Yunnan Baiyao Group Co., Ltd.
Interim Report 2024
August 2024
Section I Important Notes, Contents, and DefinitionsThe Board of Directors (the “Board”), the Supervisory Committee and thedirectors, supervisors and senior management of the Company confirm the truthfulness,accuracy and completeness of the contents of this Interim Report and there are nomisrepresentation, misleading statement or material omission from this Interim Report,and they accept joint and several responsibilities for the truthfulness, accuracy andcompleteness of the contents herein.Mr. Dong Ming, the person in charge of the Company, Mr. Ma Jia, the accountingofficer, and Ms. Xu Jing, the head of accounting center (accounting supervisor), herebydeclare that they warrant the truthfulness, accuracy, and completeness of the financialstatements in this Interim Report.All directors of the Company attended the Board meeting in respect of consideringand approving this Interim Report.The Company kindly requests investors to read through this Interim Report andpay special attention to “X. Risks and Countermeasures” in the “Section IIIManagement Discussion and Analysis.” Investors are advised to pay attention toinvestment risks.The Company has no plan to distribute cash dividends and bonus shares or convertcapital reserves into share capital during the reporting period.This report has been prepared in Chinese and translated into English. Should therebe any discrepancies or misunderstandings between the two versions, the Chineseversion shall prevail.
Contents
Section I Important Notes, Contents, and Definitions ...... 1
Section II Company Profile and Key Financial Indicators ...... 5
Section III Management Discussion and Analysis ...... 8
Section IV Corporate Governance ...... 38
Section V Environmental and Social Responsibilities ...... 40
Section VI Significant Events ...... 49Section VII Changes in Shareholdings and Particulars about Shareholders ...... 73Section VIII Preference Shares ...... 81
Section IX Bonds ...... 82
Section X Financial Statements ...... 84
Documents Available for Inspection(I) Financial statements affixed with the signatures and stamps of the person incharge of the Company, the accounting officer, the general manager of accountingcenter;
(II) Originals of all the Company’s documents and announcements publiclydisclosed on the Securities Times, Shanghai Securities News, China Securities Journal,and http://www.cninfo.com.cn during the reporting period;
(III) Other related materials.
Definitions
| Term | Definitions |
| CSRC | China Securities Regulatory Commission |
| SZSE | Shenzhen Stock Exchange |
| Hong Kong Stock Exchange | The Stock Exchange of Hong Kong Limited |
| SASAC of Yunnan Province | State-owned Assets Supervision and Administration Commission of Yunnan Provincial People’s Government |
| CSRC Yunnan Bureau | Yunnan Bureau of China Securities Regulatory Commission |
| The Company / Yunnan Baiyao | Yunnan Baiyao Group Co., Ltd. |
| New Huadu | New Huadu Industrial Group Co., Ltd. |
| Yunnan Investment Holdings Group | Yunnan Provincial Investment Holdings Group Co., Ltd. |
| Yunnan State-owned Equity Operation Management Company | Yunnan State-owned Equity Operation Management Co., Ltd. |
| Yunnan Hehe | Yunnan Hehe (Group) Co., Ltd. |
| Jiangsu Yuyue | Jiangsu Yuyue Science & Technology Development Co., Ltd. |
| Baiyao Holdings | Yunnan Baiyao Holdings Co., Ltd. |
| YNBY International / Ban Loong Holdings | YNBY International Limited (Formerly Ban Loong Holdings Limited) |
| Shanghai Pharma | Shanghai Pharmaceuticals Holding Co., Ltd. |
| Mixed ownership reform | Baiyao Holdings, former controlling shareholder of Yunnan Baiyao, introduced strategic investors New Huadu and Jiangsu Yuyue by capital increase |
| Merger and overall listing | A transaction that Yunan Baiyao merged with Baiyao Holdings by issuing shares to all shareholders of Baiyao Holdings, including SASAC of Yunnan Province, New Huadu and Jiangsu Yuyue |
| Yunnan Pharma | Yunnan Pharmaceutical Co., Ltd. |
| OTC | Over-the-counter drug |
| Reporting period | The period from January 1, 2024 to June 30, 2024 |
| RMB, RMB’0,000, RMB’00,000,000 | Expressed in the Chinese currency of Renminbi, expressed in tens of thousands of Renminbi, expressed in hundreds of millions of Renminbi |
Section II Company Profile and Key Financial IndicatorsI. Company Profile
| Stock Abbreviation | Yunnan Baiyao | Stock Code | 000538 |
| Stock Exchange | Shenzhen Stock Exchange | ||
| Company Name in Chinese | 云南白药集团股份有限公司 | ||
| Company Abbreviation in Chinese (If any) | 云南白药 | ||
| Company Name in English (If any) | YUNNAN BAIYAO GROUP CO., LTD | ||
| Company Abbreviation in English (If any) | YUNNAN BAIYAO | ||
| Legal Representative of the Company | Dong Ming | ||
II. Contact Person and Contact Information
| Secretary of the Board of Directors | Representative of Securities Affairs | |
| Name | Qian Yinghui | Li Mengjue |
| Contact Address | No.3686 Yunnan Baiyao Street, Chenggong District, Kunming, Yunnan Province | No.3686 Yunnan Baiyao Street, Chenggong District, Kunming, Yunnan Province |
| Tel | 0871-66226106 | 0871-66226106 |
| Fax | 0871-66203531 | 0871-66203531 |
| 000538dm@ynby.cn | 000538@ynby.cn |
III. Other Information
1. Contact information of the Company
Whether the Company’s registered address, office address, postal code, website, and e-mail address have changed during the reportingperiod
□ Applicable ? Not applicable
There was no change in the Company’s registered address, office address, postal code, website, or e-mail addressduring the reporting period. For more information, please refer to the 2023 Annual Report.
2. Information disclosure and location
Whether the information disclosure and location have changed during the reporting period
□ Applicable ? Not applicable
There was no change in the stock exchange website, media outlets, and their websites where the Companydisclosed the Interim Report, or the location where the Interim Report was prepared and placed during the reportingperiod. For more information, please refer to the 2023 Annual Report.
3. Other information
Whether other information has changed during the reporting period
□ Applicable ? Not applicable
IV. Key Accounting Data and Financial Indicators
Whether the Company needed retroactive adjustment or restatement of accounting data in prior years or not?Yes ?No
| The reporting period | The same period of the previous year | Increase/decrease during the reporting period compared with the same period of the previous year | |
| Operating revenue (RMB) | 20,455,286,287.52 | 20,309,372,850.07 | 0.72% |
| Net profit attributable to shareholders of the listed company (RMB) | 3,188,829,903.10 | 2,828,011,615.30 | 12.76% |
| Net profit attributable to shareholders of the listed company after deducting non-recurring profits and losses (RMB) | 3,135,015,340.93 | 2,737,055,785.90 | 14.54% |
| Net cash flows from operating activities (RMB) | 3,261,617,391.99 | 2,251,951,370.10 | 44.84% |
| Basic earnings per share (RMB/share) | 1.79 | 1.58 | 13.29% |
| Diluted earnings per share (RMB/share) | 1.79 | 1.58 | 13.29% |
| Weighted average ROE | 7.93% | 7.17% | Up 0.76 percentage points |
| End of the reporting period | End of the previous year | Increase/decrease at the end of the reporting period compared with the end of the previous year | |
| Total assets (RMB) | 54,367,545,232.24 | 53,784,293,183.93 | 1.08% |
| Net assets attributable to shareholders of the listed company (RMB) | 39,369,278,205.03 | 39,879,122,031.51 | -1.28% |
Total share capital of the Company as of the trading day preceding disclosure:
| Total share capital of the Company as of the trading day preceding disclosure (shares) | 1,784,262,603 |
Fully diluted earnings per share calculated under the latest share capital
| Preferred stock dividends paid | 0.00 |
| Interest paid on perpetual bonds (RMB) | 0.00 |
| Fully diluted earnings per share calculated under the latest share capital (RMB/share) | 1.7872 |
V. Differences in Accounting Data under Chinese Accounting Standards (CAS) and OverseasAccounting Standards
1. Differences in the net profits and net assets in financial statements disclosed respectively underInternational Financial Reporting Standards (IFRS) and CAS
□ Applicable ? Not applicable
During the reporting period, there was no difference in net profits and net assets in financial statements disclosedrespectively under IFRS and CAS.
2. Differences in the net profits and net assets in financial statements disclosed respectively under overseasaccounting standards and CAS
□ Applicable ? Not applicable
During the reporting period, there was no difference in the net profits and net assets in financial statementsdisclosed respectively under overseas accounting standards and CAS.
VI. Non-recurring Profits and Losses? Applicable □ Not applicable
Unit: RMB
| Item | Amount | Remarks |
| Profits or losses from disposal of non-current assets (including the write-off for the accrued impairment of assets) | -1,658,086.88 | |
| Government subsidies included in the current profits and losses (excluding the government subsidies closely related to regular businesses of the Company, in line with national policies, and consecutively received by a standard quota or quantity) | 34,220,746.37 | |
| Profits and losses from changes in fair value of financial assets and liabilities held for trading, and investment income from disposal of financial assets and liabilities held for trading and financial assets available for sale, except for effective hedging operations related to regular businesses of the Company | -4,964,027.66 | |
| Profits and losses arising from entrusted investment or asset management | 3,003,994.06 | |
| Non-operating revenue and expenses other than the above | -257,970.80 | |
| Other profits and losses satisfying the definition of non-recurring profits and losses | 27,441,539.97 | |
| Less: Amount affected by the income tax | 3,960,096.44 | |
| Amount affected by minority interests (after tax) | 11,536.45 | |
| Total | 53,814,562.17 |
Other profits and losses satisfying the definition of non-recurring profits and losses:
?Applicable □Not applicable
Other non-recurring profits and losses that meet the definition of non-recurring profits and losses mainly includeother non-recurring profits and losses such as interest on fixed deposits and value added tax credit.Note for the definition of non-recurring profits and losses set out in the No.1 Explanatory Announcement on Information Disclosurefor Companies Offering Their Securities to the Public - Non-recurring Profits and Losses, as recurring profits and losses
□Applicable ?Not applicable
The Company does not define any non-recurring profits and losses set out in the No.1 ExplanatoryAnnouncement on Information Disclosure for Companies Offering Their Securities to the Public - Non-recurringProfits and Losses as recurring profits and losses.
Section III Management Discussion and Analysis
I. Principal Businesses of the Company during the Reporting Period
(I) Overview
1. Industry landscape and development trends
The Central Committee of the Chinese Communist Party (“CPC”) and the State Council attach greatimportance to the development of TCM, positioning the inheritance and innovation of TCM as an important aspectof the socialist cause with Chinese characteristics in the new era. The report to the 20th CPC National Congress hasexplicitly stated that we should “promote the inheritance and innovation of TCM.” The Third Plenary Session ofthe 20th Central Committee of the Communist Party of China highlighted key strategies for the high-qualitydevelopment in pharmaceutical and health sectors, outlined new deployments, tasks, and requirements forcomprehensively deepening TCM reforms, and proposed to “perfect the mechanism for the inheritance andinnovation of TCM,” marking the start of comprehensively deepening TCM reforms.
In the first half of 2024, numerous policies were introduced to support the TCM industry in China. Regardingthe development of the TCM industry, the government work report requires “promoting the inheritance andinnovation of TCM and strengthening the construction of TCM advantageous specialties,” which gives the industrya new mission in the new era to carry forward the inheritance and advance innovation. The 2024 Key Tasks forDeepening the Reform of Pharmaceutical Health Systems issued by the General Office of the State Council proposedthat we should “advance the construction of national TCM inheritance and innovation center and other institutions,support the presence of leading TCM enterprises across the entire industry chain and accelerate the establishmentof the traceability system across the entire TCM industry chain,” which provides guidelines and institutionalguarantees for the construction of the entire industry chain in the TCM industry. The Special Regulations on theManagement of Traditional Chinese Medicine Standards issued by the National Medical Products Administration(NMPA) marked a crucial step forward for this industry towards standardized and normalized management. Thisseries of top-level policies, issued consecutively, clarifies the pathways for the healthy, sustainable, and high-qualitydevelopment of the TCM industry, thus leading to increased confidence in its future prospects.
Meanwhile, China has increasingly supported the innovative drug industry through various policies. The StateCouncil of China has recently approved the Implementation Plan for Supporting the Development of InnovativeDrugs Across the Entire Value Chain. This plan aims to bolster innovative drug development in areas such as R&D,transformation, approval, production, usage, and reimbursement, heralding new development opportunities for theindustry.
From a market perspective, with the acceleration of population aging, TCM offers unique advantages such asdisease prevention, early intervention, and natural ingredients, effectively supporting the demand for chronic diseasemanagement. The market prospects are broad and promising.
Supported by national policies, the value of efficient integration and integrated construction across the entireindustry chain in the TCM industry is further highlighted, which is increasingly becoming the key for enterprises inthis industry to build core competitiveness in the future. As social demands shift from “disease treatment” to “health-
focused” products and services, the TCM industry is becoming more innovative and consumer-oriented. Theintegration of the entire industry chain—including TCM materials, branded TCM products, TCM consumer goods,and retail pharmacy terminals—is set to create a new business model, propelling the industry into a new era ofdevelopment.In the first half of 2024, the consumer goods industry experienced low-level growth, with consumer confidencestill needs to be restored. Relevant data shows that in terms of consumption behaviors and preferences, on one hand,consumers became more rational and cautious with their purchasing decisions due to the slowdown in the growthof residents’ disposable income. On the other hand, consumption trends continued to rise. Consumers sought cost-effective products and product experience and were willing to pay a premium for high quality. In terms of theconsumer market, consumers’ reliance on online shopping has further increased, and online retail markets continuedto exhibit strong growth momentum. Benefited from the presence of e-commerce business into lower-tier marketsand improved infrastructure, the lower-tier consumer markets also showed a substantial growth potential. In thecontext of a slow recovery in the overall consumer goods sector, the market increasingly demands that businessesmaintain sharp insights and innovation, and implement more refined management and empowerment strategies forchannels and endpoints.
2. Industry position
Yunnan Baiyao has 567 drug approvals and 316 varieties, including 222 Chinese patent drugs, including 43exclusive varieties. The Company has consistently focused on integrating TCM into modern life, explored theendogenous potential of traditional medical products, responded to the needs of modern life with product innovationand infused traditional brands and TCM products with renewed vitality, being highly consistent with the nationalstrategic positioning of “attaching importance to the inheritance and innovation of TCM.” In the pharmaceuticalproducts domain, the Company’s roots lie in Yunnan Baiyao Powder with a century-long legacy. Through persistentexploration and innovation, Yunnan Baiyao has progressively developed a series of core pharmaceutical productsencompassing diverse forms like aerosol, plaster, tincture, and woundplast. In terms of personal care products, theCompany has successfully combined core ingredients of Yunnan Baiyao with oral care items and created a groupof oral care products, notably exemplified by Yunnan Baiyao Toothpaste. This achievement stands as a prominentcase for TCM enterprises venturing into cross-border innovation and reshaping consumer preferences. Leveragingits successful development strategies in pharmaceutical and health product sectors, the Company has expanded itsbusiness footprint into various domains, including natural medicine, TCM decoction pieces, special medicines,medical devices, personal care products, and healthcare food. This move enables the Company’s evolution from aTCM manufacturing enterprise to a modern, Big Health-oriented entity.In June 2024, BrandFinance2024 - Ranking of Global Most Valuable and Strongest Pharma, Medical Device,and Healthcare Services Brands in Value released by Brand Finance, an authoritative international brand valuationagency, showed that Yunnan Baiyao was shortlisted into the List of Global Top 25 Most Valuable PharmaceuticalBrands. In July 2024, Yunnan Baiyao was shortlisted into the 2024 Fortune Top 500 Chinese Enterprises Listreleased by Fortune China for the 15th consecutive year and ranked 385
th. In July 2024, Yunnan Baiyao wasshortlisted into 2024 Pharm Exec 50 released by Pharm Exec, an American magazine and ranked 33
th. In June 2024,the list of Top 100 Chinese Pharmaceutical Companies for 2023 was released, with Yunnan Baiyao once again
ranked among the top 100 Chinese TCM companies, securing the 5
th
position. In June 2024, Yunnan Baiyao wasincluded in the “China’s Top 100 ESG Pioneer Listed Companies” list.
3. Product and business
The Company has four business groups, namely Pharmaceutical Business Group, Health Products BusinessGroup, Traditional Chinese Medicine (TCM) Resources Business Group and Yunnan Pharmaceutical Co., Ltd(“Yunnan Pharma”). These business groups serve as the foundation for the Company’s production and operations.Pharmaceutical Business Group focuses on the products of Yunnan Baiyao series, (for example, YunnanBaiyao Aerosol, Yunnan Baiyao Plaster, Yunnan Baiyao Woundplast, etc), which are mainly used in the painmanagement of traumatology such as hemostasis, pain relief, swelling reduction, and blood stasis elimination. Thebranded TCMs with natural characteristics focus on areas such as tonifying Qi and blood, treating colds and flu,cardiovascular health, gynecology, and pediatrics. The BG is also actively involved in the development of Panaxnotoginseng botanical supplements, aiming to identify new avenues for growth.Health Products Business Group, with its core focus on the toothpaste category, relies on its robust brandinfrastructure encompassing people, products, and consumer scenarios. Embracing a user-centric approach, the BGactively explores new consumer scenarios and introduces innovative product categories, and actively expands therealms of oral care and Yangyuanqing anti-hair loss solutions.
TCM Resources Business Group capitalizes on Yunnan Province’s unique medicinal plant resources. Whileensuring the high-quality, efficient, and cost-effective supply of TCM raw materials across the Group, the BG strivesto develop both B-end (including Panax notoginseng series, branded medicinal materials, raw material extracts)and C-end (including TCM decoction pieces and healthcare food) products. Moreover, the BG continues to advancethe digitalization, platform-based operation, and integrated management of TCM resource cultivation, whileconstantly enhancing the development.
Yunnan Pharma remains steadfast in pursuit of maintaining its leading market share among pharmaceuticaldistribution companies in Yunnan Province. It has achieved full coverage in all 16 prefectures and cities of YunnanProvince, with its channels radiating across major retail chain pharmacies. It also assists governments and medicalinstitutions in building better management and service systems, providing high-quality and modern pharmaceuticalsupply chain service solutions for upstream and downstream customers.
4. Overview of business data
In the first half of 2024, the Company focused on its core businesses, continuously optimizing its businessstructure, with contribution to profit from the industrial revenue steadily increasing. During the reporting period,the Company achieved operating revenue of RMB 20.455 billion, a 0.72% increase compared to the same periodlast year. Among this, the proportion of industrial revenue in total operating revenue further rose to 37.41%, anincrease of 0.49 percentage points compared to the previous year; industrial revenue growth rate reached 2.05%;and the industrial gross profit margin was 67.37%, up 3.10 percentage points year-on-year.
While maintaining steady growth in operating performance, the Company focused on unleashing potential andenhancing efficiency across the entire value chain, with operational quality and efficiency continuing to improve.During the reporting period, the Company achieved a net profit attributable to the parent company of RMB 3.189billion, a 12.76% increase from RMB 2.828 billion in the same period last year, setting a new historical high for the
period; the weighted average return on net assets was 7.93%, up 0.76 percentage points from the previous year;basic earnings per share were RMB 1.79, a 13.29% increase year-on-year; net cash flow from operating activitieswas RMB 3.262 billion, up 44.84% year-on-year; and management expenses decreased by 4.95% year-on-year. Atthe end of the reporting period, the Company’s total assets were RMB 54.368 billion, an increase of 1.08% fromthe beginning of the period; and the cash and bank balance were RMB 14.720 billion, up 3.53% from the beginningof the period.(II) Review of main tasks and prospects
1. Leading in Party building, strategic orientation, and enhanced management efficiency
(1) Strengthening the leadership in Party building and enhancing the quality and efficiency of PartybuildingDuring the reporting period, the Company deepened its learning and implementation of General Secretary XiJinping’s important expositions on Party building, and promote the development of the Company to a new stage bystrengthening the Party building, gathering strength, increasing momentum, and improving the effectiveness, withthe goal of “leading and ensuring the high-quality development of Yunnan Baiyao by high-quality Party building.”We will constantly deepen the construction of modern enterprise system with Chinese characteristics, promote theintegration of the Party’s leadership into the entire process and all aspects of corporate governance, focus on“integration and inclusion,” identify the key areas and focus points of Party building efforts, and lead reform anddevelopment to a higher level of quality through high-quality Party building.
(2) Completed compilation of 2024-2028 Strategic Planning Outline for Yunnan Baiyao Group to clarifythe Company’s strategies
During the reporting period, the Company’s Board of Directors considered and approved 2024-2028 StrategicPlanning Outline for Yunnan Baiyao Group, which establishes a clear, well-defined, and actionable developmentstrategy for the Company, and continues to refine the specific implementation pathways and methods for thestrategic plan, effectively ensuring and supporting the successful execution of the strategy.
The Company will set the strategic goal of “driving Yunnan Baiyao, a century-old pharmaceutical brand, tobecome a leading Chinese and world-class modern pharmaceutical industry group, achieving reasonable growth inscale, steady improvement in efficiency, and continuous optimization of industrial and product structures for high-quality development,” steadfastly deepen its roots in the “pharmaceutical” industry, and drive its each business tofocus on its advantageous fields in Big Health industry to constantly enhance its leading industry position. Whilecontinuously enhancing core competencies, the Company is also advancing the development of new businessgrowth drivers in a scientific, prudent, and effective manner.
In the short term, leveraging a “dual-wheel drive” strategy of internal growth and external expansion, theCompany will strengthen and expand the quality influence of “Big TCM” products along the comprehensive TCMindustry chain; enhance and refine the health and wellness offerings through a focus on efficacious products andservices in personal healthcare; stabilize and improve the new regional distribution channels via market-specificcommercial circulation, and make up for the insufficiency in internal growth by centering on industrial strategicorientation 1+1>2, to rapidly build a health industry system.
In the mid-to-long term, the Company will focus on developing Yunnan authentic medicinal resources, produceexcellent TCM products from excellent medicinal materials in Yunnan, and position itself as a “chain leader” in thehigh-quality development of Yunnan TCM resources. Focusing on the core products of Baiyao, and leveraginghigh-quality Yunnan medicinal materials, the Company aims to become a model for TCM inheritance, innovation,and development, and the “leading” brand in the comprehensive pain management of traumatology. Benefited fromthe functional advantages of Baiyao and authentic regional medicinal resources, the Company will build itself intothe benchmark for new Chinese-style health life philosophy and the “best” partner for quality life andcomprehensive ecological services. The Company will focus on meeting the treatment needs of key disease areasand establish itself as a new model pharmaceutical enterprise in high-potential, high-value, high-success-rate, andsustainably premium sectors. Focusing on customers’ health needs, the Company will offer value-drivenpharmaceutical commercial services and strive to become the “leading” enterprise in value-based life and healthservices. The Company will also further build a healthy and sustainable industry portfolio system to promote theachievement of its strategic goals.
(3) Advancement to improve organizational structure and control capabilities
In the first half of 2024, the Company steadily implemented its organizational reforms centered on“strengthening the front-end, empowering the middle-end, and optimizing the back-end,” driving control modelshifting from financial control to strategical control, and constructing a more focused, streamlined and efficientorganizational structure, with strengthened internal correlation and synergy within the Company, offering a strongerorganizational support for the Company to focus on its principal business, integrate advantageous resources,strengthen vertical control, and empower control.
Looking ahead, the Company will continue to enhance the Group’s control capabilities. By building a groupcontrol system for “hierarchical classification,” especially the research, production, and sales control system thatsupports business development, the Company constantly promotes the core capability building throughout the group.Moreover, the Company will refine and improve the performance indicator structure system, establish an effectivemedium- to long-term incentive system and improve its overall salary incentive mechanism. The Company will alsoperform new corporate culture construction to support overall strategic development goals, thus maximizing theoverall value of the Company. The Company will strive to further improve its organization capabilities, and inresponse to the latest strategic planning, control positioning, and functional division, the Company will enhance itsorganizational system in a scientific and orderly manner to support the implementation of its own strategic goals.
(4) Improvement in both quality and efficiency by focusing on operation excellence across the entirevalue chain
In the first half of 2024, the Company further strengthened its budget management, risk control and costawareness, and by digital and intelligent empowerment, systematically brought its level of operation across theentire value chain to a new height, achieving improvement in both quality and efficiency. The Company alsoadhered to practically implementing comprehensive budget management to give full play to the value creationability of management accounting in enterprise management. By creating a comprehensive strategy-guided budgetmanagement system, the Company aimed to promote the linkage between strategic management and comprehensivebudget, thus achieving strategic organic growth and orderly performance growth. Furthermore, the Company
continued to perfect its “all-in-one” compliance monitoring system, and further improved its internal control insystematicity and precision at the institutional level. In addition, the Company further returned to the “essence ofmanufacturing”, focusing on the three elements of “quality, cost and efficiency,” and promoting cost reduction andefficiency improvement to be a long-term systematic work for the Company. From the perspective of the entireprocess, the Company cultivated its capabilities to reduce the cost and improve the efficiency across the entire valuechain based on end-to-end process. Also, the Company made efforts to advance the digitalization for each businesssegment by mainly focusing on platform operation and management, and from the perspectives of supply chain,quality management, legal affair management and human resource management, promote the realization of digitaland intelligent management, operation and innovation. In the future, the Company will continue to focus on the“entire industry chain management synergy and entire value chain efficiency improvement,” further unleashpotential and enhance efficiency, and build up the culture and philosophy of “maximizing the value of the entireindustry chain,” so as to stably and scientifically bring its operation excellence system and capability to a new heightin an orderly manner, and constantly improve its internal growth quality.
2. Focusing on the principal businesses, optimizing the structure, and achieving high-qualitydevelopment
(1) Pharmaceutical Business Group
During the reporting period, the principal business income of the Pharmaceutical Business Group reachedRMB 4.069 billion, up 9.6% year on year. The core products of Baiyao series maintained robust growth. The salesrevenue of Yunnan Baiyao Aerosol exceeded RMB 1.2 billion, representing a YOY increase of more than 30%, andthe sales revenue of Yunnan Baiyao Plaster and Yunnan Baiyao Capsule achieved significant growth. Other brandedTCM products showed impressive growth. The sales revenue of Pudilan Anti-inflammatory Tablet surpassed RMB100 million, with a nearly double-digit growth year-on-year. The sales revenue of Gongxuening Capsule, used forgynecological inflammation, saw a 36% year-on-year increase. The sales revenue of Baotaikang Granule forChildren and Pain Relief Capsule increased significantly. Botanical supplements also achieved significant growth,with the sales revenue of Qixuekang Oral Liquid surpassing RMB 100 million, and the sales revenue of SanqiShenfeng Oral Liquid increasing by more than 80% year-on-year.
During the reporting period, the Pharmaceutical Business Group continued to implement the guidelines offocusing on the principal business, improving quality and efficiency, and promoted various key tasks from academicand clinical, marketing, channel cultivation, production efficiency and other aspects. In terms of academic andclinical aspects, a number of clinical studies on the secondary development of Yunnan Baiyao Capsule,Gongxuening Capsule, Qixuekang Oral Liquid and other core products have been steadily promoted. In terms ofmarketing, the Aerosol Campus Basketball Game was launched in Kunming, Shanghai, Changsha and Guangzhou,with 512 teams participating in the activity. The “Let’s go and play basketball” Douyin topic page recorded viewcounts of more than 290 million, and more than 38,000 videos have been submitted for the national mission, withthe accumulated submissions exceeding 32,000. In terms of channel cultivation, the “generic drug for thousands ofhouseholds” project was launched offline, and the first-level short channel operation model was built to achieveextensive small chain distribution. Great efforts were made to further the online channel development, acquiringabout 350 million exposures, 2.96 million interactions, a user base of about 22.17 million audience for the brand
through the content platform, and attracting 10.52 million visitors to the e-commerce platform, which brought morethan 1.1 million consumers, and led to GMV increase of 47% year-on-year. In terms of production efficiencyimprovement, we have advanced projects such as biomass gasification intelligent heating, granule capacity increaseand expansion, storage optimization, and Dali production line upgrading to lay a solid foundation for market supplyassurance, cost reduction and efficiency increase. The compliance transformation of the clean separation coarsecrushing process in the raw material center was completed, and 446 improvements were implemented to improvethe intelligent level of production and manufacturing.
In the second half of 2024, centering around the strategic positioning of “the leading brand of painmanagement in the field of traumatology,” the Pharmaceutical Business Group will promote the optimization ofbusiness deployment in an orderly manner, and initiate online and offline engagement across all touchpoints.Specifically, for our core series of Baiyao products, we will address market demands and focus on our painmanagement strategy. We aim to achieve breakthroughs with key individual products and develop a new painmanagement model, thereby fully leveraging our Company’s strengths in the field of trauma. We will establish a“Pain Service Center” by utilizing chain pharmacies located within communities. This center will consolidate painmanagement products, offer primary treatment services, and collaborate to extend medical resourcescomprehensively, thereby addressing the diverse pain management needs of the community. For branded TCMproducts, we will implement the refined growth strategy, take the treatment field as the standard, build the refinedgrowth capabilities, enhance traceability across marketing, commercial control, and investment, and thus achieveintegration between production and marketing. Regarding botanical supplements, we will capitalize on the autumnand winter season, which is ideal for Qi and blood replenishment, to rapidly increase the market share of oursupplement products.
(2) Health Products Business Group
During the reporting period, the Health Products Business Group achieved an operating income of RMB
3.144 billion and a net profit of RMB 1.231 billion, with a year-on-year growth of 1.7% in net profit and a year-on-year growth of 0.7 percentage points in gross margin. In the oral care segment, the market share of Yunnan BaiyaoToothpaste maintained a leading position in China. During the “618” period in 2024, Yunnan Baiyao oral healthbrand successively ranked top 1 oral care brand in the whole network (Source: open.shangzhizhen.com). In the haircare and anti-hair loss segment, Yangyuanqing recorded sales revenue of RMB 195 million during the reportingperiod, up 41% year on year. With the special makeup certificate for hair care, the national invention patentcertificate for hair care and anti-hair loss, and the product quality achieved through differentiated technologicalbarriers that earn the trust of Chinese consumers, we have successfully created the core brand of Yunnan BaiyaoYangyuanqing - “For controlling oil and preventing hair loss, choose Yangyuanqing.” Thanks to increased marketpenetration, Yangyuanqing has outpaced the industry average growth in the anti-hair loss category amid intensecompetition. During the “618” shopping festival in 2024, it became the top domestic anti-hair loss shampoo brandon Tmall, with the six-month cumulative GMV on Douyin e-commerce platform exceeding RMB 100 million(Source: open.shangzhizhen.com).
During the reporting period, the Health Products Business Group achieved the goal of lean operation andproduct leadership through digital-driven measures. In terms of R&D and innovation, the Health Products Business
Group obtained 4 new patent authorizations, submitted 5 applications, and published 2 papers in top internationalSCI journals during the reporting period. In terms of content marketing, by focusing on the core keywords of thebrands, such as “gum care” for Yunnan Baiyao Toothpaste, “anti-hair loss” for hair care and anti-hair loss series,we maintained content connection through private marketing and achieved joint creation and interaction with usersfor new products. We launched special initiatives at key moments and marketing campaigns such as “The FamilyGets Together to Watch the Spring Festival Gala,” “Healthy Oral 123 Plan,” and “Good Oral Health for Longevityand Well-being,” to enhance national and professional brand recognition while precisely targeting our user base.These campaigns achieved a total exposure of over 3.6 billion.
In the second half of 2024, the Health Products Business Group will focus on the “circle-breaking” growthof products, and create long-term end-to-end full value chain collaboration. In the future, we will strengthen the oralhealth professional positioning of Yunnan Baiyao. For oral care products, we will focus on gingival care and launchchannel exclusive products to reach different consumer groups. For washing and care products, we will focus on“anti-hair loss” and promptly introduce targeted offerings such as a special travel package for “anti-hair loss,”tailored to the characteristics of each channel. Through the construction of digital system, we can achieve theoperation digitalization, channel visualization, terminal lean management, and data-driven decision-making, andultimately enabling omni-channel operations.
(3) TCM Resources Business Group
During the reporting period, while meeting the Company’s internal resource needs in a high-quality andefficient manner, the TCM Resources Business Group implemented lean operations, and achieved externaloperating income of RMB 894 million, representing a year-on-year increase of about 22% under the same caliber.In terms of continuously ensuring a stable supply and price of the Company’s strategic varieties, with an averageorder delivery rate of 99.36% in the first half of the year, we effectively stabilized the price of the Company’sfeeding herbs, with their price increase significantly lower than the average industry-wide price rise for Chinesemedicinal materials. Focusing on the Yunnan authentic herbs and the strategic advantageous varieties of YunnanBaiyao, we maintained a leadership in the Panax notoginseng segment. In the natural plant extraction business, oursales revenue increased by 47% year-on-year during the reporting period. In the pharmaceutical services sector, theTCM Resources Business Group made strides by pioneering a channel covering “diagnosis and treatment -prescription - prescription examination - decoction - distribution - delivery to household,” which was achievedthrough the establishment of a Chinese medicine service center and a Chinese medicine library, allowing us to offerpatients a full range of personalized and efficient pharmaceutical services. At present, Yunnan Baiyao has built andoperated the largest drug decocting center in Yunnan. By further strengthening the construction of digitalintelligence and multi-point deployment planning, we will provide greater convenience for residents’ dailymedication.
In the second half of 2024, regarding TCM resources, we will build on our strategic positioning as “a ‘chainleader’ dedicated to the high-quality development of Yunnan TCM resources.” We will continue to embrace andfulfill our responsibilities as a chain leader enterprise. Relying on the authentic herb resources and locationadvantages of Yunnan Province, we will give play to the industrial accumulation of Yunnan Baiyao Group intechnology, brand, channel, capital and talent, as well as the demonstration, leading and driving role of the leading
enterprise in industrial development. We will use the “1+1+N” model of “one integrated digital intelligenceplatform for production, research and marketing of Chinese medicinal materials + one new production basespecialized market for Chinese medicinal materials + multiple collaboration” to build the entire industrial chainecosystem for digital management and operation of Chinese medicinal materials, and transform resource advantagesinto industrial competitive advantages and regional long-term sustainable development advantages, so as to achievethe goal of “supporting high-quality traditional Chinese medicines with premium Yunnan herbs.” We will leverageindustrial thinking to empower agriculture, integrate agriculture with farmers and lead by example with YunnanProvince’s natural assets in TCM varieties, promote industry development and enrich the people, and support thehigh-quality development of Yunnan Baiyao and Yunnan TCM industries.
(4) Yunnan Pharma (Pharmaceutical Distribution)
During the reporting period, Yunnan Pharma undertook a comprehensive effort to enhance quality, reducecosts, and improve efficiency across all factors and processes. We aimed to achieve balanced growth in scale,structure, and quality. As a result, we achieved an operating income of RMB 12.19 billion and a net profit of RMB290 million, reflecting a significant year-on-year growth of 26% in net profit. Sales orders increased by 6.7% year-on-year, and logistics throughput grew by 9.36% year-on-year.
In the first half of 2024, Yunnan Pharma carried out targeted management and control of accounts receivablethrough customized programs, consolidating responsibilities, empowering customers and other measures, andachieved phased results. For the pharmaceutical distribution business, we further consolidated market share byfocusing on varieties, markets and terminals. For non-pharmaceutical distribution business, we achieved a 9% year-on-year growth in the first half of the year through system construction, model innovation and market expansion.
In the second half of 2024, Yunnan Pharma will align business objectives with our overall development plan,adhere to the principle of seeking both progress and stability, and promoting stability through progress, promotestabilization of revenue scale, deepen the community-level market, develop professional pharmacies, and expandnon-drug business. We will continuously strengthen risk control and management, improve accounts receivablemanagement, and enhance platform capacity building, thus achieving overall improvement in operation quality andefficiency.
(5) Optimizing business deployment for emerging business units
During the reporting period, the Company promoted the restructuring and adjustment of the emergingbusiness units, achieving rapid business development of the Tonic Health Products BU, the Skin Beauty BU, andthe Medical Device BU. During the reporting period, the Tonic Health Products BU implemented measures such ascontinuously optimizing cost reduction and efficiency improvement of the supply chain, unified upgrading of thepackaging of all series of Panax notoginseng products, deployment of integrated online and offline marketing, andconstruction of the front, middle and back office organizational security system. In the future, we will focus on thedeep cultivation of Panax notoginseng and other advantageous TCM products, with an aim to become a leader innourishing and health care segment. During the reporting period, the Skin Beauty BU launched a new raw materialdeveloped through independent R&D - Paris fargesii, which won the double awards of ICIC for raw materials andproducts thanks to the independently cultivated, developed and produced core ingredients. We launched the “CAIZHI JI - Paris fargesii” series, known for its anti-inflammatory, soothing, and anti-redness properties, on platforms
like Tmall and JD.com, effectively integrating medicinal plant extracts into skincare. During the reporting period,the Medical Device BU focused on pain physiotherapy, significantly growing our treatment and eye care businesses.This led to a substantial increase in operating income and a notable improvement in operation quality and efficiency.Moving forward, we will enhance our market competitiveness by optimizing our core business, expanding our twokey areas, and achieving overall synergy.
(6) Boosting development momentum by focusing on R&D
By upholding an innovation-driven strategy, the Company has accelerated the transformation of results,continuously enhanced development momentum, and systematically advanced the planning of short-, medium- andlong-term projects.
In the short-term projects, on the one hand, the Company conducted clinical research on the existing productsfrom the Pharmaceutical Business Group to support their promotion and sales. During the reporting period, wecollaborated with the National Trauma Medical Center on research that focused on preventing deep vein thrombosisin patients with multiple injuries and thrombosis following hip fractures using Yunnan Baiyao Capsule. We alsopartnered with Grade A tertiary hospitals in China to conduct clinical studies on the efficacy of Yunnan BaiyaoCapsule in promoting bone healing and its impact on subgingival microflora and immune balance in patients withmoderate to severe periodontitis. Besides, we carried out clinical research on improving cardiovascular health withQixuekang Oral Liquid. On the other hand, the Company actively carried out the secondary development of dormantproducts and the resumption of production, constantly enriching its high-quality product pipeline. During thereporting period, we cooperated with our partner hospitals to initiate clinical observation and research on treatingabnormal uterine bleeding with Gongxuening Capsule and randomized controlled trial (RCT) study on reducingbleeding after induced abortion under the project titled “Secondary Development and Research on GongxueningCapsule, a major TCM variety,” and successfully applied for major science and technology projects in YunnanProvince; conducted research on resuming production of Shulie’an Capsule, and a multi-center, open-label,randomized, placebo-controlled clinical pre-trial study on treating patients with type III chronic prostatitis usingShulie’an Capsule led by Grade A tertiary hospitals in China.
In the medium-term projects, we actively promoted the development of innovative TCM and intensified ourfocus on Yunnan Baiyao’s transdermal preparations, to continually create star products in this category whileimplementing the overall deployment to address critical national needs in the field of trauma. During the reportingperiod, Panax Notoginseng Tablet, an innovative drug in Chinese medicine category 1.1 for the prevention andtreatment of symptoms such as chest tightness and heart pain caused by stagnation of the heart veins in middle-agedand elderly people, was undergoing randomized double-blind phase II clinical trial. In the first half of 2024, 55subjects were enrolled (285 subjects have been enrolled in total), and it is expected to complete phase II clinicaltrial in 2025. Fuqi Guben Ointment for excessive nocturnal urination caused by kidney Yang deficiency has beenput into phase III clinical trials, and it is expected to complete phase III clinical trials by the end of 2025. Clinicaltrial approval was obtained for Flurbiprofen Cataplasms, and production technology transfer was completed. Thepilot test and full test of Loxoprofen Sodium Cataplasms were completed. The formulation process with excellentadhesion properties has been explored for Yunnan Baiyao Cataplasms. Pilot test and preliminary study have beencompleted for Yunnan Baiyao New Rubber Plaster.
In the innovative drug projects, we focused on the transformation of innovative drug R&D results to providesustainable development momentum for the Company. During the reporting period, clinical trial approval wasobtained for the INR101 diagnostic nuclear drug project for PET/CT imaging in patients with suspected prostatecancer, and phase I clinical trial was completed. The precursor pharmaceutical and non-clinical studies werelaunched for the INR102 project. In June 2024, the Company introduced the relevant patents of the antibody drugKA-1641 from KYinno Biotechnology Co., Ltd, and will conduct R&D, production and commercializationactivities on the subject product worldwide.
In the second half of 2024, the Company will build a strategy-oriented R&D management system alignedwith its strategic planning, improve R&D management capabilities, coordinate and optimize the R&D platformconstruction by referring to the experience of world-class pharmaceutical enterprises in R&D platform construction,in a bid to effectively support the Company’s long-term, stable, sustainable and high-quality development. In termsof overall R&D management, we will comprehensively plan the development of key industries and pipelines in linewith strategic planning and industry objectives. By integrating internal and external resources and promotingcoordinated efforts, we set to achieve the phased goals for key industries, pipelines, and projects, which includemeeting the R&D targets for innovative drug development, secondary development of major TCM varieties,development of transdermal preparations and medical devices, and projects focused on medicinal frontiers andhealth enhancement. In addition, we will strengthen the construction of R&D project management mechanism,consolidate project management capabilities, and improve the transformation efficiency of R&D projects.
(III) Business model
1. Transformation from a leading Chinese pharmaceutical TCM enterprise to a “Chinese leading andworld-class” modern pharmaceutical industry group
The Company will focus on synergistic development across the entire industry chain, meticulous cultivationof core sectors, expansion of leading advantages in key products, and accelerating the establishment of the industrialsystem, among other dimensions. The Company will also make efforts to expand the medicine, health products,TCM resources, and commercial logistics sectors, with the goal of achieving significant, leapfrog development. Atthe same time, in line with its future development strategy, the Company will scientifically assess and swiftlyadvance its internationalization strategy. It will effectively leverage the synergy and complementary effects of bothChinese and international markets and resources. The focus will be on expanding TCM products overseas,developing new growth drivers for health products, and integrating international resources for innovative drugs.These efforts aim to drive the Company’s sustained high-quality development with internationalization and facilitatethe transformation of Yunnan Baiyao from a leading Chinese TCM enterprise into a “Chinese leading and world-class” modern pharmaceutical industry group.
2. Transformation from a primarily “endogenous growth” model to a dual approach of “internal growthand external expansion”
Driven by synergies from both “internal growth” and “external expansion,” the Company’s industry portfolioswill continue to optimize, serving as the primary growth model. “Internal” growth focuses on cost reduction andefficiency improvement. Adopting a holistic approach to maximizing overall benefits, the Company focuses onenhancing standardized management efficiency across the entire business lifecycle. The Company will
systematically optimize industry chains, value chains, and productivity factors to continually elevate cost reductionand efficiency to the next level. “External” expansion focuses on complementing and strengthening the Company’sportfolio. Guided by overall strategic requirements and guidance, the Company will actively explore strategicmergers and acquisitions (M&As) and partnerships to address gaps and enhance growth in existing industrysegments. This approach aims to overcome current growth bottlenecks, build a healthy and sustainable industryportfolio, and achieve higher quality development.
3. Transformation from training internal talents to “training internal talents + introducing externaltalents”
The Company believes in the pivotal role of talent in driving its development. It has established acomprehensive training system, which provides various avenues for employee growth and fosters both specializedknowledge and comprehensive skills, with the mutual development of talents and the Company as the objective.Meanwhile, the Company will leverage its advantageous resources to actively recruit high-caliber specialists acrossvarious domains such as drug R&D, digitalization, and strategic investment. By continuously enhancing capabilitiesin innovation and R&D, lean operations, and investment and mergers, the Company will employ a dual approachof internal training and external recruitment. By utilizing both internal training and external recruitment, andleveraging the Company’s growth environment and market resources, we will build a high-quality talent pipelinethat meets the future development needs of the Company.
4. Transformation from a traditional manufacturing enterprise to a smart enterprise based on digitaloperations
The Company is committed to building a digital driving force and actively seeking for transformation to digitaloperations with customers as the center, and improve their experience. Leveraging cutting-edge digital technologiessuch as cloud computing, big data, artificial intelligence, 5G, and the Internet of Things, the Company drivesinnovation and development. The Company also seeks for transformation from a function-oriented process to aprocess that connects customer scenarios to drive the Company’s management change and organizationaldevelopment. Also, the Company will establish a unified “data base” and governance strategy, and build anintelligent decision-making system “based on facts.”II. Analysis on core competitiveness
(I) Brand strength
Yunnan Baiyao is a well-established Chinese heritage brand with a history of over 120 years. The Companyplaces the Yunnan Baiyao brand at its core, evolving from a pharmaceutical brand to cover a diverse range of sub-brands, including personal healthcare products, crude drugs, and Big Health products. We have built a diverseportfolio of brands and continuously expanded our reach to target audiences, enhancing our brand value over thelong term. During the reporting period, Yunnan Baiyao was constantly recognized in its brand value by the markets.In June 2024, BrandFinance Healthcare 2024 - Ranking of Global Most Valuable and Strongest Pharma, MedicalDevice, and Healthcare Services Brands in Value officially released by Brand Finance, an authoritative internationalbrand valuation agency, showed that Yunnan Baiyao was shortlisted into the List of Global Top 25 Most ValuablePharmaceutical Brands. In July 2024, Yunnan Baiyao was shortlisted into the 2024 Fortune Top 500 ChineseEnterprises List released by Fortune China for the 15th consecutive year and ranked 385th. In July 2024, Yunnan
Baiyao was shortlisted into 2024 Pharm Exec 50 released by Pharm Exec, an American magazine and ranked 33th.In June 2024, the list of Top 100 Chinese Pharmaceutical Companies for 2023 was released, with Yunnan Baiyaoonce again ranked among the top 100 Chinese TCM companies, securing the 5th position. In June 2024, YunnanBaiyao was included in the “China’s Top 100 ESG Pioneer Listed Companies” list.(II) Talent team advantagesThe Company continues to enhance its market-oriented talent selection and appointment mechanism, andimprove its systems for talent acquisition, training, and selection, laying a solid foundation for its talent teambuilding. The Company is expanding its internal teams and actively recruiting new talent, thus establishing highlyskilled and market-aware management teams in each business area. In February 2024, the Board of Directors electedMr. Zhang Wenxue to be the chairman of the tenth Board of Directors. After the chairman took office, under hisleadership, the Company achieved a comprehensive improvement in operational quality and efficiency by makingsystematic planning from various dimensions such as Party building, strategy, internal control, organization, layinga solid foundation for the Company’s long-term, healthy and sustainable development. The Company strives toseize new development opportunities and drive the Company to march towards sustained high-quality development,laying a good foundation for achieving synergy and win-win situation among all stakeholders.
(III) Innovation capabilities and product portfolio strengthsYunnan Baiyao’s enduring vitality over the span of two centuries can be attributed to its commitment tocontinuous business and product innovation, addressing the ever-evolving consumer demands. The Company’sinnovation strategy revolves around three key areas: “customer-oriented innovation” centered on consumers, “socialinnovation” carried by government, industry, academia, research and medicine, and “digital and intelligentinnovation” driven by advanced technologies such as artificial intelligence, big data and cloud computing. TheCompany is committed to integrating TCM into modern life. As such, the Company has evolved from a singlehemostatic product manufacturer into a company with broad and diversified Yunnan Baiyao products encompassingvarious sectors within the Big Health industry. Among them, aerosol, plaster, capsule, toothpaste, woundplast, andBaoqi Sanqi products rank among the top in the segmented market share, creating classic cases of TCM innovationsuch as “Yunnan Baiyao Woundplast” and “Yunnan Baiyao Toothpaste” and their use in daily scenarios.
The Company’s commitment to continuously enhancing its R&D capabilities and driving digitaltransformation has constantly boosted its R&D innovation capacity. To support its R&D team, the Company hasestablished more than 10 national and provincial-level research platforms. It has also forged partnerships withvarious research institutions and universities to establish dedicated R&D centers focusing on the pharmaceuticalfield. These collaborations focus on the pharmaceutical field, facilitate talent acquisition, scientific research, andcooperation exchange. By promoting close collaboration between basic research and clinical practices, the Companytruly translates research findings into practical outcomes, encourages interdisciplinary integration, and fostersinnovation. The Company has successfully expanded its business presence in pharmaceutical products and healthproducts, and holds a leading position in various market segments. The coordinated development and mutualempowerment of pharmaceutical and consumer businesses can effectively mitigate market and policy risks acrossdifferent economic cycles, achieving stable and sustainable overall business operations for the Company.(IV) Full industry chain advantage
Yunnan Baiyao relies heavily on the biological resources in Yunnan Province and has always adhered to along-term approach when establishing its presence in key strategic varieties of TCM, especially focusing on strategicTCM varieties like Paris polyphylla and Panax notoginseng. Over two decades of dedicated research on Parispolyphylla, a strategic medicinal material for the Company, the Company has successfully addressed the challengesassociated with its cultivation. The Company has transformed this once-wild and endangered plant into acultivatable medicinal material suitable for industrialization. Additionally, the Company has embraced digitalinfrastructure and information-oriented approaches in the Panax notoginseng industry chain, driving the digitaltransformation across the entire supply chain. Through digital solutions, Yunnan Baiyao ensures stable quality andfull traceability of Panax notoginseng raw materials, effectively mitigating the quality fluctuations often associatedwith traditional agricultural products due to extensive processing. This progress allows the Company to graduallyestablish a fair pricing mechanism and standardized industrial operations, thereby leading and advancing thedevelopment and upgrading of the Panax notoginseng industry. The Company is extending the experience gainedfrom establishing the “Digital Sanqi Industrial Platform” to other TCM supply chains. It is gradually building along-term, stable, and high-quality traceable supply chain system for authentic Yunnan medicinal herbs such asPanax notoginseng, Paris polyphylla, Carthamus tinctorius, and Poria cocos.Driven by its long-term and continuous investment in key strategic varieties of TCM, the Company hasachieved a complete and closed-loop industry chain from seed selection and cultivation to production and processing.This has established a robust supply system for strategic medicinal materials, effectively ensuring the qualitystability of TCM raw materials and controlling the price fluctuations of strategic TCM raw materials. Such systemhas laid the groundwork for the long-term and sustainable development of Yunnan Baiyao.
(V) Channel advantages
In terms of pharmaceuticals, the Company has built a marketing network covering medical institutions andretail pharmacies across various provinces, regions, counties, and towns in China. In the advantageous over-the-counter (OTC) channels, we have nationwide coverage, serving 5,000 top-tier chains and reaching over 400,000retail stores. Especially in areas with well-developed chain pharmacies such as East China, Hunan Province, HubeiProvince, and Yunnan Province, the Company has achieved the high coverage, the penetration rate, and strongmarket control capabilities, and implemented the special marketing cooperation under the principle of “OneProvince, One Strategy” or even “One Chain Store, One Strategy”. The Company also has conducted extensivecooperation with major e-commerce platforms such as Alibaba, JD.com, and Douyin, for expansion of online OTCsales channels, and achieved efficient reach to modern consumers by virtue of customized digital marketing.
Regarding health products, Yunnan Baiyao has established a comprehensive nationwide sales team dedicatedto Big Health products, covering all terminals. Yunnan Baiyao Toothpaste continues to lead the market share inChina with a high brand penetration in the oral product category. Through ongoing optimization of its full chainchannels, the Company has not only strengthened its position in traditional offline channels but also experiencedsignificant growth in emerging business models such as on-demand retail, community group purchases, and interest-based e-commerce. This demonstrates the Company’s willingness to keep trying new things and adapt, takingmeasured steps forward and learning from any mistakes along the way, all of which enhance its ability to quicklyrespond to evolving business trends. Such channel advantages have driven significantly enhancement to Yunnan
Baiyao’s market competitiveness, laying the foundation for the Company to continuously commercialize newproducts.III. Analysis on Principal Businesses
Overview: Refer to relevant contents of “I. Principal Businesses of the Company during the Reporting Period.”
1. Year-on-year changes in the key financial data
Unit: RMB
| The reporting period | The same period of the previous year | Year-on-year increase/decrease | Reasons for changes | |
| Operating revenue | 20,455,286,287.52 | 20,309,372,850.07 | 0.72% | Mainly due to increase in industrial sales revenue by RMB 154 million |
| Operating cost | 14,462,809,950.85 | 14,713,232,267.40 | -1.70% | Mainly due to decrease in industrial sales cost by RMB 183 million and decrease in commercial sales cost by RMB 64 million during the reporting period. |
| Sales expenses | 2,296,821,490.59 | 2,257,688,549.69 | 1.73% | Sales volume and sales expenses increased during this period. |
| Administrative expenses | 327,410,020.48 | 344,443,810.40 | -4.95% | No significant changes. |
| Financial expenses | -129,619,278.35 | -105,990,570.67 | -22.29% | Mainly due to YOY increase in interest income by RMB 48 million. |
| Income tax expenses | 482,065,489.87 | 477,020,837.61 | 1.06% | Corresponding increase in income tax expenses caused by increase in total profits during the reporting period. |
| R&D investment | 148,043,019.34 | 144,819,933.66 | 2.23% | Increase in R&D investments during the reporting period. |
| Net cash flows from operating activities | 3,261,617,391.99 | 2,251,951,370.10 | 44.84% | Mainly due to increase in the cash received from sales of goods or rendering of services during the reporting period by RMB 1.389 billion compared to the same period last year and increase in the cash paid for goods purchased and services received during the reporting period by RMB 349 million compared to the same period last year. |
| Net cash flows from investing activities | -205,582,688.32 | 307,088,767.49 | -166.95% | The main reasons are as follows: cash received from investment recovery decreased by RMB 966 million compared to the same period last year, mainly due to the cash received from the disposal of funds; cash received from other investment-related activities increased by RMB 3.444 billion compared to the same period last year, mainly due to the cash recovered from maturing time deposits; cash paid for investments increased by RMB 831 million compared to the same period last year, mainly due to cash used for purchasing financial products; cash paid for other investment-related activities increased by RMB 2.24 billion compared to the same period last year, mainly due to cash deposited into time deposits. |
| Net cash flows from financing activities | -3,145,514,928.97 | -3,107,700,963.75 | -1.22% | Mainly due to cash received from borrowing increased by RMB 895 million compared to the same period last year; cash paid for dividend distribution, profit sharing, or interest payments increased by RMB 990 million compared to the same period last year. |
| Net increase in cash and cash equivalents | -89,528,803.06 | -543,421,662.08 | 83.52% | Mainly due to increase in the net cash flows from operating activities during the reporting period compared to the previous period. |
Significant changes in the profit composition or profit source of the Company during the reporting period
□ Applicable ? Not applicable
There were no significant changes in the profit composition or profit source of the Company during the reporting period.
2. Operating revenue structure
Unit: RMB
| The reporting period | The same period of the previous year | Year-on-year increase/decrease | |||
| Amount | Proportion in operating revenue | Amount | Proportion in operating revenue | ||
| Total operating revenue | 20,455,286,287.52 | 100% | 20,309,372,850.07 | 100% | 0.72% |
| By industries | |||||
| Income from industrial sales | 7,652,967,384.61 | 37.41% | 7,498,960,250.10 | 36.92% | 2.05% |
| Income from commercial sales | 12,742,489,364.88 | 62.29% | 12,771,903,564.67 | 62.89% | -0.23% |
| Technical service | 13,419,064.28 | 0.07% | 2,184,678.61 | 0.01% | 514.24% |
| Hospitality industry | 6,332,847.91 | 0.03% | 7,304,629.14 | 0.04% | -13.30% |
| Income from plantation sales | 2,387,937.40 | 0.01% | 1,449,878.20 | 0.01% | 64.70% |
| Income from other businesses | 37,689,688.44 | 0.18% | 27,569,849.35 | 0.14% | 36.71% |
| By products | |||||
| Industrial products (Self-made) | 7,652,967,384.61 | 37.41% | 7,498,960,250.10 | 36.92% | 2.05% |
| Wholesale and retail | 12,742,489,364.88 | 62.29% | 12,771,903,564.67 | 62.89% | -0.23% |
| Agricultural products | 2,387,937.40 | 0.01% | 1,449,878.20 | 0.01% | 64.70% |
| Others | 19,751,912.19 | 0.10% | 9,489,307.75 | 0.05% | 108.15% |
| Income from other businesses | 37,689,688.44 | 0.18% | 27,569,849.35 | 0.14% | 36.71% |
| By regions | |||||
| Domestic | 20,241,882,062.31 | 98.96% | 19,913,147,313.47 | 98.05% | 1.65% |
| Overseas | 213,404,225.21 | 1.04% | 396,225,536.60 | 1.95% | -46.14% |
3. The industries, products, or regions that account for more than 10% of the Company’s operating revenueor operating profit
? Applicable □ Not applicable
Unit: RMB
| Operating revenue | Operating cost | Gross margin | Increase/decrease of operating revenue compared with the same period of the previous year | Increase/decrease of operating cost compared with the same period of the previous year | Increase/decrease of gross margin compared with the same period of the previous year | |
| By industries | ||||||
| Income from industrial sales | 7,652,967,384.61 | 2,497,275,449.58 | 67.37% | 2.05% | -6.81% | 3.10% |
| Income from commercial sales | 12,742,489,364.88 | 11,940,543,065.08 | 6.29% | -0.23% | -0.53% | 0.28% |
| By products | ||||||
| Industrial products (Self-made) | 7,652,967,384.61 | 2,497,275,449.58 | 67.37% | 2.05% | -6.81% | 3.10% |
| Wholesale and retail | 12,742,489,364.88 | 11,940,543,065.08 | 6.29% | -0.23% | -0.53% | 0.28% |
| By regions | ||||||
| Domestic | 20,241,882,062.31 | 14,261,235,522.19 | 29.55% | 1.65% | -0.57% | 1.58% |
When the statistical caliber of the Company’s principal business data is adjusted in the reporting period, the Company’s principalbusiness data should be subject to the one after the statistical caliber at the end of the reporting period is adjusted in the latest year
□ Applicable ? Not applicable
Ⅳ. Analysis on Non-principal Businesses
? Applicable □ Not applicable
Unit: RMB
| Amount | Proportion in total profits | Reasons | Whether it is sustainable | |
| Investment income | 477,498,314.49 | 13.00% | Mainly consisted of investment income from Shanghai Pharmaceuticals Holding Co., Ltd (“Shanghai Pharma”). | No |
| Profits and losses from changes in fair value | 4,596,876.81 | 0.13% | Mainly consisted of the change in fair value of the Company’s financial assets held for trading and other non-current financial assets. | No |
| Non-operating revenue | 4,431,701.71 | 0.12% | Mainly consisted of income from activities unrelated to the Company’s daily business activities. | No |
| Non-operating expenses | 4,755,624.76 | 0.13% | Mainly consisted of expenses not related to daily business activities. | No |
| Other income | 47,920,871.74 | 1.31% | Mainly consisted of government subsidies. | No |
| Credit impairment losses | -82,762,335.12 | -2.25% | Mainly consisted of provision for bad debt for accounts receivable in the commercial sector. | No |
| Asset impairment losses | -3,578,594.53 | -0.10% | Mainly consisted of the provision for inventory write-downs. | No |
| Income from disposal of assets | -1,592,134.63 | -0.04% | Mainly consisted of proceeds from the disposal of non-current assets and proceeds from the disposal of right of use assets. | No |
V. Analysis on Assets and Liabilities
1. Significant changes in assets composition
Unit: RMB
| End of the reporting period | End of the previous year | Increase/decrease in proportion | Statement on significant changes | |||
| Amount | Proportion in total assets | Amount | Proportion in total assets | |||
| Cash and bank balance | 14,719,563,531.35 | 27.07% | 14,218,343,076.67 | 26.44% | 0.63% | No significant changes. |
| Accounts receivable | 10,105,457,470.63 | 18.59% | 9,966,170,447.21 | 18.53% | 0.06% | No significant changes. |
| Inventories | 5,988,059,390.20 | 11.01% | 6,442,194,823.67 | 11.98% | -0.97% | No significant changes. |
| Investment property | 47,029,107.86 | 0.09% | 44,104,145.97 | 0.08% | 0.01% | No significant changes. |
| Long-term equity investments | 11,770,384,034.03 | 21.65% | 11,536,660,992.93 | 21.45% | 0.20% | No significant changes. |
| Fixed assets | 2,601,062,934.15 | 4.78% | 2,662,900,014.03 | 4.95% | -0.17% | No significant changes. |
| Construction in progress | 713,596,692.91 | 1.31% | 529,708,553.58 | 0.98% | 0.33% | Increased investment in construction in progress during the reporting period. |
| Right-of-use assets | 270,258,242.13 | 0.50% | 258,319,485.58 | 0.48% | 0.02% | No significant changes. |
| Short-term loans | 1,144,447,669.32 | 2.11% | 1,747,303,700.34 | 3.25% | -1.14% | No significant changes. |
| Contractual liabilities | 1,762,470,306.12 | 3.24% | 1,739,865,228.75 | 3.23% | 0.01% | Mainly due to increase in advance payments received by Pharmaceutical Business Group. |
| Long-term loans | 2,100,000.00 | 0.00% | 2,100,000.00 | 0.00% | 0.00% | No significant changes. |
| Leasing liabilities | 193,456,851.84 | 0.36% | 172,347,309.72 | 0.32% | 0.04% | No significant changes. |
| Financial assets held for trading | 1,046,815,045.34 | 1.93% | 149,366,687.56 | 0.28% | 1.65% | Mainly due to the purchase of financial products during the period. |
| Notes receivable | 346,072,424.86 | 0.64% | 227,542,572.56 | 0.42% | 0.22% | Mainly due to the increase in bankers’ acceptances held at the end of the period. |
| Other receivables | 364,961,972.39 | 0.67% | 104,050,709.53 | 0.19% | 0.48% | Mainly due to an increase in dividends receivable. |
| Non-current assets due within one year | 0.00% | 442,772,777.78 | 0.82% | -0.82% | Initial term deposit converted to current deposit upon maturity. | |
| Other current assets | 1,830,161,506.46 | 3.37% | 2,862,076,217.20 | 5.32% | -1.95% | Mainly due to the conversion of initial term deposit to current deposit upon maturity. |
| Receipts in advance | 2,045,212.68 | 0.00% | 486,612.12 | 0.00% | 0.00% | Increased rent in advance during the reporting period. |
| Taxes payable | 515,227,950.50 | 0.95% | 339,670,850.02 | 0.63% | 0.32% | Income tax and VAT payable outstanding at the end of the period increased. |
| Other payables | 1,380,365,853.97 | 2.54% | 1,025,085,879.54 | 1.91% | 0.63% | Mainly due to an increase in accrued and unpaid expenses. |
| Other current liabilities | 1,698,311,110.99 | 3.12% | 532,943,904.40 | 0.99% | 2.13% | Mainly due to the issuance of ultra short-term financing bonds during the period. |
| Estimated liabilities | 16,050,005.49 | 0.03% | 0.00% | 0.03% | Reclassification of returns payable. | |
| Other non-current liabilities | 1,931,554.36 | 0.00% | 17,296,814.41 | 0.03% | -0.03% | Reclassification of returns payable. |
| Treasury stock | 0.00% | 707,428,892.15 | 1.32% | -1.32% | Treasury stock written off during the period. |
2. Major overseas assets
□ Applicable ?Not applicable
3. Assets and liabilities at fair value
? Applicable □ Not applicable
Unit: RMB
| Item | Opening balance | Profits or losses on changes in fair value during the reporting period | Cumulative changes in fair value included in equity | Impairment accrued during the reporting period | Purchase amount during the reporting period | Sales amount during the reporting period | Other changes | Closing balance |
| Financial assets | ||||||||
| 1. Financial assets held for trading (derivative financial assets excluded) | 149,366,687.56 | 16,811,914.40 | 900,000,000.00 | 16,133,556.62 | -3,230,000.00 | 1,046,815,045.34 | ||
| 2. Other equity instrument investments | 71,745,000.00 | 71,745,000.00 | ||||||
| 3. Other non-current financial assets | 324,674,379.63 | -12,215,037.59 | 312,459,342.04 | |||||
| Subtotal of financial assets | 545,786,067.19 | 4,596,876.81 | 900,000,000.00 | 16,133,556.62 | -3,230,000.00 | 1,431,019,387.38 | ||
| Total | 545,786,067.19 | 4,596,876.81 | 900,000,000.00 | 16,133,556.62 | -3,230,000.00 | 1,431,019,387.38 | ||
| Financial liabilities | 0.00 | 0.00 |
Note: The increase in purchases of financial assets held for trading during the period was mainly due to the purchase of financial products during the reporting period, please refer to “V. Analysison Assets and Liabilities 1. Significant changes in assets composition” for details.Other variations: None.Whether the Company has significant changes in measurement attributes of main assets during the reporting period
□ Yes ? No
4. Restrictions on asset rights as of the end of the reporting period
| Item | Closing book value (RMB) | Reason for restriction |
| Cash and bank balance | 2,643,785.07 | Earmarked for housing maintenance in reformed housing |
| Cash and bank balance | 500,000.00 | The lawsuit in question has been won, and the lifting of the freeze and other related matters are in progress |
| Cash and bank balance | 46,583,430.74 | Guarantee deposits, banker’s acceptance deposits, performance bonds, etc. |
| Assets in special account for system reform | 607,599,650.11 | Special fund for paying the cost of employee status conversion in state-owned enterprises |
| Long-term equity investments | 11,770,370,976.32 | The holdings shall not be transferred within 36 months since the ending date of the private placement by Shanghai Pharma in 2021 |
| Total | 12,427,697,842.24 | -- |
VI. Investment Analysis
1. Overview
? Applicable □ Not applicable
| Investment during the reporting period (RMB) | Investment during the same period of the previous year (RMB) | Percentage of change |
| 4,085,229,378.59 | 1,041,333,795.16 | 292.31% |
2. Significant equity investments made during the reporting period
□ Applicable ? Not applicable
3. Significant non-equity investments in progress during the reporting period
? Applicable □ Not applicable
Unit: RMB
| Project | Investment method | Investment in fixed assets or not | Involved industry in investment projects | Amount invested in the reporting period | Cumulative actual investment as of the end of reporting period | Source of funding | Progress of project | Estimated income | Cumulative income as of the end of the reporting period | Reasons for unmet progress and estimated income | Disclosure date (if any) | Disclosure index (if any) |
| Yunnan Baiyao Shanghai International Center | Self-established | Yes | Pharmaceuticals, daily chemical products | 87,706,087.92 | 655,131,190.91 | Self-raised | 61.00% | N/A | June 9, 2021 | http://www.cninfo.com.cn/new/disclosure/detail?stockCode=000538&announcementId=1210206330&orgId=gssz0000538&announcementTime=2021-06-09 | ||
| Yunnan Baiyao R&D Platform - Kunming Center Construction Project | Self-established | Yes | Pharmaceuticals | 33,799,180.03 | 120,995,985.93 | Self-raised | 40.00% | N/A | ||||
| Total | -- | -- | -- | 121,505,267.95 | 776,127,176.84 | -- | -- | 0.00 | 0.00 | -- | -- | -- |
4. Financial assets investment
(1) Securities investment
? Applicable □ Not applicable
Unit: RMB
| Type of securities | Stock code | Stock abbreviation | Initial investment cost | Accounting measurement model | Opening book value | Profits or losses on changes in fair value during the reporting period | Cumulative changes in fair value included in equity | Purchase amount during the reporting period | Sales amount during the reporting period | Profits and losses during the reporting period | Closing book value | Accounting items | Source of funding |
| Domestic and overseas stocks | HK.02633 | Jacobson Pharma | 238,699,200.00 | Fair value | 115,996,160.00 | 2,652,240.00 | 2,652,240.00 | 118,648,400.00 | Other non-current financial assets | Self-raised | |||
| Domestic and overseas stocks | HK.02161 | JBM (Healthcare) | 25,039,800.00 | Fair value | 72,221,202.90 | 514,829.70 | 514,829.70 | 72,736,032.60 | Financial assets held for trading | Self-raised | |||
| Domestic and overseas stocks | HK.03681 | SinoMab BioScience | 354,119,828.19 | Fair value | 72,545,484.66 | 13,012,784.70 | 16,133,556.62 | 24,768.48 | 69,424,712.74 | Financial assets held for trading | Self-raised | ||
| Total | 617,858,828.19 | -- | 260,762,847.56 | 16,179,854.40 | - | - | 16,133,556.62 | 3,191,838.18 | 260,809,145.34 | -- | -- | ||
Note: The Company’s shares in Jacobson Pharma and SinoMab BioScience were subscribed in the form of strategic investment in September 2018 and October 2019; the Company acquired theshares of JBM (Healthcare) distributed to the Company by Jacobson Pharma in 2021 and 2023, respectively, as a result of the Company’s shares in Jacobson Pharma.
(2) Investments in derivatives
□ Applicable ? Not applicable
The Company had no investments in derivatives during the reporting period.
5. Use of proceeds
□ Applicable ? Not applicable
The Company had no use of proceeds during the reporting period.
VII. Significant Assets and Equity Sales
1. Significant assets sales
□ Applicable ? Not applicable
The Company had no significant assets sales during the reporting period.
2. Significant equity sales
□ Applicable ? Not applicable
VIII. Analysis on the Major Holding Companies and Joint-stock Companies
? Applicable □ Not applicableMajor subsidiaries and joint-stock companies with a net profit impact of over 10%
Unit: RMB
| Company name | Company type | Principal businesses | Registered capital | Total assets | Net assets | Operating revenue | Operating profit | Net profit |
| Yunnan Pharmaceutical, Co., Ltd. | Subsidiary | Wholesale and retail of pharmaceuticals | 1,000,000,000.00 | 16,965,236,193.51 | 6,158,248,210.23 | 12,329,242,791.12 | 337,269,422.60 | 286,490,361.99 |
| Yunnan Baiyao Group Health Products Co., Ltd. | Subsidiary | Production and sales of oral hygiene products | 84,500,000.00 | 9,836,431,237.28 | 7,753,449,669.89 | 3,148,545,484.92 | 1,432,853,923.98 | 1,216,170,372.04 |
| Shanghai Pharmaceuticals Holding Co., Ltd. | Joint-stock company | R&D, manufacturing, and sales of API, pharmaceutical products (including but not limited to chemical Active Pharmaceutical Ingredients (APIs), chemical preparations, TCM materials, Chinese patent medicines, TCM decoction pieces, biochemical drugs, biological products, narcotics, psychotropic drugs, and toxic drugs for medical use (Adapted to the scope of business), vaccines) of various dosage forms (including but not limited to tablets, capsules, aerosols, immune preparations, granules, plasters, pills, oral liquids, inhalants, injections, liniments, tinctures, suppositories) health products, medical devices, and related products, manufacturing and sales of | 3,702,788,059.00 | 221,335,871,829.06 | 82,228,621,195.06 | 139,413,145,524.43 | 4,830,896,881.37 | 3,597,363,036.62 |
pharmaceutical equipment,engineering installation andmaintenance, warehousing andlogistics, sea, land, and air freightforwarding business, industrialinvestment, asset management,provision of internationaleconomic and trade informationand consulting services, self-owned house leasing, import andexport business of various self-operated and agent drugs andrelated goods and technologies.
Acquisition and disposal of subsidiaries during the reporting period? Applicable □ Not applicable
| Company name | Approaches of acquiring and disposing of subsidiaries during the reporting period | Influences on overall production, operation and performance |
| Hangzhou Shanqi Health Industry Co., Ltd. | Newly incorporated | No significant influence. |
| Yunnan Pharmaceutical Zhaotong Co., Ltd. | Newly incorporated | No significant influence. |
| Ban Loong Capital GP | Cancelled | No significant influence. |
Description of the major holding companies and joint-stock companies: None.
Ⅸ. Structured Entities Controlled by the Company? Applicable □ Not applicableSee Section X “X. Interest in Other Entities”
X. Risks and Countermeasures(I) Policy changesIn recent years, a series of supportive policies for the pharmaceutical industry have been introducedsuccessively, opening up favorable development opportunities for pharmaceutical enterprises. Meanwhile, thehealthcare reform will be further deepened, and the routine centralized volume-based procurement will cover morepharmaceuticals. Comprehensive revisions to laws and regulations pertaining to drug supervision are also on thehorizon. All of these factors are exerting higher requirements for the healthy development of the pharmaceuticalindustry. Given this context, the Company will place even greater emphasis on aligning with the Chinesepharmaceutical policy direction, intensify its efforts in tracking, analyzing and comprehending critical industryinformation, and promptly grasp industry development and shifting trends. By devising suitable strategies, theCompany aims to alleviate the pressure and uncertainty arising from policy changes on production and operations,ultimately achieving sustained growth.(II) Market uncertaintiesDue to rising raw material costs, price controls on pharmaceutical products, and slowing growth at the terminallevel, the pharmaceutical industry is experiencing significant operational pressure. Health consumer products arefacing challenges from increasingly rational consumer behavior and fragmented demand. In response to thesepressures, the Company will continue to leverage its full industry chain competitiveness and innovation as keydrivers. By continuously enhancing operational efficiency and refining management of channels and retail, theCompany aims to deepen its innovation, cost, and channel advantages, which enables the Company to navigatethrough economic cycles and achieve sustainable, high-quality development in the competitive market.(III) Transformation of innovation and R&D achievementsIn pursuit of fulfilling technological advantages and enhancing core competitiveness, the Company hasconsistently escalated its investment in drug R&D over recent years. Generally, new drug R&D is featured withlarge amount of investment, long R&D cycle, less-than-expected industry transformation rate, market uncertaintyafter industrialization in the future, etc. Any changes in relevant policies and market demands will be likely to affectthe commercial value of the products under R&D. Upon completion of R&D, the successful commercialization ofa new drug stands as an important factor influencing R&D yields. The Company is poised to meticulously assessthe R&D projects of novel drugs within the framework of its strategic direction. Resources will be apportioned tokey projects, bolstering risk management capabilities throughout the R&D. Collaborative IUR efforts will befortified, optimizing the transformation of achievements and reducing the uncertainties associated with R&Dinvestments.
(IV) External expansionBy implementing an industrial development strategy to seek both internal growth and external expansion, theCompany actively advances towards its strategic goals and strives to inject new momentum into sustainabledevelopment. In the process of pursuing external expansion, a key challenge for the Company is how to leverage
investment and innovation to introduce new variables, build a new Baiyao platform, integrate more externalresources, and develop a complete industry chain, to ultimately establish a strong foothold in a highly competitiveand rapidly changing market. The Company will continue to be guided by its strategy and focus on the needs ofusers, constantly enhance its market insights, and construct an industry portfolio system, management system andcapability system, which are suitable for its healthy and sustainable development. Also, the Company will controlrisks in external expansion by adhering to a scientific and standardized risk management system. It will cautiouslymake overall arrangement and constantly adjust short-, medium-, and long-term strategies to drive the achievementof its strategic goals.XI. Implementation of the “Enhancement of Quality and Returns” InitiativeWhether the Company disclosed the Announcement of the “Enhancement of Quality and Returns” Initiative?Yes □No
The Company disclosed the Announcement on “Enhancement of Quality and Returns” Initiative on March 9,2024 (Announcement No.: 2024-12).In the first half of 2024, the Company focused on its core businesses, continuously optimizing its businessstructure, with contribution to profit from the industrial revenue steadily increasing. During the reporting period,the Company achieved operating revenue of RMB 20.455 billion, a 0.72% increase compared to the same periodlast year. Among this, the proportion of industrial revenue in total operating revenue further rose to 37.41%, anincrease of 0.49 percentage points compared to the same period of previous year; industrial revenue growth ratereached 2.05%; and the industrial gross profit margin was 67.37%, up 3.10 percentage points year-on-year.While maintaining steady growth in operating performance, the Company focused on unleashing potential andenhancing efficiency across the entire value chain, with operational quality and efficiency continuing to improve.During the reporting period, the Company achieved a net profit attributable to the parent company of RMB 3.189billion, a 12.76% increase from RMB 2.828 billion in the same period last year, setting a new historical high for theperiod; the weighted average return on net assets was 7.93%, up 0.76 percentage points from the previous year;basic earnings per share were RMB 1.79, a 13.29% increase year-on-year; net cash flow from operating activitieswas RMB 3.262 billion, up 44.84% year-on-year; and management expenses decreased by 4.95% year-on-year. Atthe end of the reporting period, the Company’s total assets were RMB 54.368 billion, an increase of 1.08% fromthe beginning of the period; and the cash and bank balance were RMB 14.720 billion, up 3.53% from the beginningof the period.During the reporting period, the Company implemented cash dividends and completed cancellation ofrepurchased share, continually enhancing shareholder returns. The Company’s dividend plan for 2023 is to distributeRMB 20.77 per 10 shares, with a total dividend amount of RMB 3.706 billion, accounting for 90.53% of the 2023net profit attributable to the parent company. The annual equity distribution was completed on May 10, 2024. OnFebruary 23, 2024, The Company’s shareholders’ meeting considered and approved the cancellation of 12,599,946repurchased shares and a corresponding reduction in the Company’s registered capital. The cancelled sharesrepresent approximately 0.7015% of the Company’s total share capital, with repurchase costs exceeding RMB 700million. In April 2024, the Company completed the cancellation procedures for the 12,599,946 repurchased shares.Through this share repurchase cancellation arrangement, the Company demonstrates its confidence in its
development and enhances investors’ sense of achievement with concrete actions. This fully safeguards the interestsof investors and stakeholders and further enhances investors’ recognition of the Company’s value.The Company will set the strategic goal of “driving Yunnan Baiyao, a century-old pharmaceutical brand, tobecome a leading Chinese and world-class modern pharmaceutical industry group, achieving reasonable growth inscale, steady improvement in efficiency, and continuous optimization of industrial and product structures for high-quality development,” steadfastly deepen its roots in the “pharmaceutical” industry, and drive its each business tofocus on its advantageous fields in Big Health industry to constantly enhance its leading industry position. Whilecontinuously enhancing core competencies, the Company is also advancing the development of new businessgrowth drivers in a scientific, prudent, and effective manner. The Company will stabilize its core foundation throughinternal growth and, via external expansion, integrate advantageous resources to optimize and enhance its industryportfolio, rapidly advancing its growth trajectory to lay a solid foundation for medium- to long-term strategicdevelopment. Specifically, from an industry perspective, the company will focus on internal growth by:
strengthening and expanding the quality influence of “Big TCM” products along the comprehensive TCM industrychain; enhancing and refining the health and wellness offerings through a focus on efficacious products and servicesin personal healthcare; stabilizing and improving the new regional distribution channels via market-specificcommercial circulation. From an investment perspective, the Company will focus on external expansion by: makingup for the insufficiency in internal growth by introducing new platforms centering on industrial strategic orientationfor achieving 1+1>2, to rapidly build a health industry system and establish a stronger foundation for future high-quality development.
The Company will strictly remain committed to fulfilling its responsibilities and obligations as a listedcompany. Through focusing on our principal businesses, continuous innovation, and operational improvements toenhance our intrinsic value, we aim to promote the healthy and sustainable development of the Company. We willadhere to the “investor-oriented” principle, striving to safeguard investors’ rights and interests through variousmeans, enhance investment returns and bolster investors’ sense of achievement. By effectively implementing the“Enhancement of Quality and Returns” initiative, we seek to boost market confidence and contribute to the positiveand healthy development of the capital market.
Section IV Corporate GovernanceI. Annual General Meeting and Extraordinary General Meeting Held during the ReportingPeriod
1. Shareholders’ meetings during the reporting period
| Sessions | Meeting type | Proportion of attendance of the investors | Meeting date | Disclosure date | Resolutions |
| First Extraordinary General Meeting for 2024 | Extraordinary General Meeting | 63.39% | February 23, 2024 | February 24, 2024 | The following proposals had been considered and approved: 1. Proposal on Election of Non-Independent Directors for the Tenth Board of Directors; 2. Proposal on Change of Use of Repurchased Shares and Cancellation |
| 2023 Annual General Meeting | Annual General Meeting | 62.19% | April 23, 2024 | April 24, 2024 | The following proposals had been considered and approved: 1. Proposal on the 2023 Annual Work Report of the Board of Directors; 2. Proposal on the 2023 Annual Work Report of the Supervisory Committee; 3. Proposal on the 2023 Final Financial Report; 4. Proposal on the 2023 Annual Report and its Summary; 5. Proposal on the 2023 Profit Distribution Plan; 6. Proposal on the 2024 Financial Budget Report; 7. Proposal on Estimated Routine Related Party Transactions for 2024; 8. Proposal on Revising the “Yunnan Baiyao Board Meeting Rules” |
| Second Extraordinary General Meeting for 2024 | Extraordinary General Meeting | 55.89% | June 11, 2024 | June 12, 2024 | The following proposals had been considered and approved: 1. Proposal on Election of Shareholder Supervisors for the Tenth Supervisory Committee; 2. Proposal on Election of Non-Independent Directors for the Tenth Board of Directors |
2. Extraordinary general meetings convened at the request of preferred shareholders withresumed voting rights
□ Applicable ? Not applicable
II. Changes of Directors, Supervisors, and Senior Management of the Company
? Applicable □ Not applicable
| Name | Position held | Type | Date | Reason |
| Zhang Wenxue | Chairman | Elected | February 23, 2024 | Elected as Chairman to further improve the Company’s board governance structure |
| Yin Pinyao | Former Chief Operating Officer and Senior Vice President | Dismissed | February 7, 2024 | Resigned as Chief Operating Officer and Senior Vice President due to personal reasons |
| Yu Juan | Former Chief Human Resources Officer | Dismissed | February 7, 2024 | Resigned as Chief Human Resources Officer due to personal reasons |
| Chen Fashu | Former Director | Resigned | May 22, 2024 | Resigned as Director of the Tenth Board of Directors, Chairman of the Strategy Committee, and Member of the Remuneration and Appraisal Committee due to job adjustments |
| Lu Hongdong | Former Director | Resigned | May 22, 2024 | Resigned as Director of the Tenth Board of Directors and Member of the Strategy Committee due to job adjustments |
| Chen Yanhui | Former Director | Resigned | May 22, 2024 | Resigned as Director of the Tenth Board of Directors and Member of the Nomination Committee due to job adjustments |
| You Guanghui | Former Chairman of the Supervisory Committee | Resigned | May 22, 2024 | Resigned as Supervisor and Chairman of the Tenth Supervisory Committee of Yunnan Baiyao due to job adjustments |
| Zhong Jie | Former Vice Chairman of the Supervisory Committee | Resigned | June 11, 2024 | Resigned as Supervisor, Vice Chairman of the Tenth Supervisory Committee, and all positions at Yunnan Baiyao and its controlling subsidiaries upon reaching the mandatory retirement age |
| Guo Xin | Director | Elected | June 11, 2024 | Recommended by the shareholder Yunnan State-owned Equity Operation Management Co., Ltd (“Yunnan State-owned Equity Operation Management Company”), nominated by the Company’s Board of Directors, and elected at the Second Extraordinary General Meeting for 2024 |
| Shangguan Changchuan | Director | Elected | June 11, 2024 | Recommended by the shareholder New Huadu Industrial Group Co., Ltd (“New Huadu”), nominated by the Company’s Board of Directors, and elected at the Second Extraordinary General Meeting for 2024 |
| You Guanghui | Director | Elected | June 11, 2024 | Recommended by the shareholder New Huadu, nominated by the Company’s Board of Directors, and elected at the Second Extraordinary General Meeting for 2024 |
| Dai Pujun | Vice Chairman of the Supervisory Committee | Elected | June 11, 2024 | Recommended by the shareholder Yunnan State-owned Equity Operation Management Company, nominated by the Company’s Supervisory Committee, and elected at the Second Extraordinary General Meeting for 2024 |
III. Profit Distribution and Conversion of Capital Reserve into Share Capital during theReporting Period
□ Applicable ? Not applicable
The Company did not plan to distribute cash dividends, bonus shares, or convert capital reserves into share capital during the reportingperiod.
IV. Implementation of the Company’s Equity Incentive Plan, Employee Stock Ownership Plan(ESOP), or Other Employee Incentive Measures
□ Applicable ? Not applicable
The Company had no equity incentive plans, employee stock ownership plans, or other employee incentive measures and theirimplementation during the reporting period.
Section V Environmental and Social Responsibilities
I. Significant Environmental Issues
Whether the listed company and its subsidiaries are the key pollutant discharge unit announced by the environmental protection departments?Yes □No
1. Environmental protection related policies and industry standards
Yunnan Baiyao has strictly complied with laws and regulations such as the Law of the People’s Republic of China on Environmental Protection, the Law of thePeople’s Republic of China on Air Pollution Prevention and Control, the Law of the People’s Republic of China on Water Pollution Prevention and Control, the Lawof the People’s Republic of China on Solid Waste Pollution Prevention and Control, and the Law of the People’s Republic of China on Environmental Noise PollutionPrevention and Control, and internally formulated and implemented environmental management policies such as the Environmental Protection Management System,Environmental Protection Responsibility System, Environmental Protection Approval Management System, and Hazardous Waste Management System.
2. Administrative permits for environmental protection
(1) Yunnan Baiyao Group
Environmental Impact Assessment (EIA) Approvals: YHXZH [2008] No. 255
Approval for Acceptance of Completed Environmental Protection Projects: Phase I YH Acceptance [2013] No. 1, Phase II YH Acceptance [2015] No. 30
Pollution Discharge Permit No.: 9153000021652214XX001Q, valid from July 2, 2023 to July 1, 2028
(2) Yunnan Baiyao Group Traditional Chinese Medicine Resources Co., Ltd.
EIA Approvals: YH Review [2009] No. 261 and YHSH Approval [2014] No. 1
Approval for Acceptance of Completed Environmental Protection Projects: Phase I YH Acceptance [2014] No. 16, Phase II Acceptance (independent acceptanceon March 20, 2021) and YHSH Acceptance [2016] No. 4
Pollution Discharge Permit No.: 91530100216583890U001U, valid from May 13, 2024 to May 12, 2029
(3) Yunnan Baiyao Group Dali Pharmaceutical Co., Ltd.
EIA Approvals: DH Review [2010] No. 21
Approval for Acceptance of Completed Environmental Protection Projects: DH Review [2015] No. 32
Pollution Discharge Permit No.: 91532900218671552P001V, valid from August 5, 2022 to August 4, 2027
(4) Yunnan Baiyao Group Wenshan Qihua Co., Ltd.
EIA Approvals: WHSH [2017] No. 53Approval for Acceptance of Completed Environmental Protection Projects: Independent acceptance on January 5, 2021Pollution Discharge Permit No.: 91532600709893942X002R, valid from August 3, 2021 to August 2, 2026
3. Industry emission standards and specific situations of pollutant emissions involved in production and operation activities
| Name of Company or Subsidiary | Types of Main Pollutants and Characteristic Pollutants | Names of Main Pollutants and Characteristic Pollutants | Emission Method | Number of Discharge Outlets | Distribution of Discharge Outlets | Emission Concentration/Intensity | Pollutant Emission Standards Implemented | Total Emissions | Approved Total Emissions | Emissions Exceeding Standards |
| Yunnan Baiyao Group Co., Ltd. | Exhaust gas | Particulate matter, non-methane total hydrocarbon | Particulate matter, non-methane total hydrocarbon | Organized emissions | 4 | Alcohol extraction exhaust gas discharge outlet | Alcohol extraction exhaust gas discharge outlet 1 (particulate matter 3.6mg/m3); alcohol extraction exhaust gas discharge outlet 2 (particulate matter 3.6mg/m3); alcohol extraction exhaust gas discharge outlet 3 (particulate matter 3.3mg/m3); alcohol extraction exhaust gas discharge outlet 4 (particulate matter 3.4mg/m3); alcohol extraction exhaust gas discharge outlet 1 (non-methane total hydrocarbon 2.44mg/m3); alcohol extraction exhaust gas discharge outlet 2 (non- | Standards for the Emission of Air Pollutants in the Pharmaceutical Industry (GB37823-2019): particulate matter<30mg/m3, non-methane total hydrocarbon<100mg/m3 | No total emission indicator available | Unassessed |
| methane total hydrocarbon 4.45mg/m3); alcohol extraction exhaust gas discharge outlet 3 (non-methane total hydrocarbon 2.37mg/m3); alcohol extraction exhaust gas discharge outlet 4 (non-methane total hydrocarbon 3.82mg/m3) | ||||||||||
| Yunnan Baiyao Group Co., Ltd. | Exhaust gas | NOx, particulate matter, SO2 | Organized emissions | 3 | Main discharge outlet of boiler exhaust gas | 4t/h boiler (NOx 50mg/m3); 10t/h boiler (NOx 66.2mg/m3); 15t/h boiler (NOx 82mg/m3); 4t/h boiler (particulate matter 5.7mg/m3); 10t/h boiler (particulate matter 5.3mg/m3); 15t/h boiler (particulate matter 5.3mg/m3); 4t/h boiler (SO2<3mg/m3); 10t/h boiler (SO2<3mg/m3); 15t/h boiler (SO2<3mg/m3) | Standards for the Emission of Air Pollutants for Boilers (GB13271-2014): NOx <400mg/m3; particulate matter<30mg/m3; SO2<100mg/m3 | In 1H 2024, the NOx emissions amount was 1.142t | The annual total NOx emissions amount was 11.0667t | Within the standard |
| Yunnan Baiyao Group Co., Ltd. | Wastewater | Total nitrogen, ammonia nitrogen, COD, suspended solids, BOD5, TP | Drainage outlet | 1 | Main drainage outlet | Total nitrogen 1.69mg/L; ammonia nitrogen 1.79mg/L; COD 38.96mg/L; suspended solids<4mg/L; BOD 52.43mg/L; TP 5.53mg/L | Wastewater Quality Standards for Discharge to Municipal Sewers (GB/T 31962-2015); Integrated Wastewater Discharge Standard (GB8978-1996): total nitrogen<70mg/L; ammonia | No total emission indicator available | Unassessed | Within the standard |
| nitrogen<45mg/L; COD <500mg/L; suspended solids<400mg/L; BOD5 <350mg/L; TP <8mg/L | ||||||||||
| Yunnan Baiyao Group Traditional Chinese Medicine Resources Co., Ltd. | Exhaust gas | Non-methane total hydrocarbon | Organized | 1 | Combustion exhaust gas discharge outlet | Non-methane total hydrocarbon 3.97mg/m? | Standards for the Emission of Air Pollutants in the Pharmaceutical Industry (GB37823-2019): non-methane total hydrocarbon<100mg/m? | No total emission indicator available | Unassessed | Within the standard |
| Yunnan Baiyao Group Traditional Chinese Medicine Resources Co., Ltd. | Exhaust gas | Particulate matter | Organized | 5 | Pulverization discharge outlet | Pulverization discharge outlet 1 (particulate matter 22.4 mg/m?); pulverization discharge outlet 2 (particulate matter 7 mg/m?); pulverization discharge outlet 3 (particulate matter 7.4 mg/m?); pulverization discharge outlet 4 (particulate matter 4.6 mg/m?); pulverization discharge outlet 5 (Particulate matter 2.8 mg/m?) | Standards for the Emission of Air Pollutants in the Pharmaceutical Industry (GB37823-2019): particulate matter<30mg/m? | No total emission indicator available | Unassessed | Within the standard |
| Yunnan Baiyao Group Traditional Chinese Medicine Resources Co., Ltd. | Exhaust gas | SO2, NOx, particulate matter, Lingeman blackness | Organized | 3 | Main discharge outlet for boiler exhaust gas | SO2<2mg/m3; NOx 70.28mg/m3; particulate matter 2.5mg/m3; Lingeman blackness< Grade1 |
Standards for theEmission of AirPollutants from Boilers(GB13271-2014):
SO2<50mg/m?; NOx<200mg/m?; particulatematter<20mg/m?;
| In 1H 2024, the NOx emissions amount was 2.259t | The annual total NOx emissions amount was 32.18t | Within the standard |
| Lingeman blackness Grade 1 | ||||||||||
| Yunnan Baiyao Group Traditional Chinese Medicine Resources Co., Ltd. | Wastewater | Total nitrogen, ammonia nitrogen, COD, suspended solids, BOD5, TP | Drainage outlet | 1 | Main drainage outlet | Total nitrogen 3.27mg/L; ammonia nitrogen 0.29mg/L; COD 58.07mg/L; suspended solids 23.7mg/L; BOD5 3.2mg/L; TP 2.34mg/L | Wastewater Quality Standards for Discharge to Municipal Sewers GB/T 31962-2015; Integrated Wastewater Discharge Standard GB8978-1996: total nitrogen <70mg/L; ammonia nitrogen<45mg/L; COD <500mg/L; suspended solids<400mg/L; BOD5 <350mg/L; TP <8mg/L | No total emission indicator available | Unassessed | Within the standard |
| Yunnan Baiyao Group Dali Pharmaceutical Co., Ltd. | Exhaust gas | SO2, NOx, particulate matter, Lingeman blackness | Organized emissions | 1 | Main discharge outlet for boiler exhaust gas | SO2<3mg/m3; NOx 51mg/m3; particulate matter 7.2mg/m3; Lingeman blackness<1 | Standards for the Emission of Air Pollutants from Boilers (GB13271-2014): SO2<50mg/m?; NOx <200mg/m?; particulate matter<20mg/m?; Lingeman blackness Grade 1 | No total emission indicator available | Unassessed | Within the standard |
| Yunnan Baiyao Group Dali Pharmaceutical Co., Ltd. | Wastewater | COD, suspended solids, BOD5, ammonia nitrogen, total nitrogen, TP | Drainage outlet | 1 | Main drainage outlet | COD 43mg/L; suspended solids 4 mg/L; BOD5 14 mg/L; ammonia nitrogen 6.92 mg/L; total nitrogen 8.96 mg/L; TP 0.46 mg/L | Discharge Standards for Water Pollutants from the Pharmaceutical Industry for Mixed Formulation Products (GB21908-2008): COD<60mg/L; suspended | No total emission indicator available | Unassessed | Within the standard |
| solids<30mg/L; BOD5<15mg/L; ammonia nitrogen<10 mg/L; total nitrogen<20 mg/L; TP<0.5 mg/L | ||||||||||
| Yunnan Baiyao Group Wenshan Qihua Co., Ltd. | Exhaust gas | Particulate matter, SO2, NOx, smoke blackness | Organized emissions | 2 | Main discharge outlet for boiler exhaust gas | Boiler 2 (particulate matter 2.3mg/m3); boiler 3 (particulate matter 2.2mg/m3); boiler 2 (SO2<3mg/m3); boiler 3 (SO2<3mg/m3); boiler 2 (NOx 45mg/m3); boiler 3 (NOx 51mg/m3); boiler 2 (smoke blackness <1); boiler 3 (smoke blackness <1) | Standards for the Emission of Air Pollutants from Boilers (GB13271-2014): SO2<50mg/m?; NOx <200mg/m?; particulate matter<20mg/m?; Lingeman blackness Grade 1 | In 1H 2024, the emissions amount: sulfur dioxide 0.038t; nitrogen oxide 0.622t; particulate matter 0.029t | Annual emissions amount: sulfur dioxide 0.3t; nitrogen oxide 14.02t; particulate matter 2.14t | Within the standard |
| Yunnan Baiyao Group Wenshan Qihua Co., Ltd. | Wastewater | Total nitrogen, ammonia nitrogen, COD, suspended solids, BOD5, TP | Drainage outlet | 1 | Sewage main outlet | Total nitrogen 4.04mg/L; ammonia nitrogen 1.30mg/L; COD 67mg/L; suspended solids 13mg/L; BOD5 19.4mg/L; TP 0.53mg/L | Wastewater Quality Standards for Discharge to Municipal Sewers GB/T 31962-2015; Integrated Wastewater Discharge Standard GB8978-1996: total nitrogen<70mg/L; ammonia nitrogen<45mg/L; COD<500mg/L; suspended solids<400mg/L; BOD5<300mg/L; TP<8mg/L | No total emission indicator available | Unassessed | Within the standard |
4. Treatment of pollutants
The Company strictly follows the requirements of EIA in construction of pollution prevention and controlfacilities, and has obtained complete related environmental protection approvals. In the first half of 2024, theCompany and its subsidiaries actively carried out third-party environmental testing, showing the emissions ofvarious pollutants such as wastewater, exhaust gas, solid waste and noise, were in strict line with the standards.
(1) Yunnan Baiyao Group Co., Ltd.
The Company has commissioned a third party, Yunnan Chenqing Environmental Monitoring Co., Ltd, toconduct environmental monitoring according to the Yunnan Baiyao Group Self-Monitoring Plan and to providemonitoring reports, ensuring that monitoring indicators and tasks are strictly completed.
1) Exhaust gas: The exhaust gas meets discharge standards after treatment by exhaust gas treatment facilities.
2) Wastewater:
The sewage treatment plant is located in the southwest corner of the plant area, using the A2O process. Thedesigned treatment capacity for Phase I is 800 m?/d, and for Phase II is 1,200 m?/d. The combined treatment capacityfor both phases is 750 m?/d.
Pre-treatment System: The system removes suspended solids, phosphorus, and some COD from wastewater tofacilitate subsequent biological treatment. Main facilities include collection wells, screens, primary settling tanks,adjustment tanks, and emergency tanks.
Biological Treatment System: The A?O biochemical process is adopted. Wastewater undergoes treatment inanaerobic tanks, anoxic tanks, and aerobic tanks with different environmental conditions and microbial communitiesto remove most COD, phosphorus, and ammonia nitrogen. Treated water is discharged into the municipal sewagesystem. Main facilities include anaerobic tanks, aerobic tanks, anoxic tanks, and secondary settling tanks.
Advanced Treatment System: The system uses coagulation sedimentation, ozone oxidation, and aerationbiological filtration for advanced treatment, ensuring that the treated water meets reuse requirements. Main facilitiesinclude coagulation sedimentation tanks, aeration biological filters, and reclaimed water storage tanks.
3) Noise
Noise mainly originates from transport vehicles, pumps, and fans. Effective noise reduction measures includesoundproofing of plant buildings and vibration isolation foundations. Furthermore, low-noise equipment is used tominimize environmental noise pollution.
4) Hazardous and solid waste
Solid waste is classified and managed into general solid waste and hazardous waste with strict differentiation.Hazardous waste is managed by designated personnel, with established records, proper labeling, and complianttemporary storage facilities to prevent leakage, rain, theft, and dispersion. Sludge and pharmaceutical residues aredisposed of by qualified third parties. Hazardous waste liquids and solids are managed through a rigorous selectionprocess of enterprises meeting national standards.
(2) Yunnan Baiyao Group Wenshan Qihua Co., Ltd.:
1) The Company adopts a physical-biological contact oxidation process for sewage treatment (3,000m?/day),a closed treatment process, which can efficiently treat organic compounds in high-concentration Wastewater fromtraditional Chinese medicine pharmaceuticals and mainly has the following characteristics:
The acid-base regulation tank, pre-acidification tank, anoxic tank, aerobic tank, and sludge concentration tank,etc, all of which have a closed design. Volatile gases (odor, hydrogen sulfide, ammonia, etc.) are collected throughpipelines and then transported to photocatalytic oxidation deodorization equipment, for decomposing and purifyingharmful gases to reduce air pollution. The methane gas produced during the anaerobic reaction stage is transported,through the biogas recovery system, to the boiler for combustion, which not only protects the environment but alsoprovides energy for the Company and saves costs.
2) The 40t/h boiler burns clean energy natural gas, and the data of the produced flue gas emission are connectedto an environmental protection platform through online monitoring devices, achieving real-time online monitoringof main indicators to meet emission standards.
3) For the auxiliary material crushing and other work sections in the production OU, bags for dust removal are used.The collected drugs, environmentally friendly and cost-effective, can be reused for production and extraction.
The wastewater and exhaust gas facilities are operating normally, and the discharges of various pollutantfactors (wastewater, exhaust gas, noise) meet the standards.
5. Emergency plans for sudden environmental events
The Company has prepared the Yunnan Baiyao Group Emergency Plan for Environmental Incidents (2021Edition) (530114-2021-006-L) and has submitted it for record to the environmental protection department.
As required by the approval of the EIA report for the Relocation and Expansion Project Phase I of YunnanBaiyao Group Wenshan Qihua Co., Ltd, the emergency plan for sudden environmental events was prepared onDecember 25, 2020, and filed with the Wenshan Branch of the Wenshan Prefecture Ecological Environment Bureauon January 5, 2021, No. 532601-2021-002-L. The change was completed on July 15, 2024, and filed with theWenshan Branch of the Wenshan Prefecture Ecological Environment Bureau, No. 532621-2024-037-L.
6. Investments in environmental governance and protection and payment of environmental protectiontaxes
The Company pays environmental protection taxes on a quarterly basis in a timely manner based on its ownemissions.
7. Self-environmental monitoring plan
The Yunnan Baiyao Group Self-Monitoring Plan for 2024 has been submitted and disclosed, and it is beingstrictly implemented.
8. Administrative punishments for environmental issues during the reporting period: None.
9. Other environmental information that should be disclosed: None.
10. Measures taken to reduce carbon emissions and their effects during the reporting period
□Applicable ?Not applicable
11. Other environmental protection related information: None.
II. Social Responsibility
In the first half of 2024, Yunnan Baiyao, guided by Xi Jinping Thought on Socialism with ChineseCharacteristics for a New Era, has thoroughly implemented the decisions and deployments of the Central Committeeof the Communist Party of China, the State Council, as well as the provincial Party committee and provincial
governments regarding rural revitalization. Leveraging its own advantages and focusing on key objectives, YunnanBaiyao has developed a task list, detailed work measures, and concentrated on rural revitalization and thedevelopment of TCM materials. By integrating the planning and layout of the entire TCM industrial chain, theCompany has consistently increased its support for Chazhiluo Village and Xinle Village in Pantiange Township,Weixi Lisu Autonomous County, Diqing Tibetan Autonomous Prefecture, and has effectively achieved its phase-specific objectives.Yunnan Baiyao fully leverages the advantages of the entire TCM industrial chain. By considering the actualconditions of Xinle Village and Chazhiluo Village in Pantiange Township, the Company promotes ruralrevitalization through the cultivation of Yunmuxiang. On one hand, the Company has provided training in“Yunmuxiang Cultivation Technology” for local farmers and developed a Special Technical Solution forYunmuxiang Cultivation. On the other hand, Yunnan Baiyao has offered comprehensive guidance on the variety,cultivation water and fertilizer management, pesticide use, and pest and disease control of Yunmuxiang to furtherimprove planting efficiency. Meanwhile, Yunnan Baiyao has invested in optimizing and upgrading the convenienceservice center, supported the construction of Chazhiluo Village Party Member Activity Room/Display Hall of State-Level Intangible Cultural Heritage Peacock Dance, and renovated the Party activity base in Xinle Village. TheCompany has also purchased video equipment and educational materials for Party members, creating a base forParty activities. Efforts have been made to strengthen grassroots organization, improve village appearance, preserveintangible cultural heritage and protect the unique local ethnic culture. The village work team regularly conductscomprehensive analysis and assessment on poverty relapse warning and monitoring, as well as delivery of the “TwoAssurances and Three Guarantees.” The team actively works on preventing mountain floods, landslides, debrisflows, landslides, and forest fires, and continuously focus on improving village appearance, revising villageregulations and agreements, visiting and assisting disadvantaged groups, and mediating village disputes. Bydeepening, solidifying, and refining their work with the community, the team ensures the safety and stability of thesupport areas.Yunnan Baiyao is committed to continuously exploring new paths and models for rural revitalization throughmultiple channels and diversification, concentrating more resources on enhancing the internal developmentmomentum of support areas, and accelerating industry development and continuous income growth in targetedsupport regions, thereby making a substantial contribution to the rural revitalization.
Section VI Significant EventsI. Commitments of the Company’s De Facto Controller, Shareholders, Related Parties and Acquirers, as well as the Company Itself andOther Related Entities Fulfilled during the Reporting Period or Ongoing at the Period-End?Applicable □Not applicable
| Commitments | Commitment Party | Commitment Type | Contents | Commitment Time | Commitment Period | Performance Status |
| Commitments made in the acquisition report or equity change report | Yunnan Provincial Investment Holdings Group Co., Ltd (“Yunnan Investment Holdings Group”) | Commitments regarding horizontal competition | 1. Our company is not engaged in any business or activity that is the same as, similar to, or resembling, and constitutes or may constitute directly or indirectly a competition in any aspect with, the listed company’s any existing business, nor will we actively provide, in any way, any assistance in finance, business, management, etc or any trade secrets such as technical information, business operations, sales channels, to any enterprises, agencies or other economic organizations that compete with the listed company in any of its existing business. 2. As of the date of issuance of this commitment letter, our company will legally take necessary and possible measures to avoid, and urge any other enterprises under our actual control to avoid, any businesses or activities that may in any way substantially or potentially constitute a horizontal competition or a conflict of interest, with the principal businesses of the listed company. If, in the future, a material conflict of interest arising from substantial or potential horizontal competition between our company and any enterprises under our control and the listed company, our company and such enterprises under our actual control will give up that business opportunity that may result in a material horizontal competition and thus lead to a substantial conflict of interest or take appropriate measures permitted by other laws and regulations to eliminate the potential impact of material horizontal competition. 3. Our company will not, by virtue of any information learned or known from the listed company, assist our company itself or any third party in engaging in any business activities that may in any way substantially or potentially constitute a horizontal competition with the principal businesses of the listed company. | December 10, 2021 | Remain effective during the period of holding indirect stake in Yunnan Baiyao | In progress |
| Commitments made in the acquisition | Yunnan Investment Holdings Group | Commitments to maintain the independence | In order to protect the legitimate rights and interest of any and all of the shareholders of the listed company, our company undertakes to warrant: 1. The personnel independence of the listed company, that is: (1) The general | December 10, 2021 | Remain effective during the period of | In progress |
| report or equity change report | of the listed company | manager, deputy general manager, CFO, secretary of the Board of Directors, and other senior management personnels of the listed company will work full-time and receive compensation in the listed company, with holding no positions other than directors or supervisors or receiving no compensation in any other enterprises under the control of our company, for continuously maintaining the independence of personnel of the listed company; (2) The listed company has a complete and independent labor, personnel, and salary management system, which is fully independent from our company and any other enterprises under our control; (3) The directors, supervisors, and senior management personnels of the listed company are elected or appointed in accordance with legal procedures, and our company will not interfere with the personnel appointment and removal decisions already made by the Board of Directors and the general meeting of the listed company. 2. The asset independence of the listed company, that is: (1) The listed company has independent and complete assets, all of which are under the control of the listed company and are independently owned and operated by the listed company; (2) Our company and any other enterprises under our control do not and will not in any way occupy the funds, assets, and other resources of the listed company in violation of laws and regulations; (3) Our company and any other enterprises under our control will not use the assets of the listed company as guarantee for our and their debts in violation of regulations. 3. The financial independence of the listed company, that is: (1) The listed company continues to maintain its independent financial department and independent financial accounting system; (2) The listed company opens an independent bank account and does not share a bank account with our company or any other enterprises under our control; (3) The listed company is able to make independent financial decisions, without our company’s illegal interference with its asset utilization scheduling; (4) The independence of the listed company’s financial personnels who will not work part-time or receive remuneration in any other enterprises under our control; (5) The listed company legally pays taxes independently. 4. The institutional independence of the listed company, that is: (1) The listed company continues to maintain a sound corporate governance structure and has an independent and complete organizational structure; (2) The general meeting, Board of Directors, independent directors, Supervisory Committee, general manager, etc of the listed company independently exercise their powers in accordance with laws, regulations, and the listed company’s articles of association; (3) The listed company has an independent and complete organizational structure, without institutional confusion with any | holding indirect stake in Yunnan Baiyao |
| other enterprises under our control. 5. The business independence of the listed company, that is: (1) The listed company has the assets, personnels, qualifications, and capabilities to independently carry out business activities, and also has the capabilities to independently and continuously operate in the market; (2) The listed company has minimized related party transactions between our company and any other enterprises under our control and the listed company as much as possible, and fairly carry out necessary and inevitable related party transactions at fair prices in accordance with market-oriented principles, with transaction procedures and information disclosure obligations fulfilled in accordance with relevant laws, regulations, and normative documents. 6. The listed company maintains independence from our company and any other enterprises under our control in any other aspects. | ||||||
| Commitments made in the acquisition report or equity change report | Yunnan Investment Holdings Group | Commitments regarding related party transactions | 1. After the completion of this equity transfer, our company will consciously safeguard the interest of the listed company and any and all of its shareholders, and minimize and avoid related party transactions with the listed company. We will not, by virtue of our indirect stake in the listed company, seek for improper benefits or harm any interest of the listed company and any and all of its shareholders in related party transactions. 2. Our company does not and will not, by virtue of our indirect stake in the listed company and its own controlling influence, seek from the listed company for better commercial terms for business cooperation than that given to the third parties in the market for itself or for any other enterprises under our control. 3. Our company does not and will not, by virtue of our indirect stake in the listed company and its own controlling influence, seek for privileges for itself or any other enterprises under our control to enter into transactions with the listed company. 4. After completing this equity transfer, our company will strictly adhere to the provisions of the Company Law of the People’s Republic of China, the Articles of Association of Yunnan Baiyao Group, the Rules of Procedure for General Meetings, and the Decision System for Related Party Transactions of the Listed Company when engaging in inevitable related party transactions with the listed company. We are committed to conducting these transactions in a transparent, fair, and equitable manner. This involves adhering to commercial principles such as “fairness, impartiality, and voluntariness.” We will enter into fair and reasonable transaction contracts with the listed company, ensuring that pricing policies are developed based on market fairness, impartiality, and openness. This approach guarantees the fairness of transaction prices. 5. After the completion of this equity transfer, our | December 10, 2021 | Remain effective during the period of holding indirect stake in Yunnan Baiyao | In progress |
| company and any other enterprises under our control will not illegally occupy the funds and assets of the listed company, and under no circumstances will the listed company be required to provide any form of guarantees to our company or any other enterprises under our control. | ||||||
| Commitments made in the acquisition report or equity change report | State-owned Assets Supervision and Administration Commission of Yunnan Provincial People’s Government (“SASAC of Yunnan Province”), New Huadu | Commitments regarding horizontal competition | In the future, when the time is ripe, SASAC of Yunnan Province and New Huadu shall urge Yunnan Baiyao Holdings Co., Ltd (“Baiyao Holdings”) to gradually inject the high-quality assets related to Yunnan Baiyao’s existing business and future development areas into Yunnan Baiyao Group. Both SASAC of Yunnan Province and New Huadu will also strictly comply with the regulations to avoid horizontal competition. | March 23, 2017 | Remain effective during the period of holding the shares of Yunnan Baiyao (directly and indirectly) | In progress |
| Commitments made in the acquisition report or equity change report | New Huadu | Commitments regarding related party transactions | 1. New Huadu and any other enterprises under our control will try the best to avoid related party transactions with Yunnan Baiyao. For inevitable related party transactions or those occurring for reasonable reasons, New Huadu will undertake to conduct such transactions on an equal and voluntary basis in the principles of fairness, impartiality, and compensation for equal value, with the transaction prices to be determined based on the reasonable prices recognized in the market. 2. New Huadu and any other enterprises under our control will strictly comply with the avoidance provisions on related party transactions set out in Yunnan Baiyao’s articles of association and in other relevant regulations. All related party transactions involved will be carried out in accordance with the decision-making procedures for related party transactions for Yunnan Baiyao, and legal procedures will be followed to ensure not to harm any legitimate rights and interest of Yunnan Baiyao and any other shareholders through related party transactions. 3. If New Huadu and any other enterprises under our control violate any of the above statements and commitments, leading to any damages to any rights and interest of Yunnan Baiyao, New Huadu agrees to bear any and all of the corresponding compensation liabilities for such damages so caused to Yunnan Baiyao. | March 23, 2017 | Remain effective during the period of holding the shares of Yunnan Baiyao (directly and indirectly) | In progress |
| Commitments made during | Yunnan State-owned Equity Operation | Commitments regarding | 1. Yunnan State-owned Equity Operation Management Company has undertaken the previous commitments of SASAC of Yunnan Province: After the completion of this significant asset restructuring, SASAC of Yunnan | October 31, 2018 | Remain effective during the period of | In progress |
| asset restructuring | Management Company, New Huadu and its acting-in-concert parties | related party transactions | Province will try its best to avoid related party transactions with the listed company. For inevitable related party transactions or those occurring for reasonable reasons, SASAC of Yunnan Province will undertake to conduct such transactions on an equal and voluntary basis in the principles of fairness, impartiality, and compensation for equal value, with the transaction prices to be determined based on the reasonable prices recognized in the market. SASAC of Yunnan Province will strictly comply with the provisions of relevant laws, regulations, normative documents, and the articles of association of the listed company, perform the decision-making procedures and information disclosure obligations for related party transactions, and warrant not to harm any legitimate rights and interest of the listed company and any other shareholders through related party transactions. This commitment letter shall come into effect and be irrevocable as of the date of official signature by SASAC of Yunnan Province. SASAC of Yunnan Province warrants the effective fulfillment of these commitments, and the listed company has the right to supervise its fulfillment of this commitment letter. If SASAC of Yunnan Province fails to effectively fulfill this commitment letter, leading to any actual losses to the listed company, SASAC of Yunnan Province will compensate for any and all of such direct or indirect losses so caused to the listed company. 2. New Huadu and its acting-in-concert parties undertake that: after the completion of this merger and overall listing, our company/I and any enterprises under our/my control will try the best to avoid related party transactions with the listed company. For inevitable related party transactions or those occurring for reasonable reasons, our company/I undertake(s) to conduct such transactions on an equal and voluntary basis in the principles of fairness, impartiality, and compensation for equal value, with the transaction prices to be determined based on the reasonable prices recognized in the market. Our company/I and any other enterprises under our/my control will strictly comply with the provisions of relevant laws, regulations, normative documents, and the articles of association of the listed company, perform the decision-making procedures and information disclosure obligations for related party transactions, and warrant not to harm any legitimate rights and interest of the listed company and any other shareholders through related party transactions. This commitment letter shall come into effect and be irrevocable as of the date of official signature by our company/me. Our company/I warrant(s) the effective fulfillment of these commitments, and the listed company has the right to supervise the fulfillment of this commitment letter. If our company/I fail(s) to effectively | holding the shares of Yunnan Baiyao (directly and indirectly) |
| fulfill this commitment letter, leading to any actual losses to the listed company, our company/I will compensate for any and all of such direct or indirect losses so caused to the listed company. | ||||||
| Commitments made during asset restructuring | Jiangsu Yuyue Science & Technology Development Co., Ltd (“Jiangsu Yuyue”) | Commitments regarding related party transactions | Jiangsu Yuyue undertakes that: after the completion of this merger and overall listing, our company and any enterprises under our control will try the best to avoid related party transactions with the listed company. For inevitable related party transactions or those occurring for reasonable reasons, our company undertakes to conduct such transactions on an equal and voluntary basis in the principles of fairness, impartiality, and compensation for equal value, with the transaction prices to be determined based on the reasonable prices recognized in the market. Our company and any enterprises under our control will strictly comply with the provisions of relevant laws, regulations, normative documents, and the articles of association of the listed company, perform the decision-making procedures and information disclosure obligations for related party transactions, and warrant not to harm any legitimate rights and interest of the listed company and any other shareholders through related party transactions. This commitment letter shall come into effect and be irrevocable as of the date of official signature by our company. Our company warrants the effective fulfillment of these commitments, and the listed company has the right to supervise the fulfillment of this commitment letter. If our company fails to effectively fulfill this commitment letter, leading to any actual losses to the listed company, our company will compensate for any and all of such direct or indirect losses so caused to the listed company. | October 31, 2018 | Remain effective during the period of holding the shares of Yunnan Baiyao (directly and indirectly) | Completed |
| Commitments made during asset restructuring | Yunnan State-owned Equity Operation Management Company, New Huadu | Commitments to maintain the independence of the listed company | After the completion of this merger and overall listing, our company/institution will maintain independence from the listed company in terms of personnel, assets, business, institutions, and finance in accordance with relevant laws, regulations, and normative documents. We will not, by virtue of the identity as a related party of the listed company, engage in the acts that affect the independence of the listed company’s personnel, assets, business, institutions, and finances, or harm any rights and interest of the listed company and any other shareholders. Instead, we will effectively ensure the independence of the listed company in terms of personnel, assets, business, institutions, finance, etc. This commitment letter shall come into effect and be irrevocable as of the date of official signature by our company/institution. Our company/institution warrants the effective fulfillment of these commitments, and the listed company has the right to supervise the fulfillment of this commitment letter. If our company/institution fails to effectively fulfill this commitment letter, | October 31, 2018 | Remain effective during the period of holding the shares of Yunnan Baiyao (directly and indirectly) | In progress |
| leading to any actual losses to the listed company, our company/institution will compensate for any and all of such direct or indirect losses so caused to the listed company. | ||||||
| Commitments made during asset restructuring | Jiangsu Yuyue | Commitments to maintain the independence of the listed company | After the completion of this merger and overall listing, our company/institution will maintain independence from the listed company in terms of personnel, assets, business, institutions, and finance in accordance with relevant laws, regulations, and normative documents. We will not, by virtue of the identity as a related party of the listed company, engage in the acts that affect the independence of the listed company’s personnel, assets, business, institutions, and finances, or harm any rights and interest of the listed company and any other shareholders. Instead, we will effectively ensure the independence of the listed company in terms of personnel, assets, business, institutions, finance, etc. This commitment letter shall come into effect and be irrevocable as of the date of official signature by our company/institution. Our company/institution warrants the effective fulfillment of these commitments, and the listed company has the right to supervise the fulfillment of this commitment letter. If our company/institution fails to effectively fulfill this commitment letter, leading to any actual losses to the listed company, our company/institution will compensate for any and all of such direct or indirect losses so caused to the listed company. | October 31, 2018 | Remain effective during the period of holding the shares of Yunnan Baiyao (directly and indirectly) | Completed |
| Commitments made during asset restructuring | Baiyao Holdings, Yunnan State-owned Equity Operation Management Company, New Huadu | Commitments regarding real estate business | If Yunnan Baiyao and its subsidiaries within the scope of its consolidated financial statements, and, Baiyao Holdings and its subsidiaries within the scope of its consolidated financial statements engaged in any illegal activities in the domestic real estate development business during the reporting period, such as undisclosed land vacancy, speculation of land, property hoarding, and price gouging, which have caused any losses to Yunnan Baiyao and investors, our company/institution will bear any and all of corresponding compensation liabilities for such losses as required by relevant laws, regulations and securities regulatory authorities. | December 11, 2018 | Remain effective during the period of holding the shares of Yunnan Baiyao (directly and indirectly) | In progress |
| Commitments made during asset restructuring | Jiangsu Yuyue | Commitments regarding real estate business | If Yunnan Baiyao and its subsidiaries within the scope of its consolidated financial statements, and, Baiyao Holdings and its subsidiaries within the scope of its consolidated financial statements engaged in any illegal activities in the domestic real estate development business during the reporting period, such as undisclosed land vacancy, speculation of land, property hoarding, and price gouging, which have caused any losses to Yunnan Baiyao and investors, our company/institution will bear any and all of corresponding compensation liabilities for such losses as required by relevant laws, regulations and securities regulatory authorities. | December 11, 2018 | Remain effective during the period of holding the shares of Yunnan Baiyao (directly and indirectly) | Completed |
| Commitments made during asset restructuring | Directors and senior management of the listed company | Commitments regarding real estate business | If Yunnan Baiyao and its subsidiaries within the scope of its consolidated financial statements, and, Baiyao Holdings and its subsidiaries within the scope of its consolidated financial statements engaged in any illegal activities in the domestic real estate development business during the reporting period, such as undisclosed land vacancy, speculation of land, property hoarding, and price gouging, which have caused any losses to Yunnan Baiyao and investors, I will bear any and all of the corresponding compensation liabilities for such losses as required by relevant laws, regulations and securities regulatory authorities. | December 11, 2018 | Remain effective | In progress |
| Commitments made during asset restructuring | Baiyao Holdings, Yunnan State-owned Equity Operation Management Company, New Huadu | Commitments regarding compensatory measures after dilution of immediate returns | 1. Our company/institution will not interfere with any operation and management activities of the listed company beyond authority, nor will it encroach on any interest of the listed company. 2. After the date of issuance of this commitment letter, if the securities regulatory authorities make other regulatory requirements regarding compensatory measures and related commitments, and the above commitments fail to meet such new regulatory regulations of the securities regulatory authorities, our company/institution will undertake to issue supplementary commitments in accordance with their then latest relevant regulations. 3. Our company/institution undertakes to effectively fulfill the relevant compensatory measures formulated by the listed company and the relevant commitments made by our company/institution. If our company/institution violates these commitments and causes any losses to the listed company or investors, our company/institution is willing to legally bear any and all of the corresponding compensation liabilities for such losses. | December 11, 2018 | Remain effective during the period of holding the shares of Yunnan Baiyao (directly and indirectly) | In progress |
| Commitments made during asset restructuring | Jiangsu Yuyue | Commitments regarding compensatory measures after dilution of immediate returns | 1. Our company/institution will not interfere with any operation and management activities of the listed company beyond authority, nor will it encroach on any interest of the listed company. 2. After the date of issuance of this commitment letter, if the securities regulatory authorities make other regulatory requirements regarding compensatory measures and related commitments, and the above commitments fail to meet such new regulatory regulations of the securities regulatory authorities, our company/institution will undertake to issue supplementary commitments in accordance with their then latest relevant regulations. 3. Our company/institution undertakes to effectively fulfill the relevant compensatory measures formulated by the listed company and the relevant commitments made by our company/institution. If our company/institution violates these commitments and causes any losses to the listed company or | December 11, 2018 | Remain effective during the period of holding the shares of Yunnan Baiyao (directly and indirectly) | Completed |
| investors, our company/institution is willing to legally bear any and all of the corresponding compensation liabilities for such losses. | ||||||
| Commitments made during asset restructuring | Directors, supervisors, and senior management of the listed company | Commitments regarding compensatory measures after dilution of immediate returns | 1. I undertake not to transfer benefits to any other units or individuals without compensations or under unfair conditions, nor to harm any interest of the listed company in any other way. 2. I undertake to restrain my official consumption. 3. I undertake not to use the assets of the listed company to engage in investment or consumption activities unrelated to my duties. 4. I undertake that the compensation system to be formulated by the Board of Directors or Remuneration Committee in the future will be linked to the implementation of compensatory measures taken by the listed company. 5. I undertake that the exercise conditions of the listed company’s equity incentives to be announced in the future will be linked to the implementation of the compensatory measures taken by the listed company. 6. I undertake to effectively fulfill the relevant compensatory measures formulated by the listed company and any commitments made by myself regarding compensatory measures. If I violate or refuse to fulfill any of the above commitments, leading to any losses to the listed company or any and all of its shareholders, I’m willing to legally bear any and all of the corresponding compensation liabilities. This commitment letter shall come into effect as of the date of my signature and shall constitute a binding legal document on me upon its effectiveness. If I violate this commitment letter, I’m willing to bear any and all of the corresponding legal liabilities. | December 11, 2018 | Remain effective | In progress |
| Commitments made during asset restructuring | Yunnan State-owned Equity Operation Management Company, New Huadu | Commitments regarding horizontal competition | 1. Yunnan State-owned Equity Operation Management Company has undertaken the previous commitments of SASAC of Yunnan Province: In order to avoid horizontal competition with the listed company and safeguard the legitimate rights and interest of the listed company and other shareholders, Yunnan State-owned Equity Operation Management Company solemnly makes the following statements and commitments: After the completion of this transaction, Yunnan State-owned Equity Operation Management Company will not directly engage in any businesses that are the same as or similar to, and constitute a competition with, the principal businesses of the listed company. 2. New Huadu undertakes that: As of the issuance date of this commitment letter, our company and any enterprises under our control have not invested in any company, enterprise or other operating entity engaged in any business the same as, or similar to, the principal businesses of the listed company or co-operating or co-engaged, with others, in business the same as, or similar to, the principal businesses of the listed company. | October 31, 2018 | Remain effective during the period of holding the shares of Yunnan Baiyao (directly and indirectly) | In progress |
| After the completion of this transaction, our company and any enterprises under our control will not directly or indirectly engage in any form (including but not limited to investment, M&A, affiliation, joint ventures, cooperation, partnership, contracting or leasing operations, and equity participation) in businesses that are the same as or similar to, and constitute a competition with, the principal businesses of the listed company, nor will we directly or indirectly own any absolute or relative control over any other companies, enterprises or operating entities that engage in businesses that are the same as or similar to, and constitute a competition with the principal businesses of the listed company. During the commitment period mentioned above, if the listed company actually further expands its existing principal businesses, and our company and any enterprises under our control have not yet engaged in production or operation of such new businesses, our company and any enterprises under our control will not engage in such new businesses that compete with the principal businesses of the listed company unless the listed company notifies us in writing that it would no longer engage in such new businesses. During the aforementioned commitment period, if our company and any enterprises under our control obtain from any third party any business opportunity that competes or may compete with the principal businesses of the listed company, we shall immediately notify the listed company. If the listed company provides a positive response that it is willing to take advantage of that business opportunity within the reasonable period specified in the notice, our company and any enterprises under our control will abandon that business opportunity. If our company and any enterprises under our control violate any of the above statements and commitments, leading to any damages to any rights and interest of the listed company, our company agrees to bear any and all of the corresponding compensation liabilities for such damages so caused to the listed company. | ||||||
| Commitments made during asset restructuring | Directors, supervisors, and senior management of the listed company | Commitments regarding the authenticity, accuracy, and completeness of the information provided | Our company/I has/have provided necessary, authentic, accurate, complete, and effective documents, materials, or oral statements and explanations for this transaction at this stage, without any concealments, false records, or significant omissions. The provided copy materials or photocopies are consistent and aligned with the original materials or originals. The signatures and seals on the provided documents and materials are authentic, with necessary legal procedures for such signatures and seals having been fulfilled, and legal authorizations having been obtained. All statements and explanations of facts are consistent with the facts that occurred. According | June 10, 2021 | Remain effective | In progress |
| to the progress of this transaction, our company/I will provide relevant information and documents in a timely manner in accordance with relevant laws, regulations, rules, and relevant provisions of the China Securities Regulatory Commission (CSRC) and the stock exchange, and ensure that the information and documents to be constantly provided still meet the requirements of authenticity, accuracy, completeness, and effectiveness. Our company/I undertake(s) and warrant(s) the information provided or disclosed in this transaction is authentic, accurate, complete, and effective, without false records, misleading statements, or material omissions, and is/am willing to bear any and all of the corresponding individual and joint legal liabilities for that. | ||||||
| Commitments made during asset restructuring | Yunnan State-owned Equity Operation Management Company | Commitments regarding the authenticity, accuracy, and completeness of the information provided | As of the date of the issuance of this commitment, our company has provided necessary, authentic, accurate, complete, and effective documents, materials, or oral statements and explanations for this transaction at this stage, without any concealments, false records, or significant omissions. The provided copy materials or photocopies are consistent and aligned with the original materials or originals. The signatures and seals on the provided documents and materials are authentic, with necessary legal procedures for such signatures and seals having been fulfilled, and legal authorizations having been obtained. All statements and explanations of facts are consistent with the facts that occurred. According to the progress of this transaction, our company will provide relevant information and documents in a timely manner in accordance with relevant laws, regulations, rules, and relevant provisions of the CSRC and the stock exchange, and ensure that the information and documents to be constantly provided still meet the requirements of authenticity, accuracy, completeness, and effectiveness. Our company undertakes and warrants the information provided or disclosed in this transaction is authentic, accurate, complete, and effective, without false records, misleading statements, or material omissions, and is willing to bear any and all of the corresponding individual and joint legal liabilities for that. | June 10, 2021 | Remain effective | In progress |
| Commitments made during asset restructuring | New Huadu and its acting-in-concert parties | Commitments regarding the authenticity, accuracy, and completeness of the information provided | Our company and our acting-in-concert parties have provided necessary, authentic, accurate, complete, and effective documents, materials, or oral statements and explanations for this transaction at this stage, without any concealments, false records, or significant omissions. The provided copy materials or photocopies are consistent and aligned with the original materials or originals. The signatures and seals on the provided documents and materials are authentic, with necessary legal procedures for such signatures and seals having been fulfilled, and legal authorizations having been obtained. All statements and explanations of facts are consistent with | June 10, 2021 | Remain effective | In progress |
| the facts that occurred. According to the progress of this transaction, our company and our acting-in-concert parties will provide relevant information and documents in a timely manner in accordance with relevant laws, regulations, rules, and relevant provisions of the CSRC and the stock exchange, and ensure that the information and documents to be constantly provided still meet the requirements of authenticity, accuracy, completeness, and effectiveness. Our company and our acting-in-concert parties undertake and warrant the information provided or disclosed in this significant asset restructuring is authentic, accurate, complete, and effective, without false records, misleading statements, or material omissions, and are willing to bear any and all of the corresponding individual and joint legal liabilities for that. | ||||||
| Commitments made during asset restructuring | Directors, supervisors, and senior management of the listed company | Commitments regarding compensatory measures after diluting immediate returns by this restructuring | 1. I undertake not to transfer benefits to any other units or individuals without compensations or under unfair conditions, nor to harm any interest of the listed company in any other way. 2. I undertake to restrain my official consumption behavior. 3. I undertake not to use the assets of the listed company to engage in investment or consumption activities unrelated to my duties. 4. I undertake that the compensation system to be formulated by the Board of Directors or Remuneration Committee in the future will be linked to the implementation of compensatory measures taken by the listed company. 5. If the listed company subsequently introduces equity incentive policies, I undertake that the exercise conditions of the listed company’s equity incentives to be announced in the future will be linked to the implementation of the compensatory measures taken by the listed company. 6. If, during the period after the date of issuance of this commitment letter and before the completion of this transaction by the listed company, the CSRC makes other regulatory requirements regarding compensatory measures and related commitments, and the above commitments fail to meet such new regulatory regulations of the CSRC, I undertake to issue supplementary commitments in accordance with the then latest CSRC regulations. 7. If I violate any of the above commitments, leading to any losses to the listed company or investors, I’m willing to legally bear any and all of the corresponding compensation liabilities for such losses so caused to the listed company or investors. | June 10, 2021 | Remain effective | In progress |
| Commitments made during asset restructuring | Yunnan State-owned Equity Operation Management Company | Commitments to maintain the independence of the listed company, reduce and | 1.On October 31, 2018, SASAC of Yunnan Province, as a shareholder of the listed company, issued the Commitment Letter of SASAC of Yunnan Province on Maintaining the Independence of the Listed Company, Commitment Letter of SASAC of Yunnan Province on Reducing and Regulating Related Party Transactions, and Commitment Letter of SASAC of Yunnan Province on Avoiding Horizontal Competition. On April 7, 2020, our company issued | June 10, 2021 | Remain effective | In progress |
| regulate related party transactions, and avoid horizontal competition | the Commitment Letter of Yunnan State-owned Equity Operation Management Company on Its Undertaking of the Relevant Commitments Made in the Process of Yunnan Baiyao’s Merger Transaction by SASAC of Yunnan Province (hereinafter referred to as the “Commitment Letter on Undertaking”), committing to fully undertake, as of the date of completion of this equity transfer (calculated from the date of registration of the underlying equity in the name of our company), the responsibilities and obligations specified in the commitment documents previously made by SASAC of Yunnan Province and continuously effective at the time of this equity transfer as set out in the following list. The list includes the foregoing three commitment letters issued by SASAC of Yunnan Province. 2. As of the date of signing this commitment letter, our company has always strictly fulfilled the commitments to maintain the independence of the listed company, reduce and regulate related party transactions, and avoid horizontal competition in accordance with the requirements of the Commitment Letter on Undertaking, and has not violated any of the commitments made. After the completion of this transaction, our company will continue to strictly fulfill the Commitment Letter on Undertaking to safeguard the interest of the listed company and any and all of its shareholders. | |||||
| Commitments made during asset restructuring | New Huadu and its acting-in-concert parties | Commitments to maintain the independence of the listed company, reduce and regulate related party transactions, and avoid horizontal competition | 1. As of the date of signing this commitment letter, our company has always strictly fulfilled the Commitment Letter on Maintaining the Independence of the Listed Company, Commitment Letter on Reducing and Regulating Related Party Transactions, and Commitment Letter on Avoiding Horizontal Competition all issued on October 31, 2018. Our company’s acting-in-concert parties have always strictly fulfilled the Commitment Letter on Reducing and Regulating Related Party Transactions issued on October 31, 2018, and have not violated any of the commitments made. After the completion of this transaction, our company and our acting-in-concert parties will continue to strictly fulfill this commitment letter to safeguard the interest of the listed company and any and all of its shareholders. 2. After the completion of this transaction, our company’s acting-in-concert parties will maintain independence from the listed company in terms of personnel, assets, business, institutions, and finance in accordance with relevant laws, regulations, and normative documents, and will not, by virtue of the identity as a shareholder and a related party of the listed company, engage in the acts that affect the independence of the listed company’s personnel, assets, business, institutions, and finances, or harm any rights and interest of the listed company and other shareholders. Instead, they will | June 10, 2021 | Remain effective | In progress |
| effectively ensure the independence of the listed company in terms of personnel, assets, business, institutions, finance, etc. 3. As of the date of signing this commitment letter, our company’s acting-in-concert parties and any other companies or enterprises under their control have not engaged in any business that constitute a horizontal competition with the principal businesses of the listed company and any other companies or enterprises under its control. In order to avoid horizontal competition with the listed company and safeguard the legitimate rights and interest of the listed company and other shareholders, after the completion of this transaction, our company’s acting-in-concert parties and any other companies or enterprises under their control will not directly engage in businesses that are the same as, or similar to, and constitute a competition with, the principal businesses of the listed company. 4. This commitment letter shall come into effect and be irrevocable as of the date of official signature by our company and our acting-in-concert parties. Our company and our acting-in-concert parties warrant the effective fulfillment of these commitments, and the listed company has the right to supervise their fulfillment of this commitment letter. If our company and our acting-in-concert parties fail to effectively fulfill this commitment letter, leading to any actual losses to the listed company, our company and our acting-in-concert parties will compensate for any and all of such direct or indirect losses so caused to the listed company. | ||||||
| Commitments made during asset restructuring | Listed company | Commitments to reduce and regulate related party transactions | During the period when our company is a related party of Shanghai Pharma, our company and any other companies or enterprises under our control will try the best to avoid and reduce related party transactions with Shanghai Pharma and its subsidiaries. For inevitable related party transactions or those occurring for reasonable reasons, the company undertakes to conduct such transactions on an equal and voluntary basis in the principles of fairness, impartiality, and compensation for equal value, with the transaction prices to be determined based on the reasonable prices recognized in the market. Our company will strictly comply with the provisions of relevant laws, regulations, normative documents, and the Articles of Association of Shanghai Pharma, perform the decision-making procedures and information disclosure obligations for related party transactions, and warrant not to harm any legitimate rights and interest of Shanghai Pharma and any other shareholders through related party transactions. This commitment letter shall come into effect and be irrevocable as of the date of official signature by our company. Our company warrants the effective fulfillment of these commitments, and Shanghai Pharma has the right to supervise the fulfillment | June 10, 2021 | Remain effective | In progress |
| of this commitment letter. If our company fails to effectively fulfill this commitment letter, leading to any actual losses to Shanghai Pharma, our company will compensate for any and all of such direct or indirect losses so caused to Shanghai Pharma. | ||||||
| Commitments made during asset restructuring | Listed company | Commitments regarding lock-up shares | Shanghai Pharma’s shares subscribed by our company through this transaction shall not be transferred within 36 months from the end of the issuance of these shares. After the expiration of the aforementioned lockup period, the transfer and trading of such shares shall be handled in accordance with the then effective laws and regulations, as well as the regulations and rules of the CSRC, Shenzhen Stock Exchange (SZSE), and Shanghai Stock Exchange (SHSE). After the completion of this transaction, our company will also arrange a lockup period as described above for our any increased stake in Shanghai Pharma after it issues bonus shares or convert public reserve funds into share capital. | May 11, 2021 | Thirty-six months from the end of the issuance of new shares by Shanghai Pharma | In progress |
| Whether the commitments are fulfilled as scheduled | Yes | |||||
II. Occupation of the Company’s Capital by the Controlling Shareholder or any of Its Related Parties for Non-Operating Purposes
□Applicable ?Not applicable
During the reporting period, there was no occupation of the Company’s capital by the controlling shareholder or any of its related parties for non-operating purposes.III. Non-compliant Provision of External Guarantees
□Applicable ?Not applicable
There was no non-compliant provision of external guarantees during the reporting period.IV. Engagement and Disengagement of AuditorWhether the interim financial statements were audited or not
□Yes ?No
The Company’s interim financial statements were unaudited.V. Explanations Given by the Board of Directors and the Supervisory Committee Regarding the Auditor’s “Modified Opinion” on theFinancial Statements of the Reporting Period
□Applicable ?Not applicable
VI. Explanations Given by the Board of Directors Regarding the Auditor’s “Modified Opinion” on the Financial Statements of PreviousYear
□Applicable ?Not applicable
VII. Bankruptcy and Reorganization
□Applicable ?Not applicable
There was no bankruptcy or reorganization related events during the reporting period.VIII. Legal Matters
Significant lawsuits and arbitrations
□Applicable ?Not applicable
There was no significant lawsuits and arbitrations during the reporting period.
Other lawsuits?Applicable □Not applicable
| Basic Information of Litigation (Arbitration) | Amount Involved (RMB’0,000) | Any Estimated Liability Caused or Not | Litigation (Arbitration) Progress | Litigation (Arbitration) Trial Results and Impacts | Enforcement of Litigation (Arbitration) Judgments | Disclosure Date | Disclosure Index |
| Contract Dispute of Yunnan Baiyao Group Traditional Chinese Medicine Resources Co., Ltd (one of the Company’s subsidiaries) vs Chuxiong Linxin Mushroom Developing Co., Ltd | 368.60 | No | The Supreme People’s Court has disallowed the request for a retrial by Chuxiong Linxin Mushroom Developing Co., Ltd. | If payments of both parties payable to each other can be offset against each other, in accordance with the content of the civil judgments, Chuxiong Linxin Mushroom Developing Co., Ltd shall also need to pay Yunnan Baiyao Group Traditional Chinese Medicine Resources Co., Ltd an outstanding payment loss of RMB 2,876,484.81, together with an interest calculated from the offsetting date based on the above outstanding payment loss and Loan Prime Rate (LPR) published by the National Interbank Funding Center. Meanwhile, Chuxiong Linxin Mushroom Developing Co., Ltd shall also need to compensate Yunnan Baiyao Group Traditional Chinese Medicine Resources Co., Ltd for the prepaid litigation fee of RMB 34,332.00. | The claims were transmitted by means of communication, written reports and other forms through the liaison channel of the Kunming Intermediate Court of the rule of law business environment. The enforcement for debt offsetting was completed on October 24, 2023. A total of RMB 34.8934 million was offset, with a remaining RMB 3.686 million pending further asset discovery for execution. (In the case of final execution, if any executable assets are discovered, the execution process will be resumed.) | March 31, 2023 | Annual Report for 2022, Interim Report for 2023 and Annual Report for 2023. For details, please refer to http://www.cninfo.com.cn |
| Summary of other events not meeting the disclosure standards for being included in significant litigation (arbitration) | 85,567.79 | No | Some cases have been filed to be tried; some are being under trials to be adjudicated; some have been adjudicated; some have been closed. | Summary of litigation events has no significant impact on the Company | Some judgments have come into effect and have been enforced or are being enforced | / |
IX. Punishments and Rectifications
□Applicable ?Not applicable
There was no punishment or rectification involving the Company during the reporting period.X. Credit Quality of the Company as well as its Controlling Shareholder and De Facto Controller
□Applicable ?Not applicable
XI. Significant Related Party Transactions
1. Related party transactions related to daily operations
□Applicable ?Not applicable
There were no related party transactions related to daily operations during the reporting period.
2. Related party transactions arising from acquisition or sale of assets or equity
□Applicable ?Not applicable
There were no related party transactions arising from acquisition or sale of assets or equity during the reporting period.
3. Related party transactions regarding joint investments in third parties
□Applicable ?Not applicable
There were no related party transactions regarding joint investments in third parties during the reporting period.
4. Amounts due to and from related parties
□Applicable ?Not applicable
There were no amounts due to and from related parties during the reporting period.
5. Transactions with related finance companies
□Applicable ?Not applicable
There were no deposit, loan, credit or other financial business occurred between the Company and its related financecompanies/related parties.
6. Transactions with related parties by finance company controlled by the Company
□Applicable ?Not applicable
There were no deposit, loan, credit or other financial business occurred between any finance companies under thecontrol of the Company and related parties.
7. Other significant related party transactions
□Applicable ?Not applicable
There were no other significant related party transactions during the reporting period.XII. Major Contracts and Their Performance
1. Entrustment, contracting and leases
(1) Entrustment
□Applicable ?Not applicable
There were no entrustment events of the Company during the reporting period.
(2) Contracting
□Applicable ?Not applicable
There were no contracting events of the Company during the reporting period.
(3) Leases
□Applicable ?Not applicable
There were no leases of the Company during the reporting period.
2. Major guarantees
?Applicable □Not applicable
Unit: RMB’0,000
| Guarantees for others by the Company and its subsidiaries (excluding those provided by the Company for its subsidiaries) | ||||||||||
| Guaranteed party | Disclosure date of related announcement of guarantee quota | Guarantee quota | Actual occurrence date | Actual guarantee amount | Guarantee type | Collateral (if any) | Counter guarantee (if any) | Guarantee period | Fulfilled or not | Guarantee for a related party or not |
| Yunnan Yuncheng Hospital Management Co., Ltd. | November 24, 2017 | 150,000 | Joint and several liability guarantee | 12 years | No | No | ||||
| Total approved limit for guarantees for others during the reporting period (A1) | 0 | Total amount of guarantees for others incurred during the reporting period (A2) | 0 | ||||||||
| Total approved limit for guarantees for others at the end of the reporting period (A3) | 150,000 | Total actual balance of guarantees for others at the end of the reporting period (A4) | 150,000 | ||||||||
| Guarantees by the Company to subsidiaries | |||||||||||
| Guaranteed party | Disclosure date of related announcement of guarantee quota | Guarantee quota | Actual occurrence date | Actual guarantee amount | Guarantee type | Collateral (if any) | Counter guarantee (if any) | Guarantee period | Fulfilled or not | Guarantee for a related party or not | |
| None | |||||||||||
| Total approved limit for guarantees for subsidiaries during the reporting period (B1) | 0 | Total amount of guarantees for subsidiaries incurred during the reporting period (B2) | 0 | ||||||||
| Total approved limit for guarantees for subsidiaries at the end of the reporting period (B3) | 0 | Total actual balance of guarantees for subsidiaries at the end of the reporting period (B4) | 0 | ||||||||
| Guarantees by subsidiaries to another subsidiaries | |||||||||||
| Guaranteed party | Disclosure date of related announcement of guarantee quota | Guarantee quota | Actual occurrence date | Actual guarantee amount | Guarantee type | Collateral (if any) | Counter guarantee (if any) | Guarantee period | Fulfilled or not | Guarantee for a related party or not | |
| None | |||||||||||
| Total approved limit for guarantees for subsidiaries during the reporting period (C1) | 0 | Total amount of guarantees for subsidiaries incurred during the reporting period (C2) | 0 | ||||||||
| Total approved limit for guarantees for subsidiaries at the end of the reporting period (C3) | 0 | Total actual balance of guarantees for subsidiaries at the end of the reporting period (C4) | 0 | ||||||||
| The Company’s total guarantee amount (total amount of the first three major items) | |||||||||||
| Total approved guarantee limit during the reporting period (A1+B1+C1) | 0 | Total actual amount of guarantee incurred during the reporting period (A2+B2+C2) | 0 | ||||||||
| Total approved guarantee limit at the end of the reporting period (A3+B3+C3) | 150,000 | Total actual guarantee balance at the end of the reporting period (A4+B4+C4) | 150,000 | ||||||||
| The proportion of actual total guarantee amount (i.e. A4+B4+C4) to the Company’s net assets | 3.81% | ||||||||||
| Of which: | |||||||||||
| Balance of guarantees for shareholders, de facto controllers and related parties (D) | 0 | ||||||||||
| Balance of debt guarantees directly or indirectly provided to the parties with the gearing ratio exceeding 70% (E) | 0 | ||||||||||
| Total amount of guarantees exceeding 50% of net assets (F) | 0 | ||||||||||
| Total amount of the above three types of guarantees (D+ E+ F) | 0 |
| Description of the circumstances, if any, under which the guarantee liability arose during the reporting period or there is evidence of a likelihood of joint and several liquidation liability for the outstanding guarantee contracts during the reporting period | None. |
| Explanation on provision of guarantee to external parties in violation of prescribed procedures, if any | None. |
Note: On April 22, 2024, Yunnan Yuncheng Hospital Management Co., Ltd held a shareholders’ meeting where the shareholdersunanimously agreed to terminate the PPP project for the Chenggong Hospital (Phase I) of Kunming Medical University First AffiliatedHospital. They also agreed to terminate the PPP project contract, investment agreement, and drug distribution project agreement. Theproject company is currently in the liquidation phase.Explanations on the specific situation of guarantees provided by composite methods: None.
3. Cash entrusted for wealth management
?Applicable □Not applicable
Unit: RMB’0,000
| Type | Source of funding | Amount | Undue amount | Unrecovered overdue amount | Provision for impairment on unrecovered overdue amount |
| Bank financial products | Self-owned | 100,690.20 | 100,690.20 | 0 | 0 |
| Other type | Self-owned | 0 | 0 | 0 | 0 |
| Total | 100,690.20 | 100,690.20 | 0 | 0 | |
Details of high-risk guaranteed wealth management products with a significant amount per single item or of low safety and poorliquidity
□Applicable ?Not applicable
It is expected that the principal of entrusted financing cannot be recovered, or there may be other circumstances that may result inimpairment
□Applicable ?Not applicable
4. Other Significant Contracts
□Applicable ?Not applicable
There were no other significant contracts of the Company during the reporting period.
XIII. Explanations to Other Significant Events?Applicable □Not applicable(I) System updates
1. On March 28, 2024, the Company held the third session of the Tenth Board of Directors for 2024, at whichthe Proposal on Revising the Rules of Procedure for the Board of Directors and the Proposal on Revising the Rulesof Procedure for Office Meetings had been considered and approved. More details can be found in theAnnouncement on Resolutions of the Third Session of the Tenth Board of Directors for 2024 (Announcement No.2024-15), the Rules of Procedure for the Board of Directors and the Rules of Procedure for Office Meetingsdisclosed by the Company at http://www.cninfo.com.cn on March 30, 2024.
2. On April 26, 2024, the Company held the fourth session of the Tenth Board of Directors for 2024, at whichthe Proposal on Formulating the Yunnan Baiyao Group’s Compliance Management Measures (Trial) had been
considered and approved. More details can be found in the Announcement on Resolutions of the Fourth Session ofthe Tenth Board of Directors for 2024 (Announcement No. 2024-23), and Yunnan Baiyao Group’s ComplianceManagement Measures (Trial) disclosed by the Company at http://www.cninfo.com.cn on April 27, 2024.(II) Changes in shareholdings of shareholders
1. Expiration of the shareholder’s shareholding reduction plan
On January 17, 2024, the Company disclosed the Announcement on the Expiration of the Shareholder’sShareholding Reduction Plan (Announcement No.: 2014-01) and received from its shareholder Jiangsu Yuyue, theNotice on Voluntary Information Disclosure Regarding the Expiration of Bidding-based Shareholding ReductionPlan and Shareholding Reduction Implementation Progress, stating that as of January 13, 2024, Jiangsu Yuyue’sshareholding reduction plan had expired and it had completed the shareholding reduction plan. From July 17, 2023to January 13, 2024, Jiangsu Yuyue accumulatively reduced, by means of centralized bidding trading, itsshareholding in the Company by 35,936,638 shares not subject to trading moratorium, accounting for 1.99997% ofthe Company’s total share capital, indicating that its shareholding reduction was consistent with the previouslydisclosed shareholding reduction plan, and that the shareholding reduction quantity fell within the quantity scope ofthe shareholding reduction plan.
2. Shareholders’ partial share pledge and release of pledge
(1) On February 28, 2024, the Company disclosed the Announcement on the Release of Shareholders’ PartialShare Pledge (Announcement No. 2024-10). On February 27, 2024, the Company received a notice from itsshareholder Yunnan State-owned Equity Operation Management Company, stating that Yunnan State-owned EquityOperation Management Company had released the pledge on its 71,400,000 shares held in the Company (accountingfor 3.97% of the Company’s total share capital).
(2) On May 17, 2024, the Company disclosed the Announcement on Shareholders’ Partial Share Pledge(Announcement No.: 2024-29). In the past few days, the Company received a notice from its shareholder NewHuadu, stating that New Huadu set up a pledge on its 46,380,000 shares held in the Company (accounting for 2.60%of the Company’s total share capital).
(III) Change of use of repurchased shares and cancellation
On February 8, 2024, the Company disclosed the Announcement on Change of Use of Repurchased Shares andCancellation (Announcement No.: 2024-04), stating that the Company intends to change the use of repurchasedshares for the purpose of safeguarding the interests of investors. The use of such repurchased shares is changed from“for the implementation of employee stock ownership plan or equity incentive plan” to “for cancellation to reducethe registered capital.” That is, the Company intends to cancel all 12,599,946 shares in the special securities accountfor stock repurchase and reduce the Company’s registered capital accordingly.
The above matters had been considered and approved at the first session of the Company’s Tenth Board ofDirectors for 2024 on February 7, 2024 and the Company’s first extraordinary general meeting for 2024 on February23, 2024. More details can be found in the Announcement on Resolutions of the First Session of the Tenth Board ofDirectors for 2024 (Announcement No. 2024-03), Announcement on Change of Use of Repurchased Shares andCancellation (Announcement No. 2024-04), Announcement on Resolutions of the First Extraordinary General
Meeting for 2024 (Announcement No. 2024-07), and Announcement on Change of Use of Repurchased Shares andCancellation and Notice to Creditors (Announcement No. 2024-08) disclosed at http://www.cninfo.com.cn.On April 23, 2024, the Company disclosed the Announcement on Cancellation of Repurchased Shares andChange in Shareholding (Announcement No.: 2024-21). On April 19, 2024, the Company completed thecancellation of the above 12,599,946 repurchased shares with the Shenzhen Branch of China Securities Depositoryand Clearing Corporation. The Company has 1,784,262,603.00 shares in total after this cancellation.
(IV) Application for registration and issuance of ultra short-term financing bondsOn February 26, 2024, the Company received the Notice of Acceptance of Registration (Zhongshi Xiezhu[2024] No. SCP63) issued by National Association of Financial Market Institutional Investors (“NAFMII”), statingits agreement to accept the Company’s registration of ultra short-term financing bonds. According to the aboveNotice of Acceptance of Registration, the Company’s registered amount of ultra short-term financing bonds is RMB3 billion, in which the registration limit remains valid within two (2) years as of the signature of the Notice, withIndustrial and Commercial Bank of China Limited as the lead underwriter. The Company may issue ultra short-term financing bonds in installments during the effective registration period. After the issuance, the issuance resultswill be disclosed through channels NAFMII recognizes. More details can be found in the Announcement onApproval on Registration of Issuance of Ultra-short-term Financing Bonds (Announcement No. 2024-11) disclosedby the Company at http://www.cninfo.com.cn on February 28, 2024.
On March 20, 2024, the issuance of the Company’s First Tranche of Ultra Short-Term Financing Bonds for2024 valued RMB 1 billion (Sci-Tech Innovation Notes/Rural Revitalization) was completed and the proceeds werereceived in full. For details, please refer to the Announcement on Results of Issuance of the First Tranche of Ultra-short-term Financing Bonds (Sci-Tech Innovation Notes/Rural Revitalization) (Announcement No. 2024-14)disclosed by the Company at http://www.cninfo.com.cn on March 21, 2024.(V) R&D projects
1. On May 11, 2024, the Company disclosed the Announcement on the Approval of INR101 Injection for DrugClinical Trials (Announcement No. 2024-26). Recently, Yunhe Pharmaceutical (Tianjin) Co., Ltd (“YunhePharmaceutical”), a wholly-owned subsidiary of the Company, received the Notice of Approval for Clinical DrugTrial (Notice No.: 2024LP01109) issued by the National Medical Products Administration, stating that after review,the application for INR101 injection (hereinafter referred to as “this product”) to be used for clinical trials by YunhePharmaceutical meets the relevant requirements for drug registration, so this product is approved for clinical trialsin healthy individuals and patients with prostate cancer.
2. On May 11, 2024, the Company disclosed the Announcement on the Approval of Flurbiprofen Cataplasmsfor Drug Clinical Trials (Announcement No. 2024-27). Recently, Yunnan Baiyao Group Wuxi Pharmaceutical Co.,Ltd, a wholly-owned subsidiary of the Company, received the Notice of Approval for Clinical Drug Trial (NoticeNo.: 2024LP00886) issued by the National Medical Products Administration, stating that after review, FlurbiprofenCataplasms are approved for clinical trials to relieve pains.
3. On June 27, 2024, the Company held the seventh session of the Tenth Board of Directors for 2024, at whichthe Proposal on Introducing KA-1641 Projects had been considered and approved, and it is agreed to introduce therelevant patents of antibody drug KA-1641 (hereinafter referred to as the “target product”) from Kyinno
Biotechnology Co., Ltd for the Company, and perform R&D, production, and commercialization activities on thetarget product worldwide. More details can be found in the Announcement on Resolutions of the Seventh Session ofthe Tenth Board of Directors for 2024 (Announcement No. 2024-38), and Announcement on Introducing KA-1641Projects (Announcement No. 2024-39) disclosed by the Company at http://www.cninfo.com.cn.
XIV. Significant Events of the Company’s Subsidiaries
?Applicable □Not applicableOn January 30, 2024, YNBY International Limited (“YNBY International”) made a public disclosure asrequired by the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited and thelaws of Hong Kong. As of the date of this announcement, YNBY International has met the requirements under theresumption guidance. At the request of YNBY International, trading of its shares was suspended on Hong KongStock Exchange from 9:00 am on June 21, 2022. YNBY International has fully met the requirements under theresumption guidance to the satisfaction of Hong Kong Stock Exchange. Therefore, YNBY International has appliedto Hong Kong Stock Exchange for resumption of trading of its shares from 9:00 am on January 31, 2024. Moredetails can be found in the Announcement on Progress of Relevant Matters of YNBY International Limited(Announcement No. 2024-02) disclosed by the Company at http://www.cninfo.com.cn. on February 1, 2024.
Section VII Changes in Shareholdings and Particulars about
ShareholdersI. Changes in Shareholdings
1. Changes in shareholdings
Unit: Share
| Before this change | Increase/decrease (+, -) | After this change | |||||||
| Quantity | Proportion | New shares | Bonus shares | Capital reserve converted into share capital | Others | Subtotal | Quantity | Proportion | |
| I. Shares subject to trading moratorium | 11,567,358 | 0.64% | 0 | 0 | 0 | 3,295,210 | 3,295,210 | 14,862,568 | 0.83% |
| 1. State-owned shares | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| 2. Shares held by state-owned legal persons | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| 3. Shares held by other domestic shareholders | 11,567,358 | 0.64% | 0 | 0 | 0 | 3,295,210 | 3,295,210 | 14,862,568 | 0.83% |
| Of which: shares held by domestic legal persons | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| Shares held by domestic natural persons | 11,567,358 | 0.64% | 0 | 0 | 0 | 3,295,210 | 3,295,210 | 14,862,568 | 0.83% |
| 4. Foreign-invested shares | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| Of which: | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| shares held by overseas legal persons | |||||||||
| Shares held by overseas natural persons | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| II. Shares not subject to trading moratorium | 1,785,295,191 | 99.36% | 0 | 0 | 0 | -15,895,156 | -15,895,156 | 1,769,400,035 | 99.17% |
| 1. RMB-denominated ordinary share | 1,785,295,191 | 99.36% | 0 | 0 | 0 | -15,895,156 | -15,895,156 | 1,769,400,035 | 99.17% |
| 2. Domestic-listed foreign-invested shares | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| 3. Overseas-listed foreign-invested shares | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| 4. Others | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| III. Total number of shares | 1,796,862,549 | 100.00% | 0 | 0 | 0 | -12,599,946 | -12,599,946 | 1,784,262,603 | 100.00% |
Reasons for changes in shareholdings? Applicable □Not applicable
To safeguard the interests of investors, the Company held a shareholders’ meeting in February 2024 andapproved to change the use of the 12,599,946 repurchased shares to “for cancellation to reduce the registered capital,”which accounted for 0.7015% of the total share capital of the Company, and the Company completed thecancellation procedures of the 12,599,946 repurchased shares in April 2024, which accounted for 0.7015% of thetotal share capital of the Company. In April 2024, the Company completed the cancellation procedures for the12,599,946 repurchased shares.
Approval of changes in shareholdings?Applicable □Not applicable
At the first session of the Tenth Board of Directors of the Company for 2024 held on February 7, 2024 and thefirst extraordinary general meeting of the Company for 2024 held on February 23, 2024, the Company consideredand approved the Proposal on Change of Use of Repurchased Shares and Cancellation, and agreed that theCompany should change the use of the above 12,599,946 repurchased shares in the special securities account forrepurchase, and change the use of the repurchased shares from “for the implementation of employee stock ownership
plan or equity incentive plan” to “for cancellation to reduce the registered capital.” On April 19, 2024, the Companycompleted the cancellation procedures of 12,599,946 shares in the special securities account for repurchase at theShenzhen Branch of China Securities Depository and Clearing Corporation.Transfers for changes in shareholdings
□Applicable ? Not applicable
Implementation of share repurchases
□Applicable ? Not applicable
Implementation of reduction in share repurchases by means of centralized bidding
□Applicable ?Not applicable
The impact of changes in shareholdings on financial indicators such as basic and diluted earnings per share, net assets per shareattributable to the Company’s ordinary shareholders for the latest year and period?Applicable □Not applicableTo safeguard the interests of investors, the Company held a shareholders’ meeting in February 2024 andapproved to change the use of the 12,599,946 repurchased shares to “for cancellation to reduce the registered capital,”which accounted for 0.7015% of the total share capital of the Company, and the Company completed thecancellation procedures of the 12,599,946 repurchased shares in April 2024, which accounted for 0.7015% of thetotal share capital of the Company. In April 2024, the Company completed the cancellation procedures for the12,599,946 repurchased shares.The total share capital of the Company was 1,796,862,549 shares prior to the completion of the write-off, andthe total share capital of the Company was 1,784,262,603 shares after the completion of the write-off. Based on thetotal share capital before the completion of the write-off, the Company’s basic earnings per share for the first halfof 2024 will be RMB 1.77/share, diluted earnings per share will be RMB 1.77/share, and the net assets per shareattributable to the Company’s ordinary shareholders will be RMB 21.91/share; based on the total share capital afterthe completion of the write-off, the Company’s basic earnings per share will be RMB 1.79/share, diluted earningsper share will be RMB 1.79/share, and the net assets per share attributable to the Company’s ordinary shareholderswill be RMB 22.06/share.
Other disclosures deemed necessary by the Company or required by securities regulators
□Applicable ? Not applicable
2. Changes in shares subject to trading moratorium
? Applicable □Not applicable
Unit: share
| Name of shareholder | Number of shares subject to trading moratorium at the beginning of the reporting period | Number of shares released from trading moratorium during the reporting period | Increase in shares subject to trading moratorium during the reporting period | Number of shares subject to trading moratorium at the end of the reporting period | Reason for moratorium | Date of shares released from trading moratorium |
| Dong Ming | 9,960 | 0 | 0 | 9,960 | Locked-up shares held by senior management | Implemented in accordance with regulatory requirements |
| Zhu Zhaoyun | 42,000 | 0 | 0 | 42,000 | Locked-up shares held by senior management | Implemented in accordance with regulatory requirements |
| Qin Wanmin | 378,000 | 0 | 0 | 378,000 | Locked-up shares held by senior management | Implemented in accordance with regulatory requirements |
| Yang Yong | 75,768 | 0 | 0 | 75,768 | Locked-up shares held by senior management | Implemented in accordance with regulatory requirements |
| Li Jing | 42,000 | 0 | 0 | 42,000 | Locked-up shares held by senior management | Implemented in accordance with regulatory requirements |
| Wang Minghui | 756,000 | 0 | 0 | 756,000 | Locked-up shares held by senior management | Implemented in accordance with regulatory requirements |
| Chen Fashu | 9,395,621 | 0 | 3,131,874 | 12,527,495 | Locked-up shares held by senior management | Implemented in accordance with regulatory requirements |
| Chen Yanhui | 133,009 | 0 | 44,336 | 177,345 | Locked-up shares held by senior management | Implemented in accordance with regulatory requirements |
| Yin Pinyao | 252,000 | 0 | 84,000 | 336,000 | Locked-up shares held by senior management | Implemented in accordance with regulatory requirements |
| Yu Juan | 105,000 | 0 | 35,000 | 140,000 | Locked-up shares held by senior management | Implemented in accordance with regulatory requirements |
| Wang Jin | 378,000 | 0 | 0 | 378,000 | Locked-up shares held by senior management | Implemented in accordance with regulatory requirements |
| Total | 11,567,358 | 0 | 3,295,210 | 14,862,568 | -- | -- |
II. Issuance and Listing of Securities
□Applicable ? Not applicable
III. Number of Shareholders of the Company and Their Shareholdings
Unit: Share
| Total number of ordinary shareholders at the end of the reporting period | 177,126 | Total number of preferred shareholders with resumed voting rights at the end of the reporting period (if any) | 0 | |
| Shareholdings of ordinary shareholders holding more than 5% of the shares or the top 10 ordinary shareholders (excluding lending of shares through securities finance) | ||||
| Pledged, marked or frozen | ||||
| Name of shareholder | Nature of shareholder | Shareholding ratio | Number of ordinary shares held at the end of the reporting period | Change during the reporting period | Number of ordinary shares subject to trading moratorium | Number of ordinary shares not subject to trading moratorium | Status | Quantity | |
| Yunnan State-owned Equity Operation Management Co., Ltd. | State-owned legal person | 25.20% | 449,624,311 | 0 | 0 | 449,624,311 | Pledged | 119,343,840 | |
| New Huadu Industrial Group Co., Ltd. | Domestic non-state-owned legal person | 24.42% | 435,742,244 | 0 | 0 | 435,742,244 | Pledged | 336,894,000 | |
| Yunnan Hehe (Group) Co., Ltd. | State-owned legal person | 8.19% | 146,185,851 | 0 | 0 | 146,185,851 | NA | 0 | |
| Hong Kong Securities Clearing Company Limited | Overseas legal person | 3.87% | 69,040,056 | 2,178,991 | 0 | 69,040,056 | NA | 0 | |
| China Securities Finance Corp. | Domestic non-state-owned legal person | 2.09% | 37,373,108 | 0 | 0 | 37,373,108 | NA | 0 | |
| Central Huijin Investment Ltd. | State-owned legal person | 0.93% | 16,617,440 | 0 | 0 | 16,617,440 | NA | 0 | |
| UBS Asset Management (Singapore) Ltd. - UBS Lux Investment SICAV | Overseas legal person | 0.88% | 15,691,628 | -577,000 | 0 | 15,691,628 | NA | 0 | |
| China Construction Bank Corporation－E Fund CSI. 300 Medical and Healthcare Trading Open-End Index Securities Investment Fund | Others | 0.74% | 13,167,666 | 1,867,900 | 0 | 13,167,666 | NA | 0 | |
| Chen Fashu | Domestic natural person | 0.70% | 12,527,495 | 0 | 12,527,495 | 0 | NA | 0 | |
| National Social Security Fund 110 | Others | 0.68% | 12,151,514 | 354,656 | 0 | 0 | NA | 0 | |
| Strategic investors or general legal persons who become the top 10 ordinary shareholders due to rights issue (if any) | Not applicable | ||||||||
| Related or acting-in-concert parties among the shareholders above | Chen Fashu is the de facto controller of New Huadu Industrial Group Co., Ltd. It is unclear whether there are any related relationships among other shareholders or whether there is any concerted action as defined by the Administrative Measures for Information Disclosure of Changes in Shareholdings of Listed Companies. | ||||||||
| Above shareholders involved in entrusting/being entrusted with voting rights and giving up voting rights | Not applicable | |||
| Special account for share repurchases (if any) among the top 10 shareholders | Not applicable | |||
| Shareholdings of the top 10 ordinary shareholders not subject to trading moratorium (excluding lending of shares through securities finance, and locked-up shares held by senior management) | ||||
| Name of shareholder | Number of ordinary shares not subject to trading moratorium held at the end of the reporting period | Type of shares | ||
| Type | Quantity | |||
| Yunnan State-owned Equity Operation Management Co., Ltd. | 449,624,311 | RMB-denominated ordinary share | 449,624,311 | |
| New Huadu Industrial Group Co., Ltd. | 435,742,244 | RMB-denominated ordinary share | 435,742,244 | |
| Yunnan Hehe (Group) Co., Ltd. | 146,185,851 | RMB-denominated ordinary share | 146,185,851 | |
| Hong Kong Securities Clearing Company Limited | 69,040,056 | RMB-denominated ordinary share | 69,040,056 | |
| China Securities Finance Corp. | 37,373,108 | RMB-denominated ordinary share | 37,373,108 | |
| Central Huijin Investment Ltd. | 16,617,440 | RMB-denominated ordinary share | 16,617,440 | |
| UBS Asset Management (Singapore) Ltd.－UBS Lux Investment SICAV | 15,691,628 | RMB-denominated ordinary share | 15,691,628 | |
| China Construction Bank Corporation－E Fund CSI 300 Health Care Index ETF | 13,167,666 | RMB-denominated ordinary share | 13,167,666 | |
| National Social Security Fund 110 | 12,151,514 | RMB-denominated ordinary share | 12,151,514 | |
| Industrial and Commercial Bank of China Limited－Huatai-pinebridge CSI. 300 Trading Open-End Index Securities Investment Fund | 10,729,483 | RMB-denominated ordinary share | 10,729,483 | |
| Related or acting-in-concert parties among the top 10 ordinary shareholders not subject to trading moratorium, and the top 10 ordinary shareholders not subject to trading moratorium and the top 10 ordinary shareholders | Whether there is any related relationship between the above shareholders or concerted action as stipulated in the Administrative Measures for Disclosure of Changes in Shareholdings of Shareholders of Listed Companies is not known. | |||
| Top 10 ordinary shareholders involved in securities margin trading (if any) | Not applicable | |||
Shareholders holding more than 5% of shares, top 10 shareholders and top 10 shareholders not subject to trading moratoriumparticipating in the lending of shares in the securities finance?Applicable □Not applicable
Unit: Share
| Shareholders holding more than 5% of shares, top 10 shareholders and top 10 shareholders with shares not subject to trading moratorium participating in the lending of shares in the transfer and financing business | ||||||||
| Name of shareholder (full name) | General and credit account holdings at the beginning of the period | Refinancing shares lent at the beginning of the period and not yet returned | General and credit account holdings at the end of the period | Refinancing shares lent at the end of the period and not yet returned | ||||
| Total | Percentage of total share capital | Total | Percentage of total share capital | Total | Percentage of total share capital | Total | Percentage of total share capital | |
| China Construction Bank Corporation－E Fund CSI. 300 Medical and Healthcare Trading Open-End Index Securities Investment Fund | 11,299,766 | 0.63% | 2,242,900 | 0.12% | 13,167,666 | 0.74% | 271,600 | 0.02% |
| Industrial and Commercial Bank of China Limited－Huatai-pinebridge CSI. 300 Trading Open-End Index Securities Investment Fund | 6,490,784 | 0.36% | 312,300 | 0.02% | 10,729,483 | 0.61% | 3,600 | 0.00% |
Changes in top 10 shareholders and top 10 shareholders with shares not subject to trading moratorium compared to the previous perioddue to lending/returning of shares in the securities finance
□Applicable ? Not applicable
Whether the top 10 ordinary shareholders and the top 10 ordinary shareholders not subject to trading moratorium of the Companyconducted any agreed repurchase transactions during the reporting period
□Yes ? No
The top 10 ordinary shareholders and the top 10 ordinary shareholders not subject to trading moratorium of theCompany did not conduct any agreed repurchase transactions during the reporting period.IV. Changes in Shareholdings of Directors, Supervisors and Senior Management
□Applicable ? Not applicable
There was no change in the shareholdings of the directors, supervisors, and senior management of the Companyduring the reporting period. For details, please refer to the 2023 Annual Report.V. Changes in Controlling Shareholders or De Facto ControllersChanges in controlling shareholders during the reporting period
□Applicable ? Not applicable
There was no change in the controlling shareholders of the Company during the reporting period.
Change of de facto controllers during the reporting period
□Applicable ? Not applicable
There was no change in the de facto controllers of the Company during the reporting period.
Section VIII Preference Shares
□Applicable ? Not applicable
There were no preference shares in the Company during the reporting period.
Section IX Bonds? Applicable □Not applicableI. Enterprise bonds
□Applicable ? Not applicable
The Company did not have enterprise bonds during the reporting period.
II. Corporate bonds
□Applicable ? Not applicable
The Company did not have corporate bonds during the reporting period.III. Debt financing instruments for non-financial enterprises? Applicable □Not applicable
1. Basic information on debt financing instruments for non-financial enterprises
Unit: RMB 0’000
| Bond name | Abbreviation | Bond code | Issue date | Interest starting date | Maturity date | Bond balance | Interest rate | Debt service method | Trading place |
| 2024 First Tranche of Ultra-short-term Financing Bonds (Sci-Tech Notes/Rural Revitalization) of Yunnan Baiyao Group Co., Ltd. | 2024 Yunnan Baiyao SCP001 (Sci-Tech Notes) | 012480938 | March 18, 2024 | March 20, 2024 | December 15, 2024 | 100,000 | 2.30% | Lump-sum debt service on maturity | Interbank market |
| Investor suitability arrangements (if any) | For qualified institutional investors | ||||||||
| Applicable trading mechanism | Bid, offer, request for quotation and agreement trading | ||||||||
| Risk of termination of listing and trading (if any) and countermeasures | No | ||||||||
Overdue bonds
□Applicable ? Not applicable
2. Triggering and enforcement of issuer or investor option clauses, investor protection clauses
□Applicable ? Not applicable
3. Adjustments to credit rating results during the reporting period
□Applicable ? Not applicable
4. Implementation and changes in guarantees, debt-servicing plans and other debt-servicing safeguardsduring the reporting period and their impact on the rights and interests of bond investors
□Applicable ? Not applicable
IV. Convertible corporate bonds
□Applicable ? Not applicable
The Company did not have convertible corporate bonds during the reporting period.
V. Losses in the scope of the consolidated statements during the reporting period exceeding 10%of net assets at the end of the previous year
□Applicable ? Not applicable
VI. Major accounting data and financial indicators of the Company for the latest two years asat the end of the reporting period
Unit: RMB 0’000
| Item | At the end of the reporting period | At the end of the previous year | Increase/decrease at the end of the reporting period compared to the end of the previous year |
| Current ratio | 2.6405 | 2.8510 | -7.38% |
| Gearing ratio | 27.55% | 25.80% | 1.75% |
| Quick ratio | 2.2066 | 2.3453 | -5.91% |
| The reporting period | The same period last year | Increase/decrease in the reporting period over the same period last year | |
| Net profit after extraordinary profits and losses | 313,614.83 | 273,530.30 | 14.65% |
| EBITDA total debt ratio | 25.86% | 25.30% | 0.56% |
| Interest coverage multiple | 148.73 | 176.72 | -15.84% |
| Cash interest coverage multiple | 200.41 | 159.65 | 25.53% |
| EBITDA interest coverage multiple | 155.84 | 186.79 | -16.57% |
| Loan repayment ratio | 100.00% | 100.00% | 0.00% |
| Interest repayment ratio | 100.00% | 100.00% | 0.00% |
Section X Financial StatementsI. Auditors’ ReportWhether the Interim Report has been audited
□Yes ? No
The Company’s interim financial statements were unaudited.II. Financial StatementsThe units in the Notes to the Financial Statements are presented in RMB.
1. Consolidated balance sheet
Prepared by: Yunnan Baiyao Group Co., Ltd.
June 30, 2024
Unit: RMB
| Item | Closing balance | Opening balance |
| Current assets: | ||
| Cash and bank balance | 14,719,563,531.35 | 14,218,343,076.67 |
| Provision of settlement fund | ||
| Placements with banks and other financial institutions | ||
| Financial assets held for trading | 1,046,815,045.34 | 149,366,687.56 |
| Derivative financial assets | ||
| Notes receivable | 346,072,424.86 | 227,542,572.56 |
| Accounts receivable | 10,105,457,470.63 | 9,966,170,447.21 |
| Accounts receivable financing | 1,723,807,715.55 | 1,590,749,810.74 |
| Prepayment | 309,222,685.06 | 312,298,727.01 |
| Premium receivable | ||
| Reinsurance premium receivable | ||
| Reserves for reinsurance contract receivable | ||
| Other receivables | 364,961,972.39 | 104,050,709.53 |
| Including: Interest receivable | ||
| Dividends receivable | 272,906,986.36 | 4,531,100.00 |
| Financial assets held under resale agreements | ||
| Inventory | 5,988,059,390.20 | 6,442,194,823.67 |
| Including: Data resources | ||
| Contractual assets | ||
| Held-for-sales assets | ||
| Non-current assets due within one year | 442,772,777.78 | |
| Other current assets | 1,830,161,506.46 | 2,862,076,217.20 |
| Total current assets | 36,434,121,741.84 | 36,315,565,849.93 |
| Non-current assets: |
| Loans and advances to customers | ||
| Debt investments | ||
| Other debt investments | ||
| Long-term receivables | ||
| Long-term equity investments | 11,770,384,034.03 | 11,536,660,992.93 |
| Investment in other equity instruments | 71,745,000.00 | 71,745,000.00 |
| Other non-current financial assets | 312,459,342.04 | 324,674,379.63 |
| Investment properties | 47,029,107.86 | 44,104,145.97 |
| Fixed assets | 2,601,062,934.15 | 2,662,900,014.03 |
| Construction in progress | 713,596,692.91 | 529,708,553.58 |
| Productive biological assets | 902,474.79 | 988,424.85 |
| Oil and gas assets | ||
| Right-of-use assets | 270,258,242.13 | 258,319,485.58 |
| Intangible assets | 570,976,982.20 | 583,372,000.59 |
| Including: Data resources | ||
| Development expenses | 22,488,583.70 | 14,452,474.57 |
| Including: Data resources | ||
| Goodwill | 104,121,771.67 | 104,121,771.67 |
| Long-term deferred expenses | 88,313,398.34 | 105,335,550.31 |
| Deferred income tax assets | 798,191,932.10 | 690,869,209.12 |
| Other non-current assets | 561,892,994.48 | 541,475,331.17 |
| Total non-current assets | 17,933,423,490.40 | 17,468,727,334.00 |
| Total assets | 54,367,545,232.24 | 53,784,293,183.93 |
| Current liabilities: | ||
| Short-term loans | 1,144,447,669.32 | 1,747,303,700.34 |
| Borrowings from the central bank | ||
| Placements from banks and other financial institutions | ||
| Financial liabilities held for trading | ||
| Derivative financial liabilities | ||
| Notes payable | 1,851,834,540.05 | 1,850,863,313.78 |
| Accounts payable | 4,511,428,127.33 | 4,359,632,642.20 |
| Receipts in advance | 2,045,212.68 | 486,612.12 |
| Contractual liabilities | 1,762,470,306.12 | 1,739,865,228.75 |
| Financial assets sold under repurchase agreements | ||
| Deposits from customers and interbank | ||
| Customer brokerage deposits | ||
| Acting underwriting of securities | ||
| Payroll payable | 863,101,527.50 | 1,067,190,665.08 |
| Taxes and duties payable | 515,227,950.50 | 339,670,850.02 |
| Other payables | 1,380,365,853.97 | 1,025,085,879.54 |
| Including: Interest payable | ||
| Dividends payable | 87,345,672.28 | 86,490,742.04 |
| Fees and commissions payable | ||
| Reinsurance amounts payable | ||
| Held-for-sales liabilities | ||
| Non-current liabilities due within one year | 68,739,138.20 | 74,736,102.58 |
| Other current liabilities | 1,698,311,110.99 | 532,943,904.40 |
| Total current liabilities | 13,797,971,436.66 | 12,737,778,898.81 |
| Non-current liabilities: | ||
| Reserves for insurance contract | ||
| Long-term loans | 2,100,000.00 | 2,100,000.00 |
| Bonds payable | ||
| Including: Preferred shares | ||
| Perpetual bonds | ||
| Lease liabilities | 193,456,851.84 | 172,347,309.72 |
| Long-term payables | 612,220,198.12 | 631,735,908.04 |
| Long-term payroll payable | 4,044,355.72 | 4,090,687.99 |
| Estimated liabilities | 16,050,005.49 | |
| Deferred income | 258,295,711.44 | 238,811,111.04 |
| Deferred income tax liabilities | 91,307,338.06 | 74,772,071.70 |
| Other non-current liabilities | 1,931,554.36 | 17,296,814.41 |
| Total non-current liabilities | 1,179,406,015.03 | 1,141,153,902.90 |
| Total liabilities | 14,977,377,451.69 | 13,878,932,801.71 |
| Owners’ equity: | ||
| Share capital | 1,784,262,603.00 | 1,796,862,549.00 |
| Other equity instruments | ||
| Including: Preferred shares | ||
| Perpetual bonds | ||
| Capital reserves | 17,567,398,358.39 | 18,246,619,742.09 |
| Less: Treasury stock | 707,428,892.15 | |
| Other comprehensive income | -97,906,037.73 | -89,538,172.13 |
| Special reserves | ||
| Surplus reserves | 2,530,458,968.58 | 2,530,458,968.58 |
| Provision for general risk | ||
| Undistributed profit | 17,585,064,312.79 | 18,102,147,836.12 |
| Total owners’ equity attributable to parent company | 39,369,278,205.03 | 39,879,122,031.51 |
| Minority interests | 20,889,575.52 | 26,238,350.71 |
| Total owners’ equity | 39,390,167,780.55 | 39,905,360,382.22 |
| Total liabilities and owners’ equity | 54,367,545,232.24 | 53,784,293,183.93 |
Legal representative: Dong Ming Accounting officer: Ma Jia Head of accounting center: Xu Jing
2. Balance sheet of parent company
Unit: RMB
| Item | Closing balance | Opening balance |
| Current assets: | ||
| Cash and bank balance | 10,694,741,380.08 | 11,558,478,370.89 |
| Financial assets held for trading | 972,790,332.60 | 72,221,202.90 |
| Derivative financial assets | ||
| Notes receivable | 49,901,491.15 | 6,112,294.09 |
| Accounts receivable | 1,741,700,162.89 | 1,330,908,560.96 |
| Accounts receivable financing | 780,279,415.32 | 602,881,796.61 |
| Prepayment | 1,417,634,473.46 | 1,600,931,041.18 |
| Other receivables | 6,389,820,006.77 | 4,127,088,902.76 |
| Including: Interest receivable | ||
| Dividends receivable | 272,906,986.36 | 4,531,100.00 |
| Inventory | 1,193,583,333.68 | 1,462,389,548.82 |
| Including: Data resources | ||
| Contractual assets | ||
| Held-for-sales assets | ||
| Non-current assets due within one year | 442,772,777.78 | |
| Other current assets | 1,920,776,647.02 | 3,156,374,029.15 |
| Total current assets | 25,161,227,242.97 | 24,360,158,525.14 |
| Non-current assets: | ||
| Debt investments | ||
| Other debt investments | ||
| Long-term receivables | ||
| Long-term equity investments | 14,116,277,031.67 | 13,882,263,332.22 |
| Investment in other equity instruments | ||
| Other non-current financial assets | 311,959,342.04 | 324,174,379.63 |
| Investment properties | 319,374,073.80 | 319,279,203.56 |
| Fixed assets | 1,370,356,779.09 | 1,406,905,437.93 |
| Construction in progress | 195,596,927.19 | 127,864,253.80 |
| Productive biological assets | ||
| Oil and gas assets | ||
| Right-of-use assets | 199,204,552.73 | 259,635,687.65 |
| Intangible assets | 276,983,642.95 | 283,913,499.08 |
| Including: Data resources | ||
| Development expenses | 22,488,583.70 | 14,452,474.57 |
| Including: Data resources | ||
| Goodwill | ||
| Long-term deferred expenses | 17,137,953.28 | 19,333,368.56 |
| Deferred income tax assets | 415,141,588.71 | 374,888,819.41 |
| Other non-current assets | 474,139,553.78 | 467,069,694.11 |
| Total non-current assets | 17,718,660,028.94 | 17,479,780,150.52 |
| Total assets | 42,879,887,271.91 | 41,839,938,675.66 |
| Current liabilities: | ||
| Short-term loans | 248,155,931.32 | 19,002,863.01 |
| Financial liabilities held for trading | ||
| Derivative financial liabilities | ||
| Notes payable | ||
| Accounts payable | 3,734,040,440.23 | 3,247,231,002.57 |
| Receipts in advance | 2,008,625.40 | 368,860.80 |
| Contractual liabilities | 1,360,965,799.79 | 1,316,384,668.74 |
| Payroll payable | 672,286,505.42 | 742,388,264.48 |
| Taxes and duties payable | 202,578,430.89 | 53,940,771.05 |
| Other payables | 10,980,899,000.41 | 9,513,887,394.94 |
| Including: Interest payable | ||
| Dividends payable | 86,490,742.04 | 86,490,742.04 |
| Held-for-sales liabilities | ||
| Non-current liabilities due within one year | 16,345,705.75 | 17,766,112.27 |
| Other current liabilities | 1,088,480,198.01 | 86,664,716.45 |
| Total current liabilities | 18,305,760,637.22 | 14,997,634,654.31 |
| Non-current liabilities: | ||
| Long-term loans | 1,100,000.00 | 1,100,000.00 |
| Bonds payable | ||
| Including: Preferred shares | ||
| Perpetual bonds | ||
| Lease liabilities | 190,885,020.32 | 247,778,172.74 |
| Long-term payables | 612,220,198.12 | 631,735,908.04 |
| Long-term payroll payable | ||
| Estimated liabilities | ||
| Deferred income | 166,165,129.66 | 147,405,764.87 |
| Deferred income tax liabilities | 34,442,391.21 | 48,751,418.36 |
| Other non-current liabilities | 1,931,554.36 | 1,931,554.36 |
| Total non-current liabilities | 1,006,744,293.67 | 1,078,702,818.37 |
| Total liabilities | 19,312,504,930.89 | 16,076,337,472.68 |
| Owners’ equity | ||
| Share capital | 1,784,262,603.00 | 1,796,862,549.00 |
| Other equity instruments | ||
| Including: Preferred shares |
| Perpetual bonds | ||
| Capital reserves | 17,769,789,683.33 | 18,449,011,067.03 |
| Less: Treasury stock | 707,428,892.15 | |
| Other comprehensive income | -60,472,160.74 | -54,646,721.46 |
| Special reserves | ||
| Surplus reserves | 2,529,297,618.08 | 2,529,297,618.08 |
| Undistributed profits | 1,544,504,597.35 | 3,750,505,582.48 |
| Total owners’ equity | 23,567,382,341.02 | 25,763,601,202.98 |
| Total liabilities and owners’ equity | 42,879,887,271.91 | 41,839,938,675.66 |
3. Consolidated income statement
Unit: RMB
| Item | 1H 2024 | 1H 2023 |
| I. Total operating revenue | 20,455,286,287.52 | 20,309,372,850.07 |
| Including: Operating revenue | 20,455,286,287.52 | 20,309,372,850.07 |
| Interest income | ||
| Premiums earned | ||
| Fee and commission income | ||
| II. Total operating cost | 17,225,017,022.40 | 17,462,566,820.49 |
| Including: Operating cost | 14,462,809,950.85 | 14,713,232,267.40 |
| Interest expenses | ||
| Fee and commission expenses | ||
| Surrender value | ||
| Net payments for insurance claims | ||
| Net provision for insurance liability | ||
| Bond insurance expenses | ||
| Reinsurance expenses | ||
| Taxes and surcharges | 119,551,819.49 | 108,372,830.01 |
| Selling expenses | 2,296,821,490.59 | 2,257,688,549.69 |
| Administrative expenses | 327,410,020.48 | 344,443,810.40 |
| R&D expenses | 148,043,019.34 | 144,819,933.66 |
| Financial expenses | -129,619,278.35 | -105,990,570.67 |
| Including: Interest expenses | 27,648,907.91 | 18,798,896.05 |
| Interest income | 162,711,635.16 | 114,776,796.46 |
| Plus: Other income | 47,920,871.74 | 42,177,454.66 |
| Investment income (loss is indicated with “-”) | 477,498,314.49 | 421,542,165.56 |
| Including: Income from investment in associates and joint ventures | 506,633,970.31 | 447,048,881.55 |
| Investment income from derecognition of financial assets at amortized cost | ||
| Exchange gains (loss is indicated with “-”) | ||
| Net exposure hedging income (loss is indicated with “-”) |
| Income from changes in fair value (loss is indicated with “-”) | 4,596,876.81 | 53,088,928.07 |
| Credit impairment losses (loss is indicated with “-”) | -82,762,335.12 | -74,680,582.29 |
| Asset impairment losses (loss is indicated with “-”) | -3,578,594.53 | 19,008,334.90 |
| Gains from asset disposal (loss is indicated with “-”) | -1,592,134.63 | 5,403,078.51 |
| III. Operating profit (loss is indicated with “-”) | 3,672,352,263.88 | 3,313,345,408.99 |
| Plus: Non-operating revenue | 4,431,701.71 | 2,002,724.29 |
| Less: Non-operating expenses | 4,755,624.76 | 12,068,474.23 |
| IV. Total profit (total loss is indicated with “-”) | 3,672,028,340.83 | 3,303,279,659.05 |
| Less: Income tax expenses | 482,065,489.87 | 477,020,837.61 |
| V. Net profit (net loss is indicated with “-”) | 3,189,962,850.96 | 2,826,258,821.44 |
| (I) Classification by operation continuity | ||
| 1. Net profit from continuing operations (net loss is indicated with “-”) | 3,189,962,850.96 | 2,826,258,821.44 |
| 2. Net profit from discontinued operations (net loss is indicated with “-”) | ||
| (II) Classification by ownership | ||
| 1. Net profits attributable to the shareholders of the parent company (net loss to be listed with “-”) | 3,188,829,903.10 | 2,828,011,615.30 |
| 2. Minority interests (net loss is indicated with “-”) | 1,132,947.86 | -1,752,793.86 |
| VI. Other comprehensive income, net of tax | -8,020,440.18 | -28,749,435.38 |
| Other comprehensive income attributable to owners of parent company, net of tax | -8,367,865.60 | -27,537,362.56 |
| (I) Other comprehensive income that cannot be reclassified into profits or losses | 2,004,091.79 | -8,119,659.75 |
| 1. Changes arising from re-measurement of the defined benefit plan | ||
| 2. Other comprehensive income that cannot be reclassified into profits or losses under the equity method | 2,004,091.79 | -8,119,659.75 |
| 3. Changes in fair value of other equity instrument investments | ||
| 4. Changes in fair value of the enterprise’s credit risk | ||
| 5. Others | ||
| (II) Other comprehensive income that will be reclassified into profits or losses | -10,371,957.39 | -19,417,702.81 |
| 1. Other comprehensive income that can be reclassified into profits or losses under the equity method | -7,829,531.07 | -14,727,792.59 |
| 2. Changes in fair value of other debt investments | ||
| 3. Amount of the financial asset reclassified into other comprehensive income | ||
| 4. Provision for credit impairment of other debt investments | ||
| 5. Cash flow hedging reserves | ||
| 6. Exchange differences from translation of statements denominated in foreign currencies | -2,542,426.32 | -4,689,910.22 |
| 7. Others | ||
| Other comprehensive income attributable to minority interests, net of tax | 347,425.42 | -1,212,072.82 |
| VII. Total comprehensive income | 3,181,942,410.78 | 2,797,509,386.06 |
| Total comprehensive income attributable to owners of parent company | 3,180,462,037.50 | 2,800,474,252.74 |
| Total comprehensive income attributable to minority interests | 1,480,373.28 | -2,964,866.68 |
| VIII. Earnings per share: | ||
| (I) Basic earnings per share | 1.79 | 1.58 |
| (II) Diluted earnings per share | 1.79 | 1.58 |
Net profit realized by the combined party in business combination under common control before the business combination in the currentperiod was RMB 0.00, and net profit realized by the combined party in the previous period was RMB 0.Legal representative: Dong Ming Accounting officer: Ma Jia Head of accounting center: Xu Jing
4. Income statement of parent company
Unit: RMB
| Item | 1H 2024 | 1H 2023 |
| I. Operating revenue | 4,525,654,675.76 | 4,070,676,103.03 |
| Less: Operating costs | 1,899,760,551.87 | 1,887,507,329.14 |
| Tax and surcharge | 55,183,550.08 | 44,672,855.31 |
| Selling expenses | 1,249,190,451.48 | 1,113,001,120.00 |
| Administrative expenses | 152,522,356.56 | 137,464,403.96 |
| R&D expenses | 81,085,974.45 | 87,188,305.63 |
| Financial expenses | -141,417,510.19 | -101,225,996.11 |
| Including: Interest expenses | 8,569,478.28 | 78,186.12 |
| Interest income | 150,808,813.01 | 102,169,525.79 |
| Plus: Other income | 13,409,933.24 | 26,946,820.33 |
| Investment income (loss is indicated with “-”) | 479,391,856.82 | 446,784,505.53 |
| Including: Income from investment in associates and joint ventures | 497,138,562.64 | 438,812,247.13 |
| Derecognized financial assets measured by amortized cost (loss is indicated with “-”) | ||
| Net exposure hedging income (loss is indicated with “-”) | ||
| Income from changes in fair value (loss is indicated with “-”) | -11,645,907.89 | 51,654,189.47 |
| Credit impairment losses (loss is indicated with “-”) | -2,037,055.26 | -1,916,080.56 |
| Asset impairment losses (loss is indicated with “-”) | -5,605,130.40 | -4,697,182.46 |
| Gains from asset disposal (loss is indicated with “-”) | -1,085,296.81 | -75,147.74 |
| II. Operating profit (loss is indicated with “-”) | 1,701,757,701.21 | 1,420,765,189.67 |
| Plus: Non-operating revenue | 705,167.42 | 705,000.94 |
| Less: Non-operating expenses | 3,214,775.99 | 5,805,874.24 |
| III. Total profit (total loss is indicated with “-”) | 1,699,248,092.64 | 1,415,664,316.37 |
| Less: income tax expenses | 199,335,651.34 | 159,983,774.67 |
| IV. Net profit (net loss is indicated with “-”) | 1,499,912,441.30 | 1,255,680,541.70 |
| (I) Net profit from continuing operations (net loss is indicated with “-”) | 1,499,912,441.30 | 1,255,680,541.70 |
| (II) Net profit from discontinued operations (net loss is indicated with “-”) | ||
| V. Other comprehensive income, net of tax | -5,825,439.28 | -22,847,452.34 |
| (I) Other comprehensive income that cannot be reclassified into profits or losses | 2,004,091.79 | -8,119,659.75 |
| 1. Changes arising from re-measurement of the defined benefit plan | ||
| 2. Other comprehensive income that cannot be reclassified into profits or losses under the equity method | 2,004,091.79 | -8,119,659.75 |
| 3. Changes in fair value of other equity instrument investments | ||
| 4. Changes in fair value of the enterprise’s credit risk | ||
| 5. Others | ||
| (II) Other comprehensive income that will be reclassified into profits or losses | -7,829,531.07 | -14,727,792.59 |
| 1. Other comprehensive income that can be reclassified into profits or losses under the equity method | -7,829,531.07 | -14,727,792.59 |
| 2. Changes in fair value of other debt investments | ||
| 3. Amount of the financial asset reclassified into other comprehensive income | ||
| 4. Provision for credit impairment of other debt investments | ||
| 5. Cash flow hedging reserves | ||
| 6. Exchange differences from translation of statements denominated in foreign currencies | ||
| 7. Others | ||
| VI. Total comprehensive income | 1,494,087,002.02 | 1,232,833,089.36 |
| VII. Earnings per share: | ||
| (I) Basic earnings per share | ||
| (II) Diluted earnings per share |
5. Consolidated cash flow statement
Unit: RMB
| Item | 1H 2024 | 1H 2023 |
| I. Cash flows from operating activities: | ||
| Cash received from sales of goods or rendering of services | 22,091,374,463.95 | 20,702,033,007.45 |
| Net increase in customer deposits and placements from financial institutions | ||
| Net increase in borrowings from the central bank | ||
| Net increase in placements from other financial institutions | ||
| Cash received from premiums of original insurance contracts | ||
| Net cash received from reinsurance business | ||
| Net increase in deposits of the insured and investment | ||
| Cash received from interest, fees and commissions | ||
| Net increase in placements from banks and other financial institutions | ||
| Net increase in repurchase business funds | ||
| Net cash received from acting trading of securities | ||
| Receipts from tax refunds | 5,182,541.29 | 4,075,145.25 |
| Other cash receipts related to operating activities | 355,397,604.71 | 243,193,845.25 |
| Subtotal of cash inflows from operating activities | 22,451,954,609.95 | 20,949,301,997.95 |
| Cash paid for goods purchased and services received | 15,211,108,311.76 | 14,862,338,495.13 |
| Net increase in loans and advances to customers | ||
| Net increase in deposits with the central bank and other financial institutions | ||
| Cash paid for claim settlements on original insurance contract | ||
| Net increase in placements to banks and other financial institutions | ||
| Cash paid for interest, fees and commissions | ||
| Cash paid for policy dividends | ||
| Cash paid to and on behalf of employees | 1,450,599,844.70 | 1,247,729,927.92 |
| Payments of all types of taxes | 1,217,056,511.47 | 1,315,371,659.24 |
| Other cash paid relating to operating activities | 1,311,572,550.03 | 1,271,910,545.56 |
| Subtotal of cash outflows from operating activities | 19,190,337,217.96 | 18,697,350,627.85 |
| Net cash flows from operating activities | 3,261,617,391.99 | 2,251,951,370.10 |
| II. Cash flows from investment activities: | ||
| Cash received from disposal of investments | 3,145,988.51 | 968,704,891.05 |
| Cash received from returns on investments | 69,197,636.37 | 16,545,231.60 |
| Net cash received from disposal of fixed assets, intangible assets and other long-term assets | 262,565.39 | 172,440.00 |
| Net cash received from disposal of subsidiaries and other business units | ||
| Other cash received relating to investment activities | 3,807,040,500.00 | 363,000,000.00 |
| Subtotal of cash inflows from investment activities | 3,879,646,690.27 | 1,348,422,562.65 |
| Cash paid for acquisition of fixed assets, intangible assets and other long-term assets | 248,334,378.59 | 275,314,995.16 |
| Cash paid for acquisition of investments | 900,000,000.00 | 68,700,000.00 |
| Net increase in pledged loans | ||
| Net cash paid for acquisition of subsidiaries and other business units | ||
| Other cash paid relating to investment activities | 2,936,895,000.00 | 697,318,800.00 |
| Subtotal of cash outflows from investment activities | 4,085,229,378.59 | 1,041,333,795.16 |
| Net cash flows from investment activities | -205,582,688.32 | 307,088,767.49 |
| III. Cash flows from financing activities: | ||
| Cash received from absorption of investments | ||
| Including: Cash received from subsidiaries’ absorbing minority shareholder investment | ||
| Cash received from borrowings | 1,486,779,951.02 | 592,248,791.91 |
| Other cash received relating to financing activities | 40,525,603.23 | |
| Subtotal of cash inflows from financing activities | 1,527,305,554.25 | 592,248,791.91 |
| Cash payments for settlement of debts | 869,283,674.87 | 917,334,047.33 |
| Cash payments for distribution of dividends and profits or repayment of interest | 3,731,518,655.97 | 2,741,240,399.43 |
| Including: Dividends and profits paid to minority shareholders by subsidiaries | 5,974,218.23 | 11,316,213.63 |
| Other cash payments relating to financing activities | 72,018,152.38 | 41,375,308.90 |
| Subtotal of cash outflows from financing activities | 4,672,820,483.22 | 3,699,949,755.66 |
| Net cash flow from financing activities | -3,145,514,928.97 | -3,107,700,963.75 |
| IV. Effect of foreign exchange rate changes on cash and cash equivalents | -48,577.76 | 5,239,164.08 |
| V. Net increase in cash and cash equivalents | -89,528,803.06 | -543,421,662.08 |
| Plus: Opening balance of cash and cash equivalents | 14,151,765,468.49 | 13,046,160,012.47 |
| VI. Closing balance of cash and cash equivalents | 14,062,236,665.43 | 12,502,738,350.39 |
6. Cash flow statement of parent company
Unit: RMB
| Item | 1H 2024 | 1H 2023 |
| I. Cash flows from operating activities: | ||
| Cash received from sales of goods or rendering of services | 4,211,532,161.23 | 2,961,019,462.94 |
| Receipts from tax refunds | ||
| Other cash receipts related to operating activities | 2,318,428,479.99 | 2,590,203,193.90 |
| Subtotal of cash inflows from operating activities | 6,529,960,641.22 | 5,551,222,656.84 |
| Cash paid for goods purchased and services received | 920,909,291.39 | 928,869,090.40 |
| Cash paid to and on behalf of employees | 671,012,577.79 | 528,333,366.43 |
| Payments of all types of taxes | 426,048,880.64 | 451,039,753.23 |
| Other cash paid relating to operating activities | 3,435,877,770.62 | 2,192,698,982.19 |
| Subtotal of cash outflows from operating activities | 5,453,848,520.44 | 4,100,941,192.25 |
| Net cash flows from operating activities | 1,076,112,120.78 | 1,450,281,464.59 |
| II. Cash flows from investment activities: | ||
| Cash received from disposal of investments | 10,000,000.00 | 884,291,638.76 |
| Cash received from returns on investments | 69,186,661.37 | 9,639,488.08 |
| Net cash received from disposal of fixed assets, intangible assets and other long-term assets | 214,762.78 | |
| Net cash received from disposal of subsidiaries and other business units | ||
| Other cash received relating to investment activities | 3,806,540,500.00 | 160,000,000.00 |
| Subtotal of cash inflows from investment activities | 3,885,941,924.15 | 1,053,931,126.84 |
| Cash paid for acquisition of fixed assets, intangible assets and other long-term assets | 113,441,479.45 | 87,181,750.91 |
| Cash paid for acquisition of investments | 900,000,000.00 | 100,000,000.00 |
| Net cash paid for acquisition of subsidiaries and other business units | ||
| Other cash paid relating to investment activities | 2,936,395,000.00 | 696,518,800.00 |
| Subtotal of cash outflows from investment activities | 3,949,836,479.45 | 883,700,550.91 |
| Net cash flows from investment activities | -63,894,555.30 | 170,230,575.93 |
| III. Cash flows from financing activities: | ||
| Cash received from absorption of investments | ||
| Cash received from borrowings | 1,247,553,068.31 | 19,000,000.00 |
| Other cash received relating to financing activities | 40,525,603.23 | |
| Subtotal of cash inflows from financing activities | 1,288,078,671.54 | 19,000,000.00 |
| Cash payments for settlement of debts | 19,000,000.00 |
| Cash payments for distribution of dividends and profit or repayment of interest | 3,707,251,340.14 | 2,712,079,156.56 |
| Other cash payments relating to financing activities | 31,287,137.53 | 2,219,511.75 |
| Subtotal of cash outflows from financing activities | 3,757,538,477.67 | 2,714,298,668.31 |
| Net cash flow from financing activities | -2,469,459,806.13 | -2,695,298,668.31 |
| IV. Effect of foreign exchange rate changes on cash and cash equivalents | -108,231.17 | -628,796.56 |
| V. Net increase in cash and cash equivalents | -1,457,350,471.82 | -1,075,415,424.35 |
| Plus: Opening balance of cash and cash equivalents | 11,541,299,802.72 | 10,750,790,137.56 |
| VI. Closing balance of cash and cash equivalents | 10,083,949,330.90 | 9,675,374,713.21 |
7. Consolidated statement of changes in owners’ equity
Amount for the current period
Unit: RMB
| Item | 1H 2024 | ||||||||||||||
| Owners’ equity attributable to parent company | Minority interests | Total owners’ equity | |||||||||||||
| Share capital | Other equity instruments | Capital reserves | Less: Treasury stock | Other comprehensive income | Special reserves | Surplus reserves | Provision for general risk | Undistributed profits | Others | Subtotal | |||||
| Preferred shares | Perpetual bonds | Others | |||||||||||||
| I. Closing balance of the previous year | 1,796,862,549.00 | 18,246,619,742.09 | 707,428,892.15 | -89,538,172.13 | 2,530,458,968.58 | 18,102,147,836.12 | 39,879,122,031.51 | 26,238,350.71 | 39,905,360,382.22 | ||||||
| Plus: Changes in accounting policies | |||||||||||||||
| Correction of errors in the prior period | |||||||||||||||
| Others | |||||||||||||||
| II. Opening balance of the current period | 1,796,862,549.00 | 18,246,619,742.09 | 707,428,892.15 | -89,538,172.13 | 2,530,458,968.58 | 18,102,147,836.12 | 39,879,122,031.51 | 26,238,350.71 | 39,905,360,382.22 | ||||||
| III. Increase/decrease for the period (decrease is indicated with “-”) | -12,599,946.00 | -679,221,383.70 | -707,428,892.15 | -8,367,865.60 | -517,083,523.33 | -509,843,826.48 | -5,348,775.19 | -515,192,601.67 | |||||||
| (I) Total comprehensive income | -8,367,865.60 | 3,188,829,903.10 | 3,180,462,037.50 | 1,480,373.28 | 3,181,942,410.78 | ||||||||||
| (II) Contribution and withdrawal of capital by owners | -12,599,946.00 | -694,828,946.15 | -707,428,892.15 | ||||||||||||
| 1．Ordinary shares invested by owners | |||||||||||||||
| 2．Capital invested by holders of other equity instruments | |||||||||||||||
| 3．Amount of share payment credited to owners’ equity | |||||||||||||||
| 4．Others | -12,599,946.00 | -694,828,946.15 | -707,428,892.15 | ||||||||||||
| (III) Profit distribution | -3,705,913,426.43 | -3,705,913,426.43 | -6,829,148.47 | -3,712,742,574.90 | |||||||||||
| 1．Withdrawal of surplus reserves | |||||||||||||||
| 2．Withdrawal of general risk provision | |||||||||||||||
| 3．Distribution to owners (or shareholders) | -3,705,913,426.43 | -3,705,913,426.43 | -6,829,148.47 | -3,712,742,574.90 | |||||||||||
| 4．Others | |||||||||||||||
| (IV) Internal carry-over of owner’s equity | |||||||||||||||
| 1．Transfer of capital reserves to capital (or share capital) | |||||||||||||||
| 2．Transfer of surplus reserves to capital (or share capital) |
| 3．Covering loss with surplus reserves | |||||||||||||||
| 4．Change of defined benefit plan carried forward to retained earnings | |||||||||||||||
| 5．Other comprehensive income carried forward to retained earnings | |||||||||||||||
| 6．Others | |||||||||||||||
| (V) Special reserves | |||||||||||||||
| 1．Provision for the period | |||||||||||||||
| 2．Utilization for the period | |||||||||||||||
| (VI) Others | 15,607,562.45 | 15,607,562.45 | 15,607,562.45 | ||||||||||||
| IV. Closing balance for the period | 1,784,262,603.00 | 17,567,398,358.39 | -97,906,037.73 | 2,530,458,968.58 | 17,585,064,312.79 | 39,369,278,205.03 | 20,889,575.52 | 39,390,167,780.55 |
Amount for the previous year
Unit: RMB
| Item | 1H 2023 | ||||||||||||||
| Owners’ equity attributable to parent company | Minority interests | Total owners’ equity | |||||||||||||
| Share capital | Other equity instruments | Capital reserves | Less: Treasury stock | Other comprehensive income | Special reserves | Surplus reserves | Provision for general risk | Undistributed profits | Others | Subtotal | |||||
| Preferred shares | Perpetual bonds | Others | |||||||||||||
| I. Closing balance of the previous year | 1,796,862,549.00 | 18,231,423,838.72 | 707,428,892.15 | -68,087,650.95 | 2,530,458,968.58 | 16,720,444,918.66 | 38,503,673,731.86 | 23,323,529.93 | 38,526,997,261.79 | ||||||
| Plus: Changes in accounting policies | |||||||||||||||
| Correction of errors in the prior period | |||||||||||||||
| Others | |||||||||||||||
| II. Opening balance of the current year | 1,796,862,549.00 | 18,231,423,838.72 | 707,428,892.15 | -68,087,650.95 | 2,530,458,968.58 | 16,720,444,918.66 | 38,503,673,731.86 | 23,323,529.93 | 38,526,997,261.79 | ||||||
| III. Increase/decrease for the period (decrease is indicated with “-”) | 5,841,351.14 | -27,537,362.56 | 115,932,458.74 | 94,236,447.32 | -24,799,290.64 | 69,437,156.68 | |||||||||
| (I) Total comprehensive income | -27,537,362.56 | 2,828,011,615.30 | 2,800,474,252.74 | -2,964,866.68 | 2,797,509,386.06 | ||||||||||
| (II) Contribution and withdrawal of capital by owners | -4,900,000.00 | -4,900,000.00 | |||||||||||||
| 1. Ordinary shares invested by owners | -4,900,000.00 | -4,900,000.00 | |||||||||||||
| 2. Capital invested by holders of other equity instruments | |||||||||||||||
| 3. Amount of share payment credited to owners’ equity | |||||||||||||||
| 4. Others | |||||||||||||||
| (III) Profit distribution | -2,712,079,156.56 | -2,712,079,156.56 | -16,934,423.96 | -2,729,013,580.52 |
| 1. Withdrawal of surplus reserves | |||||||||||||||
| 2. Withdrawal of general risk provision | |||||||||||||||
| 3. Distribution to owners (or shareholders) | -2,712,079,156.56 | -2,712,079,156.56 | -16,934,423.96 | -2,729,013,580.52 | |||||||||||
| 4. Others | |||||||||||||||
| (IV) Internal carry-over of owners’ equity | |||||||||||||||
| 1. Transfer of capital reserve to capital (or share capital) | |||||||||||||||
| 2. Transfer of surplus reserves to capital (or share capital) | |||||||||||||||
| 3. Covering loss with surplus reserves | |||||||||||||||
| 4. Change of defined benefit plan carried forward to retained earning | |||||||||||||||
| 5. Other comprehensive income carried forward to retained earnings | |||||||||||||||
| 6. Others |
| (V) Special reserves | |||||||||||||||
| 1. Provision for the period | |||||||||||||||
| 2. Utilization for the period | |||||||||||||||
| (VI) Others | 5,841,351.14 | 5,841,351.14 | 5,841,351.14 | ||||||||||||
| IV. Closing balance for the period | 1,796,862,549.00 | 18,237,265,189.86 | 707,428,892.15 | -95,625,013.51 | 2,530,458,968.58 | 16,836,377,377.40 | 38,597,910,179.18 | -1,475,760.71 | 38,596,434,418.47 |
8. Statement of changes in owners’ equity of parent company
Amount for the current period
Unit: RMB
| Item | 1H 2024 | |||||||||||
| Share capital | Other equity instruments | Capital reserves | Less: Treasury stock | Other comprehensive income | Special reserves | Surplus reserves | Undistributed profits | Others | Total owners’ equity | |||
| Preferred shares | Perpetual bonds | Others | ||||||||||
| I. Closing balance of the previous year | 1,796,862,549.00 | 18,449,011,067.03 | 707,428,892.15 | -54,646,721.46 | 2,529,297,618.08 | 3,750,505,582.48 | 25,763,601,202.98 | |||||
| Plus: Changes in accounting policies | ||||||||||||
| Correction of errors in the prior period | ||||||||||||
| Others | ||||||||||||
| II. Opening balance of the current year | 1,796,862,549.00 | 18,449,011,067.03 | 707,428,892.15 | -54,646,721.46 | 2,529,297,618.08 | 3,750,505,582.48 | 25,763,601,202.98 | |||||
| III. Increase/decrease for the period (decrease is indicated with “-”) | -12,599,946.00 | -679,221,383.70 | -707,428,892.15 | -5,825,439.28 | -2,206,000,985.13 | -2,196,218,861.96 | ||||||
| (I) Total comprehensive income | -5,825,439.28 | 1,499,912,441.30 | 1,494,087,002.02 | |||||||||
| (II) Contribution and withdrawal of capital by owners | -12,599,946.00 | -694,828,946.15 | -707,428,892.15 | |||||||||
| 1. Ordinary shares invested by owners | ||||||||||||
| 2. Capital invested by holders of other equity instruments | ||||||||||||
| 3. Amount of share payment credited to owners’ equity | ||||||||||||
| 4. Others | -12,599,946.00 | -694,828,946.15 | -707,428,892.15 | |||||||||
| (III) Profit distribution | -3,705,913,426.43 | -3,705,913,426.43 | ||||||||||
| 1. Withdrawal of surplus reserves | ||||||||||||
| 2. Distribution to owners (or shareholders) | -3,705,913,426.43 | -3,705,913,426.43 | ||||||||||
| 3. Others | ||||||||||||
| (IV) Internal carry-over of owners’ equity | ||||||||||||
| 1. Transfer of capital reserves to capital (or share capital) | ||||||||||||
| 2. Transfer of surplus reserves to capital (or share capital) | ||||||||||||
| 3. Covering loss with surplus reserves | ||||||||||||
| 4. Change of defined benefit plan carried forward to retained earning |
| 5. Other comprehensive income carried forward to retained earnings | ||||||||||||
| 6. Others | ||||||||||||
| (V) Special reserves | ||||||||||||
| 1. Provision for the period | ||||||||||||
| 2. Utilization for the period | ||||||||||||
| (VI) Others | 15,607,562.45 | 15,607,562.45 | ||||||||||
| IV. Closing balance for the period | 1,784,262,603.00 | 17,769,789,683.33 | -60,472,160.74 | 2,529,297,618.08 | 1,544,504,597.35 | 23,567,382,341.02 |
Amount for the previous year
Unit: RMB
| Item | 1H 2023 | |||||||||||
| Share capital | Other equity instruments | Capital reserves | Less: Treasury stock | Other comprehensive income | Special reserves | Surplus reserves | Undistributed profits | Others | Total owners’ equity | |||
| Preferred shares | Perpetual bonds | Others | ||||||||||
| I. Closing balance of the previous year | 1,796,862,549.00 | 18,430,166,434.80 | 707,428,892.15 | -32,221,472.36 | 2,529,297,618.08 | 5,050,873,408.22 | 27,067,549,645.59 | |||||
| Plus: Changes in accounting policies | ||||||||||||
| Correction of errors in the prior period | ||||||||||||
| Others | ||||||||||||
| II. Opening balance of the current year | 1,796,862,549.00 | 18,430,166,434.80 | 707,428,892.15 | -32,221,472.36 | 2,529,297,618.08 | 5,050,873,408.22 | 27,067,549,645.59 | |||||
| III. Increase/decrease for the period (decrease is indicated with “-”) | 5,841,351.14 | -22,847,452.34 | -1,456,398,614.86 | -1,473,404,716.06 | ||||||||
| (I) Total comprehensive income | -22,847,452.34 | 1,255,680,541.70 | 1,232,833,089.36 | |||||||||
| (II) Contribution and withdrawal of capital by owners | ||||||||||||
| 1. Ordinary shares invested by owners | ||||||||||||
| 2. Capital invested by holders of other equity instruments | ||||||||||||
| 3. Amount of share payment credited to owners’ equity | ||||||||||||
| 4. Others | ||||||||||||
| (III) Profit distribution | -2,712,079,156.56 | -2,712,079,156.56 | ||||||||||
| 1. Withdrawal of surplus reserves | ||||||||||||
| 2. Distribution to owners (or shareholders) | -2,712,079,156.56 | -2,712,079,156.56 | ||||||||||
| 3. Others | ||||||||||||
| (IV) Internal carry-over of owners’ equity | ||||||||||||
| 1. Transfer of capital reserves to capital (or share capital) | ||||||||||||
| 2. Transfer of surplus reserves to capital (or share capital) |
| 3. Covering loss with surplus reserves | ||||||||||||
| 4. Change of defined benefit plan carried forward to retained earning | ||||||||||||
| 5. Other comprehensive income carried forward to retained earnings | ||||||||||||
| 6. Others | ||||||||||||
| (V) Special reserves | ||||||||||||
| 1. Provision for the period | ||||||||||||
| 2. Utilization for the period | ||||||||||||
| (VI) Others | 5,841,351.14 | 5,841,351.14 | ||||||||||
| IV. Closing balance for the period | 1,796,862,549.00 | 18,436,007,785.94 | 707,428,892.15 | -55,068,924.70 | 2,529,297,618.08 | 3,594,474,793.36 | 25,594,144,929.53 |
III. Basic Information of the Company
1. Place of registration, form of organization and address of headquarters of the CompanyThe registered address of Yunnan Baiyao Group Co., Ltd is No.3686 Yunnan Baiyao Street, ChenggongDistrict, Kunming, Yunnan Province. The Company is established as a joint-stock limited company with its headoffice located at No.3686 Yunnan Baiyao Street, Chenggong District, Kunming, Yunnan Province.
2. History of the Company
The Company was formerly known as Yunnan Baiyao Factory, which was established in June 1971. On May3, 1993, Yunnan Provincial System Reform Committee approved the establishment of Yunnan Baiyao IndustrialCo., Ltd in the Document Yun Ti Gai [1993] No.48. The Company’s sponsors were Yunnan Baiyao Factory, YunnanFudian Trust and Investment Company and Lianjiang International Trade Co., Ltd. On June 18, 1993, the EconomicSystem Reform Commission and the Planning Commission of Yunnan Province jointly issued the Document YunTi Gai [1993] No.74 to approve the Company’s public offering of RMB 20 million of individual shares (in the parvalue of the shares). On June 24, 1993, the Administration of State-owned Assets of Yunnan Province issued theDocument Yun Guo Zi Zi (1993) No.37 to confirm the appraisal results of Yunnan Baiyao Factory and decided toset up RMB 40 million of national capital stock, amounting to 40 million shares. Yunnan Baiyao Industrial Co., Ltdwas approved by CSRC under the Document Zheng Jian Fa Shen Zi (1993) No.55 to issue 20 million RMB-denominated ordinary shares to the public. Yunnan Baiyao issued 20 million shares to the public in November 1993,of which 18 million shares were issued to the public individuals and 2 million shares to the Company’s internalemployees.
On November 30, 1993, the Company was registered as a joint-stock limited company with the Administrationfor Industry and Commerce of Yunnan Province, and on December 15, 1993, the public shares issued by theCompany were listed on the SZSE, with a total share capital of 80 million shares and a stock code of “000538.”
In accordance with the resolutions passed at the third Extraordinary General Meeting of the fifth Board ofDirectors of the Company in 2008 on August 11, 2008, and at the first Extraordinary General Meeting of theCompany in 2008 on August 27, 2008, and the approval by the CSRC on the Document (2008) No.1411 Reply onApproving the Private Issuance of Shares of Yunnan Baiyao Group Co., Ltd, the Company issued 50,000,000 newshares to Ping An Life Insurance Company of China Limited in a private offering, raising funds of RMB1,393,500,000.00 (including issuance expenses), all of which were subscribed in cash. The share capital of theCompany increased from 484,051,138 shares to 534,051,138 shares after the implementation of the above privateofferings.
In accordance with the 2009 Annual Equity Distribution Plan approved at the General Meeting of the Companyin May 2010, 3 shares were issued to all shareholders from the capital reserve as a bonus for every 10 shares held.The Company’s share capital amounted to 534,051,138 shares prior to the distribution, and the total share capitalincreased to 694,266,479 shares after the distribution.
The 2013 Annual General Meeting was held on May 8, 2014, and in accordance with the resolution of themeeting and the amended articles of association, the shareholders of the Company increased the registered capitalby RMB 347,133,239.00. The newly registered capital would be increased by the distribution of 5 bonus shares for
every 10 shares to all shareholders based on the Company’s existing total share capital of 694,266,479 shares. Afterthe change, the share capital of the Company increased from 694,266,479 shares to 1,041,399,718 shares.The Company underwent a merger and overall listing with Baiyao Holdings by issuing shares to threeshareholders of Baiyao Holdings: SASAC of Yunnan Province, New Huadu and Jiangsu Yuyue. This merger andoverall listing were successfully completed on June 1, 2019, with the Company as the existing entity. As a result,the Company acquired all the assets, liabilities, businesses, contracts, and other rights and obligations of BaiyaoHoldings. Following the completion of the transaction, the 432,426,597 shares of the listed company previouslyheld by Baiyao Holdings were canceled. The merger and overall listing brought in a newly registered capital ofRMB 236,003,599.00, and the Company’s total share capital amounted to RMB 1,277,403,317.00 after this change.A total of 236,003,599 newly issued shares subject to trading moratorium were issued, with a listing date of July 3,2019, and the shares were listed on the SZSE. Upon completion of this transaction, SASAC of Yunnan Provinceand New Huadu with its acting-in-concert parties, were equally the largest shareholder of the Company, and neitherof them obtained control over the Company.
On May 22, 2020, SASAC of Yunnan Province transferred its 321,160,222 shares of the Company to YunnanState-owned Equity Operation Management Company at nil consideration. Upon completion of this transfer,Yunnan State-owned Equity Operation Management Company and New Huadu with its acting-in-concert parties,were equally the largest shareholder of the Company, and there was no change in the Company’s situation of nothaving a de facto controller or controlling shareholder.On December 8, 2021, SASAC of Yunnan Province transferred 100% of its shares of Yunnan State-ownedEquity Operation Management Company into Yunnan Investment Holdings Group. After the equity transfer,Yunnan Investment Holdings Group held 321,160,222 shares of the Company through the Yunnan State-ownedEquity Operation Management Company, accounting for 25.04% of the total share capital of the Company. YunnanState-owned Equity Operation Management Company and New Huadu with its acting-in-concert parties, wereequally the largest shareholder of the Company, and there was no change in the Company’s situation of not havinga de facto controller or controlling shareholder.On April 20, 2022, the Company’s 2021 Annual Equity Distribution Plan had been considered and approvedat the Company’s 2021 Annual General Meeting, and the details of 2021 Annual Equity Distribution Plan were asfollows: Based on the total share capital on the equity registration date when the distribution plan was implementedin the future, a cash dividend of RMB 16.00 (including tax) for every 10 shares and 4.00 bonus shares (includingtax) for every 10 shares would be distributed to all shareholders, and there would be no conversion of share capitalfrom the capital reserve. On April 21, 2020, the fourth session of the ninth Board of Directors of the Company in2020 and the third session of the ninth Supervisory Committee of the Company in 2020 respectively considered andapproved the Proposal on Granting Stock Options (Initially Granted Part) to Incentive Participants of the 2020Equity Incentive Plan. As of December 31, 2022, the Company had completed distributing dividends of 513,206,278shares and stock exercises of 941,029 shares, increasing its share capital to 1,796,862,549 shares.
On April 23, 2024, the Company disclosed the Announcement on Cancellation of Repurchased Shares andChange in Shareholding (Announcement No.: 2024-21). On April 19, 2024, the Company completed thecancellation of the above 12,599,946 repurchased shares with the Shenzhen Branch of China Securities Depository
and Clearing Corporation. The Company has 1,784,262,603.00 shares in total after this cancellation. Thiscancellation will not have a substantial impact on the Company’s financial position and operational results.As of June 30, 2024, the Company’s share capital is 1,784,262,603 shares, with no treasury shares. YunnanState-owned Equity Operation Management Company and New Huadu with its acting-in-concert parties, wereequally the largest shareholder of the Company, and there was no change in the Company’s situation of not havinga de facto controller or controlling shareholder.
3. Business nature and principal businesses of the Company
The business nature and operating activities of the Company and its subsidiaries (collectively referred to as the“Group”) mainly include: R&D, manufacturing, and sales of chemical APIs, chemical preparations, Chinese patentmedicines, TCM materials, biological products, medical devices, healthcare food, food, beverages, special laborprotection products, non-household textile products, daily chemical products, cosmetics, outdoor products; Sales ofrubber pastes, plasters, disinfectant products, electronic and digital products; Information technology, science andtechnology and economic and technological consulting services; Import and export of goods; Property operationand management (carrying out business activities with qualification certificates), wholesale and retail of drugs,logistics and distribution, etc (For items that require approval according to law, business activities of these projectscan only be carried out after approval by relevant departments).
4. These financial statements were approved for reporting by a resolution of the Board of Directors ofthe Company dated August 26, 2024.
As of June 30, 2024, there were 107 subsidiaries and structured entities included in the scope of the Group’sconsolidated financial statements. For details, please refer to Note IX “Interest in Other Entities.” The Group had 2new entities included in its consolidated financial statements compared to the end of the previous year, while 1entity was excluded. For details, please refer to Note IX “Changes in Consolidation Scope.”IV. Basis for Preparation of Financial Statements
1. Basis for preparation
The financial statements of the Group are prepared on the basis of going concern assumptions, based on actualtransactions and events that occur and in accordance with the Accounting Standards for Business Enterprises —Basic Standards issued by the Ministry of Finance (issued by Decree No. 33 of the Ministry of Finance, revised byDecree No. 76 of the Ministry of Finance), 40 specific accounting standards, Guidelines for the Application ofAccounting Standards for Business Enterprises, interpretations of Accounting Standards for Business Enterprisesand other relevant provisions promulgated and revised on and after February 15, 2006 (collectively “AccountingStandards for Business Enterprises” or “ASBEs”), as well the disclosure provisions of the Rules Governing theDisclosure of Information by Companies Issuing Public Securities No. 15 — General Provisions for FinancialReporting (Revised in 2023) issued by CSRC.
In accordance with the relevant provisions of the Accounting Standards for Business Enterprises, the Group’saccounting is based on the accrual basis. Except for certain financial instruments, these financial statements areprepared at historical cost. In case of asset impairment, provision for impairment would be made according to therelevant regulations.
2. Going concern basis
The Company and the Group evaluated their abilities to continue as a going concern for the 12 months fromthe end of the reporting period and there are no material matters affecting their abilities to continue as a goingconcern.V. Significant Accounting Policies and Accounting EstimatesNotes on significant accounting policies and accounting estimates:
Based on the actual production and operation characteristics and in accordance with the provisions of relevantaccounting standards for enterprises, the Group has formulated a number of specific accounting policies andaccounting estimates for transactions and matters such as revenue recognition and R&D expenses. For details, seethe descriptions under Section 31 “Revenue” under this Note V. For the description of significant accountingjudgments and estimates made by the management, please refer to Section 36 “Other Significant AccountingPolicies and Accounting Estimates” under Note V.
1. Statement of compliance with the ASBEs
The financial statements prepared by the Company are in compliance with the requirements of the AccountingStandards for Business Enterprises (ASBEs), and have reflected truly and completely such relevant information asthe financial positions of the Company and the Group as of June 30, 2024 as well as the business results and cashflows of the Company and the Group for 1H 2024. In addition, the financial statements of the Company and theGroup also comply with the disclosure requirements of the Rules Governing the Disclosure of Information byCompanies Issuing Public Securities No. 15 — General Provisions on Financial Reporting as amended by theCSRC in 2023.
2. Accounting period
The Group’s accounting periods are divided into annual and interim periods. An interim period refers to areporting period less than a full accounting year. The accounting year of the Group is the calendar year that startsfrom January 1 and ends on December 31.
3. Operating cycle
The normal operating cycle refers to the period from purchasing the assets for processing to realizing the cashor cash equivalents. The operating cycle of the Group consists of 12 months which is the standard of theclassification for the liquidity of the assets and liabilities.
4. Reporting currency
RMB is the currency used in the major economic environment where the Company and its domesticsubsidiaries operate. The reporting currency of the Company and its domestic subsidiaries is RMB. The Company’sforeign subsidiaries select HKD as their reporting currencies based on the currency of the primary economicenvironment in which they operate. The currency used by the Group in preparing the financial statements is RMB.
5. Determination method and selection basis of materiality standards
?Applicable □Not applicable
| Item | Materiality standards |
| Significant accounts receivable, bad debt provisions to be recovered or reversed | The single provision amount accounts for more than 10% of the total amount of bad debt provision for various types of receivables and the amount is greater than RMB 5 million. |
| Actual write-off of significant receivables | The value of a single item is greater than RMB 5 million |
| Significant construction in progress | Projects with budgets exceeding RMB 50 million or deemed to be of significance |
| Significant advance receipts | The amount of a single advance receipt with an age of more than 1 year is greater than RMB 5 million |
| Significant contract liabilities | A single contractual liability with an age of more than 1 year accounts for more than 10% of the total contractual liabilities and the amount is greater than RMB 100 million |
| Significant accounts payable aged over one year or overdue | The amount of a single account payable is greater than RMB 5 million |
| Significant other payables aged over one year or overdue | The amount of a single item is greater than RMB 5 million |
| Significant dividends payable outstanding for over one year | The amount of a single item is greater than RMB 100 million |
| Receipts and payments of significant cash related to investment activities | The amount of a single item is greater than RMB 100 million |
| Significant offshore operating entity | The net assets of the economic entity exceed RMB 100 million |
| Significant structured entity | The net assets of the structured entity exceed RMB 2 million |
| Significant non-wholly-owned subsidiaries | The net assets of the subsidiary exceed RMB 100 million |
| Significant capitalized R&D projects | The year-end balance of a single project exceeds RMB 50 million |
| Significant outsourced project under research | The amount of a single project accounts for more than 20% of the total R&D investment |
| Significant investment activities | A single investment activity accounts for more than 10% of the total cash inflow or outflow related to the investment activities and the amount is greater than RMB 1 billion |
| Significant joint ventures or associates | The book value of long-term equity investment in a single investee account for more than 5% of the Group’s net assets and the amount is greater than RMB 1 billion, or the investment profit and loss under the long-term equity investment equity method accounts for more than 10% of the Group’s consolidated net profit |
| Significant subsidiaries | The net assets of the subsidiary account for more than 10% of the Group’s net assets, or the net profits of subsidiary account for more than 10% of the Group’s consolidated profits, and the subsidiaries with significant strategic position |
6. Accounting treatment for business combination under common control and not under common controlA business combination refers to the transaction or matter in which one reporting subject formed due to thecombination of two or above separate entities. A business combination can be classified as the combination undercommon control and not under common control.
(1) Business combination under common control
A business combination under common control is a business combination in which all of the combining entitiesare ultimately controlled by the same party or parties both before and after the combination, and that control is nottransitory. For a business combination under common control, the party that obtains the control of the other partieson the combination date is the acquirer, and other parties involving in the business combination are the acquirees.The combination date is the date on which the acquirer effectively obtains the control of the acquirees.Assets and liabilities that are obtained by the acquirer in a business combination shall be measured at theirbook value at the combination date as recorded by the acquirees. The difference between the book value of the netassets obtained and the book value of the consideration paid by the acquirer for the combination (or the aggregatepar value of the issued shares) shall be adjusted to share premium under capital reserve (or capital premium). If theshare premium under capital reserve (or capital premium) is not sufficient to absorb the difference, any excess shallbe adjusted against retained earnings.Expenses that are directly attributable to the business combination by the acquirer are charged to the currentprofits and losses in which they are incurred.
(2) Business combination not under common control
A business combination not under common control is a business combination in which all of the combiningentities are not ultimately controlled by the same party or parties both before and after the combination. For abusiness combination not under common control, the party that obtains the control of the other parties on theacquisition date is the acquirer; other parties involving in the business combination are the acquirees. The acquisitiondate is the date on which the acquirer effectively obtains control of the acquirees.
For a business combination not under common control, the cost of business combination is the fair value ofassets paid, liabilities incurred or undertaken, and equity securities issued by the acquirer for obtaining the controlof the acquirees at the acquisition date. Expenses that are attributable to the business combination such as audit fees,legal services fees, consultancy fees and other administration expenses incurred by the Company as acquirer areexpensed in the current profits and losses in which they are incurred. Transaction fees of equity securities or debtsecurities issued by the acquirer as consideration for a business combination are included in the initially recognizedamount of equity securities or debt securities. Contingent consideration involved is recorded as the combinationcost at its fair value on the acquisition date. Should any new or further evidence in relation to the circumstancesexisting on the acquisition date arise within 12 months after the acquisition date, making it necessary to adjust thecontingent consideration, the goodwill arising from the business combination shall be adjusted accordingly. Thecost of combination incurred and identifiable net assets obtained by the acquirer in a business combination aremeasured at fair value on the acquisition date. Where the cost of the combination exceeds the acquirer’s interest inthe fair value of the acquiree’s identifiable net assets on the acquisition date, the difference is recognized as goodwill;Where the cost of combination is lower than the acquirer’s interest in the fair value of the acquiree’s identifiable net
assets on the acquisition date, the difference is recognized in current profits and losses after a review of measurementfor the fair value of identifiable assets, liabilities and contingent liabilities of the acquiree and the combination cost.In relation to the deductible temporary difference acquired from the acquiree, which was not recognized asdeferred tax assets due to non-fulfillment of the recognition criteria at the date of the acquisition, if new or furtherinformation that is obtained within 12 months after the acquisition date indicates that related conditions at theacquisition date already existed, and that the realization of the economic benefits brought by the deductibletemporary difference of the acquiree on the acquisition date can be expected, the relevant deferred tax assets shallbe recognized and goodwill shall be deducted accordingly. When the amount of goodwill is less than the deferredtax assets that shall be recognized, the difference shall be recognized in the current profits and losses. Except forthe above circumstances, deferred tax assets in relation to business combination are recognized in the current profitsand losses.For a business combination involving entities not under common control that is achieved in stages, theCompany shall determine whether the business combination shall be treated as “a bundle of transactions” inaccordance with the determination standards as contained in the Circular on the Publishment of Interpretation 5 onAccounting Standards for Business Enterprises Issued by the Ministry of Finance (Finance and Taxation[2012] No.
19) and Section 51 of Accounting Standards for Business Enterprises No. 33 — Consolidated Financial Statements(See Item (2) of Section 6 “Accounting treatment for business combination under common control and not undercommon control” under this Note V). Where the business combination is treated as “a bundle of transactions,” thebusiness combination shall be accounted for in accordance with the previous paragraphs and Section 17 “Long-termequity investments” of this Note V; where the business combination does not fall within “a bundle of transactions,”the business combination in the Company’s and the consolidated financial statements shall be accounted for asfollows:
In the Company’s financial statements, the initial cost of the investment shall be the sum of the book value ofequity investment held in the acquiree prior to the acquisition date and the amount of additional investment madeto the acquiree at the acquisition date. Other comprehensive income relating to the equity interest held in the acquireeprior to the acquisition date shall be, upon disposal of the investment, accounted for in accordance with the samebasis as that the acquiree adopts in directly disposing of relevant assets or liabilities.In the consolidated financial statements, the equity interest held in the acquiree prior to the acquisition date isre-measured according to its fair value at the acquisition date; the difference between the fair value and the bookvalue is recognized as investment income for the current period. Other comprehensive income relating to the equityinterest held in the acquiree prior to the acquisition date shall be accounted for in accordance with the same basis asthat the acquiree adopts in directly disposing of relevant assets or liabilities.
7. Judgement criteria of control and preparation of consolidated financial statements
(1) Judgement criteria of control
The scope of consolidation shall be determined based on the concept of control. Control means that the Grouphas power over the investee, enjoys variable returns through its participation in the investee’s related activities, andhas the ability to use its power over the investee to influence the amount of its returns. Among these, if the Grouphas current rights that enable it to direct the relevant activities of the investee, regardless of whether the Group
actually exercises those rights, it is considered that the Group has power over the investee. If the returns the Groupreceives from the investee are subject to variations based on the investee’s performance, it is considered that theGroup has variable returns. If the Group exercises decision-making authority as the main responsible party, it isconsidered that the Group has the ability to use its power over the investee to influence the amount of returns. Theconsolidated financial statements comprise the financial statements of the Company and all of its subsidiaries, whichare defined as those entities controlled by the Group.
The Group assesses whether it controls the investee based on a comprehensive consideration of all relevantfacts and circumstances. These relevant facts and circumstances include: the purpose of establishing the investee;the investee’s relevant activities and how decisions about these activities are made; whether the rights held by theGroup enable it to currently direct the relevant activities of the investee; whether the Group has variable returnsfrom participating in the investee’s relevant activities; whether the Group can influence the amount of returns fromits power over the investee; and the relationships between the Group and other parties. Once any change in the factsand circumstances arises which leads to a change in the elements involved in the definition of control, the Groupwill conduct an assessment.
(2) Preparation of consolidated financial statements
Subsidiaries are consolidated from the date on which the Group obtains their net assets and actual control overtheir operating decisions, and are deconsolidated from the date when such control ceases. For subsidiaries beingdisposed of, the business results and cash flows prior to the date of disposal are duly included in the consolidatedincome statement and consolidated cash flow statement; for subsidiaries disposed of during the period, the openingbalances of the consolidated balance sheet would not be restated. For subsidiaries acquired from a businesscombination not under common control, their operating results and cash flows subsequent to the acquisition dateare included in the consolidated income statement and consolidated cash flow statement, and the opening balancesand comparative figures in the consolidated financial statements would not be restated. For subsidiaries acquiredfrom a business combination under common control and acquirees from a merger by absorption, their operatingresults and cash flows from the date of commencement of the period in which the combination occurred to the dateof combination are included in the consolidated income statement and consolidated cash flow statement, and thecomparative figures in the consolidated financial statements would be restated.
In preparing the consolidated financial statements, where the accounting policies or the accounting periods areinconsistent between the Company and subsidiaries, the financial statements of subsidiaries are adjusted inaccordance with the accounting policies and accounting period of the Company. For subsidiaries acquired from abusiness combination involving enterprises not under common control, the financial statements of the subsidiariesare adjusted based on the fair value of the identifiable net assets at the acquisition date.
All significant intra-group balances, transactions and unrealized profits are offset in preparing the consolidatedfinancial statements.
The portion of a subsidiary’s equity and the portion of a subsidiary’s net profits and losses for the period notattributable to the Company are recognized as minority interests and profits and losses attributable to minorityinterests respectively, which are presented under shareholders’ equity and net profit separately, in the consolidatedfinancial statement. A subsidiary’s net current profits and losses attributable to minority interests is recognized as
share of profits or losses of minority interests under net profit in the consolidated income statement. When theamount of a subsidiary’s loss attributable to the minority shareholders exceeds the minority shareholders’ share ofthe opening balance of shareholders’ equity of the subsidiary, the excess is deducted from the minority interests.In event of loss of control over a former subsidiary due to disposal of certain equity investments or otherreasons, any retained equity is re-measured at its fair value on the date when the control is lost. The surplus of theaggregate considerations received upon disposal of equity plus the fair value of any retained equity less the share ofnet assets in the former subsidiary calculated cumulatively from the acquisition date based on the originalshareholding percentage is included in the investment income for the period where the control is lost. Othercomprehensive income related to the equity investment in the former subsidiary shall be accounted for on the samebasis at the time of loss of control as the subsidiary directly disposed of the related asset or liability. Then, theremaining equity shall be measured subsequently in accordance with the Accounting Standards for BusinessEnterprises No. 2 — Long-term Equity Investments or Accounting Standards for Business Enterprises No. 22 — TheRecognition and Measurement of Financial Instruments and other regulations. For details, please see Section 17“Long-term equity investments” or Section 11 “Financial instruments” under this Note V.For disposal of the Group’s equity investments in a subsidiary in phases through multiple transactions untilloss of control, it is determined based on whether such transactions should be regarded as a bundle of transactions.If the terms, conditions and economic effects of all transactions are conducted for the purpose of disposing of theequity investments in a subsidiary and meet the following one or more criteria, it is usually shown that such multipletransactions are deemed as a bundle of transactions for accounting treatment: ① These transactions were enteredinto at the same time or upon the consideration of the effects therebetween; ② These transactions can only generateone complete business result when conducted all together; ③ The occurrence of one transaction depends on theoccurrence of at least one other transaction; and ④ One transaction alone is not economical, but is economical whenconsidered with other transactions. When the transactions do not constitute a bundle of transactions, each transactionthereof shall be accounted in accordance with principles applicable to the “disposal of part of long-term equityinvestments in a subsidiary that does not result in the loss of control” (please see Item (2) ④ of Section 17 “Long-term equity investments” under this Note V for details) and “loss of control over a former subsidiary due to disposalof certain equity investments or other reasons” (please see the preceding paragraph for details). If such transactionsfall under a bundle of transactions, those transactions are accounted for as one deal under which the subsidiary isdisposed of and control is lost. However, before the control over the subsidiary is lost, the surplus betweenconsideration received for each disposal and the value of corresponding share of net assets in the subsidiary entitledby the investment underlying the disposal shall be recognized as other comprehensive income in the consolidatedfinancial statements, and, when control is lost, converted into investment income or loss for the period in whichcontrol is lost.
8. Classification of joint venture arrangements and accounting treatment method for joint operations
Joint venture arrangement means an arrangement under the common control of two or more parties. The Groupclassifies the joint venture arrangement into joint operations and joint ventures based on the rights and obligationsit enjoys and assumes in the joint venture arrangement. Joint operation means a joint venture arrangement in which
the Group owns the assets and assumes the liabilities associated with the arrangement. Joint venture means a jointventure arrangement in which the Group only has rights to the net assets of the arrangement.
The Group’s investments in joint ventures are accounted for using the equity method and are treated inaccordance with the accounting policies described in Item (2) ② “Long-term equity investments accounted for usingthe equity method” in Section 17 “Long-term equity investments” under this Note V.
For the joint operations, the Group, as a joint venture party, recognizes the assets and liabilities separately heldby the Group, as well as the assets and liabilities jointly held by the Group in accordance with the Group’s share;recognizes the income arising from the disposal of the Group’s share of joint operation output; recognizes theincome from the sale of outputs from joint operations based on the Group’s share; and recognizes the expensesincurred by the Group alone and the expenses incurred based on the Group’s share in the joint operation.
When the Group, as a joint venture party, invests in or sells assets to the joint venture (which do not constitutea business, the same below), or purchases assets from the joint operation, the Group recognizes only those portionsof the profits or losses arising from the transaction that are attributable to other participants in the joint operation,prior to the sale of such assets to a third party. In the event that such assets incur asset impairment losses inaccordance with the provisions of Accounting Standard for Enterprises No. 8 — Asset Impairment, the Group willfully recognize such losses if the assets are invested or sold by the Group to the joint operation; In the case of assetspurchased by the Group from the joint operation, the Group will recognize such losses on the basis of its share ofcommitment.
9. Determination standards for cash and cash equivalents
Cash and cash equivalents of the Group include the cash on hand, deposits that can be used for payment at anytime, the investments that are held for a short period of time (generally maturing within three months from the dateof purchase), are highly liquid, easily convertible to known amounts of cash, and having minimal risk of changes invalue.
10. Foreign currency business and foreign currency statement translation
Method for determining exchange rates for foreign currency transactions
Upon initial recognition, the foreign currency transactions of the Group are converted into the amount ofreporting currency according to the spot exchange rate of the trading day (usually referring to the median price ofthe foreign exchange rate of the day published by the People’s Bank of China, the same below).
(1) Method for translating foreign currency monetary items on the balance sheet date and the treatment ofexchange rate profits and losses
On the balance sheet date, if the foreign currency monetary items are translated at the spot rate of the balancesheet date, the resulting exchange difference, except for ① Exchange differences arising from special loans inforeign currencies related to the acquisition and construction of assets eligible for capitalization, which shall betreated in accordance with the principle of capitalization of borrowing costs; ② Exchange difference of hedginginstruments used to operate effective hedging of net investment abroad (this difference is included in othercomprehensive income and is not recognized as current profits and losses until the net investment is disposed of)and ③ foreign currency monetary items classified as measured at fair value through other comprehensive income,
shall be recorded into current profits and losses, provided that exchange differences resulting from changes in otherbook balances other than amortized costs (including impairment) shall be recorded in other comprehensive income.The non-monetary foreign currency items measured at historical cost shall be measured at the amount ofreporting currency that is translated into based on the spot rate on the transaction date. For non-monetary foreigncurrency items measured at fair value, the exchange rate prevailing at the date when the fair value is determined isused for translation, and the difference between the translated amount of the reporting currency and the originalamount of the reporting currency shall be treated as the change in fair value (including change of exchange rate)and recorded in current profits and losses or recognized as other comprehensive income.
(2) Translation of foreign currency financial statement
Foreign currency financial statements of overseas operations are translated into RMB statements in thefollowing ways: The items of assets and liabilities in the balance sheet were translated at the spot exchange rate onthe balance sheet date. The shareholders’ equity items are translated at the spot rate at the time of occurrence exceptfor the “undistributed profit” items. The income and expense items in the income statement are converted using theaverage exchange rate of the current period on the date of occurrence of the transaction. The undistributed profit atthe beginning of the year is the undistributed profit at the end of the year after the conversion of the previous year;The undistributed profit at the end of the period is calculated and shown on the basis of each item of profitdistribution after translation; The difference between the total amount of asset items and liability items andshareholders’ equity items after translation is treated as the difference in the translation of foreign currencystatements and recognized as other comprehensive income. Upon disposal of an overseas operation and loss ofcontrol, the conversion difference of the foreign currency statement related to the overseas operation, as shownbelow in the shareholders’ equity item in the balance sheet, shall be transferred to the profits or losses of the disposalof the current period in full or in proportion to the disposal of the overseas operation.Foreign currency cash flow and cash flow of overseas subsidiaries shall be translated at the spot exchange ratein the period when the cash flow is generated. The effect of exchange rate changes on cash is presented separatelyin the cash flow statement as an adjustment item.
The figures for the beginning of the year and the actual figures for the previous year are presented in accordancewith the amounts of the financial statements of the previous year after translation.
Upon the disposal of all the owners’ equity of the Group’s overseas operations or the loss of control overoverseas operations due to the disposal of part of the equity investment or other reasons, the translation differenceof the foreign currency statement related to the owners’ equity of the overseas operations attributable to the parentcompany, as shown below in the shareholders’ equity item in the balance sheet, shall be fully transferred to theprofits or losses of the disposal period.
When part of the equity investment is disposed of or the proportion of overseas operating interest is reducedbut the control of overseas operations is not lost for other reasons, the difference in the translation of foreigncurrency statements related to the disposal part of the overseas operation will be attributed to the minorityshareholders’ equity and will not be transferred to the current profits and losses. Upon disposal of part of the equityof the overseas operation as an associate or joint venture, the translation difference of the foreign currency statement
related to the overseas operation shall be transferred to the profits or losses of the disposal period in full or inproportion to the disposal of the overseas operation.
If there are foreign currency monetary items that substantially constitute net investments in overseas operations,the exchange difference resulting from changes in exchange rates shall be recognized as other comprehensiveincome in the consolidated financial statements as “translation difference in foreign currency statements;” Upondisposal of the overseas operations, it shall be included in the profits or losses of the disposal period.
11. Financial instruments
When the Group becomes a party to a financial instrument contract, it shall recognize a financial asset orfinancial liability.
(1) Classification and measurement of financial assets
The Group has classified the financial assets as financial assets at amortized cost; financial assets at fair valuethrough other comprehensive income and financial assets at fair value through profits or losses based on the businessmodel for managing financial assets and the contractual cash flow characteristics of the financial assets.
Financial assets are measured at fair value on initial recognition. For financial assets at fair value throughprofits or losses, the related transaction costs are recognized directly in profits or losses, and for other categories offinancial assets, the related transaction costs are recognized in initial recognition amounts. For the accountsreceivable or notes receivable arising from the sale of products or the provision of services that do not contain ortake into account a significant financing component, the amount of consideration to which the Group is expected tobe entitled shall be taken as the initial recognition amount.
① Financial assets at amortized cost
The Group’s business model of managing financial assets at amortized cost is aimed at the collection ofcontractual cash flows, and the contractual cash flow characteristics of such financial assets are consistent with thebasic borrowing arrangement, that is, the cash flows generated on a specific date are only payments of principal andinterest based on the outstanding principal amount. For such financial assets, the effective interest rate method isused for subsequent measurement at amortized cost, and any profits or losses arising from amortization orimpairment is included in the current profits and losses.
② Financial assets at fair value through other comprehensive income
The Group’s business model of managing such financial assets is aimed at the collection of contractual cashflows and disposal, and the contractual cash flow characteristics of such financial assets are consistent with the basicborrowing arrangement. The Group measures such financial assets at fair value and their changes are recognized inother comprehensive income, but impairment losses or gains, exchange gains or losses and interest incomecalculated under the effective interest rate method are recognized in current profits and losses.
In addition, the Group has designated certain non-trading equity instrument investments as financial assets atfair value through other comprehensive income. The Group recognizes the relevant dividend income of suchfinancial assets in current profits and losses and the fair value changes in other comprehensive income. Upon thederecognition of the financial assets, the accumulated gains or losses previously recognized in other comprehensiveincome are transferred from other comprehensive income to retained earnings and are not recognized in the currentprofits and losses.
③ Financial assets at fair value through profits or losses
The Group’s financial assets other than those at amortized cost and those at fair value through othercomprehensive income as described above are classified as financial assets at fair value through profits or losses. Inaddition, at the time of initial recognition, in order to eliminate or significantly reduce accounting misalignments,the Group designated certain financial assets as financial assets at fair value through profits or losses. Such financialassets are subsequently measured at fair value, with changes in fair value recognized in the current profits and losses.
(2) Classification and measurement of financial liabilities
Financial liabilities are classified as financial liabilities at fair value through profits or losses and other financialliabilities at the time of initial recognition. For financial liabilities at fair value through profits or losses, the relatedtransaction costs are recognized directly in profits or losses, and for other financial liabilities, the related transactioncosts are recognized in their initial recognition amounts.
① Financial liabilities at fair value through profits or losses
The financial liabilities at fair value through profits or losses include financial liabilities held for trading(including derivatives that are financial liabilities) and those designated as financial liabilities at fair value throughprofits or losses at the initial recognition.
Financial liabilities held for trading (including derivatives that are financial liabilities) are subsequentlymeasured at fair value, with changes in fair value recognized in current profits and losses, except for those relatedto hedge accounting.
However, for those designated as financial liabilities at fair value through profits or losses, the change in fairvalue of such liabilities caused by changes in the Group’s own credit risk is included in other comprehensive income,and the cumulative change in its fair value caused by changes in its own credit risk included in other comprehensiveincome is transferred to retained earnings when such liabilities are derecognized. Other changes in fair value areincluded in current profits and losses. If the treatment of the effect of the change in the credit risk of the financialliabilities in the manner described above would cause or widen the accounting mismatch in profits or losses, theGroup would recognize the full profits or losses of the financial liabilities (including the amount affected by thechange in the credit risk of the enterprise) in the current profits and losses.
② Other financial liabilities
Financial liabilities other than financial liabilities resulting from the transfer of financial assets that do not meetthe conditions for derecognition or continue to be involved in the transfer of financial assets, financial guaranteecontracts are classified as financial liabilities at amortized cost, which are subsequently measured at amortized cost,and the gains or losses resulting from the derecognition or amortization are included in current profits and losses.
(3) Recognition basis and measurement method for transfer of financial assets
A financial asset is derecognized if it meets any of the following conditions: ① The contractual right to receivethe cash flow of the financial asset is terminated; ② The financial asset has been transferred, and substantially allthe risks and returns of ownership of the financial asset have been transferred to the transferee; ③ The financialasset has been transferred, substantially all the risks and returns of ownership of the financial asset have neitherbeen transferred nor retained, but the control over the financial asset has been relinquished.
If neither substantially all the risks and returns of ownership of a financial asset are transferred nor retained,and the control over the financial asset is not relinquished, the underlying financial asset shall be recognized to theextent of its continuing involvement in the transferred financial asset, and the related liability shall be recognizedaccordingly. The extent of continued involvement in the transferred financial asset is the level of risk to which theenterprise is exposed as a result of changes in the value of that financial asset.
If the overall transfer of financial assets meets the conditions for derecognition, the difference between thebook value of the transferred financial assets and the consideration received as a result of the transfer and thecumulative change in the fair value originally included in other comprehensive income is included in the currentprofits and losses.
If the partial transfer of financial assets meets the conditions for derecognition, the book value of the transferredfinancial assets shall be apportioned between the portion derecognized and the portion not for derecognitionaccording to their relative fair value. The difference between the sum of the consideration received as a result of thetransfer and the cumulative changes in fair value that should be apportioned to the portion derecognized and theabove-mentioned book value apportioned is recognized in current profits and losses.
If the Group sells the financial assets by recourse or makes endorsement transfer of the financial assets it holds,it is necessary to determine whether virtually all risks and returns in the ownership of the financial asset have beentransferred. If the Group has transferred substantially all the risks and returns related to the ownership of a financialasset to the transferee, the Group shall derecognize the financial asset. If substantially all the risks and returns relatedto the ownership of a financial asset are retained, the financial assets shall not be derecognized. if substantially allthe risks and returns related to the ownership of the financial asset are neither transferred nor retained, whether theenterprise retains control of the asset shall be determined and accounting treatment shall be made in accordancewith the principles described in the preceding paragraphs.
(4) Derecognition of financial liabilities
A financial liability (or a portion thereof) is derecognized when the present obligation is discharged. If anagreement is entered into between the Group (the borrower) and the lender to replace the original financial liabilityby assuming a new financial liability, and the contractual terms of the new financial liability are materially differentfrom those of the original financial liability, the original financial liability is derecognized and the new financialliability is recognized at the same time. If the Group materially modifies the contractual terms of the originalfinancial liability (or part thereof), it shall derecognize the original financial liability and recognize a new financialliability in accordance with the modified terms.
If a financial liability is derecognized in whole or in part, the difference between the book value of thederecognized portion and the consideration paid (including non-cash assets transferred or liabilities assumed) isrecognized in current profits and losses.
(5) Offsetting of financial assets and financial liabilities
When the Group has the legal rights to offset the financial assets and financial liabilities whose amounts havebeen recognized, the legal rights are currently exercisable, and the Group plans to settle with net amount or realizethe financial asset and repay the financial liability simultaneously, the financial assets and financial liabilities can
be presented in the balance sheet with the net amount after they are mutually offset. Apart from this, financial assetsand financial liabilities shall be presented separately in the balance sheet and not be offset against each other.
(6) Methods for determining the fair value of financial assets and financial liabilitiesFair value is the price that a market participant would receive to sell an asset or pay to transfer a liability in anorderly transaction occurring on the measurement date. Regarding the financial instruments for which there is anactive market, the Group uses quoted prices in an active market to determine their fair values. A quoted price in anactive market is a price that is readily available on a regular basis from an exchange, broker, trade association,pricing service, etc., and represents the price of a market transaction that actually takes place in a fair trade. If thereis no active market for the financial instrument, the Group uses valuation techniques to determine its fair value. Thevaluation techniques include reference to prices used in recent market transactions by the parties who are familiarwith the situation and willing to deal, reference to the current fair value of other substantially identical financialinstruments, the discounted cash flow method, and option pricing models. In the valuation, the Group will adopt thevaluation techniques applicable in the current situation and supported by sufficiently available data and otherinformation, select the input values that are consistent with the characteristics of the asset or liability considered bymarket participants in the transaction of the relevant asset or liability, and give priority to the relevant observableinput values when possible. The non-observable input values will be used only when the relevant observable inputvalues are unavailable or not practicable to obtain.
(7) Equity instruments
Equity instruments are contracts that demonstrate ownership of the remaining interest in the Group’s assetsafter deducting all liabilities. The Group’s issuance (including refinancing), repurchase, sale or cancellation ofequity instruments is treated as changes in equity, and the transaction expenses related to equity transactions arededucted from equity. The Group does not recognize the changes in fair value of other equity instruments.Dividends (including “interest” on instruments classified as equity instruments) distributed during theexistence of the Group’s equity instruments are treated as profit distributions.
(8) Impairment of financial assets
The financial assets for which the Group needs to recognize impairment losses are financial assets at amortizedcost, debt instruments at fair value through other comprehensive income, lease receivables, which mainly includenotes receivable, accounts receivable, receivables financing, other receivables, debt investments, other debtinvestments, long-term receivables, etc. In addition, for contractual assets and certain financial guarantee contracts,impairment provisions are made and credit impairment losses are recognized in accordance with the accountingpolicies described in this section.
① Recognition of provision for impairment losses
On the basis of expected credit losses, the Group makes an impairment provision and recognizes creditimpairment losses for each of the above items in accordance with its applicable expected credit loss measurementmethod (general method or simplified method).
Credit losses represent the difference between all contractual cash flows receivable under the contract and allcash flows expected to be received by the Group, discounted at the original effective interest rate, i.e., the present
value of all cash shortfalls. Financial assets purchased or originated by the Group that are credit impaired shall bediscounted at the credit-adjusted effective interest rate of the financial assets.
The general method of measurement of expected credit losses means that the Group assesses at each balancesheet date whether the credit risk of financial assets (including contractual assets and other applicable items, thesame below) has increased significantly since the initial recognition. If the credit risk has increased significantlysince the initial recognition, the Group measures the loss provision at an amount equivalent to the expected creditloss over the entire duration; If credit risk does not increase significantly since the initial recognition, the Groupmeasures the loss provision at an amount equivalent to expected credit losses over the next 12 months. The Groupwill consider all the reasonable and evidence-based information, including forward-looking information, whenassessing expected credit losses.For financial instruments with low credit risk on the balance sheet date, the Group assumes that their creditrisk has not increased significantly since initial recognition, and measures the provision for losses based on expectedcredit losses over the next 12 months.
② Criteria for determining whether credit risk has increased significantly since the initial recognition
If the probability of default of a financial asset during the estimated duration determined on the balance sheetdate is significantly higher than the probability of default during the estimated duration determined at the time ofinitial recognition, it indicates that the credit risk of the financial asset has significantly increased. Except inexceptional circumstances, the Group uses the change in default risk occurring over the next 12 months as areasonable estimate of the change in default risk occurring over the duration to determine whether credit risk hasincreased significantly since the initial recognition.
③ The portfolio-based approach to assessing expected credit risk
The Group assesses credit risk individually for financial assets with significantly different credit risks, such asreceivables from related parties; receivables that are in dispute with other parties or involved in litigation orarbitration; or where there are clear indications that the debtor is likely to be unable to meet its repayment obligations.
Apart from financial assets that are individually assessed for credit risk, the Group classifies financial assetsinto different groups based on common risk characteristics and assesses credit risk on a portfolio basis.
④ Accounting treatment of impairment of financial assets
At the end of the period, the Group will calculate the estimated credit losses of various financial assets, and ifthe estimated credit losses are greater than the book value of its current impairment provision, the difference isrecognized as an impairment loss; If it is less than the book value of the current impairment provision, the differenceis recognized as an impairment gain.
⑤ Determination of credit loss of various financial assets
a. Notes receivable
The Group measures the loss provision for notes receivable at the amount equivalent to expected credit lossesin the entire duration. Based on the credit risk characteristics of notes receivable, they are divided into differentportfolios:
| Item | Basis for determining the portfolio |
| Banker’s acceptance bill, domestic letter of credit | Banks with less credit risk in relation to acceptors and negotiation acts |
| Commercial acceptance bill | Divided according to the acceptor’s credit risk |
b. Accounts receivableFor the accounts receivable that do not have a significant financing component, the Group measures the lossprovision for notes receivable at the amount equivalent to expected credit losses in the entire duration.For the accounts receivable and lease receivables that have a significant financing component, the Groupchooses to always measure the loss provision at an amount equivalent to expected credit losses over the duration.Apart from the accounts receivable for single assessment of credit risk, they are divided into different portfoliosbased on their credit risk characteristics:
| Item | Basis for determining the portfolio |
| Related party within the consolidation scope | This portfolio represents amounts receivable of the Company within the scope of consolidation. |
| Account age portfolio | The portfolio takes the age of receivables as the credit risk characteristics. |
Aging calculation method for determining credit risk characteristics: The Group calculates the aging ofreceivables based on the principle of “first in, first out.”Impairment provision recognition criteria for individual receivables: The Group performs separate impairmenttests for receivables with significantly different credit risk characteristics, such as significant deterioration in thedebtor’s credit standing, low probability of future repayment, and credit impairment occurred.c. Accounts receivable financingNotes and accounts receivable measured at fair value through other comprehensive income are presented asaccounts receivable financing if their maturities are within one year (including one year) from the initial recognitiondate. The Group measures the loss provision at the amount equivalent to expected credit losses in the entire duration.Apart from the accounts receivable financing for single assessment of credit risk, they are divided into differentportfolios based on their credit risk characteristics:
| Item | Basis for determining the portfolio |
| Related party within the consolidation scope | This portfolio represents amounts receivable of the Company within the scope of consolidation. |
| Account age portfolio | The portfolio takes the age of receivables as the credit risk characteristics. |
Aging calculation method for determining credit risk characteristics: The Group calculates the aging ofreceivables based on the principle of “first in, first out.”
Impairment provision recognition criteria for individual receivables: The Group performs separate impairmenttests for receivables with significantly different credit risk characteristics, such as significant deterioration in thedebtor’s credit standing, low probability of future repayment, and credit impairment occurred.
d. Other receivables
Based on whether the credit risk of other receivables has increased significantly since initial recognition, theGroup measures the loss provision at the amount equivalent to expected credit losses in the next 12 months or the
entire duration. Apart from the other receivable for single assessment of credit risk, they are divided into differentportfolios based on their credit risk characteristics:
| Item | Basis for determining the portfolio |
| Related party within the consolidation scope | This portfolio represents amounts receivable of the Company within the scope of consolidation. |
| Account age portfolio | The portfolio takes the age of receivables as the credit risk characteristics. |
Aging calculation method for determining credit risk characteristics: The Group calculates the aging ofreceivables based on the principle of “first in, first out.”Impairment provision recognition criteria for individual receivables: The Group performs separate impairmenttests for receivables with significantly different credit risk characteristics, such as significant deterioration in thedebtor’s credit standing, low probability of future repayment, and credit impairment occurred.
12. Notes receivable
Please refer to “11. Financial instruments.”
13. Accounts receivable
Please refer to “11. Financial instruments.”
14. Accounts receivable financing
Notes and accounts receivable at fair value through other comprehensive income are presented as accountsreceivable financing if their maturities are within one year (including one year) from the initial recognition date.The Notes and accounts receivable with the maturity of more than 1 year since the initial recognition date arepresented as other debt investments. For the relevant accounting policies, please refer to “11. Financial instruments”under this Note.
15. Other receivables
Method of determining expected credit losses on other receivables and the accounting treatment
For the method of determining expected credit losses on other receivables and the accounting treatment, pleaserefer to “11. Financial instruments.”
16. Inventories
(1) Categories of inventories
Inventories mainly include raw materials, packaging and low-value consumable goods, products in process,goods in stock, consumable biological assets, development costs, development products, etc. Contract fulfillmentcosts with an amortization period not exceeding one year or one operating cycle are also reported as inventory.
(2) Pricing of inventories
Inventories are initially measured at actual cost. The cost of inventories includes procurement cost, processingcost and other costs. Inventories are measured by the weighted average method upon delivery.
(3) Determination of net realizable value of inventories and method of making provision for inventoryimpairment
The net realizable value of inventories refers to the selling price deducted by estimated costs until they aremade into finished goods, estimated selling expense and relevant taxes in daily activities. The determination of the
net realizable value of inventories is based on conclusive evidence obtained, taking into account the purpose forwhich the inventories are held and the effect of events after the balance sheet date.At the balance sheet date, inventories are measured at the lower of cost and net realizable value, and provisionfor their impairment shall be made when the net realizable value is below the cost of inventories. Provision forinventory impairment is made on the basis of the difference whereby the cost of one single inventory item exceedsits net realizable value.
After provision for inventory impairment is made, if the factors that once resulted in the impairment disappear,leading to the net realizable value of inventories higher than their book value, the provision of inventory impairmentshall be reversed to the extent of provision previously made, and the reversed amount shall be recognized in currentprofits and losses.
(4) The inventory system shall be the perpetual inventory system.
(5) Amortization of low-value consumables and packaging materials
The low-value consumables and packaging materials are amortized using a one-off amortization method.
17. Long-term equity investments
Long-term equity investments in this section refers to any equity investment by which the Group has control,common control or significant influence over the investee. Long-term equity investments by which the Group doesnot have control, common control or significant influence over the investee are accounted for as financial assets atfair value through profits or losses. If they are non-trading, the Group may elect to designate them as financial assetsat fair value through other comprehensive income at the time of initial recognition. For the accounting policies,please refer to “11. Financial instruments” under Note IV.
Common control is the Group’s contractually agreed sharing of control over an arrangement, the activitiesunder which must be decided by unanimous agreement from parties who share the control. Significant influence isthe power of the Group to participate in the decision-making for financial and operating policies of an investee, butnot to control or common control the formulation of such policies together with other parties.
(1) Determination of investment cost
For long-term equity investments acquired relating to business combination under common control, the initialinvestment cost is determined on the date of consolidation according to the percentage of shareholders’equity/owners’ equity from the combined party as a part of the book value of total shareholders’ equity set forth inthe consolidated financial statements of the ultimate controlling party. The difference between the said initialinvestment cost and the sum of cash being paid, non-cash assets being transferred and book value of liabilities beingassumed shall be adjusted against the capital reserve; or, in case of insufficient capital reserve to cover the difference,against the retained earnings accordingly. In case that the consideration of the business combination is satisfied byissuing equity securities, the initial investment cost of the long-term equity investments is determined on the dateof consolidation according to the percentage of shareholders’ equity/owners’ equity from the combined party as apart of the book value of total shareholders’ equity set forth in the consolidated financial statements of the ultimatecontrolling party. With the sum of par values of shares being issued as the share capital, the difference between thesaid initial investment cost and the sum of par values of shares being issued shall be adjusted against the capitalreserve; or, in case of insufficient capital reserve to cover the difference, against the retained earnings accordingly.
Where a business combination under common control is achieved by acquiring the equity of a combined party undercommon control in phases through multiple transactions, following policies shall apply depending on whether thosetransactions are “a bundle of transactions”: if so, the Company shall account for all transactions together as the onedeal to obtain the control; if not, the initial investment cost of the long-term equity investments shall be determinedon the date of consolidation according to the percentage of shareholders’ equity/owners’ equity from the combinedparty as a part of the book value of total shareholders’ equity set forth in the consolidated financial statements ofthe ultimate controlling party, while the difference between the initial investment cost and the sum of book value oflong-term equity investments before the consolidation and that of consideration newly paid to acquire additionalequities on the date of consolidation shall be adjusted against the capital reserve, or, in case of insufficient capitalreserve to cover the difference, against retained earnings accordingly. Accounting treatment is currently not requiredfor other comprehensive income that has been recognized due to the adoption of equity method in accounting or theclassification as financial assets at fair value through other comprehensive income in respect of equity investmentsheld before the date of consolidation.For the long-term equity investments acquired relating to business combination not under common control, theinitial investment cost is the cost of combination on the date of acquisition which equals to the aggregate fair valueof assets transferred, liabilities incurred or assumed and equity securities issued by the acquirer. Where a businesscombination not under common control is achieved by acquiring the equity of a combined party under commoncontrol in phases through multiple transactions, following policies shall apply depending on whether thosetransactions are “a bundle of transactions”: if so, the Group shall account for all transactions together as the onedeal to obtain the control; if not, the initial investment cost of the long-term equity investments that is re-accountedfor using the cost method shall be the sum of book value of long-term equity investments previously held by theacquirer in the acquiree and new investment cost. Accounting treatment is currently not required for othercomprehensive income in respect of equity investments that have been accounted for using the equity method,The intermediary expenses on items such as audit, legal service and valuation advisory for businesscombination and other related administrative expenses incurred by the combining party or acquirer are recognizedin current profits and losses upon their occurrence.Long-term equity investments other than those formed by business combination is initially measured at costwhich varies depending on the different ways of acquiring the long-term equity investments and is determined byconsidering (if applicable) the amount of actual cash paid by the Group, the fair value of the equity securities issuedby the Group, the conventional value stipulated in the investment contract or agreement, the fair value or originalbook value of the assets surrendered in the non-monetary assets swap transaction, the fair value of the long-termequity investments itself, and etc. The expenses, taxes and other necessary expenses directly related to theacquisition of the long-term equity investments are also included in the investment cost. For additional long-termequity investments that entitles the Company with significant influence or common control but not control over theinvestee, its cost of investment is the sum of fair value of equity investments that have been held plus new cost ofinvestment pursuant to the Accounting Standards for Business Enterprises No. 22 — Recognition and Measurementof Financial Instrument.
(2) Subsequent measurement and recognition method of profits and losses
A long-term equity investment with common control (excluding that constituting a joint venture) over orsignificant influence on the investee is accounted for by using the equity method, and a long-term equity investmentwith control over the investee is accounted for in the Company’s financial statements by using the cost method.
① Long-term equity investment accounted for with cost method
When a long-term equity investment is accounted for with cost method, its price is measured at initialinvestment cost, and where the long-term equity investment is added or disposed, its cost is adjusted accordingly.The cash dividend or profit declared by the investee, except for the cash dividend or profit declared but not yetgranted that is included in the price or consideration actually paid upon the acquisition of the investment shall berecognized as investment income for the period.
② Long-term equity investment accounted for with equity method
When a long-term equity investment is accounted for with equity method and its initial investment cost ishigher than the proportion of fair value of the investee’s identifiable net assets attributable to the investor becauseof the investment, its initial cost shall not be adjusted; if lower, the difference shall be recognized in the currentprofits and losses, and its cost shall be adjusted accordingly.
When a long-term equity investment is accounted for with equity method, the investment income and othercomprehensive income arising therefrom are recognized in accordance with the proportion of net profits or lossesand other comprehensive income of the investee attributable to the investor, and the book value of long-term equityinvestments is adjusted accordingly; if any profit or cash dividend is declared by the investee, the book value oflong-term equity investments shall be reduced according to the part of profit or dividends attributable to the investor;if there is any other changes in shareholders’ equity other than net profits or losses, other comprehensive incomeand profit distribution, such change shall be adjusted against the book value of long-term equity investments andrecognized in the capital reserve. The Group recognizes its share of the investee’s net profits or losses based on fairvalue of the investee’s identifiable assets at the time of acquisition, after making appropriate adjustments thereto.In case of any inconsistency between the accounting policies and accounting periods adopted by the investee andby the Group, the financial statements of the investee shall be adjusted in accordance with the accounting policiesand accounting periods of the Group, and the gain on investment and other comprehensive income shall berecognized accordingly. In respect of the transactions between the Group and its associates and joint ventures inwhich the assets invested or disposed of are not part of the business, the share of unrealized profits or losses arisingfrom inter-group transactions shall be offset by the portion attributable to the Group, and the profits or losses oninvestment shall be recognized accordingly. However, any unrealized loss arising from inter-group transactionsbetween the Group and an investee is not offset to the extent that the loss is impairment loss of the assets transferred.Where the Group invests to its joint ventures or associates an asset forming part of a business, giving rise to theacquisition of a long-term equity investment by the investor without obtaining control, the initial investment cost ofthe additional long-term equity investments shall be recognized at fair value of the business invested. The differencebetween initial investment cost and book value of the business invested will be fully included in current profits andlosses. Where the Group disposes of an asset forming part of a business to its associates or joint ventures, thedifference between the consideration received and the book value of the business shall be fully included in currentprofits and losses. Where the Group acquires from its associates or joint ventures an asset forming part of a business,
the profits or losses related to the transaction shall be accounted for and recognized in accordance with theAccounting Standards for Business Enterprises No. 20 — Business Combination.The Group’s share of net loss of the investee shall be recognized to the extent that the book value of the long-term equity investment and any long-term equity that substantially forms part of the investor’s net investment in theinvestee are written down to zero. If the Group has to assume additional obligations to the loss of the investee, theestimated liabilities shall be recognized for the estimated obligation assumed and charged to the profits or losses asinvestment loss for the period. Where the investee makes profits in subsequent periods, the Group shall re-recognizeits share of the profits after setting off against the share of unrecognized losses.
③ Acquisition of minority interests
When preparing the consolidated financial statements, the Company adjusts the capital reserve and, if thecapital reserve is insufficient, adjusts the retained earnings based on the difference between the additional long-termequity investments arising on acquisition of minority interests and the Company’s share in the net assets of thesubsidiary accrued from the acquisition date (or consolidation date) in proportion to the additional shareholdings.
④ Disposal of long-term equity investments
In the consolidated financial statements, if the parent disposes part of the long-term equity investment in thesubsidiary without losing its control, the difference between the disposal price and the Company’s share in the netassets of the subsidiary attributable to the disposal of the long-term equity investment is recognized in theshareholders’ equity; if the parent disposes part of the long-term equity investment in the subsidiary resulting in theloss of its control over the subsidiary, the accounting treatment shall be in accordance with the policies as set out inItem (2) of Section 6 “Accounting treatment for business combination under common control and not under commoncontrol” under this Note V.
In other cases, upon the disposal of a long-term equity investment, the difference between the book value ofthe investment and the price received is recognized in the current profits and losses.
For a long-term equity investment that is accounted for using the equity method where the remaining equityafter disposal continues to be accounted for using the equity method, the portion of other comprehensive incomepreviously included in shareholder’s equity shall be treated in accordance with the same basis as the investee directlydisposes of relevant asset or liability on pro rata basis at the time of disposal. The owners’ equity recognized for thechange in owners’ equity of the investee other than net profits or losses, other comprehensive income and profitdistribution shall be transferred to current profits and losses on pro rata basis.
For a long-term equity investment accounted for using the cost method where the remaining equity afterdisposal continues to be accounted for using cost method, other comprehensive income recognized using the equitymethod or in accordance with the standard for recognition and measurement of financial instruments prior to theacquisition of control over the investee shall be treated in accordance with the same basis as the investee directlydisposes of relevant asset or liability, and transferred to current profits and losses on pro rata basis. The change inowners’ equity recognized in net assets of the investee by using the equity method other than net profits or losses,other comprehensive income and profit distribution shall be transferred to current profits and losses on pro rata basis.
In preparing separate financial statements, if control is lost over the investee upon partial disposal of equityinvestment, the remaining equity with common control or an ability to impose a significant influence over the
investee after disposal shall be accounted for using the equity method, and shall be adjusted as if it has beenaccounted for using the equity method since it was acquired. The remaining equity without common control or anability to impose a significant influence over the investee after disposal shall be accounted for based on the standardfor recognition and measurement of financial instruments, and the difference between its fair value and book valueon the date of loss of control shall be included in current profits and losses. In respect of other comprehensiveincome recognized using the equity method or in accordance with the standard for recognition and measurement offinancial instruments prior to the acquisition of control over the investee, it shall be accounted for in accordancewith the same basis as the investee directly disposes of relevant asset or liability when the control is lost. The changein owners’ equity recognized in net assets of the investee by using the equity method other than net profits or losses,other comprehensive income and profit distribution shall be transferred to current profits and losses at the time whenthe control over investee is lost. Where the remaining equity after disposal is accounted for using the equity method,other comprehensive income and other owners’ equity shall be carried forward on pro rata basis. Where theremaining equity after disposal is accounted for in accordance with the standard for recognition and measurementof financial instruments, other comprehensive income and other owners’ equity shall be fully carried forward.
If the common control or significant influence of the Group over the investee is lost upon partial disposal ofequity investment, the remaining equity after disposal shall be accounted for in accordance with the standard forrecognition and measurement of financial instruments. The difference between its fair value and book value on thedate of loss of common control or significant influence shall be included in current profits and losses. For othercomprehensive income recognized previously for the equity investment using equity method, it shall be accountedfor in accordance with the same basis as the investee directly disposes of relevant asset or liability at the time whenthe equity method is ceased to be used. The owners’ equity recognized arising from the change in owners’ equityof the investee other than net profits or losses, other comprehensive income and profit distribution shall betransferred to current profits and losses at the time when the equity method is ceased to be used.Where the Group disposes of its equity investment in a subsidiary in a series of transactions until the controlis lost, and such transactions form “a bundle of transactions,” each transaction shall be accounted for as a disposalof equity investment of the subsidiary resulting in a loss of control. The difference between the consideration foreach transaction and the book value of the long-term equity investment attributable to the equity interests disposedprior to loss of control shall be initially recognized as other comprehensive income, and upon loss of control,transferred to current profits and losses when the loss of control takes place.
18. Investment properties
Measurement models of investment property
Cost model measurement
Depreciation or amortization method
Investment properties are real estate held for rental income or capital appreciation, or both, including land userights that have been leased, land use rights that are held and intended to be transferred after appreciation, andbuildings that have been leased. In addition, vacant buildings held by the Group for operating leases are reported asinvestment properties if the Board of Directors (or similar organization) makes a written resolution that they will beused for operating leases and the intention to hold them will not change in the near future.
Investment properties shall be initially measured at cost. The subsequent expenses related to investmentproperties shall be recognized as cost of the investment properties only if it is probable that economic benefitsassociated with the assets will flow to the Group and the cost of the assets can be measured reliably. Othersubsequent expenses shall be recognized in the current profits and losses when incurred.The Group uses the cost model for subsequent measurement of investment properties and depreciates oramortizes them according to the policies consistent with that for buildings or land use rights.For the method of impairment test and provision for impairment loss of investment properties, please refer toSection 25 “Impairment of long-term assets” under Note V.
When self-use property or inventory is converted into investment property or investment property is convertedinto self-use property, the book value before conversion is taken as the entry value after conversion.
When the use of an investment property changes to self-use, the investment property is converted to a fixedasset or an intangible asset from the date of the change. When the use of a self-use property is changed to earnrentals or for capital appreciation, the fixed assets or intangible assets are converted to investment properties fromthe date of change. When conversion occurs, the book value before conversion is used as the entry value afterconversion for investment properties measured using the cost model, and the fair value at the date of conversion isused as the entry value after conversion for investment properties measured using the fair value model.
An investment property is derecognized upon disposal or when it is permanently withdrawn from use and nofuture economic benefits are expected from its disposal. The net proceeds from sale, transfer, retirement or damageof an investment property after its book value and related taxes and expenses are recognized in the current profitsand losses.
19. Fixed assets
(1) Recognition criteria
Fixed assets refer to the tangible assets held by the Company for producing goods, rendering services, rentingor operation and administration purposes with useful life of over one accounting year. The fixed assets arerecognized only when the economic interests related thereto are likely to flow into the Group and its cost can bemeasured reliably. The fixed assets are initially measured at cost with consideration of the impact of estimateddisposal costs.
(2) Depreciation Method
| Category | Depreciation method | Depreciation life (year) | Rate of residual value (%) | Annual depreciation rate (%) |
| House and building for production | Straight-line method | 39 | 5 | 2.44 |
| Production machine and equipment | Straight-line method | 10 | 5 | 9.5 |
| Transportation equipment | Straight-line method | 10 | 5 | 9.5 |
| Electronic device and management tools | Straight-line method | 5 | 5 | 19 |
| Non-production machine and equipment | Straight-line method | 10 | 5 | 9.5 |
| House and building for non-production purpose | Straight-line method | 45 | 5 | 2.11 |
| Others | Straight-line method | 5 | 5 | 19 |
Expected net residual value refers to the amount the Group obtains from the disposal of an asset, less estimateddisposal costs, assuming that the asset has reached the end of its useful life and is in its expected condition at thattime.
(3) Methods for impairment testing and recognizing impairment provisions for fixed assets
The methods for impairment testing and recognizing impairment provisions for fixed assets are detailed inSection 25 “Impairment of long-term assets” under Note V.
(4) Additional notes
Subsequent expenditures related to fixed assets should be included in the cost of the fixed asset if they maygenerate future economic benefits and their cost can be reliably measured. The book value of any replaced partshould be derecognized. Subsequent expenditures other than these are recognized in profits or losses when incurred.
When a fixed asset is held for disposal or is not expected to generate future economic benefits through use ordisposal, it should be derecognized. The difference between the proceeds from the sale, transfer, scrapping, ordestruction of the fixed asset and its book value, less related taxes, should be recognized in profits or losses for theperiod.
The Group reviews the useful life, expected net residual value, and depreciation method of fixed assets at leastannually. Any changes are treated as changes in accounting estimates.
20. Construction in progress
The cost of construction in progress is measured according to the actual expense for the construction in progress,including all the necessary expenses incurred in the process of construction, and borrowing costs to be capitalizedbefore the project is ready for its intended use and other related costs.
The construction in progress is transferred to fixed assets after it is ready for its intended use.
For the method of impairment test and provision for impairment loss of construction in progress, please referto Section 25 “Impairment of long-term assets” under Note V.
21. Borrowing costs
Borrowing costs include interest on borrowings, amortization of discounts or premiums, ancillary costs, andexchange differences arising from foreign currency borrowings. Where the borrowing costs can be directlyattributable to the acquisition and construction or production activities of assets eligible for capitalization, it shallbe capitalized on the basis that the expense for the asset has already been incurred, the borrowing costs have beenincurred and the acquisition and construction or production activities necessary to prepare the asset for its intendeduse or for sale have already commenced; after the acquired or produced asset eligible for capitalization is availablefor its intended use or for sale, the capitalization shall be stopped. Other borrowing costs shall be recognized asexpenses at the time when they are incurred.
The actual interest cost incurred in the period of specific-purpose borrowing (net of any interest income fromthe borrowed funds not used and deposited in bank or any investment income from the temporary investment ofthose funds) shall be capitalized; the amount of interest of general-purpose borrowings to be capitalized is
determined by multiplying the weighted average of the amounts of cumulative expenses on the asset over and abovethe amounts of specific-purpose borrowings by the capitalization rate of the corresponding general-purposeborrowings. Capitalization rate is calculated and determined based on the weighted average rate of general-purposeborrowings.During the capitalization period, exchange differences related to specific-purpose borrowings denominated inforeign currencies are fully capitalized; exchange differences related to general-purpose borrowings denominatedin foreign currencies are recognized in the current profits and losses.
Assets eligible for capitalization refer to the fixed assets, investment properties, inventories and other assetsthat require a substantially long period of time of acquisition and construction or production activities for intendeduse or for sale.
Where the acquisition and construction or production activities of an asset eligible for capitalization isinterrupted abnormally and the interruption period lasts for more than 3 months, the capitalization of the borrowingcosts shall be suspended until the acquisition and construction or production of the asset is resumed.
22. Biological assets
(1) Consumptive biological assets
Consumptive biological assets are the biological assets held for sale or harvested for agricultural products inthe future, including growing field crops, vegetables, timber stands and livestock stored for sale. Consumptivebiological assets shall be initially measured at cost. The cost of a consumptive biological asset that is cultivated,constructed, propagated or farmed by the Company is the necessary expense incurred before the asset isharvested/closed/sold/sold or placed in storage that is directly attributable to the asset, including borrowing coststhat are eligible for capitalization. Subsequent expenses such as management and feeding costs incurred afterharvesting/closing/storage of consumptive biological assets are included in current profits and losses.
Consumptive biological assets are carried forward at book value using the weighted average method whenharvested or sold.
On the balance sheet date, consumptive biological assets are measured at the lower of cost or net realizablevalue, and the provision for impairment of consumptive biological assets shall be calculated and recognized basedon the methods consistent with those for the recognition of the provision for inventory impairment. Where theimpairment factors disappear, the amount written down shall be restored and reversed from the original provisionfor depreciation, with the amount reversed recognized in the current profits and losses.
(2) Productive biological assets
Productive biological assets refer to the biological assets held for the purpose of producing agriculturalproducts, providing services or leasing, including economic forests, firewood forests, production animals and draftanimals. Productive biological assets shall be initially measured at cost. The cost of a self-created or propagatedproductive biological asset is the necessary expenses incurred before the asset achieves the intended purpose ofproduction and operation that can be directly attributable to the asset, including borrowing costs that meet thecapitalization conditions.
The Group reviews the useful life and estimated net residual value of a productive biological asset and thedepreciation method applied at least at each year-end. Any change shall be accounted for as a change in accountingestimate.
The difference between the disposal proceeds from the sale, liquidation, death or destruction of productivebiological assets less their book value and related taxes and charges is included in the current profits and losses.
The Group determines whether a productive biological asset has any signs of impairment on each balance sheetdate. If the asset shows signs of impairment, the recoverable amount is estimated. The recoverable amount isestimated on a single asset basis. If it is difficult to estimate the recoverable amount of a single asset, the recoverableamount of the asset group to which the asset belongs shall be determined. If the recoverable amount of an asset islower than its book value, the provision for asset impairment shall be made according to the difference and recordedin the current profits and losses.
Once the above asset impairment loss is recognized, it shall not be reversed in subsequent accounting periods.
If a productive biological asset changes its use and becomes a consumptive biological asset, the cost of thechange of use is determined at the book value at the time of the change of use. If the productive biological assetchanges its use and becomes a public welfare biological asset, whether there is any impairment is determined inaccordance with the provisions of Accounting Standard for Business Enterprises No. 8 - Asset Impairment. Whenan impairment occurs, an impairment provision shall be first made and then determined on the basis of the bookvalue after such provision is made.
23. Oil and gas assets
Not applicable
24. Intangible assets
(1) Useful life and the basis for its determination, estimation, amortization method or review procedures
An intangible asset is an identifiable non-monetary asset without physical substance owned or controlled bythe Group.
An intangible asset shall be initially measured at cost. The expenses incurred on an intangible asset shall berecognized as cost of the intangible asset only if it is probable that economic benefits associated with the asset willflow to the Group and the cost of the asset can be measured reliably. Other expenses on an item asset shall berecognized in the current profits and losses when incurred.
Land use right acquired shall normally be recognized as an intangible asset. For self-constructed buildings (e.g.plants), the expenses on the land use right and cost of the buildings shall be separately accounted for as an intangibleasset and fixed asset. For buildings and structures purchased, the purchase consideration shall be allocated amongthe land use right and the buildings on a reasonable basis. In case there is difficulty in making a reasonable allocation,the consideration shall be recognized in full as a fixed asset.
An intangible asset with a definite useful life is amortized by deducting the estimated net residual value andaccrued provision for impairment loss from the original value over the estimated useful life from the time when itis available for use. An intangible asset with an indefinite useful life is not amortized.
During the end of the period, the Company shall check the useful life and the amortization method of intangibleassets with limited useful life and carry out accounting estimate change in case that a change happens. In addition,
the Company shall check the useful life of intangible assets with indefinite useful life, if there are evidences showingthat the intangible assets can bring economic benefit for the Company within the foreseeable period, the Companyshall estimate the useful life and carry out amortization according to the amortization policy for intangible assetswith finite useful life.The Group’s intangible assets include land use rights, software, franchise rights, patented technologies, non-patented technologies and trademarks, etc.; the amortization periods and status of major intangible assets are asfollows:
① Land use rights are amortized on an average annual basis over the remaining useful lives of 30 to 50 yearsas stated in the land use rights certificates. If it is difficult to reasonably allocate the price of purchased land andbuildings between land use rights and buildings, all of them are recognized as fixed assets.
② Software, patented technologies, and non-patented technologies are amortized equally over 10 years based
on their estimated useful lives.
③ Franchise rights are amortized evenly over 30 years based on their estimated useful lives.
(2) Scope of R&D expenditures and the related accounting treatment
The scope of the Company’s R&D expenditures is mainly formulated based on the Company’s R&D projects,and mainly includes employee salaries for R&D staff, direct input expenses, depreciation and amortization expenses,design and testing expenses, outsourced R&D expenses, and other expenses.
The Group classifies the expense on an internal R&D project into expense at the research phase and expenseat the development phase.
Expense at the research phase is recognized in the current profits and losses when incurred.
Expense at the development phase is recognized as an intangible asset if all of the following conditions aresatisfied at the same time, and otherwise, it is recognized in the current profits and losses:
① It is technically feasible to complete the intangible asset so that it will be available for use or sale;
② It is intended to complete and to use or sell the intangible asset;
③ It can be demonstrated how the intangible asset will generate economic benefits, including demonstratingthat there is an existing market for products produced by the intangible asset or for the intangible asset itself, andthat it can be used if the intangible asset is to be used internally;
④ There are adequate technical, financial and other resources to complete the development and the ability touse or sell the intangible assets;
⑤ The expense attributable to the intangible asset at its development phase can be reliably measured.
All the expenses on R&D which cannot be distinguished between the research phase and development phaseare recognized in the profits or losses when incurred.
Specific criteria for classifying internal R&D projects into research stage and development stage: Thecorresponding projects of the Group enter the development stage and start to be capitalized after meeting theabove conditions and undergoing evaluation and project establishment.
(3) Impairment testing methods and provision for impairment of intangible assets
For details of the impairment test method and provision for impairment of intangible assets, please refer toSection 25 “Impairment of long-term assets” under Note V.
25. Impairment of long-term assets
For non-current non-financial assets such as fixed assets, construction in progress, right of use assets, intangibleassets with limited useful life, investment real estate measured at cost and long-term equity investments insubsidiaries, joint ventures and associates, the Group determines whether there are signs of impairment on thebalance sheet date. If the asset shows signs of impairment, the recoverable amount is estimated, and impairment testis conducted. Goodwill, intangible assets with indefinite useful lives and intangible assets that have not yet reachedtheir useful lives are tested annually for impairment regardless of whether there is an indication of impairment.If the impairment test results show that the recoverable amount of an asset is lower than its carrying value, theimpairment provision shall be made and the impairment loss shall be recorded according to the difference. Therecoverable amount is the higher between the net value of the fair value of the asset less the disposal expense andthe present value of the estimated future cash flow of the asset. The fair value of the asset is determined based onthe sales agreement price in fair transactions. Where there is no sales agreement but there is an active market for theasset, the fair value shall be determined according to the buyer’s bid for the asset. Where there is neither salesagreement nor active market for the asset, the fair value of the asset is estimated based on the best informationavailable. Disposal costs include legal costs associated with the disposal of the asset, related taxes, removal costsand direct costs incurred to bring the asset to marketable status. The present value of the expected future cash flowof the asset shall be determined according to the discounted amount of the expected future cash flow generated bythe asset in the process of continuous use and final disposal, which is converted according to the appropriate discountrate. The asset impairment provision is calculated and recognized on a single asset basis. If it is difficult to estimatethe recoverable amount of a single asset, the recoverable amount of the asset group to which the asset belongs shallbe determined. An asset group is the smallest portfolio of assets that can independently generate cash inflows.
For the goodwill presented separately in the financial statements, when tested for impairment, the book valueof goodwill will be apportioned to the asset group or combination of asset groups expected to benefit from thesynergies of the business combination. Where the test results indicate that the recoverable amount of an asset groupor combination of asset groups containing the apportioned goodwill is less than its book value, the correspondingimpairment loss is recognized. The impairment loss amount is first set off against the book value of the goodwillapportioned to the asset group or combination of asset groups and then set off against the book value of other assetsbased on the proportion of the book value of each asset other than goodwill in the asset group or combination ofasset groups.
Once the above asset impairment loss is recognized, it shall not be reversed in subsequent accounting periodsfor the part whose value is restored.
26. Long-term deferred expenses
Long-term unamortized expenses are the expenses that have been incurred but shall be borne in the reportingperiod and subsequent periods for a period of assessment of more than one year. The Group’s long-term amortizedexpenses are mainly for house improvement and project renovation. Long-term amortized expenses are amortizedon a straight-line basis over the expected period of benefit.
27. Contractual liabilities
The contractual liabilities refer to the obligation of the Group to transfer goods to customers for considerationreceived or receivable. If the customer has paid the contractual consideration or the Group has obtained anunconditional right of collection prior to the transfer of goods by the Group to the customer, the Group presents theamount received or receivable as a contractual liability on the date when the actual payment is made by the customeror the payment due date, whichever is earlier. Contractual assets and contractual liabilities under the same contractare presented on a net basis, and contractual assets and contractual liabilities under different contracts are not offset.
28. Employee compensation
(1) Accounting treatment for short-term employee compensation
The employee compensation of the Group includes short-term compensation, post-employment benefits,termination benefits and other long-term employee benefits. Where:
Short-term compensation mainly includes wages, bonuses, allowances and subsidies, employee welfareexpenses, medical insurance premiums, maternity insurance premiums, work-related injury insurance premiums,housing provident funds, union funds and employee education funds, non-monetary benefits, etc. The Grouprecognizes short-term employee compensation actually incurred during the accounting period in which employeesprovide services to the Group as a liability and includes it in current profits and losses or related asset cost. Non-monetary benefits are measured at fair value.
(2) Accounting treatment for post-employment benefits
Post-employment benefits mainly include basic pension insurance, unemployment insurance and annuity. Post-employment benefit plans include defined contribution plans and defined benefit plans. If a defined contributionplan is adopted, the corresponding amount due is included in the relevant asset cost or current profits and losses atthe time of occurrence.
If the employment relationship with the employee is terminated before the expiration of the employee’semployment contract, or a compensation proposal is made to encourage the employee to voluntarily accept thereduction, the employee compensation liabilities arising from termination benefits shall be recognized and includedin current profits and losses when the Group cannot unilaterally withdraw the termination benefits provided as aresult of the termination plan or the reduction proposal, or the Group recognizes the costs associated with thereorganization involving the payment of termination benefits, whichever is earlier. However, if the terminationbenefits cannot be fully paid within 12 months after the end of the annual reporting period, they shall be treated asother long-term employee compensations.
(3) Accounting treatment for termination benefits
Internal employee retirement plans are treated in the same way as the termination benefits mentioned above.The Group will recognize the salary of internal retirees and social insurance premiums to be paid during the periodfrom the date the employee ceases to provide service to the normal retirement date in the current profits and losses(termination benefits) when the conditions for recognition of the estimated liabilities are met.
(4) Accounting treatment for other long-term employee benefits
Other long-term employee benefits provided by the Group to employees that meet the defined contributionplan are accounted for in accordance with the defined contribution plan. Other benefits shall be accounted for inaccordance with the defined benefit plan.
29. Estimated liabilities
An obligation relating to a contingency is recognized as an estimated liability when the following conditionsare met: (1) The obligation is a current obligation undertaken by the Group; (2) The performance of the obligationis likely to result in the outflow of economic benefits; (3) The amount of the obligation can be measured reliably.
On the balance sheet date, estimated liabilities are measured according to the best estimate of expenses requiredto meet the relevant current obligations, taking into account factors such as risks, uncertainties and the time valueof money associated with contingencies.
If all or part of the expenses required to pay off the estimated liabilities are expected to be compensated by athird party, the compensation amount shall be recognized separately as an asset when it is basically determined thatit can be received, and the recognized compensation amount shall not exceed the book value of the estimatedliabilities.
(1) Loss-making contract
A loss-making contract is a contract in which the cost of fulfilling the contractual obligation inevitably exceedsthe expected economic benefit. If the contract to be executed becomes a loss-making contract and the obligationsarising from the loss-making contract meet the conditions for recognition of the above-mentioned estimatedliabilities, the portion of the estimated loss of the contract exceeding the recognized impairment loss (if any) of theunderlying asset of the contract is recognized as an estimated liability.
(2) Reorganization obligation
For a detailed, formal reorganization plan that has been announced to the public, the estimated liability amountis determined on the basis of direct expenses related to the reorganization, subject to meeting the conditions forrecognition of the estimated liabilities described above.
30. Share-based payments
(1) Accounting treatment for share-based payment
Share-based payments are transactions in which equity instruments are granted or liabilities are assumed onthe basis of equity instruments in exchange for services rendered by employees or other parties. The share-basedpayments are divided into equity-settled share-based payment and cash-settled share-based payment.
① Equity-settled share-based payments
Equity-settled share-based payments in exchange for services rendered by employees shall be measured at daysthe fair value of the equity instruments granted to employees. For the equity-settled share-based payment that canonly be vested after services during a waiting period are provided, or required performance conditions are met, theamount of such fair value is calculated on a straight-line basis, based on the best estimate of the number of equityinstruments that can be vested during the waiting period, and is included in the relevant costs or expenses, or ifavailable immediately after grant, included in the relevant costs or expenses on the grant date, increasing capitalreserves accordingly.
On each balance sheet date during the waiting period, the Group makes the best estimate based on the latestfollow-up information such as changes in the number of employees that satisfy vesting conditions, and revises thenumber of equity instruments expected to be vested. The impact of the above estimates is included in the relevantcosts or expenses for the period, and capital reserves are adjusted accordingly.The equity-settled share-based payments in exchange for services rendered by other parties shall be measuredat the fair value of the services on the acquisition date if the fair value of services rendered by other parties can bereliably measured. However, if the fair value of services rendered by other parties cannot be reliably measured, butthe fair value of the equity instruments can be reliably measured, the equity-settled share-based payments shall bemeasured at the fair value of the equity instruments on the acquisition date of the services, and included in therelevant costs or expenses, increasing shareholders’ equity correspondingly.When the fair value of an equity instrument granted cannot be reliably measured, it is measured by the intrinsicvalue of the equity instrument at the date of service acquisition, at each subsequent balance sheet date and at thesettlement date, with changes in intrinsic value recognized in profits or losses for the period.
② Cash-settled share-based payments
A cash-settled share-based payment shall be measured in accordance with the fair value of liability determinedbased on the shares or other equity instruments undertaken by the Group. If the cash-settled share-based paymentcan be vested immediately after granting, it shall be included in the relevant costs or expenses on the grant date,increasing the liabilities correspondingly. For the cash-settled share-based payment that can only be vested afterservices during a waiting period are provided or required performance conditions are met, on each balance sheetdate during the waiting period, the services obtained during the current period are included in the cost or expense atthe fair value of the liabilities assumed by the Group based on the best estimate of the situation of vesting, increasingthe corresponding liabilities correspondingly.
The Group shall, on each balance sheet date and each account date prior to the settlement of the relevantliabilities, re-measure the fair values of the liabilities and include the changes in the current profits and losses.
(2) Accounting treatment for modification and termination of share-based payment plan
When the Group makes a modification to the share-based payment plan, if the modification increases the fairvalue of the equity instrument granted, the increase in services obtained is recognized in accordance with theincrease in the fair value of the equity instrument. The increase in the fair value of equity instruments refers to thedifference between fair values of the equity instruments before and after the modification on the date of modification.If a modification reduces the total fair value of share-based payments or is otherwise unfavorable to the employees,the acquired services continue to be accounted for as if the change never occurs, unless the Group cancels some orall of the equity instruments granted.
If a grant of equity instruments is canceled during the waiting period, the Group treats the cancellation of thegranted equity instruments as accelerated exercise of right and includes the amount to be recognized over theremaining waiting period in the current profits and losses immediately, and recognizes the capital reserve at thesame time. If employees or other parties can choose to meet the non-vesting conditions but have not met theconditions within the waiting period, the Group treats it as cancellation of equity instruments granted.
(3) Accounting treatment for share-based payment transactions involving the Group and shareholders or defacto controllers of the Company
Transactions involving share payments between the Group and shareholders or de facto controllers of theCompany are accounted for in the Group’s consolidated financial statements in accordance with the followingprovisions if either one of the settlement enterprises and receiving enterprise is within the Group, while the otherone is outside the Group:
① If the settlement enterprise settles by its own equity instruments, the share-based payment transaction shall
be treated as the equity-settled share-based payment; otherwise, they shall be treated as the cash-settled share-basedpayment.
If the settlement enterprise is an investor of the enterprise receiving the services, it shall be recognized as along-term equity investment in the enterprise receiving the services according to the fair value of the equityinstrument on the grant date or the fair value of the liability assumed, and the capital reserve (other capital reserve)or liability shall be recognized at the same time.
② If the enterprise receiving the services has no settlement obligation or the equity instrument granted to itsemployees is its own equity instrument, the share-based payment transaction shall be treated as the equity-settledshare-based payment. If the enterprise receiving the services has settlement obligation and the equity instrumentgranted to its employees is not its own equity instrument, the share-based payment transaction shall be treated asthe cash-settled share-based payment.
For the share-based payment transaction occurring among the enterprises within the Group, where theenterprise receiving the services and the settlement enterprise are not the same enterprise, the recognition andmeasurement of the share-based payment transaction in the individual financial statements of the enterprisereceiving the services and the settlement enterprise shall be processed in accordance with the above principles.
31. Revenue
Accounting policies for revenue recognition and measurement disclosed by business types
Revenue is the total inflow of economic benefits arising from the Group’s ordinary activities that would resultin an increase in shareholders’ equity and are unrelated to capital contributions by shareholders. When the contractbetween the Group and the customer meets the following conditions, revenue is recognized when the customerobtains control of the relevant goods (including services, the same below): The parties to the contract have approvedthe contract and undertake to perform their obligations; The contract specifies the rights and obligations of theparties to the contract in relation to the goods transferred or the provision of services; The contract has clear paymentterms related to the transferred goods; The contract is commercial in nature, i.e. the performance of the contract willchange the risk, timing or amount of the Group’s future cash flows; The consideration to which the Group is entitledas a result of the transfer of goods to customers is likely to be recovered. Gaining control of the relevant goodsmeans being able to dominate the use of that goods and derive almost all of the economic benefits from it.
On the commencement date of the contract, the Group identifies the individual performance obligationsexisting in the contract and allocates the transaction price to each individual performance obligation in proportionto the individual selling price of the goods promised by each individual performance obligation. Factors such as
variable consideration, significant financing elements in the contract, non-cash consideration, and considerationpayable to customers are considered in determining the transaction price.For each individual performance obligation in the contract, the Group will recognize the transaction priceallocated to the individual performance obligation in accordance with the performance progress during the relevantperformance period as revenue if one of the following conditions is met: The customer acquires and consumes theeconomic benefits arising from the Group’s performance at the same time as the Group’s performance; Thecustomer can control the goods under construction in the course of the Group’s performance; The goods producedin the course of the Group’s performance have irreplaceable uses and the Group is entitled to receive paymentthroughout the contract period for the cumulative part of the performance completed to date. The performanceprogress is determined by the input or output method, depending on the nature of the goods transferred. When theperformance progress cannot be reasonably determined, and the costs incurred by the Group are expected to becompensated, revenue is recognized at the amount of the costs incurred until the progress of performance can bereasonably determined.
If one of the above conditions is not met, the Group recognizes revenue at the point at which the customerobtains control of the relevant goods at the transaction price apportioned to the individual performance obligation.In determining whether a customer has acquired control of the goods, the Group considers the following indications:
The enterprise has the current right of collection in respect of the goods, that is, the customer has the current paymentobligation in respect of the goods; The enterprise has transferred the legal ownership of the goods to the customer,that is, the customer has the legal ownership of the goods; The enterprise has physically transferred the goods to thecustomer, that is, the customer has physically possessed the goods; The enterprise has transferred the main risks andreturns in the ownership of the goods to the customer, that is, the customer has obtained the main risks and returnsin the ownership of the goods; The customer has accepted the goods; Other indications that the customer has takencontrol of the goods.
Principles for specific revenue recognition:
(1) Domestic sales
Under sales contracts or orders with customers, where it is contractually agreed that the transfer of controloccurs when the relevant products are delivered to the customer’s designated location and confirmed by thecustomer’s signature and acceptance, revenue is recognized when the relevant products are delivered to thecustomer’s designated location and confirmed by the customer’s signature and acceptance.
Under sales contracts or orders with customers, where it is contractually agreed that the transfer of controloccurs when the relevant products are delivered to the customer’s designated location and inspected andcompleted by the customer in accordance with the relevant standards, revenue is recognized when the relevantproducts are delivered to the customer’s designated location and inspected and completed by the customer inaccordance with the relevant standards.
Revenue is recognized when hotel rooms and food and beverage services have been provided and the right toreceive service charges has been acquired.
(2) Overseas sales
Revenue is recognized when the related products are shipped out of the warehouse and undergo customsclearance procedures for export, if the transfer of control occurs under the sales contract or order signed with thecustomer and the contract stipulates that the related products will be shipped out of the warehouse and undergocustoms clearance procedures for export.
Where different operating models for the same type of business involve different revenue recognition and measurement methods: Notapplicable.
32. Contract cost
Incremental costs incurred by the Group to acquire contracts that are expected to be recovered are taken as thecontract acquisition costs and recognized as an asset. However, if the amortization period of the asset does notexceed one year, it is included in the current profits and losses when it occurs.
The cost incurred for the performance of the contract is recognized as an asset if it does not fall within thescope of Accounting Standard for Business Enterprises No. 14 — Revenue (Revised in 2017) and meets thefollowing conditions: ① The costs are directly related to a current or anticipated contract, including direct labor,direct materials, manufacturing expenses (or similar expenses), costs expressly borne by the customer, and othercosts incurred solely as a result of the contract; ② This cost increases the Group’s future resources to meet itsperformance obligations; ③ This cost is expected to be recovered.
Assets related to contract costs are amortized on the same basis as for the recognition of the commodity revenueassociated with the assets and are recognized in current profits and losses.
When the book value of an asset related to contract costs is greater than the difference between: (i) theremaining consideration expected to be received for the transfer of goods related to the asset; and (ii) the estimatedcosts to be incurred for the transfer of the related goods, an allowance for impairment is provided and an assetimpairment loss is recognized. When there is a subsequent change in the factors that impaired the asset in a previousperiod, such that the difference between (i) and (ii) is greater than the book value of the asset, the reversal of theprovision for impairment shall be recognized in current profits and losses, provided that the book value of the assetafter the reversal shall not exceed the book value that would have been determined as of the date of the reversal ifno provision for impairment had been made.
33. Government subsidy
Government subsidy refers to the monetary assets and non-monetary assets that the Group obtains from thegovernment free of charge, excluding the capital invested by the government as an investor with the correspondingowners’ equity. Government subsidies are divided into asset-related government subsidies and income-relatedgovernment subsidies. The Group defines government subsidies obtained for the acquisition or otherwise formationof long-term assets as asset-related government subsidies. Other government subsidies are defined as income-relatedgovernment subsidies. If the government document does not specify the recipients of the subsidies, the subsidiesdivided into asset-related government subsidies and income-related government subsidies in the following way: (1)If the government documents specify the specific project for which the subsidy is targeted, the division shall bemade according to the relative proportion of the disbursement amount forming assets and the disbursement amountincluded in the expenses in the budget of the specific project, and the division proportion shall be reviewed on eachbalance sheet date and changed if necessary; (2) Where the government document only has a general description of
the purpose and no specific project is specified, it shall be regarded as an income-related government subsidy. Fora government subsidy in the form of transfer of monetary assets, the subsidy is measured at the amount received orreceivable. For a government subsidy in the form of transfer of non-monetary assets, it is measured at fair value; ifthe fair value cannot be reliably determinable, the subsidy is measured at nominal amount. Government subsidiesmeasured at nominal amounts are directly included in current profits and losses.The Group usually recognizes and measures government subsidies in accordance with the amount actuallyreceived when they are actually received. However, government subsidies are recognized at the amount receivableif there is evidence that the Group can meet the relevant conditions specified in the financial support policy at theend of the period and the Group is expected to receive the financial support funds. Government subsidies measuredat the amounts receivable shall also meet the following conditions: (1) The amount of the receivable subsidies hasbeen confirmed by the competent government department, or can be reasonably calculated according to the relevantprovisions of the officially issued measures for the management of financial funds, and there is no significantuncertainty in the estimated amount; (2) It is based on the financial support projects and financial fund managementmeasures officially issued by the local financial department and actively disclosed in accordance with the provisionsof the Regulations on the Disclosure of Government Information, and the management measures should be inclusive(that is, any enterprise that meets the prescribed conditions can apply), rather than specifically formulated forspecific enterprises; (3) The relevant grant approval has clearly promised the disbursement period, and thedisbursement of the amount is guaranteed by the corresponding financial budget, so it can be reasonably guaranteedthat it can be received within the specified period; (4) Other relevant conditions (if any), to be fulfilled according tothe specific circumstances of the Group and the subsidy.Asset-related government subsidies are recognized as deferred revenues and included in the current profits andlosses over the useful life of the related assets in accordance with a reasonable and systematic method. Income-related government subsidies that compensate the future costs, expenses or losses are recorded as deferred incomeand recognized in current profits and losses, or deducted against related costs in the period in which the related costs,expenses or losses are recognized; Income-related government subsidies that compensate the incurred expenses orlosses are included directly in the current profits and losses.For government subsidies that contain both parts related to assets and parts related to income, accountingtreatments shall be made separately for different parts. If it is difficult to distinguish, it shall be classified as theincome-related government subsidy.
Government subsidies related to ordinary activities are recorded in other income in accordance the substanceof economic operations. Government subsidies unrelated to daily activities are included in non-operating revenueand expense.In case a recognized government subsidy is required to be returned, if there is a deferred income balance, thebook balance of the deferred income is reduced and the excess is recognized in the current profits and losses or (inthe case of government subsidies related to assets whose book value is reduced by the initial recognition of therelated asset) the book value of the asset is adjusted. In other cases, it is recognized directly in the current profitsand losses.
34. Deferred income tax assets/deferred income tax liabilities
(1) Current income tax
The current income tax liabilities or assets generated in the current period and previous periods are measuredon the balance sheet date in accordance with the expected payable or refunded income tax amount calculatedaccording to the tax law. The taxable income amount on which the current income tax expense is calculated is basedon the corresponding adjustment of the pre-tax accounting profit of the reporting period in accordance with therelevant provisions of the tax law.
(2) Deferred income tax assets and deferred income tax liabilities
The deferred income tax assets and deferred income tax liabilities can be determined with the balance sheetliability method, based on the difference between the book value of certain assets and liabilities and the tax basis,as well as the temporary difference between the tax basis and the book value of the items not recognized as assetsand liabilities but whose tax basis can be determined according to the tax law.
For taxable temporary differences relating to the initial recognition of goodwill and the initial recognition ofassets or liabilities arising from transactions that are neither a business combination nor affect accounting profit andtaxable income (or deductible losses) at the time of occurrence, the relevant deferred tax liabilities are not recognized(except for individual transactions in which the initial recognition of assets and liabilities results in equal amountsof taxable temporary differences and deductible temporary differences). In addition, for taxable temporarydifferences related to investments in subsidiaries, associates and joint ventures, deferred tax liabilities are notrecognized if the Group is able to control the timing of the reversal of the temporary difference and it is likely thatthe temporary difference will not be reversed in the foreseeable future. Subject to the above exceptions, the Grouprecognizes all other deferred tax liabilities arising from taxable temporary differences.
For deductible temporary differences relating to the initial recognition of assets or liabilities arising fromtransactions that are neither a business combination nor affect accounting profit and taxable income (or deductiblelosses) at the time of occurrence, the relevant deferred tax assets are not recognized (except for individualtransactions in which the initial recognition of assets and liabilities results in equal amounts of taxable temporarydifferences and deductible temporary differences). For deductible temporary differences associated withinvestments in subsidiaries, associates and joint ventures, the relevant deferred tax asset is recognized if it is notlikely that the temporary differences will reverse in the foreseeable future and it is not likely that taxable incomewill be available against which the deductible temporary differences can be utilized in the future. Subject to theabove exceptions, the Group recognizes other deferred income tax assets arising from deductible temporarydifferences to the extent that it is probable that taxable income will be available against which deductible temporarydifferences can be utilized.
For the deductible losses and tax credits that can be carried forward to future years, the Group recognizes thecorresponding deferred tax assets to the extent that it is probable that future taxable income will be available againstwhich the deductible losses and tax credits can be utilized.
On the balance sheet date, deferred income tax assets and deferred income tax liabilities are measured at thetax rates that are expected to apply in the period in which the asset is recovered or the liability is settled accordingto the tax law.
On the balance sheet date, the Group reviews the book value of deferred income tax assets. If no sufficienttaxable income is probably obtained in the future to offset the benefits of deferred income tax assets, the book valueof the deferred income tax assets shall be written down. When it is probable to obtain sufficient taxable incometaxes, such write-down amount shall be reversed.
(3) Income tax expense
Income tax expenses include current income tax expenses and deferred income tax expenses.
Except for current income tax and deferred income tax related to transactions and events recognized as othercomprehensive income or directly included in shareholders’ equity, and the book value of deferred income taxadjusted goodwill resulting from business combination, the remaining current income tax and deferred income taxexpenses or gains are included in current profits and losses.
(4) Offsetting of income tax
If the Group has the legal right to settle on a net basis, and intends to settle on a net basis or acquire assets andsettle liabilities simultaneously, the current income tax assets and current income tax liabilities are presented on anet basis after offsetting.
If the Group has a legally enforceable right to settle current income tax assets and liabilities on a net basis; andthe deferred income tax assets and liabilities are related to the income taxes levied by the same taxation authorityon either the same taxable entity or different taxable entities, which intend either to settle current income tax assetsand liabilities on a net basis or to realize the assets and settle the liabilities simultaneously, in each future period inwhich significant amounts of deferred income tax assets and liabilities are expected to be reversed; the deferredincome tax assets and liabilities can be offset and presented on a net basis.
35. Leases
A lease is a contract in which the Group assigns or acquires the right to control the use of one or more identifiedassets for a certain period of time in exchange for or payment of consideration. On the contract inception date, theGroup assesses whether the contract is a lease or contains a lease.
(1) Accounting for leases as lessee
The Group’s lease assets are mainly housing and buildings.
① Initial measurement
On the date of commencement of the lease term, the Group recognizes the right to use the lease asset duringthe lease term as a right of use asset and recognizes the present value of the outstanding lease payments as a leaseliability, except for short-term leases and low value asset leases. When calculating the present value of leasepayments, the interest rate implicit in the lease is used as the discount rate. If the interest rate implicit in the leasecannot be determined, the lessor’s incremental borrowing rate is used as the discount rate.
② Subsequent measurement
The Group shall depreciate the right of use assets in accordance with the relevant depreciation provisions ofAccounting Standard for Business Enterprises No. 4 — Fixed Assets (see Section 24 “Fixed assets” under Note Vfor details). If the ownership of the leased asset can be reasonably determined at the end of the lease term, the Groupshall depreciate the leased asset during the remaining useful life. Where it is unable to reasonably determine the
ownership of the leased asset at the end of the and lease term, the Group shall make depreciation provision over thelease term or the remaining useful life of the leased asset, whichever is shorter.The Group calculates the interest expense on lease liabilities for each period of the lease term at a fixed periodicrate, which is included in the current profits and losses or the related asset cost. Variable lease payments that arenot included in the measurement of the lease liability are recognized in current profits and losses or the related assetcost when they are actually incurred.After the commencement date of the lease term, when there is a change in the substantive fixed paymentamount, a change in the amount expected to be payable for the guaranteed residual value, a change in the index orrate used to determine the lease payment amount, or a change in the evaluation result or actual exercise of thepurchase option, renewal option or termination option, the Group remeasures the lease liability at the present valueof the changed lease payment amount and adjusts the carrying value of the right-of-use asset accordingly. If thebook value of the right-of-use asset has been reduced to zero but the lease liability is subject to further reduction,the Group recognizes the remaining amount in current profits and losses.
③ Short-term leases and leases of low-value assets
For short-term leases (leases with a lease term of not more than 12 months since the commencement date ofthe lease) and low-value asset leases (leases with a value of less than RMB 40,000 or USD 5,000 when the individualleased asset is a brand new asset), the Group adopts a simplified approach whereby the right of use assets and leaseliabilities are not recognized and the lease payments are recognized in the relevant asset cost or current profits andlosses in accordance with the straight-line method or other systematic and reasonable methods during the variousperiods of the lease term.
(2) Accounting for leases as lessor
On the inception date of the lease, the Group classifies the lease as a finance lease and an operating lease basedon the substance of transaction. A finance lease is a lease that transfers substantially all the risks and returnsassociated with ownership of the leased asset. An operating lease is a lease other than a finance lease.
① Operating lease
Lease receipts under operating leases are recognized as rental income on a straight-line basis over the respectiveperiods of the lease term. Variable lease payments acquired in connection with operating leases that are not includedin the lease receipts are recognized in current profits and losses when they are actually incurred.
② Finance lease
The Group recognizes finance lease receivables and derecognizes finance lease assets on the commencementdate of the lease term. Finance lease receivables are initially measured at the net lease investment (the sum of theunsecured balance and the unreceived lease proceeds on the commencement date of the lease term at the presentvalue discounted with the intrinsic interest rate of the lease), and interest income is recognized during the lease termat a fixed periodic interest rate. Variable lease payments obtained by the Group which are not included in the netlease investment measurement are recognized in current profits and losses when they are actually incurred.
36. Other significant accounting policies and accounting estimates
Repurchase of shares
Consideration and transaction costs paid in share repurchases reduce shareholders’ equity and no profits orlosses is recognized when shares of the Company are repurchased, transferred or cancelled.For the transfer of treasury shares, the difference between the amount actually received and the book value oftreasury shares shall be included in the capital reserve. If the capital reserve is insufficient for deduction, the surplusreserve and undistributed profits shall be deducted. For the cancellation of treasury shares, the share capital shall bereduced according to the par value of the shares and the number of shares cancelled, and the difference between thebook balance and the par value of treasury shares shall be charged to the capital reserve. If the capital reserve isinsufficient for deduction, the surplus reserve and undistributed profits shall be deducted.
37. Changes in significant accounting policies and accounting estimates
(1) Changes in significant accounting policies
□Applicable ?Not applicable
(2) Changes in significant accounting estimates
□Applicable ?Not applicable
(3) First-time implementation of the new accounting standard in 2024 to adjust relevant items in the financial statements atthe beginning of the year of first-time implementation
□Applicable ?Not applicable
38. Others
None.VI. Taxation
1. Main tax types and tax rates
| Tax type | Taxation basis | Tax rate |
| Value-added tax | Value added from sales of goods or rendering of services | 13%, 9%, 6%, 5%, 3% |
| Consumption tax | Quantity-based collection and price-based collection | Price-based collection: 20%, 10%, 15%; Quantity-based collection: RMB 0.5 per 0.5kg |
| Urban maintenance and construction tax | Amount of turnover tax payables | 7%, 5%, 1% |
| Enterprise Income Tax | Taxable income | 15%, 16.5%, 20%, 25% |
| Education surcharge | Amount of turnover tax payables | 3% |
| Local education surcharge | Amount of turnover tax payables | 2% |
If there are taxable entities with different corporate income tax rates, disclose the description of the situation
| Taxpayer | Income tax rate |
| Yunnan Baiyao Group Co., Ltd. | 15% |
| Yunnan Baiyao Group Medicine E-commerce Co., Ltd. | 15% |
| Yunnan Institute of Materia Medica | 15% |
| Yunbaiyao Zhengwu Technology (Shanghai) Co., Ltd. | 15% |
| Yunnan Baiyao Group Dali Pharmaceutical Co., Ltd. | 15% |
| Yunnan Baiyao Group Health Products Co., Ltd. | 15% |
| Yunnan Baiyao Group Traditional Chinese Medicine Resources Co., Ltd. | 15% |
| Yunnan Baiyao Group Lijiang Pharmaceutical Co., Ltd. | 15% |
| Yunnan Baiyao Group Wenshan Qihua Co., Ltd. | 15% |
| Yunnan Baiyao Group Wuding Pharmaceutical Co., Ltd. | 15% |
| Yunnan Pharmaceutical Co., Ltd. | 15% |
| Yunnan Pharmaceutical Yuxi Sales Co., Ltd. | 15% |
| Yunnan Pharmaceutical Xingda Co., Ltd. | 15% |
| Yunnan Pharmaceutical Baoshan Drug Development Co., Ltd. | 15% |
| Yunnan Pharmaceutical Technology Co., Ltd. | 15% |
| Yunnan Pharmaceutical Sanfa Co., Ltd. | 15% |
| Yunnan Pharmaceutical Dehong Development Co., Ltd. | 15% |
| Yunnan Pharmaceutical Xihui Co., Ltd. | 15% |
| Yunnan Pharmaceutical Qujing Co., Ltd. | 15% |
| Yunnan Baiyao Pharmacy Co., Ltd. | 15% |
| Yunnan Pharmaceutical Wanhe Co., Ltd. | 15% |
| Yunnan Pharmaceutical Tianma Co., Ltd. | 15% |
| YNBY International Limited | 16.50% |
| Yunbaiyao Hong Kong Co., Limited | 16.50% |
| Beijing Ruiyou Testing Technology Co., Ltd. | 20% |
| Yunnan Pharmaceutical Jiayuan Co., Ltd. | 20% |
| Yunnan Pharmaceutical Xiongyi Co., Ltd. | 20% |
| Yunnan Pharmaceutical Tianfu Dahua Co., Ltd. | 20% |
| Yunnan Pharmaceutical Lincang Sales Co., Ltd. | 20% |
| Yunnan Pharmaceutical Diqing Development Co., Ltd. | 20% |
| Yunnan Pharmaceutical Pu’er Co., Ltd. | 20% |
| Yunnan Pharmaceutical Dali Development Co., Ltd. | 20% |
| Lijiang Yunquan Biological Development Co., Ltd. | 20% |
| Yunnan Baiyao Tiancui Business Management Co., Ltd. | 20% |
| Beijing Yunzhi Health Management Co., Ltd. | 20% |
| Shanghai Wenshu Health Management Co., Ltd. | 20% |
| Yunnan Baiyao Yunzhen International Trade Co., Ltd. | 20% |
| Kunming Yunzhen Medical Technology Co., Ltd. | 20% |
| Shanghai Yunyao Oral Medical Technology Co., Ltd. | 20% |
| Yunnan Fengqing Tea Plant | 20% |
| Tianjin Yunshuda Comprehensive Clinic Co., Ltd. | 20% |
| Yunnan Tianzheng Testing Technology Co., Ltd. | 20% |
| Shanghai Yunzhen Medical Technology Co., Ltd. | 20% |
| Yunnan Baiyao Group Wuxi Pharmaceutical Co., Ltd. | 15% |
| Yunnan Baiyao Group Beijing Co., Ltd. | 20% |
| Yunnan Baiyao Group Teayield Lincang Manor Co., Ltd. | 15% |
| Shanghai Yunzhen Clinic Co., Ltd. | 20% |
| Shanghai Yunzhenni Medical Beauty Clinic Co., Ltd. | 20% |
| Shanghai Yunpu Medical Technology Co., Ltd. | 20% |
| Yunnan Baiyao Holdings Co., Ltd. | 20% |
| Shanghai Yunyi Clinic Co., Ltd. | 20% |
| Shanghai Yunyi Medical Technology Co., Ltd. | 20% |
| Beijing Yunzhen Medical Beauty Clinic Co., Ltd. | 20% |
| Beijing Branch of Yunnan Baiyao Group Co., Ltd. | 20% |
| Shanghai Hanshi Health Consulting Co., Ltd. | 20% |
| Xingzhong Digital Intelligence TCM Service Co., Ltd of Yunnan Baiyao Group | 20% |
| Yunnan Yunyao Nuxiang Co., Ltd. | 20% |
| Yunhe Pharmaceutical (Tianjin) Co., Ltd. | 20% |
| Hangzhou Shanqi Health Industry Co., Ltd. | 20% |
| Yunnan Pharmaceutical Dali Co., Ltd. | 20% |
| Yunnan Pharmaceutical Zhaotong Co., Ltd. | 20% |
2. Preferential tax treatment
(1) Yunnan Baiyao Group Co., Ltd, Yunnan Baiyao Group Medicine E-commerce Co., Ltd, YunnanPharmaceutical Co., Ltd, Yunnan Pharmaceutical Technology Co., Ltd, Yunnan Pharmaceutical Yuxi Sales Co.,Ltd, Yunnan Pharmaceutical Sanfa Co., Ltd, Yunnan Pharmaceutical Xingda Co., Ltd, Yunnan PharmaceuticalWanhe Co., Ltd, Yunnan Pharmaceutical Baoshan Drug Development Co., Ltd, Yunnan Baiyao Group HealthProducts Co., Ltd, Yunnan Baiyao Group Lijiang Pharmaceutical Co., Ltd, Yunnan Baiyao Group Wenshan QihuaCo., Ltd, Yunnan Baiyao Pharmacy Co., Ltd, Yunnan Baiyao Group Wuding Pharmaceutical Co., Ltd, YunnanBaiyao Group Dali Pharmaceutical Co., Ltd, Yunnan Pharmaceutical Tianma Co., Ltd, Yunnan PharmaceuticalDehong Development Co., Ltd, Yunnan Pharmaceutical Xihui Co., Ltd, and Yunnan Pharmaceutical Qujing Co.,Ltd enjoy the preferential tax treatment for the Western Development and pay the enterprise income tax at the taxrate of 15%.
(2) Yunnan Institute of Materia Medica, Yunbaiyao Zhengwu Technology (Shanghai) Co., Ltd, Yunnan BaiyaoGroup Traditional Chinese Medicine Resources Co., Ltd, and Yunnan Baiyao Group Wuxi Pharmaceutical Co., Ltdenjoy the preferential tax treatment for high-tech enterprises and pay the enterprise income tax at the tax rate of15%.
(3) For Yunnan Baiyao Group Tai’an Biotechnology Industry Co., Ltd, the primary processing of agriculturalproducts is exempt from enterprise income tax, and the income other than that is taxed at 25%.
(4) According to the Announcement of the General Administration of Taxation of the Ministry of Finance onthe Further Implementation of the Preferential Income Tax Policy for Small and Micro Enterprises (Finance andTaxation [2022] No. 13), “the part of the annual taxable income of small and micro profit enterprises exceedingRMB 1 million but not exceeding RMB 3 million shall be included in the taxable income at a reduced rate of 25%,and the enterprise income tax shall be paid at a tax rate of 20%. The period of implementation of this announcementis from January 1, 2022 to December 31, 2024,” the Announcement of the General Administration of Taxation ofthe Ministry of Finance on Preferential Income Tax Policies for Small and Micro Enterprises and IndividualIndustrial and Commercial Households (Finance and Taxation [2023] No. 6), “the part of the annual taxable incomeof small and micro profit enterprises that does not exceed RMB 1 million shall be included in the taxable income ata reduced rate of 25%, and the enterprise income tax shall be paid at a tax rate of 20%. The period of enforcementof this Announcement is from January 1, 2023 to December 31, 2024,” and the Announcement of the GeneralAdministration of Taxation of the Ministry of Finance on Tax Policies for Further Supporting the Development ofSmall and Micro Enterprises and Individual Industrial and Commercial Enterprises (Finance and Taxation [2023]
No. 12), “For small, low-profit enterprises, the taxable income amount shall be calculated at a reduced rate of 25%,and the enterprise income tax shall be paid at a tax rate of 20%. The policy shall be continued until December 31,2027.” Thirty-five companies, including Beijing Ruiyou Testing Technology Co., Ltd and Yunnan PharmaceuticalJiayuan Co., Ltd, pay enterprise income tax at a tax rate of 20% according to this policy.
3. Others: None.
VII. Notes to Items in Consolidated Financial Statements
1. Cash and bank balance
Unit: RMB
| Item | Closing balance | Opening balance |
| Cash on hand | 156,115.36 | 258,600.92 |
| Bank deposit | 14,632,093,549.56 | 14,132,709,154.14 |
| Other cash and bank balance | 87,313,866.43 | 85,375,321.61 |
| Total | 14,719,563,531.35 | 14,218,343,076.67 |
| Including: Total amount of money deposited overseas | 139,023,398.61 | 190,267,321.90 |
Other explanations: None.
2. Financial assets held for trading
Unit: RMB
| Item | Closing balance | Opening balance |
| Financial assets at fair value through profits or losses | 1,046,815,045.34 | 149,366,687.56 |
| Including: | ||
| Investment in debt instruments | ||
| Investment in equity instruments | 142,160,745.34 | 144,766,687.56 |
| Others | 904,654,300.00 | 4,600,000.00 |
| Total | 1,046,815,045.34 | 149,366,687.56 |
Other explanations: None.
3. Notes receivable
(1) Notes receivable by type
Unit: RMB
| Item | Closing balance | Opening balance |
| Banker’s acceptance bill | 320,572,424.86 | 227,542,572.56 |
| Domestic letter of credit | 25,500,000.00 | |
| Total | 346,072,424.86 | 227,542,572.56 |
(2) Disclosure by provision for bad debts
Unit: RMB
| Category | Closing balance | Opening balance | ||||||||
| Book balance | Provision for bad debts | Book value | Book balance | Provision for bad debts | Book value | |||||
| Amount | Proportion | Amount | Provision proportion | Amount | Proportion | Amount | Provision proportion | |||
| Including: | ||||||||||
| Bills receivable with provision for bad debts by portfolio | 346,072,424.86 | 100.00% | 346,072,424.86 | 227,542,572.56 | 100.00% | 227,542,572.56 | ||||
| Including: | ||||||||||
| Banker’s acceptance bill | 320,572,424.86 | 92.63% | 320,572,424.86 | 227,542,572.56 | 100.00% | 227,542,572.56 | ||||
| Domestic letter of credit | 25,500,000.00 | 7.37% | 25,500,000.00 | |||||||
| Total | 346,072,424.86 | 100.00% | 346,072,424.86 | 227,542,572.56 | 100.00% | 227,542,572.56 | ||||
Provision for bad debts made on portfolio basis:
Unit: RMB
| Name | Closing balance | ||
| Book balance | Provision for bad debts | Provision proportion | |
| Banker’s acceptance bill | 320,572,424.86 | ||
| Domestic letter of credit | 25,500,000.00 | ||
| Total | 346,072,424.86 | ||
Explanation on the basis for determining the portfolio: None.If provision was made for bad debts of notes receivable in accordance with the general expected credit loss model:
□Applicable ?Not applicable
(3) Provision for bad debts accrued, recovered or reversed during the reporting period: None.
(4) Notes receivable pledged by the Company at the end of the reporting period: None.
(5) Notes receivable endorsed or discounted by the Company, which were not yet due on the balance sheetdate as at the end of the reporting period
Unit: RMB
| Item | Amount derecognized at the end of the period | Amount not derecognized at the end of the period |
| Banker’s acceptance bill | 5,964,981.45 | |
| Domestic letter of credit | ||
| Total | 5,964,981.45 |
(6) Actual write-off of notes receivable for the period: None.
4. Accounts receivable
(1) Disclosure of accounts receivable by aging
Unit: RMB
| Aging | Closing book balance | Opening book balance |
| Within 1 year (inclusive of 1 year) | 9,841,385,438.50 | 9,849,981,025.64 |
| 1 to 2 years | 998,675,101.32 | 830,787,332.12 |
| 2 to 3 years | 149,264,417.35 | 86,210,266.13 |
| Above 3 years | 39,100,926.65 | 33,448,661.91 |
| Total | 11,028,425,883.82 | 10,800,427,285.80 |
(2) Disclosure by provision for bad debts
Unit: RMB
| Category | Closing balance | Opening balance | ||||||||
| Book balance | Provision for bad debts | Book value | Book balance | Provision for bad debts | Book value | |||||
| Amount | Proportion | Amount | Provision proportion | Amount | Proportion | Amount | Provision proportion | |||
| Accounts receivable with provision for bad debts on individual basis | 5,666,188.00 | 0.05% | 5,666,188.00 | 100.00% | 7,404,800.00 | 0.07% | 7,404,800.00 | 100.00% | ||
| Including: | ||||||||||
| Accounts receivable with provision for bad debts on individual basis | 5,666,188.00 | 0.05% | 5,666,188.00 | 100.00% | 7,404,800.00 | 0.07% | 7,404,800.00 | 100.00% | ||
| Accounts receivable with provision for bad debts on portfolio basis | 11,022,759,695.82 | 99.95% | 917,302,225.19 | 8.32% | 10,105,457,470.63 | 10,793,022,485.80 | 99.93% | 826,852,038.59 | 7.66% | 9,966,170,447.21 |
| Including: | ||||||||||
| Aging portfolio | 11,022,759,695.82 | 99.95% | 917,302,225.19 | 8.32% | 10,105,457,470.63 | 10,793,022,485.80 | 99.93% | 826,852,038.59 | 7.66% | 9,966,170,447.21 |
| Total | 11,028,425,883.82 | 100.00% | 922,968,413.19 | 8.37% | 10,105,457,470.63 | 10,800,427,285.80 | 100.00% | 834,256,838.59 | 7.72% | 9,966,170,447.21 |
Provision for bad debts made on individual basis:
Unit: RMB
| Name | Opening balance | Closing balance | ||||
| Book balance | Provision for bad debts | Book balance | Provision for bad debts | Provision proportion | Reason for provision | |
| Ningbo Qingbing Biotechnology Co., Ltd. | 5,666,188.00 | 5,666,188.00 | 7,404,800.00 | 7,404,800.00 | 100.00% | The possibility of recovery is minimal |
| Total | 5,666,188.00 | 5,666,188.00 | 7,404,800.00 | 7,404,800.00 | ||
Provision for bad debts made on portfolio basis:
Unit: RMB
| Name | Closing balance | ||
| Book balance | Provision for bad debts | Provision proportion | |
| Aging portfolio | 11,022,759,695.82 | 917,302,225.19 | 8.32% |
| Total | 11,022,759,695.82 | 917,302,225.19 | |
Explanation on the basis for determining the portfolio: None.If provision was made for bad debts of accounts receivable in accordance with the general expected credit loss model:
□Applicable ?Not applicable
(3) Provision for bad debts accrued, recovered or reversed during the reporting periodProvision for bad debts made during the reporting period:
Unit: RMB
| Category | Opening balance | Changes in amount for the period | Closing balance | |||
| Provision | Recovery or reversal | Write-off | Others | |||
| Aging portfolio | 826,852,038.59 | 90,450,186.60 | 917,302,225.19 | |||
| Accounts receivable with provision for bad debts on individual basis | 7,404,800.00 | 1,738,612.00 | 5,666,188.00 | |||
| Total | 834,256,838.59 | 90,450,186.60 | 1,738,612.00 | 0.00 | 0.00 | 922,968,413.19 |
Among them, the important amount of recovery or reversal of provision for bad debt for the period: None.
(4) Actual write-off of accounts receivable for the period: None.
(5) Top five customers with closing balance of accounts receivable and contractual assets summarized bydebtor
Unit: RMB
| Entity name | Closing balance of accounts receivable | Closing balance of contractual assets | Closing balance of accounts receivable and contractual assets | Percentage of total of closing balance of accounts | Closing balance of provision for bad debt of accounts receivable and provision for impairment of contractual assets |
| receivable and contractual assets | |||||
| Customer A | 579,199,157.84 | 579,199,157.84 | 5.25% | 29,047,575.78 | |
| Customer B | 517,022,973.03 | 517,022,973.03 | 4.69% | 25,851,148.65 | |
| Customer C | 502,808,431.77 | 502,808,431.77 | 4.56% | 108,369,219.66 | |
| Customer D | 455,792,184.11 | 455,792,184.11 | 4.13% | 45,957,928.05 | |
| Customer E | 353,041,718.38 | 353,041,718.38 | 3.20% | 82,687,528.92 | |
| Total | 2,407,864,465.13 | 2,407,864,465.13 | 21.83% | 291,913,401.06 |
5. Accounts receivable financing
(1) Accounts receivable financing by type
Unit: RMB
| Item | Closing balance | Opening balance |
| Banker’s acceptance bill | 1,140,931,312.92 | 1,081,485,346.18 |
| Domestic letter of credit | 582,876,402.63 | 509,264,464.56 |
| Total | 1,723,807,715.55 | 1,590,749,810.74 |
(2) Disclosure by provision for bad debts: None.
(3) Provision for bad debts accrued, recovered or reversed during the reporting period: None.
(4) Accounts receivable financing pledged by the Company at the end of the reporting period: None.
(5) Accounts receivable financing endorsed or discounted by the Company, which were not yet due on thebalance sheet date as at the end of the reporting period
Unit: RMB
| Item | Amount derecognized at the end of the period | Amount not derecognized at the end of the period |
| Banker’s acceptance bill | 5,014,471,087.65 | |
| Domestic letter of credit | 428,749,627.34 | |
| Total | 5,443,220,714.99 |
(6) Actual write-off of accounts receivable financing for the period: None.
(7) Changes in accounts receivable financing and changes in fair value: None.
(8) Other explanations: None.
6. Other receivables
Unit: RMB
| Item | Closing balance | Opening balance |
| Dividends receivable | 272,906,986.36 | 4,531,100.00 |
| Other receivables | 92,054,986.03 | 99,519,609.53 |
| Total | 364,961,972.39 | 104,050,709.53 |
(1) Interest receivable: None.
(2) Dividends receivable
1) Dividends receivable by type
Unit: RMB
| Project (or investee) | Closing balance | Opening balance |
| Jacobson Pharma Corporation Limited | 4,531,100.00 | |
| Shanghai Pharmaceuticals Holding Co., Ltd. | 272,906,986.36 | |
| Total | 272,906,986.36 | 4,531,100.00 |
2) Major dividends receivable aged over one year: None.
3) Disclosure by provision for bad debts
□Applicable ?Not applicable
4) Provision for bad debts accrued, recovered or reversed during the reporting period: None.
5) Actual write-off of dividends receivable for the period: None.
(3) Other receivables
1) Other receivables by nature
Unit: RMB
| Nature of payment | Book balance at the end of the reporting period | Book balance at the beginning of the reporting period |
| Deposits and guarantees | 271,086,306.89 | 292,908,411.96 |
| Petty cash | 14,514,146.62 | 12,098,577.52 |
| Others | 293,308,162.54 | 286,715,486.83 |
| Borrowings | 6,177,211.78 | 6,777,211.78 |
| Total | 585,085,827.83 | 598,499,688.09 |
2) Disclosure by aging
Unit: RMB
| Aging | Book balance at the end of the reporting period | Book balance at the beginning of the reporting period |
| Within 1 year (inclusive of 1 year) | 76,290,677.20 | 76,994,145.16 |
| 1 to 2 years | 23,680,741.28 | 24,492,402.85 |
| 2 to 3 years | 101,922,421.37 | 101,816,008.74 |
| Above 3 years | 383,191,987.98 | 395,197,131.34 |
| Total | 585,085,827.83 | 598,499,688.09 |
3) Disclosure by provision for bad debts
?Applicable □Not applicableProvision for bad debts in accordance with the general expected credit loss model:
Unit: RMB
| Provision for bad debts | Phase I | Phase II | Phase III | Total |
| Expected credit losses for the next 12 months | Lifetime ECL (not credit-impaired) | Lifetime ECL (credit-impaired) | ||
| Balance as of January 1, 2024 | 228,060,024.02 | 270,920,054.54 | 498,980,078.56 | |
| Balance as of January 1, 2024 in the current period | ||||
| Current provision | 340,620.00 | 340,620.00 | ||
| Current reversal | 6,289,856.76 | 6,289,856.76 | ||
| Balance at of June 30, 2024 | 221,770,167.26 | 271,260,674.54 | 493,030,841.80 |
Basis for classification of phases and percentage of provision for bad debts: None.Changes in book balance with significant changes in loss reserves in the current period
□Applicable ?Not applicable
4) Provision for bad debts accrued, recovered or reversed during the reporting period
Provision for bad debts during the reporting period:
Unit: RMB
| Category | Opening balance | Changes in amount for the period | Closing balance | |||
| Provision | Recovery or reversal | Write-off | Others | |||
| Other accounts receivable with provision for bad debts on portfolio basis by credit risk characteristics | 498,980,078.56 | 960,487.19 | 6,909,723.95 | 493,030,841.80 | ||
| Total | 498,980,078.56 | 960,487.19 | 6,909,723.95 | 493,030,841.80 | ||
Among them, the important amount of reversal or recovery of provision for bad debt for the period: None.
5) Actual write-off of other receivables for the period: None.
6) Top five customers with closing balance of other receivables summarized by debtor
Unit: RMB
| Entity name | Nature of payment | Closing balance | Aging | Percentage of total of closing balance of other receivables | Closing balance of provision for bad debt |
| Entity A | Deposits and guarantees | 100,000,000.00 | Above 3 years | 17.09% | 100,000,000.00 |
| Entity B | Deposits and guarantees | 30,000,000.00 | Above 3 years | 5.13% | 30,000,000.00 |
| Entity C | Deposits and guarantees | 18,000,000.00 | Above 3 years | 3.08% | 18,000,000.00 |
| Entity D | Deposits and guarantees | 9,702,000.00 | 2 to 3 years | 1.66% | 5,821,200.00 |
| Entity E | Deposits and guarantees | 9,500,000.00 | Above 3 years | 1.62% | 9,500,000.00 |
| Total | 167,202,000.00 | 28.58% | 163,321,200.00 |
7) Those reported as other receivables due to centralized fund management: None.
7. Prepayments
(1) Prepayments by aging
Unit: RMB
| Aging | Closing balance | Opening balance | ||
| Amount | Proportion | Amount | Proportion | |
| Within 1 year | 272,218,145.20 | 88.03% | 274,935,247.83 | 88.04% |
| 1 to 2 years | 29,355,426.17 | 9.49% | 31,179,366.00 | 9.98% |
| 2 to 3 years | 2,865,167.44 | 0.93% | 2,366,049.64 | 0.76% |
| Above 3 years | 4,783,946.25 | 1.55% | 3,818,063.54 | 1.22% |
| Total | 309,222,685.06 | 312,298,727.01 | ||
Explanation on why prepayments with aging of more than 1 year and an important amount not settled in time: None.
(2) Top five suppliers with closing balance of prepayment summarized by payee
| Series No. | Entity name | Book balance | Proportion in prepayments (%) |
| 1 | Supplier A | 57,097,512.00 | 18.46% |
| 2 | Supplier B | 10,457,050.72 | 3.38% |
| 3 | Supplier C | 10,277,234.50 | 3.32% |
| 4 | Supplier D | 9,181,015.15 | 2.97% |
| 5 | Supplier E | 7,399,634.16 | 2.39% |
| Total | 94,412,446.53 | 30.53% | |
Other explanations: None.
8. Inventories
Did the Company need to comply with the disclosure requirements of the real estate industry: No.
(1) Categories of inventories
Unit: RMB
| Item | Closing balance | Opening balance | ||||
| Book balance | Provision for decline in value of inventories or provision for impairment of contract fulfilment costs | Book value | Book balance | Provision for inventory impairment or provision for impairment of contract performance costs | Book value | |
| Raw materials | 1,556,678,122.35 | 48,190,168.24 | 1,508,487,954.11 | 1,850,907,681.12 | 71,368,550.13 | 1,779,539,130.99 |
| Work in process | 208,274,907.52 | 208,274,907.52 | 192,411,841.66 | 192,411,841.66 | ||
| Finished goods | 4,193,814,378.67 | 55,452,145.59 | 4,138,362,233.08 | 4,444,660,840.07 | 67,539,262.09 | 4,377,121,577.98 |
| Consumptive biological assets | 26,863,773.82 | 26,863,773.82 | 28,031,085.47 | 28,031,085.47 | ||
| Materials outsourced for processing | 186,319.48 | 186,319.48 | 185,148.88 | 185,148.88 | ||
| Packaging materials and low value consumables | 107,855,253.58 | 1,971,051.39 | 105,884,202.19 | 67,439,762.34 | 2,533,723.65 | 64,906,038.69 |
| Total | 6,093,672,755.42 | 105,613,365.22 | 5,988,059,390.20 | 6,583,636,359.54 | 141,441,535.87 | 6,442,194,823.67 |
(2) Data sources for inventory recognition: None.
(3) Provision for inventory impairment or provision for impairment of contract performance costs
Unit: RMB
| Item | Opening balance | Increase in the current period | Decrease in the current period | Closing balance | ||
| Provision | Others | Reversal or reselling | Others | |||
| Raw materials | 71,368,550.13 | -2,801,788.94 | 20,376,592.95 | 48,190,168.24 | ||
| Stocks | 67,539,262.09 | 7,929,480.21 | 20,016,596.71 | 55,452,145.59 | ||
| Packaging materials and low value consumables | 2,533,723.65 | 334,023.17 | 896,695.43 | 1,971,051.39 | ||
| Total | 141,441,535.87 | 5,461,714.44 | 41,289,885.09 | 105,613,365.22 | ||
Provision for inventory impairment on portfolio basis: None.
Standards for provision for inventory impairment on portfolio basis: None.
(4) Explanation on closing balance of inventories involving capitalized amount of borrowing costs: None.
(5) Explanation on the current amortization amount of contract performance costs: None.
9. Non-current assets due within one year
Unit: RMB
| Item | Closing balance | Opening balance |
| Certificate of deposit and interest | 442,772,777.78 | |
| Total | 442,772,777.78 |
(1) Debt investments due within one year
□Applicable ?Not applicable
(2) Other debt investments due within one year
□Applicable ?Not applicable
10. Other current assets
Unit: RMB
| Item | Closing balance | Opening balance |
| Time deposits and other wealth management products | 1,137,418,680.41 | 2,219,049,423.96 |
| Input tax to be deducted and certified | 378,378,785.52 | 397,271,600.13 |
| Cost of returned goods receivable | 264,837,682.23 | 147,880,091.79 |
| Prepaid taxes and fees | 11,931,972.82 | 90,685,070.74 |
| Others | 37,594,385.48 | 7,190,030.58 |
| Total | 1,830,161,506.46 | 2,862,076,217.20 |
Other explanations: None.
11. Other equity instrument investments
Unit: RMB
| Item name | Opening balance | Gains included in other comprehensive income during the period | Losses included in other comprehensive income during the period | Accumulated gains included in other comprehensive income at the end of the period | Accumulated loss included in other comprehensive income at the end of the period | Dividend income recognized in the current period | Closing balance | Reason for designating measurement at fair value through other comprehensive income |
| ImmuneSensor Therapeutics Inc. | 71,745,000.00 | 71,745,000.00 | The investment is strategic and is a non-trading equity instrument investment | |||||
| Total | 71,745,000.00 | 71,745,000.00 |
Derecognization during the reporting period: None.Itemized disclosure of investment in non-trading equity instruments for the period: None.Other explanations: None.
12. Long-term equity investments
Unit: RMB
| Investee | Opening balance (book value) | Opening balance of the impairment provision | Increase and decrease in the current period | Closing balance (book value) | Closing balance of impairment provision | |||||||
| Additional investment | Decreased investment | Profits and losses on investments recognized under the equity method | Adjustment of other comprehensive income | Change in other equities | Cash dividends or profit declared to be issued | Provision for impairment | Others | |||||
| I. Joint ventures | ||||||||||||
| Shanghai Pharmaceuticals Holding Co., Ltd. | 11,536,646,559.56 | 496,849,279.95 | -5,825,439.28 | 15,607,562.45 | 272,906,986.36 | 11,770,370,976.32 | ||||||
| Ban Loong Jacobson JBM Pharma Limited | 14,433.37 | -1,474.23 | 98.57 | 13,057.71 | ||||||||
| Yunnan Baiyao Chinese Herbal Medicine Technology Co., Ltd. | ||||||||||||
| Lijiang Changgengming Trading Co., Ltd. | ||||||||||||
| Subtotal | 11,536,660,992.93 | 496,847,805.72 | -5,825,439.28 | 15,607,562.45 | 272,906,986.36 | 98.57 | 11,770,384,034.03 | |||||
| II. Associates | ||||||||||||
| Total | 11,536,660,992.93 | 496,847,805.72 | -5,825,439.28 | 15,607,562.45 | 272,906,986.36 | 98.57 | 11,770,384,034.03 | |||||
The recoverable amount is determined by the net amount of fair value minus disposal expenses
□Applicable ?Not applicable
The recoverable amount is determined by the present value of expected future cash flows
□Applicable ?Not applicable
Reasons for significant differences between the foregoing information and information used for impairment testing in previous years or external information: None.Reasons for significant differences between the information used in the Company's impairment tests in previous years and the actual situation in the corresponding year: None.
Other explanations: For details of Yunnan Baiyao Chinese Herbal Medicine Technology Co., Ltd and Lijiang Changgengming Trading Co., Ltd, please refer to “X. Rights and interests in otherentities - 3. Rights and interests in joint venture arrangements or associates.”
13. Other non-current financial assets
Unit: RMB
| Item | Closing balance | Opening balance |
| Category of financial assets at fair value through profits or losses | 312,459,342.04 | 324,674,379.63 |
| Total | 312,459,342.04 | 324,674,379.63 |
Other explanations: None.
14. Investment properties
(1) Adoption of the cost measurement model for investment properties
?Applicable □Not applicable
Unit: RMB
| Item | Buildings and structures | Land use rights | Construction in progress | Total |
| I. Original book value | ||||
| 1. Opening balance | 54,966,967.28 | 32,184,799.93 | 87,151,767.21 | |
| 2. Increase in the current period | 10,927,186.70 | 345,728.96 | 11,272,915.66 | |
| (1) Outsourcing | 0.00 | |||
| (2) Transfer from inventory\fixed assets\construction in progress | 10,927,186.70 | 345,728.96 | 11,272,915.66 | |
| (3) Increase in business combination | ||||
| 3. Decrease in the current period | ||||
| (1) Disposal | ||||
| (2) Other transfer out | ||||
| 4. Closing balance | 65,894,153.98 | 32,530,528.89 | 98,424,682.87 | |
| II. Accumulated depreciation and accumulated amortization | ||||
| 1. Opening balance | 35,754,013.96 | 4,855,547.93 | 40,609,561.89 | |
| 2. Increase in the current period | 7,415,468.75 | 932,485.02 | 8,347,953.77 | |
| (1) Provision or amortization | 888,953.46 | 728,839.73 | 1,617,793.19 | |
| (2) Transfer from inventory\fixed assets\construction in progress | 6,526,515.29 | 203,645.29 | 6,730,160.58 | |
| 3. Decrease in the current period | ||||
| (1) Disposal | ||||
| (2) Other transfer out | ||||
| 4. Closing balance | 43,169,482.71 | 5,788,032.95 | 48,957,515.66 | |
| III. Provision for impairment | 0.00 | |||
| 1. Opening balance | 2,438,059.35 | 2,438,059.35 |
| 2. Increase in the current period | ||||
| (1) Provision | ||||
| 3. Decrease in the current period | ||||
| (1) Disposal | ||||
| (2) Other transfer out | ||||
| 4. Closing balance | 2,438,059.35 | 2,438,059.35 | ||
| IV. Book value | 0.00 | |||
| 1. Closing book value | 20,286,611.92 | 26,742,495.94 | 47,029,107.86 | |
| 2. Opening book value | 16,774,893.97 | 27,329,252.00 | 44,104,145.97 |
The recoverable amount is determined by the net amount of fair value minus disposal expenses
□Applicable ?Not applicable
The recoverable amount is determined by the present value of expected future cash flows
□Applicable ?Not applicable
Reasons for significant differences between the foregoing information and information used for impairment testing in previous yearsor external information: None.Reasons for significant differences between the information used in the Company’s impairment tests in previous years and the actualsituation in the corresponding year: None.Other explanations: None.
(2) Adoption of the fair value measurement model for investment properties
□Applicable ?Not applicable
(3) Conversion to investment properties measured at fair value: None.
(4) Investment properties for which the title certificate has not been obtained: None.
15. Fixed assets
Unit: RMB
| Item | Closing balance | Opening balance |
| Fixed assets | 2,600,945,569.94 | 2,662,805,209.03 |
| Liquidation of fixed assets | 117,364.21 | 94,805.00 |
| Total | 2,601,062,934.15 | 2,662,900,014.03 |
(1) Fixed assets
Unit: RMB
| Item | Houses and buildings | Machinery and equipment | Transportation vehicles | Electronic equipment | Others | Total |
| I. Original book value: | ||||||
| 1. Opening balance | 2,549,592,791.40 | 1,603,570,594.77 | 65,896,843.49 | 158,127,736.24 | 1,257,593.86 | 4,378,445,559.76 |
| 2. Increase in the current period | 15,957,607.45 | 25,861,820.46 | 1,023,547.34 | 6,511,207.31 | 15,214.12 | 49,369,396.68 |
| (1) Purchase | 16,782,824.59 | 1,023,547.34 | 6,511,207.31 | 15,214.12 | 24,332,793.36 | |
| (2) Transfer from construction in progress | 15,957,607.45 | 9,078,995.87 | 25,036,603.32 | |||
| (3) Increase in business combination | ||||||
| 3. Decrease in the current period | 10,927,186.70 | 7,980,227.02 | 252,461.33 | 6,207,211.19 | 25,367,086.24 | |
| (1) Disposal or scrapping | 7,980,227.02 | 252,461.33 | 6,207,211.19 | 14,439,899.54 | ||
| (2) Other transfer out | 10,927,186.70 | 10,927,186.70 | ||||
| 4. Closing balance | 2,554,623,212.15 | 1,621,452,188.21 | 66,667,929.50 | 158,431,732.36 | 1,272,807.98 | 4,402,447,870.20 |
| II. Accumulated depreciation | ||||||
| 1. Opening balance | 558,119,997.35 | 953,150,208.31 | 34,737,774.48 | 101,583,125.64 | 1,036,398.21 | 1,648,627,503.99 |
| 2. Increase in the current period | 32,070,020.90 | 56,439,334.24 | 1,820,275.92 | 10,551,064.12 | 32,577.92 | 100,913,273.10 |
| (1) Provision | 32,070,020.90 | 56,439,334.24 | 1,820,275.92 | 10,551,064.12 | 32,577.92 | 100,913,273.10 |
| 3. Decrease in the current period | 6,526,515.29 | 2,405,695.42 | 236,208.79 | 2,421,659.81 | 11,590,079.31 | |
| (1) Disposal or scrapping | 2,405,695.42 | 236,208.79 | 2,421,659.81 | 5,063,564.02 | ||
| (2) Other transfer out | 6,526,515.29 | 6,526,515.29 | ||||
| 4. Closing balance | 583,663,502.96 | 1,007,183,847.13 | 36,321,841.61 | 109,712,529.95 | 1,068,976.13 | 1,737,950,697.78 |
| III. Provision for impairment | ||||||
| 1. Opening balance | 60,577,222.16 | 2,268,381.89 | 4,167,242.69 | 67,012,846.74 | ||
| 2. Increase in the current period | 1,910.41 | 1,910.41 | ||||
| (1) Provision | 2.61 | 2.61 | ||||
| (2) Other changes | 1,907.80 | 1,907.80 | ||||
| 3. Decrease in the current period | 10,535.86 | 3,452,618.81 | 3,463,154.67 | |||
| (1) Disposal or scrapping | 10,535.86 | 3,452,618.81 | 3,463,154.67 | |||
| 4. Closing balance | 60,577,222.16 | 2,259,756.44 | 714,623.88 | 63,551,602.48 | ||
| IV. Book value | ||||||
| 1. Closing book value | 1,910,382,487.03 | 612,008,584.64 | 30,346,087.89 | 48,004,578.53 | 203,831.85 | 2,600,945,569.94 |
| 2. Opening book value | 1,930,895,571.89 | 648,152,004.57 | 31,159,069.01 | 52,377,367.91 | 221,195.65 | 2,662,805,209.03 |
(2) Temporarily idle fixed assets
Unit: RMB
| Item | Original book value | Accumulated depreciation | Impairment provision | Book value | Remarks |
| Machinery and equipment | 5,838,401.68 | 3,871,066.26 | 1,967,335.42 | ||
| Electronic equipment | 823,296.25 | 590,571.22 | 232,725.03 | ||
| Houses and buildings | 60,378.56 | 18,585.39 | 41,793.17 |
(3) Fixed assets leased out through operating lease: None.
(4) Fixed assets for which the title certificate has not been obtained
Unit: RMB
| Item | Book value | Reasons for not obtaining the title certificate |
| No. 51 Xiba Road (comprehensive workshop) | 256,800.64 | For historical legacy issues, and under application |
| Yunjian Assets | 2,111,319.44 | Obtained through judicial auction, with land certificate and property ownership certificate |
| Drug Division of Dali Pharmaceutical Economic Development Zone | 26,700,297.84 | Under application |
| Buildings in planting base of Yunquan | 1,216,295.57 | The land is a leased land |
| Overall relocation project of Wenshan Qihua | 32,288,696.44 | Some title certificates have been obtained, and the rest is under application |
Other explanations: None.
(5) Impairment tests of fixed assets
□Applicable ?Not applicable
(6) Liquidation of fixed assets
Unit: RMB
| Item | Closing balance | Opening balance |
| Machinery and equipment | 114,865.58 | 94,206.37 |
| Electronic equipment | 2,498.63 | 598.63 |
| Total | 117,364.21 | 94,805.00 |
Other explanations: None.
16. Construction in progress
Unit: RMB
| Item | Closing balance | Opening balance |
| Construction in progress | 713,596,692.91 | 529,708,553.58 |
| Total | 713,596,692.91 | 529,708,553.58 |
(1) Construction in progress
Unit: RMB
| Project | Closing balance | Opening balance | ||||
| Book balance | Impairment provision | Book value | Book balance | Impairment provision | Book value | |
| Shanghai International Center project of Yunnan Baiyao | 477,104,952.25 | 477,104,952.25 | 389,398,864.33 | 389,398,864.33 | ||
| Yunnan Baiyao R&D Platform - Kunming center construction project | 116,377,501.13 | 116,377,501.13 | 82,578,321.10 | 82,578,321.10 | ||
| Optimization project of new factory of Yunnan Baiyao toothpaste | 26,285,681.51 | 26,285,681.51 | 23,403,647.03 | 23,403,647.03 | ||
| Yunnan Baiyao Group Traditional Chinese Medicine Pharmaceutical Service (Kunming) Center Project | 23,886,242.55 | 23,886,242.55 | 2,667,581.02 | 2,667,581.02 | ||
| Granules Production Increase and Expansion Project of Pharmaceutical Business Group of Yunnan Baiyao Group | 22,571,802.90 | 22,571,802.90 | 16,649,408.02 | 16,649,408.02 | ||
| Radiopharmaceutical Drug R&D Center (Tianjin) | 12,839,406.86 | 12,839,406.86 | 1,339,572.56 | 1,339,572.56 | ||
| Aesthetics Medicine Supporting Commercial and Office Project for Yunyi Outpatient Department | 6,572,529.70 | 6,572,529.70 | 654,989.92 | 654,989.92 | ||
| Shanghai Yunzhen Outpatient Supporting Commercial and Office Project | 4,912,949.64 | 4,912,949.64 | ||||
| Dali Company’s Production Line Equipment Upgrade and Renovation Project | 3,580,443.02 | 3,580,443.02 | ||||
| Government-Enterprise Cooperation Project of Yunnan Baiyao Group in Lijiang | 3,361,170.33 | 3,361,170.33 | 5,655,808.43 | 5,655,808.43 | ||
| Ecological Science and Technology Industrial Park (Phase I) | ||||||
| Health Industry Project (Phase I) of Yunnan Baiyao | 2,972,865.07 | 2,972,865.07 | 593,826.74 | 593,826.74 | ||
| Relocation project engineering | 1,804,452.92 | 1,804,452.92 | 510,675.30 | 510,675.30 | ||
| Renovation project of fire protection facilities and outdoor pipeline network in the old factory of Economic Development Zone | 1,544,624.34 | 1,544,624.34 | ||||
| Yunnan Baiyao Wenshan Sanqi Smart Technology Park Project | 1,081,007.34 | 1,081,007.34 | 1,081,007.34 | 1,081,007.34 | ||
| Near-infrared online detection equipment project | 1,060,758.00 | 1,060,758.00 | ||||
| Others | 7,640,305.35 | 7,640,305.35 | 5,174,851.79 | 5,174,851.79 | ||
| Total | 713,596,692.91 | 713,596,692.91 | 529,708,553.58 | 529,708,553.58 |
(2) Changes in important projects of construction in progress for the period
Unit: RMB
| Project name | Budget amount | Opening balance | Increase in the current period | Transfer to fixed assets in the current period | Other decrease in the current period | Closing balance | Proportion of total project investment in budget | Project progress | Accumulated amount of interest capitalized | Including: Amount of interest capitalized for the period | Capitalization rate of interest for the period | Source of funds |
| Shanghai International Center project of Yunnan Baiyao | 1,389,170,500.00 | 389,398,864.33 | 87,706,087.92 | 477,104,952.25 | 50.32% | 61.00% | Others | |||||
| Yunnan Baiyao R&D Platform - Kunming center construction project | 921,670,000.00 | 82,578,321.10 | 33,799,180.03 | 116,377,501.13 | 12.63% | 40.00% | Others | |||||
| Optimization project of new factory of Yunnan Baiyao toothpaste | 38,000,000.00 | 23,403,647.03 | 2,882,034.48 | 26,285,681.51 | 77.97% | 99.00% | Others | |||||
| Yunnan Baiyao Group Traditional Chinese Medicine Pharmaceutical Service (Kunming) Center Project | 68,096,000.00 | 2,667,581.02 | 21,218,661.53 | 23,886,242.55 | 85.00% | 85.00% | Others | |||||
| Granules Production Increase and Expansion Project of Pharmaceutical Business Group of Yunnan Baiyao Group | 31,989,300.00 | 16,649,408.02 | 5,922,394.88 | 22,571,802.90 | 70.56% | 95.00% | Others |
(3) Provision for impairment of construction in progress for the period: None.
(4) Impairment tests of construction in progress
□Applicable ?Not applicable
(5) Project materials: None.
| Radiopharmaceutical Drug R&D Center (Tianjin) | 101,750,000.00 | 1,339,572.56 | 11,499,834.30 | 12,839,406.86 | 12.62% | 55.00% | Others | |||||
| Health Industry Project (Phase I) of Yunnan Baiyao | 1,158,174,400.00 | 593,826.74 | 18,336,645.78 | 15,957,607.45 | 2,972,865.07 | 90.59% | 99.00% | Others | ||||
| Government-Enterprise Cooperation Project of Yunnan Baiyao Group in Lijiang Ecological Science and Technology Industrial Park (Phase I) | 17,860,000.00 | 5,655,808.43 | 2,306,246.88 | 4,600,884.98 | 3,361,170.33 | 59.74% | 60.00% | Others | ||||
| Total | 3,726,710,200.00 | 522,287,029.23 | 183,671,085.80 | 20,558,492.43 | 0.00 | 685,399,622.60 |
17. Productive biological assets
(1) Adoption of the cost measurement model for productive biological assets?Applicable □Not applicable
Unit: RMB
| Item | Planting | Total |
| Tea tree | ||
| I. Original book value | ||
| 1. Opening balance | 2,578,500.00 | 2,578,500.00 |
| 2. Increase in the current period | ||
| (1) Outsourcing | ||
| (2) Self-cultivation | ||
| 3. Decrease in the current period | ||
| (1) Disposal | ||
| (2) Others | ||
| 4. Closing balance | 2,578,500.00 | 2,578,500.00 |
| II. Accumulated depreciation | ||
| 1. Opening balance | 1,590,075.15 | 1,590,075.15 |
| 2. Increase in the current period | 85,950.06 | 85,950.06 |
| (1) Provision | 85,950.06 | 85,950.06 |
| 3. Decrease in the current period | ||
| (1) Disposal | ||
| (2) Others | ||
| 4. Closing balance | 1,676,025.21 | 1,676,025.21 |
| III. Provision for impairment | ||
| 1. Opening balance | ||
| 2. Increase in the current period | ||
| (1) Provision | ||
| 3. Decrease in the current period | ||
| (1) Disposal | ||
| (2) Others | ||
| 4. Closing balance | ||
| IV. Book value | ||
| 1. Closing book value | 902,474.79 | 902,474.79 |
| 2. Opening book value | 988,424.85 | 988,424.85 |
(2) Adoption of the cost measurement model and impairment tests for productive biological assets
□Applicable ?Not applicable
(3) Adoption of the fair value measurement model for productive biological assets
□Applicable ?Not applicable
18. Right-of-use assets
(1) Right-of-use assets
Unit: RMB
| Item | Houses and buildings | Machinery | Total |
| I. Original book value | |||
| 1. Opening balance | 505,660,305.98 | 505,660,305.98 | |
| 2. Increase in the current period | 74,826,379.08 | 614,167.92 | 75,440,547.00 |
| (1) Leased in | 74,826,379.08 | 614,167.92 | 75,440,547.00 |
| 3. Decrease in the current period | 36,660,187.33 | 36,660,187.33 | |
| (1) Disposal | 28,233,389.97 | 28,233,389.97 | |
| (2) At maturity | 8,426,797.36 | ||
| 4. Closing balance | 543,826,497.73 | 614,167.92 | 544,440,665.65 |
| II. Accumulated depreciation | |||
| 1. Opening balance | 247,340,820.40 | 247,340,820.40 | |
| 2. Increase in the current period | 42,312,258.35 | 102,361.32 | 42,414,619.67 |
| (1) Provision | 42,312,258.35 | 102,361.32 | 42,414,619.67 |
| 3. Decrease in the current period | 15,573,016.55 | 15,573,016.55 | |
| (1) Disposal | 7,146,219.19 | 7,146,219.19 | |
| (2) At maturity | 8,426,797.36 | 8,426,797.36 | |
| 4. Closing balance | 274,080,062.20 | 102,361.32 | 274,182,423.52 |
| III. Provision for impairment | |||
| 1. Opening balance | |||
| 2. Increase in the current period | |||
| (1) Provision | |||
| 3. Decrease in the current period | |||
| (1) Disposal | |||
| 4. Closing balance | |||
| IV. Book value | |||
| 1. Closing book value | 269,746,435.53 | 511,806.60 | 270,258,242.13 |
| 2. Opening book value | 258,319,485.58 | 258,319,485.58 |
(2) Impairment tests of right-of-use assets
□Applicable ?Not applicable
Other explanations: None.
19. Intangible assets
(1) Intangible assets
Unit: RMB
| Item | Land use rights | Patent right | Non-patent technology | Software | Trademark | Franchise rights | Total |
| I. Original book value | |||||||
| 1. Opening balance | 689,468,137.84 | 34,492,676.60 | 2,150,381.86 | 75,464,152.76 | 20,000.00 | 154,081,682.57 | 955,677,031.63 |
| 2. Increase in the current period | |||||||
| (1) Purchase | |||||||
| (2) Internal R&D | |||||||
| (3) Increase in business combination | |||||||
| 3. Decrease in the current period | 464,996.96 | 464,996.96 | |||||
| (1) Disposal | 119,268.00 | 119,268.00 | |||||
| (2) Other transfer out | 345,728.96 | 345,728.96 | |||||
| 4. Closing balance | 689,003,140.88 | 34,492,676.60 | 2,150,381.86 | 75,464,152.76 | 20,000.00 | 154,081,682.57 | 955,212,034.67 |
| II. Accumulated amortization | |||||||
| 1. Opening balance | 157,724,667.66 | 26,857,606.79 | 2,150,381.86 | 25,105,090.79 | 3,147.77 | 17,664,216.34 | 229,505,111.21 |
| 2. Increase in the current period | 6,991,875.97 | 1,401,483.96 | 3,764,530.31 | 1,111.11 | 12,159,001.35 | ||
| (1) Provision | 6,991,875.97 | 1,401,483.96 | 3,764,530.31 | 1,111.11 | 12,159,001.35 | ||
| 3. Decrease in the current period | 228,979.92 | 228,979.92 | |||||
| (1) Disposal | 25,334.63 | 25,334.63 | |||||
| (2) Other transfer out | 203,645.29 | 203,645.29 | |||||
| 4. Closing balance | 164,487,563.71 | 28,259,090.75 | 2,150,381.86 | 28,869,621.10 | 4,258.88 | 17,664,216.34 | 241,435,132.64 |
| III. Provision for impairment | |||||||
| 1. Opening balance | 6,382,453.60 | 136,417,466.23 | 142,799,919.83 | ||||
| 2. Increase in the current period |
| (1) Provision | |||||||
| 3. Decrease in the current period | |||||||
| (1) Disposal | |||||||
| 4. Closing balance | 6,382,453.60 | 136,417,466.23 | 142,799,919.83 | ||||
| IV. Book value | |||||||
| 1. Closing book value | 518,133,123.57 | 6,233,585.85 | 46,594,531.66 | 15,741.12 | 570,976,982.20 | ||
| 2. Opening book value | 525,361,016.58 | 7,635,069.81 | 50,359,061.97 | 16,852.23 | 583,372,000.59 |
Proportion of intangible assets generated through internal R&D of the Company in the balance of intangible assets at the end of thereporting period: 0.00%
(2) Data sources for intangible asset recognition: None.
(3) Land use rights for which the title certificate has not been obtained: None.
(4) Impairment tests of intangible assets
□Applicable ?Not applicable
20. Goodwill
(1) Original book value of goodwill
Unit: RMB
| Name of the investee or items forming goodwill | Opening balance | Increase in the current period | Decrease in the current period | Closing balance |
| Formed by business combination | Disposal | |||
| YNBY International Limited (Formerly Ban Loong Holdings Limited) | 645,635,327.81 | 645,635,327.81 | ||
| Yunnan Baiyao Group Medical Technology Hefei Co., Ltd. | 26,904,931.64 | 26,904,931.64 | ||
| Shanghai Hanshi Health Consulting Co., Ltd. | 23,247,992.08 | 23,247,992.08 | ||
| Yunnan Baiyao Group Wuxi Pharmaceutical Co., Ltd. | 12,843,661.62 | 12,843,661.62 | ||
| Lijiang Yunquan Biological Development Co., Ltd. | 721,770.39 | 721,770.39 | ||
| Total | 709,353,683.54 | 709,353,683.54 |
(2) Provision for impairment of goodwill
Unit: RMB
| Name of the investee or items forming goodwill | Opening balance | Increase in the current period | Decrease in the current period | Closing balance |
| Provision | Disposal | |||
| Shanghai Hanshi Health Consulting Co., Ltd | 16,089,461.58 | 16,089,461.58 | ||
| YNBY International Limited (Formerly Ban Loong Holdings Limited) | 561,515,748.26 | 561,515,748.26 | ||
| Yunnan Baiyao Group Medical Technology Hefei Co., Ltd. | 26,904,931.64 | 26,904,931.64 | ||
| Lijiang Yunquan Biological Development Co., Ltd. | 721,770.39 | 721,770.39 | ||
| Total | 605,231,911.87 | 605,231,911.87 |
(3) Related information on asset group or combination of asset groups containing goodwill: None.
(4) Specific methods for determination of recoverable amount
The recoverable amount is determined by the net amount of fair value minus disposal expenses
□Applicable ?Not applicable
The recoverable amount is determined by the present value of expected future cash flows
□Applicable ?Not applicable
Reasons for significant differences between the foregoing information and information used for impairment testing in previous yearsor external information: None.Reasons for significant differences between the information used in the Company’s impairment tests in previous years and the actualsituation in the corresponding year: None.
(5) Fulfillment of undertakings and goodwill impairment
Performance commitments existed at the time goodwill was formed and the reporting period, or the previous period of the reportingperiod was within the performance commitment period
□Applicable ?Not applicable
Other explanations: None
21. Long-term deferred expenses
Unit: RMB
| Item | Opening balance | Increase in the current period | Amortization in the current period | Other decrease | Closing balance |
| Building decoration and project renovation | 96,424,121.71 | 10,054,846.45 | 16,039,597.82 | 7,873,676.12 | 82,565,694.22 |
| Nanping Street renovation project of Yunnan Baiyao | 6,499,119.51 | 1,772,487.18 | 4,726,632.33 | ||
| Others | 2,412,309.09 | 202,470.04 | 1,593,707.34 | 1,021,071.79 | |
| Total | 105,335,550.31 | 10,257,316.49 | 19,405,792.34 | 7,873,676.12 | 88,313,398.34 |
Other explanations: None.
22. Deferred income tax assets/deferred income tax liabilities
(1) Deferred income tax assets before offset
Unit: RMB
| Item | Closing balance | Opening balance | ||
| Deductible temporary differences | Deferred income tax assets | Deductible temporary differences | Deferred income tax assets | |
| Provision for asset impairment | 94,950,178.73 | 20,046,384.05 | 149,391,736.51 | 29,733,789.86 |
| Unrealized profits of intra-group transactions | 373,963,733.44 | 59,427,815.02 | 355,719,960.08 | 56,616,299.10 |
| Deductible losses | 173,478,236.66 | 30,834,440.01 | 85,261,634.28 | 12,772,083.95 |
| Deferred income | 193,888,523.91 | 29,052,480.59 | 174,855,238.93 | 26,308,248.51 |
| Contractual liabilities | 1,005,253,429.78 | 150,788,014.47 | 927,324,390.56 | 139,098,658.58 |
| Payroll payable and long-term employee benefits payable | 443,778,383.41 | 66,724,145.66 | 442,302,070.56 | 66,345,310.57 |
| Expenses beyond overall planning for employee status conversion expenses of state-owned enterprises and social security expenses of retirees | 469,594,015.39 | 70,439,102.31 | 488,564,678.84 | 73,284,701.83 |
| Lease liabilities | 244,846,919.18 | 38,361,704.37 | 247,083,412.30 | 33,532,096.13 |
| Changes in fair value | 43,420,767.36 | 6,513,115.10 | 31,774,859.47 | 4,766,228.92 |
| Other payables | 662,864,423.63 | 101,581,569.98 | 390,202,998.08 | 58,530,449.71 |
| Provision for credit impairment | 1,131,173,216.64 | 171,733,540.63 | 1,031,702,042.48 | 155,456,724.98 |
| Others | 55,340,811.63 | 8,301,121.76 | 56,028,058.38 | 8,404,208.76 |
| Estimated income from returned goods | 296,803,860.50 | 44,388,498.15 | 172,763,638.76 | 26,020,408.22 |
| Total | 5,189,356,500.26 | 798,191,932.10 | 4,552,974,719.23 | 690,869,209.12 |
(2) Deferred income tax liabilities before offset
Unit: RMB
| Item | Closing balance | Opening balance | ||
| Taxable temporary differences | Deferred income tax liabilities | Taxable temporary differences | Deferred income tax liabilities | |
| Appreciation of asset valuation | 4,385,832.97 | 1,096,458.23 | 5,464,293.67 | 1,366,073.41 |
| Right-of-use assets | 260,488,790.14 | 39,155,436.49 | 258,319,485.58 | 34,427,707.34 |
| Fixed assets subject to one-time pre-tax deduction | 26,760,390.32 | 4,014,058.55 | 26,760,390.32 | 4,014,058.55 |
| Investment income from business combination not under common control achieved in stages | 2,282,373.90 | 570,593.48 | 2,282,373.90 | 570,593.48 |
| Others | 30,411,388.68 | 4,561,708.30 | 65,373,768.09 | 9,806,065.22 |
| Cost of returned goods receivable | 277,176,643.38 | 41,909,083.01 | 163,264,685.39 | 24,587,573.70 |
| Total | 601,505,419.39 | 91,307,338.06 | 521,464,996.95 | 74,772,071.70 |
(3) Deferred income tax assets or liabilities after offset, net
Unit: RMB
| Item | Offsetting amount of deferred income tax assets and deferred income tax liabilities at the end of the reporting period | Closing balance of deferred income tax assets or liabilities after offset | Offsetting amount of deferred income tax assets and deferred income tax liabilities at the beginning of the reporting period | Opening balance of deferred income tax assets or liabilities after offset |
| Deferred income tax assets | 798,191,932.10 | 690,869,209.12 | ||
| Deferred income tax liabilities | 91,307,338.06 | 74,772,071.70 |
(4) Details of unrecognized deferred income tax assets
Unit: RMB
| Item | Closing balance | Opening balance |
| Deductible losses | 669,166,284.63 | 697,042,370.78 |
| Provision for asset impairment | 441,959,815.03 | 505,835,499.95 |
| Deferred income | 64,407,187.53 | 63,955,872.11 |
| Others | 67,690.70 | 10,735,715.83 |
| Total | 1,175,600,977.89 | 1,277,569,458.67 |
(5) Deductible losses for which deferred income tax assets were unrecognized will expire in the followingyears
Unit: RMB
| Year | Closing balance | Opening balance | Remarks |
| 2024 | 4,973,973.57 | 18,092,739.35 | |
| 2025 | 9,432,032.24 | 20,152,321.40 | |
| 2026 | 130,419,997.71 | 136,477,740.18 | |
| 2027 | 138,513,645.91 | 202,345,894.66 | |
| 2028 | 258,242,487.52 | 299,773,438.15 | |
| 2029 | 104,682,520.91 | 1,476,119.82 | |
| 2030 | 4,028,298.39 | 4,028,298.39 |
| 2031 | 12,861,719.12 | 12,861,719.12 | |
| 2032 | 1,599,912.28 | 1,599,912.28 | |
| 2033 | 234,187.43 | 234,187.43 | |
| 2034 | 4,177,509.55 | ||
| Total | 669,166,284.63 | 697,042,370.78 |
Other explanations: None.
23. Other non-current assets
Unit: RMB
| Item | Closing balance | Opening balance | ||||
| Book balance | Impairment provision | Book value | Book balance | Impairment provision | Book value | |
| Cost of returned goods receivable | 15,183,305.19 | 15,183,305.19 | 15,394,540.30 | 15,394,540.30 | ||
| Time deposit and interest | 478,279,569.78 | 478,279,569.78 | 913,499,670.63 | 913,499,670.63 | ||
| Stocks of special materials | 42,000,723.80 | 42,000,723.80 | 42,000,723.80 | 42,000,723.80 | ||
| Value-added tax credit refund | 21,189,358.91 | 21,189,358.91 | 9,867,575.47 | 9,867,575.47 | ||
| Advance payment for the purchase of fixed assets | 5,240,036.80 | 5,240,036.80 | 3,485,598.75 | 3,485,598.75 | ||
| Less: the part due within 1 year | -442,772,777.78 | -442,772,777.78 | ||||
| Total | 561,892,994.48 | 561,892,994.48 | 541,475,331.17 | 541,475,331.17 | ||
Other explanations: None.
24. Assets with restricted ownership or use rights
Unit: RMB
| Item | At the end of the reporting period | At the beginning of the reporting period | ||||||
| Book balance | Book value | Type of restriction | Restriction | Book balance | Book value | Restriction type | Restriction | |
| Cash and bank balance | 2,643,785.07 | 2,643,785.07 | Special use | Earmarked for housing maintenance in reformed housing | 2,643,393.65 | 2,643,393.65 | Special use | Earmarked for housing maintenance in reformed housing |
| Cash and bank balance | 500,000.00 | 500,000.00 | Property preservation | The lawsuit in question has been won, and the lifting of the freeze and other related matters are in progress | 500,000.00 | 500,000.00 | Property preservation | The lawsuit in question has been won, and the lifting of the freeze and other related matters are in progress |
| Cash and bank balance | 46,583,430.74 | 46,583,430.74 | Security deposit | Guarantee deposits, banker’s acceptance | 48,618,045.43 | 48,618,045.43 | Security deposit | Guarantee deposits, banker’s acceptance |
| deposits, performance bonds, etc. | deposits, performance bonds, etc. | |||||||
| Assets in special account for system reform | 607,599,650.11 | 607,599,650.11 | Special use | Special fund for paying the cost of employee status conversion in state-owned enterprises | 627,116,169.10 | 627,116,169.10 | Special use | Special fund for paying the cost of employee status conversion in state-owned enterprises |
| Long-term equity investments | 11,770,370,976.32 | 11,770,370,976.32 | Restricted | The holdings shall not be transferred within 36 months since the ending date of the private placement in 2021 | 11,536,646,559.56 | 11,536,646,559.56 | Restricted | The holdings shall not be transferred within 36 months since the ending date of the private placement in 2021 |
| Total | 12,427,697,842.24 | 12,427,697,842.24 | 12,215,524,167.74 | 12,215,524,167.74 |
Other explanations: None.
25. Short-term loans
(1) Classification of short-term loans
Unit: RMB
| Item | Closing balance | Opening balance |
| Loan in credit | 734,723,013.84 | 1,014,634,728.09 |
| Discounted internal bills | 409,724,655.48 | 732,668,972.25 |
| Total | 1,144,447,669.32 | 1,747,303,700.34 |
Explanation on classification of short-term loans: None.
(2) Overdue and outstanding short-term loans: None.
26. Notes payable
Unit: RMB
| Type | Closing balance | Opening balance |
| Banker’s acceptance bill | 1,851,834,540.05 | 1,850,863,313.78 |
| Total | 1,851,834,540.05 | 1,850,863,313.78 |
Total notes payable due and unpaid at the end of the reporting period were RMB 0.
27. Accounts payable
(1) Accounts payable
Unit: RMB
| Item | Closing balance | Opening balance |
| Payment for engineering projects | 28,493,511.72 | 33,522,218.09 |
| Payment for goods | 4,482,934,615.61 | 4,326,110,424.11 |
| Total | 4,511,428,127.33 | 4,359,632,642.20 |
(2) Major accounts payable aged over one year or overdue:
Unit: RMB
| Item | Closing balance | Reasons for not paying it or carrying it forward |
| Sichuan Kete Air Conditioning Purification Co., Ltd. | 5,352,541.97 | Payment terms have not been met yet |
| Total | 5,352,541.97 |
Other explanations: None.
28. Other payables
Unit: RMB
| Item | Closing balance | Opening balance |
| Dividends payable | 87,345,672.28 | 86,490,742.04 |
| Other payables | 1,293,020,181.69 | 938,595,137.50 |
| Total | 1,380,365,853.97 | 1,025,085,879.54 |
(1) Interest payable: None.
(2) Dividends payable
Unit: RMB
| Item | Closing balance | Opening balance |
| State-owned Assets Supervision and Administration Commission of Yunnan Provincial People’s Government, New Huadu Industrial Group, Co., Ltd. | 86,490,742.04 | 86,490,742.04 |
| Dali Hongxu Trading Co., Ltd. | 854,930.24 | |
| Total | 87,345,672.28 | 86,490,742.04 |
(3) Other payables
Other payables by nature of payment
Unit: RMB
| Item | Closing balance | Opening balance |
| Business promotion expenses and other marketing expenses | 781,077,229.91 | 459,313,752.19 |
| Deposits and guarantees | 278,550,605.54 | 266,970,613.85 |
| Other current accounts | 103,660,093.46 | 81,677,453.94 |
| Management fee payable to hospitals | 79,272,300.90 | 70,325,588.08 |
| Collection and payment | 23,738,339.39 | 20,013,555.07 |
| Others | 26,721,612.49 | 40,294,174.37 |
| Total | 1,293,020,181.69 | 938,595,137.50 |
29. Receipts in advance
(1) Receipts in advance
Unit: RMB
| Item | Closing balance | Opening balance |
| Receipts in advance - lease | 2,045,212.68 | 486,612.12 |
| Total | 2,045,212.68 | 486,612.12 |
(2) Major receipts in advance aged over one year or overdue: None.
30. Contractual liabilities
Unit: RMB
| Item | Closing balance | Opening balance |
| Receipts in advance - goods contract | 1,761,226,572.16 | 1,737,952,687.45 |
| Others | 1,243,733.96 | 1,912,541.30 |
| Total | 1,762,470,306.12 | 1,739,865,228.75 |
Significant contractual liabilities with aging more than 1 year: None.Amount of and reasons for significant changes in the book value during the reporting period: None.
31. Payroll payable
(1) Payroll payable
Unit: RMB
| Item | Opening balance | Increase in the current period | Decrease in the current period | Closing balance |
| I. Short-term compensation | 1,020,249,830.45 | 1,130,776,610.84 | 1,336,027,853.77 | 814,998,587.52 |
| II. Welfare after demission - defined contribution plan | 46,884,565.10 | 88,385,196.91 | 87,199,741.22 | 48,070,020.79 |
| III. Dismissal welfare | 56,269.53 | 2,786,350.85 | 2,809,701.19 | 32,919.19 |
| Total | 1,067,190,665.08 | 1,221,948,158.60 | 1,426,037,296.18 | 863,101,527.50 |
(2) Short-term compensation
Unit: RMB
| Item | Opening balance | Increase in the current period | Decrease in the current period | Closing balance |
| 1. Salary, bonus, allowance, and subsidy | 534,578,291.58 | 846,479,385.35 | 1,081,584,323.36 | 299,473,353.57 |
| 2. Staff welfare | 16,108,411.77 | 69,932,308.49 | 67,863,167.89 | 18,177,552.37 |
| 3. Social insurance contribution | 287,344.93 | 49,292,809.27 | 48,642,814.38 | 937,339.82 |
| Including: Medical insurance premiums | 252,139.10 | 44,649,079.18 | 44,049,028.68 | 852,189.60 |
| Work injury insurance premiums | 8,887.25 | 2,975,853.74 | 2,945,240.37 | 39,500.62 |
| Maternity insurance premiums | 26,318.58 | 1,667,876.35 | 1,648,545.33 | 45,649.60 |
| Others | ||||
| 4. Housing provident fund | 406,947.66 | 53,225,271.86 | 52,385,257.65 | 1,246,961.87 |
| 5. Union dues and staff training fees | 30,572,145.70 | 16,046,600.96 | 9,609,810.88 | 37,008,935.78 |
| 7. Short-term profit-sharing plan | 438,112,558.54 | 438,112,558.54 | ||
| 8. Others | 184,130.27 | 95,800,234.91 | 75,942,479.61 | 20,041,885.57 |
| Total | 1,020,249,830.45 | 1,130,776,610.84 | 1,336,027,853.77 | 814,998,587.52 |
(3) Defined contributing plans
Unit: RMB
| Item | Opening balance | Increase in the current period | Decrease in the current period | Closing balance |
| 1. Basic endowment insurance | 520,689.77 | 83,765,398.78 | 82,613,729.20 | 1,672,359.35 |
| 2. Unemployment insurance premiums | 20,881.05 | 3,370,120.72 | 3,327,022.21 | 63,979.56 |
| 3. Corporate pension payment | 46,342,994.28 | 1,249,677.41 | 1,258,989.81 | 46,333,681.88 |
| Total | 46,884,565.10 | 88,385,196.91 | 87,199,741.22 | 48,070,020.79 |
Other explanations: None.
32. Tax payables
Unit: RMB
| Item | Closing balance | Opening balance |
| Value added tax | 146,584,441.71 | 74,507,524.44 |
| Cooperate income tax | 305,194,951.74 | 215,055,624.82 |
| Individual income tax | 3,613,571.71 | 13,584,778.64 |
| Urban maintenance and construction tax | 10,833,320.99 | 5,944,928.97 |
| Property tax | 10,753,160.37 | 11,470,392.03 |
| Land use tax | 5,312,150.19 | 5,324,861.58 |
| Stamp duty | 5,735,331.86 | 5,765,684.18 |
| Consumption tax | 921.44 | 9,690.71 |
| Education surcharge | 4,666,609.36 | 2,628,898.41 |
| Local education surcharge | 3,108,511.96 | 1,752,038.22 |
| Collected and remitted taxes and fees | 19,376,620.46 | 3,611,481.85 |
| Environmental protection tax | 14,468.89 | 10,222.02 |
| Water conservancy fund | 33,889.82 | 4,724.15 |
| Total | 515,227,950.50 | 339,670,850.02 |
Other explanations: None.
33. Non-current liabilities due within one year
Unit: RMB
| Item | Closing balance | Opening balance |
| Lease liabilities due within one year | 68,739,138.20 | 74,736,102.58 |
| Total | 68,739,138.20 | 74,736,102.58 |
Other explanations: None.
34. Other current liabilities
Unit: RMB
| Item | Closing balance | Opening balance |
| Short-term bonds payable | 1,006,516,666.68 | |
| Returns payable | 289,101,964.37 | 157,398,378.74 |
| Transfer to output tax | 400,892,479.94 | 373,745,525.66 |
| Special financial support funds of “transferring loan to subsidy” for the use of intelligent voice cluster development base in the R&D project of intelligent medical devices based on medical big data | 1,800,000.00 | 1,800,000.00 |
| Total | 1,698,311,110.99 | 532,943,904.40 |
Changes in short-term bonds payable:
Unit: RMB
| Bond name | Par value | Nominal rate | Date of issuance | Bond duration | Amount issued | Opening balance | Issued in the current period | Interest accrued by par value | Premium and discount amortization | Repayment in the current period | Closing balance | Default or not |
| 2024 First Tranche of Ultra-short-term Financing Bonds (Sci-Tech Notes/Rural Revitalization) of Yunnan | 1,000,000,000.00 | 2.30% | March 18, 2024 | 270 days | 1,000,000,000.00 | 1,000,000,000.00 | 6,516,666.68 | 1,006,516,666.68 | No |
| Baiyao Group Co., Ltd. | ||||||||||||
| Total | 1,000,000,000.00 | 1,000,000,000.00 | 6,516,666.68 | 1,006,516,666.68 |
Other explanations: None.
35. Long-term loans
(1) Long-term loans by type
Unit: RMB
| Item | Closing balance | Opening balance |
| Loan in credit | 2,100,000.00 | 2,100,000.00 |
| Total | 2,100,000.00 | 2,100,000.00 |
Explanation on classification of long-term loans: None.Other explanations, including the range of interest rate: None.
36. Lease liabilities
Unit: RMB
| Item | Closing balance | Opening balance |
| Buildings and structures | 261,577,325.56 | 247,083,412.30 |
| Equipment | 618,664.48 | |
| Less: Non-current liabilities reclassified to liabilities due within one year | -68,739,138.20 | -74,736,102.58 |
| Total | 193,456,851.84 | 172,347,309.72 |
Other explanations: None.
37. Long-term payables
Unit: RMB
| Item | Closing balance | Opening balance |
| Long-term payables | 607,381,613.96 | 626,897,323.88 |
| Special payables | 4,838,584.16 | 4,838,584.16 |
| Total | 612,220,198.12 | 631,735,908.04 |
(1) Long-term payables by nature of payment
Unit: RMB
| Item | Closing balance | Opening balance |
| Expenses beyond overall planning for employee status conversion expenses of state-owned enterprises and social security expenses of retirees | 607,381,613.96 | 626,897,323.88 |
Other explanations: None.
(2) Special payables
Unit: RMB
| Item | Opening balance | Increase in the current period | Decrease in the current period | Closing balance | Reasons |
| Preliminary funds for major technological transformation projects | 888,468.00 | 888,468.00 | Transfer from Baiyao Holdings due to merger by absorption | ||
| Fulintang chain operating funds | 500,000.00 | 500,000.00 | Transfer from Baiyao Holdings due to merger by absorption | ||
| Funds for Kunming medicine distribution center | 500,000.00 | 500,000.00 | Transfer from Baiyao Holdings due to merger by absorption | ||
| Yunnan Sanqi brand registration project | 164,272.00 | 164,272.00 | Transfer from Baiyao Holdings due to merger by absorption | ||
| Group company management information system project | 250,978.00 | 250,978.00 | Transfer from Baiyao Holdings due to merger by absorption | ||
| Group company technology center construction expenses | 231,265.00 | 231,265.00 | Transfer from Baiyao Holdings due to merger by absorption | ||
| Nefuramide oxalate project funding | 85,426.00 | 85,426.00 | Transfer from Baiyao Holdings due to merger by absorption | ||
| Yunnan Natural Medicine Engineering Center project | 998,506.00 | 998,506.00 | Transfer from Baiyao Holdings due to merger by absorption | ||
| New drug research project for treatment of back pulp injury | 472,062.56 | 472,062.56 | Transfer from Baiyao Holdings due to merger by absorption | ||
| Material purchase project research expense | 489,575.00 | 489,575.00 | Transfer from Baiyao Holdings due to merger by absorption | ||
| R&D of new drugs for treating cardiovascular and cerebrovascular diseases (TCM) | 258,031.60 | 258,031.60 | Transfer from Baiyao Holdings due to merger by absorption | ||
| Total | 4,838,584.16 | 4,838,584.16 |
Other explanations: None.
38. Long-term payroll payable
(1) Details of long-term payroll payable
Unit: RMB
| Item | Closing balance | Opening balance |
| I. Termination benefits | 362,900.72 | 409,232.99 |
| II. Other long-term benefits | 3,681,455.00 | 3,681,455.00 |
| Total | 4,044,355.72 | 4,090,687.99 |
(2) Change of defined benefit plan: None.
39. Estimated liabilities
Unit: RMB
| Item | Closing balance | Opening balance | Reasons |
| Returns payable | 16,050,005.49 | ||
| Total | 16,050,005.49 |
Other explanations, including on important assumptions and estimates related to major estimated liabilities: None.
40. Deferred income
Unit: RMB
| Item | Opening balance | Increase in the current period | Decrease in the current period | Closing balance | Reasons |
| Government subsidies | |||||
| Including: Government subsidies related to income | 80,923,393.38 | 28,218,600.00 | 2,616,008.60 | 106,525,984.78 | |
| Government subsidies related assets | 157,887,717.66 | 4,665,700.00 | 10,783,691.00 | 151,769,726.66 | |
| Total | 238,811,111.04 | 32,884,300.00 | 13,399,699.60 | 258,295,711.44 |
Other explanations: None.
41. Other non-current liabilities
Unit: RMB
| Item | Closing balance | Opening balance |
| Receipts of real estate sale under staff housing reform | 1,931,554.36 | 1,931,554.36 |
| Returns payable | 15,365,260.05 | |
| Total | 1,931,554.36 | 17,296,814.41 |
Other explanations: None.
42. Share capital
Unit: RMB
| Opening balance | Increase or decrease (+, -) | Closing balance | |||||
| Issuance of new shares | Share dividend | Capitalization of capital reserve into share capital | Others | Subtotal | |||
| Total number of shares | 1,796,862,549.00 | -12,599,946.00 | -12,599,946.00 | 1,784,262,603.00 | |||
Other explanations:
Reasons for the decrease in the current period: At the first session of the Tenth Board of Directors of theCompany for 2024 held on February 7, 2024 and the first extraordinary general meeting of the Company for 2024held on February 23, 2024, the Company considered and approved the Proposal on Change of Use of RepurchasedShares and Cancellation, and agreed that the Company should change the use of the above 12,599,946 repurchasedshares in the special securities account for repurchase, and change the use of the repurchased shares from “for theimplementation of employee stock ownership plan or equity incentive plan” to “for cancellation to reduce theregistered capital.” In April 2024, the Company completed the cancellation procedures for the 12,599,946repurchased shares.
43. Capital reserve
Unit: RMB
| Item | Opening balance | Increase in the current period | Decrease in the current period | Closing balance |
| Capital premium (equity premium) | 18,175,016,281.26 | 694,828,946.15 | 17,480,187,335.11 | |
| Other capital reserves | 71,603,460.83 | 15,607,562.45 | 87,211,023.28 | |
| Total | 18,246,619,742.09 | 15,607,562.45 | 694,828,946.15 | 17,567,398,358.39 |
Other explanations, including changes and reasons thereof as at the end of the reporting period:
(1) Reasons for the increase in the current period:
During the reporting period, the Company recognized the changes in other equity in joint ventures, coupledwith passive dilution of shares due to exercise of rights and issuance of new shares, leading to an increase in capitalreserves - Other capital reserves by RMB 15,607,562.45 according to the shareholding ratio.
(2) Reasons for the decrease in the current period: At the first session of the Tenth Board of Directors of theCompany held on February 7, 2024 and the first extraordinary general meeting of the Company held on February23, 2024, the Company considered and approved the Proposal on Change of Use of Repurchased Shares andCancellation, and agreed that the Company should change the use of the above 12,599,946 repurchased shares inthe special securities account for repurchase, and change the use of the repurchased shares from “for the
implementation of employee stock ownership plan or equity incentive plan” to “for cancellation to reduce theregistered capital.” This led to a decrease in capital reserves - capital (equity) premium by RMB 694,828,946.15.
44. Treasury stock
Unit: RMB
| Item | Opening balance | Increase in the current period | Decrease in the current period | Closing balance |
| Share repurchase for equity incentives | 707,428,892.15 | 707,428,892.15 | ||
| Total | 707,428,892.15 | 707,428,892.15 |
Other explanations, including changes and reasons thereof as at the end of the reporting period:
Reasons for the decrease in the current period: At the first session of the Tenth Board of Directors of theCompany for 2024 held on February 7, 2024 and the first extraordinary general meeting of the Company for 2024held on February 23, 2024, the Company considered and approved the Proposal on Change of Use of RepurchasedShares and Cancellation, and agreed that the Company should change the use of the above 12,599,946 repurchasedshares in the special securities account for repurchase, and change the use of the repurchased shares from “for theimplementation of employee stock ownership plan or equity incentive plan” to “for cancellation to reduce theregistered capital.” In April 2024, the Company completed the cancellation procedures for the 12,599,946repurchased shares.
45. Other comprehensive income
Unit: RMB
| Item | Opening balance | Amount for the current period | Closing balance | |||||
| Amount before income tax in the current period | Less: Amount previously included in other comprehensive income but transferred to profits and losses in the current period | Less: Amount previously included in other comprehensive income but transferred to retained earnings in the current period | Less: Income tax expenses | That attributable to the parent company after tax | That attributable to minority interests after tax | |||
| I. Other comprehensive income that will not be reclassified into profits or losses | 450,547.51 | 2,004,091.79 | 2,004,091.79 | 2,454,639.30 | ||||
| Other comprehensive income that cannot be transferred to profits or losses under equity method | 450,547.51 | 2,004,091.79 | 2,004,091.79 | 2,454,639.30 | ||||
| II. Other comprehensive income to be reclassified into profits and losses | -89,988,719.64 | -10,024,531.97 | -10,371,957.39 | 347,425.42 | -100,360,677.03 | |||
| Including: Other comprehensive income that can be transferred to profits or losses under equity method | -56,428,881.64 | -7,829,531.07 | -7,829,531.07 | -64,258,412.71 | ||||
| Exchange differences from translation of financial statements denominated in foreign currencies | -33,559,838.00 | -2,195,000.90 | -2,542,426.32 | 347,425.42 | -36,102,264.32 | |||
| Total other comprehensive income | -89,538,172.13 | -8,020,440.18 | -8,367,865.60 | 347,425.42 | -97,906,037.73 |
Other explanations, including adjustment to the effective portion of the cash flow hedge profits or losses transferred to the amountinitially recognized for the hedged item: None.
46. Surplus reserves
Unit: RMB
| Item | Opening balance | Increase in the current period | Decrease in the current period | Closing balance |
| Statutory surplus reserves | 2,530,458,968.58 | 2,530,458,968.58 | ||
| Total | 2,530,458,968.58 | 2,530,458,968.58 |
Explanations on surplus reserves, including changers and reasons thereof for the period: None.
47. Undistributed profit
Unit: RMB
| Item | Current period | Previous period |
| Undistributed profit at the end of the previous period before adjustment | 18,102,147,836.12 | 16,720,444,918.66 |
| Undistributed profit at the beginning of the period after adjustment | 18,102,147,836.12 | 16,720,444,918.66 |
| Plus: Net profits attributable to equity owners of the parent company in the current period | 3,188,829,903.10 | 4,093,782,074.02 |
| Less: ordinary share dividends payable | 3,705,913,426.43 | 2,712,079,156.56 |
| Undistributed profit at the end of the period | 17,585,064,312.79 | 18,102,147,836.12 |
Details on adjustment of undistributed profits at the beginning of the period:
1) Due to retrospective adjustments in accordance with Accounting Standards for Business Enterprises and relevant new provisions,the undistributed profits at the beginning of the period were affected by RMB 0.
2) Due to changes in accounting policies, the undistributed profits at the beginning of the period were affected by RMB 0.
3) Due to correction of material accounting errors, the undistributed profits at the beginning of the period were affected by RMB 0.
4) Due to changes in the consolidation scope under common control, the undistributed profits at the beginning of the period wereaffected by RMB 0.
5) Due to other adjustments, the undistributed profits at the beginning of the period were affected by RMB 0.
48. Operating revenue and operating cost
Unit: RMB
| Item | Amount for the current period | Amount for the previous period | ||
| Revenue | Cost | Revenue | Cost | |
| Principal businesses | 20,417,596,599.08 | 14,450,146,794.38 | 20,281,803,000.72 | 14,692,689,825.40 |
| Other businesses | 37,689,688.44 | 12,663,156.47 | 27,569,849.35 | 20,542,442.00 |
| Total | 20,455,286,287.52 | 14,462,809,950.85 | 20,309,372,850.07 | 14,713,232,267.40 |
Details of operating revenue and operating cost:
Unit: RMB
| Type of contract | Drug sales | Health and daily chemical products | TCM resources | Drug circulation | Others | Total | ||||||
| Operating revenue | Operating cost | Operating revenue | Operating cost | Operating revenue | Operating cost | Operating revenue | Operating cost | Operating revenue | Operating cost | Operating revenue | Operating cost | |
| Business type | 4,357,321,920.76 | 1,362,387,438.11 | 3,153,242,986.36 | 1,034,582,426.01 | 809,479,617.18 | 686,242,173.73 | 11,786,476,329.97 | 11,088,546,093.63 | 348,765,433.25 | 291,051,819.37 | 20,455,286,287.52 | 14,462,809,950.85 |
| Including: | ||||||||||||
| Industry sales income | 4,357,321,920.76 | 1,362,387,438.11 | 3,153,242,986.36 | 1,034,582,426.01 | 131,505,728.25 | 96,665,457.34 | 10,896,749.24 | 3,640,128.12 | 7,652,967,384.61 | 2,497,275,449.58 | ||
| Commercial sales income | 675,585,951.53 | 588,436,358.58 | 11,786,476,329.97 | 11,088,546,093.63 | 280,427,083.38 | 263,560,612.87 | 12,742,489,364.88 | 11,940,543,065.08 | ||||
| Technical services | 13,419,064.28 | 5,859,542.82 | 13,419,064.28 | 5,859,542.82 | ||||||||
| Hotel catering industry | 6,332,847.91 | 5,328,379.09 | 6,332,847.91 | 5,328,379.09 | ||||||||
| Planting sales income | 2,387,937.40 | 1,140,357.81 | 2,387,937.40 | 1,140,357.81 | ||||||||
| Others | 37,689,688.44 | 12,663,156.47 | 37,689,688.44 | 12,663,156.47 | ||||||||
| Classified by operating areas | 4,357,321,920.77 | 1,362,387,438.11 | 3,153,242,986.36 | 1,034,582,426.01 | 809,479,617.17 | 686,242,173.73 | 11,786,476,329.97 | 11,088,546,093.63 | 348,765,433.25 | 291,051,819.37 | 20,455,286,287.52 | 14,462,809,950.85 |
| Including: | ||||||||||||
| In Yunnan province | 601,511,952.04 | 161,682,800.79 | 133,373,837.42 | 61,899,727.58 | 470,946,442.81 | 363,850,640.19 | 11,752,210,908.12 | 11,054,874,446.84 | 75,471,651.67 | 27,561,693.78 | 13,033,514,792.06 | 11,669,869,309.18 |
| Outside Yunnan province (excluding overseas) | 3,745,879,615.87 | 1,198,132,644.19 | 3,018,185,145.72 | 971,258,034.20 | 305,317,133.17 | 289,780,876.79 | 34,265,421.85 | 33,671,646.79 | 104,719,953.64 | 98,523,011.04 | 7,208,367,270.25 | 2,591,366,213.01 |
| Overseas | 9,930,352.86 | 2,571,993.13 | 1,684,003.22 | 1,424,664.23 | 33,216,041.19 | 32,610,656.75 | 168,573,827.94 | 164,967,114.55 | 213,404,225.21 | 201,574,428.66 | ||
Information related to performance obligations: The Company and its subsidiaries are mainly engaged in sale of drugs, medicinal materials, health and daily chemical products, etc. and recognizethe realization of revenue upon delivery of products to customers and confirmation by customers that they have obtained control over the products. No contracts are for the purpose of significantfinancing. But, some contracts may include some discount and concession clauses. Usually, no contracts contain expected refunds to customers or other similar obligations assumed by theCompany.
Other explanations: None.Information related to the transaction price allocated to the remaining performance obligations: The amount of income corresponding to the performance obligations that have been contracted butnot yet performed or not yet completed at the end of the reporting period is RMB 0.Information about variable consideration in the contract: None.Major contractual changes or significant transaction price adjustments: None.
49. Taxes and surcharges
Unit: RMB
| Item | Amount for the current period | Amount for the previous period |
| Consumption tax | 295,265.87 | 887,115.80 |
| Urban maintenance and construction tax | 52,049,849.11 | 46,983,220.42 |
| Education surcharge | 22,660,975.14 | 20,401,524.88 |
| Property tax | 10,775,652.51 | 8,886,349.82 |
| Land use tax | 5,485,490.94 | 5,619,552.59 |
| Vehicle and vessel use tax | 69,522.55 | 74,430.93 |
| Stamp duty | 12,923,290.36 | 11,827,075.83 |
| Local education surcharge | 15,105,396.00 | 13,619,043.57 |
| Others | 186,377.01 | 74,516.17 |
| Total | 119,551,819.49 | 108,372,830.01 |
Other explanations: None.
50. Administrative expenses
Unit: RMB
| Item | Amount for the current period | Amount for the previous period |
| Employee compensation | 191,576,372.21 | 176,232,082.40 |
| Depreciation and amortization | 43,832,506.15 | 59,917,023.23 |
| Agency service fee | 20,230,312.27 | 29,142,812.97 |
| Lease costs | 3,395,107.79 | 5,900,244.74 |
| Office expenses | 4,949,786.19 | 13,834,059.14 |
| Travel expenses | 8,435,899.68 | 9,036,707.10 |
| Afforestation and pollution discharge fee | 1,715,840.75 | 1,747,910.19 |
| Security and cleaning fee | 4,039,639.25 | 5,041,654.57 |
| Maintenance costs | 891,388.27 | 1,655,191.36 |
| Utilities and property management | 5,258,288.01 | 3,844,442.60 |
| Business entertainment fee | 6,728,550.46 | 6,962,426.80 |
| Others | 36,356,329.45 | 31,129,255.30 |
| Total | 327,410,020.48 | 344,443,810.40 |
Other explanations: None.
51. Selling expenses
Unit: RMB
| Item | Amount for the current period | Amount for the previous period |
| Employee compensation | 749,306,402.13 | 777,770,443.04 |
| Business promotion expenses | 390,144,815.09 | 418,015,306.70 |
| Advertising expenses | 232,981,754.87 | 132,347,367.85 |
| Display fee | 220,335,729.24 | 208,641,966.12 |
| Marketing service expenses | 139,408,237.22 | 134,835,007.61 |
| Sales promotion expenses | 66,618,496.13 | 2,159,257.96 |
| Travel expenses | 64,843,756.03 | 28,765,406.92 |
| Conference fee | 49,109,828.44 | 44,490,605.23 |
| Depreciation and amortization | 39,895,219.37 | 33,584,977.25 |
| Others | 344,177,252.07 | 477,078,211.01 |
| Total | 2,296,821,490.59 | 2,257,688,549.69 |
Other explanations: None.
52. R&D expenses
Unit: RMB
| Item | Amount for the current period | Amount for the previous period |
| Employee compensation | 68,904,549.49 | 63,827,625.06 |
| Commissioned R&D cost | 32,142,383.35 | 34,101,127.85 |
| Materials consumption and inspection fee | 22,733,275.03 | 25,507,999.95 |
| Depreciation and amortization | 5,687,670.77 | 4,753,074.27 |
| New product design fee | 4,615,013.16 | 2,732,730.98 |
| Information technology R&D expenses | 8,893,284.22 | 4,155,924.21 |
| Labor expenses | 1,372,659.54 | |
| Others | 5,066,843.32 | 8,368,791.80 |
| Total | 148,043,019.34 | 144,819,933.66 |
Other explanations: None.
53. Financial expenses
Unit: RMB
| Item | Amount for the current period | Amount for the previous period |
| Interest expenses | 27,648,907.91 | 18,798,896.05 |
| Less: Interest income | 162,711,635.16 | 114,776,796.46 |
| Net loss on foreign exchange | -1,841,489.74 | -21,031,853.69 |
| Bank charges | 7,284,938.64 | 4,460,210.16 |
| Others | 6,558,973.27 | |
| Total | -129,619,278.35 | -105,990,570.67 |
Other explanations: None.
54. Other income
Unit: RMB
| Other sources of income | Amount for the current period | Amount for the previous period |
| Government subsidies directly included in the profits and losses of the current period | 22,618,622.37 | 27,971,555.69 |
| Amortization amount of government subsidies related to assets | 8,683,691.00 | 6,654,908.45 |
| Amortization amount of government subsidies related to income | 2,563,800.24 | 3,196,411.77 |
| Return of individual income tax service charge | 9,581,633.20 | 4,117,861.85 |
| Others | 4,473,124.93 | 236,716.90 |
| Total | 47,920,871.74 | 42,177,454.66 |
55. Gains on changes in fair value
Unit: RMB
| Sources of gains on changes in fair value | Amount for the current period | Amount for the previous period |
| Financial assets held for trading | 16,811,914.40 | 55,086,478.34 |
| Other non-current financial assets | -12,215,037.59 | -1,997,550.27 |
| Total | 4,596,876.81 | 53,088,928.07 |
Other explanations: None.
56. Investment income
Unit: RMB
| Item | Amount for the current period | Amount for the previous period |
| Gain on long-term equity investment subject to accounting with equity method | 506,633,970.31 | 447,048,881.55 |
| Investment income on financial assets held for trading during holding period | 4,649,639.30 | |
| Investment income from disposal of financial assets held for trading | -12,988,016.22 | -3,681,651.93 |
| Investment income on other non-current financial assets during holding period | 3,427,111.75 | 9,774,283.29 |
| Others | -19,574,751.35 | -36,248,986.65 |
| Total | 477,498,314.49 | 421,542,165.56 |
Other explanations: None.
57. Credit impairment losses
Unit: RMB
| Item | Amount for the current period | Amount for the previous period |
| Bad debt losses on accounts receivable | -88,711,574.60 | -70,022,581.61 |
| Bad debt losses on other receivables | 5,949,239.48 | -4,658,000.68 |
| Total | -82,762,335.12 | -74,680,582.29 |
Other explanations: None.
58. Asset impairment losses
Unit: RMB
| Item | Amount for the current period | Amount for the previous period |
| I. Inventory impairment losses and contract performance cost impairment losses | -3,578,591.92 | 19,008,334.90 |
| II. Impairment losses of fixed assets | -2.61 | |
| Total | -3,578,594.53 | 19,008,334.90 |
Other explanations: None.
59. Gains on disposal of assets
Unit: RMB
| Sources of gains on disposal of assets | Amount for the current period | Amount for the previous period |
| Profit from disposal of non-current assets | -552,966.50 | -1,518,121.18 |
| Profit from disposal of right-of-use assets | -1,039,168.13 | 6,921,199.69 |
| Total | -1,592,134.63 | 5,403,078.51 |
60. Non-operating revenue
Unit: RMB
| Item | Amount for the current period | Amount for the previous period | Amount of non-recurring profits or losses included in the current period |
| Profits from destruction and scrapping of non-current assets | 83,877.29 | 118,961.77 | 83,877.29 |
| Others | 4,347,824.42 | 1,883,762.52 | 4,347,824.42 |
| Total | 4,431,701.71 | 2,002,724.29 | 4,431,701.71 |
Other explanations: None.
61. Non-operating expenses
Unit: RMB
| Item | Amount for the current period | Amount for the previous period | Amount of non-recurring profits or losses included in the current period |
| Donation | 3,130,241.66 | 1,782,430.73 | 3,130,241.66 |
| Losses from destruction and scrapping of non-current assets | 149,829.54 | 2,554,617.83 | 149,829.54 |
| Others | 1,475,553.56 | 7,731,425.67 | 1,475,553.56 |
| Total | 4,755,624.76 | 12,068,474.23 | 4,755,624.76 |
Other explanations: None.
62. Income tax expenses
(1) Table of income tax expenses
Unit: RMB
| Item | Amount for the current period | Amount for the previous period |
| Current income tax expenses | 572,852,946.49 | 466,976,774.03 |
| Deferred income tax expenses | -90,787,456.62 | 10,044,063.58 |
| Total | 482,065,489.87 | 477,020,837.61 |
(2) Adjustment process of accounting profits and income tax expenses
Unit: RMB
| Item | Amount for the current period |
| Total profits | 3,672,028,340.83 |
| Income tax expenses calculated at statutory/applicable tax rate | 550,804,223.44 |
| Effect of different tax rates applied to subsidiaries | 9,889,414.52 |
| Effect of adjusting income tax for prior periods | 21,422,983.13 |
| Effect of non-taxable income | -84,711,802.92 |
| Effect of non-deductible costs, expenses and losses | 4,892,876.32 |
| Effect of use of deductible losses of deferred income tax assets not recognized in prior periods | -14,438,822.17 |
| Effect of deductible temporary differences or deductible losses of deferred income tax assets not recognized in the current period | 17,958,737.01 |
| Changes in opening balance of deferred income tax assets/liabilities arising from tax rate adjustments | 112,528.27 |
| Extra tax deductions for R&D costs | -11,388,915.56 |
| Others | -12,475,732.17 |
| Income tax expenses | 482,065,489.87 |
Other explanations: None.
63. Other comprehensive income
For details, please refer to Note 45 “Other comprehensive income.”
64. Cash flow statements
(1) Cash relating to operating activities
Other cash received relating to operating activities
Unit: RMB
| Item | Amount for the current period | Amount for the previous period |
| Interest income | 160,542,220.78 | 117,918,059.78 |
| Deposits and guarantees | 58,473,746.22 | 33,232,300.23 |
| Government subsidy | 51,052,696.48 | 45,035,330.05 |
| Current account and petty cash | 45,935,859.53 | 22,933,663.17 |
| Others | 39,393,081.70 | 24,074,492.02 |
| Total | 355,397,604.71 | 243,193,845.25 |
Explanation on other cash received relating to operating activities: None.Other cash payments relating to operating activities
Unit: RMB
| Item | Amount for the current period | Amount for the previous period |
| Cost expenditures | 1,191,200,957.11 | 1,110,973,561.62 |
| Deposits and guarantees | 22,936,940.61 | 55,898,519.37 |
| Current account and petty cash | 87,712,907.26 | 84,345,105.68 |
| Others | 9,721,745.05 | 20,693,358.89 |
| Total | 1,311,572,550.03 | 1,271,910,545.56 |
Explanation on other cash payments relating to operating activities: None.
(2) Cash relating to investment activities
Other cash received relating to investment activities
Unit: RMB
| Item | Amount for the current period | Amount for the previous period |
| Principal and interest of time deposits and other financial products redeemed | 3,807,040,500.00 | 363,000,000.00 |
| Total | 3,807,040,500.00 | 363,000,000.00 |
Major cash received relating to investment activities
Unit: RMB
| Item | Amount for the current period | Amount for the previous period |
| Bank deposit products such as time deposits | 3,807,040,500.00 | 363,000,000.00 |
| Total | 3,807,040,500.00 | 363,000,000.00 |
Explanation on other cash received relating to investment activities: None.Other cash payments relating to investment activities
Unit: RMB
| Item | Amount for the current period | Amount for the previous period |
| Bank deposit products such as time deposits | 2,936,895,000.00 | 697,318,800.00 |
| Total | 2,936,895,000.00 | 697,318,800.00 |
Major cash payments relating to investment activities
Unit: RMB
| Item | Amount for the current period | Amount for the previous period |
| Bank deposit products such as time deposits | 2,936,895,000.00 | 697,318,800.00 |
| Total | 2,936,895,000.00 | 697,318,800.00 |
Explanation on other cash payments relating to investment activities: None.
(3) Cash relating to financing activities
Other cash received relating to financing activities
Unit: RMB
| Item | Amount for the current period | Amount for the previous period |
| Individual income tax on dividends and bonuses | 40,525,603.23 | |
| Total | 40,525,603.23 |
Explanation on other cash received relating to financing activities: None.Other cash payments relating to financing activities
Unit: RMB
| Item | Amount for the current period | Amount for the previous period |
| Lease payment | 45,614,567.75 | 34,255,797.15 |
| Individual income tax on dividends and bonuses | 24,887,761.50 | |
| Dividend handling fee | 1,515,823.13 | 2,219,511.75 |
| Return of minority equity | 4,900,000.00 |
| Total | 72,018,152.38 | 41,375,308.90 |
Explanation on other cash payments relating to financing activities: None.Change of liabilities resulting from financing activities?Applicable □Not applicable
Unit: RMB
| Item | Opening balance | Increase in the current period | Decrease in the current period | Closing balance | ||
| Cash changes | Non-cash changes | Cash changes | Non-cash changes | |||
| Short-term loans | 1,747,303,700.34 | 621,833,122.14 | 42,423,845.52 | 534,444,021.82 | 732,668,976.86 | 1,144,447,669.32 |
| Dividends payable | 86,490,742.04 | - | 14,984,329.05 | 14,129,398.81 | - | 87,345,672.28 |
| Lease liabilities (including lease liabilities due within one year) | 247,083,412.30 | - | 69,875,724.37 | 43,697,595.20 | 11,065,551.43 | 262,195,990.04 |
| Long-term loans | 2,100,000.00 | - | - | - | - | 2,100,000.00 |
| Total | 2,082,977,854.68 | 621,833,122.14 | 127,283,898.94 | 592,271,015.83 | 743,734,528.29 | 1,496,089,331.64 |
(4) Explanation on reporting cash flows on a net basis: None.
(5) Major activities and financial impacts that do not involve current cash inflows and outflows, but mayaffect the financial condition of the company or potentially impact the company's future cash flows: None.
65. Supplementary information of cash flow statement
(1) Supplementary information of cash flow statement
Unit: RMB
| Supplementary information | Amount for the current period | Amount for the previous period |
| 1．Reconciliation of net profit to cash flows from operating activities: | ||
| Net profit | 3,189,962,850.96 | 2,826,258,821.44 |
| Plus: Impairment provision for assets | 86,340,929.65 | 55,672,247.39 |
| Depreciation of fixed assets, depreciation of oil and gas assets, depreciation of productive biological assets | 103,037,172.29 | 105,698,740.66 |
| Depreciation of right-of-use assets | 42,414,619.67 | 53,794,434.08 |
| Amortization of Intangible assets | 12,159,001.35 | 15,220,430.41 |
| Amortization of long-term deferred expenses | 19,405,792.34 | 14,699,584.40 |
| Losses on disposal of fixed assets, intangible assets, and other long-term assets (gain is indicated with “-”) | 1,592,134.63 | -5,403,078.51 |
| Losses on scrapping of fixed assets (gain is indicated with “-”) | 65,952.25 | 2,435,656.06 |
| Losses on changes in fair value (gain is indicated with “-”) | -4,596,876.81 | -53,088,928.07 |
| Financing expenses (gain is indicated with “-”) | 27,648,907.91 | 18,798,896.05 |
| Investment losses (gain is indicated with “-”) | -477,498,314.49 | -421,542,165.56 |
| Decrease of deferred income tax assets (increase is indicated with “-”) | -107,322,722.98 | 36,123,144.16 |
| Increase of deferred income tax liabilities (decrease is indicated with “-”) | 16,535,266.36 | -28,402,841.52 |
| Decrease in inventories (increase is indicated with “-”) | 450,556,841.55 | 1,078,680,567.88 |
| Decrease in operating receivable items (increase is indicated with “-”) | -739,995,094.96 | -274,823,081.61 |
| Increase in operating payable items (decrease is indicated with “-”) | 623,860,555.14 | -1,172,171,057.16 |
| Others | 17,450,377.13 | |
| Net cash flows from operating activities | 3,261,617,391.99 | 2,251,951,370.10 |
| 2．Major investment and financing activities irrelevant to cash income and expense: | ||
| Conversion of debt into capital | ||
| Convertible corporate bonds due within one year | ||
| Fixed assets acquired under finance leases | ||
| 3．Net changes in cash and cash equivalents: | ||
| Closing balance of cash | 14,062,236,665.43 | 12,502,738,350.39 |
| Less: Opening balance of cash | 14,151,765,468.49 | 13,046,160,012.47 |
| Plus: Closing balance of cash equivalents | ||
| Less: Opening balance of cash equivalents | ||
| Net increase in cash and cash equivalents | -89,528,803.06 | -543,421,662.08 |
(2) Net cash paid for acquisitions of subsidiaries for the period: None.
(3) Net cash received from disposal of subsidiaries for the period: None.
(4) Composition of cash and cash equivalents
Unit: RMB
| Item | Closing balance | Opening balance |
| I. Cash | 14,062,236,665.43 | 14,151,765,468.49 |
| Including: Cash on hand | 156,115.36 | 258,600.92 |
| Bank deposit available for payment at any time | 14,021,000,581.37 | 14,114,677,091.39 |
| Other cash and bank balance available for payment at any time | 41,079,968.70 | 36,829,776.18 |
| III. Cash and cash equivalents at the end of the reporting period | 14,062,236,665.43 | 14,151,765,468.49 |
(5) Presentation of items with restricted use but still belonging to cash and cash equivalents: None.
(6) Cash and bank balance which are not cash and cash equivalents
Unit: RMB
| Item | Amount for the current period | Amount for the previous period | Reasons for not being cash or cash equivalents |
| Guarantee deposits, banker’s acceptance deposits, performance bonds, etc. | 46,583,430.74 | 48,618,045.43 | Cannot be withdrawn at any time |
| Earmarked for housing maintenance in reformed housing | 2,643,785.07 | 2,643,393.65 | Cannot be withdrawn at any time |
| For property preservation | 500,000.00 | 500,000.00 | Cannot be withdrawn at any time |
| Special fund for paying the cost of employee status conversion in state-owned enterprises | 607,599,650.11 | 14,816,169.10 | Cannot be withdrawn at any time |
| Total | 657,326,865.92 | 66,577,608.18 |
Other explanations: None.
(7) Explanation on other major activities: None.
66. Notes to statement of changes in equity
Explanation on “Others” adjusted for closing balance of the previous year and adjusted amount thereof: None.
67. Monetary items denominated in foreign currencies
(1) Monetary items denominated in foreign currencies
Unit: RMB
| Item | Closing balance of foreign currency | Exchange rate | Closing balance converted into RMB |
| Cash and bank balance | 162,766,821.67 | ||
| Including: USD | 2,976,515.26 | 7.12680 | 21,213,028.95 |
| Euro | 1,929,841.54 | 7.66170 | 14,785,866.99 |
| HKD | 137,713,107.95 | 0.91268 | 125,687,999.37 |
| Japanese yen | 8,883,065.07 | 0.04474 | 397,408.33 |
| South Korean won | 21,324,422.00 | 0.00519 | 110,643.59 |
| THB | 1,711,328.16 | 0.19516 | 333,983.13 |
| CAD | 918.00 | 5.22740 | 4,798.75 |
| CHF | 22,099.80 | 7.94710 | 175,629.32 |
| SGD | 10,885.25 | 5.27900 | 57,463.24 |
| Accounts receivable | 47,256,938.56 | ||
| Including: USD | 5,974,062.03 | 7.12680 | 42,575,945.24 |
| Euro | |||
| HKD | 5,123,199.24 | 0.91268 | 4,675,841.48 |
| SGD | 975.91 | 5.27900 | 5,151.83 |
| Other current assets | 116,148,518.10 | ||
| Including: HKD | 10,131,172.05 | 0.91268 | 9,246,518.10 |
| USD | 15,000,000.00 | 7.12680 | 106,902,000.00 |
| Accounts payable | 409,239.59 | ||
| Including: HKD | 7,048.31 | 0.91268 | 6,432.86 |
| USD | 56,520.00 | 7.12680 | 402,806.74 |
| Other receivables | 31,640,749.55 | ||
| Including: HKD | 34,582,619.42 | 0.91268 | 31,562,865.09 |
| THB | 136,499.68 | 0.19516 | 26,639.30 |
| CAD | 966.73 | 5.22740 | 5,053.51 |
| SGD | 8,750.07 | 5.27900 | 46,191.65 |
| Contractual liabilities | 1,847,598.36 | ||
| Including: HKD | 2,024,365.99 | 0.91268 | 1,847,598.36 |
| Other payables | 21,517,266.51 | ||
| Including: HKD | 23,522,653.91 | 0.91268 | 21,468,655.77 |
| Japanese yen | 860,094.00 | 0.04474 | 38,478.67 |
| THB | 51,916.67 | 0.19516 | 10,132.07 |
Other explanations: None.
(2) Description of overseas business entities; for material overseas business entities, disclose their majorbusiness places overseas, functional currency and the selection criterion thereof; should there be any changein the functional currency, disclose the reason for such change.
□Applicable ?Not applicable
68. Leases
(1) The Company as the lessee
?Applicable □Not applicableVariable lease payments not included in the measurement of lease liabilities?Applicable □Not applicable
| Item | Amount |
| Variable lease payments not included in the measurement of lease liabilities | 844,324.23 |
Simplified handling of payments of short-term leasing or leasing of low value assets?Applicable □Not applicable
| Item | Amount |
| Simplified handling of fees of short-term leasing or leasing of low value assets | 9,272,419.16 |
After-sales leaseback transactions: None.
(2) The Company as the lessor
Operating lease as a lessor?Applicable □Not applicable
Unit: RMB
| Item | Receipts from lease | Including: Receipts related to variable lease payments not included in lease receipts |
| Houses and buildings | 8,576,483.93 | |
| Total | 8,576,483.93 |
Financial lease as a lessor
□Applicable ?Not applicable
Undiscounted lease receipts for each of the next five years
□Applicable ?Not applicable
Reconciliation of undiscounted lease receipts to net investment in leases: None.
(3) Recognition of gains and losses on sales under finance leases as a manufacturer or distributor
□Applicable ?Not applicable
69. Others: None.
VIII. R&D Expenditure
Unit: RMB
| Item | Amount for the current period | Amount for the previous period |
| Employee compensation | 68,969,121.01 | 63,827,625.06 |
| Commissioned R&D cost | 39,828,301.28 | 37,031,505.21 |
| Materials consumption and inspection fees | 22,936,642.33 | 25,595,002.64 |
| Depreciation and amortization | 5,746,520.33 | 4,753,074.27 |
| New product design fee | 4,615,013.16 | 2,732,730.98 |
| Information technology R&D expenses | 8,893,284.22 | 4,155,924.21 |
| Labor expenses | 1,372,659.54 | |
| Others | 5,090,246.14 | 8,375,625.27 |
| Total | 156,079,128.47 | 147,844,147.18 |
| Including: Expensed R&D expenditure | 148,043,019.34 | 144,819,933.66 |
| Capitalized R&D expenditure | 8,036,109.13 | 3,024,213.52 |
1. R&D projects meeting capitalization conditions
Unit: RMB
| Item | Opening balance | Increase in the current period | Decrease in the current period | Closing balance | ||
| Internal development costs | Others | Recognized as intangible assets | Transfer to current | |||
| profits or losses | ||||||
| P137 Project Research and Development (IND) | 14,452,474.57 | 8,036,109.13 | 22,488,583.70 | |||
| Total | 14,452,474.57 | 8,036,109.13 | 0.00 | 0.00 | 0.00 | 22,488,583.70 |
Important capitalized R&D projects: None.Impairment provision for development expenditure: None.
2. Important outsourced project under study: None.
IX. Changes in the Consolidation Scope
1. Business combination not under common control
(1) Business combination not under common control in the current period: None.
(2) Merger cost and goodwill: None.
(3) Identifiable assets and liabilities of acquirees as at the acquisition date: None.
(4) Profits or losses generated from the re-measurement of equity held before the acquisition date at the fair valueWhether there was a transaction that realized mergers step by step via multiple transactions and obtained control during the reportingperiod
□Yes ?No
(5) Relevant information about the merger consideration that cannot be reasonably determined as at the acquisition date atthe end of the current period of merger or on the fair value of acquirees’ identifiable assets and liabilities: None.
(6) Other explanations: None.
2. Business combination under common control
(1) Business combination under common control in the current period: None.
(2) Merger cost: None.
(3) Book value of assets and liabilities of the merged entity on the date of merger: None.
3. Reverse purchase
Basic information of the transaction, the basic for the transaction to constitute a reverse purchase, whether the assets and liabilitiesretained by the listed company constitute a business and its basis, the determination of merger cost, the amount of equity adjustmentand its calculation when dealing with equity transactions: None.
4. Disposal of subsidiaries
Whether there were any transactions or events during the period in which control of subsidiaries was lost
□Yes ?No
Whether there was a loss of control in the current period under a progressive disposal of investments in subsidiaries through multipletransitions
□Yes ?No.
5. Changes in the consolidation scope due to other reasons
Describe the change in scope of consolidation for other reasons (e.g. Establishing new subsidiaries, liquidating subsidiaries, etc) andits details:
(1) Establishment of new subsidiaries
1) Yunnan Baiyao Group Traditional Chinese Medicine Resources Co., Ltd made investments to set up and wholly own (i.e. 100%shareholding in) Hangzhou Shanqi Health Industry Co., Ltd with a registered capital of RMB 1 million, and included by Yunnan Baiyaoin the consolidation scope since April 2024.
2) Yunnan Pharma made investments to set up and wholly own (i.e. 100% shareholding in) Yunnan Pharmaceutical Zhaotong Co.,Ltd with a registered capital of RMB 1 million, and included by Yunnan Baiyao in the consolidation scope since March 2024.
(2) Cancellation of subsidiaries
Ban Loong Capital GP was cancelled in April 2024.
6. Others: None.
X. Interest in Other Entities
1. Interest in subsidiaries
(1) Composition of the Group
Unit: RMB
| Subsidiary name | Registered capital | Main business location | Place of registration | Business nature | Shareholding proportion | Acquisition method | |
| Direct | Indirect | ||||||
| Yunnan Baiyao Group Traditional Chinese Medicine Resources Co., Ltd. | 16,400,000.00 | Kunming City | Kunming City | Pharmaceutical industry | 100.00% | 0.00% | Set-up or investment |
| Yunnan Baiyao Group Medicine E-commerce Co., Ltd. | 30,000,000.00 | Kunming City | Kunming City | Wholesale and retail of daily necessities | 100.00% | 0.00% | Set-up or investment |
| Yunnan Baiyao Group Wuxi Pharmaceutical Co., Ltd. | 25,000,000.00 | Wuxi City | Wuxi City | Pharmaceutical industry | 100.00% | 0.00% | Set-up or investment |
| Yunnan Baiyao Group Dali Pharmaceutical Co., Ltd. | 15,515,000.00 | Dali City | Dali City | Pharmaceutical industry | 100.00% | 0.00% | Set-up or investment |
| Yunnan Baiyao Group Health Products Co., Ltd. | 84,500,000.00 | Chuxiong City | Chuxiong City | Production and sales of health and daily chemical products | 100.00% | 0.00% | Set-up or investment |
| Yunnan Pharmaceutical Co., Ltd. | 1,000,000,000.00 | Kunming City | Kunming City | Pharmaceutical wholesale and retail | 100.00% | 0.00% | Share placement |
| Yunnan Institute of Materia Medica | 54,080,000.00 | Kunming City | Kunming City | New drug R&D | 100.00% | 0.00% | Business combination under common control |
| Yunnan Baiyao Holding Investment Co., Ltd. | 100,000,000.00 | Kunming City | Kunming City | Investment | 100.00% | 0.00% | Business combination under common control |
| Yunnan Baiyao Teayield Co., Ltd. | 20,000,000.00 | Kunming City | Kunming City | Tea | 100.00% | 0.00% | Business combination under common control |
| Yunnan Baiyao Group (Hainan) Co., Ltd. | 15,000,000.00 | Hainan Province | Sanya City | Import and export agency, technical services, etc. | 100.00% | 0.00% | Set-up or investment |
| Yunnan Baiyao Group Shanghai Co., Ltd. | 15,000,000.00 | Shanghai City | Shanghai City | Technical services | 100.00% | 0.00% | Set-up or investment |
| Yunnan Baiyao Group Medical Technology Hefei Co., Ltd. | 25,970,800.00 | Hefei City | Hefei City | Medical device production and sales | 100.00% | 0.00% | Business combination not under common control |
| Shanghai Yunzhen Medical Technology Co., Ltd. | 900,000.00 | Shanghai City | Shanghai City | Technical development and service | 100.00% | 0.00% | Set-up or investment |
| YNBY International Limited | 0.00 | Hong Kong | Hong Kong | Trade | 28.06% | 45.62% | Business combination not under common control |
| Yunnan Baiyao Tiancui Business Management Co., Ltd. | 3,000,000.00 | Kunming City | Kunming City | Catering | 100.00% | 0.00% | Set-up or investment |
| Yunnan Baiyao Group Beijing Co., Ltd. | 50,000,000.00 | Beijing City | Beijing City | Technical promotion service | 100.00% | 0.00% | Set-up or investment |
| Yunhe Pharmaceutical (Tianjin) Co., Ltd. | 20,000,000.00 | Tianjin City | Tianjin City | Research and experimental development | 100.00% | 0.00% | Set-up or investment |
Explanation of the inconsistency of the percentage of shares in subsidiaries with the proportion of voting rights:
None.Basis for holding half or less of the voting rights but still controlling investees and holding more than half of thevoting rights but not controlling investees: None.Basis for controlling major structured entities consolidated into the financial statements:
The structured entities included in the scope of consolidation of the Group include CICC Directional AssetManagement - GF-CICC Qirui 1 and Shanghai Trust Platinum Series Hong Kong Market Investment Single FundTrust. Because the Group has power over such structured entities, enjoys variable returns by participating in relatedactivities, and has the ability to use is power over the investee to influence its variable returns, the Group has controlover such structured entities.Basis for determining whether the Company is an agent and an entrustor: None.Other explanations: None.
(2) Key non-wholly owned subsidiaries
Unit: RMB
| Name of subsidiary | Percentage of shares held by minority interests | Profits and losses attributable to minority shareholders in the current period | Dividends declared for distribution to minority shareholders in the current period | Balance of minority shareholders’ equity at the end of the period |
| YNBY International Limited | 26.32% | 340,140.36 | -57,498,782.96 |
Explanation of the inconsistency of the percentage of shares of minority shareholders in subsidiaries with the proportion of votingrights: None.Other explanations: None.
(3) Main financial information of key non-wholly owned subsidiaries
Unit: RMB
| Name of subsidiary | Closing balance | Opening balance | ||||||||||
| Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | |
| YNBY International Limited | 300,674,162.60 | 14,435,664.24 | 315,109,826.84 | 71,504,006.77 | 12,966,466.66 | 84,470,473.43 | 336,579,182.52 | 17,052,211.25 | 353,631,393.77 | 112,222,845.17 | 21,056,768.96 | 133,279,614.13 |
Unit: RMB
| Name of subsidiary | Amount for the current period | Amount for the previous period | ||||||
| Operating revenue | Net profit | Total comprehensive income | Cash flows from operating activities | Operating revenue | Net profits | Total comprehensive income | Cash flows from operating activities | |
| YNBY International Limited | 329,187,942.18 | 1,292,326.58 | 2,612,331.99 | -8,687,297.45 | 332,954,515.95 | 2,320,323.85 | -1,911,698.88 | 3,010,639.68 |
Other explanations: None.
(4) Major restrictions on the use of assets and settlement of debts of the corporate group: None.
(5) Financial support or other support provided for structured entity included in the scope of consolidation for the consolidated financial statements: None.Other explanations: None.
2. Transaction in which the share of owners’ equity in the subsidiary changes while control over the subsidiary remains unchanged
(1) Explanations on changes in the share of owners’ equity in the subsidiary: None.
(2) Impact of the transaction on the minority shareholders’ equity and the owners’ equity attributable to the parent company: None.
3. Interest in joint venture arrangements or associates
(1) Important joint ventures or associates
| Name of joint ventures or associates | Main business location | Place of registration | Business nature | Shareholding proportion | The accounting method for investments in joint ventures or associates | |
| Direct | Indirect | |||||
| Shanghai Pharmaceuticals Holding Co., Ltd. | Shanghai | No. 92 Zhangjiang Road, China (Shanghai) Pilot Free Trade Zone | Pharmaceuticals | 17.97% | Equity method for long-term equity investments | |
Explanation of the inconsistency of the percentage of shares in joint ventures or associates with the proportion of voting rights: None.Basis for holding 20% or less voting rights but having important influence, or holding 20% or more voting rights but not havingimportant influence: None.
(2) Main financial information of important joint ventures: None.
(3) Main financial information of important associates
Unit: RMB
| Closing balance/Amount for the current period | Opening balance/Amount for the previous period | |
| Current assets | 171,602,970,409.07 | 162,433,862,348.46 |
| Non-current assets | 49,732,901,419.99 | 49,538,671,418.34 |
| Total assets | 221,335,871,829.06 | 211,972,533,766.80 |
| Current liabilities | 129,104,115,224.21 | 122,371,879,034.89 |
| Non-current liabilities | 10,003,135,409.79 | 9,274,561,766.98 |
| Total liabilities | 139,107,250,634.00 | 131,646,440,801.87 |
| Minority interests | 12,237,937,041.77 | 11,801,949,913.58 |
| Equity attributable to shareholders of the parent company | 69,990,684,153.29 | 68,524,143,051.35 |
| Share of net assets based on percentage of shareholding | 12,579,285,681.50 | 12,316,447,243.08 |
| Adjustment | ||
| -- Goodwill | 935,533,389.36 | 935,589,606.31 |
| -- Unrealized profit on internal transactions | -9,717,206.74 | -5,399,246.55 |
| -- Others | -1,734,730,887.80 | -1,709,991,043.28 |
| Book value of equity investments in associates | 11,770,370,976.32 | 11,536,646,559.56 |
| Fair value of equity investments in associates for which publicly quoted prices exist | 12,720,128,071.56 | 11,135,936,297.08 |
| Operating revenue | 139,413,145,524.43 | 132,592,157,323.37 |
| Net profits | 3,597,363,036.62 | 3,417,001,019.98 |
| Net profits from discontinued operations |
| Other comprehensive income | -35,643,937.69 | -122,849,260.45 |
| Total comprehensive income | 3,561,719,098.93 | 3,294,151,759.53 |
| Dividends received from associates during the year |
Other explanations: None.
(4) Combined financial information of insignificant joint ventures and associates
Unit: RMB
| Closing balance/Amount for the current period | Opening balance/Amount for the previous period | |
| Joint ventures: | ||
| Total book value of investments | ||
| Total of the followings based on the percentage of shareholdings | ||
| -- Net profits | ||
| -- Other comprehensive income | ||
| -- Total comprehensive income | ||
| Associates: | ||
| Total book value of investments | 13,057.71 | 142,253.18 |
| Total of the followings based on the percentage of shareholdings | ||
| -- Net profits | -226,188.91 | -38,841.58 |
| -- Other comprehensive income | -1,956.03 | |
| -- Total comprehensive income | -226,188.91 | -40,797.61 |
Other explanations: None.
(5) Explanation on significant restrictions on the ability of joint ventures or associates to transfer funds tothe Company: None.
(6) Excess loss generated from joint ventures or associates
Unit: RMB
| Name of joint ventures or associates | Accumulated losses in the previous periods that are accumulated and unrecognized | Unrecognized loss in the current period (or net profit shared in the current period) | Accumulated unrecognized losses at the end of the period |
| Lijiang Changgengming Trading Co., Ltd. | -199,216.33 | -215,544.24 | -414,760.57 |
| Yunnan Baiyao Chinese Herbal Medicine Technology Co., Ltd. | -150,030.48 | -9,269.01 | -159,299.49 |
Other explanations: None.
(7) Unrecognized commitment related to investments in joint ventures: None.
(8) Contingent liabilities related to investments in joint ventures or associates: None.
4. Significant joint operation: None.
5. Interest in structured entities not included in the scope of consolidated financial statementsExplanations on structured entities not included in the scope of consolidation for the consolidated financial statements: None.
6. Others: None.
XI. Government Grants
1. Government grants recognized at the end of the reporting period based on amounts receivable
□Applicable ?Not applicable
Reasons for not receiving the estimated amount of government grants at the expected time point
□Applicable ?Not applicable
2. Liabilities involving government grants
?Applicable □Not applicable
Unit: RMB
| Accounting item | Opening balance | Amount of new subsidies in the current period | The amount included in non-operating income for the current period | The amount transferred to other income in the current period | Other changes in the current period | Closing balance | Related to assets/income |
| Deferred income | 80,923,393.38 | 28,218,600.00 | 2,563,800.24 | 52,208.36 | 106,525,984.78 | Related to income | |
| Deferred income | 157,887,717.66 | 4,665,700.00 | 8,683,691.00 | 2,100,000.00 | 151,769,726.66 | Related to assets |
3. Government grants included in profit or loss for the current period
?Applicable □Not applicable
Unit: RMB
| Accounting item | Amount for the current period | Amount for the previous period |
| Other income | 33,866,113.61 | 37,822,875.91 |
Other explanations: None.
XII. Risks Associated with Financial Instruments
1. Risks incurred by financial instruments
The Group’s financial instruments include equity investments, debt investments, loans, receivables andaccounts payable, etc., as detailed in the relevant items under Note VI. The risk management objective of the Groupis to get an appropriate balance between risk and return, minimize the negative impact of risk on business results ofthe Group, and maximize the interest of shareholders and other equity investors. Based on this risk management
objective, the basic risk management strategy of the Group is to identify and analyze various risks faced by theGroup, establish an appropriate risk tolerance bottom line and conduct risk management, and supervise various risksin a timely and reliable manner to control risks within a limited range.
1. Market risks
Market risk of financial instruments is the risk of fluctuation in the fair value of a financial instrument or itsfuture cash flow arising from changes in market price, including exchange rate risk, interest rate risk and other pricerisk.The Group uses sensitivity analysis techniques to analyze the possible impact of reasonable and possiblechanges in market risk related variables on current profits and losses or shareholders’ equity. Since any risk variablerarely changes in isolation, and the correlations that exist between variables will have a significant impact on theultimate amount of a change in a risk variable, in the following explanation, it is assumed that each variable changesindependently.
(1) Exchange rate risk
Exchange rate risk refers to the risk that the fair value or future cash flow of a financial instrument will fluctuatedue to changes in the exchange rate. Exchange rate risk arises from financial instruments denominated in foreigncurrencies other than the functional currency. The Group mainly operates within China, with RMB as its functionalcurrency and its principal operations are settled in RMB. YNBY International, a subsidiary of the Group, mainlyoperates in Hong Kong, China, with Hong Kong dollars as its functional currency. The Group’s exposure to foreignexchange risks is mainly related to US dollars and Hong Kong dollars. Exchange rate risk has an impact on theresults of the Group’s trading and overseas operations. The balance of the Group’s foreign currency monetary itemsas at June 30, 2024 is as shown in Section 67 “Monetary items denominated in foreign currencies” under Note VI.If the RMB had appreciated or depreciated by 3% against the US dollar and Hong Kong dollar, while other factorsremained unchanged, the net profit of the Company would have increased or decreased by approximately RMB10,967,690.76.
(2) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuatebecause of changes in market interest rates. The Group’s interest rate risk arises from bank loans and bonds payableand other interest-bearing long-term debts. Financial liabilities at floating rates expose the Group to the cash flowinterest rate risk, and financial liabilities at fixed rates expose the Group to the fair value interest rate risk. TheGroup determines the relative proportion of contracts carrying fixed and floating rates according to prevailingmarket conditions. As at June 30, 2024, the Group’s interest-bearing debt consisted mainly of fixed-rate borrowingcontracts denominated in RMB, and ultra short-term financing bonds denominated in RMB, both totally amountingto RMB 1,743,339,680.52 (or RMB 1,016,734,728.09 at the end of the previous year), and the exposure to changesin market interest rates was not material.
(3) Other price risk
The investments classified as financial assets at fair value through profits or losses held by the Group aremeasured at fair value on the balance sheet date. Therefore, the Group is exposed to fluctuations in the securitiesmarket. The Group reduces the price risk of equity portfolio investments by holding multiple equity portfolios.
As at June 30, 2024, if the expected price at which the Group holds the above types of investments hadincreased or decreased by 5%, while other factors remained unchanged, the Group would have increased ordecreased its net profit by approximately RMB 13,040,457.27.
2. Credit risk
On June 30, 2024, the maximum exposure to credit risk that could cause the Group’s financial loss is mainlydue to losses on the Group’s financial assets arising from the failure of the other party to perform its obligationsunder the contract and financial guarantees undertaken by the Group, including:
The book value of recognized financial assets in the consolidated balance sheet. For financial instrumentsmeasured at fair value, the book value reflects its risk exposure, but not its maximum risk exposure, which willchange as fair value changes in the future.
The financial guarantee contract amount disclosed in Note XVI “Commitments and contingencies.”
To reduce credit risk, the Company’s self-produced drugs and health products are generally sold in accordancewith the principle of first payment before delivery. When selecting dealers (customers), the Company willinvestigate the scale and financial strength, market resources, operations, brands, sales networks, and sales channelsof dealers (customers). Only dealers (customers) that meet the requirements of the Company can be selected. YunnanPharma, a subsidiary of the Company, mainly faces the customer credit risk caused by credit sales. Yunnan Pharmastrictly implements credit management for the whole process of credit sales. It has established a customer creditevaluation management system, and divided customers into various types according to their nature, expected sales,operating conditions, and development potential. For each type of customer, it will set assessment credit and redline credit days according to a unified division standard, and then confirm the effective sales and the time limit tostop billing, and make credit sales forecast and evaluation before the transactions. In the process of cooperation,dynamic credit adjustment is carried out according to the actual purchase amount of customers and the change ofbusiness scale, so that the credit sales amount given matches its business strength. Because the Company only dealswith recognized and reputable third parties, and customer bases are mainly medical institutions at all levels, largepharmacy chains, distributors, community and township medical service outlets, no collateral is required. Creditrisk concentration is managed by customer type, geographic region and industry.
Because the Company’s customer base for accounts receivable is widely dispersed in different regions andindustries, there is no significant concentration of credit risk within the Company.
The Group’s working capital is held in banks with high credit ratings and therefore the credit risk of workingcapital is low.
3. Liquidity risk
Liquidity risk is the risk that a company will run short of funds to meet its obligations settled by deliveringcash or other financial assets.
It is the Company’s policy to ensure that it has sufficient cash to pay its debts as they fall due. Liquidity risk iscentrally controlled by the Company’s Financial Department. The Financial Department ensures that the Companyhas sufficient funds to service its debt with all reasonable projections by monitoring cash balances, readily realizablemarketable securities and rolling projections of cash flows for the next 12 months.
The maturity analysis of financial liabilities based on undiscounted contractual cash flows of the Company isas follows:
(1) The Company’s current liabilities include short-term loans, notes payable and accounts payable, otherpayables, and short-term bonds payable in other current liabilities, which are expected to be repaid within 1 year.
(2) The maturity analysis of non-current liabilities (including the non-current liabilities due within 1 year)based on undiscounted contractual cash flows of the Company is as follows:
| Item | June 30, 2024 | Total | |||
| Within one year | 1 to 2 years | 2 to 3 years | Above 3 years | ||
| Long-term loans | 2,100,000.00 | 2,100,000.00 | |||
| Total | 2,100,000.00 | 2,100,000.00 | |||
2. Hedging
(1) The Company carried out hedging business for risk management
□Applicable ?Not applicable
(2) The Company conducted eligible hedging business and applied hedging accounting: None.
(3) The Company carried out hedging business for risk management, which is expected to achieve risk management target, butdid not apply hedging accounting
□Applicable ?Not applicable
3. Financial assets
(1) Classification by type of transfer
□Applicable ?Not applicable
(2) Derecognition of financial assets due to transfer
□Applicable ?Not applicable
(3) Financial assets involved in continued assets transfer
□Applicable ?Not applicable
Other explanations: None.
XIII. Disclosure of Fair Value
1. Final fair value of assets and liabilities measured at fair value
Unit: RMB
| Item | Closing fair value | |||
| Level I fair value measurement | Level II fair value measurement | Level III fair value measurement | Total | |
| I. Continuous fair value measurement | -- | -- | -- | -- |
| (I) Financial assets held for trading | 142,160,745.34 | 904,654,300.00 | 1,046,815,045.34 | |
| (1) Investment in equity instruments | 142,160,745.34 | 142,160,745.34 | ||
| (2) Others | 904,654,300.00 | 904,654,300.00 | ||
| (II) Investment in other equity instruments | 71,745,000.00 | 71,745,000.00 | ||
| (III) Accounts receivable financing | 1,723,807,715.55 | 1,723,807,715.55 | ||
| (1) Notes receivable | 1,723,807,715.55 | 1,723,807,715.55 | ||
| (IV) Other non-current financial assets | 118,648,400.00 | 193,810,942.04 | 312,459,342.04 | |
| (1) Investment in equity instruments | 118,648,400.00 | 193,810,942.04 | 312,459,342.04 | |
2. Determination basis of the market price of the item measured using level I fair value measurementcontinuously and non-continuously:
The financial assets at fair value through profits or losses held by the Company are mainly the share and fundinvestments in the secondary market, whose closing fair value is determined by the closing price of the publiclytraded market on the balance sheet date.
3. Valuation techniques and qualitative and quantitative information on important parameters adopted foritems subject to level II continuous and noncontinuous fair value measurement:
The items subject to level II continuous fair value measurement mainly include the wealth managementproducts held by the Company. The profits or losses from fluctuation during the holding period are not recognizedbecause the fair value fluctuation is small.
4. Valuation techniques and qualitative and quantitative information on important parameters adopted foritems subject to level III continuous and noncontinuous fair value measurement:
(1) Other non-current financial assets subject to level III continuous fair value measurement are the equityinvestment in non-listed companies held by the Company. The Company will obtain the annual auditor’s report ofthe investee, consider the operating environment, operating conditions and financial status of the investee enterprise,and determine the closing fair value on the basis of the closing net assets of the company. Other investments in otherequity instruments are the equity of non-listed companies held by the Company. In case the investee is a start-upbiotechnology company, the Company, considering no substantial change in the business environment, operatingconditions and financial status of the investee compared to the new investment, uses the investment cost as the bestestimate of fair value in the current period.
(2) The accounts receivable financing subject to level III fair value measurement are the notes receivable heldby the Company, mainly including banker’s acceptance bill. Its credit risk is negligible, its remaining term is short
(less than 12 months), and its book value is close to its fair value. Therefore, the Company uses the book value asits fair value.
5. The reconciliation information between opening and closing book values and unobservable parametersensitivity analysis for the items subject to level III continuous fair value measurement
None.
6. For the items subject to continuous fair value measurement, if there is a conversion between all levels inthe current period, the reason for the conversion and the policy for determining the time point of theconversion
None.
7. Changes in the valuation technology and the reason for the changes in the current periodNone.
8. Fair value of financial assets and financial liabilities that are not measured at fair value:
The financial assets and liabilities measured at amortized cost reported in the financial statements mainlyinclude: notes receivable, accounts receivable, other receivables, long-term borrowings, short-term borrowings,notes payable, accounts payable, other payables, long-term payables, etc.The management of the Group believes that the book values of financial assets and liabilities reported in thefinancial statements are close to their fair values.
9. Others: None
XIV. Related Parties and Related Party Transactions
1. Information about the parent company of the Company: None
Ultimate controller of the Company: None.Other explanations:
The proposal of merger and overall listing of Yunnan Baiyao Group and Baiyao Holdings by issuing shareshad been considered and approved at the first Extraordinary General Meeting of Yunnan Baiyao for 2019. On April24, 2019, CSRC issued the Approval on the Proposal of Merger and Overall Listing of Yunnan Baiyao Group Co.,Ltd and Yunnan Baiyao Holdings Co., Ltd (Zheng Jian Xu Ke [2019] No. 770). Prior to the completion of the above-mentioned merger and overall listing, the controlling shareholder of the Company was Baiyao Holdings, and therewas no de facto controller. After the completion of the transaction, SASAC of Yunnan Province and New Huaduwith its acting-in-concert parties, were equally the largest shareholder of the Company, and neither of them obtainedthe control over the listed company. SASAC of Yunnan Province, along with New Huadu and its acting-in-concertparties, had made long-term share lock-up commitments. Therefore, the listed company did not have de factocontroller before and after the transaction.
On May 22, 2020, SASAC of Yunnan Province transferred 321,160,222 shares of the Company held by it toits wholly-owned subsidiary Yunnan State-owned Equity Operation Management Company at nil consideration.After the completion of the transfer, State-owned Equity Operation and Management Company and New Huaduwith its acting-in-concert parties, were equally the largest shareholder of the Company, and there was no change inthe Company’s situation of not having a de facto controller or controlling shareholder.
On December 8, 2021, SASAC of Yunnan Province transferred 100% of the shares held by State-owned EquityOperation and Management Company to Yunnan Investment Holdings Group. After the equity transfer, YunnanInvestment Holdings Group would hold 321,160,222 shares of the Company through State-owned Equity Operationand Management Company, accounting for 25.04% of the total share capital of the Company. State-owned EquityOperation and Management Company and New Huadu and New Huadu with its acting-in-concert parties, wereequally the largest shareholder of the Company, and the situation that the Company has no de facto controller andno controlling shareholder remain unchanged.
2. Information about subsidiaries of the Company
For details of subsidiaries of the Company, please refer to “1. Interest in Subsidiaries” under Note X.
3. Information about joint ventures and associates of the Company
For details of important joint ventures or associates of the Company, please refer to Note X 3(1) Important Joint Ventures orAssociates.
Details of joint ventures or associates with related party transactions for the period and balances resulting from related partytransactions in the previous period are as follows:
| Name of joint ventures or associates | Relationship with the Company |
| Shanghai Pharmaceuticals Holding Co., Ltd. | Associate |
| Yunnan Baiyao Chinese Herbal Medicine Technology Co., Ltd. | Associate |
| Lijiang Changgengming Trading Co., Ltd. | Associate |
Other explanations: None.
4. Information about other related parties
| Name of other related parties | Relationship between other related parties and the Company |
| New Huadu Industrial Group Co., Ltd. | Substantial shareholder of the Company |
| Jiangsu Yuyue Science & Technology Development Co., Ltd. | Former substantial shareholder of the Company |
| Yunnan Renjiu Technology Co., Ltd. | Former minority shareholder that has significant influence on the subsidiary |
| Yunnan Tianma Pharmaceutical Co., Ltd. | Minority shareholder that has significant influence on the subsidiary |
| Yunnan Jianshui County Xingda Medicine Co., Ltd. | Minority shareholder that has significant influence on the subsidiary |
| Yunnan Baoshan Medicine Co., Ltd. | Minority shareholder that has significant influence on the subsidiary |
| Qiubei County Wanhe Pharmaceutical Industry Co., Ltd., | Minority shareholder that has significant influence on the subsidiary |
| Kaiyuan Sanfa Pharmaceutical Trade Co., Ltd. | Minority shareholder that has significant influence on the subsidiary |
| Chuxiong Jiayuan Medicine Co., Ltd. | Minority shareholder that has significant influence on the subsidiary |
| Yunnan Jingxing Pharmaceutical Industry Group Co., Ltd | Minority shareholder that has significant influence on the subsidiary |
| Dali Hongxu Trading Co., Ltd. | Minority shareholder that has significant influence on the subsidiary |
| Yunnan Salt Wenshan Co., Ltd. | Sub-subsidiary of the substantial shareholder |
| Yunnan Salt Lijiang Co., Ltd. | Sub-subsidiary of the substantial shareholder |
| Yunnan Salt Industry Rixin Co., Ltd | Sub-subsidiary of the substantial shareholder |
| Yunnan Mingbo Industrial Co., Ltd | Sub-subsidiary of the substantial shareholder |
| Yunnan Medical Investment Management Group Kunming Technology Co., Ltd | Sub-subsidiary of the substantial shareholder |
| Yunnan Pharmaceutical Technology Development and Operation Co., Ltd | Subsidiary of the substantial shareholder |
| YEIG Power Assembly Park Development Co., Ltd | Subsidiary of the substantial shareholder |
| YEIG Property Services Co., Ltd. | Sub-subsidiary of the substantial shareholder |
| Tibet Jiushi Zhihe Marketing Co., Ltd. | Subsidiary of the substantial shareholder |
| Kunming Yusi Pharmaceutical Co., Ltd. | Subsidiary of the substantial shareholder |
| Kunming Guiyan New Material Technology Co., Ltd. | Sub-subsidiary of the substantial shareholder |
| Teh-Ho Canned-Food Company | Subsidiary of the substantial shareholder |
| Quanzhou New Huadu Shopping Mall Co., Ltd. | Subsidiary of the substantial shareholder |
| Kunming Jinkuan Commerce & Trade Co., Ltd. | Company controlled by the former related party |
| Shanghai Skynet Brand Management Co., Ltd. | Equity participation company of the subsidiary of the substantial shareholder |
Other explanations: None.
5. Related party transactions
(1) Related party transactions on purchase and sales of goods and rendering and receiving of servicesInformation of commodities purchased/labor services accepted
Unit: RMB
| Related party | Contents of related party transaction | Amount for the current period | Approved transaction limit | Whether exceeding the transaction limit | Amount for the previous period |
| YEIG Property Services Co., Ltd. | Acceptance of labor services | 556,163.40 | |||
| Shanghai Skynet Brand Management Co., Ltd. | Anti-counterfeiting laser label authorization for Yangyuanqing Dunhuang series | 312,388.51 | 78,849.56 | ||
| Yunnan Pharmaceutical Technology Development and Operation Co., Ltd | Medicine | 96,004.80 | |||
| Yunnan Jingxing Pharmaceutical Industry Group Co., Ltd | Medicine | 795,327.66 | |||
| Kunming Yusi Pharmaceutical Co., Ltd. | Medicine | 175,546.21 | |||
| Yunnan Salt Industry Rixin Co., Ltd. | Purchase of raw materials | -29,996.79 | |||
| Yunnan Salt Wenshan Co., Ltd. | Purchase of industrial salt | 30,265.49 | |||
| Shanghai Pharmaceuticals Holding Co., Ltd and its subsidiaries | Purchase of goods and services | 384,427,584.24 | 1,200,000,000.00 | 307,157,849.91 | |
| Yunnan Mingbo Industrial Co., Ltd. | Purchase of goods | 2,206,963.03 | 3,426,512.63 |
| Jiangsu Yuyue Science & Technology Development Co., Ltd and its subsidiaries | Purchase of medical devices, goods, and drugs | 16,306,419.41 | 50,000,000.00 | 20,884,737.52 | |
| Teh-Ho Canned-Food Company and its subsidiaries | Purchase of goods | 419,713.42 | 521,823.37 | ||
| Kunming Jinkuan Commerce & Trade Co., Ltd. | Purchase of goods and services | ||||
| Quanzhou New Huadu Shopping Mall Co., Ltd. | Purchase of services | ||||
| Yunnan Medical Investment Management Group Kunming Technology Co., Ltd. | Purchase of goods | ||||
| Yunnan Salt Lijiang Co., Ltd. | Purchase of salt products | 309.73 |
Information of commodities sold/labor services provided
Unit: RMB
| Related party | Contents of related party transaction | Amount for the current period | Amount for the previous period |
| Yunnan Baoshan Medicine Co., Ltd. | Sales of medicine | 5,572.23 | -182,136.79 |
| Yunnan Pharmaceutical Technology Development and Operation Co., Ltd | Sales of medicine | 6,514,704.02 | |
| Yunnan Jingxing Pharmaceutical Industry Group Co., Ltd | Sales of medicine | 9,531,505.43 | |
| Kunming Guiyan New Material Technology Co., Ltd. | Testing fee | 2,830.19 | 3,000.00 |
| Lijiang Changgengming Trading Co., Ltd. | Sales of medicine | 117,214.19 | 256,108.86 |
| Shanghai Pharmaceuticals Holding Co., Ltd and its subsidiaries | Sales of goods | 296,906,681.67 | 228,849,181.50 |
| Tibet Jiushi Zhihe Marketing Co., Ltd. | Sales of goods | 114,508,530.93 | 113,247,658.02 |
| Kunming Jinkuan Commerce & Trade Co., Ltd. | Sales of goods | 31,031,200.04 |
Explanations on related party transactions on purchase and sales of goods and rendering and receiving of services: None.
(2) Trusteeship/contracting and entrusted management/outsourcing: None.
(3) Lease between related parties
The Company as the lessor: None.The Company as the lessee:
Unit: RMB
| Name of lessor | Type of leased assets | Rental costs for short-term leases and leases of low-value assets that are streamlined (if applicable) | Variable lease payments that are not included in the measurement of the lease liability (if applicable) | Rent paid | Interest expense on lease liabilities assumed | Increased right-of-use assets | |||||
| Amount for the current period | Amount for the previous period | Amount for the current period | Amount for the previous period | Amount for the current period | Amount for the previous period | Amount for the current period | Amount for the previous period | Amount for the current period | Amount for the previous period | ||
| YEIG Power Assembly Park Development Co., Ltd. | Workshop | 88,443.37 | 114,210.95 | ||||||||
| Yunnan Baoshan Medicine Co., Ltd. | Real estate, facilities and equipment, vehicles | 5,627,570.16 | 229,286.90 | ||||||||
| Kaiyuan Sanfa Pharmaceutical Trade Co., Ltd. | Office equipment, transportation vehicles | 301,238.94 | 602,477.88 | ||||||||
| Yunnan Tianma Pharmaceutical Co., Ltd. | House, transportation vehicles | 385,321.10 | 420,000.00 | 8,740.00 | 25,340.65 | ||||||
| Yunnan Jianshui County Xingda Medicine Co., Ltd. | House | 1,552,123.81 | 58,290.27 | 15,144.50 | 7,545,479.15 | ||||||
Explanations on lease between related parties: None.
(4) Related party guarantees: None.
(5) Borrowings with related party: None.
(6) Asset transfer and debt restructuring of related parties: None.
(7) Remuneration to key management personnel
Unit: RMB
| Item | Amount for the current period | Amount for the previous period |
| Remuneration to key management personnel | 17,481,615.90 | 48,289,461.36 |
(8) Other related party transactions: None.
6. Amounts receivable from and payable to related parties
(1) Receivables
Unit: RMB
| Item name | Related party | Closing balance | Opening balance | ||
| Book balance | Provision for bad debt | Book balance | Provision for bad debt | ||
| Accounts receivable | Shanghai Pharmaceuticals Holding Co., Ltd and its subsidiaries | 26,757,743.29 | 1,335,690.88 | 14,929,453.95 | 588,430.73 |
| Accounts receivable | Yunnan Baoshan Medicine Co., Ltd. | 2,450.65 | 122.53 | ||
| Accounts receivable | Yunnan Pharmaceutical Technology Development and Operation Co., Ltd | 18,780.70 | 939.04 | 16,253.88 | 812.69 |
| Accounts receivable | Yunnan Jingxing Pharmaceutical Industry Group Co., Ltd | 5,056,493.32 | 252,824.67 | 256,854.37 | 12,842.72 |
| Accounts receivable | Lijiang Changgengming Trading Co., Ltd. | 2,693,654.43 | 767,754.81 | 2,717,793.63 | 610,834.92 |
| Accounts receivable | Tibet Jiushi Zhihe Marketing Co., Ltd. | 121.00 | 6.05 | ||
| Prepayment | Qiubei County Wanhe Pharmaceutical Industry Co., Ltd. | 72,206.41 | |||
| Prepayment | Yunnan Medical Investment Management Group Kunming Technology Co., Ltd | 28,871.00 | |||
| Prepayment | Jiangsu Yuyue Science & Technology Development Co., Ltd and its subsidiaries | 1,185,072.72 | |||
| Prepayment | Shanghai Pharmaceuticals Holding Co., Ltd and its subsidiaries | 205,957.44 | |||
| Other receivables | Yunnan Baiyao Chinese Herbal Medicine Technology Co., Ltd. | 179,940.16 | 158,464.23 | 179,791.57 | 158,771.36 |
| Other receivables | Lijiang Changgengming Trading Co., Ltd. | 31,067.02 | 1,553.35 | ||
| Dividends receivable | Shanghai Pharmaceuticals Holding Co., Ltd. | 272,906,986.36 | |||
| Notes receivable | Shanghai Pharmaceuticals Holding Co., Ltd and its subsidiaries | 689,199.51 | |||
| Accounts receivable financing | Tibet Jiushi Zhihe Marketing Co., Ltd. | 11,880,281.00 | 1,544,428.80 | ||
| Accounts receivable financing | Shanghai Pharmaceuticals Holding Co., Ltd and its subsidiaries | 21,561,996.94 | 8,225,916.72 |
(2) Payables
Unit: RMB
| Item name | Related party | Closing book balance | Opening book balance |
| Accounts payable | Shanghai Pharmaceuticals Holding Co., Ltd and its subsidiaries | 77,196,031.46 | 60,976,451.66 |
| Accounts payable | Yunnan Mingbo Industrial Co., Ltd | 409,608.22 | 28,682.85 |
| Accounts payable | Yunnan Pharmaceutical Technology Development and Operation Co., Ltd | 17,822.80 | |
| Accounts payable | Yunnan Jingxing Pharmaceutical Industry Group Co., Ltd. | 61,308.63 | |
| Accounts payable | Kunming Yusi Pharmaceutical Co., Ltd. | 111,740.89 | 196,663.49 |
| Accounts payable | Yunnan Salt Industry Rixin Co., Ltd. | 8,403.60 | 42,300.00 |
| Accounts payable | Yunnan Medical Investment Management Group Kunming Technology Co., Ltd. | 907,736.56 | |
| Accounts payable | Chuxiong Jiayuan Medicine Co., Ltd. | 3,126.32 | |
| Accounts payable | Qiubei County Wanhe Pharmaceutical Industry Co., Ltd. | 10,779.90 | |
| Accounts payable | Yunnan Renjiu Technology Co., Ltd. | 0.30 | |
| Accounts payable | Jiangsu Yuyue Science & Technology Development Co., Ltd and its subsidiaries | 16,426,585.07 | |
| Accounts payable | Teh-Ho Canned-Food Company and its subsidiaries | 128,161.59 | 44,515.35 |
| Notes payable | Jiangsu Yuyue Science & Technology Development Co., Ltd and its subsidiaries | 548,608.11 | 11,503,853.81 |
| Notes payable | Shanghai Pharmaceuticals Holding Co., Ltd and its subsidiaries | 40,461.60 | 1,745,473.86 |
| Contractual liabilities | Shanghai Pharmaceuticals Holding Co., Ltd and its subsidiaries | 41,340,167.06 | 50,412,199.36 |
| Contractual liabilities | Tibet Jiushi Zhihe Marketing Co., Ltd. | 11,600,220.36 | 2,427,757.00 |
| Contractual liabilities | Yunnan Baoshan Medicine Co., Ltd. | 567,217.96 | |
| Other payables | Chuxiong Jiayuan Medicine Co., Ltd. | 604.80 | |
| Other payables | Kaiyuan Sanfa Pharmaceutical Trade Co., Ltd. | 12,831.86 | |
| Other non-current liabilities due within one year | YEIG Power Assembly Park Development Co., Ltd | 1,185,189.56 | 1,185,189.56 |
| Other non-current liabilities due within one year | Yunnan Jianshui County Xingda Medicine Co., Ltd. | 1,629,730.00 | |
| Other non-current liabilities due within one year | Yunnan Tianma Pharmaceutical Co., Ltd. | 385,321.11 | 761,902.21 |
| Other non-current liabilities due within one year | Yunnan Baoshan Medicine Co., Ltd. | 2,610,019.14 | |
| Other non-current liabilities due within one year | Yunnan Jingxing Pharmaceutical Industry Group Co., Ltd | 526,744.88 | |
| Lease liabilities | Yunnan Jianshui County Xingda Medicine Co., Ltd. | 5,974,039.42 |
| Lease liabilities | Yunnan Jingxing Pharmaceutical Industry Group Co., Ltd. | 537,176.49 | |
| Lease liabilities | YEIG Power Assembly Park Development Co., Ltd | 2,792,341.92 | 3,889,088.11 |
| Lease liabilities | Yunnan Baoshan Medicine Co., Ltd. | 2,714,419.89 | |
| Dividends payable |
State-owned Assets Supervision andAdministration Commission of Yunnan ProvincialPeople’s Government, New Huadu IndustrialGroup Co., Ltd.
| 86,490,742.04 | 86,490,742.04 | ||
| Dividends payable | Dali Hongxu Trading Co., Ltd. | 854,930.24 | |
| Trade payable | Kunming Jinkuan Commerce & Trade Co., Ltd. | 60,076.28 | 60,963.52 |
7. Related party commitments: None.
8. Others: None.
XV. Share-based payment
1. General information about share-based payment
□Applicable ?Not applicable
2. Equity-settled share-based payment
□Applicable ?Not applicable
3. Cash-settled share-based payment
□Applicable ?Not applicable
4. Expenses for share-based payment during the current period
□Applicable ?Not applicable
5. Amendment and termination of share-based payment: None.
6. Others: None.
XVI. Commitment and Contingencies
1. Significant commitments: None.
2. Contingencies
(1) Significant contingencies on the balance sheet date
Provision of guarantees for Yunnan Yuncheng Hospital Management Co., Ltd.
In November 2017, the Company issued the Announcement on the Investment and Establishment of PPPProject Companies by Wholly-owned Subsidiaries and the Provision of Guarantees for Them. According to theannouncement, Yunnan Provincial Health and Family Planning Commission was authorized by Yunnan ProvincialPeople’s Government to serve as the project implementation agency of the Chenggong Hospital PPP project (PhaseI project) of the First Affiliated Hospital of Kunming Medical University, and The First Affiliated Hospital ofKunming Medical University was authorized to be the representative of the government, to invest and hold shares
on behalf of the government, and jointly establish Yunnan Yuncheng Hospital Management Co., Ltd (the “ProjectCompany”) with social capital. Yunnan Pharma, a wholly-owned subsidiary of the Company, and Yunnan HaopyPharmaceutical Sales Co., Ltd, a private capital, formed a consortium to bid for the project, and finally won the bid.According to the requirements of the procurement documents, Yunnan Pharma shall invest RMB 100,000 in theProject Company in cash, with an equity ratio of 10%. The consortium shall undertake joint and several guaranteeliability for the PPP project debt of the Project Company for a period of 12 years, and the maximum total guaranteeamount of the consortium should be RMB 150,000.On April 22, 2024, Yunnan Yuncheng Hospital Management Co., Ltd held a shareholders’ meeting, at whichthe shareholders not only unanimously agreed to terminate Chenggong Hospital PPP project (Phase I project) of theFirst Affiliated Hospital of Kunming Medical University, but also unanimously agreed to terminate the PPP projectcontracts, investment agreements, and drug distribution project agreements. Currently, the Project Company issubject to liquidation.
(2) Where the Company had no significant contingencies to disclose, explanation is also requiredThe Company had no significant contingencies to disclose.
3. Others: None.
XVII. Events Subsequent to the Balance Sheet Date
1. Important non-adjusting events: None.
2. Profit distribution: None.
3. Sales return: None.
4. Explanation on other events subsequent to the balance sheet date: None.
XVIII. Other Significant Events
1. Correction of previous accounting errors: None.
2. Debt restructuring: None
3. Assets exchange: None
4. Annuity plan
(1) In accordance with the Trial Measures for Enterprise Annuity and Trial Measures for Enterprise AnnuityFund Management of the Ministry of Labor and Social Security, as well as the Letter Yun Lao She Han [2006] No.267 of Department of Labor and Social Security of Yunnan Province, the Company was approved to establish anenterprise annuity. The investment manager of the enterprise annuity fund is Fullgoal Fund Management Co., Ltd.,and the trustee of the enterprise annuity fund is China Merchants Bank Co., Ltd. The enterprise contribution shallbe paid annually at 5% of the total salary of the employees of the Company in the previous year, and the individual
contribution of the employees shall be paid at 10% of the unit contribution. The individual contribution shall becollected and paid by the Company from the employee’s salary.
(2) According to the replies of Yunnan Provincial Department of Human Resources and Social Security (YunRen She Letter [2009] No.79) and Kunming Municipal Labor and Social Security Bureau (Kun Lao She Han [2008]No.204) on the Enterprise Annuity Implementation Plan of Yunnan Pharma, Yunnan Pharma, a subsidiary of theCompany, was approved to establish an enterprise annuity. The investment manager of the enterprise annuity fundis Ping An Annuity Insurance Company of China, Ltd, and the trustee of the enterprise annuity fund is ChinaMerchants Bank Co., Ltd. According to the plan, the enterprise contribution shall be paid annually at no more than
8.33% of the total salary of the employees of Yunnan Pharma in the previous year, and the individual contributionof the employees shall be paid at 10% of the unit contribution.
(3) According to the replies of Yunnan Provincial Department of Human Resources and Social Security (YunRen She Letter [2009] No.79) and Kunming Municipal Labor and Social Security Bureau (Kun Ren She Han [2016]No.21) on the Enterprise Annuity Implementation Plan of Yunnan Institute of Materia Medica, Yunnan Institute ofMateria Medica, a subsidiary of the Company, was approved to establish an enterprise annuity. The investmentmanager of the enterprise annuity fund is Ping An Annuity Insurance Company of China, Ltd, and the trustee of theenterprise annuity fund is China Construction Bank Corporation. According to the plan, the enterprise contributionshall be paid annually at no more than 5% of the total salary of the employees of Yunnan Institute of Materia Medicain the previous year, and the individual contribution of the employees shall be paid at 10% of the unit contribution.
(4) In accordance with the Measures on Enterprise Annuity (Decree No. 36 of Ministry of Human Resourcesand Social Security), Measures on the Management of Enterprise Annuity Fund (Decree No. 11 of Ministry ofHuman Resources and Social Security) and other relevant provisions as well as the Reply on Filing of EnterpriseAnnuity Plan of Yunnan Baiyao Group Wuxi Pharmaceutical Co., Ltd issued by Wuxi Human Resources and SocialSecurity Bureau (Xi Ren She Fu [2018] No.27), Yunnan Baiyao Group Wuxi Pharmaceutical Co., Ltd, a subsidiaryof the Company, was approved to establish an enterprise annuity. The investment manager of the enterprise annuityfund is Ping An Annuity Insurance Company of China, Ltd, and the trustee of the enterprise annuity fund is ChinaConstruction Bank Corporation. According to the plan, the enterprise contribution shall be paid annually at no morethan 5% of the total salary of the employees of Yunnan Baiyao Group Wuxi Pharmaceutical Co., Ltd in the previousyear, and the individual contribution of the employees shall be paid at 10% of the unit contribution.
5. Discontinuation of operation: None.
6. Segment information
(1) Determination basis and accounting policy of reporting segments: None.
(2) Financial information of reporting segments: None.
(3) If the Company has no reporting segments, or the total assets and total liabilities of the reporting segmentscannot be disclosed, please explain the reason: None.
(4) Other explanations: None.
7. Other significant transactions and matters that have an impact on investors’ decision-making: None.
8. Others: None.
XIX. Notes to Major Items of Financial Statements of the Parent Company
1. Accounts receivable
(1) Disclosure by aging
Unit: RMB
| Aging | Closing book balance | Opening book balance |
| Within 1 year (inclusive of 1 year) | 1,018,219,594.34 | 614,449,599.26 |
| 1 to 2 years | 86,744,749.78 | 85,846,594.74 |
| 2 to 3 years | 12,417,125.23 | 5,516,424.89 |
| Above 3 years | 647,282,502.25 | 645,998,164.53 |
| Total | 1,764,663,971.60 | 1,351,810,783.42 |
(2) Disclosure by provision for bad debts
Unit: RMB
| Category | Closing balance | Opening balance | ||||||||
| Book balance | Provision for bad debts | Book value | Book balance | Provision for bad debts | Book value | |||||
| Amount | Percentage | Amount | Provision proportion | Amount | Percentage | Amount | Provision proportion | |||
| Including: | ||||||||||
| Accounts receivable with provision for bad debts on portfolio basis | 1,764,663,971.60 | 100.00% | 22,963,808.71 | 1.30% | 1,741,700,162.89 | 1,351,810,783.42 | 100.00% | 20,902,222.46 | 1.55% | 1,330,908,560.96 |
| Including: | ||||||||||
| Accounts receivable from external customers | 86,972,857.37 | 4.93% | 22,963,808.71 | 26.40% | 64,009,048.66 | 79,297,162.59 | 5.87% | 20,902,222.46 | 26.36% | 58,394,940.13 |
| Accounts receivable from related party customers | 1,677,691,114.23 | 95.07% | 1,677,691,114.23 | 1,272,513,620.83 | 94.13% | 1,272,513,620.83 | ||||
| Total | 1,764,663,971.60 | 100.00% | 22,963,808.71 | 1.30% | 1,741,700,162.89 | 1,351,810,783.42 | 100.00% | 20,902,222.46 | 1.55% | 1,330,908,560.96 |
Provision for bad debts made on portfolio basis:
Unit: RMB
| Name | Closing balance |
| Book balance | Provision for bad debts | Provision proportion | |
| Accounts receivable from external customers | 86,972,857.37 | 22,963,808.71 | 26.40% |
| Accounts receivable from related party customers | 1,677,691,114.23 | ||
| Total | 1,764,663,971.60 | 22,963,808.71 |
Explanation on the basis for determining the portfolio: None.If provision was made for bad debts of accounts receivable in accordance with the general excepted credit loss model:
□Applicable ?Not applicable
(3) Provision for bad debts accrued, recovered or reversed during the reporting period: None.
(4) Actual write-off of accounts receivable for the period: None.
(5) Top five customers with closing balance of accounts receivable and contractual assets summarized bydebtor
Unit: RMB
| Entity name | Closing balance of accounts receivable | Closing balance of contractual assets | Closing balance of accounts receivable and contractual assets | Percentage of total closing balance of accounts receivable and contractual assets | Closing balance of provision for bad debt of accounts receivable and provision for impairment of contractual assets |
| Customer A | 651,239,757.21 | 651,239,757.21 | 36.90% | ||
| Customer B | 555,972,839.87 | 555,972,839.87 | 31.51% | ||
| Customer C | 184,490,481.83 | 184,490,481.83 | 10.45% | ||
| Customer D | 132,081,466.31 | 132,081,466.31 | 7.48% | ||
| Customer E | 90,032,281.96 | 90,032,281.96 | 5.10% | ||
| Total | 1,613,816,827.18 | 1,613,816,827.18 | 91.44% |
2. Other receivables
Unit: RMB
| Item | Closing balance | Opening balance |
| Dividends receivable | 272,906,986.36 | 4,531,100.00 |
| Other receivables | 6,116,913,020.41 | 4,122,557,802.76 |
| Total | 6,389,820,006.77 | 4,127,088,902.76 |
(1) Interest receivable
1) Interest receivable by type: None.
2) Major overdue interest: None.
3) Disclosure by provision for bad debts
□Applicable ?Not applicable
4) Provision for bad debts accrued, recovered or reversed during the reporting period: None.
5) Actual write-off of interest receivable for the period: None.
(2) Dividends receivable
1) Dividends receivable by type
Unit: RMB
| Project (or investee) | Closing balance | Opening balance |
| Jacobson Pharma Corporation Limited | 4,531,100.00 | |
| Shanghai Pharmaceuticals Holding Co., Ltd. | 272,906,986.36 | |
| Total | 272,906,986.36 | 4,531,100.00 |
2) Major dividends receivable aged over one year: None.
3) Disclosure by provision for bad debts
□Applicable ?Not applicable
4) Provision for bad debts accrued, recovered or reversed during the reporting period: None.
5) Actual write-off of dividends receivable for the period: None.
(3) Other receivables
1) Other receivables by nature
Unit: RMB
| Nature of payment | Book balance at the end of the reporting period | Book balance at the beginning of the reporting period |
| Amounts from related parties within the scope of consolidation | 6,245,637,078.87 | 4,254,011,881.88 |
| Deposits and guarantees | 9,326,051.55 | 14,347,777.84 |
| Petty cash | 14,831,329.01 | 7,104,113.05 |
| Total | 6,269,794,459.43 | 4,275,463,772.77 |
2) Disclosure by aging
Unit: RMB
| Aging | Book balance at the end of the reporting period | Book balance at the beginning of the reporting period |
| Within 1 year (inclusive of 1 year) | 3,054,259,156.11 | 1,864,972,976.56 |
| 1 to 2 years | 1,265,416,376.08 | 943,970,831.13 |
| 2 to 3 years | 800,183,513.08 | 677,614,286.73 |
| Above 3 years | 1,149,935,414.16 | 788,905,678.35 |
| Total | 6,269,794,459.43 | 4,275,463,772.77 |
3) Disclosure by provision for bad debts
Unit: RMB
| Category | Closing balance | Opening balance | ||||||||
| Book balance | Provision for bad debts | Book value | Book balance | Provision for bad debts | Book value | |||||
| Amount | Percentage | Amount | Provision proportion | Amount | Percentage | Amount | Provision proportion | |||
| Including: | ||||||||||
| Provision for bad debts on portfolio basis | 6,270,020,427.16 | 100.00% | 152,881,439.02 | 2.44% | 6,117,138,988.14 | 4,275,463,772.77 | 100.00% | 152,905,970.01 | 3.58% | 4,122,557,802.76 |
| Including: | ||||||||||
| Aging portfolio | 24,383,348.29 | 0.39% | 6,906,769.48 | 28.33% | 17,476,578.81 | 21,451,890.89 | 0.50% | 6,931,300.47 | 32.31% | 14,520,590.42 |
| Related party portfolio | 6,245,637,078.87 | 99.61% | 145,974,669.54 | 2.34% | 6,099,662,409.33 | 4,254,011,881.88 | 99.50% | 145,974,669.54 | 3.43% | 4,108,037,212.34 |
| Total | 6,270,020,427.16 | 100.00% | 152,881,439.02 | 2.44% | 6,117,138,988.14 | 4,275,463,772.77 | 100.00% | 152,905,970.01 | 3.58% | 4,122,557,802.76 |
Provision for bad debts in accordance with the general excepted credit loss model:
Unit: RMB
| Provision for bad debts | Phase I | Phase II | Phase III | Total |
| Expected credit losses for the next 12 months | Lifetime ECL (not credit-impaired) | Lifetime ECL (credit-impaired) | ||
| Balance as of January 1, 2024 | 152,905,970.01 | 0.00 | 152,905,970.01 | |
| Balance as of January 1, 2024 in the current period | ||||
| --Transfer to Phase II | 0.00 | |||
| --Transfer to Phase III | 0.00 | |||
| --Reversal to Phase II | 0.00 | |||
| --Reversal to Phase I | 0.00 | |||
| Current provision | 0.00 | |||
| Current reversal | 24,530.99 | 24,530.99 | ||
| Current resales | 0.00 | |||
| Current write-off | 0.00 | |||
| Other changes | 0.00 | |||
| Balance as of June 30, 2024 | 152,881,439.02 | 152,881,439.02 |
Basis for classification of phases and percentage of provision for bad debts: None.Changes in book balance with significant changes in loss reserves in the current period
□Applicable ?Not applicable
4) Provision for bad debts accrued, recovered or reversed during the reporting period
Provision for bad debts during the reporting period:
Unit: RMB
| Category | Opening balance | Changes in amount for the period | Closing balance | |||
| Provision | Recovery or reversal | Write-off | Others | |||
| Other accounts receivable with provision for bad debts on portfolio basis by credit risk characteristics | 152,905,970.01 | 619,867.19 | 644,398.18 | 152,881,439.02 | ||
| Total | 152,905,970.01 | 619,867.19 | 644,398.18 | 152,881,439.02 | ||
Among them, the important amount of recovery or reversal of provision for bad debt for the period: None.
5) Actual write-off of other receivables for the period: None.
6) Top five customers with closing balance of other receivables summarized by debtor
Unit: RMB
| Entity name | Nature of payment | Closing balance | Aging | Percentage of total of closing balance of other receivables | Closing balance of provision for bad debts |
| Entity A | Amounts from related parties within the scope of consolidation | 1,701,366,161.86 | Within 1 year, 1 to 2 years, 2 to 3 years | 27.13% | |
| Entity B | Amounts from related parties within the scope of consolidation | 1,378,993,166.06 | Within 1 year, 1 to 2 years, 2 to 3 years, above 3 years | 21.99% | |
| Entity C | Amounts from related parties within the scope of consolidation | 824,545,699.09 | Within 1 year, 1 to 2 years, 2 to 3 years | 13.15% | |
| Entity D | Amounts from related parties within the scope of consolidation | 748,952,791.58 | Within 1 year, 1 to 2 years, 2 to 3 years | 11.94% | |
| Entity E | Amounts from related parties within the scope of consolidation | 383,990,715.51 | Within 1 year, 1 to 2 years, 2 to 3 years, above 3 years | 6.12% | |
| Total | 5,037,848,534.10 | 80.33% |
7) Those reported as other receivables due to centralized fund management: None.
3. Long-term equity investment
Unit: RMB
| Item | Closing balance | Opening balance | ||||
| Book balance | Impairment provision | Book value | Book balance | Impairment provision | Book value | |
| Investments in subsidiaries | 2,573,195,450.92 | 244,474,941.95 | 2,328,720,508.97 | 2,573,195,450.92 | 244,474,941.95 | 2,328,720,508.97 |
| Investments in associates and joint ventures | 11,787,556,522.70 | 11,787,556,522.70 | 11,553,542,823.25 | 11,553,542,823.25 | ||
| Total | 14,360,751,973.62 | 244,474,941.95 | 14,116,277,031.67 | 14,126,738,274.17 | 244,474,941.95 | 13,882,263,332.22 |
(1) Investments in subsidiaries
Unit: RMB
| Investee | Opening balance (book value) | Opening balance of impairment provision | Increase and decrease in the current period | Closing balance (book value) | Closing balance of impairment provision | |||
| Additional investment | Decreased investment | Provision for impairment | Others | |||||
| Yunnan Baiyao Group Traditional Chinese Medicine Resources Co., Ltd. | 130,894,518.14 | 130,894,518.14 | ||||||
| Yunnan Baiyao Group Medicine E-commerce Co., Ltd. | 56,059,850.00 | 56,059,850.00 | ||||||
| Yunnan Baiyao Group Wuxi Pharmaceutical Co., Ltd. | 39,627,253.25 | 39,627,253.25 | ||||||
| Yunnan Baiyao Group Dali Pharmaceutical Co., Ltd. | 16,489,200.00 | 16,489,200.00 | ||||||
| Yunnan Baiyao Group Health Products Co., Ltd. | 168,297,661.03 | 168,297,661.03 | ||||||
| Yunnan Pharmaceutical Co., Ltd. | 765,533,647.30 | 765,533,647.30 | ||||||
| Yunnan Institute of Materia Medica | 101,075,329.94 | 101,075,329.94 | ||||||
| Yunnan Baiyao Holding Investment Co., Ltd. | 193,992,837.67 | 193,992,837.67 | ||||||
| Yunnan Baiyao Teayield Co., Ltd. | 3,701,960.00 | 20,000,000.00 | 3,701,960.00 | 20,000,000.00 | ||||
| Yunnan Baiyao Group (Hainan) Co., Ltd. | 457,198,438.74 | 457,198,438.74 | ||||||
| Yunnan Baiyao Group Shanghai Co., Ltd. | 11,350,000.00 | 11,350,000.00 | ||||||
| Yunnan Baiyao Group Medical Technology Hefei Co., Ltd. | 85,700,000.00 | 85,700,000.00 | ||||||
| Shanghai Yunzhen Medical Technology Co., Ltd. | 200,572,858.37 | 200,572,858.37 | ||||||
| YNBY International Limited (Formerly Ban Loong Holdings Limited) | 98,226,954.53 | 224,474,941.95 | 98,226,954.53 | 224,474,941.95 | ||||
| Total | 2,328,720,508.97 | 244,474,941.95 | 2,328,720,508.97 | 244,474,941.95 | ||||
(2) Investments in associates and joint ventures
Unit: RMB
| Investor | Opening balance (book value) | Opening balance of impairment provision | Increase and decrease in the current period | Closing balance (book value) | Closing balance of impairment provision | |||||||
| Additional investment | Decreased investment | Profits and losses on investments recognized under the equity method | Adjustment of other comprehensive income | Change in other equities | Cash dividends or profit declared to be issued | Provision for impairment | Others | |||||
| I. Joint ventures | ||||||||||||
| Shanghai Pharmaceuticals Holding Co., Ltd. | 11,537,291,236.28 | 497,175,749.72 | -5,825,439.28 | 15,607,562.45 | 272,906,986.36 | 11,771,342,122.81 | ||||||
| Yunnan Tianzheng Testing Co., Ltd. | 16,251,586.97 | -37,187.08 | 16,214,399.89 | |||||||||
| Yunnan Baiyao Chinese Herbal Medicine Technology Co., Ltd. | ||||||||||||
| Subtotal | 11,553,542,823.25 | 0.00 | 0.00 | 0.00 | 497,138,562.64 | -5,825,439.28 | 15,607,562.45 | 272,906,986.36 | 0.00 | 0.00 | 11,787,556,522.70 | 0.00 |
| II. Associates | ||||||||||||
| Total | 11,553,542,823.25 | 0.00 | 0.00 | 497,138,562.64 | -5,825,439.28 | 15,607,562.45 | 272,906,986.36 | 0.00 | 0.00 | 11,787,556,522.70 | ||
The recoverable amount is determined by the net amount of fair value minus disposal expenses
□Applicable ?Not applicable
The recoverable amount is determined by the present value of expected future cash flows
□Applicable ?Not applicable
Reasons for significant differences between the foregoing information and information used for impairment testing in previous years or external information: None.Reasons for significant differences between the information used in the Company’s impairment tests in previous years and the actual situation in the corresponding year: None.
(3) Other explanations
For details of Yunnan Baiyao Chinese Herbal Medicine Technology Co., Ltd., please refer to “X. Rights and interests in other entities - 3. Rights and interests in joint venture arrangements orassociates.”
4. Operating revenue and operating cost
Unit: RMB
| Item | Amount for the current period | Amount for the previous period | ||
| Revenue | Cost | Revenue | Cost | |
| Principal businesses | 4,449,661,598.70 | 1,837,265,009.69 | 4,029,037,887.33 | 1,837,757,275.70 |
| Other businesses | 75,993,077.06 | 62,495,542.18 | 41,638,215.70 | 49,750,053.44 |
| Total | 4,525,654,675.76 | 1,899,760,551.87 | 4,070,676,103.03 | 1,887,507,329.14 |
Details of operating revenue and operating cost:
Unit: RMB
| Type of contract | Drug sales | TCM resources | Others | Total | ||||
| Operating revenue | Operating cost | Operating revenue | Operating cost | Operating revenue | Operating cost | Operating revenue | Operating cost | |
| Business type | 4,390,564,339.48 | 1,791,713,513.17 | 59,097,259.22 | 45,551,496.52 | 75,993,077.06 | 62,495,542.18 | 4,525,654,675.80 | 1,899,760,551.90 |
| Including: | ||||||||
| Industry sales income | 4,390,564,339.48 | 1,791,713,513.17 | 4,390,564,339.50 | 1,791,713,513.20 | ||||
| Commercial sales income | 59,097,259.22 | 45,551,496.52 | 59,097,259.20 | 45,551,496.50 | ||||
| Others | 75,993,077.06 | 62,495,542.18 | 75,993,077.10 | 62,495,542.20 | ||||
| By operating areas | 4,390,564,339.48 | 1,791,713,513.17 | 59,097,259.22 | 45,551,496.52 | 75,993,077.06 | 62,495,542.18 | 4,525,654,675.80 | 1,899,760,551.90 |
| Including: | ||||||||
| In Yunnan province | 581,773,978.64 | 311,332,632.01 | 58,119,277.57 | 44,611,129.55 | 75,993,077.06 | 62,495,542.18 | 715,886,333.3 | 418,439,303.7 |
| Outside Yunnan province (excluding overseas) | 3,808,790,360.84 | 1,480,380,881.16 | 977,981.65 | 940,366.97 | 3,809,768,342.5 | 1,481,321,248.1 | ||
| Overseas | ||||||||
Information related to performance obligations: None.Other explanations: None.Information related to the transaction price allocated to the remaining performance obligations: At the end of thisreporting period, the Company recorded an amount of revenue of RMB 0.00 from its performance of obligations setout in the signed contracts to be fulfilled or fully fulfilled. Among this, RMB 0 is expected to be recognized as revenuein the year, RMB 0 is expected to be recognized as revenue in the year, and RMB 0 is expected to be recognized asrevenue in the year.Significant contractual changes or significant transaction price adjustments: None.Other explanations: None.
5. Investment income
Unit: RMB
| Item | Amount for the current period | Amount for the previous period |
| Long-term equity investment incomes accounted by the equity method | 497,138,562.64 | 438,812,247.13 |
| Investment income on financial assets held for trading during holding period | 4,639,488.08 |
| Investment income from disposal of financial assets held for trading | -3,681,651.93 | |
| Investment income from other non-current financial assets during the holding period | 3,427,111.75 | 5,000,000.00 |
| Others | -21,173,817.57 | 2,014,422.25 |
| Total | 479,391,856.82 | 446,784,505.53 |
6. Others: None.
XX. Supplementary Information
1. Breakdown of non-recurring profits and losses for the current period
?Applicable □Not applicable
Unit: RMB
| Item | Amount | Description |
| Profits and losses from disposal of non-current assets | -1,658,086.88 | |
| Government subsidies included in the current profit and losses (excluding the government subsidies closely related to regular businesses of the Company, in line with national policies, enjoyed by the Company according to definite standards, and affecting constantly the Company’s profits and losses) | 34,220,746.37 | |
| Except for effective hedging business related to the normal operation of the company, profits and losses arising from changes in fair value of financial assets and financial liabilities held by non-financial enterprises, as well as profits and losses arising from disposal of financial assets and financial liabilities | -4,964,027.66 | |
| Profits and losses from entrusted investments or asset management | 3,003,994.06 | |
| Non-operating revenue and expenses other than the above | -257,970.80 | |
| Other profit and loss items that meet the definition of non-recurring profits and losses | 27,441,539.97 | |
| Less: Amount affected by the income tax | 3,960,096.44 | |
| Amount affected by minority interests (after tax) | 11,536.45 | |
| Total | 53,814,562.17 | -- |
Other profits and losses satisfying the definition of non-recurring profits and losses:
?Applicable □Not applicable
Other profits and losses satisfying the definition of non-recurring profits and losses mainlyinclude non-recurring profits and losses such as time deposit interest and value added tax reductionand exemption.
Note for the definition of non-recurring profits and losses set out in the No.1 Explanatory Announcement onInformation Disclosure for Companies of Offering Their Securities to the Public - Non-recurring Profits and Losses,as recurring profits and losses
□Applicable ?Not applicable
2. Return on equity and earnings per share
| Profits during the reporting period | Earnings per share |
| Weighted average return on equity | Basic earnings per share (RMB/share) | Diluted earnings per share (RMB/share) | |
| Net profits attributable to ordinary shareholders of the Company | 7.93% | 1.79 | 1.79 |
| Net profits attributable to ordinary shareholders of the Company after the deducting non-recurring profits and losses | 7.80% | 1.76 | 1.76 |
3. Differences in the accounting data under the Chinese Accounting Standards (CAS) andoversees accounting standards
(1) Differences in the net profits and net assets in financial statements disclosed respectivelyunder International Financial Reporting Standards (IFRS) and CAS
□Applicable ?Not applicable
(2) Differences in the net profits and net assets in financial statements disclosed respectivelyunder overseas accounting standards and CAS
□Applicable ?Not applicable
(3) Explanations of the causes to differences in accounting data under CAS and overseasaccounting standards; if adjustment is made for data audited by an overseas audit institution,the name of the institution shall be provided
4. Others
None.
Yunnan Baiyao Group Co., Ltd.
Board of DirectorsAugust 26, 2024