Yiling Pharmaceutical: 2025 Independent Director Work Report (Chen Gang)

Shijiazhuang Yiling Pharmaceutical Co., Ltd.

2025 Independent Directors’ Work Report

(Chen Gang)

I, Chen Gang, as an independent director of Shijiazhuang Yiling Pharmaceutical Co., Ltd. (hereinafter referred to as the "Company" or "Yiling Pharmaceutical"), strictly follow the Company Law, the Code of Governance of Listed Companies, and the Guidelines for Self-Discipline Supervision of Listed Companies. No. 1 - Standardized Operations of Main Board Listed Companies" and other laws and regulations as well as the "Articles of Association" and the company's "Independent Director System", in line with the principles of objectivity, impartiality and independence, we must be diligent and responsible, actively attend relevant meetings, carefully review various proposals of the board of directors, actively exert the professionalism and independence of independent directors, and safeguard the overall interests of the company and the legitimate rights and interests of all shareholders, especially small and medium-sized shareholders.

I now summarize my performance of my duties as an independent director in 2025 as follows:

1. My basic situation

I was born in 1964 with Chinese nationality and no permanent residence abroad. I have a master's degree in management and am a professor at the Accounting School of Central University of Finance and Economics. I have served as the executive deputy director of Beijing Zhonghui Accounting Firm, the accounting consultant of the Inspection Bureau of the Beijing State Taxation Bureau, the deputy director of Lanzhou Economic and Technological Development Zone, and the independent director of many listed companies such as Xinhuanet, Shede Wines, Jiaxun Feihong, Beijing Cree, and Gravity Media. Currently, he is an independent director of Beijing Jiaxun Feihong Electric Co., Ltd. and Amic Technology Development Co., Ltd. He will serve as an independent director of the company from February 2023. Serving status of special committees of the Board of Directors: Convener of the Audit Committee of the 8th Board of Directors.

In accordance with relevant regulations such as the "Measures for the Administration of Independent Directors of Listed Companies" and "Shenzhen Stock Exchange Self-Regulatory Guidelines for Listed Companies No. 1 - Standardized Operations of Main Board Listed Companies", I, as an independent director of the company, conducted a self-examination on my own independence. In 2025, I did not hold any position in the company other than as an independent director, nor did I hold any position in the company's major shareholder company. There is no interest relationship with the company and major shareholders or other relationships that may hinder its independent and objective judgment. My appointment complies with the independence requirements stipulated in the "Administrative Measures for Independent Directors of Listed Companies" and other regulations, and there are no circumstances that affect independence.

2. Overview of duty performance in 2025

I actively participate in the company's board of directors and shareholders' meetings, carefully review relevant meeting materials, actively participate in the discussion of various proposals and put forward reasonable suggestions, and play an active role in the correct and scientific decision-making of the board of directors. In 2025, the convening and convening of the company's board of directors and shareholders' meeting complied with legal procedures, and relevant approval procedures were performed on major operating decision-making matters and other major matters.

(1) Attendance at meetings

1. Board meeting

The company held a total of 5 board meetings this year. I was supposed to attend 5 times but actually attended 5 times. Among them, 2 times were attended on site and 3 times were attended by communication. Other independent directors were not authorized to attend the meeting or were absent. I voted in favor of all the resolutions considered at the board meetings I attended.

2. Shareholders’ meeting

In 2025, the company held three shareholders' meetings, namely the 2024 annual shareholders' meeting, the first extraordinary shareholders' meeting in 2025, and the second extraordinary shareholders' meeting in 2025. I was present at all events.

3. Professional committee meeting

In 2025, the Audit Committee of the Company's Board of Directors held a total of 6 meetings. I was supposed to attend 6 meetings and actually attended 6 meetings. As a member of the company's audit committee, after taking office, I convened and participated in the audit committee meetings of the board of directors, actively performed my duties and expressed my opinions in accordance with the relevant provisions of the Company Law, Securities Law, Code of Governance of Listed Companies, Articles of Association and the Rules of Procedure of Special Committees. The company conducted careful research and discussion on the company’s regular financial accounting reports, internal control evaluation reports, environmental, social and corporate governance reports, appointment of financial and internal control audit institutions, changes in accounting estimates, etc., and communicated and exchanged with the annual report audit work plan, audit strategies and important audit matters with the annual audit certified public accountants, timely grasped the progress of the annual report audit work, carefully reviewed the financial statements prepared by the company and the audit opinions issued by the audit agency, and gave full play to the professional functions and supervisory role of the audit committee.

4. Special meeting of independent directors

The company has revised the "Independent Director System" in accordance with the "Company Law of the People's Republic of China", "Administrative Measures for Independent Directors of Listed Companies" and other laws and regulations. On April 28, 2025, the company held the first special meeting of independent directors of the eighth board of directors in 2025, and reviewed and approved the "Proposal on Estimated Daily Related Transactions in 2025" and "Proposal on Provision for Asset Impairment in 2024".

(2) Exercise of powers of independent directors

As an independent director of the company, I conscientiously perform my responsibilities as an independent director with a dedicated and diligent attitude. In the process of daily performance of duties, he actively participated in all board meetings and shareholders' meetings held by the company, carefully reviewed meeting proposals and related materials, actively participated in the discussion of various proposals and put forward reasonable suggestions, fully expressed his opinions, and played an active role in the correct and scientific decision-making of the board of directors. I carefully read all types of documents submitted by the company, and continue to pay attention to the company's daily operating conditions, various public media reports on the company and major events, as well as the impact of industry policy changes on the company. I actively understand the company's daily operating status and possible operating risks, and conduct in-depth exchanges and discussions with the company's management. Provide prudent and objective opinions on major matters that may affect the interests of the company's shareholders, especially small and medium-sized investors, such as the storage and use of raised funds, internal control evaluation reports, profit distribution plans, appointment of financial and internal control audit institutions, changes in accounting estimates, etc., to promote the board of directors' decision-making to be in line with the overall interests of the company, and to effectively protect the interests of small and medium-sized shareholders.

In 2025, I did not exercise the special powers of an independent director: (1) I did not propose to independently hire an intermediary agency to audit, consult or verify specific matters of the company; (2) I did not propose to the board of directors to convene an extraordinary general meeting of shareholders; (3) I did not propose to convene a board of directors meeting.

(3) Communication with internal audit institutions and accounting firms

As the convener of the company's audit committee, I convene and participate in meetings of the audit committee of the board of directors, actively perform my duties and express my opinions in accordance with the relevant provisions of the Company Law, Securities Law, Code of Governance of Listed Companies, Articles of Association and the Rules of Procedure of the Audit Committee. We carefully studied and discussed the internal audit reports and work plans submitted by the company's audit department, as well as the company's regular financial accounting reports, internal control evaluation reports, environmental, social and corporate governance reports, the appointment of financial and internal control audit institutions, etc., and actively communicated with the accounting firm on the annual report audit work plan, audit strategies and important audit matters, paid attention to the audit process, supervised the audit progress, paid close attention to the progress of the annual report audit work in a timely manner, ensured that the audit work was timely, accurate, objective and fair, and gave full play to the professional functions and supervisory role of the audit committee.

(4) Communication with small and medium-sized shareholders and protection of investors’ rights and interests

I communicate with small and medium-sized shareholders by participating in shareholders' meetings and other methods, listen to the opinions and suggestions of small and medium-sized shareholders at the shareholders' meeting, actively use professional knowledge to promote the scientific decision-making of the company's board of directors, pay attention to the implementation of board resolutions, the construction and implementation of internal control systems and the progress of major events, promote the improvement of the company's management level, and safeguard the interests of the company and small and medium-sized shareholders.

I continue to pay attention to the company's information disclosure work, and urge the company to strictly fulfill its information disclosure obligations in accordance with the "Measures for the Administration of Information Disclosure of Listed Companies", "Shenzhen Stock Exchange Stock Listing Rules" and other laws and regulations to ensure that the disclosed information is true, accurate and complete, and that the information disclosed is timely and fair. At the same time, pay close attention to media reports on the company and inquire with the company and relevant personnel when necessary.

I carefully study various regulations, rules and policies issued by regulatory agencies, exchanges, associations, etc., actively participate in training, deepen my knowledge and understanding of relevant laws and regulations, master new regulations in a timely manner, improve the awareness of protecting the legitimate rights and interests of investors, and ensure that the company and its own behavior comply with regulatory requirements.

(5) On-site work at listed companies

During the reporting period, I conducted on-site inspections of the company and its subsidiaries by participating in the board of directors and shareholders' meetings to fully understand the company's production and operation, the subsidiaries' Chinese herbal medicine breeding business, financial management and the implementation of internal controls. I worked on-site at the listed company for 18 days, in compliance with relevant regulations. At the same time, he maintains close contact with other directors, management and staff of relevant departments of the company through phone calls, emails, etc., keeps informed of the progress of the company's major events, grasps the company's production and operation dynamics, always pays attention to the impact of external environment and market changes on the company, actively provides suggestions for the company's operation and management, and effectively performs the duties of independent directors.

(6) Listed companies’ cooperation with independent directors

During the reporting period, the company's directors, senior managers and relevant personnel actively cooperated with me in effectively exercising my powers, fully supported me in performing my duties as an independent director, explained the company's production and operations to me in detail, answered questions in a timely manner, submitted detailed documents and information, and organized on-site inspections, etc., so that I could make independent and fair judgments based on relevant materials and information. The company has provided me with the necessary working conditions and personnel support to perform my duties, and designated specialized departments and personnel to assist me in performing my duties. The company supports me to participate in relevant training for independent directors, learn the latest regulatory policies and documents, and improve my ability to proactively perform my duties.

3. Status of key matters for performance of duties in 2025

During the performance of my duties in 2025, I focused on the related transactions that the company should disclose, financial information disclosed in financial accounting reports and periodic reports, internal control evaluation reports, employment of accounting firms, etc., made independent and clear judgments on whether relevant matters were legal and compliant, and supervised whether there were potential major conflicts of interest between the company and its controlling shareholders, actual controllers, directors, and senior managers. The specific situation is as follows:

(1) Related transactions that should be disclosed

During the reporting period, the company had no major related transactions related to daily operations. During the reporting period, the company and its subsidiaries had small related transactions based on actual operating needs. The transaction price was determined according to the market price and was fairly priced. It followed the principles of openness, fairness and justice, and there was no harm to the legitimate interests of the company and shareholders.

The company held the 15th meeting of the eighth board of directors on April 28, 2025. The "Proposal on Estimated Daily Related Transactions in 2025" was reviewed and approved when related directors Wu Xiangjun, Wu Rui, and Li Chenguang abstained from voting. On May 26, 2025, the proposal was reviewed and approved by the company's 2024 annual shareholders' meeting.

The procedures for the company's board of directors to review and vote on related transactions are legal and valid, and related directors have abstained from voting. The related transaction contracts signed between the company and related parties are based on the principles of equality, voluntariness, compensation, and fairness, and do not violate the principles of openness, fairness, and impartiality, and do not harm the interests of the company and shareholders. They are in compliance with the relevant regulations of the China Securities Regulatory Commission and the Shenzhen Stock Exchange. I expressed an independent opinion that I agreed with.

(2) Disclosure of financial information and internal control evaluation reports in financial accounting reports and periodic reports

During the reporting period, the company strictly complied with the requirements of the "Company Law", "Securities Law", "Measures for the Administration of Information Disclosure of Listed Companies" and other relevant laws, regulations and normative documents, and prepared and disclosed the "2024 Annual Report", "2025 First Quarter Report", "2025 Semi-annual Report" and "2025 Semi-annual Report" on time. "Third Quarter Report of the Year" accurately disclosed the financial data and important matters during the corresponding reporting period. The financial status, operating results and cash flows reflected in it were true, accurate and complete, fully revealing the company's operating conditions to investors. The above-mentioned reports have been reviewed and approved by the company's board of directors and board of supervisors. The company's directors, supervisors and senior managers have all signed written confirmation opinions on the company's regular reports.

During the reporting period, the company evaluated the effectiveness of the company and its subsidiaries' internal controls in 2024 in accordance with the provisions of the "Basic Standards for Enterprise Internal Control" and its supporting guidelines issued by the Ministry of Finance and other internal control regulatory requirements, combined with the company's internal control system and evaluation methods, and formed the "2024 Internal Control Evaluation Report". On April 28, 2025, the 15th meeting of the company's eighth board of directors reviewed and approved the "2024 Internal Control Evaluation Report". The company has established a relatively sound and complete internal control system. Various internal control systems comply with the relevant national laws, regulations and regulatory requirements, as well as the needs of the company's current production and operation conditions, and have been effectively implemented. The "2024 Internal Control Evaluation Report" truly and objectively reflects the construction and operation of the company's internal controls.

(3) Employment of accounting firms

The company held the 15th meeting of the eighth board of directors on April 28, 2025, and reviewed and approved the "Proposal on the Appointment of Financial and Internal Control Audit Institutions for 2025". The proposal was later reviewed and approved by the 2024 Annual General Meeting of Shareholders held on May 26, 2025. The company appointed Zhongqin Wanxin Accounting Firm (Special General Partnership) as the company's financial and internal control audit agency for 2025 for a period of one year. Zhongqin Wanxin is qualified to work in the securities industry and has the experience and ability to provide audit services for listed companies. It can follow independent, objective and fair professional standards and meet the company's 2025 financial audit and internal control audit requirements. The company's decision-making process for appointing Zhongqin Wanxin Accounting Firm (Special General Partnership) as the company's financial and internal control audit agency for 2025 complies with relevant regulations such as the Company Law of the People's Republic of China, the Securities Law of the People's Republic of China, the Stock Listing Rules of the Shenzhen Stock Exchange and the Articles of Association, and does not harm the interests of the company and all shareholders.

As of the date of this report, Zhongqin Wanxin Accounting Firm (Special General Partnership) has completed the audit of the company's 2025 financial report and internal control audit, and issued relevant audit reports.

(4) Correction of accounting policies, accounting estimates or major accounting errors due to reasons other than changes in accounting standards

In December 2025, the sixth meeting of 2025 of the Audit Committee of the eighth board of directors of the company reviewed and approved the "Proposal on Changes in Accounting Estimates." This change in accounting estimates can reflect the company's financial status and operating results more objectively and truly, and can provide users of financial reports with more reliable, comprehensive and accurate financial information and data. According to the "Accounting Standards for Business Enterprises No. 28 - Accounting Policies, Changes in Accounting Estimates and Error Corrections", this change in accounting estimates adopts the prospective application method for accounting treatment. There is no need to make retrospective adjustments to the disclosed financial reports, and it will not have an impact on the company's financial status and operating results in previous years. There will be no harm to the interests of the company and all shareholders, especially small and medium-sized shareholders.

4. Overall evaluation and suggestions

In 2025, I will strictly comply with laws and regulations such as the Company Law, the Code of Governance of Listed Companies, the Measures for the Administration of Independent Directors of Listed Companies, and the Articles of Association. In a serious, diligent and prudent work spirit, I will faithfully and diligently perform my obligations, review various proposals of the company, give full play to my professional and independent role, actively assume the duties of a member of the Audit Committee of the Board of Directors, actively participate in company decision-making, fully communicate on relevant issues, promote the healthy development and standardized operation of the company, and effectively safeguard the legitimate rights and interests of the company and shareholders.

In the future, I will continue to conscientiously perform my duties as an independent director in a spirit of seriousness, diligence and prudence, in accordance with relevant laws, regulations and the provisions and requirements of the Articles of Association, and actively play the role of an independent director. At the same time, we will conduct further on-site visits and investigations to gain an in-depth understanding of the company's operations, strengthen communication with the company's directors and senior managers, use our professional knowledge and experience to provide more constructive suggestions for the company's development, ensure the scientific, objective, fair and independent operation of the company's board of directors, promote the company's continuous improvement of governance structure, improve the company's operational level, and safeguard the company's overall interests and the legitimate rights and interests of all shareholders.

Shijiazhuang Yiling Pharmaceutical Co., Ltd.

Independent Director: Chen Gang

April 27, 2026