2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
Yunnan Baiyao Group Co., Ltd.
Interim Report 2024
August 2024
2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
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 center (accounting supervisor), hereby
declare that they warrant the truthfulness, accuracy, and completeness of the financial
statements in this Interim Report.
All directors of the Company attended the Board meeting in respect of considering
and approving this Interim Report.
The Company kindly requests investors to read through this Interim Report and
pay special attention to “X. Risks and Countermeasures” in the “Section III
Management Discussion and Analysis.” Investors are advised to pay attention to
investment risks.
The Company has no plan to distribute cash dividends and bonus shares or convert
capital reserves into share capital during the reporting period.
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.
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2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
Contents
Section I Important Notes, Contents, and Definitions ............................................. 1
Section II Company Profile and Key Financial Indicators ..................................... 5
Section III Management Discussion and Analysis.................................................... 8
Section IV Corporate Governance ........................................................................... 38
Section V Environmental and Social Responsibilities ........................................... 40
Section VI Significant Events ................................................................................... 49
Section VII Changes in Shareholdings and Particulars about Shareholders ...... 73
Section VIII Preference Shares ................................................................................ 81
Section IX Bonds ....................................................................................................... 82
Section X Financial Statements ................................................................................ 84
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2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
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.
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2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
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 Provincial
SASAC of Yunnan Province
People’s Government
CSRC Yunnan Bureau Yunnan Bureau of China Securities Regulatory Commission
The Company / Yunnan
Yunnan Baiyao Group Co., Ltd.
Baiyao
New Huadu New Huadu Industrial Group Co., Ltd.
Yunnan Investment Holdings
Yunnan Provincial Investment Holdings Group Co., Ltd.
Group
Yunnan State-owned Equity
Operation Management Yunnan State-owned Equity Operation Management Co., Ltd.
Company
Yunnan Hehe Yunnan Hehe (Group) Co., Ltd.
Jiangsu Yuyue Jiangsu Yuyue Science & Technology Development Co., Ltd.
Baiyao Holdings Yunnan Baiyao Holdings Co., Ltd.
YNBY International / Ban
YNBY International Limited (Formerly Ban Loong Holdings Limited)
Loong Holdings
Shanghai Pharma Shanghai Pharmaceuticals Holding 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 all
Merger and overall listing shareholders of Baiyao Holdings, including SASAC of Yunnan Province, New Huadu and
Jiangsu Yuyue
Yunnan Pharma Yunnan Pharmaceutical Co., Ltd.
OTC Over-the-counter drug
Reporting period The period from January 1, 2024 to June 30, 2024
RMB, RMB’0,000, Expressed in the Chinese currency of Renminbi, expressed in tens of thousands
RMB’00,000,000 of Renminbi, expressed in hundreds of millions of Renminbi
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2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
Section II Company Profile and Key Financial Indicators
I. Company Profile
Stock Abbreviation Yunnan Baiyao Stock Code 000538
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
云南白药
any)
Company Name in English (If any) YUNNAN BAIYAO GROUP CO., LTD
Company Abbreviation in English (If
YUNNAN BAIYAO
any)
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 Li Mengjue
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
1. Contact information of the Company
Whether the Company’s registered address, office address, postal code, website, and e-mail address have changed during the reporting
period
□ Applicable Not applicable
There was no change in the Company’s registered address, office address, postal code, website, or e-mail address
during the reporting period. For more information, please refer to the 2023 Annual Report.
2. Information disclosure and location
Whether the information disclosure and location have changed during the reporting period
□ Applicable Not applicable
There was no change in the stock exchange website, media outlets, and their websites where the Company
disclosed the Interim Report, or the location where the Interim Report was prepared and placed during the reporting
period. For more information, please refer to the 2023 Annual Report.
3. Other information
Whether other information has changed during the reporting period
□ Applicable Not applicable
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2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
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 same period of the the reporting period
The reporting period
previous year compared with the same
period of the previous year
Operating revenue (RMB) 20,455,286,287.52 20,309,372,850.07 0.72%
Net profit attributable to shareholders of the
3,188,829,903.10 2,828,011,615.30 12.76%
listed company (RMB)
Net profit attributable to shareholders of the
listed company after deducting non- 3,135,015,340.93 2,737,055,785.90 14.54%
recurring profits and losses (RMB)
Net cash flows from operating activities
3,261,617,391.99 2,251,951,370.10 44.84%
(RMB)
Basic earnings per share (RMB/share) 1.79 1.58 13.29%
Diluted earnings per share (RMB/share) 1.79 1.58 13.29%
Up 0.76 percentage
Weighted average ROE 7.93% 7.17%
points
Increase/decrease at the end
End of the reporting of the reporting period
End of the previous year
period compared with the end of
the previous year
Total assets (RMB) 54,367,545,232.24 53,784,293,183.93 1.08%
Net assets attributable to shareholders of
39,369,278,205.03 39,879,122,031.51 -1.28%
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
1,784,262,603
disclosure (shares)
Fully diluted earnings per share calculated under the latest share capital
Preferred stock dividends paid 0.00
Interest paid on perpetual bonds (RMB) 0.00
Fully diluted earnings per share calculated under the latest share capital
1.7872
(RMB/share)
V. Differences in Accounting Data under Chinese Accounting Standards (CAS) and Overseas
Accounting Standards
1. Differences in the net profits and net assets in financial statements disclosed respectively under
International Financial Reporting Standards (IFRS) and CAS
□ Applicable Not applicable
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2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
During the reporting period, there was no difference in net profits and net assets in financial statements disclosed
respectively under IFRS and CAS.
2. Differences in the net profits and net assets in financial statements disclosed respectively under overseas
accounting standards and CAS
□ Applicable Not applicable
During the reporting period, there was no difference in the net profits and net assets in financial statements
disclosed respectively under overseas accounting standards and CAS.
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
-1,658,086.88
impairment of assets)
Government subsidies included in the current profits and losses (excluding the government
subsidies closely related to regular businesses of the Company, in line with national policies, and 34,220,746.37
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
-4,964,027.66
financial assets available for sale, except for effective hedging operations related to regular
businesses of the Company
Profits and losses arising from entrusted investment or asset management 3,003,994.06
Non-operating revenue and expenses other than the above -257,970.80
Other profits and losses satisfying the definition of non-recurring profits and losses 27,441,539.97
Less: Amount affected by the income tax 3,960,096.44
Amount affected by minority interests (after tax) 11,536.45
Total 53,814,562.17
Other profits and losses satisfying the definition of non-recurring profits and losses:
Applicable □Not applicable
Other non-recurring profits and losses that meet the definition of non-recurring profits and losses mainly include
other non-recurring profits and losses such as interest on fixed deposits and value added tax credit.
Note for the definition of non-recurring profits and losses set out in the No.1 Explanatory Announcement on Information Disclosure
for Companies Offering Their Securities to the Public - Non-recurring Profits and Losses, as recurring profits and losses
□Applicable Not applicable
The Company does not define any non-recurring profits and losses set out in the No.1 Explanatory
Announcement on Information Disclosure for Companies Offering Their Securities to the Public - Non-recurring
Profits and Losses as recurring profits and losses.
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2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
Section III Management Discussion and Analysis
I. Principal Businesses of the Company during the Reporting Period
(I) Overview
1. Industry landscape and development trends
The Central Committee of the Chinese Communist Party (“CPC”) and the State Council attach great
importance to the development of TCM, positioning the inheritance and innovation of TCM as an important aspect
of the socialist cause with Chinese characteristics in the new era. The report to the 20th CPC National Congress has
explicitly stated that we should “promote the inheritance and innovation of TCM.” The Third Plenary Session of
the 20th Central Committee of the Communist Party of China highlighted key strategies for the high-quality
development in pharmaceutical and health sectors, outlined new deployments, tasks, and requirements for
comprehensively deepening TCM reforms, and proposed to “perfect the mechanism for the inheritance and
innovation of TCM,” marking the start of comprehensively deepening TCM reforms.
In the first half of 2024, numerous policies were introduced to support the TCM industry in China. Regarding
the development of the TCM industry, the government work report requires “promoting the inheritance and
innovation of TCM and strengthening the construction of TCM advantageous specialties,” which gives the industry
a new mission in the new era to carry forward the inheritance and advance innovation. The 2024 Key Tasks for
Deepening the Reform of Pharmaceutical Health Systems issued by the General Office of the State Council proposed
that we should “advance the construction of national TCM inheritance and innovation center and other institutions,
support the presence of leading TCM enterprises across the entire industry chain and accelerate the establishment
of the traceability system across the entire TCM industry chain,” which provides guidelines and institutional
guarantees for the construction of the entire industry chain in the TCM industry. The Special Regulations on the
Management of Traditional Chinese Medicine Standards issued by the National Medical Products Administration
(NMPA) marked a crucial step forward for this industry towards standardized and normalized management. This
series of top-level policies, issued consecutively, clarifies the pathways for the healthy, sustainable, and high-quality
development of the TCM industry, thus leading to increased confidence in its future prospects.
Meanwhile, China has increasingly supported the innovative drug industry through various policies. The State
Council of China has recently approved the Implementation Plan for Supporting the Development of Innovative
Drugs Across the Entire Value Chain. This plan aims to bolster innovative drug development in areas such as R&D,
transformation, approval, production, usage, and reimbursement, heralding new development opportunities for the
industry.
From a market perspective, with the acceleration of population aging, TCM offers unique advantages such as
disease prevention, early intervention, and natural ingredients, effectively supporting the demand for chronic disease
management. The market prospects are broad and promising.
Supported by national policies, the value of efficient integration and integrated construction across the entire
industry chain in the TCM industry is further highlighted, which is increasingly becoming the key for enterprises in
this industry to build core competitiveness in the future. As social demands shift from “disease treatment” to “health-
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2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
focused” products and services, the TCM industry is becoming more innovative and consumer-oriented. The
integration of the entire industry chain—including TCM materials, branded TCM products, TCM consumer goods,
and retail pharmacy terminals—is set to create a new business model, propelling the industry into a new era of
development.
In the first half of 2024, the consumer goods industry experienced low-level growth, with consumer confidence
still needs to be restored. Relevant data shows that in terms of consumption behaviors and preferences, on one hand,
consumers became more rational and cautious with their purchasing decisions due to the slowdown in the growth
of residents’ disposable income. On the other hand, consumption trends continued to rise. Consumers sought cost-
effective products and product experience and were willing to pay a premium for high quality. In terms of the
consumer market, consumers’ reliance on online shopping has further increased, and online retail markets continued
to exhibit strong growth momentum. Benefited from the presence of e-commerce business into lower-tier markets
and improved infrastructure, the lower-tier consumer markets also showed a substantial growth potential. In the
context of a slow recovery in the overall consumer goods sector, the market increasingly demands that businesses
maintain sharp insights and innovation, and implement more refined management and empowerment strategies for
channels and endpoints.
2. Industry position
Yunnan Baiyao has 567 drug approvals and 316 varieties, including 222 Chinese patent drugs, including 43
exclusive varieties. The Company has consistently focused on integrating TCM into modern life, explored the
endogenous potential of traditional medical products, responded to the needs of modern life with product innovation
and infused traditional brands and TCM products with renewed vitality, being highly consistent with the national
strategic positioning of “attaching importance to the inheritance and innovation of TCM.” 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 terms of personal care products, the
Company has successfully combined core ingredients of Yunnan Baiyao 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, personal care products, and healthcare food. This move enables the Company’s evolution from a
TCM manufacturing enterprise to a modern, Big Health-oriented entity.
In June 2024, BrandFinance2024 - Ranking of Global Most Valuable and Strongest Pharma, Medical Device,
and Healthcare Services Brands in Value released by Brand Finance, an authoritative international brand valuation
agency, showed that Yunnan Baiyao was shortlisted into the List of Global Top 25 Most Valuable Pharmaceutical
Brands. In July 2024, Yunnan Baiyao was shortlisted into the 2024 Fortune Top 500 Chinese Enterprises List
released by Fortune China for the 15th consecutive year and ranked 385th. In July 2024, Yunnan Baiyao was
shortlisted into 2024 Pharm Exec 50 released by Pharm Exec, an American magazine and ranked 33th. In June 2024,
the list of Top 100 Chinese Pharmaceutical Companies for 2023 was released, with Yunnan Baiyao once again
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2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
ranked among the top 100 Chinese TCM companies, securing the 5th position. In June 2024, Yunnan Baiyao was
included in the “China’s Top 100 ESG Pioneer Listed Companies” list.
3. Product and business
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”). These business groups serve as the foundation for the Company’s production and operations.
Pharmaceutical Business Group focuses on the products of Yunnan Baiyao series, (for example, Yunnan
Baiyao Aerosol, Yunnan Baiyao Plaster, Yunnan Baiyao Woundplast, etc), which are mainly used in the pain
management of traumatology such as hemostasis, pain relief, swelling reduction, and blood stasis elimination. The
branded TCMs with natural characteristics focus on areas such as tonifying Qi and blood, treating colds and flu,
cardiovascular health, gynecology, and pediatrics. The BG is also actively involved in the development of Panax
notoginseng botanical supplements, 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, and actively expands the
realms of oral care and Yangyuanqing anti-hair loss solutions.
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 Group, the BG strives
to develop both B-end (including Panax notoginseng series, branded medicinal materials, raw material extracts)
and C-end (including TCM decoction pieces and healthcare food) products. Moreover, the BG continues to advance
the digitalization, platform-based operation, and integrated management of TCM resource cultivation, while
constantly enhancing the development.
Yunnan Pharma remains steadfast in pursuit of maintaining its leading market share among pharmaceutical
distribution companies in Yunnan Province. It has achieved full coverage in all 16 prefectures and cities of Yunnan
Province, with its channels radiating across major retail chain pharmacies. It also assists governments and medical
institutions in building better management and service systems, providing high-quality and modern pharmaceutical
supply chain service solutions for upstream and downstream customers.
4. Overview of business data
In the first half of 2024, the Company focused on its core businesses, continuously optimizing its business
structure, with contribution to profit from the industrial revenue steadily increasing. During the reporting period,
the Company achieved operating revenue of RMB 20.455 billion, a 0.72% increase compared to the same period
last year. Among this, the proportion of industrial revenue in total operating revenue further rose to 37.41%, an
increase of 0.49 percentage points compared to the previous year; industrial revenue growth rate reached 2.05%;
and the industrial gross profit margin was 67.37%, up 3.10 percentage points year-on-year.
While maintaining steady growth in operating performance, the Company focused on unleashing potential and
enhancing efficiency across the entire value chain, with operational quality and efficiency continuing to improve.
During the reporting period, the Company achieved a net profit attributable to the parent company of RMB 3.189
billion, a 12.76% increase from RMB 2.828 billion in the same period last year, setting a new historical high for the
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period; the weighted average return on net assets was 7.93%, up 0.76 percentage points from the previous year;
basic earnings per share were RMB 1.79, a 13.29% increase year-on-year; net cash flow from operating activities
was RMB 3.262 billion, up 44.84% year-on-year; and management expenses decreased by 4.95% year-on-year. At
the end of the reporting period, the Company’s total assets were RMB 54.368 billion, an increase of 1.08% from
the beginning of the period; and the cash and bank balance were RMB 14.720 billion, up 3.53% from the beginning
of the period.
(II) Review of main tasks and prospects
1. Leading in Party building, strategic orientation, and enhanced management efficiency
(1) Strengthening the leadership in Party building and enhancing the quality and efficiency of Party
building
During the reporting period, the Company deepened its learning and implementation of General Secretary Xi
Jinping’s important expositions on Party building, and promote the development of the Company to a new stage by
strengthening the Party building, gathering strength, increasing momentum, and improving the effectiveness, with
the goal of “leading and ensuring the high-quality development of Yunnan Baiyao by high-quality Party building.”
We will constantly deepen the construction of modern enterprise system with Chinese characteristics, promote the
integration of the Party’s leadership into the entire process and all aspects of corporate governance, focus on
“integration and inclusion,” identify the key areas and focus points of Party building efforts, and lead reform and
development to a higher level of quality through high-quality Party building.
(2) Completed compilation of 2024-2028 Strategic Planning Outline for Yunnan Baiyao Group to clarify
the Company’s strategies
During the reporting period, the Company’s Board of Directors considered and approved 2024-2028 Strategic
Planning Outline for Yunnan Baiyao Group, which establishes a clear, well-defined, and actionable development
strategy for the Company, and continues to refine the specific implementation pathways and methods for the
strategic plan, effectively ensuring and supporting the successful execution of the strategy.
The Company will set the strategic goal of “driving Yunnan Baiyao, a century-old pharmaceutical brand, to
become a leading Chinese and world-class modern pharmaceutical industry group, achieving reasonable growth in
scale, steady improvement in efficiency, and continuous optimization of industrial and product structures for high-
quality development,” steadfastly deepen its roots in the “pharmaceutical” industry, and drive its each business to
focus on its advantageous fields in Big Health industry to constantly enhance its leading industry position. While
continuously enhancing core competencies, the Company is also advancing the development of new business
growth drivers in a scientific, prudent, and effective manner.
In the short term, leveraging a “dual-wheel drive” strategy of internal growth and external expansion, the
Company will strengthen and expand the quality influence of “Big TCM” products along the comprehensive TCM
industry chain; enhance and refine the health and wellness offerings through a focus on efficacious products and
services in personal healthcare; stabilize and improve the new regional distribution channels via market-specific
commercial circulation, and make up for the insufficiency in internal growth by centering on industrial strategic
orientation 1+1>2, to rapidly build a health industry system.
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2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
In the mid-to-long term, the Company will focus on developing Yunnan authentic medicinal resources, produce
excellent TCM products from excellent medicinal materials in Yunnan, and position itself as a “chain leader” in the
high-quality development of Yunnan TCM resources. Focusing on the core products of Baiyao, and leveraging
high-quality Yunnan medicinal materials, the Company aims to become a model for TCM inheritance, innovation,
and development, and the “leading” brand in the comprehensive pain management of traumatology. Benefited from
the functional advantages of Baiyao and authentic regional medicinal resources, the Company will build itself into
the benchmark for new Chinese-style health life philosophy and the “best” partner for quality life and
comprehensive ecological services. The Company will focus on meeting the treatment needs of key disease areas
and establish itself as a new model pharmaceutical enterprise in high-potential, high-value, high-success-rate, and
sustainably premium sectors. Focusing on customers’ health needs, the Company will offer value-driven
pharmaceutical commercial services and strive to become the “leading” enterprise in value-based life and health
services. The Company will also further build a healthy and sustainable industry portfolio system to promote the
achievement of its strategic goals.
(3) Advancement to improve organizational structure and control capabilities
In the first half of 2024, the Company steadily implemented its organizational reforms centered on
“strengthening the front-end, empowering the middle-end, and optimizing the back-end,” driving control model
shifting from financial control to strategical control, and constructing a more focused, streamlined and efficient
organizational structure, with strengthened internal correlation and synergy within the Company, offering a stronger
organizational support for the Company to focus on its principal business, integrate advantageous resources,
strengthen vertical control, and empower control.
Looking ahead, the Company will continue to enhance the Group’s control capabilities. By building a group
control system for “hierarchical classification,” especially the research, production, and sales control system that
supports business development, the Company constantly promotes the core capability building throughout the group.
Moreover, the Company will refine and improve the performance indicator structure system, establish an effective
medium- to long-term incentive system and improve its overall salary incentive mechanism. The Company will also
perform new corporate culture construction to support overall strategic development goals, thus maximizing the
overall value of the Company. The Company will strive to further improve its organization capabilities, and in
response to the latest strategic planning, control positioning, and functional division, the Company will enhance its
organizational system in a scientific and orderly manner to support the implementation of its own strategic goals.
(4) Improvement in both quality and efficiency by focusing on operation excellence across the entire
value chain
In the first half of 2024, the Company further strengthened its budget management, risk control and cost
awareness, and by digital and intelligent empowerment, systematically brought its level of operation across the
entire value chain to a new height, achieving improvement in both quality and efficiency. The Company also
adhered to practically implementing comprehensive budget management to give full play to the value creation
ability of management accounting in enterprise management. By creating a comprehensive strategy-guided budget
management system, the Company aimed to promote the linkage between strategic management and comprehensive
budget, thus achieving strategic organic growth and orderly performance growth. Furthermore, the Company
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2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
continued to perfect its “all-in-one” compliance monitoring system, and further improved its internal control in
systematicity and precision at the institutional level. In addition, the Company further returned to the “essence of
manufacturing”, focusing on the three elements of “quality, cost and efficiency,” and promoting cost reduction and
efficiency improvement to be a long-term systematic work for the Company. From the perspective of the entire
process, the Company cultivated its capabilities to reduce the cost and improve the efficiency across the entire value
chain based on end-to-end process. Also, the Company made efforts to advance the digitalization for each business
segment by mainly focusing on platform operation and management, and from the perspectives of supply chain,
quality management, legal affair management and human resource management, promote the realization of digital
and intelligent management, operation and innovation. In the future, the Company will continue to focus on the
“entire industry chain management synergy and entire value chain efficiency improvement,” further unleash
potential and enhance efficiency, and build up the culture and philosophy of “maximizing the value of the entire
industry chain,” so as to stably and scientifically bring its operation excellence system and capability to a new height
in an orderly manner, and constantly improve its internal growth quality.
2. Focusing on the principal businesses, optimizing the structure, and achieving high-quality
development
(1) Pharmaceutical Business Group
During the reporting period, the principal business income of the Pharmaceutical Business Group reached
RMB 4.069 billion, up 9.6% year on year. The core products of Baiyao series maintained robust growth. The sales
revenue of Yunnan Baiyao Aerosol exceeded RMB 1.2 billion, representing a YOY increase of more than 30%, and
the sales revenue of Yunnan Baiyao Plaster and Yunnan Baiyao Capsule achieved significant growth. Other branded
TCM products showed impressive growth. The sales revenue of Pudilan Anti-inflammatory Tablet surpassed RMB
100 million, with a nearly double-digit growth year-on-year. The sales revenue of Gongxuening Capsule, used for
gynecological inflammation, saw a 36% year-on-year increase. The sales revenue of Baotaikang Granule for
Children and Pain Relief Capsule increased significantly. Botanical supplements also achieved significant growth,
with the sales revenue of Qixuekang Oral Liquid surpassing RMB 100 million, and the sales revenue of Sanqi
Shenfeng Oral Liquid increasing by more than 80% year-on-year.
During the reporting period, the Pharmaceutical Business Group continued to implement the guidelines of
focusing on the principal business, improving quality and efficiency, and promoted various key tasks from academic
and clinical, marketing, channel cultivation, production efficiency and other aspects. In terms of academic and
clinical aspects, a number of clinical studies on the secondary development of Yunnan Baiyao Capsule,
Gongxuening Capsule, Qixuekang Oral Liquid and other core products have been steadily promoted. In terms of
marketing, the Aerosol Campus Basketball Game was launched in Kunming, Shanghai, Changsha and Guangzhou,
with 512 teams participating in the activity. The “Let’s go and play basketball” Douyin topic page recorded view
counts of more than 290 million, and more than 38,000 videos have been submitted for the national mission, with
the accumulated submissions exceeding 32,000. In terms of channel cultivation, the “generic drug for thousands of
households” project was launched offline, and the first-level short channel operation model was built to achieve
extensive small chain distribution. Great efforts were made to further the online channel development, acquiring
about 350 million exposures, 2.96 million interactions, a user base of about 22.17 million audience for the brand
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2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
through the content platform, and attracting 10.52 million visitors to the e-commerce platform, which brought more
than 1.1 million consumers, and led to GMV increase of 47% year-on-year. In terms of production efficiency
improvement, we have advanced projects such as biomass gasification intelligent heating, granule capacity increase
and expansion, storage optimization, and Dali production line upgrading to lay a solid foundation for market supply
assurance, cost reduction and efficiency increase. The compliance transformation of the clean separation coarse
crushing process in the raw material center was completed, and 446 improvements were implemented to improve
the intelligent level of production and manufacturing.
In the second half of 2024, centering around the strategic positioning of “the leading brand of pain
management in the field of traumatology,” the Pharmaceutical Business Group will promote the optimization of
business deployment in an orderly manner, and initiate online and offline engagement across all touchpoints.
Specifically, for our core series of Baiyao products, we will address market demands and focus on our pain
management strategy. We aim to achieve breakthroughs with key individual products and develop a new pain
management model, thereby fully leveraging our Company’s strengths in the field of trauma. We will establish a
“Pain Service Center” by utilizing chain pharmacies located within communities. This center will consolidate pain
management products, offer primary treatment services, and collaborate to extend medical resources
comprehensively, thereby addressing the diverse pain management needs of the community. For branded TCM
products, we will implement the refined growth strategy, take the treatment field as the standard, build the refined
growth capabilities, enhance traceability across marketing, commercial control, and investment, and thus achieve
integration between production and marketing. Regarding botanical supplements, we will capitalize on the autumn
and winter season, which is ideal for Qi and blood replenishment, to rapidly increase the market share of our
supplement products.
(2) Health Products Business Group
During the reporting period, the Health Products Business Group achieved an operating income of RMB
3.144 billion and a net profit of RMB 1.231 billion, with a year-on-year growth of 1.7% in net profit and a year-on-
year growth of 0.7 percentage points in gross margin. In the oral care segment, the market share of Yunnan Baiyao
Toothpaste maintained a leading position in China. During the “618” period in 2024, Yunnan Baiyao oral health
brand successively ranked top 1 oral care brand in the whole network (Source: open.shangzhizhen.com). In the hair
care and anti-hair loss segment, Yangyuanqing recorded sales revenue of RMB 195 million during the reporting
period, up 41% year on year. With the special makeup certificate for hair care, the national invention patent
certificate for hair care and anti-hair loss, and the product quality achieved through differentiated technological
barriers that earn the trust of Chinese consumers, we have successfully created the core brand of Yunnan Baiyao
Yangyuanqing - “For controlling oil and preventing hair loss, choose Yangyuanqing.” Thanks to increased market
penetration, Yangyuanqing has outpaced the industry average growth in the anti-hair loss category amid intense
competition. During the “618” shopping festival in 2024, it became the top domestic anti-hair loss shampoo brand
on Tmall, with the six-month cumulative GMV on Douyin e-commerce platform exceeding RMB 100 million
(Source: open.shangzhizhen.com).
During the reporting period, the Health Products Business Group achieved the goal of lean operation and
product leadership through digital-driven measures. In terms of R&D and innovation, the Health Products Business
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2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
Group obtained 4 new patent authorizations, submitted 5 applications, and published 2 papers in top international
SCI journals during the reporting period. In terms of content marketing, by focusing on the core keywords of the
brands, such as “gum care” for Yunnan Baiyao Toothpaste, “anti-hair loss” for hair care and anti-hair loss series,
we maintained content connection through private marketing and achieved joint creation and interaction with users
for new products. We launched special initiatives at key moments and marketing campaigns such as “The Family
Gets Together to Watch the Spring Festival Gala,” “Healthy Oral 123 Plan,” and “Good Oral Health for Longevity
and Well-being,” to enhance national and professional brand recognition while precisely targeting our user base.
These campaigns achieved a total exposure of over 3.6 billion.
In the second half of 2024, the Health Products Business Group will focus on the “circle-breaking” growth
of products, and create long-term end-to-end full value chain collaboration. In the future, we will strengthen the oral
health professional positioning of Yunnan Baiyao. For oral care products, we will focus on gingival care and launch
channel exclusive products to reach different consumer groups. For washing and care products, we will focus on
“anti-hair loss” and promptly introduce targeted offerings such as a special travel package for “anti-hair loss,”
tailored to the characteristics of each channel. Through the construction of digital system, we can achieve the
operation digitalization, channel visualization, terminal lean management, and data-driven decision-making, and
ultimately enabling omni-channel operations.
(3) TCM Resources Business Group
During the reporting period, while meeting the Company’s internal resource needs in a high-quality and
efficient manner, the TCM Resources Business Group implemented lean operations, and achieved external
operating income of RMB 894 million, representing a year-on-year increase of about 22% under the same caliber.
In terms of continuously ensuring a stable supply and price of the Company’s strategic varieties, with an average
order delivery rate of 99.36% in the first half of the year, we effectively stabilized the price of the Company’s
feeding herbs, with their price increase significantly lower than the average industry-wide price rise for Chinese
medicinal materials. Focusing on the Yunnan authentic herbs and the strategic advantageous varieties of Yunnan
Baiyao, we maintained a leadership in the Panax notoginseng segment. In the natural plant extraction business, our
sales revenue increased by 47% year-on-year during the reporting period. In the pharmaceutical services sector, the
TCM Resources Business Group made strides by pioneering a channel covering “diagnosis and treatment -
prescription - prescription examination - decoction - distribution - delivery to household,” which was achieved
through the establishment of a Chinese medicine service center and a Chinese medicine library, allowing us to offer
patients a full range of personalized and efficient pharmaceutical services. At present, Yunnan Baiyao has built and
operated the largest drug decocting center in Yunnan. By further strengthening the construction of digital
intelligence and multi-point deployment planning, we will provide greater convenience for residents’ daily
medication.
In the second half of 2024, regarding TCM resources, we will build on our strategic positioning as “a ‘chain
leader’ dedicated to the high-quality development of Yunnan TCM resources.” We will continue to embrace and
fulfill our responsibilities as a chain leader enterprise. Relying on the authentic herb resources and location
advantages of Yunnan Province, we will give play to the industrial accumulation of Yunnan Baiyao Group in
technology, brand, channel, capital and talent, as well as the demonstration, leading and driving role of the leading
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2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
enterprise in industrial development. We will use the “1+1+N” model of “one integrated digital intelligence
platform for production, research and marketing of Chinese medicinal materials + one new production base
specialized market for Chinese medicinal materials + multiple collaboration” to build the entire industrial chain
ecosystem for digital management and operation of Chinese medicinal materials, and transform resource advantages
into industrial competitive advantages and regional long-term sustainable development advantages, so as to achieve
the goal of “supporting high-quality traditional Chinese medicines with premium Yunnan herbs.” We will leverage
industrial thinking to empower agriculture, integrate agriculture with farmers and lead by example with Yunnan
Province’s natural assets in TCM varieties, promote industry development and enrich the people, and support the
high-quality development of Yunnan Baiyao and Yunnan TCM industries.
(4) Yunnan Pharma (Pharmaceutical Distribution)
During the reporting period, Yunnan Pharma undertook a comprehensive effort to enhance quality, reduce
costs, and improve efficiency across all factors and processes. We aimed to achieve balanced growth in scale,
structure, and quality. As a result, we achieved an operating income of RMB 12.19 billion and a net profit of RMB
290 million, reflecting a significant year-on-year growth of 26% in net profit. Sales orders increased by 6.7% year-
on-year, and logistics throughput grew by 9.36% year-on-year.
In the first half of 2024, Yunnan Pharma carried out targeted management and control of accounts receivable
through customized programs, consolidating responsibilities, empowering customers and other measures, and
achieved phased results. For the pharmaceutical distribution business, we further consolidated market share by
focusing on varieties, markets and terminals. For non-pharmaceutical distribution business, we achieved a 9% year-
on-year growth in the first half of the year through system construction, model innovation and market expansion.
In the second half of 2024, Yunnan Pharma will align business objectives with our overall development plan,
adhere to the principle of seeking both progress and stability, and promoting stability through progress, promote
stabilization of revenue scale, deepen the community-level market, develop professional pharmacies, and expand
non-drug business. We will continuously strengthen risk control and management, improve accounts receivable
management, and enhance platform capacity building, thus achieving overall improvement in operation quality and
efficiency.
(5) Optimizing business deployment for emerging business units
During the reporting period, the Company promoted the restructuring and adjustment of the emerging
business units, achieving rapid business development of the Tonic Health Products BU, the Skin Beauty BU, and
the Medical Device BU. During the reporting period, the Tonic Health Products BU implemented measures such as
continuously optimizing cost reduction and efficiency improvement of the supply chain, unified upgrading of the
packaging of all series of Panax notoginseng products, deployment of integrated online and offline marketing, and
construction of the front, middle and back office organizational security system. In the future, we will focus on the
deep cultivation of Panax notoginseng and other advantageous TCM products, with an aim to become a leader in
nourishing and health care segment. During the reporting period, the Skin Beauty BU launched a new raw material
developed through independent R&D - Paris fargesii, which won the double awards of ICIC for raw materials and
products thanks to the independently cultivated, developed and produced core ingredients. We launched the “CAI
ZHI JI - Paris fargesii” series, known for its anti-inflammatory, soothing, and anti-redness properties, on platforms
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2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
like Tmall and JD.com, effectively integrating medicinal plant extracts into skincare. During the reporting period,
the Medical Device BU focused on pain physiotherapy, significantly growing our treatment and eye care businesses.
This led to a substantial increase in operating income and a notable improvement in operation quality and efficiency.
Moving forward, we will enhance our market competitiveness by optimizing our core business, expanding our two
key areas, and achieving overall synergy.
(6) Boosting development momentum by focusing on R&D
By upholding an innovation-driven strategy, the Company has accelerated the transformation of results,
continuously enhanced development momentum, and systematically advanced the planning of short-, medium- and
long-term projects.
In the short-term projects, on the one hand, the Company conducted clinical research on the existing products
from the Pharmaceutical Business Group to support their promotion and sales. During the reporting period, we
collaborated with the National Trauma Medical Center on research that focused on preventing deep vein thrombosis
in patients with multiple injuries and thrombosis following hip fractures using Yunnan Baiyao Capsule. We also
partnered with Grade A tertiary hospitals in China to conduct clinical studies on the efficacy of Yunnan Baiyao
Capsule in promoting bone healing and its impact on subgingival microflora and immune balance in patients with
moderate to severe periodontitis. Besides, we carried out clinical research on improving cardiovascular health with
Qixuekang Oral Liquid. On the other hand, the Company actively carried out the secondary development of dormant
products and the resumption of production, constantly enriching its high-quality product pipeline. During the
reporting period, we cooperated with our partner hospitals to initiate clinical observation and research on treating
abnormal uterine bleeding with Gongxuening Capsule and randomized controlled trial (RCT) study on reducing
bleeding after induced abortion under the project titled “Secondary Development and Research on Gongxuening
Capsule, a major TCM variety,” and successfully applied for major science and technology projects in Yunnan
Province; conducted research on resuming production of Shulie’an Capsule, and a multi-center, open-label,
randomized, placebo-controlled clinical pre-trial study on treating patients with type III chronic prostatitis using
Shulie’an Capsule led by Grade A tertiary hospitals in China.
In the medium-term projects, we actively promoted the development of innovative TCM and intensified our
focus on Yunnan Baiyao’s transdermal preparations, to continually create star products in this category while
implementing the overall deployment to address critical national needs in the field of trauma. During the reporting
period, Panax Notoginseng Tablet, an innovative drug in Chinese medicine category 1.1 for the prevention and
treatment of symptoms such as chest tightness and heart pain caused by stagnation of the heart veins in middle-aged
and elderly people, was undergoing randomized double-blind phase II clinical trial. In the first half of 2024, 55
subjects were enrolled (285 subjects have been enrolled in total), and it is expected to complete phase II clinical
trial in 2025. Fuqi Guben Ointment for excessive nocturnal urination caused by kidney Yang deficiency has been
put into phase III clinical trials, and it is expected to complete phase III clinical trials by the end of 2025. Clinical
trial approval was obtained for Flurbiprofen Cataplasms, and production technology transfer was completed. The
pilot test and full test of Loxoprofen Sodium Cataplasms were completed. The formulation process with excellent
adhesion properties has been explored for Yunnan Baiyao Cataplasms. Pilot test and preliminary study have been
completed for Yunnan Baiyao New Rubber Plaster.
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2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
In the innovative drug projects, we focused on the transformation of innovative drug R&D results to provide
sustainable development momentum for the Company. During the reporting period, clinical trial approval was
obtained for the INR101 diagnostic nuclear drug project for PET/CT imaging in patients with suspected prostate
cancer, and phase I clinical trial was completed. The precursor pharmaceutical and non-clinical studies were
launched for the INR102 project. In June 2024, the Company introduced the relevant patents of the antibody drug
KA-1641 from KYinno Biotechnology Co., Ltd, and will conduct R&D, production and commercialization
activities on the subject product worldwide.
In the second half of 2024, the Company will build a strategy-oriented R&D management system aligned
with its strategic planning, improve R&D management capabilities, coordinate and optimize the R&D platform
construction by referring to the experience of world-class pharmaceutical enterprises in R&D platform construction,
in a bid to effectively support the Company’s long-term, stable, sustainable and high-quality development. In terms
of overall R&D management, we will comprehensively plan the development of key industries and pipelines in line
with strategic planning and industry objectives. By integrating internal and external resources and promoting
coordinated efforts, we set to achieve the phased goals for key industries, pipelines, and projects, which include
meeting the R&D targets for innovative drug development, secondary development of major TCM varieties,
development of transdermal preparations and medical devices, and projects focused on medicinal frontiers and
health enhancement. In addition, we will strengthen the construction of R&D project management mechanism,
consolidate project management capabilities, and improve the transformation efficiency of R&D projects.
(III) Business model
1. Transformation from a leading Chinese pharmaceutical TCM enterprise to a “Chinese leading and
world-class” modern pharmaceutical industry group
The Company will focus on synergistic development across the entire industry chain, meticulous cultivation
of core sectors, expansion of leading advantages in key products, and accelerating the establishment of the industrial
system, among other dimensions. The Company will also make efforts to expand the medicine, health products,
TCM resources, and commercial logistics sectors, with the goal of achieving significant, leapfrog development. At
the same time, in line with its future development strategy, the Company will scientifically assess and swiftly
advance its internationalization strategy. It will effectively leverage the synergy and complementary effects of both
Chinese and international markets and resources. The focus will be on expanding TCM products overseas,
developing new growth drivers for health products, and integrating international resources for innovative drugs.
These efforts aim to drive the Company’s sustained high-quality development with internationalization and facilitate
the transformation of Yunnan Baiyao from a leading Chinese TCM enterprise into a “Chinese leading and world-
class” modern pharmaceutical industry group.
2. Transformation from a primarily “endogenous growth” model to a dual approach of “internal growth
and external expansion”
Driven by synergies from both “internal growth” and “external expansion,” the Company’s industry portfolios
will continue to optimize, serving as the primary growth model. “Internal” growth focuses on cost reduction and
efficiency improvement. Adopting a holistic approach to maximizing overall benefits, the Company focuses on
enhancing standardized management efficiency across the entire business lifecycle. The Company will
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2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
systematically optimize industry chains, value chains, and productivity factors to continually elevate cost reduction
and efficiency to the next level. “External” expansion focuses on complementing and strengthening the Company’s
portfolio. Guided by overall strategic requirements and guidance, the Company will actively explore strategic
mergers and acquisitions (M&As) and partnerships to address gaps and enhance growth in existing industry
segments. This approach aims to overcome current growth bottlenecks, build a healthy and sustainable industry
portfolio, and achieve higher quality development.
3. Transformation from training internal talents to “training internal talents + introducing external
talents”
The Company believes in the pivotal role of talent in driving its development. It has established a
comprehensive training system, which provides various avenues for employee growth and fosters both specialized
knowledge and comprehensive skills, with the mutual development of talents and the Company as the objective.
Meanwhile, the Company will leverage its advantageous resources to actively recruit high-caliber specialists across
various domains such as drug R&D, digitalization, and strategic investment. By continuously enhancing capabilities
in innovation and R&D, lean operations, and investment and mergers, the Company will employ a dual approach
of internal training and external recruitment. By utilizing both internal training and external recruitment, and
leveraging the Company’s growth environment and market resources, we will build a high-quality talent pipeline
that meets the future development needs of the Company.
4. Transformation from a traditional manufacturing enterprise to a smart enterprise based on digital
operations
The Company is committed to building a digital driving force and actively seeking for transformation to digital
operations with customers as the center, 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 facts.”
II. Analysis on core competitiveness
(I) Brand strength
Yunnan Baiyao is a well-established Chinese heritage brand with a history of over 120 years. The Company
places the Yunnan Baiyao brand at its core, evolving from a pharmaceutical brand to cover a diverse range of sub-
brands, including personal healthcare products, crude drugs, and Big Health products. We have built a diverse
portfolio of brands and continuously expanded our reach to target audiences, enhancing our brand value over the
long term. During the reporting period, Yunnan Baiyao was constantly recognized in its brand value by the markets.
In June 2024, BrandFinance Healthcare 2024 - Ranking of Global Most Valuable and Strongest Pharma, Medical
Device, and Healthcare Services Brands in Value officially released by Brand Finance, an authoritative international
brand valuation agency, showed that Yunnan Baiyao was shortlisted into the List of Global Top 25 Most Valuable
Pharmaceutical Brands. In July 2024, Yunnan Baiyao was shortlisted into the 2024 Fortune Top 500 Chinese
Enterprises List released by Fortune China for the 15th consecutive year and ranked 385th. In July 2024, Yunnan
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2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
Baiyao was shortlisted into 2024 Pharm Exec 50 released by Pharm Exec, an American magazine and ranked 33th.
In June 2024, the list of Top 100 Chinese Pharmaceutical Companies for 2023 was released, with Yunnan Baiyao
once again ranked among the top 100 Chinese TCM companies, securing the 5th position. In June 2024, Yunnan
Baiyao was included in the “China’s Top 100 ESG Pioneer Listed Companies” list.
(II) Talent team advantages
The Company continues to enhance its market-oriented talent selection and appointment mechanism, and
improve its systems for talent acquisition, training, and selection, laying a solid foundation for its talent team
building. The Company is expanding its internal teams and actively recruiting new talent, thus establishing highly
skilled and market-aware management teams in each business area. In February 2024, the Board of Directors elected
Mr. Zhang Wenxue to be the chairman of the tenth Board of Directors. After the chairman took office, under his
leadership, the Company achieved a comprehensive improvement in operational quality and efficiency by making
systematic planning from various dimensions such as Party building, strategy, internal control, organization, laying
a solid foundation for the Company’s long-term, healthy and sustainable development. The Company strives to
seize new development opportunities and drive the Company to march towards sustained high-quality development,
laying a good foundation for achieving synergy and win-win situation among all stakeholders.
(III) Innovation capabilities and product portfolio strengths
Yunnan Baiyao’s enduring vitality over the span of two centuries can be attributed to its commitment to
continuous business and product innovation, addressing the ever-evolving consumer demands. The Company’s
innovation strategy revolves around three key areas: “customer-oriented innovation” centered on consumers, “social
innovation” carried by government, industry, academia, research and medicine, and “digital and intelligent
innovation” driven by advanced technologies such as artificial intelligence, big data and cloud computing. The
Company is committed to integrating TCM into modern life. 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 Sanqi 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.
The Company’s commitment to continuously enhancing its R&D capabilities and driving digital
transformation has constantly boosted its R&D innovation capacity. To support its R&D team, the Company has
established more than 10 national and provincial-level research platforms. It has also forged partnerships with
various research institutions and universities to establish dedicated R&D centers focusing on the pharmaceutical
field. These collaborations focus on the pharmaceutical field, facilitate talent acquisition, scientific research, and
cooperation exchange. By promoting close collaboration between basic research and clinical practices, the Company
truly translates research findings into practical outcomes, encourages interdisciplinary integration, and fosters
innovation. The Company has successfully expanded its business presence in pharmaceutical products and health
products, and holds a leading position in various market segments. The coordinated development and mutual
empowerment of pharmaceutical and consumer businesses can effectively mitigate market and policy risks across
different economic cycles, achieving stable and sustainable overall business operations for the Company.
(IV) Full industry chain advantage
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2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
Yunnan Baiyao relies heavily on the biological resources in Yunnan Province and has always adhered to a
long-term approach when establishing its presence in key strategic varieties of TCM, 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. The Company is extending the experience gained
from establishing the “Digital Sanqi Industrial Platform” to other TCM supply chains. It is gradually building a
long-term, stable, and high-quality traceable supply chain system for authentic Yunnan medicinal herbs such as
Panax notoginseng, Paris polyphylla, Carthamus tinctorius, and Poria cocos.
Driven by its long-term and continuous investment in key strategic varieties of TCM, the Company has
achieved a complete and closed-loop industry chain from seed selection and cultivation to production and processing.
This has established a robust supply system for strategic medicinal materials, effectively ensuring the quality
stability of TCM raw materials and controlling the price fluctuations of strategic TCM raw materials. Such system
has laid the groundwork 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 medical institutions and
retail pharmacies across various provinces, regions, counties, and towns in China. In the advantageous over-the-
counter (OTC) channels, we have nationwide coverage, serving 5,000 top-tier chains and reaching over 400,000
retail stores. Especially in areas with well-developed chain pharmacies such as East China, Hunan Province, Hubei
Province, and Yunnan Province, the Company has achieved the high coverage, the penetration rate, and strong
market control capabilities, and implemented the special marketing cooperation under the principle of “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 Douyin, for expansion of online OTC
sales channels, and achieved efficient reach to modern 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. Yunnan Baiyao Toothpaste continues to lead the market share in
China with a high brand penetration in the oral product category. Through ongoing optimization of its full chain
channels, the Company has not only strengthened its position in traditional offline channels but also experienced
significant growth in emerging business models such as on-demand retail, community group purchases, and interest-
based e-commerce. This demonstrates the Company’s willingness to keep trying new things 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
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2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
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.”
1. Year-on-year changes in the key financial data
Unit: RMB
The same period of the Year-on-year
The reporting period Reasons for changes
previous year increase/decrease
Mainly due to increase in industrial sales
Operating revenue 20,455,286,287.52 20,309,372,850.07 0.72%
revenue by RMB 154 million
Mainly due to decrease in industrial sales
cost by RMB 183 million and decrease in
Operating cost 14,462,809,950.85 14,713,232,267.40 -1.70%
commercial sales cost by RMB 64 million
during the reporting period.
Sales volume and sales expenses increased
Sales expenses 2,296,821,490.59 2,257,688,549.69 1.73%
during this period.
Administrative
327,410,020.48 344,443,810.40 -4.95% No significant changes.
expenses
Financial Mainly due to YOY increase in interest
-129,619,278.35 -105,990,570.67 -22.29%
expenses income by RMB 48 million.
Corresponding increase in income tax
Income tax
482,065,489.87 477,020,837.61 1.06% expenses caused by increase in total profits
expenses
during the reporting period.
Increase in R&D investments during the
R&D investment 148,043,019.34 144,819,933.66 2.23%
reporting period.
Mainly due to increase in the cash received
from sales of goods or rendering of services
during the reporting period by RMB 1.389
Net cash flows
billion compared to the same period last year
from operating 3,261,617,391.99 2,251,951,370.10 44.84%
and increase in the cash paid for goods
activities
purchased and services received during the
reporting period by RMB 349 million
compared to the same period last year.
The main reasons are as follows: cash
received from investment recovery
decreased by RMB 966 million compared to
the same period last year, mainly due to the
cash received from the disposal of funds;
cash received from other investment-related
activities increased by RMB 3.444 billion
compared to the same period last year,
Net cash flows
mainly due to the cash recovered from
from investing -205,582,688.32 307,088,767.49 -166.95%
maturing time deposits; cash paid for
activities
investments increased by RMB 831 million
compared to the same period last year,
mainly due to cash used for purchasing
financial products; cash paid for other
investment-related activities increased by
RMB 2.24 billion compared to the same
period last year, mainly due to cash
deposited into time deposits.
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2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
Mainly due to cash received from borrowing
increased by RMB 895 million compared to
Net cash flows the same period last year; cash paid for
from financing -3,145,514,928.97 -3,107,700,963.75 -1.22% dividend distribution, profit sharing, or
activities interest payments increased by RMB 990
million compared to the same period last
year.
Mainly due to increase in the net cash flows
Net increase in
from operating activities during the
cash and cash -89,528,803.06 -543,421,662.08 83.52%
reporting period compared to the previous
equivalents
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.
2. 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
20,455,286,287.52 100% 20,309,372,850.07 100% 0.72%
revenue
By industries
Income from
7,652,967,384.61 37.41% 7,498,960,250.10 36.92% 2.05%
industrial sales
Income from
12,742,489,364.88 62.29% 12,771,903,564.67 62.89% -0.23%
commercial sales
Technical service 13,419,064.28 0.07% 2,184,678.61 0.01% 514.24%
Hospitality industry 6,332,847.91 0.03% 7,304,629.14 0.04% -13.30%
Income from
2,387,937.40 0.01% 1,449,878.20 0.01% 64.70%
plantation sales
Income from other
37,689,688.44 0.18% 27,569,849.35 0.14% 36.71%
businesses
By products
Industrial products
7,652,967,384.61 37.41% 7,498,960,250.10 36.92% 2.05%
(Self-made)
Wholesale and retail 12,742,489,364.88 62.29% 12,771,903,564.67 62.89% -0.23%
Agricultural
2,387,937.40 0.01% 1,449,878.20 0.01% 64.70%
products
Others 19,751,912.19 0.10% 9,489,307.75 0.05% 108.15%
Income from other
37,689,688.44 0.18% 27,569,849.35 0.14% 36.71%
businesses
By regions
Domestic 20,241,882,062.31 98.96% 19,913,147,313.47 98.05% 1.65%
Overseas 213,404,225.21 1.04% 396,225,536.60 1.95% -46.14%
3. The industries, products, or regions that account for more than 10% of the Company’s operating revenue
or operating profit
Applicable □ Not applicable
23
2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
Unit: RMB
Increase/decrease
Increase/decrease Increase/decrease
of operating
of operating cost of gross margin
revenue compared
Operating revenue Operating cost Gross margin compared with the compared with the
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 7,652,967,384.61 2,497,275,449.58 67.37% 2.05% -6.81% 3.10%
sales
Income from
commercial 12,742,489,364.88 11,940,543,065.08 6.29% -0.23% -0.53% 0.28%
sales
By products
Industrial
products 7,652,967,384.61 2,497,275,449.58 67.37% 2.05% -6.81% 3.10%
(Self-made)
Wholesale
12,742,489,364.88 11,940,543,065.08 6.29% -0.23% -0.53% 0.28%
and retail
By regions
Domestic 20,241,882,062.31 14,261,235,522.19 29.55% 1.65% -0.57% 1.58%
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 investment
income from Shanghai
Investment income 477,498,314.49 13.00% No
Pharmaceuticals Holding Co., Ltd
(“Shanghai Pharma”).
Mainly consisted of the change in
Profits and losses
fair value of the Company’s financial
from changes in fair 4,596,876.81 0.13% No
assets held for trading and other non-
value
current financial assets.
Mainly consisted of income from
Non-operating
4,431,701.71 0.12% activities unrelated to the Company’s No
revenue
daily business activities.
Non-operating Mainly consisted of expenses not
4,755,624.76 0.13% No
expenses related to daily business activities.
Mainly consisted of government
Other income 47,920,871.74 1.31% No
subsidies.
Mainly consisted of provision for
Credit impairment
-82,762,335.12 -2.25% bad debt for accounts receivable in No
losses
the commercial sector.
24
2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
Asset impairment Mainly consisted of the provision for
-3,578,594.53 -0.10% No
losses inventory write-downs.
Mainly consisted of proceeds from
Income from the disposal of non-current assets and
-1,592,134.63 -0.04% No
disposal of assets proceeds from the disposal of right of
use assets.
25
2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
V. Analysis on Assets and Liabilities
1. Significant changes in assets composition
Unit: RMB
End of the reporting period End of the previous year
Increase/decrease in
Proportion in Proportion in Statement on significant changes
Amount Amount proportion
total assets total assets
Cash and bank balance 14,719,563,531.35 27.07% 14,218,343,076.67 26.44% 0.63% No significant changes.
Accounts receivable 10,105,457,470.63 18.59% 9,966,170,447.21 18.53% 0.06% No significant changes.
Inventories 5,988,059,390.20 11.01% 6,442,194,823.67 11.98% -0.97% No significant changes.
Investment property 47,029,107.86 0.09% 44,104,145.97 0.08% 0.01% No significant changes.
Long-term equity investments 11,770,384,034.03 21.65% 11,536,660,992.93 21.45% 0.20% No significant changes.
Fixed assets 2,601,062,934.15 4.78% 2,662,900,014.03 4.95% -0.17% No significant changes.
Increased investment in construction
Construction in progress 713,596,692.91 1.31% 529,708,553.58 0.98% 0.33% in progress during the reporting
period.
Right-of-use assets 270,258,242.13 0.50% 258,319,485.58 0.48% 0.02% No significant changes.
Short-term loans 1,144,447,669.32 2.11% 1,747,303,700.34 3.25% -1.14% No significant changes.
Mainly due to increase in advance
Contractual liabilities 1,762,470,306.12 3.24% 1,739,865,228.75 3.23% 0.01% payments received by
Pharmaceutical Business Group.
Long-term loans 2,100,000.00 0.00% 2,100,000.00 0.00% 0.00% No significant changes.
Leasing liabilities 193,456,851.84 0.36% 172,347,309.72 0.32% 0.04% No significant changes.
Financial assets held for Mainly due to the purchase of
1,046,815,045.34 1.93% 149,366,687.56 0.28% 1.65%
trading financial products during the period.
Mainly due to the increase in
Notes receivable 346,072,424.86 0.64% 227,542,572.56 0.42% 0.22% bankers’ acceptances held at the end
of the period.
Mainly due to an increase in
Other receivables 364,961,972.39 0.67% 104,050,709.53 0.19% 0.48%
dividends receivable.
Non-current assets due within Initial term deposit converted to
0.00% 442,772,777.78 0.82% -0.82%
one year current deposit upon maturity.
26
2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
Mainly due to the conversion of
Other current assets 1,830,161,506.46 3.37% 2,862,076,217.20 5.32% -1.95% initial term deposit to current deposit
upon maturity.
Increased rent in advance during the
Receipts in advance 2,045,212.68 0.00% 486,612.12 0.00% 0.00%
reporting period.
Income tax and VAT payable
Taxes payable 515,227,950.50 0.95% 339,670,850.02 0.63% 0.32% outstanding at the end of the period
increased.
Mainly due to an increase in accrued
Other payables 1,380,365,853.97 2.54% 1,025,085,879.54 1.91% 0.63%
and unpaid expenses.
Mainly due to the issuance of ultra
Other current liabilities 1,698,311,110.99 3.12% 532,943,904.40 0.99% 2.13% short-term financing bonds during
the period.
Estimated liabilities 16,050,005.49 0.03% 0.00% 0.03% Reclassification of returns payable.
Other non-current liabilities 1,931,554.36 0.00% 17,296,814.41 0.03% -0.03% Reclassification of returns payable.
Treasury stock written off during the
Treasury stock 0.00% 707,428,892.15 1.32% -1.32%
period.
2. Major overseas assets
□ Applicable Not applicable
3. Assets and liabilities at fair value
Applicable □ Not applicable
Unit: RMB
Cumulative Impairment
Profits or losses on changes accrued Purchase amount Sales amount
changes in fair value in fair value
Item Opening balance during the during the reporting during the Other changes Closing balance
during the reporting
included in reporting period reporting period
period
equity period
Financial assets
1. Financial assets
held for trading
(derivative 149,366,687.56 16,811,914.40 900,000,000.00 16,133,556.62 -3,230,000.00 1,046,815,045.34
financial assets
excluded)
27
2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
2. Other equity
instrument 71,745,000.00 71,745,000.00
investments
3. Other non-
current financial 324,674,379.63 -12,215,037.59 312,459,342.04
assets
Subtotal of
545,786,067.19 4,596,876.81 900,000,000.00 16,133,556.62 -3,230,000.00 1,431,019,387.38
financial assets
Total 545,786,067.19 4,596,876.81 900,000,000.00 16,133,556.62 -3,230,000.00 1,431,019,387.38
Financial
0.00 0.00
liabilities
Note: The increase in purchases of financial assets held for trading during the period was mainly due to the purchase of financial products during the reporting period, please refer to “V. Analysis
on Assets and Liabilities 1. Significant changes in assets composition” for details.
Other variations: None.
Whether the Company has significant changes in measurement attributes of main assets during the reporting period
□ Yes No
28
2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
4. Restrictions on asset rights as of the end of the reporting period
Item Closing book value (RMB) Reason for restriction
Cash and bank balance 2,643,785.07 Earmarked for housing maintenance in reformed housing
The lawsuit in question has been won, and the lifting of the freeze and
Cash and bank balance 500,000.00
other related matters are in progress
Guarantee deposits, banker’s acceptance deposits, performance bonds,
Cash and bank balance 46,583,430.74
etc.
Assets in special account Special fund for paying the cost of employee status conversion in state-
607,599,650.11
for system reform owned enterprises
Long-term equity The holdings shall not be transferred within 36 months since the ending
11,770,370,976.32
investments date of the private placement by Shanghai Pharma in 2021
Total 12,427,697,842.24 --
VI. Investment Analysis
1. Overview
Applicable □ Not applicable
Investment during the reporting period Investment during the same period of the
Percentage of change
(RMB) previous year (RMB)
4,085,229,378.59 1,041,333,795.16 292.31%
2. Significant equity investments made during the reporting period
□ Applicable Not applicable
29
2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
3. Significant non-equity investments in progress during the reporting period
Applicable □ Not applicable
Unit: RMB
Cumulative Reasons for
Investment Cumulative actual income as unmet
Involved industry
Investment in fixed Amount invested in investment as of the Source of Progress of Estimated of the end progress Disclosure Disclosure
Project in investment
method assets or the reporting period end of reporting funding project income of the and date (if any) index (if any)
projects
not period reporting estimated
period income
http://www.cnin
fo.com.cn/new/
disclosure/detail
Yunnan
?stockCode=00
Baiyao Pharmaceuticals,
Self- Self- 0538&announce
Shanghai Yes daily chemical 87,706,087.92 655,131,190.91 61.00% N/A June 9, 2021
established raised mentId=121020
International products
6330&orgId=gs
Center
sz0000538&ann
ouncementTime
=2021-06-09
Yunnan
Baiyao R&D
Platform -
Self- Self-
Kunming Yes Pharmaceuticals 33,799,180.03 120,995,985.93 40.00% N/A
established raised
Center
Construction
Project
Total -- -- -- 121,505,267.95 776,127,176.84 -- -- 0.00 0.00 -- -- --
30
2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
4. Financial assets investment
(1) Securities investment
Applicable □ Not applicable
Unit: RMB
Purchase
Cumulative
Profits or losses amount
Accounting changes Sales amount Profits and losses Source
Type of Stock Initial investment on changes in fair during Accounting
Stock code measurement Opening book value in fair value during the during the Closing book value of
securities abbreviation cost value during the the items
model included in reporting period reporting period funding
reporting period reporting
equity
period
Domestic Other non-
and Jacobson current Self-
HK.02633 238,699,200.00 Fair value 115,996,160.00 2,652,240.00 2,652,240.00 118,648,400.00
overseas Pharma financial raised
stocks assets
Domestic
Financial
and JBM Self-
HK.02161 25,039,800.00 Fair value 72,221,202.90 514,829.70 514,829.70 72,736,032.60 assets held
overseas (Healthcare) raised
for trading
stocks
Domestic
Financial
and SinoMab Self-
HK.03681 354,119,828.19 Fair value 72,545,484.66 13,012,784.70 16,133,556.62 24,768.48 69,424,712.74 assets held
overseas BioScience raised
for trading
stocks
Total 617,858,828.19 -- 260,762,847.56 16,179,854.40 - - 16,133,556.62 3,191,838.18 260,809,145.34 -- --
Note: The Company’s shares in Jacobson Pharma and SinoMab BioScience were subscribed in the form of strategic investment in September 2018 and October 2019; the Company acquired the
shares of JBM (Healthcare) distributed to the Company by Jacobson Pharma in 2021 and 2023, respectively, as a result of the Company’s shares in Jacobson Pharma.
(2) Investments in derivatives
□ Applicable Not applicable
31
2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
The Company had no investments in derivatives during the reporting period.
5. Use of proceeds
□ Applicable Not applicable
The Company had no use of proceeds during the reporting period.
VII. Significant Assets and Equity Sales
1. Significant assets sales
□ Applicable Not applicable
The Company had no significant assets sales during the reporting period.
2. Significant equity sales
□ Applicable Not applicable
32
2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
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
Wholesale and retail of
Pharmaceutical, Subsidiary 1,000,000,000.00 16,965,236,193.51 6,158,248,210.23 12,329,242,791.12 337,269,422.60 286,490,361.99
pharmaceuticals
Co., Ltd.
Yunnan Baiyao
Group Health Production and sales of oral
Subsidiary 84,500,000.00 9,836,431,237.28 7,753,449,669.89 3,148,545,484.92 1,432,853,923.98 1,216,170,372.04
Products Co., hygiene products
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,
Shanghai narcotics, psychotropic drugs, and
Pharmaceuticals Joint-stock toxic drugs for medical use
3,702,788,059.00 221,335,871,829.06 82,228,621,195.06 139,413,145,524.43 4,830,896,881.37 3,597,363,036.62
Holding Co., company (Adapted to the scope of
Ltd. business), vaccines) of various
dosage forms (including but not
limited to tablets, capsules,
aerosols, immune preparations,
granules, plasters, pills, oral
liquids, inhalants, injections,
liniments, tinctures, suppositories)
health products, medical devices,
and related products,
manufacturing and sales of
33
2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
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 disposing of subsidiaries during
Company name Influences on overall production, operation and performance
the reporting period
Hangzhou Shanqi Health Industry Co., Ltd. Newly incorporated No significant influence.
Yunnan Pharmaceutical Zhaotong Co., Ltd. Newly incorporated No significant influence.
Ban Loong Capital GP Cancelled No significant influence.
Description of the major holding companies and joint-stock companies: None.
34
2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
Ⅸ. Structured Entities Controlled by the Company
Applicable □ Not applicable
See Section X “X. Interest in Other Entities”
X. Risks and Countermeasures
(I) Policy changes
In recent years, a series of supportive policies for the pharmaceutical industry have been introduced
successively, opening up favorable development opportunities for pharmaceutical enterprises. Meanwhile, the
healthcare reform will be further deepened, and the routine centralized volume-based procurement will cover more
pharmaceuticals. Comprehensive revisions to laws and regulations pertaining to drug supervision are also on the
horizon. All of these factors are exerting higher requirements for the healthy development of the pharmaceutical
industry. Given this context, the Company will place even greater emphasis on aligning with the Chinese
pharmaceutical policy direction, intensify its efforts in tracking, 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.
(II) Market uncertainties
Due to rising raw material costs, price controls on pharmaceutical products, and slowing growth at the terminal
level, the pharmaceutical industry is experiencing significant operational pressure. Health consumer products are
facing challenges from increasingly rational consumer behavior and fragmented demand. In response to these
pressures, the Company will continue to leverage its full industry chain competitiveness and innovation as key
drivers. By continuously enhancing operational efficiency and refining management of channels and retail, the
Company aims to deepen its innovation, cost, and channel advantages, which enables the Company to navigate
through economic cycles and achieve sustainable, high-quality development in the competitive market.
(III) Transformation of innovation and R&D achievements
In pursuit of fulfilling technological advantages and enhancing core competitiveness, the Company has
consistently escalated its investment in drug R&D over recent years. Generally, new drug R&D is featured with
large amount of investment, long R&D cycle, less-than-expected industry transformation rate, market uncertainty
after industrialization in the future, etc. Any changes in relevant policies and market demands will be likely to affect
the commercial value of the products under R&D. Upon completion of R&D, the successful commercialization of
a new drug stands as an important factor influencing R&D yields. The Company is poised to meticulously assess
the R&D projects of novel drugs within the framework of its strategic direction. Resources will be apportioned to
key projects, bolstering risk management capabilities throughout the R&D. Collaborative IUR efforts will be
fortified, optimizing the transformation of achievements and reducing the uncertainties associated with R&D
investments.
(IV) External expansion
By implementing an industrial development strategy to seek both internal growth and external expansion, the
Company actively advances towards its strategic goals and strives to inject new momentum into sustainable
development. In the process of pursuing external expansion, a key challenge for the Company is how to leverage
35
2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
investment and innovation to introduce new variables, build a new Baiyao platform, integrate more external
resources, and develop a complete industry chain, to ultimately establish a strong foothold in a highly competitive
and rapidly changing market. The Company will continue to be guided by its strategy and focus on the needs of
users, constantly enhance its market insights, and construct an industry portfolio system, management system and
capability system, which are suitable for its healthy and sustainable development. Also, the Company will control
risks in external expansion by adhering to a scientific and standardized risk management system. It will cautiously
make overall arrangement and constantly adjust short-, medium-, and long-term strategies to drive the achievement
of its strategic goals.
XI. Implementation of the “Enhancement of Quality and Returns” Initiative
Whether the Company disclosed the Announcement of the “Enhancement of Quality and Returns” Initiative
Yes □No
The Company disclosed the Announcement on “Enhancement of Quality and Returns” Initiative on March 9,
2024 (Announcement No.: 2024-12).
In the first half of 2024, the Company focused on its core businesses, continuously optimizing its business
structure, with contribution to profit from the industrial revenue steadily increasing. During the reporting period,
the Company achieved operating revenue of RMB 20.455 billion, a 0.72% increase compared to the same period
last year. Among this, the proportion of industrial revenue in total operating revenue further rose to 37.41%, an
increase of 0.49 percentage points compared to the same period of previous year; industrial revenue growth rate
reached 2.05%; and the industrial gross profit margin was 67.37%, up 3.10 percentage points year-on-year.
While maintaining steady growth in operating performance, the Company focused on unleashing potential and
enhancing efficiency across the entire value chain, with operational quality and efficiency continuing to improve.
During the reporting period, the Company achieved a net profit attributable to the parent company of RMB 3.189
billion, a 12.76% increase from RMB 2.828 billion in the same period last year, setting a new historical high for the
period; the weighted average return on net assets was 7.93%, up 0.76 percentage points from the previous year;
basic earnings per share were RMB 1.79, a 13.29% increase year-on-year; net cash flow from operating activities
was RMB 3.262 billion, up 44.84% year-on-year; and management expenses decreased by 4.95% year-on-year. At
the end of the reporting period, the Company’s total assets were RMB 54.368 billion, an increase of 1.08% from
the beginning of the period; and the cash and bank balance were RMB 14.720 billion, up 3.53% from the beginning
of the period.
During the reporting period, the Company implemented cash dividends and completed cancellation of
repurchased share, continually enhancing shareholder returns. The Company’s dividend plan for 2023 is to distribute
RMB 20.77 per 10 shares, with a total dividend amount of RMB 3.706 billion, accounting for 90.53% of the 2023
net profit attributable to the parent company. The annual equity distribution was completed on May 10, 2024. On
February 23, 2024, The Company’s shareholders’ meeting considered and approved the cancellation of 12,599,946
repurchased shares and a corresponding reduction in the Company’s registered capital. The cancelled shares
represent approximately 0.7015% of the Company’s total share capital, with repurchase costs exceeding RMB 700
million. In April 2024, the Company completed the cancellation procedures for the 12,599,946 repurchased shares.
Through this share repurchase cancellation arrangement, the Company demonstrates its confidence in its
36
2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
development and enhances investors’ sense of achievement with concrete actions. This fully safeguards the interests
of investors and stakeholders and further enhances investors’ recognition of the Company’s value.
The Company will set the strategic goal of “driving Yunnan Baiyao, a century-old pharmaceutical brand, to
become a leading Chinese and world-class modern pharmaceutical industry group, achieving reasonable growth in
scale, steady improvement in efficiency, and continuous optimization of industrial and product structures for high-
quality development,” steadfastly deepen its roots in the “pharmaceutical” industry, and drive its each business to
focus on its advantageous fields in Big Health industry to constantly enhance its leading industry position. While
continuously enhancing core competencies, the Company is also advancing the development of new business
growth drivers in a scientific, prudent, and effective manner. The Company will stabilize its core foundation through
internal growth and, via external expansion, integrate advantageous resources to optimize and enhance its industry
portfolio, rapidly advancing its growth trajectory to lay a solid foundation for medium- to long-term strategic
development. Specifically, from an industry perspective, the company will focus on internal growth by:
strengthening and expanding the quality influence of “Big TCM” products along the comprehensive TCM industry
chain; enhancing and refining the health and wellness offerings through a focus on efficacious products and services
in personal healthcare; stabilizing and improving the new regional distribution channels via market-specific
commercial circulation. From an investment perspective, the Company will focus on external expansion by: making
up for the insufficiency in internal growth by introducing new platforms centering on industrial strategic orientation
for achieving 1+1>2, to rapidly build a health industry system and establish a stronger foundation for future high-
quality development.
The Company will strictly remain committed to fulfilling its responsibilities and obligations as a listed
company. Through focusing on our principal businesses, continuous innovation, and operational improvements to
enhance our intrinsic value, we aim to promote the healthy and sustainable development of the Company. We will
adhere to the “investor-oriented” principle, striving to safeguard investors’ rights and interests through various
means, enhance investment returns and bolster investors’ sense of achievement. By effectively implementing the
“Enhancement of Quality and Returns” initiative, we seek to boost market confidence and contribute to the positive
and healthy development of the capital market.
37
2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
Section IV Corporate Governance
I. Annual General Meeting and Extraordinary General Meeting Held during the Reporting
Period
1. Shareholders’ meetings during the reporting period
Proportion
of
Sessions Meeting type attendance Meeting date Disclosure date Resolutions
of the
investors
The following proposals had been
First
considered and approved: 1. Proposal on
Extraordinary Extraordinary
Election of Non-Independent Directors for
General General 63.39% February 23, 2024 February 24, 2024
the Tenth Board of Directors; 2. Proposal
Meeting for Meeting
on Change of Use of Repurchased Shares
2024
and Cancellation
The following proposals had been
considered and approved: 1. Proposal on
the 2023 Annual Work Report of the Board
of Directors; 2. Proposal on the 2023
Annual Work Report of the Supervisory
Committee; 3. Proposal on the 2023 Final
2023 Annual Annual
Financial Report; 4. Proposal on the 2023
General General 62.19% April 23, 2024 April 24, 2024
Annual Report and its Summary; 5.
Meeting Meeting
Proposal on the 2023 Profit Distribution
Plan; 6. Proposal on the 2024 Financial
Budget Report; 7. Proposal on Estimated
Routine Related Party Transactions for
2024; 8. Proposal on Revising the
“Yunnan Baiyao Board Meeting Rules”
The following proposals had been
Second
considered and approved: 1. Proposal on
Extraordinary Extraordinary
Election of Shareholder Supervisors for the
General General 55.89% June 11, 2024 June 12, 2024
Tenth Supervisory Committee; 2. Proposal
Meeting for Meeting
on Election of Non-Independent Directors
2024
for the Tenth Board of Directors
2. Extraordinary general meetings convened at the request of preferred shareholders with
resumed 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
Zhang Elected as Chairman to further improve the Company’s
Chairman Elected February 23, 2024
Wenxue board governance structure
Former Chief Operating
Resigned as Chief Operating Officer and Senior Vice
Yin Pinyao Officer and Senior Vice Dismissed February 7, 2024
President due to personal reasons
President
Former Chief Human Resigned as Chief Human Resources Officer due to
Yu Juan Dismissed February 7, 2024
Resources Officer personal reasons
38
2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
Resigned as Director of the Tenth Board of Directors,
Chairman of the Strategy Committee, and Member of the
Chen Fashu Former Director Resigned May 22, 2024
Remuneration and Appraisal Committee due to job
adjustments
Resigned as Director of the Tenth Board of Directors and
Lu
Former Director Resigned May 22, 2024 Member of the Strategy Committee due to job
Hongdong
adjustments
Resigned as Director of the Tenth Board of Directors and
Chen
Former Director Resigned May 22, 2024 Member of the Nomination Committee due to job
Yanhui
adjustments
Resigned as Supervisor and Chairman of the Tenth
You Former Chairman of the
Resigned May 22, 2024 Supervisory Committee of Yunnan Baiyao due to job
Guanghui Supervisory Committee
adjustments
Resigned as Supervisor, Vice Chairman of the Tenth
Former Vice Chairman of Supervisory Committee, and all positions at Yunnan
Zhong Jie Resigned June 11, 2024
the Supervisory Committee Baiyao and its controlling subsidiaries upon reaching the
mandatory retirement age
Recommended by the shareholder Yunnan State-owned
Equity Operation Management Co., Ltd (“Yunnan State-
owned Equity Operation Management Company”),
Guo Xin Director Elected June 11, 2024
nominated by the Company’s Board of Directors, and
elected at the Second Extraordinary General Meeting for
2024
Recommended by the shareholder New Huadu Industrial
Shangguan Group Co., Ltd (“New Huadu”), nominated by the
Director Elected June 11, 2024
Changchuan Company’s Board of Directors, and elected at the Second
Extraordinary General Meeting for 2024
Recommended by the shareholder New Huadu,
You nominated by the Company’s Board of Directors, and
Director Elected June 11, 2024
Guanghui elected at the Second Extraordinary General Meeting for
2024
Recommended by the shareholder Yunnan State-owned
Vice Chairman of the Equity Operation Management Company, nominated by
Dai Pujun Elected June 11, 2024
Supervisory Committee the Company’s Supervisory Committee, and elected at the
Second Extraordinary General Meeting for 2024
III. Profit Distribution and Conversion of Capital Reserve 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
The Company had no equity incentive plans, employee stock ownership plans, or other employee incentive measures and their
implementation during the reporting period.
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2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
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
1. 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.
2. Administrative permits for environmental protection
(1) Yunnan Baiyao Group
Environmental Impact Assessment (EIA) Approvals: YHXZH [2008] No. 255
Approval for Acceptance of Completed Environmental Protection Projects: Phase I YH Acceptance [2013] No. 1, Phase II YH Acceptance [2015] No. 30
Pollution Discharge Permit No.: 9153000021652214XX001Q, valid from July 2, 2023 to July 1, 2028
(2) Yunnan Baiyao Group Traditional Chinese Medicine Resources Co., Ltd.
EIA Approvals: YH Review [2009] No. 261 and YHSH Approval [2014] No. 1
Approval for Acceptance of Completed Environmental Protection Projects: Phase I YH Acceptance [2014] No. 16, Phase II Acceptance (independent acceptance
on March 20, 2021) and YHSH Acceptance [2016] No. 4
Pollution Discharge Permit No.: 91530100216583890U001U, valid from May 13, 2024 to May 12, 2029
(3) Yunnan Baiyao Group Dali Pharmaceutical Co., Ltd.
EIA Approvals: DH Review [2010] No. 21
Approval for Acceptance of Completed Environmental Protection Projects: DH Review [2015] No. 32
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2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
Pollution Discharge Permit No.: 91532900218671552P001V, valid from August 5, 2022 to August 4, 2027
(4) Yunnan Baiyao Group Wenshan Qihua Co., Ltd.
EIA Approvals: WHSH [2017] No. 53
Approval for Acceptance of Completed Environmental Protection Projects: Independent acceptance on January 5, 2021
Pollution Discharge Permit No.: 91532600709893942X002R, valid from August 3, 2021 to August 2, 2026
3. 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 Emissions
Pollutants and Pollutants and Emission Distribution of Emission Pollutant Emission Approved Total
Company or Discharge Total Emissions Exceeding
Characteristic Characteristic Method Discharge Outlets Concentration/Intensity Standards Implemented Emissions
Subsidiary Outlets Standards
Pollutants Pollutants
Alcohol extraction
exhaust gas discharge
outlet 1 (particulate
matter 3.6mg/m3);
alcohol extraction
exhaust gas discharge
outlet 2 (particulate
matter 3.6mg/m3);
Standards for the
alcohol extraction
Emission of Air
exhaust gas discharge
Pollutants in the
Particulate Particulate outlet 3 (particulate No total
Yunnan Alcohol extraction Pharmaceutical Industry
matter, non- matter, non- Organized matter 3.3mg/m3); emission
Baiyao Group Exhaust gas 4 exhaust gas discharge (GB37823-2019): Unassessed
methane total methane total emissions alcohol extraction indicator
Co., Ltd. outlet particulate
hydrocarbon hydrocarbon exhaust gas discharge available
matter<30mg/m3, non-
outlet 4 (particulate
methane total
matter
hydrocarbon<100mg/m3
3.4mg/m3); alcohol
extraction exhaust gas
discharge outlet 1 (non-
methane total
hydrocarbon
2.44mg/m3); alcohol
extraction exhaust gas
discharge outlet 2 (non-
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2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
methane total
hydrocarbon
4.45mg/m3); alcohol
extraction exhaust gas
discharge outlet 3 (non-
methane total
hydrocarbon
2.37mg/m3); alcohol
extraction exhaust gas
discharge outlet 4 (non-
methane total
hydrocarbon
3.82mg/m3)
4t/h boiler (NOx
50mg/m3); 10t/h boiler
(NOx 66.2mg/m3);
15t/h boiler (NOx
82mg/m3); 4t/h boiler Standards for the
(particulate matter Emission of Air
The annual total
Yunnan NOx, Main discharge 5.7mg/m3); 10t/h boiler Pollutants for Boilers In 1H 2024, the NOx
Organized NOx emissions Within the
Baiyao Group Exhaust gas particulate 3 outlet of boiler (particulate matter (GB13271-2014): NOx emissions amount was
emissions amount was standard
Co., Ltd. matter, SO2 exhaust gas 5.3mg/m3); 15t/h boiler <400mg/m3; particulate 1.142t
11.0667t
(particulate matter matter<30mg/m3;
5.3mg/m3); 4t/h boiler SO2<100mg/m3
(SO2<3mg/m3); 10t/h
boiler (SO2<3mg/m3);
15t/h boiler
(SO2<3mg/m3)
Wastewater Quality
Total nitrogen
Standards for Discharge
Total nitrogen, 1.69mg/L; ammonia
to Municipal Sewers
ammonia nitrogen 1.79mg/L;
Yunnan (GB/T 31962-2015);
nitrogen, COD, Main drainage COD 38.96mg/L; No total emission Within the
Baiyao Group Wastewater Drainage outlet 1 Integrated Wastewater Unassessed
suspended outlet suspended indicator available standard
Co., Ltd. Discharge Standard
solids, BOD5, solids<4mg/L; BOD
(GB8978-1996): total
TP 52.43mg/L;
nitrogen<70mg/L;
TP 5.53mg/L
ammonia
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2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
nitrogen<45mg/L; COD
<500mg/L; suspended
solids<400mg/L;
BOD5 <350mg/L; TP
<8mg/L
Standards for the
Yunnan
Emission of Air
Baiyao Group
Pollutants in the
Traditional Non-methane Combustion
Non-methane total Pharmaceutical No total emission Within the
Chinese Exhaust gas total Organized 1 exhaust gas Unassessed
hydrocarbon 3.97mg/m Industry (GB37823- indicator available standard
Medicine hydrocarbon discharge outlet
2019): non-methane
Resources Co.,
total
Ltd.
hydrocarbon<100mg/m
Pulverization discharge
outlet 1 (particulate
matter 22.4 mg/m
pulverization discharge
Yunnan outlet 2 (particulate Standards for the
Baiyao Group matter 7 mg/m Emission of Air
Traditional pulverization discharge Pollutants in the
Particulate Pulverization No total emission Within the
Chinese Exhaust gas Organized 5 outlet 3 (particulate Pharmaceutical Unassessed
matter discharge outlet indicator available standard
Medicine matter 7.4 mg/m Industry (GB37823-
Resources Co., pulverization discharge 2019): particulate
Ltd. outlet 4 (particulate matter<30mg/m
matter 4.6 mg/m
pulverization discharge
outlet 5 (Particulate
matter 2.8 mg/m
Yunnan Standards for the
Baiyao Group SO2, NOx, SO2<2mg/m3; NOx Emission of Air
The annual total
Traditional particulate Main discharge 70.28mg/m3; particulate Pollutants from Boilers In 1H 2024, the NOx
NOx emissions Within the
Chinese Exhaust gas matter, Organized 3 outlet for boiler matter 2.5mg/m3; (GB13271-2014): emissions amount was
amount was standard
Medicine Lingeman exhaust gas Lingeman blackness< SO2<50mg/mNOx 2.259t
32.18t
Resources Co., blackness Grade1 <200mg/mparticulate
Ltd. matter<20mg/m
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2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
Lingeman blackness
Grade 1
Wastewater Quality
Standards for
Discharge to Municipal
Total nitrogen Sewers GB/T 31962-
Yunnan
Total nitrogen, 3.27mg/L; ammonia 2015; Integrated
Baiyao Group
ammonia nitrogen 0.29mg/L; Wastewater Discharge
Traditional
nitrogen, COD, Main drainage COD 58.07mg/L; Standard GB8978- No total emission Within the
Chinese Wastewater Drainage outlet 1 Unassessed
suspended outlet suspended solids 1996: total nitrogen indicator available standard
Medicine
solids, BOD5, 23.7mg/L; <70mg/L; ammonia
Resources Co.,
TP BOD5 3.2mg/L; nitrogen<45mg/L; COD
Ltd.
TP 2.34mg/L <500mg/L; suspended
solids<400mg/L;
BOD5 <350mg/L; TP
<8mg/L
Standards for the
Emission of Air
Yunnan SO2, NOx, Pollutants from Boilers
SO2<3mg/m3; NOx
Baiyao Group particulate Main discharge (GB13271-2014):
Organized 51mg/m3; particulate No total emission Within the
Dali Exhaust gas matter, 1 outlet for boiler SO2<50mg/mNOx Unassessed
emissions matter 7.2mg/m3; indicator available standard
Pharmaceutical Lingeman exhaust gas <200mg/mparticulate
Lingeman blackness<1
Co., Ltd. blackness matter<20mg/m
Lingeman blackness
Grade 1
Discharge Standards
COD 43mg/L;
for Water Pollutants
COD, suspended solids
Yunnan from the
suspended 4 mg/L; BOD5
Baiyao Group Pharmaceutical
solids, BOD5, Main drainage 14 mg/L; ammonia No total emission Within the
Dali Wastewater Drainage outlet 1 Industry for Mixed Unassessed
ammonia outlet nitrogen 6.92 mg/L; indicator available standard
Pharmaceutical Formulation Products
nitrogen, total total nitrogen
Co., Ltd. (GB21908-2008):
nitrogen, TP 8.96 mg/L; TP
COD<60mg/L;
0.46 mg/L
suspended
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2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
solids<30mg/L;
BOD5<15mg/L;
ammonia
nitrogen<10 mg/L; total
nitrogen<20 mg/L;
TP<0.5 mg/L
Boiler 2 (particulate
matter 2.3mg/m3);
boiler 3 (particulate
Standards for the
matter Annual
Emission of Air
2.2mg/m3); boiler 2 emissions
Pollutants from Boilers In 1H 2024, the
Yunnan Particulate (SO2<3mg/m3); boiler amount: sulfur
Main discharge (GB13271-2014): emissions amount:
Baiyao Group matter, SO2, Organized 3 dioxide 0.3t; Within the
Exhaust gas 2 outlet for boiler SO2<50mg/mNOx sulfur dioxide 0.038t;
Wenshan NOx, smoke emissions (SO2<3mg/m3); boiler nitrogen oxide standard
exhaust gas <200mg/mparticulate nitrogen oxide 0.622t;
Qihua Co., Ltd. blackness 2 (NOx 45mg/m3); 14.02t;
matter<20mg/m particulate matter 0.029t
boiler 3 (NOx particulate
Lingeman blackness
51mg/m3); boiler 2 matter 2.14t
Grade 1
(smoke blackness <1);
boiler 3 (smoke
blackness <1)
Wastewater Quality
Standards for
Discharge to Municipal
Sewers GB/T 31962-
Total nitrogen 2015; Integrated
Total nitrogen, 4.04mg/L; ammonia Wastewater Discharge
Yunnan ammonia nitrogen 1.30mg/L; Standard GB8978-
Baiyao Group nitrogen, COD, Sewage main COD 67mg/L; 1996: total No total emission Within the
Wastewater Drainage outlet 1 Unassessed
Wenshan suspended outlet suspended solids nitrogen<70mg/L; indicator available standard
Qihua Co., Ltd. solids, BOD5, 13mg/L; BOD5 ammonia
TP 19.4mg/L; TP nitrogen<45mg/L;
0.53mg/L COD<500mg/L;
suspended
solids<400mg/L;
BOD5<300mg/L;
TP<8mg/L
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2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
4. Treatment of pollutants
The Company strictly follows the requirements of EIA in construction of pollution prevention and control
facilities, and has obtained complete related environmental protection approvals. In the first half of 2024, the
Company and its subsidiaries actively carried out third-party environmental testing, showing the emissions of
various pollutants such as wastewater, exhaust gas, solid waste and noise, were in strict line with the standards.
(1) Yunnan Baiyao Group Co., Ltd.
The Company has commissioned a third party, Yunnan Chenqing Environmental Monitoring Co., Ltd, to
conduct environmental monitoring according to the Yunnan Baiyao Group Self-Monitoring Plan and to provide
monitoring reports, ensuring that monitoring indicators and tasks are strictly completed.
1) Exhaust gas: The exhaust gas meets discharge standards after treatment by exhaust gas treatment facilities.
2) Wastewater:
The sewage treatment plant is located in the southwest corner of the plant area, using the A2O process. The
designed treatment capacity for Phase I is 800 m/d, and for Phase II is 1,200 m/d. The combined treatment capacity
for both phases is 750 m/d.
Pre-treatment System: The system removes suspended solids, phosphorus, and some COD from wastewater to
facilitate subsequent biological treatment. Main facilities include collection wells, screens, primary settling tanks,
adjustment tanks, and emergency tanks.
Biological Treatment System: The AO biochemical process is adopted. Wastewater undergoes treatment in
anaerobic tanks, anoxic tanks, and aerobic tanks with different environmental conditions and microbial communities
to remove most COD, phosphorus, and ammonia nitrogen. Treated water is discharged into the municipal sewage
system. Main facilities include anaerobic tanks, aerobic tanks, anoxic tanks, and secondary settling tanks.
Advanced Treatment System: The system uses coagulation sedimentation, ozone oxidation, and aeration
biological filtration for advanced treatment, ensuring that the treated water meets reuse requirements. Main facilities
include coagulation sedimentation tanks, aeration biological filters, and reclaimed water storage tanks.
3) Noise
Noise mainly originates from transport vehicles, pumps, and fans. Effective noise reduction measures include
soundproofing of plant buildings and vibration isolation foundations. Furthermore, low-noise equipment is used to
minimize environmental noise pollution.
4) Hazardous and solid waste
Solid waste is classified and managed into general solid waste and hazardous waste with strict differentiation.
Hazardous waste is managed by designated personnel, with established records, proper labeling, and compliant
temporary storage facilities to prevent leakage, rain, theft, and dispersion. Sludge and pharmaceutical residues are
disposed of by qualified third parties. Hazardous waste liquids and solids are managed through a rigorous selection
process of enterprises meeting national standards.
(2) Yunnan Baiyao Group Wenshan Qihua Co., Ltd.:
1) The Company adopts a physical-biological contact oxidation process for sewage treatment (3,000m/day),
a closed treatment process, which can efficiently treat organic compounds in high-concentration Wastewater from
traditional Chinese medicine pharmaceuticals and mainly has the following characteristics:
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2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
The acid-base regulation tank, pre-acidification tank, anoxic tank, aerobic tank, and sludge concentration 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. The methane gas produced during the anaerobic reaction stage is transported,
through the biogas recovery system, to the boiler for combustion, which not only protects the environment but also
provides energy for the Company and saves costs.
2) The 40t/h boiler burns clean energy natural gas, and the data of the produced flue gas emission are connected
to an environmental protection platform through online monitoring devices, achieving real-time online monitoring
of main indicators to meet emission standards.
3) For the auxiliary material crushing and other work sections in the production OU, bags for dust removal are used.
The collected drugs, environmentally friendly and cost-effective, can be reused for production and extraction.
The wastewater and exhaust gas facilities are operating normally, and the discharges of various pollutant
factors (wastewater, exhaust gas, noise) meet the standards.
5. Emergency plans for sudden environmental events
The Company has prepared the Yunnan Baiyao Group Emergency Plan for Environmental Incidents (2021
Edition) (530114-2021-006-L) and has submitted it for record to the environmental protection department.
As required by the approval of the EIA report for the Relocation and Expansion Project Phase I of Yunnan
Baiyao Group Wenshan Qihua Co., Ltd, the emergency plan for sudden environmental events was prepared on
December 25, 2020, and filed with the Wenshan Branch of the Wenshan Prefecture Ecological Environment Bureau
on January 5, 2021, No. 532601-2021-002-L. The change was completed on July 15, 2024, and filed with the
Wenshan Branch of the Wenshan Prefecture Ecological Environment Bureau, No. 532621-2024-037-L.
6. 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.
7. Self-environmental monitoring plan
The Yunnan Baiyao Group Self-Monitoring Plan for 2024 has been submitted and disclosed, and it is being
strictly implemented.
8. Administrative punishments for environmental issues during the reporting period: None.
9. Other environmental information that should be disclosed: None.
10. Measures taken to reduce carbon emissions and their effects during the reporting period
□Applicable Not applicable
11. Other environmental protection related information: None.
II. Social Responsibility
In the first half of 2024, Yunnan Baiyao, guided by Xi Jinping Thought on Socialism with Chinese
Characteristics for a New Era, has thoroughly implemented the decisions and deployments of the Central Committee
of the Communist Party of China, the State Council, as well as the provincial Party committee and provincial
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2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
governments regarding rural revitalization. Leveraging its own advantages and focusing on key objectives, Yunnan
Baiyao has developed a task list, detailed work measures, and concentrated on rural revitalization and the
development of TCM materials. By integrating the planning and layout of the entire TCM industrial chain, the
Company has consistently increased its support for Chazhiluo Village and Xinle Village in Pantiange Township,
Weixi Lisu Autonomous County, Diqing Tibetan Autonomous Prefecture, and has effectively achieved its phase-
specific objectives.
Yunnan Baiyao fully leverages the advantages of the entire TCM industrial chain. By considering the actual
conditions of Xinle Village and Chazhiluo Village in Pantiange Township, the Company promotes rural
revitalization through the cultivation of Yunmuxiang. On one hand, the Company has provided training in
“Yunmuxiang Cultivation Technology” for local farmers and developed a Special Technical Solution for
Yunmuxiang Cultivation. On the other hand, Yunnan Baiyao has offered comprehensive guidance on the variety,
cultivation water and fertilizer management, pesticide use, and pest and disease control of Yunmuxiang to further
improve planting efficiency. Meanwhile, Yunnan Baiyao has invested in optimizing and upgrading the convenience
service center, supported the construction of Chazhiluo Village Party Member Activity Room/Display Hall of State-
Level Intangible Cultural Heritage Peacock Dance, and renovated the Party activity base in Xinle Village. The
Company has also purchased video equipment and educational materials for Party members, creating a base for
Party activities. Efforts have been made to strengthen grassroots organization, improve village appearance, preserve
intangible cultural heritage and protect the unique local ethnic culture. The village work team regularly conducts
comprehensive analysis and assessment on poverty relapse warning and monitoring, as well as delivery of the “Two
Assurances and Three Guarantees.” The team actively works on preventing mountain floods, landslides, debris
flows, landslides, and forest fires, and continuously focus on improving village appearance, revising village
regulations and agreements, visiting and assisting disadvantaged groups, and mediating village disputes. By
deepening, solidifying, and refining their work with the community, the team ensures the safety and stability of the
support areas.
Yunnan Baiyao is committed to continuously exploring new paths and models for rural revitalization through
multiple channels and diversification, concentrating more resources on enhancing the internal development
momentum of support areas, and accelerating industry development and continuous income growth in targeted
support regions, thereby making a substantial contribution to the rural revitalization.
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2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
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
1. Our company is not engaged in any business or activity that is the same
as, similar to, or resembling, and constitutes or may constitute directly or
indirectly a competition in any aspect with, the listed company’s any existing
business, nor will we actively provide, in any way, any assistance in finance,
business, management, etc or any trade secrets such as technical information,
business operations, sales channels, to any enterprises, agencies or other
economic organizations that compete with the listed company in any of its
existing business. 2. As of the date of issuance of this commitment letter, our
Yunnan
company will legally take necessary and possible measures to avoid, and
Provincial
urge any other enterprises under our actual control to avoid, any businesses Remain
Commitments Investment
Commitments or activities that may in any way substantially or potentially constitute a effective during
made in the Holdings Group
regarding horizontal competition or a conflict of interest, with the principal businesses December 10, the period of
acquisition Co., Ltd In progress
horizontal of the listed company. If, in the future, a material conflict of interest arising 2021 holding indirect
report or equity (“Yunnan
competition from substantial or potential horizontal competition between our company stake in
change report Investment
and any enterprises under our control and the listed company, our company Yunnan Baiyao
Holdings
and such enterprises under our actual control will give up that business
Group”)
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 Remain
December 10,
made in the Investment to maintain the shareholders of the listed company, our company undertakes to warrant: 1. effective during In progress
2021
acquisition Holdings Group independence The personnel independence of the listed company, that is: (1) The general the period of
49
2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
report or equity of the listed manager, deputy general manager, CFO, secretary of the Board of Directors, holding indirect
change report company and other senior management personnels of the listed company will work stake in
full-time and receive compensation in the listed company, with holding no Yunnan Baiyao
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
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2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
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.
1. After the completion of this equity transfer, our company will consciously
safeguard the interest of the listed company and any and all of its
shareholders, and minimize and avoid related party transactions with the
listed company. We will not, by virtue of our indirect stake in the listed
company, seek for improper benefits or harm any interest of the listed
company and any and all of its shareholders in related party transactions. 2.
Our company does not and will not, by virtue of our indirect stake in the
listed company and its own controlling influence, seek from the listed
company for better commercial terms for business cooperation than that
given to the third parties in the market for itself or for any other enterprises
under our control. 3. Our company does not and will not, by virtue of our Remain
Commitments
Commitments indirect stake in the listed company and its own controlling influence, seek effective during
made in the Yunnan
regarding for privileges for itself or any other enterprises under our control to enter December 10, the period of
acquisition Investment In progress
related party into transactions with the listed company. 4. After completing this equity 2021 holding indirect
report or equity Holdings Group
transactions transfer, our company will strictly adhere to the provisions of the Company stake in
change report
Law of the People’s Republic of China, the Articles of Association of Yunnan Yunnan Baiyao
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
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2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
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
Remain
Administration
In the future, when the time is ripe, SASAC of Yunnan Province and New effective during
Commitments Commission of
Commitments Huadu shall urge Yunnan Baiyao Holdings Co., Ltd (“Baiyao Holdings”) to the period of
made in the Yunnan
regarding gradually inject the high-quality assets related to Yunnan Baiyao’s existing holding the
acquisition Provincial March 23, 2017 In progress
horizontal business and future development areas into Yunnan Baiyao Group. Both shares of
report or equity People’s
competition SASAC of Yunnan Province and New Huadu will also strictly comply with Yunnan Baiyao
change report Government
the regulations to avoid horizontal competition. (directly and
(“SASAC of
indirectly)
Yunnan
Province”), New
Huadu
1. New Huadu and any other enterprises under our control will try the best
to avoid related party transactions with Yunnan Baiyao. For inevitable
related party transactions or those occurring for reasonable reasons, New
Huadu will undertake to conduct such transactions on an equal and voluntary
basis in the principles of fairness, impartiality, and compensation for equal
value, with the transaction prices to be determined based on the reasonable
Remain
prices recognized in the market. 2. New Huadu and any other enterprises
effective during
Commitments under our control will strictly comply with the avoidance provisions on
Commitments the period of
made in the related party transactions set out in Yunnan Baiyao’s articles of association
regarding holding the
acquisition New Huadu and in other relevant regulations. All related party transactions involved will March 23, 2017 In progress
related party shares of
report or equity be carried out in accordance with the decision-making procedures for related
transactions Yunnan Baiyao
change report party transactions for Yunnan Baiyao, and legal procedures will be followed
(directly and
to ensure not to harm any legitimate rights and interest of Yunnan Baiyao
indirectly)
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.
Yunnan State- 1. Yunnan State-owned Equity Operation Management Company has Remain
Commitments Commitments October 31,
owned Equity undertaken the previous commitments of SASAC of Yunnan Province: After effective during In progress
made during regarding 2018
Operation the completion of this significant asset restructuring, SASAC of Yunnan the period of
52
2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
asset Management related party Province will try its best to avoid related party transactions with the listed holding the
restructuring Company, New transactions company. For inevitable related party transactions or those occurring for shares of
Huadu and its reasonable reasons, SASAC of Yunnan Province will undertake to conduct Yunnan Baiyao
acting-in-concert such transactions on an equal and voluntary basis in the principles of (directly and
parties fairness, impartiality, and compensation for equal value, with the transaction indirectly)
prices to be determined based on the reasonable prices recognized in the
market. SASAC of Yunnan Province will strictly comply with the provisions
of relevant laws, regulations, normative documents, and the articles of
association of the listed company, perform the decision-making procedures
and information disclosure obligations for related party transactions, 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 SASAC of Yunnan Province. SASAC of Yunnan
Province warrants the effective fulfillment of these commitments, and the
listed company has the right to supervise its fulfillment of this commitment
letter. If SASAC of Yunnan Province fails to effectively fulfill this
commitment letter, leading to any actual losses to the listed company,
SASAC of Yunnan Province will compensate for any and all of such direct
or indirect losses so caused to the listed company.
2. New Huadu and its acting-in-concert parties undertake that: after the
completion of this merger and overall listing, our company/I and any
enterprises under our/my control will try the best to avoid related party
transactions with the listed company. For inevitable related party
transactions or those occurring for reasonable reasons, our company/I
undertake(s) to conduct such transactions on an equal and voluntary basis in
the principles of fairness, impartiality, and compensation for equal value,
with the transaction prices to be determined based on the reasonable prices
recognized in the market. Our company/I and any other enterprises under
our/my control will strictly comply with the provisions of relevant laws,
regulations, normative documents, and the articles of association of the listed
company, perform the decision-making procedures and information
disclosure obligations for related party transactions, and warrant not to harm
any legitimate rights and interest of the listed company and any other
shareholders through related party 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
53
2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
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.
Jiangsu Yuyue undertakes that: after the completion of this merger and
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
Remain
Jiangsu Yuyue based on the reasonable prices recognized in the market. Our company and
effective during
Science & any enterprises under our control will strictly comply with the provisions of
Commitments Commitments the period of
Technology relevant laws, regulations, normative documents, and the articles of
made during regarding October 31, holding the
Development association of the listed company, perform the decision-making procedures Completed
asset related party 2018 shares of
Co., Ltd and information disclosure obligations for related party transactions, and
restructuring transactions Yunnan Baiyao
(“Jiangsu warrant not to harm any legitimate rights and interest of the listed company
(directly and
Yuyue”) and any other shareholders through related party transactions. This
indirectly)
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.
After the completion of this merger and overall listing, our
company/institution will maintain independence from the listed company in
terms of personnel, assets, business, institutions, and finance in accordance
with relevant laws, regulations, and normative documents. We will not, by
Remain
virtue of the identity as a related party of the listed company, engage in the
Yunnan State- effective during
Commitments acts that affect the independence of the listed company’s personnel, assets,
Commitments owned Equity the period of
to maintain the business, institutions, and finances, or harm any rights and interest of the
made during Operation October 31, holding the
independence listed company and any other shareholders. Instead, we will effectively In progress
asset Management 2018 shares of
of the listed ensure the independence of the listed company in terms of personnel, assets,
restructuring Company, New Yunnan Baiyao
company business, institutions, finance, etc. This commitment letter shall come into
Huadu (directly and
effect and be irrevocable as of the date of official signature by our
indirectly)
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,
54
2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
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.
After the completion of this merger and overall listing, our
company/institution will maintain independence from the listed company in
terms of personnel, assets, business, institutions, and finance in accordance
with relevant laws, regulations, and normative documents. We will not, by
virtue of the identity as a related party of the listed company, engage in the
acts that affect the independence of the listed company’s personnel, assets, Remain
business, institutions, and finances, or harm any rights and interest of the effective during
Commitments
Commitments listed company and any other shareholders. Instead, we will effectively the period of
to maintain the
made during ensure the independence of the listed company in terms of personnel, assets, October 31, holding the
Jiangsu Yuyue independence Completed
asset business, institutions, finance, etc. This commitment letter shall come into 2018 shares of
of the listed
restructuring effect and be irrevocable as of the date of official signature by our Yunnan Baiyao
company
company/institution. Our company/institution warrants the effective (directly and
fulfillment of these commitments, and the listed company has the right to indirectly)
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.
If Yunnan Baiyao and its subsidiaries within the scope of its consolidated
Baiyao Remain
financial statements, and, Baiyao Holdings and its subsidiaries within the
Holdings, effective during
scope of its consolidated financial statements engaged in any illegal
Commitments Yunnan State- the period of
Commitments activities in the domestic real estate development business during the
made during owned Equity December 11, holding the
regarding real reporting period, such as undisclosed land vacancy, speculation of land, In progress
asset Operation 2018 shares of
estate business property hoarding, and price gouging, which have caused any losses to
restructuring Management Yunnan Baiyao
Yunnan Baiyao and investors, our company/institution will bear any and all
Company, New (directly and
of corresponding compensation liabilities for such losses as required by
Huadu indirectly)
relevant laws, regulations and securities regulatory authorities.
If Yunnan Baiyao and its subsidiaries within the scope of its consolidated
Remain
financial statements, and, Baiyao Holdings and its subsidiaries within the
effective during
scope of its consolidated financial statements engaged in any illegal
Commitments the period of
Commitments activities in the domestic real estate development business during the
made during December 11, holding the
Jiangsu Yuyue regarding real reporting period, such as undisclosed land vacancy, speculation of land, Completed
asset 2018 shares of
estate business property hoarding, and price gouging, which have caused any losses to
restructuring Yunnan Baiyao
Yunnan Baiyao and investors, our company/institution will bear any and all
(directly and
of corresponding compensation liabilities for such losses as required by
indirectly)
relevant laws, regulations and securities regulatory authorities.
55
2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
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.
1. Our company/institution will not interfere with any operation and
management activities of the listed company beyond authority, nor will it
encroach on any interest of the listed company.
2. After the date of issuance of this commitment letter, if the securities
Baiyao regulatory authorities make other regulatory requirements regarding Remain
Commitments
Holdings, compensatory measures and related commitments, and the above effective during
regarding
Commitments Yunnan State- commitments fail to meet such new regulatory regulations of the securities the period of
compensatory
made during owned 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 compensatory measures formulated by the listed company and the relevant indirectly)
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.
1. Our company/institution will not interfere with any operation and
management activities of the listed company beyond authority, nor will it
encroach on any interest of the listed company.
2. After the date of issuance of this commitment letter, if the securities Remain
Commitments
regulatory authorities make other regulatory requirements regarding effective during
regarding
Commitments compensatory measures and related commitments, and the above the period of
compensatory
made during commitments fail to meet such new regulatory regulations of the securities December 11, holding the
Jiangsu Yuyue measures after Completed
asset regulatory authorities, our company/institution will undertake to issue 2018 shares of
dilution of
restructuring supplementary commitments in accordance with their then latest relevant Yunnan Baiyao
immediate
regulations. (directly and
returns
3. Our company/institution undertakes to effectively fulfill the relevant indirectly)
compensatory measures formulated by the listed company and the relevant
commitments made by our company/institution. If our company/institution
violates these commitments and causes any losses to the listed company or
56
2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
investors, our company/institution is willing to legally bear any and all of
the corresponding compensation liabilities for such losses.
1. I undertake not to transfer benefits to any other units or individuals without
compensations or under unfair conditions, nor to harm any interest of the
listed company in any other way. 2. I undertake to restrain my official
consumption. 3. I undertake not to use the assets of the listed company to
engage in investment or consumption activities unrelated to my duties. 4. I
undertake that the compensation system to be formulated by the Board of
Directors or Remuneration Committee in the future will be linked to the
Commitments
Directors, implementation of compensatory measures taken by the listed company. 5. I
regarding
Commitments supervisors, and undertake that the exercise conditions of the listed company’s equity
compensatory
made during senior incentives to be announced in the future will be linked to the implementation December 11, Remain
measures after In progress
asset management of of the compensatory measures taken by the listed company. 6. I undertake to 2018 effective
dilution of
restructuring the listed effectively fulfill the relevant compensatory measures formulated by the
immediate
company listed company and any commitments made by myself regarding
returns
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.
1. Yunnan State-owned Equity Operation Management Company has
undertaken the previous commitments of SASAC of Yunnan Province: In
order to avoid horizontal competition with the listed company and safeguard
the legitimate rights and interest of the listed company and other
shareholders, Yunnan State-owned Equity Operation Management Remain
Yunnan State- Company solemnly makes the following statements and commitments: After effective during
Commitments owned Equity Commitments the completion of this transaction, Yunnan State-owned Equity Operation the period of
made during Operation regarding Management Company will not directly engage in any businesses that are October 31, holding the
In progress
asset Management horizontal the same as or similar to, and constitute a competition with, the principal 2018 shares of
restructuring Company, New competition businesses of the listed company. Yunnan Baiyao
Huadu 2. New Huadu undertakes that: As of the issuance date of this commitment (directly and
letter, our company and any enterprises under our control have not invested indirectly)
in any company, enterprise or other operating entity engaged in any business
the same as, or similar to, the principal businesses of the listed company or
co-operating or co-engaged, with others, in business the same as, or similar
to, the principal businesses of the listed company.
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2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
After the completion of this transaction, our company and any enterprises
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,
Commitments
and effective documents, materials, or oral statements and explanations for
Directors, regarding the
this transaction at this stage, without any concealments, false records, or
Commitments supervisors, and authenticity,
significant omissions. The provided copy materials or photocopies are
made during senior accuracy, and Remain
consistent and aligned with the original materials or originals. The signatures June 10, 2021 In progress
asset management of completeness effective
and seals on the provided documents and materials are authentic, with
restructuring the listed of the
necessary legal procedures for such signatures and seals having been
company information
fulfilled, and legal authorizations having been obtained. All statements and
provided
explanations of facts are consistent with the facts that occurred. According
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2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
to the progress of this transaction, our company/I will provide relevant
information and documents in a timely manner in accordance with relevant
laws, regulations, rules, and relevant provisions of the China Securities
Regulatory Commission (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
regarding the
Yunnan State- such signatures and seals having been fulfilled, and legal authorizations
Commitments authenticity,
owned Equity having been obtained. All statements and explanations of facts are consistent
made during accuracy, and Remain
Operation with the facts that occurred. According to the progress of this transaction, June 10, 2021 In progress
asset completeness effective
Management our company will provide relevant information and documents in a timely
restructuring of the
Company manner in accordance with relevant laws, regulations, rules, and relevant
information
provisions of the CSRC and the stock exchange, and ensure that the
provided
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,
Commitments
authentic, accurate, complete, and effective documents, materials, or oral
regarding the
statements and explanations for this transaction at this stage, without any
Commitments authenticity,
New Huadu and concealments, false records, or significant omissions. The provided copy
made during accuracy, and Remain
its acting-in- materials or photocopies are consistent and aligned with the original June 10, 2021 In progress
asset completeness effective
concert parties materials or originals. The signatures and seals on the provided documents
restructuring of the
and materials are authentic, with necessary legal procedures for such
information
signatures and seals having been fulfilled, and legal authorizations having
provided
been obtained. All statements and explanations of facts are consistent with
59
2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
the facts that occurred. According to the progress of this transaction, our
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.
1. I undertake not to transfer benefits to any other units or individuals without
compensations or under unfair conditions, nor to harm any interest of the
listed company in any other way. 2. I undertake to restrain my official
consumption 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 linked
Commitments 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 company. effective
restructuring the listed immediate 6. If, during the period after the date of issuance of this commitment letter
company returns by this and before the completion of this transaction by the listed company, the
restructuring 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.On October 31, 2018, SASAC of Yunnan Province, as a shareholder of the
Yunnan State-
Commitments to maintain the listed company, issued the Commitment Letter of SASAC of Yunnan Province
owned Equity
made during independence on Maintaining the Independence of the Listed Company, Commitment Remain
Operation June 10, 2021 In progress
asset of the listed Letter of SASAC of Yunnan Province on Reducing and Regulating Related effective
Management
restructuring company, Party Transactions, and Commitment Letter of SASAC of Yunnan Province
Company
reduce and on Avoiding Horizontal Competition. On April 7, 2020, our company issued
60
2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
regulate the Commitment Letter of Yunnan State-owned Equity Operation
related party Management Company on Its Undertaking of the Relevant Commitments
transactions, Made in the Process of Yunnan Baiyao’s Merger Transaction by SASAC of
and avoid Yunnan Province (hereinafter referred to as the “Commitment Letter on
horizontal Undertaking”), committing to fully undertake, as of the date of completion
competition of this equity transfer (calculated from the date of registration 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. 2. As of
the date of signing this commitment letter, our company has 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.
1. As of the date of signing this commitment letter, our company has always
strictly fulfilled the Commitment Letter on Maintaining the Independence of
the Listed Company, Commitment Letter on Reducing and Regulating
Related Party Transactions, and Commitment Letter on Avoiding Horizontal
Commitments
Competition all issued on October 31, 2018. Our company’s acting-in-
to maintain the
concert parties have always strictly fulfilled the Commitment Letter on
independence
Reducing and Regulating Related Party Transactions issued on October 31,
of the listed
2018, and have not violated any of the commitments made. After the
Commitments company,
New Huadu and completion of this transaction, our company and our acting-in-concert
made during reduce and Remain
its acting-in- parties will continue to strictly fulfill this commitment letter to safeguard the June 10, 2021 In progress
asset regulate effective
concert parties interest of the listed company and any and all of its shareholders.
restructuring related party
2. After the completion of this transaction, our company’s acting-in-concert
transactions,
parties will maintain independence from the listed company in terms of
and avoid
personnel, assets, business, institutions, and finance in accordance with
horizontal
relevant laws, regulations, and normative documents, and will not, by virtue
competition
of the identity as a shareholder and a related party of the listed company,
engage in the acts that affect the independence of the listed company’s
personnel, assets, business, institutions, and finances, or harm any rights and
interest of the listed company and other shareholders. Instead, they will
61
2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
effectively ensure the independence of the listed company in terms of
personnel, assets, business, institutions, finance, etc.
3. As of the date of signing this commitment letter, our company’s 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.
4. This commitment letter shall come into effect and be irrevocable as of the
date of official signature by our company and our acting-in-concert parties.
Our company and our acting-in-concert parties warrant the effective
fulfillment of these commitments, and the listed company has the right to
supervise their fulfillment of this commitment letter. If our company and our
acting-in-concert parties fail to effectively fulfill this commitment letter,
leading to any actual losses to the listed company, our company and our
acting-in-concert parties will compensate for any and all of such direct or
indirect losses so caused to the listed company.
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,
Commitments impartiality, and compensation for equal value, with the transaction prices
Commitments
to reduce and to be determined based on the reasonable prices recognized in the market.
made during Remain
Listed company regulate Our company will strictly comply with the provisions of relevant laws, June 10, 2021 In progress
asset effective
related party regulations, normative documents, and the Articles of Association of
restructuring
transactions Shanghai Pharma, perform the decision-making 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
62
2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
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 period, the transfer and trading of such shares shall be handled in accordance
Commitments the end of the
made during with the then effective laws and regulations, as well as the regulations and
Listed company regarding May 11, 2021 issuance of new In progress
asset rules of the CSRC, Shenzhen Stock Exchange (SZSE), and Shanghai Stock
lock-up shares shares by
restructuring Exchange (SHSE). After the completion of this transaction, our company
Shanghai
will also arrange a lockup period as described above for our any increased
Pharma
stake in Shanghai Pharma after it issues bonus shares or convert public
reserve funds into share capital.
Whether the
commitments
Yes
are fulfilled as
scheduled
63
2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
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 reorganization related events during the reporting period.
VIII. Legal Matters
Significant lawsuits and arbitrations
□Applicable Not applicable
There was no significant lawsuits and arbitrations during the reporting period.
64
2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
Other lawsuits
Applicable □Not applicable
Any
Basic Amount
Estimated Litigation Enforcement of Litigation
Information of Involved Litigation (Arbitration) Trial Results and
Liability (Arbitration) (Arbitration) Judgments Disclosure Date Disclosure Index
Litigation (RMB’0,0 Impacts
Caused or Progress
(Arbitration) 00)
Not
The claims were
transmitted by means of
communication, written
If payments of both parties payable to each other reports and other forms
Contract Dispute can be offset against each other, in accordance through the liaison channel
of Yunnan with the content of the civil judgments, Chuxiong of the Kunming
The Supreme
Baiyao Group Linxin Mushroom Developing Co., Ltd shall also Intermediate Court of the
People’s
Traditional need to pay Yunnan Baiyao Group Traditional rule of law business
Court has
Chinese Chinese Medicine Resources Co., Ltd an environment. The Annual Report for 2022,
disallowed the
Medicine outstanding payment loss of RMB 2,876,484.81, enforcement for debt Interim Report for 2023
request for a
Resources Co., together with an interest calculated from the offsetting was completed and Annual Report for
368.60 No retrial by March 31, 2023
Ltd (one of the offsetting date based on the above outstanding on October 24, 2023. A 2023. For details, please
Chuxiong
Company’s payment loss and Loan Prime Rate (LPR) total of RMB 34.8934 refer to
Linxin
subsidiaries) vs published by the National Interbank Funding million was offset, with a http://www.cninfo.com.cn
Mushroom
Chuxiong Linxin Center. Meanwhile, Chuxiong Linxin Mushroom remaining RMB 3.686
Developing
Mushroom Developing Co., Ltd shall also need to million pending further
Co., Ltd.
Developing Co., compensate Yunnan Baiyao Group Traditional asset discovery for
Ltd Chinese Medicine Resources Co., Ltd for the execution. (In the case of
prepaid litigation fee of RMB 34,332.00. final execution, if any
executable assets are
discovered, the execution
process will be resumed.)
65
2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
Some cases
have been
Summary of
filed to be
other events not
tried; some are
meeting the
being under Some judgments have
disclosure
trials to be Summary of litigation events has no significant come into effect and have
standards for 85,567.79 No /
adjudicated; impact on the Company been enforced or are being
being included in
some have enforced
significant
been
litigation
adjudicated;
(arbitration)
some have
been closed.
IX. Punishments and Rectifications
□Applicable Not applicable
There was no punishment or rectification involving the Company during the reporting period.
X. Credit Quality of the Company as well as its Controlling Shareholder and De Facto Controller
□Applicable Not applicable
XI. Significant Related Party Transactions
1. Related party transactions related to daily operations
□Applicable Not applicable
There were no related party transactions related to daily operations during the reporting period.
2. Related party transactions arising from acquisition or sale of assets or equity
□Applicable Not applicable
There were no related party transactions arising from acquisition or sale of assets or equity during the reporting period.
66
2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
3. Related party transactions regarding joint investments in third parties
□Applicable Not applicable
There were no related party transactions regarding joint investments in third parties during the reporting period.
4. Amounts due to and from related parties
□Applicable Not applicable
There were no amounts due to and from related parties during the reporting period.
5. Transactions with related finance companies
□Applicable Not applicable
There were no deposit, loan, credit or other financial business occurred between the Company and its related finance
companies/related parties.
6. Transactions with related parties by finance company controlled by the Company
□Applicable Not applicable
There were no deposit, loan, credit or other financial business occurred between any finance companies under the
control of the Company and related parties.
7. Other significant related party transactions
□Applicable Not applicable
There were no other significant related party transactions during the reporting period.
XII. Major Contracts and Their Performance
1. Entrustment, contracting and leases
(1) Entrustment
□Applicable Not applicable
There were no entrustment events of the Company during the reporting period.
(2) Contracting
□Applicable Not applicable
There were no contracting events of the Company during the reporting period.
(3) Leases
□Applicable Not applicable
There were no leases of the Company during the reporting period.
2. Major guarantees
Applicable □Not applicable
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 for a related
party quota type (if any) period or not
of guarantee date amount (if any) party or not
quota
Yunnan
Joint and
Yuncheng
November 24, several
Hospital 150,000 12 years No No
2017 liability
Management
guarantee
Co., Ltd.
67
2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
Total approved limit for guarantees Total amount of guarantees
for others during the reporting 0 for others incurred during 0
period (A1) the reporting period (A2)
Total actual balance of
Total approved limit for guarantees
guarantees for others at the
for others at the end of the reporting 150,000 150,000
end of the reporting period
period (A3)
(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 for a related
party quota type (if any) period or not
of guarantee date amount (if any) party or not
quota
None
Total amount of guarantees
Total approved limit for guarantees
for subsidiaries incurred
for subsidiaries during the reporting 0 0
during the reporting period
period (B1)
(B2)
Total actual balance of
Total approved limit for guarantees
guarantees for subsidiaries at
for subsidiaries at the end of the 0 0
the end of the reporting
reporting period (B3)
period (B4)
Guarantees by subsidiaries to another subsidiaries
Disclosure date
of related Actual Actual Counter Guarantee
Guaranteed Guarantee Guarantee Collateral Guarantee Fulfilled
announcement occurrence guarantee guarantee for a related
party quota type (if any) period or not
of guarantee date amount (if any) party or not
quota
None
Total approved limit for guarantees Total amount of guarantees for
for subsidiaries during the reporting 0 subsidiaries incurred during the 0
period (C1) reporting period (C2)
Total approved limit for guarantees Total actual balance of
for subsidiaries at the end of the 0 guarantees for subsidiaries at the 0
reporting period (C3) end of the reporting period (C4)
The Company’s total guarantee amount (total amount of the first three major items)
Total approved guarantee limit Total actual amount of guarantee
during the reporting period 0 incurred during the reporting 0
(A1+B1+C1) period (A2+B2+C2)
Total approved guarantee limit at Total actual guarantee balance at
the end of the reporting period 150,000 the end of the reporting period 150,000
(A3+B3+C3) (A4+B4+C4)
The proportion of actual total guarantee amount (i.e. A4+B4+C4)
3.81%
to the Company’s net assets
Of which:
Balance of guarantees for shareholders, de facto controllers and
0
related parties (D)
Balance of debt guarantees directly or indirectly provided to the
0
parties with the gearing ratio exceeding 70% (E)
Total amount of guarantees exceeding 50% of net assets (F) 0
68
2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
Total amount of the above three types of guarantees (D+ E+ F) 0
Description of the circumstances, if any, under which the guarantee
liability arose during the reporting period or there is evidence of a
None.
likelihood of joint and several liquidation liability for the
outstanding guarantee contracts during the reporting period
Explanation on provision of guarantee to external parties in
None.
violation of prescribed procedures, if any
Note: On April 22, 2024, Yunnan Yuncheng Hospital Management Co., Ltd held a shareholders’ meeting where the shareholders
unanimously agreed to terminate the PPP project for the Chenggong Hospital (Phase I) of Kunming Medical University First Affiliated
Hospital. They also agreed to terminate the PPP project contract, investment agreement, and drug distribution project agreement. The
project company is currently in the liquidation phase.
Explanations on the specific situation of guarantees provided by composite methods: None.
3. Cash entrusted for wealth management
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 100,690.20 100,690.20 0 0
products
Other type Self-owned 0 0 0 0
Total 100,690.20 100,690.20 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
4. Other Significant Contracts
□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
(I) System updates
1. On March 28, 2024, the Company held the third session of the Tenth Board of Directors for 2024, at which
the Proposal on Revising the Rules of Procedure for the Board of Directors and the Proposal on Revising the Rules
of Procedure for Office Meetings had been considered and approved. More details can be found in the
Announcement on Resolutions of the Third Session of the Tenth Board of Directors for 2024 (Announcement No.
2024-15), the Rules of Procedure for the Board of Directors and the Rules of Procedure for Office Meetings
disclosed by the Company at http://www.cninfo.com.cn on March 30, 2024.
2. On April 26, 2024, the Company held the fourth session of the Tenth Board of Directors for 2024, at which
the Proposal on Formulating the Yunnan Baiyao Group’s Compliance Management Measures (Trial) had been
69
2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
considered and approved. More details can be found in the Announcement on Resolutions of the Fourth Session of
the Tenth Board of Directors for 2024 (Announcement No. 2024-23), and Yunnan Baiyao Group’s Compliance
Management Measures (Trial) disclosed by the Company at http://www.cninfo.com.cn on April 27, 2024.
(II) Changes in shareholdings of shareholders
1. Expiration of the shareholder’s shareholding reduction plan
On January 17, 2024, the Company disclosed the Announcement on the Expiration of the Shareholder’s
Shareholding Reduction Plan (Announcement No.: 2014-01) and received from its shareholder Jiangsu Yuyue, the
Notice on Voluntary Information Disclosure Regarding the Expiration of Bidding-based Shareholding Reduction
Plan and Shareholding Reduction Implementation Progress, stating that as of January 13, 2024, Jiangsu Yuyue’s
shareholding reduction plan had expired and it had completed the shareholding reduction plan. From July 17, 2023
to January 13, 2024, Jiangsu Yuyue accumulatively reduced, by means of centralized bidding trading, its
shareholding in the Company by 35,936,638 shares not subject to trading moratorium, accounting for 1.99997% of
the Company’s total share capital, indicating that its shareholding reduction was consistent with the previously
disclosed shareholding reduction plan, and that the shareholding reduction quantity fell within the quantity scope of
the shareholding reduction plan.
2. Shareholders’ partial share pledge and release of pledge
(1) On February 28, 2024, the Company disclosed the Announcement on the Release of Shareholders’ Partial
Share Pledge (Announcement No. 2024-10). On February 27, 2024, the Company received a notice from its
shareholder Yunnan State-owned Equity Operation Management Company, stating that Yunnan State-owned Equity
Operation Management Company had released the pledge on its 71,400,000 shares held in the Company (accounting
for 3.97% of the Company’s total share capital).
(2) On May 17, 2024, the Company disclosed the Announcement on Shareholders’ Partial Share Pledge
(Announcement No.: 2024-29). In the past few days, the Company received a notice from its shareholder New
Huadu, stating that New Huadu set up a pledge on its 46,380,000 shares held in the Company (accounting for 2.60%
of the Company’s total share capital).
(III) Change of use of repurchased shares and cancellation
On February 8, 2024, the Company disclosed the Announcement on Change of Use of Repurchased Shares and
Cancellation (Announcement No.: 2024-04), stating that the Company intends to change the use of repurchased
shares for the purpose of safeguarding the interests of investors. The use of such repurchased shares is changed from
“for the implementation of employee stock ownership plan or equity incentive plan” to “for cancellation to reduce
the registered capital.” That is, the Company intends to cancel all 12,599,946 shares in the special securities account
for stock repurchase and reduce the Company’s registered capital accordingly.
The above matters had been considered and approved at the first session of the Company’s Tenth Board of
Directors for 2024 on February 7, 2024 and the Company’s first extraordinary general meeting for 2024 on February
23, 2024. More details can be found in the Announcement on Resolutions of the First Session of the Tenth Board of
Directors for 2024 (Announcement No. 2024-03), Announcement on Change of Use of Repurchased Shares and
Cancellation (Announcement No. 2024-04), Announcement on Resolutions of the First Extraordinary General
70
2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
Meeting for 2024 (Announcement No. 2024-07), and Announcement on Change of Use of Repurchased Shares and
Cancellation and Notice to Creditors (Announcement No. 2024-08) disclosed at http://www.cninfo.com.cn.
On April 23, 2024, the Company disclosed the Announcement on Cancellation of Repurchased Shares and
Change in Shareholding (Announcement No.: 2024-21). On April 19, 2024, the Company completed the
cancellation of the above 12,599,946 repurchased shares with the Shenzhen Branch of China Securities Depository
and Clearing Corporation. The Company has 1,784,262,603.00 shares in total after this cancellation.
(IV) Application for registration and issuance of ultra short-term financing bonds
On February 26, 2024, the Company received the Notice of Acceptance of Registration (Zhongshi Xiezhu
[2024] No. SCP63) issued by National Association of Financial Market Institutional Investors (“NAFMII”), stating
its agreement to accept the Company’s registration of ultra short-term financing bonds. According to the above
Notice of Acceptance of Registration, the Company’s registered amount of ultra short-term financing bonds is RMB
3 billion, in which the registration limit remains valid within two (2) years as of the signature of the Notice, with
Industrial and Commercial Bank of China Limited as the lead underwriter. The Company may issue ultra short-
term financing bonds in installments during the effective registration period. After the issuance, the issuance results
will be disclosed through channels NAFMII recognizes. More details can be found in the Announcement on
Approval on Registration of Issuance of Ultra-short-term Financing Bonds (Announcement No. 2024-11) disclosed
by the Company at http://www.cninfo.com.cn on February 28, 2024.
On March 20, 2024, the issuance of the Company’s First Tranche of Ultra Short-Term Financing Bonds for
2024 valued RMB 1 billion (Sci-Tech Innovation Notes/Rural Revitalization) was completed and the proceeds were
received in full. For details, please refer to the Announcement on Results of Issuance of the First Tranche of Ultra-
short-term Financing Bonds (Sci-Tech Innovation Notes/Rural Revitalization) (Announcement No. 2024-14)
disclosed by the Company at http://www.cninfo.com.cn on March 21, 2024.
(V) R&D projects
1. On May 11, 2024, the Company disclosed the Announcement on the Approval of INR101 Injection for Drug
Clinical Trials (Announcement No. 2024-26). Recently, Yunhe Pharmaceutical (Tianjin) Co., Ltd (“Yunhe
Pharmaceutical”), a wholly-owned subsidiary of the Company, received the Notice of Approval for Clinical Drug
Trial (Notice No.: 2024LP01109) issued by the National Medical Products Administration, stating that after review,
the application for INR101 injection (hereinafter referred to as “this product”) to be used for clinical trials by Yunhe
Pharmaceutical meets the relevant requirements for drug registration, so this product is approved for clinical trials
in healthy individuals and patients with prostate cancer.
2. On May 11, 2024, the Company disclosed the Announcement on the Approval of Flurbiprofen Cataplasms
for Drug Clinical Trials (Announcement No. 2024-27). Recently, Yunnan Baiyao Group Wuxi Pharmaceutical Co.,
Ltd, a wholly-owned subsidiary of the Company, received the Notice of Approval for Clinical Drug Trial (Notice
No.: 2024LP00886) issued by the National Medical Products Administration, stating that after review, Flurbiprofen
Cataplasms are approved for clinical trials to relieve pains.
3. On June 27, 2024, the Company held the seventh session of the Tenth Board of Directors for 2024, at which
the Proposal on Introducing KA-1641 Projects had been considered and approved, and it is agreed to introduce the
relevant patents of antibody drug KA-1641 (hereinafter referred to as the “target product”) from Kyinno
71
2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
Biotechnology Co., Ltd for the Company, and perform R&D, production, and commercialization activities on the
target product worldwide. More details can be found in the Announcement on Resolutions of the Seventh Session of
the Tenth Board of Directors for 2024 (Announcement No. 2024-38), and Announcement on Introducing KA-1641
Projects (Announcement No. 2024-39) disclosed by the Company at http://www.cninfo.com.cn.
XIV. Significant Events of the Company’s Subsidiaries
Applicable □Not applicable
On January 30, 2024, YNBY International Limited (“YNBY International”) made a public disclosure as
required by the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited and the
laws of Hong Kong. As of the date of this announcement, YNBY International has met the requirements under the
resumption guidance. At the request of YNBY International, trading of its shares was suspended on Hong Kong
Stock Exchange from 9:00 am on June 21, 2022. YNBY International has fully met the requirements under the
resumption guidance to the satisfaction of Hong Kong Stock Exchange. Therefore, YNBY International has applied
to Hong Kong Stock Exchange for resumption of trading of its shares from 9:00 am on January 31, 2024. More
details can be found in the Announcement on Progress of Relevant Matters of YNBY International Limited
(Announcement No. 2024-02) disclosed by the Company at http://www.cninfo.com.cn. on February 1, 2024.
72
2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
Section VII Changes in Shareholdings and Particulars about
Shareholders
I. Changes in Shareholdings
1. Changes in shareholdings
Unit: Share
After this
Before this change Increase/decrease (+, -)
change
Capital
reserve
New Bonus
Quantity Proportion converted Others Subtotal Quantity Proportion
shares shares
into share
capital
I. Shares
subject to
11,567,358 0.64% 0 0 0 3,295,210 3,295,210 14,862,568 0.83%
trading
moratorium
1. State-
owned 0 0.00% 0 0 0 0 0 0 0.00%
shares
2. Shares
held by
state-owned 0 0.00% 0 0 0 0 0 0 0.00%
legal
persons
3. Shares
held by
other 11,567,358 0.64% 0 0 0 3,295,210 3,295,210 14,862,568 0.83%
domestic
shareholders
Of
which:
shares held
0 0.00% 0 0 0 0 0 0 0.00%
by domestic
legal
persons
Shares
held by
domestic 11,567,358 0.64% 0 0 0 3,295,210 3,295,210 14,862,568 0.83%
natural
persons
4.
Foreign-
0 0.00% 0 0 0 0 0 0 0.00%
invested
shares
Of
0 0.00% 0 0 0 0 0 0 0.00%
which:
73
2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
shares held
by overseas
legal
persons
Shares
held by
overseas 0 0.00% 0 0 0 0 0 0 0.00%
natural
persons
II. Shares
not subject - -
1,785,295,191 99.36% 0 0 0 1,769,400,035 99.17%
to trading 15,895,156 15,895,156
moratorium
1. RMB-
denominated - -
1,785,295,191 99.36% 0 0 0 1,769,400,035 99.17%
ordinary 15,895,156 15,895,156
share
2.
Domestic-
listed
0 0.00% 0 0 0 0 0 0 0.00%
foreign-
invested
shares
3.
Overseas-
listed
0 0.00% 0 0 0 0 0 0 0.00%
foreign-
invested
shares
4. Others 0 0.00% 0 0 0 0 0 0 0.00%
III. Total
- -
number of 1,796,862,549 100.00% 0 0 0 1,784,262,603 100.00%
12,599,946 12,599,946
shares
Reasons for changes in shareholdings
Applicable □Not applicable
To safeguard the interests of investors, the Company held a shareholders’ meeting in February 2024 and
approved to change the use of the 12,599,946 repurchased shares to “for cancellation to reduce the registered capital,”
which accounted for 0.7015% of the total share capital of the Company, and the Company completed the
cancellation procedures of the 12,599,946 repurchased shares in April 2024, which accounted for 0.7015% of the
total share capital of the Company. In April 2024, the Company completed the cancellation procedures for the
12,599,946 repurchased shares.
Approval of changes in shareholdings
Applicable □Not applicable
At the first session of the Tenth Board of Directors of the Company for 2024 held on February 7, 2024 and the
first extraordinary general meeting of the Company for 2024 held on February 23, 2024, the Company considered
and approved the Proposal on Change of Use of Repurchased Shares and Cancellation, and agreed that the
Company should change the use of the above 12,599,946 repurchased shares in the special securities account for
repurchase, and change the use of the repurchased shares from “for the implementation of employee stock ownership
74
2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
plan or equity incentive plan” to “for cancellation to reduce the registered capital.” On April 19, 2024, the Company
completed the cancellation procedures of 12,599,946 shares in the special securities account for repurchase at the
Shenzhen Branch of China Securities Depository and Clearing Corporation.
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
To safeguard the interests of investors, the Company held a shareholders’ meeting in February 2024 and
approved to change the use of the 12,599,946 repurchased shares to “for cancellation to reduce the registered capital,”
which accounted for 0.7015% of the total share capital of the Company, and the Company completed the
cancellation procedures of the 12,599,946 repurchased shares in April 2024, which accounted for 0.7015% of the
total share capital of the Company. In April 2024, the Company completed the cancellation procedures for the
12,599,946 repurchased shares.
The total share capital of the Company was 1,796,862,549 shares prior to the completion of the write-off, and
the total share capital of the Company was 1,784,262,603 shares after the completion of the write-off. Based on the
total share capital before the completion of the write-off, the Company’s basic earnings per share for the first half
of 2024 will be RMB 1.77/share, diluted earnings per share will be RMB 1.77/share, and the net assets per share
attributable to the Company’s ordinary shareholders will be RMB 21.91/share; based on the total share capital after
the completion of the write-off, the Company’s basic earnings per share will be RMB 1.79/share, diluted earnings
per share will be RMB 1.79/share, and the net assets per share attributable to the Company’s ordinary shareholders
will be RMB 22.06/share.
Other disclosures deemed necessary by the Company or required by securities regulators
□Applicable Not applicable
2. Changes in shares subject to trading moratorium
Applicable □Not applicable
Unit: share
Number of
shares Increase in
Number of shares Number of shares Date of shares
released shares subject to
subject to trading subject to trading
Name of from trading trading Reason for released from
moratorium at the moratorium at the
shareholder moratorium moratorium moratorium trading
beginning of the end of the
during the during the moratorium
reporting period reporting period
reporting reporting period
period
Locked-up Implemented in
shares held accordance with
Dong Ming 9,960 0 0 9,960
by senior regulatory
management requirements
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2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
Locked-up Implemented in
Zhu shares held accordance with
42,000 0 0 42,000
Zhaoyun by senior regulatory
management requirements
Locked-up Implemented in
Qin shares held accordance with
378,000 0 0 378,000
Wanmin by senior regulatory
management requirements
Locked-up Implemented in
shares held accordance with
Yang Yong 75,768 0 0 75,768
by senior regulatory
management requirements
Locked-up Implemented in
shares held accordance with
Li Jing 42,000 0 0 42,000
by senior regulatory
management requirements
Locked-up Implemented
Wang shares held in accordance with
756,000 0 0 756,000
Minghui by senior regulatory
management requirements
Locked-up Implemented in
shares held accordance with
Chen Fashu 9,395,621 0 3,131,874 12,527,495
by senior regulatory
management requirements
Locked-up Implemented in
Chen shares held accordance with
133,009 0 44,336 177,345
Yanhui by senior regulatory
management requirements
Locked-up Implemented in
shares held accordance with
Yin Pinyao 252,000 0 84,000 336,000
by senior regulatory
management requirements
Locked-up Implemented in
shares held accordance with
Yu Juan 105,000 0 35,000 140,000
by senior regulatory
management requirements
Locked-up Implemented in
shares held accordance with
Wang Jin 378,000 0 0 378,000
by senior regulatory
management requirements
Total 11,567,358 0 3,295,210 14,862,568 -- --
II. Issuance and Listing of Securities
□Applicable Not applicable
III. Number of Shareholders of the Company and Their Shareholdings
Unit: Share
Total number of ordinary shareholders at Total number of preferred shareholders with resumed voting
177,126 0
the end of the reporting period rights at the end of the reporting period (if any)
Shareholdings of ordinary shareholders holding more than 5% of the shares or the top 10 ordinary shareholders (excluding lending of shares
through securities finance)
Pledged, marked or frozen
76
2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
Number of Number of Number of
ordinary Change ordinary ordinary
Name of Nature of Shareholding shares held at during the shares shares not
shareholder shareholder ratio the end of the reporting subject to subject to Status Quantity
reporting period trading trading
period moratorium moratorium
Yunnan State-
owned Equity
State-owned
Operation 25.20% 449,624,311 0 0 449,624,311 Pledged 119,343,840
legal person
Management Co.,
Ltd.
Domestic
New Huadu
non-state-
Industrial Group 24.42% 435,742,244 0 0 435,742,244 Pledged 336,894,000
owned legal
Co., Ltd.
person
Yunnan Hehe State-owned
8.19% 146,185,851 0 0 146,185,851 NA 0
(Group) Co., Ltd. legal person
Hong Kong
Securities Overseas
3.87% 69,040,056 2,178,991 0 69,040,056 NA 0
Clearing legal person
Company Limited
Domestic
China Securities non-state-
2.09% 37,373,108 0 0 37,373,108 NA 0
Finance Corp. owned legal
person
Central Huijin State-owned
0.93% 16,617,440 0 0 16,617,440 NA 0
Investment Ltd. legal person
UBS Asset
Management
(Singapore) Ltd. - Overseas
0.88% 15,691,628 -577,000 0 15,691,628 NA 0
UBS Lux legal person
Investment
SICAV
China Construction
Bank Corporation－
E Fund CSI. 300
Medical and
Others 0.74% 13,167,666 1,867,900 0 13,167,666 NA 0
Healthcare Trading
Open-End Index
Securities
Investment Fund
Domestic
Chen Fashu natural 0.70% 12,527,495 0 12,527,495 0 NA 0
person
National Social
Others 0.68% 12,151,514 354,656 0 0 NA 0
Security Fund 110
Strategic investors or general legal
persons who become the top 10 ordinary Not applicable
shareholders due to rights issue (if any)
Chen Fashu is the de facto controller of New Huadu Industrial Group Co., Ltd. It is unclear whether
Related or acting-in-concert parties there are any related relationships among other shareholders or whether there is any concerted
among the shareholders above action as defined by the Administrative Measures for Information Disclosure of Changes in
Shareholdings of Listed Companies.
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2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
Above shareholders involved in
entrusting/being entrusted with voting Not applicable
rights and giving up voting rights
Special account for share repurchases (if
Not applicable
any) among the top 10 shareholders
Shareholdings of the top 10 ordinary shareholders not subject to trading moratorium (excluding lending of shares through securities finance, and
locked-up shares held by senior management)
Number of ordinary shares not subject to trading Type of shares
Name of shareholder moratorium held at the end of the reporting
period Type Quantity
RMB-
Yunnan State-owned Equity Operation Management
449,624,311 denominated 449,624,311
Co., Ltd.
ordinary share
RMB-
New Huadu Industrial Group Co., Ltd. 435,742,244 denominated 435,742,244
ordinary share
RMB-
Yunnan Hehe (Group) Co., Ltd. 146,185,851 denominated 146,185,851
ordinary share
RMB-
Hong Kong Securities Clearing Company Limited 69,040,056 denominated 69,040,056
ordinary share
RMB-
China Securities Finance Corp. 37,373,108 denominated 37,373,108
ordinary share
RMB-
Central Huijin Investment Ltd. 16,617,440 denominated 16,617,440
ordinary share
RMB-
UBS Asset Management (Singapore) Ltd.－UBS Lux
15,691,628 denominated 15,691,628
Investment SICAV
ordinary share
RMB-
China Construction Bank Corporation－E Fund CSI
13,167,666 denominated 13,167,666
300 Health Care Index ETF
ordinary share
RMB-
National Social Security Fund 110 12,151,514 denominated 12,151,514
ordinary share
Industrial and Commercial Bank of China Limited－ RMB-
Huatai-pinebridge CSI. 300 Trading Open-End Index 10,729,483 denominated 10,729,483
Securities Investment Fund ordinary share
Related or acting-in-concert parties among the top
10 ordinary shareholders not subject to trading Whether there is any related relationship between the above shareholders or concerted action
moratorium, and the top 10 ordinary shareholders as stipulated in the Administrative Measures for Disclosure of Changes in Shareholdings of
not subject to trading moratorium and the top 10 Shareholders of Listed Companies is not known.
ordinary shareholders
Top 10 ordinary shareholders involved in securities
Not applicable
margin trading (if any)
Shareholders holding more than 5% of shares, top 10 shareholders and top 10 shareholders not subject to trading moratorium
participating in the lending of shares in the securities finance
Applicable □Not applicable
Unit: Share
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2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
Shareholders holding more than 5% of shares, top 10 shareholders and top 10 shareholders with shares not subject to trading moratorium
participating in the lending of shares in the transfer and financing business
General and credit account Refinancing shares lent at the General and credit account Refinancing shares lent at
holdings at the beginning of beginning of the period and holdings at the end of the the end of the period and
Name of the period not yet returned period not yet returned
shareholder Percentage Percentage Percentage Percentage
(full name) of total of total of total of total
Total Total Total Total
share share share share
capital capital capital capital
China
Construction
Bank
Corporation－
E Fund CSI.
300 Medical
11,299,766 0.63% 2,242,900 0.12% 13,167,666 0.74% 271,600 0.02%
and Healthcare
Trading Open-
End Index
Securities
Investment
Fund
Industrial and
Commercial
Bank of China
Limited－
Huatai-
pinebridge
6,490,784 0.36% 312,300 0.02% 10,729,483 0.61% 3,600 0.00%
CSI. 300
Trading Open-
End Index
Securities
Investment
Fund
Changes in top 10 shareholders and top 10 shareholders with shares not subject to trading moratorium compared to the previous period
due to lending/returning of shares in the securities finance
□Applicable Not applicable
Whether the top 10 ordinary shareholders and the top 10 ordinary shareholders not subject to trading moratorium of the Company
conducted any agreed repurchase transactions during the reporting period
□Yes No
The top 10 ordinary shareholders and the top 10 ordinary shareholders not subject to trading moratorium of the
Company did not conduct any agreed repurchase transactions during the reporting period.
IV. Changes in Shareholdings of Directors, 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 2023 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
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2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
□Applicable Not applicable
There was no change in the de facto controllers of the Company during the reporting period.
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Section VIII Preference Shares
□Applicable Not applicable
There were no preference shares in the Company during the reporting period.
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Section IX Bonds
Applicable □Not applicable
I. Enterprise bonds
□Applicable Not applicable
The Company did not have enterprise bonds during the reporting period.
II. Corporate bonds
□Applicable Not applicable
The Company did not have corporate bonds during the reporting period.
III. Debt financing instruments for non-financial enterprises
Applicable □Not applicable
1. Basic information on debt financing instruments for non-financial enterprises
Unit: RMB 0’000
Debt
Interest starting Bond Interest Trading
Bond name Abbreviation Bond code Issue date Maturity date service
date balance rate place
method
2024 First Tranche
of Ultra-short-term Lump-
Financing Bonds 2024 Yunnan sum
(Sci-Tech Baiyao debt Interbank
012480938 March 18, 2024 March 20, 2024 December 15, 2024 100,000 2.30%
Notes/Rural SCP001 (Sci- service market
Revitalization) of Tech Notes) on
Yunnan Baiyao maturity
Group Co., Ltd.
Investor suitability arrangements (if any) For qualified institutional investors
Applicable trading mechanism Bid, offer, request for quotation and agreement trading
Risk of termination of listing and trading (if any) and
No
countermeasures
Overdue bonds
□Applicable Not applicable
2. Triggering and enforcement of issuer or investor option clauses, investor protection clauses
□Applicable Not applicable
3. Adjustments to credit rating results during the reporting period
□Applicable Not applicable
4. Implementation and changes in guarantees, debt-servicing plans and other debt-servicing safeguards
during the reporting period and their impact on the rights and interests of bond investors
□Applicable Not applicable
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IV. Convertible corporate bonds
□Applicable Not applicable
The Company did not have convertible corporate bonds during the reporting period.
V. Losses in the scope of the consolidated statements during the reporting period exceeding 10%
of net assets at the end of the previous year
□Applicable Not applicable
VI. Major accounting data and financial indicators of the Company for the latest two years as
at the end of the reporting period
Unit: RMB 0’000
Increase/decrease at the end
At the end of the reporting At the end of the previous of the reporting period
Item
period year compared to the end of the
previous year
Current ratio 2.6405 2.8510 -7.38%
Gearing ratio 27.55% 25.80% 1.75%
Quick ratio 2.2066 2.3453 -5.91%
Increase/decrease in the
The reporting period The same period last year reporting period over the
same period last year
Net profit after extraordinary
313,614.83 273,530.30 14.65%
profits and losses
EBITDA total debt ratio 25.86% 25.30% 0.56%
Interest coverage multiple 148.73 176.72 -15.84%
Cash interest coverage
200.41 159.65 25.53%
multiple
EBITDA interest coverage
155.84 186.79 -16.57%
multiple
Loan repayment ratio 100.00% 100.00% 0.00%
Interest repayment ratio 100.00% 100.00% 0.00%
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2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
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.
1. Consolidated balance sheet
Prepared by: Yunnan Baiyao Group Co., Ltd.
June 30, 2024
Unit: RMB
Item Closing balance Opening balance
Current assets:
Cash and bank balance 14,719,563,531.35 14,218,343,076.67
Provision of settlement fund
Placements with banks and other financial institutions
Financial assets held for trading 1,046,815,045.34 149,366,687.56
Derivative financial assets
Notes receivable 346,072,424.86 227,542,572.56
Accounts receivable 10,105,457,470.63 9,966,170,447.21
Accounts receivable financing 1,723,807,715.55 1,590,749,810.74
Prepayment 309,222,685.06 312,298,727.01
Premium receivable
Reinsurance premium receivable
Reserves for reinsurance contract receivable
Other receivables 364,961,972.39 104,050,709.53
Including: Interest receivable
Dividends receivable 272,906,986.36 4,531,100.00
Financial assets held under resale agreements
Inventory 5,988,059,390.20 6,442,194,823.67
Including: Data resources
Contractual assets
Held-for-sales assets
Non-current assets due within one year 442,772,777.78
Other current assets 1,830,161,506.46 2,862,076,217.20
Total current assets 36,434,121,741.84 36,315,565,849.93
Non-current assets:
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2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
Loans and advances to customers
Debt investments
Other debt investments
Long-term receivables
Long-term equity investments 11,770,384,034.03 11,536,660,992.93
Investment in other equity instruments 71,745,000.00 71,745,000.00
Other non-current financial assets 312,459,342.04 324,674,379.63
Investment properties 47,029,107.86 44,104,145.97
Fixed assets 2,601,062,934.15 2,662,900,014.03
Construction in progress 713,596,692.91 529,708,553.58
Productive biological assets 902,474.79 988,424.85
Oil and gas assets
Right-of-use assets 270,258,242.13 258,319,485.58
Intangible assets 570,976,982.20 583,372,000.59
Including: Data resources
Development expenses 22,488,583.70 14,452,474.57
Including: Data resources
Goodwill 104,121,771.67 104,121,771.67
Long-term deferred expenses 88,313,398.34 105,335,550.31
Deferred income tax assets 798,191,932.10 690,869,209.12
Other non-current assets 561,892,994.48 541,475,331.17
Total non-current assets 17,933,423,490.40 17,468,727,334.00
Total assets 54,367,545,232.24 53,784,293,183.93
Current liabilities:
Short-term loans 1,144,447,669.32 1,747,303,700.34
Borrowings from the central bank
Placements from banks and other financial institutions
Financial liabilities held for trading
Derivative financial liabilities
Notes payable 1,851,834,540.05 1,850,863,313.78
Accounts payable 4,511,428,127.33 4,359,632,642.20
Receipts in advance 2,045,212.68 486,612.12
Contractual liabilities 1,762,470,306.12 1,739,865,228.75
Financial assets sold under repurchase agreements
Deposits from customers and interbank
Customer brokerage deposits
Acting underwriting of securities
Payroll payable 863,101,527.50 1,067,190,665.08
Taxes and duties payable 515,227,950.50 339,670,850.02
Other payables 1,380,365,853.97 1,025,085,879.54
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2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
Including: Interest payable
Dividends payable 87,345,672.28 86,490,742.04
Fees and commissions payable
Reinsurance amounts payable
Held-for-sales liabilities
Non-current liabilities due within one year 68,739,138.20 74,736,102.58
Other current liabilities 1,698,311,110.99 532,943,904.40
Total current liabilities 13,797,971,436.66 12,737,778,898.81
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 193,456,851.84 172,347,309.72
Long-term payables 612,220,198.12 631,735,908.04
Long-term payroll payable 4,044,355.72 4,090,687.99
Estimated liabilities 16,050,005.49
Deferred income 258,295,711.44 238,811,111.04
Deferred income tax liabilities 91,307,338.06 74,772,071.70
Other non-current liabilities 1,931,554.36 17,296,814.41
Total non-current liabilities 1,179,406,015.03 1,141,153,902.90
Total liabilities 14,977,377,451.69 13,878,932,801.71
Owners’ equity:
Share capital 1,784,262,603.00 1,796,862,549.00
Other equity instruments
Including: Preferred shares
Perpetual bonds
Capital reserves 17,567,398,358.39 18,246,619,742.09
Less: Treasury stock 707,428,892.15
Other comprehensive income -97,906,037.73 -89,538,172.13
Special reserves
Surplus reserves 2,530,458,968.58 2,530,458,968.58
Provision for general risk
Undistributed profit 17,585,064,312.79 18,102,147,836.12
Total owners’ equity attributable to parent company 39,369,278,205.03 39,879,122,031.51
Minority interests 20,889,575.52 26,238,350.71
Total owners’ equity 39,390,167,780.55 39,905,360,382.22
Total liabilities and owners’ equity 54,367,545,232.24 53,784,293,183.93
Legal representative: Dong Ming Accounting officer: Ma Jia Head of accounting center: Xu Jing
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2. Balance sheet of parent company
Unit: RMB
Item Closing balance Opening balance
Current assets:
Cash and bank balance 10,694,741,380.08 11,558,478,370.89
Financial assets held for trading 972,790,332.60 72,221,202.90
Derivative financial assets
Notes receivable 49,901,491.15 6,112,294.09
Accounts receivable 1,741,700,162.89 1,330,908,560.96
Accounts receivable financing 780,279,415.32 602,881,796.61
Prepayment 1,417,634,473.46 1,600,931,041.18
Other receivables 6,389,820,006.77 4,127,088,902.76
Including: Interest receivable
Dividends receivable 272,906,986.36 4,531,100.00
Inventory 1,193,583,333.68 1,462,389,548.82
Including: Data resources
Contractual assets
Held-for-sales assets
Non-current assets due within one year 442,772,777.78
Other current assets 1,920,776,647.02 3,156,374,029.15
Total current assets 25,161,227,242.97 24,360,158,525.14
Non-current assets:
Debt investments
Other debt investments
Long-term receivables
Long-term equity investments 14,116,277,031.67 13,882,263,332.22
Investment in other equity instruments
Other non-current financial assets 311,959,342.04 324,174,379.63
Investment properties 319,374,073.80 319,279,203.56
Fixed assets 1,370,356,779.09 1,406,905,437.93
Construction in progress 195,596,927.19 127,864,253.80
Productive biological assets
Oil and gas assets
Right-of-use assets 199,204,552.73 259,635,687.65
Intangible assets 276,983,642.95 283,913,499.08
Including: Data resources
Development expenses 22,488,583.70 14,452,474.57
Including: Data resources
Goodwill
Long-term deferred expenses 17,137,953.28 19,333,368.56
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2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
Deferred income tax assets 415,141,588.71 374,888,819.41
Other non-current assets 474,139,553.78 467,069,694.11
Total non-current assets 17,718,660,028.94 17,479,780,150.52
Total assets 42,879,887,271.91 41,839,938,675.66
Current liabilities:
Short-term loans 248,155,931.32 19,002,863.01
Financial liabilities held for trading
Derivative financial liabilities
Notes payable
Accounts payable 3,734,040,440.23 3,247,231,002.57
Receipts in advance 2,008,625.40 368,860.80
Contractual liabilities 1,360,965,799.79 1,316,384,668.74
Payroll payable 672,286,505.42 742,388,264.48
Taxes and duties payable 202,578,430.89 53,940,771.05
Other payables 10,980,899,000.41 9,513,887,394.94
Including: Interest payable
Dividends payable 86,490,742.04 86,490,742.04
Held-for-sales liabilities
Non-current liabilities due within one
16,345,705.75 17,766,112.27
year
Other current liabilities 1,088,480,198.01 86,664,716.45
Total current liabilities 18,305,760,637.22 14,997,634,654.31
Non-current liabilities:
Long-term loans 1,100,000.00 1,100,000.00
Bonds payable
Including: Preferred shares
Perpetual bonds
Lease liabilities 190,885,020.32 247,778,172.74
Long-term payables 612,220,198.12 631,735,908.04
Long-term payroll payable
Estimated liabilities
Deferred income 166,165,129.66 147,405,764.87
Deferred income tax liabilities 34,442,391.21 48,751,418.36
Other non-current liabilities 1,931,554.36 1,931,554.36
Total non-current liabilities 1,006,744,293.67 1,078,702,818.37
Total liabilities 19,312,504,930.89 16,076,337,472.68
Owners’ equity
Share capital 1,784,262,603.00 1,796,862,549.00
Other equity instruments
Including: Preferred shares
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2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
Perpetual bonds
Capital reserves 17,769,789,683.33 18,449,011,067.03
Less: Treasury stock 707,428,892.15
Other comprehensive income -60,472,160.74 -54,646,721.46
Special reserves
Surplus reserves 2,529,297,618.08 2,529,297,618.08
Undistributed profits 1,544,504,597.35 3,750,505,582.48
Total owners’ equity 23,567,382,341.02 25,763,601,202.98
Total liabilities and owners’ equity 42,879,887,271.91 41,839,938,675.66
3. Consolidated income statement
Unit: RMB
Item 1H 2024 1H 2023
I. Total operating revenue 20,455,286,287.52 20,309,372,850.07
Including: Operating revenue 20,455,286,287.52 20,309,372,850.07
Interest income
Premiums earned
Fee and commission income
II. Total operating cost 17,225,017,022.40 17,462,566,820.49
Including: Operating cost 14,462,809,950.85 14,713,232,267.40
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 119,551,819.49 108,372,830.01
Selling expenses 2,296,821,490.59 2,257,688,549.69
Administrative expenses 327,410,020.48 344,443,810.40
R&D expenses 148,043,019.34 144,819,933.66
Financial expenses -129,619,278.35 -105,990,570.67
Including: Interest expenses 27,648,907.91 18,798,896.05
Interest income 162,711,635.16 114,776,796.46
Plus: Other income 47,920,871.74 42,177,454.66
Investment income (loss is indicated with “-”) 477,498,314.49 421,542,165.56
Including: Income from investment in associates and joint
506,633,970.31 447,048,881.55
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 “-”)
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2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
Income from changes in fair value (loss is indicated with “-”) 4,596,876.81 53,088,928.07
Credit impairment losses (loss is indicated with “-”) -82,762,335.12 -74,680,582.29
Asset impairment losses (loss is indicated with “-”) -3,578,594.53 19,008,334.90
Gains from asset disposal (loss is indicated with “-”) -1,592,134.63 5,403,078.51
III. Operating profit (loss is indicated with “-”) 3,672,352,263.88 3,313,345,408.99
Plus: Non-operating revenue 4,431,701.71 2,002,724.29
Less: Non-operating expenses 4,755,624.76 12,068,474.23
IV. Total profit (total loss is indicated with “-”) 3,672,028,340.83 3,303,279,659.05
Less: Income tax expenses 482,065,489.87 477,020,837.61
V. Net profit (net loss is indicated with “-”) 3,189,962,850.96 2,826,258,821.44
(I) Classification by operation continuity
1. Net profit from continuing operations (net loss is indicated with
3,189,962,850.96 2,826,258,821.44
“-”)
2. Net profit from discontinued operations (net loss is indicated with
“-”)
(II) Classification by ownership
1. Net profits attributable to the shareholders of the parent company
3,188,829,903.10 2,828,011,615.30
(net loss to be listed with “-”)
2. Minority interests (net loss is indicated with “-”) 1,132,947.86 -1,752,793.86
VI. Other comprehensive income, net of tax -8,020,440.18 -28,749,435.38
Other comprehensive income attributable to owners of parent
-8,367,865.60 -27,537,362.56
company, net of tax
(I) Other comprehensive income that cannot be reclassified into
2,004,091.79 -8,119,659.75
profits or losses
1. Changes arising from re-measurement of the defined benefit
plan
2. Other comprehensive income that cannot be reclassified into
2,004,091.79 -8,119,659.75
profits or losses under the equity method
3. Changes in fair value of other equity instrument investments
4. Changes in fair value of the enterprise’s credit risk
5. Others
(II) Other comprehensive income that will be reclassified into
-10,371,957.39 -19,417,702.81
profits or losses
1. Other comprehensive income that can be reclassified into
-7,829,531.07 -14,727,792.59
profits or losses under the equity method
2. Changes in fair value of other debt investments
3. Amount of the financial asset reclassified into other
comprehensive income
4. Provision for credit impairment of other debt investments
5. Cash flow hedging reserves
6. Exchange differences from translation of statements
-2,542,426.32 -4,689,910.22
denominated in foreign currencies
7. Others
Other comprehensive income attributable to minority interests, net of
347,425.42 -1,212,072.82
tax
VII. Total comprehensive income 3,181,942,410.78 2,797,509,386.06
Total comprehensive income attributable to owners of parent company 3,180,462,037.50 2,800,474,252.74
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2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
Total comprehensive income attributable to minority interests 1,480,373.28 -2,964,866.68
VIII. Earnings per share:
(I) Basic earnings per share 1.79 1.58
(II) Diluted earnings per share 1.79 1.58
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 center: Xu Jing
4. Income statement of parent company
Unit: RMB
Item 1H 2024 1H 2023
I. Operating revenue 4,525,654,675.76 4,070,676,103.03
Less: Operating costs 1,899,760,551.87 1,887,507,329.14
Tax and surcharge 55,183,550.08 44,672,855.31
Selling expenses 1,249,190,451.48 1,113,001,120.00
Administrative expenses 152,522,356.56 137,464,403.96
R&D expenses 81,085,974.45 87,188,305.63
Financial expenses -141,417,510.19 -101,225,996.11
Including: Interest expenses 8,569,478.28 78,186.12
Interest income 150,808,813.01 102,169,525.79
Plus: Other income 13,409,933.24 26,946,820.33
Investment income (loss is indicated with “-”) 479,391,856.82 446,784,505.53
Including: Income from investment in associates and joint
497,138,562.64 438,812,247.13
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 “-”) -11,645,907.89 51,654,189.47
Credit impairment losses (loss is indicated with “-”) -2,037,055.26 -1,916,080.56
Asset impairment losses (loss is indicated with “-”) -5,605,130.40 -4,697,182.46
Gains from asset disposal (loss is indicated with “-”) -1,085,296.81 -75,147.74
II. Operating profit (loss is indicated with “-”) 1,701,757,701.21 1,420,765,189.67
Plus: Non-operating revenue 705,167.42 705,000.94
Less: Non-operating expenses 3,214,775.99 5,805,874.24
III. Total profit (total loss is indicated with “-”) 1,699,248,092.64 1,415,664,316.37
Less: income tax expenses 199,335,651.34 159,983,774.67
IV. Net profit (net loss is indicated with “-”) 1,499,912,441.30 1,255,680,541.70
(I) Net profit from continuing operations (net loss is indicated with
1,499,912,441.30 1,255,680,541.70
“-”)
(II) Net profit from discontinued operations (net loss is indicated with
“-”)
V. Other comprehensive income, net of tax -5,825,439.28 -22,847,452.34
(I) Other comprehensive income that cannot be reclassified into
2,004,091.79 -8,119,659.75
profits or losses
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1. Changes arising from re-measurement of the defined benefit
plan
2. Other comprehensive income that cannot be reclassified into
2,004,091.79 -8,119,659.75
profits or losses under the equity method
3. Changes in fair value of other equity instrument investments
4. Changes in fair value of the enterprise’s credit risk
5. Others
(II) Other comprehensive income that will be reclassified into
-7,829,531.07 -14,727,792.59
profits or losses
1. Other comprehensive income that can be reclassified into
-7,829,531.07 -14,727,792.59
profits or losses under the equity method
2. Changes in fair value of other debt investments
3. Amount of the financial asset reclassified into other
comprehensive income
4. Provision for credit impairment of other debt investments
5. Cash flow hedging reserves
6. Exchange differences from translation of statements
denominated in foreign currencies
7. Others
VI. Total comprehensive income 1,494,087,002.02 1,232,833,089.36
VII. Earnings per share:
(I) Basic earnings per share
(II) Diluted earnings per share
5. Consolidated cash flow statement
Unit: RMB
Item 1H 2024 1H 2023
I. Cash flows from operating activities:
Cash received from sales of goods or rendering of services 22,091,374,463.95 20,702,033,007.45
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 5,182,541.29 4,075,145.25
Other cash receipts related to operating activities 355,397,604.71 243,193,845.25
Subtotal of cash inflows from operating activities 22,451,954,609.95 20,949,301,997.95
Cash paid for goods purchased and services received 15,211,108,311.76 14,862,338,495.13
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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 1,450,599,844.70 1,247,729,927.92
Payments of all types of taxes 1,217,056,511.47 1,315,371,659.24
Other cash paid relating to operating activities 1,311,572,550.03 1,271,910,545.56
Subtotal of cash outflows from operating activities 19,190,337,217.96 18,697,350,627.85
Net cash flows from operating activities 3,261,617,391.99 2,251,951,370.10
II. Cash flows from investment activities:
Cash received from disposal of investments 3,145,988.51 968,704,891.05
Cash received from returns on investments 69,197,636.37 16,545,231.60
Net cash received from disposal of fixed assets, intangible assets
262,565.39 172,440.00
and other long-term assets
Net cash received from disposal of subsidiaries and other
business units
Other cash received relating to investment activities 3,807,040,500.00 363,000,000.00
Subtotal of cash inflows from investment activities 3,879,646,690.27 1,348,422,562.65
Cash paid for acquisition of fixed assets, intangible assets and
248,334,378.59 275,314,995.16
other long-term assets
Cash paid for acquisition of investments 900,000,000.00 68,700,000.00
Net increase in pledged loans
Net cash paid for acquisition of subsidiaries and other business
units
Other cash paid relating to investment activities 2,936,895,000.00 697,318,800.00
Subtotal of cash outflows from investment activities 4,085,229,378.59 1,041,333,795.16
Net cash flows from investment activities -205,582,688.32 307,088,767.49
III. Cash flows from financing activities:
Cash received from absorption of investments
Including: Cash received from subsidiaries’ absorbing minority
shareholder investment
Cash received from borrowings 1,486,779,951.02 592,248,791.91
Other cash received relating to financing activities 40,525,603.23
Subtotal of cash inflows from financing activities 1,527,305,554.25 592,248,791.91
Cash payments for settlement of debts 869,283,674.87 917,334,047.33
Cash payments for distribution of dividends and profits or
3,731,518,655.97 2,741,240,399.43
repayment of interest
Including: Dividends and profits paid to minority shareholders
5,974,218.23 11,316,213.63
by subsidiaries
Other cash payments relating to financing activities 72,018,152.38 41,375,308.90
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Subtotal of cash outflows from financing activities 4,672,820,483.22 3,699,949,755.66
Net cash flow from financing activities -3,145,514,928.97 -3,107,700,963.75
IV. Effect of foreign exchange rate changes on cash and cash
-48,577.76 5,239,164.08
equivalents
V. Net increase in cash and cash equivalents -89,528,803.06 -543,421,662.08
Plus: Opening balance of cash and cash equivalents 14,151,765,468.49 13,046,160,012.47
VI. Closing balance of cash and cash equivalents 14,062,236,665.43 12,502,738,350.39
6. Cash flow statement of parent company
Unit: RMB
Item 1H 2024 1H 2023
I. Cash flows from operating activities:
Cash received from sales of goods or rendering of services 4,211,532,161.23 2,961,019,462.94
Receipts from tax refunds
Other cash receipts related to operating activities 2,318,428,479.99 2,590,203,193.90
Subtotal of cash inflows from operating activities 6,529,960,641.22 5,551,222,656.84
Cash paid for goods purchased and services received 920,909,291.39 928,869,090.40
Cash paid to and on behalf of employees 671,012,577.79 528,333,366.43
Payments of all types of taxes 426,048,880.64 451,039,753.23
Other cash paid relating to operating activities 3,435,877,770.62 2,192,698,982.19
Subtotal of cash outflows from operating activities 5,453,848,520.44 4,100,941,192.25
Net cash flows from operating activities 1,076,112,120.78 1,450,281,464.59
II. Cash flows from investment activities:
Cash received from disposal of investments 10,000,000.00 884,291,638.76
Cash received from returns on investments 69,186,661.37 9,639,488.08
Net cash received from disposal of fixed assets, intangible assets
214,762.78
and other long-term assets
Net cash received from disposal of subsidiaries and other business
units
Other cash received relating to investment activities 3,806,540,500.00 160,000,000.00
Subtotal of cash inflows from investment activities 3,885,941,924.15 1,053,931,126.84
Cash paid for acquisition of fixed assets, intangible assets and
113,441,479.45 87,181,750.91
other long-term assets
Cash paid for acquisition of investments 900,000,000.00 100,000,000.00
Net cash paid for acquisition of subsidiaries and other business
units
Other cash paid relating to investment activities 2,936,395,000.00 696,518,800.00
Subtotal of cash outflows from investment activities 3,949,836,479.45 883,700,550.91
Net cash flows from investment activities -63,894,555.30 170,230,575.93
III. Cash flows from financing activities:
Cash received from absorption of investments
Cash received from borrowings 1,247,553,068.31 19,000,000.00
Other cash received relating to financing activities 40,525,603.23
Subtotal of cash inflows from financing activities 1,288,078,671.54 19,000,000.00
Cash payments for settlement of debts 19,000,000.00
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Cash payments for distribution of dividends and profit or
3,707,251,340.14 2,712,079,156.56
repayment of interest
Other cash payments relating to financing activities 31,287,137.53 2,219,511.75
Subtotal of cash outflows from financing activities 3,757,538,477.67 2,714,298,668.31
Net cash flow from financing activities -2,469,459,806.13 -2,695,298,668.31
IV. Effect of foreign exchange rate changes on cash and cash
-108,231.17 -628,796.56
equivalents
V. Net increase in cash and cash equivalents -1,457,350,471.82 -1,075,415,424.35
Plus: Opening balance of cash and cash equivalents 11,541,299,802.72 10,750,790,137.56
VI. Closing balance of cash and cash equivalents 10,083,949,330.90 9,675,374,713.21
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7. Consolidated statement of changes in owners’ equity
Amount for the current period
Unit: RMB
1H 2024
Owners’ equity attributable to parent company
Item
Other equity instruments Other Provision Minority interests Total owners’ equity
Special
Share capital Preferred Perpetual Capital reserves Less: Treasury stock comprehensive Surplus reserves for general Undistributed profits Others Subtotal
Others reserves
shares bonds income risk
I. Closing balance
1,796,862,549.00 18,246,619,742.09 707,428,892.15 -89,538,172.13 2,530,458,968.58 18,102,147,836.12 39,879,122,031.51 26,238,350.71 39,905,360,382.22
of the previous year
Plus: Changes
in accounting
policies
Correction
of errors in the prior
period
Others
II. Opening balance
1,796,862,549.00 18,246,619,742.09 707,428,892.15 -89,538,172.13 2,530,458,968.58 18,102,147,836.12 39,879,122,031.51 26,238,350.71 39,905,360,382.22
of the current period
III.
Increase/decrease
for the period -12,599,946.00 -679,221,383.70 -707,428,892.15 -8,367,865.60 -517,083,523.33 -509,843,826.48 -5,348,775.19 -515,192,601.67
(decrease is
indicated with “-”)
(I) Total
comprehensive -8,367,865.60 3,188,829,903.10 3,180,462,037.50 1,480,373.28 3,181,942,410.78
income
(II) Contribution
and withdrawal of -12,599,946.00 -694,828,946.15 -707,428,892.15
capital by owners
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1．Ordinary shares
invested by owners
2．Capital invested
by holders of other
equity instruments
3．Amount of share
payment credited to
owners’ equity
4．Others -12,599,946.00 -694,828,946.15 -707,428,892.15
(III) Profit
-3,705,913,426.43 -3,705,913,426.43 -6,829,148.47 -3,712,742,574.90
distribution
1．Withdrawal of
surplus reserves
2．Withdrawal of
general risk
provision
3．Distribution to
owners (or -3,705,913,426.43 -3,705,913,426.43 -6,829,148.47 -3,712,742,574.90
shareholders)
4．Others
(IV) Internal carry-
over of owner’s
equity
1．Transfer of
capital reserves to
capital (or share
capital)
2．Transfer of
surplus reserves to
capital (or share
capital)
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3．Covering loss
with surplus
reserves
4．Change of
defined benefit plan
carried forward to
retained earnings
5．Other
comprehensive
income carried
forward to retained
earnings
6．Others
(V) Special reserves
1．Provision for the
period
2．Utilization for
the period
(VI) Others 15,607,562.45 15,607,562.45 15,607,562.45
IV. Closing balance
1,784,262,603.00 17,567,398,358.39 -97,906,037.73 2,530,458,968.58 17,585,064,312.79 39,369,278,205.03 20,889,575.52 39,390,167,780.55
for the period
Amount for the previous year
Unit: RMB
1H 2023
Owners’ equity attributable to parent company
Item
Other equity instruments Other Provision Minority interests Total owners’ equity
Less: Treasury Special
Share capital Capital reserves comprehensive Surplus reserves for general Undistributed profits Others Subtotal
Preferred Perpetual stock reserves
Others income risk
shares bonds
I. Closing balance of
1,796,862,549.00 18,231,423,838.72 707,428,892.15 -68,087,650.95 2,530,458,968.58 16,720,444,918.66 38,503,673,731.86 23,323,529.93 38,526,997,261.79
the previous year
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Plus: Changes
in accounting
policies
Correction
of errors in the prior
period
Others
II. Opening balance
1,796,862,549.00 18,231,423,838.72 707,428,892.15 -68,087,650.95 2,530,458,968.58 16,720,444,918.66 38,503,673,731.86 23,323,529.93 38,526,997,261.79
of the current year
III.
Increase/decrease
for the period 5,841,351.14 -27,537,362.56 115,932,458.74 94,236,447.32 -24,799,290.64 69,437,156.68
(decrease is
indicated with “-”)
(I) Total
comprehensive -27,537,362.56 2,828,011,615.30 2,800,474,252.74 -2,964,866.68 2,797,509,386.06
income
(II) Contribution
and withdrawal of -4,900,000.00 -4,900,000.00
capital by owners
1. Ordinary shares
-4,900,000.00 -4,900,000.00
invested by owners
2. Capital invested
by holders of other
equity instruments
3. Amount of share
payment credited to
owners’ equity
4. Others
(III) Profit
-2,712,079,156.56 -2,712,079,156.56 -16,934,423.96 -2,729,013,580.52
distribution
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1. Withdrawal of
surplus reserves
2. Withdrawal of
general risk
provision
3. Distribution to
owners (or -2,712,079,156.56 -2,712,079,156.56 -16,934,423.96 -2,729,013,580.52
shareholders)
4. Others
(IV) Internal carry-
over of owners’
equity
1. Transfer of
capital reserve to
capital (or share
capital)
2. Transfer of
surplus reserves to
capital (or share
capital)
3. Covering loss
with surplus
reserves
4. Change of
defined benefit plan
carried forward to
retained earning
5. Other
comprehensive
income carried
forward to retained
earnings
6. Others
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(V) Special reserves
1. Provision for the
period
2. Utilization for the
period
(VI) Others 5,841,351.14 5,841,351.14 5,841,351.14
IV. Closing balance
1,796,862,549.00 18,237,265,189.86 707,428,892.15 -95,625,013.51 2,530,458,968.58 16,836,377,377.40 38,597,910,179.18 -1,475,760.71 38,596,434,418.47
for the period
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8. Statement of changes in owners’ equity of parent company
Amount for the current period
Unit: RMB
1H 2024
Other equity instruments Other
Item
Share capital Capital reserves Less: Treasury stock comprehensive Special reserves Surplus reserves Undistributed profits Others Total owners’ equity
Preferred shares Perpetual bonds Others
income
I. Closing balance
1,796,862,549.00 18,449,011,067.03 707,428,892.15 -54,646,721.46 2,529,297,618.08 3,750,505,582.48 25,763,601,202.98
of the previous year
Plus: Changes
in accounting
policies
Correction
of errors in the prior
period
Others
II. Opening balance
1,796,862,549.00 18,449,011,067.03 707,428,892.15 -54,646,721.46 2,529,297,618.08 3,750,505,582.48 25,763,601,202.98
of the current year
III.
Increase/decrease
for the period -12,599,946.00 -679,221,383.70 -707,428,892.15 -5,825,439.28 -2,206,000,985.13 -2,196,218,861.96
(decrease is
indicated with “-”)
(I) Total
comprehensive -5,825,439.28 1,499,912,441.30 1,494,087,002.02
income
(II) Contribution
and withdrawal of -12,599,946.00 -694,828,946.15 -707,428,892.15
capital by owners
1. Ordinary shares
invested by owners
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2. Capital invested
by holders of other
equity instruments
3. Amount of share
payment credited to
owners’ equity
4. Others -12,599,946.00 -694,828,946.15 -707,428,892.15
(III) Profit
-3,705,913,426.43 -3,705,913,426.43
distribution
1. Withdrawal of
surplus reserves
2. Distribution to
owners (or -3,705,913,426.43 -3,705,913,426.43
shareholders)
3. Others
(IV) Internal carry-
over of owners’
equity
1. Transfer of
capital reserves to
capital (or share
capital)
2. Transfer of
surplus reserves to
capital (or share
capital)
3. Covering loss
with surplus
reserves
4. Change of
defined benefit plan
carried forward to
retained earning
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5. Other
comprehensive
income carried
forward to retained
earnings
6. Others
(V) Special reserves
1. Provision for the
period
2. Utilization for the
period
(VI) Others 15,607,562.45 15,607,562.45
IV. Closing balance
1,784,262,603.00 17,769,789,683.33 -60,472,160.74 2,529,297,618.08 1,544,504,597.35 23,567,382,341.02
for the period
Amount for the previous year
Unit: RMB
1H 2023
Item Other equity instruments Other comprehensive
Share capital Capital reserves Less: Treasury stock Special reserves Surplus reserves Undistributed profits Others Total owners’ equity
Preferred shares Perpetual bonds Others income
I. Closing balance of
1,796,862,549.00 18,430,166,434.80 707,428,892.15 -32,221,472.36 2,529,297,618.08 5,050,873,408.22 27,067,549,645.59
the previous year
Plus: Changes in
accounting policies
Correction
of errors in the prior
period
Others
II. Opening balance of
1,796,862,549.00 18,430,166,434.80 707,428,892.15 -32,221,472.36 2,529,297,618.08 5,050,873,408.22 27,067,549,645.59
the current year
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III. Increase/decrease
for the period (decrease 5,841,351.14 -22,847,452.34 -1,456,398,614.86 -1,473,404,716.06
is indicated with “-”)
(I) Total
-22,847,452.34 1,255,680,541.70 1,232,833,089.36
comprehensive income
(II) Contribution and
withdrawal of capital
by owners
1. Ordinary shares
invested by owners
2. Capital invested by
holders of other equity
instruments
3. Amount of share
payment credited to
owners’ equity
4. Others
(III) Profit distribution -2,712,079,156.56 -2,712,079,156.56
1. Withdrawal of
surplus reserves
2. Distribution to
owners (or -2,712,079,156.56 -2,712,079,156.56
shareholders)
3. Others
(IV) Internal carry-over
of owners’ equity
1. Transfer of capital
reserves to capital (or
share capital)
2. Transfer of surplus
reserves to capital (or
share capital)
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2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
3. Covering loss with
surplus reserves
4. Change of defined
benefit plan carried
forward to retained
earning
5. Other comprehensive
income carried forward
to retained earnings
6. Others
(V) Special reserves
1. Provision for the
period
2. Utilization for the
period
(VI) Others 5,841,351.14 5,841,351.14
IV. Closing balance for
1,796,862,549.00 18,436,007,785.94 707,428,892.15 -55,068,924.70 2,529,297,618.08 3,594,474,793.36 25,594,144,929.53
the period
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III. Basic Information of the Company
1. Place of registration, form of organization and address of headquarters of the Company
The registered address of Yunnan Baiyao Group Co., Ltd is No.3686 Yunnan Baiyao Street, Chenggong
District, Kunming, Yunnan Province. The Company is established as a joint-stock limited company with its head
office located at No.3686 Yunnan Baiyao Street, Chenggong District, Kunming, Yunnan Province.
2. History of the Company
The Company was formerly known as Yunnan Baiyao Factory, which was established in June 1971. On May
3, 1993, Yunnan Provincial System Reform Committee approved the establishment of Yunnan Baiyao Industrial
Co., Ltd in the Document Yun Ti Gai [1993] No.48. The Company’s sponsors were Yunnan Baiyao Factory, Yunnan
Fudian Trust and Investment Company and Lianjiang International Trade Co., Ltd. On June 18, 1993, the Economic
System Reform Commission and the Planning Commission of Yunnan Province jointly issued the Document Yun
Ti Gai [1993] No.74 to approve the Company’s public offering of RMB 20 million of individual shares (in the par
value of the shares). On June 24, 1993, the Administration of State-owned Assets of Yunnan Province issued the
Document Yun Guo Zi Zi (1993) No.37 to confirm the appraisal results of Yunnan Baiyao Factory and decided to
set up RMB 40 million of national capital stock, amounting to 40 million shares. Yunnan Baiyao Industrial Co., Ltd
was approved by CSRC under the Document Zheng Jian Fa Shen Zi (1993) No.55 to issue 20 million RMB-
denominated ordinary shares to the public. Yunnan Baiyao issued 20 million shares to the public in November 1993,
of which 18 million shares were issued to the public individuals and 2 million shares to the Company’s internal
employees.
On November 30, 1993, the Company was registered as a joint-stock limited company with the Administration
for Industry and Commerce of Yunnan Province, and on December 15, 1993, the public shares issued by the
Company were listed on the SZSE, with a total share capital of 80 million shares and a stock code of “000538.”
In accordance with the resolutions passed at the third Extraordinary General Meeting of the fifth Board of
Directors of the Company in 2008 on August 11, 2008, and at the first Extraordinary General Meeting of the
Company in 2008 on August 27, 2008, and the approval by the CSRC on the Document (2008) No.1411 Reply on
Approving the Private Issuance of Shares of Yunnan Baiyao Group Co., Ltd, the Company issued 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
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2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
every 10 shares to all shareholders based on the Company’s existing total share capital of 694,266,479 shares. After
the change, the share capital of the Company increased from 694,266,479 shares to 1,041,399,718 shares.
The Company underwent a merger and overall listing with Baiyao Holdings by issuing shares to three
shareholders of Baiyao Holdings: SASAC of Yunnan Province, New Huadu and Jiangsu Yuyue. This merger and
overall listing were successfully completed on June 1, 2019, with the Company as the existing entity. As a result,
the Company acquired all the assets, liabilities, businesses, contracts, and other rights and obligations of Baiyao
Holdings. Following the completion of the transaction, the 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 SZSE. 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 2020 respectively considered and
approved the Proposal on Granting Stock Options (Initially Granted Part) to Incentive Participants of the 2020
Equity Incentive Plan. As of December 31, 2022, the Company had completed distributing dividends of 513,206,278
shares and stock exercises of 941,029 shares, increasing its share capital to 1,796,862,549 shares.
On April 23, 2024, the Company disclosed the Announcement on Cancellation of Repurchased Shares and
Change in Shareholding (Announcement No.: 2024-21). On April 19, 2024, the Company completed the
cancellation of the above 12,599,946 repurchased shares with the Shenzhen Branch of China Securities Depository
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and Clearing Corporation. The Company has 1,784,262,603.00 shares in total after this cancellation. This
cancellation will not have a substantial impact on the Company’s financial position and operational results.
As of June 30, 2024, the Company’s share capital is 1,784,262,603 shares, with no treasury shares. 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.
3. Business nature and principal businesses of the Company
The business nature and operating activities of the Company and its subsidiaries (collectively referred to as the
“Group”) mainly include: R&D, manufacturing, and sales of chemical APIs, chemical preparations, Chinese patent
medicines, TCM materials, biological products, medical devices, healthcare food, food, beverages, special labor
protection products, non-household textile products, daily chemical products, cosmetics, outdoor products; Sales of
rubber pastes, plasters, disinfectant products, electronic and digital products; Information technology, science and
technology and economic and technological consulting services; Import and export of goods; Property operation
and management (carrying out business activities with qualification certificates), wholesale and retail of drugs,
logistics and distribution, etc (For items that require approval according to law, business activities of these projects
can only be carried out after approval by relevant departments).
4. These financial statements were approved for reporting by a resolution of the Board of Directors of
the Company dated August 26, 2024.
As of June 30, 2024, there were 107 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 2
new entities included in its consolidated financial statements compared to the end of the previous year, while 1
entity was excluded. For details, please refer to Note IX “Changes in Consolidation Scope.”
IV. Basis for Preparation of Financial Statements
1. Basis for preparation
The financial statements of the Group are prepared on the basis of going concern assumptions, based on actual
transactions and events that occur and in accordance with the Accounting Standards for Business Enterprises —
Basic Standards issued by the Ministry of Finance (issued by Decree No. 33 of the Ministry of Finance, revised by
Decree No. 76 of the Ministry of Finance), 40 specific accounting standards, Guidelines for the Application of
Accounting Standards for Business Enterprises, interpretations of Accounting Standards for Business Enterprises
and 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 2023) issued by CSRC.
In accordance with the relevant provisions of the Accounting Standards for Business Enterprises, the Group’s
accounting is based on the accrual basis. Except for certain financial instruments, these financial statements are
prepared at historical cost. In case of asset impairment, provision for impairment would be made according to the
relevant regulations.
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2. Going concern basis
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 31 “Revenue” under this Note V. For the description of significant accounting
judgments and estimates made by the management, please refer to Section 36 “Other Significant Accounting
Policies and Accounting Estimates” under Note V.
1. Statement of compliance with the ASBEs
The financial statements prepared by the Company are in compliance with the requirements of the Accounting
Standards for Business Enterprises (ASBEs), and have reflected truly and completely such relevant information as
the financial positions of the Company and the Group as of June 30, 2024 as well as the business results and cash
flows of the Company and the Group for 1H 2024. 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
CSRC in 2023.
2. Accounting period
The Group’s accounting periods are divided into annual and interim periods. An interim period refers to a
reporting period less than a full accounting year. The accounting year of the Group is the calendar year that starts
from January 1 and ends on December 31.
3. Operating cycle
The normal operating cycle refers to the period from purchasing the assets for processing to realizing the cash
or cash equivalents. The operating cycle of the Group consists of 12 months which is the standard of the
classification for the liquidity of the assets and liabilities.
4. Reporting currency
RMB is the currency used in the major economic environment where the Company and its domestic
subsidiaries operate. The reporting currency of the Company and its domestic subsidiaries is RMB. The Company’s
foreign subsidiaries select HKD as their reporting currencies based on the currency of the primary economic
environment in which they operate. The currency used by the Group in preparing the financial statements is RMB.
5. Determination method and selection basis of materiality standards
Applicable □Not applicable
Item Materiality standards
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The single provision amount accounts for more than 10% of the
Significant accounts receivable, bad debt provisions to be
total amount of bad debt provision for various types of
recovered or reversed
receivables and the amount is greater than RMB 5 million.
Actual write-off of significant receivables The value of a single item is greater than RMB 5 million
Projects with budgets exceeding RMB 50 million or deemed to
Significant construction in progress
be of significance
The amount of a single advance receipt with an age of more
Significant advance receipts
than 1 year is greater than RMB 5 million
A single contractual liability with an age of more than 1 year
Significant contract liabilities accounts for more than 10% of the total contractual liabilities
and the amount is greater than RMB 100 million
Significant accounts payable aged over one year or The amount of a single account payable is greater than RMB 5
overdue million
Significant other payables aged over one year or overdue The amount of a single item is greater than RMB 5 million
Significant dividends payable outstanding for over one
The amount of a single item is greater than RMB 100 million
year
Receipts and payments of significant cash related to
The amount of a single item is greater than RMB 100 million
investment activities
Significant offshore operating entity The net assets of the economic entity exceed RMB 100 million
Significant structured entity The net assets of the structured entity exceed RMB 2 million
Significant non-wholly-owned subsidiaries The net assets of the subsidiary exceed RMB 100 million
The year-end balance of a single project exceeds RMB 50
Significant capitalized R&D projects
million
The amount of a single project accounts for more than 20% of
Significant outsourced project under research
the total R&D investment
A single investment activity accounts for more than 10% of the
Significant investment activities total cash inflow or outflow related to the investment activities
and the amount is greater than RMB 1 billion
The book value of long-term equity investment in a single
investee account for more than 5% of the Group’s net assets and
the amount is greater than RMB 1 billion, or the investment
Significant joint ventures or associates
profit and loss under the long-term equity investment equity
method accounts for more than 10% of the Group’s
consolidated net profit
The net assets of the subsidiary account for more than 10% of
the Group’s net assets, or the net profits of subsidiary account
Significant subsidiaries
for more than 10% of the Group’s consolidated profits, and the
subsidiaries with significant strategic position
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6. Accounting treatment for business combination under common control and not under common control
A business combination refers to the transaction or matter in which one reporting subject formed due to the
combination of two or above separate entities. A business combination can be classified as the combination under
common control and not under common control.
(1) Business combination under common control
A business combination under common control is a business combination in which all of the combining entities
are ultimately controlled by the same party or parties both before and after the combination, and that control is not
transitory. For a business combination under common control, the party that obtains the control of the other parties
on the combination date is the acquirer, and other parties involving in the business combination are the acquirees.
The combination date is the date on which the acquirer effectively obtains the control of the acquirees.
Assets and liabilities that are obtained by the acquirer in a business combination shall be measured at their
book value at the combination date as recorded by the acquirees. The difference between the book value of the net
assets obtained and the book value of the consideration paid by the acquirer for the combination (or the aggregate
par value of the issued shares) shall be adjusted to share premium under capital reserve (or capital premium). If the
share premium under capital reserve (or capital premium) is not sufficient to absorb the difference, any excess shall
be adjusted against retained earnings.
Expenses that are directly attributable to the business combination by the acquirer are charged to the current
profits and losses in which they are incurred.
(2) Business combination not under common control
A business combination not under common control is a business combination in which all of the combining
entities are not ultimately controlled by the same party or parties both before and after the combination. For a
business combination not under common control, the party that obtains the control of the other parties on the
acquisition date is the acquirer; other parties involving in the business combination are the acquirees. The acquisition
date is the date on which the acquirer effectively obtains control of the acquirees.
For a business combination not under common control, the cost of business combination is the fair value of
assets paid, liabilities incurred or undertaken, and equity securities issued by the acquirer for obtaining the control
of the acquirees at the acquisition date. Expenses that are attributable to the business combination such as audit fees,
legal services fees, consultancy fees and other administration expenses incurred by the Company as acquirer are
expensed in the current profits and losses in which they are incurred. Transaction fees of equity securities or debt
securities issued by the acquirer as consideration for a business combination are included in the initially recognized
amount of equity securities or debt securities. Contingent consideration involved is recorded as the combination
cost at its fair value on the acquisition date. Should any new or further evidence in relation to the circumstances
existing on the acquisition date arise within 12 months after the acquisition date, making it necessary to adjust the
contingent consideration, the goodwill arising from the business combination shall be adjusted accordingly. The
cost of combination incurred and identifiable net assets obtained by the acquirer in a business combination are
measured at fair value on the acquisition date. Where the cost of the combination exceeds the acquirer’s interest in
the fair value of the acquiree’s identifiable net assets on the acquisition date, the difference is recognized as goodwill;
Where the cost of combination is lower than the acquirer’s interest in the fair value of the acquiree’s identifiable net
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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 “Accounting treatment for business combination under common control and not under
common control” under this Note V). Where the business combination is treated as “a bundle of transactions,” the
business combination shall be accounted for in accordance with the previous paragraphs and Section 17 “Long-term
equity investments” of this Note V; where the business combination does not fall within “a bundle of transactions,”
the business combination in the Company’s and the consolidated financial statements shall be accounted for as
follows:
In the Company’s financial statements, the initial cost of the investment shall be the sum of the book value of
equity investment held in the acquiree prior to the acquisition date and the amount of additional investment made
to the acquiree at the acquisition date. Other comprehensive income relating to the equity interest held in the acquiree
prior to the acquisition date shall be, upon disposal of the investment, accounted for in accordance with the same
basis as that the acquiree adopts in directly disposing of relevant assets or liabilities.
In the consolidated financial statements, the equity interest held in the acquiree prior to the acquisition date is
re-measured according to its fair value at the acquisition date; the difference between the fair value and the book
value is recognized as investment income for the current period. Other comprehensive income relating to the equity
interest held in the acquiree prior to the acquisition date shall be accounted for in accordance with the same basis as
that the acquiree adopts in directly disposing of relevant assets or liabilities.
7. Judgement criteria of control and preparation of consolidated financial statements
(1) Judgement criteria of control
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. Among these, if the Group
has current rights that enable it to direct the relevant activities of the investee, regardless of whether the Group
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actually exercises those rights, it is considered that the Group has power over the investee. If the returns the Group
receives from the investee are subject to variations based on the investee’s performance, it is considered that the
Group has variable returns. If the Group exercises decision-making authority as the main responsible party, it is
considered that the Group has the ability to use its power over the investee to influence the amount of 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.
The Group assesses whether it controls the investee based on a comprehensive consideration of all relevant
facts and circumstances. These relevant facts and circumstances include: the purpose of establishing the investee;
the investee’s relevant activities and how decisions about these activities are made; whether the rights held by the
Group enable it to currently direct the relevant activities of the investee; whether the Group has variable returns
from participating in the investee’s relevant activities; whether the Group can influence the amount of returns from
its power over the investee; and the relationships between the Group and other parties. 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
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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 17
“Long-term equity investments” or Section 11 “Financial instruments” under this Note V.
For disposal of the Group’s equity investments in a subsidiary in phases through multiple transactions until
loss of control, it is determined based on whether such transactions should be regarded as a bundle of transactions.
If the terms, conditions and economic effects of all transactions are conducted for the purpose of disposing of the
equity investments in a subsidiary and meet the following one or more criteria, it is usually shown that such multiple
transactions are deemed as a bundle of transactions for accounting treatment: 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 17 “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.
8. Classification of joint venture arrangements and accounting treatment method for joint operations
Joint venture arrangement means an arrangement under the common control of two or more parties. The Group
classifies the joint venture arrangement into joint operations and joint ventures based on the rights and obligations
it enjoys and assumes in the joint venture arrangement. Joint operation means a joint venture arrangement in which
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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 17 “Long-term equity investments” under this Note V.
For the joint operations, the Group, as a joint venture party, recognizes the assets and liabilities separately held
by the Group, as well as the assets and liabilities jointly held by the Group in accordance with the Group’s share;
recognizes the income arising from the disposal of the Group’s share of joint operation output; recognizes the
income from the sale of outputs from joint operations based on the Group’s share; and recognizes the expenses
incurred by the Group alone and the expenses incurred based on the Group’s share in the joint operation.
When the Group, as a joint venture party, invests in or sells assets to the joint venture (which do not constitute
a business, the same below), or purchases assets from the joint operation, the Group recognizes only those portions
of the profits 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.
9. Determination standards for cash and cash equivalents
Cash and cash equivalents of the Group include the cash on hand, deposits that can be used for payment at any
time, the investments that are held for a short period of time (generally maturing within three months from the date
of purchase), are highly liquid, easily convertible to known amounts of cash, and having minimal risk of changes in
value.
10. Foreign currency business and foreign currency statement translation
Method for determining exchange rates for foreign currency transactions
Upon initial recognition, the foreign currency transactions of the Group are converted into the amount of
reporting currency according to the spot exchange rate of the trading day (usually referring to the median price of
the foreign exchange rate of the day published by the People’s Bank of China, the same below).
(1) Method for translating foreign currency monetary items on the balance sheet date and the treatment of
exchange rate profits and losses
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,
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shall be recorded into current profits and losses, provided that exchange differences resulting from changes in other
book balances other than amortized costs (including impairment) shall be recorded in other comprehensive income.
The non-monetary foreign currency items measured at historical cost shall be measured at the amount of
reporting currency that is translated into based on the spot rate on the transaction date. For non-monetary foreign
currency items measured at fair value, the exchange rate prevailing at the date when the fair value is determined is
used for translation, and the difference between the translated amount of the reporting currency and the original
amount of the reporting currency shall be treated as the change in fair value (including change of exchange rate)
and recorded in current profits and losses or recognized as other comprehensive income.
(2) Translation of foreign currency financial statement
Foreign currency financial statements of overseas operations are translated into RMB statements in the
following ways: The items of assets and liabilities in the balance sheet were translated at the spot exchange rate on
the balance sheet date. The shareholders’ equity items are translated at the spot rate at the time of occurrence except
for the “undistributed profit” items. The income and expense items in the income statement are converted using the
average exchange rate of the current period on the date of occurrence of the transaction. The undistributed profit at
the beginning of the year is the undistributed profit at the end of the year after the conversion of the previous year;
The undistributed profit at the end of the period is calculated and shown on the basis of each item of profit
distribution after translation; The difference between the total amount of asset items and liability items and
shareholders’ equity items after translation is treated as the difference in the translation of foreign currency
statements and recognized as other comprehensive income. Upon disposal of an overseas operation and loss of
control, the conversion difference of the foreign currency statement related to the overseas operation, as shown
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
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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.
11. Financial instruments
When the Group becomes a party to a financial instrument contract, it shall recognize a financial asset or
financial liability.
(1) Classification 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.
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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.
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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
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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
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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 from related parties; 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
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Banker’s acceptance bill, domestic letter Banks with less credit risk in relation to acceptors and
of credit negotiation acts
Commercial acceptance bill Divided according to the acceptor’s credit risk
b. Accounts receivable
For the accounts receivable 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 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
consolidation scope the scope of consolidation.
The portfolio takes the age of receivables as the credit risk
Account age portfolio
characteristics.
Aging calculation method for determining credit risk characteristics: The Group calculates the aging of
receivables based on the principle of “first in, first out.”
Impairment provision recognition criteria for individual receivables: The Group performs separate impairment
tests for receivables with significantly different credit risk characteristics, such as significant deterioration in the
debtor’s credit standing, low probability of future repayment, and credit impairment occurred.
c. Accounts receivable financing
Notes and accounts receivable measured at fair value through other comprehensive income are presented as
accounts receivable financing if their maturities are within one year (including one year) from the initial recognition
date. The Group measures the loss provision at the amount equivalent to expected credit losses in the entire duration.
Apart from the accounts receivable financing for single assessment of credit risk, they are divided into different
portfolios based on their credit risk characteristics:
Item Basis for determining the portfolio
Related party within the This portfolio represents amounts receivable of the Company within
consolidation scope the scope of consolidation.
The portfolio takes the age of receivables as the credit risk
Account age portfolio
characteristics.
Aging calculation method for determining credit risk characteristics: The Group calculates the aging of
receivables based on the principle of “first in, first out.”
Impairment provision recognition criteria for individual receivables: The Group performs separate impairment
tests for receivables with significantly different credit risk characteristics, such as significant deterioration in the
debtor’s credit standing, low probability of future repayment, and credit impairment occurred.
d. Other receivables
Based on whether the credit risk of other receivables has increased significantly since initial recognition, the
Group measures the loss provision at the amount equivalent to expected credit losses in the next 12 months or the
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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
consolidation scope the scope of consolidation.
The portfolio takes the age of receivables as the credit risk
Account age portfolio
characteristics.
Aging calculation method for determining credit risk characteristics: The Group calculates the aging of
receivables based on the principle of “first in, first out.”
Impairment provision recognition criteria for individual receivables: The Group performs separate impairment
tests for receivables with significantly different credit risk characteristics, such as significant deterioration in the
debtor’s credit standing, low probability of future repayment, and credit impairment occurred.
12. Notes receivable
Please refer to “11. Financial instruments.”
13. Accounts receivable
Please refer to “11. Financial instruments.”
14. Accounts receivable financing
Notes and accounts receivable at fair value through other comprehensive income are presented as accounts
receivable financing if their maturities are within one year (including one year) from the initial recognition date.
The Notes and accounts receivable with the maturity of more than 1 year since the initial recognition date are
presented as other debt investments. For the relevant accounting policies, please refer to “11. Financial instruments”
under this Note.
15. Other receivables
Method of determining expected credit losses on other receivables and the accounting treatment
For the method of determining expected credit losses on other receivables and the accounting treatment, please
refer to “11. Financial instruments.”
16. Inventories
(1) Categories of inventories
Inventories mainly include raw materials, packaging and low-value consumable goods, products in process,
goods in stock, consumable biological assets, development costs, development products, etc. Contract fulfillment
costs with an amortization period not exceeding one year or one operating cycle are also reported as inventory.
(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
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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.
At 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.
After provision for inventory impairment is made, if the factors that once resulted in the impairment disappear,
leading to the net realizable value of inventories higher than their book value, the provision of inventory impairment
shall be reversed to the extent of provision previously made, and the reversed amount shall be recognized in current
profits and losses.
(4) The inventory system shall be the perpetual inventory system.
(5) Amortization of low-value consumables and packaging materials
The low-value consumables and packaging materials are amortized using a one-off amortization method.
17. Long-term equity investments
Long-term equity investments in this section refers to any equity investment by which the Group has control,
common control or significant influence over the investee. Long-term equity investments by which the Group does
not have control, common control or significant influence over the investee are accounted for as financial assets at
fair value through profits or losses. If they are non-trading, the Group may elect to designate them as financial assets
at fair value through other comprehensive income at the time of initial recognition. For the accounting policies,
please refer to “11. Financial instruments” under Note IV.
Common control is the Group’s contractually agreed sharing of control over an arrangement, 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/owners’ equity from the combined party as a part of the book value of total shareholders’ equity set forth in
the consolidated financial statements of the ultimate controlling party. 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/owners’ equity from the combined party as a
part of the book value of total shareholders’ equity set forth in the consolidated financial statements of the ultimate
controlling party. 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.
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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/owners’ equity from the combined
party as a part of the book value of total shareholders’ equity set forth in the consolidated financial statements of
the ultimate controlling party, while the difference between the initial investment cost and the sum of book value of
long-term equity investments before the consolidation and that of consideration newly paid to acquire additional
equities on the date of consolidation shall be adjusted against the capital reserve, or, in case of insufficient capital
reserve to cover the difference, against retained earnings accordingly. Accounting treatment is currently not required
for other comprehensive income that has been recognized due to the adoption of equity method in accounting or the
classification as financial assets at fair value through other comprehensive income in respect of equity investments
held before the date of consolidation.
For the long-term equity investments acquired relating to business combination not under common control, the
initial investment cost is the cost of combination on the date of acquisition which equals to the aggregate fair value
of assets transferred, liabilities incurred or assumed and equity securities issued by the acquirer. Where a business
combination not under common control is achieved by acquiring the equity of a combined party under common
control in phases through multiple transactions, following policies shall apply depending on whether those
transactions are “a bundle of transactions”: if so, the Group shall account for all transactions together as the one
deal to obtain the control; if not, the initial investment cost of the long-term equity investments that is re-accounted
for using the cost method shall be the sum of book value of long-term equity investments previously held by the
acquirer in the acquiree and new investment cost. Accounting treatment is currently not required for other
comprehensive income in respect of equity investments that have been accounted for using the equity method,
The intermediary expenses on items such as audit, legal service and valuation advisory for business
combination and other related administrative expenses incurred by the combining party or acquirer are recognized
in current profits and losses upon their occurrence.
Long-term equity investments other than those formed by business combination is initially measured at cost
which varies depending on the different ways of acquiring the long-term equity investments and is determined by
considering (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
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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,
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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 “Accounting treatment for business combination under common control and not under common
control” under this Note V.
In other cases, upon the disposal of a long-term equity investment, the difference between the book value of
the investment and the price received is recognized in the current profits and losses.
For a long-term equity investment that is accounted for using the equity method where the remaining equity
after disposal continues to be accounted for using the equity method, the portion of other comprehensive income
previously included in shareholder’s equity shall be treated in accordance with the same basis as the investee directly
disposes of relevant asset or liability on pro rata basis at the time of disposal. The owners’ equity recognized for the
change in owners’ equity of the investee other than net profits 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
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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.
18. Investment properties
Measurement models of investment property
Cost model measurement
Depreciation or amortization method
Investment properties are real estate held for rental income or capital appreciation, or both, including land use
rights that have been leased, land use rights that are held and intended to be transferred after appreciation, and
buildings that have been leased. In addition, vacant buildings held by the Group for operating leases are reported as
investment properties if the Board of Directors (or similar organization) makes a written resolution that they will be
used for operating leases and the intention to hold them will not change in the near future.
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Investment properties shall be initially measured at cost. The subsequent expenses related to investment
properties shall be recognized as cost of the investment properties only if it is probable that economic benefits
associated with the assets will flow to the Group and the cost of the assets can be measured reliably. Other
subsequent expenses shall be recognized in the current profits and losses when incurred.
The Group uses the cost model for subsequent measurement of investment properties and depreciates or
amortizes them according to the policies consistent with that for buildings or land use rights.
For the method of impairment test and provision for impairment loss of investment properties, please refer to
Section 25 “Impairment of long-term assets” under Note V.
When 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.
When the use of an investment property changes to self-use, the investment property is converted to a fixed
asset or an intangible asset from the date of the change. When the use of a self-use property is changed to earn
rentals or for capital appreciation, the fixed assets or intangible assets are converted to investment properties from
the date of change. When conversion occurs, the book value before conversion is used as the entry value after
conversion for investment properties measured using the cost model, and the fair value at the date of conversion is
used as the entry value after conversion for investment properties measured using the fair value model.
An investment property is derecognized upon disposal or when it is permanently withdrawn from use and no
future economic benefits are expected from its disposal. The net proceeds from sale, transfer, retirement or damage
of an investment property after its book value and related taxes and expenses are recognized in the current profits
and losses.
19. Fixed assets
(1) Recognition criteria
Fixed assets refer to the tangible assets held by the Company for producing goods, rendering services, renting
or operation and administration purposes with useful life of over one accounting year. The fixed assets are
recognized only when the economic interests related thereto are likely to flow into the Group and its cost can be
measured reliably. The fixed assets are initially measured at cost with consideration of the impact of estimated
disposal costs.
(2) Depreciation Method
Rate of residual value Annual depreciation
Category Depreciation method Depreciation life (year)
(%) rate (%)
House and building for
Straight-line method 39 5 2.44
production
Production machine
Straight-line method 10 5 9.5
and equipment
Transportation
Straight-line method 10 5 9.5
equipment
Electronic device and
Straight-line method 5 5 19
management tools
Non-production
machine and Straight-line method 10 5 9.5
equipment
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House and building for
non-production Straight-line method 45 5 2.11
purpose
Others Straight-line method 5 5 19
Expected net residual value refers to the amount the Group obtains from the disposal of an asset, less estimated
disposal costs, assuming that the asset has reached the end of its useful life and is in its expected condition at that
time.
(3) Methods for impairment testing and recognizing impairment provisions for fixed assets
The methods for impairment testing and recognizing impairment provisions for fixed assets are detailed in
Section 25 “Impairment of long-term assets” under Note V.
(4) Additional notes
Subsequent expenditures related to fixed assets should be included in the cost of the fixed asset if they may
generate future economic benefits and their cost can be reliably measured. The book value of any replaced part
should be derecognized. Subsequent expenditures other than these are recognized in profits or losses when incurred.
When a fixed asset is held for disposal or is not expected to generate future economic benefits through use or
disposal, it should be derecognized. The difference between the proceeds from the sale, transfer, scrapping, or
destruction of the fixed asset and its book value, less related taxes, should be recognized in profits or losses for the
period.
The Group reviews the useful life, expected net residual value, and depreciation method of fixed assets at least
annually. Any changes are treated as changes in accounting estimates.
20. Construction in progress
The cost of construction in progress is measured according to the actual expense for the construction in progress,
including all the necessary expenses incurred in the process of construction, 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 25 “Impairment of long-term assets” under Note V.
21. Borrowing costs
Borrowing costs include interest on borrowings, amortization of discounts or premiums, ancillary costs, and
exchange differences arising from foreign currency borrowings. Where the borrowing costs can be directly
attributable to the acquisition and construction or production activities of assets eligible for capitalization, it shall
be capitalized on the basis that the expense for the asset has already been incurred, the borrowing costs have been
incurred and the acquisition and construction or production activities necessary to prepare the asset for its intended
use or for sale have already commenced; after the acquired or produced asset eligible for capitalization is available
for its intended use or for sale, the capitalization shall be stopped. Other borrowing costs shall be recognized as
expenses at the time when they are incurred.
The actual interest cost incurred in the period of specific-purpose borrowing (net of any interest income from
the borrowed funds not used and deposited in bank or any investment income from the temporary investment of
those funds) shall be capitalized; the amount of interest of general-purpose borrowings to be capitalized is
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determined by multiplying the weighted average of the amounts of cumulative expenses on the asset over and above
the amounts of specific-purpose borrowings by the capitalization rate of the corresponding general-purpose
borrowings. Capitalization rate is calculated and determined based on the weighted average rate of general-purpose
borrowings.
During the capitalization period, exchange differences related to specific-purpose borrowings denominated in
foreign currencies are fully capitalized; exchange differences related to general-purpose borrowings denominated
in foreign currencies are recognized in the current profits and losses.
Assets eligible for capitalization refer to the fixed assets, investment properties, inventories and other assets
that require a substantially long period of time of acquisition and construction or production activities for intended
use or for sale.
Where the acquisition and construction or production activities of an asset eligible for capitalization is
interrupted abnormally and the interruption period lasts for more than 3 months, the capitalization of the borrowing
costs shall be suspended until the acquisition and construction or production of the asset is resumed.
22. Biological assets
(1) Consumptive biological assets
Consumptive biological assets are the biological assets held for sale or harvested for agricultural products in
the future, including growing field crops, vegetables, timber stands and livestock stored for sale. Consumptive
biological assets shall be initially measured at cost. The cost of a consumptive biological asset that is cultivated,
constructed, propagated or farmed by the Company is the necessary expense incurred before the asset is
harvested/closed/sold/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.
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The Group reviews the useful life and estimated net residual value of a productive biological asset and the
depreciation method applied at least at each year-end. Any change shall be accounted for as a change in accounting
estimate.
The difference between the disposal proceeds from the sale, liquidation, death or destruction of productive
biological assets less their book value and related taxes and charges is included in the current profits and losses.
The Group determines whether a productive biological asset has any signs of impairment on each balance sheet
date. If the asset shows signs of impairment, the recoverable amount is estimated. The recoverable amount is
estimated on a single asset basis. If it is difficult to estimate the recoverable amount of a single asset, the recoverable
amount of the asset group to which the asset belongs shall be determined. If the recoverable amount of an asset is
lower than its book value, the provision for asset impairment shall be made according to the difference and recorded
in the current profits and losses.
Once the above asset impairment loss is recognized, it shall not be reversed in subsequent accounting periods.
If a productive biological asset changes its use and becomes a consumptive biological asset, the cost of the
change of use is determined at the book value at the time of the change of use. If the productive biological asset
changes its use and becomes a public welfare biological asset, whether there is any impairment is determined in
accordance with the provisions of Accounting Standard for Business Enterprises No. 8 - Asset Impairment. When
an impairment occurs, an impairment provision shall be first made and then determined on the basis of the book
value after such provision is made.
23. Oil and gas assets
Not applicable
24. Intangible assets
(1) Useful life and the basis for its determination, estimation, amortization method or review procedures
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,
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the Company shall check the useful life of intangible assets with indefinite useful life, if there are evidences showing
that the intangible assets can bring economic benefit for the Company within the foreseeable period, the Company
shall estimate the useful life and carry out amortization according to the amortization policy for intangible assets
with finite useful life.
The Group’s intangible assets include land use rights, software, franchise rights, patented technologies, non-
patented technologies and trademarks, etc.; the amortization periods and status of major intangible assets are as
follows:
① Land use rights are amortized on an average annual basis over the remaining useful lives of 30 to 50 years
as stated in the land use rights certificates. If it is difficult to reasonably allocate the price of purchased land and
buildings between land use rights and buildings, all of them are recognized as fixed assets.
② Software, patented technologies, and non-patented technologies are amortized equally over 10 years based
on their estimated useful lives.
③ Franchise rights are amortized evenly over 30 years based on their estimated useful lives.
(2) Scope of R&D expenditures and the related accounting treatment
The scope of the Company’s R&D expenditures is mainly formulated based on the Company’s R&D projects,
and mainly includes employee salaries for R&D staff, direct input expenses, depreciation and amortization expenses,
design and testing expenses, outsourced R&D expenses, and other expenses.
The Group classifies the expense on an internal R&D project into expense at the research phase and expense
at the development phase.
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.
Specific criteria for classifying internal R&D projects into research stage and development stage: The
corresponding projects of the Group enter the development stage and start to be capitalized after meeting the
above conditions and undergoing evaluation and project establishment.
(3) Impairment testing methods and provision for impairment of intangible assets
For details of the impairment test method and provision for impairment of intangible assets, please refer to
Section 25 “Impairment of long-term assets” under Note V.
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25. Impairment of long-term assets
For non-current non-financial assets such as fixed assets, construction in progress, right of use assets, intangible
assets with limited useful life, investment real estate measured at cost and long-term equity investments in
subsidiaries, joint ventures and associates, the Group determines whether there are signs of impairment on the
balance sheet date. If the asset shows signs of impairment, the recoverable amount is estimated, and impairment test
is conducted. Goodwill, intangible assets with indefinite useful lives and intangible assets that have not yet 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.
26. Long-term deferred expenses
Long-term unamortized expenses are the expenses that have been incurred but shall be borne in the reporting
period and subsequent periods for a period of assessment of more than one year. The Group’s long-term amortized
expenses are mainly for house improvement and project renovation. Long-term amortized expenses are amortized
on a straight-line basis over the expected period of benefit.
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27. Contractual liabilities
The contractual liabilities refer to the obligation of the Group to transfer goods to customers for consideration
received or receivable. If the customer has paid the contractual consideration or the Group has obtained an
unconditional right of collection prior to the transfer of goods by the Group to the customer, the Group presents the
amount received or receivable as a contractual liability on the date when the actual payment is made by the customer
or the payment due date, whichever is earlier. Contractual assets and contractual liabilities under the same contract
are presented on a net basis, and contractual assets and contractual liabilities under different contracts are not offset.
28. Employee compensation
(1) Accounting treatment for short-term employee compensation
The employee compensation of the Group includes short-term compensation, post-employment benefits,
termination benefits and other long-term employee benefits. Where:
Short-term compensation mainly includes wages, bonuses, allowances and subsidies, employee welfare
expenses, medical insurance premiums, maternity insurance premiums, work-related injury insurance premiums,
housing provident funds, union funds and employee education funds, non-monetary benefits, etc. The Group
recognizes short-term employee compensation actually incurred during the accounting period in which employees
provide services to the Group as a liability and includes it in current profits and losses or related asset cost. Non-
monetary benefits are measured at fair value.
(2) Accounting treatment for post-employment benefits
Post-employment benefits mainly include basic pension insurance, unemployment insurance and annuity. Post-
employment benefit plans include defined contribution plans and defined benefit plans. 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.
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(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.
29. Estimated liabilities
An obligation relating to a contingency is recognized as an estimated liability when the following conditions
are met: (1) The obligation is a current obligation undertaken by the Group; (2) The performance of the obligation
is likely to result in the outflow of economic benefits; (3) The amount of the obligation can be measured reliably.
On the balance sheet date, estimated liabilities are measured according to the best estimate of expenses required
to meet the relevant current obligations, taking into account factors such as risks, uncertainties and the time value
of money associated with contingencies.
If all or part of the expenses required to pay off the estimated liabilities are expected to be compensated by a
third party, the compensation amount shall be recognized separately as an asset when it is basically determined that
it can be received, and the recognized compensation amount shall not exceed the book value of the estimated
liabilities.
(1) Loss-making contract
A loss-making contract is a contract in which the cost of fulfilling the contractual obligation inevitably exceeds
the expected economic benefit. If the contract to be executed becomes a loss-making contract and the obligations
arising from the loss-making contract meet the conditions for recognition of the above-mentioned estimated
liabilities, the portion of the estimated loss of the contract exceeding the recognized impairment loss (if any) of the
underlying asset of the contract is recognized as an estimated liability.
(2) Reorganization obligation
For a detailed, formal reorganization plan that has been announced to the public, the estimated liability amount
is determined on the basis of direct expenses related to the reorganization, subject to meeting the conditions for
recognition of the estimated liabilities described above.
30. Share-based payments
(1) Accounting treatment for share-based payment
Share-based payments are transactions in which equity instruments are granted or liabilities are assumed on
the basis of equity instruments in exchange for services rendered by employees or other parties. The share-based
payments are divided into equity-settled share-based payment and cash-settled share-based payment.
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.
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On each balance sheet date during the waiting period, the Group makes the best estimate based on the latest
follow-up information such as changes in the number of employees that satisfy vesting conditions, and revises the
number of equity instruments expected to be vested. The impact of the above estimates is included in the relevant
costs or expenses for the period, and capital reserves are adjusted accordingly.
The equity-settled share-based payments in exchange for services rendered by other parties shall be measured
at the fair value of the services on the acquisition date if the fair value of services rendered by other parties can be
reliably measured. However, if the fair value of services rendered by other parties cannot be reliably measured, but
the fair value of the equity instruments can be reliably measured, the equity-settled share-based payments shall be
measured at the fair value of the equity instruments on the acquisition date of the services, and included in the
relevant costs or expenses, increasing shareholders’ equity correspondingly.
When the fair value of an equity instrument granted cannot be reliably measured, it is measured by the intrinsic
value of the equity instrument at the date of service acquisition, at each subsequent balance sheet date and at the
settlement date, with changes in intrinsic value recognized in profits or losses for the period.
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.
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(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.
31. Revenue
Accounting policies for revenue recognition and measurement disclosed by business types
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
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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.
Principles for specific revenue recognition:
(1) Domestic sales
Under sales contracts or orders with customers, where it is contractually agreed that the transfer of control
occurs when the relevant products are delivered to the customer’s designated location and confirmed by the
customer’s signature and acceptance, revenue is recognized when the relevant products are delivered to the
customer’s designated location and confirmed by the customer’s signature and acceptance.
Under sales contracts or orders with customers, where it is contractually agreed that the transfer of control
occurs when the relevant products are delivered to the customer’s designated location and inspected and
completed by the customer in accordance with the relevant standards, revenue is recognized when the relevant
products are delivered to the customer’s designated location and inspected and completed by the customer in
accordance with the relevant standards.
Revenue is recognized when hotel rooms and food and beverage services have been provided and the right to
receive service charges has been acquired.
(2) Overseas sales
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Revenue is recognized when the related products are shipped out of the warehouse and undergo customs
clearance procedures for export, if the transfer of control occurs under the sales contract or order signed with the
customer and the contract stipulates that the related products will be shipped out of the warehouse and undergo
customs clearance procedures for export.
Where different operating models for the same type of business involve different revenue recognition and measurement methods: Not
applicable.
32. Contract cost
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.
When the book value of an asset related to contract costs is greater than the difference between: (i) the
remaining consideration expected to be received for the transfer of goods related to the asset; and (ii) the estimated
costs to be incurred for the transfer of the related goods, an allowance for impairment is provided and an asset
impairment loss is recognized. When there is a subsequent change in the factors that impaired the asset in a previous
period, such that the difference between (i) and (ii) is greater than the book value of the asset, the reversal of the
provision for impairment shall be recognized in current profits and losses, provided that the book value of the asset
after the reversal shall not exceed the book value that would have been determined as of the date of the reversal if
no provision for impairment had been made.
33. Government subsidy
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
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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; (4) Other relevant conditions (if any), to be fulfilled according to
the specific circumstances of the Group and the subsidy.
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 or (in
the case of government subsidies related to assets whose book value is reduced by the initial recognition of the
related asset) the book value of the asset is adjusted. In other cases, it is recognized directly in the current profits
and losses.
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34. Deferred income tax assets/deferred income tax liabilities
(1) Current income tax
The current income tax liabilities or assets generated in the current period and previous periods are measured
on the balance sheet date in accordance with the expected payable or refunded income tax amount calculated
according to the tax law. The taxable income amount on which the current income tax expense is calculated is based
on the corresponding adjustment of the pre-tax accounting profit of the reporting period in accordance with the
relevant provisions of the tax law.
(2) Deferred income tax assets and deferred income tax liabilities
The deferred income tax assets and deferred income tax liabilities can be determined with the balance sheet
liability method, based on the difference between the book value of certain assets and liabilities and the tax basis,
as well as the temporary difference between the tax basis and the book value of the items not recognized as assets
and liabilities but whose tax basis can be determined according to the tax law.
For taxable temporary differences relating to the initial recognition of goodwill and the initial recognition of
assets or liabilities arising from transactions that are neither a business combination nor affect accounting profit and
taxable income (or deductible losses) at the time of occurrence, the relevant deferred tax liabilities are not recognized
(except for individual transactions in which the initial recognition of assets and liabilities results in equal amounts
of taxable temporary differences and deductible temporary differences). In addition, for taxable temporary
differences related to investments in subsidiaries, associates and joint ventures, deferred tax liabilities are not
recognized if the Group is able to control the timing of the reversal of the temporary difference and it is likely that
the temporary difference will not be reversed in the foreseeable future. Subject to the above exceptions, the Group
recognizes all other deferred tax liabilities arising from taxable temporary differences.
For deductible temporary differences relating to the initial recognition of assets or liabilities arising from
transactions that are neither a business combination nor affect accounting profit and taxable income (or deductible
losses) at the time of occurrence, the relevant deferred tax assets are not recognized (except for individual
transactions in which the initial recognition of assets and liabilities results in equal amounts of taxable temporary
differences and deductible temporary differences). For deductible temporary differences associated with
investments in subsidiaries, associates and joint ventures, the relevant deferred tax asset is 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.
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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.
35. Leases
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) Accounting for leases as 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
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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 or the related asset cost. Variable lease payments that are
not included in the measurement of the lease liability are recognized in current profits and losses or the related asset
cost 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 (leases with a value of less than RMB 40,000 or USD 5,000 when the individual
leased asset is a brand new asset), the Group adopts a simplified approach whereby the right of use assets and lease
liabilities are not recognized and the lease payments are recognized in the relevant asset cost or current profits and
losses in accordance with the straight-line method or other systematic and reasonable methods during the various
periods of the lease term.
(2) Accounting for leases as 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.
36. Other significant accounting policies and accounting estimates
Repurchase of shares
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Consideration and transaction costs paid in share repurchases reduce shareholders’ equity and no profits or
losses is recognized when shares of the Company are repurchased, transferred or cancelled.
For the transfer of treasury shares, the difference between the amount actually received and the book value of
treasury shares shall be included in the capital reserve. If the capital reserve is insufficient for deduction, the surplus
reserve and undistributed profits shall be deducted. For the cancellation of treasury shares, the share capital shall be
reduced according to the par value of the shares and the number of shares cancelled, and the difference between the
book balance and the par value of treasury shares shall be charged to the capital reserve. If the capital reserve is
insufficient for deduction, the surplus reserve and undistributed profits shall be deducted.
37. Changes in significant accounting policies and accounting estimates
(1) Changes in significant accounting policies
□Applicable Not applicable
(2) Changes in significant accounting estimates
□Applicable Not applicable
(3) First-time implementation of the new accounting standard in 2024 to adjust relevant items in the financial statements at
the beginning of the year of first-time implementation
□Applicable Not applicable
38. Others
None.
VI. Taxation
1. Main tax types and tax rates
Tax type Taxation basis Tax rate
Value added from sales of goods or
Value-added tax 13%, 9%, 6%, 5%, 3%
rendering of services
Quantity-based collection and price- Price-based collection: 20%, 10%, 15%; Quantity-
Consumption tax
based collection based collection: RMB 0.5 per 0.5kg
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. 15%
Yunnan Institute of Materia Medica 15%
Yunbaiyao Zhengwu Technology (Shanghai) Co., Ltd. 15%
Yunnan Baiyao Group Dali Pharmaceutical Co., Ltd. 15%
Yunnan Baiyao Group Health Products Co., Ltd. 15%
Yunnan Baiyao Group Traditional Chinese Medicine Resources
15%
Co., Ltd.
Yunnan Baiyao Group Lijiang Pharmaceutical Co., Ltd. 15%
Yunnan Baiyao Group Wenshan Qihua Co., Ltd. 15%
Yunnan Baiyao Group Wuding Pharmaceutical Co., Ltd. 15%
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Yunnan Pharmaceutical Co., Ltd. 15%
Yunnan Pharmaceutical Yuxi Sales Co., Ltd. 15%
Yunnan Pharmaceutical Xingda Co., Ltd. 15%
Yunnan Pharmaceutical Baoshan Drug Development Co., Ltd. 15%
Yunnan Pharmaceutical Technology Co., Ltd. 15%
Yunnan Pharmaceutical Sanfa Co., Ltd. 15%
Yunnan Pharmaceutical Dehong Development Co., Ltd. 15%
Yunnan Pharmaceutical Xihui Co., Ltd. 15%
Yunnan Pharmaceutical Qujing Co., Ltd. 15%
Yunnan Baiyao Pharmacy Co., Ltd. 15%
Yunnan Pharmaceutical Wanhe Co., Ltd. 15%
Yunnan Pharmaceutical Tianma Co., Ltd. 15%
YNBY International Limited 16.50%
Yunbaiyao Hong Kong Co., Limited 16.50%
Beijing Ruiyou Testing Technology Co., Ltd. 20%
Yunnan Pharmaceutical Jiayuan Co., Ltd. 20%
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. 20%
Yunnan Pharmaceutical Pu’er Co., Ltd. 20%
Yunnan Pharmaceutical Dali Development Co., Ltd. 20%
Lijiang Yunquan Biological Development Co., Ltd. 20%
Yunnan Baiyao Tiancui Business Management Co., Ltd. 20%
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%
Tianjin Yunshuda Comprehensive Clinic Co., Ltd. 20%
Yunnan Tianzheng Testing Technology Co., Ltd. 20%
Shanghai Yunzhen Medical Technology Co., Ltd. 20%
Yunnan Baiyao Group Wuxi Pharmaceutical Co., Ltd. 15%
Yunnan Baiyao Group Beijing Co., Ltd. 20%
Yunnan Baiyao Group Teayield Lincang Manor Co., Ltd. 15%
Shanghai Yunzhen Clinic Co., Ltd. 20%
Shanghai Yunzhenni Medical Beauty Clinic Co., Ltd. 20%
Shanghai Yunpu Medical Technology Co., Ltd. 20%
Yunnan Baiyao Holdings Co., Ltd. 20%
Shanghai Yunyi Clinic Co., Ltd. 20%
Shanghai Yunyi Medical Technology Co., Ltd. 20%
Beijing Yunzhen Medical Beauty Clinic Co., Ltd. 20%
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Beijing Branch of Yunnan Baiyao Group Co., Ltd. 20%
Shanghai Hanshi Health Consulting Co., Ltd. 20%
Xingzhong Digital Intelligence TCM Service Co., Ltd of
20%
Yunnan Baiyao Group
Yunnan Yunyao Nuxiang Co., Ltd. 20%
Yunhe Pharmaceutical (Tianjin) Co., Ltd. 20%
Hangzhou Shanqi Health Industry Co., Ltd. 20%
Yunnan Pharmaceutical Dali Co., Ltd. 20%
Yunnan Pharmaceutical Zhaotong Co., Ltd. 20%
2. Preferential tax treatment
(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 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
Dehong Development Co., Ltd, Yunnan Pharmaceutical Xihui 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 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 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%.
(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. 6), “the part of the annual taxable income
of small and micro profit enterprises that does not exceed RMB 1 million shall be included in the taxable income at
a reduced rate of 25%, and the enterprise income tax shall be paid at a tax rate of 20%. The period 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]
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2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
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.” Thirty-five companies, including Beijing Ruiyou Testing Technology Co., Ltd and Yunnan Pharmaceutical
Jiayuan Co., Ltd, pay enterprise income tax at a tax rate of 20% according to this policy.
3. Others: None.
VII. Notes to Items in Consolidated Financial Statements
1. Cash and bank balance
Unit: RMB
Item Closing balance Opening balance
Cash on hand 156,115.36 258,600.92
Bank deposit 14,632,093,549.56 14,132,709,154.14
Other cash and bank balance 87,313,866.43 85,375,321.61
Total 14,719,563,531.35 14,218,343,076.67
Including: Total amount of money
139,023,398.61 190,267,321.90
deposited overseas
Other explanations: None.
2. Financial assets held for trading
Unit: RMB
Item Closing balance Opening balance
Financial assets at fair value through profits or losses 1,046,815,045.34 149,366,687.56
Including:
Investment in debt instruments
Investment in equity instruments 142,160,745.34 144,766,687.56
Others 904,654,300.00 4,600,000.00
Total 1,046,815,045.34 149,366,687.56
Other explanations: None.
3. Notes receivable
(1) Notes receivable by type
Unit: RMB
Item Closing balance Opening balance
Banker’s acceptance bill 320,572,424.86 227,542,572.56
Domestic letter of credit 25,500,000.00
Total 346,072,424.86 227,542,572.56
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(2) Disclosure by provision for bad debts
Unit: RMB
Closing balance Opening balance
Book balance Provision for bad debts Book balance Provision for bad debts
Category
Provision Book value Provision Book value
Amount Proportion Amount Amount Proportion Amount
proportion proportion
Including:
Bills receivable
with provision
346,072,424.86 100.00% 346,072,424.86 227,542,572.56 100.00% 227,542,572.56
for bad debts by
portfolio
Including:
Banker’s
320,572,424.86 92.63% 320,572,424.86 227,542,572.56 100.00% 227,542,572.56
acceptance bill
Domestic letter
25,500,000.00 7.37% 25,500,000.00
of credit
Total 346,072,424.86 100.00% 346,072,424.86 227,542,572.56 100.00% 227,542,572.56
Provision for bad debts made on portfolio basis:
Unit: RMB
Closing balance
Name
Book balance Provision for bad debts Provision proportion
Banker’s acceptance bill 320,572,424.86
Domestic letter of credit 25,500,000.00
Total 346,072,424.86
Explanation on the basis for determining the portfolio: None.
If provision was made for bad debts of notes receivable in accordance with the general expected credit loss model:
□Applicable Not applicable
(3) Provision for bad debts accrued, recovered or reversed during the reporting period: None.
(4) Notes receivable pledged by the Company at the end of the reporting period: None.
(5) Notes receivable endorsed or discounted by the Company, which were not yet due on the balance sheet
date as at the end of the reporting period
Unit: RMB
Amount derecognized at the end of the Amount not derecognized at the end of
Item
period the period
Banker’s acceptance bill 5,964,981.45
Domestic letter of credit
Total 5,964,981.45
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(6) Actual write-off of notes receivable for the period: None.
4. Accounts receivable
(1) Disclosure of accounts receivable by aging
Unit: RMB
Aging Closing book balance Opening book balance
Within 1 year (inclusive of 1 year) 9,841,385,438.50 9,849,981,025.64
1 to 2 years 998,675,101.32 830,787,332.12
2 to 3 years 149,264,417.35 86,210,266.13
Above 3 years 39,100,926.65 33,448,661.91
Total 11,028,425,883.82 10,800,427,285.80
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(2) Disclosure by provision for bad debts
Unit: RMB
Closing balance Opening balance
Category Book balance Provision for bad debts Book balance Provision for bad debts
Book value Book value
Provision Provision
Amount Proportion Amount Amount Proportion Amount
proportion proportion
Accounts receivable
with provision for bad
5,666,188.00 0.05% 5,666,188.00 100.00% 7,404,800.00 0.07% 7,404,800.00 100.00%
debts on individual
basis
Including:
Accounts receivable
with provision for bad
5,666,188.00 0.05% 5,666,188.00 100.00% 7,404,800.00 0.07% 7,404,800.00 100.00%
debts on individual
basis
Accounts receivable
with provision for bad 11,022,759,695.82 99.95% 917,302,225.19 8.32% 10,105,457,470.63 10,793,022,485.80 99.93% 826,852,038.59 7.66% 9,966,170,447.21
debts on portfolio basis
Including:
Aging portfolio 11,022,759,695.82 99.95% 917,302,225.19 8.32% 10,105,457,470.63 10,793,022,485.80 99.93% 826,852,038.59 7.66% 9,966,170,447.21
Total 11,028,425,883.82 100.00% 922,968,413.19 8.37% 10,105,457,470.63 10,800,427,285.80 100.00% 834,256,838.59 7.72% 9,966,170,447.21
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Provision for bad debts made on individual basis:
Unit: RMB
Opening balance Closing balance
Name Provision for bad Provision for bad Provision Reason for
Book balance Book balance
debts debts proportion provision
Ningbo Qingbing
The possibility of
Biotechnology 5,666,188.00 5,666,188.00 7,404,800.00 7,404,800.00 100.00%
recovery is minimal
Co., Ltd.
Total 5,666,188.00 5,666,188.00 7,404,800.00 7,404,800.00
Provision for bad debts made on portfolio basis:
Unit: RMB
Closing balance
Name
Book balance Provision for bad debts Provision proportion
Aging portfolio 11,022,759,695.82 917,302,225.19 8.32%
Total 11,022,759,695.82 917,302,225.19
Explanation on the basis for determining the portfolio: None.
If provision was made for bad debts of accounts receivable in accordance with the general expected credit loss model:
□Applicable Not applicable
(3) Provision for bad debts accrued, recovered or reversed during the reporting period
Provision for bad debts made during the reporting period:
Unit: RMB
Changes in amount for the period
Category Opening balance Recovery or Closing balance
Provision Write-off Others
reversal
Aging portfolio 826,852,038.59 90,450,186.60 917,302,225.19
Accounts receivable with
provision for bad debts 7,404,800.00 1,738,612.00 5,666,188.00
on individual basis
Total 834,256,838.59 90,450,186.60 1,738,612.00 0.00 0.00 922,968,413.19
Among them, the important amount of recovery or reversal of provision for bad debt for the period: None.
(4) Actual write-off of accounts receivable for the period: None.
(5) Top five customers with closing balance of accounts receivable and contractual assets summarized by
debtor
Unit: RMB
Closing balance of
Closing Percentage of
Closing balance of provision for bad debt of
Closing balance of balance of total of closing
Entity name accounts receivable and accounts receivable and
accounts receivable contractual balance of
contractual assets provision for impairment of
assets accounts
contractual assets
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receivable and
contractual assets
Customer A 579,199,157.84 579,199,157.84 5.25% 29,047,575.78
Customer B 517,022,973.03 517,022,973.03 4.69% 25,851,148.65
Customer C 502,808,431.77 502,808,431.77 4.56% 108,369,219.66
Customer D 455,792,184.11 455,792,184.11 4.13% 45,957,928.05
Customer E 353,041,718.38 353,041,718.38 3.20% 82,687,528.92
Total 2,407,864,465.13 2,407,864,465.13 21.83% 291,913,401.06
5. Accounts receivable financing
(1) Accounts receivable financing by type
Unit: RMB
Item Closing balance Opening balance
Banker’s acceptance bill 1,140,931,312.92 1,081,485,346.18
Domestic letter of credit 582,876,402.63 509,264,464.56
Total 1,723,807,715.55 1,590,749,810.74
(2) Disclosure by provision for bad debts: None.
(3) Provision for bad debts accrued, recovered or reversed during the reporting period: None.
(4) Accounts receivable financing pledged by the Company at the end of the reporting period: None.
(5) Accounts receivable financing 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 5,014,471,087.65
Domestic letter of credit 428,749,627.34
Total 5,443,220,714.99
(6) Actual write-off of accounts receivable financing for the period: None.
(7) Changes in accounts receivable financing and changes in fair value: None.
(8) Other explanations: None.
6. Other receivables
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Unit: RMB
Item Closing balance Opening balance
Dividends receivable 272,906,986.36 4,531,100.00
Other receivables 92,054,986.03 99,519,609.53
Total 364,961,972.39 104,050,709.53
(1) Interest receivable: None.
(2) Dividends receivable
1) Dividends receivable by type
Unit: RMB
Project (or investee) Closing balance Opening balance
Jacobson Pharma Corporation Limited 4,531,100.00
Shanghai Pharmaceuticals Holding Co.,
272,906,986.36
Ltd.
Total 272,906,986.36 4,531,100.00
2) Major dividends receivable aged over one year: None.
3) Disclosure by provision for bad debts
□Applicable Not applicable
4) Provision for bad debts accrued, recovered or reversed during the reporting period: None.
5) Actual write-off of dividends receivable for the period: None.
(3) Other receivables
1) Other receivables by nature
Unit: RMB
Book balance at the end of the reporting Book balance at the beginning of the
Nature of payment
period reporting period
Deposits and guarantees 271,086,306.89 292,908,411.96
Petty cash 14,514,146.62 12,098,577.52
Others 293,308,162.54 286,715,486.83
Borrowings 6,177,211.78 6,777,211.78
Total 585,085,827.83 598,499,688.09
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2) Disclosure by aging
Unit: RMB
Book balance at the end of the reporting Book balance at the beginning of the
Aging
period reporting period
Within 1 year (inclusive of 1 year) 76,290,677.20 76,994,145.16
1 to 2 years 23,680,741.28 24,492,402.85
2 to 3 years 101,922,421.37 101,816,008.74
Above 3 years 383,191,987.98 395,197,131.34
Total 585,085,827.83 598,499,688.09
3) Disclosure by provision for bad debts
Applicable □Not applicable
Provision for bad debts in accordance with the general expected credit loss model:
Unit: RMB
Phase I Phase II Phase III
Provision for bad debts Expected credit losses Lifetime ECL (not Lifetime ECL (credit- Total
for the next 12 months credit-impaired) impaired)
Balance as of January 1,
228,060,024.02 270,920,054.54 498,980,078.56
2024
Balance as of January 1,
2024 in the current
period
Current provision 340,620.00 340,620.00
Current reversal 6,289,856.76 6,289,856.76
Balance at of June 30,
221,770,167.26 271,260,674.54 493,030,841.80
2024
Basis for classification of phases and percentage of provision for bad debts: None.
Changes in book balance with significant changes in loss reserves in the current period
□Applicable Not applicable
4) Provision for bad debts accrued, recovered or reversed during the reporting period
Provision for bad debts during the reporting period:
Unit: RMB
Changes in amount for the period
Category Opening balance Closing balance
Recovery or
Provision Write-off Others
reversal
Other accounts receivable with
provision for bad debts on portfolio 498,980,078.56 960,487.19 6,909,723.95 493,030,841.80
basis by credit risk characteristics
Total 498,980,078.56 960,487.19 6,909,723.95 493,030,841.80
Among them, the important amount of reversal or recovery of provision for bad debt for the period: None.
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5) Actual write-off of other receivables for the period: None.
6) Top five customers with closing balance of other receivables summarized by debtor
Unit: RMB
Percentage of total of Closing balance of
Entity name Nature of payment Closing balance Aging closing balance of other provision for bad
receivables debt
Entity A Deposits and guarantees 100,000,000.00 Above 3 years 17.09% 100,000,000.00
Entity B Deposits and guarantees 30,000,000.00 Above 3 years 5.13% 30,000,000.00
Entity C Deposits and guarantees 18,000,000.00 Above 3 years 3.08% 18,000,000.00
Entity D Deposits and guarantees 9,702,000.00 2 to 3 years 1.66% 5,821,200.00
Entity E Deposits and guarantees 9,500,000.00 Above 3 years 1.62% 9,500,000.00
Total 167,202,000.00 28.58% 163,321,200.00
7) Those reported as other receivables due to centralized fund management: None.
7. Prepayments
(1) Prepayments by aging
Unit: RMB
Closing balance Opening balance
Aging
Amount Proportion Amount Proportion
Within 1 year 272,218,145.20 88.03% 274,935,247.83 88.04%
1 to 2 years 29,355,426.17 9.49% 31,179,366.00 9.98%
2 to 3 years 2,865,167.44 0.93% 2,366,049.64 0.76%
Above 3 years 4,783,946.25 1.55% 3,818,063.54 1.22%
Total 309,222,685.06 312,298,727.01
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
Series No. Entity name Book balance Proportion in prepayments (%)
1 Supplier A 57,097,512.00 18.46%
2 Supplier B 10,457,050.72 3.38%
3 Supplier C 10,277,234.50 3.32%
4 Supplier D 9,181,015.15 2.97%
5 Supplier E 7,399,634.16 2.39%
Total 94,412,446.53 30.53%
Other explanations: None.
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8. Inventories
Did the Company need to comply with the disclosure requirements of the real estate industry: No.
(1) Categories of inventories
Unit: RMB
Closing balance Opening balance
Provision for Provision for
decline in value of inventory
Item inventories or impairment or
Book balance provision for Book value Book balance provision for Book value
impairment of impairment of
contract fulfilment contract
costs performance costs
Raw
1,556,678,122.35 48,190,168.24 1,508,487,954.11 1,850,907,681.12 71,368,550.13 1,779,539,130.99
materials
Work in
208,274,907.52 208,274,907.52 192,411,841.66 192,411,841.66
process
Finished
4,193,814,378.67 55,452,145.59 4,138,362,233.08 4,444,660,840.07 67,539,262.09 4,377,121,577.98
goods
Consumptive
biological 26,863,773.82 26,863,773.82 28,031,085.47 28,031,085.47
assets
Materials
outsourced
186,319.48 186,319.48 185,148.88 185,148.88
for
processing
Packaging
materials
and low 107,855,253.58 1,971,051.39 105,884,202.19 67,439,762.34 2,533,723.65 64,906,038.69
value
consumables
Total 6,093,672,755.42 105,613,365.22 5,988,059,390.20 6,583,636,359.54 141,441,535.87 6,442,194,823.67
(2) Data sources for inventory recognition: None.
(3) Provision for inventory impairment or provision for impairment of contract performance costs
Unit: RMB
Increase in the current period Decrease in the current period
Item Opening balance Reversal or Closing balance
Provision Others Others
reselling
Raw materials 71,368,550.13 -2,801,788.94 20,376,592.95 48,190,168.24
Stocks 67,539,262.09 7,929,480.21 20,016,596.71 55,452,145.59
Packaging materials and
2,533,723.65 334,023.17 896,695.43 1,971,051.39
low value consumables
Total 141,441,535.87 5,461,714.44 41,289,885.09 105,613,365.22
Provision for inventory impairment on portfolio basis: None.
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Standards for provision for inventory impairment on portfolio basis: None.
(4) Explanation on closing balance of inventories involving capitalized amount of borrowing costs: None.
(5) Explanation on the current amortization amount of contract performance costs: None.
9. Non-current assets due within one year
Unit: RMB
Item Closing balance Opening balance
Certificate of deposit and interest 442,772,777.78
Total 442,772,777.78
(1) Debt investments due within one year
□Applicable Not applicable
(2) Other debt investments due within one year
□Applicable Not applicable
10. Other current assets
Unit: RMB
Item Closing balance Opening balance
Time deposits and other wealth
1,137,418,680.41 2,219,049,423.96
management products
Input tax to be deducted and certified 378,378,785.52 397,271,600.13
Cost of returned goods receivable 264,837,682.23 147,880,091.79
Prepaid taxes and fees 11,931,972.82 90,685,070.74
Others 37,594,385.48 7,190,030.58
Total 1,830,161,506.46 2,862,076,217.20
Other explanations: None.
11. Other equity instrument investments
Unit: RMB
Accumulated Accumulated Reason for
Dividend
Gains included Losses included gains included loss included in designating
income
in other in other in other other measurement at
recognized
Item name Opening balance comprehensive comprehensive comprehensive comprehensive Closing balance fair value
in the
income during income during income at the income at the through other
current
the period the period end of the end of the comprehensive
period
period period income
The investment
is strategic and
ImmuneSensor
71,745,000.0 is a non-trading
Therapeutics 71,745,000.00
0 equity
Inc.
instrument
investment
71,745,000.0
Total 71,745,000.00
0
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Derecognization during the reporting period: None.
Itemized disclosure of investment in non-trading equity instruments for the period: None.
Other explanations: None.
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12. Long-term equity investments
Unit: RMB
Opening Increase and decrease in the current period
Closing
balance of Profits and losses on
Opening balance (book Adjustment of other Cash dividends or Closing balance (book balance of
Investee the Additional Decreased investments Change in other Provision for
value) comprehensive profit declared to be Others value) impairment
impairment investment investment recognized under the equities impairment
income issued provision
provision equity method
I. Joint ventures
Shanghai
Pharmaceuticals 11,536,646,559.56 496,849,279.95 -5,825,439.28 15,607,562.45 272,906,986.36 11,770,370,976.32
Holding Co., Ltd.
Ban Loong Jacobson
14,433.37 -1,474.23 98.57 13,057.71
JBM Pharma Limited
Yunnan Baiyao
Chinese Herbal
Medicine Technology
Co., Ltd.
Lijiang
Changgengming
Trading Co., Ltd.
Subtotal 11,536,660,992.93 496,847,805.72 -5,825,439.28 15,607,562.45 272,906,986.36 98.57 11,770,384,034.03
II. Associates
Total 11,536,660,992.93 496,847,805.72 -5,825,439.28 15,607,562.45 272,906,986.36 98.57 11,770,384,034.03
The recoverable amount is determined by the net amount of fair value minus disposal expenses
□Applicable Not applicable
The recoverable amount is determined by the present value of expected future cash flows
□Applicable Not applicable
Reasons for significant differences between the foregoing information and information used for impairment testing in previous years or external information: None.
Reasons for significant differences between the information used in the Company's impairment tests in previous years and the actual situation in the corresponding year: None.
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Other explanations: For details of Yunnan Baiyao Chinese Herbal Medicine Technology Co., Ltd and Lijiang Changgengming Trading Co., Ltd, please refer to “X. Rights and interests in other
entities - 3. Rights and interests in joint venture arrangements or associates.”
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13. Other non-current financial assets
Unit: RMB
Item Closing balance Opening balance
Category of financial assets at fair value
312,459,342.04 324,674,379.63
through profits or losses
Total 312,459,342.04 324,674,379.63
Other explanations: None.
14. Investment properties
(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
1. Opening balance 54,966,967.28 32,184,799.93 87,151,767.21
2. Increase in the current period 10,927,186.70 345,728.96 11,272,915.66
(1) Outsourcing 0.00
(2) Transfer from
inventory\fixed assets\construction in 10,927,186.70 345,728.96 11,272,915.66
progress
(3) Increase in business
combination
3. Decrease in the current period
(1) Disposal
(2) Other transfer out
4. Closing balance 65,894,153.98 32,530,528.89 98,424,682.87
II. Accumulated depreciation and
accumulated amortization
1. Opening balance 35,754,013.96 4,855,547.93 40,609,561.89
2. Increase in the current period 7,415,468.75 932,485.02 8,347,953.77
(1) Provision or amortization 888,953.46 728,839.73 1,617,793.19
(2) Transfer from
inventory\fixed assets\construction in 6,526,515.29 203,645.29 6,730,160.58
progress
3. Decrease in the current period
(1) Disposal
(2) Other transfer out
4. Closing balance 43,169,482.71 5,788,032.95 48,957,515.66
III. Provision for impairment 0.00
1. Opening balance 2,438,059.35 2,438,059.35
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2. Increase in the current period
(1) Provision
3. Decrease in the current period
(1) Disposal
(2) Other transfer out
4. Closing balance 2,438,059.35 2,438,059.35
IV. Book value 0.00
1. Closing book value 20,286,611.92 26,742,495.94 47,029,107.86
2. Opening book value 16,774,893.97 27,329,252.00 44,104,145.97
The recoverable amount is determined by the net amount of fair value minus disposal expenses
□Applicable Not applicable
The recoverable amount is determined by the present value of expected future cash flows
□Applicable Not applicable
Reasons for significant differences between the foregoing information and information used for impairment testing in previous years
or external information: None.
Reasons for significant differences between the information used in the Company’s impairment tests in previous years and the actual
situation in the corresponding year: None.
Other explanations: None.
(2) Adoption of the fair value measurement model for investment properties
□Applicable Not applicable
(3) Conversion to investment properties measured at fair value: None.
(4) Investment properties for which the title certificate has not been obtained: None.
15. Fixed assets
Unit: RMB
Item Closing balance Opening balance
Fixed assets 2,600,945,569.94 2,662,805,209.03
Liquidation of fixed assets 117,364.21 94,805.00
Total 2,601,062,934.15 2,662,900,014.03
(1) Fixed assets
Unit: RMB
Machinery and Transportation
Item Houses and buildings Electronic equipment Others Total
equipment vehicles
I. Original book value:
1. Opening balance 2,549,592,791.40 1,603,570,594.77 65,896,843.49 158,127,736.24 1,257,593.86 4,378,445,559.76
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2. Increase in the current
15,957,607.45 25,861,820.46 1,023,547.34 6,511,207.31 15,214.12 49,369,396.68
period
(1) Purchase 16,782,824.59 1,023,547.34 6,511,207.31 15,214.12 24,332,793.36
(2) Transfer from
15,957,607.45 9,078,995.87 25,036,603.32
construction in progress
(3) Increase in
business combination
3. Decrease in the
10,927,186.70 7,980,227.02 252,461.33 6,207,211.19 25,367,086.24
current period
(1) Disposal or
7,980,227.02 252,461.33 6,207,211.19 14,439,899.54
scrapping
(2) Other transfer
10,927,186.70 10,927,186.70
out
4. Closing balance 2,554,623,212.15 1,621,452,188.21 66,667,929.50 158,431,732.36 1,272,807.98 4,402,447,870.20
II. Accumulated depreciation
1. Opening balance 558,119,997.35 953,150,208.31 34,737,774.48 101,583,125.64 1,036,398.21 1,648,627,503.99
2. Increase in the current
32,070,020.90 56,439,334.24 1,820,275.92 10,551,064.12 32,577.92 100,913,273.10
period
(1) Provision 32,070,020.90 56,439,334.24 1,820,275.92 10,551,064.12 32,577.92 100,913,273.10
3. Decrease in the
6,526,515.29 2,405,695.42 236,208.79 2,421,659.81 11,590,079.31
current period
(1) Disposal or
2,405,695.42 236,208.79 2,421,659.81 5,063,564.02
scrapping
(2) Other transfer
6,526,515.29 6,526,515.29
out
4. Closing balance 583,663,502.96 1,007,183,847.13 36,321,841.61 109,712,529.95 1,068,976.13 1,737,950,697.78
III. Provision for impairment
1. Opening balance 60,577,222.16 2,268,381.89 4,167,242.69 67,012,846.74
2. Increase in the current
1,910.41 1,910.41
period
(1) Provision 2.61 2.61
(2) Other changes 1,907.80 1,907.80
3. Decrease in the
10,535.86 3,452,618.81 3,463,154.67
current period
(1) Disposal or
10,535.86 3,452,618.81 3,463,154.67
scrapping
4. Closing balance 60,577,222.16 2,259,756.44 714,623.88 63,551,602.48
IV. Book value
1. Closing book value 1,910,382,487.03 612,008,584.64 30,346,087.89 48,004,578.53 203,831.85 2,600,945,569.94
2. Opening book value 1,930,895,571.89 648,152,004.57 31,159,069.01 52,377,367.91 221,195.65 2,662,805,209.03
(2) Temporarily idle fixed assets
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2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
Unit: RMB
Original book Accumulated Impairment
Item Book value Remarks
value depreciation provision
Machinery and
5,838,401.68 3,871,066.26 1,967,335.42
equipment
Electronic
823,296.25 590,571.22 232,725.03
equipment
Houses and
60,378.56 18,585.39 41,793.17
buildings
(3) Fixed assets leased out 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
No. 51 Xiba Road (comprehensive For historical legacy issues, and under
256,800.64
workshop) application
Obtained through judicial auction, with
Yunjian Assets 2,111,319.44 land certificate and property ownership
certificate
Drug Division of Dali Pharmaceutical
26,700,297.84 Under application
Economic Development Zone
Buildings in planting base of Yunquan 1,216,295.57 The land is a leased land
Overall relocation project of Wenshan Some title certificates have been obtained,
32,288,696.44
Qihua and the rest is under application
Other explanations: None.
(5) Impairment tests of fixed assets
□Applicable Not applicable
(6) Liquidation of fixed assets
Unit: RMB
Item Closing balance Opening balance
Machinery and equipment 114,865.58 94,206.37
Electronic equipment 2,498.63 598.63
Total 117,364.21 94,805.00
Other explanations: None.
16. Construction in progress
Unit: RMB
Item Closing balance Opening balance
Construction in progress 713,596,692.91 529,708,553.58
Total 713,596,692.91 529,708,553.58
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(1) Construction in progress
Unit: RMB
Closing balance Opening balance
Project Impairment Impairment
Book balance Book value Book balance Book value
provision provision
Shanghai
International Center
477,104,952.25 477,104,952.25 389,398,864.33 389,398,864.33
project of Yunnan
Baiyao
Yunnan Baiyao
R&D Platform -
116,377,501.13 116,377,501.13 82,578,321.10 82,578,321.10
Kunming center
construction project
Optimization project
of new factory of
26,285,681.51 26,285,681.51 23,403,647.03 23,403,647.03
Yunnan Baiyao
toothpaste
Yunnan Baiyao
Group Traditional
Chinese Medicine
23,886,242.55 23,886,242.55 2,667,581.02 2,667,581.02
Pharmaceutical
Service (Kunming)
Center Project
Granules Production
Increase and
Expansion Project of
Pharmaceutical 22,571,802.90 22,571,802.90 16,649,408.02 16,649,408.02
Business Group of
Yunnan Baiyao
Group
Radiopharmaceutical
Drug R&D Center 12,839,406.86 12,839,406.86 1,339,572.56 1,339,572.56
(Tianjin)
Aesthetics Medicine
Supporting
Commercial and
6,572,529.70 6,572,529.70 654,989.92 654,989.92
Office Project for
Yunyi Outpatient
Department
Shanghai Yunzhen
Outpatient
Supporting 4,912,949.64 4,912,949.64
Commercial and
Office Project
Dali Company’s
Production Line
Equipment Upgrade 3,580,443.02 3,580,443.02
and Renovation
Project
Government-
Enterprise
Cooperation Project 3,361,170.33 3,361,170.33 5,655,808.43 5,655,808.43
of Yunnan Baiyao
Group in Lijiang
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Ecological Science
and Technology
Industrial Park
(Phase I)
Health Industry
Project (Phase I) of 2,972,865.07 2,972,865.07 593,826.74 593,826.74
Yunnan Baiyao
Relocation project
1,804,452.92 1,804,452.92 510,675.30 510,675.30
engineering
Renovation project
of fire protection
facilities and outdoor
pipeline network in 1,544,624.34 1,544,624.34
the old factory of
Economic
Development Zone
Yunnan Baiyao
Wenshan Sanqi
1,081,007.34 1,081,007.34 1,081,007.34 1,081,007.34
Smart Technology
Park Project
Near-infrared online
detection equipment 1,060,758.00 1,060,758.00
project
Others 7,640,305.35 7,640,305.35 5,174,851.79 5,174,851.79
Total 713,596,692.91 713,596,692.91 529,708,553.58 529,708,553.58
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(2) Changes in important projects of construction in progress for the period
Unit: RMB
Including:
Other Proportion
Accumulated Amount of Capitalization
Transfer to fixed decrease of total
Increase in the Project amount of interest rate of Source of
Project name Budget amount Opening balance assets in the in the Closing balance project
current period progress interest capitalized interest for funds
current period current investment
capitalized for the the period
period in budget
period
Shanghai
International Center
1,389,170,500.00 389,398,864.33 87,706,087.92 477,104,952.25 50.32% 61.00% Others
project of Yunnan
Baiyao
Yunnan Baiyao
R&D Platform -
921,670,000.00 82,578,321.10 33,799,180.03 116,377,501.13 12.63% 40.00% Others
Kunming center
construction project
Optimization project
of new factory of
38,000,000.00 23,403,647.03 2,882,034.48 26,285,681.51 77.97% 99.00% Others
Yunnan Baiyao
toothpaste
Yunnan Baiyao
Group Traditional
Chinese Medicine
68,096,000.00 2,667,581.02 21,218,661.53 23,886,242.55 85.00% 85.00% Others
Pharmaceutical
Service (Kunming)
Center Project
Granules Production
Increase and
Expansion Project of
Pharmaceutical 31,989,300.00 16,649,408.02 5,922,394.88 22,571,802.90 70.56% 95.00% Others
Business Group of
Yunnan Baiyao
Group
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Radiopharmaceutical
Drug R&D Center 101,750,000.00 1,339,572.56 11,499,834.30 12,839,406.86 12.62% 55.00% Others
(Tianjin)
Health Industry
Project (Phase I) of 1,158,174,400.00 593,826.74 18,336,645.78 15,957,607.45 2,972,865.07 90.59% 99.00% Others
Yunnan Baiyao
Government-
Enterprise
Cooperation Project
of Yunnan Baiyao
Group in Lijiang 17,860,000.00 5,655,808.43 2,306,246.88 4,600,884.98 3,361,170.33 59.74% 60.00% Others
Ecological Science
and Technology
Industrial Park
(Phase I)
Total 3,726,710,200.00 522,287,029.23 183,671,085.80 20,558,492.43 0.00 685,399,622.60
(3) Provision for impairment of construction in progress for the period: None.
(4) Impairment tests of construction in progress
□Applicable Not applicable
(5) Project materials: None.
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17. Productive biological assets
(1) Adoption of the cost measurement model for productive biological assets
Applicable □Not applicable
Unit: RMB
Planting
Item Total
Tea tree
I. Original book value
1. Opening balance 2,578,500.00 2,578,500.00
2. Increase in the current period
(1) Outsourcing
(2) Self-cultivation
3. Decrease in the current period
(1) Disposal
(2) Others
4. Closing balance 2,578,500.00 2,578,500.00
II. Accumulated depreciation
1. Opening balance 1,590,075.15 1,590,075.15
2. Increase in the current period 85,950.06 85,950.06
(1) Provision 85,950.06 85,950.06
3. Decrease in the current period
(1) Disposal
(2) Others
4. Closing balance 1,676,025.21 1,676,025.21
III. Provision for impairment
1. Opening balance
2. Increase in the current period
(1) Provision
3. Decrease in the current period
(1) Disposal
(2) Others
4. Closing balance
IV. Book value
1. Closing book value 902,474.79 902,474.79
2. Opening book value 988,424.85 988,424.85
(2) Adoption of the cost measurement model and impairment tests for productive biological assets
□Applicable Not applicable
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(3) Adoption of the fair value measurement model for productive biological assets
□Applicable Not applicable
18. Right-of-use assets
(1) Right-of-use assets
Unit: RMB
Item Houses and buildings Machinery Total
I. Original book value
1. Opening balance 505,660,305.98 505,660,305.98
2. Increase in the current
74,826,379.08 614,167.92 75,440,547.00
period
(1) Leased in 74,826,379.08 614,167.92 75,440,547.00
3. Decrease in the current
36,660,187.33 36,660,187.33
period
(1) Disposal 28,233,389.97 28,233,389.97
(2) At maturity 8,426,797.36
4. Closing balance 543,826,497.73 614,167.92 544,440,665.65
II. Accumulated depreciation
1. Opening balance 247,340,820.40 247,340,820.40
2. Increase in the current
42,312,258.35 102,361.32 42,414,619.67
period
(1) Provision 42,312,258.35 102,361.32 42,414,619.67
3. Decrease in the current
15,573,016.55 15,573,016.55
period
(1) Disposal 7,146,219.19 7,146,219.19
(2) At maturity 8,426,797.36 8,426,797.36
4. Closing balance 274,080,062.20 102,361.32 274,182,423.52
III. Provision for impairment
1. Opening balance
2. Increase in the current
period
(1) Provision
3. Decrease in the current
period
(1) Disposal
4. Closing balance
IV. Book value
1. Closing book value 269,746,435.53 511,806.60 270,258,242.13
2. Opening book value 258,319,485.58 258,319,485.58
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(2) Impairment tests of right-of-use assets
□Applicable Not applicable
Other explanations: None.
19. Intangible assets
(1) Intangible assets
Unit: RMB
Non-patent
Item Land use rights Patent right Software Trademark Franchise rights Total
technology
I. Original book value
1. Opening balance 689,468,137.84 34,492,676.60 2,150,381.86 75,464,152.76 20,000.00 154,081,682.57 955,677,031.63
2. Increase in the
current period
(1) Purchase
(2) Internal
R&D
(3) Increase in
business combination
3. Decrease in the
464,996.96 464,996.96
current period
(1) Disposal 119,268.00 119,268.00
(2) Other
345,728.96 345,728.96
transfer out
4. Closing balance 689,003,140.88 34,492,676.60 2,150,381.86 75,464,152.76 20,000.00 154,081,682.57 955,212,034.67
II. Accumulated
amortization
1. Opening balance 157,724,667.66 26,857,606.79 2,150,381.86 25,105,090.79 3,147.77 17,664,216.34 229,505,111.21
2. Increase in the
6,991,875.97 1,401,483.96 3,764,530.31 1,111.11 12,159,001.35
current period
(1) Provision 6,991,875.97 1,401,483.96 3,764,530.31 1,111.11 12,159,001.35
3. Decrease in the
228,979.92 228,979.92
current period
(1) Disposal 25,334.63 25,334.63
(2) Other transfer
203,645.29 203,645.29
out
4. Closing balance 164,487,563.71 28,259,090.75 2,150,381.86 28,869,621.10 4,258.88 17,664,216.34 241,435,132.64
III. Provision for
impairment
1. Opening balance 6,382,453.60 136,417,466.23 142,799,919.83
2. Increase in the
current period
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(1) Provision
3. Decrease in the
current period
(1) Disposal
4. Closing balance 6,382,453.60 136,417,466.23 142,799,919.83
IV. Book value
1. Closing book
518,133,123.57 6,233,585.85 46,594,531.66 15,741.12 570,976,982.20
value
2. Opening book
525,361,016.58 7,635,069.81 50,359,061.97 16,852.23 583,372,000.59
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: 0.00%
(2) Data sources for intangible asset recognition: None.
(3) Land use rights for which the title certificate has not been obtained: None.
(4) Impairment tests of intangible assets
□Applicable Not applicable
20. Goodwill
(1) Original book value of goodwill
Unit: RMB
Decrease in
Increase in the
the current
current period
period
Name of the investee or items forming goodwill Opening balance Closing balance
Formed by
business Disposal
combination
YNBY International Limited (Formerly Ban Loong
645,635,327.81 645,635,327.81
Holdings Limited)
Yunnan Baiyao Group Medical Technology Hefei
26,904,931.64 26,904,931.64
Co., Ltd.
Shanghai Hanshi Health Consulting Co., Ltd. 23,247,992.08 23,247,992.08
Yunnan Baiyao Group Wuxi Pharmaceutical Co.,
12,843,661.62 12,843,661.62
Ltd.
Lijiang Yunquan Biological Development Co., Ltd. 721,770.39 721,770.39
Total 709,353,683.54 709,353,683.54
(2) Provision for impairment of goodwill
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Unit: RMB
Decrease in
Increase in the
the current
Name of the investee or items forming goodwill Opening balance current period Closing balance
period
Provision Disposal
Shanghai Hanshi Health Consulting Co., Ltd 16,089,461.58 16,089,461.58
YNBY International Limited (Formerly Ban Loong
561,515,748.26 561,515,748.26
Holdings Limited)
Yunnan Baiyao Group Medical Technology Hefei
26,904,931.64 26,904,931.64
Co., Ltd.
Lijiang Yunquan Biological Development Co., Ltd. 721,770.39 721,770.39
Total 605,231,911.87 605,231,911.87
(3) Related information on asset group or combination of asset groups containing goodwill: None.
(4) Specific methods for determination of recoverable amount
The recoverable amount is determined by the net amount of fair value minus disposal expenses
□Applicable Not applicable
The recoverable amount is determined by the present value of expected future cash flows
□Applicable Not applicable
Reasons for significant differences between the foregoing information and information used for impairment testing in previous years
or external information: None.
Reasons for significant differences between the information used in the Company’s impairment tests in previous years and the actual
situation in the corresponding year: None.
(5) Fulfillment of undertakings and goodwill impairment
Performance commitments existed at the time goodwill was formed and the reporting period, or the previous period of the reporting
period was within the performance commitment period
□Applicable Not applicable
Other explanations: None
21. Long-term deferred expenses
Unit: RMB
Increase in the Amortization in the
Item Opening balance Other decrease Closing balance
current period current period
Building
decoration and
96,424,121.71 10,054,846.45 16,039,597.82 7,873,676.12 82,565,694.22
project
renovation
Nanping Street
renovation
6,499,119.51 1,772,487.18 4,726,632.33
project of
Yunnan Baiyao
Others 2,412,309.09 202,470.04 1,593,707.34 1,021,071.79
Total 105,335,550.31 10,257,316.49 19,405,792.34 7,873,676.12 88,313,398.34
Other explanations: None.
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22. Deferred income tax assets/deferred income tax liabilities
(1) Deferred income tax assets before offset
Unit: RMB
Closing balance Opening balance
Item Deductible temporary Deferred income tax Deductible temporary Deferred income tax
differences assets differences assets
Provision for asset
94,950,178.73 20,046,384.05 149,391,736.51 29,733,789.86
impairment
Unrealized profits of intra-
373,963,733.44 59,427,815.02 355,719,960.08 56,616,299.10
group transactions
Deductible losses 173,478,236.66 30,834,440.01 85,261,634.28 12,772,083.95
Deferred income 193,888,523.91 29,052,480.59 174,855,238.93 26,308,248.51
Contractual liabilities 1,005,253,429.78 150,788,014.47 927,324,390.56 139,098,658.58
Payroll payable and long-
term employee benefits 443,778,383.41 66,724,145.66 442,302,070.56 66,345,310.57
payable
Expenses beyond overall
planning for employee
status conversion expenses
469,594,015.39 70,439,102.31 488,564,678.84 73,284,701.83
of state-owned enterprises
and social security expenses
of retirees
Lease liabilities 244,846,919.18 38,361,704.37 247,083,412.30 33,532,096.13
Changes in fair value 43,420,767.36 6,513,115.10 31,774,859.47 4,766,228.92
Other payables 662,864,423.63 101,581,569.98 390,202,998.08 58,530,449.71
Provision for credit
1,131,173,216.64 171,733,540.63 1,031,702,042.48 155,456,724.98
impairment
Others 55,340,811.63 8,301,121.76 56,028,058.38 8,404,208.76
Estimated income from
296,803,860.50 44,388,498.15 172,763,638.76 26,020,408.22
returned goods
Total 5,189,356,500.26 798,191,932.10 4,552,974,719.23 690,869,209.12
(2) Deferred income tax liabilities before offset
Unit: RMB
Closing balance Opening balance
Item Taxable temporary Deferred income tax Taxable temporary Deferred income tax
differences liabilities differences liabilities
Appreciation of asset valuation 4,385,832.97 1,096,458.23 5,464,293.67 1,366,073.41
Right-of-use assets 260,488,790.14 39,155,436.49 258,319,485.58 34,427,707.34
Fixed assets subject to one-time
26,760,390.32 4,014,058.55 26,760,390.32 4,014,058.55
pre-tax deduction
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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 30,411,388.68 4,561,708.30 65,373,768.09 9,806,065.22
Cost of returned goods
277,176,643.38 41,909,083.01 163,264,685.39 24,587,573.70
receivable
Total 601,505,419.39 91,307,338.06 521,464,996.95 74,772,071.70
(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
798,191,932.10 690,869,209.12
assets
Deferred income tax
91,307,338.06 74,772,071.70
liabilities
(4) Details of unrecognized deferred income tax assets
Unit: RMB
Item Closing balance Opening balance
Deductible losses 669,166,284.63 697,042,370.78
Provision for asset impairment 441,959,815.03 505,835,499.95
Deferred income 64,407,187.53 63,955,872.11
Others 67,690.70 10,735,715.83
Total 1,175,600,977.89 1,277,569,458.67
(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
2024 4,973,973.57 18,092,739.35
2025 9,432,032.24 20,152,321.40
2026 130,419,997.71 136,477,740.18
2027 138,513,645.91 202,345,894.66
2028 258,242,487.52 299,773,438.15
2029 104,682,520.91 1,476,119.82
2030 4,028,298.39 4,028,298.39
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2031 12,861,719.12 12,861,719.12
2032 1,599,912.28 1,599,912.28
2033 234,187.43 234,187.43
2034 4,177,509.55
Total 669,166,284.63 697,042,370.78
Other explanations: None.
23. Other non-current assets
Unit: RMB
Closing balance Opening balance
Item Impairment Impairment
Book balance Book value Book balance Book value
provision provision
Cost of returned
15,183,305.19 15,183,305.19 15,394,540.30 15,394,540.30
goods receivable
Time deposit and
478,279,569.78 478,279,569.78 913,499,670.63 913,499,670.63
interest
Stocks of special
42,000,723.80 42,000,723.80 42,000,723.80 42,000,723.80
materials
Value-added tax
21,189,358.91 21,189,358.91 9,867,575.47 9,867,575.47
credit refund
Advance payment for
the purchase of fixed 5,240,036.80 5,240,036.80 3,485,598.75 3,485,598.75
assets
Less: the part due
-442,772,777.78 -442,772,777.78
within 1 year
Total 561,892,994.48 561,892,994.48 541,475,331.17 541,475,331.17
Other explanations: None.
24. Assets with restricted ownership or use rights
Unit: RMB
At the end of the reporting period At the beginning of the reporting period
Item Type of Restriction
Book balance Book value Restriction Book balance Book value Restriction
restriction type
Earmarked Earmarked
Cash and for housing for housing
bank 2,643,785.07 2,643,785.07 Special use maintenance 2,643,393.65 2,643,393.65 Special use maintenance
balance in reformed in reformed
housing housing
The lawsuit The lawsuit
in question in question
has been has been
Cash and won, and the won, and the
Property Property
bank 500,000.00 500,000.00 lifting of the 500,000.00 500,000.00 lifting of the
preservation preservation
balance freeze and freeze and
other related other related
matters are matters are
in progress in progress
Guarantee Guarantee
Cash and
Security deposits, deposits,
bank 46,583,430.74 46,583,430.74 48,618,045.43 48,618,045.43 Security
deposit banker’s banker’s
balance deposit
acceptance acceptance
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deposits, deposits,
performance performance
bonds, etc. bonds, etc.
Special
Special fund
fund for
for paying
paying the
Assets in the cost of
cost of
special employee
employee
account for 607,599,650.11 607,599,650.11 Special use status 627,116,169.10 627,116,169.10 Special use
status
system conversion
conversion
reform in state-
in state-
owned
owned
enterprises
enterprises
The
holdings The holdings
shall not be shall not be
transferred transferred
within 36 within 36
Long-term
months months since
equity 11,770,370,976.32 11,770,370,976.32 Restricted 11,536,646,559.56 11,536,646,559.56 Restricted
since the the ending
investments
ending date date of the
of the private
private placement in
placement 2021
in 2021
Total 12,427,697,842.24 12,427,697,842.24 12,215,524,167.74 12,215,524,167.74
Other explanations: None.
25. Short-term loans
(1) Classification of short-term loans
Unit: RMB
Item Closing balance Opening balance
Loan in credit 734,723,013.84 1,014,634,728.09
Discounted internal bills 409,724,655.48 732,668,972.25
Total 1,144,447,669.32 1,747,303,700.34
Explanation on classification of short-term loans: None.
(2) Overdue and outstanding short-term loans: None.
26. Notes payable
Unit: RMB
Type Closing balance Opening balance
Banker’s acceptance bill 1,851,834,540.05 1,850,863,313.78
Total 1,851,834,540.05 1,850,863,313.78
Total notes payable due and unpaid at the end of the reporting period were RMB 0.
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27. Accounts payable
(1) Accounts payable
Unit: RMB
Item Closing balance Opening balance
Payment for engineering projects 28,493,511.72 33,522,218.09
Payment for goods 4,482,934,615.61 4,326,110,424.11
Total 4,511,428,127.33 4,359,632,642.20
(2) Major accounts payable aged over one year or overdue:
Unit: RMB
Reasons for not paying it or carrying it
Item Closing balance
forward
Sichuan Kete Air Conditioning
5,352,541.97 Payment terms have not been met yet
Purification Co., Ltd.
Total 5,352,541.97
Other explanations: None.
28. Other payables
Unit: RMB
Item Closing balance Opening balance
Dividends payable 87,345,672.28 86,490,742.04
Other payables 1,293,020,181.69 938,595,137.50
Total 1,380,365,853.97 1,025,085,879.54
(1) Interest payable: None.
(2) Dividends payable
Unit: RMB
Item Closing balance Opening balance
State-owned Assets Supervision and
Administration Commission of Yunnan
86,490,742.04 86,490,742.04
Provincial People’s Government, New
Huadu Industrial Group, Co., Ltd.
Dali Hongxu Trading Co., Ltd. 854,930.24
Total 87,345,672.28 86,490,742.04
(3) Other payables
Other payables by nature of payment
Unit: RMB
Item Closing balance Opening balance
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Business promotion expenses and other
781,077,229.91 459,313,752.19
marketing expenses
Deposits and guarantees 278,550,605.54 266,970,613.85
Other current accounts 103,660,093.46 81,677,453.94
Management fee payable to hospitals 79,272,300.90 70,325,588.08
Collection and payment 23,738,339.39 20,013,555.07
Others 26,721,612.49 40,294,174.37
Total 1,293,020,181.69 938,595,137.50
29. Receipts in advance
(1) Receipts in advance
Unit: RMB
Item Closing balance Opening balance
Receipts in advance - lease 2,045,212.68 486,612.12
Total 2,045,212.68 486,612.12
(2) Major receipts in advance aged over one year or overdue: None.
30. Contractual liabilities
Unit: RMB
Item Closing balance Opening balance
Receipts in advance - goods contract 1,761,226,572.16 1,737,952,687.45
Others 1,243,733.96 1,912,541.30
Total 1,762,470,306.12 1,739,865,228.75
Significant contractual liabilities with aging more than 1 year: None.
Amount of and reasons for significant changes in the book value during the reporting period: None.
31. Payroll payable
(1) Payroll payable
Unit: RMB
Increase in the current Decrease in the
Item Opening balance Closing balance
period current period
I. Short-term compensation 1,020,249,830.45 1,130,776,610.84 1,336,027,853.77 814,998,587.52
II. Welfare after demission -
46,884,565.10 88,385,196.91 87,199,741.22 48,070,020.79
defined contribution plan
III. Dismissal welfare 56,269.53 2,786,350.85 2,809,701.19 32,919.19
Total 1,067,190,665.08 1,221,948,158.60 1,426,037,296.18 863,101,527.50
(2) Short-term compensation
Unit: RMB
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Increase in the current Decrease in the current
Item Opening balance Closing balance
period period
1. Salary, bonus, allowance,
534,578,291.58 846,479,385.35 1,081,584,323.36 299,473,353.57
and subsidy
2. Staff welfare 16,108,411.77 69,932,308.49 67,863,167.89 18,177,552.37
3. Social insurance
287,344.93 49,292,809.27 48,642,814.38 937,339.82
contribution
Including: Medical
252,139.10 44,649,079.18 44,049,028.68 852,189.60
insurance premiums
Work injury
8,887.25 2,975,853.74 2,945,240.37 39,500.62
insurance premiums
Maternity
26,318.58 1,667,876.35 1,648,545.33 45,649.60
insurance premiums
Others
4. Housing provident fund 406,947.66 53,225,271.86 52,385,257.65 1,246,961.87
5. Union dues and staff
30,572,145.70 16,046,600.96 9,609,810.88 37,008,935.78
training fees
7. Short-term profit-sharing
438,112,558.54 438,112,558.54
plan
8. Others 184,130.27 95,800,234.91 75,942,479.61 20,041,885.57
Total 1,020,249,830.45 1,130,776,610.84 1,336,027,853.77 814,998,587.52
(3) Defined contributing plans
Unit: RMB
Increase in the current Decrease in the current
Item Opening balance Closing balance
period period
1. Basic endowment
520,689.77 83,765,398.78 82,613,729.20 1,672,359.35
insurance
2. Unemployment
20,881.05 3,370,120.72 3,327,022.21 63,979.56
insurance premiums
3. Corporate pension
46,342,994.28 1,249,677.41 1,258,989.81 46,333,681.88
payment
Total 46,884,565.10 88,385,196.91 87,199,741.22 48,070,020.79
Other explanations: None.
32. Tax payables
Unit: RMB
Item Closing balance Opening balance
Value added tax 146,584,441.71 74,507,524.44
Cooperate income tax 305,194,951.74 215,055,624.82
Individual income tax 3,613,571.71 13,584,778.64
Urban maintenance and construction tax 10,833,320.99 5,944,928.97
Property tax 10,753,160.37 11,470,392.03
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Land use tax 5,312,150.19 5,324,861.58
Stamp duty 5,735,331.86 5,765,684.18
Consumption tax 921.44 9,690.71
Education surcharge 4,666,609.36 2,628,898.41
Local education surcharge 3,108,511.96 1,752,038.22
Collected and remitted taxes and fees 19,376,620.46 3,611,481.85
Environmental protection tax 14,468.89 10,222.02
Water conservancy fund 33,889.82 4,724.15
Total 515,227,950.50 339,670,850.02
Other explanations: None.
33. Non-current liabilities due within one year
Unit: RMB
Item Closing balance Opening balance
Lease liabilities due within one year 68,739,138.20 74,736,102.58
Total 68,739,138.20 74,736,102.58
Other explanations: None.
34. Other current liabilities
Unit: RMB
Item Closing balance Opening balance
Short-term bonds payable 1,006,516,666.68
Returns payable 289,101,964.37 157,398,378.74
Transfer to output tax 400,892,479.94 373,745,525.66
Special financial support funds of “transferring loan to
subsidy” for the use of intelligent voice cluster development
1,800,000.00 1,800,000.00
base in the R&D project of intelligent medical devices based
on medical big data
Total 1,698,311,110.99 532,943,904.40
Changes in short-term bonds payable:
Unit: RMB
Premium and Repayment
Date of Bond Opening Issued in the current Interest accrued by Default or
Bond name Par value Nominal rate Amount issued discount in the current Closing balance
issuance duration balance period par value not
amortization period
2024 First
Tranche of
Ultra-short-
term Financing
March
Bonds (Sci- 1,000,000,000.00 2.30% 270 days 1,000,000,000.00 1,000,000,000.00 6,516,666.68 1,006,516,666.68 No
18, 2024
Tech
Notes/Rural
Revitalization)
of Yunnan
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Baiyao Group
Co., Ltd.
Total 1,000,000,000.00 1,000,000,000.00 6,516,666.68 1,006,516,666.68
Other explanations: None.
35. Long-term loans
(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.
36. Lease liabilities
Unit: RMB
Item Closing balance Opening balance
Buildings and structures 261,577,325.56 247,083,412.30
Equipment 618,664.48
Less: Non-current liabilities reclassified to liabilities
-68,739,138.20 -74,736,102.58
due within one year
Total 193,456,851.84 172,347,309.72
Other explanations: None.
37. Long-term payables
Unit: RMB
Item Closing balance Opening balance
Long-term payables 607,381,613.96 626,897,323.88
Special payables 4,838,584.16 4,838,584.16
Total 612,220,198.12 631,735,908.04
(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 607,381,613.96 626,897,323.88
security expenses of retirees
Other explanations: None.
(2) Special payables
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Unit: RMB
Increase in Decrease in
Item Opening balance the current the current Closing balance Reasons
period period
Transfer from
Preliminary funds for major
Baiyao Holdings
technological transformation 888,468.00 888,468.00
due to merger by
projects
absorption
Transfer from
Fulintang chain operating Baiyao Holdings
500,000.00 500,000.00
funds due to merger by
absorption
Transfer from
Funds for Kunming medicine Baiyao Holdings
500,000.00 500,000.00
distribution center due to merger by
absorption
Transfer from
Yunnan Sanqi brand Baiyao Holdings
164,272.00 164,272.00
registration project due to merger by
absorption
Transfer from
Group company management Baiyao Holdings
250,978.00 250,978.00
information system project due to merger by
absorption
Transfer from
Group company technology Baiyao Holdings
231,265.00 231,265.00
center construction expenses due to merger by
absorption
Transfer from
Nefuramide oxalate project Baiyao Holdings
85,426.00 85,426.00
funding due to merger by
absorption
Transfer from
Yunnan Natural Medicine Baiyao Holdings
998,506.00 998,506.00
Engineering Center project due to merger by
absorption
Transfer from
New drug research project for Baiyao Holdings
472,062.56 472,062.56
treatment of back pulp injury due to merger by
absorption
Transfer from
Material purchase project Baiyao Holdings
489,575.00 489,575.00
research expense due to merger by
absorption
R&D of new drugs for Transfer from
treating cardiovascular and Baiyao Holdings
258,031.60 258,031.60
cerebrovascular diseases due to merger by
(TCM) absorption
Total 4,838,584.16 4,838,584.16
Other explanations: None.
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38. Long-term payroll payable
(1) Details of long-term payroll payable
Unit: RMB
Item Closing balance Opening balance
I. Termination benefits 362,900.72 409,232.99
II. Other long-term benefits 3,681,455.00 3,681,455.00
Total 4,044,355.72 4,090,687.99
(2) Change of defined benefit plan: None.
39. Estimated liabilities
Unit: RMB
Item Closing balance Opening balance Reasons
Returns payable 16,050,005.49
Total 16,050,005.49
Other explanations, including on important assumptions and estimates related to major estimated liabilities: None.
40. Deferred income
Unit: RMB
Increase in the Decrease in the
Item Opening balance Closing balance Reasons
current period current period
Government
subsidies
Including:
Government
80,923,393.38 28,218,600.00 2,616,008.60 106,525,984.78
subsidies related to
income
Government
subsidies related 157,887,717.66 4,665,700.00 10,783,691.00 151,769,726.66
assets
Total 238,811,111.04 32,884,300.00 13,399,699.60 258,295,711.44
Other explanations: None.
41. Other non-current liabilities
Unit: RMB
Item Closing balance Opening balance
Receipts of real estate sale under staff
1,931,554.36 1,931,554.36
housing reform
Returns payable 15,365,260.05
Total 1,931,554.36 17,296,814.41
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Other explanations: None.
42. Share capital
Unit: RMB
Increase or decrease (+, -)
Opening balance Capitalization Closing balance
Issuance
Share of capital
of new Others Subtotal
dividend reserve into
shares
share capital
Total
number of 1,796,862,549.00 -12,599,946.00 -12,599,946.00 1,784,262,603.00
shares
Other explanations:
Reasons for the decrease in the current period: At the first session of the Tenth Board of Directors of the
Company for 2024 held on February 7, 2024 and the first extraordinary general meeting of the Company for 2024
held on February 23, 2024, the Company considered and approved the Proposal on Change of Use of Repurchased
Shares and Cancellation, and agreed that the Company should change the use of the above 12,599,946 repurchased
shares in the special securities account for repurchase, and change the use of the repurchased shares from “for the
implementation of employee stock ownership plan or equity incentive plan” to “for cancellation to reduce the
registered capital.” In April 2024, the Company completed the cancellation procedures for the 12,599,946
repurchased shares.
43. Capital reserve
Unit: RMB
Increase in the current Decrease in the current
Item Opening balance Closing balance
period period
Capital premium
18,175,016,281.26 694,828,946.15 17,480,187,335.11
(equity premium)
Other capital
71,603,460.83 15,607,562.45 87,211,023.28
reserves
Total 18,246,619,742.09 15,607,562.45 694,828,946.15 17,567,398,358.39
Other explanations, including changes and reasons thereof as at the end of the reporting period:
(1) Reasons for the increase in the current period:
During the reporting period, the Company recognized the changes in other equity in joint ventures, coupled
with passive dilution of shares due to exercise of rights and issuance of new shares, leading to an increase in capital
reserves - Other capital reserves by RMB 15,607,562.45 according to the shareholding ratio.
(2) Reasons for the decrease in the current period: At the first session of the Tenth Board of Directors of the
Company held on February 7, 2024 and the first extraordinary general meeting of the Company held on February
23, 2024, the Company considered and approved the Proposal on Change of Use of Repurchased Shares and
Cancellation, and agreed that the Company should change the use of the above 12,599,946 repurchased shares in
the special securities account for repurchase, and change the use of the repurchased shares from “for the
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implementation of employee stock ownership plan or equity incentive plan” to “for cancellation to reduce the
registered capital.” This led to a decrease in capital reserves - capital (equity) premium by RMB 694,828,946.15.
44. Treasury stock
Unit: RMB
Increase in the Decrease in the
Item Opening balance Closing balance
current period current period
Share repurchase for equity
707,428,892.15 707,428,892.15
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:
Reasons for the decrease in the current period: At the first session of the Tenth Board of Directors of the
Company for 2024 held on February 7, 2024 and the first extraordinary general meeting of the Company for 2024
held on February 23, 2024, the Company considered and approved the Proposal on Change of Use of Repurchased
Shares and Cancellation, and agreed that the Company should change the use of the above 12,599,946 repurchased
shares in the special securities account for repurchase, and change the use of the repurchased shares from “for the
implementation of employee stock ownership plan or equity incentive plan” to “for cancellation to reduce the
registered capital.” In April 2024, the Company completed the cancellation procedures for the 12,599,946
repurchased shares.
45. Other comprehensive income
Unit: RMB
Amount for the current period
Less: Amount Less: Amount
previously previously
included in included in
That
other other Less:
Item Opening balance Amount before That attributable to attributable to Closing balance
comprehensive comprehensive Income
income tax in the the parent company minority
income but income but tax
current period after tax interests after
transferred to transferred to expenses
tax
profits and retained
losses in the earnings in the
current period current period
I. Other
comprehensive
income that
will not be 450,547.51 2,004,091.79 2,004,091.79 2,454,639.30
reclassified
into profits or
losses
Other
comprehensive
income that
cannot be
450,547.51 2,004,091.79 2,004,091.79 2,454,639.30
transferred to
profits or
losses under
equity method
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II. Other
comprehensive
income to be -
-89,988,719.64 -10,024,531.97 -10,371,957.39 347,425.42
reclassified 100,360,677.03
into profits and
losses
Including:
Other
comprehensive
income that
can be -56,428,881.64 -7,829,531.07 -7,829,531.07 -64,258,412.71
transferred to
profits or
losses under
equity method
Exchange
differences
from
translation of
financial -33,559,838.00 -2,195,000.90 -2,542,426.32 347,425.42 -36,102,264.32
statements
denominated
in foreign
currencies
Total other
comprehensive -89,538,172.13 -8,020,440.18 -8,367,865.60 347,425.42 -97,906,037.73
income
Other explanations, including adjustment to the effective portion of the cash flow hedge profits or losses transferred to the amount
initially recognized for the hedged item: None.
46. Surplus reserves
Unit: RMB
Increase in the current Decrease in the current
Item Opening balance Closing balance
period period
Statutory surplus
2,530,458,968.58 2,530,458,968.58
reserves
Total 2,530,458,968.58 2,530,458,968.58
Explanations on surplus reserves, including changers and reasons thereof for the period: None.
47. Undistributed profit
Unit: RMB
Item Current period Previous period
Undistributed profit at the end of the previous
18,102,147,836.12 16,720,444,918.66
period before adjustment
Undistributed profit at the beginning of the period
18,102,147,836.12 16,720,444,918.66
after adjustment
Plus: Net profits attributable to equity owners of
3,188,829,903.10 4,093,782,074.02
the parent company in the current period
Less: ordinary share dividends payable 3,705,913,426.43 2,712,079,156.56
Undistributed profit at the end of the period 17,585,064,312.79 18,102,147,836.12
Details on adjustment of undistributed profits at the beginning of the period:
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2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
1) Due to retrospective adjustments in accordance with Accounting Standards for Business Enterprises and relevant new provisions,
the undistributed profits at the beginning of the period were affected by RMB 0.
2) Due to changes in accounting policies, the undistributed profits at the beginning of the period were affected by RMB 0.
3) Due to correction of material accounting errors, the undistributed profits at the beginning of the period were affected by RMB 0.
4) Due to changes in the consolidation scope under common control, the undistributed profits at the beginning of the period were
affected by RMB 0.
5) Due to other adjustments, the undistributed profits at the beginning of the period were affected by RMB 0.
48. Operating revenue and operating cost
Unit: RMB
Amount for the current period Amount for the previous period
Item
Revenue Cost Revenue Cost
Principal businesses 20,417,596,599.08 14,450,146,794.38 20,281,803,000.72 14,692,689,825.40
Other businesses 37,689,688.44 12,663,156.47 27,569,849.35 20,542,442.00
Total 20,455,286,287.52 14,462,809,950.85 20,309,372,850.07 14,713,232,267.40
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Details of operating revenue and operating cost:
Unit: RMB
Type of Drug sales Health and daily chemical products TCM resources Drug circulation Others Total
contract Operating revenue Operating cost Operating revenue Operating cost Operating revenue Operating cost Operating revenue Operating cost Operating revenue Operating cost Operating revenue Operating cost
Business type 4,357,321,920.76 1,362,387,438.11 3,153,242,986.36 1,034,582,426.01 809,479,617.18 686,242,173.73 11,786,476,329.97 11,088,546,093.63 348,765,433.25 291,051,819.37 20,455,286,287.52 14,462,809,950.85
Including:
Industry sales
4,357,321,920.76 1,362,387,438.11 3,153,242,986.36 1,034,582,426.01 131,505,728.25 96,665,457.34 10,896,749.24 3,640,128.12 7,652,967,384.61 2,497,275,449.58
income
Commercial
675,585,951.53 588,436,358.58 11,786,476,329.97 11,088,546,093.63 280,427,083.38 263,560,612.87 12,742,489,364.88 11,940,543,065.08
sales income
Technical
13,419,064.28 5,859,542.82 13,419,064.28 5,859,542.82
services
Hotel catering
6,332,847.91 5,328,379.09 6,332,847.91 5,328,379.09
industry
Planting sales
2,387,937.40 1,140,357.81 2,387,937.40 1,140,357.81
income
Others 37,689,688.44 12,663,156.47 37,689,688.44 12,663,156.47
Classified by
4,357,321,920.77 1,362,387,438.11 3,153,242,986.36 1,034,582,426.01 809,479,617.17 686,242,173.73 11,786,476,329.97 11,088,546,093.63 348,765,433.25 291,051,819.37 20,455,286,287.52 14,462,809,950.85
operating areas
Including:
In Yunnan
601,511,952.04 161,682,800.79 133,373,837.42 61,899,727.58 470,946,442.81 363,850,640.19 11,752,210,908.12 11,054,874,446.84 75,471,651.67 27,561,693.78 13,033,514,792.06 11,669,869,309.18
province
Outside
Yunnan
province 3,745,879,615.87 1,198,132,644.19 3,018,185,145.72 971,258,034.20 305,317,133.17 289,780,876.79 34,265,421.85 33,671,646.79 104,719,953.64 98,523,011.04 7,208,367,270.25 2,591,366,213.01
(excluding
overseas)
Overseas 9,930,352.86 2,571,993.13 1,684,003.22 1,424,664.23 33,216,041.19 32,610,656.75 168,573,827.94 164,967,114.55 213,404,225.21 201,574,428.66
Information related to performance obligations: The Company and its subsidiaries are mainly engaged in sale of drugs, medicinal materials, health and daily chemical products, etc. and recognize
the realization of revenue upon delivery of products to customers and confirmation by customers that they have obtained control over the products. No contracts are for the purpose of significant
financing. But, some contracts may include some discount and concession clauses. Usually, no contracts contain expected refunds to customers or other similar obligations assumed by the
Company.
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2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
Other explanations: None.
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.
Information about variable consideration in the contract: None.
Major contractual changes or significant transaction price adjustments: None.
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49. Taxes and surcharges
Unit: RMB
Item Amount for the current period Amount for the previous period
Consumption tax 295,265.87 887,115.80
Urban maintenance and construction tax 52,049,849.11 46,983,220.42
Education surcharge 22,660,975.14 20,401,524.88
Property tax 10,775,652.51 8,886,349.82
Land use tax 5,485,490.94 5,619,552.59
Vehicle and vessel use tax 69,522.55 74,430.93
Stamp duty 12,923,290.36 11,827,075.83
Local education surcharge 15,105,396.00 13,619,043.57
Others 186,377.01 74,516.17
Total 119,551,819.49 108,372,830.01
Other explanations: None.
50. Administrative expenses
Unit: RMB
Item Amount for the current period Amount for the previous period
Employee compensation 191,576,372.21 176,232,082.40
Depreciation and amortization 43,832,506.15 59,917,023.23
Agency service fee 20,230,312.27 29,142,812.97
Lease costs 3,395,107.79 5,900,244.74
Office expenses 4,949,786.19 13,834,059.14
Travel expenses 8,435,899.68 9,036,707.10
Afforestation and pollution discharge fee 1,715,840.75 1,747,910.19
Security and cleaning fee 4,039,639.25 5,041,654.57
Maintenance costs 891,388.27 1,655,191.36
Utilities and property management 5,258,288.01 3,844,442.60
Business entertainment fee 6,728,550.46 6,962,426.80
Others 36,356,329.45 31,129,255.30
Total 327,410,020.48 344,443,810.40
Other explanations: None.
51. Selling expenses
Unit: RMB
Item Amount for the current period Amount for the previous period
Employee compensation 749,306,402.13 777,770,443.04
Business promotion expenses 390,144,815.09 418,015,306.70
Advertising expenses 232,981,754.87 132,347,367.85
Display fee 220,335,729.24 208,641,966.12
Marketing service expenses 139,408,237.22 134,835,007.61
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2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
Sales promotion expenses 66,618,496.13 2,159,257.96
Travel expenses 64,843,756.03 28,765,406.92
Conference fee 49,109,828.44 44,490,605.23
Depreciation and amortization 39,895,219.37 33,584,977.25
Others 344,177,252.07 477,078,211.01
Total 2,296,821,490.59 2,257,688,549.69
Other explanations: None.
52. R&D expenses
Unit: RMB
Item Amount for the current period Amount for the previous period
Employee compensation 68,904,549.49 63,827,625.06
Commissioned R&D cost 32,142,383.35 34,101,127.85
Materials consumption and inspection fee 22,733,275.03 25,507,999.95
Depreciation and amortization 5,687,670.77 4,753,074.27
New product design fee 4,615,013.16 2,732,730.98
Information technology R&D expenses 8,893,284.22 4,155,924.21
Labor expenses 1,372,659.54
Others 5,066,843.32 8,368,791.80
Total 148,043,019.34 144,819,933.66
Other explanations: None.
53. Financial expenses
Unit: RMB
Item Amount for the current period Amount for the previous period
Interest expenses 27,648,907.91 18,798,896.05
Less: Interest income 162,711,635.16 114,776,796.46
Net loss on foreign exchange -1,841,489.74 -21,031,853.69
Bank charges 7,284,938.64 4,460,210.16
Others 6,558,973.27
Total -129,619,278.35 -105,990,570.67
Other explanations: None.
54. Other income
Unit: RMB
Other sources of income Amount for the current period Amount for the previous period
Government subsidies directly included
in the profits and losses of the current 22,618,622.37 27,971,555.69
period
Amortization amount of government
8,683,691.00 6,654,908.45
subsidies related to assets
Amortization amount of government
2,563,800.24 3,196,411.77
subsidies related to income
Return of individual income tax service
9,581,633.20 4,117,861.85
charge
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2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
Others 4,473,124.93 236,716.90
Total 47,920,871.74 42,177,454.66
55. Gains on changes in fair value
Unit: RMB
Sources of gains on changes in fair value Amount for the current period Amount for the previous period
Financial assets held for trading 16,811,914.40 55,086,478.34
Other non-current financial assets -12,215,037.59 -1,997,550.27
Total 4,596,876.81 53,088,928.07
Other explanations: None.
56. Investment income
Unit: RMB
Item Amount for the current period Amount for the previous period
Gain on long-term equity investment subject to
506,633,970.31 447,048,881.55
accounting with equity method
Investment income on financial assets held for
4,649,639.30
trading during holding period
Investment income from disposal of financial
-12,988,016.22 -3,681,651.93
assets held for trading
Investment income on other non-current financial
3,427,111.75 9,774,283.29
assets during holding period
Others -19,574,751.35 -36,248,986.65
Total 477,498,314.49 421,542,165.56
Other explanations: None.
57. Credit impairment losses
Unit: RMB
Item Amount for the current period Amount for the previous period
Bad debt losses on accounts receivable -88,711,574.60 -70,022,581.61
Bad debt losses on other receivables 5,949,239.48 -4,658,000.68
Total -82,762,335.12 -74,680,582.29
Other explanations: None.
58. Asset impairment losses
Unit: RMB
Item Amount for the current period Amount for the previous period
I. Inventory impairment losses and contract performance
-3,578,591.92 19,008,334.90
cost impairment losses
II. Impairment losses of fixed assets -2.61
Total -3,578,594.53 19,008,334.90
Other explanations: None.
59. Gains on disposal of assets
Unit: RMB
Sources of gains on disposal of assets Amount for the current period Amount for the previous period
Profit from disposal of non-current assets -552,966.50 -1,518,121.18
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Profit from disposal of right-of-use assets -1,039,168.13 6,921,199.69
Total -1,592,134.63 5,403,078.51
60. Non-operating revenue
Unit: RMB
Amount of non-recurring profits
Amount for the current Amount for the previous
Item or losses included in the current
period period
period
Profits from destruction and
scrapping of non-current 83,877.29 118,961.77 83,877.29
assets
Others 4,347,824.42 1,883,762.52 4,347,824.42
Total 4,431,701.71 2,002,724.29 4,431,701.71
Other explanations: None.
61. Non-operating expenses
Unit: RMB
Amount for the current Amount for the Amount of non-recurring profits or
Item
period previous period losses included in the current period
Donation 3,130,241.66 1,782,430.73 3,130,241.66
Losses from destruction and
149,829.54 2,554,617.83 149,829.54
scrapping of non-current assets
Others 1,475,553.56 7,731,425.67 1,475,553.56
Total 4,755,624.76 12,068,474.23 4,755,624.76
Other explanations: None.
62. Income tax expenses
(1) Table of income tax expenses
Unit: RMB
Item Amount for the current period Amount for the previous period
Current income tax expenses 572,852,946.49 466,976,774.03
Deferred income tax expenses -90,787,456.62 10,044,063.58
Total 482,065,489.87 477,020,837.61
(2) Adjustment process of accounting profits and income tax expenses
Unit: RMB
Item Amount for the current period
Total profits 3,672,028,340.83
Income tax expenses calculated at statutory/applicable tax rate 550,804,223.44
Effect of different tax rates applied to subsidiaries 9,889,414.52
Effect of adjusting income tax for prior periods 21,422,983.13
Effect of non-taxable income -84,711,802.92
Effect of non-deductible costs, expenses and losses 4,892,876.32
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2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
Effect of use of deductible losses of deferred income tax assets not recognized in
-14,438,822.17
prior periods
Effect of deductible temporary differences or deductible losses of deferred income
17,958,737.01
tax assets not recognized in the current period
Changes in opening balance of deferred income tax assets/liabilities arising from
112,528.27
tax rate adjustments
Extra tax deductions for R&D costs -11,388,915.56
Others -12,475,732.17
Income tax expenses 482,065,489.87
Other explanations: None.
63. Other comprehensive income
For details, please refer to Note 45 “Other comprehensive income.”
64. Cash flow statements
(1) Cash relating to operating activities
Other cash received relating to operating activities
Unit: RMB
Item Amount for the current period Amount for the previous period
Interest income 160,542,220.78 117,918,059.78
Deposits and guarantees 58,473,746.22 33,232,300.23
Government subsidy 51,052,696.48 45,035,330.05
Current account and petty cash 45,935,859.53 22,933,663.17
Others 39,393,081.70 24,074,492.02
Total 355,397,604.71 243,193,845.25
Explanation on other cash received relating to operating activities: None.
Other cash payments relating to operating activities
Unit: RMB
Item Amount for the current period Amount for the previous period
Cost expenditures 1,191,200,957.11 1,110,973,561.62
Deposits and guarantees 22,936,940.61 55,898,519.37
Current account and petty cash 87,712,907.26 84,345,105.68
Others 9,721,745.05 20,693,358.89
Total 1,311,572,550.03 1,271,910,545.56
Explanation on other cash payments relating to operating activities: None.
(2) Cash relating to investment activities
Other cash received relating to investment activities
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Unit: RMB
Amount for the current
Item Amount for the previous period
period
Principal and interest of time deposits and other financial
3,807,040,500.00 363,000,000.00
products redeemed
Total 3,807,040,500.00 363,000,000.00
Major cash received relating to investment activities
Unit: RMB
Item Amount for the current period Amount for the previous period
Bank deposit products such as time
3,807,040,500.00 363,000,000.00
deposits
Total 3,807,040,500.00 363,000,000.00
Explanation on other cash received relating to investment activities: None.
Other cash payments relating to investment activities
Unit: RMB
Item Amount for the current period Amount for the previous period
Bank deposit products such as time
2,936,895,000.00 697,318,800.00
deposits
Total 2,936,895,000.00 697,318,800.00
Major cash payments relating to investment activities
Unit: RMB
Item Amount for the current period Amount for the previous period
Bank deposit products such as time
2,936,895,000.00 697,318,800.00
deposits
Total 2,936,895,000.00 697,318,800.00
Explanation on other cash payments relating to investment activities: None.
(3) Cash relating to financing activities
Other cash received relating to financing activities
Unit: RMB
Item Amount for the current period Amount for the previous period
Individual income tax on dividends and
40,525,603.23
bonuses
Total 40,525,603.23
Explanation on other cash received relating to financing activities: None.
Other cash payments relating to financing activities
Unit: RMB
Item Amount for the current period Amount for the previous period
Lease payment 45,614,567.75 34,255,797.15
Individual income tax on dividends and
24,887,761.50
bonuses
Dividend handling fee 1,515,823.13 2,219,511.75
Return of minority equity 4,900,000.00
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Total 72,018,152.38 41,375,308.90
Explanation on other cash payments relating to financing activities: None.
Change of liabilities resulting from financing activities
Applicable □Not applicable
Unit: RMB
Increase in the current period Decrease in the current period
Item Opening balance Closing balance
Cash changes Non-cash changes Cash changes Non-cash changes
Short-term loans 1,747,303,700.34 621,833,122.14 42,423,845.52 534,444,021.82 732,668,976.86 1,144,447,669.32
Dividends payable 86,490,742.04 - 14,984,329.05 14,129,398.81 - 87,345,672.28
Lease liabilities
(including lease
247,083,412.30 - 69,875,724.37 43,697,595.20 11,065,551.43 262,195,990.04
liabilities due
within one year)
Long-term loans 2,100,000.00 - - - - 2,100,000.00
Total 2,082,977,854.68 621,833,122.14 127,283,898.94 592,271,015.83 743,734,528.29 1,496,089,331.64
(4) Explanation on reporting cash flows on a net basis: None.
(5) Major activities and financial impacts that do not involve current cash inflows and outflows, but may
affect the financial condition of the company or potentially impact the company's future cash flows: None.
65. Supplementary information of cash flow statement
(1) Supplementary information of cash flow statement
Unit: RMB
Supplementary information Amount for the current period Amount for the previous period
1．Reconciliation of net profit to cash flows from operating
activities:
Net profit 3,189,962,850.96 2,826,258,821.44
Plus: Impairment provision for assets 86,340,929.65 55,672,247.39
Depreciation of fixed assets, depreciation of oil and
103,037,172.29 105,698,740.66
gas assets, depreciation of productive biological assets
Depreciation of right-of-use assets 42,414,619.67 53,794,434.08
Amortization of Intangible assets 12,159,001.35 15,220,430.41
Amortization of long-term deferred expenses 19,405,792.34 14,699,584.40
Losses on disposal of fixed assets, intangible assets,
1,592,134.63 -5,403,078.51
and other long-term assets (gain is indicated with “-”)
Losses on scrapping of fixed assets (gain is indicated
65,952.25 2,435,656.06
with “-”)
Losses on changes in fair value (gain is indicated
-4,596,876.81 -53,088,928.07
with “-”)
Financing expenses (gain is indicated with “-”) 27,648,907.91 18,798,896.05
Investment losses (gain is indicated with “-”) -477,498,314.49 -421,542,165.56
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Decrease of deferred income tax assets (increase is
-107,322,722.98 36,123,144.16
indicated with “-”)
Increase of deferred income tax liabilities (decrease
16,535,266.36 -28,402,841.52
is indicated with “-”)
Decrease in inventories (increase is indicated with
450,556,841.55 1,078,680,567.88
“-”)
Decrease in operating receivable items (increase is
-739,995,094.96 -274,823,081.61
indicated with “-”)
Increase in operating payable items (decrease is
623,860,555.14 -1,172,171,057.16
indicated with “-”)
Others 17,450,377.13
Net cash flows from operating activities 3,261,617,391.99 2,251,951,370.10
2．Major investment and financing activities irrelevant to
cash income and expense:
Conversion of debt into capital
Convertible corporate bonds due within one year
Fixed assets acquired under finance leases
3．Net changes in cash and cash equivalents:
Closing balance of cash 14,062,236,665.43 12,502,738,350.39
Less: Opening balance of cash 14,151,765,468.49 13,046,160,012.47
Plus: Closing balance of cash equivalents
Less: Opening balance of cash equivalents
Net increase in cash and cash equivalents -89,528,803.06 -543,421,662.08
(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 14,062,236,665.43 14,151,765,468.49
Including: Cash on hand 156,115.36 258,600.92
Bank deposit available for payment at any time 14,021,000,581.37 14,114,677,091.39
Other cash and bank balance available for
41,079,968.70 36,829,776.18
payment at any time
III. Cash and cash equivalents at the end of the
14,062,236,665.43 14,151,765,468.49
reporting period
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(5) Presentation of items with restricted use but still belonging to cash and cash equivalents: None.
(6) Cash and bank balance which are not cash and cash equivalents
Unit: RMB
Amount for the Amount for the previous Reasons for not being cash or
Item
current period period cash equivalents
Guarantee deposits, banker’s acceptance Cannot be withdrawn at any
46,583,430.74 48,618,045.43
deposits, performance bonds, etc. time
Earmarked for housing maintenance in Cannot be withdrawn at any
2,643,785.07 2,643,393.65
reformed housing time
Cannot be withdrawn at any
For property preservation 500,000.00 500,000.00
time
Special fund for paying the cost of
Cannot be withdrawn at any
employee status conversion in state- 607,599,650.11 14,816,169.10
time
owned enterprises
Total 657,326,865.92 66,577,608.18
Other explanations: None.
(7) Explanation on other major activities: None.
66. Notes to statement of changes in equity
Explanation on “Others” adjusted for closing balance of the previous year and adjusted amount thereof: None.
67. Monetary items denominated in foreign currencies
(1) Monetary items denominated in foreign currencies
Unit: RMB
Closing balance of foreign Closing balance converted
Item Exchange rate
currency into RMB
Cash and bank balance 162,766,821.67
Including: USD 2,976,515.26 7.12680 21,213,028.95
Euro 1,929,841.54 7.66170 14,785,866.99
HKD 137,713,107.95 0.91268 125,687,999.37
Japanese yen 8,883,065.07 0.04474 397,408.33
South Korean won 21,324,422.00 0.00519 110,643.59
THB 1,711,328.16 0.19516 333,983.13
CAD 918.00 5.22740 4,798.75
CHF 22,099.80 7.94710 175,629.32
SGD 10,885.25 5.27900 57,463.24
Accounts receivable 47,256,938.56
Including: USD 5,974,062.03 7.12680 42,575,945.24
Euro
HKD 5,123,199.24 0.91268 4,675,841.48
SGD 975.91 5.27900 5,151.83
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Other current assets 116,148,518.10
Including: HKD 10,131,172.05 0.91268 9,246,518.10
USD 15,000,000.00 7.12680 106,902,000.00
Accounts payable 409,239.59
Including: HKD 7,048.31 0.91268 6,432.86
USD 56,520.00 7.12680 402,806.74
Other receivables 31,640,749.55
Including: HKD 34,582,619.42 0.91268 31,562,865.09
THB 136,499.68 0.19516 26,639.30
CAD 966.73 5.22740 5,053.51
SGD 8,750.07 5.27900 46,191.65
Contractual liabilities 1,847,598.36
Including: HKD 2,024,365.99 0.91268 1,847,598.36
Other payables 21,517,266.51
Including: HKD 23,522,653.91 0.91268 21,468,655.77
Japanese yen 860,094.00 0.04474 38,478.67
THB 51,916.67 0.19516 10,132.07
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
68. Leases
(1) The Company as the lessee
Applicable □Not applicable
Variable lease payments not included in the measurement of lease liabilities
Applicable □Not applicable
Item Amount
Variable lease payments not included in the measurement of lease
844,324.23
liabilities
Simplified handling of payments of short-term leasing or leasing of low value assets
Applicable □Not applicable
Item Amount
Simplified handling of fees of short-term leasing or leasing of low value
9,272,419.16
assets
After-sales leaseback transactions: None.
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(2) The Company as the lessor
Operating lease as a lessor
Applicable □Not applicable
Unit: RMB
Including: Receipts related to variable
Item Receipts from lease lease payments not included in lease
receipts
Houses and buildings 8,576,483.93
Total 8,576,483.93
Financial lease as a lessor
□Applicable Not applicable
Undiscounted lease receipts for each of the next five years
□Applicable Not applicable
Reconciliation of undiscounted lease receipts to net investment in leases: None.
(3) Recognition of gains and losses on sales under finance leases as a manufacturer or distributor
□Applicable Not applicable
69. Others: None.
VIII. R&D Expenditure
Unit: RMB
Item Amount for the current period Amount for the previous period
Employee compensation 68,969,121.01 63,827,625.06
Commissioned R&D cost 39,828,301.28 37,031,505.21
Materials consumption and inspection
22,936,642.33 25,595,002.64
fees
Depreciation and amortization 5,746,520.33 4,753,074.27
New product design fee 4,615,013.16 2,732,730.98
Information technology R&D expenses 8,893,284.22 4,155,924.21
Labor expenses 1,372,659.54
Others 5,090,246.14 8,375,625.27
Total 156,079,128.47 147,844,147.18
Including: Expensed R&D expenditure 148,043,019.34 144,819,933.66
Capitalized R&D expenditure 8,036,109.13 3,024,213.52
1. R&D projects meeting capitalization conditions
Unit: RMB
Increase in the current period Decrease in the current period
Item Opening balance Recognized Closing balance
Internal Transfer to
Others as intangible
development costs current
assets
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profits or
losses
P137 Project
Research and
14,452,474.57 8,036,109.13 22,488,583.70
Development
(IND)
Total 14,452,474.57 8,036,109.13 0.00 0.00 0.00 22,488,583.70
Important capitalized R&D projects: None.
Impairment provision for development expenditure: None.
2. Important outsourced project under study: None.
IX. Changes in the Consolidation Scope
1. Business combination not under common control
(1) Business combination not under common control 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 at
the end of the current period of merger or on the fair value of acquirees’ identifiable assets and liabilities: None.
(6) Other explanations: None.
2. Business combination under common control
(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.
3. Reverse purchase
Basic information of the transaction, the basic 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.
4. Disposal of subsidiaries
Whether there were any transactions or events during the period in which control of subsidiaries was lost
□Yes No
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Whether there was a loss of control in the current period under a progressive disposal of investments in subsidiaries through multiple
transitions
□Yes No.
5. Changes in the consolidation scope due to other reasons
Describe the change in scope of consolidation for other reasons (e.g. Establishing new subsidiaries, liquidating subsidiaries, etc) and
its details:
(1) Establishment of new subsidiaries
1) Yunnan Baiyao Group Traditional Chinese Medicine Resources Co., Ltd made investments to set up and wholly own (i.e. 100%
shareholding in) Hangzhou Shanqi Health Industry Co., Ltd with a registered capital of RMB 1 million, and included by Yunnan Baiyao
in the consolidation scope since April 2024.
2) Yunnan Pharma made investments to set up and wholly own (i.e. 100% shareholding in) Yunnan Pharmaceutical Zhaotong Co.,
Ltd with a registered capital of RMB 1 million, and included by Yunnan Baiyao in the consolidation scope since March 2024.
(2) Cancellation of subsidiaries
Ban Loong Capital GP was cancelled in April 2024.
6. Others: None.
X. Interest in Other Entities
1. Interest in subsidiaries
(1) Composition of the Group
Unit: RMB
Main Shareholding proportion
Place of Acquisition
Subsidiary name Registered capital business Business nature
registration Direct Indirect method
location
Yunnan Baiyao Group
Traditional Chinese Kunming Pharmaceutical Set-up or
16,400,000.00 Kunming City 100.00% 0.00%
Medicine Resources Co., City industry investment
Ltd.
Yunnan Baiyao Group
Kunming Wholesale and retail of Set-up or
Medicine E-commerce 30,000,000.00 Kunming City 100.00% 0.00%
City daily necessities investment
Co., Ltd.
Yunnan Baiyao Group
Pharmaceutical Set-up or
Wuxi Pharmaceutical 25,000,000.00 Wuxi City Wuxi City 100.00% 0.00%
industry investment
Co., Ltd.
Yunnan Baiyao Group
Pharmaceutical Set-up or
Dali Pharmaceutical Co., 15,515,000.00 Dali City Dali City 100.00% 0.00%
industry investment
Ltd.
Yunnan Baiyao Group Production and sales
Chuxiong Set-up or
Health Products Co., 84,500,000.00 Chuxiong City of health and daily 100.00% 0.00%
City investment
Ltd. chemical products
Yunnan Pharmaceutical Kunming Pharmaceutical Share
1,000,000,000.00 Kunming City 100.00% 0.00%
Co., Ltd. City wholesale and retail placement
Business
combination
Yunnan Institute of Kunming
54,080,000.00 Kunming City New drug R&D 100.00% 0.00% under
Materia Medica City
common
control
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Business
combination
Yunnan Baiyao Holding Kunming
100,000,000.00 Kunming City Investment 100.00% 0.00% under
Investment Co., Ltd. City
common
control
Business
combination
Yunnan Baiyao Teayield Kunming
20,000,000.00 Kunming City Tea 100.00% 0.00% under
Co., Ltd. City
common
control
Import and export
Yunnan Baiyao Group Hainan Set-up or
15,000,000.00 Sanya City agency, technical 100.00% 0.00%
(Hainan) Co., Ltd. Province investment
services, etc.
Yunnan Baiyao Group Shanghai Set-up or
15,000,000.00 Shanghai City Technical services 100.00% 0.00%
Shanghai Co., Ltd. City investment
Business
Yunnan Baiyao Group combination
Medical device
Medical Technology 25,970,800.00 Hefei City Hefei City 100.00% 0.00% not under
production and sales
Hefei Co., Ltd. common
control
Shanghai Yunzhen Technical
Shanghai Set-up or
Medical Technology 900,000.00 Shanghai City development and 100.00% 0.00%
City investment
Co., Ltd. service
Business
combination
YNBY International Hong
0.00 Hong Kong Trade 28.06% 45.62% not under
Limited Kong
common
control
Yunnan Baiyao Tiancui
Kunming Set-up or
Business Management 3,000,000.00 Kunming City Catering 100.00% 0.00%
City investment
Co., Ltd.
Yunnan Baiyao Group Beijing Technical promotion Set-up or
50,000,000.00 Beijing City 100.00% 0.00%
Beijing Co., Ltd. City service investment
Research and
Yunhe Pharmaceutical Tianjin Set-up or
20,000,000.00 Tianjin City experimental 100.00% 0.00%
(Tianjin) Co., Ltd. City investment
development
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 is 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 and an entrustor: None.
Other explanations: None.
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(2) Key non-wholly owned subsidiaries
Unit: RMB
Profits and losses Dividends declared Balance of minority
Percentage of shares held attributable to for distribution to shareholders’
Name of subsidiary
by minority interests minority shareholders minority shareholders equity at the end of
in the current period in the current period the period
YNBY International
26.32% 340,140.36 -57,498,782.96
Limited
Explanation of the inconsistency of the percentage of shares of minority shareholders in subsidiaries with the proportion of voting
rights: None.
Other explanations: None.
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(3) Main financial information of key non-wholly owned subsidiaries
Unit: RMB
Closing balance Opening balance
Name of
subsidiary Non-current Non-current
Current assets Non-current assets Total assets Current liabilities Total liabilities Current assets Non-current assets Total assets Current liabilities Total liabilities
liabilities liabilities
YNBY
International 300,674,162.60 14,435,664.24 315,109,826.84 71,504,006.77 12,966,466.66 84,470,473.43 336,579,182.52 17,052,211.25 353,631,393.77 112,222,845.17 21,056,768.96 133,279,614.13
Limited
Unit: RMB
Amount for the current period Amount for the previous period
Name of subsidiary Total
Total comprehensive Cash flows from Cash flows from
Operating revenue Net profit Operating revenue Net profits comprehensive
income operating activities operating activities
income
YNBY International
329,187,942.18 1,292,326.58 2,612,331.99 -8,687,297.45 332,954,515.95 2,320,323.85 -1,911,698.88 3,010,639.68
Limited
Other explanations: 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.
Other explanations: None.
2. Transaction in which the share of owners’ equity in the subsidiary changes while control over the subsidiary remains unchanged
(1) Explanations on changes in the share of owners’ equity in the subsidiary: None.
(2) Impact of the transaction on the minority shareholders’ equity and the owners’ equity attributable to the parent company: None.
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3. Interest in joint venture arrangements or associates
(1) Important joint ventures or associates
Name of joint Main Shareholding The accounting method for
ventures or business Place of registration Business nature proportion investments in joint ventures or
associates location Direct Indirect associates
No. 92 Zhangjiang
Shanghai
Road, China Equity method for long-term
Pharmaceuticals Shanghai Pharmaceuticals 17.97%
(Shanghai) Pilot equity investments
Holding Co., Ltd.
Free Trade 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 Opening balance/Amount for the
current period previous period
Current assets 171,602,970,409.07 162,433,862,348.46
Non-current assets 49,732,901,419.99 49,538,671,418.34
Total assets 221,335,871,829.06 211,972,533,766.80
Current liabilities 129,104,115,224.21 122,371,879,034.89
Non-current liabilities 10,003,135,409.79 9,274,561,766.98
Total liabilities 139,107,250,634.00 131,646,440,801.87
Minority interests 12,237,937,041.77 11,801,949,913.58
Equity attributable to shareholders of the parent company 69,990,684,153.29 68,524,143,051.35
Share of net assets based on percentage of shareholding 12,579,285,681.50 12,316,447,243.08
Adjustment
-- Goodwill 935,533,389.36 935,589,606.31
-- Unrealized profit on internal transactions -9,717,206.74 -5,399,246.55
-- Others -1,734,730,887.80 -1,709,991,043.28
Book value of equity investments in associates 11,770,370,976.32 11,536,646,559.56
Fair value of equity investments in associates for which
12,720,128,071.56 11,135,936,297.08
publicly quoted prices exist
Operating revenue 139,413,145,524.43 132,592,157,323.37
Net profits 3,597,363,036.62 3,417,001,019.98
Net profits from discontinued operations
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2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
Other comprehensive income -35,643,937.69 -122,849,260.45
Total comprehensive income 3,561,719,098.93 3,294,151,759.53
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 book value of investments
Total of the followings based on the
percentage of shareholdings
-- Net profits
-- Other comprehensive income
-- Total comprehensive income
Associates:
Total book value of investments 13,057.71 142,253.18
Total of the followings based on the
percentage of shareholdings
-- Net profits -226,188.91 -38,841.58
-- Other comprehensive income -1,956.03
-- Total comprehensive income -226,188.91 -40,797.61
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
Unrecognized loss in the
Accumulated losses in the Accumulated unrecognized
Name of joint ventures or current period (or net
previous periods that are losses at the end of the
associates profit shared in the
accumulated and unrecognized period
current period)
Lijiang Changgengming Trading
-199,216.33 -215,544.24 -414,760.57
Co., Ltd.
Yunnan Baiyao Chinese Herbal
-150,030.48 -9,269.01 -159,299.49
Medicine Technology Co., Ltd.
Other explanations: None.
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(7) Unrecognized commitment related to investments in joint ventures: None.
(8) Contingent liabilities related to investments in joint ventures or associates: None.
4. Significant joint operation: None.
5. Interest in structured entities not included in the scope of consolidated financial statements
Explanations on structured entities not included in the scope of consolidation for the consolidated financial statements: None.
6. Others: None.
XI. Government Grants
1. Government grants recognized at the end of the reporting period based on amounts receivable
□Applicable Not applicable
Reasons for not receiving the estimated amount of government grants at the expected time point
□Applicable Not applicable
2. Liabilities involving government grants
Applicable □Not applicable
Unit: RMB
The amount
The amount
Amount of new included in
Accounting transferred to other Other changes in Related to
Opening balance subsidies in the non-operating Closing balance
item income in the the current period assets/income
current period income for the
current period
current period
Deferred Related to
80,923,393.38 28,218,600.00 2,563,800.24 52,208.36 106,525,984.78
income income
Deferred
157,887,717.66 4,665,700.00 8,683,691.00 2,100,000.00 151,769,726.66 Related to assets
income
3. Government grants included in profit or loss for the current period
Applicable □Not applicable
Unit: RMB
Accounting item Amount for the current period Amount for the previous period
Other income 33,866,113.61 37,822,875.91
Other explanations: None.
XII. Risks Associated with Financial Instruments
1. Risks incurred by financial instruments
The Group’s financial instruments include equity investments, debt investments, loans, receivables and
accounts payable, etc., as detailed in the relevant items under Note VI. 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
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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.
1. Market risks
Market risk of financial instruments is the risk of fluctuation in the fair value of a financial instrument or its
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. Exchange rate risk arises from financial instruments denominated in foreign
currencies other than the functional currency. The Group mainly operates within China, with RMB as its functional
currency and its principal operations are settled in RMB. YNBY International, a subsidiary of the Group, mainly
operates in Hong Kong, China, with Hong Kong dollars as its functional currency. The Group’s exposure to foreign
exchange risks is mainly related to US dollars and Hong Kong dollars. Exchange rate risk has an impact on the
results of the Group’s trading and overseas operations. The balance of the Group’s foreign currency monetary items
as at June 30, 2024 is as shown in Section 67 “Monetary items denominated in foreign currencies” under Note VI.
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
10,967,690.76.
(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, 2024, the Group’s interest-bearing debt consisted mainly of fixed-rate borrowing
contracts denominated in RMB, and ultra short-term financing bonds denominated in RMB, both totally amounting
to RMB 1,743,339,680.52 (or RMB 1,016,734,728.09 at the end of the previous year), 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.
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As at June 30, 2024, 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 13,040,457.27.
2. Credit risk
On June 30, 2024, 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 XVI “Commitments and contingencies.”
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, and customer bases are mainly medical institutions at all levels, large
pharmacy chains, distributors, community and township medical service outlets, no collateral is required. Credit
risk concentration is managed by customer type, 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.
3. Liquidity risk
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.
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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, other
payables, and short-term bonds payable in other current liabilities, 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:
June 30, 2024
Item Total
Within one year 1 to 2 years 2 to 3 years Above 3 years
Long-term loans 2,100,000.00 2,100,000.00
Total 2,100,000.00 2,100,000.00
2. Hedging
(1) The Company carried out hedging business for risk management
□Applicable Not applicable
(2) The Company conducted eligible hedging business and applied hedging accounting: None.
(3) The Company carried out hedging business for risk management, which is expected to achieve risk management target, but
did not apply hedging accounting
□Applicable Not applicable
3. Financial assets
(1) Classification by type of transfer
□Applicable Not applicable
(2) Derecognition of financial assets due to transfer
□Applicable Not applicable
(3) Financial assets involved in continued assets transfer
□Applicable Not applicable
Other explanations: None.
XIII. Disclosure of Fair Value
1. Final fair value of assets and liabilities measured at fair value
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Unit: RMB
Closing fair value
Item Level II fair
Level I fair value Level III fair value
value Total
measurement measurement
measurement
I. Continuous fair value measurement -- -- -- --
(I) Financial assets held for trading 142,160,745.34 904,654,300.00 1,046,815,045.34
(1) Investment in equity instruments 142,160,745.34 142,160,745.34
(2) Others 904,654,300.00 904,654,300.00
(II) Investment in other equity
71,745,000.00 71,745,000.00
instruments
(III) Accounts receivable financing 1,723,807,715.55 1,723,807,715.55
(1) Notes receivable 1,723,807,715.55 1,723,807,715.55
(IV) Other non-current financial assets 118,648,400.00 193,810,942.04 312,459,342.04
(1) Investment in equity instruments 118,648,400.00 193,810,942.04 312,459,342.04
2. Determination basis of the market price of the item measured using level I 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.
3. Valuation techniques and qualitative and quantitative information on important parameters adopted for
items subject to level II continuous and noncontinuous fair value measurement:
The 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.
4. Valuation techniques and qualitative and quantitative information on important parameters adopted 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, considering no substantial change in the business environment, operating
conditions and financial status of the investee compared to the new investment, uses the investment cost 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
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(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.
5. The reconciliation information between opening and closing book values and unobservable parameter
sensitivity analysis for the items subject to level III continuous fair value measurement
None.
6. For the items subject to continuous fair value measurement, if there is a conversion between all levels in
the current period, the reason for the conversion and the policy for determining the time point of the
conversion
None.
7. Changes in the valuation technology and the reason for the changes in the current period
None.
8. Fair value of financial assets and financial liabilities that are not measured at fair value:
The financial assets and liabilities measured at amortized cost reported in the financial statements mainly
include: notes receivable, accounts receivable, other receivables, long-term borrowings, short-term borrowings,
notes payable, accounts payable, other payables, long-term payables, etc.
The management of the Group believes that the book values of financial assets and liabilities reported in the
financial statements are close to their fair values.
9. Others: None
XIV. Related Parties and Related Party Transactions
1. Information about the parent company of the Company: None
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, CSRC issued the Approval on the Proposal of Merger and Overall Listing of Yunnan Baiyao Group Co.,
Ltd and Yunnan Baiyao Holdings Co., Ltd (Zheng Jian Xu Ke [2019] No. 770). Prior to the completion of the above-
mentioned merger and overall listing, the controlling shareholder of the Company was Baiyao Holdings, and there
was no de facto controller. After the completion of the transaction, SASAC of Yunnan Province and New Huadu
with its acting-in-concert parties, were equally the largest shareholder of the Company, and neither of them obtained
the control over the listed company. SASAC of Yunnan Province, along with New Huadu and its acting-in-concert
parties, had made long-term share lock-up commitments. Therefore, the listed company did not have de facto
controller before and after the transaction.
On May 22, 2020, SASAC of Yunnan Province transferred 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.
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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. After the equity transfer, Yunnan
Investment Holdings Group 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.
2. Information about subsidiaries of the Company
For details of subsidiaries of the Company, please refer to “1. Interest in Subsidiaries” under Note X.
3. Information about joint ventures and associates of the Company
For details of important joint ventures or associates of the Company, please refer to Note X 3(1) Important Joint Ventures or
Associates.
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
Shanghai Pharmaceuticals Holding Co., Ltd. Associate
Yunnan Baiyao Chinese Herbal Medicine Technology Co., Ltd. Associate
Lijiang Changgengming Trading Co., Ltd. Associate
Other explanations: None.
4. Information about other related parties
Name of other related parties Relationship between other related parties and the Company
New Huadu Industrial Group Co., Ltd. Substantial shareholder of the Company
Jiangsu Yuyue Science & Technology Development Co., Ltd. Former substantial shareholder of the Company
Former minority shareholder that has significant influence on the
Yunnan Renjiu Technology Co., Ltd.
subsidiary
Minority shareholder that has significant influence on the
Yunnan Tianma Pharmaceutical 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
Qiubei County Wanhe Pharmaceutical Industry 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
Yunnan Jingxing Pharmaceutical Industry Group Co., Ltd
subsidiary
Minority shareholder that has significant influence on the
Dali Hongxu Trading Co., Ltd.
subsidiary
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Yunnan Salt Wenshan Co., Ltd. Sub-subsidiary of the substantial shareholder
Yunnan Salt Lijiang Co., Ltd. Sub-subsidiary of the substantial shareholder
Yunnan Salt Industry Rixin Co., Ltd Sub-subsidiary of the substantial shareholder
Yunnan Mingbo Industrial Co., Ltd Sub-subsidiary of the substantial shareholder
Yunnan Medical Investment Management Group Kunming
Sub-subsidiary of the substantial shareholder
Technology Co., Ltd
Yunnan Pharmaceutical Technology Development and
Subsidiary of the substantial shareholder
Operation Co., Ltd
YEIG Power Assembly Park Development Co., Ltd Subsidiary of the substantial shareholder
YEIG Property Services Co., Ltd. Sub-subsidiary of the substantial shareholder
Tibet Jiushi Zhihe Marketing Co., Ltd. Subsidiary of the substantial shareholder
Kunming Yusi Pharmaceutical Co., Ltd. Subsidiary of the substantial shareholder
Kunming Guiyan New Material Technology Co., Ltd. Sub-subsidiary of the substantial shareholder
Teh-Ho Canned-Food Company Subsidiary of the substantial shareholder
Quanzhou New Huadu Shopping Mall Co., Ltd. Subsidiary of the substantial shareholder
Kunming Jinkuan Commerce & Trade Co., Ltd. Company controlled by the former related party
Equity participation company of the subsidiary of the substantial
Shanghai Skynet Brand Management Co., Ltd.
shareholder
Other explanations: None.
5. Related party transactions
(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 transaction Amount for the
Related party exceeding the
party transaction current period limit previous period
transaction limit
Acceptance of labor
YEIG Property Services Co., Ltd. 556,163.40
services
Anti-counterfeiting
laser label
Shanghai Skynet Brand Management
authorization for 312,388.51 78,849.56
Co., Ltd.
Yangyuanqing
Dunhuang series
Yunnan Pharmaceutical Technology
Medicine 96,004.80
Development and Operation Co., Ltd
Yunnan Jingxing Pharmaceutical
Medicine 795,327.66
Industry Group Co., Ltd
Kunming Yusi Pharmaceutical Co.,
Medicine 175,546.21
Ltd.
Purchase of raw
Yunnan Salt Industry Rixin Co., Ltd. -29,996.79
materials
Purchase of
Yunnan Salt Wenshan Co., Ltd. 30,265.49
industrial salt
Shanghai Pharmaceuticals Holding Purchase of goods
384,427,584.24 1,200,000,000.00 307,157,849.91
Co., Ltd and its subsidiaries and services
Yunnan Mingbo Industrial Co., Ltd. Purchase of goods 2,206,963.03 3,426,512.63
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Jiangsu Yuyue Science & Technology Purchase of medical
Development Co., Ltd and its devices, goods, and 16,306,419.41 50,000,000.00 20,884,737.52
subsidiaries drugs
Teh-Ho Canned-Food Company and its
Purchase of goods 419,713.42 521,823.37
subsidiaries
Kunming Jinkuan Commerce & Trade Purchase of goods
Co., Ltd. and services
Quanzhou New Huadu Shopping Mall
Purchase of services
Co., Ltd.
Yunnan Medical Investment
Management Group Kunming Purchase of goods
Technology Co., Ltd.
Purchase of salt
Yunnan Salt Lijiang Co., Ltd. 309.73
products
Information of commodities sold/labor services provided
Unit: RMB
Contents of related Amount for the current Amount for the
Related party
party transaction period previous period
Yunnan Baoshan Medicine Co., Ltd. Sales of medicine 5,572.23 -182,136.79
Yunnan Pharmaceutical Technology Development
Sales of medicine 6,514,704.02
and Operation Co., Ltd
Yunnan Jingxing Pharmaceutical Industry Group Co.,
Sales of medicine 9,531,505.43
Ltd
Kunming Guiyan New Material Technology Co., Ltd. Testing fee 2,830.19 3,000.00
Lijiang Changgengming Trading Co., Ltd. Sales of medicine 117,214.19 256,108.86
Shanghai Pharmaceuticals Holding Co., Ltd and its
Sales of goods 296,906,681.67 228,849,181.50
subsidiaries
Tibet Jiushi Zhihe Marketing Co., Ltd. Sales of goods 114,508,530.93 113,247,658.02
Kunming Jinkuan Commerce & Trade Co., Ltd. Sales of goods 31,031,200.04
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.
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2024 Interim Report of Yunnan Baiyao Group Co., Ltd.
(3) Lease between related parties
The Company as the lessor: None.
The Company as the lessee:
Unit: RMB
Variable lease
payments that are not
Rental costs for short-term leases and
included in the Interest expense on lease liabilities
leases of low-value assets that are Rent paid Increased right-of-use assets
measurement of the assumed
streamlined (if applicable)
Type of leased lease liability (if
Name of lessor applicable)
assets
Amount Amount
Amount for the Amount for the for the for the Amount for the Amount for the Amount for the Amount for the Amount for the Amount for the
current period previous period current previous current period previous period current period previous period current period previous period
period period
YEIG Power
Assembly Park
Workshop 88,443.37 114,210.95
Development Co.,
Ltd.
Real estate,
Yunnan Baoshan facilities and
5,627,570.16 229,286.90
Medicine Co., Ltd. equipment,
vehicles
Kaiyuan Sanfa Office equipment,
Pharmaceutical transportation 301,238.94 602,477.88
Trade Co., Ltd. vehicles
Yunnan Tianma House,
Pharmaceutical transportation 385,321.10 420,000.00 8,740.00 25,340.65
Co., Ltd. vehicles
Yunnan Jianshui
County Xingda House 1,552,123.81 58,290.27 15,144.50 7,545,479.15
Medicine Co., Ltd.
Explanations on lease between related parties: None.
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(4) Related party guarantees: None.
(5) Borrowings with related party: None.
(6) Asset transfer and debt restructuring of related parties: None.
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(7) Remuneration to key management personnel
Unit: RMB
Item Amount for the current period Amount for the previous period
Remuneration to key management
personnel 17,481,615.90 48,289,461.36
(8) Other related party transactions: None.
6. Amounts receivable from and payable to related parties
(1) Receivables
Unit: RMB
Closing balance Opening balance
Item name Related party Provision for bad Provision for
Book balance Book balance
debt bad debt
Accounts Shanghai Pharmaceuticals Holding
26,757,743.29 1,335,690.88 14,929,453.95 588,430.73
receivable Co., Ltd and its subsidiaries
Accounts Yunnan Baoshan Medicine Co.,
2,450.65 122.53
receivable Ltd.
Yunnan Pharmaceutical
Accounts
Technology Development and 18,780.70 939.04 16,253.88 812.69
receivable
Operation Co., Ltd
Accounts Yunnan Jingxing Pharmaceutical
5,056,493.32 252,824.67 256,854.37 12,842.72
receivable Industry Group Co., Ltd
Accounts Lijiang Changgengming Trading
2,693,654.43 767,754.81 2,717,793.63 610,834.92
receivable Co., Ltd.
Accounts Tibet Jiushi Zhihe Marketing Co.,
121.00 6.05
receivable Ltd.
Qiubei County Wanhe
Prepayment 72,206.41
Pharmaceutical Industry Co., Ltd.
Yunnan Medical Investment
Prepayment Management Group Kunming 28,871.00
Technology Co., Ltd
Jiangsu Yuyue Science &
Prepayment Technology Development Co., Ltd 1,185,072.72
and its subsidiaries
Shanghai Pharmaceuticals Holding
Prepayment 205,957.44
Co., Ltd and its subsidiaries
Other Yunnan Baiyao Chinese Herbal
179,940.16 158,464.23 179,791.57 158,771.36
receivables Medicine Technology Co., Ltd.
Other Lijiang Changgengming Trading
31,067.02 1,553.35
receivables Co., Ltd.
Dividends Shanghai Pharmaceuticals Holding
272,906,986.36
receivable Co., Ltd.
Notes Shanghai Pharmaceuticals Holding
689,199.51
receivable Co., Ltd and its subsidiaries
Accounts
Tibet Jiushi Zhihe Marketing Co.,
receivable 11,880,281.00 1,544,428.80
Ltd.
financing
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Accounts
Shanghai Pharmaceuticals Holding
receivable 21,561,996.94 8,225,916.72
Co., Ltd and its subsidiaries
financing
(2) Payables
Unit: RMB
Closing book Opening book
Item name Related party
balance balance
Shanghai Pharmaceuticals Holding Co., Ltd and its
Accounts payable 77,196,031.46 60,976,451.66
subsidiaries
Accounts payable Yunnan Mingbo Industrial Co., Ltd 409,608.22 28,682.85
Yunnan Pharmaceutical Technology Development
Accounts payable 17,822.80
and Operation Co., Ltd
Yunnan Jingxing Pharmaceutical Industry Group
Accounts payable 61,308.63
Co., Ltd.
Accounts payable Kunming Yusi Pharmaceutical Co., Ltd. 111,740.89 196,663.49
Accounts payable Yunnan Salt Industry Rixin Co., Ltd. 8,403.60 42,300.00
Yunnan Medical Investment Management Group
Accounts payable 907,736.56
Kunming Technology Co., Ltd.
Accounts payable Chuxiong Jiayuan Medicine Co., Ltd. 3,126.32
Qiubei County Wanhe Pharmaceutical Industry
Accounts payable 10,779.90
Co., Ltd.
Accounts payable Yunnan Renjiu Technology Co., Ltd. 0.30
Jiangsu Yuyue Science & Technology
Accounts payable 16,426,585.07
Development Co., Ltd and its subsidiaries
Teh-Ho Canned-Food Company and its
Accounts payable 128,161.59 44,515.35
subsidiaries
Jiangsu Yuyue Science & Technology
Notes payable 548,608.11 11,503,853.81
Development Co., Ltd and its subsidiaries
Shanghai Pharmaceuticals Holding Co., Ltd and its
Notes payable 40,461.60 1,745,473.86
subsidiaries
Shanghai Pharmaceuticals Holding Co., Ltd and its
Contractual liabilities 41,340,167.06 50,412,199.36
subsidiaries
Contractual liabilities Tibet Jiushi Zhihe Marketing Co., Ltd. 11,600,220.36 2,427,757.00
Contractual liabilities Yunnan Baoshan Medicine Co., Ltd. 567,217.96
Other payables Chuxiong Jiayuan Medicine Co., Ltd. 604.80
Other payables Kaiyuan Sanfa Pharmaceutical Trade Co., Ltd. 12,831.86
Other non-current liabilities due
YEIG Power Assembly Park Development Co., Ltd 1,185,189.56 1,185,189.56
within one year
Other non-current liabilities due Yunnan Jianshui County Xingda Medicine Co.,
1,629,730.00
within one year Ltd.
Other non-current liabilities due
Yunnan Tianma Pharmaceutical Co., Ltd. 385,321.11 761,902.21
within one year
Other non-current liabilities due
Yunnan Baoshan Medicine Co., Ltd. 2,610,019.14
within one year
Other non-current liabilities due Yunnan Jingxing Pharmaceutical Industry Group
526,744.88
within one year Co., Ltd
Yunnan Jianshui County Xingda Medicine Co.,
Lease liabilities 5,974,039.42
Ltd.
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Yunnan Jingxing Pharmaceutical Industry Group
Lease liabilities 537,176.49
Co., Ltd.
Lease liabilities YEIG Power Assembly Park Development Co., Ltd 2,792,341.92 3,889,088.11
Lease liabilities Yunnan Baoshan Medicine Co., Ltd. 2,714,419.89
State-owned Assets Supervision and
Administration Commission of Yunnan Provincial
Dividends payable 86,490,742.04 86,490,742.04
People’s Government, New Huadu Industrial
Group Co., Ltd.
Dividends payable Dali Hongxu Trading Co., Ltd. 854,930.24
Trade payable Kunming Jinkuan Commerce & Trade Co., Ltd. 60,076.28 60,963.52
7. Related party commitments: None.
8. Others: None.
XV. Share-based payment
1. General information about share-based payment
□Applicable Not applicable
2. Equity-settled share-based payment
□Applicable Not applicable
3. Cash-settled share-based payment
□Applicable Not applicable
4. Expenses for share-based payment during the current period
□Applicable Not applicable
5. Amendment and termination of share-based payment: None.
6. Others: None.
XVI. Commitment and Contingencies
1. Significant commitments: None.
2. Contingencies
(1) Significant contingencies on the balance sheet date
Provision of guarantees for Yunnan Yuncheng Hospital Management Co., Ltd.
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
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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 12 years, and the maximum total guarantee
amount of the consortium should be RMB 150,000.
On April 22, 2024, Yunnan Yuncheng Hospital Management Co., Ltd held a shareholders’ meeting, at which
the shareholders not only unanimously agreed to terminate Chenggong Hospital PPP project (Phase I project) of the
First Affiliated Hospital of Kunming Medical University, but also unanimously agreed to terminate the PPP project
contracts, investment agreements, and drug distribution project agreements. Currently, the Project Company is
subject to liquidation.
(2) Where the Company had no significant contingencies to disclose, explanation is also required
The Company had no significant contingencies to disclose.
3. Others: None.
XVII. Events Subsequent to the Balance Sheet Date
1. Important non-adjusting events: None.
2. Profit distribution: None.
3. Sales return: None.
4. Explanation on other events subsequent to the balance sheet date: None.
XVIII. Other Significant Events
1. Correction of previous accounting errors: None.
2. Debt restructuring: None
3. Assets exchange: None
4. Annuity plan
(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% of the total salary of the employees of the Company in the previous year, and the individual
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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.
5. Discontinuation of operation: None.
6. Segment information
(1) Determination basis and accounting policy of reporting segments: None.
(2) Financial information of reporting segments: None.
(3) If the Company has no reporting segments, or the total assets and total liabilities of the reporting segments
cannot be disclosed, please explain the reason: None.
(4) Other explanations: None.
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7. Other significant transactions and matters that have an impact on investors’ decision-making: None.
8. Others: None.
XIX. Notes to Major Items of Financial Statements of the Parent Company
1. Accounts receivable
(1) Disclosure by aging
Unit: RMB
Aging Closing book balance Opening book balance
Within 1 year (inclusive of 1 year) 1,018,219,594.34 614,449,599.26
1 to 2 years 86,744,749.78 85,846,594.74
2 to 3 years 12,417,125.23 5,516,424.89
Above 3 years 647,282,502.25 645,998,164.53
Total 1,764,663,971.60 1,351,810,783.42
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(2) Disclosure by provision for bad debts
Unit: RMB
Closing balance Opening balance
Book balance Provision for bad debts Book balance Provision for bad debts
Category
Provision Book value Provision Book value
Amount Percentage Amount Amount Percentage Amount
proportion proportion
Including:
Accounts
receivable
with
provision 1,764,663,971.60 100.00% 22,963,808.71 1.30% 1,741,700,162.89 1,351,810,783.42 100.00% 20,902,222.46 1.55% 1,330,908,560.96
for bad debts
on portfolio
basis
Including:
Accounts
receivable
from 86,972,857.37 4.93% 22,963,808.71 26.40% 64,009,048.66 79,297,162.59 5.87% 20,902,222.46 26.36% 58,394,940.13
external
customers
Accounts
receivable
from related 1,677,691,114.23 95.07% 1,677,691,114.23 1,272,513,620.83 94.13% 1,272,513,620.83
party
customers
Total 1,764,663,971.60 100.00% 22,963,808.71 1.30% 1,741,700,162.89 1,351,810,783.42 100.00% 20,902,222.46 1.55% 1,330,908,560.96
Provision for bad debts made on portfolio basis:
Unit: RMB
Name Closing balance
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Book balance Provision for bad debts Provision proportion
Accounts receivable from external customers 86,972,857.37 22,963,808.71 26.40%
Accounts receivable from related party
1,677,691,114.23
customers
Total 1,764,663,971.60 22,963,808.71
Explanation on the basis for determining the portfolio: None.
If provision was made for bad debts of accounts receivable in accordance with the general excepted credit loss model:
□Applicable Not applicable
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(3) Provision for bad debts accrued, recovered or reversed during the reporting period: None.
(4) Actual write-off of accounts receivable for the period: None.
(5) Top five customers with closing balance of accounts receivable and contractual assets summarized by
debtor
Unit: RMB
Percentage of total Closing balance of provision
Closing
Closing balance of closing balance of for bad debt of accounts
Closing balance of balance of
Entity name accounts receivable and accounts receivable receivable and provision for
accounts receivable contractual
contractual assets and contractual impairment of contractual
assets
assets assets
Customer A 651,239,757.21 651,239,757.21 36.90%
Customer B 555,972,839.87 555,972,839.87 31.51%
Customer C 184,490,481.83 184,490,481.83 10.45%
Customer D 132,081,466.31 132,081,466.31 7.48%
Customer E 90,032,281.96 90,032,281.96 5.10%
Total 1,613,816,827.18 1,613,816,827.18 91.44%
2. Other receivables
Unit: RMB
Item Closing balance Opening balance
Dividends receivable 272,906,986.36 4,531,100.00
Other receivables 6,116,913,020.41 4,122,557,802.76
Total 6,389,820,006.77 4,127,088,902.76
(1) Interest receivable
1) Interest receivable by type: None.
2) Major overdue interest: None.
3) Disclosure by provision for bad debts
□Applicable Not applicable
4) Provision for bad debts accrued, recovered or reversed during the reporting period: None.
5) Actual write-off of interest receivable for the period: None.
(2) Dividends receivable
1) Dividends receivable by type
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Unit: RMB
Project (or investee) Closing balance Opening balance
Jacobson Pharma Corporation Limited 4,531,100.00
Shanghai Pharmaceuticals Holding Co.,
272,906,986.36
Ltd.
Total 272,906,986.36 4,531,100.00
2) Major dividends receivable aged over one year: None.
3) Disclosure by provision for bad debts
□Applicable Not applicable
4) Provision for bad debts accrued, recovered or reversed during the reporting period: None.
5) Actual write-off of dividends receivable for the period: None.
(3) Other receivables
1) Other receivables by nature
Unit: RMB
Book balance at the end of the reporting Book balance at the beginning of the
Nature of payment
period reporting period
Amounts from related parties within the
6,245,637,078.87 4,254,011,881.88
scope of consolidation
Deposits and guarantees 9,326,051.55 14,347,777.84
Petty cash 14,831,329.01 7,104,113.05
Total 6,269,794,459.43 4,275,463,772.77
2) Disclosure by aging
Unit: RMB
Book balance at the end of the reporting Book balance at the beginning of the
Aging
period reporting period
Within 1 year (inclusive of 1 year) 3,054,259,156.11 1,864,972,976.56
1 to 2 years 1,265,416,376.08 943,970,831.13
2 to 3 years 800,183,513.08 677,614,286.73
Above 3 years 1,149,935,414.16 788,905,678.35
Total 6,269,794,459.43 4,275,463,772.77
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3) Disclosure by provision for bad debts
Unit: RMB
Closing balance Opening balance
Book balance Provision for bad debts Book balance Provision for bad debts
Category
Provision Book value Provision Book value
Amount Percentage Amount Amount Percentage Amount
proportion proportion
Including:
Provision for bad debts on
6,270,020,427.16 100.00% 152,881,439.02 2.44% 6,117,138,988.14 4,275,463,772.77 100.00% 152,905,970.01 3.58% 4,122,557,802.76
portfolio basis
Including:
Aging portfolio 24,383,348.29 0.39% 6,906,769.48 28.33% 17,476,578.81 21,451,890.89 0.50% 6,931,300.47 32.31% 14,520,590.42
Related party
6,245,637,078.87 99.61% 145,974,669.54 2.34% 6,099,662,409.33 4,254,011,881.88 99.50% 145,974,669.54 3.43% 4,108,037,212.34
portfolio
Total 6,270,020,427.16 100.00% 152,881,439.02 2.44% 6,117,138,988.14 4,275,463,772.77 100.00% 152,905,970.01 3.58% 4,122,557,802.76
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Provision for bad debts in accordance with the general excepted credit loss model:
Unit: RMB
Phase I Phase II Phase III
Provision for bad debts Expected credit Lifetime ECL (not credit- Lifetime ECL (credit- Total
losses for the next impaired) impaired)
12 months
Balance as of January 1,
152,905,970.01 0.00 152,905,970.01
2024
Balance as of January 1,
2024 in the current
period
--Transfer to Phase II 0.00
--Transfer to Phase III 0.00
--Reversal to Phase II 0.00
--Reversal to Phase I 0.00
Current provision 0.00
Current reversal 24,530.99 24,530.99
Current resales 0.00
Current write-off 0.00
Other changes 0.00
Balance as of June 30,
152,881,439.02 152,881,439.02
2024
Basis for classification of phases and percentage of provision for bad debts: None.
Changes in book balance with significant changes in loss reserves in the current period
□Applicable Not applicable
4) Provision for bad debts accrued, recovered or reversed during the reporting period
Provision for bad debts during the reporting period:
Unit: RMB
Changes in amount for the period
Category Opening balance Recovery or Closing balance
Provision Write-off Others
reversal
Other accounts
receivable with
provision for bad
152,905,970.01 619,867.19 644,398.18 152,881,439.02
debts on portfolio
basis by credit risk
characteristics
Total 152,905,970.01 619,867.19 644,398.18 152,881,439.02
Among them, the important amount of recovery or reversal of provision for bad debt for the period: None.
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5) Actual write-off of other receivables for the period: None.
6) Top five customers with closing balance of other receivables summarized by debtor
Unit: RMB
Closing
Percentage of total of balance of
Entity Nature of
Closing balance Aging closing balance of other provision
name payment
receivables for bad
debts
Amounts from
related parties Within 1 year, 1 to 2 years, 2 to 3
Entity A 1,701,366,161.86 27.13%
within the scope years
of consolidation
Amounts from
related parties Within 1 year, 1 to 2 years, 2 to 3
Entity B 1,378,993,166.06 21.99%
within the scope years, above 3 years
of consolidation
Amounts from
related parties Within 1 year, 1 to 2 years, 2 to 3
Entity C 824,545,699.09 13.15%
within the scope years
of consolidation
Amounts from
related parties Within 1 year, 1 to 2 years, 2 to 3
Entity D 748,952,791.58 11.94%
within the scope years
of consolidation
Amounts from
related parties Within 1 year, 1 to 2 years, 2 to 3
Entity E 383,990,715.51 6.12%
within the scope years, above 3 years
of consolidation
Total 5,037,848,534.10 80.33%
7) Those reported as other receivables due to centralized fund management: None.
3. Long-term equity investment
Unit: RMB
Closing balance Opening balance
Item
Impairment Impairment
Book balance Book value Book balance Book value
provision provision
Investments
in 2,573,195,450.92 244,474,941.95 2,328,720,508.97 2,573,195,450.92 244,474,941.95 2,328,720,508.97
subsidiaries
Investments
in
associates 11,787,556,522.70 11,787,556,522.70 11,553,542,823.25 11,553,542,823.25
and joint
ventures
Total 14,360,751,973.62 244,474,941.95 14,116,277,031.67 14,126,738,274.17 244,474,941.95 13,882,263,332.22
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(1) Investments in subsidiaries
Unit: RMB
Increase and decrease in the current period
Opening balance of Closing balance of
Opening balance Provision Closing balance
Investee impairment Additional Decreased impairment
(book value) for Others (book value)
provision investment investment provision
impairment
Yunnan Baiyao Group
Traditional Chinese
130,894,518.14 130,894,518.14
Medicine Resources
Co., Ltd.
Yunnan Baiyao Group
Medicine E-commerce 56,059,850.00 56,059,850.00
Co., Ltd.
Yunnan Baiyao Group
Wuxi Pharmaceutical 39,627,253.25 39,627,253.25
Co., Ltd.
Yunnan Baiyao Group
Dali Pharmaceutical 16,489,200.00 16,489,200.00
Co., Ltd.
Yunnan Baiyao Group
Health Products Co., 168,297,661.03 168,297,661.03
Ltd.
Yunnan Pharmaceutical
765,533,647.30 765,533,647.30
Co., Ltd.
Yunnan Institute of
101,075,329.94 101,075,329.94
Materia Medica
Yunnan Baiyao Holding
193,992,837.67 193,992,837.67
Investment Co., Ltd.
Yunnan Baiyao
3,701,960.00 20,000,000.00 3,701,960.00 20,000,000.00
Teayield Co., Ltd.
Yunnan Baiyao Group
457,198,438.74 457,198,438.74
(Hainan) Co., Ltd.
Yunnan Baiyao Group
11,350,000.00 11,350,000.00
Shanghai Co., Ltd.
Yunnan Baiyao Group
Medical Technology 85,700,000.00 85,700,000.00
Hefei Co., Ltd.
Shanghai Yunzhen
Medical Technology 200,572,858.37 200,572,858.37
Co., Ltd.
YNBY International
Limited (Formerly Ban
98,226,954.53 224,474,941.95 98,226,954.53 224,474,941.95
Loong Holdings
Limited)
Total 2,328,720,508.97 244,474,941.95 2,328,720,508.97 244,474,941.95
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(2) Investments in associates and joint ventures
Unit: RMB
Increase and decrease in the current period
Opening Closing
Opening balance balance of Profits and losses on Adjustment of Closing balance balance of
Investor Cash dividends or Provision
impairment Additional Decreased investments other Change in other impairment
(book value) profit declared to be for Others (book value)
provision investment investment recognized under comprehensive equities provision
issued impairment
the equity method income
I. Joint ventures
Shanghai
Pharmaceuticals
11,537,291,236.28 497,175,749.72 -5,825,439.28 15,607,562.45 272,906,986.36 11,771,342,122.81
Holding Co.,
Ltd.
Yunnan
Tianzheng 16,251,586.97 -37,187.08 16,214,399.89
Testing Co., Ltd.
Yunnan Baiyao
Chinese Herbal
Medicine
Technology
Co., Ltd.
Subtotal 11,553,542,823.25 0.00 0.00 0.00 497,138,562.64 -5,825,439.28 15,607,562.45 272,906,986.36 0.00 0.00 11,787,556,522.70 0.00
II. Associates
Total 11,553,542,823.25 0.00 0.00 497,138,562.64 -5,825,439.28 15,607,562.45 272,906,986.36 0.00 0.00 11,787,556,522.70
The recoverable amount is determined by the net amount of fair value minus disposal expenses
□Applicable Not applicable
The recoverable amount is determined by the present value of expected future cash flows
□Applicable Not applicable
Reasons for significant differences between the foregoing information and information used for impairment testing in previous years or external information: None.
Reasons for significant differences between the information used in the Company’s impairment tests in previous years and the actual situation in the corresponding year: None.
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(3) Other explanations
For details of Yunnan Baiyao Chinese Herbal Medicine Technology Co., Ltd., please refer to “X. Rights and interests in other entities - 3. Rights and interests in joint venture arrangements or
associates.”
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4. Operating revenue and operating cost
Unit: RMB
Amount for the current period Amount for the previous period
Item
Revenue Cost Revenue Cost
Principal businesses 4,449,661,598.70 1,837,265,009.69 4,029,037,887.33 1,837,757,275.70
Other businesses 75,993,077.06 62,495,542.18 41,638,215.70 49,750,053.44
Total 4,525,654,675.76 1,899,760,551.87 4,070,676,103.03 1,887,507,329.14
Details of operating revenue and operating cost:
Unit: RMB
Type of Drug sales TCM resources Others Total
contract Operating revenue Operating cost Operating revenue Operating cost Operating revenue Operating cost Operating revenue Operating cost
Business type 4,390,564,339.48 1,791,713,513.17 59,097,259.22 45,551,496.52 75,993,077.06 62,495,542.18 4,525,654,675.80 1,899,760,551.90
Including:
Industry sales
4,390,564,339.48 1,791,713,513.17 4,390,564,339.50 1,791,713,513.20
income
Commercial
59,097,259.22 45,551,496.52 59,097,259.20 45,551,496.50
sales income
Others 75,993,077.06 62,495,542.18 75,993,077.10 62,495,542.20
By operating
4,390,564,339.48 1,791,713,513.17 59,097,259.22 45,551,496.52 75,993,077.06 62,495,542.18 4,525,654,675.80 1,899,760,551.90
areas
Including:
In Yunnan
581,773,978.64 311,332,632.01 58,119,277.57 44,611,129.55 75,993,077.06 62,495,542.18 715,886,333.3 418,439,303.7
province
Outside
Yunnan
province 3,808,790,360.84 1,480,380,881.16 977,981.65 940,366.97 3,809,768,342.5 1,481,321,248.1
(excluding
overseas)
Overseas
Information related to performance obligations: None.
Other explanations: None.
Information related to the transaction price allocated to the remaining performance obligations: At the end of this
reporting period, the Company recorded an amount of revenue of RMB 0.00 from its performance of obligations set
out in the signed contracts to be fulfilled or fully fulfilled. Among this, RMB 0 is expected to be recognized as revenue
in the year, RMB 0 is expected to be recognized as revenue in the year, and RMB 0 is expected to be recognized as
revenue in the year.
Significant contractual changes or significant transaction price adjustments: None.
Other explanations: None.
5. Investment income
Unit: RMB
Item Amount for the current period Amount for the previous period
Long-term equity investment incomes accounted by the
497,138,562.64 438,812,247.13
equity method
Investment income on financial assets held for trading
4,639,488.08
during holding period
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Investment income from disposal of financial assets held
-3,681,651.93
for trading
Investment income from other non-current financial assets
3,427,111.75 5,000,000.00
during the holding period
Others -21,173,817.57 2,014,422.25
Total 479,391,856.82 446,784,505.53
6. Others: None.
XX. Supplementary Information
1. Breakdown of non-recurring profits and losses for the current period
Applicable □Not applicable
Unit: RMB
Item Amount Description
Profits and losses from disposal of non-current assets -1,658,086.88
Government subsidies included in the current profit and losses (excluding the government
subsidies closely related to regular businesses of the Company, in line with national policies,
34,220,746.37
enjoyed by the Company according to definite standards, and affecting constantly the
Company’s profits and losses)
Except for effective hedging business related to the normal operation of the company, profits
and losses arising from changes in fair value of financial assets and financial liabilities held by
-4,964,027.66
non-financial enterprises, as well as profits and losses arising from disposal of financial assets
and financial liabilities
Profits and losses from entrusted investments or asset management 3,003,994.06
Non-operating revenue and expenses other than the above -257,970.80
Other profit and loss items that meet the definition of non-recurring profits and losses 27,441,539.97
Less: Amount affected by the income tax 3,960,096.44
Amount affected by minority interests (after tax) 11,536.45
Total 53,814,562.17 --
Other profits and losses satisfying the definition of non-recurring profits and losses:
Applicable □Not applicable
Other profits and losses satisfying the definition of non-recurring profits and losses mainly
include non-recurring profits and losses such as time deposit interest and value added tax reduction
and exemption.
Note for the definition of non-recurring profits and losses set out in the No.1 Explanatory Announcement on
Information Disclosure for Companies of Offering Their Securities to the Public - Non-recurring Profits and Losses,
as recurring profits and losses
□Applicable Not applicable
2. Return on equity and earnings per share
Profits during the reporting period Earnings per share
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Weighted average return on Basic earnings per share Diluted earnings per
equity (RMB/share) share (RMB/share)
Net profits attributable to ordinary
7.93% 1.79 1.79
shareholders of the Company
Net profits attributable to ordinary
shareholders of the Company after
7.80% 1.76 1.76
the deducting non-recurring profits
and losses
3. Differences in the accounting data under the Chinese Accounting Standards (CAS) and
oversees accounting standards
(1) Differences in the net profits and net assets in financial statements disclosed respectively
under International Financial Reporting Standards (IFRS) and CAS
□Applicable Not applicable
(2) Differences in the net profits and net assets in financial statements disclosed respectively
under overseas accounting standards and CAS
□Applicable Not applicable
(3) Explanations of the causes to differences in accounting data under CAS and overseas
accounting standards; if adjustment is made for data audited by an overseas audit institution,
the name of the institution shall be provided
4. Others
None.
Yunnan Baiyao Group Co., Ltd.
Board of Directors
August 26, 2024
240
