and c. 3,783,982.66 yuan was due to changes inequity (excluding net profit or loss) of the subsidiary Xinxing Pharmacy.
2) Current decrease of share premium: a. 288,681,972.00 yuan was due to conversion of capitalreserve to share capital, please refer tosectionX(VII) of notes to the financial statements for details;b. 3,324,288.00 yuan was due to repurchase of restricted shares, please refer to section X(VII), ofnotes to the financial statements for details; and c. 935,540.33 yuan was due to acquisition ofnon-controlling interest of subsidiaries, please refer to section X(X)2(2) of notes to the financialstatements for details.
3) Other capital reserve current was increased by 41,169,112.30 yuan due to share-based paymentrecognized from issuance of restricted shares in the current period.
56. Treasury shares
? Applicable ? Not Applicable
| Items | Opening balance | Increase | Decrease | Closing balance |
| Restricted shares | 77,410,952.00 | 7,390,791.00 | 42,563,261.85 | 42,238,481.15 |
| Total | 77,410,952.00 | 7,390,791.00 | 42,563,261.85 | 42,238,481.15 |
Other remarks, including current period movements and reasons of movementCurrent increase of treasury shares was due to recognition of issued restricted share repurchaseobligation in the current period, and current decrease of treasury shares was due to the reversal ofthe unlocked restricted share repurchase obligation recognized before.
57. Other comprehensive income (OCI)
? Applicable ? Not Applicable
| Items | Opening balance | Current period cumulative | Closing balance | |||||
| Net OCI after tax | Less: OCI previously recognized but transferred to retained earnings in the current period (attributable to parent company after tax) | |||||||
| Current period cumulative before income tax | Less: OCI previously recognized but transferred to profit or loss in the current period | Less: Income tax expenses | Attributable to parent company | Attributable to non-controlling shareholders | ||||
| Items not to be reclassified subsequently to profit or loss | -17,001,709.05 | 51,224,558.05 | 12,806,139.51 | 38,418,418.54 | 21,416,709.49 | |||
| Including:Changes in fair value of other equity instrument investments | -17,001,709.05 | 51,224,558.05 | 12,806,139.51 | 38,418,418.54 | 21,416,709.49 | |||
| Total | -17,001,709.05 | 51,224,558.05 | 12,806,139.51 | 38,418,418.54 | 21,416,709.49 | |||
Other remarks, including adjustments of initial recognition amount of hedging items fromeffective portion of cash flow hedging profits and lossesNone
58. Special reserve
? Applicable ? Not Applicable
59. Surplus reserve
? Applicable ? Not Applicable
| Items | Opening balance | Increase | Decrease | Closing balance |
| Statutory surplus reserve | 132,066,047.02 | 66,216,102.98 | 198,282,150.00 | |
| Discretionary surplus reserve | ||||
| Reserve fund | ||||
| Enterprise development fund | ||||
| Others | ||||
| Total | 132,066,047.02 | 66,216,102.98 | 198,282,150.00 |
Other remarksCurrent increase is due the appropriation of surplus reserve at 10% of the net profit generated bythe parent company in the current period.
60. Undistributed profit
? Applicable ? Not Applicable
| Items | Current period cumulative | Preceding period comparative |
| Balance before adjustment at the end of preceding period | 3,720,020,128.04 | 2,693,579,088.57 |
| Add: Increase due to adjustment (or less: decrease) | -2,862,658.05 | 906,182.14 |
| Opening balance after adjustment | 3,717,157,469.99 | 2,694,485,270.71 |
| Add: Net profit attributable to owners of the parent company | 1,411,985,024.41 | 1,261,841,039.80 |
| Less: Appropriation of statutory surplus reserve | 66,216,102.98 | 23,585,921.52 |
| Dividend payable on ordinary shares | 288,681,972.00 | 215,582,919.00 |
| Closing balance | 4,774,244,419.42 | 3,717,157,469.99 |
Other remarksPursuant to related requirements stipulated in the CASBEs, adjustments of -2,862,658.05 yuan aremade on opening balance of undistributed profit on retroactive basis.
61. Operating revenue/Operating cost
(1) Details of Operating revenue/Operating cost
? Applicable ? Not Applicable
| Items | Current period cumulative | Preceding period comparative | ||
| Revenue | Cost | Revenue | Cost | |
| Main operations | 22,077,562,498.66 | 13,908,901,380.54 | 19,381,778,677.11 | 11,964,451,794.17 |
| Other operations | 510,664,903.56 | 48,697,474.20 | 504,617,158.84 | 61,112,247.88 |
| Total | 22,588,227,402.22 | 13,957,598,854.74 | 19,886,395,835.95 | 12,025,564,042.05 |
(2) Breakdown of revenue
? Applicable ? Not ApplicableOther remarks? Applicable ? Not Applicable
(3) Information related to performance obligations
? Applicable ? Not Applicable
(4) Transaction price allocated to the remaining performance obligations
? Applicable ? Not Applicable
(5) Significant changes in contracts or significant adjustments on transaction price? Applicable ? Not ApplicableOther remarksNone
62. Taxes and surcharges
? Applicable ? Not Applicable
| Items | Current period cumulative | Preceding period comparative |
| Urban maintenance and construction tax | 35,465,407.90 | 28,306,929.39 |
| Education surcharge | 15,674,596.23 | 12,541,119.79 |
| Stamp duty | 17,299,709.05 | 11,599,135.45 |
| Local education surcharge | 10,450,521.34 | 8,310,156.82 |
| Housing property tax | 7,838,151.74 | 6,792,490.80 |
| Land use tax | 2,630,372.52 | 2,607,832.17 |
| Vehicle and vessel use tax | 30,243.57 | 20,964.25 |
| Others | 76,855.08 | |
| Total | 89,389,002.35 | 70,255,483.75 |
Other remarksNone
63. Selling expenses
? Applicable ? Not Applicable
| Items | Current period cumulative | Preceding period comparative |
| Employee benefits | 2,809,254,666.69 | 2,544,910,435.32 |
| House rent and property fees | 1,514,364,484.71 | 1,336,577,503.80 |
| Advertising promotion and sales service fees | 367,224,634.13 | 342,346,432.05 |
| Amortization of long-term prepayments | 181,370,295.07 | 145,330,103.25 |
| Utility bills | 144,656,651.36 | 122,003,030.69 |
| Freight expenses | 126,062,967.65 | 120,778,550.92 |
| Depreciation and amortization | 135,291,410.84 | 101,280,370.67 |
| Office expenses | 76,911,445.10 | 71,745,221.99 |
| Organization expenses | 41,632,349.38 | 32,489,707.40 |
| Transportation and business travelling expenses | 41,539,549.10 | 29,113,617.40 |
| Others | 49,141,705.99 | 31,697,966.68 |
| Total | 5,487,450,160.02 | 4,878,272,940.17 |
Other remarksNone
64. Administrative expenses
? Applicable ? Not Applicable
| Items | Current period cumulative | Preceding period comparative |
| Items | Current period cumulative | Preceding period comparative |
| Employee benefits | 718,236,117.42 | 700,113,530.83 |
| Depreciation | 71,223,439.11 | 57,398,130.97 |
| Business entertainment expenses | 54,370,528.07 | 53,748,498.67 |
| Consulting service fees | 47,202,303.94 | 49,681,200.06 |
| Share-based payments | 41,169,112.30 | 23,159,834.00 |
| Amortization of intangible assets | 18,550,693.80 | 10,464,335.57 |
| Amortization of low-value consumables | 5,823,383.73 | 3,358,650.27 |
| Others | 5,849,281.11 | 6,136,479.93 |
| Total | 962,424,859.48 | 904,060,660.30 |
Other remarksNone
65. R&D expenses
? Applicable ? Not Applicable
| Items | Current period cumulative | Preceding period comparative |
| Amortization of Intangible assets | 14,110,402.04 | 14,650,300.67 |
| Material | 13,798,816.73 | 4,953,504.31 |
| Employee benefits | 4,081,993.55 | 4,360,748.41 |
| Depreciation | 1,480,886.21 | 1,297,043.46 |
| Others | 77,886.38 | 48,042.15 |
| Total | 33,549,984.91 | 25,309,639.00 |
Other remarksNone
66. Financial expenses
? Applicable ? Not Applicable
| Items | Current period cumulative | Preceding period comparative |
| Interest expense | 160,528,586.40 | 165,208,532.62 |
| Less: Interest income | 93,286,397.47 | 73,208,764.18 |
| Financial institute charges | 18,942,414.15 | 12,812,707.39 |
| Total | 86,184,603.08 | 104,812,475.83 |
Other remarksNone
67. Other income
? Applicable ? Not Applicable
| Items | Current period cumulative | Preceding period comparative |
| Government grants related to assets | 401,359.91 | 417,913.24 |
| Government grants related to income | 43,933,681.43 | 32,290,672.58 |
| Tax deduction and exemption for small-scale taxpayer | 25,856,801.13 | 9,950,248.55 |
| Refund of handling fees for withholding individual income tax | 2,602,921.20 | 1,202,328.42 |
| VAT deduction and exemption for poverty alleviation personnel and veterans | 3,340,149.99 | |
| Total | 76,134,913.66 | 43,861,162.79 |
Other remarksNone
68. Investment income
? Applicable ? Not Applicable
| Items | Current period cumulative | Preceding period comparative |
| Investment income from long-term equity investments under equity method | 316,574.96 | -11,413.00 |
| Investment income from Other equity instrument investments | 17,084,000.00 | |
| Investment income from financial instruments | 24,958,558.90 | 6,953,820.05 |
| Including:Financial assets classified as at fair value through profit or loss | 24,958,558.90 | 6,953,820.05 |
| Investment income from disposal of subsidiaries | 13,074.67 | -73,684.08 |
| Total | 42,372,208.53 | 6,868,722.97 |
Other remarksNone
69. Gains on net exposure to hedging risk
? Applicable ? Not Applicable
70. Gains on changes in fair value
? Applicable ? Not Applicable
71. Credit impairment loss
? Applicable ? Not Applicable
| Items | Current period cumulative | Preceding period comparative |
| Items | Current period cumulative | Preceding period comparative |
| Bad debts | -4,537,333.68 | -10,465,943.08 |
| Total | -4,537,333.68 | -10,465,943.08 |
Other remarksNone
72. Assets impairment loss
? Applicable ? Not Applicable
| Items | Current period cumulative | Preceding period comparative |
| Inventory write-down loss | -72,633,545.68 | -56,018,740.98 |
| Total | -72,633,545.68 | -56,018,740.98 |
Other remarksNone
73. Gains on asset disposal
? Applicable ? Not Applicable
| Items | Current period cumulative | Preceding period comparative | Amount included in non-recurring profit or loss |
| Gains on disposal of fixed assets | 1,460,232.34 | 2,825,230.77 | 1,460,232.34 |
| Gains on disposal of Right-of-use assets | 40,358,701.38 | 20,341,910.73 | 40,358,701.38 |
| Total | 41,818,933.72 | 23,167,141.50 | 41,818,933.72 |
Other remarksNone
74. Non-operating revenue
Details? Applicable ? Not Applicable
| Items | Current period cumulative | Preceding period comparative | Amount included in non-recurring profit or loss |
| Government grants [Note] | 595,167.68 | 111,747.23 | 595,167.68 |
| Compensation | 1,385,890.73 | 909,588.31 | 1,385,890.73 |
| Cash short and over | 2,527,261.15 | 2,534,863.24 | 2,527,261.15 |
| Exempted payments | 1,109,567.13 | 805,134.58 | 1,109,567.13 |
| Confiscatory income | 1,475,505.71 | 1,430,741.72 | 1,475,505.71 |
| Gains on scrapping of fixed assets | 1,025,366.12 | 140,595.52 | 1,025,366.12 |
| Others | 4,586,164.89 | 6,308,928.27 | 4,586,164.89 |
| Total | 12,704,923.41 | 12,241,598.87 | 12,704,923.41 |
Other remarks? Applicable ? Not Applicable
75. Non-operating expenditures
? Applicable ? Not Applicable
| Items | Current period cumulative | Preceding period comparative | Amount included in non-recurring profit or loss |
| Donation expenditures | 6,406,521.25 | 1,030,307.25 | 6,406,521.25 |
| Penalty expenditures and overdue fines | 937,491.87 | 2,174,060.37 | 937,491.87 |
| Compensation expenses | 3,132,097.54 | 4,497,464.89 | 3,132,097.54 |
| Losses on scrapping of intangible assets | 8,759,898.90 | 6,083,204.66 | 8,759,898.90 |
| Losses on scrapping of fixed assets | 4,991,790.85 | 4,387,408.50 | 4,991,790.85 |
| Others | 5,668,317.26 | 2,115,064.12 | 5,668,317.26 |
| Total | 29,896,117.67 | 20,287,509.79 | 29,896,117.67 |
Other remarksNone
76. Income tax expenses
(1) Details
? Applicable ? Not Applicable
| Items | Current period cumulative | Preceding period comparative |
| Current period income tax expenses | 477,407,759.56 | 464,346,001.57 |
| Deferred income tax expenses | -20,744,785.07 | -10,285,006.62 |
| Total | 456,662,974.49 | 454,060,994.95 |
(2) Reconciliation of accounting profit to income tax expenses
? Applicable ? Not Applicable
| Items | Current period cumulative | Preceding period comparative |
| Profit before tax | 2,037,593,919.93 | 1,877,487,027.13 |
| Income tax expenses based on tax rate applicable to the parent company | 509,398,479.98 | 469,371,756.78 |
| Effect of different tax rate applicable to subsidiaries | -30,197,400.73 | -19,171,090.19 |
| Effect of prior income tax reconciliation | 882,422.20 | -3,435,177.34 |
| Effect of non-taxable income | -141,277,682.11 | -89,512,291.03 |
| Effect of non-deductible costs, expenses and losses | 99,646,125.92 | 74,736,164.44 |
| Effect of utilization of deductible losses not previously recognized as deferred tax assets | -3,822,964.31 | -1,593,274.92 |
| Items | Current period cumulative | Preceding period comparative |
| Effect of deducible temporary differences or deductible losses not recognized as deferred tax assets in the current period | 22,033,993.54 | 23,664,907.21 |
| Income tax expenses | 456,662,974.49 | 454,060,994.95 |
Other remarks? Applicable ? Not Applicable
77. Other comprehensive income
? Applicable ? Not ApplicablePlease refer to section VII 56 of notes to the financial statements for details.
78. Notes to items of the consolidated cash flow statement
(1) Cash flow related to operating activities
Other cash receipts related to operating activities? Applicable ? Not Applicable
| Items | Current period cumulative | Preceding period comparative |
| Interest income | 89,069,632.14 | 57,680,036.65 |
| Government grants | 44,337,282.43 | 32,290,672.58 |
| Intercompany balances and others | 216,292,968.05 | 69,919,617.47 |
| Deposits for notes | 100,320,828.82 | |
| Total | 450,020,711.44 | 159,890,326.70 |
Remarks on other cash receipts related to operating activitiesNoneOther cash payments related to operating activities? Applicable ? Not Applicable
| Items | Current period cumulative | Preceding period comparative |
| Cash payments related to selling expenses | 986,561,162.17 | 750,174,527.13 |
| Cash payments related to administrative expenses | 113,245,496.85 | 109,566,178.66 |
| Cash payments related to financial expenses | 18,942,414.15 | 12,812,707.39 |
| Deposits for notes | 200,868,938.61 | |
| Intercompany balances and others | 83,455,950.56 | 81,114,634.22 |
| Total | 1,202,205,023.73 | 1,154,536,986.01 |
Remarks on other cash payments related to operating activitiesNone
(2) Cash flow related to investing activities
Significant cash receipts related to investing activities? Applicable ? Not ApplicableSignificant cash payments related to investing activities? Applicable ? Not ApplicableOther cash receipts related to investing activities? Applicable ? Not Applicable
| Items | Current period cumulative | Preceding period comparative |
| Redemption of wealth management products and structured deposits | 3,660,000,000.00 | 710,000,000.00 |
| Receipt of interest income on wealth management products and structured deposits | 22,480,295.18 | 9,096,406.63 |
| Total | 3,682,480,295.18 | 719,096,406.63 |
Remarks on other cash receipts related to investing activitiesNoneOther cash payments related to investing activities? Applicable ? Not Applicable
| Items | Current period cumulative | Preceding period comparative |
| Payments for acquisition of wealth management products and structured deposits | 5,388,100,000.00 | 610,000,000.00 |
| Prepaid payments for equity transfer and store acquisition | 15,650,000.00 | 4,015,070.00 |
| Total | 5,403,750,000.00 | 614,015,070.00 |
Remarks on other cash payments related to investing activitiesNone
(3) Cash flow related to financing activities
Other cash receipts related to financing activities? Applicable ? Not ApplicableOther cash payments related to financing activities? Applicable ? Not Applicable
| Items | Current period cumulative | Preceding period comparative |
| Payments for issuance costs of convertible bonds | 1,230,000.00 | |
| Payments for interest arising from repurchase of equity incentive | 45,677.44 | 129,873.11 |
| Items | Current period cumulative | Preceding period comparative |
| Repurchase of restricted shares | 3,521,408.00 | 2,850,265.60 |
| Payments for house rent | 1,602,759,502.03 | 1,351,559,819.89 |
| Payments for acquisition of non-controlling interest | 1,400,000.00 | 10,230,000.00 |
| Total | 1,608,956,587.47 | 1,364,769,958.60 |
Remarks on other cash payments related to financing activitiesNoneChanges in liabilities related to financing activities? Applicable ? Not Applicable
| Items | Opening balance | Increase | Decrease | Closing balance | ||
| Changes in cash | Changes in non-cash | Changes in cash | Changes in non-cash | |||
| Long-term borrowings (including long-term borrowings due within one year) | 321,591,316.34 | 335,315.18 | 84,825,129.54 | 237,101,501.98 | ||
| Lease liabilities (lease liabilities due within one year) | 3,135,952,983.22 | 2,027,299,274.05 | 1,602,759,502.03 | 3,560,492,755.24 | ||
| Subtotal | 3,457,544,299.56 | 2,027,634,589.23 | 1,687,584,631.57 | 3,797,594,257.22 | ||
(4) Presentation of cash flows on a net basis
? Applicable ? Not Applicable
(5) Significant activities not involving cash receipts and payments
? Applicable ? Not Applicable
79. Supplementary information to the cash flow statement
(1) Supplementary information to the cash flow statement
? Applicable ? Not Applicable
| Supplementary information | Current period cumulative | Preceding period comparative |
| (1) Reconciliation of net profit to cash flows from operating activities: | ||
| Net profit | 1,580,930,945.44 | 1,423,426,032.18 |
| Add: Provision for assets impairment | 77,170,879.36 | 66,484,684.06 |
| Depreciation of fixed assets, oil and gas assets, productive biological assets | 185,915,002.19 | 159,652,438.40 |
| Depreciation of right-of-use assets | 1,430,310,433.50 | 1,254,123,985.22 |
| Amortization of intangible assets | 32,592,861.43 | 27,324,571.55 |
| Amortization of long-term prepayments | 182,972,564.91 | 145,378,461.51 |
| Losses on disposal of fixed assets, intangible assets and other long-term assets (Less: gains) | -41,818,933.72 | -23,167,141.50 |
| Fixed assets retirement loss (Less: gains) | 12,726,323.63 | 10,330,017.64 |
| Losses on changes in fair value (Less: gains) |
| Supplementary information | Current period cumulative | Preceding period comparative |
| Financial expenses (Less: gains) | 160,528,586.40 | 165,208,532.62 |
| Investment losses (Less: gains) | -42,372,208.53 | -6,868,722.97 |
| Decrease of deferred tax assets (Less: increase) | -16,654,154.77 | -13,495,711.37 |
| Increase of deferred tax liabilities (Less: decrease) | -4,090,630.30 | 21,547,597.76 |
| Decrease of inventories (Less: increase) | -261,544,910.25 | -459,394,401.53 |
| Decrease of operating receivables (Less: increase) | -258,276,649.06 | -1,013,307,787.54 |
| Increase of operating payables (Less: decrease) | 1,542,951,573.07 | 2,139,864,914.12 |
| Others | 42,399,112.30 | 23,159,834.00 |
| Net cash flows from operating activities | 4,623,740,795.60 | 3,920,267,304.15 |
| (2) Significant investing and financing activities not related to cash receipts and payments: | ||
| Conversion of debt into capital | ||
| Convertible bonds due within one year | ||
| Fixed assets leased in under finance leases | ||
| (3) Net changes in cash and cash equivalents: | ||
| Cash at the end of the period | 2,468,580,139.60 | 2,918,199,648.45 |
| Less: Cash at the beginning of the period | 2,918,199,648.45 | 1,927,200,486.57 |
| Add: Cash equivalents at the end of the period | ||
| Less: Cash equivalents at the beginning of the period | ||
| Net increase of cash and cash equivalents | -449,619,508.85 | 990,999,161.88 |
(2) Net cash payments for the acquisition of subsidiaries
? Applicable ? Not Applicable
(3) Net cash receipt for the disposal of subsidiaries
? Applicable ? Not Applicable
(4) Composition of cash and cash equivalents
? Applicable ? Not Applicable
| Items | Closing balance | December 31, 2022 |
| 1) Cash | 2,468,580,139.60 | 2,918,199,648.45 |
| Including: Cash on hand | 232,721.88 | 294,708.93 |
| Cash in bank on demand for payment | 2,468,347,417.72 | 2,917,904,939.52 |
| Other cash and bank balances on demand for payment | ||
| 2) Cash equivalents | ||
| Including: Bond investments maturing within three months |
| Items | Closing balance | December 31, 2022 |
| 3) Cash and cash equivalents at the end of the period | 2,468,580,139.60 | 2,918,199,648.45 |
| Including: Cash and cash equivalents of parent company or subsidiaries with use restrictions |
(5) Cash and cash equivalents with use restrictions
? Applicable ? Not Applicable
| Items | Closing balance | Reasons for use restrictions and for considered as cash and cash equivalents cash and cash equivalents |
| Cash and bank balances | 6,188,730.80 | Raised Funds |
| Subtotal | 6,188,730.80 |
(6) Cash and bank balances not considered as cash and cash equivalents
? Applicable ? Not Applicable
| Items | Closing balance | December 31, 2022 | Reasons for not considered as cash and cash equivalents |
| Cash and bank balances | 1,097,325,599.21 | 1,194,319,556.21 | Deposits and judicial frozen funds |
| Subtotal | 1,097,325,599.21 | 1,194,319,556.21 |
Other remarks? Applicable ? Not Applicable
80. Notes to items of the consolidated statement of changes in equity
Remarks on other items of closing balance of previous year and changes in equity? Applicable ? Not Applicable
81. Monetary items in foreign currencies
(1) Monetary items in foreign currencies
? Applicable ? Not Applicable
(2) Remarks on foreign operations, including significant foreign operating entities, mainoperating place, functional currencies, basis for selection of functional currencies? Applicable ? Not Applicable
82. Leases
(1) The Company as lessee
? Applicable ? Not Applicable
1) Please refer to section VII 25 of notes to the financial statements for details on right-of-useassets.
2) Please refer to section V 38 of notes to the financial statements for details on the Company’saccounting policies on short-term leases and leases for which the underlying asset is of low value.The amounts of short-term leases and low-value asset leases included into profit or loss are 0
yuan:
3) Profit or loss and cash flows related to leases
| Items | Current period cumulative | Preceding period comparative |
| Interest expenses on lease liabilities | 134,822,305.16 | 137,226,599.48 |
| Income from subleasing right-of-use assets | 29,620,319.17 | 27,705,895.25 |
| Total cash outflows related to leases | 1,602,159,315.01 | 1,351,559,819.89 |
| Gains or losses arising from sale and leaseback transactions | 5,700.00 | 2,611.60 |
4) Please refer to section XII of notes to the financial statements for details on maturity analysis oflease liabilities and related liquidity risk management.Variable lease payments included in profit or loss but not included in the measurement of leaseliabilities? Applicable ? Not ApplicableRent expenses on short-term leases and low-value asset leases? Applicable ? Not ApplicableSale and leaseback transactions and judgement basis? Applicable ? Not ApplicableThe total amounts of cash payment related to lease are 1,602,159,315.01 yuan.
(2) The Company as lessor
Operating lease? Applicable ? Not Applicable
| Items | Current period cumulative | Preceding period comparative |
| Lease income | 29,871,070.50 | 27,705,895.25 |
Finance lease? Applicable ? Not ApplicableReconciliation of undiscounted lease payments to net investment in the lease? Applicable ? Not ApplicableUndiscounted lease payments to be received arising from non-cancellable leases based on thelease contract signed with lessee? Applicable ? Not Applicable
| Remaining years | Closing balance | December 31, 2022 |
| Within 1 year | 275,625.00 | 262,500.00 |
| 1-2 years | 275,625.00 | 275,625.00 |
| Remaining years | Closing balance | December 31, 2022 |
| 2-3 years | 45,937.50 | 275,625.00 |
| 3-4 years | 45,937.50 | |
| 4-5 years | ||
| Total | 597,187.50 | 859,687.50 |
(3) Recognition of profits and losses from finance lease sales as a manufacturer or dealer? Applicable ? Not ApplicableOther remarksNone
83. Others
? Applicable ? Not Applicable
VIII. R&D costs
(1) R&D costs
? Applicable ? Not Applicable
| Items | Current period cumulative | Preceding period comparative |
| Amortization of intangible assets | 14,110,402.04 | 14,650,300.67 |
| Direct materials | 13,798,816.73 | 4,953,504.31 |
| Employee benefits | 37,275,207.95 | 39,856,302.96 |
| Depreciation | 1,480,886.21 | 1,297,043.46 |
| Others | 77,886.38 | 48,042.15 |
| Total | 66,743,199.31 | 60,805,193.55 |
| Including: R&D costs to be expensed | 33,549,984.91 | 25,309,639.00 |
| R&D costs to be capitalized | 33,193,214.40 | 35,495,554.55 |
Other remarksNone
(2) Development expenditures
? Applicable ? Not Applicable
| Items | Opening balance | Increase | Decrease | Closing balance | ||
| Internal development expenditures | Others | Recognized as intangible assets | Transferred out into profit or loss | |||
| Construction of O2O Healthcare Cloud Service Platform | 7,251,672.96 | 33,193,214.40 | 32,154,430.52 | 4,793,758.20 | 3,496,698.64 | |
| Total | 7,251,672.96 | 33,193,214.40 | 32,154,430.52 | 4,793,758.20 | 3,496,698.64 | |
Capitalization of important R&D projects? Applicable ? Not ApplicableImpairment of development expenditures? Applicable ? Not ApplicableOther remarksNone
(3) Important outsourced R&D projects in progress
? Applicable ? Not Applicable
IX. Changes in the consolidation scope
1. Business combination not under common control
? Applicable ? Not Applicable
(1) Business combination not under common control in the current period
? Applicable ? Not Applicable
| Acquirees | Equity acquisition date | Equity acquisition cost | Proportion of equity acquired (%) | Equity acquisition method | Acquisition date |
| Tangshan Xinxing Deshengtang | March, 2023 | 113,000,000.00 | 100.00 | Equity Transfer | March, 2023 |
| Qinhuangdao Xinxing Minle | March, 2023 | 63,000,000.00 | 70.00 | Equity Transfer | March, 2023 |
| Handan Xinxing Baixinkang | August, 2023 | 23,344,000.00 | 80.00 | Equity Transfer | August, 2023 |
| Shijiazhuang Yingqi Medical Service | September, 2023 | 1,400,000.00 | 70.00 | Equity Transfer | September, 2023 |
| Handan Xinxing Huakang | December, 2023 | 52,500,000.00 | 70.00 | Equity Transfer | December, 2023 |
| Langfang Xinxing Dekunyuan | December, 2023 | 27,192,000.00 | 80.00 | Equity Transfer | December, 2023 |
| Chengde Xinxing Xinyu | December, 2023 | 23,100,000.00 | 70.00 | Equity Transfer | December, 2023 |
| Suzhou Xinqunzhong Clinic | December, 2023 | 4,500,000.00 | 90.00 | Equity Transfer | December, 2023 |
| Yichun Yifeng | August, 2023 | 24,600,000.00 | 60.00 | Equity Transfer | August, 2023 |
| Guangshui Yifeng Kangji | February, 2023 | 8,540,000.00 | 70.00 | Equity Transfer | February, 2023 |
| Yingtan Yifeng | October, 2023 | 19,500,000.00 | 65.00 | Equity Transfer | October, 2023 |
(Continued)
| Acquirees | Determination basis for acquisition date | Acquiree’s income from acquisition date to period end | Acquiree’s net profit from acquisition date to period end | Acquiree’s cash flows from acquisition date to period end | ||
| Net inflows from operating activities | Net inflows from investing activities | Net inflows from financing activities | ||||
| Tangshan Xinxing Deshengtang | Complete the | 93,764,703.94 | -6,119,043.70 | -3,494,414.60 | -1,426,611.65 | 4,974,914.65 |
| Acquirees | Determination basis for acquisition date | Acquiree’s income from acquisition date to period end | Acquiree’s net profit from acquisition date to period end | Acquiree’s cash flows from acquisition date to period end | ||
| Net inflows from operating activities | Net inflows from investing activities | Net inflows from financing activities | ||||
| Qinhuangdao Xinxing Minle | property handover procedures and achieve substantial control over the acquired party | 177,629,497.69 | 8,902,494.32 | 2,317,017.16 | -593,393.34 | -1,639,492.00 |
| Handan Xinxing Baixinkang | 23,228,121.12 | -930,921.50 | 1,324,901.80 | -943,490.04 | -360,386.41 | |
| Shijiazhuang Yingqi Medical Service | 383,972.95 | 100,732.80 | -245,011.67 | -2,961.98 | ||
| Handan Xinxing Huakang | 11,373,553.75 | 167,668.94 | -6,610,684.61 | -347,397.17 | 6,999,767.10 | |
| Langfang Xinxing Dekunyuan | 5,622,021.57 | 156,257.26 | -2,273,326.34 | -212,070.10 | 2,536,000.00 | |
| Chengde Xinxing Xinyu | 400,383.51 | 455,537.26 | -2,894,707.12 | 2,979,312.78 | ||
| Suzhou Xinqunzhong Clinic | -23,318.12 | 7,925.21 | ||||
| Yichun Yifeng | 18,232,068.26 | -44,450.08 | 1,928,557.54 | -2,438,347.55 | 1,227,015.00 | |
| Guangshui Yifeng Kangji | 23,989,621.74 | 102,121.07 | 3,001,690.32 | -1,101,050.81 | -210,568.91 | |
| Yingtan Yifeng | 5,822,192.46 | 256,619.76 | 897,179.17 | -1,410,204.82 | 1,177,740.00 | |
(2) Combination costs and goodwill
? Applicable ? Not Applicable
| Items | Tangshan Xinxing Deshengtang | Qinhuangdao Xinxing Minle | Handan Xinxing Baixinkang | Shijiazhuang Yingqi Medical Service |
| Combination costs | 113,000,000.00 | 63,000,000.00 | 23,344,000.00 | 1,400,000.00 |
| Cash | 113,000,000.00 | 63,000,000.00 | 23,344,000.00 | 1,400,000.00 |
| Total combination costs | 113,000,000.00 | 63,000,000.00 | 23,344,000.00 | 1,400,000.00 |
| Less: Share of fair value of net identifiable assets acquired | 11,300,000.00 | 6,300,000.00 | 800,000.00 | 132.97 |
| Goodwill | 101,700,000.00 | 56,700,000.00 | 22,544,000.00 | 1,399,867.03 |
(Continued)
| Items | Handan Xinxing Huakang | Langfang Xinxing Dekunyuan | Chengde Xinxing Xinyu | Suzhou Xinqunzhong Clinic |
| Combination costs | 52,500,000.00 | 27,192,000.00 | 23,100,000.00 | 4,500,000.00 |
| Cash | 52,500,000.00 | 27,192,000.00 | 23,100,000.00 | 4,500,000.00 |
| Total combination costs | 52,500,000.00 | 27,192,000.00 | 23,100,000.00 | 4,500,000.00 |
| Less: Share of fair value of net identifiable assets acquired | 5,250,000.00 | 2,400,000.00 | 2,100,000.00 | 333.14 |
| Goodwill | 47,250,000.00 | 24,792,000.00 | 21,000,000.00 | 4,499,666.86 |
(Continued)
| Items | Yichun Yifeng | Guangshui Yifeng Kangji | Yingtan Yifeng |
| Combination costs | 24,600,000.00 | 8,540,000.00 | 19,500,000.00 |
| Cash | 24,600,000.00 | 8,540,000.00 | 19,500,000.00 |
| Total combination costs | 24,600,000.00 | 8,540,000.00 | 19,500,000.00 |
| Less: Share of fair value of net identifiable assets acquired | 2,100,000.00 | 700,000.00 | 1,300,000.00 |
| Goodwill | 22,500,000.00 | 7,840,000.00 | 18,200,000.00 |
Determination method of fair value of combination costs, contingent considerations and theirmovements? Applicable ? Not ApplicableCompletion of performance commitment? Applicable ? Not ApplicableMain reasons for goodwill in large amount? Applicable ? Not ApplicableLarge amounts of goodwill are formed by the difference between the combination costs and sharesof fair value of net identifiable assets acquiredOther remarksIn November 2022, the Company’s subsidiary Tangshan Xinxing Deshuntang, Bi Hongsheng, YinHui, Yin Zhixue and Tangshan Deshengtang Medicine Chain Co., Ltd. signed the “FrameworkAgreement on the Restructuring and Acquisition of Tangshan Deshengtang Medicine Chain Co.,Ltd.”. Pursuant to the agreement, the third party which designated and actually controlled by BiHongsheng, Yin Hui and Yin Zhixue contributed capital to set up Tangshan Xinxing Deshengtangprior to January 31, 2023, and completed the injection of the entire business and related assets ofTangshan Deshengtang Medicine Chain Co., Ltd. to Tangshan Xinxing Deshengtang prior toMarch 31, 2023. After the injection of business and assets, the Company acquired 100.00% ofequity of Tangshan Deshengtang Medicine Chain Co., Ltd. held by Bi Hongsheng, Yin Hui, YinZhixue and the designated third party at a consideration of 113.00 million yuan. The equitytransfer and registration in administration for market regulation had been completed in March2023.In October 2022, the Company’s subsidiary Xinxing Pharmacy, Shang Yong, Guo Tiezhu, DuKeqiang, Xu Jihe, and Qinhuangdao Minle Medicine Chain Co., Ltd. signed the “FrameworkAgreement on the Restructuring and Acquisition of Qinhuangdao Minle Medicine Chain Co.,Ltd.”. Pursuant to the agreement, the third party which designated and actually controlled byShang Yong, Guo Tiezhu, Du Keqiang, and Xu Jihe contributed capital to set up QinhuangdaoXinxing Minle prior to November 30, 2022, and completed the injection of the entire business andrelated assets of Qinhuangdao Minle Medicine Chain Co., Ltd. to Qinhuangdao Xinxing Minle
prior to February 28, 2023. After the injection of business and assets, the Company acquired 70.00%of equity of Qinhuangdao Minle Medicine Chain Co., Ltd. held by Shang Yong, Guo Tiezhu, DuKeqiang, Xu Jihe and the designated third party at a consideration of 63.00 million yuan. Theequity transfer and registration in administration for market regulation had been completed inMarch 2023.In May 2023, the Company’s subsidiary Xinxing Pharmacy, Wang Yunqiang, Cong Houmao, FanKaimin, and Hebei Baixinkang Medicine Chain Co., Ltd. signed the “Framework Agreement onthe Restructuring and Acquisition of Hebei Baixinkang Medicine Chain Co., Ltd.”. Pursuant to theagreement, the third party which designated and actually controlled by Wang Yunqiang, CongHoumao, and Fan Kaimin contributed capital to set up Handan Xinxing Baixinkang prior to June30, 2023, and completed the injection of the entire business and related assets of HebeiBaixinkang Medicine Chain Co., Ltd. to Handan Xinxing Baixinkang prior to July 31, 2023. Afterthe injection of business and assets, the Company acquired 80.00% of equity of Hebei BaixinkangMedicine Chain Co., Ltd. held by Wang Yunqiang, Cong Houmao, Fan Kaimin and thedesignated third party at the consideration of 23.34 million yuan. The equity transfer andregistration in administration for market regulation had been completed in August 2023.In August 2023, the Company’s subsidiary Xinxing Pharmacy, Shijiazhuang Yingqi PharmacyCo., Ltd., and Shijiazhuang Yingqi Medical Service signed the “Framework Agreement on theEquity Transfer of Shijiazhuang Yingqi Medical Service”. Pursuant to the agreement, XinxingPharmacy acquired 70.00% of equity of Shijiazhuang Yingqi Medical Service at the considerationof 1.40 million yuan. The equity transfer and registration in administration for market regulationhad been completed in September 2023.In August 2023, the Company’s subsidiary Xinxing Pharmacy, Wang Ruimin, Feng Chunxiang,Feng Xuefang, and Linzhang Huakang Pharmacy Chain Co., Ltd. signed the “FrameworkAgreement on the Restructuring and Acquisition of Linzhang Huakang Pharmacy Chain Co.,Ltd.”. Pursuant to the agreement, the third party which designated and actually controlled byWang Ruimin, Feng Chunxiang, and Feng Xuefang contributed capital to set up Handan XinxingHuakang prior to September 30, 2023, and completed the injection of the entire business andrelated assets of Linzhang Huakang Pharmacy Chain Co., Ltd. to Handan Xinxing Huakang priorto October 31, 2023. After the injection of business and assets, the Company acquired 70.00% ofequity of Linzhang Huakang Pharmacy Chain Co., Ltd. held by Wang Ruimin, Feng Chunxiang,Feng Xuefang and the designated third party at the consideration of 52.50 million yuan. Theequity transfer and registration in administration for market regulation had been completed inDecember 2023.In July 2023, the Company’s subsidiary Xinxing Pharmacy, Sun Shuzhi and Langfang DekunyuanPharmaceutical Retail Chain Co., Ltd. signed the “Framework Agreement on the Restructuringand Acquisition of Langfang Dekunyuan Pharmaceutical Retail Chain Co., Ltd., Sun Shuzhi
Clinic in Southwest Street Village and The Third Clinic in Northwest Street Village, ShuyangTown, Xianghe County”. Pursuant to the agreement, the third party which designated and actuallycontrolled by Sun Shuzhi contributed capital to set up Langfang Xinxing Dekunyuan prior toSeptember 20, 2023, and completed the injection of the entire business and related assets ofLangfang Dekunyuan Pharmaceutical Retail Chain Co., Ltd. to Langfang Xinxing Dekunyuanprior to October 31, 2023. After the injection of business and assets, the Company acquired 80.00%of equity of Langfang Dekunyuan Pharmaceutical Retail Chain Co., Ltd. held by Sun Shuzhi andthe designated third party at the consideration of 27.19 million yuan. The equity transfer andregistration in administration for market regulation had been completed in December 2023.In October 2023, the Company’s subsidiary Xinxing Pharmacy, Zhang Zhen and Chengde XinyuPharmacy Chain Co., Ltd. signed the “Framework Agreement on the Restructuring andAcquisition of Chengde Xinyu Pharmacy Chain Co., Ltd.”. Pursuant to the agreement, the thirdparty which designated and actually controlled by Zhang Zhen contributed capital to set upChengde Xinxing Xinyu prior to December 31, 2023, and completed the injection of the entirebusiness and related assets of Chengde Xinyu Pharmacy Chain Co., Ltd. to Chengde XinxingXinyu prior to February 28, 2024. After the injection of business and assets, the Companyacquired 100.00% of equity of Chengde Xinyu Pharmacy Chain Co., Ltd. held by Zhang Zhen andthe designated third party at the consideration of 23.10 million yuan. The equity transfer andregistration in administration for market regulation had been completed in December 2023.In May 2023, the Company’s subsidiary Suzhou Yuehai, Zhang Xihong and Wang Yujuan signedthe “Framework Agreement on the Equity Transfer of Suzhou Xinqunzhong Clinic (GeneralPartnership)”. Pursuant to the agreement, Suzhou Yuehai acquired 90.00% of equity of SuzhouXinqunzhong Clinic at the consideration of 4.50 million yuan. The equity transfer and registrationin administration for market regulation had been completed in December 2023.In April 2023, the Company’s subsidiary Jiangxi Ganxi Yifeng Pharmacy Chain Co., Ltd., ChenZhilin, Deng Shuihua and Yichun Laobaixing Medicine Chain Co., Ltd. signed the “FrameworkAgreement on the Restructuring and Acquisition of Yichun Laobaixing Medicine Chain Co., Ltd.”.Pursuant to the agreement, the third party which designated and actually controlled by Chen Zhilinand Deng Shuihua contributed capital to set up Yichun Yifeng prior to May 31, 2023, andcompleted the injection of the entire business and related assets of Yichun Laobaixing MedicineChain Co., Ltd. to Yichun Yifeng prior to July 31, 2023. After the injection of business and assets,the Company acquired 60.00% of equity of Yichun Laobaixing Medicine Chain Co., Ltd. held byChen Zhilin, Deng Shuihua and the designated third party at the consideration of 24.60 millionyuan. The equity transfer and registration in administration for market regulation had beencompleted in August 2023.In February 2023, the Company’s subsidiary Hubei Yifeng Pharmacy Chain Co., Ltd., LiQionghua, Guangshui Yingshan Kangji Pharmacy General Store, Guangshui Yingshan Kangsheng
Pharmacy, Guangshui Kangji Pharmacy Aviation Road Store, Guangshui Yingshan KangjiPharmacy, Guangshui Yingshan Kangliji Pharmacy, Guangshui Kangsanji Pharmacy, GuangshuiHaoran Pharmacy, Guangshui Yingshan Kangji Pharmacy Sixian Road Store, Guangshui YingshanKangji Pharmacy Zhenxiao Store, Guangshui Yingshan Kangji Pharmacy, and GuangshuiYingshan Kanglishiji Pharmacy (hereinafter referred to as 11 pharmacies including GuangshuiYingshan Kangji Pharmacy General Store) signed the “Framework Agreement on theRestructuring and Acquisition of 11 Pharmacies Including Guangshui Yingshan Kangji PharmacyGeneral Store”. Pursuant to the agreement, the third party which designated and actuallycontrolled by Li Qionghua contributed capital to set up Guangshui Yifeng Kangji prior to March15, 2023, and completed the injection of the entire business and related assets of 11 pharmaciesincluding Guangshui Yingshan Kangji Pharmacy General Store to Guangshui Yifeng Kangji priorto April 15, 2023. After the injection of business and assets, the Company acquired 70.00% ofequity of 11 pharmacies including Guangshui Yingshan Kangji Pharmacy General Store held byLi Qionghua and the designated third party at the consideration of 7.84 million yuan and 70.00%of approved net assets. The equity transfer and registration in administration for market regulationhad been completed in February 2023.In February 2023, the Company’s subsidiary Jiangxi Yifeng, Wang Yang, Zhou Wei and YingtanJiujiu Medicine Chain Co., Ltd. signed the “Framework Agreement on the Restructuring andAcquisition of Yingtan Jiujiu Medicine Chain Co., Ltd.”. Pursuant to the agreement, the thirdparty which designated and actually controlled by Wang Yang and Zhou Wei contributed capitalto set up Yingtan Yifeng prior to September 20, 2023, and completed the injection of the entirebusiness and related assets of Yingtan Jiujiu Medicine Chain Co., Ltd. to Yingtan Yifeng prior toOctober 31, 2023. After the injection of business and assets, the Company acquired 65.00% ofequity of Yingtan Jiujiu Medicine Chain Co., Ltd. held by Wang Yang, Zhou Wei and thedesignated third party at the consideration of 18.20 million yuan and 65.00% of approved netassets. The equity transfer and registration in administration for market regulation had beencompleted in October 2023.
(3) Acquisition-date identifiable assets and liabilities of acquirees
? Applicable ? Not Applicable
| Items | Tangshan Xinxing Deshengtang | Qinhuangdao Xinxing Minle | Handan Xinxing Baixinkang | |||
| Acquisition-date fair value | Acquisition-date carrying amount | Acquisition-date fair value | Acquisition-date carrying amount | Acquisition-date fair value | Acquisition-date carrying amount | |
| Assets | 11,300,000.00 | 11,300,000.00 | 9,000,000.00 | 9,000,000.00 | 1,000,000.00 | 1,000,000.00 |
| Cash and bank balances | ||||||
| Accounts receivable | ||||||
| Other receivables | 11,300,000.00 | 11,300,000.00 | 9,000,000.00 | 9,000,000.00 | 1,000,000.00 | 1,000,000.00 |
| Advances paid | ||||||
| Inventories | ||||||
| Items | Tangshan Xinxing Deshengtang | Qinhuangdao Xinxing Minle | Handan Xinxing Baixinkang | |||
| Acquisition-date fair value | Acquisition-date carrying amount | Acquisition-date fair value | Acquisition-date carrying amount | Acquisition-date fair value | Acquisition-date carrying amount | |
| Fixed assets | ||||||
| Right-of-use assets | ||||||
| Intangible assets | ||||||
| Long-term prepayments | ||||||
| Deferred tax assets | ||||||
| Other assets | ||||||
| Liabilities | ||||||
| Accounts payable | ||||||
| Advances received | ||||||
| Employee benefits payable | ||||||
| Taxes and rates payable | ||||||
| Other payables | ||||||
| Lease liabilities | ||||||
| Deferred tax liabilities | ||||||
| Other liabilities | ||||||
| Net assets | 11,300,000.00 | 11,300,000.00 | 9,000,000.00 | 9,000,000.00 | 1,000,000.00 | 1,000,000.00 |
| Less: Non-controlling interest | 2,700,000.00 | 2,700,000.00 | 200,000.00 | 200,000.00 | ||
| Net assets acquired | 11,300,000.00 | 11,300,000.00 | 6,300,000.00 | 6,300,000.00 | 800,000.00 | 800,000.00 |
(Continued)
| Items | Shijiazhuang Yingqi Medical Service | Handan Xinxing Huakang | Langfang Xinxing Dekunyuan | |||
| Acquisition-date fair value | Acquisition-date carrying amount | Acquisition-date fair value | Acquisition-date carrying amount | Acquisition-date fair value | Acquisition-date carrying amount | |
| Assets | 478,649.50 | 478,649.50 | 7,500,000.00 | 7,500,000.00 | 3,000,000.00 | 3,000,000.00 |
| Cash and bank balances | 300,000.00 | 300,000.00 | ||||
| Accounts receivable | 23,810.32 | 23,810.32 | ||||
| Other receivables | 24,167.81 | 24,167.81 | 7,500,000.00 | 7,500,000.00 | 3,000,000.00 | 3,000,000.00 |
| Advances paid | 100,511.55 | 100,511.55 | ||||
| Inventories | 30,159.82 | 30,159.82 | ||||
| Fixed assets | ||||||
| Right-of-use assets | ||||||
| Intangible assets | ||||||
| Long-term prepayments | ||||||
| Deferred tax assets | ||||||
| Other assets | ||||||
| Liabilities | 478,459.55 | 478,459.55 | ||||
| Items | Shijiazhuang Yingqi Medical Service | Handan Xinxing Huakang | Langfang Xinxing Dekunyuan | |||
| Acquisition-date fair value | Acquisition-date carrying amount | Acquisition-date fair value | Acquisition-date carrying amount | Acquisition-date fair value | Acquisition-date carrying amount | |
| Accounts payable | ||||||
| Advances received | ||||||
| Employee benefits payable | ||||||
| Taxes and rates payable | ||||||
| Other payables | 478,459.55 | 478,459.55 | ||||
| Lease liabilities | ||||||
| Deferred tax liabilities | ||||||
| Other liabilities | ||||||
| Net assets | 189.95 | 189.95 | 7,500,000.00 | 7,500,000.00 | 3,000,000.00 | 3,000,000.00 |
| Less: Non-controlling interest | 56.99 | 56.99 | 2,250,000.00 | 2,250,000.00 | 600,000.00 | 600,000.00 |
| Net assets acquired | 132.97 | 132.97 | 5,250,000.00 | 5,250,000.00 | 2,400,000.00 | 2,400,000.00 |
(Continued)
| Items | Chengde Xinxing Xinyu | Suzhou Xinqunzhong Clinic | Yichun Yifeng | |||
| Acquisition-date fair value | Acquisition-date carrying amount | Acquisition-date fair value | Acquisition-date carrying amount | Acquisition-date fair value | Acquisition-date carrying amount | |
| Assets | 3,000,000.00 | 3,000,000.00 | 176,726.65 | 176,726.65 | 3,500,000.00 | 3,500,000.00 |
| Cash and bank balances | 93.51 | 93.51 | ||||
| Accounts receivable | 50,452.42 | 50,452.42 | ||||
| Other receivables | 3,000,000.00 | 3,000,000.00 | 3,500,000.00 | 3,500,000.00 | ||
| Advances paid | ||||||
| Inventories | 126,180.72 | 126,180.72 | ||||
| Fixed assets | ||||||
| Right-of-use assets | ||||||
| Intangible assets | ||||||
| Long-term prepayments | ||||||
| Deferred tax assets | ||||||
| Other assets | ||||||
| Liabilities | 176,356.49 | 176,356.49 | ||||
| Accounts payable | ||||||
| Advances received | ||||||
| Employee benefits payable | ||||||
| Taxes and rates payable | ||||||
| Other payables | 176,356.49 | 176,356.49 | ||||
| Lease liabilities | ||||||
| Deferred tax liabilities | ||||||
| Items | Chengde Xinxing Xinyu | Suzhou Xinqunzhong Clinic | Yichun Yifeng | |||
| Acquisition-date fair value | Acquisition-date carrying amount | Acquisition-date fair value | Acquisition-date carrying amount | Acquisition-date fair value | Acquisition-date carrying amount | |
| Other liabilities | ||||||
| Net assets | 3,000,000.00 | 3,000,000.00 | 370.16 | 370.16 | 3,500,000.00 | 3,500,000.00 |
| Less: Non-controlling interest | 900,000.00 | 900,000.00 | 37.02 | 37.02 | 1,400,000.00 | 1,400,000.00 |
| Net assets acquired | 2,100,000.00 | 2,100,000.00 | 333.14 | 333.14 | 2,100,000.00 | 2,100,000.00 |
(Continued)
| Items | Guangshui Yifeng Kangji | Yingtan Yifeng | ||
| Acquisition-date fair value | Acquisition-date carrying amount | Acquisition-date fair value | Acquisition-date carrying amount | |
| Assets | 1,000,000.00 | 1,000,000.00 | 2,000,000.00 | 2,000,000.00 |
| Cash and bank balances | ||||
| Accounts receivable | ||||
| Other receivables | 1,000,000.00 | 1,000,000.00 | 2,000,000.00 | 2,000,000.00 |
| Advances paid | ||||
| Inventories | ||||
| Fixed assets | ||||
| Right-of-use assets | ||||
| Intangible assets | ||||
| Long-term prepayments | ||||
| Deferred tax assets | ||||
| Other assets | ||||
| Liabilities | ||||
| Accounts payable | ||||
| Advances received | ||||
| Employee benefits payable | ||||
| Taxes and rates payable | ||||
| Other payables | ||||
| Lease liabilities | ||||
| Deferred tax liabilities | ||||
| Other liabilities | ||||
| Net assets | 1,000,000.00 | 1,000,000.00 | 2,000,000.00 | 2,000,000.00 |
| Less: Non-controlling interest | 300,000.00 | 300,000.00 | 700,000.00 | 700,000.00 |
| Net assets acquired | 700,000.00 | 700,000.00 | 1,300,000.00 | 1,300,000.00 |
Fair value determination method on identifiable assets and liabilitiesThe fair value of identifiable assets and liabilities is determined based on “Market ValueValuation Report on the Relevant Asset Groups of Tangshan Deshengtang Medicine Chain Co.,
Ltd. Involved in the Proposed Asset Acquisition of Tangshan Xinxing Deshuntang PharmaceuticalChain Co., Ltd., a Subsidiary of Yifeng Pharmacy Chain Co., Ltd.” (Dong Zhou Zi Bao Zi [2023]No. 1567) and “Retrospective Valuation Report on the Market Value of the Relevant AssetGroups of Hebei Baixinkang Medicine Chain Co., Ltd. Involved in the Asset Acquisition ofShijiazhuang Xinxing Pharmacy Chain Co., Ltd., a Subsidiary of Yifeng Pharmacy Chain Co.,Ltd.” (Dong Zhou Zi Bao Zi [2023] No. 2102) issued by Shanghai Dongzhou Asset Appraisal Co.,Ltd.; “Value Consulting Report on the Operating Asset Groups of 89 Retail Pharmacies and 2Clinics Owned by Qinhuangdao Minle Medicine Chain Co., Ltd. Proposed to be Acquired byShijiazhuang Xinxing Pharmacy Chain Co., Ltd.” (Jing Kun Ping Zi Zi [2023] No. 0103), “ValueConsulting Report on the Operating Asset Groups of 50 Retail Pharmacies Owned by LinzhangHuakang Pharmacy Chain Co., Ltd. Proposed to be Acquired by Shijiazhuang Xinxing PharmacyChain Co., Ltd.” (Jing Kun Ping Zi Zi [2023] No. 0156); “Value Consulting Report on theOperating Asset Groups of 30 Retail Pharmacies of Yichun Laobaixing Medicine Chain Co., Ltd.Owned by Chen Zhilin and Deng Shuihua Proposed to be Acquired by Jiangxi Ganxi YifengPharmacy Chain Co., Ltd.” (Jing Kun Ping Zi Zi [2023] No. 0154), “Value Consulting Report onthe Operating Asset Groups of 11 Retail Pharmacies Including Guangshui Yingshan KangjiPharmacy General Store Owned by Li Qionghua and Wang Haoran Proposed to be Acquired byHubei Yifeng Pharmacy Chain Co., Ltd.” (Jing Kun Ping Zi Zi [2023] No. 0083) and “ValueConsulting Report on the Operating Asset Groups of 29 Retail Pharmacies Owned by YingtanJiujiu Medicine Chain Co., Ltd. Proposed to be Acquired by Jiangxi Yifeng Pharmacy Chain Co.,Ltd.” (Jing Kun Ping Zi Zi [2023] No. 0163) issued by Beijing Kunyuan Zhicheng AssetAppraisal Co., Ltd.Contingent liabilities of acquirees assumed in business combinationNoneOther remarksNone
(4) Gains/Losses on fair value remeasurement of equity held before the acquisition dateWhether there is a transaction that achieves corporate merger through multiple transactions stepby step and obtains control rights within the reporting period.? Applicable ? Not Applicable
(5) Combination costs or fair value of acquiree’s identifiable assets/liabilities failed to bereasonably determined at the acquisition date or at the end of current period? Applicable ? Not Applicable
(6) Other remarks
? Applicable ? Not Applicable
2. Business combination under common control
? Applicable ? Not Applicable
3. Reverse acquisition
? Applicable ? Not Applicable
4. Disposal of subsidiaries
One-time disposal leading to loss of control over a subsidiary? Applicable ? Not ApplicableOther remarks? Applicable ? Not ApplicableDisposal of subsidiaries in stages leading to loss of control in the current period? Applicable ? Not ApplicableOther remarks? Applicable ? Not Applicable
5. Changes in the consolidation scope due to other reasons
Remarks on changes in the consolidation scope due to other reasons? Applicable ? Not Applicable
1. Entities brought into the consolidation scope
| Entities | Equity acquisition method | Equity acquisition date | Capital contribution | Holding proportion (%) |
| Hunan Yifeng Hengtai Medicine Co., Ltd. | Establishment | February 2023 | 100.00% [Note 1] | |
| Shijiazhuang Yingqi Internet Hospital Co., Ltd. | Establishment | September 2023 | 70.00% [Note 2] | |
| Wuxi Jiuzhou Traditional Chinese Medicine Clinic Co., Ltd. | Establishment | August 2023 | 100.00% [Note 3] | |
| Changzhou Yifeng Chain Pharmacy Co., Ltd. | Establishment | July 2023 | 100.00% [Note 4] | |
| Suqian Yifeng Chain Pharmacy Co., Ltd. | Establishment | November 2023 | 100.00% [Note 5] | |
| Shanghai Yifeng Longshuntang Traditional Chinese Medicine Clinic Co., Ltd. | Establishment | January 2023 | 100.00% [Note 6] | |
| Gao’an Yifeng Pharmacy Chain Co., Ltd. | Establishment | July 2023 | 100.00% [Note 7] | |
| Yichun Yifeng Pharmacy Chain Medical Co., Ltd. | Establishment | October 2023 | 60.00% [Note 8] | |
| Qinhuangdao Yifeng Xinxing Pharmacy Chain Co., Ltd. | Establishment | June 2023 | 1,400,000.00 | 70.00% [Note 9] |
| Baoding Xinxing Pharmacy Chain Operating Co., Ltd. | Establishment | June 2023 | 100.00% [Note 10] | |
| Guangdong Yifeng Xiangqin Pharmacy Medicine Chain Co., Ltd. | Establishment | May 2023 | 100.00% | |
| Guangzhou Yifeng Clinic Co., Ltd. | Establishment | September 2023 | 100.00% [Note 11] |
| Entities | Equity acquisition method | Equity acquisition date | Capital contribution | Holding proportion (%) |
| Hubei Yifeng Pharmacy Chain Medical Co., Ltd. | Establishment | October 2023 | 100.00% |
Note 1: The Company holds 100% of equity of Hunan Yifeng Medicine, and Hunan YifengMedicine holds 100% of the equity of Hunan Yifeng Hengtai Medicine Co., Ltd.Note 2: The Company holds 91% of equity of Xinxing Pharmacy, Xinxing Pharmacy holds 70%of equity of Shijiazhuang Yingqi Medical Service, and Shijiazhuang Yingqi Medical Service holds70% of equity of Shijiazhuang Yingqi Internet Hospital Co., Ltd.Note 3: The Company holds 100% of equity of Jiangsu Yifeng, Jiangsu Yifeng holds 51% ofequity of Jiuzhou Medicine, and Jiuzhou Medicine holds 100% of equity of Wuxi JiuzhouTraditional Chinese Medicine Clinic Co., Ltd.Note 4: The Company holds 100% of equity of Jiangsu Yifeng, and Jiangsu Yifeng holds 100% ofequity of Changzhou Yifeng Chain Pharmacy Co., Ltd.Note 5: The Company holds 100% of equity of Jiangsu Yifeng, and Jiangsu Yifeng holds 100% ofequity of Suqian Yifeng Chain Pharmacy Co., Ltd.Note 6: The Company holds 93% of equity of Shanghai Yifeng, Shanghai Yifeng holds 51% ofequity of Longshuntang, and Longshuntang holds 100% of equity of Shanghai YifengLongshuntang Traditional Chinese Medicine Clinic Co., Ltd.Note 7: The Company holds 100% of equity of Jiangxi Yifeng, Jiangxi Yifeng holds 60% of equityof Jiangxi Tianshun, Jiangxi Tianshun holds 100% of equity of Jiangxi Ganxi Yifeng PharmacyChain Co., Ltd., and Jiangxi Ganxi Yifeng Pharmacy Chain Co., Ltd. holds 100% of equity ofGao’an Yifeng Pharmacy Chain Co., Ltd.Note 8: The Company holds 100% of equity of Jiangxi Yifeng, Jiangxi Yifeng holds 60% of equityof Jiangxi Ganxi Yifeng Pharmacy Medicine Chain Co., Ltd., and Jiangxi Ganxi Yifeng PharmacyMedicine Chain Co., Ltd. holds 60% of equity of Yichun Yifeng Pharmacy Chain Medical Co.,Ltd.Note 9: The Company holds 91% of equity of Hebei Xinxing Pharmacy Chain Co., Ltd., HebeiXinxing Pharmacy Chain Co., Ltd. holds 70% of equity of Qinhuangdao Yifeng XinxingPharmacy Chain Co., Ltd.Note 10: The Company holds 91% of equity of Hebei Xinxing Pharmacy Chain Co., Ltd., HebeiXinxing Pharmacy Chain Co., Ltd. holds 100% of equity of Baoding Xinxing Pharmacy ChainOperating Co., Ltd.Note 11: The Company holds 100% of equity of Guangdong Yifeng Xiangqin Pharmacy MedicineChain Co., Ltd., Guangdong Yifeng Xiangqin Pharmacy Medicine Chain Co., Ltd. holds 100% of
equity of Guangzhou Yifeng Clinic Co., Ltd.
2. Entities excluded from the consolidation scope
| Entities | Equity disposal method | Equity disposal date | Disposal-date net assets | Net profit from the period beginning to the disposal date |
| Xincheng Clinic of Rudong Yifeng Bencao Pharmacy Chain Co., Ltd. | Cancellation | June 2023 | -20,413.61 | |
| Suzhou Zhongqiao Medicine Co., Ltd. | Cancellation | August 2023 | -901.98 | |
| Suzhou Wujiang Beishe Dakang Pharmacy Co., Ltd. | Cancellation | August 2023 | -945.41 | |
| Shanghai Yifeng Weimin Pharmacy Co., Ltd. | Cancellation | May 2023 | -43,574.52 |
6. Other remarks
? Applicable ? Not Applicable
V. Interest in other entities
1. Interest in subsidiaries
(1) Composition of the consolidation scope
? Applicable ? Not Applicable
| Subsidiaries | Main operating place | Registration capital((CN?10,000)) | Place of registration | Business nature | Holding proportion (%) | Acquisition method | |
| Direct | Indirect | ||||||
| Hunan Yifeng Medicine | Hunan | 15,000.00 | Changsha | Business | 100.00 | Business combination under common control | |
| Jiangsu Yifeng | Jiangsu | 15,000.00 | Nanjing | Business | 100.00 | Business combination under common control | |
Remarks on inconsistency between holding proportion and voting right proportion in subsidiariesNoneBasis for the control of an investee while holding its half or less than half voting rights, and thenon-control of an investee while holding its more than half voting rightsNoneBasis for control of significant structured entities brought into the consolidation scopeNoneBasis for determining an entity being acting as an agent or a principalNoneOther remarksThe Company has brought 123 subsidiaries including Xinxing Pharmacy, Jiangsu YifengPharmacy Chain Co., Ltd. (the “Jiangsu Yifeng”), Shanghai Yifeng Pharmacy Chain Co., Ltd. (the
“Shanghai Yifeng”), Jiangxi Yifeng, Hunan Yifeng Medicine Co., Ltd. (the “Hunan YifengMedicine”), and Jiuzhitang Medicine into the consolidation scope.
(2) Significant not wholly-owned subsidiaries
? Applicable ? Not Applicable
(3) Main financial information of significant not wholly-owned subsidiaries? Applicable ? Not Applicable
(4) Significant restriction on use of the group assets and liquidation of the group liabilities? Applicable ? Not Applicable
(5) Financial and other support provided for structured entities brought into theconsolidation scope? Applicable ? Not ApplicableOther remarks? Applicable ? Not Applicable
2. Transactions resulting in changes in subsidiaries’ equity but without losing control? Applicable ? Not Applicable
(1) Changes in subsidiaries’ equity
? Applicable ? Not Applicable
| Subsidiaries | Date of change | Holding proportion before change | Holding proportion after change |
| Hebei Xinxing Pharmacy Chain Co., Ltd. | September 2023 | 99.19% | 91.00% |
| Pingjiang Yifeng | May 2023 | 70.00% | 80.00% |
(2) Effect of transactions on non-controlling interest and equity attributable to parentcompany? Applicable ? Not Applicable
| Items | Hebei Xinxing Pharmacy Chain Co., Ltd. | Pingjiang Yifeng |
| Acquisition costs/Disposal considerations | 900,000.00 | 1,400,000.00 |
| Cash | 900,000.00 | 1,400,000.00 |
| Total acquisition costs/ disposal considerations | 900,000.00 | 1,400,000.00 |
| Less: Share in subsidiaries’ net assets based on acquired/ disposed net assets proportion | -5,535,727.26 | 464,459.67 |
| Balance | 6,435,727.26 | 935,540.33 |
| Including: Capital reserve adjusted | 6,435,727.26 | 935,540.33 |
Other remarks
? Applicable ? Not Applicable
3. Interest in joint ventures or associates
? Applicable ? Not Applicable
(1). Significant joint ventures or associates
? Applicable ? Not Applicable
(2). Main financial information of significant joint ventures
? Applicable ? Not Applicable
(3). Main financial information of significant associates
? Applicable ? Not Applicable
(4). Aggregated financial information of insignificant joint ventures and associates? Applicable ? Not Applicable
| Items | Closing balance/Current period cumulative | Opening balance/Preceding period comparative |
| Joint ventures | ||
| Total carrying amount of investments | 5,565,690.31 | 5,249,115.35 |
| Proportionate shares in the following items | ||
| Net profit | 316,574.96 | -11,413.00 |
| Other comprehensive income | ||
| Total comprehensive income | 316,574.96 | -11,413.00 |
Other remarksNone
(5). Significant restrictions on remittance of fund from joint ventures or associates to the Company? Applicable ? Not Applicable
(6). Excess losses incurred by joint ventures or associates
? Applicable ? Not Applicable
(7). Unrecognized commitments related to investments in joint ventures
? Applicable ? Not Applicable
(8). Contingent liabilities related to investments in joint ventures or associates? Applicable ? Not Applicable
4. Significant joint operations
? Applicable ? Not Applicable
5. Interest in unconsolidated structured entities
Remarks on unconsolidated structured entities
? Applicable ? Not Applicable
6. Others
? Applicable ? Not ApplicableXI. Government grants
1. Government grants recognized based on receivables
? Applicable ? Not ApplicableReasons for not receiving government grants receivable at the expected time point? Applicable ? Not Applicable
2. Liabilities related to government grants
? Applicable ? Not Applicable
| Items | Opening balance | Increase | Amount included into other income | Amount included into non-operating revenue |
| Deferred income | 49,893,077.47 | 401,359.91 | ||
| Deferred income | 4,773,202.76 | 191,566.68 | ||
| Subtotal | 54,666,280.23 | 401,359.91 | 191,566.68 |
(Continued)
| Items | Amount offsetting costs | Amount offsetting assets | Other changes | Closing balance | Related to assets/Related to income |
| Deferred income | 49,491,717.56 | Related to assets | |||
| Deferred income | 4,581,636.08 | Related to assets | |||
| Subtotal | 54,073,353.64 |
3. Government grants included into profit or loss
? Applicable ? Not Applicable
| Items | Current period cumulative | Preceding period comparative |
| Related to income | 43,933,681.43 | 32,290,672.58 |
| Related to assets | 401,359.91 | 417,913.24 |
| Other | 595,167.68 | 111,747.23 |
| Total | 44,930,209.02 | 32,820,333.05 |
Other remarksNone
XII. Risks related to financial instruments
1. Financial instruments risks
? Applicable ? Not ApplicableIn risk management, the Company aims to seek the appropriate balance between the risks and
benefits from its use of financial instruments and to mitigate the adverse effects that the risks offinancial instruments have on the Company’s financial performance, so as to maximize the profitsof shareholders and other equity investors. Based on such risk management objectives, theCompany’s risk management policies are established to identify and analyze the risks faced by theCompany, to set appropriate risk limits and controls, and to monitor risks and adherence to limitson a timely and reliable basis.The Company has exposure to the following risks from its use of financial instruments, whichmainly include: credit risk, liquidity risk, and market risk. The Management has deliberated andapproved policies concerning such risks, and details are:
(I) Credit riskCredit risk is the risk that one party to a financial instrument will cause a financial loss for theother party by failing to discharge an obligation.
1. Credit risk management practice
(1) Evaluation method of credit risk
At each balance sheet date, the Company assesses whether the credit risk on a financial instrumenthas increased significantly since initial recognition. When assessing whether the credit risk hasincreased significantly since initial recognition, the Company takes into account reasonable andsupportable information, which is available without undue cost or effort, including qualitative andquantitative analysis based on historical data, external credit risk rating, and forward-lookinginformation. The Company determines the changes in default risk of financial instruments duringthe estimated lifetime through comparison of the default risk at the balance sheet date and theinitial recognition date, on an individual basis or a collective basis.The Company considers the credit risk on a financial instrument has increased significantly whenone or more of the following qualitative and quantitative standards are met:
1) Quantitative standard mainly relates to the scenario in which, at the balance sheet date, theprobability of default in the remaining lifetime has risen by more than a certain percentagecompared with the initial recognition;
2) Qualitative standard mainly relates to significant adverse changes in the debtor’s operation orfinancial position, present or expected changes in technology, market, economy or legalenvironment that will have significant adverse impact on the debtor’s repayment ability;
(2) Definition of default and credit-impaired assets
A financial instrument is defined as defaulted when one or more following events have occurred,of which the standard is consistent with that for credit-impairment:
1) significant financial difficulty of the debtor;
2) a breach of binding clause of contract;
3) it is very likely that the debtor will enter bankruptcy or other financial reorganization;
4) the creditor of the debtor, for economic or contractual reasons relating to the debtor’s financialdifficulty, having granted to the debtor a concession(s) that the creditor would not otherwiseconsider.
2. Measurement of expected credit losses
The key factors in the measurement of expected credit loss include the probability of default, lossgiven default, and exposure to default risk. The Company develops a model of the probability ofdefault, loss given default, and exposure to default risk on the basis of quantitative analysis ofhistorical data (e.g. counterparty rating, guarantee measures and collateral type, payment method,etc.) and forward-looking information.
3. Please refer to section V (I) 3 and 6 of notes to the financial statements for details on thereconciliation table of opening balance and closing balance of provision for losses of financialinstrument.
4. Exposure to credit risk and concentration of credit risk
The Company’s credit risk is primarily attributable to cash and bank balances and receivables. Inorder to control such risks, the Company has taken the following measures:
(1) Cash and bank balances
The Company deposits its bank balances and other cash and bank balances in financial institutionswith relatively high credit levels, hence, its credit risk is relatively low.
(2) Receivables
The Company performs credit assessment on customers using credit settlement on a regular basis.The Company selects credible and well-reputed customers based on credit assessment result, andconducts ongoing monitoring on balance of receivables, to avoid significant risks in bad debts.As the Company’s credit risks fall into several business partners and customers, as of December 312023, 26.44% (December 31, 2022: 24.68%) of the total accounts receivable was due from the fivelargest customers of the Company. The Company has no significant central credit risk.The maximum amount of exposure to credit risk of the Company is the carrying amount of eachfinancial asset at the balance sheet.(II) Liquidity riskLiquidity risk is the risk that the Company may encounter deficiency of funds in meetingobligations associated with cash or other financial assets settlement, which is possibly attributableto failure in selling financial assets at fair value on a timely basis, or failure in collecting liabilitiesfrom counterparties of contracts, or early redemption of debts, or failure in achieving estimatedcash flows.
In order to control such risk, the Company comprehensively utilizes financing tools such as notessettlement, bank borrowings, etc. and adopts long-term and short-term financing methods tooptimize financing structures, and finally maintains a balance between financing sustainability andflexibility. The Company has obtained credit limit from several commercial banks to meetworking capital requirements and expenditures.Financial liabilities classified based on remaining time period till maturity
| Items | Closing balance | ||||
| Carrying amount | Contract amount not yet discounted | Within 1 year | 1-3 years | Over 3 years | |
| Bank borrowings (including due within one year) | 237,101,501.98 | 258,452,597.56 | 112,971,855.83 | 80,864,754.23 | 64,615,987.50 |
| Notes payable | 6,215,388,292.66 | 6,215,388,292.66 | 6,215,388,292.66 | ||
| Accounts payable | 1,955,564,568.05 | 1,955,564,568.05 | 1,955,564,568.05 | ||
| Other payable | 810,446,678.28 | 810,446,678.28 | 810,446,678.28 | ||
| Lease liabilities (including due within one year) | 3,560,492,755.24 | 3,785,968,727.53 | 1,490,098,669.17 | 2,248,097,941.31 | 47,772,117.05 |
| Subtotal | 12,778,993,796.21 | 13,025,820,864.08 | 10,584,470,063.99 | 2,328,962,695.54 | 112,388,104.55 |
(Continued)
| Items | December 31, 2022 | ||||
| Carrying amount | Contract amount not yet discounted | Within 1 year | 1-3 years | Over 3 years | |
| Bank borrowings (including due within one year) | 321,591,316.34 | 356,980,381.47 | 106,731,200.12 | 104,309,543.98 | 145,939,637.37 |
| Notes payable | 5,082,931,546.02 | 5,082,931,546.02 | 5,082,931,546.02 | ||
| Accounts payable | 1,677,740,647.28 | 1,677,740,647.28 | 1,677,740,647.28 | ||
| Other payable | 760,185,299.36 | 760,185,299.36 | 760,185,299.36 | ||
| Lease liabilities (including due within one year) | 3,135,952,983.22 | 3,395,085,831.51 | 1,302,080,159.57 | 1,872,368,528.95 | 220,637,142.99 |
| Subtotal | 10,978,401,792.22 | 11,272,923,705.64 | 8,929,668,852.35 | 1,976,678,072.93 | 366,576,780.36 |
(III) Market riskMarket risk is the risk that the Company may encounter fluctuation in fair value or future cashflows of financial instruments due to changes in market price. Market risk mainly includes interestrisk and foreign currency risk.
1. Interest risk
Interest risk is the risk that an enterprise may encounter fluctuation in fair value or future cashflows of financial instruments due to changes in market interest. The Company’s fair valueinterest risks arise from fixed-rate financial instruments, while the cash flow interest risks arisefrom floating-rate financial instruments. The Company determines the proportion of fixed-ratefinancial instruments and floating-rate financial instruments based on the market environment, andmaintains a proper financial instruments portfolio through regular review and monitoring.
2. Foreign currency risk
Foreign currency risk is the risk arising from changes in fair value or future cash flows of financialinstrument resulted from changes in exchange rate. The Company is mainly operated in mainlandChina, whose main activities are denominated in RMB, hence, the Company bears insignificantmarket risk arising from foreign exchange changes.
2. Hedging businesses
(1) Risk management of hedging businesses
? Applicable ? Not ApplicableOther remarks? Applicable ? Not Applicable
(2) Conducting eligible hedging businesses and applying hedge accounting
? Applicable ? Not ApplicableOther remarks? Applicable ? Not Applicable
(3) Reasons and effects of not applying hedge accounting
? Applicable ? Not ApplicableOther remarks? Applicable ? Not Applicable
3. Financial assets transfer
(1) Basics condition of financial assets transfer
? Applicable ? Not Applicable
(2) Financial assets derecognized due to transfer
? Applicable ? Not Applicable
(3) Assets and liabilities arising from transferred but still involved financial assets? Applicable ? Not ApplicableOther remarks? Applicable ? Not Applicable
XIII. Fair value disclosure
1. Details of fair value of assets and liabilities at fair value at the balance sheet date? Applicable ? Not Applicable
| Items | Fair value as at the balance sheet date | |||
| Level 1 fair value measurement | Level 2 fair value measurement | Level 3 fair value measurement | Total | |
| Items | Fair value as at the balance sheet date | |||
| Level 1 fair value measurement | Level 2 fair value measurement | Level 3 fair value measurement | Total | |
| Recurring fair value measurement | ||||
| 1. Held-for-trading financial assets and other non-current financial assets | 1,631,730,887.94 | 1,631,730,887.94 | ||
| Financial assets classified as at fair value through profit or loss | 1,631,730,887.94 | 1,631,730,887.94 | ||
| Wealth management products | 1,630,720,887.94 | 1,630,720,887.94 | ||
| Equity instrument investments | 1,010,000.00 | 1,010,000.00 | ||
| 2. Receivables financing | 11,889,888.58 | 11,889,888.58 | ||
| 3. Other equity instrument investments | 432,225,200.00 | 432,225,200.00 | ||
| Total assets at recurring fair value measurement | 432,225,200.00 | 1,643,620,776.52 | 2,075,845,976.52 | |
2. Basis for determining level 1 fair value at recurring and non-recurring fair measurement? Applicable ? Not ApplicableLevel 1 fair value at recurring and non-recurring fair measurement is determined based on theclosing price of the active market such as exchanges at the balance sheet date.
3. Qualitative and quantitative information of valuation technique(s) and key input(s) forlevel 2 fair value at recurring and non-recurring fair value measurement? Applicable ? Not Applicable
4. Qualitative and quantitative information of valuation technique(s) and key input(s) forlevel 3 fair value at recurring and non-recurring fair measurement? Applicable ? Not ApplicableAs there is no significant change in the operating environment, operating situation and financialposition of investees, the Company takes investment cost as the reasonable estimate of the fairvalue of equity instrument investments. The fair value of other equity instrument investments ismeasured based on the public market quotation.The Company regards capital-guaranteed floating-income wealth management products asfinancial assets measured at fair value through profit or loss, and determines the fair value basedon principal plus the market value of expected earnings as of the balance sheet date using expectedcash flow model.Due to the fact that the term of bank acceptance is relative short and the acceptor of bankacceptance is commercial bank, which is of high credit level, there is very little possibility offailure in recoverability when it is due. Based on this fact, the Company takes par value of bankacceptances as the reasonable estimate of their fair value.
5. Items for level 3 recurring fair value measurement, a reconciliation from the openingbalances to the closing balances, and sensitive analysis on unobservable inputs
? Applicable ? Not Applicable
6. Items at recurring fair value measurement with inter-level transfer, and reasons andpolicies for determining inter-level transfer time? Applicable ? Not Applicable
7. Changes in valuation techniques in the current period and reasons for changes? Applicable ? Not Applicable
8. Fair value of financial assets and liabilities not at fair value
? Applicable ? Not Applicable
9. Other
? Applicable ? Not Applicable
XIV. Related party relationships and transactions
1. Parent company
? Applicable ? Not Applicable
| Parent company | Place of registration | Business nature | Registered capital(CN?10,000) | Holding proportion over the Company (%) | Voting right proportion over the Company (%) |
| Ningbo Meishan Bonded Port Houxin Venture Capital Investment Partnership Enterprise (Limited Partnership) | Ningbo | Investment | 66,330.7289 | 21.65 | 21.65 |
Remarks on the parent companyNoneThe Company’s ultimate controlling party is Gao Yi.Other remarksNone
2. Subsidiaries
Please refer to section X of notes to the financial statements for details on the Company’ssubsidiaries.? Applicable ? Not Applicable
3. Joint ventures and associates of the Company
? Applicable ? Not ApplicableDetails of other joint ventures or associates carrying out related party transactions with theCompany in the current period or in preceding period but with balance in the current period are asfollows:
? Applicable ? Not Applicable
Other remarks? Applicable ? Not Applicable
4. Other related parties of the Company
? Applicable ? Not Applicable
| Related parties | Relationships with the Company |
| Jiuzhitang Co., Ltd. | Holding 49% of equity of Jiuzhitang Medicine, which is a subsidiary of the Company |
| Jiuzhitang Pharmaceutical Trading Co., Ltd. | Subsidiary of Jiuzhitang Co., Ltd. |
| Hunan Siqi Biopharmaceutical Co., Ltd. | Subsidiary of Jiuzhitang Co., Ltd. |
| Chengdu Jiuzhitang Jinding Pharmaceutical Co., Ltd. | Subsidiary of Jiuzhitang Co., Ltd. |
| Hainan Jiuzhitang Pharmaceutical Co., Ltd. | Subsidiary of Jiuzhitang Co., Ltd. |
| Mudanjiang Youbo Pharmaceutical Co., Ltd. | Subsidiary of Jiuzhitang Co., Ltd. |
| Jiuzhitang (Hunan) Health Management Co., Ltd. | Subsidiary of Jiuzhitang Co., Ltd. |
| Taizhou Baixingren | Joint venture |
Other remarksNone
5. Related party transactions
(1) Purchase and sale of goods, rendering and receiving of services
Purchase of goods and receiving of services? Applicable ? Not Applicable
| Related parties | Content of transactions | Current period cumulative | Preceding period comparative |
| Jiuzhitang Co., Ltd. | Purchase of medicine | 78,898,456.73 | 36,266,882.38 |
| Jiuzhitang Co., Ltd. | Purchase of utilities, etc. | 668,776.99 | 716,508.06 |
| Jiuzhitang Pharmaceutical Trading Co., Ltd. | Purchase of medicine | 27,125,278.46 | 11,284,071.60 |
| Hunan Siqi Biopharmaceutical Co., Ltd. | Purchase of medicine | 1,406,627.30 | 2,052,604.92 |
| Chengdu Jiuzhitang Jinding Pharmaceutical Co., Ltd. | Purchase of medicine | 4,433,047.85 | 2,145,219.23 |
| Hainan Jiuzhitang Pharmaceutical Co., Ltd. | Purchase of medicine | 695,787.60 | 845,414.16 |
| Jiuzhitang (Hunan) Health Management Co., Ltd. | Purchase of medicine | 13,187.96 |
| Related parties | Content of transactions | Current period cumulative | Preceding period comparative |
| Mudanjiang Youbo Pharmaceutical Co., Ltd. | Purchase of medicine | 529,110.12 |
Note: The proposal of "Confirmation of the ordinary course of related party transactions in 2022and Forecast of the ordinary course of related party transactions in 2023" were approved by the24th meeting of the forth session of the Board of Directors dated April 26, 2023. It was estimatedthat the total procurement of goods from the related party, Jiuzhitang Co., Ltd. and its subsidiaries,in 2023 will not exceed 150 million yuan. The actual amount occurred in 2023 did not exceed theapproved transaction quota.Sale of goods and rendering of services? Applicable ? Not Applicable
| Related parties | Content of transactions | Current period cumulative | Preceding period comparative |
| Jiuzhitang Pharmaceutical Trading Co., Ltd. | Sale of medicine | 86,894.59 | 720,613.43 |
| Jiuzhitang (Hunan) Health Management Co., Ltd. | Sale of medicine | 19,093,516.03 | 10,870,296.16 |
Remarks on purchase and sale of goods, rendering and receiving of services? Applicable ? Not ApplicableThe above preceding period comparative of related party transactions of purchase and salebetween the Company, Jiuzhitang Co., Ltd., and its subsidiaries was the statistical data from Juneto December 2022.
(2) Related party trust/contracting and consignation/outsourcing
The Company as the trustee or contractor? Applicable ? Not ApplicableRemarks on related party trust/contracting? Applicable ? Not ApplicableThe Company as the trustor or contractee? Applicable ? Not ApplicableRemarks on related party consignation/outsourcing? Applicable ? Not Applicable
(3). Related party leases
The Company as the lessor? Applicable ? Not ApplicableThe Company as the lessee? Applicable ? Not Applicable
| Lessors | Types of assets leased | Expenses for short-term leases and leases of low-value assets with simplified approach and variable lease payments not included in the measurement of lease liabilities | Variable lease payments not included in the measurement of lease liabilities | ||
| Current period cumulative | Preceding period comparative | Current period cumulative | Preceding period comparative | ||
| Jiuzhitang Co., Ltd. | Buildings and structures | ||||
(Continued)
| Lessors | Types of assets leased | Lease expenses paid | Increased principal of lease liabilities | Interest expenses recognized | |||
| Current period cumulative | Preceding period comparative | Current period cumulative | Preceding period comparative | Current period cumulative | Preceding period comparative | ||
| Jiuzhitang Co., Ltd. | Buildings and structures | 5,076,256.65 | 726,000.00 | 14,743.52 | 7,831.36 | 3,252,735.16 | |
Remarks on related party leases? Applicable ? Not ApplicableNone
(4). Related party trust
The Company and its subsidiaries as guarantors? Applicable ? Not ApplicableThe Company as the trustee? Applicable ? Not Applicable
| Guarantors | Financing banks | Amount of borrowings [Note] | Commencement date | Maturity date | Whether the guarantee is mature |
| Gao Yi | China Merchants Bank Co., Ltd. Changsha Shaoshan Road Sub-branch | 122,858,186.80 | 8/10/2018 | 8/10/2025 | No |
| Guarantors | Financing banks | Amount of borrowings [Note] | Commencement date | Maturity date | Whether the guarantee is mature |
| Gao Yi | China Merchants Bank Co., Ltd. Changsha Shaoshan Road Sub-branch | 37,908,000.00 | 12/30/2021 | 12/30/2024 | No |
| Gao Yi | China Construction Bank Corporation Changde Dingcheng Sub-branch | 947,227,331.62 | 8/1/2022 | 8/1/2029 | No |
Remarks on related party trust? Applicable ? Not ApplicableThe borrowings disclosed refer to the balance of merger and acquisition loan borrowings and theamount of bank acceptance that have been issued but not yet matured before the new creditcontract takes effect.
(5). Call loans between related parties
? Applicable ? Not Applicable
(6). Assets transfer and debt restructuring of the related parties
? Applicable ? Not Applicable
(7). Key management’s emoluments
? Applicable ? Not Applicable
Unit: Ten Thousand Yuan
| Items | Current period cumulative | Preceding period comparative |
| Key management’s emoluments | 2,288.02 | 1,984.27 |
(8). Other related party transactions
? Applicable ? Not ApplicableNone
6. Balances due to or from related parties
(1). Balances due from related parties
? Applicable ? Not Applicable
| Items | Related parties | Closing balance | December 31, 2022 | ||
| Book balance | Provision for bad debts | Book balance | Provision for bad debts | ||
| Accounts receivable | Jiuzhitang (Hunan) Health Management Co., Ltd. | 711,768.78 | 35,588.44 | ||
| Accounts receivable | Jiuzhitang Pharmaceutical Trading Co., Ltd. | 144,343.95 | 7,217.20 | ||
| Subtotal | 711,768.78 | 35,588.44 | 144,343.95 | 7,217.20 | |
(2). Balances due to related parties
? Applicable ? Not Applicable
| Items | Related parties | Closing balance | December 31, 2022 |
| Accounts payable | Jiuzhitang Co., Ltd. | 3,780,845.69 | 6,132,854.56 |
| Accounts payable | Jiuzhitang Pharmaceutical Trading Co., Ltd. | 604,238.60 | 5,715,711.24 |
| Accounts payable | Hunan Siqi Biopharmaceutical Co., Ltd. | 571,892.00 | 1,136,507.89 |
| Accounts payable | Chengdu Jiuzhitang Jinding Pharmaceutical Co., Ltd. | 1,518,135.55 | 1,446,954.52 |
| Accounts payable | Hainan Jiuzhitang Pharmaceutical Co., Ltd. | 214,032.00 | 285,708.43 |
| Accounts payable | Jiuzhitang (Hunan) Health Management Co., Ltd. | 7,465.20 | |
| Accounts payable | Mudanjiang Youbo Pharmaceutical Co., Ltd. | 576,730.00 | |
| Subtotal | 6,696,609.04 | 15,294,466.64 | |
| Other payables | Jiuzhitang Co., Ltd. | 149,367.56 | 1,200.62 |
| Other payables | Taizhou Baixingren | 10,797,825.21 | 11,622,268.64 |
| Subtotal | 10,947,192.77 | 11,623,469.26 |
(3). Others
? Applicable ? Not Applicable
7. Related party commitments
? Applicable ? Not Applicable
8. Others
? Applicable ? Not ApplicableXV. Share-based payment
1. Equity instruments
? Applicable ? Not Applicable
| Objects | Quantity and amount of equity instruments | |||||||
| Granted in the current period | Vested in the current period | Unlocked in the current period | Expired in the current period | |||||
| Quantity | Amount | Quantity | Amount | Quantity | Amount | Quantity | Amount | |
| Management personnel | 390,015.00 | 7,390,791.00 | 2,062,480.00 | 36,844,732.00 | 197,120.00 | 3,521,408.00 | ||
| Total | 390,015.00 | 7,390,791.00 | 2,062,480.00 | 36,844,732.00 | 197,120.00 | 3,521,408.00 | ||
Share options and other equity instruments outstanding at the balance sheet date? Applicable ? Not Applicable
| Objects | Share options outstanding | Other equity instruments outstanding | ||
| Range of exercise prices | Remaining contractual life | Range of exercise prices | Remaining contractual life | |
| Management personnel | 17.58 | 8 months | ||
| Management personnel | 18.95 | Phase I: 7 months Phase II: 19 months |
Other remarks
(1) Details
On September 16, 2022, “Proposal on the First Grant of Restricted Shares to Incentive Objects ofthe 2022 Restricted Share Incentive Plan” was deliberated and approved by the 18
thmeeting of thefourth session of the Board of Directors and the 16
th
meeting of the fourth session of the Board ofSupervisors. It was confirmed that the conditions for the first grant had been met, and it wasdecided to grant 3,132,000 restricted shares to 245 incentive objects at a price of 25.01 yuan pershare, with the grant date on September 16, 2022. During the process of capital verification uponpayment, the actual number of incentive objects granted by the Company changed from 245 to241, and the actual number of restricted shares granted changed from 3,132,000 to 3,095,200shares.On August 29, 2023, “Proposal on Granting Reserved Equity to the Incentive Objects ofRestricted Shares Incentive Plan of 2022” was deliberated and approved by the 31
st
meeting of thefourth session of the Board of Directors and the 26
thmeeting of the fourth session of the Board ofSupervisors. It was confirmed that the conditions for granting reserved equity under the incentiveplan had been met, and it was decided to grant 402,165 restricted shares to 42 incentive objects ata price of 18.95 yuan per share, with the grant date on August 30, 2023.
(2) Arrangement of the restricted shares sale restriction period
The restricted shares sale restriction period for the restricted shares granted for the first time underthis incentive plan is 12 months and 24 months from the date of completion of the registration forthe first granted restricted shares. The unlocking period for the restricted shares granted for thefirst time by the Company and the timing for each unlocking period are as shown in the followingtable:
| Arrangements for unlocking period | Timing for unlocking period | Proportion of the number of restricted shares that can be unlocked to the total number of restricted shares |
| The first unlocking period | From the first trading day after 12 months from the date of completion of the first grant to the last trading day within 24 months from the date of completion of the first grant. | 50% |
| The second unlocking period | From the first trading day after 24 months from the date of completion of the first grant to the last trading day within 36 months from the date of completion of the first grant. | 50% |
The restricted shares sale restriction period for the reserved granted restricted shares under this
incentive plan is 12 months and 24 months from the date of completion of the registration for thereserved granted restricted shares. The unlocking period for the restricted shares reserved grantedby the Company and the timing for each unlocking period are as shown in the following table:
| Arrangements for unlocking period | Timing for unlocking period | Proportion of the number of restricted shares that can be unlocked to the total number of restricted shares |
| The first unlocking period | From the first trading day after 12 months from the date of completion of the reserved grant to the last trading day within 24 months from the date of completion of the reserved grant. | 50% |
| The second unlocking period | From the first trading day after 24 months from the date of completion of the reserved grant to the last trading day within 36 months from the date of completion of the reserved grant. | 50% |
(3) Unlocking conditions
1) Requirements for performance evaluation
The restricted shares first granted under the incentive plan have an unlocking evaluation period oftwo fiscal years from 2022 to 2023, with an evaluation conducted for each fiscal year. Therequirement for unlocking of restricted shares is the achievement of performance evaluationtargets.The performance evaluation targets for each fiscal year of the restricted shares first granted are asshown in the following table:
| Unlocking periods | Requirements for performance evaluation |
| The first unlocking period | Based on the net profit of 2021, the net profit of the Company in 2022 increases by no less than 20% compared to 2021. |
| The second unlocking period | Based on the net profit of 2021, the net profit of the Company in 2023 increases by no less than 45% compared to 2021. |
The restricted shares reserved granted under the incentive plan have an unlocking evaluationperiod of two fiscal years from 2023 to 2024, with an evaluation conducted for each fiscal year.The requirement for unlocking of restricted shares is the achievement of performance evaluationtargets.The performance evaluation targets for each fiscal year of the restricted shares reserved grantedare as shown in the following table:
| Unlocking periods | Requirements for performance evaluation |
| The first unlocking period | Based on the net profit of 2021, the net profit of the Company in 2023 increases by no less than 45% compared to 2021. |
| The second unlocking period | Based on the net profit of 2021, the net profit of the Company in 2024 increases by no less than 70% compared to 2021. |
The aforementioned “net profit” refers to the net profit attributable to the owners of the parentcompany. If the Company fails to meet the above performance evaluation targets, all restrictedshares of incentive objects that can be unlocked in the corresponding year of evaluation shall notbe unlocked, and shall be repurchased and cancelled by the Company. The repurchase price shallbe the grant price plus the interest on bank deposits for the corresponding period.
2) Requirements for individual performance evaluation
The Company conducts a comprehensive evaluation of the individual annual performancecategories for incentive objects, and the comprehensive evaluation results are shown in thefollowing table.
| Evaluation results | Standard | Standard coefficient |
| Satisfactory | Annual evaluation completion rate≥80% | 1.0 |
| Unsatisfactory | Annual evaluation completion rate<80% | 0 |
If the individual performance evaluation meets the unlocking conditions, the incentive object mayapply to unlock the restricted shares eligible for unlocking during that period in accordance withthe relevant provisions of the incentive plan based on the evaluation results. If the individualperformance evaluation fails to meet the unlocking conditions, the portion of restricted shareseligible for unlocking in the current period for that incentive object shall be cancelled, and shall berepurchased and cancelled by the Company at the grant price. If the conditions for obtaining andexercising rights and interests granted to incentive objects are not met, the relevant rights andinterests shall not be deferred to the next period.
2. Equity-settled share-based payment
? Applicable ? Not Applicable
| Determination method for grant-date fair value of equity instruments | Balance of the closing price on the grant date and the exercise price of the restricted shares |
| Determination method for the number of equity instruments expected to vest | Based on the equity instruments corresponding to the in-service incentive objects, the Company's performance, and individual evaluation results. |
| Reasons for significant difference between the estimates in the current period and preceding period | N/A |
| Capital reserve accumulated due to equity-settled share-based payment | 59,400,016.30 |
Other remarksNone
3. Cash-settled share-based payment
? Applicable ? Not Applicable
4. Total share-based payments recognized in the current period
? Applicable ? Not Applicable
| Objects | Equity-settled share-based payment | Cash-settled share-based payment |
| Management personnel | 41,169,112.30 | |
| Subtotal | 41,169,112.30 |
Other remarksNone
5. Modifications and cancellations of share-based payment
? Applicable ? Not Applicable
6. Others
? Applicable ? Not Applicable
XVI. Commitments and contingencies
1. Significant commitments
? Applicable ? Not ApplicableNone
2. Significant contingencies
(1). Significant contingencies
? Applicable ? Not Applicable
(2). Remarks on insignificant contingencies not been issued
? Applicable ? Not Applicable
3. Others
? Applicable ? Not Applicable
XVII. Events after the balance sheet date
1. Significant non-adjusting events
? Applicable ? Not Applicable
2. Profit distribution after the balance sheet date
? Applicable ? Not Applicable
| Profit or dividend planned to be distributed | 505,289,898.50 |
| Profit or dividend approved to be distributed |
Pursuant to the Proposal of Profit Distribution Plan of 2023 deliberated and approved by the 24
th
meeting of the fourth session of the Board of Directors, based on the total share capital at theequity registration date, the Company distributed cash dividend of 0.5 yuan (tax inclusive) per
share to all shareholders, and increased 0.2 share per share to all shareholders by convertingcapital reserve, without issuing bonus shares.If the company's total share capital changes due to repurchase and cancellation of equity incentiveshares between the date of approval of this proposal and the date of equity registration for theimplementation of equity distribution, the company will maintain the constant proportion ofdistribution (additional issuance) per share and adjust the total amount of distribution (additionalissuance) accordingly.This plan still should be deliberated and approved by the shareholders’ meeting.
3. Sales return
? Applicable ? Not Applicable
4. Other remarks
? Applicable ? Not Applicable
XVIII. Other significant events
1. Corrections of prior period errors
(1) Retroactive restatement method
? Applicable ? Not Applicable
(2) Prospective application method
? Applicable ? Not Applicable
2. Debt restructuring
? Applicable ? Not Applicable
3. Assets exchange
(1). Non-cash assets exchange
? Applicable ? Not Applicable
(2). Other assets exchange
? Applicable ? Not Applicable
4. Annuity plan
? Applicable ? Not Applicable
5. Discontinued operations
? Applicable ? Not Applicable
6. Segment information
(1). Identification basis for reportable segments
? Applicable ? Not ApplicableReportable segments are identified according to the structure of the Company’s internal
organization, management requirements and internal reporting system, and based on industrysegments. Assessments are respectively performed on the operation performance of retail businessand wholesale business. Assets and liabilities shared by different segments are allocated amongsegments proportionate to their respective sizes.
(2). Financial information of reportable segments
? Applicable ? Not Applicable
| Items | Retail business | Wholesale business | Inter-segment offsetting | Total |
| Operating revenue | 20,185,078,131.34 | 5,254,841,654.57 | -3,362,357,287.25 | 22,077,562,498.66 |
| Operating cost | 12,193,594,911.77 | 4,833,697,688.32 | -3,118,391,219.55 | 13,908,901,380.54 |
| Total assets | 26,289,889,392.29 | 11,951,215,541.58 | -14,104,565,739.23 | 24,136,539,194.64 |
| Total liabilities | 17,828,776,001.79 | 8,730,272,924.58 | -12,869,597,393.57 | 13,689,451,532.80 |
(3). If the company does not have a reporting segment, or cannot disclose the total assets andliabilities of each reporting segment, the reasons shall be stated? Applicable ? Not Applicable
(4). Other remarks
? Applicable ? Not Applicable
7. Other significant transactions and events that may be influential for investors indecision-making? Applicable ? Not Applicable
8. Others
? Applicable ? Not Applicable
IXX. Notes to items of parent company financial statements
1. Accounts receivable
(1) Age analysis
? Applicable ? Not Applicable
| Ages | Closing balance | Opening balance |
| Within 1 year | 492,921,964.50 | 347,746,087.10 |
| 1-2 years | 220,567.54 | 122,332.98 |
| 2-3 years | 8,613.29 | 3,250.00 |
| 3-4 years | 2,717.49 | |
| Total | 493,153,862.82 | 347,871,670.08 |
(2) Provision for bad debts
? Applicable ? Not Applicable
| Categories | Closing balance |
| Book balance | Provision for bad debts | Carrying amount | |||
| Amount | % to total | Amount | Provision proportion (%) | ||
| Receivables with provision made on a collective basis | 493,153,862.82 | 100.00 | 5,812,230.14 | 1.18 | 487,341,632.68 |
| Total | 493,153,862.82 | 100.00 | 5,812,230.14 | 1.18 | 487,341,632.68 |
(Continued)
| Categories | December 31, 2022 | ||||
| Book balance | Provision for bad debts | Carrying amount | |||
| Amount | % to total | Amount | Provision proportion (%) | ||
| Receivables with provision made on a collective basis | 347,871,670.08 | 100.00 | 3,232,236.49 | 0.93 | 344,639,433.59 |
| Total | 347,871,670.08 | 100.00 | 3,232,236.49 | 0.93 | 344,639,433.59 |
Accounts receivable with provision made on an individual basis? Applicable ? Not ApplicableAccounts receivable with provision for bad debts made on a collective basis? Applicable ? Not Applicable
| Items | Closing balance | ||
| Book balance | Provision for bad debts | Provision proportion (%) | |
| Portfolio grouped Medical insurance payments | 377,169,254.88 | ||
| Portfolio grouped with ages | 115,984,607.94 | 5,812,230.14 | 5.01 |
| Subtotal | 493,153,862.82 | 5,812,230.14 | 1.18 |
Remarks on accounts receivable with provision for bad debts made on a collective basis? Applicable ? Not ApplicableProvision for bad debts withdrawn based on the general model of expected credit losses? Applicable ? Not ApplicableDivision basis for stages and proportions of provision for bad debtsNoneReasons for significant changes in carrying amount of accounts receivable in the current period? Applicable ? Not Applicable
(3) Changes in provision for bad debts
? Applicable ? Not Applicable
| Items | Opening balance | Increase | Decrease | Closing balance | ||||
| Accrual | Recovery | Others | Reversal | Write-off | Others | |||
| Items | Opening balance | Increase | Decrease | Closing balance | ||||
| Accrual | Recovery | Others | Reversal | Write-off | Others | |||
| Receivables with provision made on a collective basis | 3,232,236.49 | 2,579,993.65 | 5,812,230.14 | |||||
| Total | 3,232,236.49 | 2,579,993.65 | 5,812,230.14 | |||||
Significant provisions collected or reversed? Applicable ? Not ApplicableOther remarksNone
(4) Accounts receivable written off
? Applicable ? Not ApplicableSignificant accounts receivable written off in the current period? Applicable ? Not ApplicableRemarks on accounts receivable written off? Applicable ? Not Applicable
(5) Details of the top 5 debtors with largest balances
? Applicable ? Not Applicable
| Debtors | Book balance | Proportion to the total balance of accounts receivable (%) | Provision for bad debts |
| Changsha Medical Security Affairs Center | 113,711,988.43 | 23.06 | |
| Pukang (Hangzhou) Health Technology Co., Ltd. | 39,387,713.10 | 7.99 | |
| Hengyang Medical Security Bureau | 20,540,716.47 | 4.17 | |
| Youjia Jianbao Health Technology (Beijing) Co., Ltd. | 17,046,344.87 | 3.46 | |
| Zhuzhou Medical Security Affairs Center | 14,034,736.26 | 2.85 | |
| Subtotal | 204,721,499.13 | 41.53 |
Other remarksNoneOthers? Applicable ? Not Applicable
2. Other receivables
? Applicable ? Not Applicable
| Items | Closing balance | December 31, 2022 |
| Items | Closing balance | December 31, 2022 |
| Interest receivable | 855,724.12 | |
| Dividend receivable | 581,621,336.22 | 68,563,059.65 |
| Other receivables | 794,138,361.20 | 747,795,719.34 |
| Total | 1,376,615,421.54 | 816,358,778.99 |
Other remarks? Applicable ? Not ApplicableInterest receivable
(1) Classification of interest receivables
? Applicable ? Not Applicable
| Items | Closing balance | December 31, 2022 |
| Interest receivable to Subsidiaries | 855,724.12 | |
| Subtotal | 855,724.12 |
(2) Significant overdue interest
? Applicable ? Not Applicable
(3) Provision for bad debts
? Applicable ? Not ApplicableInterest receivable with provision made on an individual basis? Applicable ? Not ApplicableRemark of interest receivable with provision made on an individual basis? Applicable ? Not ApplicableInterest receivable with provision made on a collective basis? Applicable ? Not Applicable
(4). Provision for bad debts withdrawn based on the general model of expected credit losses? Applicable ? Not ApplicableDivision basis for stages and proportions of provision for bad debtsNoneReasons for significant changes in carrying amount of interest receivable in the current period? Applicable ? Not ApplicableDetermination basis for provision for impairment made in the current period and whether creditrisk has increased significantly? Applicable ? Not Applicable
(5) Changes in provision for bad debts
? Applicable ? Not ApplicableSignificant interest receivable written off in the current period? Applicable ? Not ApplicableOther remarksNone
(6) Interest receivable actually written off
? Applicable ? Not ApplicableSignificant interest receivable written off in the current period? Applicable ? Not ApplicableRemarks on interest receivable written off? Applicable ? Not ApplicableOther remarksNoneDividend receivable
(1) Dividend receivable
? Applicable ? Not Applicable
| Items | Closing balance | December 31, 2022 |
| Dividend receivable to Subsidiaries | 581,621,336.22 | 68,563,059.65 |
| Subtotal | 581,621,336.22 | 68,563,059.65 |
(2) Significant balance with age over one year
? Applicable ? Not Applicable
(3) Provision for bad debts
? Applicable ? Not ApplicableDividend receivable with provision made on an individual basis? Applicable ? Not ApplicableRemark of dividend receivable with provision made on an individual basis? Applicable ? Not ApplicableDividend receivable with provision made on a collective basis? Applicable ? Not Applicable
(4) Provision for bad debts withdrawn based on the general model of expected credit losses? Applicable ? Not ApplicableDivision basis for stages and proportions of provision for bad debts
NoneReasons for significant changes in carrying amount of dividend receivable in the current period? Applicable ? Not Applicable
(5) Changes in provision for bad debts
? Applicable ? Not ApplicableSignificant provisions collected or reversed? Applicable ? Not ApplicableOther remarksNone
(6) Other receivables actually written off in the current period
? Applicable ? Not ApplicableSignificant other receivables written off in the current period? Applicable ? Not ApplicableRemarks on other receivables written off? Applicable ? Not ApplicableOther remarks? Applicable ? Not ApplicableOther receivables
(1) Age analysis
| Ages | Closing book balance | Book balance on December 31, 2022 |
| Within 1 year | 773,113,789.41 | 743,523,819.55 |
| 1-2 years | 24,253,860.37 | 6,309,834.01 |
| 2-3 years | 337,612.88 | 352,444.22 |
| 3-4 years | 62,048.83 | 5,000.00 |
| 4-5 years | ||
| Over 5 years | ||
| Total | 797,767,311.49 | 750,191,097.78 |
(2) Other receivables categorized by nature
? Applicable ? Not Applicable
| Nature of receivables | Closing book balance | Book balance on December 31, 2022 |
| Security deposits | 25,859,213.46 | 20,953,340.98 |
| Medical insurance reserves | 34,897,794.71 | 44,717,501.88 |
| Nature of receivables | Closing book balance | Book balance on December 31, 2022 |
| Store petty cash | 22,500.00 | 1,418,500.00 |
| Balances due from related parties within the consolidation scope | 712,667,149.76 | 656,935,539.17 |
| Others | 24,320,653.56 | 26,166,215.75 |
| Subtotal | 797,767,311.49 | 750,191,097.78 |
(3) Changes in provision for bad debts
? Applicable ? Not Applicable
| Items | Stage 1 | Stage 2 | Stage 3 | Subtotal |
| 12?month expected credit losses | Lifetime expected credit losses (credit not impaired) | Lifetime expected credit losses (credit impaired) | ||
| Opening balance | 2,316,577.24 | 78,801.20 | 2,395,378.44 | |
| Opening balance in the current period | —— | —— | —— | |
| --Transferred to stage 2 | -2,226,035.28 | 2,226,035.28 | ||
| --Transferred to stage 3 | -9,252.40 | 9,252.40 | ||
| Provision made in the current period | 1,303,120.65 | -69,548.80 | 1,233,571.85 | |
| Provision written off in the current period | ||||
| Closing balance | 1,393,662.61 | 2,226,035.28 | 9,252.40 | 3,628,950.29 |
Division basis for stages and proportions of provision for bad debts:
Stage 1 is where credit risk of other receivables has not increased significantly since initialrecognition. Stage 2 is where credit risk of other receivables has increased significantly sinceinitial recognition, but such receivables are not considered credit-impaired. Stage 3 is where otherreceivables are considered credit-impaired since initial recognition.
| Items | Stage 1 | Stage 2 | Stage 3 | Total |
| Provision proportion (%) | 0.18 | 9.18 | 2.74 | 0.45 |
Reasons for significant changes in carrying amount of other receivables in the current period? Applicable ? Not ApplicableDetermination basis for provision for impairment made in the current period and whether creditrisk has increased significantly? Applicable ? Not Applicable
(4) Changes in provision for bad debts
? Applicable ? Not Applicable
| Items | Opening balance | Increase | Decrease | Closing balance | ||||
| Accrual | Recovery | Others | Reversal | Write-off | Others | |||
| Receivables with provision made on | 2,395,378.44 | 1,233,571.85 | 3,628,950.29 | |||||
| Items | Opening balance | Increase | Decrease | Closing balance | ||||
| Accrual | Recovery | Others | Reversal | Write-off | Others | |||
| a collective basis | ||||||||
| Total | 2,395,378.44 | 1,233,571.85 | 3,628,950.29 | |||||
Significant provisions collected or reversed? Applicable ? Not ApplicableOther remarksNone
(5) Other receivables actually written off in the current period
? Applicable ? Not ApplicableSignificant other receivables written off in the current period? Applicable ? Not ApplicableRemarks on other receivables written off? Applicable ? Not Applicable
(6) Details of the top 5 debtors with largest balances
? Applicable ? Not Applicable
| Debtors | Nature of receivables | Book balance | Ages | Proportion to the total balance of other receivables (%) | Provision for bad debts |
| Shanghai Yifeng Pharmacy Medicine Co., Ltd. | Balances due from related parties within the consolidation scope | 210,918,526.58 | Within 1 year | 26.44 | |
| Jiangxi Yifeng | Balances due from related parties within the consolidation scope | 127,009,205.90 | Within 1 year | 15.92 | |
| Hunan Yifeng Pharmaceutical Holding Co., Ltd. | Balances due from related parties within the consolidation scope | 104,576,074.80 | Within 1 year | 13.11 | |
| Guangshengtang | Balances due from related parties within the consolidation scope | 88,168,174.24 | Within 1 year | 11.05 | |
| Jiangsu Yifeng | Balances due from related parties within the consolidation scope | 61,365,026.16 | Within 1 year | 7.69 | |
| Subtotal | 592,037,007.68 | 74.21 |
(7) Other receivables related to the centralized fund management
? Applicable ? Not ApplicableOther remarks? Applicable ? Not Applicable
3. Long-term equity investments
? Applicable ? Not Applicable
| Items | Closing balance | December 31, 2022 | ||||
| Book balance | Provision for impairment | Carrying amount | Book balance | Provision for impairment | Carrying amount | |
| Investments in subsidiaries | 2,600,755,329.68 | 2,600,755,329.68 | 2,597,255,329.68 | 2,597,255,329.68 | ||
| Total | 2,600,755,329.68 | 2,600,755,329.68 | 2,597,255,329.68 | 2,597,255,329.68 | ||
(1) Investments in subsidiaries
? Applicable ? Not Applicable
| Investees | Opening balance | Increase | Decrease | Closing balance | Provision for impairment made in the current period | Closing balance of provision for impairment |
| Jiangsu Yifeng | 150,000,000.00 | 150,000,000.00 | ||||
| Shanghai Yifeng | 4,650,000.00 | 4,650,000.00 | ||||
| Jiangxi Yifeng | 50,000,000.00 | 50,000,000.00 | ||||
| Hubei Yifeng | 50,000,000.00 | 50,000,000.00 | ||||
| Hunan Yifeng Medicine | 150,750,000.00 | 150,750,000.00 | ||||
| Hubei Yifeng Medicine | 100,000,000.00 | 100,000,000.00 | ||||
| Jiangxi Yifeng Medicine | 100,000,000.00 | 100,000,000.00 | ||||
| Wuhan Longtai | 66,646,000.00 | 66,646,000.00 | ||||
| Shaoguan Xiangqin | 109,000,000.00 | 109,000,000.00 | ||||
| Guangshengtang | 34,933,000.00 | 34,933,000.00 | ||||
| Yili Kangxin | 66,000,000.00 | 66,000,000.00 | ||||
| Xinxing Pharmacy | 1,444,786,329.68 | 1,444,786,329.68 | ||||
| Yueyang Yifeng | 11,690,000.00 | 11,690,000.00 | ||||
| Hebei Xinxing Pharmacy Chain Co., Ltd. | 9,100,000.00 | 9,100,000.00 | ||||
| Yifeng Luoshi Xiehe | 28,600,000.00 | 28,600,000.00 | ||||
| Pingjiang Yifeng | 9,100,000.00 | 1,400,000.00 | 10,500,000.00 | |||
| Tianjin Xianhe | 8,000,000.00 | 100,000.00 | 8,100,000.00 | |||
| Jiuzhitang Medicine | 204,000,000.00 | 204,000,000.00 | ||||
| Tianjin Yifeng Pharmacy Chain Co., Ltd. | 2,000,000.00 | 2,000,000.00 | ||||
| Subtotal | 2,597,255,329.68 | 3,500,000.00 | 2,600,755,329.68 |
(2) Investment in associates and joint ventures
? Applicable ? Not Applicable
(3) Impairment testing of long-term equity investments
? Applicable ? Not Applicable
Other remarksNoneRecoverable amount determined based on the fair value less costs of disposal? Applicable ? Not ApplicableRecoverable amount determined based on the present value of estimated future cash flows? Applicable ? Not ApplicableReasons for the significant inconsistencies between aforementioned information andinformation used in previous impairment tests or external information? Applicable ? Not ApplicableReasons for the significant inconsistencies between information used in previous impairmenttests and actual performance? Applicable ? Not Applicable
4. Operating revenue/Operating cost
(1) Details
? Applicable ? Not Applicable
| Items | Current period cumulative | Preceding period comparative | ||
| Revenue | Cost | Revenue | Cost | |
| Main operations | 4,639,899,369.88 | 3,059,643,113.79 | 4,318,244,031.95 | 2,741,437,577.26 |
| Other operations | 202,256,450.46 | 30,123,957.74 | 200,697,945.64 | 28,918,642.76 |
| Total | 4,842,155,820.34 | 3,089,767,071.53 | 4,518,941,977.59 | 2,770,356,220.02 |
(2) Breakdown of revenue from contracts with customers by main categories? Applicable ? Not ApplicableOther remarks? Applicable ? Not Applicable
(3) Information related to performance obligations
? Applicable ? Not Applicable
(4) Transaction price allocated to the remaining performance obligations
? Applicable ? Not Applicable
(5) Significant changes in contracts or significant adjustments on transaction price? Applicable ? Not ApplicableOther remarksNone
5. Investment income
? Applicable ? Not Applicable
| Items | Current period cumulative | Preceding period comparative |
| Investment income from long-term equity investments under cost method | 585,289,073.82 | 64,074,026.29 |
| Investment income from financial instruments | 15,587,350.75 | 6,953,820.05 |
| Including: Financial assets classified as at fair value through profit or loss | 15,587,350.75 | 6,953,820.05 |
| Total | 600,876,424.57 | 71,027,846.34 |
Other remarksNoneXX. Other supplementary information
1. Non-recurring profit or loss
? Applicable ? Not Applicable
| Items | Amount | Remarks |
| Gains on disposal of non-current assets, including write-off of provision for impairment | 29,092,610.09 | |
| Government grants included in profit or loss (excluding those closely related to operating activities of the Company, satisfying government policies and regulations, enjoyed based on certain standards, and continuously affecting gains or losses of the Company) | 44,930,209.02 | |
| Gains on changes in fair value of financial assets and financial liabilities held by non-financial enterprises, and gains from disposal of financial assets and financial liabilities, excluding those arising from hedging business related to operating activities | 13,074.67 | |
| Fund possession charge from non-financial entities and included in profit or loss | ||
| Gains on assets consigned to the third party for investment or management | ||
| Gains on designated loans | ||
| Losses on assets incurred due to force majeure such as natural disasters | ||
| Reversed provision for impairment of receivables based on impairment testing on an individual basis | ||
| Gains on acquisition of subsidiaries, joint ventures and associates due to the surplus of acquisition-date fair value of net identifiable assets in acquiree over the acquisition cost | ||
| Net profit on subsidiaries acquired through business combination under common control from the beginning of the period to the combination date | ||
| Gains on non-cash assets exchange | ||
| Gains on debt restructuring | ||
| One-off expenses incurred due to the discontinuation of relevant operating activities, such as severance payments |
| Items | Amount | Remarks |
| One-off effects on profit or loss due to amendments of laws and regulations on taxation, accounting, etc. | ||
| Share-based payments recognized at one time due to cancellation or modification of equity incentive plan | ||
| Gains arising from changes in the fair value of employee benefits payable after the vesting date for cash-settled share-based payment | ||
| Gains on changes in fair value of investment properties with subsequent measurement using the fair value model | ||
| Gains on transactions with unfair value | ||
| Contingent gains on non-operating activities | ||
| Management charges for consigned operations | ||
| Other non-operating revenue or expenditures | -5,060,038.31 | |
| Other profit or loss satisfying the definition of non-recurring profit or loss | ||
| Subtotal | 68,975,855.47 | |
| Less: Enterprise income tax affected | 16,885,907.38 | |
| Non-controlling interest affected (after tax) | 1,617,512.91 | |
| Net non-recurring profit or loss attributable to shareholders of the parent company | 50,472,435.18 |
Remarks on the exception that the Company recognized non-recurring profit or loss as listed inthe “Interpretation Pronouncement on Information Disclosure Criteria for Public Companies No. 1– Non-Recurring Profit or Loss (2023 Edition)” as recurring profit or loss based on relevantdefinition and principle are as follows:
? Applicable ? Not Applicable
| Items | Amount | Reasons |
| Investment income | 24,958,558.90 | Related to ordinary course of operating activities |
Other remarks? Applicable ? Not ApplicableEffect on non-recurring profit or loss in 2022 due to implementation of “InterpretationPronouncement on Information Disclosure Criteria for Public Companies No. 1 – Non-RecurringProfit or Loss (2023 Edition)”
| Items | Amount |
| Net non-recurring profit or loss attributable to the owner of the parent company in 2022 | 35,316,295.14 |
| Net non-recurring profit or loss attributable to the owner of the parent company calculated based on the “Interpretation Pronouncement on Information Disclosure Criteria for Public Companies No. 1 – Non-Recurring Profit or Loss (2023 Edition)” in 2022 | 34,414,548.82 |
| Difference | -901,746.32 |
Effect on non-recurring profit or loss in 2021 due to implementation of “Interpretation
Pronouncement on Information Disclosure Criteria for Public Companies No. 1 – Non-RecurringProfit or Loss (2023 Edition)”
| Items | Amount |
| Net non-recurring profit or loss attributable to the owner of the parent company in 2022 | 29,164,848.76 |
| Net non-recurring profit or loss attributable to the owner of the parent company calculated based on the “Interpretation Pronouncement on Information Disclosure Criteria for Public Companies No. 1 – Non-Recurring Profit or Loss (2023 Edition)” in 2022 | 28,436,923.52 |
| Difference | -727,925.24 |
2. ROE and EPS
? Applicable ? Not Applicable
| Profit of the reporting period | Weighted average ROE (%) | EPS (yuan/share) | |
| Basic EPS | Diluted EPS | ||
| Net profit attributable to shareholders of ordinary shares | 15.44 | 1.40 | 1.40 |
| Net profit attributable to shareholders of ordinary shares after deducting non-recurring profit or loss | 14.89 | 1.35 | 1.35 |
3. Differences in accounting data under domestic and foreign accounting standards? Applicable ? Not Applicable
4. Others
? Applicable ? Not Applicable
Chairman of the Board: Gao Yi
April 26, 2024