云南白药: 2023年半年度报告（英文版）-j9九游app

yunnan baiyao group co., ltd.
     interim report 2023
           august 2023
          section i important notes, contents, and definitions
    the board of directors (the “board”), the supervisory committee and the
directors, supervisors and 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. dong ming, the person in charge of the company, mr. ma jia, the
accounting officer, and ms. xu jing, the head of accounting firm (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 information publicly disclosed by the company on the securities times,
shanghai securities news, china securities journal, and http://www.cninfo.com.cn
shall prevail. forward-looking statements included in this interim report, including
future plans, do not constitute a substantive commitment to investors by the
company. investors are advised to pay attention to investment risks.
    the company kindly requests investors to read through this report and pay
special attention to “x. risks and countermeasures” in the “section iii management
discussion and analysis.” investors are advised to pay attention to investment risks.
    during the reporting period, the company has no plan to distribute cash
dividends and bonus shares or convert capital reserves into 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 vii changes in shareholdings and particulars about shareholders ...... 82
                         documents available for inspection
     (i) financial statements affixed with the signatures and stamps of the person in
charge of the company, the accounting officer, the general manager of accounting
center;
     (ii) originals of all the company’s documents and announcements publicly
disclosed on the securities times, shanghai securities news, china securities
journal, and http://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
       csrc yunnan bureau             yunnan bureau of china securities regulatory commission
  the company or yunnan baiyao        yunnan baiyao group co., ltd.
            new huadu                 new huadu industrial group co., ltd.
 yunnan investment holdings group     yunnan provincial investment holdings group co., ltd.
yunnan state-owned equity operation
                                      yunnan state-owned equity operation management co., ltd.
      management company
           yunnan hehe                yunnan hehe (group) co., ltd.
          jiangsu yuyue               jiangsu yuyue science & technology development co., ltd.
         baiyao holdings              yunnan baiyao holdings co., ltd.
        ban loong holdings            ban loong holdings limited
        sunwah greatwall              sunwah greatwall group limited
         shanghai pharma              shanghai pharmaceuticals holding co., ltd.
          tianjin pharma              tianjin pharmaceutical holdings co., ltd.
                                      baiyao holdings, former controlling shareholder of yunnan baiyao, introduced
      mixed ownership reform
                                      strategic investors new huadu and jiangsu yuyue by capital increase
                                      a transaction that yunan baiyao merged with baiyao holdings by issuing shares to
     merger and overall listing       all shareholders of baiyao holdings, including sasac of yunnan province, new
                                      huadu and jiangsu yuyue
          yunnan pharma               yunnan pharmaceutical co., ltd.
      centralized procurement         centralized volume-based procurement of drugs
               otc                    over-the-counter drug
               esg                    environmental, social and corporate governance
         reporting period             the period from january 1, 2023 to june 30, 2023
                                      expressed in the chinese currency of renminbi, expressed in tens of thousands
rmb, rmb’0,000, rmb’00,000,000
                                      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 (if any)                                             none
                  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 (if any)                                          云南白药
         company name in english (if any)                               yunnan baiyao group co., ltd.
      company abbreviation in english (if any)                                    yunnan baiyao
        legal representative of the company                                           dong ming
ii. contact person and contact information
                                          secretary of the board of directors              representative of securities affairs
               name                                  qian yinghui                                 zhao yan, zhu ruiying
                                      no.3686 yunnan baiyao street, chenggong        no.3686 yunnan baiyao street, chenggong
          contact address
                                         district, kunming, yunnan province             district, kunming, yunnan province
                tel                                 0871-66226106                                    0871-66226106
                fax                                 0871-66203531                                    0871-66203531
               e-mail                            000538dm@ynby.cn                                   000538@ynby.cn
iii. other information
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 2022 annual report.
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 2022 annual report.
whether other information has changed during the reporting period
□ applicable  not applicable
iv. key accounting data and financial indicators
whether the company needed retroactive adjustment or restatement of accounting data in prior years or not yes no
                                                                                                         increase/decrease during the
                                                                                 the same period of       reporting period compared
                                                     the reporting period
                                                                                  the previous year      with the same period of the
                                                                                                                previous year
operating revenue (rmb)                                  20,309,372,850.07         18,016,738,609.15                            12.73%
net profit attributable to shareholders of the
listed company (rmb)
net profit attributable to shareholders of the
listed company after deducting non-recurring               2,737,055,785.90          1,654,550,261.83                           65.43%
profits and losses (rmb)
net cash flows from operating activities (rmb)             2,251,951,370.10          1,177,950,057.27                           91.18%
basic earnings per share (rmb/share)                                     1.58                    1.10                           43.64%
diluted earnings per share (rmb/share)                                   1.58                    1.09                           44.95%
weighted average roe                                                    7.17%                  3.89%                            3.28%
                                                                                                         increase/decrease at the end
                                                      end of the reporting       end of the previous        of the reporting period
                                                               period                   year            compared with the end of the
                                                                                                                previous year
total assets (rmb)                                       51,926,448,675.34         53,320,943,868.74                            -2.62%
net assets attributable to shareholders of the
listed company (rmb)
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 disclosure (quantity)
fully diluted earnings per share calculated under the latest share capital
preferred stock dividends paid                                                                                                         0
interest paid on perpetual bonds (rmb)                                                                                                 0
fully diluted earnings per share calculated under the latest
share capital (rmb/share)
v. differences in accounting data under chinese accounting standards (cas) and overseas
accounting standards
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.
overseas accounting standards and cas
□ applicable  not applicable
during the reporting period, there was no difference in the net profits and net assets in financial statements disclosed respectively
under overseas accounting standards and cas.
standards
□ applicable  not applicable
vi. non-recurring profits and losses
 applicable □ not applicable
                                                                                                                         unit: rmb
                                                  item                                                    amount          remarks
  profits or losses from disposal of non-current assets (including the write-off for the accrued
  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,        37,822,875.91
  and consecutively received by a standard quota or quantity)
  profits and losses from changes in fair value of financial assets and liabilities held for trading,
  and investment income from disposal of financial assets and liabilities held for trading and
  financial assets available for sale, except for effective hedging operations related to regular
  businesses of the company
  non-operating revenue and expenses other than the above                                                -3,275,515.13
  less: amount affected by the income tax                                                                19,426,852.91
       amount affected by minority interests (after tax)                                                    234,377.97
  total                                                                                                  90,955,829.40
other profits and losses satisfying the definition of non-recurring profits and losses: □ applicable  not applicable
there were no other profits and losses of the company satisfying the definition of non-recurring profits and losses. 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 did 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 businesses of the company during the reporting period
     (i) overview
     the report of the 20th national congress of the communist party of china outlined specific requirements
for advancing healthcare system reforms and fostering the integrated development and management of medical
insurance, healthcare, and pharmaceuticals. this underscores the ongoing trend of centralized, volume-based
procurement and the continued evolution of medical insurance payment methods. given china’s increasingly
aging population, rising health consciousness, growing social healthcare needs, technological innovation, and
the continued transformation of the medical sector, the industry has witnessed a swift unleashing of its potential.
furthermore, the pharmaceutical sector has exhibited a positive rebound, buoyed by economic marginal
improvement and heightened expectations stemming from certain policies in the new era.
     china places great emphasis on the development of the traditional chinese medicine (tcm) industry.
consequently, the tcm sector consistently enjoys the advantages of various national policies, such as the 14th
five-year plan for traditional chinese medicine development and special provisions on the administration of
traditional chinese medicine registration. these policies have opened up new avenues for growth within the
tcm sector. in the field of over-the-counter (otc) tcm, with intensified competition in primary sales
channels, branding has emerged as a “barrier” in the retail terminal competition. in the context of a growing
industry concentration, the significance of brand value is increasingly pronounced. top tcm brands in the
otc sector are poised for a trajectory of high-quality development. china strongly supports the preservation
and innovation within the prescribed tcm field. the existing centralized procurement system for chinese
patent medicines, adjustments to the basic medicine catalog, and various other measures are advantageous for
the inclusion and promotion of tcms in hospitals, which, in turn, will contribute to enhancing their market
shares. furthermore, as china’s tcm review and approval system continues to evolve and mature, innovative
tcms find themselves in a favorable position for development.
     during the first half of 2023, the consumer product industry experienced a growth slowdown, as consumer
purchases gradually increased with a more rational approach. as consumer product channels are transitioning
towards “location-based” and “digital” marketing strategies, e-commerce channels have consistently dominated
for three consecutive years and continue to expand. conversely, traditional large-scale channels have seen a
continuous decline in their market share. the offline consumer product market has shown a
slower-than-anticipated recovery. in response, enterprises need to empower their channels and retail terminals
with more refined management, gain deeper insights into consumer behavior, and enhance cost competitiveness
on the supply side to maintain a competitive edge in this fiercely competitive landscape.
     yunnan baiyao has consistently focused on integrating tcm into modern life and infusing traditional
brands and tcm products with renewed vitality. in the pharmaceutical products domain, the company’s roots
lie in yunnan baiyao powder with a century-long legacy. through persistent exploration and innovation,
yunnan baiyao has progressively developed a series of core pharmaceutical products encompassing diverse
forms like aerosol, plaster, tincture, and woundplast. in the realm of health products, the company has
successfully merged traditional yunnan baiyao products with oral care items and created a group of oral care
products, notably exemplified by yunnan baiyao toothpaste. this achievement stands as a prominent case for
tcm enterprises venturing into cross-border innovation and reshaping consumer preferences. leveraging its
successful development strategies 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, health and daily chemical products, and healthcare food. this move enables the company’s
evolution from a tcm manufacturing enterprise to a modern, big health-oriented entity. in the pharmaceutical
distribution segment, the company has deeply entrenched itself in the yunnan market, forging robust
partnerships with both upstream and downstream customers. through years of growth, yunnan baiyao has
established an extensive and multifaceted sales network throughout yunnan province, establishing a supply
chain service platform for the distribution of pharmaceuticals, medical devices, and related products. this ranks
it as the leading pharmaceutical distribution enterprise in yunnan province.
     in july, brand finance, a globally recognized brand valuation company, released the healthcare 2023 -
the annual report on ranking of the most valuable and strongest pharma, medical devices and healthcare
services brands by value, in which yunnan baiyao was included in the shortlist of the global top 25 most
valuable pharmaceutical brands, marking the third time it has earned a place in this list since 2021. in the same
month, the company was included in the shortlist of 2023 fortune 500 china listed companies, marking the
     the company has four business groups, namely pharmaceutical business group, health products business
group, traditional chinese medicine (tcm) resources business group and yunnan pharmaceutical co., ltd
(“yunnan pharma”) (pharmaceutical distribution). these business groups serve as the foundation for the
company’s production and operations.
     pharmaceutical business group mainly focuses on yunnan baiyao’s key product lines, which include
products related to hemostasis, pain relief, swelling reduction, and blood stasis elimination (yunnan baiyao
aerosol, yunnan baiyao plaster, yunnan baiyao woundplast, etc). additionally, the bg extends its offerings to
encompass other branded tcms, catering to various health needs such as tonifying qi, nourishing blood, and
treating conditions like colds, cardiovascular and cerebrovascular diseases, gynecological diseases, and
pediatric ailments. furthermore, the company is actively involved in the development of botanical supplements
and explores scenarios for the home use of medical devices, aiming to identify new avenues for growth.
     health products business group, with its core focus on the toothpaste category, relies on its robust brand
infrastructure encompassing people, products, and consumer 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. yunnan baiyao toothpaste is distinguished by its
incorporation of active yunnan baiyao ingredients, known for their ability to address gum problems, repair
mucosal damage, nourish gums, and enhance periodontal health. furthermore, the yangyuanqing anti-hair loss
lotions feature extracts from various natural sources, including cacumen biotae, sophora flavescens roots,
fructus cnidii, panax notoginseng roots, and more. the product holds an invention patent for hair loss
prevention and has received a special cosmetics certificate from the medical products administration,
underscoring their effectiveness in preventing hair loss.
     tcm resources business group capitalizes on yunnan province’s unique medicinal plant resources. while
ensuring the high-quality, efficient, and cost-effective supply of tcm raw materials across the corporation, it is
in a bid to develop both b-end (including panax notoginseng series, branded medicinal materials, natural plant
extracts) and c-end (including tcm decoction pieces and healthcare food) products. moreover, tcm
resources business group is actively involved in the digital transformation, platform-based operations, and
integrated management of tcm resource cultivation. this initiative aims to offer customers traceable tcm raw
materials that boast cost advantages and consistent high quality. the company is committed to delivering
personalized services and solutions tailored to individual customer needs under the guiding principle of “one
enterprise, one strategy” in order to establish branded medicinal materials.
     yunnan pharma remains steadfast in its pursuit of maintaining its market share as one of the leading
pharmaceutical distribution companies in yunnan province. its product portfolio now extends to encompass all
major retail chain pharmacies in 16 cities within yunnan province. yunnan pharma actively collaborates with
the government and medical institutions to enhance management and service systems, offering high-quality
modern pharmaceutical supply chain service solutions to both upstream and downstream customers.
    during the first half of 2023, the company proactively adapted to evolving external conditions. it adhered
to the core principle of balancing progress with stability, maintaining its commitment to both horizontal and
vertical expansion within its existing business sectors. additionally, the company vigorously explored new
avenues for business growth, enhancing its overall enterprise value. during the reporting period, the company
achieved an operating revenue of rmb 20.309 billion, up 12.73% yoy; a net profit attributable to shareholders
of the listed company of rmb 2.828 billion, up 88.47% yoy; a profit and tax of rmb 4.509 billion, up 63.95%
yoy; a net cash flow from operating activities of rmb 2.252 billion, up 91.18% yoy; a weighted average return
on equity of 7.17%, up 3.28 percentage points yoy; basic earnings per share of rmb 1.58, up 43.64% yoy and
an inventory turnover of 92 days, 27 days shorter than the same period of the previous year. at the end of the
reporting period, the company had a net asset attributable to shareholders of the listed company of rmb 38.598
billion, up 0.24% compared to that at the beginning of the year, a balance of rmb 1.541 billion in financial
assets held for trading, down 36.21% compared to that at the beginning of the year, and a cash and bank balance
of rmb 12.546 billion.
    (ii) review of key achievements in the first half of the year
by steadily increasing their market share
    (1) pharmaceutical business group
    in the first half of 2023, pharmaceutical business group achieved remarkable results driven by its
strengthened business focus, improved operational efficiency, and performance growth. the revenue from
principal businesses reached rmb 3.852 billion, marking an increase of 14.63% compared to the same period
of the previous year. within this success, the core series of yunnan baiyao products maintained steady growth,
and other branded tcms saw a significant surge in sales volume. among the core series of yunnan baiyao
products, yunnan baiyao aerosol contributed over rmb 900 million in operating revenue, marking a 18.20%
yoy growth. yunnan baiyao plaster and yunnan baiyao capsule also displayed continuous growth in revenue.
regarding other branded tcms, the bg capitalized on increased market sales volume, achieving higher sales in
both the commercial and otc sectors through mid-platform outputs and product-driven approaches. notably,
the pudilan anti-inflammatory tablet, used for treating colds, recorded an operating revenue exceeding rmb
revenue, and huoxiang zhengqi oral liquid, a chinese patent medicine for relieving heat and dampness,
experienced a surge in operating revenue of over 260% yoy, ranking among the company’s top ten products for
the first half of the year. furthermore, qixuekang oral liquid, a botanical supplement, gained increasing
recognition in the market and achieved a revenue increase of nearly 18% yoy.
     during the reporting period, pharmaceutical business group executed more than 30,000 promotional
initiatives of “one province, one strategy,” primarily centered around the two major ips of “health exercises”
and “botanical supplement.” these efforts were aimed at boosting drug sales volume growth and engaging
potential customers. by implementing traceability and control measures via channels and employing different
tactics under the same strategies for core products, the bg achieved consistent increases in sales volume for
branded tcms. furthermore, significant headway was made in key projects for academic promotion. the bg
actively sought hospital collaboration for gongxuening capsule, a key variety. it completed the collection,
inspection, and data clearing for 484 cases in relevant cooperative hospitals. additionally, data collection and
statistical analysis were conducted on 144 cases related to yunnan baiyao capsule, as part of the national
trauma medical center project, with a report of knot provided. moreover, the study on qixuekang oral liquid
for improving various symptoms in patients, such as qi deficiency and blood stasis, was completed.
     (2) health products business group
     in the first half of 2023, health products business group achieved a revenue from principal businesses of
rmb 3.245 billion, representing a yoy increase of 0.81%. this period also saw multiple breakthroughs in the
oral care and anti-hair loss care sectors. in the oral care sector, yunnan baiyao toothpaste continued to outpace
industry growth, recording a market share of 25% (source: nielsen retail research data ytd2306) and
retaining its top-ranking position in the industry. in the anti-hair loss care sector, yangyuanqing care products
experienced a substantial operating revenue increase of 90% yoy during the reporting period. the 618
shopping festival witnessed continuous growth in the anti-hair loss care market, and yangyuanqing reached
record-high online sales volume. the interest-based e-commerce sector contributed up to 80% of the growth,
ranking no.1 among domestic anti-hair loss shampoo brands on tmall platform (source: shangzhizhen).
     during the reporting period, the oral care sector seized opportunities to enhance brand visibility both
online and offline, driving user growth. offline, a total of 10,887 promotional activities under the theme “blue
action - for higher care ability and oral health” were conducted in 129 cities. in april, the jinkoujian yugan
rainbow toothbrush was launched and, by the end of the reporting period, it had been sold in over 40,000
stores, claiming the top spot in the list of tiktok-branded toothbrushes. additionally, the bg’s health products
saw an increase in online channel revenue proportion to 16%. during the 618 shopping festival, yunnan
baiyao continued to lead the oral care sector across its online channels, widening the gap with competitors and
achieving double-digit growth against the industry trend (source: shangzhizhen). in the anti-hair loss care sector,
the company concentrated on reinforcing brand terminal construction and boosting sales volume through joint
promotion. about 20,000 core retail outlets extensively utilized various sales aids to increase product exposure
at the terminal level, and the brand emphasized its proposition of “cleansing and nurturing, patented product for
anti-hair loss.”
     (3) tcm resources business group
     in the first half of 2023, tcm resources business group continued its efforts to reduce costs and enhance
efficiency, despite challenges such as rising prices of certain raw materials. as a result, the bg achieved an
operating revenue from external sales of approximately rmb 879 million, marking a yoy increase of about
raw materials for the company. notably, the key strategic variety, panax notoginseng, experienced a 30%
increase in operating revenue from external sales.
     during the reporting period, the company remained committed to promoting branded tcm projects,
expanding the range of fresh-processed varieties, and consistently deepening its involvement in the panax
notoginseng industry platform, maintaining its leadership in the panax notoginseng segment. in the natural
plant extraction business, despite falling prices and demand in the natural flavors and spices market, the essence
and spice team defied the trend by driving eucalyptus oil to capture an even higher market share. regarding
pharmaceutical services, the company established xingzhong digital intelligence tcm service co., ltd of
yunnan baiyao group as the primary entity for its pharmaceutical services, which was dedicated to creating a
comprehensive integrated and digitally-driven pharmaceutical service system that combines tcm service
models with modern information technology. furthermore, the company achieved new progress in the health
products sector, obtaining filing certificates for healthcare foods like yangzhisu b vitamin tablets, and healthy
kids b vitamin tablets during this reporting period.
     (4) yunnan pharmaceutical co., ltd (pharmaceutical distribution)
     in the first half of 2023, yunnan pharma achieved a revenue from principal businesses of rmb 12.364
billion, marking a yoy increase of 13.6%. despite uncertainties posed by the external environment, yunnan
pharma pursued new product delivery authorizations from suppliers, strategically integrated channel resources,
and collaborated with its subsidiaries with continued efforts to promote and strengthen regional platform
construction, leading to a significant revenue growth. yunnan pharma’s logistics business continued to maintain
its regional advantages and led, in terms of market share, in serving public hospitals at the county level and
above in yunnan province.
     during the reporting period, yunnan pharma intensified its customer service system, and promoted
customer service upgrades by continuously enhancing delivery efficiency and implementing a multi-warehouse
operation system. these improvements led to a 35.2% yoy decrease in the logistics order-to-dispatch time in
yunnan province. in terms of accounts receivable management, yunnan pharma adopted stringent credit control
measures, including credit sales limits and active customer tracking. yunnan pharma utilized electronic
reconciliation tools to enhance reconciliation efficiency, reinforced monthly budgeting for collections, and
ensured that accounts receivable risks remained manageable. the june-ending inventory of yunnan pharma
reduced by approximately 12% compared to the beginning of the year. this achievement was made possible
through strengthened collaboration in overall supply chain management, continuous improvement in inventory
management practices, and dynamic digital inventory management achieved through a combination with
refined variety management. to foster business development, yunnan pharma independently developed
“dianyibao,” a refined management platform for medical consumables, during the reporting period. this
platform is designed as an information management system for the procurement, supply, and circulation of
medical consumables, with the national medical insurance code and consumables udi code as core components.
additionally, yunnan pharma continued to advance a modern supply chain system for pharmaceutical
distribution characterized by electronic, networked, visual, agile, and intelligent features, showcasing a
profound integration of digital technology with business scenarios.
units (bus)
     the company, following its established development strategies, primarily focuses on developing new
business units (bus). these bus include the smart oral care business unit, precision aesthetic medicine
business unit, and zhiyun health business unit. the company is committed to exploring precisely customized
“comprehensive solutions,” a new business model based on a big data service backend, which will create a new
performance growth driver for the company. additionally, the smart technology business unit has officially
commenced operations, providing support for the company’s digital and intelligent strategies.
     smart oral care bu concentrates on the specialized care market. at the forefront, it utilizes dental
science-based specialized brands under the “toothtalk” name to provide a comprehensive range of oral care
products, including intelligent electric toothbrushes, oral irrigators, personalized brush heads, mouthwashes,
gels, and oral sprays. at the backend, toothtalk effectively connects c-end users through the “ikanya” mini
program, an oral consultation service platform featuring private-domain traffic operations.
     precision aesthetic medicine bu establishes a strong presence in offline flagship stores for aesthetic
medicine, aiming to cover the entire aesthetic medicine industry chain. shanghai yunzhenni medical beauty
clinic and chenggong comprehensive clinic of kunming yunzhen medical technology co., ltd have
officially been put into operation. combining online with modern medicine, these clinics provide customers
with efficient and convenient integrated skincare solutions throughout their entire life cycle. furthermore, the
bu actively explores opportunities in upstream segments of the industry, focusing on the development of new
materials and products to become a comprehensive solution provider with r&d capabilities in the field of
aesthetic medicine.
     zhiyun health bu is dedicated to creating a commercial operation platform for functional food and
scientific nutrition products. in the field of nourishing products, it innovates and iterates products based on
existing products and tcm materials that resonate with the public. this strategy has led to the creation of “a
new chinese nourishing product category made from herbs,” including the “zibu” tonifying category and
“baixiaoyang” nourishing category. in the first half of the year, both nourishing and functional foods
experienced significant increases in sales volume. the concentrated decoctions, a sub-category under the
nourishing category, demonstrated outstanding performance and a positive growth trend. in terms of channel
operation, building upon the foundation of traditional channel layouts such as “baiyao lifestyle ” self-operated
stores, the bu has optimized its omnichannel marketing strategy, with a strong focus on e-commerce. it has
established a comprehensive store matrix in both shelf e-commerce and content e-commerce, with 23 online
stores launched.
     in august 2023, the company’s smart technology bu officially commenced operations. it is committed to
building a global digital platform for yunnan baiyao. this bu aligns with the company’s strategic development
direction, focusing on further improving the company’s digital and intelligent capabilities. it has capitalized on
internal and external opportunities in the digital economy, constructing technology application scenarios and
industrial ecosystems through intelligent digital operations and deep digital applications, and creating a digital
comprehensive solution to enhance operational efficiency and drive business innovation. the smart technology
bu comprises five service units (b2c su, b2b su, base support su, system construction su, and digital
intelligence applications su), which, in collaboration with multiple supportive departments and specialist
committees, promote the company’s digital information technology construction needs and achieve its digital
strategic goals.
development
     the report of the 20th national congress of the communist party of china emphasized the need to
strengthen enterprise-led iur (industry-university-research) collaboration, enhancing goal-oriented efforts and
elevating the level of transformation and industrialization of scientific and technological achievements. in
recent years, yunnan baiyao has partnered with the peking university health science center to drive
continuous innovations in the fields of medicine and healthcare. this collaboration has spanned multiple
domains and has yielded significant advancements. the establishment of the peking university-yunnan baiyao
international medical research center (pku-ybimrc) serves as a crucial bridge and platform for promoting
industry-university collaborative research and fostering innovation. it plays a pivotal role in bridging the gap
between academic and industrial innovation chains. the “2023 pharmaceutical innovation and technology
frontier forum” was successfully held at yunnan baiyao group’s kunming head office from august 8 to 9,
universities, research institutes, and enterprises. the event provided a platform for discussions and exchanges
on cutting-edge medical concepts, technological innovations, and service experiences. it showcased the latest
achievements in medical technology development both domestically and internationally and facilitated
collaborative efforts aimed at driving medical innovation and development.
     during the reporting period, the company actively advanced their strategic cooperation with shanghai
pharmaceuticals holding co., ltd (hereinafter referred to as “shanghai pharma”) in multiple areas for
participating in the corporate governance and operation of the latter, based on its equity partnerships with
shanghai pharma. first, joint procurement of tcm materials. the “yuntianshang” tcm industry alliance,
jointly established with tianjin pharmaceutical holdings co., ltd (hereinafter referred to as “tianjin pharma”),
has completed the joint procurement of the first batch of 8 varieties, and will continue to promote large-scale
procurement of more varieties. second, promotion of otc variety business cooperation, which is underway.
third, collaboration in innovation and r&d services. fourth, commercial business cooperation aimed at
enhancing supply chain value via further cooperation in products, resources, and channels between both parties.
furthermore, the general meeting of shanghai pharma on june 29 officially elected mr. chen fashu, a director
of the company, as a non-executive director of its eighth board of directors, mr. dong ming, a director and
ceo of the company, as an executive director of its eighth board of directors, and mr. ma jia, the cfo of the
company, as a supervisor of its eighth supervisory committee. the company’s participation in shanghai
pharma’s corporate governance promotes the integration of their advantageous resources and coordinated
development.
     talent and innovation capabilities are at the core of competition among modern biopharmaceutical
technology enterprises. yunnan baiyao’s sustainable development in the new era hinges on the establishment of
robust independent r&d and global resource integration capabilities, driven by continuous investment in
innovation and complemented by an exceptional talent pool. regarding management talents, in march, the
company appointed mr. zhao yingming as the group’s chief business officer and senior vice president. he is
tasked with leading the development of the oral care, precision aesthetic medicine, and zhiyun health bus.
mr. zhao yingming’s vast 30-year management experience in the consumer goods and retail sector, coupled
with his professional proficiency in both traditional retail and new retail, will effectively enable the company to
expand its new business areas. in august, the company appointed mr. li shaochun as the company’s digital
strategy scientist and the general manager of smart technology bu. as a former general manager of the
medical and life science industry at ibm greater china, he possesses extensive practical experience in
medical digitization and big health. his expertise will drive innovation and digital development at yunnan
baiyao. regarding r&d talents, the pku-ybimrc serves as a platform for multidimensional talent
exploration, absorption, and recruitment. to date, the center has attracted 8 senior researchers, 2 new system
researchers, and a team of young and middle-aged experts. simultaneously, the central research institute,
positioned at the apex of the company’s innovative r&d system, has enhanced the company’s organizational
system, platform development, institutional growth, and project execution. it efficiently employs its central
coordination function to integrate and align yunnan baiyao’s cross-regional r&d resources, efficiently
promoting the r&d processes with scientific rigor.
platform
     the company continues its commitment to increasing r&d investments. during the reporting period, the
company invested rmb 145 million in r&d, representing a 12.59% yoy increase. in terms of building its
r&d capabilities, the company has established an r&d management committee to oversee the entire r&d
system. its r&d strategy is rooted in preserving the essence of yunnan tcm, facilitating product enhancements,
expanding its presence in innovative drugs, utilizing ai for drug design, and carrying out unified and efficient
management of resources. the company has also implemented a scientifically clear and diversified system for
r&d project establishment and authorization, reinforcing the oversight and management of its scientific and
technological r&d efforts.
     regarding key r&d projects, on july 24, the company registered and established yunhe pharmaceutical
(tianjin) co., ltd, a wholly-owned subsidiary, in the tianjin free trade zone (airport economic zone). this
subsidiary serves as its r&d platform for radiopharmaceuticals and will construct a 6,000 ㎡ r&d center for
radiopharmaceuticals in tianjin, including a planned 2,000 ㎡ radioactive workplace equipped with
radiochemical laboratories, quality inspection rooms, imaging facilities, etc. this initiative aims to establish a
proprietary r&d platform and systematic r&d system, enhancing the efficiency of radiopharmaceuticals r&d
and laying a solid foundation for its presence in innovative drugs.
planning and actively promoting overseas business operations
     the m&a and internationalization processes have imposed new demands on yunnan baiyao’s investment
capabilities, talent system construction, risk control capabilities, and internal control system development.
yunnan baiyao is committed to continuously enhancing and refining these capabilities while steadily advancing
its m&a and internationalization.
     ban loong holdings limited (“ban loong holdings”), one of the company’s holding subsidiaries, is
dedicated to establishing an international industry platform for yunnan baiyao based in hong kong and
catering to the global market. in the first half of 2023, ban loong holdings not only increased orders from
existing overseas markets but also successfully expanded its presence in new overseas markets, achieving a
significant boost in yunnan baiyao’s overseas operating revenue. branding-wise, ban loong holdings actively
conducted a comprehensive branding campaign for yunnan baiyao overseas, promoting the brand’s image
through various channels such as exhibitions, online platforms, city bus advertisements, and more.
     (iii) business models
     (1) procurement model
     the company’s procurement demand, execution, and decision-making are separated in authorization,
which is a system for strengthening analysis on procurement activities at more specialized level. the company
continues to explore new procurement models, and develop and integrate platform resources with internet
enterprises, for achieving a one-stop solution for employee welfare and travel services. through innovative
supply chain value and an “agency procurement model,” the company has successfully optimized its supply
chain services, reduced total supply chain costs, enhanced product competitiveness, and thus achieved a
win-win situation between supply and demand.
     (2) production model
     the company’s production of industrial products (self-made) is “customer-oriented” and “order-based,”
with emphasis on the alignment of production with sales. the company also has optimized work processes and
systems, and established a safety production management organization system from top to bottom and layer by
layer to further standardize and regulate all production links and processes, ensuring the controllability and
stability of product production and quality.
     (3) sales model
     the company sells industrial products (self-made) mainly based on the payment principle of “payment
before delivery” and signs annual agreements with distributors to fix the payment terms and other matters. the
company provides specialized maintenance for important terminals, showing its strong terminal control
capabilities. in its commercial operations, a significant portion of sales comes from wholesale activities, while
retail sales constitute a smaller portion. the wholesale business primarily targets long-term, high-volume
customers like medical institutions and commercial companies, following a “delivery before payment”
principle. in the retail sector, the company uses a “cash on delivery” approach.
     (4) r&d model
     yunnan baiyao adheres to market trend insight-driven r&d, fully taking into account its technological
capabilities and research in strategic areas. it enhances synergy between marketing and r&d through effective
mechanism construction. it requires its technical personnel to have marketing thinking, and marketing personnel
to understand mainstream technological trends, to achieve its effective integration of technology and user needs.
the company harnesses the collective wisdom and capabilities of multiple parties to expedite its access to
global r&d and technological resources. it will also continuously increase the proportion of r&d investment,
and build its own differentiated competitive advantages with integrated healthcare solutions.
     (1) transformation from a traditional manufacturing enterprise to a provider of comprehensive solutions
     driven by innovative biotechnology, artificial intelligence, and big data computing capabilities, the global
healthcare industry is undergoing a transformation from evidence-based medicine to precision medicine, which
has driven the global pharmaceutical industry to transform from large-scale industrial production to
personalized preparations and therapies. the market demand has also shifted from a single “product” to
“comprehensive solutions.” in this context, yunnan baiyao is gradually transitioning from a traditional
manufacturing enterprise that provides products to a provider of comprehensive solutions. based on its
established “1 4 1” strategic presence, yunnan baiyao is committed to providing services around customer
needs. leveraging its extensive user big data repository and adaptable production capabilities, it organically
integrates precisely customized products and personalized services, and ultimately delivers differentiated
“comprehensive solutions.” meanwhile, based on digitalization and platformization, the company is building a
new user-centered service model, which will make it move from a to-b enterprise to a to-c enterprise. through
continuous dialogues with users, the company manages users throughout the entire lifecycle, providing
comprehensive solutions for customers, and becoming a high-quality partner for users to have a healthy and
beautiful life.
     (2) transformation from a regional enterprise to an international enterprise with cross-regional presence
     yunnan baiyao has planned the establishment of regional strategic functional centers in regions such as
kunming, beijing, shanghai, and hong kong. among these, kunming is the company’s headquarters, the
production facility, and the hub for tcm research and development. it serves as the focal point from which the
company expands its influence outward. once completed, kunming innovation and r&d center will
concentrate on tcms and natural drugs research, capitalizing on the abundant local flora and fauna. this will
complement the company’s traditional r&d strengths in natural plant extraction and further enhance its
independent r&d capabilities. the company has set up functions such as yunnan baiyao international
operation center and r&d center in shanghai for building an innovative r&d system and cultivating
emerging business sectors. the company also established multi-disciplinary r&d centers there, and quickly
introduced world-class talents and project resources globally, for gathering and allocating global resources, and
promoting its technological and internationalization process. the pku-ybimrc, located in beijing, serves as
an r&d and a scientific research transformation platform, and connects the innovative iur chain. in addition,
it closely focuses on world cutting-edge technology researches, and explores new mechanisms for
enterprise-university cooperation, with an aim to attract world-class scientists, accelerate transformation of
academic and scientific research achievements, and create a competitive medical brand. the company is
creating an industrial platform that leverages resource-rich highland regions with favorable policies. this
approach involves cross-regional expansion to effectively harness resources and develop core competitive
advantages.
     (3) transformation from traditional endogenous growth to a growth model “driven by dual wheels”
     the research and innovation model of global pharmaceutical companies has shifted from the traditional
“closed-door innovation” to a new model characterized by patent collaborations, m&as, reflecting an
outward-oriented development approach. against the backdrop of centralized drug procurement, medical
insurance fee control and other payment reforms in china, reliance on a single product and simple imitation in
manufacturing will no longer meet the long-term development needs of chinese pharmaceutical enterprises. on
one hand, yunnan baiyao continues to deeply cultivate and explore the potential of its existing business sectors,
thus accumulating momentum for its significant leapfrog advancements. also, its business sectors strive to
achieve commercial collaboration, technological exchange, and data sharing, and work together to create a moat
for yunnan baiyao. on the other hand, the company will continue to promote the introduction of innovative
products at home and abroad through various business models such as m&as, patent authorization, and joint
venture construction.
     (4) transformation from training internal talents to “training internal talents   introducing external talents”
     the company firmly believes in the pivotal role of talent in driving its development. it has established a
comprehensive training system and various avenues for employee growth, fostering both specialized knowledge
and comprehensive skills, with the mutual development of talents and the company as the objective. by
creating an internal, specialized training platform centered on “attracting elites, addressing pain points,
acquiring true knowledge, spreading culture, and transcending boundaries,” it is dedicated to empowering key
businesses and enhancing the specialized abilities of its talent pool. simultaneously, the company will leverage
its advantageous resources to actively recruit high-caliber specialists across various domains such as strategic
investment, medical academia, drug r&d, and user operations. this initiative aims to bolster independent r&d
capabilities and global resource integration expertise, drive technological innovation in pharmaceuticals,
particularly in the realm of biopharmaceuticals, and integrate emerging information technologies, for achieving
a leapfrog development, and creating a comprehensive pharmaceutical solution that integrates multiple product
forms. by nurturing internal talents, welcoming 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.
     (5) transformation from a traditional manufacturing enterprise to a smart enterprise under digital
operations
     yunnan baiyao is committed to building a digital driving force and actively seeking for transformation to
digital operations with customers as the center, so as to bring new value propositions to customers, and improve
their experience. leveraging cutting-edge digital technologies such as cloud computing, big data, artificial
intelligence, 5g, and the internet of things, the company drives innovation and development. the company
also seeks for transformation from a function-oriented process to a process that connects customer scenarios to
drive the company’s management change and organizational development. also, the company will establish a
unified “data base” and governance strategy, and build an intelligent decision-making system based on data and
facts. now, it is establishing a hybrid cloud support system and pilot applications for master data and data lakes,
sorting end-to-end full process, developing artificial intelligence products, and working together with various
business sectors to achieve commercial collaboration, technological exchange, and data sharing, for creating a
data moat for the group, while initiating construction of the group’s private-domain membership system and
multiple industrial platforms.
ii. analysis on core competitiveness
     (i) brand strength
     yunnan baiyao is a well-established chinese heritage brand with a 120-year history. the company places
the yunnan baiyao brand at its core, evolving from a pharmaceutical brand to encompass a diverse range of
sub-brands, including personal healthcare products, crude drugs, and big health products. this expansion
highlights the company’s extensive portfolio of brands and its ongoing commitment to reaching and engaging
customers, thereby enhancing the brand value. with the continuous enhancement of brand market value, brands
have emerged as the focal point in the global economic arena. throughout its more than a century of evolution,
yunnan baiyao has consistently pursued innovation and transformation. looking ahead, the company is poised
to increase investments in technological innovation and expedite the optimization and transformation of its
product development processes, solidifying the company’s presence on the global stage. in july, brand finance,
a british brand evaluation agency, released the healthcare 2023 — the annual report on ranking of the most
valuable and strongest pharma, medical devices and healthcare services brands by value. yunnan baiyao
was included in the shortlist of the global top 25 most valuable pharmaceutical brands for the third time,
showing the market’s acknowledgment of yunnan baiyao’s brand value during the reporting period.
     (ii) talent team advantages
     since 1999, the company has formed a high-caliber management team with a strong market awareness
across various business sectors. in the fierce industry competition over the past two decades, the company has
always maintained a sharp business acumen of market changes and profound insight into industry trends. it
adheres to product innovation to meet iteratively upgrading consumer demands, and promotes the integration of
tcm into modern life with modern technology. this has driven the company to achieve a long-term,
sustainable, stable and sound development, benefiting from which, it has long been among the forefront in tcm
industry in terms of operating revenue, net profit, market value, and other indicators.
     since implementing mixed ownership reform, the company has leveraged the benefits of market-oriented
institutional mechanisms to attract a diverse array of top-tier talents, including ceo mr. dong ming, spanning
multiple levels and fields. during the reporting period, mr. zhao yingming was appointed as the company’s
chief business officer and senior vice president. the company’s talent team building has brought fresh blood
into its management improvement, new business incubation, business expansion, digital construction, and other
fields, significantly boosting its overall capacity to expand into new business ventures. following its official
launch, pku-ybimrc, an r&d platform representing a groundbreaking industry-university collaboration, has
attracted renowned scientists from around the world. with this, the company significantly enhanced its existing
capabilities in tcm research and established leading-edge r&d capabilities for modern pharmaceutical
products across various domains.
     the company is facilitating the rapid integration of newly acquired talent teams with its existing talent
pool to capitalize on emerging development opportunities. it aims to advance its stability, long-term prospects,
and sustainability, enabling the company to reach new milestones in its growth journey.
     (iii) innovation capabilities and product portfolio strengths
     products are not only the lifeblood and driving force behind enterprise development but also the vessel
through which users experience the value created by the company. yunnan baiyao continues to shine with
vitality after 120 years of development by continuously innovating and upgrading its products to meet the
evolving demands of consumers. the company is committed to integrating tcm into modern life by focusing
on innovation strategies such as “center stabilization and wing highlighting,” and “new baiyao & big health.”
as such, the company has evolved from a single hemostatic product manufacturer into a company with broad
and diversified yunnan baiyao products encompassing various sectors within the big health industry. among
them, aerosol, plaster, capsule, toothpaste, woundplast, and baoqi panax notoginseng products rank among the
top in the segmented market share, creating classic cases of tcm innovation such as “yunnan baiyao
woundplast” and “yunnan baiyao toothpaste” and their use in daily scenarios.
     as a model for cross-border presence of tcm enterprises, the company has successfully achieved
business presence in pharmaceutical products and health products, and holds a leading position in various
market segments. in the new era, the company’s vitality lies in its product innovation capability, which, when
combined with coordinated development and mutual empowerment between its pharmaceutical and consumer
businesses, allows the company to navigate market and policy risks in different economic cycles, ensuring
overall stability and sustainable development.
     (iv) resource advantages
     yunnan baiyao relies heavily on the rich resources in yunnan province and has always adhered to a
long-term approach when establishing its presence in strategic areas, especially focusing on strategic tcm
varieties like paris polyphylla and panax notoginseng. over two decades of dedicated research on paris
polyphylla, a strategic medicinal material for the company, the company has successfully addressed the
challenges associated with its cultivation. the company has transformed this once-wild and endangered plant
into a cultivatable medicinal material suitable for industrialization. additionally, the company has embraced
digital infrastructure and information-oriented approaches in the panax notoginseng industry chain, driving the
digital transformation across the entire supply chain. through digital solutions, yunnan baiyao ensures stable
quality and full traceability of panax notoginseng raw materials, effectively mitigating the quality fluctuations
often associated with traditional agricultural products due to extensive processing. this progress allows the
company to gradually establish a fair pricing mechanism and standardized industrial operations, thereby
leading and advancing the development and upgrading of the panax notoginseng industry.
     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, creating a stable long-term supply system for its strategic medicinal materials. this
effectively ensures the stable quality of tcm raw materials and control the price fluctuation risk of strategic
tcm raw materials, laying a solid foundation for the long-term and sustainable development of yunnan
baiyao.
     (v) channel advantages
     in terms of pharmaceuticals, the company has built a marketing network covering various provinces,
counties, and towns across china. in terms of otc channels, it covers over 400,000 stores and grassroots
medical units, with 5,000 high-quality chain stores. especially in areas with well-developed chain pharmacies
such as east china, hunan province, hubei province, and yunnan province, the company has achieved a high
coverage and penetration rate in marketing driven by its strong market control capabilities and “one province,
one strategy” or even “one chain store, one strategy”. the company also has conducted extensive
cooperation with major e-commerce platforms such as alibaba, jd.com, and pinduoduo, for expansion of
online otc sales channels, and achieved efficient reach to consumers by virtue of customized digital
marketing.
     regarding health products, yunnan baiyao has established a comprehensive nationwide sales team
dedicated to big health products, covering all terminals. as of 2022, yunnan baiyao toothpaste had maintained
the largest toothpaste sales share in omni-channels, encompassing hypermarkets, supermarkets, mini-stores,
convenience stores, and grocery stores (source: nielsen retail research data ytd2212), 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 and learning from any mistakes along the way, all of which enhance its ability to quickly respond to
evolving business trends. such channel advantages have driven significantly enhancement to yunnan baiyao’s
market competitiveness, laying the foundation for the company to continuously commercialize new products.
iii. analysis on principal businesses
overview
refer to relevant contents of “i. principal businesses of the company during the reporting period.”
year-on-year changes in the key financial data
                                                                                                                      unit: rmb
                             the reporting        the same period of        year-on-year
                                                                                                      reasons for changes
                                period             the previous year      increase/decrease
                                                                                               mainly due to increase in industrial
 operating revenue         20,309,372,850.07        18,016,738,609.15               12.73%
                                                                                               sales revenue by rmb 541 million
                                                                               and increase in commercial sales
                                                                               revenue by rmb 1.759 billion
                                                                               during the reporting period.
                                                                               mainly due to increase in industrial
                                                                               sales cost by rmb 223 million and
operating cost         14,713,232,267.40   12,792,498,131.95         15.01%    increase in commercial sales cost
                                                                               by rmb 1.698 billion during the
                                                                               reporting period.
                                                                               mainly due to increase in sales
sales expenses          2,257,688,549.69    2,010,088,694.73         12.32%
                                                                               related expenses.
administrative
expenses
                                                                               mainly due to decrease in interest
financial expenses       -105,990,570.67     -163,777,275.55         35.28%
                                                                               income by rmb 111 million.
                                                                               corresponding increase in income
                                                                               tax expenses caused by increase in
income tax expenses      477,020,837.61      290,249,994.10          64.35%
                                                                               total profits during the reporting
                                                                               period.
                                                                               increase in r&d investments
r&d investment           144,819,933.66      128,624,650.16          12.59%
                                                                               during the reporting period.
                                                                               mainly due to increase in the cash
                                                                               received from sales of goods or
                                                                               rendering of services during the
                                                                               reporting period by rmb 2.198
                                                                               billion compared to the same
net cash flows from
operating activities
                                                                               cash paid for goods purchased and
                                                                               services received during the
                                                                               reporting period by rmb 723
                                                                               million compared to the same
                                                                               period last year.
                                                                               mainly due to decrease in the cash
                                                                               paid for investments during the
                                                                               reporting period by rmb 11.518
                                                                               billion compared to the same
net cash flows from                                                            period last year and decrease in the
investing activities                                                           cash received from disposal of
                                                                               investments during the reporting
                                                                               period by rmb 2.817 billion
                                                                               compared to the same period last
                                                                               year.
                                                                               mainly due to decrease in cash
                                                                               received from borrowings during
                                                                               the reporting period by rmb 906
                                                                               million compared to the same
net cash flows from                                                            period last year and decrease in
                       -3,107,700,963.75   -2,712,674,922.09        -14.56%
financing activities                                                           other cash received relating to
                                                                               financing activities during the
                                                                               reporting period by rmb 776
                                                                               million compared to the same
                                                                               period last year.
                                                                               mainly due to increase in the net
                                                                               cash flows from operating activities
net increase in cash
                         -543,421,662.08   -8,782,469,818.78         93.81%    and investment activities during the
and cash equivalents
                                                                               reporting period 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
     revenue
     by industries
     income from
     industrial sales
     income from
     commercial sales
     technical service               2,184,678.61              0.01%                 6,118,391.45                0.03%            -64.29%
     hospitality
     industry
     income from
     plantation sales
     income from
     other businesses
     by products
     industrial
     products                    7,498,960,250.10              36.92%            6,958,391,645.13              38.62%               7.77%
     (self-made)
     wholesale and
     retail
     agricultural
     products
     others                          9,489,307.75              0.05%                11,769,343.65                0.07%            -19.37%
     income from
     other businesses
     by regions
     domestic                   19,913,147,313.47              98.05%           17,923,913,574.97              99.48%             11.10%
     overseas                      396,225,536.60               1.95%               92,825,034.18               0.52%            326.85%
   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
industrial sales
income from
commercial              12,771,903,564.67    12,004,349,749.92          6.01%               15.97%                16.47%                -0.40%
sales
by products
industrial
products                  7,498,960,250.10       2,679,860,087.48        64.26%                   7.77%                 9.08%                    -0.43%
(self-made)
wholesale and
retail
by regions
domestic                 19,913,147,313.47      14,343,621,869.12        27.97%                11.10%                 12.83%                     -1.11%
    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 year
    □ applicable  not applicable
    ⅳ. analysis on non-principal businesses
     applicable □ not applicable
                                                                                                                                   unit: rmb
                                                proportion in                                                                          whether it is
                               amount                                                          reasons
                                                 total profits                                                                          sustainable
                                                                    mainly consisted of shanghai pharma’s investment income
investment income           421,542,165.56                12.76%    and income from the holding and disposal of financial assets             no
                                                                    held for trading.
profits and losses of                                               changes in the securities and net asset value held by the
changes in fair values                                              company.
                                                                    mainly composed of provision for inventory depreciation
impairment of assets         19,008,334.90                0.58%                                                                              no
                                                                    reversed.
non-operating                                                       mainly composed of income not related to daily business
revenue                                                             activities.
non-operating                                                       mainly composed of expenses not related to daily business
expenses                                                            activities.
other income                 42,177,454.66                1.28%     mainly composed of government subsidies.                                 no
credit impairment                                                   mainly composed of provision for bad debt for accounts
                             -74,680,582.29               -2.26%                                                                             no
loss                                                                receivable in the commercial sector.
                                                                    mainly composed of proceeds from the disposal of
income from disposal
of assets
                                                                    use assets.
    v. analysis on assets and liabilities
                                                                                                                                   unit: rmb
                            end of the reporting period            end of the previous year
                                               proportion                            proportion     increase/decrease      statement on significant
                              amount             in total           amount             in total       in proportion               changes
                                                  assets                                assets
cash and bank
balance
accounts
receivable
inventories               6,970,395,685.01        13.42%         7,993,207,044.26       14.99%                 -1.57%     no significant changes.
investment                   54,825,749.03         0.11%           55,823,776.49         0.10%                  0.01%     no significant changes.
property
long-term equity
investments
fixed assets           2,639,966,624.79      5.08%     2,723,302,365.65     5.11%              -0.03%    no significant changes.
                                                                                                         increased investment in
construction in                                                                                          construction in progress
progress                                                                                                 during the reporting
                                                                                                         period.
                                                                                                         partial lease termination
right-of-use
assets
                                                                                                         period.
                                                                                                         decreased discount of
                                                                                                         credit loans and
short-term loans       1,524,432,903.76      2.94%     1,850,867,886.59     3.47%              -0.53%    internally issued bills
                                                                                                         during the reporting
                                                                                                         period.
                                                                                                         mainly due to the
                                                                                                         pre-receivables of
                                                                                                         pharmaceutical business
contractual
liabilities
                                                                                                         period recognized as
                                                                                                         revenue during the
                                                                                                         reporting period.
long-term loans            2,100,000.00      0.00%         2,100,000.00     0.00%               0.00%    no significant changes.
                                                                                                         partial lease termination
leasing liabilities     183,946,367.10       0.35%      285,783,728.73      0.54%              -0.19%    during the reporting
                                                                                                         period.
                                                                                                         mainly due to the
financial assets                                                                                         disposal of some fund
held for trading                                                                                         investments during the
                                                                                                         reporting period.
                                                                                                         mainly due to an
other receivables       533,146,423.08       1.03%      118,948,994.06      0.22%               0.81%    increase in dividends
                                                                                                         receivable.
non-current assets                                                                                       initial term deposit
due within one                               0.00%      361,774,444.44      0.68%              -0.68%    converted to current
year                                                                                                     deposit upon maturity.
                                                                                                         mainly due to increase
other current
assets
                                                                                                         the reporting period.
                                                                                                         increased rent in
receipts in
advance
                                                                                                         reporting period.
   □ applicable not applicable
    applicable □ not applicable
                                                                                                                                            unit: rmb
                                                                  cumulative
                                             profits or losses                   impairment
                                                                    changes                       purchase
                                               on changes in                       accrued                          sales amount
                                                                     in fair                   amount during                              other
        item           opening balance       fair value during                    during the                          during the                      closing balance
                                                                     value                      the reporting                            changes
                                               the reporting                      reporting                        reporting period
                                                                  included in                      period
                                                   period                           period
                                                                     equity
financial assets
assets held for
trading
(derivative
financial assets
excluded)
instrument                71,745,000.00                                                                                                                  71,745,000.00
investments
non-current             380,786,134.24           10,660,929.73                                                                                          391,447,063.97
financial assets
subtotal of
financial assets
total                  2,868,253,209.84          53,088,928.07                                 20,700,000.00        937,825,817.76                    2,004,216,320.15
financial
liabilities
               other variations: none
               whether the company has significant changes in measurement attributes of main assets during the reporting period
               □ yes  no
                             item                      closing book value (rmb)                                 reason for restriction
                                                                                        banker’s acceptance deposit, foreign exchange performance
                   cash and bank balance                                  42,956,400.00
                                                                                        bond and banker’s letter of guarantee
                 assets in special account for                                          special fund for paying the cost of employee status conversion
                        system reform                                                   in state-owned enterprises
                                                                                        the holdings shall not be transferred within 36 months since the
                long-term equity investments                          11,334,166,098.19
                                                                                        ending date of the private placement in 2021
                            total                                     12,009,690,107.96                                   --
               vi. investment analysis
                applicable □ not applicable
                 investment during the reporting period          investment during the same period of the
                                                                                                                        percentage of change
                                (rmb)                                     previous year (rmb)
□ applicable  not applicable
     applicable □ not applicable
                                                                                                                                                                                                  unit: rmb
                                                                                                                                                                   reasons for
                                                                                         cumulative                                                cumulative
                                   investment                                                                                                                        unmet
                                                involved industry      amount               actual                                                income as of
                  investment        in fixed                                                              source of     progress     estimated                      progress      disclosure          disclosure
   project                                        in investment     invested in the    investment as of                                           the end of the
                    method          assets or                                                              funding      of project    income                          and         date (if any)     index (if any)
                                                     projects       reporting period      the end of                                                reporting
                                      not                                                                                                                           estimated
                                                                                       reporting period                                              period
                                                                                                                                                                     income
                                                                                                                                                                                                   http://www.cnin
                                                                                                                                                                                                   fo.com.cn/new/
                                                                                                                                                                                                   disclosure/detail
yunnan
                                                                                                                                                                                                   ?stockcode=00
baiyao                                          pharmaceuticals,
                                                                                                          self-raised                                                                              0538&announce
shanghai        self-established      yes       daily chemical      118,969,257.53     412,849,167.14                     35.98%                                      n/a        june 9, 2021
                                                                                                            funds                                                                                  mentid=121020
international                                   products
center
                                                                                                                                                                                                   sz0000538&ann
                                                                                                                                                                                                   ouncementtime
                                                                                                                                                                                                   =2021-06-09
yunnan
baiyao r&d
platform -
                                                                                                          self-raised
kunming         self-established      yes       pharmaceuticals      34,371,250.73       54,664,681.90                    15.00%                                      n/a
                                                                                                            funds
center
construction
project
total                  --              --               --          153,340,508.26     467,513,849.04         --            --             0.00            0.00        --              --                 --
             (1) securities investment
              applicable □ not applicable
                                                                                                                                                                                                       unit: rmb
                                                                                                                                    purchase
                                                                                                profits or losses   cumulative
                                                                                                                                    amount                          profits and
                                                               accounting                        on changes in        changes                    sales amount
type of                      stock        initial investment                 opening book                                            during                        losses during    closing book        accounting      source of
             stock code                                        measurement                         fair value       in fair value                 during the
securities                abbreviation          cost                             value                                                 the                         the reporting       value              items          funding
                                                                 model                             during the       included in                 reporting period
                                                                                                                                    reporting                         period
                                                                                                reporting period       equity        period
domestic
                                                                                                                                                                                                         financial
   and                       xiaomi
             hk.01810                     1,631,800,843.40      fair value   1,078,456,867.31    13,720,796.40                                                     13,720,796.40   1,092,177,663.71     assets held     self-raised
overseas                  corporation
                                                                                                                                                                                                        for trading
 stocks
domestic                                                                                                                                                                                                  other
   and                      jacobson                                                                                                                                                                    non-current
             hk.02633                        238,699,200.00     fair value    164,361,680.00     12,658,480.00                                                     12,658,480.00    177,020,160.00                      self-raised
overseas                     pharma                                                                                                                                                                      financial
 stocks                                                                                                                                                                                                   assets
                          cicc wealth
                                                                                                                                                                                                         financial
                          management
  fund        sjs623                         129,850,746.27     fair value    136,804,621.97       2,369,451.07                                                     2,369,451.07    139,174,073.04      assets held     self-raised
                          exclusive no.
                                                                                                                                                                                                        for trading
                                                                                                                                                                                                         financial
                          guangfa juli
  fund        162712                         400,000,000.00     fair value    398,257,744.66       9,224,385.79                                 304,476,800.00      9,945,185.79    103,005,330.45      assets held     self-raised
                          bond class a
                                                                                                                                                                                                        for trading
domestic
                                                                                                                                                                                                         financial
   and                      sinomab
             hk.03681                        354,119,828.19     fair value     81,419,271.05       1,223,979.15                                                     1,223,979.15     82,643,250.20      assets held     self-raised
overseas                   bioscience
                                                                                                                                                                                                        for trading
 stocks
                          boshi robust                                                                                                                                                                   financial
  fund        seg067        preferred         25,000,000.00     fair value     61,815,384.62       1,023,076.92                                                     1,023,076.92     62,838,461.54      assets held     self-raised
                             fof2                                                                                                                                                                       for trading
domestic
                                                                                                                                                                                                         financial
   and                        jbm
             hk02161                          25,039,800.00     fair value     21,215,162.50       8,288,197.50                                                     8,288,197.50     29,503,360.00      assets held     self-raised
overseas                  (healthcare)
                                                                                                                                                                                                        for trading
 stocks
                            fullgoal                                                                                                                                                                     financial
  fund        004736       dingli net     1,700,000,000.00      fair value    289,725,481.89       6,196,610.89                                 295,922,092.78      6,807,225.83                   -    assets held     self-raised
                              debt                                                                                                                                                                      for trading
                                   guangfa                                                                                                                                                  financial
  fund          002925           juyuan class    100,999,000.00    fair value    123,309,198.09                                        123,309,198.09      668,616.43                   -   assets held   self-raised
                                      a                                                                                                                                                     for trading
                                   le rui                                                                                                                                                   financial
  fund          sw8334            enhanced        88,000,000.00    fair value    116,958,548.41                                        116,958,548.41    -1,208,297.97                  -   assets held   self-raised
                                 bond no. 27                                                                                                                                                for trading
other securities investments held at the end
of the reporting period
total                                           4,743,509,417.86       --       2,517,442,315.18   54,875,718.89   0.00       0.00     885,955,735.13    55,854,307.17   1,686,362,298.94       --            --
disclosure date of the board’s
announcement on review and approval of                                                                             december 31, 2022
securities investment
(2) investments in derivatives
□ applicable  not applicable
the company had no investments in derivatives during the reporting period.
□ applicable  not applicable
the company had no use of proceeds during the reporting period.
vii. significant assets and equity sales
□ applicable  not applicable
the company had no significant assets sales during the reporting period.
□ applicable  not applicable
            viii. analysis on the major holding 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,    subsidiary    wholesale and retail of pharmaceuticals                        1,000,000,000.00     15,166,328,699.19    5,701,337,447.53      12,372,205,584.18     279,796,951.48       238,406,435.42
co., ltd.
yunnan baiyao
group health
                   subsidiary    production and sales of oral hygiene products                     84,500,000.00      7,503,518,310.47    5,711,098,622.31       3,247,744,129.12    1,422,105,017.60    1,196,311,128.14
products co.,
ltd.
                                 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
shanghai
                                 preparations, granules, plasters, pills, oral liquids,
pharmaceuticals    joint-stock
                                 inhalants, injections, liniments, tinctures, suppositories)    3,696,414,318.00    213,317,704,838.46   78,942,476,886.95     132,592,157,323.37    4,558,084,231.87    3,417,001,019.98
holding co.,       company
                                 health products, medical devices, and related products,
ltd.
                                 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.
acquisition and disposal of subsidiaries during the reporting period
 applicable □ not applicable
                                                         approaches of acquiring and
                                                                                               influences on overall production,
                  company name                        disposing of subsidiaries during the
                                                                                                  operation and performance
                                                               reporting period
 xingzhong digital intelligence tcm service
                                                              newly incorporated                   no significant influence.
 co., ltd of yunnan baiyao group
 yunnan yunyao nuxiang co., ltd.                              newly incorporated                   no significant influence.
 yunnan pharmaceutical hanbo co., ltd.                           cancelled                         no significant influence.
 yunnan baiyao group chuxiong health
                                                                   cancelled                       no significant influence.
 products co., ltd.
 ban loong fund investment co., ltd.                             cancelled                         no significant influence.
 ban loong hemp technology inc                                   cancelled                         no significant influence.
 ban loong healthcare (overseas) co, ltd.                     newly incorporated                   no significant influence.
 ynby healthcare (shenzhen) co., ltd.                         newly incorporated                   no significant influence.
 ynby healthcare (singapore) pte ltd.                         newly incorporated                   no significant influence.
 ynby healthcare co., ltd.                                    newly incorporated                   no significant influence.
 ynby beauty co., ltd.                                        newly incorporated                   no significant influence.
 ynby pharmaceutical co., ltd.                                newly incorporated                   no significant influence.
 ynby international co., ltd.                                 newly incorporated                   no significant influence.
 ynby co., ltd.                                               newly incorporated                   no significant influence.
 ynby holdings group co., ltd.                                newly incorporated                   no significant influence.
 ynby group co., ltd.                                         newly incorporated                   no significant influence.
 ynby (hongkong) co., ltd.                                    newly incorporated                   no significant influence.
description of the major holding companies and joint-stock companies: none.
ⅸ. structured entities controlled by the company
 applicable □ not applicable
see section x “ix. interest in other entities”
x. risks and countermeasures
     (1) 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 of these factors are exerting a significant impact on the pharmaceutical industry. given this
context, the company will place even greater emphasis on aligning with the chinese pharmaceutical policy
direction. the company will intensify its efforts in analyzing and comprehending critical industry information,
and promptly grasp industry development and shifting trends. by devising suitable strategies, the company
aims to alleviate the pressure and uncertainty arising from policy changes on production and operations,
ultimately achieving sustained growth.
     (2) r&d of new drugs
     in pursuit of maintaining technological advantages and enhancing core competitiveness, the company has
consistently escalated its investment in drug r&d over recent years. the journey of developing novel drugs
entails not only substantial capital infusion but also a protracted timeline. if relevant policies and the market
undergo changes, the value of the products under r&d may depreciate. additionally, 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.
     (3) market expansion
     currently, the company is proactively constructing a secondary growth curve, endeavoring to infuse fresh
impetus into its sustainable development. in addition to ongoing product development, one of the significant
challenges facing the company is to establish a strong presence in this rapidly evolving and highly competitive
market, cultivate a brand image, and build customer loyalty in the new era. through an unwavering
commitment to user-centered approaches, the company will persistently enhance its market insight, innovate
new products with promising market outlooks, delve into new consumption scenarios, and fortify its marketing
capabilities, thus achieving performance breakthroughs.
     (4) management efficiency
     the company will maintain its strategy of integrating external m&as alongside organic growth, and its
management scope will continue to expand as external investments progress. considering that the invested
target companies may differ from the company in terms of corporate culture and external environment,
strengthening operations and management, implementing resource integration, and fostering strategic
collaboration are of paramount importance in the company’s research agenda. the company will continue to
improve the post-investment management system, bolster post-investment tracking and evaluation, optimize the
governance structure of the acquired targets, nurture a reservoir of managerial talents through internal training
and external recruitment, and augment the management capabilities of the targeted enterprises, thus achieving
the goal of coordinated development.
                                    section iv corporate governance
    i. annual general meeting and extraordinary general meeting held during the reporting
    period
                                          proportion of
     sessions         meeting type      attendance of the         meeting date           disclosure date             resolutions
                                            investors
                                                                                                            the following proposals had
                                                                                                            been considered and
                                                                                                            approved: 1. proposal on the
                                                                                                            the board of directors; 2.
                                                                                                            proposal on the 2022 annual
                                                                                                            work report of the
                                                                                                            supervisory committee; 3.
                                                                                                            proposal on the 2022 final
general meeting      meeting                                                                                on the 2022 annual report
                                                                                                            and its summary; 5. proposal
                                                                                                            on the 2022 profit
                                                                                                            distribution plan; 6. proposal
                                                                                                            on the 2023 financial budget
                                                                                                            report; 7. proposal on the
                                                                                                            re-appointment of the
                                                                                                            company’s 2023 auditor
                                                                                                            (including internal control
                                                                                                            audit).
    voting rights
    □ applicable  not applicable
    ii. changes of directors, supervisors, and senior management of the company
     applicable □ not applicable
           name                position held                     type                      date                    reason
                                                                                                           resigned as chairman
     wang minghui       chairman                      resigned                    march 6, 2023            and director for
                                                                                                           personal reasons
                                                                                                           for improving the
                        chief business officer &                                                           company’s
     zhao yingming                                    employed                    march 13, 2023
                        senior vice president                                                              management structure
                                                                                                           further
                                                                                                           resigned as chief
                        chief sales officer &                                                              sales officer and
     wang jin                                         resigned                    march 15, 2023
                        senior vice president                                                              senior vice president
                                                                                                           for personal reasons
iii. profit distribution and capital reserve converted into share capital during the
reporting period
□ applicable  not applicable
the company did not plan to distribute cash dividends, bonus shares, or convert capital reserves into share capital during the
reporting period.
iv. implementation of the company’s equity incentive plan, employee stock ownership
plan (esop), or other employee incentive measures
 applicable □ not applicable
(i) equity incentive
the proposal on fulfillment of exercise conditions for first exercisable period of stock options initially
granted under the 2020 stock option incentive plan had been considered and approved. those 670 incentive
participants initially granted with stock options under the 2020 stock option incentive plan could exercise a
total of 6,746,400 exercisable stock options in the first exercisable period by using the independent exercise
method.
initially granted under the 2020 stock option incentive plan had been considered and approved at the seventh
session of the ninth board of directors in 2022. as the company’s 2021 annual equity distribution plan had
been implemented, a cash dividend of rmb 16.00 (including tax) for every 10 shares would be paid to all
shareholders on the basis of 1,796,221,975 shares. according to the company’s 2020 stock option incentive
plan (draft), the number of unexercised options initially granted under the company’s 2020 stock option
incentive plan was adjusted from 11,257,220 to 15,760,108 and the exercise price was adjusted from rmb
stock option incentive plan had been considered and approved at the ninth session of the ninth board of
directors in 2022, canceling 947,054 stock options initially granted that had not been exercised upon expiration
of the first exercisable period. as the company’s return on equity in 2021 was less than 10.5%, the exercise
conditions for the second exercisable period had not been satisfied; therefore 7,086,240 stock options initially
granted corresponding to the second exercisable period and 840,000 stock options under reserved grant
corresponding to the first exercisable period could not be exercised and would thus be canceled by the
company accordingly. after cancellation, the number of stock options initially granted under the company’s
reserved grant was adjusted from 1,680,000 to 840,000, and the number of incentive participants was adjusted
from 671 to 653.
reviewed and confirmed that the cancellation conducted by the company had been completed. according to the
relevant provisions of the measures for the administration of equity incentives of listed companies and the
option incentive plan. in particular:
     (1) upon expiration of the first exercisable period of the stock options initially granted under the 2020
stock option incentive plan, 6,252,954 stock options had been exercised and 947,054 stock options had not
been exercised; 947,054 stock options initially granted that had not been exercised upon were canceled.
     (2) as the company’s 2021 performance indicators failed to fully meet the performance assessment
requirements set forth in the 2020 stock option incentive plan, 7,086,240 stock options initially granted
corresponding to the second exercisable period and 840,000 stock options under reserved grant corresponding
to the first exercisable period (1,200,000 stock options were under reserved grant, which were adjusted to
the first exercisable period) could not be exercised and would thus be canceled by the company accordingly.
     (3) for the stock options initially granted under the 2020 stock option incentive plan, 17 incentive
participants resigned and 1 incentive participant passed away due to other reasons than performing duties, being
no longer eligible for exercising the stock options. those 314,160 stock options granted but not exercised by the
aforementioned incentive participants could not be exercised and would thus be canceled by the company
accordingly. on september 7, 2022, the shenzhen branch of china securities depository and clearing
corporation reviewed and confirmed that the company had completed the cancelation of 9,187,454 stock
options mentioned above.
part of the 2020 stock option incentive plan and the second exercisable period of its reserved granted part
had been considered and approved at the fifth session of the tenth board of directors in 2023 and the third
session of the tenth supervisory committee in 2023, agreeing to cancel 6,772,080 stock options in the third
exercisable period of its initially granted part of the 2020 stock option incentive plan and 840,000 stock
options in the second exercisable period of its reserved granted part. after the cancellation of all the
  aforementioned stock options, the company’s 2020 stock option incentive plan will be completely terminated.
  (ii) implementation of the esop
   applicable □ not applicable
  all active esops during the reporting period
                                                                                                       proportion in
                                                 number of
                                number of                                                             the total share     source of funding to
    scope of employees                           shares held             status of change
                                employees                                                            capital of listed    implement the plan
                                                   (share)
                                                                                                         company
                                                                   from december 13, 2022 to
independent directors),                                                                                                  employee’s statutory
                                                                   may 26, 2023 after the
supervisors, and senior                                                                                                  compensation,
                                                                   lock-up period expired,
management of the                                                                                                        self-raised funds,
company; 2. employees of                                                                                                 funds raised through
                                                                   under the company’s 2021
the company and its                                                                                                      financing under the
                                                                   esop, accounting for 1.30%
holding subsidiaries. all            1,312                     0                                                0.00%    plan, incentive funds
                                                                   of the company’s current
participants are required to                                                                                             set aside by the
                                                                   total share capital, had all
be employed by the                                                                                                       company, and funds
                                                                   been reduced through
company (including its                                                                                                   obtained by any other
                                                                   centralized bidding or block
holding subsidiaries) and                                                                                                means permitted by
                                                                   trading in the secondary
sign a labor contract/service                                                                                            laws and regulations.
                                                                   markets.
contract with the company.
  shareholdings of the directors, supervisors, and senior management in esops during the reporting period
                                                                            number of shares
                                                                                                      number of shares
                                                                           held at the beginning                             proportion to the
                                                                                                      held at the end of
    name                              position                                of the reporting                               total share capital
                                                                                                     the reporting period
                                                                                   period                                    of listed company
                                                                                                            (share)
                                                                                  (share)
wang
                  chairman (resigned during the reporting period)                       520,570                          0               0.00%
minghui
lu hongdong       director                                                               26,028                          0               0.00%
dong ming         director, ceo, president (acting as the chairman)                     303,666                          0               0.00%
yin pinyao        chief operations officer & senior vice president                      303,666                          0               0.00%
                  chief sales officer & senior vice president
wang jin                                                                                303,666                          0               0.00%
                  (resigned during the reporting period)
qin wanmin        chief innovation officer & senior vice president                      303,666                          0               0.00%
yang yong         chief compliance officer & senior vice president                      303,666                          0               0.00%
zhu zhaoyun       traditional chinese medicine strategic scientist                       86,762                          0               0.00%
yu juan           chief human resources officer                                         173,523                          0               0.00%
li jin            chief quality and process officer                                      86,762                          0               0.00%
qian yinghui      secretary of the board of directors                                    21,690                          0               0.00%
you guanghui      chairman of the supervisory committee                                  43,381                          0               0.00%
zhong jie         deputy chairman of the supervisory committee                           43,381                          0               0.00%
                  chairman of the labor union & employee
qu huaxi                                                                                    26,028                       0               0.00%
                  supervisor
                  vice chairman of the labor union & employee
he yingxia                                                                                  21,690                       0               0.00%
                  supervisor
  changes in asset management institutions during the reporting period: □ applicable          not applicable
  changes in equity caused by shares disposal by holders during the reporting period: □ applicable         not applicable
        from december 13, 2022 to may 26, 2023 after the lock-up period of the esop expired, 23,379,996
  shares held under this esop, accounting for 1.30% of the company’s current total share capital, had all been
reduced through centralized bidding and block trading in the secondary markets. among them, no transferees of
the block trading and shareholders holding more than 5% of the company’s shares were related or
acting-in-concert parties.
exercise of the shareholders’ rights during the reporting period: □ applicable  not applicable
other relevant circumstances and statements of the esop during the reporting period: □ applicable  not applicable
changes in the membership of the management committee of the esop: □ applicable  not applicable
the financial impact of the esop on the listed company during the reporting period and related accounting treatment: □
applicable  not applicable
termination of the esop during the reporting period: ☑ applicable  not applicable
     the lock-up period of the company’s 2021 esop expired on june 30, 2022. as of may 26, 2023, all
currently were all monetary assets. according to the 2021 employee stock ownership plan (amendment) and
the measures for the administration of 2021 employee stock ownership plan (amendment), when the assets
under the esop are monetary assets, the esop can be terminated early, provided that the early termination has
been considered and approved by the board of directors of the company.
     on june 25, 2023, the distribution plan for the proceeds and cash assets under the esop, and the plan for
early termination of the esop have been considered and approved at the esop participants’ meeting.
according to the resolutions of the participants’ meeting, the distribution for the esop shall be based on the
number of shares held by each participant; the balance of cash assets in the account as of june 25, 2023 will be
fully allocated to each participant’s account; from june 25, 2023 until the actual date of distribution, a small
amount of the yields generated in the esop account will be used to pay the related expenses incurred in the
subsequent account cancellation process.
     according to the company’s 2021 employee stock ownership plan (amendment) and the measures for
the administration of 2021 employee stock ownership plan (amendment), on july 5, 2023, the company held
the fourth session of the tenth board of directors in 2023, at which the proposal on the early termination of
the employee stock ownership plan had been considered and approved, agreeing to this early termination.
thereafter, the esop will be liquidated by its management committee and the proceeds will be distributed in
proportion to the shares held by the participants.
other explanations: none
(iii) other employee incentive measures
□ applicable  not applicable
               section v environmental and social responsibilities
i. significant environmental issues
whether the listed company and its subsidiaries are the key pollutant discharge unit announced by the environmental protection
departments
yes □no
environmental protection related policies and industry standards
     yunnan baiyao has strictly complied with laws and regulations such as the law of the people’s republic
of china on environmental protection, the law of the people’s republic of china on air pollution prevention
and control, the law of the people’s republic of china on water pollution prevention and control, the law of
the people’s republic of china on solid waste pollution prevention and control, and the law of the people’s
republic of china on environmental noise pollution prevention and control, and internally formulated and
implemented environmental management policies such as the environmental protection management system,
environmental protection responsibility system, environmental protection approval management system, and
hazardous waste management system.
administrative permits for environmental protection
     environmental impact assessment (eia) approvals: yhxzh [2008] no. 55, yhsh [2009] no. 261,
yhshp [2014] no. 01, whsh [2017] no. 53, etc.
     approval for acceptance of completed environmental protection projects: phase i yh acceptance, [2013]
no. 1, phase ii yh acceptance [2015] no. 30, yh acceptance [2014] no. 16, yh water acceptance [2016]
no. 4.
              industry emission standards and specific situations of pollutant emissions involved in production and operation activities
                    types of main    names of main
  name of                                                             number of    distribution of                                                                                                         approved          emissions
                    pollutants and    pollutants and    emission                                                 emission
company or                                                            discharge       discharge                                        pollutant emission standards implemented       total emissions        total       exceeding
                    characteristic    characteristic     method                                           concentration/intensity
 subsidiary                                                            outlets         outlets                                                                                                            emissions      standards
                      pollutants        pollutants
                                     particulate                                                      particulate matter 3.3mg/m³;    standards for the emission of air pollutants                        nitrogen
                                                                                                                                                                                      nitrogen oxide
yunnan                               matter,           organized                   boiler flue gas    nitrogen oxide 96.64mg/m³;      for boilers (gb13271-2014), particulate                             oxide
                   waste gas                                              3                                                                                                           2.55 tons/half a                  none
baiyao group                         nitrogen oxide,   emissions                   discharge outlet   sulfur dioxide 3l (below        matter≤30 mg/m³, nitrogen oxide≤400                                 11.0667
                                                                                                                                                                                      year
                                     sulfur dioxide                                                   detection limit)                mg/m³, sulfur dioxide≤100 mg/m³                                     tons/year
                                     non-methane                                                                                      standards for the emission of air pollutants
                                                                                   alcohol                                                                                                                no total
                                     total                                                            non-methane total hydrocarbon   in the pharmaceutical industry
yunnan                                                 organized                   extraction waste                                                                                                       emission
                   waste gas         hydrocarbon,                         4                           21.18mg/m³;                     gb37823-2019, non-methane total                 /                                 none
baiyao group                                           emissions                   gas discharge                                                                                                          indicator
                                     particulate                                                      particulate matter 3.1mg/m³     hydrocarbon≤100 mg/m³, particulate
                                                                                   outlet                                                                                                                 available
                                     matter                                                                                           matter≤30 mg/m³
                                                                                                                                                                                      cod 4.54
                                                                                                                                                                                                          no total
                                                                                                                                      wastewater quality standards for discharge      tons/half a year,
yunnan                               cod, ammonia      main waste                  main drainage      cod 40.12mg/l; ammonia                                                                              emission
                   waste water                                            1                                                           to municipal sewers gb/t 31962-2015,            ammonia                           none
baiyao group                         nitrogen          water outlet                outlet             nitrogen 2.54mg/l                                                                                   indicator
                                                                                                                                      cod≤500mg/l, ammonia nitrogen≤45mg/l            nitrogen 0.29
                                                                                                                                                                                                          available
                                                                                                                                                                                      tons/half a year
yunnan
                                                                                                                                                                                      particulate
baiyao group
                                     particulate                                                      particulate matter 4.00mg/m³,   standards for the emission for air pollutants   matter 0.33
traditional                                                                                                                                                                                               nitrogen
                                     matter,           organized                   boiler flue gas    nitrogen oxide 65.03mg/m³,      for boilers (gb13271-2014), particulate         tons/half a year,
chinese            waste gas                                              3                                                                                                                               oxide 32.18   none
                                     nitrogen oxide,   emissions                   discharge outlet   sulfur dioxide 3l (below        matter≤20 mg/m³, nitrogen oxide≤200             nitrogen oxide
medicine                                                                                                                                                                                                  tons/year
                                     sulfur dioxide                                                   detection limit)                mg/m³, sulfur dioxide≤50 mg/m³                  3.85 tons/half a
resources
                                                                                                                                                                                      year
co., ltd.
yunnan
baiyao group                                                                                                                          wastewater quality standards for discharge      cod 6.115
                                                                                                                                                                                                          no total
traditional                                                                                                                           to municipal sewers gb/t 31962-2015             tons/half a year,
                                     cod, ammonia      indirect                    main drainage      cod 63.75mg/l, ammonia                                                                              emission
chinese            waste water                                            1                                                           cod≤500mg/l, ammonia nitrogen≤45mg/l,           ammonia                           none
                                     nitrogen          emissions                   outlet             nitrogen 0.34mg/l                                                                                   indicator
medicine                                                                                                                              integrated wastewater discharge standard        nitrogen 0.033
                                                                                                                                                                                                          available
resources                                                                                                                             gb8978-1996                                     tons/half a year
co., ltd.
yunnan                                                                             pulverization                                      standards for the emission of air pollutants                        no total
                                     particulate       organized
baiyao group       waste gas                                              5        waste gas          particulate matter 4.96mg/m³    in the pharmaceutical industry                  /                   emission      none
                                     matter            emissions
traditional                                                                        discharge outlet                                   gb37823-2019, particulate matter≤30                                 indicator
               types of main     names of main
  name of                                                      number of   distribution of                                                                                                      approved         emissions
                pollutants and   pollutants and     emission                                              emission
company or                                                     discharge      discharge                                        pollutant emission standards implemented      total emissions      total      exceeding
                characteristic    characteristic     method                                       concentration/intensity
 subsidiary                                                     outlets           outlets                                                                                                      emissions     standards
                  pollutants        pollutants
chinese                                                                                                                       mg/m³                                                            available
medicine
resources
co., ltd.
yunnan
baiyao group
                                                                                                                              standards for the emission of air pollutants                     no total
traditional                      non-methane                               combustion
                                                   organized                                  non-methane total hydrocarbon   in the pharmaceutical industry                                   emission
chinese        waste gas         total                            1        waste gas                                                                                         /                              none
                                                   emissions                                  3.83mg/m³                       gb37823-2019, non-methane total                                  indicator
medicine                         hydrocarbon                               discharge outlet
                                                                                                                              hydrocarbon≤100 mg/m³                                            available
resources
co., ltd.
                                                                                              boiler 2 (sulfur dioxide＜                                                      subject to
                                                                                                                                                                                               yunnan       sulfur
yunnan                                                                                        3mg/m³; particulate                                                            simplified
                                 sulfur dioxide;                                                                                                                                               baiyao       dioxide;
baiyao group                                                               main discharge     matter=1.7mg/m³; nitrogen                                                      management,
                                 particulate       organized                                                                  sulfur dioxide: ≤50mg/m³; particulate                            group        particulate
wenshan        waste gas                                          2        outlet of boiler   oxide=47mg/m³); boiler 3                                                       with no total
                                 matter;           emissions                                                                  matter≤20mg/m³; nitrogen oxide≤200mg/m³;                         wenshan      matter;
qihua co.,                                                                 waste gas          (sulfur dioxide＜3mg/m³;                                                        emission
                                 nitrogen oxide                                                                                                                                                qihua co.,   nitrogen
ltd.                                                                                          particulate matter=2.1mg/m³;                                                   indicator
                                                                                                                                                                                               ltd.         oxide
                                                                                              nitrogen oxide=39mg/m³)                                                        available
                                                                                                                                                                             subject to
                                                                                                                                                                                               yunnan       cod;
yunnan                           cod; bod5，                                                                                                                                  simplified
                                                                           main sewage        cod=32mg/l;                                                                                      baiyao       bod5;
baiyao group                     suspended                                                                                    cod≤500mg/l; bod5≤300mg/l;                     management,
                                                   organized               discharge outlet   bod5=14.3mg/l; suspended                                                                         group        suspended
wenshan        waste water       solids;                          1                                                           suspended solids≤400mg/l; ammonia              with no total
                                                   emissions               in the factory     solids=8mg/l; ammonia                                                                            wenshan      solids;
qihua co.,                       ammonia                                                                                      nitrogen≤45mg/l                                emission
                                                                           area               nitrogen=0.584mg/l                                                                               qihua co.,   ammonia
ltd.                             nitrogen                                                                                                                                    indicator
                                                                                                                                                                                               ltd.         nitrogen
                                                                                                                                                                             available
treatment of pollutants
     the company strictly follows the requirements of environmental impact assessment (eia) in construction
of pollution prevention and control facilities, and has obtained complete related environmental protection
approvals. in the first half of 2023, the company actively carried out third-party environmental testing, showing
the emissions of various pollutants such as waste water, waste gas, and noise, were in strict line with the
standards.
     the company adopts a physical-biological contact oxidation process for sewage treatment (3,000m³/day),
a closed treatment process, which can efficiently treat organic compounds in high-concentration waste water
from traditional chinese medicine pharmaceuticals and mainly has the following characteristics:
tank, etc, all of which have a closed design. volatile gases (odor, hydrogen sulfide, ammonia, etc.) are collected
through pipelines and then transported to photocatalytic oxidation deodorization equipment, for decomposing
and purifying harmful gases to reduce air pollution.
recovery system, to the boiler for combustion, which not only protects the environment but also provides energy
for the company and saves costs.
emergency plans for sudden environmental events
     the company has prepared emergency plans for sudden environmental events and submitted them to
chenggong branch of kunming ecological environment bureau, wenshan branch of wenshan prefecture
ecological environment bureau, and other competent departments for record keeping.
investments in environmental governance and protection and payment of environmental protection taxes
     the company pays environmental protection taxes on a quarterly basis in a timely manner based on its
own emissions.
self-environmental monitoring plan
     the company has completed the self-monitoring of waste water, waste gas, and noise in the first half of
indicators of pollutants in line with the emission standards.
administrative punishments for environmental issues during the reporting period
                                                                                           impact on the
                                                                                                               the company’s
 name of company            cause to                                    results of        production and
                                                  violations                                                    rectification
   or subsidiary           punishment                                  punishment         operation of the
                                                                                                                 measures
                                                                                          listed company
         none                 none                   none                 none                 none                 none
other environmental information that should be disclosed
       the monitoring results for the first half of 2023 have been made public on the national pollution source
monitoring information management and sharing platform.
measures taken to reduce carbon emissions and their effects during the reporting period
□applicable not applicable
other environmental protection related information
none
ii. social responsibility
       yunnan baiyao always fully respects and safeguards the legitimate rights and interest of stakeholders, and
achieves a coordinated balance of interest among society, shareholders, the company, employees, and many
other parties. while maintaining sustainable development, improving business performance, and safeguarding
shareholders’ interest, the company actively fulfills its social responsibilities in areas such as community
welfare, disaster relief, and public welfare. in the first half of 2023, yunnan baiyao (000538) was included in
the list of “top 100 esg listed companies in china.”
       (1) promoting esg work with high quality and efficiency
       in the first half of 2023, the company initiated a comprehensive esg systematic construction. adapting to
the contemporary trends and policies and building on past successful practices, yunnan baiyao benchmarked
new domestic and international standards, continuing its efforts in esg initiatives. the company has conducted
interviews on the construction of esg projects around functional departments of the group, and will actively
promote the structural accomplishments of top-level design such as esg strategic vision, governance
framework, indicator system, and management methods.
       (2) building a green and environmentally friendly enterprise for protecting biodiversity
       yunnan baiyao has a long-standing commitment to becoming a green and environmentally friendly
enterprise. to achieve this goal, the company continuously implements energy-saving and environmental
protection technology transformations. it actively promotes the use of new energy-saving and environmentally
friendly technologies, processes, equipment, and materials. it also actively eliminates high-energy-consuming
and low-efficiency processes, technologies, and equipment, fully embracing the concept of sustainable
development and developing new strategies for utilizing new energy to reduce carbon emissions. to promote
the orderly implementation of environmental protection in bg/bu of the group and establish a long-term
mechanism, the engineering construction development center has released the environmental protection
management system for yunnan baiyao group.
    in terms of biodiversity conservation, the company has established a gene bank of genuine traditional
chinese medicine in yunnan and continuously invested in protecting endangered species, domesticating wild
plants, and breeding tcm varieties. the company also has reasonably developed natural resources, and
comprehensively assisted in biodiversity conservation.
    (3) actively engaged in frontline efforts to support rural revitalization
    in the first half of 2023, yunnan baiyao group conscientiously implemented the relevant paired-up
assistance requirements from party committees and governments at all levels. by leveraging its inherent
strengths, the company dedicated itself to a targeted approach towards multiple objectives and tasks. with
well-defined work concepts, the company developed precise plans and fine-tuned work strategies, and
consistently extended support to chazhiluo village and xinle village in pantiange township, weixi county.
eventually, the company successfully accomplished its milestones.
    yunnan baiyao has always been committed to leveraging its corporate advantages. relying on yunnan’s
distinctive geographical advantages, the company engages in the procurement of medicinal materials from
economically disadvantaged counties, striving consistently to establish an enduring mutually beneficial
mechanism for the tcm industry’s growth. the company has entered into a strategic partnership with weixi
weihong agricultural resources development co., ltd, designating the enterprise for the acquisition and initial
processing of tcm through a unified order-based procurement approach. during this period, the company also
provided technical support in various aspects, including conducting technical guidance on tcm cultivation and
training on drug traceability. the village task force regularly carried out dynamic early warning monitoring and
assistance work at the assistance sites to prevent them from falling back into poverty again, with “a monthly
calculation, analysis and assessment” of the income of farmers there and a thorough investigation of farmers
facing poverty-returning risks before including them in early warning monitoring according to the process. also,
targeted investigations and verifications were carried out for households with substandard income, and
assistance plans were formulated on a per-household and per-person basis. support policies were refined, and
income-increasing measures were precisely implemented for each household.
     yunnan baiyao has maintained a steadfast commitment to “business for good”, emphasizing its
transformation into a public-benefit enterprise. esg (environment, society, and governance) principles serve
as the cornerstone of its commercial strategy, guiding its growth and allowing it to fulfill its role and
responsibilities as an industry leader.
                                                                 section vi 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
                                                       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 that compete with the listed
                                                       company in any of its existing business. 2. as of the date of issuance of this
                    yunnan                             commitment letter, our company will legally take necessary and possible
                    provincial                         measures to avoid, and urge any other enterprises under our actual control
                                                                                                                                                          remain
 commitments        investment                         to avoid, any businesses or activities that may in any way substantially or
                                     commitments                                                                                                          effective during
 made in the        holdings group                     potentially constitute a horizontal competition or a conflict of interest, with
                                     regarding                                                                                           december 10,     the period of
 acquisition        co., ltd                           the principal businesses of the listed company. if, in the future, a material                                         in progress
                                     horizontal                                                                                          2021             holding indirect
 report or equity   (“yunnan                           conflict of interest arising from substantial or potential horizontal
                                     competition                                                                                                          stake in yunnan
 change report      investment                         competition between our company and any enterprises under our control
                                                                                                                                                          baiyao
                    holdings                           and the listed company, our company and such enterprises under our actual
                    group”)                            control will give up that business opportunity that may result in a material
                                                       horizontal competition and thus lead to a substantial 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.
 commitments        yunnan           commitments       in order to protect the legitimate rights and interest of any and all of the      december 10,     remain
                                                                                                                                                                             in progress
 made in the        investment       to maintain the   shareholders of the listed company, our company undertakes to warrant: 1.         2021             effective during
acquisition        holdings group   independence    the personnel independence of the listed company, that is: (1) the general                       the period of
report or equity                    of the listed   manager, deputy general manager, cfo, secretary of the board of                                  holding indirect
change report                       company         directors, and other senior management personnels of the listed company                          stake in yunnan
                                                    will work full-time and receive compensation in the listed company, with                         baiyao
                                                    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 personnels 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 any other enterprises under our
                                                    control will not use the assets of the listed company as guarantee for our
                                                    and their debts in violation of regulations. 3. the financial independence of
                                                    the listed company, that is: (1) the listed company continues to maintain its
                                                    independent financial department and independent financial accounting
                                                    system; (2) the listed company opens an independent bank account and
                                                    does not share a bank account with our company or any other enterprises
                                                    under our control; (3) the listed company is able to make independent
                                                    financial decisions, without our company’s illegal interference with its
                                                    asset utilization scheduling; (4) the independence of the listed company’s
                                                    financial personnels who will not work part-time or receive remuneration
                                                    in any other enterprises under our control; (5) 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, personnels, 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.
                                                    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                              remain
commitments
                                    commitments     company for better commercial terms for business cooperation than that                              effective during
made in the        yunnan
                                    regarding       given to the third parties in the market for itself or for any other enterprises   december 10,     the period of
acquisition        investment                                                                                                                                              in progress
                                    related party   under our control. 3. our company does not and will not, by virtue of our          2021             holding indirect
report or equity   holdings group
                                    transactions    indirect stake in the listed company and its own controlling influence, seek                        stake in yunnan
change report
                                                    for privileges for itself or any other enterprises under our control to enter                       baiyao
                                                    into transactions with the listed company. 4. after completing this equity
                                                    transfer, our company will strictly adhere to the provisions of the company
                                                    law of the people’s republic of china, the articles of association of
                                                    yunnan baiyao group, the rules of procedure for general meetings, and
                                                    the decision system for related party transactions of the listed company
                                                    when engaging in inevitable related party transactions with the listed
                                                    company. we are committed to conducting these transactions in a
                                                      transparent, fair, and equitable manner. this involves adhering to
                                                      commercial 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 and
                   administration
                                                                                                                                                       remain
                   commission of
                                                      in the future, when the time is ripe, sasac of yunnan province and new                           effective during
commitments        yunnan
                                      commitments     huadu shall urge yunnan baiyao holdings co., ltd (“baiyao holdings”) to                          the period of
made in the        provincial
                                      regarding       gradually inject the high-quality assets related to yunnan baiyao’s existing                     holding the
acquisition        people’s                                                                                                           march 23, 2017                      in progress
                                      horizontal      business and future development areas into yunnan baiyao group. both                             shares of
report or equity   government
                                      competition     sasac of yunnan province and new huadu will also strictly comply with                            yunnan baiyao
change report      (“sasac of
                                                      the regulations to avoid horizontal competition.                                                 (directly and
                   yunnan
                                                                                                                                                       indirectly)
                   province”), new
                   huadu industrial
                   group co., ltd
                   (“new huadu”)
                                                      to avoid related party transactions with yunnan baiyao. for inevitable
                                                      related party transactions or those occurring for reasonable reasons, new                        remain
                                                      huadu will undertake to conduct such transactions on an equal and                                effective during
commitments
                                      commitments     voluntary basis in the principles of fairness, impartiality, and compensation                    the period of
made in the
                                      regarding       for equal value, with the transaction prices to be determined based on the                       holding the
acquisition        new huadu                                                                                                          march 23, 2017                      in progress
                                      related party   reasonable prices recognized in the market. 2. new huadu and any other                           shares of
report or equity
                                      transactions    enterprises under our control will strictly comply with the avoidance                            yunnan baiyao
change report
                                                      provisions on related party transactions set out in yunnan baiyao’s articles                     (directly and
                                                      of association and in other relevant regulations. all related party                              indirectly)
                                                      transactions involved will be carried out in accordance with the
                                                      decision-making procedures for related party transactions for yunnan
                                                    baiyao, and legal procedures will be followed to ensure not to harm any
                                                    legitimate rights and interest of yunnan baiyao and any other shareholders
                                                    through related party transactions. 3. if new huadu and any other
                                                    enterprises under our control violate any of the above statements and
                                                    commitments, leading to any damages to any 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.
                                                    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
                yunnan                              the listed company. for inevitable related party transactions or those
                state-owned                         occurring for reasonable reasons, sasac of yunnan province will
                equity                              undertake to conduct such transactions on an equal and voluntary basis in
                operation                           the principles of fairness, impartiality, and compensation for equal value,
                management                          with the transaction prices to be determined based on the reasonable prices
                co., ltd                            recognized in the market. sasac of yunnan province will strictly comply
                (“yunnan                            with the provisions of relevant laws, regulations, normative documents,
                state-owned                         and the articles of association of the listed company, perform the                                remain
                equity                              decision-making procedures and information disclosure obligations for                             effective during
commitments     operation           commitments     related party transactions, and warrant not to harm any legitimate rights                         the period of
made during     management          regarding       and interest of the listed company and any other shareholders through            october 31,      holding the
                                                                                                                                                                         in progress
asset           company”),          related party   related party transactions. this commitment letter shall come into effect        2018             shares of
restructuring   new huadu and       transactions    and be irrevocable as of the date of official signature by sasac of yunnan                        yunnan baiyao
                its                                 province. sasac of yunnan province warrants the effective fulfillment of                          (directly and
                acting-in-concert                   these commitments, and the listed company has the right to supervise its                          indirectly)
                parties, jiangsu                    fulfillment of this commitment letter. if sasac of yunnan province fails
                yuyue science                       to effectively fulfill this commitment letter, leading to any actual losses to
                & technology                        the listed company, sasac of yunnan province will compensate for any
                development                         and all of such direct or indirect losses so caused to the listed company.
                co., ltd                            2. new huadu and its acting-in-concert parties undertake that: after the
                (“jiangsu                           completion of this merger and overall listing, our company/i and any
                yuyue”)                             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 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.
                                     overall listing, our company and any enterprises under our 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 undertakes 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 and
                                     any enterprises under our 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 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 the listed company 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 the
                                     listed company, our company will compensate for any and all of such direct
                                     or indirect losses so caused to the listed company.
commitments   yunnan   commitments   after the completion of this merger and overall listing, our                      october 31,      remain            in progress
made during     state-owned      to maintain the   company/institution will maintain independence from the listed company          2018             effective during
asset           equity           independence      in terms of personnel, assets, business, institutions, and finance in                            the period of
restructuring   operation        of the listed     accordance with relevant laws, regulations, and normative documents. we                          holding the
                management       company           will not, by virtue of the identity as a related party of the listed company,                    shares of
                company, new                       engage in the acts that affect the independence of the listed company’s                          yunnan baiyao
                huadu, jiangsu                     personnel, assets, business, institutions, and finances, or harm any rights                      (directly and
                yuyue                              and interest of the listed company and any other shareholders. instead, we                       indirectly)
                                                   will effectively ensure the independence of the listed company in terms of
                                                   personnel, assets, business, institutions, finance, etc. this commitment
                                                   letter shall come into effect and be irrevocable as of the date of official
                                                   signature by our company/institution. our company/institution warrants the
                                                   effective fulfillment of these commitments, and the listed company has the
                                                   right to supervise the fulfillment of this commitment letter. if our
                                                   company/institution fails to effectively fulfill this commitment letter,
                                                   leading to any actual losses to the listed company, our company/institution
                                                   will compensate for any and all of such direct or indirect losses so caused
                                                   to the listed company.
                                                   the shares of the listed company subscribed by our company through this
                                                   transaction shall not be transferred during the period from the end of the
                                                   issuance of these shares to june 26, 2023 (inclusive). after the expiration
                                                   of the aforementioned lockup period, the transfer and trading of such
commitments
                                 commitments       shares shall be handled in accordance with the then effective laws and
made during                                                                                                                        october 31,
                jiangsu yuyue    regarding         regulations, as well as the regulations and rules of the china securities                        june 26, 2023      completed
asset                                                                                                                              2018
                                 lock-up shares    regulatory commission (csrc) and shenzhen stock exchange (szse).
restructuring
                                                   after the completion of this transaction, our company will also arrange a
                                                   lockup period as described above for our any increased stake in the listed
                                                   company after it issues bonus shares or convert public reserve funds into
                                                   share capital.
                baiyao                             if yunnan baiyao and its subsidiaries within the scope of its consolidated
                                                                                                                                                    remain
                holdings,                          financial statements, and, baiyao holdings and its subsidiaries within the
                                                                                                                                                    effective during
                yunnan                             scope of its consolidated financial statements engaged in any illegal
commitments                                                                                                                                         the period of
                state-owned      commitments       activities in the domestic real estate development business during the
made during                                                                                                                        december 11,     holding the
                equity           regarding real    reporting period, such as undisclosed land vacancy, speculation of land,                                            in progress
asset                                                                                                                              2018             shares of
                operation        estate business   property hoarding, and price gouging, which have caused any losses to
restructuring                                                                                                                                       yunnan baiyao
                management                         yunnan baiyao and investors, our company/institution will bear any and all
                                                                                                                                                    (directly and
                company, new                       of corresponding compensation liabilities for such losses as required by
                                                                                                                                                    indirectly)
                huadu, jiangsu                     relevant laws, regulations and securities regulatory authorities.
                yuyue
                                                     if yunnan baiyao and its subsidiaries within the scope of its consolidated
                                                     financial statements, and, baiyao holdings and its subsidiaries within the
                directors and                        scope of its consolidated financial statements engaged in any illegal
commitments
                senior             commitments       activities in the domestic real estate development business during the
made during                                                                                                                         december 11,     remain
                management of      regarding real    reporting period, such as undisclosed land vacancy, speculation of land,                                           in progress
asset                                                                                                                               2018             effective
                the listed         estate business   property hoarding, and price gouging, which have caused any losses to
restructuring
                company                              yunnan baiyao and investors, i will bear any and all of the corresponding
                                                     compensation liabilities for such losses as required by relevant laws,
                                                     regulations and securities regulatory authorities.
                                                     management activities of the listed company beyond authority, nor will it
                                                     encroach on any interest of the listed company.
                baiyao                               2. after the date of issuance of this commitment letter, if the securities
                holdings,                            regulatory authorities make other regulatory requirements regarding                             remain
                                   commitments
                yunnan                               compensatory measures and related commitments, and the above                                    effective during
                                   regarding
commitments     state-owned                          commitments fail to meet such new regulatory regulations of the securities                      the period of
                                   compensatory
made during     equity                               regulatory authorities, our company/institution will undertake to issue        december 11,     holding the
                                   measures after                                                                                                                       in progress
asset           operation                            supplementary commitments in accordance with their then latest relevant        2018             shares of
                                   dilution of
restructuring   management                           regulations.                                                                                    yunnan baiyao
                                   immediate
                company, new                         3. our company/institution undertakes to effectively fulfill the relevant                       (directly and
                                   returns
                huadu, jiangsu                       compensatory measures formulated by the listed company and the relevant                         indirectly)
                yuyue                                commitments made by our company/institution. if our company/institution
                                                     violates these commitments and causes any losses to the listed company or
                                                     investors, our company/institution is willing to legally bear any and all of
                                                     the corresponding compensation liabilities for such losses.
                                                     without compensations or under unfair conditions, nor to harm any interest
                                   commitments       of the listed company in any other way. 2. i undertake to restrain my
                directors,
                                   regarding         official consumption. 3. i undertake not to use the assets of the listed
commitments     supervisors, and
                                   compensatory      company to engage in investment or consumption activities unrelated to
made during     senior                                                                                                              december 11,     remain
                                   measures after    my duties. 4. i undertake that the compensation system to be formulated by                                         in progress
asset           management of                                                                                                       2018             effective
                                   dilution of       the board of directors or remuneration committee in the future will be
restructuring   the listed
                                   immediate         linked to the implementation of compensatory measures taken by the listed
                company
                                   returns           company. 5. i undertake that the exercise conditions of the listed
                                                     company’s equity incentives to be announced in the future will be linked to
                                                     the implementation of the compensatory measures taken by the listed
                                             company. 6. i undertake to effectively fulfill the relevant compensatory
                                             measures formulated by the listed company and any commitments made by
                                             myself regarding compensatory measures. if i violate or refuse to fulfill
                                             any of the above commitments, leading to any losses to 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.
                                             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, yunnan state-owned equity operation management
                                             company solemnly makes the following statements and commitments:
                                             after the completion of this transaction, yunnan state-owned equity
                                             operation 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.
                                                                                                                                                remain
                yunnan                       2. new huadu undertakes that: as of the issuance date of this commitment
                                                                                                                                                effective during
                state-owned                  letter, our company and any enterprises under our control have not invested
commitments                    commitments                                                                                                      the period of
                equity                       in any company, enterprise or other operating entity engaged in any
made during                    regarding                                                                                       october 31,      holding the
                operation                    business the same as, or similar to, the principal businesses of the listed                                           in progress
asset                          horizontal                                                                                      2018             shares of
                management                   company or co-operating or co-engaged, with others, in business the same
restructuring                  competition                                                                                                      yunnan baiyao
                company, new                 as, or similar to, the principal businesses of the listed company.
                                                                                                                                                (directly and
                huadu                        after the completion of this transaction, our company and any enterprises
                                                                                                                                                indirectly)
                                             under our control will not directly or indirectly engage in any form
                                             (including but not limited to investment, m&a, affiliation, joint ventures,
                                             cooperation, partnership, contracting or leasing operations, and equity
                                             participation) in businesses that are the same as or similar to, and constitute
                                             a competition with, the principal businesses of the listed company, nor will
                                             we directly or indirectly own any absolute or relative control over any
                                             other companies, enterprises or operating entities that engage in businesses
                                             that are the same as or similar to, and constitute a competition with the
                                             principal businesses of the listed company.
                                             during the commitment period mentioned above, if the listed company
                                                   actually further expands its existing principal businesses, and our company
                                                   and any enterprises under our control have not yet engaged in production
                                                   or operation of such new businesses, our company and any enterprises
                                                   under our control will not engage in such new businesses that 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.
                                                   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 omissions. the provided copy materials or photocopies are
                                                   consistent and aligned with the original materials or originals. the
                                   commitments
                                                   signatures and seals on the provided documents and materials are
                directors,         regarding the
                                                   authentic, with necessary legal procedures for such signatures and seals
commitments     supervisors, and   authenticity,
                                                   having been fulfilled, and legal authorizations having been obtained. all
made during     senior             accuracy, and                                                                                                  remain
                                                   statements and explanations of facts are consistent with the facts that       june 10, 2021                      in progress
asset           management of      completeness                                                                                                   effective
                                                   occurred. according to the progress of this transaction, our company/i will
restructuring   the listed         of the
                                                   provide relevant information and documents in a timely manner in
                company            information
                                                   accordance with relevant laws, regulations, rules, and relevant provisions
                                   provided
                                                   of the csrc and the stock exchange, and ensure that the information and
                                                   documents to be constantly provided still meet the requirements of
                                                   authenticity, accuracy, 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 concealments, false records, or significant omissions.
                                                    the provided copy materials or photocopies are consistent and aligned with
                                                    the original materials or originals. the signatures and seals on the provided
                                    commitments     documents and materials are authentic, with necessary legal procedures for
                yunnan              regarding the   such signatures and seals having been fulfilled, and legal authorizations
commitments     state-owned         authenticity,   having been obtained. all statements and explanations of facts are
made during     equity              accuracy, and   consistent with the facts that occurred. according to the progress of this                        remain
                                                                                                                                     june 10, 2021                      in progress
asset           operation           completeness    transaction, our company will provide relevant information and documents                          effective
restructuring   management          of the          in a timely manner in accordance with relevant laws, regulations, rules, and
                company             information     relevant provisions of the csrc and the stock exchange, and ensure that
                                    provided        the information and documents to be constantly provided still meet the
                                                    requirements of authenticity, 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
                                    commitments
                                                    concealments, false records, or significant omissions. the provided copy
                                    regarding the
                                                    materials or photocopies are consistent and aligned with the original
commitments     new huadu and       authenticity,
                                                    materials or originals. the signatures and seals on the provided documents
made during     its                 accuracy, and                                                                                                     remain
                                                    and materials are authentic, with necessary legal procedures for such            june 10, 2021                      in progress
asset           acting-in-concert   completeness                                                                                                      effective
                                                    signatures and seals having been fulfilled, and legal authorizations having
restructuring   parties             of the
                                                    been obtained. all statements and explanations of facts are consistent with
                                    information
                                                    the facts that occurred. according to the progress of this transaction, our
                                    provided
                                                    company and our acting-in-concert parties will provide relevant
                                                    information and documents in a timely manner in accordance with relevant
                                                    laws, regulations, rules, and relevant provisions of the csrc and the stock
                                                     exchange, and ensure that the information and documents to be constantly
                                                     provided still meet the requirements of 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 corresponding
                                                     individual and joint legal liabilities for that.
                                                     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 behavior. 3. i undertake not to use the assets of the
                                                     listed company to engage in investment or consumption activities unrelated
                                                     to my duties. 4. i undertake that the compensation system to be formulated
                                                     by the board of directors or remuneration committee in the future will be
                                   commitments       linked to the implementation of compensatory measures taken by the listed
                directors,         regarding         company. 5. if the listed company subsequently introduces equity incentive
commitments     supervisors, and   compensatory      policies, i undertake that the exercise conditions of the listed company’s
made during     senior             measures after    equity incentives to be announced in the future will be linked to the                             remain
                                                                                                                                      june 10, 2021                      in progress
asset           management of      diluting          implementation of the compensatory measures taken by the listed                                   effective
restructuring   the listed         immediate         company. 6. if, during the period after the date of issuance of this
                company            returns by this   commitment letter and before the completion of this transaction by the
                                   restructuring     listed company, the csrc makes other regulatory requirements regarding
                                                     compensatory measures and related commitments, and the above
                                                     commitments fail to 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.
                                   commitments       1. our company will not interfere with any operation and management
                yunnan
                                   regarding         activities of the listed company beyond authority, nor will it encroach on
commitments     state-owned
                                   compensatory      any interest of the listed company. 2. if, during the period after the date of
made during     equity                                                                                                                                 remain
                                   measures after    issuance of this commitment letter and before the completion of this             june 10, 2021                      in progress
asset           operation                                                                                                                              effective
                                   diluting          transaction by the listed company, the csrc makes other regulatory
restructuring   management
                                   immediate         requirements regarding compensatory measures and related commitments,
                company
                                   returns by this   and the above commitments fail to meet such new regulatory regulations of
                                    restructuring     the csrc, our company undertakes to issue supplementary commitments
                                                      in accordance with the then latest csrc regulations. 3. our company will
                                                      effectively fulfill this commitment letter. if our company violates any of
                                                      these commitments and causes any losses to the listed company or
                                                      investors, our company is willing to legally bear any and all of the
                                                      corresponding compensation liabilities for such losses so caused to the
                                                      listed company or investors.
                                                      any operation and management activities of the listed company beyond
                                                      authority, nor will they encroach on any interest of the listed company.
                                    commitments       and before the completion of this transaction by the listed company, the
                                    regarding         csrc makes other regulatory requirements regarding compensatory
commitments     new huadu and       compensatory      measures and related commitments, and the above commitments fail to
made during     its                 measures after    meet such new regulatory regulations of the csrc, our company and our                             remain
                                                                                                                                       june 10, 2021                      in progress
asset           acting-in-concert   diluting          acting-in-concert parties undertake to issue supplementary commitments in                         effective
restructuring   parties             immediate         accordance with the then latest csrc regulations.
                                    returns by this   3. our company and our acting-in-concert parties will effectively fulfill this
                                    restructuring     commitment letter. if our company violates any of these commitments and
                                                      causes any losses to the listed company or investors, our company and our
                                                      acting-in-concert parties are willing to legally bear any and all of the
                                                      corresponding compensation liabilities for such losses so caused to the
                                                      listed company or investors.
                                    commitments       the listed company, issued the commitment letter of sasac of yunnan
                                    to maintain the   province on maintaining the independence of the listed company,
                                    independence      commitment letter of sasac of yunnan province on reducing and
                yunnan              of the listed     regulating related party transactions, and commitment letter of sasac
commitments     state-owned         company,          of yunnan province on avoiding horizontal competition. on april 7, 2020,
made during     equity              reduce and        our company issued the commitment letter of yunnan state-owned equity                             remain
                                                                                                                                       june 10, 2021                      in progress
asset           operation           regulate          operation management company on its undertaking of the relevant                                   effective
restructuring   management          related party     commitments made in the process of yunnan baiyao’s merger transaction
                company             transactions,     by sasac of yunnan province (hereinafter referred to as the “commitment
                                    and avoid         letter on undertaking”), committing to fully undertake, as of the date of
                                    horizontal        completion of this equity transfer (calculated from the date of registration
                                    competition       of the underlying equity in the name of our company), the responsibilities
                                                      and obligations specified in the commitment documents previously made
                                                      by sasac of yunnan province and continuously effective at the time of
                                                      this equity transfer as set out in the following list. the list includes the
                                                      foregoing three commitment letters issued by sasac of yunnan province.
                                                      always strictly fulfilled the commitments to maintain the independence of
                                                      the listed company, reduce and regulate related party transactions, and
                                                      avoid horizontal competition in accordance with the requirements of the
                                                      commitment letter on 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.
                                                      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
                                    commitments
                                                      transactions issued on october 31, 2018, and have not violated any of the
                                    to maintain the
                                                      commitments made. after the completion of this transaction, our company
                                    independence
                                                      and our acting-in-concert parties will continue to strictly fulfill this
                                    of the listed
                                                      commitment letter to safeguard the interest of the listed company and any
commitments     new huadu and       company,
                                                      and all of its shareholders.
made during     its                 reduce and                                                                                                        remain
asset           acting-in-concert   regulate                                                                                                          effective
                                                      parties will maintain independence from the listed company in terms of
restructuring   parties             related party
                                                      personnel, assets, business, institutions, and finance in accordance with
                                    transactions,
                                                      relevant laws, regulations, and normative documents, and will not, by
                                    and avoid
                                                      virtue of the identity as a shareholder and a related party of the listed
                                    horizontal
                                                      company, engage in the acts that affect the independence of the listed
                                    competition
                                                      company’s personnel, assets, business, institutions, and finances, or harm
                                                      any rights and interest of the listed company and other shareholders.
                                                      instead, they will effectively ensure the independence of the listed
                                                      company in terms of personnel, assets, business, institutions, finance, etc.
                                                      acting-in-concert parties and any other companies or enterprises under their
                                                      control have not engaged in any business that constitute a horizontal
                                                 competition with the principal businesses of the listed company and any
                                                 other companies or enterprises under its control. in order to avoid
                                                 horizontal competition with the listed company and safeguard the
                                                 legitimate rights and interest of the listed company and other shareholders,
                                                 after the completion of this transaction, our company’s acting-in-concert
                                                 parties and any other 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.
                                                 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.
                                                 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, the company
                                                 undertakes to conduct such transactions on an equal and voluntary basis in
                                                 the principles of fairness, impartiality, and compensation for equal value,
                                 commitments     with the transaction prices to be determined based on the reasonable prices
commitments
                                 to reduce and   recognized in the market. our company will strictly comply with the
made during                                                                                                                                       remain
                listed company   regulate        provisions of relevant laws, regulations, normative documents, and the          june 10, 2021                      in progress
asset                                                                                                                                             effective
                                 related party   articles of association of shanghai pharma, perform the decision-making
restructuring
                                 transactions    procedures and information disclosure obligations for related party
                                                 transactions, and warrant not to harm any legitimate rights and interest of
                                                 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.
                                                           shanghai pharma’s shares subscribed by our company through this
                                                           transaction shall not be transferred within 36 months from the end of the                         thirty-six
                                                           issuance of these shares. after the expiration of the aforementioned lockup                       months from
 commitments
                                         commitments       period, the transfer and trading of such shares shall be handled in                               the end of the
 made during
                    listed company       regarding         accordance with the then effective laws and regulations, as well as the        may 11, 2021       issuance of new   in progress
 asset
                                         lock-up shares    regulations and rules of the csrc, szse, and shse. after the completion                           shares by
 restructuring
                                                           of this transaction, our company will also arrange a lockup period as                             shanghai
                                                           described above for our any increased stake in shanghai pharma after it                           pharma
                                                           issues bonus shares or convert public reserve funds into share capital.
 whether the
 commitments
                    yes
 are fulfilled as
 scheduled
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 and the supervisory committee 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 was no bankruptcy or restructuring related events during the reporting period.
viii. legal matters
significant lawsuits and arbitrations
applicable □not applicable
                                           any
      basic
                     amount             estimated    litigation                                                     enforcement of litigation (arbitration)
   information                                                        litigation (arbitration) trial results and                                               disclosure     disclosure
                     involved           liability   (arbitration)                                                                judgments
  of litigation                                                                        impacts                                                                   date           index
                   (rmb’0,000)          caused or     progress
  (arbitration)
                                           not
 chuxiong                                           yunnan          if payments of both parties payable to each
 linxin                                             provincial      other can be offset against each other, in
 mushroom                                           higher          accordance with the content of the civil                                                                 2022 annual
 developing                                         people’s        judgments, chuxiong linxin mushroom            the plaintiff chuxiong linxin mushroom                    report. more
 co., ltd. vs                                       court has       developing co., ltd shall also need to pay     developing co., ltd filed an application   march 31,      details can be
 yunnan                                             disallowed      yunnan baiyao group traditional chinese        for enforcement, and the court accepted    2023           found at
 baiyao                                             the request     medicine resources co., ltd an                 on july 12, 2023                                          http://www.c
 group                                              for a retrial   outstanding payment loss of rmb                                                                          ninfo.com.cn
 traditional                                        by both         2,876,484.81, together with an interest
 chinese                                            chuxiong        calculated from the offsetting date based on
medicine                        linxin         the above outstanding payment loss and
resources                       mushroom       loan prime rate (lpr) published by the
co., ltd, one                   developing     national interbank funding center.
of the                          co., ltd and   meanwhile, chuxiong linxin mushroom
company’s                       yunnan         developing co., ltd shall also need to
subsidiaries,                   baiyao         compensate yunnan baiyao group
(contract                       group          traditional chinese medicine resources
dispute)                        chinese        co., ltd for the prepaid litigation fee of
                                medicine       rmb 34,332.00.
                                resources
                                co., ltd.
                                                                                            after the judgment took effect,
                                                                                            compulsory execution had been applied
yunnan
                                                                                            for, as chuxiong linxin mushroom
baiyao
                                                                                            developing co., ltd could not find any
group
                                                                                            executable assets. consequently, the
traditional                     supreme
                                                                                            execution process was suspended on
chinese                         people’s
                                                                                            january 24, 2022. execution proceedings
medicine                        court has
                                                                                            would resume once assets subject to
resources                       disallowed                                                                                                             2022 annual
                                                                                            execution are located. on november 30,
co., ltd (one                   the request                                                                                                            report. more
of the                          for a new                                                                                                 march 31,    details can be
company’s                       trial by                                                                                                  2023         found at
                                                                                            legal advice on debt set-off on december
subsidiaries)                   chuxiong                                                                                                               http://www.c
vs chuxiong                     linxin                                                                                                                 ninfo.com.cn
                                                                                            appropriate accounting treatment. on july
linxin                          mushroom
mushroom                        developing
                                                                                            group traditional chinese medicine
developing                      co., ltd.
                                                                                            resources co., ltd submitted an
co., ltd.
                                                                                            application for restoration of compulsory
(contract
                                                                                            execution to the kunming intermediate
dispute)
                                                                                            people’s court, and applied for execution
                                                                                            of the mutual liability offset
other lawsuits
applicable □not applicable
                                                any
                                 amount      estimated                                              trial results and
     basic information of                                                                                                 enforcement of litigation   disclosure     disclosure
                                 involved    liability     litigation (arbitration) progress      impacts of litigation
    litigation (arbitration)                                                                                               (arbitration) judgments      date           index
                               (rmb’0,000)   caused or                                                (arbitration)
                                                not
 summary of events not                                   some cases have been filed to be
                                                                                                 summary of litigation    some judgments have
 meeting the disclosure                                  tried; some are being under trials to
                                                                                                 events has no            come into effect and have
 standards for being             32,300.94      no       be adjudicated; some have been                                                                                   /
                                                                                                 significant impact on    been enforced or are
 included in significant                                 adjudicated; some have been
                                                                                                 the company              being enforced
 litigation (arbitration)                                closed.
ix. punishments and rectifications
□applicable not applicable
x. credit quality of the company as well as its controlling shareholder and de facto
controller
□applicable not applicable
xi. significant related party transactions
□applicable not applicable
there were no related party transactions related to daily operations during the reporting period.
□applicable not applicable
there were no related party transactions arising from acquisition or sale of assets or equity during the reporting period.
□applicable not applicable
there were no related party transactions regarding joint investments in third parties during the reporting period.
□applicable not applicable
there were no amounts due to and from related parties during the reporting period.
□applicable not applicable
there were no deposit, loan, credit or other financial business occurred between the company and its related finance
companies/related parties.
□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.
□applicable not applicable
there were no other significant related party transactions during the reporting period.
            xii. major contracts and their performance
            (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.
            applicable □not applicable
                                                                                                                                         unit: rmb’0,000
                         guarantees for others by the company and its subsidiaries (excluding those provided by the company for its subsidiaries)
                   disclosure date
                     of related                            actual         actual                                     counter                                 guarantee
 guaranteed                            guarantee                                       guarantee    collateral                     guarantee   fulfilled
                   announcement                       occurrence         guarantee                                 guarantee (if                             for a related
    party                                quota                                             type      (if any)                       period          or not
                    of guarantee                            date          amount                                       any)                                  party or not
                         quota
yunnan
                                                                                       joint and
yuncheng
                  november 24,                                                         several
hospital                                                                  150,000                                                  12 years          no           no
management
                                                                                       guarantee
co., ltd.
                                                                         total actual balance of
total approved limit for
                                                                         guarantees for others at
guarantees for others at the end                 150,000                                                                           150,000
                                                                         the end of the reporting
of the reporting period (a3)
                                                                         period (a4)
                                                                    guarantees by the company to subsidiaries
                   disclosure date
                     of related                            actual         actual                                     counter                                 guarantee
guaranteed                             guarantee                                       guarantee    collateral                     guarantee   fulfilled
                   announcement                       occurrence         guarantee                                 guarantee (if                             for a related
party                                    quota                                             type      (if any)                       period          or not
                    of guarantee                            date          amount                                       any)                                  party or not
                         quota
                                                              guarantees by subsidiaries to another subsidiaries
                   disclosure date
                                                           actual         actual                                     counter                                 guarantee
 guaranteed          of related        guarantee                                       guarantee    collateral                     guarantee   fulfilled
                                                      occurrence         guarantee                                 guarantee (if                             for a related
    party          announcement          quota                                             type      (if any)                       period          or not
                                                            date          amount                                       any)                                  party or not
                    of guarantee
                       quota
                                           the company’s total guarantee amount (total amount of the first three major items)
                                                                    total actual amount of
total approved guarantee limit
                                                                    guarantee incurred
during the reporting period                                                                                                       0
                                                                    during the reporting
(a1 b1 c1)
                                                                    period (a2 b2 c2)
                                                                    total actual guarantee
total approved guarantee limit at
                                                                    balance at the end of the
the end of the reporting period                150,000                                                                          150,000
                                                                    reporting period
(a3 b3 c3)
                                                                    (a4 b4 c4)
the proportion of actual total guarantee amount (i.e.
a4 b4 c4) to the company’s net assets
of which:
         explanations on the specific situation of guarantees provided by composite methods: not applicable.
         applicable □not applicable
                                                                                                                                      unit: rmb’0,000
                                                                                                                                           provision for
                                                                                                                 unrecovered              impairment on
                    type             source of funding             amount                  undue amount
                                                                                                                overdue amount             unrecovered
                                                                                                                                          overdue amount
            bank financial
                                    self-owned funds                   11,721.88                12,051.88                         0                        0
            products
            other type              self-owned funds                             0              30,501.79                         0                        0
            total                                                      11,721.88                42,553.67                         0                        0
         details of high-risk guaranteed wealth management products with a significant amount per single item or of low safety and poor
         liquidity
         □applicable not applicable
         it is expected that the principal of entrusted financing cannot be recovered, or there may be other circumstances that may result in
         impairment
         □applicable not applicable
         □applicable not applicable
         there were no other significant contracts of the company during the reporting period.
       xiii. explanations to other significant events
         applicable □not applicable
         preparation registration of medical institutions in yunnan province and the notification of drug gmp
         compliance inspection results (announcement no. 2023-01). the company received, from yunnan provincial
         hospital of traditional chinese medicine, the notification letter on “xianghuo spray” obtaining the approval
for the preparation registration of medical institutions in yunnan province. xianghuo spray, which was
applied by yunnan provincial hospital of traditional chinese medicine and prepared by yunnan baiyao,
obtained the approval for the preparation registration of medical institutions issued by medical products
administration of yunnan province (hereinafter referred to as “mpa of yunnan province”) with mpa’s
conditional approval for its registration. during the same period, the company received the notice on the drug
gmp compliance inspection results approved by mpa of yunnan province, and the company’s sprays met
the requirements of the good manufacturing practice for drugs (2010 revision) and its appendixes. more
details can be found at http://www.cninfo.com.cn.
convertible bonds of ban loong holdings (announcement no. 2023-02). on january 12, 2023, considering
that the relevant regulatory authorities in hong kong had no further inquiries about the content of its circular,
ban loong holdings, on the same day, issued a circular and a notice of convening an extraordinary general
meeting. on february 1, 2023, ban loong holdings held the extraordinary general meeting, which considered
and approved all necessary proposals related to the maturity extension of convertible bonds. as of the
disclosure date of this announcement, ban loong holdings had obtained all necessary consents and approvals
for the maturity extension of convertible bonds. the supplementary agreement to the convertible bond
subscription agreement signed between the company and ban loong holdings had come into effect, and the
maturity date of convertible bonds had been extended from october 31, 2022 to october 30, 2024. more details
can be found at http://www.cninfo.com.cn.
(announcement no. 2023-03). the company’s tenth board of directors received the board chairman mr.
wang minghui’s resignation report, stating his application for resignation from chairman and director of the
company’s tenth board of directors, member of the strategy committee of the board and any and all of his
positions held in yunnan baiyao and its holding subsidiaries for his personal reasons. as required by the
company law and the company’s articles of association, mr. wang minghui’s resignation application took
effect as of the date of its service to the board. his resignation would not cause the number of the company’s
board members to be lower than the quorum, nor would it affect the normal operation of the company’s board
and businesses.
     the board would complete director by-election, new chairman election, and adjustment made to the
board’s special committee members as soon as possible. prior to the board’s election of new chairman by
nomination by a majority of board directors, mr. dong ming, the company’s legal representative, director,
ceo (president), would act as board chairman and preside over the board’s daily work until new board
chairman was elected. more details can be found at http://www.cninfo.com.cn.
considered and approved the proposal on the company’s appointment of senior management. as required by
the company’s articles of association, mr. zhao yingming was nominated by the company’s ceo. after
qualification review for the company’s senior management by the board’s nomination committee, the
company’s tenth board of directors agreed to appoint mr. zhao yingming as the company’s chief business
officer and senior vice president, with a term of office starting from the date of approval by this board
meeting and ending at the expiration of the tenth board of directors.
     more details can be found in the announcement on resolution of the first session of the company’s tenth
board of directors in 2023 (announcement no. 2023-04) and the announcement on appointment of the
company’s     senior   management      (announcement     no.    2023-05)    disclosed    by   the    company      at
http://www.cninfo.com.cn on march 15, 2023.
(announcement no. 2023-06). the company’s tenth board of directors received the resignation report of
mrs. wang jin, the company’s chief sales officer and senior vice president, stating her application for
resignation from chief sales officer and senior vice president of the company, and any and all of her
positions held in yunnan baiyao and its holding subsidiaries for her personal reasons. as required by the
company law and the company’s articles of association, ms. wang jin’s resignation application took effect as
of the date of its service to the board. her resignation would not affect the normal operation of the company’s
businesses. more details can be found at http://www.cninfo.com.cn.
which considered and approved 24 proposals including the 2022 annual work report of the board of directors.
on the same day, the company convened the first session of the supervisory committee in 2023, which
considered and approved 10 proposals including the 2022 annual work report of the supervisory committee.
     more details can be found in the announcement on the resolution of the second session of the tenth
board of directors in 2023 (announcement no. 2023-07), the announcement on the resolution of the first
session of the supervisory committee in 2023 (announcement no. 2023-08), the summary of the 2022 annual
report (announcement no. 2023-09), the announcement on the proposed re-appointment of auditor
(including internal control audit) for 2023 (announcement no. 2023-10), the announcement on the projected
daily related party transactions for 2023 (announcement no. 2023-11), the announcement on the provision
for asset impairment for 2022 (announcement no. 2023-12), the announcement on changes in accounting
policies (announcement no. 2023-13), and the notice on convening the 2022 annual general meeting
(announcement no. 2023-14), all disclosed by the company at http://www.cninfo.com.cn on march 31, 2023.
independent financial advisor sponsor for continuous supervision (announcement no. 2023-16). the
company engaged china international capital corporation limited (hereinafter referred to as “cicc”) as the
independent financial advisor for major asset purchase and related party transactions projects for 2022 (ie, the
company, as a strategic investor, subscribed in cash 665,626,796 a-shares shanghai pharma placed privately in
major asset restructuring would continue until december 31, 2023.
     on april 13, 2023, the company received the letter on change of the independent financial advisor
sponsor for continuous supervision of yunnan baiyao group’s major asset restructuring project from cicc,
its independent financial advisor. the letter stated that cicc originally appointed mr. xing hongyuan and mr.
liu yuran to be the independent financial advisor sponsors for continuous supervision of this major asset
restructuring; however, for his personal job change, mr. liu yuran did not continue this job during this
continuous supervision period and ms. yang luwei was appointed to replace him to perform his remaining job.
therefore, after this change, mr. xing hongyuan and ms. yang luwei were cicc’s appointed independent
financial advisor sponsors during the company’s continuous supervision period. more details can be found at
http://www.cninfo.com.cn.
approved the proposal on the 2022 annual work report of the board of directors, proposal on the 2022
annual work report of the supervisory committee, proposal on the 2022 final financial report, proposal on
the 2022 annual report and its summary, proposal on the 2022 profit distribution plan, proposal on the 2023
financial budget report, proposal on the re-appointment of the company’s 2023 auditor (including internal
control audit).
     more details can be found in the announcement on the resolution of the 2022 annual general meeting
(announcement no. 2023-19) disclosed by the company at http://www.cninfo.com.cn on may 10, 2023.
wholly-owned third-tier subsidiary of yunnan baiyao group as a private equity fund manager
(announcement no. 2023-20). hainan yunfan private equity fund management co., ltd (hereinafter referred
to as “yunfan fund”), a wholly-owned third-tier subsidiary of the company, was wholly owned by yunnan
baiyao group (hainan) co., ltd, a wholly-owned second-tier subsidiary of the company. yunfan fund
completed the registration as a private equity fund manager with the asset management association of china
(hereinafter referred to as “amac”) and registered yunfan no.1 private equity securities investment fund
with amac in 2021. recently, after liquidation of yunfan no.1 private equity securities investment fund,
yunfan fund deregistered itself as a private equity fund manager with amac. deregistration type: voluntary
deregistration. please refer to the official website of amac (http://www.amac.org.cn/) for its detailed
registration information. more details can be found at http://www.cninfo.com.cn.
distribution of yunnan baiyao group (announcement no. 2023-21). at the 2022 annual general meeting held
on may 9, 2023, the 2022 equity distribution plan had been considered and approved, in which the company
proposed to base on its 1,784,262,603 shares obtained after 12,599,946 shares repurchased in the special
securities account for stock repurchase deducted from the company’s total share capital at the end of 2022, ie
bonus shares per 10 shares, with no capital reserves converted into share capital. according to this distribution
ratio, the distributable amount would be determined based on the number of shares entitled to profit distribution
on the equity registration date when the distribution plan would be implemented in the future, with the
remaining undistributed profits to be distributed in the subsequent years. the equity distribution registration
date for this distribution is may 18, 2023, and the ex-dividend date is may 19, 2023. the distribution is made to
all shareholders of the company who are registered with the shenzhen branch of china securities depository
and clearing corporation, as of the close of trading on the shenzhen stock exchange on the afternoon of may
shareholding reduction under the 2021 annual employee stock ownership plan (announcement no. 2023-22).
on may 29, 2023, the company received a notice from the esop management committee, which stated the
completion of a full reduction in shareholding in the company under the 2021 annual esop.
    during december 13, 2022 to may 26, 2023, upon the expiration of the lock-up period of this esop, a full
reduction in shareholding in the company involving 23,379,996 shares of the company under this esop was
completed by means of centralized bidding and block trading in the secondary market. such shares accounted
for 1.30% of the company’s current total share capital, among which, the transferees of block trading were not
related or acting-in-concert parties of shareholders holding more than 5% of the company’s shares. as for this
esop, its income distribution, liquidation, termination, and other related matters would be subsequently
completed as per relevant regulations. more details can be found at http://www.cninfo.com.cn.
shareholders’ partial pledged shares (announcement no. 2023-23). on june 19, 2023, the company received
a notice from its shareholder jiangsu yuyue, stating that jiangsu yuyue had released the pledge on its 1.66%
equity in the company for its repayment of the loan from china minsheng bank co., ltd zhenjiang sub-branch.
more details can be found at http://www.cninfo.com.cn.
circulation of certain shares subject to trading moratorium (announcement no. 2023-24). the company’s
shareholder jiangsu yuyue had applied for release of the trading moratorium on its shares. there would be
totally 99,916,513 such shares circulating in the markets on june 27, 2023 for this time, accounting for 5.56%
of the company’s total share capital. more details can be found at http://www.cninfo.com.cn.
reduction by shareholders holding 5% or more shares (announcement no. 2023-25). on june 20, 2023, the
company received from its shareholder jiangsu yuyue the notification letter regarding proposed reduction
in shareholding in yunnan baiyao group, stating that it planned to reduce no more than 35,937,250 shares of
the company (accounting for no more than 2% of the company’s total share capital) from its 99,916,513 shares
in the company (accounting for 5.56% of the company’s total share capital) via bidding from july 17, 2023 to
january 13, 2024. during the implementation of this shareholding reduction plan, if the company distributes
cash dividends, bonus shares, converts capital reserves into share capital, or occurs any other ex-rights or
ex-dividend events, jiangsu yuyue would make corresponding adjustments to this shareholding reduction in the
number and equity ratio. more details can be found at http://www.cninfo.com.cn.
xiv. significant events of the company’s subsidiaries
applicable □not applicable
      (1) related events of ban loong holdings
     at the request of ban loong holdings, trading of its shares was suspended on hong kong stock exchange
as of 9:00 am on june 21, 2022 and would continue to be suspended. ban loong holdings will issue further
announcements to inform its shareholders and potential investors of any significant developments related to the
aforementioned event as and when appropriate.
     on july 26, 2022, ban loong holdings received the following resumption guidance from hong kong
stock exchange, requiring ban loong holdings to: (1) publish all outstanding financial results required under
the listing rules and address any audit modifications; (2) demonstrate the company’s compliance with rule
and take appropriate remedial actions; (4) demonstrate that there is no reasonable regulatory concern about the
management integrity and/or the integrity of any persons with substantial influence over the company’s
management and operations, which may pose a risk to investors and damage market confidence; (5) conduct an
independent internal control review and demonstrate that the company has in place adequate internal controls
and procedures to meet its obligations under the listing rules; and (6) announce all material information for the
company’s shareholders and investors to appraise its position.
     hong kong stock exchange also required ban loong holdings to correct the wrongs that led to the
suspended trading of its shares and fully comply with the listing rules to the satisfaction of hong kong stock
exchange before it was allowed to resume trading of its securities. hong kong stock exchange may revise or
supplement the resumption guidance against any changes of ban loong holdings.
     according to rule 6.01a (1) of the listing rules, hong kong stock exchange may cancel the listing
status of any securities that have been suspended for trading for 18 months. as for ban loong holdings, this
that led to suspended trading of its shares so as to meet resumption guidance, fully comply with listing rules to
the satisfaction of hong kong stock exchange, or resume trading of shares before december 20, 2023, the
listing division will recommend that the listing committee proceed with the cancellation of ban loong
holdings’ listing status. according to rules 6.01 and 6.10 of the listing rules, hong kong stock exchange
also has the right to specify a specific shorter correction period (if applicable). ban loong holdings is taking
appropriate measures to comply with the resumption guidance and relevant listing rules, and will issue separate
announcements as appropriate to ensure the public to be aware of the latest developments. ban loong holdings
is providing active support and cooperation to auditors, independent professional advisors, and independent
investigation committees, with an aim to publish the annual results for 2021/2022 as soon as feasible. ban
loong holdings will seek to reach resumption guidance as soon as feasible, fully comply with listing rules to
the satisfaction of hong kong stock exchange, and resume trading of its shares.
     on april 28, 2023, ban loong holdings disclosed that hlb hodgson impey cheng (hereinafter referred
to as “hlb”) had applied for resignation from its auditor, effective from april 25, 2023. after referring to the
recommendations given by the audit committee, the board decided to appoint zhonghui anda cpa limited.
(hereinafter referred to as “zhonghui”) as the auditor of ban loong holdings, effective from april 28, 2023, to
fill the temporary vacancy after the resignation of hlb. zhonghui’s term of office would continue until the end
of the next annual general meeting of ban loong holdings.
     as of june 20, 2023, independent investigations by forensic investigators and internal control inspections
by independent internal control advisors were still ongoing. ban loong holdings was still collaborating with
forensic investigators and independent internal control advisors to complete the investigation results report. ban
loong holdings aims to release the investigation results as soon as practical and feasible.
     to comply with the requirements of the resumption guidance, ban loong holdings will continue to
cooperate with its professional advisors to advance the resumption process. also, it will make further
announcements to notify its shareholders and potential investors about its business operations and resumption
status as and when appropriate.
     on december 13, 2022, the company entered into the framework agreement of continuing connected
transactions (hereinafter referred to as the “framework agreement”) with ban loong holdings, stating that the
company agreed to purchase from ban loong holdings product registration and promotion services, global
supply chain integration services, and specialized support services; ban loong holdings agreed to cooperate
with the company to sell and distribute to overseas markets certain products produced and branded by the
company, while the company agreed to cooperate with ban loong holdings to sell and distribute to china
health products and foods purchased, procured, manufactured, and/or branded by ban loong holdings. the
framework agreement would only take effect after adoption of the necessary resolutions for approving the
execution of the framework agreement and the transactions to be promoted thereunder at the extraordinary
general meeting.
     ban loong holdings convened an extraordinary general meeting on may 15, 2023, which adopted the
ordinary resolutions for approving, confirming, and endorsing the framework agreement, as well as the
proposed annual transaction upper limits set out in the proposed transactions thereunder and circulars related to
such transactions from the effective date to the third anniversary of the effective date. the extraordinary
general meeting also authorized any one or more directors of ban loong holdings to act on behalf of ban
loong holdings to sign all relevant documents and agreements, and to do all relevant actions and matters, if
they deem it necessary, expedient or appropriate in their discretion to implement (or make effective) the
framework agreement and all matters in connection therewith.
                   section vii changes in shareholdings and particulars about
                                                                   shareholders
         i. changes in shareholdings
                                                                                                                                     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 moratorium
shares
state-owned legal                    0            0.00%         0         0              0                0                0               0            0.00%
persons
other domestic            112,267,869             6.25%         0         0              0     -100,322,511   -100,322,511       11,945,358             0.66%
shareholders
     of which:
shares held by
domestic legal
persons
     shares held by
domestic natural           12,351,356             0.69%         0         0              0         -405,998       -405,998       11,945,358             0.66%
persons
shares
     of which:
shares held by
overseas legal
persons
     shares held by
overseas natural                     0            0.00%         0         0              0                0                0               0            0.00%
persons
ii. shares not subject
to trading               1,684,594,680        93.75%            0         0              0      100,322,511    100,322,511     1,784,917,191        99.34%
moratorium
ordinary share
foreign-invested
shares
foreign-invested                      0         0.00%         0         0            0               0               0                 0          0.00%
shares
iii. total number of
shares
         reasons for changes in shareholdings
          applicable □not applicable
              on april 24, 2019, the company received the approval for the merger and overall listing of yunnan
         baiyao group co., ltd with yunnan baiyao holdings co., ltd (zheng jian xu ke [2019] no.770) issued by the
         china securities regulatory commission, which approved the issuance of 321,160,222 shares by the company
         to the sasac of yunnan province, the issuance of 275,901,036 shares to new huadu and the issuance of
         transferred from the closing offering date to june 26, 2023 (inclusive).
              on may 5, 2022, the company completed the annual equity distribution for 2021. based on the total share
         capital of 1,283,015,697 shares, 4.00 bonus shares and rmb 16.00 in cash for every 10 shares were distributed
         to all shareholders, and after the dividend distribution, the total share capital increased to 1,796,221,975 shares.
         upon completion of this equity distribution, jiangsu yuyue held 99,916,513 shares subject to trading
         moratorium of the company. such shares held by jiangsu yuyue were listed for trading on june 27, 2023. for
         details, please refer to the informative announcement on the circulation of certain shares subject to trading
         moratorium (announcement no.: 2023-24) disclosed by the company on http://www.cninfo.com.cn.
              during the reporting period, mr. yang changhong and mr. wu wei had resigned for more than 6 months,
         and mr. wang minghui and ms. wang jin resigned during the reporting period. according to relevant
         regulations, the quantity of shares subject to trading moratorium for this period changed correspondingly.
         approval of changes in shareholdings
         □applicable  not applicable
         transfers for changes in shareholdings
         □applicable  not applicable
         implementation of share repurchases
         □applicable  not applicable
         implementation of reduction in share repurchases by means of 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 deemed necessary by the company or required by securities regulators
   □applicable  not applicable
    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                                                                                       reason for
                   moratorium at       moratorium       moratorium        moratorium at                              released from
  shareholder                                                                                   moratorium
                   the beginning       during the        during the       the end of the                          trading moratorium
                  of the reporting      reporting        reporting          reporting
                       period            period            period             period
jiangsu yuyue                                                                               shares subject to
science &                                                                                   trading
technology            99,916,513         99,916,513                  0                 0    moratorium after     june 27, 2023
development                                                                                 private
co., ltd.                                                                                   placement
                                                                                            locked-up            implemented in
                                                                                            shares held by       accordance with
chen fashu              9,395,620                  0                 1         9,395,621
                                                                                            senior               regulatory
                                                                                            management           requirements
                                                                                                                 implemented in
                                                                                            locked-up shares
                                                                                                                 accordance with
wang minghui             756,000                   0          252,000          1,008,000    held by senior
                                                                                                                 regulatory
                                                                                            management
                                                                                                                 requirements
                                                                                                                 implemented in
                                                                                            locked-up shares
                                                                                                                 accordance with
yang changhong           504,000            504,000                  0                 0    held by senior
                                                                                                                 regulatory
                                                                                            management
                                                                                                                 requirements
                                                                                                                 implemented in
                                                                                            locked-up shares
                                                                                                                 accordance with
chen yanhui              133,008                   0                 1           133,009    held by senior
                                                                                                                 regulatory
                                                                                            management
                                                                                                                 requirements
                                                                                                                 implemented in
                                                                                            locked-up shares
                                                                                                                 accordance with
dong ming                   9,960                  0                 0             9,960    held by senior
                                                                                                                 regulatory
                                                                                            management
                                                                                                                 requirements
                                                                                                                 implemented in
                                                                                            locked-up shares
                                                                                                                 accordance with
yin pinyao               252,000                   0                 0           252,000    held by senior
                                                                                                                 regulatory
                                                                                            management
                                                                                                                 requirements
                                                                                                                 implemented in
                                                                                            locked-up shares
                                                                                                                 accordance with
wang jin                 378,000                   0          126,000            504,000    held by senior
                                                                                                                 regulatory
                                                                                            management
                                                                                                                 requirements
                                                                                                                 implemented in
                                                                                            locked-up shares
                                                                                                                 accordance with
qin wanmin               378,000                   0                 0           378,000    held by senior
                                                                                                                 regulatory
                                                                                            management
                                                                                                                 requirements
                                                                                            locked-up shares     implemented in
yang yong                  75,768                  0                 0            75,768    held by senior       accordance with
                                                                                            management           regulatory
                                                                                                                               requirements
                                                                                                                               implemented in
                                                                                                       locked-up shares
                                                                                                                               accordance with
    wu wei                      280,000              280,000                   0                   0   held by senior
                                                                                                                               regulatory
                                                                                                       management
                                                                                                                               requirements
                                                                                                                               implemented in
                                                                                                       locked-up shares
                                                                                                                               accordance with
    yu juan                     105,000                   0                    0            105,000    held by senior
                                                                                                                               regulatory
                                                                                                       management
                                                                                                                               requirements
                                                                                                                               implemented in
                                                                                                       locked-up shares
                                                                                                                               accordance with
    li jin                       42,000                   0                    0             42,000    held by senior
                                                                                                                               regulatory
                                                                                                       management
                                                                                                                               requirements
                                                                                                                               implemented in
                                                                                                       locked-up shares
                                                                                                                               accordance with
    zhu zhaoyun                  42,000                   0                    0             42,000    held by senior
                                                                                                                               regulatory
                                                                                                       management
                                                                                                                               requirements
    total                  112,267,869         100,700,513                378,002        11,945,358                 --                      --
                note: mr. chen fashu and mr. chen yanhui have increased their shares subject to trading moratorium by
       depository and clearing corporation.
                mr. yang changhong and mr. wu wei had resigned for more than 6 months, and mr. wang minghui and
       ms. wang jin resigned during the reporting period. according to relevant regulations, the quantity of shares
       subject to trading moratorium for this period changed correspondingly.
       ii. issuance and listing of securities
       □applicable  not applicable
       iii. number of shareholders of the company and their shareholdings
                                                                                                                                     unit: share
                                                                                   total number of preferred
     total number of ordinary
                                                                              shareholders with resumed voting
   shareholders at the end of the                    188,674                                                                            0
                                                                               rights at the end of the reporting
         reporting period
                                                                                  period (if any) (see note 8)
                    shareholdings of ordinary shareholders holding more than 5% of the shares or the top 10 ordinary shareholders
                                                                                                         number           pledged, marked or frozen
                                                           number of                     number of           of
                                                                             change
                                                            ordinary                       ordinary      ordinary
                                                                             during
   name of               nature of        shareholding   shares held at                      shares     shares not
                                                                               the
  shareholder           shareholder          ratio       the end of the                   subject to    subject to          status                 quantity
                                                                            reporting
                                                           reporting                        trading       trading
                                                                              period
                                                             period                      moratorium     moratoriu
                                                                                                             m
yunnan
state-owned         state-owned legal                                                                   449,624,3
equity                    person                                                                           11
operation
management
co., ltd.
new huadu                domestic
industrial group     non-state-owned        24.25%         435,742,244        0             0                            pledged          290,514,000
co., ltd.              legal person
yunnan hehe
                    state-owned legal                                                                146,185,8
(group) co.,                                 8.14%         146,185,851        0             0                                                       0
                          person                                                                        51
ltd.
jiangsu yuyue
science &                domestic
technology           non-state-owned         5.56%         99,916,513         0             0                            pledged           32,365,781
development            legal person
co., ltd.
hong kong
securities
                      overseas legal                                                                 80,125,35
clearing                                     4.46%         80,125,353     -439,124          0                                                       0
                         person                                                                          3
company
limited
                         domestic
china securities                                                                                     37,373,10
                     non-state-owned         2.08%         37,373,108         0             0                                                       0
finance corp.                                                                                            8
                       legal person
ubs asset
management
(singapore) ltd.      overseas legal                                                                 18,672,12
- ubs lux                person                                                                          8
investment
sicav
central huijin      state-owned legal                                                                16,617,44
investment ltd.           person                                                                         0
                    domestic natural
chen fashu                                   0.70%         12,527,495         0        9,395,621     3,131,874                                      0
                          person
national social
security fund             others             0.66%         11,796,858     -769,700          0                                                       0
strategic investors or general legal
persons who become the top 10
                                          not applicable
ordinary shareholders due to rights
issue (if any) (see note 3)
                                          chen fashu is the de facto controller of new huadu industrial group co., ltd. it is unclear whether there are
related or acting-in-concert parties
                                          any related relationships among other shareholders or whether there is any concerted action as defined by the
among the shareholders above
                                          administrative measures for information disclosure of changes in shareholdings of listed companies.
above shareholders involved in
entrusting/being entrusted with voting    not applicable
rights and giving up voting rights
special account for share repurchases
                                          as of the end of the reporting period, yunnan baiyao group’s holdings in the special securities account for
(if any) among the top 10
                                          stock repurchase amounted to 12,599,946 shares, representing a 0.70% ownership stake.
shareholders (see note 11)
                                   shareholdings of the top 10 ordinary shareholders not subject to trading moratorium
                                           number of ordinary shares not subject to trading moratorium held at                type of shares
        name of shareholder
                                                            the end of the reporting period                                type                quantity
yunnan state-owned equity                                                                                          rmb-denominated
operation management co., ltd.                                                                                     ordinary share
new huadu industrial group co.,                                                                                    rmb-denominated
ltd.                                                                                                               ordinary share
yunnan hehe (group) co., ltd.                                                                      146,185,851     rmb-denominated         146,185,851
                                                                                                               ordinary share
jiangsu yuyue science & technology                                                                             rmb-denominated
development co., ltd.                                                                                          ordinary share
hong kong securities clearing                                                                                  rmb-denominated
company limited                                                                                                ordinary share
                                                                                                               rmb-denominated
china securities finance corp.                                                                    37,373,108                             37,373,108
                                                                                                               ordinary share
ubs asset management (singapore)                                                                               rmb-denominated
ltd.－ubs lux investment sicav                                                                                  ordinary share
                                                                                                               rmb-denominated
central huijin investment ltd.                                                                    16,617,440                             16,617,440
                                                                                                               ordinary share
                                                                                                               rmb-denominated
national social security fund 110                                                                 11,796,858                             11,796,858
                                                                                                               ordinary share
china construction bank corporation
                                                                                                               rmb-denominated
－e fund csi 300 health care index                                                                 10,297,852                             10,297,852
                                                                                                               ordinary share
etf
related or acting-in-concert parties
among the top 10 ordinary
shareholders not subject to trading
moratorium, and the top 10 ordinary     not applicable
shareholders not subject to trading
moratorium and the top 10 ordinary
shareholders
top 10 ordinary shareholders
involved in securities margin trading   not applicable
(if any) (see note 4)
        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, supervisors and senior management
        □applicable  not applicable
        there was no change in the shareholdings of the directors, supervisors, and senior management of the company during the
        reporting period. for details, please refer to the 2022 annual report.
        v. changes in controlling shareholders or de facto controllers
        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.
                                    section viii preference shares
□applicable  not applicable
there were no preference shares in the company during the reporting period.
                               section ix bonds
□applicable  not applicable
                                       section x 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.
prepared by: yunnan baiyao group co., ltd.
                                                         june 30, 2023
                                                                                                                     unit: rmb
                     item                                  june 30, 2023                           january 1, 2023
 current assets:
   cash and bank balance                                            12,545,694,750.39                        13,056,113,712.47
   provision of settlement fund
    placements with banks and other
 financial institutions
   financial assets held for trading                                 1,541,024,256.18                         2,415,722,075.60
   derivative financial assets
   notes receivable                                                    741,097,162.68                           789,465,084.93
   accounts receivable                                               9,663,208,605.27                         9,089,822,151.93
   accounts receivable financing                                       634,158,821.40                           834,668,231.58
   prepayment                                                          410,643,169.96                           542,948,440.85
   premium receivable
   reinsurance premium receivable
   reserves    for    reinsurance   contract
 receivable
   other receivables                                                   533,146,423.08                           118,948,994.06
      including: interest receivable
                   dividends receivable                                406,032,345.56
   financial assets held under resale
 agreements
   inventory                                                         6,970,395,685.01                         7,993,207,044.26
   contractual assets
   held-for-sales assets
   non-current assets due within one year                                                                       361,774,444.44
   other current assets                                              1,230,209,819.11                           474,340,107.76
total current assets                             34,269,578,693.08                        35,677,010,287.88
non-current assets:
  loans and advances to customers
  debt investments
  other debt investments
  long-term receivables
  long-term equity investments                   11,334,322,872.56                        11,318,749,947.10
  investment in other equity instruments            71,745,000.00                             71,745,000.00
  other non-current financial assets               391,447,063.97                            380,786,134.24
  investment properties                             54,825,749.03                             55,823,776.49
  fixed assets                                    2,639,966,624.79                         2,723,302,365.65
  construction in progress                         384,905,022.44                            193,993,194.93
  productive biological assets                        1,074,374.79                             1,160,324.85
  oil and gas assets
  right-of-use assets                              271,007,940.03                            389,975,390.73
  intangible assets                                592,851,437.55                            590,985,824.30
  development expenses                                9,048,987.02                             6,024,448.12
  goodwill                                         129,882,094.89                            129,882,094.89
  long-term deferred expenses                      101,750,205.68                            103,039,892.76
  deferred income tax assets                       677,123,635.50                            713,246,779.66
  other non-current assets                         996,918,974.01                            965,218,407.14
total non-current assets                         17,656,869,982.26                        17,643,933,580.86
total assets                                     51,926,448,675.34                        53,320,943,868.74
current liabilities:
  short-term loans                                1,524,432,903.76                         1,850,867,886.59
  borrowings from the central bank
   placements from banks and other
financial institutions
  financial liabilities held for trading
  derivative financial liabilities
  notes payable                                   1,889,582,464.57                         1,991,907,836.96
  accounts payable                                4,521,293,910.32                         4,639,261,396.45
  receipts in advance                                 3,200,394.26                             1,569,799.63
  contractual liabilities                         1,553,057,007.25                         2,578,264,621.13
  financial assets sold under repurchase
agreements
   deposits      from      customers       and
interbank
  customer brokerage deposits
  acting underwriting of securities
  payroll payable                                  370,969,181.40                            468,450,348.52
  taxes and duties payable                         474,549,435.58                            509,286,922.32
  other payables                                  1,340,766,834.05                         1,043,693,209.78
     including: interest payable
                    dividends payable                     95,031,694.37                             89,413,484.03
   fees and commissions payable
   reinsurance amounts payable
   held-for-sales liabilities
  non-current liabilities due within one
year
   other current liabilities                             468,011,160.68                            381,185,773.19
total current liabilities                             12,224,993,528.32                         13,558,358,697.21
non-current liabilities:
   reserves for insurance contract
   long-term loans                                         2,100,000.00                              2,100,000.00
   bonds payable
     including: preferred shares
                    perpetual bonds
   lease liabilities                                     183,946,367.10                            285,783,728.73
   long-term payables                                    637,183,176.29                            646,074,143.55
   long-term payroll payable                               4,236,056.04                              4,280,453.08
   estimated liabilities
   deferred income                                       186,342,751.32                            178,621,813.00
   deferred income tax liabilities                        69,676,395.57                             98,079,237.09
   other non-current liabilities                          21,535,982.23                             20,648,534.29
total non-current liabilities                          1,105,020,728.55                          1,235,587,909.74
total liabilities                                     13,330,014,256.87                         14,793,946,606.95
owners’ equity:
 share capital                                         1,796,862,549.00                          1,796,862,549.00
 other equity instruments
   including: preferred shares
                perpetual bonds
 capital reserves                                     18,237,265,189.86                         18,231,423,838.72
 less: treasury stock                                    707,428,892.15                            707,428,892.15
 other comprehensive income                              -95,625,013.51                            -68,087,650.95
   special reserves
  surplus reserves                                     2,530,458,968.58                          2,530,458,968.58
  provision for general risk
  undistributed profit                                16,836,377,377.40                         16,720,444,918.66
total owners’ equity attributable to
parent company
  minority interests                                      -1,475,760.71                             23,323,529.93
total owners’ equity                                  38,596,434,418.47                         38,526,997,261.79
total liabilities and owners’ equity                  51,926,448,675.34                         53,320,943,868.74
legal representative: dong ming            accounting officer: ma jia           head of accounting firm: xu jing
                                                                                                   unit: rmb
                        item                june 30, 2023                             january 1, 2023
 current assets:
   cash and bank balance                             9,675,374,713.21                           10,750,790,137.56
   financial assets held for trading                 1,426,698,888.74                            2,271,661,364.13
   derivative financial assets
   notes receivable                                    147,262,548.01                               15,053,289.26
   accounts receivable                               1,475,394,712.65                              977,848,724.80
   accounts receivable financing                       237,406,286.64                              764,707,862.56
   prepayment                                        1,836,407,049.14                            2,653,025,880.52
   other receivables                                 4,190,850,711.42                            3,123,928,450.54
      including: interest receivable
                   dividends receivable                406,032,345.56
   inventory                                         1,368,695,281.23                            1,714,985,144.48
   contractual assets
   held-for-sales assets
   non-current assets due within one year                                                          161,580,000.00
   other current assets                              1,521,554,793.00                              860,182,734.75
 total current assets                               21,879,644,984.04                           23,293,763,588.60
 non-current assets:
   debt investments
   other debt investments
   long-term receivables
   long-term equity investments                     13,671,033,044.38                           13,555,259,244.01
   investment in other equity instruments
   other non-current financial assets                  390,947,063.97                              382,286,134.24
   investment properties                               324,217,965.14                              329,163,194.06
   fixed assets                                      1,401,416,216.11                            1,466,536,097.93
   construction in progress                             88,203,141.97                               42,777,046.60
   productive biological assets
   oil and gas assets
   right-of-use assets                                 269,142,633.18                              278,370,935.35
   intangible assets                                   286,058,535.85                              279,813,388.40
   development expenses                                     9,048,987.02                             6,024,448.12
   goodwill
   long-term deferred expenses                          18,945,197.92                               26,383,681.39
   deferred income tax assets                          390,809,600.74                              393,672,386.71
   other non-current assets                            931,747,729.81                              878,933,974.44
 total non-current assets                           17,781,570,116.09                           17,639,220,531.25
 total assets                                       39,661,215,100.13                           40,932,984,119.85
 current liabilities:
  short-term loans                            19,000,000.00
  financial liabilities held for trading
  derivative financial liabilities
  notes payable
  accounts payable                          3,088,848,105.60                         3,490,312,525.91
  receipts in advance                           1,918,624.04                                78,896.18
  contractual liabilities                    994,177,648.13                          1,854,572,406.22
  payroll payable                            219,312,985.68                            260,587,798.86
  taxes and duties payable                   175,344,210.60                            136,524,520.02
  other payables                            8,441,509,326.10                         6,874,487,463.94
     including: interest payable
                    dividends payable         86,490,742.04                             86,490,742.04
  held-for-sales liabilities
  non-current liabilities due within one
year
  other current liabilities                   66,787,714.04                            168,111,106.82
total current liabilities                  13,026,977,829.05                        12,804,030,708.11
non-current liabilities:
  long-term loans                               1,100,000.00                             1,100,000.00
  bonds payable
     including: preferred shares
                    perpetual bonds
  lease liabilities                          252,841,236.63                            262,346,944.44
  long-term payables                         637,183,176.29                            646,074,143.55
  long-term payroll payable
  estimated liabilities
  deferred income                             94,384,352.02                             90,960,005.58
  deferred income tax liabilities             52,652,022.25                             58,991,118.22
  other non-current liabilities                 1,931,554.36                             1,931,554.36
total non-current liabilities               1,040,092,341.55                         1,061,403,766.15
total liabilities                          14,067,070,170.60                        13,865,434,474.26
owners’ equity
 share capital                              1,796,862,549.00                         1,796,862,549.00
 other equity instruments
   including: preferred shares
               perpetual bonds
 capital reserves                          18,436,007,785.94                        18,430,166,434.80
 less: treasury stock                         707,428,892.15                           707,428,892.15
 other comprehensive income                   -55,068,924.70                           -32,221,472.36
  special reserves
  surplus reserves                          2,529,297,618.08                         2,529,297,618.08
  undistributed profits                     3,594,474,793.36                         5,050,873,408.22
total owners’ equity                       25,594,144,929.53                        27,067,549,645.59
total liabilities and owners’ equity       39,661,215,100.13                        40,932,984,119.85
                                                                                                          unit: rmb
                                 item                                1h 2023                        1h 2022
i. total operating revenue                                            20,309,372,850.07              18,016,738,609.15
  including: operating revenue                                        20,309,372,850.07              18,016,738,609.15
              interest income
              premiums earned
              fee and commission income
ii. total operating cost                                              17,462,566,820.49              15,245,797,330.36
  including: operating cost                                           14,713,232,267.40              12,792,498,131.95
              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                                       108,372,830.01                 107,578,129.73
              selling expenses                                         2,257,688,549.69               2,010,088,694.73
              administrative expenses                                    344,443,810.40                 370,784,999.34
              r&d expenses                                               144,819,933.66                 128,624,650.16
              financial expenses                                        -105,990,570.67                -163,777,275.55
                 including: interest expenses                             18,798,896.05                  46,066,543.03
                             interest income                             114,776,796.46                 225,532,115.81
  plus: other income                                                      42,177,454.66                  35,603,814.75
        investment income (loss is indicated with “-”)                   421,542,165.56                 533,069,805.76
             including: income from investment in associates and
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 changes in fair value (loss is indicated with
“-”)
        credit impairment losses (loss is indicated with “-”)            -74,680,582.29                -669,513,755.43
        asset impairment losses (loss is indicated with “-”)              19,008,334.90                -593,505,510.85
        gains from asset disposal (loss is indicated with “-”)             5,403,078.51                  -1,942,102.28
iii. operating profit (loss is indicated with “-”)                     3,313,345,408.99               1,658,041,078.61
  plus: non-operating revenue                                              2,002,724.29                   1,898,948.41
  less: non-operating expenses                                            12,068,474.23                   3,280,239.30
iv. total profit (total loss is indicated with “-”)                    3,303,279,659.05               1,656,659,787.72
  less: income tax expenses                                              477,020,837.61                 290,249,994.10
v. net profit (net loss is indicated with “-”)                         2,826,258,821.44               1,366,409,793.62
    (i) classification by operation continuity
 indicated with “-”)
 indicated with “-”)
    (ii) classification by ownership
 company (net loss to be listed with “-”)
 vi. other comprehensive income, net of tax                                        -28,749,435.38              -41,333,084.96
    other comprehensive income attributable to owners of parent
                                                                                   -27,537,362.56              -37,357,689.77
 company, net of tax
       (i) other comprehensive income that cannot be reclassified
                                                                                     -8,119,659.75
 into profits or losses
 benefit plan
                                                                                     -8,119,659.75
 reclassified into profits or losses under the equity method
 investments
       (ii) other comprehensive income that will be reclassified
                                                                                   -19,417,702.81              -37,357,689.77
 into profits or losses
                                                                                   -14,727,792.59              -22,195,389.71
 into profits or losses under the equity method
 comprehensive income
 investments
                                                                                     -4,689,910.22             -15,162,300.06
 denominated in foreign currencies
    other comprehensive income attributable to minority interests,
                                                                                     -1,212,072.82              -3,975,395.19
 net of tax
 vii. total comprehensive income                                                 2,797,509,386.06            1,325,076,708.66
    total comprehensive income attributable to owners of parent
 company
    total comprehensive income attributable to minority interests                    -2,964,866.68            -138,060,205.38
 viii. earnings per share:
    (i) basic earnings per share                                                              1.58                        1.10
    (ii) diluted earnings per share                                                           1.58                        1.09
net profit realized by the combined party in business combination under common control before the business combination in the
current period was rmb 0.00, and net profit realized by the combined party in the previous period was rmb 0.
 legal representative: dong ming                accounting officer: ma jia                   head of accounting firm: xu jing
                                                                                                           unit: rmb
                                   item                                    1h 2023                      1h 2022
 i. operating revenue                                                       4,070,676,103.03             3,621,961,552.64
   less: operating costs                                                    1,887,507,329.14             1,594,027,409.62
         tax and surcharge                                                     44,672,855.31                40,989,010.30
         selling expenses                                                   1,113,001,120.00             1,087,138,945.02
         administrative expenses                                              137,464,403.96               183,782,902.44
         r&d expenses                                                          87,188,305.63                64,137,079.43
         financial expenses                                                  -101,225,996.11              -203,026,669.16
            including: interest expenses                                           78,186.12                   108,028.93
                        interest income                                       102,169,525.79               203,220,929.30
   plus: other income                                                          26,946,820.33                21,136,422.81
         investment income (loss is indicated with “-”)                       446,784,505.53               622,410,401.31
           including: income from investment in associates and
 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 with
 “-”)
         credit impairment losses (loss is indicated with “-”)                 -1,916,080.56                 -6,496,648.14
         asset impairment losses (loss is indicated with “-”)                  -4,697,182.46                -71,670,591.47
         gains from asset disposal (loss is indicated with “-”)                   -75,147.74                 -2,021,694.82
 ii. operating profit (loss is indicated with “-”)                          1,420,765,189.67             1,007,232,023.74
   plus: non-operating revenue                                                    705,000.94                   136,673.08
   less: non-operating expenses                                                 5,805,874.24                 2,073,009.65
 iii. total profit (total loss is indicated with “-”)                       1,415,664,316.37             1,005,295,687.17
   less: income tax expenses                                                  159,983,774.67                 6,527,317.08
 iv. net profit (net loss is indicated with “-”)                            1,255,680,541.70               998,768,370.09
    (i) net profit from continuing operations (net loss is indicated
 with “-”)
    (ii) net profit from discontinued operations (net loss is
 indicated with “-”)
 v. other comprehensive income, net of tax                                    -22,847,452.34                -22,195,389.71
       (i) other comprehensive income that cannot be reclassified
                                                                               -8,119,659.75
 into profits or losses
 benefit plan
                                                                               -8,119,659.75
 into profits or losses under the equity method
 investments
       (ii) other comprehensive income that will be reclassified into
                                                                              -14,727,792.59                -22,195,389.71
 profits or losses
                                                                          -14,727,792.59                -22,195,389.71
into profits or losses under the equity method
comprehensive income
investments
denominated in foreign currencies
vi. total comprehensive income                                          1,232,833,089.36               976,572,980.38
vii. earnings per share:
   (i) basic earnings per share
   (ii) diluted earnings per share
                                                                                                  unit: rmb
                      item                            1h 2023                           1h 2022
i. cash flows from operating activities:
   cash received from sales of goods or rendering
of services
  net increase in customer deposits             and
placements from financial institutions
  net increase in borrowings from the 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                                     4,075,145.25                    88,557,113.46
  other cash receipts related to operating
activities
subtotal of cash inflows from operating activities      20,949,301,997.95                  19,041,774,818.84
  cash paid for goods purchased and services
received
  net increase in loans and advances to customers
  net increase in deposits with the 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               1,247,729,927.92                   1,049,690,373.76
   payments of all types of taxes                        1,315,371,659.24                   1,127,340,363.11
   other cash paid relating to operating activities      1,271,910,545.56                   1,547,449,625.89
subtotal of cash outflows from operating activities     18,697,350,627.85                  17,863,824,761.57
net cash flows from operating activities                 2,251,951,370.10                   1,177,950,057.27
ii. cash flows from investment activities:
   cash received from disposal of investments              968,704,891.05                    3,785,845,797.27
   cash received from returns on investments                16,545,231.60                      216,499,527.63
   net cash received from disposal of fixed assets,
intangible assets and other long-term assets
   net cash received from disposal of subsidiaries
and other business units
   other cash received relating to investment              363,000,000.00                    1,120,000,000.00
activities
subtotal of cash inflows from investment activities     1,348,422,562.65                    5,122,939,908.04
   cash paid for acquisition of fixed assets,
intangible assets and other long-term assets
   cash paid for acquisition of investments               68,700,000.00                    11,586,624,186.44
  net increase in pledged loans
   net cash paid for acquisition of subsidiaries and
other business units
   other cash paid relating to investment activities     697,318,800.00                        38,327,517.39
subtotal of cash outflows from investment
activities
net cash flows from investment activities                307,088,767.49                    -7,254,847,260.10
iii. cash flows from financing activities:
   cash received from absorption of investments                                              122,051,491.61
   including: cash received from subsidiaries’
absorbing minority shareholder investment
   cash received from borrowings                         592,248,791.91                     1,498,269,608.15
   other cash received relating to financing
activities
subtotal of cash inflows from financing activities       592,248,791.91                     1,620,321,099.76
  cash payments for settlement of debts                  917,334,047.33                     1,356,624,806.88
  cash payments for distribution of dividends and
profits or repayment of interest
   including: dividends and profits paid to
minority shareholders by subsidiaries
   other cash payments relating to financing
activities
subtotal of cash outflows from financing activities     3,699,949,755.66                    4,332,996,021.85
net cash flow from financing activities                -3,107,700,963.75                   -2,712,674,922.09
iv. effect of foreign exchange rate changes on
cash and cash equivalents
v. net increase in cash and cash equivalents             -543,421,662.08                   -8,782,469,818.78
   plus: opening balance of cash and cash
equivalents
vi. closing balance of cash and cash equivalents       12,502,738,350.39                  10,087,395,023.54
                                                                                                 unit: rmb
                         item                            1h 2023                          1h 2022
i. cash flows from operating activities:
   cash received from sales of goods or rendering
of services
   receipts from tax refunds                                                                        102,588.12
   other cash receipts related to operating activities      2,590,203,193.90                  4,719,233,117.50
subtotal of cash inflows from operating activities          5,551,222,656.84                  7,289,522,429.04
   cash paid for goods purchased and services
received
   cash paid to and on behalf of employees                    528,333,366.43                    514,308,454.35
   payments of all types of taxes                             451,039,753.23                    452,749,410.25
   other cash paid relating to operating activities         2,192,698,982.19                  1,810,893,096.43
subtotal of cash outflows from operating activities         4,100,941,192.25                  4,133,213,553.40
net cash flows from operating activities                    1,450,281,464.59                  3,156,308,875.64
ii. cash flows from investment activities:
   cash received from disposal of investments                884,291,638.76                   2,498,345,797.03
   cash received from returns on investments                   9,639,488.08                     207,591,547.81
   net cash received from disposal of fixed assets,
intangible assets and other long-term assets
   net cash received from disposal of subsidiaries
and other business units
   other cash received relating to investment
activities
subtotal of cash inflows from investment activities         1,053,931,126.84                  2,706,366,426.98
   cash paid for acquisition of fixed assets,
intangible assets and other long-term assets
   cash paid for acquisition of investments                  100,000,000.00                  11,028,424,186.44
   net cash paid for acquisition of subsidiaries and
other business units
   other cash paid relating to investment activities         696,518,800.00
subtotal of cash outflows from investment
activities
net cash flows from investment activities                    170,230,575.93                  -8,395,004,804.17
iii. cash flows from financing activities:
   cash received from absorption of investments                                                  35,129,662.07
   cash received from borrowings                              19,000,000.00
   other cash received relating to financing
activities
subtotal of cash inflows from financing activities            19,000,000.00                      35,129,662.07
   cash payments for settlement of debts
   cash payments for distribution of dividends and
profit or repayment of interest
   other cash payments relating to financing
activities
subtotal of cash outflows from financing activities         2,714,298,668.31                  2,761,649,320.37
net cash flow from financing activities                    -2,695,298,668.31                 -2,726,519,658.30
iv. effect of foreign exchange rate changes on cash
                                                                   -628,796.56
and cash equivalents
v. net increase in cash and cash equivalents               -1,075,415,424.35                 -7,965,215,586.83
   plus: opening balance of cash and cash
equivalents
vi. closing balance of cash and cash equivalents            9,675,374,713.21                  7,677,722,146.78
                       amount for the current period
                                                                                                                                                                                                                               unit: rmb
                                                                                                                                                                                                                                                    total
                                                                                                                                                                                                                                    minority
                                                                                                    owners’ equity attributable to parent company                                                                                                  owners’
                                                                                                                                                                                                                                    interests
                                                                                                                                                                                                                                                    equity
         item
                                                  other equity instruments                                                                                             provision
                                                                                                      less:            other
                                                                                                                                       special                            for        undistributed
                            share capital     preferred   perpetual             capital reserves    treasury       comprehensive                 surplus reserves                                       others      subtotal
                                                                       others                                                         reserves                          general          profits
                                               shares       bonds                                     stock           income
                                                                                                                                                                         risk
i. closing balance
of the previous            1,796,862,549.00                                     18,231,423,838.72                    -68,087,650.95                 2,530,458,968.58                16,720,444,918.66
year
plus: changes in
accounting policies
       correction of
errors in the prior
period
       business
combination under
common control
       others
ii. opening
balance of the             1,796,862,549.00                                     18,231,423,838.72                    -68,087,650.95                 2,530,458,968.58                16,720,444,918.66
current year
iii.
increase/decrease
                                                                                                                                                                                                                                    -24,799,29
for the period                                                                       5,841,351.14                    -27,537,362.56                                                    115,932,458.74             94,236,447.32                  69,437,156.68
(decrease is
indicated with “-”)
(i) total
comprehensive                                                                                                        -27,537,362.56                                                  2,828,011,615.30
income
(ii) contribution
                                                                       -4,900,000
and withdrawal of                                                                    -4,900,000.00
                                                                              .00
capital by owners
                                                                                     -4,900,000.00
invested by owners                                                            .00
by holders of other
equity instruments
payment credited
to owners’ equity
(iii) profit                                         -2,712,079,156.   -16,934,42   -2,729,013,580
                           -2,712,079,156.56
distribution                                                     56         3.96               .52
surplus reserves
general risk
provision
                                                     -2,712,079,156.   -16,934,42   -2,729,013,580
owners (or                 -2,712,079,156.56
shareholders)
(iv) internal
carry-over of
owners’ equity
capital reserves to
capital (or share
capital)
surplus reserves to
capital (or share
capital)
with surplus
reserves
defined benefit
plan carried
forward to retained
earning
comprehensive
income carried
forward to retained
earnings
(v) special
reserves
period
the period
(vi) others                                                                         5,841,351.14                                                                                                                    5,841,351.14                   5,841,351.14
iv. closing balance                                                                                 707,428,892.                                                                                                  38,597,910,179.   -1,475,760    38,596,434,41
for the period                                                                                               15                                                                                                                18          .71             8.47
                     amount for the previous year
                                                                                                                                                                                                                               unit: rmb
                                                                                                    owners’ equity attributable to parent company
         item                                    other equity instruments                                                                                               provision                                                   minority     total owners’
                                                                                                         less:            other
                                                                                      capital                                             special         surplus          for        undistributed                                 interests       equity
                          share capital      preferred   perpetual                                      treasury      comprehensive                                                                      others     subtotal
                                                                      others          reserves                                            reserves       reserves        general         profits
                                              shares       bonds                                         stock           income
                                                                                                                                                                          risk
i. closing balance
of the previous           1,282,715,242.00                                                                              2,513,802.65
year
       plus:
changes in
accounting
policies
          correction
of errors in the
prior period
          business
combination
under common
control
            others
ii. opening
balance of the         1,282,715,242.00                                   2,513,802.65
current year
iii.
increase/decrease
for the period          514,147,307.00                                   -37,357,689.77
(decrease is
indicated with “-”)
(i) total
comprehensive                                                            -37,357,689.77
income
(ii) contribution
and withdrawal of           941,029.00    54,468,345.99
capital by owners
invested by
owners
by holders of
other equity
instruments
share payment                                                                                                                          55,409,374.9               55,409,374.9
credited to                                                                                                                                      9                           9
owners’ equity
(iii) profit                               -2,566,031,393.           -2,052,825,11   -7,029,23   -2,059,854,35
distribution                                           20                    5.20        4.99            0.19
surplus reserves
general risk
provision
                                           -2,566,031,393.           -2,052,825,11   -7,029,23   -2,059,854,35
owners (or            513,206,278.00
shareholders)
(iv) internal
carry-over of
owners’ equity
capital reserve to
capital (or share
capital)
surplus reserves to
capital (or share
capital)
with surplus
reserves
defined benefit
plan carried
forward to
retained earning
comprehensive
income carried
forward to
retained earnings
(v) special
reserves
the period
the period
(vi) others                             83,216,490.79
iv. closing
balance for the      1,796,862,549.00                                  -34,843,887.12
period
                 amount for the current period
                                                                                                                                                                                                       unit: rmb
                                                           other equity instruments                                                     other
               item                                                                                          less: treasury                         special                          undistributed                      total owners’
                                    share capital     preferred   perpetual              capital reserves                         comprehensive                 surplus reserves                         others
                                                                                others                           stock                              reserves                            profits                            equity
                                                       shares       bonds                                                               income
i. closing balance of the
previous year
     plus: changes in
accounting policies
            correction of errors
in the prior period
            others
ii. opening balance of the
current year
iii. increase/decrease for the
period (decrease is indicated                                                                 5,841,351.14                         -22,847,452.34                                  -1,456,398,614.86               -1,473,404,716.06
with “-”)
(i) total comprehensive
                                                                                                                                   -22,847,452.34                                  1,255,680,541.70                 1,232,833,089.36
income
(ii) contribution and
withdrawal of capital by
owners
owners
of other equity instruments
credited to owners’ equity
(iii) profit distribution                                                                                                          -2,712,079,156.56         -2,712,079,156.56
reserves
                                                                                                                                   -2,712,079,156.56         -2,712,079,156.56
shareholders)
(iv) internal carry-over of
owners’ equity
to capital (or share capital)
to capital (or share capital)
reserves
plan carried forward to
retained earning
income carried forward to
retained earnings
(v) special reserves
(vi) others                                               5,841,351.14                                                                                            5,841,351.14
iv. closing balance for the
period
                   amount for the previous year
                                                                                                                                                                                                     unit: rmb
                                                        other equity instruments                                                  other
            item                                                                                           less: treasury                      special                                                           total owners’
                                 share capital      preferred    perpetual             capital reserves                       comprehensive               surplus reserves   undistributed profits   others
                                                                              others                           stock                           reserves                                                               equity
                                                     shares       bonds                                                          income
i. closing balance of the
previous year
     plus: changes in
accounting policies
            correction of
errors in the prior period
            others
ii. opening balance of
the current year
iii. increase/decrease for
the period (decrease is            514,147,307.00                                          60,894,908.53   707,428,892.15     -22,195,389.71                                     -1,567,263,023.11             -1,721,845,089.44
indicated with “-”)
(i) total comprehensive
                                                                                                                              -22,195,389.71                                        998,768,370.09                  976,572,980.38
income
(ii) contribution and
withdrawal of capital by              941,029.00                                           54,468,345.99   707,428,892.15                                                                                        -652,019,517.16
owners
invested by owners
holders of other equity
instruments
payment credited to                   941,029.00                                           54,468,345.99                                                                                                             55,409,374.99
owners’ equity
(iii) profit distribution    513,206,278.00                                                                               -2,566,031,393.20           -2,052,825,115.20
reserves
(or shareholders)
(iv) internal carry-over
of owners’ equity
reserves to capital (or
share capital)
reserves to capital (or
share capital)
surplus reserves
benefit plan carried
forward to retained
earning
income carried forward to
retained earnings
(v) special reserves
period
period
(vi) others                                         6,426,562.54                                                                                            6,426,562.54
iv. closing balance for
the period
iii. basic information 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.
     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,
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 china securities regulatory commission 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 china securities regulatory commission on the
document (2008) no.1411 reply on approving the private issuance of shares of yunnan baiyao group co., ltd,
the company issued 50,000,000 new shares to ping an life insurance company of china limited in a private
offering, raising funds of rmb 1,393,500,000.00 (including issuance expenses), all of which were subscribed in
cash. the share capital of the company increased from 484,051,138 shares to 534,051,138 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 534,051,138 shares prior to the distribution, and the total
share capital increased to 694,266,479 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 347,133,239.00. 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
     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 432,426,597 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 236,003,599.00, and the company’s total share capital amounted to rmb 1,277,403,317.00
after this change. a total of 236,003,599 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 321,160,222 shares of the company to
yunnan state-owned equity operation management company at nil consideration. upon completion of this
transfer, yunnan state-owned equity operation 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 yunnan state-owned
equity operation management company into yunnan investment holdings group. after the equity transfer,
yunnan investment holdings group held 321,160,222 shares of the company through the yunnan state-owned
equity operation management company, accounting for 25.04% of the total share capital of the company.
yunnan state-owned equity operation 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
incentive participants of the 2020 equity incentive plan. as of december 31, 2022, the company had
completed distributing dividends of 513,206,278 shares and stock exercises of 941,029 shares, increasing its
share capital to 1,796,862,549 shares.
     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).
company dated august 28, 2023.
     as of june 30, 2023, there were 105 subsidiaries and structured entities included in the scope of the
group’s consolidated financial statements. for details, please refer to note ix “interest in other entities.” the
group had 13 new entities included in its consolidated financial statements compared to the end of the previous
year, while 5 entities were excluded. for details, please refer to note viii “changes in consolidation scope.”
iv. basis for preparation of financial statements
     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), 41 specific accounting standards, guidelines for
the application of accounting standards for business enterprises, interpretations of accounting standards for
business enterprises and other relevant provisions promulgated and revised on and after february 15, 2006
(collectively “accounting standards for business enterprises” or “asbes”), as well the disclosure provisions
of the rules governing the disclosure of information by companies issuing public securities no. 15 —
general provisions for financial reporting (revised in 2014) issued by china securities regulatory
commission.
     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.
     the company and the group evaluated their abilities to continue as a going concern for the 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 significant 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 39 “revenue” under this note v. for the description of
significant accounting judgments and estimates made by the management, please refer to section 43“other
significant accounting policies and accounting estimates” under this note v.
     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, 2023 as well as the business
results and cash flows of the company and the group for 1h 2023. in addition, the financial statements of the
company and the group also comply with the disclosure requirements of the rules governing the disclosure of
information by companies issuing public securities no. 15 — general provisions on financial reporting as
amended by the china securities regulatory commission in 2014.
     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.
     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.
     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.
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 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 22
“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.
     (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 or 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 where 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 22 “long-term equity investments” or section 10 “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: ①
these transactions were entered into at the same time or upon the consideration of the effects therebetween; ②
these transactions can only generate one complete business result when conducted all together; ③ the
occurrence of one transaction depends on the occurrence of at least one other transaction; and ④ 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 transaction thereof shall be accounted in accordance
with principles applicable to the “disposal of part of long-term equity investments in a subsidiary that does not
result in the loss of control” (please see item (2) ④ of section 22 “long-term equity investments” under this
note v for details) and “loss of control over a former subsidiary due to disposal of 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.
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 in
accordance with the accounting policies described in item (2) ② “long-term equity investments accounted for
using the equity method” in section 22 “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 or 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.
     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), are highly liquid, easily convertible to known amounts of cash, and having minimal risk
of changes in value.
     (1) translation of 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).
     (2) 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 ① 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; ② exchange
difference 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 ③ 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.
     (3) 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 below in the shareholders’ equity item in the balance sheet, shall be transferred to the
profits or 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 below in the shareholders’ equity item in the balance sheet, shall be fully
transferred to the profits or losses of the disposal period.
     when part of the equity investment is disposed of or the proportion of overseas operating interest is
reduced but the control of overseas operations is not lost for other reasons, 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 or losses of the disposal
period in full or 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 or losses of the disposal
period.
     when the group becomes a party to a financial instrument contract, it shall recognize a financial asset or
financial liability.
     (1) classification 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 or 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 or losses, the related transaction costs are recognized directly in profits or 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.
     ① 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.
     ② financial assets at fair value through other comprehensive income
     the group’s business model of managing such financial assets is aimed at the collection of contractual
cash flows and disposal, 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 gains or 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 gains or 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.
     ③ financial assets at fair value through profits or 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 or 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 or
losses. such financial assets are subsequently measured at fair value, with changes in fair value recognized in
the current profits and losses.
     (2) classification and measurement of financial liabilities
     financial liabilities are classified as financial liabilities at fair value through profits or losses and other
financial liabilities at the time of initial recognition. for financial liabilities at fair value through profits or 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.
     ① financial liabilities at fair value through profits or losses
     the financial liabilities at fair value through profits or losses include financial liabilities held for trading
(including derivatives that are financial liabilities) and those designated as financial liabilities at fair value
through profits or 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.
     however, for those designated as financial liabilities at fair value through profits or 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 or 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.
     ② other financial liabilities
     financial liabilities other than financial liabilities resulting from the transfer of financial assets that do not
meet the conditions for derecognition or continue to be involved in the transfer of financial assets, financial
guarantee contracts are classified as financial liabilities at amortized cost, which are subsequently measured at
amortized cost, and the gains or 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: ① the contractual right to
receive the cash flow of the financial asset is terminated; ② 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;
③ 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 that should be apportioned to the
portion derecognized and the above-mentioned book value apportioned is 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, 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 other 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.
     ① 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 loss
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 loss 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.
     ② 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.
     ③ 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.
     ④ 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.
     ⑤ determination of credit loss 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, domestic letter of      banks with less credit risk in relation to acceptors and
credit                                              negotiation acts
  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 for notes receivable 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   this portfolio represents amounts receivable of the company within the
consolidation scope                      scope of consolidation.
  account age portfolio                  the portfolio takes the age of receivables as the credit risk characteristics.
     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   this portfolio represents amounts receivable of the company within the
consolidation scope                      scope of consolidation.
  account age portfolio                  the portfolio takes the age of receivables as the credit risk characteristics.
     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   this portfolio represents amounts receivable of the company within the
                 item                                           basis for determining the portfolio
consolidation scope                     scope of consolidation.
  account age portfolio                 the portfolio takes the age of receivables as the credit risk characteristics.
     e. debt investments
     for debt investments, the group mainly accounts for bond investment at amortized cost. based on whether
the credit risk of debt investments 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 debt investments for single assessment of credit risk, they are divided into different
portfolios based on their credit risk characteristics:
                 item                                             basis for determining the portfolio
  portfolio 1                              bonds have not been downgraded since the initial purchase
  portfolio 2                              bonds have been downgraded since the initial purchase
     f. other debt investments
     for other debt investments, the group mainly accounts for bond investment at fair value through other
comprehensive income. based on whether the credit risk of debt investments 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 debt investments for single assessment of credit risk, they are divided into different
portfolios based on their credit risk characteristics:
                 item                                             basis for determining the portfolio
  portfolio 1                              bonds have not been downgraded since the initial purchase
  portfolio 2                              bonds have been downgraded since the initial purchase
     please refer to “10. financial instruments.”
     please refer to “10. financial instruments.”
     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 “10. financial
instruments” under this note.
     for the method of determining expected credit losses on other receivables and the accounting treatment,
please refer to “10. financial instruments.”
     (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 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 and net realizable value, 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 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.
     the group presents in the balance sheet as a contractual asset the right to collect the contractual
consideration from the customer which has not yet been paid but for which the group has fulfilled its
performance obligations under the contract, which is not unconditional (i.e. subject only to the passage of time).
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.
     for the method of determining expected credit losses on contractual assets and the accounting treatment,
please refer to “10. financial instruments” under this note.
     incremental costs incurred by the group to acquire contracts that are expected to be recovered are taken as
the contract acquisition costs 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: ① the costs are directly related to a current or anticipated contract, including direct
labor, direct materials, manufacturing expenses (or similar expenses), costs expressly borne by the customer,
and other costs incurred solely as a result of the contract; ② this cost increases the group’s future resources
to meet its performance obligations; ③ 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.
     not applicable
     please refer to “10. financial instruments” under note v.
     please refer to “10. financial instruments” under note v.
     not applicable
     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 “10. financial instruments” under note v.
     common control is the group’s contractually agreed sharing of control over an arrangement, 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’
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. 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’ 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 (if applicable) 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-monetary assets 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.
     ① 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 where 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.
     ② 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 or
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 or 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 or losses based on fair value of the investee’s identifiable assets at the time of acquisition,
after making appropriate adjustments 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 or losses arising from inter-group transactions shall be offset by
the portion attributable to the group, and the profits or 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
the profits or losses as 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.
     ③ 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.
     ④ disposal of long-term equity investments
     in the consolidated financial statements, if the parent 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 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 the
policies as set out in item (2) of section 6 “preparation of consolidated financial statements” 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 or 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 or 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 or 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 or 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.
     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 31 “impairment of long-term assets” under note v.
     when self-use property or inventory is converted into investment property or investment property is
converted into self-use property, the book value before conversion is taken as the entry value after conversion.
     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.
     (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
 house and building      straight-line
 for production          method
 production machine      straight-line
 and equipment           method
 transportation           straight-line
 equipment                method
 electronic device
                          straight-line
 and management                                    5                     5%                       19%
                          method
 tools
 non-production
                          straight-line
 machine and                                       10                    5%                       9.5%
                          method
 equipment
 house and building
                          straight-line
 for non-production                                45                    5%                       2.11%
                          method
 purpose
                          straight-line
 others                                            5                     5%                       19%
                          method
     (3) recognition basis, valuation and depreciation method of fixed assets acquired under financing
leases
     not applicable
     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, and 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 31 “impairment of long-term assets” under note v.
     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.
     (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/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 expenses 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.
     not applicable
     for the method of determining right-of-use assets and the accounting treatment, please refer to “42. leases”
under this note v.
     (1) valuation method, useful life, impairment test
     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 on an item asset 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 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.
     (2) accounting policies for internal r&d expenses
     the group classifies the expense on an internal r&d project into expense at the research phase and
expense at the development phase.
     expense at the research phase is recognized in the current profits and losses when incurred.
     expense at the development phase is recognized as an intangible asset if all of the following conditions are
satisfied at the same time, and otherwise, it is recognized in the current profits and losses:
     ① it is technically feasible to complete the intangible asset so that it will be available for use or sale;
     ② it is intended to complete and to use or sell the intangible asset;
     ③ 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 used if the intangible asset is to be used internally;
     ④ there are adequate technical, financial and other resources to complete the development and the ability
to use or sell the intangible assets;
     ⑤ 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 or losses when incurred.
     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 reached their useful lives 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.
     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 long-term
deferred expenses are accounted for according to the actual amount incurred and are amortized on an average
basis during the benefit period of the project. if the benefits are no longer available in the subsequent periods,
the balance is included in the current profits and losses at one time. the long-term deferred expenses shall be
amortized on the basis of the benefit period or usable period if there is a clear benefit period or usable period,
and amortized on an average basis of 3 years if there is no clear benefit period or usable period.
     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.
     (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.
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.
     for the method of determining lease liabilities and the accounting treatment, please refer to “42. leases”
under this note v.
     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. for reorganization obligations relating to
the sale of part of the business, obligations relating to reorganization are recognized only when the group has
committed to sell part of the business (i.e., entered into a binding sale agreement).
     (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.
     ① 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.
     ② 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 group and shareholders or de
facto controllers of the company
     transactions involving share payments between the group and shareholders or de facto controllers of the
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 enterprise is within the group, while the
other one is outside the group:
     ① 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.
     ② 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.
     not applicable
     accounting policies for revenue recognition and measurement
     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 obligations
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’s
performance; 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.
    differences in accounting policies for revenue recognition due to different operating models for the same
type of business
    government subsidy refers to the monetary assets and non-monetary assets 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
monetary assets, the subsidy is measured at the amount received or receivable. for a government subsidy in the
form of transfer of non-monetary assets, 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, 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.
     asset-related government subsidies are recognized as deferred revenues 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, or deducted against related costs 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.
     in case a recognized government subsidy is required to be returned, if there is a deferred income balance,
the book balance of the deferred income is reduced and the excess is recognized in the current profits and losses;
in other cases, it is recognized directly in the current profits and losses.
     (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
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-down 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.
     a lease is a contract in which the group assigns or acquires the right to control the use of one or more
identified assets for a certain period of time in exchange for or payment of consideration. on the contract
inception date, the group assesses whether the contract is a lease or contains a lease.
     (1)   the group as the lessee
     the group’s lease assets are mainly housing and buildings.
     ①     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.
     ② 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 24 “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 and 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. variable lease payments that are not included
in the measurement of the lease liability are recognized in current profits and losses 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.
     ③ 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 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) the group as a 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.
     ① 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.
     ② 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.
     (1) repurchase of shares
     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.
     (1) changes in significant accounting policies
     □applicable not applicable
     (2) changes in significant accounting estimates
     □applicable not applicable
     (3) first-time implementation of the new accounting standard in 2023 to adjust relevant items in
the financial statements at the beginning of the year of first-time implementation
     □applicable not applicable
     as operating activities have inherent uncertainties, the group needs to make judgments, estimates and
assumptions upon report items that cannot be accurately calculated in applying the above accounting policies.
these judgments, estimates and assumptions are made based on historical experiences of the management of the
group, taking other related factors into consideration. these judgments and estimates may affect the presented
amounts of incomes, expenses, assets and liabilities and, as well as the disclosure of contingent liabilities on the
balance sheet date. however, the uncertainty in these estimates may result in actual results that differ from the
current estimates of the group’s management, resulting in material adjustments to the book value of assets or
liabilities affected in the future.
     the group reviews the above judgments, estimates and assumptions periodically based on going concern.
if the changes of accounting estimates only affect the current period, the influence amount is recognized in the
current period. if the changes of accounting estimates affect both of the current year and the future period, the
influence amount is recognized in the current period and the future period.
     as at the balance sheet date, the significant areas in which the group is required to make judgments,
estimates and assumptions regarding the amounts of items in the financial statements are as follows:
     (1) revenue recognition
     as set out in section 39 “revenue” under note v, the group’s revenue recognition involves significant
accounting judgments and estimates such as: identifying customer contracts; estimating the recoverability of the
consideration to which the group is entitled as a result of the transfer of goods to the customer; identifying the
performance obligations in the contract; estimating the variable consideration present in the contract and the
amount of accumulated recognized revenue that is highly unlikely to be materially reversed when the related
uncertainty is eliminated; whether there is any significant financing component to the contract; estimating the
individual selling price of the individual performance obligations in the contract; determining whether the
performance obligation is to be performed within a certain period of time or at a certain point; determining the
implementation progress, etc.
     the group mainly relies on past experience and work to make judgments, and these significant judgments
and changes in estimates may have an impact on the operating revenue, operating costs, and profits and losses
of the period for the current or subsequent periods, and may constitute a material impact.
     (2) leases
     ① identification of leases
     when identifying whether a contract is a lease or contains a lease, the group needs to assess whether there
exists an identified asset and the customer controls the use of the asset for a certain period of time. in this
assessment, consideration needs to be given to the nature of the asset, substantial replacement rights, and
whether the customer is entitled to receive virtually all of the economic benefits arising from the use of the asset
during that period and able to direct the use of the asset.
     ② classification of leases
     when acting as a lessor, the group classifies leases into operating leases and finance leases. when making
the classification, the management needs to make an analysis and judgment as to whether all the risks and
returns associated with ownership of the leased asset have been substantially transferred to the lessee.
     ③ lease liabilities
     when the group is the lessee, the lease liabilities shall be initially measured at the present value of the
outstanding lease payment on the commencement date of the lease term. when measuring the present value of
lease payments, the group estimates the discount rate used and the lease term of a lease contract with a renewal
or termination option. when assessing the lease term, the group takes into account all relevant facts and
circumstances relating to the economic benefits arising from the exercise of the option by the group, including
expected changes in facts and circumstances between the commencement date of the lease term and the exercise
date of the option. different judgments and estimates may affect the recognition of lease liabilities and
right-of-use assets and will affect the profits or losses in subsequent periods.
     (3) impairment of financial assets
     the group uses the expected credit loss model to evaluate the impairment of financial instruments, and the
application of the expected credit loss model requires significant judgments and estimates that take into account
all reasonable and evidence-based information, including forward-looking information. when making such
judgments and estimates, the group extrapolates the expected changes in the debtors’ credit risk based on
historical data and factors such as changes in economic policies, macroeconomic indicators, industry risks,
external market conditions, technological environment and customer conditions.
     (4) provision for inventory impairment
     according to the inventory accounting policy, the group makes provision for inventory impairment based
on either the cost or the realizable net value of the old and unsalable inventory, whichever is lower, if the cost is
higher than the realizable net value. the impairment of inventory to net realizable value is based on assessing
the marketability of the inventory and its net realizable value. assessment of inventory impairment requires the
management to make judgments and estimates on the basis of obtaining solid evidence and considering factors
such as the purpose of holding inventory and the impact of events after the balance sheet date. the difference
between actual results and the original estimate will affect the book value of inventory and the withdrawal or
reversal of the provision for inventory impairment during the period in which the estimate is changed.
     (5) fair value of financial instruments
     for financial instruments without active market, the group will determine their fair values through various
valuation methods. these valuation methods include discounted cash flow model analysis. in the valuation, the
group needs to estimate future cash flows, credit risk, market volatility and correlation, and select an
appropriate discount rate. these assumptions are subject to uncertainty, and changes in them can have an impact
on the fair value of financial instruments. where equity instrument investments or contracts are publicly quoted,
the group does not use cost as the best estimate of their fair value.
     (6) provision for impairment of long-term assets
     on the balance sheet date, the group makes a judgment on whether there is any sign of possible
impairment of non-current assets other than financial assets. intangible assets with uncertain useful life shall be
subject to impairment tests when there are signs of impairment in addition to annual impairment tests.
non-current assets other than financial assets shall be subject to impairment tests when there are signs
indicating that their book value is uncollectible.
     impairment occurs when the book value of an asset or asset group is greater than the recoverable amount,
that is, the net amount of fair value minus disposal expenses and the present value of expected future cash flow,
whichever is higher.
     the net amount of fair value minus disposal expenses shall be determined by reference to the sale
agreement price or observable market price of similar assets in an arm’s length transaction, less the incremental
cost directly attributable to the disposal of the asset.
     when estimating the present value of future cash flows, it is necessary to make significant judgments about
the output of the asset (or group of assets), the selling price, the associated operating costs, and the discount rate
used in calculating the present value. when estimating the recoverable amounts, the group uses all the relevant
information available, including projections of production volumes, selling prices and related operating costs
based on reasonable and supportable assumptions.
     the group tests goodwill for impairment at least annually. this requires an estimate of the present value of
the future cash flows of the asset group or combination of asset groups to which goodwill has been allocated.
when estimating the present value of the future cash flow, the group needs to estimate the expected future cash
flow generated by the asset group or combination of asset groups, and determine the present value of the future
cash flow at an appropriate discount rate.
     (7) depreciation and amortization
     the group depreciates and amortizes the investment real estate, fixed assets and intangible assets on a
straight-line basis over their useful lives, taking into account their residual value. the group periodically
reviews the useful life to determine the amount of depreciation and amortisation expenses to be included in each
reporting period. the useful life is determined by the group based on previous experience with similar assets as
well as expected technological updates. if there is any material change in previous estimates, an adjustment will
be made to depreciation and amortization expense in future periods.
     (8) deferred income tax assets
     to the extent that there is likely sufficient taxable profit to offset the loss, the group recognises deferred
tax assets on all unutilised tax losses. this requires the management of the group to use massive judgments to
estimate the time and amount of taxable profit in the future and then to determine the value of deferred tax
assets in combination with tax planning strategies.
     (9) income tax
     in the normal business activities of the group, there are certain uncertainties in the final tax treatment and
calculation of some transactions. whether some items can be deducted before tax requires the approval of the
tax authority. where the final tax outcome of these matters is different from the estimated amounts, the
differences will impact the current income tax and deferred income tax in the period in which such
determination is made.
     (10) estimated liabilities
     based on the terms of the contract, current knowledge and historical experience, the group estimates and
makes corresponding provisions for product quality assurance, expected contract losses, liquidated damages for
late delivery, etc. where such contingencies have created a current obligation and the fulfilment of such current
obligations is likely to result in an outflow of economic benefits from the group, the group recognises the
contingency as an estimated liability based on the best estimate of the expense required to fulfil the relevant
current obligation. the recognition and measurement of the estimated liabilities relies heavily on the judgment
of the management. when making this judgment, the group needs to assess factors such as risks, uncertainties
and the time value of money associated with such contingencies.
     among other things, the group will estimate liabilities for after-sales quality maintenance commitments
provided to customers in relation to the sale, repair and modification of the products sold. the group’s recent
maintenance experience data has been taken into account when estimating liabilities, but recent maintenance
experience may not reflect future maintenance situation. any increase or decrease in this provision may affect
profits or losses in future years.
     (11)   measurement at fair value
     certain assets and liabilities of the group are measured at fair value in the financial statements. when
estimating the fair value of an asset or liability, the group uses available observable market data. if the inputs of
level 1 are not available, the group uses appropriate valuation techniques and relevant models for valuation.
vi. taxation
            tax type                           taxation basis                                tax rate
                                     value added from sales of goods
 value-added tax                                                         13%, 9%, 6%, 5%, 3%
                                     or rendering of services
                                                                         price-based collection: 20%;
                                     quantity-based collection and
 consumption tax                                                         quantity-based collection: rmb 0.5 per
                                     price-based collection
 urban maintenance and
                                     amount of turnover tax payables     7%, 5%, 1%
 construction tax
 enterprise income tax               taxable income                      15%, 16.5%, 20%, 25%
 education surcharge                 amount of turnover tax payables     3%
 local education surcharge           amount of turnover tax payables     2%
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%
 yunnan baiyao group medicine e-commerce co.,
 ltd.
 yunnan pharmaceutical co., ltd.                                15%
 yunnan pharmaceutical technology co., ltd.                     15%
 yunnan pharmaceutical yuxi sales co., ltd.                     15%
 yunnan pharmaceutical sanfa co., ltd.                          15%
 yunnan pharmaceutical xingda co., ltd.                         15%
 yunnan pharmaceutical wanhe co., ltd.                          15%
 yunnan pharmaceutical baoshan drug development
 co., ltd.
 yunnan baiyao group health products co., ltd.                  15%
 yunnan tianzheng testing technology co., ltd.                  15%
 yunnan baiyao group lijiang pharmaceutical co.,                15%
ltd.
yunnan baiyao group wenshan qihua co., ltd.           15%
yunnan baiyao pharmacy co., ltd.                      15%
yunnan baiyao group wuding pharmaceutical co.,
ltd.
yunnan baiyao group dali pharmaceutical co., ltd.     15%
yunnan pharmaceutical tianma co., ltd.                15%
yunnan pharmaceutical hongde development co.,
ltd.
yunnan pharmaceutical qujing co., ltd.                15%
yunnan institute of materia medica                    15%
yunbaiyao zhengwu technology (shanghai) co., ltd.     15%
yunnan baiyao group medical technology hefei co.,
ltd.
yunnan baiyao group traditional chinese medicine
resources co., ltd.
yunnan baiyao group wuxi pharmaceutical co., ltd.     15%
ban loong holdings ltd.                               16.5%
beijing ruiyou testing technology co., ltd.           20%
yunnan pharmaceutical jiayuan co., ltd.               20%
yunnan pharmaceutical ruiyang shenhua technology
co., ltd.
yunnan pharmaceutical xiongyi co., ltd.               20%
yunnan pharmaceutical tianfu dahua co., ltd.          20%
yunnan pharmaceutical lincang sales co., ltd.         20%
yunnan pharmaceutical diqing development co.,
ltd.
yunnan pharmaceutical pu’er co., ltd.                 20%
yunnan pharmaceutical dali development co., ltd.      20%
lijiang yunquan biological development co., ltd.      20% (excluding agricultural primary processing)
yunnan baiyao tiancui business management co.,
ltd.
beijing yunzhi health management co., ltd.            20%
shanghai wenshu health management co., ltd.           20%
yunnan baiyao yunzhen international trade co., ltd.   20%
kunming yunzhen medical technology co., ltd.          20%
shanghai yunyao oral medical technology co., ltd.     20%
yunnan fengqing tea plant                             20%
yunnan baiyao group (hainan) import and export
trade co., ltd.
     (1) yunnan baiyao group co. ltd, yunnan baiyao group medicine e-commerce co., ltd, yunnan
pharmaceutical co., ltd, yunnan pharmaceutical technology co., ltd, yunnan pharmaceutical yuxi sales co.,
ltd, yunnan pharmaceutical sanfa co., ltd, yunnan pharmaceutical xingda co., ltd, yunnan pharmaceutical
wanhe co., ltd, yunnan pharmaceutical baoshan drug development co., ltd, yunnan baiyao group health
products co., ltd, yunnan tianzheng testing technology co., ltd, yunnan baiyao group lijiang
pharmaceutical co., ltd, yunnan baiyao group wenshan qihua co., ltd, yunnan baiyao pharmacy co., ltd,
yunnan baiyao group wuding pharmaceutical co., ltd, yunnan baiyao group dali pharmaceutical co., ltd,
yunnan pharmaceutical tianma co., ltd, yunnan pharmaceutical hongde development co., ltd, and yunnan
pharmaceutical qujing 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, yunbaiyao zhengwu technology (shanghai) co., ltd, yunnan
baiyao group medical technology hefei co., ltd, yunnan baiyao group traditional chinese medicine
resources co., ltd, and yunnan baiyao group wuxi pharmaceutical co., ltd enjoy 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 and yunnan baiyao group tai’an biotechnology
industry 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) 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 (finance
and taxation [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 (finance and taxation [2023] no.
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 enforcement 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 (finance and taxation [2023] no. 12), “for small, low-profit
enterprises, the taxable income amount shall be calculated at a reduced rate of 25%, and the enterprise income
tax shall be paid at a tax rate of 20%. the policy shall be continued until december 31, 2027.” eighteen
companies, including yunnan fengqing tea plant, beijing ruiyou testing technology co., ltd and yunnan
pharmaceutical ruiyang shenhua technology co., ltd pay enterprise income tax at a tax rate of 20% according
to this policy.
none
vii. notes to items in consolidated financial statements
                                                                                                            unit: rmb
                    item                           closing balance                           opening balance
 cash on hand                                                        115,703.87                                224,637.14
 bank deposit                                               12,482,505,485.18                          13,006,283,524.34
 other cash and bank balance                                    63,073,561.34                              49,605,550.99
 total                                                      12,545,694,750.39                          13,056,113,712.47
     including: total amount of money
 deposited overseas
other explanations: none
                                                                                                            unit: rmb
                    item                           closing balance                           opening balance
 financial assets at fair value through
 profits or losses
       including:
   investments in debt instruments
   investments in equity instruments                         1,513,942,138.94                           2,357,680,635.18
     others                                                     27,082,117.24                              58,041,440.42
       including:
 total                                                       1,541,024,256.18                           2,415,722,075.60
            other explanations: none
            (1) notes receivable by type
                                                                                                                                            unit: rmb
                                   item                                      closing balance                              opening balance
              banker’s acceptance bill                                                     543,218,295.72                                789,465,084.93
              domestic letter of credit                                                    197,878,866.96
              total                                                                        741,097,162.68                                789,465,084.93
                                                                                                                                            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
  including:
bills
receivable
with                                                                             741,097,16    789,465,08
provision for                                                                          2.68          4.93
bad debts by
portfolio
  including:
banker’s
acceptance            543,218,295.72        73.30%                                                            100.00%                                789,465,084.93
bill
domestic
letter of             197,878,866.96        26.70%
credit
total                 741,097,162.68        100.00%                                                           100.00%                                789,465,084.93
            provision for bad debts made on a portfolio basis:
                                                                                                                                            unit: rmb
                                                                                                      closing balance
                                   name                                                                                                    provision
                                                                            book balance               provision for bad debts
                                                                                                                                           proportion
            banker’s acceptance bill                                             543,218,295.72
            domestic letter of credit                                            197,878,866.96
            total                                                                741,097,162.68
            if provision was made for bad debts of notes receivable in accordance with the general expected credit loss model, please disclose
            relevant information of provision for bad debts referring to the disclosure of other receivables:
            □applicable not applicable
(2) provision for bad debts accrued, recovered or reversed during the reporting period: none
(3) notes receivable pledged by the company at the end of the reporting period: none
(4) 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                                     126,635,848.51
 total                                                        126,635,848.51
(5) notes receivable that were converted to accounts receivable due to the drawer’s failure to perform the
contract: none
(6) actual write-off of notes receivable for the period: none
            (1) disclosure of accounts receivable by type
                                                                                                                                                                                      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
for bad debts on individual basis
  including:
 accounts receivable with                   7,404,800.00       0.07%       7,404,800.00     100.00%
provision for bad debts on                                                                                          0.00       7,404,800.00         0.08%       7,404,800.00     100.00%
individual basis
 accounts receivable with
provision for bad debts on portfolio   10,380,646,596.43     99.93%      717,437,991.16        6.91%    9,663,208,605.27   9,737,464,470.52        99.92%     647,642,318.59        6.65%    9,089,822,151.93
basis
  including:
aging portfolio                        10,380,646,596.43     99.93%      717,437,991.16        6.91%    9,663,208,605.27   9,737,464,470.52        99.92%     647,642,318.59        6.65%    9,089,822,151.93
total                                  10,388,051,396.43     100.00%     724,842,791.16        6.98%    9,663,208,605.27   9,744,869,270.52      100.00%      655,047,118.59        6.72%    9,089,822,151.93
provision for bad debts made on an individual basis:
                                                                                                                          unit: rmb
                                                                         closing balance
          name
                                   book balance        provision for bad debts      provision proportion         reason for provision
    ningbo qingbing
                                                                                                                  the possibility of
   biotechnology co.,                   7,404,800.00               7,404,800.00                    100.00%
                                                                                                                 recovery is minimal
          ltd.
provision for bad debts made on a portfolio basis:
                                                                                                                          unit: rmb
                                                                             closing balance
                name
                                            book balance                 provision for bad debts             provision proportion
 aging portfolio                               10,380,646,596.43                    717,437,991.16                              6.91%
 total                                         10,380,646,596.43                    717,437,991.16
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, please
disclose relevant information of provision for bad debts referring to the disclosure of other receivables:
□applicable not applicable
disclosure by aging
                                                                                                                          unit: rmb
                               aging                                                           closing balance
 within 1 year (inclusive of 1 year)                                                                                 9,695,273,937.65
 above 3 years                                                                                                          22,209,583.44
 total                                                                                                              10,388,051,396.43
(2) provision for bad debts accrued, recovered or reversed during the reporting period
provision for bad debts during the reporting period:
                                                                                                                          unit: rmb
                                                           changes in amount for the period
                         opening
     category                                                  recovery or                                             closing balance
                         balance           provision                              write-off            others
                                                                reversal
 accounts
 receivable with
 provision for
 bad debts on          647,642,318.59     70,022,581.61                            226,909.04                          717,437,991.16
 portfolio basis
 by credit risk
 characteristics
 accounts
 receivable with
 provision for           7,404,800.00                                                                                    7,404,800.00
 bad debts on
 individual basis
 total               655,047,118.59       70,022,581.61                            226,909.04                       724,842,791.16
among them, the important amount of recovery or reversal of provision for bad debt for the period: none
(3) actual write-off of accounts receivable for the period:
                                                                                                                    unit: rmb
                              item                                                       amount of write-off
             actual write-off of accounts receivable                                                                226,909.04
(4) top five customers with closing balance of accounts receivable summarized by debtor
                                                                                                                       unit: rmb
                                                                     percentage of total of closing
                                     closing balance of accounts                                      closing balance of provision
          entity name                                                    balance of accounts
                                             receivable                                                       for bad debt
                                                                              receivable
 customer a                                       678,664,760.59                             6.53%                   65,363,580.28
 customer b                                       415,835,763.29                             4.00%                   20,791,788.16
 customer c                                       408,988,809.56                             3.94%                   20,481,160.48
 customer d                                       406,380,910.51                             3.91%                   65,738,274.11
 customer e                                       397,742,912.98                             3.83%                   19,887,145.65
 total                                          2,307,613,156.93                           22.21%
(5) accounts receivable derecognized due to the transfer of financial assets: none
(6) amount of assets and liabilities generated by transferring accounts receivable and continuing to be
involved: none
                                                                                                                       unit: rmb
                    item                                  closing balance                             opening balance
 notes receivable                                                       634,158,821.40                              834,668,231.58
 total                                                                  634,158,821.40                              834,668,231.58
changes in accounts receivable financing and changes in fair value
□applicable not applicable
if provision was made for accounts receivable financing in accordance with the general expected credit loss model, please disclose
relevant information of provision for impairment referring to the disclosure of other receivables:
□applicable not applicable
other explanations: none
(1) prepayments by aging
                                                                                                                          unit: rmb
                                              closing balance                                         opening balance
           aging
                                   amount                       proportion                 amount                    proportion
 within 1 year                     377,839,021.29                       92.01%             498,263,637.61                      91.77%
 above 3 years                        3,003,581.94                           0.73%            6,247,483.55                        1.15%
 total                             410,643,169.96                                          542,948,440.85
explanation on why prepayments with aging of more than 1 year and an important amount not settled in time: none
(2) top five suppliers with closing balance of prepayment summarized by payee
                                                                                                         proportion of total
                                entity name                                  book balance (rmb)
                                                                                                            prepayments
         shenzhen china resources sanjiu medicine trading co.,
         ltd.
         yunnan summit biotechnology co., ltd.                                        22,012,956.00                       5.36%
         beijing zhongwai mingren technology co., ltd.                                20,570,581.66                       5.01%
         guangzhou baiyunshan pharmaceutical co., ltd.
         baiyunshan hejigong pharmaceutical factory
         focus media advertising co., ltd.                                            11,320,754.00                       2.76%
         total                                                                       129,646,661.65                      31.57%
other explanations: none
                                                                                                                          unit: rmb
                     item                                 closing balance                                opening balance
 dividends receivable                                                    406,032,345.56
 other receivables                                                       127,114,077.52                                 118,948,994.06
 total                                                                   533,146,423.08                                 118,948,994.06
(1) interest receivable
□applicable not applicable
(2) dividends receivable
                                                                                                                        unit: rmb
          project (or investee)                            closing balance                               opening balance
 shanghai pharmaceuticals holding co.
 ltd.
 total                                                                    406,032,345.56
□applicable not applicable
other explanations: none
(3) other receivables
                                                                                                                        unit: rmb
                                              book balance at the end of the reporting        book balance at the beginning of the
            nature of payment
                                                              period                                   reporting period
 deposits and guarantees                                                  339,901,594.94                             341,475,970.72
 petty cash                                                                32,712,469.03                              40,949,868.07
 borrowings                                                                 9,889,172.38                               9,889,172.38
 others                                                                   606,713,572.87                             584,078,713.91
 total                                                                    989,216,809.22                             976,393,725.08
                                                                                                                        unit: rmb
                                    phase i                    phase ii                    phase iii
 provision for bad debts    expected credit losses       lifetime ecl (not             lifetime ecl                   total
                            for the next 12 months        credit-impaired)           (credit-impaired)
 balance as of january
 balance as of january
 period
 current provision                     4,398,000.68                         0.00                260,000.00             4,658,000.68
 balance as of june 30,
changes in book balance with significant changes in loss reserves in the current period
□applicable not applicable
disclosure by aging
                                                                                                                          unit: rmb
                              aging                                                            closing balance
 within 1 year (inclusive of 1 year)                                                                                   209,171,601.47
 above 3 years                                                                                                         247,457,838.35
 total                                                                                                                 989,216,809.22
provision for bad debts during the reporting period:
                                                                                                                          unit: rmb
                                                           changes in amount for the period
                        opening
     category                                               recovery or                                               closing balance
                        balance             provision                             write-off              others
                                                             reversal
 other accounts
 receivable with
 provision for
 bad debts on        857,444,731.02        4,658,000.68                                                                862,102,731.70
 portfolio basis
 by credit risk
 characteristics
 total               857,444,731.02        4,658,000.68                                                                862,102,731.70
among them, the important amount of reversal or recovery of provision for bad debt for the period: none
                                                                                                                          unit: rmb
                                                                                              percentage of total
                                                                                                                    closing balance of
                                                                                              of closing balance
     entity name        nature of payment       closing balance           aging                                     provision for bad
                                                                                                    of other
                                                                                                                           debt
                                                                                                  receivables
 entity a              security deposit           100,000,000.00   above 3 years                         10.11%        100,000,000.00
 entity b              security deposit            50,000,000.00   above 3 years                          5.05%         50,000,000.00
 entity c              security deposit            30,000,000.00   above 3 years                          3.03%         30,000,000.00
 entity d              security deposit            18,000,000.00   2 to 3 years                           1.82%         10,800,000.00
 entity e              security deposit            10,800,000.00   above 3 years                          1.09%         10,800,000.00
 total                                            208,800,000.00                                         21.10%        201,600,000.00
   involved: none
   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
                                                                                                           inventory
                                         decline in value
                                                                                                        impairment or
        item                             of inventories or
                                                                                                         provision for
                       book balance        provision for          book value        book balance                              book value
                                                                                                        impairment of
                                          impairment of
                                                                                                            contract
                                              contract
                                                                                                         performance
                                         fulfillment costs
                                                                                                             costs
raw materials         1,939,064,950.14       63,944,242.20      1,875,120,707.94   2,392,701,254.76     118,815,553.26      2,273,885,701.50
work in
process
finished
goods
consumptive
biological              36,472,686.08                             36,472,686.08       36,074,617.71                            36,074,617.71
assets
contract
performance             10,381,879.61                             10,381,879.61       13,070,656.42                            13,070,656.42
costs
materials
outsourced for                                                                           447,210.05                               447,210.05
processing
packaging
materials and
low value
consumables
total                 7,091,300,371.87      120,904,686.86      6,970,395,685.01   8,169,980,939.75     176,773,895.49      7,993,207,044.26
   (2) provision for inventory impairment or provision for impairment of contract performance costs
                                                                                                                            unit: rmb
                                                 increase in the current period      decrease in the current period
                              opening
               item                                                                 reversal or                          closing balance
                              balance            provision            others                              others
                                                                                     reselling
    raw materials          118,815,553.26           30,432.21                       54,901,743.27                         63,944,242.20
 work in
 process
 finished goods       55,694,955.01       6,223,413.42                        7,067,200.30                       54,851,168.13
 packaging
 materials and
 low value
 consumables
 total               176,773,895.49       6,288,653.47                       62,157,862.10                      120,904,686.86
(3) explanation on closing balance of inventories involving capitalized amount of borrowing costs: none
(4) explanation on the current amortization amount of contract performance costs: none
                                                                                                                  unit: rmb
                    item                                  closing balance                          opening balance
 certificate of deposit and interest                                                                            361,774,444.44
 total                                                                                                          361,774,444.44
important debt investments/other debt investments: none
                                                                                                                  unit: rmb
                    item                                  closing balance                          opening balance
 input tax to be deducted and certified                               357,399,146.08                            309,513,536.94
 cost of returned goods receivable                                    145,762,005.26                            136,588,595.19
 prepaid taxes and fees                                                 5,013,862.30                             13,248,495.90
 time deposits and other wealth
 management products
 others                                                                 3,529,348.34                              3,779,807.55
 total                                                              1,230,209,819.11                            474,340,107.76
other explanations: none
(1) long-term receivables: none
(2) long-term receivables derecognized due to the transfer of financial assets: none
(3) amount of assets and liabilities generated by transferring long-term receivables and continuing to be
involved: none
                                                                                                                                                                                                 unit: rmb
                                                                                         increase and decrease in the current period
                                                                                                                                                                                                         closing
                      opening balance                                profits and losses on     adjustment of                                                                         closing balance    balance of
        investee                                                                                                                        cash dividends or      provision
                        (book value)      additional    decreased        investments                other            change in other                                                   (book value)     impairment
                                                                                                                                        profit declared to        for      others
                                          investment    investment   confirmed under the       comprehensive             equities                                                                       provision
                                                                                                                                            be issued         impairment
                                                                        equity method              income
i. joint ventures
ii. associates
shanghai
pharmaceuticals       11,318,607,693.92                                   438,596,851.03         -22,847,452.34          5,841,351.14     406,032,345.56                            11,334,166,098.19
holding co. ltd.
lijiang
changgengming               142,253.18                                                                                                                                                     142,253.18
trading co., ltd.
ban loong
jacobson jbm                                55,318.80                          -38,841.58             -1,956.03                                                                             14,521.19
pharma limited
yunnan baiyao
chinese herbal
medicine
technology co.,
ltd.
subtotal              11,318,749,947.10     55,318.80                     438,558,009.45         -22,849,408.37          5,841,351.14     406,032,345.56                            11,334,322,872.56
total                 11,318,749,947.10     55,318.80                     438,558,009.45         -22,849,408.37          5,841,351.14     406,032,345.56                            11,334,322,872.56
        other explanations: none
                                                                                                                        unit: rmb
                           item                                 closing balance                          opening balance
    immune sensor therapeutics inc.                                          71,745,000.00                             71,745,000.00
    total                                                                    71,745,000.00                             71,745,000.00
  itemized disclosure of investment in non-trading equity instruments for the period: none
                                                                                                                        unit: rmb
                           item                                 closing balance                          opening balance
    classified as financial assets at fair value
    through profits or losses
    total                                                                   391,447,063.97                            380,786,134.24
  other explanations: none
  (1) adoption of the cost measurement model for investment properties
  applicable □not applicable
                                                                                                                        unit: rmb
                                          buildings and                                      construction in
                item                                                land use rights                                        total
                                           structures                                          progress
i. original book value
period
            (1) outsourcing
          (2) transfer from
inventory\fixed assets\
construction in progress
          (3) increase in
business combination
period
            (1) disposal
            (2) other transfer out
ii. accumulated depreciation
and accumulated amortization
period
            (1) provision or                       519,350.88               478,676.58                                        998,027.46
   amortization
   period
               (1) disposal
               (2) other transfer out
   iii. provision for impairment
   period
               (1) provision
   period
               (1) disposal
               (2) other transfer out
   iv. book value
      (2) adoption of the fair value measurement model for investment properties
      □applicable not applicable
      (3) investment properties for which the title certificate has not been obtained: none
                                                                                                                            unit: rmb
                              item                                closing balance                          opening balance
       fixed assets                                                         2,639,966,219.12                           2,721,970,469.98
       liquidation of fixed assets                                                    405.67                                1,331,895.67
       total                                                                2,639,966,624.79                           2,723,302,365.65
      (1) fixed assets
                                                                                                                            unit: rmb
                          houses and          machinery and       transportation        electronic
      item                                                                                                    others                total
                           buildings           equipment             vehicles           equipment
i. original book
value:
balance
in the current                 7,886,027.84     12,933,583.64        8,894,368.94       13,371,158.07          805,173.83        43,890,312.32
period
(1) purchase                    823,838.26      11,718,904.69        8,799,803.86       13,233,034.30            1,000.00        34,576,581.11
(2) transfer from
construction in          6,381,997.71       1,214,678.95                                                                7,596,676.66
progress
(3) increase in
business
combination
(4) others                680,191.87                          94,565.08           138,123.77          804,173.83        1,717,054.55
the current period
(1) disposal or
scrapping
(2) others                                   638,033.09                        16,549,198.19                           17,187,231.28
balance
ii. accumulated
depreciation
balance
in the current         32,422,386.61      59,082,447.63     1,749,876.84       11,942,811.15          689,399.32      105,886,921.55
period
(1) provision          31,821,741.92      59,082,447.63     1,658,396.69       11,847,602.35          204,574.55      104,614,763.14
(2) others                600,644.69                          91,480.15            95,208.80          484,824.77        1,272,158.41
in the current            839,925.43        3,993,345.24    2,629,464.28        2,204,562.75                            9,667,297.70
period
(1) disposal or
scrapping
(2) others                                   564,747.31                                                                   564,747.31
balance
iii. provision for
impairment
balance
in the current
period
(1) provision
in the current                                51,705.56                                                                    51,705.56
period
(1) disposal or
scrapping
balance
iv. book value
book value
book value
     (2) temporarily idle fixed assets
                                                                                                                             unit: rmb
                                original book        accumulated             impairment
              item                                                                                 book value              remarks
                                    value            depreciation             provision
      houses and
      buildings
      machinery and
      equipment
      electronic
      equipment
      total                       23,506,269.21        19,861,835.24             2,498,836.20         1,145,597.77
     (3) fixed assets leased through operating lease: none
     (4) fixed assets for which the title certificate has not been obtained
                                                                                                                             unit: rmb
                                                                                                   reasons for not obtaining the title
                        item                                       book value
                                                                                                              certificate
                                                                                                some title certificates have been
      overall relocation project of yunnan
      baiyao in yuhua industrial zone
                                                                                                application.
      r&d center in the health industry park                                 113,787,196.71     under application
      api center phase ii expansion project of
      yunnan baiyao group (warehouse, office                                    70,162,712.19   under application
      building, corridor)
      drug division of dali pharmaceutical
      economic development zone
                                                                                                some title certificates have been
      overall relocation project of wenshan
      qihua
                                                                                                application.
      buildings in planting base of yunquan                                    1,322,338.00     the land is a leased land
      total                                                                  449,659,358.85
     other explanations: none
     (5) liquidation of fixed assets
                                                                                                                             unit: rmb
                        item                                     closing balance                            opening balance
      machinery and equipment                                                         405.67                                 1,223,963.94
      transportation vehicles                                                                                                  107,058.13
      electronic equipment                                                                                                         873.60
      total                                                                           405.67                                 1,331,895.67
     other explanations: none
                                                                                                               unit: rmb
                   item                                closing balance                          opening balance
 construction in progress                                          384,905,022.44                            193,993,194.93
 total                                                             384,905,022.44                            193,993,194.93
(1) construction in progress
                                                                                                               unit: rmb
                                     closing balance                                      opening balance
         item                          impairment                                           impairment
                    book balance                         book value      book balance                         book value
                                        provision                                            provision
 shanghai
 international
 center project     234,822,928.48                     234,822,928.48    115,853,670.95                      115,853,670.95
 of yunnan
 baiyao
 yunnan baiyao
 r&d platform -
 kunming
 center
 construction
 project
 upgrading
 project of the
 old workshop
 in the economic
 development
 zone
 health industry
 project (phase
 i) of yunnan
 baiyao group
 yunnan baiyao
 shanghai
 project office       5,513,196.92                       5,513,196.92      5,513,196.92                        5,513,196.92
 decoration
 project
 whole plant
 organic
 cosmetics                                                                 4,254,297.70                        4,254,297.70
 production
 workshop
 yunnan baiyao
 wenshan sanqi
 smart                3,986,332.63                       3,986,332.63      3,986,332.63                        3,986,332.63
 technology
 park project
 yunnan baiyao
 tai’an project                                                            2,271,149.08                        2,271,149.08
 phase iii
 aesthetic
 medicine
supporting
commercial and
office projects
of yunnan
baiyao in
beijing soho
peking
university
baiyao
international
medical                                              1,890,969.29                        1,890,969.29
research
center
renovation
project
production base
construction
project of
yunnan baiyao
group
shanghai
technology
co., ltd.
optimization
project of new
factory of         12,885,659.00   12,885,659.00     1,677,435.34                        1,677,435.34
yunnan baiyao
toothpaste
data lake
construction        5,156,670.77    5,156,670.77     3,366,622.14                        3,366,622.14
project
tcm resources
phase ii project
greenhouse
project of
yunnan baiyao       1,746,206.00    1,746,206.00     1,746,206.00                        1,746,206.00
taian project
phase iv
yuhua
industrial zone
— museum
project
electromechani
cal installation
project for
panax               1,317,431.19    1,317,431.19
notoginseng
oral liquid
production line
oa system
upgrade and
instant
messaging
integration
project
government-en
terprise
cooperation
project of
yunnan baiyao
group in
lijiang
ecological
science and
technology
industrial park
(phase i)
others             13,559,542.71    13,559,542.71     7,996,939.49                        7,996,939.49
total             384,905,022.44   384,905,022.44   193,993,194.93                      193,993,194.93
             (2) changes in important projects of construction in progress for the period
                                                                                                                                                                                                unit: rmb
                                                                                                                                                                                  including:
                                                                                     transfer to        other                          proportion of               accumulated    amount of     capitalization
                                                                  increase in the   fixed assets in   decrease in                      total project    project     amount of      interest        rate of         source of
       project name         budget amount      opening balance                                                       closing balance
                                                                  current period     the current      the current                      investment in   progress      interest     capitalized    interest for       funds
                                                                                        period          period                            budget                    capitalized     for the      the period
                                                                                                                                                                                    period
shanghai international
center project of yunnan    1,550,556,100.00     115,853,670.95   118,969,257.53                                     234,822,928.48          30.09%      35.98%                                                     others
baiyao
yunnan baiyao r&d
platform - kunming
center construction
project
health industry project
(phase i) of yunnan         1,158,174,400.00       6,979,457.53        44,374.86                              0.00     7,023,832.39          90.00%      99.00%                                                     others
baiyao group
peking university baiyao
international medical
research center
renovation project
upgrading project of the
old workshop in the
economic development
zone
optimization project of
new factory of yunnan        380,000,000.00        1,677,435.34    11,208,223.66                              0.00    12,885,659.00          37.44%      86.00%                                                     others
baiyao toothpaste
government-enterprise
cooperation project of
yunnan baiyao group in
lijiang ecological
science and technology
industrial park (phase i)
production base               45,850,000.00        4,216,297.70    21,007,595.34                                      25,223,893.04          98.72%      99.00%                                                     others
construction project of
yunnan baiyao group
shanghai technology
co., ltd.
total                     4,126,967,000.00   155,877,858.93   191,665,896.63        3,916,275.74   343,627,479.82
             (3) provision for impairment of construction in progress for the period: none
             (4) project materials: none
(1) adoption of the cost measurement model for productive biological assets
applicable □not applicable
                                                                                                      unit: rmb
                               planting       stockbreeding   forestry          aquaculture
           item                                                                                          total
                                 tea
i. original book value
balance
current period
        (1) outsourcing
        (2) self-cultivation
current period
          (1) disposal
          (2) others
ii. accumulated
depreciation
current period
        (1) provision            85,950.06                                                                 85,950.06
current period
        (1) disposal
        (2) others
iii. provision for
impairment
balance
current period
        (1) provision
current period
        (1) disposal
        (2) others
iv. book value
value
value
(2) adoption of the fair value measurement model for productive biological assets
□applicable not applicable
□applicable not applicable
                                                                                                              unit: rmb
                     item                        houses and buildings                               total
  i. original book value
  (1) lease                                                     20,646,509.12                                20,646,509.12
  (2) others                                                        65,097.17                                    65,097.17
  (1) disposal                                                  99,850,335.19                                99,850,335.19
  ii. accumulated depreciation
            (1) provision                                       53,794,434.08                                53,794,434.08
            (1) disposal                                        13,965,712.28                                13,965,712.28
  iii. provision for impairment
            (1) provision
            (1) disposal
  iv. book value
other explanations: none
           (1) intangible assets
                                                                                                                                unit: rmb
                                                                     non-patent
            item                land use rights   patent right                          software        trademark     franchise rights         total
                                                                     technology
i. original book value
current period
          (1) purchase                                                                  15,906,005.46                                     15,906,005.46
          (2) internal
r&d
          (3) increase in
business combination
(4) transfer in                                                                                                           2,228,167.25       2,228,167.25
current period
          (1) disposal                                                                   1,070,580.62                                        1,070,580.62
ii. accumulated
amortization
current period
          (1) provision            8,085,179.89     1,392,817.32                         5,337,122.58     1,110.66          404,199.96    15,220,430.41
current period
          (1) disposal                                                                     22,451.57                                           22,451.57
iii. provision for impairment
current period
          (1) provision
current period
          (1) disposal
iv. book value
           proportion of intangible assets generated through internal r&d of the company in the balance of intangible assets at the end of
           the reporting period: nil
(2) land use rights for which the title certificate has not been obtained: none
                                                                                                                            unit: rmb
                                                           increase in the current         decrease in the current         closing
                                                                   period                         period                   balance
                                          opening                                       recognized      transfer to
                   item                                     internal
                                          balance                                            as           current
                                                         development       others
                                                                                         intangible     profits and
                                                           expenses
                                                                                           assets         losses
   p137 project research and
   development (ind)
   total                                6,024,448.12      3,024,538.90                                                   9,048,987.02
other explanations: none
(1) original book value of goodwill
                                                                                                                            unit: rmb
                                                                         increase in the       decrease in the
                                                                         current period        current period
    name of the investee or items forming
                                                   opening balance         formed by                                  closing balance
                  goodwill
                                                                            business               disposal
                                                                          combination
  ban loong holdings ltd.                            645,635,327.81                                                     645,635,327.81
  shanghai hanshi health consulting co.,
  ltd.
  yunnan baiyao group wuxi
  pharmaceutical co., ltd.
  yunnan baiyao group medical
  technology hefei co., ltd.
  lijiang yunquan biological development
  co., ltd.
  total                                              709,353,683.54                                                     709,353,683.54
(2) provision for impairment of goodwill
                                                                                                                       unit: rmb
                                                                         increase in the      decrease in the
           name of the investee or items forming         opening         current period       current period     closing balance
                         goodwill                        balance
                                                                            provision            disposal
       ban loong holdings ltd.                        561,515,748.26                                             561,515,748.26
       yunnan baiyao group medical
       technology hefei co., ltd.
       lijiang yunquan biological development
       co., ltd.
       total                                          579,471,588.65                                             579,471,588.65
related information on asset group or combination of asset groups containing goodwill: none
explanation on goodwill impairment test process, key parameters (such as the forecast period growth rate when the present value
of future cash flows are expected, the stable period growth rate, profit rate, discount rate, forecast period, etc.) and the method of
recognition of goodwill impairment loss: none
impact of goodwill impairment test: none
other explanations: none
                                                                                                                            unit: rmb
                                                  increase in the         amortization in
         item             opening balance                                                       other decrease         closing balance
                                                  current period         the current period
 building
 decoration and              90,442,503.49           15,184,070.87           11,947,336.05          1,774,173.55          91,905,064.76
 project renovation
 nanping street
 renovation project            9,497,542.66                                   1,676,036.94                                  7,821,505.72
 of yunnan baiyao
 external
 preparation
 demonstration hall
 renovation project
 others                        1,665,425.97                                     359,001.23                                  1,306,424.74
 total                      103,039,892.76           15,184,070.87           14,699,584.40          1,774,173.55         101,750,205.68
other explanations: none
(1) deferred 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 asset
 impairment
 unrealised profits of
 intra-group                         351,145,242.68                  55,904,719.95            433,164,555.99              68,246,952.21
 transactions
 deductible losses                     89,475,980.28                 14,202,475.09             98,294,872.23              16,407,198.08
 provision for credit
 impairment
 deferred income                     117,661,353.99                  17,706,736.43            112,673,439.27              16,991,015.89
 contractual liabilities             643,314,389.17                  96,497,158.38            744,264,425.60             111,639,663.83
 payroll payable and
 long-term employee                  184,354,149.24                  27,653,122.39            213,880,961.43              32,082,144.21
 benefits payable
 expenses beyond
 overall planning for
 employee status
 conversion expenses of              443,562,376.80                  66,534,356.52            523,242,481.81              78,486,372.27
 state-owned enterprises
 and social security
 expenses of retirees
 lease liabilities                  263,093,805.41                51,128,603.14               377,446,471.13                78,492,672.52
 changes in fair value              496,803,036.88                74,520,455.53               511,601,593.57                76,740,239.04
 other payables                     606,511,081.38                90,976,662.21               439,458,968.57                65,918,845.29
 others                              24,577,525.29                 3,818,411.64                11,621,529.09                 1,754,995.48
 total                            4,331,753,069.64               677,123,635.50              4,507,481,042.01              713,246,779.66
(2) deferred 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
 changes in fair value               77,987,638.47                11,976,293.43               111,313,586.41                16,988,794.59
 right-of-use assets                243,095,319.95                47,924,173.30               359,106,274.04                74,402,624.87
 fixed assets subject to
 one-time pre-tax                      26,619,194.06                3,992,879.11               25,258,729.32                  3,788,809.41
 deduction
 appreciation of asset
 valuation
 investment income
 from business
 combination not under                  2,282,373.90                  570,593.48                 2,282,373.90                   570,593.48
 common control
 achieved in stages
 others                                23,062,905.04                3,576,807.66                 7,867,630.46                 1,180,144.57
 total                              379,590,025.83                69,676,395.57               513,471,012.36                98,079,237.09
(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            assets and deferred        deferred income tax
          item
                            income tax liabilities at   assets or liabilities after   income tax liabilities at   assets or liabilities after
                            the end of the reporting              offset                the beginning of the                offset
                                     period                                               reporting period
 deferred income tax
 assets
 deferred income tax
 liabilities
(4) details of unrecognized deferred income tax assets
                                                                                                                              unit: rmb
                     item                                   closing balance                                 opening balance
 deductible losses                                                         608,499,949.08                                  443,245,994.93
 provision for asset impairment and
 provision for credit impairment
 deferred income                                                            68,681,397.33                                   65,948,373.73
 unrealized profit on internal sales
 others                                                                       7,424,247.40                                    9,339,644.36
 total                                                                   2,147,453,954.09                                1,758,704,963.73
(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
  total                                         608,499,949.08                     443,245,994.93
other explanations: none
                                                                                                                       unit: rmb
                                       closing balance                                             opening balance
        item                             impairment                                                  impairment
                      book balance                          book value           book balance                          book value
                                          provision                                                   provision
cost of returned
goods receivable
time deposit and
interest
stocks of special
materials
advance payment
for the purchase       40,391,657.77                        40,391,657.77         24,712,674.27                        24,712,674.27
of fixed assets
value-added tax
credit refund
advance payment
for investment
less: the part due
                                                                                 -161,580,000.00                     -161,580,000.00
within 1 year
total                 996,918,974.01                       996,918,974.01        965,218,407.14                       965,218,407.14
other explanations: none
(1) classification of short-term loans
                                                                                                                   unit: rmb
                   item                                   closing balance                           opening balance
 loan in credit                                                       741,998,578.55                             890,531,958.04
 factoring contract loans
 discounted internal bills                                            782,434,325.21                             960,335,928.55
 total                                                              1,524,432,903.76                           1,850,867,886.59
explanation on classification of short-term loans: none
(2) overdue and outstanding short-term loans: none
                                                                                                                   unit: rmb
                   type                                   closing balance                           opening balance
 commercial acceptance bill                                                                                           100,000.00
 banker’s acceptance bill                                           1,889,582,464.57                           1,991,807,836.96
 total                                                              1,889,582,464.57                           1,991,907,836.96
total notes payable due and unpaid at the end of the period were rmb 0.
(1) accounts payable
                                                                                                                   unit: rmb
                   item                                   closing balance                           opening balance
 payment for goods                                                  4,504,683,578.71                           4,598,356,773.61
 payment for engineering equipment                                     16,610,331.61                              40,782,479.02
 labor expenses and others                                                                                           122,143.82
 total                                                              4,521,293,910.32                           4,639,261,396.45
(2) major accounts payable aged over one year: none
(1) receipts in advance
                                                                                                                   unit: rmb
                   item                                   closing balance                           opening balance
 lease payment                                                            3,200,394.26                             1,569,799.63
 total                                                                    3,200,394.26                             1,569,799.63
(2) major receipts in advance aged over one year: none
                                                                                                                      unit: rmb
                      item                               closing balance                               opening balance
 advances from customers                                            1,550,793,001.50                              2,575,823,948.53
 others                                                                 2,264,005.75                                  2,440,672.60
 total                                                              1,553,057,007.25                              2,578,264,621.13
amount of and reasons for significant changes in the book value during the reporting period: none
(1) payroll payable
                                                                                                                      unit: rmb
                                                      increase in the current      decrease in the current
           item                opening balance                                                                 closing balance
                                                              period                      period
 i. short-term
 compensation
 ii. welfare after
 demission - defined                27,839,224.27              74,875,752.43                74,913,505.30            27,801,471.40
 contribution plan
 iii. dismissal welfare                 280,863.98              3,629,998.05                 3,708,199.37                202,662.66
 iv. other welfares due
 within one year
 v.   others                                                      375,807.82                   375,807.82                      0.00
 total                             468,450,348.52           1,199,052,675.87             1,296,533,842.99           370,969,181.40
(2) short-term compensation
                                                                                                                      unit: rmb
                                                       increase in the current      decrease in the current
           item                 opening balance                                                                  closing balance
                                                               period                      period
allowance, and                      163,058,986.84             684,344,814.14               728,993,206.93           118,410,594.05
subsidy
contribution
     of which: medical
insurance premiums
             industrial
injury insurance                           7,217.66              2,615,445.88                 2,612,527.26                 10,136.28
premiums
            maternity
insurance premiums
others                                         0.00                148,531.28                   148,531.28                      0.00
fund
training fees
absence
profit-sharing plan
compensation
total                               440,330,260.27            1,120,171,117.57             1,217,536,330.50           342,965,047.34
(3) defined contribution plans
                                                                                                                       unit: rmb
                                                       increase in the current      decrease in the current
          item                opening balance                                                                   closing balance
                                                               period                      period
 insurance
 insurance premiums
 payment
 total                              27,839,224.27              74,875,752.43                 74,913,505.30            27,801,471.40
other explanations: none
                                                                                                                       unit: rmb
                      item                                closing balance                               opening balance
 value added tax                                                       166,448,608.35                                105,116,961.78
 consumption tax                                                             25,544.51                                    274,825.30
 enterprise income tax                                                 249,150,959.42                                366,975,428.61
 individual income tax                                                   26,497,071.69                                16,268,091.05
 urban maintenance and construction tax                                  12,161,574.06                                 6,874,277.78
 property tax                                                               114,400.33                                   152,423.60
 land use tax                                                                25,004.80                                    25,004.80
 stamp duty                                                               4,125,238.39                                 4,476,145.74
 education surcharge                                                      5,286,020.87                                 3,110,941.91
 local education surcharge                                                3,519,225.93                                 2,049,949.71
 environmental protection tax                                                 7,865.71                                    18,065.25
 water conservancy fund                                                       3,947.55                                    11,439.47
 collected and remitted taxes and fees                                    7,183,973.97                                 3,933,367.32
 total                                                                 474,549,435.58                                509,286,922.32
other explanations: none
                                                                                                              unit: rmb
                     item                          closing balance                           opening balance
 dividends payable                                              95,031,694.37                               89,413,484.03
 other payables                                              1,245,735,139.68                              954,279,725.75
 total                                                       1,340,766,834.05                            1,043,693,209.78
(1) interest payable: none
(2) dividends payable
                                                                                                              unit: rmb
                     item                          closing balance                           opening balance
 state-owned assets supervision and
 administration commission of yunnan
 provincial people’s government, new
 huadu industrial group co., ltd.
 kunming nuo’an enterprise
 management co., ltd.
 yunnan baoshan medicine co., ltd.                               4,276,038.78
 yunnan jianshui county xingda
 medicine co., ltd.
 qiubei county wanhe pharmaceutical
 co., ltd.
 dali hongxu trading co., ltd.                                       784,161.64
 diqing xingjian trading co., ltd.                                   288,542.05
 total                                                          95,031,694.37                               89,413,484.03
(3) other payables
                                                                                                              unit: rmb
                     item                          closing balance                           opening balance
 market maintenance fee                                        685,594,131.74                              449,675,991.26
 deposits and guarantees                                       304,428,270.53                              305,330,173.64
 management fee payable                                         99,384,319.02                               85,937,574.20
 other current accounts                                         66,828,827.91                               31,366,513.19
 collection and payment                                         15,287,363.50                               14,954,473.71
 loans and interest                                             54,800,000.00                               60,956,390.23
 others                                                         19,412,226.98                                6,058,609.52
 total                                                       1,245,735,139.68                              954,279,725.75
                                                                                                              unit: rmb
                     item                          closing balance                reasons for outstanding or carry-forward
 entity a                                                       21,800,000.00     unsettled
 entity b                                                       20,000,000.00     unsettled
 entity c                                                       13,000,000.00     unsettled
 entity d                                                        4,497,653.51     the warranty period has not expired
 total                                                          59,297,653.51
other explanations: none
                                                                                                                   unit: rmb
                    item                                   closing balance                          opening balance
 lease liabilities due within one year                                  79,130,236.45                             93,870,902.64
 total                                                                  79,130,236.45                             93,870,902.64
other explanations: none
                                                                                                                   unit: rmb
                    item                                   closing balance                          opening balance
 returns payable                                                       156,251,622.75                            145,436,712.72
 transfer to output tax                                                309,959,537.93                            233,949,060.47
 special financial support funds of
 “transferring loan to subsidy” for the use
 of intelligent voice cluster development
 base in the r&d project of intelligent
 medical devices based on medical big
 data
 total                                                                 468,011,160.68                            381,185,773.19
changes in short-term bonds payable: none
(1) long-term loans by type
                                                                                                                   unit: rmb
                    item                                   closing balance                          opening balance
 loan in credit                                                          2,100,000.00                              2,100,000.00
 total                                                                   2,100,000.00                              2,100,000.00
explanation on classification of long-term loans: none
other explanations, including the range of interest rate: none
(1) bonds payable: none
(2) changes in bonds payable (excluding preferred shares, perpetual bonds and other financial
instruments classified as financial liabilities): none
(3) explanation on conversion conditions and conversion time of convertible corporate bonds: none
(4) explanation on other financial instruments classified as financial liabilities: none
                                                                                                                      unit: rmb
                       item                                   closing balance                          opening balance
 buildings and structures                                               263,076,603.55                              379,654,631.37
 less: non-current liabilities reclassified to
                                                                         -79,130,236.45                             -93,870,902.64
 liabilities due within one year
 total                                                                  183,946,367.10                              285,783,728.73
other explanations: none
                                                                                                                      unit: rmb
                    item                                    closing balance                            opening balance
 long-term payables                                                     632,344,592.13                              641,235,559.39
 special payables                                                          4,838,584.16                               4,838,584.16
 total                                                                  637,183,176.29                              646,074,143.55
(1) long-term payables by nature of payment
                                                                                                                      unit: rmb
                    item                                    closing balance                            opening balance
 expenses beyond overall planning for
 employee status conversion expenses of
 state-owned enterprises and social
 security expenses of retirees
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
                                                                                                               transfer from
for major
                                                                                                               baiyao holdings
technological                  888,468.00                                                         888,468.00
                                                                                                               due to merger by
transformation
                                                                                                               absorption
projects
fulintang chain                500,000.00                                                         500,000.00   transfer from
operating funds                                                                                 baiyao holdings
                                                                                                due to merger by
                                                                                                absorption
                                                                                                transfer from
funds for
                                                                                                baiyao holdings
kunming medicine                 500,000.00                                        500,000.00
                                                                                                due to merger by
distribution center
                                                                                                absorption
                                                                                                transfer from
yunnan sanqi
                                                                                                baiyao holdings
brand registration               164,272.00                                        164,272.00
                                                                                                due to merger by
project
                                                                                                absorption
group company                                                                                   transfer from
management                                                                                      baiyao holdings
information                                                                                     due to merger by
system project                                                                                  absorption
group company                                                                                   transfer from
technology center                                                                               baiyao holdings
construction                                                                                    due to merger by
expenses                                                                                        absorption
                                                                                                transfer from
nefuramide
                                                                                                baiyao holdings
oxalate project                   85,426.00                                         85,426.00
                                                                                                due to merger by
funding
                                                                                                absorption
yunnan natural                                                                                  transfer from
medicine                                                                                        baiyao holdings
engineering                                                                                     due to merger by
center project                                                                                  absorption
new drug research                                                                               transfer from
project for                                                                                     baiyao holdings
treatment of back                                                                               due to merger by
pulp injury                                                                                     absorption
                                                                                                transfer from
material purchase
                                                                                                baiyao holdings
project research                 489,575.00                                        489,575.00
                                                                                                due to merger by
expense
                                                                                                absorption
r&d of new drugs
                                                                                                transfer from
for treating
                                                                                                baiyao holdings
cardiovascular and               258,031.60                                        258,031.60
                                                                                                due to merger by
cerebrovascular
                                                                                                absorption
diseases (tcm)
total                        4,838,584.16                                        4,838,584.16
other explanations: none
(1) details of long-term payroll payable
                                                                                                       unit: rmb
                     item                     closing balance                           opening balance
 ii. termination benefits                                       554,601.04                                598,998.08
 iii. other long-term benefits                              3,681,455.00                               3,681,455.00
 total                                                      4,236,056.04                               4,280,453.08
             (2) change of defined benefit plan: none
                                                                                                                                                unit: rmb
                                                                      increase in the      decrease in the
                          item             opening balance                                                          closing balance           reasons
                                                                      current period       current period
                 including:
                 government
                 subsidies related to
                 income
                     government
                 subsidies related to         158,268,152.28             9,833,000.00          6,674,908.45             161,426,243.83
                 assets
                 total                        178,621,813.00            17,063,774.36          9,342,836.04             186,342,751.32
             projects involving government subsidies:
                                                                                                                                                unit: rmb
                                                                             amount
                                                                                            amount          amount that
                                                         amount of         included in
                                                                                          included in       offsets costs
                                                        new subsidies     non-operating                                         other                         asset-related/
        liability items            opening balance                                        other income      and expenses                  closing balance
                                                         during the          revenue                                           changes                       income-related
                                                                                           during the        during the
                                                           period           during the
                                                                                             period            period
                                                                              period
industrial development
support funds for health                                                                                                                                     related to
industry project (phase i) of                                                                                                                                assets
yunnan baiyao group
industrial development
support funds for health                                                                                                                                     related to
industry project (phase ii) of                                                                                                                               assets
yunnan baiyao group
subsidies for construction of
yunnan baiyao (tianzihong)
                                                                                                                                                             related to
project road, water supply and          20,030,768.58                                                                                      19,673,076.24
drainage and other
infrastructure
construction of chinese
herbal medicine supply public
service platform and
standardized service
                                                                                                                                                             related to
demonstration system of                 18,606,822.49                                       670,819.74                                     17,936,002.75
                                                                                                                                                             assets
panax notoginseng, paris
polyphylla and other
advantage chinese herbal
medicines
                                                                                                                                                             related to
medicine production capacity             9,421,333.34                                       144,666.72                                      9,276,666.62
                                                                                                                                                             assets
improvement project
relocation and expansion of                                                                                                                                  related to
wenshan qihua co., ltd.                                                                                                                                      assets
fiscal appropriation for panax                                                                                                                               related to
notoginseng series preparation                                                              750,000.00                                                       assets
                                                                       amount
                                                                                       amount          amount that
                                                      amount of       included in
                                                                                     included in       offsets costs
                                                     new subsidies   non-operating                                      other                         asset-related/
          liability items          opening balance                                   other income      and expenses               closing balance
                                                      during the       revenue                                         changes                       income-related
                                                                                      during the        during the
                                                        period        during the
                                                                                        period            period
                                                                        period
product upgrade project of
yunnan baiyao
healthcare food key
technology research and                                                                                                                              related to
industrialization                                                                      300,000.00                                                    assets
demonstration project
preclinical studies and quality
(psq) of yunnan
                                                                                                                                                     related to
characteristic key variety            5,559,585.93                                      25,452.83                                    5,534,133.10
                                                                                                                                                     income
panax notoginseng innovative
drugs
special fund for provincial
strategic emerging industry
                                                                                                                                                     related to
development - yunnan baiyao           5,500,000.00                                                                                   5,500,000.00
                                                                                                                                                     assets
paris polyphylla industry
chain construction
relocation and expansion of                                                                                                                          related to
qihua company in 2015                                                                                                                                assets
science and technology
                                                                                                                                                     related to
outstanding contribution              3,272,324.12                                     116,854.66                                    3,155,469.46
                                                                                                                                                     income
award of yunnan province
warehousing project in
                                                                                                                                                     related to
denggao area of wenshan               2,771,794.88                                      57,051.30                                    2,714,743.58
                                                                                                                                                     assets
sanqi industrial park
construction of yunnan
                                                                                                                                                     related to
characteristic plant drug             2,337,329.75                                    1,532,111.58                                    805,218.17
                                                                                                                                                     income
development platform
key technology innovation
platform for consistency                                                                                                                             related to
evaluation of chemical generic                                                                                                                       assets
drugs
new preparation varieties
                                                                                                                                                     related to
industrialization construction        2,160,000.00                                   1,080,000.00
project
panax notoginseng standard
extract, special total saponin,                                                                                                                      related to
xuesaitong capsule industry                                                                                                                          assets
demonstration project
national service industry
development guidance fund -
                                                                                                                                                     related to
construction of third-party test      1,800,000.00                                     225,000.00                                    1,575,000.00
                                                                                                                                                     assets
technology demonstration
center of yunnan baiyao
                                                                                                                                                     related to
technical modifications               1,493,333.32                                     320,000.00                                    1,173,333.32
                                                                                                                                                     assets
improving the capacity of
third-party public technical                                                                                                                         related to
service platforms of yunnan                                                                                                                          assets
institute of materia medica
evaluation of the effectiveness                                                                                                                      related to
of new transdermal drug                                                                                                                              income
                                                                      amount
                                                                                      amount          amount that
                                                     amount of       included in
                                                                                    included in       offsets costs
                                                    new subsidies   non-operating                                      other                         asset-related/
          liability items         opening balance                                   other income      and expenses               closing balance
                                                     during the       revenue                                         changes                       income-related
                                                                                     during the        during the
                                                       period        during the
                                                                                       period            period
                                                                       period
delivery system and
construction of key technology
platform for preparation
research
                                                                                                                                                    related to
smart technology park project        1,400,000.00                                                                                   1,400,000.00
                                                                                                                                                    assets
panax notoginseng tablet                                                                                                                            related to
in-depth research project                                                                                                                           income
annual fixed assets
                                                                                                                                                    related to
investment subsidy (health           1,263,461.49                                      17,307.72                                    1,246,153.77
                                                                                                                                                    assets
industry phase i)
special fund for tcm
decoction pieces industry                                                                                                                           related to
development of yunnan                                                                                                                               assets
province in 2018
dali manufacturing center                                                                                                                           related to
project                                                                                                                                             assets
overall relocation project of                                                                                                                       related to
the api center                                                                                                                                      assets
improving the ability of the
experimental research
condition platform of new                                                                                                                           related to
technology for extraction and                                                                                                                       assets
separation of traditional
chinese medicine
                                                                                                                                                    related to
standard plant subsidy                 840,000.00                                      28,000.00                                     812,000.00
                                                                                                                                                    assets
transfer of assets by dali
economic development zone                                                                                                                           related to
management committee at nil                                                                                                                         assets
consideration
construction of quality control
                                                                                                                                                    related to
system of authentic tcm                800,000.00                                                                                    800,000.00
                                                                                                                                                    assets
materials in yunnan
                                                                                                                                                    related to
crude drugs development fee            800,000.00                                                                                    800,000.00
                                                                                                                                                    assets
tea production line                                                                                                                                 related to
construction subsidy                                                                                                                                assets
guo shunxing expert
                                                                                                                                                    related to
workstation of yunnan                  120,000.00     120,000.00                                                                     240,000.00
                                                                                                                                                    assets
province
construction and application
of “land of yunnan medicine”                                                                                                                        related to
quality evaluation system of                                                                                                                        assets
tcm materials
project fund of wild resources
                                                                                                                                                    related to
exploration and utilization in         360,000.00     270,000.00                                                                     630,000.00
                                                                                                                                                    assets
northwest yunnan
research and demonstration
                                                                                                                                                    related to
project on standardized                               600,000.00                                                                     600,000.00
                                                                                                                                                    assets
planting technology of
                                                                       amount
                                                                                       amount          amount that
                                                     amount of        included in
                                                                                     included in       offsets costs
                                                    new subsidies    non-operating                                      other                           asset-related/
        liability items          opening balance                                     other income      and expenses                 closing balance
                                                     during the        revenue                                         changes                         income-related
                                                                                      during the        during the
                                                       period         during the
                                                                                        period            period
                                                                        period
authentic medicinal materials,
such as yunnan angelica and
yunnan paris polyphylla
land subsidy for overall                                                                                                                               related to
relocation of the company                                                                                                                              assets
study on the secondary
development of gongxuening
                                                                                                                                                       related to
capsule, a large variety of                         2,100,000.00                                                                      2,100,000.00
                                                                                                                                                       assets
chinese medicine launched on
the market
r&d of digital twin key
technology in the core                                                                                                                                 related to
production line of traditional                                                                                                                         assets
chinese medicine
research and screening of
ethnic and folk applied                                                                                                                                related to
drugs (academician’s free                                                                                                                              income
exploration project)
subsidies for new r&d
                                                                                                                                                       related to
institutions in yunnan                              2,000,000.00                                                                      2,000,000.00
                                                                                                                                                       income
province in 2022
other government subsidies                                                                                                                             related to
related to income                                                                                                                                      income
other government subsidies                                                                                                                             related to
related to assets                                                                                                                                      assets
              other explanations: none
                                                                                                                                          unit: rmb
                                  item                                     closing balance                              opening balance
                 receipts of real estate sale under staff
                housing reform
                 returns payable                                                         19,604,427.87                                  18,716,979.93
                total                                                                    21,535,982.23                                  20,648,534.29
              other explanations: none
                                                                                                                                          unit: rmb
                                                                             increase or decrease (＋,－)
                                                                                      capitalization
                                 opening balance       issuance of        share         of capital                                   closing balance
                                                                                                            others      subtotal
                                                       new shares        dividend      reserve into
                                                                                      share capital
                total number
                of shares
           other explanations: none
           (1) details of outstanding preferred shares, perpetual bonds and other financial instruments as at the end of the reporting
           period: none
           (2) changes in outstanding preferred shares, perpetual bonds and other financial instruments as at the end of the reporting
           period: none
                                                                                                                                              unit: rmb
                                                                   increase in the current          decrease in the current
                       item                 opening balance                                                                        closing balance
                                                                           period                          period
            capital premium (equity
            premium)
            other capital reserves              52,758,828.60                   5,841,351.14                                              58,600,179.74
            total                           18,231,423,838.72                   5,841,351.14                                         18,237,265,189.86
           other explanations, including changes and reasons thereof as at the end of the reporting period: none
                                                                                                                                              unit: rmb
                                                                   increase in the current          decrease in the current
                        item                 opening balance                                                                       closing balance
                                                                           period                          period
            share repurchase for equity
            incentives
            total                              707,428,892.15                                                                           707,428,892.15
           other explanations, including changes and reasons thereof as at the end of the reporting period: none
                                                                                                                                              unit: rmb
                                                                              amount for the current period
                                                          less: amount          less: amount
                                                            previously            previously
                                                            included in          included in
                                                                                                                                        that
                          opening       amount before          other                other             less:           that
         item                                                                                                                      attributable to    closing balance
                          balance        income tax in    comprehensive        comprehensive         income      attributable to
                                                                                                                                     minority
                                          the current       income but           income but            tax       the company
                                                                                                                                   interests after
                                            period         transferred to       transferred to       expenses       after tax
                                                                                                                                        tax
                                                            profits and            retained
                                                           losses in the        earnings in the
                                                          current period        current period
i. other
comprehensive
incomes that will
not be reclassified
into profits or
losses
     other
comprehensive
income that cannot
be transferred to         8,731,257.88     -8,119,659.75                                                       -8,119,659.75                        611,598.13
profits or losses
under equity
method
ii. other
comprehensive
incomes to be            -76,818,908.83   -20,629,775.63              0.00               0.00         0.00    -19,417,702.81   -1,212,072.82     -96,236,611.64
reclassified into
profits and losses
including: other
comprehensive
income that can be
transferred to           -42,284,342.91   -14,727,792.59              0.00               0.00         0.00    -14,727,792.59            0.00     -57,012,135.50
profits or losses
under equity
method
     exchange
differences from
translation of
financial                -34,534,565.92    -5,901,983.04              0.00               0.00         0.00     -4,689,910.22   -1,212,072.82     -39,224,476.14
statements
denominated in
foreign currencies
total other
comprehensive            -68,087,650.95   -28,749,435.38              0.00               0.00         0.00    -27,537,362.56   -1,212,072.82     -95,625,013.51
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
                                                                                                                                        unit: rmb
                                                                    increase in the current      decrease in the current
                       item                 opening balance                                                                    closing balance
                                                                            period                      period
              statutory surplus
              reserves
              total                            2,530,458,968.58                                                                  2,530,458,968.58
            explanations on surplus reserves, including changes and reasons thereof for the period: none
                                                                                                                                        unit: rmb
                                  item                                  current period                                previous period
              undistributed profit at the end of the
              previous period before adjustment
              undistributed profit at the beginning of                           16,720,444,918.66                              16,285,350,424.41
         the period after adjustment
         plus: net profits attributable to equity
         owners the company’s owners in the                                      2,828,011,615.30                              3,001,125,887.45
         current period
         less: withdrawal of statutory surplus
         reserve
               ordinary share dividends payable                                  2,712,079,156.56                              2,566,031,393.20
         undistributed profit at the end of the
         period
        details on adjustment of undistributed profits at the beginning of the period:
        provisions, the undistributed profits at the beginning of the period were affected by rmb 0.
        affected by rmb 0.
                                                                                                                                   unit: rmb
                                               amount for the current period                         amount for the previous period
                   item
                                             revenue                      cost                      revenue                       cost
         principal businesses              20,281,803,000.72         14,692,689,825.40          17,983,574,414.62           12,774,456,694.30
         other businesses                     27,569,849.35              20,542,442.00               33,164,194.53               18,041,437.65
         total                             20,309,372,850.07         14,713,232,267.40          18,016,738,609.15           12,792,498,131.95
        income related information:
                                                                                                                                   unit: rmb
    contract                                 health and daily
                          drug sales                                tcm resources         drug circulation            others                   total
  classification                            chemical products
commodity type        3,915,741,141.58       3,321,729,096.51        741,539,046.93       11,811,844,170.14      490,949,545.56          20,281,803,000.72
including:
industry sales
income
commercial sales
income
technical
services
hotel catering
industry
planting sales
income
classified by
operating areas
  including:
in yunnan
province
outside yunnan
province
(excluding
overseas)
overseas                  13,790,802.03            924,570.31         18,488,642.85                                363,021,521.41       396,225,536.60
total                   3,915,741,141.58    3,321,729,096.51         741,539,046.93     11,811,844,170.14          490,949,545.56     20,281,803,000.72
        information related to performance obligations:
        the principal businesses of the company and its subsidiaries is the sale of pharmaceuticals, medicinal materials, health and daily
        chemical products and other commodities. after the products are delivered to the customer and it is confirmed by the customer
        that it has obtained the control of the products, the realization of revenue will be recognized. there is no significant financing
        component to the contract, some contracts have discount clauses, and there is usually no similar obligation for the company to
        return the relevant amount to the customer.
        information related to the transaction price allocated to the remaining performance obligations:
        the amount of income corresponding to the performance obligations that have been contracted but not yet performed or not yet
        completed at the end of the reporting period is rmb 0.
        other explanations: none
                                                                                                                                 unit: rmb
                             item                           amount for the current period                  amount for the previous period
         consumption tax                                                              887,115.80                                    567,626.00
         urban maintenance and construction tax                                   46,983,220.42                                 44,747,191.97
         education surcharge                                                      20,401,524.88                                 19,664,576.16
         property tax                                                              8,886,349.82                                  9,619,581.48
         land use tax                                                              5,619,552.59                                  6,123,222.80
         vehicle and vessel use tax                                                    74,430.93                                    149,743.87
         stamp duty                                                               11,827,075.83                                 13,544,326.74
         local education surcharge                                                13,619,043.57                                 13,109,579.55
         environmental protection tax                                                                                               40,919.41
         others                                                                        74,516.17                                    11,361.75
         total                                                                  108,372,830.01                                107,578,129.73
        other explanations: none
                                                                                                                                 unit: rmb
                             item                           amount for the current period                  amount for the previous period
         market maintenance and promotion
         expenses
         employee compensation                                                  777,770,443.04                                623,536,834.47
         advertising expenses                                                   132,347,367.85                                296,379,432.87
         hospital management fee                                                 42,673,545.65                                 51,422,435.58
         planning service fee                                                    22,174,137.89                                 36,162,807.06
         information technology service fee                                      32,546,782.70                                 31,101,487.58
         transportation, handling and storage
         charges
         depreciation and amortization                                            33,584,977.25                                 23,812,587.47
         travel expenses                                                          28,765,406.92                                 21,503,321.44
         office expenses                                                          21,788,886.99                                 20,440,859.79
 lease costs                                                      6,931,034.48                             12,971,789.71
 material consumption                                            15,269,432.17                             11,971,140.40
 sample expenses                                                  3,381,831.59                              8,056,472.91
 promotion expenses                                               2,159,257.96                              3,957,638.96
 service fees                                                     6,682,118.87                              4,590,173.99
 others                                                          35,864,222.31                             27,689,355.59
 total                                                        2,257,688,549.69                          2,010,088,694.73
other explanations: none
                                                                                                            unit: rmb
                   item                      amount for the current period            amount for the previous period
 employee compensation                                          176,232,082.40                            209,742,818.56
 depreciation and amortization                                   59,917,023.23                             48,215,186.22
 agency service fee                                              29,142,812.97                             44,626,638.53
 lease costs                                                      5,900,244.74                              3,616,684.57
 business entertainment fee                                       6,962,426.80                              5,100,861.30
 office expenses                                                 13,834,059.14                              7,777,467.13
 travel expenses                                                  9,036,707.10                              4,871,043.17
 afforestation and pollution discharge fee                        1,747,910.19                              2,231,575.79
 security and cleaning fee                                        5,041,654.57                              2,372,506.00
 maintenance costs                                                1,655,191.36                              1,181,766.10
 utilities and property management fee                            3,844,442.60                              3,542,376.46
 others                                                          31,129,255.30                             37,506,075.51
 total                                                          344,443,810.40                            370,784,999.34
other explanations: none
                                                                                                            unit: rmb
                   item                      amount for the current period            amount for the previous period
 employee compensation                                           63,827,625.06                             62,073,883.53
 materials consumption and inspection
 fee
 depreciation and amortisation                                    4,753,074.27                              2,776,922.47
 labor expenses                                                   1,372,659.54                              4,070,052.97
 information technology r&d expenses                              4,155,924.21                                984,801.34
 commissioned r&d cost                                           34,101,127.85                             31,764,737.09
 new product design fee                                           2,732,730.98                                838,037.73
 other expenses                                                   8,368,791.80                              3,364,155.49
 total                                                          144,819,933.66                            128,624,650.16
other explanations: none
                                                                                                                      unit: rmb
                    item                           amount for the current period               amount for the previous period
 interest expenses                                                     18,798,896.05                                46,066,543.03
 less: interest income                                                114,776,796.46                               225,532,115.81
 net loss on foreign exchange                                         -21,031,853.69                                -9,423,203.60
 bank charges                                                           4,460,210.16                                19,709,762.44
 others                                                                 6,558,973.27                                 5,401,738.39
 total                                                               -105,990,570.67                              -163,777,275.55
other explanations: none
                                                                                                                      unit: rmb
         other sources of income                   amount for the current period               amount for the previous period
 government subsidies related to assets                                 6,654,908.45                                 5,666,555.53
 government subsidies related to income                                31,167,967.46                                26,775,445.18
 return of individual income tax service
 charge
 others                                                                   236,716.90                                    19,512.87
 total                                                                 42,177,454.66                                35,603,814.75
                                                                                                                      unit: rmb
                             item                               amount for the current period       amount for the previous period
 gain on long-term equity investments subject to accounting
 with equity method
 investment income on financial assets held for trading
 during holding period
 investment income from disposal of financial assets held for
                                                                                    -3,681,651.93                   77,548,919.17
 trading
 dividend income earned during the holding period of
 investments in other equity instruments
 gains arising from the re-measurement of equity at fair
                                                                                                                   -71,670,591.47
 value when acquiring the right of control
 others                                                                            -36,248,986.65                  108,275,333.85
 total                                                                         421,542,165.56                      533,069,805.76
other explanations: none
                                                                                                                      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                                     55,086,478.34                              -433,321,452.13
 other non-current financial assets                                     -1,997,550.27                               16,709,000.00
 total                                                                 53,088,928.07                              -416,612,452.13
other explanations: none
                                                                                                                       unit: rmb
                     item                          amount for the current period              amount for the previous period
 bad debt losses on other receivables                                   -4,658,000.68                              -220,667,864.34
 bad debt losses on accounts receivable                               -70,022,581.61                               -113,891,065.58
 impairment loss of placements with
                                                                                                                    -19,729,837.73
 banks and other financial institutions
 prepayment impairment loss                                                                                        -315,224,987.78
 total                                                                -74,680,582.29                               -669,513,755.43
other explanations: none
                                                                                                                       unit: rmb
                     item                           amount for the current period              amount for the previous period
 inventory impairment losses and contract
 performance cost impairment losses
 goodwill impairment loss                                                                                           -560,577,285.88
 total                                                                  19,008,334.90                               -593,505,510.85
other explanations: none
                                                                                                                       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 assets                             5,403,078.51                                 -1,942,102.28
 total                                                                  5,403,078.51                                 -1,942,102.28
                                                                                                                       unit: rmb
                                                                                                       amount of non-recurring
                                                                     amount for the previous
              item                 amount for the current period                                      profits or losses included in
                                                                            period
                                                                                                           the current period
 profits from destruction and
 scrapping of non-current                            118,961.77                         10,088.37                       118,961.77
 assets
 others                                            1,883,762.52                      1,888,860.04                     1,883,762.52
 total                                             2,002,724.29                      1,898,948.41                     2,002,724.29
government subsidies included in current profits or losses: none
                                                                                                                       unit: rmb
                                                                                                    amount of non-recurring profits
                                                                    amount for the previous
            item                 amount for the current period                                      or losses included in the current
                                                                           period
                                                                                                                  period
donation                                          1,782,430.73                      2,548,887.69                        1,782,430.73
losses from destruction and
scrapping of non-current                             2,554,617.83                         206,231.31                         2,554,617.83
assets
others                                               7,731,425.67                         525,120.30                         7,731,425.67
total                                               12,068,474.23                        3,280,239.30                       12,068,474.23
other explanations: none
(1) table of income tax expenses
                                                                                                                            unit: rmb
                    item                                 amount for the current period             amount for the previous period
 current income tax expenses                                                466,976,774.03                               415,456,714.58
 deferred income tax expenses                                                10,044,063.58                               -125,206,720.48
 total                                                                      477,020,837.61                               290,249,994.10
(2) adjustment process of accounting profit and income tax expense
                                                                                                                            unit: rmb
                                item                                                     amount for the current period
 total profit                                                                                                        3,303,279,659.05
 income tax expense calculated at statutory/applicable tax rate                                                          495,491,948.86
 effect of different tax rates applied to subsidiaries                                                                     -6,236,751.24
 effect of adjusting income tax for prior periods                                                                         22,579,240.46
 effect of non-taxable income                                                                                             -74,517,918.69
 effect of non-deductible costs, expenses and losses                                                                        2,402,037.25
 effect of deductible losses on the use of deferred tax assets not
 recognized in prior periods
 effect of deductible temporary differences or deductible losses
 on deferred income tax assets not recognized in the current                                                              38,638,944.97
 period
 extra tax deductions for r&d costs                                                                                       -11,406,207.30
 others                                                                                                                      -206,878.92
 income tax expenses                                                                                                     477,020,837.61
other explanations: none
for details, please refer to 57 “other comprehensive income” under note vii.
(1) cash received relating to other operating activities
                                                                                                                            unit: rmb
                    item                                 amount for the current period             amount for the previous period
 interest income                                                            117,918,059.78                               218,371,072.31
 security deposit received                                                   33,232,300.23                           148,718,173.57
 current account and petty cash                                              22,933,663.17                            39,286,395.57
 government subsidy                                                          45,035,330.05                            27,715,183.79
 rent income                                                                  2,488,401.74                             1,867,131.36
 collection and payment                                                         768,281.91                             1,254,563.56
 others                                                                      20,817,808.37                            11,665,619.61
 total                                                                  243,193,845.25                               448,878,139.77
explanations on cash received relating to other operating activities: none
(2) cash payments relating to other operating activities
                                                                                                                       unit: rmb
                    item                            amount for the current period                amount for the previous period
 market maintenance fee                                                 721,438,351.98                               814,502,745.32
 advertising expenses                                                   126,520,457.04                               298,756,053.35
 deposits and guarantees                                                 57,874,758.32                                37,355,460.25
 office expenses                                                         41,879,106.52                                21,542,583.91
 consulting and other intermediary fee                                   13,241,300.53                                31,282,608.35
 travel expenses                                                         39,236,566.81                                26,552,820.62
 general and administrative expenses                                     58,089,540.13                                23,685,101.09
 planning service fee                                                    11,619,803.55                                17,324,987.25
 material consumption                                                    12,736,064.41                                12,446,449.57
 other expenses                                                         170,598,801.61                               251,465,426.32
 others                                                                  18,675,794.66                                12,535,389.86
 total                                                                1,271,910,545.56                             1,547,449,625.89
explanations on cash payments relating to other operating activities: none
(3) cash received relating to other investment activities
                                                                                                                       unit: rmb
                    item                            amount for the current period                amount for the previous period
 time deposits                                                          363,000,000.00                             1,120,000,000.00
 total                                                                  363,000,000.00                             1,120,000,000.00
explanations on cash received relating to other investment activities: none
(4) cash payments relating to other investment activities
                                                                                                                       unit: rmb
                    item                            amount for the current period                amount for the previous period
 time deposits                                                          697,318,800.00                                12,000,000.00
 agency service fee                                                                                                   26,327,517.39
 total                                                                  697,318,800.00                                38,327,517.39
explanations on cash payments relating to other investment activities: none.
(5) cash received relating to other financing activities: none
(6) cash payments relating to other financing activities
                                                                                                                           unit: rmb
                      item                            amount for the current period                  amount for the previous period
 payment for share repurchase                                                                                           707,577,483.90
 dividend handling fee                                                       2,219,511.75                                 1,246,721.27
 payment for commercial factoring                                                                                        96,556,155.50
 lease payment                                                            34,255,797.15                                  11,572,733.95
 return of minority equity                                                 4,900,000.00
 total                                                                    41,375,308.90                                 816,953,094.62
explanations on cash payments relating to other financing activities: none
(1)     supplementary information of cash flow statement
                                                                                                                           unit: rmb
                    supplementary information                    amount for the current period          amount for the previous period
 operating activities:
      net profit                                                               2,826,258,821.44                        1,366,409,793.62
      plus: impairment provision for assets                                       55,672,247.39                        1,263,019,266.28
        depreciation of fixed assets, depreciation of oil
 and gas assets, depreciation of productive biological                           105,698,740.66                         103,920,722.17
 assets
           depreciation of right-of-use assets                                    53,794,434.08                           39,856,191.53
           amortization of intangible assets                                      15,220,430.41                           11,588,358.47
           amortization of long-term deferred expenses                            14,699,584.40                            4,018,652.58
        loss on disposal of fixed assets, intangible assets
                                                                                   -5,403,078.51                           1,942,102.28
 and other long-term assets (gain is indicated with “-”)
         losses on scrapping of fixed assets (gain is
 indicated with “-”)
        losses on changes in fair value (gain is indicated
                                                                                  -53,088,928.07                        416,612,452.13
 with “-”)
           financial expenses (income is indicated with “-”)                      18,798,896.05                           46,066,543.03
           investment losses (gain is indicated with “-”)                       -421,542,165.56                         -533,069,805.76
         decrease of deferred income tax assets (increase is
 indicated with “-”)
        increase of deferred income tax liabilities
                                                                                  -28,402,841.52                          -2,659,012.40
 (decrease is indicated with “-”)
           decrease in inventories (increase is indicated with
 “-”)
         decrease in operating receivable items (increase is
                                                                                -274,823,081.61                         -421,612,094.17
 indicated with “-”)
         increase in operating payable items (decrease is
                                                                               -1,172,171,057.16                        -925,593,643.30
 indicated with “-”)
           others
           net cash flows from operating activities                            2,251,951,370.10                        1,177,950,057.27
 cash income and expense:
   conversion of debts into capital
   convertible corporate bonds due within one year
   fixed assets acquired under finance leases
   closing balance of cash                                                   12,502,738,350.39                     10,087,395,023.54
   less: opening balance of cash                                             13,046,160,012.47                     18,869,864,842.32
   plus: closing balance of cash equivalents
   less: opening balance of cash equivalents
   net increase in cash and cash equivalents                                   -543,421,662.08                     -8,782,469,818.78
(2) net cash paid for acquisitions of subsidiaries for the period: none
(3) net cash received from disposal of subsidiaries for the period: none
(4) composition of cash and cash equivalents
                                                                                                                        unit: rmb
                   item                                    closing balance                               opening balance
 i. cash                                                            12,502,738,350.39                              13,046,160,012.47
 including: cash on hand                                                     115,703.87                                    224,637.14
       bank deposit available for
 payment at any time
        other cash and bank balance
 available for payment at any time
 iii. cash and cash equivalents at the end
 of the reporting period
other explanations: none
explanation on “others” adjusted for closing balance of the previous year and adjusted amount thereof: none
                                                                                                                        unit: rmb
           item                       closing book value                                  reason for restriction
                                                                 banker’s acceptance deposit, foreign exchange performance bond
 cash and bank balance                           42,956,400.00
                                                                 and banker’s letter of guarantee
 assets in special
                                                                 special fund for paying the cost of employee status conversion in
 account for system                             632,567,609.77
                                                                 state-owned enterprises
 reform
 long-term equity                                                the holdings shall not be transferred within 36 months since the
 investments                                                     ending date of the private placement in 2021
 total                                       12,009,690,107.96
other explanations: none
   (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                                                                                                 185,120,496.11
    including: usd                                           9,523,776.03                           7.2258                 68,816,900.83
              euro                                           2,013,915.88                           7.8771                 15,863,816.75
              hkd                                       107,071,483.98                           0.92198                   98,717,766.80
    japanese yen                                         27,127,306.93                           0.05009                    1,358,806.80
    south korean won                                     21,882,422.00                            0.0055                      120,353.32
    thb                                                   1,112,732.81                           0.20343                      226,363.24
    cad                                                         984.23                            5.4721                        5,385.81
    chf                                                       1,214.27                            8.0614                        9,788.72
    sgd                                                         245.84                            5.3442                        1,313.84
    accounts receivable                                                                                                    53,333,378.12
    including: usd                                           7,033,399.52                           7.2258                 50,821,938.23
              euro                                                                                  7.8771
              hkd                                            2,723,963.52                        0.92198                    2,511,439.89
    other receivables                                                                                                       4,160,326.54
    including: usd                                              1,654.36                            7.2258                     11,954.07
    euro
    hkd                                                      4,190,185.00                        0.92198                    3,863,266.77
    japanese yen                                             5,092,206.00                        0.05009                      255,068.60
    thb                                                        121,648.52                        0.20343                       24,746.96
    cad                                                            966.75                         5.4721                        5,290.14
    other current assets                                                                                                  101,161,200.00
    including: usd                                       14,000,000.00                              7.2258                101,161,200.00
    euro
    hkd
    long-term loans
    including: usd
              euro
              hkd
   other explanations: none
   (2) 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
                           main business        place of                                                 functional       selection basis for
 name of subsidiary                                                         business nature
                             location         registration                                                currency       functional currency
                                                                                                                        operating revenue and
yunbaiyao hong kong                                                                                                      expenses are mainly
                            hong kong         hong kong                       investment                     hkd
      co., ltd.                                                                                                       denominated in hong kong
                                                                                                                                dollars
                                                          at present, it is mainly engaged in
                                                          finished cooking oil, sugar, personal care
                                                          product and cosmetics trade. based on
                                                          the accumulation of resources in the
                                                          trading business of cosmetics and
                                                                                                                   operating revenue and
                                                          personal care products, it has gradually
                                                                                                                    expenses are mainly
ban loong holdings ltd.    hong kong         bermuda      expanded the business scope to the           hkd
                                                                                                                 denominated in hong kong
                                                          upper, middle and downstream of the
                                                                                                                          dollars
                                                          related products, including raw material
                                                          cultivation, extraction, technology r&d,
                                                          product development, production and
                                                          testing for medical and non-medical
                                                          uses.
     disclosure of hedging items and related hedging instruments and qualitative and quantitative information on hedged risks in
     accordance with the hedging category: none
     (1) details of government subsidies
                                                                                                                         unit: rmb
                                                                                                         amount included in current
                  type                          amount                         presented items
                                                                                                            profits and losses
       government subsidies related
      to assets received in the                         9,833,000.00    deferred income                                   200,000.00
      current period
       government subsidies related
      to assets received in the                                         other income
      current period
       government subsidies related
      to income received in the                         7,230,774.36    deferred income
      current period
       government subsidies related
      to income received in the                        27,971,555.69    other income                                   27,971,555.69
      current period
     (2) return of government subsidies
     applicable □not applicable
                                                                                                                         unit: rmb
                         item                                    amount                                      reason
                                                                                              returned for non-compliance with
      public employment and talent service                                        7,500.00
                                                                                              entitlement requirements
      bureau
     other explanations: none
viii. changes in the consolidation scope
(1) business combination not under common control in the current period: none
(2) merger cost and goodwill: none
(3) identifiable assets and liabilities of acquirees as at the acquisition date: none
(4) profits or losses generated from the re-measurement of equity held before the acquisition date at the fair value
whether there was a transaction that realized mergers step by step via multiple transactions and obtained control during the
reporting period
□ yes no
(5) relevant information about the merger consideration that cannot be reasonably determined as at the acquisition date
or the end of the current period of merger or on the fair value of acquirees’ identifiable assets and liabilities: none
(6) other explanations: none
(1) business combination under common control in the current period: none
(2) merger cost: none
(3) book value of assets and liabilities of the merged entity on the date of merger: none
basic information of the transaction, the basis for the transaction to constitute a reverse purchase, whether the assets and liabilities
retained by the listed company constitute a business and its basis, the determination of merger cost, the amount of equity
adjustment and its calculation when dealing with equity transactions: none
loss of control upon a single disposal of an investment in a subsidiary
□ yes no
whether there was a loss of control in the current period under a progressive disposal of investments in subsidiaries through
multiple transactions
□ yes no
      describe the change in scope of consolidation for other reasons (e.g. establishing new subsidiaries,
liquidating subsidiaries, etc.) and its details:
     (1) yunnan medical hanbo co., ltd completed the cancellation of industrial and commercial registration
in february 2023.
     (2) yunnan baiyao group chuxiong health products co., ltd completed the cancellation of industrial and
commercial registration in june 2023.
     (3) ban loong fund investment co., ltd was cancelled in february 2023.
     (4) ban loong hemp technology inc was cancelled in march 2023.
     (1) yunnan baiyao group traditional chinese medicine resources co., ltd established through
investment xingzhong digital intelligence tcm service co., ltd, with the registered capital of rmb 20
million and the shareholding ratio of 100%. yunnan baiyao included xingzhong digital intelligence tcm
service co., ltd into the scope of consolidation in may 2023.
     (2) yunnan yunyao co., ltd established through investment yunnan yunyao nuxiang co., ltd, with the
registered capital of rmb 2 million and the shareholding ratio of 100%. yunnan baiyao included yunnan
yunyao nuxiang co., ltd into the scope of consolidation in june 2023.
     (3) ban loong healthcare (overseas) co., ltd, ynby healthcare (shenzhen) co., ltd, ynby healthcare
(singapore) pte ltd, ynby healthcare co., ltd, ynby beauty co., ltd, ynby pharmaceutical co., ltd,
ynby international co., ltd, ynby co., ltd, ynby holdings group co., ltd, ynby group co., ltd, and
ynby (hong kong) co., ltd were established in the current period.
     the structured entity yunfan no. 1 private equity investment fund was liquidated in may 2023.
ix. interest in other entities
(1) composition of the group
    name of         main business      place of                           shareholding proportion          acquisition
                                                    business nature
   subsidiary         location       registration                         direct           indirect         method
 yunnan baiyao
 group
 traditional                                        pharmaceutical                                       set-up or
                  kunming           kunming                                 100.00%
 chinese                                            industry                                             investment
 medicine
 resources co.,
ltd.
yunnan baiyao
group                                     wholesale and
                                                                                               set-up or
medicine          kunming     kunming     retail of daily         100.00%
                                                                                               investment
e-commerce                                necessities
co., ltd.
yunnan baiyao
group wuxi                                pharmaceutical                                       set-up or
                  wuxi        wuxi                                100.00%
pharmaceutical                            industry                                             investment
co., ltd.
yunnan baiyao
group dali                                pharmaceutical                                       set-up or
                  dali        dali                                100.00%
pharmaceutical                            industry                                             investment
co., ltd.
                                          production and
yunnan baiyao
                                          sales of health
group health                                                                                   set-up or
                  chuxiong    chuxiong    and daily               100.00%
products co.,                                                                                  investment
                                          chemical
ltd.
                                          products
yunnan                                    pharmaceutical
                                                                                               set-up or
pharmaceutical    kunming     kunming     wholesale and           100.00%
                                                                                               investment
co., ltd.                                 retail
                                                                                               business
yunnan
                                                                                               combination
institute of      kunming     kunming     new drug r&d            100.00%
                                                                                               under common
materia medica
                                                                                               control
yunnan baiyao                                                                                  business
holding                                                                                        combination
                  kunming     kunming     investment              100.00%
investment co.,                                                                                under common
ltd.                                                                                           control
                                                                                               business
yunnan baiyao
                                                                                               combination
teayield co.,     kunming     kunming     tea                     100.00%
                                                                                               under common
ltd.
                                                                                               control
                                          import and
yunnan baiyao
                                          export agency,                                       set-up or
group (hainan)    hainan      danya                               100.00%
                                          technical                                            investment
co., ltd.
                                          services, etc.
yunnan baiyao
group                                     technical                                            set-up or
                  shanghai    shanghai                            100.00%
shanghai co.                              services                                             investment
ltd.
yunnan baiyao                                                                                  business
                                          medical device
group medical                                                                                  combination
                  hefei       hefei       production and           70.00%
technology                                                                                     not under the
                                          sales
hefei co., ltd.                                                                                same control
shanghai
yunzhen                                   technical
                                                                                               set-up or
medical           shanghai    shanghai    development             100.00%
                                                                                               investment
technology                                and service
co., ltd.
                                                                                               business
ban loong                                                                                      combination
                  hong kong   hong kong   trade                    28.06%            45.62%
holdings ltd.                                                                                  not under the
                                                                                               same control
yunnan baiyao                                                                                  set-up or
                  kunming     kunming     catering                100.00%
tiancui                                                                                        investment
 business
 management
 co., ltd.
 yunnan baiyao                                                technology
                                                                                                                          set-up or
 group beijing       beijing             beijing              promotion                  100.00%
                                                                                                                          investment
 co. ltd.                                                     service
explanation of the inconsistency of the percentage of shares 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 cicc directional asset management-gf-cicc qirui 1 and 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: none
(3) main financial information of key non-wholly owned subsidiaries: none
(4) major restrictions on the use of assets and settlement of debts of the corporate group: none
(5) financial support or other support provided for structured entity included in the scope of consolidation for the
consolidated financial statements: none
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: none
(1) important joint ventures or associates
                                                                                        shareholding proportion           the accounting
   name of joint                                                                                                             method for
                      main business           place of
    venture or                                                business nature                                             investments in
                        location            registration                               direct             indirect
     associate                                                                                                             joint ventures
                                                                                                                            or associates
                                         no. 92
 shanghai                                zhangjiang                                                                       equity method
 pharmaceuticals                         road, china                                                                      for long-term
                      shanghai                                pharmaceuticals              17.97%
 holding co.                             (shanghai)                                                                       equity
 ltd.                                    pilot free trade                                                                 investments
                                         zone
explanation of the inconsistency of the percentage of shares 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
                                                               period                             previous period
 current assets                                                   164,781,723,168.36                       149,512,870,619.79
 non-current assets                                                48,535,981,670.10                         48,622,030,879.16
 total assets                                                     213,317,704,838.46                       198,134,901,498.95
 current liabilities                                              124,339,571,550.90                        110,691,046,029.78
 non-current liabilities                                           10,035,656,400.61                          9,441,404,411.74
 total liabilities                                                134,375,227,951.51                       120,132,450,441.52
 minority interests                                                 11,583,828,501.82                        10,939,445,168.20
 equity attributable to shareholders of the
 parent company
 share of net assets based on percentage
 of shareholding
 adjustment
 — goodwill                                                            935,611,988.99                           937,045,521.30
 — unrealized profit on internal
                                                                       -13,989,883.58                            -5,425,757.63
 transactions
 — others                                                           -1,694,708,279.77                        -1,685,593,795.42
 book value of equity investment in
 associates
 fair value of equity investments in
 associates for which publicly quoted                              14,916,696,498.36                         11,868,125,772.68
 prices exist
 operating revenue                                                132,592,157,323.37                        111,707,464,327.64
 net profits                                                         3,417,001,019.98                         4,564,219,430.25
 net profits from discontinued operations
 other comprehensive income                                           -122,849,260.45                          -166,533,548.07
 total comprehensive income                                          3,294,151,759.53                         4,397,685,882.18
 dividends received        from   associates
 during the year
other explanations: none
(4) combined financial information of insignificant joint ventures and associates
                                                                                                                  unit: rmb
                                               closing balance/amount for the current      opening balance/amount for the
                                                               period                             previous period
 joint ventures:
 total of the followings based on the
 percentage of shareholdings
 associates:
 total book value of investments                                             156,774.37                                   142,253.18
 total of the followings based on the
 percentage of shareholdings
 — net profit                                                                -38,841.58                                -1,241,779.39
 — other comprehensive income                                                 -1,956.03
 — total comprehensive income                                                -40,797.61                                -1,241,779.39
other explanations: none
(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
                                                                                                                         unit: rmb
                                      accumulated losses in the
                                                                         unrecognized loss in the
    name of joint venture or          previous periods that are                                          accumulated unrecognized
                                                                       current period (or net profit
          associate                       accumulated and                                               losses at the end of the period
                                                                       shared in the current period)
                                            unrecognized
yunnan baiyao chinese herbal
                                                       -292,238.56                        -21,982.82                      -314,221.38
medicine technology co., ltd.
other explanations: none
(7) unrecognised commitment related to investments in joint ventures: none
(8) contingent liabilities related to investments in joint ventures or associates: none
explanations on structured entities not included in the scope of consolidation for the consolidated financial statements: none
x. risks associated with financial instruments
     the group’s financial instruments include equity investments, debt investments, loans, receivables and
accounts payable, as detailed in the relevant items under note vii. the risk management objective of the group
is to get an appropriate balance between risk and return, minimize the negative impact of risk on business
results of the group, and maximize the interest of shareholders and other equity investors. based on this risk
management objective, the basic risk management strategy of the group is to identify and analyze various risks
faced by the group, 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.
     market risk of financial instruments is the risk of fluctuation in the fair value of financial instruments or
future cash flow arising from changes in market price, including exchange rate risk, interest rate risk and other
price risk.
     the group uses sensitivity analysis techniques to analyze the possible impact of reasonable and possible
changes in market risk related variables on current profits and losses or shareholders’ equity. since any risk
variable rarely changes in isolation, and the correlations that exist between variables will have a significant
impact on the ultimate amount of a change in a risk variable, in the following explanation, it is assumed that
each variable changes independently.
     (1) exchange rate risk
     exchange rate risk refers to the risk that the fair value or future cash flow of a financial instrument will
fluctuate due to changes in the exchange rate. the group’s exposure to foreign exchange risks is mainly related
to us dollars and hong kong dollars. with the exception of several subsidiaries of the group that conduct
purchases and sales in us dollars and hong kong dollars, other major business activities of the group are
denominated and settled in rmb. exchange rate risk has an impact on the group’s trading and the results of its
overseas operations. the balance of the group’s foreign currency monetary items as at june 30, 2023 is as
shown in section 82 “monetary items denominated in foreign currencies” under note vii. if the rmb had
appreciated or depreciated by 3% against the us dollar and hong kong dollar, while other factors remained
unchanged, the net profit of the company would have increased or decreased by approximately rmb
     (2) interest rate risk
     interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in market interest rates. the group’s interest rate risk arises from bank loans and bonds
payable and other interest-bearing long-term debts. financial liabilities at floating rates expose the group to the
cash flow interest rate risk, and financial liabilities at fixed rates expose the group to the fair value interest rate
risk. the group determines the relative proportion of contracts carrying fixed and floating rates according to
prevailing market conditions. as at june 30, 2023, the group’s interest-bearing debt consisted mainly of
fixed-rate borrowing contracts denominated in rmb amounting to rmb 741,998,578.55, and the exposure to
changes in market interest rates was not material.
     (3) other price risk
     the investments classified as financial assets at fair value through profits or losses held by the group are
measured at fair value on the balance sheet date. therefore, the group is exposed to fluctuations in the
securities market. the group reduces the price risk of equity portfolio investments by holding multiple equity
portfolios.
     as at june 30, 2023, if the expected price at which the group holds the above types of investments had
increased or decreased by 5%, while other factors remained unchanged, the group would have increased or
decreased its net profit by approximately rmb 96,623,566.00.
     as at june 30, 2023, the maximum exposure to credit risk that could cause the group’s financial loss is
mainly due to losses on the group’s financial assets arising from the failure of the other party to perform its
obligations under the contract and financial guarantees undertaken by the group, including:
     the book value of recognized financial assets in the consolidated balance sheet. for financial instruments
measured at fair value, the book value reflects its risk exposure, but not its maximum risk exposure, which will
change as fair value changes in the future;
     the financial guarantee contract amount disclosed in note xiv “commitments and contingencies.”
     in order to reduce credit risk, the company’s self-produced drugs and health products are generally sold in
accordance with the principle of first payment before delivery. when selecting dealers (customers), the
company will investigate the scale and financial strength, market resources, operations, brands, sales networks,
and sales channels of dealers (customers). only dealers (customers) that meet the requirements of the company
can be selected. yunnan pharma, a subsidiary of the company, mainly faces the customer credit risk caused by
credit sales. yunnan pharma strictly implements credit management for the whole process of credit sales. it has
established a customer credit evaluation management system, and divided customers into various types
according to their nature, expected sales, operating conditions, and development potential. for each type of
customer, it will set assessment credit and red line credit days according to a unified division standard, and then
confirm the effective sales and the time limit to stop billing, and make credit sales forecast and evaluation
before the transactions. in the process of cooperation, dynamic credit adjustment is carried out according to the
actual purchase amount of customers and the change of business scale, so that the credit sales amount given
matches its business strength. because the company only deals with recognized and reputable third parties, no
collateral is required. credit risk concentration is managed by customer, geographic region and industry.
     because the company’s customer base for accounts receivable is widely dispersed in different regions and
industries, there is no significant concentration of credit risk within the company.
     the group’s working capital is held in banks with high credit ratings and therefore the credit risk of
working capital is low.
     liquidity risk is the risk that a company will run short of funds to meet its obligations settled by delivering
cash or other financial assets.
     it is the company’s policy to ensure that it has sufficient cash to pay its debts as they fall due. liquidity
risk is centrally controlled by the company’s financial department. the financial department ensures that the
company has sufficient funds to service its debt with all reasonable projections by monitoring cash balances,
readily realizable marketable securities and rolling projections of cash flows for the next 12 months.
     the maturity analysis of financial liabilities based on undiscounted contractual cash flows of the company
is as follows:
     (1) the company’s current liabilities include short-term loans, notes payable and accounts payable, and
other payables, which are expected to be repaid within 1 year.
     (2) the maturity analysis of non-current liabilities (including the non-current liabilities due within 1 year)
based on undiscounted contractual cash flows of the company is as follows: (unit: rmb)
                                                                         december 31, 2022
                               item                    within one                                  above 3       total
                                                          year                                      years
                  long-term loans                                                                2,100,000.00 2,100,000.00
                               total                                                             2,100,000.00 2,100,000.00
xi. disclosure of 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 for trading
 fair value through
 profits or losses
 (1) investment in
 equity instruments
 (2) others                                               27,082,117.24                                    27,082,117.24
 (ii) accounts
 receivable financing
 (1) notes receivable                                                           634,158,821.40            634,158,821.40
 (iii) other non-current
 financial assets
 (1) investment in
 equity instruments
 (iv) investment in
 other equity                                                                     71,745,000.00            71,745,000.00
 instruments
 total assets
 continuously measured        1,690,962,298.94            27,082,117.24         920,330,725.37          2,638,375,141.55
 at fair value
 ii. non-continuous fair
                                  --                       --                      --                       --
 value measurement
continuously and non-continuously:
     the financial assets at fair value through profits or losses held by the company are mainly the share and
fund investments in the secondary market, whose closing fair value is determined by the closing price of the
publicly traded market on the balance sheet date.
for items subject to level ii continuous and noncontinuous fair value measurement:
     the items subject to level ii continuous fair value measurement mainly include the wealth management
products held by the company. the profits or losses from fluctuation during the holding period are not
recognized because the fair value fluctuation is small.
for items subject to level iii continuous and noncontinuous fair value measurement:
     (1) other non-current financial assets subject to level iii continuous fair value measurement are the equity
investment in non-listed companies held by the company. the company will obtain the annual auditor’s report
of the investee, consider the operating environment, operating conditions and financial status of the investee
enterprise, and determine the closing fair value on the basis of the closing net assets of the company. other
investments in other equity instruments are the equity of non-listed companies held by the company. in case the
investee is a start-up biotechnology company, the company will the business environment, operating conditions
and financial status of the investee, and the investment cost is used as the best estimate of fair value in the
current period.
     (2) the accounts receivable financing subject to level iii fair value measurement are the notes receivable
held by the company, mainly including banker’s acceptance bill. its credit risk is negligible, its remaining term
is short (less than 12 months), and its book value is close to its fair value. therefore, the company uses the
book value as its fair value.
sensitivity analysis for the items subject to level iii continuous fair value measurement: none
in the current period, the reason for the conversion and the policy for determining the time point of the
conversion: none
     the financial assets and liabilities at amortized cost in the financial statements mainly include notes
receivable, accounts receivable, other receivables, long-term loans, short-term loans, notes payable, accounts
payable, other payables, and long-term payables.
     the management of the group believes that the book value of the financial assets and financial liabilities
in the financial statements is close to the fair value of such assets and liabilities.
xii. related parties and related party transactions
ultimate controller of the company: none.
other explanations:
     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, china securities regulatory commission 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 321,160,222 shares of the company held by it
to its wholly-owned subsidiary yunnan state-owned equity operation 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 holdings group co., ltd. after the equity
transfer, yunnan investment holdings group co., ltd would hold 321,160,222 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.
for details of subsidiaries of the company, please refer to 1 “interest in subsidiaries” under note ix.
details of 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
 yunnan baiyao chinese herbal medicine technology co., ltd.           associate
 lijiang changgengming trading co., ltd.                              associate
 shanghai pharmaceuticals holding co. ltd.                            associate
 ban loong jacobson jbm pharma limited                                associate
other explanations: none
                   name of other related parties                        relationship between other related parties and the company
 lijiang dongchuang trading co., ltd.                                 shareholder of the equity participation company
 guangxi zhongheng chinese herbal medicine industry
                                                                      shareholder of the equity participation company
 development co., ltd.
 beijing langjia culture development co., ltd.                        shareholder of the equity participation company
 new huadu industrial group co., ltd.                                 substantial shareholder of the company
 jiangsu yuwell technology development co., ltd.                      substantial shareholder of the company
                                                             minority shareholder that has significant       influence on the
yunnan tianma pharmaceutical co., ltd.
                                                             subsidiary
                                                             minority shareholder that has significant       influence on the
yunnan pharmaceutical ruiyang shenhua technology co., ltd.
                                                             subsidiary
                                                             minority shareholder that has significant       influence on the
yunnan jianshui county xingda medicine co., ltd.
                                                             subsidiary
                                                             minority shareholder that has significant       influence on the
yunnan baoshan medicine co., ltd.
                                                             subsidiary
                                                             minority shareholder that has significant       influence on the
yunnan renjiu technology co., ltd.
                                                             subsidiary
                                                             minority shareholder that has significant       influence on the
qiubei county wanhe 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 jiayuan medicine co., ltd.
                                                             subsidiary
                                                             minority shareholder that has significant       influence on the
beijing jinjianqiao technology culture co., ltd.
                                                             subsidiary
                                                             minority shareholder that has significant       influence on the
hefei qifu jupu health technology co., ltd.
                                                             subsidiary
jiangsu yuwell medical equipment & supply co., ltd.          subsidiary of the substantial shareholder
jiangsu yuwell-poct biological technology co., ltd.          sub-subsidiary of the substantial shareholder
yunnan salt wenshan co., ltd.                                sub-subsidiary of the substantial shareholder
yunnan salt lijiang co., ltd.                                sub-subsidiary of the substantial shareholder
mb packaging                                                 sub-subsidiary of the substantial shareholder
kunming branch of shanghai zhongyou medicine high-tech
                                                             branch of sub-subsidiary of the substantial shareholder branch
co., ltd.
quanzhou new huadu shopping mall co., ltd.                   sub-subsidiary of the substantial shareholder
yunnan drug technology development operation co., ltd.       subsidiary of the substantial shareholder
yeig power assembly park development co., ltd.               subsidiary of the substantial shareholder
tibet jiushi zhihe marketing co., ltd.                       subsidiary of the substantial shareholder
tibet jiujia e-commerce co., ltd.                            subsidiary of the substantial shareholder
kunming yusi pharmaceutical co., ltd.                        subsidiary of the substantial shareholder
kunming guiyan new material technology co., ltd.             subsidiary of the substantial shareholder
kunming dehe trade co., ltd.                                 subsidiary of the substantial shareholder
teh-ho canned food company                                   subsidiary of the substantial shareholder
techpool bio-pharma co., ltd.                                subsidiaries of associates
fujian new huadu haiwuhui investment co., ltd.               subsidiary of the substantial shareholder
fujian new huadu enterprise management co., ltd.             subsidiary of the substantial shareholder
                                                             equity participation company of the subsidiary of the
shanghai skynet brand management crop., ltd.
                                                             substantial shareholder
kunming jinkuan commerce & trade co., ltd.                   company controlled by the related party
zhang sulei                                                  minority shareholder of the subsidiary
yin yifei                                                    minority shareholder of the subsidiary
jin mingwen                                                  minority shareholder of the subsidiary
wang qiwan                                                   minority shareholder of the subsidiary
cao liangming                                                minority shareholder of the subsidiary
                                                             equity participation company of minority shareholder of the
yunnan zhongruixinlian investment development co., ltd.
                                                             former subsidiary
                                                             equity participation company of minority shareholder of the
yunnan zhongjia trading co., ltd.
                                                             former subsidiary
beijing jingji chenggong sports brokerage co., ltd.          holding company of minority shareholder of the subsidiary
hefei juyinzhai health technology co., ltd.                  holding company of minority shareholder of the subsidiary
wenshan yungui agricultural development co., ltd.            former associate
kpc pharmaceuticals, inc                                     previously having the same director
kunming nuo’an enterprise management co., ltd.               minority shareholder of the sub-subsidiary
other explanations: none
(1) related party transactions on purchase and sales of goods and rendering and receiving of services
information of commodities purchased/labor services accepted
                                                                                                                 unit: rmb
                                                                                            whether
                        contents of related   amount for the          approved                               amount for the
    related party                                                                         exceeding the
                         party transaction    current period       transaction limit                         previous period
                                                                                        transaction limit
 shanghai
 pharmaceuticals
                        purchase of goods       307,157,849.91     1,031,000,000.00           no              145,179,876.67
 holding co. ltd
 and its subsidiaries
 jiangsu yuyue
 science &
 technology
                        purchase of goods        20,884,737.52        60,000,000.00           no                13,695,588.86
 development co.,
 ltd. and its
 subsidiaries
 teh-ho canned
 food company           purchase of foods           521,823.37                                                   1,060,218.58
 and its subsidiaries
 mb packaging
                        purchase of goods         3,426,512.63
 limited
 shanghai skynet
                        purchase of
 brand
                        anti-counterfeiting          78,849.56
 management
                        laser label
 crop., ltd
 yunnan salt
                        purchase of goods            30,265.49                                                      36,000.00
 wenshan co., ltd.
 yunnan salt            purchase of
 lijiang co., ltd.      mineral salt
 fujian new huadu
 comprehensive
                        purchase of
 general                                                                                                           198,982.30
                        medicines
 department store
 co., ltd.
 wenshan yungui
 agricultural
                        purchase of goods                                                                       51,016,777.20
 development co.,
 ltd
 yunnan renjiu
                        purchase of
 technology co.,                                                                                                 5,887,494.81
                        medicines
 ltd.
 yunnan
 zhongruixinlian
 investment             purchase of goods                                                                          197,129.12
 development co.,
 ltd.
information of commodities sold/labor services provided
                                                                                                                                     unit: rmb
                                                   contents of related party                                          amount for the previous
                      related party                                               amount for the current period
                                                         transaction                                                         period
            shanghai pharmaceuticals
            holding co. ltd and its              sale of goods                                  228,849,181.50                     67,139,958.40
            subsidiaries
            tibet jiushi zhihe marketing
                                                 sale of goods                                  113,247,658.02                    163,623,392.90
            co., ltd.
            guangxi zhongheng chinese
            herbal medicine industry             sales of panax notoginseng                                                        49,029,375.00
            development co., ltd.
            lijiang changgengming
                                                 sale of goods                                      256,108.86                           645,253.91
            trading co., ltd.
            beijing langjia culture
                                                 sale of goods                                                                            13,549.76
            development co., ltd.
            lijiang dongchuang trading
                                                 sale of goods
            co., ltd.
            kunming guiyan new
                                                 testing fees                                            3,000.00                          2,700.00
            material technology co., ltd
            jiangsu yuyue medical
            equipment & supply co.,              sales of tea                                                                            896,504.42
            ltd.
            kunming hongyun hospital
                                                 sales of medicine                                4,493,134.50                       2,560,958.72
            co., ltd.
            yunnan baoshan medicine
                                                 sales of medicine                                 -182,136.79                           425,102.28
            co., ltd.
            kunming jinkuan commerce
                                                 sale of goods                                   31,031,200.04
            & trade co., ltd.
            kpc pharmaceuticals, inc             sale of goods                                    9,808,504.09
           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) lease between related parties: none
           the company as the lessor: none
           the company as the lessee:
                                                                                                                                     unit: rmb
                           rental costs for          variable lease
                          short-term leases        payments that are
                            and leases of         not included in the                                        interest expense on lease           increased
                                                                                   rent paid
             types        low-value assets        measurement of the                                            liabilities assumed          right-to-use assets
name of        of       that are streamlined       lease liability (if
 lessor      leased        (if applicable)            applicable)
             assets     amount        amount     amount         amount                                                                      amount      amount
                                                                           amount for     amount for        amount for     amount for
                        for the        for the   for the         for the                                                                    for the      for the
                                                                           the current    the previous      the current    the previous
                        current       previous   current        previous                                                                    current     previous
                                                                             period          period           period          period
                         period        period     period         period                                                                     period       period
yeig
power
assembly     house                                                                                           114,210.95     137,166.64
park
developm
ent co.,
ltd
yunnan
tianma
pharmace        house                                                     420,000.00      420,000.00      25,340.65
utical co.,
ltd.
kaiyuan
sanfa
pharmace
                house                                                     602,477.88      240,000.00
utical
trade co.,
ltd.
yunnan
jianshui
county
                house                                                    1,552,123.81                     15,144.50
xingda
medicine
co., ltd.
chuxiong
jiayuan         equip
medicine        ment
co., ltd.
              explanations on lease between related parties: none
              (4) related party guarantees: none
              (5) borrowings with related parties
                                                                                                                               unit: rmb
                    related party          borrowing amount          commencement date              due date               description
               borrowing
               entity a                           21,800,000.00     june 10, 2021           june 10, 2024
               entity b                           20,000,000.00     september 10, 2021      september 10, 2024
               entity c                           13,000,000.00     august 13, 2021         august 13, 2024
               loans
              (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 paid to key management
               personnel
              (8) other related party transactions: none
              (1) receivables
                                                                                                                      unit: rmb
                                                              closing balance                              opening balance
   project name             related party                                provision for bad                           provision for bad
                                                     book balance                               book balance
                                                                               debts                                       debts
                    shanghai pharmaceuticals
accounts
                    holding co., ltd and its           33,705,935.43          1,685,296.77           20,885,033.46           974,051.40
receivable
                    subsidiaries
accounts            lijiang changgengming
receivable          trading co., ltd.
                    kaiyuan sanfa
accounts
                    pharmaceutical trade co.,            200,214.52              60,064.36             200,214.52             60,064.36
receivable
                    ltd.
accounts            yunnan baoshan medicine
receivable          co., ltd.
accounts
                    kpc pharmaceuticals, inc             387,209.68              19,360.48
receivable
accounts            kunming hongyun hospital
receivable          co., ltd.
                    beijing jingji chenggong
other receivables                                       2,360,000.00          1,416,000.00            2,360,000.00        1,416,000.00
                    sports brokerage co., ltd.
                    yunnan baiyao chinese
other receivables   herbal medicine technology           179,626.46             158,762.90             177,922.32            111,723.90
                    co., ltd.
other receivables   cao liangming                        133,368.00              40,010.40             133,368.00             40,010.40
                    hefei juyinzhai health
other receivables                                           4,283.45              3,770.07                4,283.45             2,985.04
                    technology co., ltd.
other receivables   zhang sulei                             1,432.00                429.60                1,432.00              429.60
                    lijiang changgengming
other receivables                                           5,107.85                255.39
                    trading co., ltd.
dividends           shanghai pharmaceuticals
receivable          holding co., ltd.
                    jiangsu yuyue science &
prepayment          technology development                                                            2,074,165.10
                    co., ltd and its subsidiaries
                    qiubei county wanhe
prepayment                                                                                              72,206.41
                    pharmaceutical co., ltd.
                    shanghai pharmaceuticals
prepayment          holding co., ltd and its            1,537,110.55                                   645,917.73
                    subsidiaries
                    shanghai pharmaceuticals
notes receivable    holding co., ltd and its            4,048,781.51                                  1,212,677.73
                    subsidiaries
accounts            shanghai pharmaceuticals
receivable          holding co., ltd and its           21,215,027.46                                 12,229,069.00
financing           subsidiaries
accounts
                    tibet jiushi zhihe marketing
receivable                                             23,540,000.00                                 10,000,000.00
                    co., ltd.
financing
   (2) payables
                                                                                                                      unit: rmb
                                                                    book balance at the end of the    book balance at the beginning
     project name                    related party
                                                                          reporting period               of the reporting period
    accounts        shanghai pharmaceuticals holding co. ltd and                   77,578,407.89                     76,496,404.37
payable          its subsidiaries
accounts         teh-ho canned food company and its
payable          subsidiaries
accounts         yunnan pharmaceutical ruiyang shenhua
payable          technology co., ltd.
accounts
                 yunnan renjiu technology co., ltd.                             0.30                      10,471.90
payable
accounts
                 chuxiong jiayuan medicine co., ltd.                        4,762.46                       4,762.46
payable
accounts         beijing jingji chenggong sports brokerage
payable          co., ltd.
accounts         yunnan drug technology development
payable          operation co., ltd.
accounts         jiangsu yuyue science & technology
payable          development co., ltd. and its subsidiaries
accounts
                 mb packaging                                           1,322,073.31
payable
notes payable    yunnan renjiu technology co., ltd.                   10,391,748.76                   16,989,446.48
                 jiangsu yuwell technology development co.,
notes payable                                                           2,307,194.20                   8,653,145.32
                 ltd. and its subsidiaries
                 shanghai pharmaceuticals holding co. ltd and
notes payable                                                                                          2,690,480.00
                 its subsidiaries
                 beijing jingji chenggong sports brokerage
other payables                                                           798,000.00                      798,000.00
                 co., ltd.
other payables   qiubei county wanhe pharmaceutical co., ltd.            570,000.00                      630,000.00
                 shanghai pharmaceuticals holding co., ltd
other payables                                                                                            70,000.00
                 and its subsidiaries
other payables   chuxiong jiayuan medicine co., ltd.                          604.80                         604.80
other payables   kunming jinkuan commerce & trade co., ltd.                60,000.00
                 state-owned assets supervision and
dividends        administration commission of yunnan
payable          provincial people’s government, new huadu
                 industrial group co., ltd.
dividends        kunming nuo’an enterprise management co.,
payable          ltd.
dividends
                 dali hongxu trading co. ltd                             784,161.64
payable
dividends
                 diqing xingjian trading co., ltd.                       288,542.05
payable
dividends
                 qiubei county wanhe pharmaceutical co., ltd.           1,388,255.99
payable
dividends
                 yunnan baoshan medicine co., ltd.                      4,276,038.78
payable
dividends        yunnan jianshui county xingda medicine co.,
payable          ltd.
contractual      shanghai pharmaceuticals holding co. ltd and
liabilities      its subsidiaries
contractual
                 tibet jiushi zhihe marketing co., ltd.                 6,729,155.30                   3,061,507.53
liabilities
contractual
                 kunming jinkuan commerce & trade co., ltd.           10,649,636.38                   15,714,893.18
liabilities
contractual
                 yunnan baoshan medicine co., ltd.                       483,008.06
liabilities
contractual
                 hefei qifu jupu health technology co., ltd.               30,270.00
liabilities
contractual      beijing jinjianqiao technology culture co.,
liabilities      ltd.
non-current
liabilities due   yeig power assembly park development co.,
within one        ltd.
year
lease             yeig power assembly park development co.,
liabilities       ltd.
xiii. share-based payment
□applicable not applicable
□applicable not applicable
□applicable not applicable
xiv. commitment and contingencies
(1) significant contingencies on the balance sheet date
      in november 2017, the company issued the announcement on the investment and establishment of ppp
project companies by wholly-owned subsidiaries and the provision of guarantees for them. according to the
announcement, yunnan provincial health and family planning commission was authorized by yunnan
provincial people’s government to serve as the project implementation agency of the chenggong hospital ppp
project (phase i project) of the first affiliated hospital of kunming medical university, and the first affiliated
hospital of kunming medical university was authorized to be the representative of the government, to invest
and hold shares on behalf of the government, and jointly establish yunnan yuncheng hospital management co.,
ltd (the “project company”) with social capital. yunnan pharma, a wholly-owned subsidiary of the company,
and yunnan haopy pharmaceutical sales co., ltd, a private capital, formed a consortium to bid for the project,
and finally won the bid. according to the requirements of the procurement documents, yunnan pharma shall
invest rmb 100,000 in the project company in cash, with an equity ratio of 10%. the consortium shall
undertake joint and several guarantee liability for the ppp project debt of the project company for a period of
subsidiary of the company
     ① litigation of chuxiong linxin mushroom developing co., ltd, against yunnan baiyao group
traditional chinese medicine resources co., ltd, a subsidiary of the company, for contract disputes
     on october 9, 2021, yunnan baiyao group traditional chinese medicine resources co., ltd, a subsidiary
of the company, received the civil judgment numbered (2021) yun min zhong 1007 of the higher people’s
court of yunnan province. on the litigation of chuxiong linxin mushroom developing co., ltd, against
yunnan baiyao group traditional chinese medicine resources co., ltd for contract disputes, the higher
people’s court of yunnan province made the following judgment: within 10 days after the judgment takes
effect, yunnan baiyao group traditional chinese medicine resources co., ltd shall pay rmb 29,789,443.69
due to the plaintiff chuxiong linxin mushroom developing co., ltd, as well as the interest calculated based on
the payment of rmb 24,617,671.59 owed by yunnan baiyao group traditional chinese medicine resources
co., ltd to linxin company and the interest rate of the loan interest rate issued by the people’s bank of china
for the period from april 10, 2018 to august 19, 2019, and the interest rate of the loan prime rate published by
the national interbank funding center for the period from august 20, 2019 to april 19, 2020, and the interest
calculated based on the payment of rmb 29,789,443.69 owed by yunnan baiyao group traditional chinese
medicine resources co., ltd to linxin company and the interest rate of loan prime rate (lpr) published by
the national interbank funding center for the period from april 20, 2020 until the date of payment in full.
     ② litigation of yunnan baiyao group traditional chinese medicine resources co., ltd, a subsidiary of
the company, against chuxiong linxin mushroom developing co., ltd for contract disputes
     on july 2, 2021, yunnan baiyao group traditional chinese medicine resources co., ltd, a subsidiary of
the company, received the civil judgment (2021) yun min zhong no. 506 of the higher people’s court of
yunnan province. the second instance judgment rejected the appeal of linxin company and upheld the original
judgment (according to the civil judgment (2020) yun 01 min chu no. 2306 made by the kunming
intermediate people’s court on october 20, 2020: within 10 days, linxin company shall pay the unrecovered
loss of rmb 29,483,588.1 and the tax refund loss of rmb 4,960,807.42 to yunnan baiyao group traditional
chinese medicine resources co., ltd; as well as the interest calculated based on the unreturned losses and tax
refund losses and the interest rate of the loan prime rate published by the national interbank funding center
for the period from may 14, 2020 until the date of payment in full. later, linxin company filed an application
for retrial, and the supreme people’s court made civil ruling (2021) zui gao fa min shen no.7351 on
december 17, 2021, ruling to reject linxin company’s application for retrial.
     in respect of the above two cases, yunnan baiyao group traditional chinese medicine resources co., ltd
served the notice of debt set-off by notarization on november 30, 2022, and contacted the enforcement court to
offset the debts owed by the two parties. after the set-off of debts between the parties, in accordance with the
contents of the civil judgments, linxin company shall also pay the unrecovered loss of rmb 2,876,484.81 and
the interest calculated on the basis of the said unrecovered loss from the date of set-off in accordance with the
interest rate of the loan prime rate published by the national interbank funding center, and linxin company
shall indemnify yunnan baiyao group traditional chinese medicine resources co., ltd for the legal costs of
rmb 34,332.00.
(2) where the company had no significant contingencies to disclose, explanation is also required
the company had no significant contingencies to disclose.
xv. events subsequent to the balance sheet date
xvi. other significant events
(1) retrospective restatement method: none
(2) prospective application method: none
(1) exchange of non-monetary assets: none
(2) exchange of other assets: none
     (1) in accordance with the trial measures for enterprise annuity and trial measures for enterprise
annuity fund management of the ministry of labor and social security, as well as the letter yun lao she han
[2006] no. 267 of department of labor and social security of yunnan province, the company was approved to
establish an enterprise annuity. the investment manager of the enterprise annuity fund is fullgoal fund
management co., ltd., and the trustee of the enterprise annuity fund is china merchants bank co., ltd. the
enterprise contribution shall be paid annually at 5-8.33% of the total salary of the employees of the company in
the previous year, and the individual contribution of the employees shall be paid at 10% of the unit contribution.
the individual contribution shall be collected and paid by the company from the employee’s salary.
     (2) according to the replies of yunnan provincial department of human resources and social security
(yun ren she letter [2009] no.79) and kunming municipal labor and social security bureau (kun lao she
han [2008] no.204) on the enterprise annuity implementation plan of yunnan pharma, yunnan pharma, a
subsidiary of the company, was approved to establish an enterprise annuity. the investment manager of the
enterprise annuity fund is ping an annuity insurance company of china, ltd, and the trustee of the enterprise
annuity fund is china merchants bank co., ltd. according to the plan, the enterprise contribution shall be paid
annually at no more than 8.33% of the total salary of the employees of yunnan pharma in the previous year, and
the individual contribution of the employees shall be paid at 10% of the unit contribution.
     (3) according to the replies of yunnan provincial department of human resources and social security
(yun ren she letter [2009] no.79) and kunming municipal labor and social security bureau (kun ren she
han [2016] no.21) on the enterprise annuity implementation plan of yunnan institute of materia medica,
yunnan institute of materia medica, a subsidiary of the company, was approved to establish an enterprise
annuity. the investment manager of the enterprise annuity fund is ping an annuity insurance company of
china, ltd, and the trustee of the enterprise annuity fund is china construction bank corporation. according to
the plan, the enterprise contribution shall be paid annually at no more than 5% of the total salary of the
employees of yunnan institute of materia medica in the previous year, and the individual contribution of the
employees shall be paid at 10% of the unit contribution.
     (4) in accordance with the measures on enterprise annuity (decree no. 36 of ministry of human
resources and social security), measures on the management of enterprise annuity fund (decree no. 11 of
ministry of human resources and social security) and other relevant provisions as well as the reply on filing
of enterprise annuity plan of yunnan baiyao group wuxi pharmaceutical co., ltd issued by wuxi human
resources and social security bureau (xi ren she fu [2018] no.27), yunnan baiyao group wuxi
pharmaceutical co., ltd, a subsidiary of the company, was approved to establish an enterprise annuity. the
investment manager of the enterprise annuity fund is ping an annuity insurance company of china, ltd, and
the trustee of the enterprise annuity fund is china construction bank corporation. according to the plan, the
enterprise contribution shall be paid annually at no more than 5% of the total salary of the employees of yunnan
baiyao group wuxi pharmaceutical co., ltd in the previous year, and the individual contribution of the
employees shall be paid at 10% of the unit contribution.
     there was no significant change in the contribution ratio of enterprise annuity during the reporting period.
(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
xvii. notes to major items of financial statements of the parent company
        (1) disclosure of accounts receivable by type
                                                                                                                                                                                                  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 for
bad debts on portfolio basis
  including:
receivables from external customers           76,273,480.13        5.11%     18,411,300.17        24.14%        57,862,179.96       78,444,316.75         7.88%       18,016,130.77         22.97%     60,428,185.98
receivables from related parties           1,417,532,532.69      94.89%                                      1,417,532,532.69     917,420,538.82         92.12%                                       917,420,538.82
  including:
total                                      1,493,806,012.82      100.00%     18,411,300.17                   1,475,394,712.65     995,864,855.57        100.00%       18,016,130.77                   977,848,724.80
        if provision was made for bad debts of accounts receivable in accordance with the general expected credit loss model, please disclose relevant information of provision for bad debts referring
        to the disclosure of other receivables:
        □applicable not applicable
 disclosure by aging
                                                                                                                           unit: rmb
                               aging                                                           closing balance
  within 1 year (inclusive of 1 year)                                                                                 1,473,867,801.32
  above 3 years                                                                                                          13,514,165.06
  total                                                                                                               1,493,806,012.82
 (2) provision for bad debts accrued, recovered or reversed during the reporting period
 provision for bad debts during the reporting period:
                                                                                                                           unit: rmb
                                                                change in the current period
                          opening
        category                                               recovery or                                             closing balance
                          balance           provision                              write-off              others
                                                                reversal
  accounts
  receivable with
  provision for
  bad debts on         18,016,130.77          395,169.40                                                                 18,411,300.17
  portfolio basis
  by credit risk
  characteristics
  total                18,016,130.77          395,169.40                                                                 18,411,300.17
 among them, the important amount of recovery or reversal of provision for bad debt for the period: none
 (3) actual write-off of accounts receivable for the period: none
 (4) top five customers with closing balance of accounts receivable summarized by debtor
                                                                                                                           unit: rmb
                                                                         percentage of total of closing
                                        closing balance of accounts                                          closing balance of provision
            entity name                                                      balance of accounts
                                                receivable                                                           for bad debt
                                                                                  receivable
yunnan pharmaceutical co., ltd.                         672,130,896.84                          44.99%
yunnan baiyao group health
products co., ltd.
yunnan baiyao group traditional
chinese medicine resources co.,                         131,064,017.03                           8.77%
ltd.
yunnan baiyao group wuxi
pharmaceutical co., ltd.
yunnan baiyao group lijiang
pharmaceutical co., ltd.
total                                              1,408,641,571.83                             94.29%
(5) accounts receivable derecognized due to the transfer of financial assets: none
(6) amount of assets and liabilities generated by transferring accounts receivable and continuing to be
involved: none
                                                                                                                  unit: rmb
                     item                               closing balance                           opening balance
 dividends receivable                                                406,032,345.56
 other receivables                                                 3,784,818,365.86                          3,123,928,450.54
 total                                                             4,190,850,711.42                          3,123,928,450.54
(1) interest receivable
□applicable not applicable
(2) dividends receivable
                                                                                                                  unit: rmb
            project (or investee)                       closing balance                           opening balance
 shanghai pharmaceuticals holding co.
 ltd.
 total                                                               406,032,345.56
□applicable not applicable
(3) other receivables
                                                                                                                  unit: rmb
                                            book balance at the end of the reporting    book balance at the beginning of the
            nature of payment
                                                            period                               reporting period
 related party within consolidation scope                          3,911,806,246.95                          3,258,095,819.76
 petty cash                                                           15,576,217.04                              9,512,706.51
 deposits and guarantees                                              11,792,390.02                              9,155,501.26
 total                                                             3,939,174,854.01                          3,276,764,027.53
                                                                                                                      unit: rmb
                                       phase i                  phase ii                  phase iii
 provision for bad debts     expected credit losses         lifetime ecl (not           lifetime ecl                 total
                             for the next 12 months          credit-impaired)         (credit-impaired)
 balance as of january
 balance as of january
 period
 current provision                       1,520,911.16                                                                 1,520,911.16
 balance as of june 30,
changes in book balance with significant changes in loss reserves in the current period
□applicable not applicable
disclosure by aging
                                                                                                                      unit: rmb
                              aging                                                            closing balance
 within 1 year (inclusive of 1 year)                                                                              3,927,666,183.85
 above 3 years                                                                                                        8,752,411.93
 total                                                                                                            3,939,174,854.01
provision for bad debts during the reporting period:
                                                                                                                      unit: rmb
                                                                change in the current period
                          opening
     category                                                 recovery or                                          closing balance
                          balance            provision                            write-off            others
                                                               reversal
 other accounts
 receivable with
 provision for
 bad debts on         152,835,576.99         1,520,911.16                                                           154,356,488.15
 portfolio basis
 by credit risk
 characteristics
 total                152,835,576.99         1,520,911.16                                                           154,356,488.15
among them, the important amount of reverse or recovery of provision for bad debt for the period: none
                                                                                                                                unit: rmb
                                                                                                       percentage of total
                                                                                                                             closing balance of
                                                                                                       of closing balance
               entity name        nature of payment       closing balance             aging                                  provision for bad
                                                                                                             of other
                                                                                                                                    debt
                                                                                                           receivables
          yunnan baiyao          related party
                                                                              within 1 year, 1-2
          group traditional      within
          chinese medicine       consolidation
                                                                              above 3 years
          resources co., ltd.    scope
                                 related party
          yunnan baiyao
                                 within                                       within 1 year, 1-2
          group (hainan) co.,                                828,502,242.92                                       21.03%
                                 consolidation                                years
          ltd.
                                 scope
                                 related party
          shanghai yijian        within                                       within 1 year, 1-2
          industrial co., ltd.   consolidation                                years
                                 scope
                                 related party
                                                                              within 1 year, 1-2
          yunnan baiyao          within
          teayield co., ltd.     consolidation
                                                                              above 3 years
                                 scope
                                 related party
          yunnan yunyao
                                 within                                       within 1 year, 1-2
          flavor and fragrance                               214,082,197.63                                        5.43%
                                 consolidation                                years
          co., ltd.
                                 scope
          total                                           3,109,266,084.84                                        78.93%        145,974,692.50
                                                                                                                                unit: rmb
                                           closing balance                                                   opening balance
        item                                 impairment                                                        impairment
                       book balance                                 book value          book balance                                 book value
                                              provision                                                         provision
investments in
subsidiaries
investments in
associates and       11,350,412,535.41                          11,350,412,535.41     11,334,638,735.04                          11,334,638,735.04
joint ventures
total                13,915,507,986.33       244,474,941.95     13,671,033,044.38     13,799,734,185.96        244,474,941.95    13,555,259,244.01
         (1) investments in subsidiaries
                                                                                                                        unit: rmb
                                                    increase and decrease in the current period
                                                                                                                              closing balance
                      opening balance                                        provision                     closing balance
        investee                            additional       decreased                                                         of impairment
                       (book value)                                             for               others    (book value)
                                            investment       investment                                                          provision
                                                                            impairment
yunnan baiyao
group traditional
chinese medicine
resources co., ltd.
yunnan baiyao
group medicine
e-commerce co.,
ltd.
yunnan baiyao
group wuxi
pharmaceutical co.,
ltd.
yunnan baiyao
group dali
pharmaceutical co.,
ltd.
yunnan baiyao
group health            168,297,661.03                                                                       168,297,661.03
products co., ltd.
yunnan
pharmaceutical co.,     765,533,647.30                                                                       765,533,647.30
ltd.
yunnan institute of
materia medica
yunnan baiyao
holding investment      193,992,837.67                                                                       193,992,837.67
co., ltd.
yunnan baiyao
teayield co., ltd.
yunnan baiyao
group (hainan) co.,     457,198,438.74                                                                       457,198,438.74
ltd.
yunnan baiyao
group shanghai co.       11,350,000.00                                                                        11,350,000.00
ltd.
yunnan baiyao
group medical
technology hefei
co., ltd.
shanghai yunzhen
medical technology      100,572,858.37     100,000,000.00                                                    200,572,858.37
co., ltd.
ban loong holdings
ltd.
total                  2,220,620,508.97    100,000,000.00                                                  2,320,620,508.97    244,474,941.95
              (2) investments in associates and joint ventures
                                                                                                                                                                                                     unit: rmb
                                                                                                          increase and decrease in the current period
                                                                                                                                                                                                                       closing
                                            opening balance                               profits and losses      adjustment of                         cash dividends                         closing balance        balance of
                    investee                                                                                                                                             provision
                                             (book value)       additional   decreased     on investments             other           change in other      or profit                             (book value)         impairment
                                                                                                                                                                            for       others
                                                                investment   investment   recognized under       comprehensive            equities      declared to be                                                provision
                                                                                                                                                                         impairment
                                                                                          the equity method          income                                 issued
i. joint ventures
ii. associates
shanghai pharmaceuticals holding co.
ltd.
yunnan tianzheng testing technology
co., ltd.
yunnan      baiyao       chinese   herbal
medicine technology co., ltd.
subtotal                                    11,334,638,735.04                               438,812,247.13         -22,847,452.34        5,841,351.14   406,032,345.56                         11,350,412,535.41
total                                       11,334,638,735.04                               438,812,247.13         -22,847,452.34        5,841,351.14   406,032,345.56                         11,350,412,535.41
              (3) other explanations: none
                                                                                                                              unit: rmb
                                            amount for the current period                       amount for the previous period
           item
                                      revenue                         cost                  revenue                          cost
 principal businesses                4,029,037,887.33             1,837,757,275.70         3,561,427,768.32               1,554,347,170.55
 other businesses                       41,638,215.70                 49,750,053.44             60,533,784.32               39,680,239.07
 total                               4,070,676,103.03             1,887,507,329.14         3,621,961,552.64               1,594,027,409.62
income related information:
                                                                                                                              unit: rmb
                  contract classification                drug sales              tcm resources                    total
          commodity type                                 3,983,284,860.36             45,753,026.97             4,029,037,887.33
          including:
          industry sales income                          3,983,284,860.36                                       3,983,284,860.36
          commercial sales income                                                     45,753,026.97                45,753,026.97
          classified by operating areas                  3,983,284,860.36             45,753,026.97             4,029,037,887.33
            including:
          in yunnan province                               482,846,422.64             45,753,026.97              528,599,449.61
          outside yunnan province
          (excluding overseas)
          overseas                                           5,180,121.09                                           5,180,121.09
          total                                          3,983,284,860.36             45,753,026.97             4,029,037,887.33
information related to performance obligations:
the main business of the company and its subsidiaries is the sale of pharmaceuticals, medicinal materials and other commodities.
after the products are delivered to the customer and it is confirmed by the customer that it has obtained the control of the products,
the realization of revenue will be recognized. there is no significant financing component to the contract, some contracts have
discount clauses, and there is usually no similar obligation for the company to return the relevant amount to the customer.
information related to the transaction price allocated to the remaining performance obligations:
the amount of income corresponding to the performance obligations that have been contracted but not yet performed or not yet
completed at the end of the reporting period is rmb 0.
other explanations: none
                                                                                                                              unit: rmb
                        item                               amount for the current period             amount for the previous period
 gains on long-term equity investments
 subject to accounting with equity method
 investment income on trading financial
 assets held for trading during holding period
 investment income from disposal of
                                                                                -3,681,651.93                               75,711,736.30
 financial assets held for trading
 investment income from other non-current
 financial assets during the holding period
 others                                                                         2,014,422.25                               123,479,345.99
 total                                                                        446,784,505.53                               622,410,401.31
xviii. supplementary information
applicable □not applicable
                                                                                                                            unit: rmb
                                              item                                                        amount           description
 profits or losses from disposal of non-current assets (including the write-off for the accrued
 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               37,822,875.91
 policies, and consecutively received by a standard quota or quantity)
 profits and losses from changes in fair value of financial assets and liabilities held for
 trading, and investment income from disposal of financial assets and liabilities for trading
 and financial assets available for sale, except for effective hedging operations related to
 regular businesses of the company
 non-operating revenue and expenses other than the above                                                 -3,275,515.13
 less: amount affected by the income tax                                                             19,426,852.91
      amount affected by minority interests (after tax)                                                    234,377.97
 total                                                                                               90,955,829.40              --
other profits and losses satisfying the definition of non-recurring profits and losses:
□applicable not applicable
there are no other profits and losses of the company satisfying the definition of non-recurring profits and losses.
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
                                                                                             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 the                                7.17%                                1.58                               1.58
 company
 net profits attributable to
 ordinary shareholders of the
 company after deducting                                     6.94%                                1.53                               1.53
 non-recurring profits and
 losses
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 adjustment is made for data audited by an overseas audit institution, the name of the
institution shall be provided
                                                                     yunnan baiyao group co., ltd.
                                                                                      board of directors
                                                                                        august 28, 2023