-- 2025 Semi-annual Report

Guizhou Sanli Pharmaceutical Co., Ltd. 2025 Semi-annual Report Company Code: 603439 Company Abbreviation: Guizhou Sanli Guizhou Sanli Pharmaceutical Co., Ltd.

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Guizhou Sanli Pharmaceutical Co., Ltd. 2025 Semi-Annual Report

Important tips

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

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

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

4. The person in charge of the company, Zhang Hai, the person in charge of accounting work, Guo Ke, and the person in charge of the accounting department (accounting supervisor) Guo Ke declare that they guarantee the authenticity, accuracy and completeness of the financial report in the semi-annual report.

5. The profit distribution plan for the reporting period or the plan for converting public reserve funds into share capital passed by the board of directors

None

6. Risk Statement for Forward-Looking Statements

√Applicable □Not applicable

This report contains several forward-looking statements about the company's future development strategies, business plans, and business plans. These statements are estimates or predictions of the future based on currently available information and data and do not constitute the company's substantive commitment to investors. Investors are advised to pay attention to investment risks.

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

No

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

No

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

No

10. Major Risk Warning

During the reporting period, there were no major risks that had a substantial impact on the company's production and operations. In the "(1) Possible Risks" section of "V. Other Disclosure Matters" in "Section 3 Management Discussion and Analysis" of this report, the company elaborates on various risks and countermeasures that the company may face in its future business development. Investors are kindly requested to read the relevant specific content carefully and pay attention to investment risks.

11. Others

□Applicable √Not applicable

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Directory

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

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

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

Section 4 Corporate Governance, Environment and Society......................................................................................22

Section 5 Important Matters................................................................................................................................24

Section 6 Changes in Shares and Shareholders...................................................................................................30

Section 7 Bond-related situations................................................................................................................34

Section 8 Financial Report................................................................................................................................35

Financial statements containing the signatures of the company's legal representative, the person in charge of accounting work, and the person in charge of the accounting department.

Document directory for reference

The originals of all documents and announcements publicly disclosed on the Shanghai Stock Exchange website, China Securities Journal and Securities Daily during the reporting period.

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Section 1 Interpretation

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

Commonly used word definitions

Guizhou Sanli, Sanli, the Company, the Company refers to Guizhou Sanli Pharmaceutical Co., Ltd.

China Securities Regulatory Commission refers to China Securities Regulatory Commission

Securities Regulatory Bureau refers to Guizhou Supervision Bureau of China Securities Regulatory Commission

Shanghai Stock Exchange, Exchange refers to Shanghai Stock Exchange

Sanli Zhongyue refers to Sanli Zhongyue (Shanghai) Marketing Planning Co., Ltd.

Sanli Health refers to Guizhou Sanli Health Management Co., Ltd.

Dechangxiang refers to Guizhou Dechangxiang Pharmaceutical Co., Ltd.

Dechangxiang Traditional Chinese Medicine Pieces Company refers to Guizhou Dechangxiang Traditional Chinese Medicine Pieces Co., Ltd.

Hanfang Pharmaceutical refers to Guizhou Hanfang Pharmaceutical Co., Ltd.

Haost refers to Guizhou Haost Biotechnology Co., Ltd.

Yunnan Wudi and Wudi Pharmaceutical refer to Yunnan Wudi Pharmaceutical Co., Ltd.

Sankang Traditional Chinese Medicine refers to Guizhou Sankang Traditional Chinese Medicine Industry Development Co., Ltd.

Sankang Partnership refers to Guizhou Sankang Enterprise Management Partnership (Limited Partnership)

Yaozunbao Technology refers to Yaozunbao Digital Intelligence Technology (Chengdu) Co., Ltd.

Guizhou Qianli Biomedicine Venture Capital Fund Partnership (Limited Qianli Biomedicine Fund refers to

Guy)

"National Basic Medical Insurance, Work Injury Insurance and Maternity Insurance Drug Catalog" National Medical Insurance Catalog refers to

(2024 edition)》

The English abbreviation of OverTheCounter refers to over-the-counter drugs, which are drugs selected by experts through long-term clinical practice and believed to be safe for patients to purchase and use by themselves.

GMP refers to GoodManufacturingPractice and GoodAgriculturalPracticeTCM GAP refers to

forChineseCrudeDrugs)

Also known as authentic medicinal materials, it is a special term for high-quality pure medicinal materials. It refers to authentic medicinal materials with a long history, suitable origin, excellent varieties, high yields, sophisticated processing, outstanding curative effects, and regional characteristics.

Throat Sword series products refer to Throat Sword Spray (children's type), Throat Sword Spray

The Miao people have accumulated rich and valuable medical experience in their long-term production activities and Miao medical practice of fighting against diseases and injuries, which has become part of the treasure house of traditional medicine in my country.

The medicines used under the guidance of Miao medicine theory are the main ethnic Miao medicines in my country.

One of the types of medicine, it belongs to the branch of traditional Chinese medicine.

Prescription refers to a ready-made prescription that has been proven to be effective through clinical use.

Pharmaceutical companies use academic promotion conferences, academic promotion activities, etc. to promote the characteristics and advantages of drugs as well as the latest basic theories and clinical specialization academic promotion to doctors.

Efficacy research results are publicized to patients through doctors, so that patients can generate effective demand for drugs and realize the sales of drugs.

Shareholders’ meeting refers to the shareholders’ meeting of Guizhou Sanli Pharmaceutical Co., Ltd.

Board of Directors refers to the Board of Directors of Guizhou Sanli Pharmaceutical Co., Ltd.

Board of Supervisors refers to the Board of Supervisors of Guizhou Sanli Pharmaceutical Co., Ltd.

"Company Law" means "Company Law of the People's Republic of China"

Reporting period, current period refers to January 1, 2025 to June 30, 2025

Yuan, RMB 10,000, and RMB 100 million refer to RMB yuan, RMB 10,000, and RMB 100 million

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Section 2 Company Profile and Main Financial Indicators

1. Company information

The Chinese name of the company Guizhou Sanli Pharmaceutical Co., Ltd. The Chinese abbreviation of the company Guizhou Sanli

The company's foreign name GUIZHOUSANLIPHARMACEUTICALCO., LTD The company's foreign name abbreviation GUIZHOUSANLI

The legal representative of the company Zhang Hai

2. Contact person and contact information

Secretary of the Board of Directors Name of Securities Affairs Representative Zhang Qianfan Ju Lingke

Contact address Xiayun Industrial Park, Pingba District, Anshun City, Guizhou Province Xiayun Industrial Park, Pingba District, Anshun City, Guizhou Province Telephone 0851-38113395 0851-38113395 Fax 0851-38113572 0851-38113572 Email [email protected] [email protected]

3. Introduction to changes in basic situation

Company registered address: Xiayun Industrial Park, Pingba District, Anshun City, Guizhou Province

Historical changes in the registered address of Guizhou An Company from No. 104 Guigong Road, Guiyang City, Guizhou Province on December 1, 2015

Xiayun Industrial Park, Pingba District, Shun City

Company office address Postal code of the company's office address in Xiayun Industrial Park, Pingba District, Anshun City, Guizhou Province 561000

Company website https://www.gz-sanli.com/

Email [email protected]

Query index for changes during the reporting period None

4. Brief introduction to changes in information disclosure and storage location

The name of the newspaper selected by the company for information disclosure. The website address of "China Securities Journal" and "Securities Daily" for publishing the semi-annual report: http://www.sse.com.cn/

The company's semi-annual report is prepared at the company's Securities Division

Query index for changes during the reporting period None

5. Brief introduction of company stocks

Stock type Stock listing exchange Stock abbreviation Stock code Stock abbreviation before change

A shares Shanghai Stock Exchange Guizhou Sanli 603439 Not applicable

6. Other relevant information

□Applicable √Not applicable

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

(1) Main accounting data

Unit: Yuan Currency: RMB Main accounting data for this reporting period compared with the same period last year

(January to June) Increase/decrease in the same period (%) Operating income 701,831,013.39 920,225,877.42 -23.73Total profit 93,909,650.86 139,376,299.22 -32.62Net profit attributable to shareholders of listed companies 83,060,963.83 117,059,801.45 -29.04 Deduction of non-recurring expenses attributable to shareholders of listed companies

70,982,107.80 112,708,225.68 -37.02 Net profit of profit and loss

Net cash flow generated from operating activities 16,947,321.04 22,509,046.21 -24.71 The end of this reporting period is higher than the end of this reporting period The end of the previous year

Year-end increase or decrease (%) Net assets attributable to shareholders of listed companies 1,479,682,399.20 1,527,340,401.45 -3.12 Total assets 2,932,835,729.88 3,192,107,890.63 -8.12

(2) Main financial indicators

The main financial indicators of this reporting period and the previous year are the same as those of the previous year.

(January to June) Period-to-period increase or decrease (%)

Basic earnings per share (yuan/share) 0.20 0.29 -31.03

Diluted earnings per share (yuan/share) 0.20 0.29 -31.03Basic earnings per share after deducting non-recurring gains and losses (yuan/share) 0.18 0.28 -35.71 Weighted average return on equity (%) 5.29 7.60 A decrease of 2.31 percentage points Weighted average return on equity after deducting non-recurring gains and losses (%) 4.52 7.31 A decrease of 2.79 percentage points

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

√Applicable □Not applicable

The decline in total profits and net profits attributable to shareholders of listed companies excluding non-recurring gains and losses was mainly due to the following reasons: ① Affected by market environment factors, the company's product sales declined and operating income decreased compared with the same period last year; ② The cost of some raw materials increased compared with the same period last year.

The decrease in basic earnings per share, diluted earnings per share and basic earnings per share after deducting non-recurring gains and losses was mainly due to the decrease in net profit attributable to shareholders of listed companies compared with the same period last year.

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

□Applicable √Not applicable

9. Non-recurring profit and loss items and amounts

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Non-recurring profit and loss items Amount Note (if applicable) Profit and loss from disposal of non-current assets, including the write-off part of the provision for asset impairment 92,043.74

Government subsidies included in the current profit and loss, but closely related to the company's normal business operations,

Comply with national policies and regulations, enjoy according to determined standards, and contribute to the company’s profits and losses 7,246,239.63

Except for government subsidies that will continue to affect

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In addition to effective hedging business related to the company's normal business operations, non-financial enterprises

Gains and losses from changes in fair value of financial assets and financial liabilities held by the enterprise and disposal 386,736.06

Gains and losses arising from financial assets and financial liabilities

Other non-operating income and expenses other than the above items 6,732,527.84

Less: Income tax impact 2,265,394.15

Amount of impact on minority shareholders’ equity (after tax) 113,297.09

Total 12,078,856.03

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

□Applicable √Not applicable

10. Companies with equity incentives and employee stock ownership plans may choose to disclose net profits after deducting the impact of share-based payments.

□Applicable √Not applicable

11. Others

□Applicable √Not applicable

Section 3 Management Discussion and Analysis

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

According to the "Industry Statistical Classification and Code of Listed Companies" (JR/T0020-2024) issued by the China Securities Regulatory Commission, the company belongs to the "CE27 Pharmaceutical Manufacturing Industry".

(1) Overall situation of the industry

In the first half of 2025, the pharmaceutical industry will face pressure from slowing growth and declining profits. According to data from the National Bureau of Statistics, from January to June 2025, the operating income of the national pharmaceutical manufacturing industry above designated size fell by 1.2% year-on-year; total profits fell by 2.8% year-on-year.

The pharmaceutical industry is highly sensitive to policies. China has basically formed and continues to deepen the policy reform system of "three medical linkages" (medical care, medical insurance, and pharmaceuticals), aiming to coordinate the development of the industry: (1) The centralized procurement rules continue to be optimized, and the current focus on quality orientation and the "anti-involution" principle will help promote healthy competition in the industry. Centralized procurement price reductions may be more moderate. At the same time, the expansion of the scope of direct settlement of medical insurance funds is expected to shorten the payment collection cycle of pharmaceutical companies and improve corporate operating efficiency. (2) Medical insurance payment reform and commercial insurance expansion: The reform of DRG/DIP payment methods continues to deepen, driving hospitals to focus on cost control. In addition, the "Commercial Health Insurance Innovative Drug Catalog" will debut in 2025, and 121 innovative drug varieties that have passed the preliminary review can enjoy the "three exceptions" policy (not included in the hospital's self-payment assessment, not included in centralized procurement alternative monitoring, and related cases may not be included in payment by disease), providing an important payment supplement for innovative drugs and smoothing the channels for hospital admission.

Driven by both market demand and policy dividends: (1) The demand for an aging population continues to be released: According to data from the National Bureau of Statistics, the population over 65 years old will increase to 220 million in 2024, accounting for 15.6% of the country’s total population, an increase of 3.47 million over the previous year; according to China’s population and The Development Research Center predicts that between 2025 and 2030, the elderly population aged 60 and above will show rapid growth, with the scale increasing from 320 million to 390 million, with an average annual net increase of 13.09 million, and the aging rate increasing from 22.8% to 27.7%. It will directly promote the continued expansion of demand for chronic disease diagnosis and treatment, health management and related drugs, laying the foundation for the steady growth of the pharmaceutical market. (2) Driven by policy dividends: The reform of medical insurance payment methods has deepened, and companies have been encouraged to improve product competitiveness through refined fee control and optimized directory structure. The deepening of the "three-medicine linkage", the coordination of medical care, medical insurance, and pharmaceuticals, as well as policies such as priority review and conditional approval have accelerated the launch of new drugs and continued to inject vitality into the industry.

Pay equal attention to innovation support and compliance supervision: In terms of innovation support, policies have been intensively introduced at the national and local levels. The state has adopted policies such as the "Implementation Plan for Full-chain Support for the Development of Innovative Drugs" to optimize the review and approval process (for example, the clinical trial approval of innovative drugs has been shortened to 30 working days), and many provinces have launched several local measures to support the development of the pharmaceutical industry throughout the chain. At the same time, policies such as strengthening the linkage of medical insurance payment and commercial insurance, in-depth integration of artificial intelligence (AI) and industry, and seven departments jointly promoting the digital transformation of the pharmaceutical industry will provide full-chain support for the research and development of innovative drugs. Industry compliance supervision has become more normalized and centralized. The anti-corruption campaign in the pharmaceutical field, which has been ongoing since 2023, continues to advance with expanded scope and upgraded methods. Hospitals in many places strictly implement the registration and reception system for medical representatives ("Three Determines and Two Decisions").

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Yes"), illegal contact is strictly prohibited. Compliance management has become the basic threshold for the survival and development of enterprises, which also objectively promotes the concentration of market share in leading enterprises with strong R&D capabilities and excellent cost control, and increases industry concentration.

China's pharmaceutical manufacturing industry is undergoing a profound transformation due to the deepening of the "three medical linkage" reform, the release of the needs of the aging population and the drive of innovative technology. The policy pursues a balance between quality and innovation, with innovation as the core driving force and compliance as the basic requirement. Despite facing challenges such as homogeneous competition and narrowing profit margins, the industry as a whole is unswervingly moving towards high-quality, innovation-driven, and sustainable development.

(2) Main industry policies

In the first half of 2025, a series of pharmaceutical policies issued by the state will build a high-quality development ecosystem covering the entire chain of R&D, production, circulation, and payment through four-dimensional linkage of innovation incentives, quality upgrades, digital transformation and payment collaboration. Some of the main policies are as follows:

In January 2025, the General Office of the State Council issued the "Opinions on Comprehensively Deepening the Reform of Drug and Medical Device Supervision to Promote the High-Quality Development of the Pharmaceutical Industry." The "Opinions" proposed that by 2027, the laws and regulations for drug and medical device supervision will be more complete, the supervision system, supervision mechanisms, and supervision methods will better adapt to the needs of pharmaceutical innovation and high-quality development of the industry. The quality and efficiency of the review and approval of innovative drugs and medical devices will be significantly improved, the whole life cycle supervision will be significantly strengthened, the quality and safety level will be comprehensively improved, and a supervision system compatible with pharmaceutical innovation and industry development will be established. By 2035, the quality, safety, effectiveness, and accessibility of drugs and medical devices will be fully guaranteed, the pharmaceutical industry will have stronger innovation creativity and global competitiveness, and regulatory modernization will be basically achieved.

In January 2025, the State Administration for Market Regulation and the State Food and Drug Administration jointly organized the "2025 National Drug Supervision and Administration Work Conference". The meeting deployed seven key tasks for drug supervision throughout the year, clearly focusing on "politics, strong supervision, ensuring safety, promoting development, and benefiting people's livelihood" as the main line of work, focusing on coordinating development and safety, coordinating efficiency and fairness, coordinating supervision and services, deepening drug regulatory reform throughout the process, building a comprehensive bottom line for drug safety, and supporting high-quality development of the pharmaceutical industry throughout the chain.

In March 2025, the General Office of the State Council issued the "Opinions on Improving the Quality of Traditional Chinese Medicine and Promoting the High-Quality Development of the Traditional Chinese Medicine Industry", which proposed 21 key contents in 8 aspects. The State Council requires strengthening the coordination of the traditional Chinese medicine industry chain, accelerating the review of new traditional Chinese medicines, optimizing the rules for centralized procurement of proprietary Chinese medicines, and promoting high quality and low prices. It is clear that the quality and competitiveness of traditional Chinese medicine should be improved through technological innovation and institutional reform, and the inheritance, innovation and development of traditional Chinese medicine should be promoted.

In April 2025, seven departments including the Ministry of Industry and Information Technology, the Ministry of Commerce, and the National Health Commission jointly issued the "Implementation Plan for the Digital and Intelligent Transformation of the Pharmaceutical Industry (2025-2030)", proposing to ensure the quality and safety of drugs and safeguard people's lives and health as the fundamental goals, and to coordinate the development of the entire industry chain as the The main line is to take digital transformation as the main direction, use scenario applications as the traction, adhere to planning guidance, problem orientation, classified policies, and systematic promotion, coordinate and improve the digital development and smart supervision level of the pharmaceutical industry, and promote the high-end, intelligent, green, and integrated development of the pharmaceutical industry in a scenario-based and map-based manner. The introduction of this implementation plan will effectively promote the upgrading of the pharmaceutical industry towards higher quality, higher safety and higher efficiency.

In June 2025, the National Medical Security Administration issued the "Notice on Further Improving the Pharmaceutical Price and Recruitment Credit Evaluation System." This revision of the system is to better eliminate unfair trading practices such as commercial bribery and gold sales, and urge pharmaceutical companies to participate in market operations with integrity and optimize resource allocation, which plays a very important role in purifying the industry ecology. On the other hand, it is to more strictly constrain companies that operate dishonestly, strictly deal with them, increase the cost of dishonesty for pharmaceutical companies, guide pharmaceutical companies to improve quality, improve efficacy, sell in compliance with regulations, enter the market more through centralized procurement, national negotiations, etc., and reduce reliance on the path of "high pricing, high rebates, and light quality".

In July 2025, the National Medical Insurance Administration announced the "2025 National Basic Medical Insurance, Maternity Insurance and Work Injury Insurance Drug Catalog and Commercial Health Insurance Innovative Drug Catalog Adjustment Work Plan" and other related documents. The 2025 medical insurance catalog adjustment will focus on areas where the basic catalog protection is insufficient or has gaps in protection, such as encouraging the development of children's drugs, rare disease drugs, etc. without limiting the time to market, to make up for the shortcomings in clinical drug demand.

In July 2025, the National Medical Security Administration and the National Health Commission jointly issued the "Several Measures to Support the High-Quality Development of Innovative Drugs", proposing 16 measures in five aspects, including strengthening support for the research and development of innovative drugs, supporting the entry of innovative drugs into the medical insurance catalog and the commercial health insurance innovative drug catalog, encouraging the clinical application of innovative drugs, improving the multiple payment capabilities of innovative drugs, and strengthening organizational guarantees. These measures will provide active support for the high-quality development of innovative drugs in the future.

A series of recently released policies break industrial bottlenecks through "system innovation + technological revolution + payment synergy", which not only accelerates high-quality supply, but also reduces the burden on people's livelihood, promotes the transformation of the pharmaceutical industry into an innovation-driven one, and lays the foundation for building a powerful pharmaceutical country in 2030.

(3) The company’s main business and products

The company's main business is the research and development, production and sales of pharmaceuticals. The main products are Kaihoujian spray (children's type), Kaihoujian spray, Qijiaoshengbai capsules, gynecological reconstruction pills, anti-cough and phlegm pills, astragalus granules, powerful Gastrodia ulmoides capsules, etc.

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Kaithroat Spray (children's type) and Kaithroat Spray are national patented products and exclusive varieties. They have been included in the national medical insurance catalog and the local supplementary catalog of national essential drugs in some provinces. They are clinically used for upper respiratory tract infections, acute and chronic pharyngitis, tonsillitis, sore throat, stomatitis, oral ulcers, gum swelling and pain, etc.

Qijiao Shengbai Capsule is a national patent product and an exclusive variety. It has been included in the national medical insurance catalog and the local supplementary catalog of national essential drugs in some provinces. It is clinically used for dizziness, shortness of breath, fatigue, spontaneous sweating and night sweats caused by Qi and blood deficiency syndrome, as well as leukopenia with the above syndromes.

Fuke Zao Zao Pill is a national patented product and an exclusive variety. It has been included in the national medical insurance catalog and the local supplementary catalog of national essential drugs in some provinces. It is clinically used to nourish blood and regulate menstruation, tonify the liver and kidneys, warm the palace and relieve pain. It is used for symptoms such as irregular menstruation, prolonged menstruation, bleeding, dysmenorrhea, and vaginal discharge.

Zhicough and Huatan Pills are an exclusive product in the country and have been included in the National Medical Insurance Catalog. They are expectorants that can clear the lungs and resolve phlegm, relieve coughs and relieve asthma. It is used for heat-resistant lungs, chronic cough, hemoptysis, phlegm and shortness of breath, wheezing and insomnia. It is easy to take and can relieve cough quickly.

Astragalus granules are on the national medical insurance list. They are mainly used to replenish qi and strengthen the surface, and are used for symptoms such as shortness of breath, heart palpitations, collapse, spontaneous sweating, physical weakness and edema.

Qiangli Tianma Duzhong Capsule is a product on the national medical insurance list. It is clinically used for the symptoms of meridian pain, limb numbness, walking difficulty, waist and leg pain, headache and dizziness caused by stroke.

(4) The company’s main business model

The company's main business is the research and development, production and sales of pharmaceuticals. Its procurement, production and sales model is as follows:

1. Procurement model

The main raw materials required by the company are medicinal materials, auxiliary materials, packaging materials, etc., such as octopus golden dragon, mountain root, cicada slough, gastrodia elata, eucommia ulmoides, angelica root, astragalus, sophora flavescens, Gangmei, sucrose, etc. For Chinese herbal medicines, the company has established long-term and stable cooperative relationships with suppliers, signing framework contracts every year, and making specific purchases based on actual demand and market prices; for excipients, packaging materials, equipment, etc., the company mostly purchases through bidding or inquiry, taking into account frequent replacement of excipients, Suppliers of packaging materials, equipment, etc. need to match and debug the production process, which consumes a lot of time and labor costs. Therefore, within the scope of qualified suppliers of auxiliary materials, packaging materials, and equipment selected by the company, adjustments will be made from time to time based on the quality, sales price, and after-sales service quality of the products they supply. The company's important purchases are all executed by the purchasing department. The purchasing process is as follows:

(1) Supplier selection

The company follows the premise of "guaranteing quality, quantity and supply", implements the principle of comparing quality and price, and selects suppliers in accordance with the relevant requirements of GMP. The purchasing department is responsible for finding and contacting suppliers of relevant materials, conducting preliminary screening and requesting qualification materials for relevant production and operation licenses, and submitting them to the quality assurance department for review; after the quality assurance department conducts preliminary review and on-site audit of supplier qualifications, it is responsible for organizing the purchasing department, materials department, production department and other departments to evaluate the suppliers and determine whether they are included in the list of qualified suppliers. All raw material suppliers must become qualified suppliers of the company before they can conduct procurement transactions. In order to ensure stable supply, in principle, more than two qualified suppliers are selected for each raw material. The Quality Assurance Department inspects each batch of purchased goods and is responsible for continuous tracking and evaluation of cooperative suppliers as the basis for supplier selection.

(2) Formulate material procurement plan

The company's production model is based on sales. In order to improve the efficiency of the use of raw materials, the company estimates the annual procurement plan at the end of each year based on the current year's production and sales, as well as the market estimate and sales plan for the coming year. Before the end of each month, the company's sales department sends the sales plan for the next month to the vice president of production and the manager of the production department. The manager of the production department prepares a production plan based on the sales plan and submits it to the vice president of production for review and approval. The material department prepares a material plan based on the production plan and raw material inventory and submits it to the purchasing department. The manager of the purchasing department prepares a purchasing plan at the beginning of next month based on the final confirmed material requirements.

(3) Determination of purchase price

The company adopts different price confirmation methods according to different categories of raw materials. For the procurement of raw medicinal materials, after the company prepares a procurement plan, the procurement department will inquire from suppliers who have signed an annual procurement framework contract. After comprehensively considering factors such as product quality, price, delivery time, and payment terms, the two parties will determine the procurement price and quantity through commercial negotiations. For excipients and packaging materials, the company's purchasing department negotiates and agrees on the purchase product name, specifications and unit price in the annual purchasing contract signed with the supplier at the end of the year. During the actual procurement process, if market prices fluctuate significantly, the company will renegotiate prices and other content with suppliers.

(4) Implement procurement and payment

Based on the material procurement plan and commercial negotiations with suppliers, the company issues purchase orders to target suppliers. All payments to the company's suppliers are made by the Finance Department in accordance with management procedures. Raw materials, auxiliary materials and packaging materials are generally paid 1-3 months after they pass the inspection and are put into storage.

(5) Material acceptance

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After the materials arrive, the Purchasing Department, Materials Department, and Quality Assurance Department jointly inspect the goods, check the product name, quantity, and specifications. After the quality control department passes the inspection in accordance with the pharmacopoeia and relevant standards, and completes quality release in accordance with GMP requirements, the warehousing procedures can be completed.

2. Production mode

Since the sprays and granules in the company's products need to share the pre-treatment and extraction workshops, in order to improve production efficiency and coordinate with product sales, and optimize the company's input and output efficiency, the company adopts the production model of "sales determine production". The specific production process is as follows: (1) Formulate a production plan

The company's sales department dynamically adjusts the sales plan based on market demand and submits a request plan to the production department. After receiving the sales request plan, the production department combines the company's inventory of finished products and raw and auxiliary materials, equipment and personnel, raw material supply and other factors to reasonably formulate annual, quarterly and monthly production plans to maximize the effectiveness and economy of the production process.

(2) Implement production plan

In accordance with the requirements of the new version of GMP and the process characteristics of various products, the company has formulated technical standard documents (STP), management process documents (SMP) and operating procedure documents (SOP) to standardize and standardize the management, operation and execution of the production process. The material picker in the production workshop issues a "Material Picking List" according to the requirements of the batch production instruction or batch packaging instruction; after the warehouse administrator receives the batch production instruction or batch packaging instruction and the "Material Picking List", he prepares the required materials and informs the production workshop picker. After both parties verify that they are correct, they go through the material picking procedures and Sign; after the quality assurance department has inspected the production site hygiene, production equipment status, and material conditions, the production workshop technicians and team leaders can organize relevant production operations according to the production plan and material preparation. During this period, the quality assurance department will supervise and inspect the entire process on site to ensure the quality of the product.

(3) Product quality control

The company has passed the new version of GMP certification and strictly complies with the requirements of pharmaceutical production quality management specifications. It has established a comprehensive quality control system, equipped with professional quality management and inspection personnel, and strictly implemented it during the production process. The company has formulated and implemented the "Product Process Regulations", "Production Quality Risk Assessment Regulations", "Raw Materials Quality Standards", "Intermediate Product Quality Standards", "Finished Product Quality Standards", "Packaging Material Quality Standards", etc., standardized quality control measures and standards, and adopted the following quality control measures during the production process:

①Self-check

The team leaders and operators of each production position shall, in accordance with the company's production process and quality standard requirements, check whether the critical quality attributes (CQA) and critical process parameters (CPP) of the process and position are within the established range of the process regulations at the established frequency to ensure that the production process and product quality are always under control.

②Mutual inspection

Team members at each position will strictly check whether the contents of the labels in the containers are correct for the intermediate products handed over from the previous process, and conduct inspection and acceptance according to the company's quality indicators and internal control requirements. If there are any abnormalities, they should promptly report to the team leader, start the deviation investigation process, carry out corresponding cause investigations, and formulate reasonable corrective and preventive actions (CAPA) to ensure that unqualified and quality-risk products do not flow into the next process.

③Special inspection

During the production process, the Quality Assurance Department supervises and inspects the operating steps of key processes at any time, provides supervision and feedback on the implementation of critical quality attributes (CQA) and critical process parameters (CPP), and sends samples of control process samples for inspection. The Quality Control Department inspects intermediate products in accordance with the company's quality standards and relevant GMP documents. After passing the inspection, the quality assurance department should release the intermediate products based on the inspection report, and then the products can flow into the next process. The Quality Assurance Department is also responsible for supervising each process and organizing production activities in accordance with GMP documents (such as pre-production inspection, sanitation management, cleaning and status marking, etc.).

(4) Product warehousing and delivery

The products produced by the production department every day must be put into storage and uniformly entered into the finished product warehouse for management by the material department. After the warehouse administrator of the material department first checks that the product name, batch number, specification, and quantity are correct, the products can be shipped to downstream customers only after the batch of products has completed the corresponding factory inspection, completed the record review, material balance survey, and uploaded the traceability code, and has been signed by the quality authorized person for marketing release.

3. Sales model

(1) Sales model of pharmaceutical manufacturing industry

The sales model of the pharmaceutical manufacturing industry mainly includes the distribution model, professional academic promotion, self-built sales team, etc. The current prescription channel sales model is mainly based on the professional academic promotion model, and the OTC channel sales model is mainly based on the distribution model and self-built sales team. (2) Company sales model

The company's prescription channel adopts a sales model based on professional academic promotion. It mainly uses professional academic promotion service providers and the company's sales team to carry out academic promotion of the company's products in cooperative promotion areas and realize product sales intentions to hospitals and other terminals. The company through professional promotion model of product marketing, academic exchanges, academic promotion, market research, customer service, commercial maintenance and other professional

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Industrialized marketing activities and established a strong marketing system. The company aims to continue to strengthen the construction of its marketing system. While deeply exploring the clinical market, it also strengthens the development and construction of second and third terminal channels to enhance the company's overall industry status and market share.

The company's OTC channel adopts the sales model of self-built sales team and directly participates in the sales management of the terminal market. By building its own sales team, the company has achieved independent channel layout on the one hand, directly cooperating with chain pharmacies, independent pharmacies, supermarkets, e-commerce platforms, etc., focusing on core cities and high-potential markets, and improving the distribution rate and terminal display quality through refined operations; on the other hand, it has improved the execution of sales strategies, and the self-operated team can quickly implement various sales policies formulated by the company and improve overall profitability.

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

□Applicable √Not applicable

2. Discussion and analysis of operating conditions

During the reporting period, affected by factors such as the weakening of the epidemic intensity of respiratory tract infections and increased investment in marketing channel construction, the company's overall operations faced phased challenges, and the performance in the first half of 2025 showed certain downward pressure. According to the "Influenza Surveillance Weekly Report" regularly released by the Chinese Center for Disease Control and Prevention, from January to June 2025, the proportion of influenza-like cases reported in sentinel hospitals in northern and southern provinces in outpatient and emergency departments generally decreased compared with the same period last year; the overall market demand for respiratory infection-related drugs has shrunk, resulting in a year-on-year decrease in sales of the company's core product Throat Sword Spray (including children's type). At the same time, the company has actively promoted the construction of a national OTC channel network since 2024. The scale of sales and management personnel has rapidly expanded. Related operating expenses have increased significantly in the short term, but the channel scale effect has not yet been fully released. Under the dual impact of weakening demand and rising costs, the company's operating income and profits declined during the reporting period compared with the same period last year.

In the first half of 2025, the company achieved operating income of 702 million yuan, a year-on-year decrease of 23.73%. Net profit attributable to owners of the parent company was 83 million yuan, a year-on-year decrease of 29.04%. Non-net profit attributable to owners of the parent company was 71 million yuan, a year-on-year decrease of 37.02%. Owners' equity attributable to shareholders of listed companies was 1.480 billion yuan, a decrease of 3.12% from the beginning of the period.

Under the leadership of the Board of Directors and the governance of the management, the company has closely focused on the company's established development strategy and business goals, and has focused on the following work:

(1) Channel construction has achieved initial results, but cost control faces challenges

The company continues to promote the strategic restructuring of the marketing system, strengthens the refined operation of OTC channels, and coordinates the development of online and offline channels. In 2024, the OTC direct sales network layout covering the whole country has been completed, 13 new provincial branches have been established, a professional OTC marketing team of more than 1,700 people has been established, and the strategic goal of transforming from "prescription channel dominance" to "OTC channel dominance, prescription channel collaboration" has been established. Established an e-commerce center, relying on the market reputation accumulated by the company's products, established in-depth cooperation with mainstream pharmaceutical e-commerce platforms such as JD Health and Alibaba Health, and simultaneously promoted the expansion of e-commerce channels.

Channel expansion and transformation are a game of short-term pain and long-term efficiency gains. The expansion of channels and teams is accompanied by a surge in operating costs. Regional market development requires large-scale hiring of additional sales personnel, which drives up fixed salaries, social security benefits and performance expenses. In the short term, the increase in new channels does not meet expectations, and there is a lag in superimposed payment collections. The company's cash flow is under pressure. The company will adopt measures such as dynamic commission mechanism, channel efficiency elimination mechanism and digital cost-efficiency monitoring to strengthen cost control, implement refined budgeting and intelligent management and control, avoid falling into the dilemma of "diseconomies of scale", and strive to transform short-term pressure into sustainable growth momentum.

(2) Focus on industrial integration and lay a solid foundation for high-quality development

1. The company deepens the strategic closed-loop of "controlling mergers and acquisitions - professional integration - empowering development", and has completed two core integrations since last year: ① further enhance the control of Kampo Pharmaceutical (98.80% shareholding). Since its participation in 2020, Kampo Pharmaceutical has turned losses into profits, verifying the effectiveness of industrial integration; ② with Guizhou The Provincial Agricultural and Rural Modernization Development Equity Investment Fund Partnership (Limited Partnership) cooperates to control Sankang Chinese Herbal Medicine (55.56% shareholding), and strives to build a raw material control system of "GAP planting-digital traceability-shared warehousing". Through the collaboration of the trade and planting sectors, it helps the long-term goal of ensuring the quality and price control of Chinese herbal medicines. In August 2025, the standardized astragalus (GAP) planting base jointly built by Hanfang Pharmaceutical and Longxi County Chengkang Traditional Chinese Medicine Farmers Cooperative in Gansu was completed and successfully passed the joint inspection by the Guizhou Provincial Food and Drug Administration and the Gansu Provincial Food and Drug Administration. Kampo Pharmaceutical became the first company in Guizhou Province to pass this inspection.

2. Extension of the field through equity investment: ① The wholly-owned subsidiary Sanli Health invested in Yaozunbao Technology (holding 25% of the shares) to build a digital sales platform for the pharmaceutical industry, empowering terminals to distribute goods intelligently, improving marketing response efficiency, and taking an important step in the field of digitally empowered sales. ② The holding subsidiary Dechangxiang invested in the establishment of Dechangxiang Traditional Chinese Medicine Pieces Company (holding 32.73% of the shares), and collaborated with the Sankang Chinese herbal medicine planting sector and trading sector to continue to penetrate into the upstream field of proprietary Chinese medicines and stabilize the supply of raw materials. In the first half of 2025, the company will continue to promote the business integration and collaborative management of the above-mentioned joint-stock companies to further consolidate the foundation of the industrial chain layout.

3. Integrate industry and finance to promote innovation incubation. Jointly held subsidiary Yunnan Invincible and Guiyang Industrial Development Fund and other professional investment institutions established the Qianli Biomedical Fund at the end of last year, with a total fund size of 500 million yuan, focusing on equity investment projects in the biotechnology and health management tracks. The fund adopts the dual-driven model of "industrial insight + capital empowerment" and has so far reserved more than ten innovative drug targets, including

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Several products have entered Phase III clinical trials. In the first half of 2025, investment delivery of individual projects has been completed; some projects are in the process of due diligence. This move will gradually build a three-dimensional investment ecology of the company's investment in the field of innovative drugs, future M&A target reserves, and industrial chain extension, providing support for cultivating the company's second growth curve.

(3) Continue to pay stable dividends and attach importance to shareholder returns

The company always attaches great importance to shareholder returns, continues to improve its governance structure, and enhances investor returns through cash dividends, share repurchases and other methods. Since its listing in 2020, the company has accumulated a total cash dividend and repurchase of nearly 500 million yuan, and has taken multiple measures to improve the level of shareholder returns. Last year, it released a three-year (2024-2026) shareholder dividend return plan. The profit distribution takes into account reasonable returns for investors and the company's sustainable operations. The plan is that "the profits distributed in the form of cash every year shall not be less than 50% of the profits available for distribution in that year." In June 2025, the company implemented the equity distribution for 2024, distributing a cash dividend of 0.34 yuan per share (tax included), with a total cash dividend of nearly 138 million yuan (tax included), and the cash dividend ratio for 2024 was 50.23%. The three-year high dividend plan will bring mid- to long-term stable investment returns to investors and enhance their sense of gain.

The company has always adhered to the corporate mission of "creating a healthy life for mankind". Under the leadership of the board of directors, the management actively shouldered the responsibilities of a pharmaceutical company and actively met the challenges of the market environment. At the same time, based on the medium- and long-term development strategy, we will continue to focus on the main business, focus on marketing, strengthen research and development, give full play to the advantages of diversified products, accelerate transformation, and continuously enhance core competitiveness; continue to promote marketing model optimization, channel development and brand building, open up new growth points, and empower the company for high-quality and sustainable development. We are moving towards the vision of “becoming a pharmaceutical company trusted by the Chinese people” and fulfilling our commitment to steady development in the national pharmaceutical and health industry with practical actions.

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

□Applicable √Not applicable

3. Analysis of core competitiveness during the reporting period

√Applicable □Not applicable

(1) Brand advantages

After long-term development and accumulation, the company has many well-known brands under its name, among which Dechangxiang and Wudi Pharmaceutical are both century-old brands, embodying more than a hundred years of traditional Chinese medicine inheritance history. Dechangxiang has been selected into the third batch of Chinese time-honored brands list by the Ministry of Commerce. It has developed for more than 120 years. It is the earliest pharmaceutical factory in Guizhou and the earliest existing industrial manufacturing enterprise in Guizhou. The production technology of Dragon and Phoenix Zhibao Dan has been selected into the fifth batch of provincial intangible cultural heritage in Guizhou Province. Invincible Pharmaceuticals, which originated in the late Ming Dynasty and has a history of more than 300 years, is a "Chinese time-honored brand" enterprise issued by the Ministry of Commerce. For hundreds of years, the descendants of the Wang family have been committed to inheriting ancient pharmaceutical technology, promoting traditional "intangible cultural heritage" culture, and creating the "Four Elites" series of orthopedic drugs. In December 2013, the company was awarded the "Provincial Intangible Cultural Heritage" commendation.

At the same time, Guizhou Sanli has won many honors such as National High-tech Enterprise and Top 100 Private Enterprises in Guizhou. Many of its products have been rated as Guizhou Province Famous Brand Products, its trademarks have been rated as Guizhou Province Famous Trademarks, and it has been selected into the Guizhou Province Intellectual Property Advantage Cultivation Enterprise Database. The company is currently applying for intellectual property standards implementation to establish a complete intellectual property strategic management system as the core force for the company's strategic development and competition.

In order to continue to maintain its brand advantage, the company is committed to continuously improving product quality. It has established long-term strategic cooperative relationships with a number of scientific research institutes and universities. It conducts in-depth research on the research and development of new varieties, research on improving existing product quality standards, secondary development and post-market safety re-evaluation, pharmacology and toxicology research, etc., to further optimize and improve the quality, safety and efficacy stability of products.

(2) Product advantages

1. Product dosage form advantages

Children are a group at high risk of throat diseases. The onset of such diseases is relatively remote. Oral drugs such as tablets, capsules, and granules commonly used in clinical practice need to be absorbed by the gastrointestinal tract and liver before being distributed throughout the body during use. They cannot directly act on the diseased site, have slow onset, poor drug delivery targeting, low bioavailability, and may cause damage to the liver. At the same time, oral drugs often require auxiliary conditions when taking them, such as brewing vessels, warm boiled water, etc., and there are time intervals required for taking them. Open Throat Sword Spray (Children's Type) is a spray-type drug that is easy to carry and simple to use. It requires no auxiliary conditions and can be administered at any time. The drug adopts a 360-degree rotating nozzle design, which can rotate 360 degrees up and down and 360 degrees horizontally, and the spray can be extended. The head can directly spray the drug into the diseased parts such as the mouth and throat that are difficult to reach directly with conventional dosage forms. The spray administration can directly act on the throat, tonsils and other lesions, reducing the burden on the liver of drug metabolism in pediatric patients. It is directly absorbed, has fast onset of action, high efficacy and short course of treatment. The effectiveness and convenience of the spray form in treating children's throat diseases have been fully recognized by pediatric patients, parents and doctors, and it has become the leading dosage form in the market. open

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Throat Sword Spray (children's type) has been leading the Chinese patent medicine market for children's throat diseases for many years, and has been at the forefront of the hospital terminal market for Chinese patent medicine sprays for throat diseases for many years.

2. Advantages of diversified product lines

Since its listing, the company has actively deployed in the Chinese patent medicine pharmaceutical industry and is committed to enriching its product line. In 2023, it successively invested and controlled Invincible Pharmaceuticals (indirectly controlled through the acquisition of Haost) and Kampo Pharmaceuticals. Together with Dechangxiang, which invested and controlled in 2022, it will release the efficiency of investment and mergers and acquisitions, improve the layout of the traditional Chinese medicine manufacturing industry chain, and achieve product line expansion. In the future, Sanli's flagship products Kaihoujian Spray (Children's Type) and Kaihoujian Spray will be used as the foundation, Kampo Pharmaceutical's key products Qijiao Shengbai Capsules, Astragalus Granules, Children's Huichun Granules, and Gynecological Reconstruction Capsules will be expanded, and Dechangxiang's specialty products Gynecological Reconstruction Pills, Zhicough and Phlegm Pills, etc. will be extended to create a multi-department product matrix, covering respiratory system, tonics, gynecology, orthopedics and other departmental products. At present, Sanli and its subsidiaries have a total of 21 GMP production lines in 14 dosage forms including sprays, granules, capsules, pills, tablets, wines, and ointments, 165 Chinese medicine product approval numbers, and 35 exclusive varieties.

(3) Advantages of the entire industry chain

The company has always been committed to the development vision of "becoming a pharmaceutical company trusted by the Chinese people". It conducts in-depth research on the main raw medicinal materials of its products, continuously improves the standards of medicinal materials, and controls the quality of medicinal materials, including conducting large-scale resource storage and distribution surveys on the origins of the medicinal materials of Octopus golden dragon across the country. It also participates in the revision of local medicinal material standards in Guizhou Province and independently presides over the revision of the quality standards of the local authentic medicinal substance Octopus golden dragon. On this basis, the company will begin to develop upstream in 2024. The industrial chain will expand from the production and sales of Chinese patent medicines to planting, trade and the production and sales of Chinese medicinal materials, achieving a full industrial chain layout.

(4) Production technology advantages

Since its establishment, the company has always adhered to the quality policy of quality first, abiding by credibility and dedicated service, taking the new version of GMP as the minimum control standard, striving for excellence and continuous improvement. During the reporting period, the company formed the following core advantages in the field of production technology based on its continuously deepened process research capabilities and process innovation system:

Pill production efficiency has been comprehensively improved: Dechangxiang has completed the intelligent transformation of the pill production line. Through core process optimization and equipment upgrading, the pill molding efficiency and appearance quality have been significantly improved, and production capacity has achieved leapfrog growth. Breakthroughs in the industrialization of new preparations: Kampo Pharmaceutical has successfully broken through in the preparation technology of effervescent tablets, studied the overall process parameters of effervescent tablets, and conquered the key technologies of ingredient compatibility and stability. It has passed the stability inspection, laying the foundation for the establishment of an effervescent tablet production line and the launch of new products; intelligent manufacturing resource integration: the strategic integration of the granule production capacity of Sanli and its subsidiaries has been achieved, and the production transfer of all categories of granules has been completed relying on the Sanli intelligent chemical factory. The stability and controllability of granule product production have been greatly improved through the digital production management system, and the synergy of large-scale production has been strengthened. Whole-chain quality risk control upgrade: Linked three major production bases to improve drug life cycle management, took the lead in completing the revision of key product instructions in response to national regulations, systematically built adverse reaction monitoring and risk warning mechanisms, and significantly improved quality and safety management levels.

This technological upgrade marks the company's formation of an innovation matrix of "traditional dosage form optimization + new dosage form development + intelligent production collaboration" in the field of intelligent manufacturing of traditional Chinese medicine, providing core support for the construction of a modernized traditional Chinese medicine production system.

(5) Team advantages

The company has an excellent management team with theoretical expertise, rich industry experience, management innovation and shared values. The senior managers have rich management experience in the pharmaceutical industry and can deeply understand and comprehensively control pharmaceutical industry policies and development laws. The average age is less than 43 years old, and 50% of them have postgraduate degrees, ensuring the company's steady and sustainable development. In addition, there is a group of young and energetic middle managers who are creative and have complete knowledge of management theory. Their average age is about 39 years old. They have strong learning ability, are decisive and responsible, and have high execution efficiency. The entire management team is a combination of middle-aged and young people, each making up for their shortcomings. They are rigorous and steady without sacrificing innovation. The management team is sound and the talent pool is continuously supplied, laying a good foundation for the company's future sustainable development.

In terms of management model, the company's internal control system is sound, ensuring the company's decision-making efficiency and risk control capabilities. The company's incentive and assessment system is perfect, performance, rating, and salary are linked, and talents grow rapidly, ensuring the company's sustainable development. These management models ensure the rapid and sustained growth of the management team and safeguard the talent pool needed for the company's development.

4. Main operating conditions during the reporting period

(1) Main business analysis

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

Unit: Yuan Currency: RMB account Number for the current period Number for the same period last year Change ratio (%) Operating income 701,831,013.39 920,225,877.42 -23.73 Operating costs 227,979,815.51 290,949,083.35 -21.64

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Selling expenses 285,717,035.87 382,550,061.14 -25.31 Administrative expenses 75,774,631.59 73,646,586.32 2.89 Financial expenses 4,736,226.42 7,940,315.49 -40.35 Research and development expenses 16,860,762.88 17,418,528.59 -3.20 Net cash flow from operating activities 16,947,321.04 22,509,046.21 -24.71 Net cash flow from investing activities -202,801,305.62 -17,881,110.45 -1,034.17 Net cash flow generated from financing activities -5,443,852.74 -39,774,368.76 86.31 Explanation of reasons for changes in operating income: due to the decrease in the company’s product sales in the current period

Explanation of reasons for changes in operating costs: due to the decrease in the company’s operating income in the current period

Explanation of reasons for changes in sales expenses: due to the reduction in the company’s marketing activities in this period

Explanation of reasons for changes in financial expenses: due to the company receiving fiscal interest discounts in the current period

Explanation of reasons for changes in net cash flow generated from operating activities: due to the decrease in the company’s operating income in the current period and the increase in the cost of purchasing Chinese herbal medicines

Explanation of reasons for changes in net cash flow generated from investing activities: due to the company's payment of equity transfer payments to minority shareholders of subsidiaries and investment payments to associates in the current period

Explanation of reasons for changes in net cash flow generated from financing activities: due to the net increase in the company’s loans in the current period

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

□Applicable √Not applicable

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

□Applicable √Not applicable

(3) Analysis of assets and liabilities

√Applicable □Not applicable

1. Assets and liabilities status

Unit: yuan last year end of current period

End of current period

The last amount accounts for the higher amount

Percentage of total assets Situation Project name Closing balance of the current period Closing balance of the previous year Total assets Change at the end of the year

Proportion of production Explanation of proportion Dynamic proportion

(%)

(%) (%)

Monetary funds 283,547,177.02 9.67 474,845,014.34 14.88 -40.29 Note 1 Accounts receivable 647,997,907.50 22.09 728,669,788.22 22.83 -11.07 Not applicable to inventory 364,371,508.34 12.42 320,722,064.52 10.05 13.61 Not applicable to long-term equity investment 63,556,353.25 2.17 12,547,227.44 0.39 406.54 Note 2 Fixed assets 545,647,306.46 18.60 563,914,039.44 17.67 -3.24 Not applicable to construction in progress 5,045.01 0.00 Not applicable to right-of-use assets 11,173,800.88 0.38 9,631,487.54 0.30 16.01 Not applicable to short-term borrowings 542,926,654.78 18.51 351,521,547.18 11.01 54.45 Note 3 Contract liabilities 7,301,847.73 0.25 7,790,038.48 0.24 -6.27 Not applicable to long-term borrowings 179,400,000.00 6.12 209,300,000.00 6.56 -14.29 Not applicable Lease liabilities 164,116.61 0.01 211,539.96 0.01 -22.42 Not applicable Notes receivable 57,651,599.69 1.97 82,062,569.10 2.57 -29.75 Note 4 Receivables financing 64,091,536.64 2.19 121,388,452.65 3.80 -47.20 Note 5 Prepayments 46,077,575.75 1.57 33,687,505.24 1.06 36.78 Note 6 Other receivables 5,002,984.13 0.17 7,099,346.97 0.22 -29.53 Note 7 Productive biological assets 29,999,388.76 1.02 11,603,881.45 0.36 158.53 Note 8 Accounts payable 235,084,278.81 8.02 360,623,598.69 11.30 -34.81 Note 9

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Employee benefits payable 3,609,222.96 0.12 22,651,658.65 0.71 -84.07 Note 10 Taxes payable 17,598,139.72 0.60 72,637,959.40 2.28 -75.77 Note 11 Other payables 177,315,040.93 6.05 351,280,861.50 11.00 -49.52 Note 12 Other instructions

Note 1: The decrease in monetary funds was mainly due to the decrease in sales revenue during the reporting period and the payment for equity acquisition of subsidiaries in the previous period; Note 2: The increase in long-term equity investment was mainly due to the new investment in associates during the reporting period;

Note 3: The increase in short-term borrowings was mainly due to the increase in bill discounts and credit borrowings;

Note 4: The decrease in bills receivable was mainly due to the decrease in sales revenue during the reporting period, the decrease in bill settlement and the collection of bills upon maturity; Note 5: The decrease in receivables financing was mainly due to the decrease in sales revenue during the reporting period, the decrease in bill settlement and the payment for goods endorsed by bills; Note 6: The increase in prepayments was mainly due to the increase in prepaid medicinal material planting costs;

Note 7: The decrease in other receivables is mainly due to the collection and payment collected in the current period;

Note 8: The increase in productive biological assets was mainly due to purchases in the current period;

Note 9: The decrease in accounts payable was mainly due to the decrease in accounts payable for purchasing raw materials;

Note 10: The decrease in employee benefits payable is mainly due to the employee benefits paid for the current period;

Note 11: The decrease in taxes payable is mainly due to the decrease in sales revenue and the payment of personal income tax that needs to be withheld and paid due to the previous acquisition of minority shareholders' equity in subsidiaries in the current period, resulting in a decrease in taxes payable;

Note 12: The decrease in other payables was mainly due to the payment for equity acquisition of subsidiaries in the previous period.

1. Overseas assets

□Applicable √Not applicable

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

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Book value at the end of the period Monetary funds due to restrictions 2,000.00 ETC margin notes receivable 37,608,487.66 Pledged loan fixed assets 142,515,536.37 Pledged loan intangible assets 18,062,593.01 Pledged loan

Total 198,188,617.04

3. Other instructions

□Applicable √Not applicable

(4) Investment status analysis

1. Overall analysis of external equity investment

□Applicable √Not applicable

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(1).Significant equity investment

□Applicable √Not applicable

(2).Significant non-equity investment

□Applicable √Not applicable

(3).Financial assets measured at fair value

√Applicable □Not applicable

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

Impairment amount due to changes in fair value Others 32,945,081.52 110,145.21 50,990,000.00 54,545,081.52 29,500,145.21

Total 32,945,081.52 110,145.21 50,990,000.00 54,545,081.52 29,500,145.21

Securities investment situation

□Applicable √Not applicable

Explanation of securities investment situation

□Applicable √Not applicable

Private equity fund investment situation

□Applicable √Not applicable

Derivatives investment situation

□Applicable √Not applicable

(5) Major assets and equity sales

□Applicable √Not applicable

(1) Analysis of major holding and participating companies

√Applicable □Not applicable

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

√Applicable □Not applicable

Unit: Yuan Currency: RMB Company name Company type Main business Registered capital Total assets Net assets Operating income Operating profit Net profit Guizhou Sanli Health Management

Subsidiaries Health management services 50,000,000.00 191,803,179.18 182,818,974.43 32,683,660.24 -1,510,557.77 -1,222,848.24 Management Co., Ltd.

Guizhou Hanfang Pharmaceutical has R&D and production of drugs

Subsidiaries 221,548,700.00 608,779,556.89 418,669,635.22 136,720,030.35 25,348,871.25 23,092,137.77 Co., Ltd. and sales

Guizhou Dechangxiang Pharmaceutical R&D and production of drugs

Subsidiaries 50,000,000.00 241,650,843.51 137,978,810.10 120,413,662.96 32,878,143.44 32,765,258.68 Co., Ltd. and sales

Guizhou Haost Biotech Medical Supplies and Equipment

Subsidiaries 135,000,000.00 154,349,449.80 141,761,785.61 33,406,595.87 4,235,384.64 4,066,038.68 Technology Co., Ltd. Sales; Pharmaceutical Consulting

Acquisition and disposal of subsidiaries during the reporting period

□Applicable √Not applicable

Other instructions

□Applicable √Not applicable

(6) Structured entities controlled by the company

□Applicable √Not applicable

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5. Other disclosure matters

(1) Possible risks

√Applicable □Not applicable

1. Industry policy risks

The pharmaceutical industry is a policy-driven industry, and its development is deeply affected by the national medical and health system reform measures. Our country continues to deepen the reform of the pharmaceutical management system, medical security mechanism and drug supervision system. While these policies promote the industry to develop in an orderly and healthy direction, they may also change the industry's operating model and competition pattern, bringing uncertainty to corporate operations.

In recent years, the dynamic adjustment mechanism of the national medical insurance drug catalog has been continuously improved, management authority has continued to be centralized to the central government, and the degree of standardization has been continuously improved. According to the "Interim Measures for the Administration of Drugs in Basic Medical Insurance" and related policy requirements, all localities must strictly implement the national catalog. They are not allowed to formulate their own catalogs or use flexible methods to add drugs in the catalog, nor are they allowed to adjust the limited payment scope of drugs in the catalog. Local governments can only digest original and supplemented varieties through the provincial medical insurance catalog. If the company's products are removed from the medical insurance catalog and the proportion of patients paying out-of-pocket increases, it will significantly reduce drug accessibility and market competitiveness, leading to shrinking demand; even if it is successfully included in medical insurance, adjustments to payment standards may bring pressure to reduce prices and erode profit margins. However, in recent years, the national medical insurance policy has given priority to children's medicines. At the same time, the company strictly adheres to GMP standards for production and sales. The main products have significant clinical efficacy and high safety, and the risk of being removed from the medical insurance catalog is small. At the same time, children's drugs are relatively low in dependence on medical insurance reimbursement. Even if they are removed from the medical insurance catalog, there will be basically no impact on the company's sales.

2. Risk of raw material price fluctuations

The market price fluctuations of Chinese medicinal materials are affected by multiple factors such as natural conditions, supply and demand relationships, production costs, policy regulation, market speculation, and seasonal and regional characteristics. In the first half of 2025, the Chinese medicinal materials market showed an "overall downward trend and partial rebound" pattern. As of June 30, 2025, the Comprehensive Traditional Chinese Medicine 200 Index closed at 2905.26 points. Compared with 3566.46 points on June 30, 2024, the index fell by 6 61.20 points, compared with 3019.62 points on December 31, 2024, the index fell by 114.36 points; the prices of some varieties fell due to the impact of increased production and weak consumption. At the same time, abnormal weather, policy adjustments and capital hedging brought about the market rebound of some varieties. In the future, the stability and cost control of the supply of Chinese herbal medicines will also become operational difficulties faced by the industry.

3. Product relative concentration risk

The company has currently included Dechangxiang, Invincible Pharmaceuticals, and Kampo Pharmaceuticals into the scope of merger. However, the company's main products Kaihoujian Spray and Kaihoujian Spray (children's type) still contribute a large proportion to the company's performance. For example, if there are major changes in the production and sales of Kaihoujian Spray series products, it may have a greater impact on the company's operating performance.

4. Risk of product price reduction

With the gradual deepening of the national medical reform system, the continuous tightening of medical insurance fee control, the implementation of medical insurance payment standards, the establishment of medical insurance bureaus, and the implementation of mass procurement, drug price decline will become an unavoidable trend in the future. On the one hand, the company will continue to improve the bidding management system, actively carry out strategic layout and response work for product bidding, and at the same time vigorously expand OTC sales channels and third-party terminals; on the other hand, the company will also strictly control product quality and costs, and continuously improve the clinical effectiveness and economics of products.

5. Manage Risks

As the company's scale continues to expand, and its assets, businesses, institutions and personnel continue to expand, the company will face greater challenges in strategic planning, system formulation, organizational structure, operation management and internal control. It needs to establish a management system, internal control system, organizational structure, talent reserve and business processes that adapt to the company's long-term development. There is a possibility that the company's existing management system cannot fully adapt to the company's rapid expansion in the future, bringing risks to the company's normal production and operations.

6. Risk of goodwill impairment

According to the "Accounting Standards for Business Enterprises", the company's acquisition of 60.98% of the equity of Haost, 98.80% of the equity of Kamfang Pharmaceutical and 95% of the equity of Dechangxiang is a business combination not under common control. The part of the merger cost that exceeds the fair value of identifiable net assets should be recognized as goodwill. As of the end of the reporting period, goodwill was RMB 554 million. According to the relevant provisions of the "Accounting Standards for Business Enterprises", the goodwill formed by the company's acquisition of the above equity interests will not be amortized, but it will be subject to impairment testing at the end of each year in the future.

Competition in the pharmaceutical industry is fierce, and profitability is affected by many factors. If the future operating conditions of Dechangxiang, Invincible Pharmaceuticals, and Kampo Pharmaceuticals do not meet expectations, there will be a risk of goodwill impairment. Goodwill impairment will directly affect the company's operating performance and reduce the company's current profits. If a large amount of goodwill impairment is concentrated, it will have an adverse impact on the company's profitability.

(2) Other disclosure matters

√Applicable □Not applicable

1. Progress of the action plan of “Improving Quality, Increasing Efficiency and Focusing on Return”

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In order to implement the "investor-oriented" development concept and safeguard the interests of all shareholders of the company, the company actively takes measures to effectively promote the action plan of "improving quality, increasing efficiency and focusing on returns" to establish a good market image of the company. The main progress is as follows:

(1) Deeply cultivate the main business, and the results of mergers and acquisitions are beginning to show

Since its listing in 2020, the company has actively deployed in the traditional Chinese medicine pharmaceutical industry and strived to enrich its product line. It has successively invested and controlled Invincible Pharmaceuticals and Kampo Pharmaceutical. Together with the investment holding Dechangxiang, it has released the efficiency of investment and mergers and acquisitions, improved the layout of the traditional Chinese medicine manufacturing industry chain, and achieved product line expansion. The audited operating income has increased from 630 million yuan at the beginning of listing to 2.144 billion yuan in 2024, an increase of 240.32%. During the reporting period, the company continued to promote various production and operation tasks. For details, please refer to "Section 3 Management Discussion and Analysis" and "II. Discussion and Analysis of Operating Situations".

(2) Provide both buyback incentives and dividends to effectively enhance investor confidence

While continuously improving its internal quality, the company has always focused on continuing to reasonably reward investors. The company has distributed a cumulative cash dividend of 362 million yuan since its listing in 2020. The cumulative dividend amount accounts for approximately 35.70% of the cumulative net profit attributable to shareholders of the listed company during the period. The company has released a three-year (2024-2026) shareholder dividend return plan. Cash dividends should be distributed if conditions are met, and the profits distributed in cash every year should not be less than 50% of the distributable profits achieved in that year. In June 2025, the company implemented the equity distribution for 2024, distributing a cash dividend of 0.34 yuan per share (tax included), with a total cash dividend of nearly 138 million yuan (tax included), and the cash dividend ratio for 2024 was 50.23%.

At the same time, in order to safeguard the interests of investors, enhance investor confidence, improve the company's long-term incentive mechanism, fully mobilize the enthusiasm of the company's employees, improve cohesion, and promote the company's long-term development, the company has implemented two share repurchase plans during 2023-2024, with a cumulative repurchase fund size of approximately 130 million yuan. Achieve the consistency of the interests of the company, shareholders and employees, and promote all parties to jointly focus on the company's long-term interests and long-term development, thereby bringing more efficient and lasting returns to the company.

(3) Value protection, voluntary commitment not to reduce holdings

Based on the confidence in the company's future development prospects and recognition of the long-term value, and in order to enhance the confidence of investors and effectively safeguard the rights and interests of investors and the stability of the capital market, Mr. Zhang Hai, the company's controlling shareholder and actual controller, voluntarily promised not to actively reduce the company's shares directly held by him in any way within 18 months from September 13, 2024 (i.e., September 13, 2024 to March 12, 2026). It conveys to the market that the controlling shareholders and actual controllers are firmly optimistic about the company's future development, which greatly enhances market confidence.

(4) Keep communication channels open and effectively convey company value

The company attaches great importance to investor relations management and has gradually established a diversified investor communication mechanism. With the help of performance briefings, e-interactions, investor phone calls, investor e-mails, investor surveys and other platforms, the company enhances interaction with investors, listens to the opinions and suggestions of small and medium-sized shareholders, effectively protects the right to know of small and medium-sized investors, and delivers the company's value to the market.

(5) Continue to standardize operations and continuously improve governance levels

During the reporting period, based on strategic goals and company development needs, the company conducted research and made decisions on major matters such as regular reports, company internal system revisions, profit distribution plans and plans, and related transactions. It operated in strict accordance with the company's rules of procedure and fully utilized the role of special committees and special meetings of independent directors to provide support for the company's standardized operations. The company will continue to improve the corporate governance system, improve the corporate governance operating mechanism, continue to strengthen basic management and risk management construction, standardize company operations, strengthen risk management and control, continue to improve risk management systems, and improve risk management levels.

(6) Focus on the responsibilities of the “key few” and strengthen compliance awareness

The company maintains close communication with its controlling shareholders, actual controllers, directors, supervisors and senior management, organizes the above-mentioned relevant parties to participate in relevant trainings organized by the exchange, the China Securities Regulatory Bureau and other regulatory agencies on a regular basis, regularly delivers information such as regulatory updates and regulatory developments, strengthens the awareness of the "key minority" standardization, improves the ability to perform duties, and jointly promotes the company's long-term stable development.

2. Matters concerning the signing of a technology transfer contract and a technology development (cooperation) contract with Guangdong Pharmaceutical University

On June 13, 2025, the company issued the "Voluntary Information Disclosure Announcement on the Plan to Sign a Technology Transfer Contract and a Technology Development (Cooperation) Contract with Guangdong Pharmaceutical University" (Announcement Number: 2025-034), which disclosed matters related to the signing of a "Technology Transfer (Patent Rights/Patent Application Rights) Contract" and a "Technology Development (Cooperation) Contract" between the company and Guangdong Pharmaceutical University. The total contract amount is RMB 150 million; mainly involving the transfer of 7 patents including the application of Jinlu Banfenghe in the preparation of drugs to prevent and/or treat liver damage, other diseases or preparation related patents (including PCT patent rights) derived from the Jinlu Banfenghe project, and joint participation in the research and development of "SL&GDPU-001 (Class 1.2 New Traditional Chinese Medicine Drug)" (for the treatment of liver damage and fibrosis, etc.). The matters related to the signing of the technology contract this time are aimed at promoting the transformation of innovative drug scientific research results by integrating the company's industrialization capabilities and university R&D resources, helping the company expand its product layout, and are in line with the company's long-term development strategic goals and the interests of all shareholders.

At present, the relevant parties are actively promoting relevant cooperation matters. The project research and development plan, progress and results delivery will be advanced in accordance with the signed contract and will not have a significant impact on the company's financial status and operating performance this year. Due to the particularity of drug research and development,

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It has the characteristics of long cycle, many links, high risk, and large investment. It is easily affected by many unpredictable factors. There is uncertainty in the subsequent specific implementation progress and final results. There is also uncertainty in whether the research and development can be successful and approved by the drug regulatory department. Regarding subsequent relevant progress, the company will fulfill its information disclosure obligations in accordance with relevant regulations.

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Section 4 Corporate Governance, Environment and Society

1. Changes in directors, supervisors and senior managers of the company

□Applicable √Not applicable

Description of changes in directors, supervisors and senior managers of the company

□Applicable √Not applicable

2. Profit distribution or capital reserve conversion plan

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

Whether to distribute or transfer No

Number of bonus shares for every 10 shares (shares) Not applicable

Dividend amount per 10 shares (yuan) (tax included) Not applicable

Number of shares transferred per 10 shares (shares) Not applicable

No relevant information on profit distribution or capital reserve conversion plan

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

(1) Relevant equity incentive matters have been disclosed in temporary announcements and there is no progress or change in subsequent implementation √ Applicable □ Not applicable

Overview of Matters Query Index On March 28, 2025, the company held the 11th meeting of the fourth session of the Board of Directors,

At the 10th meeting of the 4th Board of Supervisors, the “Repurchase and Cancellation of the Department” was reviewed and approved.

Proposal to Separate Restricted Stocks". According to the company’s “2024 Restricted Stock Incentive Plan”

For details, please refer to the relevant provisions of the "Guizhou Sanli Pharmaceutical Co., Ltd. Incentive Plan (Draft)". Due to the company's restricted stock incentives

Announcement on the Repurchase and Cancellation of Certain Restricted Stocks" One of the incentive targets (Ouyang Zhiqiang) in the plan has resigned and is no longer in line with the company

(2025-007). Provisions on incentive objects in the 2024 restricted stock incentive plan, the company

Plans to repurchase and cancel all restricted shares that have been granted but have not been released from sale

60,000 shares. The cancellation of relevant shares has not yet been completed.

On April 21, 2025, the company held the twelfth meeting of the fourth board of directors

At the eleventh meeting of the fourth session of the Supervisory Board, the "About 2021" was reviewed and approved.

The third unlocking period of the restricted stock incentive plan has not met the conditions for lifting the restrictions.

Regarding the proposal to repurchase and cancel some restricted stocks, according to the relevant provisions of the "Guizhou Sanli Pharmaceutical Co., Ltd. For details, please refer to the "Guizhou Sanli Pharmaceutical Co., Ltd. Guan Pharmaceutical Co., Ltd. 2021 Restricted Stock Incentive Plan Implementation Assessment and Management Measures for the 2021 Restricted Stock Incentive Plan Third Management Measures" and the "Guizhou Sanli Pharmaceutical Co., Ltd. 2021 Restricted Restriction Period Lifting Restriction Conditions Unfulfilled Stock Incentive Plan (Draft)", the company's operations in 2024 "Announcement on the Repurchase and Cancellation of Certain Restricted Stocks" failed to meet the third unlocking period (2025-022) of the 2021 Restricted Stock Incentive Plan. According to the conditions for lifting the sales restrictions, it is planned to release the third sales restriction period for the 7 incentive targets.

A total of 732,000 restricted shares (accounting for 0.18% of the company’s total share capital) were issued.

Perform repurchase and cancellation. The cancellation of relevant shares has not yet been completed.

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

Equity incentives

□Applicable √Not applicable

Other instructions

□Applicable √Not applicable

Employee stock ownership plan status

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□Applicable √Not applicable

Other incentives

□Applicable √Not applicable

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

√Applicable □Not applicable

Number of companies included in the list of companies that disclose environmental information in accordance with the law (number) 1

Serial number Company name Query index for legal environmental information disclosure report https://222.85.128.186:8081/eps/index/ent enterprise-more?code=91520115215742298 1 Guizhou Hanfang Pharmaceutical Co., Ltd.

Y&uniqueCode=d2eb7b7ec4729ed4&dat

e=2024&type=true&isSearch=true

Other instructions

□Applicable √Not applicable

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

√Applicable □Not applicable

1. In response to Guizhou's important strategic measures to improve the level of primary medical care, protect people's health, and promote rural revitalization, Guizhou Sanli Charity Foundation cooperated with Shanghai Fosun Foundation-Rural Doctor Project to select an employee to serve as a "rural doctor" resident team member in Zhijin County, Bijie City, Guizhou Province to assist the development of grassroots rural medical care.

2. In May 2025, Guizhou Sanli Charity Foundation continued to donate a batch of hospital public goods worth 6,000 yuan to the Huansha Branch of Longxing Town Health Center, Daozhen County, Zunyi City.

3. In June 2025, Guizhou Sanli Charity Foundation carried out monthly charity activities and inspected Xiliang National Primary School in Pingtang, Guizhou through on-site visits. The school is located in Xingfa Village, Jiacha Town, Pingtang County, adjacent to Hechi City, Guangxi, 46 kilometers away from Pingtang County, and surrounded by mountains. The school’s hardware facilities are backward and the running conditions are difficult. Guizhou Sanli Charity Foundation will donate 500 sets of desks and chairs to the school in September this year. 500 Kaikai Xia gift packs, 500 Happy Meals, 276 sets of school uniforms, 1,000 extracurricular psychological reading materials, sports equipment covering 12 classes in the school and other materials worth 250,000 yuan.

4. Congjiang County, Qiandongnan Miao and Dong Autonomous Prefecture, Guizhou Province is located in the southeast of Guizhou Province, in the hinterland of Moon Mountain. In August 2021, it was listed as a key county for national rural revitalization. The passion fruit industry is a "one county, one industry" key development characteristic agriculture identified by Congjiang County. In order to support the practice of rural revitalization in Guizhou's capital market and consolidate and expand the effectiveness of poverty alleviation, the company will purchase 350 boxes of passion fruit from the Qiuxin Breeding Professional Cooperative of Congjiang County in 2025, with an amount of approximately 34,700 yuan.

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Section 5 Important Matters

1. Fulfillment of commitments

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

√Applicable □Not applicable

if not and if not whether whether

Fulfill on time. Fulfill commitments on time. Commitments. Commitments. Fulfilled on time.

Commitment Party Commitment Time Commitment Period Explanation Unfinished Line Should Say Background Type Content Line Period Strict

If the performance is fulfilled, the next limit shall be specified for performance.

Specific reasons Step plan to resolve horizontal competition The company’s controlling shareholder and actual controller Zhang Hai See Note 1 for details April 15, 2020 Yes Long-term effective Yes Not applicable Not applicable Resolving related transactions Zhang Hai, the company’s controlling shareholder and actual controller See Note 2 for details April 15, 2020 Yes Long-term effective Yes Not applicable Not applicable Others Guizhou Sanli Pharmaceutical Co., Ltd. See Note 3 for details April 15, 2020 Yes Long-term valid Yes Not applicable Not applicable and for the first time Others Zhang Hai, the company’s controlling shareholder and actual controller See Note 4 for details April 15, 2020 Yes Long-term valid Yes Not applicable Not applicable to public issuance

Others Directors and senior managers of the company See Note 5 for details April 15, 2020 Yes Long-term yes Not applicable Not applicable Line-related

Commitments Others Guizhou Sanli Pharmaceutical Co., Ltd. See Note 6 for details April 15, 2020 Yes Long-term effective Yes Not applicable Not applicable Other Zhang Hai, the company’s controlling shareholder and actual controller See Note 7 for details April 15, 2020 Yes Long-term effective Yes Not applicable Not applicable Others The issuer’s directors, supervisors, and senior managers See Note 8 for details April 15, 2020 Yes Long-term effective Yes Not applicable Not applicable Others Guizhou Sanli Pharmaceutical Co., Ltd. See Note 9 for details April 15, 2020 Yes Long-term validity Yes Not applicable Not applicable

September 13, 2024

Others

Restricted sale of shares Zhang Hai, the company’s controlling shareholder and actual controller See Note 10 for details September 13, 2024 Yes Date to 3, 2026 Yes Not applicable Not applicable Commitment

month 12

Note 1: Zhang Hai, the company’s controlling shareholder and actual controller, promised:

(1) I currently do not and will not engage in any activities that directly or indirectly constitute horizontal competition with the existing and future businesses of the company and its holding subsidiaries in any way (including but not limited to sole proprietorship, joint venture operation, or ownership of shares and other interests in another company or enterprise).

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(2) Other enterprises controlled by me, my close family members and other enterprises controlled by me are not currently engaged in any activities that directly or indirectly constitute horizontal competition with the current and future business of the company and its controlled subsidiaries in any way (including but not limited to sole proprietorship, joint venture operation, or ownership of shares and other interests in another company or enterprise). I will continue to urge other enterprises controlled by me, close family members and other enterprises controlled by me not to engage in business that constitutes horizontal competition with the company and its controlled subsidiaries in the future.

(3) I will not provide proprietary technology or provide sales channels, customer information and other commercial information to other companies, enterprises or other institutions, organizations or individuals whose business is the same as, similar to or competing in any way with the company. (4) If I or an enterprise controlled by me intend to sell any other assets, business or interests related to the company's production and operation, the company has the first right to purchase. I will not take advantage of my shareholder status or other relationships to conduct business activities that may harm the legitimate rights and interests of the company and other shareholders.

(5) If the company further expands its products and business scope, I and the companies I control will not compete with the company’s expanded products or business. If there is a situation that may compete with the company's expanded products or business, I and the companies I control will withdraw from competition with the company in the following ways, including but not limited to: ① Stop producing products that compete or may compete; ② Stop operating businesses that compete or may compete; ③ Put competing assets or businesses into the company in a legal way; ④ Transfer competing assets or businesses to unrelated third parties; ⑤ Take other actions that are beneficial to safeguarding the company's rights and interests to eliminate horizontal competition.

(6) If I, other companies I control, my close family members and other companies I control violate the aforementioned commitments and cause losses to the company or its controlled subsidiaries, I am willing to bear the corresponding legal liability. (7) I confirm that each commitment contained in this commitment is an independently enforceable commitment. If any commitment is deemed invalid or terminated, it will not affect the validity of other commitments.

(8) This commitment will continue to be effective as long as I, other companies I control, my close family members, and other companies I control are related to the company or its controlled subsidiaries.

Note 2: Zhang Hai, the company’s controlling shareholder and actual controller:

(1) As of the signing date of this commitment, except for the related transactions that have been disclosed, there are no other major related transactions between myself and other enterprises controlled by me, the company and its controlled subsidiaries.

(2) I will perform my obligations as a shareholder of the company in good faith and will not take advantage of my shareholder status to take any action or seek improper benefits in relation to any related transactions between the company and myself; I will not use my shareholder status to deliberately prompt the company to make decisions that infringe on the legitimate rights and interests of other shareholders.

(3) I and other companies controlled by me will try to avoid related transactions with the company and its controlled subsidiaries; for related transactions that are truly necessary and unavoidable, we will strictly implement the relevant laws, regulations, rules, normative documents and the "Articles of Association" and other systems related to related transaction decision-making procedures and avoidance systems to ensure that related transactions comply with the principles of openness, fairness and impartiality and are impartial, and do not harm the interests of the company and other shareholders. (4) If I and other companies controlled by me violate the above commitments by conducting transactions with the company and its holding subsidiaries, thereby causing losses to the company and other shareholders of the company, I shall bear the liability for compensation.

(5) This commitment will continue to be effective as long as I and other enterprises controlled by me are related to the company or its controlled subsidiaries.

Note 3: In order to prevent the possible risk of current earnings being diluted, the company commits to take the following safeguard measures:

(1) Actively implement investment projects with raised funds and improve the efficiency of use of raised funds.

(2) Strengthen business management and internal control.

(3) Improve profit distribution policy.

(4) Improve the corporate governance structure.

Note 4: Controlling shareholder and actual controller Zhang Hai promises:

(1) Do not interfere with the company’s business and management activities beyond their authority and do not encroach on the company’s interests.

(2) If I fail to fulfill the above commitments, I will publicly explain the specific reasons for not fulfilling the above commitments at the company's shareholders' meeting and in newspapers designated by the China Securities Regulatory Commission and apologize to the company's shareholders and public investors. If I cause losses to the company or the company's shareholders due to my violation of the above commitments, I will bear liability for compensation in accordance with the law.

Note 5: The directors and senior managers of the company commit to:

(1) I will not transfer benefits to other units or individuals for free or on unfair terms, nor will I harm the interests of the company in other ways.

(2) I will restrict my job consumption behavior.

(3) I will not use company assets to engage in investment or consumption activities that have nothing to do with the performance of my duties.

(4) I will be responsible for linking the remuneration system formulated by the board of directors or the remuneration and appraisal committee with the implementation of the company's supplementary return measures.

(5) I will do my best to link the exercise conditions (if any) of the company's equity incentives to be announced with the implementation of the company's supplementary return measures.

(6) After the issuance of this commitment, if the China Securities Regulatory Commission makes other regulatory provisions on supplementary return measures and commitments, and the above commitments cannot meet the regulatory requirements of the regulatory agencies, I promise to issue a supplementary commitment in accordance with the relevant regulations.

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(7) If I fail to fulfill the above commitments, I will publicly explain the specific reasons for failure to fulfill the above commitments at the company's shareholders' meeting and in newspapers designated by the China Securities Regulatory Commission and apologize to the company's shareholders and public investors. If I cause losses to the company or the company's shareholders due to my violation of the above commitments, I will be liable for compensation in accordance with the law.

Note 6: The issuer Guizhou Sanli Pharmaceutical Co., Ltd. promises:

(1) The company's prospectus and its summary do not contain false records, misleading statements or major omissions, and the company shall bear individual and joint legal liability for its authenticity, accuracy and completeness.

(2) If a company's prospectus contains false records, misleading statements or major omissions, causing investors to suffer losses in securities transactions, investors will be compensated for their losses in accordance with the law.

(3) If the China Securities Regulatory Commission or the People's Court and other competent authorities determine that the company's prospectus contains false records, misleading statements or major omissions, and these circumstances have a significant and substantial impact on whether the company meets the issuance conditions stipulated by law, the company will make a decision on the company's existence before the China Securities Regulatory Commission or the People's Court and other competent authorities. The board of directors shall be convened within 30 days after the final determination of the above-mentioned facts or the effective judgment, to formulate a share repurchase plan and submit it to the shareholders' meeting for review and approval, and to repurchase all the new shares of the company's initial public offering in accordance with the law. The repurchase price shall not be lower than the company's stock issue price plus bank demand deposit interest or other prices recognized by the China Securities Regulatory Commission during the relevant period from the issuance of the shares to the time of repurchase. If the company engages in ex-rights and ex-dividend activities such as profit distribution, transfer of capital reserves to share capital, additional issuance, allotment of shares and other ex-rights and ex-dividends after the initial public offering of stocks before the repurchase, the above issuance price shall be the price after ex-rights and ex-dividends.

Note 7: Zhang Hai, the issuer’s controlling shareholder and actual controller, promises:

(1) The company's prospectus and its summary do not contain false records, misleading statements or major omissions, and the company shall bear individual and joint legal liability for its authenticity, accuracy and completeness.

(2) If a company's prospectus contains false records, misleading statements or major omissions, causing investors to suffer losses in securities transactions, investors will be compensated for their losses in accordance with the law.

(3) If the China Securities Regulatory Commission or the People's Court and other competent authorities determine that the company's prospectus contains false records, misleading statements or major omissions, and these circumstances have a significant and substantial impact on the judgment of whether the company meets the issuance conditions stipulated by law, I will make a decision on the company to the China Securities Regulatory Commission or the People's Court and other competent authorities. A share repurchase plan shall be formulated within 30 days after the final determination of the above-mentioned facts or the effective judgment, and all new shares initially issued by the company and the original restricted shares that have been transferred shall be repurchased in accordance with the law. The repurchase price shall not be lower than the issuance price of the company's shares plus bank demand deposit interest during the relevant period from the issuance of the shares to the time of repurchase or other prices recognized by the China Securities Regulatory Commission. If the company engages in ex-rights and ex-dividend activities such as profit distribution, transfer of capital reserves to share capital, additional issuance, allotment of shares and other ex-rights and ex-dividends after the initial public offering of stocks before the repurchase, the above issuance price shall be the price after ex-rights and ex-dividends.

Note 8: The issuer’s directors, supervisors, and senior managers commit to:

(1) The company's prospectus and its summary do not contain false records, misleading statements or major omissions, and the company shall bear individual and joint legal liability for its authenticity, accuracy and completeness.

(2) If a company's prospectus contains false records, misleading statements or major omissions, causing investors to suffer losses in securities transactions, investors will be compensated for their losses in accordance with the law.

Note 9: Guizhou Sanli Pharmaceutical Co., Ltd. promises:

(1) If the company fails to fulfill relevant commitments, the company will publicly explain the specific reasons for failure to fulfill its commitments at the company's shareholders' meeting and newspapers designated by the China Securities Regulatory Commission and apologize to the company's shareholders and public investors. (2) If the company fails to fulfill relevant commitments and causes investors to suffer losses in securities transactions, the company will compensate investors for their losses in accordance with the law.

Note 10: Mr. Zhang Hai, the company’s controlling shareholder and actual controller, voluntarily promised:

Within 18 months from September 13, 2024 (that is, from September 13, 2024 to March 12, 2026), it will not actively reduce its directly held company shares in any way. During the above-mentioned commitment period, if additional shares occur due to transfer of capital reserves to share capital, distribution of stock dividends, allotment of shares, etc., the commitment not to reduce holdings will also be observed. If the above commitment is violated, all proceeds from the reduction of the company's shares will belong to the company.

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

□Applicable √Not applicable

3. Illegal guarantee situation

□Applicable √Not applicable

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4. Audit status of semi-annual report

□Applicable √Not applicable

5. Changes and handling of matters involved in non-standard audit opinions in last year’s annual report □ Applicable √ Not applicable

6. Matters related to bankruptcy and reorganization

□Applicable √Not applicable

7. Major litigation and arbitration matters

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

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

and rectification status

□Applicable √Not applicable

9. Explanation of the integrity status of the company, its controlling shareholders and actual controllers during the reporting period √ Applicable □ Not applicable

During the reporting period, the integrity of the company and its controlling shareholder and actual controller, Mr. Zhang Hai, was in good condition, and there were no dishonesty situations such as failure to fulfill the effective court judgment and large amounts of debts being due and unpaid.

10. Major related transactions

(1) Related transactions related to daily operations

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

□Applicable √Not applicable

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

On April 23, 2025, the company issued the "Announcement of Guizhou Sanli Pharmaceutical Co., Ltd. on Daily Related Transactions in 2024 and Estimated Daily Related Transactions in 2025" (Announcement No.: 2025-017), which disclosed that the company expected to purchase goods from the related party Guizhou Yongji Printing Co., Ltd. in 2025, with an estimated amount of 550 Ten thousand yuan, the amount incurred during the reporting period was 1.7932 million yuan; the company is expected to accept labor services from its related party Yaozunbao Digital Intelligence Technology (Chengdu) Co., Ltd. in 2025, with an estimated amount of 20 million yuan, and the amount incurred during the reporting period was 188,700 yuan.

3. Matters not disclosed in temporary announcements

□Applicable √Not applicable

(2) Related transactions arising from asset acquisition or equity acquisition or sale

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

□Applicable √Not applicable

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

3. Matters not disclosed in temporary announcements

□Applicable √Not applicable

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

(3) Major related transactions of joint external investments

1. Matters that have been disclosed in temporary announcements and have no progress or changes in subsequent implementation □Applicable √Not applicable

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

3. Matters not disclosed in temporary announcements

□Applicable √Not applicable

(4) Related credit and debt transactions

1. Matters that have been disclosed in temporary announcements and have no progress or changes in subsequent implementation □Applicable √Not applicable

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

3. Matters not disclosed in temporary announcements

□Applicable √Not applicable

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

(6) Other major related transactions

□Applicable √Not applicable

(7) Others

□Applicable √Not applicable

11. Major contracts and their performance

(1) Custody, contracting and leasing matters

□Applicable √Not applicable

(2) Major guarantees performed and not yet completed during the reporting period □Applicable √Not applicable

(3) Other major contracts

□Applicable √Not applicable

12. Instructions on the use of raised funds

□Applicable √Not applicable

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13. Description of other major matters

□Applicable √Not applicable

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Section 6 Changes in Shares and Shareholders

1. Changes in share capital

(1) Statement of changes in shares

1. Statement of changes in shares

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

2. Description of changes in shares

□Applicable √Not applicable

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

□Applicable √Not applicable

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

□Applicable √Not applicable

(2) Changes in restricted shares

□Applicable √Not applicable

2. Shareholder situation

(1) Total number of shareholders:

Total number of ordinary shareholders (households) as of the end of the reporting period 25,821 Total number of preference shareholders (households) with voting rights restored as of the end of the reporting period 0

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

Holders are pledged, marked or frozen

Yes

limited

for sale

Name of shareholder Shareholding ratio at the end of the reporting period

Article Nature of shareholder (full name) Increase or decrease Number (%) Shares

Piece quantity status

shares

portion

number

quantity

Zhang Hai 0 167,668,440 40.91 0 Pledge 69,500,000 Domestic natural person Sheng Yongjian 0 21,924,559 5.35 0 None 0 Domestic natural person Hainan Yuexin Pharmaceutical Investment Partnership Domestic non-state-owned

0 21,000,000 5.12 0 None 0 Enterprise (general partnership) Legal person

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Shanghai Guosheng Capital Management Co., Ltd.

Company-Shanghai Guosheng Haitongmin

Private equity investment in high-quality development of domestic non-state-owned enterprises 0 20,490,100 5.00 0 None 0

legal person

Fund partnership (limited partnership)

Guy)

Wang Huiying 0 11,197,947 2.73 0 None 0 Domestic natural person Shen Jiayi 0 5,504,790 1.34 0 None 0 Domestic natural person Guizhou Sanli Pharmaceutical Co., Ltd. Domestic non-state-owned

0 4,190,200 1.02 0 None 0

Special securities account for company repurchase Legal person

Deng Daixing 4,097,969 4,124,969 1.01 0 None 0 Domestic natural person Yang Shuyu 0 3,096,900 0.76 0 None 0 Domestic natural person Liu Xiaohua -450,000 2,310,877 0.56 0 None 0 Shareholding status of the top ten domestic natural persons shareholders without selling restrictions (excluding shares lent through refinancing)

Type and number of shares held without selling restrictions

Shareholder name

Number of common shares Type Quantity Zhang Hai 167,668,440 RMB ordinary shares 167,668,440 Sheng Yongjian 21,924,559 RMB ordinary shares 21,924,559 Hainan Yuexin Pharmaceutical Investment Partnership (General Partnership) 21,000,000 RMB ordinary shares 21,000,000 Shanghai Guosheng Capital Management Co., Ltd. - Shanghai Guoshenghai

High-quality private equity development private investment fund partnership 20,490,100 RMB ordinary shares 20,490,100 (limited partnership)

Wang Huiying 11,197,947 RMB ordinary shares 11,197,947 Shen Jiayi 5,504,790 RMB ordinary shares 5,504,790 Special repurchase securities of Guizhou Sanli Pharmaceutical Co., Ltd.

4,190,200 RMB ordinary shares 4,190,200 account

Deng Daixing 4,124,969 RMB ordinary shares 4,124,969 Yang Shuyu 3,096,900 RMB ordinary shares 3,096,900 Liu Xiaohua 2,310,877 RMB ordinary shares 2,310,877

Explanation of the special repurchase securities account of Guizhou Sanli Pharmaceutical Co., Ltd. used by the top ten shareholders of the company to repurchase shares.

Currently, the company has a special repurchase account of 4,190,200 shares, accounting for 1.02% of the company's total share capital. The above-mentioned shareholders have entrusted voting rights, entrusted voting rights, delegated

None

Explanation on abstaining from voting

Explanation on the related relationship or concerted action of the above shareholders Wang Huiying is Zhang Hai’s mother. The two are mother and son. There is a relationship of concerted action. Preferred shareholders with restored voting rights and the number of shares held

None

description

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

□Applicable √Not applicable

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

□Applicable √Not applicable

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

√Applicable □Not applicable

Unit: shares with trading restrictions. Shares can be listed and traded.

Sales restrictions held by shareholders subject to sales restrictions

Serial number Name of selling restriction conditions Quantity of conditional shares Can be listed and traded Newly added can be listed and traded

Time Yi Share Quantity

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1 Wang Yi 760,000 Note 1, Note 2 0 Equity incentive restricted stock 2 Yang Zhiyu 400,000 Note 2 0 Equity incentive restricted stock 3 Guo Ke 322,000 Note 1, Note 2 0 Equity incentive restricted stock 4 Zhang Qianfan 310,000 Note 1, Note 2 0 Equity incentive restricted stock 5 Luo Zhanbiao 310,000 Note 1, Note 2 0 Equity incentive restricted stock 6 Wang Jueben 310,000 Note 1, Note 2 0 Equity incentive restricted stock 7 Yu Yuan 280,000 Note 1, Note 2 0 Equity incentive restricted stock 8 Deng Li 250,000 Note 2 0 Equity incentive restricted stock 9 Zhu Song 200,000 Note 2 0 Equity incentive restricted shares 10 Tang Jianfeng 200,000 Note 2 0 Equity incentive restricted shares The above-mentioned shareholder related relationship or one

None

instructions for action

Note 1: Among them, 40% of the restricted stocks in the 2021 restricted stock incentive plan have been listed and circulated since May 17, 2023; 30% have been listed and circulated since May 21, 2024; and the remaining 30% have been held by the company on April 21, 2025. The twelfth meeting of the fourth session of the Board of Directors and the eleventh meeting of the fourth session of the Board of Supervisors reviewed and approved the "Proposal on the Unfulfilled Conditions for Removing Restrictions during the Third Unlocking Period of the 2021 Restricted Stock Incentive Plan and the Repurchase and Cancellation of Part of the Restricted Stocks". Due to the company's 2024 The operating performance failed to meet the conditions for unlocking the third unlocking period of the 2021 restricted stock incentive plan. A total of 732,000 restricted stocks (accounting for 0.18% of the company's total share capital) for the third unlocking period of the 7 incentive targets were repurchased and canceled. For details, please refer to the "Guizhou Sanli Pharmaceutical Co., Ltd.'s Announcement on the Unfulfilled Restriction Conditions for the Third Unlocking Period of the 2021 Restricted Stock Incentive Plan and the Repurchase and Cancellation of Some Restricted Stocks" (2025-022) disclosed by the company on April 23, 2025. As of now, the relevant shares have not yet been cancelled.

Note 2: On November 8, 2024, the company held the eighth meeting of the fourth board of directors and the seventh meeting of the fourth board of supervisors, and reviewed and approved the "Proposal on Granting Restricted Stocks to Incentive Objects of the 2024 Restricted Stock Incentive Plan" and determined November 8, 2024 as the equity grant date of this incentive plan, and granted 5.23 million restricted shares to 54 eligible incentive objects. Among them, the 30% unlocking time is from the first trading day 18 months after the grant date to the last trading day within 30 months from the grant date, the 30% unlocking time is from the first trading day 30 months after the grant date to the last trading day within 42 months from the grant date, and the 40% unlocking time is from the first trading day 42 months after the grant date to the last trading day within 54 months from the grant date.

On March 28, 2025, Guizhou Sanli held the 11th meeting of the 4th Board of Directors and the 10th meeting of the 4th Board of Supervisors, and reviewed and approved the "Proposal on the Repurchase and Cancellation of Certain Restricted Stocks". The company plans to provide incentives to an incentive target in the 2024 Restricted Stock Incentive Plan who no longer has the incentive qualifications due to resignation. The 60,000 restricted stocks that have been granted but have not yet been released from sale restrictions will be repurchased and cancelled. For details, please refer to the "Guizhou Sanli Pharmaceutical Co., Ltd. Announcement on the Repurchase and Cancellation of Certain Restricted Stocks" (2025-007) disclosed by the company on March 29, 2025. The relevant shares have not yet been cancelled.

(3) Strategic investors or general legal persons become the top ten shareholders due to the placement of new shares

□Applicable √Not applicable

3. Directors, supervisors and senior managers

(1) Changes in shareholdings of current and departing directors, supervisors and senior managers during the reporting period

□Applicable √Not applicable

Other situation description

□Applicable √Not applicable

(2) Equity incentives granted to directors, supervisors and senior managers during the reporting period

□Applicable √Not applicable

(3) Other instructions

□Applicable √Not applicable

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4. Changes in controlling shareholders or actual controllers □Applicable √Not applicable

5. Relevant information on preference shares

□Applicable √Not applicable

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Section 7 Bond-Related Information

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

2. Convertible corporate bonds

□Applicable √Not applicable

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Section 8 Financial Report

1. Audit report

□Applicable √Not applicable

2. Financial statements

Consolidated Balance Sheet

June 30, 2025

Prepared by: Guizhou Sanli Pharmaceutical Co., Ltd.

Unit: Yuan Currency: RMB

Item Notes June 30, 2025 Current assets as of December 31, 2024:

Monetary funds Note 1 283,547,177.02 474,845,014.34 Settlement reserves

Loan funds

Trading financial assets Note 2 19,500,145.21 22,945,081.52 Derivative financial assets Note 3

Notes receivable Note 4 57,651,599.69 82,062,569.10 Accounts receivable Note 5 647,997,907.50 728,669,788.22 Receivables financing Note 7 64,091,536.64 121,388,452.65 Prepayments Note 8 46,077,575.75 33,687,505.24 Premiums receivable

Reinsurance accounts receivable

Receivable reinsurance contract reserves

Other receivables Note 9 5,002,984.13 7,099,346.97 Including: interest receivable

Dividends receivable

Buy financial assets under resale agreements

Inventory Note 10 364,371,508.34 320,722,064.52 Including: data resources

Contract Assets Note 6

Assets held for sale Note 11

Non-current assets due within one year Note 12

Other current assets Note 13 6,879,071.69 6,565,499.28

Total current assets 1,495,119,505.97 1,797,985,321.84 Non-current assets:

Grant loans and advances

Debt Investment Note 14

Other debt investments Note 15

Long-term receivables Note 16

Long-term equity investment Note 17 63,556,353.25 12,547,227.44 Other equity instrument investments Note 18 10,000,000.00 10,000,000.00 Other non-current financial assets Note 19

Investment Properties Note 20

Fixed assets Note 21 545,647,306.46 563,914,039.44 Construction in progress Note 22 5,045.01

Productive biological assets Note 23 29,999,388.76 11,603,881.45

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Oil and Gas Properties Note 24

Right-of-use assets Note 25 11,173,800.88 9,631,487.54 Intangible assets Note 26 206,591,589.50 216,128,219.15 Including: data resources

development expenditure

Among them: data resources

Goodwill Note 27 554,606,134.60 554,606,134.60 Long-term deferred expenses Note 28 721,791.16 562,691.20 Deferred income tax assets Note 29 15,414,814.29 15,128,887.97 Other non-current assets Note 30

Total non-current assets 1,437,716,223.91 1,394,122,568.79

Total assets 2,932,835,729.88 3,192,107,890.63 Current liabilities:

Short-term borrowings Note 32 542,926,654.78 351,521,547.18 Borrowings from the central bank

borrowing funds

Trading financial liabilities Note 33

Derivative financial liabilities Note 34

Notes payable Note 35

Accounts payable Note 36 235,084,278.81 360,623,598.69 Advance payments Note 37

Contract liabilities Note 38 7,301,847.73 7,790,038.48 Financial assets sold under repurchase agreements

Taking deposits and placing deposits with other banks

Agent for buying and selling securities

Agent underwriting securities funds

Employee benefits payable Note 39 3,609,222.96 22,651,658.65 Taxes payable Note 40 17,598,139.72 72,637,959.40 Other payables Note 41 177,315,040.93 351,280,861.50 Including: interest payable

Dividends payable 890.00 550.00 Handling fees and commissions payable

Reinsurance accounts payable

Liabilities held for sale Note 42

Non-current liabilities due within one year Note 43 52,763,259.66 45,648,207.95 Other current liabilities Note 44 18,371,385.97 22,302,970.52

Total current liabilities 1,054,969,830.56 1,234,456,842.37 Non-current liabilities:

insurance contract reserves

Long-term borrowings Note 45 179,400,000.00 209,300,000.00 Bonds payable Note 46

Among them: preferred shares

perpetual bond

Lease liabilities Note 47 164,116.61 211,539.96 Long-term payables Note 48 7,849,411.33 8,287,850.80 Long-term employee benefits payable Note 49

Estimated liabilities Note 50

Deferred income Note 51 40,927,878.16 42,970,860.79

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Deferred income tax liabilities Note 29 23,737,678.79 25,498,918.59 Other non-current liabilities Note 52 76,754,836.20 76,754,836.20 Total non-current liabilities 328,833,921.09 363,024,006.34

Total liabilities 1,383,803,751.65 1,597,480,848.71 Owners’ equity (or shareholders’ equity):

Paid-in capital (or share capital) Note 53 409,802,216.00 409,802,216.00 Other equity instruments Note 54

Among them: preferred shares

perpetual bond

Capital reserve Note 55 155,962,103.18 149,042,263.82 Less: treasury shares Note 56 100,642,385.06 100,642,385.06 Other comprehensive income Note 57

Special Reserve Note 58

Surplus reserve Note 59 133,275,177.34 133,275,177.34 General risk reserve

Undistributed profits Note 60 881,285,287.74 935,863,129.35 Attributable to owners’ equity of the parent company

1,479,682,399.20 1,527,340,401.45 (or shareholders’ equity) total

Minority shareholders’ equity 69,349,579.03 67,286,640.47 Owner’s equity (or shareholder’s rights

1,549,031,978.23 1,594,627,041.92 profit) total

Liabilities and Owner's Equity (or

2,932,835,729.88 3,192,107,890.63 shareholders’ equity) total

Person in charge of the company: Zhang Hai Person in charge of accounting work: Guo Ke Person in charge of the accounting department: Guo Ke

Parent company balance sheet

June 30, 2025

Prepared by: Guizhou Sanli Pharmaceutical Co., Ltd.

Unit: Yuan Currency: RMB

Item Notes June 30, 2025 Current assets as of December 31, 2024:

Monetary funds 105,265,905.43 189,950,224.26 Trading financial assets 3,045,310.23 Derivative financial assets

Notes receivable 51,018,035.37 46,462,371.12 Accounts receivable Note 1 358,594,383.04 434,723,861.36 Accounts receivable financing 20,596,288.91 41,402,267.21 Prepayments 9,727,231.23 5,467,845.15 Other receivables Note 2 4,663,956.73 3,313,035.08 Including: interest receivable

Dividends receivable

Inventory 210,672,062.45 164,569,835.31 Including: data resources

contract assets

Assets held for sale

Non-current assets due within one year 3,981,331.00 3,907,578.71 Other current assets 591,285.40 142,050.00

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Total current assets 765,110,479.56 892,984,378.43 Non-current assets:

debt investment

Other debt investments

Long-term receivables 37,821,318.19 37,111,359.84 Long-term equity investment Note 3 1,317,749,772.63 1,313,910,578.74 Other equity instrument investments 10,000,000.00 10,000,000.00 Other non-current financial assets

investment real estate

Fixed assets 284,316,538.73 293,901,228.20 Construction in progress

productive biological assets

oil and gas assets

Right-of-use assets 400,400.39 611,681.42 Intangible assets 15,886,691.33 15,901,595.67 Including: data resources

development expenditure

Among them: data resources

goodwill

Long-term deferred expenses

Deferred income tax assets 14,430,105.85 14,598,548.44 Other non-current assets

Total non-current assets 1,680,604,827.12 1,686,034,992.31

Total assets 2,445,715,306.68 2,579,019,370.74 Current liabilities:

Short-term borrowings 491,747,457.11 300,340,849.96 Trading financial liabilities

Derivative financial liabilities 27,953,294.26 27,953,294.26 Notes payable

Accounts payable 190,955,118.86 276,473,949.76 Advance payments

Contract liabilities 2,311,901.52 1,253,036.04 Employee benefits payable 1,220,931.12 16,589,632.96 Taxes payable 9,066,361.89 48,446,415.65 Other payables 52,064,584.34 174,604,539.06 of which: interest payable

Dividends payable 890.00 550.00 Liabilities held for sale

Non-current liabilities due within one year 52,763,259.66 45,588,055.45 Other current liabilities 4,580,665.80 4,827,785.62

Total current liabilities 832,663,574.56 896,077,558.76 Non-current liabilities:

Long-term borrowings 179,400,000.00 209,300,000.00 Bonds payable

Among them: preferred shares

perpetual bond

Lease liabilities 164,116.61 104,036.36 Long-term payables

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Long-term employee benefits payable

Estimated liabilities

Deferred income 39,725,361.86 41,679,688.70 Deferred income tax liabilities 1,390,525.70 1,491,042.66 Other non-current liabilities

Total non-current liabilities 220,680,004.17 252,574,767.72

Total liabilities 1,053,343,578.73 1,148,652,326.48 Owners’ equity (or shareholders’ equity):

Paid-in capital (or equity) 409,802,216.00 409,802,216.00 Other equity instruments

Among them: preferred shares

perpetual bond

Capital reserve 199,547,825.80 192,249,524.07 Less: treasury shares 100,642,385.06 100,642,385.06 Other comprehensive income

special reserve

Surplus reserve 133,275,177.34 133,275,177.34 Undistributed profits 750,388,893.87 795,682,511.91 Owners’ equity (or shareholders’ rights

1,392,371,727.95 1,430,367,044.26 profit) total

Liabilities and Owner's Equity (or

2,445,715,306.68 2,579,019,370.74 shareholders’ equity) total

Person in charge of the company: Zhang Hai Person in charge of accounting work: Guo Ke Person in charge of the accounting department: Guo Ke

consolidated income statement

January-June 2025

Unit: Yuan Currency: RMB

Item Notes 2025 Half Year 2024 Half Year

1. Total operating income 701,831,013.39 920,225,877.42 Including: operating income Note 61 701,831,013.39 920,225,877.42 Interest income

Premiums earned

Fee and commission income

2. Total operating costs 620,808,740.33 782,811,023.88 Including: operating costs Note 61 227,979,815.51 290,949,083.35 Interest expenses

Handling fees and commission expenses

surrender deposit

Net compensation expenses

Net withdrawal of insurance liability reserves

policy dividend payout

Reinsurance cost

Taxes and surcharges Note 62 9,740,268.06 10,306,448.99 Selling expenses Note 63 285,717,035.87 382,550,061.14 Administrative expenses Note 64 75,774,631.59 73,646,586.32 Research and development expenses Note 65 16,860,762.88 17,418,528.59

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Financial expenses Note 66 4,736,226.42 7,940,315.49 Including: interest expenses 6,654,547.47 10,236,148.95

Interest income 1,380,764.73 2,328,453.63 Add: other income Note 67 3,779,654.59 6,480,070.67 Investment income (losses are listed with "-") Note 68 285,716.66 919,210.25 Including: investments in associates and joint ventures

9,125.81 -79,548.00 capital income

Financial assets measured at amortized cost

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

Exchange gains (losses are listed with "-")

Net exposure hedging income (losses are listed with a “-” sign) Note 69

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

Note 70 110,145.21

(Fill in the number)

Credit impairment loss (losses are listed with "-") Note 71 3,598,062.64 -2,366,156.43 Asset impairment losses (losses are listed with "-") Note 72 -1,710,772.88 -1,146,124.67 Asset disposal income (losses are marked with "-"

Note 73 92,043.74 -164,144.05 columns)

3. Operating profit (losses are listed with "-") 87,177,123.02 141,137,709.31 plus: non-operating income Note 74 6,864,429.41 436,153.91 minus: non-operating expenses Note 75 131,901.57 2,197,564.00

4. Total profits (total losses are listed with "-") 93,909,650.86 139,376,299.22 Less: income tax expenses Note 76 8,518,316.84 20,907,956.26

5. Net profit (net loss is listed with "-") 85,391,334.02 118,468,342.96

(1) Classification by business continuity

1. Net profit from continuing operations (net loss is filled in with "-"

85,391,334.02 118,468,342.96 columns)

2. Net profit from discontinued operations (net loss is filled in with "-"

column)

(2) Classification according to ownership ownership

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

83,060,963.83 117,059,801.45 (please fill in with "-")

2. Profit and loss of minority shareholders (net loss is listed with "-") 2,330,370.19 1,408,541.51

6. Net amount of other comprehensive income after tax

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

net profit after tax

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

(1) Remeasurement of changes in defined benefit plan

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

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

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

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

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

(2) Changes in fair value of other debt investments

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

Amount

(4) Credit impairment provisions for other debt investments

(5) Cash flow hedging reserve

(6) Translation differences of foreign currency financial statements

(7) Others

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(2) Other comprehensive income attributable to minority shareholders

net of tax

7. Total comprehensive income 85,391,334.02 118,468,342.96

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

83,060,963.83 117,059,801.45 total

(2) Total comprehensive income attributable to minority shareholders 2,330,370.19 1,408,541.51

8. Earnings per share:

(1) Basic earnings per share (yuan/share) 0.20 0.29

(2) Diluted earnings per share (yuan/share) 0.20 0.29

If a business merger under the same control occurs in this period, the net profit realized by the merged party before the merger is: 0 yuan, and the net profit realized by the merged party in the previous period is: 0 yuan.

Person in charge of the company: Zhang Hai Person in charge of accounting work: Guo Ke Person in charge of the accounting department: Guo Ke

Parent company income statement

January-June 2025

Unit: Yuan Currency: RMB

Item Notes 2025 Half Year 2024 Half Year

1. Operating income Note 4 390,685,062.44 573,219,895.92 Less: Operating costs Note 4 121,586,528.81 166,106,217.29 Taxes and surcharges 4,193,225.52 5,035,896.62 Sales expenses 175,825,153.46 233,908,212.60 Administrative expenses 43,848,103.40 42,264,392.05 Research and development expenses 7,156,529.54 1,136,247.82 Financial expenses 4,653,357.42 7,756,427.44 Including: interest expense 5,872,436.36 9,432,432.27

Interest income 1,235,774.39 1,697,036.85 plus: other income 2,196,534.55 2,100,170.54 Investment income (losses are listed with "-") Note 5 53,501,482.19 285,772.23 Including: investments in associates and joint ventures

-7,006.71 -79,548.00 capital income

Financial assets measured at amortized cost

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

Net exposure hedging income (losses are listed with a “-” sign)

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

(Fill in the number)

Credit impairment loss (losses are listed with "-") 3,303,587.95 -988,484.48 Asset impairment losses (losses are listed with "-")

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

107,963.14 -171,223.70 columns)

2. Operating profit (losses are listed with "-") 92,531,732.12 118,238,736.69 Plus: non-operating income 6,177,010.27 285,793.31 Less: non-operating expenses 1,256.57 13,503.41

3. Total profits (total losses are listed with "-") 98,707,485.82 118,511,026.59 Less: income tax expenses 6,362,298.42 16,151,811.68

4. Net profit (net loss is listed with "-") 92,345,187.40 102,359,214.91

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

No. 92,345,187.40 102,359,214.91 (please fill in the list)

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

(Fill in the number)

5. Net amount of other comprehensive income after tax

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

benefit

1. Remeasure the changes in defined benefit plan

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

benefit

3. Changes in fair value of other equity instrument investments

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

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

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

2. Changes in fair value of other debt investments

3. Financial assets are reclassified and included in other comprehensive income

amount of

4. Credit impairment provisions for other debt investments

5. Cash flow hedging reserve

6. Translation differences of foreign currency financial statements

7.Others

6. Total comprehensive income 92,345,187.40 102,359,214.91

7. Earnings per share:

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

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

Person in charge of the company: Zhang Hai Person in charge of accounting work: Guo Ke Person in charge of the accounting department: Guo Ke

Consolidated cash flow statement from January to June 2025 Unit: Yuan Currency: RMB

Item Notes 2025 Half Year 2024 Half Year

1. Cash flow generated from operating activities:

Cash received from sales of goods and provision of services 881,693,172.86 917,909,563.15 Net increase in customer deposits and interbank deposits

Net increase in borrowing from the central bank

Net increase in borrowing funds from other financial institutions

Cash received from premiums from the original insurance contract

Net cash received from reinsurance business

Net increase in policyholders’ savings and investment funds

Cash collected from interest, fees and commissions

Net increase in borrowing funds

Net increase in repurchase business funds

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

Tax returns received 23,521.23 861,280.00 Other cash received related to operating activities Note 78 20,400,752.17 17,486,526.16

Subtotal of cash inflows from operating activities 902,117,446.26 936,257,369.31 Cash paid for purchasing goods and receiving services 269,478,920.98 238,427,994.57 Net increase in customer loans and advances

Net increase in deposits with central banks and inter-banks

Cash used to pay compensation from the original insurance contract

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Net increase in lending funds

Cash payments for interest, fees and commissions

Cash payment for policy dividends

Cash paid to and for employees 176,636,190.75 143,115,016.41 Various taxes paid 111,917,580.21 105,045,425.40 Other cash paid related to operating activities Note 78 327,137,433.28 427,159,886.72 Subtotal of cash outflows from operating activities 885,170,125.22 913,748,323.10

Net cash flow generated from operating activities 16,947,321.04 22,509,046.21

2. Cash flow generated from investing activities:

Recover cash received on investments

Cash received from investment income 421,672.37 998,758.25 Disposal of fixed assets, intangible assets and other long-term assets

614,000.00 Net cash amount recovered from assets in period 463,000.00

Received from disposal of subsidiaries and other business units

net cash

Other cash received related to investing activities Note 78 54,400,000.00 69,500,000.00

Subtotal of cash inflows from investing activities 55,435,672.37 70,961,758.25 Purchase and construction of fixed assets, intangible assets and other long-term assets

16,416,977.99 23,448,868.70 Cash paid for assets

Cash paid for investment 190,830,000.00 6,394,000.00 Net increase in pledged loans

Obtain payment from subsidiaries and other business units

net cash

Other cash payments related to investing activities Note 78 50,990,000.00 59,000,000.00 Subtotal of cash outflows from investing activities 258,236,977.99 88,842,868.70

Net cash flow generated from investing activities -202,801,305.62 -17,881,110.45

3. Cash flow generated from financing activities:

Cash received from investment 24,200,000.00, including: income from investments from minority shareholders by subsidiaries

24,200,000.00 in cash

Cash received from borrowings 355,857,527.76 180,000,000.00 Cash received from other financing activities Note 78

Subtotal of cash inflows from financing activities 355,857,527.76 204,200,000.00 Cash paid to repay debts 202,425,000.00 147,425,000.00 Paid to distribute dividends, profits or pay interest

149,329,036.50 92,846,278.02 cash

Including: shares paid by subsidiaries to minority shareholders

654,894.00

Profit, profit

Payment of other cash related to financing activities Note 78 9,547,344.00 3,703,090.74 Subtotal of cash outflows from financing activities 361,301,380.50 243,974,368.76

Net cash flow generated from financing activities -5,443,852.74 -39,774,368.76

4. The impact of exchange rate changes on cash and cash equivalents

influence

5. Net increase in cash and cash equivalents -191,297,837.32 -35,146,433.00 plus: opening balance of cash and cash equivalents 474,843,014.34 571,370,247.89

6. Balance of cash and cash equivalents at the end of the period 283,545,177.02 536,223,814.89

Person in charge of the company: Zhang Hai Person in charge of accounting work: Guo Ke Person in charge of the accounting department: Guo Ke

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Parent company cash flow statement

January-June 2025

Unit: Yuan Currency: RMB

Item Notes 2025 Half Year 2024 Half Year

1. Cash flow generated from operating activities:

Cash received from selling goods and providing services 522,622,469.31 595,802,354.51 Tax refunds received

Other cash received related to operating activities 16,441,544.43 14,194,375.70

Subtotal of cash inflows from operating activities 539,064,013.74 609,996,730.21 Cash paid for purchasing goods and receiving services 172,905,052.69 123,770,444.67 Cash paid to and for employees 132,795,689.54 86,748,552.88 Various taxes paid 67,465,761.86 64,104,535.40 Cash paid other related to operating activities 160,101,112.12 261,708,213.36

Subtotal of cash outflows from operating activities 533,267,616.21 536,331,746.31 Net cash flow from operating activities 5,796,397.53 73,664,983.90

2. Cash flow generated from investing activities:

Recover cash received on investments

Cash received from investment income 53,553,799.13 365,320.23 Disposal of fixed assets, intangible assets and other long-term assets

560,000.00 455,000.00 Net cash recovered from property

Disposal of cash received from subsidiaries and other business units

Net amount of money

Other cash received related to investing activities 23,000,000.00

Subtotal of cash inflows from investing activities 77,113,799.13 820,320.23 Purchase and construction of fixed assets, intangible assets and other long-term assets

6,466,155.28 19,366,295.72 Cash paid for property

Cash paid for investment 140,830,500.00 6,394,000.00 Cash paid for acquisition of subsidiaries and other business units

Net amount of money

Other cash payments related to investing activities 20,000,000.00 3,050,000.00 Subtotal of cash outflows from investing activities 167,296,655.28 28,810,295.72

Net cash flow generated from investing activities -90,182,856.15 -27,989,975.49

3. Cash flow generated from financing activities:

Absorbing cash received from investments

Cash received from borrowings 305,857,527.76 130,000,000.00 Cash received from other financing activities

Subtotal of cash inflows from financing activities 305,857,527.76 130,000,000.00 Cash paid to repay debts 152,425,000.00 107,425,000.00 Cash paid to distribute dividends, profits or pay interest 148,009,987.97 91,781,847.45 Other cash payments related to financing activities 5,720,400.00 444,000.00 Subtotal of cash outflows from financing activities 306,155,387.97 199,650,847.45

Net cash flow generated from financing activities -297,860.21 -69,650,847.45

4. The impact of exchange rate changes on cash and cash equivalents

5. Net increase in cash and cash equivalents -84,684,318.83 -23,975,839.04 plus: opening balance of cash and cash equivalents 189,950,224.26 269,086,008.94

6. Balance of cash and cash equivalents at the end of the period 105,265,905.43 245,110,169.90

Person in charge of the company: Zhang Hai Person in charge of accounting work: Guo Ke Person in charge of the accounting department: Guo Ke

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Consolidated Statement of Changes in Owner's Equity

January-June 2025

Unit: Yuan Currency: RMB 2025 Half Year

Owner's equity attributable to parent company

Other Equity Instruments Part 1

Item Others Special General Total paid-in capital (or shares) of minority shareholders’ equity

Excellent

Comprehensive risk (profit capital) Continued Capital reserve Less: treasury shares, combined reserve, surplus reserve insurance, retained profits, other subtotal

Stock and debt collection preparations

Be prepared

1. Closing balance of the previous year 409,802,216.00 149,042,263.82 100,642,385.06 133,275,177.34 935,863,129.35 1,527,340,401.45 67,286,640.47 1,594,627,041.92 plus: Changes in accounting policies

Early error correction

Others

2. Opening balance of the year 409,802,216.00 149,042,263.82 100,642,385.06 133,275,177.34 935,863,129.35 1,527,340,401.45 67,286,640.47 1,594,627,041.92

3. Increase or decrease of change funds in this period

Amount (reduced by "-" to fill in the columns 6,919,839.36 -54,577,841.61 -47,658,002.25 2,062,938.56 -45,595,063.69)

(1) Total comprehensive income 83,060,963.83 83,060,963.83 2,330,370.19 85,391,334.02

(2) Owner’s investment and

6,919,839.36 6,919,839.36 378,462.37 7,298,301.73 Capital reduction

1. Owner's investment

common stock

2. Other equity instruments held

Someone invests capital

3. Share-based payments are included in the

6,919,839.36 6,919,839.36 378,462.37 7,298,301.73Amount of owners’ equity

4. Others

(3) Profit distribution -137,638,805.44 -137,638,805.44 -645,894.00 -138,284,699.44 1. Withdrawal from surplus reserve

2. Extract general risk allowance

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Prepare

3. to the owner (or stock

-137,638,805.44 -137,638,805.44 -645,894.00 -138,284,699.44 East) distribution

4. Others

(4) Within owner’s equity

carried forward

1. Conversion of capital reserve to capital increase

Capital (or share capital)

2. Conversion of surplus reserves to capital increase

Capital (or share capital)

3. Surplus reserve to cover losses

loss

4. Defined benefit plan changes

Moving amount carried forward to retained earnings

5. Other comprehensive income

Transfer to retained earnings

6. Others

(5) Special reserves

1. Extract this period

2. Used in this issue

(6) Others

4. Ending balance of the current period 409,802,216.00 155,962,103.18 100,642,385.06 133,275,177.34 881,285,287.74 1,479,682,399.20 69,349,579.03 1,549,031,978.23

2024 half year

Owner's equity attributable to parent company

One of the other equity instruments

Item Others General minority shareholders’ equity Total paid-in capital (or shares) of owners’ equity

You Yong Capital Reserve Less: Treasury Shares

Comprehensive items

Surplus reserve

Wind undistributed profits and its subtotal)

Continue first

Other joint savings insurance, other collection reserves, quasi-equity bonds

Be prepared

1. Closing balance of the previous year 409,862,216.00 225,123,807.28 41,429,610.92 113,010,801.09 763,743,959.06 1,470,311,172.51 239,042,237.85 1,709,353,410.36 plus: Changes in accounting policies

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Early error correction

Others

2. Balance at the beginning of the year 409,862,216.00 225,123,807.28 41,429,610.92 113,010,801.09 763,743,959.06 1,470,311,172.51 239,042,237.85 1,709,353,410.36

3. Amount of increase or decrease in the current period (decreases are filled in with "-" 14,093,146.15 -5,490,000.00 35,415,538.25 54,998,684.40 12,745,678.22 67,744,362.62 columns)

(1) Total comprehensive income 117,059,801.45 117,059,801.45 1,408,541.51 118,468,342.96

(2) Owner’s investment and

14,093,146.15 -5,490,000.00 19,583,146.15 11,337,136.71 30,920,282.86 Capital reduction

1. Owner's investment

12,862,863.29 12,862,863.29 11,337,136.71 24,200,000.00 shares

2. Capital invested by other equity instrument holders

3. Share-based payments are included in all

1,230,282.86 -5,490,000.00 6,720,282.86 6,720,282.86 Amount of shareholders’ equity

4. other

(3) Profit distribution -81,644,263.20 -81,644,263.20 -81,644,263.20 1. Withdrawal from surplus reserve

2. Extract general risk reserves 3. To the owner (or shareholder)

-81,644,263.20 -81,644,263.20 -81,644,263.20 allocation

4. Others

(4) Internal carryover of owners’ equity

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

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

3. Surplus reserve to make up for losses 4. Changes in defined benefit plans are carried forward to retained earnings

4. Other comprehensive income carried forward to retained earnings

5. Others

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(5) Special reserves

1. Extract this period

2. Used in this issue

(6) Others

4. Ending balance of the current period 409,862,216.00 239,216,953.43 35,939,610.92 113,010,801.09 799,159,497.31 1,525,309,856.91 251,787,916.07 1,777,097,772.98

Person in charge of the company: Zhang Hai Person in charge of accounting work: Guo Ke Person in charge of the accounting department: Guo Ke

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

January-June 2025

Unit: Yuan Currency: RMB 2025 Half Year

Item Paid-in capital (or shares) Other equity instruments Other comprehensive Special items

Capital reserve less: treasury shares Surplus reserve Undistributed profits Total owners’ equity

This) Preferred shares Perpetual bonds Other joint income Reserves

1. Closing balance of the previous year 409,802,216.00 192,249,524.07 100,642,385.06 133,275,177.34 795,682,511.91 1,430,367,044.26 Add: changes in accounting policies

Early error correction

Others

2. Opening balance of the year 409,802,216.00 192,249,524.07 100,642,385.06 133,275,177.34 795,682,511.91 1,430,367,044.26

3. Amount of increase or decrease in the current period (decreases are marked with “-”

No. 7,298,301.73 -45,293,618.04 -37,995,316.31 (please fill in the list)

(1) Total comprehensive income 92,345,187.40 92,345,187.40

(2) Owner’s investment and capital reduction 7,298,301.73 7,298,301.73 1. Common stock invested by owners

2. Capital invested by other equity instrument holders

3. The amount of share-based payment included in owners’ equity 7,298,301.73 7,298,301.73 4. Others

(3) Profit distribution -137,638,805.44 -137,638,805.44 1. Withdrawal from surplus reserve

2. Distribution to owners (or shareholders) -137,638,805.44 -137,638,805.44 3. Others

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(4) Internal carryover of owners’ equity

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

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

3. Surplus reserve to cover losses

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

5. Other comprehensive income carried forward to retained earnings

6. Others

(5) Special reserves

1. Extract this period

2. Used in this issue

(6) Others

4. Ending balance of the current period 409,802,216.00 199,547,825.80 100,642,385.06 133,275,177.34 750,388,893.87 1,392,371,727.95

2024 half year

Item Paid-in capital (or shares) Other equity instruments Other comprehensive Special items

Capital reserve less: treasury shares Surplus reserve Undistributed profits Total owners’ equity

This) Preferred shares Perpetual bonds Other joint income Reserves

1. Closing balance of the previous year 409,862,216.00 227,330,444.50 41,429,610.92 113,010,801.09 694,947,388.84 1,403,721,239.51 Add: changes in accounting policies

Early error correction

Others

2. Balance at the beginning of the year 409,862,216.00 227,330,444.50 41,429,610.92 113,010,801.09 694,947,388.84 1,403,721,239.51

3. Amount of increase or decrease in the current period (decreases are marked with “-”

1,230,282.86 -5,490,000.00 20,714,951.71 (Fill in No. 27,435,234.57)

(1) Total comprehensive income 102,359,214.91 102,359,214.91

(2) Owner’s investment and capital reduction 1,230,282.86 -5,490,000.00 6,720,282.86 1. Common stock invested by owners

2. Capital invested by other equity instrument holders

3. The amount of share-based payment included in owners’ equity 1,230,282.86 -5,490,000.00 6,720,282.86 4. other

(3) Profit distribution -81,644,263.20 -81,644,263.20 1. Withdrawal from surplus reserve

2. Distribution to owners (or shareholders) -81,644,263.20 -81,644,263.20

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3. Others

(4) Internal carryover of owners’ equity

1. Convert capital reserve to capital (or share capital) 2. Convert surplus reserves to capital (or share capital) 3. Surplus reserve to cover losses

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

3. Other comprehensive income carried forward to retained earnings

4. Others

(5) Special reserves

1. Extract this period

2. Used in this issue

(6) Others

4. Ending balance of the current period 409,862,216.00 228,560,727.36 35,939,610.92 113,010,801.09 715,662,340.55 1,431,156,474.08

Person in charge of the company: Zhang Hai Person in charge of accounting work: Guo Ke Person in charge of the accounting department: Guo Ke

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3. Basic situation of the company

1. Company profile

√Applicable □Not applicable

(1) Company profile

1. Name: Guizhou Sanli Pharmaceutical Co., Ltd.

2. Unified social credit code: 91520000622415091L

3. Enterprise type: joint stock limited company (listed, natural person investment or holding)

4. Registered address: Xiayun Industrial Park, Pingba District, Anshun City, Guizhou Province

5. Legal representative: Zhang Hai

6. Registered capital: RMB 409.802216 million

7. Date of establishment: September 22, 1995

(2) The company’s industry nature, business scope and main products or services provided

Industry nature: Pharmaceutical manufacturing industry

Business scope: No operations are permitted if prohibited by laws, regulations, and State Council decisions; if laws, regulations, and State Council decisions stipulate that permission (examination and approval) is required, the business shall be operated with the permission (approval) document after being approved by the examination and approval authority; if laws, regulations, and State Council decisions stipulate that no license (examination and approval) is required, market entities shall choose to operate independently. (Production and sales of soft capsules, hard capsules, and sprays (including extraction of traditional Chinese medicine); traditional Chinese medicine technology consulting services.)

The main products provided by the company: production and sales of Kaihoujian spray (including children's type), Qijiao Shengbai capsules, gynecological reconstruction pills and powerful Gastrodia ulmoides capsules, etc.

(3) Historical evolution

1. In September 1995, Sanli Co., Ltd. was established with a registered capital of 600,000 yuan.

The predecessor of Guizhou Sanli Pharmaceutical Co., Ltd. (hereinafter referred to as the "Company", "the Company" and "Guizhou Sanli"), Guizhou Sanli Pharmaceutical Co., Ltd. (hereinafter referred to as "Sanli Co., Ltd.") was established on September 22, 1995. It was jointly funded by Zhang Leling and Wu Liguang, with a registered capital of 600,000 yuan. Among them, Zhang Leling contributed 540,000 yuan, accounting for 90.00% of the registered capital; Wu Liguang contributed 60,000 yuan, accounting for 10.00% of the registered capital. The registered capital has been verified by the Guiyang Audit Firm and a "Capital Verification Certificate" (95) Zhu Shen Yan Zi No. 0277 was issued on September 11, 1995.

On September 22, 1995, Guizhou Provincial Administration for Industry and Commerce issued the "Enterprise Legal Person Business License".

2. In June 2000, Sanli Co., Ltd.’s first equity transfer

In May 2000, Wu Liguang transferred his 60,000 yuan investment in Sanli Limited (accounting for 10% of the registered capital) to Zhang Yong. On June 15, 2000, Sanli Co., Ltd. handled the industrial and commercial change registration for the above-mentioned equity transfer matter.

3. In November 2002, Sanli Co., Ltd. increased its capital for the first time, and its registered capital increased to 30.6 million yuan.

On November 1, 2002, after review and approval by the shareholders' meeting of Sanli Co., Ltd., the registered capital was increased to 30.6 million yuan. Among them, Zhang Leling converted the 27 million yuan he advanced for the production and operation of Sanli Co., Ltd. from January 1, 1998 to September 30, 2002, into a capital contribution to Sanli Co., Ltd., and Zhang Yong converted his 3 million yuan claim against Sanli Co., Ltd. on October 29, 2002 into a capital contribution to Sanli Co., Ltd. The capital increase was verified by Guiyang Xinghong United Accounting Firm and a "Capital Verification Report" No. Zhu Xinghong Hui Yan Zi [2002] 011 was issued on November 12, 2002.

On November 26, 2002, Sanli Co., Ltd. completed the industrial and commercial change registration for the above-mentioned capital increase.

4. In June 2004, Sanli Co., Ltd. increased its capital for the second time, and its registered capital increased to 45.6 million yuan.

On March 12, 2004, after review and approval by the shareholders' meeting of Sanli Co., Ltd., the registered capital was increased to 45.6 million yuan. Among them, Zhang Leling converted the 13.5 million yuan he advanced for the production and operation of Sanli Co., Ltd. from December 1, 2002 to May 31, 2004 into a capital contribution to Sanli Co., Ltd., and Zhang Yong converted the 1.5 million yuan he advanced for Sanli Co., Ltd. from August 1, 2003 to November 30, 2003 into an investment in Sanli Co., Ltd. The capital increase was verified by Guizhou Zhiyuan Accounting Firm Co., Ltd. and a "Capital Verification Report" No. Qian Zhiyuan Yanzi [2004] 1-049 was issued on June 2, 2004.

On June 30, 2004, Sanli Co., Ltd. completed the industrial and commercial change registration for the above-mentioned capital increase.

5. In September 2004, Sanli Co., Ltd. increased its capital for the third time, and its registered capital increased to 48.6 million yuan.

On August 21, 2004, after review and approval by the shareholders' meeting of Sanli Co., Ltd., the registered capital was increased to 48.6 million yuan. Among them, Zhang Leling increased his capital in the form of currency by 2.7 million yuan, and Zhang Yong increased his capital in the form of currency by 300,000 yuan. The capital increase was verified by Guizhou Zhiyuan Accounting Firm Co., Ltd. and a "Capital Verification Report" No. [2004] 89 was issued on August 26, 2004.

On September 1, 2004, Sanli Co., Ltd. completed the industrial and commercial change registration for the above-mentioned capital increase.

6. In October 2004, the second equity transfer of Sanli Co., Ltd.

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On September 7, 2004, with the approval of the shareholders' meeting of Sanli Co., Ltd., Zhang Yong transferred his 4.86 million yuan investment in Sanli Co., Ltd. (accounting for 10% of the registered capital) to Liang Wei, Tong Jiabin and Feng Yanming respectively. On September 8, 2004, the parties to the equity transfer signed an "Equity Transfer Agreement" respectively, stipulating that Zhang Yong would transfer the capital contribution of 2.43 million yuan in Sanli Co., Ltd. held by Liang Wei (accounting for 5% of the registered capital), the 1.215 million yuan investment in Sanli Co., Ltd. held by Tong Jiabin (accounting for 2.50% of the registered capital), and the 1.215 million yuan investment in Sanli Co., Ltd. held by Feng Yanming (accounting for 2.50% of the registered capital).

On October 26, 2004, Sanli Co., Ltd. completed the industrial and commercial change registration for the above equity transfer matter.

7. In September 2005, the third equity transfer of Sanli Co., Ltd.

On August 21, 2005, with the approval of the shareholders' meeting of Sanli Co., Ltd., Zhang Leling transferred the capital contribution of 2.43 million yuan (accounting for 5% of the registered capital) of Sanli Co., Ltd. to Wu Haiyan. On August 30, 2005, both parties to the equity transfer signed the Equity Transfer Agreement. On September 7, 2005, Sanli Co., Ltd. completed the industrial and commercial change registration for the above equity transfer matter.

8. In February 2010, the fourth equity transfer of Sanli Co., Ltd.

On January 18, 2010, upon review and approval by the shareholders' meeting of Sanli Co., Ltd., Wu Haiyan, Tong Jiabin, and Feng Yanming respectively transferred their capital contributions of 2.43 million yuan (accounting for 5% of the registered capital), 1.215 million yuan (accounting for 2.5% of the registered capital), and 1.215 million yuan (accounting for 2.5% of the registered capital) of Sanli Co., Ltd. to Zhang Leling. On January 18, 2010, Tong Jiabin, Feng Yanming and Zhang Leling signed the "Equity Transfer Agreement" respectively. On January 22, 2010, Wu Haiyan and Zhang Leling signed the Equity Transfer Agreement. On February 10, 2010, Sanli Co., Ltd. completed the industrial and commercial change registration for the above equity transfer matter.

9. In March 2010, the fifth equity transfer of Sanli Co., Ltd.

On March 1, 2010, with the approval of the shareholders' meeting of Sanli Co., Ltd., Zhang Leling transferred the capital contribution of 9.72 million yuan (accounting for 20% of the registered capital) of Sanli Co., Ltd. to Zhang Hai. On the same day, both parties to the equity transfer signed the Equity Transfer Agreement. Zhang Leling is Zhang Hai's father. This transfer is an equity transfer between immediate family members, and no actual payment has been made.

On March 30, 2010, Sanli Co., Ltd. completed the industrial and commercial change registration for the above equity transfer matter.

10. In May 2011, the sixth equity transfer of Sanli Co., Ltd.

On May 10, 2011, with the approval of the shareholders' meeting of Sanli Co., Ltd., Liang Wei transferred his capital contribution of 2.43 million yuan (accounting for 5% of the registered capital) of Sanli Co., Ltd. to Zhang Leling. On the same day, both parties to the equity transfer signed the Equity Transfer Agreement.

On May 12, 2011, Sanli Co., Ltd. completed the industrial and commercial change registration for the above equity transfer matter.

11. In May 2011, the seventh equity transfer of Sanli Co., Ltd.

On May 11, 2011, with the approval of the shareholders' meeting of Sanli Co., Ltd., Zhang Leling transferred his capital contribution of 5.832 million yuan (accounting for 12% of the registered capital) of Sanli Co., Ltd. to Sheng Yongjian. On the same day, both parties to the equity transfer signed the Equity Transfer Agreement.

On May 19, 2011, Sanli Co., Ltd. completed the industrial and commercial change registration for the above equity transfer matter.

12. In October 2011, Sanli Limited Equity Succession

On September 30, 2011, after deliberation and approval at the Sanli Co., Ltd. shareholders’ meeting, due to Zhang Leling’s death and Zhang Leling’s mother Liao Dexian voluntarily giving up her equity inheritance rights, Zhang Leling’s original investment of 33.048 million yuan in Sanli Co., Ltd. (accounting for 68% of the registered capital), Zhang Leling’s wife Wang Huiying inherited an investment of 9.72 million yuan (accounting for 20% of the registered capital), and Zhang Leling’s son Zhang Hai inherited an investment of 23.328 million yuan (accounting for 48% of the registered capital).

On October 10, 2011, Zhang Leling's mother, Liao Dexian, issued a "Declaration of Renunciation of Equity Inheritance Rights", stating that Zhang Leling would give up the inheritance rights of Zhang Leling's equity in Sanli Limited. On the same day, Zhang Hai and Wang Huiying signed a "Share Succession Agreement", stipulating that the capital contribution of 33.048 million yuan (accounting for 68% of the registered capital) of Sanli Co., Ltd. held by Zhang Leling will be inherited by Zhang Hai and Wang Huiying. Zhang Hai inherited the capital contribution of 23.328 million yuan (accounting for 48% of the registered capital) of Sanli Co., Ltd., and Wang Huiying inherited the capital contribution of 9.72 million yuan (accounting for 20% of the registered capital) of Sanli Co., Ltd.

On October 12, 2011, Sanli Co., Ltd. completed the industrial and commercial change registration for the above-mentioned inheritance matters.

13. In July 2014, the eighth equity transfer of Sanli Co., Ltd.

On July 11, 2014, upon review and approval by the shareholders' meeting of Sanli Co., Ltd., Wang Huiying transferred her capital contribution of 2.916 million yuan (accounting for 6% of the registered capital) of Sanli Co., Ltd. to Wang Yi and Xu Jun respectively. It was agreed that Wang Huiying would transfer the capital contribution of 1.458 million yuan (accounting for 3% of the registered capital) of Sanli Co., Ltd. held by Wang Huiying to Wang Yi; and the capital contribution of 1.458 million yuan (accounting for 3% of the registered capital) of Sanli Co., Ltd. held by Wang Huiying would be transferred to Xu Jun; on July 14, 2014, Wang Huiying, Wang Yi, and Xu Jun signed the "Equity Transfer Agreement" respectively.

On July 18, 2014, Sanli Co., Ltd. completed the industrial and commercial change registration for the above equity transfer matter.

14. In November 2014, the ninth equity transfer of Sanli Co., Ltd.

On November 12, 2014, upon review and approval at the Sanli Co., Ltd. shareholders' meeting, Wang Yi and Xu Jun transferred their shares of Sanli Co., Ltd., which they had transferred in July 2014, to Wang Huiying for 1.458 million yuan each. On the same day, Wang Yi, Xu Jun and Wang Huiying signed the "Equity Transfer Agreement" respectively.

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On November 13, 2014, Sanli Co., Ltd. completed the industrial and commercial change registration for the above equity transfer matter.

15. In November 2014, Sanli Co., Ltd. increased its capital for the fourth time, and its registered capital increased to 50.15 million yuan.

On November 13, 2014, after review and approval by the shareholders' meeting of Sanli Co., Ltd., the registered capital was increased to 50.15 million yuan. Guiyang Industrial Investment Biomedical Industry Venture Capital Co., Ltd. increased its capital by 10.23 million yuan in cash. 1.55 million yuan is used as the registered capital, and the premium of 8.68 million yuan is included in the capital reserve. The capital increase was verified by the Guizhou Branch of Shun Li Xin Certified Public Accountants LLP (Special General Partnership) and issued the "Capital Verification Report" No. 40047 [2014] Xinhuishi Guibaozi [2014] on November 14, 2014.

On November 28, 2014, Sanli Co., Ltd. completed the industrial and commercial change registration for the above-mentioned capital increase.

16. In January 2015, Sanli Co., Ltd. was changed into a joint stock company as a whole.

On January 5, 2015, with the approval of the shareholders' meeting of Sanli Co., Ltd., based on the net assets of Sanli Co., Ltd. as of December 31, 2014, the overall change was established as a joint-stock company.

On January 28, 2015, Guizhou Sanli held its founding meeting and the first extraordinary shareholders' meeting in 2015. The meeting voted and passed the "Proposal on the overall change of Guizhou Sanli Pharmaceutical Co., Ltd. into Guizhou Sanli Pharmaceutical Co., Ltd." and agreed to use Sanli Pharmaceutical Co., Ltd. As of December 31, 2014, the audited net assets of Lili Co., Ltd. were 108.9159 million yuan, which were converted into 50.15 million shares at a ratio of 1:0.4604, with a par value of 1 yuan per share, and a registered capital of 50.15 million yuan. The total share capital before and after the restructuring remained unchanged. On the same day, all the sponsors jointly signed the "Sponsor Agreement on the Overall Change and Establishment of Guizhou Sanli Pharmaceutical Co., Ltd." and agreed to convert Sanli Co., Ltd.'s audited net assets of RMB 108.9159 million as of December 31, 2014 into 50.15 million shares at a ratio of 1:0.4604. The portion of RMB 58.7659 million in net assets greater than the share capital will be included in the capital reserve. The capital verification for this overall change was verified by Shun Li Xin Certified Public Accountants (Special General Partnership) and a Capital Verification Report No. 150301 [2015] was issued on January 28, 2015.

On January 30, 2015, Guizhou Sanli was registered at the Guizhou Provincial Administration for Industry and Commerce and obtained a "Business License" with registration number 520000000029334.

17. In August 2015, Guizhou Sanli was listed on the Small and Medium Enterprises Equities Exchange and Quotations, the first capital increase and the first stock issuance, and the total share capital increased to 55.7223 million shares.

On May 19, 2015, Guizhou Sanli's 2015 second extraordinary shareholders' meeting passed the "Proposal on the Company's Stock Issuance Plan" and other motions, agreeing to the company's non-public directional stock issuance plan. It signed a "Share Subscription and Capital Increase Agreement" with GF Securities Co., Ltd., Guangzhou GF Xinde Phase I Health Industry Investment Enterprise (Limited Partnership), and Zhuhai Kangyuan Investment Enterprise (Limited Partnership) and signed an "Investment Agreement" respectively, subscribing a total of 5.5723 million shares of Guizhou Sanli. Shareholders contributed RMB 55 million in currency to subscribe for 5.5723 million shares, and the premium of RMB 49.4277 million was included in the capital reserve. The total share capital increased to 55.7223 million shares. The capital increase was verified by Shun Li Xin Certified Public Accountants (Special General Partnership) and a "Capital Verification Report" No. 151105 [2015] was issued on June 11, 2015.

On June 16, 2015, Guizhou Sanli received the "Letter Concerning Approval for Guizhou Sanli Pharmaceutical Co., Ltd.'s Stock to be Listed on the National Equities Exchange and Quotations" issued by the National Equities Exchange and Quotations (National Equities Exchange and Quotations) (equity transfer system letter [2015] No. 2766), which approved the company's listing on August 1, 2015. It was listed on the National Equities Exchange and Quotations on the 7th. The stock abbreviation is "Sanli Pharmaceutical" and the stock code is 832708. The company's total share capital at the time of listing was 50.15 million shares, of which 50.15 million shares were subject to selling conditions and 0 shares were not subject to selling conditions. The transfer method was agreement transfer.

On July 6, 2015, according to the "Share Registration Letter" [2015] No. 3531 issued by the National Small and Medium-sized Share Transfer System, the company completed the above-mentioned stock issuance, with a total stock issuance of 5.5723 million shares, including 0 shares with sales restrictions and 5.5723 million shares without sales conditions.

On June 18, 2015, Guizhou Sanli completed the industrial and commercial change registration for the above-mentioned increase in share capital. On August 17, 2015, Guizhou Sanli completed the registration of the above-mentioned stock issuance at the Beijing Branch of China Securities Depository and Clearing Co., Ltd.

18. In October 2015, Guizhou Sanli’s stock transfer method was changed from agreement transfer to market-making transfer.

On September 11, 2015, Guizhou Sanli's 2015 Third Extraordinary General Meeting of Shareholders reviewed and approved the "Proposal on Changing the Company's Stock Transfer Method from Agreement Transfer to Market-making Transfer", which planned to change the company's stock transfer method from agreement transfer to market-making transfer.

On October 12, 2015, with the consent of the National Equities Exchange and Quotations Co., Ltd., the stock transfer method of Guizhou Sanli was changed from agreement transfer to market-making transfer. The market makers are GF Securities Co., Ltd. and Guohai Securities Co., Ltd. 19. In November 2015, Guizhou Sanli made its second capital increase and first equity distribution, and the total share capital increased to 111.4446 million shares.

On November 3, 2015, Guizhou Sanli's 2015 Fourth Extraordinary General Meeting of Shareholders reviewed and approved the "Proposal on the Transfer of the Company's Capital Reserves to Share Capital" and other motions. Based on the total existing share capital of 55,722,300 shares, the company's capital reserves as of September 30, 2015 were transferred to all shareholders for every 10 shares, for a total of 55,722,300 shares, with a par value of 1 yuan per share. After the transfer, the share capital increased to 111.4446 million shares.

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On November 13, 2015, Guizhou Sanli completed the registration of the above-mentioned stock issuance at the Beijing Branch of China Securities Depository and Clearing Co., Ltd. A total of 55.7223 million shares were transferred, including 50.15 million shares with trading restrictions and 5.5723 million shares without selling conditions.

On December 1, 2015, Guizhou Sanli completed the industrial and commercial change registration for the above-mentioned increase in share capital.

20. In August 2016, Guizhou Sanli’s third capital increase and second stock issuance increased the total share capital to 128.1756 million shares.

On March 18, 2016, Guizhou Sanli's first extraordinary shareholders' meeting in 2016 passed the "Proposal on the Company's Stock Issuance Plan" and other proposals, agreeing to the company's non-public directional stock issuance plan. Respectively with Beijing Zhonghe Growth Investment Center (Limited Partnership), Guizhou Wenkang Medical and Health Industry Investment Fund (Limited Partnership), Jinmanhui (Beijing) Investment Management Co., Ltd., Chongqing Boyi Xintian Equity Investment Fund Partnership (Limited Partnership), Shenzhen Tongchuang Jincheng New Third Board Investment Enterprise (Limited Partnership), Tianjin Yongxing Beituo Asset Management Partnership (Limited Partnership), Cai Chengchi, Haimen Times Bole Equity Investment Partnership (Limited Partnership), Nantong Kangchengheng Key Growth Enterprise Equity Investment Partnership (Limited Partnership), Zhenjiang Kangchengheng Venture Capital Partnership (Limited Partnership), Huizhou Times Bole Pharmaceutical Consumer Industry M&A Investment Partnership (Limited Partnership), Foshan Bit Times Bole No. 1 Equity Investment Partnership (Limited Partnership) and Zhang Wei signed a "Share Subscription Agreement" to subscribe for a total of 16.731 million shares of Guizhou Sanli. Shareholders contributed RMB 209.1375 million in cash to subscribe for 16.731 million shares, and the premium of RMB 192.4065 million was included in the capital reserve. The total share capital increased to 128.1756 million shares. The capital increase was verified by Shun Li Xin Certified Public Accountants (Special General Partnership) and a "Capital Verification Report" No. 151132 [2016] was issued on May 6, 2016.

On July 26, 2016, according to the "Share Registration Letter" [2016] No. 5657 issued by the National Equities Exchange and Quotations, the company completed the above-mentioned stock issuance, with a total stock issuance of 16.731 million shares, including 0 shares with sales restrictions and 16.731 million shares with no sales conditions.

On August 5, 2016, Guizhou Sanli completed the industrial and commercial change registration for the above-mentioned increase in share capital. On August 11, 2016, Guizhou Sanli completed the registration of the above-mentioned stock issuance at the Beijing Branch of China Securities Depository and Clearing Co., Ltd.

21. In February 2017, Guizhou Sanli’s stock transfer method was changed from market-making transfer to agreement transfer.

On December 2, 2016, Guizhou Sanli's 2016 Fourth Extraordinary General Meeting of Shareholders reviewed and approved the "Proposal on Changing the Company's Stock Transfer Method from Market-making Transfer to Agreement Transfer", which planned to change the company's stock transfer method from market-making transfer to agreement transfer.

On February 3, 2017, with the consent of the National Equities Exchange and Quotations Co., Ltd., the stock transfer method of Guizhou Sanli was changed from market-making transfer to agreement transfer.

22. In May 2017, Guizhou Sanli made its fourth capital increase and second equity distribution, and its total share capital increased to 366,582,216 shares.

On May 8, 2017, Guizhou Sanli's 2017 Second Extraordinary General Meeting of Shareholders reviewed and approved the "Proposal on the Company's Profit Distribution Plan for 2016" and other proposals. It is planned to transfer 18.6 shares to all shareholders for every 10 shares based on the total share capital of 128.1756 million shares, for a total of 238.406616 shares, with a par value of 1 yuan per share. After the transfer, the share capital increased to 366,582,216 shares.

On May 24, 2017, the company completed the above-mentioned equity distribution and transferred a total of 238,406,616 shares, including 108,628,650 shares with sales restrictions and 129,777,966 shares without sales restrictions. Shares subject to sales restrictions were listed for public transfer on the National Equities Exchange and Quotations on May 25, 2017.

On May 25, 2017, Guizhou Sanli completed the registration of the above-mentioned stock issuance at the Beijing Branch of China Securities Depository and Clearing Co., Ltd. On June 7, 2017, Guizhou Sanli completed the industrial and commercial change registration for the above-mentioned increase in share capital.

23. In June 2018, Guizhou Sanli terminated its listing on the Small and Medium Enterprises Equities Exchange and Quotations System.

On March 7, 2018, Guizhou Sanli’s 2017 Annual General Meeting of Shareholders reviewed and approved the “Proposal on Applying for the Termination of Listing of the Company’s Stocks on the National Equities Exchange and Quotations of the National Equities Exchange and Quotations” and other proposals, and planned to terminate the listing of the company’s shares on the National Equities Exchange and Quotations of the National Equities Exchange and Quotations.

According to the "Letter Concerning the Termination of Listing of Guizhou Sanli Pharmaceutical Co., Ltd.'s Stocks on the National Equities Exchange and Quotations" issued by the National Equities Exchange and Quotations (equity transfer system letter [2018] No. 1963), Guizhou Sanli will terminate its listing on the National Equities Exchange and Quotations on June 6, 2018.

24. In April 2020, Guizhou Sanli was listed on the Shanghai Stock Exchange, its fifth capital increase and third stock issuance, and its total share capital increased to 407,322,216 shares.

On November 7, 2017, Guizhou Sanli's 2017 Fifth Extraordinary General Meeting of Shareholders reviewed and approved the "Proposal on the Company's Application for the Initial Public Offering and Listing of RMB Ordinary Shares (A Shares)" and the China Securities Regulatory Commission's Zhengjian Xu [2020] No. 561 "Reply on the Approval of the Initial Public Offering of Guizhou Sanli Pharmaceutical Co., Ltd." approved Guizhou Sanli's public issuance of no more than 40.74 million RMB ordinary shares (A shares) to the public. Guizhou Sanli issued 40.74 million RMB ordinary shares (A shares) to public investors on April 16, 2020, with a face value of 1.00 yuan per share and a subscription price of 7.35 yuan per share.

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A total of 299.439 million yuan was raised, excluding tax-exclusive expenses of 62.598 million yuan related to the issuance. Guizhou Sanli’s actual net raised funds was 236.841 million yuan, of which 40.74 million yuan was included in share capital, and the premium part of 196.101 million yuan was included in capital reserves. The changed share capital is 407,322,216 yuan, and the paid-in share capital is 407,322,216 yuan. Dahua Accounting Firm (Special General Partnership) verified this capital increase and issued the Capital Verification Report No. Dahua Yanzi [2020] 000079.

On April 23, 2020, Guizhou Sanli completed the registration of the above-mentioned stock issuance at the Shanghai Branch of China Securities Depository and Clearing Co., Ltd.

On April 28, 2020, Guizhou Sanli was listed on the Shanghai Stock Exchange. The stock abbreviation is "Guizhou Sanli" and the stock code is 603439. The company's total share capital at the time of listing was 407.322216 million shares, including: 366.582216 million shares with sales restrictions and 40.74 million shares without sales restrictions. The transfer method is market-making transfer.

On July 1, 2020, Guizhou Sanli completed the industrial and commercial change registration for the above-mentioned increase in share capital.

25. In November 2021, the sixth capital increase and fourth stock issuance increased the total share capital to 410,862,216 shares.

On September 1, 2021, Guizhou Sanli's 2021 Second Extraordinary General Meeting of Shareholders reviewed and approved the "Proposal on the 2021 Restricted Stock Incentive Plan (Draft) of Guizhou Sanli Pharmaceutical Co., Ltd." and its summary. Guizhou Sanli plans to grant 4.8 million restricted RMB ordinary shares (A shares) to 9 incentive targets through targeted issuance, with a par value of 1 yuan per share and a grant price of RMB 7.50 per share.

On November 3, 2021, the sixth meeting of the third board of directors of Guizhou Sanli reviewed and approved the "Proposal on Adjusting the Number of Rights Granted to Incentive Objects of the Company's 2021 Restricted Stock Incentive Plan" and the "Proposal on Granting Restricted Stocks to Incentive Objects of the 2021 Restricted Stock Incentive Plan". According to Guizhou Sanli 202 Authorized by the resolution of the second extraordinary general meeting of shareholders in 2021, the board of directors of Guizhou Sanli adjusted the number of rights granted to the incentive objects of the 2021 restricted stock incentive plan. The number of restricted shares granted was adjusted from the original 4.8 million shares to 3.74 million shares. The actual number of restricted shares granted was 3.54 million shares, and a total of RMB 26.55 million was raised. Among them, 3.54 million yuan was included in the share capital, and the premium part of 23.01 million yuan was included in the capital reserve. The changed share capital is 410,862,216 yuan, and the paid-in share capital is 410,862,216 yuan. Dahua Accounting Firm (Special General Partnership) verified this capital increase and issued the Capital Verification Report No. Dahua Yanzi [2021] 000739.

On November 17, 2021, Guizhou Sanli completed the registration for the grant of the 2021 restricted stock incentive plan at the Shanghai Branch of China Securities Depository and Clearing Corporation.

26. In January 2023, the first capital reduction and the first repurchase and cancellation of treasury shares reduced the total share capital to 409,862,216 shares.

On October 28, 2022, the 12th meeting of the third board of directors of Guizhou Sanli reviewed and approved the "Proposal on the Repurchase and Cancellation of Restricted Stocks that have been granted to some of the company's incentive targets but have not been released from sales restrictions." In view of the fact that one of the first incentive targets involved in the "Company's 2021 Restricted Stock Incentive Plan", including Zhou Xianning, has resigned and is no longer in compliance with the incentive conditions, all 1 million restricted stocks that have been awarded but have not been released from sales restrictions will be repurchased and canceled by the company. The changed share capital is 409,862,216 yuan, and the paid-in share capital is 409,862,216 yuan. Dahua Accounting Firm (Special General Partnership) has verified this capital reduction, Dahua Yanzi [2023] 000042 "Capital Verification Report".

On January 12, 2023, Guizhou Sanli completed the registration of the above-mentioned stock cancellation at the Shanghai Branch of China Securities Depository and Clearing Co., Ltd.

27. In July 2024, the second capital reduction and the second repurchase and cancellation of treasury shares reduced the total share capital to 409,802,216 shares.

On April 25, 2024, the 26th meeting of the third board of directors of Guizhou Sanli reviewed and approved the "Proposal on the Repurchase and Cancellation of Some Restricted Stocks". In view of the fact that one of the first incentive targets involved in the "Company's 2021 Restricted Stock Incentive Plan", including Wang Kangxiang, has resigned and is no longer in compliance with the incentive conditions. All 60,000 restricted shares that have been granted but have not yet been released from sale restrictions will be repurchased and canceled by the company. The changed share capital is 409,802,216 yuan, and the paid-in share capital is 409,802,216 yuan.

On July 1, 2024, Guizhou Sanli completed the registration of the above-mentioned stock cancellation at the Shanghai Branch of China Securities Depository and Clearing Co., Ltd.

As of June 30, 2025, Guizhou Sanli's share capital was 409,802,216 yuan, and the total number of shares was 409,802,216 shares (face value 1 yuan per share), all of which are tradable shares. Among them: 5.962 million shares with selling restrictions and 403.840216 shares without selling conditions.

4. Basis for preparation of financial statements

1. Basics of preparation

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

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2. Continuous operation

√Applicable □Not applicable

The Company evaluated its ability to continue operating in the 12 months from the end of the reporting period and found no matters or circumstances that cast any significant doubt on its ability to continue operating. Therefore, these financial statements have been prepared on the basis of going concern assumption.

5. Important accounting policies and accounting estimates

Specific accounting policies and accounting estimation tips:

√Applicable □Not applicable

The following disclosures cover the specific accounting policies and accounting estimates formulated by the Company based on actual production and operation characteristics.

1. Statement on compliance with corporate accounting standards

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

2. Accounting period

The company's fiscal year begins on January 1 and ends on December 31 of the Gregorian calendar. The reporting period is from January 1, 2025 to June 30, 2025.

3. Business cycle

√Applicable □Not applicable

The operating cycle is the period from when a company purchases assets for processing to when it realizes cash or cash equivalents. The company uses 12 months as an operating cycle and uses it as the liquidity classification standard for assets and liabilities.

4. Accounting standard currency

The company's accounting standard currency is RMB.

5. Determination method and selection basis of materiality criteria

√Applicable □Not applicable

Project Materiality Criteria

The individual amount accounts for more than 2% of the book balance of accounts receivable/other receivables. The bad debt provision for important accounts receivable/other receivables is recovered or reversed

And the amount is greater than 10 million yuan

Important accounts receivable/other receivables with a single amount accounting for more than 2% of the book balance of accounts receivable/other receivables are written off

And the amount is greater than 10 million yuan

Single prepayments aged more than one year account for 5% of the total prepayments, and prepayments aged more than one year and with significant amounts account for 5% of the total prepayments.

and the amount is greater than 3 million yuan

Important projects under construction with a single project budget greater than 30 million yuan

Accounts payable that are individually aged for more than one year account for 5% of the total accounts payable and important accounts payable that are aged for more than one year.

and the amount is greater than 10 million yuan

Other payables that are individually aged over 1 year account for the total other payables that are important other payables that are aged over 1 year

More than 5% and the amount is greater than 5 million yuan

The company will receive/pay important cash related to investing activities whose cash flow exceeds 10% of its net assets.

Cash flows recognized as important investing activities

Important non-wholly-owned subsidiaries The total assets of non-wholly-owned subsidiaries account for more than 10% of the total consolidated assets. The book value of long-term equity investments in joint ventures or associates accounts for an important joint venture or associate of the Group.

More than 5% of the total assets in the consolidated financial statements

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

√Applicable □Not applicable

1. If the terms, conditions and economic impact of each transaction in the step-by-step enterprise merger process meet one or more of the following conditions, multiple transactions will be accounted for as a package transaction.

(1) These transactions are entered into simultaneously or with consideration of mutual effects.

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

(3) The occurrence of a transaction depends on the occurrence of at least one other transaction.

(4) A transaction is uneconomical when viewed alone, but is economical when considered together with other transactions.

2. Business merger under common control

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

The assets and liabilities acquired by the Company in a business merger are measured based on the book value of the assets and liabilities of the merged party on the date of merger (including the goodwill formed by the ultimate controlling party's acquisition of the merged party) in the consolidated financial statements of the ultimate controlling party. The difference between the book value of the net assets acquired in the merger and the book value of the merger consideration paid (or the total face value of the shares issued) is adjusted to the equity premium in the capital reserve. If the equity premium in the capital reserve is insufficient to offset it, the retained earnings are adjusted.

If there is a contingent consideration and it is necessary to recognize estimated liabilities or assets, the difference between the amount of the estimated liabilities or assets and the subsequent settlement amount of the contingent consideration will be adjusted to the capital reserve (capital premium or equity premium). If the capital reserve is insufficient, the retained earnings will be adjusted.

For enterprise mergers that are finally realized through multiple transactions, if it is a package transaction, each transaction will be accounted for as a transaction that obtains control; if it is not a package transaction, on the date when control is obtained, the difference between the initial investment cost of the long-term equity investment and the sum of the book value of the long-term equity investment before the merger plus the book value of the new consideration for further acquisition of shares on the merger date will be adjusted to the capital reserve; if the capital reserve is insufficient for offset, the retained earnings will be adjusted. For equity investments held before the merger date, other comprehensive income recognized due to the use of equity method accounting or financial instrument recognition and measurement standards will not be subject to accounting treatment until the investment is disposed of, using the same basis as the investee's direct disposal of relevant assets or liabilities. Other changes in the owner's equity of the investee's net assets recognized due to equity method accounting, other than net profit and loss, other comprehensive income and profit distribution, will not be subject to accounting treatment until the investment is disposed and transferred to the current profit and loss.

3. Business combination not under common control

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

The purchase date refers to the date when the company actually obtains control over the purchased party, that is, the date when control of the net assets or production and operation decisions of the purchased party is transferred to the company. When the following conditions are met at the same time, the company generally considers that the transfer of control has been achieved: ① The business merger contract or agreement has been approved by the company's internal authority.

② If the enterprise merger matters need to be reviewed and approved by the relevant national competent authorities, the approval has been obtained.

③The necessary property rights transfer procedures have been completed.

④ The company has paid most of the merger price and has the ability and plan to pay the remaining amount.

⑤ The company has actually controlled the financial and operating policies of the purchased party, and enjoys corresponding benefits and bears corresponding risks.

The assets paid and liabilities incurred or assumed by the company as consideration for the business combination are measured at fair value on the purchase date, and the difference between the fair value and its book value is included in the current profit and loss.

The Company recognizes the difference that the merger cost is greater than the fair value share of the acquiree's identifiable net assets acquired in the merger as goodwill; if the merger cost is less than the fair value share of the acquiree's identifiable net assets acquired in the merger, the company first reviews the fair value of the acquiree's identifiable assets, liabilities and contingent liabilities and the measurement of the merger cost. If the merger cost is still less than the fair value share of the acquiree's identifiable net assets acquired in the merger after the review, it is included in the current profit and loss.

If the merger of enterprises not under the same control is realized step by step through multiple exchange transactions, and it is a package transaction, each transaction will be accounted for as a transaction to obtain control; if it is not a package transaction, the equity investment held before the merger date is accounted for using the equity method, and the equity of the purchased party held before the purchase date will be accounted for. The sum of the book value of the investment and the new investment cost on the date of purchase shall be regarded as the initial investment cost of the investment; other comprehensive income recognized due to the equity method accounting for equity investments held before the date of purchase shall be accounted for on the same basis as when the invested unit directly disposes relevant assets or liabilities when disposing of the investment. If the equity investment held before the merger date is accounted for using the financial instrument recognition and measurement standards, the sum of the fair value of the equity investment on the merger date plus the new investment cost shall be the initial investment cost on the merger date. The difference between the fair value and book value of the original equity holdings and the cumulative fair value changes originally included in other comprehensive income should all be transferred to the investment income of the current period on the merger date.

4. Related expenses incurred for the merger

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Intermediary fees such as auditing, legal services, evaluation consulting, and other directly related expenses incurred for a business merger shall be included in the current profits and losses when incurred; transaction costs for the issuance of equity securities for a business merger may be deducted from equity if they are directly attributable to equity transactions.

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

√Applicable □Not applicable

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.

2.Consolidation scope

The scope of the company's consolidated financial statements is determined on the basis of control, and all subsidiaries (including separate entities controlled by the company) are included in the consolidated financial statements.

3. Merger process

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

The accounting policies and accounting periods adopted by all subsidiaries included in the scope of the consolidated financial statements are consistent with the Company's. If the accounting policies and accounting periods adopted by the subsidiaries are inconsistent with the Company's, necessary adjustments shall be made in accordance with the Company's accounting policies and accounting periods when preparing consolidated financial statements.

When consolidating financial statements, the impact of internal transactions between the company and its subsidiaries and between subsidiaries on the consolidated balance sheet, consolidated income statement, consolidated cash flow statement, and consolidated statement of changes in shareholders' equity is eliminated. If the recognition of the same transaction from the perspective of the enterprise group's consolidated financial statements is different from that of the company or its subsidiary as the accounting entity, the transaction will be adjusted from the perspective of the enterprise group.

The owner's equity of subsidiaries, current net profit and loss and current comprehensive income belonging to minority shareholders are presented separately under the owner's equity item in the consolidated balance sheet, the net profit item and the total comprehensive income item in the consolidated income statement. If the current losses shared by the minority shareholders of a subsidiary exceed the minority shareholders' share of the subsidiary's opening owner's equity, the balance is offset against the minority shareholders' equity.

For a subsidiary acquired through a business combination under common control, its financial statements will be adjusted based on the book value of its assets and liabilities (including the goodwill formed by the ultimate controller's acquisition of the subsidiary) in the financial statements of the ultimate controller.

For subsidiaries acquired through business combinations not under common control, their financial statements will be adjusted based on the fair value of the identifiable net assets on the date of acquisition.

(1) Add subsidiaries or businesses

During the reporting period, if a subsidiary or business is added due to a business merger under the same control, the opening balance of the consolidated balance sheet will be adjusted; the income, expenses, and profits from the beginning of the current period to the end of the reporting period of the subsidiary or business combination will be included in the consolidated income statement; the cash flow of the subsidiary or business combination from the beginning of the current period to the end of the reporting period will be included in the consolidated cash flow statement, and relevant items in the comparative statement will be adjusted at the same time. The post-merger reporting entity will be deemed to have existed from the time when the ultimate controlling party began to control.

If it is possible to exercise control over an investee under the same control due to additional investment or other reasons, the parties involved in the merger will be deemed to have existed in their current state when the final controlling party began to control and adjustments will be made. For equity investments held before obtaining control of the merged party, relevant profits and losses, other comprehensive income and other changes in net assets have been recognized between the date of acquisition of the original equity and the date when the merging party and the merged party are under the same control, whichever is later, to the date of merger, and shall be offset against the opening retained earnings or current profits and losses during the comparative statement period respectively.

During the reporting period, if a subsidiary or business is added due to a business combination not under common control, the opening balance of the consolidated balance sheet will not be adjusted; the income, expenses and profits of the subsidiary or business from the date of acquisition to the end of the reporting period will be included in the consolidated income statement; the cash flow of the subsidiary or business from the date of acquisition to the end of the reporting period will be included in the consolidated cash flow statement.

If it is able to exercise control over an investee that is not under the same control due to additional investment or other reasons, the company will remeasure the equity of the purchased party held before the purchase date based on the fair value of the equity on the purchase date. The difference between the fair value and its book value will be

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The amount is included in the current investment income. If the equity of the purchased party held before the purchase date involves other comprehensive income under equity method accounting and other changes in owner's equity other than net profit and loss, other comprehensive income and profit distribution, the related other comprehensive income and changes in other owner's equity will be converted into investment income for the current period on the purchase date, except for other comprehensive income arising from the investee's remeasurement of the net liabilities or changes in net assets of the defined benefit plan.

(2) Disposal of subsidiaries or businesses

1. General processing methods

During the reporting period, if the company disposes of a subsidiary or business, the income, expenses and profits of the subsidiary or business from the beginning of the period to the date of disposal will be included in the consolidated income statement; the cash flow of the subsidiary or business from the beginning of the period to the date of disposal will be included in the consolidated cash flow statement.

When the company loses control over the investee due to the disposal of part of the equity investment or other reasons, the company will remeasure the remaining equity investment after the disposal according to its fair value on the date of loss of control. The difference between the sum of the consideration obtained for disposing of the equity and the fair value of the remaining equity, minus the sum of the share of the original subsidiary's net assets calculated continuously from the date of purchase or merger based on the original shareholding ratio and the sum of goodwill, shall be included in the investment income in the period when control is lost. Other comprehensive income related to the equity investment in the original subsidiary or other changes in owner's equity other than net profit and loss, other comprehensive income and profit distribution will be converted into investment income for the current period when control is lost, except for other comprehensive income arising from the investee's remeasurement of the net liabilities or changes in net assets of the defined benefit plan.

2. Dispose of subsidiaries step by step

If the equity investment in a subsidiary is disposed of step by step through multiple transactions until the control is lost, the terms, conditions and economic impact of each transaction to dispose of the equity investment in the subsidiary meet one or more of the following circumstances, which usually indicates that multiple transactions should be accounted for as a package deal:

A. These transactions were entered into simultaneously or with consideration of mutual effects.

B. Only these transactions as a whole can achieve a complete business result.

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

D. A transaction that is uneconomical on its own is economical when considered together with other transactions.

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

If the various transactions involving the disposal of equity investments in subsidiaries until the loss of control do not belong to a package deal, before the loss of control, accounting treatment will be carried out according to the relevant policies for partial disposal of equity investments in subsidiaries without losing control; when control is lost, accounting treatment will be carried out according to the general treatment method for disposal of subsidiaries.

(3) Purchase minority shares in subsidiaries

The difference between the company's newly acquired long-term equity investment due to the purchase of minority shares and the share of the subsidiary's net assets calculated continuously from the purchase date (or merger date) calculated based on the new shareholding ratio, shall be adjusted to the equity premium in the capital reserve in the consolidated balance sheet. If the equity premium in the capital reserve is insufficient to offset, the retained earnings shall be adjusted.

(4) Partially dispose of equity investments in subsidiaries without losing control

The difference between the disposal price obtained from the partial disposal of the long-term equity investment in the subsidiary without losing control and the share of the subsidiary's net assets calculated continuously from the date of purchase or merger corresponding to the disposal of the long-term equity investment shall be adjusted to the equity premium in the capital reserve in the consolidated balance sheet. If the equity premium in the capital reserve is insufficient to offset, the retained earnings shall be adjusted.

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

√Applicable □Not applicable

1. Classification of joint arrangements

The Company classifies joint arrangements into joint operations and joint ventures based on factors such as the structure, legal form of the joint arrangement, the terms agreed in the joint arrangement, and other relevant facts and circumstances. A joint operation refers to a joint arrangement in which the joint venture party enjoys the relevant assets of the arrangement and assumes the relevant liabilities of the arrangement. A joint venture is a joint arrangement in which the parties only have rights to the net assets of the arrangement.

Joint arrangements that are not reached through a separate entity are classified as joint operations; joint arrangements that are reached through a separate entity are usually classified as joint ventures; but there is conclusive evidence that joint arrangements that meet any of the following conditions and comply with relevant laws and regulations are classified as joint operations:

(1) The legal form of the joint arrangement indicates that the joint venture parties have rights and assume obligations respectively for the relevant assets and liabilities in the arrangement.

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(2) The contract terms of the joint arrangement stipulate that the joint venture parties shall have rights and bear obligations respectively with respect to the relevant assets and liabilities in the arrangement.

(3) Other relevant facts and circumstances indicate that the joint venture party has rights and assumes obligations for the relevant assets and liabilities in the arrangement respectively. For example, the joint venture party enjoys almost all the output related to the joint venture arrangement, and the settlement of liabilities in the arrangement continues to rely on the support of the joint venture party.

2. Accounting treatment method for joint operations

The company confirms the following items related to the company in the interest share in joint operations, and performs accounting treatments in accordance with the relevant accounting standards for enterprises:

(1) Recognize individually held assets and recognize jointly held assets based on their shares.

(2) Recognize the liabilities borne individually and recognize the liabilities borne jointly according to their shares.

(3) Recognize the income generated from the sale of its share of joint operating output.

(4) Recognize the income generated by the joint operation from the sale of output according to its share.

(5) Recognize the expenses incurred individually, and recognize the expenses incurred by joint operations according to their share.

The company invests or sells assets, etc., to a joint operation (except where the assets constitute a business). Before the assets, etc. are sold by the joint operation to a third party, only the portion of the profits and losses arising from the transaction that are attributable to the other participants in the joint operation is recognized. If an asset invested or sold suffers an asset impairment loss that complies with the "Accounting Standards for Business Enterprises No. 8 - Asset Impairment" and other provisions, the company will recognize the loss in full.

The Company purchases assets, etc. from a joint operation (except where the assets constitute a business), and before selling the assets, etc. to a third party, only recognizes the portion of the profits and losses arising from the transaction that are attributable to other participants in the joint operation. If the purchased assets suffer asset impairment losses that comply with the provisions of "Accounting Standards for Business Enterprises No. 8 - Asset Impairment" and other regulations, the company will recognize this part of the loss based on its share.

The company does not enjoy joint control over the joint operation. If the company owns the assets related to the joint operation and assumes the liabilities related to the joint operation, the accounting treatment shall still be carried out in accordance with the above principles. Otherwise, the accounting treatment shall be carried out in accordance with the relevant accounting standards for enterprises.

9. Determination standards for cash and cash equivalents

Cash equivalents refer to investments held by an enterprise that have a short term (generally due within three months from the date of purchase), are highly liquid, are easily convertible into known amounts of cash, and have little risk of value changes.

10. Foreign currency business and foreign currency statement conversion

√Applicable □Not applicable

1. Foreign currency business

When foreign currency business transactions are initially recognized, the spot exchange rate on the date of transaction is used as the conversion rate and is converted into RMB for accounting.

On the balance sheet date, foreign currency monetary items are translated at the spot exchange rate on the balance sheet date. The resulting exchange differences, except for the exchange differences arising from special foreign currency borrowings related to the acquisition and construction of assets that meet capitalization conditions, are treated in accordance with the principle of capitalization of borrowing costs, and are 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 transaction, and their recording currency amount does not change.

Foreign currency non-monetary items measured at fair value are converted using the spot exchange rate on the date when the fair value is determined. The difference between the converted accounting functional currency amount and the original accounting functional currency amount is treated as a change in fair value (including exchange rate changes), and is included in the current profit and loss or recognized as other comprehensive income.

2. Conversion of foreign currency financial statements

Assets and liability items in the balance sheet are translated using the spot exchange rate on the balance sheet date; owners' equity items, except for "undistributed profits" items, are translated using the spot exchange rate at the time of occurrence. Income and expense items in the income statement are translated using the average exchange rate for the period. The translation difference of foreign currency financial statements resulting from the above translation is included in other comprehensive income.

When disposing of an overseas operation, the foreign currency financial statement translation differences listed in other comprehensive income items in the balance sheet and related to the overseas operation will be transferred from the other comprehensive income items to the current profit and loss of the disposal; when the proportion of equity held in the overseas operation is reduced due to the disposal of part of the equity investment or other reasons but the control of the overseas operation is not lost, the foreign currency statement translation difference related to the disposal part of the overseas operation will be attributed to the minority shareholders' equity and will not be transferred to the current profit and loss. When disposing of part of the equity of an overseas operation that is an associate or joint venture, the translation difference of foreign currency statements related to the overseas operation shall be transferred to the current profit and loss of the disposal in proportion to the disposal of the overseas operation.

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11. Financial instruments

√Applicable □Not applicable

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

The effective interest rate method refers to the method of calculating the amortized cost of financial assets or financial liabilities and allocating interest income or interest expenses into each accounting period.

The actual interest rate refers to the interest rate used to discount the estimated future cash flows of a financial asset or financial liability during the expected duration of the financial asset or the amortized cost of the financial liability. When determining the actual interest rate, the expected cash flow is estimated based on taking into account all contractual terms of the financial asset or financial liability (such as early repayment, extension, call options or other similar options, etc.), but does not take into account expected credit losses.

The amortized cost of a financial asset or financial liability is the initial recognition amount of the financial asset or financial liability minus the repaid principal, plus or minus the cumulative amortization amount formed by amortizing the difference between the initial recognition amount and the maturity amount using the effective interest method, and then deducting the accumulated loss provisions (only applicable to financial assets).

1. Classification, recognition and measurement of financial assets

The Company divides financial assets into the following three categories based on the business model of the financial assets under management and the contractual cash flow characteristics of the financial assets:

(1) Financial assets measured at amortized cost.

(2) Financial assets measured at fair value with changes included in other comprehensive income.

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

Financial assets are measured at fair value upon initial recognition. However, if accounts receivable or notes receivable arising from the sale of goods or provision of services do not contain a significant financing component or do not consider the financing component that does not exceed one year, they will be initially measured based on the transaction price. 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, and the relevant transaction costs of other types of financial assets are included in their initial recognition amount.

The subsequent measurement of financial assets depends on their classification. If and only if the company changes the business model of managing financial assets, all affected related financial assets will be reclassified.

(1) Financial assets classified as measured at amortized cost

If the contractual terms of a financial asset stipulate that the cash flow generated on a specific date is only the payment of principal and interest based on the outstanding principal amount, and the business model for managing the financial asset is to collect contractual cash flow as the goal, then the company will classify the financial asset as a financial asset measured at amortized cost. Financial assets classified by the Company as measured at amortized cost include monetary funds, some notes receivable measured at amortized cost, accounts receivable, other receivables, debt investments, long-term receivables, etc.

The Company adopts the actual interest rate method to recognize interest income on such financial assets, and conducts subsequent measurement at amortized cost. Gains or losses arising from impairment or derecognition or modification shall be included in the current profit and loss. Except for the following circumstances, the Company determines interest income based on the book balance of financial assets multiplied by the actual interest rate:

1. For purchased or originated financial assets that have suffered credit impairment, the Company determines its interest income based on the amortized cost of the financial asset and the credit-adjusted actual interest rate from the initial recognition.

2. For purchased or originated financial assets that have not been credit-impaired but become credit-impaired in subsequent periods, the Company will calculate and determine its interest income based on the amortized cost and actual interest rate of the financial assets in subsequent periods. If the financial instrument no longer has credit impairment due to its credit risk improvement in the subsequent period, the company will calculate and determine interest income by multiplying the actual interest rate by the book balance of the financial asset.

(2) Financial assets classified as measured at fair value with changes included in other comprehensive income

If the contractual terms of a financial asset stipulate that the cash flows generated on a specific date are only the payment of principal and interest based on the outstanding principal amount, and the business model for managing the financial asset aims at both collecting contractual cash flows and selling the financial asset, then the company classifies the financial asset as a financial asset measured at fair value with changes included in other comprehensive income. The Company uses the effective interest rate method to recognize interest income on such financial assets. Except for interest income, impairment losses and exchange differences, which are recognized as current profits and losses, other changes in fair value are included in other comprehensive income. When the financial asset is derecognised, the accumulated gains or losses previously included in other comprehensive income are transferred out of other comprehensive income and included in the current profit and loss.

Notes receivable and accounts receivable measured at fair value with changes included in other comprehensive income are presented as receivable financing, and other such financial assets are presented as other debt investments. Among them: other debt investments due within one year from the balance sheet date are presented as non-current assets due within one year, and other debt investments with original maturity dates within one year are presented as other current assets.

(3) Financial assets designated as measured at fair value and changes included in other comprehensive income

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At the time of initial recognition, the Company may irrevocably designate non-trading equity instrument investments as financial assets measured at fair value with changes included in other comprehensive income on a single financial asset basis.

Changes in the fair value of such financial assets are included in other comprehensive income, and no impairment provisions are required. When the financial asset is derecognised, the accumulated gains or losses previously included in other comprehensive income are transferred out of other comprehensive income and included in retained earnings. During the period when the company holds the equity instrument investment, when the company's right to receive dividends has been established, the economic benefits related to the dividends are likely to flow into the company, and the amount of dividends can be reliably measured, dividend income is recognized and included in the current profit and loss. The Company reports such financial assets under other equity instrument investment items.

If an equity instrument investment meets one of the following conditions, it is a financial asset measured at fair value and its changes are included in the current profit and loss: the purpose of acquiring the financial asset is mainly for the recent sale; when initially recognized, it is part of a portfolio of identifiable financial assets under centralized management, and there is objective evidence that there is an actual short-term profit model in the near future; it is a derivative instrument (except for derivatives that meet the definition of a financial guarantee contract and are designated as effective hedging instruments).

(4) Financial assets classified as measured at fair value and changes included in current profits and losses

Financial assets that do not meet the conditions for classification as financial assets measured at amortized cost or at fair value through other comprehensive income, and are not designated as measured at fair value through other comprehensive income, are classified as financial assets at fair value through profit or loss for the current period.

The Company uses fair value for subsequent measurement of such financial assets, and includes gains or losses arising from changes in fair value as well as dividends and interest income related to such financial assets into current profits and losses.

The Company presents such financial assets in trading financial assets and other non-current financial assets based on their liquidity. (5) Financial assets designated as measured at fair value and changes included in current profits and losses

At the time of initial recognition, in order to eliminate or significantly reduce accounting mismatches, the company can irrevocably designate financial assets as financial assets measured at fair value and whose changes are included in current profits and losses on a single financial asset basis.

If a hybrid contract contains one or more embedded derivatives, and its main contract does not belong to the above financial assets, the company may designate the entire contract as a financial instrument measured at fair value with changes included in current profits and losses. Except for the following circumstances:

1. Embedded derivatives will not significantly change the cash flows of hybrid contracts.

2. When initially determining whether a similar hybrid contract needs to be unbundled, little analysis is needed to make it clear that the embedded derivatives it contains should not be unbundled. For example, the prepayment right embedded in the loan allows the holder to repay the loan early at an amount close to the amortized cost, and the prepayment right does not need to be split.

The Company uses fair value for subsequent measurement of such financial assets, and includes gains or losses arising from changes in fair value as well as dividends and interest income related to such financial assets into current profits and losses.

The Company presents such financial assets in trading financial assets and other non-current financial assets based on their liquidity. 2. Classification, recognition and measurement of financial liabilities

The company classifies the financial instrument or its components as financial liabilities or equity instruments upon initial recognition based on the contractual terms of the financial instruments issued and the economic substance reflected rather than just the legal form, combined with the definitions of financial liabilities and equity instruments. Financial liabilities are classified upon initial recognition as: financial liabilities at fair value through profit or loss, other financial liabilities, and derivatives designated as effective hedging instruments.

Financial liabilities are measured at fair value upon initial recognition. For financial liabilities measured at fair value and whose changes are included in the current profit and loss, the relevant transaction costs are directly included in the current profit and loss; for other types of financial liabilities, the relevant transaction costs are included in the initial recognition amount.

The subsequent measurement of financial liabilities depends on their classification:

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

Such financial liabilities include trading financial liabilities (including derivatives that are financial liabilities) and financial liabilities designated as measured at fair value with changes included in current profits and losses upon initial recognition.

Financial liabilities that meet one of the following conditions are classified as trading financial liabilities: the purpose of assuming relevant financial liabilities is mainly to sell or repurchase in the near future; they are part of a portfolio of identifiable financial instruments that are centrally managed, and there is objective evidence that the enterprise has recently adopted a short-term profit-making model; they are derivatives, except for derivatives that are designated and are effective hedging instruments and derivatives that comply with financial guarantee contracts. Trading financial liabilities (including derivatives belonging to financial liabilities) are subsequently measured at fair value. Except for those related to hedging accounting, all changes in fair value are included in the current profit and loss.

At the time of initial recognition, in order to provide more relevant accounting information, the Company will irrevocably designate financial liabilities that meet one of the following conditions as financial liabilities measured at fair value with changes included in current profits and losses:

1. Ability to eliminate or significantly reduce accounting mismatches.

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2. According to the enterprise risk management or investment strategy stated in formal written documents, manage and perform performance evaluation on the financial liability portfolio or financial assets and financial liability portfolio on the basis of fair value, and report to key management personnel on this basis within the enterprise. The company uses fair value for subsequent measurement of such financial liabilities. Except for changes in fair value caused by changes in the company's own credit risk, which are included in other comprehensive income, other changes in fair value are included in current profits and losses. Unless the changes in fair value caused by changes in the company's own credit risk are included in other comprehensive income, which will cause or expand the accounting mismatch in profit and loss, the company will include all changes in fair value (including the amount affected by changes in its own credit risk) into profit and loss for the current period.

(2) Other financial liabilities

In addition to the following items, the company classifies financial liabilities as financial liabilities measured at amortized cost. This type of financial liabilities adopts the effective interest rate method and is subsequently measured at amortized cost. Gains or losses arising from derecognition or amortization are included in the current profit and loss: 1) Financial liabilities measured at fair value and their changes are included in the current profit and loss.

2. The transfer of financial assets does not meet the conditions for derecognition or the financial liabilities formed by continued involvement in the transferred financial assets.

3. Financial guarantee contracts that do not fall into the first two categories of this article, and loan commitments for loans at lower than market interest rates that do not fall into category 1) of this article.

A financial guarantee contract refers to a contract that requires the issuer to pay a specific amount of compensation to the contract holder who has suffered a loss when a specific debtor is unable to repay the debt in accordance with the terms of the original or modified debt instrument when due. Financial guarantee contracts that are not designated as financial liabilities at fair value through profit or loss shall, after initial recognition, be measured according to the higher of the loss reserve amount and the initial recognition amount less accumulated amortization during the guarantee period, whichever is higher.

3. Derecognition of financial assets and financial liabilities

(1) If a financial asset meets one of the following conditions, the financial asset will be derecognized, that is, it will be written off from its account and balance sheet:

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

2. The financial asset has been transferred, and the transfer meets the requirements for derecognition of financial assets.

(2) Conditions for derecognition of financial liabilities

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

The company signs an agreement with the lender to replace the original financial liability by assuming a new financial liability, and if the contract terms of the new financial liability are substantially different from the original financial liability, or if the contract terms of the original financial liability (or a part thereof) are substantially modified, the original financial liability will be derecognized and a new financial liability will be recognized. The difference between the book value and the consideration paid (including non-cash assets transferred out or liabilities assumed) will be included in the current profit and loss.

If the company repurchases part of a financial liability, the overall book value of the financial liability will be allocated based on the proportion of the fair value of the continued recognition part and the derecognition part on the repurchase date to the overall fair value on the repurchase date. The difference between the book value allocated to the derecognized part and the consideration paid (including non-cash assets transferred out or liabilities assumed) shall be included in the current profit and loss. 4. Recognition basis and measurement method of financial asset transfer

When the company transfers financial assets, it evaluates the degree of risks and rewards in retaining ownership of the financial assets, and handles the following situations respectively:

(1) If substantially all the risks and rewards of ownership of a financial asset are transferred, the financial asset will be derecognised, and the rights and obligations arising or retained in the transfer will be separately recognized as assets or liabilities.

(2) If almost all risks and rewards of ownership of the financial asset are retained, the financial asset will continue to be recognized.

(3) If substantially all the risks and rewards of ownership of a financial asset are neither transferred nor retained (i.e. other situations other than (1) and (2) of this article), the following situations will be dealt with based on whether it retains control of the financial asset:

1. If control of the financial asset is not retained, the financial asset will be derecognised, and the rights and obligations arising or retained in the transfer will be separately recognized as assets or liabilities.

2. If control of the financial assets is retained, the relevant financial assets will continue to be recognized to the extent of its continued involvement in the transferred financial assets, and relevant liabilities will be recognized accordingly. The degree of continued involvement in the transferred financial assets refers to the extent to which the company bears the risks or rewards of changes in the value of the transferred financial assets.

When judging whether the transfer of financial assets meets the above conditions for derecognition of financial assets, the principle of substance over form is adopted. The company distinguishes the transfer of financial assets into overall transfer and partial transfer of financial assets.

(1) If the overall transfer of financial assets meets the conditions for derecognition, the difference between the following two amounts will be included in the current profit and loss:

1. The book value of the transferred financial assets on the date of derecognition.

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2. The sum of the consideration received for the transfer of financial assets and the amount corresponding to the derecognition portion of the cumulative amount of changes in fair value that was originally directly included in other comprehensive income (the financial assets involved in the transfer are financial assets measured at fair value and their changes are included in other comprehensive income).

(2) If a financial asset is partially transferred and the transferred part as a whole meets the conditions for derecognition, the book value of the entire financial asset before the transfer will be apportioned between the derecognized part and the continued recognition part (in this case, the retained service assets shall be regarded as part of the continued recognition of the financial assets) according to their respective relative fair values on the date of transfer, and the difference between the following two amounts shall be included in the current profit and loss:

1. The book value of the derecognized part on the date of derecognition.

2. The sum of the consideration received for the derecognized part and the amount corresponding to the derecognized part of the cumulative amount of changes in fair value originally included in other comprehensive income (the financial assets involved in the transfer are financial assets measured at fair value and their changes are included in other comprehensive income).

If the transfer of financial assets does not meet the conditions for derecognition, the financial assets will continue to be recognized, and the consideration received will be recognized as a financial liability.

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

For financial assets or financial liabilities that have an active market, their fair value is determined based on the quoted price in the active market, unless the financial asset has a sales restriction period on the asset itself. For financial assets with sales restrictions on the asset itself, the determination shall be based on the quoted price in the active market after deducting the amount of compensation required by market participants for assuming the risk of being unable to sell the financial asset on the open market within a specified period. Quotes in active markets include quotes for relevant assets or liabilities that are easily and regularly obtainable from exchanges, dealers, brokers, industry groups, pricing agencies or regulatory agencies, etc., and can represent actual and frequently occurring market transactions on an arm's length basis. For financial assets initially acquired or derived or financial liabilities assumed, the market transaction price is used as the basis for determining their fair value.

For financial assets or financial liabilities for which there is no active market, valuation techniques are used to determine their fair value. When valuing, the Company adopts valuation techniques that are applicable under the current circumstances and supported by sufficient available data and other information, selects input values ​​that are consistent with the characteristics of the assets or liabilities considered by market participants in transactions of related assets or liabilities, and gives priority to the use of relevant observable input values ​​whenever possible. Unobservable input values ​​are used when relevant observable input values ​​cannot be obtained or are impracticable to obtain. 6. Impairment of financial assets

The Company classifies financial assets measured at amortized cost into financial assets measured at fair value with changes included in other comprehensive income, lease receivables, contract assets, loan commitments that are not financial liabilities measured at fair value with changes included in current profits and losses, and loan commitments that are not financial liabilities measured at fair value with changes included in current profits and losses. Financial liabilities measured at fair value through profit or loss for the current period and financial guarantee contracts formed due to the transfer of financial assets that do not meet the conditions for derecognition or continued involvement in the transferred financial assets are subject to impairment accounting and recognition of loss provisions based on 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 loss refers to the difference between all contractual cash flows receivable under the contract and all cash flows expected to be received by the company, discounted at the original actual interest rate, that is, the present value of all cash shortfalls. Among them, credit-impaired financial assets purchased or originated by the company should be discounted according to the credit-adjusted actual interest rate of the financial assets.

The Company measures loss provisions for all contract assets, notes receivable and accounts receivable formed by transactions regulated by the Revenue Standards, as well as lease receivables/financing lease receivables/operating leases receivable formed by transactions regulated by the Lease Standards at an amount equivalent to the expected credit losses during the entire duration.

For purchased or originated financial assets that have suffered credit impairment, only the cumulative change in expected credit losses during the entire duration since initial recognition will be recognized as loss provisions on the balance sheet date. On each balance sheet date, the change in expected credit losses during the entire duration is included in the current profit and loss as impairment losses or gains. Even if the expected credit losses during the entire duration determined on the balance sheet date are less than the amount of expected credit losses reflected in the estimated cash flows at initial recognition, favorable changes in expected credit losses will be recognized as impairment gains.

In addition to the above-mentioned simplified measurement methods and other financial assets that have incurred credit impairment when purchased or originated, the company evaluates on each balance sheet date whether the credit risk of relevant financial instruments has increased significantly since the initial recognition, and measures its loss provisions, recognizes expected credit losses and changes according to the following circumstances:

(1) If the credit risk of the financial instrument has not increased significantly since initial recognition and is in the first stage, its loss provision will be measured based on an amount equivalent to the expected credit losses of the financial instrument in the next 12 months, and interest income will be calculated based on the book balance and actual interest rate.

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(2) If the credit risk of the financial instrument has increased significantly since initial recognition but no credit impairment has occurred, and it is in the second stage, its loss provision will be measured based on an amount equivalent to the expected credit losses during the entire duration of the financial instrument, and interest income will be calculated based on the book balance and actual interest rate.

(3) If the financial instrument has been credit-impaired since initial recognition and is in the third stage, the company will measure its loss provision based on an amount equivalent to the expected credit losses during the entire duration of the financial instrument, and calculate interest income based on the amortized cost and actual interest rate.

The amount of increase or reversal of credit loss provision for financial instruments is included in the current profit and loss as impairment loss or gain. Except for financial assets classified as at fair value through other comprehensive income, the allowance for credit losses is reduced by the carrying balance of the financial asset. For financial assets classified as measured at fair value with changes included in other comprehensive income, the Company recognizes its credit loss provisions in other comprehensive income without reducing the book value of the financial assets listed in the balance sheet.

The Company has measured loss provisions in the previous accounting period at an amount equivalent to the expected credit losses during the entire duration of the financial instrument. However, on the current balance sheet date, if the financial instrument no longer has a significant increase in credit risk since initial recognition, the Company will measure the loss provisions for the financial instrument at an amount equivalent to the expected credit losses within the next 12 months on the current balance sheet date. The resulting reversal amount of the loss provisions is included in the current profit and loss as impairment gain.

(1) Credit risk increases significantly

The Company uses the reasonable and evidence-based forward-looking information available to determine whether the credit risk of a financial instrument has increased significantly since initial recognition by comparing the risk of default of a financial instrument on the balance sheet date with the risk of default on the initial recognition date. For financial guarantee contracts, when the Company applies the provisions on impairment of financial instruments, the date when the Company becomes the party making the irrevocable commitment shall be the date of initial recognition.

The company will consider the following factors when assessing whether credit risk has increased significantly:

1. Whether the actual or expected operating results of the debtor have changed significantly.

2. Whether there have been significant adverse changes in the regulatory, economic or technological environment in which the debtor operates.

3. Whether the value of the collateral used as collateral for the debt or the quality of the guarantee or credit enhancement provided by a third party has changed significantly. These changes are expected to reduce the debtor's economic incentives to repay within the time limit specified in the contract or affect the probability of default.

4. Whether the debtor’s expected performance and repayment behavior have changed significantly.

5. Whether the company’s credit management methods for financial instruments have changed, etc.

On the balance sheet date, if the Company determines that a financial instrument has only low credit risk, the Company assumes that the credit risk of the financial instrument has not increased significantly since initial recognition. If the default risk of a financial instrument is low, the borrower has a strong ability to fulfill its contractual cash flow obligations in the short term, and even if there are adverse changes in the economic situation and operating environment in the longer term, it may not necessarily reduce the borrower's ability to fulfill its contractual cash flow obligations, then the financial instrument is considered to have lower credit risk. (2) Financial assets that have suffered credit impairment

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:

1. The issuer or debtor encounters major financial difficulties.

2. The debtor violates the contract, such as default or overdue payment of interest or principal.

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

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

5. Financial difficulties of the issuer or debtor cause the active market for the financial asset to disappear.

6. Purchase or originate a financial asset at a substantial discount that reflects the fact that credit losses have occurred.

Credit impairment of financial assets may be caused by the combined effect of multiple events and may not be caused by an individually identifiable event. (3) Determination of expected credit losses

The Company evaluates the expected credit losses of financial instruments individually and collectively. When evaluating expected credit losses, it considers reasonable and well-founded information about past events, current conditions, and forecasts of future economic conditions.

The Company divides financial instruments into different combinations based on common credit risk characteristics. The common credit risk characteristics adopted by the company include: aging portfolio, etc. For details on the individual evaluation standards and combined credit risk characteristics of relevant financial instruments, please refer to the accounting policies of relevant financial instruments.

The company determines the expected credit losses of relevant financial instruments according to the following methods:

1. For financial assets, credit loss is the present value of the difference between the contractual cash flow that the company should receive and the cash flow that is expected to be received.

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2. For lease receivables, credit loss is the present value of the difference between the contractual cash flow that the company should receive and the cash flow that is expected to be received.

3. For financial guarantee contracts, credit losses are the present value of the difference between the company's estimated payment to the contract holder for credit losses incurred, minus the amount the company expects to collect from the contract holder, debtor or any other party. 4) For financial assets that have been credit-impaired on the balance sheet date but were not purchased or originated from credit-impairment, the credit loss is the difference between the book balance of the financial asset and the present value of the estimated future cash flows discounted at the original effective interest rate.

The Company's method of measuring expected credit losses of financial instruments reflects factors including: the unbiased probability weighted average amount determined by evaluating a series of possible outcomes; the time value of money; reasonable and well-founded information about past events, current conditions and forecasts of future economic conditions that can be obtained without unnecessary additional cost or effort on the balance sheet date.

(4) Write down financial assets

When the company no longer reasonably expects that the contractual cash flows of a financial asset can be fully or partially recovered, the book balance of the financial asset will be directly written down. Such a write-down constitutes the derecognition of the relevant financial asset.

7. Offset of financial assets and financial liabilities

Financial assets and financial liabilities are presented separately in the balance sheet without offsetting each other. However, if the following conditions are met at the same time, the net amount after offsetting each other will be presented in the balance sheet:

(1) The company has the legal right to offset the confirmed amount, and this legal right is currently enforceable.

(2) 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.

12. Notes receivable

√Applicable □Not applicable

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

√Applicable □Not applicable

For details on the determination method and accounting treatment method of the Company's expected credit losses on notes receivable, please refer to Note V. 11. Financial Instruments 6. Impairment of Financial Assets.

For notes receivable whose credit risk is significantly different from the combined credit risk, the Company accrues expected credit losses on an individual basis. The Company separately determines the credit losses of notes receivable that are individually significant and have suffered credit impairment after initial recognition.

When there is insufficient evidence to assess expected credit losses at a reasonable cost at the individual instrument level, the Company refers to historical credit loss experience, combined with current conditions and judgments of future economic conditions, divides notes receivable into several portfolios based on credit risk characteristics, and calculates expected credit losses on a portfolio basis. The basis for determining the combination is as follows:

Combination name Basis for determining combination Provision method

The drawer has a higher credit rating, history

With reference to historical credit loss experience, combined with the current situation and the fact that no bill default has occurred on bank acceptances, the credit loss risk

Forecasts of future economic conditions, through default risk exposure and the entire deposit bill are extremely low, the current performance of its payment contract in the short term

Renewal expected credit loss rate, calculate expected credit loss

Strong ability to fulfill cash flow obligations

commercial acceptance

Notes receivable other than bank acceptance bills are accrued based on the comparison table between aging and expected credit loss rate throughout the duration.

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

√Applicable □Not applicable

Withdrawal method:

The Company uses aging to assess the expected credit losses of such portfolios. This type of portfolio has the same risk characteristics, and the aging information can reflect the solvency of this type of portfolio and the receivables when they mature. On the balance sheet date, 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 notes receivable and expected credit loss rates, and calculates expected credit losses.

The comparison table between the aging of the aging portfolio and the expected credit loss rate is as follows:

Aging Expected credit loss rate of notes receivable (%)

Within 1 year 5.00 1 to 2 years 10.00

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2 to 3 years 30.00 3 to 4 years 50.00 4 to 5 years 75.00 More than 5 years 100.00 The aging of notes receivable is calculated based on the first-in, first-out method.

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

□Applicable √Not applicable

13. Accounts receivable

√Applicable □Not applicable

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

√Applicable □Not applicable

For details on the determination method and accounting treatment method of the Company's expected credit losses on accounts receivable, please refer to Note V. 11. Financial Instruments 6. Impairment of Financial Assets.

For accounts receivable whose credit risk is significantly different from the combined credit risk, the Company accrues expected credit losses on an individual basis. The Company separately determines credit losses for accounts receivable that are individually significant and have suffered credit impairment after initial recognition.

When there is insufficient evidence to assess expected credit losses at a reasonable cost at the individual instrument level, the Company refers to historical credit loss experience, combined with current conditions and judgments of future economic conditions, divides accounts receivable into several combinations based on credit risk characteristics, and calculates expected credit losses on a combination basis. The basis for determining the combination is as follows:

Combination name Basis for determining combination Provision method

This combination is based on the aging of accounts receivable.

Portfolio 1: Provision is made as a credit risk characteristic based on the comparison table between the aging of the account and the expected credit loss rate throughout the duration.

With reference to historical credit loss experience, combined with the current situation and the forecast of the future economic conditions of the uncombined company's accounts receivable within the consolidated scope, through the default risk exposure and the entire existence

Renewal expected credit loss rate, calculate expected credit loss

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

√Applicable □Not applicable

Withdrawal method:

The Company uses aging to assess the expected credit losses of such portfolios. This type of portfolio has the same risk characteristics, and the aging information can reflect the solvency of this type of portfolio and the receivables when they mature. On the balance sheet date, 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 expected credit loss rates, and calculates expected credit losses.

The comparison table between the aging of the aging portfolio and the expected credit loss rate is as follows:

Aging Accounts receivable expected credit loss rate (%)

Within 1 year 5.00 1 to 2 years 10.00 2 to 3 years 30.00 3 to 4 years 50.00 4 to 5 years 75.00 More than 5 years 100.00 The aging of accounts receivable is calculated according to the first-in, first-out method.

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

□Applicable √Not applicable

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14. Receivables Financing

√Applicable □Not applicable

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

√Applicable □Not applicable

Notes receivable and accounts receivable classified as measured at fair value with changes included in other comprehensive income, if the maturity period is within one year (including one year) from the initial recognition date, are listed as receivable financing; if the maturity period is more than one year from the initial recognition date, they are listed as other debt investments. Please refer to Note V. 11. Financial Instruments for its relevant accounting policies.

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

□Applicable √Not applicable

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

□Applicable √Not applicable

15. Other receivables

√Applicable □Not applicable

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

√Applicable □Not applicable

For details of the Company’s determination method and accounting treatment method of expected credit losses on other receivables, please refer to Note V. 11. Financial Instruments 6. Impairment of Financial Assets.

For other receivables whose credit risk is significantly different from the combined credit risk, the Company accrues expected credit losses on an individual basis. The Company separately determines the credit losses of other receivables that are individually significant and have suffered credit impairment after initial recognition.

When there is insufficient evidence to assess expected credit losses at a reasonable cost at the individual instrument level, the Company refers to historical credit loss experience, combined with current conditions and judgments of future economic conditions, divides other receivables into several combinations based on credit risk characteristics, and calculates expected credit losses on a combination basis. The basis for determining the combination is as follows:

Combination name Basis for determining combination Provision method

This combination represents receivables from daily operating activities

Combination 1: Various types of deposits, advances, and quality guarantees are collected. Provisions and other receivables are accrued based on the comparison table between the age of the accounts and the expected credit loss rate throughout the duration.

With reference to historical credit loss experience, combined with current conditions and forecasts of future economic conditions of Portfolio 2, other receivables of the company within the consolidation scope, through default risk exposure and the entire duration

Expected credit loss rate, calculate expected credit loss

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

√Applicable □Not applicable

Withdrawal method:

The Company uses aging to assess the expected credit losses of such portfolios. This type of portfolio has the same risk characteristics, and the aging information can reflect the solvency of this type of portfolio and the receivables when they mature. On the balance sheet date, 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 other receivables and expected credit loss rates to calculate expected credit losses.

The comparison table between the aging of the aging portfolio and the expected credit loss rate is as follows:

Aging Expected credit loss rate of other receivables (%)

Within 1 year 5.00 1 to 2 years 10.00 2 to 3 years 30.00 3 to 4 years 50.00 4 to 5 years 75.00 More than 5 years 100.00

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The aging of other receivables is calculated based on the first-in, first-out method.

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

□Applicable √Not applicable

16. Inventory

√Applicable □Not applicable

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

√Applicable □Not applicable

(1) Classification of inventory

Inventories refer to the finished products or commodities held by the company for sale in daily activities, products in progress during the production process, materials and supplies consumed in the production process or the provision of labor services, etc. It mainly includes raw materials, products in progress, semi-finished products, inventory goods, packaging materials, turnover materials, etc.

(2) Valuation method of inventory

When inventories are acquired, they are initially measured at cost, including purchase costs, processing costs and other costs. Inventories are valued based on the weighted average method at the end of the month when shipped.

For details on the specific pricing method of consumable biological assets, please refer to Note V. 24, Biological Assets.

(3) Inventory inventory system

The inventory inventory system is a perpetual inventory system.

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

1. Low-value consumables adopt the weighted average method at the end of the month.

2. Packaging adopts the weighted average method at the end of the month.

Recognition standards and accrual methods for inventory depreciation provisions

√Applicable □Not applicable

After conducting a comprehensive inventory of the inventory at the end of the period, the inventory depreciation reserve is withdrawn or adjusted based on the lower of the inventory cost and the net realizable value. For inventory of goods that are directly for sale, such as finished goods, inventory, and materials for sale, during the normal production and operation process, the net realizable value is determined by the estimated selling price of the inventory minus the estimated sales expenses and related taxes; for material inventories that need to be processed, during the normal production and operation process, the estimated selling price of the finished goods produced is deducted to the time of completion. The net realizable value is determined based on the estimated costs, estimated sales expenses and relevant taxes. For inventories held for the execution of sales contracts or labor contracts, the net realizable value is calculated based on the contract price. If the quantity of inventory held is greater than the quantity ordered in the sales contract, the net realizable value of the excess inventory is calculated based on the general sales price.

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

If the factors that caused the previous write-down of the inventory value have disappeared, the amount of the write-down will be restored and reversed within the amount of the inventory devaluation provision that was originally accrued, and the reversed amount will be included in the current profit and loss.

The combination categories and basis for determining inventory depreciation provisions according to the combination, and the basis for determining the net realizable value of different types of inventories.

□Applicable √Not applicable

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

□Applicable √Not applicable

17. Contract assets

√Applicable □Not applicable

Recognition methods and standards for contract assets

√Applicable □Not applicable

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If the company has transferred the goods to the customer and has the right to receive consideration, and the right depends on factors other than the passage of time, it is recognized as a contract asset. The Company's unconditional (i.e., subject only to the passage of time) right to receive consideration from customers is presented separately as receivables.

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

√Applicable □Not applicable

The Company’s determination method and accounting treatment method of expected credit losses on contract assets are detailed in Note V. 11. Financial Instruments 6. Impairment of Financial Assets.

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

□Applicable √Not applicable

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

□Applicable √Not applicable

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

√Applicable □Not applicable

The company recognizes non-current assets or disposal groups that simultaneously meet the following conditions as components held for sale:

(1) According to the practice of selling such assets or disposal groups in similar transactions, they can be sold immediately under the current conditions.

(2) The sale is very likely to occur, that is, the company has made a resolution on a sale plan and obtained a firm purchase commitment, and the sale is expected to be completed within one year.

A firm purchase commitment refers to a legally binding purchase agreement signed between the company and other parties. The agreement contains important terms such as transaction price, time and sufficiently severe penalties for breach of contract, making the possibility of major adjustments or cancellation of the agreement extremely small.

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

√Applicable □Not applicable

The company does not make depreciation or amortization for non-current assets or disposal groups held for sale. If the book value is higher than the net amount of the fair value minus the selling expenses, the book value shall be written down to the net amount of the fair value minus the selling expenses. The amount of the write-down shall be recognized as an asset impairment loss and included in the current profit and loss, and at the same time, a provision for impairment of the assets held for sale shall be made.

For non-current assets or disposal groups that are classified as held for sale on the acquisition date, at the time of initial measurement, the initial measurement amount and the net amount of fair value minus selling expenses are compared assuming that they are not classified as held for sale, and the lower of the two is measured. The above principles apply to all non-current assets, but do not include investment real estate that is subsequently measured using the fair value model, biological assets that are measured using the net amount of fair value minus selling costs, assets formed from employee compensation, deferred income tax assets, financial assets regulated by relevant accounting standards for financial instruments, and rights arising from insurance contracts regulated by relevant accounting standards for insurance contracts.

Determination standards and presentation methods for discontinued operations

□Applicable √Not applicable

19. Long-term equity investment

√Applicable □Not applicable

1. Determination of initial investment cost

(1) For long-term equity investments formed by business mergers, please refer to Note V. 6. Accounting treatment methods for business mergers under the same control and those not under the same control for detailed accounting policies.

(2) Long-term equity investment obtained through other means

For long-term equity investments obtained by paying cash, the actual purchase price paid shall be regarded as the initial investment cost. Initial investment costs include fees, taxes and other necessary expenses directly related to obtaining long-term equity investment.

For long-term equity investments obtained by issuing equity securities, the initial investment cost is the fair value of the equity securities issued; transaction costs incurred when issuing or acquiring its own equity instruments can be deducted from equity if they are directly attributable to equity transactions.

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Under the premise that the non-monetary asset exchange has commercial substance and the fair value of the assets exchanged or the assets exchanged can be measured reliably, the initial investment cost of the long-term equity investment exchanged in the non-monetary asset exchange is based on the fair value of the assets exchanged, unless there is conclusive evidence that the fair value of the assets exchanged is more reliable; for non-monetary asset exchanges that do not meet the above premise, the book value of the assets exchanged and the relevant taxes payable shall be used as the initial investment cost of the long-term equity investment exchanged.

For long-term equity investments obtained through debt restructuring, the initial investment cost is determined based on fair value.

2. Subsequent measurement and profit and loss recognition

(1) Cost method

The long-term equity investment that the company can control over the investee is accounted for using the cost method, and is priced according to the initial investment cost, and the cost of the long-term equity investment is adjusted by adding or withdrawing the investment.

In addition to the actual price paid when acquiring the investment or the cash dividends or profits included in the consideration that have been declared but not yet distributed, the company recognizes the cash dividends or profits declared by the invested unit as investment income for the current period.

(2) Equity method

The Company adopts the equity method to account for long-term equity investments in associates and joint ventures; for some of the equity investments in associates indirectly held through venture capital institutions, mutual funds, trust companies or similar entities including investment-linked insurance funds, they are measured at fair value and changes are included in profit and loss.

If the initial investment cost of a long-term equity investment is greater than the fair value share of the investee's identifiable net assets at the time of investment, the initial investment cost of the long-term equity investment will not be adjusted; the difference between the initial investment cost and the fair value share of the investee's identifiable net assets at the time of investment shall be included in the current profit and loss.

After the company obtains a long-term equity investment, it recognizes investment income and other comprehensive income respectively according to its share of the net profit or loss and other comprehensive income realized by the investee, and adjusts the book value of the long-term equity investment at the same time. It also calculates its share of the profits or cash dividends declared by the investee and reduces the book value of the long-term equity investment accordingly. For other changes in the owner's equity of the investee other than net profits and losses, other comprehensive income and profit distribution, the book value of the long-term equity investment is adjusted and included in the owner's equity.

When the company recognizes its share of the investee's net profits and losses, it adjusts and recognizes the investee's net profit based on the fair value of the investee's identifiable assets when the investment was obtained. Unrealized gains and losses from internal transactions between the Company and its associates and joint ventures are offset according to the proportion attributable to the Company, and investment gains and losses are recognized on this basis.

When the company confirms that it should share the losses incurred by the invested unit, it will proceed in the following order: first, offset the book value of the long-term equity investment. Secondly, if the book value of the long-term equity investment is not sufficient to offset it, investment losses will continue to be recognized to the extent of the book value of other long-term equities that essentially constitute a net investment in the investee, and the book value of long-term receivable items, etc. will be offset. Finally, after the above processing, if the enterprise still bears additional obligations according to the investment contract or agreement, estimated liabilities will be recognized based on the estimated obligations and included in the current investment losses.

If the invested unit realizes profits in the subsequent period, the company will proceed in the opposite order to the above after deducting the unrecognized loss sharing amount, write down the book balance of the recognized estimated liabilities, restore the book value of other long-term equities and long-term equity investments that essentially constitute a net investment in the invested unit, and then resume recognition of investment income.

3. Conversion of long-term equity investment accounting methods

(1) Fair value measurement converted to equity method accounting

The equity investment originally held by the Company that does not have control, joint control or significant influence on the investee and is accounted for according to the financial instrument recognition and measurement standards, due to additional investment and other reasons, can exert significant influence or joint control on the investee but does not constitute control, the sum of the fair value of the originally held equity investment plus the new investment cost determined in accordance with the "Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments" shall be regarded as the initial investment cost to be accounted for under the equity method.

If the initial investment cost calculated according to the equity method is less than the difference between the fair value share of the investee's identifiable net assets on the date of the additional investment calculated based on the new shareholding ratio after the additional investment, the book value of the long-term equity investment will be adjusted and included in the non-operating income of the current period.

(2) Fair value measurement or equity method accounting converted to cost method accounting

If the Company originally holds equity investments that do not have control, joint control or significant influence on the investee and are accounted for according to the financial instrument recognition and measurement standards, or originally held long-term equity investments in associates and joint ventures, and are able to exercise control over investees not under the same control due to additional investments or other reasons, when preparing individual financial statements, the sum of the book value of the original equity investment plus the new investment cost will be used as the initial investment cost to be accounted for using the cost method.

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Other comprehensive income recognized due to equity method accounting for equity investments held before the acquisition date will be accounted for on the same basis as the investee's direct disposal of relevant assets or liabilities when disposing of the investment.

If the equity investment held before the purchase date is accounted for in accordance with the relevant provisions of the "Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments", the cumulative fair value changes originally included in other comprehensive income will be transferred to the current profit and loss when the cost method is used. (3) Conversion from equity method accounting to fair value measurement

If the company loses joint control or significant influence on the investee due to disposal of part of its equity investment or other reasons, the remaining equity after disposal will be accounted for in accordance with "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 joint control or significant influence shall be included in the current profit and loss.

Other comprehensive income recognized as a result of the original equity investment being accounted for using the equity method will be accounted for on the same basis as if the investee directly disposed of relevant assets or liabilities when the equity method is terminated.

(4) Conversion from cost method to equity method

If the company loses control of the invested unit due to the disposal of part of its equity investments or other reasons, when preparing individual financial statements, if 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 instead, 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.

(5) Conversion from cost method to fair value measurement

If the company loses control of the invested unit due to the disposal of part of its equity investments and other reasons, when preparing individual financial statements, if the remaining equity after disposal cannot jointly control or exert significant influence on the invested unit, the accounting treatment shall be carried out in accordance with the relevant provisions of "Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments", and the difference between the fair value and the book value on the date of loss of control shall be included in the current profit and loss.

4. Disposal of long-term equity investments

When disposing of a long-term equity investment, the difference between its book value and the actual price obtained shall be included in the current profit and loss. When disposing of a long-term equity investment accounted for using the equity method, the same basis as the investee's direct disposal of relevant assets or liabilities will be used, and the portion originally included in other comprehensive income will be accounted for in a corresponding proportion.

If the terms, conditions and economic impact of various transactions related to the disposal of equity investments in subsidiaries meet one or more of the following circumstances, multiple transactions will be accounted for as a package deal:

(1) These transactions are entered into simultaneously or with consideration of mutual effects.

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

(3) The occurrence of a transaction depends on the occurrence of at least one other transaction.

(4) A transaction is uneconomical when viewed alone, but is economical when considered together with other transactions.

If the control over the original subsidiary is lost due to the disposal of part of the equity investment or other reasons, and it does not belong to a package deal, the relevant accounting treatment shall be carried out separately between individual financial statements and consolidated financial statements:

(1) In individual financial statements, for the equity disposed of, the difference between its book value and the actual price obtained is included in the current profit and loss. If the remaining equity after disposal can jointly control or exert significant influence on the investee, it will be accounted for according to the equity method, and the remaining equity will be deemed to have been accounted for using the equity method since the time of acquisition. If the remaining equity after disposal cannot jointly control or exert significant influence on the investee, it will be accounted for in accordance with the relevant provisions of "Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments", and the difference between its fair value and book value on the date of loss of control will be included in the current profit and loss.

(2) In the consolidated financial statements, for each transaction before the loss of control over the subsidiary, the difference between the disposal price and the long-term equity investment in the disposal of the subsidiary's share of net assets continuously calculated from the date of purchase or merger is adjusted to the capital reserve (equity premium). If the capital reserve is insufficient for offset, the retained earnings are adjusted; when the control of the subsidiary is lost, the remaining equity is remeasured according to its fair value on the date of loss of control. The difference between the sum of the consideration obtained for disposing of the equity and the fair value of the remaining equity, minus the share of the original subsidiary's net assets calculated continuously from the date of purchase based on the original shareholding ratio, is included in the investment income in the period when control is lost, and goodwill is offset at the same time. Other comprehensive income related to the equity investment in the original subsidiary will be converted into current investment income when control is lost.

If the various transactions involving the disposal of the subsidiary's equity investment until the loss of control belong to a package transaction, each transaction shall be accounted for as a transaction of disposal of the subsidiary's equity investment and loss of control, and relevant accounting treatment shall be carried out by distinguishing between individual financial statements and consolidated financial statements:

(1) In individual financial statements, the difference between the price of each disposal before the loss of control and the book value of the long-term equity investment corresponding to the equity disposed is recognized as other comprehensive income, and is transferred to the profit and loss of the current period when control is lost.

(2) In the consolidated financial statements, the difference between each disposal price and the share of the subsidiary's net assets corresponding to the disposal investment before the loss of control is recognized as other comprehensive income, and is transferred to the profit and loss of the current period when control is lost.

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5. Judgment criteria for joint control and significant influence

If the Company collectively controls an arrangement with other participants in accordance with relevant agreements, and decisions on activities that have a significant impact on the returns of the arrangement require the unanimous consent of the participants sharing control rights, then the Company and other participants are deemed to jointly control an arrangement, and the arrangement is a joint arrangement.

If a joint venture arrangement is reached through an independent entity, when it is determined based on the relevant agreement that the company has rights to the net assets of the independent entity, the independent entity will be treated as a joint venture and accounted for using the equity method. If it is judged based on the relevant agreement that the company does not have rights to the net assets of the separate entity, the separate entity will be treated as a joint operation, and the company will confirm the items related to the joint operation interest share and conduct accounting treatment in accordance with the relevant accounting standards for enterprises.

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. The company determines that it has a significant impact on the invested unit through one or more of the following circumstances and after comprehensively considering all the facts and circumstances: (1) having representatives on the invested unit's board of directors or similar authority; (2) participating in the financial and operating policy formulation process of the invested unit; (3) significant transactions with the invested unit; (4) dispatching management personnel to the invested unit; (5) providing key technical information to the invested unit.

20. Investment real estate

Not applicable

21. Fixed assets

(1). Confirm conditions

√Applicable □Not applicable

Fixed assets refer to tangible assets held for the purpose of producing goods, providing labor services, leasing or operating management, and whose useful life exceeds one accounting year. Fixed assets are recognized when the following conditions are met at the same time:

(1) The economic benefits related to the fixed asset are likely to flow into the enterprise.

(2) The cost of the fixed asset can be measured reliably.

(2). Depreciation method

√Applicable □Not applicable

Category Depreciation method Depreciation life (years) Salvage value rate (%) Annual depreciation rate (%) Houses and buildings Average age method 2030 5.00 3.174.75 Machinery and equipment Average age method 1012 5.00 7.929.50 Transportation equipment Average age method 810 5.00 9.5011.88 Electronic equipment Average age method 5 5.00 19.00

Other equipment Average age method 58 5.00 11.8819.00

22. Projects under construction

√Applicable □Not applicable

1. Initial measurement of projects under construction

The construction in progress constructed by the Company itself is valued at actual cost, and the actual cost consists of the necessary expenditures incurred before the asset reaches its intended usable condition. Including project material costs, labor costs, relevant taxes and fees paid, borrowing costs that should be capitalized and indirect costs that should be allocated, etc.

2. Standards and timing for transferring construction in progress to fixed assets

For projects under construction, all expenditures incurred before the asset reaches its intended usable state shall be regarded as the recorded value of the fixed assets. If the construction in progress has reached the intended usable state, but the final settlement of completion has not yet been processed, from the date it reaches the intended usable state, the estimated value will be transferred to fixed assets based on the project budget, cost or actual cost of the project, etc., and the depreciation of the fixed assets will be accrued in accordance with the company's fixed asset depreciation policy. After the final settlement of completion has been processed, the original estimated value will be adjusted based on the actual cost, but the originally accrued depreciation amount will not be adjusted.

Please refer to Note V. 27, Impairment of Long-term Assets for details on the impairment testing method and impairment provision accrual method for projects under construction.

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23. Borrowing costs

√Applicable □Not applicable

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. Assets that meet the conditions for capitalization refer to fixed assets, investment real estate, inventories and other assets that require a considerable period of acquisition, construction or production activities to reach the intended usable or salable state.

Capitalization of borrowing costs begins when the following conditions are met 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 purchase, construction or production activities necessary to bring the asset to its intended usable or salable state have begun.

2. Capitalization period of borrowing costs

The capitalization period refers to the period from the time when borrowing costs start to be capitalized to the time when capitalization stops. The period during which the capitalization of borrowing costs is suspended is not included.

When the acquisition, construction or production of assets that meet the capitalization conditions reaches the intended usable or salable state, the capitalization of borrowing costs ceases.

When part of the projects in the acquisition, construction or production of assets that meet the capitalization conditions are completed and can be used independently, the capitalization of the borrowing costs of this part of the assets will cease.

If each part of an asset purchased, constructed or produced is completed separately, but it cannot be used or sold until the entirety is completed, the capitalization of borrowing costs will stop when the entire asset is completed.

3. Suspension period of capitalization

If an abnormal interruption occurs during the acquisition, construction or production of assets that qualify for capitalization, and the interruption lasts for more than three months, the capitalization of borrowing costs will be suspended; if the interruption is a necessary procedure for the acquisition, construction or production of assets that qualify for capitalization to reach the intended usable or salable state, the borrowing costs will continue to be capitalized. Borrowing costs incurred during the interruption period are recognized as current profits and losses, and the borrowing costs continue to be capitalized until the acquisition, construction or production activities of the assets restart.

4. Calculation method of capitalized amount of borrowing costs

Interest expenses on special borrowings (deducting interest income from unused borrowed funds deposited in banks or investment income from temporary investments) and their auxiliary expenses shall be capitalized before the assets purchased, constructed or produced that meet the capitalization conditions reach the intended usable or salable state.

The amount of interest that should be capitalized on general borrowings is calculated and determined based on the weighted average amount of asset disbursements (based on the simple average at the beginning and end of the year) of the portion of accumulated asset disbursements that exceeds the 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.

If there is a discount or premium on the loan, the amount of discount or premium that should be amortized in each accounting period shall be determined according to the actual interest rate method, and the interest amount of each period shall be adjusted.

24. Biological assets

√Applicable □Not applicable

1. Biological asset classification

The company's biological assets include consumable biological assets and productive biological assets. Consumable biological assets include Codonopsis pilosula, etc., and productive biological assets include Cortex Phellodendron.

Biological assets shall be recognized if they meet the following conditions at the same time:

(1) The enterprise owns or controls the biological assets due to past transactions or events;

(2) The economic benefits or service potential related to the biological assets are likely to flow into the enterprise;

(3) The cost of the biological asset can be measured reliably.

2. Initial measurement of biological assets

The biological assets acquired by the company shall be initially measured according to the cost at the time of acquisition. The cost of purchased biological assets includes the purchase price, relevant taxes, transportation fees, insurance premiums and other expenses directly attributable to the purchase of the asset. The biological assets invested by investors shall be recorded as the value stipulated in the investment contract or agreement plus the relevant taxes payable. However, if the value stipulated in the contract or agreement is unfair, the actual cost shall be determined according to the fair value.

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3. Subsequent measurement of biological assets

(1) Subsequent expenditures

For self-cultivated and established consumable biological assets, the actual expenses incurred before canopy closure constitute the cost of consumable biological assets. Subsequent expenditures such as management and maintenance after canopy closure are included in the current profit and loss.

(2) Depreciation of productive biological assets

The company uses the straight-line method to calculate depreciation on a periodic basis for productive biological assets that have achieved the intended production and operation purposes. The company determines the useful life and estimated net residual value of productive biological assets based on their nature, use and expected realization of relevant economic benefits; and at the end of the year, the company reviews the useful life, estimated net residual value and depreciation method of productive biological assets, and makes corresponding adjustments if there are differences from the original estimates.

The estimated service life, estimated net residual value rate and annual depreciation rate of the Company’s productive biological assets are as follows:

Asset category Estimated useful life (years) Estimated net residual value rate (%) Annual depreciation rate (%)

Cork 6-10 years 5.00 9.5-15.83

(3) Biological asset disposal

When consumable biological assets are harvested or sold, the cost is carried forward using the weighted average method; the cost of the biological assets after the use is changed is determined based on the book value at the time of the change of use; when the biological assets are sold, damaged, or lost, the balance of the disposal income after deducting the book value and related taxes is included in the current profit and loss.

4. Impairment of biological assets

The company shall inspect consumable biological assets and productive biological assets at least at the end of each year. If there is conclusive evidence that the net realizable value of consumable biological assets or the recoverable amount of productive biological assets is lower than its book value due to natural disasters, pests or diseases, changes in market demand, etc., a provision for depreciation or impairment of biological assets shall be made based on the difference between the net realizable value or the recoverable amount and the book value, and shall be included in the current profit and loss.

If the influencing factors of the impairment of consumable biological assets have disappeared, the amount of the write-down will be restored and reversed within the amount of the provision for decline in price originally accrued, and the amount reversed will be included in the current profit and loss. Once the provision for impairment of productive biological assets is made, it cannot be reversed.

25. Oil and gas assets

□Applicable √Not applicable

26. Intangible assets

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

√Applicable □Not applicable

Intangible assets refer to identifiable non-monetary assets without physical form owned or controlled by the company, including land use rights, proprietary technology and software use rights, etc.

1. Initial measurement of intangible assets

The cost of outsourced intangible assets includes the purchase price, relevant taxes and other expenses directly attributable to achieving the intended use of the asset. If the purchase price of intangible assets is deferred beyond normal credit conditions and is essentially financing in nature, the cost of the intangible assets shall be determined based on the present value of the purchase price.

Debt restructuring obtains the intangible assets used by the debtor to offset debts, and determines their book value based on the fair value of the intangible assets, and the difference between the book value of the restructured debt and the fair value of the intangible assets used to offset debts is included in the current profit and loss.

Under the premise that the exchange of non-monetary assets has commercial substance and the fair value of the assets exchanged or exchanged can be reliably measured, the intangible assets exchanged in the exchange of non-monetary assets shall be valued based on the fair value of the assets exchanged, unless there is conclusive evidence that the fair value of the assets exchanged is more reliable; for non-monetary asset exchanges that do not meet the above premise, the book value of the assets exchanged and the relevant taxes payable shall be used as the cost of the intangible assets exchanged, and no profit or loss shall be recognized.

The entry value of intangible assets acquired through the merger of enterprises under the same control shall be determined based on the book value of the merged party; the entry value of intangible assets acquired through the merger of enterprises under the same control shall be determined based on the fair value.

The cost of intangible assets developed internally includes: materials used in developing the intangible assets, labor costs, registration fees, amortization of other patent rights and franchises used in the development process, interest expenses that meet the capitalization conditions, and other direct costs incurred before the intangible assets reach their intended use.

2. Subsequent measurement of intangible assets

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The company analyzes and determines the service life of intangible assets when acquiring them, and divides them into intangible assets with limited service life and intangible assets with uncertain service life.

(1) Intangible assets with limited useful life

Intangible assets with limited service life are amortized on a straight-line basis over the period of time they bring economic benefits to the enterprise. The estimated life and basis of intangible assets with limited useful life are as follows:

Item Estimated service life Basis

Land use rights 40~50 years legal period

Patent right 10 years reasonable period

Non-proprietary technology 5~10 years reasonable period

Software and others 5~10 years reasonable period

At the end of each period, the service life and amortization method of intangible assets with limited service life are reviewed. If there are differences from the original estimates, corresponding adjustments are made.

After review, the useful life and amortization method of the intangible assets at the end of the current period are no different from previous estimates.

(2) Intangible assets with indefinite service life

If the period during which an intangible asset can bring economic benefits to the enterprise cannot be foreseen, it is regarded as an intangible asset with an indefinite useful life. The basis for judging the uncertain service life is: it comes from contractual rights or other legal rights, but there is no clear service life in the contract or legal provisions; based on the situation in the same industry or the argumentation of relevant experts, it is still impossible to judge the period during which the intangible assets can bring economic benefits to the company. For intangible assets with indefinite service life, they are not amortized during the holding period, and the life of the intangible assets is reviewed at the end of each period. If it is still uncertain after re-examination at the end of the period, impairment testing will continue to be performed in each accounting period.

For details on the impairment testing method and impairment provision accrual method for intangible assets, please refer to Note V. 27. Impairment of long-term assets.

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

√Applicable □Not applicable

1. Divide the specific standards for the research stage and development stage of the company’s internal research and development projects

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.

Research stage: The stage of original planned investigation and research activities to obtain and understand new scientific or technical knowledge.

Development stage: A stage in which research results or other knowledge are applied to a plan or design to produce new or substantially improved materials, devices, products, etc. before commercial production or use.

Expenditures in the research phase of internal research and development projects are included in the current profits and losses when incurred.

2. Expenditures during the development phase meet specific standards for capitalization

Expenditures incurred during the development phase of internal research and development projects are recognized as intangible assets when the following conditions are met:

(1) It is technically feasible to complete the intangible asset so that it can be used or sold.

(2) Have the intention to complete the intangible asset and use or sell it.

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

(4) Have sufficient technical, financial and other resource support to complete the development of the intangible assets and have the ability to use or sell the intangible assets.

(5) Expenditures attributable to the development stage of the intangible asset can be measured reliably.

Expenditures in the development phase that do not meet the above conditions are included in the current profits and losses when incurred. Development expenditures that have been recognized in profit or loss in previous periods will not be re-recognized as assets in subsequent periods. 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.

27. Impairment of long-term assets

√Applicable □Not applicable

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The Company checks on each balance sheet date whether there are any signs of possible impairment in long-term equity investments, investment properties measured using the cost method, fixed assets, projects under construction, and intangible assets with definite useful lives. If there are signs of impairment of a long-term asset, its recoverable amount is estimated on the basis of an individual 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 on the basis of it.

The estimate of the recoverable amount of an asset is determined based on the higher of its fair value minus disposal costs and the present value of the asset's expected future cash flows.

The measurement results of the recoverable amount show that if the recoverable amount of a long-term asset is lower than its book value, the book value of the long-term asset will be written down to the recoverable amount, and the reduced amount will be recognized as asset impairment loss and included in the current profit and loss, and corresponding asset impairment provisions will be made. Once an asset impairment loss is recognized, it cannot be reversed in subsequent accounting periods.

After the asset impairment loss is recognized, the depreciation or amortization expense of the impaired asset will be adjusted accordingly in the future period, so that the adjusted book value of the asset (deducting the estimated net residual value) will be systematically apportioned within the remaining useful life of the asset.

Goodwill and intangible assets with indefinite useful lives formed due to business combinations are tested for impairment every year regardless of whether there are signs of impairment.

When conducting an impairment test on goodwill, the book value of goodwill is allocated to the asset groups or combinations of asset groups that are expected to benefit from the synergies of the business combination. When conducting an impairment test on a relevant asset group or combination of asset groups that contains goodwill, if there are signs of impairment in the asset group or combination of asset groups that are 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 compare it with the relevant book value to confirm the corresponding impairment loss. Then conduct an impairment test on the asset group or asset group combination containing goodwill, and compare the book value of these related asset groups or asset group combinations (including the book value portion of the allocated goodwill) with their recoverable amount. If the recoverable amount of the relevant asset group or asset group combination is lower than its book value, the impairment loss of goodwill is recognized.

28. Long-term deferred expenses

√Applicable □Not applicable

1.Amortization method

Long-term deferred expenses refer to various expenses that have been incurred by the company but should be borne by the current and subsequent periods with an amortization period of more than one year. Long-term deferred expenses are amortized on a straight-line basis over the benefit period.

2.Amortization period

It is amortized according to the straight-line method within the benefit period; if the long-term deferred expense item cannot benefit future accounting periods, all the amortized value of the item that has not yet been amortized will be transferred to the current profit and loss.

29. Contract liabilities

√Applicable □Not applicable

The Company recognizes the portion of the obligation to transfer goods to customers for consideration received or receivable from customers as contract liabilities.

30. Employee compensation

(1). Accounting treatment of short-term compensation

√Applicable □Not applicable

Short-term compensation refers to the employee compensation that the company needs to pay in full within twelve months after the end of the annual reporting period in which employees provide relevant services, excluding post-employment benefits and termination benefits. During the accounting period when employees provide services, the company recognizes short-term remuneration payable as liabilities, and includes them into relevant asset costs and expenses based on the beneficiaries of services provided by employees.

(2). Accounting treatment of post-employment benefits

√Applicable □Not applicable

Post-employment benefits refer to various forms of remuneration and benefits provided by the company in order to obtain the services provided by employees after the employees retire or terminate the labor relationship with the enterprise, excluding short-term remuneration and dismissal benefits.

The Company's post-employment benefit plans are all defined contribution plans.

The post-employment welfare defined contribution plan mainly involves participation in basic social pension insurance, unemployment insurance, etc. organized and implemented by local labor and social security agencies; during the accounting period when employees provide services to the company, the deposit amount payable calculated based on the defined contribution plan is recognized as a liability and included in the current profit and loss or related asset costs.

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After the company regularly pays the above amounts in accordance with the standards stipulated by the state, it will have no other payment obligations.

(3). Accounting treatment method for dismissal benefits

√Applicable □Not applicable

Dismissal benefits refer to the compensation given to employees by the company when the company terminates the labor relationship with employees before the expiration of the employee's labor contract, or to encourage employees to voluntarily accept redundancy. When the company cannot unilaterally withdraw the labor relationship plan or layoff proposal or when the costs and expenses related to the restructuring involving the payment of dismissal benefits are recognized, whichever is earlier, the liability arising from the compensation for terminating the labor relationship with employees is recognized, and is included in the current profit and loss.

The Company provides early retirement benefits to employees who accept internal retirement arrangements. Early retirement benefits refer to the wages and social insurance premiums paid to employees who have not reached the retirement age stipulated by the state and who voluntarily quit their jobs with the approval of the company's management. The Company will pay internal retirement benefits to early-retired employees from the date when internal retirement arrangements begin until the employees reach normal retirement age. For early retirement benefits, the Company conducts accounting treatment in accordance with dismissal benefits. When the relevant recognition conditions for dismissal benefits are met, the wages and social insurance premiums to be paid to early retirement employees from the date when the employees stop providing services to the normal retirement date are recognized as liabilities and included in the current profit and loss in one go. Differences caused by changes in actuarial assumptions of early retirement benefits and adjustments to welfare standards are included in the current profit and loss when they occur.

(4). Accounting treatment methods for other long-term employee benefits

√Applicable □Not applicable

Other long-term employee benefits refer to all employee benefits except short-term salary, post-employment benefits, and termination benefits.

For other long-term employee benefits that meet the conditions of the defined contribution plan, during the accounting period when the employees provide services to the company, the deposit amount payable is recognized as a liability and included in the current profit and loss or related asset costs.

31. Estimated liabilities

√Applicable □Not applicable

1. Recognition standards for estimated liabilities

When obligations related to contingencies meet the following conditions at the same time, the company recognizes them as estimated liabilities:

(1) This obligation is a current obligation borne by the company.

(2) Fulfilling 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.

2.Measurement method of estimated liabilities

The Company's estimated liabilities are initially measured based on the best estimate of the expenditures required to fulfill the relevant current obligations.

When determining the best estimate, the company comprehensively considers factors such as risks, uncertainties and time value of money related to contingencies. For those that have a significant impact on the time value of money, the best estimate is determined by discounting the relevant future cash outflows. The best estimate is processed in the following situations:

If there is a continuous range (or interval) of required expenditures, and various outcomes within the range are equally likely to occur, the best estimate shall be determined based on the middle value of the range, that is, the average of the upper and lower limits.

If the required expenditure does not exist in a continuous range (or interval), or although there is a continuous range, the likelihood of occurrence of various results within the range is not the same. If the contingency involves a single project, the best estimate is determined based on the most likely amount; if the contingency involves multiple projects, the best estimate is calculated and determined based on various possible results and related probabilities.

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

32. Share-based payment

√Applicable □Not applicable

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

For equity instruments such as options granted in an active market, the fair value shall be determined based on the quoted price in the active market. For equity instruments such as options granted for which there is no active market, an option pricing model is used to determine their fair value.

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The price model considers the following factors: (1) The exercise price of the option; (2) The validity period of the option; (3) The current price of the underlying stock; (4) The expected volatility of the stock price; (5) The expected dividend of the stock; (6) The risk-free interest rate during the validity period of the option.

When determining the fair value of equity instruments on the grant date, the impact of market conditions and non-vestigation conditions in the vesting conditions stipulated in the share-based payment agreement shall be considered. If there are non-exercisable conditions for share-based payment, as long as the employees or other parties meet all the non-market conditions (such as service period, etc.) among the exercisable conditions, the corresponding costs and expenses for the services will be confirmed.

3. Basis for determining the best estimate of exercisable equity instruments

On each balance sheet date during the waiting period, the best estimate is made based on the latest changes in the number of vested employees and other subsequent information, and the number of equity instruments expected to be vested is revised. On the vesting date, the final expected number of vested equity instruments is consistent with the actual number of vested equity instruments.

4.Accounting treatment method

(1) Accounting treatment of equity-settled and cash-settled share-based payments

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.

(2) Accounting treatment for modification of share-based payment terms and conditions

For adverse modifications, the Company will treat the change as if it had never occurred and continue to account for the services obtained.

For favorable modifications, the company handles them in accordance with the following regulations: If the modification increases the fair value of the equity instruments granted, the enterprise shall recognize the increase in services obtained according to the increase in the fair value of the equity instruments. If the modification occurs during the waiting period, when the fair value of the service is obtained between the modification date and the modified vesting date, it shall include both the service amount determined based on the fair value of the original equity instrument grant date during the remaining original waiting period, and the increase in the fair value of the equity instrument. If the modification occurs after the vesting date, the increase in the fair value of the equity instrument should be recognized immediately. If the share-based payment agreement requires employees to complete a longer period of service before they can obtain modified equity instruments, the company should recognize the increase in the fair value of the equity instruments throughout the waiting period.

If the modification increases the number of equity instruments granted, the enterprise will recognize the fair value of the increased equity instruments as an increase in the services obtained accordingly. If the modification occurs during the waiting period, when the fair value of the service is obtained between the date of confirmation of the modification and the vesting date of the increased equity instrument, it shall include both the service amount determined based on the fair value of the original equity instrument granting date within the remaining original waiting period, and the increase in the fair value of the equity instrument.

If an enterprise modifies the vesting conditions in a way that is beneficial to employees, such as shortening the waiting period, changing or canceling performance conditions (rather than market conditions), the enterprise should consider the modified vesting conditions when handling the vesting conditions.

(3) Accounting treatment for cancellation of share-based payment

If the granted equity instruments are canceled during the waiting period, 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.

33. Preferred shares, perpetual bonds and other financial instruments

√Applicable □Not applicable

In accordance with the provisions of the Financial Instrument Standards, the Company classifies the financial instruments or their components as financial liabilities or equity instruments at the time of initial recognition based on the contractual terms of the issued preferred shares, perpetual bonds and other financial instruments and the economic substance reflected therein rather than just the legal form, combined with the definitions of financial liabilities and equity instruments:

1. If one of the following conditions is met, the issued financial instruments will be classified as financial liabilities.

(1) Contractual obligations 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.

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(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.

2. If the following conditions are met at the same time, the financial instruments issued will be classified as equity instruments

(1) The financial instrument does not include contractual obligations to deliver cash or other financial assets to other parties, or to exchange financial assets or financial liabilities with other parties under potentially adverse conditions.

(2) If the financial instrument must or can be settled with the enterprise's own equity instruments in the future, if the financial instrument is a non-derivative instrument, it does not include the contractual obligation to deliver a variable number of its own equity instruments for settlement; if it is a derivative instrument, the enterprise can only settle the financial instrument by exchanging a fixed number of its own equity instruments for a fixed amount of cash or other financial assets.

3.Accounting treatment method

For financial instruments classified as equity instruments, their interest payments or dividend distributions should be treated as profit distributions of the issuing enterprise, and their repurchases, cancellations, etc. are treated as changes in equity, and transaction costs such as handling fees and commissions are deducted from equity.

For financial instruments classified as financial liabilities, their interest payments or dividend distributions are in principle treated as borrowing costs. Gains or losses arising from their repurchase or redemption are included in the current profits and losses, and transaction costs such as handling fees and commissions are included in the initial measurement amount of the issued instruments.

34. Income

(1). Disclose the accounting policies adopted for revenue recognition and measurement according to business type

√Applicable □Not applicable

The company's revenue mainly comes from pharmaceutical manufacturing business.

1. General principles of revenue recognition

When 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 based on the transaction price allocated to the performance obligation.

Performance obligations refer to the company's commitment in the contract to transfer clearly distinguishable goods or services to customers.

Obtaining control over relevant goods means being able to direct the use of the goods and obtain almost all economic benefits from them.

The Company evaluates the contract on the contract inception date, identifies each individual performance obligation contained in the contract, and determines whether each individual performance obligation will be performed within a certain period of time or at a certain point in time. If one of the following conditions is met, it is a performance obligation performed within a certain period of time, and the company will recognize revenue over a period of time according to the progress of the contract: (1) The customer obtains and consumes the economic benefits brought by the company's performance while the company is performing the contract; (2) The customer can control the goods under construction during the company's performance; (3) The goods produced during the company's performance have irreplaceable uses, and the company has the right to collect payment for the cumulative performance part that has been completed so far during the entire contract period. Otherwise, the Company recognizes revenue at the point when the customer obtains control of the relevant goods or services.

For performance obligations to be fulfilled within a certain period of time, the company uses the output method/input method to determine the appropriate performance progress based on the nature of the goods and services. The output method determines the performance progress based on the value of the goods transferred to the customer to the customer (the input method determines the performance progress based on the company's input to fulfill the performance obligations). 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. 2. Specific methods of revenue recognition

The business staff submits a shipment application based on the customer's order. After the financial department's settlement review personnel review and confirm based on the customer's corresponding contract situation, payment settlement method, credit policy and other factors, the business staff submits the sales order and notifies the warehouse to handle the outbound procedures. The company obtains the corresponding receipt documents (sales contract (order), outbound order, receipt signed by the customer, or delivery notice information from the logistics express company), and confirms the sales revenue when it confirms that control of the goods has been transferred.

(2) Similar businesses using different business models involve different revenue recognition methods and measurement methods

□Applicable √Not applicable

35. Contract costs

√Applicable □Not applicable

1. Contract performance costs

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The company's costs incurred to perform the contract are recognized as an asset as contract performance costs if they do not fall within the scope of other business accounting standards other than the revenue standards and meet the following conditions:

(1) The cost is directly related to a current or expected contract, including direct labor, direct materials, manufacturing overhead (or similar expenses), costs expressly 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.

(3) The cost is expected to be recovered.

The asset is reported in inventory or other non-current assets based on whether its amortization period at initial recognition exceeds one normal operating cycle.

2. Contract acquisition costs

The incremental costs incurred by the Company to obtain the contract are expected to be recovered and are recognized as an asset as the contract acquisition cost. Incremental costs refer to costs that the company would not incur without obtaining the contract, such as sales commissions, etc. If the amortization period does not exceed one year, it will be included in the current profit and loss when incurred.

3. Amortization of contract costs

The above-mentioned assets related to contract costs are amortized on the same basis as the revenue from goods or services related to the assets, and are amortized at the time when the performance obligation is fulfilled or according to the performance progress of the performance obligation, and included in the current profit and loss.

4. Impairment of contract costs

If the book value of the above-mentioned assets related to contract costs is higher than the difference between the remaining consideration that the company expects to obtain for the transfer of the goods related to the asset and the estimated cost to be incurred for the transfer of the related goods, the excess shall be provided for impairment and recognized as asset impairment losses.

After the impairment provision is made, if the factors of impairment in the previous period change, causing the difference between the above two items to be higher than the book value of the asset, the asset impairment provision that was originally made will be reversed and included in the current profit and loss, but the book value of the asset after the reversal shall not exceed the book value of the asset on the date of reversal if no impairment provision is made.

36. Government subsidies

√Applicable □Not applicable

1. Type

Government subsidies are monetary assets and non-monetary assets that the company obtains free of charge from the government. According to the subsidy objects specified in relevant government documents, government subsidies are divided into asset-related government subsidies and income-related government subsidies.

For government subsidies that do not specify the subsidy objects in government documents, the company will classify them as asset-related government subsidies or income-related government subsidies based on the actual subsidy objects. They will not form assets and will all be classified as income-related government subsidies.

Asset-related government subsidies refer to government subsidies obtained by the company and used to purchase, construct or otherwise form long-term assets. Government subsidies related to income refer to government subsidies other than government subsidies related to assets.

2. Confirmation of government subsidies

If there is evidence at the end of the period that the company can meet the relevant conditions stipulated in the financial support policy and is expected to receive financial support funds, the government subsidy will be recognized based on the amount receivable. In addition, government subsidies are recognized when they are actually received.

If government subsidies are monetary assets, they shall be measured based on the amount received or receivable. If the government subsidy is a non-monetary asset, it shall be measured at fair value; if the fair value cannot be obtained reliably, it shall be measured at the nominal amount (RMB 1). Government subsidies measured according to the nominal amount are directly included in the current profit and loss.

3.Accounting treatment method

Government subsidies related to assets should be offset against the book value of the relevant assets or recognized as deferred income. If government subsidies related to assets are recognized as deferred income, they shall be included in profits and losses in installments in a reasonable and systematic manner within the useful life of the assets constructed or purchased. If government subsidies related to income are used to compensate the enterprise for relevant expenses or losses in the future period, they are recognized as deferred income, and are included in the current profit and loss or offset the relevant costs during the period when the relevant expenses or losses are recognized; if they are used to compensate the enterprise for the relevant expenses or losses that have already occurred, they are directly included in the current profits and losses or offset the relevant costs when they are obtained.

Government subsidies related to the daily activities of the enterprise are included in other income or offset related costs and expenses; government subsidies unrelated to the daily activities of the enterprise are included in non-operating income and expenses.

Government subsidies related to policy-based preferential loan interest discounts are received to offset related borrowing costs; if a policy-based preferential interest rate loan is obtained from a lending bank, the actual loan amount received is used as the entry value of the loan, and the relevant borrowing costs are calculated based on the loan principal and the policy-based preferential interest rate.

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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; if there is no relevant deferred income, it is directly included in the current profit and loss.

37. Deferred income tax assets/deferred income tax liabilities

√Applicable □Not applicable

Deferred income tax assets and deferred income tax liabilities are calculated and recognized based on the difference (temporary difference) between the tax basis of assets and liabilities and their book value. On the balance sheet date, deferred income tax assets and deferred income tax liabilities are measured according to the applicable tax rate during the period when the asset is expected to be recovered or the liability is settled.

1. Basis for recognizing deferred income tax assets

The Company recognizes deferred income tax assets arising from deductible temporary differences to the extent that it is likely to obtain taxable income that can be used to offset the deductible temporary differences and can be carried forward to deductible losses and tax credits in future years. However, deferred income tax assets arising from the initial recognition of assets or liabilities in transactions with the following characteristics will not be recognized: (1) The transaction is not a business combination; (2) When the transaction occurs, it neither affects accounting profits nor taxable income or deductible losses.

For deductible temporary differences related to investments in associates, the 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.

2. Basis for recognizing deferred income tax liabilities

The company recognizes the taxable temporary differences payable and unpaid between the current period and previous periods as deferred income tax liabilities. But it does not include: (1) Temporary differences caused by the initial recognition of goodwill.

(2) Transactions or events that are not formed by a business combination, and when such transactions or events occur, they will neither affect accounting profits nor temporary differences resulting from taxable income (or deductible losses).

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

3. When the following conditions are met at the same time, deferred income tax assets and deferred income tax liabilities will be presented as the net amount after offsetting

(1) The enterprise 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 the income tax levied by the same tax collection and administration department on the same taxable entity or to different taxable entities. However, in each future period when important deferred income tax assets and deferred income tax liabilities are reversed, the taxable entity involved intends to settle the current income tax assets and current income tax liabilities with a net amount or to obtain assets and pay off debts at the same time.

38. Leasing

√Applicable □Not applicable

As a lessee, the judgment basis and accounting treatment method for simplified treatment of short-term leases and low-value asset leases

√Applicable □Not applicable

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

1. Short-term leasing and leasing of low-value assets

A short-term lease is a lease that does not include an option to buy and has a term of no more than 12 months. Low-value asset leases refer to leases with a lower value when a single leased asset is a new asset.

The company does not recognize right-of-use assets and lease liabilities for short-term leases and low-value asset leases. The relevant lease payments are included in the cost of relevant assets or current profits and losses according to the straight-line method or other systematic and reasonable methods during each period of the lease term.

2. For details of the accounting policies for right-of-use assets and lease liabilities, please refer to Note V. 39. Other important accounting policies and accounting estimates.

Lease classification standards and accounting treatment methods as a lessor

√Applicable □Not applicable

1. Classification of leasing

The Company divides leases into finance leases and operating leases on the lease commencement date. A finance lease refers to a lease that substantially transfers substantially all the risks and rewards associated with ownership of the leased asset, and the ownership may or may not ultimately be transferred. Operating leases refer to leases other than finance leases.

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If a lease has one or more of the following circumstances, the Company usually classifies it as a finance lease:

(1) At the expiration of the lease term, the ownership of the leased asset is transferred to the lessee.

(2) The lessee has the option to purchase the leased asset, and the purchase price established is sufficiently low compared to the fair value of the leased asset when the option is expected to be exercised, so that it is reasonably certain that the lessee will exercise the option on the lease commencement date.

(3) Although the ownership of the asset is not transferred, the lease period accounts for the majority of the useful life of the leased asset.

(4) On the lease commencement date, the present value of the lease receipts is almost equal to the fair value of the leased asset.

(5) The leased assets are of special nature and can only be used by the lessee if no major modifications are made.

If a lease has one or more of the following signs, the Company may also classify it as a finance lease.

(1) If the lessee cancels the lease, the loss caused to the lessor by the cancellation of the lease shall be borne by the lessee.

(2) Gains or losses arising from fluctuations in the fair value of the asset's residual value belong to the lessee.

(3) The lessee has the ability to continue leasing to the next period at a rent well below the market level.

2. Accounting treatment of finance leases

On the start date of the lease period, the Company recognizes finance lease receivables for finance leases and terminates the recognition of finance lease assets. When the financial lease receivable is initially measured, the sum of the unguaranteed residual value and the present value of the lease receipts that have not been received at the beginning of the lease term discounted at the interest rate implicit in the lease is the entry value of the financial lease receivable. Lease receipts include:

(1) The fixed payment amount and the actual fixed payment amount after deducting the amount related to the lease incentive.

(2) Variable lease payments that depend on an index or rate.

(3) When it is reasonably certain that the lessee will exercise the purchase option, the lease receipts include the exercise price of the purchase option. (4) When the lease term reflects that the lessee will exercise the option to terminate the lease, the lease receipts include the amount paid by the lessee to exercise the option to terminate the lease.

(5) The guaranteed residual value provided to the lessor by the lessee, a party related to the lessee and an independent third party with the financial ability to fulfill the guarantee obligations.

The company calculates and recognizes interest income for each period during the lease term based on the fixed interest rate implicit in the lease. The variable lease payments obtained that are not included in the measurement of the net lease investment are included in the current profit and loss when they actually occur.

3. Accounting treatment of operating leases

The company uses the straight-line method or other systematic and reasonable methods in each period of the lease term to recognize the lease receipts from the operating lease as rental income; the initial direct expenses related to the operating lease are capitalized, and are amortized on the same basis as the rental income recognition during the lease period, and included in the current profit and loss in installments; the variable lease payments related to the operating lease that are not included in the lease receipts are included in the current profit and loss when they actually occur.

39. Other important accounting policies and accounting estimates

√Applicable □Not applicable

1. Right-of-use assets

The company initially measures right-of-use assets at cost, which includes:

(1) Initial measurement amount of lease liability.

(2) For lease payments paid on or before the start date of the lease period, if there are lease incentives, the amount related to the lease incentives already enjoyed will be deducted.

(3) Initial direct costs incurred by the company.

(4) The costs that the company expects 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 (excluding costs incurred for the production of inventories).

After the start date of the lease period, the Company adopts the cost model for subsequent measurement of right-of-use assets.

If it is reasonably certain that the ownership of the leased asset will be obtained at the expiration of the lease term, the Company will accrue depreciation over the remaining useful life of the leased asset. If it is not reasonably certain that the ownership of the leased asset will be obtained at the expiration of the lease term, the Company will accrue depreciation during the shorter of the lease term and the remaining useful life of the leased asset. For right-of-use assets for which impairment provisions have been made, depreciation will be made in future periods based on the book value after deducting impairment provisions in accordance with the above principles.

The company determines whether the right-of-use assets have been impaired in accordance with the provisions of "Accounting Standards for Business Enterprises No. 8 - Asset Impairment" and conducts accounting treatment for the identified impairment losses. For details, please see Note V. 27. Impairment of long-term assets.

2. Lease liabilities

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The Company initially measures lease liabilities based on the present value of the unpaid lease payments on the start date of the lease term. When calculating the present value of lease payments, the Company uses the interest rate implicit in the lease as the discount rate; if the interest rate implicit in the lease cannot be determined, the Company's incremental borrowing rate is used as the discount rate. Lease payments include:

(1) The fixed payment amount and the actual fixed payment amount after deducting the amount related to the lease incentive.

(2) Variable lease payments that depend on an index or rate.

(3) The lease payment includes the exercise price of the purchase option when the Company is reasonably certain to exercise the option.

(4) When the lease term reflects that the Company will exercise the option to terminate the lease, the lease payment includes the amount required to exercise the option to terminate the lease.

(5) The amount expected to be paid based on the residual value of the guarantee provided by the company.

The company calculates the interest expense of the lease liability in each period during the lease term based on a fixed discount rate, and includes it in the current profit and loss or related asset costs.

Variable lease payments that are not included in the measurement of lease liabilities should be included in the current profit and loss or related asset costs when actually incurred.

40. Changes in important accounting policies and accounting estimates

(1).Changes in important accounting policies

□Applicable √Not applicable

(2).Changes in important accounting estimates

□Applicable √Not applicable

(3). The first implementation of new accounting standards or standard interpretations starting in 2025 will involve adjustments to the financial statements at the beginning of the year of first implementation.

□Applicable √Not applicable

41. Others

□Applicable √Not applicable

6. Taxes

1. Main tax types and tax rates

Main tax types and tax rates

√Applicable □Not applicable

Type of tax Tax calculation basis Tax rate

Calculate sales based on taxable income and applicable tax rate

Value-added tax shall be deducted at the rate of 13% and 6% that are allowed to be deducted in the current period.

The difference after input tax is calculated and paid VAT

Consumption tax Taxable consumer goods sales 10% urban maintenance and construction tax Paid turnover tax 7%, 5% education surcharge Paid turnover tax 3% local education surtax Paid turnover tax 2% corporate income tax Taxable income 25%, 15%, exempt from corporate income tax

If there are taxpayers with different corporate income tax rates, a description of the disclosure

√Applicable □Not applicable

Name of taxpayer Income tax rate (%) Guizhou Sanli Pharmaceutical Co., Ltd. 15

Guizhou Sanli Health Management Co., Ltd. 25

Guizhou Cenyi Medical Information Co., Ltd. 25

According to Caishui [2008] No. 15, the Ministry of Finance and the State Administration of Taxation announced that Guizhou Sankang Enterprise Management Partnership (Limited Partnership)

Notice on Income Tax Issues for Partners of Partnership Enterprises" "China

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According to the relevant provisions of Article 1 of the Enterprise Income Tax Law of the People's Republic of China, the Enterprise Income Tax Law is not applicable to partnerships. Each partner of a partnership is a tax payer. Partners of a partnership are natural persons and pay personal income tax; partners are legal persons and

For other organizations, pay corporate income tax

Guizhou Sankang Traditional Chinese Medicine Industry Development Co., Ltd. 25

Guizhou Sankang Planting Co., Ltd. Complies with Note 6, Taxes, 2, Tax Preferences, (4) Guizhou Sankang Medicinal Materials Co., Ltd. 25

Guizhou Nuorun Enterprise Management Consulting Co., Ltd. 25

Sanli Zhongyue (Shanghai) Marketing Planning Co., Ltd. 25

Xiaoxuan Pharmaceutical Technology (Guizhou) Co., Ltd. 25

Guizhou Dechangxiang Pharmaceutical Co., Ltd. 15

Guizhou Dechangxiang Traditional Chinese Medicine Cultivation Co., Ltd. Complies with Note 6, Taxes, 2, Tax Preferences, (4) Guizhou Haost Biotechnology Co., Ltd. 25

Yunnan Wudi Pharmaceutical Co., Ltd. 15

Guizhou Hanfang Pharmaceutical Co., Ltd. 15

Sanli Health Industry (Hainan) Co., Ltd. 25

2. Tax incentives

√Applicable □Not applicable

(1) According to the "Announcement of the Ministry of Finance, the State Administration of Taxation, and the National Development and Reform Commission on the Continuation of the Corporate Income Tax Policy for the Development of the Western Region" (Announcement No. 23 of the Ministry of Finance, the State Administration of Taxation, and the National Development and Reform Commission of 2020), from January 1, 2021 to December 31, 2030, enterprises in encouraged industries located in the western region will be levied a corporate income tax at a reduced rate of 15%. The parent company Guizhou Sanli Pharmaceutical Co., Ltd. and its holding subsidiary Guizhou Dechangxiang Pharmaceutical Co., Ltd. are encouraged industrial enterprises located in the western region, and are subject to a reduced corporate income tax rate of 15%.

(2) The holding subsidiary Yunnan Wudi Pharmaceutical Co., Ltd. obtained a high-tech enterprise certificate jointly approved by the Yunnan Provincial Department of Science and Technology, the Yunnan Provincial Department of Finance, and the State Administration of Taxation Yunnan Provincial Taxation Bureau on November 1, 2024, with the number GR202453000443. It is valid for three years. The holding subsidiary Yunnan Wudi Pharmaceutical Co., Ltd. has a corporate income tax reduction of 15%.

(3) The holding subsidiary Guizhou Hanfang Pharmaceutical Co., Ltd. obtained a high-tech enterprise certificate jointly issued by the Guizhou Provincial Department of Science and Technology, the Guizhou Provincial Department of Finance, and the State Administration of Taxation Guizhou Provincial Taxation Bureau on December 12, 2023. The certificate number is GR202352000080. It is valid for three years. The holding subsidiary Guizhou Hanfang Pharmaceutical Co., Ltd. has a corporate income tax reduction of 15%.

(4) The main business projects of the holding subsidiary Guizhou Sankang Planting Co., Ltd. and the holding subsidiary Guizhou Dechangxiang Traditional Chinese Medicine Planting Co., Ltd. are the cultivation of Chinese medicinal materials. Agricultural products produced and sold by enterprises within the prescribed scope are exempt from corporate income tax according to Announcement No. 23 of the State Administration of Taxation in 2018.

(5) The main business projects of the holding subsidiary Guizhou Sankang Planting Co., Ltd. and the holding subsidiary Guizhou Dechangxiang Traditional Chinese Medicine Planting Co., Ltd. are the cultivation of Chinese medicinal materials. Agricultural products produced and sold by enterprises within the prescribed scope are exempt from value-added tax according to the Interim Regulations of the People's Republic of China on Value-Added Tax (revised in 2016).

(6) Yunnan Wudi Pharmaceutical Co., Ltd., a controlled subsidiary, complies with the relevant provisions of the "Notice of the Ministry of Finance and the State Administration of Taxation on Preferential Value-Added Tax Policies for Promoting the Employment of Disabled Persons" (Caishui [2016] No. 52), and implements a method whereby the tax authorities will refund the VAT upon collection and refund according to the number of disabled persons placed by the taxpayer according to the limit.

3. Others

□Applicable √Not applicable

7. Notes on Consolidated Financial Statement Items

1. Monetary funds

√Applicable □Not applicable

Unit: Yuan Currency: RMB Item Closing balance Opening balance

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Cash on hand 89,256.36 72,310.86 Bank deposits 283,427,602.20 474,741,730.70 Other monetary funds 30,318.46 30,972.78 Deposits in finance companies

Total 283,547,177.02 474,845,014.34 Including: total amount deposited abroad

The details of restricted monetary funds are as follows:

Item Ending balance Beginning balance ETC margin 2,000.00 2,000.00

Total 2,000.00 2,000.00

Other instructions

(1) The restricted amount at the end of the period of 2,000 yuan has been deducted from the "end of cash and cash equivalents balance" when preparing the cash flow statement.

(2) For details on restricted assets, please refer to Notes, Section 8, Financial Report, VII. Notes to Items in Consolidated Financial Statements 31. Assets with restricted ownership or use rights.

2. Trading financial assets

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Closing balance Opening balance Reason and basis for designation Measured at fair value and its changes /

19,500,145.21 22,945,081.52

Financial assets included in current profits and losses

Among them:

debt instrument investment /

Others 19,500,145.21 22,945,081.52 / Designated to be measured at fair value and its change

Financial assets automatically included in current profits and losses

Among them:

Total 19,500,145.21 22,945,081.52 /Other instructions:

√Applicable □Not applicable

The closing balance represents the bank financial products purchased by the company

3. Derivative financial assets

□Applicable √Not applicable

4. Notes receivable

(1). Classified presentation of notes receivable

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Ending balance Beginning balance

Bank acceptance bills 57,651,599.69 82,062,569.10 Commercial acceptance bills

Total 57,651,599.69 82,062,569.10

(2). The company’s pledged notes receivable at the end of the period

√Applicable □Not applicable

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Unit: Yuan Currency: RMB

Project Amount pledged at the end of the period

Bank acceptance bills 37,608,487.66 Commercial acceptance bills

Total 37,608,487.66

(3). Notes receivable that have been endorsed or discounted by the company at the end of the period and have not yet matured on the balance sheet date

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Amount derecognized at the end of the period Amount not derecognized at the end of the period Bank acceptance bill 43,564,888.01 Commercial acceptance bill

Total 43,564,888.01

(4). Classified disclosure according to bad debt accrual method

□Applicable √Not applicable

Provision for bad debts is made individually:

□Applicable √Not applicable

Provision for bad debts by group:

□Applicable √Not applicable

Provision for bad debts based on the general expected credit loss model

□Applicable √Not applicable

Basis for division of each stage and provision ratio for bad debts

None

Explanation of significant changes in the book balance of notes receivable that have experienced changes in loss provisions during the current period:

□Applicable √Not applicable

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(5). Bad debt provisions

□Applicable √Not applicable

Among them, the amount of recovery or reversal of bad debt provisions for the current period is important:

□Applicable √Not applicable

Other notes:

None

(6). Notes receivable actually written off in the current period

□Applicable √Not applicable

Among them, the important write-off of bills receivable:

□Applicable √Not applicable

Instructions for writing off notes receivable:

□Applicable √Not applicable

Other notes:

√Applicable □Not applicable

For details on restricted assets, please refer to Notes, Section 8, Financial Report, VII. Notes to Items in Consolidated Financial Statements 31. Assets with restricted ownership or use rights.

5. Accounts receivable

(1). Disclosure based on aging

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Aging Book balance at the end of the period Book balance at the beginning of the period

Within 1 year (including 1 year) 658,793,471.80 750,454,423.06 Of which: within 1 year sub-item 658,793,471.80 750,454,423.06 1 to 2 years 23,854,645.89 16,871,915.37 2 to 3 years 547,695.38 507,621.88 More than 3 years

3 to 4 years 465,879.22 392,054.34 4 to 5 years 223,234.00 8,000.00 More than 5 years 96,816.20 96,816.20

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Total 683,981,742.49 768,330,830.85

(2). Classified disclosure according to bad debt accrual method

√Applicable □Not applicable

Unit: Yuan Currency: RMB Closing balance Opening balance

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

Category Provision Book Provision Book amount Proportion (%) Amount Proportion Value Amount Proportion (%) Amount Proportion Value

(%) (%)

Provision based on individual items

Provision for bad debts

Among them:

Provision based on combination

683,981,742.49 100.00 35,983,834.99 5.26 647,997,907.50 768,330,830.85 100.00 39,661,042.63 5.16 728,669,788.22 Bad debt provision

Among them:

Combination 1 683,981,742.49 100.00 35,983,834.99 5.26 647,997,907.50 768,330,830.85 100.00 39,661,042.63 5.16 728,669,788.22

Total 683,981,742.49 100.00 35,983,834.99 5.26 647,997,907.50 768,330,830.85 100.00 39,661,042.63 5.16 728,669,788.22

Provision for bad debts is made individually:

□Applicable √Not applicable

Provision for bad debts by group:

√Applicable □Not applicable

Combination accrual items: Combination 1

Unit: Yuan Currency: RMB Closing balance

Name

Book balance Bad debt provision Provision ratio (%)

Within 1 year 658,793,471.80 32,936,880.48 5.00 1 to 2 years 23,854,645.89 2,385,464.59 10.00 2 to 3 years 547,695.38 164,308.61 30.00

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3 to 4 years 465,879.22 232,939.61 50.00 4 to 5 years 223,234.00 167,425.50 75.00 More than 5 years 96,816.20 96,816.20 100.00

Total 683,981,742.49 35,983,834.99

Instructions on accruing bad debt provisions by group:

□Applicable √Not applicable

Provision for bad debts based on the general expected credit loss model

□Applicable √Not applicable

Basis for division of each stage and provision ratio for bad debts

None

Explanation of significant changes in the book balance of accounts receivable that have experienced changes in loss provisions during the current period:

□Applicable √Not applicable

(3). Bad debt provision situation

√Applicable □Not applicable

Unit: Yuan Currency: RMB Change amount in the current period

Category Beginning Balance Ending Balance

Provision Recovery or reversal Write-off or write-off Other changes

Provision for bad debts based on portfolio 39,661,042.63 3,677,207.64 35,983,834.99 Of which: Portfolio 1 39,661,042.63 3,677,207.64 35,983,834.99

Total 39,661,042.63 3,677,207.64 35,983,834.99

Among them, the amount of recovery or reversal of bad debt provisions for the current period is important:

□Applicable √Not applicable

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Other notes:

None

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

□Applicable √Not applicable

Among them, the important write-off of accounts receivable

□Applicable √Not applicable

Instructions for writing off accounts receivable:

□Applicable √Not applicable

(5). Accounts receivable and contract assets of the top five closing balances collected by debtors

√Applicable □Not applicable

Unit: Yuan Currency: RMB Accounts receivable and accounts receivable period Contract assets Accounts receivable and contracts Contract assets at the end of the period Bad debt provision at the end of the period Unit name

Ending balance Ending balance Asset ending balance Balance of total balances

Proportion (%) Customer 1 42,805,261.53 42,805,261.53 6.26 2,140,263.08 Customer 2 41,138,595.70 41,138,595.70 6.01 2,332,600.09 Customer 3 23,686,200.00 23,686,200.00 3.46 1,184,310.00Customer 4 20,519,348.68 20,519,348.68 3.00 1,385,255.96Customer 5 20,456,819.54 20,456,819.54 2.99 1,022,840.98

Total 148,606,225.45 148,606,225.45 21.72 8,065,270.11

Other instructions

None

Other notes:

□Applicable √Not applicable

6. Contract assets

(1).Contract assets

□Applicable √Not applicable

(2). The amount and reasons for significant changes in book value during the reporting period

□Applicable √Not applicable

(3). Classified disclosure according to bad debt accrual method

□Applicable √Not applicable

Provision for bad debts is made individually:

□Applicable √Not applicable

Instructions on accruing bad debt provisions individually:

□Applicable √Not applicable

Provision for bad debts by group:

□Applicable √Not applicable

Provision for bad debts based on the general expected credit loss model

□Applicable √Not applicable

Basis for division of each stage and provision ratio for bad debts

None

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Explanation of significant changes in the book balance of contract assets that have experienced changes in loss provisions in the current period: □ Applicable √ Not applicable

(4). Bad debt provisions for contract assets in the current period

□Applicable √Not applicable

Among them, the amount of recovery or reversal of bad debt provisions for the current period is important:

□Applicable √Not applicable

Other notes:

None

(5).Contract assets actually written off in this period

□Applicable √Not applicable

Among them, the important write-off of contract assets

□Applicable √Not applicable

Instructions for write-off of contract assets:

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

7. Accounts receivable financing

(1). Classified presentation of financing receivables

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Ending balance Beginning balance Notes receivable 64,091,536.64 121,388,452.65 Accounts receivable

Total 64,091,536.64 121,388,452.65

(2). Financing of receivables pledged by the company at the end of the period

□Applicable √Not applicable

(3). Financing of receivables that have been endorsed or discounted by the company at the end of the period and have not yet matured on the balance sheet date √ Applicable □ Not applicable

Unit: Yuan Currency: RMB

Item Amount derecognized at the end of the period Amount not derecognized at the end of the period Notes receivable 34,603,373.14 Accounts receivable

Total 34,603,373.14

(4). Classified disclosure according to bad debt accrual method

□Applicable √Not applicable

Provision for bad debts is made individually:

□Applicable √Not applicable

Instructions on accruing bad debt provisions individually:

□Applicable √Not applicable

Provision for bad debts by group:

□Applicable √Not applicable

Provision for bad debts based on the general expected credit loss model

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□Applicable √Not applicable

Basis for division of each stage and provision ratio for bad debts

None

Explanation of significant changes in the book balance of accounts receivable financing that have experienced changes in loss provisions in the current period:

□Applicable √Not applicable

(5). Bad debt provisions

□Applicable √Not applicable

Among them, the amount of recovery or reversal of bad debt provisions for the current period is important:

□Applicable √Not applicable

Other notes:

None

(6). Financing of receivables actually written off in the current period

□Applicable √Not applicable

Important financing write-offs of receivables

□Applicable √Not applicable

Write-off instructions:

□Applicable √Not applicable

(7). Increases and decreases in receivables financing and changes in fair value during the current period:

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Beginning balance Amount of increase or decrease in the current period Closing balance items

Cost Change in fair value Cost Change in fair value Cost Change in fair value

Notes receivable 121,388,452.65 -57,296,916.01 64,091,536.64 Accounts receivable

Total 121,388,452.65 -57,296,916.01 64,091,536.64 The company believes that the receivable financing measured at fair value and its changes included in other comprehensive income has a short remaining term/long remaining term but a small difference between the actual interest rate and the market interest rate, and the fair value is similar to the book value.

(8).Other instructions:

□Applicable √Not applicable

8. Advance payments

(1). Prepayments are presented based on aging

√Applicable □Not applicable

Unit: Yuan Currency: RMB Closing balance Opening balance Aging

Amount Proportion (%) Amount Proportion (%) Within 1 year 39,370,978.99 85.44 33,290,362.51 98.82 1 to 2 years 6,518,449.14 14.15 208,995.11 0.62 2 to 3 years 64,500.00 0.14 127,500.00 0.38 More than 3 years 123,647.62 0.27 60,647.62 0.18

Total 46,077,575.75 100.00 33,687,505.24 100.00 Explanation on the reasons why prepayments with an aging of more than 1 year and important amounts were not settled in time:

None

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(2). Prepayments of the top five ending balances by prepayment objects

√Applicable □Not applicable

Unit: Yuan Currency: RMB accounts for the total closing balance of prepayments Name of the unit Closing balance

Proportion(%)

Longli Rongyou Planting and Breeding Farmers Professional Cooperative 3,398,326.27 7.38 Shanghai Huayuhua Brand Consulting Co., Ltd. 3,000,000.00 6.51 Longli Jiangang Planting and Breeding Farmers Professional Cooperative 2,780,040.00 6.03 Longli Tangling Planting and Breeding Farmers Professional Cooperative 2,640,000.00 5.73 Longli Zebo Breeding Farmers Professional Cooperative 2,640,000.00 5.73

Total 14,458,366.27 31.38Other instructions:

None

Other instructions

□Applicable √Not applicable

9. Other receivables

Item list

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Ending balance Beginning balance

interest receivable

Dividends receivable

Other receivables 5,002,984.13 7,099,346.97

Total 5,002,984.13 7,099,346.97Other instructions:

√Applicable □Not applicable

Other receivables in the above table refer to other receivables after deducting interest receivable and dividends receivable.

interest receivable

(1).Classification of interest receivable

□Applicable √Not applicable

(2).Important overdue interest

□Applicable √Not applicable

(3). Classified disclosure according to bad debt accrual method

□Applicable √Not applicable

Provision for bad debts is made individually:

□Applicable √Not applicable

Instructions on accruing bad debt provisions individually:

□Applicable √Not applicable

Provision for bad debts by group:

□Applicable √Not applicable

(4). Provision for bad debts based on the general expected credit loss model

□Applicable √Not applicable

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(5). Bad debt provisions

□Applicable √Not applicable

Among them, the amount of bad debt provision recovery or reversal in the current period is important: □ Applicable √ Not applicable

Other notes:

None

(6). Interest receivable actually written off in the current period □ Applicable √ Not applicable

Among them, the important write-off of interest receivable □ Applicable √ Not applicable

Write-off instructions:

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

Dividends receivable

(1). Dividends receivable

□Applicable √Not applicable

(2). Important dividends receivable aged more than 1 year □ Applicable √ Not applicable

(3). Classified disclosure according to bad debt accrual method □Applicable √Not applicable

Provision for bad debts is made individually:

□Applicable √Not applicable

Explanation on the provision of bad debt provisions on an individual basis: □ Applicable √ Not applicable

Provision for bad debts by group:

□Applicable √Not applicable

(4). Provision for bad debts based on the general expected credit loss model □Applicable √Not applicable

(5). Bad debt provisions

□Applicable √Not applicable

Among them, the amount of bad debt provision recovery or reversal in the current period is important: □ Applicable √ Not applicable

Other notes:

None

(6). Dividends receivable actually written off in the current period □ Applicable √ Not applicable

Among them, the important write-off of dividends receivable □ Applicable √ Not applicable

Write-off instructions:

□Applicable √Not applicable

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Other notes:

□Applicable √Not applicable

Other receivables

(1). Disclosure based on aging

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Aging Book balance at the end of the period Book balance at the beginning of the period

Within 1 year (including 1 year) 4,681,870.46 7,164,436.28 Among them: within 1 year sub-item

Within 1 year 4,681,870.46 7,164,436.28 Subtotal within 1 year 4,681,870.46 7,164,436.28 1 to 2 years 485,673.36 33,000.00 2 to 3 years 58,000.00 53,000.00 More than 3 years

3 to 4 years 44,000.00 251,779.30 4 to 5 years 222,004.67 401,771.45 More than 5 years 400,860.70 5,640.00

Total 5,892,409.19 7,909,627.03

(2). Classification by nature of payment

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Nature of payment Book balance at the end of the period Book balance at the beginning of the period

Investment and acquisition deposit

Collection and payment 681,796.91 3,338,913.60 Withholding amount 1,690,980.37 1,679,044.70 Security deposit and deposit 893,754.58 1,660,964.91 Reserve fund 2,459,502.05 1,225,450.23 Others 166,375.28 5,253.59

Total 5,892,409.19 7,909,627.03

(3). Bad debt provision accrual

√Applicable □Not applicable

Unit: Yuan Currency: RMB Phase 1 Phase 2 Phase 3

Lifetime expectations Lifetime expectations

Provision for bad debts Expected total credit losses in the next 12 months (not incurred Credit losses (incurred

credit loss

credit impairment) credit impairment)

Balance on January 1, 2025 810,280.06 810,280.06 Balance on January 1, 2025 in the current period

--Transfer to the second stage

--Transfer to the third stage

--Return to the second stage

--Return to the first stage

Provision in this period 79,145.00 79,145.00 Transferred in this period

Sales in this period

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Write-off in this period

Other changes

Balance on June 30, 2025 889,425.06 889,425.06 Basis for division of each stage and proportion of provision for bad debts

None

Explanation of significant changes in the book balance of other receivables that have experienced changes in loss provisions during the current period:

□Applicable √Not applicable

The amount of bad debt provision for the current period and the basis for assessing whether the credit risk of financial instruments has increased significantly:

□Applicable √Not applicable

(4). Bad debt provisions

√Applicable □Not applicable

Unit: Yuan Currency: RMB Change amount in the current period

Category Opening balance Recovery or write-off or other Ending balance accrual

Reversal of write-off changes

Provision for bad debts on an individual basis

Provision for bad debts by combination 810,280.06 79,145.00 889,425.06 Of which: Portfolio 1 810,280.06 79,145.00 889,425.06

Total 810,280.06 79,145.00 889,425.06

Among them, the amount of bad debt provision reversed or recovered in the current period is important:

□Applicable √Not applicable

Other instructions

None

(5). Other receivables actually written off in the current period

□Applicable √Not applicable

Important write-offs of other receivables:

□Applicable √Not applicable

Instructions for writing off other receivables:

□Applicable √Not applicable

(6). Other receivables with top five closing balances based on debtors

√Applicable □Not applicable

Unit: Yuan Currency: RMB as a share of other receivables

Name of bad debt provision unit Closing balance Total closing balance Nature of payment Aging

Ending balance

Proportion of number (%)

Withheld payment 1,690,980.37 28.70 Withheld payment Within 1 year 84,549.02 Huidong Suikang Changzhen Hospital 681,796.91 11.57 Collection and payment Within 1 year 34,089.85 Guizhou Power Grid Co., Ltd. 4 to 5 years, 5

600,000.00 10.18 Security deposit and deposit 549,555.18 Guiyang Baiyun Power Supply Bureau More than 1 year

Guiyang Jiaji Transportation Co., Ltd. 399,442.63 6.78 Security deposit and deposit Within 1 year 19,972.13 Guangzhou Defu Ali Health Medicine

300,000.00 5.09 Security deposit and deposit 1 to 2 years 30,000.00 Housing Co., Ltd.

Total 3,672,219.91 62.32 / / 718,166.18

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(7). Presented in other receivables due to centralized management of funds

□Applicable √Not applicable

Other notes:

√Applicable □Not applicable

Disclosure according to three stages of financial asset impairment:

Unit: Yuan Currency: RMB

Ending balance Beginning balance

Project

Book balance Bad debt provision Book value Book balance Bad debt provision Book value first level

5,892,409.19 889,425.06 5,002,984.13 7,909,627.03 810,280.06 7,099,346.97 paragraph

Second level

segment

third level

segment

Total 5,892,409.19 889,425.06 5,002,984.13 7,909,627.03 810,280.06 7,099,346.97

Other receivables for which bad debt provisions are made on a group basis:

Unit: Yuan Currency: RMB

Ending balance

Aging combination

Book balance Bad debt provision Proportion of provision (%) Within 1 year 4,681,870.46 234,093.52 5.00 1 to 2 years 485,673.36 48,567.34 10.00 2 to 3 years 58,000.00 17,400.00 30.00 3 to 4 years 44,000.00 22,000.00 50.00 4 to 5 years 222,004.67 166,503.50 75.00 More than 5 years 400,860.70 400,860.70 100.00Total 5,892,409.19 889,425.06

10. Inventory

(1). Inventory classification

√Applicable □Not applicable

Unit: Yuan Currency: RMB Closing balance Opening balance

Provision for inventory decline/Provision for inventory decline/

Project

Book balance Contract performance costs Book value Book balance Contract performance costs Book value

Impairment provision Impairment provision

Raw materials 46,084,979.81 46,084,979.81 57,515,214.90 57,515,214.90 Products in progress 11,309,671.74 11,309,671.74 32,381,336.53 32,381,336.53 Inventory goods 215,422,039.49 4,285,475.82 211,136,563.67 170,786,519.46 2,971,448.96 167,815,070.50 Turnover materials 15,666,644.16 15,666,644.16 12,936,115.72 12,936,115.72Packaging 9,955,011.62 9,955,011.62 2,555,718.79 2,555,718.79 Semi-finished products 69,030,884.01 94,327.60 68,936,556.41 46,420,084.37 94,327.60 46,325,756.77 Consumable production

1,282,080.93 1,282,080.93 1,192,851.31 1,192,851.31 Physical assets

Total 368,751,311.76 4,379,803.42 364,371,508.34 323,787,841.08 3,065,776.56 320,722,064.52

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(2). Data resources confirmed as inventory

□Applicable √Not applicable

(3). Provision for inventory depreciation and provision for impairment of contract performance costs √ Applicable □ Not applicable

Unit: Yuan Currency: RMB Increase amount in the current period Decrease amount items in the current period Beginning balance Ending balance

Provision Other Transfer back or write-off Other raw materials

In product

Inventory goods 2,971,448.96 1,710,772.88 396,746.02 4,285,475.82 Semi-finished products 94,327.60 94,327.60 Turnover materials

consumable biological assets

Contract fulfillment costs

Total 3,065,776.56 1,710,772.88 396,746.02 4,379,803.42

Reasons for the reversal or write-off of inventory depreciation provisions in the current period

□Applicable √Not applicable

Provision for inventory decline in value on a group basis

□Applicable √Not applicable

Standards for accruing inventory depreciation provisions on a group basis

□Applicable √Not applicable

(4). The capitalized amount of borrowing costs included in the closing balance of inventory and its calculation standards and basis □Applicable √Not applicable

(5). Explanation of the amortization amount of contract performance costs for the current period

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

11. Assets held for sale

□Applicable √Not applicable

12. Non-current assets due within one year

□Applicable √Not applicable

Debt investments due within one year

□Applicable √Not applicable

Other debt investments due within one year

□Applicable √Not applicable

Other instructions for non-current assets due within one year

None

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13. Other current assets

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Closing balance Opening balance Amount of input tax to be certified 4,025,650.74 4,492,358.94 Cost of returns receivable 2,101,099.31 1,912,465.96 Prepaid other taxes 752,321.64 7,766.59 Prepaid corporate income tax 152,907.79

Total 6,879,071.69 6,565,499.28Other instructions:

None

14. Debt investment

(1).Debt investment situation

□Applicable √Not applicable

Changes in provision for impairment of debt investments during the current period

□Applicable √Not applicable

(2). Important debt investments at the end of the period

□Applicable √Not applicable

(3).Provision of impairment provisions

□Applicable √Not applicable

Basis for division of each stage and proportion of impairment provision: None

Explanation of significant changes in the book balance of debt investments that have experienced changes in loss provisions in the current period: □ Applicable √ Not applicable

The amount of impairment provision for the current period and the basis for assessing whether the credit risk of financial instruments has increased significantly: □ Applicable √ Not applicable

(4). Actual write-off of debt investments in the current period

□Applicable √Not applicable

Among them, the important debt investment situation is written off

□Applicable √Not applicable

Instructions for writing off debt investments:

□Applicable √Not applicable

Other notes:

None

15. Other debt investments

(1). Other debt investments

□Applicable √Not applicable

Changes in impairment provisions for other debt investments during the period □ Applicable √ Not applicable

(2). Other important debt investments at the end of the period

□Applicable √Not applicable

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(3).Provision of impairment provisions

□Applicable √Not applicable

(4). Other debt investments actually written off in the current period □Applicable √Not applicable

Among them, the write-off of other important debt investments □Applicable √Not applicable

Instructions for writing off other debt investments: □ Applicable √ Not applicable

Other notes:

□Applicable √Not applicable

16. Long-term receivables

(1). Long-term receivables

□Applicable √Not applicable

(2). Classified disclosure according to bad debt accrual method □Applicable √Not applicable

Provision for bad debts is made individually:

□Applicable √Not applicable

Explanation on the provision of bad debt provisions on an individual basis: □ Applicable √ Not applicable

Provision for bad debts by group:

□Applicable √Not applicable

Provision for bad debts based on the general expected credit loss model □ Applicable √ Not applicable

(3). Bad debt provision situation

□Applicable √Not applicable

Among them, the amount of bad debt provision recovery or reversal in the current period is important: □ Applicable √ Not applicable

Other notes:

None

(4). Long-term receivables actually written off in the current period □Applicable √Not applicable

Among them, the important write-off of long-term receivables □ Applicable √ Not applicable

Write-off instructions:

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

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17. Long-term equity investment

(1). Long-term equity investment situation

√Applicable □Not applicable

Unit: Yuan Currency: RMB Increase or decrease in the current period

Impairment

Beginning of the period Less Provision for issuance at the end of the period Provision for impairment recognized under the equity method Other comprehensive Others Provision

The balance of the invested unit (the book price is less than the cash deposit) and the balance (the book price) of the investment at the end of the provision period and the beginning of the period. Additional investment recognized investment losses and gains Equity Impairment

Value) Investment Dividends or Other Value) Balance Balance Adjustment Change Provision

capital profit

1. Joint ventures

Subtotal

2. Joint ventures

Zhejiang Kunyu Pharmaceutical Technology

2,547,227.44 -74,812.90 2,472,414.54 Co., Ltd.

Guizhou Qianli Biomedicine

Venture capital fund partnership 41,000,000.00 84,757.73 41,084,757.73 Enterprise (limited partnership)

Guizhou Dechangxiang Traditional Chinese Medicine Drink

10,000,000.00 10,000,000.00 -819.02 19,999,180.98 Film Co., Ltd.

Subtotal 12,547,227.44 51,000,000.00 9,125.81 63,556,353.25

Total 12,547,227.44 51,000,000.00 9,125.81 63,556,353.25

(2). Impairment testing of long-term equity investments

□Applicable √Not applicable

Other instructions

None

18. Investment in other equity instruments

(1). Investment in other equity instruments

√Applicable □Not applicable

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Unit: Yuan Currency: RMB Increase or decrease in the current period Designated as fair value in the current period Accumulated included Accumulated included

Included in the current period and measured in the current period and its

Into other at the beginning of the period At the end of the period Other comprehensive Other comprehensive

Item Addition Decrease Other Comprehensive Changes in subscribed shares are included in the balance Comprehensive income Other balance Interest on income Loss on income

Investment Interest income from investment income Gains and losses from other comprehensive income

gain original loss of gain

Because Guizhou Jiuxu Investment Co., Ltd. 10,000,000.00 10,000,000.00

Total 10,000,000.00 10,000,000.00 /

(2). Explanation of termination of recognition in this period

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

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19. Other non-current financial assets

□Applicable √Not applicable

20. Investment real estate

Investment real estate measurement model

Not applicable

21. Fixed assets

Item list

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Ending balance Beginning balance

Fixed assets 545,647,306.46 563,914,039.44

Fixed asset liquidation

Total 545,647,306.46 563,914,039.44

Other notes:

Note: The fixed assets in the above table refer to the fixed assets after deducting the liquidation of fixed assets.

fixed assets

(1). Fixed assets situation

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Items Houses and buildings Machinery and equipment Transportation Electronic equipment Other equipment Total

1. Original book value:

1. Opening balance 543,283,725.93 304,425,524.06 32,971,017.29 8,857,105.52 5,200,803.66 894,738,176.46 2. Increase in the current period 6,922,961.63 1,504,101.75 1,084,097.36 189,596.24 200,528.27 9,901,285.25 (1) Purchase 6,922,961.63 1,504,101.75 1,084,097.36 189,596.24 200,528.27 9,901,285.25 (2) Transfer of projects under construction

(3) Increase in business mergers

3. Decrease amount in this period 649,462.47 3,853,630.61 53,417.78 17,836.10 4,574,346.96

(1) Disposal or scrapping 649,462.47 3,853,630.61 53,417.78 17,836.10 4,574,346.96 4. Closing balance 550,206,687.56 305,280,163.34 30,201,484.04 8,993,283.98 5,383,495.83 900,065,114.75

2. Accumulated depreciation

1. Opening balance 159,159,465.05 140,822,328.74 20,318,016.22 6,407,640.88 4,116,686.13 330,824,137.02 2. Increase in the current period 9,600,011.82 15,544,979.97 1,948,447.05 375,665.54 179,558.18 27,648,662.56

(1) Provision 9,600,011.82 15,544,979.97 1,948,447.05 375,665.54 179,558.18 27,648,662.56 3. Decrease amount in the current period 518,730.84 3,475,019.67 51,735.92 9,504.86 4,054,991.29

(1) Disposal or scrapping 518,730.84 3,475,019.67 51,735.92 9,504.86 4,054,991.29 4. Closing balance 168,759,476.87 155,848,577.87 18,791,443.60 6,731,570.50 4,286,739.45 354,417,808.29

3. Impairment provision

1. Opening balance

2. Increase amount in this period

(1) Provision

3. Reduction amount in this period

(1) Disposal or scrapping

4. Ending balance

4. Book value

1. Book value at the end of the period 381,447,210.69 149,431,585.47 11,410,040.44 2,261,713.48 1,096,756.38 545,647,306.46 2. Book value at the beginning of the period 384,124,260.88 163,603,195.32 12,653,001.07 2,449,464.64 1,084,117.53 563,914,039.44

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(2). Temporarily idle fixed assets

√Applicable □Not applicable

Unit: Yuan Currency: RMB Item Original book value Accumulated depreciation Impairment provision Book value Remarks Houses and buildings 25,974,384.68 19,410,083.72 6,564,300.96 Total 25,974,384.68 19,410,083.72 6,564,300.96 Note: The company’s idle fixed assets are buildings located at No. 104 Guigong Road, Nanming District, Guiyang City (the old factory area).

(3). Fixed assets leased through operating leases

□Applicable √Not applicable

(4). Fixed assets whose property rights certificates have not been obtained

□Applicable √Not applicable

(5). Impairment testing of fixed assets

□Applicable √Not applicable

Other notes:

√Applicable □Not applicable

The situation of fixed assets used as mortgage and guarantee for bank borrowings at the end of this period:

Unit: Yuan Currency: RMB Item Original book value Accumulated depreciation Impairment provision Net book value

Houses and buildings 208,085,194.16 65,569,657.79 142,515,536.37

Fixed asset liquidation

□Applicable √Not applicable

22. Projects under construction

Item list

√Applicable □Not applicable

Unit: Yuan Currency: RMB Project Closing balance Opening balance Construction in progress 5,045.01

Engineering supplies

Total 5,045.01

Other notes:

Note: The construction in progress in the above table refers to the construction in progress after deducting project materials.

Construction in progress

(1).Construction in progress situation

√Applicable □Not applicable

Unit: Yuan Currency: RMB Closing balance Opening balance

Project

Book balance Impairment provision Book value Book balance Impairment provision Book value sporadic projects 5,045.01 5,045.01

Total 5,045.01 5,045.01

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

□Applicable √Not applicable

(3). Provision for impairment of projects under construction in the current period

□Applicable √Not applicable

(4) Impairment testing of projects under construction

□Applicable √Not applicable

Other instructions

□Applicable √Not applicable

Engineering supplies

□Applicable √Not applicable

23. Productive biological assets

(1). Productive biological assets using cost measurement model

√Applicable□Not applicable

Unit: Yuan Currency: RMB Forestry Project Total

Category

1. Original book value

1. Balance at the beginning of the period 11,603,881.45 11,603,881.45 2. Increase in the current period 18,395,507.31 18,395,507.31 (1) Outsourcing

(2) Self-cultivation 18,395,507.31 18,395,507.31 3. Reduction amount in this period

(1)Disposal

(2)Others

4. Ending balance 29,999,388.76 29,999,388.76

2. Accumulated depreciation

1. Opening balance

2. Increase amount in this period

(1)Provision

3. Reduction amount in this period

(1)Disposal

(2)Others

4. Ending balance

3. Impairment provision

1. Opening balance

2. Increase amount in this period

(1)Provision

3. Reduction amount in this period

(1)Disposal

(2)Others

4. Ending balance

4. Book value

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1. Book value at the end of the period 29,999,388.76 29,999,388.76 2. Book value at the beginning of the period 11,603,881.45 11,603,881.45

(2). Impairment testing of productive biological assets using the cost measurement model

□Applicable √Not applicable

(3). Productive biological assets using fair value measurement model

□Applicable √Not applicable

Other instructions

□Applicable √Not applicable

24. Oil and gas assets

(1). Oil and gas assets situation

□Applicable √Not applicable

(2). Impairment testing of oil and gas assets

□Applicable √Not applicable

Other notes:

None

25. Right-of-use assets

(1). Right-of-use assets

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Items Buildings and land Machinery and equipment Transportation Electronic equipment Total

1. Original book value

1. Opening balance 10,420,935.34 10,420,935.34 2. Increase in the current period 4,065,507.76 4,065,507.76 Lease 4,065,507.76 4,065,507.76 3. Decrease in the current period 2,252,983.61 2,252,983.61

Other decreases 2,252,983.61 2,252,983.61 4. Closing balance 12,233,459.49 12,233,459.49

2. Accumulated depreciation

1. Balance at the beginning of the period 789,447.80 789,447.80 2. Increase in the current period 625,017.33 625,017.33

(1) Provision 625,017.33 625,017.33 3. Decrease amount in the current period 354,806.52 354,806.52 (1) Disposal

Other decreases 354,806.52 354,806.52 4. Closing balance 1,059,658.61 1,059,658.61

3. Impairment provision

1. Opening balance

2. Increase amount in this period

3. Reduction amount in this period

4. Ending balance

4. Book value

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1. Book value at the end of the period 11,173,800.88 11,173,800.88 2. Book value at the beginning of the period 9,631,487.54 9,631,487.54

(2). Impairment testing of right-of-use assets

□Applicable √Not applicable

Other notes:

None

26. Intangible assets

(1). Intangible assets

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Items Land use rights Patent rights Trademark rights Software and others Total

1. Original book value

1. Opening balance 85,620,447.16 77,593,998.83 97,242,960.66 7,481,860.82 267,939,267.47 2. Increase in the current period

(1) Purchase

(2)Internal research and development

(3) Increase in business mergers

3. Reduction amount in this period

(1)Disposal

4. Closing balance 85,620,447.16 77,593,998.83 97,242,960.66 7,481,860.82 267,939,267.47

2. Accumulated amortization

1. Opening balance 15,097,841.57 13,590,443.92 20,860,510.89 2,262,251.94 51,811,048.32 2. Increase in the current period 1,165,509.29 3,438,367.11 4,539,163.15 393,590.10 9,536,629.65

(1) Provision 1,165,509.29 3,438,367.11 4,539,163.15 393,590.10 9,536,629.65 3. Decrease amount in the current period

(1)Disposal

4. Closing balance 16,263,350.86 17,028,811.03 25,399,674.04 2,655,842.04 61,347,677.97

3. Impairment provision

1. Opening balance

2. Increase amount in this period

(1) Provision

3. Reduction amount in this period

(1)Disposal

4. Ending balance

4. Book value

1. Book value at the end of the period 69,357,096.30 60,565,187.80 71,843,286.62 4,826,018.78 206,591,589.50 2. Book value at the beginning of the period 70,522,605.59 64,003,554.91 76,382,449.77 5,219,608.88 216,128,219.15 The proportion of intangible assets formed through the company’s internal research and development at the end of the period to the balance of intangible assets is 0.02%

(2). Data resources recognized as intangible assets

□Applicable √Not applicable

(3). Land use rights for which property rights certificates have not been obtained.

□Applicable √Not applicable

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(4). Impairment testing of intangible assets

□Applicable √Not applicable

Other notes:

√Applicable □Not applicable

Intangible assets used for mortgage and guarantee at the end of the year:

Unit: Yuan Currency: RMB

Project Area (M²) Original Value Net Value Mortgage Unit

Guizhou (2019) High-tech Zone (White) Industrial Bank Co., Ltd.

55,551.56 23,029,806.10 18,062,593.01 Real Estate No. 0000422 Guiyang Branch of the Company

Total 55,551.56 23,029,806.10 18,062,593.01

27. Goodwill

(1). Original book value of goodwill

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Increase in this period. Decrease in this period. The name or formation of the invested unit.

Opening balance Business combination Closing balance Goodwill matters Others Disposal Others

formed

Guizhou Dechangxiang Pharmaceutical Co., Ltd.

161,658,316.25 161,658,316.25 Asset Group of Co., Ltd.

Guizhou Haost Biotechnology Co., Ltd.

Co., Ltd., Yunnan Wudi Pharmaceutical 57,926,132.14 57,926,132.14 Co., Ltd.

Guizhou Hanfang Pharmaceutical Co., Ltd.

335,021,686.21 335,021,686.21

Total 554,606,134.60 554,606,134.60

(2). Goodwill impairment provision

□Applicable √Not applicable

(3). Information related to the asset group or asset group combination where the goodwill is located

□Applicable √Not applicable

Changes in asset group or asset group combination

□Applicable √Not applicable

Other instructions

□Applicable √Not applicable

(4). Specific method for determining recoverable amount

The recoverable amount is determined as the net amount after fair value minus disposal costs.

□Applicable √Not applicable

The recoverable amount is determined based on the present value of expected future cash flows.

□Applicable √Not applicable

Reasons for the obvious inconsistency between the above information and the information used in impairment testing in previous years or external information □ Applicable √ Not applicable

Reasons for the discrepancy between the information used in the company's impairment testing in previous years and the actual situation of that year.

□Applicable √Not applicable

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(5). Performance commitments and corresponding goodwill impairment

There is a performance commitment when goodwill is formed and the reporting period or the previous period of the reporting period is within the performance commitment period

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

28. Long-term deferred expenses

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Beginning balance Increase in the current period Amortization amount in the current period Other decreases Closing balance Decoration expenses 562,691.20 315,741.60 156,641.64 721,791.16

Total 562,691.20 315,741.60 156,641.64 721,791.16Other instructions:

None

29. Deferred income tax assets/deferred income tax liabilities

(1). Deferred income tax assets without offset

√Applicable □Not applicable

Unit: Yuan Currency: RMB Closing balance Opening balance

Items Deductible temporary deferred income tax Deductible temporary deferred income tax

Difference Asset Difference Asset asset impairment provision 3,953,369.63 594,152.13 2,287,057.37 344,205.30 Credit impairment provision 32,783,504.00 5,152,254.67 37,328,742.89 5,675,543.27Fair price of trading financial assets

value change

Unrealized profits from internal transactions 2,563,713.85 384,557.08 3,428,242.44 514,236.37 Deductible losses

Deferred income 40,627,878.16 6,094,181.72 42,645,860.79 6,396,879.12 Lease liabilities 382,237.52 57,335.63 714,651.52 107,197.73 Share-based payment 7,789,620.53 1,168,443.08 1,358,500.00 203,775.00 Estimated returns and rebates 13,474,837.39 2,021,225.61 13,290,414.20 1,993,562.13

Total 101,575,161.08 15,472,149.92 101,053,469.21 15,235,398.92

(2). Deferred income tax liabilities without offset

√Applicable □Not applicable

Unit: Yuan Currency: RMB Closing balance Opening balance

Item Taxable temporary deferred income tax Taxable temporary deferred income tax

Differences Liabilities Differences Liabilities due to mergers of enterprises not under common control

148,691,420.75 22,303,713.11 159,773,280.26 23,965,992.03 Value added from product evaluation

Accelerated depreciation 9,431,463.15 1,414,719.47 10,009,742.97 1,501,461.44Right-of-use assets 400,400.39 60,060.06 774,759.05 116,213.85Fair value of trading financial assets

110,145.21 16,521.78 145,081.52 21,762.22Value changes

Total 158,633,429.50 23,795,014.42 170,702,863.80 25,605,429.54

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

√Applicable □Not applicable

Unit: Yuan Currency: RMB Closing balance Opening balance

Deferred income tax assets Deferred items after offset Deferred income items after offset Deferred income tax assets

Assets and liabilities are offset by each other. Taxable assets or liabilities are offset by taxable assets or liabilities.

Amount Debt balance Debt balance Deferred income tax assets 57,335.63 15,414,814.29 106,510.95 15,128,887.97 Deferred income tax liabilities 57,335.63 23,737,678.79 106,510.95 25,498,918.59

(4). Details of deferred income tax assets not recognized

√Applicable □Not applicable

Unit: Yuan Currency: RMB Item Closing balance Opening balance

Deductible temporary differences 7,619,247.28 7,544,244.01 Deductible losses 149,853,929.14 142,148,780.17 Total 157,473,176.42 149,693,024.18

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

√Applicable □Not applicable

Unit: Yuan Currency: RMB Year Ending amount Beginning amount Remarks

2025 680,489.86 680,489.86

2026 14,415,941.55 14,415,941.55

2027 62,323,663.92 62,323,663.92

2028 41,175,797.34 41,175,797.34

2029 23,552,887.50 23,552,887.50

2030 and beyond 7,705,148.97

Total 149,853,929.14 142,148,780.17 /

Other notes:

□Applicable √Not applicable

30. Other non-current assets

□Applicable √Not applicable

31. Assets with restricted ownership or use rights

√Applicable □Not applicable

Unit: Yuan Currency: RMB End of Period Beginning of Period

Item Restricted Restricted book balance Book value Restricted situation Book balance Book value Restricted situation

Type Type Monetary funds 2,000.00 2,000.00 Others ETC margin 2,000.00 2,000.00 Others ETC margin notes receivable 37,608,487.66 37,608,487.66 Pledge Pledge loan 22,114,033.53 22,114,033.53 Pledge Pledged borrowing fixed assets 208,085,194.16 142,515,536.37 Pledge Mortgated borrowing 208,085,194.16 149,632,081.39 Pledge Mortgated borrowing intangible assets 23,029,806.10 18,062,593.01 Mortgage Mortgage borrowings 23,029,806.10 18,555,209.19 Mortgage Total mortgage borrowings 268,725,487.92 198,188,617.04 / / 253,231,033.79 190,303,324.11 / /Other instructions:

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None

32. Short-term borrowings

(1). Classification of short-term loans

□Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Ending balance Beginning balance

Pledged loan 37,608,487.66 22,114,033.53 Pledged loan 50,000,000.00 50,000,000.00 Guaranteed loan

Credit borrowings 454,962,195.47 279,104,667.71 Undue interest payable 355,971.65 302,845.94

Total 542,926,654.78 351,521,547.18 Description of short-term loan classification:

1. On June 20, 2025, the company signed a "Working Capital Loan Contract" (No. 0240200037-2025 (Nanming) Zi No. 01684) with the Guiyang Nanming Branch of the Industrial and Commercial Bank of China Co., Ltd., with a loan amount of 50 million yuan and a loan period of 1 year.

As of June 30, 2025, the loan balance was RMB 20 million, and the borrowing conditions were credit loans.

2. ① On November 20, 2024, the company signed a "Liquid Capital Loan Contract" (No.: Xingyin Qian (2024) Liudai No. 207) with Guiyang Branch of Industrial Bank Co., Ltd., with a loan amount of 120 million yuan and a loan period of 1 year. ② On April 17, 2025, the company signed a "Liquid Capital Loan Contract" (No.: Xingyin Qian (2025) Liudai No. 70) with Guiyang Branch of Industrial Bank Co., Ltd., with a loan amount of 50 million yuan and a loan period of 1 year.

As of June 30, 2025, the loan balance was RMB 170 million, and the borrowing conditions were credit loans.

3. On November 22, 2024, the company signed a "Working Capital Loan Contract" (No.: Gongliu Daizi No. ZH2400000294405) with Guiyang Branch of China Minsheng Banking Corporation, with a total loan amount of 200 million yuan and a loan period of 1 year.

As of June 30, 2025, the loan balance was 184.9622 million yuan, and the borrowing conditions were credit loans.

4. On June 5, 2025, the company signed the "Liquid Capital Loan Contract" (No. 2025 CITIC Hongtong Liudai Zi No. 470611) with the Hongtongcheng Branch of China CITIC Bank Co., Ltd., with a loan amount of 80 million yuan and a loan period of 1 year. As of June 30, 2025, the loan balance was RMB 80 million, and the borrowing conditions were credit loans.

5. ① On May 29, 2025, the holding subsidiary Guizhou Hanfang Pharmaceutical Co., Ltd. and Industrial Bank Co., Ltd. Guiyang Branch signed a "Liquid Capital Loan Contract" (No.: Xingyin Guizhou (2025) Liudai No. 109), with a loan amount of 20 million yuan and a loan period of 1 Year; ② On June 24, 2025, the holding subsidiary Guizhou Hanfang Pharmaceutical Co., Ltd. and Industrial Bank Co., Ltd. Guiyang Branch signed a "Liquid Capital Loan Contract" (No.: Xingyin Guizhou (2025) Liudai No. 110), with a loan amount of 30 million yuan and a loan period of 1 year.

As of June 30, 2025, the loan balance totaled 50 million yuan, and the borrowing conditions were mortgage loans.

6. ① As of June 30, 2025, the company has applied to the Guiyang Nanming Branch of Industrial and Commercial Bank of China Co., Ltd. for a discount of bank acceptance bills with recourse, amounting to RMB 36.4563 million; ② As of June 30, 2025, the holding subsidiary Guizhou Hanfang Pharmaceutical Co., Ltd. applied to the business department of Guiyang Branch of China Minsheng Banking Corporation for the discount of bank acceptance bill with recourse, amounting to 1.1522 million yuan.

As of June 30, 2025, the balance of bank acceptance bill pledged loans was 37.6085 million yuan.

(1). Overdue short-term borrowings that have not been repaid

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

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33. Trading financial liabilities

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

34. Derivative financial liabilities

□Applicable √Not applicable

35. Notes payable

□Applicable √Not applicable

36. Accounts payable

(1). Presentation of accounts payable

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Ending balance Beginning balance Material payment 219,441,057.89 311,574,359.80 Service procurement 3,238,968.72 31,016,157.08 Equipment and engineering payment 11,869,629.60 17,890,064.84 Others 534,622.60 143,016.97

Total 235,084,278.81 360,623,598.69

(2). Important accounts payable that are aged more than 1 year or are overdue

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

37. Advance payments

(1). Presentation of accounts received in advance

□Applicable √Not applicable

(2). Important advances from customers aged more than 1 year

□Applicable √Not applicable

(3). The amount and reasons for significant changes in book value during the reporting period

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

38. Contract liabilities

(1).Contract liabilities

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Ending balance Beginning balance Payment for goods 7,301,847.73 7,790,038.48 Total 7,301,847.73 7,790,038.48

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(2).Important contract liabilities with an aging of more than 1 year

□Applicable √Not applicable

(3). The amount and reasons for significant changes in book value during the reporting period

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

39. Payable to employees

(1). Presentation of employee benefits payable

√Applicable □Not applicable

Unit: Yuan Currency: RMB

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

1. Short-term compensation 22,542,997.18 139,053,684.88 158,096,069.36 3,500,612.70

2. Post-employment benefits - defined contribution plan 108,661.47 14,427,338.44 14,427,389.65 108,610.26

3. Dismissal benefits - 4,244,835.67 4,244,835.67 -

4. Other benefits expiring within one year

Total 22,651,658.65 157,725,858.99 176,768,294.68 3,609,222.96

(2). Presentation of short-term remuneration

√Applicable □Not applicable

Unit: Yuan Currency: RMB

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

1. Salaries, bonuses, allowances and subsidies 20,849,776.78 121,696,060.48 139,825,566.35 2,720,270.91

2. Employee welfare fees 3,253,056.09 3,253,056.09

3. Social insurance premiums 57,098.76 8,545,079.46 8,545,256.99 56,921.23 Including: medical insurance premiums 51,722.56 7,771,395.92 7,768,813.91 54,304.57 Work-related injury insurance premiums 5,376.20 705,152.70 707,912.24 2,616.66

Maternity insurance premium 68,530.84 68,530.84

4. Housing Provident Fund 5,920.00 2,900,449.00 2,906,369.00

5. Trade union funds and employee education funds 1,630,201.64 2,511,480.05 3,418,261.13 723,420.56

6. Short-term paid absences

7. Short-term profit sharing plan

Other short-term remuneration 147,559.80 147,559.80

Total 22,542,997.18 139,053,684.88 158,096,069.36 3,500,612.70

(3). Display of defined contribution plan

√Applicable □Not applicable

Unit: Yuan Currency: RMB

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

1. Basic pension insurance 105,051.80 13,856,637.60 13,857,005.24 104,684.16

2. Unemployment insurance premium 3,609.67 570,700.84 570,384.41 3,926.10

3. Enterprise annuity payment

Total 108,661.47 14,427,338.44 14,427,389.65 108,610.26

Other notes:

□Applicable √Not applicable

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40. Taxes payable

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Ending balance Beginning balance

Value-added tax 12,268,116.12 39,480,582.75 Consumption tax 200,286.58 380,291.53 Corporate income tax 3,534,421.25 13,837,790.03 Personal income tax 37,628.85 14,120,358.74 Urban maintenance and construction tax 690,195.46 2,380,624.88 Education fee surcharge 375,630.62 1,239,903.48 Local education fee surcharge 250,420.41 826,602.31 Other taxes and fees 241,440.43 371,805.68

Total 17,598,139.72 72,637,959.40Other instructions:

None

41. Other payables

(1).Project list

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Ending balance Beginning balance

interest payable

Dividends payable 890.00 550.00 Other payables 177,314,150.93 351,280,311.50 Total 177,315,040.93 351,280,861.50

(2).Interest payable

□Applicable √Not applicable

(3). Dividends payable

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Ending balance Beginning balance

Common stock dividends 890.00 550.00 Dividends divided into preference shares\perpetual bond dividends as equity instruments

Preferred shares\perpetual bond dividends-XXX

Total 890.00 550.00 Other instructions, including important dividends payable that have not been paid for more than 1 year, the reasons for non-payment should be disclosed:

None

(4).Other payables

Present other payables according to nature of payment

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Ending balance Beginning balance

Equity transfer amount 125,864,000.00 Restricted stock payment and repurchase obligation 38,994,600.00 44,715,000.00 Reimbursement and unpaid payment 111,634,646.25 160,559,815.84

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Current account 10,000,000.00

Security deposit 16,082,920.32 19,506,380.94 Others 601,984.36 635,114.72

Total 177,314,150.93 351,280,311.50

Important other payables aged more than 1 year or overdue

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

42. Liabilities held for sale

□Applicable √Not applicable

43. Non-current liabilities due within 1 year

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Ending balance Beginning balance

Long-term borrowings due within 1 year 52,545,138.75 45,145,096.39 Bonds payable due within 1 year

Long-term payables due within 1 year

Lease liabilities due within 1 year 218,120.91 503,111.56

Total 52,763,259.66 45,648,207.95Other instructions:

Description of long-term borrowings due within one year: For details, please refer to Section 8 Financial Report 7. Consolidated Financial Statement Item Notes 45.

44. Other current liabilities

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Ending balance Beginning balance

Output tax to be transferred 949,240.21 1,012,638.84 Estimated returns payable to be settled within one year 7,532,149.51 6,689,944.05 Estimated sales discount 9,889,996.25 14,600,387.63

Total 18,371,385.97 22,302,970.52

Changes in short-term bonds payable:

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

45. Long-term loans

(1). Classification of long-term loans

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Ending balance Beginning balance

Pledged loans 231,725,000.00 254,150,000.00 Pledged loans

guaranteed loan

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credit loan

Undue interest payable 220,138.75 295,096.39 Less: long-term borrowings due within one year 52,545,138.75 45,145,096.39

Total 179,400,000.00 209,300,000.00 Description of long-term loan classification:

On December 6, 2023, the company signed the "M&A Loan Contract" (No. 2023 Yingzi No. 1123200007) with the Guiyang Branch of China Merchants Bank Co., Ltd. for a loan amount of 299.00 million yuan and a loan period of 5 years. On January 4, 2024, the company signed a pledge contract (No. 2023 Yingzi No. 1123200007-1) with Guiyang Branch of China Merchants Bank Co., Ltd., using 75.89% of the equity of its holding subsidiary Guizhou Hanfang Pharmaceutical Co., Ltd. as pledge.

As of June 30, 2025, the loan balance was 231.725 million yuan, of which 52.325 million yuan was long-term loans due within one year, and the borrowing conditions were pledged loans.

Other instructions

□Applicable √Not applicable

46. Bonds payable

(1). Bonds payable

□Applicable √Not applicable

(2). Details of bonds payable: (excluding preference shares, perpetual bonds and other financial instruments classified as financial liabilities) □ Applicable √ Not applicable

(3). Description of convertible corporate bonds

□Applicable √Not applicable

Accounting treatment and judgment basis for equity transfer

□Applicable √Not applicable

(4). Description of other financial instruments classified as financial liabilities

Basic information on preferred shares, perpetual bonds and other financial instruments outstanding at the end of the period

□Applicable √Not applicable

Statement of changes in outstanding preferred stocks, perpetual bonds and other financial instruments at the end of the period

□Applicable √Not applicable

Explanation of the basis for classifying other financial instruments as financial liabilities

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

47. Lease liabilities

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Ending balance Beginning balance

Lease payments 394,711.90 753,474.55 Less: Unrecognized financing expenses 12,474.38 38,823.03 Subtotal present value of lease payments 382,237.52 714,651.52 Less: Lease liabilities due within one year 218,120.91 503,111.56 Total 164,116.61 211,539.96

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Other notes:

The lease liability interest expense of RMB 6,929.03 was recognized in this period.

48. Long-term accounts payable

Item list

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Closing balance Opening balance Long-term payables 7,849,411.33 8,287,850.80 Special payables

Total 7,849,411.33 8,287,850.80Other instructions:

None

long-term payables

Present long-term payables according to nature of payment

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Closing balance Opening balance Original state-owned enterprise restructuring expenses 7,849,411.33 8,287,850.80 Less: long-term payables due within one year

Total 7,849,411.33 8,287,850.80Other instructions:

When Guiyang Traditional Chinese Medicine Factory (the predecessor of its holding subsidiary Guizhou Dechangxiang Pharmaceutical Co., Ltd.) was restructured in 2000, it was reserved for retirees' pension, medical, insurance and other restructuring expenses.

Special payables

□Applicable √Not applicable

49. Long-term employee benefits payable

□Applicable √Not applicable

50. Estimated liabilities

□Applicable √Not applicable

51. Deferred income

Deferred income

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Opening balance Increase in the current period Decrease in the current period Closing balance Reasons for formation and asset-related government subsidies 42,970,860.79 2,042,982.63 40,927,878.16 Income-related government subsidies

Total 42,970,860.79 2,042,982.63 40,927,878.16 /Other instructions:

√Applicable □Not applicable

For details of the company's government subsidies, please see Note 11. Government subsidies 2. Liability items involving government subsidies.

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52. Other non-current liabilities

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Ending balance Beginning balance

Guizhou Province Agricultural and Rural Modernization Development Equity Investment Fund

76,754,836.20 76,754,836.20 Gold partnership (limited partnership) repurchase obligation

Total 76,754,836.20 76,754,836.20Other instructions:

None

53. Share capital

√Applicable □Not applicable

Unit: Yuan Currency: RMB Increase or decrease in this change (+, one)

Beginning balance Closing balance

Issuance of new shares Bonus shares Conversion of provident funds Others Subtotal

Total number of shares 409,802,216.00 409,802,216.00Other instructions:

See Notes, Section 8, Financial Report III. Basic Information of the Company (3) Historical Development.

54. Other equity instruments

(1).Basic information on preferred shares, perpetual bonds and other financial instruments outstanding at the end of the period

□Applicable √Not applicable

(2). Statement of changes in outstanding preferred stocks, perpetual bonds and other financial instruments at the end of the period

□Applicable √Not applicable

Changes in other equity instruments during the current period, explanations of the reasons for the changes, and the basis for relevant accounting treatments:

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

55. Capital reserve

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Opening balance Increase in the current period Decrease in the current period Ending balance Capital premium (equity premium) 146,999,341.50 146,999,341.50 Other capital reserves 2,042,922.32 6,919,839.36 8,962,761.68

Total 149,042,263.82 6,919,839.36 155,962,103.18 Other explanations, including changes in increases and decreases in the current period and explanation of reasons for changes:

Capital reserve - other capital reserve increased by 6.9198 million yuan, which was due to the confirmation of equity incentive expenses from January to June 2025 according to the company's equity incentive plan.

56. Treasury stocks

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Opening balance Increase in the current period Decrease in the current period The closing balance is subject to equity incentive repurchase 55,927,385.06 55,927,385.06

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Restricted share payment 44,715,000.00 44,715,000.00

Total 100,642,385.06 100,642,385.06 Other explanations, including changes in increases and decreases in the current period and explanation of reasons for changes:

None

57. Other comprehensive income

□Applicable √Not applicable

58. Special reserves

□Applicable √Not applicable

59. Surplus reserve

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Opening balance Increase in the current period Decrease in the current period Ending balance Statutory surplus reserve 133,275,177.34 133,275,177.34 Discretionary surplus reserve

reserve fund

Enterprise Development Fund

Others

Total 133,275,177.34 133,275,177.34 Description of surplus reserve, including changes in increases and decreases in the current period and explanation of reasons for changes:

None

60. Undistributed profits

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Items for this period and previous year

Undistributed profits at the end of the previous period before adjustment 935,863,129.35 763,743,959.06 Total undistributed profits at the beginning of the period before adjustment (adjustment +, decrease -)

Undistributed profit at the beginning of the adjusted period 935,863,129.35 763,743,959.06 Plus: Net profit attributable to owners of the parent company for the period 83,060,963.83 274,027,809.74 Less: Appropriation to statutory surplus reserve 20,264,376.25 Appropriation to discretionary surplus reserve

Withdraw general risk reserve

Dividends payable on ordinary shares 137,638,805.44 81,644,263.20

Dividends on common shares converted into equity capital

Undistributed profits at the end of the period 881,285,287.74 935,863,129.35 Adjustment details of undistributed profits at the beginning of the period:

1. Due to the retrospective adjustment of the Accounting Standards for Business Enterprises and its related new regulations, the undistributed profit at the beginning of the period was affected by RMB 0.

2. Due to changes in accounting policies, the undistributed profit at the beginning of the period was affected by RMB 0.

3. Due to the correction of major accounting errors, the undistributed profit at the beginning of the period was affected by RMB 0.

4. The change in the scope of consolidation due to the same control affects the undistributed profit at the beginning of the period of 0 yuan.

5. The total impact of other adjustments on the undistributed profit at the beginning of the period is 0 yuan.

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61. Operating income and operating costs

(1). Operating income and operating costs

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Amount for the current period Amount for the previous period

Project

revenue cost revenue cost

Main business 701,502,609.98 227,944,841.16 919,878,709.94 290,923,472.37 Other businesses 328,403.41 34,974.35 347,167.48 25,610.98Total 701,831,013.39 227,979,815.51 920,225,877.42 290,949,083.35

(2). Decomposition information of operating income and operating costs

√Applicable □Not applicable

Unit: Yuan Currency: RMB Amount for the current period

Contract classification

Operating income Operating costs

Product type 701,502,609.98 227,944,841.16 Including: Respiratory system drugs 421,336,598.96 123,837,374.98 Gynecological drugs 68,567,584.35 11,039,163.00 Tonic drugs 96,493,050.41 23,242,665.52 Cardiovascular and cerebrovascular drugs 22,371,207.25 7,689,386.63 Orthopedic drugs 33,399,752.78 14,000,835.93 Others 59,334,416.23 48,135,415.10 Classified by operating region 701,502,609.98 227,944,841.16 Among them: Northeast China 27,065,432.50 7,070,139.44 North China 89,225,360.99 22,343,060.19 East China 172,071,984.87 49,797,313.98 South China 111,125,151.42 34,495,871.64 Central China 101,051,006.39 29,925,531.68 Northwest China 34,333,383.09 9,561,086.15 Southwest Region 166,630,290.72 74,751,838.08 Classified by time of commodity transfer 701,502,609.98 227,944,841.16 Of which: Transfer at a certain point in time 701,502,609.98 227,944,841.16 Transferred within a certain period of time

Total 701,502,609.98 227,944,841.16Other instructions

□Applicable √Not applicable

(3).Description of performance obligations

□Applicable √Not applicable

(4). Description of apportionment to remaining performance obligations

□Applicable √Not applicable

(5).Major contract changes or major transaction price adjustments

□Applicable √Not applicable

Other notes:

None

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62. Taxes and surcharges

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Amount for the current period Amount for the previous period

Consumption tax 1,553,608.91 1,064,246.54 Urban maintenance and construction tax 2,749,855.17 3,239,797.67 Education surcharge 2,528,290.03 2,998,278.65 Property tax 1,746,223.24 1,742,396.08 Land use tax 663,518.77 658,756.65 Vehicle and vessel use tax 14,549.10 15,976.60 Stamp tax 479,252.96 583,938.73 Environmental protection tax 4,969.88 3,058.07

Total 9,740,268.06 10,306,448.99

Other notes:

None

63. Sales expenses

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Amount for the current period Amount for the previous period

Marketing expenses 181,568,015.67 290,993,194.83 Employee-related expenses 87,241,347.90 67,421,710.92 Travel expenses 10,726,133.58 20,277,085.00 Business entertainment expenses 3,272,597.81 677,222.64 Office expenses 532,223.84 1,237,197.44 Other sales expenses 2,001,537.64 1,943,650.31 Share-based payment expenses 375,179.43

Total 285,717,035.87 382,550,061.14

Other notes:

None

64. Management expenses

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Amount for the current period Amount for the previous period

Employee-related expenses 41,265,380.39 40,573,062.13 Travel expenses 603,943.56 3,451,663.00 Depreciation and amortization expenses 14,799,021.55 15,509,942.14 Business entertainment expenses 781,934.58 1,960,083.87 Office expenses 6,703,098.39 6,797,522.64 Consulting service fees 1,607,222.06 1,164,552.82 Publicity expenses 200,018.12 755,107.00 Share-based payment expenses 6,923,122.30 1,230,282.86 Other administrative expenses 2,890,890.64 2,204,369.86

Total 75,774,631.59 73,646,586.32Other instructions:

None

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65. Research and development expenses

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Amount for the current period Amount for the previous period

Material investment 1,031,656.66 5,398,821.45 Employee-related expenses 5,600,802.48 7,327,115.40 Outsourced R&D expenses 8,068,110.51 100,047.17 Other R&D expenses 2,160,193.23 4,592,544.57

Total 16,860,762.88 17,418,528.59Other instructions:

None

66. Financial expenses

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Amount for the current period Amount for the previous period

Interest expense 6,151,847.47 10,236,148.95 Less: Interest income 2,267,364.34 2,328,453.63 Exchange gains and losses

Bank fees and others 851,743.29 32,620.17

Total 4,736,226.42 7,940,315.49Other instructions:

None

67. Other income

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Classification by nature Amount incurred in the current period Amount incurred in the previous period

Government subsidies 2,374,539.63 6,320,112.40 Personal income tax withholding fees 227,021.62 159,958.27 Input tax plus deduction 1,178,093.34

Total 3,779,654.59 6,480,070.67Other instructions:

Government subsidies included in other income: For details, please refer to Notes, Section 8, Financial Report 11. Government subsidies 3. Government subsidies included in current profits and losses.

68. Investment income

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Amount for the current period Amount for the previous period

Income from long-term equity investments accounted for using the equity method 9,125.81 -79,548.00 Investment income from disposal of long-term equity investments

Investment income from trading financial assets during the holding period

Dividend income from other equity instrument investments during the holding period 365,231.68 Interest income from debt investments during the holding period

Interest income earned from other debt investments during the holding period

Investment income from the disposal of trading financial assets 276,590.85 633,526.57 Investment income from the disposal of other equity instrument investments

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Investment income from disposal of debt investments

Investment income from disposal of other debt investments

Debt restructuring proceeds

Income from corporate financial products

Total 285,716.66 919,210.25

Other notes:

None

69. Net exposure hedging income

□Applicable √Not applicable

70. Income from changes in fair value

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Sources of income from changes in fair value Amount for the current period Amount for the previous period Trading financial assets 110,145.21

Including: Gains from changes in fair value of derivative financial instruments

Trading financial liabilities

Investment properties measured at fair value

Total 110,145.21

Other notes:

None

71. Credit impairment losses

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Amount incurred in the current period Amount incurred in the previous period Bad debt losses on notes receivable

Bad debt losses on accounts receivable 3,677,207.64 -2,369,231.60 Bad debt losses on other receivables -79,145.00 3,075.17 Impairment losses on debt investments

Impairment losses on other debt investments

Bad debt losses on long-term receivables

Impairment losses related to financial guarantees

Total 3,598,062.64 -2,366,156.43Other instructions:

None

72. Asset impairment losses

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Amount for the current period Amount for the previous period

1. Impairment losses on contract assets

2. Inventory depreciation losses and contract performance cost impairment losses -1,710,772.88 -1,146,124.67

3. Impairment losses on long-term equity investments

4. Impairment losses on investment real estate

5. Impairment losses on fixed assets

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6. Impairment losses of engineering materials

7. Impairment losses on projects under construction

8. Impairment losses on productive biological assets

9. Impairment losses on oil and gas assets

10. Impairment losses on intangible assets

11. Goodwill impairment loss

12. Others

Total -1,710,772.88 -1,146,124.67Other instructions:

None

73. Income from asset disposal

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Amount incurred in the current period Amount incurred in the previous period Gains or losses on the disposal of fixed assets 65,897.18 -164,144.05 Gains or losses on the disposal of right-of-use assets 26,146.56

Total 92,043.74 -164,144.05Other instructions:

□Applicable √Not applicable

74. Non-operating income

√Applicable □Not applicable

Unit: Yuan Currency: RMB Included in non-recurring profit and loss items for the current period Amount incurred in the current period Amount incurred in the previous period

The amount of total gains on disposal of non-current assets

Including: Profit from disposal of fixed assets

Gains from disposal of intangible assets

Debt restructuring gains

Gains from exchange of non-monetary assets

Donations accepted

government subsidies

Income from liquidated damages 533,979.43 533,979.43 Others 6,330,449.98 436,153.91 6,330,449.98

Total 6,864,429.41 436,153.91 6,864,429.41Other instructions:

□Applicable √Not applicable

75. Non-operating expenses

√Applicable □Not applicable

Unit: Yuan Currency: RMB Included in non-recurring profit and loss items for the current period Amount incurred in the current period Amount incurred in the previous period

The amount of total losses on disposal of non-current assets

Including: Fixed asset disposal losses

Loss on disposal of intangible assets

Debt restructuring losses

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Non-monetary asset exchange losses

external donation

Loss from damage and scrapping of non-current assets 27,956.34 85,130.02 27,956.34 Others 103,945.23 2,112,433.98 103,945.23

Total 131,901.57 2,197,564.00 131,901.57Other instructions:

None

76. Income tax expenses

(1). Income tax expense schedule

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Amount for the current period Amount for the previous period

Current income tax expense 10,565,482.96 24,267,818.01 Deferred income tax expense -2,047,166.12 -3,359,861.75

Total 8,518,316.84 20,907,956.26

(2).Accounting profit and income tax expense adjustment process

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Amount incurred in this period

Total profit 93,909,650.86 Income tax expense calculated according to statutory/applicable tax rates 14,086,447.62 Impact of different tax rates applicable to subsidiaries -730,291.77 Impact of adjusting income tax in previous periods 12,406.23 Impact of non-taxable income -24,536.00 Impact of non-deductible costs, expenses and losses 249,328.81 Effect of using deductible losses that have not been recognized in deferred income tax assets in the previous period -4,915,299.87 Deductible temporary differences or deductible temporary differences that have not been recognized in deferred income tax assets in this period

1,120,923.32 Impact of loss deduction

Super deduction for R&D expenses -1,280,661.50 Income tax expense 8,518,316.84 Other notes:

□Applicable √Not applicable

77. Other comprehensive income

□Applicable √Not applicable

78. Cash flow statement items

(1). Cash related to operating activities

Other cash received related to operating activities

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Amount for the current period Amount for the previous period

Subsidy income 5,935,888.21 11,624,668.66 Interest income 1,483,535.49 2,328,453.63 Current accounts 12,981,328.47 3,533,403.87

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Total 20,400,752.17 17,486,526.16

Description of other cash received related to operating activities:

None

Other cash paid related to operating activities

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Amount for the current period Amount for the previous period

Sales expenses paid in cash 292,360,616.97 377,814,804.00 Management expenses and R&D expenses paid in cash 21,820,093.12 22,569,315.28 Manufacturing expenses paid in cash 3,844,103.71 3,810,361.31 External donations

Handling fees and others 67,990.51 32,620.17 Current accounts 9,044,628.97 22,932,785.96

Total 327,137,433.28 427,159,886.72

Description of other cash paid related to operating activities:

None

(2).Cash related to investing activities

Cash received in connection with significant investing activities

□Applicable √Not applicable

Cash payments related to significant investment activities

□Applicable √Not applicable

Other cash received related to investing activities

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Amount for the current period Amount for the previous period

Corporate financial products 54,400,000.00 69,500,000.00Bond investment

Raising funds and entrusting financial management

Entrusted financial management with own funds

Total 54,400,000.00 69,500,000.00

Description of other cash received related to investing activities:

None

Other cash paid related to investing activities

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Amount for the current period Amount for the previous period

Corporate financial products 50,990,000.00 59,000,000.00 Investment margin

bond investment

Brokerage asset management products

Entrusted financial management with own funds

Transferring the book monetary fund balance of Xinrong Pharmaceutical

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Total 50,990,000.00 59,000,000.00 Description of other cash paid related to investment activities:

None

(3).Cash related to financing activities

Other cash received related to financing activities

□Applicable √Not applicable

Other cash payments related to financing activities

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Amount for the current period Amount for the previous period

Repurchase of shares 5,720,400.00 444,000.00 Financing service fee 1,084,905.66 Payment of rent 3,826,944.00 2,174,185.08

Total 9,547,344.00 3,703,090.74 Description of other cash paid related to financing activities:

None

Changes in various liabilities arising from financing activities

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Increase in this period Decrease in this period

Item Opening balance Non-cash change Non-cash Closing balance cash change Cash change

move change

Short-term borrowings 351,521,547.18 393,976,259.86 355,971.65 202,927,123.91 542,926,654.78 Long-term borrowings 254,445,096.39 220,138.75 22,720,095.39 231,945,139.75 Lease liabilities 714,651.52 245,772.99 570,320.52 7,866.47 382,237.52Total 606,681,295.09 393,976,259.86 821,883.39 226,217,539.82 7,866.47 775,254,032.05

(4).Explanation on presenting cash flow in net amount

□Applicable √Not applicable

(5). Major activities and financial activities that do not involve current cash receipts and expenditures but affect the company's financial status or may affect the company's cash flow in the future.

business impact

□Applicable √Not applicable

79. Supplementary information for cash flow statement

(1). Supplementary information for cash flow statement

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Supplementary information Amount for the current period Amount for the previous period 1. Reconcile net profit to cash flow from operating activities:

Net profit 85,391,334.02 118,468,342.96 Plus: asset impairment provision 1,710,772.88 1,146,124.67 Credit impairment loss -3,598,062.64 2,366,156.43 Depreciation of fixed assets, depreciation of oil and gas assets, depreciation of productive biological assets 27,648,662.56 28,051,945.82

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Amortization of right-of-use assets 625,017.33 433,754.96 Amortization of intangible assets 9,536,629.65 9,486,309.58 Amortization of long-term prepaid expenses 156,641.64 146,788.98 Loss on disposal of fixed assets, intangible assets and other long-term assets (income calculated in the form of

-92,043.74 164,144.05 (Fill in “-”)

Loss from scrapping of fixed assets (income is listed with "-") 27,956.34 85,130.02 Loss from changes in fair value (income is listed with "-") -110,145.21

Financial expenses (income is listed with "-") 11,023,547.47 11,505,048.95 Investment losses (income is listed with "-") -285,716.66 -919,210.25 Decrease in deferred income tax assets (increase is listed with "-") 285,926.32 -1,608,642.72 Increase in deferred income tax liabilities (decreases are indicated with "-") 1,761,239.80 -1,751,219.03 Decrease in inventories (increases are indicated with "-") -44,963,470.68 -112,838,626.06 Decrease in operating receivables (increases are indicated with "-") 155,370,548.70 -47,585,093.02 Increase in operating payables (decreases are listed with "-") -234,839,818.47 14,127,808.01 Others 7,298,301.73 1,230,282.86 Net cash flow generated from operating activities 16,947,321.04 22,509,046.21 2. Major investing and financing activities that do not involve cash receipts and payments:

debt to capital

Convertible corporate bonds due within one year

Financing leased fixed assets

3. Net changes in cash and cash equivalents:

Closing balance of cash 283,545,177.02 536,223,814.89 Less: Opening balance of cash 474,843,014.34 571,370,247.89 Add: Closing balance of cash equivalents

Less: Opening balance of cash equivalents

Net increase in cash and cash equivalents -191,297,837.32 -35,146,433.00

(2). Net cash paid in the current period to acquire subsidiaries

□Applicable √Not applicable

(3). Net cash received from disposal of subsidiaries in the current period

□Applicable √Not applicable

(4). Composition of cash and cash equivalents

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Ending balance Beginning balance

1. Cash 283,545,177.02 474,843,014.34 Of which: Cash on hand 89,256.36 72,310.86 Bank deposits that can be used for payment at any time 283,425,602.20 474,739,730.70 Other monetary funds that can be used for payment at any time 30,318.46 30,972.78 available for payment of funds deposited with the Central Bank -

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 283,545,177.02 474,843,014.34

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Among them: the use of parent companies or subsidiaries within the group is restricted

of cash and cash equivalents

(5). Situations where the scope of use is limited but still presented as cash and cash equivalents

□Applicable √Not applicable

(6). Monetary funds that are not cash and cash equivalents

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Ending balance Beginning balance Reason ETC margin 2,000.00 2,000.00

Total 2,000.00 2,000.00 /

Other notes:

□Applicable √Not applicable

80. Notes on items in the statement of changes in owners’ equity

Explain the names of "other" items that were adjusted to the closing balance of the previous year and the amount of adjustment, etc.:

□Applicable √Not applicable

81. Foreign currency monetary items

(1). Foreign currency monetary items

□Applicable √Not applicable

(2). Description of overseas operating entities, including for important overseas operating entities, their main overseas operating place and accounting standard currency should be disclosed.

and the basis for selection. If the accounting standard currency changes, the reasons should also be disclosed.

□Applicable √Not applicable

82. Leasing

(1). As a lessee

√Applicable □Not applicable

Due to production, warehousing, office and other needs, the company rents houses and buildings from lessors for daily business activities. The lease contract terms signed are mainly within 5 years. The contract terms are in line with industry practices and there are no rare or special lease terms.

For details of the Company's right-of-use assets, lease liabilities and total cash outflows related to leases, please refer to Note 7, Note 25, Right-of-use assets, Note 47, Lease liabilities and Note 79, Supplementary Information to the Cash Flow Statement.

Unit: Yuan Currency: RMB Payment

Lessee Lessor Lease period Right-of-use asset Lease liability

mode

Lease project: Debi Rainbow WE305, Xiaoshan District, Hangzhou City

Guizhou Sanli Pharmaceutical Co., Ltd. has Hangzhou South Station New City Digital Intelligence 2024.1.10 to

Half-year payment 89,784.58 93,922.91 Co., Ltd. Zhejiang Branch Industrial Development Co., Ltd. 2026.1.31

Lease project: Room No. 1011-1012, Unit 1, Building 1, No. 2289, Section 1, Beixing Avenue, Dafeng Street, Xindu District, Chengdu City

Guizhou Sanli Pharmaceutical Co., Ltd. has Sichuan Jiangyue Pharmaceutical Co., Ltd. from April 1, 2025 to

Quarterly payment 212,056.68 185,528.09 Co., Ltd. Chengdu Branch Company 2027.6.30

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Lease project: No. 35, Fuhua West Road, Shiqiao Street, Panyu District

Guizhou Sanli Pharmaceutical Co., Ltd. Guangzhou Huahao Property Investment 2024.1.05 to

Monthly payment 98,559.13 102,786.52 Co., Ltd. Guangdong Branch Co., Ltd. 2025.12.31

Lease project: Woodland in the Laomadong Formation and Dachong Formation of Hongyan, Longshan Town Aquatic Community, Longli County

Guizhou Sankang Planting Co., Ltd. Kaiyang Yanfang Planting and Breeding Farmer 2024.10.18 to One-time

2,657,700.00 Ren Company Civilian Professional Cooperative 2036.10.17 Paid off the lease project: the forest land of the Laomadong Formation and Dachong Formation of Hongyan, Longshan Town Aquatic Community, Longli County

Guizhou Sankang Planting Co., Ltd. Kaiyang Yanfang Planting and Breeding Farmer 2024.11.8 to One-time

1,769,586.66 Ren Company Private Professional Cooperative 2036.11.7 Pay off the leased project: The forest land of Gelaoshan Group, Datian Group and Guyangzhai in Gaolimu Village, Xingshi Town, Longli County Guizhou Sankang Planting Co., Ltd. Kaiyang Yanfang Breeding Farmer 2024.11.20 to One-time

1,644,466.66 Ren Company Civilian Professional Cooperative 2036.11.19 Paid off the leased project: the forest land of the Laomadong Formation and Dachong Formation of Hongyan, Longshan Town Aquatic Community, Longli County

Guizhou Sankang Planting Co., Ltd. Kaiyang Yanfang Planting and Breeding Farmer 2024.11.20 to one-time

12,716.00 Company Renminist Professional Cooperative 2036.11.19 Pay off the leased project: The forest land of Gelaoshan Group, Datian Group and Guyangzhai in Gaolimu Village, Xingshi Town, Longli County Guizhou Sankang Planting Co., Ltd. Kaiyang Yanfang Breeding Farmer 2024.12.2 to One-time

941,715.17 Ren Company Civilian Professional Cooperative 2036.12.1 Paid off the lease project: Shilong Village, Mengguan Township, Huaxi District, Guiyang

Guizhou Sankang Planting Co., Ltd. Kaiyang Yanfang Planting and Breeding Farmer 2025.3.31 to One-time

3,747,216.00 Ren Company People’s Professional Cooperative 2037.3.30 Paid in full

Total 11,173,800.88 382,237.52

Variable lease payments not included in the measurement of lease liabilities

□Applicable √Not applicable

Simplified treatment of short-term leases or lease payments for low-value assets

√Applicable □Not applicable

The Company's short-term leases are leases that do not include an option to purchase and have a term of 12 months or less. Low-value asset leases refer to leases with a lower value when a single leased asset is a new asset.

The company's short-term leases and low-value asset leases do not recognize right-of-use assets and lease liabilities. The relevant lease payments are included in the relevant asset costs or current profits and losses according to the straight-line method or other systematic and reasonable methods during each period of the lease term.

Sale and leaseback transactions and basis for judgment

□Applicable √Not applicable

The total cash outflow related to leasing is 5,147,392.32 (Unit: Yuan Currency: RMB) (2). As the lessor

Operating lease as lessor

□Applicable √Not applicable

Finance lease as lessor

□Applicable √Not applicable

Reconciliation of undiscounted lease receipts and net lease investment

□Applicable √Not applicable

Undiscounted lease receipts over the next five years

□Applicable √Not applicable

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Guizhou Sanli Pharmaceutical Co., Ltd. 2025 Semi-Annual Report

(3). As a manufacturer or distributor, recognize financial lease sales profits and losses □Applicable √Not applicable

Other instructions

None

83. Data resources

□Applicable √Not applicable

84. Others

□Applicable √Not applicable

8. R&D expenditures

1. List according to nature of expenses

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Amount incurred in the current period Amount incurred in the previous period Material investment 1,031,656.66 5,398,821.45 Employee-related expenses 5,600,802.48 7,327,115.40 Outsourced R&D expenses 8,068,110.51 100,047.17 Other R&D expenses 2,160,193.23 4,592,544.57

Total 16,860,762.88 17,418,528.59 Including: Expenditure R&D expenditure 16,860,762.88 17,418,528.59

Capitalized R&D expenditures

Other notes:

None

2. Development expenditures on R&D projects that meet capitalization conditions

□Applicable √Not applicable

Significant Capitalized R&D Projects

□Applicable √Not applicable

Impairment provision for development expenditures

□Applicable √Not applicable

Other instructions

None

3. Important outsourced research projects

□Applicable √Not applicable

9. Changes in consolidation scope

1. Merger of enterprises not under common control

□Applicable √Not applicable

2. Merger of enterprises under common control

□Applicable √Not applicable

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3. Reverse purchase

□Applicable √Not applicable

4. Disposal of subsidiaries

Are there any transactions or events that result in the loss of control of subsidiaries during this period?

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

Is there any situation where investments in subsidiaries are disposed of step by step through multiple transactions and control is lost in the current period?

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

5. Changes in the scope of consolidation due to other reasons

Explain the changes in the scope of consolidation caused by other reasons (such as the establishment of new subsidiaries, liquidation of subsidiaries, etc.) and their related situations: □ Applicable √ Not applicable

6. Others

□Applicable √Not applicable

10. Interests in other entities

1. Interests in subsidiaries

(1).Construction of enterprise groups

√Applicable □Not applicable

Unit: RMB 10,000 Currency: RMB Shareholding ratio (%) Name of the acquired subsidiary Main place of business Registered capital Place of registration Nature of business

Direct Indirect Way Guizhou Sanli Health Management Co., Ltd. Anshun City, Guizhou Province 5,000.00 Anshun City, Guizhou Province Business services industry 100.00 Establishment of Guizhou Cenyi Medical Information Co., Ltd. Anshun City, Guizhou Province 300.00 Anshun City, Guizhou Province Pharmaceutical manufacturing industry 60.00 Establishment

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Guizhou Sankang Enterprise Management Partnership (Limited Partnership) Guiyang City, Guizhou Province 10,000.00 Guiyang City, Guizhou Province Business service industry 45.00 55.00 Establishment of Guizhou Sankang Traditional Chinese Medicine Industry Development Co., Ltd. Guiyang City, Guizhou Province 18,000.00 Guiyang City, Guizhou Province Planting industry 55.56 Establishment of Guizhou Sankang Planting Co., Ltd. Guiyang City, Guizhou Province 10,800.00 Guiyang City, Guizhou Province Planting industry 100.00 Establishment of Guizhou Sankang Medicinal Materials Co., Ltd. Guiyang City, Guizhou Province 7,200.00 Guiyang City, Guizhou Province Wholesale and retail industry 100.00 Establishment of Guizhou Nuorun Enterprise Management Consulting Co., Ltd. Guiyang City, Guizhou Province 2,100.00 Guiyang City, Guizhou Province Business services 100.00 Establishment of Sanli Zhongyue (Shanghai) Marketing Planning Co., Ltd. Shanghai City 3,000.00 Shanghai City Business services 100.00 Establishment of Xiaoxuan Pharmaceutical Technology (Guizhou) Co., Ltd. Guiyang City, Guizhou Province 5,150.00 Guiyang City, Guizhou Province Technology promotion services 57.4757 Establishment of Guizhou Dechangxiang Pharmaceutical Co., Ltd. Guiyang City, Guizhou Province 5,000.00 Guiyang City, Guizhou Province Pharmaceutical manufacturing industry 95.00 Merger of Guizhou Dechangxiang Traditional Chinese Medicine Cultivation Co., Ltd. not under common control Guiyang City, Guizhou Province 200.00 Guiyang City, Guizhou Province Planting industry 100.00 Merger of Guizhou Haost Biotechnology Co., Ltd. not under common control Guiyang City, Guizhou Province 13,500.00 Guiyang City, Guizhou Province Professional and technical services 60.9778 Merger of Yunnan Wudi Pharmaceutical Co., Ltd. not under common control Kunming City, Yunnan Province 7,801.00 Kunming City, Yunnan Province Pharmaceutical Manufacturing Industry 82.8013 Merger of Guizhou Hanfang Pharmaceutical Co., Ltd. not under common control Guiyang City, Guizhou Province 22,154.87 Guiyang City, Guizhou Province Pharmaceutical Manufacturing Industry 98.8039 Merger of Sanli Health Industry (Hainan) Co., Ltd. not under common control Qionghai City, Hainan Province 100.00 Qionghai City, Hainan Province Wholesale and retail industry 100.00 Establishment

Explanation on the difference between the proportion of shareholding in subsidiaries and the proportion of voting rights:

None

Basis for holding half or less of the voting rights but still controlling the invested unit, and holding more than half of the voting rights but not controlling the invested unit:

None

For important structured entities included in the scope of consolidation, the basis for control is:

None

Basis for determining whether a company is agent or principal:

None

Other notes:

None

(2).Important non-wholly owned subsidiaries

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Name of subsidiary company Shareholding ratio of minority shareholders (%) Profit and loss attributable to minority shareholders in the current period Dividends declared to minority shareholders in the current period Balance of minority shareholders’ equity at the end of the period Guizhou Dechangxiang Pharmaceutical Co., Ltd. 5.00 1,597,416.74 6,800,269.21 Guizhou Hanfang Pharmaceutical Co., Ltd. 1.1961 200,086.78 5,905,412.12

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Explanation on the difference between the shareholding ratio of minority shareholders of subsidiaries and the voting rights ratio:

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

(3).Main financial information of important non-wholly owned subsidiaries

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Ending balance Beginning balance

Subsidiary name

Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Guizhou Dechangxiang Pharmaceutical

150,527,841.75 91,123,001.76 241,650,843.51 57,701,303.90 45,970,729.51 103,672,033.41 147,376,573.45 77,842,627.70225,219,201.15 71,336,584.98 49,631,789.35 120,968,374.33 Co., Ltd.

Guizhou Hanfang Pharmaceutical Co., Ltd.

399,067,391.54 209,712,165.35 608,779,556.89 187,819,188.00 2,290,733.67 190,109,921.67 516,602,248.41 218,404,991.81735,007,240.22 284,113,811.04 2,561,810.59 286,675,621.63 Co., Ltd.

Unit: Yuan Currency: RMB Amount for the current period Amount for the previous period

Name of subsidiary Comprehensive income Current operating activities Comprehensive income Current operating income from operating activities Net profit Operating income Net profit

Total amount of cash flow Total amount of cash flow Guizhou Dechangxiang Pharmaceutical Co., Ltd. 120,413,662.96 32,765,258.68 32,765,258.68 13,716,782.23 97,027,126.90 14,122,771.62 14,122,771.62 -1,067,961.04 Guizhou Hanfang Pharmaceutical Co., Ltd. 136,720,030.35 23,092,137.77 23,092,137.77 33,360,539.95 204,673,964.79 23,109,539.64 23,109,539.64 5,290,642.75Other instructions:

None

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(4). Significant restrictions on the use of enterprise group assets and settlement of enterprise group debts: □ Applicable √ Not applicable

(5). Financial support or other support provided to structured entities included in the scope of consolidated financial statements: □ Applicable √ Not applicable

Other notes:

□Applicable √Not applicable

2. Transactions in which the ownership share of the subsidiary changes and the subsidiary is still controlled □Applicable √Not applicable

3. Interests in joint ventures or associated enterprises

√Applicable □Not applicable

(1). Important joint ventures or associates

□Applicable √Not applicable

(2). Main financial information of important joint ventures

□Applicable √Not applicable

(3). Main financial information of important associates

□Applicable √Not applicable

(4). Summary financial information of unimportant joint ventures and associates √Applicable □Not applicable

Unit: Yuan Currency: RMB

Closing balance/Amount incurred in the current period Opening balance/Amount incurred in the previous period Joint ventures:

Total book value of investments

The total of the following items calculated based on shareholding ratio

--Net profit

--Other comprehensive income

--Total comprehensive income

Associates:

Total book value of investments 63,556,353.25 12,547,227.44 Total of the following items calculated based on shareholding ratio

--Net profit 9,125.81 280,527.44 --Other comprehensive income

--Total comprehensive income 9,125.81 280,527.44Other instructions

None

(5). Explanation of significant restrictions on the ability of joint ventures or associates to transfer funds to the company □Applicable √Not applicable

(6). Excess losses incurred by joint ventures or associates

□Applicable √Not applicable

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(7). Unconfirmed commitments related to investments in joint ventures

□Applicable √Not applicable

(8). Contingent liabilities related to investments in joint ventures or associates

□Applicable √Not applicable

4. Important joint operations

□Applicable √Not applicable

5. Interests in structured entities not included in the scope of consolidated financial statements

Relevant instructions for structured entities not included in the scope of consolidated financial statements:

□Applicable √Not applicable

6. Others

□Applicable √Not applicable

11. Government subsidies

1. Government subsidies recognized according to the amount receivable at the end of the reporting period

□Applicable √Not applicable

Reasons for failure to receive the estimated amount of government subsidy at the estimated time

□Applicable √Not applicable

2. Liability items involving government subsidies

√Applicable □Not applicable

Unit: Yuan Currency: RMB New in this period Included in this period and assets transferred to it in this period Other

Financial statement items Opening balance Increased subsidy Non-operating income Closing balance/Income Other income Other changes

Amount Amount of deposit Relevant GMP off-site renovation project and assets

8,172,690.09 194,587.86 7,978,102.23

The relevant Anshun Municipal People’s Government awards special subsidies for the project.

Substituting industrial support funds and assets

745,562.12 17,751.48 727,810.64

(New version of GMP off-site modification related manufacturing projects)

Pingba District Industry and Trade Bureau Ancient Economics

Dianmingfang Modern Preparation New Drugs and Assets

500,000.00 37,735.86 462,264.14

National support funds for development research and industrialization projects related projects

Guizhou Province Industrial and Industrial Development in 2019

Special funds and assets for informatization development

1,584,905.54 0.00 1,584,905.54

(New version of GMP off-site modification related manufacturing projects)

Guizhou Sanli Pharmaceutical Co., Ltd.

GMP Transformation II of Assets Co., Ltd. 30,676,530.95 1,704,251.64 28,972,279.31

Relevant phase expansion projects

Angong Niuhuang Pill production capacity backup and assets

325,000.00 25,000.00 300,000.00

Construction projects related to the high-quality application of Guizhou Miao medicine 265,889.21 17,632.49 248,256.72 and assets

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Construction related to the development of scientific and technological innovation bases

A large variety of Miao medicine "Qijiaosheng"

Quality improvement of "Yuzijie White Capsules" 700,282.88 46,023.30 654,259.58

Related key process optimization

Total 42,970,860.79 2,042,982.63 40,927,878.16 /

3. Government subsidies included in current profits and losses

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Type Amount for the current period Amount for the previous period

Related to income 331,557.00 6,320,112.40 Related to assets 2,042,982.63

Others 4,871,700.00 1,268,900.00

Total 7,246,239.63 7,589,012.40

Other notes:

Government subsidies to offset costs

Unit: Yuan Currency: RMB

Type of subsidy items Amount incurred in the current period Amount incurred in the previous period Interest subsidy for offset cost items Related to income 4,871,700.00 1,268,900.00 Financial expenses - interest expenses

Total 4,871,700.00 1,268,900.00

12. Risks related to financial instruments

1. Risks of financial instruments

√Applicable □Not applicable

The company's main financial instruments include equity investments, other equity instrument investments, loans, receivables, payables, etc. Please see Note 5 of this note for detailed descriptions of each financial instrument. 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.

The company uses sensitivity analysis techniques to analyze the possible impact of reasonable and possible changes in risk variables on current profits and losses or shareholders' equity. Since any risk variable rarely changes in isolation, and the correlation between variables will have a significant impact on the final impact of a change in a certain risk variable, the following content is based on the assumption that changes in each variable are independent.

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 the lowest level, 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.

(1) Various risks arising from financial instruments

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. Management has formulated appropriate credit policies and continuously monitors credit risk exposure.

The Company has adopted a policy of only entering into transactions with creditworthy counterparties. In addition, the company evaluates the customer's credit qualifications and sets corresponding credit periods based on the customer's financial status, the possibility of obtaining guarantees from third parties, credit records and other factors such as current market conditions. The Company continuously monitors notes receivable, receivable financing, accounts receivable balances and recovery status. 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 does not face major credit losses. In addition, the Company reviews the recovery of financial assets on each balance sheet date to ensure that sufficient provisions for expected credit losses have been made for relevant financial assets.

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The Company's other financial assets include monetary funds and other receivables. The credit risk of these financial assets arises from the default of the counterparty. The maximum credit risk exposure is the carrying amount of each financial asset in the balance sheet. The Company has not provided any other guarantees that may expose the Company to credit risk.

The monetary funds held by the Company are mainly deposited in financial institutions such as state-owned banks and other large and medium-sized commercial banks. The management believes that these commercial banks have high reputation and asset status, do not have major credit risks, and will not incur any major losses due to default by counterparties. The company's policy is to control the amount of deposits placed in each well-known financial institution based on its market reputation, operating scale and financial background, in order to limit the amount of credit risk to any single financial institution.

As part of the Company's credit risk asset management, the Company uses aging to assess impairment losses on accounts receivable and other receivables. The Company's accounts receivable and other receivables involve a large number of customers, and aging information can reflect the solvency and bad debt risks of these customers for accounts receivable and other receivables. The company calculates the historical actual bad debt rates for different aging periods based on historical data, and adjusts the expected loss rate by taking into account forecasts of current and future economic conditions. For long-term receivables, the Company comprehensively considers the settlement period, the payment period stipulated in the contract, the financial status of the debtor and the economic situation of the industry in which the debtor is located, and makes reasonable assessments of expected credit losses after making adjustments based on the above-mentioned forward-looking information.

As of June 30, 2025, the book balance and expected credit impairment losses of related assets are as follows:

Unit: Yuan Currency: RMB

Item Book balance Impairment provision

Notes receivable 57,651,599.69

Accounts receivable financing 64,091,536.64

Accounts receivable 683,981,742.49 35,983,834.99 Other receivables 5,892,409.19 889,425.06 Total 811,617,288.01 36,873,260.05

The Company's main customers are large pharmaceutical distribution companies. These customers have reliable and good reputations. Therefore, the Company believes that these customers do not have significant credit risks. Because the Company has a broad range of customers, there is no significant concentration of credit risk. The Company's other receivables mainly include guarantee deposits, deposits, withholdings, and current accounts with individuals and entities. The Company manages and continuously monitors such accounts together with related economic businesses to ensure that the Company does not face significant bad debt risks.

2. Liquidity risk

Liquidity risk refers to the risk of a shortage of funds when an enterprise fulfills its obligations to settle by delivering cash or other financial assets. The Company's policy is to ensure that sufficient cash is available to repay debt obligations as they fall due. Liquidity risk is centrally controlled by the company's treasury department. The Treasury Department ensures that the company has sufficient funds to repay its debt obligations under all reasonable forecasts by monitoring cash balances, readily realizable securities, and rolling forecasts of cash flows over the next 12 months.

3. Market risk

Market risk of financial instruments refers to the risk that the fair value or future cash flow of financial instruments fluctuates due to changes in market prices, including interest rate risk and exchange rate risk.

(1) Interest rate risk

Interest rate risk refers to the risk that the fair value or future cash flows of financial instruments will fluctuate due to changes in market interest rates. The Company's interest rate risk mainly arises from interest-bearing bank borrowings. Based on the consideration of the company's sustainable development and profitability, the company mainly controls interest rate risks by strictly controlling interest rate levels. As the company's scale continues to grow and its operating capabilities improve, financing channels expand to obtain low-cost funds.

The Company pays attention to the fluctuation trend of interest rates and considers its impact on the interest rate risk faced by the Company. At present, the Company's overall interest rate risk is controllable.

(2) 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. At the end of the period, the company's main operations were located in China, and its main business was settled in RMB. The Company has not entered into any forward foreign exchange contracts or currency swap contracts.

2. Hedging

(1). The company carries out hedging business for risk management

□Applicable √Not applicable

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Other instructions

□Applicable √Not applicable

(2). The company carries out qualified hedging business and applies hedging accounting □ Applicable √ Not applicable

Other instructions

□Applicable √Not applicable

(3). The company carries out hedging business for risk management and expects to achieve risk management objectives but does not apply hedging accounting □ Applicable √ Not applicable

Other instructions

□Applicable √Not applicable

3. Transfer of financial assets

(1). Classification of transfer methods

□Applicable √Not applicable

(2). Financial assets derecognized due to transfer

□Applicable √Not applicable

(3). Transferred financial assets that continue to be involved

□Applicable √Not applicable

Other instructions

□Applicable √Not applicable

13. Disclosure of fair value

1. Closing fair value of assets and liabilities measured at fair value √Applicable □Not applicable

Unit: Yuan Currency: RMB Closing fair value items First level fairness Second level fairness Third level fairness Total

Value measurement Fair value measurement Fair value measurement

1. Continuous fair value measurement

(1) Trading financial assets 19,500,145.21 19,500,145.21 1. Measured at fair value and changes included in current profit and loss

19,500,145.21 Financial assets of 19,500,145.21

(1) Debt instrument investment

(2) Equity instrument investment

(3) Derivative financial assets

(4) Others 19,500,145.21 19,500,145.21 2. Designated to be measured at fair value and changes thereof included in the current period

financial assets with period profits and losses

(1) Debt instrument investment

(2) Equity instrument investment

(2) Other debt investments

(3) Investment in other equity instruments 10,000,000.00 10,000,000.00

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(4) Investment real estate

1. Land use rights for lease

2. Buildings for rent

3. Hold and prepare to transfer land use rights after appreciation

(5) Biological assets

1. Consumable biological assets

2. Productive biological assets

(6) Financing of receivables 64,091,536.64 64,091,536.64 Total assets continuously measured at fair value 19,500,145.21 74,091,536.64 93,591,681.85

(7) Trading financial liabilities

1. Measured at fair value and changes included in current profit and loss

financial liabilities

Including: trading bonds issued

Derivative financial liabilities

Others

2. Designated as measured at fair value with changes included in the current period

Financial liabilities for period profit and loss

Total liabilities measured at fair value on an ongoing basis

2. Non-continuous fair value measurement

(1) Assets held for sale

Total assets measured at fair value on an ongoing basis

Total liabilities measured at fair value on an ongoing basis

2. Basis for determining the market price of continuous and non-continuous first-level fair value measurement items

√Applicable □Not applicable

Trading financial assets - others are financial products held by the company. The company confirms its fair value at the end of the period based on the net value of the products listed in the bank confirmation.

3. Continuous and non-continuous second-level fair value measurement items, valuation techniques used and qualitative and quantitative information on important parameters □ Applicable √ Not applicable

4. Continuous and non-continuous third-level fair value measurement items, valuation techniques used and qualitative and quantitative information on important parameters √ Applicable □ Not applicable

The Company's continuing third-level fair value holdings at the end of the period include receivables financing and other equity instrument investments.

Receivables financing is a bank acceptance bill held by the company, and the company recognizes its fair value at the end of the period based on the face amount.

Other equity instrument investments are equity investments held by the company that have no control, joint control and significant influence. The investee has limited access to operating history data, and it is difficult to effectively obtain referenceable fair value from the primary market, making it impossible to reliably measure fair value. In addition, the investee has not introduced external investors or transferred equity between shareholders in the near future, which can be used as a reference for determining fair value. Therefore, it is a "limited situation" where book cost can be used as the best estimate of fair value. Therefore, cost is used as the fair value at the end of the period.

5. For ongoing third-level fair value measurement items, the reconciliation information and unobservable parameters between the opening and closing book values are sensitive

sexual analysis

□Applicable √Not applicable

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6. For ongoing fair value measurement items, if there is a conversion between levels during the current period, the reasons for the conversion and the policy for determining the time of conversion.

policy

□Applicable √Not applicable

7. Valuation technology changes that occurred during the period and reasons for the changes

□Applicable √Not applicable

8. Fair value of financial assets and financial liabilities not measured at fair value

□Applicable √Not applicable

9. Others

□Applicable √Not applicable

14. Related parties and related transactions

1. Information about the parent company of this enterprise

□Applicable √Not applicable

2. Information about the company’s subsidiaries

Please refer to the notes for details of the company’s subsidiaries.

√Applicable □Not applicable

For details of the company's subsidiaries, please refer to Section 8 of the Notes to the Financial Report. 10. Equity in other entities 1. Equity in subsidiaries.

3. Information about the company’s joint ventures and associated enterprises

√Applicable □Not applicable

For details of the company's important joint ventures or associates, please refer to Notes Section 8 Financial Report 10. Equity in other entities 3.

Interests in joint ventures or associates.

The information of other joint ventures or associates that have related party transactions with the company in the current period, or have balances from related party transactions with the company in previous periods, is as follows:

□Applicable √Not applicable

4. Other related parties

√Applicable □Not applicable

Names of other related parties Relationship between other related parties and the company China Shen Asia Pacific Accounting Firm Co., Ltd. Guizhou Fudi Law Firm, a company where the company’s independent director Chen Shigui is a partner. Hainan Yuexin Pharmaceutical Investment Partnership (general partnership), a company where the company’s independent director Gui Dong is the person in charge. Shareholders holding more than 5% of the shares.

Founded Yongsheng (Hangzhou) Technology Development Co., Ltd. Director Sheng Yongjian holds 95% of the shares and serves as a supervisor Guizhou Yongji Printing Co., Ltd. Zhang Hai, the company’s controlling shareholder and actual controller, holds more than 5% of the company Wang Huiying Controlling shareholder and actual controller Acting in concert

Chen Yan holds 7.77% of the holding subsidiary Xiaoxuan Pharmaceutical Technology (Guizhou) Co., Ltd.

Shares, partners, directors, supervisors and senior managers of Hainan Yuexin Pharmaceutical Investment Partnership (General Partnership) and their close relationships

Family members of directors, supervisors, senior managers and their close family members

Other instructions

None

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5. Related transactions

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

Procurement of goods/service acceptance form

√Applicable □Not applicable

Unit: Yuan Currency: RMB Related party transaction Approved transaction limit Whether it exceeds the transaction amount issued to related parties in the previous period and the amount incurred in the current period

Transaction content (if applicable) Quota (if applicable) Credit Guizhou Yongji Printing Co., Ltd.

Pill box 1,793,199.38 5,500,000.00 No 0 Company

Yaozunbao Digital Intelligence Technology (Chengdu

Service fee 188,679.24 20,000,000.00 No 0 City) Co., Ltd.

Total 1,981,878.62 25,500,000.00 0

List of goods sold/services provided

□Applicable √Not applicable

Description of related-party transactions for purchasing and selling goods, providing and receiving services □Applicable √Not applicable

(2). Related entrusted management/contracting and entrusted management/outsourcing situation

The company’s entrusted management/contracting status table: □ Applicable √ Not applicable

Description of associated hosting/contracting situations

□Applicable √Not applicable

The company’s entrusted management/outsourcing status table: □ Applicable √ Not applicable

Description of association management/outsourcing situation

□Applicable √Not applicable

(3). Related leasing situation

As a lessor, our company:

□Applicable √Not applicable

As a lessee, our company:

□Applicable √Not applicable

Description of related leasing situation

□Applicable √Not applicable

(4). Related guarantees

The company acts as a guarantor

□Applicable √Not applicable

The company as the guaranteed party

□Applicable √Not applicable

Description of related guarantees

□Applicable √Not applicable

(5). Related party lending

□Applicable √Not applicable

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(6). Asset transfer and debt restructuring of related parties

□Applicable √Not applicable

(7). Remuneration of key management personnel

√Applicable □Not applicable

Unit: 10,000 yuan Currency: RMB

Item Amount for the current period Amount for the previous period Remuneration of key management personnel 263.13 251.17

(8). Other related transactions

□Applicable √Not applicable

6. Unsettled items such as receivables and payables to related parties

(1). Items receivable

□Applicable √Not applicable

(2). Items payable

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Project name Related party Book balance at the end of the period Book balance at the beginning of the period Accounts payable Guizhou Yongji Printing Co., Ltd. 48,459.50 65,038.53 Other payables Yaozunbao Digital Intelligence Technology (Chengdu) Co., Ltd. 400,000.00

(3). Other items

□Applicable √Not applicable

7. Related party commitments

√Applicable □Not applicable

(1) Commitments related to initial public offering

1. Solve horizontal competition

Commitment person: Zhang Hai, the company’s controlling shareholder and actual controller

Commitment content:

① I currently do not and will not in the future engage in any activities that directly or indirectly constitute horizontal competition with the existing and future businesses of the company and its holding subsidiaries in any way (including but not limited to sole proprietorship, joint venture operation, or ownership of shares and other interests in another company or enterprise).

② Other enterprises controlled by me, my close family members and other enterprises controlled by me are not currently engaged in any activities that directly or indirectly constitute horizontal competition with the current and future business of the company and its controlled subsidiaries in any way (including but not limited to sole proprietorship, joint venture operation or ownership of shares and other interests in another company or enterprise). I will continue to urge other enterprises controlled by me, close family members and other enterprises controlled by me not to engage in business that constitutes horizontal competition with the company and its controlled subsidiaries in the future.

③I will not provide proprietary technology or provide sales channels, customer information and other commercial information to other companies, enterprises or other institutions, organizations or individuals whose business is the same as, similar to or competing with the company in any aspect.

④ If I or an enterprise controlled by me intend to sell any other assets, business or equity related to the company's production and operation, the company has the right to purchase it first. I will not take advantage of my shareholder status or other relationships to conduct business activities that may harm the legitimate rights and interests of the company and other shareholders.

⑤ If the company further expands its products and business scope, I and the companies I control will not compete with the company's expanded products or business. If there is a situation that may compete with the company's expanded products or business, I and the companies I control will withdraw from competition with the company in the following ways, including but not limited to: ① Stopping production to constitute competition or

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Products that may constitute competition; ② stop operating businesses that constitute competition or may constitute competition; ③ place competing assets or businesses into the company in a legal manner; ④ transfer competing assets or businesses to unrelated third parties; ⑤ take other actions that are beneficial to safeguarding the company's rights and interests to eliminate horizontal competition.

⑥ If I, other companies I control, my close family members and other companies I control violate the aforementioned commitments and cause losses to the company or its controlled subsidiaries, I am willing to bear the corresponding legal liability.

⑦I confirm that each commitment contained in this commitment is an independently executable commitment. If any commitment is deemed invalid or terminated, it will not affect the validity of other commitments.

⑧This commitment will continue to be effective as long as I, other companies I control, my close family members and other companies I control are related to the company or its controlled subsidiaries.

Commitment period: long-term

Fulfillment status: Normally being fulfilled

2. Resolve related-party transactions

Commitment person: Zhang Hai, the company’s controlling shareholder and actual controller

Commitment content:

① As of the signing date of this commitment, except for the related transactions that have been disclosed, there are no other major related transactions between myself and other enterprises controlled by me, the company and its controlled subsidiaries.

② I will perform my obligations as a shareholder of the company in good faith and will not use my shareholder status to take any action or seek illegitimate interests in relation to any related transactions between the company and me; I will not use my shareholder status to deliberately prompt the company to make decisions that infringe on the legitimate rights and interests of other shareholders.

③ I and other companies controlled by me will try to avoid related transactions with the company and its controlled subsidiaries; for related transactions that are truly necessary and unavoidable, we will strictly implement the related party transaction decision-making procedures and avoidance systems in relevant laws, regulations, rules, normative documents and the "Articles of Association" to ensure that related transactions comply with the principles of openness, fairness and justice and are impartial, and do not harm the interests of the company and other shareholders.

④ If I and other companies controlled by me violate the above commitments and conduct transactions with the company and its holding subsidiaries, thereby causing losses to the company and other shareholders of the company, I shall bear the liability for compensation.

⑤This commitment will continue to be effective while I and other companies controlled by me are related to the company or its holding subsidiaries.

Commitment period: long-term

Fulfillment status: Normally being fulfilled

3. Other commitments

Commitment: Guizhou Sanli Pharmaceutical Co., Ltd.

Commitment content:

In order to prevent the possible risk of immediate earnings being diluted, the company commits to take the following safeguard measures:

① Actively implement investment projects with raised funds and improve the efficiency of use of raised funds;

② Strengthen business management and internal control;

③Improve profit distribution policy;

④ Improve the corporate governance structure.

Commitment period: long-term

Fulfillment status: Normally being fulfilled

4. Other commitments/restrictions on share sales

Commitment person: Zhang Hai, the company’s controlling shareholder and actual controller

Commitment content:

① Do not interfere with the company’s operation and management activities beyond their authority and do not encroach on the company’s interests.

② If I fail to fulfill the above commitments, I will publicly explain the specific reasons for failure to fulfill the above commitments at the company's shareholders' meeting and newspapers designated by the China Securities Regulatory Commission and apologize to the company's shareholders and public investors. If I cause losses to the company or the company's shareholders due to my violation of the above commitments, I will bear compensation liability in accordance with the law.

Commitment period: long-term

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Fulfillment status: Normally being fulfilled

5. Other commitments

Commitment person: company directors and senior management personnel commitment

Commitment content:

① I will not transfer benefits to other units or individuals for free or on unfair terms, nor will I harm the interests of the company in other ways.

②I will restrict my job consumption behavior.

③I will not use company assets to engage in investment or consumption activities that have nothing to do with the performance of my duties.

④I will be responsible for linking the remuneration system formulated by the board of directors or the remuneration and appraisal committee with the implementation of the company's supplementary return measures.

⑤ I will be responsible for linking the exercise conditions (if any) of the company's equity incentives to be announced with the implementation of the company's supplementary return measures.

⑥After the issuance of this commitment, if the China Securities Regulatory Commission issues other regulatory provisions regarding supplementary return measures and commitments, and the above commitments cannot meet the regulatory requirements, I promise to issue a supplementary commitment in accordance with the relevant regulations.

⑦ If I fail to fulfill the above commitments, I will publicly explain the specific reasons for failure to fulfill the above commitments at the company's shareholders' meeting and in newspapers designated by the China Securities Regulatory Commission and apologize to the company's shareholders and public investors. If I cause losses to the company or the company's shareholders due to my violation of the above commitments, I will be liable for compensation in accordance with the law.

Commitment period: long-term

Fulfillment status: Normally being fulfilled

6. Other commitments

Commitment: Guizhou Sanli Pharmaceutical Co., Ltd.

Commitment content:

① The company's prospectus and its summary do not contain false records, misleading statements or major omissions, and the company shall bear individual and joint legal liability for its authenticity, accuracy and completeness.

② If the company's prospectus contains false records, misleading statements or major omissions, causing investors to suffer losses in securities transactions, the investors will be compensated for their losses in accordance with the law.

③ If the China Securities Regulatory Commission or the People's Court and other competent authorities determine that the company's prospectus contains false records, misleading statements or major omissions, and these circumstances have a significant and substantial impact on whether the company meets the issuance conditions stipulated by law, the company will make a final determination or effective judgment 30 days after the China Securities Regulatory Commission or the People's Court and other competent authorities make the company's existence of the above facts. The board of directors will be convened within the day to formulate a share repurchase plan and submit it to the general meeting of shareholders for review and approval. The company will repurchase all new shares initially issued by the company in accordance with the law. The repurchase price shall not be lower than the company's stock issuance price plus bank demand deposit interest during the relevant period from the issuance of the shares to the time of repurchase or other prices recognized by the China Securities Regulatory Commission. If the company engages in ex-rights and ex-dividend activities such as profit distribution, transfer of capital reserves to share capital, additional issuance, allotment of shares and other ex-rights and ex-dividends after the initial public offering of stocks before the repurchase, the above issuance price shall be the price after ex-rights and ex-dividends.

Commitment period: long-term

Fulfillment status: Normally being fulfilled

7. Other commitments

Commitment: Zhang Hai, the issuer’s controlling shareholder and actual controller

Commitment content:

① The company's prospectus and its summary do not contain false records, misleading statements or major omissions, and the company shall bear individual and joint legal liability for its authenticity, accuracy and completeness.

② If the company's prospectus contains false records, misleading statements or major omissions, causing investors to suffer losses in securities transactions, the investors will be compensated for their losses in accordance with the law.

③ If the China Securities Regulatory Commission or the People's Court and other competent authorities determine that the company's prospectus contains false records, misleading statements or major omissions, and these circumstances have a significant and substantial impact on whether the company meets the issuance conditions stipulated by law, I will formulate a share repurchase plan within 30 days after the China Securities Regulatory Commission or the People's Court and other competent authorities make the final determination or effective judgment of the company's existence of the above-mentioned facts, and repurchase the company's first shares in accordance with the law.

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The repurchase price for all new shares issued to the public and the original restricted shares that have been transferred shall not be lower than the issuance price of the company's shares plus bank demand deposit interest during the relevant period from the issuance of the shares to the time of repurchase or other prices approved by the China Securities Regulatory Commission. If the company engages in ex-rights and ex-dividend activities such as profit distribution, transfer of capital reserves to share capital, additional issuance, allotment of shares and other ex-rights and ex-dividends after the initial public offering of stocks before the repurchase, the above issuance price shall be the price after ex-rights and ex-dividends.

Commitment period: long-term

Fulfillment status: Normally being fulfilled

8. Other commitments

Commitment person: directors, supervisors and senior managers of the issuer

Commitment content:

① The company's prospectus and its summary do not contain false records, misleading statements or major omissions, and the company shall bear individual and joint legal liability for its authenticity, accuracy and completeness.

② If the company's prospectus contains false records, misleading statements or major omissions, causing investors to suffer losses in securities transactions, the investors will be compensated for their losses in accordance with the law.

Commitment period: long-term

Fulfillment status: Normally being fulfilled

9. Other commitments

Commitment: Guizhou Sanli Pharmaceutical Co., Ltd.

Commitment content:

① If the company fails to fulfill relevant commitments, the company will publicly explain the specific reasons for failure to fulfill its commitments at the company's shareholders' meeting and newspapers designated by the China Securities Regulatory Commission and apologize to the company's shareholders and public investors.

② If the company fails to fulfill relevant commitments and causes investors to suffer losses in securities transactions, the company will compensate investors for their losses in accordance with the law.

Commitment period: long-term

Fulfillment status: Normally being fulfilled

(2) Other commitments

Commitment: Zhang Hai, the issuer’s controlling shareholder and actual controller

Commitment content:

The company’s controlling shareholder and actual controller, Mr. Zhang Hai, voluntarily promised not to actively reduce the company’s shares directly held by him in any way within 18 months from September 13, 2024 (i.e., from September 13, 2024 to March 12, 2026). During the above-mentioned commitment period, if additional shares occur due to transfer of capital reserves to share capital, distribution of stock dividends, allotment of shares, etc., the commitment not to reduce holdings will also be observed. If the above commitment is violated, all proceeds from the reduction of the company's shares will belong to the company. Commitment period: September 13, 2024 to March 12, 2026

Fulfillment status: Normally being fulfilled

8. Others

□Applicable √Not applicable

15. Share-based payment

1. Various equity instruments

(1).Details

□Applicable √Not applicable

(2). Stock options or other equity instruments outstanding at the end of the period

□Applicable √Not applicable

2. Equity-settled share-based payment

√Applicable □Not applicable

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Unit: Yuan Currency: RMB Equity-settled share-based payment object

The method for determining the fair value of equity instruments on the date of grant is based on the closing price of the company’s stock on the date of grant.

Important parameters of fair value of equity instruments on grant date

The basis for determining the number of exercisable equity instruments on the balance sheet date based on the latest number of people who can be released from selling restrictions.

Follow-up information such as changes and completion of performance indicators will be determined. Reasons for significant differences between the current period’s estimates and the previous period’s estimates

The cumulative amount of equity-settled share-based payments included in capital reserves -16,688,404.75Other explanations

None

3. Share-based payment settled in cash

□Applicable √Not applicable

4. Share-based payment expenses for this period

□Applicable √Not applicable

5. Modification and termination of share-based payment

√Applicable □Not applicable

(1) On March 28, 2025, the company held the 11th meeting of the 4th board of directors and the 10th meeting of the 4th board of supervisors, and reviewed and approved the "Proposal on the Repurchase and Cancellation of Certain Restricted Stocks". Ouyang Zhiqiang, the incentive object granted in the company's 2024 restricted stock incentive plan, is no longer eligible for incentives due to his resignation. The company plans to repurchase the 60,000 restricted shares he holds that have been granted but have not yet been unlocked. The repurchase price is the grant price of RMB 7.50 per share. The total amount of repurchase funds expected to be paid this time is RMB 450,000, and the company will use its own funds for repurchase. As of now, the relevant shares have not yet been cancelled.

(2) On April 21, 2025, the company held the 12th meeting of the fourth board of directors and the 11th meeting of the fourth board of supervisors, and reviewed and approved the "Proposal on the Unfulfilled Conditions for Repurchasing and Cancellation of Restrictions in the Third Restriction Period of the 2021 Restricted Stock Incentive Plan". It was agreed that due to failure to meet the company-level performance assessment standards in 2024, in accordance with the "Guizhou Sanli Pharmaceutical Co., Ltd. 2021 Restricted Stock Incentive Plan" and other relevant regulations, the company will repurchase and cancel a total of 732,000 shares of restricted stocks first granted at the adjusted repurchase price of 7.20 yuan/share. As of now, the relevant shares have not yet been cancelled.

6. Others

□Applicable √Not applicable

16. Commitments and contingencies

1. Important commitments

√Applicable □Not applicable

Important external commitments, nature and amount existing on the balance sheet date

1. External investment matters that have been signed by the company but have not yet been implemented or have not been fully implemented

(1) The company jointly invested and established Guizhou Sanli Health Management Co., Ltd. with Shao Qimin in September 2015, accounting for 95% of the registered capital. On August 16, 2016, Shao Qimin transferred 5% of his equity to Guizhou Sanli. As of June 30, 2025, the subscribed capital contribution has not been paid in full. The subscription and actual payment status are as follows:

Company name Amount of capital contribution subscribed (RMB 10,000) Ratio of capital contribution subscribed (%) Amount of capital contribution paid in (RMB 10,000) Guizhou Sanli Pharmaceutical Co., Ltd.

5,000.00 100.00 4,600.00Co., Ltd.

Total 5,000.00 100.00 4,600.00

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(2) The company invested in the establishment of a wholly-owned subsidiary, Guizhou Nuorun Enterprise Management Consulting Co., Ltd., in September 2018, with a registered capital of 20.088 million yuan. The company invested RMB 20.088 million, accounting for 100.00% of the registered capital. On November 6, 2018, the shareholders meeting of Guizhou Nuorun Enterprise Management Consulting Co., Ltd. decided that the registered capital of Guizhou Nuorun Enterprise Management Consulting Co., Ltd. would be increased from 20.088 million yuan to 21 million yuan, and the company would subscribe for an additional registered capital of 912,000 yuan. Guizhou Nuorun Enterprise Management Consulting Co., Ltd. completed the industrial and commercial change registration that month. As of June 30, 2025, the subscribed capital contribution has not been paid in full. The company invested part of its fixed assets and intangible assets, and the subscription and actual payment details are as follows:

Company name Amount of capital contribution subscribed (RMB 10,000) Ratio of capital contribution subscribed (%) Amount of capital contribution paid in (RMB 10,000) Guizhou Sanli Pharmaceutical Co., Ltd. 2,100.00 100.00 1,174.61

Total 2,100.00 100.00 1,174.61

(3) The company held the fifth meeting of the fourth board of directors on September 20, 2024, and reviewed and approved the "Proposal on Joint Investment and Related Transactions between the Company's Wholly-Owned Subsidiaries and Related Persons". It was agreed that Guizhou Sanli Health Management Co., Ltd., a wholly-owned subsidiary, plans to jointly increase capital in Chengdu Dimension Times Technology Co., Ltd. (now renamed Yaozunbao Digital Intelligence Technology (Chengdu) Co., Ltd.) with Yongsheng (Hangzhou) Technology Development Co., Ltd., Sichuan Yaozunbao Supply Chain Management Partnership (General Partnership), and Sichuan Chengan Technology Partnership (Limited Partnership). Guizhou Sanli Health Management Co., Ltd. used its own funds of 20 million to subscribe for 25% of the equity of Chengdu Weiwei Times Technology Co., Ltd. (now renamed Yaozunbao Digital Intelligence Technology (Chengdu) Co., Ltd.). As of June 30, 2025, the subscribed capital contribution has not been paid in full. The subscription and actual payment status are as follows:

Company name Amount of capital contribution subscribed (RMB 10,000) Ratio of capital contribution subscribed (%) Amount of capital contribution paid in (RMB 10,000) Guizhou Sanli Health Management Co., Ltd. 2,000.00 25.00

Total 2,000.00 25.00

(4) The company held the 10th meeting of the 4th board of directors and the 9th meeting of the 4th board of supervisors on December 25, 2024, and reviewed and approved the "Proposal on the Joint Investment and Establishment of Venture Capital Funds by the Company, its Holding Subsidiaries and Professional Investment Institutions". The company and its holding subsidiaries Yunnan Wudi Pharmaceutical Co., Ltd., Guiyang Industrial Development Fund Partnership (Limited Partnership), Guiyang Venture Capital Co., Ltd., Guizhou Wudang Economic Development Zone Construction Investment and Development Co., Ltd., and Guizhou Zhuyin Capital Management Co., Ltd. jointly participated in the establishment of Guizhou Qianli Biomedicine Venture Investment Fund Partnership (Limited Partnership). The total capital subscribed for this fund is RMB 500 million, all of which is monetary. As a limited partner, the company subscribed RMB 160 million from its own funds, accounting for 32.00% of the capital contribution; Yunnan Wudi Pharmaceutical Co., Ltd., as a limited partner, subscribed RMB 40 million from its own funds, accounting for 8.00% of the capital. As of June 30, 2025, Yunnan Wudi Pharmaceutical Co., Ltd. has completed the paid-in capital contribution in full, but the capital contribution subscribed by the company has not been paid in full. The subscription and actual payment status are as follows:

Company name Amount of capital contribution subscribed (RMB 10,000) Ratio of capital contribution subscribed (%) Amount of capital contribution paid in (RMB 10,000) Guizhou Sanli Pharmaceutical Co., Ltd. 16,000.00 32.00 100.00

Yunnan Wudi Pharmaceutical Co., Ltd. 4,000.00 8.00 4,000.00

Total 20,000.00 40.00 4,100.00

2. Commitments related to related parties

For details on commitments related to related parties, please refer to Notes, Section 8, Financial Report, 14. Related Parties and Related Transactions 7. Related Party Commitments.

Except for the above commitments, as of June 30, 2025, the Company has no other important commitments that should be disclosed but have not been disclosed.

2. Contingencies

(1). Important contingencies existing on the balance sheet date

√Applicable □Not applicable

As of June 30, 2025, the amount of notes receivable (bank acceptance bills) that the company has endorsed or discounted and has not yet expired but has not been derecognized on the balance sheet date is 43.5649 million yuan.

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Except for the existence of the above-mentioned contingencies, as of June 30, 2025, the Company has no other major contingencies that should be disclosed but have not been disclosed.

(2). If the company has no important contingencies that need to be disclosed, it should also be explained: □Applicable √Not applicable

3. Others

□Applicable √Not applicable

17. Events after the balance sheet date

1. Important non-adjustment matters

□Applicable √Not applicable

2. Profit distribution

□Applicable √Not applicable

3. Sales returns

√Applicable □Not applicable

As of the date when the financial statements are approved for issuance, the Company does not need to disclose sales returns.

4. Description of other post-balance sheet events

√Applicable □Not applicable

The company held the fifth temporary meeting of the general manager office meeting in 2025 on July 1, 2025. The resolutions of the meeting are as follows: (1) It was agreed to transfer 3.98% of the equity share of its holding subsidiary Xiaoxuan Pharmaceutical Technology (Guizhou) Co., Ltd. (hereinafter referred to as Xiaoxuan Technology) to the Life Service Industry Private Equity Investment Fund Partnership (Limited Partnership) in Guanshan Lake District Pilot Zone, Guiyang City. (2) Agree to transfer the remaining 53.50% equity share of Xiaoxuan Technology to Shenzhen Yuandian Technology Co., Ltd. As of the disclosure date of this report, the company has completed the above equity delivery matters.

18. Other important matters

1. Correction of previous accounting errors

(1). Retrospective restatement method

□Applicable √Not applicable

(2). Prospective application of law

□Applicable √Not applicable

2. Important debt restructuring

□Applicable √Not applicable

3. Asset replacement

(1). Non-monetary asset exchange

□Applicable √Not applicable

(2). Other asset replacements

□Applicable √Not applicable

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4. Annuity plan

□Applicable √Not applicable

5. Termination of operations

□Applicable √Not applicable

6. Branch information

(1). Basis for determination of reporting segments and accounting policies

□Applicable √Not applicable

(2). Financial information of reportable segments

□Applicable √Not applicable

(3). If the company has no reportable segments, or cannot disclose the total assets and total liabilities of each reportable segment, the reasons should be stated □Applicable √Not applicable

(4). Other instructions

□Applicable √Not applicable

7. Other important transactions and matters that have an impact on investors’ decision-making

√Applicable □Not applicable

Equity pledges of shareholders holding more than 5% of the company's shares and persons acting in concert

As of the end of this reporting period, controlling shareholders and persons acting in concert Zhang Hai and Wang Huiying held 178,866,387 shares, accounting for 43.64% of the company's total share capital, and had pledged a total of 69.5 million shares, accounting for 16.96% of the company's total share capital.

8. Others

□Applicable √Not applicable

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

1. Accounts receivable

(1). Disclosure based on aging

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Aging Book balance at the end of the period Book balance at the beginning of the period Within 1 year (including 1 year) 376,313,996.34 455,199,847.81 Subtotal within 1 year 376,313,996.34 455,199,847.81 1 to 2 years 716,067.24 1,517,640.98 2 to 3 years 359,875.90 133,280.00 More than 3 years

3 to 4 years 29,970.00 4 to 5 years 29,970.00

More than 5 years 96,816.20 96,816.20 Total 377,516,725.68 456,977,554.99

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(2). Classified disclosure according to bad debt accrual method

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Ending balance Beginning balance

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

plan

Category Provision Book Provision Book

Proportion

Amount Amount Ratio Value Amount Ratio (%) Amount Ratio Value (%)

Example (%)

(%)

By item

bad provision

Account preparation

Among them:

by combination

Bad provision 377,516,725.68 100.00 18,922,342.64 5.01 358,594,383.04 456,977,554.99 100.00 22,253,693.63 4.87 434,723,861.36 Account preparation

Among them:

Combination one 373,672,318.19 98.98 18,922,342.64 5.06 354,749,975.55 440,780,593.73 96.46 22,253,693.63 5.05 418,526,900.10 Combination two 3,844,407.49 1.02 3,844,407.49 16,196,961.26 3.54 16,196,961.26Total 377,516,725.68 100.00 18,922,342.64 5.01 358,594,383.04 456,977,554.99 100.00 22,253,693.63 4.87 434,723,861.36

Provision for bad debts is made individually:

□Applicable √Not applicable

Provision for bad debts by group:

√Applicable □Not applicable

Combination accrual items: Combination 1

Unit: Yuan Currency: RMB Closing balance

Name

Book balance Bad debt provision Proportion of provision (%) Within 1 year 372,469,588.85 18,623,479.45 5.00 1 to 2 years 716,067.24 71,606.72 10.00 2 to 3 years 359,875.90 107,962.77 30.00 3 to 4 years 50.00 4 to 5 years 29,970.00 22,477.50 75.00 More than 5 years 96,816.20 96,816.20 100.00

Total 373,672,318.19 18,922,342.64

Combined accrual items: Combination 2

Unit: Yuan Currency: RMB Closing balance

Name

Book balance Bad debt provision Provision ratio (%) Consolidated related parties 3,844,407.49

Total 3,844,407.49

Instructions on accruing bad debt provisions by group:

□Applicable √Not applicable

Provision for bad debts based on the general expected credit loss model

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√Applicable □Not applicable

Unit: Yuan Currency: RMB Phase 1 Phase 2 Phase 3 Expected throughout the duration Expected bad debt provisions throughout the duration Expected total credit losses in the next 12 months (unissued credit losses (issued credit losses)

Credit impairment) Balance on January 1, 2025 22,253,693.63 22,253,693.63 Balance on January 1, 2025 in the current period

--Transfer to the second stage

--Transfer to the third stage

--Return to the second stage

--Return to the first stage

Provision for this period

Transferred back in the current period 3,331,350.99 3,331,350.99 Write-off in the current period

Write-off in this period

Other changes

Balance as of June 30, 2025 18,922,342.64 18,922,342.64 Basis for division of each stage and proportion of bad debt provisions

None

Explanation of significant changes in the book balance of accounts receivable that have experienced changes in loss provisions during the current period:

□Applicable √Not applicable

(3). Bad debt provision situation

√Applicable □Not applicable

Unit: Yuan Currency: RMB Change amount in the current period

Category Beginning Balance Ending Balance

Provision Recovery or reversal Write-off or write-off Other changes Combination 1 22,253,693.63 3,331,350.99 18,922,342.64

Total 22,253,693.63 3,331,350.99 18,922,342.64

Among them, the amount of recovery or reversal of bad debt provisions for the current period is important:

□Applicable √Not applicable

Other instructions

None

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

□Applicable √Not applicable

Among them, the important write-off of accounts receivable

□Applicable √Not applicable

Instructions for writing off accounts receivable:

□Applicable √Not applicable

(5). Accounts receivable and contract assets of the top five closing balances collected by debtors

√Applicable □Not applicable

Unit: Yuan Currency: RMB

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Accounts receivable and contract units Accounts receivable at the end of the period Contract assets Accounts receivable and contracts Bad debt provision at the end of the period Assets ending balance Total Name Balance Ending balance Assets ending balance Balance

Proportion of number (%) Customer 1 23,686,200.00 23,686,200.00 6.27 1,184,310.00 Customer 2 15,803,390.53 15,803,390.53 4.19 790,169.53 Customer 3 15,567,162.80 15,567,162.80 4.12 778,358.14Customer 4 11,656,610.00 11,656,610.00 3.09 582,830.50Customer 5 10,891,195.78 10,891,195.78 2.88 544,559.79

Total 77,604,559.11 77,604,559.11 20.55 3,880,227.96Other instructions

None

Other notes:

□Applicable √Not applicable

2. Other receivables

Item list

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Closing balance Opening balance Interest receivable

Dividends receivable

Other receivables 4,663,956.73 3,313,035.08

Total 4,663,956.73 3,313,035.08Other instructions:

□Applicable √Not applicable

interest receivable

(1).Classification of interest receivable

□Applicable √Not applicable

(2).Important overdue interest

□Applicable √Not applicable

(3). Classified disclosure according to bad debt accrual method

□Applicable √Not applicable

Provision for bad debts is made individually:

□Applicable √Not applicable

Instructions on accruing bad debt provisions individually:

□Applicable √Not applicable

Provision for bad debts by group:

□Applicable √Not applicable

(4). Provision for bad debts based on the general expected credit loss model

□Applicable √Not applicable

(5). Bad debt provisions

□Applicable √Not applicable

Among them, the amount of recovery or reversal of bad debt provisions for the current period is important:

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Guizhou Sanli Pharmaceutical Co., Ltd. 2025 Semi-Annual Report

□Applicable √Not applicable

Other notes:

None

(6). Interest receivable actually written off in the current period □ Applicable √ Not applicable

Among them, the important write-off of interest receivable □ Applicable √ Not applicable

Write-off instructions:

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

Dividends receivable

(1). Dividends receivable

□Applicable √Not applicable

(2). Important dividends receivable aged more than 1 year □ Applicable √ Not applicable

(3). Classified disclosure according to bad debt accrual method □Applicable √Not applicable

Provision for bad debts on an individual basis: □ Applicable √ Not applicable

Explanation on the provision of bad debt provisions on an individual basis: □ Applicable √ Not applicable

Provision for bad debts by combination: □ Applicable √ Not applicable

(4). Provision for bad debts based on the general expected credit loss model □Applicable √Not applicable

(5).Bad debt provision □Applicable √Not applicable

Among them, the amount of bad debt provision recovery or reversal in the current period is important: □ Applicable √ Not applicable

Other notes:

None

(6). Dividends receivable actually written off in the current period □ Applicable √ Not applicable

Among them, the important write-off of dividends receivable □ Applicable √ Not applicable

Write-off instructions:

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

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Other receivables

(1). Disclosure based on aging

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Aging Book balance at the end of the period Book balance at the beginning of the period

Within 1 year (including 1 year) 4,446,747.38 3,284,773.77 Subtotal within 1 year 4,446,747.38 3,284,773.77 1 to 2 years 406,711.08 50,000.00 2 to 3 years

More than 3 years

3 to 4 years 50,000.00 4 to 5 years 50,000.00 More than 5 years 40,000.00

Total 4,853,458.46 3,474,773.77

(2). Classification by nature of payment

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Nature of payment Book balance at the end of the period Book balance at the beginning of the period

investment margin

Withholding amount 1,457,659.39 1,359,213.99 Guarantee and deposit 442,520.08 776,970.16 Consolidated related parties 1,470,135.00 240,000.00 Reserve fund 1,479,107.99 1,098,589.62 Others 4,036.00

Total 4,853,458.46 3,474,773.77

(3). Bad debt provision accrual

√Applicable □Not applicable

Unit: Yuan Currency: RMB Phase 1 Phase 2 Phase 3

Lifetime expectations Lifetime expectations

Estimated total for the next 12 months

Provision for bad debts

Credit loss (unused credit loss (credit incurred)

period credit loss

credit impairment)

Balance on January 1, 2025 161,738.69 161,738.69 Balance on January 1, 2025

In this issue

--Transfer to the second stage

--Transfer to the third stage

--Return to the second stage

--Return to the first stage

Provision in this period 27,763.04 27,763.04 Transferred in this period

Sales in this period

Write-off in this period

Other changes

Balance on June 30, 2025 189,501.73 189,501.73

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Basis for division of each stage and provision ratio for bad debts

None

Explanation of significant changes in the book balance of other receivables that have experienced changes in loss provisions during the current period:

□Applicable √Not applicable

The amount of bad debt provision for the current period and the basis for assessing whether the credit risk of financial instruments has increased significantly: □ Applicable √ Not applicable

(4). Bad debt provisions

√Applicable □Not applicable

Unit: Yuan Currency: RMB Change amount in the current period

Category Opening balance Recovery or write-off or other Ending balance accrual

Reversal, write-off, change Provision for bad debts by group 161,738.69 27,763.04 189,501.73 Of which: Group 1 161,738.69 27,763.04 189,501.73

Total 161,738.69 27,763.04 189,501.73 Among them, the amount of bad debt provision for the current period that is reversed or recovered is important:

□Applicable √Not applicable

Other instructions

None

(5). Other receivables actually written off in the current period

□Applicable √Not applicable

Important write-offs of other receivables:

□Applicable √Not applicable

Instructions for writing off other receivables:

□Applicable √Not applicable

(6). Other receivables with top five closing balances based on debtors

√Applicable □Not applicable

Unit: Yuan Currency: RMB as a share of other receivables

Name of bad debt provision unit Closing balance Total closing balance Nature of payment Aging closing balance

Proportion of number (%)

Withholding amount 1,457,659.39 30.03 Withholding amount Within 1 year 72,882.97 Guizhou Hanfang Pharmaceutical Co., Ltd. 1,080,135.00 22.25 Related parties within the merger Within 1 year Guizhou Nuorun Enterprise Management Consulting

390,000.00 8.04 Related parties within the merger Limited company within 1 year

Guangzhou Defu Ali Health Medicine

300,000.00 6.18 Security deposit and deposit 1 to 2 years 30,000.00 Housing Co., Ltd.

Zhu Jiashuai 200,000.00 4.12 Reserve fund Within 1 year 10,000.00

Total 3,427,794.39 70.62 / / 112,882.97

(7). Presented in other receivables due to centralized management of funds

□Applicable √Not applicable

Other notes:

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Guizhou Sanli Pharmaceutical Co., Ltd. 2025 Semi-Annual Report

□Applicable √Not applicable

3. Long-term equity investment

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Ending balance Beginning balance

Item Impairment Impairment

Book balance Book value Book balance Book value

prepare prepare

Investment in subsidiaries 1,314,209,551.90 1,314,209,551.90 1,311,363,351.30 1,311,363,351.30 Associates and joint ventures

3,540,220.73 3,540,220.73 2,547,227.44 2,547,227.44Investment

Total 1,317,749,772.63 1,317,749,772.63 1,313,910,578.74 1,313,910,578.74

(1).Investment in subsidiaries

√Applicable □Not applicable

Unit: Yuan Currency: RMB Increase or decrease in the current period

Impairment

Impairment allowance minus

Balance at the beginning of the period Provisions at the end of the period Provision for invested units Provision at the beginning of the period Less Others

(Book value) Additional investment Impairment (Book value) Closing balance Investment Others

Prepare balance

Capital

Guizhou Sanli Health Management Co., Ltd.

46,000,000.00 46,000,000.00 Co., Ltd.

Guizhou Nuorun Enterprise Management Consulting

11,746,091.90 11,746,091.90 Consulting Co., Ltd.

Sanli Zhongyue (Shanghai) Marketing

34,561,200.00 34,561,200.00 Planning Co., Ltd.

Guizhou Hanfang Pharmaceutical Co., Ltd.

806,753,493.56 1,245,878.86 807,999,372.42 Company

Xiaoxuan Pharmaceutical Technology (Guizhou)

29,600,000.00 29,600,000.00 Co., Ltd.

Guizhou Dechangxiang Pharmaceutical Co., Ltd.

232,240,681.14 962,724.60 233,203,405.74 Co., Ltd.

Guizhou Haost Biotechnology

105,302,610.41 105,302,610.41 Co., Ltd.

Guizhou Sankang Enterprise Management Co., Ltd.

45,000,000.00 45,000,000.00 Partnership (limited partnership)

Yunnan Wudi Pharmaceutical Co., Ltd.

159,274.29 637,097.14 796,371.43 Ren Company

Sanli Health Industry (Hainan)

500.00 500.00 Limited Liability Company

Total 1,311,363,351.30 2,846,200.60 1,314,209,551.90

(2). Investment in associates and joint ventures

√Applicable □Not applicable

Unit: Yuan Currency: RMB Beginning of the period Less changes in the current period Less investments Closing balance (account balance (book value minus face value of additional investment under the equity method) value) Accurate less Confirmed investments Others report Provisions Others Accurate

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Provisions for investment gains and losses Comprehensive equity issuance and reduction Provision period Capital gains and losses Value-added at the beginning of the period Receipt and liquidation Provisions and balances at the end of the period Liquidity provision balance Adjustment of share amount to full profit

or

profit

Run

1. Joint ventures

Subtotal

2. Joint ventures

Zhejiang Kunyu Medical

Pharmaceutical Technology Co., Ltd. 2,547,227.44 -74,812.90 2,472,414.54 Company

Guizhou Qianlixheng

Biopharmaceutical Entrepreneurship

Investment fund partnership 1,000,000.00 67,806.19 1,067,806.19 partnership (limited

partnership)

Subtotal 2,547,227.44 1,000,000.00 -7,006.71 3,540,220.73Total 2,547,227.44 1,000,000.00 -7,006.71 3,540,220.73

(3). Impairment testing of long-term equity investments

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

4. Operating income and operating costs

(1). Operating income and operating costs

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Amount for the current period Amount for the previous period

Project

revenue cost revenue cost

Main business 377,533,967.02 112,720,288.65 570,859,644.43 163,801,742.77 Other businesses 13,151,095.42 8,866,240.16 2,360,251.49 2,304,474.52Total 390,685,062.44 121,586,528.81 573,219,895.92 166,106,217.29

(2). Decomposition information of operating income and operating costs

√Applicable □Not applicable

Unit: Yuan Currency: RMB

total

Contract classification

Operating income Operating costs

Product type

Including: Respiratory system drugs 360,379,670.59 107,375,057.74 Gynecological drugs

Tonic medication

Cardiovascular and cerebrovascular drugs 15,930,585.38 4,826,469.88

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Orthopedic medications

Other products 1,223,711.05 518,761.03 Classified by operating area

Among them: Northeast China 16,132,140.56 4,197,423.71 North China 40,350,375.81 11,853,474.68 East China 103,593,124.88 31,129,197.58 South China 60,813,090.42 18,260,445.00 Central China 57,873,467.47 17,701,969.89 Northwest Region 16,648,230.14 4,910,169.37 Southwest Region 82,123,537.74 24,667,608.42 Market or customer type

Contract type

Classification by time of transfer of goods

Transferred at a certain point in time 377,533,967.02 112,720,288.65 Transferred within a certain period of time

Total 377,533,967.02 112,720,288.65

Other instructions

□Applicable √Not applicable

(3). Description of performance obligations

□Applicable √Not applicable

(4). Description of allocation to remaining performance obligations

□Applicable √Not applicable

(5). Major contract changes or major transaction price adjustments

□Applicable √Not applicable

Other notes:

None

5. Investment income

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Amount for the current period Amount for the previous period

Long-term equity investment income calculated using the cost method 53,354,106.00

Income from long-term equity investments accounted for using the equity method -7,006.71 -79,548.00 Investment income from disposal of long-term equity investments

Investment income from trading financial assets during the holding period

Dividend income from other equity instrument investments during the holding period 365,231.68 Interest income from debt investments during the holding period

Interest income earned from other debt investments during the holding period

Investment income from the disposal of trading financial assets 154,382.90 88.55 Investment income from the disposal of other equity instrument investments

Investment income from disposal of debt investments

Investment income from disposal of other debt investments

Debt restructuring proceeds

Total 53,501,482.19 285,772.23

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Other notes:

None

6. Others

□Applicable √Not applicable

20. Supplementary information

1. Detailed statement of non-recurring profits and losses for the current period

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Amount Description of the profit and loss from the disposal of non-current assets, including the write-off part of the asset impairment provision 92,043.74 Government subsidies included in the current profit and loss, but closely related to the company’s normal operating business,

Except for government subsidies that comply with national policies and regulations, are enjoyed according to determined standards, and have a lasting impact on the company’s profits and losses 7,246,239.63

In addition to effective hedging business related to the company's normal business operations, non-financial enterprises

Gains and losses from changes in fair value of financial assets and financial liabilities held by the enterprise and gains and losses from disposal of financial assets and financial liabilities 386,736.06

Fund occupation fees charged to non-financial enterprises included in current profits and losses

Gains and losses from entrusting others to invest or manage assets

Profit and loss from external entrusted loans

Loss of various assets due to force majeure factors, such as natural disasters

Reversal of impairment provision for accounts receivable that has been individually tested for impairment

The investment cost for an enterprise to acquire subsidiaries, associates and joint ventures is less than the cost of acquiring the investment.

The investor shall enjoy the income generated from the fair value of the identifiable net assets of the investee.

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

Gains and losses on non-monetary asset exchanges

Debt restructuring gains and losses

One-time expenses incurred by the enterprise due to the discontinuation of relevant business activities, such as job placement

labor expenses, etc.

The one-time impact on the current profit and loss due to adjustments to laws and regulations such as taxation and accounting

ring

One-time confirmation of share-based payment expenses due to cancellation or modification of equity incentive plan

For cash-settled share-based payment, after the vesting date, employee benefits payable

Gains and losses arising from changes in fair value

Changes in the fair value of investment real estate using the fair value model for subsequent measurement

Profit and loss incurred

Gains from transactions where the transaction price appears to be unfair

Profit and loss arising from contingencies unrelated to the company's normal business operations

Custody fee income from entrusted operations

Other non-operating income and expenses other than the above items 6,732,527.84 Other profit and loss items that meet the definition of non-recurring gains and losses

Less: Impact on income tax 2,265,394.15 Impact on minority shareholders’ equity (after tax) 113,297.09

Total 12,078,856.03 For companies that identify items not listed in the "Explanatory Announcement No. 1 on Information Disclosure of Companies that Offer Securities to the Public - Non-recurring Gains and Losses" as non-recurring gains and losses with significant amounts, and define the non-recurring gain and loss items listed in the "Explanatory Announcement No. 1 on Information Disclosure by Companies that Offer Securities to the Public - Non-recurring Gains and Losses" as recurring gains and losses, the reasons should be explained.

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□Applicable √Not applicable

Other instructions

□Applicable √Not applicable

2. Return on net assets and earnings per share

√Applicable □Not applicable

Earnings per share weighted average net assets

Profit for the reporting period Basic earnings per share Diluted earnings per share (%)

(yuan/share) (yuan/share) Net profit attributable to the company’s ordinary shareholders 5.29 0.20 0.20 After deducting non-recurring gains and losses, net profit attributable to the company’s ordinary shareholders

4.52 0.18 0.18 Net profit of common shareholders

3. Differences in accounting data under domestic and foreign accounting standards

□Applicable √Not applicable

4. Others

□Applicable √Not applicable

Chairman: Zhang Hai

Board approval submission date: August 27, 2025

Revision information

□Applicable √Not applicable

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