Zhejiang Shengda Biopharmaceutical Co., Ltd. 2025 Annual Audit Report

Zhejiang Shengda Biopharmaceutical Co., Ltd. 2025

Audit report

Grant Thornton Certified Public Accountants (Special General Partnership)

Directory

Audit report 1-5 Consolidated and company balance sheet 1-2 Consolidated and company income statement 3 Consolidated and company cash flow statement 4 Consolidated and company statement of changes in shareholders' equity 5-8 Notes to financial statements 9-91

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Audit report

Zhi Tong Shen Zi (2026) No. 332A016088

All shareholders of Zhejiang Shengda Biopharmaceutical Co., Ltd.:

1. Audit opinions

We have audited the financial statements of Zhejiang Shengda Biopharmaceutical Co., Ltd. (hereinafter referred to as Shengda Biopharmaceutical Company), including the consolidated and company balance sheets on December 31, 2025, the consolidated and company income statements, the consolidated and company cash flow statements, the consolidated and company changes in shareholders' equity statements for 2025, and the notes to relevant financial statements.

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 company financial status of Shengda Biotech on December 31, 2025, as well as the consolidated and company 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 requirements for public interest entities in the Chinese Code of Ethics for Certified Public Accountants and the Chinese Code of Independence for Certified Public Accountants (if applicable), we are independent from Shengda Biotech and have fulfilled other responsibilities in professional ethics. We believe that the audit evidence we obtained is sufficient and appropriate and provides a basis for issuing an audit opinion.

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

For details of relevant information disclosure, please refer to Note 3.25 and Note 5.39 of the financial statements.

1. Description of the matter

Shengda Biological Company's operating income mainly comes from the sales of vitamins, biological preservatives and functional ingredients. In 2025, the operating income of Shengda Biological Company was RMB 844.5369 million, of which the operating income from vitamins, biological preservatives and functional ingredients was RMB 748.9516 million, accounting for 88.68% of the operating income.

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

2. Audit response

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

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

(2) Through interviews with management and random inspections of sales contracts, understand the main contract terms or conditions, and evaluate whether the revenue recognition method is appropriate and consistent with industry practices and the company’s business model;

(3) Execute analysis procedures to determine the reasonableness of changes in sales revenue and gross profit margin;

(4) Perform detailed tests and randomly inspect supporting documents related to revenue recognition, including sales contracts, sales orders, sales invoices, logistics documents, customs declaration materials, acceptance materials, 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 operating income is recognized within 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;

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

(2) Net realizable value of inventories

For details of relevant information disclosure, please refer to Note 3.12 and Note 5.8 of the financial statements.

1. Description of the matter

As of December 31, 2025, the book balance of Shengda Biology's inventory was RMB 237.2541 million, the price reduction provision was RMB 47.5123 million, and the book value was RMB 189.7417 million. 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 the cost of a single inventory and its net realizable value. The management determines the estimated selling price based on historical selling prices, future market trends, etc., based on the purpose of holding inventory, and determines the net realizable value of the inventory based on the estimated selling price minus the estimated costs to be incurred upon completion, estimated sales 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 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 key internal controls;

(2) Obtain and review the specific calculation process of the company's provision for inventory depreciation reserves, the policies and methods for the accrual of inventory depreciation reserves, and determine whether the company's policies and accrual methods for inventory depreciation reserves are reasonable and in compliance with relevant regulations such as the Accounting Standards for Business Enterprises;

(3) Evaluate the reasonableness of management’s estimates of selling prices, costs to be incurred from inventory to completion, sales expenses and related taxes;

(4) Obtain the company's inventory receipt and receipt details, perform inventory valuation tests, and analyze whether the inventory valuation is accurate;

(5) Combined with inventory monitoring, check whether there are situations such as longer inventory age, decline in output, fluctuations in production costs or selling prices, changes in technology or market demand, etc. in the ending inventory, and evaluate whether the company's management has reasonably estimated the net realizable value;

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

4. Other information

The management of Shengda Biotech is responsible for other information. The other information includes information covered in Shengda Biotech's 2025 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 of Shengda Biological Company 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 Shengda Biotech's ability to continue as a going concern, disclosing matters related to continuing operations (if applicable), and applying the going concern assumption, unless management plans to liquidate Shengda Biotech, terminate operations, or has no other realistic option.

Those charged with governance are responsible for overseeing Shengda Biotech's financial reporting processes.

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 professional skepticism. 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 Shengda Biotech'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 Shengda Biotech 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 Shengda Biotech to express an 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 auditor's report unless laws or regulations prohibit public disclosure of the matter or, in rare circumstances, we determine that the matter should not be communicated in our auditor's report if the adverse consequences of communicating the matter in the auditor's report are reasonably expected to outweigh the benefits in the public interest.

Grant Thornton Certified Public Accountants in China

(Special General Partnership) (Project Partner)

Chinese Certified Public Accountant

Beijing, China April 23, 2026

Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

Notes to Financial Statements

1. Basic situation of the company

Zhejiang Shengda Biopharmaceutical Co., Ltd. (hereinafter referred to as the company) is a joint-stock company registered in Zhejiang Province. It was registered at the Tiantai County Administration for Industry and Commerce on February 8, 1999. The corporate legal person business license registration number is: 331023000003829. The A shares of RMB ordinary shares issued by the company have been listed on the Shanghai Stock Exchange. The company is headquartered in Taizhou City, Zhejiang Province.

(The company was formerly known as Zhejiang Shengda Pharmaceutical Co., Ltd., which was reorganized into a joint-stock company in December 2013.)

(The company's [original] registered capital is RMB 189,029,624.00, the total share capital is 189,029,624 shares, and the par value of the company's shares is RMB 1 per share.)

Registration place: No. 789, Renmin East Road, Chicheng Street, Tiantai County, Zhejiang Province

Headquarters address: No. 789, Renmin East Road, Chicheng Street, Tiantai County, Zhejiang Province

Main business activities: The company belongs to the food and feed additive manufacturing industry. The main business activities are the research and development, production and sales of vitamins, biological preservatives and functional ingredients, food additives and feed additives.

These financial statements and notes to the financial statements were approved by the third meeting of the fifth session of the Board of Directors of the Company on April 23, 2026.

2. Basis for preparation of financial statements

These financial statements are prepared in accordance with the Accounting Standards for Business Enterprises and their application guidelines, interpretations and other relevant regulations issued by the Ministry of Finance (collectively: "Accounting Standards for Business Enterprises"). In addition, the company also discloses relevant financial information in accordance with the China Securities Regulatory Commission's "Information Disclosure and Preparation Rules for Companies that Offer Securities to the Public No. 15 - General Provisions on Financial Reports (2023 Revision)".

These financial statements are presented on a going concern basis.

The Company's accounting is based on the accrual basis. Except for certain financial instruments, these financial statements are measured on the basis of historical cost. If an asset is impaired, corresponding impairment provisions will be made in accordance with relevant regulations.

3. Important accounting policies and accounting estimates

The Company determines the policies for impairment of financial instruments, depreciation of inventories, fixed assets, amortization of intangible assets and revenue recognition based on its own production and operation characteristics. For specific accounting policies, please refer to Note 3.10, Note 3.12, Note 3.

14. Note 3.18 and Note 3.25.

15. Statement on compliance with corporate accounting standards

This financial statement complies with the requirements of the Accounting Standards for Business Enterprises and truly and completely reflects the company's consolidated and company's financial status as of December 31, 2025, as well as the consolidated and company's operating results and consolidated and company's current Zhejiang Shengda Biopharmaceutical Co., Ltd. in 2025.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

Cash flow and other relevant information.

2. Accounting period

The company's accounting period adopts the Gregorian calendar year, that is, from January 1 to December 31 each year.

3. Business cycle

The company's operating cycle is 12 months.

4. Accounting standard currency

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

5. Determination method and selection basis of importance standards

Project Materiality Criteria

Important individual accounts receivable with provision for bad debts: The individual amount exceeds 0.5% of total assets

Important accounts receivable in the current period are written off if the individual amount exceeds 0.5% of total assets

Important prepayments aged more than 1 year. The individual amount exceeds 0.3% of total assets.

Important projects under construction The total investment in a single project exceeds 1% 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 total assets.

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

There is a significant change in the book value of contract liabilities, and the amount of change exceeds 0.5% of total assets.

Important estimated liabilities: individual amount exceeds 0.5% of total assets

Important cash flows from investing activities: The amount of a single item exceeds 5% of total assets

Important subsidiaries and non-wholly owned subsidiaries whose total profits exceed 15% of the group’s total profits

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

(1) Business merger under common control

For business mergers under common control, the assets and liabilities of the merged party acquired by the merging party during the merger shall be measured based on the book value of the merged party in the consolidated financial statements of the ultimate controlling party on the merger date. The difference between the book value of the merger consideration and the book value of the net assets obtained in the merger is adjusted to the capital reserve. If the capital reserve is insufficient for offset, the retained earnings are adjusted.

Merger of businesses under common control through multiple transactions

The assets and liabilities of the merged party acquired by the merging party in the merger are measured based on the book value in the consolidated financial statements of the ultimate controlling party on the merger date; the difference between the book value of the investments held before the merger plus the book value of the new consideration paid on the merger date and the book value of the net assets acquired in the merger is adjusted to the capital reserve. The capital reserve of Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

If there is insufficient offset, the retained earnings will be adjusted. For long-term equity investments held by the merging party before acquiring control of the merged party, relevant profits and losses, other comprehensive income and other changes in owner's equity have been recognized between the date of acquisition of the original equity and the date when the merging party and the merged party are under the final control of the same party, whichever is later, to the date of merger, and shall be offset against the opening retained earnings or current profits and losses of the comparative statement period respectively.

(2) Business combination not under common control

For business combinations not under common control, the combination cost is the fair value of the assets paid, liabilities incurred or assumed, and equity securities issued to obtain control of the purchased party on the acquisition date. On the purchase date, the acquired assets, liabilities and contingent liabilities of the purchased party are recognized at fair value.

The difference between the merger cost and the fair value share of the acquiree's identifiable net assets obtained in the merger is recognized as goodwill, and is subsequently measured at cost less accumulated impairment reserves; the difference between the merger cost and the fair value share of the acquiree's identifiable net assets obtained in the merger is included in the current profit and loss after review.

The merger of enterprises not under common control is realized step by step through multiple transactions.

The merger cost is the sum of the consideration paid on the purchase date and the fair value of the purchased party's equity held before the purchase date on the purchase date. The equity of the purchased party that has been 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; the equity of the purchased party that has been held before the purchase date involves other comprehensive income, other owners Changes in equity are converted into current income on the date of purchase, except for other comprehensive income arising from the investee's remeasurement of changes in net liabilities or net assets of the defined benefit plan and other comprehensive income related to investments in non-trading equity instruments originally designated as measured at fair value and whose changes are included in other comprehensive income.

(3) Treatment of transaction costs in business mergers

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

7. Control judgment standards and preparation methods of consolidated financial statements

(1) Judgment criteria for control

The scope of consolidation in consolidated financial statements is determined based on control. Control means that the company has power over the invested unit, enjoys variable returns by participating in the relevant activities of the invested unit, and has the ability to use its power over the invested unit to affect its return amount. The Company will reassess when changes in relevant facts and circumstances result in changes in the relevant elements involved in the definition of control.

When judging whether to include a structured entity into the scope of consolidation, the company evaluates whether it controls the structured entity based on comprehensively considering all facts and circumstances, including assessing the purpose and design of the structured entity, identifying the type of variable returns, and whether it assumes part or all of the return variability by participating in its related activities.

Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

(2) Preparation method of consolidated financial statements

The consolidated financial statements are based on the financial statements of the Company and its subsidiaries, and are prepared by the Company based on other relevant information. When preparing consolidated financial statements, the accounting policies and accounting period requirements of the Company and its subsidiaries are consistent, and significant inter-company transactions and balances are eliminated.

Subsidiaries and businesses that are added due to business combinations under the same control during the reporting period are deemed to be included in the company's consolidation scope from the date they are both controlled by the ultimate controlling party, and their operating results and cash flows from the date they are both controlled by the ultimate controlling party are included in the consolidated income statement and consolidated cash flow statement respectively.

For subsidiaries and businesses added during the reporting period due to business combinations not under common control, the income, expenses and profits of the subsidiaries and businesses from the date of acquisition to the end of the reporting period are included in the consolidated income statement, and their cash flows are included in the consolidated cash flow statement.

The part of the subsidiary's shareholders' equity that is not owned by the company is listed separately as minority shareholders' equity under the shareholders' equity in the consolidated balance sheet; the share of the subsidiary's current net profit and loss that is minority shareholders' equity is listed as "minority shareholders' profits and losses" under the net profit item in the consolidated income statement. If the losses of a subsidiary shared by minority shareholders exceed the minority shareholders' share of the opening owner's equity of the subsidiary, the balance will still offset the minority shareholders' equity.

(3) Purchase minority shareholders’ equity in subsidiaries

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

(4) Treatment of loss of control of subsidiaries

If control of the original subsidiary is lost due to the disposal of part of the equity investment or other reasons, the remaining equity shall be remeasured according to its fair value on the date of loss of control; the sum of the consideration obtained for the disposal of the equity and the fair value of the remaining equity, minus the sum of the share of the book value of the original subsidiary's net assets calculated continuously from the date of purchase and the goodwill calculated based on the original shareholding ratio, shall be included in the investment income in the current period when control is lost.

Other comprehensive income related to the equity investment of the original subsidiary will be accounted for on the same basis as the original subsidiary's direct disposal of relevant assets or liabilities when control is lost. Other changes in owner's equity related to the original subsidiary that are accounted for under the equity method will be transferred to the current profit and loss when control is lost.

8. Determination standards for cash and cash equivalents

Cash refers to cash on hand and deposits that can be used for payment at any time. Cash equivalents refer to investments held by the Company that are short-term, highly liquid, easily convertible into known amounts of cash, and have little risk of value changes. Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

9. Foreign currency business

When the Company conducts foreign currency business, it shall convert it into the recording currency amount using an exchange rate determined in accordance with a systematic and reasonable method that is similar to the spot exchange rate on the date of the transaction.

On the balance sheet date, foreign currency monetary items are converted using the spot exchange rate on the balance sheet date. The exchange difference arising from the difference between the spot exchange rate on the balance sheet date and the spot exchange rate at the time of initial recognition or the previous balance sheet date is included in the current profit and loss; foreign currency non-monetary items measured at historical cost are still converted using the spot exchange rate on the date of the transaction; For foreign currency non-monetary items measured at fair value, they are converted using the spot exchange rate on the date when the fair value is determined. The difference between the converted accounting functional currency amount and the original accounting functional currency amount is included in the current profit and loss or other comprehensive income according to the nature of the non-monetary item.

10. Financial instruments

A financial instrument is a contract that forms a financial asset of one party and a financial liability or equity instrument of another party.

(1) Recognition and derecognition of financial instruments

The Company recognizes a financial asset or financial liability when it becomes a party to a financial instrument contract.

Financial assets shall be derecognized if they meet one of the following conditions:

① The contractual right to receive cash flows from the financial asset terminates;

② The financial asset has been transferred and meets the following conditions for derecognition of financial asset transfer.

If the current obligation of a financial liability has been discharged in whole or in part, the financial liability or part of it shall be derecognised. If the company (debtor) signs an agreement with its creditors to replace existing financial liabilities by assuming new financial liabilities, and the contract terms of the new financial liabilities are substantially different from the existing financial liabilities, the existing financial liabilities will be derecognised and the new financial liabilities will be recognized at the same time.

When financial assets are bought and sold in a regular manner, accounting recognition and derecognition will be carried out based on the transaction date.

(2) Classification and measurement of financial assets

Upon initial recognition, the Company divides financial assets into the following three categories based on the business model for managing financial assets and the contractual cash flow characteristics of financial assets: financial assets measured at amortized cost, financial assets measured at fair value with changes included in other comprehensive income, and financial assets measured at fair value with changes included in current profits and losses.

Financial assets are measured at fair value upon initial recognition. For financial assets measured at fair value and whose changes are included in the current profit and loss, the relevant transaction costs are directly included in the current profit and loss; for other types of financial assets, the relevant transaction costs are included in the initial recognition amount. For receivables arising from the sale of products or provision of services that do not include or take into account significant financing components, the amount of consideration that the company is expected to be entitled to receive shall be regarded as the initial recognition amount.

Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

Financial assets measured at amortized cost

The Company will classify financial assets that meet the following conditions and are not designated as measured at fair value through profit or loss for the current period as financial assets measured at amortized cost:

The company’s business model for managing this financial asset is aimed at collecting contractual cash flows;

 The contractual terms of the financial asset stipulate that the cash flows generated on a specific date are solely payments of principal and interest based on the outstanding principal amount.

After initial recognition, such financial assets are measured at amortized cost using the effective interest rate method. 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 they are derecognized, amortized according to the effective interest method, or impairment is recognized.

Financial assets measured at fair value through other comprehensive income

The Company will classify financial assets that meet the following conditions and are not designated as measured at fair value through profit or loss for the current period as financial assets measured at fair value through other comprehensive income:

The company's business model for managing the financial assets aims at both collecting contractual cash flows and selling the financial assets;

 The contractual terms of the financial asset stipulate that the cash flows generated on a specific date are solely payments of principal and interest based on the outstanding principal amount.

After initial recognition, such financial assets are subsequently measured at fair value. 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.

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

Except for the above-mentioned financial assets measured at amortized cost and at fair value with changes included in other comprehensive income, the Company classifies all remaining financial assets as financial assets measured at fair value with changes included in current profits and losses. At the time of initial recognition, in order to eliminate or significantly reduce accounting mismatches, the Company irrevocably designates some financial assets that should have been measured at amortized cost or at fair value through other comprehensive income as financial assets at fair value through profit or loss for the current period.

After initial recognition, such financial assets are subsequently measured at fair value, and the resulting gains or losses (including interest and dividend income) are included in the current profits and losses, unless the financial assets are part of a hedging relationship.

The business model for managing financial assets refers to how the company manages financial assets to generate cash flow. The business model determines whether the source of cash flow from the financial assets managed by the company is collection of contractual cash flow, sale of financial assets or both. The Company determines the business model for managing financial assets based on objective facts and specific business objectives for managing financial assets determined by key management personnel.

The company evaluates the contractual cash flow characteristics of financial assets to determine whether the relevant financial assets are Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

Whether the contractual cash flows generated during the period are only payments of principal and interest based on the outstanding principal amount. Among them, principal refers to the fair value of the financial asset at the time of initial recognition; interest includes consideration for the time value of money, the credit risk associated with the outstanding principal amount in a specific period, and other basic lending risks, costs and profits. In addition, the Company evaluates contract terms that may cause changes in the time distribution or amount of contractual cash flows of financial assets to determine whether they meet the requirements of the above contractual cash flow characteristics.

Only when the company changes its business model for managing financial assets, all affected relevant financial assets will be reclassified on the first day of the first reporting period after the change in business model. Otherwise, financial assets shall not be reclassified after initial recognition.

(3) Classification and measurement of financial liabilities

The Company's financial liabilities are classified upon initial recognition into: financial liabilities measured at fair value with changes included in current profits and losses, and financial liabilities measured at amortized cost. For financial liabilities that are not classified as measured at fair value and whose changes are included in current profits and losses, relevant transaction costs are included in their initial recognition amount.

Financial liabilities measured at fair value through profit or loss for the current period

Financial liabilities at fair value through profit or loss include trading financial liabilities and financial liabilities designated as fair value through profit or loss upon initial recognition. Such financial liabilities are subsequently measured at fair value, and gains or losses arising from changes in fair value, as well as dividends and interest expenses related to such financial liabilities, are included in the current profits and losses.

Financial liabilities measured at amortized cost

Other financial liabilities adopt the actual interest rate method and are subsequently measured at amortized cost. Gains or losses arising from derecognition or amortization are included in the current profits and losses.

The difference between financial liabilities and equity instruments

Financial liabilities refer to liabilities that meet one of the following conditions:

①Contractual obligation to deliver cash or other financial assets to other parties.

② Contractual obligations to exchange financial assets or financial liabilities with other parties under potentially adverse conditions.

③ Non-derivative contracts that must or can be settled with the enterprise's own equity instruments in the future, and the enterprise will deliver a variable number of its own equity instruments according to the contract.

④ Derivative contracts that must or can be settled with the enterprise's own equity instruments in the future, except for derivative contracts that exchange a fixed number of its own equity instruments for a fixed amount of cash or other financial assets.

Equity instruments refer to contracts that prove ownership of the remaining equity in the assets of an enterprise after deducting all liabilities.

If the company cannot unconditionally avoid delivering cash or other financial assets to perform a contractual obligation, Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

Then the contractual obligation meets the definition of financial liability.

If a financial instrument must or can be settled with the company's own equity instruments, it is necessary to consider whether the company's own equity instruments used to settle the instrument are used as a substitute for cash or other financial assets, or to enable the holder of the instrument to enjoy the remaining interest in the issuer's assets after deducting all liabilities. If it is the former, the instrument is the company's financial liability; if it is the latter, the instrument is the company's equity instrument.

(4) Derivative financial instruments and embedded derivatives

The Company's derivative financial instruments include forward foreign exchange contracts, currency exchange rate swap contracts, interest rate swap contracts and foreign exchange option contracts, etc. The derivative transaction contract is initially measured at the fair value on the date when the contract is signed, and subsequently measured at its fair value. Derivative financial instruments with a positive fair value are recognized as an asset, and derivative financial instruments with a negative fair value are recognized as a liability. Any gains or losses arising from changes in fair value that do not comply with the hedging accounting regulations are directly included in the current profits and losses.

For hybrid instruments containing embedded derivatives, such as if the main contract is a financial asset, the relevant provisions on the classification of financial assets shall apply to the hybrid instrument as a whole. If the main contract is not a financial asset, and the hybrid instrument is not measured at fair value and its changes are included in the current profit and loss for accounting treatment, and the embedded derivative is not closely related to the main contract in terms of economic characteristics and risks, and the conditions are the same as the embedded derivative, and the stand-alone instrument meets the definition of a derivative, the embedded derivative is separated from the hybrid instrument and treated as a separate derivative financial instrument. If the embedded derivative cannot be measured separately at the time of acquisition or at subsequent balance sheet dates, the hybrid instrument as a whole is designated as a financial asset or financial liability at fair value through profit or loss.

(5) Fair value of financial instruments

Please refer to Note 3.11 for the method of determining the fair value of financial assets and financial liabilities.

(6) Impairment of financial assets

Based on expected credit losses, the company performs impairment accounting on the following items and recognizes loss provisions:

Financial assets measured at amortized cost;

Receivables and investments in debt instruments measured at fair value through other comprehensive income;

Contract assets as defined in "Accounting Standards for Business Enterprises No. 14 - Revenue";

Lease receivables;

▪ Financial guarantee contracts (except those formed by measuring at fair value through current profits and losses, transferring financial assets that do not meet the conditions for derecognition, or continuing to be involved in the transferred financial assets).

Measurement of expected credit losses

Expected credit losses refer to the weighted average of the credit losses of financial instruments with the risk of default as the weight. Credit losses refer to all contractual cash flows Zhejiang Shengda Biopharmaceutical Co., Ltd. receivable under the contract discounted at the original actual interest rate.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

The difference between the amount and all cash flows expected to be collected is the present value of the entire cash shortfall.

The company considers reasonable and well-founded information about past events, current conditions and predictions of future economic conditions, weights the risk of default, calculates the probability-weighted amount of the present value of the difference between the cash flow receivable in the contract and the cash flow expected to be received, and recognizes expected credit losses.

The Company measures the expected credit losses of financial instruments at different stages respectively. If the credit risk of a financial instrument has not increased significantly since initial recognition, it is in the first stage, and the company will measure loss provisions based on the expected credit losses within the next 12 months; if the credit risk of a financial instrument has increased significantly since initial recognition but has not yet incurred credit impairment, it is in the second stage, and the company will measure loss provisions based on the expected credit losses throughout the entire duration of the instrument; if a financial instrument has experienced credit impairment since initial recognition, it is in the third stage, and the company will measure loss provisions based on the expected credit losses throughout the entire duration of the instrument.

For financial instruments with low credit risk on the balance sheet date, the company assumes that its credit risk has not increased significantly since initial recognition, and measures loss provisions based on expected credit losses within the next 12 months.

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

When measuring expected credit losses, the maximum period that the company needs to consider is the longest contract period for which the enterprise faces credit risk (including consideration of renewal options).

For financial instruments in the first and second stages and with lower credit risk, the company calculates interest income based on its book balance before impairment provisions and actual interest rate. For financial instruments in the third stage, interest income is calculated based on its book balance minus the amortized cost and actual interest rate after impairment provisions have been made.

For receivables such as notes receivable, accounts receivable, receivables financing, other receivables, and contract assets, if the credit risk characteristics of a certain customer are significantly different from those of other customers in the portfolio, or the credit risk characteristics of the customer change significantly, the company will make a separate provision for bad debts for the receivables. In addition to the receivables for which bad debt provisions are made individually, the Company divides the receivables into combinations based on credit risk characteristics and calculates bad debt provisions on a combination basis.

Notes receivable, accounts receivable

For notes receivable and accounts receivable, regardless of whether there is a significant financing component, the Company always measures its loss provisions at an amount equivalent to the expected credit losses during the entire duration.

When a single financial asset cannot assess expected credit losses at a reasonable cost, the company divides notes receivable and accounts receivable into groups based on credit risk characteristics, and calculates expected credit losses based on the combination. The basis for determining the group is as follows:

Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

A. Notes receivable

 Notes receivable group 1: bank acceptance bill

 Notes receivable portfolio 2: commercial acceptance bill

B. Accounts receivable

Accounts receivable portfolio 1: Related party portfolio within the scope of consolidation

Accounts receivable portfolio 2: Receivable from other customers

For accounts receivable and notes receivable classified as related party combinations within the scope of consolidation, the Company refers to historical credit loss experience, combined with current conditions and predictions of future economic conditions, and calculates expected credit losses through default risk exposure and the expected credit loss rate throughout the duration.

For accounts receivable classified as receivable from other customer portfolios, the Company refers to historical credit loss experience, combined with current conditions and predictions of future economic conditions, prepares a comparison table between the aging of accounts receivable and the expected credit loss rate for the entire duration, and calculates expected credit losses. The aging of accounts receivable is calculated from the date of confirmation.

Other receivables

The company divides other receivables into several combinations based on credit risk characteristics, and calculates expected credit losses on the basis of the combinations. The basis for determining the combinations is as follows:

Other receivables portfolio 1: Related party portfolio within the scope of consolidation

Other receivables portfolio 2: Other receivables

For other receivables classified into portfolios, the Company calculates expected credit losses through default risk exposure and expected credit loss rate within the next 12 months or throughout the duration. For other receivables grouped by aging, the aging is calculated from the date of confirmation.

Debt investment, other debt investment

For debt investments and other debt investments, the Company calculates expected credit losses based on the nature of the investment, various types of counterparties and risk exposures, and through default risk exposure and expected credit loss rate within the next 12 months or throughout the duration.

Assessment of significant increase in credit risk

The Company compares the risk of default of a financial instrument on the balance sheet date with the risk of default on the initial recognition date to determine the relative change in the default risk of the financial instrument during its expected duration to assess whether the credit risk of the financial instrument has increased significantly since initial recognition.

Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

When determining whether credit risk has increased significantly since initial recognition, the Company considers reasonable and supportable information, including forward-looking information, that is available without unnecessary additional cost or effort. Information considered by the Company includes:

The debtor fails to pay the principal and interest on the due date of the contract;

▪ The actual or expected material deterioration in the external or internal credit rating (if any) of the financial instrument; Ÿ The actual or expected material deterioration in the operating results of the debtor;

 Existing or expected changes in the technological, market, economic or legal environment that will have a material adverse impact on the debtor's ability to repay the Company's debt.

Depending on the nature of the financial instrument, the Company evaluates whether the credit risk has increased significantly on the basis of a single financial instrument or a combination of financial instruments. When evaluating based on a portfolio of financial instruments, the Company may classify financial instruments based on common credit risk characteristics, such as overdue information and credit risk ratings.

If it is overdue for more than 30 days, the Company determines that the credit risk of the financial instrument has increased significantly.

The Company believes that financial assets default in the following circumstances:

or

Financial assets are overdue for more than 90 days.

Credit-impaired financial assets

The Company assesses whether credit impairment has occurred on financial assets measured at amortized cost and debt investments measured at fair value through other comprehensive income on the balance sheet date. When one or more events occur that have an adverse impact on the expected future cash flows of a financial asset, the financial asset becomes a credit-impaired financial asset. Evidence that a financial asset has been credit-impaired includes the following observable information:

The issuer or debtor encounters significant financial difficulties;

 The debtor breaches the contract, such as default or overdue payment of interest or principal;

Ÿ The Company grants concessions to the debtor that the debtor would not make under any other circumstances due to economic or contractual considerations related to the debtor's financial difficulties;

 It is likely that the debtor will go bankrupt or undergo other financial reorganization;

 The financial difficulty of the issuer or debtor results in the disappearance of an active market for the financial asset.

Presentation of expected credit loss provisions

In order to reflect changes in the credit risk of financial instruments since the initial recognition, the company re-measures expected credit losses on each balance sheet date, and the resulting increase or reversal of loss provisions shall be treated as impairment losses Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

Loss or gain shall be included in the current profit and loss. 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.

Write off

If the company no longer reasonably expects that the contractual cash flows of a financial asset can be fully or partially recovered, it will directly write down the book balance of the financial asset. Such a write-down constitutes the derecognition of the relevant financial asset. This situation typically occurs when the Company determines that the debtor does not have the assets or sources of income to generate sufficient cash flow to repay the amount that will be written down. However, in accordance with the Company's procedures for recovering due amounts, financial assets that are written down may still be affected by execution activities.

If a financial asset that has been written down is later recovered, the reversal of the impairment loss will be included in the profit and loss of the current period of recovery.

(7) Transfer of financial assets

The transfer of financial assets refers to the transfer or delivery of financial assets to another party (the transfer-in party) other than the issuer of the financial assets.

If the Company has transferred substantially all risks and rewards of ownership of a financial asset to the transferee, it shall derecognize the financial asset; if it has retained substantially all risks and rewards of ownership of the financial asset, it shall not derecognize the 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 be dealt with: if it gives up control of the financial asset, it will terminate the recognition of the financial asset and recognize the resulting assets and liabilities; if it does not give up control of the financial asset, the relevant financial assets will be recognized according to the extent of its continued involvement in the transferred financial assets, and the relevant liabilities will be recognized accordingly.

(8) Offset of financial assets and financial liabilities

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

11. Fair value measurement

Fair value refers to the price that can be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date.

The Company measures relevant assets or liabilities at fair value and assumes that an orderly transaction to sell assets or transfer liabilities is conducted in the main market for the relevant assets or liabilities; if there is no main market, the Company assumes that the transaction is conducted in the most favorable market for the relevant assets or liabilities. The main market (or the most advantageous market) is the trading market that the company can enter on the measurement date. The Company uses the assumptions used by market participants to maximize their economic interests when pricing the asset or liability.

Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

For financial assets or financial liabilities that have an active market, the Company determines their fair value using quotes in the active market. If there is no active market for a financial instrument, the Company uses valuation techniques to determine its fair value.

When measuring non-financial assets at fair value, the ability of market participants to use the asset for its best purpose to generate economic benefits is considered, or the ability to sell the asset to other market participants that can be used for its best purpose to generate economic benefits.

The Company adopts valuation techniques that are applicable under the current circumstances and supported by sufficient available data and other information, giving priority to the use of relevant observable input values. Only when observable input values ​​cannot be obtained or are impractical to obtain, unobservable input values ​​will be used.

For assets and liabilities measured or disclosed at fair value in financial statements, the fair value level to which they belong is determined based on the lowest level input value that is significant to the overall fair value measurement: the first level input value is the unadjusted quoted price in the active market for the same asset or liability that can be obtained on the measurement date; 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; the third level input value is the unobservable input value of the relevant asset or liability.

At each balance sheet date, the Company reassesses the assets and liabilities recognized in the financial statements that continue to be measured at fair value to determine whether there is a transition between fair value measurement levels.

12. Inventory

(1) Classification of inventory

The company's inventory is divided into raw materials, work-in-progress and self-made semi-finished products, goods in stock, goods shipped, low-value consumables, commissioned processing materials, etc.

(2) Valuation method for issued inventory

The Company's inventories are valued at actual cost when acquired. Raw materials, inventory, etc. are priced using the weighted average method when shipped.

(3) Determination basis and accrual method of inventory depreciation reserve

On the balance sheet date, inventories are measured at the lower of cost and net realizable value. When the net realizable value is lower than the cost, a provision for inventory depreciation is made.

Net realizable value is the estimated selling price of the inventory minus the estimated costs to be incurred upon completion, estimated selling expenses and related taxes. When determining the net realizable value of inventories, it is based on the conclusive evidence obtained and the purpose of holding the inventories and the impact of events after the balance sheet date are also considered.

The Company usually accrues inventory depreciation provisions based on individual inventory items. For inventories with large quantities and low unit prices, inventory depreciation provisions are made according to the inventory category.

On the balance sheet date, if the factors that previously caused the inventory value to be written down have disappeared, the inventory depreciation provision shall be reversed within the amount originally accrued.

Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

(4) Inventory inventory system

The company's inventory inventory system adopts the perpetual inventory system.

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

The Company adopts the one-time write-off method for amortization of low-value consumables when they are used.

13. Long-term equity investment

Long-term equity investments include equity investments in subsidiaries, joint ventures and associates. If the company can exert significant influence on the invested unit, it is an associate of the company.

(1) Determination of initial investment cost

For long-term equity investments formed by business combinations: For long-term equity investments obtained from business combinations under the same control, the share of the book value of the owner's equity of the merged party in the final controlling party's consolidated financial statements on the merger date shall be regarded as the investment cost; for long-term equity investments obtained from business combinations not under the same control, the investment cost of the long-term equity investments shall be based on the combination cost.

For long-term equity investments obtained by other means: for long-term equity investments obtained by paying cash, the actual purchase price paid will be used as the initial investment cost; for long-term equity investments obtained by issuing equity securities, the fair value of the equity securities issued will be used as the initial investment cost.

(2) Subsequent measurement and profit and loss recognition methods

Investments in subsidiaries are accounted for using the cost method, unless the investment qualifies as held for sale; investments in associates and joint ventures are accounted for using the equity method.

For long-term equity investments accounted for using the cost method, in addition to the actual price paid when acquiring the investment or the cash dividends or profits that have been declared but not yet distributed included in the consideration, the cash dividends or profits declared to be distributed by the investee shall be recognized as investment income and included in the current profit and loss.

For long-term equity investments accounted for using the equity method, if the initial investment cost is greater than the fair value share of the investee's identifiable net assets at the time of investment, the investment cost of the long-term equity investment will not be adjusted; if the initial investment cost is less than the fair value share of the investee's identifiable net assets at the time of investment, the book value of the long-term equity investment will be adjusted, and the difference will be included in the current profit and loss of the investment.

When accounting using the equity method, investment income and other comprehensive income are recognized respectively according to the share of the net profit or loss and other comprehensive income realized by the investee that should be enjoyed or shared, and the book value of the long-term equity investment is adjusted at the same time; according to the profits or cash distributed by the invested unit, The portion to be enjoyed in the calculation of dividends will be reduced correspondingly to the book value of the long-term equity investment; other changes in the owner's equity of the invested unit other than net profits and losses, other comprehensive income and profit distribution, the book value of the long-term equity investment will be adjusted and included in the capital reserve (other capital reserve). When confirming the share of the investee's net profits and losses, the fair value of the investee's identifiable assets when the investment is obtained is used as the basis, and the net profit of the investee is adjusted and recognized in accordance with the company's accounting policies and accounting periods.

Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

If the investee is able to exert significant influence or implement joint control due to additional investment or other reasons but does not constitute control, on the conversion date, the sum of the fair value of the original equity plus the new investment cost will be used as the initial investment cost to be accounted for under the equity method. If the original equity is classified as a non-trading equity instrument investment measured at fair value and its changes are included in other comprehensive income, the related cumulative fair value changes originally included in other comprehensive income will be transferred to retained earnings when it is accounted for under the equity method.

If the joint control or significant influence on the invested unit is lost due to the disposal of part of the equity investment or other reasons, the remaining equity after disposal will be accounted for in accordance with the "Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments" on the date of loss of joint control or significant influence, and the difference between the fair value and the book value shall be included in the current profit and loss. Other comprehensive income recognized due to the equity method accounting for the original equity investment will be accounted for on the same basis as the investee's direct disposal of relevant assets or liabilities when the equity method accounting is terminated; other changes in owner's equity related to the original equity investment will be transferred to the current profit and loss.

If control over the invested unit is lost due to the disposal of part of the equity investment or other reasons, and the remaining equity after disposal can jointly control or exert significant influence on the invested unit, it shall be accounted for according to the equity method, and the remaining equity shall be deemed to have been accounted for using the equity method since the time of acquisition and adjustments shall be made; after disposal If the remaining equity cannot jointly control or exert significant influence on the invested unit, accounting treatment shall be carried out in accordance with the relevant provisions of "Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments", and the difference between its fair value and book value on the date of loss of control shall be included in the current profit and loss.

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

Unrealized gains and losses from internal transactions between the Company and its associates and joint ventures are calculated based on the shareholding ratio attributable to the Company, and investment gains and losses are recognized on an offsetting basis. However, if the unrealized internal transaction losses between the company and the investee are impairment losses on the transferred assets, they will not be offset.

(3) Basis for determining joint control and significant influence on the invested unit

Joint control refers to the shared control over an arrangement in accordance with relevant agreements, and the relevant activities of the arrangement must be decided only with the unanimous consent of the participants sharing control rights. When judging whether there is joint control, first judge whether the arrangement is collectively controlled by all participants or a combination of participants, and secondly whether decisions on activities related to the arrangement must be unanimously agreed upon by the participants who collectively control the arrangement. If all participants or a group of participants must act in concert to decide the relevant activities of an arrangement, then all participants or a group of participants are considered to collectively control the arrangement; if there are two or more parties that can collectively control an arrangement, it does not constitute joint control. When determining whether joint control exists, the protective rights enjoyed are not taken into account.

Significant influence means that the investor has the power to participate in decision-making on the financial and operating policies of the invested unit, but it is not able to control or jointly control the formulation of these policies with other parties. When determining whether it can exert a significant influence on the investee, it is considered that the voting rights of the investee directly or indirectly held by the investor and the current executable potential voting rights held by the investor and other parties are assumed to be converted into shares of the investee. Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

The effects arising after the rights are issued include the effects of current convertible warrants, share options and convertible corporate bonds issued by the investee.

When the company directly or indirectly through subsidiaries owns more than 20% (inclusive) but less than 50% of the voting shares of the invested unit, it is generally considered to have a significant impact on the invested unit. Unless there is clear evidence that it cannot participate in the production and operation decisions of the invested unit, it will not have a significant impact; the company owns the invested unit When holding less than 20% (exclusive) of the voting shares, it is generally not considered to have a significant impact on the invested unit, unless there is clear evidence that under such circumstances, it can participate in the production and operation decisions of the invested unit and have a significant impact.

(4) Impairment testing method and impairment provision accrual method

For investments in subsidiaries, associates and joint ventures, please refer to Note 3.20 for the method of calculating asset impairment.

14. Fixed assets

(1) Fixed assets recognition conditions

The company's fixed assets refer to tangible assets held for the production of goods, provision of labor services, leasing or operation and management, and with a service life of more than one accounting year.

A fixed asset can only be recognized when the economic benefits related to the fixed asset are likely to flow into the enterprise and the cost of the fixed asset can be measured reliably.

The company's fixed assets are initially measured based on the actual cost when acquired.

Subsequent expenditures related to fixed assets are included in the cost of fixed assets when the economic benefits related to them are likely to flow into the company and their costs can be measured reliably. Daily repair costs of fixed assets that do not meet the conditions for subsequent expenditures for capitalization of fixed assets are included in the current profit and loss or included in the cost of related assets according to the beneficiary objects when incurred. For the replaced part, its book value is derecognized.

(2) Depreciation methods for various types of fixed assets

The Company uses the straight-line method to calculate depreciation. Depreciation begins when fixed assets reach their intended usable condition, and depreciation stops when they are derecognized or classified as non-current assets held for sale. Without considering impairment provisions, the Company determines the annual depreciation rates of various types of fixed assets based on fixed asset category, estimated service life and estimated residual value as follows:

Category Service life (years) Residual value rate % Annual depreciation rate % Houses and buildings 3-20 5 31.67-4.75 Special equipment 6-10 5 15.83-9.50 General equipment 3-5 5 31.67-19.00 Transportation equipment 4 5 23.75

Among them, the fixed assets for which impairment provisions have been made shall also be deducted from the accumulated fixed asset impairment provisions for Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

Calculate the depreciation rate.

(3) Please refer to Note 3.20 for the impairment testing method and impairment provision accrual method of fixed assets.

(4) At the end of each year, the company evaluates the service life, estimated net residual value and depreciation method of fixed assets.

Review.

If there is a difference between the estimated useful life and the original estimate, the useful life of the fixed assets will be adjusted; if there is a difference between the expected net residual value and the original estimate, the estimated net residual value will be adjusted.

(5) Fixed asset disposal

When a fixed asset is disposed of or no economic benefits are expected to be generated through use or disposal, the fixed asset is derecognised. The amount of disposal income from the sale, transfer, scrapping or damage of fixed assets after deducting their book value and related taxes is included in the current profit and loss.

(6) Idle fixed assets

The company identifies 30% of the equipment that has not been put into use for more than 6 consecutive months, or is used but the average monthly usage time is less than the rated time, as idle fixed assets. For idle fixed assets, except for those fixed assets that have been fully depreciated and are still in use, the rest will still be depreciated normally.

15. Projects under construction

The cost of the company's construction-in-progress is determined based on actual project expenditures, including various necessary project expenditures incurred during the construction period, borrowing costs that should be capitalized before the project reaches its intended usable state, and other related expenses. Construction in progress is transferred to fixed assets when it reaches its intended usable state.

(1) Houses and buildings: The main construction project and supporting projects have been substantially completed, met the predetermined design requirements and have been accepted.

(2) Special equipment: After installation and commissioning, it must meet the design requirements or the standards stipulated in the contract.

Please refer to Note 3.20 for the method of accruing asset impairment for projects under construction.

16. Engineering materials

Our company's engineering materials refer to various materials prepared for projects under construction, including engineering materials, equipment that has not yet been installed, and tools and equipment prepared for production.

The purchased engineering materials are measured at cost, the engineering materials received are transferred to the project under construction, and the remaining engineering materials after the completion of the project are transferred to inventory.

Please refer to Note 3.20 for the method of accruing asset impairment for construction materials.

In the balance sheet, the closing balance of construction materials is listed in the "Construction in Progress" item.

Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

17. Borrowing costs

(1) Recognition principles for capitalization of borrowing costs

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

① Asset expenditures have occurred. Asset expenditures include expenditures in the form of cash payments, transfers of non-cash assets or interest-bearing debts for the acquisition, construction or production of assets that meet capitalization conditions;

② Borrowing costs have been incurred;

③ The necessary purchase, construction or production activities to bring the asset to its intended usable or salable state have begun.

(2) Capitalization period of borrowing costs

When the assets purchased, constructed or produced by the company that meet the capitalization conditions reach the intended usable or salable state, the capitalization of borrowing costs will cease. Borrowing costs incurred after the assets that meet the capitalization conditions reach the intended usable or salable state are recognized as expenses based on the amount incurred when incurred and included in the current profit and loss.

If an asset that meets the capitalization conditions is abnormally interrupted during the acquisition, construction or production process, and the interruption lasts for more than 3 months, the capitalization of borrowing costs will be suspended; the borrowing costs during the normal interruption period will continue to be capitalized.

(3) Calculation method of capitalization rate of borrowing costs and capitalization amount

The interest expenses actually incurred on special borrowings in the current period shall be capitalized after deducting the interest income from unused borrowed funds deposited in banks or investment income from temporary investments; the capitalization amount of general borrowings shall be determined based on the weighted average of asset disbursements exceeding the part of special borrowings multiplied by the capitalization rate of the occupied general borrowings. The capitalization rate is calculated and determined based on the weighted average interest rate of general borrowings.

During the capitalization period, all exchange differences on special foreign currency borrowings are capitalized; exchange differences on general foreign currency borrowings are included in the current profits and losses.

18. Intangible assets

The company's intangible assets include land use rights, patent rights and non-patented technologies.

Intangible assets are initially measured based on cost, and their service life is analyzed and judged when the intangible assets are acquired. If the service life is limited, from the time the intangible asset becomes available for use, the amortization method that can reflect the expected realization method of the economic benefits related to the asset will be used and amortized within the expected service life; if the expected realization method cannot be reliably determined, the straight-line method will be used for amortization; intangible assets with uncertain service life will not be amortized.

Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

The amortization method of intangible assets with limited useful life is as follows:

service life

Category Useful life Amortization method Remarks

Determination basis

Land use rights 50 years Time the land can be used Straight-line method

Patent and trademark rights 10 years Expected benefit period Straight-line method

Non-patented technology 10 years Expected benefit period Straight-line method

Discharge rights 10 years Contracted discharge period Straight-line method

Office software 3-5 years Expected benefit period Straight-line method

At the end of each year, the company reviews the useful life and amortization method of intangible assets with limited service life. If it is different from the previous estimate, the original estimate is adjusted and treated as a change in accounting estimate.

If it is expected that an intangible asset will no longer bring future economic benefits to the enterprise on the balance sheet date, the entire book value of the intangible asset will be transferred to the current profit and loss.

Please refer to Note 3.20 for the method of accruing asset impairment for intangible assets.

19. R&D expenditures

The company's R&D expenditures are expenditures directly related to the company's R&D activities, including R&D personnel salaries, direct investment costs, depreciation expenses and long-term deferred expenses, design expenses, equipment commissioning expenses, intangible asset amortization expenses, entrusted external research and development expenses, other expenses, etc. The wages of R&D personnel are included in R&D expenditures based on project working hours. Equipment, production lines, and sites shared between R&D activities and other production and operation activities are included in R&D expenses according to the proportion of working hours and the proportion of area.

The Company divides the expenditures on internal research and development projects into expenditures in the research phase and expenditures in the development phase.

Expenditures in the research stage are included in the current profits and losses when incurred.

Expenditures in the development stage can only be capitalized if they meet the following conditions: it is technically feasible to complete the intangible asset so that it can be used or sold; there is the intention to complete the intangible asset and use or sell it; the intangible asset generates economic benefits in a manner that can prove the use of the intangible asset to produce products There is a market or the intangible asset itself has a market, and if the intangible asset will be used internally, its usefulness can be proven; there is sufficient technical, financial and other resource support to complete the development of the intangible asset, and the ability to use or sell the intangible asset; the expenditures attributable to the development stage of the intangible asset can be measured reliably. Development expenditures that do not meet the above conditions are included in the current profit and loss.

The company's research and development projects will enter the development stage after meeting the above conditions and passing technical feasibility and economic feasibility studies to form a project.

Capitalized expenditures in the development phase are listed as development expenditures on the balance sheet and are converted into intangible assets from the date the project reaches its intended use.

Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

20. Asset impairment

The asset impairment of long-term equity investments, fixed assets, construction in progress, right-of-use assets, intangible assets, goodwill, etc. (except inventories, investment real estate measured according to the fair value model, deferred income tax assets, and financial assets) of subsidiaries, associates, and joint ventures shall be determined according to the following method:

On the balance sheet date, it is judged whether there are any signs that the asset may be impaired. If there are signs of impairment, the company will estimate its recoverable amount and conduct an impairment test. Goodwill formed due to business mergers, intangible assets with indefinite useful lives and intangible assets that have not yet reached their intended use are subject to impairment testing every year regardless of whether there are signs of impairment.

The recoverable amount is determined based on the higher of the asset's fair value less disposal costs and the present value of the asset's expected future cash flows. The Company estimates the recoverable amount on the basis of a single asset; if it is difficult to estimate the recoverable amount of an individual asset, the recoverable amount of the asset group to which the asset belongs is determined based on the asset group. The identification of an asset group is based on whether the main cash inflow generated by the asset group is independent of the cash inflows of other assets or asset groups.

When the recoverable amount of an asset or asset group is lower than its book value, the company will write down its book value to the recoverable amount, and the amount of the write-down will be included in the current profit and loss, and the corresponding asset impairment provision will be made.

As far as the impairment test of goodwill is concerned, the book value of goodwill formed due to a business combination shall be allocated to the relevant asset groups in a reasonable manner from the date of purchase; if it is difficult to allocate it to the relevant asset groups, it shall be allocated to the relevant asset group combinations. The relevant asset group or asset group combination is an asset group or asset group combination that can benefit from the synergy effects of the business combination, and is no larger than the reporting segment determined by the company.

During impairment testing, if there are signs of impairment in an asset group or combination of asset groups related to goodwill, first conduct an impairment test on the asset group or combination of asset groups that does not contain goodwill, calculate the recoverable amount, and recognize the corresponding impairment loss. Then conduct an impairment test on the asset group or asset group combination containing goodwill, and compare its book value with the recoverable amount. If the recoverable amount is lower than the book value, the impairment loss of goodwill is recognized.

Once the asset impairment loss is recognized, it will not be reversed in subsequent accounting periods.

21. Long-term deferred expenses

The long-term deferred expenses incurred by the company are measured at actual costs and amortized evenly over the expected benefit period. For long-term deferred expense items that cannot benefit future accounting periods, their amortized value shall be fully included in the current profit and loss.

22. Employee compensation

(1) Scope of employee compensation

Employee compensation refers to various forms of remuneration or compensation given by enterprises to obtain services provided by employees or to terminate labor relations. Employee compensation includes short-term compensation, post-employment benefits, termination benefits and other long-term employee benefits. Benefits provided by an enterprise to employees’ spouses, children, dependents, survivors of deceased employees and other beneficiaries are also employee benefits.

Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

(2) Short-term salary

During the accounting period when employees provide services, the company recognizes the actual employee wages, bonuses, social insurance premiums such as medical insurance premiums, work-related injury insurance premiums, maternity insurance premiums, and housing provident funds paid for employees according to prescribed standards and proportions as liabilities, and includes them in the current profit and loss or related asset costs.

(3) Post-employment benefits

Post-employment benefit plans include defined contribution plans and defined benefit plans. Among them, a defined contribution plan refers to a post-employment benefit plan in which the enterprise no longer bears further payment obligations after paying a fixed fee to an independent fund; a defined benefit plan refers to a post-employment benefit plan other than a defined contribution plan.

Set up a savings plan

Defined contribution plans include basic pension insurance, unemployment insurance, etc.

During the accounting period when employees provide services, the deposit amount payable calculated according to the defined contribution plan is recognized as a liability and included in the current profit and loss or related asset costs.

defined benefit plan

For defined benefit plans, an actuarial valuation is performed by an independent actuary on the annual balance sheet date to determine the cost of providing benefits using the expected accumulated benefit unit method. The employee compensation costs caused by the company's defined benefit plan include the following components:

① Service costs include current service costs, past service costs and settlement gains or losses. Among them, the current service cost refers to the increase in the present value of the defined benefit plan obligations caused by the services provided by employees in the current period; the past service cost refers to the increase or decrease in the present value of the defined benefit plan obligations related to employee services in previous periods caused by the modification of the defined benefit plan.

② The net interest on the net liabilities or net assets of the defined benefit plan includes the interest income on the plan assets, the interest expense on the obligations of the defined benefit plan, and the interest affected by the asset ceiling.

③ Changes caused by re-measurement of net liabilities or net assets of defined benefit plans.

Unless other accounting standards require or allow employee benefit costs to be included in asset costs, the company will include the above items ① and ② in the current profit and loss; item ③ will be included in other comprehensive income and will not be transferred back to profit and loss in subsequent accounting periods. When the original defined benefit plan is terminated, all parts originally included in other comprehensive income will be carried forward to undistributed profits within the scope of equity.

(4) Dismissal benefits

If the company provides dismissal benefits to employees, the employee compensation liabilities arising from the dismissal benefits will be recognized and included in the current profit and loss at the earliest of the following two situations: when the company cannot unilaterally withdraw the dismissal benefits provided due to the termination of labor relations plan or layoff proposal; when the company recognizes the costs or expenses related to the restructuring involving the payment of dismissal benefits.

Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

If an internal retirement plan is implemented for employees, the economic compensation before the official retirement date shall be regarded as dismissal benefits. From the date when the employee stops providing services to the normal retirement date, the wages and social insurance premiums to be paid to the employees who retire early shall be included in the current profit and loss in one go. Financial compensation after the official retirement date (such as normal pension and pension) will be treated as post-employment benefits.

(5) Other long-term benefits

Other long-term employee benefits provided by the company to employees that meet the conditions of a defined contribution plan will be handled in accordance with the above-mentioned relevant regulations on defined contribution plans. If it is in compliance with a defined benefit plan, it will be handled in accordance with the relevant provisions on defined benefit plans mentioned above, but the "changes resulting from the remeasurement of the net liabilities or net assets of the defined benefit plan" in the relevant employee compensation costs will be included in the current profit and loss or related asset costs.

23. Estimated liabilities

If the obligations related to contingencies meet the following conditions at the same time, the company will recognize them as estimated liabilities:

(1) The obligation is the current obligation of the company;

(2) The performance of this obligation is likely to result in the outflow of economic benefits from the company;

(3) The amount of the obligation can be measured reliably.

Estimated liabilities are initially measured based on the best estimate of the expenditure required to fulfill the relevant current obligations, and factors such as risks, uncertainties, and time value of money related to contingencies are comprehensively considered. If the time value of money has a significant impact, the best estimate is determined by discounting the relevant future cash outflows. The Company reviews the book value of estimated liabilities on the balance sheet date and adjusts the book value to reflect the current best estimate.

If all or part of the expenses required to settle the recognized estimated liabilities are expected to be compensated by a third party or other parties, the compensation amount can only be recognized separately as an asset when it is basically certain that it will be received. The amount of compensation recognized shall not exceed the book value of the liability recognized.

24. Share-based payment and equity instruments

(1) Types of share-based payment

The Company's share-based payment is divided into equity-settled share-based payment and cash-settled share-based payment.

(2) Method for determining the fair value of equity instruments

The Company determines the fair value of options and other equity instruments granted in active markets based on quoted prices in active markets. For equity instruments such as options granted for which there is no active market, the fair value is determined using an option pricing model. The selected option pricing model considers the following factors: A. The exercise price of the option; B. The validity period of the option; C. The current price of the underlying stock; D. The expected volatility of the stock price; E. The expected dividend of the stock; F. The risk-free interest rate during the validity period of the option.

Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

(3) Basis for confirming the best estimate of exercisable equity instruments

On each balance sheet date during the waiting period, the Company makes its best estimate based on the latest changes in the number of vested employees and other subsequent information, and revise the number of equity instruments expected to be vested. On the vesting date, the number of equity instruments ultimately expected to be vested should be consistent with the actual number of vested equity instruments.

(4) Accounting treatments related to the implementation, modification, and termination of share-based payment plans

Equity-settled share-based payments are measured at the fair value of the equity instruments granted to employees. If the rights become exercisable immediately after grant, the fair value of the equity instrument on the grant date will be included in the relevant costs or expenses, and the capital reserve will be increased accordingly. If the vesting is vested only after the services within the waiting period are completed or the specified performance conditions are met, on each balance sheet date during the waiting period, based on the best estimate of the number of vesting equity instruments and the fair value of the equity instruments on the grant date, the services obtained in the current period will be included in the relevant costs or expenses and capital reserves. No adjustments will be made to the recognized related costs or expenses and the total owner's equity after the vesting date.

Cash-settled share-based payments are measured based on the fair value of the liability calculated and determined based on shares or other equity instruments assumed by the company. If the rights become exercisable immediately after grant, the fair value of the liability assumed by the Company on the date of grant will be included in the relevant costs or expenses, and the liability will be increased accordingly. For cash-settled share-based payments that are exercisable after completing services during the waiting period or meeting specified performance conditions, on each balance sheet date during the waiting period, based on the best estimate of the vesting situation and the fair value of the liability borne by the company, the services obtained in the current period will be included in costs or expenses and corresponding liabilities. On each balance sheet date and settlement date before the settlement of relevant liabilities, the fair value of the liability is remeasured, and its changes are included in the current profit and loss.

When the company modifies the share-based payment plan, if the modification increases the fair value of the equity instruments granted, the increase in services obtained shall be recognized accordingly according to the increase in the fair value of the equity instruments; if the modification increases the number of equity instruments granted, the fair value of the increased equity instruments shall be recognized accordingly as an increase in services obtained. The increase in the fair value of equity instruments refers to the difference between the fair values ​​of the equity instruments before and after the modification on the modification date. If the modification reduces the total fair value of share-based payment or the terms and conditions of the share-based payment plan are modified in other ways that are unfavorable to employees, the accounting treatment for the services obtained will continue to be performed as if the change has never occurred, unless the company cancels some or all of the equity instruments that have been granted.

During the waiting period, if the granted equity instruments are canceled (except for those canceled due to failure to meet non-market conditions for vesting), the company will treat the cancellation of the granted equity instruments as accelerated exercise, and the amount that should be recognized during the remaining waiting period will be immediately included in the current profit and loss, and the capital reserve will be recognized at the same time. If employees or other parties can choose to meet the non-vesting conditions but fail to do so within the waiting period, the company will treat it as the cancellation of the equity instruments granted.

25. Income

(1) General principles

The company fulfills its performance obligations in the contract, that is, when the customer obtains control of the relevant goods or services, revenue is recognized.

Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

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 or services promised by each individual performance obligation on the contract commencement date, and measure revenue based on the transaction price allocated to each individual performance obligation.

When one of the following conditions is met, the performance obligation is performed within a certain period of time; otherwise, the performance obligation is performed at a certain point in time:

① When the company performs the contract, the customer obtains and consumes the economic benefits brought by the company's performance of the contract.

②Customers can control the products under construction during the company's performance of the contract.

③The goods produced by the company during the performance of the contract 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 by the company are expected to be compensated, revenue will be recognized based on the amount of costs incurred until the progress of contract performance can be reasonably determined.

For performance obligations fulfilled at a certain point in time, the Company recognizes revenue at the point when the customer obtains control of the relevant goods or services. When judging whether the customer has obtained control of the goods or services, the company will consider the following signs: ① The company has the current right to receive payment for the goods or services, that is, the customer has current payment obligations for the goods. ②The company has transferred the legal ownership of the product to the customer, which means that the customer already has the legal ownership of the product.

③The company has transferred the physical goods of the goods to the customer, that is, the customer has physically taken possession of the goods.

④ The company has transferred the main risks and rewards of ownership of the commodity to the customer, that is, the customer has obtained the main risks and rewards of ownership of the commodity.

⑤The customer has accepted the goods or services.

⑥Other signs indicating that the customer has obtained control of the product.

(2) Specific methods

The company's revenue mainly comes from the sales of vitamins, biological preservatives and functional ingredient products, which are performance obligations fulfilled at a certain point in time. The specific revenue recognition time points are as follows:

Revenue from domestically sold products 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.

Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

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 collect payment, and the relevant economic benefits are likely to flow in.

26. Contract costs

Contract costs include incremental costs incurred to obtain the contract and contract performance costs.

The incremental costs incurred to obtain the contract refer to costs that the company would not have incurred if it had not obtained the contract (such as sales commissions, etc.). If the cost is expected to be recovered, the company will recognize it as the contract acquisition cost and as an asset. Other expenses incurred by the Company to obtain the contract, except for the incremental costs expected to be recovered, are included in the current profits and losses when incurred.

If the costs incurred to fulfill the contract do not fall within the scope of other accounting standards for enterprises such as inventories and meet the following conditions, the company will recognize them as contract performance costs as an asset:

① The cost is directly related to a current or expected contract, including direct labor, direct materials, manufacturing overhead (or similar expenses), costs clearly borne by the customer, and other costs incurred solely because of the contract;

② This cost increases the company’s resources for fulfilling its performance obligations in the future;

③The cost is expected to be recovered.

Assets recognized as contract acquisition costs and assets recognized as contract performance costs (hereinafter referred to as "assets related to contract costs") are amortized on the same basis as the revenue recognition of goods or services related to the assets and included in the current profit and loss.

When the book value of assets related to contract costs is higher than the difference between the following two items, the company makes impairment provisions for the excess and recognizes it as asset impairment losses:

① The remaining consideration that the company expects to obtain from the transfer of goods or services related to the asset;

② The estimated cost that will be incurred to transfer the relevant goods or services.

27. Government subsidies

Government subsidies are recognized when the conditions attached to the government subsidies are met and received.

Government subsidies for monetary assets are measured based on the amount received or receivable. Government subsidies for non-monetary assets are measured at fair value; if the fair value cannot be obtained reliably, they are measured at a nominal amount of 1 yuan.

Asset-related government subsidies refer to government subsidies obtained by the company and used to purchase, construct or otherwise form long-term assets; in addition, they are government subsidies related to income.

For those who do not clearly stipulate the subsidy objects in government documents and can form long-term assets, the value shall correspond to the value of the assets. Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

Part of the government subsidy is treated as an asset-related government subsidy, and the remaining part is treated as an income-related government subsidy; if it is difficult to distinguish, the entire government subsidy is treated as an income-related government subsidy.

Government subsidies related to assets are recognized as deferred income and are included in profits and losses in installments according to a reasonable and systematic method during the use period of the relevant assets. If government subsidies related to income are used to compensate for relevant costs or losses that have already occurred, they will be included in the current profits and losses; if they are used to compensate for relevant costs or losses in subsequent periods, they will be included in deferred income and will be included in the current profits and losses during the period when the relevant costs or losses are recognized. Government subsidies measured according to the nominal amount are directly included in the current profit and loss. The company handles the same or similar government subsidy business in a consistent manner.

Government subsidies related to daily activities shall be included in other income according to the economic business essence. Government subsidies unrelated to daily activities are included in non-operating income.

When a confirmed government subsidy needs to be returned, if the book value of the relevant assets is offset at the time of initial recognition, the book value of the assets is adjusted; if there is a balance of relevant deferred income, the book balance of the relevant deferred income is offset, and the excess is included in the current profit and loss; in other cases, it is directly included in the current profit and loss.

For policy-based preferential loan interest discounts obtained, if the government allocates interest-discount funds to the lending bank, the actual loan amount received will be used as the entry value of the loan, and the borrowing costs will be calculated based on the loan principal and the policy-based preferential interest rate. If the finance department directly allocates interest discount funds to the company, the interest discount will offset the borrowing costs.

28. Deferred income tax assets and deferred income tax liabilities

Income tax includes current income tax and deferred income tax. Except for adjustments to goodwill arising from business combinations, or deferred income taxes related to transactions or events directly included in owners' equity, which are included in owners' equity, they are all included in current profits and losses as income tax expenses.

The company uses the balance sheet debt method to recognize deferred income tax based on the temporary differences between the book values ​​of assets and liabilities on the balance sheet date and their tax basis.

Each taxable temporary difference is recognized as a related deferred income tax liability, unless the taxable temporary difference is generated in the following transactions:

(1) Initial recognition of goodwill, or the initial recognition of assets or liabilities arising from a transaction with the following characteristics: the transaction is not a business combination, and the transaction affects neither accounting profits nor taxable income when the transaction occurs (except for individual transactions where the initial recognition of assets and liabilities results in equal amounts of taxable temporary differences and deductible temporary differences);

(2) For taxable temporary differences related to investments in subsidiaries, joint ventures and associates, the reversal time of the temporary differences can be controlled and the temporary differences are likely not to be reversed in the foreseeable future.

For deductible temporary differences, deductible losses and tax credits that can be carried forward to future years, the company recognizes the resulting deferred income tax assets to the extent that it is likely to obtain future taxable income that can be used to offset the deductible temporary differences, deductible losses and tax credits, unless the deductible temporary differences are generated in the following transactions:

Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

(1) The transaction is not a business combination, and when the transaction occurs, it affects neither accounting profits nor taxable income (except for individual transactions in which the initial recognition of assets and liabilities results in equal amounts of taxable temporary differences and deductible temporary differences);

(2) For deductible temporary differences related to investments in subsidiaries, joint ventures and associates, corresponding deferred income tax assets are recognized if the following conditions are met: the temporary differences are likely to be reversed in the foreseeable future, and it is likely to be taxable income that can be used to offset the deductible temporary differences in the future.

On the balance sheet date, the Company's deferred income tax assets and deferred income tax liabilities are measured at the applicable tax rate during the period when the asset is expected to be recovered or the liability is settled, and the income tax impact of the expected method of recovering the asset or settling the liability on the balance sheet date is reflected.

On the balance sheet date, the Company reviews the book value of deferred income tax assets. If it is probable that sufficient taxable income will not be available in future periods to offset the benefits of deferred tax assets, the carrying amount of the deferred tax assets will be reduced. The amount of the write-down is reversed when it is probable that sufficient taxable income will be obtained.

On the balance sheet date, deferred income tax assets and deferred income tax liabilities are presented as the net amount after offsetting when the following conditions are met at the same time:

(1) The tax payer within the company has the legal right to settle 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 income taxes levied by the same tax collection and administration department on the same taxpayer within the company.

29. Leasing

(1) Identification of lease

On the contract commencement date, the Company, as a lessee or lessor, evaluates whether the customer in the contract has the right to obtain substantially all of the economic benefits generated from the use of the identified assets during the use period, and has the right to direct the use of the identified assets during the use period. If a party in a contract transfers the right to control the use of one or more identified assets within a certain period in exchange for consideration, the Company determines that the contract is a lease or contains a lease.

(2) The company serves as the lessee

On the start date of the lease period, the Company recognizes right-of-use assets and lease liabilities for all leases, except short-term leases and low-value asset leases that are simplified.

The accounting policies for right-of-use assets are shown in Note 3.30.

Lease liabilities are initially measured based on the present value of the unpaid lease payments at the beginning of the lease term using the interest rate implicit in the lease. If the interest rate implicit in the lease cannot be determined, the incremental borrowing rate is used as the discount rate. Lease payments include: fixed payments and substantive fixed payments, if there are lease incentives, the amount related to the lease incentives will be deducted; variable lease payments that depend on the index or ratio; the exercise price of the purchase option, provided that the lessee is reasonably certain that the option will be exercised; the amount required to exercise the option to terminate the lease, provided that Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

The lease term reflects the lessee's exercise of its option to terminate the lease; and the expected payments based on the guaranteed residual value provided by the lessee. Subsequently, the interest expense of the lease liability for each period during the lease term is calculated based on the fixed periodic interest rate 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.

short term rental

A short-term lease refers to a lease with a lease term of no more than 12 months on the start date of the lease period, except for leases that include a purchase option.

The company will include the lease payments of short-term leases into the relevant asset costs or current profits and losses on a straight-line basis during each period of the lease term.

For short-term leases, the Company selects projects that meet the short-term lease conditions among the following asset types according to the type of leased assets and adopts the above simplified treatment method.

Low value asset leasing

Low-value asset leases refer to leases where the value of a single leased asset is less than 40,000 yuan when it is a brand-new asset.

The company will include the lease payments for low-value asset leases into the relevant asset costs or current profits and losses on a straight-line basis during each period of the lease term.

For low-value asset leases, the Company chooses to adopt the above simplified treatment method based on the specific circumstances of each lease.

Lease changes

If a lease changes and the following conditions are met at the same time, the company will account for the lease change as a separate lease: ① The lease change expands the scope of the lease by adding the right to use one or more leased assets; ② The increased consideration is equivalent to the amount of the individual price of the expanded part of the lease scope adjusted according to the conditions of the contract.

If the lease change is not accounted for as a separate lease, on the effective date of the lease change, the company re-allocates the consideration of the contract after the change, re-determines the lease term, and re-measures the lease liability based on the present value of the lease payment after the change and the revised discount rate.

If a change in the lease results in a reduction in the scope of the lease or a shortening of the lease period, the company will reduce the book value of the right-of-use assets accordingly, and include the related gains or losses from the partial or complete termination of the lease into the current profits and losses.

If other lease changes result in the remeasurement of lease liabilities, the company will adjust the book value of the right-of-use assets accordingly.

(3) The company serves as the lessor

When the Company acts as a lessor, leases that substantially transfer all risks and rewards related to asset ownership are recognized as finance leases, and leases other than finance leases are recognized as operating leases.

operating lease

Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

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

Lease changes

If an operating lease changes, the Company will account for it as a new lease from the effective date of the change, and the amount of lease receipts received in advance or receivable related to the lease before the change is regarded as the amount of receipts from the new lease.

If a financial lease changes and the following conditions are met at the same time, the company will account for the change as a separate lease: ① The change expands the scope of the lease by increasing the use rights of one or more leased assets; ② The increased consideration is equivalent to the amount of the individual price of the expanded part of the lease scope adjusted according to the conditions of the contract.

If a financial lease is changed and is not accounted for as a separate lease, the company will treat the changed lease under the following circumstances: ① If the change takes effect on the lease start date, the lease will be classified as an operating lease, the company will start from the effective date of the lease change It will be accounted for as a new lease, and the net lease investment before the effective date of the lease change will be used as the book value of the leased asset; ② If the change takes effect on the lease commencement date, the lease will be classified as a finance lease, the company shall follow the "Accounting Standards for Business Enterprises 22" No. - Recognition and Measurement of Financial Instruments" provides accounting treatment for modifying or renegotiating contracts.

30. Right-of-use assets

(1) Recognition conditions for right-of-use assets

Right-of-use assets refer to the company's rights as a lessee to use the leased assets during the lease term.

On the commencement date of the lease term, the right-of-use asset is initially measured at cost. This cost includes: the initial measurement amount of the lease liability; the lease payment amount paid on or before the start date of the lease term, and if there is a lease incentive, the amount related to the lease incentive that has been enjoyed will be deducted; the initial direct costs incurred by the company as a lessee; the costs that the company as a lessee is expected to incur to dismantle and remove the leased assets, restore the site where the leased assets are located, or restore the leased assets to the state agreed upon in the lease terms. As a lessee, the company recognizes and measures costs such as dismantling and restoration in accordance with the "Accounting Standards for Business Enterprises No. 13 - Contingencies". Adjustments are made subsequently for any subsequent remeasurement of the lease liability.

(2) Depreciation method of right-of-use assets

The Company uses the straight-line method to calculate depreciation. If the Company, as the lessee, can reasonably determine that it will obtain ownership of the leased asset at the expiration of the lease term, depreciation will be accrued 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, depreciation will be accrued during the shorter of the lease term and the remaining useful life of the leased asset.

(3) Please refer to Note 3.20 for the impairment testing method and impairment provision accrual method for right-of-use assets.

31. Repurchase shares

The shares repurchased by the company are managed as treasury stocks before they are canceled or transferred, and all expenses for the repurchased shares are Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

Converted to treasury stock cost. The consideration and transaction costs paid in share repurchases reduce owners' equity, and no gain or loss is recognized when the company's shares are repurchased, transferred or canceled.

When treasury shares are transferred, the difference between the actual amount received and the book amount of the treasury shares will be included in the capital reserve. If the capital reserve is insufficient to offset, the surplus reserve and undistributed profits will be offset. When treasury shares are canceled, the share capital is reduced according to the face value of the stock and the number of canceled shares. The difference between the book balance and the face value of the canceled treasury shares is used to offset the capital reserve. If the capital reserve is insufficient for offset, the surplus reserve and undistributed profits are offset.

32. Significant accounting judgments and estimates

The Company continuously evaluates the important accounting estimates and key assumptions adopted based on historical experience and other factors, including reasonable expectations for future events. The important accounting estimates and key assumptions that are likely to cause a significant adjustment in the book value of assets and liabilities in the next fiscal year are listed below:

Classification of financial assets

The Company's significant judgments involved in determining the classification of financial assets include analysis of business models and contractual cash flow characteristics.

The Company determines the business model for managing financial assets at the level of financial asset portfolios. Factors considered include the way to evaluate and report the performance of financial assets to key management personnel, the risks that affect the performance of financial assets and their management methods, and the way in which relevant business managers are remunerated.

When the company evaluates whether the contractual cash flows of financial assets are consistent with the basic lending arrangements, the following main judgments are made: whether the time distribution or amount of the principal may change during the duration due to early repayment and other reasons; whether the interest only includes the time value of money, credit risk, other basic lending risks and consideration for costs and profits. For example, whether the amount of early repayment only reflects the unpaid principal and interest based on the unpaid principal, as well as reasonable compensation paid for early termination of the contract.

Measurement of expected credit losses on accounts receivable

The Company calculates the expected credit losses of accounts receivable through the default risk exposure of accounts receivable and the expected credit loss rate, and determines the expected credit loss rate based on the probability of default and the loss given default rate. When determining the expected credit loss rate, the company uses internal historical credit loss experience and other data, and adjusts historical data based on current conditions and forward-looking information. When considering forward-looking information, the Company uses indicators including the risk of economic downturn, external market environment, technological environment and changes in customer conditions. The Company regularly monitors and reviews assumptions related to the calculation of expected credit losses.

Goodwill impairment

The Company assesses whether goodwill is impaired at least annually. This requires an estimate of the value in use of the asset group to which goodwill is assigned. When estimating value in use, the company needs to estimate future cash flows from the asset group and select an appropriate discount rate to calculate the present value of future cash flows.

Deferred tax assets

To the extent that it is probable that there will be sufficient taxable profits to offset the losses, Zhejiang Shengda Biopharmaceutical Co., Ltd. shall be responsible for all unused tax losses.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

Deferred income tax assets are recognized for losses. This requires management to use a lot of judgment to estimate the timing and amount of future taxable profits, combined with tax planning strategies, to determine the amount of deferred income tax assets that should be recognized.

Determination of fair value of unlisted equity investments

The fair value of unlisted equity investments is the estimated future cash flows discounted based on current discount rates for projects with similar terms and risk characteristics. Such valuation requires the Company to estimate expected future cash flows and discount rates and is therefore uncertain. In limited circumstances, if there is insufficient information to determine fair value, or if possible estimates of fair value are spread over a wide range, and the cost represents the best estimate of fair value within that range, the cost may represent an appropriate estimate of fair value within that range.

33. Changes in important accounting policies and accounting estimates

(1) Changes in important accounting policies

There were no important changes in accounting policies of the Company during the year.

(2) Changes in important accounting estimates

The Company has no significant changes in accounting estimates during the year.

4. Taxes

1. Main tax types and tax rates

Tax type Tax calculation basis Statutory tax rate

Taxable value-added amount (taxable amount is based on taxable sales volume

Value-added tax multiplied by the applicable tax rate to deduct the input tax allowed to be deducted in the current period 13%, 9%, 6%

balance calculation after)

Land use tax is calculated and levied based on the actual land area occupied by the taxpayer, ranging from 4 to 18 yuan per square meter.

If the tax is assessed on an ad valorem basis, 30% of the original value of the property will be deducted at one time

Property tax is calculated at 1.2% of the residual value; if it is levied on rent, 1.2% or 12% is charged based on the rent.

12% of income is calculated and paid

Urban maintenance and construction tax Actual turnover tax paid 5% Education surcharge Actual turnover tax paid 3% Local education surcharge Actual turnover tax paid 2% Corporate income tax Taxable income 15%, 20%, 25%

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

Name of taxpayer Income tax rate % The company 15 Zhejiang New Yinxiang Bioengineering Co., Ltd. (hereinafter referred to as Yinxiang Biological Company) 15 Anhui Shengda Biopharmaceutical Co., Ltd. (hereinafter referred to as Anhui Shengda Company) 15 Tongliao Shengda Bioengineering Co., Ltd. (hereinafter referred to as Tongliao Shengda Company) 15 Zhejiang Shengda Biological Research Institute Co., Ltd. (hereinafter referred to as Shengda Research Institute Company) 20 Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

Name of taxpayer Income tax rate % Zhejiang Yitao Food Technology Co., Ltd. (hereinafter referred to as Yitao Company) 25

2. Tax incentives and approval documents

(1) Value-added tax

Our company, Yinxiang Biological Company and Tongliao Shengda Company are all high-tech enterprises and advanced manufacturing enterprises. According to the "Announcement on the Additional VAT Deduction Policy for Advanced Manufacturing Enterprises" (Ministry of Finance and State Administration of Taxation Announcement No. 43 of 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 deduct the value-added tax payable.

(2) Corporate income tax

① According to the "Announcement on the Registration of High-tech Enterprises Certified and Reported by the Zhejiang Provincial Certification Agency in 2023" of the Office of the National High-tech Enterprise Recognition Management Leading Group, the company is recognized as a high-tech enterprise (Certificate No.: GR202333009394) and enjoys preferential tax policies for high-tech enterprises. The corporate income tax preferential period is from 2023 to 2025. The company's corporate income tax for 2025 is calculated and paid at a tax rate of 15%.

② According to the "Announcement on the Registration of High-tech Enterprises Recognized and Reported by Zhejiang Provincial Certification Agency in 2025" by the Office of the National High-tech Enterprise Recognition Management Leading Group, Yinxiang Biological Company was recognized as a high-tech enterprise (certificate number: GR202533007849) and enjoys preferential tax policies for high-tech enterprises. The corporate income tax preferential period is from 2025 to 2028. Yinxiang Biological Company's corporate income tax in 2025 will be calculated and paid at a tax rate of 15%.

③ According to the "Announcement on the Registration of the First Batch of High-tech Enterprises Recognized and Reported by the Anhui Provincial Recognition Agency in 2023" by the National High-tech Enterprise Recognition Management Leading Group Office, Anhui Shengda Company was recognized as a high-tech enterprise (Certificate No.: GR202334001771) and enjoys preferential tax policies for high-tech enterprises. The corporate income tax preferential period is from 2023 to 2025. Anhui Shengda Company's corporate income tax in 2025 will be calculated and paid at a rate of 15%.

④ According to the "Announcement on the Registration of the Second Batch of High-tech Enterprises Recognized and Reported by the Inner Mongolia Autonomous Region Recognition Agency in 2023" by the National High-tech Enterprise Recognition Management Leading Group Office, Tongliao Shengda Company was recognized as a high-tech enterprise (certificate number: GR202315000462) and enjoys preferential tax policies for high-tech enterprises. The corporate income tax preferential period is from 2023 to 2025. Tongliao Shengda Company's corporate income tax in 2025 is calculated and paid at a tax rate of 15%.

⑤According to the "Announcement of the Ministry of Finance and the State Administration of Taxation on Tax Policies to Further Support the Development of Small and Micro Enterprises and Individual Industrial and Commercial Households" (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 calculated at a reduced rate of 25% to calculate taxable income, and pay corporate income tax at a rate of 20%. The corporate income tax of Shengda Research Institute Company in 2025 will be calculated and paid at a tax rate of 20%.

Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

5. Notes to Consolidated Financial Statement Items

1. Monetary funds

Item Closing balance Cash on hand at the end of the previous year 23,880.67 43,086.50 Bank deposits 427,449,487.58 296,132,537.38 Other monetary funds 30,196,579.35 19,442,904.79

Total 457,669,947.60 315,618,528.67

Including: total amount of money deposited abroad

At the end of the period, the company's bank deposits with restricted usage rights of monetary funds amounted to RMB 2,980,000.00, which were frozen funds for litigation. Other monetary funds were bill deposits and the usage rights were restricted.

2. Trading financial assets

Item Closing balance The closing balance of the previous year is measured at fair value with changes included

182,063,991.88 14,728.48 Financial assets of current profit and loss

Including: financial products 182,047,649.32

Stocks 16,342.56 14,728.48

Total 182,063,991.88 14,728.48

3. Notes receivable

Ending balance Last year's end balance

Bill type

Book balance Bad debt provision Book value Book balance Bad debt provision Book value Bank acceptance bill 5,494,209.33 5,494,209.33

Commercial acceptance bill 668,850.00 33,442.50 635,407.50 2,262,393.18 113,119.66 2,149,273.52

Total 6,163,059.33 33,442.50 6,129,616.83 2,262,393.18 113,119.66 2,149,273.52

(1) Notes receivable that the company has endorsed or discounted but not yet matured at the end of the period

Category Amount derecognized at the end of the period Amount not derecognized at the end of the period Bank acceptance notes 4,632,759.79

Total 4,632,759.79

(2) Classification according to bad debt accrual method

Ending balance

Book balance Bad debt provision

Category

Expected credit loss Book value amount Ratio (%) Amount

Loss rate (%)

Provision for bad debts on a group basis 668,850.00 100.00 33,442.50 5.00 635,407.50 of which:

Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

Ending balance

Book balance Bad debt provision

Category

Expected credit loss Book value amount Ratio (%) Amount

Loss rate (%)

Commercial acceptance bill 668,850.00 100.00 33,442.50 5.00 635,407.50

Total 668,850.00 100.00 33,442.50 5.00 635,407.50

Continued:

Balance at the end of the previous year

Book balance Bad debt provision

Category Book expected credit losses

Amount Ratio (%) Amount Value

Loss rate (%)

Provision for bad debts on a group basis 2,262,393.18 100.00 113,119.66 5.00 2,149,273.52 of which:

Commercial acceptance bill 2,262,393.18 100.00 113,119.66 5.00 2,149,273.52

Total 2,262,393.18 100.00 113,119.66 5.00 2,149,273.52

Notes receivable with provision for bad debts on a group basis

Portfolio accrual items: aging portfolio

Ending balance Last year's end balance

Name Expected credit Expected credit Notes receivable Bad debt provision Notes receivable Bad debt provision

Loss rate (%) Loss rate (%) Within 1 year 668,850.00 33,442.50 5.00 2,262,393.18 113,119.66 5.00

Total 668,850.00 33,442.50 5.00 2,262,393.18 113,119.66 5.00

(3) Bad debt provisions accrued, recovered or reversed in the current period

Amount of bad debt provision at the beginning of the period 113,119.66 Provision for the current period

79,677.16 is recovered or transferred in this period and written off in this period.

Sales in this period

Others

Ending balance 33,442.50

4. Accounts receivable

(1) Disclosure based on aging

Account aging Closing balance Last year’s closing balance within 1 year 160,330,284.30 142,792,137.50 Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

Account aging Closing balance Last year's closing balance 1 to 2 years 532,680.00 1,882,495.82 2 to 3 years 1,318,725.84 7,547,063.32 More than 3 years 6,769,396.00 42,244.00

Subtotal 168,951,086.14 152,263,940.64

Less: Bad debt provision 16,120,212.06 15,632,922.58

Total 152,830,874.08 136,631,018.06

(2) Classified disclosure according to bad debt accrual method

Ending balance

Book balance Bad debt provision

Category

Expected Credit Book Value Amount Ratio (%) Amount

Loss rate (%)

Provision for bad debts on an individual basis 7,592,831.84 4.49 7,592,831.84 100.00

Provision for bad debts on a group basis 161,358,254.30 95.51 8,527,380.22 5.28 152,830,874.08

Total 168,951,086.14 100.00 16,120,212.06 9.54 152,830,874.08

Continued:

Balance at the end of the previous year

Book balance Bad debt provision

Category

Expected Credit Book Value Amount Ratio (%) Amount

Loss rate (%)

Provision for bad debts on an individual basis 7,592,831.84 4.99 7,592,831.84 100.00

Provision for bad debts on a group basis 144,671,108.80 95.01 8,040,090.74 5.56 136,631,018.06

Total 152,263,940.64 100.00 15,632,922.58 10.27 136,631,018.06

Accounts receivable with provision for bad debts on an individual basis

Ending balance

Name expected credit loss

Book balance Bad debt provision Provision basis rate (%)

Applied to strengthen Inner Mongolia North China Pharmaceutical Huakai

6,728,906.00 6,728,906.00 100.00 Zhixian still Pharmaceutical Co., Ltd.

not recovered

Application has been made by the Compulsory Prescription Drug Group (Kailu)

863,925.84 863,925.84 100.00 Pharmaceutical Co., Ltd.

not recovered

Total 7,592,831.84 7,592,831.84 100.00 /

Continued:

Balance at the end of the previous year

Name expected credit loss

Book balance Bad debt provision Provision basis

Rate (%)

Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

Balance at the end of the previous year

Name expected credit loss

Book balance Bad debt provision Provision basis rate (%)

Application has been made to strengthen Inner Mongolia North China Pharmaceutical Co., Ltd.

6,728,906.00 6,728,906.00 100.00 Executed by stillkai Pharmaceutical Co., Ltd.

not recovered

Application has been made by the Compulsory Prescription Drug Group (Kailu)

863,925.84 863,925.84 100.00 Pharmaceutical Co., Ltd.

not recovered

Total 7,592,831.84 7,592,831.84 100.00 /

Accounts receivable with provision for bad debts on a group basis

Portfolio accrual items: aging portfolio

Ending balance Last year's end balance

Expected credit Expected credit book balance Bad debt provision Book balance Bad debt provision

Loss rate (%) Loss rate (%) Within 1 year 160,330,284.30 8,016,514.22 5.00 142,792,137.50 7,139,606.88 5.00 1 to 2 years 532,680.00 106,536.00 20.00 1,018,569.98 203,714.00 20.00 2 to 3 years 454,800.00 363,840.00 80.00 818,157.32 654,525.86 80.00 More than 3 years 40,490.00 40,490.00 100.00 42,244.00 42,244.00 100.00

Total 161,358,254.30 8,527,380.22 5.28 144,671,108.80 8,040,090.74 5.56

(3) Bad debt provisions accrued, recovered or reversed in the current period

Opening balance of bad debt provision 15,632,922.58 Provision in this period 493,274.56 Collected or transferred back in this period 2,547.87 Write-off in this period 8,532.95 Write-off in this period

Others

Ending balance 16,120,212.06

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

Item Write-off amount Accounts receivable actually written off 8,532.95

There is no significant write-off of accounts receivable in this period

Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

(5) Top five companies with closing balances of accounts receivable and contract assets collected by debtors

Accounts receivable, accounts receivable, bad debts, accounts receivable and combined

Accounts receivable Contract assets and contract assets Reserve and contract capital unit name Ending balance of the same assets

Ending balance Ending balance Total ending balance Total amount of production impairment provision

Proportion of counting % Final balance First place 23,409,145.56 23,409,145.56 13.86 1,170,457.28 Second place 14,639,198.66 14,639,198.66 8.66 731,959.94 Third place 13,150,511.50 13,150,511.50 7.78 657,525.58Fourth place 11,321,837.50 11,321,837.50 6.70 566,091.88Fifth place 7,015,000.00 7,015,000.00 4.15 350,750.00

Total 69,535,693.22 69,535,693.22 41.15 3,476,784.68

5. Accounts receivable financing

Item Closing balance Notes receivable at the end of the previous year 96,742.74 2,464,526.45 Subtotal 96,742.74 2,464,526.45 Less: other comprehensive income - changes in fair value

Fair value at the end of the period 96,742.74 2,464,526.45

The Company has no single bank acceptance bill for which impairment provision is made. At the end of this period, the Company believes that there is no significant credit risk in the bank acceptance bills held and no significant losses will be incurred due to bank default.

(1) At the end of the period, the company had no pledged notes receivable.

(2) Notes receivable that the company has endorsed or discounted but not yet matured at the end of the period

Category Amount derecognized at the end of the period Amount not derecognized at the end of the period Bank acceptance notes 26,422,313.52

Total 26,422,313.52

6. Prepayment

(1) Prepayments are disclosed based on aging

Ending balance Last year's end balance

Account age

Amount Proportion% Amount Proportion% Within 1 year 2,486,868.66 59.17 3,832,126.33 97.80 1 to 2 years 1,665,106.76 39.62 70,789.60 1.80 2 to 3 years 51,167.43 1.21 15,600.00 0.40

Subtotal 4,203,142.85 100.00 3,918,515.93 100.00

Less: Impairment provision

Total 4,203,142.85 100.00 3,918,515.93 100.00 Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

(2) There are no important prepayments aged more than 1 year at the end of the period.

(3) Top five companies with closing balance of prepayments collected by prepayment objects

Prepayments Accounting for the closing balance of prepayments Unit name

Closing balance Proportion of total amount First place 1,530,218.38 36.41 Second place 686,305.31 16.33 Third place 246,000.00 5.85 Fourth place 197,501.96 4.70 Fifth place 153,360.00 3.65

Total 2,813,385.65 66.94

7. Other receivables

(1) Disclosure based on aging

Account aging Closing balance Last year's closing balance within 1 year 169,798.30 153,931.61 1 to 2 years 141,986.00 500,000.00 2 to 3 years 500,000.00 100.00 More than 3 years 1,444,068.50 1,546,968.50

Subtotal 2,255,852.80 2,201,000.11

Less: Bad debt provision 1,880,955.62 1,654,745.08

Total 374,897.18 546,255.03

(2) Disclosure according to the nature of the payment

Amount at the end of the period Amount at the end of the previous year

Project

Book balance Bad debt provision Book value Book balance Bad debt provision Book value deposit deposit 1,390,528.80 1,070,810.82 319,717.98 1,353,130.50 852,276.60 500,853.90 Temporary payment receivable 800,100.00 800,100.00 802,645.61 800,207.28 2,438.33 Reserve fund 65,224.00 10,044.80 55,179.20 45,224.00 2,261.20 42,962.80

Total 2,255,852.80 1,880,955.62 374,897.18 2,201,000.11 1,654,745.08 546,255.03

1 Bad debt provision accrual

Bad debt provisions in the first stage at the end of the period

next 12 months

Category Book Balance Expected Credit Bad Debt Provision Book Value

Loss rate (%)

Provision for bad debts by combination 169,798.30 5.00 8,489.92 161,308.38 Aging combination 169,798.30 5.00 8,489.92 161,308.38

Including: Within 1 year 169,798.30 5.00 8,489.92 161,308.38 Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

next 12 months

Category Book Balance Expected Credit Bad Debt Provision Book Value

Loss rate (%)

Total 169,798.30 5.00 8,489.92 161,308.38

Bad debt provisions in the second stage at the end of the period

The entire life expectancy

Category Book balance Period credit loss rate Bad debt provision Book value

(%)

Provision for bad debts by combination 141,986.00 20.00 28,397.20 113,588.80 Aging combination 141,986.00 20.00 28,397.20 113,588.80

Including: 1-2 years 141,986.00 20.00 28,397.20 113,588.80

Total 141,986.00 20.00 28,397.20 113,588.80

Bad debt provisions in the third stage at the end of the period

The entire life expectancy

Category Book balance Period credit loss rate Bad debt provision Book value

(%)

Provision for bad debts by combination 1,944,068.50 94.86 1,844,068.50 100,000.00 Aging combination 1,944,068.50 94.86 1,844,068.50 100,000.00 Of which: 2-3 years 500,000.00 80.00 400,000.00 100,000.00

More than 3 years 1,444,068.50 100.00 1,444,068.50

Total 1,944,068.50 94.86 1,844,068.50 100,000.00

Bad debt provisions in the first stage at the end of the previous year

next 12 months

Category Book Balance Expected Credit Bad Debt Provision Book Value

Loss rate (%)

Provision for bad debts by combination 153,931.61 5.00 7,696.58 146,235.03 Aging combination 153,931.61 5.00 7,696.58 146,235.03

Including: Within 1 year 153,931.61 5.00 7,696.58 146,235.03

Total 153,931.61 5.00 7,696.58 146,235.03

Bad debt provisions in the second stage at the end of the previous year

The entire life expectancy

Category Book balance Period credit loss rate Bad debt provision Book value

(%)

Provision for bad debts by combination 500,000.00 20.00 100,000.00 400,000.00 Aging combination 500,000.00 20.00 100,000.00 400,000.00

Including: 1-2 years 500,000.00 20.00 100,000.00 400,000.00

Total 500,000.00 20.00 100,000.00 400,000.00Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

Bad debt provisions in the third stage at the end of the previous year

The entire life expectancy

Category Book balance Period credit loss rate Bad debt provision Book value

(%)

Provision for bad debts by combination 1,547,068.50 99.99 1,547,048.50 20.00 Aging combination 1,547,068.50 100.00 1,547,048.50 20.00 Including: 2-3 years 100.00 80.00 80.00 20.00

More than 3 years 1,546,968.50 100.00 1,546,968.50

Total 1,547,068.50 99.99 1,547,048.50 20.00

2 Bad debt provisions accrued, recovered or reversed in the current period

The first stage The second stage The third stage

Lifetime expectations

Bad debt provision for the next 12 months Expected credit losses for the entire duration Total credit losses (not incurred

Period credit loss (credit impairment has occurred)

credit impairment)

Balance at the beginning of the period 7,696.58 100,000.00 1,547,048.50 1,654,745.08 Balance at the beginning of the period

In this issue

--Transfer to No.

-7,099.30 7,099.30

second stage

--Transfer to No.

-100,000.00 100,000.00

three stages

--Return to the first

second stage

--Return to the first

first stage

Provision in this period 7,892.64 21,297.90 197,020.00 226,210.54 Transferred in this period

Sales in this period

Write-off in this period

Other changes

Closing balance 8,489.92 28,397.20 1,844,068.50 1,880,955.62

3. Top five companies with closing balance of other receivables collected by debtors

Accounting for other receivables

Other receivables Name of bad debt provision unit Nature of payment Aging Total ending balance Ratio of ending balance (%)

2-3 years

Henan Shuanghui Investment Development 500,000.00

Deposit Guarantee 1,000,000.00 44.33 900,000.00 Exhibition Co., Ltd. Yuan, more than 3 years

500,000.00 yuan

Yueyang Yingchuan Chemical Industry

Temporary payment receivable 800,000.00 More than 3 years 35.46 800,000.00 Technology Co., Ltd.

Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

Accounting for other receivables

Other receivables Name of bad debt provision unit Nature of payment Aging Total balance at the end of the period

Ending balance Proportion of ending balance (%)

Within 1 year

45,798.30 yuan,

Heda Medicine Valley Phase I (Hangzhou

1-2 years

State) Park Operation Management Deposit Guarantee 268,418.80 11.90 157,020.82

84,862.00 yuan,

Ltd.

More than 3 years

137,758.50

Tianjin Wahaha Hongzhen

Food and beverage trade has deposit guarantee 100,000.00 Within 1 year 4.43 5,000.00 Co., Ltd.

Liu Shangrong Reserve fund 45,224.00 1-2 years 2.00 9,044.80

Total 2,213,642.80 98.12 1,871,065.62

8. Inventory

(1) Inventory classification

Ending balance Last year's end balance

Provision for price decline/consolidation Provision for price decline/consolidation

Project

Book balance Same as performance costs Book value Book balance Same as performance costs Book value

Impairment provision Impairment provision

Raw materials 66,829,337.43 9,033,159.50 57,796,177.93 55,838,398.53 3,588,905.34 52,249,493.19 Products in progress and

Self-made semi-finished products 86,967,834.76 13,726,603.00 73,241,231.76 109,133,508.32 12,447,854.53 96,685,653.79 products

Goods in stock 70,273,050.01 24,382,819.74 45,890,230.27 56,701,925.72 24,524,667.18 32,177,258.54 Goods shipped 11,692,014.95 93,032.03 11,598,982.92 11,666,992.70 706,103.95 10,960,888.75 Low value and easy to consume

907,484.47 907,484.47 1,006,630.34 1,006,630.34 products

Commissioned processing

584,337.08 276,727.08 307,610.00 10,489,734.59 6,033,484.44 4,456,250.15 Materials

Total 237,254,058.70 47,512,341.35 189,741,717.35 244,837,190.20 47,301,015.44 197,536,174.76

(2) Provision for inventory depreciation and provision for impairment of contract performance costs

Increase in this period Decrease in this period

Item Opening balance Reversal or transfer Ending balance accrual Others Others

pin

Raw materials 3,588,905.34 2,290,721.36 3,814,317.82 660,785.02 9,033,159.50 Products in progress and self-made products

12,447,854.53 4,469,924.40 3,191,175.93 13,726,603.00 Semi-finished products

Goods in stock 24,524,667.18 3,255,915.37 3,397,762.81 24,382,819.74 Goods shipped 706,103.95 93,032.03 706,103.95 93,032.03 Commissioned goods

6,033,484.44 44,241.26 1,986,680.80 3,814,317.82 276,727.08 capital

Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

Increase in this period Decrease in this period

Item Opening balance Reversal or transfer Ending balance accrual Others Others

pin

Total 47,301,015.44 10,153,834.42 3,814,317.82 9,942,508.51 3,814,317.82 47,512,341.35

Provision for inventory decline and provision for impairment of contract performance costs (continued)

Transfer or write-off in this period

Determine the net realizable value/remaining consideration and

Item: Inventory depreciation provision/Contract performance costs Specific basis for costs to be incurred

Reasons for impairment provision Raw materials

The estimated selling price of the relevant finished goods is reduced to

Work in progress and self-made semi-finished products Estimated costs and estimates for completion

Sales expenses and related taxes for entrusted processing of materials. Inventory depreciation allowances were accrued in previous periods.

The net realizable value of the inventory is determined based on the subsequent amount; the net realizable value of the inventory is increased;

Inventory goods for which inventory depreciation provisions have been made during the period shall be calculated by subtracting the estimated selling price from the estimated selling price of the inventory.

Inventory consumed/sold

After sales expenses and related taxes

Send goods

Determine its net realizable value

9. Non-current assets due within one year

Item Closing balance Last year’s closing balance Large-denomination certificate of deposit due within 1 year 10,575,700.00 30,000,000.00

Total 10,575,700.00 30,000,000.00

10. Other current assets

Item Ending balance The input tax to be deducted from the ending balance of the previous year 6,685,080.08 18,035,354.76 Prepaid corporate income tax 4,626.21 4,626.21 Prepaid other taxes 33,292.69

Intermediary service for issuing stocks to specific objects

1,849,056.60 service fee

Total 6,722,998.98 19,889,037.57

11. Other non-current financial assets

Category Closing balance The closing balance of the previous year is designated as measured at fair value and its change

10,700,000.00 10,700,000.00 Financial assets automatically included in current profits and losses

Including: Equity investment 10,700,000.00 10,700,000.00

Total 10,700,000.00 10,700,000.00

12. Fixed assets

Item Ending balance Fixed assets at the end of the previous year 461,205,931.18 432,020,992.02 Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

Item Closing balance Last year’s closing balance Fixed assets liquidation 82,037.89

Total 461,287,969.07 432,020,992.02

(1) Fixed assets

1 Fixed assets situation

Items Houses and buildings General equipment Special equipment Transportation tools Total

1. Original book value:

1. Opening balance 293,442,119.45 11,938,144.79 574,886,847.89 17,849,170.86 898,116,282.99 2. Increase in the current period 15,117,071.54 1,582,242.26 82,652,126.35 201,300.89 99,552,741.04 (1) Purchase 937,334.07 973,777.08 9,510,548.31 201,300.89 11,622,960.35 (2) Transfer of construction in progress 14,179,737.47 608,465.18 73,141,578.04 87,929,780.69 3. Decrease amount in the current period 697,794.91 181,550.72 7,363,942.78 339,413.29 8,582,701.70 (1) Disposal or scrapping 697,794.91 181,550.72 7,363,942.78 339,413.29 8,582,701.70 4. Closing balance 307,861,396.08 13,338,836.33 650,175,031.46 17,711,058.46 989,086,322.33

2. Accumulated depreciation

1. Opening balance 127,735,444.12 9,486,507.11 293,868,065.31 16,235,098.01 447,325,114.55 2. Increase in the current period 15,498,533.42 1,322,391.75 51,755,108.57 342,821.96 68,918,855.70 (1) Provision 15,498,533.42 1,322,391.75 51,755,108.57 342,821.96 68,918,855.70 3. Decrease amount in the current period 335,838.04 169,367.47 5,797,909.35 302,904.94 6,606,019.80 (1) Disposal or scrapping 335,838.04 169,367.47 5,797,909.35 302,904.94 6,606,019.80 4. Closing balance 142,898,139.50 10,639,531.39 339,825,264.53 16,275,015.03 509,637,950.45

3. Impairment provision

1. Opening balance 3,233,778.55 15,536,397.87 18,770,176.42 2. Increase in the current period

(1) Provision

3. Reduction amount in the current period 527,735.72 527,735.72 (1) Disposal or scrapping 527,735.72 527,735.72 4. Ending balance 3,233,778.55 15,008,662.15 18,242,440.70

4. Book value

1. Book value at the end of the period 161,729,478.03 2,699,304.94 295,341,104.78 1,436,043.43 461,205,931.18 2. Book value at the beginning of the period 162,472,896.78 2,451,637.68 265,482,384.71 1,614,072.85 432,020,992.02 2 Temporarily idle fixed assets

Item Original book value Accumulated depreciation Impairment provision Book value Remarks Houses and buildings 1,456,291.77 919,549.47 536,742.30

Special equipment 31,950,469.15 17,709,691.86 5,911,115.08 8,329,662.21

General equipment 303,844.80 288,652.52 15,192.28

Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

Item Original book value Accumulated depreciation Impairment provision Book value Remarks

Total 33,710,605.72 18,917,893.85 5,911,115.08 8,881,596.79

3. Fixed assets whose property rights certificates have not been obtained

Item Book value Reason for not completing the ownership certificate Tongliao Shengda Company employee dormitory 557,704.06 Processing the second fermentation workshop of Zhongyin Xiang Biological Company 1,459,489.24 Processing (2) Fixed assets liquidation

Item Ending balance Last year’s end balance Reason for transfer to liquidation Fixed assets scrapped 82,037.89 Liquidation has not been completed

Total 82,037.89

13. Projects under construction

Item Ending balance Construction in progress at the end of the previous year 431,501,128.47 335,957,398.45 Engineering materials 1,341,714.35

Total 432,842,842.82 335,957,398.45

(1) Projects under construction

1 Details of projects under construction

Ending balance Last year's end balance

Project

Book balance Impairment provision Net book value Book balance Impairment provision Net book value Vitamin series products and

API Industry Upgrading 1 375,751,324.50 375,751,324.50 236,003,616.92 236,003,616.92 Phase Construction Project

Anhui Shengda Pharmaceutical Company

5,926,029.17 5,926,029.17 40,178,542.34 40,178,542.34 Intermediate construction project

Tongliao Sandai VC Sodium

45,500,732.68 45,500,732.68 24,948,247.09 24,948,247.09 Project

Anhui Shengda Company 3 and 5

13,538,311.13 13,538,311.13 Workshop renovation project

Yitao Food Product No. 30

4,902,672.06 4,902,672.06Production expansion project

Other sporadic projects 4,323,042.12 4,323,042.12 16,386,008.91 16,386,008.91

Subtotal 431,501,128.47 431,501,128.47 335,957,398.45 335,957,398.45

2. Changes in important construction projects under construction

Interest capital of which: current period interest for the current period

Transfer to fixed assets Others

Project name Opening balance Increase in the current period Interest capital Accumulated interest capital Ending balance asset Decrease

Calculation amount Conversion amount Conversion rate %

Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

Interest capital of which: current period interest for the current period

Transfer to fixed assets Others

Project name Opening balance Increase in the current period Interest capital Accumulated interest capital Ending balance asset Decrease

Calculation amount Conversion amount Conversion rate %

Vitamin series

Products and raw materials

Pharmaceutical industry upgrade 236,003,616.92 139,747,707.58 13,623,129.09 7,012,421.03 2.45 375,751,324.50 Phase I construction project

Head

Anhui Shengdagong

Division Medical Center 40,178,542.34 9,353,581.20 43,606,094.37 5,926,029.17 Body construction project

Tongliao Shengdayi

24,948,247.09 20,552,485.59 45,500,732.68 VC sodium project

Subtotal 301,130,406.35 169,653,774.37 43,606,094.37 13,623,129.09 7,012,421.03 427,178,086.35

Changes in important construction projects under construction (continued):

Total project investment

Budget number (thousands)

Project name Budget ratio Project progress % Funding source (RMB)

Example%

Vitamin series products and raw material pharmaceutical products

49,986.97 75.00 79.00 Financial institution loan industry upgrade phase one construction project

Anhui Shengda Company Pharmaceutical Intermediates Construction Financial Institution Loan

7,739.80 90.00 95.00

Construction projects and other sources Tongliao Shengdayi VC sodium project 36,800.00 12.00 18.00 Raised funds

Total 94,526.77 -- -- --

(2) Engineering materials

Item Ending balance Last year’s end balance Special materials 1,341,714.35

Total 1,341,714.35

14. Right-of-use assets

Project Houses and Buildings Total

1. Original book value:

1. Balance at the beginning of the period 1,898,903.42 1,898,903.42 2. Increase in the current period

(1) Rent

3. Reduction amount in this period

(1) Sublease to finance lease

4. Closing balance 1,898,903.42 1,898,903.42

2. Accumulated depreciation

1. Balance at the beginning of the period 409,155.48 409,155.48 2. Increase in the current period 949,451.66 949,451.66

(1) Provision 949,451.66 949,451.66 Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

Items Houses and buildings Total 3. Decrease amount in this period

(1) Sublease to finance lease

4. Closing balance 1,358,607.14 1,358,607.14

4. Book value

1. Book value at the end of the period 540,296.28 540,296.28

2. Book value at the beginning of the period 1,489,747.94 1,489,747.94

The Company’s recognition of lease expenses related to short-term leases and low-value asset leases is shown in Note V. 57.

15. Intangible assets

Project Land use rights Office software Patent rights Non-patented technology Emission rights Total

1. Original book value

1. Opening balance 267,854,630.20 2,337,507.25 55,149,953.81 3,138,301.62 1,568,812.66 330,049,205.54 2. Increase in the current period 558,064.08 3,994,061.18 346,339.50 4,898,464.76 (1) Purchase 558,064.08 3,994,061.18 346,339.50 4,898,464.76 3. Decrease amount in the current period

(1) Disposal

4. Closing balance 268,412,694.28 6,331,568.43 55,149,953.81 3,138,301.62 1,915,152.16 334,947,670.30

2. Accumulated amortization

1. Opening balance 44,984,150.58 1,663,087.00 54,403,408.53 2,208,970.92 1,209,916.77 104,469,533.80 2. Increase in the current period 5,948,957.03 1,026,887.40 208,232.69 182,105.82 167,518.23 7,533,701.17 (1) Provision 5,948,957.03 1,026,887.40 208,232.69 182,105.82 167,518.23 7,533,701.17 (2) Other increases

2. Reduction amount in this period

(1) Disposal

4. Closing balance 50,933,107.61 2,689,974.40 54,611,641.22 2,391,076.74 1,377,435.00 112,003,234.97

4. Book value

1. Book value at the end of the period 217,479,586.67 3,641,594.03 538,312.59 747,224.88 537,717.16 222,944,435.33

2. Book value at the beginning of the period 222,870,479.62 674,420.25 746,545.28 929,330.70 358,895.89 225,579,671.74

3. Goodwill

(1) Original book value of goodwill

Increase in this period Decrease in this period

Name or formation of the invested unit

Opening balance Business combination Closing balance Goodwill matters Others Disposal Others

form

Tongliao Shengda Bioengineering Co., Ltd.

10,909,393.98 10,909,393.98 Co., Ltd.

Total 10,909,393.98 10,909,393.98 Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

(2) Goodwill impairment provision

Name of the invested unit or Increase in the current period Decrease in the current period

Opening balance Ending balance Events resulting in goodwill Provision Others Disposal Others Tongliao Shengda Biotech Co., Ltd.

Cheng Co., Ltd.

Total

The goodwill was formed when the company acquired Tongliao Shengda Company in October 2018.

The asset group portfolio in which goodwill is located consists of: Tongliao Shengda Company's buildings, special equipment and land use rights, as well as related operating assets and liabilities. The asset group combination is consistent with the asset group combination determined on the date of purchase and during goodwill impairment testing in previous years.

The operating segments to which the asset group portfolio belongs are: biological preservatives and functional ingredients, and others.

The specific method for determining the recoverable amount: determined based on the present value of expected future cash flows.

Revenue growth rate during the forecast period, stable period growth rate, profit

Forecasting period, discount rate and its determination items, parameters such as profit margin and its determination, parameters such as profit rate and its determination

Limitation basis basis determination basis

Revenue growth rate per year during the forecast period

Tongliao Shengda reaches in the fifth year of the forecast period

2%, the pre-tax profit margin is 11.33% respectively; the company’s housing has stabilized, and the sixth and

8.56%, 8.32%, 8.07%, 7.81%

The perpetual growth rate of buildings and special buildings is

5 years and 7.55%; Determination basis: weighted equipment and 0, revenue and profit rate

Average capital cost model land use and other parameters to maintain the forecast

Determination basis: Determine the status of the fifth year of the right period based on historical experience.

and expectations for market development

The management determines the budgeted gross profit margin and growth rate based on historical experience and forecasts of market development, and uses a pre-tax interest rate that can reflect the specific risks of the relevant asset group as the discount rate. The above assumptions are used to analyze the recoverable amount of each asset group within this business segment.

After calculation, the management believes that the company does not need to make impairment provisions for these asset groups.

If the budget growth rate used in future cash flow calculations is lower than 10% of the current growth rate adopted by management, the company still does not need to make impairment provisions for goodwill.

If the estimated discount rate used in the calculation of future cash flows is higher than 10% of the discount rate currently used by management, the company does not need to make impairment provisions for goodwill.

The aforementioned information is consistent with the information used in impairment testing in previous years.

17. Long-term deferred expenses

Decrease in this period

Item Beginning balance Increase in the current period Ending balance

Amortization for the current period Other decreases

Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

Decrease in this period

Item Beginning balance Increase in the current period Ending balance

Amortization for the current period Other decreases

Factory greening and workshops

2,206,392.60 1,915,492.36 290,900.24Renovation project

Wastewater comprehensive transformation project

1,599,568.03 1,371,058.20 228,509.83 items

Industrial technology development 1,319,444.42 707,547.16 1,523,513.13 503,478.45 Office building and apartment decoration

1,038,702.18 114,352.56 924,349.62 Repair project

Total 6,164,107.23 707,547.16 4,924,416.25 1,947,238.14

18. Deferred income tax assets and deferred income tax liabilities

(1) Deferred income tax assets and deferred income tax liabilities without offset

Ending balance Last year's end balance

Item Deductible/payable deferred income tax assets Deductible/payable deferred income tax assets

Tax temporary differences Assets/Liabilities Tax temporary differences Assets/Liabilities Deferred income tax assets:

Asset impairment provision 48,905,570.42 7,463,142.62 8,506,593.21 1,437,824.43 Unrealized profits from internal transactions 5,992,845.70 898,926.86 4,230,957.72 634,643.66 Deferred income 2,349,766.80 352,465.02 464,577.69 69,686.65 Deductible losses 42,572.99 6,385.95 10,988,773.70 1,648,316.06 Lease liabilities 315,876.27 15,793.81 1,297,350.21 64,867.51

Subtotal 57,606,632.18 8,736,714.26 25,488,252.53 3,855,338.31

Deferred income tax liabilities:

Fixed assets tax law and accounting discounts

35,202,029.96 5,757,430.02 45,107,266.21 6,965,739.87Old difference

Capitalized interest on convertible bonds 2,451,779.37 367,766.91 3,071,147.85 460,672.18 Right-of-use assets 540,296.28 27,014.81 1,489,747.94 74,487.40 Measured at fair value and its change

Financial assets automatically included in current profits and losses 49,263.40 7,389.51 1,210.56 181.58 assets

Subtotal 38,243,369.01 6,159,601.25 49,669,372.56 7,501,081.03

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

Deferred income tax is deferred after offsetting Deferred income tax is deferred after offsetting

Assets and Liabilities Income Tax Assets Assets and Liabilities Income Tax Asset Items

Mutual offset at the end of the period, or liabilities at the end of the period, mutual offsets at the end of the previous year, or liabilities at the end of the previous year

Amount Balance Offsetting amount Year-end balance Deferred income tax assets 1,730,805.99 7,005,908.27 3,791,354.40 63,983.91 Deferred income tax liabilities 1,730,805.99 4,428,795.26 3,791,354.40 3,709,726.63 Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

(3) Details of deductible temporary differences and deductible losses that have not been recognized for deferred income tax assets

Item Ending balance The ending balance of the previous year can deduct deductible temporary differences 48,458,652.91 85,020,093.50 Deductible losses 247,264,604.30 286,698,600.79

Total 295,723,257.21 371,718,694.29

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

Year Ending balance Last year Ending balance Note 2026 5,842,852.91 16,751,352.63

2027 6,324,242.86 23,486,367.12

2028 27,109,603.42 46,739,160.25

2029 5,281,015.46 24,081,398.56

2030 2,813,158.94 22,775,745.12

2031 13,309,838.72

2032 24,338,662.26 24,388,384.93

2033 78,480,385.34 68,494,916.16

2034 57,660,211.00 46,671,437.30

2035 39,414,472.11

Total 247,264,604.30 286,698,600.79

19. Other non-current assets

Ending balance Last year's end balance

Project

Book balance Impairment provision Book value Book balance Impairment provision Book value Long-term certificate of deposit 31,163,400.00 31,163,400.00 10,309,287.67 10,309,287.67 Prepaid long-term asset purchase

8,798,840.30 8,798,840.30 40,974,669.89 40,974,669.89 Purchase

Advance payment for intangible assets 2,373,840.78 2,373,840.78

Total 39,962,240.30 39,962,240.30 53,657,798.34 53,657,798.34

20. Assets whose ownership or use rights are restricted

End of term

Project

Book balance Book value Restriction type Restriction situation

Monetary funds used to issue bank acceptances 33,176,579.35 33,176,579.35 Freeze Note deposits and funds frozen in litigation

Endorsed undue bills receivable at the end of the period 4,632,759.79 4,632,759.79 Others

Derecognized bill fixed assets 58,846,936.32 38,487,093.30 Mortgage Intangible assets provided for bank borrowings 10,840,391.93 8,673,017.76 Mortgage Guarantee Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

End of term

Project

Book balance Book value Restriction type Restriction situation

Total 107,496,667.39 84,969,450.20

Continued:

end of previous year

Project

Book balance Book value Restriction type Restriction situation

Funds used to issue bank acceptance currency 22,422,107.03 22,422,107.03 Frozen Bill of exchange deposit and funds frozen in litigation

Provide fixed assets for bank loans 29,713,523.88 16,961,690.95 Mortgage

for guarantee

Total 52,135,630.91 39,383,797.98

21. Short-term borrowing

Item Ending balance Mortgage loan balance at the end of the previous year 30,027,958.33

Total 30,027,958.33

22. Notes payable

Type Closing balance Bank acceptance bill at the end of the previous year 84,551,947.57 72,091,801.73

Total 84,551,947.57 72,091,801.73

23. Accounts payable

Item Ending balance Last year's end balance Payment for goods 58,606,166.89 83,352,763.69 Equipment engineering payment 34,623,216.00 16,632,467.14 Expenses 4,398,684.49 914,940.48

Total 97,628,067.38 100,900,171.31

There are no important accounts payable aged more than 1 year at the end of the period.

24. Contract liabilities

Item Closing balance Balance at the end of the previous year Advance receipts 4,493,097.00 3,795,459.65 Less: Contract liabilities included in other non-current liabilities

Total 4,493,097.00 3,795,459.65 Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

There were no important contract liabilities aged more than 1 year at the end of the period.

25. Payable to employees’ salaries

Item Opening balance Increase in the current period Decrease in the current period Ending balance Short-term compensation 27,485,145.95 134,435,319.14 134,635,896.52 27,284,568.57 Post-employment benefits - defined contribution plan 509,754.08 10,508,079.84 10,424,052.38 593,781.54 Dismissal benefits 62,500.00 62,500.00

Total 27,994,900.03 145,005,898.98 145,122,448.90 27,878,350.11

(1) Short-term salary

Item Beginning balance Increase in the current period Decrease in the current period Closing balance wages, bonuses, allowances and subsidies 26,305,133.25 117,503,727.99 117,085,993.04 26,722,868.20 Employee welfare fees 442,247.40 6,557,683.63 6,755,886.23 244,044.80 Social insurance premiums 279,365.30 5,500,420.07 5,462,129.80 317,655.57 Of which: 1. Medical insurance premium 252,905.00 4,819,098.00 4,792,965.50 279,037.50

2. Work injury insurance premium 26,460.30 681,322.07 669,164.30 38,618.07 Housing provident fund 3,433,910.52 3,433,910.52

Trade union funds and employee education funds 458,400.00 1,439,576.93 1,897,976.93

Total 27,485,145.95 134,435,319.14 134,635,896.52 27,284,568.57

(2) Set up a withdrawal plan

Item Opening balance Increase in the current period Decrease in the current period Ending balance Post-employment benefits 509,754.08 10,508,079.84 10,424,052.38 593,781.54 Including: basic pension insurance premium 493,310.40 10,207,386.97 10,124,909.21 575,788.16

Unemployment insurance premium 16,443.68 300,692.87 299,143.17 17,993.38

Total 509,754.08 10,508,079.84 10,424,052.38 593,781.54

(3) Dismissal benefits

Item Opening balance Increase in the current period Decrease in the current period Ending balance Dismissal benefits 62,500.00 62,500.00

Total 62,500.00 62,500.00

26. Taxes payable

Taxes Ending balance Value-added tax 2,813,759.20 1,427,415.78 Corporate income tax 4,654,982.72 3,383,375.89 Personal income tax 283,472.03 433,179.09 Resource tax 2,639,862.14 2,639,387.50 Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

Tax items Ending balance Last year's end balance Land use tax 3,502,287.54 3,008,278.95 Real estate tax 1,722,500.98 1,708,314.04 Stamp tax 116,516.84 254,363.24 Education fee surcharge 100,764.62 85,378.88 Local education surcharge 67,176.42 56,919.25 Environmental protection tax 88,205.16 78,648.09 Local water conservancy construction fund 14,687.58 1,119.02 Urban maintenance and construction tax 167,941.03 141,548.12

Total 16,172,156.26 13,217,927.85

27. Other payables

Item Closing balance Last year's closing balance 790,848.11 790,848.11 Deposit and margin 230,680.00 234,740.00Quality deposit 225,247.20 225,247.20 Employee stock ownership plan repurchase obligation 2,349,200.00

Others 920,976.15 731,399.07

Total 4,516,951.46 1,982,234.38

There are no important other payables aged more than 1 year at the end of the period.

28. Non-current liabilities due within one year

Item Ending balance Last year's end balance Long-term borrowings due within one year 6,004,766.67 113,965.76 Lease liabilities due within one year 315,876.27 804,272.33

Total 6,320,642.94 918,238.09

(1) Long-term borrowings due within one year

Item Ending balance Mortgage loan balance at the end of the previous year 4,003,055.56

Credit borrowings 2,001,711.11 113,965.76

Total 6,004,766.67 113,965.76

29. Other current liabilities

Item Closing balance The balance at the end of the previous year has not expired and has been endorsed but not terminated.

4,632,759.79

Notes receivable

Output tax to be transferred 505,787.10 455,092.89 Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

Item Ending balance Last year’s end balance

Total 5,138,546.89 455,092.89

30. Long-term borrowing

Item Ending balance Interest rate range Ending balance of the previous year Interest rate range Credit loan 313,743,535.42 2.45%-2.80% 231,000,000.00 2.55%-3.15% Pledge loan

Mortgage borrowings 10,006,457.92 2.50%

guaranteed loan

Subtotal 323,749,993.34 231,000,000.00

Less: Long-term borrowings due within one year 6,004,766.67

Total 317,745,226.67 231,000,000.00

31. Lease liabilities

Item Ending balance Unpaid lease payments at the end of the previous year 335,456.25 501,412.84 Subtotal 335,456.25 501,412.84 Less: Unrecognized financing expenses 19,579.98 8,334.96 Less: Lease liabilities due within one year 315,876.27

Total 493,077.88

The amount of interest expense on lease liabilities accrued in 2025 is 29,778.98 yuan, which is included in financial expenses - the amount of interest expense is 29,778.98 yuan.

32. Estimated liabilities

Item Ending balance Last year’s end balance Reason for formation

Provision for pending litigation based on court judgment 8,100,000.00 8,100,000.00

litigation damages

Total 8,100,000.00 8,100,000.00

33. Deferred income

Item Beginning balance Increase in the current period Decrease in the current period Ending balance Reason for formation

Government subsidies related to assets or income 6,650,242.94 1,151,777.75 1,026,033.68 6,775,987.01

related government subsidies

Total 6,650,242.94 1,151,777.75 1,026,033.68 6,775,987.01

For details of government subsidies included in deferred income, please refer to Note 8. Government subsidies.

34. Share capital (unit: share)

Item Opening balance Increase or decrease in the current period (+, -) Closing balance Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

Issue Provident Fund

Bonus shares Other subtotal

New shares Conversion

Total number of shares 171,188,958 17,840,666 17,840,666 189,029,624

According to the resolutions of the third, ninth, tenth, fifteenth and seventeenth meetings of the fourth session of the Board of Directors of the company and the 2022 Annual General Meeting of Shareholders, the first extraordinary general meeting of shareholders in 2024, and the first extraordinary general meeting of shareholders in 2025, and with the consent of the China Securities Regulatory Commission’s "Reply on Approval of the Registration of Zhejiang Shengda Biopharmaceutical Co., Ltd.’s Issuance of Stocks to Specific Objects" (CSRC Permit [2025] No. 165), the company is permitted to issue a total amount to specific objects not exceeding 51,356,687 RMB ordinary shares (A shares). According to the actual issuance situation, the company actually issued 17,840,666 RMB ordinary shares (A shares) to specific targets, with a par value of RMB 1 per share and an issue price of RMB 15.00 per share. The total amount of funds to be raised was RMB 267,609,990.00. After deducting the underwriting fee of RMB 3,080,000.00, the raised funds are RMB 264,529,990.00. After deducting the sponsorship fee, audit and capital verification fees, lawyer fees, document production fees, and registration fees, the total amount is RMB 3,106,644.91 (tax excluded). The net amount of funds raised by your company this time is RMB 264,529,990.00. 261,423,345.09 yuan, of which: 17,840,666.00 yuan was included in the paid-in share capital, and 243,582,679.09 yuan was included in the capital reserve (share premium). The above-mentioned changes in share capital have been verified by Tianjian Accounting Firm (Special General Partnership) and a capital verification report with the document number Tianjianyan [2025] No. 143 has been issued.

35. Capital reserve

Item Opening balance Increase in the current period Decrease in the current period Ending balance Equity premium 669,194,129.65 243,582,679.09 952,580.36 911,824,228.38 Other capital reserves 138,180.00 138,180.00

Total 669,194,129.65 243,720,859.09 952,580.36 911,962,408.38

Changes in capital reserve during the current period mainly consist of the following events:

(1) Please refer to Note V. 34 for details of the increase in equity premium.

(2) Decrease in equity premium: According to the 2024 Employee Stock Ownership Plan (revised draft), the company will grant repurchased treasury shares to 6 employees in this period to a total of 280,000 shares. The grant price is RMB 8.39 per share. The average repurchase price is RMB 11.792 per share, while reducing treasury shares by RMB 952,580.36.

(3) The increase in other capital reserves in this period is the share-based payment expenses confirmed by the employee stock ownership plan in this period.

36. Treasury stocks

Item Opening balance Increase in the current period Decrease in the current period Ending balance Repurchase of shares 22,080,656.17 952,580.36 21,128,075.81

Total 22,080,656.17 952,580.36 21,128,075.81

Please refer to Note V. 35 for details of changes in treasury shares during this period.

37. Surplus reserve

Item Opening balance Increase in the current period Decrease in the current period Ending balance Statutory surplus reserve 58,567,589.69 1,240,986.61 59,808,576.30 Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

Item Opening balance Increase in the current period Decrease in the current period Ending balance

Total 58,567,589.69 1,240,986.61 59,808,576.30

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

38. Undistributed profits

Withdrawal or item Amount of the current period Amount of the previous period

Before adjustment of distribution ratio Undistributed profits at the end of the previous period 383,961,631.36 366,004,598.91 --Adjustment Total undistributed profits at the beginning of the period (adjusted +, adjusted

--minus-)

After adjustment, undistributed profits at the beginning of the period 383,961,631.36 366,004,598.91

Add: Net profit attributable to shareholders of the parent company for the current period 62,155,711.50 29,424,490.05 --Use surplus reserves to make up for losses

Use capital reserves to make up for losses

Other adjustments

Less: Appropriation of statutory surplus reserve 1,240,986.61 1,308,470.12

Withdraw discretionary surplus reserve

Withdraw general risk reserve

Dividends payable on common shares 10,158,987.48

Dividends payable to other equity holders

Dividends on common shares converted into equity capital

Undistributed profits at the end of the period 444,876,356.25 383,961,631.36

Among them: the surplus reserve withdrawn by the subsidiary in the current year belongs to

Amount of parent company

39. Operating income and operating costs

(1) Operating income and operating costs

Amount for the current period Amount for the previous period

Project

Revenue Cost Revenue Cost Main business 840,667,964.04 621,729,847.67 826,614,601.43 651,235,275.13 Other business 3,868,905.86 1,933,396.01 787,358.25 216,760.92

Total 844,536,869.90 623,663,243.68 827,401,959.68 651,452,036.05

(2) Operating income and operating costs are divided by product type

Amount for the current period Amount for the previous period

Main product types

Revenue Cost Revenue Cost Main Business:

Biological preservatives and functional ingredients 524,738,002.58 328,372,379.37 489,312,732.98 317,989,159.97 Vitamins 224,213,619.50 195,530,985.75 244,713,890.39 235,770,606.11 Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

Amount for the current period Amount for the previous period

Main product types

Revenue Cost Revenue Cost External steam sales 20,183,611.37 17,952,697.63 37,191,902.58 30,437,832.62 Others 71,532,730.59 79,873,784.92 55,396,075.48 67,037,676.43 Subtotal 840,667,964.04 621,729,847.67 826,614,601.43 651,235,275.13 Other businesses:

Sales materials 3,868,905.86 1,933,396.01 787,358.25 216,760.92 Subtotal 3,868,905.86 1,933,396.01 787,358.25 216,760.92

Total 844,536,869.90 623,663,243.68 827,401,959.68 651,452,036.05

(3) Operating income and operating costs divided by region

Amount for the current period Amount for the previous period

Main business areas

Revenue Cost Revenue Cost Domestic 618,415,936.06 444,744,790.38 591,109,038.33 443,274,089.07 Overseas 226,120,933.84 178,918,453.30 236,292,921.35 208,177,946.98

Subtotal 844,536,869.90 623,663,243.68 827,401,959.68 651,452,036.05

(4) Operating income and operating costs are divided according to the time of commodity transfer

Amount incurred this period

Project

Revenue Cost Main Business

Among them: confirmed at a certain point in time 840,667,964.04 621,729,847.67 other businesses

Among them: confirmed at a certain point in time 3,868,905.86 1,933,396.01

Total 844,536,869.90 623,663,243.68

(5) Information related to remaining performance obligations

As of December 31, 2025, the tax-exclusive transaction price corresponding to the unfulfilled performance obligations was RMB 4,493,097.00, and revenue is expected to be recognized in 2026.

40. Taxes and surcharges

Item Amount incurred in the current period Amount incurred in the previous period Urban maintenance and construction tax 1,403,911.68 780,238.31 Education fee surcharge 848,647.03 474,270.40 Resource tax 1,627.64 1,533,077.50 Property tax 2,791,367.68 2,574,861.16 Land use tax 4,290,371.41 4,468,159.59 Environmental protection tax 359,323.61 289,948.73 Local water conservancy construction fund 64,130.46 30,874.23 Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

Item Amount incurred in the current period Amount incurred in the previous period Vehicle and vessel use tax 37,772.75 37,042.75 Stamp tax 642,961.28 600,655.93 Local education surcharge 565,764.67 316,180.27

Total 11,005,878.21 11,105,308.87

For details on the calculation and payment standards of various taxes and surcharges, please refer to Note 4, Taxes.

41. Sales expenses (displayed according to nature of expenses)

Item Amount incurred in the current period Amount incurred in the previous period Employee compensation 8,724,093.20 7,877,061.96 Advertising expenses 1,885,911.46 2,041,657.65 Travel expenses 1,191,245.70 1,186,275.76 Business entertainment expenses 1,382,868.14 1,034,705.99Sales commission 299,214.72 701,241.11Others 1,539,249.62 1,804,201.73

Total 15,022,582.84 14,645,144.20

42. Management expenses (listed according to nature of expenses)

Item Amount incurred in the current period Amount incurred in the previous period Employee compensation 36,845,992.59 32,187,139.75 Depreciation expense 6,457,651.46 6,485,565.95 Amortization of intangible assets 5,807,546.53 5,087,949.18 Intermediary consulting and association fees 4,632,578.91 7,309,734.33 Business entertainment expenses 1,960,487.82 2,115,230.33 Environmental protection, pollution discharge and safety expenses 1,702,974.02 2,156,359.75 Office and travel expenses 2,540,261.76 2,368,323.09 Repair and decoration expenses 1,084,483.30 1,709,478.83 Rent and water and electricity expenses 548,051.99 465,003.91 Others 4,099,445.43 3,958,730.93

Total 65,679,473.81 63,843,516.05

43. Research and development expenses (displayed according to the nature of the expenses)

Item Amount incurred in the current period Amount incurred in the previous period Employee compensation 22,437,082.05 19,465,090.78 Material expenses 15,215,751.87 12,453,089.48 Entrusted research and development expenses 5,930,558.40 4,977,118.13 Depreciation and amortization 3,778,592.20 3,160,249.64 Fuel power 2,793,710.63 1,357,560.72 Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

Item Amount incurred in the current period Amount incurred in the previous period Travel expenses 215,864.73 431,711.93 Others 3,302,605.79 1,917,644.41

Total 53,674,165.67 43,762,465.09

44. Financial expenses (displayed according to the nature of expenses)

Item Amount incurred in the current period Amount incurred in the previous period Interest expense 7,921,349.05 7,456,590.76 Less: Capitalization of interest 7,012,421.03 5,380,426.64

Interest income 8,455,343.76 7,951,083.85 Exchange gains and losses 2,438,260.88 -4,095,450.78

Less: Capitalization of exchange gains and losses

Handling fees and others 232,007.14 214,291.48

Total -4,876,147.72 -9,756,079.03

The amount of capitalized interest has been included in construction in progress. The capitalization rate used to calculate and determine the capitalization amount of borrowing costs in this period is 2.45% (previous period: 3.03%)

45. Other income

Item Amount incurred in the current period Amount incurred in the previous period Asset subsidies related to assets 1,026,033.68 1,464,980.44 Asset subsidies related to income 6,015,517.62 3,725,607.79 Refund of personal income tax withholding fees 68,561.56 65,366.05 Additional value-added tax deduction 1,893,002.20 4,195,299.66

Total 9,003,115.06 9,451,253.94

For specific information on government subsidies, please see Note 8, Government Subsidies.

46. Investment income

Item Amount incurred in the current period Amount incurred in the previous period Investment income from financial products 2,064,913.51 623,526.92 Equity investment dividends among other non-current financial assets 100,000.00 Others -147.84

Total 2,064,913.51 723,379.08

47. Gains from changes in fair value

Sources of income from changes in fair value Amount for the current period Amount for the previous period Trading financial assets 49,263.40 1,210.56 Among them: classified as measured at fair value and changes thereof included in the current period

49,263.40 1,210.56

financial assets with period profits and losses

Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

Sources of income from changes in fair value Amount incurred in the current period Amount incurred in the previous period

Total 49,263.40 1,210.56

48. Credit impairment losses (losses are listed with “—”)

Item Amount incurred in the current period Amount incurred in the previous period Bad debt losses on notes receivable 79,677.16 -49,170.91 Bad debt losses on accounts receivable -493,274.56 -5,345,525.37 Bad debt losses on other receivables -226,210.54 -67,407.10

Total -639,807.94 -5,462,103.38

49. Asset impairment losses (losses are listed with “—”)

Item Amount incurred in the current period Amount incurred in the previous period Loss on inventory depreciation -10,153,834.42 -10,643,054.89

Total -10,153,834.42 -10,643,054.89

50. Income from asset disposal (losses are listed with “-”)

Items Amount for the current period Amount for the previous period Profit from disposal of fixed assets (losses are listed with “-”) -477,311.75 145,968.82

Total -477,311.75 145,968.82

51. Non-operating income

Included in non-recurring items for the current period Amount incurred in the current period Amount incurred in the previous period

Amount of profit and loss Liquidated damages income 10,820,000.00

Scrap disposal income 570,915.87 290,709.47 570,915.87 Compensation income 8,619.40 30,802.19 8,619.40 Others 51,353.47 29,702.16 51,353.47

Total 630,888.74 11,171,213.82 630,888.74

52. Non-operating expenses

Included in non-recurring items for the current period Amount incurred in the current period Amount incurred in the previous period

Amount of profit and loss Charitable donation expenditure 52,000.00 52,000.00 Loss from damage and scrapping of non-current assets 381,244.70 291,810.47 381,244.70 Losses from pending litigation 8,100,000.00

Tax late payment fees 282,532.27 142,254.53 282,532.27 Penalty expenses 1,786.00 850.00 1,786.00 Others 117,246.83

Total 717,562.97 8,652,161.83 717,562.97 Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

53. Income tax expenses

(1) Details of income tax expenses

Item Amount incurred in the current period Amount incurred in the previous period Current income tax calculated in accordance with tax laws and relevant regulations 17,085,853.10 11,569,401.73 Deferred income tax expense -6,222,855.73 258,223.95

Total 10,862,997.37 11,827,625.68

(2) The relationship between income tax expenses and total profits

Items Amount incurred in the current period Total profits incurred in the previous period 80,127,337.04 49,085,274.57 Income tax expenses calculated according to applicable tax rates 12,019,100.56 7,362,791.19 Impact of different tax rates applicable to certain subsidiaries 6,451,838.50 4,068,693.76 Adjustments to current income taxes in previous periods 981,835.74

Income not subject to tax (filled in with "-") -15,000.00 Non-deductible costs, expenses and losses 616,171.08 344,703.41 The impact of tax rate changes on the opening deferred income tax balance

Utilize unrecognized deductible losses and deductible temporary losses from previous years

-6,492,395.95

Tax impact of differences (enter the column with “-”)

The tax implications of unrecognized deductible losses and deductible temporary differences

ring

The tax impact of the deduction of additional research and development expenses (entered with "-") -7,685,452.95 -5,464,966.29 The use of deductible losses from deferred income tax assets not recognized in the previous period

-2,682,641.52 -4,576,604.39 impact

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

7,654,541.91 10,108,008.00 or the impact of deductible losses

Others

Income tax expenses 10,862,997.37 11,827,625.68

54. Notes on cash flow statement items

(1) Receive other cash related to operating activities

Item Amount for the current period Amount for the previous period Received government subsidies and refund of personal tax fees 7,235,856.93 6,441,773.84 Received bank deposit interest income 7,864,428.76 7,505,346.86 Received bill deposit 904,376.46 1,495,941.85 Received deposit guarantee 112,837.65 Others 787,240.31 2,363,831.47

Total 16,791,902.46 17,919,731.67 Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

(2) Payment of other cash related to operating activities

Item Amount incurred in the current period Amount incurred in the previous period Paid advertising expenses, exhibition fees, business expenses

5,302,321.79 5,197,190.78 Service and entertainment expenses

R&D expenses paid 9,607,936.29 5,961,599.84 Intermediary consulting and association fees paid 4,602,070.85 8,086,105.61 Office expenses and travel expenses paid 4,678,317.87 4,160,981.33 Sewage discharge fees, environmental protection fees, and safety fees paid 1,727,670.79 2,352,017.98 Sales commission and sales service fee paid 759,088.82 1,419,685.48 Rent and water and electricity fees paid 548,051.99 529,477.60 Repair and decoration fees paid 63,484.22 1,614,773.26 Payment of deposit guarantee and advance payment 39,653.30 1,005,491.04 Payment of bill deposit 11,658,848.78 3,083,256.00 Net payment of employee loans and reserve funds 20,000.00 45,224.00 Others 3,087,214.99 7,409,296.79

Total 42,094,659.69 40,865,099.71

(3) Cash received from recovery of investment

Item Amount for the current period Amount for the previous period Cash received from redemption of financial products 1,372,286,375.00 275,000,000.00

Total 1,372,286,375.00 275,000,000.00

(4) Cash paid for investment

Item Amount for the current period Amount for the previous period Cash paid to purchase financial products 1,547,008,315.29 291,551,375.00

Total 1,547,008,315.29 291,551,375.00

(5) Cash paid for the purchase and construction of fixed assets, intangible assets and other long-term assets

Item Amount incurred in the current period Amount incurred in the previous period Cash paid for the purchase and construction of fixed assets 99,552,741.04 72,730,586.52 Cash paid for the purchase and construction of projects under construction 79,772,738.32 75,192,279.02 Cash paid for the purchase and construction of intangible assets 4,898,464.76 592,586.41 Cash paid for long-term deferred expenses for purchase and construction 707,547.16 2,361,987.33 Input tax paid for long-term assets 13,336,064.69 13,790,704.41 Changes in prepaid long-term asset acquisition costs -34,593,958.04 7,068,089.87 Accounts payable - changes in project funds -17,990,748.86 -1,890,590.47

Total 145,682,849.07 169,845,643.09 Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

(6) Payment of other cash related to financing activities

Item Amount incurred in the current period Amount incurred in the previous period Cash paid to repurchase treasury shares 13,114,361.91 Paid intermediary service fee for issuing stocks to specific objects 1,484,800.00 350,000.00 Paid leasing fees 1,011,252.92 911,658.93

Total 2,496,052.92 14,376,020.84

(7) Changes in various liabilities arising from financing activities

Cash changes Non-cash changes

fair

Item Opening balance Its closing balance Cash inflow Cash outflow Value of interest accrued

him

change

Short-term borrowings 30,027,958.33 30,700,428.43 672,470.10

Other payables 790,848.11 790,848.11 Long-term borrowings 231,113,965.76 141,500,000.00 56,112,851.37 7,248,878.95 323,749,993.34 Lease liabilities 1,297,350.21 1,011,252.92 29,778.98 315,876.27

Total 263,230,122.41 141,500,000.00 87,824,532.72 7,951,128.03 324,856,717.72

Long-term borrowings and lease liabilities include those due within one year.

55. Supplementary information for cash flow statement

(1) Supplementary information for cash flow statement

Supplementary information Amount for the current period Amount for the previous period

1. Adjust net profit to cash flow from operating activities:

Net profit 69,264,339.67 37,257,648.89 Plus: asset impairment loss 10,153,834.42 10,643,054.89 Credit impairment loss 639,807.94 5,462,103.38 Fixed asset depreciation, investment real estate depreciation, oil and gas assets

68,918,855.70 67,267,610.41 Depreciation and depreciation of productive biological assets

Depreciation of right-of-use assets 949,451.66 826,647.01 Amortization of intangible assets 7,533,701.17 6,828,514.57 Amortization of long-term prepaid expenses 4,924,416.25 4,868,871.20 Losses on disposal of fixed assets, intangible assets and other long-term assets

477,311.75 -145,968.82 losses (income is listed with "-")

Losses from scrapping of fixed assets (income is listed with "-") 381,244.70 291,810.47 Loss from changes in fair value (income is listed with "-") -49,263.40 -1,210.56 Financial expenses (income is listed with "-") 2,425,956.35 -1,399,310.31 Investment losses (income is listed with "-") -2,064,913.51 -1,452,570.60 Decrease in deferred income tax assets (increase is listed with "-") -6,941,924.36 825,267.77 Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

Supplementary information Amount incurred in the current period Increase in deferred income tax liabilities in the previous period (decreases are indicated with "-") 719,068.63 -567,043.82 Decrease in inventories (increases are indicated with "-") -2,887,112.73 19,373,363.36 Decrease in operating receivables (increases are indicated with "-") -24,848,938.01 -45,288,873.67 Increase in operating payables (decreases are listed with "-") 9,150,535.65 40,384,987.17

Others 138,180.00 2,703,201.96 Net cash flow from operating activities 138,884,551.88 147,878,103.30

2. Major investments 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 402,769,768.25 263,508,597.32 Less: Opening balance of cash 263,508,597.32 305,867,527.96 Add: Closing balance of cash equivalents

Less: Opening balance of cash equivalents

Net increase in cash and cash equivalents 139,261,170.93 -42,358,930.64

(2) Composition of cash and cash equivalents

Item Ending balance Last year’s end balance

1. Cash 402,769,768.25 263,508,597.32 Including: Cash on hand 23,880.67 43,086.50 Bank deposits that can be used for payment at any time 402,745,887.58 263,464,713.06 Other monetary funds that can be used for payment at any time 797.76 Deposited central bank funds available for payment

Deposit funds from other banks

Funds placed with other banks

2. Cash equivalents

Including: Bond investments due within three months

3. Balance of cash and cash equivalents at the end of the period 402,769,768.25 263,508,597.32 Including: restricted cash use by the parent company or subsidiaries within the group

gold and cash equivalents

(3) Monetary funds that are not cash and cash equivalents

Items other than cash and cash equivalents Closing balance Closing balance of the previous year

Reasons for bank deposits 21,723,600.00 29,687,824.32 Bank deposits of large certificates of deposit held to maturity 2,980,000.00 2,980,000.00 Frozen funds and other monetary funds 30,196,579.35 19,442,107.03 Bank acceptance bill deposit

Total 54,900,179.35 52,109,931.35

Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

56. Foreign currency monetary items

Item Foreign currency balance at the end of the period Conversion exchange rate RMB converted balance at the end of the period Monetary funds 157,246,941.89 Including: US dollars 22,074,082.31 7.0288 155,154,309.74

Euro 254,098.98 8.2355 2,092,632.15 Accounts receivable 48,060,275.14 Including: USD 6,313,265.85 7.0288 44,374,683.01

Euro 447,525.00 8.2355 3,685,592.13

57. Leasing

as lessee

Item Amount of short-term lease expenses incurred in the current period 225,000.00 Total cash outflow related to leasing 1,236,252.92

6. R&D expenditures

Amount for the current period Amount for the previous period

Project

Expensed amount Capitalized amount Expensed amount Capitalized amount Labor cost 22,437,082.05 19,465,090.78

Material costs 15,215,751.87 12,453,089.48

Outsourcing R&D expenses 5,930,558.40 4,977,118.13

Depreciation and amortization 3,778,592.20 3,160,249.64

Fuel and power costs 2,793,710.63 1,357,560.72

Travel expenses 215,864.73 431,711.93

Others 3,302,605.79 1,917,644.41

Total 53,674,165.67 43,762,465.09

7. Interests in other entities

1. Interests in subsidiaries

(1) Composition of enterprise groups

Main business operations Shareholding ratio %

Name of subsidiary company Registered capital Place of registration Method of acquisition

camp quality direct indirect

Yinxiang Biological Company 60.8 million yuan Tiantai County Tiantai County Manufacturing 99.00 1.00 Newly established

Anhui Shengda Company not under common control 30 million yuan Dongzhi County Dongzhi County Manufacturing 100.00

The next enterprise merges with Yitao Company 50 million yuan Tiantai County Tiantai County Manufacturing 100.00 Zhejiang Shengda Biopharmaceutical Co., Ltd. is newly established

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

Main business operations Shareholding ratio %

Name of subsidiary company Registered capital Place of registration Mode of acquisition Quality Direct Indirect

Technology service

Shengda Research Institute Company 30 million yuan Hangzhou City Hangzhou City 100.00 New business establishment

Tongliao Shengda Company not under common control 230 million yuan Kailu County Kailu County Manufacturing 75.00

Under business combination (2) Important non-wholly owned subsidiaries

Shares held by minority shareholders. Attributable to minority shareholders in the current period. To minority shareholders in the current period. Name of subsidiary of minority shareholders at the end of the period.

Proportion % Shareholders’ profit and loss Dividends declared Equity balance Tongliao Shengda Company 25.00 7,108,628.17 30,251,296.01 (3) Main financial information of important non-wholly owned subsidiaries

Subsidiary closing balance

Name Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Tong Liao Sheng

134,498,479.33 268,296,934.52 402,795,413.85 262,761,872.34 7,936,735.89 270,698,608.23Da Company

Continued (1):

Balance at the end of the previous year

Subsidiary

non-current non-current

Name Current assets Total assets Current liabilities Total liabilities

Assets Liabilities

Tongliao Sheng

122,413,510.71 264,959,366.39 387,372,877.10 288,228,848.73 2,333,333.49 290,562,182.22Da Company

Continued (2):

Amount for the current period Amount for the previous period

Subsidiaries

Name Business Current operating activities Business Current net profit from operating activities Total comprehensive income Net profit Total comprehensive income

Revenue Cash Flow Revenue Cash Flow Tongliao St.

255,774,308.59 35,523,298.75 35,523,298.75 51,395,948.17 260,166,741.21 29,809,138.05 29,809,138.05 72,140,401.71Da Company

8. Government subsidies

1. Government subsidies included in deferred income

Classification Opening balance Increase in the current period Decrease in the current period Ending balance and asset-related policies

6,650,242.94 1,151,777.75 1,026,033.68 6,775,987.01 Government subsidies

Total 6,650,242.94 1,151,777.75 1,026,033.68 6,775,987.01

(1) Government subsidies included in deferred income will be subsequently measured using the gross method.

New additions in the current period are included in the losses carried forward in the current period. Others are included in the losses carried forward in the current period. Balance at the beginning of the period. Balance at the end of the period.

Subsidy amount Amount of profit and loss Changes Profit and loss presentation items related to assets Government

Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

New additions in the current period are included in the losses carried forward in the current period. Others are included in the losses carried forward in the current period. Balance at the beginning of the period. Balance at the end of the period.

Amount of subsidy Amount of profit and loss Change Subsidy for presentation items of profit:

2024 Provincial Production System

Manufacturing method transformation demonstration project 2,396,800.00 2,396,800.00

Project (green transformation)

Tiantai County Workers of the Year 2022

Industrial economy and information technology support 563,766.72 83,566.68 480,200.04 Other income support projects

Steam external supply subsidy 2,333,333.49 399,999.96 1,933,333.53 Other income to support small and medium-sized enterprises in 2025

Typical industry digital transformation 991,577.75 97,435.21 894,142.54 Other income demonstration projects

Annual output of 3000 tons of glutamyl

Amine transaminase, 20 tons of PQQ 122,082.44 21,083.64 100,998.80 Other income production line projects

Annual production of 1,000 tons of vitamins

Technical renovation of D3 (coating) production line 59,430.13 18,767.54 40,662.59 Other income items

Annual output of 3 billion tablets

108,334.25 27,659.88 80,674.37 Other yield agent production line projects

2015 Enterprise Technology of the Year

90,625.00 7,500.00 83,125.00 Other income renovation project subsidy funds

Equipment subsidies in 2021 447,456.58 114,712.32 332,744.26 Other income Private economic development in 2022

56,601.74 11,069.79 45,531.95 Other income development incentives and subsidies

High industrial economy in 2023

Quality innovation development review 254,000.00 24,594.10 229,405.90 Other income project awards and subsidies

Tiantai County Workers of the Year 2023

Industrial enterprise technological transformation project 160,200.00 34,142.10 126,057.90 Financial subsidy funds for other income items

Environmental Protection Bureau VOCS online monitoring

33,333.52 24,999.96 8,333.56 Other income testing equipment subsidies

Wastewater treatment project subsidies

49,999.68 49,999.68 Other income funds

High quality manufacturing in 2020

7,383.82 7,383.82 Other revenue-generating projects

Biological food preservation technology

Research on key agricultural enterprises 127,095.57 103,119.00 23,976.57 Other income-generating projects

Total 6,650,242.94 1,151,777.75 1,026,033.68 6,775,987.01

2. Government subsidies included in current profits and losses using the gross method

Category Amount included in profit and loss in the current period Amount included in profit and loss in the previous period Presentation items included in profit and loss Government subsidies related to income:

Industry-university-research cooperation project award 280,000.00 Other income Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

Category Amount included in profit and loss in the current period Amount included in profit and loss in the previous period Talent subsidy for reported projects included in profit and loss 175,452.00 1,271,200.00 Other income stabilizing employment subsidy 497,032.37 730,060.79 Other income special fund award for science and technology 3,245,000.00 358,547.00 Other income special new enterprise recognition award and subsidy 350,000.00 850,000.00 Other income training subsidy 68,000.00 15,800.00 Other income foreign trade subsidy 250,405.00 Other income patent-related subsidies 107,000.00 Other income manufacturing enterprise award and subsidy 526,022.25 500,000.00 Other income Subsidy for outbound business activities 516,606.00 Other income

Total 6,015,517.62 3,725,607.79

9. Risk management of financial instruments

The company's main financial instruments include monetary funds, notes receivable, accounts receivable, receivable financing, other receivables, non-current assets due within one year, other current assets, trading financial assets, debt investments, other non-current financial assets, notes payable, accounts payable, other payables, short-term borrowings, non-current liabilities due within one year, long-term borrowings and lease liabilities. Details of each financial instrument have been disclosed in the relevant notes. The risks associated with these financial instruments, and the risk management policies adopted by the Company to mitigate these risks, are described below. The company's management manages and monitors these risk exposures to ensure that the above risks are controlled within limited limits.

1. Risk management objectives and policies

The main risks caused by the company's financial instruments are credit risk, liquidity risk, and market risk (including exchange rate risk, interest rate risk, and commodity price risk).

The company's goal in risk management is to achieve an appropriate balance between risks and returns, reduce the negative impact of risks on the company's operating performance to a minimum, 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 determine 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 board of directors is responsible for planning and establishing the company's risk management structure, formulating the company's risk management policies and relevant guidelines, and supervising the implementation of risk management measures. The Company has formulated risk management policies to identify and analyze the risks faced by the Company. These risk management policies clearly define specific risks and cover many aspects such as market risk, credit risk and liquidity risk management. The Company regularly evaluates changes in the market environment and the Company's operating activities to determine whether to update risk management policies and systems. The Company's risk management is carried out by the Risk Management Committee in accordance with policies approved by the Board of Directors. The Risk Management Committee identifies, evaluates and avoids relevant risks through close cooperation with other business departments of the Company. The Company's internal audit department conducts regular audits on risk management controls and procedures and reports the audit results to the Company's Audit Committee.

Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

The Company diversifies financial instrument risks through appropriate diversification of investments and business portfolios, and reduces risks concentrated in a single industry, specific region or specific counterparty by formulating corresponding risk management policies.

(1) Credit risk

Credit risk refers to the risk that the counterparty fails to perform its contractual obligations, resulting in financial losses for the company.

The Company manages credit risks by portfolio classification. Credit risk mainly arises from bank deposits, bills receivable, accounts receivable, other receivables, etc.

The Company's bank deposits are mainly deposited in financial institutions with good reputations and high credit ratings. The Company does not expect that there will be significant credit risk in bank deposits.

For notes receivable, accounts receivable and other receivables, the Company sets relevant policies to control credit risk exposure. The company evaluates the customer's credit qualifications and sets corresponding credit periods based on the customer's financial status, credit history and other factors such as current market conditions. The company will regularly monitor customer credit records. For customers with poor credit records, the company will use written reminders, shorten the credit period or cancel the credit period to ensure that the company's overall credit risk is within a controllable range.

The debtors of the Company's accounts receivable are customers located in different industries and regions. The Company continues to conduct credit assessments on the financial status of accounts receivable and purchases credit guarantee insurance when appropriate.

The Company's maximum exposure to credit risk is the carrying amount of each financial asset on the balance sheet. The Company has not provided any other guarantees that may expose the Company to credit risk.

Among the company's accounts receivable, the accounts receivable from the top five customers by balance accounted for 41.15% of the company's total accounts receivable (2024: 40.66%); among the company's other receivables, the other receivables from the top five companies in arrears accounted for 98.12% of the company's total other receivables (2024: 98.48%).

(2) Liquidity risk

Liquidity risk refers to the risk that the company encounters a shortage of funds when fulfilling its obligations to settle by delivering cash or other financial assets.

When managing liquidity risk, the Company maintains and monitors cash and cash equivalents that management considers sufficient to meet the Company's operating needs and reduce the impact of cash flow fluctuations. The Company's management monitors the use of bank borrowings and ensures compliance with borrowing agreements. At the same time, obtain commitments from major financial institutions to provide sufficient backup funds to meet short-term and long-term funding needs.

The Company raises working capital through funds generated from operating businesses and bank and other borrowings. At the end of the period, the company's unused bank borrowing limit was RMB 33 million.

At the end of the period, the financial liabilities and off-balance sheet guarantee items held by the company are analyzed based on the maturity period of the undiscounted remaining contract cash flows as follows (unit: yuan):

Ending balance

Project

Within one year Within one to three years More than three years Total Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

Ending balance

Project

Within one year Within one to three years More than three years Total financial liabilities:

Notes payable 84,551,947.57 84,551,947.57 Accounts payable 97,628,067.38 97,628,067.38 Other payables 2,167,751.46 2,349,200.00 4,516,951.46 Non-current liabilities due within one year 335,456.25 335,456.25 Long-term borrowings 14,189,131.94 53,937,572.20 293,766,220.83 361,892,924.97 Total financial liabilities and contingent liabilities 198,872,354.60 56,286,772.20 293,766,220.83 548,925,347.63 At the end of the previous year, the financial liabilities and off-balance sheet guarantee items held by the company were analyzed based on the maturity period of the undiscounted remaining contract cash flow as follows (unit: yuan):

Balance at the end of the previous year

Project

Within one year Within one to three years More than three years Total financial liabilities:

Short-term borrowings 30,358,375.00 30,358,375.00 Notes payable 72,091,801.73 72,091,801.73 Accounts payable 100,900,171.31 100,900,171.31 Other payables 1,982,234.38 1,982,234.38 Lease liabilities 845,296.33 501,412.84 1,346,709.17 Long-term borrowings 6,537,500.00 16,988,666.66 242,320,627.77 265,846,794.43 Total financial liabilities and contingent liabilities 212,715,378.75 17,490,079.50 242,320,627.77 472,526,086.02 The amount of financial liabilities disclosed in the above table is undiscounted contractual cash flow, so it may be different from the book amount in the balance sheet.

(3) Market risk

Market risk of financial instruments refers to the risk that the fair value or future cash flows of financial instruments fluctuate due to market price changes, including interest rate risk, exchange rate risk and other price risks.

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. Interest rate risk can arise from both recognized interest-bearing financial instruments and unrecognized financial instruments (such as certain loan commitments).

The Company's interest rate risk mainly arises from long-term bank borrowings. Financial liabilities with floating interest rates expose the Company to cash flow interest rate risks, while financial liabilities with fixed interest rates expose the Company to fair value interest rate risks. The Company determines the relative proportions of fixed-rate and floating-rate contracts based on the prevailing market environment, and maintains an appropriate portfolio of fixed-rate and floating-rate instruments through regular review and monitoring.

The Company pays close attention to the impact of interest rate changes on the Company's interest rate risk.

Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

Exchange rate risk

Exchange rate risk refers to the risk that the fair value or future cash flows of financial instruments will fluctuate due to changes in foreign exchange rates. Exchange rate risk can arise from financial instruments denominated in foreign currencies other than the functional currency of accounting.

The company's main operations are located in China, and its main business is settled in RMB. However, the Company's confirmed foreign currency assets and liabilities and future foreign currency transactions (the denominated currencies of foreign currency assets and liabilities and foreign currency transactions are mainly US dollars and euros) still have foreign exchange risks.

At the end of the period, the amounts of foreign currency financial assets and foreign currency financial liabilities held by the Company converted into RMB are listed as follows (unit: RMB 10,000):

Foreign currency liabilities Foreign currency assets

Project

Ending balance Last year's end balance Last year's end balance USD 2,838.73 836.01 Euro 70.16 14.92

Total 2,908.90 850.93

The Company pays close attention to the impact of exchange rate changes on the Company's exchange rate risk. The Company currently has not taken any measures to avoid exchange rate risks. However, management is responsible for monitoring exchange rate risks and will consider hedging significant exchange rate risks if necessary.

At the end of the period, for the company's monetary funds denominated in foreign currencies, assuming that the RMB appreciates or depreciates by 10% against foreign currencies (mainly against the U.S. dollar and the euro), and other factors remain unchanged, the company's shareholders' equity and net profit will both increase or decrease by approximately RMB 20,530,700 (the end of the previous year: approximately RMB 6,121,900).

2. Capital management

The goal of the company's capital management policy is to ensure that the company can continue to operate, thereby providing returns to shareholders and benefiting other stakeholders, while maintaining an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Company may adjust financing methods, adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares and other equity instruments, or sell assets to reduce debt.

The Company monitors the capital structure based on the asset-liability ratio (i.e., total liabilities divided by total assets). At the end of the period, the company's asset-liability ratio was 26.55% (end of the previous year: 28.08%).

10. Fair value

According to the lowest level input value that is of great significance to the overall measurement in fair value measurement, the fair value hierarchy can be divided into:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: The use of observable inputs other than quoted market prices for the asset or liability in Level 1, either directly (i.e., as prices) or indirectly (i.e., as derived from prices).

Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

Level 3: The asset or liability uses any input value that is not based on observable market data (unobservable input value).

(1) Items and amounts measured at fair value

At the end of the period, assets and liabilities measured at fair value are listed as follows according to the above three levels:

First level public Second level public Third level public

Items Total

Fair value measurement Fair value measurement Fair value measurement

1. Continuous fair value measurement

(1) Trading financial assets 16,342.56 182,047,649.32 182,063,991.88

1. Debt Instrument Investment

2. Equity instrument investment 16,342.56 16,342.56

3. Classified as measured at fair value and its change

182,047,649.32 182,047,649.32 Financial assets automatically included in current profits and losses

(2) Accounts receivable financing -- 96,742.74 96,742.74

(3) Other non-current financial assets 10,700,000.00 10,700,000.00 Total assets continuously measured at fair value 16,342.56 182,047,649.32 10,796,742.74 192,860,734.62

(2) Information related to the second level fair value measurement

The trading financial assets measured at the second level of fair value held by the company are structured deposits and financial products purchased by the company. The fair value of these investments is mainly derived by referring to the expected rate of return of the product.

(3) Quantitative information on important unobservable input values used in level 3 fair value measurement

Other non-current financial assets measured at level 3 fair value held by the Company are equity interests in unlisted companies. For investments in unlisted equity instruments, the Company comprehensively considers the market approach and future cash flow discounting methods to estimate fair value. If the operating environment, operating conditions and financial status of the invested enterprise have not changed significantly, the company will measure the investment cost as a reasonable estimate of the fair value.

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.

(4) Items and amounts that are not measured at fair value but whose fair value is disclosed

The Company's financial assets and financial liabilities measured at amortized cost mainly include: monetary funds, notes receivable, accounts receivable, other receivables, notes payable, accounts payable, other payables, long-term loans due within one year, long-term loans, etc. The difference between their book value and fair value is small.

11. Related parties and related transactions

1. Information about the company’s parent company

parent company to the company

Business Registered capital Parent company’s contribution to the company

Name of parent company Registration place Nature of voting rights ratio of the company (10,000 yuan) Shareholding ratio of the company %

Example: Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

parent company to the company

Business Registered capital Parent company’s contribution to the company

Name of parent company Registration place Nature of voting rights ratio of the company (10,000 yuan) Shareholding ratio of the company %

Example: Zhejiang Shengda Group Co., Ltd. Industrial Investment

Tiantai County 5,000 24.00 24.00 (hereinafter referred to as Shengda Group) Capital

Information about the company's parent company: Zhejiang Shengda Group Co., Ltd. was established in 1995. Its business scope includes: foreign investment; manufacturing of clothing and rubber products; purchase and sale of electronic products, building materials, mechanical and electrical products, handicrafts, packaging and decoration supplies; product information consultation, etc.

The ultimate controlling party of the company is: Hong Ai

2. Information about the company’s subsidiaries

Please refer to Note VII.1 for details of subsidiaries.

3. Information about other related parties of the company

Name of related party Relationship with the company

Zhu Yonggang Hong Ai’s spouse

Zhejiang Changming Pharmaceutical Co., Ltd. is also controlled by the parent company

Tiantai Rongsheng Paper Co., Ltd. A company controlled by Zhu Yonggang’s immediate family members

Zhejiang Shengda Technology Development Co., Ltd. is also controlled by the parent company

Hefei Anke Fine Chemical Co., Ltd. and Tiantai Shengbo Industry and Trade Co., Ltd., a holding subsidiary of Zhejiang Shengda Technology Development Co., Ltd., are both controlled by the parent company

Taizhou Hanjia Environmental Technology Co., Ltd. is also controlled by the parent company

Zhejiang Shengda Zijin Biotechnology Co., Ltd. is also controlled by the parent company

Tiantai Qizhenguan Catering Management Co., Ltd. is also controlled by the parent company

Shandong Huanghelong Group Co., Ltd. Shareholder of Tongliao Shengda Company

Zhejiang Yinlun Machinery Co., Ltd. A company where company director Chen Bufei serves as vice chairman and director

4. Related transactions

(1) Related purchasing and sales situation

1 Purchasing goods and receiving services

Related parties Contents of related transactions Amount incurred in the current period Amount incurred in the previous period Tiantai Rongsheng Paper Co., Ltd. Purchased goods 3,195,213.14 3,037,786.38 Taizhou Hanjia Environmental Technology Co., Ltd. Receipt of labor services 56,343.40 250,071.85 Taizhou Hanjia Environmental Technology Co., Ltd. Purchased goods 29,646.02

Tiantai Qizhenguan Catering Management Co., Ltd. receives services 152,210.00

Hefei Anke Fine Chemical Co., Ltd. Receiving labor services 308,261.74 Hefei Anke Fine Chemical Co., Ltd. Procuring goods 2,596.81 Zhejiang Yinlun Machinery Co., Ltd. Procuring equipment 1,088,495.58 Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

Related parties Contents of related transactions Amount incurred in the current period Total amount incurred in the previous period 3,433,412.56 4,687,212.36 The sales prices between the company and the above-mentioned related parties are determined based on market prices and do not deviate from third-party prices. The details are determined through negotiation between the two parties.

2 Sell goods and provide services

Related parties Contents of related transactions Amount incurred in the current period Amount incurred in the previous period Zhejiang Shengda Zijin Biotechnology Co., Ltd. Sales of goods 5,559,890.71 6,480,533.63 Zhejiang Changming Pharmaceutical Co., Ltd. Sales of goods 8,879,203.40 4,462,300.88 Zhejiang Changming Pharmaceutical Co., Ltd. Provision of services 773,584.91

Hefei Anke Fine Chemical Co., Ltd. Sales of goods 2,977,201.00 1,797,226.92 Total 18,189,880.02 12,740,061.43 The sales prices between the company and the above-mentioned related parties are determined based on market prices and do not deviate from third-party prices. The details are determined through negotiation between the two parties.

(2) Related leasing situation

Company lease

Name of the lessor Type of leased assets Lease payment payable in the current period Lease payment payable in the previous period Tiantai Shengbo Industry and Trade Co., Ltd. House 225,000.00 225,000.00 The transaction prices between the company and the above-mentioned related parties are determined based on market prices and do not deviate from third-party prices. The details are determined through negotiation between the two parties.

(3) Remuneration of key management personnel

The company has 19 key management personnel in the current period and 15 key management personnel in the previous period. The remuneration payment information is shown in the table below:

Item Amount for the current period Amount for the previous period

Remuneration of key management personnel 4,326,820.08 3,348,625.19

5. Accounts receivable and payable from related parties

(1) Amounts receivable from related parties

Ending balance Last year's end balance

Project name Related parties

Book balance Bad debt provision Book balance Bad debt provision Accounts receivable

Zhejiang Shengda Zijinsheng

3,187,280.00 159,364.00 2,393,969.00 119,698.45 Wuwu Technology Co., Ltd.

Hefei Anke Refinement

875,386.51 43,769.33 940,795.12 47,039.76 Industrial Co., Ltd.

Zhejiang Changming Pharmaceutical has 1,871,285.23 93,564.26 724,500.00 36,225.00 Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

Ending balance Last year's end balance

Project name Related parties

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

Ltd.

Subtotal 5,933,951.74 296,697.59 4,059,264.12 202,963.21 Notes receivable

Zhejiang Changming Pharmaceutical Co., Ltd.

63,752.54

Ltd.

Hefei Anke Refinement

300,000.00

Engineering Co., Ltd.

Subtotal 363,752.54

Zhejiang Changming Pharmaceutical Co., Ltd.

Accounts receivable financing 580,097.90

Ltd.

Subtotal 580,097.90

(2) Amounts payable to related parties

Name of items with remaining balance at the end of the previous year Related parties Closing balance

Amount of accounts payable

Tiantai Rongsheng Paper Co., Ltd. 423,834.28 369,167.17 Zhejiang Yinlun Machinery Co., Ltd. 123,000.00 123,000.00

Tiantai Qizhenguan Catering Management Co., Ltd. 8,596.00

Subtotal 555,430.28 492,167.17 Other payables

Shandong Huanghelong Group Co., Ltd. 790,848.11 790,848.11 Subtotal 790,848.11 790,848.11

12. Share-based payment

1. Overall situation of share-based payment

Granted in this period, exercised in this period, unlocked in this period, expired in this period, category of grant objects

Quantity Amount Quantity Amount Quantity Amount Quantity Amount Manager 280,000.00 2,349,200.00

Total 280,000.00 2,349,200.00

On April 24, 2025, the company's 16th meeting of the fourth board of directors reviewed and approved the "Proposal on the <2024 Employee Stock Ownership Plan (Revised Draft)> and its Summary" and the "Proposal on the <2024 Employee Stock Ownership Plan Management Measures (Revised Draft)>". On October 30, 2025, the company received the "Securities Transfer Registration Confirmation" issued by China Securities Depository and Clearing Co., Ltd., and the 280,000.00 shares of the company held in the company's special securities account for repurchase were transferred non-trading to the "Zhejiang Shengda Biopharmaceutical Co., Ltd. - 2024 Employee Stock Ownership Plan" securities account on October 29, 2025 (securities account number B885766757), the transfer price is RMB 8.39 per share. The underlying stocks obtained under the employee stock ownership plan are unlocked in three phases. The unlocking time points are from the date when the company announces the transfer of the last underlying stock to the name of the employee stock ownership plan. 12 Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

After 1 month, 24 months, and 36 months, the proportion of underlying stocks unlocked in each period is 30%, 30%, and 40% respectively. The company-level assessment years are three fiscal years: 2025, 2026, and 2027. Each fiscal year is assessed once. The operating income or net profit of each year from 2025 to 2027 is used as the base. The operating income or net profit growth rate of each assessment year is assessed. If the company's performance assessment indicators for the current period are not met, the corresponding underlying stocks shall not be unlocked.

2. Equity-settled share-based payment

Method for determining the fair value of equity instruments on the grant date Stock closing price

Important parameters of fair value of equity instruments on grant date

Basis for determining the number of exercisable equity instruments Estimation based on the degree of performance compliance Reasons for significant differences between the current period’s estimate and the previous period’s estimate

The cumulative amount of equity-settled share-based payments included in capital reserves

3. Share-based payment expenses for this period

Category of Granted Objects Equity-settled share-based payment expenses Cash-settled share-based payment expenses to managers 138,180.00

Total 138,180.00

13. Commitments and contingencies

1. Important commitments

As of December 31, 2025, the Company has no commitments that should be disclosed.

2. Contingent matters

(1) Contingent liabilities arising from pending litigation and arbitration and their financial impact

Plaintiff Defendant Cause of action Court accepting the case Subject matter Progress of the case DSM Vitamins (formerly Shengda Biological Company, Infringement of invention patent Anhui Provincial Intermediate Company opposed the judgment)

8,100,000.00

Hai) Co., Ltd. Anhui Shengda Company has filed an appeal with the People's Court. The company and Anhui Shengda Company received summons and other documents served by the Hefei Intermediate People's Court of Anhui Province (hereinafter referred to as the Hefei Intermediate Court) on June 20, 2023. The case of DSM Vitamins (Shanghai) Co., Ltd. (hereinafter referred to as DSM) against our company and Anhui Shengda Company for infringement of invention patent No. 200480008505.7 was accepted by the court (Case No.: (2023) Anhui 01 Civil Litigation Qiandiao No. 402).

According to its complaint, DSM requested the court to order the company and Anhui Shengda Company to stop using the patented method of the patent involved and to stop using the products directly obtained according to the patented method. It ordered the company and Anhui Shengda Company to compensate DSM for economic losses of RMB 8 million, and ordered the company to compensate DSM for its reasonable expenses to stop the infringement (including but not limited to attorney fees, notary fees, translation fees, etc.).

On September 13, 2023, the Hefei Intermediate People's Court officially served the notice of response, the notice of evidence and other litigation documents to the company and Anhui Shengda Company. The official case number of this case is (2023) Anhui 01 Minchu No. 1086.

On July 25, 2024, the Hefei Intermediate People's Court ruled that the company and Anhui Shengda Company jointly compensated DSM Economics Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

The loss was 8 million yuan and reasonable rights protection expenses were 100,000 yuan, totaling 8.1 million yuan.

In response to the Hefei Intermediate People's Court's judgment on DSM's patent infringement case against the company and Anhui Shengda Company, the company and Anhui Shengda Company have filed an appeal in August 2024. The appeal requests are: ① the order to revoke the (2023) Anhui 01 Minchu No. 1086 Civil Judgment and change the judgment to reject all DSM's litigation claims; ② order DSM to bear the first and second instance litigation costs of the case. So far, the second instance of the company's appeal has been heard without a verdict.

In response to the patent infringement dispute by DSM, Anhui Shengda Company accrued an estimated liability of RMB 8.1 million in 2024 based on the judgment results of (2023) Anhui 01 Minchu No. 1086 Civil Judgment.

(2) Other contingent liabilities

As of December 31, 2025, the company has no other contingencies that should be disclosed.

14. Events after the balance sheet date

1. Profit distribution after the balance sheet date

According to the "Proposal on the Company's Profit Distribution Plan for 2025" reviewed and approved at the third meeting of the fifth session of the Board of Directors on April 23, 2026, a cash dividend of 1.00 RMB for every 10 shares will be distributed to all shareholders on the basis of 187,437,124 shares of the total share capital of 189,029,624 shares after excluding 1,592,500 repurchased shares. Yuan (including tax), and it is planned to distribute cash dividends of RMB 18,743,712.40 (including tax). The above-mentioned profit distribution plan is yet to be reviewed and approved by the company's shareholders' meeting.

2. Description of other post-balance sheet events

As of April 23, 2026, the company has no other post-balance sheet events that should be disclosed.

15. Other important matters

Segment reporting

The company is mainly engaged in the production, research and development and sales of food and feed additives. The company regards this business as a whole to implement management and evaluate operating results. Therefore, the Company is not required to disclose segment information.

For details of the company's operating income and operating costs classified by service/region, please refer to Note 5.39 of this financial statement.

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

1. Notes receivable

Ending balance Last year's end balance

Bill type

Book balance Bad debt provision Book value Book balance Bad debt provision Book value Bank acceptance bill 2,389,902.09 2,389,902.09

Total 2,389,902.09 2,389,902.09

Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

Notes receivable that have been endorsed or discounted by the Company but have not yet matured at the end of the period

Category Amount derecognized at the end of the period Amount not derecognized at the end of the period Bank acceptance notes 1,892,205.09

Total 1,892,205.09

2. Accounts receivable

(1) Disclosure based on aging

Account aging Closing balance Last year’s closing balance within 1 year 53,214,337.88 43,676,800.09 1-2 years 119,500.00

Subtotal 53,333,837.88 43,676,800.09

Less: Bad debt provision 2,684,616.90 2,183,840.00

Total 50,649,220.98 41,492,960.09

(2) Classified disclosure according to bad debt accrual method

Ending balance

Book balance Bad debt provision

Category

Expected Credit Book Value Amount Ratio (%) Amount

Loss rate (%)

Provision for bad debts on a group basis 53,333,837.88 100.00 2,684,616.90 5.03 50,649,220.98

Total 53,333,837.88 100.00 2,684,616.90 5.03 50,649,220.98

Continued:

Balance at the end of the previous year

Book balance Bad debt provision

Category

Expected Credit Book Value Amount Ratio (%) Amount

Loss rate (%)

Provision for bad debts on a group basis 43,676,800.09 100.00 2,183,840.00 5.00 41,492,960.09

Total 43,676,800.09 100.00 2,183,840.00 5.00 41,492,960.09

Accounts receivable with provision for bad debts on a group basis

Portfolio accrual items: aging portfolio

Ending balance Last year's end balance

Expected credit Expected credit book balance Bad debt provision Book balance Bad debt provision

Loss rate (%) Loss rate (%) Within 1 year 53,214,337.88 2,660,716.90 5.00 43,676,800.09 2,183,840.00 5.00 1 to 2 years 119,500.00 23,900.00 20.00

Total 53,333,837.88 2,684,616.90 5.03 43,676,800.09 2,183,840.00 5.00 Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

(3) Bad debt provisions accrued, recovered or reversed in the current period

Opening balance of bad debt provision amount 2,183,840.00 Provision in this period 498,229.03 Collected or transferred back in this period 2,547.87 Written off in this period

Sales in this period

Others

Ending balance 2,684,616.90

(4) Top five companies with closing balances of accounts receivable and contract assets collected by debtors

Accounts receivable and bad debts

Accounts receivable, contract assets, accounts receivable and contracts, contract assets at the end of the period, provision and contract capital unit name

Ending balance Ending balance Asset ending balance Total balances Production impairment provision period

Proportion% Final balance First place 7,451,955.53 7,451,955.53 13.97 372,597.78 Second place 6,427,140.35 6,427,140.35 12.05 321,357.02 Third place 5,091,000.00 5,091,000.00 9.55 254,550.00Fourth place 3,113,167.98 3,113,167.98 5.84 155,658.40Fifth place 3,099,698.62 3,099,698.62 5.81 154,984.93

Total 25,182,962.48 25,182,962.48 47.22 1,259,148.13

3. Other receivables

(1) Disclosure based on aging

Account aging Closing balance Last year's closing balance within 1 year 312,149,193.68 54,561,144.09 1 to 2 years 52,124.00 144,906,070.55 2 to 3 years 32,511,873.41 More than 3 years 806,210.00 50,975,770.74

Subtotal 313,007,527.68 282,954,858.79

Less: Bad debt provision 16,424,094.48 14,913,642.44

Total 296,583,433.20 268,041,216.35

(2) Disclosure according to the nature of the payment

Amount at the end of the period Amount at the end of the previous year

Project

Book balance Bad debt provision Book value Book balance Bad debt provision Book value of borrowings 312,145,193.68 15,607,259.68 296,537,934.00 282,079,579.18 14,103,978.96 267,975,600.22 Deposit guarantee

17,110.00 7,790.00 9,320.00 27,510.00 7,275.00 20,235.00 Certificate Fund

Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

Amount at the end of the period Amount at the end of the previous year

Project

Book balance Bad debt provision Book value Book balance Bad debt provision Book value receivable provisional

800,000.00 800,000.00 802,545.61 800,127.28 2,418.33Payment

Reserve fund 45,224.00 9,044.80 36,179.20 45,224.00 2,261.20 42,962.80

Total 313,007,527.68 16,424,094.48 296,583,433.20 282,954,858.79 14,913,642.44 268,041,216.35

① Bad debt provision accrual status

Bad debt provisions in the first stage at the end of the period

next 12 months

Category Book Balance Expected Credit Bad Debt Provision Book Value

Loss rate (%)

Provision for bad debts by combination 312,149,193.68 5.00 15,607,459.68 15,611,059.68 Related party combination 312,145,193.68 5.00 15,607,259.68 15,607,259.68 Aging combination 4,000.00 5.00 200.00 3,800.00

Including: Within 1 year 4,000.00 5.00 200.00 3,800.00

Total 312,149,193.68 5.00 15,607,459.68 15,611,059.68

Bad debt provisions in the second stage at the end of the period

The entire life expectancy

Category Book balance Period credit loss rate Bad debt provision Book value

(%)

Provision for bad debts by combination 52,124.00 20.00 10,424.80 41,699.20 Aging combination 52,124.00 20.00 10,424.80 41,699.20

Including: 1-2 years 52,124.00 20.00 10,424.80 41,699.20

Total 52,124.00 20.00 10,424.80 41,699.20

Bad debt provisions in the third stage at the end of the period

The entire life expectancy

Category Book balance Period credit loss rate Bad debt provision Book value

(%)

Provision for bad debts on a group basis 806,210.00 100.00 806,210.00

Aging combination 806,210.00 100.00 806,210.00

Including: more than 3 years 806,210.00 100.00 806,210.00

Total 806,210.00 100.00 806,210.00

Bad debt provisions in the first stage at the end of the previous year

next 12 months

Category Book Balance Expected Credit Bad Debt Provision Book Value

Loss rate (%)

Provision for bad debts on a portfolio basis 282,148,648.79 5.00 14,107,432.44 268,041,216.35 Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

next 12 months

Category Expected credit within book balance Bad debt provision Book value loss rate (%)

Related party portfolio 282,079,579.18 5.00 14,103,978.96 267,975,600.22 Aging portfolio 69,069.61 5.00 3,453.48 65,616.13 Of which: within 1 year 69,069.61 5.00 3,453.48 65,616.13

Total 282,148,648.79 5.00 14,107,432.44 268,041,216.35

Bad debt provisions in the third stage at the end of the previous year

The entire life expectancy

Category Book balance Period credit loss rate Bad debt provision Book value (%)

Provision for bad debts on a group basis 806,210.00 100.00 806,210.00

Aging combination 806,210.00 100.00 806,210.00

Including: more than 3 years 806,210.00 100.00 806,210.00

Total 806,210.00 100.00 806,210.00

② Bad debt provisions accrued, recovered or reversed in the current period

The first stage The second stage The third stage

Bad debt provision for the next 12 months Expected credit for the entire duration Expected credit losses for the entire duration Total

Period credit loss Loss (no credit impairment occurred) Loss (credit impairment occurred)

Opening balance 14,107,432.44 806,210.00 14,913,642.44 Opening balance in the current period

--Transfer to the second stage -2,606.20 2,606.20

--Transfer to the third stage

--Return to the second stage

--Return to the first stage

Provision in this period 1,502,633.44 7,818.60 1,510,452.04 Transferred in this period

Sales in this period

Write-off in this period

Other changes

Closing balance 15,607,459.68 10,424.80 806,210.00 16,424,094.48

③ The top five companies with the closing balance of other receivables collected by debtors

Accounting for other receivables

Account nature Other receivables Bad debt provision unit name Aging Total balance at the end of the period

Pledge Closing balance Proportion of closing balance (%)

Within 1 year 52,204,776.78 yuan,

10,579,588.93 yuan in 1-2 years, 2-3

Tongliao Shengda Company Loans 211,975,568.79 67.72 10,598,778.44 years 144,906,070.55 yuan, 3 years

Above 4,285,132.53 yuan

Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

Accounting for other receivables

Account nature Other receivables Bad debt provision unit name Aging Total balance at the end of the period

Pledge Closing balance Proportion of closing balance (%)

Within 1 year 57,838,301.98 yuan,

Anhui Shengda Company Loans 100,169,624.89 32.00 5,008,481.24

1-2 years 42,331,322.91 yuan

Yueyang Yingchuan Chemical Industry Receivable Temporary

800,000.00 More than 3 years 0.26 800,000.00 Technology Co., Ltd. Payment

Liu Shangrong Reserve fund 45,224.00 1-2 years 0.01 9,044.80

Deposit guarantee

Liu Yang 6,900.00 1-2 years 1,380.00

Security deposit

Total 312,997,317.68 99.99 16,417,684.48

4. Long-term equity investment

Ending balance Last year's end balance

Item Impairment allowance Impairment allowance

Book balance Book value Book balance Book value provision

Investment in subsidiaries 531,823,010.02 531,823,010.02 531,773,660.02 531,773,660.02

Total 531,823,010.02 531,823,010.02 531,773,660.02 531,773,660.02

Investment in subsidiaries

Increases and decreases in the current period

Impairment allowance Impairment allowance investee Opening balance (account) Closing balance (account

Beginning of the provision period End of the provision period (face value) Addition Decrease investment Provision for impairment (face value)

Balance Other Balance Investment Reserve

silver elephant creature

230,648,702.00 49,350.00 230,698,052.00

company

Anhui Shengda

140,000,000.00 140,000,000.00

company

Tongliao Shengda

128,287,600.00 128,287,600.00

company

Sunda Research

32,837,358.02 32,837,358.02

hospital company

Total 531,773,660.02 49,350.00 531,823,010.02

5. Operating income and operating costs

(1) Operating income and operating costs

Amount for the current period Amount for the previous period

Project

revenue cost revenue cost

Main business 228,322,955.78 196,953,519.06 249,763,779.00 231,768,264.47 Zhejiang Shengda Biopharmaceutical Co., Ltd.

Notes to Financial Statements

2025 (unless otherwise specified, the amount is in RMB)

Amount for the current period Amount for the previous period

Project

Revenue Cost Revenue Cost Other businesses 1,309,258.23 1,356,876.17 245,608.40 245,959.56

Total 229,632,214.01 198,310,395.23 250,009,387.40 232,014,224.03

(2) Operating income and operating costs are divided by product type

Amount for the current period Amount for the previous period

Main product types

Revenue Cost Revenue Cost Main Business:

Vitamins 224,213,619.50 195,868,319.27 244,713,890.39 227,978,042.05 Others 4,109,336.28 1,085,199.79 5,049,888.61 3,790,222.42 Small Total 228,322,955.78 196,953,519.06 249,763,779.00 231,768,264.47 Other businesses:

Sales materials 1,309,258.23 1,356,876.17 245,608.40 245,959.56 Subtotal 1,309,258.23 1,356,876.17 245,608.40 245,959.56

Total 229,632,214.01 198,310,395.23 250,009,387.40 232,014,224.03

(3) Operating income and operating costs divided by region

Amount for the current period Amount for the previous period

Main business areas

Revenue Cost Revenue Cost Domestic 97,044,277.34 77,714,419.51 100,805,884.09 89,316,213.26 Overseas 132,587,936.67 120,595,975.72 149,203,503.31 142,698,010.77

Subtotal 229,632,214.01 198,310,395.23 250,009,387.40 232,014,224.03

(4) Operating income and operating costs are divided according to the time of commodity transfer

Amount incurred this period

Project

Revenue Cost Main Business

Among them: 228,322,955.78 196,953,519.06 other businesses confirmed at a certain point in time

Among them: confirmed at a certain point in time 1,309,258.23 1,356,876.17

Total 229,632,214.01 198,310,395.23

(5) Information related to remaining performance obligations

As of December 31, 2025, the tax-exclusive transaction price corresponding to the unfulfilled performance obligations was 1,393,763.91 yuan, and revenue is expected to be recognized in 2026.

6. Investment income

Item Amount for the current period Amount for the previous period