Semi-annual Report for 2026

Jiangsu Lihuan Pharmaceutical Co., Ltd. 2026 Semi-Annual Report

Company code: 600513 Company abbreviation: Lianhuan Pharmaceutical

Jiangsu Lianhuan Pharmaceutical Co., Ltd. 2026 Semi-Annual Report

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Jiangsu Lihuan Pharmaceutical Co., Ltd. 2026 Semi-Annual Report

Important tips

1. The company’s board of directors, directors and senior managers guarantee the authenticity, accuracy and completeness of the contents of the semi-annual report and that there are no false records, misleading statements or major omissions, and bear individual and joint legal liability.

2. All directors of the company shall attend the board meeting.

3. This semi-annual report has not been audited.

4. Qian Zhenhua, the person in charge of the company, Xue Hao, the person in charge of accounting work, and Ma Tingting, the person in charge of the accounting department (accounting supervisor), declare that they guarantee the authenticity, accuracy and completeness of the financial report in the semi-annual report.

5. There is no profit distribution plan for the reporting period or a plan for converting public reserve funds into share capital passed by the board of directors.

6. Risk Statement for Forward-Looking Statements

√Applicable □Not applicable

The forward-looking descriptions of future plans and development strategies involved in this report do not constitute the company's substantive commitment to investors. Investors are advised to pay attention to investment risks.

7. Whether there is non-operational occupation of funds by controlling shareholders and other related parties

No

8. Whether there is any violation of the prescribed decision-making procedures in providing external guarantees

No

9. Whether more than half of the directors cannot guarantee the authenticity, accuracy and completeness of the semi-annual report disclosed by the company

10. Major Risk Warning

During the reporting period, there were no particularly significant risks that had a substantial impact on the company's production and operations. The company has elaborated in this report on various risks that the company may face in the production and operation process. Please refer to the "Possible Risks" section in Section 3 Management Discussion and Analysis.

11. Others

□Applicable √Not applicable

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Directory

Section 1 Interpretation......................................................................................................................................................4

Section 2 Company Profile and Main Financial Indicators......................................................................................5

Section 3 Management Discussion and Analysis................................................................................................................8

Section 4 Corporate Governance, Environment and Society......................................................................................23

Section 5 Important Matters................................................................................................................................27

Section 6 Changes in Shares and Shareholders...................................................................................................36

Section 7 Bond-related situations................................................................................................................39

Section 8 Financial Report................................................................................................................................40

Financial statements signed and stamped by the legal representative, person in charge of accounting work, and person in charge of the accounting department. Original copies of all company documents and announcements that have been publicly disclosed in the information disclosure media designated by the China Securities Regulatory Commission during the reporting period. Directory of documents for reference

original

Original copy of the company's 2026 semi-annual report signed by the legal representative

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Jiangsu Lihuan Pharmaceutical Co., Ltd. 2026 Semi-Annual Report

Section 1 Interpretation

In this report, unless the context otherwise requires, the following words have the following meanings:

Commonly used word definitions

China Securities Regulatory Commission refers to China Securities Regulatory Commission and Shanghai Stock Exchange, SSE refers to Shanghai Stock Exchange

Lianhuan Pharmaceutical, the Company, the Company refers to the "Articles of Association" of Jiangsu Lianhuan Pharmaceutical Co., Ltd., the "Articles of Association" of the company refers to the "Articles of Association of Jiangsu Lianhuan Pharmaceutical Co., Ltd." Lianhuan Group, major shareholder, controlling shareholder refers to Jiangsu Lianhuan Pharmaceutical Group Co., Ltd.

GMP refers to Pharmaceutical Good Manufacturing Practice Lianhuan Marketing refers to Yangzhou Lianhuan Pharmaceutical Marketing Co., Ltd. Nanjing Medical refers to Lianhuan (Nanjing) Medical Technology Co., Ltd. Lianhuan Smart refers to Jiangsu Lianhuan Smart Medical Co., Ltd. Yangzhou Lianyou refers to Yangzhou Lianyou Medical Co., Ltd. Longyi Pharmaceutical refers to Sichuan Longyi Pharmaceutical Co., Ltd. Changle Pharmaceutical refers to Xinxiang Changle Pharmaceutical Co., Ltd. Lianhuan Anqing refers to Lianhuan Pharmaceutical (Anqing) Co., Ltd. Lianhuan (Suqian) refers to Lianhuan (Suqian) Pharmaceutical Co., Ltd. Lianhuan (Shanghai) refers to the reporting period of Lianhuan (Shanghai) Medical Management Co., Ltd., this reporting period refers to January 1, 2026 to June 30, 2026

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Section 2 Company Profile and Main Financial Indicators

1. Company information

Company’s Chinese name: Jiangsu Lianhuan Pharmaceutical Co., Ltd.

The company’s Chinese abbreviation: Lianhuan Pharmaceutical

The company's foreign name Jiangsu Lianhuan Pharmaceutical Co.,Ltd. The company's foreign name abbreviation JLPC

The legal representative of the company Qian Zhenhua

2. Contact person and contact information

Secretary of the Board of Directors Name of Securities Affairs Representative Ge Kai Ge Kai

Contact address: No. 9, Jianjing 1st Road, Yangzhou Bio-Health Industrial Park, Yangzhou City, Jiangsu Province No. 9, Jianjian 1st Road, Yangzhou Bio-health Industrial Park, Yangzhou City, Jiangsu Province Tel: 0514-87813082 0514-87813082 Fax: 0514-87815079 0514-87815079 Email: [email protected] [email protected]

3. Introduction to changes in basic situation

The company's registered address: No. 9, Kangjian 1st Road, Yangzhou Bio-Health Industrial Park, Yangzhou City, Jiangsu Province. Historical changes in the company's registered address. For details about changes in the company's registered address, please see the Shanghai Stock Exchange website (www.sse.com.cn) and the "Shanghai

Securities Journal" related announcement (announcement number: 2019-051) Company office address No. 9 Jianjian 1st Road, Yangzhou Bio-Health Industrial Park, Yangzhou City, Jiangsu Province Postal code of the company's office address 225127

Company website http://www.lhpharma.com

Email [email protected]

4. Brief introduction to information disclosure and change of storage location

The name of the newspaper selected by the company for information disclosure: Shanghai Securities News, Securities Times

The website address for publishing the semi-annual report is www.sse.com.cn

The company's semi-annual report is prepared at No. 9, Jianjian 1st Road, Yangzhou Bio-Health Industrial Park, Yangzhou City, Jiangsu Province

5. Overview of the company’s stocks

Stock type Stock stock exchange Stock abbreviation Stock code Stock abbreviation before change A shares Shanghai Stock Exchange Lianhuan Pharmaceutical 600513 G Lianhuan

6. Other relevant information

□Applicable √Not applicable

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7. The company’s main accounting data and financial indicators

(1) Main accounting data

Unit: Yuan Currency: RMB This reporting period The main accounting data for this reporting period are the same as those for the same period last year

(January to June) Period increase or decrease (%) Operating income 1,570,814,170.07 1,285,342,346.98 22.21 Total profit 22,404,413.43 -7,505,817.90 Not applicable Net profit attributable to shareholders of listed companies 10,521,803.08 -40,028,355.46 Not applicable to deduction of non-recurring gains and losses attributable to shareholders of listed companies

Net profit of 8,751,772.59 19,509,365.93 -55.14

Net cash flow generated from operating activities -84,616,611.89 -157,809,613.00 Not applicable The end of this reporting period compared to the end of the previous year The end of this reporting period The end of the previous year

End-of-year increase or decrease (%) Net assets attributable to shareholders of listed companies 1,262,385,105.79 1,271,746,892.76 -0.74 Total assets 4,225,136,607.42 4,096,816,145.33 3.13

(2) Main financial indicators

Main financial indicators for this reporting period This reporting period are the same as those for the same period last year

(January to June) Period increase or decrease (%) Basic earnings per share (yuan/share) 0.04 -0.14 Not applicable Diluted earnings per share (yuan/share) 0.04 -0.14 Not applicable Basic earnings per share after deducting non-recurring gains and losses (yuan/share)

0.03 0.07 -57.14 shares)

Weighted average return on net assets (%) 0.82 -2.94 Increased 3.76 percentage points Weighted average return on net assets after deducting non-recurring gains and losses

0.68 1.43 Decrease 0.75 percentage points in profit rate (%)

Description of the company’s main accounting data and financial indicators

√Applicable □Not applicable

The company's current operating income increased by 22.21% year-on-year, and operating costs increased by 42.43% year-on-year. This was mainly due to the increase in the scope of consolidation of subsidiaries, which promoted the increase in operating income scale; due to the relatively low inherent gross profit level of the circulation business, the company's comprehensive gross profit margin was diluted while expanding the revenue scale. During the reporting period, the company's profit margins were further put under pressure due to industry policy factors such as national centralized drug procurement and adjustments to medical insurance payment policies. During the reporting period, the company continued to improve the corporate governance structure, optimize the construction of the internal control system, strengthen compliance operations and risk management and control, and achieved a turnaround from losses to profits in this period; due to the combined influence of multiple factors such as business mergers and industry policies, the net profit attributable to the owners of the parent company after deducting non-recurring gains and losses declined year-on-year.

8. Differences in accounting data under domestic and overseas accounting standards

□Applicable √Not applicable

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9. Non-recurring profit and loss items and amounts

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Non-recurring profit and loss items Amount Note (if applicable) Government subsidies included in the current profit and loss, but closely related to the company's normal business operations and in compliance with national standards

Government policies and regulations, enjoyed in accordance with determined standards, and having a lasting impact on the company's profits and losses 5,630,919.78

Except for subsidies

Other non-operating income and expenses other than the above items -2,533,878.02

Less: Income tax impact 788,655.57

Amount of impact on minority shareholders’ equity (after tax) 538,355.70

Total 1,770,030.49

If a company determines items not listed in the "Explanatory Announcement No. 1 on Information Disclosure of Companies that Offer Securities to the Public - Non-recurring Gains and Losses" as non-recurring gains and losses and is significant in amount, and if it defines the non-recurring gain or loss items listed in the "Explanatory Announcement No. 1 on Information Disclosure by Companies that Offer Securities to the Public - Non-recurring Gains and Losses" as recurring gains and losses, the reasons should be explained. □Applicable √Not applicable

10. Companies with equity incentives and employee stock ownership plans may choose to disclose net profits after deducting the impact of share-based payments □ Applicable √ Not applicable

11. Others

□Applicable √Not applicable

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Section 3 Management Discussion and Analysis

1. Description of the company’s industry and main business during the reporting period

(1) The main business and products of the company

The company belongs to the pharmaceutical manufacturing industry and is a national high-tech enterprise integrating R&D, production and sales. The company's main business covers the fields of pharmaceutical manufacturing and pharmaceutical circulation, and enjoys high visibility and reputation in the pharmaceutical manufacturing field at home and abroad. In the field of pharmaceutical manufacturing, the company's main products include urinary system drugs, antihistamines, cardiovascular drugs, steroid hormones, antibiotics and other major series, covering chemical raw materials, injections, solid preparations and other pharmaceutical dosage forms, including national Class I new drugs Aprelite tablets (Chuanliu), Class II new drugs Ebastine tablets (Sudi) and Felodipine tablets (Dicycloldine), Danazol capsules and suppositories, Metformin Gliclazide Tablets (Duhe), Lumbrokinase Capsules, Sertraline Hydrochloride Capsules (Dicyclovir), Dapoxetine Hydrochloride Tablets, Tadalafil Tablets, Temozolomide Capsules, Abiraterone Acetate Tablets, Moxifloxacin Hydrochloride Tablets, Ebastine Oral Liquid, Dexamethasone Sodium Phosphate API, Hydrocortisone Acetate API and other products. The company has a sound and strict quality assurance system and a nationwide marketing network, as well as an experienced professional sales team at home and abroad. The sales network of preparation products covers the whole country, and sales offices have been set up in key provinces and cities. Danazol capsules and tadalafil tablets have been registered in Cuba and Ghana (African countries) respectively and are sold through domestic middlemen. In terms of API products, the company has established long-term cooperative relationships with many manufacturers and traders in domestic, North America, South America, Eastern Europe, Southeast Asia, Australia and other countries and regions. In the field of pharmaceutical circulation, subsidiaries Lianhuan Marketing, Nanjing Medical, Yangzhou Lianyou, Lianhuan Suqian, Longyi Medicine, and Lianhuan (Shanghai) have established and maintained long-term and stable cooperative relationships with many well-known pharmaceutical companies, and have maintained business relationships with public hospitals, private hospitals, and grassroots medical and health institutions inside and outside the province for many years.

(2) Company business model

1. Procurement model

(1) The company has formulated relevant system specifications such as the "Procurement Management System", "Procurement Business Process and Management System", "Acceptance Management System", "Supplier Management Procedures", etc. to strengthen the company's internal control over procurement and payment management.

In terms of procurement planning, the production department and procurement and supply department will formulate a procurement plan for raw and auxiliary packages based on the production plan, and implement procurement step by step according to the procurement plan. For non-production materials, each department submits a purchase application. After approval by the functional department, the purchaser will summarize the purchase plan. After review and approval, the purchase can be made.

In terms of supplier evaluation and management, the company regularly sets up a quality audit team with relevant personnel from the Quality Assurance Department, Quality Control Department, Procurement and Supply Department, and Production Department to conduct quality audits on suppliers and issue quality audit reports. Based on feedback and solutions to problems, the company conducts supplier evaluation and registers the evaluation results in the "Qualified Supplier List." For new suppliers, the Quality Assurance Department shall organize a review of the new suppliers. After passing the review, a dedicated person from the Quality Assurance Department will update the "Qualified Supplier List" and archive it.

In terms of signing purchase contracts and orders, all purchases of the company must be signed with suppliers, and a copy of the signed purchase contract must be kept on file with the Finance Department. Once a purchase contract or order is issued by the purchasing director or general manager, any changes to its content must be made by way of contract or order changes.

In terms of procurement acceptance and storage, after the purchased materials arrive, the buyer should promptly organize relevant departments and warehouse managers to conduct inventory and acceptance before storage. During the acceptance process, they should first compare the product name, specifications, quantity, and unit price on the purchase order of the received materials to see if they match, and then check whether the materials are damaged and whether they meet the standards. After passing the acceptance inspection, personnel from the acceptance department should confirm the received materials. The warehouse keeper puts qualified goods into storage based on the results of the incoming inspection report. The return of unqualified products will be handled by the relevant purchaser.

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In terms of procurement payment, all payments made by the company to suppliers shall be paid to the suppliers by the Finance Department in accordance with the payment management procedures.

(2) Centralized procurement bidding for bulk materials

The company has formulated relevant systems such as the "Measures for the Management of Centralized Procurement of Bulk Materials", the "Tendering Process and Management System for Centralized Procurement of Bulk Materials" and established a leading group for centralized procurement and bidding of bulk materials, with a centralized procurement and bidding management office for bulk materials under it to strengthen the internal control of the company's bulk material procurement.

Organize the preparation and filing of the company's material procurement plan. The company and its wholly-owned and controlled subsidiaries prepare annual bulk material procurement plans at the beginning of each year based on their own needs.

Centralized procurement is conducted in two ways: public bidding and invitational bidding. Procurement projects with relatively large amounts adopt public bidding. Public bidding is conducted on government platforms or third-party agencies. After the bidding documents are reviewed and approved by the company's process, the bidding information is publicly released at the Municipal Public Resources Trading Center and the official website; the procurement results are announced at the Municipal Public Resources Trading Center and the official website. Procurement projects with medium-sized amounts are subject to invitational bidding, which establishes an internal expert database and is responsible for the review of internal procurement projects. If the conditions for bidding and procurement are not met, non-tendering procurement methods such as inquiry procurement, competitive procurement, and single-source procurement shall be adopted based on the procurement methods or after collective discussion at the company's general manager's office meeting.

The company signs a procurement contract based on the winning bid or transaction result, and the procurement contract is reviewed by the internal legal department or an external professional legal agency.

2. Production mode

During the reporting period, all the company's products in progress have passed the provincial bureau's GMP compliance inspection and site transfer supplementary registration verification. The production process strictly implements pharmaceutical GMP specifications, and has formulated relevant system specifications such as the "Production Planning Management System", "Production Scheduling Management System", and "Safety Production Responsibility System" to strengthen the company's internal control over production and quality management.

The production department is responsible for the production plan. Based on the sales performance of the previous year and the current year's sales plan, the annual production plan is prepared and the annual production plan is broken down into detailed and operable monthly plans. After the final agreed purchase quantities of the 1-8 and 12th batches of centralized purchasing are determined, the production department immediately organizes production and tracking, coordinates relevant parties, and ensures the delivery of centralized purchasing products.

The production workshop applies for materials according to production instructions and actual needs. To receive raw materials, you must fill in the material requirements part of the "Material Requirements Delivery Form" before you can collect them from the warehouse. Before sending materials to the warehouse, the product name, specifications, quantity and other information should be checked. After confirmation, fill in the delivery part of the "Material Required Delivery Form" and keep a record of the ledger. When the warehouse delivers the goods, the sender and delivery person will review and sign, and the workshop receiver will check and confirm the signature after receiving the goods.

The return of unqualified materials must be inspected and confirmed by the quality control department. The reasons for unqualified materials should be identified and responsibilities defined. Unqualified materials are stored in special areas for management to avoid confusion with qualified materials. If the materials are unqualified due to supplier reasons, the procurement and supply department will contact the supplier for return processing.

The quality management of the production process is the responsibility of the Quality Assurance Department. The Quality Assurance Department should send people to conduct patrol monitoring and do a good job in process management and analysis. If quality abnormalities are found, they should be dealt with immediately, trace the cause, and make corrections to prevent recurrence.

The EHS department is responsible for production safety and daily supervision. The main person in charge of the enterprise is the first person responsible for safety production. The workshop department is responsible for inspecting the safety facilities of the workshop department, maintaining the safety facilities, and eliminating hidden dangers in a timely manner. The EHS department is responsible for proposing safety production goals and organizing and supervising their implementation, holding safety meetings every month, researching and deploying safety production work, and solving problems in a timely manner or reporting them to the person in charge of the company.

Finished product warehousing inspection and finished product release management. Each batch of the company's products must undergo strict quality inspection and must be qualified before being put into storage. The quality authorized person shall review the relevant batch production, packaging and inspection records, and issue a release note after passing the inspection before selling to the outside world.

3. Sales model

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The company's preparation products mainly use three sales models: independent promotion, agency distribution, and online and offline retail. Among them, the independent promotion model is the main sales model of the company's preparation products. The company's API sales mainly adopt self-sales and agency sales models.

(3) Industry development status

The pharmaceutical industry is a strategic industry in my country's national economy and plays an irreplaceable and important role in protecting public life and health, maintaining social public health stability, and promoting high-quality economic development. As the aging of the domestic population continues to deepen and residents' health consumption concepts upgrade, the rigid demand for medical and health care in the whole society has steadily expanded, laying a solid market foundation for the long-term and stable development of the pharmaceutical industry. From the perspective of industry fundamentals, domestic medical and health investment continues to maintain a high level, the multi-level medical security system continues to improve, residents' health consumption needs continue to be released, and the fundamentals of the long-term development of the pharmaceutical industry have not changed. In the first half of 2026, driven by the dual drive of refined policy regulation and market structural changes, the industry continues to bid farewell to external scale expansion and comprehensively move towards a new stage of high-quality development driven by innovation, quality first, and orderly compliance.

1. Pharmaceutical manufacturing field - innovation and quality improvement and centralized procurement optimization go hand in hand to promote industrial structural upgrading

In the first half of 2026, the domestic pharmaceutical manufacturing industry is in a deep structural adjustment cycle, and the overall development characteristics are "pressure repair, structural differentiation, quality improvement and efficiency improvement". On the one hand, the industry continues to face operational pressures such as fluctuations in the price of upstream raw materials, normalization of terminal medical insurance fee control, and fierce competition among generic drugs. On the other hand, the country continues to deepen the reform of the pharmaceutical industry. By improving the full-chain support policy for innovative drugs, iteratively optimizing centralized procurement transaction rules, and improving the drug quality supervision system, it continues to guide industrial resources to concentrate on high-quality enterprises and high-value varieties, accelerating the survival of the fittest and the transformation and upgrading of the industry. The industry has shifted from single price competition to comprehensive strength competition on quality, clinical value, production capacity guarantee, and compliance capabilities. According to data from the National Bureau of Statistics, from January to June 2026, pharmaceutical manufacturing enterprises above designated size across the country achieved operating income of 1,171.78 billion yuan, flat year-on-year; total profits reached 177.32 billion yuan, a year-on-year increase of 4.2%. The pharmaceutical manufacturing industry is steadily shifting from scale expansion to a stage of high-quality, cost-effective and refined development, and the results of industrial structural reform continue to show.

Since 2026, the country has continued to consolidate the support system for the innovative drug industry, continued to improve review and approval, medical insurance payment, and commercial implementation supporting policies, and continued to encourage source innovation and differentiated clinical innovation. The state focuses on supporting the research and development and marketing of innovative drugs in the fields of chronic diseases and difficult diseases, shortening the marketing cycle of high-quality innovative products, and accelerating the industrialization and marketization of innovative results. The competitive advantages of innovative drug companies with independent core intellectual property rights, significant clinical efficacy, and outstanding commercialization capabilities continue to be highlighted, and the quality of industry innovation continues to improve. The focus of industrial innovation has gradually shifted from pipeline expansion to precision innovation with high clinical value.

The policy system in the field of generic drugs continues to be iteratively optimized, and the centralized procurement system is becoming increasingly mature and perfect. In the first half of 2026, the country will promote multi-batch centralized procurement and renewal work on a regular basis, and the centralized procurement mechanism will further standardize bidding quotations and eliminate irrational low-price bidding behavior. At the same time, we will continue to raise the entry threshold for quality compliance, production capacity guarantee, and supply chain stability for bidding companies, and guide the generic drug industry to achieve sound development of improving quality, increasing efficiency, and stabilizing prices. Policies promote the restructuring of the industry structure, and leading companies with the advantages of large-scale production, improved quality control systems, and integrated supply chain layout continue to benefit. Affected by increased compliance investment and compressed profit margins, small and medium-sized generic drug companies have continued to face increasing operating pressure, and industry concentration has steadily increased.

2. In the field of pharmaceutical circulation—compliance control and digital empowerment are simultaneously implemented to improve the quality and efficiency of the industry.

Pharmaceutical circulation is the core hub connecting the pharmaceutical production end with the terminal clinical and retail markets. In the first half of 2026, the pharmaceutical distribution industry, empowered by the dual empowerment of normalized strict supervision and digital transformation, continued to develop in the direction of standardization, standardization, efficiency, and intensification. At the regulatory level, we will continue to improve the standards of the pharmaceutical logistics industry, strengthen quality control throughout the entire chain of pharmaceutical warehousing, transportation, and distribution, and raise the entry threshold for third-party pharmaceutical logistics. A series of regulatory measures have promoted the continuous improvement of the overall compliance level of the circulation industry.

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Market-side business formats continue to iteratively upgrade, new pharmaceutical retail models are steadily expanding, and new models such as online prescription drug sales and O2O instant delivery continue to develop. The integrated online and offline drug purchasing system is becoming increasingly mature, effectively meeting residents' diversified and convenient health consumption needs. At the same time, the digital transformation of the industry continues to accelerate, and digital technologies such as smart supply chain, smart warehousing, and full-process traceability are widely implemented. Digital transformation promotes visualization, traceability, and intelligent management and control of the entire drug circulation process, improving drug distribution efficiency and supply chain response speed. The series of reforms effectively ensure the stable supply of clinical drugs and promote the high-quality development of the pharmaceutical distribution industry.

3. Summary of the overall development trends of the industry

In the first half of 2026, the differentiated development characteristics of the domestic pharmaceutical industry segmentation tracks are significant. The pharmaceutical manufacturing side has achieved two-way efforts in innovation empowerment and policy regulation. The high-quality development of the innovative pharmaceutical industry has accelerated and increased efficiency, and the generic pharmaceutical industry has continued to improve quality and upgrade driven by centralized procurement optimization. The pharmaceutical circulation side adheres to the simultaneous advancement of compliance control and efficiency innovation, and digitalization and standardized development have become the core main lines of the industry. Overall, the pharmaceutical industry has entered a critical transformation stage of structural optimization, quality improvement, and efficiency improvement.

Looking to the future, as pharmaceutical reform policies continue to be implemented and the industry's market-oriented competition mechanism continues to mature, clinical value and patient needs will become the core orientation of industrial development. The differentiated research and development capabilities of innovative drugs, the quality and cost control advantages of generic drugs, and the efficient operation capabilities of the pharmaceutical distribution supply chain will become the long-term core competitive barriers for pharmaceutical companies. The industry as a whole will continue to maintain a development trend of standardized and orderly, innovation-driven, quality and efficiency improvement, and enter a new stage of more rational, healthy and high-quality development.

(4) The company’s industry status

The company was selected as a national-level "Little Giant" enterprise for specialization, specialization and innovation, an enterprise-level industrial Internet platform in Jiangsu Province, a "5G Factory Directory" of the Ministry of Industry and Information Technology, and a list of green factories and 5G factories in Jiangsu Province. It is a demonstration enterprise for creating a world-class "specialization, specialization and innovation". It is an outstanding enterprise in Jiangsu Province recognized by the Jiangsu Provincial Committee of the Communist Party of China and the People's Government of Jiangsu Province, and a small and medium-sized enterprise for specialization, specialization and innovation in Jiangsu Province. Industry, Jiangsu Province Industrial Internet Development Demonstration Enterprise (Benchmark Factory Category), and Jiangsu Province Pharmaceutical Industry Quality Management (QC) Group Activity Outstanding Enterprise; the company passed the AAA-level implementation of the two integration management systems, and was rated as a National Intellectual Property Demonstration Enterprise by the State Intellectual Property Office. It is the Jiangsu Province Enterprise Technology Center, Jiangsu Province Engineering Research Center, and Jiangsu Province Engineering Technology Research Center.

The company's products and brands have good reputation and brand effect in domestic and international markets. The sales network of preparation products covers the whole country, with sales offices set up in key provinces and cities. Danazol capsules and tadalafil tablets have been registered in Cuba and Ghana (African countries) respectively and are sold through domestic middlemen. In terms of APIs, the company has established long-term cooperative relationships with many manufacturers and traders in domestic, North America, South America, Eastern Europe, Southeast Asia, Australia and other countries and regions.

Description of the company’s new important non-main business during the reporting period

□Applicable √Not applicable

2. Discussion and analysis of operating conditions

In 2026, faced with increasing downward pressure on the economy and high levels of competition in the pharmaceutical industry, Lianhuan Pharmaceutical, under the strong leadership of the Municipal Party Committee, the Municipal Government and the State-owned Assets Supervision and Administration Commission, and the unified deployment of Lianhuan Group, has continued to enhance its innovation momentum and significantly improved its management level.

From January to June 2026, the company achieved operating income of 1.571 billion yuan, a year-on-year increase of 22.21%; the net profit attributable to the owners of the parent company was 10.5218 million yuan, achieving a turnaround from losses to profits.

During the reporting period, the company focused on the following work:

(1) Continue to strengthen technological innovation and enhance core R&D capabilities

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The company continues to implement the innovation-driven development strategy, promotes industry-university-research collaboration and the introduction of high-end talents, and continuously improves the construction of the innovation system. During the reporting period, more than ten high-end talents such as top talents, doctors, and masters were introduced to enrich the innovative talent reserve.

Promote the approval of new drugs and generic drugs in an orderly manner. In the field of innovative drugs, the key new drug LH-1801 has completed the unblinding of single-drug and combined-administration clinical trials, and submitted a Pre-NDA communication application to accelerate the transformation of innovative drug results. Product registration applications continue to achieve phased results. In the first half of the year, the company and its subsidiaries obtained a total of 12 production approval documents for lidocaine hydrochloride gel, phloroglucinol injection, tadalafil tablets (Republic of Ghana), and argatroban API. The company and its subsidiaries continue to promote registration applications for multiple varieties. The intellectual property layout continues to advance. As of the end of the reporting period, the company has obtained 150 domestic patents, including 32 invention patents, 60 utility model patents, 58 design patents, and 5 foreign invention patents. In 2026, the company and its subsidiaries have obtained 13 domestic patents, including 8 invention patents and 5 utility model patents. The company steadily promotes the "unveiling the list and taking charge" research and development projects.

(2) Deepen the reform of the marketing system and broaden the market operation pattern

The company continues to promote the implementation of the "three integrations, one transformation" marketing strategy and deepens the reform and optimization of the sales system. At the organizational structure level, the professional promotion division was cancelled, and a professional promotion department directly managed by the company was established to strengthen the unified overall management of provinces and regions across the country; a new sales KA department was established for the commercialization path of innovative drugs, and professional managers were introduced to take charge of operations, improve the development and operation system of major customers, and accelerate the admission and market promotion of new products.

The centralized procurement business is advancing in an orderly manner. The company has solidly carried out the research and evaluation of national centralized procurement renewal policies and the formulation of quotation plans for batches 1-8. The company and its subsidiary Changle Pharmaceutical won the bid for renewal of multiple varieties. The company formulates supporting sales policies for the selected varieties, promotes the completion of secondary quotations in all provinces and regions, and continues to promote the market volume of winning products; at the same time, it strengthens standardized management of channels and maintains the stability of the price system of core products. The company’s key products, Aprelite tablets, sold 58 million tablets, Ebastine tablets sold 57 million tablets, and folic acid tablets sold 305 million tablets.

(3) Promote project construction and digital transformation and accumulate long-term development momentum

The company steadily promotes the construction of key infrastructure and technological transformation projects and continues to consolidate the hardware foundation for industrial development. During the reporting period, the company's various new construction, renovation and expansion projects were advanced in an orderly manner in strict accordance with the annual plan. The main project of the production line for export preparations and anti-tumor drugs has been successfully capped, and subsequent supporting construction has been steadily advanced; technical upgrading projects such as the pharmaceutical research institute and QC building have been implemented in an orderly manner, and the layout of scientific research experiments and inspection office hardware has been continuously optimized. The company's science and technology innovation center project and its holding subsidiary Pharmaceutical Precision Cold Chain Manufacturing Center project have completed the signing of the park entry contract and entered the preliminary preparation stage. The implementation of the above projects will further improve the company's integrated supporting system of R&D, production, inspection, warehousing and logistics, and lay a solid hardware foundation for subsequent production capacity release, R&D quality and efficiency improvement, and the improvement of the comprehensive capabilities of the industrial chain.

The company continues to deepen the transformation and construction of digital intelligence and further promotes the implementation of the "integration of four modernizations" development concept. Focusing on core scenarios such as marketing control, project management, and production quality control, we actively carry out research and planning on various digital intelligence platforms and information systems, and continue to improve the enterprise's digital application system. Relying on the "AI + administrative management" empowerment model, we will steadily promote the construction of digital office, intelligent training, and digital talent management systems, refine the implementation of technical implementation plans, and gradually improve the quality and efficiency of administrative management. Simultaneously promote the planning and construction of the information system of remote subsidiaries, complete iterative upgrades of the core information system and data security protection system, improve the intelligent monitoring and early warning platform for production safety, and build a strong defense line for corporate network security and production safety. During the reporting period, the company successfully passed the annual supervision and audit of the AAA-level management system for the integration of informatization and informatization, and the company's digital and intelligent operation levels continued to improve.

(4) Consolidate safety, environmental protection and quality control, and fulfill comprehensive corporate responsibilities

The company strictly adheres to the bottom line of safe production and continues to develop a strict safety management and control system. Regularly promote the investigation and management of hidden safety hazards in production, focus on key risk areas such as confined space operations, chemical experiments, storage of hazardous chemicals, and factory power charging to carry out special inspections, comprehensively investigate and rectify various safety hazards, and promote the implementation of problem rectification in a closed loop. The company regularly carries out safety warning education and benchmarking self-examination, organizes safety training and emergency drills on a regular basis, and continues to improve the safety literacy and emergency response capabilities of all employees. At the same time, we will solidly carry out the safety production month

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A series of theme activities popularized safety rules and regulations and practical specifications through multiple education methods, and carried out real-life emergency drills on a regular basis, effectively laying a solid foundation for safe production. The company successfully passed the provincial safety audit on-site review, and the company's safety production situation continued to stabilize and improve.

The company deeply implements the concept of green and low-carbon development and continues to deepen the construction of ecological and environmental protection management. We will continue to increase special investment in environmental protection, improve the normalized environmental protection supervision mechanism, implement dynamic monitoring and full-process management and control of wastewater, exhaust gas and other pollutant emissions, refine the full-process management of "three wastes" disposal, strictly implement normalized operation and maintenance management and control of environmental protection facilities, and ensure the stable operation of the environmental protection system. We will steadily advance energy conservation, carbon reduction, quality and efficiency improvement, continue to optimize production energy consumption management, and promote the green, safe and sustainable development of the enterprise.

The company adheres to quality compliance and builds a solid defense line for pharmaceutical production quality management on a regular basis. Strictly abide by the pharmaceutical production quality management standards, comprehensively implement basic compliance work such as various drug information filings and file organization, and orderly promote various tasks such as production line compliance verification and drug qualification licensing review. Actively connect supervision and customer audit work, carry out supplier compliance audit management on a regular basis, and continue to standardize supply chain quality control. At the same time, internal GMP self-inspections and special trainings are carried out on a regular basis, and the full-process quality management system is continuously improved to comprehensively improve the company's compliance operations and quality control levels.

Major changes in the company's operating conditions during the reporting period, as well as events that occurred during the reporting period that have a significant impact on the company's operating conditions and are expected to have a significant impact in the future

□Applicable √Not applicable

3. Analysis of core competitiveness during the reporting period

√Applicable □Not applicable

(1) Advantages of technological innovation and sustainable development

The company is a national high-tech enterprise, a national intellectual property demonstration enterprise, and a Jiangsu Province industrial Internet development demonstration enterprise (benchmark factory category). The company is equipped with a scientific and technological team with a complete range of categories and reasonable levels. It has many talents such as doctors, masters and high-quality overseas study returnees. By focusing on innovation and R&D, it accelerates high-quality project establishment, high-quality research, and high-efficiency promotion, focusing on building two R&D platforms in Yangzhou and Nanjing. It has the enterprise technology center supported by Jiangsu Province, Yangzhou Engineering Technology Research Center, Provincial Intelligent Workshop, Provincial Cardiovascular Drug Engineering Center, Jiangsu Engineering Research Center, Jiangsu Engineering Technology Research Center, Academician Workstation, and Doctoral Workstation.

The company has long been focusing on science and technology as the guide, attaches great importance to investment in technological innovation, and works closely with relevant scientific research institutions and universities. It has successfully developed and launched 2 national first-class new drugs, 7 former national second-class drugs, and 6 former national third-class drugs. As of the end of the reporting period, the company had obtained 150 domestic patents, including 32 invention patents, 60 utility model patents, 58 design patents, and 5 foreign invention patents. In 2026, the company and its subsidiaries have obtained 13 domestic patents, including 8 invention patents and 5 utility model patents.

The company attaches great importance to technological innovation and has strong R&D capabilities. The company's products are characterized by high technological content, independent intellectual property rights for its leading products, and supporting development and production of raw materials and preparations.

(2) Advantages of an enterprising management team

The company has a unique corporate culture and an experienced and enterprising management team. In the course of many years of development, the company has formed a unique corporate culture. After years of entrepreneurial development, the company's management has timely and efficiently formulated development strategies that are in line with the company's actual situation based on the company's actual situation, industry development trends and market needs. The members have smooth communication and tacit cooperation, and have a common concept for the company's future development, forming a united, efficient and pragmatic business management philosophy. The company's management team has rich experience, strong market adaptability, and the company's development strategy is forward-looking and planned. According to the different stages of development of the pharmaceutical industry, the company

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The company adjusts its strategy in a timely manner, combines its own advantages, and establishes a development strategy. The decision-making and execution capabilities of the company's management provide a strong guarantee for the company's sustainable and healthy development in the future. The company currently has a cohesive, disciplined and highly executive management team, which has constituted an important competitive advantage for the company's development.

(3) Leading products and product reserve advantages

One of the company's leading products, Aprelite tablets, is a national first-class new drug and an effective drug for the treatment of benign prostatic hyperplasia. Aprelite tablets are the first effective drug in China to treat benign prostatic hyperplasia. In August 1999, it obtained the National Class I New Drug Certificate; in February 2001, it was rated as an outstanding scientific and technological achievement in the "Ninth Five-Year Plan" National Key Science and Technology Research Plan by the Ministry of Science and Technology, the Ministry of Finance, the State Planning Commission, and the State Economic and Trade Commission; in July 2004, it obtained the National Key New Product Certificate issued by the Ministry of Science and Technology, the Ministry of Commerce, the State Administration of Quality Supervision, and the State Environmental Protection Administration.

The company's main product, Ebastine Tablets (Sudi), is a new generation of non-sedating anti-allergic drugs. It is a powerful, long-acting, highly selective histamine H1 receptor blocker and has no antagonistic effect on cholinergic receptors in the central nervous system. This product has been recognized as a national key new product and a high-tech product in Jiangsu Province.

The company's main product, felodipine tablets (dicyclidine), is a new type of calcium ion antagonist that can selectively dilate arterioles and improve heart and kidney function. It is widely applicable to the treatment needs of various patients with hypertension. Our company is the drafting unit of drug quality standards. This product was recognized as a high-tech product in Jiangsu Province.

The company's main product, Dapoxetine Hydrochloride Tablets, is a selective serotonin reuptake inhibitor used to treat premature ejaculation (PE) in men who meet certain conditions.

The company's main product, Tadalafil Tablets, is a PDE5 inhibitor drug. It is a phosphodiesterase inhibitor and is suitable for treating the symptoms and signs of erectile dysfunction combined with benign prostatic hyperplasia.

The company has a total of 148 drug approvals, including 108 approvals for preparations and 40 approvals for APIs. There are 39 preparations included in the "National Essential Drugs List" and 77 preparations included in the national "Basic Medical Insurance, Work Injury Insurance and Maternity Insurance Drug List", with a rich product reserve.

(4) Production and quality control advantages

The company has a sound pharmaceutical quality management system, equipped with key personnel such as the enterprise leader, quality controller, production leader, quality authorized person, etc., and has established quality control department, quality assurance department, pharmacovigilance department, production department, procurement and supply department and other functional departments supporting pharmaceutical production quality management. The company regularly carries out risk assessment, risk control and review activities. The quality control department is equipped with qualified laboratory personnel suitable for the production scale, as well as various inspection equipment and inspection instruments suitable for the inspection scale. Through advanced testing technology and perfect quality management system, the quality of the company's products is effectively guaranteed. The production lines involved in all the company's current products have passed the GMP compliance inspection of the drug regulatory department and hold GMP compliance notifications/announcements. The raw material levonorgestrel has passed the World Health Organization pre-certification, and many raw materials such as hydrocortisone and fludrocortisone acetate have passed FDA on-site inspections.

The company currently has the manufacturing capacity to produce Aprelate, Ebastine, Hydrocortisone, Dexamethasone Sodium Phosphate, Lumbrokinase, Levonorgestrel, Sacubitril Valsartan Sodium, Saxagliptin, Fludrocortisone Acetate, Balofloxacin and other products. We have multiple GMP production lines, complete reaction equipment for bromination, debromination, Wolters oxidation, alkynylation, Grignard, hydrogenation and other reaction chains, as well as complete supporting production facilities. The manufacturing capacity of chemical raw materials is at the leading level in the country.

The company regards product quality as its lifeline, and strictly controls every link from supplier selection to finished product delivery. At the same time, the company has formulated internal corporate control standards for incoming raw materials, excipients and finished products that are equal to or higher than national drug standards. Some products have reached European and American Pharmacopoeia standards.

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quasi-level. The company has established a complete quality management system, implemented the quality authorized person system and designed the laboratory in accordance with the requirements of the new version of GMP. All laboratory operators are trained and qualified before taking up their posts.

(5) Product brand and customer resource advantages

The company's products and brands have good reputation and brand effect in domestic and international markets. The sales network of preparation products covers the whole country. The company rationally formulates sales policies according to the nature of the sales area, optimizes the sales team, and sets up sales offices in key provinces and cities. Thanks to the quality of self-produced raw materials, many of the company's preparation products have won the trust of foreign customers. Danazol capsules and tadalafil tablets have been registered in Cuba and Ghana (African countries) respectively and are sold through domestic middlemen. In terms of APIs, the company has a certain accumulation and reputation in the production of steroid hormone APIs, and has established long-term cooperative relationships with many manufacturers and traders in domestic, North America, South America, Eastern Europe, Southeast Asia, Australia and other countries and regions.

4. Main operating conditions during the reporting period

(1) Main business analysis

1. Analysis table of changes in relevant accounts of financial statements

Unit: Yuan Currency: RMB

Item Number for the current period Number for the same period last year Change ratio (%) Operating income 1,570,814,170.07 1,285,342,346.98 22.21 Operating costs 1,120,395,602.36 786,613,734.42 42.43 Sales expenses 223,598,410.04 263,149,785.33 -15.03Administrative expenses 112,257,479.16 86,783,433.50 29.35Financial expenses 18,815,379.75 15,098,865.22 24.61R&D expenses 62,952,648.68 68,423,933.06 -8.00 Net cash flow generated from operating activities -84,616,611.89 -157,809,613.00 Not applicable Net cash flow generated from investing activities -117,084,879.71 -206,277,685.28 Not applicable Net cash flow generated from financing activities 145,428,120.92 425,351,648.01 -65.81

Explanation of the reasons for changes in operating costs: Mainly due to the increase in operating income during the reporting period, which resulted in a simultaneous increase in operating costs; at the same time, the increase was affected by the gross profit structure of the products sold by the subsidiaries.

Explanation of reasons for changes in net cash flow generated from operating activities: Mainly due to the increase in operating income during the reporting period, while excluding non-recurring profit and loss expenses of the previous year.

Explanation of reasons for changes in net cash flow generated from investing activities: Mainly due to the decrease in cash paid for the purchase and construction of fixed assets, intangible assets and external investments during the reporting period compared with the same period last year.

Reasons for changes in net cash flow generated from financing activities: Mainly due to the decrease in cash received from bank borrowings during the reporting period compared with the same period last year, and the increase in debt repayment-related expenses.

2. Detailed description of major changes in the company’s business type, profit composition or profit sources during this period

□Applicable √Not applicable

(2) Explanation of significant changes in profits caused by non-main business

□Applicable √Not applicable

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(3) Analysis of assets and liabilities

√Applicable □Not applicable

1. Assets and liabilities status

Unit: Yuan Currency: RMB The end of the current period The end of the previous year The end of the current period

Number of shares of total capital Number of shares of total capital Compared with the previous year

Project name Closing amount of the current period Closing amount of the previous year Description of the situation

Proportion of production Proportion of production Final change proportion

(%) (%) (%)

This is due to the decrease in non-A notes receivable at the end of the current period 216,134.47 0.01 1,125,149.72 0.03 -80.79 notes on hand

Prepayments for prepaid projects 216,863,808.92 5.13 150,421,950.24 3.67 44.17

caused by increase

This is the new long-term equity interest in the joint venture UNICOIN in this period.

9,000,389.30 0.21 6,011,092.92 0.15 49.73 investment, and joint investment at the same time

Caused by operating losses of operating enterprises.

Mainly due to the increase in investment in projects under construction in this phase 113,848,707.14 2.69 84,343,745.09 2.06 34.98

Other non-current flows are mainly prepaid projects 26,682,476.89 0.63 42,576,119.60 1.04 -37.33

Due to the decrease in real estate assets

Mainly due to contract liabilities of advance payment 26,745,669.60 0.63 56,735,186.85 1.38 -52.86

caused by reduction

Mainly due to the payment payable to employees during the reporting period: 15,902,346.69 0.38 30,649,223.56 0.75 -48.12 in the previous year

Salary Year-end bonus accrued

Mainly due to value-added tax, corporate income tax, and taxes payable 17,808,488.78 0.42 27,576,838.85 0.67 -35.42

Due to reduction in personal income tax

Mainly due to the increase in ordinary dividends payable 20,098,338.90 0.48 6,748,577.51 0.16 197.82 common stock dividends

Arrival within one year Mainly due to the increase in liabilities due to long-term loans due within one year 349,913,651.42 8.28 234,269,391.69 5.72 49.36

Mainly due to other current taxes to be written off and unrecognized 4,136,287.40 0.10 8,081,250.86 0.20 -48.82

Liabilities due to decrease in acceptance bills

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Other comprehensive mainly during the reporting period

-142,634.71 0.00 -240,983.56 -0.01 -40.81

Income Other explanations due to exchange rate fluctuations

None

2. Overseas assets

√Applicable □Not applicable

(1) Asset scale

Among them: overseas assets 6,673,927.84 (unit: yuan, currency: RMB), accounting for 0.16% of total assets. (2) Relevant explanations on the high proportion of overseas assets

□Applicable √Not applicable

Other instructions

None

3. Restrictions on major assets as of the end of the reporting period

√Applicable □Not applicable

Item Book value at the end of the period Monetary funds due to restrictions 42,073,695.68 Monetary funds as margin 22,029,148.00 Litigation to freeze notes receivable 78,504.04 Recognition of receivables cannot be terminated before endorsement or discount expires Financing 4,997,600.40 Fixed assets for issuance of bank acceptance bill 110,580,520.50 Intangible assets pledged for borrowings 8,648,962.84 Total borrowings pledged 188,408,431.46

4. Other instructions

□Applicable √Not applicable

(4) Investment status analysis

1. Overall analysis of external equity investment

□Applicable √Not applicable

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(1)Significant equity investment

□Applicable √Not applicable

(2) Significant non-equity investment

□Applicable √Not applicable

(3) Financial assets measured at fair value

√Applicable □Not applicable

Unit: Yuan Currency: RMB Accumulated changes in fair value during the period included in equity Category of assets sold/redeemed during the period Opening amount Impairment accrued during the period Purchase amount during the period Other changes Ending amount

Changes in fair value Amount Others 47,524,506.97 -9,892,306.84 57,416,813.81 Total 47,524,506.97 -9,892,306.84 57,416,813.81

Securities investment situation

□Applicable √Not applicable

Explanation of securities investment situation

□Applicable √Not applicable

Private equity fund investment status

□Applicable √Not applicable

Derivatives investment situation

□Applicable √Not applicable

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(5) Major asset and equity sales

□Applicable √Not applicable

(6) Analysis of major holding and participating companies

√Applicable □Not applicable

Information about major subsidiaries and joint-stock companies that affect the company's net profit by more than 10%

√Applicable □Not applicable

Unit: yuan Currency: RMB corporate type

Company name Main business Registered capital Total assets Net assets Operating income Operating profit Net profit type

General projects: remote health management services; health consultation

Services (excluding diagnostic and treatment services); medical research and experiments

Lianhuan (Shanghai) Medical Management Co., Ltd. Subsidiary 10,000,000.00 145,054,943.86 28,211,895.98 250,903,030.33 8,961,535.73 7,560,607.54 development; sales of first-class medical equipment; second-class medical treatment

Equipment sales, etc.

Lianhuan (Nanjing) Medical Technology Co., Ltd. Subsidiary Sales of medical devices and electronic products 18,000,000.00 133,318,598.61 31,952,514.43 78,963,130.74 7,609,557.10 6,973,360.55 Pharmaceutical production; pharmaceutical contract production; pharmaceutical import and export;

Production of Class II medical devices; production of medical masks; consumption

Toxic production (excluding hazardous chemicals); medical staff

Xinxiang Changle Pharmaceutical Co., Ltd. Subsidiary 39,580,000.00 349,738,032.11 252,822,100.95 125,580,457.27 6,476,650.60 5,523,722.51 Production of protective equipment (Class II medical equipment); technical services

services, technology development, technology consulting, technology exchange, technology

technology transfer, technology promotion

Chengdu Yazhong Biopharmaceutical Co., Ltd. Subsidiary Production and sales of APIs, etc. 50,000,000.00 421,393,238.99 258,609,291.69 67,881,454.03 2,683,181.79 2,670,912.68

Pharmaceutical wholesale; food sales; third-class medical device business

Sichuan Longyi Pharmaceutical Co., Ltd. Subsidiary 51,000,000.00 341,846,528.34 78,510,477.56 499,486,084.16 3,245,409.64 1,765,755.18 camp; sales of sterilization equipment

Wholesale of pharmaceuticals; business of Class III medical devices; Class I

Sales of medical devices; sales of Class II medical devices; insurance

Sales of health food (prepackaged); packaging materials and products

Lianhuan (Suqian) Pharmaceutical Co., Ltd. Subsidiary sales; business agency services; business secretarial services 10,000,000.00 33,546,615.16 -527,809.47 32,580,720.06 -2,688,509.26 -2,701,410.90; wholesale of protective equipment for medical staff; sales of daily necessities

; Information technology consulting services; Health consulting services (not

(Including diagnostic and treatment services); sales of labor protection products; market

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Investigation (excluding foreign-related investigations); business training (excluding education training, vocational skills training and other training that require permission); conference and exhibition services; wholesale of cosmetics; food sales (only sales of prepackaged food, excluding alcohol) pharmaceutical production and sales; licensing of pharmaceutical-related technologies Lianhuan Pharmaceutical (Anqing) Co., Ltd. Subsidiary 181,520,000.00 142,074,824.69 137,405,844.92 1,036,216.79 -5,299,645.59 -5,299,490.27 Use, achievement transfer, service consultation

Category III medical device business; road cargo transportation; food business (only selling prepackaged food); food business Category 1 medical device wholesale; Category 2 medical device wholesale; information consulting services (excluding licensing information consulting services); hospital management; supply chain management services; enterprise management; unit logistics management services; chemical product wholesale (excluding hazardous chemicals); other chemical product wholesale packaging materials and product sales; plastic product sales; mechanical parts and components sales; electrical machinery equipment sales; intelligent instrument sales; labor services (excluding Yangzhou Lianyou Medical Co., Ltd. subsidiaries 5,000,000.00 1,010,599.67 908,754.36 3,044,862.35 -4,385,284.83 -11,254,543.07 labor dispatch); sales of instruments and meters; general items of conference and exhibition services: sales of industrial textile products; sales of new automobiles; sales of new energy vehicles; sales of sanitary products and disposable medical supplies; sales of office supplies; retail of computer software, hardware and auxiliary equipment; sales of display devices; sales of mechanical and electrical equipment; sales of gas, liquid separation and purification equipment; sales of pumps and vacuum equipment; sales of hydraulic power machinery and components; sales of electronic measuring instruments; sales of refrigeration and air-conditioning equipment; sales of electronic products

Note: The financial data in the above tables are all single report data.

Acquisition and disposal of subsidiaries during the reporting period

√Applicable □Not applicable

Company name Method of acquiring and disposing of subsidiaries during the reporting period Impact on overall production operations and performance Jiang Lianhuan Biopharmaceutical Co., Ltd. Cancellation No significant impact on the company’s production operations and performance

Other instructions

□Applicable √Not applicable

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(7) Structured entities controlled by the company

□Applicable √Not applicable

5. Other disclosure matters

(1) Possible risks

√Applicable □Not applicable

1. Industry policy risks

The pharmaceutical industry is greatly affected by relevant national policies. my country is advancing the reform of the medical and health system. The introduction of relevant reform measures and the continuous improvement of policies will promote the orderly and healthy development of my country's pharmaceutical industry. At the same time, it may cause major changes in the industry's operating model and product competition pattern. The company will face risks brought by policy changes. In recent years, affected by drug policy price reductions and bidding price reductions in various provinces and regions, the bidding and procurement prices of some of the company's drugs have shown a downward trend. If the company's drugs cannot win the bid within the existing sales area or strategically abandon the bid because the winning bid price is lower, it may have an adverse impact on the company's profitability.

2. Risk of rising raw material and labor costs

In recent years, raw material prices and labor costs have continued to rise, and production costs have increased accordingly, putting pressure on the profit growth space of pharmaceutical companies.

3. R&D risks

Drug research and development is characterized by high technology, high risk, and high added value. The early stage of drug research and development and the product from development, clinical trial approval to production have long cycles and many links, and are easily affected by some uncertain factors. Whether the product will have good market prospects and economic returns after it is launched is also uncertain.

4. Quality risk

The company has many types of products, long production processes, complex processes, and relatively high technical requirements for production equipment, environment, and personnel. Currently, the company strictly controls the production process and has established a relatively complete quality management system. However, there are many links from production to sales. If there are problems with product quality, it will bring great risks to the company.

In the face of the above risks, the company plans to take the following measures:

1. Do a good job in drug bidding and procurement to avoid decision-making errors;

2. In response to the new situations, new characteristics, and new trends emerging in the international and domestic pharmaceutical markets, conduct early research and formulate countermeasures to grasp the marketing initiative;

3. Strengthen communication with agents, do a good job in tracking and service, strengthen cooperation with large pharmaceutical commercial companies, sum up experience, strengthen maintenance, and increase product sales;

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4. Strengthen communication with end users, promptly adjust marketing strategies, actively expand export markets, and cultivate new economic growth points;

5. Accelerate the research and development of new products, conduct horizontal alliances with universities, colleges and scientific research institutes, combine the company's product chain, cooperate to develop new varieties, and continuously introduce new varieties.

(2) Other disclosure matters

□Applicable √Not applicable

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Section 4 Corporate Governance, Environment and Society

1. Changes in directors and senior managers of the company

√Applicable □Not applicable

Name Position held Change situation Reason for change Reason for change Qian Zhenhua Secretary of the Board of Directors Resignation Job transfer Reason for work Ge Kai Secretary of the Board of Directors Appointment Job transfer New hire

Zhou Rensong, deputy general manager, appointment, job transfer, new hire

Zhang Bin Independent Director Resigned Others Served for six consecutive years Liu Guocheng Independent Director Election Others Newly elected Shen Yi Deputy General Manager Resigned Retired Age reason

Description of changes in directors and senior managers of the company

√Applicable □Not applicable

1. In view of Mr. Qian Zhenhua’s resignation as secretary of the company’s board of directors due to work reasons, the company held the seventh meeting of the ninth board of directors on April 17, 2026, and reviewed and approved the “Proposal on Appointment of Secretary of the Company’s Board of Directors” and agreed to appoint Mr. Ge Kai as secretary of the company’s board of directors.

2. In order to further enrich the company's senior management team and in conjunction with the company's strategic development plan, the company held the 23rd extraordinary meeting of the ninth board of directors on April 27, 2026, which reviewed and approved the "Proposal on the Appointment of the Company's Deputy General Manager" and agreed to appoint Mr. Zhou Rensong as the company's deputy general manager.

3. In view of the fact that Mr. Zhang Bin has served for six consecutive years and resigned as an independent director, the company held the 24th extraordinary meeting of the ninth board of directors on June 12, 2026, and the company’s first extraordinary shareholders meeting of 2026 on June 30, 2026. Mr. Liu Guocheng was elected as the company’s independent director, and the members of the special committee were adjusted accordingly.

4. In view of the fact that Mr. Shen Yi, the deputy general manager of the company, resigned from his position as deputy general manager of the company on June 22, 2026 due to retirement due to age. After his resignation, Mr. Shen Yi will not hold any position in the company or its subsidiaries.

2. Profit distribution or capital reserve conversion plan

The profit distribution plan and the plan for converting public reserve funds into share capital prepared in the semi-annual period

Whether to allocate or convert to increase No Number of bonus shares for every 10 shares (shares) 0 Number of dividends for every 10 shares (yuan) (tax included) 0 Number of bonus shares for every 10 shares (shares) 0

Explanation of relevant information on profit distribution or capital reserve conversion plan

None

3. The situation and impact of the company’s equity incentive plan, employee stock ownership plan or other employee incentive measures

(1) Relevant equity incentive matters have been disclosed in temporary announcements and there is no progress or change in subsequent implementation

□Applicable √Not applicable

(2) Incentives not disclosed in temporary announcements or with subsequent progress

Equity incentives

□Applicable √Not applicable

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Other instructions

□Applicable √Not applicable Employee stock ownership plan □Applicable √Not applicable Other incentive measures

□Applicable √Not applicable

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4. Environmental information of listed companies and their major subsidiaries included in the list of companies that disclose environmental information in accordance with the law

√Applicable □Not applicable

Number of companies included in the list of companies that disclose environmental information in accordance with the law (number) 3

Serial number Company name Query index of environmental information disclosure report according to law

http://ywxt.sthjt.jiangsu.gov.cn:18181/spsarchive-

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webapp%2F%2Fweb%2Fsps%2Fviews%2Fyfpl%2Fviews%2FyfplEntInfo%2Findex.js&versionId=565959C0D7884C569FA059 AF680FA69D&spCode=3210030201000696&validate=CN31_ggZdRyEe9v5DSyoviSEAYTrG_BylZCfdpMufwMdYgB_QsWPbrLpT 1 Jiangsu Lihuan Pharmaceutical Co., Ltd. bFSolYgLM8aFCZvLpB3njiyyRRN9TtsztCZVT3R5Xa.HvUfuXvWyFCUw6TawSvrCdz1BFzsPbrnH5kic5BfbYg5HprcKyMx8xNxxW TcqtVDfVuXfiOjHWxjAhfOBqETnSXkOwXNIm5WdKOeFUwB0bh8OTuSffvZQsv3bUoSVVKdtW4CQcapi3LawCkru6vUwkUce1er. DG_JBUVAJ0KjkL_QLzgdnlMoFpG0UXFi1ZHWGbXlqBjzUGSLPvlxnXSopFdjQjEUU94K4l84_GzfmZ1IeIcdUwQ35.iETw9h5T0c 4zC9xDaDIjzfR0wadH8SOj5sMgsvM_ftOJN6ZmYxNYspE6FTTf_gZbePJJxQ9h_vDSrgWLinuYFoQ2r9u6f_04pAf5SHGayRRCdXN. XvBfpl42MqJDETawm_exPwmji8dyrpGfCqnZvwGIWNJupT62FcTTwdcM77_v_i_1&year=2025

2 Xinxiang Changle Pharmaceutical Co., Ltd. https://permit.mee.gov.cn/permitExt/defaults/defaul t-index!getInformation.action

https://tftb.sczwfw.gov.cn:8085/jmopenpub/jmopen_files/webapp/html5/qyhjxxyfpl/index.html#/index/enter 3 Chengdu Yazhong Biopharmaceutical Co., Ltd.

prisemore?code=915101827436206658&uniqueCode=8d5cb6b2316ff49f&date=2025&type=true&isSearch=true

Other instructions

□Applicable √Not applicable

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5. Consolidate and expand the results of poverty alleviation, rural revitalization and other work specific situations

√Applicable □Not applicable

During the reporting period, the company and its subsidiaries thoroughly implemented the rural revitalization strategy, actively fulfilled the social responsibilities of listed companies, and continued to promote the "village-enterprise joint construction" pairing assistance work, focusing on industrial assistance and educational assistance to help consolidate and expand the effective connection between poverty alleviation achievements and rural revitalization.

Lianhuan Marketing, a subsidiary of the company, and Caofang Village Joint Stock Economic Cooperative, Xianqiao Town, Gaoyou City, carried out "village-enterprise joint construction" paired assistance, investing 30,000 yuan in assistance funds. The company's Sun Company Lianhuan (Gaoyou) and the Party Branch Committee of Lu'an Village in Jieshou Town carried out paired construction and invested 40,000 yuan in assistance funds. The above-mentioned assistance funds are mainly used to support industrial development, infrastructure improvement, educational assistance and other matters in paired villages, effectively helping local people solve practical difficulties and assisting the overall revitalization of the countryside.

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Section 5 Important Matters

1. Fulfillment of commitments

(1) Commitments made by the company’s actual controller, shareholders, related parties, acquirers and the company and other relevant parties during the reporting period or continuing into the reporting period

√Applicable □Not applicable

Acceptance: If not performed in time If not performed in time

Whether there is a promise, commitment, commitment, timely performance, etc. It should be stated that the unfinished performance should be performed in a timely manner.

Commitment party Commitment content Commitment time Performance period Type Duration Strict Specific instructions for performance Next

Restricted scene implementation reason step plan and

heavy

Big

Capital

After the completion of this major asset reorganization, Lianhuan Group will not be the controlling shareholder of Lianhuan Pharmaceutical.

Solving Jiangsu Soviet Union

Chongqing, within or outside China, in any way (including but not limited to operating alone, operating through joint ventures or owning another company)

Peer Pharmaceutical Group 2012-9-24 No Long-term Yes Not applicable Not applicable (shares and other interests of the group or enterprise) are directly or indirectly engaged in the same or similar business as Lianhuan Pharmaceutical and its subsidiaries

competition ltd.

Prime ministerial affairs.

close

of

inherit

promise

with

Lianhuan Group and other companies it controls will not use the rights of the controlling shareholder of Lianhuan Pharmaceutical held by Lianhuan Group to manipulate,

Resolve Jiangsu Soviet Union

Instruct Lianhuan Pharmaceutical or the directors, supervisors and senior managers of Lianhuan Pharmaceutical to cause Lianhuan Pharmaceutical to unfairly

Large Related Pharmaceutical Group 2012-9-24 No Long-term Yes Not applicable Not applicable

conditions, provide or accept funds, goods, services or other assets, or engage in any activities that harm Lianhuan Pharmaceutical and its

Capital Trading Co., Ltd.

actions in the interests of small and medium shareholders.

produce

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heavy

group

phase

close

of

inherit

promise

(1) Guarantee the independence of personnel ① Lianhuan Group guarantees that Lianhuan Pharmaceutical’s general manager, deputy general manager, financial controller and board secretary and other senior management personnel will not hold other positions other than directors and supervisors in Lianhuan Group and other companies it controls, and will not receive salaries from Lianhuan Group and other companies it controls; guarantee that Lianhuan Pharmaceutical’s financial personnel will not

Work part-time and receive salary in Lianhuan Group and other enterprises controlled by it; ② Lianhuan Group guarantees that Lianhuan Pharmaceutical has a complete and independent labor, personnel and salary management system, and these systems are completely independent from Lianhuan Group and other important enterprises controlled by it. (2) Guarantee the independence and integrity of assets ① Lianhuan Group guarantees that Lianhuan Pharmaceutical has the production system, auxiliary production system and supporting facilities related to production and operation, legally owns the land, factories, machinery and equipment related to production and operation, as well as the ownership or use rights of trademarks, patents and non-patented technologies, and has an independent production system for raw material procurement and product sales; ② Lianhuan Group guarantees that Lianhuan Pharmaceutical has independent and complete assets, and all assets are under the control of Lianhuan Pharmaceutical

Jiangsu Soviet Union

Under the restructuring, it is independently owned and operated by Lianhuan Pharmaceutical; ③ Lianhuan Group guarantees that Lianhuan Group and other companies controlled by it

Others Pharmaceutical Group 2012-9-24 No Long-term Yes Not applicable Not applicable group The company will not illegally occupy the funds and assets of Lianhuan Pharmaceutical in any way; it will not use the assets of Lianhuan Pharmaceutical as the promisee and its

Ltd.

Provide guarantees for the debts of other companies controlled by the company. (3) Guarantee financial independence ① Lianhuan Group guarantees that Lianhuan Pharmaceutical establishes an independent financial department and an independent financial accounting system; ② Lianhuan Group guarantees that Lianhuan Pharmaceutical has a standardized and independent financial accounting system and financial management system for branches and subsidiaries; ③ Lianhuan Group guarantees that Lianhuan Pharmaceutical opens an independent bank account and does not share a bank account with Lianhuan Group and other companies it controls; ④ Lianhuan Group guarantees that Lianhuan Pharmaceutical has a standardized and independent financial accounting system and a financial management system for branches and subsidiaries Huanhuan Pharmaceutical can make independent financial decisions and promises not to illegally interfere with Lianhuan Pharmaceutical's fund use and scheduling; ⑤ Lianhuan Group promises not to interfere with Lianhuan Pharmaceutical's independent tax payment in accordance with the law. (4) Guarantee the independence of the organization ① Lianhuan Group ensures that Lianhuan Pharmaceutical establishes and improves the legal person governance structure of the joint-stock company and has an independent and complete organizational structure. ② Lianhuan Group ensures that Lianhuan Pharmaceutical’s internal business management organizations independently exercise their powers in accordance with laws, regulations and the company’s articles of association. ③ Lianhuan Group guarantees that there will be no institutional confusion between the promisee and other companies it controls and Lianhuan Pharmaceutical. (5) Guarantee business

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Independence ① Lianhuan Group guarantees that the business of Lianhuan Pharmaceutical is independent of the promisee and other companies controlled by it. ② Lianhuan Group guarantees that Lianhuan Pharmaceutical has the assets, personnel, qualifications and capabilities to independently carry out business activities, and has the ability to operate independently and sustainably in the market. ③ Lianhuan Group guarantees not to interfere with the business of Lianhuan Pharmaceutical except for exercising the rights of shareholders.

activities.

The Company will strictly abide by the "Company Law of the People's Republic of China" and other relevant laws, regulations and normative documents as well as the provisions of the "Articles of Association of Jiangzhong Suhuan Pharmaceutical Co., Ltd.", exercise the rights of shareholders in accordance with the law, strictly perform the obligations of shareholders, and will not use the identity of the controlling shareholder to require Lianhuan Pharmaceutical or other companies controlled by it to directly or indirectly provide funds to the company and other companies controlled by the company in the following ways: (1) Borrow Lianhuan Pharmaceutical's assets with or without compensation. Or the funds of other enterprises controlled by it are used by the company or other enterprises controlled by the company; (2) Through banks

Jiangsu Soviet Union

Major or non-bank financial institutions provide entrusted loans to the company or other enterprises controlled by the company; (3) Entrust the company to

Others Pharmaceutical Group 2012-9-24 No Long-term Yes Not applicable Not applicable Group companies or other companies controlled by the company carry out investment activities; (4) For the company or other companies controlled by the company

Ltd.

Issue commercial acceptance bills without real transaction background; (5) Repay debts on behalf of the company or other companies controlled by the company; (6) Directly or indirectly occupy the funds of Lianhuan Pharmaceutical or other companies controlled by it through other means. The Company will strictly fulfill the above commitments and will urge other companies controlled by the Company to also strictly fulfill the above commitments. If the company or other companies controlled by the company violate this commitment and cause losses to Lianhuan Pharmaceutical or other companies controlled by it, the company will compensate Lianhuan Pharmaceutical or other companies controlled by it for all losses.

Chengdu Shichuan

The total audited net profit attributable to the shareholders of Tongfa Enterprise Co., Ltd. after deducting non-recurring gains and losses for the three fiscal years of 2025, 2026 and 2027 shall not be less than RMB 42 million. Performance commitment period year-

Others 2025-5-28 Yes Yes Not applicable Not applicable If the target company fails to complete the promised net profit within 20 working days after the issuance of the company's "Audit Report" for the 2027 financial year, the transferor shall jointly and severally bear performance compensation obligations to the transferee. Nian Xiaolan

2. Non-operating capital occupation by controlling shareholders and other related parties during the reporting period

□Applicable √Not applicable

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3. Illegal guarantee situation

□Applicable √Not applicable

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4. Audit status of semi-annual report

□Applicable √Not applicable

5. Changes and handling of matters involved in non-standard audit opinions in last year’s annual report

□Applicable √Not applicable

6. Matters related to bankruptcy and reorganization

□Applicable √Not applicable

7. Major litigation and arbitration matters

□The company has major litigation and arbitration matters during this reporting period √The company has no major litigation and arbitration matters during this reporting period

8. Listed companies and their directors, senior managers, controlling shareholders, and actual controllers are suspected of violating laws and regulations, have been punished, and have made rectifications

□Applicable √Not applicable

9. Explanation of the integrity status of the company, its controlling shareholders and actual controllers during the reporting period

□Applicable √Not applicable

10. Major related transactions

(1) Related transactions related to daily operations

1. Matters that have been disclosed in temporary announcements and have no progress or changes in subsequent implementation

√Applicable □Not applicable

Matter Overview Query Index

On April 17, 2026, the seventh meeting of the company's ninth board of directors deliberated. For details, please refer to the "Proposal of Lianhuan Pharmaceutical on the Company's Execution of Daily Related Transactions in 2025" on the website of the Shanghai Stock Exchange. "Announcement" (Announcement No.: 2026-020), "Proposal on Lianhuan Pharmaceutical's 2025 and 2026 Daily Related Transactions Estimation", the above proposals have been announced in the Annual Shareholders Meeting Resolution (Announcement No.: 2026-035). It was reviewed and approved at the company's 2025 annual shareholders' meeting on May 28, 2026.

2. Matters that have been disclosed in temporary announcements but have subsequent progress or changes in implementation

√Applicable □Not applicable

On August 24, 2026, the 27th extraordinary meeting of the company's ninth board of directors reviewed and approved the "Proposal on Newly Added Related Parties Not Under Common Control and Expected Daily Related Transactions in 2026", which was based on the actual needs and prudent considerations of the company and its subsidiaries' daily operations and business development. For details, please refer to the "Announcement of Lianhuan Pharmaceutical on Newly Added Related Parties Not Under Common Control and Expected Daily Related Transactions in 2026" (Announcement No.: 2026-056).

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3. Matters not disclosed in the temporary announcement

□Applicable √Not applicable

(2) Related transactions involving asset acquisition or equity acquisition or sale

1. Matters that have been disclosed in temporary announcements and have no progress or changes in subsequent implementation

√Applicable □Not applicable

Overview of the matter Query index Lianhuan Pharmaceutical (Anqing), a wholly-owned subsidiary of the company, has For details, please refer to the "Announcement on the Resolution of the Fifteenth Extraordinary Meeting of the Ninth Board of Directors of Lianhuan Group Holdings, the company's controlling shareholder, Lianhuan Group Holdings" disclosed on the Shanghai Stock Exchange website www.sse.com.cn (announcement number: 2025-070), Sun Company Prince (Anqing) purchased some houses "Lianhuan Pharmaceutical's Announcement on the Purchase of Assets and Related Transactions by a Wholly-Owned Subsidiary" (Announcement No.: Buildings and Land Use Rights, and Obtaining 2025-072), "Announcement on the Resolution of the Third Extraordinary Shareholders Meeting of Lianhuan Pharmaceutical in 2025" (Announcement No.: 2025-077 issued by the Anqing Municipal Natural Resources and Planning Bureau), "Lianhuan Pharmaceutical's "Real Estate Certificate of the People's Republic of China" on the Purchase of Assets and Related Transactions by a Wholly-Owned Subsidiary. Progress Announcement" (Announcement Number: 2026-007).

2. Matters that have been disclosed in temporary announcements but have subsequent progress or changes in implementation □ Applicable √ Not applicable

3. Matters not disclosed in the temporary announcement

□Applicable √Not applicable

4. If a performance agreement is involved, the performance achievement during the reporting period should be disclosed □Applicable √Not applicable

(3) Major related transactions of joint external investment

1. Matters that have been disclosed in temporary announcements and have no progress or changes in subsequent implementation

□Applicable √Not applicable

2. Matters that have been disclosed in temporary announcements but have subsequent progress or changes in implementation □ Applicable √ Not applicable

3. Matters not disclosed in the temporary announcement

□Applicable √Not applicable

(4) Related credit and debt transactions

1. Matters that have been disclosed in temporary announcements and have no progress or changes in subsequent implementation

□Applicable √Not applicable

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2. Matters that have been disclosed in temporary announcements but have subsequent progress or changes in implementation □ Applicable √ Not applicable

3. Matters not disclosed in the temporary announcement

□Applicable √Not applicable

(5) Financial business between the company and related financial companies, company-controlled financial companies and related parties □ Applicable √ Not applicable

(6) Other major related transactions

□Applicable √Not applicable

(7) Others

□Applicable √Not applicable

11. Major contracts and their performance

(1) Custody, contracting and leasing matters

□Applicable √Not applicable

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(2) Major guarantees performed and not yet completed during the reporting period

□Applicable √Not applicable

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(3) Other major contracts

□Applicable √Not applicable

12. Instructions on the use of raised funds

□Applicable √Not applicable

13. Description of other major matters

√Applicable □Not applicable

1. Regarding the company’s proposed issuance of technological innovation bonds

The company held the twelfth extraordinary meeting of the ninth board of directors on July 24, 2025, and the first extraordinary shareholders meeting of 2025 on August 11, 2025, which reviewed and approved the "Proposal on the Company's Proposed Issuance of Science and Technology Innovation Bonds" and agreed that the company would apply to the China National Association of Financial Market Institutional Investors (hereinafter referred to as the "National Association of Financial Market Institutional Investors") to register and issue science and technology innovation bonds with a maximum scale of no more than RMB 500 million (inclusive) and an issuance period of no more than 3 years (inclusive). In January 2026, the company received the "Notice of Acceptance of Registration" (Zhongshi Xiezhu [2026] MTN No. 2) issued by the National Association of Financial Market Institutional Investors and decided to accept the registration of the company's technology innovation bonds. The basic type of the company's registration this time is medium-term notes, with a registered amount of 500 million yuan. The registration quota is valid for 2 years from the date of signing this notice. It is jointly underwritten by Bank of Nanjing Co., Ltd. and Bank of Jiangsu Co., Ltd.

2. Matters regarding the signing of the "Project Park Admission Contract" by the company and its subsidiaries

The company held the 23rd extraordinary meeting of the company's ninth board of directors on April 27, 2026, and reviewed and approved the "Proposal on the Company's Plan to Sign the "Science and Technology Innovation Center Project Admission Contract" with Yangzhou High-tech Industrial Development Zone", "On the Company's Holding Subsidiary's Plan to Sign "Pharmaceutical Precision Cold Chain Manufacturing" with Yangzhou High-tech Industrial Development Zone "Proposal on the Construction Center Project Admission Contract>", agreeing that the company and the company's holding subsidiary Lianhuan Marketing signed the "Project Admission Contract" with the Yangzhou High-tech Industrial Development Zone Management Committee, and formally signed and completed the "Project Admission Contract" in July 2026. As of the disclosure date of this report, the project is in the preparatory stage of land bidding, auction, and listing.

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Section 6 Changes in Shares and Shareholders

1. Changes in share capital

(1) Statement of changes in shares

1. Statement of changes in shares

During the reporting period, the total number of shares and capital structure of the company did not change.

2. Description of changes in shares

□Applicable √Not applicable

3. The impact of changes in shares between the reporting period and the disclosure date of the semi-annual report on financial indicators such as earnings per share and net assets per share (if any)

□Applicable √Not applicable

4. Other content that the company deems necessary or required by the securities regulatory authorities to disclose

□Applicable √Not applicable

(2) Changes in restricted shares

□Applicable √Not applicable

2. Shareholder situation

(1) Total number of shareholders:

Total number of common shareholders (households) as of the end of the reporting period 38,865 Total number of preference shareholders (households) with restored voting rights as of the end of the reporting period 0

(2) As of the end of the reporting period, the shareholdings of the top ten shareholders and the top ten tradable shareholders (or shareholders without selling conditions) table unit: shareholdings of the top ten shareholders (excluding shares lent through refinancing)

Names of shareholders who hold pledged, marked or frozen shares held at the end of the period Ratio Sales restriction conditions Increase or decrease during the reporting period Nature of shareholders (full name) Amount (%) shares Number of shares Status

quantity quantity

39.90

Jiangsu Lianhuan Pharmaceutical Group Co., Ltd. 0 113,884,816 0 None 0 State-owned legal person

1.96

Hong Kong Securities Clearing Company Limited 4,432,652 5,590,623 0 None 0 Overseas legal person

1.31

Sinopharm Pharmaceutical Co., Ltd. 0 3,752,073 0 None 0 State-owned legal person

0.55

Chen Peizhong 1,581,300 1,581,300 0 None 0 Domestic natural person

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0.49

Goldman Sachs & Co. LLC 119,700 1,386,145 0 None 0 Overseas legal person

0.37

CITIGROUP GLOBAL MARKETS LIMITED 1,070,443 1,070,443 0 None 0 Others

0.32

Yang Jianwen 0 916,400 0 None 0 Domestic natural person

CITIC Securities Asset Management (Hong Kong) Co., Ltd. 0.31

418,128 881,067 0 None 0 Others - client funds

0.30

Zhou Xinggang 848,900 848,900 0 None 0 Domestic natural person

GF Securities Co., Ltd.-Western Lide Specialty 0.28

-151,660 786,600 0 None 0 Other Jingte New Quantitative Stock Selection Hybrid Securities Investment Fund

Shareholding status of the top ten shareholders without selling restrictions (excluding shares lent through refinancing)

Type and quantity of shares

Name of shareholder Number of shares held without selling restrictions

Type Quantity Jiangsu Lianhuan Pharmaceutical Group Co., Ltd. 113,884,816 RMB ordinary shares 113,884,816 Hong Kong Securities Clearing Company Limited 5,590,623 RMB ordinary shares 5,590,623 Sinopharm Group Pharmaceutical Co., Ltd. 3,752,073 RMB ordinary shares 3,752,073 Chen Peizhong 1,581,300 RMB ordinary shares 1,581,300 Goldman Sachs & Company LLC 1,386,145 RMB common shares 1,386,145 CITIGROUP GLOBAL MARKETS LIMITED 1,070,443 RMB common shares 1,070,443 Yang Jianwen 916,400 RMB common shares 916,400 CITIC Securities Asset Management (Hong Kong) Co., Ltd. - Client Funds 881,067 RMB ordinary shares 881,067 Zhou Xinggang 848,900 RMB ordinary shares 848,900 Guangfa Securities Co., Ltd.-Western Lide Specialized New Quantitative Stock Selection Mix

786,600 RMB ordinary shares 786,600 Combined securities investment funds

Description of special repurchase accounts among the top ten shareholders Not applicable

Explanation of the above-mentioned shareholders’ entrusted voting rights, entrusted voting rights and abstention from voting rights Not applicable

The company's largest shareholder, Lianhuan Pharmaceutical Group, has no related relationship with other shareholders; the company is unaware of the related relationships or concerted actions of other above-mentioned shareholders. Whether there is a related relationship between shareholders or falls within the "Measures for the Administration of Acquisitions of Listed Companies" and the "Shanghai-listed Companies Acquisition Management Measures".

Persons acting in concert as stipulated in the Measures for the Administration of Information Disclosure of Changes in Shareholdings of Municipal Companies’ Shareholders. Description of preference shareholders whose voting rights have been restored and the number of shares they hold Not applicable

Shareholders holding more than 5% of the shares, the top ten shareholders and the top ten shareholders of unrestricted tradable shares participating in the refinancing business and lending shares

□Applicable √Not applicable

The top ten shareholders and the top ten shareholders of unrestricted tradable shares have changed from the previous period due to refinancing lending/returning.

□Applicable √Not applicable

Number of shares held by the top ten shareholders subject to selling restrictions and conditions for selling restrictions

□Applicable √Not applicable

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(3) Strategic investors or general legal persons become the top ten shareholders due to the placement of new shares □Applicable √Not applicable

3. Directors and senior managers

(1) Changes in shareholdings of current and outgoing directors and senior managers during the reporting period □Applicable √Not applicable

Other situation description

□Applicable √Not applicable

(2) Equity incentives granted to directors and senior managers during the reporting period □ Applicable √ Not applicable

(3) Other instructions

□Applicable √Not applicable

4. Changes in controlling shareholders or actual controllers

□Applicable √Not applicable

5. Relevant information on preference shares

□Applicable √Not applicable

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Section 7 Bond-Related Information

1. Corporate bonds (including corporate bonds) and non-financial enterprise debt financing instruments □ Applicable √ Not applicable

2. Convertible corporate bonds

□Applicable √Not applicable

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Section 8 Financial Report

1. Audit report

□Applicable √Not applicable

2. Financial statements

Consolidated Balance Sheet

June 30, 2026

Prepared by: Jiangsu Lianhuan Pharmaceutical Co., Ltd.

Unit: Yuan Currency: RMB

Item Notes June 30, 2026 Current assets as of December 31, 2025:

Monetary funds 285,839,547.07 349,093,676.79 Settlement reserves

Loan funds

trading financial assets

Derivative financial assets

Notes receivable 216,134.47 1,125,149.72 Accounts receivable 712,564,935.76 681,331,534.10 Accounts receivable financing 57,416,813.81 47,524,506.97 Prepayments 216,863,808.92 150,421,950.24 Premiums receivable

Reinsurance accounts receivable

Receivable reinsurance contract reserves

Other receivables 41,846,198.68 43,426,042.71 Including: interest receivable

Dividends receivable

Buy financial assets under resale agreements

Inventory 648,978,992.11 660,676,660.64 Including: data resources

contract assets

Assets held for sale

Non-current assets due within one year

Other current assets 50,537,368.59 52,528,515.67

Total current assets 2,014,263,799.41 1,986,128,036.84 Non-current assets:

Grant loans and advances

debt investment

Other debt investments

long-term receivables

Long-term equity investment 9,000,389.30 6,011,092.92

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Other equity instrument investments

Other non-current financial assets

Investment real estate 6,828,254.78 6,909,664.99 Fixed assets 1,424,154,703.78 1,383,844,786.94 Construction in progress 113,848,707.14 84,343,745.09 Productive biological assets

oil and gas assets

Right-of-use assets 5,057,169.84 6,608,516.02 Intangible assets 235,971,607.87 231,172,811.90 Including: data resources

Development expenditure 289,900,555.03 247,955,031.82 Including: data resources

Goodwill 62,504,512.22 62,504,512.22 Long-term deferred expenses 2,584,184.83 2,938,695.82 Deferred income tax assets 34,340,246.33 35,823,131.17 Other non-current assets 26,682,476.89 42,576,119.60 Total non-current assets 2,210,872,808.01 2,110,688,108.49

Total assets 4,225,136,607.42 4,096,816,145.33 Current liabilities:

Short-term borrowings 1,005,094,622.35 958,590,489.84 Borrowings from the central bank

borrowing funds

Trading financial liabilities

Derivative financial liabilities

Notes payable 147,360,077.44 161,491,959.13 Accounts payable 425,181,334.39 409,460,699.47 Advance payments

Contract liabilities 26,745,669.60 56,735,186.85 Financial assets sold and repurchased

Taking deposits and placing deposits with other banks

Agent for buying and selling securities

Agent underwriting securities funds

Employee benefits payable 15,902,346.69 30,649,223.56 Taxes payable 17,808,488.78 27,576,838.85 Other payables 181,585,545.46 141,778,117.17 Including: interest payable

Dividends payable 20,098,338.90 6,748,577.51 Handling fees and commissions payable

Reinsurance accounts payable

Liabilities held for sale

Non-current liabilities due within one year 349,913,651.42 234,269,391.69 Other current liabilities 4,136,287.40 8,081,250.86

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Total current liabilities 2,173,728,023.53 2,028,633,157.42 Non-current liabilities:

insurance contract reserves

Long-term borrowings 351,166,708.20 355,089,747.73 Bonds payable

Among them: preferred shares

perpetual bond

Lease liabilities 4,330,038.83 5,177,947.20 Long-term payables

Long-term employee benefits payable

Estimated liabilities

Deferred income 13,975,878.97 12,239,146.32 Deferred income tax liabilities 15,438,452.00 15,922,541.46 Other non-current liabilities

Total non-current liabilities 384,911,078.00 388,429,382.71

Total liabilities 2,558,639,101.53 2,417,062,540.13 Owners’ equity (or shareholders’ equity):

Paid-in capital (or equity) 285,456,270.00 285,456,270.00 Other equity instruments

Among them: preferred shares

perpetual bond

Capital reserve 259,941,627.72 259,941,627.72 Less: treasury shares

Other comprehensive income -142,634.71 -240,983.56Special reserves

Surplus reserve 105,138,986.50 105,138,986.50 General risk reserve

Undistributed profits 611,990,856.28 621,450,992.10 Attributable to the owner’s equity of the parent company (or

1,262,385,105.79 1,271,746,892.76 shareholders’ equity) total

Minority shareholders’ equity 404,112,400.10 408,006,712.44 Owner’s equity (or shareholders’ equity)

1,666,497,505.89 1,679,753,605.20Total

Liabilities and owners' equity (or shares

4,225,136,607.42 4,096,816,145.33 East equity) Total

Person in charge of the company: Qian Zhenhua Person in charge of accounting work: Xue Hao Person in charge of the accounting department: Ma Tingting

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Parent company balance sheet

June 30, 2026

Prepared by: Jiangsu Lianhuan Pharmaceutical Co., Ltd.

Unit: Yuan Currency: RMB

Item Notes June 30, 2026 Current assets as of December 31, 2025:

Monetary funds 100,445,301.06 143,804,572.02 Trading financial assets

Derivative financial assets

Notes receivable 216,134.47 309,664.84 Accounts receivable 259,458,239.06 255,319,919.24 Receivables financing 33,355,319.29 32,159,095.84 Prepayments 160,783,942.93 109,729,484.94 Other receivables 22,874,367.55 23,386,698.40 Including: interest receivable

Dividends receivable

Inventory 229,523,862.53 218,181,692.62 Including: data resources

contract assets

Assets held for sale

Non-current assets due within one year

Other current assets 3,850,239.99 6,396,823.14

Total current assets 810,507,406.88 789,287,951.04 Non-current assets:

debt investment

Other debt investments

long-term receivables

Long-term equity investment 640,976,206.47 643,976,206.47 Other equity instrument investments

Other non-current financial assets

Investment real estate 6,828,254.78 6,909,664.99 Fixed assets 841,502,515.74 850,698,005.92 Construction in progress 95,223,310.28 73,511,157.74 Productive biological assets

oil and gas assets

right-of-use assets

Intangible assets 96,892,084.08 95,871,146.02 Including: data resources

Development expenditure 290,074,468.28 249,678,514.69 Including: data resources

goodwill

Long-term deferred expenses

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Jiangsu Lihuan Pharmaceutical Co., Ltd. 2026 Semi-Annual Report

Deferred income tax assets 22,363,286.81 22,005,569.26 Other non-current assets 13,596,079.02 6,543,452.18 Total non-current assets 2,007,456,205.46 1,949,193,717.27

Total assets 2,817,963,612.34 2,738,481,668.31 Current liabilities:

Short-term borrowings 712,234,084.93 747,317,239.25 Trading financial liabilities

Derivative financial liabilities

Notes payable 41,962,355.26 27,758,684.94 Accounts payable 160,581,917.41 176,740,295.47 Advance payments

Contract liabilities 5,105,780.86 4,572,099.70 Employee benefits payable 4,012,032.67 11,111,329.33 Taxes payable 11,442,958.54 15,486,389.56 Other payables 149,512,290.33 141,041,152.58 of which: interest payable

Dividends payable 20,098,338.90 116,400.00 Liabilities held for sale

Non-current liabilities due within one year 301,023,833.66 208,258,142.96 Other current liabilities 1,319,888.88 1,565,689.39

Total current liabilities 1,387,195,142.54 1,333,851,023.18 Non-current liabilities:

Long-term borrowings 309,510,458.20 283,458,497.73 Bonds payable

Among them: preferred shares

perpetual bond

Lease liability

long-term payables

Long-term employee benefits payable

Estimated liabilities

Deferred income 4,250,890.58 2,426,087.94 Deferred income tax liabilities

Other non-current liabilities

Total non-current liabilities 313,761,348.78 285,884,585.67

Total liabilities 1,700,956,491.32 1,619,735,608.85 Owners’ equity (or shareholders’ equity):

Paid-in capital (or equity) 285,456,270.00 285,456,270.00 Other equity instruments

Among them: preferred shares

perpetual bond

Capital reserve 245,219,320.93 245,219,320.93 Less: treasury shares

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other comprehensive income

special reserve

Surplus reserve 105,138,986.50 105,138,986.50 Undistributed profits 481,192,543.59 482,931,482.03 Owners’ equity (or shareholders’ equity)

1,117,007,121.02 1,118,746,059.46 total

Liabilities and owners' equity (or shares

2,817,963,612.34 2,738,481,668.31 East equity) Total

Person in charge of the company: Qian Zhenhua Person in charge of accounting work: Xue Hao Person in charge of the accounting department: Ma Tingting

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Jiangsu Lihuan Pharmaceutical Co., Ltd. 2026 Semi-Annual Report

consolidated income statement

January-June 2026

Unit: Yuan Currency: RMB

Item Notes 2026 Half Year 2025 Half Year

1. Total operating income 1,570,814,170.07 1,285,342,346.98 Including: operating income 1,570,814,170.07 1,285,342,346.98 Interest income

Premiums earned

Fee and commission income

2. Total operating costs 1,548,886,885.84 1,230,280,455.15 Including: operating costs 1,120,395,602.36 786,613,734.42 Interest expenses

Handling fees and commission expenses

surrender deposit

Net compensation expenses

Net withdrawal of insurance liability reserves

policy dividend payout

Reinsurance cost

Taxes and surcharges 10,867,365.85 10,210,703.62 Sales expenses 223,598,410.04 263,149,785.33 Management expenses 112,257,479.16 86,783,433.50 Research and development expenses 62,952,648.68 68,423,933.06Financial expenses 18,815,379.75 15,098,865.22Including: Interest expenses 18,254,517.11 15,570,894.61

Interest income 411,133.86 351,738.21 plus: other income 7,645,389.06 4,031,900.88 Investment income (losses are listed with "-") -3,135,351.67 -2,292,190.27 Including: losses to associates and joint ventures

-2,683,218.90 -1,491,479.24Investment income

Financial assets measured at amortized cost

Derecognition of income (losses are listed with "-")

Exchange gains (losses are listed with "-")

Net exposure hedging gains (losses are marked with a "-"

Fill in the column)

Gains from changes in fair value (losses indicated by “-”

(Fill in the number)

Credit impairment losses (losses are filled in with "-"

-1,047,295.76 -2,626,861.60 columns)

Asset impairment losses (losses are filled in with "-"

-300,699.19 -927,206.48 columns)

Asset disposal income (losses are filled in with "-"

32,137.12

column)

3. Operating profit (losses are listed with "-") 25,121,463.79 53,247,534.36

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Add: non-operating income 230,001.57 320,753.13

Less: Non-operating expenses 2,947,051.93 61,074,105.39

4. Total profit (total loss is filled in with "-"

22,404,413.43 -7,505,817.90 columns)

Less: Income tax expense 7,648,108.72 24,851,779.14

5. Net profit (net loss is listed with "-") 14,756,304.71 -32,357,597.04

(1) Classification by business continuity

1. Net profit from continuing operations (net loss is represented by “-”

No. 14,756,304.71 -32,357,597.04 (please fill in the list)

2. Net profit from discontinued operations (net loss is represented by “-”

(Fill in the number)

(2) Classification according to ownership ownership

1. Net profit attributable to shareholders of the parent company (net

10,521,803.08 -40,028,355.46 Losses are listed with a “-” sign)

2. Profit and loss of minority shareholders (net loss is marked with "-"

4,234,501.63 7,670,758.42 (please fill in the column)

6. Net after-tax amount of other comprehensive income 98,348.85 -96,708.40

(1) Other comprehensive assets attributable to the owners of the parent company

98,348.85 -96,708.40 Net after-tax income

1. Other comprehensive income that cannot be reclassified into profit or loss

benefit

(1) Remeasurement of changes in defined benefit plan

(2) Other comprehensive income that cannot be transferred to profit or loss under the equity method

benefit

(3) Changes in fair value of other equity instrument investments

(4) Changes in the fair value of the company’s own credit risk

2. Other comprehensive income that will be reclassified into profit and loss 98,348.85 -96,708.40 (1) Other comprehensive income that can be converted into profit and loss under the equity method 98,348.85 -96,708.40 (2) Changes in the fair value of other debt investments

(3) Financial assets are reclassified and included in other comprehensive income

amount of

(4) Credit impairment provisions for other debt investments

(5) Cash flow hedging reserve

(6) Translation differences of foreign currency financial statements

(7) Others

(2) Other comprehensive income attributable to minority shareholders

net profit after tax

7. Total comprehensive income 14,854,653.56 -32,454,305.44

(1) Comprehensive income attributable to owners of the parent company

10,620,151.93 -40,125,063.86 total profit

(2) Total comprehensive income attributable to minority shareholders

4,234,501.63 7,670,758.42 amount

8. Earnings per share:

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Jiangsu Lihuan Pharmaceutical Co., Ltd. 2026 Semi-Annual Report

(1) Basic earnings per share (yuan/share) 0.04 -0.14

(2) Diluted earnings per share (yuan/share) 0.04 -0.14 If a business merger under common control occurs in this period, the net profit realized by the merged party before the merger is: 0.00 yuan, and the net profit realized by the merged party in the previous period is: 0.00 yuan.

Person in charge of the company: Qian Zhenhua Person in charge of accounting work: Xue Hao Person in charge of the accounting department: Ma Tingting

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Parent company income statement

January-June 2026

Unit: Yuan Currency: RMB

Item Notes 2026 Half Year 2025 Half Year

1. Operating income 329,377,164.77 384,044,071.59 Less: Operating costs 91,734,578.39 74,981,314.71 Taxes and surcharges 5,130,800.24 5,927,261.50 Sales expenses 107,339,809.03 161,091,370.58 Administrative expenses 56,811,386.36 51,436,538.96 Research and development expenses 49,170,666.53 57,528,978.50 Financial expenses 14,127,835.03 11,242,181.60 Including: interest expenses 13,729,349.13 11,673,540.81

Interest income 18,674.23 153,070.08 plus: other income 4,485,542.05 1,360,009.93 Investment income (losses are listed with "-") 5,023,770.87 3,350,450.44 Including: losses to associates and joint ventures

-825,684.30 investment income

Financial assets measured at amortized cost

Derecognition of income (losses are listed with "-")

Net exposure hedging gains (losses are marked with a "-"

Fill in the column)

Gains from changes in fair value (losses indicated by “-”

(Fill in the number)

Credit impairment losses (losses are filled in with "-"

-14,184.15 -134,139.19 columns)

Asset impairment losses (losses are filled in with "-"

-330,561.71 -961,078.34 columns)

Asset disposal income (losses are filled in with "-"

column)

2. Operating profit (losses are listed with "-") 14,226,656.25 25,451,668.59 Plus: non-operating income 15,000.00 - Less: non-operating expenses 41,043.28 61,038,247.84

3. Total profit (total loss is filled in with "-"

14,200,612.97 -35,586,579.25 columns)

Less: Income tax expense -4,042,387.49 1,227,632.51

4. Net profit (net loss is listed with "-") 18,243,000.46 -36,814,211.76

(1) Net profit from continuing operations (net loss divided by

18,243,000.46 -36,814,211.76 (Fill in “-”)

(2) Net profit from discontinued operations (net loss equal to

Fill in the column with "-" sign)

5. Net amount of other comprehensive income after tax

(1) Other comprehensive items that cannot be reclassified into profit or loss

income

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1. Remeasurement of changes in defined benefit plan 2. Other comprehensive income that cannot be transferred to profit or loss under the equity method

2. Changes in the fair value of other equity instrument investments 4. Changes in the fair value of the company’s own credit risk

(2) Other comprehensive income that will be reclassified into profit and loss

1. Other comprehensive income that can be converted to profit or loss under the equity method

2. Changes in fair value of other debt investments

3. The amount of financial assets reclassified and included in other comprehensive income

4. Credit impairment provisions for other debt investments

5. Cash flow hedging reserve

6. Translation differences of foreign currency financial statements

7.Others

6. Total comprehensive income 18,243,000.46 -36,814,211.76

7. Earnings per share:

(1) Basic earnings per share (yuan/share)

(2) Diluted earnings per share (yuan/share)

Person in charge of the company: Qian Zhenhua Person in charge of accounting work: Xue Hao Person in charge of the accounting department: Ma Tingting

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Jiangsu Lihuan Pharmaceutical Co., Ltd. 2026 Semi-Annual Report

Consolidated Cash Flow Statement

January-June 2026

Unit: Yuan Currency: RMB

Item Notes 2026 Half Year 2025 Half Year

1. Cash flow generated from operating activities:

Cash received from selling goods and providing services 1,363,871,690.08 1,276,964,705.54 Net increase in customer deposits and deposits from banks

Um

Net increase in borrowing from the central bank

Net increase in borrowing funds from other financial institutions

Um

Cash received from premiums from the original insurance contract

Net cash received from reinsurance business

Net increase in policyholders’ savings and investment funds

Cash collected from interest, fees and commissions

Net increase in borrowing funds

Net increase in repurchase business funds

Net cash received from buying and selling securities on behalf of agents

tax refund received

Other cash received related to operating activities 26,014,975.52 20,038,191.49

Subtotal of cash inflows from operating activities 1,389,886,665.60 1,297,002,897.03 Cash paid for purchasing goods and receiving services 937,625,253.30 748,693,152.21 Net increase in customer loans and advances

Net increase in deposits with central banks and inter-banks

Um

Cash used to pay compensation from the original insurance contract

Net increase in lending funds

Cash payments for interest, fees and commissions

Cash payment for policy dividends

Cash paid to and for employees 133,442,845.14 107,949,942.51 Various taxes and fees paid 73,756,070.70 114,683,028.59 Cash paid for other operating activities 329,679,108.35 483,486,386.72 Subtotal cash outflow from operating activities 1,474,503,277.49 1,454,812,510.03 Net cash flow from operating activities

-84,616,611.89 -157,809,613.00 amount

2. Cash flow generated from investing activities:

Recover cash received on investments

Cash received from investment income

Disposal of fixed assets, intangible assets and other

31,228.52 6,468.00 Net cash received from long-term assets

Received from disposal of subsidiaries and other business units

net cash

Other cash received related to investing activities

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Jiangsu Lihuan Pharmaceutical Co., Ltd. 2026 Semi-Annual Report

Subtotal of cash inflows from investing activities 31,228.52 6,468.00 Purchase and construction of fixed assets, intangible assets and others

111,541,941.80 132,788,855.17 Cash paid for long-term assets

Cash paid for investment 5,574,166.43 73,495,298.11 Net increase in pledged loans

Obtain payment from subsidiaries and other business units

net cash

Other cash payments related to investing activities

Subtotal of cash outflows from investing activities 117,116,108.23 206,284,153.28 Net cash flows from investing activities

-117,084,879.71 -206,277,685.28 amount

3. Cash flow generated from financing activities:

Absorbing cash received from investments

Among them: subsidiaries absorb investment from minority shareholders

cash received

Cash received from borrowings 768,864,460.47 971,181,555.46 Cash received from other financing activities 50,000,000.00 15,000,000.00

Subtotal of cash inflows from financing activities 818,864,460.47 986,181,555.46 Cash paid to repay debts 607,122,500.00 466,456,514.42 Distribution of dividends, profits or interest payments

33,015,508.59 36,205,754.02 in cash

Including: Payments made by subsidiaries to minority shareholders

14,760,991.48 5,365,000.00 Dividends and profits

Cash payments related to other financing activities 33,298,330.96 58,167,639.01 Subtotal cash outflows from financing activities 673,436,339.55 560,829,907.45 Net cash flow generated from financing activities

145,428,120.92 425,351,648.01 amount

4. Exchange rate changes on cash and cash equivalents

-341,247.98 221,602.02 impact

5. Net increase in cash and cash equivalents -56,614,618.66 61,485,951.75 Plus: opening balance of cash and cash equivalents 278,351,322.05 186,693,885.24

6. Balance of cash and cash equivalents at the end of the period 221,736,703.39 248,179,836.99 Person in charge of the company: Qian Zhenhua Person in charge of accounting work: Xue Hao Person in charge of the accounting department: Ma Tingting

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Jiangsu Lihuan Pharmaceutical Co., Ltd. 2026 Semi-Annual Report

Parent company cash flow statement

January-June 2026

Unit: Yuan Currency: RMB

Item Notes 2026 Half Year 2025 Half Year

1. Cash flow generated from operating activities:

Cash received from selling goods and providing services 281,904,668.93 407,442,104.25 Tax refunds received

Other cash received related to operating activities 13,286,638.06 54,030,278.98

Subtotal of cash inflows from operating activities 295,191,306.99 461,472,383.23 Cash paid for purchasing goods and receiving services 57,130,783.57 71,979,194.68 Cash paid to and for employees 70,384,061.20 67,988,921.20 Various taxes paid 28,667,655.57 40,246,268.83 Other cash paid related to operating activities 205,866,690.03 386,069,748.64

Subtotal of cash outflows from operating activities 362,049,190.37 566,284,133.35 Net cash flow from operating activities -66,857,883.38 -104,811,750.12

2. Cash flow generated from investing activities:

Cash received from recovery of investment 1,785,668.64

Cash received from investment income 5,016,000.00 4,935,000.00 Disposal of fixed assets, intangible assets and others

Net cash received from long-term assets

Received from disposal of subsidiaries and other business units

net cash

Other cash received related to investing activities

Subtotal of cash inflows from investing activities 6,801,668.64 4,935,000.00 Purchase and construction of fixed assets, intangible assets and others

58,169,789.16 114,047,702.51 Cash paid for long-term assets

Cash paid for investment 22,000,000.00 140,445,000.00 Paid for acquiring subsidiaries and other business units

net cash

Other cash payments related to investing activities

Subtotal of cash outflows from investing activities 80,169,789.16 254,492,702.51 Net cash flows from investing activities

-73,368,120.52 -249,557,702.51 amount

3. Cash flow generated from financing activities:

Absorbing cash received from investments

Cash received from borrowings 543,864,460.47 760,484,490.35 Cash received from other financing activities 25,000,000.00

Subtotal of cash inflows from financing activities 568,864,460.47 760,484,490.35 Cash paid to repay debts 460,087,500.00 288,900,000.00 Distribution of dividends, profits or interest payments

13,729,349.13 26,943,400.22 in cash

Other cash payments related to financing activities

Subtotal of cash outflows from financing activities 473,816,849.13 315,843,400.22

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Jiangsu Lihuan Pharmaceutical Co., Ltd. 2026 Semi-Annual Report

Net cash flow from financing activities

95,047,611.34 444,641,090.13 amount

4. Exchange rate changes on cash and cash equivalents

-182,124.07 43,273.82 impact

5. Net increase in cash and cash equivalents -45,360,516.63 90,314,911.32

Add: Balance of cash and cash equivalents at the beginning of the period 136,767,422.01 41,727,535.10

6. Balance of cash and cash equivalents at the end of the period 91,406,905.38 132,042,446.42 Person in charge of the company: Qian Zhenhua Person in charge of accounting work: Xue Hao Person in charge of the accounting department: Ma Tingting

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Jiangsu Lihuan Pharmaceutical Co., Ltd. 2026 Semi-Annual Report

Consolidated Statement of Changes in Owner's Equity

January to June 2026 Unit: Yuan Currency: RMB 2026 Half Year

Owner's equity attributable to parent company

Other Equity Work Item 1 Tools Less General

Minority shareholders’ equity Total paid-in capital of owners’ equity: Other comprehensive income Other

Youyong Capital Reserve Special Reserve Surplus Reserve Undistributed Profit Subtotal (or Share Capital) Other Treasury Equity Insurance Others Continued

He deposits quasi-stock bonds

Stock equipment

1. Previous year 285,456,27 259,941,62 105,138,986

-240,983.56 621,450,992.10 1,271,746,892.76 408,006,712.44 1,679,753,605.20 Closing balance 0.00 7.72 .50

Plus: Accounting

Policy changes

Early stage

error correction

Others

2. This year 285,456,27 259,941,62 105,138,986

-240,983.56 621,450,992.10 1,271,746,892.76 408,006,712.44 1,679,753,605.20 Opening balance 0.00 7.72 .50

3. This issue

Increase or decrease

Amount (minus

98,348.85 -9,460,135.82 -9,361,786.97 -3,894,312.34 -13,256,099.31 less than

"-" sign

Fill in the column)

(1) Comprehensive

Total combined income 98,348.85 10,521,803.08 10,620,151.93 4,234,501.63 14,854,653.56

(2) Place

Those who invest

and reduce capital

Ben

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Jiangsu Lihuan Pharmaceutical Co., Ltd. 2026 Semi-Annual Report

1． Common shares invested by owners 2. Capital invested by other equity instrument holders 3. The amount of share-based payment included in owners’ equity 4. Others

(3) Profit

-19,981,938.90 -19,981,938.90 -8,128,813.97 -28,110,752.87 Profit distribution 1. Withdraw surplus reserve 2. Withdraw general risk reserve

3． to the owner (or

-19,981,938.90 -19,981,938.90 -8,128,813.97 -28,110,752.87 Distribution from shareholders)

4. Others

(4) Internal carryover of owners’ equity 1. Convert capital reserve to capital (or share capital) 2. Conversion of surplus reserves into capital (or share capital)

56/209 Jiangsu Lianhuan Pharmaceutical Co., Ltd. 2026 Semi-annual Report

3． surplus

Compensation for public reserve

Loss

4. Settings

Benefit plan

variable balance

transfer to deposit

benefit

5. Others

Comprehensive income

Carry forward and retained

income

6. Others

(5) Specialized

item reserves

1． This issue 620,315.

620,315.31 620,315.31Extraction 31

2. This issue 620,315.

620,315.31 620,315.31Use 31

(6) Its

him

4. This issue 285,456,27 259,941,62 105,138,986

• -142,634.71 - - 611,990,856.28 1,262,385,105.79 404,112,400.10 1,666,497,505.89 Closing balance 0.00 7.72 .50

2025 half year

Owner's equity attributable to parent company

Other Equity Work Item 1 Tools Less General

Minority shareholders’ equity Total paid-in capital of owners’ equity (or: Other comprehensive income Risks Capital reserves Special reserves Surplus reserves Undistributed profits Subtotal equity) Other treasury interests Risks Continued

He deposits quasi-stock bonds

Stock equipment

1. Previous year 285,456,270 259,941,6 105,138,986

-116,387.83 745,189,048.54 1,395,609,544.93 181,605,944.09 1,577,215,489.02 Closing balance .00 27.72 .50

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Jiangsu Lihuan Pharmaceutical Co., Ltd. 2026 Semi-Annual Report

Plus: Accounting

Policy changes

Early stage

error correction

Others

2. This year 285,456,270 259,941,6 105,138,986

-116,387.83 745,189,048.54 1,395,609,544.93 181,605,944.09 1,577,215,489.02Beginning balance .00 27.72 .50

3. This issue

Increase or decrease

Amount (minus -

-96,708.40 -65,530,671.89 181,509,737.99 115,979,066.10 less than 65,433,963.49 "-"

Fill in the column)

(1) Comprehensive

-Total income -96,708.40 -40,125,063.86 7,670,758.42 -32,454,305.44

40,028,355.46 amount

(2) Place

Those who invest

179,203,979.57 179,203,979.57 and reduced capital

Ben

1． all

179,203,979.57 179,203,979.57 ordinary shares invested by investors

2. Others

equity instruments

holders vote

invest capital

3． shares

Payment credited

Ownership rights

amount of profit

4. Others

(3) Profit

-25,405,608.03 -25,405,608.03 -5,365,000.00 -30,770,608.03Profit distribution

1． Extract

Surplus reserve

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Jiangsu Lihuan Pharmaceutical Co., Ltd. 2026 Semi-Annual Report

2. Withdraw general risk reserve

3． to the owner (or

-25,405,608.03 -25,405,608.03 -5,365,000.00 -30,770,608.03 Distribution from shareholders)

4. Others

(4) Internal carryover of owners’ equity 1. Convert capital reserve to capital (or share capital) 2. Convert surplus reserves to capital (or share capital) 3. Surplus reserve to cover losses

4. Changes in defined benefit plans are carried forward to retained earnings

5. Other comprehensive income carried forward to retained earnings

6. Others

(5) Special reserves 1. This issue 731,817.

731,817.59 731,817.59Extraction 59

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Jiangsu Lihuan Pharmaceutical Co., Ltd. 2026 Semi-Annual Report

2. This issue 731,817.

731,817.59 731,817.59Use 59

(6) Its

him

4. This issue 285,456,270 259,941,6 105,138,986

-213,096.23 679,755,085.05 1,330,078,873.04 363,115,682.08 1,693,194,555.12 Closing balance .00 27.72 .50

Person in charge of the company: Qian Zhenhua Person in charge of accounting work: Xue Hao Person in charge of the accounting department: Ma Tingting

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Jiangsu Lihuan Pharmaceutical Co., Ltd. 2026 Semi-Annual Report

Statement of changes in owner's equity of the parent company

January-June 2026

Unit: Yuan Currency: RMB 2026 Half Year

Items Paid-in capital (or shares) Other equity instruments Less: Inventories Other comprehensive Special capital reserves Surplus reserves Undistributed profits Total owners’ equity

This) Preferred shares Perpetual bonds Other shares Income Reserves

1. Closing balance of the previous year 285,456,270.00 245,219,320.93 105,138,986.50 482,931,482.03 1,118,746,059.46 Add: changes in accounting policies

Early error correction

Others

2. Opening balance of the year 285,456,270.00 245,219,320.93 105,138,986.50 482,931,482.03 1,118,746,059.46

3. Increase or decrease of change funds in this period

Amount (decreases are listed with a "-" sign -1,738,938.44 -1,738,938.44)

(1) Total comprehensive income 18,243,000.46 18,243,000.46

(2) Owner’s investment and

reduce capital

1． Owner's investment

common stock

2. Other equity instruments held

Someone invests capital

3． Share-based payments are included in the

Amount of owner's equity

4. Others

(3) Profit distribution -19,981,938.90 -19,981,938.90 1. Withdrawal from surplus reserve

2. to the owner (or stock

-19,981,938.90 -19,981,938.90 East) distribution

3． Others

(4) Within owner’s equity

carried forward

1． Conversion of capital reserve to capital increase

Capital (or share capital)

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Jiangsu Lihuan Pharmaceutical Co., Ltd. 2026 Semi-Annual Report

2. Conversion of surplus reserves to capital increase

Capital (or share capital)

3． Surplus reserve to cover losses

loss

4. Defined benefit plan changes

Moving amount carried forward to retained earnings

5. Other comprehensive income

Transfer to retained earnings

6. Others

(5) Special reserves

620,3 1. Withdrawal in this period 620,315.31 15.31

620,3 2. 620,315.31 used in this period

15.31

(6) Others

4. Ending balance of the current period 285,456,270.00 245,219,320.93 105,138,986.50 481,192,543.59 1,117,007,121.02

2025 half year

Other equity instruments

Items Paid-in capital (or shares Other comprehensive special items Capital reserves less: treasury shares Surplus reserves Undistributed profits Total owners’ equity) Preferred shares Perpetual bonds Total income reserves

him

1. Closing balance of the previous year 285,456,270.00 245,219,320.93 105,138,986.50 594,230,818.14 1,230,045,395.57 Add: changes in accounting policies

Early error correction

Others

2. Balance at the beginning of the year 285,456,270.00 245,219,320.93 105,138,986.50 594,230,818.14 1,230,045,395.57

3. Amount of increase or decrease in the current period (decrease by

-62,219,819.79 -62,219,819.79 Fill in the column with "-")

(1) Total comprehensive income -36,814,211.76 -36,814,211.76

(2) Owner’s investment and capital reduction

1． Common stock invested by owners

2. Capital invested by other equity instrument holders

3． Share-based payment included in owner’s equity

Um

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4. Others

(3) Profit distribution -25,405,608.03 -25,405,608.03 1. Withdrawal from surplus reserve

2. Distribution to owners (or shareholders) -25,405,608.03 -25,405,608.03 3. Others

(4) Internal carryover of owners’ equity

1． Conversion of capital reserves to capital (or share capital)

2. Conversion of surplus reserves into capital (or share capital)

3． Surplus reserve to cover losses

4. Changes in defined benefit plans are carried forward and retained

income

5. Other comprehensive income carried forward to retained earnings

6. Others

(5) Special reserves

731,81 1． Withdrawal in this period 731,817.59 7.59

731,81 2. Used in this period 731,817.59

7.59

(6) Others

4. Ending balance of the current period 285,456,270.00 245,219,320.93 105,138,986.50 532,010,998.35 1,167,825,575.78 Person in charge of the company: Qian Zhenhua Person in charge of accounting work: Xue Hao Person in charge of the accounting department: Ma Tingting

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3. Basic situation of the company

1. Company profile

√Applicable □Not applicable

The company is a joint-stock company established by Lianhuan Group (formerly Yangzhou Pharmaceutical Factory) as the main sponsor, United Pharmaceutical Group Co., Ltd., Shanghai Lianchuang Venture Capital Co., Ltd., Suzhou Industrial Park Pharmaceutical University New Drug Development Center Co., Ltd., and Jiangsu High-tech Industry Investment Co., Ltd. Lianhuan Group invested with its six workshops (tablet workshop), seven workshops (APIs), eight workshops (APIs workshop), power workshop, standardized warehouse and other operating net assets, as well as its intangible assets - the production technology of the national first-class new drug Aprelite, as well as monetary funds. Other sponsors contributed monetary funds. On February 22, 2000, the company obtained its corporate business license with a registered capital of RMB 40 million.

On March 4, 2003, with the approval of the "Notice on Approving the Public Issuance of Stocks by Jiangsu Lianhuan Pharmaceutical Co., Ltd." issued by the China Securities Regulatory Commission, Zheng Jian Fa Zi [2003] No. 15, the company publicly issued 20 million RMB ordinary shares to the public and was listed for trading on the Shanghai Stock Exchange on March 19, 2003. The company's registered capital was changed to RMB 60 million, and the changed corporate legal person business license was obtained on April 23, 2003.

In May 2008, according to the resolution of the shareholders' meeting, the company increased its registered capital by RMB 30,000,000.00, all of which was transferred from capital reserves to share capital. After the change, the registered capital was RMB 90,000,000.00, which has been verified by the "Tianheng Yanzi (2008) No. 52" capital verification report of Jiangsu Tianheng Accounting Firm Co., Ltd.

In May 2010, according to the resolution of the shareholders' meeting, the company increased its registered capital by RMB 27,000,000.00, all of which was transferred from capital reserves to share capital. After the change, the registered capital was RMB 117,000,000.00, which has been verified by the "Tianheng Yanzi (2010) No. 47" capital verification report of Jiangsu Tianheng Accounting Firm Co., Ltd.

In May 2012, according to the resolution of the shareholders' meeting, the company increased its registered capital by RMB 35,100,000.00, all of which was transferred from capital reserves to share capital. After the change, the registered capital was RMB 152,100,000.00, which has been verified by the "Tianheng Yanzi (2012) No. 00058" capital verification report of Tianheng Accounting Firm Co., Ltd.

In June 2013, according to the resolution of the third meeting of the fifth session of the Board of Directors of the Company in 2012 and approved by the China Securities Regulatory Commission Zhengjian Xu [2013] No. 695 "Approval of Jiangsu Lianhuan Pharmaceutical Co., Ltd.'s issuance of shares to Jiangsu Lianhuan Pharmaceutical Group Co., Ltd. to purchase assets", the company issued 4, 600,189 RMB ordinary shares were acquired to acquire 100% equity of Yangzhou Pharmaceutical Co., Ltd. held by Jiangsu Lianhuan Pharmaceutical Group Co., Ltd. After this issuance of shares, the company's registered capital was changed to RMB 156,700,189.00, which has been verified by the capital verification report "Tianheng Yanzi (2013) No. 00049" of Tianheng Accounting Firm Co., Ltd.

In April 2015, in accordance with the resolutions of the company’s first extraordinary shareholders’ meeting in 2014 and the revised articles of association, and approved by the China Securities Regulatory Commission’s “Reply on the Approval of the Non-public Issuance of Stocks by Jiangsu Lihuan Pharmaceutical Co., Ltd.” (CSRC License [2015] No. 518), the company announced to the public Non-public issuance of 12,208,846 RMB ordinary shares. After this issuance, the company's registered capital was changed to RMB 168,909,035.00, which has been verified by the "Tianheng Yanzi (2015) No. 00029" capital verification report of Tianheng Accounting Firm (Special General Partnership).

In July 2016, according to the resolution of the shareholders' meeting, the company increased its registered capital by RMB 50,672,711.00, all of which was transferred from capital reserves to share capital. After the change, the registered capital was RMB 219,581,746.00, which has been verified by the "Tianheng Yanzi (2016) No. 00174" capital verification report of Tianheng Accounting Firm (Special General Partnership).

In June 2017, the company increased its registered capital by RMB 65,874,524.00 in accordance with the resolution of the shareholders' meeting, all of which was funded by capital.

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The public reserves were converted into share capital, and the registered capital after the change was RMB 285,456,270.00, which has been verified by the capital verification report "Tianheng Yanzi (2017) No. 00087" of Tianheng Accounting Firm (Special General Partnership).

In June 2019, the company granted 2.6491 million restricted shares to 15 incentive targets in accordance with the "Proposal on Granting Restricted Stocks to Incentive Objects" passed at the fourth extraordinary meeting of the seventh board of directors. After the implementation of the equity incentive plan, the company's total share capital is 288,105,370 shares, and the registered capital has increased to 288,105,370.00 yuan, which has been verified by the "Tianheng Yanzi (2019) No. 00073" capital verification report of Tianheng Accounting Firm (Special General Partnership).

In January 2020, in accordance with the "Proposal on the Repurchase and Cancellation of Certain Restricted Stocks" reviewed and approved by the eighth extraordinary meeting of the seventh session of the Board of Directors, the Company repurchased and canceled a total of 115,000 restricted stocks that had been granted to incentive targets that no longer meet the incentive conditions but have not been released from sale. After the cancellation, the company's total share capital was 287,990,370 shares, the registered capital was reduced to 287,990,370.00 yuan.

In January 2022, based on the "Proposal on the Unfulfilled Restriction Conditions for the First Unlocking Period of the Company's 2019 Restricted Stock Incentive Plan and the Repurchase and Cancellation of Part of the Restricted Stocks" reviewed and approved by the second extraordinary meeting of the eighth Board of Directors and the second extraordinary meeting of the Eighth Board of Supervisors, the Company repurchased and canceled a total of 844,696 restricted shares of incentive objects that did not meet the conditions for unblocking the first unlocking period. After the cancellation was completed, the company's total share capital was 287,145,674 shares, and the registered capital was reduced to 287,145,674.00 yuan.

In September 2023, the company, in accordance with the "About Termination of the Implementation of the 2019 Restricted Stock Incentive Plan and the Repurchase and Cancellation of Restricted Shares that have been granted but have not yet been released from sale restrictions" reviewed and approved by the ninth extraordinary meeting of the eighth board of directors and the fourth extraordinary meeting of the eighth board of supervisors. "Proposal on Voting", a total of 1,689,404 restricted stocks involved in the incentive objects were repurchased and canceled. After the cancellation was completed, the company's total share capital was 285,456,270 shares and the registered capital was reduced to 285,456,270.00 yuan.

The company's existing registered capital is RMB 285,456,270.00, with a total share capital of 285,456,270 shares and a face value of RMB 1 per share. Among them: 0 A shares with trading restrictions; 285,456,270 A shares without selling conditions.

The company currently holds a business license with a unified social credit code of 91321000714094280W. Company registration address: No. 9, Jiankang 1st Road, Yangzhou Bio-Health Industrial Park, Yangzhou City, Jiangsu Province. Legal representative: Qian Zhenhua.

The company belongs to the pharmaceutical manufacturing industry. The main business activities of the company and its subsidiaries are: pharmaceutical production and sales, chemical raw materials, pharmaceutical wholesale, pharmaceutical research and development, technology achievement transfer, and consultation. The main products include urinary system drugs, antihistamines, cardiovascular drugs, steroid hormones, antibiotics and other major series, covering chemical raw materials, injections, solid preparations and other pharmaceutical dosage forms, including national Class I new drugs Aprelite tablets (Chuanliu), Class II new drugs Ebastine tablets (Sudi) As well as products such as felodipine tablets (Diancyclidin), felodipine extended-release capsules (Diancyclidin), simvastatin tablets (Zhengzhi), danazol capsules and suppositories, metformin gliclazide tablets (Duhe), lumbrokinase capsules, balofloxacin tablets, sertraline hydrochloride capsules (Diancyclidine) and other products.

This financial statement and the notes to the financial statements were approved by the 28th extraordinary meeting of the company's ninth board of directors on August 27, 2026.

4. Basis for preparation of financial statements

1. Basics of preparation

The company is based on going concern and based on actual transactions and events, in accordance with the "Accounting Standards for Business Enterprises - Basic Standards" promulgated by the Ministry of Finance and various specific accounting standards, the Application Guidelines for Accounting Standards for Business Enterprises, Interpretations of Accounting Standards for Business Enterprises and other relevant regulations.

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Prepare financial statements in accordance with the provisions (hereinafter collectively referred to as "Accounting Standards for Business") and the China Securities Regulatory Commission's "Information Disclosure and Preparation Rules for Companies that Offer Securities to the Public No. 15 - General Provisions on Financial Reports (2023 Revision)".

2. Continued operations

√Applicable □Not applicable

The Company has no events or circumstances that would cast significant doubt on the going concern assumption within 12 months from the end of the reporting period.

5. Important accounting policies and accounting estimates

Specific accounting policies and accounting estimation tips:

√Applicable □Not applicable

The Company and its subsidiaries have formulated a number of specific accounting policies and accounting estimates for transactions and matters such as revenue recognition, fixed asset depreciation, intangible asset amortization, and capitalization conditions for research and development expenses based on actual production and operation characteristics and in accordance with the provisions of relevant enterprise accounting standards. For specific accounting policies, please refer to the relevant explanations in this note such as "Major Accounting Policies and Accounting Estimates—Revenue," "Major Accounting Policies and Accounting Estimates—Fixed Assets" and "Major Accounting Policies and Accounting Estimates—Intangible Assets."

1. Statement on compliance with corporate accounting standards

The financial statements prepared by the company comply with the requirements of the Accounting Standards for Business Enterprises and truly and completely reflect the company's financial status, operating results, changes in shareholders' equity, cash flow and other relevant information.

2. Accounting period

The company's fiscal year begins on January 1 and ends on December 31 of the Gregorian calendar.

3. Business cycle

√Applicable □Not applicable

The normal operating cycle refers to the period from the purchase of assets for processing to the realization of cash or cash equivalents. The company uses 12 months as an operating cycle and uses it as the liquidity classification standard for assets and liabilities.

4. Accounting standard currency

The Company and its domestic subsidiaries use RMB as their functional accounting currency. The currency used by the Company in preparing these financial statements is RMB.

5. Determination method and selection basis of importance standards

√Applicable □Not applicable

Project Materiality Criteria

Important accounts receivable with provision for bad debts on an individual basis at the end of the period: RMB 3 million

Important contract liabilities aged more than 1 year RMB 5 million

Important projects under construction: The detailed amount of a single project under construction exceeds 0.5% of total assets

Large accounts payable aged more than 1 year RMB 5 million

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Other payables with large amounts aged over 1 year/larger other payables

5 million yuan

item

The company considers the cash flow amount of a single investment activity to account for 10% of the total cash inflow or outflow of investment activities received or paid as an important investment activity.

Moving cash flow.

Important capitalized R&D projects with ending balance exceeding RMB 10 million

Important joint ventures or associates The amount of long-term equity investment accounts for more than 5% of the total assets in the consolidated financial statements

Non-wholly-owned subsidiaries whose operating income accounts for more than 15% of the consolidated statement operating income or whose total profits account for a significant amount

Subsidiaries whose consolidated net profit attributable to the parent company exceeds 15%

6. Accounting treatment methods for business combinations under the same control and those not under the same control

√Applicable □Not applicable

Business merger refers to a transaction or event that combines two or more separate enterprises to form a reporting entity. Business mergers are divided into business combinations under the same control and business combinations not under the same control.

1． Accounting treatment for business combinations under common control

The enterprises participating in the merger are ultimately controlled by the same party or the same parties before and after the merger, and the control is not temporary. It is a business merger under the same control.

The assets and liabilities of the merged party acquired by the company in a business merger shall be measured according to the book value of the merged party in the consolidated financial statements of the ultimate controlling party on the merger date, except for adjustments due to different accounting policies. The difference between the company's share of the book value of the merged party's owners' equity in the ultimate controlling party's consolidated financial statements and the book value of the merger consideration paid (or the total face value of the shares issued) shall be adjusted to the capital reserve; if the capital reserve is insufficient for offset, the retained earnings shall be adjusted.

When a business merger under the same control is achieved step by step through multiple transactions, the difference between the book value of the investments held before the merger plus the book value of the new consideration paid on the merger date and the book value of the net assets acquired during the merger will be adjusted to the capital reserve (equity premium). If the capital reserve is insufficient for offset, the retained earnings will be adjusted. For long-term equity investments held by the merging party before obtaining control of the merged party, relevant profits and losses, other comprehensive income and other changes in owner's equity have been recognized between the date of acquisition of the original equity and the date when the merging party and the merged party are under the same party's final control, whichever is later, to the date of merger, and shall be offset against the opening retained earnings or current profits and losses of the comparative statement period respectively, except for other comprehensive income arising from the investee's remeasurement of the net liabilities or changes in net assets of the defined benefit plan. 2. Accounting treatment for business combinations not under common control

If the enterprises participating in the merger are not ultimately controlled by the same party or the same parties before and after the merger, it is a business merger not under the same control.

On the acquisition date, the company recognizes the difference between the merger cost and the fair value share of the acquiree's identifiable net assets acquired in the merger as goodwill; if the merger cost is less than the fair value share of the acquiree's identifiable net assets acquired in the merger, the difference is first recognized as goodwill. The fair value of the acquiree's identifiable assets, liabilities and contingent liabilities and the measurement of merger costs are reviewed. After review, if the merger cost is still less than the fair value share of the acquiree's identifiable net assets obtained in the merger, the difference is included in the current profit and loss.

If on the acquisition date or the end of the current period of merger, the fair value of each asset paid as consideration for the merger cannot be reasonably determined due to various factors, or the fair value of the identifiable assets and liabilities of the acquiree obtained during the merger, at the end of the current period of merger, the company will calculate the business merger based on the temporarily determined value. If further information is obtained within 12 months from the date of purchase indicating that the originally temporarily determined value needs to be adjusted, it will be deemed to have occurred on the date of purchase, and retrospective adjustments will be made. At the same time, the temporary value will be used as the value.

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Relevant adjustments will be made based on the comparative statement information provided by the company; adjustments to the cost of business merger or the value of identifiable assets and liabilities acquired in the merger 12 months after the date of acquisition shall be handled in accordance with the principles of "Accounting Standards for Business Enterprises No. 28 - Changes in Accounting Policies, Accounting Estimates and Correction of Errors".

The deductible temporary differences of the purchased party obtained by the company in a business combination will not be recognized if they do not meet the conditions for recognition of deferred income tax assets on the acquisition date. Within 12 months after the purchase date, if new or further information is obtained indicating that the relevant circumstances on the purchase date already exist, and it is expected that the economic benefits brought by the deductible temporary differences of the purchased party on the purchase date can be realized, the relevant deferred income tax assets will be recognized, and the goodwill will be reduced at the same time. If the goodwill is insufficient to offset, the difference will be recognized as current profits and losses; except for the above circumstances, deferred income tax assets related to the business combination will be recognized and included in the current profits and losses.

For business mergers not under common control that are realized in stages through multiple transactions, whether the multiple transactions belong to a "package transaction" shall be determined according to the Accounting Standards for Business Enterprises. If the terms, conditions and economic impact of multiple transactions meet one or more of the following circumstances, it usually indicates that multiple transactions should be accounted for as a package deal: (1) These transactions are entered into at the same time or with consideration of each other's influence; (2) These transactions can achieve a complete business result as a whole; (3) The occurrence of a transaction depends on the occurrence of at least one other transaction; (4) A transaction is uneconomical when viewed alone, but it is economical when considered together with other transactions.

If it is a "package transaction", each transaction will be accounted for as a transaction that obtains control. If it does not belong to a "package transaction", in the consolidated financial statements, the equity of the purchased party held before the acquisition date will be remeasured according to the fair value of the equity on the acquisition date, and the difference between the fair value and its book value will be included in the current investment income or retained earnings; The equity of the purchased party already held before the acquisition date involves other comprehensive income and other changes in owner's equity calculated under the equity method, which are converted into current income on the acquisition date, except for other comprehensive income arising from the investee's remeasurement of the net liabilities or changes in net assets of the defined benefit plan.

3． Handling of Transaction Costs in Business Combinations

Intermediary fees such as auditing, legal services, evaluation and consulting, and other related management fees incurred for business mergers are included in the current profit and loss when incurred. The transaction costs of equity securities or debt securities issued as consideration for the merger shall be included in the initial recognition amount of the equity securities or debt securities.

7. Judgment standards for control and preparation methods of consolidated financial statements

√Applicable □Not applicable

1． Judgment criteria and consolidation scope of control

The scope of consolidation of consolidated financial statements is determined based on control. Control means that the company has power over the investee, enjoys variable returns by participating in the investee's relevant activities, and has the ability to use its power over the investee to affect the amount of returns. The scope of consolidation includes the company and all its subsidiaries. Subsidiaries refer to entities controlled by the company (including enterprises, divisible parts of investee units, structured entities, etc.).

2. How to prepare consolidated statements

The company prepares consolidated statements based on its own and its subsidiaries' financial statements and other relevant information. The company prepares consolidated financial statements, treating the entire enterprise group as an accounting entity, and reflecting the company's overall financial status, operating results and cash flow in accordance with the recognition, measurement and presentation requirements of relevant accounting standards for enterprises and in accordance with unified accounting policies.

When consolidating financial statements, the impact of internal transactions and transactions between the company and its subsidiaries and between subsidiaries on the consolidated balance sheet, consolidated income statement, consolidated cash flow statement, and consolidated statement of changes in owner's equity are eliminated.

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Subsidiaries and businesses that are added due to business combinations under the same control during the reporting period are deemed to be included in the company's consolidation scope from the date they are both controlled by the ultimate controlling party, and their operating results and cash flows from the date they are both controlled by the ultimate controlling party are included in the consolidated income statement and consolidated cash flow statement respectively. During the reporting period, the opening balance of the consolidated balance sheet is adjusted, and the relevant items of the comparative statement are adjusted at the same time. It is deemed that the consolidated statement entity has existed since the time when the ultimate controlling party began to control.

If a subsidiary is added during the current period due to a business combination not under common control, the opening balance of the consolidated balance sheet will not be adjusted; its financial statements will be adjusted based on the fair value of the identifiable net assets on the acquisition date. The subsidiary's income, expenses and profits from the date of purchase to the end of the period are included in the consolidated income statement; the cash flow of the subsidiary from the date of purchase to the end of the period is included in the consolidated cash flow statement.

The equity, profit and loss and current comprehensive income attributable to minority shareholders of subsidiaries are presented separately under the owner's equity item in the consolidated balance sheet, and the net profit item and total comprehensive income in the consolidated income statement. If the current losses shared by the minority shareholders of a subsidiary exceed the minority shareholders' share of the subsidiary's opening owner's equity, the balance is offset against the minority shareholders' equity. 3． Purchase minority shareholders' equity and partially dispose of subsidiary equity without losing control

The difference between the cost of the long-term equity investment newly acquired by the company due to the purchase of minority shares and the share of the subsidiary's net assets calculated continuously from the date of purchase or merger based on the new shareholding ratio, as well as the difference between the cost of the partial disposal of the equity investment in the subsidiary without losing control. The difference between the disposal price obtained and the share of net assets of the subsidiary corresponding to the disposal of the long-term equity investment, calculated continuously from the date of purchase or merger, shall be adjusted to the equity premium in the capital reserve in the consolidated balance sheet. If the equity premium in the capital reserve is insufficient to offset, the retained earnings shall be adjusted.

4. Disposal of equity interests in subsidiaries due to loss of control

When the company disposes of a subsidiary in the current period, the revenue, expenses and profits of the subsidiary from the beginning of the period to the date of disposal will be included in the consolidated income statement; the cash flow of the subsidiary from the beginning of the period to the date of disposal will be included in the consolidated cash flow statement. When the company loses control over an original subsidiary due to the disposal of part of its equity investment or other reasons, the company will remeasure the remaining equity investment after the disposal based on its fair value on the date of loss of control. The sum of the consideration obtained for disposing of the equity and the fair value of the remaining equity, minus the sum of the share of the original subsidiary's net assets calculated continuously from the date of purchase and goodwill calculated based on the original shareholding ratio, shall be included in the investment income in the period when control is lost. Other comprehensive income related to the equity investment of the original subsidiary will be accounted for on the same basis as the acquiree's direct disposal of relevant assets and liabilities when control is lost (that is, except for changes in the original subsidiary's net liabilities or net assets due to remeasurement of the defined benefit plan, the rest will be transferred to the investment income of the current period). Thereafter, the remaining equity will be subsequently measured in accordance with relevant provisions such as "Accounting Standards for Business Enterprises No. 2 - Long-term Equity Investment" or "Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments". For details, please refer to this note "Major Accounting Policies and Accounting Estimates - Long-term Equity Investment" or "Major Accounting Policies and Accounting Estimates - Financial Instruments".

5. Step-by-step disposal of equity investments in subsidiaries until loss of control

If the company disposes of its equity investment in a subsidiary step by step through multiple transactions until it loses control, it needs to distinguish whether each transaction in which it disposes its equity investment in its subsidiary until it loses control is a package deal.

If the various transactions involving the disposal of equity investments in a subsidiary until the loss of control belong to a package transaction, each transaction will be accounted for as a transaction in which the subsidiary is disposed of and control is lost; however, the difference between the price of each disposal and the share of the net assets of the subsidiary corresponding to the disposal investment before the loss of control is recognized as other comprehensive income in the consolidated financial statements, and is transferred to the profit and loss of the current period when control is lost.

If it does not belong to a package deal, each of the transactions shall be dealt with in accordance with the "partial disposal without loss of control" as appropriate.

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Accounting treatment shall be carried out in accordance with the principles applicable to "the acquisition of long-term equity investment in a subsidiary" and "the loss of control over the original subsidiary due to the disposal of part of the equity investment or other reasons" (see the previous paragraph for details). That is, the difference between the price of each disposal before the loss of control and the share of the book value of the net assets of the subsidiary that has been continuously calculated from the date of purchase corresponding to the disposal investment is included in the capital reserve (equity premium) as an equity transaction. The difference previously included in the capital reserve (equity premium) shall not be transferred to the profits and losses of the current period when control is lost.

8. Classification of joint arrangements and accounting treatment of joint operations

√Applicable □Not applicable

A joint arrangement refers to an arrangement that is jointly controlled by two or more parties. The Company divides joint arrangements into joint operations and joint ventures based on the rights enjoyed and obligations assumed in the joint arrangements.

A joint venture refers to a joint arrangement in which the Company only has rights to the net assets of the arrangement. The Company's investments in joint ventures are accounted for using the equity method and are handled in accordance with the accounting policies described in "Long-term equity investments accounted for using the equity method" in this note "Major accounting policies and accounting estimates - Long-term equity investments".

Joint operation refers to a joint arrangement in which the company enjoys the relevant assets of the arrangement and assumes the relevant liabilities of the arrangement. The company confirms the following items related to the interest share in joint operations, and performs accounting treatments in accordance with the relevant accounting standards for enterprises:

1． Recognize the assets held individually by the company, and recognize the assets held jointly based on the company's share;

2. Recognize the liabilities borne by the company alone, and recognize the liabilities borne jointly by the company's share;

3． Recognize the income generated from the sale of the company’s share of joint operating output;

4. The income generated by the joint operation from the sale of output is recognized according to the company's share;

5. Expenses incurred individually are recognized, and expenses incurred in joint operations are recognized based on the company's share.

When the company invests or sells assets to a joint operation as a joint venture (the assets do not constitute a business, the same below) or purchases assets from the joint operation, before the assets are sold to a third party, the company only recognizes the portion of the profits and losses arising from the transaction that belong to other participants in the joint operation. If such assets suffer asset impairment losses that comply with the provisions of "Accounting Standards for Business Enterprises No. 8 - Asset Impairment" and other provisions, the Company shall recognize the loss in full if the Company invests or sells the assets to the joint operation; if the Company purchases assets from the joint operation, the Company shall recognize the loss based on its share.

9. Determination standards for cash and cash equivalents

When preparing the cash flow statement, the company's cash on hand and deposits that can be used for payment at any time are recognized as cash. Cash equivalents refer to investments held by an enterprise that have a short term (generally due within 3 months from the date of purchase), are highly liquid, are easily convertible into known amounts of cash, and have little risk of value changes.

10. Foreign currency business and foreign currency statement conversion

√Applicable □Not applicable

1． Foreign currency trading business

For foreign currency business that occurs, the spot exchange rate on the date of transaction is used to convert the accounting into the functional currency for accounting. However, the company's foreign currency exchange business or transactions involving foreign currency exchange shall be converted into the amount in the recording currency according to the actual exchange rate.

2. Conversion method of foreign currency monetary items and non-monetary items

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On the balance sheet date, foreign currency monetary items are converted at the spot exchange rate on the balance sheet date. The resulting exchange differences, except: (1) Exchange differences arising from special foreign currency borrowings related to the acquisition and construction of assets that meet capitalization conditions are treated in accordance with the principle of capitalization of borrowing costs; (2) Hedging tools used to effectively hedge net investments in overseas operations. (3) Exchange differences arising from changes in the book balance of foreign currency monetary items measured at fair value and whose changes are included in other comprehensive income, except for amortized cost, are included in other comprehensive income and are included in the current profit and loss.

Foreign currency non-monetary items measured at historical cost are still measured using the amount in the recording currency converted at the spot exchange rate on the date of the transaction. Foreign currency non-monetary items measured at fair value are converted using the spot exchange rate on the date when the fair value is determined. The difference between the converted accounting currency amount and the original accounting functional currency amount is included in the current profit and loss or other comprehensive income.

3． Foreign currency statement conversion

Assets and liability items in the balance sheet are translated using the spot exchange rate on the balance sheet date; owners' equity items, except for "undistributed profits" items, are translated using the spot exchange rate at the time of occurrence; income and expense items in the income statement are translated using the spot exchange rate on the date of the transaction. ; The undistributed profit at the beginning of the year is the undistributed profit at the end of the year after conversion from the previous year; the undistributed profit at the end of the year is calculated and presented according to the converted profit distribution items; the conversion difference of foreign currency financial statements generated according to the above conversion is reflected in the "other comprehensive income" item under the shareholders' equity item of the balance sheet. When an overseas operation is disposed of and control is lost, the translation difference of foreign currency statements listed under the shareholders' equity item in the balance sheet and related to the overseas operation shall be transferred to the current profit and loss of the disposal in full or in proportion to the disposal of the overseas operation. When the proportion of overseas operating equity held is reduced due to the disposal of part of the equity investment or other reasons but the control of the overseas operation is not lost, the foreign currency statement translation difference related to the disposal of the overseas operation will be attributed to the minority shareholders' equity and will not be transferred to the current profit and loss.

The cash flow statement is translated using the spot exchange rate on the date when the cash flow occurs. The impact of exchange rate changes on cash is regarded as an adjustment item and is reflected in the "Impact of exchange rate changes on cash and cash equivalents" separately in the cash flow statement.

11. Financial instruments

√Applicable □Not applicable

A financial instrument is a contract that creates a financial asset for one party and a financial liability or equity instrument for another party. Financial instruments include financial assets, financial liabilities and equity instruments.

1． Classification, recognition basis and measurement method of financial instruments

(1) Recognition and initial measurement of financial assets and financial liabilities

When the company becomes a party to a financial instrument contract, it recognizes a financial asset or financial liability. For purchases of financial assets in conventional ways, the Company recognizes the assets to be received and the liabilities to be assumed on the transaction date.

Financial assets and financial liabilities are measured at fair value upon initial recognition. For financial assets and financial liabilities measured at fair value and whose changes are included in the current profit and loss, the relevant transaction costs are directly included in the current profit and loss. For other types of financial assets and financial liabilities, the relevant transaction costs are included in the initial recognition amount. Accounts receivable that do not have a significant financing component upon initial recognition are initially measured based on the transaction price determined by the revenue recognition method described in this note "Significant Accounting Policies and Accounting Estimates - Revenue".

(2) Classification and subsequent measurement of financial assets

The Company classifies financial assets into amortization based on the business model of managing financial assets and the contractual cash flow characteristics of financial assets.

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Financial assets measured at residual cost, financial assets measured at fair value through other comprehensive income, and financial assets measured at fair value through profit or loss for the current period.

1. Financial assets measured at amortized cost

Financial assets measured at amortized cost refer to financial assets that meet the following conditions at the same time: ① The company's business model for managing the financial assets is to collect contractual cash flows as the goal; ② The contractual terms of the financial assets stipulate that the cash flow generated on a specific date is only the payment of principal and interest based on the outstanding principal amount.

After initial recognition, this type of financial assets is measured at amortized cost using the effective interest method. The gains or losses generated are included in the current profits and losses when the recognition is terminated, amortized according to the effective interest method, or impairment is recognized.

The amortized cost of a financial asset shall be determined based on the initially recognized amount of the financial asset after the following adjustments: ① deduct the repaid principal; ② plus or minus the cumulative amortization amount formed by amortizing the difference between the initial recognition amount and the maturity amount using the effective interest method; ③ deduct the accumulated loss provisions.

The effective interest rate method refers to the method of calculating the amortized cost of financial assets or financial liabilities and allocating interest income or interest expenses into each accounting period. The actual interest rate refers to the interest rate used to discount the estimated future cash flows of a financial asset or financial liability during the expected duration of the financial asset or the amortized cost of the financial liability. When determining the actual interest rate, the Company estimates expected cash flows based on all contractual terms of financial assets or financial liabilities (such as early repayment, extension, call options or other similar options, etc.), but does not consider expected credit losses.

The company calculates and determines interest income based on the book balance of financial assets multiplied by the actual interest rate, except for the following circumstances: ① For purchased or originated financial assets that have suffered credit impairment, from the initial recognition, the interest income is calculated and determined based on the amortized cost of the financial asset and the credit-adjusted actual interest rate. ②For purchased or originated financial assets that have not incurred credit impairment but become credit-impaired in subsequent periods, the interest income is calculated and determined based on the amortized cost of the financial asset and the actual interest rate. If the financial instrument no longer has credit impairment due to its credit risk improvement in the subsequent period, and this improvement can be objectively linked to an event that occurs after the above provisions are applied, the interest income should be calculated and determined based on the actual interest rate multiplied by the book balance of the financial asset.

2. Financial assets measured at fair value and changes included in other comprehensive income

Financial assets measured at fair value and whose changes are included in other comprehensive income refer to financial assets that meet the following conditions at the same time: ① The company's business model for managing the financial assets aims at both collecting contract cash flows and selling the financial assets. ②The contractual terms of the financial asset stipulate that the cash flow generated on a specific date is only the payment of principal and interest based on the outstanding principal amount.

This type of financial assets is subsequently measured at fair value after initial recognition. Interest, impairment losses or gains and exchange gains and losses calculated using the effective interest rate method are included in the current profit and loss, and other gains or losses are included in other comprehensive income. When derecognition is terminated, the accumulated gains or losses previously included in other comprehensive income will be transferred out of other comprehensive income and included in the current profit and loss.

For investments in non-trading equity instruments, the Company may irrevocably designate them as financial assets at fair value through other comprehensive income upon initial recognition. This designation is made on the basis of a single investment in non-trading equity instruments, and the relevant investment meets the definition of an equity instrument from the perspective of the instrument issuer. After the initial designation of such investments, in addition to the dividends received (except for the recovery of investment costs), which are included in the current profits and losses, other related gains or losses (including exchange gains and losses) are included in other comprehensive income. Upon derecognition, the accumulated gains or losses previously included in other comprehensive income will be transferred out of other comprehensive income and included in retained earnings.

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3. Financial assets measured at fair value and changes included in current profits and losses

Except for the situations 1) and 2) above, the Company classifies all remaining financial assets as financial assets measured at fair value and whose changes are included in current profits and losses. At initial recognition, a financial asset can be irrevocably designated as a financial asset at fair value through profit or loss if the accounting mismatch can be eliminated or significantly reduced. If the contingent consideration recognized by the Company in a business combination not under common control constitutes a financial asset, the financial asset is classified as a financial asset measured at fair value with changes included in current profits and losses.

This type of financial assets is subsequently measured at fair value after initial recognition, and the resulting gains or losses are included in the current profits and losses. (3) Classification and subsequent measurement of financial liabilities

The Company classifies financial liabilities into financial liabilities measured at fair value with changes included in current profits and losses, financial liabilities arising from the transfer of financial assets that do not meet the conditions for derecognition or continued involvement in the transferred financial assets, financial guarantee contracts and financial liabilities measured at amortized cost.

1. Financial liabilities measured at fair value and changes included in current profits and losses

Financial liabilities measured at fair value through profit or loss for the current period include trading financial liabilities (including derivatives that are financial liabilities) and financial liabilities designated as measured at fair value through profit or loss for the current period. In a business combination not under common control, if the contingent consideration recognized by the company as the purchaser forms a financial liability, the financial liability shall be accounted for at fair value through current profits and losses.

Financial liabilities measured at fair value through profit or loss for the current period are subsequently measured at fair value after initial recognition, and the resulting gains or losses are included in profit or loss for the current period.

The amount of changes in the fair value of financial liabilities designated as at fair value through profit or loss due to changes in the company's own credit risk is included in other comprehensive income, unless such treatment would cause or expand accounting mismatches in profit or loss. Other changes in the fair value of this financial liability are included in the current profit and loss. Upon derecognition, the accumulated gains or losses previously included in other comprehensive income will be transferred out of other comprehensive income and included in retained earnings.

2. The transfer of financial assets does not meet the conditions for derecognition or the financial liabilities formed by continuing to be involved in the transferred financial assets

This type of financial liabilities are measured in accordance with the method described in the "Recognition Basis and Measurement Method of Financial Asset Transfers" in this note "Significant Accounting Policies and Accounting Estimates - Financial Instruments".

3. Financial guarantee contract

A financial guarantee contract refers to a contract that requires the company to pay a specific amount of compensation to the contract holder who has suffered a loss when a specific debtor is unable to repay the debt according to the terms of the original or modified debt instrument when due.

Financial guarantee contracts that do not fall into the above situations 1) or 2) will be subsequently measured after initial recognition according to the higher of the following two amounts: ① The amount of loss reserve determined in accordance with the "Impairment of Financial Instruments" in this note "Major Accounting Policies and Accounting Estimates - Financial Instruments"; ② The balance of the initial recognition amount after deducting the accumulated amortization amount determined in accordance with the revenue recognition method described in this note "Major Accounting Policies and Accounting Estimates - Revenue".

4. Financial liabilities measured at amortized cost

Except for the above situations 1), 2) and 3), the Company classifies all remaining financial liabilities as financial liabilities measured at amortized cost. Such financial liabilities are measured at amortized cost using the effective interest method after initial recognition, and the resulting gains or losses are included in the current profits and losses when derecognized or amortized according to the effective interest method.

(4) Equity instruments

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Equity instruments are contracts that evidence ownership of a residual interest in the company's assets after deducting all liabilities. The company's issuance (including refinancing), repurchase, sale or cancellation of equity instruments is treated as a change in equity. Transaction costs associated with equity transactions are deducted from equity. The Company's various distributions to equity instrument holders (excluding stock dividends) reduce shareholders' equity. The company does not recognize changes in fair value of equity instruments.

2. Recognition basis and measurement method of financial asset transfer

The transfer of financial assets refers to the transfer or delivery of a financial asset (or its cash flow) by the company to another party other than the issuer of the financial asset. The derecognition of financial assets means that the company transfers the previously recognized financial assets out of its balance sheet.

The Company derecognizes a financial asset that meets one of the following conditions: (1) The contractual right to collect cash flows from the financial asset terminates; (2) The financial asset has been transferred, and almost all risks and rewards of ownership of the financial asset are transferred to the transferee; (3) The financial asset has been transferred, and although the Company neither transfers nor retains almost all risks and rewards of ownership of the financial asset, it has given up control of the financial asset.

If the company neither transfers nor retains substantially all risks and rewards of ownership of a financial asset, and retains control over the financial asset, it will continue to recognize the relevant financial assets to the extent of its continued involvement in the transferred financial assets, and recognize the relevant liabilities accordingly. The degree of continued involvement in the transferred financial assets refers to the level of risk faced by the enterprise due to changes in the value of the financial assets.

If the overall transfer of a financial asset meets the conditions for derecognition, the difference between the following two amounts will be included in the current profit and loss: (1) The book value of the transferred financial asset on the date of derecognition; (2) The sum of the consideration received for the transfer of the financial asset and the amount corresponding to the derecognition part of the cumulative amount of changes in fair value that was originally directly included in other comprehensive income. If a partial transfer of a financial asset meets the conditions for derecognition, the overall book value of the transferred financial asset will be apportioned between the derecognized part and the non-derecognized part according to their respective relative fair values, and the difference between the following two amounts shall be included in the current profit and loss: (1) The book value of the derecognized part on the derecognition date; (2) The sum of the consideration received for the derecognized part and the amount corresponding to the derecognized part in the cumulative amount of changes in fair value originally directly included in other comprehensive income. For non-trading equity instruments designated by the Company as measured at fair value and whose changes are included in other comprehensive income, if the transfer in whole or in part meets the conditions for derecognition, the difference calculated according to the above method shall be included in retained earnings. 3． Conditions for derecognition of financial liabilities

If the current obligation of a financial liability (or part thereof) has been discharged, the Company shall terminate the recognition of the financial liability (or part thereof). If the company (borrower) and the lender sign an agreement to replace the original financial liability by assuming a new financial liability, and the contract terms of the new financial liability are substantially different from the original financial liability, the original financial liability will be terminated and a new financial liability will be recognized at the same time. If the company makes substantial modifications to the contract terms of the original financial liability (or part thereof), it will terminate the recognition of the original financial liability and recognize a new financial liability in accordance with the modified terms.

If a financial liability (or part thereof) is derecognised, the Company will include the difference between its book value and the consideration paid (including non-cash assets transferred out or liabilities assumed) into the current profit and loss. If the company repurchases part of a financial liability, the overall book value of the financial liability will be allocated based on the proportion of the fair value of the continued recognition part and the derecognition part on the repurchase date to the overall fair value on the repurchase date. The difference between the book value allocated to the derecognized part and the consideration paid (including non-cash assets transferred out or liabilities assumed) is included in the current profit and loss.

4. Determination of fair value of financial instruments

Please refer to this note "Significant Accounting Policies and Accounting Estimates - Fair Value" for the method of determining the fair value of financial assets and financial liabilities. 5. Impairment of financial instruments

Based on expected credit losses, the Company measures financial assets and contract assets measured at amortized cost and at fair value.

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Debt instrument investments and lease receivables whose changes are included in other comprehensive income, as well as financial guarantee contracts described in "Classification and Subsequent Measurement of Financial Liabilities" in this note "Significant Accounting Policies and Accounting Estimates - Financial Instruments" are subject to impairment treatment and loss provisions are recognized. Expected credit losses refer to the weighted average of the credit losses of financial instruments with the risk of default as the weight. Credit loss refers to the difference between all contractual cash flows receivable under the contract and all cash flows expected to be received by the company, discounted at the original actual interest rate, that is, the present value of all cash shortfalls.

For purchased or originated financial assets that have suffered credit impairment, the company will only recognize the cumulative change in expected credit losses during the entire duration since initial recognition as loss provisions on the balance sheet date.

For receivables or contract assets formed by transactions regulated by "Accounting Standards for Business Enterprises No. 14 - Revenue" and lease receivables regulated by "Accounting Standards for Business Enterprises No. 21 - Lease", the company uses simplified measurement methods to measure loss provisions based on an amount equivalent to the expected credit losses during the entire duration.

For financial instruments other than the above measurement methods, the Company measures loss provisions in accordance with the general method and evaluates on each balance sheet date whether its credit risk has increased significantly since initial recognition. If the credit risk has not increased significantly since the initial recognition, it is in the first stage, and the company measures the loss provision according to the amount of expected credit losses of the financial instrument in the next 12 months; if the credit risk has increased significantly since the initial recognition but no credit impairment has occurred, it is in the second stage, the company measures the loss provision according to the amount of expected credit losses during the entire duration; if the financial asset has suffered credit impairment since the initial recognition, it is in the third stage, the company measures the loss provision according to the amount of expected credit losses during the entire duration.

Lifetime expected credit losses refer to the expected credit losses caused by all possible default events that may occur during the entire expected life of a financial instrument. Expected credit losses within the next 12 months refer to the expected credit losses caused by default events on financial instruments that may occur within 12 months after the balance sheet date (if the expected duration of the financial instrument is less than 12 months, the expected duration), and are part of the expected credit losses throughout the duration.

The Company considers all reasonable and evidence-based information, including forward-looking information, and determines the relative change in the default risk of the financial instrument during its expected duration by comparing the risk of default of the financial instrument on the balance sheet date with the risk of default on the initial recognition date to assess whether the credit risk of the financial instrument has increased significantly since initial recognition. For financial instruments for which sufficient evidence of a significant increase in credit risk cannot be obtained at a reasonable cost at the individual instrument level, the Company will consider assessing whether the credit risk has significantly increased on a portfolio basis. If the Company determines that a financial instrument has only low credit risk on the balance sheet date, it is assumed that the credit risk of the financial instrument has not increased significantly since initial recognition.

The company remeasures expected credit losses on each balance sheet date, and the resulting increase or reversal of loss provisions is included in the current profit and loss as impairment losses or gains. For financial assets measured at amortized cost, the loss provision is deducted from the book value of the financial asset listed in the balance sheet; for debt instrument investments measured at fair value with changes included in other comprehensive income, the company recognizes its loss provision in other comprehensive income and does not deduct the book value of the financial asset listed in the balance sheet. 6. Offset of financial assets and financial liabilities

When the company has the legal right to offset the recognized financial assets and financial liabilities, and the legal right is currently enforceable, and the company plans to settle on a net basis or realize the financial assets and pay off the financial liabilities at the same time, the financial assets and financial liabilities will be listed in the balance sheet at the amount after offsetting each other. Otherwise, financial assets and financial liabilities are presented separately in the balance sheet and are not offset against each other.

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12. Notes receivable

√Applicable □Not applicable

Determination method and accounting treatment method of expected credit loss of notes receivable

The Company determines the expected credit losses of notes receivable and performs accounting treatments in accordance with the simplified measurement method described in "Impairment of Financial Instruments" in this note "Significant Accounting Policies and Accounting Estimates - Financial Instruments". On the balance sheet date, credit losses on notes receivable are measured based on the present value of the difference between the contractual cash flows to be collected and the cash flows expected to be collected. The Company conducts separate impairment tests on notes receivable with significantly different credit risk characteristics and estimates expected credit losses; the remaining notes receivable are divided into several combinations based on credit risk characteristics, and the expected credit losses are estimated on a combination basis with reference to historical credit loss experience, current conditions, and forward-looking information.

Combination categories and determination basis for bad debt provisions based on combinations of credit risk characteristics

√Applicable □Not applicable

Combination name Basis for determining the combination

Bank Acceptance Bill Portfolio The acceptor is a bank with a credit rating below Class A or no rating.

Commercial Acceptance Bill Portfolio The acceptor is an enterprise with high credit risk

Account aging calculation method based on aging confirmation credit risk characteristics combination

√Applicable □Not applicable

The aging of notes receivable continues the continuous calculation of the aging of accounts receivable.

Judgment criteria for individual provision of bad debt provisions based on individual provision

√Applicable □Not applicable

The Company conducts separate impairment tests on notes receivable with significantly different credit risk characteristics, such as the debtor's credit status has significantly deteriorated, the possibility of future payment is low, and credit impairment has occurred.

13. Accounts receivable

√Applicable □Not applicable

Determination method and accounting treatment method of expected credit loss of accounts receivable

The Company determines the expected credit losses of accounts receivable and performs accounting treatments in accordance with the simplified measurement method described in "Impairment of Financial Instruments" in this note "Significant Accounting Policies and Accounting Estimates - Financial Instruments". On the balance sheet date, credit losses on accounts receivable are measured based on the present value of the difference between the contractual cash flows to be collected and the cash flows expected to be collected. The Company conducts separate impairment tests on accounts receivable with significantly different credit risk characteristics and estimates expected credit losses; the remaining accounts receivable are divided into several combinations based on credit risk characteristics, and the expected credit losses are estimated on a combination basis with reference to historical credit loss experience, current conditions, and forward-looking information.

Combination categories and determination basis for bad debt provisions based on combinations of credit risk characteristics

√Applicable □Not applicable

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Combination name Basis for determining the combination

Aging portfolio A portfolio of accounts receivable related parties with similar credit risk characteristics classified by aging Amounts receivable from subsidiaries within the company's consolidated scope

Account aging calculation method based on aging confirmation credit risk characteristics combination

√Applicable □Not applicable

The company counts and calculates the aging of accounts receivable on a first-come-first-served basis.

Judgment criteria for single provision based on the determination of individual provision for bad debts

√Applicable □Not applicable

The Company conducts separate impairment tests on accounts receivable with significantly different credit risk characteristics, such as the debtor's credit status has significantly deteriorated, the possibility of future payment is low, and credit impairment has occurred.

14. Accounts receivable financing

√Applicable □Not applicable

Determination method and accounting treatment method of expected credit loss of accounts receivable financing

The Company determines the expected credit losses of receivables financing and performs accounting treatment in accordance with the general method described in "Impairment of Financial Instruments" in this note "Significant Accounting Policies and Accounting Estimates - Financial Instruments". On the balance sheet date, credit losses on receivables financing are measured based on the present value of the difference between the contractual cash flows to be collected and the cash flows expected to be collected. The Company conducts separate impairment tests on receivable financing with significantly different credit risk characteristics and estimates expected credit losses; the remaining receivable financing is divided into several combinations based on credit risk characteristics, and estimates expected credit losses on a combination basis with reference to historical credit loss experience, current conditions, and forward-looking information.

Combination categories and determination basis for bad debt provisions based on combinations of credit risk characteristics

√Applicable □Not applicable

Portfolio name Basis for determining the portfolio Bank acceptance bill portfolio The acceptor is a bank with low credit risk

Account aging calculation method based on aging confirmation credit risk characteristics combination

□Applicable √Not applicable

Judgment criteria for individual provision of bad debt provisions based on individual provision

√Applicable □Not applicable

The Company conducts separate impairment tests on receivables with significantly different credit risk characteristics such as debtors whose credit conditions have significantly deteriorated, who are less likely to be repaid in the future, and who have experienced credit impairment.

15. Other receivables

√Applicable □Not applicable

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Determination method and accounting treatment method of expected credit losses of other receivables

The Company determines the expected credit losses of other receivables and performs accounting treatments in accordance with the general method described in "Impairment of Financial Instruments" in this note "Major Accounting Policies and Accounting Estimates - Financial Instruments". On the balance sheet date, the credit losses of other receivables are measured based on the present value of the difference between the contractual cash flows to be collected and the cash flows expected to be collected. The Company conducts separate impairment tests on other receivables with significantly different credit risk characteristics and estimates expected credit losses; the remaining other receivables are divided into several combinations based on credit risk characteristics, and the expected credit losses are estimated on a combination basis with reference to historical credit loss experience, current conditions, and forward-looking information.

Combination categories and determination basis for bad debt provisions based on combinations of credit risk characteristics

√Applicable □Not applicable

Combination name Basis for determining the combination

Aging portfolio Other receivables with similar credit risk characteristics classified by aging

Related party portfolio Amounts receivable from subsidiaries within the company’s consolidated scope

Account aging calculation method based on aging confirmation credit risk characteristics combination

√Applicable □Not applicable

The company counts and calculates the aging of other receivables on a first-come-first-served basis.

Judgment criteria for individual provision of bad debt provisions based on individual provision

√Applicable □Not applicable

The amount of demolition compensation is relatively large, and the credit risk characteristics of government departments are significantly different from other units. Therefore, the company conducts a separate impairment test on the demolition compensation receivables. The Company conducts separate impairment tests on other receivables with significantly different credit risk characteristics such as the debtor's credit status has significantly deteriorated, the possibility of future payment is low, and credit impairment has occurred.

16. Inventory

√Applicable □Not applicable

Inventory categories, issue valuation methods, inventory systems, and amortization methods for low-value consumables and packaging materials

√Applicable □Not applicable

(1) Inventories include finished products or commodities held for sale in daily activities, products in progress during the production process, materials, supplies and commissioned processing materials used in the production process or the provision of labor services, etc.

(2) The inventory obtained by the enterprise is measured at actual cost. 1) The cost of outsourced inventory is the purchase cost of the inventory. The cost of inventory obtained through further processing consists of purchase cost and processing cost. 2) Debt restructuring obtains inventory from the debtor to offset debts, and its entry value is determined based on the fair value of the relinquished claims and the relevant taxes and fees directly attributable to the inventory that were incurred to bring the inventory to its current location and state. 3) Under the premise that the exchange of non-monetary assets has commercial substance and the fair value of the assets exchanged or the assets exchanged can be reliably measured, the inventory exchanged in the exchange of non-monetary assets is usually determined based on the fair value of the assets exchanged, unless there is conclusive evidence that the fair value of the assets exchanged is more reliable; for non-monetary asset exchanges that do not meet the above premise, the book value of the assets exchanged and the relevant taxes payable shall be used as the cost of the inventory exchanged. 4) Absorption and merger of enterprises under common control

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The entry value of inventories acquired through mergers of enterprises not under common control shall be determined based on the book value of the merged party; the entry value of inventories acquired through mergers of enterprises not under common control shall be determined based on fair value.

(3) The cost measurement of inventory shipped by the enterprise adopts the weighted average method at the end of the month.

(4) Amortization method for low-value consumables and packaging materials

Low-value consumables are amortized according to the one-time write-off method.

Packaging materials are amortized according to the one-time write-off method.

(5) The inventory inventory system is a perpetual inventory system.

Recognition standards and accrual methods for inventory depreciation provisions

√Applicable □Not applicable

On the balance sheet date, inventories are measured at the lower of cost and net realizable value. The net realizable value of inventory is the estimated selling price of the inventory minus the estimated costs to be incurred upon completion, estimated selling expenses and related taxes. When determining the net realizable value of inventory, it is based on the conclusive evidence obtained and the purpose of holding the inventory and the impact of events after the balance sheet date. Unless there is clear evidence that the market price on the balance sheet date is abnormal, the net realizable value of the inventory items at the end of the period is determined based on the market price on the balance sheet date, including:

1. For commodity inventories that are directly for sale, such as finished products, commodities and materials for sale, the net realizable value is determined by the estimated selling price of the inventory minus the estimated sales expenses and related taxes during the normal production and operation process;

2. For materials inventories that need to be processed, the net realizable value is determined by the estimated selling price of the finished goods produced during normal production and operation minus the estimated costs to be incurred upon completion, estimated sales expenses and related taxes. On the balance sheet date, if part of the same inventory has a contract price and other parts do not have a contract price, the net realizable value is determined separately and compared with its corresponding cost to determine the amount of provision or reversal of inventory depreciation provisions.

At the end of the period, inventory depreciation provisions are accrued based on individual inventory items; however, for inventories with large quantities and low unit prices, inventory depreciation provisions are accrued according to inventory categories; inventory depreciation provisions are made on a consolidated basis for inventories that are related to product series produced and sold in the same region, have the same or similar end use or purpose, and are difficult to measure separately from other items.

After the provision for inventory depreciation is accrued, if the factors that previously caused the inventory value to be written down have disappeared, causing the net realizable value of the inventory to be higher than its book value, the amount of the inventory depreciation provision that was originally accrued will be reversed, and the amount reversed will be included in the current profit and loss.

The combination categories and basis for determining inventory depreciation reserves according to the combination, and the basis for determining the net realizable value of different types of inventories □ Applicable √ Not applicable

The calculation method and basis for determining the net realizable value of each warehouse age combination based on the inventory age confirmation

□Applicable √Not applicable

17. Contract assets

□Applicable √Not applicable

18. Non-current assets or disposal groups held for sale

□Applicable √Not applicable

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Recognition standards and accounting treatment methods for non-current assets or disposal groups classified as held for sale

□Applicable √Not applicable

Determination standards and presentation methods for discontinued operations

□Applicable √Not applicable

19. Long-term equity investment

√Applicable □Not applicable

The long-term equity investment referred to in this section refers to the long-term equity investment in which the company has control, joint control or significant influence on the invested unit, including equity investment in subsidiaries, joint ventures and associated enterprises.

1． Criteria for Judgment of Joint Control and Significant Influence

Joint control refers to the shared control over an arrangement in accordance with relevant agreements, and the relevant activities of the arrangement must be decided only with the unanimous consent of the parties sharing control rights. If the company and other joint venture parties jointly control the invested unit and have rights to the net assets of the invested unit, the invested unit is a joint venture of the company. When determining whether joint control exists, the protective rights enjoyed are not taken into account.

Significant influence refers to having the power to participate in the financial and operating decisions of an enterprise, but not being able to control or jointly control the formulation of these policies with other parties. If the company can exert significant influence on the invested unit, the invested unit shall be an associate of the company. When determining whether it can exert significant influence on the invested unit, the investor's direct or indirect holding of voting shares of the invested unit and the impact of the current executable potential voting rights held by the investor and other parties are assumed to be converted into equity in the invested unit, including the impact of current convertible warrants, stock options and convertible corporate bonds issued by the invested unit.

2. Determination of initial investment cost of long-term equity investment

(1) Formed by a merger under the same control, if the merging party pays cash, transfers non-cash assets, assumes debts or issues equity securities as the merger consideration, the share of the book value of the owner's equity of the merged party in the final controlling party's consolidated financial statements on the merger date shall be regarded as its initial investment cost. The difference between the initial investment cost of long-term equity investment and the cash paid, non-cash assets transferred, the book value of debts assumed or the total face value of shares issued is adjusted to the capital reserve; if the capital reserve is insufficient for offset, the retained earnings are adjusted. If the equity of the merged party under the same control is obtained step by step through multiple transactions, and the merger of enterprises under the same control is finally formed, it shall be treated separately according to whether it belongs to a "package transaction": if it belongs to a "package transaction", each transaction will be accounted for as a transaction to obtain control; if it does not belong to a "package transaction", the shares of the merged party shall be entitled to on the merger date according to the The share of the book value of Dong's equity in the ultimate controlling party's consolidated financial statements is regarded as the initial investment cost of the long-term equity investment. The difference between the initial investment cost of the long-term equity investment and the book value of the long-term equity investment before the merger plus the book value of the new consideration for further acquisition of shares on the merger date is adjusted to the capital reserve; if the capital reserve is insufficient for offset, the retained earnings are adjusted. Other comprehensive income recognized for equity investments held before the date of merger that are accounted for using the equity method or investments in other equity instruments will not be subject to accounting treatment for the time being.

(2) If formed by a business merger not under common control, the company shall use the merger cost determined on the purchase date as the initial investment cost of the long-term equity investment. The merger cost is the fair value of the assets paid, liabilities incurred or assumed, and equity securities issued by the purchaser on the purchase date in order to obtain control of the purchased party. The intermediary fees such as auditing, legal services, evaluation consulting and other related management fees incurred by the buyer for the business merger are included in the current profit and loss when incurred; the transaction costs of equity securities or debt securities issued by the buyer as consideration for the merger are included in the initial recognition amount of the equity securities or debt securities. The company regards the contingent consideration agreed in the merger agreement as part of the transfer consideration for the business merger, and includes it in the cost of the business merger according to its fair value on the purchase date.

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For business mergers not under common control that are realized in stages through multiple transactions, whether the multiple transactions belong to a "package transaction" shall be determined according to the Accounting Standards for Business Enterprises. If it is a "package transaction", each transaction will be accounted for as a transaction that obtains control. If it does not belong to a "package transaction", the sum of the book value of the equity investment originally held in the purchased party plus the new investment cost will be used as the initial investment cost of the long-term equity investment that is calculated according to the cost method; if the equity originally held is accounted for using the equity method, the relevant other comprehensive income will not be accounted for temporarily; if the equity investment originally held is an investment in other equity instruments, the difference between its fair value and book value, as well as the cumulative fair value changes originally included in other comprehensive income, will be directly transferred to retained earnings.

(3) Equity investments other than long-term equity investments formed by business combinations are initially measured at cost: if they are obtained by paying cash, the actual purchase price paid will be used as the initial investment cost; if they are obtained by issuing equity securities, the fair value of the issuance of equity securities will be used as their initial investment cost. On the premise that the exchange has commercial substance and the fair value of the assets exchanged or the assets exchanged can be measured reliably, the initial investment cost of the long-term equity investment exchanged in the exchange of non-monetary assets shall be the fair value of the assets exchanged and the relevant taxes payable, unless there is conclusive evidence that the fair value of the assets exchanged is more reliable; for non-monetary asset exchanges that do not meet the above premises, the book value of the assets exchanged and the relevant taxes payable shall be used as the initial investment cost of the long-term equity investment exchanged. For long-term equity investments obtained through debt restructuring, the initial investment cost is determined based on the fair value of the relinquished claims. Fees, taxes and other necessary expenses directly related to obtaining long-term equity investment are also included in the investment cost.

For additional investments that can exert a significant influence on the investee or implement joint control but do not constitute control, the cost of long-term equity investment is the sum of the fair value of the original equity investment determined in accordance with the "Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments" plus the cost of the new investment, as the initial investment cost that is accounted for using the equity method. If the equity investment originally held is classified as other equity instrument investment, the difference between its fair value and book value, as well as the cumulative fair value changes originally included in other comprehensive income, should be directly transferred to retained earnings.

3． Subsequent measurement and profit and loss recognition methods for long-term equity investments

(1) Long-term equity investment accounted for by cost method

The company's long-term equity investments in subsidiaries are accounted for using the cost method. In addition to the actual price paid when acquiring the investment or the cash dividends or profits that have been declared but not yet distributed included in the consideration, the company recognizes the current investment income based on the cash dividends or profits declared and distributed by the investee.

(2) Long-term equity investment accounted for by equity method

Long-term equity investments in associates and joint ventures are accounted for using the equity method.

If the initial investment cost of a long-term equity investment calculated using the equity method is greater than the fair value share of the investee's identifiable net assets at the time of investment, the initial investment cost of the long-term equity investment shall not be adjusted; if the initial investment cost of a long-term equity investment is less than the fair value share of the investee's identifiable net assets at the time of investment, the difference shall be included in the current profit and loss, and the cost of the long-term equity investment shall be adjusted at the same time. After obtaining a long-term equity investment, if the accounting policies and accounting periods adopted by the invested unit are inconsistent with the company's, the financial statements of the invested unit shall be adjusted in accordance with the company's accounting policies and accounting periods, and investment profits and losses and other comprehensive income shall be recognized accordingly. According to the share of the net profit or loss and other comprehensive income realized by the invested unit that should be enjoyed or shared, investment income and other comprehensive income are recognized respectively, and the book value of the long-term equity investment is adjusted at the same time; when confirming the share of the net profit or loss of the invested unit that should be enjoyed, the net profit of the invested unit is adjusted and recognized based on the fair value of the identifiable assets of the invested unit when the investment is obtained. The portion to be enjoyed shall be calculated based on the profits or cash dividends declared by the investee to be distributed, and the long-term investment shall be reduced accordingly.

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The book value of the long-term equity investment is adjusted to the book value of the long-term equity investment; for other changes in the owner's equity of the invested unit other than net profits and losses, other comprehensive income and profit distribution, the book value of the long-term equity investment is adjusted and included in the owner's equity. Unrealized profits and losses from internal transactions between the company and its associates and joint ventures are calculated according to the company's proportion and are offset, and investment income is recognized on this basis. Unrealized internal transaction losses with invested entities that are asset impairment losses shall be recognized in full.

When the company confirms that it should share losses incurred by the invested unit, it shall proceed in the following order: First, offset the book value of the long-term equity investment. Secondly, if the book value of the long-term equity investment is not sufficient to offset it, investment losses will continue to be recognized and the book value of long-term receivable items will be offset to the extent of the book value of other long-term interests that essentially constitute a net investment in the invested unit. After the above processing, if the enterprise still bears additional obligations according to the investment contract or agreement, estimated liabilities will be recognized based on the estimated obligations and included in the current investment losses. If the invested unit realizes net profits in the subsequent period, the company will resume recognition of the income sharing amount after the income makes up for the unrecognized loss sharing amount.

During the period when the investment is held, if the invested unit prepares consolidated financial statements, the accounting shall be based on the amount attributable to the invested unit in the net profit, other comprehensive income and other changes in owner's equity in the consolidated financial statements.

If the assets invested by the Company into joint ventures and associates constitute businesses, and the investor obtains long-term equity investment but does not obtain control, the fair value of the invested business shall be used as the initial investment cost of the new long-term equity investment. The difference between the initial investment cost and the book value of the invested business shall be fully included in the current profit and loss. If the assets sold by the company to a joint venture or associated enterprise constitute a business, the difference between the consideration obtained and the book value of the business shall be fully included in the current profit and loss. If the assets purchased by the company from associates and joint ventures constitute a business, accounting treatment shall be carried out in accordance with the provisions of "Accounting Standards for Business Enterprises No. 20 - Business Merger", and the gains or losses related to the transaction shall be recognized in full.

4. Disposal of long-term equity investments

When disposing of a long-term equity investment, the difference between its book value and the actual price obtained shall be included in the current profit and loss.

(1) Disposal of long-term equity investments under equity method accounting

For long-term equity investments accounted for using the equity method, if the remaining equity after disposal is still accounted for using the equity method, when disposing of the investment, the same basis as the investee's direct disposal of relevant assets or liabilities will be used, and the portion originally included in other comprehensive income will be accounted for in a corresponding proportion. Owner's equity recognized due to changes in other owners' equity of the invested unit other than net profit and loss, other comprehensive income and profit distribution shall be carried forward to the current profit and loss on a proportional basis.

If joint control or significant influence over the investment unit is lost due to the disposal of part of the equity investment or other reasons, the remaining equity after disposal shall be accounted for in accordance with the financial instrument recognition and measurement standards, and the difference between its fair value and book value on the date of loss of joint control or significant influence shall be included in the current profit and loss. Other comprehensive income recognized due to the use of equity method accounting for the original equity investment will be accounted for on the same basis as the investee's direct disposal of relevant assets or liabilities when the equity method accounting is terminated. Owners' equity recognized due to changes in other owners' equity of the investee other than net profit and loss, other comprehensive income and profit distribution will all be transferred to the current profit and loss when the equity method is terminated.

(2) Disposal of long-term equity investments under cost method accounting

For long-term equity investments accounted for using the cost method, if the remaining equity after disposal is still accounted for using the cost method, other comprehensive income recognized due to the use of equity method accounting or financial instrument recognition and measurement standards before obtaining control of the invested unit shall be calculated using the method directly related to the invested unit. The relevant assets or liabilities will be treated on the same basis as the subsequent disposal of the relevant assets or liabilities, and the profits and losses of the current period shall be carried forward in proportion; changes in other owners' equity other than net profits and losses, other comprehensive income and profit distribution in the net assets of the investee recognized due to the adoption of equity method accounting shall be carried forward to the profits and losses of the current period in proportion.

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If the company's shareholding ratio decreases due to capital increase by other investors and thus loses control but can exercise joint control or exert significant influence on the investee, the company's share of the investee's net assets increased due to the capital increase and share expansion shall be confirmed based on the new shareholding ratio, and the difference between the original book value of the long-term equity investment corresponding to the decrease in shareholding ratio that should be carried forward shall be included in the current profit and loss; then, according to the new shareholding ratio, it will be deemed to have been adjusted using the equity method since the investment was obtained.

If the company loses control over its original subsidiary due to the disposal of part of its equity investment or other reasons, and the remaining equity after disposal can jointly control or exert significant influence on the invested unit, it will be accounted for according to the equity method, and the remaining equity will be deemed to have been accounted for using the equity method from the time of acquisition. Other comprehensive income and other ownership of the equity investment held before the acquisition date will be recognized due to the use of the equity method. If the remaining equity after disposal cannot jointly control or exert significant influence on the invested unit, the accounting treatment shall be carried out in accordance with the relevant provisions of "Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments". The difference between its fair value and book value on the date of loss of control shall be included in the current profit and loss, and all other comprehensive income and other owners' equity shall be carried forward to the current profit and loss.

The company disposes the subsidiary's equity investment step by step through multiple transactions until it loses control. If the above-mentioned transactions are a package deal, each transaction will be accounted for as a transaction that disposes of the subsidiary's equity investment and loses control. Before the loss of control, the difference between the price of each disposal and the book value of the long-term equity investment corresponding to the equity disposed is first recognized as other comprehensive income, and then transferred to the current profit and loss for the loss of control when control is lost.

20. Investment real estate

(1) If the cost measurement model is adopted

Depreciation or amortization method

1． Investment property is property held to earn rentals or for capital appreciation, or both. Including leased land use rights, land use rights held and prepared to be transferred after appreciation, and leased buildings (including buildings that are self-constructed or used for rent after completion of development activities and buildings that are under construction or development and will be used for rent in the future).

2. Investment real estate is initially measured based on cost and subsequently measured using the cost model. For example, subsequent expenditures related to investment real estate will be included in the cost of investment real estate if the economic benefits related to the asset are likely to flow in and its cost can be measured reliably. Other subsequent expenditures shall be included in the current profits and losses when incurred.

3． For investment real estate measured in the cost model, depreciation or amortization is calculated using the same methods as fixed assets and intangible assets.

4. When the purpose of investment real estate is changed to self-use, the investment real estate will be converted into fixed assets or intangible assets from the date of change, and the book value before conversion will be used as the book value after conversion. When the purpose of self-use real estate or inventory is changed to earn rent or capital appreciation, from the date of change, if the fixed assets, intangible assets or inventory are converted into investment real estate, and converted into investment real estate measured using the cost model, the book value before conversion will be used as the entry value after conversion; if it is converted into investment real estate measured using the fair value model, the fair value on the conversion date will be used as the entry value after conversion.

5. When an investment real estate is disposed of, or is permanently withdrawn from use and no economic benefits are expected to be obtained from its disposal, the investment real estate shall be derecognised. The disposal income from the sale, transfer, scrapping or damage of investment real estate shall be included in the current profit and loss after deducting its book value and relevant taxes.

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21. Fixed assets

(1). Confirm conditions

√Applicable □Not applicable

Fixed assets refer to tangible assets that have the following characteristics at the same time: (1) held for the production of goods, provision of labor services, leasing or operation and management; (2) service life of more than one accounting year.

Fixed assets are recognized if they meet the following conditions at the same time: (1) The economic benefits related to the fixed asset are likely to flow into the enterprise; (2) The cost of the fixed asset can be measured reliably. Subsequent expenditures related to fixed assets that meet the above recognition conditions will be included in the cost of fixed assets; if they do not meet the above recognition conditions, they will be included in the current profit and loss when incurred.

Fixed assets are initially measured at cost.

(2). Depreciation method

√Applicable □Not applicable

Category Depreciation method Depreciation life (years) Residual value rate Annual depreciation rate

Houses and buildings Average age method 4-50 0-5 1.90-25.00 General equipment Average age method 2-30 0-5 3.16-50.00 Special equipment Average age method 3-32 0-5 2.97-33.33 Transportation equipment Average age method 3-15 0-5 6.33-33.33 Depreciation begins when a fixed asset reaches its intended usable condition, and depreciation stops when it is derecognized or classified as a non-current asset held for sale. If each component of a fixed asset has a different service life or provides economic benefits to the enterprise in different ways, then different depreciation rates and depreciation methods are selected and depreciation is calculated separately.

Description:

(1) For fixed asset renovation costs that meet the capitalization conditions, depreciation will be separately accrued using the straight-line method during the shorter of the two renovation periods and the remaining useful life of the fixed asset.

(2) For fixed assets that have made provision for impairment, the depreciation rate should also be calculated by deducting the accumulated amount of provision for fixed assets that has been made. (3) The company will review the service life, estimated net residual value and depreciation method of fixed assets at least at the end of the year. If any changes occur, they will be treated as changes in accounting estimates.

Other notes:

(1) Fixed assets that are out of service for three consecutive months due to insufficient construction, natural disasters, etc. are recognized as idle fixed assets (except for seasonal outage). Idle fixed assets adopt the same depreciation method as other fixed assets of the same category.

(2) If the fixed asset is in a state of disposal, or if no economic benefits are expected to be generated through use or disposal, the recognition will be terminated, and depreciation and impairment will be stopped.

(3) The difference between the disposal income from the sale, transfer, scrapping or damage of fixed assets after deducting their book value and relevant taxes is included in the current profit and loss.

(4) The major repair costs incurred by the company during regular inspections of fixed assets, if there is conclusive evidence that they meet the recognition conditions for fixed assets, are included in the cost of fixed assets, and those that do not meet the conditions for recognition of fixed assets are included in the current profit and loss. Fixed assets will continue to be depreciated during the period between regular major repairs.

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22. Projects under construction

√Applicable □Not applicable

1． Projects under construction are recognized when it is probable that economic benefits will flow in and the costs can be measured reliably. Construction in progress is measured based on the actual costs incurred before the asset reaches its intended usable condition.

2. When the project under construction reaches the intended usable state, it will be transferred to fixed assets according to the actual cost of the project. If the asset has reached the intended usable state but has not yet processed completion settlement, the estimated value will first be transferred to fixed assets. After the completion settlement is processed, the original provisional estimated value will be adjusted according to the actual cost, but the originally accrued depreciation will not be adjusted.

3． The specific standards and timing for converting the company's construction-in-progress into fixed assets are as follows:

Category Criteria and time point for conversion to fixed assets

(1) The main construction project and supporting projects have been substantially completed; (2) The construction project has reached the predetermined design requirements and has been surveyed and completed.

(3) Acceptance by external departments such as fire protection, land and planning, etc.; (4) Houses and buildings

If a construction project reaches its intended usable state but has not yet handled the final accounts for completion, the estimated value will be transferred to fixed assets based on the actual cost of the project from the date it reaches its intended usable state.

(1) Relevant equipment and other supporting facilities have been installed; (2) The equipment has been debugged and can maintain normal and stable operation for a period of time; (3) The production equipment can stably produce qualified products for a period of time; (4) The equipment has been asset managed

Acceptance of personnel and users.

4. If the company sells the products or by-products produced before the project under construction reaches the intended usable state (hereinafter referred to as trial operation sales), in accordance with the "Accounting Standards for Business Enterprises No. 14 - Revenue", "Accounting Standards for Business Enterprises No. 1 - Inventory" and other regulations, the income and costs related to the trial operation sales will be accounted for separately and included in the current profit and loss. Before the relevant products or by-products produced by the trial operation are sold externally, they shall be recognized as inventories in compliance with the provisions of "Accounting Standards for Business Enterprises No. 1 - Inventory", and shall be recognized as relevant assets in compliance with the relevant asset recognition conditions in other relevant accounting standards for enterprises.

5. Borrowing costs

√Applicable □Not applicable

Borrowing costs include borrowing interest, amortization of discounts or premiums, auxiliary expenses, and exchange differences arising from foreign currency borrowings, etc.

1． Recognition principles for capitalization of borrowing costs

If the borrowing costs incurred by the company can be directly attributed to the purchase, construction or production of assets that meet the capitalization conditions, they will be capitalized and included in the cost of the relevant assets; other borrowing costs will be recognized as expenses based on the amount incurred when they are incurred and included in the current profits and losses.

2. Borrowing cost capitalization period

(1) Capitalization begins when the following conditions are met at the same time: 1) Asset expenditures have occurred; 2) Borrowing costs have occurred; 3) The acquisition, construction or production activities necessary to bring the asset to its intended usable or salable state have begun.

(2) Suspension of capitalization: If an asset that meets the capitalization conditions is abnormally interrupted during the acquisition, construction or production process, and the interruption lasts for more than 3 months, the capitalization of borrowing costs will be suspended; the borrowing costs incurred during the interruption will be recognized as current expenses until the acquisition, construction or production activities of the asset are restarted. If the interruption is a necessary procedure for the acquired, constructed or produced assets that meet the capitalization conditions to reach the intended usable or salable state, the borrowing costs will continue to be capitalized.

(3) Stop capitalization: when the assets acquired, constructed or produced that meet the capitalization conditions reach the intended usable or salable state

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When, borrowing costs cease to be capitalized. When part of the projects in the acquisition, construction or production of assets that qualify for capitalization are completed and can be used independently, the capitalization of borrowing costs for this part of the assets ceases. If each part of an asset purchased, constructed or produced is completed separately, but it cannot be used or sold until the entirety is completed, the capitalization of borrowing costs will stop when the entire asset is completed.

3． Calculation method of capitalization rate and capitalization amount of borrowing costs

If a special loan is borrowed for the purpose of purchasing, constructing or producing assets that meet the capitalization conditions, the interest expense actually incurred on the special loan in the current period (including the amortization of discount or premium determined in accordance with the actual interest rate method) shall be deducted from the interest income obtained from depositing the unused borrowed funds in the bank or the investment income obtained from temporary investment. The amount of interest that should be capitalized is determined; if general borrowings are occupied for the purchase, construction or production of assets that meet the capitalization conditions, the amount of interest that should be capitalized on the general borrowings is calculated and determined based on the weighted average of the cumulative asset expenditures exceeding the special borrowings multiplied by the capitalization rate of the general borrowings (weighted average interest rate). During the capitalization period, the capitalized amount of interest in each accounting period shall not exceed the actual interest amount of the relevant borrowings in the current period. Exchange differences on the principal and interest of special foreign currency borrowings shall be capitalized within the capitalization period. Ancillary expenses incurred for special borrowings shall be capitalized if they are incurred before the assets purchased, constructed or produced that meet the capitalization conditions reach the intended usable or salable state; if they are incurred after the assets have reached the intended usable or salable state, they shall be included in the current profit and loss. Ancillary expenses incurred for general borrowings are included in the current profits and losses when incurred. If there is a discount or premium on the loan, the amount of discount or premium that should be amortized in each accounting period shall be determined according to the actual interest rate method, and the interest amount of each period shall be adjusted.

24. Biological assets

□Applicable √Not applicable

25. Oil and gas assets

□Applicable √Not applicable

26. Intangible assets

(1). Useful life and its determination basis, estimation, amortization method or review procedure

√Applicable □Not applicable

1． Initial measurement of intangible assets

Intangible assets are initially measured at cost. The cost of outsourced intangible assets includes the purchase price, relevant taxes and other expenses directly attributable to the asset's intended use. If the purchase price of intangible assets is deferred beyond normal credit conditions and is essentially financing in nature, the cost of the intangible assets shall be determined based on the present value of the purchase price. Debt restructuring obtains intangible assets from the debtor to offset debts, and its entry value is determined based on the fair value of the relinquished claims and taxes and other costs directly attributable to the assets for their intended use. Under the premise that the exchange of non-monetary assets has commercial substance and the fair value of the assets exchanged or exchanged out can be measured reliably, the intangible assets exchanged in the exchange of non-monetary assets shall be based on the fair value of the assets exchanged and the relevant taxes payable as the cost of the intangible assets exchanged in, unless there is conclusive evidence that the fair value of the assets exchanged in is more reliable; for non-monetary asset exchanges that do not meet the above premise, the book value of the assets exchanged out and the relevant taxes payable shall be regarded as the cost of the intangible assets exchanged in, and no profit or loss shall be recognized.

Expenditures related to intangible assets are included in the cost of intangible assets if the relevant economic benefits are likely to flow into the company and the cost can be measured reliably. Expenditures on other items besides this are included in the current profits and losses when incurred.

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Acquired land use rights are usually accounted for as intangible assets. If you develop and construct factories and other buildings by yourself, the related land use right expenditures and building construction costs will be accounted for as intangible assets and fixed assets respectively. In the case of outsourced houses and buildings, the relevant price will be allocated between the land use rights and the buildings. If it is difficult to reasonably allocate, all of them will be treated as fixed assets.

2. Useful lives, estimates, amortization methods or review procedures of intangible assets

Based on the judgment of comprehensive factors such as contractual rights or other legal rights of intangible assets, industry conditions, historical experience, relevant expert arguments and other comprehensive factors, if the period during which the intangible asset can bring economic benefits to the company can be reasonably determined, it is regarded as an intangible asset with a limited service life; if the period during which the intangible asset can bring economic benefits to the company cannot be reasonably determined, it is regarded as an intangible asset with an indefinite service life.

For intangible assets with a limited service life, the following factors are usually considered when estimating their service life: (1) the usual life cycle of the products produced using the asset and available information on the service life of similar assets; (2) the current situation of technology, processes, etc. and estimates of future development trends; (3) the market demand for products produced or services provided by the asset ; (4) Actions expected by current or potential competitors; (5) Expected maintenance expenditures to maintain the asset's ability to bring economic benefits, and the company's expected ability to pay related expenditures; (6) Relevant legal provisions or similar restrictions on the control period of the asset, such as franchise periods, lease periods, etc.; (7) Correlation with the service life of other assets held by the company, etc. Estimated useful life of intangible assets with limited useful life:

Item Estimated service life basis Period (years)

Land use rights. The registered useful life of the land use right certificate. Non-patented technology according to the useful life of the land certificate. Estimated benefit period: 10

Trademark Estimated Benefit Period 5 Software Estimated Benefit Period 3-10 Business License Estimated Benefit Period 5

Intangible assets with indefinite useful lives are not amortized, but the useful lives of the intangible assets are reviewed every year and impairment tests are conducted.

Intangible assets with limited service life shall be amortized systematically and reasonably within the service life according to the expected realization method of the economic benefits related to the intangible asset. If the expected realization method cannot be reliably determined, the straight-line method shall be used for amortization. Intangible assets with indefinite useful lives are not amortized, but the useful lives of the intangible assets are reviewed every year and impairment tests are conducted.

At the end of each year, the company reviews the service life and amortization method of intangible assets with limited service life. If it is different from the previous estimate, the original estimate will be adjusted and treated as a change in accounting estimate; if an intangible asset is expected to no longer bring future economic benefits to the company, the entire book value of the intangible asset will be transferred to the current profit and loss.

(2). Scope of aggregation of R&D expenditures and related accounting treatment methods

√Applicable □Not applicable

(1)Basic principles

Expenditures on internal research and development projects are divided into research phase expenditures and development phase expenditures. Criteria for dividing the research stage and the development stage: The planned investigation stage to obtain new technologies and knowledge should be determined as the research stage. This stage has the characteristics of planning and exploratory nature; before commercial production or use, the stage of applying research results or other knowledge to a plan or design to produce new or substantially improved materials, devices, products, etc., should be determined as the development stage. This stage has the characteristics of being targeted and having a greater possibility of producing results.

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Expenditures in the research phase of internal research and development projects are included in the current profits and losses when incurred. Expenditures in the development phase of internal research and development projects are recognized as intangible assets if they meet the following conditions: (1) It is technically feasible to complete the intangible asset so that it can be used or sold; (2) There is the intention to complete the intangible asset and use or sell it; (3) The way in which the intangible asset generates economic benefits includes being able to prove the use of the intangible asset There is a market for the products produced or the intangible asset itself has a market, and if the intangible asset will be used internally, its usefulness can be proven; (4) It has sufficient technical, financial and other resource support to complete the development of the intangible asset, and has the ability to use or sell the intangible asset; (5) Expenditures attributable to the development stage of the intangible asset can be measured reliably. If the above conditions are not met, it will be included in the current profit and loss when incurred; if it is impossible to distinguish between research stage expenditures and development stage expenditures, all R&D expenditures incurred will be included in the current profit and loss.

If the company sells the products or by-products produced during the research and development process to external parties (hereinafter referred to as trial sales), in accordance with the "Accounting Standards for Business Enterprises No. 14 - Revenue" and "Accounting Standards for Business Enterprises No. 1 - Inventory", the income and costs related to trial sales will be accounted for separately and included in the current profit and loss. Before the relevant products or by-products produced by the trial operation are sold externally, they shall be recognized as inventories in compliance with the provisions of "Accounting Standards for Business Enterprises No. 1 - Inventory", and shall be recognized as relevant assets in compliance with the relevant asset recognition conditions in other relevant accounting standards for enterprises.

(2) Specific standards

1. Scope of collection of R&D expenditures: The Company collects various expenses directly related to the development of R&D activities as R&D expenditures, including employee salaries, depreciation and amortization, material consumption, technical service fees, other expenses, etc.

2. Specific standards for dividing the research stage and development stage of internal research and development projects:

A. The company will treat the information and related preparation activities for further development activities as the research stage. Expenditures in the research stage of intangible assets will be included in the current profit and loss when incurred.

B. Development activities carried out after the company has completed the research phase are regarded as the development phase.

3. Specific conditions for capitalization of expenditures during the development phase:

Expenditures in the development stage can be recognized as intangible assets only when they meet the following conditions:

A. It is technically feasible to complete the intangible asset so that it can be used or sold;

B. Have the intention to complete the intangible asset and use or sell it;

C. The way intangible assets generate economic benefits includes being able to prove that there is a market for the products produced using the intangible assets or that the intangible assets themselves have a market. If the intangible assets will be used internally, their usefulness can be proven;

D. Have sufficient technical, financial and other resource support to complete the development of the intangible asset, and have the ability to use or sell the intangible asset;

E. The expenditures attributable to the development stage of the intangible asset can be measured reliably.

The company treats internal R&D projects as expenditures in the development phase according to the following methods:

R&D project categories R&D expense capitalization policy

Capitalization of expenditures between innovative drugs entering phase III clinical trials and obtaining production approval

① For projects that have obtained production approval and need to supplement the consistency evaluation, the capitalization time point is the project approval date ② For projects that have not obtained production approval for generic drugs, the capitalization time point is to obtain drug clinical trial approval or bioequivalence test (BE) filing (different according to different generic drug review requirements)

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27. Impairment of long-term assets

√Applicable □Not applicable

Long-term equity investments, investment real estate measured using the cost model, fixed assets, projects under construction, right-of-use assets, intangible assets, goodwill and other long-term assets have the following signs, indicating that the assets may be impaired:

1． The market price of the asset drops significantly during the current period, and the drop is significantly higher than the expected drop due to the passage of time or normal use; 2. The economic, technological or legal environment in which the enterprise operates and the market in which the assets are located have undergone major changes in the current period or will occur in the near future, which will have an adverse impact on the enterprise;

3． Market interest rates or other market investment returns have increased in the current period, which affects the discount rate used by the company to calculate the present value of the estimated future cash flows of assets, resulting in a significant reduction in the recoverable amount of assets;

4. There is evidence that the asset is obsolete or has become physically damaged;

5. The assets have been or will be idle, terminated, or planned to be disposed of in advance;

6. Evidence from the company's internal report shows that the economic performance of the asset has been or will be lower than expected, such as the net cash flow created by the asset or the operating profit (or loss) realized is far lower than (or higher than) the expected amount, etc.;

7． Other indicators that an asset may be impaired.

If there are signs of impairment of the above-mentioned long-term assets on the balance sheet date, an impairment test shall be conducted. If the impairment test results show that the recoverable amount of the asset is lower than its book value, impairment provisions will be made based on the difference and included in the impairment loss. The recoverable amount is the higher of the asset's fair value less disposal costs and the present value of the asset's expected future cash flows. For details on the determination method of fair value, please refer to this note "Significant Accounting Policies and Accounting Estimates - Fair Value"; Disposal expenses include legal fees related to asset disposal, relevant taxes, transportation fees and direct expenses incurred in bringing the asset to a salable state; the present value of the estimated future cash flow of the asset is determined based on the estimated future cash flow generated by the asset during its continued use and final disposal, and the amount after discounting it at an appropriate discount rate.

Asset impairment provisions are calculated and recognized on the basis of individual assets. If it is difficult to estimate the recoverable amount of an individual asset, the recoverable amount of the asset group is determined based on the asset group to which the asset group belongs. An asset group is the smallest combination of assets that can independently generate cash inflows.

For goodwill that is presented separately in the financial statements, when performing impairment testing, the book value of the goodwill is allocated to the asset group or combination of asset groups that are expected to benefit from the synergy benefits of the business combination. If the test results show that the recoverable amount of an asset group or combination of asset groups containing apportioned goodwill is lower than its book value, the corresponding impairment loss will be recognized. The amount of impairment loss is first deducted from the book value of the goodwill allocated to the asset group or asset group combination, and then deducted from the book value of other assets in proportion to the proportion of the book value of other assets in the asset group or asset group combination except goodwill.

Goodwill and intangible assets with indefinite useful lives are tested for impairment at least at the end of each year.

Once the above-mentioned asset impairment losses are recognized, they will not be reversed in subsequent periods.

28. Long-term deferred expenses

√Applicable □Not applicable

Long-term deferred expenses are recorded based on actual expenditures and are amortized evenly over the benefit period or a specified period. If a long-term deferred expense item cannot benefit future accounting periods, all the amortized value of the item that has not been amortized will be transferred to the current profit and loss. Among them: the improvement expenditures incurred on the leased fixed assets, if it can be reasonably determined that the ownership of the leased assets will be obtained at the expiration of the lease term, the

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The leased asset is amortized evenly over its remaining useful life. If it is not reasonably certain that the ownership of the leased asset will be obtained when the lease term expires, the asset will be amortized on an average basis over the shorter of the remaining lease term and the remaining useful life of the leased asset.

Renovation costs incurred for leased fixed assets, if it is reasonably certain that the ownership of the leased asset will be obtained at the expiration of the lease term, will be amortized on an even basis based on the shorter of the period between two renovations and the remaining useful life of the leased asset. If it is not reasonably certain that the ownership of the leased asset will be obtained at the expiration of the lease term, the leased asset will be amortized on average over the shorter of the three renovation intervals, the remaining lease term and the remaining useful life of the leased asset.

29. Contract liabilities

√Applicable □Not applicable

Contract liabilities refer to the company's obligation to transfer goods to customers for consideration received or receivable from customers. The company will present the net amount after offsetting contract assets and contract liabilities under the same contract.

30. Employee compensation

(1).Accounting treatment method of short-term compensation

√Applicable □Not applicable

Employee compensation refers to various forms of remuneration or compensation given by enterprises to obtain services provided by employees or to terminate labor relations. Employee compensation includes short-term compensation, post-employment benefits, termination benefits and other long-term employee benefits. Benefits provided by an enterprise to employees’ spouses, children, dependents, survivors of deceased employees and other beneficiaries are also employee benefits.

Based on liquidity, employee benefits are listed in the "Employee Benefits Payable" item and the "Long-Term Employee Benefits Payable" item on the balance sheet respectively.

During the accounting period when employees provide services, the company recognizes the actual employee wages, bonuses, social insurance premiums such as medical insurance premiums, work-related injury insurance premiums, maternity insurance premiums, and housing provident funds paid for employees according to prescribed standards and proportions as liabilities, and includes them in the current profit and loss or related asset costs. If employee benefits are non-monetary benefits and can be measured reliably, they are measured at fair value. If the liability is not expected to be fully paid within twelve months after the end of the annual reporting period in which the employee provides relevant services, and the financial impact is significant, the liability will be measured at a discounted amount.

(2).Accounting treatment of post-employment benefits

√Applicable □Not applicable

Post-employment benefit plans include defined contribution plans and defined benefit plans. Among them, a defined contribution plan refers to a post-employment benefit plan in which the enterprise no longer bears further payment obligations after paying a fixed fee to an independent fund; a defined benefit plan refers to a post-employment benefit plan other than a defined contribution plan.

(1) Set up a deposit plan

The company pays basic pension insurance and unemployment insurance for its employees in accordance with relevant government regulations of the current period. During the accounting period when employees provide services to the company, the deposit amount payable calculated based on the defined contribution plan is recognized as a liability and included in the current profit and loss or related asset costs.

(3).Accounting treatment of dismissal benefits

√Applicable □Not applicable

When the company cannot unilaterally withdraw the dismissal benefits provided due to the labor relationship termination plan or layoff proposal, and the company

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When the costs or expenses related to the restructuring involving the payment of dismissal benefits are recognized, whichever is earlier, the employee compensation liabilities arising from the dismissal benefits are recognized and included in the current profit and loss. However, if dismissal benefits are not expected to be fully paid twelve months after the end of the annual reporting period, they will be treated as other long-term employee benefits.

Internal employee retirement plans are treated on the same principles as the above-mentioned termination benefits. The company will include the wages and social insurance premiums to be paid to early retirees from the date when the employees stop providing services to the normal retirement date, etc., when they meet the conditions for recognition of estimated liabilities, and included in the current profit and loss (dismissal benefits). Financial compensation after the official retirement date (such as normal pension and pension) will be treated as post-employment benefits.

(4). Accounting treatment methods for other long-term employee benefits

□Applicable √Not applicable

31. Estimated liabilities

√Applicable □Not applicable

When obligations related to contingencies meet the following conditions at the same time, they will be recognized as estimated liabilities: 1. The obligation is a current obligation; 2. The performance of this obligation is likely to result in the outflow of economic benefits; 3. The amount of the obligation can be measured reliably.

Estimated liabilities are initially measured based on the best estimate of the expenditure required to fulfill the relevant current obligations, and factors such as risks, uncertainties, and time value of money related to contingencies are comprehensively considered. If the time value of money has a significant impact, the best estimate is determined by discounting the relevant future cash outflows.

The best estimate is handled in the following situations: if there is a continuous range (or interval) of required expenditures, and various outcomes within the range are equally likely to occur, the best estimate is determined based on the middle value of the range: that is, the average of the upper and lower limits. If the required expenditure does not exist in a continuous range (or interval), or although there is a continuous range, the likelihood of occurrence of various results within the range is not the same. If the contingency involves a single project, the best estimate is determined based on the most likely amount; if the contingency involves multiple projects, the best estimate is calculated and determined based on various possible results and related probabilities.

If all or part of the company's expenses required to settle estimated liabilities are expected to be compensated by a third party, the compensation amount will be recognized separately as an asset when it is basically certain that it can be received, and the recognized compensation amount will not exceed the book value of the estimated liabilities.

The book value of estimated liabilities is reviewed on each balance sheet date. If there is conclusive evidence that the book value cannot reflect the current best estimate, the book value will be adjusted based on the current best estimate.

32. Share-based payment

□Applicable √Not applicable

33. Preferred shares, perpetual bonds and other financial instruments

□Applicable √Not applicable

34. Income

(1). Disclose the accounting policies adopted for revenue recognition and measurement according to business type

√Applicable □Not applicable

1． General revenue recognition principle

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The company uses the transfer of control as the criterion for determining the timing of revenue recognition. The company fulfills its performance obligations in the contract, that is, when the customer obtains control of the relevant goods, revenue is recognized.

If one of the following conditions is met, the company performs its performance obligations within a certain period of time; otherwise, it performs its performance obligations at a certain point in time: (1) The customer obtains and consumes the economic benefits brought by the company's performance while the company performs the contract; (2) The customer can control the goods under construction during the company's performance; (3) The goods produced during the company's performance have irreplaceable uses, and the company has the right to collect payment for the cumulative performance part that has been completed so far during the entire contract period.

For performance obligations performed within a certain period of time, the company will recognize revenue based on the performance progress during that period, except where the performance progress cannot be reasonably determined. When the progress of contract performance cannot be reasonably determined, if the costs incurred by the company are expected to be compensated, revenue will be recognized based on the amount of costs incurred until the progress of contract performance can be reasonably determined.

For performance obligations fulfilled at a certain point in time, the company recognizes revenue at the point when the customer obtains control of the relevant goods. When judging whether the customer has obtained control of the goods, the company considers the following signs: (1) the company has a current right to receive payment for the goods, that is, the customer has a current payment obligation for the goods; (2) the company has transferred the legal ownership of the goods to the customer, that is, the customer already has legal ownership of the goods; (3) the company has The commodity is physically transferred to the customer, which means that the customer has physical possession of the commodity; (4) the company has transferred the main risks and rewards of ownership of the commodity to the customer, that is, the customer has obtained the main risks and rewards of ownership of the commodity; (5) the customer has accepted the commodity; (6) other indications that the customer has obtained control of the commodity.

If the contract contains two or more performance obligations, the company will allocate the transaction price to each individual performance obligation based on the relative proportion of the stand-alone selling price of the goods promised by each individual performance obligation on the contract start date, and measure revenue based on the transaction price allocated to each individual performance obligation. The transaction price is the amount of consideration that the company expects to be entitled to receive for transferring the goods to the customer. Amounts collected by the Company on behalf of third parties and amounts that the Company expects to return to customers are accounted for as liabilities and are not included in the transaction price. If there is variable consideration in the contract, the company determines the best estimate of the variable consideration based on the expected value or the most likely amount, but the transaction price including the variable consideration shall not exceed the amount at which the cumulative recognized revenue is unlikely to be significantly reversed when the relevant uncertainty is eliminated. If there is a significant financing component in the contract, the company determines the transaction price based on the amount payable in cash when the customer obtains control of the goods. The difference between the transaction price and the contract consideration is amortized using the effective interest method during the contract period. On the contract start date, if the company expects that the interval between the customer obtaining control of the goods and the customer paying the price will not exceed one year, the significant financing component in the contract will not be considered.

2. The specific recognition principles of the company’s revenue

The company's merchandise sales revenue is divided into foreign sales and domestic sales.

1. Domestic sales

The company sends the goods to the customer, and after the customer confirms receipt of the goods, the sales revenue is recognized.

2. Overseas sales

The company ships the goods to customers and recognizes sales revenue when it obtains the export declaration form and bill of lading.

(2). Similar businesses using different business models involve different revenue recognition methods and measurement methods.

□Applicable √Not applicable

35. Contract costs

√Applicable □Not applicable

1． Recognition conditions for contract costs

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Contract costs include contract acquisition costs and contract performance costs.

The incremental costs incurred by the company to obtain the contract are expected to be recovered and are recognized as an asset as the contract acquisition cost. Other expenditures incurred by the company to obtain the contract, other than the incremental costs expected to be recovered, shall be included in the current profit and loss when incurred, unless it is clearly borne by the customer.

The costs incurred by the company to perform the contract are not within the scope of other business accounting standards other than the revenue standard and meet the following conditions at the same time, and are recognized as an asset as contract performance costs: (1) The cost is directly related to a current or expected contract, including direct labor, direct materials, manufacturing expenses (or similar expenses), costs clearly borne by the customer, and other costs incurred only because of the contract; (2) The cost increases the company's future resources for fulfilling performance obligations; (3) The cost is expected to be recovered.

2. Amortization of assets related to contract costs

Assets recognized for contract acquisition costs and assets recognized for contract performance costs (hereinafter referred to as "assets related to contract costs") are amortized on the same basis as the revenue recognition of goods or services related to the assets and included in the current profit and loss. If the amortization period of contract acquisition costs does not exceed one year, they shall be included in the current profits and losses when incurred.

3． Impairment of assets related to contract costs

When determining the impairment loss of assets related to contract costs, the company first determines the impairment losses of other assets related to the contract that are recognized in accordance with other business accounting standards; then determines the impairment losses of assets related to contract costs. If the book value of assets related to contract costs is higher than the difference between the remaining consideration expected to be obtained by the company for transferring the goods related to the assets and the estimated costs to be incurred for the transfer of the related goods, the excess shall be provided for impairment and recognized as asset impairment losses.

After the impairment provision is made, if the factors of impairment in the previous period change, so that the difference between the remaining consideration expected to be obtained by the company for transferring the goods related to the asset and the estimated cost to transfer the related goods is higher than the book value of the asset, the asset impairment provision that has been made originally will be reversed and included in the current profit and loss, but the book value of the asset after the reversal will not exceed the book value of the asset on the date of reversal if no impairment provision is made.

36. Government subsidies

√Applicable □Not applicable

1． Classification of government subsidies

Government subsidies refer to the monetary assets or non-monetary assets that the company obtains free of charge from the government. It is divided into asset-related government subsidies and income-related government subsidies.

Government subsidies related to assets refer to government subsidies obtained by the company for the purchase, construction or other formation of long-term assets, including fiscal allocations for the purchase of fixed assets or intangible assets, fiscal discounts for special loans for fixed assets, etc. Government subsidies related to income refer to government subsidies other than government subsidies related to assets. For government subsidies that contain both asset-related parts and income-related parts, different parts shall be distinguished and accounted for separately; if it is difficult to distinguish, the whole shall be classified as income-related government subsidies.

The specific standards adopted by our company when classifying government subsidies are:

(1) If the subsidy object specified in the government subsidy document is used to purchase, construct or form long-term assets in other ways, or the expenditure of the subsidy object is mainly used to purchase, construct or form long-term assets in other ways, it is classified as an asset-related government subsidy.

(2) The government subsidy obtained according to the government subsidy document shall be used entirely or mainly to compensate for the expenses or losses incurred in the future period or already.

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If there is a loss, it will be classified as government subsidies related to income.

(3) If the government document does not clearly stipulate the subsidy object, the following methods will be used to classify the government subsidy into asset-related government subsidies or income-related government subsidies: 1) If the government document clarifies the specific project for which the subsidy is targeted, assets will be formed in the budget of the specific project The amount of expenditure and the amount of expenditure included in expenses are divided into relative proportions. The division ratio needs to be reviewed on each balance sheet date and changed if necessary; 2) If the purpose is only a general statement in the government document and no specific project is specified, it will be regarded as a government subsidy related to income.

2. Confirmation time of government subsidies

The Company usually recognizes and measures government subsidies based on the actual amount received when they are actually received. However, if there is conclusive evidence at the end of the period that it can meet the relevant conditions stipulated in the financial support policy and is expected to receive financial support funds, it will be measured according to the amount receivable. Government subsidies measured according to the amount receivable shall meet the following conditions at the same time:

(1) It is based on the financial support projects and their financial fund management measures officially released by the local financial department and proactively disclosed in accordance with the "Government Information Disclosure Regulations", and the management measures should be inclusive (any enterprise that meets the prescribed conditions can apply), rather than formulated specifically for specific enterprises;

(2) The amount of subsidy receivable has been confirmed by a document issued by the competent government department, or can be reasonably calculated by oneself in accordance with the relevant provisions of the officially issued financial fund management measures, and it is expected that there is no major uncertainty in its amount;

(3) The relevant subsidy approval documents have clearly promised the disbursement period, and the disbursement of the funds is guaranteed by the corresponding financial budget, so it can be reasonably guaranteed that it can be received within the specified period;

(4) Other relevant conditions (if any) that should be met based on the specific circumstances of the company and the subsidy.

3． Accounting treatment of government subsidies

If the government subsidy is a monetary asset, it shall be measured according to the amount received or receivable; if it is a non-monetary asset, it shall be measured at its fair value; if the fair value of the non-monetary asset cannot be obtained reliably, it shall be measured at its nominal amount. Government subsidies measured according to the nominal amount are directly included in the current profit and loss.

The company adopts the total amount method for government subsidies, and the specific accounting treatment is as follows:

Government subsidies related to assets are recognized as deferred income and are included in the current profits and losses in installments according to a reasonable and systematic method within the useful life of the relevant assets; if the relevant assets are sold, transferred, scrapped or damaged before the end of their useful lives, the balance of the relevant deferred income will be transferred to the profits and losses of the current period of asset disposal.

If government subsidies related to income are used to compensate the company for relevant costs, expenses or losses in future periods, they are recognized as deferred income, and are included in the current profit and loss during the period when the relevant costs, expenses or losses are recognized; if they are used to compensate the company for relevant costs, expenses or losses that have already occurred, they are directly included in the current profits and losses.

The policy-based preferential loan interest discounts obtained by the company are divided into the following two situations and are accounted for separately:

(1) If the finance department allocates interest discount funds to the lending bank, and the lending bank provides loans to the enterprise at policy preferential interest rates, the company will use the actual loan amount received as the entry value of the loan, and calculate the relevant borrowing costs based on the loan principal and the policy preferential interest rate.

(2) If the finance department directly allocates interest discount funds to the company, the company will use the corresponding interest discount to offset related borrowing costs.

If the confirmed government subsidies need to be returned, accounting treatment will be carried out in the current period in which they need to be returned according to the following circumstances:

(1) If the book value of related assets is offset during initial recognition, the book value of the assets shall be adjusted;

(2) If there is relevant deferred income, the book balance of the relevant deferred income will be offset, and the excess shall be included in the current profit and loss;

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(3) In other cases, it will be directly included in the current profit and loss.

The principle of distinguishing government subsidies included in different profit and loss items is: government subsidies related to the company's daily activities shall be included in other income or offset related costs and expenses according to the economic business essence; government subsidies unrelated to the company's daily activities shall be included in non-operating income and expenses.

37. Deferred income tax assets/deferred income tax liabilities

√Applicable □Not applicable

1． Recognition and measurement of deferred income tax assets and deferred income tax liabilities

The company uses the balance sheet debt method to recognize deferred income tax based on the temporary differences between the book values of assets and liabilities on the balance sheet date and their tax basis. The company's current income tax and deferred income tax are included in the current profit and loss as income tax expenses or income, but do not include income taxes arising from the following situations: (1) business mergers; (2) transactions or events directly recognized in owners' equity; (3) dividend payments on financial instruments classified as equity instruments in accordance with "Accounting Standards for Business Enterprises No. 37 - Presentation of Financial Instruments" and other regulations, which can be deducted before corporate income tax according to tax policies and the distributed profits come from transactions or events previously recognized in owners' equity.

For deductible temporary differences, deductible losses and tax credits that can be carried forward to future years, the company recognizes the resulting deferred income tax assets to the extent that it is likely to obtain future taxable income that can be used to offset the deductible temporary differences, deductible losses and tax credits, unless the deductible temporary differences are generated in the following transactions:

(1) The transaction is not a business combination. When the transaction occurs, it will neither affect accounting profits nor taxable income (or deductible losses), and the initially recognized assets and liabilities will not generate equal amounts of taxable temporary differences and deductible temporary differences;

(2) For deductible temporary differences related to investments in subsidiaries, joint ventures and associates, corresponding deferred income tax assets are recognized if the following conditions are met: the temporary differences are likely to be reversed in the foreseeable future, and it is likely to be taxable income that can be used to offset the deductible temporary differences in the future.

Each taxable temporary difference is recognized as a related deferred income tax liability, unless the taxable temporary difference is generated in the following transactions:

(1) The initial recognition of goodwill, or the initial recognition of assets or liabilities arising from a transaction with the following characteristics: the transaction is not a business combination, the transaction will affect neither accounting profits nor taxable income (or deductible losses) when the transaction occurs, and the initially recognized assets and liabilities will not generate equal amounts of taxable temporary differences and deductible temporary differences;

(2) For taxable temporary differences related to investments in subsidiaries, joint ventures and associates, the reversal time of the temporary differences can be controlled and the temporary differences are likely not to be reversed in the foreseeable future.

Based on the difference between the book value of assets and liabilities and their tax basis (if the tax basis of items not recognized as assets and liabilities can be determined in accordance with tax laws, the difference between the tax basis and their book amount), deferred income tax assets or deferred income tax liabilities are calculated and recognized according to the applicable tax rate during the period when the asset is expected to be recovered or the liability is settled.

For a single transaction that is not a business combination and affects neither accounting profits nor taxable income (or deductible losses) when the transaction occurs, and the initial recognition of assets and liabilities results in an equal amount of taxable temporary differences and deductible temporary differences (including the lessee's initial recognition of lease liabilities on the start date of the lease period and included in the use of Lease transactions of right-use assets, and transactions in which estimated liabilities are recognized and included in the cost of related assets due to disposal obligations of fixed assets, etc.), the company recognizes the corresponding deferred income tax liabilities for the taxable temporary differences and deductible temporary differences arising from the initial recognition of assets and liabilities for this transaction when the transaction occurs.

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and deferred tax assets.

Deferred income tax assets are recognized to the extent that it is probable that taxable income will be available against which the deductible temporary differences can be utilised. On the balance sheet date, if there is conclusive evidence that sufficient taxable income is likely to be obtained in the future period to offset the deductible temporary differences, deferred income tax assets that have not been recognized in previous accounting periods will be recognized. The carrying amount of deferred income tax assets shall be reviewed. If it is likely that sufficient taxable income will not be available in the future period to offset the benefits of deferred income tax assets, the carrying amount of deferred income tax assets shall be written down. The amount of the write-down is reversed when it is probable that sufficient taxable income will be obtained.

2. When it has the legal right to settle on a net basis and intends to settle on a net basis or acquire assets and pay off liabilities at the same time, the company's current income tax assets and current income tax liabilities are presented at the net amount after offsetting.

When you have the legal right to settle current income tax assets and current income tax liabilities on a net basis, and the deferred income tax assets and deferred income tax liabilities are related to the income tax levied by the same tax collection and administration department on the same taxable entity or on different taxable entities, but in the future each During the period when significant deferred income tax assets and liabilities are reversed, when the tax payer involved intends to settle the current income tax assets and liabilities on a net basis or to acquire assets and settle liabilities at the same time, the Company's deferred income tax assets and deferred income tax liabilities will be presented at the net amount after offsetting.

38. Leasing

√Applicable □Not applicable

Lease refers to a contract in which the lessor transfers the right to use an asset to the lessee for a consideration within a certain period of time.

On the contract inception date, the Company evaluates whether the contract is a lease or contains a lease. A contract is a lease or contains a lease if one party transfers the right to control the use of one or more identified assets for a certain period in exchange for consideration.

If the contract contains multiple separate leases at the same time, the lessee and lessor will split the contract and conduct accounting treatment for each separate lease. If the contract contains both lease and non-lease parts, the lessee and lessor shall separate the lease and non-lease parts.

Accounting for leases as lessee

(1)Right-of-use assets

On the start date of the lease period, the Company recognizes right-of-use assets for leases other than short-term leases and low-value asset leases. Right-of-use assets are initially measured at cost, including: the initial measurement amount of the lease liability; the lease payment amount paid on or before the start date of the lease term (deducting the amount related to the lease incentives already enjoyed); the initial direct costs incurred; the costs expected to be incurred to dismantle and remove the leased asset, restore the site where the leased asset is located, or restore the leased asset to the state agreed upon in the lease terms.

The Company uses the straight-line method to depreciate right-of-use assets. If it is reasonably certain that the ownership of the leased asset will be obtained at the expiration of the lease term, the Company will accrue depreciation over the remaining useful life of the leased asset. If it is not reasonably certain that the ownership of the leased asset will be obtained at the expiration of the lease term, the leased asset will be depreciated over the shorter of the lease term and the remaining useful life of the leased asset.

(2) Lease liabilities

On the commencement date of the lease period, the Company recognizes lease liabilities for leases other than short-term leases and low-value asset leases. Lease liabilities are initially measured based on the present value of the lease payments that have not yet been paid. Lease payments include: fixed payments and substantive fixed payments, if there are lease incentives, the amount related to the lease incentives is deducted; variable lease payments that depend on an index or ratio, which are determined based on the index or ratio on the start date of the lease term when initially measured; the exercise price of the purchase option, provided that the company is reasonably certain that the option will be exercised; the amount required to exercise the option to terminate the lease, provided that the lease term reflects that the company will exercise the option to terminate the lease

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Lease option; the amount expected to be paid based on the residual value of the guarantee provided by the company. The Company uses the interest rate implicit in the lease as the discount rate. If the interest rate implicit in the lease cannot be determined, the company's incremental borrowing rate will be used as the discount rate.

The company calculates the interest expense of the lease liability in each period during the lease term based on a fixed periodic interest rate, and includes it in the current profit and loss or related asset costs. Variable lease payments that are not included in the measurement of lease liabilities are included in the current profit and loss or related asset costs when actually incurred.

After the start date of the lease period, if the following circumstances occur, the Company will remeasure the lease liability based on the present value of the changed lease payment: the Company's evaluation results of the purchase option, lease renewal option or lease termination option change, or the actual exercise of the lease renewal option or lease termination option is inconsistent with the original evaluation results; the amount payable estimated based on the guaranteed residual value changes; the index or ratio used to determine the lease payment changes. When re-measurement of lease liabilities, the Company adjusts the book value of the right-of-use assets accordingly. If the book value of the right-of-use asset has been reduced to zero, but the lease liability still needs to be further reduced, the company will include the remaining amount in the current profit and loss.

As a lessee, the judgment basis and accounting treatment method for simplified treatment of short-term leases and low-value asset leases

√Applicable □Not applicable

The company chooses not to recognize right-of-use assets and lease liabilities for short-term leases and low-value asset leases, and the relevant lease payments will be included in the current profit and loss or related asset costs on a straight-line basis in each period during the lease term. Short-term lease refers to a lease with a lease period of no more than 12 months on the start date of the lease period and does not include a purchase option. Low-value asset lease refers to a lease with a low value when the single leased asset is a new asset. If a company subleases or anticipates subletting a leased asset, the original lease does not constitute a low-value asset lease.

Lease classification standards and accounting treatment methods as a lessor

√Applicable □Not applicable

On the lease commencement date, the Company divides leases into finance leases and operating leases. Finance lease refers to a lease that substantially transfers almost all risks and rewards related to the ownership of the leased asset, regardless of whether the ownership is ultimately transferred. Operating leases refer to leases other than finance leases.

When the Company acts as a sublease lessor, it classifies the sublease based on the right-of-use assets generated by the original lease. If the original lease is a short-term lease and the Company chooses not to recognize right-of-use assets and lease liabilities for the original lease, the Company classifies the sub-lease as an operating lease.

(1) Accounting treatment of operating leases

Lease receipts from operating leases are recognized as rental income on a straight-line basis throughout the lease term. The company capitalizes the initial direct expenses related to the operating lease and amortizes them into the current profit and loss during the lease period on the same basis as the rental income recognition. Variable lease payments that are not included in lease receipts are included in the current profit and loss when actually incurred.

(2) Accounting treatment of financial leases

On the lease commencement date, the Company recognizes finance lease receivables for finance leases and terminates the recognition of finance lease assets. When the Company initially measures the financial lease receivables, it takes the net lease investment as the entry value of the financial lease receivables. The net investment in a lease is the sum of the unguaranteed residual value and the present value of the lease payments that have not yet been received at the start of the lease term, discounted at the interest rate implicit in the lease.

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The Company calculates and recognizes interest income in each period during the lease term based on fixed periodic interest rates. The derecognition and impairment of finance lease receivables are accounted for in accordance with this note "Major Accounting Policies and Accounting Estimates - Financial Instruments". Variable lease payments that are not included in the measurement of net lease investment are included in the current profit and loss when actually incurred.

39. Other important accounting policies and accounting estimates

√Applicable □Not applicable

In the process of applying accounting policies, due to the inherent uncertainty in operating activities, the Company needs to make judgments, estimates and assumptions on the book values of statement items that cannot be accurately measured. These judgments, estimates and assumptions are based on the past historical experience of the company's management and taking into account other relevant factors. These judgments, estimates and assumptions affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities at the balance sheet date. However, the actual results resulting from the uncertainty of these estimates may differ from the current estimates of the Company's management, resulting in significant adjustments to the carrying amounts of the assets or liabilities affected in the future. The Company conducts regular reviews of the aforementioned judgments, estimates and assumptions on a going concern basis. If a change in accounting estimates only affects the current period of the change, the impact will be recognized in the current period of the change; if it affects both the current period of the change and future periods, the impact will be recognized in the current period of the change and future periods. On the balance sheet date, the important areas where the Company needs to make judgments, estimates and assumptions on the amounts of financial statement items are as follows:

1． Classification of rentals

When the Company acts as a lessor, it classifies leases as operating leases and finance leases in accordance with the provisions of "Accounting Standards for Business Enterprises No. 21 - Leasing". When classifying, management needs to make an analysis and judgment on whether all risks and rewards related to the ownership of the leased assets have been substantially transferred to the lessee.

2. Impairment of financial instruments

The Company uses the expected credit loss model to assess the impairment of receivables and debt investments measured at amortized cost, contract assets, receivable financing and other debt investments measured at fair value with changes included in other comprehensive income. The use of expected credit loss models involves significant management judgment and estimates. Key parameters for measuring expected credit losses include probability of default, loss given default rate and exposure to default risk. The Company considers quantitative analysis of historical statistical data and forward-looking information to establish probability of default, loss given default and default risk exposure models. The difference between the actual financial instrument impairment results and the original estimate will affect the carrying value of the financial instrument and the provision or reversal of credit impairment losses in the period when the estimate is changed.

3． Provision for inventory decline

According to the inventory accounting policy, the company measures the inventory at the lower of cost and net realizable value, and makes provision for inventory depreciation for inventory that has a cost higher than net realizable value and is obsolete and slow-moving. The impairment of inventories to net realizable value is based on an assessment of the inventory's salability and its net realizable value. Identification of inventory impairment requires management to make judgments and estimates based on obtaining conclusive evidence and considering factors such as the purpose of holding inventory and the impact of events after the balance sheet date. The difference between the actual results and the original estimate will affect the book value of inventories and the provision or reversal of inventory depreciation provisions in the period when the estimate is changed.

4. Impairment of non-financial non-current assets

The Company determines whether there are signs of possible impairment of non-current assets other than financial assets on the balance sheet date. For intangible assets with indefinite useful lives, in addition to annual impairment testing, impairment testing is also conducted when there are signs of impairment. Other non-current assets other than financial assets are tested for impairment when there are signs that their carrying amounts are irrecoverable. When the carrying amount of an asset or asset group is higher than its recoverable amount, that is, the net amount of fair value less disposal costs and the expected future

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The higher of the present value of the cash flows indicates that an impairment has occurred.

The net amount of fair value less disposal expenses is determined by referring to the sales agreement price or observable market price of similar assets in an arm's length transaction, less the incremental costs directly attributable to the disposal of the asset. When estimating the present value of future cash flows, significant judgments need to be made on the output, selling price, related operating costs, and the discount rate used in calculating the present value of the asset (or asset group). The Company will use all relevant information available when estimating the recoverable amount, including forecasts of output, selling price and related operating costs based on reasonable and supportable assumptions.

The Company assesses whether goodwill is impaired at least annually, requiring an estimate of the value in use of the asset group to which goodwill is allocated. When estimating value in use, the company needs to estimate future cash flows from the asset group and select an appropriate discount rate to calculate the present value of future cash flows.

5. Depreciation and amortization

The Company depreciates and amortizes investment real estate, fixed assets and intangible assets measured using the cost model using the straight-line method over their useful lives after taking into account their residual values. The Company regularly reviews useful lives to determine the amount of depreciation and amortization expenses to be included in each reporting period. The useful life is determined by the Company based on past experience with similar assets and combined with expected technological updates. If there are material changes to previous estimates, depreciation and amortization expenses will be adjusted in future periods.

6. Deferred tax assets

The Company recognizes deferred income tax assets for all unused tax losses to the extent that it is probable that there will be sufficient taxable profits to offset the losses. This requires the company's management to use a lot of judgment to estimate the time and amount of future taxable profits, combined with tax planning strategies, to determine the amount of deferred income tax assets that should be recognized.

7． income tax

In the company's normal operating activities, there are certain uncertainties in the final tax treatment and calculation of some transactions. Whether some items can be deducted before tax requires the approval of the tax authorities. If the final determination of these tax matters is different from the initially estimated amount, the difference will have an impact on current income tax and deferred income tax during the period of final determination. 8． Estimated liabilities

Based on the contract terms, existing knowledge and historical experience, the company estimates and makes corresponding provisions for product quality assurance, expected contract losses, delayed delivery liquidated damages, etc. When such contingencies have formed a current obligation, and the performance of such current obligations is likely to result in the outflow of economic benefits from the Company, the Company recognizes the contingencies as estimated liabilities based on the best estimate of the expenditure required to fulfill the relevant current obligations. The recognition and measurement of estimated liabilities rely largely on management's judgment. In the process of making judgments, the company needs to evaluate the risks, uncertainties, time value of money and other factors related to these contingencies.

Among them, the company will commit estimated liabilities for after-sales quality maintenance provided to customers for the sale, repair and modification of the goods sold. The company's recent maintenance experience data has been taken into account when estimating liabilities, but recent maintenance experience may not reflect future maintenance conditions. Any increase or decrease in this provision may affect profits and losses in future years.

9． Fair value measurement

Certain of the Company's assets and liabilities are measured at fair value in the financial statements. When estimating the fair value of an asset or liability, the Company uses available observable market data; if the first level input value cannot be obtained, it hires a third-party qualified appraisal agency to conduct a valuation. During this process, the Company's management works closely with it to determine appropriate valuation techniques and input values ​​for related models. For detailed information on the valuation techniques and input values ​​used in determining the fair value of various types of assets and liabilities, please refer to this note "Fair Value Disclosure".

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40. Changes in important accounting policies and accounting estimates

(1) Changes in important accounting policies

□Applicable √Not applicable

(2) Changes in important accounting estimates

□Applicable √Not applicable

(3) The first implementation of new accounting standards or standard interpretations starting in 2026 will involve adjustments to the financial statements at the beginning of the year of first implementation □ Applicable √ Not applicable

41. Others

□Applicable √Not applicable

6. Taxes

1. Main tax types and tax rates

Main tax types and tax rates

√Applicable □Not applicable

Type of tax Tax calculation basis Tax rate

Calculated and paid according to tax rates of 6%, 9%, 13%, etc. Export value-added tax refers to the value-added amount generated in the process of selling goods or providing taxable services. Goods implement the tax policy of "exemption, credit and refund", and the tax refund rate is 5%-13%.

If levied on an ad valorem basis, the remaining value will be deducted 30% from the original value of the property.

Property tax 1.2%, 12%

1.2% is calculated and paid; if the tax is calculated based on rent, it is calculated and paid at 12% of the rental income.

Urban maintenance and construction tax Actual turnover tax paid 7%, 5%

Education fee surcharge Actual turnover tax paid 3%

Local education surcharge Actual turnover tax paid 2%

Corporate income tax Taxable income 25%, 20%, 15% If there are taxpayers with different corporate income tax rates, a description of the disclosure

□Applicable √Not applicable

2. Tax incentives

√Applicable □Not applicable

1． VAT related preferential policies

(1) According to Caishui [2012] No. 39 "Notice of the Ministry of Finance and the State Administration of Taxation on Value-Added Tax and Consumption Tax Policies for Exported Goods and Services" and Guoshuifa [2012] No. 24 "State Administration of Taxation's Promulgation of "Administrative Measures for Value-Added Tax and Consumption Tax on Exported Goods and Services" Announcement" and the "Announcement on Relevant Policies for Deepening the Value-Added Tax Reform" No. 39 of 2019 issued by the Ministry of Finance, the State Administration of Taxation and the General Administration of Customs and other documents, the company and its subsidiary Chengdu Yazhong Biopharmaceutical Co., Ltd. implement the "exemption, credit and refund" method of value-added tax on self-operated export goods.

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(2) According to Caishui [2016] No. 36 "Notice of the Ministry of Finance and the State Administration of Taxation on Comprehensively Launching the Pilot Program of Replacing Business Tax with Value-Added Tax", the technology transfer, technology development and related technical consulting and technical services provided by the subsidiary Nanjing Lianzhi Pharmaceutical Technology Co., Ltd. during the reporting period are exempt from value-added tax.

(3) According to the Announcement No. 15 of 2023 of the Ministry of Finance, the State Administration of Taxation, the Ministry of Human Resources and Social Security, and the Ministry of Agriculture and Rural Affairs, the "Announcement of the Ministry of Finance, the State Administration of Taxation, the Ministry of Human Resources and Social Security, the Ministry of Agriculture and Rural Affairs on tax policies related to further supporting the entrepreneurship and employment of key groups", during the reporting period, the subsidiary Sichuan Longyi Pharmaceutical Co., Ltd. will deduct value-added tax accordingly for the employment of people who have been lifted out of poverty and registered unemployed for more than half a year.

(4) According to the Announcement No. 14 of 2023 of the Ministry of Finance, the State Administration of Taxation, and the Ministry of Veterans Affairs, the Announcement of the Ministry of Finance, the State Administration of Taxation, and the Ministry of Veterans Affairs on Tax Policies to Further Support the Entrepreneurship and Employment of Self-Employed Retired Soldiers, the subsidiary Sichuan Longyi Pharmaceutical Co., Ltd. will deduct value-added tax accordingly when recruiting retired soldiers for employment during the reporting period.

(5) According to Article 15 of Order No. 538 of the State Council of the People's Republic of China of the "Interim Regulations of the People's Republic of China on Value-Added Tax"

Item (2): During the reporting period, the sales of contraceptives and appliances by the subsidiary Sichuan Longyi Pharmaceutical Co., Ltd. are exempt from value-added tax.

(6) According to the Announcement No. 43 of 2023 of the Ministry of Finance and the State Administration of Taxation on the Super Credit Policy for Value-Added Tax for Advanced Manufacturing Enterprises, from January 1, 2023 to December 31, 2027, advanced manufacturing enterprises are allowed to deduct an additional 5% of the deductible input tax for the current period to offset the value-added tax payable. During the reporting period, the Company and its subsidiary Chengdu Yazhong Biopharmaceutical Co., Ltd. applied the super deduction policy.

2. Preferential policies related to corporate income tax

(1) The company conducted a high-tech enterprise qualification re-evaluation in 2023 and passed it. It obtained certificate No. GR202332009520, which is valid for three years. The subsidiary Chengdu Yazhong Biopharmaceutical Co., Ltd. conducted a high-tech enterprise qualification re-evaluation in 2023 and passed it. It obtained certificate No. GR202351002373, which is valid for three years. The subsidiary Nanjing Lianzhi Pharmaceutical Technology Co., Ltd. obtained the high-tech enterprise certificate in 2023. The certificate number is GR202332006811 and is valid for three years. The subsidiary Xinxiang Changle Pharmaceutical Co., Ltd. obtained the high-tech enterprise certificate in 2024, with the certificate number GR202441001588 and is valid for three years. In accordance with relevant regulations such as the Enterprise Income Tax Law of the People's Republic of China, the Implementation Regulations of the Enterprise Income Tax Law of the People's Republic of China, and the Management Measures for the Recognition of High-tech Enterprises (Guokefahuo [2008] No. 172), the Company and its subsidiaries Chengdu Yazhong Biopharmaceutical Co., Ltd., Nanjing Lianzhi Pharmaceutical Technology Co., Ltd. and Xinxiang Changle Pharmaceutical Co., Ltd. have a reduced income tax rate of 15%.

(2) According to the relevant provisions of Caishui [2023] No. 6 "Announcement of the Ministry of Finance and the State Administration of Taxation on Preferential Income Tax Policies for Small and Micro Enterprises and Individual Industrial and Commercial Households", small-scale VAT taxpayers who engage in VAT taxable sales will enjoy the above preferential tax policies for small and micro enterprises. According to Caishui [2023] No. 12 "Announcement of the Ministry of Finance and the State Administration of Taxation on Tax Policies to Further Support the Development of Small and Micro Enterprises and Individual Industrial and Commercial Households", small and low-profit enterprises will be subject to a 25% reduction in calculating taxable income and paying corporate income tax at a rate of 20%. This policy will continue to be implemented until December 31, 2027. During the reporting period, Jiangsu Lianhuan Smart Medical Co., Ltd., Yangzhou Lianyang New Energy Co., Ltd., Jiangsu Lianhuan Jijia Technology Co., Ltd., Jiangsu Lianhuan Biopharmaceutical Co., Ltd., Yangzhou Lianyou Medical Co., Ltd., Lianhuan (Suqian) Pharmaceutical Co., Ltd., and Lianhuan Pharmaceutical (Gaoyou) Co., Ltd. met the standards of small and low-profit enterprises to enjoy relevant tax incentives. 3． Other tax-related preferential policies

According to the Ministry of Finance and the State Administration of Taxation Announcement No. 12 of 2023 "Announcement on Further Supporting the Development of Small and Micro Enterprises and Individual Industrial and Commercial Households on Relevant Tax Policies", during the reporting period, subsidiaries Jiangsu Lihuan Jijia Technology Co., Ltd., Lianhuan (Suqian) Pharmaceutical Co., Ltd., Lianhuan Pharmaceutical (Anqing) Co., Ltd., Yangzhou Lianyang New Energy Co., Ltd., and Yangzhou Lianhuan Investment Co., Ltd. are all eligible for a 50% reduction in resource tax (excluding water resources tax), urban maintenance and construction tax, real estate tax, urban land use tax, and stamp tax (not including

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Including securities transaction stamp tax), farmland occupation tax and education surcharge. During the reporting period, subsidiaries Yangzhou Lianyou Medical Co., Ltd., Lianhuan Pharmaceutical (Gaoyou) Co., Ltd., Nanjing Lianzhi Pharmaceutical Technology Co., Ltd., and Lianhuan (Shanghai) Medical Management Co., Ltd. were partially exempted from resource tax (excluding water resources tax), urban maintenance and construction tax, real estate tax, urban land use tax, stamp tax (excluding securities transaction stamp tax), cultivated land occupation tax and education surcharge at 50% of the tax amount.

3. Others

□Applicable √Not applicable

7. Notes on Consolidated Financial Statement Items

1. Monetary funds

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Ending balance Beginning balance

Cash on hand 77,918.79 94,422.78 Bank deposits 221,523,207.34 277,814,843.08 Other monetary funds 64,102,843.68 71,049,274.83 Deposits in finance companies

Digital currency - RMB 135,577.26 135,136.10 Total 285,839,547.07 349,093,676.79 Including: total amount deposited overseas

Other notes:

1． For details of mortgages, pledges, seizures, freezes, seizures and other amounts with restricted ownership or use rights, please refer to the description of "Notes to Consolidated Financial Statement Items - Assets with Restricted Ownership or Use Rights" in this note.

2. For details of foreign currency monetary funds, please refer to the explanation of "Notes on Consolidated Financial Statement Items - Foreign Currency Monetary Items" in this note.

3. Trading financial assets

□Applicable √Not applicable

3. Derivative financial assets

□Applicable √Not applicable

4. Notes receivable

(1). Classified presentation of notes receivable

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Ending balance Beginning balance

Bank acceptance bills 216,134.47 1,125,149.72 Commercial acceptance bills

Total 216,134.47 1,125,149.72 (2). The company’s pledged notes receivable at the end of the period

□Applicable √Not applicable

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(3). Notes receivable that have been endorsed or discounted by the company at the end of the period and have not yet matured on the balance sheet date

√Applicable □Not applicable

Unit: Yuan Currency: RMB Item Amount derecognized at the end of the period Amount not derecognized at the end of the period Bank acceptance notes 78,504.04 Commercial acceptance notes

Total 78,504.04 (4). Classified disclosure based on bad debt accrual method

√Applicable □Not applicable

Unit: Yuan Currency: RMB Closing balance Opening balance

Book balance Bad debt provision Book balance Bad debt provision category Book Book amount Provision ratio Provision ratio amount Proportion (%) Value Amount Proportion (%) Value

Amount Example (%) Amount Example (%) calculated individually

Accurate provision of bad debts

Prepare

Among them:

Total by group

Provision for bad debts 216,134.47 100.00 216,134.47 1,125,149.72 100.00 1,125,149.72 Provision

Among them:

bank acceptance

216,134.47 100.00 216,134.47 1,125,149.72 100.00 1,125,149.72 Money order

Total 216,134.47 100.00 216,134.47 1,125,149.72 100.00 1,125,149.72 Provision for bad debts is made individually:

□Applicable √Not applicable

Provision for bad debts by group:

√Applicable □Not applicable

Portfolio accrual items: aging portfolio

Unit: Yuan Currency: RMB Closing balance

Name

Book balance Bad debt provision Provision ratio (%) Bank acceptance bill 216,134.47

Total 216,134.47

Instructions on accruing bad debt provisions by portfolio

□Applicable √Not applicable

Provision for bad debts based on the general expected credit loss model

□Applicable √Not applicable

Basis for division of each stage and provision ratio for bad debts

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None

Explanation of significant changes in the book balance of notes receivable that have experienced changes in loss provisions during the current period:

□Applicable √Not applicable

(5). Bad debt provisions

□Applicable √Not applicable

Among them, the amount of recovery or reversal of bad debt provisions for the current period is important:

□Applicable √Not applicable

Other notes:

None

(6). Notes receivable actually written off in the current period

□Applicable √Not applicable

Among them, the important write-off of bills receivable:

□Applicable √Not applicable

Instructions for writing off notes receivable:

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

5. Accounts receivable

(1). Disclosure based on aging

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Aging Book balance at the end of the period Book balance at the beginning of the period

Within 1 year (including 1 year) 693,659,688.38 659,678,513.37 Subtotal within 1 year 693,659,688.38 659,678,513.37 1 to 2 years 33,906,294.05 39,515,954.86 2 to 3 years 27,724,648.58 23,076,963.06 More than 3 years

3 to 4 years 6,290,510.45 6,225,736.84 4 to 5 years 4,389,457.11 4,493,019.25 More than 5 years 12,169,797.03 11,815,253.62 Total 778,140,395.60 744,805,441.00

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(2). Classified disclosure according to bad debt accrual method

√Applicable □Not applicable

Unit: Yuan Currency: RMB Closing balance Opening balance

Category Book balance Bad debt provision Book Book balance Bad debt provision

book value

Amount Proportion (%) Amount Provision proportion (%) Value Amount Proportion (%) Amount Provision proportion (%)

Provision for bad debts made individually 4,724,279.14 0.61 4,724,279.14 100.00 5,497,885.31 0.74 5,497,885.31 100.00 Of which:

Provision for bad debts on a group basis 773,416,116.46 99.39 60,851,180.70 7.87 712,564,935.76 739,307,555.69 99.26 57,976,021.59 7.84 681,331,534.10 of which:

Aging combination 773,416,116.46 99.39 60,851,180.70 7.87 712,564,935.76 739,307,555.69 99.26 57,976,021.59 7.84 681,331,534.10Total 778,140,395.60 100.00 65,575,459.84 8.43 712,564,935.76 744,805,441.00 100.00 63,473,906.90 8.52 681,331,534.10

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Provision for bad debts is made individually:

√Applicable □Not applicable

Unit: Yuan Currency: RMB Closing balance

Name Provision Ratio

Book balance Bad debt provision Reasons for provision

(%)

Nanjing Jilang Biotechnology Co., Ltd. 3,337,122.12 3,337,122.12 100.00 It is expected that it cannot be recovered. Others 1,387,157.02 1,387,157.02 100.00 It is expected that it cannot be recovered. Total 4,724,279.14 4,724,279.14 100.00

Instructions on accruing bad debt provisions individually:

□Applicable √Not applicable

Provision for bad debts by group:

√Applicable □Not applicable

Portfolio accrual items: aging portfolio

Unit: Yuan Currency: RMB Closing balance

Name

Book balance Bad debt provision Proportion of provision (%) Within 1 year (including 1 year) 693,575,691.45 34,678,784.58 5.00 1-2 years 33,674,390.92 3,367,439.09 10.00 2-3 years 27,684,811.58 8,305,443.47 30.00 3-4 years 6,249,127.95 3,124,563.98 50.00 4-5 years 4,285,724.89 3,428,579.91 80.00 More than 5 years 7,946,369.67 7,946,369.67 100.00 Total 773,416,116.46 60,851,180.70 7.87 Instructions on the provision of bad debt provisions by group:

□Applicable √Not applicable

Provision for bad debts based on the general expected credit loss model

□Applicable √Not applicable

Basis for division of each stage and provision ratio for bad debts

For details, see Section 8.5 13. Accounts receivable

Explanation of significant changes in the book balance of accounts receivable that have experienced changes in loss provisions during the current period:

□Applicable √Not applicable

(3). Bad debt provision situation

√Applicable □Not applicable

Unit: Yuan Currency: RMB Change amount in the current period

Category Opening balance Write-off or verification Ending balance accrual Recovery or reversal Other changes

pin

Provision based on individual items 5,497,885.31 773,606.17 4,724,279.14

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Provision for bad debts

Provision based on combination

57,976,021.59 2,875,159.11 60,851,180.70 Bad debt provision

Total 63,473,906.90 2,875,159.11 773,606.17 65,575,459.84 Among them, the amount of bad debt provision recovery or reversal in the current period is important:

□Applicable √Not applicable

Other notes:

Other changes are due to the increase in the scope of business consolidation in this period.

(4). Accounts receivable actually written off in the current period

□Applicable √Not applicable

Among them, the important write-off of accounts receivable

□Applicable √Not applicable

Instructions for writing off accounts receivable:

□Applicable √Not applicable

(5). Accounts receivable and contract assets of the top five closing balances collected by debtors

√Applicable □Not applicable

Unit: Yuan Currency: RMB Contract

Proportion of the closing balance of accounts receivable and contract receivables Assets Accounts receivable and contract bad debt provision Unit name at the end of the period Total asset closing balance at the end of the period (%)

balance

Chongqing Minzhijian Medicine Co., Ltd.

24,972,440.50 24,972,440.50 3.21 1,248,622.03 Co., Ltd.

Nanjing Zhengda Tianqing Pharmaceutical

18,407,700.00 18,407,700.00 2.37 920,385.00 Co., Ltd.

Shanghai Huanying Medical Equipment

15,980,017.91 15,980,017.91 2.05 799,000.90 Co., Ltd.

Shanghai Shanghai New Asia Pharmaceutical Co., Ltd.

15,904,000.00 15,904,000.00 2.04 795,200.00 Co., Ltd.

Xuzhou Central Hospital 15,685,834.01 15,685,834.01 2.02 1,460,392.88Total 90,949,992.42 90,949,992.42 11.69 5,223,600.81Other instructions:

None

Other notes:

√Applicable □Not applicable

For details on foreign currency accounts receivable at the end of the period, please refer to the explanation in this note "Notes to Items in Consolidated Financial Statements - Foreign Currency Monetary Items"

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6. Contract assets

(1).Contract assets

□Applicable √Not applicable

(2). Amount and reasons for significant changes in book value during the reporting period □Applicable √Not applicable

(3). Classified disclosure according to bad debt accrual method □Applicable √Not applicable

Provision for bad debts is made individually:

□Applicable √Not applicable

Explanation on the provision of bad debt provisions by individual items: □ Applicable √ Not applicable

Provision for bad debts by group:

□Applicable √Not applicable

Provision for bad debts based on the general expected credit loss model □ Applicable √ Not applicable

The basis for dividing each stage and the proportion of provision for bad debts are not available

Explanation of significant changes in the book balance of contract assets that have experienced changes in loss provisions in the current period: □ Applicable √ Not applicable

(4). Bad debt provisions for contract assets in the current period □ Applicable √ Not applicable

Among them, the amount of bad debt provision recovery or reversal in the current period is important: □ Applicable √ Not applicable

Other notes:

None

(5).Contract assets actually written off in the current period □Applicable √Not applicable

Among them, the important write-off of contract assets □ Applicable √ Not applicable

Instructions for write-off of contract assets:

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

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7. Accounts receivable financing

(1). Classified presentation of financing receivables

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Ending balance Beginning balance

Bank acceptance bills with higher credit ratings 57,416,813.81 47,524,506.97 Total 57,416,813.81 47,524,506.97 (2). Financing of receivables pledged by the company at the end of the period

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Project Amount pledged at the end of the period

Bank acceptance bill 4,997,600.40 Total 4,997,600.40 (3). Financing of receivables that the company has endorsed or discounted at the end of the period and has not yet matured on the balance sheet date

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Amount derecognized at the end of the period Amount not derecognized at the end of the period Bank acceptance bill 150,533,218.98

Total 150,533,218.98

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(4). Classified disclosure according to bad debt accrual method

√Applicable □Not applicable

Unit: Yuan Currency: RMB Closing balance Opening balance

Category Book balance Bad debt provision Book Book balance Bad debt provision Book

Amount Proportion (%) Amount Provision proportion (%) Value Amount Proportion (%) Amount Provision proportion (%) Value Provision for bad debts is made individually.

Among them:

Provision for bad debts on a group basis 57,416,813.81 100.00 57,416,813.81 47,524,506.97 100.00 47,524,506.97 Of which:

Bank acceptance bill 57,416,813.81 100.00 57,416,813.81 47,524,506.97 100.00 47,524,506.97Total 57,416,813.81 100.00 57,416,813.81 47,524,506.97 100.00 47,524,506.97

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Provision for bad debts is made individually:

□Applicable √Not applicable

Instructions on accruing bad debt provisions individually:

□Applicable √Not applicable

Provision for bad debts by group:

□Applicable √Not applicable

Provision for bad debts based on the general expected credit loss model

□Applicable √Not applicable

Basis for division of each stage and provision ratio for bad debts

None

Explanation of significant changes in the book balance of accounts receivable financing that have experienced changes in loss provisions in the current period: □ Applicable √ Not applicable

(5). Bad debt provisions

□Applicable √Not applicable

Among them, the amount of recovery or reversal of bad debt provisions for the current period is important:

□Applicable √Not applicable

Other notes:

None

(6). Financing of receivables actually written off in the current period

□Applicable √Not applicable

Important financing write-offs of receivables

□Applicable √Not applicable

Write-off instructions:

□Applicable √Not applicable

(7). Increases and decreases in receivables financing and changes in fair value during the current period:

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Accumulated other comprehensive income in the current period

Cumulative fair items Opening amount Cost Fair value Ending amount Opening cost Ending cost Recognized in profit

Loss due to change in value

Prepare bank commitment

47,524,506.97 57,416,813.81 47,524,506.97 57,416,813.81 Exchange of draft

(8).Other instructions

□Applicable √Not applicable

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8. Prepayment

(1). Prepayments are listed based on aging

√Applicable □Not applicable

Unit: Yuan Currency: RMB Closing balance Opening balance

Aging

Amount Proportion (%) Amount Proportion (%) Within 1 year 210,317,811.86 96.98 145,240,380.27 96.55 1 to 2 years 3,978,683.10 1.83 3,139,028.78 2.09 2 to 3 years 737,167.55 0.34 374,662.48 0.25 More than 3 years 1,830,146.41 0.84 1,667,878.71 1.11 Total 216,863,808.92 100 150,421,950.24 100.00 Explanation on the reasons why prepayments with an aging of more than 1 year and important amounts were not settled in time:

Prepayments aged more than one year are purchases that have not yet been settled.

(2). Prepayments of the top five closing balances by prepayment objects

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Unit name Closing balance Proportion of total closing balance of prepayments (%) Shanghai Jiaqi Biotechnology Suzhou Co., Ltd. 11,102,213.74 5.12 Hangzhou Huanxi Extreme Holding Group Co., Ltd. 5,000,000.00 2.31 Jiangsu Yingke Biopharmaceutical Co., Ltd. 4,320,000.00 1.99 Beijing Xinjun Chengyue Consulting Co., Ltd. 2,182,800.00 1.01 Nanning Jiangyang Technology Co., Ltd. 2,080,800.00 0.96 Total 24,685,813.74 11.39 Other notes:

None

Other notes:

√Applicable □Not applicable

No obvious signs of impairment were found in prepayments at the end of the period, so no impairment provision was made.

9. Other receivables

Item list

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Ending balance Beginning balance

interest receivable

Dividends receivable

Other receivables 41,846,198.68 43,426,042.71Total 41,846,198.68 43,426,042.71Other instructions:

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□Applicable √Not applicable

interest receivable

(1).Classification of interest receivable

□Applicable √Not applicable

(2).Important overdue interest

□Applicable √Not applicable

(3). Classified disclosure according to bad debt accrual method □Applicable √Not applicable

Provision for bad debts on an individual basis: □ Applicable √ Not applicable

Explanation on the provision of bad debt provisions by individual items: □ Applicable √ Not applicable

Provision for bad debts by combination: □ Applicable √ Not applicable

(4). Provision for bad debts based on the general expected credit loss model □Applicable √Not applicable

The basis for dividing each stage and the proportion of provision for bad debts are not available

Explanation of significant changes in the book balance of interest receivable due to changes in loss provisions in the current period: □ Applicable √ Not applicable

(5).Bad debt provision □Applicable √Not applicable

Among them, the amount of bad debt provision recovery or reversal in the current period is important: □ Applicable √ Not applicable

Other notes:

None

(6). Interest receivable actually written off in the current period □ Applicable √ Not applicable

Among them, the important write-off of interest receivable □ Applicable √ Not applicable

Write-off instructions:

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

Dividends receivable

(7). Dividends receivable

□Applicable √Not applicable

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(8). Important dividends receivable aged more than 1 year □ Applicable √ Not applicable

(9). Classified disclosure according to bad debt accrual method

□Applicable √Not applicable

Provision for bad debts is made individually:

□Applicable √Not applicable

Instructions on accruing bad debt provisions individually:

□Applicable √Not applicable

Provision for bad debts by group:

□Applicable √Not applicable

(10). Provision for bad debts based on the general expected credit loss model □Applicable √Not applicable

Basis for division of each stage and provision ratio for bad debts: None

Explanation of significant changes in the book balance of dividends receivable due to changes in loss provisions in the current period: □ Applicable √ Not applicable

(11).Bad debt provisions

□Applicable √Not applicable

Among them, the amount of bad debt provision recovery or reversal in the current period is important: □ Applicable √ Not applicable

Other notes:

None

(12). Dividends receivable actually written off in the current period □ Applicable √ Not applicable

Among them, the important write-off of dividends receivable

□Applicable √Not applicable

Write-off instructions:

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

Other receivables

(13). Disclosure based on aging

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Aging Book balance at the end of the period Book balance at the beginning of the period Within 1 year (including 1 year) 5,525,011.02 5,796,825.35 Subtotal within 1 year 5,525,011.02 5,796,825.35

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1 to 2 years 32,469,517.91 32,891,258.98 2 to 3 years 4,882,191.42 6,189,886.15 More than 3 years

3 to 4 years 3,632,400.60 3,672,019.95 4 to 5 years 63,167.00 97,454.32 More than 5 years 5,428,454.52 5,987,398.93 Total 52,000,742.47 54,634,843.68 (14). Classification by nature of payment

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Nature of payment Book balance at the end of the period Book balance at the beginning of the period

Demolition compensation 30,500,000.00 30,500,000.00 Reserve fund 10,863,548.24 11,161,935.20 Security deposit and deposit 4,830,147.91 7,564,968.19 Current accounts 5,807,046.32 5,407,940.29 Total 52,000,742.47 54,634,843.68 (15). Bad debt provision accrual

√Applicable □Not applicable

Unit: Yuan Currency: RMB Phase 1 Phase 2 Phase 3

Lifetime expectations letter Lifetime forecast letter

Bad debt provision Expected total credit losses in the next 12 months (credit losses that have not occurred (credit losses that have occurred)

loss

Use impairment) Use impairment)

Balance on January 1, 2026 289,841.26 8,568,959.71 2,350,000.00 11,208,800.97 Balance on January 1, 2026 in the current period

--Transfer to the second stage -93,913.95 93,913.95

--Transfer to the third stage

--Return to the second stage

--Return to the first stage

Provision in this period 80,323.24 -1,134,580.42 -1,054,257.18 Transferred in this period

Sales in this period

Write-off in this period

Other changes

Balance on June 30, 2026 276,250.55 7,528,293.24 2,350,000.00 10,154,543.79 Basis for division of each stage and proportion of provision for bad debts

For details, please refer to the description of "Impairment of Financial Instruments" in Section 8 "V. Significant Accounting Policies and Accounting Estimates - Financial Instruments". Explanation of significant changes in the book balance of other receivables that have experienced changes in loss provisions during the current period:

□Applicable √Not applicable

The amount of bad debt provision for the current period and the basis for assessing whether the credit risk of financial instruments has increased significantly:

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□Applicable √Not applicable

(16). Bad debt provisions

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Amount of changes in the current period

Category Opening balance Recovery or transfer Others Ending balance accrual Write-off or write-off

Return Changes are accrued as bad items individually

2,350,000.00 2,350,000.00 Account preparation

Bad provision based on combination

8,858,800.97 -1,054,257.18 7,804,543.79 Account preparation

Total 11,208,800.97 -1,054,257.18 10,154,543.79 Among them, the amount of bad debt provision reversed or recovered in the current period is important:

□Applicable √Not applicable

Other notes:

Other changes are due to the increase in the scope of business consolidation in this period.

Other receivables actually written off in the current period

□Applicable √Not applicable

Important write-offs of other receivables:

□Applicable √Not applicable

Instructions for writing off other receivables:

□Applicable √Not applicable

(17). Other receivables actually written off in the current period

□Applicable √Not applicable

Important write-offs of other receivables:

□Applicable √Not applicable

Instructions for writing off other receivables:

□Applicable √Not applicable

(18). Other receivables with top five closing balances based on debtors

√Applicable □Not applicable

Unit: Yuan Currency: RMB as a share of other receivables at the end of the period

Name of bad debt provision unit Closing balance Proportion of total balance Nature of payment Aging closing balance

(%)

Yangzhou City Economy and Information

30,500,000.00 58.65 Demolition compensation 1-2 years 0.00 Chemical Committee

Huixian City Jiaoding Mountain Tourism

2,350,000.00 4.52 Current accounts more than 5 years 2,350,000.00 Development Services Co., Ltd.

Xu Shu 1,779,000.00 3.42 Reserve fund Within 1 year 88,950.00

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Feng Chun 1,453,829.58 2.80 Reserve fund more than 5 years 1,453,829.58 Yan Guangshun 1,383,578.80 2.66 Current account 1-2 years 138,357.88 Total 37,466,408.38 72.05 4,031,137.46 (19). Presented in other receivables due to centralized management of funds

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

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10. Inventory

(1).Inventory classification

√Applicable □Not applicable

Unit: Yuan Currency: RMB Closing balance Opening balance

Items Provision for inventory depreciation/contract performance Provision for inventory depreciation/contract performance

Book balance Book value Book balance Book value

Provision for cost impairment Provision for cost impairment

Raw materials 163,332,436.57 392,901.08 162,939,535.49 140,765,512.95 403,727.93 140,361,785.02 Products in progress 62,422,643.60 62,422,643.60 72,934,535.86 72,934,535.86 Inventory goods 424,947,846.50 12,247,723.29 412,700,123.21 449,609,659.52 11,936,197.25 437,673,462.27 Turnover materials 10,194,100.65 10,194,100.65 8,705,029.23 8,705,029.23 Consumable biological assets 0.00

Contract performance cost 0.00

Entrusted processing materials 722,589.16 722,589.16 1,001,848.26 1,001,848.26 Total 661,619,616.48 12,640,624.37 648,978,992.11 673,016,585.82 12,339,925.18 660,676,660.64 (2). Data resources recognized as inventory

□Applicable √Not applicable

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(3). Provision for inventory depreciation and provision for impairment of contract performance costs

√Applicable □Not applicable

Unit: Yuan Currency: RMB Increase amount in the current period Decrease amount items in the current period Beginning balance Ending balance

Provision Other Transfer or resale Other raw materials 403,727.93 -10,826.85 392,901.08 Work in progress

Inventory goods 11,936,197.25 311,526.04 12,247,723.29 Turnover materials

consumable biological assets

Contract fulfillment costs

Total 12,339,925.18 300,699.19 12,640,624.37

Reasons for the reversal or write-off of inventory depreciation provisions in the current period

√Applicable □Not applicable

The specific basis for determining net realizable value is the reversal or write-off of inventory depreciation reserves and contract performance costs minus categories in the current period.

Reasons for value preparation

Estimated selling price less estimated selling expenses and related taxes

Inventory goods The amount after selling the inventory goods for which inventory depreciation provisions have been made in the current period

The estimated selling price of the inventory less the estimated amount of money that will be shipped upon completion

Raw materials Cost of production, estimated sales expenses and related taxes Amount after production and external sales

Provision for inventory decline in value on a group basis

□Applicable √Not applicable

Standards for accruing inventory depreciation provisions on a group basis

□Applicable √Not applicable

(4). The capitalized amount of borrowing costs included in the closing balance of inventory and its calculation standards and basis □Applicable √Not applicable

(5).Explanation of the amortization amount of contract performance costs for the current period

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

11. Assets held for sale

□Applicable √Not applicable

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12. Non-current assets due within one year

□Applicable √Not applicable

Debt investments due within one year

□Applicable √Not applicable

Other debt investments due within one year

□Applicable √Not applicable

Other instructions for non-current assets due within one year:

None

13. Other current assets

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Ending balance Beginning balance Contract acquisition cost

Returns receivable cost

Value-added tax credit 43,452,607.73 40,840,070.04 Prepaid corporate income tax 7,052,954.84 11,668,730.03 Prepaid expenses 31,806.02 19,715.60 Total 50,537,368.59 52,528,515.67Other instructions:

None

14. Debt investment

(1).Debt investment situation

□Applicable √Not applicable

Changes in provision for impairment of debt investments during the current period

□Applicable √Not applicable

(2). Important debt investments at the end of the period

□Applicable √Not applicable

(3).Provision of impairment provisions

□Applicable √Not applicable

Basis for dividing each stage and proportion of impairment provision:

None

Explanation of significant changes in the book balance of debt investments that have experienced changes in loss provisions in the current period: □ Applicable √ Not applicable

The amount of impairment provision for the current period and the basis for assessing whether the credit risk of financial instruments has significantly increased □Applicable √Not applicable

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(4). Actual write-off debt investments in the current period □ Applicable √ Not applicable

Among them, the write-off of important debt investments □Applicable √Not applicable

Instructions for writing off debt investments:

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

15. Other debt investments

(1). Other debt investments

□Applicable √Not applicable

Changes in impairment provisions for other debt investments during the period □ Applicable √ Not applicable

(2). Other important debt investments at the end of the period

□Applicable √Not applicable

(3).Provision of impairment provisions

□Applicable √Not applicable

Basis for division of each stage and proportion of impairment provision: None

Explanation of significant changes in the book balance of other debt investments that have experienced changes in loss provisions in the current period: □ Applicable √ Not applicable

The amount of impairment provision for the current period and the basis for assessing whether the credit risk of financial instruments has significantly increased □Applicable √Not applicable

(4). Other debt investments actually written off in the current period □ Applicable √ Not applicable

Among them, the write-off situation of other important debt investments □Applicable √Not applicable

Instructions for writing off other debt investments:

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

16. Long-term receivables

(1). Long-term receivables

□Applicable √Not applicable

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(2). Classified disclosure according to bad debt accrual method □Applicable √Not applicable

Provision for bad debts is made individually:

□Applicable √Not applicable

Explanation on the provision of bad debt provisions by individual items: □ Applicable √ Not applicable

Provision for bad debts by group:

□Applicable √Not applicable

(3). Provision for bad debts based on the general expected credit loss model □Applicable √Not applicable

The basis for dividing each stage and the proportion of provision for bad debts are not available

Explanation of significant changes in the book balance of long-term receivables that have experienced changes in loss provisions in the current period: □ Applicable √ Not applicable

The amount of bad debt provision for the current period and the basis for assessing whether the credit risk of financial instruments has significantly increased □Applicable √Not applicable

(4). Bad debt provisions

□Applicable √Not applicable

Among them, the amount of bad debt provision recovery or reversal in the current period is important: □ Applicable √ Not applicable

Other notes:

None

(5). Long-term receivables actually written off in the current period □ Applicable √ Not applicable

Among them, the important write-off of long-term receivables □ Applicable √ Not applicable

Instructions for writing off long-term receivables:

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

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17. Long-term equity investment

(1). Long-term equity investment situation

√Applicable □Not applicable

Unit: Yuan Currency: RMB Increase or decrease in the current period Impairment

Beginning balance (account Others Provision for announcement of distribution Ending balance (account Provision for investee) Decrease Recognized under the equity method Other comprehensive income Others

(face value) Additional investment in equity Cash dividends Impairment (face value) Adjustment of investment gains and losses at the end of the period Investment others

Change or Profit Reserve Balance

1. Joint ventures

UNIONCLE PHARMA LLC 3,742,951.12 5,574,166.43 -2,741,538.56 98,348.85 6,673,927.84 Subtotal 3,742,951.12 5,574,166.43 -2,741,538.56 98,348.85 6,673,927.84

2. Joint ventures

Yangzhou Yangda Lianhuan Pharmaceutical Gene Engineering Co., Ltd.

0.00 0.00 Co., Ltd.

Yangzhou Nenglian New Energy Co., Ltd. 2,268,141.80 58,319.66 2,326,461.46 Subtotal 2,268,141.80 58,319.66 2,326,461.46 Total 6,011,092.92 5,574,166.43 -2,683,218.90 98,348.85 9,000,389.30 (2). Impairment testing of long-term equity investments

□Applicable √Not applicable

Other notes:

No obvious signs of impairment were found in the long-term equity investment at the end of the period, so no impairment provision was made.

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18. Investment in other equity instruments

(1). Investment in other equity instruments

□Applicable √Not applicable

(2). Explanation of termination of recognition in this period

□Applicable √Not applicable

Other notes:

√Applicable □Not applicable

None

19. Other non-current financial assets

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

20. Investment real estate

Investment real estate measurement model

(1). Investment real estate using cost measurement model Unit: Yuan Currency: RMB

Projects Houses and buildings Land use rights Construction in progress Total

1. Original book value

1. Opening balance 7,445,381.73 251,818.74 7,697,200.47 2. Increase in the current period

(1) Outsourcing

(2) Inventory\fixed assets\under construction

Project transfer

(3) Increase in business mergers

3. Reduction amount in this period

(1) Disposal

(2) Other transfer-out

4. Closing balance 7,445,381.73 251,818.74 7,697,200.47

2. Accumulated depreciation and accumulated amortization

1. Opening balance 734,465.48 53,070.00 787,535.48 2. Increase in current period 78,819.20 2,591.01 81,410.21 (1) Provision or amortization 78,819.20 2,591.01 81,410.21 3. Reduction amount in this period

(1) Disposal

(2) Other transfer-out

4. Closing balance 813,284.68 55,661.01 868,945.69

3. Impairment provision

1. Opening balance

2. Increase amount in this period

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(1) Provision

3. Reduction amount in this period

(1) Disposal

(2) Other transfer-out

4. Ending balance

4. Book value

1. Book value at the end of the period 6,632,097.05 196,157.73 6,828,254.78 2. Book value at the beginning of the period 6,710,916.25 198,748.74 6,909,664.99 (2). Investment properties for which title certificates have not been obtained

□Applicable √Not applicable

(3). Impairment testing of investment real estate measured using the cost model

□Applicable √Not applicable

Other instructions

□Applicable √Not applicable

21. Fixed assets

Item list

√Applicable □Not applicable

Unit: Yuan Currency: RMB Item Closing balance Opening balance

Fixed assets 1,424,154,703.78 1,383,844,786.94 Liquidation of fixed assets

Total 1,424,154,703.78 1,383,844,786.94Other instructions:

□Applicable √Not applicable

fixed assets

(1). Fixed assets situation

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Houses and buildings Transportation Special equipment General equipment Total

1. Original book value:

1. Opening balance 813,260,999.00 14,372,055.63 603,819,175.94 283,589,736.69 1,715,041,967.26 2. Increase in the current period 68,040,742.64 461,225.25 9,752,895.82 8,733,889.52 86,988,753.23 (1) Purchase 66,455,932.85 196,915.94 7,457,730.26 1,402,400.27 75,512,979.32 (2) Construction in progress

1,584,809.79 264,309.31 2,295,165.56 7,331,489.25 11,475,773.91 Transfer in

(3) Business merger

increase

3. Reduction amount in the current period 0.00 22,442.57 0.00 116,746.89 139,189.46 (1) Disposal or reporting

0.00 22,442.57 0.00 116,746.89 139,189.46Waste

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(2) Transfer to under construction

Engineering

4. Closing balance 881,301,741.64 14,810,838.31 613,572,071.76 292,206,879.32 1,801,891,531.03

2. Accumulated depreciation

1. Opening balance 92,799,915.57 8,476,216.97 137,342,202.53 92,578,845.25 331,197,180.32 2. Increase in the current period 11,762,765.27 5,078,661.09 19,990,485.16 9,797,299.18 46,629,210.69 (1) Provision 11,762,765.27 5,078,661.09 19,990,485.16 9,797,299.18 46,629,210.69 (2) Business merger

increase

3. Reduction amount in the current period 0.00 18,291.12 0.00 71,272.64 89,563.76 (1) Disposal or reporting

18,291.12 71,272.64 89,563.76 Waste

(2) Transfer to under construction

Engineering

4. Closing balance 104,562,680.84 13,536,586.94 157,332,687.69 102,304,871.79 377,736,827.25

3. Impairment provision

1. Opening balance

2. Increase amount in this period

(1) Provision

3. Reduction amount in this period

(1) Dispose or report

waste

4. Ending balance

4. Book value

1. Book value at the end of the period 776,739,060.81 1,274,251.37 456,239,384.07 189,902,007.54 1,424,154,703.78 2. Book value at the beginning of the period 720,461,083.43 5,895,838.66 466,476,973.41 191,010,891.44 1,383,844,786.94

(2). Temporarily idle fixed assets

□Applicable √Not applicable

(3). Fixed assets leased through operating leases

√Applicable □Not applicable

Unit: Yuan Currency: RMB Item Ending book value

Houses and buildings 2,441,263.74 Total 2,441,263.74 (4). Fixed assets with uncompleted property rights certificates

√Applicable □Not applicable

Unit: Yuan Currency: RMB Item Book value Reasons for not completing the property ownership certificate Changle factory building 2,308,475.11 No relevant licenses were obtained during the construction process. Joint-stock factory building 1,658,106.72 Functional changes and planning acceptance have not been passed. Joint-stock factory building 456,220.49 Not yet declared

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Subtotal 4,422,802.32

(5). Impairment testing of fixed assets

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

Fixed asset liquidation

□Applicable √Not applicable

22. Projects under construction

Item list

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Closing balance Opening balance Construction in progress 113,365,626.41 84,084,852.00 Engineering materials 483,080.73 258,893.09 Total 113,848,707.14 84,343,745.09 Other notes:

□Applicable √Not applicable

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Construction in progress

(1).Construction in progress situation

√Applicable □Not applicable

Unit: Yuan Currency: RMB Closing balance Opening balance

Item Impairment Impairment

Book balance Book value Book balance Book value

prepare prepare

Newly built export preparation drugs and anti-tumor drug factories and production lines

51,670,898.01 51,670,898.01 25,962,139.61 25,962,139.61 projects

Hormone powder aerosol production line 17,878,625.01 17,878,625.01 16,102,713.72 16,102,713.72 Hormone semi-solid preparation workshop 10,139,971.55 10,139,971.55 8,934,227.74 8,934,227.74 Technical renovation of lidocaine hydrochloride gel line 0.00 0.00 8,609,624.07 8,609,624.07 Solid preparation hormone production line 10,647,676.04 10,647,676.04 7,789,408.31 7,789,408.31 Anqing API Factory 7,103,760.09 7,103,760.09 6,486,356.08 6,486,356.08 Intelligent transformation project of some positions in the third workshop 2,537,573.50 2,537,573.50 1,696,982.88 1,696,982.88 Phloroglucinol pilot scale-up technical improvement 0 0 1,368,280.31 1,368,280.31 Bilastine process technical improvement 0 0 1,233,560.22 1,233,560.22 Pengzhou biopharmaceutical R&D and manufacturing base project 4,326,251.39 4,326,251.39 834,182.16 834,182.16 Other sporadic projects 9,060,870.82 9,060,870.82 5,067,376.90 5,067,376.90Total 113,365,626.41 113,365,626.41 84,084,852.00 84,084,852.00 (2). Changes in important construction projects during the current period

√Applicable □Not applicable

Unit: Yuan Currency: RMB

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This period’s projects are exhausted

Engineering interest capital Including: Current period Interest capitalization at the beginning of the period This period is transferred to fixed Others End of period Calculated investment Name of capital project Budget number Increase amount in this period Progress Capital accumulation Interest capitalization Interest capital balance Asset amount Decrease Balance Account for budget Source (%) Calculated amount Amount Conversion rate (%)

Amount Ratio (%)

New export system

medicine, anti-swelling

250,000,000.00 25,962,139.61 25,708,758.40 51,670,898.01 20.67 23.00 Self-raised tumor drug factory and

Production line project

Anqing API

81,091,000.00 6,486,356.08 617,404.01 7,103,760.09 56.47 58.59 Self-financed factory

Total 331,091,000.00 32,448,495.69 26,326,162.41 58,774,658.10

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(3). Provision for impairment of projects under construction in the current period

□Applicable √Not applicable

(4) Impairment testing of projects under construction

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

Engineering supplies

√Applicable □Not applicable

Unit: Yuan Currency: RMB Closing balance Beginning balance items

Book balance Impairment provision Book value Book balance Impairment provision Book value Special equipment 482,298.74 482,298.74 258,111.10 258,111.10 Special materials 781.99 781.99 781.99 781.99

Total 483,080.73 483,080.73 258,893.09 258,893.09Other instructions:

No obvious signs of impairment of construction materials were found at the end of the period, so no impairment provision was made.

23. Productive biological assets

(1).Producing biological assets using cost measurement model

□Applicable √Not applicable

(2) Impairment testing of productive biological assets using the cost measurement model □ Applicable √ Not applicable

(3).Producer biological assets using fair value measurement model □Applicable √Not applicable

Other notes:

□Applicable √Not applicable

24. Oil and gas assets

(1). Oil and gas assets situation

□Applicable √Not applicable

(2). Impairment testing of oil and gas assets

□Applicable √Not applicable

Other notes:

None

25. Right-of-use assets

(1). Right-of-use assets

√Applicable □Not applicable

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Unit: Yuan Currency: RMB

Project Factory and House Rental Total

1. Original book value

1. Balance at the beginning of the period 10,050,081.20 10,050,081.20 2. Increase in the current period

Business mergers increase

3. Reduction amount in this period

4. Ending balance 10,050,081.20 10,050,081.20

2. Accumulated depreciation

1. Opening balance 3,441,565.18 3,441,565.18 2. Increase in current period 1,551,346.18 1,551,346.18 (1) Provision 1,551,346.18 1,551,346.18 (2) Increase due to business combination

2. Reduction amount in this period

(1) Disposal

4. Closing balance 4,992,911.36 4,992,911.36

3. Impairment provision

1. Opening balance

2. Increase amount in this period

(1) Provision

3. Reduction amount in this period

(1) Disposal

4. Ending balance

4. Book value

1. Book value at the end of the period 5,057,169.84 5,057,169.84 2. Book value at the beginning of the period 6,608,516.02 6,608,516.02

(2). Impairment testing of right-of-use assets

□Applicable √Not applicable

Other notes:

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26. Intangible assets

(1).Intangible assets

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Project Land use rights Non-patented technology Software Trademark Business license Total

1. Original book value

1. Opening balance 72,180,316.65 230,958,974.51 4,126,373.22 1,827,586.21 526,273.37 309,619,523.96 2. Increase in the current period 10,326,603.00 5,715,586.07 0.00 0.00 0.00 16,042,189.07 (1) Purchase 10,326,603.00 50,000.00 10,376,603.00 (2) Internal research and development 0.00 5,665,586.07 5,665,586.07 (3) Increase in business mergers

2. Reduction amount in this period

(1) Disposal

4. Ending balance 82,506,919.65 236,674,560.58 4,126,373.22 1,827,586.21 526,273.37 325,661,713.03

2. Accumulated amortization

1. Opening balance 12,257,165.45 62,314,602.53 1,757,000.14 1,827,586.21 290,357.73 78,446,712.06 2. Increase in the current period 1,113,112.49 9,658,835.33 417,003.21 0.00 54,442.08 11,243,393.11 (1) Provision 1,113,112.49 9,658,835.33 417,003.21 54,442.08 11,243,393.11 (2) Increase in business mergers

2. Reduction amount in this period

(1) Disposal

4. Closing balance 13,370,277.94 71,973,437.86 2,174,003.35 1,827,586.21 344,799.81 89,690,105.16

3. Impairment provision

1. Opening balance

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2. Increase amount in this period

(1) Provision

3. Reduction amount in this period

(1) Disposal

4. Ending balance

4. Book value

1. Book value at the end of the period 69,136,641.71 164,701,122.72 1,952,369.87 0.00 181,473.57 235,971,607.87 2. Book value at the beginning of the period 59,923,151.20 168,644,371.98 2,369,373.08 235,915.64 231,172,811.90 Intangible assets formed through the company’s internal research and development at the end of the period accounted for 25.89% of the balance of intangible assets

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(2). Data resources recognized as intangible assets

□Applicable √Not applicable

(3). Land use rights for which property rights certificates have not been obtained.

□Applicable √Not applicable

(4). Impairment testing of intangible assets

□Applicable √Not applicable

Other notes:

√Applicable □Not applicable

1． No obvious signs of impairment were found for intangible assets at the end of the period, so no impairment provision was made.

2. For details of intangible assets with restricted ownership or use rights such as mortgages, pledges, seizures, freezes, and seizures, please refer to the description of "Notes to Consolidated Financial Statement Items - Assets with Restricted Ownership or Use Rights" in this note.

3. Goodwill

(1).Original book value of goodwill

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Increase in this period Decrease in this period

The name of the invested unit or the matter that creates goodwill

Beginning balance Other ending balance Items formed by business combination

He sets him

Chengdu Yazhong Biopharmaceutical Co., Ltd. 21,071,947.29 21,071,947.29 Sichuan Longyi Pharmaceutical Co., Ltd. 29,360,807.44 29,360,807.44 Xinxiang Changle Pharmaceutical Co., Ltd. 12,071,757.49 12,071,757.49 Total 62,504,512.22 62,504,512.22

(2).Provision for impairment of goodwill

□Applicable √Not applicable

(3). Information related to the asset group or asset group combination where the goodwill is located

√Applicable □Not applicable

Whether it is consistent with the name of the previous year, the composition and basis of the asset group or portfolio it belongs to, and the maintenance and basis of the operating segment.

Accord Chengdu Yazhong Biopharmaceutical "Diosmin and Ergosterol" owned by Chengdu Yazhong Biopharmaceutical Co., Ltd.

The main cash inflow from the overall operation of a limited liability company "production line" is independent of other assets or asset groups.

Sichuan Longyi Pharmaceutical Co., Ltd.

The asset group refers to the long-term assets related to production and operation owned by the purchased party at the time of acquisition.

company

Xinxiang Changle Pharmaceutical Co., Ltd.

The asset group refers to the long-term assets related to production and operation owned by the purchased party at the time of acquisition.

limited liability company

Changes in asset group or asset group combination

□Applicable √Not applicable

Other notes:

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□Applicable √Not applicable

(4).Specific method for determining recoverable amount

The recoverable amount is determined based on the net amount after deducting disposal costs from fair value □Applicable √Not applicable

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The recoverable amount is determined based on the present value of expected future cash flows.

√Applicable □Not applicable

Unit: Yuan Currency: RMB Key parameters in the forecast period Key parameters in the stable period

Impairment Parameters in the forecast period Items of key parameters in the stable period Book value Recoverable amount Number of years in the forecast period Number (growth rate, profit rate (growth rate, profit rate,

Amount Determination basis Determination basis

Profit rate, etc.) Discount rate, etc.)

to the future of the valuation base date

The five-year main business revenue growth rate is based on historical operating data and Chengdu Yazhong Biotechnology

2026-2030 Revenue and related profits 0%; operating profit margin is Future operating forecast information, Pharmaceutical Co., Ltd. 22,281.17 23,231.00 Note 1

(The subsequent period is the stable period) Cost, expenses, and profits have been 18.59%; the pre-tax discount rate is based on the management's profit forecast.

predict the volatility of operations 13.43%

test

to the future of the valuation base date

The five-year main business revenue growth rate is 0% based on historical operating data and Sichuan Longyi Pharmaceutical 2026-2030 revenue and related costs; the net profit rate is future operating forecast data, 9,448.47 13,467.00 Note 2

Co., Ltd. (the subsequent period is the stable period). The capital, expenses and profits are 1.18%; the after-tax discount rate is predicted 10.06% based on the volatility of the management's profit pre-operation.

test

to the future of the valuation base date

The five-year main business income growth rate is based on historical operating data and Xinxiang Changle System

2026-2030 Revenue and related profits 0%; net profit rate is Future operating forecast information, Pharmaceutical Co., Ltd. 33,291.65 33,762.00 Note 3

(The subsequent period is the stable period) Cost, expenses, and profits have been 8.86%; the pre-tax discount rate is based on the management's profit forecast.

Predict the volatility of operations by 10.12%

test

Total 65,021.29 70,460.00

Note 1: The operating income growth rates of Chengdu Yazhong Biopharmaceutical Co., Ltd. are expected to be 5.42%, 12.22%, 3.31%, 6.77%, and 12.79% respectively from 2026 to 2030, and the average operating profit margin is approximately 16.57%.

Note 2: The operating income growth rate of Sichuan Longyi Pharmaceutical Co., Ltd. is expected to be 5.45%, 4.45%, 2.93%, 2.12%, and 0.90% respectively from 2026 to 2030, and the average net profit rate is approximately 1.28%.

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Jiangsu Lianhuan Pharmaceutical Co., Ltd. 2026 Semi-annual Report Note 3: The operating income growth rate of Xinxiang Changle Pharmaceutical Co., Ltd. is expected to be 10.58%, 15.96%, 16.34%, 16.79%, and 15.78% respectively from 2026 to 2030, with an average net profit rate of approximately 7.14%.

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Reasons for the obvious inconsistency between the aforementioned information and the information used in impairment testing in previous years or external information

□Applicable √Not applicable

Reasons for the discrepancy between the information used in the company's impairment testing in previous years and the actual situation of that year.

□Applicable √Not applicable

(5) Performance commitments and corresponding goodwill impairment

There is a performance commitment when goodwill is formed and the reporting period or the previous period of the reporting period is within the performance commitment period

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

28. Long-term deferred expenses

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Beginning balance Increase in the current period Amortization in the current period Other decreases Ending balance Decoration fee 1,611,679.35 419,171.38 409,561.03 1,621,289.70Service fee 1,097,252.25 134,357.46 962,894.79Diosiming comprehensive renovation project

229,764.22 229,763.88 0.34 Cheng

Total 2,938,695.82 419,171.38 773,682.37 2,584,184.83Other instructions:

None

29. Deferred income tax assets/deferred income tax liabilities

(1). Deferred income tax assets without offset

√Applicable □Not applicable

Unit: Yuan Currency: RMB Closing balance Opening balance

Items Deductible temporary differences Deferred income tax Deductible temporary differences Deferred income taxes

Different assets Different assets

Asset impairment provision 12,640,624.37 2,141,191.18 12,339,925.18 1,974,358.19 Unrealized profits from internal transactions 7,144,102.28 1,526,966.48 19,332,912.07 4,574,168.93 deductible losses

Provision for bad debts 75,730,003.63 14,755,031.99 74,682,707.87 14,037,359.52 Accrued expenses 759,876.13 113,981.42 759,876.13 113,981.42 Lease liabilities 5,759,333.92 896,152.36 6,688,986.64 1,040,842.44 Undeducted losses 139,922,549.11 21,443,194.61 144,744,980.44 22,400,635.75 Deferred income 13,975,878.97 2,148,239.85 12,239,146.32 1,893,491.95Total 255,932,368.41 43,024,757.89 270,788,534.65 46,034,838.20 (2). Deferred income tax liabilities without offset

√Applicable □Not applicable

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Unit: Yuan Currency: RMB Closing balance Opening balance

Item Taxable temporary difference Deferred income tax Taxable temporary difference Deferred income tax

Different liabilities Different liabilities Assets consolidated by enterprises not under common control

129,934,623.26 20,341,375.86 139,595,045.28 21,868,571.32 Appraisal value added

Changes in fair value of other debt investments

move

Fair value of other equity instrument investments

value change

Accelerated depreciation of fixed assets 20,468,115.97 3,070,217.40 21,558,076.27 3,233,711.44 Right-of-use assets 5,057,169.84 711,370.30 6,608,516.02 1,031,965.73Total 155,459,909.07 24,122,963.56 167,761,637.57 26,134,248.49 (3). Deferred income tax assets or liabilities presented on a net basis after offsetting

√Applicable □Not applicable

Unit: Yuan Currency: RMB Closing balance Opening balance

Item Deferred income tax assets Deferred income tax after offset Deferred income tax assets and Deferred income tax assets after offset

Amount offset against liabilities Balance of assets or liabilities Offset amount of liabilities Balance of assets or liabilities Deferred income tax assets 8,684,511.56 34,340,246.33 10,211,707.03 35,823,131.17 Deferred income tax liabilities 8,684,511.56 15,438,452.00 10,211,707.03 15,922,541.46 (4). Unrecognized details of deferred income tax assets

□Applicable √Not applicable

(5). Deductible losses that have not been recognized as deferred income tax assets will expire in the following years

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

30. Other non-current assets

√Applicable □Not applicable

Unit: Yuan Currency: RMB Closing balance Opening balance

Item Impairment Impairment

Book balance Book value Book balance Book value

prepare prepare

contract acquisition cost

Contract fulfillment costs

Returns receivable cost

contract assets

Prepaid project payment 26,682,476.89 26,682,476.89 42,576,119.60 42,576,119.60 Total 26,682,476.89 26,682,476.89 42,576,119.60 42,576,119.60

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Other notes on the 2026 semi-annual report of Jiangsu Lianhuan Pharmaceutical Co., Ltd.:

None

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31. Assets with restricted ownership or use rights

√Applicable □Not applicable

Unit: Yuan Currency: RMB End of Period Beginning of Period

Project

Book balance Book value Restricted type Restricted situation Book balance Book value Restricted type Restricted situation Monetary funds 42,073,695.68 42,073,695.68 Others Margin 51,781,988.74 51,781,988.74 Others Margin monetary funds 22,029,148.00 22,029,148.00 Others Frozen in litigation 6,906,925.94 6,906,925.94 Others Monetary funds frozen in litigation 12,053,440.06 12,053,440.06 Frozen Restricted use

Endorsement or discount of undue undue bills Other Endorsement or discount of undue undue bills 78,504.04 78,504.04 Others 1,028,107.79 1,028,107.79

Can be derecognized Financing with derecognized receivables 4,997,600.40 4,997,600.40 Pledge Issuance of bank acceptance bill 2,131,414.49 2,131,414.49 Pledge Issuance of bank acceptance bill inventory

Among them: data resources

Mortgage

Fixed assets 114,369,560.77 110,580,520.50 Mortgage Mortgage of borrowings 114,369,560.77 111,724,216.10 Mortgage of borrowings

Fixed assets 21,315,258.46 15,749,874.41 Mortgage Sale and leaseback mortgage Intangible assets 10,627,960.59 8,648,962.84 Mortgage Mortgage of borrowing 10,627,960.59 8,914,661.86 Mortgage Mortgage of borrowing Including: data resources

Total 194,176,469.48 188,408,431.46 220,214,656.84 210,290,629.39

Other notes:

None

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32. Short-term borrowing

(1).Classification of short-term loans

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Ending balance Beginning balance Pledge loan

mortgage loan

Guaranteed loans 84,054,082.19 83,467,728.01 Credit loans 921,040,540.16 865,064,798.52 Guaranteed + pledged loans 10,057,963.31 Total 1,005,094,622.35 958,590,489.84 Description of short-term loan classification:

None

(2). Overdue short-term borrowings that have not been repaid

□Applicable √Not applicable

Among them, the important overdue short-term borrowings that have not been repaid are as follows:

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

33. Trading financial liabilities

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

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34. Derivative financial liabilities

□Applicable √Not applicable

35. Notes payable

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Category Ending balance Beginning balance

commercial acceptance bill

Bank acceptance bill 147,360,077.44 161,491,959.13 Total 147,360,077.44 161,491,959.13

The total amount of due and unpaid bills payable at the end of this period is 0 yuan. The reason for not paying when due is none

36. Accounts payable

(1). Presentation of accounts payable

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Ending balance Beginning balance

Within 1 year 368,463,008.46 348,834,733.24 1-2 years 19,738,082.02 26,782,816.99 2-3 years 7,498,457.84 6,377,315.65 More than 3 years 29,481,786.07 27,465,833.59 Total 425,181,334.39 409,460,699.47

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(2). Important accounts payable that are aged more than 1 year or are overdue

√Applicable □Not applicable

Unit: Yuan Currency: RMB items Closing balance Reasons for outstanding repayment or carry-forward Unit one 8,000,000.00 Unsettled unit two 7,038,958.68 Total unsettled 15,038,958.68 Other notes:

□Applicable √Not applicable

37. Advance payments

(1). Presentation of advance receipts

□Applicable √Not applicable

(2).Important advance receipts aged more than 1 year

□Applicable √Not applicable

(3). The amount and reasons for significant changes in book value during the reporting period

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

38. Contract liabilities

(1).Contract liabilities

√Applicable □Not applicable

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Unit: Yuan Currency: RMB

Item Ending balance Beginning balance

Advance payment 26,745,669.60 56,735,186.85 Total 26,745,669.60 56,735,186.85

(2).Important contract liabilities with an aging of more than 1 year

□Applicable √Not applicable

(3). The amount and reasons for significant changes in book value during the reporting period

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

39. Employee compensation payable

(1). Presentation of employee benefits payable

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Opening balance Increase in the current period Decrease in the current period Ending balance

1. Short-term compensation 30,641,838.16 108,449,007.09 123,190,780.74 15,900,064.51

2. Post-employment benefits - defined contribution plan 7,385.40 13,491,221.22 13,496,324.44 2,282.18

3. Dismissal benefits

4. Other benefits expiring within one year

Total 30,649,223.56 121,940,228.31 136,687,105.18 15,902,346.69

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(2). Presentation of short-term remuneration

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Opening balance Increase in the current period Decrease in the current period Ending balance

1. Salaries, bonuses, allowances and subsidies 29,830,559.99 82,328,387.42 96,929,387.54 15,229,559.87

2. Employee welfare fees 44,288.00 10,514,858.18 10,559,146.18

3. Social insurance premiums 4,171.62 7,888,750.43 7,881,365.03 11,557.02 Including: medical insurance premiums 4,028.40 7,276,346.46 7,268,817.84 11,557.02 Work-related injury insurance premiums 143.22 578,630.12 578,773.34

Maternity insurance premium 33,773.85 33,773.85

4. Housing provident fund 5,952,897.80 5,951,367.80 1,530.00

5. Trade union funds and employee education funds 762,818.55 1,764,113.26 1,869,514.19 657,417.62

6. Short-term paid absences

7. Short-term profit sharing plan

Total 30,641,838.16 108,449,007.09 123,190,780.74 15,900,064.51

(3). Display of defined contribution plan

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Opening balance Increase in the current period Decrease in the current period Ending balance

1. Basic pension insurance 7,161.60 12,967,359.06 12,972,238.48 2,282.18

2. Unemployment insurance premium 223.80 523,862.16 524,085.96

3. Enterprise annuity payment 0.00

Total 7,385.40 13,491,221.22 13,496,324.44 2,282.18Other instructions:

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Jiangsu Lihuan Pharmaceutical Co., Ltd. 2026 Semi-Annual Report

□Applicable √Not applicable

40. Taxes payable

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Ending balance Beginning balance

Value-added tax 2,750,668.28 4,955,343.46 Consumption tax

business tax

Corporate income tax 2,439,990.87 7,326,430.66 Personal income tax 10,063,693.09 12,239,433.05 Urban maintenance and construction tax 281,099.40 473,604.72 Real estate tax 1,679,604.31 1,677,263.62 Education fee surcharge 135,664.48 365,169.03 Stamp tax 263,867.89 216,007.70 Land use tax 186,053.83 138,825.63 Others 7,846.63 184,760.98 Total 17,808,488.78 27,576,838.85Other instructions:

None

41. Other payables

(1).Project list

√Applicable □Not applicable

Unit: Yuan Currency: RMB Item Closing balance Opening balance

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Jiangsu Lihuan Pharmaceutical Co., Ltd. 2026 Semi-Annual Report

interest payable

Dividends payable 20,098,338.90 6,748,577.51 Other payables 161,487,206.56 135,029,539.66 Total 181,585,545.46 141,778,117.17 Other notes:

□Applicable √Not applicable

(2).Interest payable

Classification list

□Applicable √Not applicable

Important overdue interest payable:

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

(3). Dividends payable

Classification list

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Closing balance Opening balance Ordinary stock dividends 20,098,338.90 116,400.00 Preferred stock\perpetual bond dividends classified as equity instruments

Dividends payable to minority shareholders of subsidiaries 6,632,177.51 Total 20,098,338.90 6,748,577.51 Other instructions, including important dividends payable that have not been paid for more than one year, the reasons for non-payment should be disclosed:

None

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(4).Other payables

Present other payables according to nature of payment

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Ending balance Beginning balance

Deposit and security deposit 66,961,194.38 71,592,693.47 Current accounts 51,869,097.54 22,630,719.17 Sales expenses payable, etc. 23,892,093.26 22,155,793.81 Equity investment 18,326,000.00 18,326,000.00 Others 438,821.38 324,333.21 Total 161,487,206.56 135,029,539.66

Important other payables aged more than 1 year or overdue

√Applicable □Not applicable

Unit: Yuan Currency: RMB Item Closing balance Reason for outstanding or carry-forward

Unit 1 11,982,100.00 Deposit security deposit

Unit 2 7,440,000.00 Sewage discharge fee and comprehensive service fee

Total 19,422,100.00

Other notes:

□Applicable √Not applicable

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42. Liabilities held for sale

□Applicable √Not applicable

43. Non-current liabilities due within one year

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Ending balance Beginning balance

Long-term borrowings due within 1 year 348,484,356.33 229,328,670.30 Bonds payable due within 1 year

Long-term payables due within 1 year 3,429,681.95 Lease liabilities due within 1 year 1,429,295.09 1,511,039.44Total 349,913,651.42 234,269,391.69Other notes:

None

44. Other current liabilities

Other current liabilities

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Ending balance Beginning balance

short term bonds payable

Return payment payable

Output tax to be reversed 3,297,907.23 6,212,774.69 Acceptance bill not terminated 78,504.04 1,107,894.92 Withholding expenses 759,876.13 760,581.25 Total 4,136,287.40 8,081,250.86

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Changes in short-term bonds payable:

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

45. Long-term borrowing

(1). Classification of long-term loans

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Ending balance Beginning balance Pledge loan

Mortgage loans 21,656,250.00 16,131,250.00 Guaranteed loans 20,000,000.00 47,000,000.00 Credit loans 309,510,458.20 291,958,497.73 Total 351,166,708.20 355,089,747.73 Description of long-term loan classification:

None

Other notes:

□Applicable √Not applicable

46. Bonds payable

(1).Bonds payable

□Applicable √Not applicable

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(2). Details of bonds payable: (excluding preference shares, perpetual bonds and other financial instruments classified as financial liabilities) □ Applicable √ Not applicable

(3).Description of convertible corporate bonds

□Applicable √Not applicable

Accounting treatment and judgment basis for equity transfer

□Applicable √Not applicable

(4). Description of other financial instruments classified as financial liabilities

Basic information on preferred shares, perpetual bonds and other financial instruments outstanding at the end of the period

□Applicable √Not applicable

Statement of changes in outstanding preferred stocks, perpetual bonds and other financial instruments at the end of the period

□Applicable √Not applicable

Explanation of the basis for classifying other financial instruments as financial liabilities

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

47. Lease liabilities

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Closing balance Opening balance 1-2 years 994,338.37 1,340,269.55 2-3 years 1,053,006.53 1,021,915.61 3-4 years 1,097,552.36 1,076,540.27 4-5 years 493,756.31 859,475.07

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More than 5 years 691,385.26 879,746.70Total 4,330,038.83 5,177,947.20Other instructions:

None

48. Long-term payables

Item list

□Applicable √Not applicable

long-term payables

□Applicable √Not applicable

Special payables

□Applicable √Not applicable

49. Long-term employee benefits payable

□Applicable √Not applicable

50. Estimated liabilities

□Applicable √Not applicable

51. Deferred income

Deferred income

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Beginning balance Increase in the current period Decrease in the current period Ending balance Causes Government subsidies 12,239,146.32 2,900,000.00 1,163,267.35 13,975,878.97 Total 12,239,146.32 2,900,000.00 1,163,267.35 13,975,878.97

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Other notes:

√Applicable □Not applicable

For details of government subsidies included in deferred income, please refer to the explanation of "Government Subsidies" in this note.

52. Other non-current liabilities

□Applicable √Not applicable

53. Share capital

√Applicable □Not applicable

Unit: Yuan Currency: RMB Increase or decrease due to this change (+, -) Beginning balance Ending balance

Issuance of new shares Bonus shares Conversion of reserve funds Others Subtotal total number of shares 285,456,270.00 285,456,270.00 Other notes:

None

54. Other equity instruments

(1).Basic information on preferred shares, perpetual bonds and other financial instruments outstanding at the end of the period

□Applicable √Not applicable

(2). Statement of changes in outstanding preferred stocks, perpetual bonds and other financial instruments at the end of the period

□Applicable √Not applicable

Changes in other equity instruments during the current period, explanations of reasons for changes, and the basis for relevant accounting treatments: □ Applicable √ Not applicable

Other notes:

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□Applicable √Not applicable

55. Capital reserve

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Opening balance Increase in the current period Decrease in the current period Ending balance Capital premium (equity premium) 257,261,627.72 257,261,627.72 Other capital reserves 2,680,000.00 2,680,000.00 Total 259,941,627.72 259,941,627.72 Other explanations, including changes in increases and decreases in the current period and explanation of reasons for changes:

None

56. Treasury stocks

□Applicable √Not applicable

57. Other comprehensive income

√Applicable □Not applicable

Unit: Yuan Currency: RMB Amount incurred in the current period

Beginning of the period Less: Included in the previous period Less: Included in the previous period Less: All after-tax items attributed to the current period Income tax After-tax attributable to the ending balance Balance of other comprehensive income Other comprehensive income for the current period Taxes and expenses belong to the amount previously incurred Parent company

Transferred to profit and loss for the current period Transferred to retained earnings Used by shareholders

1. Other comprehensive income that cannot be reclassified into profit or loss

Including: remeasurement of changes in defined benefit plan

Other comprehensive income that cannot be transferred to profit or loss under the equity method

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Changes in fair value of other equity instrument investments

Changes in the fair value of the company's own credit risk

2. Other comprehensive income that will be reclassified into profit and loss -240,983.56 98,348.85 98,348.85 -142,634.71 Among them: other comprehensive income that can be converted into profit and loss under the equity method -240,983.56 98,348.85 98,348.85 -142,634.71 Changes in fair value of other debt investments

The amount of financial assets reclassified and included in other comprehensive income

Credit impairment provisions for other debt investments

Cash flow hedging reserve

Translation differences of foreign currency financial statements

Total other comprehensive income -240,983.56 98,348.85 98,348.85 -142,634.71

Other explanations, including adjustments to the initial recognition amount of the effective portion of cash flow hedging gains and losses converted into hedged items: None

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58. Special reserves

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Opening balance Increase in the current period Decrease in the current period Ending balance Safety production fee 620,315.31 620,315.31

Total 620,315.31 620,315.31

Other explanations, including changes in increases and decreases in the current period and explanations of reasons for changes:

None

59. Surplus reserve

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Opening balance Increase in the current period Decrease in the current period Ending balance Statutory surplus reserve 105,138,986.50 105,138,986.50 Discretionary surplus reserve

reserve fund

Enterprise Development Fund

Others

Total 105,138,986.50 105,138,986.50 Description of surplus reserve, including changes in increases and decreases in the current period and explanation of reasons for changes:

None

60. Undistributed profits

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Current period Undistributed profits at the end of the previous period before adjustments in the previous period 621,450,992.10 745,189,048.54 Total undistributed profits at the beginning of the period adjusted (increase +, decrease -)

Undistributed profit at the beginning of the adjusted period 621,450,992.10 745,189,048.54 Plus: Net profit attributable to owners of the parent company for the period 10,521,803.08 -98,332,448.41 Less: Appropriation of statutory surplus reserve

Withdraw discretionary surplus reserve

Withdraw general risk reserve

Dividends payable on ordinary shares 19,981,938.90 25,405,608.03

Dividends on common shares converted into equity capital

Undistributed profits at the end of the period 611,990,856.28 621,450,992.10 Adjustment details of undistributed profits at the beginning of the period:

1. Due to the retrospective adjustment of the Accounting Standards for Business Enterprises and its related new regulations, the undistributed profit at the beginning of the period was affected by RMB 0.

2. Due to changes in accounting policies, the undistributed profit at the beginning of the period was affected by RMB 0.

3. Due to the correction of major accounting errors, the undistributed profit at the beginning of the period was affected by RMB 0.

4. The change in the scope of consolidation due to the same control affects the undistributed profit at the beginning of the period of 0 yuan.

5. The total impact of other adjustments on the undistributed profit at the beginning of the period is 0 yuan.

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61. Operating income and operating costs

(1). Operating income and operating costs

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Amount for the current period Amount for the previous period

Project

revenue cost revenue cost

Main business 1,559,971,296.09 1,112,850,774.82 1,279,952,521.97 784,382,008.12 Other businesses 10,842,873.98 7,544,827.54 5,389,825.01 2,231,726.30 Total 1,570,814,170.07 1,120,395,602.36 1,285,342,346.98 786,613,734.42

(2). Decomposition information of operating income and operating costs

√Applicable □Not applicable

Unit: Yuan Currency: RMB Total

Contract classification

Operating income Operating costs

Product type

Drugs 1,159,846,084.81 747,590,910.95 Medical devices 339,218,746.66 314,001,016.75 Others 71,749,338.60 58,803,674.67 Total 1,570,814,170.07 1,120,395,602.36 Classified by business area

Domestic sales 1,551,837,671.33 1,098,565,180.85 Overseas sales 18,976,498.74 21,830,421.51

Total 1,570,814,170.07 1,120,395,602.36

Other notes:

□Applicable √Not applicable

(3).Description of performance obligations

□Applicable √Not applicable

(4). Description of apportionment to remaining performance obligations

□Applicable √Not applicable

(5).Major contract changes or major transaction price adjustments

□Applicable √Not applicable

Other notes:

None

62. Taxes and surcharges

√Applicable □Not applicable

Unit: Yuan Currency: RMB

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Item Amount for the current period Amount for the previous period

consumption tax

business tax

Urban maintenance and construction tax 3,555,101.97 3,656,841.59 Education surcharge 2,749,549.48 2,781,884.30 Resource tax 32,740.77 7,836.18 Property tax 2,707,563.93 2,305,428.02 Land use tax 782,100.71 708,620.08 Vehicle and vessel use tax

Stamp duty 1,021,730.12 735,774.18 Others 18,578.87 14,319.27 Total 10,867,365.85 10,210,703.62 Other notes:

For details on calculation and payment standards, please refer to the explanation of "Taxes" in this note.

63. Sales expenses

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Amount for the current period Amount for the previous period

Employee compensation 15,283,243.42 3,700,252.15 Travel expenses 1,204,763.85 2,035,102.90 Market development expenses 204,111,559.98 254,803,432.96 Others 2,998,842.79 2,610,997.32Total 223,598,410.04 263,149,785.33Other instructions:

None

64. Management expenses

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Amount for the current period Amount for the previous period

Employee compensation 58,506,941.93 51,523,428.40 Office communication expenses 5,546,576.28 2,954,102.07 Material consumption 3,737,611.35 2,436,528.37 Transportation and travel expenses 1,904,825.66 1,102,138.90 Leasing and property fees 1,057,913.90 1,075,042.25 Business entertainment fees 1,292,301.72 829,492.83 Consulting fees 1,025,063.18 764,479.98 Depreciation and amortization 28,860,173.01 19,889,898.36 Inventory profit or loss 23,993.71 47,620.57 Share-based payment 0.00 Other expenses 10,302,078.42 6,160,701.77 Total 112,257,479.16 86,783,433.50 Other instructions:

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None

65. Research and development expenses

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Amount for the current period Amount for the previous period

Employee compensation 11,930,892.10 15,035,632.94 Material consumption 12,547,636.63 11,702,705.56 Depreciation and amortization 2,364,500.78 2,206,573.82 Technical service fee 33,230,517.06 35,463,180.10 Other expenses 2,879,102.11 4,015,840.64 Total 62,952,648.68 68,423,933.06 Other instructions:

None

66. Financial expenses

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Amount for the current period Amount for the previous period

Interest expense 18,254,517.11 15,745,617.35 Less: Interest income 411,133.86 357,718.55 Exchange loss 779,011.02 -475,249.98 Financial institution fees 192,985.48 186,216.40Total 18,815,379.75 15,098,865.22Other instructions:

For details of government subsidies included in financial expenses during the current period, please refer to the explanation of "Government Subsidies" in this note.

67. Other income

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Classification by nature Amount incurred in the current period Amount incurred in the previous period

Government subsidies 7,464,257.25 3,994,647.70 Personal income tax refund 181,131.81 37,253.18 Total 7,645,389.06 4,031,900.88 Other notes:

None

68. Investment income

√Applicable □Not applicable

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Unit: Yuan Currency: RMB

Item Amount incurred in the current period Amount incurred in the previous period Income from long-term equity investments accounted for using the equity method -2,683,218.90 -1,491,479.24 Investment income generated from disposal of long-term equity investments

Investment income from trading financial assets during the holding period

Dividends received from other equity instrument investments during the holding period

income

Interest income earned from debt investments during the holding period

Interest income earned from other debt investments during the holding period

Investment income from disposal of trading financial assets

Investment income from disposal of other equity instrument investments

Investment income from disposal of debt investments

Investment income from disposal of other debt investments

Debt restructuring proceeds

Bill discount interest -452,132.77 -800,711.03Total -3,135,351.67 -2,292,190.27Other notes:

None

69. Net exposure hedging income

□Applicable √Not applicable

70. Income from changes in fair value

□Applicable √Not applicable

71. Credit impairment losses

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Amount incurred in the current period Amount incurred in the previous period Bad debt losses on notes receivable

Bad debt losses on accounts receivable -2,101,552.94 -2,418,616.03 Bad debt losses on other receivables 1,054,257.18 -208,245.57 Impairment losses on debt investments

Impairment losses on other debt investments

Bad debt losses on long-term receivables

Impairment losses related to financial guarantees

Impairment losses on contract assets

Total -1,047,295.76 -2,626,861.60Other instructions:

None

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72. Asset impairment losses

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Amount for the current period Amount for the previous period

1. Impairment losses on contract assets

2. Inventory depreciation losses and contract performance cost impairment losses -300,699.19 -927,206.48

3. Impairment losses on long-term equity investments

4. Impairment losses on investment real estate

5. Impairment losses on fixed assets

6. Impairment losses of engineering materials

7. Impairment losses on projects under construction

8. Impairment losses on productive biological assets

9. Impairment losses on oil and gas assets

10. Impairment losses on intangible assets

11. Goodwill impairment losses

12. Others

Total -300,699.19 -927,206.48Other instructions:

None

73. Income from asset disposal

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Items Amounts incurred in the current period Gains recognized when disposing of amounts incurred in the previous period that are not classified as non-current assets held for sale 32,137.12 Including: fixed assets 32,137.12Right-of-use assets

Total 32,137.12

Other notes:

None

74. Non-operating income

Non-operating income

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Amount incurred in the current period Amount incurred in the previous period Amount included in non-recurring gains and losses for the current period Total gains from disposal of non-current assets 15,000.00 5,723.89 Including: gains from disposal of fixed assets 15,000.00 5,723.89

Gains from disposal of intangible assets

Debt restructuring gains

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Gains from exchange of non-monetary assets

Donations accepted

government subsidies

Income from fines and compensation 286.02 50,000.00 Accounts payable that do not need to be paid 214,715.55 259,262.00 Others 5,767.24 Total 230,001.57 320,753.13

Other notes:

□Applicable √Not applicable

75. Non-operating expenses

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Amount incurred in the current period Amount incurred in the previous period Amount included in non-recurring gains and losses for the current period Total losses on disposal of non-current assets 15,194.73 21,815.28 Among them: losses on disposal of fixed assets 15,194.73 21,815.28

Loss on disposal of intangible assets

Debt restructuring losses

Non-monetary asset exchange losses

External donation 31,200.00

Late payment fees and fines 2,855,240.43 61,038,247.84 Others 45,416.77 14,042.27 Total 2,947,051.93 61,074,105.39 Other notes:

None

76. Income tax expenses

(1). Income tax expense schedule

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Amount incurred in the current period Amount incurred in the previous period Current income tax expense 6,649,313.35 24,134,704.51 Deferred income tax expense 998,795.37 717,074.63 Total 7,648,108.72 24,851,779.14

(2).Accounting profit and income tax expense adjustment process

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Total profit for the current period 22,404,413.43

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Income tax expenses calculated based on statutory/applicable tax rates 3,360,662.02 The impact of different tax rates applicable to subsidiaries 1,749,815.92 The impact of adjusting income tax in previous periods 4,373,423.77 The impact of non-taxable income

The impact of non-deductible costs, expenses and losses 713,810.11 The impact of using deductible losses that have not been recognized as deferred income tax assets in the previous period

ring

No deductible temporary differences are recognized for deferred income tax assets in the current period or

The impact of deductible losses

Impact of super deduction -2,549,603.09 Impact of small low-profit enterprises and tax incentives

Impact of tax rate changes on income tax expenses and others 7,648,108.72

Other notes:

□Applicable √Not applicable

77. Other comprehensive income

√Applicable □Not applicable

For details of other comprehensive income, please refer to the description of "Notes to Consolidated Financial Statement Items - Other Comprehensive Income" in this note.

78. Cash flow statement items

(1). Cash related to operating activities

Other cash received related to operating activities

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Amount for the current period Amount for the previous period

Interest income received 411,133.86 351,738.21 Government subsidies and deferred income received 5,814,092.12 2,249,287.72 Other temporary receipts and temporary payments received 8,507.44 77,707.85 Various types of guarantee deposits, deposits, reserve funds, etc. received 19,781,242.10 17,359,457.71 Total 26,014,975.52 20,038,191.49 Description of other cash received related to operating activities:

None

Other cash paid related to operating activities

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Amount for the current period Amount for the previous period

Directly paid period expenses 316,897,998.26 415,213,860.90 Non-operating expenses 2,886,440.43 61,051,886.06 Current accounts paid, deposits, reserves, etc. 9,894,669.66 7,220,639.76 Total 329,679,108.35 483,486,386.72

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Description of other cash paid related to operating activities:

None

(2).Cash related to investing activities

Cash received in connection with significant investing activities

□Applicable √Not applicable

Cash payments related to significant investment activities

√Applicable □Not applicable

Unit: Yuan Currency: RMB project Amount for the current period Amount for the previous period Payment for mergers and acquisitions investment 73,495,298.11 Total 73,495,298.11 Notes on cash paid for important investment activities

None

Other cash received related to investing activities

□Applicable √Not applicable

Other cash paid related to investing activities

□Applicable √Not applicable

(3).Cash related to financing activities

Other cash received related to financing activities

√Applicable □Not applicable

Unit: Yuan Currency: RMB items Amount for the current period Amount for the previous period Current accounts 50,000,000.00 15,000,000.00 Total 50,000,000.00 15,000,000.00 Description of other cash received related to financing activities:

None

Other cash payments related to financing activities

√Applicable □Not applicable

Unit: Yuan Currency: RMB items Amount incurred in the current period Amount incurred in the previous period Current accounts 32,429,681.95 57,588,342.81 Repayment of principal and interest on lease liabilities under the new lease standards

868,649.01 579,296.20 Cash paid

Total 33,298,330.96 58,167,639.01 Description of other cash paid related to financing activities:

None

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Changes in various liabilities arising from financing activities

√Applicable □Not applicable

Unit: Yuan Currency: RMB Increase in this period Decrease in this period

Item Beginning balance Closing balance

Cash changes Non-cash changes Cash changes Non-cash changes

Short-term borrowings 958,590,489.84 651,994,308.62 10,501,422.79 615,991,598.90 1,005,094,622.35 Long-term borrowings and long-term borrowings due within one year 584,418,418.03 116,870,151.85 7,554,182.15 9,191,687.49 699,651,064.54 Lease liabilities and lease liabilities due within one year 6,688,986.64 132,727.01 1,062,379.73 5,759,333.92 Long-term payables and long-term payables due within one year 3,429,681.95 3,429,681.95 0.00 Dividends payable 6,748,577.51 28,110,752.87 14,760,991.48 20,098,338.90 Other payables 20,086,904.10 50,000,000.00 721,863.02 29,000,000.00 41,808,767.12Total 1,579,963,058.07 818,864,460.47 47,020,947.84 673,436,339.55 0.00 1,772,412,126.83

(4).Explanation on presenting cash flow in net amount

□Applicable √Not applicable

(5). Major activities and financial impacts that do not involve current cash receipts and payments, but affect the company's financial status or may affect the company's cash flow in the future.

□Applicable √Not applicable

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79. Supplementary information for cash flow statement

(1). Supplementary information for cash flow statement

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Supplementary information Amount for the current period Amount for the previous period 1. Reconcile net profit to cash flow from operating activities:

Net profit 14,756,304.71 -32,357,597.04 plus: asset impairment provision 300,699.19 927,206.48 Credit impairment loss 1,047,295.76 2,626,861.60 Fixed asset depreciation, investment real estate depreciation 46,710,620.90 31,302,262.03 Amortization of right-of-use assets 1,551,346.18 660,652.60 Amortization of intangible assets 11,243,393.10 10,096,922.66 Amortization of long-term prepaid expenses 773,682.37 934,054.43 Losses on disposal of fixed assets, intangible assets and other long-term assets (income calculated as

-15,000.00 -5,723.89 (Fill in “-”)

Losses from scrapping of fixed assets (income is listed with “-”) -16,942.39 21,815.28 Loss from changes in fair value (income is listed with “-”)

Financial expenses (income is listed with "-") 19,033,528.13 15,270,367.37 Investment losses (income is listed with "-") 2,683,218.90 1,491,479.24 Decrease in deferred income tax assets (increase is listed with "-") 1,482,884.84 1,076,819.49 Increase in deferred income tax liabilities (decreases are indicated by "-") -484,089.47 -359,744.86 Decrease in inventories (increases are indicated by "-") 11,697,668.53 -20,343,726.10 Decrease in operating receivables (increases are indicated by "-") -104,134,856.58 -164,636,393.33 Increase in operating payables (decreases are listed with "-") -91,246,366.07 -4,514,868.96 Others

Net cash flow generated from operating activities -84,616,611.89 -157,809,613.00 2. Major investing and financing activities that do not involve cash receipts and payments:

debt to capital

Convertible corporate bonds due within one year

Financing leased fixed assets

3． Net changes in cash and cash equivalents:

Closing balance of cash 221,736,703.39 248,179,836.99 Less: Opening balance of cash 278,351,322.05 186,693,885.24 Add: Closing balance of cash equivalents

Less: Opening balance of cash equivalents

Net increase in cash and cash equivalents -56,614,618.66 61,485,951.75

(2). Net cash paid in the current period to acquire subsidiaries

□Applicable √Not applicable

(3). Net cash received from disposal of subsidiaries in the current period

□Applicable √Not applicable

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(4). Composition of cash and cash equivalents

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Ending balance Beginning balance

1. Cash 221,736,703.39 278,351,322.05 Including: Cash on hand 77,918.79 94,422.78 Bank deposits that can be used for payment at any time 221,523,207.34 277,814,843.08 Digital currencies that can be used for payment at any time 135,577.26 135,136.10 Other monetary funds that can be used for payment at any time 306,920.09 Amounts deposited with the central bank that can be used for payment

Deposit funds from other banks

Funds placed with other banks

2. Cash equivalents

Including: Bond investments due within three months

3. Balance of cash and cash equivalents at the end of the period 221,736,703.39 278,351,322.05 Among them: restricted use by the parent company or subsidiaries within the group

cash and cash equivalents

(5). Situations where the scope of use is limited but still presented as cash and cash equivalents

□Applicable √Not applicable

(6). Monetary funds that are not cash and cash equivalents

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Ending balance Beginning balance Reason

Other monetary funds 42,073,695.68 51,781,988.74 Margin

Other monetary funds 6,906,925.94 Restricted use

Other monetary funds 22,029,148.00 12,053,440.06 Litigation frozen

Total 64,102,843.68 70,742,354.74 /

Other notes:

□Applicable √Not applicable

80. Notes on items in the statement of changes in owners’ equity

Explain the names of "other" items that were adjusted to the closing balance of the previous year and the amount of adjustment, etc.:

□Applicable √Not applicable

81. Foreign currency monetary items

(1). Foreign currency monetary items

√Applicable □Not applicable

Unit: Yuan

Item Foreign currency balance at the end of the period Conversion exchange rate Conversion of RMB balance at the end of the period Monetary Funds

Including: USD 1,612,644.36 6.8109 10,983,559.47

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Euro 269.48 7.7671 2,093.08 Hong Kong dollars

Ruble 36,055.00 0.0883 3,183.66Accounts receivable

Of which: USD 2,142,866.25 6.8109 14,594,847.74 Euros

Hong Kong dollar

long term borrowing

Of which: US dollars

Euro

Hong Kong dollar

Other notes:

None

(2). The nature of the lack of currency convertibility and its financial impact, the spot exchange rate used and its estimation process, and the risks faced by the enterprise due to the lack of currency convertibility

□Applicable √Not applicable

(3). Description of overseas business entities, including for important overseas business entities, their main overseas business location, accounting standard currency and basis for selection should be disclosed. If the accounting standard currency changes, the reasons should also be disclosed.

□Applicable √Not applicable

(4). Lack of convertibility between the accounting functional currency of overseas operations and the enterprise’s presentation currency □Applicable √Not applicable

82. Leasing

(1)As a lessee

√Applicable □Not applicable

Variable lease payments not included in the measurement of lease liabilities

□Applicable √Not applicable

Simplified treatment of short-term leases or lease payments for low-value assets

√Applicable □Not applicable

Item Short-term lease expenses for this period 160,792.74 Low-value asset lease expenses 2,420.00 Total 163,212.74

Sale and leaseback transactions and basis for judgment

√Applicable □Not applicable

Seller Buyer/lessor Lessee Lease start date Lease expiration date Xinxiang Changle Pharmaceutical Co., Ltd. Far East International Financial Leasing Co., Ltd. Xinxiang Changle Pharmaceutical Co., Ltd. 2023/7/28 2026/5/9

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company limited company

Xinxiang Changle Pharmaceutical Co., Ltd. Far East International Financial Leasing Co., Ltd. Xinxiang Changle Pharmaceutical Co., Ltd.

2023/11/7 2026/5/9 Company Co., Ltd.

Xinxiang Changle Pharmaceutical Co., Ltd. and Far East International Financial Leasing Co., Ltd. signed an ownership transfer agreement and a sale and leaseback contract. The seller sells machinery and equipment to the buyer, and then the buyer leases it to the seller. Since the asset control rights have not been transferred to the buyer, the lessor, from the beginning to the end, it is judged not to be a sale, and the assets are not terminated. The amount received is accounted for as a liability.

The total cash outflow related to leasing is 1,037,040.77 (Unit: Yuan Currency: RMB) (2) As the lessor

Operating lease as lessor

√Applicable □Not applicable

Unit: Yuan Currency: RMB Including: Variable lease items not included in lease receipts Lease income

Income related to lease payments Houses and buildings 230,137.65

Total 230,137.65

Finance lease as lessor

□Applicable √Not applicable

Reconciliation of undiscounted lease receipts and net lease investment

□Applicable √Not applicable

Undiscounted lease receipts over the next five years

□Applicable √Not applicable

(3) Recognizing financial lease sales profits and losses as a manufacturer or distributor

□Applicable √Not applicable

Other instructions

None

83. Data resources

□Applicable √Not applicable

84. Others

□Applicable √Not applicable

8. R&D expenditures

1. List according to nature of expenses

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Amount for the current period Amount for the previous period Employee compensation 15,580,276.70 19,107,263.84

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Material consumption 14,392,804.02 15,153,462.24 Depreciation and amortization 3,232,104.03 3,250,063.82 Technical service fee 71,027,644.11 100,263,903.29 Other expenses 6,330,929.10 6,989,913.24

Total 110,563,757.96 144,764,606.43 Including: Expenditure R&D expenditure 62,952,648.68 68,423,933.06 Capitalized R&D expenditure 47,611,109.28 76,340,673.37 Other notes:

None

2. Development expenditures on R&D projects that meet capitalization conditions

√Applicable □Not applicable

Unit: Yuan Currency: RMB Increase amount in this period Decrease amount in this period

Items transferred to the end of the period at the beginning of the period are recognized as intangible assets

Balance Internal development expenditure Current balance Other assets

Profit and loss

Innovative anti-diabetic drugs 170,066,033.83 27,811,769.20 197,877,803.03 Project 6 12,056,434.25 6,783,980.11 18,840,414.36 Consistency evaluation of Loratadine tablets 11,263,977.00 1,550,282.75 12,814,259.75 Item three 9,697,594.03 232,075.96 9,929,669.99 Consistency evaluation of simvastatin tablets 9,302,985.79 74,772.15 9,377,757.94 Item seven 5,466,329.36 109,562.21 5,575,891.57 Consistency evaluation of folic acid tablets 5,309,492.56 356,093.51 5,665,586.07 0.00 Project 8 5,230,231.51 742,063.51 5,972,295.02 Project two 5,123,869.07 28,013.83 5,151,882.90 Project one 3,957,148.38 1,296,067.38 5,253,215.76 Project nine 2,967,260.39 337,806.17 3,305,066.56 Project 10 2,256,519.65 709,848.27 2,966,367.92 Project 5 1,897,330.86 382,169.89 2,279,500.75 Project 11 1,771,625.34 3,629,545.54 5,401,170.88 Project 4 1,506,369.62 1,506,369.62 Project 12 553,180.75 1,902,453.35 2,455,634.10 Other projects 1,035,019.05 158,235.83 1,193,254.88 Total 247,955,031.82 47,611,109.28 5,665,586.07 289,900,555.03

Significant Capitalized R&D Projects

√Applicable □Not applicable

Estimated completion Estimated economic profits Start capitalization

Project R&D progress Specific basis

The point in time when the profit is generated

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Acceptance number: Completed preliminary CSR

Innovative anti-diabetic drugs 2026 Commercial operation January 2024 CXHL2000464; draft

CXHL2000465 acceptance number: Project 6 Phase III clinical trial 2026 Commercial operation June 2024

CTR20242347 project approval, consistency evaluation of loratadine tablets, CDE declared, 2026, commercial operation, January 2017

day

Impairment provision for development expenditures

□Applicable √Not applicable

Other notes:

The increase in development expenditure for this period includes the amount of capitalized borrowing costs of RMB 1,080,414.32. The capitalization rate used to calculate and determine the capitalized amount of borrowing costs for this period is 2.51%.

3. Important outsourced research projects

□Applicable √Not applicable

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9. Changes in consolidation scope

1. Business merger not under common control □Applicable √Not applicable

2. Merger of enterprises under common control

□Applicable √Not applicable

3. Reverse purchase

□Applicable √Not applicable

4. Disposal of subsidiaries

Are there any transactions or events that result in the loss of control of subsidiaries in this period? Applicable √ Not applicable

Other notes:

□Applicable √Not applicable

Is there any situation where investments in subsidiaries are disposed of step by step through multiple transactions and control is lost in the current period? Applicable √ Not applicable

Other notes:

□Applicable √Not applicable

5. Changes in the scope of consolidation caused by other reasons Explain the changes in the scope of consolidation caused by other reasons (such as the establishment of new subsidiaries, liquidation of subsidiaries, etc.) and their related situations: √ Applicable □ Not applicable

In January 2026, the subsidiary Jiangsu Lianhuan Biopharmaceutical Co., Ltd. completed industrial and commercial deregistration.

6. Others

□Applicable √Not applicable

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10. Interests in other entities

1. Interests in subsidiaries

(1).Construction of enterprise groups

√Applicable □Not applicable

Unit: 10,000 yuan Currency: RMB Subsidiary shareholding ratio (%)

Main place of business Registered capital Place of registration Nature of business Method of acquisition

name direct indirect

Yangzhou Lianhuan Pharmaceutical Marketing Co., Ltd. Yangzhou City 1,000.00 Yangzhou City Wholesale of chemical raw materials and medicines 98.50 Acquired from the merger of enterprises under common control Yangzhou Lianhuan Investment Co., Ltd. Yangzhou City 12,500.00 Yangzhou City Industrial investment 100.00 Establishment

Yangzhou Pharmaceutical Co., Ltd. Yangzhou City 10,418.70 Yangzhou City Pharmaceutical production and sales 100.00 Acquired Yangzhou Lianyang New Energy Co., Ltd. through a merger of enterprises under common control Yangzhou City 2,000.00 Yangzhou City Power station operation and management 100.00 Established Lianhuan (Nanjing) Medical Technology Co., Ltd. Nanjing City 1,800.00 Nanjing City Sales of medical equipment and electronic products 51.00 Establishment of Nanjing Lianzhi Pharmaceutical Technology Co., Ltd. Nanjing City 500.00 Nanjing City Pharmaceutical technology research and development and technology transfer 100.00 Establishment of Lianhuan (Shanghai) Medical Management Co., Ltd. Shanghai City 1,000.00 Shanghai City Wholesale of drugs and medical devices 100.00 Establishment of Chengdu Yazhong Biopharmaceutical Co., Ltd. Chengdu City 5,000.00 Chengdu City Production and sales of APIs 45.00 Acquired through business combination not under common control

Yangzhou Lianyou Medical Co., Ltd. Yangzhou City 500.00 Yangzhou City Sales of medical devices 100.00 Establishment of Jiangsu Lianhuan Smart Medical Co., Ltd. Nanjing City 1,000.00 Nanjing City Sales of medical devices 100.00 Establishment of Lianhuan Pharmaceutical (Anqing) Co., Ltd. Anqing City 18,152.00 Anqing City Production and sales of APIs 100.00 Establishment of Jiangsu Lianhuan Jijia Technology Co., Ltd. Nanjing City 1,000.00 Nanjing City Wholesale and retail of cosmetics 51.00 Establishment of Lianhuan Pharmaceutical (Gaoyou) Co., Ltd. Gaoyou City 500.00 Gaoyou City Wholesale of medicines and medical equipment 100.00 Establishment of Lianhuan (Suqian) Pharmaceutical Co., Ltd. Suqian City 1,000.00 Suqian City Wholesale of medicines and medical equipment 50.01 Acquired through business combination not involving enterprises under common control

Sichuan Longyi Pharmaceutical Co., Ltd. Chengdu City 5,100.00 Chengdu City Pharmaceutical Wholesale 51.00 Xinxiang Changle Pharmaceutical Co., Ltd. acquired through a business combination not under common control Xinxiang City 3,958.00 Xinxiang City Pharmaceutical production 49.00 Yangzhou Ailiante Chemical Co., Ltd. acquired through a business combination not under common control Yangzhou City 200.00 Yangzhou City Pharmaceutical Wholesale 100.00 Establish

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Explanation on the difference between the proportion of shareholding in subsidiaries and the proportion of voting rights:

None

Basis for holding half or less of the voting rights but still controlling the invested unit, and holding more than half of the voting rights but not controlling the invested unit:

(1) Basis for holding half or less of the voting rights but still controlling the invested unit

The company holds 45% of the equity of Chengdu Yazhong Biopharmaceutical Co., Ltd., which is the company's largest shareholder and holds a majority of seats on the board of directors. It has substantial control over it, so it is included in the scope of the consolidated financial statements.

The company holds 49% of the equity of Xinxiang Changle Pharmaceutical Co., Ltd., is the company's largest shareholder, holds a majority of seats on the board of directors, and has substantial control over it, so it is included in the scope of the consolidated financial statements.

(2) Basis for holding more than half of the voting rights but not controlling the invested unit

The company holds 60% of the equity of UNIONCLE PHARMA LLC and is the company's largest shareholder. The board of directors of UNIONCLE PHARMA LLC has 4 directors, of which the company appoints 2 directors. Voting on major operating matters must be approved by shareholders representing more than 2/3 of the voting rights. Therefore, the company does not have substantial control over it and does not include it in the consolidated financial statements.

For important structured entities included in the scope of consolidation, the basis for control is:

None

Basis for determining whether a company is agent or principal:

None

Other notes:

None

(2).Important non-wholly owned subsidiaries

√Applicable □Not applicable

Unit: RMB 10,000 Currency: RMB Shareholdings held by minority shareholders Attributable to minority shareholders in the current period Attributable to minority shareholders in the current period Name of subsidiary with minority shares at the end of the period

Proportion Profit and loss of several shareholders Dividends declared Balance of shareholders’ equity Sichuan Longyi Pharmaceutical Co., Ltd. 49.00 86.52 306.48 4168.50 Lianhuan (Shanghai) Medical Management Co., Ltd. 49.00 370.47 1,382.38 Lianhuan (Nanjing) Medical Technology Co., Ltd. 49.00 341.69 392.00 1,565.67 Explanation on the difference between the shareholding ratio of minority shareholders of subsidiaries and the voting rights ratio:

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

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(3).Main financial information of important non-wholly owned subsidiaries

√Applicable □Not applicable

Unit: 10,000 yuan Currency: RMB Closing balance Opening balance

Subsidiary name

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 Sichuan Longyi Pharmaceutical

31,313.65 3,820.91 35,134.56 26,309.76 261.32 26,571.08 28,080.95 3,730.73 31,811.68 22,721.51 75.54 22,797.05 Co., Ltd.

Lianhuan (Shanghai)

Medical Management Co., Ltd. 14,457.37 48.12 14,505.49 11,684.30 0.00 11,684.30 16,110.37 360.04 16,470.41 14,149.19 256.09 14,405.28Company

Lianhuan (Nanjing) Hospital

Medical Technology Co., Ltd. 10,715.80 2,616.06 13,331.86 10,136.61 0.00 10,136.61 11,339.53 2,592.66 13,932.19 10,604.75 0.00 10,604.75

Amount for the current period Amount for the previous period

Name of subsidiary Company Current comprehensive income from operating activities Current operating income from operating activities Net profit Total comprehensive income Operating income Net profit

Cash flow Total profit Cash flow Sichuan Longyi Pharmaceutical Co., Ltd. 49,948.61 117.98 117.98 -2,373.79

Lianhuan (Shanghai) Medical Management Co., Ltd. 25,090.30 756.06 756.06 -2,815.51 20,671.73 611.78 611.78 -997.03 Lianhuan (Nanjing) Medical Technology Co., Ltd. 7,896.31 697.34 697.34 -752.01 34,309.92 929.16 160.47 -1793.58

Other notes:

None

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(4).Significant restrictions on the use of enterprise group assets and repayment of enterprise group debts

□Applicable √Not applicable

(5). Financial support or other support provided to structured entities included in the scope of consolidated financial statements □Applicable √Not applicable

Other notes:

□Applicable √Not applicable

2. Transactions in which the ownership share of the subsidiary changes and the subsidiary is still controlled

□Applicable √Not applicable

3. Interests in joint ventures or associated enterprises

√Applicable □Not applicable

(1).Important joint ventures or associates

□Applicable √Not applicable

(2).Main financial information of important joint ventures

□Applicable √Not applicable

(3).Main financial information of important associates

□Applicable √Not applicable

(4). Summary financial information of unimportant joint ventures and associates

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Closing balance/Amount incurred in the current period Opening balance/Amount incurred in the previous period Joint ventures:

Total book value of investments 6,673,927.84 3,742,951.12 Total of the following items calculated based on shareholding ratio

--Net profit -2,741,538.56 -665,794.94 --Other comprehensive income 98,348.85 -96,708.4 --Total comprehensive income -2,643,189.71 -762,503.34

Associates:

Total book value of investments 2,326,461.46 2,268,141.80 Total of the following items calculated based on shareholding ratio

--Net profit 58,319.66 -825,684.30 --Other comprehensive income - --Total comprehensive income 58,319.66 -825,684.30 Other notes:

None

(5). Explanation of significant restrictions on the ability of joint ventures or associates to transfer funds to the company □Applicable √Not applicable

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(6).Excess losses incurred by joint ventures or associates

□Applicable √Not applicable

(7).Unconfirmed commitments related to investment in joint ventures

□Applicable √Not applicable

(8).Contingent liabilities related to investments in joint ventures or associates

□Applicable √Not applicable

4. Important joint operations

□Applicable √Not applicable

5. Equity in structured entities not included in the scope of consolidated financial statements

Relevant instructions for structured entities not included in the scope of consolidated financial statements:

□Applicable √Not applicable

6. Others

□Applicable √Not applicable

11. Government subsidies

1. Government subsidies recognized according to the amount receivable at the end of the reporting period

□Applicable √Not applicable

Reasons for failure to receive the estimated amount of government subsidy at the estimated time

□Applicable √Not applicable

2. Liability items involving government subsidies

√Applicable □Not applicable

Unit: Yuan Currency: RMB for the current period

Financial Statements for the Current Period New subsidies for the current period have been transferred to operations and other assets/income have been transferred to the current period.

Beginning balance Others Closing balance items Amount Extra income Income Relevant changes

Amount

Deferred income 12,239,146.32 2,900,000.00 1,163,267.35 13,975,878.97 Total related to assets 12,239,146.32 2,900,000.00 1,163,267.35 13,975,878.97 related to assets

3. Government subsidies included in current profits and losses

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Type Amount for the current period Amount for the previous period

Related to assets 1,163,267.35 1,033,267.34

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Related to income 5,630,919.78 2,212,034.54 Total 6,794,187.13 3,245,301.88

Other notes:

None

12. Risks related to financial instruments

1. Risks of financial instruments

√Applicable □Not applicable

The Company faces risks from various financial instruments in its daily activities, mainly including credit risk, market risk and liquidity risk. The company's main financial instruments include monetary funds, equity investments, loans, accounts receivable, accounts payable, etc. For detailed descriptions of various financial instruments, please see the relevant items in the "Notes to Consolidated Financial Statements" in this note. The risks associated with these financial instruments, and the risk management policies adopted by the Company to mitigate these risks, are set out below:

The board of directors is responsible for planning and establishing the company's risk management structure, formulating the company's risk management policies and relevant guidelines, and supervising the implementation of risk management measures. The Company has formulated risk management policies to identify and analyze the risks faced by the Company. These risk management policies clearly define specific risks and cover many aspects such as market risk, credit risk and liquidity risk management. The Company regularly evaluates changes in the market environment and the Company's operating activities to determine whether to update risk management policies and systems. The Company's internal audit department conducts regular audits on risk management controls and procedures and reports the audit results to the Company's Audit Committee.

The Company diversifies financial instrument risks through appropriate diversification of investments and business portfolios, and reduces risks concentrated in a single industry, specific region or specific counterparty by formulating corresponding risk management policies.

1． market risk

Market risk of financial instruments refers to the risk that the fair value or future cash flow of financial instruments fluctuates due to market price changes, including foreign exchange risk, interest rate risk and other price risks.

(1) Exchange rate risk

Exchange rate risk refers to the risk that the fair value or future cash flows of financial instruments will fluctuate due to changes in foreign exchange rates. The company's main operations are located in China, and its main business is settled in RMB. Therefore, the market risk of foreign exchange changes borne by the company is not significant, but the company's confirmed foreign currency assets and liabilities and future foreign currency transactions (the denominated currency of foreign currency assets and liabilities and foreign currency transactions are mainly US dollars) still have foreign exchange risks. Relevant foreign currency assets and foreign currency liabilities include: monetary funds and accounts receivable denominated in foreign currencies. The amount of foreign currency financial assets and foreign currency financial liabilities converted into RMB is shown in this note "Notes to Consolidated Financial Statement Items - Foreign Currency Monetary Items".

At the end of the current period, the foreign exchange risk faced by the Company mainly comes from financial assets and financial liabilities denominated in US dollars. The amounts of foreign currency financial assets and foreign currency financial liabilities converted into RMB are shown in this note "Notes to Items in Consolidated Financial Statements - Foreign Currency Monetary Items".

With all other variables held constant, if the RMB appreciates or depreciates by 5% against the US dollar, the impact on the company's net profit will be as follows:

Impact on net profit (10,000 yuan)

Exchange rate changes

Number of current period Number of previous year

Up 5% -84.97 -47.54 Down 5% 84.97 47.54

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Management believes that 5% reasonably reflects the reasonable range of possible changes in the RMB against the US dollar.

(2) Interest rate risk

Interest rate risk refers to the risk that the fair value or future cash flows of financial instruments will fluctuate due to changes in market interest rates. The risk of changes in market interest rates faced by the Company is mainly related to the Company's borrowings with floating interest rates. The Company's interest rate risk mainly arises from long-term interest-bearing debt such as long-term bank borrowings and bonds payable. Financial liabilities with floating interest rates expose the Company to cash flow interest rate risks, while financial liabilities with fixed interest rates expose the Company to fair value interest rate risks. The Company determines the relative proportions of fixed-rate and floating-rate contracts based on the prevailing market environment, and maintains an appropriate portfolio of fixed-rate and floating-rate instruments through regular review and monitoring.

With other variables held constant, if the borrowing rate calculated as a floating rate increases or decreases by 50 basis points, the impact on the company's net profit will be as follows:

Impact on net profit (10,000 yuan)

Interest rate changes

The current period's number. The previous year's number increased by 50 basis points -167.52 -26.23 and decreased by 50 basis points. 167.52 26.23 Management believes that 50 basis points reasonably reflects the reasonable range of possible changes in interest rates in the next year.

(3) Other price risks

The company does not hold equity investments in other listed companies and does not have other price risks.

2. credit risk

Credit risk refers to the risk that the counterparty fails to perform its contractual obligations, resulting in financial losses for the company. The Company's credit risk mainly arises from bank deposits and receivables.

The company's bank deposits are mainly deposited in state-owned banks and other large and medium-sized listed banks. The company does not expect that there will be significant credit risk in bank deposits.

For accounts receivable, the Company sets relevant policies to control credit risk exposure based on customer management credit risk concentration. The Company evaluates the debtor's credit qualifications and sets the corresponding debt limit and credit period based on the debtor's financial status, external ratings, the possibility of obtaining guarantees from third parties, credit records and other factors such as current market conditions. The company will regularly monitor the credit records of debtors. For debtors with poor credit records, the company will use written reminders, shorten the credit period or cancel the credit period to ensure that the company's overall credit risk is within a controllable range. As the Company's receivable customers are widely dispersed in different regions and industries, there is no significant concentration of credit risk in the Company.

The Company has not provided any other guarantees that may expose the Company to credit risk. The maximum credit risk exposure assumed by the Company is the book value of each financial asset in the balance sheet.

(1) Basis for judgment of significant increase in credit risk

The Company assesses on each balance sheet date whether the credit risk of relevant financial instruments has increased significantly since initial recognition. When determining whether credit risk has increased significantly since initial recognition, the Company considers reasonable and evidence-based information that can be obtained without unnecessary additional cost or effort, including qualitative and quantitative analysis based on the Company's historical data, external credit risk ratings, and forward-looking information. When one or more of the following quantitative and qualitative criteria are met, the company considers that the credit risk has increased significantly: 1) Contract payment is overdue for more than 30 days.

2. According to the external public credit rating results, the debtor's credit rating dropped significantly.

3. Serious problems occur in the debtor's production or operation links, and actual or expected operating results decline significantly.

4. Significant adverse changes occur in the regulatory, economic or technological environment in which the debtor operates.

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5. Significant adverse changes in business, financial or economic conditions that are expected to result in the debtor's ability to meet its debt repayment obligations. 6) Other objective evidence indicating that the credit risk of financial assets has increased significantly.

(2) Basis for credit impairment that has occurred

When the Company assesses whether a debtor has suffered credit impairment, it mainly considers the following factors:

1. The issuer or debtor encounters major financial difficulties.

2. The debtor violates the contract, such as default or overdue payment of interest or principal.

3. The creditor grants concessions to the debtor that the debtor would not make under any other circumstances due to economic or contractual considerations related to the debtor's financial difficulties.

4. The debtor is likely to go bankrupt or undergo other financial reorganization.

5. The financial difficulties of the issuer or debtor cause the active market for the financial asset to disappear.

6. Purchase or originate a financial asset at a substantial discount that reflects the fact that credit losses have occurred.

(3) Parameters for measuring expected credit losses

Depending on whether there is a significant increase in credit risk and whether credit impairment has occurred, the company measures loss provisions based on expected credit losses for 12 months or the entire duration of different assets. Key parameters for measuring expected credit losses include probability of default, loss given default rate and exposure to default risk. The Company considers quantitative analysis of historical statistical data and forward-looking information to establish probability of default, loss given default and default risk exposure models. The relevant definitions are as follows:

1. Default probability refers to the possibility that the debtor will be unable to fulfill its payment obligations in the next 12 months or throughout the remaining duration. 2) Default risk exposure refers to the amount that the company should be repaid when a default occurs in the next 12 months or throughout the remaining duration.

2. Loss given default refers to the company’s expectation of the extent of losses due to default exposure. LGDs vary depending on the type of counterparty, the method and priority of recourse, and the availability of collateral or other credit support.

The Company determines expected credit losses by estimating the default probability, default loss rate and default risk exposure of a single exposure or asset portfolio in the coming months. During the reporting period, there were no significant changes in expected credit loss estimation techniques or key assumptions.

(4) Forward-looking information included in the expected credit loss model

The assessment of significant increases in credit risk and the calculation of expected credit losses involve forward-looking information. Through historical data analysis, the company identifies relevant information that affects the credit risk and expected credit losses of each asset portfolio, such as macroeconomic conditions such as GDP growth rate, industry cycle stage and other industry development conditions, etc. The company predicts the impact of this information on the probability of default and loss given default based on changes in the company's future sales strategy or credit policy.

3． Liquidity risk

Liquidity risk refers to the risk of a shortage of funds when an enterprise fulfills its obligations to settle by delivering cash or other financial assets. Liquidity risk is centrally controlled by the Company's financial department. By monitoring cash balances, marketable securities that can be liquidated at any time, and rolling forecasts of cash flows in the next 12 months, the financial department ensures that the company has sufficient funds to repay debts under all reasonable forecasts, meet the company's operating needs, and reduce the impact of cash flow fluctuations.

The financial liabilities and off-balance sheet guarantee items held by the Company are analyzed based on the maturity period of the undiscounted remaining contract cash flows as follows (unit: RMB 10,000):

Closing amount

Project

Within one year One to two years Two to three years More than three years Total

Short-term loans 100,509.46 100,509.46 Notes payable 14,736.01 14,736.01

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Accounts payable 42,518.13 42,518.13 Other payables 18,158.55 18,158.55 Due within one year

35,023.09 35,023.09 Non-current liabilities

Other current liabilities 75.99 75.99 Long-term borrowings 20,400.00 3,000.00 11,716.67 35,116.67 Lease liabilities 113.97 115.87 238.32 468.16 Financial liabilities and or

211,021.23 20,513.97 3,115.87 11,954.99 246,606.06Total liabilities

Continuation of the above table:

Beginning balance

Project

Within one year One to two years Two to three years More than three years Total

Short-term borrowings 95,859.05 95,859.05

Notes payable 16,149.20 16,149.20

Accounts payable 40,946.07 40,946.07

Other payables 14,177.81 14,177.81 Non-current accounts due within one year

23,460.09 23,460.09 Liquid liabilities

Other current liabilities 76.06 76.06

Long-term borrowings 27,291.25 1,970.00 6,247.72 35,508.97

Lease liabilities 162.80 114.78 296.40 573.98 Financial liabilities and contingent liabilities

190,668.28 27,454.05 2,084.78 6,544.12 226,751.23 Total debt

4. capital management

The goal of the company's capital management policy is to ensure that the company can continue to operate, thereby providing returns to shareholders and benefiting other stakeholders, while maintaining an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. The Company monitors capital structure based on the asset-liability ratio (i.e., total liabilities divided by total assets). As of June 30, 2026, the company's asset-liability ratio was 60.56% (December 31, 2025: 59.00%).

2. Hedging

(1). The company carries out hedging business for risk management

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

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(2). The company carries out qualified hedging business and applies hedging accounting

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

(3). The company carries out hedging business for risk management and expects to achieve risk management objectives but does not apply hedging accounting □ Applicable √ Not applicable

Other notes:

□Applicable √Not applicable

3. Transfer of financial assets

(1). Classification of transfer methods

√Applicable □Not applicable

Unit: Yuan Currency: RMB transfer Financial assets transferred Financial assets transferred Termination of recognition

Basis for judgment on derecognition Asset nature Amount Situation

Receivables Financing Due to bank acceptance bill credit risk and deferred endorsement in receivables financing

The payment risk of the capital has not yet arrived is very small, and the interest rate risk related to the bill has been transferred to Bank of China. 150,533,218.98 Derecognition

The bank accepts the bill for a certain period of time and can judge that the main risks and rewards of ownership of the bill have been realized.

The bill of exchange was transferred, so the recognition was terminated.

notes receivable,

in accounts receivable

Endorsement is not due since this type of note is underwritten by a bank or financial company with a low credit rating.

Not yet expired

and discount 78,504.04 shall be terminated and confirmed. The endorsed or discounted bills will not affect the right of recourse. Information related to the bills

bank acceptance

The current recognition risk and deferred payment risk have not been transferred, so the recognition has not been terminated. Invoices and financial statements

company notes

Total 150,611,723.02

(2). Financial assets derecognized due to transfer

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Method of transfer of financial assets Amount of financial assets derecognized Gains or losses related to derecognition Receivables Financing Endorsement 84,346,224.10

Accounts receivable financing discount 66,186,994.88 -452,132.77 Total 150,533,218.98 -452,132.77

(3). Transferred financial assets that continue to be involved

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

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13. Disclosure of fair value

14. Closing fair value of assets and liabilities measured at fair value √ Applicable □ Not applicable

Unit: Yuan Currency: RMB Closing fair value item First level fair value Second level fair value Total third level fair value

measurement measurement value measurement

1. Continuous fair value measurement

(1) Trading financial assets

1. Financial assets measured at fair value and changes included in current profit and loss

(1) Debt instrument investment

(2) Equity instrument investment

(3) Derivative financial assets

2. Designate financial assets measured at fair value with changes included in current profits and losses.

(1) Debt instrument investment

(2) Equity instrument investment

(2) Other debt investments

(3) Investment in other equity instruments

(4) Investment real estate

1. Land use rights for lease

2. Buildings for rent

3. Hold and prepare to transfer land use rights after appreciation

(5) Biological assets

1. Consumable biological assets

2. Productive biological assets

Total assets measured at fair value on an ongoing basis

(6) Trading financial liabilities

1. Financial liabilities measured at fair value and changes included in current profit and loss

Including: Derivative financial liabilities of trading bonds issued

Others

2. Financial liabilities designated as measured at fair value and changes included in current profit and loss

Receivables financing 57,416,813.81 57,416,813.81

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Liabilities measured at fair value on an ongoing basis

57,416,813.81 57,416,813.81 total

2. Non-continuous fair value measurement

(1) Assets held for sale

Assets that are not continuously measured at fair value

Total output

Non-continuous negative liabilities measured at fair value

Total debt

2. Basis for determining the market price of continuous and non-continuous first-level fair value measurement items □Applicable √Not applicable

3. Continuous and non-continuous second-level fair value measurement items, valuation techniques used and qualitative and quantitative information on important parameters

√Applicable □Not applicable

For receivables financing, because the remaining term is short and the book value is close to the fair value, the face value is used as the fair value.

4. Continuous and non-continuous third-level fair value measurement projects, valuation techniques used and qualitative and quantitative information on important parameters

□Applicable √Not applicable

5. Continuous third-level fair value measurement items, reconciliation information between the opening and closing book values and sensitivity analysis of unobservable parameters

□Applicable √Not applicable

6. For ongoing fair value measurement items, if there is a conversion between various levels during the current period, the reasons for the conversion and the policy for determining the time of conversion

□Applicable √Not applicable

7. Valuation technology changes that occurred during the current period and reasons for the changes

□Applicable √Not applicable

8. Fair value of financial assets and financial liabilities not measured at fair value √Applicable □Not applicable

The Company's financial assets and financial liabilities measured at amortized cost mainly include: monetary funds, notes receivable, accounts receivable, other receivables, short-term loans, notes payable, accounts payable, other payables, long-term payables, etc. The difference between the book value of the Company's financial assets and financial liabilities not measured at fair value and their fair value is very small.

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9. Others

□Applicable √Not applicable

14. Related parties and related transactions

1. Information about the parent company of this enterprise

√Applicable □Not applicable

Unit: 10,000 yuan Currency: RMB Parent company to this Parent company to this Parent company name Place of registration Nature of business Registered capital Shareholding of the enterprise Voting of the enterprise

Proportion (%) Equity proportion (%) Jiangsu Lianhuan Pharmaceutical Group Co., Ltd. Yangzhou City Production and Sales 40,000.00 39.90 39.90 Description of the parent company of this enterprise

The ultimate controller of this enterprise is the State-owned Assets Supervision and Administration Commission of Yangzhou Municipal People’s Government

Other notes:

None

2. Information about the company’s subsidiaries

Please refer to the notes for details of the company’s subsidiaries.

√Applicable □Not applicable

For details of the Company’s subsidiaries, please refer to this note “Equity in Other Entities—Equity in Subsidiaries”.

3. Information on joint ventures and associated enterprises of the enterprise

Please refer to the notes for details of important joint ventures or associates of this company.

√Applicable □Not applicable

For details of the Company's important joint ventures and associates, please refer to this note "Interests in other entities - Interests in joint arrangements or associates".

The details of other joint ventures or associates that have related party transactions with the company in the current period, or have balances from related party transactions with the company in previous periods are as follows:

√Applicable □Not applicable

Name of the joint venture or associated enterprise Relationship with the enterprise Yangzhou Yangda Lianhuan Pharmaceutical Genetic Engineering Co., Ltd. Associated company and the same parent company

Other notes:

□Applicable √Not applicable

4. Other related parties

√Applicable □Not applicable

Names of other related parties Relationship between other related parties and the company Jiangsu Huatianbao Pharmaceutical Co., Ltd. The same actual controller Yangzhou Prince Medical Technology Co., Ltd. The same actual controller Yangzhou Unicom Medical Equipment Co., Ltd. The same actual controller

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Yangzhou Lian'an Construction Engineering Co., Ltd. Same actual controller

Jiang Lianhuan Medical Technology Co., Ltd. The same actual controller Jiang Lianhuan Health Pharmacy Chain Co., Ltd. and its subsidiaries The same actual controller Jiang Lianhuan Yihetang Traditional Chinese Medicine Co., Ltd. The same actual controller Sinopharm Holdings Yangzhou Co., Ltd. and its subsidiaries Nanjing Lianfang Traditional Chinese Medicine Technology Co., Ltd., an associate of the parent company The same actual controller Yangzhou Lianhuan Hospital Co., Ltd. The same actual controller Liantu Shuzhi (Beijing) Technology Co., Ltd. The same actual controller Yangzhou Ouhuadi Sanitary Washing Co., Ltd. The same actual controller, Prince (Anqing) Pharmaceutical Technology Co., Ltd. The same actual controller, Jiangsu Lianyang Pharmaceutical Investment Co., Ltd. The same actual controller, Jiangsu Lihua Inspection and Testing Co., Ltd. Yizheng Jipeng Ecological Agriculture Development Co., Ltd., an associate of the parent company, Li Donghong, a company in which the company's Dong Gao serves as director and supervisor in other companies Li Haiju, a minority shareholder of the subsidiary Changle Pharmaceutical Li Donghong's spouse

Hainan Xintai Pharmaceutical Co., Ltd. Huixian City Color Printing and Packaging Factory, a company controlled by Li Donghong’s sister Xinxiang Dadong Color Printing Co., Ltd., a company controlled by Li Haiju’s legal person Xinxiang Jinmu Consulting Co., Ltd., a company controlled by Li Haiju Henan Dahong Pharmaceutical Technology Co., Ltd., a company controlled by Li Donghong Huixian Xinglin Pharmacy Co., Ltd., a company controlled by Li Donghong Li Chengdu Chuantongfa Enterprise Management Co., Ltd., a company held by Li Donghong Minority shareholders of subsidiary Longyi Medicine

Other notes:

None

5. Related transactions

(1) Related transactions related to the purchase and sale of goods, provision and receipt of services

Procurement of goods/service acceptance form

√Applicable □Not applicable

Unit: 10,000 yuan Currency: RMB Whether the approved transaction exceeds the number of related transactions that occurred in this period

Related party quota (if applicable) Amount incurred in the previous period Amount

Use) (if appropriate

Used) Yangzhou Yangda Lianhuan Pharmaceutical Gene Engineering Co., Ltd. Purchase goods 54.34 30.00 Yes 38.52 Yangzhou Prince Pharmaceutical Technology Co., Ltd. and its subsidiaries

Purchase of goods 760.15 1,500.00 No 730.05 Division

Procurement of fixed capital

Yangzhou Unicom Medical Equipment Co., Ltd. and its subsidiaries Production and construction in progress 742.85 1,900.00 No 362.94 Cheng

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Labor equipment maintenance

Yangzhou Unicom Medical Equipment Co., Ltd. and its subsidiaries 104.51 650.00 No 369.33

repair

Liantu Shuzhi (Beijing) Technology Co., Ltd. Procurement service 637.80 600.00 Yes 214.93 Jiangsu Lianhuan Yihetang Traditional Chinese Medicine Co., Ltd. Procurement of goods 13.03 20.00 No 4.94 Jiangsu Lianhuan Pharmaceutical Group Co., Ltd. Comprehensive service fee 40.00 400.00 No 40.00 Jiangsu Lianhuan Healthy Pharmacy Chain Co., Ltd. Procurement of goods 0.59 200.00 No 16.93 Jiangsu Lianhuan Health Pharmacy Chain Co., Ltd. Consulting fee 25.00 52.00 No 25.00 Jiangsu Huatianbao Pharmaceutical Co., Ltd. Purchase of goods 48.80 150.00 No 67.97 Sinopharm Yangzhou Co., Ltd. and its subsidiaries Purchase of goods 0.81 45.00 10.35 Yangzhou Lianhuan Hospital Co., Ltd. Physical examination fee 0.46 2.00 No 0.56 Jiangsu Lihua Inspection and Testing Co., Ltd. Procurement service 10.24 35.00 No 5.17 Jiangsu Lianyang Pharmaceutical Investment Co., Ltd. Procurement service 41.98 50.00 No

Huixian City Color Printing Packaging Factory Purchased Goods 507.51 Hainan Xintai Pharmaceutical Co., Ltd. Purchased Goods -63.78 800.00 No 370.66 Xinxiang Dadong Color Printing Co., Ltd. Purchased Goods 510.28 1,400.00 No 125.80 Yizheng Jipeng Ecological Agriculture Development Co., Ltd. Purchased Goods 55.52 10.00 Yes

Total 2,982.58 7,844.00 2,890.66

List of goods sold/services provided

√Applicable □Not applicable

Unit: 10,000 yuan Currency: RMB

Related parties Contents of related transactions Amount incurred in the current period Amount incurred in the previous period Sinopharm Holding Yangzhou Co., Ltd. and its subsidiaries Sales of drugs, materials, etc. 316.58 824.85 Jiangsu Lianhuan Health Pharmacy Chain Co., Ltd. and subsidiaries Sales of drugs, materials, etc. 118.56 95.30 Henan Dahong Pharmaceutical Technology Co., Ltd. Sales of drugs, materials, etc. 73.72

Nanjing Lianfang Traditional Chinese Medicine Technology Co., Ltd. Sales technical service fee 10.46

Yangzhou Lianhuan Hospital Co., Ltd. Sales of medicines, materials, etc. 2.20 4.40 Huixian Xinglin Pharmacy Co., Ltd. Sales of medicines, materials, etc. 4.06 0.15 Total 525.58 924.70

Description of related transactions for purchasing and selling goods, providing and receiving services

□Applicable √Not applicable

(2). Related entrusted management/contracting and entrusted management/outsourcing situation

The company's entrusted management/contracting status table:

√Applicable □Not applicable

Unit: 10,000 yuan Currency: RMB

Entrusting party/outsourcing party Entrusted party/contractor Entrusted/contracting capital Entrusted/contracting start Entrusted/contracting end Custody income/contracting Custodian confirmed in this period

Name Name Product type Start date End date Revenue pricing basis Revenue/contracting revenue Jiangsu Lianhuan Pharmaceutical Co., Ltd. Jiangsu Lianhuan Pharmaceutical Co., Ltd. May 2020 May 2026

Other Asset Custody Quarterly Settlement 110.00 Co., Ltd. Group Co., Ltd. 22nd 21st

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Description of associated hosting/contracting situations

√Applicable □Not applicable

In May 2020, the company signed a sewage custody agreement with Jiangsu Lianhuan Pharmaceutical Group Co., Ltd., entrusting Jiangsu Lianhuan Pharmaceutical Group Co., Ltd. to manage the sewage treatment equipment owned by the company and be responsible for sewage treatment-related matters. The two parties determined the quarterly custody fee of 550,000 yuan (excluding tax) based on market prices and unrelated third-party transaction prices. In May 2023, the company renewed the agreement with Jiangsu Lianhuan Pharmaceutical Group Co., Ltd.

The company's entrusted management/outsourcing status table

□Applicable √Not applicable

Description of association management/outsourcing situation

□Applicable √Not applicable

(3). Related leasing situation

As a lessor, our company:

√Applicable □Not applicable

Unit: 10,000 yuan Currency: RMB

Name of the lessee Type of leased assets Lease income recognized in the current period Lease income recognized in the previous period Yangzhou Ouhuadi Sanitary Washing Co., Ltd. House 7.25 2.30 Yangzhou Unicom Medical Equipment Co., Ltd. Lease property and equipment 2.90 0.69 Nanjing Lianfang Traditional Chinese Medicine Technology Co., Ltd. House 3.82 3.51

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As a lessee, our company:

√Applicable □Not applicable

Unit: 10,000 yuan Currency: RMB Amount for the current period Amount for the previous period

Simplified processing of short terms not included in the lease

Lease Short-term rental with simplified treatment Assumable Increase Assured

Not included in the calculation of lease liabilities. Payments for long-term leases and low-price assets are not included in the calculation of lease liabilities.

Asset Expenses Asset Expenses Asset Expenses

Applicable) Used)

Jiangsu Lianhuan Medical Technology Co., Ltd. House 23.50 1.48 0.00 2.18

Description of related leasing situation

√Applicable □Not applicable

Lianhuan Pharmaceutical (Gaoyou) Co., Ltd., as the lessee, will lease the southeastern part of the second floor of Building 4, No. 38-1, Chuangye Road, Jieshou Town, Gaoyou City, Jiangsu Province from January 1, 2023 to December 31, 2027. The leased area is 3,270 square meters for business activities, and the rent is 400,000 yuan/year.

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(4) Related guarantees

The company acts as a guarantor

□Applicable √Not applicable

The company as the guaranteed party

√Applicable □Not applicable

Unit: 10,000 yuan Currency: RMB Guarantee Whether the guarantor Amount of guarantee Guarantee starting date Guarantee expiration date Has been fulfilled

Completed Li Donghong, Li Haiju, Xinxiang Jinmu Consulting Co., Ltd. [Note 1] 880.00 2023/7/28 2026/5/9 It is Li Donghong, Li Haiju [Note 2] 880.00 2023/11/7 2026/5/9 It is Jiangsu Lianhuan Pharmaceutical Group Co., Ltd. 500.00 2025/12/15 2026/12/9 No Jiang Lianhuan Pharmaceutical Group Co., Ltd. 500.00 2026/4/22 2027/4/20 No Jiang Lianhuan Pharmaceutical Group Co., Ltd. 1,000.00 2025/11/28 2026/11/27 No Jiang Lianhuan Pharmaceutical Group Co., Ltd. 400.00 2025/12/4 2026/8/4 No Jiang Lianhuan Pharmaceutical Group Co., Ltd. 1,000.00 2026/1/15 2026/8/14 No Jiang Lianhuan Pharmaceutical Group Co., Ltd. 1,000.00 2026/4/22 2027/4/22 No Jiang Lianhuan Pharmaceutical Group Co., Ltd. 1,000.00 2026/5/19 2026/12/18 No Jiangsu Lianhuan Pharmaceutical Group Co., Ltd. 1,000.00 2025/12/15 2026/12/9 No Jiangsu Lianhuan Pharmaceutical Group Co., Ltd. 980.00 2025/1/1 2026/7/1 No Jiangsu Lianhuan Pharmaceutical Group Co., Ltd. 980.00 2025/11/28 2027/5/28 No Jiangsu Lianhuan Pharmaceutical Group Co., Ltd. 940.00 2025/6/6 2027/6/5 No Jiangsu Lianhuan Pharmaceutical Group Co., Ltd. 940.00 2025/6/18 2027/6/17 No Jiangsu Lianhuan Pharmaceutical Group Co., Ltd. 1,000.00 2026/6/24 2027/6/23 No Jiangsu Lianhuan Pharmaceutical Group Co., Ltd. 1,000.00 2025/9/30 2026/9/29 No Jiangsu Lianhuan Pharmaceutical Group Co., Ltd. 2,000.00 2025/7/11 2027/7/10 No

[Note 1] According to the sale and leaseback agreement signed between Changle Pharmaceutical and Far East International Financial Leasing Co., Ltd., the lease cost is 8.8 million yuan, and Li Donghong, Li Haiju, and Xinxiang Jinmu Consulting Co., Ltd. provide joint liability guarantees. As of June 30, 2026, the guarantee balance is RMB 00,000.

[Note 2] According to the sale and leaseback agreement signed between Changle Pharmaceutical and Far East International Financial Leasing Co., Ltd., the lease cost is 8.8 million yuan, and Li Donghong and Li Haiju provide joint liability guarantee. As of June 30, 2026, the guarantee balance is RMB 00,000.

Description of related guarantees

□Applicable √Not applicable

(5). Related party fund lending

√Applicable □Not applicable

Unit: 10,000 yuan Currency: RMB

Related parties Borrowing amount Start date Maturity date Description

dismantle

Chengdu Chuantongfa Enterprise Management Co., Ltd. 500.00 2025/8/26 Fund turnover, no expiration date agreed

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Chengdu Chuantongfa Enterprise Management Co., Ltd. 500.00 2025/8/27 Capital turnover, no expiration date agreed Li Donghong 1,000.00 2025/8/18 2026/1/12 Capital turnover

Jiangsu Environmental Health Industry Management Development Co., Ltd.

1,000.00 2026/1/14 2026/2/9 Fund turnover

Division

Jiangsu Lianhuan Pharmaceutical Group Co., Ltd. 2,500.00 2026/6/26 Capital turnover, no expiration date agreed

(6).Related party asset transfer and debt restructuring

√Applicable □Not applicable

Unit: RMB 10,000 Currency: RMB Related parties Related party transaction content Amount of the current period Amount of the previous period

Transferred housing buildings (structures) and land

Prince (Anqing) Pharmaceutical Technology Co., Ltd. 7,450.00

right to use

(7).Remuneration of key management personnel

√Applicable □Not applicable

Unit: 10,000 yuan Currency: RMB

Item Amount for the current period Amount for the previous period

Remuneration of key management personnel 250.59 208.48

(8).Other related transactions

□Applicable √Not applicable

6. Unsettled items such as receivables and payables to related parties

(1).Items receivable

√Applicable □Not applicable

Unit: 10,000 yuan Currency: RMB

Ending balance Beginning balance

Project name Related parties

Book balance Bad debt provision Book balance Bad debt provision (1) Accounts receivable

Sinopharm Holdings Yangzhou Co., Ltd. and its subsidiaries 269.96 13.50 535.73 27.09 Jiangsu Lianhuan Health Pharmacy Chain Co., Ltd. and its subsidiaries

559.00 42.33 512.11 38.61Subsidiaries

Hainan Xintai Pharmaceutical Co., Ltd. 259.32 25.93 359.32 22.29 Yangzhou Ouhuadi Sanitary Washing Co., Ltd. 92.84 6.05 76.31 4.83 Henan Dahong Pharmaceutical Technology Co., Ltd. 66.30 3.32 51.00 2.55 Yangzhou Yangda Lianhuan Pharmaceutical Genetic Engineering Co., Ltd. 28.38 28.38 28.38 28.38 Jiangsu Lianhuan Medical Technology Co., Ltd. 0.00 0.00 23.50 2.35 Yangzhou Lianhuan Hospital Co., Ltd. 0.98 0.05 1.51 0.08 Yangzhou Lianhuan Medical Equipment Co., Ltd. 0.77 0.04

(2)Advance payment

Henan Dahong Pharmaceutical Technology Co., Ltd. 33.00

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Xinxiang Dadong Color Printing Co., Ltd. 25.02

Hainan Xintai Pharmaceutical Co., Ltd. 35.38

Yangzhou Yangda Lianhuan Pharmaceutical Gene Engineering Co., Ltd. 20.26 20.26

Jiangsu Lianhua Inspection and Testing Co., Ltd. 12.30 7.26

Jiangsu Huatianbao Pharmaceutical Co., Ltd. 1.47

Huixian Xinglin Pharmacy Co., Ltd. 1.11

Sinopharm Holdings Yangzhou Co., Ltd. 0.73 0.73

Huixian City Color Printing and Packaging Factory 151.66

(3) Other non-current

Prince (Anqing) Pharmaceutical Technology Co., Ltd. 2,436.15

assets

Yangzhou Unicom Medical Equipment Co., Ltd. and its subsidiaries 30.00

(2). Payable items

√Applicable □Not applicable

Unit: RMB 10,000 Currency: RMB Project name Related parties Book balance at the end of the period Book balance at the beginning of the period (1) Notes payable

Yangzhou Unicom Medical Equipment Co., Ltd. 35.38 Yangzhou Prince Medical Technology Co., Ltd. 118.16 110.25

(2)Accounts payable

Yangzhou Lian'an Construction Engineering Co., Ltd. 497.05 618.26 Yangzhou Unicom Medical Equipment Co., Ltd. 105.34 535.37 Yangzhou Prince Medical Technology Co., Ltd. 358.03 512.64 Jiangsu Lianhuan Pharmaceutical Group Co., Ltd. 243.60 287.75 Hainan Xintai Pharmaceutical Co., Ltd. 176.05

Huixian City Color Printing and Packaging Factory 151.66 Jiangsu Huatianbao Pharmaceutical Co., Ltd. 63.38 119.85 Jiangsu Lianyang Pharmaceutical Investment Co., Ltd. 41.98

Zhou Yuxin 27.00 Prince (Anqing) Pharmaceutical Technology Co., Ltd. 816.68 7.14 Jiangsu Lianhuan Health Pharmacy Chain Co., Ltd. 1.54 Jiangsu Lianhuan Yihetang Traditional Chinese Medicine Co., Ltd. 1.97 0.76 Yangzhou Keyi Biotechnology Co., Ltd. 0.12 0.12 Liantu Shuzhi (Beijing) Technology Co., Ltd. 10.00

(3)Contract liabilities

(4)Other payables

Jiangsu Lianhuan Pharmaceutical Group Co., Ltd. 3,244.00 596.00 Yangzhou Unicom Pharmaceutical Equipment Co., Ltd. and its subsidiaries 9.00 9.00 Chengdu Chuantongfa Enterprise Management Co., Ltd. 1,021.65 1,008.69 Li Donghong 0.00 1,000.00

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(5) Lease liabilities

Jiangsu Lianhuan Medical Technology Co., Ltd. 23.70 24.47

(3).Other items

□Applicable √Not applicable

7. Related party commitments

□Applicable √Not applicable

8. Others

□Applicable √Not applicable

15. Share-based payment

1. Various equity instruments

(1)Details

□Applicable √Not applicable

(2) Stock options or other equity instruments outstanding at the end of the period □ Applicable √ Not applicable

2. Equity-settled share-based payment □Applicable √Not applicable

3. Cash-settled share-based payment □Applicable √Not applicable

4. Share-based payment fees for this period □ Applicable √ Not applicable

5. Modification and termination of share-based payment □Applicable √Not applicable

6. Others

□Applicable √Not applicable

16. Commitments and contingencies

17. Important commitments

√Applicable □Not applicable

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Important external commitments, nature and amount existing on the balance sheet date

Other major financial commitments

Property pledge guarantee status of each company within the scope of consolidation for its external borrowings (unit: 10,000 yuan) Pledge subject Pledge Pledge Guaranteed loan guarantee unit Pledgee Loan expiration date

Original book value Book value Balance Chengdu Yazhong Biopharmaceutical Chengdu Rural Commercial Bank shares

Note 1 Note 1 Note 1 1,000.00 2026/09/29 Co., Ltd. Pengzhou Branch of Co., Ltd.

Note 1: Chengdu Yazhong Biopharmaceutical Co., Ltd. obtained a patent pledge loan from Pengzhou Branch of Chengdu Rural Commercial Bank Co., Ltd. in July 2025. The contract registration number is Cheng Nong Shang Peng Gong Quan Zhi 20250004. The pledge is an invention patent certificate (Certificate No. 5568041), a method for industrialized preparation of citrus flavonoid raw materials.

2. Contingent matters

(1). Important contingencies existing on the balance sheet date

□Applicable √Not applicable

(2). The company has no important contingencies that need to be disclosed, and it should also explain:

□Applicable √Not applicable

3. Others

□Applicable √Not applicable

17. Events after the balance sheet date

1. Important non-adjustment matters

□Applicable √Not applicable

2. Profit distribution

□Applicable √Not applicable

3. Sales return

□Applicable √Not applicable

4. Description of other post-balance sheet events

√Applicable □Not applicable

(1) Regarding the proposed cancellation of the company’s subsidiary Lianhuan Intelligence

Due to business integration, the company plans to cancel Sun Company Lianhuan Intelligence. This matter has been reviewed and approved by the company's general manager office meeting. As of the disclosure date of this report, Lianhuan Wisdom has completed tax cancellation and obtained a tax clearance certificate.

(2) Regarding the capital increase in the company’s subsidiary Lianhuan Anqing

In order to support the development of Lianhuan Anqing, after review and approval by the company's general manager office meeting, the company increased capital to its subsidiary Lianhuan Anqing with two drug approval documents (intangible assets) for Ebastine Oral Liquid and Fudosteine Oral Liquid, with an estimated value of RMB 1.52 million. cut

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As of the disclosure date of this report, the drug holder change procedure for Ebastine Oral Liquid involved in the above-mentioned capital increase has been completed, and the change of drug holder for Fordostein Oral Liquid is still in progress.

18. Other important matters

19. Correction of accounting errors in the previous period (1) Retrospective restatement method

□Applicable √Not applicable

(2) Future applicable law

□Applicable √Not applicable

2. Important debt restructuring

□Applicable √Not applicable

3. Asset replacement

(1).Non-monetary asset exchange□Applicable √Not applicable

(2).Other asset replacement

□Applicable √Not applicable

4. Annuity plan

□Applicable √Not applicable

5. Termination of operations

□Applicable √Not applicable

6. Branch information

(1). Basis for determination of reporting segments and accounting policies □ Applicable √ Not applicable

(2). Financial information of reportable segments □ Applicable √ Not applicable

(3). If the company has no reportable segments, or cannot disclose the total assets and total liabilities of each reportable segment, the reasons should be stated □Applicable √Not applicable

(4).Other instructions

□Applicable √Not applicable

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7. Other important transactions and matters that have an impact on investors’ decision-making

□Applicable √Not applicable

8. Others

□Applicable √Not applicable

19. Notes on main items of the parent company’s financial statements

1. Accounts receivable

(1) Disclosure based on aging

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Aging Book balance at the end of the period Book balance at the beginning of the period

Within 1 year (including 1 year) 239,402,800.73 236,921,646.88 Subtotal within 1 year 239,402,800.73 236,921,646.88

1 to 2 years 16,485,801.40 16,616,632.90 2 to 3 years 19,574,891.95 17,649,177.05 More than 3 years

3 to 4 years 1,531,895.06 1,435,378.95 4 to 5 years 2,297,721.75 2,292,479.67 More than 5 years 5,013,634.96 4,700,820.41 Total 284,306,745.85 279,616,135.86

(2) Classified disclosure according to bad debt accrual method

√Applicable □Not applicable

Unit: Yuan Currency: RMB Closing balance Opening balance

Book balance Provision for bad debts Book balance Provision for bad debts

Category Book Book Ratio Provision Ratio Ratio Provision Ratio Amount Amount Value Amount Amount Value

(%) Example (%) (%) Example (%) Provision is made individually

191,909.36 0.07 191,909.36 100.00 0.00 191,909.36 0.07 191,909.36 100.00 0.00 Bad debt provision

Among them:

Provision based on combination

284,114,836.49 99.93 24,656,597.43 8.68 259,458,239.06 279,424,226.50 99.93 24,104,307.26 8.63 255,319,919.24 Bad debt provision

Among them:

Analysis by age

284,114,836.49 99.93 24,656,597.43 8.68 259,458,239.06 279,424,226.50 99.93 24,104,307.26 8.63 255,319,919.24 method combination

Total 284,306,745.85 / 24,848,506.79 / 259,458,239.06 279,616,135.86 / 24,296,216.62 / 255,319,919.24

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Provision for bad debts is made individually:

□Applicable √Not applicable

Provision for bad debts by group:

√Applicable □Not applicable

Portfolio accrual items: aging portfolio

Unit: Yuan Currency: RMB Closing balance

Name

Book balance Bad debt provision Proportion (%) Within 1 year (including 1 year) 194,193,983.42 9,709,699.17 5.00 1-2 years 16,485,801.40 1,648,580.14 10.00 2-3 years 19,574,891.95 5,872,467.59 30.00 3-4 years 1,531,895.06 765,947.53 50.00 4-5 years 2,297,721.75 1,838,177.40 80.00 More than 5 years 4,821,725.60 4,821,725.60 100.00 Total 238,906,019.18 24,656,597.43

Instructions on accruing bad debt provisions by group:

□Applicable √Not applicable

Provision for bad debts based on the general expected credit loss model

□Applicable √Not applicable

Basis for division of each stage and provision ratio for bad debts

None

Explanation of significant changes in the book balance of accounts receivable that have experienced changes in loss provisions during the current period:

□Applicable √Not applicable

(3) Bad debt provisions

√Applicable □Not applicable

Unit: Yuan Currency: RMB Change amount in the current period

Category Beginning Balance Ending Balance

Provision Recovery or reversal Write-off or write-off Other changes

Bad provision based on individual items

191,909.36 191,909.36 Account preparation

Bad provision based on combination

24,104,307.26 552,290.17 24,656,597.43 Account preparation

Total 24,296,216.62 552,290.17 24,848,506.79

Among them, the amount of recovery or reversal of bad debt provisions for the current period is important:

□Applicable √Not applicable

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Other instructions

None

(4) Accounts receivable actually written off in the current period

□Applicable √Not applicable

Among them, the important write-off of accounts receivable

□Applicable √Not applicable

Instructions for writing off accounts receivable:

□Applicable √Not applicable

(5) Accounts receivable and contract assets of the top five ending balances by debtors

√Applicable □Not applicable

Unit: Yuan Currency: RMB accounts receivable and

Accounts Receivable and Hehe

Accounts receivable at the end of the period Contract assets at the end of the period Contract assets at the end of the period Bad debt provision at the end of the unit name Same assets at the end of the period

Balance Balance Balance amount of total balance

Proportion (%) Lianhuan (Suqian)

23,918,738.82 23,918,738.82 8.41 Pharmaceutical Co., Ltd.

Shandong Jiuzhou General Medical Clinic

14,038,014.40 14,038,014.40 4.94 701,900.72 Pharmaceutical Co., Ltd.

Jiangsu Province Huabao Medical

12,777,052.19 12,777,052.19 4.49 4,281,049.25 Pharmaceutical Co., Ltd.

Shanxi Kangbaolongda

Trading Co., Ltd. 11,024,755.00 11,024,755.00 3.88 551,237.75 Pharmaceutical Branch

Yangzhou Lianhuan Pharmaceutical

8,702,820.00 8,702,820.00 3.06 Marketing Co., Ltd.

Total 70,461,380.41 70,461,380.41 24.78 5,534,187.72Other instructions

None

Other notes:

□Applicable √Not applicable

2. Other receivables

Item list

√Applicable □Not applicable

Unit: Yuan Currency: RMB

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Jiangsu Lihuan Pharmaceutical Co., Ltd. 2026 Semi-Annual Report

Item Closing balance Opening balance Interest receivable

Dividends receivable

Other receivables 22,874,367.55 23,386,698.40

Total 22,874,367.55 23,386,698.40

Other notes:

□Applicable √Not applicable

interest receivable

(1).Classification of interest receivable

□Applicable √Not applicable

(2).Important overdue interest

□Applicable √Not applicable

(3). Classified disclosure according to bad debt accrual method □Applicable √Not applicable

Provision for bad debts is made individually:

□Applicable √Not applicable

Explanation on the provision of bad debt provisions by individual items: □ Applicable √ Not applicable

Provision for bad debts by group:

□Applicable √Not applicable

(4). Provision for bad debts based on the general expected credit loss model □Applicable √Not applicable

The basis for dividing each stage and the proportion of provision for bad debts are not available

Explanation of significant changes in the book balance of interest receivable due to changes in loss provisions in the current period: □ Applicable √ Not applicable

(5). Bad debt provisions

□Applicable √Not applicable

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Among them, the amount of bad debt provision recovery or reversal in the current period is important: □ Applicable √ Not applicable

Other notes:

None

(6). Interest receivable actually written off in the current period □ Applicable √ Not applicable

Among them, the important write-off of interest receivable □ Applicable √ Not applicable

Write-off instructions:

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

Dividends receivable

(7). Dividends receivable

□Applicable √Not applicable

(8). Important dividends receivable aged more than 1 year □ Applicable √ Not applicable

(9). Classified disclosure according to bad debt accrual method □Applicable √Not applicable

Provision for bad debts is made individually:

□Applicable √Not applicable

Explanation on the provision of bad debt provisions by individual items: □ Applicable √ Not applicable

Provision for bad debts by group:

□Applicable √Not applicable

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(10). Provision for bad debts based on the general expected credit loss model □Applicable √Not applicable

Basis for division of each stage and provision ratio for bad debts

None

Explanation of significant changes in the book balance of dividends receivable due to changes in loss provisions in the current period: □ Applicable √ Not applicable

(11).Bad debt provisions

□Applicable √Not applicable

Among them, the amount of recovery or reversal of bad debt provisions for the current period is important:

□Applicable √Not applicable

Other notes:

None

(12). Dividends receivable actually written off in the current period

□Applicable √Not applicable

Among them, the important write-off of dividends receivable

□Applicable √Not applicable

Write-off instructions:

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

Other receivables

(13). Disclosure based on aging

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Aging Book balance at the end of the period Book balance at the beginning of the period Within 1 year (including 1 year) 3,035,190.34 3,288,705.50 Subtotal within 1 year 3,035,190.34 3,288,705.50 1 to 2 years 15,334,264.48 15,661,522.55 2 to 3 years 3,313,900.21 3,330,419.86

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More than 3 years

3 to 4 years 3,202,353.65 3,125,734.00 4 to 5 years 26,928.00 45,454.32 More than 5 years 3,480,739.95 3,991,977.27Total 28,393,376.63 29,443,813.50

(14). Classification by nature of payment

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Nature of payment Book balance at the end of the period Book balance at the beginning of the period

Demolition compensation 14,798,816.57 14,798,816.57 Reserve fund 10,245,361.51 10,352,636.75 Security deposit and deposit 736,117.00 1,679,278.63 Current accounts 2,613,081.55 2,613,081.55 Total 28,393,376.63 29,443,813.50

(15). Bad debt provision accrual

√Applicable □Not applicable

Unit: Yuan Currency: RMB Phase 1 Phase 2 Phase 3

Expected credit throughout the lifetime Credit expected throughout the lifetime

Provision for bad debts Expected for the next 12 months Total

Loss (no credit deduction has occurred Loss (credit deduction has occurred)

credit loss

value) value)

Balance as of January 1, 2026

Balance as of January 1, 2026

164,435.28 5,892,679.82 6,057,115.10 in this period

--Transfer to the second stage -26,772.40 26,772.40

--Transfer to the third stage

--Return to the second stage

--Return to the first stage

Provision in this period 14,096.64 -552,202.66 -538,106.02 Transferred in this period

Sales in this period

Write-off in this period

Other changes

Balance on June 30, 2026 151,759.52 5,367,249.56 5,519,009.08

Basis for division of each stage and provision ratio for bad debts

None

Explanation of significant changes in the book balance of other receivables that have experienced changes in loss provisions during the current period:

□Applicable √Not applicable

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The amount of bad debt provision for the current period and the basis for assessing whether the credit risk of financial instruments has increased significantly:

□Applicable √Not applicable

(16). Bad debt provisions

√Applicable □Not applicable

Unit: Yuan Currency: RMB Change amount in the current period

Category Opening balance Recovery or write-off or other Ending balance accrual

Reversal of write-off changes

Provision for bad debts on an individual basis

Provision for bad debts by combination 6,057,115.10 -538,106.02 5,519,009.08 Total 6,057,115.10 -538,106.02 5,519,009.08

Among them, the amount of bad debt provision for the current period that is reversed or recovered is important:

□Applicable √Not applicable

Other notes:

None

(17). Other receivables actually written off in the current period

□Applicable √Not applicable

Important write-offs of other receivables:

□Applicable √Not applicable

Instructions for writing off other receivables:

□Applicable √Not applicable

(18). Other receivables with top five closing balances based on debtors

√Applicable □Not applicable

Unit: Yuan Currency: RMB to others

Accounts receivable

Closing balance Name of bad debt provision unit Closing balance Nature of payment Aging

Ratio of the total balance at the end of the period

Example(%)

Yangzhou Municipal Economic and Information Technology Commission 14,798,816.57 52.12 Demolition compensation 1-2 years 0.00 Yangzhou Lianhuan Investment Co., Ltd. 2,613,081.55 9.20 Current accounts 2-3 years 0.00 Xu Shu 1,779,000.00 6.27 Reserve fund Within 1 year 88,950.00

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Feng Chun 1,453,829.58 5.12 Reserve fund more than 5 years 1,453,829.58 Housing and Urban-Rural Development of Hanjiang District, Yangzhou City

600,000.00 2.11 Security deposit and deposit Within 1 year 30,000.00 round

Total 21,244,727.70 74.82 1,572,779.58

(19). Presented in other receivables due to centralized management of funds

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

3. Long-term equity investment

√Applicable □Not applicable

Unit: Yuan Currency: RMB Closing balance Opening balance

Less Less

item value value

Book balance Book value Book balance Book value accurate

Be prepared

Investment in subsidiaries 640,976,206.47 640,976,206.47 643,976,206.47 643,976,206.47 Investment in associates and joint ventures

Total 640,976,206.47 640,976,206.47 643,976,206.47 643,976,206.47

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(1).Investment in subsidiaries

√Applicable □Not applicable

Unit: Yuan Currency: RMB Increase or decrease in the current period

Impairment provision Ending balance (book value Impairment provision invested unit Beginning balance (book value)

Balance at the beginning of the period Additional investment Decrease in investment Provision for impairment (other values) Ending balance

Yangzhou Lianhuan Pharmaceutical Marketing Co., Ltd. 9,902,181.51 9,902,181.51 Yangzhou Lianhuan Investment Co., Ltd. 110,190,000.00 2,000,000.00 112,190,000.00 Yangzhou Pharmaceutical Co., Ltd. 90,672,654.16 90,672,654.16 Jiangsu Lianhuan Biopharmaceutical Co., Ltd. 40,000,000.00 40,000,000.00 0.00 Nanjing Lianzhi Pharmaceutical Technology Co., Ltd. 8,421,370.80 8,421,370.80 Lianhuan (Nanjing) Medical Technology Co., Ltd. 9,180,000.00 9,180,000.00 Chengdu Yazhong Biopharmaceutical Co., Ltd. 82,350,000.00 82,350,000.00 Lianhuan Pharmaceutical (Anqing) Co., Ltd. 110,000,000.00 35,000,000.00 145,000,000.00 Xinxiang Changle Pharmaceutical Co., Ltd. 183,260,000.00 0.00 183,260,000.00Total 643,976,206.47 37,000,000.00 40,000,000.00 640,976,206.47

(2). Investment in associates and joint ventures

√Applicable □Not applicable

Unit: Yuan Currency: RMB Increase or decrease in the current period

Closing balance Impairment

chase

Investment Opening balance (Account Other Comprehensive Others Announcement of distribution Provision amount (Account provision

Addition Decrease Recognized under the equity method

Unit (face value) Combined income Equity Cash dividend Impairment Face value Investment gains and losses on investments at the end of the period Others

Adjustment change or profit reserve value) balance

Capital

1. Joint ventures

Subtotal

2. Joint ventures

Yangzhou Yangda Lianhuan Pharmaceutical Gene Engineering Co., Ltd. 0.00 0.00

Subtotal

Total 0.00 0.00

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(3). Impairment testing of long-term equity investments

□Applicable √Not applicable

Other notes:

None

4. Operating income and operating costs

(1). Operating income and operating costs

√Applicable □Not applicable

Unit: Yuan Currency: RMB Amount for the current period Amount for the previous period

Project

Revenue Cost Revenue Cost Main business 328,197,845.23 91,283,234.96 383,537,269.06 74,854,110.86 Other business 1,179,319.54 451,343.43 506,802.53 127,203.85

Total 329,377,164.77 91,734,578.39 384,044,071.59 74,981,314.71

(2). Decomposition information of operating income and operating costs

√Applicable □Not applicable

Unit: Yuan Currency: RMB Total

Contract classification

Operating Income Operating Cost Product Type

Drugs 328,197,845.23 91,283,234.96 Others 1,179,319.54 451,343.43 Total 329,377,164.77 91,734,578.39 Classified by business area

Domestic sales 323,373,828.08 82,139,396.06 Overseas sales 6,003,336.69 9,595,182.33 Total 329,377,164.77 91,734,578.39

total

Other notes:

□Applicable √Not applicable

(3).Description of performance obligations

□Applicable √Not applicable

(4). Description of apportionment to remaining performance obligations

□Applicable √Not applicable

(5).Major contract changes or major transaction price adjustments

□Applicable √Not applicable

Other notes:

None

5. Investment income

√Applicable □Not applicable

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Jiangsu Lihuan Pharmaceutical Co., Ltd. 2026 Semi-Annual Report

Unit: Yuan Currency: RMB

Items Amount incurred in the current period Amount incurred in the previous period Long-term equity investment income calculated using the cost method 5,475,903.64 4,935,000.00 Long-term equity investment income calculated using the equity method -825,684.30 High credit rating bank acceptance bill discount interest -452,132.77 -758,865.26 Total 5,023,770.87 3,350,450.44Other instructions:

None

6. Others

□Applicable √Not applicable

20. Supplementary information

1. Detailed statement of non-recurring profits and losses for the current period

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Amount Description of gains and losses from disposal of non-current assets, including the write-off portion of asset impairment provisions that have been made

Government subsidies included in the current profit and loss, but are closely related to the company's normal business operations and comply with national policies and regulations

5,630,919.78, except for government subsidies that are enjoyed according to determined standards and have a lasting impact on the company’s profits and losses.

In addition to effective hedging business related to the company's normal business operations, non-financial enterprises hold financial assets and

Gains and losses from changes in fair value of financial liabilities and gains and losses from the disposal of financial assets and financial liabilities

Fund occupation fees charged to non-financial enterprises included in current profits and losses

Gains and losses from entrusting others to invest or manage assets

Profit and loss from external entrusted loans

Loss of various assets due to force majeure factors, such as natural disasters

Reversal of impairment provision for accounts receivable that has been individually tested for impairment

The investment cost of the enterprise in acquiring subsidiaries, associates and joint ventures is less than the investment it should enjoy when acquiring the investment.

Income arising from the fair value of the identifiable net assets of the unit

Net profit and loss for the current period from the beginning of the period to the date of merger of subsidiaries resulting from business combinations under common control

Gains and losses on non-monetary asset exchanges

Debt restructuring gains and losses

One-time expenses incurred by the enterprise due to the cessation of relevant business activities, such as expenses for relocating employees, etc.

One-time impact on current profits and losses due to adjustments to tax, accounting and other laws and regulations

One-time confirmation of share-based payment expenses due to cancellation or modification of equity incentive plan

For cash-settled share-based payments, changes in the fair value of employee compensation payable after the vesting date occur.

profit and loss

Gains and losses arising from changes in the fair value of investment properties that are subsequently measured using the fair value model

Gains from transactions where the transaction price appears to be unfair

Profit and loss arising from contingencies unrelated to the company's normal business operations

Custody fee income from entrusted operations

Other non-operating income and expenses other than the above items -2,533,878.02 Other profit and loss items that meet the definition of non-recurring gains and losses

Less: Impact on income tax 788,655.57 Impact on minority shareholders’ equity (after tax) 538,355.70 Total 1,770,030.49

If a company determines items not listed in the "Explanatory Announcement No. 1 on Information Disclosure of Companies that Offer Securities to the Public - Non-recurring Gains and Losses" as non-recurring gains and losses and is significant in amount, and if it defines the non-recurring gain or loss items listed in the "Explanatory Announcement No. 1 on Information Disclosure by Companies that Offer Securities to the Public - Non-recurring Gains and Losses" as recurring gains and losses, the reasons should be explained. □Applicable √Not applicable

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Other notes:

□Applicable √Not applicable

2. Return on net assets and earnings per share

√Applicable □Not applicable

Earnings per share weighted average net assets

Profit during the reporting period

Profit rate (%) Basic earnings per share Diluted earnings per share Net profit attributable to the company’s common shareholders 0.82 0.04 0.04 Net profit attributable to the company’s common shareholders after deducting non-recurring gains and losses 0.68 0.03 0.03

3. Differences in accounting data under domestic and foreign accounting standards

□Applicable √Not applicable

4. Others

□Applicable √Not applicable

Chairman: Qian Zhenhua Board of Directors Approval Submission Date: August 27, 2026

Revision information

□Applicable √Not applicable

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