Beijing Fuyuan Pharmaceutical Co., Ltd. 2025 Annual Audit Report

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1. Audit report………………………………………………… Pages 1-6

2. Financial Statements……………………………………………… Pages 7-14

(1) Consolidated Balance Sheet…………………………………………… Page 7

(2) Balance sheet of the parent company…………………………… Page 8

(3) Consolidated Income Statement…………………………………………… Page 9

(4) Income statement of the parent company…………………………… Page 10

(5) Consolidated Cash Flow Statement………………………………Page 11

(6) Cash flow statement of the parent company……………………………………Page 12

(7) Consolidated Statement of Changes in Owners’ Equity………………… Page 13

(8) Statement of changes in owner’s equity of the parent company………………… Page 14

3. Notes to the financial statements…………………………………… Pages 15-86

Audit report

Tianjian Shen [2026] No. 5517

All shareholders of Beijing Fuyuan Pharmaceutical Co., Ltd.:

1. Audit opinions

We have audited the financial statements of Beijing Fuyuan Pharmaceutical Co., Ltd. (hereinafter referred to as Fuyuan Pharmaceutical Company), including the consolidated and parent company balance sheets on December 31, 2025, the consolidated and parent company income statements, consolidated and parent company cash flow statements, consolidated and parent company owner's equity changes statements, and relevant financial statement notes for 2025.

We believe that the attached financial statements are prepared in accordance with the Accounting Standards for Business Enterprises in all material respects and fairly reflect the consolidated and parent company's financial status of Fuyuan Pharmaceutical Company on December 31, 2025, as well as the consolidated and parent company's operating results and cash flows in 2025.

2. The basis for forming audit opinions

We performed the audit work in accordance with the Chinese Certified Public Accountants Auditing Standards. Our responsibilities under these standards are further described in the "CPA's Responsibilities for the Audit of Financial Statements" section of the auditor's report. In accordance with the "Independence Standards for Chinese Certified Public Accountants No. 1 - Requirements for Independence in Financial Statement Auditing and Review Engagements" and the Chinese Code of Professional Ethics for Certified Public Accountants, we are independent from Fuyuan Pharmaceutical Company and have fulfilled other responsibilities in terms of professional ethics. In our audit, we followed the independence requirements for audits of public interest entities. We believe that the audit evidence we obtained is sufficient and appropriate and provides a basis for issuing an audit opinion.

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3. Key audit matters

Key audit matters are matters that we, based on our professional judgment, consider to be most important in the audit of the current period's financial statements. The response to these matters is based on the audit of the financial statements as a whole and the formation of audit opinions. We do not express opinions on these matters individually.

(1) Revenue recognition

1. Description of the matter

For details of relevant information disclosure, please refer to Notes 3(22), 5(2)1 and 14(1) of the financial statements.

Fuyuan Pharmaceutical Company's operating income mainly comes from the research and development, production and sales of chemical preparations and medical devices. In 2025, Fuyuan Pharmaceutical Company's operating income was RMB 3,504,445,600.

Since operating income is one of the key performance indicators of Fuyuan Pharmaceutical Company, there may be an inherent risk that the management of Fuyuan Pharmaceutical Company (hereinafter referred to as the management) achieves specific goals or expectations through inappropriate revenue recognition. Therefore, we identified revenue recognition as a key audit matter.

2. Audit response

For revenue recognition, the audit procedures we implement mainly include:

(1) Understand the key internal controls related to revenue recognition, evaluate the design of these controls, determine whether they are implemented, and test the operating effectiveness of relevant internal controls;

(2) Check the sales contract, understand the main contract terms or conditions, and evaluate whether the revenue recognition method is appropriate;

(3) Implement analysis procedures on operating income and gross profit margin by month, product, customer, etc. to identify whether there are major or abnormal fluctuations and find out the reasons;

(4) For domestic sales revenue, select relevant supporting documents for project inspection, including sales contracts, orders, sales invoices, outbound orders, delivery notes, transportation bills, customer receipt records, etc.; for export revenue, obtain electronic port information and check it with accounting records, and select relevant supporting documents for project inspection, including sales contracts, export declarations, freight bills of lading, sales invoices, etc.;

(5) Combined with the confirmation of accounts receivable, select the project to confirm the sales amount;

(6) Implement cut-off testing to check whether revenue is recognized during the appropriate period;

(7) Obtain sales return records after the balance sheet date and check whether there is any situation where the revenue recognition conditions are not met on the balance sheet date;

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(8) Check whether information related to operating income has been appropriately presented in the financial statements.

(2) Net realizable value of inventories

1. Description of the matter

For details of relevant information disclosure, please refer to Notes 3(12) and 5(1)7 of the financial statements.

As of December 31, 2025, the book balance of Fuyuan Pharmaceutical Company's inventory was RMB 421.2747 million, the provision for price decline was RMB 8.6102 million, and the book value was RMB 412.6645 million. Inventories are measured at the lower of cost and net realizable value. Management determines the net realizable value based on the estimated selling price minus the estimated costs to be incurred upon completion, estimated selling expenses and related taxes. As the inventory amount is significant and determining the net realizable value of the inventory involves significant management judgment, we identified the net realizable value of the inventory as a key audit matter.

2. Audit response

Regarding the net realizable value of inventories, the audit procedures we implemented mainly include:

(1) Understand the key internal controls related to the net realizable value of inventories, evaluate the design of these controls, determine whether they are implemented, and test the operating effectiveness of relevant internal controls;

(2) Review the results of management’s estimates of the net realizable value of inventories in previous years or subsequent re-estimates made by management;

(3) Select items to evaluate the rationality of the estimated selling price of the inventory, and review whether the estimated selling price is consistent with the sales contract price, market sales price, historical data, etc.;

(4) Evaluate the reasonableness of management’s estimates of the costs, sales expenses and related taxes that will be incurred when the inventory is completed;

(5) Test whether management’s calculation of the net realizable value of inventory is accurate;

(6) Combined with inventory monitoring, identify whether there are situations such as long inventory age, obsolete models, decreased production, fluctuations in production costs or selling prices, changes in technology or market demand, etc., and evaluate the rationality of management’s estimates of net realizable value of inventory;

(7) Check whether information related to the net realizable value of inventories has been appropriately presented in the financial statements.

4. Other information

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Management is responsible for other information. Other information includes information covered in the annual report but does not include the financial statements and our auditor's report.

Our audit opinion on the financial statements does not cover other information, nor do we express any form of assurance conclusion on other information.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained during the audit or otherwise appears to be materially misstated.

If we determine, based on the work we have performed, that other information is materially misstated, we should report that fact. We have nothing to report in this regard.

5. Responsibility of management and those charged with governance for financial statements

The management is responsible for preparing financial statements in accordance with the provisions of the Accounting Standards for Business Enterprises to achieve fair reflection, and to design, implement and maintain necessary internal controls so that the financial statements do not contain material misstatements due to fraud or errors.

When preparing financial statements, management is responsible for assessing Fuyuan Pharmaceutical's ability to continue as a going concern, disclosing matters related to going concern (if applicable), and applying the going concern assumption unless it plans to liquidate, terminate operations, or has no other realistic alternative.

Those charged with governance of Fuyuan Pharmaceutical Company (hereinafter referred to as those charged with governance) are responsible for overseeing Fuyuan Pharmaceutical Company’s financial reporting process.

6. Responsibilities of certified public accountants for auditing financial statements

Our objective is to obtain reasonable assurance as to whether the financial statements as a whole are free of material misstatements due to fraud or error, and to issue an audit report containing an audit opinion. Reasonable assurance is a high level of assurance, but it does not guarantee that an audit performed in accordance with auditing standards will always detect a material misstatement when it exists. Misstatements may be due to fraud or error and are generally considered material if they are reasonably expected individually or in aggregate to affect the economic decisions made by users of financial statements based on the financial statements.

In the process of performing audit work in accordance with the auditing standards, we use professional judgment and maintain professionalism.

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Doubtful. At the same time, we also perform the following tasks:

(1) Identify and assess the risks of material misstatement of financial statements due to fraud or errors, design and implement audit procedures to respond to these risks, and obtain sufficient and appropriate audit evidence as the basis for issuing audit opinions. Because fraud may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal controls, the risk of failing to detect a material misstatement resulting from fraud is higher than the risk of failing to detect a material misstatement resulting from error.

(2) Understand the internal controls related to auditing to design appropriate audit procedures.

(3) Evaluate the appropriateness of the accounting policies adopted by management and the reasonableness of accounting estimates and related disclosures.

(4) Draw conclusions on the appropriateness of management’s use of the going concern assumption. At the same time, based on the audit evidence obtained, a conclusion is drawn as to whether there are significant uncertainties about events or conditions that may cause significant doubts about Fuyuan Pharmaceutical Company's ability to continue as a going concern. If we conclude that significant uncertainty exists, auditing standards require us to draw the attention of users to the relevant disclosures in the financial statements in our audit report; if the disclosures are insufficient, we should issue a qualified opinion. Our conclusions are based on information available as of the date of the auditor's report. However, future events or conditions may cause Fuyuan Pharmaceutical Company to cease to continue as a going concern.

(5) Evaluate the overall presentation, structure and content of the financial statements, and evaluate whether the financial statements fairly reflect relevant transactions and events.

(6) Obtain sufficient and appropriate audit evidence regarding the financial information of entities or business activities in Fuyuan Pharmaceutical Company to express an audit opinion on the financial statements. We are responsible for directing, supervising and performing group audits and take full responsibility for our audit opinions.

We communicate with those charged with governance regarding, among other matters, the planned audit scope, timing and significant audit findings, including communication of significant internal control deficiencies identified during our audit.

We also provide statements to those charged with governance that we have complied with ethical requirements related to independence and communicate with those charged with governance all relationships and other matters that may reasonably be considered to affect our independence, and related safeguards, if applicable.

From the matters communicated with those charged with governance, we determine which matters are most significant to the audit of the current period's financial statements and therefore constitute key audit matters. We describe these matters in our audit report unless prohibited by law or regulation

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prohibit public disclosure of these matters, or, in rare circumstances, we determine that a matter should not be communicated in the auditor's report if the negative consequences that are reasonably expected to result from communicating in the auditor's report outweigh the benefits in the public interest.

Tianjian Certified Public Accountants (Special General Partnership) Chinese Certified Public Accountant: (Project Partner)

Hangzhou, China Chinese Certified Public Accountant: April 10, 2026

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Beijing Fuyuan Pharmaceutical Co., Ltd.

Notes to Financial Statements

2025

Amount unit: RMB

1. Basic situation of the company

Beijing Fuyuan Pharmaceutical Co., Ltd. (hereinafter referred to as the company or the company) was formerly Beijing Wansheng Pharmaceutical Co., Ltd. (hereinafter referred to as Wansheng Pharmaceutical Company). Wansheng Pharmaceutical Company was jointly funded and established by Beijing Biochemical Pharmaceutical Factory and Beijing Comprehensive Investment Company. It was registered with the Beijing Municipal Administration for Industry and Commerce on February 3, 1999, and obtained an enterprise legal person business license with registration number 1100001021511. With August 31, 2018 as the base date, Wansheng Pharmaceutical Company was changed into a joint-stock company as a whole. It was registered with the Tongzhou Branch of the Beijing Municipal Administration for Industry and Commerce on May 31, 2019, and is headquartered in Beijing. The company currently holds a business license with a unified social credit code of 91110112700216160K, a registered capital of 480 million yuan, and a total of 480,000,000 shares (face value 1 yuan per share). Among them, 480,000,000 A shares are circulating shares without any selling conditions. The company's shares have been listed for trading on the Shanghai Stock Exchange on June 30, 2022. The company belongs to the pharmaceutical manufacturing industry. The main business activities are the research and development, production and sales of chemical preparations and medical devices. This financial statement has been approved for external reporting by the fifth meeting of the company's third board of directors on April 10, 2026.

2. Basis for preparation of financial statements

(1) Basis for compilation

The company's financial statements are prepared on a going concern basis.

(2) Evaluation of sustainable operating capabilities

The Company has no events or circumstances that would cause significant doubts about its ability to continue operating within 12 months from the end of the reporting period.

3. Important accounting policies and accounting estimates

Important note: The Company has formulated specific accounting policies and accounting estimates based on the actual production and operation characteristics for transactions or matters such as impairment of financial instruments, inventory, depreciation of fixed assets, construction in progress, intangible assets, revenue recognition, etc.

(1) Statement on compliance with accounting standards for enterprises

The financial statements prepared by the company comply with the requirements of the accounting standards for enterprises and truly and completely reflect the company's financial status.

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conditions, operating results, cash flows and other relevant information.

(2) Accounting period

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

(3) Business cycle

The company's operating business has a short operating cycle, and 12 months is used as the liquidity classification standard for assets and liabilities.

(4) Accounting standard currency

RMB is adopted as the standard accounting currency.

(5) Determination method and selection basis of materiality criteria

The company prepares and discloses financial statements in compliance with the principle of materiality. The matters disclosed in the notes to these financial statements involve the judgment of materiality standards and the determination methods and selection basis of the materiality standards are as follows:

Judgments involving importance criteria

Materiality criteria determination method and selection basis

Disclosure matters

Important write-off accounts receivable: individual amount exceeds 0.5% of total assets

Important prepayments aged more than 1 year. The individual amount exceeds 0.5% of total assets.

Important write-off of other receivables, the individual amount exceeds 0.5% of the total assets

Important construction projects in progress The total investment in a single project exceeds 0.5% of the total assets Important accounts payable with an age exceeding 1 year The individual amount exceeds 0.5% of the total assets

Important other payables aged more than 1 year. The individual amount exceeds 0.5% of the total assets.

Important cash flows from investing activities: The amount of a single item exceeds 10% of total assets

For important capitalized R&D projects and outsourced R&D projects, the individual amount exceeds 0.5% of total assets.

Total assets/total income/total profits exceed the group's total assets/important subsidiaries and non-wholly owned subsidiaries

15% of total revenue/profit

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

1. Accounting treatment for business combinations under common control

The assets and liabilities acquired by the company in a business merger are measured according to the book value of the merged party in the consolidated financial statements of the ultimate controlling party on the merger date. The company adjusts the capital reserve based on the difference between the book value share of the owner's equity of the merged party in the final controlling party's consolidated financial statements and the book value of the merger consideration paid or the total face value of the shares issued; if the capital reserve is insufficient for offset, the company adjusts the retained earnings.

2. Accounting treatment for business combinations not under common 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 recognized as goodwill.

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First, review the fair value of each identifiable asset, liability and contingent liability of the acquired party and the measurement of the merger cost. After review, if the merger cost is still less than the fair value share of the acquiree's identifiable net assets acquired in the merger, the difference shall be included in the current profit and loss.

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

1. Judgment of control

If it has power over the investee, enjoys variable returns by participating in the relevant activities of the investee, and has the ability to use its power over the investee to affect the amount of its variable returns, it is deemed to be control.

2. Preparation method of consolidated financial statements

The parent company includes all subsidiaries it controls in the consolidated financial statements. The consolidated financial statements are based on the financial statements of the parent company and its subsidiaries, and based on other relevant information, are prepared by the parent company in accordance with the "Accounting Standards for Business Enterprises No. 33 - Consolidated Financial Statements".

(8) Determination standards for cash and cash equivalents

The cash shown in the cash flow statement refers to cash on hand and deposits that can be used for payment at any time. Cash equivalents refer to investments held by an enterprise that have short maturities, are highly liquid, are easily convertible into known amounts of cash, and have little risk of changes in value.

(9) Foreign currency business conversion

When foreign currency transactions are initially recognized, they are converted into RMB amounts using the approximate exchange rate of the spot exchange rate on the date of the transaction. On the balance sheet date, foreign currency monetary items are translated using the spot exchange rate on the balance sheet date. The exchange differences arising from different exchange rates, except for the exchange differences on the principal and interest of special foreign currency borrowings related to the acquisition and construction of assets that qualify for capitalization, are included in the current profit and loss; calculated at historical cost. Non-monetary items in foreign currencies are still translated at the approximate exchange rate of the spot exchange rate on the date of the transaction, without changing their RMB amounts; non-monetary items in foreign currencies measured at fair value are translated at the spot exchange rate on the date when the fair value is determined, and the difference is included in the current profit or loss or other comprehensive income.

(10) Financial instruments

1. Classification of financial assets and financial liabilities

Financial assets are divided into the following three categories upon initial recognition: (1) Financial assets measured at amortized cost; (2) Financial assets measured at fair value with changes included in other comprehensive income; (3) Financial assets measured at fair value with changes included in current profits and losses.

Financial liabilities are divided into the following four categories upon initial recognition: (1) Financial liabilities measured at fair value through current profits and losses; (2) Financial liabilities formed when the transfer of financial assets does not meet the conditions for derecognition or continued involvement in the transferred financial assets; (3) Financial guarantee contracts that do not belong to the above (1) or (2), and loan commitments that do not belong to the above (1) and provide loans at lower than market interest rates; (4) Financial liabilities measured at amortized cost.

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2. Recognition basis, measurement method and derecognition conditions of financial assets and financial liabilities

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

When a company becomes a party to a financial instrument contract, it recognizes a financial asset or financial liability. When financial assets or financial liabilities are initially recognized, they are measured at fair value; for financial assets and financial liabilities measured at fair value and whose changes are included in current profits and losses, relevant transaction costs are directly included in current profits and losses; for other types of financial assets or financial liabilities, relevant transaction costs are included in the initial recognition amount. However, if the company's initial recognition of accounts receivable does not contain a significant financing component or the company does not consider the financing component of a contract that does not exceed one year, the initial measurement shall be based on the transaction price defined in "Accounting Standards for Business Enterprises No. 14 - Revenue".

(2) Subsequent measurement method of financial assets

1. Financial assets measured at amortized cost

The actual interest rate method is adopted and subsequent measurement is carried out based on amortized cost. Gains or losses arising from financial assets that are measured at amortized cost and are not part of any hedging relationship are included in the current profit and loss when derecognized, reclassified, amortized according to the effective interest method, or impairment is recognized.

2. Debt instrument investments measured at fair value and changes included in other comprehensive income

Fair value is used for subsequent measurement. 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.

3. Equity instrument investments measured at fair value and changes included in other comprehensive income

Fair value is used for subsequent measurement. Dividends received (except for the recovery part of investment costs) are included in the current profits and losses, and other gains or 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.

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

Fair value is used for subsequent measurement, and the resulting gains or losses (including interest and dividend income) are included in the current profit or loss, unless the financial asset is part of a hedging relationship.

(3) Subsequent measurement method of financial liabilities

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

Such financial liabilities include trading financial liabilities (including derivatives that are financial liabilities) and financial liabilities designated as measured at fair value with changes included in current profits and losses. Such financial liabilities are subsequently measured at fair value. 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. this type of finance

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Other gains or losses arising from liabilities (including interest expenses, excluding changes in fair value caused by changes in the company's own credit risk) are included in the current profits and losses, unless the financial liability is part of a hedging relationship. 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. 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 shall be measured in accordance with the relevant provisions of "Accounting Standards for Business Enterprises No. 23 - Transfer of Financial Assets".

3. Financial guarantee contracts that do not fall under 1) or 2) above, and loan commitments that do not fall under 1) above and provide loans at lower than market interest rates

After initial recognition, subsequent measurement shall be based on the higher of the following two amounts: ① The amount of loss provision determined in accordance with the impairment regulations of financial instruments; ② The balance after the initial recognition amount deducts the accumulated amortization amount determined in accordance with the relevant provisions of "Accounting Standards for Business Enterprises No. 14 - Revenue".

4. Financial liabilities measured at amortized cost

Measured at amortized cost using the effective interest method. Gains or losses arising from financial liabilities that are measured at amortized cost and are not part of any hedging relationship are included in the current profit and loss when they are derecognized and amortized according to the effective interest method.

(4) Derecognition of financial assets and financial liabilities

1. Financial assets are derecognised when one of the following conditions is met:

① The contractual right to receive cash flows from financial assets has terminated;

② The financial assets have been transferred, and the transfer meets the provisions of the "Accounting Standards for Business Enterprises No. 23 - Transfer of Financial Assets" regarding the derecognition of financial assets.

2. When the current obligation of a financial liability (or part thereof) has been discharged, the financial liability (or part thereof) shall be derecognised accordingly.

3. Recognition basis and measurement method of financial asset transfer

If the company transfers almost all the risks and rewards of the ownership of the financial asset, it shall terminate the recognition of the financial asset, and separately recognize the rights and obligations arising or retained in the transfer as assets or liabilities; if it retains almost all the risks and rewards of the ownership of the financial asset, it shall continue to recognize the transferred financial asset. If the company neither transfers nor retains substantially all the risks and rewards of ownership of a financial asset, the following situations will apply: (1) If it does not retain control over the financial asset, the financial asset will be derecognised, and the rights and obligations arising or retained in the transfer will be separately recognized as assets or liabilities; (2) If it retains control over the financial asset, the relevant financial assets will be recognized to the extent of its continued involvement in the transferred financial assets, and the relevant liabilities will be recognized accordingly.

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 consideration received for the transfer of the financial asset shall be directly included in the current profit and loss.

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The sum of the accumulated changes in fair value of other comprehensive income corresponding to the derecognition portion (the financial assets involved in the transfer are debt instrument investments measured at fair value and whose changes are included in other comprehensive income). If a part of a financial asset is transferred, and the transferred part as a whole meets the conditions for derecognition, the entire book value of the financial asset before transfer will be apportioned between the derecognized part and the continued recognition part according to their respective relative fair values on the date of transfer, 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; (2) The consideration for the derecognition part is the sum of 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 (the financial assets involved in the transfer are debt instrument investments that are measured at fair value and their changes are included in other comprehensive income).

4. Determination method of fair value of financial assets and financial liabilities

The company determines the fair value of relevant financial assets and financial liabilities using valuation techniques that are applicable under the current circumstances and supported by sufficient available data and other information. The company divides the input values used in the valuation technology into the following levels and uses them in sequence:

(1) The first level input value is the unadjusted quoted price in an active market for the same asset or liability that can be obtained on the measurement date;

(2) The second level input value is the directly or indirectly observable input value of the relevant assets or liabilities in addition to the first level input value, including: quotations of similar assets or liabilities in active markets; quotations of the same or similar assets or liabilities in inactive markets; other observable input values other than quotations, such as interest rates and yield curves that are observable during normal quotation intervals; market verification input values, etc.;

(3) The third level input value is the unobservable input value of the relevant assets or liabilities, including interest rates that cannot be directly observed or cannot be verified by observable market data, stock volatility, future cash flows of abandonment obligations assumed in business combinations, financial forecasts made using its own data, etc.

5. Impairment of financial instruments

Based on expected credit losses, the company calculates financial assets measured at amortized cost, debt instrument investments measured at fair value with changes included in other comprehensive income, contract assets, lease receivables, and financial liabilities classified as measured at fair value with changes included in current profits and losses. Other than loan commitments, financial liabilities that are not measured at fair value through profit or loss, or financial guarantee contracts that are not financial liabilities arising from the transfer of financial assets that do not meet the conditions for derecognition or that continue to be involved in the transferred financial assets 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 effective interest rate, that is, the present value of all cash shortfalls. Among them, credit-impaired financial assets purchased or originated by the company are discounted according to the credit-adjusted actual interest rate of the financial assets.

For purchased or originated financial assets that have suffered credit impairment, the company will only recognize the financial assets since initial recognition on the balance sheet date.

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The cumulative changes in expected credit losses throughout the entire duration are recognized as loss provisions.

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

For financial assets other than the above measurement methods, the company evaluates at each balance sheet date whether its credit risk has increased significantly since initial recognition. If the credit risk has increased significantly since initial recognition, the company will measure loss provisions based on the amount of expected credit losses during the entire duration; if the credit risk has not increased significantly since initial recognition, the company will measure loss provisions based on the amount of expected credit losses on the financial instrument within the next 12 months.

The Company uses reasonable and evidence-based information available, including forward-looking information, to determine whether the credit risk of a financial instrument has increased significantly since initial recognition by comparing the risk of default on the financial instrument on the balance sheet date with the risk of default on the initial recognition date.

On the balance sheet date, if the company determines that a financial instrument has only low credit risk, it is assumed that the credit risk of the financial instrument has not increased significantly since initial recognition.

The company assesses expected credit risk and measures expected credit losses on the basis of a single financial instrument or a combination of financial instruments. When based on a portfolio of financial instruments, the company divides financial instruments into different portfolios based on common risk characteristics.

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 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.

6. Offset of financial assets and financial liabilities

Financial assets and financial liabilities are presented separately in the balance sheet and do not offset each other. However, if the following conditions are met at the same time, the company will present the net amount after offsetting each other in the balance sheet: (1) The company has the legal right to offset the recognized amount, and the legal right is currently enforceable; (2) The company plans to settle on a net basis, or realize the financial assets and pay off the financial liabilities at the same time.

For transfers of financial assets that do not meet the conditions for derecognition, the company will not offset the transferred financial assets and related liabilities.

(11) Recognition standards and accrual methods for expected credit losses on accounts receivable

1. Accounts receivable with expected credit losses based on combination of credit risk characteristics

Portfolio category Basis for determining portfolio Method of measuring expected credit losses Bank acceptance bills receivable Note type Refer to historical credit loss experience and combine with the current situation

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Portfolio category Basis for determining portfolio Method for measuring expected credit losses

conditions and predictions of future economic conditions, and calculate expected credit losses through the default risk exposure of commercial acceptance bills receivable and the expected credit loss rate throughout the duration.

Prepare accounts receivable-account aging portfolio with reference to historical credit loss experience, combined with current conditions and predictions of future economic conditions.

Comparison table of accounts receivable aging and expected credit loss rate to calculate expected credit losses

With reference to historical credit loss experience, combined with current conditions and predictions of future economic conditions, other receivables - related matters within the consolidation scope

Nature of payment, default risk exposure and combination of joint parties within the next 12 months

Expected credit loss rate for a duration, calculate expected credit losses

Prepare other receivables - aging portfolio with reference to historical credit loss experience, combined with current conditions and predictions of future economic conditions.

Comparison table of aging of other receivables and expected credit loss rate to calculate expected credit losses

2. Comparison table of aging and expected credit loss rate of aging portfolio

Accounts receivable Other receivables

Account age

Expected credit loss rate (%) Expected credit loss rate (%)

Within 1 year (inclusive, the same below) 5 5

1-2 years 20 20

2-3 years 80 80

More than 3 years 100 100

The aging of accounts receivable/other receivables is calculated from the date of initial recognition.

3. Recognition standards for accounts receivable for which expected credit losses are calculated individually

For receivables whose credit risk is significantly different from the combined credit risk, the company accrues expected credit losses on an individual basis.

(12) Inventory

1. Classification of inventory

Inventories include finished products or commodities held for sale in daily activities, work-in-progress in the production process, materials and supplies consumed in the production process or in the process of providing services, etc.

2. Valuation method for issued inventory

Inventories are issued using the weighted average method at the end of the month.

3. Inventory inventory system

The inventory system of inventories is the perpetual inventory system.

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4. Amortization method for low-value consumables and packaging materials

(1) Low value consumables

Amortization is carried out according to the one-time write-off method.

(2) Packaging

Amortization is carried out according to the one-time write-off method.

5. Provision for inventory decline

(1) Recognition standards and accrual methods for inventory depreciation provisions

On the balance sheet date, inventories are measured at the lower of cost and net realizable value, and inventory depreciation provisions are made based on the difference between cost and net realizable value. For inventories that are directly used for sale, the net realizable value is determined by the estimated selling price of the inventory minus the estimated sales expenses and related taxes in the normal production and operation process; for inventories that need to be processed, the estimated selling price of the finished products produced during the normal production and operation process is deducted by the estimated costs to be incurred upon completion. The amount after the estimated sales expenses and related taxes is determined to determine its net realizable value; on the balance sheet date, if part of the same inventory has a contract price and other parts do not have a contract price, its net realizable value is determined separately and compared with its corresponding cost to determine the amount of provision or reversal of inventory depreciation provisions.

(2) Provision for inventory decline in value on a group basis

Combination category Basis for determining the combination The net realizable value of inventory is determined based on raw materials/entrusted processing materials - validity period combination. Validity period. The net realizable value of inventory is determined based on the validity period. Inventory goods/issued goods - validity period combination. Validity period. The net realizable value of inventory is determined based on the validity period. Packaging - validity period combination. Validity period. The net realizable value of inventory is determined based on the validity period. The calculation method and basis for determining the net realizable value under the validity period combination.

Raw materials/entrusted processing materials Inventory goods/shipped goods Net realizable effect of packaging materials Period

Calculation method of net realizable value Calculation method of net realizable value Value calculation method Within 6 months (inclusive, the same below) 0% of the book balance 0% of the book balance 0% of the book balance More than 6 months 100% of the book balance 100% of the book balance 100% of the book balance

The basis for determining the net realizable value of the validity period combination: the company's product sales are affected by the validity period. The possibility of sales of inventory within 6 months of the validity period is low, and the net realizable value is expected to be 0; the sales of inventories with a validity period of more than 6 months are good, and the net realizable value is expected to be equal to the closing book balance of the inventory.

(13) Long-term equity investment

1. Judgment of joint control and significant influence

There is shared control over an arrangement in accordance with relevant agreements, and the relevant activities of the arrangement must be carried out through shared control

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Decisions can only be made after unanimous consent of all participants, and are deemed to be jointly controlled. Having the power to participate in decision-making on the financial and operating policies of the investee, but not being able to control or jointly control the formulation of these policies with other parties, is deemed to have significant influence.

2. Determination of investment costs

(1) Formed through a merger of enterprises under common control, if the merging party pays cash, transfers non-cash assets, assumes debts or issues equity securities as the merger consideration, the initial investment cost shall be the share of the book value of the owner's equity of the merged party in the consolidated financial statements of the ultimate controlling party on the date of merger. The difference between the initial investment cost of the long-term equity investment and the book value of the merger consideration paid or the total face value of the shares issued is adjusted to the capital reserve; if the capital reserve is insufficient for offset, the retained earnings are adjusted.

The company realizes the long-term equity investment formed by the merger of enterprises under the same control step by step through multiple transactions to determine whether it is a "package transaction". If it belongs to a "package transaction", each transaction shall be accounted for as a transaction that obtains control. If it does not belong to a "package deal", on the merger date, the initial investment cost will be determined based on the share of the book value of the combined party's net assets in the ultimate controlling party's consolidated financial statements that should be enjoyed after the merger. The difference between the initial investment cost of the long-term equity investment on the merger date and the book value of the long-term equity investment before the merger plus the book value of the new payment for further shares acquired on the merger date is adjusted to the capital reserve; if the capital reserve is insufficient for offset, the retained earnings are adjusted.

(2) If it is formed by a business combination not under the same control, the fair value of the merger consideration paid on the purchase date shall be regarded as its initial investment cost.

The company realizes the long-term equity investment formed by the merger of enterprises not under common control step by step through multiple transactions, and distinguishes individual financial statements and consolidated financial statements for relevant accounting treatment:

1. In individual financial statements, the sum of the book value of the original equity investment plus the new investment cost is regarded as the initial investment cost that is calculated according to the cost method.

2. In the consolidated financial statements, determine whether it is a "package deal". If it belongs to a "package transaction", each transaction shall be accounted for as a transaction that obtains control. If it does not belong to a "package transaction", the equity of the purchased party held before the purchase date will be remeasured according to the fair value of the equity on the purchase date, and the difference between the fair value and its book value will be included in the investment income of the current period; if the equity of the purchased party held before the purchase date involves other comprehensive income under equity method accounting, the other comprehensive income related to it will be converted into the current period income on the purchase date. However, other comprehensive income arising from changes in the net liabilities or net assets of the defined benefit plan due to the remeasurement of the investee is excluded.

(3) Except for business mergers: if it is obtained by paying cash, the actual purchase price paid will be used as its initial investment cost; if it is obtained by issuing equity securities, its initial investment cost will be based on the fair value of the equity securities issued; if it is obtained by debt restructuring, its initial investment cost will be determined according to "Accounting Standards for Business Enterprises No. 12 - Debt Restructuring"; if it is obtained by exchanging non-monetary assets, its initial investment cost will be determined according to "Accounting Standards for Business Enterprises No. 7 - Exchange of Non-monetary Assets"

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investment costs.

3. Subsequent measurement and profit and loss recognition methods

Long-term equity investments that control the invested unit are accounted for using the cost method; long-term equity investments in associates and joint ventures are accounted for using the equity method.

4. Methods of disposing of investments in subsidiaries step by step through multiple transactions until loss of control

(1) Principles for judging whether it is a “package deal”

If the equity investment in a subsidiary is disposed of in stages through multiple transactions until it loses control, the company shall determine whether the step-by-step transaction is a "package transaction" based on the transaction agreement terms of each step of the step-by-step transaction, the disposal consideration obtained respectively, the object of the equity sale, the disposal method, the time of disposal, and other information. If the terms, conditions and economic impact of each transaction meet one or more of the following conditions, it usually indicates that multiple transactions are a "package deal":

1. These transactions are entered into at the same time or with consideration of mutual effects;

2. These transactions as a whole can achieve a complete business result;

3. The occurrence of one transaction depends on the occurrence of at least one other transaction;

4. A transaction is uneconomical on its own but is economical when considered together with other transactions.

(2) Accounting treatment that does not belong to “package deal”

1. Individual financial statements

For the equity disposed of, the difference between its book value and the actual price obtained shall be included in the current profit and loss. For the remaining equity, if it still has a significant influence on the invested unit or exercises joint control with other parties, it will be converted to equity method accounting; if it can no longer exercise control, joint control or significant influence on the invested unit, it will be accounted for in accordance with the relevant provisions of "Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments".

2. Consolidated financial statements

Before the loss of control, the difference between the disposal price and the share of net assets of the subsidiary corresponding to the disposal of the long-term equity investment continuously calculated from the date of purchase or merger is adjusted to the capital reserve (capital premium). If the capital premium is insufficient to offset, the retained earnings are offset.

When control over the atomic company is lost, the remaining equity will be remeasured according to its fair value on the date of loss of control. The difference between the sum of the consideration obtained for disposing of the equity and the fair value of the remaining equity, minus the share of the original subsidiary's net assets calculated continuously from the date of purchase or merger based on the original shareholding ratio, shall be included in the investment income in the period when control is lost, and the goodwill shall be offset at the same time. Other comprehensive income related to the equity investment in the original subsidiary shall be converted into investment income for the current period when control is lost.

(3) Accounting treatment for “package transactions”

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1. Individual financial statements

Each transaction is accounted for as a transaction in which a subsidiary is disposed of and control is lost. However, the difference between the price of each disposal before the loss of control and the book value of the long-term equity investment corresponding to the disposal investment is recognized as other comprehensive income in individual financial statements, and is transferred to the profit and loss of the current period when control is lost.

2. Consolidated financial statements

Each transaction is accounted for as a transaction in which a subsidiary is disposed of and control is lost. However, before the loss of control, the difference between the price of each disposal and the share of the subsidiary's net assets corresponding to the disposal investment is recognized as other comprehensive income in the consolidated financial statements, and is transferred to the profit and loss of the current period when the control is lost.

(14) Fixed assets

1. Recognition conditions for fixed assets

Fixed assets refer to tangible assets held for the production of goods, provision of labor services, leasing or operation and management, and with a useful life of more than one accounting year. Fixed assets are recognized when it is likely that economic benefits will flow in and the cost can be measured reliably.

2. Depreciation methods for various types of fixed assets

Category Depreciation method Depreciation life (years) Salvage value rate (%) Annual depreciation rate (%) Houses and buildings Average annual method 5-40 3-10 19.40-2.25 General equipment Average method 3-10 3-10 32.33-9.00 Special equipment Average method 3-10 3-10 32.33-9.00 Transportation tools Average method of years 4-10 3-10 24.25-9.00

(15) Projects under construction

1. Construction in progress is recognized when it is likely that economic benefits will flow in and the cost 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 completed the final settlement, the estimated value will be transferred to fixed assets first. After the final settlement is completed, the original temporary estimated value will be adjusted according to the actual cost, but the originally accrued depreciation will not be adjusted.

Category Standards and timing for transferring construction in progress to fixed assets

The main construction project and supporting projects of houses and buildings have been substantially completed, met the predetermined design requirements, and the general equipment has been accepted. After installation and commissioning, it has reached the design requirements or the standards stipulated in the contract.

Special equipment shall meet the design requirements or standards stipulated in the contract after installation and commissioning.

(16) Borrowing costs

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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 shall be capitalized and included in the cost of the relevant assets; other borrowing costs shall be recognized as expenses when incurred and included in the current profits and losses.

2. Borrowing cost capitalization period

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

(2) 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 is suspended; the borrowing costs incurred during the interruption are recognized as current expenses until the acquisition, construction or production activities of the asset are restarted.

(3) When the assets purchased, constructed or produced that meet the capitalization conditions reach the intended usable or salable state, the capitalization of borrowing costs ceases.

3. 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 actual interest expenses incurred on the special loan in the current period (including the amortization of discounts or premiums 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 based on the amount after profit; 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 occupied.

(17) Intangible assets

1. Intangible assets include land use rights, patent rights, non-patented technologies and special software, etc., which are initially measured at cost.

2. 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. The details are as follows:

Item Service life and basis for determination Amortization method Land use rights The service life is determined to be 20-50 years based on the property rights registration period. Straight-line method

Patent rights are determined according to the expected benefit period and the service life is 5-10 years. Straight-line method

Non-patented technology has a useful life of 10 years based on the expected benefit period. Straight-line method

Special software. Determine the service life based on the expected benefit period, which is 3-10 years. Straight-line method

3. Scope of aggregation of R&D expenditures

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(1) Personnel labor costs

Personnel labor expenses include the wages and salaries of the company's R&D personnel, basic pension insurance premiums, basic medical insurance premiums, unemployment insurance premiums, work-related injury insurance premiums, maternity insurance premiums and housing provident funds, as well as labor costs for external R&D personnel.

If R&D personnel serve multiple R&D projects at the same time, labor costs will be recognized based on the working hours records of R&D personnel for each R&D project provided by the company's management department, and will be allocated proportionally among different R&D projects.

For those who are directly engaged in R&D activities or external R&D personnel who are also engaged in non-R&D activities, the company will allocate the actual labor costs incurred by the R&D personnel between R&D expenses and production and operating expenses based on reasonable methods such as the proportion of actual working hours based on the R&D personnel’s working time records in different positions.

(2) Direct investment costs

Direct investment expenses refer to the actual expenditures incurred by the company to implement research and development activities. Including: 1) Direct consumption of materials, fuel and power costs; 2) Development and manufacturing costs of molds and process equipment used for intermediate testing and product trial production, purchase costs for samples, prototypes and general testing means that do not constitute fixed assets, and inspection fees for trial products; 3) Operation and maintenance, adjustment, inspection, detection, repair and other costs of instruments and equipment used for research and development activities.

(3) Depreciation expenses and long-term prepaid expenses

Depreciation expenses refer to the depreciation expenses of instruments, equipment and buildings in use used for research and development activities.

If instruments, equipment, and buildings in use are used for R&D activities and are also used for non-R&D activities, necessary records shall be made of the use of such instruments, equipment, and buildings in use, and the actual depreciation expenses incurred shall be allocated between R&D expenses and production and operating expenses in a reasonable manner based on factors such as actual working hours and usage area.

Long-term deferred expenses refer to the long-term deferred expenses incurred during the reconstruction, modification, decoration and repair of R&D facilities. They are collected based on actual expenditures and amortized evenly in installments within the specified period.

(4) Amortization expense of intangible assets

Amortization expenses of intangible assets refer to the amortization expenses of software, intellectual property, non-patented technology (proprietary technology, licenses, design and calculation methods, etc.) used in research and development activities.

(5) Test costs

Expenses incurred for routine tooling preparation and industrial engineering for large-scale batch and commercial production are not included in the scope of the collection.

Trial expenses include clinical trial fees for new drug development, etc.

(6) Commissioned external research and development expenses

Entrusted external research and development expenses refer to the expenses incurred by the company entrusting other institutions or individuals at home and abroad to conduct research and development activities (the results of research and development activities are owned by the company and are closely related to the company's main business).

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(7) Other expenses

Other expenses refer to other expenses directly related to research and development activities in addition to the above expenses, including technical book materials fees, data translation fees, expert consultation fees, high-tech R&D insurance fees, retrieval, demonstration, review, identification, and acceptance fees for R&D results, intellectual property application fees, registration fees, agency fees, conference fees, travel expenses, communication fees, etc.

4. 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 that there is a market for the products produced using the intangible asset or that the intangible asset itself has a market. 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.

(18) Impairment of some long-term assets

For long-term assets such as long-term equity investments, fixed assets, projects under construction, right-of-use assets, and intangible assets with limited useful lives, if there are signs of impairment on the balance sheet date, the recoverable amount is estimated. Goodwill and intangible assets with indefinite useful lives formed due to business combinations are subject to impairment testing every year regardless of whether there are signs of impairment. Goodwill is tested for impairment in combination with its related asset groups or combinations of asset groups.

If the recoverable amount of the above-mentioned long-term assets is lower than its book value, the asset impairment provision shall be recognized based on the difference and included in the current profit and loss.

(19) Long-term deferred expenses

Long-term deferred expenses are calculated as expenses that have been spent and have an amortization period of more than 1 year (excluding 1 year). Long-term deferred expenses are recorded based on the actual amount incurred, 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 yet been amortized will be transferred to the current profit and loss.

(20) Employee compensation

1. Employee compensation includes short-term compensation, post-employment benefits, termination benefits and other long-term employee benefits.

2. Accounting treatment of short-term compensation

During the accounting period when employees provide services to the company, the actual short-term compensation is recognized as a liability and included in the current profit and loss or related asset costs.

3. Accounting treatment of post-employment benefits

Post-employment benefits are divided into defined contribution plans and defined benefit plans.

(1) During the accounting period when employees provide services to the company, the deposit amount payable calculated according to the defined contribution plan is recognized as a negative

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debts and included in current profits and losses or related asset costs.

(2) The accounting treatment of defined benefit plans usually includes the following steps:

1. Based on the expected cumulative benefit unit method, use unbiased and mutually consistent actuarial assumptions to estimate relevant demographic variables and financial variables, measure the obligations arising from the defined benefit plan, and determine the period to which the relevant obligations belong. At the same time, the obligations arising from the defined benefit plan are discounted to determine the present value of the defined benefit plan obligations and the current service cost;

2. If there are assets in the defined benefit plan, the deficit or surplus formed by deducting the present value of the defined benefit plan obligations from the fair value of the defined benefit plan assets is recognized as a net liability or net asset of the defined benefit plan. If a defined benefit plan has a surplus, the net assets of the defined benefit plan shall be measured at the lower of the surplus of the defined benefit plan and the asset upper limit;

3. At the end of the period, the employee compensation costs generated by the defined benefit plan are recognized as service costs, net interest on the net liabilities or net assets of the defined benefit plan, and changes caused by remeasurement of the net liabilities or net assets of the defined benefit plan. Among them, service costs and net liabilities or net assets of the defined benefit plan are The net interest is included in the current profit and loss or related asset costs, and the changes resulting from the remeasurement of the net liabilities or net assets of the defined benefit plan are included in other comprehensive income, and are not allowed to be transferred back to profit or loss in subsequent accounting periods, but these amounts recognized in other comprehensive income can be transferred within the scope of equity.

4. Accounting treatment of dismissal benefits

For dismissal benefits provided to employees, the employee compensation liabilities arising from the dismissal benefits are recognized at the earliest of the following two times and included in the current profit and loss: (1) When the company cannot unilaterally withdraw the dismissal benefits provided due to the labor relationship termination plan or layoff proposal;

(2) When a company recognizes costs or expenses related to a restructuring involving the payment of termination benefits.

5. Accounting treatment methods for other long-term employee benefits

Other long-term benefits provided to employees that meet the conditions of the defined contribution plan shall be accounted for in accordance with the relevant provisions of the defined contribution plan; other long-term benefits shall be accounted for in accordance with the relevant provisions of the defined benefit plan. In order to simplify the relevant accounting treatment, the employee compensation costs incurred are recognized as service costs, net interest on other long-term employee benefit net liabilities or net assets, and the total net amount of the changes resulting from the remeasurement of other long-term employee benefit net liabilities or net assets shall be included in the current profit and loss or related asset costs.

(21) Estimated liabilities

1. Obligations resulting from contingencies such as external guarantees, litigation matters, product quality guarantees, loss-making contracts, etc., become current obligations borne by the company. When the performance of the obligation is likely to cause economic benefits to flow out of the company, and the amount of the obligation can be reliably measured, the company will recognize the obligation as an estimated liability.

2. The company initially measures estimated liabilities based on the best estimate of the expenditure required to fulfill relevant current obligations, and reviews the book value of estimated liabilities on the balance sheet date.

(22) Income

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1. Principles of revenue recognition

On the contract commencement date, the company evaluates the contract, identifies each individual performance obligation contained in the contract, and determines whether each individual performance obligation is to be performed within a certain period of time or at a certain point in time.

When one of the following conditions is met, the performance obligation is fulfilled within a certain period of time; otherwise, the performance obligation is fulfilled 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 is able to 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 recognizes revenue based on the performance progress within that period of time. When the progress of contract performance cannot be reasonably determined, if the costs incurred are expected to be compensated, revenue shall 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, revenue is recognized at the point when the customer obtains control of the relevant goods or services. 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 commodity, that is, the customer has a current payment obligation for the commodity; (2) The company has transferred the legal ownership of the commodity to the customer, that is, the customer has legal ownership of the commodity; (3) The company has physically transferred the commodity to the customer, that is, the customer has physically taken possession of the commodity; (4) The company has transferred the major risks and rewards of ownership of the commodity to the customer, that is, the customer has obtained the major risks and rewards of ownership of the commodity; (5) The customer has accepted the product; (6) Other signs indicating that the customer has obtained control of the product.

2. Income measurement principles

(1) The company measures 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 goods or services to the customer, excluding amounts collected on behalf of third parties and amounts expected to be returned to the customer.

(2) 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 a significant reversal of the cumulative recognized revenue is unlikely to occur when the relevant uncertainty is eliminated.

(3) 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 or services. 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's obtaining control of the goods or services and the customer's payment of the price will not exceed one year, it will not consider the significant financing component in the contract.

(4) 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 commencement date.

3. Specific methods of revenue recognition

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The company mainly sells products such as chemical preparations and medical devices, which are required to perform performance obligations at a certain point in time. Domestic sales revenue is recognized when the company delivers the product to the delivery location stipulated in the contract and the customer confirms acceptance, the price has been collected or the right to receive payment has been obtained, and the relevant economic benefits are likely to flow in. Export sales revenue is recognized when the company has declared the product to customs according to the contract, obtained the bill of lading, collected payment or obtained the right to receive payment, and the relevant economic benefits are likely to flow in.

(23) Contract assets and contract liabilities

Companies present contract assets or contract liabilities on their balance sheets based on the relationship between the fulfillment of performance obligations and payments from customers. The company will present the net amount after offsetting contract assets and contract liabilities under the same contract.

The Company presents the right to receive consideration from customers that is unconditional (i.e., dependent only on the passage of time) as receivables and the right to receive consideration for goods transferred to the customer (that is, a right that is dependent on factors other than the passage of time) as a contract asset.

The Company presents obligations to transfer goods to customers for consideration received or receivable from customers as contract liabilities.

(24) Government subsidies

1. Government subsidies are recognized when the following conditions are met at the same time: (1) The company is able to meet the conditions attached to the government subsidy;

(2) The company can receive government subsidies. If government subsidies are monetary assets, they shall be measured based on the amount received or receivable. If the government subsidy is a non-monetary asset, it shall be measured at fair value; if the fair value cannot be obtained reliably, it shall be measured at the nominal amount.

2. Judgment basis and accounting treatment method for government subsidies related to assets

Government documents stipulate that government subsidies used to purchase, construct or otherwise form long-term assets are classified as asset-related government subsidies. If the government documents are unclear, the judgment will be based on the basic conditions that must be met to obtain the subsidy. If the basic condition is the acquisition, construction or other means of forming long-term assets, it will be regarded as an asset-related government subsidy. Government subsidies related to assets are offset against the book value of the relevant assets or recognized as deferred income. If government subsidies related to assets are recognized as deferred income, they shall be included in profits and losses in installments according to a reasonable and systematic method within the useful life of the relevant assets. Government subsidies measured according to the nominal amount are directly included in the current profit and loss. If the relevant assets are sold, transferred, scrapped or damaged before the end of their useful life, the undistributed balance of relevant deferred income will be transferred to the profit and loss of the current period of asset disposal.

3. Basis for judgment and accounting treatment of government subsidies related to income

Government subsidies other than asset-related government subsidies are classified as income-related government subsidies. For government subsidies that contain both asset-related parts and income-related parts, it is difficult to distinguish whether they are asset-related or income-related, and are classified as a whole as income-related government subsidies. If government subsidies related to income are used to compensate for relevant costs, expenses or losses in the future period, they are recognized as deferred income. During the period when the relevant costs, expenses or losses are recognized, they are included in the current profits and losses or offset the relevant costs; if they are used to compensate for the relevant costs, expenses or losses that have already occurred, they are directly included in the current profits and losses or offset the relevant costs.

4. Government subsidies related to the company’s daily operating activities shall be included in other income or offset related expenses according to the economic and business essence.

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related costs. Government subsidies that have nothing to do with the company's daily activities are included in non-operating income and expenses.

5. Accounting treatment method for policy preferential loan interest discounts

(1) The finance department allocates interest discount funds to the lending bank, and the lending bank provides loans to the company at policy-based preferential interest rates. The actual loan amount received is used as the entry value of the loan, and the relevant borrowing costs are calculated based on the loan principal and the policy-based preferential interest rate.

(2) If the finance department directly allocates interest discount funds to the company, the corresponding interest discount will be used to offset related borrowing costs.

(25) Deferred income tax assets and deferred income tax liabilities

1. 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.

2. Deferred income tax assets are recognized to the extent that it is probable that the taxable income will be available to offset the deductible temporary differences. 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.

3. On the balance sheet date, the book value of the deferred tax assets is reviewed. If it is likely that sufficient taxable income will not be available in the future period to offset the benefits of the deferred tax assets, the book value of the deferred tax assets will be written down. The amount of the write-down is reversed when it is probable that sufficient taxable income will be obtained.

4. 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 tax arising from the following situations: (1) business merger; (2) transactions or events directly recognized in owner's equity.

5. When the following conditions are met at the same time, the company will present the deferred income tax assets and deferred income tax liabilities as the net amount after offsetting: (1) It has the legal right to settle the current income tax assets and current income tax liabilities on a net basis; (2) 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 to different taxable entities. However, in each future period when important deferred income tax assets and deferred income tax liabilities are reversed, the taxable entity involved intends to settle the current income tax assets and current income tax liabilities with a net amount or to obtain assets and pay off debts at the same time.

(26) Leasing

1. The company as lessee

On the start date of the lease period, the company identifies leases with a lease term of no more than 12 months and that do not include a purchase option as short-term leases; leases with a low value when a single leased asset is a new asset are identified as low-value asset leases. If a company subleases or anticipates subletting a leased asset, the original lease will not be deemed a low-value asset lease.

For all short-term leases and leases of low-value assets, the Company extends the lease payments on a straight-line basis over the lease term.

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The amount shall be included in the cost of relevant assets or current profits and losses.

In addition to the above-mentioned short-term leases and low-value asset leases that adopt simplified treatment, the company recognizes right-of-use assets and lease liabilities for leases on the start date of the lease period.

(1) Right-of-use assets

The right-of-use assets are initially measured at cost, which includes: 1) the initial measurement amount of the lease liability; 2) the lease payment amount paid on or before the start date of the lease period, and if there is a lease incentive, the amount related to the lease incentive that has been enjoyed will be deducted;

3. The initial direct costs incurred by the lessee; 4) The costs that the lessee expects to incur 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 depreciates right-of-use assets on a straight-line basis. 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 company will accrue depreciation during the shorter of the lease term and the remaining useful life of the leased asset.

(2) Lease liabilities

At the beginning of the lease period, the company recognizes the present value of the unpaid lease payments as lease liabilities. When calculating the present value of lease payments, the interest rate implicit in the lease is used as the discount rate. If the interest rate implicit in the lease cannot be determined, the company's incremental borrowing rate is used as the discount rate. The difference between the lease payment and its present value is regarded as an unrecognized financing expense, and interest expenses are recognized at the discount rate used to confirm the present value of the lease payment during each period of the lease term, and included in the current profit and loss. Variable lease payments that are not included in the measurement of lease liabilities are included in the current profit and loss when actually incurred.

After the start date of the lease period, when the actual fixed payment amount changes, the estimated amount payable of the guaranteed residual value changes, the index or ratio used to determine the lease payment amount changes, the evaluation results or actual exercise of the purchase option, lease renewal option or termination option change, When a change occurs, the company remeasures the lease liability based on the present value of the changed lease payment, and adjusts the book value of the right-of-use asset 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 remaining amount will be included in the current profit and loss.

2. The company acts as lessor

On the lease commencement date, the Company classifies leases that substantially transfer almost all risks and rewards related to the ownership of the leased assets as finance leases, and other leases as operating leases.

(1) Operating lease

The company recognizes the lease receipts as rental income according to the straight-line method in each period during the lease term. The initial direct expenses incurred are capitalized and amortized on the same basis as the rental income recognition, and included in the current profit and loss in installments. Variable lease payments obtained by the company related to operating leases that are not included in the lease receipts are included in the current profit and loss when they actually occur.

(2) Finance lease

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On the start date of the lease period, the company recognizes the financial lease receivable based on the net lease investment (the sum of the unguaranteed residual value and the present value of the lease payments not yet received on the start date of the lease discounted at the interest rate implicit in the lease), and terminates the recognition of financial lease assets. During each period of the lease term, the company calculates and recognizes interest income based on the interest rate implicit in the lease.

Variable lease payments obtained by the company that are not included in the measurement of net lease investment are included in the current profit and loss when actually incurred.

3. Sale and leaseback

(1) The company as lessee

The company evaluates and determines whether the asset transfer in the sale and leaseback transaction is a sale in accordance with the provisions of "Accounting Standards for Business Enterprises No. 14 - Revenue".

If the asset transfer in a sale and leaseback transaction is a sale, the company measures the right-of-use assets formed by the sale and leaseback based on the portion of the original asset's book value related to the right of use obtained through the leaseback, and only recognizes relevant gains or losses for the rights transferred to the lessor.

If the asset transfer in a sale and leaseback transaction does not constitute a sale, the company will continue to recognize the transferred assets, and at the same time recognize a financial liability equal to the transfer income, and perform accounting treatment on the financial liability in accordance with the "Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments".

(2) The company acts as lessor

The company evaluates and determines whether the asset transfer in the sale and leaseback transaction is a sale in accordance with the provisions of "Accounting Standards for Business Enterprises No. 14 - Revenue".

If the asset transfer in a sale and leaseback transaction is a sale, the company will account for the asset purchase in accordance with other applicable accounting standards for enterprises, and account for the asset leasing in accordance with "Accounting Standards for Business Enterprises No. 21 - Lease". If the asset transfer in a sale and leaseback transaction does not constitute a sale, the company does not recognize the transferred asset, but recognizes a financial asset equal to the transfer income, and performs accounting treatment on the financial asset in accordance with the "Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments".

(27) Safety production fees

The safety production fees withdrawn by the company in accordance with the "Administrative Measures for the Withdrawal and Use of Enterprise Safety Production Expenses" (Caizi [2022] No. 136) issued by the Ministry of Finance and the Ministry of Emergency Response shall be included in the cost of related products or current profits and losses, and shall also be recorded in the "Special Reserve" account. If the use of extracted safety production costs time and is an expense, it will be directly offset against the special reserve. If a fixed asset is formed, the expenditure incurred is collected through the "construction in progress" account and is recognized as a fixed asset when the safety project is completed and reaches the intended usable state; at the same time, the special reserve is offset according to the cost of forming the fixed asset, and the accumulated depreciation of the same amount is recognized. The fixed asset will no longer be depreciated in subsequent periods.

(28) Segment report

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The company determines its operating segments based on its internal organizational structure, management requirements, internal reporting system, etc. A company's operating segments refer to components that simultaneously meet the following conditions:

1. This component can generate income and incur expenses in daily activities;

2. The management can regularly evaluate the operating results of the component to decide to allocate resources to it and evaluate its performance;

3. Be able to obtain relevant accounting information such as the financial status, operating results and cash flow of the component through analysis.

4. Taxes

(1) Main tax types and tax rates

Tax Type Tax Calculation Basis Tax Rate

3%, 5%, 6%, 9%, 13% based on sales of goods and taxable labor calculated in accordance with tax laws;

The output tax is calculated on the basis of business income, after deducting the current export tax rebate. Goods enjoy "exemption and value-added tax".

After the input tax is allowed to be deducted, the difference is subject to the tax deduction and refund policy, and the VAT refund rate for exports is 13%.

If the tax is assessed on an ad valorem basis, 30% of the original value of the property will be deducted from the remainder.

Property tax is calculated at 1.2% of the value; if it is calculated from rent, it is calculated at 1.2% or 12% of the rental income.

12% calculated payment

Urban maintenance and construction tax Actual turnover tax paid 5%, 7%

Education fee surcharge Actual turnover tax paid 3%

Local education surcharge Actual turnover tax paid 2%

Corporate income tax: taxable income 15%, 20%

Explanation of corporate income tax rates for taxpayers with different tax rates

Name of tax payer Income tax rate

Zhejiang Yanjitang Pharmaceutical Technology Co., Ltd. 20%

Other tax entities other than the above 15%

(2) Tax incentives

1. Income tax

(1) Tax incentives for high-tech enterprises

According to the "High-tech Enterprise Certificate" No. GS202411000115 jointly issued by the Beijing Municipal Science and Technology Commission, the Beijing Municipal Bureau of Finance, and the Beijing Municipal Taxation Bureau of the State Administration of Taxation, the company is recognized as a high-tech enterprise and will enjoy the preferential tax policies for high-tech enterprises from 2024 to 2026. In 2025, the corporate income tax will be calculated and paid at a rate of 15%.

According to the "High-tech Enterprise Certificate" No. GS202511000019 jointly issued by the Beijing Municipal Science and Technology Commission, the Beijing Municipal Finance Bureau, and the Beijing Municipal Taxation Bureau of the State Administration of Taxation, the subsidiary Beijing Wanshengren Technology Co., Ltd. was recognized

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Designated as a high-tech enterprise, it will enjoy the preferential tax policies for high-tech enterprises from 2025 to 2027, and the corporate income tax will be calculated and paid at a rate of 15% in 2025.

According to the "High-tech Enterprise Certificate" No. GR202534001007 jointly issued by the Anhui Provincial Department of Industry and Information Technology, the Anhui Provincial Department of Finance, and the Anhui Provincial Taxation Bureau of the State Administration of Taxation, the subsidiary Fuyuan Pharmaceutical Co., Ltd. was recognized as a high-tech enterprise and will enjoy the preferential tax policies for high-tech enterprises from 2025 to 2027. In 2025, corporate income tax will be calculated and paid at a rate of 15%.

According to the "High-tech Enterprise Certificate" No. GR202433012318 issued by the Zhejiang Provincial Department of Economy and Information Technology, the Zhejiang Provincial Department of Finance, and the Zhejiang Provincial Taxation Bureau of the State Administration of Taxation, the subsidiary Zhejiang Aisheng Pharmaceutical Co., Ltd. is recognized as a high-tech enterprise and will enjoy the preferential tax policies for high-tech enterprises from 2024 to 2026. In 2025, corporate income tax will be calculated and paid at a rate of 15%.

(2) Tax incentives for small and micro enterprises

According to the "Announcement of the Ministry of Finance and the State Administration of Taxation on Relevant Tax Policies to Further Support the Development of Small and Micro Enterprises and Individual Industrial and Commercial Households" (Announcement No. 12 of the Ministry of Finance and the State Administration of Taxation of 2023), from January 1, 2023 to December 31, 2027, small and low-profit enterprises will be included in taxable income at a reduced rate of 25%, and corporate income tax will be paid at a rate of 20%. The subsidiary Zhejiang Yanjitang Pharmaceutical Technology Co., Ltd. calculates and pays corporate income tax according to the corresponding preferential tax rate.

2. Additional VAT deduction

According to the "Announcement of the Ministry of Finance and the State Administration of Taxation on the Additional VAT Deduction Policy for Advanced Manufacturing Enterprises" (Announcement No. 43 of the Ministry of Finance and the State Administration of Taxation in 2023), 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. The Company and its subsidiaries Beijing Wanshengren Technology Co., Ltd., Fuyuan Pharmaceutical Co., Ltd., and Zhejiang Aisheng Pharmaceutical Co., Ltd. enjoy the preferential policy of super deduction of input tax.

5. Notes on Consolidated Financial Statement Items

(1) Notes on consolidated balance sheet items

1. Monetary funds

(1) Details

Item Ending amount Beginning amount

Cash on hand 2,354.22 2,519.26 Bank deposits 634,045,740.08 792,937,073.20

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Item Ending amount Beginning amount

Other monetary funds 307,000.00 1,128,211.19 Total 634,355,094.30 794,067,803.65

(2) Other monetary funds at the end of the period include a guarantee deposit of RMB 300,000.00 and an ETC deposit of RMB 7,000.00.

2. Trading financial assets

Item Ending amount Beginning amount

Classified as measured at fair value with changes included in current profit and loss

1,428,800,000.00 1,579,000,000.00 Financial assets

Including: Capital-guaranteed and floating-income financial products 1,428,800,000.00 1,579,000,000.00 Total 1,428,800,000.00 1,579,000,000.00

3. Accounts receivable

(1) Aging status

Aging of accounts Closing balance Opening balance

Within 1 year 431,030,711.48 371,902,279.45 1-2 years 3,504,030.45 1,326,285.98 2-3 years 444,688.88 1,440,784.73 More than 3 years 429,289.93 448,566.32 Total book balance 435,408,720.74 375,117,916.48 Less: bad debt provision 23,037,382.70 20,461,565.27 Total book value 412,371,338.04 354,656,351.21

(2) Bad debt provision accrual

1. Category details

Closing amount

Book balance Bad debt provision

Type

Provision Book value amount Proportion (%) Amount

Proportion (%)

Provision for bad debts by combination 435,408,720.74 100.00 23,037,382.70 5.29 412,371,338.04 Total 435,408,720.74 100.00 23,037,382.70 5.29 412,371,338.04

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(Continued from above table)

Beginning balance

Book balance Bad debt provision

Type

Provision Book value amount Proportion (%) Amount

Proportion (%)

Provision for bad debts by combination 375,117,916.48 100.00 20,461,565.27 5.45 354,656,351.21 Total 375,117,916.48 100.00 20,461,565.27 5.45 354,656,351.21

2. Accounts receivable using aging combination to accrue bad debt provisions

Closing amount

Account age

Book balance Bad debt provision Proportion of provision (%) Within 1 year 431,030,711.48 21,551,535.58 5.00 1-2 years 3,504,030.45 700,806.09 20.00 2-3 years 444,688.88 355,751.10 80.00 More than 3 years 429,289.93 429,289.93 100.00 Total 435,408,720.74 23,037,382.70 5.29

(3) Changes in bad debt provisions

Amount of changes in the current period

Item Beginning balance Closing balance

Provision Recovery or transfer Write-off Others

Provision based on combination

20,461,565.27 3,174,295.87 598,478.44 23,037,382.70 Bad debt provision

Total 20,461,565.27 3,174,295.87 598,478.44 23,037,382.70

(4) Accounts receivable actually written off in the current period

Item write-off amount

Accounts receivable actually written off 598,478.44

(5) Top 5 accounts receivable

Accounts receivable at the end of the period Name of the bad billing unit of accounts receivable Ending book balance

Proportion of amount (%) Prepare

Customer one 7,479,136.13 1.72 373,956.81Customer two 6,950,280.05 1.60 347,514.00Customer three 6,654,657.75 1.53 332,732.89Customer four 6,111,966.06 1.40 305,598.30

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Accounts receivable at the end of the period Name of the bad billing unit of accounts receivable Ending book balance

Proportion of amount (%) Prepare

Customer five 5,539,019.33 1.27 276,950.97 Subtotal 32,735,059.32 7.52 1,636,752.97

4. Receivables Financing

(1) Details

Item Closing balance Opening balance Bank acceptance bill 110,191,392.50 97,425,194.26 Total 110,191,392.50 97,425,194.26

(2) Provision for impairment losses

1. Category details

Closing amount

Cumulatively recognized credit impairment allowance

cost

Type of equipment

Proportion of book value Provision

Amount Amount

(%) Proportion (%)

Provision for impairment by group 110,191,392.50 100.00 110,191,392.50 Including: bank acceptance bill 110,191,392.50 100.00 110,191,392.50 Total 110,191,392.50 100.00 110,191,392.50 (continued from the above table)

Beginning balance

Cost Cumulatively recognized credit impairment provisions

Type

Proportion Provision Book value amount Amount

(%) Proportion (%)

Provision for impairment on a group basis 97,425,194.26 100.00 97,425,194.26 Including: bank acceptance bill 97,425,194.26 100.00 97,425,194.26 Total 97,425,194.26 100.00 97,425,194.26

2. Financing of receivables using collective impairment provision

Closing amount

Project

Cost Cumulatively recognized credit impairment provisions Provision ratio (%) Bank acceptance bill portfolio 110,191,392.50

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Closing amount

Project

Cost Total recognized credit impairment provisions Provision ratio (%) 110,191,392.50

(3) Financing of receivables 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

Terminate at the end of the period

Project

Confirm amount

Bank acceptance bill 280,533,625.51

Subtotal 280,533,625.51

The acceptor of the bank acceptance bill is a commercial bank with relatively high credit, and the possibility that the bank acceptance bill accepted by it will not be paid when due is low, so the company will derecognize the bank acceptance bill that has been endorsed or discounted. However, if the bills are not paid when due, the company will still be jointly and severally liable to the holders in accordance with the provisions of the Negotiable Instruments Law.

5. Advance payments

(1) Aging analysis

Ending amount Beginning amount

Aging Proportion Impairment Proportion Impairment

Book balance Book value Book balance Book value

(%) Prepare (%) Prepare

Within 1 year 41,501,522.26 98.77 41,501,522.26 23,602,385.46 96.33 23,602,385.46 1-2 years 143,050.09 0.34 143,050.09 784,984.14 3.20 784,984.14 2-3 years 311,076.57 0.74 311,076.57 59,813.40 0.24 59,813.40 More than 3 years 61,503.40 0.15 61,503.40 57,527.43 0.23 57,527.43 Total 42,017,152.32 100.00 42,017,152.32 24,504,710.43 100.00 24,504,710.43

(2) Top 5 prepayment amounts

Name of unit accounting for prepayments Book balance

Proportion of balance (%) Supplier one 2,852,065.66 6.79 Supplier two 2,517,743.36 5.99 Supplier three 2,358,490.57 5.61 Supplier four 2,099,056.60 5.00 Supplier five 2,025,831.12 4.82 Subtotal 11,853,187.31 28.21

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6. Other receivables

(1) Classification of payment nature

Nature of payment Ending amount Beginning amount

Deposit and guarantee 4,569,144.82 4,759,251.82 Others 218,682.24 104,729.44 Total book balance 4,787,827.06 4,863,981.26 Less: bad debt provision 3,367,507.53 3,662,015.49 Total book value 1,420,319.53 1,201,965.77

(2) Aging status

Aging of accounts Closing balance Opening balance

Within 1 year 1,074,824.82 671,857.26 1-2 years 373,038.24 563,026.74 2-3 years 504,026.74 566,400.00 More than 3 years 2,835,937.26 3,062,697.26 Total book balance 4,787,827.06 4,863,981.26 Less: bad debt provision 3,367,507.53 3,662,015.49 Total book value 1,420,319.53 1,201,965.77

(3) Bad debt provision accrual

1. Category details

Closing amount

Book balance Bad debt provision

Type

Provision Book value amount Proportion (%) Amount

Proportion (%)

Provision for bad debts on a group basis 4,787,827.06 100.00 3,367,507.53 70.33 1,420,319.53 Total 4,787,827.06 100.00 3,367,507.53 70.33 1,420,319.53 (continued from the above table)

Beginning balance

Book balance Bad debt provision

Type

Provision Book value amount Proportion (%) Amount

Proportion (%)

Provision for bad debts by combination 4,863,981.26 100.00 3,662,015.49 75.29 1,201,965.77 Total 4,863,981.26 100.00 3,662,015.49 75.29 1,201,965.77

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2. Other receivables using collective provision for bad debts

Closing amount

Combination name

Book balance Bad debt provision Provision ratio (%) Aging combination 4,787,827.06 3,367,507.53 70.33 Of which: within 1 year 1,074,824.82 53,741.24 5.00 1-2 years 373,038.24 74,607.64 20.00 2-3 years 504,026.74 403,221.39 80.00 More than 3 years 2,835,937.26 2,835,937.26 100.00 Total 4,787,827.06 3,367,507.53 70.33

(4) Changes in bad debt provisions

The first stage The second stage The third stage

Lifetime expectations Lifetime forecasts

Item Total credit losses in the next 12 months (has not occurred) Period credit losses (has

expected credit losses

Credit impairment) Credit impairment occurs)

Opening amount 33,592.88 112,605.35 3,515,817.26 3,662,015.49 Opening amount in the current period —— —— ——

--Transfer to the second stage -18,651.91 18,651.91

--Transfer to the third stage -100,805.34 100,805.34

Provision for the current period 38,800.27 44,155.72 -377,463.95 -294,507.96 Ending amount 53,741.24 74,607.64 3,239,158.65 3,367,507.53 Ending bad debt provision calculation

5.00 20.00 96.98 70.33Proportion (%)

(5) Top 5 other receivables

Account for the balance of other receivables

Unit name Nature of payment Ending book balance Account age Ending bad debt provision

Proportion of amount (%)

Beijing Futian Embroidery Machine Co., Ltd.

Deposit guarantee 1,389,095.00 More than 3 years 29.01 1,389,095.00 Co., Ltd.

Beijing Dongxingtang Technology Development

Deposit security deposit 720,142.26 More than 3 years 15.04 720,142.26 Exhibition Co., Ltd.

3,800.00 2-3 years 0.08 3,040.00Beijing Jinglin Yuantai Technology

Deposit security deposit

DEVELOPMENTS LIMITED.

430,000.00 More than 3 years 8.98 430,000.00

50,000.00 Within 1 year 1.04 2,500.00 Guangzhou Defu Ali Health

Deposit security deposit

Big Pharmacy Co., Ltd.

330,000.00 2-3 years 6.89 264,000.00 Aramark Service Industry Deposit Security Deposit 342,090.00 Within 1 year 7.14 17,104.50

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Account for the balance of other receivables

Unit name Nature of payment Book balance at the end of the period Aging of accounts Proportion of bad debt provision at the end of the period (%)

(China) Co., Ltd. North

Beijing Branch

Subtotal 3,265,127.26 68.18 2,825,881.76

7. Inventory

(1) Details

Ending amount Beginning amount

Project

Book balance Provision for price decline Book value Book balance Provision for price decline Book value Raw materials 142,929,952.65 4,939,944.60 137,990,008.05 153,340,715.97 4,624,658.02 148,716,057.95 Work in progress 121,026,815.17 121,026,815.17 67,648,564.49 67,648,564.49 Goods in stock 100,206,514.91 3,247,676.12 96,958,838.79 86,556,447.10 1,605,083.47 84,951,363.63 Products shipped 12,203,162.42 12,203,162.42 8,753,738.28 8,753,738.28 Commissioned processing

8,440,771.10 4,600.60 8,436,170.50 6,612,430.91 81,868.55 6,530,562.36 Materials

Packaging 28,762,124.27 370,148.74 28,391,975.53 24,820,616.17 750,231.88 24,070,384.29 Low value and easy to consume

7,705,364.29 47,854.42 7,657,509.87 6,937,582.34 52,790.93 6,884,791.41 products

Total 421,274,704.81 8,610,224.48 412,664,480.33 354,670,095.26 7,114,632.85 347,555,462.41

(2) Provision for inventory decline

1. Details

Increase in this period Decrease in this period

Item Opening amount Ending amount Provision Others Reversal or write-off Others

Raw materials 4,624,658.02 5,139,593.80 4,824,307.22 4,939,944.60 Inventory goods 1,605,083.47 9,942,420.61 8,299,827.96 3,247,676.12 Commissioned processing materials 81,868.55 262,048.22 339,316.17 4,600.60 Packaging 750,231.88 1,137,742.90 1,517,826.04 370,148.74 Low-value consumables 52,790.93 9,432.22 14,368.73 47,854.42 Total 7,114,632.85 16,491,237.75 14,995,646.12 8,610,224.48

2. The specific basis for determining the net realizable value and the reasons for the reversal or write-off of inventory depreciation reserves in the current period

Determine net realizable value, reverse inventory depreciation, write off inventory depreciation

Project

Specific basis for preparation Reason for preparation

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Determine the net realizable value, reverse inventory depreciation items, and write off inventory depreciation items.

Specific basis Reason for preparation Reason for preparation Raw materials Inventory Validity within 6 months, variable

/ In this period, the inventory of depreciated goods will be accrued to the issuer. The current net value is equal to 0 and the validity period is 6 months.

/ Not applicable Inventories prepared for scrapping/sold/commissioned processing for more than 3 months, net realizable value, etc.

/ consumption

Materials and packaging materials in book balance

/

Estimated selling price of relevant finished goods minus

Inventories were accrued in previous periods. Inventory depreciation has been accrued in this period.

Estimated selling expenses and related

Low-value consumables The inventory prepared for depreciation is variable. The amount of inventory prepared for scrapping/sold/taxes is determined to be realizable.

Increase in current net worth Consumption

net worth

Estimated selling price of relevant finished goods minus

Costs estimated to be incurred until completion. Inventories were accrued in previous periods. In this period, the inventory work-in-progress cost, estimated sales expenses, and inventory variable provision for depreciation have been accrued at the beginning of the period. The amount after inventory scrapping/related taxes and fees for depreciation provision has been determined. The net realizable value has increased. Consumption

net realizable value

3. Inventory depreciation provisions accrued on a group basis

Closing amount

Combination name

Book balance Provision for price decline Provision standard and proportion Raw materials - validity period combination 142,929,952.65 4,939,944.60

Including: Within 6 months 4,939,944.60 4,939,944.60 Provision based on 100% of the book balance

More than 6 months 137,990,008.05

Inventory products - validity period combination 100,206,514.91 3,247,676.12

Including: Within 6 months 3,247,676.12 3,247,676.12 Provision based on 100% of the book balance

More than 6 months 96,958,838.79

Goods issued - validity period combination 12,203,162.42

Among them: within 6 months, accrued at 100% of the book balance

More than 6 months 12,203,162.42

Entrusted processing of materials - validity period group

8,440,771.10 4,600.60

combine

Including: Within 6 months 4,600.60 4,600.60 Provision based on 100% of the book balance

More than 6 months 8,436,170.50

Packaging - validity period combination 28,762,124.27 370,148.74

Including: Within 6 months 370,148.74 370,148.74 Provision based on 100% of the book balance for more than 6 months 28,391,975.53

Subtotal 292,542,525.35 8,562,370.06

(Continued from above table)

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Beginning balance

Combination name

Book balance Provision for price decline Provision standard and proportion Raw materials - validity period combination 153,340,715.97 4,624,658.02

Including: Within 6 months 4,624,658.02 4,624,658.02 Provision based on 100% of the book balance

More than 6 months 148,716,057.95

Inventory products - validity period combination 86,556,447.10 1,605,083.47

Including: Within 6 months 1,605,083.47 1,605,083.47 Provision based on 100% of the book balance

More than 6 months 84,951,363.63

Goods shipped—validity combination 8,753,738.28

Among them: within 6 months, accrued at 100% of the book balance

More than 6 months 8,753,738.28

Entrusted processing of materials - validity period group

6,612,430.91 81,868.55

combine

Including: Within 6 months 81,868.55 81,868.55 Provision based on 100% of the book balance

More than 6 months 6,530,562.36

Packaging - validity period combination 24,820,616.17 750,231.88

Including: Within 6 months 750,231.88 750,231.88 Provision based on 100% of the book balance for more than 6 months 24,070,384.29

Subtotal 280,083,948.43 7,061,841.92

8. Other current assets

Ending amount Beginning amount

Item Impairment Impairment

Book balance Book value Book balance Book value

prepare prepare

Prepaid corporate income tax 6,510,833.28 6,510,833.28

Input value to be deducted

506,531.44 506,531.44 tax amount

Prepaid expenses 4,175,678.14 4,175,678.14 2,244,495.60 2,244,495.60 Total 10,686,511.42 10,686,511.42 2,751,027.04 2,751,027.04

9. Fixed assets

(1) Details

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Items Houses and buildings General equipment Special equipment Transportation Total original book value

Beginning amount 523,072,780.94 36,370,681.91 563,024,874.55 10,261,355.45 1,132,729,692.85 Increase in the current period 765,138,166.12 23,776,651.41 283,886,543.99 1,094,249.45 1,073,895,610.97

1. Purchase 115,253,647.79 4,951,129.46 30,020,510.62 918,050.32 151,143,338.19

2. Construction in progress

649,884,518.33 18,825,521.95 253,866,033.37 176,199.13 922,752,272.78 Transfer in

Decrease amount in the current period 222,295.55 1,843,128.04 4,589,017.19 440,940.14 7,095,380.92

Disposal or scrapping 222,295.55 1,843,128.04 4,589,017.19 440,940.14 7,095,380.92 Closing amount 1,287,988,651.51 58,304,205.28 842,322,401.35 10,914,664.76 2,199,529,922.90 Accumulated depreciation

Beginning amount 156,671,003.70 24,893,631.15 271,921,003.21 6,058,887.52 459,544,525.58 Increase in current period 36,751,895.43 4,803,833.39 57,652,057.88 693,382.50 99,901,169.20

Provision 36,751,895.43 4,803,833.39 57,652,057.88 693,382.50 99,901,169.20 Decrease amount in the current period 171,014.37 1,768,218.73 3,892,434.38 383,780.61 6,215,448.09

Disposal or scrapping 171,014.37 1,768,218.73 3,892,434.38 383,780.61 6,215,448.09 Closing amount 193,251,884.76 27,929,245.81 325,680,626.71 6,368,489.41 553,230,246.69 Impairment provision

Beginning amount 18,158.42 18,158.42 Increase in this period

Decrease amount in this period

Closing amount 18,158.42 18,158.42 Book value

Book value at the end of the period 1,094,736,766.75 30,374,959.47 516,623,616.22 4,546,175.35 1,646,281,517.79 Book value at the beginning of the period 366,401,777.24 11,477,050.76 291,085,712.92 4,202,467.93 673,167,008.85

(2) Temporarily idle fixed assets

Item Original book value Accumulated depreciation Impairment provision Book value Remarks Special equipment 6,227,032.19 3,522,818.38 2,704,213.81

Subtotal 6,227,032.19 3,522,818.38 2,704,213.81

(3) Situation of fixed assets for which title certificates have not been obtained

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Item Book value Reasons for not completing the property ownership certificate Houses and buildings 82,410,615.19 Processing in progress

Subtotal 82,410,615.19

10. Construction in progress

(1) Details

Ending amount Beginning amount

Item Impairment Impairment

Book balance Book value Book balance Book value provision Provision

High-precision pharmaceutical products

1,980,871.82 1,980,871.82 637,550,777.75 637,550,777.75Industrial construction projects

Pharmaceutical production wisdom

71,101,172.08 71,101,172.08 Support center project

Equipment to be installed and

17,284,271.44 17,284,271.44 10,499,116.44 10,499,116.44 Other sporadic projects

Total 19,265,143.26 19,265,143.26 719,151,066.27 719,151,066.27

(2) Changes in important projects under construction during the current period

Budget transfer

Project name Beginning amount Increase in the current period Other decreases Ending amount

(100 million yuan) Fixed assets

High-precision drugs

Industrial construction 11.24 637,550,777.75 185,634,058.92 814,742,671.17 6,461,293.68 1,980,871.82 projects

Drug production intelligence

Smart Support Center 1.01 71,101,172.08 22,806,521.20 93,907,693.28

Project

Subtotal 708,651,949.83 208,440,580.12 908,650,364.45 6,461,293.68 1,980,871.82 (continued from the above table)

Cumulative project investment Project Interest capitalization Interest for the current period Interest capital for the current period

Project name Funding source

Proportion of budget (%) Progress (%) Cumulative amount Capitalized amount Capitalization rate (%)

High-precision pharmaceutical products, raised funds, self-owned

81.93 99.00

Industrialization construction project, capital, pharmaceutical production wisdom

93.23 100.00 Own funds to support center projects

small plan

Note: The budget for the industrialization construction project of high-precision drugs includes tax.

11. Right-of-use assets

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Project Houses and Buildings Total

original book value

Beginning amount 82,734,620.64 82,734,620.64 Increase in current period 7,930,339.94 7,930,339.94

Lease 7,930,339.94 7,930,339.94 Reduction in current period 21,483,274.61 21,483,274.61

Disposal 21,483,274.61 21,483,274.61 Closing amount 69,181,685.97 69,181,685.97 Accumulated depreciation

Beginning amount 49,257,408.88 49,257,408.88 Increase in current period 16,236,408.81 16,236,408.81

Provision 16,236,408.81 16,236,408.81 Decrease in current period 20,620,917.33 20,620,917.33

Disposal 20,620,917.33 20,620,917.33 Closing amount 44,872,900.36 44,872,900.36 Book value

Book value at the end of the period 24,308,785.61 24,308,785.61 Book value at the beginning of the period 33,477,211.76 33,477,211.76

12. Intangible assets

Items Land use rights Patent rights Special software Non-patented technology Total original book value

Beginning amount 138,674,084.78 51,022,996.35 7,062,925.87 26,650,943.35 223,410,950.35 Increase in current period 6,542,897.45 7,075,468.78 13,618,366.23 Purchase 6,542,897.45 7,075,468.78 13,618,366.23 Reduction amount in this period

Closing amount 138,674,084.78 51,022,996.35 13,605,823.32 33,726,412.13 237,029,316.58 Accumulated amortization

Amount at the beginning of the period 31,988,441.43 43,241,876.06 4,896,080.41 4,075,471.65 84,201,869.55 Increase in the current period 5,722,438.44 3,205,492.80 690,016.66 3,419,810.97 13,037,758.87

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Items Land use rights Patent rights Special software Non-patented technology Total provision 5,722,438.44 3,205,492.80 690,016.66 3,419,810.97 13,037,758.87 Decrease amount in this period

Closing amount 37,710,879.87 46,447,368.86 5,586,097.07 7,495,282.62 97,239,628.42 Book value

Book value at the end of the period 100,963,204.91 4,575,627.49 8,019,726.25 26,231,129.51 139,789,688.16 Book value at the beginning of the period 106,685,643.35 7,781,120.29 2,166,845.46 22,575,471.70 139,209,080.80

13. Long-term deferred expenses

Item Beginning amount Increase in the current period Amortization in the current period Other decreases Closing amount Renovation and renovation expenses 21,760,711.29 198,220.07 8,553,469.45 435,578.28 12,969,883.63 Property expenses 55,599.04 3,864.53 25,219.38 34,244.19 Total 21,816,310.33 202,084.60 8,578,688.83 435,578.28 13,004,127.82 Note: Other decreases are temporary adjustments to renovation and renovation expenses

14. Deferred income tax assets and deferred income tax liabilities

(1) Deferred income tax assets without offset

Ending amount Beginning amount

Item deductible deferred deductible deferred

Temporary differences Income tax assets Temporary differences Provision for impairment of income tax assets 31,383,538.73 4,707,530.81 29,168,629.04 4,375,294.36 Unrealized profits from internal transactions 34,318.92 5,147.84 75,885.88 11,382.88 Deferred income 49,062,521.01 7,359,378.15 34,490,321.55 5,173,548.23 Lease liabilities 25,761,402.14 3,624,115.12 35,127,864.20 4,938,492.60 expenses that can be deducted in subsequent periods

73,272,368.08 10,990,855.21

use and expenses

Total 179,514,148.88 26,687,027.13 98,862,700.67 14,498,718.07

(2) Deferred income tax liabilities without offset

Ending amount Beginning amount

Item taxable deferred taxable deferred

Temporary differences Income tax liabilities Temporary differences Income tax liabilities Fixed assets depreciation difference 270,571,925.96 40,585,788.90 145,536,624.00 21,830,493.60

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Ending amount Beginning amount

Item taxable deferred taxable deferred

Temporary differences Income tax liabilities Temporary differences Income tax liabilities Right-of-use assets 24,308,785.61 3,408,101.76 33,477,211.76 4,688,079.25 Unrealized losses from internal transactions 587,212.57 88,081.89

Total 295,467,924.14 44,081,972.55 179,013,835.76 26,518,572.85

(3) Deferred income tax assets or liabilities presented on a net basis after offsetting

Ending amount Beginning amount

After offset Items after offset Deferred income tax assets Deferred income tax assets

Deferred income tax assets The amount of deferred income tax assets and liabilities set off each other The amount of deferred income tax assets and liabilities set off each other

Or liability balance Or liability balance Deferred income tax assets 22,295,553.75 4,391,473.38 11,190,645.50 3,308,072.57 Deferred income tax liabilities 22,295,553.75 21,786,418.80 11,190,645.50 15,327,927.35

(4) Details of deferred income tax assets not recognized

Item Ending amount Beginning amount

Asset impairment provision 3,631,575.98 2,069,584.56 Deductible losses 170,157,689.87 44,072,686.99 Unrealized profits from internal transactions 555,658.39 559,289.95 Total 174,344,924.24 46,701,561.50

(5) Deductible losses that have not been recognized as deferred income tax assets will expire in the following years

Year Ending amount Beginning amount Remarks

2026 3,785.09 87,360.19

2027 283,382.51 283,382.51

2028 7,609,862.71 7,609,862.71

2029 3,777,680.28 3,816,682.64

2032 13,560,364.76 13,560,364.76

2033 10,519,466.93 10,519,466.93

2034 8,457,455.78 8,195,567.25

2035 125,945,691.81

Total 170,157,689.87 44,072,686.99

15. Other non-current assets

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Ending amount Beginning amount

Item Impairment Impairment

Book balance Book value Book balance Book value

prepare prepare

prepaid long term

24,294,719.72 24,294,719.72 25,232,899.31 25,232,899.31 Assets

排污权 73,409.46 73,409.46 108,220.40 108,220.40合 计 24,368,129.18 24,368,129.18 25,341,119.71 25,341,119.71

16. Assets with restricted ownership or rights of use

(1) Asset restrictions at the end of the period

Item Book balance at the end of the period Book value at the end of the period Restriction type Reason for restriction

300,000.00 300,000.00 Pledge Letter of Guarantee Deposit

Monetary funds

7,000.00 7,000.00 Pledge ETC deposit deposit

Total 307,000.00 307,000.00

(2) Asset restrictions at the beginning of the period

Item Opening book balance Opening book value Restriction type Reason for restriction

300,000.00 300,000.00 Pledge Letter of Guarantee Deposit

Monetary funds 8,000.00 8,000.00 Pledge ETC deposit margin

80,000,000.00 80,000,000.00 Freeze Purchase financial management

Total 80,308,000.00 80,308,000.00

17. Short-term borrowings

Item Ending amount Beginning amount Guaranteed borrowings 10,011,166.67 Credit borrowings 30,022,366.67 Total 40,033,533.34

18. Accounts payable

项 目 期末数 期初数采购货款 139,846,995.51 154,621,365.64工程及设备款 118,647,125.16 132,139,143.39

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Item Ending amount Beginning amount

Total 258,494,120.67 286,760,509.03

19. Advance payments

Item Ending amount Beginning amount

Rent collected in advance 86,900.00 82,800.00 Total 86,900.00 82,800.00

20. Contract liabilities

Item Ending amount Beginning amount

Sales payment 23,879,554.59 36,591,930.56 Total 23,879,554.59 36,591,930.56

21. Employee benefits payable

(1) Details

Item Beginning amount Increase in the current period Decrease in the current period Ending amount Short-term compensation 140,697,999.89 636,586,645.14 622,621,334.13 154,663,310.90 Post-employment benefits—set

2,943,602.66 52,932,324.86 52,540,941.00 3,334,986.52Defined contribution plan

Total 143,641,602.55 689,518,970.00 675,162,275.13 157,998,297.42

(2) Details of short-term remuneration

Item Opening amount for the current period Increase for the current period Decrease for the current period Closing amount Wages, bonuses, allowances and subsidies 136,322,955.20 545,240,065.70 531,474,736.80 150,088,284.10 Employee welfare fees 19,125,659.59 19,125,659.59

Social insurance premiums 1,851,391.37 31,520,806.48 31,353,495.68 2,018,702.17 Including: medical insurance premiums 1,723,539.84 29,417,550.79 29,183,784.90 1,957,305.73Work-related injury insurance premium 119,056.74 2,010,181.69 2,074,919.36 54,319.07

Maternity insurance premium 8,794.79 93,074.00 94,791.42 7,077.37 Housing provident fund 147.00 30,867,410.99 30,867,410.99 147.00 Trade union funds and employee education funds 2,523,506.32 9,832,702.38 9,800,031.07 2,556,177.63

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Item Opening amount Increase in the current period Decrease in the current period Subtotal of the closing amount 140,697,999.89 636,586,645.14 622,621,334.13 154,663,310.90

(3) Set up the details of the contribution plan

Item Beginning amount Increase in the current period Decrease in the current period Ending amount Basic pension insurance 2,848,872.58 51,230,722.53 50,850,455.08 3,229,140.03 Unemployment insurance premium 94,730.08 1,701,602.33 1,690,485.92 Subtotal 105,846.49 2,943,602.66 52,932,324.86 52,540,941.00 3,334,986.52

22. Taxes payable

Item Ending amount Beginning amount

Value-added tax 28,085,767.41 14,848,570.59 Corporate income tax 10,849,365.32 25,830,207.19 Urban maintenance and construction tax 1,495,706.29 888,023.94 Personal income tax withheld 1,459,854.95 1,894,703.89 Property tax 683,486.53 537,494.00 Land use tax 837,647.83 880,354.18 Education surcharge 849,268.60 491,472.12 Local education surcharge 566,179.06 327,648.09 Water conservancy construction fund 62,845.63 41,574.20 Stamp tax 448,160.36 374,145.02 Environmental protection tax 9,333.64 6,108.95 Total 45,347,615.62 46,120,302.17

23. Other payables

Item Ending amount Beginning amount

Marketing fees payable 437,153,504.13 494,506,931.22 Deposit and security deposit 68,648,780.44 74,637,293.50 Unpaid fees payable 15,025,440.54 20,298,204.83 Others 461,608.10 319,691.80

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Item Ending amount Beginning amount

Total 521,289,333.21 589,762,121.35

24. Non-current liabilities due within one year

Item Ending amount Beginning amount

Lease liabilities due within one year 16,762,855.49 14,334,663.90 Total 16,762,855.49 14,334,663.90

25. Other current liabilities

Item Ending amount Beginning amount

Output tax to be transferred 2,262,084.02 3,766,799.60 Amount of discount on withholding invoice 25,184,560.54 28,845,285.86 Total 27,446,644.56 32,612,085.46

26. Lease liabilities

Item Ending amount Beginning amount

Unpaid lease payments 9,245,487.19 21,626,581.80 Less: Unrecognized financing costs 246,940.54 833,381.50 Total 8,998,546.65 20,793,200.30

27. Deferred income

Item Opening amount for the current period Increase for the current period Decrease for the current period Ending amount Reason for receipt of assets related to

related government subsidies, government subsidies 34,490,321.55 16,852,100.00 2,279,900.54 49,062,521.01

According to the discount of the corresponding assets

Total amortization of old progress 34,490,321.55 16,852,100.00 2,279,900.54 49,062,521.01

28. Share capital

Increases and decreases in the current period (decreases are represented by “-”)

Item Opening amount Issued Provident Fund Ending amount Bonus shares Others Subtotal

New shares Conversion

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Increases and decreases in the current period (decreases are represented by “-”)

Item Opening amount Issued Provident Fund Ending amount Bonus shares Others Subtotal

New shares Conversion

Total number of shares 480,000,000 480,000,000

29. Capital reserve

Item Beginning balance Increase in the current period Decrease in the current period Closing balance

Capital premium (equity premium) 1,662,392,718.51 1,662,392,718.51 Total 1,662,392,718.51 1,662,392,718.51

30. Treasury stock

(1) Details

Item Opening amount Increase in the current period Decrease in the current period Ending amount of treasury shares 176,186,608.79 176,186,608.79 Total 176,186,608.79 176,186,608.79

(2) Treasury shares are part of the public shares repurchased by the company to implement equity incentives or employee stock ownership plans.

31. Special reserves

(1) Details

Item Opening amount Increase in the current period Decrease in the current period Closing amount Safety production expenses 10,977,571.60 582,576.88 10,394,994.72 Total 10,977,571.60 582,576.88 10,394,994.72

(2) Due to the cancellation of the dangerous goods production and storage license of subsidiary Zhejiang Aisheng Pharmaceutical Co., Ltd. in 2021, production safety fees will no longer be accrued from 2021. The decrease in production safety expenses was due to expenditures of 582,576.88 yuan on improving, transforming and maintaining safety protection facilities and equipment.

32. Surplus reserve

(1) Details

Item Opening amount Increase in the current period Decrease in the current period Ending amount Statutory surplus reserve 192,060,121.76 30,942,668.77 223,002,790.53

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Item Opening amount Increase in the current period Decrease in the current period Total closing amount 192,060,121.76 30,942,668.77 223,002,790.53

(2) The increase in surplus reserve in the current period is due to the statutory surplus reserve provision based on 10% of the net profit realized by the parent company in the current period.

33. Undistributed profits

(1) Details

Item Number for the current period Undistributed profit at the beginning of the same period last year 1,375,312,235.02 1,159,506,439.29 Plus: Net profit attributable to owners of the parent company for the current period 469,364,240.73 488,674,918.14 Less: Appropriation of statutory surplus reserve 30,942,668.77 37,878,122.41 Common stock dividends payable 234,000,000.00 234,991,000.00 Ending undistributed profits 1,579,733,806.98 1,375,312,235.02

(2) According to the "2024 Profit Distribution Plan" passed by the company's 2024 shareholders' meeting, based on the company's total share capital of 480,000,000 shares, deducting the accumulated repurchased shares of 12,000,000 shares in the special repurchase account, a cash dividend of 0.5 yuan (tax included) will be distributed to all shareholders per share, and a total cash dividend of 234,000,000.00 yuan (tax included) will be distributed.

(2) Notes on consolidated income statement items

1. Operating income/operating costs

(1) Details

Amount for the current period Amount for the same period last year

Project

Revenue Cost Revenue Cost Main business income 3,444,039,629.08 1,150,342,511.22 3,433,279,962.97 1,132,108,644.83 Other business income 60,406,013.61 58,237,653.90 12,362,523.42 1,881,441.62

Total 3,504,445,642.69 1,208,580,165.12 3,445,642,486.39 1,133,990,086.45 of which: with customers

3,502,216,813.23 1,206,937,148.46 3,445,541,010.21 1,133,990,086.45 income from the contract

(2) Revenue breakdown information

1. For detailed information on the breakdown of revenue by type of goods or services, please refer to Note 14 (1) of this financial statement.

2. Revenue generated from contracts with customers is broken down by the time of transfer of goods or services

Item Amount for the current period Amount for the same period last year

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Item Number for the current period Number for the same period last year Recognized revenue at a certain point in time 3,502,216,813.23 3,445,541,010.21 Subtotal 3,502,216,813.23 3,445,541,010.21

(3) The company's performance obligations are mainly to deliver pharmaceutical products to customers in accordance with the contract. The company adopts the method of receiving payment in advance or providing account terms according to the type of customer. The company is the main responsible person for direct sales. For domestic sales, the performance obligation is generally completed when the product is delivered to the customer according to the contract and the customer has accepted the product. For overseas sales, the company has declared the product to customs, obtained a bill of lading or shipped it to the designated destination and delivered it to the customer in accordance with the contract. The control of the product is transferred to the customer and the company obtains the unconditional right to receive payment.

(4) The income recognized in the current period and included in the opening book value of contract liabilities was RMB 32,023,097.66.

2. Taxes and surcharges

Item Number for this period Number for the same period last year Urban maintenance and construction tax 14,344,442.74 13,195,438.67 Property tax 8,669,674.35 3,942,634.98 Education surcharge 7,639,296.43 6,923,655.11 Local education surtax 5,092,864.28 4,615,770.02 Land use tax 3,361,344.50 3,520,118.90 Stamp tax 1,684,971.70 1,642,839.45 Vehicle and vessel tax 20,602.48 19,975.81 Environmental protection tax 57,260.87 57,072.18 combined Total 40,870,457.35 33,917,505.12

3. Selling expenses

Item Number for the current period Number for the same period last year Marketing expenses 847,114,736.29 924,914,358.88 Employee compensation 239,742,934.96 228,039,924.19 Office expenses and travel expenses 46,099,151.10 45,171,443.03 Business promotion expenses 28,258,486.89 18,056,394.89 Business entertainment expenses 18,823,485.02 19,598,458.48

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Item Number for the current period Number for the same period last year Intermediary service fee 8,244,279.10 10,586,345.20 Lease fee 6,497,084.38 6,493,561.18 Depreciation and amortization 1,901,221.45 1,098,878.77 Others 2,628,718.04 2,148,837.32 Total 1,199,310,097.23 1,256,108,201.94

4. Administrative expenses

Item Number for the current period Number for the same period last year Employee compensation 90,389,557.54 81,360,118.83 Depreciation and amortization 20,074,664.61 14,191,366.93 Office expenses and travel expenses 13,741,554.13 12,186,726.41 Business entertainment expenses 8,507,872.59 12,652,325.81 Intermediary service fee 8,468,132.33 6,165,066.48 Employment security fund for persons with disabilities 4,736,876.48 4,373,377.54 Rental fee 3,513,986.49 3,270,931.02 Others 1,165,918.68 1,709,687.12 Total 150,598,562.85 135,909,600.14

5. Research and development expenses

Item Number for the current period Number for the same period last year Employee compensation 112,035,001.60 109,193,229.29 Outsourcing expenses 152,372,880.61 180,403,976.78 Research and development materials 82,397,123.18 76,019,223.01 Depreciation and amortization 21,769,291.95 17,505,299.21 Pilot test expenses 19,027,460.67 15,868,389.21 Research and development of fuel and power 5,553,097.37 4,221,565.04 Others 10,260,801.47 14,158,714.56 combined Total 403,415,656.85 417,370,397.10

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6. Financial charges

Item Number for the current period Number for the same period last year Interest expense 1,579,732.14 3,503,320.64 Interest income -13,576,613.30 -38,483,474.83 Exchange gains and losses 98,050.29 -370,745.90 Bank fees and others 159,959.59 130,946.23 Total -11,738,871.28 -35,219,953.86

7. Other income

Included in non-recurring items for the current period Amount for the current period Amount for the same period last year

The amount of personal gains and losses and asset-related government subsidies 2,279,900.54 1,274,634.54

Government subsidies related to income 11,103,183.85 25,814,199.37 11,103,183.85 Refund of personal income tax withholding fees 438,004.86 399,524.64

Additional value-added tax deduction 8,164,688.34 11,668,834.84

Total 21,985,777.59 39,157,193.39 18,103,183.85

8. Investment income

Item Number for the current period Number for the same period last year Income from bank financial products 17,756,892.40 11,193,979.12 Bill discount interest -148,988.60 -426,218.41 Total 17,607,903.80 10,767,760.71

9. Credit impairment losses

Item Number for the current period Bad debt loss for the same period last year -2,879,787.91 -1,317,605.33 Total -2,879,787.91 -1,317,605.33

10. Asset impairment loss

Item Amount for the current period Amount for the same period last year

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Item Number for the current period Number for the same period last year Loss on inventory depreciation -16,491,237.75 -10,682,920.78 Total -16,491,237.75 -10,682,920.78

11. Income from asset disposals

Included in non-recurring items for the current period Amount for the current period Amount for the same period last year

Amount of profit and loss Income from disposal of fixed assets 13,812.24 -205,506.82 13,812.24 Income from disposal of right-of-use assets 8,025.68 356,244.75 8,025.68 Income from disposal of other non-current assets 886,792.46

Total 21,837.92 1,037,530.39 21,837.92

12. Non-operating income

Included in non-recurring items for the current period Amount for the current period Amount for the same period last year

Amount of profit and loss Government subsidies 42,000.00 58,120.00 42,000.00 Penalty and compensation income 669,174.03 876,279.07 669,174.03 No payment required 11,655.03 1,495,545.49 11,655.03 Gains from damage and scrapping of non-current assets 18,584.07 47,601.52 18,584.07 Others 408,383.08 67,970.31 408,383.08 Total 1,149,796.21 2,545,516.39 1,149,796.21

13. Non-operating expenses

Included in non-recurring items for the current period Amount for the current period Amount for the same period last year

Amount of profit and loss

Loss from damage and scrapping of non-current assets 54,493.55 2,801,569.27 54,493.55 Water conservancy construction fund 626,990.80 544,651.74

Late payment fees 9,811,260.61 895,304.34 9,811,260.61External donations 590,000.00 550,000.00 590,000.00Others 376,754.12 167,401.00 376,754.12Total 11,459,499.08 4,958,926.35 10,832,508.28

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14. Income tax expenses

(1) Details

Item Amount for the current period Amount for the same period last year Current income tax expense 46,705,739.71 51,433,357.34 Deferred income tax expense 5,375,090.64 -3,395,757.81 Total 52,080,830.35 48,037,599.53

(2) Adjustment process of accounting profits and income tax expenses

Item Number for the current period Total profit for the same period last year 523,344,365.35 540,115,197.92 Income tax expense calculated based on the parent company’s applicable tax rate 78,501,654.80 81,017,279.69 Impact of different tax rates applicable to subsidiaries -72,261.76 348,809.17 Impact of adjusting income tax in previous periods 22,146,278.11 17,528,760.45 Impact of non-deductible costs, expenses and losses 1,367,103.10 4,416,555.51 Use of deductible losses from deferred income tax assets not recognized in the previous period

-15,381,260.06

influence

No deductible temporary differences have been recognized for deferred income tax assets in the current period

19,081,199.96 1,239,471.58 The impact of exclusive or deductible losses

The impact of the super deduction of R&D expenses -53,554,399.27 -56,465,461.15 The impact of the super deduction of wages for persons with disabilities -7,484.53 -47,815.72 Income tax expenses 52,080,830.35 48,037,599.53

(3) Notes on Consolidated Cash Flow Statement Items

1. Other cash received or paid related to operating activities, investing activities and financing activities

(1) Other cash received related to operating activities

Item Number for the current period Number for the same period last year Government subsidy income 27,997,283.85 49,519,169.37 Bank interest income 13,576,613.30 38,483,474.83 Deposit 30,479,867.43 25,697,140.19 Other net amounts received and transactions 4,246,850.12 9,138,110.71 Total 76,300,614.70 122,837,895.10

(2) Other cash payments related to operating activities

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Item Number for this period Number for the same period last year Marketing fee 921,184,307.25 897,286,116.55 Deposit and security deposit 36,276,273.49 35,824,031.81 Outsourcing fees and intermediary service fees 168,956,965.09 188,301,722.47 Office expenses and travel expenses 63,345,286.12 60,900,501.80 Business entertainment expenses 31,064,032.84 36,688,288.40 Business promotion expenses 28,258,486.89 18,868,671.77 Rental expenses 10,225,636.14 9,764,492.20 Others 48,471,520.74 28,913,979.64 Total 1,307,782,508.56 1,276,547,804.64

(3) Receive other cash related to investment activities

Item Number for this period Number for the same period last year Recovered financial products 8,488,800,000.00 2,388,000,000.00 Guarantee deposit 25,998,981.92 Total 8,488,800,000.00 2,413,998,981.92

(4) Cash payments related to other investment activities

Item Amount for the current period Amount for the same period last year Purchase of financial products 8,258,600,000.00 4,047,000,000.00 Deposit and margin 3,300,448.00 Total 8,258,600,000.00 4,050,300,448.00

(5) Payment of other cash related to financing activities

Item Number for the current period Number for the same period last year Repurchase of treasury shares 176,186,608.79 Payment of lease liabilities and deposits 18,893,193.90 21,801,470.85 Payment of guarantee fees 17,784.00 Total 18,893,193.90 198,005,863.64

2. Supplementary information to the cash flow statement

Supplementary information Number for the current period Number for the same period last year

(1) Adjust net profit to cash flow from operating activities:

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Supplementary information Current period Net profit for the same period last year 471,263,535.00 492,077,598.39 Plus: asset impairment provision 16,491,237.75 10,682,920.78 Credit impairment provision 2,879,787.91 1,317,605.33 Depreciation of fixed assets, depreciation of right-of-use assets, depreciation of oil and gas assets

116,025,678.98 89,800,011.15 Depreciation of consumption and productive biological assets

Amortization of intangible assets 13,037,758.87 12,167,542.16 Amortization of long-term deferred expenses 8,578,688.83 5,185,097.80 Disposal of fixed assets, intangible assets and other long-term assets

-21,837.92 -1,037,530.39 loss (income is listed with "-")

Loss from scrapping of fixed assets (income is listed with "-") 35,909.48 2,753,967.75 Loss from changes in fair value (income is listed with "-")

Financial expenses (income is listed with "-") 1,579,732.14 3,520,928.56 Investment losses (income is listed with "-") -17,756,892.40 -11,193,979.12 Decrease in deferred income tax assets (increase is listed with "-") -1,083,400.81 -500,167.37 Increase in deferred income tax liabilities (decreases are indicated with "-") 6,458,491.45 -2,895,590.44 Decrease in inventories (increases are indicated with "-") -81,600,255.67 -50,819,027.82 Decrease in operating receivables (increases are indicated with "-") -127,886,859.16 -28,570,338.42 Increase in operating payables (decreases are listed with "-") -46,564,461.39 169,620,264.71 Others -582,576.88 -1,357,708.15 Net cash flow generated from operating activities 360,854,536.18 690,751,594.92

(2) Major investment and financing activities that do not involve cash receipts and payments:

debt to capital

Convertible corporate bonds due within one year

Add a new right-of-use asset

(3) Net changes in cash and cash equivalents:

Closing balance of cash 634,048,094.30 713,759,803.65 Less: Opening balance of cash 713,759,803.65 2,504,500,364.08 Add: Closing balance of cash equivalents

Less: Opening balance of cash equivalents

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Supplementary information Current period Net increase in cash and cash equivalents for the same period last year -79,711,709.35 -1,790,740,560.43

3. Composition of cash and cash equivalents

(1) Details

Item Ending amount Beginning amount

1. Cash 634,048,094.30 713,759,803.65 Of which: Cash on hand 2,354.22 2,519.26 Bank deposits that can be used for payment at any time 634,045,740.08 712,937,073.20 Other monetary funds that can be used for payment at any time 820,211.19

Central bank deposits available for payment

2. Cash equivalents

Including: Bond investments due within three months

3. Closing balance of cash and cash equivalents 634,048,094.30 713,759,803.65 Among them: restricted cash and cash used by the parent company or subsidiaries within the group

cash equivalents

(2) Cash and cash equivalents held by the company with limited use scope

Reasons for limited scope of use, as an item Closing balance Opening balance

Reasons for cash and cash equivalents Monetary funds 48,400,569.09 187,410,359.10 Raised funds, payable at any time Subtotal 48,400,569.09 187,410,359.10

(3) Monetary funds other than cash and cash equivalents

Items other than cash and cash equivalents Closing balance Opening balance

Reason

300,000.00 300,000.00 Guarantee deposit

Monetary funds 7,000.00 8,000.00 ETC margin

80,000,000.00 Purchase financial management frozen

Subtotal 307,000.00 80,308,000.00

4. Changes in liabilities related to financing activities

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 40,033,533.34 207,958.33 40,241,491.67

Lease liabilities 35,127,864.20 9,298,847.96 17,794,927.08 870,382.94 25,761,402.14

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Increase in this period Decrease in this period

Item Beginning balance Closing balance

Cash changes Non-cash changes Cash changes Non-cash changes

(Including within one year

Expired lease

Liabilities)

Dividends payable 234,000,000.00 234,000,000.00

Subtotal 75,161,397.54 243,506,806.29 292,036,418.75 870,382.94 25,761,402.14

5. Major activities that do not involve cash receipts and payments

Amount of endorsement and transfer of commercial bills not involving cash receipts or payments

Item Number for this period Number for the same period last year Amount of commercial bills endorsed and transferred 636,582,934.58 526,134,741.07 Including: Payment for goods 607,709,987.29 488,773,913.43 Payment for the purchase of long-term assets such as fixed assets 28,872,947.29 37,360,827.64

(4) Others

1. Foreign currency monetary items

Item Foreign currency balance at the end of the period Conversion exchange rate Converted into RMB balance at the end of the period Monetary funds 1.97 Including: US dollars 0.28 7.0288 1.97 Accounts receivable 8,159,225.46 Including: US dollars 1,160,827.66 7.0288 8,159,225.46

2. Leasing

(1) The company as lessee

1. For details on the right-of-use assets, please refer to Note 5 (1) 11 of this financial statement.

2. For details of the company’s accounting policies for short-term leases and low-value asset leases, please refer to Note 3 (26) of this financial statement. The amount of short-term lease expenses and low-value asset lease expenses included in the current profit and loss is as follows:

Item Amount for the current period Amount for the same period last year Short-term rental expenses 10,008,763.11 10,597,795.89 Total 10,008,763.11 10,597,795.89

3. Current profits and losses and cash flow related to leasing

Item Amount for the current period Amount for the same period last year

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Interest expense on lease liabilities 1,368,508.08 1,920,938.96 Total cash outflows related to leases 29,118,830.04 32,399,266.74

4. For details on the maturity analysis of lease liabilities and corresponding liquidity risk management, please refer to Note 9 (2) of this financial statement.

(2) The company acts as lessor

operating lease

1. Rental income

Item Number for the current period Number for the same period last year Lease income 2,228,829.46 101,476.18

2. According to the lease contract signed with the lessee, the undiscounted lease receipts that will be received in the future under the irrevocable lease

Remaining period Closing amount Last year's closing amount within 1 year 86,900.00 90,800.00 1-2 years 12,000.00 Total 86,900.00 102,800.00

6. R&D expenditures

(1) R&D expenditures

Item Number for the current period Number for the same period last year Employee compensation 112,035,001.60 109,193,229.29 Outsourcing expenses 152,372,880.61 180,403,976.78 Research and development materials 82,397,123.18 76,019,223.01 Depreciation and amortization 21,769,291.95 17,505,299.21 Pilot test expenses 19,027,460.67 15,868,389.21 Research and development fuel power 5,553,097.37 4,221,565.04 Others 10,260,801.47 14,158,714.56

Total 403,415,656.85 417,370,397.10 Including: Expenditure R&D expenditure 403,415,656.85 417,370,397.10 Capitalized R&D expenditure

(2) Judgment standards and specific basis for capitalization or expense of outsourced research projects

Amount of items expected to generate economic benefits for capitalization or expense

Benefit method accurate and specific basis

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Amount of items expected to generate economic benefits for capitalization or expense

Benefit method accurate and specific basis

Innovative drug N-ER project (nuclear can be implemented after successful research and development Uncertainty of successful research and development of innovative drugs 79,749,709.36

Acid technology platform project) has strong sales potential and is fully expensed

7. Interests in other entities

(1) Composition of enterprise groups

1. The company includes four subsidiaries: Beijing Wansheng Renhe Technology Co., Ltd., Fuyuan Pharmaceutical Co., Ltd., Zhejiang Aisheng Pharmaceutical Co., Ltd. and Zhejiang Yanjitang Pharmaceutical Technology Co., Ltd. into the scope of consolidated financial statements.

2. Basic information of subsidiaries

Shareholding ratio (%)

principal place of business

Name of subsidiary company Registered capital Nature of business Method of acquisition and place of registration

direct indirect

Beijing Wansheng Renhe Technology 15.385 million Technology promotion and non-common control

Beijing 83.50

Co., Ltd. RMB Application Services Industry Merger acquired Zhejiang Aisheng Pharmaceutical Co., Ltd. 4,302.9824 Under the same control

Hangzhou Pharmaceutical Manufacturing Industry 100.00

Company RMB 10,000 acquired through merger

75 million people Fuyuan Pharmaceutical Co., Ltd. under common control Xuancheng Pharmaceutical Manufacturing 100.00

RMB Merger acquired Zhejiang Yanjitang Pharmaceutical Co., Ltd. 10 million Technology promotion and 100.00 Under common control

Hangzhou

Technology Co., Ltd. RMB Application Service Industry [Note] Acquired through merger [Note] Held through subsidiary Zhejiang Aisheng Pharmaceutical Co., Ltd.

8. Government subsidies

(1) New government subsidies in this period

Project New subsidy amount in this period

Asset-related government subsidies 16,852,100.00

Including: included in deferred income 16,852,100.00

Government subsidies related to income 11,145,183.85

Including: included in other income 11,103,183.85

Included in non-operating income 42,000.00

Total 27,997,283.85

(2) Liability items involving government subsidies

New items added in this period Included in this period Included in this period Items presented in the financial statements Opening amount

Subsidy amount Other income amount Non-operating income amount

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New items added in this period Included in this period Included in this period Items presented in the financial statements Opening amount

Amount of subsidy Amount of other income Amount of non-operating income Deferred income 34,490,321.55 16,852,100.00 2,279,900.54

Subtotal 34,490,321.55 16,852,100.00 2,279,900.54

(Continued from above table)

Offset costs for the current period Other items presented in financial statements with assets/income Closing balance for the current period

Amount of costs Change in asset amount Related deferred income 49,062,521.01 Subtotal related to assets 49,062,521.01

(3) Amount of government subsidies included in current profits and losses

Item Number for the current period Number for the same period last year Amount of government subsidies included in other income 13,383,084.39 27,088,833.91 Amount of government subsidies included in non-operating income 42,000.00 58,120.00 Amount of impact of fiscal discount on total profit 59,200.00 Total 13,425,084.39 27,206,153.91

9. Risks related to financial instruments

The company's goal in risk management is to strike a balance between risks and returns, minimize the negative impact of risks on the company's operating performance, and maximize the interests of shareholders and other equity investors. Based on this risk management objective, the company's basic risk management strategy is to confirm and analyze the various risks faced by the company, establish an appropriate risk tolerance bottom line and conduct risk management, and supervise various risks in a timely and reliable manner to control risks within a limited range.

The Company faces various risks related to financial instruments in its daily activities, mainly including credit risk, liquidity risk and market risk. Management has reviewed and approved policies for managing these risks, which are summarized below.

(1) Credit risk

Credit risk refers to the risk that one party to a financial instrument cannot fulfill its obligations, causing financial losses to the other party.

1. Credit risk management practices

(1) Credit risk evaluation methods

The Company assesses at 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 is available without unnecessary additional cost or effort, including qualitative and quantitative analysis based on historical data, external credit risk ratings, and forward-looking information. The company based on a single financial instrument or a combination of financial instruments with similar credit risk characteristics,

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By comparing the risk of default of a financial instrument on the balance sheet date with the risk of default on the initial recognition date, the change in default risk of the financial instrument during its expected duration is determined.

When one or more of the following quantitative and qualitative criteria are triggered, the company believes that the credit risk of financial instruments has increased significantly:

1. The quantitative standard is mainly that the default probability of the remaining duration on the balance sheet date has increased by more than a certain percentage compared with the initial recognition;

2. Qualitative standards mainly include major adverse changes in the debtor's operating or financial conditions, existing or expected changes in technology, market, economic or legal environment, which will have a major adverse impact on the debtor's ability to repay the company, etc.

(2) Definition of defaulted and credit-impaired assets

When a financial instrument meets one or more of the following conditions, the company defines the financial asset as having defaulted, and its standards are consistent with the definition of credit impairment:

1. The debtor encounters major financial difficulties;

2. The debtor violates the binding terms on the debtor in the contract;

3. The debtor is likely to go bankrupt or undergo other financial reorganization;

4. The creditor grants concessions to the debtor that the debtor would not have made under any other circumstances due to economic or contractual considerations related to the debtor's financial difficulty.

2. Measurement of expected credit losses

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 and forward-looking information of historical statistical data (such as counterparty ratings, guarantee methods and collateral types, repayment methods, etc.) to establish default probability, default loss rate and default risk exposure models.

3. For the reconciliation statement between the opening balance and the closing balance of financial instrument loss provisions, please refer to Notes 5 (1) 3 and 5 of this financial statement for details.

Explanation of (1) 4 and 5 (1) 6.

4. Credit risk exposure and credit risk concentration

The company's credit risk mainly comes from monetary funds and accounts receivable. In order to control the above-mentioned related risks, the Company has taken the following measures.

(1) Monetary funds

The Company places bank deposits and other monetary funds in financial institutions with higher credit ratings, so its credit risk is lower.

(2) Accounts receivable

The company regularly conducts credit assessments on customers who trade on credit. Based on the credit assessment results, the Company chooses to conduct transactions with approved customers with good credit and monitors their receivable balances to ensure that the Company does not face significant bad debt risks.

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Since the company's accounts receivable risk points are distributed among multiple partners and customers, as of December 31, 2025, 7.52% of the company's accounts receivable (December 31, 2024: 9.84%) originated from the top five customers with balances, and the company does not have significant credit concentration risk.

The Company's maximum exposure to credit risk is the carrying value of each financial asset on the balance sheet.

(2) Liquidity risk

Liquidity risk refers to the risk of a shortage of funds when the company fulfills its obligations to settle by delivering cash or other financial assets. Liquidity risk may arise from the inability to sell financial assets at fair value as quickly as possible; or from the counterparty's inability to repay its contractual debts; or from debts that mature prematurely; or from the inability to generate expected cash flows.

In order to control this risk, the Company comprehensively uses various financing methods such as bill settlement and bank borrowing, and adopts an appropriate combination of long-term and short-term financing methods to optimize the financing structure and maintain a balance between financing continuity and flexibility. The Company has obtained bank credit lines from a number of commercial banks to meet its working capital requirements and capital expenditures.

Financial liabilities are classified by remaining maturity

Closing amount

Project

Book value Undiscounted contract amount Within 1 year 1-3 years More than 3 years Accounts payable 258,494,120.67 258,494,120.67 258,494,120.67

Other payables 521,289,333.21 521,289,333.21 521,289,333.21

Due within one year

16,762,855.49 17,517,780.05 17,517,780.05

non-current liabilities

Lease liabilities 8,998,546.65 9,245,487.19 9,245,487.19

Subtotal 805,544,856.02 806,546,721.12 797,301,233.93 9,245,487.19

(Continued from above table)

End of last year

Project

Book value Undiscounted contract amount Within 1 year 1-3 years Short-term borrowings over 3 years 40,033,533.34 40,244,408.33 40,244,408.33

Accounts payable 286,760,509.03 286,760,509.03 286,760,509.03

Other payables 589,762,121.35 589,762,121.35 589,762,121.35

Due within one year

14,334,663.90 15,579,036.75 15,579,036.75

non-current liabilities

Lease liabilities 20,793,200.30 21,626,581.80 21,121,994.67 504,587.13 Subtotal 951,684,027.92 953,972,657.26 932,346,075.46 21,121,994.67 504,587.13

(3) Market risk

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Market risk refers to the risk that the fair value or future cash flows of financial instruments will fluctuate due to changes in market prices. Market risks mainly include interest rate risk and foreign exchange risk.

1. 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. Fixed-rate interest-bearing financial instruments expose the Company to fair value interest rate risk, while floating-rate interest-bearing financial instruments expose the Company to cash flow interest rate risk. The Company determines the proportion of fixed-rate and floating-rate financial instruments based on market conditions, and maintains an appropriate portfolio of financial instruments through regular review and monitoring. The cash flow interest rate risk faced by the Company is mainly related to the Company's bank borrowings with floating interest rates.

As of December 31, 2025, the Company had no bank borrowings with floating interest rates (December 31, 2024: RMB 30,000,000.00). Assuming that other variables remain unchanged, assuming that the interest rate changes by 50 basis points, it will not have a significant impact on the Company's total profit and shareholders' equity.

2. Foreign exchange risk

Foreign exchange 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 operates in Mainland China and its main activities are denominated in RMB. Therefore, the market risk of foreign exchange changes borne by the Company is not significant.

For details of the Company’s foreign currency monetary assets and liabilities at the end of the period, please refer to Note 5 (4) 1 of this financial statement.

(4) Transfer of financial assets

1. Basic information on transfer of financial assets

Transferred financial assets Transferred financial assets Determination of recognition situation Determination of transfer method Derecognition situation

Nature of property Amount Basis

Has transferred almost all of its note endorsements. Receivables financing 270,265,362.76 Derecognized

There are risks and rewards

Has transferred almost all of its bill discount receivables financing 10,268,262.75 Derecognized

There are risks and rewards

Subtotal 280,533,625.51

2. Financial assets derecognized due to transfer

Financial assets derecognized. Profit items related to derecognition. Financial asset transfer method.

amount gain or loss

Receivables financing endorsement 270,265,362.76

Accounts receivable financing discount 10,268,262.75 -148,988.60 Subtotal 280,533,625.51 -148,988.60

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10. Disclosure of fair value

(1) Details of the period-end fair value of assets and liabilities measured at fair value

Closing fair value

Item First level fairness Second level fairness Third level fairness

Total

value measurement value measurement value measurement

Ongoing fair value measurement

1. Trading financial assets 1,428,800,000.00 1,428,800,000.00 are classified as measured at fair value and their

1,428,800,000.00 1,428,800,000.00 Financial assets with changes included in current profits and losses

Capital-guaranteed and floating-income financial products 1,428,800,000.00 1,428,800,000.00

2. Receivables financing 110,191,392.50 110,191,392.50 Total assets continuously measured at fair value 1,538,991,392.50 1,538,991,392.50

(2) Continuous and non-continuous third-level fair value measurement items, valuation techniques used and qualitative and quantitative information on important parameters

The trading financial assets measured at the third level of fair value held by the Company are bank wealth management products, and their fair value is determined by using the par amount.

The third-level fair value measurement receivable financing held by the Company is bank acceptance bill receivable, which has low credit risk and short remaining period. The Company determines its fair value based on its face balance.

11. Related parties and related transactions

(1) Related party situation

1. Information about the company’s parent company

(1) The parent company of our company

parent company to parent company to

The name of the company’s parent company Registration place Nature of business Registered capital

Shareholding ratio Voting rights ratio (%) Example (%) Chemical raw materials

Zhejiang Province New 120 million

Xinhecheng Holding Group Co., Ltd. Hehua Manufacturing 37.43 37.67 Changxian RMB

product manufacturing industry

Note: Xinhecheng Holding Group Co., Ltd. directly holds 36.73% of the company's shares, and indirectly holds 0.70% of the company's shares through Xuancheng Renhe Investment Partnership (Limited Partnership)

(2) The ultimate controller of the company is Hu Baifan. Hu Baifan directly and indirectly holds Xinhecheng Holdings Group Co., Ltd.

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61.8138% equity.

2. For details of the company’s subsidiaries, please refer to Note 7 of this financial statement.

3. Information about other related parties of the company

Names of other related parties Other related parties’ relationship with the company Zhejiang Xinhecheng Co., Ltd. Also controlled by Xinhecheng Holding Group Co., Ltd. Zhejiang Jingshi Real Estate Co., Ltd. Both controlled by Xinhecheng Holding Group Co., Ltd. Courtyard by Marriott Hotel Branch of Shaoxing Jinghe Hotel Management Co., Ltd. Both controlled by Xinhecheng Holding Group Co., Ltd. Zhejiang Xinseike Pharmaceutical Co., Ltd. Hu Baishan, the brother of the actual controller, serves as a director of the company Zhejiang Deli Equipment Co., Ltd. Tongshou Xinhecheng Holdings Group Co., Ltd. controls Qionghai Boao Heyue Hotel Management Co., Ltd. Tongshou Xinhecheng Holdings Group Co., Ltd. controls Shangyu Xinhecheng Biochemical Co., Ltd. Shandong Xinhecheng Pharmaceutical Co., Ltd., a subsidiary of Zhejiang Xinhecheng Co., Ltd. Shandong Xinhecheng Refining Technology Co., Ltd., a subsidiary of Zhejiang Xinhecheng Co., Ltd. Shandong Xinhecheng Holdings Co., Ltd., a subsidiary of Zhejiang Xinhecheng Co., Ltd. Beijing Hecheng Real Estate Holdings Co., Ltd., a subsidiary of Zhejiang Xinhecheng Co., Ltd. Weifang Hecheng Real Estate Co., Ltd., a subsidiary of Beijing Hecheng Real Estate Holdings Co., Ltd. Zhejiang Yuexiu Foreign Languages University, a subsidiary of Beijing Hecheng Real Estate Holdings Co., Ltd. Zhejiang Saiya Chemical Materials Co., Ltd., an associate of Zhejiang Xinhecheng Co., Ltd. Shaoxing Heyue Property Services Co., Ltd., an associate of Zhejiang Xinhecheng Co., Ltd. Heilongjiang Xinhecheng Biotechnology Co., Ltd., a subsidiary of Zhejiang Jingshi Real Estate Co., Ltd. Shaoxing Yuchen New Materials Co., Ltd., a subsidiary of Zhejiang New Hecheng Co., Ltd. Zhejiang New Hecheng Pharmaceutical Co., Ltd., a subsidiary of Zhejiang New Hecheng Co., Ltd. Zhejiang New Hecheng Pharmaceutical Co., Ltd., a subsidiary of Zhejiang New Hecheng Co., Ltd.

(2) Related transactions

1. Related transactions related to the purchase and sale of goods, provision and receipt of services

(1) Related transactions of purchasing goods and receiving services

Related parties Related party transactions Contents for the current period Number for the same period last year

Purchase of materials 1,553,097.35 1,247,787.63 Zhejiang Xinhecheng Co., Ltd.

Procurement of labor services 400,000.00 206,141.51 Courtyard by Shaoxing Jinghe Hotel Management Co., Ltd.

Procurement of labor services 49,376.07 47,774.65 Hotel branch

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Related parties Related party transactions Amount for this period Amount for the same period last year Zhejiang Xinsec Pharmaceutical Co., Ltd. Purchased materials 590,265.48 90,353.98 Zhejiang Deli Equipment Co., Ltd. Purchased materials 189,480.71 154,029.22 Qionghai Boao Heyue Hotel Management Co., Ltd. Purchased services 28,539.24 Heilongjiang Xinhecheng Biotechnology Co., Ltd. Purchased materials 774.34

Shandong Xinhecheng Pharmaceutical Co., Ltd. Purchase materials 1,592.92

Zhejiang Jingshi Real Estate Co., Ltd. Procurement services 5,844.34

Subtotal 2,790,431.21 1,774,626.23

(2) Related transactions involving sale of goods and provision of services

Related parties Related party transactions Contents for the current period Number for the same period last year

Health products, etc. 105,221.24

Zhejiang Xinhecheng Co., Ltd.

Technical services 130,424.75 Shangyu Xinhecheng Biochemical Co., Ltd. Health products, etc. 318.58 Xinhecheng Holding Group Co., Ltd. Health products, etc. 5,486.72 Shandong Xinhecheng Pharmaceutical Co., Ltd. Health products, etc. 1,911.50 6,053.09 Zhejiang Deli Equipment Co., Ltd. Health products, etc. 3,185.84 3,185.84 Shandong Xinhecheng Refined Chemical Technology Co., Ltd. Health products, etc. 6,371.68 1,592.92 Weifang Hecheng Real Estate Co., Ltd. Health products, etc. 1,283.19 Zhejiang Yuexiu Foreign Languages College Health products, etc. 48,230.08 Zhejiang Saiya Chemical Materials Co., Ltd. Health products, etc. 6,415.93 Beijing Hecheng Real Estate Holdings Co., Ltd. Health products, etc. 13,584.07 Shaoxing Heyue Property Services Co., Ltd. Health products, etc. 707.96 Shandong Xinhecheng Holdings Co., Ltd. Health products, etc. 2,867.26

Shaoxing Yuchen New Materials Co., Ltd. Health products, etc. 3,185.84

Zhejiang Xinhecheng Pharmaceutical Co., Ltd. Health products, etc. 2,230.09

Subtotal 124,973.45 217,283.13

2. Related leasing situation

Company leasing situation

Lessor’s name Type of leased assets Number of current period

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Short-term rentals with simplified processing

Recognition of leases of right-of-use assets and leases of low-value assets

Rent paid (excluding increased rental expenses and not included

The recognized profit has not been included in the measurement of lease liabilities. The variability in the measurement of lease liabilities has not been included in the measurement of lease liabilities.

variable lease payments (variable lease payments)

Lease payment

Zhejiang Jingshi Real Estate

Houses and buildings 25,332.11

Ltd.

3. Transfer of assets from related parties

Related parties Related transaction contents Number for this period Number for the same period last year Shandong Xinhecheng Pharmaceutical Co., Ltd. Purchase of equipment 2,300.89

4. Remuneration of key management personnel

Item Amount for the current period Amount for the same period last year Remuneration of key management personnel 11,458,888.50 8,507,531.62

(3) Accounts receivable and payable from related parties

Amounts receivable from related parties

Closing Amount Opening Amount Item Name Related Party

Book balance Provision for bad debts Book balance Provision for bad debts

Shandong Xinhecheng Pharmaceutical Co., Ltd.

Advance Payment 299.12 Co., Ltd.

Subtotal 299.12

Zhejiang Jingshi Real Estate Co., Ltd.

Other receivables 27,612.00 1,380.60

company

Subtotal 27,612.00 1,380.60

Zhejiang Jingshi Real Estate Co., Ltd.

Other current assets 155,882.25

company

Subtotal 155,882.25

Zhejiang Deli Equipment Co., Ltd.

Other non-current assets 116,900.00 48,000.00 Company

Subtotal 116,900.00 48,000.00

12. Commitments and contingencies

(1) Important commitments

1. Various types of unexpired letters of guarantee issued

As of December 31, 2025, the unexpired letters of guarantee issued by the company and its subsidiaries are as follows:

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Issuing bank Applicant Unit Type of guarantee Guarantee amount Conditions for issuance Bank of China Co., Ltd.

Zhejiang Aisheng Pharmaceutical Co., Ltd. Performance guarantee 300,000.00 Deposit security deposit Hangzhou Jianbei Branch

Subtotal 300,000.00

2. Except for assets whose ownership or use rights are restricted in Note 5 (1) 16 of this financial statement and the above-mentioned matters, the Company has no other major commitments as of the balance sheet date.

(2) Contingencies

As of the balance sheet date, the Company has no major contingencies that need to be disclosed.

13. Events after the balance sheet date

(1) Profit distribution after the balance sheet date

According to the company’s approval at the fifth meeting of the third board of directors on April 10, 2026

The "2025 Profit Distribution Plan", based on the profits or dividends to be distributed from 480,000,000 shares of capital stock at the end of 2025, minus the company's repurchase of 12,000,000 treasury shares, will distribute a cash dividend of 5 yuan (tax included) to all shareholders for every 10 shares, with a total cash dividend of 234,000,000.00.

Yuan (including tax). The above plan is yet to be reviewed and approved by the shareholders' meeting.

Note: According to the "Rules for Share Repurchase of Listed Companies", shares in the special account for repurchase of listed companies do not enjoy the rights to profit distribution and conversion of capital reserve funds into share capital. If the company's total share capital changes before the implementation of the distribution plan due to convertible bond conversion, share repurchase, exercise of equity incentives, listing of new shares through refinancing, etc., the total distribution amount will be adjusted accordingly based on the principle that the distribution ratio remains unchanged.

(2) Except for the above matters, as of the date when this financial statement is approved for external reporting, the Company has no other major post-balance sheet events.

14. Other important matters

(1) Segment information

1. Factors considered in determining reporting segments

The company determines reporting segments based on internal organizational structure, management requirements, internal reporting systems, etc., and determines reporting segments based on business segments.

2. Financial information of reportable segments

Business segment

Item Drug Medical Device Inter-segment elimination Total

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Operating income 3,305,303,146.03 201,969,758.41 2,827,261.75 3,504,445,642.69 Including: with customers

3,302,740,416.76 201,969,758.41 2,493,361.94 3,502,216,813.23 Income generated from contracts

Operating costs 1,100,709,372.65 110,592,549.63 2,721,757.16 1,208,580,165.12 Total assets 4,809,343,120.08 131,127,330.34 16,555,296.78 4,923,915,153.64 Total liabilities 1,081,386,954.48 49,765,853.54 1,131,152,808.02

15. Notes on main items of the parent company’s financial statements

(1) Notes on parent company’s balance sheet items

1. Accounts receivable

(1) Aging status

Aging of accounts Closing balance Opening balance

Within 1 year 144,194,696.60 91,768,072.50 1-2 years 165,275.46 181,449.22 2-3 years 161,800.00 9,564.00Total book balance 144,521,772.06 91,959,085.72 Less: Bad debt provision 7,372,229.92 4,632,344.67 Total book value 137,149,542.14 87,326,741.05

(2) Bad debt provision accrual

1. Category details

Closing amount

Book balance Bad debt provision

Type of provision

Ratio Book Value Amount Ratio

(%)

(%)

Provision for bad debts by combination 144,521,772.06 100.00 7,372,229.92 5.10 137,149,542.14 Total 144,521,772.06 100.00 7,372,229.92 5.10 137,149,542.14 (continued from the above table)

Beginning balance

Book balance Bad debt provision

Type

Provision Book value amount Proportion (%) Amount

Proportion (%)

Provision for bad debts on a group basis 91,959,085.72 100.00 4,632,344.67 5.04 87,326,741.05

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Beginning balance

Book balance Bad debt provision

Type

Provision Book value amount Proportion (%) Amount

Proportion (%)

Total 91,959,085.72 100.00 4,632,344.67 5.04 87,326,741.05

2. Accounts receivable using aging combination to accrue bad debt provisions

Closing amount

Account age

Book balance Bad debt provision Proportion of provision (%) Within 1 year 144,194,696.60 7,209,734.83 5.00 1-2 years 165,275.46 33,055.09 20.00 2-3 years 161,800.00 129,440.00 80.00 Total 144,521,772.06 7,372,229.92 5.10

(3) Changes in bad debt provisions

Amount of changes in the current period

Item Beginning balance Closing balance

Provision Recovery or transfer Write-off Others

Provision based on combination

4,632,344.67 2,739,885.25 7,372,229.92 Bad debt provision

Total 4,632,344.67 2,739,885.25 7,372,229.92

(4) Top 5 accounts receivable amount

Accounts receivable at the end of the period Name of bad unit in accounts receivable Ending book balance

Proportion of balance (%) Account preparation Customer 1 7,479,136.13 5.18 373,956.81 Customer 2 6,654,657.75 4.60 332,732.89 Customer 3 5,660,825.06 3.92 283,041.25 Customer 4 3,627,561.00 2.51 181,378.05Customer 5 3,496,640.56 2.42 174,832.03 Subtotal 26,918,820.50 18.63 1,345,941.03

2. Other receivables

(1) Classification of payment nature

Nature of payment Ending amount Beginning amount

Deposit and security deposit 1,939,047.82 2,253,687.82 Loans 5,000,000.00

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Nature of payment Ending amount Beginning amount

Total book balance 1,939,047.82 7,253,687.82 Less: provision for bad debts 1,248,196.91 2,066,975.06 Total book value 690,850.91 5,186,712.76

(2) Aging status

Aging of accounts Closing balance Opening balance

Within 1 year 509,790.00 264,508.82 1-2 years 237,378.82 142,236.74 2-3 years 83,236.74 5,358,200.00 More than 3 years 1,108,642.26 1,488,742.26 Total book balance 1,939,047.82 7,253,687.82 Less: Bad debt provision 1,248,196.91 2,066,975.06 Total book value 690,850.91 5,186,712.76

(3) Bad debt provision accrual

1. Category details

Closing amount

Book balance Bad debt provision

Type

Provision Book value amount Proportion (%) Amount

Proportion (%)

Provision for bad debts by combination 1,939,047.82 100.00 1,248,196.91 64.37 690,850.91 Total 1,939,047.82 100.00 1,248,196.91 64.37 690,850.91 (continued from the above table)

Beginning balance

Book balance Bad debt provision

Type

Provision Book value amount Proportion (%) Amount

Proportion (%)

Provision for bad debts by combination 7,253,687.82 100.00 2,066,975.06 28.50 5,186,712.76 Total 7,253,687.82 100.00 2,066,975.06 28.50 5,186,712.76

2. Other receivables using collective provision for bad debts

Closing amount

Combination name

Book balance Bad debt provision Provision ratio (%) Aging combination 1,939,047.82 1,248,196.91 64.37

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Closing amount

Combination name

Book balance Bad debt provision Proportion of provision (%) including: Within 1 year 509,790.00 25,489.50 5.00 1-2 years 237,378.82 47,475.76 20.00 2-3 years 83,236.74 66,589.39 80.00 More than 3 years 1,108,642.26 1,108,642.26 100.00 Total 1,939,047.82 1,248,196.91 64.37

(4) Changes in bad debt provisions

The first stage The second stage The third stage

Lifetime expectations Lifetime forecasts

Item Total credit losses in the next 12 months (has not occurred) Period credit losses (has

expected credit losses

Credit impairment) Credit impairment occurs)

Opening amount 263,225.45 28,447.35 1,775,302.26 2,066,975.06 Opening amount in the current period —— —— ——

--Transfer to the second stage -11,868.94 11,868.94

--Transfer to the third stage -16,647.35 16,647.35

Provision for the current period -225,867.01 23,806.82 -616,717.96 -818,778.15 Ending amount 25,489.50 47,475.76 1,175,231.65 1,248,196.91 Ending bad debt provision

5.00 20.00 98.60 64.37 Proportion (%)

(5) Top 5 other receivables

Accounting for other receivables

Unit name (name) Nature of payment Ending book balance Account age Ending bad debt provision

Proportion of balance (%)

Beijing Dongxingtang Technology Development

Deposit security deposit 720,142.26 More than 3 years 37.14 720,142.26 Exhibition Co., Ltd.

Aramark service industry

(China) Co., Ltd. Beijing Deposit Guarantee 342,090.00 Within 1 year 17.64 17,104.50 Beijing Branch

Beijing Jinglin Yuantai Technology

Deposit security deposit 230,000.00 More than 3 years 11.86 230,000.00 Development Co., Ltd.

Deposit guarantee 68,593.08 1-2 years 3.54 13,718.62Beijing Tongniu Co., Ltd.

company

Deposit and guarantee 67,486.74 2-3 years 3.48 53,989.39 Chen Guozhang Deposit and guarantee 70,000.00 Within 1 year 3.61 3,500.00 Subtotal 1,498,312.08 77.27 1,038,454.77

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3. Long-term equity investment

(1) Details

Ending amount Beginning amount

Item Impairment Impairment

Book balance Book value Book balance Book value provision Provision

Investment in subsidiaries 269,177,285.63 269,177,285.63 269,177,285.63 269,177,285.63 Total 269,177,285.63 269,177,285.63 269,177,285.63 269,177,285.63

(2) Investment in subsidiaries

Beginning amount Increase/decrease in the current period Ending amount Investee's book Impairment Addition Decrease Provision Less Book Impairment Others

Value Preparation Investment Investment Value Preparation Value Preparation Beijing Wanshenghe

12,846,000.00 12,846,000.00 Technology Co., Ltd.

Zhejiang Aisheng Pharmaceutical

126,059,881.14 126,059,881.14 Co., Ltd.

Fuyuan Pharmaceutical Co., Ltd.

130,271,404.49 130,271,404.49 Company

Subtotal 269,177,285.63 269,177,285.63

(2) Notes on parent company’s income statement items

1. Operating income/operating costs

(1) Details

Items for the current period and the same period last year

Revenue Cost Revenue Cost Main business income 2,114,872,897.44 458,299,489.75 2,169,904,856.49 474,135,234.55 Other business income 59,901,585.86 60,527,082.77 8,213,060.31 2,457.83

Total 2,174,774,483.30 518,826,572.52 2,178,117,916.80 474,137,692.38 Among them: with customers

Income generated from contracts between

(2) Revenue breakdown information

1. Revenue generated from contracts with customers broken down by type of goods or services

Amount for the current period Amount for the same period last year

Project

Revenue Cost Revenue Cost Drugs 2,114,872,897.44 456,656,473.09 2,169,904,856.49 474,135,234.55

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Amount for the current period Amount for the same period last year

Project

revenue cost revenue cost

Others 57,463,084.79 60,527,082.77 7,578,648.85 2,457.83 Subtotal 2,172,335,982.23 517,183,555.86 2,177,483,505.34 474,137,692.38

2. Revenue generated from contracts with customers is broken down by the time of transfer of goods or services

Item Number for the current period Number for the same period last year Recognized income at a certain point in time 2,172,335,982.23 2,177,483,505.34 Subtotal 2,172,335,982.23 2,177,483,505.34

(3) The company's performance obligations are mainly to deliver pharmaceutical products to customers in accordance with the contract. The company adopts the method of receiving payment in advance or providing account terms according to the type of customer. The company is the main responsible person for direct sales. Product sales generally complete the performance obligations when the product is delivered to the customer according to the contract and the customer has accepted the product.

(4) The income recognized in the current period and included in the opening book value of contract liabilities was RMB 22,155,092.65.

2. Research and development expenses

Item Number for the current period Number for the same period last year Outsourcing expenses 123,490,839.67 168,982,955.10 Employee compensation 77,094,079.09 76,471,082.39 Research and development materials 62,170,529.51 60,949,962.03 Pilot test expenses 18,872,795.83 15,107,268.44 Depreciation and amortization 16,452,888.24 11,962,323.19 Research and development of fuel and power 4,365,063.29 3,335,610.91 Others 8,144,651.59 12,319,431.20 Total 310,590,847.22 349,128,633.26

3. Investment income

Item Number for the current period Number for the same period last year Income from bank wealth management products 16,393,997.80 11,107,264.20 Borrowing interest income 54,428.71 284,335.71 Dividends from subsidiaries 45,000,000.00 Guarantee fee income 47,169.81

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Total 16,448,426.51 56,438,769.72

16. Other supplementary information

(1) Non-recurring gains and losses

1. Detailed statement of non-recurring gains and losses

Item Amount Description of gains and losses from disposal of non-current assets, including write-off of provision for asset impairment

-Part 14,071.56

Government subsidies included in the current profit and loss, except for government subsidies that are closely related to the company's normal business operations, comply with national policies and regulations, are enjoyed in accordance with determined standards, and have a lasting impact on the company's profit and loss 11,145,183.85

In addition to the effective hedging business related to the company's normal operating business, non-financial enterprises' gains and losses from changes in fair value arising from holding financial assets and financial liabilities and gains and losses arising 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 17,756,892.40 Gains and losses from external entrusted loans

The impairment provision for receivables shall be reversed based on separate impairment tests for various asset losses caused by force majeure factors, such as natural disasters.

The investment cost of the enterprise in acquiring subsidiaries, associates and joint ventures is less than the income generated from the fair value of the investee's identifiable net assets when acquiring the investment.

Net profit and loss for the current period from the beginning of the period to the date of merger of subsidiaries resulting from business mergers 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

The one-time confirmation of share-based payment expenses due to the cancellation or modification of the equity incentive plan. For cash-settled share-based payment, the gains and losses arising from changes in the fair value of employee compensation payable after the vesting date

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

Page 84 of 86 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 -9,688,802.59

Other profit and loss items that meet the definition of non-recurring profits and losses

Subtotal 19,199,202.10

Less: Impact on corporate income tax (reduced income tax is represented by “-”) 690,459.97

Amount of impact on minority shareholders’ equity (after tax) 12,156.74

Net non-recurring gains and losses attributable to owners of the parent company 18,496,585.39

(2) Return on net assets and earnings per share

1. Details

Weighted average net assets Earnings per share (yuan/share)

Profit during the reporting period

Yield (%) Basic earnings per share Diluted earnings per share Net profit attributable to the company’s ordinary shareholders 12.96 1.00 1.00 Attributable to the company after deducting non-recurring gains and losses

12.44 0.96 0.96 Net profit for ordinary shareholders

2. Calculation process of weighted average return on equity

Item Serial Number Current Issue Number

Net profit attributable to the company's common shareholders A 469,364,240.73 Non-recurring gains and losses B 18,496,585.39 Net profit attributable to the company's common shareholders after deducting non-recurring gains and losses C=A-B 450,867,655.34 Opening net assets attributable to the company's common shareholders D 3,544,556,038.10 New net income attributable to the company’s ordinary shareholders due to the issuance of new shares or debt-to-equity swaps

E

assets

Cumulative number of months from the next month of new net assets to the end of the reporting period F

Repurchases or cash dividends, etc. reduce the net capital attributable to the company’s ordinary shareholders

G 234,000,000.00 produced

The cumulative number of months from the next month when net assets are reduced to the end of the reporting period H 8

Special reserves I1 -582,576.88 Others

Cumulative months of increase or decrease in net assets from the next month to the end of the reporting period

J1 6

number

Number of months in the reporting period K 12

L= D+A/2+ E×F/K-G×

Weighted average net assets 3,622,946,870.03 H/K±I×J/K

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