Yunnan Baiyao Group Co. Ltd.Interim Report 2026
August 2026Section I Important Notes Contents and Definitions
The Board of Directors (the “Board”) the directors and the senior management of the
Company confirm the truthfulness accuracy and completeness of the contents of this Interim
Report and there are no misrepresentation misleading statement or material omission from
this Interim Report and they accept joint and several responsibilities for the truthfulness
accuracy and completeness of the contents herein.Mr. Zhang Wenxue the person in charge of the Company Mr. Ma Jia the accounting
officer and Ms. Xu Jing the head of accounting center (accounting supervisor) hereby declare
that they warrant the truthfulness accuracy and completeness of the financial statements in
this Interim Report.All directors of the Company attended the Board meeting in respect of considering and
approving this Interim Report.The Company kindly requests investors to read through this Interim Report and pay
special attention to “X. Risks and Countermeasures” in the “Section III ManagementDiscussion and Analysis.” Investors are advised to pay attention to investment risks.The profit distribution plan considered and approved by the Board of Directors is as
follows: Based on a total of 1784262603 shares a cash dividend of RMB 10.38 (tax inclusive)
for every 10 shares will be paid to all shareholders with no bonus shares issued (tax inclusive)
and no capital reserve to increase the share capital.This report has been prepared in Chinese and translated into English. Should there be any
discrepancies or misunderstandings between the two versions the Chinese version shall prevail.
Contents
Section I Important Notes Contents and Definitions... 1
Section II Company Profile and Key Financial Indic... 5
Section III Management Discussion and Analysis ...... 9
Section IV Corporate Governance Environment and So.. 48
Section V Significant Events ....................... 55
Section VI Changes in Shareholdings and Particular.. 74
Section VII Bonds .................................. 80
Section VIII Financial Statements .................. 81
Documents Available for Inspection
(I) Financial statements affixed with the signatures and stamps of the person in
charge of the Company the accounting officer and the general manager of Financial
Management Department;
(II) Originals of all the Company’s documents and announcements publicly
disclosed on the Securities Times Shanghai Securities News China Securities Journal
and www.cninfo.com.cn during the reporting period;
(III) Other related materials.
Definitions
Term Definitions
CSRC China Securities Regulatory Commission
SZSE Shenzhen Stock Exchange
Hong Kong Stock Exchange The Stock Exchange of Hong Kong Limited
State-owned Assets Supervision and Administration Commission of Yunnan
SASAC of Yunnan Province
Provincial People’s Government
The Company Yunnan Baiyao or Yunnan
Yunnan Baiyao Group Co. Ltd.Baiyao Group
New Huadu New Huadu Industrial Group Co. Ltd.State-owned Equity Management Company Yunnan State-owned Equity Operation Management Co. Ltd.Yunnan Hehe Yunnan Hehe (Group) Co. Ltd.Baiyao Holdings Yunnan Baiyao Holdings Co. Ltd.YNBY International YNBY International Limited
Shanghai Pharma Shanghai Pharmaceuticals Holding Co. Ltd.A transaction that Yunan Baiyao merged with Baiyao Holdings by issuing shares
Merger and overall listing to all shareholders of Baiyao Holdings including SASAC of Yunnan Province
New Huadu and Jiangsu Yuyue Science & Technology Development Co. Ltd.Health Products Company Yunnan Baiyao Group Health Products Co. Ltd.TCM Resources Company Yunnan Baiyao Group TCM Resources Co. Ltd.Yunnan Pharma Yunnan Pharmaceutical Co. Ltd.Yunhe Pharma Yunhe Pharmaceutical (Tianjin) Co. Ltd.NMPA National Medical Products Administration
FDA U.S. Food and Drug Administration
Juyaotang Anguo Juyaotang Pharmaceutical Co. Ltd.Reporting period The period from January 1 2026 to June 30 2026
Expressed in the Chinese currency of Renminbi expressed in tens of thousands
RMB RMB’0000 RMB’00000000 of Renminbi expressed in hundreds of millions of Renminbi
Section II Company Profile and Key Financial Indicators
I. Company Profile
Stock Abbreviation Yunnan Baiyao Stock Code 000538
Stock Abbreviation before Change
None
(if any)
Stock Exchange Shenzhen Stock Exchange
Company Name in Chinese 云南白药集团股份有限公司
Company Abbreviation in Chinese云南白药
(if any)
Company Name in English (if any) YUNNAN BAIYAO GROUP CO. LTD.Company Abbreviation in English
YUNNAN BAIYAO
(if any)
Legal Representative of the
Zhang Wenxue
Company
II. Contact Person and Contact Information
Secretary of the Board of Directors Representative of Securities Affairs
Name Qian Yinghui Li Mengjue
No. 3686 Yunnan Baiyao Street Chenggong District No. 3686 Yunnan Baiyao Street Chenggong
Contact Address
Kunming City Yunnan Province District Kunming City Yunnan Province
Tel 0871-66226106 0871-66226106
Fax 0871-66203531 0871-66203531
E-mail 000538dm@ynby.cn 000538@ynby.cn
III. Other Information
1. Contact information of the Company
Whether the Company’s registered address office address postal code website and e-mail address have changed during the reporting
period
□ Applicable □ Not applicable
There was no change in the Company’s registered address office address postal code website or e-mail address during the reporting
period. For more information please refer to the 2025 Annual Report.
2. Information disclosure and location
Whether the information disclosure and location have changed during the reporting period
□ Applicable □ Not applicable
There was no change in the stock exchange website media outlets and their websites where the Company disclosed the Interim Report
or the location where the Interim Report was prepared and placed during the reporting period. For more information please refer to the
2025 Annual Report.
3. Other information
Whether other information has changed during the reporting period
□ Applicable □ Not applicable
IV. Key Accounting Data and Financial Indicators
Whether the Company needs retroactive adjustment or restatement of accounting data in prior years or not
□Yes □ No
Increase/decrease during the
The same period of the reporting period compared
The reporting period
previous year with the same period of the
previous year
Operating revenue (RMB) 21884075971.15 21257102896.02 2.95%
Net profit attributable to shareholders of the
3701170618.67 3632911303.12 1.88%
listed company (RMB)
Net profit attributable to shareholders of the
listed company after deducting non- 3518415542.36 3460915449.48 1.66%
recurring profits and losses (RMB)
Net cash flows from operating activities
4106039368.33 3961187202.77 3.66%
(RMB)
Basic earnings per share (RMB/share) 2.07 2.04 1.47%
Diluted earnings per share (RMB/share) 2.07 2.04 1.47%
Weighted average ROE 9.04% 9.09% Down 0.05 percentage points
Increase/decrease at the end
End of the reporting of the reporting period
End of the previous year
period compared with the end of the
previous year
Total assets (RMB) 55145269649.47 54268581131.82 1.62%
Net assets attributable to shareholders of
40973152783.10 40044058844.44 2.32%
the listed company (RMB)
The lower of the Company’s net profits before and after deducting non-recurring profits and losses in the latest three accounting
years are all negative and the Company’s audit report for the previous year shows uncertainties in the Company’s ability to continue
as a going concern
□Yes □ No
During the reporting period the lower of the Company’s audited total profit net profit and net profit after deducting non-recurring
gains and losses was negative
□Yes □ No
Total share capital of the Company as of the trading day preceding disclosure:
Total share capital of the Company as of the trading day preceding
1784262603.00
disclosure (shares)
Fully diluted earnings per share calculated based on the latest share capital:
Preferred share dividend paid 0.00
Perpetual bond interest paid (RMB) 0.00
Fully diluted earnings per share calculated based on the latest share
2.0743
capital (RMB/share)
V. Differences in Accounting Data under Chinese Accounting Standards (CAS) and Overseas
Accounting Standards
1. Differences in the net profits and net assets in financial statements disclosed respectively under
International Financial Reporting Standards (IFRS) and CAS
□Applicable □Not applicable
During the reporting period there was no difference in net profits and net assets in financial statements disclosed respectively under
IFRS and CAS.
2. Differences in the net profit and net assets in financial statements disclosed respectively under overseas
accounting standards and CAS
□Applicable □Not applicable
During the reporting period there was no difference in the net profits and assets in financial statements disclosed respectively under
overseas accounting standards and CAS.VI. Non-recurring Profits and Losses and their Amounts
□Applicable □Not applicable
Unit: RMB
Item Amount Remarks
Profits and losses from disposal of non-current assets (including the write-off for the accrued
3357305.66
impairment of assets)
Government subsidies included in the current profits and losses (excluding the government
subsidies closely related to regular businesses of the Company in line with national policies and
55632035.55
received by a determined standard with a continuous impact on the Company’s profits and
losses)
Profits and losses from changes in fair value of financial assets and liabilities held for trading by
non-financial enterprises and from disposal of such financial assets and liabilities except for 129325396.89
effective hedging operations related to regular businesses of the Company
Profits and losses from entrusted investment or asset management 17162500.72
Reversal of impairment provision of accounts receivable subject to individual impairment test 764946.00
Non-operating revenue and expenses other than the above 8365551.93
Other profits and losses satisfying the definition of non-recurring profits and losses 2706934.78
Less: Amount affected by the income tax 34145671.34
Amount affected by minority interests (after tax) 413923.88
Total 182755076.31
Other profits and losses satisfying the definition of non-recurring profits and losses:
□Applicable □Not applicable
Other non-recurring profits and losses that meet the definition of non-recurring profits and losses mainly include other non-recurring
profits and losses such as interest on fixed deposits and value added tax credit.Note for the definition of non-recurring profits and losses set out in the No.1 Explanatory Announcement on Information
Disclosure for Companies Offering Their Securities to the Public - Non-recurring Profits and Losses as recurring profits and losses
□Applicable □Not applicable
The Company does not define any non-recurring profits and losses set out in the No.1 Explanatory Announcement on Information
Disclosure for Companies Offering Their Securities to the Public - Non-recurring Profits and Losses as recurring profits and losses.
Section III Management Discussion and Analysis
I. Principal business of the Company during the Reporting Period
(I) Overview
1. Industry landscape and development trends
(1) Steady growth in health-related demand: synergy between population aging and health-consumption
upgrade
In recent years population aging progression upgraded health awareness and lifestyle shifts constitute the key
drivers of sustained demand growth in the pharmaceutical and healthcare sector. First accelerated population aging
unlocks rigid health-related demand. In 2026 the share of China’s population aged 60 and above in the total
population maintains its upward trend. The elderly group sees rigid growth in demand for chronic?disease
management and health?preserving wellness services. Second the concept of proactive health is reshaping
consumption patterns. As of 2025 69.1% of the residents aged 7 and above in China exercised at least once a week
(Source: Bulletin on National Fitness Activity Survey). As of early April 2025 the number of people participating
in outdoor sports in China had surpassed 400 million (Source: The China Outdoor Sports Industry Development
Report (2024-2025)). The growing demand for sports has also driven up demand for related pharmaceutical and
healthcare products such as sports injury prevention and rehabilitation and pain management. Collectively these
factors have expanded market potential and created favorable conditions for the traditional Chinese medicine (TCM)
industry to leverage its inherent strengths.
(2) New cycle of TCM high-quality development: TCM industry restructuring amid closed?loop policies
In 2026 driven by policies the TCM industry continues to deepen its transition toward high?quality
development. Nevertheless an adjustment cycle marked by intertwined multiple pressures is still underway.On the one hand top-level policies have formed a closed-loop system for high-quality development. On
January 16 2026 the State Council promulgated the revised the Implementation Regulations of the Drug
Administration Law. As for the administrative regulations it formally establishes four accelerated
review?and?approval pathways for innovative drugs: breakthrough therapy procedure conditional approval priority
review and approval and special approval procedure which comprehensively removes institutional bottlenecks
hindering new drugs from clinical trials to marketing launch. On March 1 2026 the Special Provisions for the
Supervision and Administration of TCM Manufacturing officially took effect. These provisions place strong
emphasis on quality control across the supply chain at every stage and throughout the production process of TCM
materials; encourage the acceleration of modernization and upgrading in TCM production; and promote digital and
intelligent transformation to ensure the quality and safety of TCM from the source. On July 10 2026 the State
Council approved the 15th Five-Year Plan for the Revitalization and Development of TCM which serves as the
overarching blueprint for the development healthcare application scientific research and internationalization of
TCM industry over the next five years. It calls for multi-departmental collaboration to establish supporting policies
to ensure implementation charting a new course for the TCM industry chain including TCM materials Chinese
patent medicine TCM services and TCM innovation.On the other hand under the combined influence of multiple policies the TCM industry is shifting away from
the traditional path of scale?driven expansion toward a new stage of high?quality development centered on
“quality?oriented and efficacy?driven.” Amid an adjustment cycle for the transformation of growth drivers the
industry faces mounting pressure on revenue growth and profit realization leading to an overall slowdown in growth
rates. Meanwhile the industry is transitioning from fragmented competition toward centralized collaboration.Approvals and production capacities characterized by weak clinical evidence untraceable quality and low?level
duplication will be phased out at an accelerated pace and the trend of structural optimization and adjustment will
continue to deepen.
(3) The consumer market is characterized by “aggregate?volume pressure structural differentiation and a returnto rationality”
In the consumer goods market total retail sales of consumer goods reached RMB 24.87 trillion in the first half
of 2026 up 1.3% year on year. The growth rate retreated from that for the full?year 2025. Household consumption
willingness remains subdued and the consumer confidence index is yet to improve. (Sources: The National Bureau
of Statistics)Competition intensifies in the oral-care track with three major growth drivers in full swing: “rapid onlinegrowth enhanced product efficacy and channel restructuring.” First online channels register rapid growth. In the
first quarter of 2026 sales of oral care products on mainstream e-commerce platforms reached RMB 5.813 billion
representing a year-on-year increase of 13.8%. Second profound structural differentiation has emerged among
online channels. In the first quarter sales through Douyin accounted for 55% of the total e-commerce sales in the
oral care category with a year-on-year increase of 30.73% leading the growth rate. Growth in traditional shelf?based
e-commerce platforms posted slower growth with JD.com’s sales up 13.76% year-on-year and Tmall’s sales down
2.31% year-on-year. (Source: Moojing Market Intelligence) Third offline channels are undergoing shifts in sales
structure. The share of traditional hypermarkets and convenience stores is shrinking while emerging channels such
as warehouse membership stores snack specialty stores and discount stores are bucking the trend and growing
becoming new growth engines of offline sales. Fourth the demand for oral care is shifting toward precision and
functionality. Functional demands such as whitening gum care and anti?sensitivity stand out while
functional?oriented premium and children’s segments have become key drivers of growth.
2. Industry position
The Central Committee of the Communist Party of China (“CPC” or the “Party”) and the State Council attach
great importance to the development of TCM positioning the inheritance and innovation of TCM as an important
aspect of the socialist cause with Chinese characteristics in the new era. The report to the 20th CPC National
Congress has explicitly stated that we should “promote the inheritance and innovation of TCM.” The Yunnan
Provincial Committee of the CPC and the provincial government place great emphasis on the development of the
TCM materials industry positioning this industry as the key focus for developing agriculture of Yunnan plateau
characteristics and an important part of the growth of “resource-driven economy.” The Three-year Action Work Plan
for the High-quality Development of the TCM Industry in Yunnan Province (2025-2027) outlines the goal of building
industrial clusters with Yunnan Baiyao Group serving as the “chain leader” to expand and strengthen the TCM
materials industry.Yunnan Baiyao has always been committed to the inheritance and innovation of TCM continuously exploring
the intrinsic potential of traditional medicinal products and promoting the integration of TCM into modern life. The
Company continuously injects new vitality into its brand and products forming a product matrix with 40 categories
and 416 varieties. In the pharmaceutical products domain Yunnan Baiyao holds 567 drug approvals and 316 product
varieties including 222 types of Chinese patent medicines 43 of which are exclusive varieties. The Company started
with the century-old Yunnan Baiyao powder as its foundation and has gradually created a series of core
pharmaceutical products in the field of musculoskeletal and minor wound care covering all kinds of product forms
such as aerosols plasters tinctures and woundplast and has formed a competitive matrix of branded TCM in the
areas of cold and anti-inflammatory gastrointestinal digestion cardiovascular medicines and gynecological and
pediatric medicines. In the field of health products combining traditional Yunnan Baiyao products with oral care
products we have successfully created a group of oral care products with the flagship product of Yunnan Baiyao
Toothpaste and continuously researched developed and launched other functional oral?care products such as
whitening and anti?sensitive items. Based on the pharmaceutical science and technology and drawing on the essence
of natural plants we have successfully created the scalp health care brand “Yangyuanqing.” Leveraging its
successful development in pharmaceutical and health product sectors the Company has expanded its business
footprint into various domains including natural medicine TCM decoction pieces special medicines medical
devices personal care products and health supplements. This move enables the Company’s evolution from a TCM
manufacturing enterprise to a modern holistic wellness-oriented entity.Yunnan Baiyao’s full?industrial?chain layout strengths in authentic medicinal materials investment in
technological innovation and established brand reputation are highly aligned with the policy-guided market trends
in the current pharmaceutical and healthcare industry. First market demand closely matches the Company’s product
matrix. The demand for chronic?disease treatment and rehabilitation brought by population aging as well as the
rapidly?growing demand in the sports health sector directly resonates with Yunnan Baiyao’s core medicines
branded TCM and tonic products. Rising sports?related demand for injury repair and functional healthcare is highly
aligned with the Company’s Baiyao Aerosol and sports?protection product lines. Second we will advance our full-
industrial-chain layout extend upstream into high-quality TCM materials implement a “flagship product” strategy
in the midstream to deepen our focus on the pharmaceutical and health products industries and expand downstream
into retail pharmacies and online sales channels build an integrated “raw materials–production–sales” system and
further enhance the core competitiveness of our principal businesses. Third we will strengthen technological
innovation promote the redevelopment of traditional products and scientifically formulate short- medium- and
long-term innovation and R&D plans to ensure the sustainable commercialization of innovative achievements. At
the same time we will continuously explore innovations in distribution channels business models and application
scenarios to better meet the health management needs of various demographics and expand our market reach.In the first half of 2026 Yunnan Baiyao continued to maintain its market leadership in multiple business sectors.The Company’s core product Yunnan Baiyao Aerosol ranked first in retail market share among topical aerosols of
Chinese patent medicine used for joint and muscle pain in the musculoskeletal system. Yunnan Baiyao Woundplast
ranked first in retail market share in the topical hemostatic category. Yunnan Baiyao (Powder) ranked first in retail
market share among the full-body Chinese patent medicines for bone injuries in the musculoskeletal system (Source:
Sinohealth CHIS). Yunnan Baiyao Toothpaste continues to maintain the No.1 market share in the Chinese full-
channel market in the first half of 2026 (Source: Nielsen Retail Research Data). In 2026 Yunnan Baiyao was listed
on the Fortune China 500 List published by Fortune China for the 17th year ranking 366th; and was ranked 33rd
in the List of Top 50 Global Pharmaceutical Companies by Pharmaceutical Executive in US.
3. Product and business
The Company has four business groups namely Pharmaceutical Business Group Health Products Business
Group TCM Resources Business Group and Yunnan Pharmaceutical Co. Ltd (“Yunnan Pharma”). These business
groups serve as the foundation for the Company’s production and operations.Pharmaceutical Business Group focuses on the products of Yunnan Baiyao series (for example Yunnan Baiyao
Aerosol Yunnan Baiyao Plaster Yunnan Baiyao Woundplast etc) which are mainly used for hemostasis pain relief
swelling reduction and blood stasis elimination. The BG extends its offerings to include other branded TCMs with
natural characteristics covering areas such as tonifying Qi and blood treating colds and flu cardiovascular health
gynecology pediatrics and more. The BG is also actively involved in the development of Panax notoginseng-based
botanical supplements.Health Products Business Group with its core focus on the toothpaste category relies on its robust brand
infrastructure encompassing consumers products and scenarios. Embracing a user-centric approach the BG
actively explores new consumer scenarios and introduces innovative product categories particularly in the realms
of oral care and Yangyuanqing anti-hair loss solutions aiming to become the benchmark of the new concept of
Chinese healthy lifestyle.By making full use of the characteristic medicinal plant resources of Yunnan Province TCM Resources
Business Group while ensuring high quality high efficiency and low cost supply of raw materials for TCM has
built a digitalized industrial chain ecosystem for TCM materials with the model of “1+1+N” which consists of “1TCM production research and marketing integrated digital intelligence platform + 1 new specialized market forTCM materials at the origin + multi-dimensional synergies” so as to support “excellent TCM products” by
“excellent Yunnan TCM resources.”
Yunnan Pharma remains steadfast in pursuit of maintaining its leading market share among pharmaceutical
distribution companies in Yunnan Province. It has achieved full coverage in all 16 prefectures and cities of Yunnan
Province with its channels radiating across major retail chain pharmacies. It also assists governments and medical
institutions in building better management and service systems providing high-quality and modern pharmaceutical
supply chain service solutions for upstream and downstream customers.
4. Business model
(1) Transformation from a Chinese leading TCM enterprise to a “Chinese leading world-class” modern
pharmaceutical industry group
As a “chain leader” the Company is committed to promoting coordinated development across the industrial
chain intensively cultivating its core business segments expanding the leadership of advantageous products and
accelerating the construction of the industrial system. Centered on the principles of “strengthening principalbusinesses stabilizing growth and ensuring sustainability” we aim to create a comprehensive industrial chain for
Yunnan-branded TCM materials. We will focus on expanding the long-term potential of pharmaceuticals health
products TCM resources and pharmaceutical commerce thus achieving self-driven leapfrog development. In
addition based on the development strategy the Company will fully leverage the synergy and promotion between
Chinese and international markets and resources focusing on expanding the global footprint of TCM products
creating new growth drivers for health products and integrating international resources for the development of
innovative medicines so as to continuously drive our high-quality development and support the transformation of
Yunnan Baiyao from a Chinese leading TCM enterprise to a “Chinese leading world-class” modern pharmaceutical
industry group.
(2) Transformation from a development model centered on “endogenous growth” to “intensive and extensivegrowth” in parallel
The Company’s primary growth model is to pursue the internal efficiency improvement (“intensive growth”)
and the external market expansion (“extensive growth”) in parallel continuously optimizing its business portfolio.“Intensive growth” focuses on tapping potential and increasing efficiency to stabilize the fundamental base. It
concentrates on the development foundations of the pharmaceutical health and pharmaceutical commerce
industries. Following the approach of maximizing overall benefits it aims for systematic improvement and
optimization across the industrial chain value chain and production factors continuously promoting the high-
quality development of the Company’s principal businesses. “Extensive growth” emphasizes foresight and insight.Based on the overall strategic requirements and orientation we actively explore strategic mergers and acquisitions
strategic cooperation and other models to complement and strengthen the existing industrial segments and quickly
break through the existing growth bottlenecks. This dual approach enables the Company to establish a sound and
resilient industrial portfolio system and to achieve sustainable high-quality development.
(3) Transformation from training internal talents to the model of “training internal talents + introducing externaltalents”
The Company believes in the pivotal role of talent in driving its development. It has established a systematic
and scientific training system that offers diverse career development pathways fostering both specialized
knowledge and comprehensive skills with the mutual development of talents and the Company as the objective.The Company concentrates its superior resources and actively introduces high-level professionals from multiple
fields including drug R&D digital construction and strategic investment. It continues to enhance its business
capabilities in multiple dimensions such as innovative R&D lean operations and investment and mergers &
acquisitions. By nurturing internal talents actively recruiting external experts and fully utilizing its organizational
environment for talent development and market resources the Company strives to build a high-quality talent pool
aligned with its future growth requirements.
(4) Transformation from a traditional manufacturing enterprise to a smart enterprise based on digital operations
The Company continues to advance its transformation into a digital and intelligent enterprise using
digitalization as the core driver and adopting a customer-centric approach to optimize its business operations
thereby comprehensively enhancing B2B channel services and the B2C consumer experience. The Company
leverages digital technologies such as big data artificial intelligence and the Internet of Things to empower its core
businesses including TCM R&D full-industrial-chain management intelligent manufacturing and omni-channel
marketing thereby restructuring the end-to-end scenario-based customer service processes and integrating the end-
to-end chain spanning production sales and fulfillment. The Company continues to strengthen its unified data
foundation and improve data governance to support the implementation of the Leigong TCM Big Model. Leveraging
AI and RPA (Robotic Process Automation) digital employees the Company has established an intelligent decision-
making system to digitize operations quality control and risk management. A full-chain digital and intelligent
framework has now been established. Leveraging the “Digital Intelligence of Yunnan TCM” Platform the industry’s
first TCM lighthouse factory and a “one product one code” system the Company has built a closed-loop system
that enables efficient iteration across marketing R&D and production.
5. Business data overview
In the first half of 2026 the Company steadily implemented its strategic plan and continued to pursue its
development strategy of “growth efficiency and value creation.” As a result its performance maintained steady
growth and its operational resilience and long-term growth potential were further strengthened. Core flagship
products in the pharmaceuticals and health products segments continued to generate stable revenue and new
products were launched in an orderly manner. The Company remained committed to innovation and R&D as growth
drivers advancing both major TCM products and innovative drugs in parallel. Significant progress has been made
in the industrial chain deployment releasing the synergies across the supply chain of TCM materials.During the reporting period the Company generated operating revenue of RMB 21.884 billion representing a
year-on-year increase of 2.95%; net profit attributable to the parent company was RMB 3.701 billion up 1.88%
year on year; net profit attributable to the parent company after deducting non-recurring profits and losses was RMB
3.518 billion up 1.66% year on year reaching a record high for the same period; and basic earnings per share were
RMB 2.07 up 1.47% year on year. The Company’s business structure continued to optimize. The industrial revenue
amounted to RMB 8.772 billion accounting for 40.08% of the total operating revenue up 0.07 percentage points
year on year with the growth rate of industrial revenue reaching 3.15%. Since 2023 the proportion of industrial
revenue in total revenue has continued to increase. The Company’s investment income from Shanghai Pharma for
the current period was affected by fluctuations in one-time extraordinary gains and losses resulting in a year-on-
year decrease of RMB 169 million. Excluding this impact the Company’s net profit attributable to the parent
company for the first half of 2026 increased by 8.33% year on year while net profit attributable to the parent
company for the second quarter rose by 13.18% year on year.In terms of growth quality the Company’s net operating cash flow for the reporting period was RMB 4.106
billion representing a year-on-year increase of 3.66%; the weighted average return on equity was 9.04%; selling
expenses decreased by 2.62% year on year and administrative expenses decreased by 9.88% year on year. During
the reporting period R&D investment totaled RMB 217 million representing a significant year-on-year increase of
27.13% and the Company’s R&D capabilities continued to improve. The Company continued to maintain a healthy
asset structure. At the end of the reporting period the Company had total assets of RMB 55.145 billion net assets
attributable to the shareholders of the listed company amounted to RMB 40.973 billion the asset-liability ratio was
25.56% and the cash and bank balance stood at RMB 9.57 billion.
(II) Review of the main work and prospects
1. Party building as the driving force behind high-quality development
Under the leadership of the Yunnan Provincial Committee of the CPC and the provincial government as well
as the Party Committee of the Provincial State-owned Assets Supervision and Administration Commission the
Company’s Party Committee has unwaveringly implemented the requirements of the “Two Consistencies”
resolutely and decisively ensuring that the decisions and directives of the Central Committee of the CPC as well as
the requirements of the Provincial Party Committee and the provincial government are fully and effectively carried
out at Baiyao. Actively aligning with the “Healthy China” initiative and Yunnan Province’s “3815” strategicdevelopment goals based on the overarching principle of synergistically advancing “growth efficiency and valuecreation” while focusing on a development approach that is “profitable high-quality and sustainable” we will
deepen Party-building leadership promote integration and empowerment and drive innovation to enhance quality
striving to transform our political and organizational strengths into competitive advantages that propel the
Company’s high-quality development and continuously improve the quality efficiency and core competitiveness
of the Company.
2. Promoting improvements in the quality and efficiency of decision-making through scientific
governance
During the reporting period the Company focused on scientific governance to systematically improve the
quality and efficiency of decision-making. We completed the appointment of management clarified the division of
responsibilities and strengthened implementation; optimized the organizational structure with the Board of
Directors reviewing and approving the 2026 Corporate Organizational Structure Plan to provide organizational
support for the implementation of the strategic plan. We systematically refined the decision-making mechanism for
“major issues significant projects important appointments and large-scale expenditures” clarified the boundaries
of authority and responsibility among various governance bodies and further improved corporate governancemechanisms. This will enable the Party Committee to “set the direction oversee the overall situation and ensureimplementation” the Board of Directors to “formulate strategies make decisions and mitigate risks” and the
executive management to “plan operations ensure implementation and strengthen management” thereby fostering
a clearer and more efficient collaborative relationship among the three.
3. Maintaining strategic resolve to ensure efficient execution
During the reporting period the Company remained focused on its strategic direction maintained strategic
resolve closely followed the guidelines of the “15th Five-Year Plan” iteratively updated its “15th Five-Year Plan”
strategy and resolutely advanced the development of the century-old Baiyao to new heights. In addition the
Company was firmly committed to implementing its strategy with a comprehensive focus on decoding and
executing it. Each business unit aligned with the Group’s overall direction systematically broke down objectives
and assigned tasks at every level to ensure the strategy is implemented efficiently. First we focused on our products
continued to advance the “flagship product” strategy and built a product system characterized by “flagship productsleading the way mid-range products providing support and basic products laying a solid foundation.” Second we
focused on our distribution channels strengthening our ability to manage them with precision and based on the
differing customer needs across online and offline channels carefully designed product matrix tailored to those
needs streamlined distribution channels and allocated resources efficiently so as to improve channel operational
efficiency. Third we focused on allocating resources including human resources capital budgets and incentives
to the Company’s strategic direction key industries and key products thereby continuously improving the
efficiency of our investments.
4. Focusing on our principal businesses to consolidate our foundations and explore new avenues;
achieving breakthroughs across multiple fronts with our “flagship product” matrix; and promoting
coordinated development across the industrial chain
(1) Pharmaceutical Business Group
During the reporting period the Pharmaceutical Business Group generated revenue of RMB 4.93 billion. First
Yunnan Baiyao’s core product lines continued to post steady growth with sales revenue from Yunnan Baiyao
Aerosol exceeding RMB 1.5 billion and sales revenue from Yunnan Baiyao plaster exceeding RMB 700 million.Second the “flagship products” of the second curve continued to achieve breakthroughs. Sales revenue for the
flagship product Qixuekang Oral Liquid continued to grow rapidly reaching RMB 339 million an increase of
approximately 68.1% year on year. Third other brands of TCM products achieved impressive results. Sales revenue
for Pudilan Anti-Inflammatory Tablets exceeded RMB 100 million representing a year-on-year increase of 27.8%;
and sales revenue for Huoxiang Zhengqi Oral Liquid surpassed RMB 50 million representing a year-on-year
increase of 60.2%.In the first half of 2026 the Pharmaceutical Business Group guided by its strategy remained committed to
driving performance growth through flagship products by strengthening its brand presence and enhancing products
through clinical research. We continued to upgrade the “Yunding Jingwei” ecosystem collaboration model to foster
mutual progress with partners at all levels achieving sustained growth for products in the traumatology pain
management field despite a high baseline. Meanwhile the Pharmaceutical Business Group continued to expand the
promotion of key products in high-potential therapeutic areas including cardiovascular and cerebrovascular
respiratory gastrointestinal and urological thereby increasing the market share of its second-tier flagship products.First we continued to focus on the clinical value of our products actively conducting clinical research and post-
marketing re-evaluation studies to strengthen the medical foundation for key products such as Yunnan Baiyao
Capsules Yunnan Baiyao Aerosol Yunnan Baiyao Plaster Qixuekang Oral Liquid Gongxuening Capsules and
Tongshu Capsules. We have expanded indication studies opening up broader application scenarios and maintaining
growth in our “fundamental base” of the pharmaceutical business. Second we continued to upgrade the “YundingJingwei” ecosystem cooperation model. By leveraging the direct data connection system we established a
streamlined efficient direct-supply model through tier-one distributors enabling point-to-point delivery of products
from production to the point of sale. This will allow for more effective management of the “brand+channel+service”
trinity within the ecosystem while simultaneously strengthening traceability management and sales promotion
services to set a benchmark for channel management in the pharmaceutical industry. Third we actively expanded
our online market and used online platforms as channels for brand and content promotion building a comprehensive
coordinated marketing matrix that integrates both on-site and off-site efforts. This will not only drive sales growth
but also strengthen Yunnan Baiyao’s brand awareness and market competitiveness in the on-demand health
consumption sector. Fourth we fully leveraged the strengths of our field sales teams to organize and implement
large-scale systematic “mass mobilization” campaigns tailored to project needs coordinating personnel across
provinces and regions and directly driving sales growth. Fifth we implemented a scenario-based specialized and
youth-oriented content marketing system. Focusing on scenarios such as “traumatology pain” “workout partners”
“nourishing the spleen during the long summer” and “Qi and blood health” we leveraged major IP projects and
utilized various platforms to conduct matrix-style content promotion. Through omni-channel integrated marketing
that deeply integrates brand building effectiveness and sales we have driven sales growth and rejuvenated the
brand image.Looking ahead the Pharmaceutical Business Group will continue to implement the “1+4+N” industry portfolio
and development strategy. Centered on the “1” core area - pain management we will continuously enhance the
clinical value of our products and expand our market share in the healthcare channel through specialized research
initiatives while driving steady growth in the retail channel through professional brand management. At the same
time we will identify high-potential high-quality and high-value products in the pain management sector to
supplement our portfolio and refine our product matrix. Focusing on the “4” key breeding areas - cardiovascular
and cerebrovascular respiratory gastrointestinal and urological we will concentrate on promising products and
leverage our supply chain and channel strengths to cultivate a series of flagship products that will form a second
growth curve. We will also continue to incubate and explore multiple (“N”) promising therapeutic areas such as
oncology autoimmune diseases and gynecology to meet future consumer demand and drive sustained healthy
business growth.
(2) Health Products Business Group
During the reporting period the Health Products Business Group generated revenue of RMB 3.454 billion. In
the oral care sector Yunnan Baiyao toothpaste maintained its position as the top-ranked brand in terms of omni-
channel market share in China during the first half of 2026 (Source: Nielsen Retail Research Data). While continuing
to consolidate the competitive edge of Yunnan Baiyao Toothpaste the Company has actively expanded into new
market segments with remarkable results. In the first half of 2026 sales of sensitivity-relief toothpaste reached RMB
242 million and sales of whitening toothpaste reached RMB 208 million. Sales of these two new toothpaste
categories have already significantly exceeded the total sales for the previous year. In the hair loss prevention and
care sector backed by a special cosmetic license and a national invention patent Yangyuanqing hair care products
generated sales revenue of RMB 254 million representing a year-on-year increase of nearly 17%. During the 2026
“618” shopping festival Yangyuanqing retained its position as the top Chinese anti-hair loss shampoo brand on
Tmall (Source: shangzhizhen.com). Faced with the challenge of sluggish growth in traditional offline channels the
Company while maintaining its competitive edge in those channels implemented a comprehensive strategy across
all channels. Through scenario-based marketing educational content promoting product benefits and integrated
short-video and live-streaming campaigns to drive conversions we achieved a significant year-on-year increase of
21% in online sales for the health products segment effectively fostering steady growth in that segment. In addition
driven by the optimization of the Company’s product matrix and improvements in operational efficiency the
profitability of the Company’s health products business continued to rise with net profit in this segment reaching a
new high for the same period since 2023.In the first half of 2026 we focused on deepening our presence in functional segments in the oral care sector
maintaining a stable foundation for the gum care category as a core functional segment driving expansion into new
categories through professional R&D taking into account the varying oral health needs of different demographics
and engaging in continuous innovation centering on areas such as gum care sensitivity relief whitening and
children’s care precisely identifying and meeting consumers’ diverse and niche oral care needs enriching the
product matrix and opening up new avenues for category growth. The sensitivity-relief toothpaste incorporates
patented micron-sized hydroxyapatite and is professionally formulated with sensitivity-relief ingredients to provide
specialized care for people with sensitive teeth. Whitening toothpaste features the proprietary 3S Dual-Action
Whitening Technology which fights stains whitens teeth and repairs enamel. Children’s toothpaste utilizes yolk
immunoglobulin-based biological cavity prevention technology and “Shu’anfu” cavity prevention technology to
effectively reduce tooth decay in children. In the hair care and anti-hair loss category the Yangyuanqing product
line has achieved sustained growth driven by digital retail. For existing products the brand continues to deepen
research and development into the application of Yunnan’s efficacious botanical ingredients driving iterative
upgrades to anti-hair loss formulations efficacy and fragrances. In terms of new products the brand has launched
the “Anti-Hair Loss+” Scalp Health Management Series which precisely addresses diverse scalp care needs such
as oil control strength and resilience and volume further enriching the product matrix.Looking ahead the Health Products Business Group will continue to expand its existing customer base and
strengthen its product categories to establish a sustainable growth model. To expand the existing customer base we
will fully tap into the potential of our current products and users using scenario-based operations and product
reinvention to boost repeat purchases and customer loyalty. To develop new product categories we will focus on
anti-allergy skin-brightening children’s and hair and body care products to build a technology-driven second
growth curve. The Health Products Business Group will focus on its core development priorities continuously refine
its development strategies fully tap into the potential of its products and markets foster sustainable growth
momentum and drive high-quality development across the category.
(3) TCM Resources Business Group
During the reporting period the TCM Resources Business Group achieved external revenue of RMB 744
million. The TCM Resources Business Group earnestly fulfilled its responsibilities as the “chain leader” with an
aim to build a TCM materials industry cluster and drive coordinated development across the supply chain. We
continued to perform our obligations in the Yunyao Enterprise Alliance and the Digital Intelligence of Yunnan TCM
Platform Testing Alliance successfully exploring and forming a distinctive Yunnan-style “one product one chain”
development path for the TCM materials industry. The TCM Resources Business Group has stabilized its core
revenue streams and through the integrated “Large-scale Procurement” management platform has significantly
reduced procurement and production costs.In the first half of 2026 the business units within the TCM Resources Business Group worked together in a
coordinated effort. First we have developed the seed industry from a high starting point by implementing a targeted
R&D and commercialization model of “1 variety + 1 expert team + 3-5 cooperative bases.” We have systematically
formulated 39 industry standards including 33 standards for seeds and seedlings of 11 key varieties as well as six
standards such as the Procedures for the Construction and Evaluation of High-Quality Seed Propagation Bases for
TCM Materials (Non-Forest Tree Species). We have fully launched the “Yunyao Seed Valley” strategy and
accelerated the construction of key seed source projects including the Pingbian Virus-Free Ginger Tissue Culture
Plant the Wenshan Panax notoginseng Seed Source Base and the Lijiang High-Altitude Seed Source Base thereby
laying the groundwork for a modern seed industry system that spans from germplasm evaluation and elite variety
selection to standardized propagation. Second we have promoted high-standard cultivation by shifting cultivation
management from “experience-based judgment” to “data-driven decision-making.” We added more than 19000 mu
of GAP-certified cultivation areas and conducted six cultivation training sessions reaching nearly 1000 participants
thereby demonstrating and driving the overall upgrading of TCM materials cultivation across Yunnan. During the
harvest season of Carthamus tinctorius more than 700 metric tons were collected and stored from demonstrationplanting areas benefiting over 10000 farming households and reinforcing the quality and stable supply of “excellentYunnan TCM resources.” Third we advanced high-level processing. We continued to advance the “One Product
One Chain” model establishing 8 standardized origin warehouses in major medicinal materials production areas to
achieve significant improvements in product standardization and quality consistency. We leveraged the integration
of data from the “Digital Intelligence of Yunnan TCM” platform and the warehouse management system to enhance
inventory turnover and order fulfillment speed and reduced overall operating costs through the use of energy-
efficient equipment control of processing losses and the development of a collaborative processing network. Fourth
we developed high-level markets through “Digital Intelligence of Yunnan TCM” our independently developed
“1+1+N” one-stop platform for direct supply of TCM materials from their places of origin which is designed to
achieve “optimal costs at the source” and “consistent high quality.” As of the end of August 2026 the platform’s
cumulative transaction volume had exceeded RMB 4.2 billion with over 90000 farmers registered online.Leveraging the synergies between origin warehouses in Yunnan’s authentic TCM production regions and
distribution warehouses in markets such as Bozhou Anhui and Yulin Guangxi we continue to build a
comprehensive “origin-to-market” marketing system. Fifth we have taken a strategic approach to brand building
by establishing “Rapid Testing Stations” and developing the “Yunjian Bencao” brand. We formulated 26 corporate
standards for TCM materials and decoction pieces two of which were ranked first on the provincial “leader” list.We led the revision of Pharmacopoeia standards for Panax notoginseng and Atractylodes lancea released three
group standards for Yunnan Paris polyphylla seeds on-site processing and production environment co-established
two provincial-level key laboratories and developed multiple ready-to-eat decoction pieces to diversify our product
matrix and developed a range of high-value-added foods and raw materials including ginger oil Carthamus
tinctorius extract and Dendrobium catenatum pulp to drive new product development. We obtained one invention
patent for Carthamus tinctorius extract and organized the formulation of 15 standards for the Dendrobium
catenatum series. Sixth breakthroughs were achieved in cross-border business with the first-ever exports of the
medicinal materials Dipsacus asperoides and Gentiana macrophylla. Exports of eucalyptus oil opened up
opportunities for cooperation in the Southeast Asian fragrance market and the brand’s influence was significantly
enhanced. Seventh steady progress has been made in other business areas. The natural plant extracts business is
accelerating its transformation. Breakthroughs have been achieved in projects such as flavorings and co-branded
products and the flavor and fragrance production platform project has been approved.Looking ahead the TCM Resources Business Group will continue to undertake the strategic positioning and
responsibility of Yunnan Baiyao Group as the “chain leader” for the high-quality development of the TCM industry
in Yunnan Province and tap into Yunnan’s inherent advantages in TCM resources. In terms of branded herbal
medicines we will leverage Yunyao resources to strengthen the foundation of the Yunyao supply chain. With regard
to Digital Intelligence of Yunnan TCM we will create new business models and build new service platforms. In the
natural plant extracts sector we will adjust our business operations to fully empower our products through a
combination of technology and branding. Through the coordinated advancement of these businesses we will help
transform Yunnan’s natural endowment of TCM materials into a competitive industrial advantage thereby achieving
the strategic goal of supporting “excellent TCM products” by “excellent Yunnan TCM resources” contributing to
the industry’s in-depth development.
(4) Yunnan Pharmaceutical Co. Ltd (“Yunnan Pharma”)
During the reporting period Yunnan Pharma realized revenue of RMB 12.289 billion. At the product level the
expansion of the non-pharmaceutical distribution business has begun to show results with sales up 23.6% year-on-
year. Under the “hospital-adjacent store” model specialized pharmacies handling new and specialty drugs which
actively capture prescriptions diverted from hospitals maintained strong growth with sales up 36.1% year-on-year.In the first half of 2026 faced with ongoing policy adjustments in the pharmaceutical industry and profound
changes in the macroeconomic market environment Yunnan Pharma fully implemented its “Regaining Growth”strategy centering on “consolidating and improving existing business while driving innovation to expand newgrowth areas.” By deepening supply chain collaboration optimizing its business structure and strengthening digital
and intelligent operations we have effectively enhanced our overall resilience and ability to adapt to the changing
environment. First we optimized our business structure based on the principle of seeking progress while
maintaining stability. The Company continued to consolidate its core business of pharmaceutical sales in the tiered
healthcare market steadily driving the recovery and rebound of sales in the commercial market segment and
achieving significant results in expanding its in-hospital non-pharmaceutical distribution business. At the same time
the Company deeply engaged in the primary markets in prefectures and cities continuously expanding its presencein primary healthcare facilities and third-party retail outlets. In the non-hospital market we leveraged our “SpecialtyPharmacy for New and Rare Drugs” and the “Yunzhaoyao” online platform to achieve dual improvements in sales
and service efficiency. We have also piloted the use of drones to deliver emergency medical supplies to key hospitals
within various service areas providing healthcare institutions with a faster delivery experience while better fulfilling
our social responsibility to safeguard people’s lives and health. Second we deepened supply chain collaboration to
improve quality and efficiency and maximize management effectiveness. Taking the integration of procurement and
sales as a key strategy and incorporating collaborative mechanisms throughout the entire upstream and downstream
partnership chain the Company has comprehensively enhanced supply chain efficiency and the ability to source
core products. Third we accelerated the transition to intelligent manufacturing. Taking the development of tightly-
knit county-level medical consortiums as an opportunity the Company has innovatively created a “MedicalConsortium Intelligent Medication Management Platform + Central Pharmacy” model. Employing digital tools to
restructure the three-tiered (county township and village) pharmaceutical and medical device supply and
pharmaceutical service system we have achieved “five unifications” in drug formularies procurement stockpiling
monitoring and pharmaceutical services. We helped expand and extend high-quality medical resources to
underserved areas promote the modernization of the pharmaceutical and medical device supply system in remote
regions and effectively improve the equity and accessibility of primary healthcare services.Looking ahead Yunnan Pharma will steadfastly implement its core business strategy of “stabilizing growthmanaging risks and improving profitability.” Leveraging our core strengths including digital and intelligent
operations a mature compliance system and a solid operational foundation we will precisely capitalize on
opportunities arising from the industry’s transformation and development maintain steady growth in a complex and
ever-changing market environment and continue to consolidate and enhance our leading position in the province’s
pharmaceutical distribution sector.
(5) Central Research Institute
The Company focuses on TCM and innovative drugs. On the one hand we develop TCM by pursuing
innovation and integrity. Efforts have been focused on strengthening the identification of evidence-based medical
data to fully release the potential of existing products and the clinical value of TCM resulting in significant progress
in the redevelopment of major TCM products. On the other hand we strive to make differentiated deployment in
innovative drugs. Based on the criteria of technology frontier clinical demand and resource endowment we take
the initiative to integrate into the national and local biomedical strategies and deploy and develop innovative drugs
with more competitiveness and market prospects. At the same time the Company is extending the R&D capabilities
it has built up in the pharmaceutical sector to empower the iterative upgrades of other health products. During the
reporting period upholding the innovation-driven strategy the Company has promoted the transformation of results
continuously improved the development momentum and promoted scientific planning of short- medium- and long-
term projects in an orderly manner.For short-term projects we will dedicate our efforts to the innovative redevelopment of marketed varieties and
the development of drugs and medical devices and drive the development of health products by leveraging the
R&D capabilities of pharmaceutical companies. In the short term R&D will remain firmly focused on clinical value.We will continue to conduct clinical studies on marketed products using evidence-based medicine approaches to
strengthen our evidence base thereby expanding product indications broadening application scenarios and fully
realizing the value of our existing product matrix. Twenty-four large varieties of TCM involving redevelopment are
currently under research and 53 projects are in progress. The progress of key projects during the reporting period
is as follows:
Project Therapeutic
Project Name Progress Overview
Cycle Area
The evidence-based medical research project on the use of Yunnan Baiyao
Aerosol for the treatment of pain associated with closed rib fractures has been
Orthopedics approved for funding by the lead institution and received ethical approval. The
preparation of the study medication and the blinding of the medication have
Redevelopment
been completed.Project for
Baiyao Series The Multi-center Clinical Trial of Yunnan Baiyao Capsules for Treating Orthopedics
Products Swelling in Limbs with Perimalleolar Fractures has enrolled 97 subjects.The Yunnan Baiyao New Rubber Plaster Project has completed the product
Orthopedics
formulation and process development quality research and safety evaluation
Rheumatology
and passed the project acceptance inspection.A monograph detailing the clinical research findings on the effects of
Qixuekang Oral Liquid in improving vascular health has been published and
the project has successfully passed its final acceptance review.Qixuekang
Cardiovascular The redevelopment and research project for Qixuekang Oral Liquid under the
project major TCM variety initiative has been successfully approved as a major
provincial science and technology initiative by the Yunnan Provincial
Department of Science and Technology. To date the screening and enrollment
of more than 220 participants has been completed for the clinical trial.Redevelopment The pharmaceutical nonclinical and clinical studies have been completed and
project of Gynecology a project acceptance application has been submitted to the Yunnan Provincial
Gongxuening Department of Science and Technology.The post-marketing re-evaluation study has received the clinical trial summary
Redevelopment report and completed the project acceptance process.project of
Urology A preclinical study of a modified new drug for the treatment of benign prostatic
Shuliean hyperplasia has been successfully approved under the Major Science and
Short- capsules Technology Special Project Program of Yunnan Provincial Department of
term Science and Technology.The dual-action whitening toothpaste has been successfully designed to deliver
teeth-whitening benefits while providing anti-stain and anti-damage protection./
It uses soft-light and polishing technologies to brighten and whiten the tooth
surface.Using an AI model we have identified two peptides obtained International
Nomenclature of Cosmetic Ingredients (INCI) designations from the Personal
/
Care Products Council (PCPC) in the United States and filed for a national
Toothpaste
invention patent.For this gum-protecting sensitivity-relieving toothpaste we have developed a
/ biomass-derived short-rod-shaped micron-sized hydroxyapatite dentin tubule
repair material that promotes remineralization and relieves tooth sensitivity.A machine learning model for formula recommendations has been developed
/ and a database of Baiyao formula models has been built through autonomous
learning and continuous training.We have completed a big data study on the skin and scalp of Chinese women
/ identifying hair loss prevention needs and laying the foundation for the
Yangyuanqing development of Yangyuanqing’s hair loss prevention technologies and products.We have completed the filing for two new shampoo products: one for volume
/
and one for preventing hair breakage.Development of For the development of Caizhiji’s botanical active ingredients and their
Caizhiji application in skincare products we have obtained a patent related to Paris
/
Skincare polyphylla cultivar and completed the cosmetic registration filing for the
Products “Sevenfold Essence Face Cream.”
Research on the The “Yunbai Zhiyao-X” system has been successfully established; the anti-
Anti-Aging aging active components of Panax notoginseng and their anti-aging effects have
/
Components been identified and the relevant anti-aging mechanisms have been preliminarily
and elucidated; the anti-aging effects of the active components in Paris polyphylla
Mechanisms of have been preliminarily identified. One paper on digital cells has been
Panax published.notoginseng and
Paris
polyphylla and
the
Development of
the Yunbai
Zhiyao X
System
Development of
Nutritional We have obtained a registration certificate for foods for special medical
Formula for / purposes; completed the construction of the on-site laboratory and submitted
Special Medical the required information to the provincial bureau’s production license system.Purposes
For medium-term projects we have made every effort to promote the development of innovative TCMs
and continued to build star products of Yunnan Baiyao transdermal preparations. The progress of key projects
during the reporting period is as follows:
Project Therapeutic
Project Name Progress Overview
Cycle Area
Pan-Panax A Phase II clinical trial has been completed.notoginseng Cardiovascular
Tablet project A small-sample clinical trial has been launched.Fuqi Guben
Phase III clinical trials have been initiated at 18 research centers with 696
Ointment Urology
participants enrolled.project
Ancient The NMPA has accepted the marketing authorization application for
classical Urology Qingxin Lotus Seed Granules.famous respirology
Medium- prescription gastroenterology The research on the production process for the commercial-scale
term project transition batch of Ophiopogon Decoction Granules has been completed.The bioequivalence study for the Flurbiprofen Cataplasms has been
completed.Bioequivalence studies for the Loxoprofen Sodium Cataplasms are
currently underway.Plaster projects Orthopedics
The methodological validation for the Yunnan Baiyao Gel Plaster project
has been completed.The preliminary scale-up studies for the pilot-scale formulation has been
completed for the Yunnan Baiyao Hot Melt Adhesive Plaster project.For the long-term projects based on its industrial expertise financial strength and collaborative resources
spanning industry academia and research guided by unmet clinical needs and empowered by cutting-edge
technologies the Company has established a differentiated innovation strategy centering on the development
of radiopharmaceuticals. By advancing the R&D of multiple high-value innovative drugs in a phased manner
the Company is forging an innovation growth trajectory distinct from that of TCM enterprises and continuously
fostering the momentum for its long-term sustainable development. The progress of key projects during the
reporting period is as follows:
Project
Project Name Progress Overview
Cycle
INR101 diagnostic
Phase III clinical trials have been initiated at 31 (a total of 32) research centers with a patient
radiopharmaceutical
enrollment rate of 75%.project
INR102 therapy
Enrollment for the Phase I clinical trial has been completed and more than half of the Phase IIa
Long- radiopharmaceutical
clinical trial sites have begun operations.term project
INB301 Monoclonal
Antibody Project for The Company has obtained approval for clinical trials from NMPA and FDA and has initiated a
the Treatment of Phase I clinical trial in China.Cancer Cachexia
The Company will focus on building a collaborative open and efficient innovation system and promote
the formation of a dual-helix mechanism for the coordinated development of the industrial chain and the
innovation chain. First we will strengthen the development of innovation platforms enhance our capacity for
scientific and technological innovation and focus on achieving breakthroughs in core technologies related to
the strategic industrial layout. Second we will enhance our capacity for innovative development establish a
proactive business portfolio management system and promote effective synergy between our core businesses
and emerging growth businesses. Third we will accelerate the development of new-quality productive forces
actively coordinate the planning of key industries and infrastructure projects fully leverage the benchmarking
advantages of our “Lighthouse Factories” and promote the expansion and enhancement of digital and
intelligent manufacturing. Fourth we will strategically target high-potential sectors and accelerate the
development of new sectors new pathways and new business models that align with our operational and
developmental needs. Fifth we will actively foster a positive environment that encourages innovation firmly
establish the mindset of driving enterprise development through science and technology and strengthening the
enterprise with talents and effectively build a team of scientific and technological innovation talent so that a
culture of “wanting to innovate daring to innovate and being able to innovate” becomes the norm within the
enterprise.
(6) Digital and intelligent technologies empowering business upgrades and innovative development
During the reporting period the Company in line with the overall framework for digital transformation
outlined in the “15th Five-Year Plan” and securing key positions in areas such as AI application AI scenario
validation data governance data assetization and digital marketing actively promoted the industrialtransformation and upgrading as well as innovative business development. Our proprietary “DigitalIntelligence of Yunnan TCM” platform was selected as a model case of AI applications by the Ministry of
Industry and Information Technology making it the only platform in the field of TCM nationwide to be
selected. Focusing on five core business areas including production supply chain and marketing the Company
systematically advanced its data asset inventory and governance efforts successfully obtaining DCMM
Quantitative Management Level (Level 4) certification. It became the first company in China’s pharmaceutical
industry to receive this certification with its governance capabilities now on par with the top tier of domestic
companies. We were the first in the TCM industry to establish a nationwide system for tracking product flow
and inventory that extends down to the product specification and retail store levels effectively empowering
the development of the “Yunding Jingwei” channel value chain. The Omni-channel Marketing Platform 1.0
has been officially launched completing the full implementation of “one product one code” for core personal
care categories such as toothpaste thereby establishing an integrated closed-loop system that covers omni-
channel marketing outreach business execution and risk management. Aligning closely with the national
strategic direction for reforming the market-based allocation of data as a production factor and leveraging its
proprietary “one item one code” core dataset the Company has become the first publicly listed company in
the TCM industry to recognize data assets on its balance sheet officially entering a new phase of data
assetization.II. Analysis on Core Competitiveness
(II) Full industrial chain advantageWe will further uphold our responsibilities as a chain leader based on the strategic positioning of “the ‘chainleader’ with high-quality development of Yunnan TCM resources.” Relying on the authentic medicinal resources
and location advantages of Yunnan Province we will leverage Yunnan Baiyao’s strengths and influence in
production technology distribution channels and branding as well as the demonstration leading and driving role
of the leading enterprise in industrial development. We have built a digitalized industrial chain ecosystem for TCM
materials with the model of “1+1+N” which consists of “1 TCM production research and marketing integrateddigital intelligence platform + 1 new specialized market for TCM materials at the origin + multi-dimensionalsynergies” to promote the standardization scaling branding and digitalization of the TCM industry and transform
resource advantages into industrial competitive advantages and long-term sustainable development advantages so
as to support “excellent TCM products” by “excellent Yunnan TCM resources.”
Driven by its long-term and continuous investment in key strategic varieties of TCM materials the Company
has achieved a complete and closed-loop industrial chain from seed selection and cultivation to production and
processing established a robust supply system for strategic medicinal materials effectively ensured the quality
stability of TCM raw materials controlled the price fluctuations of strategic TCM raw materials and thus laid the
groundwork for the long-term and sustainable development of Yunnan Baiyao.(II) Continuous innovation capability
Yunnan Baiyao consistently meets the rapidly evolving and upgrading consumer demand through continuous
innovation. The Company is committed to integrating TCM into modern life. We have evolved from a single
hemostatic product to a vast Yunnan Baiyao industrial group covering various sectors of the holistic wellness
industry and created classic examples of innovation and the integration of TCM products into daily life such as
“Yunnan Baiyao Woundplast” and “Yunnan Baiyao Toothpaste.”
Looking ahead the Company is committed to integrating cross-regional resources to build a modern R&D
system driving the inheritance and innovation of TCM alongside advancements in biopharmaceutical technology
and leveraging digital and intelligent transformation to continuously enhance our innovation efficiency. Currently
the Group’s Central Research Institute has established five major R&D centers and more than 10 national and
provincial-level research platforms building a cross-regional R&D capability that spans TCM and ethnic medicine
radiopharmaceuticals biopharmaceuticals transdermal formulations medical devices and skin care. Through
collaboration with numerous leading domestic research institutions and universities the Company has integrated
industry-academia-research resources and attracted top-tier R&D talents. Leveraging a dual-track mechanism of
“external recruitment and internal development” we have established a high-caliber talent team led by members of
the Chinese Academy of Engineering recipients of the National “Ten Thousand Talents Program” and recipients of
the National Science Fund for Distinguished Young Scholars with over 60% of the team holding master’s ordoctoral degrees. Leveraging the strengths of its R&D system which focuses on “building platforms establishingmechanisms and attracting talent” the Company adheres to a market-driven approach to R&D and innovation. We
deeply explore the clinical value of existing products and are fully committed to promoting the synergistic
development of the industrial and innovation chains thereby achieving the effective commercialization of research
outcomes cross-disciplinary integration and innovative breakthroughs. In addition the Company has identified
“AI+Healthcare” as the core focus of its strategic transformation deeply integrating technologies such as artificial
intelligence big data and cloud computing to empower drug discovery and clinical research thereby continuously
improving R&D efficiency.(III) Channel advantages
In terms of pharmaceuticals the Company has built a marketing network covering medical institutions and
retail pharmacies across various provinces regions counties and towns in China and simultaneously expanded its
presence in the online market. We have developed the “Yunding Jingwei” ecosystem cooperation model
establishing a streamlined flat-structured data- and intelligence-driven direct-supply model from primary
distributors. This enables point-to-point delivery of products from manufacturers to pharmacies facilitates a more
effective “brand+channel+service” integrated ecosystem management model and continuously strengthens
traceability management and sales performance monitoring thereby setting a new industry benchmark for channel
management in the pharmaceutical sector. In the advantageous over-the-counter (“OTC”) channels we have
nationwide coverage serving 5000 top-tier chains and reaching nearly 400000 retail stores. In terms of healthcare
facilities our network covers the more than 12000 hospitals nationwide (including primary care facilities). In the
online marketplace we have precisely targeted the “immediacy” trend in O2O channels establishing a
comprehensive “on-site+off-site” collaborative matrix and engaging in extensive partnerships with major e-
commerce platforms to effectively reach modern consumers through customized digital marketing.Regarding health products Yunnan Baiyao has established a comprehensive nationwide sales team dedicated
to holistic wellness products covering all terminals. Yunnan Baiyao Toothpaste continues to maintain a leading
market share in China with a high brand penetration in the oral product category. Through ongoing optimization of
its full chain channels the Company has not only strengthened its position in traditional offline channels but also
experienced significant growth in emerging business models such as on-demand retail community group purchases
and interest-based e-commerce. This demonstrates the Company’s willingness to experiment and adapt taking
measured steps forward along the way all of which enhance its ability to quickly respond to evolving business
trends. Such channel advantages of Yunnan Baiyao have significantly enhanced market competitiveness of the
Company laying the foundation to continuously commercialize new products.(IV) Talent team strengths
The Company continues to strengthen the development of a specialized workforce aligned with the Group’s
strategic development while collaboratively advancing the development of talent pipelines across all fields. First
we have established a long-term mechanism for talent development opening up career pathways across
management technical and professional tracks and implement targeted recruitment based on specific needs
promoting the recruitment of highly skilled highly technical and high-level talent in core professional fields
essential for our development. Second in order to advance the development of our talent pool in the new era we
have established a career grading system and training mechanisms and implemented a lifelong vocational skills
training system leveraging the mentorship and guidance provided by professionals in various fields to build a high-
quality specialized workforce. Third we keep refining our incentive mechanisms using a variety of approaches to
stimulate the creativity of all types of talent. We have further aligned our compensation system with areas such as
industrial transformation and upgrading technological innovation reform and development value creation new
product development and the development of flagship products prioritizing those working in frontline positions
that are arduous dirty dangerous or physically demanding. This ensures employees genuinely feel the benefits of
the Company’s growth helps maximize the enthusiasm and creativity of our staff in pursuing their work and
building the business and propel the Company toward high-quality development laying a solid foundation for
achieving collaborative win-win outcomes among all stakeholders.(V) Brand strength
Yunnan Baiyao is a well-established Chinese heritage brand with a history of over 124 years. Centered around
the Yunnan Baiyao brand the Company has expanded from a pharmaceutical brand into a multi-brand ecosystem
covering personal healthcare products crude drugs and holistic wellness products. We have built a diverse portfolio
of brands and continuously expanded our reach to target audiences enhancing our brand value over the long term.The Company has been repeatedly named to Interbrand’s China’s Best Brands List and Kantar BrandZ’s Top 100
Most Valuable Chinese Brands list among others.III. Analysis on Principal Businesses
Overview
Refer to “I. Principal Businesses of the Company during the Reporting Period” for details.Year-on-year changes in the key financial data
Unit: RMB
Year-on-
The reporting The same period of year
Reasons for changes
period the previous year increase/dec
rease
Mainly due to increase in industrial sales revenue by
Operating revenue 21884075971.15 21257102896.02 2.95% RMB 268 million and increase in commercial revenue
by RMB 356 million during the current period.Mainly due to increase in cost of sales resulting from
Operating cost 15305914691.16 14697868069.29 4.14%
higher sales revenue.Mainly due to a decrease in display and advertising
Sales expenses 2450428700.94 2516371857.04 -2.62%
expenses for the current period.During this period the Company continued to
Administrative implement cost-cutting and efficiency-enhancing
327578033.29 363479043.45 -9.88%
expenses measures resulting in a decrease in administrative
expenses.Primarily due to a decrease in interest income for the
Financial expenses 18175003.06 -23106607.43 178.66%
current period compared to the same period last year.Income tax
585309080.65 587271873.85 -0.33% No significant changes.
expenses
Investment in R&D 216527381.78 170320907.17 27.13% R&D investment increased during the current period.The main reason is that cash received from sales of
goods and provision of services during the current
period increased by RMB 1.414 billion compared with
Net cash flows from
4106039368.33 3961187202.77 3.66% the same period last year; cash paid for purchases of
operating activities
goods and services during the current period increased
by RMB 1.193 billion compared with the same period
last year.The main reason is that cash received from the recovery
of investments for the current period increased by RMB
1.504 billion compared with the same period last year;
cash received from investment income for the current
period increased by RMB 81 million compared with the
same period last year; cash received from other
Net cash flows from activities related to investing activities for the current
-584685544.14 -955287317.14 38.79%
investing activities period increased by RMB 521 million compared with
the same period last year; and cash paid for investments
for the current period increased by RMB 1.6 billion
compared with the same period last year; and cash paid
for other items related to investing activities during the
current period increased by RMB 121 million
compared with the same period last year.The main reason is that cash received from investment
activities during the current period decreased by RMB
84 million compared with the same period last year;
cash paid for debt repayment during the current period
Net cash flows from
-3042217336.60 -2583841878.43 -17.74% decreased by RMB 251 million compared with the
financing activities
same period last year; and cash paid for dividends
profits or interest during the current period increased
by RMB 628 million compared with the same period
last year.Net increase in cash The main reason is that net cash flows from operating
and cash 468816381.80 416969387.98 12.43% and investing activities for the current period increased
equivalents compared to the previous period.Significant changes in the profit composition or profit source of the Company during the reporting period
□ Applicable □ Not applicable
There were no significant changes in the profit composition or profit source of the Company during the reporting period.Operating revenue structure
Unit: RMB
The reporting period The same period of the previous year
Year-on-year
Proportion in Proportion in increase/decrease
Amount Amount
operating revenue operating revenue
Total operating
21884075971.15 100% 21257102896.02 100% 2.95%
revenue
By industries
Income from
8772075444.26 40.08% 8504399783.93 40.01% 3.15%
industrial sales
Income from
13064278378.91 59.70% 12708142389.60 59.78% 2.80%
commercial sales
Technical services 4095884.66 0.02% 16169654.29 0.08% -74.67%
Hospitality industry 7588226.99 0.03% 6156813.81 0.03% 23.25%
Income from
1470.00 0.00% 932453.26 0.00% -99.84%
plantation sales
Income from other
36036566.33 0.16% 21301801.13 0.10% 69.17%
businesses
By products
Industrial products
8772075444.26 40.08% 8504399783.93 40.01% 3.15%
(Self-made)
Wholesale and retail 13064278378.91 59.70% 12708142389.60 59.78% 2.80%
Agricultural
1470.00 0.00% 932453.26 0.00% -99.84%
products
Other services 11684111.65 0.05% 22326468.10 0.11% -47.67%
Others 36036566.33 0.16% 21301801.13 0.10% 69.17%
By regions
Domestic 21822819303.21 99.72% 21026816805.98 98.92% 3.79%
Overseas 61256667.94 0.28% 230286090.04 1.08% -73.40%
The industries products or regions that account for more than 10% of the Company’s operating revenue or operating profit
□Applicable □ Not applicable
Unit: RMB
Increase/decrease
Increase/decrease Increase/decrease
of operating
of operating cost of gross margin
Gross revenue compared
Operating revenue Operating cost compared with the compared with the
margin with the same
same period of the same period of the
period of the
previous year previous year
previous year
By industries
Income from
8772075444.26 2997425057.02 65.83% 3.15% 9.91% -2.10%
industrial sales
Income from
13064278378.91 12286148467.25 5.96% 2.80% 2.91% -0.10%
commercial sales
By products
Industrial products
8772075444.26 2997425057.02 65.83% 3.15% 9.91% -2.10%
(Self-made)
Wholesale and retail 13064278378.91 12286148467.25 5.96% 2.80% 2.91% -0.10%
By regions
Domestic 21822819303.21 15243663565.26 30.15% 3.79% 5.30% -1.00%
When the statistical caliber of the Company’s principal business data is adjusted in the reporting period the Company’s principal
business data should be subject to the one after the statistical caliber at the end of the reporting period is adjusted in the latest period
□ Applicable □ Not applicable
Ⅳ. Analysis on Non-principal Businesses
□Applicable □ Not applicable
Unit: RMB
Proportion in total Whether it is
Amount Reasons
profits sustainable
Mainly consisted of investment income
Investment income 601930486.00 14.06% No
from Shanghai Pharma.Mainly consisted of the change in net value
Profits and losses from of the Company’s financial assets held for
129325396.89 3.02% No
changes in fair value trading and other non-current financial
assets.Mainly consisted of provision for inventory
Asset impairment -24068120.33 -0.56% No
write-down.Mainly consisted of income not related to
Non-operating revenue 13148676.97 0.31% No
daily business activities.Mainly consisted of expenses not related to
Non-operating expenses 4675701.85 0.11% No
daily business activities.Credit impairment loss (loss is Mainly consisted of provision for bad debt
40950070.41 0.96% No
indicated with “-”) in the commercial sector.Other income 63467539.93 1.48% Mainly consisted of government grants. No
Mainly consisted of proceeds from the
Gains from disposal of assets
1111348.76 0.03% disposal of non-current assets and proceeds No
(loss is indicated with “-”)
from the disposal of right of use assets.Note: Investment income from Shanghai Pharma amounted to RMB 615 million. This investment represents a strategic collaboration
between the two parties facilitating synergies in their respective industries. The investment income is sustainable.V. Analysis on Assets and Liabilities
1. Significant changes in assets composition
Unit: RMB
End of the reporting period End of the previous year Statement on
Increase/decrease
Proportion in Proportion in significant in proportion
Amount Amount
total assets total assets changes
Cash and bank No significant
9569904053.50 17.35% 9107829167.98 16.78% 0.57%
balance changes.Accounts No significant
10182602486.28 18.47% 10160059223.29 18.72% -0.25%
receivable changes.Inventory
management
efficiency was
Inventories 6147877228.16 11.15% 6231383826.69 11.48% -0.33% improved
accelerating
inventory
turnover.Investment No significant
46995322.73 0.09% 50366578.65 0.09% -0.00%
property changes.Mainly due to
Long-term sustained
equity 13648237691.06 24.75% 13227578051.91 24.37% 0.38% investment
investments income from
Shanghai
Pharma.No significant
Fixed assets 3212622675.46 5.83% 3274340152.34 6.03% -0.20%
changes.Mainly due to
ongoing
Contruction in
932187206.75 1.69% 807592848.36 1.49% 0.20% investment in
progress
projects under
construction.Right-of-use No significant
231636423.58 0.42% 248003380.85 0.46% -0.04%
assets changes.Mainly due to
a decrease in
credit loans
Short-term
25113604.10 0.05% 182775753.21 0.34% -0.29% and the
loans
discounting of
internally
issued bills.Contractual No significant
1578687785.93 2.86% 1505826938.18 2.77% 0.09%
liabilities changes.The main
reason is that
Long-term the secured
2100000.00 0.00% 86569400.83 0.16% -0.16%
loans loan is due
within one
year.No significant
Lease liabilities 133099612.83 0.24% 141830379.18 0.26% -0.02%
changes.Mainly due to
a decrease in
Receivables bank-accepted
838621388.17 1.52% 1681985583.93 3.10% -1.58%
financing bills held at
the end of the
period.Mainly due to
changes in
dividends
Other
632395561.18 1.15% 406517244.11 0.75% 0.40% receivable
receivables
deposits and
guarantee
deposits.Mainly due to
changes in the
Other non- fair value of
current 312435493.34 0.57% 210855260.47 0.39% 0.18% other non-
financial assets current
financial
assets held.Mainly due to
the increase in
Receipts in
518138.91 0.00% 190841.21 0.00% 0.00% prepaid rent at
advance
the end of the
period.Mainly due to
an increase in
Taxes payable 578166281.56 1.05% 278051492.11 0.51% 0.54%
income tax
and value-
added tax
payable but
not yet paid at
the end of the
period.The main
reason is that
Non-current
the secured
liabilities due 164848943.89 0.30% 76443711.53 0.14% 0.16%
loan is due
within one year
within one
year.Mainly due to
the increase in
Estimated the provision
32255978.72 0.06% 22513696.41 0.04% 0.02%
liabilities for returns
payable in this
period.
2. Major overseas assets
□ Applicable □ Not applicable
3. Assets and liabilities at fair value
□Applicable □ Not applicable
Unit: RMB
Profits or losses Impairment
Cumulative
on changes in accrued Purchase amount Sales amount
changes in fair Other
Item Opening balance fair value during the during the during the Closing balance
value included changes
during the reporting reporting period reporting period
in equity
reporting period period
Financial assets
1. Financial
assets held for
trading
4192113408.43 27745164.02 6800000000.00 6268689294.27 4751169278.18
(derivative
financial assets
excluded)
2. Other equity
instrument 71745000.00 71745000.00
investments
3. Other non-
current financial 210855260.47 101580232.87 312435493.34
assets
Subtotal of
4474713668.90 129325396.89 6800000000.00 6268689294.27 5135349771.52
financial assets
Total 4474713668.90 129325396.89 6800000000.00 6268689294.27 5135349771.52
Financial
0.00 0.00
liabilities
Other variations: None.
Whether the Company has significant changes in measurement attributes of main assets during the reporting period
□ Yes □No
4. Restrictions on asset rights as of the end of the reporting period
Unit: RMB
Item Closing book value Reason for restriction
Cash and bank balance 29534231.67 Bank acceptance bill deposit performance bond deposit etc.Specifically designated for the maintenance of housing related to
Cash and bank balance 2657295.33
housing reform
Assets of the restructured special account specifically used to cover
Assets of the restructured
536663457.31 the costs of identity conversion for employees of state-owned
special account
enterprises
Accounts receivable factoring for Anguo Juyaotang Pharmaceutical
Accounts receivable 10522325.40
Co. Ltd.Mortgage loan secured by houses and buildings of Anguo Juyaotang
Fixed assets 133537692.82
Pharmaceutical Co. Ltd.Land use right mortgage loan for Anguo Juyaotang Pharmaceutical
Intangible assets 44665082.82
Co. Ltd.Total 757580085.35 --
VI. Investment Analysis
1. Overview
□Applicable □ Not applicable
Investment during the reporting period Investment during the same period of the
Percentage of change
(RMB) previous year (RMB)
5226006150.52 3486707527.53 49.88%
2. Significant equity investments made during the reporting period
□ Applicable □ Not applicable
3. Significant non-equity investments in progress during the reporting period
□Applicable □ Not applicable
Unit: RMB
Cumulative
Investment Cumulative actual Reasons for
Involved industry Amount income as of
Investment in fixed investment as of the Source of Progress Estimated unmet progress Disclosure
Project Name in investment invested in the the end of the Disclosure index (if any)
method assets or end of reporting funding of project income and estimated date (if any)
projects reporting period reporting
not period income
period
http://www.cninfo.com.cn/new
Yunnan Baiyao /disclosure/detailstockCode=
Pharmaceuticals
Shanghai Self- Self- 000538&announcementId=121
Yes daily chemical 37967484.42 1031469637.86 98.00% N/A June 9 2021
International established raised 0206330&orgId=gssz0000538
products
Center &announcementTime=2021-
Yunnan Baiyao
R&D Platform -
Kunming Self- Self-
Yes Pharmaceuticals 5479016.71 312551269.25 57.00% N/A
Center established raised
Construction
Project
Total -- -- -- 43446501.13 1344020907.11 -- -- 0.00 0.00 -- -- --
4. Financial assets investment
(1) Securities investment
□ Applicable □ Not applicable
The Company had no securities investments during the reporting period.
(2) Investments in derivatives
□ Applicable □ Not applicable
The Company had no investments in derivatives during the reporting period.
5. Use of proceeds
□ Applicable □ Not applicable
The Company had no use of proceeds during the reporting period.VII. Significant Assets and Equity Sales
1. Significant assets sales
□ Applicable □ Not applicable
The Company had no significant assets sales during the reporting period.
2. Significant equity sales
□ Applicable □ Not applicable
VIII. Analysis on the Majority-controlled Companies and Joint-stock Companies
□Applicable □ Not applicable
Major subsidiaries and joint-stock companies with a net profit impact of over 10%
Unit: RMB
Company
Company name Principal businesses Registered capital Total assets Net assets Operating revenue Operating profit Net profit
type
Yunnan
Pharmaceutical Co. Subsidiary Wholesale and retail of pharmaceuticals 1000000000.00 16311030666.95 7629712170.62 12405238630.98 495322383.39 386657325.16
Ltd.
Yunnan Baiyao
Group Health Subsidiary Production and sales of oral hygiene products 84500000.00 8437599289.60 5956654157.71 3454327967.45 864955267.36 740626930.04
Products Co. Ltd.Yunnan Baiyao Production and sales of TCM materials TCM
Group TCM Subsidiary decoction pieces Chinese patent medicines food 16400000.00 11389214819.72 4415972807.02 1908350515.37 344300883.65 328611014.92
Resources Co. Ltd. and health supplements
YNBY International Specialized in trade of finished cooking oil
Subsidiary 415278149.99 310235818.94 671370535.93 4582739.97 2286416.50
Limited sugar personal care products and cosmetics.R&D manufacturing and sales of API
pharmaceutical products (including but not
limited to chemical Active Pharmaceutical
Ingredients (APIs) chemical preparations TCM
materials Chinese patent medicines TCM
decoction pieces biochemical drugs biological
products narcotics psychotropic drugs and toxic
drugs for medical use (Adapted to the scope of
business) vaccines) of various dosage forms
(including but not limited to tablets capsules
aerosols immune preparations granules
Shanghai
Joint-stock plasters pills oral liquids inhalants injections
Pharmaceuticals 3708361809.00 240769418449.23 92785779818.76 147469729395.20 5639763113.89 4341656313.04
company liniments tinctures suppositories) health
Holding Co. Ltd.products medical devices and related products
manufacturing and sales of pharmaceutical
equipment engineering installation and
maintenance warehousing and logistics sea
land and air freight forwarding business
industrial investment asset management
provision of international economic and trade
information and consulting services self-owned
house leasing import and export business of
various self-operated and agent drugs and related
goods and technologies.Note: In accordance with relevant company regulations the Health Products Company recognized brand usage fees totaling RMB 609 million payable to the parent company for the use of the
“Yunnan Baiyao” main brand trademark. Excluding brand usage fees the Health Products Company achieved a profit of RMB 1.258 billion for the first half of 2026.Acquisition and disposal of subsidiaries during the reporting period
□Applicable □ Not applicable
Approaches of acquiring and disposing of subsidiaries during
Company name Influence on overall production operation and performance
the reporting period
Yunnan Baiyao (Ziyang) Technology Co. Ltd. Newly incorporated No significant influence.Shanghai Hanshi Health Consulting Co. Ltd. Sale No significant influence.Shanghai Yunzhenni Medical Beauty Clinic Co. Ltd. Sale No significant influence.Time Travel (Guangzhou) Intelligent Technology Co. Ltd. Cancellation No significant influence.Description of the major holding companies and joint-stock companies: None.
Ⅸ. Structured Entities Controlled by the Company
See Section VIII “X. Interest in Other Entities.”
X. Risks and Countermeasures
(I) Policy changes
In recent years a series of supportive policies for the pharmaceutical industry have been introduced
successively opening up favorable development opportunities for pharmaceutical enterprises. Meanwhile the
healthcare reform will be further deepened and the routine centralized volume-based procurement will cover more
pharmaceuticals. Comprehensive revisions to laws and regulations pertaining to drug supervision are also on the
horizon. All these factors are exerting higher requirements for the healthy development of the pharmaceutical
industry. Given this context the Company will place even greater emphasis on aligning with the Chinese
pharmaceutical policy direction and intensify its efforts in tracking analyzing and comprehending critical industry
information and remain steadfast in upholding pharmaceutical compliance standards. Guided by clinical value we
will drive the establishment and optimization of our innovation and R&D system as well as our efficacy evaluation
system thereby fostering the Company’s sustained and stable growth.(II) Market uncertainties
Due to fluctuating raw material costs price controls on pharmaceutical products and intensified competitions
at the terminal level the pharmaceutical industry is experiencing significant operational pressure. Health consumer
products are grappling with challenges such as wavering consumer confidence which is posing obstacles to business
growth. In response to these pressures the Company will continue to leverage its full industry chain competitiveness
and innovation as key drivers. By continuously consolidating the supply chain foundation enhancing operational
efficiency and refining management of channels and retail the Company aims to deepen its innovation cost and
channel advantages which enables the Company to navigate through economic cycles and achieve sustainable
high-quality development in the competitive market.(III) Transformation of innovation and R&D achievements
In pursuit of enhancing core competitiveness the Company has consistently escalated its investment in drug
R&D over recent years. Generally new drug R&D is featured with large amount of investment long R&D cycle
less-than-expected industry transformation rate market uncertainty after industrialization in the future etc. Any
changes in relevant policies and market demands will be likely to affect the commercial value of the products under
R&D. Upon completion of R&D the successful commercialization of a new drug stands as an important factor
influencing R&D yields. The Company is poised to meticulously assess the R&D projects of novel drugs within the
framework of its strategic direction. Resources will be apportioned to key projects bolstering risk management
capabilities throughout the R&D. Collaborative IUR efforts will be fortified optimizing the transformation of
achievements and reducing the uncertainties associated with R&D investments.(IV) External expansion
By implementing an industrial development strategy to seek both internal growth and external expansion the
Company actively advances towards its strategic goals and strives to inject new momentum into sustainable
development. In the process of pursuing external expansion a key challenge for the Company is how to leverage
investment and innovation to introduce new variables build a new Baiyao platform integrate more external
resources and develop a complete industry chain to ultimately establish a strong foothold in a highly competitive
and rapidly changing market. The Company will remain strategy-driven and user-centric continuously sharpening
market insight to build a healthy sustainable portfolio.XI. Implementation of the Market Capitalization Management System and Valuation
Improvement Plan
Whether the Company implemented the market capitalization management system
□Yes □No
Whether the Company disclosed the valuation improvement plan
□ Yes □No
To effectively enhance the Company’s investment value standardize market capitalization management
practices ensure the compliance scientific rigor and effectiveness of such activities maximize corporate value and
shareholder interests and actively respond to the call in the State Council’s Several Opinions on Strengthening
Supervision Preventing Risks and Promoting High-Quality Development of the Capital Market to encourage listed
companies to establish market capitalization management systems the Company’s 10th Board of Directors held its
first session of 2025 on March 31 2025 and approved the Market Capitalization Management System of Yunnan
Baiyao Group Co. Ltd. For details please refer to the system disclosed on the same day on www.cninfo.com.cn.XII. Implementation of the “Enhancement of Quality and Returns” Initiative
Whether the Company disclosed the Announcement of the “Enhancement of Quality and Returns” Initiative
□Yes □No
The Company disclosed the Announcement on “Enhancement of Quality and Returns” Initiative
(Announcement No.: 2024-12) on March 9 2024.
Firmly upholding the principle of rewarding shareholders and consistently focusing on its principal businesses
and maintaining prudent operations the Company kept enhancing shareholder returns while continuously
advancing high-quality development. In April 2025 in active response to the call in the State Council’s Several
Opinions on Strengthening Supervision Preventing Risks and Promoting High-Quality Development of the Capital
Market to encourage listed companies to establish market capitalization management systems the Company
formulated the Market Capitalization Management System of Yunnan Baiyao Group Co. Ltd in accordance with the
Company Law of the People’s Republic of China the Securities Law of the People’s Republic of China the Rules
Governing the Listing of Shares on Shenzhen Stock Exchange the Self-Regulatory Guidelines No. 1 for Companies
Listed on Shenzhen Stock Exchange - Standardized Operation of Listed Companies on the Main Board and the
Listed Company Regulatory Guidance No. 10 - Market Capitalization Management other laws and regulations and
normative documents as well as the Articles of Association of Yunnan Baiyao Group Co. Ltd. In accordance with
the regulations and in light of our own circumstances we adopted a comprehensive set of measures including
enhancing the quality of information disclosure managing investor relations conducting cash dividends and
encouraging major shareholders to increase their holdings to promote the rational reflection of the Company’s
investment value and its high-quality development achievements.(I) Constantly improving the quality and efficiency of production and operation
In the first half of 2026 the Company steadily implemented its strategic plan and continued to pursue its
development strategy of “growth efficiency and value creation.” As a result its performance maintained steady
growth and its operational resilience and long-term growth potential were further strengthened. Core flagship
products in the pharmaceuticals and health products segments continued to generate stable revenue and new
products were launched in an orderly manner. The Company remained committed to innovation as drivers of growth
advancing both major TCM products and innovative drugs in parallel. Significant progress has been made in the
industrial chain deployment releasing the synergies across the supply chain of TCM materials.During the reporting period the Company generated operating revenue of RMB 21.884 billion representing a
year-on-year increase of 2.95%; net profit attributable to the parent company was RMB 3.701 billion up 1.88%
year on year; net profit attributable to the parent company after deducting non-recurring profits and losses was
RMB 3.518 billion up 1.66% year on year reaching a record high for the same period; and basic earnings per share
were RMB 2.07 up 1.47% year on year. The Company’s business structure continued to optimize. The industrial
revenue amounted to RMB 8.772 billion accounting for 40.08% of the total operating revenue up 0.07 percentage
points year-on-year with the growth rate of industrial revenue reaching 3.15%. Since 2023 the proportion of
industrial revenue in total revenue has continued to increase. The Company’s investment income from Shanghai
Pharma for the current period was affected by fluctuations in one-time extraordinary gains and losses resulting in
a year-on-year decrease of RMB 169 million. Excluding this impact the Company’s net profit attributable to the
parent company for the first half of 2026 increased by 8.33% year on year while net profit attributable to the parent
company for the second quarter rose by 13.18% year on year.In terms of growth quality the Company’s net operating cash flow for the reporting period was RMB 4.106
billion representing a year-on-year increase of 3.66%; the weighted average return on equity was 9.04%; selling
expenses decreased by 2.62% year on year and general and administrative expenses decreased by 9.88% year on
year. During the reporting period R&D investment totaled RMB 217 million representing a significant year-on-
year increase of 27.13% and the Company’s R&D capabilities continued to improve. The Company continued to
maintain a healthy asset structure. At the end of the reporting period the Company had total assets of RMB 55.145
billion net assets attributable to the shareholders of the listed company amounted to RMB 40.973 billion the asset-
liability ratio was 25.56% and the cash and bank balance stood at RMB 9.57 billion.(II) Enhancing returns to shareholders in multiple dimensions
The Company takes a multi-pronged approach to enhance shareholder satisfaction including cash dividends
and increasing the frequency of dividend payments.During the reporting period with a track record of consistently high dividends the Company increased the
frequency of dividend payments to enhance investors’ sense of benefit through special dividends. In April 2026 the
Company completed the distribution of dividends for the 2025 paying a cash dividend of RMB 15.84 (tax inclusive)
per 10 shares to all shareholders for a total cash dividend payout of RMB 2.824 billion. When combined with the
special dividend already paid in 2025 the total cumulative cash dividend for 2025 reached RMB 4.643 billion
accounting for 90.09% of the Company’s net profit attributable to parent company in 2025.On August 28 2026 the 11th Board of Directors of the Company considered and approved the 2026 special
dividend plan at its sixth session of 2026. Based on the Company’s total issued share capital of 1784262603 shares
as of the first half of 2026 the plan proposes to distribute a cash dividend of RMB 10.38 (tax inclusive) per 10
shares to all shareholders with no bonus shares (tax inclusive). The total amount of this cash dividend is RMB
1852064581.91 and no capital reserves will be used to increase share capital. The total amount of the 2026 special
dividend represents 50.04% of the net profit attributable to the parent company for the first half of 2026.
(III) Continuously improving the information disclosure quality
The Company consistently adheres to the principles of truthfulness accuracy completeness timeliness and
fairness in information disclosure strictly following applicable laws regulations and corporate policies. Actively
engaging with investors the Company carefully considers their needs and suggestions regarding periodic reports.The Company discloses the interim report data across multiple dimensions including segments and channels
ensuring compliance while offering a comprehensive view of its operations and development. Meanwhile the
Company practically engages in voluntary information disclosure proactively sharing information that aids
investors in value assessment and decision-making thereby enhancing the relevance and transparency of disclosures.In addition the Company employs various methods to present and interpret periodic reports including graphics
videos and PowerPoint presentations to communicate information in a clear engaging and easy-to-understand
manner. As of the end of the reporting period Yunnan Baiyao has been awarded the Class A rating in the information
disclosure assessment by the Shenzhen Stock Exchange for the 18th consecutive time.(IV) Fully protecting the rights and interests of investors and ensuring smooth communication channels
The Company has established a smooth communication channel to effectively safeguard the rights and interests
of investors and continuously improves the effectiveness of positive interaction with investors. During the reporting
period the Company held a total of one performance briefing with a record high level of investor participation. We
received investors for a total of 16 times (online and offline) involving more than 100 organizations and more than
230 investors and survey records were released in a timely manner in accordance with information disclosure
requirements. We responded to 24 inquiries at irm.cninfo.com.cn. Specialized personnel were assigned to answer
investor relations hotline calls in earnest ensuring the effective operation of the investor relations hotline. In
addition the Company has scientifically built a professional financial media matrix through text video and other
forms and actively engages in multi-channel information dissemination building and maintaining the Company’s
multi-dimensional value in the capital market.(V) Exploring and practicing the path of high-quality development
The Company has a clear strategic plan. For intensive growth we will focus on the foundational development
of the three key segments that is pharmaceutical health and distribution and systematically explore potential and
enhance efficiency across the industrial chain value chain and production factors. For extensive growth we will
in line with the overall strategic requirements and orientation actively explore ways to complement and strengthen
existing industrial segments through strategic mergers and acquisitions strategic partnerships and other approaches
enabling us to rapidly overcome current growth bottlenecks and achieve sustained growth. The Company aims to
achieve growth in revenue profit asset scale and other key indicators through the two-phase strategy which will
drive the century-old Baiyao toward becoming a Chinese leading and world-class modern pharmaceutical industry
group.Creating value managing value and realizing value are essential steps in the value enhancement journey for
listed companies. The Company will strictly remain committed to fulfilling its responsibilities and obligations as a
listed company. Through focusing on our principal businesses continuous innovation and operational
improvements to enhance our intrinsic value we aim to promote the healthy and sustainable development of the
Company by continuously exploring and practicing the methodology of high-quality development. We will adhere
to the “investor-oriented” principle striving to safeguard investors’ rights and interests through various means
enhance investment returns and bolster investors’ sense of achievement. By effectively implementing the
“Enhancement of Quality and Returns” initiative we seek to boost market confidence and contribute to the positive
and healthy development of the capital market.
Section IV Corporate Governance Environment and Society
I. Changes of Directors and Senior Management of the Company
□Applicable □ Not applicable
Name Position held Type Date Reason
Zhu Zhaoyun TCM Strategic Scientist Resigned February 10 2026 Job transfer
Zhang Ning Chief Scientist Resigned February 10 2026 Job transfer
Former Secretary of the Commission for
Li Jin Discipline Inspection and Chief Quality and Resigned February 10 2026 Retired
Process Officer
II. Profit Distribution and Conversion of Capital Reserve into Share Capital during the
Reporting Period
□Applicable □ Not applicable
Bonus shares per 10 shares (shares) 0
Cash dividend per 10 shares (RMB tax inclusive) 10.38
Capitalization issue per 10 shares (shares) 0
Base of share capital for the distribution plan (shares) 1784262603
Cash dividend amount (RMB tax inclusive) 1852064581.91
Cash distributed via other methods (e.g. share repurchase)
0.00
(RMB)
Total cash dividend (including other methods) (RMB) 1852064581.91
Distributable profit (RMB) 2698569875.39
Proportion of total cash dividend (including other methods) to
100%
total profit distributed
The current cash dividend
For companies in the mature stage with no material capital expenditure plans cash dividends must account for at least 80% of the
total profit distribution
Details of the profit distribution and conversion of capital reserve into share capital
The 2026 special dividend plan considered and approved by the Board of Directors is as follows: Based on a total of 1784262603
shares a cash dividend of RMB 10.38 (tax inclusive) for every 10 shares will be paid to all shareholders with no bonus shares
issued (tax inclusive) and no capital reserve to increase the share capital. The cash dividend represents 50.04% of the net profit
attributable to the parent company for the first half of 2026.III. Implementation of the Company’s Equity Incentive Plan Employee Stock Ownership Plan
(ESOP) or Other Employee Incentive Measures
□ Applicable □Not applicable
The Company had no equity incentive plans employee stock ownership plans or other employee incentive measures and their
implementation during the reporting period.
IV. Disclosure of Environmental Information
Whether the listed company and its major subsidiaries are included in the list of enterprises legally required to disclose environmental
information
□Yes □No
Number of enterprises included in the list of enterprises
4
legally required to disclose environmental information
Index for Environmental Information Disclosure Reports Required
Series No. Enterprise Name
by the Law
http://183.224.17.39:10097/ynyfpl/frontal/index.html#/home/enter
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Yunnan Baiyao Group TCM Resources Co.
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Ltd.
69981a37ac71&XH=1676796185788043921408&year=2025
http://183.224.17.39:10097/ynyfpl/frontal/index.html#/home/enter
Yunnan Baiyao Group Wenshan Qihua Co.
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Ltd.
8ce6e4d8bf56&XH=1676796204034043921408&year=2025
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Yunnan Baiyao Group Dali Pharmaceutical
4 priseInfoXTXH=31de9536-0920-46ec-9d52-
Co. Ltd.
1dfbae1dde08&XH=1682673698668045334528&year=2025
V. Social Responsibility
In the first half of 2026 under the guidance and arrangements of the Provincial Party Committee the provincial
government and the Party Committee of the Provincial State-owned Assets Supervision and Administration
Commission Yunnan Baiyao Group leveraged its core strengths across the TCM materials industry chain. With an
aim to precisely address the needs of Weixi County in rural revitalization improve the quality of the TCM materials
industry and ensure the health of residents in border areas the Group dispatched key personnel allocated special
funds implemented distinctive projects and effectively carried out initiatives to improve people’s livelihoods.Through these efforts the Group advanced its targeted poverty alleviation work in a comprehensive multi-level
and practical manner and yielded significant phased results. Earnestly shouldering its social responsibility the
Group has effectively assisted Weixi County in consolidating and expanding the achievements of poverty alleviation
while advancing the quality and efficiency of rural development.In the first half of 2026 the Group continued to dispatch six village-based work team members to take up posts
on the front lines in Weixi to carry out assistance work making every effort to ensure the smooth implementation
of the village-based work. In the first half of 2026 a total of RMB 2.3317 million was allocated for various forms
of assistance including RMB 120000 for village-based work expenses RMB 350000 for industrial assistance and
RMB 1.8617 million for consumption-based assistance procurement. During this period two key assistance projects
were implemented in rural counties; 10 industrial skills training sessions were conducted reaching 300 participants;
three rural prosperity leaders were cultivated; and two public welfare initiatives were successfully completed
benefiting more than 2100 people. All assistance efforts were carried out with precision and achieved significant
results. At the same time we continued to strengthen the medical and health security system in Diqing Prefecture
thoroughly resolving the challenges of medicine distribution in remote rural areas achieving 100% coverage of
medical supplies throughout the prefecture and effectively safeguarding the lives and health of the people in the
border regions.(I) Accurately addressing needs improving support mechanisms and promoting higher quality and
greater efficiency in support efforts
In the first half of 2026 taking a problem? and demand?oriented approach the Group proactively engages and
swiftly responds to assistance?related needs from Diqing Prefecture and Weixi County. It has established an efficient
interconnected and closed?loop implementation mechanism for support efforts to ensure all assistance tasks are
delivered in a thorough and detailed manner.First we responded quickly to requests and improved the closed-loop support mechanism. In March 2026 in
response to the specific assistance requests submitted by Weixi County regarding industrial upgrading talent support
and consumption-based poverty alleviation the Group’s Party Committee attached great importance to the matter
and promptly convened a special meeting to discuss and make arrangements systematically reviewing the list of
requests item by item clarifying the responsible parties for each item and formulating implementation plans foreach one. The Group established a working mechanism featuring “regular communication dedicated personnel forspecific tasks and full-process tracking and supervision” ensuring that every assistance request receives a response
every matter is resolved and progress is made every month.Second we established a special task force to tackle key challenges and provided targeted assistance through
a multi-pronged approach. Focusing on the five key priorities for improving the quality of the TCM materials
industry in Weixi County the Group established a dedicated support task force and dispatched professionals from
the TCM Resources Business Group to conduct multiple on-site surveys and provide guidance in Weixi. This effort
has enabled the Group to precisely advance key initiatives including supply chain integration the implementation
of a digital platform the construction of high-quality seedling bases the promotion of primary processing
technologies and guidance on Good Agricultural Practice (GAP) certification. Focusing on gaps in rural talent
development and taking into account the actual conditions of Weixi’s industrial development we partnered with the
county’s agriculture and rural affairs department to conduct specialized skills training in areas such as cultivation
base operation and maintenance and on-site processing of TCM materials. In the first half of 2026 we provided
training to a total of 300 grassroots officials and farmers effectively addressing the shortage of industry talent.Focusing on farmers’ income?growth needs the Group has expanded channels for consumption?based assistance.Through multiple approaches including trade?union procurement staff internal purchases and consignment sales
via platforms the Company directly purchased TCM materials and special agricultural products from Weixi worth
RMB 1.8617 million in the first half of 2026 benefiting 4543 residents. Consumption?led support has effectively
driven steady income growth for local farmers.(II) Building on industrial strengths deepening targeted assistance and creating a model of Baiyao’s
support efforts
In the first half of 2026 the Group thoroughly implemented the requirements of the Three-year Action Work
Plan for the High-quality Development of the TCM Industry in Yunnan Province (2025-2027) closely aligning with
Weixi County’s “3455” development strategy for the TCM materials industry. Leveraging its own full-industry-
chain resources in TCM the Group focused its efforts precisely on five dimensions (standardization digital
empowerment supply chain integration brand building and skills enhancement) to drive the transformation of
Weixi’s TCM materials industry from “extensive cultivation” to “high-quality efficient and standardizeddevelopment” thereby producing a series of replicable and scalable outcomes in targeted assistance.First we achieved a breakthrough in GAP certification and lay a solid foundation for industry standardization.To address the paint points of low standardization and a lack of authoritative certification in the cultivation of TCM
materials in Weixi County the Group proactively coordinated with the provincial task force responsible for
evaluating GAP bases for TCM materials ensuring that key bases in Weixi County were included in the list for the
first round of on-site inspections in 2026. We dispatched senior base management experts to provide on-site
assistance to Weixi Baixin TCM Materials Co. Ltd offering comprehensive one-on-one professional guidance in
areas such as establishing a standardization system on-site management of cultivation bases standardizing
production records upgrading warehousing facilities and standardizing signage. Thanks to the targeted assistance
the Company successfully passed the GAP on-site inspection in June 2026 becoming the first model entity for
standardized cultivation of TCM materials in Weixi County and laying a solid foundation for the standardized
regulated and branded development of the county’s TCM materials industry.Second we implemented a digital and intelligent platform to empower businesses and established a digital
channel linking production and sales. To address the issues of information asymmetry and low distribution
efficiency in the production and sales of TCM materials in Weixi the Group promoted the implementation of the
“Digital Intelligence of Yunnan TCM” platform in Weixi fully committed to building a digital production and sales
system. In the first half of 2026 the platform team traveled to townships and villages to conduct specialized outreach
sessions and hands-on training covering three pilot townships (Pantiange Township Yongchun Township and
Baohe Town) and 23 administrative villages. The team provided guidance on establishing a whitelist system for 30
enterprises affiliated with the county’s TCM materials cultivation and breeding associations and a total of 666
farming households were registered on the whitelist. By establishing a digital production-to-sales linkage
mechanism based on the “enterprise + production base + farmer” model we ensured a seamless end-to-end process
for TCM materials from field cultivation and traceability at the source to corporate procurement significantly
reducing distribution costs and increasing farmers’ income.Third we integrated local resources into the Group’s supply chain system to expand product sales channels.The Group proactively integrated upstream and downstream segments of the industrial chain established targeted
partnerships with local pharmaceutical companies in Weixi and actively promoted the inclusion of high-quality
local TCM material resources into the Group’s nationwide supply chain system. In the first half of 2026 we focused
on conducting in-depth negotiations with local companies such as Weixi Weihong Pharmaceutical Weixi Baixin
TCM Materials and Shangri-La Lancao Pharmaceutical. We promoted a stable “order-based inventory lock-in”
cooperation model and successfully added two key local pharmaceutical companies to the Group’s supplier database.We also provided on-site hands-on training on the SRM procurement system to help these companies effectively
integrate with the Group’s procurement channels thereby completely resolving the challenges local TCM materials
producers faced in obtaining fair prices for high-quality products and finding adequate sales channels.Fourth we built a distinctive medicinal cuisine brand to enhance the influence of local products. Building on
Weixi’s distinctive industrial resources we focused on upgrading the “Weixi Glutinous Yam” brand a nationally
renowned unique high-quality and innovative agricultural product. In the first half of 2026 the Group partnered
with the Weixi County Bureau of Agriculture and Rural Affairs to host the “Weixi Glutinous Yam Feast” competition
dispatching professional TCM practitioners and culinary chefs to serve as judges and provide technical guidance.At the same time we guided Weixi County in participating in the Yunnan Provincial Medicinal Cuisine Innovation
Competition where the signature dish featuring glutinous yam won the Specialty Award in the Lijiang division.This effectively enhanced the visibility reputation and market competitiveness of “Weixi Glutinous Yam” helping
to boost the quality and efficiency of this specialty industry through brand empowerment.Fifth we organized skill competitions to comprehensively improve industrial processing standards. To
comprehensively enhance farmers’ capacity for the primary processing of TCM materials the Group allocated RMB
350000 from its special fund for the development of the TCM materials industry and in collaboration with the
Weixi County Bureau of Agriculture and Rural Affairs successfully hosted the opening ceremony for Weixi
County’s first “Medicinal Herb Street” along with a medicinal herb primary processing skills competition and the
“Weixi Glutinous Yam Feast” competition. The TCM materials Primary Processing Skills Competition covered
more than 60 administrative villages across 8 townships in the county with 160 core growers participating. By using
the competition to promote learning and practice the event effectively established a platform for technical exchange
standardized the primary processing procedures for TCM materials comprehensively improved the quality of local
medicinal material processing and advanced the refined development of the Weixi TCM materials industry.(III) Upholding our mission for public wellbeing fortifying the health?safety line and fully safeguarding
drug safety in border areas
Diqing Prefecture is characterized by significant variations in elevation a vast territory and poor transportation
infrastructure; as a result difficulties in distributing medicines to rural areas and ensuring the availability of
emergency medications have long been persistent challenges affecting people’s livelihoods. In the first half of 2026
the Group taking safeguarding the lives and health of people in frontier regions as the core of its livelihood
assistance initiatives continuously improved the localized pharmaceutical supply system and thoroughly bridged
the “last mile” gap in access to medications for grassroots healthcare.First we expanded the intelligent pharmaceutical distribution network and established an integrated county-
level pharmaceutical supply system. By deepening its localized operations in Diqing the Group has established a
smart pharmaceutical supply network featuring multi-warehouse coordination tiered distribution and end-to-end
cold chain logistics. Through innovative refined and agile dispatch and distribution mechanisms the Group has
achieved 100% coverage in the distribution of medical supplies to 9 prefectural and county-level medical institutions
30 primary-level health centers and 163 village clinics in Diqing Prefecture. Among these we achieved direct door-
to-door delivery to 42 village health clinics completely resolving the issues of untimely medication access and
inadequate distribution in remote villages. In addition we spared no effort in assisting with the implementation of
the “Integrated Procurement and Distribution for Medical Consortiums” project. Taking the construction of the
central pharmacy for the Shangri-La City Medical Consortium as a model we helped Weixi establish a standardized
management model featuring “unified drug directory unified procurement and unified distribution” thereby
significantly improving the efficiency of drug procurement at the grassroots level the accuracy of inventory
management and end-to-end traceability capabilities and ensuring the safety of medications for the public.
Second we tackled the challenges in ensuring the supply of special medications and strengthened the health
and safety defenses along the border. To address the challenges of distributing emergency and special cold-chain
medications such as antivenom neonatal emergency drugs and insulin the Group spared no expense to ensure the
supply of emergency and special medications and comprehensively safeguard the lives and health of people of all
ethnic groups in border regions by utilizing diverse transportation methods including high-speed rail air transport
and specialized refrigerated vehicles. In 2025 the Group supplied medical and pharmaceutical supplies worth a
total of RMB 105 million to public medical institutions in Diqing Prefecture including RMB 14 million worth of
drugs developed and manufactured in-house by the Group thereby continuing to strengthen the foundation of
medical and health care in border regions.
Section V Significant Events
I. Commitments of the Company’s De Facto Controller Shareholders Related Parties and Acquirers as well as the Company Itself and
Other Related Entities Fulfilled during the Reporting Period or Ongoing at the Period-End
□Applicable □ Not applicable
Commitment Commitment Commitment Commitment Performance
Commitments Contents
Party Type Time Period Status
1. Our company is not engaged in any business or activity that is the same as similar to or resembling and constitutes
or may constitute directly or indirectly a competition in any aspect with the listed company’s any existing business nor
will we actively provide in any way any assistance in finance business management etc. or any trade secrets such as
technical information business operations sales channels to any enterprises agencies or other economic organizations
Remain
that compete with the listed company in any of its existing business. 2. As of the date of issuance of this commitment
effective
letter our company will legally take necessary and possible measures to avoid and urge any other enterprises under our
Commitments made Commitments during the
Yunnan actual control to avoid any businesses or activities that may in any way substantially or potentially constitute a
in the acquisition regarding December 10 period of
Investment horizontal competition or a conflict of interest with the principal businesses of the listed company. If in the future a In progress
report or equity horizontal 2021 holding
Group material conflict of interest arising from substantial or potential horizontal competition between our company and any
change report competition indirect stake
enterprises under our control and the listed company our company and such enterprises under our actual control will
in Yunnan
give up that business opportunity that may result in a material horizontal competition and thus lead to a substantial
Baiyao
conflict of interest or take appropriate measures permitted by other laws and regulations to eliminate the potential
impact of material horizontal competition. 3. Our company will not by virtue of any information learned or known from
the listed company assist our company itself or any third party in engaging in any business activities that may in any
way substantially or potentially constitute a horizontal competition with the principal businesses of the listed company.
Commitment Commitment Commitment Commitment Performance
Commitments Contents
Party Type Time Period Status
To protect the legitimate rights and interest of any and all of the shareholders of the listed company our company
undertakes to warrant: 1. The personnel independence of the listed company that is: (1) The general manager deputy
general manager CFO secretary of the Board of Directors and other senior management personnel of the listed
company will work full-time and receive compensation in the listed company with holding no positions other than
directors or supervisors or receiving no compensation in any other enterprises under the control of our company for
continuously maintaining the independence of personnel of the listed company; (2) The listed company has a complete
and independent labor personnel and salary management system which is fully independent from our company and
any other enterprises under our control; (3) The directors supervisors and senior management personnel of the listed
company are elected or appointed in accordance with legal procedures and our company will not interfere with the
personnel appointment and removal decisions already made by the Board of Directors and the general meeting of the
listed company. 2. The asset independence of the listed company that is: (1) The listed company has independent and
complete assets all of which are under the control of the listed company and are independently owned and operated by
the listed company; (2) Our company and any other enterprises under our control do not and will not in any way occupy
the funds assets and other resources of the listed company in violation of laws and regulations; (3) Our company and
Remain
any other enterprises under our control will not use the assets of the listed company as guarantee for our and their debts
effective
Commitments in violation of regulations. 3. The financial independence of the listed company that is: (1) The listed company
Commitments made during the
Yunnan to maintain the continues to maintain its independent financial department and independent financial accounting system; (2) The listed
in the acquisition December 10 period of
Investment independence company opens an independent bank account and does not share a bank account with our company or any other In progress
report or equity 2021 holding
Group of the listed enterprises under our control; (3) The listed company is able to make independent financial decisions without our
change report indirect stake
company company’s illegal interference with its asset utilization scheduling; (4) The independence of the listed company’s
in Yunnan
financial personnel who will not work part-time or receive remuneration in any other enterprises under our control; (5)
Baiyao
The listed company legally pays taxes independently. 4. The institutional independence of the listed company that is:
(1) The listed company continues to maintain a sound corporate governance structure and has an independent and
complete organizational structure; (2) The general meeting Board of Directors independent directors Supervisory
Committee general manager etc. of the listed company independently exercise their powers in accordance with laws
regulations and the listed company’s articles of association; (3) The listed company has an independent and complete
organizational structure without institutional confusion with any other enterprises under our control. 5. The business
independence of the listed company that is: (1) The listed company has the assets personnel qualifications and
capabilities to independently carry out business activities and also has the capabilities to independently and
continuously operate in the market; (2) The listed company has minimized related party transactions between our
company and any other enterprises under our control and the listed company as much as possible and fairly carry out
necessary and inevitable related party transactions at fair prices in accordance with market-oriented principles with
transaction procedures and information disclosure obligations fulfilled in accordance with relevant laws regulations
and normative documents. 6. The listed company maintains independence from our company and any other enterprises
under our control in any other aspects.
Commitment Commitment Commitment Commitment Performance
Commitments Contents
Party Type Time Period Status
1. After the completion of this equity transfer our company will consciously safeguard the interest of the listed company
and any and all of its shareholders and minimize and avoid related party transactions with the listed company. We will
not by virtue of our indirect stake in the listed company seek for improper benefits or harm any interest of the listed
company and any and all of its shareholders in related party transactions. 2. Our company does not and will not by
virtue of our indirect stake in the listed company and its own controlling influence seek from the listed company for
better commercial terms for business cooperation than that given to the third parties in the market for itself or for any
Remain
other enterprises under our control. 3. Our company does not and will not by virtue of our indirect stake in the listed
effective
company and its own controlling influence seek for privileges for itself or any other enterprises under our control to
Commitments made Commitments during the
Yunnan enter into transactions with the listed company. 4. After completing this equity transfer our company will strictly adhere
in the acquisition regarding December 10 period of
Investment to the provisions of the Company Law of the People’s Republic of China the Articles of Association of Yunnan Baiyao In progress
report or equity related party 2021 holding
Group Group the Rules of Procedure for the General Meetings and the Decision System for Related Party Transactions of the
change report transactions indirect stake
Listed Company when engaging in inevitable related party transactions with the listed company. We are committed to
in Yunnan
conducting these transactions in a transparent fair and equitable manner. This involves adhering to commercial
Baiyao
principles such as “fairness impartiality and voluntariness.” We will enter into fair and reasonable transaction contracts
with the listed company ensuring that pricing policies are developed based on market fairness impartiality and
openness. This approach guarantees the fairness of transaction prices. 5. After the completion of this equity transfer our
company and any other enterprises under our control will not illegally occupy the funds and assets of the listed
company and under no circumstances will the listed company be required to provide any form of guarantees to our
company or any other enterprises under our control.State-owned
Assets
Supervision
Remain
and
effective
Administration
during the
Commitments made Commission of Commitments In the future when the time is ripe SASAC of Yunnan Province and New Huadu shall urge Baiyao Holdings to
period of
in the acquisition Yunnan regarding gradually inject the high-quality assets related to Yunnan Baiyao’s existing business and future development areas into
March 23 2017 holding the In progress
report or equity Provincial horizontal Yunnan Baiyao Group. Both SASAC of Yunnan Province and New Huadu will also strictly comply with the regulations
shares of
change report People’s competition to avoid horizontal competition.Yunnan Baiyao
Government
(directly and(“SASAC ofindirectly)
YunnanProvince”)
New Huadu
Commitment Commitment Commitment Commitment Performance
Commitments Contents
Party Type Time Period Status
1. New Huadu and any other enterprises under our control will try the best to avoid related party transactions with
Yunnan Baiyao. For inevitable related party transactions or those occurring for reasonable reasons New Huadu will
Remain
undertake to conduct such transactions on an equal and voluntary basis in the principles of fairness impartiality and
effective
compensation for equal value with the transaction prices to be determined based on the reasonable prices recognized in
during the
Commitments made Commitments the market. 2. New Huadu and any other enterprises under our control will strictly comply with the avoidance provisions
period of
in the acquisition regarding on related party transactions set out in Yunnan Baiyao’s articles of association and in other relevant regulations. All
New Huadu March 23 2017 holding the In progress
report or equity related party related party transactions involved will be carried out in accordance with the decision-making procedures for related
shares of
change report transactions party transactions for Yunnan Baiyao and legal procedures will be followed to ensure not to harm any legitimate rights
Yunnan Baiyao
and interest of Yunnan Baiyao and any other shareholders through related party transactions. 3. If New Huadu and any
(directly and
other enterprises under our control violate any of the above statements and commitments leading to any damages to any
indirectly)
rights and interest of Yunnan Baiyao New Huadu agrees to bear any and all of the corresponding compensation
liabilities for such damages so caused to Yunnan Baiyao.
1. State-owned Equity Management Company has undertaken the previous commitments of SASAC of Yunnan
Province: After the completion of this significant asset restructuring SASAC of Yunnan Province will try its best to
avoid related party transactions with the listed company. For inevitable related party transactions or those occurring for
reasonable reasons SASAC of Yunnan Province will undertake to conduct such transactions on an equal and voluntary
basis in the principles of fairness impartiality and compensation for equal value with the transaction prices to be
determined based on the reasonable prices recognized in the market. SASAC of Yunnan Province will strictly comply
with the provisions of relevant laws regulations normative documents and the articles of association of the listed
company perform the decision-making procedures and information disclosure obligations for related party transactions
Remain
and warrant not to harm any legitimate rights and interest of the listed company and any other shareholders through
State-owned effective
related party transactions. This commitment letter shall come into effect and be irrevocable as of the date of official
Equity during the
Commitments signature by SASAC of Yunnan Province. SASAC of Yunnan Province warrants the effective fulfillment of these
Commitments made Management period of
regarding commitments and the listed company has the right to supervise its fulfillment of this commitment letter. If SASAC of
during asset Company New October 31 2018 holding the In progress
related party Yunnan Province fails to effectively fulfill this commitment letter leading to any actual losses to the listed company
restructuring Huadu and its shares of
transactions SASAC of Yunnan Province will compensate for any and all of such direct or indirect losses so caused to the listed
acting-in- Yunnan Baiyao
company.concert parties (directly and
2. New Huadu and its acting-in-concert parties undertake that: after the completion of this merger and overall listing
indirectly)
our company/I and any enterprises under our/my control will try the best to avoid related party transactions with the
listed company. For inevitable related party transactions or those occurring for reasonable reasons our company/I
undertake (s) to conduct such transactions on an equal and voluntary basis in the principles of fairness impartiality and
compensation for equal value with the transaction prices to be determined based on the reasonable prices recognized in
the market. Our company/I and any other enterprises under our/my control will strictly comply with the provisions of
relevant laws regulations normative documents and the articles of association of the listed company perform the
decision-making procedures and information disclosure obligations for related party transactions and warrant not to
harm any legitimate rights and interest of the listed company and any other shareholders through related party
Commitment Commitment Commitment Commitment Performance
Commitments Contents
Party Type Time Period Status
transactions. This commitment letter shall come into effect and be irrevocable as of the date of official signature by our
company/me. Our company/I warrant(s) the effective fulfillment of these commitments and the listed company has the
right to supervise the fulfillment of this commitment letter. If our company/I fail(s) to effectively fulfill this commitment
letter leading to any actual losses to the listed company our company/I will compensate for any and all of such direct or
indirect losses so caused to the listed company.After the completion of this merger and overall listing our company/institution will maintain independence from the
listed company in terms of personnel assets business institutions and finance in accordance with relevant laws Remain
regulations and normative documents. We will not by virtue of the identity as a related party of the listed company effective
State-owned Commitments engage in the acts that affect the independence of the listed company’s personnel assets business institutions and during the
Commitments made Equity to maintain the finances or harm any rights and interest of the listed company and any other shareholders. Instead we will effectively period of
during asset Management independence ensure the independence of the listed company in terms of personnel assets business institutions finance etc. This October 31 2018 holding the In progress
restructuring Company New of the listed commitment letter shall come into effect and be irrevocable as of the date of official signature by our shares of
Huadu company company/institution. Our company/institution warrants the effective fulfillment of these commitments and the listed Yunnan Baiyao
company has the right to supervise the fulfillment of this commitment letter. If our company/institution fails to (directly and
effectively fulfill this commitment letter leading to any actual losses to the listed company our company/institution will indirectly)
compensate for any and all of such direct or indirect losses so caused to the listed company.Remain
Baiyao effective
If Yunnan Baiyao and its subsidiaries within the scope of its consolidated financial statements and Baiyao Holdings
Holdings during the
and its subsidiaries within the scope of its consolidated financial statements engaged in any illegal activities in the
Commitments made State-owned Commitments period of
domestic real estate development business during the reporting period such as undisclosed land vacancy speculation of December 11
during asset Equity regarding real holding the In progress
land property hoarding and price gouging which have caused any losses to Yunnan Baiyao and investors our 2018
restructuring Management estate business shares of
company/institution will bear any and all of corresponding compensation liabilities for such losses as required by
Company New Yunnan Baiyao
relevant laws regulations and securities regulatory authorities.Huadu (directly and
indirectly)
If Yunnan Baiyao and its subsidiaries within the scope of its consolidated financial statements and Baiyao Holdings
Directors and
and its subsidiaries within the scope of its consolidated financial statements engaged in any illegal activities in the
Commitments made senior Commitments
domestic real estate development business during the reporting period such as undisclosed land vacancy speculation of December 11 Remain
during asset management of regarding real In progress
land property hoarding and price gouging which have caused any losses to Yunnan Baiyao and investors I will bear 2018 effective
restructuring the listed estate business
any and all of the corresponding compensation liabilities for such losses as required by relevant laws regulations and
company
securities regulatory authorities.
Commitment Commitment Commitment Commitment Performance
Commitments Contents
Party Type Time Period Status
1. Our company/institution will not interfere with any operation and management activities of the listed company
Remain
beyond authority nor will it encroach on any interest of the listed company.Baiyao Commitments effective
2. After the date of issuance of this commitment letter if the securities regulatory authorities make other regulatory
Holdings regarding during the
requirements regarding compensatory measures and related commitments and the above commitments fail to meet such
Commitments made State-owned compensatory period of
new regulatory regulations of the securities regulatory authorities our company/institution will undertake to issue December 11
during asset Equity measures after holding the In progress
supplementary commitments in accordance with their then latest relevant regulations. 2018
restructuring Management dilution of shares of
3. Our company/institution undertakes to effectively fulfill the relevant compensatory measures formulated by the listed
Company New immediate Yunnan Baiyao
company and the relevant commitments made by our company/institution. If our company/institution violates these
Huadu returns (directly and
commitments and causes any losses to the listed company or investors our company/institution is willing to legally bear
indirectly)
any and all of the corresponding compensation liabilities for such losses.
1. I undertake not to transfer benefits to any other units or individuals without compensations or under unfair conditions
nor to harm any interest of the listed company in any other way. 2. I undertake to restrain my official consumption. 3. I
undertake not to use the assets of the listed company to engage in investment or consumption activities unrelated to my
Commitments duties. 4. I undertake that the compensation system to be formulated by the Board of Directors or Remuneration
Directors
regarding Committee in the future will be linked to the implementation of compensatory measures taken by the listed company. 5.supervisors
Commitments made compensatory I undertake that the exercise conditions of the listed company’s equity incentives to be announced in the future will be
and senior December 11 Remain
during asset measures after linked to the implementation of the compensatory measures taken by the listed company. 6. I undertake to effectively In progress
management of 2018 effective
restructuring dilution of fulfill the relevant compensatory measures formulated by the listed company and any commitments made by myself
the listed
immediate regarding compensatory measures. If I violate or refuse to fulfill any of the above commitments leading to any losses to
company
returns the listed company or any and all of its shareholders I’m willing to legally bear any and all of the corresponding
compensation liabilities. This commitment letter shall come into effect as of the date of my signature and shall constitute
a binding legal document on me upon its effectiveness. If I violate this commitment letter I’m willing to bear any and
all of the corresponding legal liabilities.
Commitment Commitment Commitment Commitment Performance
Commitments Contents
Party Type Time Period Status
1. State-owned Equity Management Company has undertaken the previous commitments of SASAC of Yunnan
Province: In order to avoid horizontal competition with the listed company and safeguard the legitimate rights and
interest of the listed company and other shareholders State-owned Equity Management Company solemnly makes the
following statements and commitments: After the completion of this transaction State-owned Equity Management
Company will not directly engage in any businesses that are the same as or similar to and constitute a competition with
the principal businesses of the listed company.
2. New Huadu undertakes that: As of the issuance date of this commitment letter our company and any enterprises
under our control have not invested in any company enterprise or other operating entity engaged in any business the
same as or similar to the principal businesses of the listed company or co-operating or co-engaged with others in
business the same as or similar to the principal businesses of the listed company.After the completion of this transaction our company and any enterprises under our control will not directly or Remain
indirectly engage in any form (including but not limited to investment M&A affiliation joint ventures cooperation effective
State-owned partnership contracting or leasing operations and equity participation) in businesses that are the same as or similar to during the
Commitments
Commitments made Equity and constitute a competition with the principal businesses of the listed company nor will we directly or indirectly own period of
regarding
during asset Management any absolute or relative control over any other companies enterprises or operating entities that engage in businesses that October 31 2018 holding the In progress
horizontal
restructuring Company New are the same as or similar to and constitute a competition with the principal businesses of the listed company. shares of
competition
Huadu During the commitment period mentioned above if the listed company actually further expands its existing principal Yunnan Baiyao
businesses and our company and any enterprises under our control have not yet engaged in production or operation of (directly and
such new businesses our company and any enterprises under our control will not engage in such new businesses that indirectly)
compete with the principal businesses of the listed company unless the listed company notifies us in writing that it
would no longer engage in such new businesses.During the aforementioned commitment period if our company and any enterprises under our control obtain from any
third party any business opportunity that competes or may compete with the principal businesses of the listed company
we shall immediately notify the listed company. If the listed company provides a positive response that it is willing to
take advantage of that business opportunity within the reasonable period specified in the notice our company and any
enterprises under our control will abandon that business opportunity.If our company and any enterprises under our control violate any of the above statements and commitments leading to
any damages to any rights and interest of the listed company our company agrees to bear any and all of the
corresponding compensation liabilities for such damages so caused to the listed company.
Commitment Commitment Commitment Commitment Performance
Commitments Contents
Party Type Time Period Status
Our company/I has/have provided necessary authentic accurate complete and effective documents materials or oral
statements and explanations for this transaction at this stage without any concealments false records or significant
Commitments omissions. The provided copy materials or photocopies are consistent and aligned with the original materials or
Directors regarding the originals. The signatures and seals on the provided documents and materials are authentic with necessary legal
supervisors authenticity procedures for such signatures and seals having been fulfilled and legal authorizations having been obtained. All
Commitments made
and senior accuracy and statements and explanations of facts are consistent with the facts that occurred. According to the progress of this Remain
during asset June 10 2021 In progress
management of completeness transaction our company/I will provide relevant information and documents in a timely manner in accordance with effective
restructuring
the listed of the relevant laws regulations rules and relevant provisions of the CSRC and the stock exchange and ensure that the
company information information and documents to be constantly provided still meet the requirements of authenticity accuracy
provided completeness and effectiveness. Our company/I undertake (s) and warrant (s) the information provided or disclosed in
this transaction is authentic accurate complete and effective without false records misleading statements or material
omissions and is/am willing to bear any and all of the corresponding individual and joint legal liabilities for that.As of the date of the issuance of this commitment our company has provided necessary authentic accurate complete
and effective documents materials or oral statements and explanations for this transaction at this stage without any
Commitments concealments false records or significant omissions. The provided copy materials or photocopies are consistent and
regarding the aligned with the original materials or originals. The signatures and seals on the provided documents and materials are
State-owned authenticity authentic with necessary legal procedures for such signatures and seals having been fulfilled and legal authorizations
Commitments made
Equity accuracy and having been obtained. All statements and explanations of facts are consistent with the facts that occurred. According to Remain
during asset June 10 2021 In progress
Management completeness the progress of this transaction our company will provide relevant information and documents in a timely manner in effective
restructuring
Company of the accordance with relevant laws regulations rules and relevant provisions of the CSRC and the stock exchange and
information ensure that the information and documents to be constantly provided still meet the requirements of authenticity
provided accuracy completeness and effectiveness. Our company undertakes and warrants the information provided or disclosed
in this transaction is authentic accurate complete and effective without false records misleading statements or
material omissions and is willing to bear any and all of the corresponding individual and joint legal liabilities for that.Our company and our acting-in-concert parties have provided necessary authentic accurate complete and effective
documents materials or oral statements and explanations for this transaction at this stage without any concealments
Commitments false records or significant omissions. The provided copy materials or photocopies are consistent and aligned with the
regarding the original materials or originals. The signatures and seals on the provided documents and materials are authentic with
New Huadu authenticity necessary legal procedures for such signatures and seals having been fulfilled and legal authorizations having been
Commitments made
and its acting- accuracy and obtained. All statements and explanations of facts are consistent with the facts that occurred. According to the progress Remain
during asset June 10 2021 In progress
in-concert completeness of this transaction our company and our acting-in-concert parties will provide relevant information and documents in a effective
restructuring
parties of the timely manner in accordance with relevant laws regulations rules and relevant provisions of the CSRC and the stock
information exchange and ensure that the information and documents to be constantly provided still meet the requirements of
provided authenticity accuracy completeness and effectiveness. Our company and our acting-in-concert parties undertake and
warrant the information provided or disclosed in this significant asset restructuring is authentic accurate complete and
effective without false records misleading statements or material omissions and are willing to bear any and all of the
Commitment Commitment Commitment Commitment Performance
Commitments Contents
Party Type Time Period Status
corresponding individual and joint legal liabilities for that.
1. I undertake not to transfer benefits to any other units or individuals without compensations or under unfair conditions
nor to harm any interest of the listed company in any other way. 2. I undertake to restrain my official consumption. 3. I
undertake not to use the assets of the listed company to engage in investment or consumption activities unrelated to my
Commitments duties. 4. I undertake that the compensation system to be formulated by the Board of Directors or Remuneration
Directors regarding Committee in the future will be linked to the implementation of compensatory measures taken by the listed company. 5.supervisors compensatory If the listed company subsequently introduces equity incentive policies I undertake that the exercise conditions of the
Commitments made
and senior measures after listed company’s equity incentives to be announced in the future will be linked to the implementation of the Remain
during asset June 10 2021 In progress
management of diluting compensatory measures taken by the listed company. 6. If during the period after the date of issuance of this effective
restructuring
the listed immediate commitment letter and before the completion of this transaction by the listed company the CSRC makes other
company returns by this regulatory requirements regarding compensatory measures and related commitments and the above commitments fail to
restructuring meet such new regulatory regulations of the CSRC I undertake to issue supplementary commitments in accordance with
the then latest CSRC regulations. 7. If I violate any of the above commitments leading to any losses to the listed
company or investors I’m willing to legally bear any and all of the corresponding compensation liabilities for such
losses so caused to the listed company or investors.
1. On October 31 2018 SASAC of Yunnan Province as a shareholder of the listed company issued the Commitment
Letter of SASAC of Yunnan Province on Maintaining the Independence of the Listed Company Commitment Letter of
Commitments SASAC of Yunnan Province on Reducing and Regulating Related Party Transactions and Commitment Letter of SASAC
to maintain the of Yunnan Province on Avoiding Horizontal Competition. On April 7 2020 our company issued the Commitment Letter
independence of State-owned Equity Management Company on Its Undertaking of the Relevant Commitments Made in the Process ofof the listed Yunnan Baiyao’s Merger Transaction by SASAC of Yunnan Province (hereinafter referred to as the “Commitment LetterState-owned company on Undertaking”) committing to fully undertake as of the date of completion of this equity transfer (calculated from the
Commitments made
Equity reduce and date of registration of the underlying equity in the name of our company) the responsibilities and obligations specified Remain
during asset June 10 2021 In progress
Management regulate in the commitment documents previously made by SASAC of Yunnan Province and continuously effective at the time of effective
restructuring
Company related party this equity transfer as set out in the following list. The list includes the foregoing three commitment letters issued by
transactions SASAC of Yunnan Province. 2. As of the date of signing this commitment letter our company has always strictly
and avoid fulfilled the commitments to maintain the independence of the listed company reduce and regulate related party
horizontal transactions and avoid horizontal competition in accordance with the requirements of the Commitment Letter on
competition Undertaking and has not violated any of the commitments made. After the completion of this transaction our company
will continue to strictly fulfill the Commitment Letter on Undertaking to safeguard the interest of the listed company and
any and all of its shareholders.
Commitment Commitment Commitment Commitment Performance
Commitments Contents
Party Type Time Period Status
1. As of the date of signing this commitment letter our company has always strictly fulfilled the Commitment Letter on
Maintaining the Independence of the Listed Company Commitment Letter on Reducing and Regulating Related Party
Transactions and Commitment Letter on Avoiding Horizontal Competition all issued on October 31 2018. Our
company’s acting-in-concert parties have always strictly fulfilled the Commitment Letter on Reducing and Regulating
Related Party Transactions issued on October 31 2018 and have not violated any of the commitments made. After the
completion of this transaction our company and our acting-in-concert parties will continue to strictly fulfill this
commitment letter to safeguard the interest of the listed company and any and all of its shareholders.
2. After the completion of this transaction our company’s acting-in-concert parties will maintain independence from the
Commitments
listed company in terms of personnel assets business institutions and finance in accordance with relevant laws
to maintain the
regulations and normative documents and will not by virtue of the identity as a shareholder and a related party of the
independence
listed company engage in the acts that affect the independence of the listed company’s personnel assets business
of the listed
institutions and finances or harm any rights and interest of the listed company and other shareholders. Instead they will
New Huadu company
Commitments made effectively ensure the independence of the listed company in terms of personnel assets business institutions finance
and its acting- reduce and Remain
during asset etc. June 10 2021 In progress
in-concert regulate effective
restructuring 3. As of the date of signing this commitment letter our company’s acting-in-concert parties and any other companies or
parties related party
enterprises under their control have not engaged in any business that constitute a horizontal competition with the
transactions
principal businesses of the listed company and any other companies or enterprises under its control. In order to avoid
and avoid
horizontal competition with the listed company and safeguard the legitimate rights and interest of the listed company
horizontal
and other shareholders after the completion of this transaction our company’s acting-in-concert parties and any other
competition
companies or enterprises under their control will not directly engage in businesses that are the same as or similar to and
constitute a competition with the principal businesses of the listed company.
4. This commitment letter shall come into effect and be irrevocable as of the date of official signature by our company
and our acting-in-concert parties. Our company and our acting-in-concert parties warrant the effective fulfillment of
these commitments and the listed company has the right to supervise their fulfillment of this commitment letter. If our
company and our acting-in-concert parties fail to effectively fulfill this commitment letter leading to any actual losses to
the listed company our company and our acting-in-concert parties will compensate for any and all of such direct or
indirect losses so caused to the listed company.
Commitment Commitment Commitment Commitment Performance
Commitments Contents
Party Type Time Period Status
During the period when our company is a related party of Shanghai Pharma our company and any other companies or
enterprises under our control will try the best to avoid and reduce related party transactions with Shanghai Pharma and
its subsidiaries. For inevitable related party transactions or those occurring for reasonable reasons our company
undertakes to conduct such transactions on an equal and voluntary basis in the principles of fairness impartiality and
Commitments compensation for equal value with the transaction prices to be determined based on the reasonable prices recognized in
Commitments made to reduce and the market. Our company will strictly comply with the provisions of relevant laws regulations normative documents
Remain
during asset Listed company regulate and the Articles of Association of Shanghai Pharma perform the decision-making procedures and information June 10 2021 In progress
effective
restructuring related party disclosure obligations for related party transactions and warrant not to harm any legitimate rights and interest of
transactions Shanghai Pharma and any other shareholders through related party transactions. This commitment letter shall come into
effect and be irrevocable as of the date of official signature by our company. Our company warrants the effective
fulfillment of these commitments and Shanghai Pharma has the right to supervise the fulfillment of this commitment
letter. If our company fails to effectively fulfill this commitment letter leading to any actual losses to Shanghai Pharma
our company will compensate for any and all of such direct or indirect losses so caused to Shanghai Pharma.Whether the
commitments are
Yes
fulfilled as
scheduled
If the commitments
are overdue and
have not been
fulfilled the specific
N/A
reason for the failure
and further work
plan shall be
explained in detail
II. Occupation of the Company’s Capital by the Controlling Shareholder or any of Its Related Parties for Non-Operating Purposes
□ Applicable □Not applicable
During the reporting period there was no occupation of the Company’s capital by the controlling shareholder or any of its related parties for non-operating purposes.III. Non-compliant Provision of External Guarantees
□ Applicable □Not applicable
There was no non-compliant provision of external guarantees during the reporting period.
IV. Engagement and Disengagement of Auditor
Whether the interim financial statements were audited or not
□ Yes □No
The Company’s interim financial statements were unaudited.V. Explanations Given by the Board of Directors Regarding the Auditor’s “Modified Opinion”
on the Financial Statements of the Reporting Period
□ Applicable □Not applicable
VI. Explanations Given by the Board of Directors Regarding the Auditor’s “Modified Opinion”
on the Financial Statements of Previous Year
□ Applicable □Not applicable
VII. Bankruptcy and Reorganization
□ Applicable □Not applicable
There were no bankruptcy or reorganization related events during the reporting period.VIII. Legal Matters
Material litigation or arbitration matters
□ Applicable □Not applicable
During the reporting period the Company had no material litigation or arbitration matters.Other litigation
□Applicable □ Not applicable
Amount Enforcement of
Any Estimated Litigation
Basic Information of Involved Litigation (Arbitration) Litigation Disclosure Disclosure
Liability (Arbitration) Trial
Litigation (Arbitration) (RMB’000 Progress (Arbitration) Date Index
Caused or Not Results and Impacts
0) Judgments
Some cases have been Some are in the
Summary of events not filed to be tried; some Summary of process of being
meeting the disclosure are being under trials to litigation events has fulfilled or are
standards for being 41246.97 No be adjudicated; some no significant being enforced
included in significant have been adjudicated; impact on the against the
litigation (arbitration) Some are in the process Company opposing party in
of enforcement the lawsuit
IX. Punishments and Rectifications
□ Applicable □Not applicable
There was no punishment or rectification involving the Company during the reporting period.
X. Credit Quality of the Company as well as its Controlling Shareholder and De Facto
Controller
□ Applicable □Not applicable
XI. Significant Related Party Transactions
1. Related party transactions in relation to daily operations
□ Applicable □Not applicable
There were no related party transactions related to daily operations during the reporting period.
2. Related party transactions arising from acquisition or sale of assets or equity
□ Applicable □Not applicable
There were no related party transactions arising from acquisition or sale of assets or equity during the reporting period.
3. Related party transactions regarding joint investments in third parties
□ Applicable □Not applicable
There were no related party transactions regarding joint investments in third parties during the reporting period.
4. Amounts due to and from related parties
□ Applicable □Not applicable
There were no amounts due to and from related parties during the reporting period.
5. Transactions with related finance companies
□ Applicable □Not applicable
There were no deposit loan credit or other financial business occurring between the Company and its related finance
companies/related parties.
6. Transactions with related parties by finance company controlled by the Company
□ Applicable □Not applicable
There were no deposit loan credit or other financial business occurred between any finance companies under the control of the
Company and related parties.
7. Other significant related party transactions
□Applicable □Not applicable
Based on its routine business needs for 2026 the Company has made reasonable estimates regarding various
related-party transactions related to daily operations including procurement and sales of goods. The Company
estimated that the total amount of routine related-party transactions with Shanghai Pharma and Tibet Jiushi Zhihe
Marketing Co. Ltd in 2026 would be RMB 2300 million accounting for 5.74% of the Company’s audited net
assets of RMB 40044.0588 million as of the end of 2025 which shall be submitted to the Company’s 2025 Annual
Shareholders’ Meeting for consideration.This matter has been considered and approved by the Company’s 11th Board of Directors at its second session
of 2026 and at the 2025 Annual Shareholders’ Meeting. For details please refer to the Announcement on Estimated
Routine Related-Party Transactions for 2026 (Announcement No. 2026-11) the Announcement on the Resolutions
of the Second Meeting of the 11th Board of Directors in 2026 (2026-08) and the Announcement on the Resolutions
of the 2025 Annual Shareholders’ Meeting (2026-15).Inquiries regarding the website for the disclosure of interim reports on significant related-party transactions
Date of Disclosure of the Name of Website for the Disclosure of
Title of the Temporary Announcement
Temporary Announcement Temporary Announcements
Announcement on Estimated Routine Related-
April 1 2026 http://www.cninfo.com.cn
Party Transactions for 2026
Announcement on the Resolutions of the Second
April 1 2026 http://www.cninfo.com.cn
Session of the 11th Board of Directors in 2026
Announcement on the Resolutions of the 2025
April 22 2026 http://www.cninfo.com.cn
Annual Shareholders’ Meeting
XII. Major Contracts and Their Performance
1. Entrustment contracting and leases
(1) Entrustment
□ Applicable □Not applicable
There were no entrustment events of the Company during the reporting period.
(2) Contracting
□ Applicable □Not applicable
There were no contracting events of the Company during the reporting period.
(3) Leases
□ Applicable □Not applicable
There were no leases of the Company during the reporting period.
2. Major guarantees
□ Applicable □Not applicable
There were no major guarantees of the Company during the reporting period.
3. Entrusted wealth management
□Applicable □ Not applicable
Unit: RMB’0000
Balance of entrusted wealth
Product category Risk characteristics management during the Unrecovered overdue amount
Reporting Period
Bank financial products Self-owned capital 142000 0
Brokerage financial products Self-owned capital 330000 0
Details regarding the Company’s engagement of financial institutions as a single client to conduct asset management or invest in
high-risk wealth management products with lower safety and poorer liquidity
□Applicable □ Not applicable
Unit: RMB’0000
Actual
Gains or Overview of
Actual Recovery of Gains
Name of Type of Risk Product Starting Ending Investment Losses for Matters and
Amount or Losses for the
trustee trustee characteristics category date date allocation the Related Inquiry
Reporting Period
Reporting Index (if any)
Period
On February 27 2026
YNBY International
allotted and issued
1937984496 shares of
YNBY International to
Shanghai International
Trust Corp. Ltd a
https://www.cnin
designated trustee of
fo.com.cn/new/di
Yunnan Baiyao (which
sclosure/detailst
subscribed to and holds the
Shanghai Fixed- ockCode=00053
convertible bonds on
International Income HKD October 8&announcemen
Trust - Debt Assets -774.08 behalf of Yunnan Baiyao)
Trust Corp. Fund 50000.00 28 2020 tId=1224988569
at a conversion price of
Ltd. Trusts &orgId=gssz000
HKD 0.258 per share.
0538&announce
Upon completion of the
mentTime=2026-
exercise and conversion of
options the Company will
implement the subsequent
matters related to the trust
products in accordance
with the established plan
and operational
procedures.HKD
Total -- -- -- -774.08 -- --
50000.00
4. Other Significant Contracts
□ Applicable □Not applicable
There were no other significant contracts of the Company during the reporting period.
XIII. Registration Form of Survey Communication Interviews and Other Activities Received
During the Reporting Period
□Applicable □ Not applicable
Time of Mode of Type of Discussions and
Place of reception Guests Basic information index of the survey
reception reception guests information provided
6 persons from To understand the business https://www.cninfo.com.cn/new/disclosure/detailstoc
January 21 Office building at Telephone Institutional
E-Fund Fund situation of the Company kCode=000538&announcementId=1224948225&orgI
2026 the headquarters communication investors
etc. and other related issues d=gssz0000538&announcementTime=2026-01-23
5 persons from
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January 22 Office building at Telephone Institutional PICC Asset
situation of the Company kCode=000538&announcementId=1224948249&orgI
2026 the headquarters communication investors Management
and other related issues d=gssz0000538&announcementTime=2026-01-23
etc.
2 persons from
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January 22 Office building at Telephone Institutional
Securities Asset situation of the Company kCode=000538&announcementId=1224948227&orgI
2026 the headquarters communication investors
Management and other related issues d=gssz0000538&announcementTime=2026-01-23
etc.
2 persons from
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January 23 Office building at Telephone Institutional ABC-CA Fund
situation of the Company kCode=000538&announcementId=1224952206&orgI
2026 the headquarters communication investors Management
and other related issues d=gssz0000538&announcementTime=2026-01-27
etc.
4 persons from To understand the business https://www.cninfo.com.cn/new/disclosure/detailstoc
January 23 Office building at Telephone Institutional
Zhong Hui Life situation of the Company kCode=000538&announcementId=1224952208&orgI
2026 the headquarters communication investors
Insurance etc. and other related issues d=gssz0000538&announcementTime=2026-01-27
151 persons
including those
Individual
from To understand the business https://www.cninfo.com.cn/new/disclosure/detailstoc
April 1 Office building at Telephone and
institutional situation of the Company kCode=000538&announcementId=1225072712&orgI
2026 the headquarters communication institutional
investors and and other related issues d=gssz0000538&announcementTime=2026-04-01
investors
individual
investors
18 persons from To understand the business https://www.cninfo.com.cn/new/disclosure/detailstoc
April 2 Office building at Institutional
Field research ICBC Credit situation of the Company kCode=000538&announcementId=1225075992&orgI
2026 the headquarters investors
Suisse etc. and other related issues d=gssz0000538&announcementTime=2026-04-02
5 persons from
China Universal To understand the business https://www.cninfo.com.cn/new/disclosure/detailstoc
April 8 Office building at Telephone Institutional
Asset situation of the Company kCode=000538&announcementId=1225085370&orgI
2026 the headquarters communication investors
Management and other related issues d=gssz0000538&announcementTime=2026-04-08
etc.
3 persons from To understand the business https://www.cninfo.com.cn/new/disclosure/detailstoc
April 8 Office building at Telephone Institutional
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2026 the headquarters communication investors
etc. and other related issues d=gssz0000538&announcementTime=2026-04-08
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April 8 Office building at Telephone Institutional 3 persons from
situation of the Company kCode=000538&announcementId=1225085375&orgI
2026 the headquarters communication investors NCI etc.
and other related issues d=gssz0000538&announcementTime=2026-04-08
9 persons from
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April 10 Office building at Telephone Institutional Taiping Asset
situation of the Company kCode=000538&announcementId=1225094986&orgI
2026 the headquarters communication investors Management
and other related issues d=gssz0000538&announcementTime=2026-04-10
etc.
5 persons from
China Life To understand the business https://www.cninfo.com.cn/new/disclosure/detailstoc
April 10 Office building at Telephone Institutional
Asset situation of the Company kCode=000538&announcementId=1225095024&orgI
2026 the headquarters communication investors
Management and other related issues d=gssz0000538&announcementTime=2026-04-10
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2 persons from To understand the business https://www.cninfo.com.cn/new/disclosure/detailstoc
April 10 Office building at Telephone Institutional
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2026 the headquarters communication investors
etc. and other related issues d=gssz0000538&announcementTime=2026-04-10
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and institutional
investors
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participating in To understand the business https://www.cninfo.com.cn/new/disclosure/detailstoc
April 21 Office building at investors
Field research the investor situation of the Company kCode=000538&announcementId=1225142365&orgI
2026 the headquarters individual
Q&A session of and other related issues d=gssz0000538&announcementTime=2026-04-21
investors
2025 Annual
Shareholders’
Meeting
9 persons from To understand the business https://www.cninfo.com.cn/new/disclosure/detailstoc
April 22 Office building at Telephone Institutional
Huaxing situation of the Company kCode=000538&announcementId=1225146303&orgI
2026 the headquarters communication investors
Securities etc. and other related issues d=gssz0000538&announcementTime=2026-04-22
10 persons from To understand the business https://www.cninfo.com.cn/new/disclosure/detailstoc
June 4 Office building at Institutional
Field research E-Fund Fund situation of the Company kCode=000538&announcementId=1225352226&orgI
2026 the headquarters investors
etc. and other related issues d=gssz0000538&announcementTime=2026-06-04
XIV. Explanation for Other Significant Events
□Applicable □ Not applicable
1. Progress of R&D projects
On April 1 2026 the Company issued the Announcement on the Approval of INB301 Injection for Drug
Clinical Trial (Announcement No. 2026-13). The Company received the Notice of Approval for Clinical Trials of
Drugs (Notice No.: 2026LP01002) issued by the National Medical Products Administration. Upon review the
clinical trial application for INB301 Injection (“the Product”) which was accepted on February 24 2026 was found
to comply with the relevant requirements for drug registration and approval was granted to conduct clinical trials
of the Product for cancer cachexia.On June 3 2026 the Company issued the Announcement on the Approval of a New Drug Clinical Trial
Application for INB301 Injection by U.S. Food and Drug Administration (Announcement No. 2026-20). The
Company received notification from the U.S. Food and Drug Administration (the “U.S. FDA”) that the New Drug
Clinical Trial Application for INB301 Injection submitted by the Company has been approved by the U.S. FDA
which has granted permission to conduct clinical trials. The intended indication for development is cancer cachexia.
2. Progress on the private placement of exchangeable corporate bonds to shareholders
On April 20 2026 the Company disclosed the Reminder Announcement Regarding the Entry into the Exchange
Period for Exchangeable Corporate Bonds Issued Privately to Shareholders Holding More Than 5% of the Shares
(Announcement No. 2026-14). The Company received a written notice from New Huadu a shareholder holding
more than 5% of our shares stating that these exchangeable bonds will enter the exchange period on April 23 2026
with the current exchange price set at RMB 71.66 per share. The exchange period runs from the first trading day six
months after the completion of the exchangeable bond issuance until the trading day immediately preceding the
delisting of the exchangeable bonds specifically from April 23 2026 to October 20 2028.On April 27 2026 the Company issued the Notice Regarding the Adjustment of the Exchange Price for
Exchangeable Corporate Bonds Issued Privately to Shareholders Holding More Than 5% of the Shares
(Announcement No. 2026-17). On April 27 2026 the Company received a written notice from New Huadu a
shareholder holding more than 5% of our shares stating that the exchange price for these exchangeable bonds would
be adjusted. As the Company has disclosed the specific plan for Yunnan Baiyao’s 2025 annual equity distribution
in accordance with the relevant provisions of the Prospectus the conversion price of these exchangeable bonds will
be adjusted from RMB 71.66 per share to RMB 70.08 per share effective from April 30 2026 the ex-dividend and
ex-rights date for this equity distribution.
3. Pledge and lifting of pledge of some shares by the shareholders
(1) On January 23 2026 the Company issued the Announcement Regarding the Lifting of Pledge of Certain
Shares by a Shareholder (Announcement No. 2026-01) stating that the Company was informed that New Huadu
had released 75000000 shares of the Company (representing 4.20% of the total issued share capital) from pledge.
(2) On February 3 2026 the Company issued the Announcement Regarding the Pledge of Certain Shares by
a Shareholder (Announcement No. 2026-02) stating that the Company was informed that New Huadu had pledged
6750000 shares of the Company (representing 0.38% of the total issued share capital).
(3) On February 25 2026 the Company issued the Announcement Regarding the Pledge of Certain Shares by
a Shareholder (Announcement No. 2026-05) stating that the Company was informed that New Huadu had pledged
7470000 shares of the Company (representing 0.42% of the total issued share capital).
(4) On March 24 2026 the Company issued the Announcement Regarding the Pledge of Certain Shares by a
Shareholder (Announcement No. 2026-07) stating that the Company was informed that New Huadu had pledged
10450000 shares of the Company (representing 0.59% of the total issued share capital).
XV. Significant Events of the Company’s Subsidiaries
□Applicable □ Not applicable
On May 22 2026 at the Annual General Meeting of Shareholders the Board of Directors of YNBY
International received a share repurchase authorization from the shareholders of YNBY International to repurchase
on the open market no more than 10% of the total number of issued shares of YNBY International as of the date the
resolution was passed at the Annual General Meeting of Shareholders. The Board of Directors of YNBY
International has formally resolved to authorize the management to exercise this repurchase authorization from time
to time as appropriate on the open market to implement the share repurchase program. YNBY International may
repurchase shares at an appropriate time depending on the circumstances. If YNBY International repurchases any
shares pursuant to the repurchase authorization YNBY International may based on market conditions at the time
of the repurchase and its capital management needs cancel such repurchased shares and/or hold them as treasury
shares.As of August 14 2026 YNBY International had repurchased a total of 109936000 shares under its repurchase
authorization representing approximately 1.15% of YNBY International’s total issued shares. The repurchased
shares will be canceled or held as treasury shares depending on market conditions and YNBY International’s capital
management needs.
Section VI Changes in Shareholdings and Particulars about
Shareholders
I. Changes in Shares
1. Changes in shares
Unit: share
Before this change Increase/decrease (+ -) After this change
Capital
reserve
New Bonus
Quantity Proportion converted Others Subtotal Quantity Proportion
shares Shares
into share
capital
I. Shares subject
to trading 11329233 0.63% -11199023 -11199023 130210 0.01%
moratorium
1. State-
owned shares
2. Shares held
by state-owned
legal persons
3. Shares held
by other
11329233 0.63% -11199023 -11199023 130210 0.01%
domestic
shareholders
Of which:
shares held by
domestic legal
persons
Shares held
by domestic 11329233 0.63% -11199023 -11199023 130210 0.01%
natural persons
4. Foreign-
invested shares
Of which:
shares held by
overseas legal
persons
Shares held
by overseas
natural persons
II. Shares not
subject to
1772933370 99.37% 11199023 11199023 1784132393 99.99%
trading
moratorium
1. RMB-
denominated 1772933370 99.37% 11199023 11199023 1784132393 99.99%
ordinary shares
2. Domestic-
listed foreign
shares
3. Overseas-
listed foreign
shares
4. Others
III. Total
number of 1784262603 100.00% 0 0 1784262603 100.00%
shares
Reasons for changes in shareholdings
□ Applicable □Not applicable
Approval of changes in shareholdings
□ Applicable □Not applicable
Transfers for changes in shareholdings
□ Applicable □Not applicable
Progress of share repurchase implementation
□ Applicable □Not applicable
Progress of the implementation of the reduction and repurchase of shares through centralized bidding
□ Applicable □Not applicable
The impact of changes in shareholdings on financial indicators such as basic and diluted earnings per share net assets per share
attributable to the Company’s ordinary shareholders for the latest year and period
□ Applicable □Not applicable
Other disclosures the Company deems necessary or required by securities regulators
□ Applicable □Not applicable
2. Changes in shares subject to trading moratorium
□Applicable □ Not applicable
Unit: share
Number of
Number of Increase in Number of
shares subject
shares released shares subject shares subject
to trading
from trading to trading to trading Date of shares
Name of moratorium at Reason for
moratorium moratorium moratorium at released from trading
shareholder the beginning moratorium
during the during the the end of the moratorium
of the
reporting reporting reporting
reporting
period period period
period
Implemented in
Locked-up shares
accordance with
Dong Ming 9960 0 0 9960 held by senior
regulatory
management
requirements
Zhu Locked-up shares Implemented in
42000 0 14000 56000
Zhaoyun held by senior accordance with
management regulatory
requirements
Implemented in
Locked-up shares
accordance with
Yang Fan 8250 0 0 8250 held by senior
regulatory
management
requirements
Implemented in
Locked-up shares
accordance with
Li Jin 42000 0 14000 56000 held by senior
regulatory
management
requirements
Locked-up shares
Yu Juan 110625 110625 0 0 held by senior May 6 2026
management
Locked-up shares
Yin Pinyao 189000 189000 0 0 held by senior May 6 2026
management
Locked-up shares
Yang Yong 75768 75768 0 0 held by senior May 6 2026
management
Locked-up shares
Wang
567000 567000 0 0 held by senior May 6 2026
Minghui
management
Locked-up shares
Wang Jin 378000 378000 0 0 held by senior May 6 2026
management
Locked-up shares
Qin Wanmin 378000 378000 0 0 held by senior May 6 2026
management
Locked-up shares
Chen
133009 133009 0 0 held by senior May 6 2026
Yanhui
management
Locked-up shares
Chen Fashu 9395621 9395621 0 0 held by senior May 6 2026
management
Total 11329233 11227023 28000 130210 -- --
II. Issuance and Listing of Securities
□ Applicable □Not applicable
III. Number of Shareholders of the Company and Their Shareholdings
Unit: share
Total number of ordinary Total number of preferred shareholders with
shareholders at the end of the 189362 resumed voting rights at the end of the reporting 0
reporting period period (if any)
Shareholdings of ordinary shareholders holding more than 5% of the shares or the top 10 ordinary shareholders (excluding lending of shares through
securities finance)
Number of Number of Number of Pledged marked or
Change
ordinary shares ordinary ordinary shares frozen
Nature of Shareholding during the
Name of shareholder held at the end shares subject not subject to
shareholder ratio reporting
of the reporting to trading trading
period Status Quantity
period moratorium moratorium
State-owned Equity
State-owned
Management 26.20% 467431774 0 0 467431774 Pledged 115500000
legal person
Company
Domestic
New Huadu Industrial non-state-
21.28% 379742244 0 0 379742244 Pledged 42170000
Group Co. Ltd. owned legal
person
Yunnan Hehe (Group) State-owned
8.19% 146185851 0 0 146185851 N/A 0
Co. Ltd. legal person
China Life Insurance
Company Limited –
Traditional – Ordinary
Others 4.14% 73948314 48779065 0 73948314 N/A 0
Insurance Products –
005L-CT001
Shanghai
New Huadu Group –
Guosen Securities – Domestic
25 New Huadu EB01 non-state-
3.14% 56000000 0 0 56000000 N/A 0
Guaranteed and Trust owned legal
Property Special person
Account
Hong Kong Securities
Overseas
Clearing Company 2.08% 37164164 -11983902 0 37164164 N/A 0
legal person
Limited
China Construction
Bank Corporation－E
Fund CSI 300
Medical and
Others 0.81% 14498382 2584036 0 14498382 N/A 0
Healthcare Trading
Open-End Index
Securities Investment
Fund
Domestic
Chen Fashu natural 0.70% 12527495 0 0 12527495 N/A 0
person
Taiping (Shenzhen)
Private Equity
Securities Investment
Fund Management
Others 0.51% 9079675 1617775 0 9079675 N/A 0
Co. Ltd. - Taiping
Zhuoyuan No. 1
Private Securities
Investment Fund
Huatai Securities Co. State-owned
0.33% 5877654 3047144 0 5877654 N/A 0
Ltd. legal person
Strategic investors or general legal
persons who become the top 10
N/A
ordinary shareholders due to rights
issue (if any)
Chen Fashu is the de facto controller of New Huadu Industrial Group Co. Ltd. It is unclear whether there are any
Related or acting-in-concert parties
related relationships among other shareholders or whether there is any concerted action as defined by the
among the shareholders above
Administration of the Takeover of Listed Companies Procedures.Above shareholders involved in
entrusting/being entrusted with voting N/A
rights and giving up voting rights
Special account for share repurchases N/A
(if any) among the top 10
shareholders
Shareholdings of the top 10 ordinary shareholders not subject to trading moratorium (excluding lending of shares through securities finance and locked-up
shares held by senior management)
Number of ordinary Type of shares
shares not subject to
Name of shareholder trading moratorium
held at the end of the Type Quantity
reporting period
RMB-denominated
State-owned Equity Management Company 467431774 467431774
ordinary share
RMB-denominated
New Huadu Industrial Group Co. Ltd. 379742244 379742244
ordinary share
RMB-denominated
Yunnan Hehe (Group) Co. Ltd. 146185851 146185851
ordinary share
China Life Insurance Company Limited – Traditional – Ordinary Insurance Products – RMB-denominated
73948314 73948314
005L-CT001 Shanghai ordinary share
New Huadu Group – Guosen Securities – 25 New Huadu EB01 Guaranteed and Trust RMB-denominated
56000000 56000000
Property Special Account ordinary share
RMB-denominated
Hong Kong Securities Clearing Company Limited 37164164 37164164
ordinary share
China Construction Bank Corporation－E Fund CSI 300 Medical and Healthcare Trading RMB-denominated
14498382 14498382
Open-End Index Securities Investment Fund ordinary share
RMB-denominated
Chen Fashu 12527495 12527495
ordinary share
Taiping (Shenzhen) Private Equity Securities Investment Fund Management Co. Ltd. - RMB-denominated
9079675 9079675
Taiping Zhuoyuan No. 1 Private Securities Investment Fund ordinary share
RMB-denominated
Huatai Securities Co. Ltd. 5877654 5877654
ordinary share
Related or acting-in-concert parties
among the top 10 ordinary
shareholders not subject to trading Chen Fashu is the de facto controller of New Huadu Industrial Group Co. Ltd. It is unclear whether there are any
moratorium and the top 10 ordinary related relationships among other shareholders or whether there is any concerted action as defined by the
shareholders not subject to trading Administration of the Takeover of Listed Companies Procedures.moratorium and the top 10 ordinary
shareholders
Top 10 ordinary shareholders
involved in securities margin trading N/A
(if any)
Note: New Huadu Industrial Group Co. Ltd (hereinafter referred to as “New Huadu”) completed the issuance of exchangeable bonds
of RMB 2 billion on October 22 2025. On September 29 2025 New Huadu transferred 56000000 unrestricted tradable shares ofYunnan Baiyao it held to the “New Huadu Group – Guosen Securities – 25 New Huadu EB01 Guaranteed and Trust Property SpecialAccount” opened at the Shenzhen Branch of China Securities Depository and Clearing Corporation Limited. Guosen Securities Co.Ltd the trustee for this bond issue will act as the nominee holder and the shares will be used to provide collateral for the exchange of
shares by holders of this exchangeable corporate bond and for the repayment of principal and interest on this bond issue. The shares
subject to this security and trust registration (including dividends accrued during the trust registration period) will be held in the nameof Guosen Securities the bond trustee and registered in the Company’s securities holder registry under the name “New Huadu Group– Guosen Securities – 25 New Huadu EB01 Guaranteed and Trust Property Special Account.” When exercising voting rights attached
to shares subject to security and trust registration Guosen Securities will seek New Huadu’s opinion in advance and act in accordance
with New Huadu’s opinion provided that such actions shall not harm the interests of the holders of this series of bonds.Shareholders holding more than 5% of shares top 10 shareholders and top 10 shareholders not subject to trading moratorium
participating in the lending of shares in the securities finance
□ Applicable □Not applicable
Changes in top 10 shareholders and top 10 shareholders with shares not subject to trading moratorium compared to the previous period
due to lending/returning of shares in the securities finance
□ Applicable □Not applicable
Whether the top 10 ordinary shareholders and the top 10 ordinary shareholders not subject to trading moratorium of the Company
conducted any agreed repurchase transactions during the reporting period
□ Yes □No
The top 10 ordinary shareholders and the top 10 ordinary shareholders not subject to trading moratorium of the Company did not
conduct any agreed repurchase transactions during the reporting period.IV. Changes in Shareholdings of Directors and Senior Management
□ Applicable □Not applicable
There was no change in the shareholdings of the directors and senior management of the Company during the reporting period. For
details please refer to the 2025 Annual Report.V. Changes in Controlling Shareholders or De Facto Controllers
If the Company has previously disclosed that its actual controller is planning a change in control but the change has not yet been
completed please describe the progress of the change in control.□ Applicable □Not applicable
Changes in controlling shareholders during the reporting period
□ Applicable □Not applicable
There was no change in the controlling shareholders of the Company during the reporting period.Change of de facto controllers during the reporting period
□ Applicable □Not applicable
There was no change in the de facto controllers of the Company during the reporting period.VI. Preference Shares
□ Applicable □Not applicable
There were no preference shares in the Company during the reporting period.
Section VII Bonds
□ Applicable □Not applicable
Section VIII Financial Statements
I. Auditors’ Report
Whether the Interim Report has been audited
□Yes □ No
The Company’s interim financial statements were unaudited.II. Financial Statements
The units in the Notes to the Financial Statements are presented in RMB.
1. Consolidated balance sheet
Prepared by: Yunnan Baiyao Group Co. Ltd.June 30 2026
Unit: RMB
Item Closing balance Opening balance
Current assets:
Cash and bank balance 9569904053.50 9107829167.98
Provision of settlement fund
Placements with banks and other
financial institutions
Financial assets held for trading 4751169278.18 4192113408.43
Derivative financial assets
Notes receivable 626199670.96 585366210.93
Accounts receivable 10182602486.28 10160059223.29
Accounts receivable financing 838621388.17 1681985583.93
Prepayment 337934281.51 434442949.73
Premium receivable
Reinsurance premium receivable
Reserves for reinsurance contract
receivable
Other receivables 632395561.18 406517244.11
Including: Interest receivable
Dividends receivable 232969378.60 79875215.52
Financial assets held under resale
agreements
Inventory 6147877228.16 6231383826.69
Including: Data resources
Contractual assets
Held-for-sales assets
Non-current assets due within one year
Other current assets 1181461092.17 1234895158.04
Total current assets 34268165040.11 34034592773.13
Non-current assets:
Loans and advances to customers
Debt investments
Other debt investment
Long-term receivables
Long-term equity investments 13648237691.06 13227578051.91
Investment in other equity instruments 71745000.00 71745000.00
Other non-current financial assets 312435493.34 210855260.47
Investment properties 46995322.73 50366578.65
Fixed assets 3212622675.46 3274340152.34
Construction in progress 932187206.75 807592848.36
Productive biological assets 558674.79 644624.85
Oil and gas assets
Right-of-use assets 231636423.58 248003380.85
Intangible assets 683001612.22 699193405.35
Including: Data resources 1190987.32
Development expenses 125163486.09 98211219.56
Including: Data resources
Goodwill 300805632.99 300805632.99
Long-term deferred expenses 119477510.15 108871585.00
Deferred income tax assets 1021868341.03 974220393.56
Other non-current assets 170369539.17 161560224.80
Total non-current assets 20877104609.36 20233988358.69
Total assets 55145269649.47 54268581131.82
Current liabilities:
Short-term loans 25113604.10 182775753.21
Borrowings from the central bank
Placements from banks and other
financial institutions
Financial liabilities held for trading
Derivative financial liabilities
Notes payable 1668214258.64 1846714475.61
Accounts payable 5719113254.81 5523021856.86
Receipts in advance 518138.91 190841.21
Contractual liabilities 1578687785.93 1505826938.18
Financial assets sold under repurchase
agreements
Deposits from customers and
interbank
Customer brokerage deposits
Acting underwriting of securities
Payroll payable 1234856594.21 1482601305.72
Taxes and duties payable 578166281.56 278051492.11
Other payables 1378906340.85 1461459334.99
Including: Interest payable
Dividends payable 1317388.73 1317388.73
Fees and commissions payable
Reinsurance amounts payable
Held-for-sales liabilities
Non-current liabilities due within one
164848943.89 76443711.53
year
Other current liabilities 637544159.21 533163346.13
Total current liabilities 12985969362.11 12890249055.55
Non-current liabilities:
Reserves for insurance contract
Long-term loans 2100000.00 86569400.83
Bonds payable
Including: Preferred shares
Perpetual bonds
Lease liabilities 133099612.83 141830379.18
Long-term payables 535500453.36 556079941.48
Long-term payroll payable 1598405.18 1718946.33
Estimated liabilities 32255978.72 22513696.41
Deferred income 240714191.91 271769812.59
Deferred income tax liabilities 164130283.73 148417516.74
Other non-current liabilities 1931554.36 1931554.36
Total non-current liabilities 1111330480.09 1230831247.92
Total liabilities 14097299842.20 14121080303.47
Owners’ equity
Share capital 1784262603.00 1784262603.00
Other equity instruments
Including: Preferred shares
Perpetual bonds
Capital reserves 17697085699.03 17632117190.85
Less: Treasury stock
Other comprehensive income -117648883.03 -105091380.51
Special reserves
Surplus reserves 2530458968.58 2530458968.58
Provision for general risk
Undistributed profit 19078994395.52 18202311462.52
Total owners’ equity attributable to
40973152783.10 40044058844.44
parent company
Minority interests 74817024.17 103441983.91
Total owners’ equity 41047969807.27 40147500828.35
Total liabilities and owners’ equity 55145269649.47 54268581131.82
Legal representative: Zhang Wenxue Accounting officer: Ma Jia Head of accounting center: Xu Jing
2. Balance sheet of parent company
Unit: RMB
Item Closing balance Opening balance
Current assets:
Cash and bank balance 7016821187.34 7898899516.62
Financial assets held for trading 4746569278.18 4187513408.43
Derivative financial assets
Notes receivable 438581176.21 407360145.42
Accounts receivable 2260119873.38 1959868853.22
Accounts receivable financing 273840198.29 437824968.41
Prepayment 1352120894.74 1321672589.52
Other receivables 7115340906.37 6632088211.74
Including: Interest receivable
Dividends receivable 232969378.60 79875215.52
Inventory 681317124.94 915778341.49
Including: Data resources
Contractual assets
Held-for-sales assets
Non-current assets due within one year
Other current assets 502776236.34 526360546.17
Total current assets 24387486875.79 24287366581.02
Non-current assets:
Debt investments
Other debt investments
Long-term receivables
Long-term equity investments 16027235530.90 15606066432.75
Investment in other equity instruments
Other non-current financial assets 311935493.34 210355260.47
Investment properties 478888763.64 486768216.63
Fixed assets 1490781721.97 1542652814.35
Construction in progress 82030107.89 25493467.64
Productive biological assets
Oil and gas assets
Right-of-use assets 107671357.30 110808820.06
Intangible assets 244245418.19 249740403.29
Including: Data resources
Development expenses 131620766.76 116497399.09
Including: Data resources
Goodwill
Long-term deferred expenses 21165234.90 27248415.57
Deferred income tax assets 379709056.12 378492475.32
Other non-current assets 420758573.62 407180610.18
Total non-current assets 19696042024.63 19161304315.35
Total assets 44083528900.42 43448670896.37
Current liabilities:
Short-term loans 150010000.00
Financial liabilities held for trading
Derivative financial liabilities
Notes payable
Accounts payable 4846805034.59 4801338529.81
Receipts in advance 178100.28 83822.40
Contractual liabilities 1083725891.30 1034888677.35
Payroll payable 937764791.63 1098078735.81
Taxes and duties payable 275927645.34 46701616.03
Other payables 11278433776.07 10214340163.01
Including: Interest payable
Dividends payable
Held-for-sales liabilities
Non-current liabilities due within one
4214461.95 4725069.53
year
Other current liabilities 33609569.89 25640252.72
Total current liabilities 18460659271.05 17375806866.66
Non-current liabilities:
Long-term loans 1100000.00 1100000.00
Bonds payable
Including: Preferred shares
Perpetual bonds
Lease liabilities 105369320.17 107226300.59
Long-term payables 534659360.59 554689731.33
Long-term payroll payable
Estimated liabilities
Deferred income 133505061.08 166140712.09
Deferred income tax liabilities 53035337.98 37035887.84
Other non-current liabilities 1931554.36 1931554.36
Total non-current liabilities 829600634.18 868124186.21
Total liabilities 19290259905.23 18243931052.87
Owners’ equity:
Share capital 1784262603.00 1784262603.00
Other equity instruments
Including: Preferred shares
Perpetual bonds
Capital reserves 17848330505.77 17797498647.03
Less: Treasury stock
Other comprehensive income -67191607.05 -61252370.53
Special reserves
Surplus reserves 2529297618.08 2529297618.08
Undisturbed profits 2698569875.39 3154933345.92
Total owners’ equity 24793268995.19 25204739843.50
Total liabilities and owners’ equity 44083528900.42 43448670896.37
3. Consolidated income statement
Unit: RMB
Item H1 2026 H1 2025
I. Total operating revenue 21884075971.15 21257102896.02
Including: Operating revenue 21884075971.15 21257102896.02
Interest income
Premiums earned
Fee and commission income
II. Total operating cost 18422708603.11 17836286155.07
Including: Operating cost 15305914691.16 14697868069.29
Interest expenses
Fee and commission expenses
Surrender value
Net payments for insurance claims
Net provision for insurance liability
Bond insurance expenses
Reinsurance expenses
Taxes and surcharges 131037059.41 125773653.15
Selling expenses 2450428700.94 2516371857.04
Administrative expenses 327578033.29 363479043.45
R&D expenses 189575115.25 155900139.57
Financial expenses 18175003.06 -23106607.43
Including: Interest expenses 10236543.28 10821177.16
Interest income 19118451.87 49581264.78
Plus: other income 63467539.93 27406398.49
Investment income (loss is indicated with “-”) 601930486.00 839628716.65
Including: Income from investment in associates and
615750695.41 783530345.39
joint ventures
Investment income from derecognition of
financial assets at amortized cost
Exchange gains (loss is indicated with “-”)
Net exposure hedging income (loss is indicated with “-”)
Income from change in fair value (loss is indicated with “-”) 129325396.89 70037496.76
Credit impairment losses (loss is indicated with “-”) 40950070.41 -98382642.61
Asset impairment losses (loss is indicated with “-”) -24068120.33 -41743184.35
Gains from asset disposal (loss is indicated with “-”) 1111348.76 2552729.83
III. Operating profit (loss is indicated with “-”) 4274084089.70 4220316255.72
Plus: Non-operating revenue 13148676.97 17525440.99
Less: Non-operating expenses 4675701.85 5969854.92
IV. Total profit (total loss is indicated with “-”) 4282557064.82 4231871841.79
Less: Income tax expenses 585309080.65 587271873.85
V. Net profit (net loss is indicated with “-”) 3697247984.17 3644599967.94
(I) Classification by operation continuity
1. Net profit from continuing operations (net loss is indicated
3697247984.17 3644599967.94
with “-”)
2. Net profit from discontinued operations (net loss is indicated
with “-”)
(II) Classification by ownership
1. Net profits attributable to the shareholders of the parent
3701170618.67 3632911303.12
company (net loss to be listed with “-”)
2. Minority interests (net loss to be listed with “-”) -3922634.50 11688664.82
VI. Other comprehensive income net of tax -15517150.66 4613102.15
Other comprehensive income attributable to owners of parent
-12557502.52 3258451.54
company net of tax
(I) Other comprehensive income that cannot be reclassified into
-2105340.95 -1680417.88
profits or losses
1. Changes arising from re-measurement of the defined benefit
plan
2. Other comprehensive income that cannot be reclassified into
-2105340.95 -1680417.88
profits or losses under the equity method
3. Changes in fair value of other equity instrument investments
4. Changes in fair value of the enterprise’s credit risk
5. Others
(II) Other comprehensive income that will be reclassified into
-10452161.57 4938869.42
profits or losses
1. Other comprehensive income that can be reclassified into
-3833895.57 2427464.76
profits or losses under the equity method
2. Changes in fair value of other debt investments
3. Amount of the financial asset reclassified into other
comprehensive income
4. Provision for credit impairment of other debt investments
5. Cash flow hedging reserves
6. Exchange differences from translation of statements
-6618266.00 2511404.66
denominated in foreign currencies
7. Others
Other comprehensive income attributable to minority interests net
-2959648.14 1354650.61
of tax
VII. Total comprehensive income 3681730833.51 3649213070.09
Total comprehensive income attributable to owners of parent
3688613116.15 3636169754.66
company
Total comprehensive income attributable to minority interests -6882282.64 13043315.43
VIII. Earnings per share
(I) Basic earnings per share 2.07 2.04
(II) Diluted earnings per share 2.07 2.04
Net profit realized by the combined party in business combination under common control before the business combination in the
current period was RMB 0 and net profit realized by the combined party in the previous period was RMB 0.Legal representative: Zhang Wenxue Accounting officer: Ma Jia Head of accounting center: Xu Jing
4. Income statement of parent company
Unit: RMB
Item H1 2026 H1 2025
I. Operating revenue 5500491883.80 5535899310.73
Less: Operating cost 2021009289.30 1893024450.97
Taxes and surcharges 65263114.42 68991175.77
Selling expenses 1217872078.01 1344109035.90
Administrative expenses 144060121.27 164503932.65
R&D expenses 122009259.76 100674255.21
Financial expenses 5259199.20 -36991769.80
Including: Interest expenses 46000.00 80000.00
Interest income 17051609.87 42203815.87
Plus: Other income 36643814.80 13586306.55
Investment income (loss is indicated with “-”) 611454729.08 813972731.59
Including: Income from investment in associates and
609245854.53 772957330.00
joint ventures
Derecognized financial assets measured
by amortized cost (loss is indicated with “-”)
Net exposure hedging income (loss is indicated with
“-”)
Income from changes in fair value (loss is indicated
129325396.89 53978663.05
with “-”)
Credit impairment losses (loss is indicated with “-”) 854572.75 -627361.48
Asset impairment losses (loss is indicated with “-”) -9457760.13 -26399519.27
Gains from asset disposal (loss is indicated with “-”) 47871.63
II. Operating profit (loss is indicated with “-”) 2693887446.86 2856099050.47
Plus: Non-operating revenue 1614027.89 11400991.25
Less: Non-operating expenses 512696.04 3216437.18
III. Total profit (total loss is indicated with “-”) 2694988778.71 2864283604.54
Less: Income tax expenses 326864563.57 339419273.87
IV. Net profit (net loss is indicated with “-”) 2368124215.14 2524864330.67
(I) Net profit from continuing operations (net loss is
2368124215.14 2524864330.67
indicated with “-”)
(II) Net profit from discontinued operations (net loss is
indicated with “-”)
V. Other comprehensive income net of tax -5939236.52 747046.88
(I) Other comprehensive income that cannot be
-2105340.95 -1680417.88
reclassified into profits or losses
1. Changes arising from re-measurement of the defined
benefit plan
2. Other comprehensive income that cannot be
-2105340.95 -1680417.88
reclassified into profits or losses under the equity method
3. Changes in fair value of other equity instrument
investments
4. Changes in fair value of the enterprise’s credit risk
5. Others
(II) Other comprehensive income that will be reclassified
-3833895.57 2427464.76
into profits or losses
1. Other comprehensive income that can be reclassified
-3833895.57 2427464.76
into profits or losses under the equity method
2. Changes in fair value of other debt investments
3. Amount of the financial asset reclassified into other
comprehensive income
4. Provision for credit impairment of other debt
investments
5. Cash flow hedging reserves
6. Exchange differences from translation of statements
denominated in foreign currencies
7. Others
VI. Total comprehensive income 2362184978.62 2525611377.55
VII. Earnings per share
(I) Basic earnings per share
(II) Diluted earnings per share
5. Consolidated cash flow statement
Unit: RMB
Item H1 2026 H1 2025
I. Cash flows from operating activities:
Cash received from sales of goods or rendering of services 25032335561.86 23618604701.00
Net increase in customer deposits and placements from
financial institutions
Net increase in borrowings from central bank
Net increase in placements from other financial institutions
Cash received from premiums of original insurance contracts
Net cash received from reinsurance business
Net increase in deposits of the insured and investment
Cash received from interest fees and commissions
Net increase in placements from banks and other financial
institutions
Net increase in repurchase business funds
Net cash received from acting trading of securities
Receipts from tax refunds -1125399.10 3375249.41
Other cash receipts related to operating activities 257522866.05 380592063.79
Subtotal of cash inflows from operating activities 25288733028.81 24002572014.20
Cash paid for goods purchased and services received 16381571633.98 15188614073.94
Net increase in loans and advances to customers
Net increase in deposits with central bank and other financial
institutions
Cash paid for claim settlements on original insurance contract
Net increase in placements to banks and other financial
institutions
Cash paid for interest fees and commissions
Cash paid for policy dividends
Cash paid to and on behalf of employees 1578175029.66 1531166171.38
Payments of all types of taxes 1229014992.42 1479024101.67
Other cash paid relating to operating activities 1993932004.42 1842580464.44
Subtotal of cash outflows from operating activities 21182693660.48 20041384811.43
Net cash flows from operating activities 4106039368.33 3961187202.77
II. Cash flows from investment activities:
Cash received from disposal of investments 3850000000.00 2345628996.48
Cash received from returns on investments 119011633.21 38011539.40
Net cash received from disposal of fixed assets intangible
479654.90 982974.51
assets and other long-term assets
Net cash received from disposal of subsidiaries and other
6098162.67 1680000.00
business units
Other cash received relating to investment activities 665731155.60 145116700.00
Subtotal of cash inflows from investment activities 4641320606.38 2531420210.39
Cash paid for acquisition of fixed assets intangible assets and
222045750.52 204046627.53
other long-term assets
Cash paid for acquisition of investments 4400000000.00 2800040000.00
Net increase in pledged loans
Net cash paid for acquisition of subsidiaries and other business
units
Other cash paid relating to investment activities 603960400.00 482620900.00
Subtotal of cash outflows from investment activities 5226006150.52 3486707527.53
Net cash flows from investment activities -584685544.14 -955287317.14
III. Cash flows from financing activities:
Cash received from absorption of investments 84483323.35
Including: Cash received from subsidiaries’ absorbing
84483323.35
minority shareholder investment
Cash received from borrowings 10169668.64
Other cash received relating to financing activities 23985516.95 39062080.04
Subtotal of cash inflows from financing activities 23985516.95 133715072.03
Cash payments for settlement of debts 170424516.74 421749695.51
Cash payments for distribution of dividends and profits or
2831274723.16 2203314851.78
repayment of interest
Including: Dividends and profits paid to minority shareholders
by subsidiaries
Other cash payments relating to financing activities 64503613.65 92492403.17
Subtotal of cash outflows from financing activities 3066202853.55 2717556950.46
Net cash flow from financing activities -3042217336.60 -2583841878.43
IV. Effect of foreign exchange rate changes on cash and cash
-10320105.79 -5088619.22
equivalents
V. Net increase in cash and cash equivalents 468816381.80 416969387.98
Plus: Opening balance of cash and cash equivalents 8532232687.39 10275529575.34
VI. Closing balance of cash and cash equivalents 9001049069.19 10692498963.32
6. Cash flow statement of parent company
Unit: RMB
Item H1 2026 H1 2025
I. Cash flows from operating activities:
Cash received from sales of goods or rendering of services 5728165859.37 5478720727.93
Receipts from tax refunds
Other cash receipts related to operating activities 13990837496.52 3202527946.76
Subtotal of cash inflows from operating activities 19719003355.89 8681248674.69
Cash paid for goods purchased and services received 1565240428.68 955466642.34
Cash paid to and on behalf of employees 738016632.04 715770512.83
Payments of all types of taxes 491993968.08 741623236.23
Other cash paid relating to operating activities 14157928986.56 2981032782.60
Subtotal of cash outflows from operating activities 16953180015.36 5393893174.00
Net cash flows from operating activities 2765823340.53 3287355500.69
II. Cash flows from investment activities:
Cash received from disposal of investments 3850000000.00 2100000000.00
Cash received from returns on investments 117715899.41 27547530.21
Net cash received from disposal of fixed assets intangible assets
380780.90
and other long-term assets
Net cash received from disposal of subsidiaries and other business
units
Other cash received relating to investment activities 500000000.00 108199500.00
Subtotal of cash inflows from investment activities 4468096680.31 2235747030.21
Cash paid for acquisition of fixed assets intangible assets and
149289590.14 63316121.69
other long-term assets
Cash paid for acquisition of investments 4400000000.00 2800000000.00
Net cash paid for acquisition of subsidiaries and other business
units
Other cash paid relating to investment activities 568674000.00 272043000.00
Subtotal of cash outflows from investment activities 5117963590.14 3135359121.69
Net cash flows from investment activities -649866909.83 -899612091.48
III. Cash flows from financing activities:
Cash received from absorption of investments
Cash received from borrowings
Other cash received relating to financing activities 23985516.95 39062080.04
Subtotal of cash inflows from financing activities 23985516.95 39062080.04
Cash payments for settlement of debts 150000000.00 400000000.00
Cash payments for distribution of dividends and profits or
2824543687.24 2194360177.18
repayment of interest
Other cash payments relating to financing activities 23955527.49 56402942.56
Subtotal of cash outflows from financing activities 2998499214.73 2650763119.74
Net cash flow from financing activities -2974513697.78 -2611701039.70
IV. Effect of foreign exchange rate changes on cash and cash
-3229820.84 -426505.07
equivalents
V. Net increase in cash and cash equivalents -861787087.92 -224384135.56
Plus: Opening balance of cash and cash equivalents 7345468896.19 7795079954.83
VI. Closing balance of cash and cash equivalents 6483681808.27 7570695819.27
7. Consolidated statement of changes in owners’ equity
Amount for the current period
Unit: RMB
H1 2026
Owner’s equity attributable to parent company
Item
Other equity instruments Provision Less: Other Minority interests Total owners’ equity
Special for
Share capital Capital reserves Treasury comprehensive Surplus reserves Undisturbed profits Others Subtotal
Preferred Perpetual reserves general
Others stock income
shares bonds risk
I. Closing balance of the
1784262603.00 17632117190.85 -105091380.51 2530458968.58 18202311462.52 40044058844.44 103441983.91 40147500828.35
previous year
Plus: Changes in
accounting policies
Correction of
errors in the prior period
Others
II. Opening balance of the
1784262603.00 17632117190.85 -105091380.51 2530458968.58 18202311462.52 40044058844.44 103441983.91 40147500828.35
current period
III. Increase/decrease for
the period (decrease is 64968508.18 -12557502.52 876682933.00 929093938.66 -28624959.74 900468978.92
indicated with “-”)
(I) Total comprehensive
-12557502.52 3701170618.67 3688613116.15 -6882282.64 3681730833.51
income
(II) Contribution and
withdrawal of capital by 14136649.44 14136649.44 -21742677.10 -7606027.66
owners
1. Ordinary shares
invested by owners
2. Capital invested by
holders of other equity
instruments
3. Amount of share
payment credited to
owners’ equity
4. Others 14136649.44 14136649.44 -21742677.10 -7606027.66
(III) Profit distribution -2824487685.67 -2824487685.67 -2824487685.67
1. Withdrawal of surplus
reserves
2. Withdrawal of general
risk provision
3. Distribution to owners
-2824487685.67 -2824487685.67 -2824487685.67
(or shareholders)
4. Others
(IV) Internal carry-over of
owner’s equity
1. Transfer of capital
reserves to capital (or
share capital)
2. Transfer of surplus
reserves to capital (or
share capital)
3. Covering loss with
surplus reserves
4. Change of defined
benefit plan carried
forward to retained
earnings
5. Other comprehensive
income carried forward to
retained earnings
6. Others
(V) Special reserves
1. Provision for the period
2. Utilization for the
period
(VI) Others 50831858.74 50831858.74 50831858.74
IV. Closing balance for
1784262603.00 17697085699.03 -117648883.03 2530458968.58 19078994395.52 40973152783.10 74817024.17 41047969807.27
the period
Amount for the previous year
Unit: RMB
H1 2025
Owner’s equity attributable to parent company
Item Other equity instruments Less: Other Provision Minority Total owners’
Special Surplus Undisturbed
Share capital Capital reserves Treasury comprehensive for general Others Subtotal interests equity Preferred Perpetual
Others reserves reserves profits
shares bonds stock income risk
I. Closing balance
of the previous 1784262603.00 17637148823.48 -101263356.31 2530458968.58 16981339385.76 38831946424.51 34138137.76 38866084562.27
year
Plus: Changes in
accounting
policies
Correction of
errors in the prior
period
Others
II. Opening
balance of the 1784262603.00 17637148823.48 -101263356.31 2530458968.58 16981339385.76 38831946424.51 34138137.76 38866084562.27
current period
III.Increase/decrease
for the period 52836059.54 3258451.54 1518560118.56 1574654629.64 60234443.96 1634889073.60
(decrease is
indicated with “-”)
(I) Total
comprehensive 3258451.54 3632911303.12 3636169754.66 13043315.43 3649213070.09
income
(II) Contribution
and withdrawal of 37009868.76 37009868.76 47191128.53 84200997.29
capital by owners
1. Ordinary shares
invested by 47191128.53 47191128.53
owners
2. Capital invested
by holders of
other equity
instruments
3. Amount of
share payment
credited to
owners’ equity
4. Others 37009868.76 37009868.76 37009868.76
(III) Profit
-2114351184.56 -2114351184.56 -2114351184.56
distribution
1. Withdrawal of
surplus reserves
2. Withdrawal of
general risk
provision
3. Distribution to
owners (or -2114351184.56 -2114351184.56 -2114351184.56
shareholders)
4. Others
(IV) Internal
carry-over of
owner’s equity
1. Transfer of
capital reserves to
capital (or share
capital)
2. Transfer of
surplus reserves to
capital (or share
capital)
3. Covering loss
with surplus
reserves
4. Change of
defined benefit
plan carried
forward to retained
earnings
5. Other
comprehensive
income carried
forward to
retained earnings
6. Others
(V) Special
reserves
1. Provision for
the period
2. Utilization for
the period
(VI) Others 15826190.78 15826190.78 15826190.78
IV. Closing
balance for the 1784262603.00 17689984883.02 -98004904.77 2530458968.58 18499899504.32 40406601054.15 94372581.72 40500973635.87
period
8. Statement of changes in owners’ equity of parent company
Amount for the current period
Unit: RMB
H1 2026
Item Other equity instruments Other
Less: Treasury Special Undisturbed
Share capital Capital reserves comprehensive Surplus reserves Others Total owners’ equity
Preferred Perpetual stock reserves profits
Others income
shares bonds
I. Closing balance of the previous
1784262603.00 17797498647.03 -61252370.53 2529297618.08 3154933345.92 25204739843.50
year
Plus: Changes in accounting
policies
Correction of errors in
the prior period
Others
II. Opening balance of the current
1784262603.00 17797498647.03 -61252370.53 2529297618.08 3154933345.92 25204739843.50
period
III. Increase/decrease for the
period (decrease is indicated with 50831858.74 -5939236.52 -456363470.53 -411470848.31
“-”)
(I) Total comprehensive income -5939236.52 2368124215.14 2362184978.62
(II) Contribution and withdrawal
of capital by owners
1. Ordinary shares invested by
owners
2. Capital invested by holders of
other equity instruments
3. Amount of share payment
credited to owners’ equity
4. Others
(III) Profit distribution -2824487685.67 -2824487685.67
1. Withdrawal of surplus reserves
2. Distribution to owners (or
-2824487685.67 -2824487685.67
shareholders)
3. Others
(IV) Internal carry-over of
owner’s equity
1. Transfer of capital reserves to
capital (or share capital)
2. Transfer of surplus reserves to
capital (or share capital)
3. Covering loss with surplus
reserves
4. Change of defined benefit plan
carried forward to retained
earnings
5. Other comprehensive income
carried forward to retained
earnings
6. Others
(V) Special reserves
1. Provision for the period
2. Utilization for the period
(VI) Others 50831858.74 50831858.74
IV. Closing balance for the period 1784262603.00 17848330505.77 -67191607.05 2529297618.08 2698569875.39 24793268995.19
Amount for the previous year
Unit: RMB
H1 2025
Other equity instruments
Item Other Less: Treasury Special Total owners’
Share capital Preferred Perpetual Capital reserves comprehensive Surplus reserves Undisturbed profits Others
Others stock reserves equity
shares bonds income
I. Closing balance of
1784262603.00 17839540148.42 -61502389.01 2529297618.08 2287686657.27 24379284637.76
the previous year
Plus: Changes in
accounting policies
Correction of
errors in the prior
period
Others
II. Opening balance of
1784262603.00 17839540148.42 -61502389.01 2529297618.08 2287686657.27 24379284637.76
the current period
III. Increase/decrease
for the period (decrease 15826190.78 747046.88 410513146.11 427086383.77
is indicated with “-”)
(I) Total comprehensive
747046.88 2524864330.67 2525611377.55
income
(II) Contribution and
withdrawal of capital
by owners
1. Ordinary shares
invested by owners
2. Capital invested by
holders of other equity
instruments
3. Amount of share
payment credited to
owners’ equity
4. Others
(III) Profit distribution -2114351184.56 -2114351184.56
1. Withdrawal of
surplus reserves
2. Distribution to
owners (or -2114351184.56 -2114351184.56
shareholders)
3. Others
(IV) Internal carry-over
of owner’s equity
1. Transfer of capital
reserves to capital (or
share capital)
2. Transfer of surplus
reserves to capital (or
share capital)
3. Covering loss with
surplus reserves
4. Change of defined
benefit plan carried
forward to retained
earnings
5. Other comprehensive
income carried forward
to retained earnings
6. Others
(V) Special reserves
1. Provision for the
period
2. Utilization for the
period
(VI) Others 15826190.78 15826190.78
IV. Closing balance for
1784262603.00 17855366339.20 -60755342.13 2529297618.08 2698199803.38 24806371021.53
the period
III. Basic Information of the Company
1. Place of registration form of organization and address of headquarters of the Company
The registered address of Yunnan Baiyao Group Co. Ltd is No.3686 Yunnan Baiyao Street Chenggong
District Kunming Yunnan Province. The Company is established as a joint-stock limited company with its head
office located at No.3686 Yunnan Baiyao Street Chenggong District Kunming Yunnan Province.
2. History of the Company
The Company was formerly known as Yunnan Baiyao Factory which was established in June 1971. On May
3 1993 Yunnan Provincial System Reform Committee approved the establishment of Yunnan Baiyao Industrial
Co. Ltd in the Document Yun Ti Gai [1993] No.48. The Company’s sponsors were Yunnan Baiyao Factory
Yunnan Fudian Trust and Investment Company and Lianjiang International Trade Co. Ltd. On June 18 1993
the Economic System Reform Commission and the Planning Commission of Yunnan Province jointly issued the
Document Yun Ti Gai [1993] No.74 to approve the Company’s public offering of RMB 20 million of individual
shares (in the par value of the shares). On June 24 1993 the Administration of State-owned Assets of Yunnan
Province issued the Document Yun Guo Zi Zi (1993) No.37 to confirm the appraisal results of Yunnan Baiyao
Factory and decided to set up RMB 40 million of national capital stock amounting to 40 million shares. Yunnan
Baiyao Industrial Co. Ltd was approved by CSRC under the Document Zheng Jian Fa Shen Zi (1993) No.55 to
issue 20 million RMB-denominated ordinary shares to the public. Yunnan Baiyao issued 20 million shares to the
public in November 1993 of which 18 million shares were issued to the public individuals and 2 million shares
to the Company’s internal employees.On November 30 1993 the Company was registered as a joint-stock limited company with the
Administration for Industry and Commerce of Yunnan Province and on December 15 1993 the public shares
issued by the Company were listed on the Shenzhen Stock Exchange with a total share capital of 80 million
shares and a stock code of “000538.”
In accordance with the resolutions passed at the third Extraordinary General Meeting of the fifth Board of
Directors of the Company in 2008 on August 11 2008 and at the first Extraordinary General Meeting of the
Company in 2008 on August 27 2008 and the approval by the CSRC on the Document (2008) No.1411 Reply on
Approving the Private Issuance of Shares of Yunnan Baiyao Group Co. Ltd the Company issued 50000000 new
shares to Ping An Life Insurance Company Of China Ltd in a private offering raising funds of RMB
1393500000.00 (including issuance expenses) all of which were subscribed in cash. The share capital of the
Company increased from 484051138 shares to 534051138 shares after the implementation of the above
private offerings.In accordance with the 2009 Annual Equity Distribution Plan approved at the General Meeting of the Company
in May 2010 3 shares were issued to all shareholders from the capital reserve as a bonus for every 10 shares held.The Company’s share capital amounted to 534051138 shares prior to the distribution and the total share capital
increased to 694266479 shares after the distribution.The 2013 Annual General Meeting was held on May 8 2014 and in accordance with the resolution of the
meeting and the amended articles of association the shareholders of the Company increased the registered capital
by RMB 347133239.00. The newly registered capital would be increased by the distribution of 5 bonus shares for
every 10 shares to all shareholders based on the Company’s existing total share capital of 694266479 shares. After
the change the share capital of the Company increased from 694266479 shares to 1041399718 shares.The Company underwent a merger and overall listing with Baiyao Holdings by issuing shares to three
shareholders of Baiyao Holdings: SASAC of Yunnan Province New Huadu and Jiangsu Yuyue. This merger and
overall listing were successfully completed on June 1 2019 with the Company as the existing entity. As a result
the Company acquired all the assets liabilities businesses contracts and other rights and obligations of Baiyao
Holdings. Following the completion of the transaction the 432426597 shares of the listed company previously
held by Baiyao Holdings were canceled. The merger and overall listing brought in a newly registered capital of
RMB 236003599.00 and the Company’s total share capital amounted to RMB 1277403317.00 after this change.A total of 236003599 newly issued shares subject to trading moratorium were issued with a listing date of July 3
2019 and the shares were listed on the Shenzhen Stock Exchange. Upon completion of this transaction SASAC
of Yunnan Province and New Huadu with its acting-in-concert parties were equally the largest shareholder of the
Company and neither of them obtained control over the Company.On May 22 2020 SASAC of Yunnan Province transferred its 321160222 shares of the Company to State-
owned Equity Management Company at nil consideration. Upon completion of this transfer State-owned Equity
Management Company and New Huadu with its acting-in-concert parties were equally the largest shareholder of
the Company and there was no change in the Company’s situation of not having a de facto controller or controlling
shareholder.On December 8 2021 SASAC of Yunnan Province transferred 100% of its shares of State-owned Equity
Management Company into Yunnan Investment Group. After the equity transfer Yunnan Investment Group held
321160222 shares of the Company through the State-owned Equity Management Company accounting for 25.04%
of the total share capital of the Company. State-owned Equity Management Company and New Huadu with its acting-
in-concert parties were equally the largest shareholder of the Company and there was no change in the Company’s
situation of not having a de facto controller or controlling shareholder.On April 20 2022 the Company’s 2021 Annual Equity Distribution Plan had been considered and approved
at the Company’s 2021 Annual General Meeting and the details of 2021 Annual Equity Distribution Plan were as
follows: Based on the total share capital on the equity registration date when the distribution plan was implemented
in the future a cash dividend of RMB 16.00 (including tax) for every 10 shares and 4.00 bonus shares (including
tax) for every 10 shares would be distributed to all shareholders and there would be no conversion of share capital
from the capital reserve. On April 21 2020 the fourth session of the ninth Board of Directors of the Company in
2020 and the third session of the ninth Supervisory Committee of the Company in 2020 respectively considered
and approved the Proposal on Granting Stock Options (Initially Granted Part) to Incentive Participants of the 2020
Equity Incentive Plan. As of December 31 2022 the Company had completed distributing dividends of
513206278 shares and stock exercises of 941029 shares increasing its share capital to 1796862549 shares.
On April 23 2024 the Company disclosed the Announcement on Completion of Cancellation of the Repurchased
Shares and Changes in Shares (Announcement No. 2024-21). The Company completed the cancellation of the
aforesaid 12599946 repurchased shares at the Shenzhen Branch of China Securities Depository and Clearing
Corporation Limited on April 19 2024. Upon completion of the cancellation of the shares repurchased the total
number of shares of the Company was 1784262603.00. The shares repurchased for cancellation will not have a
material impact on the Company’s financial condition and operating results.As of June 30 2026 the Company has a total capital of 1784262603 shares with 0 shares in treasury. The
situation that the Company has no de facto controller and no controlling shareholder remain unchanged.
3. Business nature and principal businesses of the Company
The business nature and operating activities of the Company and its subsidiaries (collectively referred to as
the “Group”) mainly include: R&D manufacturing and sales of chemical APIs chemical preparations Chinese
patent medicines TCM materials biological products medical devices healthcare food food beverages special
labor protection products non-household textile products daily chemical products cosmetics outdoor products;
Sales of rubber pastes plasters disinfectant products electronic and digital products; Information technology
science and technology and economic and technological consulting services; Import and export of goods; Property
operation and management (carrying out business activities with qualification certificates) wholesale and retail of
drugs logistics and distribution etc (For items that require approval according to law business activities of these
projects can only be carried out after approval by relevant departments).
4. These financial statements were approved for reporting by a resolution of the Board of Directors of
the Company dated August 28 2026.As of June 30 2026 there were 112 subsidiaries and structured entities included in the scope of the Group’s
consolidated financial statements. For details please refer to Note X “Interest in Other Entities.” The Group had
1 new entity included and 3 entities excluded in its consolidated financial statements compared to the end of the
previous year.IV. Basis for Preparation of Financial Statements
1. Basis for preparation
The financial statements of the Group are prepared on the basis of going concern assumptions based on actual
transactions and events that occur and in accordance with the Accounting Standards for Business Enterprises - Basic
Standards issued by the Ministry of Finance (issued by Decree No. 33 of the Ministry of Finance revised by Decree
No. 76 of the Ministry of Finance) 40 specific accounting standards Guidelines for the Application of Accounting
Standards for Business Enterprises interpretations of Accounting Standards for Business Enterprises and otherrelevant provisions promulgated and revised on and after February 15 2006 (collectively “Accounting Standardsfor Business Enterprises” or “ASBEs”) as well the disclosure provisions of the Rules No.15 for Governing the
Disclosure of Information by Companies Issuing Public Securities - General Provisions for Financial Reporting
(Revised in 2023) issued by CSRC.In accordance with the relevant provisions of the Accounting Standards for Business Enterprises the Group’s
accounting is based on the accrual basis. Except for certain financial instruments these financial statements are
prepared at historical cost. In case of asset impairment provision for impairment would be made according to the
relevant regulations.
2. Going concern basis
The Company and the Group evaluated their abilities to continue as a going concern for at least 12 months
from the end of the reporting period and there are no material matters affecting their abilities to continue as a going
concern.V．Significant Accounting Policies and Accounting Estimates
Notes on specific accounting policies and accounting estimates:
Based on the actual production and operation characteristics and in accordance with the provisions of relevant
accounting standards for enterprises the Group has formulated a number of specific accounting policies and
accounting estimates for transactions and matters such as revenue recognition and R&D expenses. For details see
the descriptions under Section 30 “Revenue” under this Note V. For the descriptions of significant accountingjudgments and estimates made by the management please refer to Section 36 “Other Significant AccountingPolicies and Accounting Estimates” under this Note V.
1. Statement of compliance with the ASBEs
The financial statements prepared by the Company are in compliance with the requirements of the Accounting
Standards for Business Enterprises (ASBEs) and have reflected truly and completely such relevant information as
the financial positions of the Company and the Group as of June 30 2026 as well as the business results and cash
flows of the Company and the Group for the first half of 2026. In addition all significant aspects of the financial
statements of the Company and the Group also comply with the disclosure requirements about the financial
statements and their notes in the Rules No.15 for Governing the Disclosure of Information by Companies Issuing
Public Securities - General Provisions for Financial Reporting as amended by the CSRC in 2023.
2. Accounting period
The Group’s accounting periods are divided into annual and interim periods. An interim period refers to a
reporting period less than a full accounting year. The accounting year of the Group is the calendar year that starts
from January 1 and ends on December 31.
3. Operating cycle
The normal operating cycle refers to the period from purchasing the assets for processing to realizing the cash
or cash equivalents. The operating cycle of the Group consists of 12 months which is the standard of the
classification for the liquidity of the assets and liabilities.
4. Reporting currency
RMB is the currency used in the major economic environment where the Company and its domestic
subsidiaries operate. The reporting currency of the Company and its domestic subsidiaries is RMB. The Company’s
foreign subsidiaries select HKD as their reporting currencies based on the currency of the primary economic
environment in which they operate. The currency used by the Group in preparing the financial statements is RMB.
5. Determination method and selection basis of materiality standards
□Applicable □Not applicable
Item Materiality standards
The single provision amount accounts for more than 10% of the
Significant accounts receivable bad debt provisions to be
total amount of bad debt provision for various types of receivables
recovered or reversed
and the amount is greater than RMB 5 million
Actual write-off of significant receivables The value of a single item is greater than RMB 5 million
Projects with budgets exceeding RMB 50 million or deemed to be
Significant construction in progress
of significance
The amount of a single advance receipt with an age of more than 1
Significant advance receipts
year is greater than RMB 5 million
A single contractual liability with an age of more than 1 year
Significant contract liabilities accounts for more than 10% of the total contractual liabilities and
the amount is greater than RMB 100 million
The amount of a single account payable is greater than RMB 5
Significant accounts payable aged over one year or overdue
million
Significant other payables aged over one year or overdue The amount of a single item is greater than RMB 5 million
Significant dividends payable outstanding for over one year The amount of a single item is greater than RMB 100 million
Receipts and payments of significant cash related to investment
The amount of a single item is greater than RMB 100 million
activities
Significant offshore operating entity The net assets of the economic entity exceed RMB 100 million
Significant structured entity The net assets of the structured entity exceed RMB 2 million
Significant non-wholly-owned subsidiaries The net assets of the subsidiary exceed RMB 100 million
R&D projects whose investment for a single project accounts for
Significant capitalized R&D projects more than 2% of the net assets as well as other key R&D projects
identified by the Company
R&D projects whose investment for a single project accounts for
Significant outsourced project under research more than 2% of the net assets as well as other key R&D projects
identified by the Company
A single investment activity accounts for more than 10% of the
Significant investment activities total cash inflow or outflow related to the investment activities and
the amount is greater than RMB 1 billion
The book value of long-term equity investment in a single investee
accounts for more than 5% of the Group’s net assets and the
Significant joint ventures or associates amount is greater than RMB 1 billion or the investment profit and
loss under the long-term equity investment equity method accounts
for more than 10% of the Group’s consolidated net profit
The net assets of the subsidiary account for more than 10% of the
Group’s net assets or the net profits of subsidiary account for more
Significant subsidiaries
than 10% of the Group’s consolidated profits and the subsidiaries
with significant strategic position
6. Accounting treatment for business combination under common control and not under common control
A business combination refers to the transaction or matter in which one reporting subject formed due to the
combination of two or above separate entities. A business combination can be classified as the combination under
common control and not under common control.
(1) Business combination under common control
A business combination under common control is a business combination in which all of the combining entities
are ultimately controlled by the same party or parties both before and after the combination and that control is not
transitory. For a business combination under common control the party that obtains the control of the other parties
on the combination date is the acquirer and other parties involving in the business combination are the acquirees.The combination date is the date on which the acquirer effectively obtains the control of the acquirees.
Assets and liabilities that are obtained by the acquirer in a business combination shall be measured at their book
value at the combination date as recorded by the acquirees. The difference between the book value of the net assets
obtained and the book value of the consideration paid by the acquirer for the combination (or the aggregate par value
of the issued shares) shall be adjusted to share premium under capital reserve (or capital premium). If the share
premium under capital reserve (or capital premium) is not sufficient to absorb the difference any excess shall be
adjusted against retained earnings.Expenses that are directly attributable to the business combination by the acquirer are charged to the current
profits and losses in which they are incurred.
(2) Business combination not under common control
A business combination not under common control is a business combination in which all of the combining
entities are not ultimately controlled by the same party or parties both before and after the combination. For a
business combination not under common control the party that obtains the control of the other parties on the
acquisition date is the acquirer; other parties involving in the business combination are the acquirees. The acquisition
date is the date on which the acquirer effectively obtains control of the acquirees.For a business combination not under common control the cost of business combination is the fair value of
assets paid liabilities incurred or undertaken and equity securities issued by the acquirer for obtaining the control
of the acquirees at the acquisition date. Expenses that are attributable to the business combination such as audit fees
legal services fees consultancy fees and other administration expenses incurred by the Company as acquirer are
expensed in the current profits and losses in which they are incurred. Transaction fees of equity securities or debt
securities issued by the acquirer as consideration for a business combination are included in the initially recognized
amount of equity securities or debt securities. Contingent consideration involved is recorded as the combination cost
at its fair value on the acquisition date. Should any new or further evidence in relation to the circumstances existing
on the acquisition date arise within 12 months after the acquisition date making it necessary to adjust the contingent
consideration the goodwill arising from the business combination shall be adjusted accordingly. The cost of
combination incurred and identifiable net assets obtained by the acquirer in a business combination are measured at
fair value on the acquisition date. Where the cost of the combination exceeds the acquirer’s interest in the fair value
of the acquiree’s identifiable net assets on the acquisition date the difference is recognized as goodwill; Where the
cost of combination is lower than the acquirer’s interest in the fair value of the acquiree’s identifiable net assets on
the acquisition date the difference is recognized in current profits and losses after a review of measurement for the
fair value of identifiable assets liabilities and contingent liabilities of the acquiree and the combination cost.In relation to the deductible temporary difference acquired from the acquiree which was not recognized as
deferred tax assets due to non-fulfillment of the recognition criteria at the date of the acquisition if new or further
information that is obtained within 12 months after the acquisition date indicates that related conditions at the
acquisition date already existed and that the realization of the economic benefits brought by the deductible
temporary difference of the acquiree on the acquisition date can be expected the relevant deferred tax assets shall
be recognized and goodwill shall be deducted accordingly. When the amount of goodwill is less than the deferred
tax assets that shall be recognized the difference shall be recognized in the current profits and losses. Except for the
above circumstances deferred tax assets in relation to business combination are recognized in the current profits
and losses.For a business combination involving entities not under common control that is achieved in stages the
Company shall determine whether the business combination shall be treated as “a bundle of transactions” in
accordance with the determination standards as contained in the Circular on the Publishment of Interpretation No.5
on Accounting Standards for Business Enterprises Issued by the Ministry of Finance (Finance and Taxation (2012)
No. 19) and Section 51 of Accounting Standards for Business Enterprises No.33 - Consolidated Financial
Statements (See Item (2) of Section 6 “Preparation of the consolidated financial statements” under this Note V).Where the business combination is treated as “a bundle of transactions” the business combination shall be accounted
for in accordance with the previous paragraphs and Section 17 “Long-term equity investments” of this Note V;
where the business combination does not fall within “a bundle of transactions” the business combination in the
Company’s and the consolidated financial statements shall be accounted for as follows:
In the Company’s financial statements the initial cost of the investment shall be the sum of the book value of
equity investment held in the acquiree prior to the acquisition date and the amount of additional investment made to
the acquiree at the acquisition date. Other comprehensive income relating to the equity interest held in the acquiree
prior to the acquisition date shall be upon disposal of the investment accounted for in accordance with the same
basis as that the acquiree adopts in directly disposing of relevant assets or liabilities.In the consolidated financial statements the equity interest held in the acquiree prior to the acquisition date is
re-measured according to its fair value at the acquisition date; the difference between the fair value and the book
value is recognized as investment income for the current period. Other comprehensive income relating to the equity
interest held in the acquiree prior to the acquisition date shall be accounted for in accordance with the same basis as
that the acquiree adopts in directly disposing of relevant assets or liabilities.
7. Judgement criteria of control and preparation of consolidated financial statements
(1) Criteria for the recognition of scope of consolidated financial statements
The scope of consolidation shall be determined based on the concept of control. Control means that the Group
has power over the investee enjoys variable returns through its participation in the investee’s related activities and
has the ability to use its power over the investee to influence the amount of its returns. The consolidated financial
statements comprise the financial statements of the Company and all of its subsidiaries which are defined as those
entities controlled by the Group.Once any change in the facts and circumstances arises which leads to a change in the elements involved in the
definition of control the Group will conduct an assessment.
(2) Preparation of consolidated financial statements
Subsidiaries are consolidated from the date on which the Group obtains their net assets and actual control over
their operating decisions and are deconsolidated from the date when such control ceases. For subsidiaries being
disposed of the business results and cash flows prior to the date of disposal are duly included in the consolidated
income statement and consolidated cash flow statement; for subsidiaries disposed of during the period the opening
balances of the consolidated balance sheet would not be restated. For subsidiaries acquired from a business
combination not under common control their operating results and cash flows subsequent to the acquisition date are
included in the consolidated income statement and consolidated cash flow statement and the opening balances and
comparative figures in the consolidated financial statements would not be restated. For subsidiaries acquired from
a business combination under common control and acquirees from a merger by absorption their operating results
and cash flows from the date of commencement of the period in which the combination occurred to the date of
combination are included in the consolidated income statement and consolidated cash flow statement and the
comparative figures in the consolidated financial statements would be restated.In preparing the consolidated financial statements where the accounting policies or the accounting periods are
inconsistent between the Company and subsidiaries the financial statements of subsidiaries are adjusted in
accordance with the accounting policies and accounting period of the Company. For subsidiaries acquired from a
business combination involving enterprises not under common control the financial statements of the subsidiaries
are adjusted based on the fair value of the identifiable net assets at the acquisition date.All significant intra-group balances transactions and unrealized profits are offset in preparing the consolidated
financial statements.The portion of a subsidiary’s equity and the portion of a subsidiary’s net profits and losses for the period not
attributable to the Company are recognized as minority interests and profits and losses attributable to minority
interests respectively which are presented under shareholders’ equity and net profit separately in the consolidated
financial statement. A subsidiary’s net current profits and losses attributable to minority interests is recognized as
“share of profits and losses of minority interests” under net profit in the consolidated income statement. When the
amount of a subsidiary’s loss attributable to the minority shareholders exceeds the minority shareholders’ share of
the opening balance of shareholders’ equity of the subsidiary the excess is deducted from the minority interests.In event of loss of control over a former subsidiary due to disposal of certain equity investments or other reasons
any retained equity is re-measured at its fair value on the date when the control is lost. The surplus of the aggregate
considerations received upon disposal of equity plus the fair value of any retained equity less the share of net assets
in the former subsidiary calculated cumulatively from the acquisition date based on the original shareholding
percentage is included in the investment income for the period when the control is lost. Other comprehensive income
related to the equity investment in the former subsidiary shall be accounted for on the same basis at the time of loss
of control as the subsidiary directly disposed of the related asset or liability. Then the remaining equity shall be
measured subsequently in accordance with the Accounting Standards for Business Enterprises No. 2 - Long-term
Equity Investments or Accounting Standards for Business Enterprises No. 22 - The Recognition and Measurement
of Financial Instruments and other regulations. For details please see Section 17 “Long-term equity investments”
or Section 11 “Financial instruments” under this Note V.For disposal of the Group’s equity investments in a subsidiary in phases through multiple transactions until
loss of control it is determined based on whether such transactions should be regarded as a bundle of transactions.If the terms conditions and economic effects of all transactions are conducted for the purpose of disposing of the
equity investments in a subsidiary and meet the following one or more criteria it is usually shown that such multiple
transactions are deemed as a bundle of transactions for accounting treatment: * These transactions were entered
into at the same time or upon the consideration of the effects therebetween; * These transactions can only generate
one complete business result when conducted all together; * The occurrence of one transaction depends on the
occurrence of at least one other transaction; and * One transaction alone is not economical but is economical when
considered with other transactions. When the transactions do not constitute a bundle of transactions each transactionthereof shall be accounted in accordance with principles applicable to the “disposal of part of long-term equityinvestments in a subsidiary that does not result in the loss of control” (please see Item (2) * of Section 17 “Long-term equity investments” under this Note V for details) and “loss of control over a former subsidiary due to disposalof certain equity investments or other reasons” (please see the preceding paragraph for details). If such transactions
fall under a bundle of transactions those transactions are accounted for as one deal under which the subsidiary is
disposed of and control is lost. However before the control over the subsidiary is lost the surplus between
consideration received for each disposal and the value of corresponding share of net assets in the subsidiary entitled
by the investment underlying the disposal shall be recognized as other comprehensive income in the consolidated
financial statements and when control is lost converted into investment income or loss for the period in which
control is lost.
8. Classification of joint venture arrangements and accounting treatment method for joint operations
Joint venture arrangement means an arrangement under the common control of two or more parties. The Group
classifies the joint venture arrangement into joint operations and joint ventures based on the rights and obligations
it enjoys and assumes in the joint venture arrangement. Joint operation means a joint venture arrangement in which
the Group owns the assets and assumes the liabilities associated with the arrangement. Joint venture means a joint
venture arrangement in which the Group only has rights to the net assets of the arrangement.The Group’s investments in joint ventures are accounted for using the equity method and are treated inaccordance with the accounting policies described in Item (2) * “Long-term equity investments accounted forusing the equity method” in Section 17 “Long-term equity investments” under this Note V.For the joint operations the Group as a joint venture party recognizes the assets and liabilities separately held
by the Group as well as the assets and liabilities jointly held by the Group in accordance with the Group’s share;
recognizes the income arising from the disposal of the Group’s share of joint operation output; recognizes the income
from the sale of outputs from joint operations based on the Group’s share; and recognizes the expenses incurred by
the Group alone and the expenses incurred based on the Group’s share in the joint operation.When the Group as a joint venture party invests in or sells assets to the joint venture (which do not constitute
a business the same below) or purchases assets from the joint operation the Group recognizes only those portions
of the profits and losses arising from the transaction that are attributable to other participants in the joint operation
prior to the sale of such assets to a third party. In the event that such assets incur asset impairment losses in
accordance with the provisions of Accounting Standard for Enterprises No. 8 - Asset Impairment the Group will
fully recognize such losses if the assets are invested or sold by the Group to the joint operation; In the case of assets
purchased by the Group from the joint operation the Group will recognize such losses on the basis of its share of
commitment.
9. Determination standards for cash and cash equivalents
Cash and cash equivalents of the Group include the cash on hand deposits that can be used for payment at any
time the investments that are held for a short period of time (generally maturing within three months from the date
of purchase) which are highly liquid easily convertible to known amounts of cash and having minimal risk of
changes in value.
10. Foreign currency business and foreign currency statement translation
The method for determining the conversion exchange rate in foreign currency transactions
Upon initial recognition the foreign currency transactions of the Group are converted into the amount of
reporting currency according to the spot exchange rate of the trading day (usually referring to the median price of
the foreign exchange rate of the day published by the People’s Bank of China the same below).
(1) Translation of foreign currency monetary items and foreign currency non-monetary items
On the balance sheet date if the foreign currency monetary items are translated at the spot rate of the balance
sheet date the resulting exchange difference except for * Exchange differences arising from special loans in
foreign currencies related to the acquisition and construction of assets eligible for capitalization which shall be
treated in accordance with the principle of capitalization of borrowing costs; * Exchange differences of hedging
instruments used to operate effective hedging of net investment abroad (this difference is included in other
comprehensive income and is not recognized as current profits and losses until the net investment is disposed of)
and * foreign currency monetary items classified as measured at fair value through other comprehensive income
shall be recorded into current profits and losses provided that exchange differences resulting from changes in other
book balances other than amortized costs (including impairment) shall be recorded in other comprehensive income.The non-monetary foreign currency items measured at historical cost shall be measured at the amount of
reporting currency that is translated into based on the spot rate on the transaction date. For non-monetary foreign
currency items measured at fair value the exchange rate prevailing at the date when the fair value is determined is
used for translation and the difference between the translated amount of the reporting currency and the original
amount of the reporting currency shall be treated as the change in fair value (including change of exchange rate) and
recorded in current profits and losses or recognized as other comprehensive income.
(2) Translation of foreign currency financial statement
Foreign currency financial statements of overseas operations are translated into RMB statements in the
following ways: The items of assets and liabilities in the balance sheet were translated at the spot exchange rate on
the balance sheet date. The shareholders’ equity items are translated at the spot rate at the time of occurrence except
for the “undistributed profit” items. The income and expense items in the income statement are converted using the
average exchange rate of the current period on the date of occurrence of the transaction. The undistributed profit at
the beginning of the year is the undistributed profit at the end of the year after the conversion of the previous year;
The undistributed profit at the end of the period is calculated and shown on the basis of each item of profit
distribution after translation; The difference between the total amount of asset items and liability items and
shareholders’ equity items after translation is treated as the difference in the translation of foreign currency
statements and recognized as other comprehensive income. Upon disposal of an overseas operation and loss of
control the conversion difference of the foreign currency statement related to the overseas operation as shown
under the shareholders’ equity item in the balance sheet shall be transferred to the profits and losses of the disposal
of the current period in full or in proportion to the disposal of the overseas operation.Foreign currency cash flow and cash flow of overseas subsidiaries shall be translated at the spot exchange rate
in the period when the cash flow is generated. The effect of exchange rate changes on cash is presented separately
in the cash flow statement as an adjustment item.The figures for the beginning of the year and the actual figures for the previous year are presented in accordance
with the amounts of the financial statements of the previous year after translation.Upon the disposal of all the owners’ equity of the Group’s overseas operations or the loss of control over
overseas operations due to the disposal of part of the equity investment or other reasons the translation difference
of the foreign currency statement related to the owners’ equity of the overseas operations attributable to the parent
company as shown under the shareholders’ equity item in the balance sheet shall be fully transferred to the profits
and losses of the disposal period.When part of the equity investment is disposed of or the proportion of overseas operating interest is reduced
for other reasons but the control of overseas operations is not lost the difference in the translation of foreign currency
statements 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 profits and losses. Upon disposal of part of the equity of the overseas
operation as an associate or joint venture the translation difference of the foreign currency statement related to the
overseas operation shall be transferred to the profits and losses of the disposal period in proportion to the disposal
of the overseas operation.If there are foreign currency monetary items that substantially constitute net investments in overseas operations
the exchange difference resulting from changes in exchange rates shall be recognized as other comprehensive
income in the consolidated financial statements as “translation difference in foreign currency statements;” Upon
disposal of the overseas operations it shall be included in the profits and losses of the disposal period.
11. Financial instruments
When the Group becomes a party to a financial instrument contract it shall recognize a financial asset or
financial liability.
(1) Classification recognition and measurement of financial assets
The Group has classified the financial assets as financial assets at amortized cost; financial assets at fair value
through other comprehensive income and financial assets at fair value through profits and losses based on the
business model for managing financial assets and the contractual cash flow characteristics of the financial assets.Financial assets are measured at fair value on initial recognition. For financial assets at fair value through profits
and losses the related transaction costs are recognized directly in profits and losses; and for other categories of
financial assets the related transaction costs are recognized in initial recognition amounts. For the accounts
receivable or notes receivable arising from the sale of products or the provision of services that do not contain or
take into account a significant financing component the amount of consideration to which the Group is expected to
be entitled shall be taken as the initial recognition amount.
* Financial assets at amortized cost
The Group’s business model of managing financial assets at amortized cost is aimed at the collection of
contractual cash flows and the contractual cash flow characteristics of such financial assets are consistent with the
basic borrowing arrangement that is the cash flows generated on a specific date are only payments of principal and
interest based on the outstanding principal amount. For such financial assets the effective interest rate method is
used for subsequent measurement at amortized cost and any profits or losses arising from amortization or
impairment is included in the current profits and losses.* Financial assets at fair value through other comprehensive income
The Group’s business model of managing such financial assets is aimed at the collection and disposal of
contractual cash flows and the contractual cash flow characteristics of such financial assets are consistent with the
basic borrowing arrangement. The Group measures such financial assets at fair value and their changes are
recognized in other comprehensive income but impairment losses or gains exchange profits and losses and interest
income calculated under the effective interest rate method are recognized in current profits and losses.In addition the Group has designated certain non-trading equity instrument investments as financial assets at
fair value through other comprehensive income. The Group recognizes the relevant dividend income of such
financial assets in current profits and losses and the fair value changes in other comprehensive income. Upon the
derecognition of the financial assets the accumulated profits and losses previously recognized in other
comprehensive income are transferred from other comprehensive income to retained earnings and are not recognized
in the current profits and losses.* Financial assets at fair value through profits and losses
The Group’s financial assets other than those at amortized cost and those at fair value through other
comprehensive income as described above are classified as financial assets at fair value through profits and losses.In addition at the time of initial recognition in order to eliminate or significantly reduce accounting misalignments
the Group designated certain financial assets as financial assets at fair value through profits and losses. Such
financial assets are subsequently measured at fair value with changes in fair value recognized in the current profits
and losses.
(2) Classification recognition and measurement of financial liabilities
Financial liabilities are classified as financial liabilities at fair value through profits and losses and other
financial liabilities at the time of initial recognition. For financial liabilities at fair value through profits and losses
the related transaction costs are recognized directly in profits or losses and for other financial liabilities the related
transaction costs are recognized in their initial recognition amounts.* Financial liabilities at fair value through profits and losses
The financial liabilities at fair value through profits and losses include financial liabilities held for trading
(including derivatives that are financial liabilities) and those designated as financial liabilities at fair value through
profits and losses at the initial recognition.
Financial liabilities held for trading (including derivatives that are financial liabilities) are subsequently
measured at fair value with changes in fair value recognized in current profits and losses except for those related
to hedge accounting.For those designated as financial liabilities at fair value through profits and losses the change in fair value of
such liabilities caused by changes in the Group’s own credit risk is included in other comprehensive income and
the cumulative change in its fair value caused by changes in its own credit risk included in other comprehensive
income is transferred to retained earnings when such liabilities are derecognized. Other changes in fair value are
included in current profits and losses. If the treatment of the effect of the change in the credit risk of the financial
liabilities in the manner described above would cause or widen the accounting mismatch in profits and losses the
Group would recognize the full profits or losses of the financial liabilities (including the amount affected by the
change in the credit risk of the enterprise) in the current profits and losses.* Other financial liabilities
Financial liabilities other than those resulting from the transfer of financial assets that does not meet the
conditions for derecognition or continues to be involved in the transfer of financial assets and other financial
liabilities excluding financial guarantee contracts are classified as financial liabilities at amortized cost which are
subsequently measured at amortized cost and the profits and losses resulting from the derecognition or amortization
are included in current profits and losses.
(3) Recognition basis and measurement method for transfer of financial assets
A financial asset is derecognized if it meets any of the following conditions: * The contractual right to receive
the cash flow of the financial asset is terminated; * The financial asset has been transferred and substantially all
the risks and returns of ownership of the financial asset have been transferred to the transferee; * The financial
asset has been transferred substantially all the risks and returns of ownership of the financial asset have neither been
transferred nor retained but the control over the financial asset has been relinquished.If neither substantially all the risks and returns of ownership of a financial asset are transferred nor retained
and the control over the financial asset is not relinquished the underlying financial asset shall be recognized to the
extent of its continuing involvement in the transferred financial asset and the related liability shall be recognized
accordingly. The extent of continued involvement in the transferred financial asset is the level of risk to which the
enterprise is exposed as a result of changes in the value of that financial asset.If the overall transfer of financial assets meets the conditions for derecognition the difference between the
book value of the transferred financial assets and the consideration received as a result of the transfer and the
cumulative change in the fair value originally included in other comprehensive income is included in the current
profits and losses.If the partial transfer of financial assets meets the conditions for derecognition the book value of the transferred
financial assets shall be apportioned between the portion derecognized and the portion not for derecognition
according to their relative fair value. The difference between the sum of the consideration received as a result of the
transfer and the cumulative changes in fair value originally included in other comprehensive income that should be
apportioned to the portion derecognized and the above-mentioned book value apportioned are recognized in current
profits and losses.If the Group sells the financial assets by recourse or makes endorsement transfer of the financial assets it holds
it is necessary to determine whether virtually all risks and returns in the ownership of the financial asset have been
transferred. If the Group has transferred substantially all the risks and returns related to the ownership of a financial
asset to the transferee the Group shall derecognize the financial asset. If substantially all the risks and returns related
to the ownership of a financial asset are retained the financial assets shall not be derecognized. If substantially all
the risks and returns related to the ownership of the financial asset are neither transferred nor retained whether the
enterprise retains control of the asset shall be determined and accounting treatment shall be made in accordance with
the principles described in the preceding paragraphs.
(4) Derecognition of financial liabilities
A financial liability (or a portion thereof) is derecognized when the present obligation is discharged. If an
agreement is entered into between the Group (the borrower) and the lender to replace the original financial liability
by assuming a new financial liability and the contractual terms of the new financial liability are materially different
from those of the original financial liability the original financial liability is derecognized and the new financial
liability is recognized at the same time. If the Group materially modifies the contractual terms of the original
financial liability (or part thereof) it shall derecognize the original financial liability and recognize a new financial
liability in accordance with the modified terms.If a financial liability is derecognized in whole or in part the difference between the book value of the
derecognized portion and the consideration paid (including non-cash assets transferred or liabilities assumed) is
recognized in current profits and losses.
(5) Offsetting of financial assets and financial liabilities
When the Group has the legal rights to offset the financial assets and financial liabilities whose amounts have
been recognized the legal rights are currently exercisable and the Group plans to settle with net amount or realize
the financial asset and repay the financial liability simultaneously the financial assets and financial liabilities can
be presented in the balance sheet with the net amount after they are mutually offset. Apart from this financial assets
and financial liabilities shall be presented separately in the balance sheet and not be offset against each other.
(6) Methods for determining the fair value of financial assets and financial liabilities
Fair value is the price that a market participant would receive to sell an asset or pay to transfer a liability in an
orderly transaction occurring on the measurement date. Regarding the financial instruments for which there is an
active market the Group uses quoted prices in an active market to determine their fair values. A quoted price in an
active market is a price that is readily available on a regular basis from an exchange broker trade association
pricing service agency etc. and represents the price of a market transaction that actually takes place in a fair trade.If there is no active market for the financial instrument the Group uses valuation techniques to determine its fair
value. The valuation techniques include reference to prices used in recent market transactions by the parties who are
familiar with the situation and willing to deal reference to the current fair value of other substantially identical
financial instruments the discounted cash flow method and option pricing models. In the valuation the Group will
adopt the valuation techniques applicable in the current situation and supported by sufficiently available data and
other information select the input values that are consistent with the characteristics of the asset or liability
considered by market participants in the transaction of the relevant asset or liability and give priority to the relevant
observable input values when possible. The non-observable input values will be used only when the relevant
observable input values are unavailable or not practicable to obtain.
(7) Equity instruments
Equity instruments are contracts that demonstrate ownership of the remaining interest in the Group’s assets
after deducting all liabilities. The Group’s issuance (including refinancing) repurchase sale or cancellation of equity
instruments is treated as changes in equity and the transaction expenses related to equity transactions are deducted
from equity. The Group does not recognize the changes in fair value of equity instruments.Dividends (including “interest” on instruments classified as equity instruments) distributed during the existence
of the Group’s equity instruments are treated as profit distributions.
(8) Impairment of financial assets
The financial assets for which the Group needs to recognize impairment losses are financial assets at amortized
cost debt instruments at fair value through other comprehensive income lease receivables which mainly include
notes receivable accounts receivable receivables financing other receivables debt investments other debt
investments long-term receivables etc. In addition for contractual assets and certain financial guarantee contracts
impairment provisions are made and credit impairment losses are recognized in accordance with the accounting
policies described in this section.* Recognition of provision for impairment losses
On the basis of expected credit losses the Group makes an impairment provision and recognizes credit
impairment losses for each of the above items in accordance with its applicable expected credit losses measurement
method (general method or simplified method).Credit losses represent the difference between all contractual cash flows receivable under the contract and all
cash flows expected to be received by the Group discounted at the original effective interest rate i.e. the present
value of all cash shortfalls. Financial assets purchased or originated by the Group that are credit impaired shall be
discounted at the credit-adjusted effective interest rate of the financial assets.The general method of measurement of expected credit losses means that the Group assesses at each balance
sheet date whether the credit risk of financial assets (including contractual assets and other applicable items the
same below) has increased significantly since the initial recognition. If the credit risk has increased significantly
since the initial recognition the Group measures the loss provision at an amount equivalent to the expected credit
losses over the entire duration; If credit risk does not increase significantly since the initial recognition the Group
measures the loss provision at an amount equivalent to expected credit losses over the next 12 months. The Group
will consider all the reasonable and evidence-based information including forward-looking information when
assessing expected credit losses.For financial instruments with low credit risk on the balance sheet date the Group assumes that their credit risk
has not increased significantly since initial recognition and measures the provision for losses based on expected
credit losses over the next 12 months.* Criteria for determining whether credit risk has increased significantly since the initial recognition
If the probability of default of a financial asset during the estimated duration determined on the balance sheet
date is significantly higher than the probability of default during the estimated duration determined at the time of
initial recognition it indicates that the credit risk of the financial asset has significantly increased. Except in
exceptional circumstances the Group uses the change in default risk occurring over the next 12 months as a
reasonable estimate of the change in default risk occurring over the duration to determine whether credit risk has
increased significantly since the initial recognition.* The portfolio-based approach to assessing expected credit risk
The Group assesses credit risk individually for financial assets with significantly different credit risks such as
receivables that are in dispute with other parties or involved in litigation or arbitration; or where there are clear
indications that the debtor is likely to be unable to meet its repayment obligations.Apart from financial assets that are individually assessed for credit risk the Group classifies financial assets
into different groups based on common risk characteristics and assesses credit risk on a portfolio basis.* Accounting treatment of impairment of financial assets
At the end of the period the Group will calculate the estimated credit losses of various financial assets and if
the estimated credit losses are greater than the book value of its current impairment provision the difference is
recognized as an impairment loss; If it is less than the book value of the current impairment provision the difference
is recognized as an impairment gain.* Determination of credit losses of various financial assets
a. Notes receivable
The Group measures the loss provision for notes receivable at the amount equivalent to expected credit losses
in the entire duration. Based on the credit risk characteristics of notes receivable they are divided into different
portfolios:
Item Basis for determining the portfolio
Banker’s acceptance bill Banks with less credit risk in relation to acceptors
Commercial acceptance bill Divided according to the acceptor’s credit risk
b. Accounts receivable and contractual assets
For the accounts receivable and contractual assets that do not have a significant financing component the
Group measures the loss provision at the amount equivalent to expected credit losses in the entire duration.For the accounts receivable contractual assets and lease receivables that have a significant financing
component the Group chooses to always measure the loss provision at an amount equivalent to expected credit
losses over the duration.
Apart from the accounts receivable for single assessment of credit risk they are divided into different portfolios
based on their credit risk characteristics:
Item Basis for determining the portfolio
Related party within the consolidation This portfolio represents amounts receivable of the Company within the
scope
scope of consolidation.Account age portfolio The portfolio takes the age of receivables as the credit risk characteristics.Method for calculating aging years based on credit risk characteristics portfolio: The Group calculates the aging
years of accounts receivable based on the principle of First Occurrence First Recovery.Recognition criteria for provision of bad debts of a single account receivable: The Group conducts separate
impairment tests on accounts receivable with significantly different credit risk characteristics such as significantly
deteriorating credit status of the debtor low possibility of future repayment and credit impairment that has occurred.c. Accounts receivable financing
Notes and accounts receivable measured at fair value through other comprehensive income are presented as
accounts receivable financing if their maturities are within one year (including one year) from the initial recognition
date. The Group measures the loss provision at the amount equivalent to expected credit losses in the entire duration.Apart from the accounts receivable financing for single assessment of credit risk they are divided into different
portfolios based on their credit risk characteristics:
Item Basis for determining the portfolio
Related party within the consolidation This portfolio r epresents amounts receivable of the Company within the
scope scope of consolidation.Account age portfolio The portfolio takes the age of receivables as the credit risk characteristics.Method for calculating aging years based on credit risk characteristics portfolio: The Group calculates the
aging years of accounts receivable based on the principle of First Occurrence First Recovery.Recognition criteria for provision of bad debts of a single account receivable: The Group conducts separate
impairment tests on accounts receivable with significantly different credit risk characteristics such as significantly
deteriorating credit status of the debtor low possibility of future repayment and credit impairment that has occurred.d. Other receivables
Based on whether the credit risk of other receivables has increased significantly since initial recognition the
Group measures the loss provision at the amount equivalent to expected credit losses in the next 12 months or the
entire duration. Apart from the other receivable for single assessment of credit risk they are divided into different
portfolios based on their credit risk characteristics:
Item Basis for determining the portfolio
Related party within the consolidation This portfolio represents amounts receivable of the Company within the scope of
scope consolidation.
Account age portfolio The portfolio takes the age of receivables as the credit risk characteristics.Method for calculating aging years based on credit risk characteristics portfolio: The Group calculates the
aging years of accounts receivable based on the principle of First Occurrence First Recovery.Recognition criteria for provision of bad debts of a single account receivable: The Group conducts separate
impairment tests on accounts receivable with significantly different credit risk characteristics such as significantly
deteriorating credit status of the debtor low possibility of future repayment and credit impairment that has occurred.
12. Notes receivable
Please refer to “11. Financial instruments.”
13. Accounts receivable
Please refer to “11. Financial instruments.”
14. Accounts receivable financing
Notes and accounts receivable at fair value through other comprehensive income are presented as accounts
receivable financing if their maturities are within one year (including one year) from the initial recognition date.The Notes and accounts receivable with the maturity of more than 1 year since the initial recognition date are
presented as other debt investments. For the relevant accounting policies please refer to “11. Financial instruments”
under this Note.
15. Other receivables
Method of determining expected credit losses on other receivables and the accounting treatment
For the method of determining expected credit losses on other receivables and the accounting treatment please
refer to “11. Financial instruments.”
16. Inventories
(1) Categories of inventories
Inventories mainly include raw materials packaging and low-value consumable goods products in process
goods in stock consumable biological assets development costs development products etc.
(2) Pricing of inventories
Inventories are initially measured at actual cost. The cost of inventories includes procurement cost processing
cost and other costs. Inventories are measured by the weighted average method upon delivery.
(3) Determination of net realizable value of inventories and method of making provision for inventory
impairment
The net realizable value of inventories refers to the estimated selling price deducted by estimated costs until
they are made into finished goods estimated selling expense and relevant taxes in daily activities. The determination
of the net realizable value of inventories is based on conclusive evidence obtained taking into account the purpose
for which the inventories are held and the effect of events after the balance sheet date.Inventories are measured at the lower of cost or net realizable value at the balance sheet date and provision
for their impairment shall be made when the net realizable value is below the cost of inventories. Provision for
inventory impairment is made on the basis of the difference whereby the cost of one single inventory item exceeds
its net realizable value. For inventories with large quantities and low unit prices provision for inventory impairment
shall be made according to inventory categories. Inventories that are related to product series produced and sold in
the same region and have the same or similar end use or purpose and are difficult to be documented separately from
other items that shall be combined for making provision for inventory impairment.After provision for inventory impairment is made if the factors that once resulted in the impairment disappear
leading to the net realizable value of inventories higher than their book value the provision of inventory impairment
shall be reversed to the extent of provision previously made and the reversed amount shall be recognized in current
profits and losses.
(4) The inventory system shall be the perpetual inventory system.
(5) Amortization of low-value consumables and packaging materials
The low-value consumables and packaging materials are amortized using a one-off amortization method.
17. Long-term equity investments
Long-term equity investments in this section refers to any equity investment by which the Group has control
common control or significant influence over the investee. Long-term equity investments by which the Group does
not have control common control or significant influence over the investee are accounted for as financial assets at
fair value through profits or losses. If they are non-trading the Group may elect to designate them as financial assets
at fair value through other comprehensive income at the time of initial recognition. For the accounting policies
please refer to “11. Financial instruments” under Note IV.Common control is the Group’s contractually agreed sharing of control over an arrangement and the activities
under which must be decided by unanimous agreement from parties who share the control. Significant influence is
the power of the Group to participate in the decision-making for financial and operating policies of an investee but
not to control or common control the formulation of such policies together with other parties.
(1) Determination of investment cost
For long-term equity investments acquired relating to business combination under common control the initial
investment cost is determined on the date of consolidation according to the percentage of shareholders/owners’
equity from the combined party as a part of the book value of total shareholders/owners’ equity set forth in the
consolidated financial statements of the ultimate controlling party. The difference between the said initial
investment cost and the sum of cash being paid non-cash assets being transferred and book value of liabilities being
assumed shall be adjusted against the capital reserve; or in case of insufficient capital reserve to cover the difference
against the retained earnings accordingly. In case that the consideration of the business combination is satisfied by
issuing equity securities the initial investment cost of the long-term equity investments is determined on the date
of consolidation according to the percentage of shareholders’ equity from the combined party as a part of the book
value of total shareholders’ equity set forth in the consolidated financial statements of the ultimate controlling party.With the sum of par values of shares being issued as the share capital the difference between the said initial
investment cost and the sum of par values of shares being issued shall be adjusted against the capital reserve; or in
case of insufficient capital reserve to cover the difference against the retained earnings accordingly. Where a
business combination under common control is achieved by acquiring the equity of a combined party under common
control in phases through multiple transactions following policies shall apply depending on whether those
transactions are “a bundle of transactions”: if so the Company shall account for all transactions together as the one
deal to obtain the control; if not the initial investment cost of the long-term equity investments shall be determined
on the date of consolidation according to the percentage of shareholders/owners’ equity from the combined party as
a part of the book value of total shareholders’ equity set forth in the consolidated financial statements of the ultimate
controlling party while the difference between the initial investment cost and the sum of book value of long-term
equity investments before the consolidation and that of consideration newly paid to acquire additional equities on
the date of consolidation shall be adjusted against the capital reserve or in case of insufficient capital reserve to
cover the difference against retained earnings accordingly. Accounting treatment is currently not required for other
comprehensive income that has been recognized due to the adoption of equity method in accounting or the
classification as financial assets at fair value through other comprehensive income in respect of equity investments
held before the date of consolidation.For the long-term equity investments acquired relating to business combination not under common control the
initial investment cost is the cost of combination on the date of acquisition which equals to the aggregate fair value
of assets transferred liabilities incurred or assumed and equity securities issued by the acquirer. Where a business
combination not under common control is achieved by acquiring the equity of a combined party under common
control in phases through multiple transactions following policies shall apply depending on whether those
transactions are “a bundle of transactions”: if so the Group shall account for all transactions together as the one
deal to obtain the control; if not the initial investment cost of the long-term equity investments that is re-accounted
for using the cost method shall be the sum of book value of long-term equity investments previously held by the
acquirer in the acquiree and new investment cost. Accounting treatment is currently not required for other
comprehensive income in respect of equity investments that have been accounted for using the equity method.The intermediary expenses on items such as audit legal service and valuation advisory for business
combination and other related administrative expenses incurred by the combining party or acquirer are recognized
in current profits and losses upon their occurrence.Long-term equity investments other than those formed by business combination is initially measured at cost
which varies depending on the different ways of acquiring the long-term equity investments and is determined by
considering the amount of actual cash paid by the Group the fair value of the equity securities issued by the Group
the conventional value stipulated in the investment contract or agreement the fair value or original book value of
the assets surrendered in the non-cash and bank balance swap transaction the fair value of the long-term equity
investments itself and etc. The expenses taxes and other necessary expenses directly related to the acquisition of
the long-term equity investments are also included in the investment cost. For additional long-term equity
investments that entitles the Company with significant influence or common control but not control over the investee
its cost of investment is the sum of fair value of equity investments that have been held plus new cost of investment
pursuant to the Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial
Instrument.
(2) Subsequent measurement and recognition method of profits and losses
A long-term equity investment with common control (excluding that constituting a joint venture) over or
significant influence on the investee is accounted for by using the equity method and a long-term equity investment
with control over the investee is accounted for in the Company’s financial statements by using the cost method.* Long-term equity investment accounted for with cost method
When a long-term equity investment is accounted for with cost method its price is measured at initial
investment cost and when the long-term equity investment is added or disposed its cost is adjusted accordingly.The cash dividend or profit declared by the investee except for the cash dividend or profit declared but not yet
granted that is included in the price or consideration actually paid upon the acquisition of the investment shall be
recognized as investment income for the period.* Long-term equity investment accounted for with equity method
When a long-term equity investment is accounted for with equity method and its initial investment cost is
higher than the proportion of fair value of the investee’s identifiable net assets attributable to the investor because
of the investment its initial cost shall not be adjusted; if lower the difference shall be recognized in the current
profits and losses and its cost shall be adjusted accordingly.When a long-term equity investment is accounted for with equity method the investment income and other
comprehensive income arising therefrom are recognized in accordance with the proportion of net profits and losses
and other comprehensive income of the investee attributable to the investor and the book value of long-term equity
investments is adjusted accordingly; if any profit or cash dividend is declared by the investee the book value of
long-term equity investments shall be reduced according to the part of profit or dividends attributable to the investor;
if there is any other changes in shareholders’ equity other than net profits and losses other comprehensive income
and profit distribution such change shall be adjusted against the book value of long-term equity investments and
recognized in the capital reserve. The Group recognizes its share of the investee’s net profits and losses based on
fair value of the investee’s identifiable assets at the time of acquisition after making appropriate adjustments to net
profits thereto. In case of any inconsistency between the accounting policies and accounting periods adopted by the
investee and by the Group the financial statements of the investee shall be adjusted in accordance with the
accounting policies and accounting periods of the Group and the gain on investment and other comprehensive
income shall be recognized accordingly. In respect of the transactions between the Group and its associates and joint
ventures in which the assets invested or disposed of are not part of the business the share of unrealized profits and
losses arising from inter-group transactions shall be offset by the portion attributable to the Group and the profits
and losses on investment shall be recognized accordingly. However any unrealized loss arising from inter-group
transactions between the Group and an investee is not offset to the extent that the loss is impairment loss of the
assets transferred. Where the Group invests to its joint ventures or associates an asset forming part of a business
giving rise to the acquisition of a long-term equity investment by the investor without obtaining control the initial
investment cost of the additional long-term equity investments shall be recognized at fair value of the business
invested. The difference between initial investment cost and book value of the business invested will be fully
included in current profits and losses. Where the Group disposes of an asset forming part of a business to its
associates or joint ventures the difference between the consideration received and the book value of the business
shall be fully included in current profits and losses. Where the Group acquires from its associates or joint ventures
an asset forming part of a business the profits or losses related to the transaction shall be accounted for and
recognized in accordance with the Accounting Standards for Business Enterprises No. 20 - Business Combination.The Group’s share of net loss of the investee shall be recognized to the extent that the book value of the long-
term equity investment and any long-term equity that substantially forms part of the investor’s net investment in the
investee are written down to zero. If the Group has to assume additional obligations to the loss of the investee the
estimated liabilities shall be recognized for the estimated obligation assumed and charged to investment loss for the
period. Where the investee makes profits in subsequent periods the Group shall re-recognize its share of the profits
after setting off against the share of unrecognized losses.* Acquisition of minority interests
When preparing the consolidated financial statements the Company adjusts the capital reserve and if the
capital reserve is insufficient adjusts the retained earnings based on the difference between the additional long-term
equity investments arising on acquisition of minority interests and the Company’s share in the net assets of the
subsidiary accrued from the acquisition date (or consolidation date) in proportion to the additional shareholdings.* Disposal of long-term equity investments
In the consolidated financial statements if the parent company disposes part of the long-term equity investment
in the subsidiary without losing its control the difference between the disposal price and the Company’s share in
the net assets of the subsidiary attributable to the disposal of the long-term equity investment is recognized in the
shareholders’ equity; if the parent company disposes part of the long-term equity investment in the subsidiary
resulting in the loss of its control over the subsidiary the accounting treatment shall be in accordance with thepolicies as set out in Item (2) of Section 6 “Accounting treatment for business combination under common controland not under common control” under this Note V.In other cases upon the disposal of a long-term equity investment the difference between the book value of
the investment and the price received is recognized in the current profits and losses.For a long-term equity investment that is accounted for using the equity method where the remaining equity
after disposal continues to be accounted for using the equity method the portion of other comprehensive income
previously included in shareholder’s equity shall be treated in accordance with the same basis as the investee directly
disposes of relevant asset or liability on pro rata basis at the time of disposal. The owners’ equity recognized for the
change in owners’ equity of the investee other than net profits and losses other comprehensive income and profit
distribution shall be transferred to current profits and losses on pro rata basis.For a long-term equity investment accounted for using the cost method where the remaining equity after
disposal continues to be accounted for using cost method other comprehensive income recognized using the equity
method or in accordance with the standard for recognition and measurement of financial instruments prior to the
acquisition of control over the investee shall be treated in accordance with the same basis as the investee directly
disposes of relevant asset or liability and transferred to current profits and losses on pro rata basis. The change in
owners’ equity recognized in net assets of the investee by using the equity method other than net profits and losses
other comprehensive income and profit distribution shall be transferred to current profits and losses on pro rata basis.In preparing separate financial statements if control is lost over the investee upon partial disposal of equity
investment the remaining equity with common control or an ability to impose a significant influence over the
investee after disposal shall be accounted for using the equity method and shall be adjusted as if it has been
accounted for using the equity method since it was acquired. The remaining equity without common control or an
ability to impose a significant influence over the investee after disposal shall be accounted for based on the standard
for recognition and measurement of financial instruments and the difference between its fair value and book value
on the date of loss of control shall be included in current profits and losses. In respect of other comprehensive income
recognized using the equity method or in accordance with the standard for recognition and measurement of financial
instruments prior to the acquisition of control over the investee it shall be accounted for in accordance with the
same basis as the investee directly disposes of relevant asset or liability when the control is lost. The change in
owners’ equity recognized in net assets of the investee by using the equity method other than net profits and losses
other comprehensive income and profit distribution shall be transferred to current profits and losses at the time when
the control over investee is lost. Where the remaining equity after disposal is accounted for using the equity method
other comprehensive income and other owners’ equity shall be carried forward on pro rata basis. Where the
remaining equity after disposal is accounted for in accordance with the standard for recognition and measurement
of financial instruments other comprehensive income and other owners’ equity shall be fully carried forward.If the common control or significant influence of the Group over the investee is lost upon partial disposal of
equity investment the remaining equity after disposal shall be accounted for in accordance with the standard for
recognition and measurement of financial instruments. The difference between its fair value and book value on the
date of loss of common control or significant influence shall be included in current profits and losses. For other
comprehensive income recognized previously for the equity investment using equity method it shall be accounted
for in accordance with the same basis as the investee directly disposes of relevant asset or liability at the time when
the equity method is ceased to be used. The owners’ equity recognized arising from the change in owners’ equity of
the investee other than net profits and losses other comprehensive income and profit distribution shall be transferred
to current profits and losses at the time when the equity method is ceased to be used.Where the Group disposes of its equity investment in a subsidiary in a series of transactions until the control is
lost and such transactions form “a bundle of transactions” each transaction shall be accounted for as a disposal of
equity investment of the subsidiary resulting in a loss of control. The difference between the consideration for each
transaction and the book value of the long-term equity investment attributable to the equity interests disposed prior
to loss of control shall be initially recognized as other comprehensive income and upon loss of control transferred
to current profits and losses when the loss of control takes place.
18. Investment properties
Measurement model for investment property
Cost model
Depreciation or amortization method
Investment properties are real estate held for rental income or capital appreciation or both including land use
rights that have been leased land use rights that are held and intended to be transferred after appreciation and
buildings that have been leased. In addition vacant buildings held by the Group for operating leases are reported as
investment properties if the Board of Directors (or similar organization) makes a written resolution that they will be
used for operating leases and the intention to hold them will not change in the near future.Investment properties shall be initially measured at cost. The subsequent expenses related to investment
properties shall be recognized as cost of the investment properties only if it is probable that economic benefits
associated with the assets will flow to the Group and the cost of the assets can be measured reliably. Other subsequent
expenses shall be recognized in the current profits and losses when incurred.The Group uses the cost model for subsequent measurement of investment properties and depreciates or
amortizes them according to the policies consistent with that for buildings or land use rights.For the method of impairment test and provision for impairment loss of investment properties please refer to
Section 25 “Impairment of long-term assets” under Note V.When the purpose of an investment property changes to self-use from the date of the change the investment
property shall be reclassified as a fixed asset or intangible asset. When the purpose of a self-use property changes
to earning rental income or capital appreciation from the date of the change the fixed asset or intangible asset shall
be reclassified as an investment property. Upon reclassification for investment properties measured using the cost
model the carrying value before reclassification is recognized as the carrying value after reclassification. For
investment properties measured using the fair value model the fair value on the date of reclassification is recognized
as the carrying value after reclassification.An investment property is derecognized upon disposal or when it is permanently withdrawn from use and no
future economic benefits are expected from its disposal. The net proceeds from sale transfer retirement or damage
of an investment property after its book value and related taxes and expenses are recognized in the current profits
and losses.
19. Fixed assets
(1) Recognition criteria
Fixed assets refer to the tangible assets held by the Company for producing goods rendering services renting
or operation and administration purposes with useful life of over one accounting year. The fixed assets are
recognized only when the economic interests related thereto are likely to flow into the Group and its cost can be
measured reliably. The fixed assets are initially measured at cost with consideration of the impact of estimated
disposal costs.
(2) Depreciation method
Depreciation Depreciation life Rate of residual Annual depreciation
Category
method (year) value (%) rate (%)
Building for production Straight-line method 39 5 2.44
Machine and equipment
Straight-line method 10 5 9.5
for production
Transportation
Straight-line method 10 5 9.5
equipment
Electronic device
Straight-line method 5 5 19
and management tools
Machine and
equipment for non- Straight-line method 10 5 9.5
production purpose
Building for non-
Straight-line method 45 5 2.11
production purpose
Others Straight-line method 5 5 19
The expected residual value refers to the anticipated condition of the fixed asset at the end of its estimated
useful life. It represents the estimated amount that the Group would receive from the disposal of the asset net of
any expected disposal costs incurred.
(3) Impairment test method and provision for impairment of fixed assets
The impairment testing method and provision for impairment of fixed assets can be found in Section 25
“Impairment of Long-term Assets” under Note V.
(4) Other information
Subsequent expenditures related to fixed assets that are expected to generate economic benefits and can be
reliably measured are capitalized as part of the fixed asset's cost and the carrying value of the replaced portion is
derecognized. Other subsequent expenditures are recognized in the current period's income statement upon
occurrence.When a fixed asset is classified as held for disposal or is expected to no longer generate economic benefits
through use or disposal it is derecognized. Proceeds from the sale transfer scrapping or destruction of fixed assets
net of their carrying value and related taxes are recognized in the current period’s income statement.The Group reviews the useful lives estimated residual values and depreciation methods of fixed assets at least
annually. Changes in these estimates are treated as changes in accounting estimates.
20. Construction in progress
The cost of construction in progress is measured according to the actual expense for the construction in progress
including all the necessary expenses incurred in the process of construction borrowing costs to be capitalized before
the project is ready for its intended use and other related costs.The construction in progress is transferred to fixed assets after it is ready for its intended use.For the method of impairment test and provision for impairment loss of construction in progress please refer
to Section 25 “Impairment of long-term assets” under Note V.
21. Borrowing costs
Borrowing costs include interest on borrowings amortization of discounts or premiums ancillary costs and
exchange differences arising from foreign currency borrowings. Where the borrowing costs can be directly
attributable to the acquisition and construction or production activities of assets eligible for capitalization it shall
be capitalized on the basis that the expense for the asset has already been incurred the borrowing costs have been
incurred and the acquisition and construction or production activities necessary to prepare the asset for its intended
use or for sale have already commenced; after the acquired or produced asset eligible for capitalization is available
for its intended use or for sale the capitalization shall be stopped. Other borrowing costs shall be recognized as
expenses at the time when they are incurred.The actual interest cost incurred in the period of specific-purpose borrowing net of any interest income from
the borrowed funds not used and deposited in bank or any investment income from the temporary investment of
those funds shall be capitalized; the amount of interest of general-purpose borrowings to be capitalized is determined
by multiplying the weighted average of the amounts of cumulative expenses on the asset over and above the amounts
of specific-purpose borrowings by the capitalization rate of the corresponding general-purpose borrowings.Capitalization rate is calculated and determined based on the weighted average rate of general-purpose borrowings.During the capitalization period exchange differences related to specific-purpose borrowings denominated in
foreign currencies are fully capitalized; exchange differences related to general-purpose borrowings denominated
in foreign currencies are recognized in the current profits and losses.Assets eligible for capitalization refer to the fixed assets investment properties inventories and other assets
that require a substantially long period of time of acquisition and construction or production activities for intended
use or for sale.Where the acquisition and construction or production activities of an asset eligible for capitalization is
interrupted abnormally and the interruption period lasts for more than 3 months the capitalization of the borrowing
costs shall be suspended until the acquisition and construction or production of the asset is resumed.
22. Biological assets
(1) Consumptive biological assets
Consumptive biological assets are the biological assets held for sale or harvested for agricultural products in
the future including growing field crops vegetables timber stands and livestock stored for sale. Consumptive
biological assets shall be initially measured at cost. The cost of a consumptive biological asset that is cultivated
constructed propagated or farmed by the Company is the necessary expense incurred before the asset is
harvested/closed/sold or placed in storage that is directly attributable to the asset including borrowing costs that are
eligible for capitalization. Subsequent expenses such as management and feeding costs incurred after
harvesting/closing/storage of consumptive biological assets are included in current profits and losses.Consumptive biological assets are carried forward at book value using the weighted average method when
harvested or sold.
On the balance sheet date consumptive biological assets are measured at the lower of cost or net realizable
value and the provision for impairment of consumptive biological assets shall be calculated and recognized based
on the methods consistent with those for the recognition of the provision for inventory impairment. Where the
impairment factors disappear the amount written down shall be restored and reversed from the original provision
for depreciation with the amount reversed recognized in the current profits and losses.
(2) Productive biological assets
Productive biological assets refer to the biological assets held for the purpose of producing agricultural products
providing services or leasing including economic forests firewood forests production animals and draft animals.Productive biological assets shall be initially measured at cost. The cost of a self-created or propagated productive
biological asset is the necessary expense incurred before the asset achieves the intended purpose of production and
operation that can be directly attributable to the asset including borrowing costs that meet the capitalization
conditions.The Group reviews the useful life and estimated net residual value of a productive biological asset and the
depreciation method applied at least at each year-end. Any change shall be accounted for as a change in accounting
estimate.The difference between the disposal proceeds from the sale liquidation death or destruction of productive
biological assets less their book value and related taxes and charges is included in the current profits and losses.The Group determines whether a productive biological asset has any signs of impairment on each balance sheet
date. If the asset shows signs of impairment the recoverable amount is estimated. The recoverable amount is
estimated on a single asset basis. If it is difficult to estimate the recoverable amount of a single asset the recoverable
amount of the asset group to which the asset belongs shall be determined. If the recoverable amount of an asset is
lower than its book value the provision for asset impairment shall be made according to the difference and recorded
in the current profits and losses.Once the above asset impairment loss is recognized it shall not be reversed in subsequent accounting periods.If a productive biological asset changes its use and becomes a consumptive biological asset the cost of the
change of use is determined at the book value at the time of the change of use. If the productive biological asset
changes its use and becomes a public welfare biological asset whether there is any impairment is determined in
accordance with the provisions of Accounting Standard for Business Enterprises No. 8 - Asset Impairment. When
an impairment occurs an impairment provision shall be first made and then determined on the basis of the book
value after such provision is made.
23. Intangible assets
(1) Useful life and its basis for determination estimate amortization method or review procedure
An intangible asset is an identifiable non-monetary asset without physical substance owned or controlled by
the Group.An intangible asset shall be initially measured at cost. The expenses incurred on an intangible asset shall be
recognized as cost of the intangible asset only if it is probable that economic benefits associated with the asset will
flow to the Group and the cost of the asset can be measured reliably. Other expenses shall be recognized in the
current profits and losses when incurred.Land use right acquired shall normally be recognized as an intangible asset. For self-constructed buildings (e.g.plants) the expenses on the land use right and cost of the buildings shall be separately accounted for as an intangible
asset and fixed asset. For buildings and structures purchased the purchase consideration shall be allocated among
the land use right and the buildings on a reasonable basis. In case there is difficulty in making a reasonable allocation
the consideration shall be recognized in full as a fixed asset.An intangible asset with a definite useful life is amortized on average and by stages using the straight line
method by deducting the estimated net residual value and accrued provision for impairment loss from the original
value over the estimated useful life from the time when it is available for use. An intangible asset with an indefinite
useful life is not amortized.During the end of the period the Company shall check the useful life and the amortization method of intangible
assets with limited useful life and carry out accounting estimate change in case that a change happens. In addition
the Company shall check the useful life of intangible assets with indefinite useful life. If there are evidences showing
that the intangible assets can bring economic benefit for the Company within the foreseeable period the Company
shall estimate the useful life and carry out amortization according to the amortization policy for intangible assets
with finite useful life.The Group’s intangible assets include land use rights software franchise rights patent technology non-patent
technology and trademarks. The amortization periods and conditions for the main intangible assets are as follows:
* Land use rights are amortized over the remaining useful life specified in the land use right certificate with
an average annual amortization period of 30-50 years. When the purchase price of land and buildings cannot be
reasonably allocated between land use rights and buildings the entire amount is treated as fixed assets.* Software patent technology and non-patent technology are amortized over the estimated useful life of 10
years with an average annual amortization period.* Franchise rights are amortized over the estimated useful life of 30 years with an average annual
amortization period.
(2) Scope of R&D expenses and related accounting treatment
The scope of our Company’s R&D expenses is primarily determined based on the Company’s R&D projects.It includes R&D personnel salaries direct input costs depreciation and amortization expenses design and testing
expenses outsourced R&D expenses and other expenses.The Group classifies the expense on an internal R&D project into expense at the research phase and expense
at the development phase.Research is the original and planned investigation undertaken with the objective of acquiring and understanding
new scientific or technical knowledge. Expense at the research phase is recognized in the current profits and losses
when incurred.
Development is the application of research findings or other knowledge to a plan or design prior to commercial
production or use for the production of new or substantially improved materials devices products and so on.Expenditures incurred during the development phase shall be capitalised if all of the following conditions are met.Expenditures in the development phase that fail to satisfy any of the conditions below shall be recognized in profit
or loss for the current period:
* It is technically feasible to complete the intangible asset so that it will be available for use or sale;
* It is intended to complete and to use or sell the intangible asset;
* It can be demonstrated how the intangible asset will generate economic benefits including demonstrating
that there is an existing market for products produced by the intangible asset or for the intangible asset itself
and that it can be proven to be useful if the intangible asset is to be used internally;
* There are adequate technical financial and other resources to complete the development and the ability to
use or sell the intangible assets;
* The expense attributable to the intangible asset at its development phase can be reliably measured.All the expenses on R&D which cannot be distinguished between the research phase and development phase
are recognized in the profits and losses when incurred.
(3) The impairment testing method and provision for impairment of intangible assets
For the impairment testing method and provision for impairment of intangible assets please refer to Section
24 of “Impairment of long-term assets” under Note V.
24. Impairment of long-term assets
For non-current non-financial assets such as fixed assets construction in progress right of use assets intangible
assets with limited useful life investment real estate measured at cost and long-term equity investments in
subsidiaries joint ventures and associates the Group determines whether there are signs of impairment on the
balance sheet date. If the asset shows signs of impairment the recoverable amount is estimated and impairment test
is conducted. Goodwill intangible assets with indefinite useful lives and intangible assets that have not yet ready
for use are tested annually for impairment regardless of whether there is an indication of impairment.If the impairment test results show that the recoverable amount of an asset is lower than its carrying value the
impairment provision shall be made and the impairment loss shall be recorded according to the difference. The
recoverable amount is the higher between the net value of the fair value of the asset less the disposal expense and
the present value of the estimated future cash flow of the asset. The fair value of the asset is determined based on
the sales agreement price in fair transactions. Where there is no sales agreement but there is an active market for the
asset the fair value shall be determined according to the buyer’s bid for the asset. Where there is neither sales
agreement nor active market for the asset the fair value of the asset is estimated based on the best information
available. Disposal costs include legal costs associated with the disposal of the asset related taxes removal costs
and direct costs incurred to bring the asset to marketable status. The present value of the expected future cash flow
of the asset shall be determined according to the discounted amount of the expected future cash flow generated by
the asset in the process of continuous use and final disposal which is converted according to the appropriate discount
rate. The asset impairment provision is calculated and recognized on a single asset basis. If it is difficult to estimate
the recoverable amount of a single asset the recoverable amount of the asset group to which the asset belongs shall
be determined. An asset group is the smallest portfolio of assets that can independently generate cash inflows.For the goodwill presented separately in the financial statements when tested for impairment the book value
of goodwill will be apportioned to the asset group or combination of asset groups expected to benefit from the
synergies of the business combination. Where the test results indicate that the recoverable amount of an asset group
or combination of asset groups containing the apportioned goodwill is less than its book value the corresponding
impairment loss is recognized. The impairment loss amount is first set off against the book value of the goodwill
apportioned to the asset group or combination of asset groups and then set off against the book value of other assets
based on the proportion of the book value of each asset other than goodwill in the asset group or combination of
asset groups.Once the above asset impairment loss is recognized it shall not be reversed in subsequent accounting periods
for the part whose value is restored.
25. Long-term deferred expenses
Long-term unamortized expenses are the expenses that have been incurred but shall be borne in the reporting
period and subsequent periods for a period of assessment of more than one year. The Group’s long-term deferred
expenses mainly consist of building renovations and project improvements. These long-term deferred expenses are
amortized using the straight-line method over the estimated period of benefit.
26. Contractual liabilities
The contractual liabilities refer to the obligation of the Group to transfer goods to customers for consideration
received or receivable. If the customer has paid the contractual consideration or the Group has obtained an
unconditional right of collection prior to the transfer of goods by the Group to the customer the Group presents the
amount received or receivable as a contractual liability on the date when the actual payment is made by the customer
or the payment due date whichever is earlier. Contractual assets and contractual liabilities under the same contract
are presented on a net basis and contractual assets and contractual liabilities under different contracts are not offset.
27. Employee compensation
(1) Accounting treatment for short-term employee compensation
The employee compensation of the Group includes short-term compensation post-employment benefits
termination benefits and other long-term employee benefits. Where:
Short-term compensation mainly includes wages bonuses allowances and subsidies employee welfare
expenses medical insurance premiums maternity insurance premiums work-related injury insurance premiums
housing provident funds union funds and employee education funds non-monetary benefits etc. The Group
recognizes short-term employee compensation actually incurred during the accounting period in which employees
provide services to the Group as a liability and includes it in current profits and losses or related asset cost. Non-
monetary benefits are measured at fair value.
(2) Accounting treatment for post-employment benefits
Post-employment benefits mainly include basic pension insurance unemployment insurance and annuity. The
post-employment benefits plan includes the establishment of a defined contribution plan and the establishment of a
defined benefit plan. If a defined contribution plan is adopted the corresponding amount due is included in the
relevant asset cost or current profits and losses at the time of occurrence.If the employment relationship with the employee is terminated before the expiration of the employee’s
employment contract or a compensation proposal is made to encourage the employee to voluntarily accept the
reduction the employee compensation liabilities arising from termination benefits shall be recognized and included
in current profits and losses when the Group cannot unilaterally withdraw the termination benefits provided as a
result of the termination plan or the reduction proposal or the Group recognizes the costs associated with the
reorganization involving the payment of termination benefits whichever is earlier. However if the termination
benefits cannot be fully paid within 12 months after the end of the annual reporting period they shall be treated as
other long-term employee compensations.
(3) Accounting treatment for termination benefits
Internal employee retirement plans are treated in the same way as the termination benefits mentioned above.The Group will recognize the salary of internal retirees and social insurance premiums to be paid during the period
from the date the employee ceases to provide service to the normal retirement date in the current profits and losses
(termination benefits) when the conditions for recognition of the estimated liabilities are met.
(4) Accounting treatment for other long-term employee benefits
Other long-term employee benefits provided by the Group to employees that meet the defined contribution plan
are accounted for in accordance with the defined contribution plan. Other benefits shall be accounted for in
accordance with the defined benefit plan.
28. Estimated liabilities
An obligation relating to a contingency is recognized as an estimated liability when the following conditions
are met: (1) The obligation is a current obligation undertaken by the Group; (2) The performance of the obligation
is likely to result in the outflow of economic benefits; (3) The amount of the obligation can be measured reliably.On the balance sheet date estimated liabilities are measured according to the best estimate of expenses required
to meet the relevant current obligations taking into account factors such as risks uncertainties and the time value
of money associated with contingencies.If all or part of the expenses required to pay off the estimated liabilities are expected to be compensated by a
third party the compensation amount shall be recognized separately as an asset when it is basically determined that
it can be received and the recognized compensation amount shall not exceed the book value of the estimated
liabilities.
(1) Loss-making contract
A loss-making contract is a contract in which the cost of fulfilling the contractual obligation inevitably exceeds
the expected economic benefit. If the contract to be executed becomes a loss-making contract and the obligations
arising from the loss-making contract meet the conditions for recognition of the above-mentioned estimated
liabilities the portion of the estimated loss of the contract exceeding the recognized impairment loss (if any) of the
underlying asset of the contract is recognized as an estimated liability.
(2) Reorganization obligation
For a detailed formal reorganization plan that has been announced to the public the estimated liability amount
is determined on the basis of direct expenses related to the reorganization subject to meeting the conditions for
recognition of the estimated liabilities described above.
29. Share-based payments
(1) Accounting treatment for share-based payment
Share-based payments are transactions in which equity instruments are granted or liabilities are assumed on the
basis of equity instruments in exchange for services rendered by employees or other parties. The share-based
payments are divided into equity-settled share-based payment and cash-settled share-based payment.* Equity-settled share-based payments
Equity-settled share-based payments in exchange for services rendered by employees shall be measured at days
the fair value of the equity instruments granted to employees. For the equity-settled share-based payment that can
only be vested after services during a waiting period are provided or required performance conditions are met the
amount of such fair value is calculated on a straight-line basis based on the best estimate of the number of equity
instruments that can be vested during the waiting period and is included in the relevant costs or expenses or if
available immediately after grant included in the relevant costs or expenses on the grant date increasing capital
reserves accordingly.On each balance sheet date during the waiting period the Group makes the best estimate based on the latest
follow-up information such as changes in the number of employees that satisfy vesting conditions and revises the
number of equity instruments expected to be vested. The impact of the above estimates is included in the relevant
costs or expenses for the period and capital reserves are adjusted accordingly.The equity-settled share-based payments in exchange for services rendered by other parties shall be measured
at the fair value of the services on the acquisition date if the fair value of services rendered by other parties can be
reliably measured. However if the fair value of services rendered by other parties cannot be reliably measured but
the fair value of the equity instruments can be reliably measured the equity-settled share-based payments shall be
measured at the fair value of the equity instruments on the acquisition date of the services and included in the
relevant costs or expenses increasing shareholders’ equity correspondingly.When the fair value of equity instruments granted cannot be reliably measured the intrinsic value of the equity
instruments is used to measure their value on the grant date subsequent balance sheet dates and settlement dates.Changes in the intrinsic value are recognized in the current period’s income statement.* Cash-settled share-based payments
A cash-settled share-based payment shall be measured in accordance with the fair value of liability determined
based on the shares or other equity instruments undertaken by the Group. If the cash-settled share-based payment
can be vested immediately after granting it shall be included in the relevant costs or expenses on the grant date
increasing the liabilities correspondingly. For the cash-settled share-based payment that can only be vested after
services during a waiting period are provided or required performance conditions are met on each balance sheet
date during the waiting period the services obtained during the current period are included in the cost or expense
at the fair value of the liabilities assumed by the Group based on the best estimate of the situation of vesting
increasing the corresponding liabilities correspondingly.The Group shall on each balance sheet date and each account date prior to the settlement of the relevant
liabilities re-measure the fair values of the liabilities and include the changes in the current profits and losses.
(2) Accounting treatment for modification and termination of share-based payment plan
When the Group makes a modification to the share-based payment plan if the modification increases the fair
value of the equity instrument granted the increase in services obtained is recognized in accordance with the increase
in the fair value of the equity instrument. The increase in the fair value of equity instruments refers to the difference
between fair values of the equity instruments before and after the modification on the date of modification. If a
modification reduces the total fair value of share-based payments or is otherwise unfavorable to the employees the
acquired services continue to be accounted for as if the change never occurs unless the Group cancels some or all
of the equity instruments granted.If a grant of equity instruments is canceled during the waiting period the Group treats the cancellation of the
granted equity instruments as accelerated exercise of right and includes the amount to be recognized over the
remaining waiting period in the current profits and losses immediately and recognizes the capital reserve at the
same time. If employees or other parties can choose to meet the non-vesting conditions but have not met the
conditions within the waiting period the Group treats it as cancellation of equity instruments granted.
(3) Accounting treatment for share-based payment transactions involving the shareholders or de facto
controllers of the Group and Company
Transactions involving share payments between the shareholders or de facto controllers of the Group and
Company are accounted for in the Group’s consolidated financial statements in accordance with the following
provisions if either one of the settlement enterprises and receiving enterprises is within the Group while the other
one is outside the Group:
* If the settlement enterprise settles by its own equity instruments the share-based payment transaction shall
be treated as the equity-settled share-based payment; otherwise they shall be treated as the cash-settled share-based
payment.If the settlement enterprise is an investor of the enterprise receiving the services it shall be recognized as a
long-term equity investment in the enterprise receiving the services according to the fair value of the equity
instrument on the grant date or the fair value of the liability assumed and the capital reserve (other capital reserve)
or liability shall be recognized at the same time.* If the enterprise receiving the services has no settlement obligation or the equity instrument granted to its
employees is its own equity instrument the share-based payment transaction shall be treated as the equity-settled
share-based payment. If the enterprise receiving the services has settlement obligation and the equity instrument
granted to its employees is not its own equity instrument the share-based payment transaction shall be treated as
the cash-settled share-based payment.For the share-based payment transaction occurring among the enterprises within the Group where the
enterprise receiving the services and the settlement enterprise are not the same enterprise the recognition and
measurement of the share-based payment transaction in the individual financial statements of the enterprise
receiving the services and the settlement enterprise shall be processed in accordance with the above principles.
30. Revenue
Disclose the accounting policies for revenue recognition and measurement by business type
Revenue is the total inflow of economic benefits arising from the Group’s ordinary activities that would result
in an increase in shareholders’ equity and are unrelated to capital contributions by shareholders. When the contract
between the Group and the customer meets the following conditions revenue is recognized when the customer
obtains control of the relevant goods (including services the same below) : The parties to the contract have approved
the contract and undertake to perform their obligations; The contract specifies the rights and obligations of the parties
to the contract in relation to the goods transferred or the provision of services; The contract has clear payment terms
related to the transferred goods; The contract is commercial in nature i.e. the performance of the contract will change
the risk timing or amount of the Group’s future cash flows; The consideration to which the Group is entitled as a
result of the transfer of goods to customers is likely to be recovered. Gaining control of the relevant goods means
being able to dominate the use of that goods and derive almost all of the economic benefits from it.On the commencement date of the contract the Group identifies the individual performance obligation existing
in the contract and allocates the transaction price to each individual performance obligation in proportion to the
individual selling price of the goods promised by each individual performance obligation. Factors such as variable
consideration significant financing elements in the contract non-cash consideration and consideration payable to
customers are considered in determining the transaction price.For each individual performance obligation in the contract the Group will recognize the transaction price
allocated to the individual performance obligation in accordance with the performance progress during the relevant
performance period as revenue if one of the following conditions is met: The customer acquires and consumes the
economic benefits arising from the Group’s performance at the same time as the Group fulfills its obligations; The
customer can control the goods under construction in the course of the Group’s performance; The goods produced
in the course of the Group’s performance have irreplaceable uses and the Group is entitled to receive payment
throughout the contract period for the cumulative part of the performance completed to date. The performance
progress is determined by the input or output method depending on the nature of the goods transferred. When the
performance progress cannot be reasonably determined and the costs incurred by the Group are expected to be
compensated revenue is recognized at the amount of the costs incurred until the progress of performance can be
reasonably determined.If one of the above conditions is not met the Group recognizes revenue at the point at which the customer
obtains control of the relevant goods at the transaction price apportioned to the individual performance obligation.
In determining whether a customer has acquired control of the goods the Group considers the following indications:
The enterprise has the current right of collection in respect of the goods that is the customer has the current payment
obligation in respect of the goods; The enterprise has transferred the legal ownership of the goods to the customer
that is the customer has the legal ownership of the goods; The enterprise has physically transferred the goods to the
customer that is the customer has physically possessed the goods; The enterprise has transferred the main risks and
returns in the ownership of the goods to the customer that is the customer has obtained the main risks and returns
in the ownership of the goods; The customer has accepted the goods; Other indications that the customer has taken
control of the goods.Revenue recognition principles for specific scenarios are as follows:
(1) Domestic sales:
Revenue is recognized when control is transferred to the customer upon delivering the products to the
customer’s specified location and obtaining customer acknowledgement through a signed confirmation as stipulated
in the sales contract or order.Revenue is recognized when control is transferred to the customer upon delivering the products to the
customer’s specified location and completing the customer's inspection based on relevant standards as stipulated in
the sales contract or order.Revenue is recognized when the services have been provided and the right to collect service fees is obtained.
(2) International sales:
Revenue is recognized when control is transferred to the customer upon the products being dispatched and
customs clearance procedures being completed as stipulated in the sales contract or order.Situations where similar businesses adopt different operation models involving different revenue recognition methods and
measurement methods: Not applicable.
31. Contract cost
Incremental cost incurred by the Group to acquire contract that is expected to be recovered is taken as the
contract acquisition cost and recognized as an asset. However if the amortization period of the asset does not exceed
one year it is included in the current profits and losses when it occurs.The cost incurred for the performance of the contract is recognized as an asset if it does not fall within the
scope of Accounting Standard for Business Enterprises No. 14 - Revenue (Revised in 2017) and meets the following
conditions: * The cost is directly related to a current or anticipated contract including direct labor direct materials
manufacturing expenses (or similar expenses) cost expressly borne by the customer and other costs incurred solely
as a result of the contract; * This cost increases the Group’s future resources to meet its performance obligations;
* This cost is expected to be recovered.Assets related to contract costs are amortized on the same basis as for the recognition of the commodity revenue
associated with the assets and are recognized in current profits and losses.When the carrying amount of an asset related to contract costs exceeds the difference between the following
two amounts an impairment provision is recognized for the excess amount and an asset impairment loss is
recognized: (1) The expected remaining consideration to be obtained from transferring the goods related to that asset.
(2) The estimated costs necessary to complete the transfer of the related goods. If there is a change in the factors
that led to impairment in previous periods resulting in the difference between (1) minus (2) exceeding the carrying
amount of the asset the previously recognized impairment provision is reversed and recognized in the current
period’s income statement. However the carrying amount of the asset after the reversal should not exceed the
carrying amount of the asset on the date of the reversal assuming no impairment provision had been recognized.
32. Government subsidy
Government subsidy refers to the cash and bank balance and non-cash and bank balance that the Group obtains
from the government free of charge excluding the capital invested by the government as an investor with the
corresponding owners’ equity. Government subsidies are divided into asset-related government subsidies and
income-related government subsidies. The Group defines government subsidies obtained for the acquisition or
otherwise formation of long-term assets as asset-related government subsidies. Other government subsidies are
defined as income-related government subsidies. If the government document does not specify the recipients of the
subsidies the subsidies divided into asset-related government subsidies and income-related government subsidies
in the following way: (1) If the government documents specify the specific project for which the subsidy is targeted
the division shall be made according to the relative proportion of the disbursement amount forming assets and the
disbursement amount included in the expenses in the budget of the specific project and the division proportion shall
be reviewed on each balance sheet date and changed if necessary; (2) Where the government document only has a
general description of the purpose and no specific project is specified it shall be regarded as an income-related
government subsidy. For a government subsidy in the form of transfer of cash and bank balance the subsidy is
measured at the amount received or receivable. For a government subsidy in the form of transfer of non-cash and
bank balance it is measured at fair value; if the fair value cannot be reliably determinable the subsidy is measured
at nominal amount. Government subsidies measured at nominal amounts are directly included in current profits and
losses.The Group usually recognizes and measures government subsidies in accordance with the amount actually
received when they are actually received. However government subsidies are recognized at the amount receivable
if there is evidence that the Group can meet the relevant conditions specified in the financial support policy at the
end of the period and the Group is expected to receive the financial support funds. Government subsidies measured
at the amounts receivable shall also meet the following conditions: (1) The amount of the receivable subsidies has
been confirmed by the competent government department in writing or can be reasonably calculated according to
the relevant provisions of the officially issued measures for the management of financial funds and there is no
significant uncertainty in the estimated amount; (2) It is based on the financial support projects and financial fund
management measures officially issued by the local financial department and actively disclosed in accordance with
the provisions of the Regulations on the Disclosure of Government Information and the management measures
should be inclusive (that is any enterprise that meets the prescribed conditions can apply) rather than specifically
formulated for specific enterprises; (3) The relevant grant approval has clearly promised the disbursement period
and the disbursement of the amount is guaranteed by the corresponding financial budget so it can be reasonably
guaranteed that it can be received within the specified period; (4) Other relevant conditions that should be met based
on the specific circumstances of the Group and the grant in question (if any).Asset-related government subsidies are recognized as deferred income and included in the current profits and
losses over the useful life of the related assets in accordance with a reasonable and systematic method. Income-
related government subsidies that compensate the future costs expenses or losses are recorded as deferred income
and recognized in current profits and losses in the period in which the related costs expenses or losses are recognized;
Income-related government subsidies that compensate the incurred expenses or losses are included directly in the
current profits and losses.For government subsidies that contain both parts related to assets and parts related to income accounting
treatments shall be made separately for different parts. If it is difficult to distinguish it shall be classified as the
income-related government subsidy.Government subsidies related to ordinary activities are recorded in other income in accordance the substance
of economic operations. Government subsidies unrelated to daily activities are included in non-operating revenue
and expense.When confirmed government subsidies need to be returned and there is a related balance of deferred income
the related deferred income balance is offset. Any excess amount is recognized in the current period’s income
statement or adjusted against the carrying value of the asset (for government subsidies that were initially offset
against the carrying value of the asset); in other cases it is recognized directly in the current profits and losses.
33. Deferred income tax assets/deferred income tax liabilities
(1) Current income tax
The current income tax liabilities (or assets) generated in the current period and previous periods are measured
on the balance sheet date in accordance with the expected payable (or refunded) income tax amount calculated
according to the tax law. The taxable income amount on which the current income tax expense is calculated is based
on the corresponding adjustment of the pre-tax accounting profit of the reporting period in accordance with the
relevant provisions of the tax law.
(2) Deferred income tax assets and deferred income tax liabilities
The deferred income tax assets and deferred income tax liabilities can be determined with the balance sheet
liability method based on the difference between the book value of certain assets and liabilities and the tax basis
as well as the temporary difference between the tax basis and the book value of the items not recognized as assets
and liabilities but whose tax basis can be determined according to the tax law.For taxable temporary differences relating to the initial recognition of goodwill and the initial recognition of
assets or liabilities arising from transactions that are neither a business combination nor affect accounting profit and
taxable income (or deductible losses) at the time of occurrence the relevant deferred tax liabilities are not recognized
(except for individual transactions in which the initial recognition of assets and liabilities results in equal amounts
of taxable temporary differences and deductible temporary differences). In addition for taxable temporary
differences related to investments in subsidiaries associates and joint ventures deferred tax liabilities are not
recognized if the Group is able to control the timing of the reversal of the temporary difference and it is likely that
the temporary difference will not be reversed in the foreseeable future. Subject to the above exceptions the Group
recognizes all other deferred tax liabilities arising from taxable temporary differences.For deductible temporary differences relating to the initial recognition of assets or liabilities arising from
transactions that are neither a business combination nor affect accounting profit and taxable income (or deductible
losses) at the time of occurrence the relevant deferred tax assets are not recognized (except for individual
transactions in which the initial recognition of assets and liabilities results in equal amounts of taxable temporary
differences and deductible temporary differences). For deductible temporary differences associated with
investments in subsidiaries associates and joint ventures the relevant deferred tax asset is not recognized if it is not
likely that the temporary differences will reverse in the foreseeable future and it is not likely that taxable income
will be available against which the deductible temporary differences can be utilized in the future. Subject to the
above exceptions the Group recognizes other deferred income tax assets arising from deductible temporary
differences to the extent that it is probable that taxable income will be available against which deductible temporary
differences can be utilized.For the deductible losses and tax credits that can be carried forward to future years the Group recognizes the
corresponding deferred tax assets to the extent that it is probable that future taxable income will be available against
which the deductible losses and tax credits can be utilized.On the balance sheet date deferred income tax assets and deferred income tax liabilities are measured at the
tax rates that are expected to apply in the period in which the asset is recovered or the liability is settled according
to the tax law.On the balance sheet date the Group reviews the book value of deferred income tax assets. If no sufficient
taxable income is probably obtained in the future to offset the benefits of deferred income tax assets the book value
of the deferred income tax assets shall be written down. When it is probable to obtain sufficient taxable income
taxes such write-off amount shall be reversed.
(3) Income tax expense
Income tax expenses include current income tax expenses and deferred income tax expenses.Except for current income tax and deferred income tax related to transactions and events recognized as other
comprehensive income or directly included in shareholders’ equity and the book value of deferred income tax
adjusted goodwill resulting from business combination the remaining current income tax and deferred income tax
expenses or gains are included in current profits and losses.
(4) Offsetting of income tax
If the Group has the legal right to settle on a net basis and intends to settle on a net basis or acquire assets and
settle liabilities simultaneously the current income tax assets and current income tax liabilities are presented on a
net basis after offsetting.If the Group has a legally enforceable right to settle current income tax assets and liabilities on a net basis，
and the deferred income tax assets and liabilities are related to the income taxes levied by the same taxation authority
on either the same taxable entity or different taxable entities which intend either to settle current income tax assets
and liabilities on a net basis or to realize the assets and settle the liabilities simultaneously in each future period in
which significant amounts of deferred income tax assets and liabilities are expected to be reversed the deferred
income tax assets and liabilities can be offset and presented on a net basis.
34. Leases
(1) Accounting treatment as the lessee
Leasing refers to contracts in which the Group conveys or acquires the right to control the use of one or more
identified assets for a specified period in exchange for consideration. At the commencement date of a contract the
Group assesses whether the contract is a lease or contains a lease component.The Group’s lease assets are mainly housing and buildings.* Initial measurement
On the date of commencement of the lease term the Group recognizes the right to use the lease asset during
the lease term as a right of use asset and recognizes the present value of the outstanding lease payments as a lease
liability except for short-term leases and low value asset leases. When calculating the present value of lease
payments the interest rate implicit in the lease is used as the discount rate. If the interest rate implicit in the lease
cannot be determined the lessor’s incremental borrowing rate is used as the discount rate.* Subsequent measurement
The Group shall depreciate the right of use assets in accordance with the relevant depreciation provisions of
Accounting Standard for Business Enterprises No. 4 - Fixed Assets (see Section 19 “Fixed assets” under Note
V for details). If the ownership of the leased asset can be reasonably determined at the end of the lease term the
Group shall depreciate the leased asset during the remaining useful life. Where it is unable to reasonably determine
the ownership of the leased asset at the end of the lease term the Group shall make depreciation provision over the
lease term or the remaining useful life of the leased asset whichever is shorter.The Group calculates the interest expense on lease liabilities for each period of the lease term at a fixed periodic
rate which is included in the current profits and losses or the relevant asset costs. Variable lease payments that are
not included in the measurement of the lease liability are recognized in current profits and losses or the relevant
asset costs when they are actually incurred.After the commencement date of the lease term when there is a change in the substantive fixed payment amount
a change in the amount expected to be payable for the guaranteed residual value a change in the index or rate used
to determine the lease payment amount or a change in the evaluation result or actual exercise of the purchase option
renewal option or termination option the Group remeasures the lease liability at the present value of the changed
lease payment amount and adjusts the carrying value of the right-of-use asset accordingly. If the book value of the
right-of-use asset has been reduced to zero but the lease liability is subject to further reduction the Group recognizes
the remaining amount in current profits and losses.* Short-term leases and leases of low-value assets
For short-term leases (leases with a lease term of not more than 12 months since the commencement date of
the lease) and low-value asset leases (the value of a single lease asset which is a brand-new asset is lower than
either RMB 40000 or USD 5000) the Group adopts a simplified approach whereby the right of use assets and lease
liabilities are not recognized and the lease payments are recognized in the relevant asset cost or current profits and
losses in accordance with the straight-line method or other systematic and reasonable methods during the various
periods of the lease term.
(2) Accounting treatment as the lessor
On the inception date of the lease the Group classifies the lease as a finance lease and an operating lease based
on the substance of transaction. A finance lease is a lease that transfers substantially all the risks and returns
associated with ownership of the leased asset. An operating lease is a lease other than a finance lease.* Operating lease
Lease receipts under operating leases are recognized as rental income on a straight-line basis over the respective
periods of the lease term. Variable lease payments acquired in connection with operating leases that are not included
in the lease receipts are recognized in current profits and losses when they are actually incurred.* Finance lease
The Group recognizes finance lease receivables and derecognizes finance lease assets on the commencement
date of the lease term. Finance lease receivables are initially measured at the net lease investment (the sum of the
unsecured balance and the unreceived lease proceeds on the commencement date of the lease term at the present
value discounted with the intrinsic interest rate of the lease) and interest income is recognized during the lease term
at a fixed periodic interest rate. Variable lease payments obtained by the Group which are not included in the net
lease investment measurement are recognized in current profits and losses when they are actually incurred.
35. Segment Reporting
The Company determines its operating segments on the basis of its internal organizational structure
management requirements and internal reporting system. An operating segment of the Company is a
component that satisfies all of the following conditions simultaneously:
1.?The component is capable of generating revenues and incurring expenses in its ordinary-course
activities;
2.?The management regularly evaluates the component’s operating results for the purposes of
resource-allocation decisions and performance assessment;
3.?Relevant accounting information concerning the component’s financial position operating results and
cash flows can be obtained through analysis.
36. Other significant accounting policies and accounting estimates
Share repurchase
Consideration and transaction costs paid in share repurchases reduce shareholders’ equity and no profits or
losses is recognized when shares of the Company are repurchased transferred or cancelled.For the transfer of treasury shares the difference between the amount actually received and the book value of
treasury shares shall be included in the capital reserve. If the capital reserve is insufficient for deduction the surplus
reserve and undistributed profits shall be deducted. For the cancellation of treasury shares the share capital shall be
reduced according to the par value of the shares and the number of shares cancelled and the difference between the
book balance and the par value of treasury shares shall be charged to the capital reserve. If the capital reserve is
insufficient for deduction the surplus reserve and undistributed profits shall be deducted.
37. Changes in significant accounting policies and accounting estimates
(1) Changes in significant accounting policies
? Applicable □ Not applicable
* Effective?January?1 2026 the Company has adopted the provisions of Accounting Standards InterpretationNo.?19 issued by the Ministry of Finance “Accounting Treatment of Indemnification Assets in a BusinessCombination Not Under Common Control” and applied a retrospective adjustment to indemnification assets
existing as at January?1 2026.This change in accounting policy has no impact on the Company’s financial statements.* Effective?January?1 2026 the Company has adopted the provisions of Accounting Standards InterpretationNo.?19 issued by the Ministry of Finance “Accounting Treatment of Relevant Capital Reserve upon Disposal ofa-Subsidiary Previously Acquired through a Business Combination Under Common Control” with retrospective
adjustment made accordingly.This change in accounting policy has no impact on the Company’s financial statements.* Effective?January?1 2026 the Company has adopted the provisions of Accounting Standards InterpretationNo.?19 issued by the Ministry of Finance “Derecognition of Financial Liabilities Settled via Electronic PaymentSystems.” In accordance with the transitional requirements between the old and new standards comparative-period
information shall not be restated. The cumulative effect at the date of initial application shall be adjusted against
opening retained earnings and other relevant items in the financial statements for the current reporting period.This change in accounting policy has no impact on the Company’s financial statements.* Effective?January?1 2026 the Company has adopted the provisions of Accounting Standards InterpretationNo.?19 issued by the Ministry of Finance “Assessment of Contractual Cash-flow Characteristics of Financial Assetsand Related Disclosures.” In accordance with the transitional requirements between the old and new standards
comparative-period information shall not be restated. The cumulative effect at the date of initial application shall
be adjusted against opening retained earnings and other relevant items in the financial statements for the current
reporting period.This change in accounting policy has no impact on the Company’s financial statements.* Effective?January?1 2026 the Company has adopted the provisions of Accounting Standards InterpretationNo.?19 issued by the Ministry of Finance “Disclosures for Equity Instruments Designated as Measured at Fair ValueThrough Other Comprehensive Income.”
* Effective?January?1 2026 the Company has adopted the provisions of Accounting Standards Interpretation
No.?20 issued by the Ministry of Finance “Assessment of Contractual Cash-flow Characteristics of Financial Assets.”
In accordance with the transitional requirements between the old and new standards comparative-period
information shall not be restated. The cumulative effect at the date of initial application shall be adjusted against
opening retained earnings and other relevant items in the financial statements for the current reporting period.This change in accounting policy has no impact on the Company’s financial statements.* Effective?January?1 2026 the Company has adopted the provisions of Accounting Standards InterpretationNo.?20 issued by the Ministry of Finance “Accounting Treatment and Related Disclosures in the Absence ofCurrency Convertibility.” Pursuant to the transitional requirements between the old and new standards
comparative-period information shall not be restated. Where an entity reports foreign-currency transactions in its
functional currency and determines that such foreign currency is not convertible into its functional currency it shall
translate affected foreign-currency monetary items and non-monetary items measured at fair value in a foreign
currency using the estimated spot exchange rate at the date of initial application; the effect of initially applying this
Interpretation shall be adjusted against opening retained earnings. Where an entity’s presentation currency differs
from its functional currency or when translating the financial position and operating results of a foreign operation
and a lack of convertibility is identified between the entity’s / foreign operation’s functional currency and the entity’s
presentation currency the entity shall translate affected assets and liabilities using the estimated spot exchange rate
at the date of initial application. If the entity’s functional currency is subject to hyperinflation affected equity items
shall also be translated at the estimated spot exchange rate at the date of initial application. The impact arising from
initial-application of this Interpretation shall be treated as an adjustment to the accumulated amount of translation
differences (recognized as a separate component of equity).This change in accounting policy has no impact on the Company’s financial statements.
(2) Changes in significant accounting estimates
□ Applicable ? Not applicable
(3) First-time implementation of the new accounting standard in 2026 to adjust relevant items in the
financial statements at the beginning of the year of first-time implementation
□ Applicable ? Not applicable
38. Others: None.
VI. Taxation
1. Main tax types and tax rates
Tax type Taxation basis Tax rate
General Taxation Method: the balance
of output VAT for the current period
after deducting input VAT for the
Value-added tax 13% 9% 6% 3% 0%
current period. Simplified Taxation
Method: sales amount for the current
period multiplied by the levy rate.Price-based collection: 15% 10%; Quantity-
Quantity-based collection and price-
Consumption tax based collection: 20% plus RMB 0.5 per 0.5kg
based collection
(or 500 mL)
Urban maintenance and
Amount of turnover tax payables 7% 5% 1%
construction tax
Education surcharge Amount of turnover tax payables 3%
Local education surcharge Amount of turnover tax payables 2%
Enterprise income tax Taxable income 25% 20% 16.5% 15% 8.25%
If there are taxable entities with different corporate income tax rates disclose the description of the situation
Taxpayer Income tax rate
Yunnan Baiyao Group Co. Ltd. 15.00%
Yunnan Digital Intelligence TCM Development Co. Ltd. 15.00%
Yunnan Baiyao Group Health Products Co. Ltd. 15.00%
Yunnan Baiyao Group Lijiang Pharmaceutical Co. Ltd. 15.00%
Yunnan Baiyao Group Wenshan Qihua Co. Ltd. 15.00%
Yunnan Baiyao Pharmacy Co. Ltd. 15.00%
Yunnan Baiyao Teayield Co. Ltd. 15.00%
Yunnan Baiyao Group Dali Pharmaceutical Co. Ltd. 15.00%
Yunnan Institute of Materia Medica 15.00%
Yunnan Tianzheng Testing Technology Co. Ltd. 20.00%
Yunbaiyao Zhengwu Technology (Shanghai) Co. Ltd. 20.00%
Yunnan Pharmaceutical Xihui Co. Ltd. 20.00%
Beijing Rui’er Testing Technology Co. Ltd. 20.00%
Yunnan Pharmaceutical Jiayuan Co. Ltd. 20.00%
Yunnan Pharmaceutical Tianfu Dahua Co. Ltd. 20.00%
Yunnan Pharmaceutical Diqing Development Co. Ltd. 20.00%
Yunnan Pharmaceutical Pu’er Co. Ltd. 20.00%
Lijiang Yunquan Biological Development Co. Ltd. 20.00%
Yunnan Baiyao Tiancui Business Management Co. Ltd. 20.00%
Beijing Yunzhi Health Management Co. Ltd. 20.00%
Shanghai Wenshu Health Management Co. Ltd. 20.00%
Kunming Yunzhen Medical Technology Co. Ltd. 20.00%
Shanghai Yunyi Medical Technology Co. Ltd. 20.00%
Shanghai Yunpu Medical Technology Co. Ltd. 20.00%
Beijing Yunzhen Medical Aesthetic Clinic Co. Ltd. 20.00%
Shanghai Hanshi Health Consulting Co. Ltd. 20.00%
Shanghai Yunzhenni Medical Aesthetic Outpatient Department Co. Ltd. 20.00%
Yunnan Baiyao Yunzhen International Trade Co. Ltd. 20.00%
Shanghai Yunyao Oral Medical Technology Co. Ltd. 20.00%
Yunnan Fengqing Tea Plant Co. Ltd. 20.00%
Yunnan Baiyao Tianyi Chayuan Lincang Manor Co. Ltd. 20.00%
Tianjin Yunshuda Comprehensive Clinic Co. Ltd. 20.00%
Xingzhong Digital Intelligence TCM Service Co. Ltd of Yunnan Baiyao Group 20.00%
Yunnan Yunyao Nuxiang Co. Ltd. 20.00%
Hangzhou Shanqi Health Industry Co. Ltd. 20.00%
Yunnan Baiyao Group Seed Technology Co. Ltd. 20.00%
Yunnan Baiyao Group (Hainan) Import & Export Trading Co. Ltd. 20.00%
Shaanxi Zhiyun Wenshu Health Services Co. Ltd. 20.00%
Yunnan Baiyao Group Shanghai Co. Ltd. 20.00%
Yunnan Pharmaceutical Xiongyi Co. Ltd. 20.00%
Yunnan Baiyao Group Shanghai Technology Co. Ltd. 20.00%
YNBY Healthcare (Shenzhen) Limited 20.00%
YNBY Healthcare Technology (Yunnan) Co. Ltd. 20.00%
2. Preferential tax treatment
(1) A total of 8 companies including Yunnan Baiyao Group Co. Ltd Yunnan Digital Intelligence TCM
Development Co. Ltd Yunnan Baiyao Group Health Products Co. Ltd Yunnan Baiyao Group Lijiang
Pharmaceutical Co. Ltd Yunnan Baiyao Group Wenshan Qihua Co. Ltd Yunnan Baiyao Pharmacy Co. Ltd
Yunnan Baiyao Teayield Co. Ltd and Yunnan Baiyao Group Dali Pharmaceutical Co. Ltd enjoy the preferential
tax treatment for the Western Development and pay the enterprise income tax at the tax rate of 15%.
(2) Yunnan Institute of Materia Medica enjoys the preferential tax treatment for high-tech enterprises and pay
the enterprise income tax at the tax rate of 15%.
(3) For Yunnan Baiyao Group Sanqi Industry Co. Ltd Yunnan Baiyao Group Tai’an Biotechnology Industry
Co. Ltd and Anguo Juyaotang Pharmaceutical Co. Ltd the primary processing of agricultural products is exempt
from enterprise income tax and the income other than that is taxed at 25%.For Lijiang Yunquan Biological Development Co. Ltd the primary processing of agricultural products is
exempt from enterprise income tax and the income other than that shall be subject to enterprise income tax for small
and micro enterprises.
(4) YNBY International Limited and its profitable Hong?Kong?based subsidiaries are eligible for Hong?Kong’s
“two?tiered tax?rate” policy. Under this policy the tax rate is 8.25% on the first HKD 2?million of assessable profits
for a tax year and 16.5% on the portion of assessable profits in excess of HKD 2?million. Certain Hong?Kong?based
subsidiaries of Yunbaiyao Hong Kong Co. Limited and YNBY International Limited are not subject to
Hong?Kong’s “two?tiered tax?rate” policy as they conduct minor?scale operations have no significant operating
revenue and generate no assessable profits.
(5) According to the Announcement of the General Administration of Taxation of the Ministry of Finance on
the Further Implementation of the Preferential Income Tax Policy for Small and Micro Enterprises (Announcementby the Ministry of Finance and the State Taxation Administration [2022] No. 13) “the part of the annual taxable
income of small and micro profit enterprises exceeding RMB 1 million but not exceeding RMB 3 million shall be
included in the taxable income at a reduced rate of 25% and the enterprise income tax shall be paid at a tax rate of
20%. The period of implementation of this announcement is from January 1 2022 to December 31 2024” the
Announcement of the General Administration of Taxation of the Ministry of Finance on Preferential Income Tax
Policies for Small and Micro Enterprises and Individual Industrial and Commercial Households (Announcementby the Ministry of Finance and the State Taxation Administration [2023] No. 6) “the part of the annual taxableincome of small and micro profit enterprises that does not exceed RMB 1 million shall be included in the taxable
income at a reduced rate of 25% and the enterprise income tax shall be paid at a tax rate of 20%. The period ofenforcement of this Announcement is from January 1 2023 to December 31 2024” and the Announcement of the
General Administration of Taxation of the Ministry of Finance on Tax Policies for Further Supporting the
Development of Small and Micro Enterprises and Individual Industrial and Commercial Enterprises
(Announcement by the Ministry of Finance and the State Taxation Administration [2023] No. 12) “For small low-profit enterprises the taxable income amount shall be calculated at a reduced rate of 25% and the enterprise incometax shall be paid at a tax rate of 20%. The policy shall be continued until December 31 2027.” Thirty-four companies
including Yunnan Fengqing Tea Plant Co. Ltd and Beijing Rui’er Testing Technology Co. Ltd pay enterprise
income tax at a tax rate of 20% according to this policy.
3. Others: None.
VII. Notes to Items in Consolidated Financial Statements
1. Cash and bank balance
Unit: RMB
Item Closing balance Opening balance
Cash on hand 172822.40 125243.29
Bank deposit 9451514106.22 9042351401.06
Other cash and bank balance 118217124.88 65352523.63
Total 9569904053.50 9107829167.98
Including: Total amount of money
deposited overseas 54213276.77 112994332.70
Other explanations: None.
2. Financial assets held for trading
Unit: RMB
Item Closing balance Opening balance
Financial assets at fair value through
4751169278.18 4192113408.43
profits or losses
Including:
Others 4751169278.18 4192113408.43
Including:
Total 4751169278.18 4192113408.43
Other explanations: The Company adheres to the principle of prudent investment utilizing idle proprietary funds for wealth
management and investment activities while ensuring daily operations and capital security thereby enhancing corporate returns and
capital utilization efficiency.
3. Notes receivable
(1) Notes receivable by type
Unit: RMB
Item Closing balance Opening balance
Banker’s acceptance bill 270909670.96 239281210.93
Commercial acceptance bill 290000.00 85000.00
Domestic letter of credit 355000000.00 346000000.00
Total 626199670.96 585366210.93
(2) Disclosure by the method of provision for bad debts
Unit: RMB
Closing balance Opening balance
Book balance Provision for bad debts Book balance Provision for bad debts Category
Provision Provision
Amount Proportion Amount Book value Amount Proportion Amount Book value
proportion proportion
Bills receivable with provision for bad debts by 626199670.96 100.00% 626199670.96 585366210.93 100.00% 585366210.93
portfolio
Including:
Banker’s acceptance bill 270909670.96 43.26% 270909670.96 239281210.93 40.88% 239281210.93
Commercial acceptance bill 290000.00 0.05% 290000.00 85000.00 0.01% 85000.00
Domestic letter of credit 355000000.00 56.69% 355000000.00 346000000.00 59.11% 346000000.00
Total 626199670.96 100.00% 626199670.96 585366210.93 100.00% 585366210.93
Provision for bad debts by portfolio:
Unit: RMB
Closing balance
Item
Book balance Provision for bad debts Provision proportion
Banker’s acceptance bill 270909670.96
Commercial acceptance bill 290000.00
Domestic letter of credit 355000000.00
Total 626199670.96
The explanation for determining the basis of this combination: None.If provision was made for bad debts of notes receivable in accordance with the general expected credit loss model:
□ Applicable ? Not applicable
(3) Provision for bad debts accrued recovered or reversed during the reporting period
Provision for bad debts accrued during the period: None.Provision for bad debts recovered or reversed during the period:
□ Applicable ? Not applicable
(4) Notes receivable pledged by the Company at the end of the reporting period: None.
(5) Notes receivable endorsed or discounted by the Company which were not yet due on the balance sheet
date as at the end of the reporting period
Unit: RMB
Amount derecognized at the end of the Amount not derecognized at the end of
Item
period the period
Banker’s acceptance bill 310000.00
Domestic letter of credit 497000000.00
Total 497310000.00
(6) Actual write-off of notes receivable for the period: None.
4. Accounts receivable
(1) Disclosure by aging
Unit: RMB
Aging Closing balance Opening balance
Within 1 year (inclusive of 1 year) 9934100036.23 9956655013.57
1 to 2 years 996006510.56 865042333.71
2 to 3 years 110621127.73 211881274.53
Above 3 years 76870127.26 81486165.98
Total 11117597801.78 11115064787.79
(2) Disclosure by the method of provision for bad debts
Unit: RMB
Closing balance Opening balance
Book balance Provision for bad debts Book balance Provision for bad debts
Category
Provision Book value Provision Book value
Amount Proportion Amount Amount Proportion Amount
proportion proportion
Accounts receivable with provision
5666188.00 0.05% 5666188.00 100.00% 0.00 5666188.00 0.05% 5666188.00 100.00%
for bad debts on individual basis
Including:
Accounts receivable with provision
5666188.00 0.05% 5666188.00 100.00% 0.00 5666188.00 0.05% 5666188.00 100.00%
for bad debts on individual basis
Accounts receivable with
provision for bad debts on 11111931613.78 99.95% 929329127.50 8.36% 10182602486.28 11109398599.79 99.95% 949339376.50 8.55% 10160059223.29
portfolio basis
Including:
Age-based portfolio 11111931613.78 99.95% 929329127.50 8.36% 10182602486.28 11109398599.79 99.95% 949339376.50 8.55% 10160059223.29
Total 11117597801.78 100.00% 934995315.50 8.41% 10182602486.28 11115064787.79 100.00% 955005564.50 8.59% 10160059223.29
Provision for bad debts made on an individual basis:
Unit: RMB
Opening balance Closing balance
Name Provision for Provision for Provision Reason for
Book balance Book balance
bad debts bad debts proportion provision
Ningbo
Qingbing Little chance of
5666188.00 5666188.00 5666188.00 5666188.00 100.00%
Biotechnology recovery
Co. Ltd.Total 5666188.00 5666188.00 5666188.00 5666188.00
Provision for bad debts made on a portfolio basis:
Unit: RMB
Closing balance
Name
Book balance Provision for bad debts Provision proportion
Age-based portfolio 11111931613.78 929329127.50 8.36%
Total 11111931613.78 929329127.50
Explanation on the basis for determining the portfolio: None.If provision was made for bad debts of accounts receivable in accordance with the general expected credit loss model:
□ Applicable ? Not applicable
(3) Provision for bad debts accrued recovered or reversed during the reporting period
Provision for bad debts for the period:
Unit: RMB
Changes in this period
Category Opening balance Closing balance
Recovery or
Provision Write-off Others
reversal
Single account
receivable with
5666188.00 5666188.00
provision for bad
debts
Age-based
949339376.50 16897402.35 3089632.32 -23214.33 929329127.50
portfolio
Total 955005564.50 16897402.35 3089632.32 -23214.33 934995315.50
Including significant amount recovered or reversed provision for bad debts during the reporting period: None.
(4) Actual write-off of accounts receivable for the period
Unit: RMB
Item Amount of write-off
Actual write-off of accounts receivable 3089632.32
Significant write-off of accounts receivable: None.Explanation on write-off of accounts receivable: None.
(5) Top five customers in closing balance of accounts receivable and contractual assets summarized by debtor
Unit: RMB
Percentage of total Closing balance of
Closing balance of
of closing balance provision for bad debts of
Closing balance of Closing balance of accounts
Entity name of accounts account receivable and
accounts receivable contractual assets receivable and
receivable and provision for impairment
contractual assets
contractual assets of contractual assets
Customer A 589685104.67 589685104.67 5.30% 111406193.66
Customer B 528450977.39 528450977.39 4.75% 27423495.43
Customer C 427238675.06 427238675.06 3.84% 21793150.27
Customer D 253899752.49 253899752.49 2.28% 17751371.49
Customer E 236783795.31 236783795.31 2.13% 24573454.07
Total 2036058304.92 2036058304.92 18.30% 202947664.92
5. Accounts receivable financing
(1) Accounts receivable financing by type
Unit: RMB
Item Closing balance Opening balance
Banker’s acceptance bill 513382144.02 1230423455.01
Domestic letter of credit 325239244.15 451562128.92
Total 838621388.17 1681985583.93
(2) Classified disclosure according to the method of bad debt provision: None.
(3) The bad debt provisions accrued recovered or reversed during the period: None.
(4) Financing of receivable pledged by the Company at the end of the reporting period: None.
(5) Financing of receivable endorsed or discounted by the Company which was not yet due on the balance
sheet date as at the end of the reporting period
Unit: RMB
Amount derecognized at the end of the Amount not derecognized at the end of
Item
period the period
Banker’s acceptance bill 8362529551.50
Domestic letter of credit 492383997.93
Total 8854913549.43
(6) Financing of the actual write-off of accounts receivable during the reporting period: None.
(7) Increase/decrease in the financing of accounts receivable and in their fair values during the reporting
period: None.
(8) Other explanations: None.
6. Other receivables
Unit: RMB
Item Closing balance Opening balance
Dividends receivable 232969378.60 79875215.52
Other receivables 399426182.58 326642028.59
Total 632395561.18 406517244.11
(1) Interests receivable
1) Interests receivable by type: None.
2) Major overdue interests: None.
3) Disclosure by method of provision for bad debts
□Applicable ?Not applicable
4) Provision for bad debts accrued recovered or reversed during the reporting period: None.
5) Actual write-off of interests receivable during the period: None.
(2) Dividends receivable
1) Dividends receivable by type
Unit: RMB
Project (or investee) Closing balance Opening balance
Shanghai Pharmaceuticals Holding Co.
232969378.60 79875215.52
Ltd.Total 232969378.60 79875215.52
2) Significant dividends receivable aged over one year: None.
3) Disclosure by the method of provision for bad debts
□Applicable ?Not applicable
4) Provision for bad debts accrued recovered or reversed during the reporting period: None.
5) Actual write-off of dividend receivable during the period: None.
(3) Other receivables
1) Other receivables by nature
Unit: RMB
Nature Closing book balance Opening book balance
Deposits and guarantees 347905012.77 261910279.76
Borrowings 2677211.78 2677211.78
Current account and petty cash 63419778.47 106645507.97
Others 302691456.54 316089936.01
Total 716693459.56 687322935.52
2) Disclosure by aging
Unit: RMB
Aging Closing book balance Opening book balance
Within 1 year (inclusive of 1 year) 391944545.69 336848203.09
1 to 2 years 41297727.61 17700710.11
2 to 3 years 12089540.86 6347352.58
Above 3 years 271361645.40 326426669.74
Total 716693459.56 687322935.52
3) Disclosure by the method of provision for bad debts
? Applicable □ Not applicable
Provision was made for bad debts in accordance with the general expected credit loss model:
Unit: RMB
Phase I Phase II Phase III
Provision for bad debts Total
Expected credit losses Lifetime ECL (not credit- Lifetime ECL (credit-
for the next 12 months impaired) impaired)
Balance as of January 1 2026 89420232.39 0.00 271260674.54 360680906.93
Balance as of January 1 2026
in the current period
Current reversal 23380567.72 0.00 664393.96 24044961.68
Current transfer 0.00 0.00 0.00 0.00
Current write-off 0.00 0.00 19368668.27 19368668.27
Balance as of June 30 2026 66039664.67 251227612.31 317267276.98
Division base for each phase and proportion of provision for bad debts: Not applicable.Changes in book balance with significant changes in loss reserves in the current period
□ Applicable ? Not applicable
4) Provision for bad debts accrued recovered or reversed during the current period: None.
5) Actual write-off of other receivables for the period
Unit: RMB
Item Write-off Amount
Other receivables 19368668.27
Write?off of other significant receivables:
Unit: RMB
Reason for Write-off
Nature of Other Write-off Arising from Related Party
Entity name Write-off Procedures
Receivables Amount Transactions
Performed
See
Hong Kong Yuhe
Others 19368668.27 explanation No
Trading Co. Limited
below
Total 19368668.27
Explanations on write-off of other receivables: In 2022 YNBY International Limited had outstanding current receivables totalling
HKD 22.3 million from Hong Kong Yuhe Trading Co. Limited. Following a forensic investigation conducted by KPMG YNBY
International Limited made full impairment provisions against the above receivables in the financial statements for 2022. In mid-2026
the Company received official statutory notification from the liquidator confirming that the liquidation proceedings of the debtor were
nearing completion and no residual assets were available for distribution to creditors. Accordingly YNBY International Limited
formally wrote off the total amount of HKD 22.3 million during the reporting period.
6) Top five customers in closing balance of other receivables summarized by debtor
Unit: RMB
Percentage of Closing balance of
Entity name Nature of payment Closing balance Aging total of closing provision for bad
balance of other debt
receivables
Deposits and
Customer A 100000000.00 Within 1 year 13.95% 5000000.00
guarantees
Deposits and
Customer B 59990000.00 Within 1 year 8.37% 2999500.00
guarantees
Deposits and
Customer C 37799431.74 Within 1 year 5.27% 1889971.59
guarantees
Current account
Customer D 22742400.00 Within 1 year 3.17% 1137120.00
and petty cash
Deposits and
Customer E 19200000.00 Within 1 year 2.68% 960000.00
guarantees
Total 239731831.74 33.45% 11986591.59
7) Presentation under Other receivables due to centralized fund management: None.
7. Prepayments
(1) Prepayments by aging
Unit: RMB
Closing balance Opening balance
Aging
Amount Proportion Amount Proportion
Within 1 year 327167395.43 96.81% 425475454.48 97.94%
1 to 2 years 4267756.19 1.26% 4135029.82 0.95%
2 to 3 years 2648728.29 0.78% 2124307.70 0.49%
Above 3 years 3850401.60 1.14% 2708157.73 0.62%
Total 337934281.51 434442949.73
Explanations on why prepayments with aging of more than 1 year and an important amount not settled in time: None.
(2) Top five suppliers in closing balance of prepayment summarized by payee
Series Percentage of prepayments
Company name Book balance
No. (%)
1 Supplier A 19621407.07 5.81%
2 Supplier B 18042131.36 5.34%
3 Supplier C 17361818.91 5.14%
4 Supplier D 14711863.23 4.35%
5 Supplier E 14351440.46 4.25%
Total 84088661.03 24.89%
Other explanations: None.
8. Inventories
Did the Company need to comply with the disclosure requirements of the real estate industry: No
(1) Categories of inventories
Unit: RMB
Closing balance Opening balance
Provision for Provision for
decline in value decline in value
of inventories or of inventories or
Item provision for
Book balance Book value Book balance provision for Book value
impairment of impairment of
contract contract
performance performance
costs costs
Raw materials 1715935501.51 117270196.82 1598665304.69 1515887407.03 139864005.50 1376023401.53
Construction
132717752.84 6824914.85 125892837.99 246090458.23 6824914.85 239265543.38
in process
Finished
4455859395.58 139306443.44 4316552952.14 4664617530.93 145683078.79 4518934452.14
goods
Consumptive
45800788.30 45800788.30 36331281.28 36331281.28
biological assets
Materials
outsourced for 1467372.95 1467372.95
processing
Packaging
materials and
60460573.03 962600.94 59497972.09 61727408.47 898260.11 60829148.36
low value
consumables
Total 6412241384.21 264364156.05 6147877228.16 6524654085.94 293270259.25 6231383826.69
(2) Data resources confirmed as inventory: None.
(3) Provision for decline in value of inventories or provision for impairment of contract performance costs
Unit: RMB
Increase in the current period Decrease in the current period
Item Opening balance Reversal or Closing balance
Provision Others Others
reselling
Raw materials 139864005.50 8050940.20 30644748.88 117270196.82
Construction in 6824914.85 0.00 6824914.85
process
Stocks 145683078.79 18858668.41 25214563.71 20740.05 139306443.44
Goods sent for
processing
Packaging
materials and
898260.11 127635.40 63294.57 962600.94
low value
consumables
Total 293270259.25 27037244.01 0.00 55922607.16 20740.05 264364156.05
Provision for decline in value of inventories on a portfolio basis: None.Standards for provision for decline in value of inventories on a portfolio basis: None.
(4) Explanation on closing balance of inventories involving capitalized amount of borrowing costs: None.
(5) Explanation on the current amortization amount of contract performance costs: None.
9. Other current assets
Unit: RMB
Item Closing balance Opening balance
Cost of returned goods receivable 174920435.17 161604003.07
Time deposits and other
303007339.00 373132815.85
wealth?management products
Input tax to be deducted and certified 461367013.80 364066091.69
Prepaid taxes and fees 16343267.13 101041664.39
Others 225823037.07 235050583.04
Total 1181461092.17 1234895158.04
Information on indemnification assets: None.Other explanations: None.
10. Other equity instrument investments
Unit: RMB
Loss included Accumulated gains Accumulated loss Dividend
Gains included
in other in other included in other included in other income
Reason for designating
Opening Closing measurement at fair
Item name comprehensive comprehensive comprehensive comprehensive recognized
balance
income during balance
value through other
income during income at the end of income at the end in the current comprehensive income
the period
the period the period of the period period
The investment is
ImmuneSensor
strategic and is a non-
Therapeutics 71745000.00 71745000.00
trading equity instrument
Inc.investment
Total 71745000.00 71745000.00
Derecognition during the period: None.Itemized disclosure of investment in non-trading equity instruments for the period:
Amounts reclassified Reasons for
Dividend from other Reason for designating reclassification from
Cumulative Cumulative measurement at fair value
Item name income comprehensive other comprehensive
gains losses through other comprehensive
recognized income to retained income income to retained
earnings earnings
ImmuneSensor The investment is strategic and
Therapeutics is a non-trading equity
Inc. instrument investment
Other explanations: None.
11. Long-term equity investments
Unit: RMB
Increase and decrease in the current period
Opening Profits and Closing
Opening Cash
balance of losses on Adjustment of Closing balance balance of Investee balance (book Change in dividends or Provision
impairment Additional Decreased
investments
other (book value) impairment
value) recognized other profit for Others
provision investment investment comprehensive under the provision
income equities declared to impairment
equity
distribute
method
I. Joint ventures
II. Associates
Shanghai
Pharmaceuticals
12727754542.87 608027114.39 -5939236.52 50831858.74 232969378.60 13147704900.88
Holding Co.Ltd.Yunnan TCM
Comprehensive
Health
Innovation
Equity 499823509.04 709281.14 500532790.18
Investment Fund
Partnership
(Limited
Partnership)
Lijiang
Changgengming
Trading Co. Ltd.Subtotal 13227578051.91 608736395.53 -5939236.52 50831858.74 232969378.60 - - 13648237691.06
Total 13227578051.91 608736395.53 -5939236.52 50831858.74 232969378.60 - - 13648237691.06
The recoverable amount is determined based on the net amount obtained by the fair value less the disposal expense.□ Applicable ? Not applicable
The recoverable amount is determined based on the present value of estimated future cash flows.□ Applicable ? Not applicable
Reasons for significant differences between the foregoing information and information used for impairment testing in previous years
or external information: None.Reasons for significant differences between the information used in the Company’s impairment tests in previous years and the actual
situation in the corresponding years: None.Other explanations: None.
12. Other non-current financial assets
Unit: RMB
Item Closing balance Opening balance
Financial assets at fair value through
312435493.34 210855260.47
profits or losses
Total 312435493.34 210855260.47
Other explanations: None.
13. Investment properties
(1) Adoption of the cost measurement model for investment properties
?Applicable □Not applicable
Unit: RMB
Construction in
Item Houses and buildings Land use rights Total
progress
I. Original book value
1. Opening balance 65586463.80 36595425.89 102181889.69
2. Increase in the current period
(1) Outsourcing
(2) Transfer from
inventory\fixed assets\ construction
in progress
(3) Increase in business
combination
3. Decrease in the current period 1174896.46 1174896.46
(1) Disposal
(2) Other transfer out 1174896.46 1174896.46
4. Closing balance 64411567.34 36595425.89 101006993.23
II. Accumulated depreciation and
accumulated amortization
1. Opening balance 42075914.85 6963893.99 49039808.84
2. Increase in the current period 1528948.03 714052.70 2243000.73
(1) Provision or amortization 1528948.03 714052.70 2243000.73
3. Decrease in the current period 46641.27 46641.27
(1) Disposal
(2) Other transfer out 46641.27 46641.27
4. Closing balance 43558221.61 7677946.69 51236168.30
III. Provision for impairment
1. Opening balance 2775502.20 2775502.20
2. Increase in the current period
(1) Provision
3. Decrease in the current period
(1) Disposal
(2) Other transfer out
4. Closing balance 2775502.20 2775502.20
IV. Book value
1. Closing book value 18077843.53 28917479.20 46995322.73
2. Opening book value 20735046.75 29631531.90 50366578.65
The recoverable amount is determined based on the net amount obtained by the fair value less the disposal expense.□Applicable ?Not applicable
The recoverable amount is determined based on the present value of estimated future cash flows.□Applicable ?Not applicable
Reasons for significant differences between the foregoing information and information used for impairment testing in previous years
or external information: None.Reasons for significant differences between the information used in the Company's impairment tests in previous years and the actual
situation in the corresponding years: None.Other explanations: None.
(2) Adoption of the fair value measurement model for investment properties
□Applicable ?Not applicable
(3) Conversion to investment properties and adoption of fair value measurement: None.
(4) Investment properties for which the title certificate has not been obtained: None.
14. Fixed assets
Unit: RMB
Item Closing balance Opening balance
Fixed assets 3212019003.42 3273782844.91
Liquidation of fixed assets 603672.04 557307.43
Total 3212622675.46 3274340152.34
(1) Fixed assets
Unit: RMB
Houses and Machinery and Transportation Electronic
Item Others Total
buildings equipment vehicles equipment
I. Original book value:
1. Opening balance 3228220795.03 1963015590.59 69847930.81 212811359.61 11307336.91 5485203012.95
2. Increase in the
1227139.23 54723338.05 797801.09 5587741.73 50901.40 62386921.50
current period
(1) Purchase - 38315807.97 797801.09 5587741.73 50901.40 44752252.19
(2) Transfer from 52242.77 16407530.08 16459772.85
construction in progress
(3) Increase in business
combination
(4) Other transfer-in 1174896.46 1174896.46
3. Decrease in the
-150404.06 16698313.32 895612.17 5523811.37 22967332.80
current period
(1) Disposal or
14439918.50 895612.17 324238.70 15659769.37
scrapping
(2) Other transfer-out -150404.06 -150404.06
(3) Decrease in business
2258394.82 5199572.67 7457967.49
combination
4. Closing balance 3229598338.32 2001040615.32 69750119.73 212875289.97 11358238.31 5524622601.65
II. Accumulated
depreciation
1. Opening balance 737253376.61 1209708016.38 42276534.93 147327705.53 3624503.70 2140190137.15
2. Increase in the
41952504.53 58628865.51 2061655.42 12541744.16 469362.69 115654132.31
current period
(1) Provision 41905863.26 58628865.51 2061655.42 12541744.16 469362.69 115607491.04
(2) Other transfer-in 46641.27 46641.27
3. Decrease in the current
39222.50 7528235.61 661957.46 3442451.34 11671866.91
period
(1) Disposal or
6682408.75 661957.46 465075.28 7809441.49
scrapping
(2) Other transfer-
39222.50 39222.50
out
(3) Decrease in
845826.86 2977376.06 3823202.92
business combination
4. Closing balance 779166658.64 1260808646.28 43676232.89 156426998.35 4093866.39 2244172402.55
III. Provision for
impairment
1. Opening balance 42494354.75 25478506.18 3257169.96 71230030.89
2. Increase in the
current period
(1) Provision
3. Decrease in the -56339.21 1212775.67 1642398.75 2798835.21
current period
(1) Disposal or
89022.87 15346.82 104369.69
scrapping
(2) Other transfer-
-56339.21 -56339.21
out
(3) Decrease in
1123752.80 1627051.93 2750804.73
business combination
4. Closing balance 42550693.96 24265730.51 1614771.21 68431195.68
IV. Book value
1. Closing book value 2407880985.72 715966238.53 26073886.84 54833520.41 7264371.92 3212019003.42
2. Opening book value 2448473063.67 727829068.03 27571395.88 62226484.12 7682833.21 3273782844.91
(2) Temporarily idle fixed assets
Unit: RMB
Accumulated Impairment
Item Original book value Book value Remarks
depreciation provision
Houses and buildings 4629817.80 2774687.70 0 1855130.10
Machinery and equipment 44051179.29 12931065.71 19433112.03 11687001.55
Transportation vehicles 230619.47 114497.49 0 116121.98
Electronic equipment 10079412.95 8586457.25 567755.55 925200.15
Others 54060.15 52914.52 1145.63
(3) Fixed assets leased through operating lease: None.
(4) Fixed assets for which the title certificate has not been obtained
Unit: RMB
Item Book value Reasons for not obtaining the title certificate
Acquired through judicial auction with land use
Yunjian Assets 1841283.01
certificate but no property certificate
The property rights of the resettlement housing to
Commercial properties in Xiaguan Dali 1417591.45
be processed
Buildings in planting base of Yunquan 1017746.00 The land is a leased land
Overall relocation project of Wenshan Partial ownership has been secured and the
15284523.09
Qihua remaining is in process
Drug Division of Dali Pharmaceutical
31298481.20 In process
Economic Development Zone
No. 1 Building of Shanghai Center 98077012.85 In process
Kunming Center 270168951.56 In process
Other explanations: None.
(5) Impairment test of fixed assets
□Applicable ? Not applicable
(6) Liquidation of fixed assets
Unit: RMB
Item Closing balance Opening balance
Machinery and equipment 555465.76 495495.35
Electronic equipment 48206.28 61812.08
Total 603672.04 557307.43
Other explanations: None.
15. Construction in progress
Unit: RMB
Item Closing balance Opening balance
Construction in progress 932187206.75 807592848.36
Total 932187206.75 807592848.36
(1) Construction in progress
Unit: RMB
Closing balance Opening balance
Item
Impairment Impairment
Book balance Book value Book balance Book value
provision provision
Project of Yunnan Baiyao
Shanghai International 768899314.04 768899314.04 730931829.62 730931829.62
Center
Yunnan Baiyao TCM
Industry Culture Park 71570974.99 71570974.99 22041089.96 22041089.96
Project
Construction Project for the
Decoction Pieces
29528700.13 29528700.13 5964702.46 5964702.46
Production Center in the
Qidian Industrial Zone
Government-Enterprise
Cooperation Project of
Yunnan Baiyao Group in
28591656.94 28591656.94 38967429.33 38967429.33
Lijiang Ecological Science
and Technology Industrial
Park (Phase II)
Yunnan Baiyao R&D
Platform - Kunming Center 6729998.59 6729998.59 1250981.88 1250981.88
Construction Project
Second Phase of the
Government-Enterprise
Cooperation Project of
Yunnan Baiyao Group in 4872642.17 4872642.17 -
Lijiang Ecological Science
and Technology Industrial
Park (Phase II)
Yunnan Baiyao Teayield
Upgrade?and?Renovation 3587467.12 3587467.12 363853.83 363853.83
Project
Renovation Costs for the
2341749.33 2341749.33 150479.94 150479.94
Wuxi Laboratory
Steam Renovation Project
of Yunnan Baiyao Group 1885399.99 1885399.99 40754.72 40754.72
Health Industrial Park
Filling?line Replacement
Project at Jingkai
Toothpaste Factory Yunnan 1698458.77 1698458.77
Baiyao Group Health
Products Co. Limited
Upgrade?and?Renovation
Project for
Combined?packaging 1020081.24 1020081.24
Filling?packaging Lines
Yunnan Baiyao
Smart?Health Factory
Phase-II Oral-liquid Project
265605.91 265605.91
of Wenshan Company
Other projects 11195157.53 11195157.53 7881726.62 7881726.62
Total 932187206.75 932187206.75 807592848.36 807592848.36
(2) Changes in important projects of construction in progress for the period
Unit: RMB
Including:
Proportion
Transfer to Other Accumulated Amount of Capitalization
Increase in of total
Opening fixed assets decrease in Closing Engineering amount of interest rate of Source
Item name Budget amount the current project
balance in the current the current balance progress interest capitalized interest for of funds
period investment
period period capitalized for the the period
in budget
period
Project of
Yunnan Baiyao
Self-
Shanghai 1389170500.00 730931829.62 37967484.42 768899314.04 74.25% 98.00%
funded
International
Center
Yunnan Baiyao
R&D Platform -
Self-
Kunming Center 921670000.00 1250981.88 5479016.71 6729998.59 34.80% 57.00%
funded
Construction
Project
Government-
Enterprise
Cooperation
Project of Yunnan
Baiyao Group in Self-
146650000.00 38967429.33 27928314.05 15982928.32 22321158.12 28591656.94 73.42% 73.51%
Lijiang Ecological funded
Science and
Technology
Industrial Park
(Phase II)
Yunnan Baiyao
TCM Industry Self-
183000000.00 22041089.96 49529885.03 71570974.99 69.00% 85.00%
Culture Park funded
Project
Construction
Self-
Project for the 83893300.00 5964702.46 23563997.67 29528700.13 35.20% 48.00%
funded
Decoction Pieces
Production
Center in the
Qidian Industrial
Zone
Second Phase of
the Government-
Enterprise
Cooperation
Project of Yunnan
Baiyao Group in Self-
64100000.00 4872642.17 4872642.17 7.60% 15.96%
Lijiang funded
Ecological
Science and
Technology
Industrial Park
(Phase II)
Phase-II
Oral-liquid
Self-
Project of 137360500.00 265605.91 265605.91 0.19% 0.75%
funded
Wenshan
Company
Total 2925844300.00 799156033.25 149606945.96 15982928.32 22321158.12 910458892.77
(3) Provision for impairment of construction in progress for the period: None.
(4) Impairment test of construction in progress
□ Applicable ? Not applicable
(5) Project materials: None.
16. Productive biological assets
(1) Adoption of the cost measurement model for productive biological assets
? Applicable □ Not applicable
Unit: RMB
Planting
Item Total
Tea plant
I. Original book value
1. Opening balance 2578500.00 2578500.00
2. Increase in the current period
(1) Outsourcing
(2) Self-cultivation
3. Decrease in the current period
(1) Disposal
(2) Others
4. Closing balance 2578500.00 2578500.00
II. Accumulated depreciation 0.00
1. Opening balance 1933875.15 1933875.15
2. Increase in the current period 85950.06 85950.06
(1) Provision 85950.06 85950.06
3. Decrease in the current period
(1) Disposal
(2) Others
4. Closing balance 2019825.21 2019825.21
III. Provision for impairment
1. Opening balance
2. Increase in the current period
(1) Provision
3. Decrease in the current period
(1) Disposal
(2) Others
4. Closing balance
IV. Book value
1. Closing book value 558674.79 558674.79
2. Opening book value 644624.85 644624.85
(2) Impairment test of productive biological assets measured at cost
□ Applicable ? Not applicable
(3) Adoption of the fair value measurement model for productive biological assets
□ Applicable ? Not applicable
17. Right-of-use assets
(1) Right-of-use assets
Unit: RMB
Machinery and
Item Houses and buildings Land use rights Total
equipment
I. Original book value
1. Opening balance 416859685.85 4591241.37 14781939.40 436232866.62
2. Increase in the current period 40771785.95 431728.06 3608514.21 44812028.22
(1) Lease 40771785.95 431728.06 3608514.21 44812028.22
(2) Others
3. Decrease in the current period 64803261.25 870366.49 65673627.74
(1) Lease expiration 48751995.58 48751995.58
(2) Disposal 16051265.67 870366.49 16921632.16
(3) Others
4. Closing balance 392828210.55 5022969.43 17520087.12 415371267.10
II. Accumulated depreciation
1. Opening balance 182550735.23 1249962.46 4428788.08 188229485.77
2. Increase in the current 52687802.05 412695.20 875345.70 53975842.95
period
(1) Provision 52687802.05 412695.20 875345.70 53975842.95
(2) Others
3. Decrease in the current period 58181025.80 289459.40 58470485.20
(1) Lease expiration 48751995.58 48751995.58
(2) Disposal 9429030.22 289459.40 9718489.62
(3) Others
4. Closing balance 177057511.48 1662657.66 5014674.38 183734843.52
III. Provision for impairment
1. Opening balance
2. Increase in the current period
3. Decrease in the current period
4. Closing balance
IV. Book value
1. Closing book value 215770699.07 3360311.77 12505412.74 231636423.58
2. Opening book value 234308950.62 3341278.91 10353151.32 248003380.85
(2) Impairment test of right-of-use assets
□ Applicable ? Not applicable
Other explanations: None.
18. Intangible assets
(1) Intangible assets
Unit: RMB
Land use Non-patent Franchise
Item Patent right Software Trademark Data assets Others Total
rights rights technology
I. Original book value
1. Opening balance 743969528.65 34492676.60 81432377.88 131535219.31 67297.17 154081682.57 218474.55 1145797256.73
2. Increase in the
1000000.00 2713613.64 1276057.83 4989671.47
current period
(1) Purchase 1000000.00 2713613.64 3713613.64
(2) Internal R&D 1276057.83 1276057.83
(3) Increase in
business combination
3. Decrease in the
84377.47 26335.93 110713.40
current period
(1) Disposal 6335.93 6335.93
(2) Decrease in
84377.47 20000.00 104377.47
business combination
4. Closing balance 743969528.65 34492676.60 82432377.88 134164455.48 40961.24 154081682.57 1276057.83 218474.55 1150676214.80
II. Accumulated
amortization
1. Opening balance 197895217.60 31891186.39 10086039.40 45688471.63 10628.09 17664216.34 154006.65 303389766.10
2. Increase in the
7607758.45 787100.52 6229093.32 6429255.73 3454.89 85070.51 21489.30 21163222.72
current period
(1) Provision 7607758.45 787100.52 6229093.32 6429255.73 3454.89 85070.51 21489.30 21163222.72
(2) Increase in
business combination
3. Decrease in the
44532.55 8094.05 52626.60
current period
(1) Disposal 501.84 501.84
(2) Decrease in
44532.55 7592.21 52124.76
business combination
4. Closing balance 205502976.05 32678286.91 16315132.72 52073194.81 5988.93 17664216.34 85070.51 175495.95 324500362.22
III. Provision for
impairment
1. Opening balance 6382453.60 414165.45 136417466.23 143214085.28
2. Increase in the
current period
(1) Provision
3. Decrease in the
39844.92 39844.92
current period
(1) Disposal
(2) Decrease in
39844.92 39844.92
business combination
4. Closing balance 6382453.60 374320.53 136417466.23 143174240.36
IV. Book value
1. Closing book 532084099.00 1814389.69 66117245.16 81716940.14 34972.31 1190987.32 42978.60 683001612.22
value
2. Opening book 539691857.45 2601490.21 71346338.48 85432582.23 56669.08 64467.90 699193405.35
value
The proportion of intangible assets formed through the Company’s internal R&D at the end of the period is 0.22% of the total
intangible assets balance.
(2) Data resources for recognition of intangible assets
Unit: RMB
Data?resource
Data?resource Data?resource
intangible assets
Item intangible assets intangible assets Total
obtained via other
externally purchased internally developed
methods
I. Original book value
1. Opening balance 0.00
2. Increase in the
1276057.83 1276057.83
current period
Including: Internal
1276057.83 1276057.83
R&D
3. Closing balance 1276057.83 1276057.83
II. Accumulated
amortization
1. Opening balance
2. Increase in the
85070.51 85070.51
current period
Others: Provision 85070.51 85070.51
3. Closing balance 85070.51 85070.51
III. Book value
1. Closing book value 1190987.32 1190987.32
In accordance with the Interim Provisions on the Accounting Treatment of Enterprise?Related Data Resources the Company has
recognized data resources meeting the capitalization criteria under the “One?Item?One?Code Health Promotion Development” project
as intangible assets - data assets.
(3) Land use rights for which the title certificate has not been obtained: None.
(4) Impairment test of intangible assets
□Applicable ?Not applicable
19. Goodwill
(1) Original book value of goodwill
Unit: RMB
Increase in the current Decrease in the
period current period
Name of the investee or items forming
Opening balance Closing balance
goodwill
Formed by business
Disposal
combination
YNBY International Limited 645635327.81 645635327.81
Anguo Juyaotang Pharmaceutical Co. Ltd. 203842391.82 203842391.82
Yunnan Baiyao Group Medical
26904931.64 26904931.64
Technology Hefei Co. Ltd.Shanghai Hanshi Health Consulting
23247992.08 23247992.08 0
Co. Ltd.Yunnan Baiyao Group Wuxi
12843661.62 12843661.62
Pharmaceutical Co. Ltd.Lijiang Yunquan Biological Development
721770.39 721770.39
Co. Ltd.Total 913196075.36 0.00 23247992.08 889948083.28
(2) Provision for impairment of goodwill
Unit: RMB
Increase in the Decrease in the
Name of the investee or items forming goodwill Opening balance current period current period Closing balance
Provision Disposal
YNBY International Limited 561515748.26 561515748.26
Yunnan Baiyao Group Medical Technology
26904931.64 26904931.64
Hefei Co. Ltd.Shanghai Hanshi Health Consulting Co. Ltd. 23247992.08 23247992.08 0
Lijiang Yunquan Biological Development
721770.39 721770.39
Co. Ltd.Total 612390442.37 23247992.08 589142450.29
(3) Related information on asset group or combination of asset groups containing goodwill: None.
(4) Determination of recoverable amount
The recoverable amount is determined based on the net amount obtained by the fair value less the disposal expense
□Applicable ?Not applicable
The recoverable amount is determined based on the present value of estimated future cash flows
□Applicable ?Not applicable
Reasons for significant differences between the foregoing information and information used for impairment testing in previous years
or external information: None.Reasons for significant differences between the information used in the Company’s impairment tests in previous years and the actual
situation in the corresponding years: None.
(5) Fulfillment of undertakings and goodwill impairment
Performance commitments existed at the time goodwill was formed and the reporting period or the previous period of the reporting
period was within the performance commitment period
? Applicable □ Not applicable
Unit: RMB’0000
Goodwill
Performance commitment fulfilment
impairment loss
Item Current period Previous period
Current Previous
Committed Actual Completion Committed Actual Completion period period
performance performance rate performance performance rate
Acquisition of
Full-year 2026
100% equity
principal-business
interest in Anguo
revenue of no less 31833.34 51.68%
Juyaotang
than RMB
Pharmaceutical
616000000
Co. Ltd.Acquisition of
100% equity Full-year 2026 net
interest in Anguo profit of no less
2236.71 37.47%
Juyaotang than RMB
Pharmaceutical 59700000
Co. Ltd.Other explanations: The original shareholders of Juyaotang (Ma Xinhong Ma Zhanjiang Zhang Shuang Shi Yuexin and Shi Guang)
undertake commitments in respect of the audited net profit and principal?business revenue achieved by Juyaotang for the period from
January?1 2025 to December?31 2027 (the “Performance Commitment Period”). Compensation shall be payable to the TCM Resources
Company if Juyaotang fails to meet the committed net?profit or principal?business?revenue targets. Juyaotang shall cooperate with the
TCM Resources Company to ensure that its financial audit is completed on or before April 30 each year and whether the performance
commitment has been satisfied shall be determined based on the audit results.“Net profit” means the net profit of Juyaotang presented in its consolidated financial statements audited and confirmed by an
accounting firm appointed or approved by the TCM Resources Company after deducting non?recurring gains and losses and excluding
the impact of accrued credit?impairment losses and the corresponding income?tax expenses. Net?profit calculation also includes
government subsidies subject to a cap of RMB?5?million.Anguo Juyaotang Pharmaceutical Co. Ltd was acquired through a business combination not under common control in October?2025;
accordingly no comparative?period information was disclosed in the previous?year column.
20. Long-term deferred expenses
Unit: RMB
Increase in the Amortization in the
Item Opening balance Other decrease Closing balance
current period current period
Building
decoration and
107205063.25 30417784.79 19694724.77 66770.56 117861352.71
project
renovation
Others 1666521.75 255044.46 305408.77 1616157.44
Total 108871585.00 30672829.25 20000133.54 66770.56 119477510.15
Other explanations: None.
21. Deferred income tax assets/deferred income tax liabilities
(1) Deferred income tax assets before offset
Unit: RMB
Closing balance Opening balance
Item Deductible temporary Deferred income tax Deductible temporary Deferred income tax
differences assets differences assets
Provision for
251839745.27 48893608.57 256615532.88 49817175.53
asset impairment
Unrealized profits
of intra-group 482520191.19 73352897.91 381194243.82 58116998.22
transactions
Contractual liabilities 1309240479.25 209649037.73 1108022102.46 174861064.03
Provision for credit
958796883.39 234665563.45 1007784161.87 246778896.60
impairment
Payroll payable and
long-term employee 908753950.20 139980023.11 876439754.41 138521511.70
benefits payable
Other payables 617032257.54 92977751.05 574640684.63 91924056.78
Lease liabilities 255138284.62 49923649.53 232212961.75 49716850.19
Deferred income 218209749.92 34022840.27 249515197.31 38583222.00
Losses that can be offset 192640599.81 44982533.54 206673510.27 47304724.31
Estimated revenue
217186332.05 54158823.95 193306921.10 48198621.99
from returns
Expenses beyond
overall planning for
employee status
conversion expenses of 36550060.60 5482509.09 35561860.54 5334279.08
state-owned enterprises
and social security
expenses of retirees
Others 135683129.57 33779102.83 114628658.17 25062993.13
Total 5583591663.41 1021868341.03 5236595589.21 974220393.56
(2) Deferred income tax liabilities before offset
Unit: RMB
Closing balance Opening balance
Item Taxable temporary Deferred income tax Taxable temporary Deferred income tax
differences liabilities differences liabilities
Right-of-use assets 225783968.74 48196824.06 239818175.63 51042693.07
Changes in fair value 234419511.73 35162926.76 125288066.60 18793209.99
Fixed assets subject to
one-time pre-tax 5891418.50 1472854.63 5932346.78 1483086.70
deduction
Appreciation of asset
103134274.68 25783568.67 117186331.29 29296582.81
valuation
Investment income
from business
combination not
2282373.90 570593.48 2282373.90 570593.48
under common
control achieved in
stages
Cost of returned goods
205398223.78 51221808.53 182911787.55 45609995.85
receivable
Others 11478050.67 1721707.60 10809032.18 1621354.84
Total 788387822.00 164130283.73 684228113.93 148417516.74
(3) Deferred income tax assets or liabilities after offset net
Unit: RMB
Offsetting amount of Offsetting amount of
deferred income tax Closing balance of deferred income tax Opening balance of
assets and deferred deferred income tax Item assets and deferred
deferred income tax
income tax liabilities at assets or liabilities after income tax liabilities assets or liabilities
the end of the reporting offset at the beginning of the after offset
period reporting period
Deferred income
1021868341.03 974220393.56
tax assets
Deferred income
164130283.73 148417516.74
tax liabilities
(4) Details of unrecognized deferred income tax assets
Unit: RMB
Item Closing balance Opening balance
Deductible losses 1108781367.24 1013209963.03
Provision for asset impairment 580808329.53 561351160.73
Deferred income 22504441.99 22254615.28
Others 1079831.10 6532431.38
Total 1713173969.86 1603348170.42
(5) Deductible losses for which deferred income tax assets were unrecognized will expire in the following
years
Unit: RMB
Year Closing balance Opening balance Remarks
2026 129769505.04 125496431.94
2027 199441320.92 191835644.06
2028 240527425.15 244229846.52
2029 219073244.53 230918592.53
2030 182069095.20 210522367.97
2031 129516337.71 2135102.79
2032 1599912.28 1599912.28
2033 355122.11 355122.11
2034 2006985.93 2006985.93
2035 2396930.47 4109956.90
2036 2025487.90
Total 1108781367.24 1013209963.03
Other explanations: None.
22. Other non-current assets
Unit: RMB
Closing balance Opening balance
Item Impairment Impairment
Book balance Book value Book balance Book value
provision provision
Cost of returned
30477788.61 30477788.61 21307784.48 21307784.48
goods receivable
Indemnification
0.00 0.00
assets
Reserved
special?purpose 42004661.40 42004661.40 42004661.40 42004661.40
supplies
VAT excess?input
52259747.67 52259747.67 52259747.67 52259747.67
tax credit
Prepayments for
purchase of fixed
45627341.49 45627341.49 45988031.25 45988031.25
assets and other
items
Total 170369539.17 170369539.17 161560224.80 161560224.80
Information on indemnification assets: None.Other explanations: None.
23. Assets with restricted ownership or use rights
Unit: RMB
At the end of the period At the beginning of the period
Item
Type of Type of
Book balance Book value Restriction Book balance Book value Restriction
restriction restriction
Guarantee
Banker’s
deposit banker’s
acceptance bill
Cash and acceptance bill
Security deposits Security
bank 29534231.67 29534231.67 14353427.82 14353427.82 deposits
deposit
balance performance deposit performance
bond deposits
bond deposits
etc.etc.Specially used for Specially used for
Cash and
maintenance of maintenance of
bank 2657295.33 2657295.33 Special use 2650040.09 2650040.09 Special use
balance housing?reform housing?reform
housing housing
Cash and All assets of the
All assets of the
bank 536663457.31 536663457.31 Special use special account 557103568.81 557103568.81 Special use
balance for special account
restructuring for restructuring
the special fund
the special fund
for paying the
cost of for paying the
employee status cost of employee
conversion in
status conversion
state-owned
enterprises in state-owned
enterprises
Litigation
preservation. As
of the date of
issuance of
these financial
statements the
plaintiff has
Cash and Property withdrawn the
bank 1489443.87 1489443.87 preservation lawsuit and the
balance court has ruled
to lift the
litigation
preservation
effective
immediately
from the date of
the ruling
Accounts Accounts
receivable receivable
Accounts Accounts factoring of
Accounts factoring of
11076132.00 10522325.40 receivable 12541236.47 11914174.65 receivable Anguo
receivable Anguo Juyaotang
factoring factoring Juyaotang
Pharmaceutical Pharmaceutical
Co. Ltd. Co. Ltd.Mortgage loans Mortgage loans
secured by secured by
buildings and buildings and
Fixed
204156457.15 133537692.82 Mortgage loan structures of 165119200.00 140829049.75 Mortgage loan structures of
assets
Anguo Juyaotang Anguo Juyaotang
Pharmaceutical Pharmaceutical
Co. Ltd. Co. Ltd.Mortgage loans Mortgage loans
secured by land secured by land
Intangible use rights of use rights of
57000237.75 44665082.82 Mortgage loan 57000237.75 45520086.38 Mortgage loan
assets Anguo Juyaotang Anguo Juyaotang
Pharmaceutical Pharmaceutical
Co. Ltd. Co. Ltd.Total 841087811.21 757580085.35 810257154.81 773859791.37
Other explanations: None.
24. Short-term loans
(1) Classification of short-term loans
Unit: RMB
Item Closing balance Opening balance
Pledged borrowings 11076132.00 12541236.47
Guaranteed borrowings 14037472.10
Loan in credit 0.00 150010000.00
Discounted internal bills 0.00 20224516.74
Total 25113604.10 182775753.21
Explanations on classification of short-term loans: The pledged borrowings for the current period were taken out by Juyaotang; the
guaranteed borrowings were borrowed by the subsidiary of YNBY International.
(2) Overdue and outstanding short-term loans: None.
25. Notes payable
Unit: RMB
Type Closing balance Opening balance
Banker’s acceptance bill 1668214258.64 1846714475.61
Total 1668214258.64 1846714475.61
Total notes payable due and unpaid at the end of the period were RMB 0.00. No amounts were due but unpaid.
26. Accounts payable
(1) Accounts payable
Unit: RMB
Item Closing balance Opening balance
Payment for goods 5415236276.82 5242447200.83
Payment for engineering equipment and
303876977.99 280574656.03
others
Total 5719113254.81 5523021856.86
(2) Major accounts payable aged over one year: None.
27. Other payables
Unit: RMB
Item Closing balance Opening balance
Dividend payable 1317388.73 1317388.73
Other payables 1377588952.12 1460141946.26
Total 1378906340.85 1461459334.99
(1) Interests payable: None.
(2) Dividend payable
Unit: RMB
Item Closing balance Opening balance
Chuxiong Yunzhu Trading Co. Ltd. 743156.77 743156.77
Kunming Nuo’an Enterprise
574231.96 574231.96
Management Co. Ltd.Total 1317388.73 1317388.73
Other explanations: It included the major payable but unpaid dividends aged over one year. The reasons for the unpayment should
be disclosed: None.
(3) Other payables
1) Other payables by nature of payment
Unit: RMB
Item Closing balance Opening balance
Market maintenance fee 617914324.45 625164703.25
Deposits and guarantees 342974999.24 377010766.64
Other current accounts 129647265.61 128759561.20
Collection and payment 110214318.18 98268582.83
Hospital management fee payable 5683393.98 52353461.90
Equity transfer payment 132000000.00 132000000.00
Others 39154650.66 46584870.44
Total 1377588952.12 1460141946.26
2) Other important payables aged over 1 year or overdue: None.
28. Receipts in advance
(1) Receipts in advance
Unit: RMB
Item Closing balance Opening balance
Receipts in advance - lease 518138.91 190841.21
Total 518138.91 190841.21
(2) Major receipts in advance aged over one year or overdue: None.
29. Contractual liabilities
Unit: RMB
Item Closing balance Opening balance
Contract receipts in advance 1578641211.36 1504554209.16
Others 46574.57 1272729.02
Total 1578687785.93 1505826938.18
Significant contractual liabilities aged more than 1 year: None.The amount of and reasons for significant changes in the book value during the reporting period: None.
30. Payroll payable
(1) Payroll payable
Unit: RMB
Increase in the current Decrease in the current
Item Opening balance Closing balance
period period
I. Short-term
1410415900.90 1211814094.84 1457290166.51 1164939829.23
compensation
II. Welfare after
demission -
70917819.80 131524830.89 133104694.61 69337956.08
defined
contribution plan
III. Dismissal welfares 1267585.02 3081706.11 3770482.23 578808.90
Total 1482601305.72 1346420631.84 1594165343.35 1234856594.21
(2) Short-term compensation
Unit: RMB
Increase in the current Decrease in the current
Item Opening balance Closing balance
period period
1. Salary bonus
613649047.12 871104159.17 1077025442.86 407727763.43
allowance and subsidy
2. Staff welfare 24602536.57 68304211.97 52352468.56 40554279.98
3. Social insurance
8483413.39 64585795.50 71578766.53 1490442.36
contribution
Including: Medical
8280108.23 55612261.53 62510865.14 1381504.62
insurance premiums
Industrial 68440.31 4540985.62 4533471.22 75954.71
injury insurance premiums
Maternity
134864.85 4432548.35 4534430.17 32983.03
insurance premiums
4. Housing provident fund 1989133.03 82024880.98 82168689.66 1845324.35
5. Union dues and staff
43082357.77 21616857.51 14041721.68 50657493.60
training fees
7. Short-term profit-
700364428.31 51343809.09 649020619.22
sharing plan
8. Other short-term
18244984.71 104178189.71 108779268.13 13643906.29
compensation
Total 1410415900.90 1211814094.84 1457290166.51 1164939829.23
(3) Defined contribution plans
Unit: RMB
Increase in the current Decrease in the current
Item Opening balance Closing balance
period period
1. Basic endowment
2656346.28 126427981.02 126405793.82 2678533.48
insurance
2. Unemployment
98780.71 5096849.87 5095858.89 99771.69
insurance premiums
3. Corporate pension
68162692.81 0.00 1603041.90 66559650.91
payment
Total 70917819.80 131524830.89 133104694.61 69337956.08
Other explanations: None.
31. Tax payables
Unit: RMB
Item Closing balance Opening balance
Corporate income tax 242709957.82 127452678.42
Individual income tax 12406573.68 5223796.68
Value added tax 256009802.26 90500172.56
Property tax 13025796.99 12877107.87
Land use tax 5393098.15 5382781.43
Stamp duty 5085208.07 5448846.28
Resource tax 1804.00
Education surcharge 8288496.25 3345171.01
Urban maintenance and construction tax 18586398.70 9360180.43
Local education surcharge 5115020.97 3439910.43
Environmental protection tax 3688.38 4316.61
Water conservancy fund 9792.04 28387.12
Vehicle and vessel usage tax 2850.00
Collected and remitted taxes and fees 11532448.25 14983489.27
Total 578166281.56 278051492.11
Other explanations: None.
32. Non-current liabilities due within one year
Unit: RMB
Item Closing balance Opening balance
Long-term borrowings due within one year 84662275.00 400330.00
Lease liabilities due within one year 80186668.89 76043381.53
Total 164848943.89 76443711.53
Other explanations: The long?term borrowings due within one year were drawn by Juyaotang.
33. Other current liabilities
Unit: RMB
Item Closing balance Opening balance
Refunds payable 184930353.43 170793224.69
Deferred output tax 450813805.78 360570121.44
Special financial support funds of
“transferring loan to subsidy” for the
use of intelligent voice cluster
1800000.00 1800000.00
development base in the R&D project of
intelligent medical devices based on
medical big data
Total 637544159.21 533163346.13
Changes in short-term bonds payable: None.Other explanations: None.
34. Long-term loans
(1) Long-term loans by type
Unit: RMB
Item Closing balance Opening balance
Mortgaged borrowings 84469400.83
Loan in credit 2100000.00 2100000.00
Total 2100000.00 86569400.83
Explanation on classification of long-term loans: None.Other explanations including the range of interest rate: None.
35. Lease liabilities
Unit: RMB
Item Closing balance Opening balance
Houses and buildings 199076755.51 205042296.11
Machinery and equipment 1255704.71 965984.38
Right of land use 12953821.50 11865480.22
Less: Non-current liabilities reclassified to
-80186668.89 -76043381.53
liabilities due within one year
Total 133099612.83 141830379.18
Other explanations: None.
36. Long-term payables
Unit: RMB
Item Closing balance Opening balance
Long-term payables 530661869.20 551241357.32
Special payables 4838584.16 4838584.16
Total 535500453.36 556079941.48
(1) Long-term payables by nature of payment
Unit: RMB
Item Closing balance Opening balance
Expenses beyond overall planning for
employee status conversion expenses
529820776.43 549851147.17
of state-owned enterprises and social
security expenses of retirees
Boiler room investment boiler and
supporting equipment transfer and 841092.77 1390210.15
operation contract
Other explanations: None.
(2) Special payables
Unit: RMB
Increase in the Decrease in the
Item Opening balance Closing balance Reasons
current period current period
Preliminary funds
for major Transfer from
technological 888468.00 888468.00 Baiyao Holdings due
transformation to merger by
absorption
projects
Transfer from
Fulintang chain
500000.00 500000.00 Baiyao Holdings
operating funds
due to merger by
absorption
Transfer from
Funds for Baiyao
Kunming 500000.00 500000.00 Holdings due to
medicine merger by
distribution center absorption
Transfer from
Yunnan Panax
Baiyao
notoginseng
brand 164272.00 164272.00 Holdings due to
registration merger by
project absorption
Group Transfer from
company Baiyao
management 250978.00 250978.00 Holdings due to
information merger by
system project absorption
Group company Transfer from
technology Baiyao
center 231265.00 231265.00 Holdings due to
construction merger by
expenses absorption
Transfer from
Nefuramide Baiyao
oxalate 85426.00 85426.00 Holdings due to
project merger by
funding
absorption
Transfer from
Yunnan Natural
Baiyao
Medicine
998506.00 998506.00 Holdings due to
Engineering
merger by
Center project
absorption
Transfer from
New drug
Baiyao
research project
472062.56 472062.56 Holdings due to
for treatment of
merger by
back pulp injury
absorption
Transfer from
Baiyao
Material
purchase project 489575.00 489575.00 Holdings due to
research expense merger by
absorption
R&D of
redesigned drugs Transfer from
for treating Baiyao
cardiovascular 258031.60 258031.60 Holdings due to
and merger by
cerebrovascular absorption
diseases (TCM)
Total 4838584.16 4838584.16
Other explanations: None.
37. Long-term payroll payable
(1) Details of long-term payroll payable
Unit: RMB
Item Closing balance Opening balance
II. Dismissal welfares 743921.48 825601.53
III. Other long-term welfares 854483.70 893344.80
Total 1598405.18 1718946.33
(2) Change of defined benefit plan: None.
38. Estimated liabilities
Unit: RMB
Item Closing balance Opening balance Reasons
Returns payable not settled within one
Returns payable 32255978.72 22513696.41
year
Total 32255978.72 22513696.41
Other explanations including important assumptions and estimates related to significant estimated liabilities: None.
39. Deferred income
Unit: RMB
Increase in the Decrease in the
Item Opening balance Closing balance Reasons
current period current period
Government
271769812.59 10387500.00 41443120.68 240714191.91
subsidies
Including:
Government
119513816.80 1789948.03 34435227.41 86868537.42
subsidies related to
income
Government
subsidies related to 152255995.79 8597551.97 7007893.27 153845654.49
assets
Total 271769812.59 10387500.00 41443120.68 240714191.91
Other explanations: None.
40. Other non-current liabilities
Unit: RMB
Item Closing balance Opening balance
Receipts of real estate sale under staff
1931554.36 1931554.36
housing reform
Total 1931554.36 1931554.36
Other explanations: None.
41. Share capital
Unit: RMB
Increase or decrease (＋－)
Capitalization
Issuance of of capital
Opening balance Share dividend Others Subtotal new shares Closing balance reserve into
share capital
Total
1784262603.0
number of 1784262603.00
0
shares
Other explanations: None.
42. Capital reserves
Unit: RMB
Increase in the current Decrease in the current
Item Opening balance Closing balance
period period
Capital premium (equity
17480187335.11 57154279.89 6007761.69 17531333853.31
premium)
Other capital reserves 151929855.74 13821989.98 165751845.72
Total 17632117190.85 70976269.87 6007761.69 17697085699.03
Other explanations including changes and reasons thereof during the reporting period:
(1) The allotment and issue of shares by YNBY International constitutes a transaction that changes the
Company’s ownership interest in a subsidiary while retaining control over the subsidiary. This transaction is
accounted for as an equity?based transaction with a corresponding increase in capital surplus of RMB?57154279.89.
(2) In June?2026 YNBY International repurchased treasury shares. This transaction represents a change in the
ownership interest in a subsidiary without loss of control. It is accounted for as an equity-based transaction resulting
in a reduction to capital surplus of RMB?6007761.69.
(3) Other equity adjustments recognized in respect of associates during the current year led to an increase in
capital surplus of RMB?13821989.98.
43. Other comprehensive income
Unit: RMB
Amount for the current period
Less: Amount previously
Amount
included in other Less: Amount previously included
That
Less: That attributable
Item Opening balance before income
comprehensive income in other comprehensive income but
attributable to Closing balance
income tax to minority
tax in the but transferred to profits transferred to retained earnings in the parent expenses interests after tax
current period after tax
and losses in the the current period
current period
I. Other comprehensive
incomes that will not be
-3634014.66 -2105340.95 -2105340.95 -5739355.61
reclassified into profits
or losses
Other comprehensive
income that cannot be
transferred to profits or -3634014.66 -2105340.95 -2105340.95 -5739355.61
losses under equity
method
II. Other
comprehensive incomes
-101457365.85 -13411809.71 -10452161.57 -2959648.14 -111909527.42
to be reclassified into
profits and losses
Including: Other
comprehensive income
that can be transferred to -58949724.34 -3833895.57 -3833895.57 -62783619.91
profits or losses under
equity method
Exchange differences
from translation of
financial statements -42507641.51 -9577914.14 -6618266.00 -2959648.14 -49125907.51
denominated in foreign
currencies
Total other comprehensive
-105091380.51 -15517150.66 -12557502.52 -2959648.14 -117648883.03
income
Other explanations including adjustments to the effective portion of the cash flow hedge profits or losses transferred to the amount initially recognized for the hedged item: None.
44. Surplus Reserves
Unit: RMB
Item Opening balance Increase in the current period Decrease in the current period Closing balance
Statutory surplus
2530458968.58 2530458968.58
reserves
Total 2530458968.58 2530458968.58
Explanations on surplus reserves including changes and reasons thereof for the period: None.
45. Undistributed profit
Unit: RMB
Item Current period Previous period
Undistributed profit at the end of the
18202311462.52 16981339385.76
previous period before adjustment
Undistributed profit at the beginning of the
18202311462.52 16981339385.76
period after adjustment
Plus: Net profits attributable to equity
3701170618.67 5153486838.91
owners of the parent in the current period
Ordinary share dividends payable 2824487685.67 3932514762.15
Undistributed profit at the end of the
19078994395.52 18202311462.52
period
Details on adjustment of undistributed profits at the beginning of the period:
1) Due to retrospective adjustments in accordance with Accounting Standards for Business Enterprises and relevant new provisions the undistributed profits at the beginning of the period
were affected by RMB 0.00.
2) Due to changes in accounting policies the undistributed profits at the beginning of the period were affected by RMB 0.00.
3) Due to correction of material accounting errors the undistributed profits at the beginning of the period were affected by RMB 0.00.
4) Due to changes in the consolidation scope under common control the undistributed profits at the beginning of the period were affected by RMB 0.00.
5) Due to other adjustments the undistributed profits at the beginning of the period were affected by RMB 0.00.
Details of losses offset by capital surplus: None.
46. Operating revenue and operating cost
Unit: RMB
Amount for the current period Amount for the previous period
Item
Revenue Cost Revenue Cost
Principal businesses 21848039404.82 15290593430.87 21235801094.89 14684081632.34
Other businesses 36036566.33 15321260.29 21301801.13 13786436.95
Total 21884075971.15 15305914691.16 21257102896.02 14697868069.29
Breakdown information of operating revenue and operating cost:
Unit: RMB
Drug sales Health and daily chemical TCM resources Pharmaceutical distribution Others Total
Type of
contract Operating Operating Operating Operating Operating Operating Operating
Operating cost Operating cost Operating cost Operating cost Operating cost
revenue revenue revenue revenue revenue cost revenue
Business
4529889186.43 1306277004.03 3468925584.70 1016630693.83 1253836525.94 1122164609.15 11971038200.56 11279042283.11 660386473.52 581800101.04 21884075971.15 15305914691.16
type
Including:
Industry
sales 4529889186.43 1306277004.03 3468925584.70 1016630693.83 753796878.59 667903267.63 19463794.54 6614091.53 8772075444.26 2997425057.02
income
Commercial
sales 500038177.35 454195057.06 11971038200.56 11279042283.11 593202001.00 552911127.08 13064278378.91 12286148467.25
income
Technical
4095884.66 949622.30 4095884.66 949622.30
services
Hotel 7588226.99 6003999.84 7588226.99 6003999.84
catering
industry
Planting
sales 1470.00 66284.46 1470.00 66284.46
income
Others 36036566.33 15321260.29 36036566.33 15321260.29
By
operating 4529889186.43 1306277004.03 3468925584.70 1016630693.84 1253836525.94 1122164609.15 11971038200.56 11279042283.11 660386473.52 581800101.03 21884075971.15 15305914691.16
areas
Including:
In Yunnan
433234311.74 118024830.07 24071020.73 6881410.79 381704090.81 272289690.68 11958661255.91 11259288616.52 81176264.54 54466918.43 12878846943.73 11710951466.49
province
Outside
Yunnan
province 4101613530.01 1189836705.26 3443979871.09 1009234746.04 808160708.41 787889283.67 12376944.65 19753666.59 577841305.32 525997697.21 8943972359.48 3532712098.77
(excluding
overseas)
Overseas -4958655.32 -1584531.30 874692.88 514537.01 63971726.72 61985634.80 - - 1368903.66 1335485.39 61256667.94 62251125.90
Information on performance obligations: The Company and its subsidiaries are mainly engaged in sale of drugs medicinal
materials health and daily chemical products etc. and recognize the realization of revenue upon delivery of products to
customers and confirmation by customers that they have obtained control over the products. No contracts are for the purpose
of significant financing. But some contracts may include some discount and concession clauses. Usually no contracts contain
expected refunds to customers or other similar obligations assumed by the Company.Other explanations: None.Information on the transaction price allocated to remaining performance obligations: None.As of the end of this reporting period the income corresponding to the performance obligations that have been contracted but
not yet fulfilled or completed is RMB 0.00.Information on variable consideration in the contract: None.Significant contract changes or significant adjustments to the transaction price: None.Other explanations: None.
47. Taxes and surcharges
Unit: RMB
Item Amount for the current period Amount for the previous period
Consumption tax 6179.97 90599.59
Urban maintenance and construction 56935716.08 56335793.96
tax
Education surcharge 24834564.95 23824953.63
Property tax 15855096.83 12418205.22
Land use tax 5652683.44 5379563.73
Vehicle and vessel use tax 80039.35 68236.50
Stamp duty 11066568.47 10413199.41
Local education surcharge 16556320.31 17085636.36
Others 49890.01 157464.75
Total 131037059.41 125773653.15
Other explanations: None.
48. Administrative expenses
Unit: RMB
Item Amount for the current period Amount for the previous period
Employee compensation 190952507.81 220150105.14
Depreciation and amortization 45757079.66 42231339.89
Technical service fee 12418785.40 12247751.22
Office expenses 12123845.02 13222610.61
Agency service fee 11642436.35 15634005.27
Travel expenses 7646030.57 8830501.17
Utilities and property management fee 5871631.59 4143847.39
Security and cleaning fee 4072380.78 4932048.51
Business entertainment fee 3090822.94 4533911.81
Afforestation and pollution discharge
1918874.86 1537568.00
fee
Lease cost 1585099.82 1249073.17
Maintenance fee 649094.24 578273.51
Others 29849444.25 34188007.76
Total 327578033.29 363479043.45
Other explanations: None.
49. Selling expenses
Unit: RMB
Item Amount for the current period Amount for the previous period
Employee compensation 710001318.72 678291868.07
Display expenses 459124707.55 535889331.94
Business promotion expenses 426268136.76 451443263.66
Advertising expenses 227594159.72 283935986.74
Marketing service fees 103327960.39 84210520.18
Promotional staff expenses 103583612.33 92216999.74
Travel expenses 64955920.32 63980897.09
Conference service fees 129301795.39 41064583.09
Depreciation and amortization 43151430.29 41044875.76
Others 183119659.47 244293530.77
Total 2450428700.94 2516371857.04
Other explanations: None.
50. R&D expenses
Unit: RMB
Item Amount for the current period Amount for the previous period
Employee compensation 77979832.34 74108094.35
Materials consumption and
25842360.72 26337827.78
inspection fee
Commissioned R&D cost 25568700.75 23531702.05
New product design fee 3716778.50 126423.35
Experimental expenses 20911270.83 6045969.30
Depreciation and amortization 17439183.74 13240528.82
Others 18116988.37 12509593.92
Total 189575115.25 155900139.57
Other explanations: None.
51. Financial expenses
Unit: RMB
Item Amount for the current period Amount for the previous period
Interest expenses 10236543.28 10821177.16
Less: interest income 19118451.87 49581264.78
Net loss on foreign exchange 23435146.50 13055426.98
Bank charges 3621765.15 2598053.21
Total 18175003.06 -23106607.43
Other explanations: None.
52. Other income
Unit: RMB
Other sources of income Amount for the current period Amount for the previous period
Government subsidies directly included
in current profit and loss during the 14381092.88 12325615.11
period
Amortization of government subsidies
7007893.27 6088809.60
related to assets
Amortization of government subsidies
34249581.41 1767257.96
related to income
Return of individual income tax
7043990.74 3802493.92
service charge
Others 784981.63 3422221.90
Total 63467539.93 27406398.49
53. Gains on changes in fair value
Unit: RMB
Sources of gains on changes in fair value Amount for the current period Amount for the previous period
Financial assets held for trading 27745164.02 33268150.43
Other non-current financial assets 101580232.87 36769346.33
Total 129325396.89 70037496.76
Other explanations: None.
54. Investment income
Unit: RMB
Item Amount for the current period Amount for the previous period
Gain on long-term equity investments under the equity
615750695.41 783530345.39
method
Investment income from disposal of long-term equity
2138533.71
investment
Investment income from disposal of financial assets
17162500.72 62659897.96
held for trading
Investment income from disposal of other non-current
15898940.95
financial assets
Others -33121243.84 -22460467.65
Total 601930486.00 839628716.65
Other explanations: None.
55. Credit impairment losses
Unit: RMB
Item Amount for the current period Amount for the previous period
Bad debt losses on accounts receivable 16897402.35 -133537271.89
Bad debt losses on other receivables 24052668.06 35154629.28
Total 40950070.41 -98382642.61
Other explanations: None.
56. Asset impairment losses
Unit: RMB
Item Amount for the current period Amount for the previous period
I. Inventory impairment losses and
contract performance cost impairment -24068120.33 -41743184.35
losses
Total -24068120.33 -41743184.35
Other explanations: None.
57. Gains on disposal of assets
Unit: RMB
Source of gains on disposal of assets Amount for the current period Amount for the previous period
Profit from disposal of non-current
3051.83 2262598.53
assets
Profit from disposal of right-of-use
1108296.93 290131.30
assets
Total 1111348.76 2552729.83
58. Non-operating revenue
Unit: RMB
Amount for the previous Amount of non-recurring
Item Amount for the current period
period profits or losses included
in the current period
Profits from destruction
and scrapping of non- 367533.29 460.18 367533.29
current assets
Others 12781143.68 17524980.81 12781143.68
Total 13148676.97 17525440.99 13148676.97
Other explanations: None.
59. Non-operating expenses
Unit: RMB
Amount for the previous period Amount of non-recurring profits or Item Amount for the current period
losses included in the current period
Losses from destruction
and scrapping of non- 259110.10 147310.51 259110.10
current assets
External donations 150000.00 3042269.30 150000.00
Others 4266591.75 2780275.11 4266591.75
Total 4675701.85 5969854.92 4675701.85
Other explanations: None.
60. Income tax expense
(1) Table of income tax expenses
Unit: RMB
Item Amount for the current period Amount for the previous period
Current income tax expenses 617263528.73 757017264.51
Deferred income tax expenses -31954448.08 -169745390.66
Total 585309080.65 587271873.85
(2) Adjustment process of accounting profit and income tax expense
Unit: RMB
Item Amount for the current period
Total profit 4282557064.82
Income tax expense calculated at statutory/applicable tax 642383559.72
rate
Effect of different tax rates applied to subsidiaries 75836436.22
Effect of adjusting income tax for prior periods -1440763.61
Effect of non-taxable income -143868175.83
Effect of non-deductible costs expenses and losses 16975526.70
Effect of the use of the deductible losses of the deferred tax
346596.34
assets not recognized in prior periods
Effect of deductible temporary differences or deductible
losses of the deferred income tax assets not recognized in 12913222.03
the current period
Change in the balance of deferred income tax
assets/liabilities at the beginning of the year due to tax rate -64389.01
adjustments
Extra deductions for R&D costs -22027521.92
Others 4254590.01
Income tax expenses 585309080.65
Other explanations: None.
61. Other comprehensive income
For details please refer to Note 43 “Other comprehensive income.”
62. Cash flow statement
(1) Cash relating to operating activities
Other cash received relating to operating activities
Unit: RMB
Item Amount for the current period Amount for the previous period
Interest income 19118451.87 49581264.78
Deposits and guarantees 107826547.89 79075011.67
Government subsidy 31306051.61 35902118.61
Current account and petty cash 93034832.20 118959071.16
Others 6236982.48 97074597.57
Total 257522866.05 380592063.79
Explanations on other cash received relating to operating activities: None.Other cash payments relating to operating activities
Unit: RMB
Item Amount for the current period Amount for the previous period
Expenses of cost nature 1763015913.46 1628887047.85
Deposits and guarantees 193077884.45 80757823.69
Current account and petty cash 32934883.93 96355202.04
Others 4903322.58 36580390.86
Total 1993932004.42 1842580464.44
Explanations on other cash payments relating to operating activities: None.
(2) Cash relating to investment activities
Other cash received relating to investment activities
Unit: RMB
Item Amount for the current period Amount for the previous period
Principal and interest of time deposits
665731155.60 145116700.00
and other financial products redeemed
Total 665731155.60 145116700.00
Important cash received relating to investment activities
Unit: RMB
Item Amount for the current period Amount for the previous period
Redeeming the principal of financial products
3850000000.00 2345628996.48
and more
Principal and interest of time deposits and other
665731155.60 145116700.00
financial products redeemed
Collecting financial management income and
119011633.21 38011539.40
dividends
Total 4634742788.81 2528757235.88
Explanations on other cash received relating to investment activities: None.Other cash payments relating to investment activities
Unit: RMB
Item Amount for the current period Amount for the previous period
Time deposits and other bank deposits 603960400.00 482620900.00
Total 603960400.00 482620900.00
Important cash payments relating to investment activities
Unit: RMB
Item Amount for the current period Amount for the previous period
Time deposits and other bank deposits 603960400.00 482620900.00
Cash paid to acquire fixed assets intangible assets and
222045750.52 204046627.53
other long-term assets
Purchasing banking products and other wealth
4400000000.00 2800000000.00
management products
Total 5226006150.52 3486667527.53
Explanations on other cash payments relating to investment activities: None.
(3) Cash relating to financing activities
Other cash received relating to financing activities
Unit: RMB
Item Amount for the current period Amount for the previous period
Withholding and remittance of individual income tax
22980906.32 39062080.04
on dividend distribution
Refund of dividend distribution guarantee deposit 1004610.63 0.00
Total 23985516.95 39062080.04
Explanations on other cash received relating to financing activities: None.Other cash payments relating to financing activities
Unit: RMB
Item Amount for the current period Amount for the previous period
Payment of lease costs 39313059.28 45446663.39
Handling fee for dividend distribution 611486.67 421750.46
Withholding and remittance of
individual income tax on dividend 17566695.38 46623989.32
distribution
Dividend distribution guarantee
1004610.63 0.00
deposit
Share repurchase of YNBY
6007761.69
International
Total 64503613.65 92492403.17
Explanations on other cash payments relating to financing activities: None.Change of liabilities resulting from financing activities
□Applicable □Not applicable
Unit: RMB
Increase in the current period Decrease in the current period
Item Opening balance Non-cash Closing balance
Cash change Non-cash change Cash change
change
Short-term
182775753.21 19119197.10 170280516.74 6500829.47 25113604.10
borrowings
Long-term
borrowings 86969730.83 384194.16 591649.99 86762275.00
(including long-
term borrowings
due within one
year)
Lease liabilities
(Lease liabilities
217873760.71 49866384.45 43866327.63 10587535.81 213286281.72
due within one
year inclusive)
Dividend payable 1317388.73 2824487685.67 2824487685.67 1317388.73
Total 488936633.48 2893857461.38 3039226180.03 17088365.28 326479549.55
(4) Explanation on presentation of cash flow in net amount: None.
(5) Significant activities and financial effects that do not involve current cash receipts and
disbursements but affect the enterprise’s financial position or may affect the enterprise’s cash flows in
the future: None.
63. Supplementary information of cash flow statement
(1) Supplementary information of cash flow statement
Unit: RMB
Supplementary information Amount for the current period Amount for the previous period
1. Reconciliation of net profit to cash flows from
operating activities:
Net profit 3697247984.17 3644599967.94
Plus: Impairment provision for assets -16881950.08 140125826.96
Depreciation of fixed assets depreciation of oil
and gas assets depreciation of productive 117936441.83 101222940.05
biological assets
Depreciation of right-of-use assets 53975842.95 56286759.64
Amortization of intangible assets 21163222.72 13534265.25
Amortization of long-term deferred expenses 20000133.54 27032910.50
Losses on disposal of fixed assets intangible
assets and other long-term assets (gain is indicated -3051.83 -2262598.53
with “-”)
Losses on scrapping of fixed assets
-108423.19 146850.33
(gain is indicated with “-”)
Losses on changes in fair value (gain is
-129325396.89 -70037496.76
indicated with “-”)
Financial expenses (income is indicated with “-”) 10236543.28 10821177.16
Investment losses (gain is indicated with “-”) -636982682.99 -873839341.77
Decrease of deferred income tax assets
-47647947.47 -204069581.29
(increase is indicated with “-”)
Increase of deferred income tax
15712766.99 34342180.17
liabilities (decrease is indicated with “-”)
Decrease in inventories (increase is indicated
with 59459218.25 417205595.88
“-”)
Decrease in operating receivable items
913107195.15 -148312791.38
(increase is indicated with “-”)
Increase in operating payable items (decrease
28149471.90 804585525.61
is indicated with “-”)
Others 9805013.01
Net cash flows from operating activities 4106039368.33 3961187202.77
2. Major investment and financing activities
irrelevant to cash income and expense:
Conversion of debts into capital
Convertible corporate bonds due within one year
Fixed assets acquired under finance leases
3. Net changes in cash and cash equivalents:
Closing balance of cash 9001049069.19 10692498963.32
Less: Opening balance of cash 8532232687.39 10275529575.34
Plus: Closing balance of cash equivalents
Less: Opening balance of cash equivalents
Net increase in cash and cash equivalents 468816381.80 416969387.98
(2) Net cash paid for acquisitions of subsidiaries for the period: None.
(3) Net cash received from disposal of subsidiaries for the period
Unit: RMB
Amount
Cash or cash equivalents received from disposal of subsidiaries during the period 6111111.00
Including:
Shanghai Hanshi Health Consulting Co. Ltd. 6111111.00
Shanghai Yunzhenni Medical Aesthetic Outpatient Department Co. Ltd. 0.00
Less: Cash and cash equivalents held by the subsidiary at the date of loss of
12948.33
control
Including:
Shanghai Hanshi Health Consulting Co. Ltd. 3.00
Shanghai Yunzhenni Medical Aesthetic Outpatient Department Co. Ltd. 12945.33
Including:
Net cash received from disposal of subsidiaries 6098162.67
Other explanations: None.
(4) Composition of cash and cash equivalents
Unit: RMB
Item Closing balance Opening balance
I. Cash 9001049069.19 8532232687.39
Including: Cash on hand 172822.40 125243.29
Bank deposit available
8912122326.67 8482597792.16
for payment at any time
Other cash and bank
balance available for payment at 88753920.12 49509651.94
any time
III. Closing balance of cash and cash
equivalents at the end of the reporting 9001049069.19 8532232687.39
period
(5) Presentation of items with restricted use but still belonging to cash and cash equivalents: None.
(6) Cash and bank balance which are not cash and cash equivalents
Unit: RMB
Amount in the Amount in the Reasons for not belonging to cash and cash
Item
reporting period previous period equivalents
Guarantee deposit
banker’s acceptance
bill deposit 29534231.68 14353427.82 Cannot be withdrawn at any time
performance deposit
etc.Cannot be withdrawn at any time; litigation
preservation: as of the date of issuance of the
Fund for litigation financial statement the plaintiff has withdrawn
1489443.87
preservation the lawsuit and the court has ruled to lift the
litigation preservation which shall be
immediately executed from the date of the ruling.Specially used for
housing reform and 2657295.33 2650040.09 Cannot be withdrawn at any time
maintenance
Specially used for
identity conversion
for employees in 536663457.31 557103568.81 Cannot be withdrawn at any time
state-owned
enterprises
Total 568854984.32 575596480.59
Other explanations: None.
(7) Explanations on other significant activities: None.
64. Notes to statement of changes in owners’ equity
Explanations on item “Others” adjusted in terms of closing balance at the end of the previous year the adjusted amount there of
etc.: None.
65. Monetary items denominated in foreign currencies
(1) Monetary items denominated in foreign currencies
Unit: RMB
Closing balance of foreign Closing balance converted
Item Exchange rate
currency into RMB
Cash and bank balance
Including: HKD 193587480.53 0.868550 168140386.45
USD 9508917.09 6.810900 64764283.41
Euro 1822216.71 7.767100 14153339.41
Japanese yen 27148.00 0.042045 1141.43
South Korean won 21324422.00 0.004403 93884.62
THB 4369259.56 0.204244 892394.66
CAD 1858.88 4.784700 8894.19
SGD 108129.91 5.260500 568817.48
MYR 119956.90 1.673416 200737.85
Accounts receivable
Including: HKD 238592282.07 0.868550 207229317.44
USD 2104842.45 6.810900 14335871.45
Japanese yen 2484592.00 0.042045 104464.11
Other receivables
Including: HKD 1964289.00 0.868550 1706083.65
THB 20500.00 0.204244 4187.00
Other current assets
Including: HKD 301169448.57 0.868550 261580724.93
USD 10000000.00 6.810900 68109000.00
Accounts payable
Including: HKD 8871939.54 0.868550 7704960.76
Other payables
Including: HKD 8431149.45 0.868550 7322987.28
THB 2785.00 0.204244 568.82
SGD 513.00 5.260500 2698.64
Non-current liabilities due
within one year
Including: HKD 3511242.15 0.868550 3049689.09
Other explanations: None.
(2) The nature of the currency’s lack of convertibility and its financial impacts the spot exchange rates
adopted together with their estimation process and the risks to which the entity is exposed as a result
of the currency?inconvertibility
□ Applicable □Not applicable
(3) Description of overseas business entities; for material overseas business entities disclose their major
business places overseas functional currency and the selection criterion thereof; should there be any
change in the functional currency disclose the reason for such change.□ Applicable □Not applicable
The subsidiary YNBY International Limited operates in Hong?Kong. Since Hong?Kong Dollar is the
currency of the primary economic environment in this region Hong?Kong Dollar has been adopted as its
functional currency with no change occurring since it was brought into the consolidation scope. Its
subsidiaries determine their respective functional currencies based on the economic environments of their
places of operation. In preparing the consolidated financial statements of YNBY International all amounts are
translated into Hong?Kong Dollar for presentation.
(4) Lack?of?convertibility between functional currency of foreign operations and the entity’s
presentation currency
□ Applicable □Not applicable
66. Lease
(1) The Company as the lessee
□ Applicable □ Not applicable
Variable lease payments not included in the measurement of lease liabilities
□ Applicable □ Not applicable
Item Current period Same period last year
Variable lease payments included in current profit and loss but
3315146.94 1971216.70
not included in the measurement of lease liabilities
Simplified handling of payments of short-term leasing or leasing of low value assets
□ Applicable □ Not applicable
Item Current period Same period last year
Short-term leasing fee 8051070.57 7203084.89
Total 8051070.57 7203084.89
After-sales leaseback transactions: None.
(2) The Company as the lessor
Operating lease where the Company is the lessor
□ Applicable □ Not applicable
Including: Receipts related to variable lease payments not
Item Receipts from lease
included in lease receipts
Houses and buildings 9746054.17
Total 9746054.17
Finance lease where the Company is the lessor
□ Applicable ? Not applicable
Undiscounted lease receipts for each of the next five years
□ Applicable ? Not applicable
Reconciliation of undiscounted lease receipts to net investment in leases: None.
(3) Recognition of profits and losses on sales under finance leases as a manufacturer or distributor
□ Applicable ? Not applicable
67. Data Resources
For details see Note 18 - Intangible Assets.
68. Others: None.
VIII. R&D Expenditure
Unit: RMB
Item Amount for the current period Amount for the previous period
Employee compensation 85578009.89 74262697.80
New product design fee 5400059.13 126423.35
Commissioned R&D cost 31902397.26 37644068.94
Experimental expenses 27927316.07 6045969.30
Materials consumption and inspection
24840846.08 26341779.99
fees
Depreciation and amortization 18912077.13 13328808.65
Others 21966676.22 12571159.14
Total 216527381.78 170320907.17
Including: Expensed R&D expenditure 189575115.25 155900139.57
Capitalized R&D expenditure 26952266.53 14420767.60
1. R&D projects meeting capitalization conditions
Unit: RMB
Increase in the current
Decrease in the current period
period
Opening Closing
Item
balance Internal Transfer to Recognized as balance
development Others current profits
intangible assets
costs or losses
INR101 Injection New Drug
56564450.04 24174664.93 80739114.97
Application (NDA) research project
Phase III clinical trial of Fuji
15711255.23 1767073.81 17478329.04
Guben Ointment
P137 Project R&D (IND) 25935514.29 17745.78 25953260.07
Yunnan Baiyao Plaster Project ?
0.00 992782.01 992782.01
Flurbiprofen
Total 98211219.56 26952266.53 125163486.09
Important capitalized R&D projects: None.Impairment provision for R&D expenditure: None.
2. Important outsourced project under study: None.
IX. Changes in the Consolidation Scope
1. Business combination not under common control
(1) Business combination not under common control during this reporting period: None .
(2) Cost of business combination and goodwill: None
(3) Identifiable assets and liabilities of the acquiree on the acquisition date: None.
(4) Proceeds or losses caused by remeasurement of the equity held before the acquisition date at the fair value
Whether there was any trading that contributed to a progressive realization of business combination by multiple transactions and
during this reporting period through this business combination control was acquired.□Yes □No
(5) Explanations on no reasonable recognition of the business combination consideration or the acquiree’s identifiable
assets and liabilities on the acquisition date or at the end of the period of the business combination: None.
(6) Other explanations: None.
2. Business combination under common control
(1) Business combination under common control during this reporting period: None .
(2) Cost of business combination: None.
(3) The book value of the merged party’s assets and liabilities on the merger date: None .
3. Reverse acquisition: None.
4. Disposal of subsidiaries
Whether there were any transactions or events during the period in which control of subsidiaries was lost
□Yes □No
Unit: RMB
Difference Method and
between the main
disposal price assumptions
Amount of other
and the share Fair value of for
Book value of comprehensive
of the Proportion the remaining determining
Basis for the remaining Gains or losses income related to
Disposal Disposal Disposal Time subsidiary’s of equity at the the fair value
determin equity on the arising from the equity
price at proportion method at point net assets remaining consolidated of the
Name of ing the consolidated remeasurement investments in
the time at the time the time of when corresponding equity on financial remaining
subsidiary point of financial of the remaining subsidiaries
of losing of losing losing control is to the disposal the date of statement equity at the
losing statements at equity at fair transferred to
control control control lost investment as losing level on the consolidated
control the date of value investment profit
presented on control date of losing financial
losing control and loss or
the control statement
retained earnings
consolidated level on the
financial date of losing
statements control
Shanghai
Hanshi
6111111. Transfer by February?
Health 100.00% agreement 2138533.71
00 28?2026
Consulting
Co. Ltd.Other explanations: Shanghai Yunzhenni Medical Aesthetic Outpatient Department Co. Ltd was a wholly?owned subsidiary of
Shanghai Hanshi Health Consulting Co. Ltd. As control over this entity was lost concurrently it is no longer included in th e
consolidation scope.
Whether there was a loss of control in the current period under a progressive disposal of investments in subsidiaries through
multiple transactions
□Yes □No
5. Changes in the consolidation scope for other reasons
Describe the change in scope of consolidation for other reasons (e.g. Establishing new subsidiaries liquidating subsidiaries
etc.) and its details:
Newly?established subsidiary: Yunnan Baiyao Group Health Products Co. Ltd invested in and
incorporated Yunnan Baiyao (Ziyang) Technology Co. Ltd with a registered capital of RMB?1000000 and
an equity holding of 100%. Yunnan Baiyao brought Yunnan Baiyao (Ziyang) Technology Co. Ltd into the
consolidation scope effective March?2026.Deregistration: Time Travel (Guangzhou) Intelligent Technology Co. Ltd was deregistered in June?2026.
6. Others: None.
X. Interest in Other Entities
1. Interest in subsidiaries
(1) Composition of the Group
Unit: RMB
Main Shareholding proportion
Name of Registered Place of Acquisition
business Business nature
subsidiary capital registration
location Direct Indirect
method
Yunnan Baiyao
Group TCM Set-up or
16400000.00 Kunming Kunming Pharmaceutical 100.00% 0.00%
Resources Co. investment
Ltd.Yunnan Digital
and Intelligent Wholesale and
Set-up or
TCM Material 30000000.00 Kunming Kunming retail of daily 100.00% 0.00%
Development investment necessities
Co. Ltd.Yunnan Baiyao
Group Wuxi Set-up or
25000000.00 Wuxi Wuxi Pharmaceutical 100.00% 0.00%
Pharmaceutical investment
Co. Ltd.Yunnan Baiyao
Group Dali Set-up or
15515000.00 Dali Dali Pharmaceutical 100.00% 0.00%
Pharmaceutical investment
Co. Ltd.Yunnan Baiyao Production and
Group Health sales of health Set-up or
84500000.00 Kunming Kunming 100.00% 0.00%
Products Co. and daily investment
Ltd. chemicals
Yunnan Pharmaceutical Allotment of
1000000000.00 Kunming Kunming 100.00% 0.00%
Pharmaceutical wholesale and shares
Co. Ltd. retail
Business
Yunnan combination
Institute of 54080000.00 Kunming Kunming New Drug R&D 100.00% 0.00% under
Materia Medica common
control
Business
Yunnan Baiyao
combination
Holding
100000000.00 Kunming Kunming Investment 100.00% 0.00% under
Investment Co.common
Ltd.control
Business
Yunnan Baiyao combination
Teayield Co. 20000000.00 Kunming Kunming Tea 100.00% 0.00% under
Ltd. common
control
Import and
Yunnan Baiyao
export agency Set-up or
Group (Hainan) 15000000.00 Hainan Danya 100.00% 0.00%
technical investment
Co. Ltd.services etc.Yunnan Baiyao
Technical Set-up or
Group Shanghai 15000000.00 Shanghai Shanghai 100.00% 0.00%
services investment
Co. Ltd.Yunnan Baiyao Business
Medical Device
Group Medical combination
25970800.00 Hefei Hefei Production and 100% 0.00%
Technology not under the
Sales
Hefei Co. Ltd. same control
Shanghai
Yunzhen Technical
Set-up or
Medical 900000.00 Shanghai Shanghai development 100.00% 0.00%
investment
Technology and service
Co. Ltd.Business
YNBY
Hong combination
International Hong Kong Trade 25.11% 40.82%
Kong not under the
Limited
same control
Yunnan Baiyao
Tiancui
Set-up or
Business 3000000.00 Kunming Kunming Catering 100.00% 0.00%
investment
Management
Co. Ltd.Yunnan Baiyao Technology
Set-up or
Group Beijing 50000000.00 Beijing Beijing promotion 100.00% 0.00%
investment
Co. Ltd. service
Yunhe
Research and
Pharmaceutical Tianjin Tianjin Set-up or
20000000.00 experimental 100.00% 0.00%
(Tianjin) Co. City City investment
development
Ltd.Business
Yunnan Baiyao
combination
Group Health
5000000.00 Kunming Kunming Hygiene 100.00% 0.00% under
Pharmacy Co.common
Ltd.control
Yunnan Baiyao Software and
Group Digital information Set-up or
11152470.00 Kunming Kunming 100.00% 0.00%
Intelligence technology investment
Technology service industry
Co. Ltd.Explanations on the inconsistency of the ratio of shareholding in subsidiaries with the proportion of voting rights: None.Basis for holding half or less of the voting rights but still controlling investees and holding more than half of the voting
rights but not controlling investees: None.Basis for controlling major structured entities consolidated into the financial statements: The structured entities included
in the scope of consolidation of the Group include Shanghai Trust Platinum Series Hong Kong Market Investment Single Fund
Trust. Because the Group has power over such structured entities enjoys variable returns by participating in related activities
and has the ability to use its power over the investee to influence its variable returns the Group has control over such structured
entities.Basis for determining whether the Company is an agent or an entrustor: None.Other explanations: None.
(2) Key non-wholly owned subsidiaries
Unit: RMB
Profit and loss Balance of minority
Percentage of shares Dividends declared to
attributable to shareholders’ equity
Name of subsidiary held by minority minority shareholders
minority shareholders at the end of the
shareholders in the current period
in the current period period
YNBY International
26.94% 310526.73 -33270088.12
Limited
Explanation on the inconsistency of the ratio of shareholding held by minority shareholders in subsidiaries with the
proportion of voting rights: None.Other explanations: None.
(3) Main financial information of key non-wholly owned subsidiaries
Unit: RMB
Closing balance Opening balance
Name of
subsidiary Non-current Current Non-current Non-current Current Non-current Current assets Total assets Total liabilities Current assets Total assets Total liabilities
assets liabilities liabilities assets liabilities liabilities
YNBY
International 407359326.02 7918823.97 415278149.99 103512949.99 1529381.06 105042331.05 523888159.10 10489436.18 534377595.28 207416955.49 3628959.12 211045914.61
Limited
Unit: RMB
Amount for the current period Amount for the previous period
Name of subsidiary Operating Total comprehensive Cash flows from Total comprehensive Cash flows from
Net Profit Operating revenue Net Profit
revenue income operating activities income operating activities
YNBY
International 671370535.93 2286416.50 -9374516.54 -21380118.65 365374936.94 2133674.99 -1089543.60 -3655973.04
Limited
Other explanations: None.
(4) Major restrictions on the use of assets of the corporate group and settlement of its debts: None.
(5) Financial support or other support provided for structured entities included in the scope of consolidation for the
consolidated financial statements: None.
2. Transaction in which the share of owners’ equity in the subsidiary changes while control over the
subsidiary remains unchanged
(1) Explanations on changes in the share of owners’ equity in the subsidiary: None.
(2) Impact of the transaction on the minority shareholders’ equity and the owners’ equity attributable to the parent company
Unit: RMB
Acquisition cost/disposal consideration
--Cash 6007761.69
--Fair value of the non-cash assets
Total acquisition cost/disposal consideration 6007761.69
Less: the subsidiary’s net asset shares calculated in proportion to the
20144411.13
acquired /disposed equity ratio
Amount difference -14136649.44
Including: Adjustment of capital reserves -14136649.44
Adjustment of surplus reserve
Adjustment of undistributed profits
Other explanations: None.
3. Interest in joint ventures or associates
(1) Important joint ventures or associates
Shareholding proportion The accounting
Name of joint Main method for
venture or business Place of registration Business nature investments in
associate location Direct Indirect joint ventures
or associates
Equity
No. 92
Shanghai method for
Zhangjiang Road China
Pharmaceuticals long-term
Shanghai (Shanghai) Pilot Free Pharmaceuticals 17.95%
Holding Co. Ltd. equity
Trade Zone
investments
Explanations on the inconsistency of the ratio of shareholding in joint ventures or associates with the proportion of voting rights:
None.Basis for holding 20% or less voting rights but having important influence or holding 20% or more voting rights but not having
important influence: None.
(2) Main financial information of important joint ventures: None.
(3) Main financial information of important associates
Unit: RMB
Closing balance/Amount for the current Opening balance/Amount for the previous
period period
Current assets 188381450861.08 180463695237.78
Non-current assets 52387967588.15 52685071529.43
Total assets 240769418449.23 233148766767.21
Current liabilities 140421743446.62 135198106270.50
Non-current liabilities 7561895183.85 8163366773.11
Total liabilities 147983638630.47 143361473043.61
Minority interests 14437823921.39 13895965899.43
Equity attributable to shareholders of the
78347955897.37 75891327824.17
parent company
Share of net assets based on percentage
14062948821.85 13622000050.81
of shareholding
Adjustment
- Goodwill 934312752.73 934312752.73
- Unrealized profit from internal
-7078928.16 -7314646.14
transactions
- Others -1842477745.54 -1821243614.53
Book value of equity investment in
13147704900.88 12727754542.87
associates
Fair value of equity investments in
associates for which publicly quoted 10250652658.40 11888094576.56
prices exist
Operating revenue 147469729395.20 141592782502.79
Net profits 4341656313.04 4994784030.29
Net profits from discontinued operations
Other comprehensive income -33890811.10 19680758.31
Total comprehensive income 4307765501.94 5014464788.60
Dividends received from associates
79875215.52
during the year
Other explanations: None.
(4) Combined financial information of insignificant joint ventures and associates
Closing balance/Amount for the current Opening balance/Amount for the previous
period period
Associates:
Total book value of investments 500532790.18 499823509.04
Total of the followings based on the
percentage of shareholdings
- Net profit 709281.14 -565965.37
- Other comprehensive income
- Total comprehensive income
(5) Explanation on significant restrictions on the ability of joint ventures or associates to transfer funds to
the Company: None.
(6) Excess loss generated from joint ventures or associates
Unrecognized losses in the Cumulative unrecognized
Name of joint venture or Cumulative unrecognized
current period (or net profit losses at the end of the current
associate losses in the previous periods
shared in the current period) period
Lijiang Changgengming
-473812.41 -83.06 -473895.47
Trading Co. Ltd.
(7) Unrecognized commitment related to investments in joint ventures: None.
(8) Contingent liabilities related to investments in joint ventures or associates: None.
4. Significant joint operation: None.
5. Interest in structured entities not included in the scope of consolidated financial statements
Relevant explanation on structured entities not included in the consolidated financial statements: None.
6. Others: None.
XI. Government Grants
1. Government grants recognized at the end of the reporting period based on amounts receivable
□Applicable □Not applicable
Reasons for not receiving the estimated amount of government grants at the expected time point
□Applicable □Not applicable
2. Liabilities involving government grants
?Applicable □Not applicable
Unit: RMB
Amount
included in Amount
Other
Amount of new non- transferred to
Accounting Opening changes in Closing Related to
subsidies in the operating other income
item balance the current balance assets/income
current period revenue in the current
period
during the period
period
Deferred Related to
119513816.80 1789948.03 34249581.41 185646.00 86868537.42
income income
Deferred Related to
152255995.79 8597551.97 7007893.27 153845654.49
income assets
3. Government grants included in profit or loss of the current period
?Applicable □Not applicable
Unit: RMB
Accounting item Amount for the current period Amount for the previous period
Other income 55638567.56 20181682.67
Other explanations: None.XII. Risks Associated with Financial Instruments
(I) Risks incurred by financial instruments
The risk management objective of the Company is to get a balance between risk and return minimize the
negative impact of risk on business results of the Company and maximize the interest of shareholders and other
equity investors. Based on this risk management objective the basic risk management strategy of the Company is
to identify and analyze various risks faced by the Company establish an appropriate risk tolerance bottom line and
conduct risk management and supervise various risks in a timely and reliable manner to control risks within a
limited range.The Company faces various risks related to financial instruments in its daily activities primarily including
credit risk liquidity risk and market risk. The management has reviewed and approved policies for managing these
risks which are summarized as follows.(i) Credit risk
Credit risk refers to the risk that one party to a financial instrument fails to fulfill its obligations resulting in
financial losses to the other party.
1. Credit risk management practices
(1) Evaluation of credit risk
The Company assesses whether the credit risk of relevant financial instruments has significantly increased
since initial recognition on each balance sheet date. In whether the credit risk has significantly increased since initial
recognition the Company considers obtaining reasonable and well-founded information without incurring
unnecessary additional costs or efforts including qualitative and quantitative analysis based on historical data
external credit risk ratings and forward-looking information. The Company compares the risk of default on financial
instruments on the balance sheet date with the risk of default on the initial recognition date based on individual
financial instruments or portfolios of financial instruments with similar credit risk characteristics to determine the
changes in default risk over the expected life of the financial instruments.When one or more of the following quantitative and qualitative criteria are triggered the Company deems that
the credit risk of financial instruments has significantly increased:
1) The primary quantitative criterion is that the probability of default during the remaining duration as of the
balance sheet date has increased by more than a certain percentage compared to the initial recognition;
2) The qualitative criteria primarily include significant adverse changes in the debtor’s operational or financial
status as well as existing or anticipated shifts in the technological market economic or legal environment that are
expected to have a material adverse impact on the debtor’s repayment capacity to the Company.
(2) Definition of default and credit impaired assets
When a financial instrument meets one or more of the following conditions the Company defines the financial
asset as having defaulted and its criteria are consistent with the definition of credit impairment:
1) The debtor encounters significant financial difficulties;
2) The debtor violates the restrictive clauses imposed on the debtor in the contract;
3) The debtor is likely to go bankrupt or undergo other financial restructuring; and
4) The creditor due to economic or contractual considerations related to the debtor’s financial difficulties
grants concessions that the debtor would not otherwise make.
2. Measurement of expected credit losses
The key parameters for measuring expected credit losses include probability of default loss given default and
exposure at default. The Company takes into account quantitative analysis of historical statistical data (such as
counterparty ratings types of guarantees and collateral repayment methods etc.) and forward-looking information
to establish models for probability of default loss given default and exposure at default.
3. For the detailed reconciliation statement of the beginning and ending balances of provisions for losses onfinancial instruments please refer to “Section VIII Financial Statements VII. Notes to Consolidated FinancialStatement Items 3. Bills Receivable; 4. Accounts Receivable; 5. Receivables Financing; 6. Other Receivables; 9.Non-current Assets Due Within One Year; 10. Other Current Assets; 23. Other Non-current Assets.”
4. Credit risk exposure and credit risk concentration
The credit risk of the Company primarily arises from monetary funds and receivables. To mitigate the
aforementioned risks we have implemented the following measures.
(1) Monetary funds
The Company deposits its bank deposits and other monetary funds with financial institutions of high credit
ratings thus its credit risk is relatively low.
(2) Accounts receivable and contract assets
The Company continuously conducts credit assessments on customers who engage in transactions using credit
methods. Based on the results of these assessments the Company chooses to conduct transactions with approved
customers who have good credit and monitor their accounts receivable balances to make sure that it does not face
significant bad debt risks.Due to the distribution of the Company’s accounts receivable risk points across multiple partners and customers
as of June 30 2026 18.31% (December 31 2025: 16.98%) of its accounts receivable originated from the top five
customers by balance. The Company does not have significant credit concentration risk.The maximum credit risk exposure borne by the Company is the carrying amount of each financial asset in the
balance sheet.(ii) Liquidity risk
Liquidity risk is the risk that the Company will run short of funds to meet its obligations settled by delivering
cash or other financial assets. Liquidity risk may arise from the inability to sell financial assets at fair value as soon
as possible; or from the counterparty’s inability to repay its contractual debts; or from early maturity of debts; or
from the inability to generate expected cash flows.To control this risk the Company comprehensively utilizes various financing methods such as bill settlement
and bank loans and adopts a method of appropriately combining long-term and short-term financing to optimize
the financing structure maintaining a balance between financing continuity and flexibility. The Company has
obtained bank credit lines from multiple commercial banks to meet its working capital needs and capital
expenditures.Financial liabilities classified by their remaining maturity
Closing balance
Item Undiscounted contract More than 3
Book value Within one year 1-3 years
amount years
Short-term borrowings 25113604.10 25207453.18 25207453.18
Notes payable 1668214258.64 1668214258.64 1668214258.64
Accounts payable 5719113254.81 5719113254.81 5719113254.81
Other payables 1378906340.85 1378906340.85 1378906340.85
Lease liabilities
(including those
213286281.72 223030115.41 87280501.94 109038567.56 26711045.91
maturing within one
year)
Long-term borrowings
(including those
86762275.00 88626211.39 86526211.39 0.00 2100000.00
maturing within one
year)
Subtotal 9091396015.12 9103097634.28 8965248020.81 109038567.56 28811045.91
(Continued)
Closing balance of the previous year
Item Undiscounted More than 3
Book value Within one year 1-3 years
contract amount years
Short-term borrowings 182775753.21 186182419.88 186182419.88
Notes payable 1846714475.61 1846714475.61 1846714475.61
Accounts payable 5523021856.86 5523021856.86 5523021856.86
Other payables 1461459334.99 1461459334.99 1461459334.99
Lease liabilities
(including those
217873760.71 217873760.71 76043381.53 103824679.18 38005700.00
maturing within one
year)
Long-term borrowings
(including those
86969730.83 91623211.37 3849534.79 803945.75 86969730.83
maturing within one
year)
Subtotal 9318814912.21 9326875059.42 9097271003.66 104628624.93 124975430.83
(iii) Market risk
Market risk refers to the risk that the fair value of a financial instrument or future cash flows fluctuate due to
changes in market prices. Market risk primarily includes interest rate risk and foreign exchange risk.
1. Interest rate risk
Interest rate risk refers to the risk of fluctuations in the fair value of financial instruments or future cash flows
due to changes in market interest rates. Fixed-rate interest-bearing financial instruments expose the Company to fair
value interest rate risk while floating-rate interest-bearing financial instruments expose the Company to cash flow
interest rate risk. The Company determines the proportion of fixed-rate and floating-rate financial instruments based
on market conditions and maintains an appropriate portfolio of financial instruments through regular review and
monitoring. The cash flow interest rate risk faced by the Company is primarily related to the Company’s bank loans
with floating interest rates.As of June 30 2026 the Company’s bank loans with floating interest rates amounted to RMB 98637472.10
(as of December 31 2025: RMB 234800000.00). Assuming that other variables remain unchanged a 50 basis
point change in interest rates would not have a significant impact on the Company’s total profit and shareholders’
equity.
2. Foreign exchange risk
Foreign exchange risk refers to the risk of fluctuations in the fair value of financial instruments or future cash
flows due to changes in foreign exchange rates. The Company’s exposure to exchange rate fluctuations is primarily
related to its foreign currency monetary assets and liabilities. The Company primarily operates in mainland China
and its main activities are denominated in Renminbi. Therefore the Company’s exposure to market risk from foreign
exchange fluctuations is not significant.For details of the Company’s foreign currency monetary assets and liabilities at the end of the period pleaserefer to “Section VIII Financial Statements VII. Notes to Consolidated Financial Statements 65. Foreign CurrencyMonetary Items.”
2. Hedging
(1) The Company carried out hedging business for risk management
□Applicable □Not applicable
(2) The Company conducted eligible hedging business and applied hedging accounting: None.
(3) The Company carried out hedging business for risk management which is expected to achieve risk
management target but did not apply hedging accounting
□Applicable □Not applicable
3. Financial assets
(1) Classification by type of transfer
□Applicable □Not applicable
(2) Derecognition of financial assets due to transfer
□Applicable □Not applicable
(3) Financial assets involved in continued assets transfer
□Applicable □Not applicable
Other explanations: None.XIII. Disclosure of Fair Value
1. Final fair value of assets and liabilities measured at fair value
Unit: RMB
Closing fair value
Item Level I fair value Level II fair value Level III fair value
Total
measurement measurement measurement
I. Continuous fair
-- -- -- --
value measurement
(I) Financial assets held
4746569278.18 4600000.00 4751169278.18
for trading
1. Financial assets
measured at fair value
4746569278.18 4600000.00 4751169278.18
with changes recognized
in current profit and loss
(1) Others
2. Financial assets
measured at fair value
with changes recognized
in current profit and loss
(1) Investment in debt
instruments
(2) Investment in equity
instruments
(II) Accounts receivable
6937103313.15 6937103313.15
financing
(1) Notes receivable 6937103313.15 6937103313.15
(III) Investment in other
71745000.00 71745000.00
equity instruments
(IV) Other non-current
312435493.34 312435493.34
financial assets
Investment in equity
312435493.34 312435493.34
instruments
Total assets at
continuous fair value 4746569278.18 902162637.36 5648731915.54
measurement
2. Determination basis of the market price of the item measured using level I fair value measurement
continuously and non-continuously
The trading financial assets held by the Company that are measured at fair value at the first level are stocks traded in the active market.The Company determines their fair value based on the closing price of the open market on the balance sheet date.
3. Valuation techniques and qualitative and quantitative information on important parameters adopted for
items subject to level II continuous and noncontinuous fair value measurement
The trading financial assets held by the Company which are measured at fair value at the second level consist of bank and brokerage
financial products. The Company determines their fair value based on the net value of each financial product at the end of the period.Other non?current financial assets represent the Company’s equity investments in unlisted companies whose closing?date fair values
are determined on the basis of the appraised value of such equity interests.
4. Valuation techniques and qualitative and quantitative information on important parameters adopted for
items subject to level III continuous and noncontinuous fair value measurement
The other non-current financial assets held by the Company that are measured at fair value at the third level are equity investments in
unlisted companies. The Company obtains the annual audit reports of the invested enterprises considers their operating environment
operational status and financial condition and determines the fair value at the end of the period based on the Company’s net assets at
the end of the period.
5. The reconciliation information between opening and closing book values and unobservable parameter
sensitivity analysis for the items subject to level III continuous fair value measurement
None.
6. For the items subject to continuous fair value measurement if there is a conversion between all levels in
the current period the reason for the conversion and the policy for determining the time point of the
conversion
None.
7. Changes in the valuation technology and the reason for the changes in the current period
None.
8. Fair value of financial assets and financial liabilities that are not measured at fair value
The financial assets and financial liabilities of the Company not measured at fair value mainly include: cash and cash equivalents notes
receivable accounts receivable other receivables short?term borrowings accounts payable other payables long?term borrowings
lease liabilities long?term payables etc. Their carrying amounts do not differ materially from their fair values.
9. Others: None.
XIV. Related Parties and Related Party Transactions
1. Information about the parent company of the Company
Explanations on the parent company of the Company: None.Ultimate controller of the Company: None.Other explanations:
Controlling shareholders and ultimate controller
The proposal of merger and overall listing of Yunnan Baiyao Group and Baiyao Holdings by issuing shares
had been considered and approved at the First Extraordinary General Meeting of Yunnan Baiyao for 2019. On April
24 2019 CSRC issued the Approval on the Proposal of Merger and Overall Listing of Yunnan Baiyao Group Co.
Ltd and Yunnan Baiyao Holdings Co. Ltd (Zheng Jian Xu Ke [2019] No. 770). Prior to the completion of the above-
mentioned merger and overall listing the controlling shareholder of the Company was Baiyao Holdings and there
was no de facto controller. After the completion of the transaction SASAC of Yunnan Province and New Huadu
with its acting-in-concert parties were equally the largest shareholder of the Company and neither of them obtained
the control over the listed company. SASAC of Yunnan Province along with New Huadu and its acting-in-concert
parties had made long-term share lock-up commitments. Therefore the listed company did not have de facto
controller before and after the transaction.On May 22 2020 SASAC of Yunnan Province transferred 321160222 shares of the Company held by it to
its wholly-owned subsidiary State-owned Equity Management Company at nil consideration. After the completion of
the transfer State-owned Equity Operation and Management Company and New Huadu with its acting-in-concert
parties were equally the largest shareholder of the Company and there was no change in the Company’s situation
of not having a de facto controller or controlling shareholder.On December 8 2021 SASAC of Yunnan Province transferred 100% of the shares held by State-owned Equity
Operation and Management Company to Yunnan Investment Group Co. Ltd. After the equity transfer Yunnan
Investment Group Co. Ltd would hold 321160222 shares of the Company through State-owned Equity Operation
and Management Company accounting for 25.04% of the total share capital of the Company. State-owned Equity
Operation and Management Company and New Huadu and New Huadu with its acting-in-concert parties were
equally the largest shareholder of the Company and the situation that the Company has no de facto controller and
no controlling shareholder remain unchanged.On August 7 2024 the Company disclosed the Announcement on Increase in Shareholdings of the Company
by Shareholders of 5% or More and the Subsequent Shareholding Increase Plan. The Company’s largest
shareholder the State-owned Equity Management Company increased its shareholdings in the Company by
17807463 or 0.9980% shares through the Shenzhen Stock Exchange’s centralized bidding system during the
period from August 6 2024 to February 5 2025. As of February 6 2025 the State-owned Equity Management
Company held 467431774 shares of the Company accounting for 26.20% of the Company’s total shares. The
State-owned Equity Management Company remains the largest shareholder and the Company continues to have no
de facto controller and no controlling shareholder.
2. Information about subsidiaries of the Company
For details of subsidiaries of the Company please refer to Section 1 “Interest in Subsidiaries” under Note X.
3. Information about joint ventures and associates of the Company
For details of important joint ventures or associates of the Company please refer to Note X3 (1) Important Joint Ventures or
Associates.Details of other joint ventures or associates with related party transactions for the period and balances resulting from related
party transactions in the previous period are as follows:
Name of joint ventures or associates Relationship with the Company
Shanghai Pharmaceuticals Holding Co. Ltd. Associate
Lijiang Changgengming Trading Co. Ltd. Associate
Other explanations: None.
4. Information about other related parties
Name of other related parties Relationship between other related parties and the Company
Yunnan State-owned Equity Operation Management Co. Ltd. Substantial shareholder of the Company
New Huadu Industrial Group Co. Ltd. Substantial shareholder of the Company
Yunnan Hehe (Group) Co. Ltd. Substantial shareholder of the Company
YEIG Property Services Co. Ltd. Sub-subsidiary of the substantial shareholder
Yunnan Drug Technology Development Operation Co. Ltd. Investee company of a minority shareholder of the sub-subsidiary
Minority shareholder that has significant influence on the
Yunnan Jingxing Pharmaceutical Group Co. Ltd.subsidiary
MB Packaging Limited [Note 1] Sub-subsidiary of the former substantial shareholder
Kunming Yusi Pharmaceutical Co. Ltd. [Note 2] Sub-subsidiary of the former substantial shareholder
Yunnan Salt Wenshan Co. Ltd. Sub-subsidiary of the substantial shareholder
Yunnan Gongtou TCM Materials and Decoction Pieces Industry
Previous employers of the director
Development Co. Ltd. [Note 5]
Yunnan Energy-Saving Technology Development and Operation
Sub-subsidiary of the substantial shareholder
Co. Ltd.Yunnan Sports Industry Investment Co. Ltd. Sub-subsidiary of the substantial shareholder
Hongta Securities Co. Ltd. [Note 3] Previous employers of the senior management
Yunnan Medical Investment Management Group Co. Ltd. Sub-subsidiary of the substantial shareholder
Yunnan Salt Industry Dianzhong Co. Ltd. Sub-subsidiary of the substantial shareholder
Yunnan Geological Engineering Survey Co. Ltd. Sub-subsidiary of the substantial shareholder
Kunming Dehe Canned Food Co. Ltd and its subsidiaries Subsidiary of the substantial shareholder
YEIG Electric Power Assembly Park Development Co. Ltd. Sub-subsidiary of the substantial shareholder
Tibet Jiushi Zhihe Marketing Co. Ltd. Subsidiary of the substantial shareholder
Tibet Jiujia E-Commerce Co. Ltd. Sub-subsidiary of the substantial shareholder
Jiuai Zhihe (Beijing) Technology Co. Ltd. Subsidiary of the substantial shareholder
Yunnan Hongta Bank Co. Ltd. Subsidiary of the substantial shareholder
Yunnan Health & Cultural Tourism Holding Group Co. Ltd. Employers of family members of the senior management
Minority shareholder that has significant influence on the
Yunnan Jianshui County Xingda Medicine Co. Ltd.subsidiary
Former minority shareholder that has significant influence on the
Yunnan Baoshan Medicine Co. Ltd. [Note 4]
subsidiary
Minority shareholder that has significant influence on the
Yunnan Tianma Pharmaceutical Co. Ltd.subsidiary
Minority shareholder that has significant influence on the
Kaiyuan Sanfa Pharmaceutical Trade Co. Ltd.subsidiary
Minority shareholder that has significant influence on the
Chuxiong Yunzhu Trading Co. Ltd.subsidiary
Minority shareholder that has significant influence on the
Kunming Nuo’an Enterprise Management Co. Ltd.subsidiary
Yunnan Medical Investment Management Group Kunming
Sub-subsidiary of the substantial shareholder
Technology Co. Ltd.Minority shareholder that has significant influence on the
Qiubei County Wanhe Pharmaceutical Co. Ltd.subsidiary
Yunnan Salt Industry Dianzhong Co. Ltd. Sub-subsidiary of the substantial shareholder
Yunnan Kunhua Hospital Investment Management Co. Ltd. Sub-subsidiary of the substantial shareholder
Yunnan Salt Rixin Co. Ltd. Sub-subsidiary of the substantial shareholder
Yunnan Geotechnical Engineering Survey and Design Research
Sub-subsidiary of the substantial shareholder
Institute Co. Ltd.Yunnan Labor Force Center Market Co. Ltd. Sub-subsidiary of the substantial shareholder
Yunnan Medical Investment Management Group Kunming
Sub-subsidiary of the substantial shareholder
Technology Co. Ltd.Ma Xinhong Senior management of the sub-subsidiary
Ma Zhanjiang Senior management of the sub-subsidiary
Shi Guang Senior management of the sub-subsidiary
Other explanations:
[Note 1] Its former controlling shareholder Yunnan Energy Research Institute Co. Ltd (a subsidiary of Yunnan Investment Holdings
Group) reduced its shareholding to become the third?largest shareholder on February 14 2025 and no longer exercises control over
the entity.[Note 2] It was formerly a wholly?owned subsidiary of Yunnan Ran’er Chemical Co. Ltd (a subsidiary of Yunnan Investment Holdings
Group Co. Ltd) and ceased to be its subsidiary with effect from October 18 2024.[Note 3] This is a company where the Company’s current senior management previously served. It was a connected legal person of the
Company for the period from June 11 2025 to June 11 2026.[Note 4] It ceased to be a minority shareholder with significant influence over the subsidiary with effect from July 2024.[Note 5] This is a company where the Company’s current director served within the 12?month period prior to his appointment. It was
a related party of the Company for the period from June 11 2024 to June 11 2025.
5. Related party transactions
(1) Related party transactions on purchase and sales of goods and rendering and receiving of services
Information on commodities purchased/labor services accepted
Unit: RMB
Contents of related Amount for the Approved Whether Amount for the
Related party
party transaction current period transaction limit exceeding the previous period
transaction limit
YEIG Property
349993.64 556163.40
Services Co. Ltd. Receipt of services
Yunnan Drug
Technology
Purchase of goods 4612634.67 267380.84
Development
Operation Co. Ltd.Yunnan Jingxing
Pharmaceutical Purchase of goods 481400.58
Group Co. Ltd.Kunming Yusi
Pharmaceutical Co. Purchase of goods 579216.92
Ltd.
Yunnan Salt Purchase of industrial
30600.00
Wenshan Co. Ltd. salt
Shanghai
Pharmaceuticals Purchase of goods and
363239327.99 1200000000.00 330329271.95
Holding Co. Ltd services
and its subsidiaries
MB Packaging
Purchase of goods 1321193.92 Limited
Yunnan Gongtou
TCM Materials
and Decoction Purchase of TCM
394948.67
Pieces Industry materials
Development Co.Ltd.Yunnan Energy-
saving Technology
Development and Technical services
48000.00
Operation Co. Ltd.Yunnan State-owned
Equity Operation Purchase of services 1661477.28 1658970.50
Management Co. Ltd.Yunnan Sports Industry
Purchase of services 1000000.00
Investment Co. Ltd.Hongta Securities Co.Purchase of services 100000.00
Ltd.Yunnan Medical
Investment
Purchase of goods 390486.73
Management Group
Co. Ltd.Yunnan Salt Industry
Purchase of goods 30911.52
Dianzhong Co. Ltd.Yunnan Geological
Engineering Survey Purchase of services 12400.00
Co. Ltd.Kunming Dehe Canned
Food Co. Ltd and its Purchase of goods 5197.33
subsidiaries
Information on commodities sold/labor services provided
Unit: RMB
Contents of related party Amount for the previous
Related Party Amount for the current period
transaction period
Yunnan Provincial
Pharmaceutical Technology
Sale of drugs 4736783.46 15870951.51 Development and Operation
Co. Ltd.Yunnan Jingxing
Pharmaceutical Group Co. Sales of drugs -1278.00 2179474.73
Ltd.Shanghai Pharmaceuticals
Holding Co. Ltd and its Sales of goods 248119338.30 282839620.84
subsidiaries
Tibet Jiushi Zhihe Marketing
Sale of goods 174978625.82 113621290.60 Co. Ltd.Tibet Juliang E-Commerce
Co. Ltd. Sale of goods
64230.79 45405.66
Jiuai Zhihe (Beijing)
82300.88 29911.51
Technology Co. Ltd. Sale of goods
Yunnan Hongta Bank Co. Ltd. Sales of drugs 7100.38
Yunnan Hehe (Group) Co.Sales of drugs 1944.11 Ltd.Yunnan Health & Cultural
Tourism Holding Group Co. Sales of drugs 2086.37
Ltd.Explanations on related party transactions on purchase and sales of goods and rendering and receiving of services: None.
(2) Trusteeship/contracting and entrusted management/outsourcing: None.
(3) Leasing between related parties
The Company as the lessor: None.
The Company as the lessee:
Unit: RMB
Rental costs for short-term Variable lease payments
leases and leases of low- that are not included in
Interest expense on lease
value assets that are the measurement of the Rent paid Increased right-to-use assets
liabilities assumed
streamlined in accounting lease liability (if
Types of leased
Name of lessor treatment (if applicable) applicable)
assets
Amount Amount
Amount for Amount for Amount for Amount for
for the for the Amount for the Amount for the Amount for the Amount for the
the current the previous the current the previous
current previous current period previous period current period previous period
period period period period
period period
YEIG Power Assembly
Park Development Co. House 31554.51 61490.47
Ltd.Yunnan Jianshui County
Xingda Medicine Co. House 76181.48 104593.90
Ltd.Yunnan Tianma
House 22065.55 28286.13
Pharmaceutical Co. Ltd.Yunnan Jingxing
Pharmaceutical Group House 1108799.34 22761.60 44623.38 -835516.44
Co. Ltd.Kaiyuan Sanfa
Vehicle and
Pharmaceutical Trade 125840.71 248495.58
equipment
Co. Ltd.Explanations on leasing between related parties: None.
(4) Related party guarantees: None.
(5) Borrowings with related parties: None.
(6) Asset transfer and debt restructuring of related parties: None.
(7) Remuneration to key management personnel
Unit: RMB
Item Amount for the current period Amount for the previous period
Remuneration to key management
10262778.50 17481615.90
personnel
Note: The current?period and previous?period amounts of remuneration paid to key management personnel represent the basic
compensation received by directors and senior management from the Company for the first half?year including base salaries post
allowances and other items.
(8) Other related party transactions: None.
6. Amounts receivable from and payable to related parties
(1) Receivables
Unit: RMB
Closing balance Opening balance
Item name Related party Provision for Provision for
Book balance Book balance
bad debt bad debt
Accounts Shanghai Pharmaceuticals Holding
11879812.33 593915.40 15165860.65 758293.03
receivable Co. Ltd and its subsidiaries
Accounts Lijiang Changgengming Trading Co.
2849942.43 2675994.41 2849942.43 2302794.52
receivable Ltd.Accounts Yunnan Jingxing Pharmaceutical
384707.89 18877.75
receivable Group Co. Ltd.Accounts Yunnan Drug Technology
3000328.57 150016.43 100454.55 5022.73
receivable Development and Operation Co. Ltd.Notes Shanghai Pharmaceuticals Holding
834828.38 8377326.34
receivable Co. Ltd and its subsidiaries
Accounts
Shanghai Pharmaceuticals Holding
receivable 3531101.31
Co. Ltd and its subsidiaries
financing
Dividends Shanghai Pharmaceuticals Holding
232969378.60 79875215.52
receivable Co. Ltd.Shanghai Pharmaceuticals Holding
Prepayment 17046.50
Co. Ltd and its subsidiaries
Yunnan Medical Investment
Prepayment Management Group Kunming 28871.00 28871.00
Technology Co. Ltd.Qiubei County Wanhe
Prepayment 72206.41
Pharmaceutical Co. Ltd
Yunnan Salt Industry Dianzhong Co.Prepayment 3500.00
Ltd.Other Yunnan Kunhua Hospital Investment
200000.00 60000.00 200000.00 60000.00
receivables Management Co. Ltd.
(2) Payables
Unit: RMB
Book balance at the end of Book balance at the
Item name Related party
the period beginning of the period
Accounts Shanghai Pharmaceuticals Holding Co. Ltd and its
84118197.66 71609299.66
payable subsidiaries
Accounts
MB Packaging Limited 862711.03
payable
Accounts Yunnan Drug Technology Development Operation
2961463.68 92915.38
payable Co. Ltd.Accounts
Yunnan Salt Industry Wenshan Co. Ltd. 23362.83
payable
Accounts
Yunnan Salt Rixin Co. Ltd. 8403.60 8403.60
payable
Accounts
Yunnan Jingxing Pharmaceutical Group Co. Ltd. 7152.62
payable
Accounts
Kunming Dehe Canned Food Co. Ltd. 5655.00 5655.00
payable
Accounts Yunnan Geotechnical Engineering Survey and
167338.81 167338.81
payable Design Research Institute Co. Ltd.Notes Shanghai Pharmaceuticals Holding Co. Ltd and its
974298.00 1101228.80
payable subsidiaries
Contractual
Tibet Jiushi Zhihe Marketing Co. Ltd. 19233009.57 17545544.65
liabilities
Contractual Shanghai Pharmaceuticals Holding Co. Ltd and its
4182926.90 11316812.74
liabilities subsidiaries
Contractual
Yunnan Tianma Pharmaceutical Co. Ltd. 14832.33 13125.96
liabilities
Other
Yunnan Labor Force Center Market Co. Ltd. 82130.72 94981.90
payables
Other Shanghai Pharmaceuticals Holding Co. Ltd and its
42600.00 317419.54
payables subsidiaries
Other
Yunnan Salt Rixin Co. Ltd. 5000.00 5000.00
payables
Other Yunnan Medical Investment Management Group
4229.99 4229.99
payables Kunming Technology Co. Ltd.Other
Ma Xinhong 46200000.00 46200000.00
payables
Other
Ma Zhanjiang 26400000.00 26400000.00
payables
Other
Shi Guang 18480000.00 18480000.00
payables
Lease Yunnan Jianshui County Xingda Medicine Co.
3212218.84 3165586.27
liabilities Ltd.Non-
current
liabilities Yunnan Baoshan Medicine Co. Ltd. 3679384.19
due within
one year
Non-
current
Yunnan Jianshui County Xingda Medicine Co.liabilities 1521623.88 1492074.97
Ltd.due within
one year
Non-
current YEIG Power Assembly Park Development Co.
1419089.96 1382344.99
liabilities Ltd.due within
one year
Non-
current
liabilities Yunnan Tianma Pharmaceutical Co. Ltd. 1456597.43
due within
one year
Accounts Yunnan Medical Investment Management Group
151810.00
payable Co. Ltd.Accounts Yunnan Jianshui County Xingda Medicine Co.
540.03
payable Ltd.Other Yunnan Drug Technology Development Operation
2850000.00
payables Co. Ltd.Accounts
Kunming Dehe Economic and Trade Co. Ltd. 29527.63
payable
Non-
current
liabilities Yunnan Jingxing Pharmaceutical Group Co. Ltd. 1257355.18
due within
one year
Contractual
Yunnan Jingxing Pharmaceutical Group Co. Ltd. 1278.23
liabilities
Dividends
Chuxiong Yunzhu Trading Co. Ltd. 743156.77 743156.77
payable
Dividends Kunming Nuo’an Enterprise Management Co.
574231.96 574231.96
payable Ltd.
7. Related party commitments: None.
8. Others: None.
XV. Share-based Payment
1. General information about share-based payment
□Applicable ?Not applicable
2. Equity-settled share-based payment
□Applicable ?Not applicable
3. Cash-settled share-based payment
□Applicable ?Not applicable
4. Share payments during the period
□Applicable ?Not applicable
5. Amendment and termination of share-based payment: None.
6. Others: None.
XVI. Commitment and Contingencies
1. Significant commitments
Significant commitments on the balance sheet date: None.
2. Contingencies
(1) Significant contingencies on the balance sheet date: None.
(2) Where the Company had no significant contingencies to disclose explanation is also required
The Company had no significant contingencies to disclose.
3. Others: None.
XVII. Events Subsequent to the Balance Sheet Date
1. Important non-adjusting events: None.
2. Profit distribution
Proposed dividend per 10 shares (RMB) 10.38
Proposed bonus shares per 10 shares (shares) 0.00
Proposed capitalization?issue shares per 10 shares
0.00
(shares)
Approved and declared dividend per 10 shares
10.38
(RMB)
Approved and declared bonus shares per 10 shares
0.00
(shares)
Approved and declared capitalization?issue shares
0.00
per 10 shares (shares)
Based on the Company’s total issued share capital of 1784262603 shares as of the
first half of 2026 the plan proposes to distribute a cash dividend of RMB 10.38 (tax
inclusive) per 10 shares to all shareholders with no bonus shares (tax inclusive).Profit distribution plan The total amount of this cash dividend is RMB 1852064581.91 and no capital
reserves will be used to increase share capital. The total amount of the 2026 special
dividend represents 50.04% of the net profit attributable to the parent company for
the first half of 2026.
3. Sales return: None.
4. Explanation on other events subsequent to the balance sheet date: None.
XVIII. Other Significant Events
1. Correction of previous accounting errors
(1) Retrospective restatement method: None.
(2) Prospective application method: None.
2. Debt restructuring: None.
3. Assets exchange
(1) Exchange of non-cash and bank balance: None.
(2) Exchange of other assets: None.
4. Annuity plan
(1) The Company has established an enterprise annuity plan in accordance with the Trial Measures for
Enterprise Annuity the Trial Measures for Enterprise Annuity Fund Management and other regulations issued by
the Ministry of Labor and Social Security. The enterprise annuity plan was submitted to the Department of Labor
and Social Security of Yunnan Province and the Company obtained the Reply on the Filing of the Enterprise
Annuity Plan of Yunnan Baiyao Group Co. Ltd (Yun Lao She Han [2006] No.?267). Amendments to the annuity
plan were submitted to the Department of Human Resources and Social Security of Yunnan Province and the
Company obtained the Letter on Amendments to the Enterprise Annuity Plan of Yunnan Baiyao Group Co. Ltd
(Yun?Ren?She?Han [2023] No.?207). Employees of the Company who meet the criteria under the plan may
participate on a voluntary basis. The annual enterprise contribution is 5% of the Company’s total payroll of the
previous year while individual employee contributions equal 10% of the enterprise’s contribution amount.Individual contributions are withheld by the Company from employees’ salaries. The account manager for the
annuity plan has been changed to Bank of China Limited. Guotai Asset Management Co. Ltd and Ping An Annuity
Insurance Company Of China Ltd have been added as investment managers. The trustee and custodian remain
unchanged.
(2) Yunnan Pharmaceutical Co. Ltd a subsidiary of the Company has established an enterprise annuity plan
in accordance with the Trial Measures for Enterprise Annuity the Trial Measures for Enterprise Annuity Fund
Management and other regulations issued by the Ministry of Labor and Social Security. The enterprise annuity plan
was submitted to the Department of Human Resources and Social Security of Yunan Province and the Kunming
Municipal Bureau of Labor and Social Security and the Company obtained the Confirmation Letter on the
Enterprise Annuity Plan of Yunnan Pharmaceutical Co. Ltd issued by the Department of Human Resources and
Social Security of Yunan Province (Yun Ren She Han [2009] No.?79) and the Reply on the Filing of the Enterprise
Annuity Plan of Yunnan Pharmaceutical Co. Ltd issued by the Kunming Municipal Bureau of Labor and Social
Security (Kun Lao She Han [2008] No.?204). Amendments to the annuity plan were submitted to the Kunming
Municipal Bureau of Human Resources and Social Security and the Company obtained the Letter on Filing of
Amendments to the Enterprise Annuity Plan of Yunnan Pharmaceutical Co. Ltd (Kun Ren She Han [2019] No.?2).Employees of the Company who meet the criteria under the plan may participate on a voluntary basis. The annual
enterprise contribution is 5% of Yunnan Pharmaceutical Co. Ltd’s total payroll of the previous year while
individual employee contributions equal 10% of the enterprise’s contribution amount. Individual contributions are
withheld by the Company from employees’ salaries. The account manager of the enterprise annuity plan remains
unchanged.
(3) Yunnan Institute of Materia Medica a subsidiary of the Company has established an enterprise annuity
plan in accordance with the Reply Letter on the Implementation Plan for the Enterprise Annuity of Yunnan Institute
of Materia Medica issued by the Department of Human Resources and Social Security of Yunnan Province (Yun
Ren She Han [2009] No.?79) and the Kunming Municipal Bureau of Labor and Social Security (Kun?Ren?She?Han
[2016] No.?21). Adjustments to the annuity plan were submitted to the Kunming Municipal Bureau of Human
Resources and Social Security and the Company obtained the Reply Letter on Adjustment to the Enterprise Annuity
Plan of Yunnan Institute of Materia Medica (Kun Ren She Han [2024] No.?105). Employees of the Company who
meet the criteria under the plan may participate on a voluntary basis. The annual enterprise contribution is 5% of
Yunnan Institute of Materia Medica’s total payroll of the previous year while individual employee contributions
equal 10% of the enterprise’s contribution amount. Individual contributions are withheld by the Company from
employees’ salaries. The manager of the enterprise annuity plan remains unchanged.
(4) Yunnan Baiyao Group Wuxi Pharmaceutical Co. Ltd a subsidiary of the Company has established an enterprise
annuity plan in accordance with the Reply on the Establishment of the Enterprise Annuity Plan for Yunnan Baiyao
Group (Xi Ren She Fu [2018] No.?27) issued by the Wuxi Municipal Bureau of Human Resources and Social
Security. Amendments to the annuity plan were submitted to the Wuxi Municipal Bureau of Human Resources and
Social Security and the Company obtained the Reply on Re?filing of the Enterprise Annuity Plan of Yunnan Baiyao
Group Wuxi Pharmaceutical Co. Ltd (Xi Ren She Fu [2025] No.?14). Employees of the Company who meet the
criteria under the plan may participate on a voluntary basis. The annual enterprise contribution is 5% of Yunnan
Baiyao Group Wuxi Pharmaceutical Co. Ltd’s total payroll of the previous year while individual employee
contributions equal 10% of the enterprise’s contribution amount. Individual contributions are withheld by the
Company from employees’ salaries. The manager of the enterprise annuity plan remains unchanged.
5. Discontinuation of operation: None.
6. Segment information
(1) Determination basis and accounting policy of reporting segments: None.
(2) Financial information of reporting segments: None.
(3) If the Company has no reporting segment or the total assets and total liabilities of the reporting segments
cannot be disclosed please explain the reason: None.
(4) Other explanations: None.
7. Other significant transactions and matters that have an impact on investors’ decision-making: None.
8. Others: None.
XIX. Notes to Major Items of Financial Statements of the Parent Company
1. Accounts receivable
(1) Disclosure by aging
Unit: RMB
Aging Closing balance Opening balance
Within 1 year (inclusive of 1 year) 1538783326.64 1244764619.52
1 to 2 years 10627149.53 8224921.66
2 to 3 years 3256443.61 1685144.62
Above 3 years 728405904.55 726736143.29
Total 2281072824.33 1981410829.09
(2) Disclosure by the method of provision for bad debts
Unit: RMB
Closing balance Opening balance
Book balance Provision for bad debt Book balance Provision for bad debt Book value
Category
Book value
Provision Provision
Amount Proportion Amount Amount Proportion Amount
proportion proportion
Account receivables
with provision for
2281072824.33 100.00% 20952950.95 0.92% 2260119873.38 1981410829.09 100.00% 21541975.87 1.09% 1959868853.22
bad debt on
portfolio basis
Including:
Related party
2219125757.38 97.28% 2219125757.38 1882817812.89 95.02% 1882817812.89
portfolio
Age-based
61947066.95 2.72% 20952950.95 33.82% 40994116.00 98593016.20 4.98% 21541975.87 21.85% 77051040.33
portfolio
Total 2281072824.33 100.00% 20952950.95 0.92% 2260119873.38 1981410829.09 100.00% 21541975.87 1.09% 1959868853.22
Provision for bad debts made on a portfolio basis:
Unit: RMB
Closing balance
Name
Book balance Provision for bad debts Provision proportion
Related party portfolio 2219125757.38
Age-based portfolio 61947066.95 20952950.95 33.82%
Total 2281072824.33 20952950.95
Explanation on the basis for determining the portfolio: None.If provision was made for bad debts of accounts receivable in accordance with the general expected credit loss model:
□Applicable □Not applicable
(3) Provision for bad debts accrued recovered or reversed during the period: None.
(4) Actual write-off of accounts receivable for the period
Unit: RMB
Item Amount of write-off
Actual write-off of accounts receivable 130978.95
Significant write-off of accounts receivable: None.Explanation on write-off of accounts receivable: None.
(5) Top five customers in closing balance of accounts receivable and contractual assets summarized by debtor
Unit: RMB
Closing balance
Percentage of of provision for
Closing total of closing bad debts of
Closing balance of
Closing balance of balance of balance of accounts
Customer name accounts receivable
accounts receivable contractual accounts receivable and
and contractual assets
assets receivable and provision for
contractual assets impairment of
contractual assets
Customer A 922765374.00 922765374.00 13.12%
Customer B 823175632.58 823175632.58 11.70%
Customer C 242319413.31 242319413.31 3.45%
Customer D 143722655.80 143722655.80 2.04%
Customer E 35865651.89 35865651.89 0.51%
Total 2167848727.58 2167848727.58 30.82%
2. Other receivables
Unit: RMB
Item Closing balance Opening balance
Dividends receivable 232969378.60 79875215.52
Other receivables 6882371527.77 6552212996.22
Total 7115340906.37 6632088211.74
(1) Interest receivable: None.
(2) Dividends receivable
1) Category of dividends receivable
Unit: RMB
Item (or investee) Closing balance Opening balance
Shanghai Pharmaceuticals Holding Co.
232969378.60 79875215.52
Ltd.Total 232969378.60 79875215.52
2) Significant dividends receivable aged above 1 year: None.
3) Disclosure by the method of provision for bad debts
□Applicable □Not applicable
4) Provision for bad debts accrued recovered or reversed during the period: None.
5) Actual write-off of dividends receivable during this reporting period: None.
(3) Other receivables
1) Other receivables by nature
Unit: RMB
Book balance at the end of the reporting Book balance at the beginning of the
Nature
period reporting period
Amounts due from/to related?parties
7013260766.49 6686598659.88
within the consolidation scope
Deposits and guarantees 2867232.36 4639663.00
Petty cash and others 17585499.12 12713170.32
Total 7033713497.97 6703951493.20
2) Disclosure by aging
Unit: RMB
Aging Book balance at the end of the period Opening balance at the end of the period
Within 1 year (inclusive of 1 year) 3184081801.79 2754961521.16
1 to 2 years 775777592.02 801370373.68
2 to 3 years 1042537442.61 1596345756.81
Above 3 years 2031316661.55 1551273841.55
Total 7033713497.97 6703951493.20
3) Disclosure by the method of provision for bad debts
Unit: RMB
Closing balance Opening balance
Book balance Provision for bad debts Book balance Provision for bad debts
Category
Book value Book value
Provision Provision
Amount Proportion Amount Amount Proportion Amount
proportion proportion
Provision for bad
7033713497.97 100.00% 151341970.20 2.15% 6882371527.77 6703951493.20 100.00% 151738496.98 2.26% 6552212996.22
debts by portfolio
Including:
Age-based
20452731.48 0.29% 5367300.66 26.24% 15085430.82 17352833.32 0.26% 5763827.44 33.22% 11589005.88
portfolio
Related party
7013260766.49 99.71% 145974669.54 2.08% 6867286096.95 6686598659.88 99.74% 145974669.54 2.18% 6540623990.34
portfolio
Total 7033713497.97 100.00% 151341970.20 2.15% 6882371527.77 6703951493.20 100.00% 151738496.98 2.26% 6552212996.22
Provision for bad debts made on a portfolio basis:
Unit: RMB
Closing balance
Name
Book balance Provision for bad debts Provision proportion
Age-based portfolio 20452731.48 5367300.66 26.24%
Related party portfolio 7013260766.49 145974669.54 2.08%
Total 7033713497.97 151341970.20
Explanation on the basis for determining the portfolio: None.Provision for bad debts in accordance with the general expected credit loss model:
Unit: RMB
Phase I Phase II Phase III
Provision for bad debts Expected credit losses Lifetime ECL (not credit- Lifetime ECL (credit- Total
for the next 12
impaired) impaired)
months
Balance as of January 1 2026 151738496.98 151738496.98
Balance as of January 1 2026 in
the current period
Current reversal 396526.78 396526.78
Balance as of June 30 2026 151341970.20 151341970.20
Division base for each phase and proportion of provision for bad debts: None.Changes in book balance with significant changes in loss reserves in the current period
□Applicable □Not applicable
4) Provision for bad debts accrued recovered or reversed during the period
Provision for bad debts for the period:
Unit: RMB
Change in the current period
Opening
Category Closing balance
balance Recovery or Transfer or Provision Others
reversal write-off
Age-based
5763827.44 396526.78 5367300.66
portfolio
Related party
145974669.54 145974669.54
portfolio
Total 151738496.98 0.00 396526.78 151341970.20
Provision for bad debt with important amount of recovery or reversal during the period: None.
5) Actual write-off of other receivables during this reporting period: None.
6) Top five customers in closing balance of other receivables summarized by debtor
Unit: RMB
Percentage of
Closing balance
total of closing
Entity name Nature Closing balance Aging of provision for
balance of other
bad debts
receivables
Amounts due
from/to
Within 1 year 1 to 2
related?parties
Customer A 2110054946.99 years 2 to 3 years， 30.00%within the
above 3 years
consolidation
scope
Amounts due
from/to
Within 1 year 1 to 2
related?parties
Customer B 1010474351.77 years 2 to 3 years， 14.37%within the
above 3 years
consolidation
scope
Amounts due
from/to
related?parties
Customer C 986717000.79 Within 1 year 14.03%
within the
consolidation
scope
Amounts due
from/to
Within 1 year 1 to 2
related?parties
Customer D 823745699.09 years 2 to 3 years， 11.71%within the
above 3 years
consolidation
scope
Amounts due
from/to
Within 1 year 1 to 2
related?parties
Customer E 522943846.89 years 2 to 3 years， 7.43%within the
above 3 years
consolidation
scope
Total 5453935845.53 77.54%
7) Reported as other receivables due to centralized fund management: None.
3. Long-term equity investment
Unit: RMB
Closing balance Opening balance
Item Impairment Impairment
Book balance Book value Book balance Book value
provision provision
Investments
in 2603195450.92 244474941.95 2358720508.97 2603195450.92 244474941.95 2358720508.97
subsidiaries
Investments
in associates
13668515021.93 0.00 13668515021.93 13247345923.78 0.00 13247345923.78
and joint
ventures
Total 16271710472.85 244474941.95 16027235530.90 15850541374.70 244474941.95 15606066432.75
(1) Investments in subsidiaries
Unit: RMB
Opening Increase or decrease in the current period
Closing balance of
Opening balance (book balance of Closing balance
Investee Provision impairment
value) impairment Additional Decreased for Others (book value) provision
provision investment investment impairment
Yunnan Pharmaceutical Co. Ltd. 765533647.30 765533647.30 0.00
Yunnan Baiyao Group Health Products
168297661.03 168297661.03 0.00
Co. Ltd.Yunnan Baiyao Group TCM Resources
130894518.14 130894518.14 0.00
Co. Ltd.Yunnan Baiyao Group Wuxi
39627253.25 39627253.25 0.00
Pharmaceutical Co. Ltd.Yunnan Baiyao Group Dali
16489200.00 16489200.00 0.00
Pharmaceutical Co. Ltd.Yunnan Baiyao Group (Hainan) Co.
457198438.74 457198438.74 0.00
Ltd.Yunnan Baiyao Group Shanghai Co.
11350000.00 11350000.00 0.00
Ltd.Yunnan Digital-Intelligent TCM
56059850.00 56059850.00 0.00
Materials Development Co. Ltd.Yunnan Baiyao Teayield Co. Ltd. 3701960.00 20000000.00 3701960.00 20000000.00
Shanghai Yunzhen Medical Technology
200572858.37 200572858.37 0.00
Co. Ltd.Yunnan Baiyao Holding Investment Co.
193992837.67 193992837.67 0.00
Ltd.Yunnan Institute of Materia Medica 101075329.94 101075329.94 0.00
Yunnan Baiyao Group Medical
85700000.00 85700000.00 0.00
Technology Hefei Co. Ltd.YNBY International Limited 98226954.53 224474941.95 98226954.53 224474941.95
Yunhe Pharmaceutical (Tianjin) Co.
20000000.00 20000000.00 0.00
Ltd.Yunnan Baiyao Group Digital-Intelligent
10000000.00 10000000.00
Technology Co. Ltd.Total 2358720508.97 244474941.95 2358720508.97 244474941.95
(2) Investments in associates and joint ventures
Unit: RMB
Increase and decrease in the current period
Opening Profit and loss
Adjustment of
Opening balance balance of on investments Cash dividends or Closing balance Closing balance of
Investee Additional Decreased other Change in other Provision for
(book value) impairment recognized profit declared to Others (book value) impairment provision
investment investment comprehensive equities impairment
provision under the equity distribute
income
method
I. Joint ventures
II. Associates
Shanghai
Pharmaceuticals 12729067728.22 607479774.72 -5939236.52 50831858.74 232969378.60 13148470746.56
Holding Co. Ltd.Yunnan TCM
Comprehensive
Health Innovation
Equity Investment 499823509.04 709281.14 500532790.18
Fund Partnership
(Limited
Partnership)
Yunnan Tianzheng
Testing Technology 18454686.52 1056798.67 19511485.19
Co. Ltd.Subtotal 13247345923.78 609245854.53 -5939236.52 50831858.74 232969378.60 13668515021.93
Total 13247345923.78 0.00 609245854.53 -5939236.52 50831858.74 232969378.60 13668515021.93 0.00
The recoverable amount is determined based on the net amount obtained by fair value less the disposal expense.□Applicable □Not applicable
The recoverable amount is determined based on the present value of estimated future cash flows.□Applicable □Not applicable
Reasons for significant differences between the foregoing information and information used for impairment testing in previous
years or external information: None.Reasons for significant differences between the information used in the Company’s impairment tests in previous years and
the actual situation in the corresponding years: None.
(3) Other explanations: None.
4. Operating revenue and operating cost
Unit: RMB
Amount for the current period Amount for the previous period
Item
Income Cost Income Cost
Principal business 4820988776.92 1969426499.88 4870362127.22 1839210250.39
Other business 679503106.88 51582789.42 665537183.51 53814200.58
Total 5500491883.80 2021009289.30 5535899310.73 1893024450.97
Breakdown information of operating revenue and operating cost:
Unit: RMB
Drug sales TCM resources Others Total
Contract classification
Operating revenue Operating cost Operating revenue Operating cost Operating revenue Operating cost Operating revenue Operating cost
Business type 4772938933.99 1929954380.69 48001095.46 39472119.19 679551854.35 51582789.42 5500491883.80 2021009289.30
Including:
Industry sales income 4772938933.99 1929954380.69 - - 4772938933.99 1929954380.69
Commercial sales income 48001095.46 39472119.19 48001095.46 39472119.19
Technical services income 48747.47 48747.47 -
Others 679503106.88 51582789.42 679503106.88 51582789.42
By operating areas 4772938933.99 1929954380.69 48001095.46 39472119.19 679551854.35 51582789.42 5500491883.80 2021009289.30
Including:
In Yunnan province 560483171.10 197907019.61 47933803.01 39400823.49 679551854.35 49450591.52 1287968828.46 286758434.62
Outside Yunnan province
4212455762.89 1732047361.08 67292.45 71295.70 2132197.90 4212523055.34 1734250854.68
(excluding overseas)
Overseas
Information on performance obligations: None.Other explanations: None.Information on the transaction price allocated to the remaining performance obligations:
As of the end of this reporting period the income corresponding to the performance obligations that have been contracted but
not yet fulfilled or completed is RMB 0.00.Significant contractual changes or significant transaction price adjustments: None.Other explanations: None.
5. Investment income
Unit: RMB
Item Amount for the current period Amount for the previous period
Income from long-term equity investment under the equity
609245854.53 772957330.00
method
Investment income from disposal of financial assets held for
17162500.72 26695771.21
trading
Others -14953626.17 14319630.38
Total 611454729.08 813972731.59
6. Others: None.
XX. Supplementary Information
1. Breakdown of non-recurring profits and losses for the current period
?Applicable □Not applicable
Unit: RMB
Item Amount Description
Profits and losses from disposal of non-current assets 3357305.66
Government subsidies included in the current profits and losses (excluding the government
subsidies closely related to regular businesses of the Company in line with national policies
55632035.55
and received by a determined standard with a continuous impact on the Company’s profits
and losses)
Profits and losses from changes in fair value of financial assets and liabilities held for trading
by non-financial enterprises and from disposal of such financial assets and liabilities except 129325396.89
for effective hedging operations related to regular businesses of the Company
Profits and losses from entrusted investment or asset management 17162500.72
Reversal of impairment provision of accounts receivable subject to individual impairment test 764946.00
Non-operating revenue and expenses other than the above 8365551.93
Other profits and losses satisfying the definition of non-recurring profits and losses 2706934.78
Less: Amount affected by the income tax 34145671.34
Amount affected by minority interests (after tax) 413923.88
Total 182755076.31 --
Details of other profits and losses satisfying the definition of non-recurring profits and losses:
?Applicable □Not applicable
Other profit and loss items that meet the definition of non-recurring profit and loss mainly include other non-recurring profit
and loss such as interest on time deposits and value-added tax reduction and exemption.Note for the definition of non-recurring profits and losses set out in the No.1 Explanatory Announcement on Information
Disclosure for Companies Offering Their Securities to the Public - Non-recurring Profits and Losses as recurring profits and
losses
□Applicable □Not applicable
2. Return on equity and earnings per share
Earnings per share
Profits during the reporting Weighted average return on
period equity Basic earnings per share Diluted earnings per share
(RMB/share) (RMB/share)
Net profits attributable to
ordinary shareholders of 9.04% 2.07 2.07
the Company
Net profits attributable to
ordinary shareholders of
the Company after
8.61% 1.97 1.97
deducting non-recurring
profits and
losses
3. Differences in Accounting Data under Chinese Accounting Standards (CAS) and Overseas Accounting
Standards
(1) Differences in the net profits and net assets in financial statements disclosed respectively under
International Financial Reporting Standards (IFRS) and CAS
□Applicable □Not applicable
(2) Differences in the net profits and net assets in financial statements disclosed respectively under
overseas accounting standards and CAS
□Applicable □Not applicable
(3) Explanations of the causes to differences in accounting data under CAS and overseas accounting
standards; if a difference adjustment is made to data audited by an overseas audit institution the name
of the institution shall be provided: None.
4. Others: None.
Yunnan Baiyao Group Co. Ltd.Board of Directors
August 28 2026
沪公网安备31011802005267号
