Guizhou Sanli Pharmaceutical Co., Ltd. 2025 Annual Report

Guizhou Sanli Pharmaceutical Co., Ltd. 2025 Annual Report Company Code: 603439 Company Abbreviation: Sanli Pharmaceutical

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Important tips

1. The company’s board of directors, directors and senior managers guarantee the authenticity, accuracy and completeness of the contents of the 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. Beijing Dehao International Accounting Firm (Special General Partnership) issued a standard unqualified audit report for the company.

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

In 2025, the company's audited net profit attributable to shareholders of the listed company was 46,254,223.69 yuan, and the company's parent company's distributable profit at the end of the period was 766,210,791.85 yuan. In accordance with the "Regulatory Guidelines for Listed Companies No. 3 - Cash Dividends of Listed Companies (Revised in 2025)", the Articles of Association and other relevant provisions, comprehensively considering the current industry development situation, the company's actual operating conditions and debt solvency and other factors, the company's 23rd meeting of the fourth session of the Board of Directors resolved that the company's 2025 The annual profit distribution plan is to distribute profits based on the total share capital registered on the equity registration date for equity distribution (excluding the shares in the company's special repurchase account and the shares to be repurchased and canceled). It is planned to distribute a cash dividend of 0.60 yuan (tax included) to all shareholders for every 10 shares. No bonus shares will be given, and no capital reserve will be converted into share capital. This plan still needs to be submitted to the company's annual shareholders' meeting for review.

As of the end of the reporting period, the parent company had unrecovered losses and its impact on the company’s dividends and other matters

□Applicable √Not applicable

6. Risk Statement for Forward-Looking Statements

√Applicable □Not applicable

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

7. Whether there is any non-operating use 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 annual report disclosed by the company

No

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10. Major Risk Warning

The company's discussion and analysis on the company's future development in the Management Discussion and Analysis in Section 3 of this report describes the challenges, existing risks and countermeasures it may face, and does not constitute the company's substantive commitment to investors. Investors are advised to pay attention to investment risks.

11. Others

□Applicable √Not applicable

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Directory

Section 1 Interpretation......................................................................................................................................5

Section 2 Company Profile and Main Financial Indicators......................................................................................6

Section 3 Management Discussion and Analysis................................................................................................10

Section 4 Corporate Governance, Environment and Society......................................................................................40

Section 5 Important Matters................................................................................................................................58

Section 6 Changes in Shares and Status of Shareholders................................................................................................69

Section 7 Bond-related situations......................................................................................................76

Section 8 Financial Report......................................................................................................................77

Financial statements signed and stamped by the person in charge of the company, the person in charge of accounting work, and the person in charge of the accounting department (accounting supervisor).

Catalog of documents available for inspection: The original audit report containing the seal of the accounting firm and the signature and seal of the certified public accountant.

The original copies of all company documents and announcements publicly disclosed in the media designated by the China Securities Regulatory Commission during the reporting period.

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Section 1 Interpretation

1. Definition

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

Commonly used word definitions

Sanli, Sanli Pharmaceutical, 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 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.

Wudi Pharmaceutical refers to Yunnan Wudi Pharmaceutical Co., Ltd.

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

Qianli Biomedicine Fund refers to Guizhou Qianli Biomedicine Venture Capital Fund Partnership (Limited Partnership) Yuexin Pharmaceutical refers to Hainan Yuexin Pharmaceutical Investment Partnership (General Partnership)

Sanli Charity Foundation, Foundation refers to Guizhou Sanli Charity Foundation

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

(2025)》

The abbreviation of Over The Counter in English 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 December 31, 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

Company’s Chinese name: Guizhou Sanli Pharmaceutical Co., Ltd.

The company’s Chinese abbreviation: Sanli Pharmaceutical

The company's foreign name is GuizhouSanliPharmaceuticalCo., Ltd. The company's foreign name abbreviation SanliPharmaceutical

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 Ju Lingke Contact address of Ju Lingke Xiayun Industrial Park, Pingba District, Anshun City, Guizhou Province Xiayun Industrial Park, Pingba District, Anshun City, Guizhou Province Tel: 0851-38113395 0851-38113395

Fax 0851-38113572 0851-38113572

Email [email protected] [email protected]

3. Basic situation introduction

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

Historical changes of the company’s registered address from No. 104 Guigong Road, Guiyang City, Guizhou Province to Anshun Company, Guizhou Province on December 1, 2015

Xiayun Industrial Park, Pingba District, City

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

Postal code of company office address 561000

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

Email [email protected]

4. Information disclosure and preparation location

"Securities Times": www.stcn.com The media name and website where the company discloses its annual report

"Shanghai Securities News": www.cnstock.com The website of the stock exchange where the company discloses its annual report http://www.sse.com.cn/

The company's annual report is prepared at the company's Securities Affairs Department

5. Brief introduction of company stocks

Company Stock Profile

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

A shares Shanghai Stock Exchange Sanli Pharmaceutical 603439 Guizhou Sanli

6. Other relevant information

Name: Accounting firm hired by Beijing Dehao International Accounting Firm (Special General Partnership)

Office address: Room 519A, 5th Floor, No. 31, Fuchengmenwai Street, Xicheng District, Beijing (domestic)

Name of the signing accountant: Guo Yan, Xu Ruixing

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7. Main accounting data and financial indicators in the past three years

(1) Main accounting data

Unit: Yuan Currency: RMB Current period compared with the same period last year

Main accounting data 2025 2024 2023

Increase or decrease(%)

Operating income 1,702,842,901.68 2,144,385,836.12 -20.59 1,634,977,930.43 Total profit 67,765,454.30 325,025,392.74 -79.15 334,022,471.60 Attributable to shares of listed companies

46,254,223.69 274,027,809.74 -83.12 292,702,869.34 Dong’s net profit

Attributable to listed company shares

Net profit after deducting non-recurring items 26,322,288.36 267,971,194.03 -90.18 245,654,275.27 profit and loss

Cash generated from business activities

164,577,024.37 107,072,584.42 53.71 276,701,405.67 Net cash flow

The end of this period was the same as that of the previous year

End of 2025 End of 2024 End of 2023

Increase or decrease at the end of the period (%)

Attributable to listed company shares

1,445,596,999.40 1,527,340,401.45 -5.35 1,470,311,172.51 Dong’s net assets

Total assets 2,847,922,519.04 3,192,107,890.63 -10.78 2,920,451,107.53

(2) Main financial indicators

Main financial indicators 2025 2024 Increase/decrease for this period compared with the same period last year (%) Basic earnings per share in 2023 (yuan/share) 0.11 0.67 -83.58 0.71 Diluted earnings per share (yuan/share) 0.11 0.67 -83.58 0.71Basic earnings per share after deducting non-recurring gains and losses

0.06 0.66 -90.91 0.60 profit (yuan/share)

Weighted average return on equity (%) 3.11 17.65 A decrease of 14.54 percentage points 21.45 Weighted average net return after deducting non-recurring gains and losses

1.77 17.26 decreased by 15.49 percentage points 18.00 return on assets (%)

Explanation of the company's main accounting data and financial indicators for the previous three years at the end of the reporting period

√Applicable □Not applicable

The decline in total profits, net profits attributable to shareholders of listed companies, and net profits attributable to shareholders of listed companies after deducting non-recurring gains and losses: Mainly due to the impact of market environment factors, the company's product sales have declined, and operating income has declined compared with the same period last year;

The increase in net cash flow generated from operating activities was mainly due to the improvement in the ability to withdraw sales funds in the current period;

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

(1) Net profits in financial reports disclosed in accordance with both international accounting standards and Chinese accounting standards are attributable to shareholders of listed companies.

Differences in net assets

□Applicable √Not applicable

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(2) The net profits in financial reports disclosed in accordance with both overseas accounting standards and Chinese accounting standards are attributable to shareholders of the listed company.

Differences in net assets

□Applicable √Not applicable

(3) Explanation of differences between domestic and foreign accounting standards:

□Applicable √Not applicable

9. Main financial data by quarter in 2025

Unit: Yuan Currency: RMB First quarter Second quarter Third quarter Fourth quarter

(January to March) (April to June) (July to September) (October to December) Operating income 408,589,489.70 293,241,523.69 336,667,398.67 664,344,489.62 Attributable to shareholders of listed companies

41,946,770.84 41,114,192.99 -2,273,990.52 -34,532,749.62Net profit

Attributable to shareholders of listed companies

Net profit after deducting non-recurring gains and losses 38,582,237.18 32,399,870.62 -4,553,556.37 -40,106,263.07

cash flow from operating activities

-15,082,051.92 32,029,372.96 33,116,314.13 114,513,389.20 Net amount

Explanation of differences between quarterly data and disclosed periodic report data

□Applicable √Not applicable

10. Non-recurring profit and loss items and amounts

√Applicable □Not applicable

Unit: Yuan Currency: RMB Note (such as

Non-recurring profit and loss items Amount in 2025 Amount in 2024 Amount in 2023

applicable)

Gains and losses on disposal of non-current assets, including accrued asset deductions

-115,565.58 -251,988.90 47,630,947.06 Offset portion of value preparation

Government subsidies are included in the current profit and loss, but are not related to the company’s normal operations.

Closely related to business operations, in compliance with national policies and regulations, and in accordance with

20,895,408.01 7,117,347.87 10,137,874.60 The determined standards are enjoyed and have a continuous impact on the company’s profit and loss

Except for government subsidies

Except for effective hedging related to the company’s normal business operations,

In addition to value-added businesses, non-financial enterprises hold financial assets and financial

-2,890,368.97 1,391,492.33 1,521,287.90 Gains and losses from changes in fair value of liabilities and disposal fees

Gains and losses arising from financial assets and financial liabilities

Funds collected from non-financial enterprises included in current profits and losses

837,777.78 occupancy fee

Gains and losses from entrusting others to invest or manage assets 365,231.68

Other non-operating income and expenses other than the above items 3,219,051.67 -1,223,393.66 -1,806,296.02 Other profit and loss items that meet the definition of non-recurring gains and losses

Less: Impact on income tax 851,255.31 680,399.03 8,989,478.92 Impact on minority shareholders’ equity (after tax) 325,334.49 661,674.58 2,283,518.33

Total 19,931,935.33 6,056,615.71 47,048,594.07

The company identifies 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" -

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It is a non-recurring profit and loss item with a significant amount, and the "Explanatory Announcement No. 1 on Information Disclosure of Companies that Offer Securities to the Public"

The non-recurring profit and loss items listed in "Non-recurring Profit and Loss" are defined as recurring profit and loss items, and the reasons should be explained.

□Applicable √Not applicable

11. 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

12. Items measured by fair value

√Applicable □Not applicable

Unit: Yuan Currency: RMB Impact on Current Profit Project Name Beginning Balance Closing Balance Changes in the Current Period

Amount

Receivables financing 121,388,452.65 151,989,603.53 30,601,150.88 0.00 Trading financial assets 22,945,081.52 19,925,822.20 -3,019,259.32 155,822.20 Other equity instrument investments 10,000,000.00 10,000,000.00 0.00 0.00

Total 154,333,534.17 181,915,425.73 27,581,891.56 155,822.20

13. Others

□Applicable √Not applicable

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Section 3 Management Discussion and Analysis

1. Business status of the company during the reporting period

(1) 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 include Kaihoujian spray (children's type), Kaihoujian spray, Qijiaoshengbai capsules, gynecological reconstruction pills, anti-cough and phlegm pills, astragalus granules, powerful Gastrodia eucommia capsules, etc. The main related products are as follows:

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.

(2) 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 the procurement plan, the procurement department will inquire from the suppliers who have signed the annual procurement framework contract. After comprehensive consideration of product quality, price, delivery

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After considering time, payment terms and other factors, the two parties will determine the purchase 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

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.

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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 has established a strong marketing system through professional marketing activities such as product marketing, academic exchanges, academic promotion, market research, customer service, and commercial maintenance under the professional promotion model. 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. Industry conditions of the company 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 2025, driven by intensive policies, China's pharmaceutical manufacturing industry will generally show a high-quality development trend centered on innovation-driven, quality improvement and digital transformation. At the policy level, the State Council, the National Medical Insurance Administration, the State Food and Drug Administration and other departments have worked together to systematically deepen the reform of the entire chain from the optimization of medical insurance payment methods to anti-monopoly supervision.

Among specific industry dynamics, the pharmaceutical manufacturing industry is accelerating its transformation towards digital intelligence and greening. The "Implementation Plan for the Digital and Intelligent Transformation of the Pharmaceutical Industry (2025-2030)" issued by seven departments including the Ministry of Industry and Information Technology clearly promotes the integration of artificial intelligence and the pharmaceutical industry chain and improves the resilience of the supply chain. The normalization and expansion of centralized drug procurement (such as the launch of the eleventh batch of national centralized procurement) has forced companies to reduce costs and increase efficiency. The selection rate of over 60% shows that competition is intensifying but tends to be rational. In addition, measures such as the addition of 114 new drugs (including 50 first-class innovative drugs) to the medical insurance catalog and the mandatory implementation of drug traceability codes have jointly promoted the industry's shift from scale expansion to value orientation and strengthened quality, safety and compliance operations.

Overall, in 2025, the structure of the pharmaceutical manufacturing industry will continue to be optimized under the guidance of policies: the clinical application of innovative drugs is accelerated (such as "Several Measures to Support the High-Quality Development of Innovative Drugs"), primary care and chronic disease management are strengthened, and the internationalization of traditional Chinese medicine is accelerated (such as the launch of the China-ASEAN Platform). While the industry is responding to the pressure of centralized procurement to reduce prices, it is cultivating new productivity through digital upgrades and international layout. However, stricter supervision (such as the crackdown on commercial bribery and the "100-day action" of medical insurance funds) also requires companies to improve their compliance capabilities, which indicates that the industry will move towards a more refined and sustainable development stage.

(2) Main industry policies

In 2025, China's pharmaceutical industry has launched a series of major policies in the field of high-quality development. The core features are to deepen the full-chain regulatory reform and strengthen multi-department system coordination. Some of the main policies are as follows:

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", starting from the key links of the entire industry chain, systematically planning a number of important reform measures, major institutional mechanisms, and key tasks to further build a modernized traditional Chinese medicine industry system and promote the high-quality development of the traditional Chinese medicine industry.

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. The fundamental goal is to take the coordinated development of the entire industry chain as the main line, take digital and intelligent transformation as the main direction, take scenario application as the traction, adhere to planning guidance, problem-oriented, classified policy implementation, and systematic promotion, and coordinate and improve the level of digital development and smart supervision of the pharmaceutical industry, with scenario-based,

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The graph-based approach promotes the high-end, intelligent, green and integrated development of the pharmaceutical industry. 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 June 2025, the National Health Commission, together with 12 departments including the Ministry of Education, the Ministry of Industry and Information Technology, and the Ministry of Public Security, jointly issued the "Key Points for Correcting Improper Practices in the Pharmaceutical Purchase and Sales Field and Medical Services in 2025", which proposed 15 key points from four parts: comprehensively strengthening the top-level design of the correction work, continuing to deepen governance in the pharmaceutical purchase and sales field, systematically correcting chaos in medical services, and solidly advancing the implementation of guarantees.

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.

In August 2025, the State Administration for Market Regulation (National Standards Committee) released the "Technical Specifications Related to Convenient Services for Medical Insurance Information Platforms". This standard was organized and developed by the National Medical Insurance Administration. It is the first national standard in the field of medical insurance in my country, marking a milestone breakthrough in the standardization construction of medical insurance in my country. The standard will be implemented from January 1, 2026.

In September 2025, the website of the Central Commission for Discipline Inspection and the National Supervisory Commission released the "Discipline Inspection and Supervision Team of the National Health Commission Focuses on Key Rectifications and Strengthens Promote Correcting and Corruption in the Pharmaceutical Field", which clarified that the next step in correcting corruption in the pharmaceutical field will be to focus on "key minorities", key positions, as well as key areas and links such as pharmaceuticals, high-value consumables, and medical equipment procurement, and strictly investigate work practices and corruption cases with a zero-tolerance attitude.

In September 2025, the State Food and Drug Administration issued the "Special Regulations on the Supervision and Management of the Production of Traditional Chinese Medicines", which will be effective from March 1, 2026. This regulation is a special requirement formulated based on the characteristics of traditional Chinese medicine production, and is a supplement to further strengthen and standardize the production of traditional Chinese medicine and its supervision and management. Focus on the source problems and key links that affect the production and quality of traditional Chinese medicines, propose targeted solutions, focus on the standardized development of traditional Chinese medicines, encourage the accelerated transformation and upgrading of traditional Chinese medicine production, and promote digital and intelligent transformation. The implementation of this regulation will play a positive role in strictly controlling source quality, strengthening the entire process control of traditional Chinese medicine production, improving the quality of traditional Chinese medicine, and developing new quality productivity of traditional Chinese medicine according to local conditions.

In October 2025, the "Recommendations of the Central Committee of the Communist Party of China on Formulating the Fifteenth Five-Year Plan for National Economic and Social Development" was adopted at the fourth plenary session of the 20th Central Committee of the Communist Party of China. During the "15th Five-Year Plan" period, the coordinated development and governance mechanism of medical care, medical insurance and medicine will be improved, and policies for centralized drug procurement, medical insurance payment and the use of surplus funds will be optimized.

In October 2025, the State Administration of Traditional Chinese Medicine issued the "Measures for the Administration of National (Industry) Standards of Traditional Chinese Medicine", which will be implemented from the date of issuance. Traditional Chinese medicine standards include national standards, industry standards, local standards, group standards, and enterprise standards. This management method further strengthens the standardized management of traditional Chinese medicine and leads and promotes the high-quality development of traditional Chinese medicine standards.

In November 2025, the National Health and Medical Commission, together with the National Development and Reform Commission, the Ministry of Industry and Information Technology and five other departments, issued the "Implementation Opinions on Promoting and Standardizing the Development of "Artificial Intelligence + Medical and Health" Applications. The "Implementation Opinions" consist of five parts and propose 24 key applications in 8 directions, including grassroots application of artificial intelligence, clinical diagnosis and treatment, patient services, traditional Chinese medicine, public health, scientific research and teaching, industry governance, and health industry.

In December 2025, the National Medical Insurance Administration issued the "Notice on Issuing the Three-Year Action Plan to Improve the Quality and Efficiency of Medical Insurance Fund Liquidation" to further optimize the settlement management of medical insurance funds, accelerate the construction of a scientific settlement system compatible with the "1+3+N" multi-level medical security system, comprehensively improve the quality and efficiency of medical insurance fund liquidation, and continue to empower the development of pharmaceutical institutions.

In February 2026, eight departments including the Ministry of Industry and Information Technology jointly issued the "Implementation Plan for the High-Quality Development of Traditional Chinese Medicine Industry (2026-2030)". The plan is consistent with the previous high-quality development layout of traditional Chinese medicine at the national level: the "Opinions on Improving the Quality of Traditional Chinese Medicine and Promoting the High-Quality Development of the Traditional Chinese Medicine Industry" issued by the General Office of the State Council in 2025. "See" has built a quality assurance system from source to end, and this plan focuses on the "industrial" link to further refine the implementation path of traditional Chinese medicine production and manufacturing, technological innovation, and industrial chain collaboration. It echoes the "Implementation Plan for the Digital and Intelligent Transformation of the Pharmaceutical Industry (2025-2030)" and promotes the deep integration of digital intelligence technology and the traditional Chinese medicine industry.

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In February 2026, the National Health Commission and other departments officially released the "Measures for the Management of the National Essential Drug List". The establishment and implementation of the national essential drug system has played a leading role in eliminating the mechanism of using drugs to supplement medical care, improving the centralized drug procurement system, implementing consistency evaluations of generic drug quality and efficacy, ensuring supply and stable prices of shortage drugs, and standardizing rational clinical drug use. It has played a fundamental role in solving the problem of balance and accessibility of clinical drugs. The selection and adjustment of essential drugs adhere to the principle of paying equal attention to both Chinese and Western medicine, using both Chinese and Western medicine, and being clinically preferred, and are reasonably determined with reference to international experience.

In March 2026, the "Outline of the 15th Five-Year Plan for National Economic and Social Development of the People's Republic of China" was officially released. During the 15th Five-Year Plan period, the pharmaceutical industry will be driven by the development of new productive forces, build biomedicine into an emerging pillar industry, and focus on original innovation in core pharmaceutical and device technologies. We must tackle key problems, deepen the collaborative reform of the three medicines, promote the green upgrading of industrial digital intelligence and the upright innovation and international development of traditional Chinese medicine, strengthen the quality and safety supervision of the entire drug chain, improve the innovation support system, use high-quality industrial development to help build a healthy China, and realize the results of pharmaceutical development to benefit people's livelihood.

The implementation of Article 75 of the "Special Regulations on the Registration and Management of Traditional Chinese Medicines" of the State Food and Drug Administration has entered the final window period. This regulation, known in the industry as the "life and death clause" of Chinese patent medicines, is clear. From July 1, 2023, it will be 3 years old. If any of the instructions for Chinese patent medicines is still marked as "unclear", the re-registration application will not be approved in accordance with the law.

By improving the credit evaluation system, dynamically adjusting the medical insurance catalog (focusing on clinical needs such as children's drugs and rare disease drugs), supporting the development of innovative drugs, and exploring payment methods for traditional Chinese medicine's dominant diseases, the National Medical Insurance Administration and other departments strive to improve drug accessibility, reduce the public's drug burden, and build a "three-medicine" collaborative governance mechanism. On the other hand, multi-department joint rectification actions in the pharmaceutical field, as well as strict rectification of unhealthy practices such as commercial bribery, are committed to purifying the market environment and guiding enterprises to return to a sound development track based on quality and innovation, thereby comprehensively ensuring the drug safety and rights of the people.

3. Discussion and analysis of operating conditions

In 2025, the momentum of global economic recovery will diverge, geopolitical conflicts will continue to evolve, international trade friction will intensify, and the complexity and uncertainty of the external environment will further increase. The domestic macro-economy adheres to the policy orientation of stabilizing growth, promoting transformation, and benefiting people's livelihood. The economic operation is generally stable, and high-quality development is solidly advanced. According to the National Bureau of Statistics' "Statistical Bulletin of the National Economic and Social Development of the People's Republic of China in 2025", the annual GDP exceeded 140 trillion yuan, a year-on-year increase of 5.0%. Consumption and industrial upgrading worked together to provide support for the stable operation of the pharmaceutical industry.

The pharmaceutical and health industry is in a critical cycle of policy deepening, structural adjustment and innovation acceleration. The 2025 pharmaceutical industry economic operation data of the China Pharmaceutical Enterprise Management Association shows that the added value of the pharmaceutical industry above designated size in 2025 will increase by 3.3% year-on-year, operating income will decrease by 0.6% year-on-year, and total profits will increase by 1.4% year-on-year. The industry as a whole has bottomed out and is rebounding, showing the characteristics of intensified structural differentiation, prominent leading effect, and enhanced innovation drive. At the policy level, the state organizes the normalization and institutionalization of the centralized procurement of medicines, and the joint procurement of Chinese patent medicines and traditional Chinese medicine pieces has been fully implemented, and the centralized procurement rules have been optimized to stabilize prices, maintain quality, and improve quality and efficiency; the policy of revitalizing and developing traditional Chinese medicine continues to increase, and the General Office of the State Council's "Opinions on Improving the Quality of Traditional Chinese Medicine and Promoting the High-Quality Development of the Traditional Chinese Medicine Industry" (Guobanfa [2025] No. 11) With implementation, the reform of traditional Chinese medicine registration classification and review and approval mechanism has been deepened, and the "three-in-one" review system has been accelerated; the medical insurance catalog has been dynamically adjusted to favor innovative drugs and clinically needed varieties, the DRG/DIP payment reform has been fully covered, and commercial health insurance and basic medical insurance have formed complementary supports, forcing the industry to accelerate product upgrades, channel optimization, and cost control. 2025 is the final year of the "14th Five-Year Plan" and the year of high-quality development and transformation of the traditional Chinese medicine industry. The entire industry will reshape the competitive landscape through compliance operations, intensive development, and innovative breakthroughs.

Against the background of deep adjustments in the industry and changes in the market environment, 2025 has become the reporting period with the most concentrated operating pressure and the most severe challenges since the company's listing. The company faces the combined effects of multiple internal and external factors: First, the adjustment of the macroeconomic environment, residents' consumption willingness and medical demand structure have undergone phased changes; second, industry competition has intensified and channel changes have occurred. The company's OTC self-operated sales team, which has been rapidly expanding since 2024, is still in the performance climbing period, and the early sales resource investment and performance transformation have failed to form an effective match, which has a negative impact on the overall operation. Third, the operating performance of its subsidiaries (mainly Kamfang Pharmaceutical) fell short of expectations due to factors such as market competition and product structure. According to the "Asset Valuation Report" issued by the evaluation agency, there was an impairment of goodwill in the relevant asset groups of Kamfang Pharmaceutical. The company made a large amount of impairment provisions for the relevant goodwill, which had a greater impact on the profit level of the current period.

Affected by the resonance of the above multiple factors, the company is facing periodic pressure on its operating performance. The company's management attaches great importance to it, conducts a comprehensive review, and deeply realizes that this round of performance fluctuations is not only an objective reflection of changes in the external environment and industry cycle adjustments, but also a periodic adjustment in the company's marketing system upgrade and industrial layout optimization process. It is found that the company has room for improvement in operational efficiency, resource allocation, subsidiary management and control, etc. In 2025, the company achieved operating income of 1.703 billion yuan, a year-on-year decrease of 20.59%, net profit attributable to owners of the parent company of 46.2542 million yuan, a year-on-year decrease of 83.12%, non-net profit attributable to owners of the parent company of 26.3223 million yuan, a year-on-year decrease of 90.18%, and owner's equity attributable to shareholders of listed companies of 1.446 billion yuan, a decrease of 5.35% from the beginning of the period.

Facing the complex industry environment and staged operating challenges in 2025, the company's management adheres to the strategic focus and takes "improving quality and efficiency, consolidating the foundation" as the core to build a "Sanli Pharmaceuticals, Genuinely Good Medicines" brand building system, closely focusing on the dual products of respiratory line and silver hair line

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product strategy, complete the systematic planning of brand positioning, symbol system, discourse system and communication strategy, and continue to make efforts in key areas such as production technology upgrades, industrial chain layout, R&D innovation breakthroughs, etc., to lay a solid foundation for the company's long-term development. The key tasks are as follows:

(1) Channel system optimization, transformation from scale expansion to efficiency improvement

In response to the management challenges and performance bottlenecks caused by the rapid expansion of OTC channels in 2024, the company will launch a systematic optimization of the marketing system in 2025, focusing on the three major directions of "intensive terminal cultivation, improving human efficiency, and implementing classified policies". The company has always regarded the OTC channel as its core operating position and long-term strategic focus. This year, it has carried out systematic optimization and iteration of operational tactics, abandoned the traditional extensive human expansion model, and fully shifted to lean operations with per capita efficiency as the core, promoting the transformation of the marketing system into new quality productivity, and laying a solid foundation for long-term and high-quality development.

In terms of OTC channels, the company has established an assessment system centered on terminal output and per capita efficiency, decisively optimized the personnel structure of the sales team, and prepared for the subsequent transformation of "efficient team + precise delivery". By implementing hierarchical management of chain pharmacies, independent pharmacies and third-party terminals, we focus on core markets, core varieties and high-value terminals to comprehensively improve resource utilization efficiency. In terms of business system construction, the company strives to standardize the channel price system and circulation order, carry out full-link inventory sorting and elimination work, stabilize the profit expectations of partners at all levels, and lay a solid foundation for ensuring a virtuous cycle and sustainable growth of terminal sales. The prescription channel continues to deepen academic development, focusing on the promotion of evidence-based medicine of core varieties in second-level and above hospitals, and consolidating the academic influence of hospital terminals through professional academic exchanges, clinical data sharing and other activities. E-commerce channels have deepened cooperation with mainstream platforms such as JD Health and Alibaba Health to build a channel layout of "offline intensive cultivation + online empowerment" and broaden product access paths.

(2) Consolidate core product advantages and lay the foundation for brand building.

Based on the future development trend of the pharmaceutical market and the company's current market foundation, variety characteristics and team capabilities, the company will focus its business core on the respiratory line product group and silver hair line product group, so as to effectively leverage the company's existing market resources, team capabilities and channel category advantages. On the basis of consolidating its position in the segmented market, it will drive a series of products through its flagship products, deepen the foundation of the segmented market, build a professional brand image in the respiratory line and silver hair line market, and lay a solid foundation for subsequent systematic brand operations.

As the core brand of the company's respiratory line, the Throat Sword series products continue to lead the market segment of Chinese patent medicine sprays for children's throat diseases with clear clinical positioning and stable product efficacy, and the market share in hospitals and retail terminals is firmly at the forefront. During the reporting period, the company further completed market research on respiratory products, deeply explored the needs of target customer groups, sorted out the core values ​​of the brand, formulated precise communication strategies, and made comprehensive preparations for large-scale brand promotion. In addition, the company has a rich reserve of approval documents that are consistent with the "silver hair economy". The core varieties of the silver hair line are represented by Qijiao Shengbai Capsules, Astragalus Granules, Zhisu Huatan Pills, Wudidan Capsules and other products for replenishing qi and blood, postoperative rehabilitation, long-term and chronic diseases, and middle-aged and elderly orthopedics. The company has completed the sorting, demand research and category development planning of silver hair products, thereby establishing a dual-line marketing system for respiratory lines and silver hair lines.

In 2025, the company strengthened the organizational system and capacity building of the marketing department. Facing the new situation and new challenges, the company established the business theory of "making medicines with real materials and selling medicines with genuine goods and prices", clarified the scientific expression of products of "good medicinal materials, good technology, and good efficacy", and gradually built a "genuinely good medicine" brand construction and implementation system, so that end patients can experience "accessible medicines, reliable efficacy, and sensible services." In the future, the company will carry out online and offline media promotions, comprehensively implement brand communication, user operations, scene promotion and other work, continue to amplify brand influence and enhance user loyalty.

(3) Intelligent manufacturing deepens and production technology continues to be upgraded.

The company continues to promote the intelligentization and standardization of the production end, and the synergy of each production base has been significantly improved. Dechangxiang completed the intelligent transformation of the pill production line. Through core process optimization and equipment upgrading, pill molding efficiency and appearance quality have been greatly improved, and production capacity has achieved leapfrog growth. Kampo Pharmaceutical has successfully overcome the problems of ingredient compatibility and stability in effervescent tablet preparation technology, and through multiple rounds of stabilization The inspection and verification have laid a technical foundation for the industrialization of new preparations; the intelligent chemical factory of Sanli headquarters has completed the strategic integration of granule production capacity, the digital production management system has continued to be upgraded, the stability and controllability of all types of granule production have been significantly enhanced, and the advantages of large-scale production have further emerged.

In terms of quality control, the company has linked up with the three major production bases to improve the quality management system for the entire drug life cycle. It has taken the lead in responding to national regulations to complete the revision of key product instructions, and has systematically built an adverse reaction monitoring and risk warning mechanism to achieve full-chain quality control from raw material procurement, production process to terminal delivery. By strictly implementing GMP standards and strengthening key process parameter monitoring and quality traceability management, we ensure safe and stable product quality and provide a solid guarantee for the company's brand reputation.

(4) The layout of the entire industrial chain is advanced, and upstream planting has achieved initial results.

The company continues to promote the entire industry chain layout strategy from the cultivation and trade of Chinese medicinal materials to the research and development, production and sales of Chinese patent medicines. During the reporting period, the upstream planting business made substantial progress, and the GAP base certification work was steadily promoted around the key raw materials of core products such as Phellodendron cypress, cinnabar root, and astragalus. The standardized astragalus (GAP) planting base jointly built by Hanfang Pharmaceutical and Longxi County Chengkang Traditional Chinese Medicine Farmers Cooperative in Gansu has been completed. Conducting research on key technologies for seed selection and planting of the ethnic medicinal material Cinnabar root, a set of mature planting technical specifications has been formed, taking a step closer to ensuring the stability and safety of the supply of core raw materials.

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(5) R&D and innovation achieved important phased results

In terms of research and development, the company made a number of important developments during the reporting period:

In terms of post-marketing research, (1) the multi-center randomized double-blind clinical study of Kaihoujian Spray in the treatment of acute pharyngitis (heat syndrome in the lung and stomach) was successfully completed. The results of the study showed that the disappearance rate of pharyngeal pain (dysphagia) after the medication was significantly better than that of the control group , the test group was more effective than the control group; after a fixed period of medication, the onset of sore throat in the test group was significantly higher than that of the control group; the improvement in the total pharyngeal signs evaluation score and pharyngeal mucosal congestion score were both better than those in the control group; and there were no adverse reactions throughout the process, and the safety was good. The above-mentioned high-quality multi-center clinical evidence further consolidates the academic and scientific nature of the Kaithroat Sword brand. (2) A multi-center randomized double-blind clinical study of Kaihoujian Spray (children's type) for the treatment of acute pharyngitis-tonsillitis in children was officially launched during the reporting period. It was led by the First Affiliated Hospital of Henan University of Traditional Chinese Medicine and 10 centers jointly participated, which will further consolidate the clinical value of the children-specific variety. (3) The post-marketing quality standard improvement research, pharmacodynamic research and post-marketing re-evaluation research of core products such as Qijiao Shengbai Capsules, Zhisou Huatan Pills, and Fukezao Pills continue to advance, and a number of topics have been concluded in stages, which has systematically improved the quality control level of the company's products and the evidence-based medical evidence system.

In terms of the layout of innovative traditional Chinese medicines, (1) the SL&GDPU-001 project (category 1.2 new traditional Chinese medicines, subdivided into liver protection and prevention and treatment of fibrosis), which the company cooperated with Guangdong Pharmaceutical University, was officially launched during the reporting period. Intellectual property transfer and pharmaceutical research are progressing in an orderly manner. It is planned to subsequently promote pharmaceutical research and CMC research and start non-clinical research. (2) The company cooperates with Hainan University on the HXW2324 compound (preparation) project (the subdivision is anti-Alzheimer's disease). Hainan University is currently conducting verification of the efficacy of candidate compounds. The research and development of innovative traditional Chinese medicine drugs are all early-stage projects, mainly to prepare reserves for the company to build a future-oriented innovative drug research and development pipeline.

(6) Goodwill impairment and annual performance description

The company will complete the controlling acquisition of Kamfang Pharmaceutical in 2023 and form goodwill. Affected by factors such as intensified competition in the Chinese patent medicine industry, medical insurance fee controls, and product structure adjustments, Kampo Pharmaceutical's operating performance in 2025 was lower than expected, and the recoverable amount was lower than the book value. In accordance with the relevant provisions of "Accounting Standards for Business Enterprises No. 8 - Asset Impairment", the company conducted an impairment test on the consolidated goodwill and made a large amount of goodwill impairment provision. The above-mentioned goodwill impairment loss has a significant impact on the company's net profit attributable to the parent company in 2025, and is the core reason for the sharp decline in performance this year.

The company's management will take this as an important opportunity to effectively improve the post-merger integration management mechanism, increase the market expansion of Kampo Pharmaceutical's core products, and push Kampo Pharmaceutical's operating performance onto the track of recovery as soon as possible.

The phased challenges in 2025 not only expose the areas for improvement in the company's rapid development process, but also allow the company to more clearly define the core direction of "high-quality development". In the future, the company will continue to deepen various key tasks, continuously improve operational efficiency, product competitiveness and industrial chain resilience, and reward shareholders and investors with more stable development.

4. 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 a development history of more than 120 years. It is the earliest pharmaceutical factory in Guizhou and the earliest existing industrial manufacturing enterprise in Guizhou. In 2024, it won many honors such as Chinese Time-honored Brand, National High-tech Enterprise, and County-level Intangible Cultural Heritage Workshop; in 2025, it won the Guizhou Award The company has been recognized as a provincial key specialized and new small and medium-sized enterprise. The special processing techniques of "Aristolochia", the special techniques of wrapping "Angong Niuhuang Pills" with gold, and the special techniques of ironing "whip" medicinal materials and many other traditional techniques mastered have been selected into the ninth batch of representative projects of county-level intangible cultural heritage in Xiuwen County. Invincible Pharmaceuticals originated in the late Ming Dynasty and has a history of more than 300 years. It is a "Chinese Time-honored Brand" enterprise awarded by the Ministry of Commerce of the People's Republic of China. 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" orthopedic series of drugs. In 2013 In December, it was awarded the "Provincial Intangible Cultural Heritage" commendation. It is a high-tech enterprise, recognized by the Yunnan Provincial Expert Grassroots Scientific Research Workstation, and passed three international management system certifications (ISO9001\ISO45001\ISO14001) and the assessment of digital transformation of small and medium-sized enterprises.

Kamfang Pharmaceutical was rated as Guizhou Province’s Specialized, Special and New Little Giant Cultivation Enterprise, Guizhou’s Top 100 Manufacturing Enterprises and Growth Star Enterprise. It also became the first enterprise in Guizhou Province to pass the GAP extended inspection of Chinese medicinal materials. Its core product Qijiao Shengbai Capsule was approved by the National Level 2 Protection of Traditional Chinese Medicine. Variety; In 2025, it was awarded the title of Green Supply Chain Management Enterprise at the Guiyang City and Guizhou Province levels, passed three international management system certifications (ISO9001\ISO45001\ISO14001), and was rated as an outstanding enterprise in Guizhou Province.

Sanli Pharmaceutical was awarded the title of Guizhou Province's specialized and new small and medium-sized enterprises, ranked 45th among the TOP100 traditional Chinese medicine companies in the Chinese pharmaceutical market in the "China Pharmaceutical R&D Blue Book", 2025 China's Famous Consumer Products, Top 100 Guizhou Enterprises, Top 100 Guizhou Private Enterprises, 2025 Top 100 manufacturing enterprises in Guizhou in 2024, Guizhou Province Excellent Enterprise in 2024-2025, Guizhou Province Green Supply Chain Management Enterprise, Guizhou Province Patent Award Silver Award, Anshun City Private Enterprise with Outstanding Contribution, 2026 Guizhou Province May Day Labor Award Planned Recognition Object and many other honors, etc.

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The product was rated as a famous brand product in Guizhou Province, and the trademark was rated as a famous trademark in Guizhou Province. It was also selected into the national intellectual property demonstration enterprise creation target, Guizhou Province Doctoral Innovation Station (2025-2028), and the 2025 Guizhou Province Green Manufacturing List.

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 medicine. It is easy to carry and easy to use. It does not require any auxiliary conditions and can be administered at any time. The medicine 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. Kaihoujian 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 Pharmaceutical and its subsidiaries have a total of 21 GMP production lines in 16 dosage forms including sprays, granules, capsules, and pills, and 166 drug approval numbers, including 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 that the Chinese people truly trust". 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

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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 41 years old, and 66.67% of them have graduate 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 40 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.

5. Main operating conditions during the reporting period

During the reporting period, the company faced the combined effects of multiple internal and external factors: First, the adjustment of the macroeconomic environment, residents' consumption willingness and medical demand structure experienced phased changes; second, intensified industry competition coupled with channel changes, the company's rapidly expanding OTC self-operated sales team since 2024 is still in the performance climbing period, and the early sales resource investment and performance transformation failed to form an effective match, which has a negative impact on the overall The growth of overall revenue has formed periodic constraints; third, the operating performance of its subsidiaries (mainly Kamfang Pharmaceutical) has not met expectations due to factors such as market competition and product structure. According to the "Asset Assessment Report" issued by the evaluation agency, there is an impairment of goodwill in the relevant asset groups of Kamfang Pharmaceutical. The company has made a large amount of impairment provisions for the relevant goodwill, which has a greater impact on the profit level of the current period.

In 2025, the company achieved operating income of 1.703 billion yuan, a year-on-year decrease of 20.59%, net profit attributable to owners of the parent company of 46.2542 million yuan, a year-on-year decrease of 83.12%, non-net profit attributable to owners of the parent company of 26.3223 million yuan, a year-on-year decrease of 90.18%, and owner's equity attributable to shareholders of listed companies of 1.446 billion yuan, a decrease of 5.35% from the beginning of the period.

(1) Main business analysis

1. Analysis table of changes in relevant items of the income statement and cash flow statement

Unit: Yuan Currency: RMB

Item Number for the current period Number for the same period last year Change ratio (%) Operating income 1,702,842,901.68 2,144,385,836.12 -20.59% Operating costs 511,485,032.02 649,987,094.24 -21.31% Sales expenses 800,918,155.93 941,944,254.20 -14.97% Administrative expenses 147,384,803.38 147,412,607.70 -0.02% Financial expenses 7,219,186.08 10,659,965.16 -32.28% Research and development expenses 27,913,455.39 46,503,580.21 -39.98% Net cash flow from operating activities 164,577,024.37 107,072,584.42 53.71% Net cash flow from investing activities -228,435,323.29 -102,998,551.21 Not applicable Net cash flow from financing activities -21,567,355.11 -100,601,266.76 Not applicable Explanation of reasons for changes in operating income: Affected by market environment factors, the company’s product sales decreased

Explanation of reasons for changes in operating costs: due to decrease in operating income

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

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 R&D expenses: due to the company's early R&D projects being completed one after another, new R&D projects are still in the early stages, and expenditures decreased.

Explanation of reasons for changes in net cash flow from operating activities: The increase in net cash flow from operating activities is mainly due to the improvement in the ability to withdraw sales funds in the current period.

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

Detailed description of major changes in the company's business type, profit composition or profit sources during the current period

□Applicable √Not applicable

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2. Revenue and cost analysis

√Applicable □Not applicable

During the reporting period, the company achieved main business income of 1,701,984,294.17 yuan, a year-on-year decrease of 20.61%; main business costs incurred were 510,823,351.49 yuan, a year-on-year decrease of 21.39%. See the analysis table below for details.

(1). Main business breakdown by industry, product, region, and sales model

Unit: Yuan Currency: RMB Main business by industry

Business success

operating income

Gross profit margin Year-on-year increase or decrease Gross profit margin increased or decreased by industry Operating income Operating cost Increased from previous year

(%) Annual increase or decrease (%)

minus (%)

(%)

Pharmaceutical manufacturing industry 1,701,984,294.17 510,823,351.49 69.99 -20.61 -21.39 Increase of 0.30 percentage points Main business breakdown by product

operating income

operating costs

Gross profit margin is higher than revenue. Gross profit margin is increased or decreased by product compared with the previous year. Operating income Operating cost is higher than the previous year.

(%) Annual increase or decrease (%)

minus (%)

(%)

Respiratory system drugs 1,093,122,284.14 309,986,405.09 71.64 -24.85 -27.82 Increased by 1.16 percentage points Supplementary drugs 296,403,181.46 75,415,858.46 74.56 -21.69 -20.01 Reduce the use of gynecological drugs by 0.53 percentage points 134,584,639.77 23,701,790.56 82.39 19.09 19.75 Reduce the use of orthopedic drugs by 0.10 percentage points 46,448,654.23 18,917,396.28 59.27 -6.93 -21.69 Cardiovascular and cerebrovascular drug use increased by 7.67 percentage points 50,768,731.53 17,288,089.19 65.95 18.89 10.41 Medicinal material trade increased by 2.62 percentage points 53,291,342.73 51,942,060.68 2.53 36.92 35.21 Increased by 1.23 percentage points Others 27,365,460.31 13,571,751.23 50.41 -58.65 -51.60 Decreased by 5.87 percentage points Main business by region

Business success

operating income

Gross profit margin Year-on-year increase or decrease Gross profit margin increased or decreased by region Operating income Operating cost Increased from previous year

(%) Annual increase or decrease (%)

minus (%)

(%)

Northeast China 80,495,762.38 20,683,265.65 74.31 -27.66 -35.58 An increase of 3.16 percentage points North China 206,805,573.72 49,283,870.72 76.17 -10.66 -15.68 Increase by 1.42 percentage points East China 458,492,057.32 128,653,875.04 71.94 -23.87 -22.84 Decrease 0.37 percentage points South China 237,894,732.61 65,226,915.61 72.58 -13.49 -22.26 An increase of 3.09 percentage points. Central China 277,408,458.84 76,568,857.55 72.40 -30.03 -33.05 An increase of 1.24 percentage points. Northwest China 81,352,909.74 21,969,678.02 72.99 -31.55 -33.96 Increased by 0.99 percentage points Southwest Region 359,534,799.56 148,436,888.90 58.71 -11.98 -7.79 Decreased by 1.88 percentage points Note: Other subjects listed by product in 2024 include trade in medicinal materials, and trade in medicinal materials will be listed separately in 2025.

Description of the main business by industry, product, region and sales model

South China includes Guangdong, Guangxi, Hainan and other provinces and regions; Central China includes Henan, Hubei, Hunan, Jiangxi and other provinces; East China includes Shanghai, Jiangsu, Zhejiang, Anhui, Fujian, Shandong and other provinces and cities; North China includes Beijing, Tianjin, Henan, etc. The provinces, autonomous regions and municipalities in the north, Shanxi, and Inner Mongolia, the southwest includes provinces and cities such as Sichuan, Chongqing, Guizhou, and Yunnan, the northwest includes provinces and regions such as Shaanxi, Gansu, Ningxia, Qinghai, and Xinjiang, and the northeast includes provinces such as Liaoning, Jilin, and Heilongjiang.

(2). Production and sales analysis table

√Applicable □Not applicable

Production volume ratio Sales volume ratio Inventory volume ratio Main products Unit Production volume Sales volume Inventory volume

Increase/decrease in the previous year Increase/decrease in the previous year

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(%) (%) (%) Respiratory system medicine box 45,860,888.00 52,295,055.00 7,662,558.00 -44.30 -28.97 -43.95 Supplementary medicine box 10,955,707.00 9,065,353.00 3,390,369.00 -8.72 -20.99 190.75 Gynecological medicine box 5,386,128.00 5,225,888.00 1,423,626.00 -1.06 6.17 26.51 Orthopedic medicine box 2,682,445.00 2,720,340.00 265,561.00 -9.67 -10.07 -11.67 Cardiovascular and cerebrovascular medicine box 2,089,350.00 2,141,471.00 293,051.00 5.99 14.92 -14.33 Medicinal materials trade kg 1,911,376.94 1,530,215.44 381,161.50 28.46 55.98 -24.81Other boxes 2,267,817.00 1,931,004.00 914,538.00 -61.24 -62.91 -58.09

Description of production and sales

None

(3). Performance of major purchase contracts and major sales contracts

□Applicable √Not applicable

Performance of major sales contracts signed as of this reporting period

□Applicable √Not applicable

Performance of major procurement contracts signed as of this reporting period

□Applicable √Not applicable

(4). Cost analysis table

Unit: Yuan Currency: RMB Industry Situation

Amount for the current period as a percentage of the same period last year

Cost composition Same period as last year Amount by industry Current period Total cost Amount for the same period last year % of total cost

Project Period Change Ratio Ratio (%) Ratio (%)

Example (%) Material cost 409,511,265.74 80.17 557,852,079.11 85.85 -26.59 Medicine

Direct labor 23,054,573.07 4.51 25,380,247.69 3.91 -9.16 Manufacturing industry

Manufacturing expenses 78,257,512.68 15.32 66,587,605.82 10.25 17.53 based on product conditions

Amount for the current period as a percentage of the same period last year

Cost composition Same period as last year Amount by product Current period Total cost Amount for the same period last year % of total cost

Project Period Change Ratio Ratio (%) Ratio (%)

Example (%) Material cost 262,238,039.79 51.34 385,501,030.36 59.32 -31.97 Respiratory system

Direct labor 10,713,550.59 2.10 11,552,443.26 1.78 -7.26 Medication

Manufacturing expenses 37,034,814.71 7.25 32,314,201.12 4.97 14.61Material expenses 50,451,381.39 9.88 73,257,187.75 11.27 -31.13 Supplementary medicines Direct labor 6,633,959.51 1.30 7,314,796.84 1.13 -9.31Manufacturing expenses 18,330,517.56 3.59 13,673,449.98 2.10 34.06Material expenses 11,563,997.27 2.26 12,384,815.21 1.91 -6.63 Gynecological drugs Direct labor 2,994,006.70 0.59 2,651,469.99 0.41 12.92 Manufacturing expenses 9,143,786.59 1.79 4,894,452.48 0.75 86.82 Material expenses 13,317,922.82 2.61 17,309,105.04 2.66 -23.06 Orthopedic drugs Direct labor 525,726.26 0.10 583,975.14 0.09 -9.97 Manufacturing expenses 5,073,747.20 0.99 6,263,352.42 0.96 -18.99

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Material costs 13,332,713.00 2.61 13,536,398.53 2.08 -1.50 Cardiovascular and cerebral vascular

Direct labor 779,094.14 0.15 451,665.39 0.07 72.49 Medication

Manufacturing expenses 3,176,282.05 0.62 1,690,296.65 0.26 87.91 Material expenses 51,942,060.68 10.17 38,414,455.86 5.91 35.21 Medicinal materials trade Direct labor

manufacturing overhead

Material costs 6,665,150.79 1.30 17,449,086.36 2.69 -61.80 Others Direct labor 1,408,235.87 0.28 2,825,897.07 0.43 -50.17 Manufacturing expenses 5,498,364.57 1.08 7,751,853.17 1.19 -29.07

Cost analysis and other explanations

None

(5). Changes in the scope of consolidation caused by changes in the equity of major subsidiaries during the reporting period

√Applicable □Not applicable

Company name, method of increase or decrease, shareholding ratio, time of change

Xiaoxuan Pharmaceutical Technology (Guizhou) Co., Ltd. For sale 57.48% 2025-07-07

Guizhou Sanli Pharmaceutical Co., Ltd. Established 100% 2025-10-23

(6). Significant changes or adjustments to the company’s business, products or services during the reporting period

□Applicable √Not applicable

(7). Major sales customers and major suppliers

Customers or suppliers controlled by the same controller are deemed to be the same customer or supplier for consolidated presentation, except those under the actual control of the same state-owned asset management institution.

Description of the following customer and supplier information consolidated and presented according to the same control standards

None

A. The company’s main sales customers and main suppliers

√Applicable □Not applicable

The sales of the top five customers were RMB 785.6126 million, accounting for 46.16% of the total annual sales; among the sales of the top five customers, the sales of related parties were RMB 0,000, accounting for 0 of the total annual sales.

The purchasing amount of the top five suppliers was 205.0438 million yuan, accounting for 59.32% of the total annual purchasing amount; among the purchasing amount of the top five suppliers, the related party purchasing amount was 0.0 million yuan, accounting for 0.0 million yuan of the total annual purchasing amount.

B. During the reporting period, the sales ratio to a single customer exceeds 50% of the total, and there are new customers among the top 5 customers or they are heavily dependent on a few customers.

√Applicable □Not applicable

Unit: 10,000 yuan Currency: RMB serial number Customer name Sales Proportion of total annual sales (%) 1 Customer 1 27,302.14 16.04 2 Customer 2 22,986.25 13.51 3 Customer 3 14,049.30 8.25 4 Customer 4 7,915.13 4.65 5 Customer 5 6,308.44 3.71 During the reporting period, the proportion of purchases from a single supplier exceeds 50% of the total, there are new suppliers among the top 5 suppliers, or the situation is heavily dependent on a few suppliers.

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√Applicable □Not applicable

Unit: 10,000 yuan Currency: RMB serial number Supplier name Purchase amount Proportion of total annual purchases (%) 1 Supplier 1 11,658.15 33.73 2 Supplier 2 5,185.66 15.00 3 Supplier 3 1,647.90 4.77 4 Supplier 4 1,076.09 3.11

5 Supplier 5 936.58 2.71

C. The company’s stocks were subject to delisting risk warnings or other risk warnings during the reporting period

Top five sales customers

□Applicable √Not applicable

Top five suppliers

□Applicable √Not applicable

D. The company had trading business income during the reporting period

√Applicable □Not applicable

Unit: Yuan Currency: RMB The operating income of the current period compared with the previous year's trading business development The operating income of the current period The operating income of the previous period

Increase/decrease in the same period (%) medicinal materials trade 53,291,342.73 38,921,122.04 36.92

The top five sales customers whose trading business accounts for more than 10% of operating income

□Applicable √Not applicable

The top five suppliers whose trading business revenue accounts for more than 10% of operating revenue

□Applicable √Not applicable

Other notes:

None

3. Cost

√Applicable □Not applicable

For details on the reasons for the changes, please refer to "(1) Main business analysis" of "V. Main operating conditions during the reporting period".

4. R&D investment

(1). R&D investment status table

√Applicable □Not applicable

Unit: Yuan Currency: RMB Expenditure R&D investment for the current period 27,913,455.39 Capitalized R&D investment for the current period

Total R&D investment 27,913,455.39 Proportion of total R&D investment in operating income (%) 1.64 Proportion of capitalized R&D investment (%) -

(2). R&D personnel status table

√Applicable □Not applicable

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The number of R&D personnel in the company 202 The number of R&D personnel as a proportion of the total number of people in the company (%) 10.70

Educational structure of R&D personnel

Academic qualification structure category Academic qualification structure Number of people

Doctoral students 0 Master students 14 Undergraduate students 127 College students 43 High school students and below 18

Age structure of R&D personnel

Age structure category Age structure number of people

Under 30 years old (excluding 30 years old) 85 30-40 years old (including 30 years old, excluding 40 years old) 83 40-50 years old (including 40 years old, excluding 50 years old) 28 50-60 years old (including 50 years old, excluding 60 years old) 5 60 years old and above 1

(3).Situation description

□Applicable √Not applicable

(4). Reasons for major changes in the composition of R&D personnel and their impact on the company’s future development

□Applicable √Not applicable

5. Cash flow

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item 2025 2024 Net cash flow from operating activities with variable proportion 164,577,024.37 107,072,584.42 53.71% Net cash flow from investing activities -228,435,323.29 -102,998,551.21 Not applicable Net cash flow from financing activities -21,567,355.11 -100,601,266.76 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 Currency: RMB Current period End of current period

End of last period

The last amount accounts for the higher amount

Number of total assets Situation Item name at the end of the current period Total assets at the end of the previous period Changes at the end of the period

Proportion of production Explanation of proportion Dynamic proportion

(%)

(%) (%)

Notes receivable 115,957,941.30 4.07 82,062,569.10 2.57 41.30 Note 1 Other receivables 3,018,710.90 0.11 7,099,346.97 0.22 -57.48 Note 2 Inventory 222,418,695.43 7.81 320,722,064.52 10.05 -30.65 Note 3

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Long-term equity investment 79,595,087.12 2.79 12,547,227.44 0.39 534.36 Note 4 Investment real estate 39,811,308.65 1.40 Note 5 Productive biological assets 51,855,853.12 1.82 11,603,881.45 0.36 346.88 Note 6 Short-term borrowings 548,668,336.30 19.27 351,521,547.18 11.01 56.08 Note 7 Accounts payable 112,294,534.20 3.94 360,623,598.69 11.30 -68.86 Note 8 Employee benefits payable 34,008,918.24 1.19 22,651,658.65 0.71 50.14 Note 9 Other payables 203,167,158.65 7.13 351,280,861.50 11.00 -42.16 Note 10 Non-payable payables due within one year

59,905,510.31 2.10 45,648,207.95 1.43 31.23 Note 11 Current liabilities

Other notes:

Note 1: The increase in bills receivable was mainly due to the increase in bill settlement during the reporting period;

Note 2: The decrease in other receivables was mainly due to the recovery of previous collections and payments;

Note 3: The decrease in inventory is mainly due to the decrease in sales revenue and the reduction in stocking at the end of the period;

Note 4: The increase in long-term equity investment was mainly due to the new investment in associates during the reporting period;

Note 5: The increase in investment real estate was mainly due to the transfer of fixed assets during the reporting period;

Note 6: The increase in productive biological assets was mainly due to the expansion of planting scale during the reporting period;

Note 7: The increase in short-term borrowings was mainly due to the increase in bill discounts and credit borrowings during the reporting period;

Note 8: The decrease in accounts payable was mainly due to the decrease in accounts payable for purchasing raw materials;

Note 9: The increase in employee compensation payable is mainly due to the provision of year-end bonus;

Note 10: The decrease in other payables was mainly due to the payment for the equity acquisition of subsidiaries in the previous period;

Note 11: The increase in non-current liabilities due within one year is mainly due to the reclassification of long-term borrowings.

2. Overseas assets

□Applicable √Not applicable

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

√Applicable □Not applicable

Unit: Yuan Currency: RMB Item Ending book value Reason for restriction

Notes receivable 78,303,168.10 Pledged loans

Fixed assets 146,480,248.26 Mortgage loans

Intangible assets 18,062,593.01 Mortgage loans

Total 242,846,009.37

4. Other instructions

□Applicable √Not applicable

(4) Industry operating information analysis

√Applicable □Not applicable

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".

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Analysis of operating information of pharmaceutical manufacturing industry

1. Basic situation of the industry and major pharmaceutical (products)

(1). Basic situation of the industry

√Applicable □Not applicable

For detailed analysis of industry conditions, please refer to "II. Industry conditions of the company during the reporting period" in "Section 3 Management Discussion and Analysis".

(2). Basic information on major drugs (products)

√Applicable □Not applicable

Basic information on major drugs (products) divided by industry segments and therapeutic areas

√Applicable □Not applicable

Yes Does it belong? Does it belong? Does it belong? Does it belong? Does it belong to it? Does it belong to it? Does it belong to it?

Drug (Product) Registration

Subdivided industries Main therapeutic areas Indications or functional indications Protected products Expiration period (such as new products launched) National Provincial product name Classification

Recipe Type (if applicable) Drug (Product) Essential Drug Medical Insurance Medical Insurance Drug Involved) Product Catalog Catalog Catalog Clear away heat and detoxify, reduce swelling and relieve pain. Used for urgent and slow

Pediatric Respiratory System Throat Sword Spray 2005-03-22-

Chinese patent medicine Chinese medicine for pharyngitis, tonsillitis, sore throat, yes no no no yes yes and oral medicine (children's type) 2025-03-22

Stomatitis, gum swelling and pain.

Clear away heat and detoxify, reduce swelling and relieve pain. Used for lung and stomach accumulation

Respiratory system and mouth Throat-opening sword Swelling and pain in the throat caused by heat, dry mouth and bitter mouth, teeth 2005-03-22-

Chinese patent medicines Chinese medicines Yes No No No Yes Yes Yes Oral medicine Spray Gingival swelling and pain, oral ulcers, recurrent aphtha 2025-03-22

Those who see the above symptoms

Disperses wind, activates blood circulation, relaxes muscles and relieves pain. Used for stroke

Strong Gastrodia Du 2012-05-07-

Chinese patent medicines Cardiovascular and cerebrovascular medicines Traditional Chinese medicines cause pain in muscles and pulses, numbness in limbs, difficulty walking Yes No No No Yes Yes Shizhong Capsule 2032-05-07

Constipation, soreness in waist and legs, headache, dizziness, etc.

Nourishes blood and regulates menstruation, nourishes liver and kidneys, warms palace and relieves pain.

2002-11-28-

Chinese patent medicines, gynecological medicines, gynecological reconstruction pills, Chinese medicines, used for irregular menstruation and long-term menstruation, No No No No No Yes Yes 2024-08-18

Dysmenorrhea, take it off.

Chinese patent medicines for the respiratory system. Anti-cough and Huatan Pills. Chinese medicine. Clears the lungs and relieves cough, resolves phlegm and calms asthma. For chronic cough, Yes No 2013-04-27- No No Yes Yes

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Coughing up blood, phlegm, shortness of breath, wheezing and insomnia. 2029-7-29 Nourishes blood and regulates menstruation, nourishes the liver and kidneys, warms the uterus and relieves pain.

Gynecological Reconstruction 2016-07-14-Chinese Patent Medicine Gynecological Medicine Chinese Medicine Used for irregular menstruation, prolonged menstruation, Yes No No No Yes Yes Capsule 2036-07-14 Dry bleeding, dysmenorrhea, vaginal discharge and other symptoms.

Replenishing blood and replenishing qi, used for symptoms caused by deficiency of qi and blood

Qijiao Shengbai 2022-04-24-Chinese patent medicine, medicine for nourishing qi and blood, Chinese medicine for dizziness, shortness of breath, fatigue, spontaneous sweating and night sweats, Yes Yes No No Yes Yes Capsule 2042-04-24 and leukopenia with the above syndromes.

Reinforcing Qi and strengthening the surface, diuresis, relieving toxins and draining pus, and promoting muscle growth.

Used for shortness of breath, palpitations, collapse, spontaneous sweating, physical weakness 2013-03-05-Chinese patent medicines tonic medicine Astragalus granules Chinese medicine Yes No No No Yes It is edema, chronic nephritis, chronic diarrhea, prolapse, child 2033-03-05 Uterine prolapse, carbuncle is difficult to ulcerate, and the sore does not heal for a long time.

Replenishing qi and activating blood, nourishing liver and kidney, dispelling wind and removing dampness,

Rheumatism, immunity, bone swelling and pain relief. It is used for osteoarthritis (bone hyperplasia, bone hyperplasia, fractures) caused by qi deficiency, blood stasis, liver and kidney deficiency.

Expelling wind and dampness, removing blood stasis and activating blood circulation, reducing swelling and relieving pain,

Rheumatism, immunity, bones, clearing away heat and removing toxins, relieving numbness and relieving pain. Used for bruises

Chinese patent medicine External use Wuwei ointment Chinese medicine No No Not applicable No No No No scientific medicine Injury, rheumatism and numbness, waist, shoulder and leg pain, sores and boils

Swelling and pain.

Replenishes Qi and blood, nourishes liver and kidneys, strengthens muscles and bones,

Relieves pain, reduces swelling, dispels wind and removes dampness. Used for urgent and slow

Rheumatism, immunity, bone 2012-06-01-Chinese patent medicine Wudi Liquor Chinese medicine Sexual sprains and contusions, rheumatoid arthritis, gout, bone Yes No No No No No scientific medication 2032-06-01 Hyperplasia, shoulder, back and low back pain, fractures, elderly body

Deficiency, soreness in waist and legs. (prescription)

Replenishes Qi and blood, nourishes liver and kidneys, strengthens muscles and bones,

Rheumatism, immunity, bone, pain relieving, reducing swelling, dispelling wind and removing dampness. For acute and chronic 2012-06-01-Chinese patent medicine Wudi Liquor Chinese medicine No No No No No No No scientific medicine Sexual sprains and contusions, shoulder, back and low back pain, the elderly and weak, 2032-06-01 Backache and leg pain. (OTC)

Soften hardness and dissipate stagnation, reduce swelling and relieve pain, activate blood circulation and remove blood stasis,

Rheumatism, immunity, bone and invincible pain relief

Chinese patent medicines Chinese medicines to stimulate the meridians. For acute and chronic sprains and contusions, yes no not applicable no no no no scientific medication liniment

Bone hyperplasia, chilblains and lumbar disc prolapse pain

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Pain. (prescription)

Rheumatism, immunity, bone, Wudi relieves pain, reduces swelling and relieves pain, activates blood circulation and removes blood stasis. Used for urgent and slow

Chinese patent medicine Chinese medicine No No Not applicable No No No No No

Medical liniment for sprains, contusions, chilblains. (OTC)

The new entry and exit of major drugs into the essential medicine catalog and the medical insurance catalog during the reporting period

□Applicable √Not applicable

Winning bids for major drugs in centralized drug bidding and procurement during the reporting period

□Applicable √Not applicable

Situation description

□Applicable √Not applicable

Business data divided by treatment areas or major drug (product) categories

√Applicable □Not applicable

Unit: Yuan Currency: RMB Operating income compared with the previous year Operating costs compared with the previous year Gross profit margin compared with the previous year Products in the same industry and field Treatment areas Operating income Operating costs Gross profit margin (%)

Increase or decrease (%) Increase or decrease (%) Increase or decrease (%) Gross profit margin Respiratory system drugs 1,093,122,284.14 309,986,405.09 71.64 -24.85 -27.82 1.16 Not applicable to supplementary drugs 296,403,181.46 75,415,858.46 74.56 -21.69 -20.01 -0.53 Not applicable to gynecological drugs 134,584,639.77 23,701,790.56 82.39 19.09 19.75 -0.10 Not applicable to orthopedic drugs 46,448,654.23 18,917,396.28 59.27 -6.93 -21.69 7.67 Not applicable to cardiovascular and cerebrovascular drugs 50,768,731.53 17,288,089.19 65.95 18.89 10.41 2.62 Not applicable to trade in medicinal materials 53,291,342.73 51,942,060.68 2.53 36.92 35.21 1.23 Not applicable Others 27,365,460.31 13,571,751.23 50.41 -58.65 -51.60 -5.87 Not applicable

Situation description

□Applicable √Not applicable

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2. The company’s drug (product) research and development status

(1). Overall situation of R&D

√Applicable □Not applicable

Post-marketing research: (1) The multi-center randomized double-blind clinical study of Kaihoujian Spray in the treatment of acute pharyngitis (heat syndrome in the lung and stomach) was successfully completed. The study results showed that the disappearance rate of pharyngeal pain (dysphagia) after the medication was significantly better than that of the control group , the test group was more effective than the control group; after a fixed period of medication, the onset of sore throat in the test group was significantly higher than that of the control group; the improvement in the total pharyngeal signs evaluation score and pharyngeal mucosal congestion score were both better than those in the control group; and there were no adverse reactions throughout the process, and the safety was good. The above-mentioned high-quality multi-center clinical evidence further consolidates the academic and scientific nature of the Kaithroat Sword brand. (2) A multi-center randomized double-blind clinical study of Kaihoujian Spray (children's type) for the treatment of acute pharyngitis-tonsillitis in children was officially launched during the reporting period. It was led by the First Affiliated Hospital of Henan University of Traditional Chinese Medicine and 10 centers jointly participated, which will further consolidate the clinical value of the children-specific variety. (3) The post-marketing quality standard improvement research, pharmacodynamic research and post-marketing re-evaluation research of core products such as Qijiao Shengbai Capsules, Zhisou Huatan Pills, and Fukezao Pills continue to advance, and a number of topics have been concluded in stages, which has systematically improved the quality control level of the company's products and the evidence-based medical evidence system.

In terms of the layout of innovative traditional Chinese medicines, (1) the SL&GDPU-001 project (category 1.2 new traditional Chinese medicines, subdivided into liver protection and prevention and treatment of fibrosis), which the company cooperated with Guangdong Pharmaceutical University, was officially launched during the reporting period. Intellectual property transfer and pharmaceutical research are progressing in an orderly manner. It is planned to subsequently promote pharmaceutical research and CMC research and start non-clinical research. (2) The company cooperates with Hainan University on the HXW2324 compound (preparation) project (the subdivision is anti-Alzheimer's disease). Hainan University is currently conducting verification of the efficacy of candidate compounds. The research and development of innovative traditional Chinese medicine drugs are all early-stage projects, mainly to prepare reserves for the company to build a future-oriented innovative drug research and development pipeline.

(2).Basic information on major R&D projects

√Applicable □Not applicable

Whether the R&D project (including consistency registration) is under the Chinese medicine insurance? Name of the drug (product) used for R&D (registration) indications or functional indications

Evaluation items) Category Prescription Type of care (if involved) Stage Kaihoujian Spray Clears away heat and detoxifies, reduces swelling and relieves pain. For acute and chronic pharyngitis, flatulence. Post-marketing quality standard improvement and standard research. Traditional Chinese medicine Yes No

(Children's type) Psilitis, sore throat, stomatitis, gum swelling and pain. Study on clearing heat, detoxifying, reducing swelling and relieving pain. Used for throat problems caused by heat accumulation in the lungs and stomach

Swelling and pain, dry mouth and bitter mouth, swollen and painful gums and oral ulcers, recurrence

Kaihoujian Spray Post-marketing Quality Standards Improvement and Standard Research Traditional Chinese Medicine Aphthous Sores with the above symptoms. Clear away heat and detoxify, reduce swelling and relieve pain. Use Yes No

(Including children's type) Study on acute and chronic pharyngitis, tonsillitis, sore throat, oral cavity

inflammation, gum swelling and pain.

Clear away heat and detoxify, reduce swelling and relieve pain. Used for throat problems caused by heat accumulation in the lungs and stomach

Post-marketing re-evaluation study Kaihoujian Spray Traditional Chinese Medicine Swelling and pain, dry mouth and bitter mouth, gum swelling and pain, and oral ulcers, recurrence Yes No Post-marketing safety evaluation of aphthous ulcers in patients with the above symptoms.

Clear away heat and detoxify, reduce swelling and relieve pain. Used for throat problems caused by heat accumulation in the lungs and stomach

Quality improvement and standard research Kaihoujian Spray Traditional Chinese Medicine Yes No Post-marketing study on swelling and pain, dry mouth and bitter mouth, gum swelling and pain, oral ulcers, and recurrence

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Sexual aphthous ulcers with the above symptoms.

Clear away heat and detoxify, reduce swelling and relieve pain. Used for throat problems caused by heat accumulation in the lungs and stomach

Multi-center clinical study Kaihoujian Spray Traditional Chinese Medicine Swelling and pain, dry mouth and bitter mouth, gum swelling and pain, oral ulcers, recurrence Yes No Post-marketing study

Sexual aphthous ulcers with the above symptoms.

Preclinical research SL&GDPU-001 / For the treatment of liver fibrosis / No Basic research for the prevention and treatment of calcium deficiency, such as osteoporosis and tetany

Compound calcium carbonate convulsions, bone hypoplasia, rickets, and pregnant and lactating women

Research on production process technology Chemical drugs No No Study on effervescent tablets after launch. Calcium supplementation for women and menopausal women. It can also be used to enhance the body’s resistance to

Vitamin C supplement required for resistance.

Nourish blood and replenish qi. Used for dizziness and dizziness caused by deficiency of qi and blood.

Quality Improvement and Standard Research Qijiao Shengbai Capsule Traditional Chinese Medicine Shortness of breath and fatigue, spontaneous sweating and night sweats, and leukopenia are listed above. Yes Yes The symptoms will be studied after marketing.

Nourish blood and replenish qi. Used for dizziness and dizziness caused by deficiency of qi and blood.

Pharmacodynamic Study Qijiao Shengbai Capsule Traditional Chinese Medicine Shortness of breath, fatigue, spontaneous sweating and night sweats, and leukopenia are as shown above. Yes Yes The symptoms will be studied after marketing.

Nourish blood and replenish qi. Used for dizziness and dizziness caused by deficiency of qi and blood.

Pharmacokinetic study Qijiao Shengbai Capsule Traditional Chinese Medicine Shortness of breath, fatigue, spontaneous sweating and night sweats, and leukopenia are as shown above. Yes Yes The symptoms will be studied after marketing.

Nourishes blood and regulates menstruation, nourishes liver and kidneys, warms palace and relieves pain. Used for menstruation

Research on production technology and technology Fuke Zai Zao Pills Traditional Chinese Medicine No No Research on irregular periods, prolonged menstruation, bleeding, dysmenorrhea, vaginal discharge and other symptoms

Clears the lungs and resolves phlegm, relieves cough and relieves asthma. Used for phlegm-heat blocking the lungs, chronic cough, and hemoptysis.

Pharmacodynamic study Zhisou Huatan Pills Traditional Chinese medicine Yes No In the study, phlegm, asthma, dyspnea, wheezing and insomnia were reported.

It replenishes qi and activates blood circulation, nourishes the liver and kidneys, expels wind and removes dampness, reduces swelling and relieves pain. use

Pharmacodynamic study of Wudidan Capsule, Chinese medicine, for osteoarthritis (bone quality) caused by qi deficiency, blood stasis, liver and kidney insufficiency, yes no, to be studied after launch

hyperplasia, fracture).

(3). Status of drugs (products) submitted to and approved by regulatory authorities during the reporting period

□Applicable √Not applicable

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(4). Major R&D projects were canceled or drugs (products) were not approved during the reporting period

□Applicable √Not applicable

(5).Develop accounting policies

√Applicable □Not applicable

The company divides expenditures on internal research and development projects into research phase expenditures and development phase expenditures. Expenditures in the research stage are included in the current profits and losses when incurred. Expenditures in the development stage can only be capitalized if they meet the following conditions: it is technically feasible to complete the intangible asset so that it can be used or sold; there is the intention to complete the intangible asset and use or sell it; the intangible asset generates economic benefits in a manner that can prove the use of the intangible asset to produce products There is a market or the intangible asset itself has a market, and the intangible asset will be used internally and its usefulness can be proven; there is sufficient technical, financial and other resource support to complete the development of the intangible asset, and the ability to use or sell the intangible asset: the expenditures attributable to the development stage of the intangible asset can be measured reliably. Development expenditures that do not meet the above conditions are included in the current profit and loss. If it is impossible to distinguish between expenditures in the research stage and expenditures in the development stage, all R&D expenditures incurred will be included in the current profit and loss.

The company's research and development projects will enter the development stage after meeting the above conditions and passing technical feasibility and economic feasibility studies to form a project. Capitalized expenditures in the development phase are listed as development expenditures on the balance sheet and are converted into intangible assets from the date the project reaches its intended use.

(6). R&D investment

Comparison with the same industry

√Applicable □Not applicable

Unit: 10,000 yuan Currency: RMB

Comparable companies in the same industry Amount of R&D investment R&D investment as a proportion of operating income (%) R&D investment as a share of net assets (%) Capitalized R&D investment (%) Dong'e Ejiao 33,719.68 5.03 3.26 7.90 Darentang 20,406.02 4.15 2.87 6.98 Jianmin Group 11,565.64 3.43 4.35 14.68 Tong Ren Tang 39,116.95 2.27 1.83 - Yunnan Baiyao 42,333.41 1.03 1.06 17.19 Average amount of R&D investment in the same industry 29,428.34 The company’s R&D investment accounted for the proportion of operating income during the reporting period (%) 1.64 The company’s R&D investment accounted for the proportion of net assets during the reporting period (%) 1.85 Capitalized proportion of the company's R&D investment during the reporting period (%) - Explanation of significant changes in R&D investment and the rationality of the R&D investment proportion and capitalization proportion

□Applicable √Not applicable

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Investment status of major R&D projects

√Applicable □Not applicable

Unit: 10,000 yuan Currency: RMB R&D investment R&D investment R&D investment as a share of business The amount for this period is compared with the same period last year

R&D project R&D investment amount Description of the situation

Expenditure amount Capitalization amount Revenue proportion (%) Change proportion (%)

Multi-center clinical research, preclinical research 392.24 392.24 - 0.23 Not applicable

Post-marketing re-evaluation research, secondary development research 599.95 599.95 - 0.35 Not applicable

Production process technology research 312.93 312.93 - 0.18 Not applicable

Pharmacodynamic studies 566.55 566.55 - 0.33 Not applicable

Quality improvement and standard research 554.28 554.28 - 0.33 Not applicable

Research on key planting technologies 51.38 51.38 - 0.03 Not applicable

3. Sales of the company’s drugs (products)

(1). Analysis of main sales models

√Applicable □Not applicable

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 has established a strong marketing system through product marketing, academic exchanges, academic promotion, market research, customer service, commercial maintenance and other marketing activities under the professional promotion model. 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.

(2). Analysis of sales expenses

The specific composition of sales expenses

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Specific project name Amount incurred in this period Proportion of amount incurred in this period to total sales expenses (%)

Marketing expenses 573,000,043.65 71.54 Employee-related expenses 201,490,820.86 25.16

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Travel expenses 16,317,226.81 2.04 Business entertainment expenses 6,939,849.74 0.87 Office expenses 757,290.90 0.09 Equity incentives 771,595.43 0.10 Other sales expenses 1,641,328.54 0.20

Total 800,918,155.93 100.00

Comparison with the same industry

√Applicable □Not applicable

Unit: 10,000 yuan Currency: RMB

Comparable companies in the same industry Sales expenses Sales expenses account for operating income (%)

Jichuan Pharmaceutical 295,413.29 36.85 Taiji Group 164,770.14 15.96 Yisheng Pharmaceutical 31,744.22 49.59 Kangyuan Pharmaceutical 153,517.95 39.39 Tibet Pharmaceutical 164,430.00 55.15 The company’s total sales expenses during the reporting period 80,091.82 The company’s sales expenses accounted for the proportion of operating income during the reporting period (%) 47.03

Significant changes in sales expenses and explanation of the reasonableness of sales expenses

√Applicable □Not applicable

Source of data on the proportion of sales expenses to operating income in the same industry: the data of Jichuan Pharmaceutical and Kangyuan Pharmaceutical are from the 2024 annual report; the data of Yisheng Pharmaceutical, Taiji Group, and Tibet Pharmaceutical are from the 2025 annual report.

4. Other instructions

□Applicable √Not applicable

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(5) Investment status analysis

Overall analysis of external equity investment

√Applicable □Not applicable

During this period, external equity investment increased by RMB 67.318 million, while investment in subsidiaries decreased by RMB 29.60 million. The main external equity investments are as follows:

Unit: Yuan Currency: RMB

Investee Balance at the beginning of the period Balance at the end of the period Ending shareholding ratio Guizhou Qianli Biomedicine Venture Capital Fund Partnership (Limited Partnership) 0.00 57,000,000.00 36.04% Guizhou Dechangxiang Traditional Chinese Medicine Pieces Co., Ltd. 10,000,000.00 20,000,000.00 32.73% Guizhou Sanli Pharmaceutical Co., Ltd. 0.00 318,000.00 100.00% Xiaoxuan Pharmaceutical Technology (Guizhou) Co., Ltd. 29,600,000.00 0.00 0.00%

1. Significant equity investment

□Applicable √Not applicable

2. Significant non-equity investments

□Applicable √Not applicable

3. Financial assets measured at fair value

√Applicable □Not applicable

Unit: Yuan Currency: RMB Fair value for the period Accumulated in equity Sales for the period/

Asset category Opening amount Impairment accrued in the current period Purchase amount in the current period Other changes Closing amount

Change in profit and loss Change in fair value Redemption amount

Others 32,945,081.52 155,822.20 99,985,000.00 103,160,081.52 29,925,822.20

Total 32,945,081.52 155,822.20 99,985,000.00 103,160,081.52 29,925,822.20

Securities investment situation

□Applicable √Not applicable

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Explanation of securities investment situation

□Applicable √Not applicable

Private equity fund investment situation

□Applicable √Not applicable

Derivatives investment situation

□Applicable √Not applicable

4. The specific progress of major asset restructuring and integration during the reporting period

□Applicable √Not applicable

Opinions of independent directors

None

(6) Major asset and equity sales

□Applicable √Not applicable

(7) Analysis of major holding and participating companies

√Applicable □Not applicable

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 50,000,000.00 189,349,178.52 182,230,652.44 53,291,342.73 -1,911,745.22 -1,811,170.23 Management Co., Ltd.

Guizhou Hanfang Pharmaceutical has R&D and production of drugs

Subsidiaries 221,548,700.00 634,990,889.56 428,684,776.18 365,788,973.93 40,079,759.74 31,932,188.44 Co., Ltd. and sales

Guizhou Dechangxiang Pharmaceutical R&D and production of drugs

Subsidiaries 50,000,000.00 264,081,988.96 146,586,021.66 235,016,803.61 40,478,335.96 40,409,745.69 Co., Ltd. and sales

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Guizhou Haost Biotech Medical Supplies and Equipment

Subsidiaries 135,000,000.00 154,310,882.39 142,198,813.37 46,289,305.06 4,218,455.76 3,924,959.78 Technology Co., Ltd. Sales; Pharmaceutical Consulting

Acquisition and disposal of subsidiaries during the reporting period

√Applicable □Not applicable

Company name Method of acquiring and disposing of subsidiaries during the reporting period Impact on overall production operations and performance Guizhou Sanli Pharmaceutical Co., Ltd. Establishment of Xiaoxuan Pharmaceutical Technology (Guizhou) Co., Ltd. Other instructions for sale

□Applicable √Not applicable

(8) Structural entities controlled by the company

□Applicable √Not applicable

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6. The company’s discussion and analysis on the company’s future development

(1) Industry structure and trends

√Applicable □Not applicable

Looking forward to the future, the Chinese patent medicine industry is generally in the critical stage of "deep adjustment and poised for transformation", with both challenges and opportunities coexisting.

Challenges: The continued deepening of the DRG/DIP payment reform will further compress the space for use of proprietary Chinese medicines in hospitals; the expansion of centralized procurement of Chinese patent medicines at the provincial and alliance levels will intensify price competition among varieties, and the average gross profit margin of the industry will continue to be under pressure; changes in demographic structure - especially the phased decline in the number of newborns - will put potential pressure on the pediatric drug market; the involution of the pharmaceutical industry has intensified, and the requirements for enterprises' refined management capabilities and cost control levels continue to increase.

Opportunities: The policy dividends for the revitalization of traditional Chinese medicine at the national level continue to be released, and the application space of Chinese patent medicines in primary care, chronic disease management, and "preventive treatment" continues to expand; the aging of the population has intensified, providing long-term demand for cardiovascular, cerebrovascular, orthopedic, and tonic Chinese patent medicines; the rapid growth of OTC pharmacy channels and e-commerce channels The development has broadened the reach of consumers for branded Chinese patent medicine companies; consumers' health awareness has increased, and their preference for natural ingredients in Chinese medicine has continued to strengthen, providing a broad space for the consumerization of branded Chinese patent medicines; high-quality exclusive varieties with sufficient clinical evidence-based evidence will continue to widen their moats in medical insurance negotiations and market competition.

In the medium to long term, the industry structure will accelerate the concentration of leading enterprises with branding, scale and innovation. This is highly consistent with the company's core advantages in exclusive varieties, brand accumulation and R&D investment, and will help the company continue to consolidate and expand its market position in future competition.

For the remaining details, please refer to "(1) Overall Industry Situation" of "II. Industry Situation of the Company During the Reporting Period" in "Section 3 Management Discussion and Analysis".

(2) Company development strategy

√Applicable □Not applicable

The company's core strategic positioning: with brand strategy as the core, build a high-quality proprietary Chinese medicine brand enterprise driven by the two-wheel drive of respiratory line and silver hair line, and realize the transformation from scale-driven to brand + quality two-wheel drive.

The company has built two core brand business segments: the first is the respiratory line brand business, with the Kaihoujian series of products as the core, adhering to the leading position in the market segments, deeply exploring brand value, and stabilizing the core profit base; the second is the silver hair line brand business, with Qijiao Shengbai Capsules, Astragalus Granules, and Zhicough and Phlegm Pills as the core, focusing on the aging incremental market, and creating a new growth engine through channel sinking and brand penetration.

Focusing on the strategic goals, the company focuses on promoting four major directions: first, the brand strategy, focusing on the brand building of the breathing line and silver hair line, strengthening user awareness, and improving brand premium and stickiness; the second is the channel strategy, focusing on the branch operation of the breathing line and silver hair line, promoting refined management, and replacing extensive expansion with per capita efficiency improvement; The research and development strategy is driven by evidence-based medical evidence to continue to strengthen the academic moat of core varieties while promoting the research and development of innovative traditional Chinese medicines; the fourth is the whole industry chain strategy, from GAP cultivation of traditional Chinese medicine to intelligent manufacturing, to comprehensively consolidate the quality management system, help achieve full control of "from land to medicine", and build a solid brand foundation.

Sanli Pharmaceutical, really good medicine. The company has always adhered to the business theory of "making medicines with genuine materials and selling medicines at genuine prices", adhering to the corporate values ​​of "not cutting corners, not reducing materials, and not cheating", adhering to the enterprise spirit of "sincerely being a person, sincerely doing things, and sincerely making medicines". With the product science of "good medicinal materials, good technology, and good efficacy", the company is committed to becoming a pharmaceutical enterprise that the Chinese people truly trust and strives for the development vision. The company has always controlled the source of "good raw materials" to the ingenious manufacturing of "good craftsmanship", and finally realized the value of "good medicinal efficacy" and built a complete product and brand value chain. In the future, the company's management will continue to take the initiative to shoulder the responsibilities of a pharmaceutical company under the leadership of the board of directors, actively meet the challenges of the market environment, and continue to increase market share. We will take practical actions to fulfill our commitment to the steady development of the national pharmaceutical and health industry.

(3) Business plan

√Applicable □Not applicable

2026 is the first year of the “15th Five-Year Plan” and a critical year for the company to move out of phased adjustments and move toward restorative growth. Facing the development trend of deepening policies, accelerating innovation and optimizing the structure of the pharmaceutical industry, the company will base on the results of the 2025 operational review and take "focusing on the main business, improving quality and efficiency, and consolidating the foundation" as the main line of annual operations. Focusing on the five core tasks of marketing upgrade, brand building, R&D innovation, cost reduction and efficiency, and management improvement, the company will strive to achieve restorative growth in operating performance and consolidate the foundation for medium- and long-term high-quality development. The company will focus on the following key tasks:

1. The marketing system is divided into separate lines to improve efficiency and drive steady revenue recovery.

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Reconstruct the marketing organizational structure and formally implement a professional business system that coordinates the prescription line, OTC respiratory line, OTC silver hair line, marketing department, and commerce department, saying goodbye to extensive expansion and turning to precise and efficient operations. (1) The marketing department should further deepen the function of "strategic staff + brand engine", carry out efficient and scientific competitive product dynamics, category trends, and consumer insights, establish a normalized market monitoring mechanism, focus on the dual-product line strategy of breathing line and silver hair line, focus on implementing large single product creation market strategies, and implement systematic marketing implementation plans and standardized marketing strategies. On-site terminal sales activities help the healthy development of the market and lay a solid foundation for the construction of online and offline all-area marketing; (2) OTC channels focus on the respiratory field and the silver hair economy, strictly implement professional line operations in accordance with the two major product lines of respiratory line and silver hair line, implement refined terminal classification management and differentiated services, improve the omni-channel price control system, and deepen Optimize strategic cooperation with core drugstore chains across the country, concentrate resources on core markets and high-quality terminals, and maximize resource investment efficiency and terminal output benefits; (3) The business system optimizes dealer networks, standardizes channel inventory and price order, stabilizes the upstream and downstream cooperation ecology and channel profit margins, and improves capital turnover efficiency; (4) Prescription channel promotion Deepen management and academic cultivation, strengthen the promotion of evidence-based medicine of core varieties in second-level hospitals and primary medical terminals, and expand clinical coverage and market penetration; (5) e-commerce and new channels deploy real-time retail and new media content operations, use brand content to drive online conversion, strictly control the cost-to-sales ratio, and create a growth pattern of "offline intensive cultivation + online empowerment". Through organizational optimization, channel stratification, and assessment restructuring, the growth momentum of the marketing system was activated and the main business income was steadily recovered.

2. Continue to build the advantages of dual product lines and comprehensively launch the brand upgrade strategy

Firmly adhere to the brand strategy and adhere to the main line of dual brand development of breathing line and silver hair line. Continue to consolidate the leading position of the Throat Sword series products in the throat spray market segment of Chinese patent medicines. Through the market influence, academic resources and team capabilities of the Throat Sword, we will strengthen the academic clinical value and market competition barriers in the respiratory system field; increase investment in core varieties of silver hair line resources, create a new brand growth curve, and form a dual product line collaborative development pattern.

In 2026, as the first year of systematic brand building, the company will focus on implementing the "six three forces" brand building project. The first is the "three forces of science and technology" to enhance the brand with technology; the second is the "three forces of quality" to protect the brand with quality; the third is the "three forces of digital" to empower the brand with digital; the fourth is the "three forces of culture" to lead the brand with culture; the fifth is the "three forces of sharing" to achieve the brand through sharing; the sixth is the "three forces of public welfare" to sublimate the brand with public welfare. Through the implementation of the "Six Three Powers" brand building project, the company's product competitiveness and market influence will be comprehensively improved from products to markets, and from inside the company to outside. Focusing on market channels and end customers, the company will vigorously carry out the "True Partner Plan" project and realize industrial and commercial resource sharing and value co-construction through project implementation, thereby comprehensively enhancing the cohesion and marketing power of the company, business partners and end customers.

3. Adhere to R&D and innovation to build the core competitiveness of brand products

Taking the brand value upgrade of Breathing Line and Silver Hair Line as the core of research and development, we will focus on strengthening evidence-based medicine and improving post-market value. At the same time, we will take the reserve of innovative traditional Chinese medicine pipelines as the direction of advancement, continue to increase investment in research and development, and establish a research and development system that pays equal attention to innovation of traditional Chinese medicine and upgrading of classic varieties. Promote multi-center clinical research on Kaihoujian Spray (children's type) to consolidate evidence-based medicine for dominant varieties; promote pharmacokinetics and pharmacodynamics research on core varieties of the silver hair line, and strengthen intellectual property barriers. Steadyly advance the pharmaceutical research, CMC research and non-clinical research of the SL&GDPU-001 project, advance the research and development process of the HXW2324 compound project, and enrich the research and development reserves of innovative traditional Chinese medicine drugs. Simultaneously optimize core product processes, dosage form improvements and consumer experience upgrades to support the long-term development of the brand with product strength.

4. Strengthen the governance of subsidiaries and promote the improvement of operating quality

With the goal of unifying management and improving operation quality, we will improve the group management and control mechanism and comprehensively improve the operating efficiency and profitability of subsidiaries. For Kampo Pharmaceuticals, it will increase support for the market expansion of its core products, optimize product strategies and channel resource allocation, promote refined cost control, and promote the effective repair of its operating quality; Dechangxiang focuses on clinical research and brand building of core varieties, releases the efficiency of intelligent pill production lines, and enhances product competitiveness and profitability; Invincible Pharmaceuticals relies on the accumulation of Chinese time-honored brands to deeply explore the regional orthopedic drug market and promote pharmacodynamic research and market expansion of core varieties. Establish a unified closed-loop mechanism for operation management and control, performance appraisal and review of the group, continue to promote the standardized operation of subsidiaries in each vertical business line, and realize the synergy and value maximization of the group's overall resources.

5. Improve the construction of industrial chain and enhance the level of intelligent manufacturing

Continue to promote the GAP base certification of core medicinal materials, improve the supply chain quality control system of core raw materials, and establish a multi-level supplier reserve mechanism to ensure stable supply of raw materials and controllable costs. The production end will deepen the digitalization and intelligent transformation, promote the cost efficiency assessment of the four production bases, optimize the production process and manufacturing cost control; upgrade the full life cycle quality management system, continue to strictly implement GMP specifications, strengthen the monitoring of key process parameters and quality traceability, ensure the safety and stability of product quality, and enhance the advantages of large-scale production and the resilience of the industrial chain.

6. Optimize organizational management and talent development, and strengthen operational support capabilities

Upgrade the organizational management system with human efficiency improvement, process optimization, and digital empowerment as the core. We will continue to optimize staffing and improve operational efficiency based on the human input-output ratio; we will integrate the digital systems of finance, production and marketing, strengthen data collaboration, and improve operational decision-making efficiency. The company steadily promotes digital and intelligent upgrades, introduces AI tools to empower internal operations, and replaces some standards with technology

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eliminate redundant, repetitive and inefficient basic positions, streamline redundant processes, reduce management costs, and comprehensively improve organizational operational efficiency and lean management levels. At the same time, we will establish a closed-loop management mechanism for strategic decomposition, implementation, and review and optimization, strengthen core talent training and echelon construction, improve the incentive and assessment system, and provide solid organizational and talent guarantees for the implementation of the dual brand strategies of Breathing Line and Silver Hair Line.

7. Steadyly promote industrial investment layout and optimize investor relations management

Relying on the Qianli Biomedical Fund, the company focuses on high-quality innovative drugs and high-end medical devices, prudently carries out investment layout guided by financial investment and industrial collaboration, steadily promotes the delivery of equity projects, and reserves potential for industry development. Continue to expand communication channels in the capital market and clearly communicate the company's business strategy and development value; strictly abide by relevant regulations on information disclosure, protect investors' rights to know and participate, and maintain a good image of listed companies through sound operations and standardized governance.

In 2026, the company will face industry changes and its own development challenges, stick to the main business of traditional Chinese medicine, promote the implementation of various business plans with strategic determination, continue to improve core competitiveness, operational efficiency and risk resistance capabilities, strive to achieve steady recovery of operating performance and high-quality development, and create greater value for shareholders, customers and society.

(4) 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 company's main raw materials are Chinese medicinal materials, whose market prices are affected by multiple variables such as natural climate, planting cycle, supply and demand relationship, origin policies, market speculation and seasonal factors, and the fluctuations are relatively significant. In 2025, the Chinese medicinal materials market will overall show a downward trend. According to Kangmei China Traditional Chinese Medicine Price Index data, as of December 31, 2025, the Comprehensive Traditional Chinese Medicine 200 Index closed at 2,542.16 points, a decrease of 477.46 points from 3,019.62 points at the end of 2024, and a year-on-year decline of 15.81%, ending the previous two-year high operating cycle. From a structural point of view, most bulk medicinal materials will continue to decline in 2025 due to high prices in the early stage to stimulate the release of production capacity, increased supply and weak terminal demand; some varieties will rebound in stages due to abnormal weather, policy adjustments in production areas and capital hedging factors, and the market differentiation characteristics are obvious. Although the overall price of Chinese medicinal materials has declined from the previous high, it is still at a relatively high level compared with the historical center. Fluctuations in the price of Chinese medicinal materials directly affect the production costs and gross profit margin levels of the company's products. If the price of Chinese herbal medicines rises sharply or the supply becomes tight in the future, it may have an impact on the company's profitability.

3. 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.

4. 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.

5. 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.

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As of the end of the reporting period, the original value of goodwill was RMB 554.6061 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.

In 2025, due to the slowdown in market demand for Kampo Pharmaceutical products and intensified industry competition, the operating situation was not as good as expected, and the performance dropped significantly year-on-year. Based on Kampo Pharmaceutical's current operating conditions and future forecasts, the company made a goodwill impairment provision of RMB 121.9779 million, and the book value of goodwill after impairment was RMB 432.6282 million.

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 still 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.

(5) Others

□Applicable √Not applicable

7. Explanation of circumstances and reasons for the company’s failure to disclose in accordance with the Code due to non-applicability of the Code or special reasons such as state secrets or commercial secrets

□Applicable √Not applicable

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Section 4 Corporate Governance, Environment and Society

1. Description of corporate governance related situations

√Applicable □Not applicable

During the reporting period, the company strictly complied with the provisions of the China Securities Regulatory Commission and the requirements of laws, regulations and normative documents such as the Company Law, the Securities Law, the Code of Governance of Listed Companies, the Shanghai Stock Exchange Stock Listing Rules, etc., and continuously improved the company's corporate governance structure, established and improved the internal control system, continuously standardized the company's operations, and improved the level of corporate governance. At the end of the reporting period, the company's governance situation basically complied with the Company Law and the China Securities Regulatory Commission's requirements on the governance of listed companies. The details are as follows:

1. About shareholders and shareholders’ meetings

During the reporting period, the company convened two shareholders' meetings convened by the board of directors. The convening, convening procedures, qualifications of personnel attending the shareholders' meetings and the voting procedures of the shareholders' meeting complied with the provisions of the "Company Law", "Shareholders' Meeting Rules of Listed Companies", "Company Articles", "Shareholders' Meeting Rules" and other relevant laws, regulations and rules, which can ensure that all shareholders, especially small and medium-sized shareholders, enjoy equal status and fully exercise their rights.

2. About the company and controlling shareholders

The company's controlling shareholders regulate their own behavior and fulfill their obligations in strict accordance with the "Code of Corporate Governance for Listed Companies", "Shanghai Stock Exchange Stock Listing Rules", "Shanghai Stock Exchange Self-Regulatory Guidelines for Listed Companies No. 1 - Standardized Operations", "Articles of Association", and the Articles of Association.

3. About directors and board of directors

The company elects directors in strict accordance with the selection and appointment procedures stipulated in laws, regulations and the Articles of Association; the board of directors consists of 9 directors, including 3 independent directors, 1 employee representative director, and a chairman, which complies with the requirements of laws, regulations and the Articles of Association. The company's board of directors has established four special committees: Audit Committee, Remuneration and Assessment Committee, Strategy Committee, and Nomination Committee to provide professional opinions and references for the board of directors' decision-making. During the reporting period, the company held a total of 10 board meetings, all of which were held in accordance with prescribed procedures. All directors of the company can carry out their work in accordance with the company's "Rules of Procedure for the Board of Directors", "Working System for Independent Directors" and other systems, attend the board of directors and shareholders' meetings on time with a serious and responsible attitude, actively participate in relevant training, become familiar with relevant laws and regulations, and safeguard the overall interests of the company.

4. Supervisors and Board of Supervisors

During the reporting period, the company held 8 meetings of the Board of Supervisors. The convening, convening, voting and other procedures of the Board of Supervisors are in compliance with the Company Law, Articles of Association, Rules of Procedure of the Board of Supervisors and other laws and regulations as well as the company's internal systems, ensuring the supervisory effect of the Board of Supervisors. The company's board of supervisors once had three supervisors, including one employee representative supervisor. The number and composition of the board of supervisors complied with the provisions of laws, regulations and the Articles of Association. All supervisors of the company conscientiously perform their duties, attend the board of directors and shareholders' meetings, diligently and responsibly supervise the company's financial status and the legality and compliance of directors and senior managers in performing their duties, supervise and express opinions on major company matters, related transactions, financial reports, etc., safeguard the legitimate rights and interests of the company and all shareholders, effectively supervise the company's internal management and the performance of directors and senior managers, and promote the healthy development of the company.

On December 18, 2025, in order to further improve the level of corporate governance, the company held a shareholders' meeting to review and adopt the "Proposal on Cancellation of the Board of Supervisors, Change of Registered Capital and Business Scope, and Amendment of the Articles of Association" in accordance with the provisions of the "Company Law", "Relevant Transition Period Arrangements for the Implementation of Supporting System Rules of the New Company Law", "Guidelines on the Articles of Association of Listed Companies" and other relevant laws, regulations and normative documents. There will no longer be a board of supervisors, and the powers of the board of supervisors stipulated in the "Company Law" will be exercised by the Audit Committee of the Board of Directors.

5. About management

The company's senior managers have clear responsibilities and can perform their duties strictly in accordance with the "Articles of Association", "General Manager's Work Rules" and other management systems. They are fully responsible for the company's operation and management, organizing and implementing the company's annual business plan and investment plan, formulating the company's basic management system, formulating the company's specific regulations, etc., and are diligent and responsible, and effectively implement and execute the resolutions of the board of directors.

6. About information disclosure and transparency

During the reporting period, the company disclosed relevant information of the company in a true, accurate and timely manner in accordance with relevant laws, regulations and normative documents such as the "Shanghai Stock Exchange Stock Listing Rules" to ensure that all shareholders of the company have fair access to relevant information of the company.

During the reporting period, in order to further improve the company's remuneration management system for directors and senior managers, establish a scientific and effective incentive and restraint mechanism, effectively mobilize the work enthusiasm of the company's directors and senior managers, improve the company's operating and management efficiency, and promote the company's sustainable and healthy development, the company formulated the "Remuneration Management System for Directors and Senior Managers" and completed it based on the actual situation of the company.

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Completed the revision and formulation of more than 20 core governance systems such as the Articles of Association, Rules of Procedure for Shareholders' Meetings, and Rules of Procedure for Board of Directors; further improved the corporate governance mechanism, improved the level of standardized operations, and ensured the legal compliance of information disclosure.

7. About stakeholders

The company fully respects and safeguards the legitimate rights and interests of relevant stakeholders, strengthens communication and exchanges with all parties, and actively cooperates with relevant stakeholders. While the company creates profits, it also attaches great importance to social responsibilities, achieves a balance between the interests of shareholders, employees, society and other parties, and promotes the company's sustainable, stable and healthy development.

Whether there are any major differences between corporate governance and laws, administrative regulations and the China Securities Regulatory Commission’s provisions on the governance of listed companies; if there are major differences, the reasons should be explained

□Applicable √Not applicable

2. Specific details of the company’s controlling shareholders and actual controllers in ensuring the independence of the company’s assets, personnel, finance, organization, business, etc.

measures, as well as solutions, work progress and follow-up work plans that affect the company's independence

√Applicable □Not applicable

Since its establishment, the company has strictly operated in accordance with relevant regulations such as the "Company Law of the People's Republic of China" and the "Articles of Association", gradually established and improved the company's legal person governance structure, and achieved independence from the controlling shareholder and actual controller in terms of assets, personnel, finance, organization, business, etc.

1. Asset integrity: The company has an independent and complete asset structure. The company's assets are completely independent from the controlling shareholder and actual controller and other companies controlled by it. The company has complete control over all its assets, and there is no situation where assets or funds are occupied by shareholders to the detriment of the company's interests.

2. Personnel independence: The company’s senior managers all work full-time in the company and receive remuneration. They do not hold other positions or receive remuneration other than directors and supervisors in the controlling shareholder and actual controller or other enterprises controlled by them, nor do they operate the same or similar business as the company on their own or for others.

3. Financial independence: The company has established an independent financial department, equipped with full-time financial personnel, established an independent financial accounting system and internal control system, made independent financial decisions, and had standardized financial accounting systems and financial management systems for subsidiaries; since the establishment of the company, it has opened independent accounts in banks.

4. Institutional independence: The company has established an independent and complete internal organization and management institution that is consistent with the actual situation, clarified the functions of each institution, and formulated corresponding internal management and control systems. The company exercises management powers independently and is not confused with the controlling shareholder and actual controller and other companies it controls.

5. Business independence: The company has an independent business operation system and the ability to operate independently directly to the market. It has complete legal person property rights, including an independent pharmaceutical production system, management and operation system and marketing system. It has all the qualifications required for business operations, and also has the necessary personnel, funds and equipment to conduct business.

Controlling shareholders, actual controllers and other units controlled by them are engaged in the same or similar business as the company, as well as horizontal competition or the impact of major changes in horizontal competition on the company, the resolution measures taken, resolution progress and follow-up resolution plans □ Applicable √ Not applicable

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3. Situation of directors and senior managers

(1) Changes in shareholdings and remuneration of current and outgoing directors and senior managers during the reporting period

√Applicable □Not applicable

Unit: Share during the reporting period

Obtained from the company Whether the official term begins and ends. Increase or decrease in shares during the year

Name Position Gender Age Number of shares held at the beginning of the year Number of shares held at the end of the year Obtained pre-tax related party date Date Amount of increase or decrease Reason for change

Total salary Obtained salary (10,000 yuan)

Chairman 2015-01-01 2027-05-16

Zhang Hai Male 41 167,668,440 167,668,440 0 / 75.85 No

Director 2015-01-01 2027-05-16

Sheng Yongjian Director Male 52 2015-01-01 2027-05-16 21,924,559 21,924,559 0 / 0 No Vice Chairman 2024-05-27 2027-05-16

Director 2018-03-01 2027-05-16 Shareholding reduction, repurchase

Zhang Qianfan Male 41 714,600 475,950 238,650 63.13 No General Manager 2024-05-27 2027-05-16 Cancel

Secretary of the Board of Directors 2016-08-11 2026-01-08

Vice Chairman 2024-10-29 2027-05-16

Wang Jueben Director Male 40 2024-10-10 2027-05-16 410,700 350,700 60,000 Repurchase and cancellation 49.11 No Deputy General Manager 2024-05-27 2027-05-16

Employee Director 2024-05-17 2027-05-16

Guo Ke Deputy General Manager Female 39 2021-05-01 2024-10-31 490,000 418,000 72,000 Repurchase and cancellation 54.13 No Financial Director 2024-11-01 2027-05-16

Director 2024-10-10 2027-05-16 Shareholding reduction, repurchase

Wang Yi Male 39 1,335,000 641,300 693,700 52.79 No

Deputy General Manager 2018-03-01 2027-05-16 Cancel

Guidong Independent Director Male 52 2022-12-01 2027-05-16 0 0 0 / 6 No Chen Shigui Independent Director Male 63 2022-12-01 2027-05-16 0 0 0 / 6 No Feng Sanitation Independent Director Male 66 2024-10-10 2027-05-16 0 0 0 / 6 Fu Deng Li Deputy General Manager Male 41 2024-05-27 2027-05-16 250,000 250,000 0 / 52.75 Fu Luo Zhanbiao Deputy General Manager Male 48 2024-05-27 2027-05-16 370,000 250,000 120,000 Reduction and repurchase 54.90 No

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Log out

Yang Zhiyu Deputy General Manager Male 40 2024-05-27 2027-05-16 400,000 400,000 0 / 65.90 No

Reduce holdings, repurchase

Yu Yuan Deputy General Manager Male 44 2021-05-01 2027-05-16 325,000 250,000 75,000 54.17 No

Log out

Zhang Hongyu

Deputy General Manager Female 63 2024-11-01 2025-07-07 259,500 169,500 90,000 Repurchase and cancellation 8.77 No (resigned)

Long Jing

Chairman of the Board of Supervisors Female 41 2021-05-19 2025-12-18 0 0 0 / 43.09 No (resigned)

Liang Donghai

Supervisor Male 43 2022-11-23 2025-12-18 0 0 0 / 32.38 No (resigned)

Yang Yi

Employee Supervisor Female 33 2022-08-25 2025-12-18 0 0 0 / 22.11 No (resigned)

Total / / / / / 194,147,799 192,798,449 1,349,350 / 647.08 /

Name Main work experience

From January 2008 to December 2009, he served as the Guizhou regional sales manager of Guizhou Sanli Pharmaceutical Co., Ltd.; from January 2010 to August 2011, he served as Zhang Hai of Guizhou Sanli Pharmaceutical Co., Ltd.

The company's sales director; from September 2011 to present, he serves as the chairman of Guizhou Sanli Pharmaceutical Co., Ltd.

From December 1994 to December 1996, he served as an employee of the Materials Bureau of Fuyang City, Zhejiang Province (now Fuyang District, Hangzhou City); from January 1997 to December 2014, he served as an agent for sales of Guizhou Weikang Pharmaceutical, Products of Guizhou Dalong Pharmaceutical, Anhui Fengyuan Pharmaceutical and other companies; from November 2004 to December 2017, he served as the general manager and executive director of Zhejiang Hesheng Information Technology Co., Ltd.; in September 2009, Sheng Yongjian

From September to October 2017, he served as supervisor of Hangzhou Hesheng Pharmaceutical Technology Co., Ltd.; from September 2012 to November 2018, he concurrently served as executive director of Hangzhou Zhijianyou Network Technology Co., Ltd. From September 2011 to present, he serves as a director of the company.

From June 2007 to March 2010, he served as the academic assistant of the Canadian Institute of Certified Public Accountants; from March 2010 to October 2013, he served as the marketing director of Guizhou Starry Sky Film Co., Ltd.; from October 2013 to October 2014, he served as the general manager of Guiyang Western Chemical Market Co., Ltd. Assistant; from October 2014 to present, he has served as assistant to the general manager and secretary of the board of directors of Guizhou Sanli Pharmaceutical Co., Ltd., and currently serves as vice chairman and general manager of the company; from March 2018 to December 2020, he also served as director of Guizhou Green Sun Pharmaceutical Co., Ltd.; from August 2018 to 2023 Zhang Qianfan

In August 2021, he concurrently served as the executive partner of Guizhou Sanli Investment Partnership (Limited Partnership) Limited Partnership; from September 2018 to present, he concurrently served as executive director and general manager of Guizhou Nuorun Enterprise Management Consulting Co., Ltd.; concurrently served as executive director and general manager of Guizhou Xinrong Pharmaceutical Technology Co., Ltd.; from June 2021 to present, he served as director of Guizhou Hanfang Pharmaceutical Co., Ltd.; from May 2023 to present, he served as the legal representative, executive director and general manager of Guizhou Haost Biotechnology Co., Ltd.

He has successively served as section chief of the Production Technology Department of Wudang Power Supply Bureau of Guizhou Power Grid Company, supervisor of Anhui Jiuqi Pharmaceutical Co., Ltd., and general manager of Ziyun Changmeng Agricultural Science and Technology Development Co., Ltd. In February 2019, Wang Jueben joined the company as deputy manager of the securities business department and vice president of administration. From January 2022 to present, he has served as the general manager of the Public Affairs Center and Innovation Center. He is currently the vice chairman and deputy general manager of the company and the general manager of Guizhou Hanfang Pharmaceutical Co., Ltd.

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From June 2013 to May 2015, he served as the risk manager of ChinaBond Credit Enhancement Co., Ltd.; from June 2015 to October 2017, he worked as an investment banking staff member of Shenwan Hongyuan Underwriting and Recommendation Co., Ltd.; from October 2017 to September 2020, he worked as an investment banking staff member of Shengang Securities Co., Ltd.; in November 2020, he joined Guizhou Sanli Pharmaceutical Co., Ltd. to Guo Ke Today, he currently serves as the employee representative director and financial director of Guizhou Sanli Pharmaceutical Co., Ltd.; from June 2021 to present, he serves as director of Guizhou Hanfang Pharmaceutical Co., Ltd.; from July 2021 to present, he serves as director of Xiaoshuang Pharmaceutical Technology (Guizhou) Co., Ltd.; from June 2023 to present Today, he serves as a director of Guizhou Dechangxiang Pharmaceutical Co., Ltd.; from September 2023 to the present, he serves as the chairman, general manager and financial person in charge of Guizhou Sankang Traditional Chinese Medicine Industry Development Co., Ltd.; from November 2023 to the present, he serves as the executive director and general manager of Guizhou Sankang Planting Co., Ltd.

From June 2009 to November 2009, he served as the accountant of Guizhou Provincial Transportation Planning, Survey and Design Institute Co., Ltd. From November 2009 to present, he serves as the sales manager of the company; since January 2015, Wang Yi

From March 2018 to March 2018, he served as chairman of the company’s board of supervisors and employee representative supervisor; from March 2018 to present, he currently serves as director and deputy general manager of the company.

From 1996 to 2003, he worked at the Law Institute of the Guizhou Academy of Social Sciences; from 1999 to 2003, he practiced as a part-time lawyer at Guizhou Gongda Law Firm and Guizhou Chenji Law Firm; from December 2003 to August 2009, he practiced at the Guiyang Branch of Beijing Zhongyin Law Firm; in September 2009, he was one of the founders of Guizhou Fudi Law Firm, Guidong He has been the director of the firm since then; he was awarded the title of Level 2 lawyer (deputy senior professional title) at the end of 2011. He currently serves as a perennial legal adviser to the Guiyang Municipal People's Government, the Guiyang Wudang District People's Government and other government agencies; he is employed as a legislative expert of the Standing Committee of the Guizhou Provincial People's Congress and a director of the Guiyang Law Society; he serves as a director of the Guizhou Provincial Lawyers Association, the vice president of the Guiyang Lawyers Association, a member (youth member) of the Party Committee of the Guiyang Lawyers Industry, and the vice president of the Guiyang Bankruptcy Administrators Association. From December 12, 2022 to present, he serves as an independent director of the company’s board of directors.

From February 1997 to May 2001, he served as assistant to the director of Guiyang Xinhua Accounting Firm; from June 2001 to January 2004, he served as deputy general manager of the Guizhou branch of Yunnan Asia Pacific Accounting Firm; from January 2004 to September 2024, he served as deputy general manager of Asia Pacific Zhonghui Accounting Firm Co., Ltd. and China Shen Asia Pacific Accounting Firm Co., Ltd.; from October 2024 to present, he has served as Chen Shigui

Deputy General Manager of Zhou Zhengyi Accounting Firm Co., Ltd.; from June 2020 to present, he has served as an independent director of Shanghai Miracle Pharmaceutical Investment Management Co., Ltd., and from April 2026 to present, he has served as an independent director of Guizhou Yongji Printing Co., Ltd. From December 2022 to present, he serves as an independent director of the company’s board of directors.

From 2008 to present, he has served as dean, vice president and second-level professor of the School of Pharmacy of Henan University of Traditional Chinese Medicine. From 2011 to 2015, he served as an independent director of Henan Lingrui Pharmaceutical Co., Ltd. Feng Health

From October 10, 2024 to present, he serves as an independent director of the company’s board of directors.

In February 2016, he joined the company as the Specialist of the Securities Business Department, Manager of the Securities Business Department, and Deputy General Manager of Guizhou Hanfang Pharmaceutical Co., Ltd. In January 2024, he was appointed as Deng Li of Yunnan Wudi Pharmaceutical Co., Ltd.

General manager of the company; from May 2024 to present, he serves as deputy general manager of the company.

He has successively served as assistant to the factory director, human resources manager, quality supervisor (QA), director of the general manager office, deputy general manager, director and general manager of Guizhou Hanfang Pharmaceutical Co., Ltd., and Luo Zhanbiao of Guizhou Dechang

Human Resources Administration Director, Director and General Manager of Xiang Pharmaceutical Co., Ltd. He joined the company in December 2020 and is currently the deputy general manager of the company.

Yang Zhiyu once worked at Guizhou Bailing Enterprise Group Pharmaceutical Co., Ltd. as the head of the sales department. Joined the company in April 2023 and currently serves as the company's deputy general manager and general manager of the OTC2 Department.

From July 2004 to July 2006, he served as a physical and chemical inspector at Shanghai Baijiayi Pharmaceutical Co., Ltd. From July 2006 to July 2008, he served as the workshop director of Shanghai Baijiayi Pharmaceutical Co., Ltd. From July 2008 to February 2015, he served as the director of the production department of Guizhou Jingfeng Injection Co., Ltd. From February 2015 to May 2015, he served as Director of the Quality Department of Guizhou Jingfeng Injection Co., Ltd. Yu Yuan. From June 2015 to December 2017, he served as deputy general manager of Dalian Holley Jingang Pharmaceutical Co., Ltd. From March 2017 to December 2017, he served as deputy general manager of Shanghai Jingfeng Pharmaceutical Co., Ltd. From December 2017 to May 2018, he served as the general manager of Guizhou Jingcheng Pharmaceutical Co., Ltd. From June 2018 to November 2020, he served as the general manager of Guizhou Jingfeng Injection Co., Ltd. From May 2021 to present, he serves as the deputy general manager of the company.

From May 1983 to June 2003, he served as the financial section chief of the Liuzhi Mining Bureau (now Guizhou Liuzhi Industry and Mining (Group) Co., Ltd.); from June 2003 to August 2013, he served as the financial director of Guizhou Shengzhang Hongyu Jitang Pharmaceutical Co., Ltd. From January 2015 to May 2024, he served as a director of the company. From January 2015 to November 2024, he served as the company's financial director. From November 2024 to July 2025, he served as the company's deputy general manager.

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From July 2008 to December 2010, he served as the administrative and financial assistant of Guizhou Youxiangyun Industrial Co., Ltd. From March 2011 to August 2011, he served as the administrative assistant of Guizhou Sanli Pharmaceutical Co., Ltd. Director of administrative personnel of the company; from January 2013 to September 2014, he served as the administrative personnel manager of Guizhou Sanli Pharmaceutical Co., Ltd.; from October 2014 to October 2015, he served as the administrative manager of Guizhou Sanli Pharmaceutical Co., Ltd.; from 2015 From November to present, he has served as the manager of the human resources department and the administrative human resources director of Guizhou Sanli Pharmaceutical Co., Ltd. From May 2021 to December 2025, he served as the chairman of the company's board of supervisors. He is currently the manager of the administrative human resources department of Guizhou Sanli Pharmaceutical Co., Ltd.

From 2005 to 2010, he worked for Guizhou Magic Pharmaceutical Co., Ltd., and served successively as market inspector, regional sales manager, and office commercial manager. In 2010, he joined Guizhou Sanli Pharmaceutical Co., Ltd. Liang Donghai Co., Ltd., and served successively as the sales business department manager of Guizhou Sanli Pharmaceutical Co., Ltd., and is currently the compliance department manager of Guizhou Sanli Pharmaceutical Co., Ltd. From November 2022 to December 2025, he served as a supervisor of Guizhou Sanli Pharmaceutical Co., Ltd., and is currently the company's compliance department manager.

Joined Guizhou Sanli Pharmaceutical Co., Ltd. in 2016 and served as the company's human resources specialist, deputy manager of the human resources department, and manager of the human resources department. From August 2022 to December 2025, Yang Yi

Served as employee supervisor of the company.

Other situation description

√Applicable □Not applicable

In accordance with the provisions of the "Company Law of the People's Republic of China", "Guidelines on the Articles of Association of Listed Companies", "Shanghai Stock Exchange Stock Listing Rules" and other laws, regulations and normative documents, and taking into account the actual situation of the company, the company held the company's first extraordinary shareholders meeting in 2025 on December 18, 2025, and reviewed and approved the " "Proposal on Abolition of the Board of Supervisors, Change of Registered Capital and Business Scope, and Amendment of the Articles of Association", adjust the corporate governance structure, no longer set up a Board of Supervisors, the powers of the Board of Supervisors will be exercised by the Audit Committee of the Board of Directors, and the "Rules of Procedure of the Board of Supervisors" shall be abolished accordingly; and the "Articles of Association" shall be revised accordingly in accordance with relevant regulations.

On January 8, 2026, the company held the 21st meeting of the fourth board of directors, which reviewed and approved the "Proposal on Changing the Secretary of the Company's Board of Directors". In accordance with the relevant provisions of the Company Law and the Articles of Association, the company's board of directors agreed to appoint Ms. Ju Lingke as the secretary of the company's board of directors after being nominated by the company's chairman, Mr. Zhang Hai, and subject to qualification review by the nomination committee of the board of directors. The term will be from the date of approval by the board of directors to the expiration date of the company's fourth session of the board of directors.

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(2) Employment status of current and resigned directors and senior managers during the reporting period

1. Employment status in shareholder units

□Applicable √Not applicable

2. Employment status in other units

√Applicable □Not applicable

Personnel holding positions in other units Starting from term Ending of term

Other unit names

Name Position Start date End date

Legal representative 2018-09 Guizhou Nuorun Enterprise Management Consulting Co., Ltd.

Director, General Manager 2024-11

Legal representative 2015-09 Guizhou Sanli Health Management Co., Ltd.

Director 2024-11 Zhang Qianfan

Legal representative 2023-05 Guizhou Haost Biotechnology Co., Ltd.

Director 2024-11 Guizhou Hanfang Pharmaceutical Co., Ltd. Director 2021-06 Guizhou Sanli Pharmaceutical Co., Ltd. Hangzhou Branch Head 2022-08 Guizhou Sankang Traditional Chinese Medicine Industry Development Co., Ltd. Director 2023-09 Guizhou Hanfang Pharmaceutical Co., Ltd. Director, General Manager 2023-12 Wang Jueben Guizhou Dechangxiang Pharmaceutical Co., Ltd. Director 2023-06 Xiaoxuan Pharmaceutical Technology (Guizhou) Co., Ltd. Director 2021-07 2026-03 Guizhou Sanli Charity Foundation Board of Directors 2021-07 Guizhou Sanli Health Management Co., Ltd. Financial Manager 2024-11

Legal representative, director

Guizhou Sankang Chinese Medicinal Materials Industry Development Co., Ltd. Chief Executive Officer, General Manager, Finance Manager 2023-12

Legal representative, execution

Guizhou Sankang Planting Co., Ltd. Director and General Manager, Finance 2023-11

person in charge

Guizhou Hanfang Pharmaceutical Co., Ltd. Director 2021-06 Guo Ke

Guizhou Dechangxiang Pharmaceutical Co., Ltd. Director 2023-06 Guizhou Dechangxiang Traditional Chinese Medicine Pieces Co., Ltd. Director 2024-12 Guizhou Haost Biotechnology Co., Ltd. Financial person in charge 2024-11 Guizhou Cenyi Medical Information Co., Ltd. Financial person in charge 2023-11 Guizhou Nuorun Enterprise Management Consulting Co., Ltd. Financial person in charge 2024-11

Legal representative, execution

Sanli Health Industry (Hainan) Co., Ltd. Director, General Manager, Financial Manager 2024-06

Chairman 2024-11 2026-03 Yaozunbao Digital Intelligence Technology (Chengdu) Co., Ltd.

Director 2024-11Sheng Yongjian

Founded Yongsheng (Hangzhou) Technology Development Co., Ltd. Supervisor 2020-08 Guizhou Hanfang Pharmaceutical Co., Ltd. Director 2021-06 Wang Yi Sanli Zhongyue (Shanghai) Marketing Planning Co., Ltd. Executive Director 2020-10 Shanghai Miracle Pharmaceutical Investment Management Co., Ltd. Independent Director 2020-06 Chen Shigui Guizhou Zhengyi Accounting Firm Co., Ltd. Deputy General Manager 2024-10 appointed Guizhou Yongji Printing Co., Ltd. Independent Director 2026-04 Guidong Guizhou Fudi Law Firm Partner 2009-06

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Guiyang Industrial Development Holding Group Co., Ltd. Director 2023-06

Guizhou Gui'an Development Group Co., Ltd. Director 2024-08

Guizhou Dushan Rural Commercial Bank Co., Ltd. Independent Director 2023-09

Guizhou Longli Rural Commercial Bank Co., Ltd. Director 2015-11

Yang Zhiyu Yaozunbao Digital Intelligence Technology (Chengdu) Co., Ltd. Director 2024-11 2026-03 Guizhou Cenyi Medical Information Co., Ltd. Legal representative 2023-11

Yu Yuan

Guizhou Dechangxiang Pharmaceutical Co., Ltd. Legal representative 2023-06

in other orders

Position: None

explanation of the situation

(3) Remuneration of directors and senior managers

√Applicable □Not applicable

The remuneration of directors and senior management personnel shall be approved by the shareholders' meeting after deliberation by the board of directors, and the remuneration of senior management personnel shall be approved by the directors' decision-making process meeting.

Directors discuss their remuneration at the board meeting

Yes

Whether to avoid matters

Remuneration and Appraisal Committee or Independent Director

The Remuneration and Appraisal Committee will hold special meetings based on the remuneration levels of the industry and scale of the company, including directors, senior executives, etc.

The actual operating conditions of the company are formulated. The remuneration disbursement procedure complies with relevant laws, regulations and management personnel remuneration matters.

The provisions of the company's articles of association do not harm the interests of the company and investors.

specific situation

The remuneration of the company's independent directors is a fixed allowance, which is reviewed and approved by the shareholders' meeting. For other directors and senior managers who receive remuneration from the company, the remuneration of directors and senior managers shall be determined by the company’s remuneration and assessment committee at the end of each year.

Based on the annual operating performance assessment results, and based on the company's operating conditions and the city where it is located.

Responsible for formulating remuneration plans for company directors and senior managers based on specific conditions such as residents’ consumption levels.

The company's actual remuneration paid to directors and senior managers is consistent with the data disclosed in the annual report. Detailed remuneration of directors and senior management

See "(1) Changes in shareholdings and actual salary payments of current and outgoing directors and senior managers during the reporting period

Remuneration Situation".

At the end of the reporting period, the actual pre-tax remuneration received by all directors and senior management personnel during the reporting period totaled RMB 5.495 million.

The Remuneration and Appraisal Committee of the Company's Board of Directors is responsible for reporting to all directors and senior managers at the end of the period the directors who have paid remuneration or allowances to the Company.

Officers and senior managers are assessed. The assessment is mainly based on the company's performance in the current year and the assessment of the actual remuneration of post managers.

Responsibilities, satisfaction evaluation, etc. are implemented by the company's administrative and human resources department. The company's financial basis and completion status are

The Ministry of Finance organizes the distribution.

At the end of the reporting period, all directors and senior management

In 2025, there is no deferred payment arrangement for the remuneration of all directors and senior management personnel of the company. payment arrangements

At the end of the reporting period, all directors and senior management

In 2025, the remuneration of all directors and senior management personnel of the company has not been stopped, and the actual remuneration of reasonable personnel has been stopped.

shape.

Recovery situation

(4) Changes in directors and senior managers of the company

√Applicable □Not applicable

Name Position held Change circumstances Reason for change

Zhang Hongyu, deputy general manager, resigned and retired.

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(5) Description of punishments received by securities regulatory authorities in the past three years

□Applicable √Not applicable

(6) Others

□Applicable √Not applicable

4. Directors’ performance of duties

(1) Directors’ participation in board of directors and shareholders’ meetings

Participating shareholders’ participation in the board of directors

Will the director

Independent. This year, you should participate in the communication. Is it two consecutive years?

Name In person Presented by proxy Absent Attend shareholder director Join the board of directors Participate in the form of participation Not in person

Number of seats Number of seats Number of meetings

Times Add times Add meetings

Zhang Hai No 10 10 0 0 0 No 2 Zhang Qianfan No 10 10 0 0 0 No 2 Sheng Yongjian No 10 10 10 0 0 No 2 Guo Ke No 10 10 0 0 0 No 2 Wang Jueben No 10 10 0 0 0 No 2 Wang Yi No 10 10 0 0 0 No 2 Feng Weili Yes 10 10 10 0 0 No 2 Chen Shigui Yes 10 10 0 0 0 No 2 Guidong Yes 10 10 0 0 0 No 2 Explanation for not attending the board of directors meeting in person for two consecutive times

□Applicable √Not applicable

Number of board meetings held during the year 10

Among them: Number of on-site meetings 0

Number of meetings held by communication method 0

Number of meetings held on site combined with communication methods 10

(2) Directors raise objections to company-related matters

□Applicable √Not applicable

(3) Others

□Applicable √Not applicable

5. Special committees under the board of directors

√Applicable □Not applicable

(1) Members of the special committees under the board of directors

Special Committee Category Member Names

Audit Committee Feng Weisheng, Chen Shigui, Sheng Yongjian

Nomination Committee Guidong, Zhang Hai, Feng Weisheng

Remuneration and Appraisal Committee Chen Shigui, Guidong, Guo Ke

Strategy Committee Zhang Hai, Sheng Yongjian, Guidong

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(2) The Audit Committee held 7 meetings during the reporting period

Other performance dates, meeting contents, important opinions and suggestions

Responsibilities The Audit Committee reviewed and approved the following proposal regarding the re-signing of the partnership agreement: "About the Company

The project was analyzed and discussed in depth, and it was agreed that the company and its holding subsidiaries and professional investment institutions would jointly

2025-03-20 The company and its holding subsidiaries and professional investment institutions are not applicable to the venture capital funds established with the same investment.

Sign a new partnership agreement and agree to the relevant proposals for signing a partnership agreement.

The proposal was submitted to the company's board of directors for review.

The following proposals were reviewed and approved: "Company 2024

The Audit Committee strictly complies with laws, regulations and annual report and summary "Company 2024"

Carry out relevant rules and regulations and work diligently and responsibly. Annual Internal Control Evaluation Report "About Continued"

Based on the actual situation of the company, the relevant 2025-04-10 Proposal on the Appointment of an Accounting Firm was put forward, and the company’s opinions on the inapplicability were unanimous. After full communication and discussion, the 2025 First Quarter Report was unanimously revised.

Passed all motions and agreed to submit them to the board of directors and order <Guizhou Sanli Pharmaceutical Co., Ltd.

Considered by the general meeting of shareholders.

Internal Audit System>Proposal》

The Audit Committee conducted in-depth deliberation on the matters under review and passed the following resolution: "About the Company

After analysis and discussion, it was agreed that the company and Guangdong Pharmaceutical University intend to sign a technology transfer agreement with Guangdong Pharmaceutical University

2025-06-03 The university signed a technology transfer contract and technology development N/A contract and technology development (cooperation) contract negotiation

(Cooperation) Contract Proposal and agree to transfer the proposal"

The proposal was submitted to the company's board of directors for review.

The Audit Committee reviewed and approved the semi-annual report in strict accordance with laws, regulations and relevant rules and regulations and approved the following proposals: "Company 2025

2025-08-20 Work diligently and conscientiously, combined with the actual situation of the company. N/A Semi-annual Report and Summary》

situation, fully communicated and discussed, unanimously passed this proposal, and agreed to submit it to the board of directors for review. The following proposal was reviewed and approved: "The company's 2025 third quarter report for 2024 was reviewed and approved, the same as the third quarter report for 2025-10-17 is not applicable" and was submitted to the company's board of directors for review.

The following proposals were reviewed and approved: "About the revision of the "Internal Audit System". The Audit Committee strictly abides by the laws, regulations and the relevant rules and regulations of the "Accounting Firm Selection and Employment System" to carry out its work diligently and conscientiously. 2025-11-20 Not applicable. "About the revision of the "Internal Audit System". Agree to the proposal to amend this system and agree to submit the proposal" to be reviewed by the board of directors.

The Audit Committee reviewed and approved the following proposal on the matters under review: "In-depth analysis and discussion on the proposal of the company's wholly-owned subsidiary to withdraw from the jointly invested enterprise with related parties." and agreed to submit the relevant proposals to the company's board of directors for review.

(3) The Nomination Committee held 1 meeting during the reporting period

Other performance dates, meeting contents, important opinions and suggestions

Responsibilities: The candidate for the secretary of the company's board of directors complies with relevant laws and the following motion was reviewed and approved: "Proposal on changing the qualifications of senior managers of listed companies 2025-12-31 Not applicable to the appointment of senior managers of listed companies", and agreed to nominate Ms. Ju Lingke as the candidate for secretary of the company's board of directors.

(4) The Remuneration and Appraisal Committee held 4 meetings during the reporting period

Other performance dates, meeting contents, important opinions and suggestions

Responsibilities

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According to the "Measures for the Administration of Equity Incentives for Listed Companies", the "Incentive Plan" and other relevant regulations, in view of the fact that one of the incentive targets in the company's 2024 restricted stock incentive plan resigned due to resignation, the following proposal was no longer reviewed and approved: Qualified as an incentive target, the Supervisory Board agreed to the company's repurchase and cancellation of 60,000 shares of restricted and inapplicable institutional stocks that have been granted to the above incentive targets but have not been unlocked. The repurchase and cancellation of some of the granted unrestricted restricted stocks will not affect the subsequent implementation of the company's restricted stock incentive plan, and will not harm the interests of the company and all shareholders.

The third release of the company's 2021 restricted stock incentive plan reviewed and approved the following motion: Except that the conditions for lifting the restrictions during the lock-up period have not been met, it is agreed that the company will purchase and cancel the third release of the restricted stock incentive plan for 2021 that has been granted but has not yet been released. This repurchase and cancellation is in compliance with relevant laws and regulations, regulatory achievements and limited documents on repurchase and cancellation, and the relevant provisions of this incentive plan, such as the "2025-04-10 Listed Companies Lifting the Restriction Conditions and Not Applying the Restriction Period" and other relevant laws and regulations, normative achievements and repurchase and cancellation restrictions, and the relevant provisions of this incentive plan. There is no proposal to damage the interests of the company and all shareholders, and will not have a significant impact on the company's financial status and operating results.

According to the "Measures for the Administration of Equity Incentives for Listed Companies", the "Incentive Plan" and other relevant regulations, in view of the fact that two incentive targets in the company's 2024 restricted stock incentive plan resigned due to resignation, the following proposals were no longer reviewed and approved: Qualified as incentive targets, the Supervisory Board agreed to the company's repurchase note 2025-07-30 "Proposal on the repurchase and cancellation of part of the restricted and inapplicable institutional stocks that have been granted but not unlocked to the above incentive targets" A total of 80,000 shares. The repurchase and cancellation of some of the granted unrestricted restricted stocks will not affect the subsequent implementation of the company's restricted stock incentive plan, and will not harm the interests of the company and all shareholders.

The following motions were considered and approved:

"About the Establishment<Director, Senior

The Remuneration and Appraisal Committee strictly complies with laws, regulations and relevant management personnel remuneration management systems.

2025-11-20 We will carry out our work in accordance with the relevant rules and regulations, work diligently and conscientiously, and agree to this resolution of inapplicability> "About Repurchase

System amendment proposal and agreed to be submitted to the Board of Directors for review. Cancellation of some restricted stocks

Bill

(5) The Strategy Committee held 3 meetings during the reporting period

Other performance dates, meeting contents, important opinions and suggestions

The following proposals were reviewed and approved on the responsibilities:

The Strategy Committee conducted the "About Modifications <Guizhou Qianli" regarding the re-signing of the partnership agreement.

After in-depth analysis and discussion, it was agreed that the company and its holding subsidiaries would re-sign a partnership agreement with 2025-03-14 Biomedical Venture Capital Fund Not Applicable Professional Investment Institutions, and agreed to convert the partnership (limited partnership)

Relevant proposals were submitted to the company's board of directors for review.

Partnership Agreement>Proposal》

The following motions were considered and approved:

The Strategy Committee conducted an in-depth analysis and discussion on the matters under review, "About the Company's proposed agreement with Guangdong Pharmaceutical

Discussion, agreed that the company and Guangdong Pharmaceutical University signed a technology transfer contract 2025-05-26 University of Science and Technology signed a technology transfer contract and technology development (cooperation) contract, and agreed to sign a technology transfer contract and technology development (cooperation) contract

Submit the proposal to the company's board of directors for consideration.

Proposal on Contract

The following motion was reviewed and approved: Committee member and independent director Gui Dong said that the motion was in line with the 2025-12-16 "About the Company's Cooperation with Hainan University" The company's development strategy is conducive to the company's long-term development.

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Case" The situation of the interests of small shareholders. It is also recommended that company management

When promoting this cooperation, the contract should be carefully performed and the project should be strengthened.

project management and risk monitoring to ensure the efficiency and efficiency of fund use

effect. At the same time, it is recommended that follow-up major technology introduction projects

Consider strengthening proactive independent technical due diligence and value assessment

evaluation work to further improve the decision support system.

(6) Specific circumstances of objectionable matters

□Applicable √Not applicable

6. Explanation of the risks found by the audit committee in the company

□Applicable √Not applicable

The Audit Committee has no objection to the supervision matters during the reporting period.

7. Employees of the parent company and major subsidiaries at the end of the reporting period

(1) Employee situation

Number of active employees of the parent company 1,361 Number of active employees of major subsidiaries 526 Total number of active employees 1,887 Number of retired employees of the parent company and major subsidiaries who need to bear expenses 331 Professional composition

Major composition category Major composition number

Production staff 306 sales staff 974 technical staff 266 financial staff 36 administrative staff 305 total 1,887 education level

Education level category Number (person)

Master's degree or above 37 Bachelor's degree 477 College degree 681 High school or technical secondary school degree 450 Technical secondary school or below degree 242

Total 1,887

(2) Remuneration policy

√Applicable □Not applicable

In 2025, the company will continue to improve the compensation system and incentive mechanism based on job value, ability contribution and performance appraisal that are closely linked. According to the company's strategic plan and annual operating indicators, responsibilities are consolidated at all levels, key performance goals are broken down and implemented, and the performance assessment of subsidiaries is further refined to give full play to the guiding and pulling role of performance goals.

The company always follows the remuneration principle of "keeping total remuneration and benefits competitive in the employee's local labor market; personal income also depends on the employee's contribution and performance" to set reasonable remuneration levels for various positions. In order to improve employees' work enthusiasm, the company has established different reward systems for employees in different positions, including performance rewards, sales rewards, and contribution rewards, aiming to encourage employees who have served the company for a long time and who have successfully completed their jobs and made special contributions. This reward system is based on employee

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It is formulated based on the completion of business indicators, the overall performance of employees and the company's operating conditions, and strives to ensure that remuneration is fair and reasonable within the company and stimulates the ownership spirit of employees.

In order to further improve the remuneration management system of the company's directors and senior managers, establish a scientific and effective incentive and restraint mechanism, effectively mobilize the work enthusiasm of the company's directors and senior managers, improve the company's operating and management efficiency, and promote the company's sustainable and healthy development, in accordance with the "Company Law of the People's Republic of China", "Listed Company Governance Code" and "Shanghai Stock Exchange Stock Listing Rules" In accordance with the "Shanghai Stock Exchange Self-Regulatory Guidelines for Listed Companies No. 1 - Standardized Operations" and other relevant laws and regulations, normative documents and the "Articles of Association", and in combination with the actual situation of the company, the "Remuneration Management System for Directors and Senior Management Personnel" was formulated. The system stipulates that the company’s remuneration system for directors and senior managers shall follow the following principles:

(1) The salary level is consistent with the company’s size and performance, and is competitive with the income level of similar positions in the market;

(2) Responsibilities, rights, and interests are equal, and remuneration is consistent with the value of the position and the size of the responsibilities;

(3) The combination of short-term and long-term incentives is consistent with the company’s goal of sustainable and healthy development;

(4) Pay equal attention to incentives and constraints, and link salary payment to assessment, rewards and punishments.

(3) Training plan

√Applicable □Not applicable

The company's employee training has always been closely centered on the company's business development strategic requirements, established a complete hierarchical training system, and developed a training network around the three main axes of "GMP", "non-GMP" and "corporate culture". Targeting "management, marketing, production, and professional and technical levels"; taking the big talent concept and the big training pattern as the guiding ideology; adhering to service production and operation as the center; and comprehensively improving the quality of employees as the purpose; with the purpose of continuously improving the core competitiveness of the company and ensuring the sustainable development of the company's operations and production, using various training methods such as lectures, external training, and assessments to broaden training channels and fully launch the training project. In order to create a high-quality and highly-skilled workforce, we conduct annual employee training.

During the reporting period, the company organized a total of 359 training sessions of various types, and took multiple measures to implement the training work, effectively improving the skills of employees and strengthening the construction of the company's corporate culture, so as to better allow employees to release their own strength and participate in the company's operations, and at the same time achieve the sustainable development of the company through the common progress of employees and the company.

(4) Labor outsourcing situation

□Applicable √Not applicable

8. Profit distribution or capital reserve conversion plan

(1) Formulation, implementation or adjustment of cash dividend policy

√Applicable □Not applicable

1. Adjustments to dividend policy

On October 10, 2024, the company held the first extraordinary shareholders' meeting in 2024, which reviewed and approved the "Proposal on the Company's Shareholder Dividend Return Plan for the Next Three Years (2024-2026)", which clarified the conditions and proportions of the company's cash dividends for the three fiscal years 2024-2026. For details, please see the company's announcement on September 13, 2024. The "Guizhou Sanli Pharmaceutical Co., Ltd.'s shareholder dividend return plan for the next three years (2024-2026)" was disclosed on the Shanghai Stock Exchange website (www.sse.com.cn).

2. Profit distribution plan for 2025

As of the end of this reporting period, the company's total share capital was 408,930,216 shares. It is planned to use 399,650,016 shares (excluding the number of shares in the company's special securities account for repurchase and the number of shares to be repurchased and canceled, a total of 9,280,200 shares) as the base number. It is planned to distribute a cash dividend of 0.60 yuan (tax included) to all shareholders for every 10 shares, and a total cash dividend of 23,979,000.96 yuan (tax included) is planned to be distributed. The company's cash dividend ratio this year was 51.84%. This profit distribution plan still needs to be submitted to the company's shareholders' meeting for review.

3. Other instructions

If the company's total share capital changes due to share repurchase/equity incentive grant share repurchase and cancellation, etc., the company plans to maintain the per share distribution ratio unchanged and adjust the total distribution accordingly. If the total share capital changes subsequently, specific adjustments will be announced separately. Since the company has repurchased shares, this profit distribution involves differentiated dividends.

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(2) Special explanation of cash dividend policy

√Applicable □Not applicable

Whether it complies with the provisions of the company's articles of association or the requirements of the resolution of the shareholders' meeting √Yes □No Whether the dividend standards and proportions are clear and clear √Yes □No Whether the relevant decision-making procedures and mechanisms are complete √Yes □No Whether the independent directors have performed their duties and played their due role √Yes □No Whether small and medium-sized shareholders have the opportunity to fully express their opinions and demands, and whether their legitimate rights and interests have been fully protected √Yes □No

(3) If the company is profitable during the reporting period and the parent company has positive profits available for distribution to shareholders, but has not proposed a cash profit distribution plan, the company shall

When disclosing in detail the reasons as well as the purpose and use plan of undistributed profits

□Applicable √Not applicable

(4) Profit distribution and capital reserve conversion plan for the reporting period

√Applicable □Not applicable

Unit: Yuan Currency: RMB Number of bonus shares per 10 shares (shares) 0 Number of dividends per 10 shares (yuan) (tax included) 0.60 Number of converted shares per 10 shares (shares) 0 Cash dividend amount (tax included) 23,979,000.96 Net profit attributable to ordinary shareholders of listed companies in the consolidated statement 46,254,223.69 The amount of cash dividends accounts for the net profit attributable to ordinary shareholders of the listed company in the consolidated statements.

51.84 Profit Ratio (%)

The amount of shares repurchased in cash is included in cash dividends 0.00 Total dividend amount (tax included) 23,979,000.96 The total dividend amount accounts for the net profit attributable to ordinary shareholders of the listed company in the consolidated statement

51.84 Profit Ratio (%)

(5) Cash dividend distribution in the last three fiscal years

√Applicable □Not applicable

Unit: Yuan Currency: RMB The cumulative amount of cash dividends in the last three fiscal years (tax included) (1) 243,268,069.60 The cumulative amount of repurchases and cancellations in the last three fiscal years (2) 0.00 The cumulative amount of cash dividends and repurchases and cancellations in the last three fiscal years (3) = (1) + (2) 243,268,069.60 The average annual net profit amount in the last three fiscal years (4) 204,328,300.92 Cash dividend ratio in the last three fiscal years (%) (5)=(3)/(4) 119.06 Net profit attributable to ordinary shareholders of the listed company in the consolidated statement of the most recent fiscal year 46,254,223.69 Undistributed profit at the end of the parent company's statement of the most recent fiscal year 766,210,791.85

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

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

√Applicable □Not applicable

Matter Overview Query Index

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According to the relevant regulations of the company’s “2024 Restricted Stock Incentive Plan”

Determined to award incentives to Mr. Ouyang Zhiqiang, Mr. Gu Jiyang, and Mr. Wang Xunxian

The student is no longer eligible for incentives due to resignation, so the company will

The 140,000 restricted shares that have been granted to the incentive targets but have not been released from sale restrictions are detailed in the company's repurchase and cancellation on October 24, 2025; according to the relevant provisions of the company's "2021 Restricted Stock Incentive Plan Shanghai Stock Exchange Website (www.sse.com.cn)", the company's operating performance in 2024 failed to meet the plan. The "Guizhou Sanli Pharmaceutical Co., Ltd. has set the third lifting period for the lifting of restrictions on sales. Therefore, the company will implement the repurchase and cancellation of 7 equity incentive restricted stocks for the 732,000 restricted shares that have been granted to the public incentive targets but have not yet been released from the restrictions" (Announcement No.: 2025-056).

The shares will be repurchased and cancelled. The cancellation date is October 28, 2025.

On October 29, 2025, the company received China Securities Depository and Clearing Co., Ltd.

Securities registration certificate of Shanghai Branch of Ren Company.

On November 27, 2025, the company held the 10th meeting of the fourth session of the Board of Directors.

The seventh meeting and the 16th meeting of the fourth session of the Board of Supervisors were reviewed and approved. For details, please refer to the "Proposal on the Repurchase and Cancellation of Certain Restricted Stocks" issued by the company on November 28, 2025. The incentive target is the Shanghai Stock Exchange website (www.sse.com.cn). Mr. Tang Jianfeng is no longer eligible for incentives due to his resignation, and the company will repurchase the shares. As disclosed above, Guizhou Sanli Pharmaceutical Co., Ltd. sold a total of 200,000 shares of restricted stock that had been granted but not yet unlocked. Announcement on the Repurchase and Cancellation of Certain Restricted Stocks" This proposal has been reviewed and approved by the Remuneration and Assessment Committee of the Company's Board of Directors. (Announcement Number: 2025-065).

Before the deadline, the repurchase and cancellation of this part of restricted stocks had not been completed.

On March 9, 2026, the company held the 20th meeting of the fourth board of directors

At the second meeting, the "Repurchase and Cancellation of Certain Restricted Stocks" was reviewed and approved.

For details, please refer to the company’s resolution on March 10, 2026. Mr. Feng Youchao, the incentive object, no longer has the incentive due to his resignation.

The company will repurchase and cancel the restricted shares that have been granted but not yet unlocked.

"About the repurchase and cancellation of some restricted stocks totaling 40,000 shares" disclosed above. The proposal has been approved by the company’s board of directors on remuneration and assessment

Announcement of Tickets" (Announcement No.: 2026-005). The committee reviewed and approved. Before the deadline, this part of restricted stock has not yet been completed.

Cancel the repurchase.

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

Equity incentives

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

Employee stock ownership plan status

□Applicable √Not applicable

Other incentives

□Applicable √Not applicable

(3) Equity incentives granted to directors and senior managers during the reporting period

□Applicable √Not applicable

(4) The evaluation mechanism for senior managers during the reporting period, as well as the establishment and implementation of the incentive mechanism

√Applicable □Not applicable

The company has formulated the "Remuneration Management System for Directors and Senior Management Personnel" in accordance with relevant laws, regulations and the relevant provisions of the "Articles of Association". The Remuneration and Assessment Committee of the company's board of directors is responsible for the formulation of remuneration policies, the review and approval of remuneration plans, and based on the company's annual business plan objectives, it evaluates the operating performance and management indicators of the company's directors and senior managers and the work they are responsible for. The company continues to improve long-term incentive policies based on actual conditions to encourage senior managers to perform their duties more diligently and responsibly.

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10. Construction and implementation of internal control system during the reporting period

√Applicable □Not applicable

In accordance with the provisions of the "Company Law of the People's Republic of China", "Guidelines on the Articles of Association of Listed Companies", "Rules of Shareholders' Meetings of Listed Companies" and "Measures for the Administration of Information Disclosure of Listed Companies" and other relevant laws and regulations, in order to further improve the company's standardized operation level and improve the corporate governance structure, the company comprehensively sorted out the existing relevant governance systems. Based on the actual situation of the company, the company completed the relevant procedures for canceling the board of supervisors, transferred the relevant supervisory powers to the audit committee under the board of directors, and completed the "Articles of Association" based on the actual situation of the company. The revision and formulation of more than 20 core governance systems including the "Rules of Procedure for Shareholders' Meetings" and "Rules of Procedure for Board of Directors". For other details, please see the "2025 Internal Control Self-Evaluation Report".

Explanation of major deficiencies in internal control during the reporting period

□Applicable √Not applicable

11. Management and control of subsidiaries during the reporting period

√Applicable □Not applicable

During the reporting period, the company's board of directors used risk prevention and improvement of management effectiveness as guidance to strengthen the execution of the internal control system and the effectiveness of internal control management. In accordance with relevant laws and regulations, combined with the company's industry characteristics and actual operating conditions, a corresponding decision-making system, execution system and audit supervision system have been established to conduct risk control on the company's organization, resources, assets, investments and company operations, improve the company's overall operational efficiency and anti-risk capabilities, safeguard the legitimate rights and interests of the company and investors, and promote the healthy development of the company.

Risk reminder of abnormal management control of subsidiaries

□Applicable √Not applicable

12. Relevant description of internal control audit report

√Applicable □Not applicable

The company hired Beijing Dehao International Accounting Firm (Special General Partnership) to issue an audit report on the company's internal control for 2025, which was disclosed on the website of the Shanghai Stock Exchange (www.sse.com.cn) on April 27, 2026.

Whether to disclose the internal control audit report: Yes

Type of opinion on internal control audit report: standard unqualified opinion

Whether a non-standard audit opinion on internal control was issued during the reporting period or the previous year

□Yes √No

13. Rectification of self-examination issues in the special action on governance of listed companies

Not applicable

14. 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 of environmental information disclosure report according to law

https://222.85.128.186:8081/eps/index/enterprise-more?code=915 1 Guizhou Hanfang Pharmaceutical Co., Ltd. 20115215742298Y&uniqueCode=d2eb7b7ec4729ed4&date=2024

&type=true&isSearch=true

Other instructions

□Applicable √Not applicable

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15. Social Responsibility Work

(1) Whether to separately disclose social responsibility report, sustainable development report or ESG report

□Applicable √Not applicable

(2) Specific situation of social responsibility work

√Applicable □Not applicable

External donations and public welfare projects Quantity/content Description Total investment (10,000 yuan) 90.61 Department of Sanli Public Welfare Fund Among them: Funds (10,000 yuan) 0.00 External donations. Material discount (10,000 yuan) 90.61 Sanli Charity Foundation

The number of people benefited by the use of funds from Sanli (person) 1,450

Pre-pharmaceutical donation.

Specific instructions

√Applicable □Not applicable

In 2025, Sanli Charity Foundation donated to five schools. The donations include desks, chairs, benches, sports equipment, school uniforms, stationery and books and other hardware facilities needed for daily teaching, as well as companion materials such as Lego blocks, Dicos children's meals, game prizes, down jackets, scarves and gloves. Sanli Charity Foundation has continued the "Sanli Happy Summer Vacation" charity activity, leading second-year junior high school students from impoverished mountainous areas to study in Shanghai to broaden their horizons, enrich their experiences, and increase their knowledge.

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

√Applicable □Not applicable

Poverty Alleviation and Rural Revitalization Projects Quantity/Content Description

The total investment (10,000 yuan) 72.33 is the external donation made by Sanli Charity Foundation. Among them: Funds (10,000 yuan) 0.00 Donations. The funds used by the Sanli Public Welfare Foundation are the discounted materials donated by Sanli Pharmaceutical in the early stage (10,000 yuan) 72.33

Grants.

Rural revitalization: 5,000 people

Number of people benefited (person) 6,420

Poverty alleviation: 1,420 people

Forms of assistance (such as industrial poverty alleviation, employment assistance

Poverty alleviation through grassroots medical care and poverty alleviation through education

poverty, education poverty alleviation, etc.)

Specific instructions

√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 approximately 5,300 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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5. In August 2025, Guizhou Sanli Charity Foundation launched the fifth-year "Sanli Happy Summer Vacation" study project, leading 30 second-year junior high school students from Pingba Cross Middle School, Meitan Middle School, and Chaodi Middle School on a five-day and four-night study trip to Shanghai.

6. In October 2025, the Guizhou Sanli Charity Foundation teamed up with the Kamfang Pharmaceutical volunteer team to drive through the winding mountain road and into Dakuo Primary School, Heitu Town, Zhijin County, to launch the "Beautiful Childhood, Happy Present - Kaikaixia Escort Plan" public welfare action.

7. In November 2025, the Guizhou Sanli Charity Foundation joined hands with the volunteer team of Guizhou Dechangxiang Pharmaceutical Co., Ltd. and went to Longchangying Town, Qixingguan District, Bijie City. They visited Huangjin Primary School and Anding Primary School, letting the warmth of the "Kaikaixia Escort Plan" fall on the smiling faces of every rural child.

8. In December 2025, the Guizhou Sanli Charity Foundation joined hands with the volunteer team of Guizhou Sanli Pharmaceutical Co., Ltd. to go to the Central School of Longchangying Town, Bijie City to make donations, bringing a successful conclusion to the 2025 monthly public welfare activities of "Beautiful Childhood, Happy Present - Kaikaixia Escort Plan".

9. In December 2025, the foundation sent down jackets and pairs of gloves and scarves to the primary schools it served in 2025, bringing warm sunshine to the winter of 988 children in mountainous areas. In the new year, I hope every child can take this warmth with him, grow vigorously like spring grass, and be as enthusiastic as the summer sun. I hope they will always be accompanied by love during their childhood, be healthy and happy, and grow into what they like best.

17. Others

□Applicable √Not applicable

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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 you fail to perform in time, if you fail to do so in time,

Is there? Is it time?

Commitment Commitment Commitment The line should indicate the unfinished performance of the obligation.

The committed party shall be strict in fulfilling its commitment time and commitment period.

Background Type Content Details of performance Description of next deadline for performance

Reason step plan

The company’s controlling shareholder, actual

To resolve horizontal competition, see Note 1 for details April 15, 2020 Yes Long-term effective Yes Not applicable Not applicable International controller Zhang Hai

The company’s controlling shareholder, actual

Resolve related transactions. See Note 2 for details. April 15, 2020. Yes. Long-term. Yes. Not applicable. Not applicable. Actual controller Zhang Hai.

Guizhou Sanli Pharmaceutical Stock

Others See Note 3 for details April 15, 2020 Yes Long-term validity Yes Not applicable Not applicable

Co., Ltd.

With the controlling shareholder and actual shareholder of the first company

Others See Note 4 for details April 15, 2020 Yes Long-term validity Yes Not applicable Not applicable Sub-public controller Zhang Hai

Development Company Directors, Senior Management

Others See Note 5 for details. April 15, 2020 Yes. Long-term validity. Yes. Not applicable. Not applicable. Commitment of management personnel.

Guizhou Sanli Pharmaceutical Stock

Others See Note 6 for details April 15, 2020 Yes Long-term validity Yes Not applicable Not applicable Commitment Co., Ltd.

The issuer’s controlling shareholder,

Others See Note 7 for details April 15, 2020 Yes Long-term yes Not applicable Not applicable Actual controller Zhang Hai

Issuer directors and supervisors

Others See Note 8 for details April 15, 2020 Yes Long-term validity Yes Not applicable Not applicable Executives and senior managers

Guizhou Sanli Pharmaceutical Stock

Others See Note 9 for details April 15, 2020 Yes Long-term validity Yes Not applicable Not applicable

Co., Ltd.

Others The company’s controlling shareholder, actual September 13, 2024 to

Restricted sale of shares See Note 10 for details September 13, 2024 Yes Yes Not applicable Not applicable Commitment International controller Zhang Hai March 12, 2026

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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).

(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:

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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 using raised funds;

(2) Strengthen business management and internal control;

(3) Improve profit distribution policies;

(4) Improve the corporate governance structure.

Note 4:

Zhang Hai, the controlling shareholder and actual controller, promised:

(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 company’s directors and senior managers promise 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.

(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 report to the China Securities Regulatory Commission. The board of directors shall be convened within 30 days after the competent authorities such as the National People's Congress or the People's Court make the final determination or effective judgment of the existence of the above-mentioned facts of the company, formulate a share repurchase plan and submit it to the shareholders' meeting for review and approval, and repurchase all new shares initially issued by the company in accordance with the law. The repurchase price shall not be lower than the issuance price of the company's shares plus the issuance of shares

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Bank demand deposit interest or other prices approved by the China Securities Regulatory Commission during the relevant period 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, promised:

(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 promise 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 not to actively reduce the company’s shares he directly holds in any way within 18 months from September 13, 2024 (i.e., 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.

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(2) There is a profit forecast for the company's assets or projects, and the reporting period is still in the profit forecast period. The company will ask whether the assets or projects have reached

An explanation of the original profit forecast and its reasons

□Achieved □Not reached √Not applicable

(3) Performance commitments

□Applicable √Not applicable

Changes in performance commitments

□Applicable √Not applicable

Other instructions

□Applicable √Not applicable

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

4. Explanation of the company’s board of directors on the “non-standard opinion audit report” of the accounting firm

□Applicable √Not applicable

5. The company’s analysis and explanation of the causes and effects of changes in accounting policies, accounting estimates, or corrections of major accounting errors

(1) The company’s analysis and explanation of the reasons and impacts of changes in accounting policies and accounting estimates

□Applicable √Not applicable

(2) The company’s analysis and explanation of the causes and effects of correction of major accounting errors

□Applicable √Not applicable

(3) Communication status with the previous accounting firm

□Applicable √Not applicable

(4) Approval procedures and other instructions

□Applicable √Not applicable

6. Appointment and dismissal of accounting firms

Unit: Yuan Currency: RMB

Name of domestic accounting firm currently employed: Beijing Dehao International Accounting Firm (Special General Partnership) Domestic accounting firm Remuneration 350,000.00 Auditing years of domestic accounting firm 3 years Name of CPA of domestic accounting firm Guo Yan, Xu Ruixing Domestic accounting firm CPA audit services

3 years cumulative service life

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Name Remuneration Internal Control Audit Accounting Firm Beijing Dehao International Accounting Firm (Special General Partnership) 200,000.00 Description of the appointment and dismissal of the accounting firm

□Applicable √Not applicable

Explanation on the change of accounting firm during the audit period

□Applicable √Not applicable

Explanation of audit fees falling by more than 20% (inclusive) compared with the previous year □ Applicable √ Not applicable

7. Facing the risk of delisting

(1) Reasons for delisting risk warning

□Applicable √Not applicable

(2) The company’s planned response measures

□Applicable √Not applicable

(3) Situations and reasons for facing termination of listing

□Applicable √Not applicable

8. Matters related to bankruptcy and reorganization

□Applicable √Not applicable

9. Major litigation and arbitration matters

□The company has major litigation and arbitration matters this year √The company has no major litigation and arbitration matters this year

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

situation

□Applicable √Not applicable

11. 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 company, its controlling shareholders, and actual controllers were in good faith, and there were no cases of failure to fulfill effective court judgments or large amounts of debts that were due and unpaid.

12. 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

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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 2.3379 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 193,400 yuan.

3. Matters not disclosed in temporary announcements

□Applicable √Not applicable

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

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

√Applicable □Not applicable

Matter Overview Query Index

According to the company’s strategy and development needs and Yaozunbao’s actual business operations

situation, more effectively activate resources, optimize business structure and asset balance

For details, please refer to the company's structure on the Shanghai Stock Exchange on December 4, 2025. It will concentrate its efforts on developing key core businesses and further focus on corporate governance.

"The main business of Guizhou Sanli Manufacturing Company" disclosed on the website (www.sse.com.cn). Sanli Health and Chuang Yongsheng and other relevant parties participated

Pharmaceutical Co., Ltd. regarding the withdrawal of its wholly-owned subsidiary and the capital reduction of Yaozunbao, a related party company, of which the company reduced its capital by 20 million yuan;

Announcement on the Termination of Joint Investment Enterprises and Related Transactions" (Announcement) After the completion of this capital reduction, the company will no longer hold the equity of Yaozunbao.

No.: 2025-070).

Yaozunbao currently has a registered capital of 80 million yuan, and this capital reduction totals

53.5975 million yuan, and the registered capital after capital reduction is 26.4025 million yuan.

The company held a general manager office meeting on July 1, 2025 2025

The fifth extraordinary meeting in 2025, the resolution of the meeting is as follows: For details, please refer to Section 8 of the "2025 Semi-annual Report of Guizhou Sanli System Equity Investment Fund Partnership (Limited Partnership) Transfer of Holding Pharmaceutical Co., Ltd." which the company agreed to disclose on the Shanghai Stock Exchange on August 28, 2025 to the Guiyang Guanshan Lake District Experimental Zone Life Service Industry Private Website (www.sse.com.cn). Subsidiary Xiaoxuan Pharmaceutical Technology (Guizhou) Co., Ltd. 3.98% 17. Events after the balance sheet date.

Equity share.

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. If a performance agreement is involved, the performance achievement during the reporting period should be disclosed.

□Applicable √Not applicable

(3) Major related transactions of joint external investment

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

□Applicable √Not applicable

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

3. Matters not disclosed in the temporary announcement □Applicable √Not applicable

(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 the temporary announcement □Applicable √Not applicable

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

(6) Others

□Applicable √Not applicable

13. Major contracts and their performance

(1) Custody, contracting and leasing matters

1. Custody status

□Applicable √Not applicable

2. Contracting situation

□Applicable √Not applicable

3. Leasing situation

□Applicable √Not applicable

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(2) Guarantee situation

□Applicable √Not applicable

(3) Entrusting others to manage cash assets

1. Entrusted financial management situation

(1). Overall situation of entrusted financial management

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Type Risk characteristics Undue balance Overdue uncollected amount Bank financial products R2 medium and low risk 19,770,000.00 /

Other situations

□Applicable √Not applicable

(1). Individual entrusted financial management situation

√Applicable □Not applicable

Unit: 10,000 yuan Currency: RMB

Entrusted financial management From the beginning of entrusted financial management, whether the funds of entrusted financial management exist or not, the actual income, the overdue amount, the trustee, the type of entrusted financial management, the risk characteristics, the undue amount.

Amount Start date End date Investment direction Restricted situation or loss Return amount CNCBI Financial Management has non-principal guaranteed

Bank financial products R2 medium and low risk 1,065.00 2025-02-11 No fixed term No 3.88 1,065.00 Limited liability company Floating income

CMB Wealth Management is non-principal guaranteed

Bank financial products R2 medium and low risk 200.00 2025-02-12 2026-01-16 No 3.26 200.00 Limited liability company Floating income

China Post Financial Management is non-principal guaranteed

Bank financial products R2 medium and low risk 392.00 2025-02-10 No fixed term No 5.87 392.00 Limited liability company Floating income

BOC Wealth Management is non-principal guaranteed

Bank financial products R2 medium and low risk 320.00 2025-02-11 No fixed term No 2.58 320.00 Limited liability company Floating income

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Other situations

□Applicable √Not applicable

(2). Impairment provisions for entrusted financial management □Applicable √Not applicable

2. Entrusted loans

(1). Overall situation of entrusted loans □Applicable √Not applicable

Other situations

□Applicable √Not applicable

(2). Individual entrusted loans □Applicable √Not applicable

Other situations

□Applicable √Not applicable

(3). Impairment provisions for entrusted loans □Applicable √Not applicable

3. Other situations

□Applicable √Not applicable

(4) Other major contracts

√Applicable □Not applicable

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(1) In August 2025, the company signed a "Technology Transfer (Patent Rights/Patent Application Rights) Contract" and a "Technology Development (Cooperation) Contract" with Guangdong Pharmaceutical University. The total contract amount is RMB 150 million: mainly involving the use of Jinlu Banfenghe in the preparation of drugs to prevent and/or treat liver damage. Transfer of 7 patents including application, other diseases or preparation related patents (including PCT patent rights) derived from 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.). For details, please refer to the "Guizhou Sanli Pharmaceutical Co., Ltd.'s Voluntary Information Disclosure Announcement on the Plan to Sign a Technology Transfer Contract and a Technology Development (Cooperation) Contract with Guangdong Pharmaceutical University" disclosed by the company on the website of the Shanghai Stock Exchange (www.sse.com.cn) (Announcement Number: 2025-034).

As of the end of this reporting period, the company has paid RMB 5 million as agreed in the contract, and the remaining balance will be paid in installments based on milestones as agreed in the contract. The SL&GDPU-001 project (category 1.2 new traditional Chinese medicine, subdivided into liver protection and prevention and treatment of fibrosis) jointly developed by the company and Guangdong Pharmaceutical University has been officially launched during the reporting period. Intellectual property transfer and pharmaceutical research are progressing in an orderly manner. It is planned to subsequently promote pharmaceutical research and CMC research and start non-clinical research.

(2) In December 2025, the company signed a "Technology Transfer (Patent Application Rights) Contract" with Hainan University. The total contract amount is RMB 200 million, including a milestone payment of RMB 20 million (tax included) and a sales commission of RMB 180 million (tax included). The transfer price will be paid in installments by the company in accordance with the contract. This cooperation mainly involves projects related to the research on the efficacy of HXW2324 compound on three classic Alzheimer's disease animal models. For details, please refer to the "Announcement of Guizhou Sanli Pharmaceutical Co., Ltd. on Signing a Technology Transfer Contract with Hainan University" disclosed by the company on the website of the Shanghai Stock Exchange (www.sse.com.cn) (Announcement No.: 2025-074).

As of the end of this reporting period, the company cooperated with Hainan University on the HXW2324 compound (preparation) project (subdivided into anti-Alzheimer's disease), and Hainan University is currently conducting efficacy verification of the candidate compounds.

The research and development of innovative traditional Chinese medicine drugs are all early-stage projects and are mainly reserved for the company to build a future-oriented innovative drug research and development pipeline.

14. Instructions on the use of raised funds

□Applicable √Not applicable

15. Description of other major matters that have a significant impact on investors’ value judgments and investment decisions

□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

Unit: Share

Before this change, this change increases or decreases (+, -) After this change, the proportion issuance and bonus provident fund proportional quantity other subtotal quantity

(%) New shares Conversion of shares (%)

1. Shares subject to sales restrictions 5,962,000 1.45 -872,000 -872,000 5,090,000 1.24

2. State shareholding 0 0 0 0

3. Shareholding by state-owned legal persons 0 0 0 0

4. Other domestic shareholdings 5,962,000 1.45 -872,000 -872,000 5,090,000 1.24 Among them: domestic non-state-owned legal person shareholdings 0 0 0 0

Shareholdings held by domestic natural persons 5,962,000 1.45 -872,000 -872,000 5,090,000 1.24

4. Foreign shareholding 0 0 0 0 Including: shareholding by overseas legal persons 0 0 0 0

Shareholding by foreign natural persons 0 0 0 0

2. Circulable shares without selling restrictions 403,840,216 98.55 403,840,216 98.76

3. RMB ordinary shares 403,840,216 98.55 403,840,216 98.76

4. Domestic listed foreign shares 0 0 0 0

5. Foreign-invested stocks listed overseas 0 0 0 0

6. Others 0 0 0 0

7. Total number of shares 409,802,216 100.00 -872,000 -872,000 408,930,216 100.00

8. Description of changes in shares

√Applicable □Not applicable

According to the relevant provisions of the company's "2024 Restricted Stock Incentive Plan", the incentive objects Mr. Ouyang Zhiqiang and Gu Jiyang were granted

Mr. Wang Xun and Mr. Wang Xun no longer have incentive qualifications due to their resignation. Therefore, the above three incentive targets have been awarded but have not been released by the company.

The 140,000 restricted shares restricted for sale will be repurchased and canceled; according to the relevant regulations of the company’s “2021 Restricted Stock Incentive Plan”

It is determined that the company's operating performance in 2024 failed to meet the conditions for lifting the sales restrictions in the third lifting period of the plan, so the company will be responsible for the 7

732,000 restricted shares that have been granted to incentive targets but have not been released from sale restrictions will be repurchased and canceled; this part of the shares has been released in 2025

The cancellation was completed on October 28, 2016, and the company's total share capital was changed from 409,802,216 shares to 408,930,216 shares. For details, please refer to the Company’s 2025

"Guizhou Sanli Pharmaceutical Co., Ltd." disclosed on the Shanghai Stock Exchange website (www.sse.com.cn) on October 24, 2019

Announcement on the Implementation of Repurchase and Cancellation of Equity Incentive Restricted Stocks (Announcement Number: 2025-056).

3. The impact of share changes on financial indicators such as earnings per share and net assets per share in the most recent year and period (if any)

√Applicable □Not applicable

During the reporting period, the company's 2024 restricted stock incentive plan has resigned incentive objects and the company's 2021 restricted stock incentive plan.

The incentive plan is due to the operating performance in 2024 failing to meet the conditions for unlocking the sale of the shares in the third unlocking period of the plan.

872,000 shares were repurchased and canceled. After the cancellation, the company's share capital was reduced to 408,930,216 shares. The above changes will increase earnings per share,

Financial indicators such as net assets per share.

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

□Applicable √Not applicable

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(2) Changes in restricted shares

√Applicable □Not applicable

Unit: Share

Sales restrictions at the beginning of the year are lifted during the year. Increased during the year. Sales restrictions at the end of the year. Name of the shareholder who lifted the restrictions. Reasons for the sales restrictions.

Number of shares Number of restricted shares Number of restricted shares Number of shares Sale date Zhang Qianfan 310,000 0 0 250,000 Equity incentive restricted shares / Zhang Hongyu 90,000 0 0 0 Equity incentive restricted shares / Guo Ke 322,000 0 0 250,000 Equity incentive restricted shares / Wang Yi 760,000 0 0 400,000 Equity Incentive Restricted Stocks/Yu Yuan 280,000 0 0 250,000 Equity Incentive Restricted Stocks/Luo Zhanbiao 310,000 0 0 250,000 Equity Incentive Restricted Stocks/Wang Jueben 310,000 0 0 250,000 Equity Incentive Restricted Stocks/Ouyang Zhiqiang 60,000 0 0 0 Equity incentive restricted shares / Gu Jiyang 40,000 0 0 0 Equity incentive restricted shares / Wang Xun 40,000 0 0 0 Equity incentive restricted shares / Total 2,522,000 0 0 1,650,000 / /

Note: The decrease in the number of restricted shares at the end of the year was due to repurchase and cancellation during the reporting period. According to the relevant provisions of the company's "2024 Restricted Stock Incentive Plan", the incentive recipients Mr. Ouyang Zhiqiang, Mr. Gu Jiyang, and Mr. Wang Xun no longer have the incentive qualifications due to their resignation. Therefore, the company will repurchase and cancel the 140,000 restricted shares that have been granted to the above three incentive recipients but have not been released from sale. According to the relevant provisions of the company's "2021 Restricted Stock Incentive Plan", the company's operating results in 2024 have not yet been released. If the conditions for unlocking sales in the third unlocking period of the plan can be met, the company will repurchase and cancel 732,000 restricted shares that have been granted to 7 incentive targets but have not yet been released; the total number of repurchases during the reporting period 872,000 restricted stocks were cancelled. The cancellation of this part of stocks was completed on October 28, 2025, and the company's total share capital was changed from 409,802,216 shares to 408,930,216 shares. For details, please refer to the "Announcement on the Implementation of the Repurchase and Cancellation of Equity Incentive Restricted Stocks of Guizhou Sanli Pharmaceutical Co., Ltd." disclosed by the company on the Shanghai Stock Exchange website (www.sse.com.cn) on October 24, 2025 (announcement number: 2025-056).

2. Securities issuance and listing

(1) Securities issuance as of the reporting period

□Applicable √Not applicable

Description of securities issuance as of the reporting period (for bonds with different interest rates during the duration, please explain separately):

□Applicable √Not applicable

(2) Changes in the company’s total number of shares and shareholder structure, as well as changes in the company’s asset and liability structure

□Applicable √Not applicable

(3) Existing internal employee shares

□Applicable √Not applicable

3. Shareholders and actual controllers

(1) Total number of shareholders

Total number of common shareholders (households) as of the end of the reporting period 26,521 Total number of common shareholders (households) as of the end of the previous month before the date of disclosure of the annual report 24,970 Total number of preference shareholders (households) with voting rights restored as of the end of the reporting period 0 Total number of preference shareholders (households) with restored voting rights as of the end of the previous month before the date of disclosure of the annual report 0

(2) Shareholding status of the top ten shareholders and top ten tradable shareholders (or shareholders without selling restrictions) as of the end of the reporting period

Unit: Share

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Shareholding status of the top ten shareholders (excluding shares lent through refinancing)

Held with pledged, marked or frozen

Name of shareholder, shareholding at the end of the reporting period, sales restriction conditions during the reporting period

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

Quantity

Quantity Status

Zhang Hai 0 167,668,440 41.00 0 Pledge 80,000,000 Domestic natural person Sheng Yongjian 0 21,924,559 5.36 0 None 0 Domestic natural person Hainan Yuexin Pharmaceutical Investment Co., Ltd.

-809,900 20,190,100 4.94 0 None 0 Other partnerships (general partnerships)

Wang Huiying 0 11,197,947 2.74 0 None 0 Domestic natural person Wang Wei 5,400,000 5,400,000 1.32 0 None 0 Domestic natural person Deng Daixing 5,357,569 5,384,569 1.32 0 None 0 Domestic natural person Shen Jiayi -504,790 5,000,000 1.22 0 None 0 Domestic natural person Guizhou Sanli Pharmaceutical Co., Ltd.

Co., Ltd. special securities for repurchase 0 4,190,200 1.02 0 None 0 Other accounts

Cathay Haitong Securities Co., Ltd.

Co., Ltd. agreed to repurchase certificates 3,270,100 3,270,100 0.80 0 None 0 Special securities account for other securities transactions

Lang Yifei 2,375,820 2,375,820 0.58 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 circulating shares Category 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) 20,190,100 RMB ordinary shares 20,190,100 Wang Huiying 11,197,947 RMB ordinary shares 11,197,947 Wang Wei 5,400,000 RMB ordinary shares 5,400,000 Deng Daixing 5,384,569 RMB ordinary shares 5,384,569 Shen Jiayi 5,000,000 RMB ordinary shares 5,000,000 Special buy-back certificate for Guizhou Sanli Pharmaceutical Co., Ltd.

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

Cathay Haitong Securities Co., Ltd. Agreed Repurchase Form

3,270,100 RMB ordinary shares 3,270,100 Special securities account for securities trading

Lang Yifei 2,375,820 RMB ordinary shares 2,375,820

As of the end of the reporting period, the company's special repurchase securities account held 4,190,200 shares, accounting for the top ten shareholders of the company. Description of the special repurchase accounts

The proportion of the company's total share capital is 1.02%.

The above-mentioned shareholders’ proxy voting rights, entrusted voting rights and waivers

None

Description of voting rights

Wang Huiying is Zhang Hai’s mother, and the relationship between the two is mother and son; Explanation of the related relationship or concerted action among the above shareholders of Hainan Yuexin Pharmaceutical Investment Partnership

(General partnership) and Zhang Hai are persons acting in concert

Preference shareholders whose voting rights have been restored and the number of shares they hold

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

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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 with trading restrictions can be listed and traded.

Conditions for sale restrictions Holding shares subject to sale restrictions

Serial number Newly listed and traded Name of shareholder with sales restrictions Number of conditional shares Available for listing and trading time

Number of Yi shares

1 Yang Zhiyu 400,000 Note 1 0 Equity incentive restricted stock 2 Wang Yi 400,000 Note 1 0 Equity incentive restricted stock 3 Zhang Qianfan 250,000 Note 1 0 Equity incentive restricted stock 4 Luo Zhanbiao 250,000 Note 1 0 Equity incentive restricted stock 5 Deng Li 250,000 Note 1 0 Equity incentive restricted stock 6 Wang Jueben 250,000 Note 1 0 Equity incentive restricted stock 7 Guo Ke 250,000 Note 1 0 Equity incentive restricted stock 8 Yu Yuan 250,000 Note 1 0 Equity incentive restricted stock 9 Zhu Song 200,000 Note 1 0 Equity incentive restricted stock 10 Tang Jianfeng 200,000 Note 2 0 Equity incentive restricted stock related relationship among the above shareholders

None

or description of concerted action

Note 1: On April 23, 2026, the company held the 23rd meeting of the fourth session of the Board of Directors, and reviewed and approved the "Proposal on the Unfulfilled Conditions for Unlocking the First Restriction Period of the 2024 Restricted Stock Incentive Plan and the Repurchase and Cancellation of Part of the Restricted Stocks" , the company’s 2024 restricted stock incentive plan’s first lifting period and conditions for lifting the restrictions were not met, and the board of directors agreed to repurchase and cancel 1,455,000 restricted stocks that had been granted to 49 incentive targets but had not yet been unlocked; April 23, 2026 , the company held the 23rd meeting of the fourth board of directors, and reviewed and approved the "Proposal on Terminating the Implementation of the 2024 Restricted Stock Incentive Plan and Repurchasing and Cancellation of Relevant Restricted Stocks". In order to fully implement effective incentives for employees, from the long-term development of the company and the immediate interests of employees, Proceeding from the interests of the people, after careful study, the company plans to terminate the implementation of the 2024 restricted stock incentive plan, and repurchase and cancel all 3,395,000 restricted stocks that have been granted to 49 incentive targets in the second and third unlocking periods but have not yet been unlocked. The proposal still needs to be reviewed by the company's 2025 annual shareholders' meeting.

Note 2: Mr. Tang Jianfeng, the incentive target of the 2024 restricted stock incentive plan, is no longer eligible for incentives due to his resignation. The company will repurchase and cancel a total of 200,000 restricted stocks that have been granted but have not been unlocked. This proposal has been reviewed and approved at the 17th meeting of the company's fourth board of directors. As of the disclosure date of this report, the repurchase and cancellation of this part of restricted shares has not yet been completed.

(3) Strategic investors or general legal persons become the top 10 shareholders due to the placement of new shares

□Applicable √Not applicable

4. Controlling shareholders and actual controllers

(1) Controlling shareholders

1. Legal person

□Applicable √Not applicable

2. Natural person

√Applicable □Not applicable

Name Zhang Hai

Nationality China

Whether you have obtained the right of residence in other countries or regions? No

Main occupation and position Chairman of the company

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3. Special explanation that the company does not have a controlling shareholder

□Applicable √Not applicable

4. Explanation of changes in controlling shareholders during the reporting period

□Applicable √Not applicable

5. Block diagram of the property rights and control relationship between the company and its controlling shareholder √ Applicable □ Not applicable

(2) Actual controller situation

1. Legal person

□Applicable √Not applicable

2. Natural person

√Applicable □Not applicable

Name Zhang Hai Nationality Whether China has obtained the right of residence in other countries or regions? No Main occupation and position Information about the domestic and overseas listed companies that the chairman of the company has controlled in the past 10 years None

3. Special explanation of the situation where the company does not have an actual controller

□Applicable √Not applicable

4. Description of changes in the company’s control during the reporting period

□Applicable √Not applicable

5. Block diagram of the property rights and control relationship between the company and the actual controller √ Applicable □ Not applicable

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6. The actual controller controls the company through trust or other asset management methods

□Applicable √Not applicable

(3) Other information about the controlling shareholder and actual controller

√Applicable □Not applicable

On November 6, 2025, Mr. Zhang Hai and Yuexin Pharmaceutical decided to sign the "Concerted Action Agreement" after friendly negotiation and take concerted actions in relevant matters for a period of 12 months from the date of signing the agreement. For details, please see the company's November 8, 2025 The disclosed "Guizhou Sanli Pharmaceutical Co., Ltd.'s Indicative Announcement on the Signing of a Concerted Action Agreement and Changes in Equity by the Controlling Shareholders" (Announcement Number: 2025-060) and "Guizhou Sanli Pharmaceutical Co., Ltd.'s Detailed Equity Change Report".

5. The proportion of the cumulative number of pledged shares of the company’s controlling shareholder or largest shareholder and its persons acting in concert to the number of shares held by them in the company

Reach more than 80%

□Applicable √Not applicable

6. Other legal person shareholders holding more than 10% of the shares

□Applicable √Not applicable

7. Explanation of shareholding restrictions and reductions

√Applicable □Not applicable

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

1. Intention to reduce holdings and quantity: If the shares held by me are reduced within two years after the lock-up period expires, the shares transferred each year shall not exceed 25% of the total number of company shares held.

2. Reduction price: If the stocks held by me are reduced within two years after the expiration of the lock-up period, the reduction price shall not be lower than the issue price. If the company's stock undergoes ex-rights and ex-dividend behavior during the above-mentioned period, such as profit distribution, conversion of capital reserves into share capital, additional issuance, allotment of shares, etc., the above-mentioned issuance price shall be the price after ex-rights and ex-dividend.

3. I will carry out holding reduction operations in strict accordance with laws, regulations and normative documents, and fulfill my information disclosure obligations in a true, accurate, complete and timely manner. I will report to the company the number of shares I hold and any changes in a timely manner. If the China Securities Regulatory Commission, Shanghai Stock Exchange, etc. have new regulations on the listing and circulation of the above-mentioned shares, I promise to comply with the new regulations.

4. If I violate the above commitment on share reduction, the proceeds from the reduction of the company's shares will belong to the company.

8. Specific implementation of share repurchases during the reporting period

√Applicable □Not applicable

Unit: 10,000 yuan Currency: RMB Share repurchase plan name Proposal on the company’s share repurchase plan through centralized bidding transactions

Disclosure time of share repurchase plan September 13, 2024

Calculated based on the maximum repurchase price of 17.85 yuan/share and the upper limit of the repurchase amount of 120 million yuan (inclusive), the number of repurchases is expected to not exceed 6,722,700 shares, accounting for approximately 1.64% of the company's current total share capital; based on the maximum repurchase price of 17.85, the number of shares to be repurchased and the proportion of the total share capital (%)

Yuan per share and the lower limit of the repurchase amount is 80 million yuan (inclusive). It is estimated that the number of repurchases will be no less than 4,481,800 shares, accounting for approximately 1.09% of the company's current total share capital.

Not less than RMB 80 million (inclusive) and not exceeding the proposed repurchase amount in RMB

120 million yuan (inclusive)

Planned buyback period: September 13, 2024 - September 12, 2025

Repurchase purpose: used for employee stock ownership plans or equity incentives

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Proportion (%) of stocks not applicable (if any)

The company uses centralized bidding transactions to reduce its holdings of repurchased shares

Progress of N/A parts

9. Information related to 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

Dehaoshenzi[2026]00001791

All shareholders of Guizhou Sanli Pharmaceutical Co., Ltd.:

1. Audit opinions

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

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

2. The basis for forming audit opinions

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

3. Key audit matters

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

1. Revenue recognition

2. Collectability of accounts receivable

3. Impairment of goodwill

(1) Revenue recognition

1. Description of the matter

For details and analysis of the accounting policies for revenue recognition, please refer to “III. Important Accounting Policies and Accounting Estimates” in the notes to the consolidated financial statements.

(36) The accounting policies mentioned and Note 38 of “V. Notes on Main Items of Consolidated Financial Statements”.

In 2025, Sanli Pharmaceutical's operating income was RMB 1,702,842,900.

Since revenue is one of Sanli Pharmaceutical's key performance indicators, there is an inherent risk that management will manipulate the timing of revenue recognition in order to achieve specific goals or expectations. We identify Sanli Pharmaceutical's revenue recognition as a key audit matter.

2. Audit response

The important audit procedures we perform on revenue recognition include:

(1) Understand and evaluate the design and operating effectiveness of management’s key internal controls related to revenue recognition.

(2) Select a sample to check the sales contract, identify the contract terms and conditions related to the transfer of product control rights, and evaluate whether the time of revenue recognition meets the requirements of the Accounting Standards for Business Enterprises.

(3) Perform analysis procedures on revenue and gross profit based on product types to determine the rationality of changes in revenue and gross profit for the current period. (4) Perform revenue detail testing, select samples through stratified sampling, check major customer contracts, orders, outbound orders, invoices, receipt/sign-off orders, etc., and evaluate whether relevant revenue recognition complies with the company's accounting policy for revenue recognition.

(5) Perform the income confirmation procedure through large-amount and stratified sample selection to check the authenticity and correctness of the confirmed income. (6) Perform revenue cut-off testing, select samples to check outbound orders, receipt/receipt orders and other supporting documents, combined with inventory counts, to evaluate whether revenue is recorded in the appropriate accounting period.

Based on the audit work performed, we believe that the revenue recognition and disclosure by Sanli Pharmaceutical management are reasonable.

(2) Collectability of accounts receivable

1. Description of the matter

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For details and analysis of accounting policies on the recoverability of accounts receivable, please refer to the accounting policies described in "III. Significant accounting policies and accounting estimates" (XIII) of the notes to the consolidated financial statements and note 4 of "V. Notes to major items of the consolidated financial statements".

As of December 31, 2025, the balance of accounts receivable was 624.4365 million yuan, and the bad debt provision was 34.0482 million yuan.

When determining the expected recoverable amount of accounts receivable, the management of Sanli Pharmaceutical needs to evaluate factors such as the credit situation and actual repayment status of relevant customers.

Since the management of Sanli Pharmaceutical needs to use significant accounting estimates and judgments when determining the expected recoverable amount of accounts receivable and the impact is significant, we identify the recoverability of accounts receivable as a key audit matter for Sanli Pharmaceutical.

2. Audit response

Significant audit procedures we perform regarding the collectability of accounts receivable include:

(1) Understand, evaluate and test management’s internal controls related to bad debt provisions for accounts receivable. Including the basis for determining the accounts receivable portfolio, etc.

(2) Review management’s relevant considerations and objective evidence for impairment testing of accounts receivable, and pay attention to whether management has fully identified items that have been impaired.

(3) Evaluate the rationality of the management's provision for bad debt provisions for accounts receivable by selecting large amounts and stratified samples to perform accounts receivable confirmation procedures and checking historical payment records and post-period payment collections.

(4) For accounts receivable for which management has accrued bad debt provisions based on a combination of credit risk characteristics, evaluate whether the proportion of bad debt provisions determined by management is reasonable.

(5) Obtain the bad debt provision accrual table and review whether the bad debt provision has been made correctly according to the scope and standard of bad debt provision. Based on the audit work performed, we believe that the relevant judgments and estimates made by the management of Sanli Pharmaceutical on the recognition and collectability of accounts receivable are reasonable.

(3) Impairment of goodwill

1. Description of the matter

For details and analysis of accounting policies for impairment of goodwill, please refer to Notes "III. Important Accounting Policies and Accounting Estimates" to the consolidated financial statements.

(28) The accounting policies mentioned and Note 17 of “V. Notes on Main Items of Consolidated Financial Statements”.

As of December 31, 2025, the original book value of Sanli Pharmaceutical's goodwill was RMB 554.6061 million, and the balance of goodwill impairment provisions was RMB 121.9779 million.

Management assesses possible impairment of goodwill annually. Impairment assessments estimate the value in use of goodwill based on discounted cash flow forecasts prepared. The preparation of discounted cash flow forecasts involves the use of significant judgments and estimates, particularly in determining revenue growth rates, sustainable growth rates, cost increases, and in determining the risk-adjusted discount rates applied, which are inherently uncertain and may be affected by management preferences.

Because goodwill impairment forecasts and discounted future cash flows involve inherent uncertainties, as well as the risk that management may develop preferences in the selection of assumptions and estimates, we identify the assessment of goodwill impairment as a key audit matter for Sanli Pharmaceuticals.

2. Audit response

The important audit procedures we perform for goodwill impairment include:

(1) We evaluated and tested the design and execution effectiveness of internal controls related to goodwill impairment testing, including the adoption of key assumptions and the review and approval of the impairment provision amount.

(2) Evaluate the competence, professional quality and objectivity of external valuation experts.

(3) By referring to industry practices, the appropriateness of the valuation methods used by management in making cash flow forecasts was assessed. (4) Carefully evaluate the key assumptions and judgments used in preparing discounted cash flow forecasts by comparing key input values ​​such as revenue growth rate, sustainable growth rate and cost increase with past performance, management budgets and forecasts, and industry reports.

(5) Recalculate the discount rate based on market data of comparable companies in the same industry, and compare our calculation results with the discount rate used by management to calculate the present value of expected future cash flows to evaluate the discount rate used to calculate the present value of expected future cash flows.

(6) Conduct sensitivity analysis on key assumptions such as forecast revenue and the discount rate adopted to evaluate the impact of changes in key assumptions on the impairment assessment results and consider whether there are signs of management bias in the selection of key assumptions.

Based on the audit work performed, we believe that the assumptions and methods adopted by management in the impairment of goodwill and the overall assessment of impairment of goodwill are acceptable, and the relevant judgments and estimates of impairment of goodwill are reasonable.

4. Other information

Sanli Pharmaceutical management is responsible for other information. Other information includes information covered in Sanli Pharmaceutical's 2025 annual report, but does not include the financial statements and our auditor's report.

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

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

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

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

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

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

Those charged with governance are responsible for overseeing Sanli Pharmaceuticals’ financial reporting processes.

6. Responsibilities of certified public accountants for auditing financial statements

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

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

2. Understand audit-related internal controls to design appropriate audit procedures.

3. Evaluate the appropriateness of management's selection of accounting policies and the reasonableness of accounting estimates and related disclosures.

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

5. Evaluate the overall presentation, structure and content of the financial statements and evaluate whether the financial statements fairly reflect the underlying transactions and events. 6. Obtain sufficient and appropriate audit evidence regarding the financial information of entities or business activities within Sanli Pharmaceuticals to express an opinion on the financial statements. We are responsible for directing, supervising and performing group audits and take full responsibility for our audit opinions.

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

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

From the matters communicated with those charged with governance, we determine which matters are most significant to the audit of the current period's financial statements and therefore constitute key audit matters. We describe these matters in our auditor's report unless laws or regulations prohibit public disclosure of the matter or, in rare circumstances, we determine that the matter should not be communicated in our auditor's report if the adverse consequences of communicating the matter in the auditor's report are reasonably expected to outweigh the benefits in the public interest.

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Beijing, China (Project Partner) Guo Yan China Certified Public Accountant:

Xu Ruixing April 23, 2026

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2. Financial statements

Consolidated Balance Sheet

December 31, 2025

Prepared by: Guizhou Sanli Pharmaceutical Co., Ltd.

Unit: Yuan Currency: RMB

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

Monetary funds Note 1 389,417,360.31 474,845,014.34 Settlement reserves

Loan funds

Trading financial assets Note 2 19,925,822.20 22,945,081.52 Derivative financial assets

Notes receivable Note 4 115,957,941.30 82,062,569.10 Accounts receivable Note 5 590,388,340.83 728,669,788.22 Receivables financing Note 7 151,989,603.53 121,388,452.65 Prepayments Note 8 31,325,940.81 33,687,505.24 Premiums receivable

Reinsurance accounts receivable

Receivable reinsurance contract reserves

Other receivables Note 9 3,018,710.90 7,099,346.97 Including: interest receivable

Dividends receivable 226,031.78

Buy financial assets under resale agreements

Inventory Note 10 222,418,695.43 320,722,064.52 Including: data resources

contract assets

Assets held for sale

Non-current assets due within one year

Other current assets Note 13 5,144,856.58 6,565,499.28

Total current assets 1,529,587,271.89 1,797,985,321.84 Non-current assets:

Grant loans and advances

debt investment

Other debt investments

long-term receivables

Long-term equity investment Note 17 79,595,087.12 12,547,227.44 Other equity instrument investments Note 18 10,000,000.00 10,000,000.00 Other non-current financial assets

Investment real estate Note 20 39,811,308.65

Fixed assets Note 21 483,234,447.36 563,914,039.44 Construction in progress

Productive biological assets Note 23 51,855,853.12 11,603,881.45 Oil and gas assets

Right-of-use assets Note 25 10,475,269.37 9,631,487.54 Intangible assets Note 26 194,282,624.43 216,128,219.15 Including: data resources

development expenditure

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Among them: data resources

Goodwill Note 27 432,628,224.24 554,606,134.60 Long-term deferred expenses Note 28 658,797.75 562,691.20 Deferred income tax assets Note 29 15,793,635.11 15,128,887.97 Other non-current assets

Total non-current assets 1,318,335,247.15 1,394,122,568.79

Total assets 2,847,922,519.04 3,192,107,890.63 Current liabilities:

Short-term borrowings Note 32 548,668,336.30 351,521,547.18 Borrowings from the central bank

borrowing funds

Trading financial liabilities

Derivative financial liabilities

Notes payable

Accounts payable Note 36 112,294,534.20 360,623,598.69 Advance payments

Contract liabilities Note 38 5,468,013.17 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 34,008,918.24 22,651,658.65 Taxes payable Note 40 55,298,438.99 72,637,959.40 Other payables Note 41 203,167,158.65 351,280,861.50 Including: interest payable

Dividends payable 890.00 550.00 Handling fees and commissions payable

Reinsurance accounts payable

Liabilities held for sale

Non-current liabilities due within one year Note 43 59,905,510.31 45,648,207.95 Other current liabilities Note 44 18,360,292.80 22,302,970.52

Total current liabilities 1,037,171,202.66 1,234,456,842.37 Non-current liabilities:

insurance contract reserves

Long-term borrowings Note 45 149,720,927.78 209,300,000.00 Bonds payable

Among them: preferred shares

perpetual bond

Lease liabilities Note 47 26,461.30 211,539.96 Long-term payables Note 48 7,479,200.24 8,287,850.80 Long-term employee benefits payable

Estimated liabilities

Deferred income Note 51 39,190,654.00 42,970,860.79 Deferred income tax liabilities Note 29 21,990,532.29 25,498,918.59 Other non-current liabilities Note 52 80,112,688.40 76,754,836.20 Total non-current liabilities 298,520,464.01 363,024,006.34

Total liabilities 1,335,691,666.67 1,597,480,848.71 Owners’ equity (or shareholders’ equity):

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Share capital Note 53 408,930,216.00 409,802,216.00 Other equity instruments

Among them: preferred shares

perpetual bond

Capital reserve Note 55 153,262,243.52 149,042,263.82 Less: treasury shares Note 56 94,349,185.06 100,642,385.06 Other comprehensive income

special reserve

Surplus reserve Note 59 145,293,742.38 133,275,177.34 General risk reserve

Undistributed profits Note 60 832,459,982.56 935,863,129.35 Attributable to the owners’ equity of the parent company

1,445,596,999.40 1,527,340,401.45 (or shareholders’ equity) total

Minority shareholders’ equity 66,633,852.97 67,286,640.47 Owner’s equity (or shareholder’s rights

1,512,230,852.37 1,594,627,041.92 profit) total

Liabilities and Owner's Equity (or

2,847,922,519.04 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

December 31, 2025

Prepared by: Guizhou Sanli Pharmaceutical Co., Ltd.

Unit: Yuan Currency: RMB

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

Monetary funds 127,803,411.69 189,950,224.26 Trading financial assets 3,045,310.23 Derivative financial assets

Notes receivable 98,441,232.67 46,462,371.12 Accounts receivable Note 1 354,563,549.09 434,723,861.36 Accounts receivable financing 69,110,246.05 41,402,267.21 Prepayments 8,324,553.38 5,467,845.15 Other receivables Note 2 2,864,469.63 3,313,035.08 Including: interest receivable

Dividends receivable 226,031.78

Inventory 97,823,345.16 164,569,835.31 Including: data resources

contract assets

Assets held for sale

Non-current assets due within one year 4,055,083.30 3,907,578.71 Other current assets 573,133.02 142,050.00

Total current assets 763,559,023.99 892,984,378.43 Non-current assets:

debt investment

Other debt investments

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Long-term receivables 33,056,276.54 37,111,359.84 Long-term equity investment Note 3 1,273,365,019.82 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 43,166,168.72

Fixed assets 231,591,463.31 293,901,228.20 Construction in progress

productive biological assets

oil and gas assets

Right-of-use assets 171,868.88 611,681.42 Intangible assets 15,421,786.97 15,901,595.67 Including: data resources

development expenditure

Among them: data resources

goodwill

Long-term deferred expenses

Deferred income tax assets 19,171,934.27 14,598,548.44 Other non-current assets

Total non-current assets 1,625,944,518.51 1,686,034,992.31

Total assets 2,389,503,542.50 2,579,019,370.74 Current liabilities:

Short-term borrowings 487,139,760.66 300,340,849.96 Trading financial liabilities

Derivative financial liabilities 21,218,366.83 27,953,294.26 Notes payable

Accounts payable 80,156,486.87 276,473,949.76 Advance payments

Contract liabilities 1,387,812.63 1,253,036.04 Employee benefits payable 25,211,227.83 16,589,632.96 Taxes payable 39,495,683.74 48,446,415.65 Other payables 53,735,506.85 174,604,539.06 of which: interest payable

Dividends payable 890.00 550.00 Liabilities held for sale

Non-current liabilities due within one year 59,905,510.31 45,588,055.45 Other current liabilities 5,477,925.59 4,827,785.62

Total current liabilities 773,728,281.31 896,077,558.76 Non-current liabilities:

Long-term borrowings 149,720,927.78 209,300,000.00 Bonds payable

Among them: preferred shares

perpetual bond

Lease liabilities 26,461.30 104,036.36 Long-term payables

Long-term employee benefits payable

Estimated liabilities

Deferred income 38,081,035.02 41,679,688.70 Deferred income tax liabilities 1,307,043.87 1,491,042.66

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Other non-current liabilities

Total non-current liabilities 189,135,467.97 252,574,767.72 Total liabilities 962,863,749.28 1,148,652,326.48 Owners’ equity (or shareholders’ equity):

Share capital 408,930,216.00 409,802,216.00 Other equity instruments

Among them: preferred shares

perpetual bond

Capital reserve 200,554,228.05 192,249,524.07 Less: treasury shares 94,349,185.06 100,642,385.06 Other comprehensive income

special reserve

Surplus reserve 145,293,742.38 133,275,177.34 Undistributed profits 766,210,791.85 795,682,511.91 Owners’ equity (or shareholders’ rights

1,426,639,793.22 1,430,367,044.26 profit) total

Liabilities and Owner's Equity (or

2,389,503,542.50 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-December 2025

Unit: Yuan Currency: RMB

Item Notes 2025 2024

1. Total operating income Note 61 1,702,842,901.68 2,144,385,836.12 Including: Operating income Note 61 1,702,842,901.68 2,144,385,836.12 Interest income

Premiums earned

Fee and commission income

2. Total operating costs 1,521,731,029.37 1,821,200,312.82 Including: operating costs Note 61 511,485,032.02 649,987,094.24 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 26,810,396.57 24,692,811.31 Selling expenses Note 63 800,918,155.93 941,944,254.20 Administrative expenses Note 64 147,384,803.38 147,412,607.70 Research and development expenses Note 65 27,913,455.39 46,503,580.21 Financial expenses Note 66 7,219,186.08 10,659,965.16 Including: interest expenses 11,074,230.19 14,612,712.92

Interest income 3,958,428.09 3,988,287.47 plus: other income Note 67 10,364,359.65 14,499,347.25

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Investment income (losses are listed with "-") Note 68 -2,772,299.71 1,812,621.93 Including: investment in associates and joint ventures

47,859.68 280,527.44Income

Financial assets measured at amortized cost

Stop recognizing revenue

Exchange gains (losses are listed with "-")

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

Gains from changes in fair value (losses are marked with “-”

Note 70 155,822.20 145,081.52 fill in the column)

Credit impairment loss (losses are listed with "-") Note 71 5,627,069.87 -10,230,274.92 Asset impairment losses (losses are listed with "-") Note 72 -129,825,096.73 -2,991,071.78

Asset disposal income (losses are listed with "-") Note 73 -115,565.58 -172,440.90

3. Operating profit (losses are listed with "-") 64,546,162.01 326,248,786.40 Add: non-operating income Note 74 6,921,263.34 1,922,315.20

Less: Non-operating expenses Note 75 3,701,971.05 3,145,708.86

4. Total profits (total losses are listed with "-") 67,765,454.30 325,025,392.74

Less: Income tax expenses Note 76 19,611,851.56 45,187,860.19

5. Net profit (net loss is listed with "-") 48,153,602.74 279,837,532.55

(1) Classification by business continuity

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

48,153,602.74 279,837,532.55 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

46,254,223.69 274,027,809.74 (please fill in with "-")

2. Profit and loss of minority shareholders (net loss is listed with "-") 1,899,379.05 5,809,722.81

6. Net amount of other comprehensive income after tax

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

net of 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

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 to be reclassified into profit or 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

(2) Other comprehensive income attributable to minority shareholders

net of tax

7. Total comprehensive income 48,153,602.74 279,837,532.55

(1) Total comprehensive income attributable to owners of the parent company 46,254,223.69 274,027,809.74

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Um

(2) Total comprehensive income attributable to minority shareholders 1,899,379.05 5,809,722.81

8. Earnings per share:

(1) Basic earnings per share (yuan/share) 0.11 0.67

(2) Diluted earnings per share (yuan/share) 0.11 0.67

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-December 2025

Unit: Yuan Currency: RMB

Item Notes 2025 2024

1. Operating income Note 4 1,029,393,463.20 1,337,219,564.94 Less: Operating costs Note 4 311,604,958.44 390,782,357.24 Taxes and surcharges 11,521,581.67 11,546,869.38 Sales expenses 479,546,389.45 571,529,004.84 Administrative expenses 85,461,963.53 89,199,099.44 Research and development expenses 11,235,240.10 14,764,348.28 Financial expenses 7,158,864.89 11,340,362.45 Including: interest expense 9,333,413.03 14,138,322.06

Interest income 2,220.881.03 2,821,919.27 plus: other income 4,448,435.34 4,175,197.40 Investment income (losses are listed with "-") Note 5 24,084,786.53 566,299.67 Including: investment income from associates and joint ventures

-49,735.15 280,527.44 gain

Termination of financial assets measured at amortized cost

Recognize revenue

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

Gains from changes in fair value (losses are filled in with “-”

6,734,927.43 -10,911,079.62 columns)

Credit impairment losses (losses are listed with "-") 2,522,665.88 -5,565,801.56 Asset impairment losses (losses are listed with "-") -34,457,258.58

Asset disposal income (losses are listed with "-") -86,217.59 -158,562.24

2. Operating profit (losses are listed with "-") 126,111,804.13 236,163,576.96 Plus: non-operating income 6,184,479.08 940,402.20 Less: non-operating expenses 239,190.03 393,900.35

3. Total profits (total losses are listed with "-") 132,057,093.18 236,710,078.81 Less: income tax expenses 11,871,442.76 34,066,316.29

4. Net profit (net loss is listed with "-") 120,185,650.42 202,643,762.52

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

120,185,650.42 202,643,762.52 columns)

(2) Net profit from discontinued operations (net loss is marked with “-”

Fill in the column)

5. Net amount of other comprehensive income after tax

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

1. Remeasure the changes in defined benefit plan

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

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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.

Um

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 120,185,650.42 202,643,762.52

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

January-December 2025

Unit: Yuan Currency: RMB

Item Notes 2025 2024

1. Cash flow generated from operating activities:

Cash received from selling goods and providing services 1,858,198,458.16 2,030,745,473.00 Net increase in customer deposits and deposits from banks

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 1,926,582.23 3,640,668.41 Other cash received related to operating activities Note 78 59,772,017.72 37,915,232.23

Subtotal of cash inflows from operating activities 1,919,897,058.11 2,072,301,373.64 Cash paid for purchasing goods and receiving services 490,853,740.74 572,082,427.10 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

Net increase in lending funds

Cash payments for interest, fees and commissions

Cash payment for policy dividends

Cash paid to and for employees 319,776,028.09 306,726,477.71 Various taxes paid 193,103,919.71 214,442,102.18 Other cash paid related to operating activities Note 78 751,586,345.20 871,977,782.23 Subtotal of cash outflows from operating activities 1,755,320,033.74 1,965,228,789.22

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Net cash flow generated from operating activities 164,577,024.37 107,072,584.42

2. Cash flow generated from investing activities:

Recover cash received on investments

Cash received from investment income 657,842.82 1,611,642.49 Disposal of fixed assets, intangible assets and other long-term assets

639,687.50 548,622.30 Net cash amount from asset recovery

Received from disposal of subsidiaries and other business units

net cash

Other cash received related to investing activities Note 78 103,015,000.00 190,000,000.00

Subtotal of cash inflows from investing activities 104,312,530.32 192,160,264.79 Purchase and construction of fixed assets, intangible assets and other long-term assets

25,838,199.57 45,198,116.00 Cash paid for assets

Cash paid for investment 206,830,000.00 88,660,700.00 Net increase in pledged loans

Obtain payment from subsidiaries and other business units

net cash

Other cash payments related to investing activities Note 78 100,079,654.04 161,300,000.00 Subtotal of cash outflows from investing activities 332,747,853.61 295,158,816.00

Net cash flow generated from investing activities -228,435,323.29 -102,998,551.21

3. Cash flow generated from financing activities:

Cash received from investment 63,425,000.00, including: income from investments from minority shareholders by subsidiaries

24,200,000.00 in cash

Cash received from borrowings 570,543,303.50 351,218,701.24 Cash received from other financing activities

Subtotal of cash inflows from financing activities 570,543,303.50 414,643,701.24 Cash paid to repay debts 418,906,778.97 299,850,000.00 Payments to distribute dividends, profits or pay interest

161,443,697.28 104,044,246.39 cash

Including: shares paid by subsidiaries to minority shareholders

Profit, profit

Payment of other cash related to financing activities Note 78 11,760,182.36 111,350,721.61 Subtotal of cash outflows from financing activities 592,110,658.61 515,244,968.00

Net cash flow generated from financing activities -21,567,355.11 -100,601,266.76

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

influence

5. Net increase in cash and cash equivalents -85,425,654.03 -96,527,233.55 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 389,417,360.31 474,843,014.34

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 cash flow statement

January-December 2025

Unit: Yuan Currency: RMB

Item Notes 2025 2024

1. Cash flow generated from operating activities:

Cash received from selling goods and rendering services 1,123,687,863.53 1,321,494,116.30

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tax refund received

Other cash received related to operating activities 40,172,904.48 21,736,240.78

Subtotal of cash inflows from operating activities 1,163,860,768.01 1,343,230,357.08 Cash paid for purchasing goods and receiving services 340,951,558.43 331,662,736.53 Cash paid to and for employees 245,286,564.46 204,829,758.96 Various taxes paid 113,185,483.34 133,782,965.23 Other cash paid related to operating activities 392,072,469.98 527,108,778.20

Subtotal of cash outflows from operating activities 1,091,496,076.21 1,197,384,238.92 Net cash flow from operating activities 72,364,691.80 145,846,118.16

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

6,042,687.50 Net cash amount from asset recovery in period 6,012,300.00

Received from disposal of subsidiaries and other business units

1.00

net cash

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

Subtotal of cash inflows from investing activities 82,596,487.63 6,377,620.23 Purchase and construction of fixed assets, intangible assets and other long-term assets

12,726,553.78 36,353,568.54 Cash payments for assets

Cash paid for investment 157,148,500.00 78,660,700.00 Cash paid for acquisition of subsidiaries and other business units

net cash

Other cash payments related to investing activities 20,000,000.00 3,050,000.00 Subtotal of cash outflows from investing activities 189,875,053.78 118,064,268.54

Net cash flow generated from investing activities -107,278,566.15 -111,686,648.31

3. Cash flow generated from financing activities:

Cash received from investments 39,225,000.00 Cash received from borrowings 509,052,227.86 300,085,226.24 Cash received from other financing activities 500,000.00

Subtotal of cash inflows from financing activities 509,052,227.86 339,810,226.24 Cash paid to repay debts 368,906,778.97 249,850,000.00 Payments to distribute dividends, profits or pay interest

159,445,148.75 102,099,940.82 cash

Other cash payments related to financing activities 7,933,238.36 101,155,539.95 Subtotal of cash outflows from financing activities 536,285,166.08 453,105,480.77

Net cash flow generated from financing activities -27,232,938.22 -113,295,254.53

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

influence

5. Net increase in cash and cash equivalents -62,146,812.57 -79,135,784.68 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 127,803,411.69 189,950,224.26

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-December 2025

Unit: Yuan Currency: RMB 2025

Owner's equity attributable to parent company

Project Other Equity Instruments Specialized

Others General Minority shareholders’ equity Total owners’ equity

Paid-in capital) (or shares, preferred shares, perpetual bonds, other capital reserves less: treasury shares, comprehensive income items, reserves, surplus reserves, risk reserves, undistributed profits, other subtotal

1. Ending 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. Amount of increase or decrease in the current period

-872,000.00 4,219,979.70 -6,293,200.00 12,018,565.04 -103,403,146.79 -81,743,402.05 -652,787.50 -82,396,189.55 (reduced by "-")

(1) Total comprehensive income 46,254,223.69 46,254,223.69 1,899,379.05 48,153,602.74

(2) Owner’s investment and reduction

-872,000.00 4,219,979.70 -6,293,200.00 9,641,179.70 -1,906,272.55 7,734,907.15 Less capital

1. Ordinary shares invested by owners -33,400,000.00 -33,400,000.00 2. Other equity instrument holders

Invest capital

3. Share-based payments are credited to owners

12,999,031.90 12,999,031.90 726,872.08 13,725,903.98Amount of equity

4. Others -872,000.00 -8,779,052.20 -6,293,200.00 -3,357,852.20 30,766,855.37 27,409,003.17

(3) Profit distribution 12,018,565.04 -149,657,370.48 -137,638,805.44 -645,894.00 -138,284,699.44 1. Withdrawal from surplus reserve 12,018,565.04 -12,018,565.04

2. Withdraw general risk reserve

3. To the owner (or shareholder)

Distribution of -137,638,805.44 -137,638,805.44 -645,894.00 -138,284,699.44

4. Others

(4) Internal owners’ equity

carry forward

1. Capital reserve converted into capital

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(or equity)

2. Conversion of surplus reserves into capital

(or equity)

3. Surplus reserve to cover losses

4. Change amount of defined benefit plan

Carry forward retained earnings

5. Other comprehensive income carried forward

savings income

6. Others

(5) Special reserves

1. Extract this period

2. Used in this issue

(6) Others

4. Ending balance of the current period 408,930,216.00 153,262,243.52 94,349,185.06 145,293,742.38 832,459,982.56 1,445,596,999.40 66,633,852.97 1,512,230,852.37

2024

Owner's equity attributable to parent company

One

Other equity instruments

Items Others Special General Minority shareholders Owner's equity Paid-in capital Comprehensive Items Risk Other equity Total premium Permanent capital reserve Less: treasury shares Surplus reserve Undistributed profits Subtotal (or share capital)

Continue first

Other joint savings insurance, others are ready to collect

stocks bonds

Be prepared

1. Ending 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

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

-60,000.00 -76,081,543.46 59,212,774.14 20,264,376.25 172,119,170.29 57,029,228.94 -171,755,597.38 -114,726,368.44 (reduce the number with "-")

(1) Total comprehensive income 274,027,809.74 274,027,809.74 5,809,722.81 279,837,532.55

(2) Owner’s investment and reduction

-60,000.00 -75,162,460.84 59,212,774.14 -134,435,234.98 -177,565,320.19 -312,000,555.17 Less capital

1. Owner's investment

-60,000.00 -390,000.00 -450,000.00 -110,059,204.36 -110,509,204.36 shares

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2. Other equity instruments held

investors invest capital

3. Share-based payments are included in all

-34,803,352.66 59,212,774.14 -94,016,126.80 95,571.63 -93,920,555.17 Amount of shareholders’ equity

4. Others -39,969,108.18 -39,969,108.18 -67,601,687.46 -107,570,795.64

(3) Profit distribution 20,264,376.25 -101,908,639.45 -81,644,263.20 -81,644,263.20 1. Withdrawal from surplus reserve 20,264,376.25 -20,264,376.25 0 2. Withdraw general risk reserve

3. To the owner (or shareholder)

-81,644,263.20 -81,644,263.2 -81,644,263.20 allocation

4. Others

(4) Internal owners’ equity

carry forward

1. Capital reserve converted into capital

(or equity)

2. Conversion of surplus reserves into capital

(or equity)

3. Surplus reserve to cover losses

4. Changes to defined benefit plans

Amount carried forward to retained earnings

5. Other comprehensive income carried forward

retained earnings

6. Others

(5) Special reserves

1. Extract this period

2. Used in this issue

(6) Others -919,082.62 -919,082.62 -919,082.62

4. Ending balance of the current period 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

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

January-December 2025

Unit: Yuan Currency: RMB 2025

Other equity instruments

Projects Paid-in Capital Excellent Yong Other Comprehensive Special Projects

Its capital reserve less: treasury shares surplus reserve undistributed profits total owners’ equity (or share capital) continued income reserves

him

stocks bonds

1. Ending 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 (decrease

-872,000.00 8,304,703.98 -6,293,200.00 12,018,565.04 -29,471,720.06 -3,727,251.04 (please fill in the list with "-")

(1) Total comprehensive income 120,185,650.42 120,185,650.42

(2) Owner’s investment and capital reduction -872,000.00 8,304,703.98 -6,293,200.00 13,725,903.98 1. Common stock invested by owners

2. Investments from other equity instrument holders

capital

3. Share-based payments are included in owners’ equity

Amount of 13,725,903.98 13,725,903.98

4. Others -872,000.00 -5,421,200.00 -6,293,200.00

(3) Profit distribution 12,018,565.04 -149,657,370.48 -137,638,805.44 1. Withdrawal from surplus reserve 12,018,565.04 -12,018,565.04

2. Distribution to owners (or shareholders)

-137,638,805.44 -137,638,805.44 matching

3. Others

(4) Internal carryover of owners’ equity

1. Conversion of capital reserves into capital (or shares)

this)

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

this)

3. Surplus reserve to cover losses

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4. Carrying forward changes in defined benefit plans

retained earnings

5. Other comprehensive income carried forward and retained

benefit

6. Others

(5) Special reserves

1. Extract this period

2. Used in this issue

(6) Others

4. Ending balance of the current period 408,930,216.00 200,554,228.05 94,349,185.06 145,293,742.38 766,210,791.85 1,426,639,793.22

2024

Other equity instruments

Projects Paid-in Capital Excellent Yong Other Comprehensive Special Projects

Its capital reserve less: treasury shares surplus reserve undistributed profits total owners’ equity (or share capital) continued income reserves

him

stocks bonds

1. Ending 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 (decrease

-60,000.00 -35,080,920.43 59,212,774.14 20,264,376.25 100,735,123.07 26,645,804.75 (Enter with “-” sign)

(1) Total comprehensive income 202,643,762.52 202,643,762.52

(2) Owner’s investment and capital reduction -60,000.00 -35,080,920.43 59,212,774.14 -94,353,694.57 1. Common shares invested by owners -60,000.00 -390,000.00 -450,000.00 2. Investments from other equity instrument holders

capital

3. Share-based payments are included in owners’ equity

Amount of -34,690,920.43 59,212,774.14 -93,903,694.57

4. Others

(3) Profit distribution 20,264,376.25 -101,908,639.45 -81,644,263.20

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1. Withdrawal from surplus reserve 20,264,376.25 -20,264,376.25 2. Distribution to owners (or shareholders)

-81,644,263.20 -81,644,263.20 matching

3. Others

(4) Internal carryover of owners’ equity 1. Conversion of capital reserves to capital (or share capital)

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

3. Surplus reserve to cover losses

4. Changes in defined benefit plans are carried forward 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 409,802,216.00 192,249,524.07 100,642,385.06 133,275,177.34 795,682,511.91 1,430,367,044.26

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 capsules, sprays, and granules (including extraction of traditional Chinese medicine); production and sales of health food; traditional Chinese medicine technology consulting services.)

The main products provided by the company: 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.

(3) Historical evolution

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

Guizhou Sanli Pharmaceutical Co., Ltd. (hereinafter referred to as the "Company", "the Company" and "Sanli Pharmaceutical"), the predecessor of 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.

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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.

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 the "Share Succession Agreement", stipulating that the three shares held by Zhang Leling

The investment of RMB 33.048 million from Sanli Co., Ltd. (accounting for 68% of the registered capital) was inherited by Zhang Hai and Wang Huiying. Zhang Hai inherited the investment of RMB 23.328 million from Sanli Co., Ltd. (accounting for 48% of the registered capital), and Wang Huiying inherited the investment of RMB 9.72 million from Sanli Co., Ltd. (accounting for 20% of the registered capital).

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.

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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.

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, Sanli Pharmaceutical held its founding meeting and the first extraordinary general meeting of shareholders 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 the ratio of 1:0.4604. The portion of the net assets greater than the share capital of RMB 58.7659 million was 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, Sanli Pharmaceutical was registered and established in Guizhou Provincial Administration for Industry and Commerce, and obtained a registration number of

"Business License" of 520000000029334.

17. In August 2015, Sanli Pharmaceutical 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, Sanli Pharmaceutical's second extraordinary shareholders' meeting in 2015 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 Sanli Pharmaceutical. 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, Sanli Pharmaceutical received the "Letter Concerning Approval for the Listing of Guizhou Sanli Pharmaceutical Co., Ltd.'s Shares 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, Sanli Pharmaceutical completed the industrial and commercial change registration for the above-mentioned increase in share capital. On August 17, 2015, Sanli Pharmaceutical 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, the method of stock transfer of Sanli Pharmaceutical was changed from agreement transfer to market-making transfer.

On September 11, 2015, the 2015 Third Extraordinary General Meeting of Shareholders of Sanli Pharmaceutical 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 transfer method of Sanli Pharmaceutical stocks was changed from agreement transfer to market-making transfer, and the market makers were GF Securities Co., Ltd. and Guohai Securities Co., Ltd. 19. In November 2015, Sanli Pharmaceutical made its second capital increase and first equity distribution, and the total share capital increased to 111.4446 million shares.

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On November 3, 2015, the 2016 Fourth Extraordinary General Meeting of Shareholders of Sanli Pharmaceutical reviewed and approved the "Proposal on Converting the Company's Capital Reserves to Share Capital" and other motions. Based on the total existing share capital of 55.7223 million shares, the company's capital reserves as of September 30, 2015 were transferred to all shareholders for every 10 shares. A total of 55.7223 million shares were transferred, with a par value of 1 yuan per share. After the transfer, the share capital increased to 111.4446 million shares.

On November 13, 2015, Sanli Pharmaceutical 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, Sanli Pharmaceutical completed the industrial and commercial change registration for the above-mentioned increase in share capital.

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

On March 18, 2016, Sanli Pharmaceutical's first extraordinary shareholders' meeting in 2016 passed the "Proposal on the Company's Stock Issuance Plan" and other motions, 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., and Chongqing Boyi Xintian Equity Investment Fund Partnership (Limited Partnership), Shenzhen Tongchuang Jincheng New OTC Market Investment Company (Limited Partnership), Tianjin Yongxing Beituo Asset Management Partnership (Limited Partnership), Cai Chengchi, Haimen Times Bole Equity Investment Partnership (Limited Partnership), Nantong Kangcheng Heng Key Growth Enterprise Equity Investment Partnership (Limited Partnership), Zhenjiang Kang Chengheng 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 Sanli Pharmaceutical. 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" No. [2016] 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 without sales conditions.

On August 5, 2016, Sanli Pharmaceutical completed the industrial and commercial change registration for the above-mentioned increase in share capital. On August 11, 2016, Sanli Pharmaceutical 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, the stock transfer method of Sanli Pharmaceutical was changed from market-making transfer to agreement transfer.

On December 2, 2016, the 2016 Fourth Extraordinary General Meeting of Shareholders of Sanli Pharmaceutical 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 National Equities Exchange and Quotations Co., Ltd., the stock transfer method of Sanli Pharmaceutical was changed from market-making transfer to agreement transfer.

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

On May 8, 2017, Sanli Pharmaceutical's second extraordinary shareholders' meeting in 2017 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, Sanli Pharmaceutical 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, Sanli Pharmaceutical completed the industrial and commercial change registration for the above-mentioned increase in share capital.

23. In June 2018, Sanli Pharmaceutical ceased to be listed on the Small and Medium Enterprises Equities Exchange and Quotations.

On March 7, 2018, Sanli Pharmaceutical's 2017 Annual Shareholders Meeting reviewed and approved the "Proposal on Application for 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 it was planned to terminate the listing of the company's shares on the National Equities Exchange and Quotations.

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

24. In April 2020, Sanli Pharmaceutical was listed on the Shanghai Stock Exchange, its fifth capital increase and third stock issuance, and its total share capital increased to 407,322,160 shares.

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On November 7, 2017, the 2017 Fifth Extraordinary General Meeting of Shareholders of Sanli Pharmaceutical 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 Stocks by Guizhou Sanli Pharmaceutical Co., Ltd." approved the public issuance of no more than 40.74 million RMB ordinary shares (A shares) by Sanli Pharmaceutical to the public. Sanli Pharmaceutical 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 an issuance subscription price of 7.35 yuan per share, raising a total of 299.439 million yuan, minus Excluding the tax-exclusive expenses related to the issuance of RMB 62.598 million, Sanli Pharmaceutical's actual net raised funds was RMB 236.841 million, of which RMB 40.74 million was included in share capital, and the premium part of RMB 196.101 million 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, Sanli Pharmaceutical 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, Sanli Pharmaceutical 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 restricted selling conditions and 40.74 million shares without selling restrictions. The transfer method is market-making transfer.

On July 1, 2020, Sanli Pharmaceutical 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, Sanli Pharmaceutical's second extraordinary shareholders' meeting in 2021 reviewed and approved the "Proposal on Guizhou Sanli Pharmaceutical Co., Ltd.'s 2021 Restricted Stock Incentive Plan (Draft)" and its summary. Sanli Pharmaceutical plans to grant 4.8 million restricted RMB ordinary shares (A shares) to 9 incentive targets through targeted issuance, with a face 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 Sanli Pharmaceutical 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 Sanli Pharmaceutical 202 Authorized by the resolution of the second extraordinary general meeting of shareholders in 2021, Sanli Pharmaceutical's board of directors 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, Sanli Pharmaceutical 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 Sanli Pharmaceutical 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 yet been released from sales restrictions." In view of the fact that Zhou Xianning, the first incentive target involved in the "Company's 2021 Restricted Stock Incentive Plan", 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, Sanli Pharmaceutical 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 Sanli Pharmaceutical reviewed and approved the "Proposal on the Repurchase and Cancellation of Part of Restricted Stocks". In view of the fact that Wang Kangxiang, one of the first incentive recipients involved in the "Company's 2021 Restricted Stock Incentive Plan", has resigned and is no longer in compliance with the incentive conditions, all 60,000 restricted shares that have been granted but have not been released from sale 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, Sanli Pharmaceutical completed the registration of the above-mentioned stock cancellation at the Shanghai Branch of China Securities Depository and Clearing Co., Ltd.

28. In March 2025, the third capital reduction and the third repurchase and cancellation of treasury shares reduced the total share capital to 409,742,216 shares.

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". Incentives granted under the Company’s 2024 Restricted Stock Incentive Plan

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The subject Ouyang Zhiqiang is no longer eligible for incentives due to his resignation. The 60,000 restricted shares that have been granted but have not yet been released will be repurchased by the company. The changed share capital is 409,742,216 yuan, and the paid-in share capital is 409,742,216 yuan.

On October 28, 2025, Sanli Pharmaceutical completed the registration of the above-mentioned stock cancellation at the Shanghai Branch of China Securities Depository and Clearing Co., Ltd.

29. In April 2025, the fourth capital reduction and the fourth repurchase and cancellation of treasury shares reduced the total share capital to 409,010,216 shares.

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 Restriction Conditions and Repurchase Cancellation of the Third Unlocking Period of the 2021 Restricted Stock Incentive Plan." It was agreed that because the company-level performance assessment in 2025 did not meet the standards, in accordance with the "Guizhou Sanli Pharmaceutical Co., Ltd. 2021 Restricted Stock Incentive Plan" and other relevant regulations, a total of 732,000 restricted shares that have been granted but have not been released from sale will be repurchased and canceled by the company. The changed share capital is 409,010,216 yuan, and the paid-in share capital is 409,010,216 yuan.

On October 28, 2025, Sanli Pharmaceutical completed the registration of the above-mentioned stock cancellation at the Shanghai Branch of China Securities Depository and Clearing Co., Ltd.

30. In July 2025, the fifth capital reduction and the fifth repurchase and cancellation of treasury shares reduced the total share capital to 408,930,216 shares.

On July 30, 2025, the company held the 14th meeting of the 4th board of directors and the 13th meeting of the 4th board of supervisors, and reviewed and approved the "Proposal on the Repurchase and Cancellation of Certain Restricted Stocks". Two incentive targets in the company's 2024 restricted stock incentive plan (Mr. Gu Jiyang and Mr. Wang Xun) are no longer eligible for incentives due to their resignation. A total of 80,000 restricted shares that have been granted but have not been released will be repurchased and canceled by the company. The changed share capital is 408,930,216 yuan, and the paid-in share capital is 408,930,216 yuan.

On October 28, 2025, Sanli Pharmaceutical completed the registration of the above-mentioned stock cancellation at the Shanghai Branch of China Securities Depository and Clearing Co., Ltd.

As of December 31, 2025, Sanli Pharmaceutical's share capital was 408,930,216 yuan, its registered capital was 409,802,160 yuan (of which 872,000 restricted shares that had been repurchased and canceled on October 28, 2025 have not yet completed industrial and commercial change registration), and the total number of shares was 408,930,216 shares (par value of 1 yuan per share), all of which are tradable shares. Among them: 5.09 million shares with sales restrictions and 403,840,216 shares without sales restrictions.

4. Basis for preparation of financial statements

1. Basics of preparation

The company conducts recognition and measurement based on actual transactions and events and in accordance with the "Accounting Standards for Business Enterprises - Basic Standards" promulgated by the Ministry of Finance and specific accounting standards for enterprises, application guidelines for accounting standards for enterprises, interpretations of accounting standards for enterprises and other relevant regulations (hereinafter collectively referred to as "Accounting Standards for Business Enterprises"). On this basis, the company prepares financial statements in conjunction with the provisions of the China Securities Regulatory Commission's "Information Disclosure Preparation Rules for Companies that Offer Securities to the Public No. 15 - General Provisions for Financial Reports" (revised in 2023).

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

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, cash flow and other relevant information during the reporting period.

2. Accounting period

A fiscal year runs from January 1 to December 31 of the Gregorian calendar.

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3. Business cycle

√Applicable □Not applicable

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

4. Accounting standard currency

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

5. Determination method and selection basis of materiality criteria

√Applicable □Not applicable

Project Materiality Criteria

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

The amount is greater than 10 million yuan

Accounts receivable/other receivables whose individual amount accounts for more than 2% of the book balance of accounts receivable/other receivables and which are important are written off

The amount is greater than 10 million yuan

A single prepayment aged over one year accounts for more than 5% of the total prepayments. Prepayments aged over one year and with an important amount

And the amount is greater than 3 million yuan

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

Single accounts payable with an aging of more than 1 year account for more than 5% of the total accounts payable. Important accounts payable with an aging of more than 1 year.

And the amount is greater than 10 million yuan

Other payables individually aged over one year account for 5% of the total other payables Important other payables aged over one year

Above and the amount is greater than 5 million yuan

The company will recognize the cash flow from investment activities in which the amount of income and expenditure exceeds 10% of the net assets as important cash received/paid related to investment activities.

Cash flows from 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 a significant portion of the Group's consolidated joint ventures or associates

More than 5% of total assets in financial statements

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,

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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, and the same basis as the investee's direct disposal of relevant assets or liabilities will be used for accounting treatment; other changes in the owner's equity other than net profit and loss, other comprehensive income and profit distribution in the net assets of the investee recognized due to the use of equity method accounting 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

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.

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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 acquisition date based on the fair value of the equity on the acquisition date, and the difference between the fair value and its book value will be included in the investment income of the current period. If the equity of the purchased party held before the purchase date involves other comprehensive income under equity method accounting 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.

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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.

(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.

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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

When preparing the cash flow statement, the company's cash on hand and deposits that can be used for payment at any time are recognized as cash. Investments that meet the four conditions of short term (generally due within three months from the date of purchase), strong liquidity, easy conversion into known amounts of cash, and small risk of value changes are determined as cash equivalents.

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.

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.

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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

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

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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.

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 derecognised, that is, it will be transferred from its account and balance sheet

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Pin:

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.

(4) 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.

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).

(5) 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.

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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.

(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.

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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.

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

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.

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Guizhou Sanli Pharmaceutical Co., Ltd. 2025 Annual Report

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 high credit rating and has a history of

Refer to historical credit loss experience, combined with the current situation and the

There has been no note default or credit loss in history.

Banker's Acceptance Bills anticipate future economic conditions, fulfill their payments in the short term through extremely low default risk exposure and consolidation risk

Expected credit loss rate for a duration, and strong ability to calculate expected credit loss contractual cash flow obligations

Bills receivable other than bank acceptance bills are calculated based on aging and lifetime expected credit loss rate.

According to mention

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

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.

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

□Applicable √Not applicable

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

13. Accounts receivable

√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

Portfolio 1 This portfolio uses the aging of accounts receivable as credit. Comparison table based on aging and expected credit loss rate throughout the duration.

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Provision based on risk characteristics

Refer to historical credit loss experience, combined with current conditions and

Forecast of future economic conditions, through default risk exposure portfolio 2 Accounts receivable of companies within the scope of consolidation

and the expected credit loss rate throughout the duration to calculate the expected credit loss

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 Expected credit loss rate of accounts receivable (%) 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 using the first-in, first-out method.

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

□Applicable √Not applicable

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

14. Accounts receivable financing

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

□Applicable √Not applicable

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

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.

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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

Various types of deposits, advances, and guarantee deposits are calculated based on the comparison table between the aging of the accounts and the expected credit loss rate throughout the entire duration.

mention

accounts receivable

With reference to historical credit loss experience, combined with the current situation and the forecast of the uncombined future economic conditions, the expected credit loss accrual method is calculated through the default risk exposure and the expected credit loss rate throughout the duration:

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

The aging of other receivables is calculated based on the first-in, first-out method.

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

□Applicable √Not applicable

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

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.

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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

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.

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.

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

□Applicable √Not applicable

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

Classification as held for sale confirmation criteria

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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

Held-for-sale accounting method

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 combinations, please refer to Note V. (6) Accounting treatment methods for business combinations 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.

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.

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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.

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

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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. 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.

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20. Investment real estate

(1). If the cost measurement model is adopted:

Depreciation or amortization method

Investment real estate refers to real estate held for the purpose of earning rentals or capital appreciation, or both, including leased land use rights, land use rights held and prepared to be transferred after appreciation, and leased buildings. In addition, for vacant buildings held by the company for operating leasing, if the board of directors makes a written resolution clearly stating that the building will be used for operating leasing and the holding intention will not change in the short term, it will also be reported as investment real estate.

The Company's investment real estate is recorded at its cost. The cost of purchased investment real estate includes the purchase price, relevant taxes and other expenses directly attributable to the asset; the cost of self-constructed investment real estate consists of the necessary expenses incurred before the asset reaches its intended usable state.

The company adopts the cost model for subsequent measurement of investment real estate. The investment real estate measured according to the cost model - rental buildings adopts the same depreciation policy as the company's fixed assets. The rental land use rights follow the same amortization policy as intangible assets. For details, please see Note V. 21 Fixed Assets and Note V. 26 Intangible Assets.

Please refer to Note V. 27 Impairment of Long-term Assets for details on the impairment testing method and impairment provision method for investment real estate.

When the purpose of investment real estate is changed to self-use, the Company will convert the investment real estate into fixed assets or intangible assets from the date of change. When the purpose of self-used real estate is changed to earn rent or capital appreciation, the company will convert fixed assets or intangible assets into investment real estate from the date of change. When conversion occurs, the book value before conversion will be used as the entry value after conversion. When the investment real estate is disposed of, or is permanently withdrawn from use and no economic benefits are expected to be obtained from its disposal, the investment real estate shall be derecognized. The amount of income from the sale, transfer, scrapping or damage of investment real estate after deducting its book value and relevant taxes is included in the current profit and loss.

21. Fixed assets

(1). Confirm conditions

√Applicable □Not applicable

1.Conditions for confirmation of fixed assets

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. Initial measurement of fixed assets

The company's fixed assets are initially measured at cost.

(1) The cost of purchased fixed assets includes the purchase price, import duties and other related taxes and fees, as well as other expenses directly attributable to the asset that are incurred before the fixed asset reaches its intended usable condition.

(2) The cost of self-constructed fixed assets consists of the necessary expenditures incurred before the asset reaches its intended usable condition.

(3) Fixed assets invested by investors shall be recorded at the value stipulated in the investment contract or agreement. However, if the value stipulated in the contract or agreement is unfair, they shall be recorded at fair value.

(4) If the purchase price of fixed assets is deferred beyond normal credit conditions and is essentially financing in nature, the cost of the fixed assets shall be determined based on the present value of the purchase price. The difference between the actual price paid and the present value of the purchase price, except for those that should be capitalized, shall be included in the current profit and loss during the credit period.

3. Subsequent measurement and disposal of fixed assets

(1) Depreciation of fixed assets

Depreciation of fixed assets is accrued over the estimated useful life based on their recorded value minus the estimated net residual value. Depreciation of fixed assets is accrued by classification using the straight-line method. For fixed assets with provision for impairment, the depreciation amount will be determined based on the book value after deduction of impairment provision and the remaining useful life in the future period; no depreciation will be provided for fixed assets that have been fully depreciated and are still in use.

The company determines the service life and estimated net residual value of fixed assets based on their nature and usage. At the end of the year, the service life, estimated net residual value and depreciation method of fixed assets will be reviewed. If there are differences from the original estimates, corresponding adjustments will be made.

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(2). Depreciation method

√Applicable □Not applicable

Category Depreciation method Depreciation life (years) Residual value rate Annual depreciation rate Houses and buildings Year-average method 2030 5.00% 3.17%4.75% Machinery and equipment Year-average method 1012 5.00% 7.92%9.50% Transportation equipment Year-average method 810 5.00% 9.50%11.88% Electronic equipment Year-average method 5 5.00% 19.00% Other equipment Year-average method 58 5.00% 11.88%19.00%

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.

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 meet the capitalization conditions, and the interruption lasts for more than 3 months, the capitalization of borrowing costs will be suspended; if the interruption is that the assets that meet the capitalization conditions that have been acquired, constructed or produced can reach the expected level, the capitalization of borrowing costs will be suspended.

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The borrowing costs will continue to be capitalized if the necessary procedures are carried out for the usable status or salable status. 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. Classification of biological assets

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.

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 5.00 9.50-15.83

(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.

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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

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.

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(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

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

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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

Employee compensation refers to various forms of remuneration or compensation given by the company to obtain services provided by employees or to terminate labor relations. Employee compensation includes short-term compensation, post-employment benefits, termination benefits and other long-term employee benefits.

(1).Accounting treatment method 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.

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 of 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.

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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 the fair value. The option pricing model selected takes into account the following factors: (1) the exercise price of the option; (2) the validity period of the option; (3) the current price of the underlying shares; (4) the expected volatility of the stock price; (5) the expected dividends of the shares; (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. Cash-settled shares that become exercisable after completing services within the waiting period or meeting specified performance conditions.

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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.

(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.

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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.

General principles for 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). Similar businesses using different business models involve different revenue recognition methods and measurement methods.

√Applicable □Not applicable

Specific method 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.

35. Contract costs

√Applicable □Not applicable

1. Contract performance costs

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

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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. Apart from this, 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.

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.

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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 income taxes levied by the same tax collection and administration department on the same taxpayer or to different taxpayers, but in each future period when important deferred income tax assets and deferred income tax liabilities are reversed, the taxpayers involved intend to settle the current income tax assets and current income taxes on a net basis.

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 contract inception date, the Company evaluates whether the contract is a lease or contains a lease. A contract is a lease or contains a lease if one party transfers the right to control the use of one or more identified assets for a certain period in exchange for consideration.

1. Split of lease contract

When a contract contains multiple separate leases at the same time, the company will split the contract and conduct accounting treatment for each separate lease.

When the contract contains both lease and non-lease parts, the company will separate the lease and non-lease parts. The lease part shall be accounted for in accordance with the leasing standards, and the non-lease part shall be accounted for in accordance with other applicable business accounting standards.

2. Merger of lease contracts

When two or more contracts containing leases entered into between the Company and the same transaction party or its related parties at the same time or at similar times meet one of the following conditions, they are combined into one contract for accounting treatment:

(1) The two or more contracts are concluded based on the overall commercial purpose and constitute a package deal. The overall commercial purpose cannot be understood without considering them as a whole.

(2) The amount of consideration in one of the two or more contracts depends on the pricing or performance of the other contracts.

(3) The asset use rights transferred by the two or more contracts together constitute a single lease.

3. Accounting treatment of the company as a lessee

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 low-value asset leasing

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. 25, Right-of-use Assets and Note V. 47, Lease Liabilities.

Lease classification standards and accounting treatment methods as a lessor

√Applicable □Not applicable

1. Classification of leasing

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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.

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.

4. Sale and leaseback transactions

(1) The company is the seller and lessee

If the asset transfer in a sale and leaseback transaction is a sale, the company measures the right-of-use assets formed by the sale and leaseback based on the portion of the original asset's book value related to the right of use obtained through the leaseback, and only recognizes relevant gains or losses for the rights transferred to the lessor. If the fair value of the sales consideration is different from the fair value of the asset, or the lessor does not charge rent according to the market price, the company will account for the amount of the sales consideration that is lower than the market price as prepaid rent, and account for the amount that is higher than the market price as additional financing provided by the lessor to the lessee; at the same time, the relevant sales gains or losses will be adjusted according to the fair value.

If the asset transfer in a sale and leaseback transaction does not constitute a sale, the company continues to recognize the transferred assets and at the same time recognizes a financial liability equal to the transfer income.

(2) The company is both buyer and lessor

If the asset transfer in a sale and leaseback transaction is a sale, the Company shall conduct corresponding accounting treatment according to asset purchase, and shall conduct accounting treatment for asset leasing according to the leasing standards. If the fair value of the sales consideration is different from the fair value of the asset, or the company does not charge rent according to the market price, the company will account for the amount of the sales consideration that is lower than the market price as prepaid rent, and account for the amount that is higher than the market price as additional financing provided by the company to the lessee; at the same time, the rental income will be adjusted according to the market price.

If the asset transfer in a sale and leaseback transaction does not constitute a sale, the company shall recognize a financial amount equal to the transfer income.

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39. Other important accounting policies and accounting estimates

□Applicable √Not applicable

40. Changes in important accounting policies and accounting estimates

For details, please refer to "The Company's Analysis and Explanation of the Causes and Impact of Changes in Accounting Policies, Accounting Estimates or Correction of Major Accounting Errors" under "Important Matters"

41. The first implementation of new accounting standards or standard interpretations starting from 2025 will involve adjustments to the financial statements at the beginning of the year of first implementation.

□Applicable √Not applicable

42. 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 calculated and paid based on the difference after deducting the 13%, 6% and exempt input tax allowed for the current period.

Urban maintenance and construction tax turnover tax payable 7%, 5%

Corporate income tax: 25%, 15% of taxable income, exempt from corporate income tax, education surcharge, 3% of turnover tax payable

Local education surcharge turnover tax payable 2%

If there are taxpayers with different corporate income tax rates, a description of the disclosure

√Applicable □Not applicable

Name of tax payer 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 the relevant provisions of Article 1 of Caishui [2008] No. 15 "Notice of the Ministry of Finance and the State Administration of Taxation on Income Tax Issues for Partnership Enterprise Partners" and the Enterprise Income Tax Law of the People's Republic of China, Guizhou Sankang Enterprise Management Partnership (Limited Partnership) Partnership is not subject to the Enterprise Income Tax Law. 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

Other organizations, pay corporate income tax Guizhou Sankang Traditional Chinese Medicine Industry Development Co., Ltd. 25%

Comply with Note 4, Taxes, (2), preferential tax policies and Guizhou Sankang Planting Co., Ltd.

Basis, 4 tax exemption

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%

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Comply with Note 4, Taxes, (2), preferential tax policies and Guizhou Dechangxiang Traditional Chinese Medicine Planting Co., Ltd.

Basis, 4 tax exemption

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%

Guizhou Sanli Pharmaceutical 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., its holding subsidiary Guizhou Hanfang 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 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.

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 value-added tax according to the Interim Regulations of the People's Republic of China on Value-Added Tax (revised in 2016).

5. The controlled subsidiary Yunnan Wudi Pharmaceutical Co., Ltd. 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 based on the number of disabled persons placed by the taxpayer according to the quota.

6. Others

□Applicable √Not applicable

7. Notes on Consolidated Financial Statement Items

1. Monetary funds

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Ending balance Beginning balance

Cash on hand 54,863.86 72,310.86 Bank deposits 389,332,169.90 474,741,730.70 Other monetary funds 30,326.55 30,972.78 Deposits in finance companies

Total 389,417,360.31 474,845,014.34 Including: total amount deposited abroad

The details of restricted monetary funds are as follows:

Unit: Yuan Currency: RMB

Item Ending balance Beginning balance

ETC margin 2,000.00 Total 2,000.00

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Other notes:

None

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

19,925,822.20 22,945,081.52 /Financial assets included in current profits and losses

Among them:

debt instrument investment /

Others 19,925,822.20 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:

Debt Instrument Investment

blending tools

Others

Total 19,925,822.20 22,945,081.52 /Other instructions:

√Applicable □Not applicable

Other explanations for trading financial assets: The closing balance is 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 115,957,941.30 82,062,569.10 Commercial acceptance bills

Total 115,957,941.30 82,062,569.10

As of December 31, 2025, the company believes that there is no significant credit risk in the notes receivable held by the company, and no significant losses will be incurred due to default by banks or other acceptors.

(2). The company’s pledged notes receivable at the end of the period

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Project Amount pledged at the end of the period

Bank acceptance bills 78,303,168.10 Commercial acceptance bills

Total 78,303,168.10

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(3). Notes receivable that have been endorsed or discounted by the company at the end of the period and have not yet matured on the balance sheet date √ Applicable □ Not applicable

Unit: Yuan Currency: RMB

Item Amount derecognized at the end of the period Amount not derecognized at the end of the period Bank acceptance bill 81,490,124.60 Commercial acceptance bill

Total 81,490,124.60

(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 in the current period: □ 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). 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.

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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) 581,691,823.92 750,454,423.06 Within 1 year (including 1 year) Subtotal 581,691,823.92 750,454,423.06 1 to 2 years 40,902,691.99 16,871,915.37 2 to 3 years 990,489.00 507,621.88 3 to 4 years 354,658.88 392,054.34 4 to 5 years 392,054.34 8,000.00 More than 5 years 104,816.20 96,816.20

Total 624,436,534.33 768,330,830.85

(2). Classified disclosure according to bad debt accrual method

√Applicable □Not applicable

Unit: Yuan Currency: RMB Closing balance

Book balance Bad debt provision

Category Book Ratio Provision Ratio

amount amount value

(%) Example(%)

Provision for bad debts on an individual basis

Among them:

Provision for bad debts on a group basis 624,436,534.33 100.00 34,048,193.50 5.45 590,388,340.83 of which:

Combination 1 624,436,534.33 100.00 34,048,193.50 5.45 590,388,340.83Total 624,436,534.33 100.00 34,048,193.50 5.45 590,388,340.83

Opening balance

Book balance Bad debt provision

Category Book Ratio Provision Ratio

amount amount value

(%) Example(%)

Provision for bad debts on an individual basis

Among them:

Provision for bad debts on a group basis 768,330,830.85 100.00 39,661,042.63 5.16 728,669,788.22 Of which:

Combination 1 768,330,830.85 100.00 39,661,042.63 5.16 728,669,788.22

Total 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 (%)

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Within 1 year 581,691,823.92 29,084,591.19 5.00 1 to 2 years 40,902,691.99 4,090,269.21 10.00 2 to 3 years 990,489.00 297,146.70 30.00 3 to 4 years 354,658.88 177,329.44 50.00 4 to 5 years 392,054.34 294,040.76 75.00 More than 5 years 104,816.20 104,816.20 100.00

Total 624,436,534.33 34,048,193.50

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 based on combination

39,661,042.63 5,578,448.85 -34,400.28 34,048,193.50 Bad debt provision

Among them: Combination 1 39,661,042.63 5,578,448.85 -34,400.28 34,048,193.50

Total 39,661,042.63 5,578,448.85 -34,400.28 34,048,193.50

Among them, the amount of recovery or reversal of bad debt provisions for the current period is important:

□Applicable √Not applicable

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

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Accounts receivable and accounts receivable period Contract assets Accounts receivable and contracts Contract assets at the end of the period Bad debt provisions at the end of the period Unit name

Ending balance Ending balance Asset ending balance Balance of total balances

Proportion (%) Customer 1 22,562,392.38 22,562,392.38 3.61 1,396,518.10 Customer 2 22,462,373.87 22,462,373.87 3.60 1,123,118.69 Customer 3 18,827,888.44 18,827,888.44 3.02 941,394.42Customer 4 16,255,404.77 16,255,404.77 2.60 812,770.24Customer 5 14,448,400.00 14,448,400.00 2.31 1,249,890.00

Total 94,556,459.46 94,556,459.46 15.14 5,523,691.45Other 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

Explanation of significant changes in the book balance of contract assets that have experienced changes in loss provisions during the current period:

□Applicable √Not applicable

(4). Bad debt provisions for contract assets in the current period

□Applicable √Not applicable

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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 151,989,603.53 121,388,452.65 Accounts receivable

Total 151,989,603.53 121,388,452.65

(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 Bank acceptance bill 26,993,295.66 Commercial acceptance bill

Total 26,993,295.66

(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

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Provision for bad debts based on the general expected credit loss model

□Applicable √Not applicable

Basis for division of each stage and provision ratio for bad debts

None

Explanation of significant changes in the book balance of accounts receivable financing that have experienced changes in loss provisions in the current period: □ Applicable √ Not applicable

(5). Bad debt provisions

□Applicable √Not applicable

Among them, the amount of recovery or reversal of bad debt provisions for the current period is important:

□Applicable √Not applicable

Other notes:

None

(6). Financing of receivables actually written off in the current period

□Applicable √Not applicable

Important financing write-offs of receivables

□Applicable √Not applicable

Write-off instructions:

□Applicable √Not applicable

(7). Increases and decreases in receivables financing and changes in fair value during the current period:

√Applicable □Not applicable

Unit: Yuan Currency: RMB Beginning balance Amount of increase or decrease in the current period Ending balance

fair value

Item Fair value Fair value to cost Cost value Change in cost

change

Invoices receivable

121,388,452.65 30,601,150.88 151,989,603.53According to

Accounts receivable

money

Total 121,388,452.65 30,601,150.88 151,989,603.53 The company believes that the receivable financing measured at fair value and its changes included in other comprehensive income has a short remaining period/long remaining period but there is not much 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

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8. Advance payments

(1). Prepayments are listed based on aging

√Applicable □Not applicable

Unit: Yuan Currency: RMB Closing balance Opening balance

Aging

Amount Proportion (%) Amount Proportion (%) Within 1 year 27,890,596.46 89.04 33,290,362.51 98.82 1 to 2 years 3,309,344.35 10.56 208,995.11 0.62 2 to 3 years 0.00 0.00 127,500.00 0.38 More than 3 years 126,000.00 0.40 60,647.62 0.18

Total 31,325,940.81 100.00 33,687,505.24 100.00 Explanation of reasons why prepayments with an aging of more than 1 year and important amounts were not settled in time:

None

(2). Prepayments of the top five closing balances by prepayment objects

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Unit name Closing balance Proportion of total closing balance of prepayments (%) Guangdong Pharmaceutical University 5,000,000.00 15.96 Sichuan Junhong Shengjing Seedling Technology Co., Ltd. 1,999,760.00 6.38 Yingshan County Haoxin Agricultural Development Co., Ltd. 1,999,760.00 6.38 Longli Rongyou Planting and Breeding Farmers Professional Cooperative 1,876,326.27 5.99 Longli Zebo Farmers’ Professional Cooperative 1,670,400.00 5.33

Total 12,546,246.27 40.04

Other notes:

None

Other notes:

□Applicable √Not applicable

9. Other receivables

Item list

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Ending balance Beginning balance

interest receivable

Dividends receivable 226,031.78

Other receivables 2,792,679.12 7,099,346.97 Total 3,018,710.90 7,099,346.97

Other notes:

√Applicable □Not applicable

Note: Other receivables in the above table refer to other receivables after deducting interest receivable and dividends receivable.

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(1). Classification of interest receivable

□Applicable √Not applicable

(2). Important overdue interest

□Applicable √Not applicable

(3). Classified disclosure according to bad debt accrual method □Applicable √Not applicable

Provision for bad debts is made individually:

□Applicable √Not applicable

Explanation on the provision of bad debt provisions 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

The basis for dividing each stage and the proportion of provision for bad debts are not available

Explanation of significant changes in the book balance of interest receivable due to changes in loss provisions in the current period: □ Applicable √ Not applicable

(5). Bad debt provisions

□Applicable √Not applicable

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:

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□Applicable √Not applicable

Dividends receivable

(7). Dividends receivable

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Project (or invested unit) Closing balance Opening balance Guizhou Jiuxu Investment Co., Ltd. 226,031.78

Total 226,031.78 (8). Important dividends receivable aged more than 1 year □Applicable √Not applicable

(9). Classified disclosure according to bad debt accrual method

□Applicable √Not applicable

Provision for bad debts is made individually:

□Applicable √Not applicable

Instructions on accruing bad debt provisions individually:

□Applicable √Not applicable

Provision for bad debts by group:

□Applicable √Not applicable

(10). Provision for bad debts based on the general expected credit loss model □Applicable √Not applicable

Basis for division of each stage and proportion of bad debt provision: None

Explanation of significant changes in the book balance of dividends receivable due to changes in loss provisions in the current period: □ Applicable √ Not applicable

(11).Bad debt provisions

□Applicable √Not applicable

Among them, the amount of bad debt provision recovery or reversal in the current period is important: □ Applicable √ Not applicable

Other notes:

None

(12). Dividends receivable actually written off in the current period

□Applicable √Not applicable

Among them, the important write-off of dividends receivable

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□Applicable √Not applicable

Write-off instructions:

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

Other receivables

(13). Disclosure based on aging

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Aging Book balance at the end of the period Book balance at the beginning of the period

Within 1 year (including 1 year) 2,620,453.83 7,164,436.28 Within 1 year (including 1 year) Subtotal 2,620,453.83 7,164,436.28 1 to 2 years 230,516.08 33,000.00 2 to 3 years 33,000.00 53,000.00 More than 3 years

3 to 4 years 32,000.00 251,779.30 4 to 5 years 226,734.05 401,771.45 More than 5 years 403,860.70 5,640.00

Total 3,546,564.66 7,909,627.03

(14). Classification by nature of payment

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Nature of payment Book balance at the end of the period Book balance at the beginning of the period

Investment and acquisition deposit

Collection and payment 3,338,913.60 Withholding amount 1,362,773.34 1,679,044.70 Security deposit and deposit 1,770,575.08 1,660,964.91 Reserve fund 268,261.49 1,225,450.23 Others 144,954.75 5,253.59 Subtotal 3,546,564.66 7,909,627.03 Less: Bad debt provision 753,885.54 810,280.06

Total 2,792,679.12 7,099,346.97

(15). Bad debt provision accrual

√Applicable □Not applicable

Unit: Yuan Currency: RMB Phase 1 Phase 2 Phase 3

Lifetime forecasts Lifetime forecasts

Provision for bad debts Estimated total for the next 12 months

Credit losses for the period (credit losses for the period to come) (credit losses for the period to come)

period credit loss

Credit impairment occurs) Credit impairment occurs)

Balance as of January 1, 2025

The balance on January 1, 2025 in the current period 810,280.06 810,280.06 --Transfer to the second stage

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--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 48,621.02 48,621.02 Write-off in the current period

Write-off in this period

Other changes -7,773.50 -7,773.50 Balance on December 31, 2025 753,885.54 753,885.54

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

(16). Bad debt provisions

√Applicable □Not applicable

Unit: Yuan Currency: RMB Change amount in the current period

Category Opening balance Write-off or Ending balance accrual Recovery or reversal Other changes

Write off

Provision for bad debts on an individual basis

Provision for bad debts by combination 810,280.06 48,621.02 -7,773.50 753,885.54 Among them: combination one 810,280.06 48,621.02 -7,773.50 753,885.54

Total 810,280.06 48,621.02 -7,773.50 753,885.54

Among them, the amount of bad debt provision reversed or recovered in the current period is important:

□Applicable √Not applicable

Other notes:

None

(17). Other receivables actually written off in the current period

□Applicable √Not applicable

Important write-offs of other receivables:

□Applicable √Not applicable

Instructions for writing off other receivables:

□Applicable √Not applicable

(18). Other receivables with the top five closing balances collected by debtors

√Applicable □Not applicable

Unit: Yuan Currency: RMB

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Accounting for other receivables

Name of bad debt provision unit Closing balance Total closing balance Nature of payment Aging

Ending balance

Proportion of number (%)

Beijing Yadong Biopharmaceutical Co., Ltd.

900,000.00 25.38 Security deposit and deposit Within 1 year 45,000.00 Co., Ltd.

Guizhou Power Grid Co., Ltd.

600,000.00 16.92 Security deposit and deposit 4-5 years, more than 5 years 549,555.18 Guiyang Baiyun Power Supply Bureau

China National Petroleum Corporation Within 1 year, 1-2 years,

Co., Ltd. Yunnan Kunming Sales 144,954.75 4.09 Others 2-3 years, 3-4 years, 47,816.06 Sales branch 4-5 years

Anguo Yadong Biopharmaceutical Co., Ltd.

100,000.00 2.82 Security deposit and deposit Within 1 year 5,000.00 Co., Ltd.

Yu Lin 81,969.04 2.31 Reserve fund Within 1 year 4,098.45

Total 1,826,923.79 51.52 / / 651,469.69

(19). 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 Closing balance Opening balance

Project

Book balance Bad debt provision Book value Book balance Bad debt provision Book value First stage 3,546,564.66 753,885.54 2,792,679.12 7,909,627.03 810,280.06 7,099,346.97 Second stage

The third stage

Total 3,546,564.66 753,885.54 2,792,679.12 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 Closing balance

Aging combination

Book balance Bad debt provision Proportion of provision (%) Within 1 year 2,620,453.83 131,022.69 5.00 1 to 2 years 230,516.08 23,051.61 10.00 2 to 3 years 33,000.00 9,900.00 30.00 3 to 4 years 32,000.00 16,000.00 50.00 4 to 5 years 226,734.05 170,050.54 75.00 More than 5 years 403,860.70 403,860.70 100.00

Total 3,546,564.66 753,885.54

10. Inventory

(1).Inventory classification

√Applicable □Not applicable

Unit: Yuan Currency: RMB

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Ending balance Beginning balance

Inventories are accurate for price decreases Inventories are accurate for decreases in price

Project preparation/contract performance preparation/contract performance

Book balance Book value Book balance Book value cost impairment Cost impairment

prepare prepare

Raw materials 45,701,907.31 45,701,907.31 57,515,214.90 57,515,214.90 Work in progress 2,985,261.34 2,985,261.34 32,381,336.53 32,381,336.53 Goods in stock 115,617,086.90 6,657,776.35 108,959,310.55 170,786,519.46 2,971,448.96 167,815,070.50 Turnover materials 15,630,702.38 15,630,702.38 12,936,115.72 12,936,115.72 Packaging 4,489,021.43 4,489,021.43 2,555,718.79 2,555,718.79 Semi-finished products 44,966,093.37 321,707.98 44,644,385.39 46,420,084.37 94,327.60 46,325,756.77 Consumable production

1,719,069.07 1,710,962.04 8,107.03 1,192,851.31 1,192,851.31 Physical assets

Total 231,109,141.80 8,690,446.37 222,418,695.43 323,787,841.08 3,065,776.56 320,722,064.52

(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 this period Decrease amount in this period

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

raw materials

In product

Inventory goods 2,971,448.96 5,908,843.95 2,222,516.56 6,657,776.35 Semi-finished products 94,327.60 227,380.38 321,707.98 Turnover materials

Consumable biological assets 1,710,962.04 1,710,962.04 Contract performance costs

Total 3,065,776.56 7,847,186.37 2,222,516.56 8,690,446.37

Reasons for the reversal or write-off of inventory depreciation provisions in the current period

√Applicable □Not applicable

The company will write off the inventory that has been sold in the current period and has made provision for inventory decline at the beginning of the period.

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

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Other notes:

√Applicable □Not applicable

Consumable biological assets:

Unit: Yuan Currency: RMB

Item Ending book value. Beginning book value

1. Planting industry 8,107.03 1,192,851.31 Codonopsis pilosula 8,107.03 1,192,851.31

Total 8,107.03 1,192,851.31

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

13. Other current assets

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Ending balance Beginning balance

Prepaid corporate income tax 293,000.76 152,907.79 Cost of returns receivable 2,365,216.61 1,912,465.96 Input tax to be certified 2,486,639.21 4,492,358.94 Other taxes prepaid 7,766.59

Total 5,144,856.58 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

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(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 significantly increased □Applicable √Not applicable

(4). Actual write-off debt investments in the current period □ Applicable √ Not applicable

Among them, the write-off of important debt investments □Applicable √Not applicable

Instructions for writing off debt investments:

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

15. Other debt investments

(1). Other debt investments

□Applicable √Not applicable

Changes in impairment provisions for other debt investments during the period □ Applicable √ Not applicable

(2). Other important debt investments at the end of the period

□Applicable √Not applicable

(3).Provision of impairment provisions

□Applicable √Not applicable

Basis for division of each stage and proportion of impairment provision: None

Explanation of significant changes in the book balance of other debt investments that have experienced changes in loss provisions in the current period: □ Applicable √ Not applicable

The amount of impairment provision for the current period and the basis for assessing whether the credit risk of financial instruments has significantly increased □Applicable √Not applicable

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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

(3). Provision for bad debts based on the general expected credit loss model □Applicable √Not applicable

The basis for dividing each stage and the proportion of provision for bad debts are not available

Explanation of significant changes in the book balance of long-term receivables that have experienced changes in loss provisions in the current period: □ Applicable √ Not applicable

The amount of bad debt provision for the current period and the basis for assessing whether the credit risk of financial instruments has significantly increased □Applicable √Not applicable

(4). Bad debt provisions

□Applicable √Not applicable

Among them, the amount of bad debt provision recovery or reversal in the current period is important: □ Applicable √ Not applicable

Other notes:

None

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(5). Long-term receivables actually written off in the current period

□Applicable √Not applicable

Among them, the important write-off of long-term receivables

□Applicable √Not applicable

Instructions for writing off long-term receivables:

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

17. Long-term equity investment

(2). Long-term equity investment situation

√Applicable □Not applicable

Unit: Yuan Currency: RMB Increase or decrease in the current period

Impairment minus Others Declaration of issuance

Balance at the beginning of the period Other accruals under the equity method Closing balance Provision for invested units less Comprehensive Cash disbursement Its (book value) Additional investment Confirmed investment equity Impairment (book value) Closing investment income Dividends or changes in other capital gains and losses Provision balance

capital adjustment profit

1. Joint ventures

Subtotal

2. Joint ventures

Guizhou Qianli Biotechnology

Pharmaceutical venture capital

57,000,000.00 53,676.68 57,053,676.68 Fund partnership

(limited partnership)

Zhejiang Kunyu Pharmaceutical

2,547,227.44 -92,676.49 2,454,550.95 Technology Co., Ltd.

Guizhou Dechang Xiangzhong

Medicine Pieces Co., Ltd. 10,000,000.00 10,000,000.00 86,859.49 20,086,859.49 Company

Subtotal 12,547,227.44 67,000,000.00 47,859.68 79,595,087.12Total 12,547,227.44 67,000,000.00 47,859.68 79,595,087.12

(3). Impairment testing of long-term equity investments

□Applicable √Not applicable

Other notes:

None

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18. Investment in other equity instruments

(1). Investment in other equity instruments

√Applicable □Not applicable

Unit: Yuan Currency: RMB Increases and decreases in the current period are designated as accumulated at fair price. Accumulatively included in it

At the beginning of the period, the current period is included in it. At the end of the period, the value recognized in the current period is measured and its changing items are added to other comprehensive income and reduced to other comprehensive income.

Balance Other comprehensive income Other comprehensive income Balance Dividend income Included in other comprehensive income investments Investment gains and losses

The reasons for the gains and losses of Guizhou Jiuxu Investment are as follows: For details, please refer to other equity work

10,000,000.00 10,000,000.00 226,031.78

Limited company with other investment instructions

Total 10,000,000.00 10,000,000.00 226,031.78 /

(2). Explanation of termination of recognition in this period

□Applicable √Not applicable

Other notes:

√Applicable □Not applicable

The equity investment held by the company in Guizhou Jiuxu Investment Co., Ltd. is a non-trading equity instrument investment, so the company designated it as an equity instrument investment measured at fair value and its changes included in other comprehensive income.

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19. Other non-current financial assets

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

20. Investment real estate

Investment real estate measurement model

(1). Investment real estate using cost measurement model

Unit: Yuan Currency: RMB

Projects Houses and buildings Land use rights Construction in progress Total

1. Original book value

1. Opening balance

2. Increased amount in this period 47,645,302.80 47,645,302.80 (1) Outsourcing

(2) Transfer of fixed assets 47,645,302.80 47,645,302.80 (3) Increase in business mergers

3. Reduction amount in this period

(1) Disposal

(2) Other transfer-out

4. Ending balance 47,645,302.80 47,645,302.80

2. Accumulated depreciation and accumulated amortization

1. Opening balance

2. Increase in the current period 7,833,994.15 7,833,994.15 (1) Provision or amortization 541,612.97 541,612.97 (2) Transfer of fixed assets 7,292,381.18 7,292,381.18 3. Decrease in the current period

(1) Disposal

(2) Other transfer-out

4. Closing balance 7,833,994.15 7,833,994.15

3. Impairment provision

1. Opening balance

2. Increase amount in this period

(1) Provision

3. Reduction amount in this period

(1) Disposal

(2) Other transfer-out

4. Ending balance

4. Book value

1. Book value at the end of the period 39,811,308.65 39,811,308.65 2. Book value at the beginning of the period

(2). Investment real estate that has not completed the ownership certificate

□Applicable √Not applicable

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(3). Impairment testing of investment real estate using the cost measurement model

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

21. Fixed assets

Item list

√Applicable □Not applicable

Unit: Yuan Currency: RMB Item Ending balance Beginning balance Fixed assets 483,234,447.36 563,914,039.44 Fixed assets liquidation

Total 483,234,447.36 563,914,039.44

Other notes:

√Applicable □Not applicable

Note: The fixed assets in the above table refer to the fixed assets after deducting the liquidation of fixed assets.

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fixed assets

(1). Fixed assets

√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 5,779,011.83 1,085,370.79 354,310.25 311,772.67 14,453,427.17 (1) Purchase 6,922,961.63 5,779,011.83 1,085,370.79 354,310.25 311,772.67 14,453,427.17 (2) Transfer of projects under construction

(3) Increase in business mergers

3. Reduction amount in the current period 47,645,302.80 803,912.05 4,746,079.73 380,429.28 248,457.11 53,824,180.97 (1) Disposal or scrapping 803,912.05 4,746,079.73 380,429.28 248,457.11 6,178,878.17 (2) Transferred to investment real estate 47,645,302.80 47,645,302.80 4. Closing balance 502,561,384.70 309,400,623.84 29,310,308.35 8,830,986.49 5,264,119.22 855,367,422.66

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 24,821,110.69 25,072,260.47 3,203,998.60 511,508.08 342,132.26 53,951,010.10 (1) Provision 24,821,110.69 25,072,260.47 3,203,998.60 511,508.08 342,132.26 53,951,010.10 3. Decrease amount in the current period 7,292,381.18 652,766.25 4,298,793.92 292,643.39 105,587.08 12,642,171.82 (1) Disposal or scrapping 652,766.25 4,298,793.92 292,643.39 105,587.08 5,349,790.64 (2) Transfer to investment real estate 7,292,381.18 7,292,381.18 4. Closing balance 176,688,194.56 165,241,822.96 19,223,220.90 6,626,505.57 4,353,231.31 372,132,975.30

3. Impairment provision

1. Opening balance

2. Increase amount in this period

(1) Provision

3. Reduction amount in this period

(1) Disposal or scrapping

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4. Ending balance

4. Book value

1. Book value at the end of the period 325,873,190.20 144,158,800.88 10,087,087.45 2,204,480.92 910,887.91 483,234,447.36 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 the year:

Unit: Yuan Currency: RMB

Item Original book value Accumulated depreciation Impairment provision Net book value Houses and buildings 211,731,176.44 65,250,928.18 146,480,248.26

Fixed asset liquidation

□Applicable √Not applicable

22. Projects under construction

Item list

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

Construction in progress

(1). Projects under construction

□Applicable √Not applicable

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

□Applicable √Not applicable

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(3). Provision for impairment of projects under construction in the current period

□Applicable √Not applicable

(4). Impairment testing of projects under construction

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

Engineering supplies

(5). Project materials situation

□Applicable √Not applicable

23. Productive biological assets

(1).Producing biological assets using cost measurement model

√Applicable □Not applicable

Unit: Yuan Currency: RMB Forestry Project Total

Cork

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 40,251,971.67 40,251,971.67 (1) Outsourcing

(2) Self-cultivation 40,251,971.67 40,251,971.67 3. Reduction amount in this period

(1) Disposal

(2) Others

4. Ending balance 51,855,853.12 51,855,853.12

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

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3. Reduction amount in this period

(1) Disposal

(2) Others

4. Ending balance

4. Book value

1. Book value at the end of the period 51,855,853.12 51,855,853.12 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).Producing biological assets using fair value measurement model

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

24. Oil and gas assets

(2).Oil and gas assets situation

□Applicable √Not applicable

(3). 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

Project Buildings and Land Total

1. Original book value

1. Balance at the beginning of the period 10,420,935.34 10,420,935.34 2. Increase in the current period 3,848,216.64 3,848,216.64

Lease 3,848,216.64 3,848,216.64 3. Decrease amount in the current period 2,807,123.26 2,807,123.26

Lease maturity 2,807,123.26 2,807,123.26 4. Closing balance 11,462,028.72 11,462,028.72

2. Accumulated depreciation

1. Opening balance 789,447.80 789,447.80

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2. Increase in the current period 1,244,821.48 1,244,821.48 (1) Provision 1,244,821.48 1,244,821.48 3. Decrease in the current period 1,047,509.93 1,047,509.93 (1) Disposal

(2) Lease maturity 1,047,509.93 1,047,509.93 4. Closing balance 986,759.35 986,759.35

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 10,475,269.37 10,475,269.37 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 non-specific

Items Land use rights Patent rights Technology Trademark rights Software and others Total

technique

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 32,934.98 32,934.98 (1) Purchase 32,934.98 32,934.98 (2) Internal research and development

(3) Increase in business mergers

3. Reduction amount in the current period 4,157,713.97 4,157,713.97 (1) Disposal 4,157,713.97 4,157,713.97 4. Closing balance 85,620,447.16 77,593,998.83 97,242,960.66 3,357,081.83 263,814,488.48

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

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2. Increase in the current period 2,315,736.46 6,892,016.20 9,078,326.27 581,901.11 18,867,980.04 (1) Provision 2,315,736.46 6,892,016.20 9,078,326.27 581,901.11 18,867,980.04 3. Reduction amount in the current period 1,147,164.31 1,147,164.31 (1) Disposal 1,147,164.31 1,147,164.31 4. Ending balance 17,413,578.03 20,482,460.12 29,938,837.16 1,696,988.74 69,531,864.05

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 68,206,869.13 57,111,538.71 67,304,123.50 1,660,093.09 194,282,624.43 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 to the balance of intangible assets at the end of the period is 0

(2). Data resources recognized as intangible assets

□Applicable √Not applicable

(3). Land use rights for which property rights certificates have not been obtained.

□Applicable √Not applicable

(4). Impairment testing of intangible assets

□Applicable √Not applicable

Other notes:

√Applicable □Not applicable

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 Qian (2019) High-tech Zone (White) Industrial Bank Co., Ltd. 55,551.56 23,029,806.10 18,062,593.01

Real Estate No. 0000422 The Company’s Guiyang Branch Total 23,029,806.10 18,062,593.01

27. Goodwill

(1).Original book value of goodwill

√Applicable □Not applicable

Unit: Yuan Currency: RMB

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This issue

Increase in the current period. Name or formation of the invested unit at the end of the period. Decrease.

Opening balance

Goodwill Matters

Disposal resulting from business combination

Guizhou Dechangxiang Pharmaceutical Co., Ltd.

161,658,316.25 161,658,316.25 production group

Guizhou Haost Biotechnology Co., Ltd.,

57,926,132.14 57,926,132.14 Yunnan Wudi Pharmaceutical Co., Ltd.

Guizhou Hanfang Pharmaceutical Co., Ltd. 335,021,686.21 335,021,686.21 Total 554,606,134.60 554,606,134.60

(1) The company used April 28, 2022 as the purchase date, and paid cash to acquire 95.00% of the equity of Guizhou Dechangxiang Pharmaceutical Co., Ltd. The fair value of the identifiable net assets of Guizhou Dechangxiang Pharmaceutical Co., Ltd. on the purchase date was RMB 74.0439 million. The difference between the merger cost and the proportionally recognized fair value of the identifiable assets and liabilities of Guizhou Dechangxiang Pharmaceutical Co., Ltd. is RMB 161,658,300, which is recognized as the goodwill related to the merger of Guizhou Dechangxiang Pharmaceutical Co., Ltd.

(2) The company used January 13, 2023 as the purchase date, and paid cash to acquire 60.9778% of the equity of Guizhou Haost Biotechnology Co., Ltd. The fair value of the identifiable net assets of Guizhou Haost Biotechnology Co., Ltd. on the purchase date was RMB 93.8268 million. The difference of RMB 57.9261 million between the merger cost and the proportionally recognized fair value of the identifiable assets and liabilities of Guizhou Haost Biotechnology Co., Ltd. is recognized as the goodwill related to the merger of Guizhou Haost Biotechnology Co., Ltd.

(3) The company used November 3, 2023 as the purchase date, and paid cash to acquire 50.2553% of the equity of Guizhou Hanfang Pharmaceutical Co., Ltd. The fair value of the identifiable net assets of Guizhou Hanfang Pharmaceutical Co., Ltd. on the purchase date was RMB 458,551,600. The difference between the merger cost and the proportionally recognized fair value of the identifiable assets and liabilities of Guizhou Hanfang Pharmaceutical Co., Ltd. is RMB 335.0217 million, which is recognized as the goodwill related to the merger of Guizhou Hanfang Pharmaceutical Co., Ltd.

(2).Provision for impairment of goodwill

√Applicable □Not applicable

Unit: Yuan Currency: RMB Name or formation of the invested unit Beginning of the period Increase in the current period Decrease in the current period

Ending balance

Goodwill matters Balance Provision Others Disposal Others

Guizhou Hanfang Pharmaceutical Co., Ltd. 121,977,910.36 121,977,910.36 Total 121,977,910.36 121,977,910.36

Relevant information on the asset group or asset group combination where goodwill is located, goodwill impairment testing process, key parameters, confirmation method and conclusion of goodwill impairment loss

At the end of the period, the company conducted an impairment test on each asset group related to goodwill. First, the goodwill and the goodwill attributable to minority shareholders' equity were included, the book value of each asset group was adjusted, and then the adjusted book value of each asset group was compared with its recoverable amount to determine whether each asset group (including goodwill) was impaired.

(1) Guizhou Dechangxiang Pharmaceutical Co., Ltd.

1. Relevant information about the asset group or asset group combination where the goodwill is located

The assessment scope on the valuation base date of Guizhou Dechangxiang Pharmaceutical Co., Ltd. is the goodwill-related asset group formed by Guizhou Dechangxiang Pharmaceutical Co., Ltd., which is consistent with the asset group determined during the goodwill impairment test on the purchase date and previous years.

The book value and allocation method of goodwill allocated to this asset group or asset group combination: All goodwill is allocated to this asset group or asset group combination.

2. Goodwill impairment testing process, key parameters, confirmation methods and conclusions of goodwill impairment losses

Unit: Yuan Currency: RMB

Project Asset Group of Guizhou Dechangxiang Pharmaceutical Co., Ltd.

Book balance of goodwill① 161,658,316.25

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Goodwill impairment provision balance ②

Book value of goodwill ③=①-② 161,658,316.25 Unrecognized goodwill value attributable to minority shareholders’ equity④ 8,508,332.43 Includes unrecognized goodwill value attributable to minority shareholders’ equity⑤=④+③ 170,166,648.68 Book value of asset group⑥ 126,457,261.70 Including the fair value of the overall goodwill asset group ⑦ = ⑤ + ⑥ 296,623,910.38 The present value of the asset group’s expected future cash flows (recoverable amount) ⑧ 415,696,729.47 Goodwill impairment loss (when greater than 0) ⑨ = ⑦-⑧

The relevant key parameters are as follows:

Key parameters

Asset groups and asset group combinations

Forecast period Growth rate during the forecast period Growth rate during the stable period Profit rate Discount rate (before tax)

According to forecast

Guizhou Dechangxiang Pharmaceutical Co., Ltd.’s revenue and performance from 2026 to 2030

Note 0.00% 11.22% Limited Company Asset Group (Subsequent Stable Period) Capital, expenses, etc.

Calculate

The present value (recoverable amount) of the estimated future cash flows of the asset group of Guizhou Dechangxiang Pharmaceutical Co., Ltd. uses the evaluation results of the "Asset Assessment Report on the Recoverable Amount of the Asset Group Containing Goodwill of Guizhou Sanli Pharmaceutical Co., Ltd.'s Asset Group Containing Goodwill Involved in the Goodwill Impairment Test Planned by Guizhou Sanli Pharmaceutical Co., Ltd." (China Enterprise Hua Ping Bao Zi (2026) No. 8248) issued by Beijing China Enterprise Hua Asset Appraisal Co., Ltd.

Note: The recoverable amount of an asset group containing goodwill is calculated based on the present value of expected future cash flows. Its estimated cash flow is based on the company's approved five-year cash flow forecast, which uses a discount rate of 11.22%. Sales revenue growth rates are expected to be 1.92%, 2.00%, 2.00%, 1.50% and 1.00% respectively between 2026 and 2030.

Other key data used in impairment testing include: expected product revenue, costs and other related expenses.

The company determines the above key data based on historical experience and forecasts of market development. The discount rate used by the Company is a pre-tax discount rate that reflects the current market time value of money and the risks specific to the underlying asset group.

The above estimates of recoverable amounts indicate that Guizhou Dechangxiang Pharmaceutical Co., Ltd. has no impairment losses.

(2) Guizhou Haost Biotechnology Co., Ltd., Yunnan Wudi Pharmaceutical Co., Ltd.

1. Relevant information about the asset group or asset group combination where the goodwill is located

The assessment scope of Guizhou Haost Biotechnology Co., Ltd. and Yunnan Wudi Pharmaceutical Co., Ltd. on the evaluation base date is that the asset group of Guizhou Haost Biotechnology Co., Ltd. and Yunnan Wudi Pharmaceutical Co., Ltd. forms an asset group related to goodwill. This asset group is consistent with the asset group determined during the goodwill impairment test on the purchase date and previous years.

The book value and allocation method of goodwill allocated to this asset group or asset group combination: All goodwill is allocated to this asset group or asset group combination.

2. Goodwill impairment testing process, key parameters, confirmation methods and conclusions of goodwill impairment losses

Unit: Yuan Currency: RMB Guizhou Haost Biotechnology Co., Ltd., cloud project

Book balance of goodwill of the asset group of Nanwudi Pharmaceutical Co., Ltd. ① 57,926,132.14 Balance of goodwill impairment provision ②

Book value of goodwill③=①-② 57,926,132.14 Unrecognized goodwill value attributable to minority shareholders’ equity④ 56,800,864.26 Includes unrecognized goodwill value attributable to minority shareholders’ equity⑤=④+③ 114,726,996.40 Book value of asset group⑥ 37,626,331.00 Including the fair value of the overall goodwill asset group ⑦ = ⑤ + ⑥ 152,353,327.40 The present value of the asset group’s expected future cash flows (recoverable amount) ⑧ 156,942,907.03 Goodwill impairment loss (when greater than 0) ⑨ = ⑦-⑧

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The relevant key parameters are as follows:

Key parameters

Asset Groups and Asset Groups

Forecast period Stable period Discount rate combination Forecast period Profit rate

Growth rate Growth rate (before tax) Guizhou Haost Biotechnology

According to the forecast revenue

Technology Co., Ltd., Yunnan None 2026-2030

Note 0.00% of income, costs, and fees 11.97% of Enemy Pharmaceutical Co., Ltd. (the subsequent period is the stable period)

Use equal calculations

Asset Group

The present value (recoverable amount) of the estimated future cash flows of Guizhou Haost Biotechnology Co., Ltd. and Yunnan Wudi Pharmaceutical Co., Ltd. uses the evaluation results of the "Asset Assessment Report on the Recoverable Amount of the Asset Group Containing Goodwill of Guizhou Sanli Pharmaceutical Co., Ltd.'s Asset Group Containing Goodwill Involved in the Goodwill Impairment Test Planned to be Conducted by Guizhou Sanli Pharmaceutical Co., Ltd." (China Enterprise Hua Ping Bao Zi (2026) No. 8236) issued by Beijing China Enterprise Hua Asset Appraisal Co., Ltd.

Note: The recoverable amount of an asset group containing goodwill is calculated based on the present value of expected future cash flows. Its estimated cash flows are based on the company's approved five-year cash flow forecast, which uses a discount rate of 11.97%. Sales revenue growth rates are expected to be 3.32%, 12.77%, 18.23%, 17.93% and 8.00% respectively between 2026 and 2030.

Other key data used in impairment testing include: expected product revenue, costs and other related expenses.

The company determines the above key data based on historical experience and forecasts of market development. The discount rate used by the Company is a pre-tax discount rate that reflects the current market time value of money and the risks specific to the underlying asset group.

The above estimates of recoverable amounts indicate that Guizhou Haost Biotechnology Co., Ltd. and Yunnan Invincible Pharmaceutical Co., Ltd. have not incurred impairment losses.

(3) Guizhou Hanfang Pharmaceutical Co., Ltd.

1. Relevant information about the asset group or asset group combination where the goodwill is located

The evaluation scope of the asset group assessment base date of Guizhou Hanfang Pharmaceutical Co., Ltd. is the asset group related to goodwill formed by Guizhou Hanfang Pharmaceutical Co., Ltd. This asset group is consistent with the asset group determined during the goodwill impairment test on the purchase date and previous years.

The book value and allocation method of goodwill allocated to this asset group or asset group combination: All goodwill is allocated to this asset group or asset group combination.

2. Goodwill impairment testing process, key parameters, confirmation methods and conclusions of goodwill impairment losses

Unit: Yuan Currency: RMB

Item Goodwill book balance of the asset group of Guizhou Hanfang Pharmaceutical Co., Ltd. ① 335,021,686.21 Goodwill impairment provision balance ②

Book value of goodwill③=①-② 335,021,686.21 Unrecognized goodwill value attributable to minority shareholders’ equity④ 106,418,985.65 Includes unrecognized goodwill value attributable to minority shareholders’ equity⑤=④+③ 441,440,671.86 Book value of asset group⑥ 246,768,548.34 Including the fair value of the overall goodwill asset group ⑦ = ⑤ + ⑥ 688,209,220.20 The present value of the asset group’s expected future cash flows (recoverable amount) ⑧ 527,485,264.36 Goodwill impairment loss (when greater than 0) ⑨ = ⑦-⑧ 160,723,955.84, including impairment loss of goodwill attributable to the parent company 121,977,910.36

The relevant key parameters are as follows:

Asset Group and Asset Group Key Parameters

Portfolio Forecast period Growth rate in the forecast period Growth rate in the stable period Profit rate Discount rate (before tax) Guizhou Hanfang Pharmaceutical has 2026-2030 (after) According to the forecast revenue,

Note 0.00% 11.25% Co., Ltd. asset group (continued as stable period) Calculation of costs, expenses, etc.

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The present value (recoverable amount) of the estimated future cash flows of the asset group of Guizhou Hanfang Pharmaceutical Co., Ltd. uses the evaluation results of the "Asset Assessment Report on the Recoverable Amount of the Asset Group Containing Goodwill of Guizhou Sanli Pharmaceutical Co., Ltd. Involved in the Proposed Goodwill Impairment Test of Guizhou Sanli Pharmaceutical Co., Ltd." (China Enterprise Hua Ping Bao Zi (2026) No. 8262) issued by Beijing Zhongqihua Asset Appraisal Co., Ltd.

The recoverable amount of an asset group containing goodwill is calculated based on the present value of expected future cash flows. Its estimated cash flows are based on the company's approved five-year cash flow forecast, which uses a discount rate of 11.25%. Sales revenue growth rates are expected to be 26.36%, 8.48%, 4.96%, 3.97% and 3.97% respectively between 2026 and 2030.

Other key data used in impairment testing include: expected product revenue, costs and other related expenses. The company determines the above key data based on historical experience and forecasts of market development. The discount rate used by the Company is a pre-tax discount rate that reflects the current market time value of money and the risks specific to the underlying asset group.

The above estimate of the recoverable amount indicates that the asset portfolio of Guizhou Hanfang Pharmaceutical Co., Ltd. has suffered impairment losses. (3). Relevant information on 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 notes:

□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 aforementioned information and the information used in impairment testing in previous years or external information

□Applicable √Not applicable

Reasons for the discrepancy between the information used in the company's impairment testing in previous years and the actual situation of that year.

□Applicable √Not applicable

(5) Performance commitments and corresponding goodwill impairment

There is a performance commitment when goodwill is formed and the reporting period or the previous period of the reporting period is within the performance commitment period

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

28. Long-term deferred expenses

√Applicable □Not applicable

Unit: Yuan Currency: RMB items Beginning balance of the period Increase in the current period Amortization of the current period Other decreases Closing balance Decoration fee 562,691.20 413,448.02 317,341.47 658,797.75

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Total 562,691.20 413,448.02 317,341.47 658,797.75Other 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 impairment provision 5,047,043.34 761,753.51 2,287,057.37 344,205.30 Credit impairment provision 30,877,192.82 4,744,450.44 37,328,742.89 5,675,543.27Fair price of trading financial assets

value change

Unrealized profits from internal transactions 2,971,782.74 445,767.41 3,428,242.44 514,236.37 Deductible losses

Deferred income 38,915,653.97 5,837,348.09 42,645,860.79 6,396,879.12 Lease liabilities 131,971.61 19,795.74 714,651.52 107,197.73 Share-based payment 13,847,349.26 2,077,102.39 1,358,500.00 203,775.00 Estimated returns and rebates 12,848,088.50 1,927,213.27 13,290,414.20 1,993,562.13

Total 104,639,082.24 15,813,430.85 101,053,469.21 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

137,600,138.80 20,640,020.82 159,773,280.26 23,965,992.03 Value added from product evaluation

Accelerated depreciation 8,807,690.41 1,321,153.55 10,009,742.97 1,501,461.44Right-of-use assets 171,868.88 25,780.33 774,759.05 116,213.85Fair value of trading financial assets

155,822.20 23,373.33 145,081.52 21,762.22Value changes

Total 146,735,520.29 22,010,328.03 170,702,863.80 25,605,429.54

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

√Applicable □Not applicable

Unit: Yuan Currency: RMB Closing balance Opening balance

Item Deferred income tax assets Deferred income tax after offset Deferred income tax assets Amount of offset of deferred income tax and liabilities after offset Balance of assets or liabilities and amount of offset of liabilities Balance of assets or liabilities

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Deferred income tax assets 19,795.74 15,793,635.11 106,510.95 15,128,887.97 Deferred income tax liabilities 19,795.74 21,990,532.29 106,510.95 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 11,330,127.73 7,544,244.01 Deductible losses 46,603,997.37 142,148,780.17 Total 57,934,125.10 149,693,024.18

(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

2022

2023

2024

2025 680,489.86 680,489.86

2026 3,607,780.75 14,415,941.55

2027 5,074,242.90 62,323,663.92

2028 25,108,927.86 41,175,797.34

2029 7,920,403.99 23,552,887.50

2030 and beyond 4,212,152.01

Total 46,603,997.37 142,148,780.17 /

Other notes:

√Applicable □Not applicable

The main reason for the substantial decrease in deductible losses in the current period is the disposal of subsidiary Xiaoxuan Pharmaceutical Technology (Guizhou) Co., Ltd., which reduced its deductible losses and the use of deductible losses to offset taxable income.

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 notes receivable 78,303,168.10 78,303,168.10 Pledge Pledge loan 22,114,033.53 22,114,033.53 Pledge Pledge loan fixed assets 211,731,176.44 146,480,248.26 Mortgage Mortgage borrowing 208,085,194.16 149,632,081.39 Mortgage Mortgage borrowing

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Intangible assets 23,029,806.10 18,062,593.01 Mortgage Mortgage loans 23,029,806.10 18,555,209.19 Mortgage Total mortgage loans 313,064,150.64 242,846,009.37 / / 253,231,033.79 190,303,324.11 //

Other notes:

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 78,303,168.10 22,114,033.53 Pledged loan 50,000,000.00 50,000,000.00 Guaranteed loan

Credit borrowings 420,000,000.00 279,104,667.71 Undue interest payable 365,168.20 302,845.94

Total 548,668,336.30 351,521,547.18 Description of short-term loan classification:

None

(2). Overdue short-term borrowings that have not been repaid

□Applicable √Not applicable

Among them, the important overdue short-term borrowings that have not been repaid are as follows:

□Applicable √Not applicable

Other notes:

√Applicable □Not applicable

1. 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 20 million yuan, a loan period of 1 year, and a credit loan condition. ②On July 18, 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 10 million yuan, a loan period of 1 year, and a credit loan condition.

2. ① On August 5, 2025, the company signed a "Liquid Capital Loan Contract" (No. 2025 CITIC Hongtong Liudai Zi No. 470801) with China CITIC Bank Co., Ltd. Hongtongcheng Branch. The loan amount is 30 million yuan, the loan period is 1 year, and the loan conditions are credit loans. ②On July 18, 2025, the company signed a "Working Capital Loan Contract" (No. 2025 Xinyin Hongtong Liudai No. 470611) with the Guiyang Nanming Branch of the Industrial and Commercial Bank of China Co., Ltd. The loan amount is 50 million yuan, the loan period is 1 year, and the loan conditions are credit loans.

3. ① 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, a loan period of 1 year, and a credit loan condition. ; ② On October 16, 2025, the company signed a "Liquid Capital Loan Contract" (No.: Xingyin Qian (2025) Liudai No. 71) with Guiyang Branch of Industrial Bank Co., Ltd., with a loan amount of 30 million yuan, a loan period of 1 year, and a credit loan condition. ③On November 19, 2025, the company signed a "Liquid Capital Loan Contract" (No.: Xingyin Qian (2025) Liudai No. 72) with Guiyang Branch of Industrial Bank Co., Ltd. The loan amount is 30 million yuan, the loan period is 1 year, and the loan conditions are credit loans.

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4. On September 8, 2025, the company signed a "Liquid Capital Loan Contract" (No. ZHHT25000118863) with Guiyang Branch of China Minsheng Banking Corporation, with a total loan amount of 200 million yuan. In 2024, a total of 220.3679 million yuan of loans will be issued. The loan period is 1 year, and the loan conditions are 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. signed a "Liquid Capital Loan Contract" (No.: Xingyin Guizhou (2025) Liudai No. 110) with Guiyang Branch of Industrial Bank Co., Ltd., with a loan amount of 30 million yuan and a loan period of 1 year.

The holding subsidiary Guizhou Hanfang Pharmaceutical Co., Ltd. and Industrial Bank Co., Ltd. Guiyang Branch signed the "Maximum Mortgage Contract" (No.: Xingyin Guizhou (2022) Gaodaizi No. 7). The loan period is 36 months, and a credit line of 70 million yuan is provided during the credit period. The collateral is No. 1, Unit 1, Floor 1, 1st Floor, Unit 1, 1st Floor, Extraction Workshop, Extraction Workshop, Extension Project, New Hanfang Traditional Chinese Medicine Modernization Production Base, No. 118, Chuangwei Road, Baiyun District (High-tech), Guiyang City. A total of RMB 50 million in borrowings have been withdrawn, and the borrowing conditions are mortgage loans.

6. ① From August 25, 2025 to December 18, 2025, the company applied for the bank acceptance bill discount with recourse to Guiyang Nanming Branch of Industrial and Commercial Bank of China Co., Ltd., with an amount of 66.812 million yuan; ② On August 22, 2025 and October 14, 2025, the controlling subsidiary Guizhou Dechangxiang Pharmaceutical Co., Ltd. applied to the Guiyang Nanming Branch of the Industrial and Commercial Bank of China Co., Ltd. for a discount of a bank acceptance bill with recourse, with an amount of 9.3875 million yuan; ③ On September 9, 2025, its holding subsidiary Yunnan Wudi Pharmaceutical Co., Ltd. applied to the Kunming Platinum Avenue Branch of China Merchants Bank Kunming Branch for a discount of a bank acceptance bill with recourse, with an amount of 2.1034 million yuan.

As of December 31, 2025, the balance of bank acceptance bill pledged loans was RMB 78.3031 million.

33. Trading financial liabilities

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

34. Derivative financial liabilities

□Applicable √Not applicable

35. Notes payable

(1). List of bills payable

□Applicable √Not applicable

36. Accounts payable

(1). Presentation of accounts payable

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Ending balance Beginning balance

Materials 89,547,677.93 311,574,359.80 Service procurement 11,562,334.25 31,016,157.08 Equipment and engineering funds 11,184,522.02 17,890,064.84 Others 143,016.97 Total 112,294,534.20 360,623,598.69

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(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 advance receipts

□Applicable √Not applicable

(2). Important advances from customers aged more than 1 year

□Applicable √Not applicable

(3). 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 Loan 5,468,013.17 7,790,038.48

Total 5,468,013.17 7,790,038.48

(2). Important contract liabilities aged more than 1 year

□Applicable √Not applicable

(3). 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

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

1. Short-term salary 22,542,997.18 304,014,259.39 292,630,806.98 33,926,449.59

2. Post-employment benefits - defined contribution plan 108,661.47 26,845,453.90 26,871,646.72 82,468.65

3. Dismissal benefits 4,060,074.84 4,060,074.84

4. Other benefits expiring within one year

Total 22,651,658.65 334,919,788.13 323,562,528.54 34,008,918.24

(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 20,849,776.78 271,354,659.98 259,869,389.20 32,335,047.56

2. Employee welfare fees 5,828,274.78 5,828,274.78

3. Social insurance premiums 57,098.76 15,702,802.79 15,709,041.79 50,859.76 Including: medical insurance premiums 51,722.56 14,362,500.87 14,367,768.82 46,454.61 work-related injury insurance premiums 5,376.20 1,215,734.30 1,216,705.35 4,405.15

Maternity insurance premium 124,567.62 124,567.62

4. Housing provident fund 5,920.00 5,707,077.50 5,705,147.50 7,850.00

5. Trade union funds and employee education funds 1,630,201.64 5,273,884.54 5,371,393.91 1,532,692.27

6. Short-term paid absences

7. Short-term profit sharing plan

cash-settled share-based payment

Other short-term remuneration 147,559.80 147,559.80

Total 22,542,997.18 304,014,259.39 292,630,806.98 33,926,449.59

(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 25,769,094.98 25,794,177.18 79,969.60

2. Unemployment insurance premium 3,609.67 1,076,358.92 1,077,469.54 2,499.05

3. Enterprise annuity payment

Total 108,661.47 26,845,453.90 26,871,646.72 82,468.65

Other notes:

□Applicable √Not applicable

40. Taxes payable

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Ending balance Beginning balance

Value-added tax 40,108,761.56 39,480,582.75 Consumption tax 8,802.31 380,291.53 Corporate income tax 10,514,092.32 13,837,790.03

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Urban maintenance and construction tax 2,210,192.02 2,380,624.88 Education surcharge 1,203,522.00 1,239,903.48 Local education surcharge 802,348.00 826,602.31 Personal income tax 110,356.53 14,120,358.74 Other taxes and fees 340,364.25 371,805.68

Total 55,298,438.99 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 203,166,268.65 351,280,311.50 Total 203,167,158.65 351,280,861.50

Other notes:

√Applicable □Not applicable

Other payables in the above table refer to other payables after deducting interest payable and dividends payable.

(2). Interest payable

Classification list

□Applicable √Not applicable

Important overdue interest payable:

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

(3). Dividends payable

Classification list

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Ending balance Beginning balance

Common stock dividends 890.00 550.00 Dividends divided into preference shares\perpetual bond dividends as equity instruments

Among them: Tool 1

Tool 2

Total 890.00 550.00

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Other explanations, including important dividends payable that have not been paid for more than one year, should disclose the reasons for non-payment:

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 equity repurchase obligation 36,989,800.00 44,715,000.00 Reimbursement and unpaid payment 136,696,284.01 160,559,815.84 Security deposit 17,651,731.05 19,506,380.94 special scientific research funds

Others 11,828,453.59 635,114.72

Total 203,166,268.65 351,280,311.50

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 59,800,000.00 45,145,096.39 Bonds payable due within 1 year

Long-term payables due within 1 year

Lease liabilities due within 1 year 105,510.31 503,111.56

Total 59,905,510.31 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 Note 45.

44. Other current liabilities

Other current liabilities

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Ending balance Beginning balance

short term bonds payable

Return payment payable

Output tax to be transferred 720,744.36 1,012,638.84

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Estimated returns payable within one year 7,156,747.25 6,689,944.05 Estimated sales discount 10,482,801.19 14,600,387.63

Total 18,360,292.80 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 loan 209,300,000.00 254,150,000.00 Pledged loan

guaranteed loan

credit loan

Undue interest payable 220,927.78 295,096.39 Less: Long-term borrowings due within one year 59,800,000.00 45,145,096.39

Total 149,720,927.78 209,300,000.00 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 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 50.26% of the equity of its holding subsidiary Guizhou Hanfang Pharmaceutical Co., Ltd. as pledge.

As of December 31, 2025, the loan balance was RMB 209.3 million. Among them, RMB 59.8 million is long-term loans due within one year, and the borrowing conditions are pledged loans.

Other notes:

□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

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□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 137,532.16 753,474.55 Less: Unrecognized financing costs 5,560.55 38,823.03 Subtotal present value of lease payments 131,971.61 714,651.52 Less: Lease liabilities due within one year 105,510.31 503,111.56

Total 26,461.30 211,539.96Other instructions:

The lease liability interest expense of RMB 29,280.87 was recognized in this period.

48. Long-term accounts payable

Item list

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Ending balance Beginning balance

Long-term payables 7,479,200.24 8,287,850.80 Special payables

Total 7,479,200.24 8,287,850.80

Other notes:

√Applicable □Not applicable

Note: Long-term payables in the above table refer to long-term payables after deducting special payables.

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long-term payables

(1). Present long-term payables according to the nature of the payment

√Applicable □Not applicable

Unit: Yuan Currency: RMB Item Closing balance Opening balance

Restructuring costs of former state-owned enterprises 7,479,200.24 8,287,850.80 Less: long-term payables due within one year

Total 7,479,200.24 8,287,850.80

Other notes:

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

(2). List special payables according to the nature of the payment

□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

Formed items Beginning balance Increase in the current period Decrease in the current period Ending balance

Reasons and asset-related government subsidies 42,970,860.79 310,000.00 4,090,206.79 39,190,654.00

Income-related government subsidies

Total 42,970,860.79 310,000.00 4,090,206.79 39,190,654.00 /Other instructions:

√Applicable □Not applicable

For details of the company's government subsidies, please refer to Note 11. Government Subsidy 2. Liability items involving government subsidies.

52. Other non-current liabilities

√Applicable □Not applicable

Unit: Yuan Currency: RMB Item Closing balance Opening balance

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Guizhou Province Agricultural and Rural Modernization Development Equity Investment

80,112,688.40 76,754,836.20 Fund partnership (limited partnership) repurchase obligation

Total 80,112,688.40 76,754,836.20Other instructions:

None

53. Share capital

√Applicable □Not applicable

Unit: Yuan Currency: RMB Increase or decrease in this change (+, -)

Balance at the beginning of the period Issued Provident Fund Balance at the end of the period Bonus shares Other Subtotal

New shares Conversion

Total number of shares 409,802,216.00 -872,000.00 -872,000.00 408,930,216.00Other instructions:

The decrease in share capital of RMB 872,000.00 in the current period was due to the cancellation of equity incentive repurchase. For details, please see Section 8 Financial Report III. Company Overview and History.

54. Other equity instruments

(1). Basic information on preferred stocks, 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 8,779,052.20 138,220,289.30 Other capital reserves 2,042,922.32 12,999,031.90 15,041,954.22Total 149,042,263.82 12,999,031.90 8,779,052.20 153,262,243.52 Other explanations, including changes in increases and decreases in the current period and explanation of reasons for changes:

1. The capital reserve (equity premium) decreased by RMB 8,779,052.20 in the current period, of which: a decrease of RMB 5,421,200.00 due to equity incentive repurchase and write-off. Please refer to Section 8 Financial Report III. Company Overview Historical Evolution for details. In this period, it is estimated that the difference between the present value of the repurchase obligation and the exercise amount of the equity of the holding subsidiary Guizhou Sankang Traditional Chinese Medicine Industry Development Co., Ltd. decreased by RMB 3,357,852.20.

2. The increase in other capital reserves of RMB 12,999,031.90 was due to the provision for share-based payment.

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56. Treasury stocks

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Opening balance Increase in the current period Decrease in the current period Ending balance decrease Registered capital repurchase

Implement equity incentive repurchase 55,927,385.06 6,293,200.00 49,634,185.06 Restricted share payment 44,715,000.00 44,715,000.00

Total 100,642,385.06 6,293,200.00 94,349,185.06 Other explanations, including changes in increases and decreases in the current period and explanations of reasons for changes:

The reason for the decrease of RMB 6,293,200.00 in equity incentive repurchases implemented in this period is due to the cancellation of equity incentive repurchases. For details, please see Section 8 Financial Report III. Company Overview and History.

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 12,018,565.04 145,293,742.38 Discretionary surplus reserve

reserve fund

Enterprise Development Fund

Profits return investment

Others

Total 133,275,177.34 12,018,565.04 145,293,742.38 Description of surplus reserve, including changes in increases and decreases in the current period and explanation of reasons for changes:

The parent company accrues statutory surplus reserve for the current period based on 10% of the current year's net profit.

60. Undistributed profits

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item This period Undistributed profits at the end of the previous period before adjustments in the previous period 935,863,129.35 763,743,959.06 Adjustment to the total undistributed profits at the beginning of the period (increase +, 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 46,254,223.69 274,027,809.74 Less: Appropriation of statutory surplus reserve 12,018,565.04 20,264,376.25 Withdrawal of discretionary surplus reserve

Withdraw general risk reserve

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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 832,459,982.56 935,863,129.35

Adjust the 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 0.00.

2. Due to changes in accounting policies, the undistributed profit at the beginning of the period was affected by RMB 0.00.

3. Due to the correction of major accounting errors, the undistributed profit at the beginning of the period was affected by RMB 0.00.

4. Changes in the scope of consolidation due to the same control affect the undistributed profit at the beginning of the period by RMB 0.00.

5. The total impact of other adjustments on the undistributed profit at the beginning of the period is 0.00 yuan.

On May 16, 2025, the company's 2024 annual shareholders' meeting reviewed and approved the "Proposal on the 2024 Profit Distribution Plan." Specifically: based on the total share capital registered on the equity registration date for equity distribution (excluding the shares in the company's special repurchase account and the shares to be repurchased and canceled) as the base, it is planned to distribute a cash dividend of 3.40 yuan (tax included) to all shareholders for every 10 shares, and a total cash dividend of 137,638,805.44 yuan (tax included) is planned, thus reducing undistributed profits by 137,638,805.44 yuan.

61. Operating income and operating costs

(1). Operating income and operating costs

√Applicable □Not applicable

Unit: Yuan Currency: RMB Amount for the current period Amount for the previous period

Project

revenue cost revenue cost

Main business 1,701,984,294.17 510,823,351.49 2,143,838,288.73 649,819,932.62 Other businesses 858,607.51 661,680.53 547,547.39 167,161.62

Total 1,702,842,901.68 511,485,032.02 2,144,385,836.12 649,987,094.24

(2). Decomposition information of operating income and operating costs

√Applicable □Not applicable

Unit: Yuan Currency: RMB Amount for the current period Amount for the previous period

Contract classification

Operating income Operating costs Operating income Operating costs

1. Product type 1,701,984,294.17 510,823,351.49 2,143,838,288.73 649,819,932.62 Among them: Respiratory system drugs 1,093,122,284.14 309,986,405.09 1,454,610,173.01 429,470,603.81 Gynecological drugs 134,584,639.77 23,701,790.56 113,014,548.88 19,792,452.79 Tonic drugs 296,403,181.46 75,415,858.46 378,500,886.04 94,285,010.92 Cardiovascular and cerebrovascular drugs 50,768,731.53 17,288,089.19 42,703,516.86 15,658,369.17 Orthopedic drugs 46,448,654.23 18,917,396.28 49,907,171.57 24,156,432.60 Medicinal materials trade 53,291,342.73 51,942,060.68 38,921,122.04 38,414,455.86 Others 27,365,460.31 13,571,751.23 66,180,870.33 28,042,607.47

2. Classification by business area 1,701,984,294.17 510,823,351.49 2,143,838,288.73 649,819,932.62 Among them: Northeast China 80,495,762.38 20,683,265.65 111,272,922.05 32,106,151.04 North China 206,805,573.72 49,283,870.72 231,485,804.37 58,451,037.68 East China 458,492,057.32 128,653,875.04 602,282,768.39 166,744,643.09 South China 237,894,732.61 65,226,915.61 274,995,575.73 83,902,204.19 Central China 277,408,458.84 76,568,857.55 396,477,038.01 114,367,189.52Northwestern Region 81,352,909.74 21,969,678.02 118,848,881.61 33,268,372.73

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Southwest region 359,534,799.56 148,436,888.90 408,475,298.57 160,980,334.37

3. Classification by time of transfer of goods 1,701,984,294.17 510,823,351.49 2,143,838,288.73 649,819,932.62 Of which: transfer at a certain point in time 1,701,984,294.17 510,823,351.49 2,143,838,288.73 649,819,932.62 Transferred within a certain period of time

Total 1,701,984,294.17 510,823,351.49 2,143,838,288.73 649,819,932.62Other 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

62. Taxes and surcharges

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Amount for the current period Amount for the previous period

Consumption tax 1,589,026.19 2,600,239.16Business tax

Urban maintenance and construction tax 7,548,585.09 8,429,462.24 Education surcharge 4,106,372.24 4,553,600.17 Resource tax

Real estate tax 8,045,002.45 3,488,271.10 Land use tax 1,327,964.23 1,317,513.30 Vehicle and vessel use tax 25,709.10 31,816.60 Stamp tax 1,333,792.13 1,228,611.30 Environmental protection tax 13,256.68 7,564.02 Local education surcharge 2,820,688.46 3,035,733.42

Total 26,810,396.57 24,692,811.31Other instructions:

None

63. Sales expenses

√Applicable □Not applicable

Unit: Yuan Currency: RMB

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Item Amount for the current period Amount for the previous period

Marketing expenses 573,000,043.65 713,446,351.98 Employee-related expenses 201,490,820.86 180,324,123.19 Travel expenses 16,317,226.81 41,234,308.52 Business entertainment expenses 6,939,849.74 2,013,753.87 Office expenses 757,290.90 1,229,049.06 Equity incentives 771,595.43 120,340.59 Other sales expenses 1,641,328.54 3,576,326.99

Total 800,918,155.93 941,944,254.20

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 71,238,903.05 80,943,649.15 Travel expenses 1,322,793.29 7,393,684.48 Depreciation and amortization 29,398,661.83 30,613,587.14 Business entertainment expenses 2,605,055.95 5,518,306.72 Office expenses 11,754,653.27 10,087,909.14 Consulting service fees 10,046,797.44 4,637,286.87 Publicity expenses 211,786.61 1,466,024.68 Share-based payment expenses 12,954,308.55 -15,161.13 Other administrative expenses 7,851,843.39 6,767,320.65

Total 147,384,803.38 147,412,607.70Other instructions:

None

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 3,712,887.03 14,539,854.65 Employee-related expenses 8,990,930.02 15,279,302.05 Entrusted research and development expenses 11,747,240.87 5,769,208.69 Registration and intellectual property fees 1,216,786.58 3,223,662.88 Depreciation and amortization 1,317,157.94 2,372,735.91 Other research and development expenses 928,452.95 5,318,816.03

Total 27,913,455.39 46,503,580.21Other instructions:

None

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66. Financial expenses

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Amount for the current period Amount for the previous period

Interest expense 11,074,230.19 14,612,712.92 Less: Interest income 3,958,428.09 3,988,287.47 Exchange gains and losses

Bank fees and others 103,383.98 35,539.71

Total 7,219,186.08 10,659,965.16Other 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 8,561,228.01 10,501,947.87 Value-added tax additional deduction 1,582,316.91 3,837,441.11 Personal tax refund 220,814.73 159,958.27

Total 10,364,359.65 14,499,347.25Other instructions:

For details of the company's government subsidies, please see Note 11. Government subsidies 3. Government subsidies included in current profits and losses.

68. Investment income

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Amount incurred in the current period Amount incurred in the previous period Income from long-term equity investments calculated using the equity method 47,859.68 280,527.44 Investment income from disposal of long-term equity investment -3,558,952.47 -79,548.00 Investment income from trading financial assets during the holding period

Dividend income from other equity instrument investments during the holding period

Interest income earned 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 512,761.30 1,246,410.81 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

Dividend income from other equity instrument investments during the holding period 226,031.78 365,231.68

Total -2,772,299.71 1,812,621.93

Other notes:

None

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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 incurred in the current period Amount incurred in the previous period Trading financial assets 155,822.20 145,081.52 Including: Income from changes in fair value generated by derivative financial instruments

Trading financial liabilities

Investment properties measured at fair value

Total 155,822.20 145,081.52Other instructions:

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 5,578,448.85 -9,897,472.48 Bad debt losses on other receivables 48,621.02 -332,802.44 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 5,627,069.87 -10,230,274.92Other 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. Loss on inventory depreciation and impairment loss on contract performance costs -7,847,186.37 -2,991,071.78

3. Impairment losses on long-term equity investments

4. Impairment losses on investment real estate

5. Impairment losses on fixed assets

6. Impairment losses of engineering materials

7. Impairment losses on projects under construction

8. Impairment losses on productive biological assets

9. Impairment losses on oil and gas assets

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10. Impairment losses on intangible assets

11. Goodwill impairment loss -121,977,910.36

12. Others

Total -129,825,096.73 -2,991,071.78Other instructions:

None

73. Income from asset disposal

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Amount for the current period Amount for the previous period

Gains or losses on disposals held for sale

Gains or losses from the disposal of fixed assets -147,313.86 -173,086.31 Gains or losses from the disposal of projects under construction

Gains or losses on disposal of biological assets

Gains or losses on disposal of intangible assets

Gains or losses on disposal of right-of-use assets 31,748.28 645.41

Total -115,565.58 -172,440.90Other instructions:

None

74. Non-operating income

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

amount of

Total gains from disposal of non-current assets

Including: Profit from disposal of fixed assets

Gains from disposal of intangible assets

Gains from exchange of non-monetary assets

Donations accepted

government subsidies

Income from liquidated damages 33,979.43 33,979.43 Amounts not required to be paid 6,172,477.62 6,172,477.62 Others 714,806.29 1,922,315.20 714,806.29

Total 6,921,263.34 1,922,315.20 6,921,263.34

Other notes:

√Applicable □Not applicable

None

75. Non-operating expenses

√Applicable □Not applicable

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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

amount of

Total losses on disposal of non-current assets 31,973.43 572,621.88 31,973.43 Including: losses on disposal of fixed assets

Loss on disposal of intangible assets

Non-monetary asset exchange losses

External donations 3,000.00 3,000.00 Others 3,666,997.62 2,573,086.98 3,666,997.62

Total 3,701,971.05 3,145,708.86 3,701,971.05Other 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 23,949,536.07 52,649,294.34 Deferred income tax expense -4,337,684.51 -7,461,434.15

Total 19,611,851.56 45,187,860.19

(2).Accounting profit and income tax expense adjustment process

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Total profit for the current period 67,765,454.30 Income tax expenses calculated according to statutory/applicable tax rates 10,164,818.14 Impact of different tax rates applicable to subsidiaries -574,273.70 Impact of adjusting income tax in previous periods 247,321.35 Impact of non-taxable income 14,228,055.25 Impact of non-deductible costs, expenses and losses 1,581,725.14 The impact of using deductible temporary differences or deductible losses of unrecognized deferred income tax assets in the previous period -6,061,967.25 The impact of deductible temporary differences or deductible losses of unrecognized deferred income tax assets in the current period 1,779,562.41 Additional deduction for R&D expenses and wages for disabled persons -1,753,389.77 Others

Income tax expenses 19,611,851.56

Other notes:

√Applicable □Not applicable

None

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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 17,294,406.64 21,879,146.29 Interest income 2,354,511.50 3,988,287.47 Current accounts 40,123,099.58 12,047,798.47

Total 59,772,017.72 37,915,232.23 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 673,120,670.42 748,787,094.84 Management expenses and R&D expenses paid in cash 43,059,387.41 48,272,947.30 Manufacturing expenses paid in cash 9,539,826.52 29,825,117.82 External donations 3,000.00

Handling fees and others 269,413.92 35,539.71 Current accounts 25,594,046.93 45,057,082.56

Total 751,586,345.20 871,977,782.23 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 103,015,000.00 190,000,000.00 Bond investment

Raising funds and entrusting financial management

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Total 103,015,000.00 190,000,000.00 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 wealth management products 99,985,000.00 161,300,000.00 Net cash received from disposal of subsidiaries 94,654.04

Total 100,079,654.04 161,300,000.00 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 7,725,200.00 100,414,416.76 Payment of rent 4,034,982.36 9,851,399.19 Financing fees 1,084,905.66

Total 11,760,182.36 111,350,721.61 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 Beginning balance Closing balance

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

Short-term borrowings 351,521,547.18 570,543,303.50 365,168.20 373,761,682.58 548,668,336.30 Long-term borrowings 254,445,096.39 220,927.78 45,145,096.39 209,520,927.78 Lease liabilities 714,651.52 252,686.82 645,395.26 189,971.47 131,971.61Total 606,681,295.09 570,543,303.50 838,782.80 419,552,174.23 189,971.47 758,321,235.69

(4).Explanation on presenting cash flow in net amount

□Applicable √Not applicable

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(5). Major activities that do not involve current cash receipts and payments, but affect the company's financial status or may affect the company's cash flow in the future;

financial 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 48,153,602.74 279,837,532.55 Plus: asset impairment provision 129,825,096.73 2,991,071.78 Credit impairment loss -5,627,069.87 10,230,274.92 Depreciation of fixed assets, depreciation of oil and gas assets, depreciation of productive biological assets 53,951,010.10 55,720,644.31 Amortization of right-of-use assets 1,244,821.48 903,570.93 Amortization of intangible assets 18,867,980.04 19,100,408.98 Amortization of long-term prepaid expenses 317,341.47 293,577.96 Losses on disposal of fixed assets, intangible assets and other long-term assets (receipt

115,565.58 172,440.90 (please fill in with "-")

Loss from scrapping of fixed assets (income is listed with "-") 31,973.43 572,621.88 Loss from changes in fair value (income is listed with "-") -155,822.20 -145,081.52 Financial expenses (income is listed with "-") 25,304,530.19 22,375,112.92 Investment losses (income is shown with "-") 2,772,299.71 -1,812,621.93 Decrease in deferred income tax assets (increase is shown with "-") -664,747.14 -4,082,709.61 Increase in deferred income tax liabilities (decrease is shown with "-") -3,508,386.30 -3,378,724.54 Decrease in inventory (increases are indicated by "-") 92,678,699.28 -147,988,187.38 Decrease in operating receivables (increases are indicated by "-") 196,233,956.34 -295,557,206.15 Increase in operating payables (decreases are listed with "-") -408,689,731.19 167,692,205.83 Others 13,725,903.98 147,652.59 Net cash flow generated from operating activities 164,577,024.37 107,072,584.42 2． Major investing and financing activities that do not involve cash receipts and payments:

debt to capital

Convertible corporate bonds due within one year

New right-of-use assets in the current period 3,848,216.64 10,283,451.05 Financing leased fixed assets

3. Net changes in cash and cash equivalents:

Closing balance of cash 389,417,360.31 474,843,014.34 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 -85,425,654.03 -96,527,233.55

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(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

Unit: Yuan Currency: RMB

Amount

Cash or cash equivalents received from disposal of subsidiaries in the current period 1.00

Including: Xiaoxuan Pharmaceutical Technology (Guizhou) Co., Ltd. 1.00 minus: Cash and cash equivalents held by the company on the date of loss of control 94,655.04

Including: Xiaoxuan Pharmaceutical Technology (Guizhou) Co., Ltd. 94,655.04 plus: cash or cash equivalents received in the current period from subsidiaries disposed of in previous periods

Net cash received from disposal of subsidiaries -94,654.04 Other notes:

None

(4). Composition of cash and cash equivalents

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Ending balance Beginning balance

1. Cash 389,417,360.31 474,843,014.34 Of which: Cash on hand 54,863.86 72,310.86 Bank deposits that can be used for payment at any time 389,332,169.90 474,739,730.70 Other monetary funds that can be used for payment at any time 30,326.55 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 389,417,360.31 474,843,014.34 Among them: restricted cash and cash equivalents used by the parent company or subsidiaries within the group

(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 margin

Total 2,000.00 /

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Other notes:

√Applicable □Not applicable

None

80. Notes on items in the statement of changes in owners’ equity

Explain the name of the "other" items and the adjustment amount and other matters that were adjusted to the closing balance of the previous year: □ 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 should be disclosed.

currency 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

1. Rental activities

Due to production, warehousing, office and other needs, the company rents houses and buildings from lessors for daily business activities. The lease contract period signed is 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.

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As of December 31, 2025, the leasing-related situation is as follows:

Unit: Yuan Currency: RMB

Lessee Lessor Lease period Payment model Right-of-use assets Lease liabilities Lease project: Debi Rainbow WE305, Xiaoshan District, Hangzhou

Guizhou Sanli Pharmaceutical Co., Ltd. Zhejiang Branch Hangzhou South Station Xincheng Digital Intelligence Industry Development Co., Ltd. 2024-1-10 to 2026-1-31 Half-year payment 12,826.36 (281.65) Lease project: No. 1011-1012, Unit 1, Building 1, No. 2289, Section 1, Beixing Avenue, Dafeng Street, Xindu District, Chengdu

Guizhou Sanli Pharmaceutical Co., Ltd. Sichuan Jiangyue Pharmaceutical Co., Ltd. 2025-4-1 to 2027-6-30 Quarterly payment 159,042.52 132,253.26 Lease project: Woodland in Laomadong Formation and Dachong Formation, Hongyan, Longshan Town Aquatic Community, Longli County

Guizhou Sankang Planting Co., Ltd. Kaiyang Yanfang Planting and Breeding Farmers Professional Cooperative 2024-10-18 to 2036-10-17 One-time payment 2,539,580.00 Lease project: Woodland in Laomadong Group and Dachong Group, Hongyan, Longshan Town Aquatic Community, Longli County

Guizhou Sankang Planting Co., Ltd. Kaiyang Yanfang Planting and Breeding Farmers Professional Cooperative 2024-11-8 to 2036-11-7 One-time payment 1,691,516.66 Lease project: Woodland in the Gelaoshan Group, Datian Group and Guyangzhai in Gaolimu Village, Xingshi Town, Longli County

Guizhou Sankang Planting Co., Ltd. Kaiyang Yanfang Planting and Breeding Farmers Professional Cooperative 2024-11-20 to 2036-11-19 One-time payment 1,571,916.66 Leased project: Woodland in Laomadong Group and Dachong Group, Hongyan, Longshan Town Aquatic Community, Longli County

Guizhou Sankang Planting Co., Ltd. Kaiyang Yanfang Planting and Breeding Farmers Professional Cooperative 2024-11-20 to 2036-11-19 One-time payment 12,155.00 Lease project: Woodland in the Gelaoshan Group, Datian Group and Guyangzhai in Gaolimu Village, Xingshi Town, Longli County

Guizhou Sankang Planting Co., Ltd. Kaiyang Yanfang Planting and Breeding Farmers Professional Cooperative 2024-12-2 to 2036-12-1 One-time payment 900,472.17 Lease project: Shilong Village, Mengguan Township, Huaxi District, Guiyang

Guizhou Sankang Planting Co., Ltd. Kaiyang Yanfang Planting and Breeding Farmers Professional Cooperative 2025-3-31 to 2037-3-30 One-time payment 3,587,760.00 Total 10,475,269.37 131,971.61

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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 lease refers to a lease that does not include a purchase option and has a lease period 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'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. During the reporting period, short-term leasing expenses and low-value asset leasing expenses of RMB 3.3896 million were included in the current profit and loss.

Sale and leaseback transactions and basis for judgment

□Applicable √Not applicable

Total cash outflow related to leasing 0 (Unit: Yuan Currency: RMB)

(2). As a lessor

Operating lease as lessor

√Applicable □Not applicable

Unit: Yuan Currency: RMB Including: Variable items not included in lease receipts Lease income

Income related to lease payments for the current period 219,221.16 219,221.16

Total 219,221.16 219,221.16

Finance lease as lessor

□Applicable √Not applicable

Reconciliation of undiscounted lease receipts and net lease investment

□Applicable √Not applicable

Undiscounted lease receipts over the next five years

□Applicable √Not applicable

(3). Recognize financial lease sales profits and losses as a manufacturer or distributor

□Applicable √Not applicable

Other notes:

None

83. Data resources

□Applicable √Not applicable

84. Others

□Applicable √Not applicable

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8. R&D expenditures

1. List according to nature of expenses

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Amount for the current period Amount for the previous period

Material investment 3,712,887.03 14,539,854.65 Employee-related expenses 8,990,930.02 15,279,302.05 Outsourced R&D expenses 11,747,240.87 5,769,208.69 Registration and intellectual property fees 1,216,786.58 3,223,662.88 Depreciation and amortization 1,317,157.94 2,372,735.91 Other research and development expenses 928,452.95 5,318,816.03

Total 27,913,455.39 46,503,580.21 Including: expensed R&D expenditures 27,913,455.39 46,503,580.21

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 notes:

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

3. Reverse purchase

□Applicable √Not applicable

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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

Unit: Yuan Currency: RMB out of control

Loss of control, loss of control, loss of control, loss of control, loss of control, loss of control, loss of control, loss of control

The disposal price is related to the merger date of disposal, the date of merger loss of control, the date of merger value re-investment, and the loss of control.

Loss of control Loss of control at the consolidated financial statement level corresponding to the investment. Consolidated financial report. Financial statement. Measurement residual. Other comprehensive income. Name of the subsidiary. The remaining equity at the financial statement level at the time of ownership. Disposal ratio at the time point. Remaining equity at the surface level. Equity generated at the equity level is transferred to investment profits and losses.

Judgment basis: Profit or retained earnings from the remaining shares of the subsidiary's net equity (%) and the fair value of the subsidiary's net assets (%).

Determination method and main payment method of the difference between equity shares (%) Book value The amount of public losses on rights must be assumed

Allowable value

Xiaoxuan Medical Technology (Gui

2025-07-07 1.00 57.48 Transfer Equity Change -3,558,952.47 - - - - - -zhou) Co., Ltd.

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 circumstances:

√Applicable □Not applicable

Company name, method of increase or decrease in equity, time of control

Guizhou Sanli Pharmaceutical Co., Ltd. established 2025-10-23

6. Others

□Applicable √Not applicable

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10. Interests in other entities

1. Interests in subsidiaries

(1).Construction of enterprise groups

√Applicable □Not applicable

Unit: 10,000 yuan Currency: RMB

Shareholding ratio (%) Name of 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 service industry 100.00 Establishing a company

Guizhou Cenyi Medical Information Co., Ltd.

Anshun City, Guizhou Province 300.00 Anshun City, Guizhou Province Pharmaceutical Manufacturing Industry 60.00 Establishment of a responsible company

Guizhou Sankang Enterprise Management Partnership

Guiyang City, Guizhou Province 10,000.00 Guiyang City, Guizhou Province Business service industry 45.00 55.00 Establishing an enterprise (limited partnership)

Guizhou Sankang Traditional Chinese Medicine Industry Development

Guiyang City, Guizhou Province 18,000.00 Guiyang City, Guizhou Province Planting industry 55.56 Establishment of Exhibition Co., Ltd.

Guizhou Sankang Planting Co., Ltd.

Guiyang City, Guizhou Province 10,800.00 Guiyang City, Guizhou Province Planting industry 100.00 Establishing a company

Guizhou Sankang Medicinal Materials Co., Ltd. Guiyang City, Guizhou Province 7,200.00 Guiyang City, Guizhou Province Wholesale and retail industry 100.00 Establishment

Guizhou Nuorun Enterprise Management Consulting

Guiyang City, Guizhou Province 2,100.00 Guiyang City, Guizhou Province Business service industry 100.00 Establishment of a limited company

Sanli Zhongyue (Shanghai) Marketing

Shanghai City 3,000.00 Shanghai City Business Services Industry 100.00 Establishment of Planning Co., Ltd.

Not owned by the same Guizhou Dechangxiang Pharmaceutical Co., Ltd.

Guiyang City, Guizhou Province 5,000.00 Guiyang City, Guizhou Province Pharmaceutical Manufacturing Industry 95.00 Lower Control Limit Company

merge

Non-identical Guizhou Dechangxiang Chinese medicinal material cultivation

Guiyang City, Guizhou Province 200.00 Guiyang City, Guizhou Province Planting industry 100.00 Controlled Co., Ltd.

merge

Non-identical Guizhou Haost Biotechnology has professional technical services

Guiyang City, Guizhou Province 13,500.00 Guiyang City, Guizhou Province 60.9778 Lower Control Limit Company Business

merge

Not the same Yunnan Wudi Pharmaceutical Co., Ltd.

Kunming City, Yunnan Province 7,801.00 Kunming City, Yunnan Province Pharmaceutical Manufacturing Industry 82.8013 Controlled Company

merge

Non-identical Guizhou Hanfang Pharmaceutical Co., Ltd. Guiyang City, Guizhou Province 22,154.87 Guiyang City, Guizhou Province Pharmaceutical Manufacturing Industry 98.8039 Under control

Merger with Sanli Health Industry (Hainan)

Qionghai City, Hainan Province 100.00 Qionghai City, Hainan Province Wholesale and retail industry 100.00 Establishment of a limited liability company

Guizhou Sanli Pharmaceutical Co., Ltd. Anshun City, Guizhou Province 200.00 Anshun City, Guizhou Province Wholesale 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

According to:

None

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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 Minority shareholders hold Attributable to minority shareholders in the current period Name of subsidiary with minority shares at the end of the period

Share ratio Profit and loss of minority shareholders Dividends declared Balance of shareholders’ equity Guizhou Dechangxiang Pharmaceutical Co., Ltd. 5.00% 1,937,835.56 7,246,649.36 Guizhou Hanfang Pharmaceutical Co., Ltd. 1.1961% 229,830.43 4,975,388.13 Explanation on the difference between the shareholding ratio of minority shareholders of subsidiaries and the voting rights ratio:

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

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(3).Main financial information of important non-wholly owned subsidiaries

√Applicable □Not applicable

Unit: Yuan Currency: RMB Subsidiary Closing balance Opening balance

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 shares: 173,819,438.78 90,262,550.18 264,081,988.96 76,685,490.52 40,810,476.78 117,495,967.30 147,376,573.45 77,842,627.70 225,219,201.15 71,336,584.98 49,631,789.35 120,968,374.33 Co., Ltd.

Guizhou Kampo medicine

434,126,541.01 200,864,348.55 634,990,889.56 204,178,953.03 2,127,160.35 206,306,113.38 516,602,248.41 218,404,991.81 735,007,240.22 284,113,811.04 2,561,810.59 286,675,621.63 Industry Co., Ltd.

Unit: Yuan Currency: RMB Amount for the current period Amount for the previous period

Subsidiary name Operating income from operating activities Net profit Total comprehensive income Cash flow from operating activities Operating income Net profit Total comprehensive income

Cash Flow Guizhou Dechangxiang Pharmaceutical Co., Ltd.

235,016,803.61 40,409,745.69 40,409,745.69 29,469,147.93 205,697,015.37 37,724,948.69 37,724,948.69 18,432,727.48 Co., Ltd.

Guizhou Hanfang Pharmaceutical Co., Ltd. 365,788,973.93 31,932,188.44 31,932,188.44 88,486,269.46 532,427,144.98 65,579,436.65 65,579,436.65 44,811,666.08

Other notes:

None

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(4).Significant restrictions on the use of enterprise group assets and repayment of enterprise group debts□Applicable √Not applicable

(5). Financial support or other support provided to structured entities included in the scope of consolidated financial statements □Applicable √Not applicable

Other notes:

□Applicable √Not applicable

2. Transactions in which the ownership share of the subsidiary changes and the subsidiary is still controlled □Applicable √Not applicable

3. Interests in joint ventures or associated enterprises

√Applicable □Not applicable

(1).Important joint ventures or associates

□Applicable √Not applicable

(2).Main financial information of important joint ventures

□Applicable √Not applicable

(3).Main financial information of important associates

□Applicable √Not applicable

(4). Summary financial information of unimportant joint ventures and associates √Applicable □Not applicable

Unit: Yuan Currency: RMB

Closing balance/Amount incurred in the current period Opening balance/Amount incurred in the previous period Joint ventures:

Total book value of investments

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 79,595,087.12 12,547,227.44 Total of the following items calculated based on shareholding ratio

--Net profit -63,565.42 280,527.44 --Other comprehensive income

--Total comprehensive income -63,565.42 280,527.44Other notes:

None

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(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

(7).Unconfirmed commitments related to investment in joint ventures

□Applicable √Not applicable

(8).Contingent liabilities related to investments in joint ventures or associates

□Applicable √Not applicable

4. Important joint operations

□Applicable √Not applicable

5. Interests in structured entities that are not included in the scope of consolidated financial statements. Relevant instructions for structured entities that are not included in the scope of consolidated financial statements: □ Applicable √ Not applicable

6. Others

□Applicable √Not applicable

11. Government subsidies

1. Government subsidies recognized according to the amount receivable at the end of the reporting period

□Applicable √Not applicable

Reasons for failure to receive the estimated amount of government subsidy at the estimated time

□Applicable √Not applicable

2. Liability items involving government subsidies

√Applicable □Not applicable

Unit: Yuan Currency: RMB for the current period

Financial Statements for the Current Period

Beginning balance Others Closing balance items Subsidy amount Extra income Other income Related changes

Amount

GMP changed in different places

Construction project 8,172,690.09 389,175.72 7,783,514.37 Special subsidies related to assets

People of Anshun City

The government awards

Supplementary industrial support 745,562.12 35,502.96 710,059.16 Asset-related funds (new version

GMP changed in different places

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construction project)

Pingba District Industry and Trade

ancient classics

Mingfang modern system

Development of new drugs 500,000.00 500,000.00 Research and industries related to assets

chemical project countries

Support funds

Guizhou in 2019

Provincial Industry and Information

Information development specialist

1,584,905.54 75,471.72 1,509,433.82 Funds related to assets (new version

GMP changed in different places

construction project)

Guizhou three-force system

Pharmaceutical Co., Ltd.

The company's GMP reform 30,676,530.95 3,408,503.28 27,268,027.67 Phase II expansion related to assets

Project

Guizhou Science and Technology

Office-funded enterprise

R&D innovation support 310,000.00 310,000.00 Asset-related cultivation funds

(Special funds for special use)

Angong Niuhuang Pills

Production capacity backup construction 325,000.00 50,000.00 275,000.00 Asset-related equipment projects

Guizhou Miao Medicine High

Qualitative application and

265,889.21 39,506.51 226,382.70 Asset-related development of technological innovation

New base construction

Large varieties of Miao medicine

"Stilbene gum rises white

Capsule quality improvement 700,282.88 92,046.60 608,236.28 Asset-related upgrades and key processes

Art optimization

Total 42,970,860.79 310,000.00 4,090,206.79 39,190,654.00 /

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 4,471,021.22 6,891,346.29 Related to assets 4,090,206.79 3,610,601.58Others 7,762,400.00Total 8,561,228.01 18,264,347.87Other notes:

Government subsidies to offset costs

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Unit: Yuan Currency: Cost of RMB offset

Type of subsidy items Amount incurred in the current period Amount incurred in the previous period

This expense item of interest subsidy for civil trade is related to income 14,230,300.00 7,762,400.00 Financial expenses - interest expenses

Total 14,230,300.00 7,762,400.00

12. Risks related to financial instruments

4. Risks of financial instruments

√Applicable □Not applicable

(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.

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 December 31, 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 115,957,941.30

Accounts receivable financing 151,989,603.53

Accounts receivable 624,436,534.33 34,048,193.50 Other receivables 3,546,564.66 753,885.54 Total 895,930,643.82 34,802,079.04

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 monitors cash balances, marketable securities that can be liquidated at any time, and rolling forecasts of cash flows for the next 12 months.

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Tests are conducted to ensure that the company has sufficient funds to repay its debts under all reasonably foreseeable circumstances. (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.

5. Hedging

(2). The company carries out hedging business for risk management

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

(3). The company carries out qualified hedging business and applies hedging accounting □ Applicable √ Not applicable

Other notes:

□Applicable √Not applicable

(4). The company carries out hedging business for risk management and expects to achieve risk management objectives but does not apply hedging accounting □ Applicable √ Not applicable

Other notes:

□Applicable √Not applicable

6. Transfer of financial assets

(2). Classification of transfer methods

□Applicable √Not applicable

(3). Financial assets derecognized due to transfer

□Applicable √Not applicable

(4). Transferred financial assets that continue to be involved

□Applicable √Not applicable

Other notes:

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□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 Level 1 fair Second level fair Total third level fair

value measurement value measurement value measurement

1. Continuous fair value measurement

(1) Trading financial assets 19,925,822.20 19,925,822.20 1. Measured at fair value and changes

19,925,822.20 19,925,822.20 Financial assets included in current profits and losses

(1) Debt instrument investment

(2) Equity instrument investment

(3) Derivative financial assets

(4) Others 19,925,822.20 19,925,822.20

2. Designated to be measured at fair value and

The changes are included in the current profit and loss

Financing assets

(1) Debt instrument investment

(2) Equity instrument investment

(3) Accounts receivable financing 151,989,603.53 151,989,603.53

(2) Other debt investments

(3) Investment in other equity instruments 10,000,000.00 10,000,000.00

(4) Investment real estate

1. Land use rights for lease

2. Buildings for rent

3. Hold and prepare to transfer after appreciation

land use rights

(5) Biological assets

1. Consumable biological assets

2. Productive biological assets

Assets measured at fair value on an ongoing basis

19,925,822.20 161,989,603.53 181,915,425.73 Total output

(6) Trading financial liabilities

1. Measured at fair value and changes

Financial liabilities included in current profits and losses

Including: trading bonds issued

Derivative financial liabilities

Others

2. Designated as measured at fair value

and the changes are included in the current profit and loss

financial liabilities

Negative assets measured at fair value on an ongoing basis

Total debt

2. Non-continuous fair value measurement

(1) Assets held for sale

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Measured at fair value on a non-continuous basis

Total assets

Measured at fair value on a non-continuous basis

total liabilities

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 product 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

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

6. Information about the parent company of this enterprise

□Applicable √Not applicable

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7. 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.

8. Information on joint ventures and associated enterprises of the enterprise

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. Equity in joint ventures or associates

□Applicable √Not applicable

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

Other notes:

□Applicable √Not applicable

9. Other related parties

√Applicable □Not applicable

Names of other related parties Relationship between other related parties and the company

Guizhou Zhengyi Accounting Firm Co., Ltd. A company where independent director Chen Shigui serves as deputy general manager

Guizhou Fudi Law Firm A company where Gui Dong, the company’s independent director, is the person in charge

Hainan Yuexin Pharmaceutical Investment Partnership (General Partnership) Controlling shareholder and actual controller acting in concert

Yongsheng (Hangzhou) Technology Development Co., Ltd. was established. Company director Sheng Yongjian holds 95% of the shares and serves as a supervisor.

Zhang Hai Guizhou Yongji Printing Co., Ltd. is the controlling shareholder and actual controller of the company in the past 12 months.

Companies holding more than 5% of shares

Wang Huiying, controlling shareholder and actual controller acting in concert

Directors, supervisors and senior managers and their close relatives. Family members of directors, supervisors and senior managers and their close relatives. Members

Jointly invested in Guizhou Jiuxu Investment Co., Ltd. with related legal person Guizhou Yongji Printing Co., Ltd.

company

The company controlled by Mr. Sheng Yongjian, director of the company and more than 5% shareholder, established Yaozunbao Digital Intelligence Technology (Chengdu) Co., Ltd. Yongsheng (Hangzhou) Technology Development Co., Ltd. is the controlling shareholder of Yaozunbao Digital Intelligence Technology (Chengdu) Co., Ltd.

In view of Mr. Sheng Yongjian, director of the company and shareholder holding more than 5% of the shares,

Sheng Xiaoping, a close family member, is the largest shareholder of Zhejiang Kunyu Medical Technology Co., Ltd. Zhejiang Kunyu Medical Technology Co., Ltd. The company recognized Zhejiang Kunyu Medical Technology Co., Ltd. as a related party of the company based on the principle of substance over form.

joint legal person

Other notes:

None

10. 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

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Approved transaction amount Whether it exceeds the related parties of the transaction Contents of related transactions Amount incurred in the current period Amount incurred in the previous period (if applicable) Amount (if applicable) Guizhou Yongji Printing

Pill box 2,337,894.37 5,500,000.00 No 2,516,122.23 Co., Ltd.

Yaozunbao Digital Intelligence Technology

Technology (Chengdu City) Software development 193,443.40 20,000,000.00 No limited company

Total 2,531,337.77 25,500,000.00 2,516,122.23

List of goods sold/services provided

□Applicable √Not applicable

Description of related transactions for purchasing and selling goods, providing and receiving services

□Applicable √Not applicable

(2). Related entrusted management/contracting and entrusted management/outsourcing situation

The company's entrusted management/contracting status table:

□Applicable √Not applicable

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

Unit: Yuan Currency: RMB Name of the lessee Type of leased assets Lease income recognized in the current period Lease income recognized in the previous period Guizhou Yongji Printing Co., Ltd. House 219,221.16 Total 219,221.16 The company as the lessee:

□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

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Description of related guarantees

□Applicable √Not applicable

(5). Related party lending

□Applicable √Not applicable

(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 647.08 694.11

(8). Other related transactions

□Applicable √Not applicable

11. Unsettled items such as receivables and payables to related parties

(1).Items receivable

□Applicable √Not applicable

(2). Payable items

√Applicable □Not applicable

Unit: Yuan Currency: RMB Project name Related parties Book balance at the end of the period Book balance at the beginning of the period Accounts payable Guizhou Yongji Printing Co., Ltd. 490,021.12 65,038.53

Other payables Guizhou Jiuxu Investment Co., Ltd. 10,000,000.00

(3).Other items

□Applicable √Not applicable

12. 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 existing and future business 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), and I will continue to promote

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Other enterprises controlled by me, my close family members and other enterprises controlled by me will not 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: a. Stop producing products that compete or may compete; b. Stop operating businesses that compete or may compete; c. Put competing assets or businesses into the company in a legal way; d. Transfer competing assets or businesses to unrelated third parties; e. 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 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 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

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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

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 decision before the China Securities Regulatory Commission or the People's Court and other competent authorities that the company has the above-mentioned existence. The board of directors shall be convened within 30 days after the final determination of the 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 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.

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.

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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 make a company existence decision to the China Securities Regulatory Commission or the People's Court and other competent authorities. Formulate a share repurchase plan within 30 days after the final determination of the above facts or the effective judgment, and repurchase all new shares of the company's initial public offering and the original restricted shares that have been transferred in accordance with the law. The repurchase price shall not be lower than the company's stock issue price plus bank demand deposit interest during the relevant period from the issuance of the stock 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/restrictions on share sales

Commitment: Zhang Hai, the issuer’s controlling shareholder and actual controller

Commitment content: Mr. Zhang Hai, the company’s controlling shareholder and actual controller, voluntarily promises 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). 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

Performance status: Completed

13. Others

□Applicable √Not applicable

15. Share-based payment

1. Various equity instruments

(1). Details

√Applicable □Not applicable

Quantity unit: shares Amount unit: Yuan Currency: RMB

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Granted in this period, exercised in this period, unlocked in this period, expired in this period

Grant object category

Quantity Amount Quantity Amount Quantity Amount Quantity Amount Manager 280,000.00 1,825,600.00Sales staff 60,000.00 391,200.00Total 340,000.00 2,216,800.00

(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

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

On the balance sheet date, the basis for determining the latest number of exercisable equity instruments that can be unlocked, headcount changes, completion of performance indicators and other follow-up information are determined.

Determined.

Reasons for significant differences between the current period’s estimate and the previous period’s estimate None

The cumulative amount of equity-settled share-based payment included in capital reserves 15,041,954.22 Total expenses recognized for equity-settled share-based payment in the current period 13,725,903.98 Other notes:

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.

(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 because the company-level performance assessment in 2024 did not meet the standards, 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 the first-granted restricted stock at the grant price. The cancellation price for this repurchase is 7.20 yuan/share. The total amount of repurchase funds expected to be paid this time is RMB 5.2704 million, and the company will use its own funds for repurchase.

(3) On July 30, 2025, the company held the 14th meeting of the 4th board of directors and the 13th meeting of the 4th board of supervisors, and reviewed and approved the "Proposal on the Repurchase and Cancellation of Certain Restricted Stocks". In the company's 2024 restricted stock incentive plan, two incentive targets (Mr. Gu Jiyang and Mr. Wang Xun) are no longer eligible for incentives due to their resignation. The company plans to repurchase a total of 80,000 restricted shares held by them that have been granted but not yet unlocked. The cancellation price for this repurchase is 7.16 yuan/share. The total amount of repurchase funds expected to be paid this time is RMB 572,800, and the company will use its own funds for repurchase.

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(4) On November 27, 2025, the company held the 17th meeting of the fourth board of directors and the 16th meeting of the fourth board of supervisors, and reviewed and approved the "Proposal on the Repurchase and Cancellation of Certain Restricted Stocks". Mr. Tang Jianfeng, the incentive object in the company's 2024 restricted stock incentive plan, is no longer eligible for incentives due to his resignation. The company plans to repurchase a total of 200,000 restricted shares held by him that have been granted but have not yet been unlocked. The cancellation price for this repurchase is 7.16 yuan/share. The total amount of repurchase funds expected to be paid this time is RMB 1.432 million, and the company will use its own funds for repurchase.

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 Sanli Pharmaceutical. As of December 31, 2025, the subscribed capital contribution has not been paid in full. The subscription and actual payment status are as follows:

Company name Amount of subscribed capital contribution (10,000 yuan) Ratio of subscribed capital contribution (%) Amount of paid-in capital contribution (10,000 yuan) Guizhou Sanli Pharmaceutical Co., Ltd. 5,000.00 100.00 4,600.00Total 5,000.00 100.00 4,600.00

(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. 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 December 31, 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 subscribed capital contribution (10,000 yuan) Ratio of subscribed capital contribution (%) Amount of paid-in capital contribution (10,000 yuan) Guizhou Sanli Pharmaceutical Co., Ltd. 2,100.00 100.00 1,174.61Total 2,100.00 100.00 1,174.61

(3) 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 are monetary contributions. As a limited partner, the company subscribed and contributed RMB 160 million from its own funds, accounting for 32.00% of the total capital; as a limited partner, Yunnan Wudi Pharmaceutical Co., Ltd. subscribed and contributed RMB 40 million from its own funds, accounting for 8.00% of the total. As of December 31, 2025, the subscribed capital contribution has not been paid in full. The subscription and actual payment status are as follows:

Company name Amount of subscribed capital contribution (RMB 10,000) Ratio of subscribed capital contribution (%) Amount of paid-in capital contribution (RMB 10,000) Guizhou Sanli Pharmaceutical Co., Ltd. 16,000.00 32.00 1,700.00Total 16,000.00 32.00 1,700.00 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 December 31, 2025, the Company has no other important commitments that should be disclosed but have not been disclosed.

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2. Contingencies

(1). Important contingencies existing on the balance sheet date

√Applicable □Not applicable

As of December 31, 2025, the amount of notes receivable (bank acceptance bills) that the company has endorsed or discounted and has not expired but has not been derecognized on the balance sheet date is 81.4901 million yuan.

Except for the existence of the above-mentioned contingencies, as of December 31, 2025, the Company has no other major contingencies that should be disclosed but have not been disclosed.

(2). The company has no important contingencies that need to be disclosed, and it should also explain:

□Applicable √Not applicable

3. Others

□Applicable √Not applicable

17. Events after the balance sheet date

1. Important non-adjustment matters

□Applicable √Not applicable

2. Profit distribution

√Applicable □Not applicable

Unit: Yuan Currency: RMB Profit or dividend to be distributed 23,979,000.96 Profit or dividend declared to be distributed after review and approval 23,979,000.96

The company held the 23rd meeting of the fourth board of directors on April 23, 2026, and reviewed and approved the "Proposal on the Profit Distribution Plan for 2025". The profit distribution plan proposed by the company for 2025 is: based on the total share capital registered on the equity registration date for equity distribution (deducting the number of shares in the company's special securities account for repurchase and the number of restricted shares to be repurchased and canceled) as the base, it plans to distribute a cash dividend of 0.60 yuan (tax included) to all shareholders for every 10 shares, and a total cash dividend of 23,979,000.96 yuan (tax included) is planned. No bonus shares will be issued, and no capital reserve will be converted into share capital.

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

As of the date when the financial statements are approved for issuance, the Company does not need to disclose any other description of events after the balance sheet date.

18. Other important matters

1. Correction of previous accounting errors

For details, please refer to "The Company's Analysis and Explanation of the Causes and Impact of Changes in Accounting Policies, Accounting Estimates or Correction of Major Accounting Errors" under "Important Matters"

2. Important debt restructuring

□Applicable √Not applicable

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3. Asset replacement

(1). Non-monetary asset exchange

□Applicable √Not applicable

(2). Other asset replacements

□Applicable √Not applicable

4. Annuity plan

□Applicable √Not applicable

5. Termination of operations

□Applicable √Not applicable

6. Branch information

(1). Basis for determination of reporting segments and accounting policies

□Applicable √Not applicable

(2). Financial information of reporting 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

8. Share buyback

For details, please refer to Section 8 Financial Report 7. Notes to Items in Consolidated Financial Statements 56. Treasury Stocks

2. For details on the granting of the restricted stock incentive plan in 2024, please refer to Section 8 Financial Report 15. Share-based Payment

3. Equity pledges of shareholders and persons acting in concert who collectively hold more than 5% of the company’s shares. As of the end of this reporting period, controlling shareholders and persons acting in concert Zhang Hai and Wang Huiying held 178.8664 million shares, accounting for 43.74% of the company’s total share capital. A total of 80 million shares had been pledged, accounting for 19.56% of the company’s total share capital.

4. Others

□Applicable √Not applicable

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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) 354,128,596.93 455,199,847.81 Within 1 year (including 1 year) Subtotal 354,128,596.93 455,199,847.81 1 to 2 years 19,502,987.45 1,517,640.98 2 to 3 years 570,000.00 133,280.00 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 374,328,370.58 456,977,554.99

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(2). Classified disclosure according to bad debt accrual method

√Applicable □Not applicable

Unit: Yuan Currency: RMB Closing balance Opening balance

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

Category Book Provision Book Ratio Provision Ratio Ratio

Amount Amount Value Amount Amount Proportion Value (%) Example (%) (%)

(%)

Provision for bad debts on an individual basis

Among them:

Provision for bad debts on a group basis 374,328,370.58 100.00 19,764,821.49 5.28 354,563,549.09 456,977,554.99 100.00 22,253,693.63 4.87 434,723,861.36

Among them:

Combination 1 370,684,354.52 99.03 19,764,821.49 5.33 350,919,533.03 440,780,593.73 96.46 22,253,693.63 5.05 418,526,900.10 Combination 2 3,644,016.06 0.97 3,644,016.06 16,196,961.26 3.54 16,196,961.26Total 374,328,370.58 100.00 19,764,821.49 5.28 354,563,549.09 456,977,554.99 100.00 22,253,693.63 4.87 434,723,861.36

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Provision for bad debts is made individually:

□Applicable √Not applicable

Provision for bad debts by group:

√Applicable □Not applicable

Portfolio accrual items: Portfolio 1

Unit: Yuan Currency: RMB Closing balance

Name

Book balance Bad debt provision Ratio of provision (%) Within 1 year 350,484,580.87 17,524,229.04 5.00 1 to 2 years 19,502,987.45 1,950,298.75 10.00 2 to 3 years 570,000.00 171,000.00 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 370,684,354.52 19,764,821.49

Portfolio accrual items: Portfolio 2

Unit: Yuan Currency: RMB Closing balance

Name

Book balance Bad debt provision Provision ratio (%) Consolidated related parties 3,644,016.06

Total 3,644,016.06

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 Opening balance Write-off or other Ending balance accrual Recovery or reversal

Write-off change

Provision based on combination

Period credit losses 22,253,693.63 2,488,872.14 19,764,821.49 Notes receivable

Among them: Combination 1 22,253,693.63 2,488,872.14 19,764,821.49

Total 22,253,693.63 2,488,872.14 19,764,821.49

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 and Hehe

Accounts receivable period End of the contract asset period End of the contract asset period Name of the unit at the end of the bad debt provision Period End of the same asset period

Ending balance balance balance balance of total balance

Proportion (%)

Customer 1 14,448,400.00 14,448,400.00 3.86 1,249,890.00 Customer 2 12,480,170.73 12,480,170.73 3.33 624,008.54 Customer 3 12,056,858.00 12,056,858.00 3.22 602,842.90Customer 4 10,191,568.83 10,191,568.83 2.72 509,578.44Customer 5 9,947,980.80 9,947,980.80 2.66 497,399.04

Total 59,124,978.36 59,124,978.36 15.79 3,483,718.92

Other notes:

None

Other notes:

□Applicable √Not applicable

2. Other receivables

Item list

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Item Ending balance Beginning balance

interest receivable

Dividends receivable 226,031.78

Other receivables 2,638,437.85 3,313,035.08

Total 2,864,469.63 3,313,035.08 Note: Other receivables in the above table refer to other receivables after deducting interest receivable and dividends receivable.

Other notes:

□Applicable √Not applicable

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(1). Classification of interest receivable

□Applicable √Not applicable

(2). Important overdue interest

□Applicable √Not applicable

(3). Classified disclosure according to bad debt accrual method □Applicable √Not applicable

Provision for bad debts is made individually:

□Applicable √Not applicable

Explanation on the provision of bad debt provisions 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

The basis for dividing each stage and the proportion of provision for bad debts are not available

Explanation of significant changes in the book balance of interest receivable due to changes in loss provisions in the current period: □ Applicable √ Not applicable

(5). Bad debt provisions

□Applicable √Not applicable

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:

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□Applicable √Not applicable

Dividends receivable

(7). Dividends receivable

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Project (or invested unit) Closing balance Opening balance Guizhou Jiuxu Investment Co., Ltd. 226,031.78

Total 226,031.78

(8). Important dividends receivable aged more than 1 year □ Applicable √ Not applicable

(9). Classified disclosure according to bad debt accrual method

□Applicable √Not applicable

Provision for bad debts is made individually:

□Applicable √Not applicable

Instructions on accruing bad debt provisions individually:

□Applicable √Not applicable

Provision for bad debts by group:

□Applicable √Not applicable

(10). Provision for bad debts based on the general expected credit loss model □Applicable √Not applicable

The basis for dividing each stage and the proportion of provision for bad debts are not available

Explanation of significant changes in the book balance of dividends receivable due to changes in loss provisions in the current period: □ Applicable √ Not applicable

(11).Bad debt provisions

□Applicable √Not applicable

Among them, the amount of bad debt provision recovery or reversal in the current period is important: □ Applicable √ Not applicable

Other notes:

None

(12). Dividends receivable actually written off in the current period □ Applicable √ Not applicable

Among them, the important write-off of dividends receivable

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□Applicable √Not applicable

Write-off instructions:

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

Other receivables

(13). Disclosure based on aging

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Aging Book balance at the end of the period Book balance at the beginning of the period

Within 1 year (including 1 year) 2,343,866.72 3,284,773.77 Within 1 year (including 1 year) Subtotal 2,343,866.72 3,284,773.77 1 to 2 years 232,516.08 50,000.00 2 to 3 years 50,000.00

More than 3 years

3 to 4 years 50,000.00 4 to 5 years 50,000.00 50,000.00 More than 5 years 90,000.00 40,000.00

Total 2,766,382.80 3,474,773.77

(14). Classification by nature of payment

√Applicable □Not applicable

Unit: Yuan Currency: RMB

Nature of payment Book balance at the end of the period Book balance at the beginning of the period

investment margin

Withholding amount 1,068,187.72 1,359,213.99 Guarantee and deposit 1,149,935.08 776,970.16 Consolidated related parties 390,000.00 240,000.00 Reserve fund 158,260.00 1,098,589.62 Others

Total 2,766,382.80 3,474,773.77

(15). 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 Estimated total credit losses in the next 12 months (unissued Credit losses (issued)

period credit loss

resulting in credit impairment) resulting in credit impairment)

Balance on January 1, 2025 161,738.69 161,738.69 Balance on January 1, 2025 in the current period

--Transfer to the second stage

--Transfer to the third stage

--Return to the second stage

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--Return to the first stage

Provision for this period

Transferred back in the current period 33,793.74 33,793.74 Write-off in the current period

Write-off in this period

Other changes

Balance on December 31, 2025 127,944.95 127,944.95 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

(16). Bad debt provisions

√Applicable □Not applicable

Unit: Yuan Currency: RMB Change amount in the current period

Category Beginning Balance Ending Balance

Provision, recovery or reversal, write-off or write-off, other changes are accrued on a group basis

161,738.69 33,793.74 127,944.95 Bad debt provision

Among them: Combination 1 161,738.69 33,793.74 127,944.95

Total 161,738.69 33,793.74 127,944.95

Among them, the amount of bad debt provision reversed or recovered in the current period is important:

□Applicable √Not applicable

Other notes:

None

(17). Other receivables actually written off in the current period

□Applicable √Not applicable

Important write-offs of other receivables:

□Applicable √Not applicable

Instructions for writing off other receivables:

□Applicable √Not applicable

(18). Other receivables with the top five closing balances collected by 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 (%)

Beijing Yadong Biopharmaceutical

900,000.00 32.53 Security deposit and deposit Within 1 year 45,000.00 Co., Ltd.

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Guizhou Sanli Pharmaceutical Co., Ltd. 2025 Annual Report

Guizhou Nuorun Enterprise Management Merger of related parties Within 1 year, 1-2 years,

390,000.00 14.10

Consulting Co., Ltd. Payment 3-4 years, more than 5 years

Anguo Yadong Biopharmaceutical

100,000.00 3.61 Security deposit and deposit Within 1 year 5,000.00 Co., Ltd.

Sun Rongjian 79,000.00 2.86 Reserve fund Within 1 year 3,950.00 Guangzhou Defu Ali Health

50,000.00 1.81 Security deposit and deposit 1-2 years 5,000.00 Big Pharmacy Co., Ltd.

Total 1,519,000.00 54.91 / 58,950.00

(19). Presented in other receivables due to centralized management of funds

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

3. Long-term equity investment

√Applicable □Not applicable

Unit: Yuan Currency: RMB Closing balance Opening balance

minus

item value

Book balance Impairment provision Book value Book balance Book value

Prepare

Investment in subsidiaries 1,287,643,473.40 33,775,945.87 1,253,867,527.53 1,311,363,351.30 1,311,363,351.30 Associates and joint ventures

19,497,492.29 19,497,492.29 2,547,227.44 2,547,227.44Enterprise investment

Total 1,307,140,965.69 33,775,945.87 1,273,365,019.82 1,313,910,578.74 1,313,910,578.74

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(1). Investment in subsidiaries

√Applicable □Not applicable

Unit: Yuan Currency: RMB impairment allowance Changes in current period

Balance at the beginning of the period Balance at the end of the period Impairment provision Invested unit at the end of the period Provision at the beginning of the period Other

(Book value) Additional investment Decrease investment Provision for impairment (Book value) Balance

balance he

Guizhou Sanli Health Management Co., Ltd. 46,000,000.00 46,000,000.00 Guizhou Nuorun Enterprise Management Consulting Co., Ltd. 11,746,091.90 11,746,091.90 Sanli Zhongyue (Shanghai) Marketing Planning Co., Ltd.

34,561,200.00 34,561,200.00Company

Xiaoxuan Pharmaceutical Technology (Guizhou) Co., Ltd. 29,600,000.00 29,600,000.00

Guizhou Dechangxiang Pharmaceutical Co., Ltd. 232,240,681.14 1,925,449.15 234,166,130.29 Guizhou Haost Biotechnology Co., Ltd. 105,302,610.41 105,302,610.41 Guizhou Hanfang Pharmaceutical Co., Ltd. 806,753,493.56 2,420,969.15 33,775,945.87 775,398,516.84 33,775,945.87 Guizhou Sankang Enterprise Management Partnership (with

45,000,000.00 500.00 45,000,500.00 limited partnership)

Yunnan Wudi Pharmaceutical Co., Ltd. 159,274.29 1,215,203.80 1,374,478.09 Guizhou Sanli Pharmaceutical Co., Ltd. 318,000.00 318,000.00 Total 1,311,363,351.30 5,880,122.10 29,600,000.00 33,775,945.87 1,253,867,527.53 33,775,945.87

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(2). Investment in associates and joint ventures

√Applicable □Not applicable

Unit: Yuan Currency: RMB Increase or decrease in the current period

announce

sue to reduce

It's worth his plan

Release the allowance, reduce the amount, and raise it

Investment Opening balance Recognized under equity method Closing balance Reserve less Joint rights Less other

Unit (book value) Additional investment Recognized investment (book value) Period investment income value Others

Profit and loss stock final capital loss change standard

Make use of remaining resources to mobilize preparations

or amount

profit

Run

1. Joint ventures

Subtotal

2. Joint ventures

Zhejiang Kunyu Medical

Pharmaceutical Technology Co., Ltd. 2,547,227.44 -92,676.49 2,454,550.95 Company

Guizhou Qianlixheng

Biopharmaceutical Entrepreneurship

Investment fund partnership 17,000,000.00 42,941.34 17,042,941.34 partnership (limited

partnership)

Subtotal 2,547,227.44 17,000,000.00 -49,735.15 19,497,492.29Total 2,547,227.44 17,000,000.00 -49,735.15 19,497,492.29

(1). Impairment testing of long-term equity investments

□Applicable √Not applicable

Other notes:

None

4. Operating income and operating costs

(1). Operating income and operating costs

√Applicable □Not applicable

Unit: Yuan Currency: RMB Amount for the current period Amount for the previous period

Project

revenue cost revenue cost

Main business 1,003,216,436.15 285,274,773.94 1,315,185,670.44 375,781,121.19 Other businesses 26,177,027.05 26,330,184.50 22,033,894.50 15,001,236.05Total 1,029,393,463.20 311,604,958.44 1,337,219,564.94 390,782,357.24

(2). Decomposition information of operating income and operating costs

√Applicable □Not applicable

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Unit: Yuan Currency: RMB Amount for the current period

Contract classification

Operating income Operating costs

1. Product type 1,003,216,436.15 285,274,773.94 Including: Respiratory system drugs 964,575,845.24 273,700,105.97 Cardiovascular and cerebrovascular drugs 36,045,939.07 10,531,537.10

Other products 2,594,651.84 1,043,130.87

2. Classification by operating region 1,003,216,436.15 285,274,773.94 Of which: Northeast China 48,504,410.71 12,402,795.24 North China 100,807,881.47 29,255,790.63 East China 269,243,403.51 78,493,283.61 South China 149,355,323.96 40,086,399.60 Central China 185,699,242.61 52,613,517.61 Northwest China 43,098,619.94 11,751,638.25

Southwest region 206,507,553.95 60,671,349.00

3. Classification by time of transfer of goods 1,003,216,436.15 285,274,773.94 Among them: Transfer at a certain point in time 1,003,216,436.15 285,274,773.94 Transfer within a certain period of time

Total 1,003,216,436.15 285,274,773.94

Other notes:

□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 53,354,106.00 280,527.44 Long-term equity investment income calculated using the equity method -49,735.15

Investment income from the disposal of long-term equity investments -29,599,999.00 -79,548.00 Investment income from trading financial assets during the holding period

Dividend income from other equity instrument investments during the holding period 226,031.78 365,231.68 Interest income from debt investments during the holding period

Interest income earned from other debt investments during the holding period

Investment income from disposal of trading financial assets 154,382.90 88.55

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Investment income from disposal of other equity instrument investments

Investment income from disposal of debt investments

Investment income from disposal of other debt investments

Debt restructuring proceeds

Total 24,084,786.53 566,299.67Other instructions:

None

6. Others

□Applicable √Not applicable

20. Supplementary information

1. Detailed statement of non-recurring profits and losses for the current period

√Applicable □Not applicable

Unit: Yuan Currency: RMB

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

-115,565.58 prepared write-off portion

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

Closely related to the business, in compliance with national policies and regulations, and in accordance with the determined

The government enjoys the standard of 20,895,408.01 and has a continuous impact on the company’s profits and losses.

Except for subsidies

Except for effective hedging related to the company’s normal business operations

Outside of financial affairs, non-financial enterprises hold financial assets and financial liabilities

-2,890,368.97 gains and losses from changes in fair value and disposal of financial assets and funds

Profit and loss arising from financial liabilities

Other non-operating income and expenses other than the above items 3,219,051.67 Less: Impact on income tax 851,255.31 Impact on minority shareholders’ equity (after tax) 325,334.49

Total 19,931,935.33

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

Other notes:

□Applicable √Not applicable

2. Return on net assets and earnings per share

√Applicable □Not applicable

Weighted average net capital Earnings per share Profit for the reporting period

Yield of profit (%) Basic earnings per share Diluted earnings per share Net profit attributable to the company’s ordinary shareholders 3.11 0.11 0.11 Attributable to the company after deducting non-recurring gains and losses

1.77 0.06 0.06 Net profit for ordinary shareholders

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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: April 23, 2026 Revised information

□Applicable √Not applicable

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