Fangsheng Pharmaceutical’s announcement on the provision for asset impairment in 2025
Hunan Nansheng Pharmaceutical Co., Ltd.
HUNANFANGSHENGPHARMACEUTICALCO.,LTD.
Securities code: 603998 Securities abbreviation: Fangsheng Pharmaceutical Announcement number: 2026-024
Hunan Nansheng Pharmaceutical Co., Ltd.
Announcement on Provision for Asset Impairment in 2025
The company's board of directors and all directors guarantee that the contents of this announcement do not contain any false records, misleading statements or major omissions, and assume legal responsibility for the authenticity, accuracy and completeness of its contents.
Hunan Fangsheng Pharmaceutical Co., Ltd. (the "Company" or "Fangsheng Pharmaceutical") held the fifth meeting of the sixth board of directors on April 23, 2026 and reviewed and approved the "Proposal on Provision for Asset Impairment". In order to objectively reflect the company's asset status and operating results and ensure that the accounting information is true and reliable, the company, in accordance with the relevant provisions of "Accounting Standards for Business Enterprises No. 8 - Asset Impairment", conducts necessary impairment tests and assessments on assets with signs of impairment, and plans to accrue impairment provisions for assets with signs of impairment based on the principle of prudence. The main situations are as follows:
1. Reasons for the provision of asset impairment provisions this time
In accordance with the requirements of the "Accounting Standards for Business Enterprises", "Accounting Supervision Risk Warning No. 8 - Impairment of Goodwill" and other relevant regulations, in order to truly reflect the company's asset value and financial status as of December 31, 2025, the company conducted a comprehensive inventory and impairment test on various assets. Based on the principle of prudence, impairment provisions were made for relevant assets with signs of impairment.
2. The scope and total amount of assets provided for asset impairment this time
After the company conducted a comprehensive inventory and asset impairment test on assets with signs of possible impairment at the end of 2025 (including accounts receivable, other receivables, inventories, long-term receivables, goodwill, fixed assets, intangible assets, and long-term equity investments), the company made provision for impairment of various assets in 2025 totaling RMB 18,490,203.98.
Changes in asset impairment provisions are as follows (unit: yuan):
Page 1 of 5
Hunan Nansheng Pharmaceutical Co., Ltd.
HUNANFANGSHENGPHARMACEUTICALCO.,LTD.
Item Beginning amount Increase in the current period Decrease in the current period
Provision for the current period Reversal or write-off Other changes Ending amount
Bad debt provision for accounts receivable 20,895,409.95 5,856,859.32 3,997,640.54 22,754,628.73
Provision for bad debts of other receivables 21,268,527.95 2,808,407.00 9,306,770.01 14,770,164.94
Provision for bad debts of long-term receivables 10,596,991.83 5,285,128.51 5,311,863.32
Provision for inventory decline 14,493,464.95 5,213,005.22 1,064,896.08 18,641,574.09
Goodwill impairment provision 7,752,940.00 3,815,800.00 11,568,740.00
Fixed asset impairment provision 28,679.79 28,679.79
Provision for impairment of intangible assets 0.00
Provision for impairment of long-term equity investments 17,764,741.69 796,132.44 18,560,874.13
Total 92,800,756.16 18,490,203.98 19,654,435.14 0.00 91,636,525.00
3. Specific explanation of the provision for asset impairment this time
(1) Bad debt provision for accounts receivable
- Accounts receivable with expected credit losses based on combination of credit risk characteristics
Item Basis for determining portfolio Method for measuring expected credit losses
With reference to historical credit loss experience, combined with current conditions and predictions of future economic conditions, bank acceptance bills receivable are used to determine default risk exposure. Note types
and the expected credit loss rate throughout the duration to calculate the expected credit loss
With reference to historical credit loss experience, combined with current conditions and predictions of future economic conditions, commercial acceptance bills receivable are used to determine default risk exposure. Note types
and the expected credit loss rate throughout the duration to calculate the expected credit loss
With reference to historical credit loss experience, combined with current conditions and predictions of future economic conditions, prepare the aging of accounts receivable Accounts receivable - aging portfolio Aging
Comparison table with expected credit loss rate throughout the duration to calculate expected credit losses
Referring to the historical credit loss experience, combined with the current situation and accounts receivable - related parties within the consolidation scope, the scope of the consolidated financial statements receivable and the prediction of future economic conditions, the expected credit losses are calculated by combining the internal related transactions and the expected credit loss rate of the entire duration through the default risk exposure.
With reference to historical credit loss experience, combined with current conditions and predictions of future economic conditions, prepare a comparison table of other receivables - aging combination, aging and expected credit loss rate, and calculate the expected credit loss based on the expected credit loss rate within the next 12 months or the entire duration.
With reference to historical credit loss experience, combined with the current situation and other receivables - related within the scope of consolidation, the scope of consolidated financial statements receivable and the prediction of future economic conditions, the expected credit losses are calculated through the related current accounts within the default risk exposure portfolio and the expected credit loss rate throughout the duration.
With reference to historical credit loss experience, combined with the current situation and long-term receivables-financial lease portfolio aging and prediction of future economic conditions, prepare a comparison table between the aging of long-term receivables and the expected credit loss rate for the entire duration. Page 2 of 5
Hunan Nansheng Pharmaceutical Co., Ltd.
HUNANFANGSHENGPHARMACEUTICALCO.,LTD.
Calculate expected credit losses
- Comparison table between the aging of the aging portfolio and the expected credit loss rate for the entire duration
Aging Expected credit loss rate of accounts receivable (%) Expected credit loss rate of other receivables (%) Within 1 year (inclusive, the same below) 5 5
1-2 years 10 10
2-3 years 30 30
3-4 years 50 50
4-5 years 80 80
More than 5 years 100 100
(2) Goodwill impairment provision
According to the "Accounting Standards for Business Enterprises" and "Accounting Supervision Risk Warning No. 8" No. - Impairment of Goodwill" and other relevant requirements, the company entrusted Zhongwei Zhengxin (Beijing) Asset Appraisal Co., Ltd. to evaluate Guangdong Fangsheng Jianmeng Pharmaceutical Co., Ltd. (hereinafter referred to as "Jianmeng Pharmaceutical") and its holding subsidiary Yongzhou Fangsheng Tianhong Cancer Hospital Co., Ltd. (hereinafter referred to as "Jianmeng Pharmaceutical") Fangsheng Tianhong") conducted a goodwill impairment test. At the same time, the company conducted a goodwill impairment test on Jiangxi Tengwangge Pharmaceutical Co., Ltd. (hereinafter referred to as "Tengwangge Pharmaceutical") and Guangdong Jida Genetic Drug Engineering Research Center Co., Ltd. (hereinafter referred to as "Jida Gene").
According to the "Appraisal Report" issued by Zhongwei Zhengxin (Beijing) Asset Appraisal Co., Ltd. (Zhongwei Zhengxin Pingbao Zi (2026) No. 9003), the recoverable amount of the asset group or asset group combination of Hainan Boda Pharmaceutical Co., Ltd. including goodwill is 97.92 million yuan, which is higher than the book value of 97.4118 million yuan. There is no impairment loss on goodwill.
According to the "Appraisal Report" issued by Zhongwei Zhengxin (Beijing) Asset Appraisal Co., Ltd. (Zhongwei Zhengxin Appraisal Zi (2026) No. 9005), the recoverable amount of the asset group or asset group combination of Yongzhou Fangsheng Tianhong Cancer Hospital Co., Ltd. including goodwill is 55.99 million yuan, which is lower than the book value of 63.1567 million yuan, and the goodwill is impaired by 7.1667 million yuan, of which the goodwill impairment attributable to the company is 3.8158 million yuan.
According to the company's test, the recoverable amount of the Tengwangge Pharmaceutical asset group or asset group portfolio including goodwill is 412.6897 million yuan, which is higher than the book value of 181.6740 million yuan.
Page 3 of 5
Hunan Nansheng Pharmaceutical Co., Ltd.
HUNANFANGSHENGPHARMACEUTICALCO.,LTD.
There was no impairment loss on goodwill.
According to the company's test, the recoverable amount of the asset group or asset group combination of Guangdong Jinda Genetic Medicine Engineering Research Center Co., Ltd. including goodwill is 31.6428 million yuan, which is higher than the book value of 31.6138 million yuan. There is no impairment loss on goodwill.
(3) Provision for inventory decline
According to the "Accounting Standards for Business Enterprises" and the company's relevant accounting policies, a provision for inventory decline in price of RMB 5.213 million was made in 2025, and RMB 1.0649 million was reversed in the current period. It is measured using the lower of cost and net realizable value, and a provision for inventory decline is made based on the difference between the cost of a single inventory and the net realizable value.
4. Details of the write-off of some receivables in 2025
In accordance with the provisions of the "Accounting Standards for Business Enterprises" and relevant accounting policies, in order to objectively and fairly reflect the company's financial status and operating results, the company adheres to the principle of prudence and, with the approval of the chairman of the board, writes off the receivables that are expected to be irrecoverable as of December 31, 2025, but still retains the right to continue recourse. The total write-off amount is 6.5867 million yuan.
The impact of this provision for asset impairment and writing off part of the receivables on the company
The total asset impairment provision made this time is 18,490,203.98 yuan. The asset impairment provision of 19,654,435.14 yuan is reversed this year, which will increase the company's total profit in 2025 by 1,164,231.16 yuan.
In 2025, the company wrote off some receivables totaling RMB 6.5867 million, and made provision for bad debts of RMB 4.0119 million, reducing the consolidated profit in 2025 by RMB 2.5748 million.
Review procedures for making provision for asset impairment and writing off part of accounts receivable this time
The company held the fifth meeting of the sixth board of directors on April 23, 2026, and reviewed and approved the "Proposal on Provision for Asset Impairment Provisions" with 6 votes in favor, 0 votes against, and 0 abstentions.
Page 4 of 5
Hunan Nansheng Pharmaceutical Co., Ltd.
HUNANFANGSHENGPHARMACEUTICALCO.,LTD.
- On December 21, 2025, with the approval of the chairman of the board, the company wrote off part of the accounts receivable of RMB 6.5867 million.
7. Explanation of the Board of Directors on the Reasonability of the Provision for Asset Impairment
The board of directors believes that the provision of asset impairment provisions for 2025 is carried out in accordance with the "Accounting Standards for Business Enterprises" and other relevant regulations, conforms to the principle of prudence, and has sufficient basis for the provision. After the provision for impairment is made, the 2025 financial statements can more fairly reflect the company's financial status, asset value and operating performance in 2025 as of December 31, 2025, making the company's accounting information more true, reliable and reasonable. Therefore, the provision for asset impairment is agreed to this time.
8. Documents for reference
Resolution of the fifth meeting of the sixth board of directors.
Announcement hereby
Board of Directors of Hunan Nansheng Pharmaceutical Co., Ltd. April 25, 2026
Page 5 of 5