Joincare Pharmaceutical Group Annual Report 2023
Stock Code: 600380 Stock Short Name: 健康元
Joincare Pharmaceutical Group Industry Co., Ltd.
2023 Annual Report
1
Joincare Pharmaceutical Group Annual Report 2023
Important Notice
I. The Board of Directors (the “Board”), the Board of Supervisors and directors, supervisors
and senior management of the Company hereby warrant the truthfulness, accuracy and
completeness of the contents of this annual report (the “Report”), and that there are no false
representations, misleading statements or material omissions contained in the Report, and
severally and jointly accept legal responsibility.
II. All directors of the Company attended the Board meeting.
III. Grant Thornton (Special General Partnership) issued a standard unqualified audit report
for the Company.
IV. Mr. Zhu Baoguo (朱保国), the person-in-charge of the Company, and Mr. Qiu Qingfeng
(邱庆丰), the person-in-charge of accounting work and the person-in-charge of the accounting
department (the head of the accounting department) declare that they hereby warrant the
truthfulness, accuracy and completeness of the financial statements contained in the Report.
V. Profit distribution plan or plan for conversion of capital reserve to share capital approved
by the Board resolution during the Reporting Period
Based on the audit conducted by Grant Thornton (Special General Partnership), in 2023, the Parent
Company generated net profit of RMB1,241,411,898.00, 10% of which was contributed to the
statutory surplus reserve, namely RMB124,141,189.80, the remainder of which, together with
undistributed profits for the last year of RMB1,968,175,713.20 and gain on disposal of other equity
investments of RMB1,245,892.23, subtracting cash dividends for the last year of
RMB336,792,056.76, is the profits available for distribution to shareholders for the year of
RMB2,749,900,256.87. The Company plans to distribute cash dividends for the fiscal year 2023,
based on the total number of shares for dividend distribution, which is defined by the total shares of
Company on the equity registration date designated by the annual profit distribution plan. The
Company plans to distribute cash dividend of RMB1.80 (tax inclusive) for every 10 shares of to all
shareholders of the Company, and the remaining undistributed profits will be carried forward to the
following year.
VI. Risk declaration for the forward-looking statements
√Applicable □N/A
The Report contains forward-looking statements which involve the future plans, development
strategies, etc. of the Company, yet do not constitute substantive undertakings of the Company to
investors. Investors should exercise caution prior to making investment decisions.
VII. Whether there is non-operating use of funds by the controlling shareholder and their
related parties
No
VIII. Whether there is a violation of the prescribed decision-making procedures to provide
external guarantees
2
Joincare Pharmaceutical Group Annual Report 2023
No
IX. Whether more than half of directors cannot warrant the truthfulness, accuracy and
completeness of the Report disclosed by the Company
No
X. Significant risk warnings
There is no exceptionally significant risk that will have a material impact on the production and
operation of the Company during the Reporting Period. In this Report, the Company has elaborated
on the risks and countermeasures that the Company may face in the course of production and
operation, including industry policy risk, market risk, risk of safety and environmental protection,
risk in price and supply of raw materials and R&D risk. For more information, please refer to
“Potential risks” part in Chapter 3 Management Discussion and Analysis.
XI. Others
□Applicable √N/A
3
Joincare Pharmaceutical Group Annual Report 2023
Table of Contents
Important Notice ............................................................................................................................. 2
Chairman's Statement .................................................................................................................... 5
Financial Highlights ........................................................................................................................ 9
Chapter 1 Definitions .................................................................................................................... 11
Chapter 2 Company Profile and Major Financial Indicators ................................................... 13
Chapter 3 Management Discussion and Analysis ...................................................................... 18
Chapter 4 Corporate Governance ............................................................................................... 78
Chapter 5 Environmental and Corporate Social Responsibility ............................................ 100
Chapter 6 Major Events ............................................................................................................. 128
Chapter 7 Changes in Equity and Shareholders ...................................................................... 146
Chapter 8 Information on Preferred Shares ............................................................................ 153
Chapter 9 Information on Bonds ............................................................................................... 154
Chapter 10 Financial Statements ............................................................................................... 155
The Financial Statements signed and sealed by the person-in-charge of
the Company, the person-in-charge of the Company's accounting work
and the person-in-charge of the accounting department (the head of the
accounting department)
List of documents The original document of the auditors’ report sealed by the accounting
available for inspection firm and signed and sealed by the certified public accountants
The original copies of all documents and announcements of the
Company which have been disclosed to the public on the website
designated by CSRC (China Securities Regulatory Commission) during
the Reporting Period
4
Joincare Pharmaceutical Group Annual Report 2023
Chairman's Statement
Dear shareholders,
2023 marked the first year of the implementation of the guiding principles of the 20th CPC National
Congress. China’s health undertakings made new significant achievements and the construction of
healthy China accelerated. This year, the pharmaceuticals industry underwent all-sector, full-chain
and full-coverage system governance, while industry-friendly policies were introduced frequently
amidst challenges and opportunities. Driven by policy support, scientific and technological
innovation, and market demand, the pharmaceutical industry system witnessed notable optimization
and upgrading, with innovation-led and high-quality development emerging as the prevailing theme.
In retrospect of 2023, Joincare adhered to its dual-drive strategy of innovative medicines and high-
barrier complex formulations, focusing on the high-quality development of the principal
pharmaceutical business. Overcoming challenges, Joincare not only achieved substantial
achievements in research, production, and marketing, but also enhanced its overall R&D capabilities
and innovation levels by leveraging business development channels to swiftly expand its R&D and
innovation pipeline reserves, which laid a solid foundation for the Group to achieve comprehensive
innovative transformation. Facing various challenges such as price reductions in key varieties due
to volume-based procurementand intensified competition in the APIs market, all employees of the
Group worked diligently and unitedly and made concerted efforts to achieve the Group’s annual
business objectives.
In 2023, the Group realized total revenues of RMB16.646 billion, representing a year-on-year
decrease of 2.90%; realized a net profit attributable to shareholders of the listed company of
RMB1.443 billion, representing a year-on-year decrease of 3.99%; and realized a net profit
attributable to shareholders of the listed company after deduction of the extraordinary gains and
losses of RMB1.374 billion, representing a year-on-year decrease of 3.18%.
We firmly believe that robust performance is the cornerstone of creating value for
shareholders and we are committed to providing shareholders with excellent returns. Based
on the operating results and overall financial position of the Group in 2023, the Board of Directors
proposed that we continue to adopt a stable profit distribution scheme in 2023. Specifically, a cash
dividend of RMB1.80 (tax inclusive) for every 10 shares will be distributed to all shareholders of
the Company, based on the total number of shares on the equity registration date designated by the
annual profit distribution plan for 2023. No bonus shares will be distributed and no conversion of
capital reserve into share capital will be carried out. The profit distribution scheme for 2023 is yet
to be reviewed and approved at the Company’s 2023 Annual General Meeting.
In 2023, the Group further carried out and practiced the dual-drive strategy of innovative
medicines and high-barrier complex formulations, implemented differentiated R&Dstrategy,
and created a diversified product matrix and a rich pipeline. In terms of R&D innovation, the
Group adhered to a development philosophy centered on R&D innovation, and differentially
deployed innovative medicines and high-barrier complex formulations through self-research and
introduction to achieve high-quality development.
We continued to increase our R&D expenditures and made breakthroughs in the construction of
several major platforms, including inhalation formulation, antibody, and sustained-release
microspheres for injections. In 2023, the Group made great progress on various innovative
medicines and high-barrier complex formulations in the R&D pipeline. In terms of innovative
medicines, Ilaprazole Sodium for injection ( 注 射 用 艾 普 拉 唑 钠 ) with new indication and
Triptorelin Acetate Microspheres for Injection (注射用醋酸曲普瑞林微球) with prostatic cancer
5
Joincare Pharmaceutical Group Annual Report 2023
indication were approved for launching; Recombinant SARS-COV-2 Bivalent (Original/Omicron
XBB) Fusion Protein Vaccine (CHO Cell) (重組新型冠状病毒融合蛋白二价(原型株/Omicron
XBB 变异株)疫苗(CHO 细胞)) was approved for EUA; and Aripiprazole Microspheres for
Injection (注射用阿立哌唑微球) were applied for marketing launch. TG-1000 capsules and
Recombinant Anti-human IL-17A/F Humanized Monoclonal Antibody Injection (重组抗人 IL-
17A/F 人源化单克隆抗体注射液) had commenced the phase III clinical trials. In terms of high-
barrier complex formulations, Formoterol Fumarate Inhalation Solution (富马酸福莫特罗吸入溶
液), Long Chain Fat Emulsion Injection (长链脂肪乳注射液) (OO) and Tocilizumab Injection (托
珠 单 抗 注 射 液 ) were approved for market launch; and Salmeterol Xinafoate-Fluticasone
Propionate Powder for Inhalation (沙美特罗替卡松吸入粉雾剂) completed Phase III clinical trial
and was the first to apply for marketing launch after the issuance of new domestic regulations.
We are deeply engaged in the construction of innovative R&D technology platforms for innovative
and high-barrier complex formulations, so as to continuously improve our independent R&D
capabilities and competitiveness. In December 2023, Meloxicam Nanocrystalline Injection (美洛
昔康纳米晶注射液), which was independently developed by the Group, received approval for
clinical trials. This success represents a significant breakthrough in the Group’s newly established
R&D platform for complex injections, injecting fresh energy into the Group’s progress in this area.
Meanwhile, Joincare Biopharmaceutical Research Institute also made a series of significant
breakthroughs in the field of synthetic biology. As of the end of 2023, the Institute had applied for
a total of 14 national invention patents (with 4 granted), 8 utility model patents (with 4 granted),
Moreover, the Institute obtained 1 software copyright and published 2 high-level academic papers.
In order to further deepen the implementation of the Group’s innovative development strategy, we
strengthened independent innovation and foreign cooperation to accelerate R&D innovation and
upgrading. In 2023, the Group successfully introduced innovative medicines such as TG-1000, a
new anti-influenza medicine, and DBM-1152A, a new dual-targeted medicine of LABA+LAMA,
further expanding the Group’s R&D pipeline in the sector of respiratory diseases. Additionally, the
Group actively expanded into new sectors, and obtained the exclusive licensing rights for FZ008-
145, an analgesic drug in the Greater China region.
In terms of marketing innovation, in 2023, the Group continuously consolidated its user-centric
digital marketing system and promoted steady performance growth with brand building. In the
respiratory drug sector, the Group continued to promote the construction of its digital marketing
platform through the establishment of a flat management ecosystem and the acceleration of digital
marketing and other measures. Leveraging digital tools, the Group expedited its marketing progress.
Meanwhile, through analyzing patients’ feedback on medicine taking and focusing on public
awareness campaigns on respiratory diseases, the Group offered entire-process services from
disease awareness to disease treatment, ultimately improving our brand recognition and influence.
In the health care productsand OTC segment, the Group accomplished a successful marketing
reform, showing robust growth in sales revenue. Through ongoing optimization and enhancement
of its marketing strategy, which integrated online and offline channels, the Group established a data-
driven DTC brand digital marketing system centered on user engagement. This initiative injected
new vitality into the brand, resulting in significant performance-driven outcomes.
In terms of international expansion, the Group steadily accelerated its internationalization strategy.
In 2023, the revenues of the Group from overseas operations were RMB2,584 million, representing
15.64% of the Group’s revenues from principalbusinesses.
In addition to maintaining its existing strengths in APIs exports, the Group proactively promoted
the global planning and strategy for our key formulation products. In 2023, 4 chemical formulations
6
Joincare Pharmaceutical Group Annual Report 2023
of the Company were approved for registration in overseas markets, and 14 new registrations were
submitted. Among them, Compound Ipratropium Bromide Solution was completed the registration
review in Philippines and obtained the registration approval in January 2024, Levosalbutamol
Hydrochloride Nebulizer Solution was submitted the registration application in Macao and obtained
the registration approval in February 2024, and Cetrorelix Acetate for Injection was submitted the
registration application to the United States.
Leveraging the opportunity of the successful issuance of Global Depository Receipts (GDRs) on
the Swiss Exchange in 2022, the Group’s Investor Relation Team actively engaged in overseas
roadshows in countries such as Singapore, the United Arab Emirates, Switzerland. They showcased
the Group’s business model, financial condition, and development strategy to overseas investors,
effectively enhancing the Group’s international visibility and influence This initiative received
positive responses from a wide range of investors.
In addition to commitment to business development, we actively participated in social welfare
undertakings, effectively fulfilled our social responsibilitiesby integrating ESG concepts into
our strategic planning and daily operations. As a leading manufacturer of inhalation formulations
in China, we consistently upheld our commitment to serving the nation and its people as a
pharmaceutical company. Following the inclusion of three inhalation formulation products,雾舒,
舒 坦 琳 , and 丽 雾 安 , in the fifth round of national volume-based procurement, and the
inclusion of 特瑞通 in the seventh round of national volume-based procurement, Levosalbutamol
Hydrochloride Nebulizer Solution (盐酸左沙丁胺醇雾化吸入溶液) successfully won the bidding
in the ninth round of national volume-based procurement. As of the end of 2023, Tobramycin
Solution for Inhalation (妥布霉素吸入溶液) (健可妥), the first independently developed inhaled
antibiotics in China, was included in the latest National Reimbursement Drug List. This
development is anticipated to enhance the drug’s accessibility and offer more convenient and
effective treatment options for a large number of patients. In 2023, the inhalation formulation
segment of Joincare recorded a revenue of RMB1,741 million, representing a year-on-year increase
of 48.35%. This also means that more and more Chinese people are using domestically produced,
high-quality and affordable new drugs.
To improve public awareness of chronic disease diagnosis, treatment, and management, the Group
orderly conducted public awareness campaigns through academic publications, public welfare
actions, and the promotion of science popularization, thereby raising public health awareness and
advancing universal healthcare development. As of the end of 2023, “Respiratory Experts’ Views”
(呼吸专家说), a public welfare patient education platform in the domestic respiratory diseases
sector under the Group, which is the first of its kind in the industry, has collaborated with over 5,000
doctors in popularizing the scientific concept on the prevention of chronic respiratory diseases
among millions of followers. It focused on chronic obstructive pulmonary disease (COPD), asthma,
bronchiectasis and other respiratory diseases with high morbidity but low awareness and rate of
standardized treatment, so as to support the “Healthy China 2030” initiative.
Over the years, we have always kept in mind our responsibilities as a corporate citizen, actively
responded to national call, and continued to devote ourselves to the construction of healthy China
and the rural revitalization plan. Leveraging our industrial strengths, we consistently launched the
“Access to Public Welfare for Chronic Diseases Prevention and Treatment (普惠慢病防治公益项
目)” program. This program currently covers 8 provinces and 4 autonomous regions in China,
effectively easing the financial burdens of low-income households and solidifying the gains made
in poverty alleviation efforts. In 2023, the Group’s public welfare donations amounted to
approximately RMB25.9846 million.
As we look forward to 2024, the international situation will be complex and unpredictable,
7
Joincare Pharmaceutical Group Annual Report 2023
presenting various challenges to the development of China’s pharmaceutical industry alongside new
opportunities for growth. This year, for the first time “innovative medicines, bio-manufacturing,
and life sciences” were collectively mentioned in the government work report during the National
People's Congress and the Chinese People's Political Consultative Conference indicating potential
breakthroughs for the industry. The Group will stay true to its original aspiration, be poised to seize
opportunities, and steadfastly commit to achieving high-quality growth objectives by anchoring to
the two pillars of “innovation” and “internationalization”, so as to promote the Group's all-around
innovation and transformation.
Firstly, we will continue to increase investment in innovation to improve R&D and business
development capabilities, boost the Group’s R&D employment across various segments, and
continuously enrich and consolidate the Group’s innovative product pipelines. Secondly, we will
transform and upgrade our intelligent manufacturing to comprehensively enhance product
competitiveness through quality improvements, cost reductions and efficiency enhancements.
Thirdly, we will deepen digital marketing reforms to reshape brand positioning with a user-centric
driver, thereby expanding product market shares. Fourthly, we will strengthen our partnership with
global strategic customers, accelerate international product registrations and certifications, enhance
the market development of our superior products, so as to further increase our overseas market
shares, and propel the Group towards sustainable high-quality growth.
In 2023, we faced challenges head-on and moved forward with courage. In 2024, we embrace our
original aspirations, ready to embark on the journey with renewed vigor and determination.
In the new year, we will continue to deepen the dual-drive strategy of innovative medicines and
high-barrier complex formulations, deeply integrate the overall situation of “introduction” and
“going global”, fully accelerate the progress of innovative research and development and the
commercialization of new products, further enhance our competitive edges in the future, and
continue to struggle for the Group’s all-around innovation, transformation and high-quality
development. On behalf of the Board of the Company, I would like to take this opportunity to
express my sincere gratitude to all Shareholders, employees and business partners of Joincare for
your long-lasting care, companionship and support!
Chairman: Zhu Baoguo
2 April 2024
8
Joincare Pharmaceutical Group Annual Report 2023
Financial Highlights
9
Joincare Pharmaceutical Group Annual Report 2023
Financial Highlights
10
Joincare Pharmaceutical Group Annual Report 2023
Chapter 1 Definitions
I. Definitions
In this Report, unless the context otherwise requires, the following expressions shall have the
following meanings:
Definitions of common terms
CSRC Refers to China Securities Regulatory Commission
SSE Refers to Shanghai Stock Exchange
Baiyeyuan or the Controlling Shenzhen Baiyeyuan Investment Co., Ltd. * (深圳市百业源投
Refers to
Shareholder 资有限公司)
Company, the Company, Group or Joincare Pharmaceutical Group Industry Co., Ltd.* (健康元药
Refers to
the Group 业集团股份有限公司)
BD Refers to Business Development
GMP Refers to Good Manufacturing Practice
GSP Refers to Good Supply Practice
The certification of the products by European Union,
indicating that the product has complied the safety
requirements specified in the European Directives. The access
CE Refers to condition for a product to enter the EU market is that the
product has undergone the appropriate conformity assessment
procedures and the declaration of conformity of a
manufacturer, with attachment of CE mark
Certificate of Suitability to Monograph of European
CEP Refers to
Pharmacopoeia
NRDL Refers to National Reimbursement Drug List
BE Refers to Bioequivalence
EUA Refers to Emergency Use Authorization
CPC Refers to Cephalosporin C
DTC Refers to Direct-to-Consumers
KOL Refers to Key Opinion Leader
AIPL Refers to Awareness, Interest, Purchase, Loyalty
ANDA Refers to Abbreviated New Drug Application
BLA Refers to Biologics License Application
IND Refers to Investigational New Drug Application
R&D Refers to Research and Development
TCM Refers to Traditional Chinese Medicine
NHSA Refers to National Health Security Administration
NMPA Refers to National Medical Products Administration
RTO Refers to Regenerative Thermal Oxidizer
Livzon Pharmaceutical Group Inc.* (丽珠医药集团股份有限
Livzon Group Refers to
公司)
Shenzhen Haibin Pharmaceutical Co., Ltd.* (深圳市海滨制药
Haibin Pharma Refers to
有限公司)
Joincare Haibin Pharmaceutical Co., Ltd.* (健康元海滨药业有
Joincare Haibin Refers to
限公司)
Xinxiang Haibin Pharmaceutical Co., Ltd. * (新乡海滨药业有
Xinxiang Haibin Refers to
限公司)
Shenzhen Taitai Pharmaceutical Co., Ltd. * (深圳太太药业有
Taitai Pharmaceutical Refers to
限公司)
Shenzhen Taitai Genomics Inc. Co., Ltd. * (深圳太太基因工程
Taitai Genomics Refers to
有限公司)
Joincare Biopharmaceutical Henan Province Joincare Biopharmaceutical Research Institute
Refers to
Research Institute Co., Ltd. *（河南省健康元生物医药研究院有限公司）
Jiaozuo Joincare Bio Technological Co., Ltd.*（焦作健康元
Jiaozuo Joincare Refers to
生物制品有限公司）
Joincare Daily-Use & Health Care Co., Ltd. * (健康元日用保
Joincare Daily-Use Refers to
健品有限公司)
11
Joincare Pharmaceutical Group Annual Report 2023
Topsino Refers to Topsino Industries Limited * (天诚实业有限公司)
Shenzhen Fenglei Electric Power Investment Co., Ltd. *（深
Fenglei Electric Power Refers to
圳市风雷电力投资有限公司）
Health Pharmaceutical (China) Co., Ltd. * (健康药业(中国)有
Health Pharmaceutical Refers to
限公司)
Shanghai Frontier Health Pharmaceutical Technology Co., Ltd.
Shanghai Frontier Refers to *(上海方予健康医药科技有限公司)
Joincare (Guangdong) Special Medicine Food Co., Ltd. *(健康
Joincare Special Medicine Food Refers to
元(广东)特医食品有限公司)
Livzon MABPharm Inc. * (珠海市丽珠单抗生物技术有限公
Livzon MAB Refers to
司)
Zhuhai Livzon Diagnostics Inc. * ( 珠海丽珠试剂股份有限公
Livzon Diagnostics Refers to
司)
Livzon Group Fuzhou Fuxing Pharmaceutical Co., Ltd.*(丽珠
Fuzhou Fuxing Refers to
集团福州福兴医药有限公司)
Livzon Group Xinbeijiang Pharmaceutical Manufacturing
Livzon Xinbeijiang Refers to Inc.*( 丽珠集团新北江制药股份有限公司)
Livzon Group (Ningxia) Pharmaceutical Manufacturing Co.,
Ningxia Pharmaceutical Refers to
Ltd.* ( 丽珠集团 ( 宁夏) 制药有限公司)
Gutian Fuxing Pharmaceutical Co., Ltd. * ( 古田福兴医药有
Gutian Fuxing Refers to
限公司)
Zhuhai FTZ Livzon Hecheng Pharmaceutical Manufacturing
Livzon Hecheng Refers to
Co., Ltd. * ( 珠海保税区丽珠合成制药有限公司)
Livzon Group Limin Pharmaceutical Manufacturing Factory
Livzon Limin Refers to *(丽珠集团利民制药厂)
Livzon Group Livzon Pharmaceutical Factory * (丽珠集团丽
Livzon Pharmaceutical Factory Refers to
珠制药厂)
Jiaozuo Livzon Hecheng Pharmaceutical Manufacturing Co.,
Jiaozuo Hecheng Refers to
Ltd.* ( 焦作丽珠合成制药有限公司)
Shanghai Livzon Pharmaceutical Manufacturing Co., Ltd.
Shanghai Livzon Refers to *( 上海丽珠制药有限公司)
Sichuan Guangda Pharmaceutical Manufacturing Co., Ltd.
Sichuan Guangda Refers to *( 四川光大制药有限公司)
Jiaozuo Jinguan Jiahua Electric Power Co., Ltd. *( 焦作金冠
Jinguan Electric Power Refers to
嘉华电力有限公司)
Zhuhai Livzon Biotechnology Co., Ltd.*( 珠海市丽珠生物医
LivzonBio Refers to
药科技有限公司)
COVID-19 Refers to A new coronavirus (SARS-CoV-2)
The outbreak of the disease caused by a new coronavirus called
COVID- 19 pandemic or pandemic Refers to
SARS-CoV-2
Ruihua Certied Public Accountants (Special General
Ruihua Certied Public Accountants Refers to
Partnership)
Grant Thornton Refers to Grant Thornton (Special General Partnership)
Reporting Period Refers to From 1 January 2023 to 31 December 2023
End of the Reporting Period Refers to 31 December 2023
Currency or unit Refers to RMB unless otherwise specied
12
Joincare Pharmaceutical Group Annual Report 2023
Chapter 2 Company Profile and Major Financial Indicators
I. Company profile
Chinese name of the Company 健康元药业集团股份有限公司
Abbreviation of the Chinese name 健康元
English name of the Company Joincare Pharmaceutical Group Industry Co., Ltd.
Abbreviation of the English name Joincare
Legal representative of the Company Zhu Baoguo(朱保国)
II. Contact persons and contact information
Board Secretary Representatives of Securities Aairs
Name Zhao Fengguang ( 赵凤光 ) Li Hongtao( 李洪涛 ) and Luo Xiao( 罗逍 )
Joincare Pharmaceutical Group Building, No. Joincare Pharmaceutical Group Building, No. 17,
Address 17, Langshan Road, North District, Hi-tech Langshan Road, North District, Hi-tech Zone,
Zone, Nanshan District, Shenzhen Nanshan District, Shenzhen
Telephone 0755-86252656, 0755-86252388 0755-86252656, 0755-86252388
Fax 0755-86252165 0755-86252165
lihongtao@joincare.com
E-mail zhaofengguang@joincare.com
luoxiao@joincare.com
III. Introduction of the Company's basic information
Registered Joincare Pharmaceutical Group Building, No. 17, Langshan Road, North District, Hi-tech
address Zone, Nanshan District, Shenzhen
Registered at B5, Hengfeng Industrial City, Hezhou Community, Huangtian Village, Xin’an
Town, Bao’an County on 18 December 1992
Changed its registered address to 4-5/F, Dongpeng Building, Shangmeilin Industrial Area,
Futian District, Shenzhen on 25 May 1994
Changed its registered address to 24/F, Block B, Fujian Building, Caitian South Road, Futian
District, Shenzhen on 4 July 1995
Changed its registered address to 23/F, Diwang Building, Shun Hing Square, No .333,
Historical Shennan East Road, Shenzhen on 20 June 1997
changes in
Changed its registered address to Taitai Pharmaceutical Industrial Building, the 5th
registered
Industrial Area, Nanshan District, Shenzhen on 22 September 2000
address
Changed its registered address to 23/F, Diwang Building, Shun Hing Square, No .5002,
Shennan East Road, Luohu District, Shenzhen on 4 June 2003
Changed its registered address to Joincare Pharmaceutical Group Building, No. 17,
Langshan Road, North District, Hi-tech Zone, Nanshan District, Shenzhen on 29 January
2008
Changed its registered address to Joincare Pharmaceutical Group Building, No. 17,
Langshan Road, North District, Hi-tech Zone, Nanshan District, Shenzhen on 27 November
2012
Joincare Pharmaceutical Group Building, No. 17, Langshan Road, North District, Hi-tech
Oce address
Zone, Nanshan District, Shenzhen
Postal code of
518057
Oce address
Website www.joincare.com
E-mail joincare@joincare.com
IV. Information disclosure and place for inspection
13
Joincare Pharmaceutical Group Annual Report 2023
Designated media and website for disclosing China Securities Journal, Securities Times, Securities Daily, and
annual report Shanghai Securities News
Stock exchange website for disclosing annual
www.sse.com.cn
report
The place for inspection of annual report Oce address of the Company
V. Company stock profile
Company Stock Profile
Stock abbreviation prior to
Class of stock Listed on Stock Abbreviation Stock code
change
A Share Shanghai Stock Exchange 健康元 600380 太太药业, S健康元
Joincare Pharmaceutical
GDR SIX Swiss Exchange JCARE /
Group Industry Co., Ltd.
VI. Other relevant information
Name Grant Thornton (Special General Partnership)
5th Floor, Scitech Palace, 22 Jianguomen Wai Avenue,
Accounting firm appointed by Oce address
Chaoyang District, Beijing
the Company (domestic) Name of the
signing Wang Yuan (王远) and Wang Qilai (王其来)
accountants
Name Minsheng Securities Co., Ltd.
Oce address 8 Puming Road, China (Shanghai) Pilot Free Trade Zone
Sponsor appointed for
performing the duty of Representatives
continuous supervisory signing the Yu Chunyu (于春宇) and Ma Chujin (马初进)
responsibilities during the report
Reporting Period Period of
continuous From 24 October 2018 to 31 December 2019
supervision
Note: According to Article 12.2.2 of “the Rules Governing the Listing of Stocks on Shanghai Stock Exchange”, for
offering of new stocks or convertible corporate bonds by a listed company, the period of continuous supervision and
guidance shall be the remaining time of the current year of the listing of securities and the following one full
accounting year. As the Company issued shares to the public by allotment on 24 October 2018, the period of
continuous supervision should start from the completion of this issuance and end on 31 December 2019. Furthermore,
according to “Article 13 of the Guidelines of Shanghai Stock Exchange for Self-Regulation Rules for Listed
Companies No. 11 - Continuous Supervision”, the sponsor shall continue to perform the obligations of continuous
supervision if the funds raised have not been fully utilized upon the expiration of the continuous supervision period.
During the Reporting Period, funds raised in this issuance have not yet been fully utilized, so the sponsor, Minsheng
Securities, shall continue to perform its continuous supervision obligations in respect of the deposit and utilization
of the funds raised.
VII. Major accounting data and financial indicators in the last three years
(1) Major accounting data
Unit: Yuan Currency: RMB
Major 2022 2021
YoY Change
accounting 2023
After adjustment Before adjustment (%) After adjustment Before adjustment
data
Revenues 16,646,350,349.72 17,142,753,068.82 17,142,753,068.82 -2.90 15,903,688,266.59 15,903,688,266.59
Net prot
attributable to
1,442,779,722.23 1,502,777,133.76 1,502,595,840.48 -3.99 1,328,453,099.44 1,328,499,432.05
shareholders of
the listed
14
Joincare Pharmaceutical Group Annual Report 2023
company
Net prot
attributable to
shareholders of
the listed
company after 1,374,136,730.41 1,419,232,205.54 1,419,050,912.26 -3.18 1,224,951,038.96 1,224,997,371.57
deduction of
extraordinary
gains and
losses
Net cash ow
from operating 3,928,909,609.73 3,977,705,139.29 3,977,705,139.29 -1.23 2,563,089,045.24 2,563,089,045.24
activities
Increase or
End of 2022 decrease at End of 2021
the end of the
End of 2023 period over
the same
After adjustment Before adjustment After adjustment Before adjustment
period of last
year(%)
Net assets
attributable to
shareholders of 13,755,901,924.06 13,121,955,371.22 13,121,820,410.55 4.83 11,820,247,324.08 11,820,293,656.69
the listed
company
Total assets 36,358,126,258.82 35,735,429,731.71 35,729,253,651.41 1.74 31,112,098,179.40 31,103,900,389.29
Note: Retroactive adjustments to accounting data for the previous years due to changes in accounting policies.
(2) Major financial indicators
2022 YoY 2021
Major nancial indicators 2023 After Before Change After Before
adjustment adjustment (%) adjustment adjustment
Basic earnings per share
0.7580 0.7934 0.7933 -4.46 0.6863 0.6864
(RMB/share)
Diluted earnings per share
0.7565 0.7922 0.7921 -4.51 0.6858 0.6858
(RMB/share)
Basic earnings per share
after deduction of
0.7219 0.7493 0.7492 -3.66 0.6329 0.6329
extraordinary gains and
losses (RMB/share)
Decreased
Weighted average return on by 1.23
11.00 12.23 12.23 11.50 11.50
net assets (%) percentage
points
Weighted average return on Decreased
net assets after deduction of by 1.08
10.47 11.55 11.55 10.60 10.60
extraordinary gains and percentage
losses (%) points
Note: Retroactive adjustments to accounting data for the previous years due to changes in accounting policies.
Statement on major accounting data and nancial indicators within three years before the End of
the Reporting Period
□Applicable √N/A
VIII. Differences in accounting data under domestic and foreign accounting standards
(1) Differences in net profit and net assets attributable to shareholders of the listed company
disclosed in the financial statements according to international financial reporting standards
(IFRS) and Chinese accounting standards (Chinese GAAP)
□ Applicable √ N/A
15
Joincare Pharmaceutical Group Annual Report 2023
(2) Differences in net profit and net assets attributable to shareholders of the listed company
disclosed in the financial statements according to foreign accounting standards and Chinese
accounting standards
□ Applicable √ N/A
(3) Explanations on differences under domestic and foreign accounting standards:
□ Applicable √ N/A
IX. Major financial indicators in 2023 by quarter
Unit: Yuan Currency: RMB
1st quarter 2nd quarter 3rd quarter 4th quarter
(Jan. - Mar.) (Apr.- Jun.) (Jul. - Sept.) (Oct. - Dec.)
Revenues 4,559,049,786.82 4,160,691,812.41 3,931,515,787.21 3,995,092,963.28
Net prot attributable to
462,746,183.03 352,688,551.87 268,214,419.85 359,130,567.48
shareholders of the listed company
Net profit attributable to
Shareholders of the listed company
446,772,473.94 334,971,668.24 267,477,595.49 324,914,992.74
after deducting the extraordinary
gains or losses
Net cash flow from operating
248,084,750.71 1,009,122,934.83 1,202,644,059.16 1,469,057,865.03
activities
Statement on differences between quarterly data and the data disclosed in previous periodic
reports
□Applicable √N/A
X. Items and amounts of extraordinary gains and losses
√Applicable □N/A
Unit: Yuan Currency: RMB
Item of extraordinary gains and losses 2023 2022 2021
Gain or loss on disposal of non-current
-169,901.01 -705,357.30 14,492,047.24
assets
Government grants recognized in profit or
loss for the current period (excluding
government grants that are closely related
to the business of the Company and are 233,058,407.11 286,842,932.33 245,335,140.69
provided in fixed amount or quantity
continuously according to the applicable
polices and standards of the country)
Gains and losses on fair value changes
incurred from financial assets held for
trading, derivative financial assets,
financial liabilities held for trading and
derivative financial liabilities, and
investment income on disposal of financial
-48,440,235.41 -109,887,696.11 8,110,644.25
assets held for trading, derivative financial
assets, financial liabilities held for trading,
derivative financial liabilities and other
debt investments, except for effective
hedging activities related to the ordinary
operating business of the Company
Reversal of impairment loss on accounts
receivable and contract assets tested for 1,013,650.67 158,470.77 1,013,650.67
impairment individually
Other non-operating income and expenses
-41,010,372.38 -23,830,838.49 -30,737,442.83
apart from the above items
Less: Effect of income tax 21,086,934.90 31,919,034.26 39,580,260.30
Effect of minority equity (after tax) 54,721,622.26 37,113,548.72 95,131,719.24
Total 68,642,991.82 83,544,928.22 103,502,060.48
16
Joincare Pharmaceutical Group Annual Report 2023
Explanations for the Company’s extraordinary gain or loss items as defined in the “Explanatory
Announcement No.1 for Public Company Information Disclosures – Extraordinary Gains or
Losses”, and the extraordinary gain or loss items as illustrated in the “Explanatory Announcement
No.1 for Public Company Information Disclosures – Extraordinary Gains or Losses” which has
been defined as its recurring gain or loss items.
□ Applicable √ N/A
XI. Items measured at fair value
√ Applicable □ N/A
Unit: Yuan Currency: RMB
Beginning Change for the Effect on profits &
Item Ending balance
balance period losses for the period
Financial assets held for
109,015,664.98 82,899,154.24 -26,116,510.74 -48,752,886.09
trading
Financial liabilities held
755,634.43 86,817.12 -668,817.31 668,817.31
for trading
Other equity instrument
1,193,958,879.05 1,155,283,408.36 -38,675,470.69 29,344,854.27
investments
Total 1,303,730,178.46 1,238,269,379.72 -65,460,798.74 -18,739,214.51
XII. Others
□ Applicable √ N/A
17
Joincare Pharmaceutical Group Annual Report 2023
Chapter 3 Management Discussion and Analysis
I. Discussion and analysis of business operation
2023 is the first year to fully implement the spirit of the 20th National Congress of the Communist
Party of China, and also the key year for economic recovery after three years of pandemic prevention
and control in COVID-19. The pharmaceutical industry has ushered in a systematic governance in
all fields, chains and coverages. Facing the slow global economic recovery, as well as market
challenges such as price reduction in centralized procurement in Meropenem for Injection and
intensified competition in the API market, the Company adhered to the mission of “For the health,
For the future” and the vision to “Diligently make high-quality and innovative drugs”, focused on
high-quality development of the pharmaceutical industry, increased R&D investment, enhanced
R&D innovation capabilities as well as promoted differentiated product pipeline upgrading, so as
to achieve long-term sustainable development.
(1) Dual-driver strategy of “innovative drugs + high-barrier complex formulations” and
accelerating the transformation to innovative pharmaceutical enterprises
The Company deeply implemented the dual-driver strategy of “innovative drugs + high-barrier
complex formulations”, focused on unmet clinical needs, accelerated product projects initiation and
development, optimized R&D pipelines as well as improved the technical contents and levels of
products. In terms of innovative drugs, the new indications of Ilaprazole Sodium for injection and
the prostate cancer indications of Triptorelin Acetate Microspheres for Injection were approved for
launching, Recombinant SARS-COV-2 Bivalent (Original/Omicron XBB) Fusion Protein Vaccine
(CHO Cell) was approved for EUA, Lipustobart for Injection was submitted for conditional
launchapproval, Aripiprazole Microspheres for Injection and Triptorelin Acetate Microspheres for
Injection were submitted for launching application for endometriosis indication, and Recombinant
Anti-human IL-17A/F Humanized Monoclonal Antibody Injection was initiated Phase III clinical
trials. In terms of high-barrier complex formulations, Formoterol Fumarate Inhalation Solution,
Long Chain Fat Emulsion Injection (OO) and Tocilizumab Solution for Injection were approved for
launching, Salmeterol Xinafoate-Fluticasone Propionate Powder for Inhalation completed Phase Ⅲ
clinical trials, which the first company submitted for registration application in China following the
publication of the Guideline for Bioequivalence Study on Genetic Drugs of Orally Inhaled Drug
Products. And Meloxicam Nanocrystal Injection and other products had obtained clinical approval
and conducted Phase III clinical trails. The Company is actively expanding the research and
development of pharmaceutical and medical device combinations, its mesh nebulizer was approved
as a Class II medical device, its airway stent was submitted a Class III medical device registration
application, and the smear drug dispenser was completed the registration of Class I medical device.
18
Joincare Pharmaceutical Group Annual Report 2023
While continuously strengthening independent innovation, the Company continued to deepen the
cooperative development and licensing introduction of varieties in core fields, docked with global
superior resources and cutting-edge technologies, and strengthened its own commercialization and
integration capabilities. During the Reporting Period, the Company made significant progress in
Business Development (BD), successfully introduced several innovative pharmaceutical products
in the respiratory, digestive, nervous, cardiovascular and analgesia systems accelerating its
transformation into an innovative pharmaceutical enterprise. TG-1000 capsules, a new influenza
drug, entered Phase III clinical trails andcompleted the enrolment plan. DBM-1152A, a double-
target innovative drug, could act on both M receptor and β receptor (MABA) at the same time to
play a synergistic role in bronchiectasis, and successfully entered Phase I clinical trials. N91115, an
oral innovative drug for asthma treatment, a small molecular inhibitor of GSNOR, could reduce the
inflammatory response of asthma patients has entered Phase Ⅰ clinical trails. Potassium Ion
Competitive Acid Blocker (P-CAB), an innovative medicine of digestive system, obtained clinical
approval in February 2024. FZ008-145, a highly selective second-generation Nav1.8 inhibitor,
providing potent, non-addictive analgesia, obtained clinical approval in January 2024, and is poised
to enter clinical trials. Meanwhile, both the thrombin inhibitor HHT120 and the innovative
antidepressant LS21031 have been carried out Phase Ⅰ clinical trials.
(2) Establishing a sound marketing management system and enhancing the brand value of
Joincare
During the Reporting Period, the Company’s sales of prescription drugs faced challenges due to
price reduction in centralized procurement, industry regulation and other factors. Combining with
national policies, the Company continued to build and improve the marketing system by taking
various measures, and actively implemented the sales deployment: paid attention to the construction
of a sales team, enhanced the terminal coverage of core products, implemented refined management
and precise coverage of terminals, formulated scientific and personalized performance appraisal
indicators, optimized salary system, and enhanced self-driving force and team vitality of the sales
team; centered on core varieties, continued to deepen evidence-based construction, advocated
cooperation among the medical department, the marketing department and the sales team, actively
participated in national or regional academic conferences, pushed forward post-marketing research
of key products in an orderly manner; as well as continued to promote the construction of a digital
marketing platform, focused on popular science of diseases, linked doctors with patients, offered
refined services for patients, and gave full-process services for patients from “knowing diseases” to
“treating diseases”; Increased patients’ awareness of diseases and products, and enhanced brand
awareness; as well as actively followed up the implementation of national medical reform policy.
During the Reporting Period, Tobramycin Inhalation Solution and Triptorelin Acetate Microspheres
for Injection were included in the China’s National Reimbursement Drug List and Ilaprazole
Sodium for injection was successfully renewed its qualification for NRDL and expended the
reimbursement scope. Meanwhile, 2 products were included in the eighth batch of national volume-
19
Joincare Pharmaceutical Group Annual Report 2023
basedprocurement and 1 product was included in the ninth batch of national volume-based
procurement, reducing the economic burden of patients and improving the accessibility of drugs.
In 2023, the global trade environment was complicated and changeable. Facing the challenging
external situations and fierce competitions, the Company’s API sales team actively sought a
breakthrough. The export business of high-end antibiotics, pet deworming medications and
intermediate products continued to deepen the market segment. In the second half of the year, the
Company seized the opportunity of market recovery, and had several products maintained their
leading positions in terms of global market share: High-end antibiotic products such as teicoplanin
and daptomycin maintained good growth as a result of benefiting from the volume of downstream
formulation products; Pet deworming medication series products including Milbeoxime, Moxikedin
and Doramectin were cooperated with internationally renowned animal protection companies,
making the market share further rose. The export of intermediate mycophenolic acid deepened
customer cooperation, and the ceftriaxone industry chain was linked up and down, achieving steady
growth. And in terms of domestic sales, the domestic market share of meropenem API, ceftriaxone
sodium and cefuroxime sodium continued to rise, while the sales of other products such as lovastatin
and acarbose kept growing.
(3) Deepening the international strategies and steadily advancing the internationalization
process
The Company’s products have been exported to over 80 countries and regions in Asia, Europe,
North America, Africa, etc. In order to continuously intensify the overseas market layout, the
Company has carried out business visits to Southeast Asia, and made strategic deployments to
establish international production bases and accelerate product exports in the future. The Company
is actively promoting international registration and certification; and currently, the registration and
application process for Meropenem APIs is underway in Japan. High-end pet drugs like Fluralaner
and Afoxolaner, antibiotic products like Dalbavancin Hydrochloride as well as Meropenem Crude
have completed industrial validation and batch production and are currently undergoing registration
and application in the United States; and Sulfate Polymyxin B has also completed industrial
validation and batch production and is currently undergoing registration and application in China,
the United States and Europe simultaneously. As at the end of 2023, 18 varieties have passed the
on-site inspection of international certification, and 35 international certificates were obtained
within the validity period.
The Company actively expanded its international business in pharmaceutical products, and
continued to sell and register respiratory, assisted reproductive, digestive, psychiatric and anti-
infection products in countries such as Pakistan, Indonesia, the Philippines and Vietnam. During the
Reporting Period, 4 chemical formulations of the Company were approved for registration in
overseas markets, and 14 new registrations were submitted. Among them, Compound Ipratropium
20
Joincare Pharmaceutical Group Annual Report 2023
Bromide Solution was completed the registration review in Philippines and obtained the registration
approval in January 2024, Levosalbutamol Hydrochloride Nebulizer Solution was submitted the
registration application in Macao and obtained the registration approval in February 2024, and
Cetrorelix Acetate for Injection was submitted the registration application in the United States.
(4) Emphasizing both to quality and efficiency, prioritizing automation and intelligence to
enhance productivity.
The Company actively practiced high-standard and compliant system management, continuously
strengthened quality and EHS capacity building, constantly elevated system support capacity,
further enhanced core business competitiveness, and better guaranteed sustainable and healthy
development. In terms of quality system management, the Company adhered to the basic principles
of “risk management, full-process control and social co-governance”, and established a risk
management system covering R&D, production and operation modules to comprehensively control
quality risks throughout the product lifecycle. In the meantime, with a view to improving employee
quality awareness and strengthening the quality culture construction, the Company publicized
quality knowledge through monthly quality activities, regulatory training, document training and
other methods, and created a quality awareness of “emphasizing quality and valuing regulations”,
thereby providing effective guarantees for the safety and stability of its products in various fields.
In terms of EHS system management, the Company established an environmental management
system conforming to ISO14001 standard and an occupational health and safety management
system conforming to ISO45001 standard, continuously optimized the management system, actively
advanced the certification of green factory, and steadily improved its own safety, environment and
occupational health levels. The Company continuously strengthened the development and
construction of source emission reduction and pretreatment processes for wastewater, waste gas and
solid waste, and constantly promoted the construction of and capacity improvement in three-waste
facilities.
The Company continuously increased its investment in upgrading equipment and facilities and
technically transforming production processes, with its investment amount for technical upgrade
and operation maintenance of environmental protection equipment exceeding RMB103 million. All
production enterprises inferior to the Company continued to embrace independent innovation to
upgrade quality and efficiency, and carried out actions such as automation upgrading, process
optimization, energy saving and consumption reduction, so as to help the Company produce safely
and efficiently and accelerate production capacity release. Among them, the new factory of Sichuan
Guangda Pharmaceutical Manufacturing Co., Ltd. has been completed and put into use, realizing
the transformation and upgrading of Chinese medicine manufacturing; and Shenzhen Haibin
Pharmaceutical Co., Ltd. has completed the construction of electronic management system in some
workshops and put it into use.
21
Joincare Pharmaceutical Group Annual Report 2023
(5) Deeply engage in practicing the ESG principles, driving the fulfillment of corporate social
responsibility
The Company actively practiced the concept of sustainable development, and continuously
optimized corporate governance, R&D innovation, employee care, environmental protection and
social responsibility, having achieved remarkable results. In 2023, MSCI, an international
authoritative index institution, upgraded the Company’s rating from “BBB” to “AA”, revealing the
industry-leading level of the Company, and fully reflecting the recognition and affirmation of the
Company’s ESG management achievements and sustainable development ability by the
international capital market. The Company valued environmental protection, carried forward the
environmental management policy of “pollution prevention, compliance with laws and regulations,
continuous improvement”, actively improved energy efficiency, intensified green investment, as
well as formulated and strove to achieve the goal of “carbon emission peaking in 2028 and carbon
neutrality in 2055”. The Company always kept in mind its corporate citizenship responsibility,
actively responded to the call of the state, invested in the healthy China construction and the rural
revitalization plan, and carried out the “Access to Public Welfare for Chronic Diseases Prevention
and Treatment Program” in combination with its own industrial advantages, which so far has
covered 8 provinces and 4 autonomous regions across the country, effectively alleviating the
economic burden of low-income families. Meanwhile, the Company fully supported industrial
assistance, consolidated the achievements of poverty alleviation and difficulty tackling, carried out
public science popularization in an orderly manner, and helped improve public health knowledge.
In 2023, the aggregate amount of public welfare donations of the Company was approximately
RMB25.9846 million.
II. Overview on the industry in which the Company operates during the Reporting Period
The pharmaceutical industry is a national strategic emerging industry bearing on the national
economy and people’s livelihood, and an important part of the national economy. During the “13th
Five-Year Plan” period, the average annual growth rate of the added value of pharmaceutical
industry above designated scale was 9.5%, 4.2 percentage points higher than the overall growth rate
of all the industries, and the proportion of the total added value of the pharmaceutical industry to
that of all the industries increased from 3.0% to 3.9%; the average annual growth rate of the
operating revenues and total profit of enterprises above designated scale were 9.9% and 13.8%,
respectively, being at the forefront of various industries in terms of growth rate. At the same time,
the scale of leading pharmaceutical manufacturers has further expanded with the steadily increasing
industry concentration. According to the 14th Five-Year Plan for the Development of
Pharmaceutical Industry (《“十四五”医药工业发展规划》), the overall development of the
pharmaceutical industry will reach a new level. In 2023, with the deepening reform of the national
medical and healthcare system and increasing improvement in the innovation environment, the
pharmaceutical industry continued to advance towards high-quality development featuring
22
Joincare Pharmaceutical Group Annual Report 2023
transformation as well as upgrading and encouraging innovation. With the aging population and the
increasing urbanization rate in China, from the long-term and holistic perspective, China’s
pharmaceutical industry will continue to present a promising development trend.
Data of National Bureau of Statistics shows that in 2023, enterprises in the pharmaceutical
manufacturing industry above designated scale in China recorded revenues of RMB2,520.57 billion,
representing a year-on-year decrease of 3.7%; operating costs of RMB1,440.16 billion, representing
a year-on-year decrease of 2.3%; and total profits of RMB347.30 billion, representing a year-on-
year decrease of 15.1%.
III. Overview on the businesses of the Company during the Reporting Period
(I) Principal businesses and products of the Company
The Company is primarily engaged in the R&D, production and sales of pharmaceutical products
and health care products. The business scope of the Company covers chemical pharmaceuticals,
biologics, chemical active pharmaceutical ingredients (APIs) and intermediates, traditional Chinese
medicine, diagnostic reagents, equipment, health care products, etc. The enriched product series and
mix provide larger market and growth opportunities for the Company. Main products of the
Company are as follows:
23
Joincare Pharmaceutical Group Annual Report 2023
(II) Business model of the Company
With the stable operation and rapid development over the years, the Company has become an
integrated pharmaceutical group that is driven by scientific research and innovation, integrating the
R&D, production, sale and service of pharmaceutical and health care products. It has complete
systems of R&D, procurement, production and sale. Main business models of the Company are as
follows:
1. R&D
Combining independent R&D, external introduction and cooperative development, the Company
has been paying attention to the cutting-edge technology and unmet clinical needs, with efforts
focused on innovative drugs and high-barrier complex formulations and has established an efficient
R&D innovation management model. In terms of independent innovation, the Company has a
diversified and multi-dimensional R&D organization with mature R&D teams for chemical
pharmaceuticals, biologics, TCM drugs, APIs, diagnostic reagents and health care products. Based
on technology platform construction, the Company has built a clear product R&D pipeline centering
on key areas such as respiratory, tumor immunity and psychiatry. In terms of cooperative innovation,
the Company has launched technical cooperation with domestic and foreign scientific research
institutions by way of commissioned development or cooperative development, and has introduced
new technologies and products that meet the strategic development goal of the Company through
technology transfer or license-in to implement industrial transformation, so as to reinforce and
strengthen our position and strategy in the leading and emerging fields.
2. Procurement
In terms of procurement, the Company pays strict attention to effectiveness, quality and cost of
procurement and has established long-term and stable partnership with many suppliers. Active
pharmaceutical ingredients, supplementary materials, and packaging materials were purchased and
stocked up by manufacturers according to production schedules. The Company has developed strict
quality standards and procurement management systems and required subordinate manufacturers to
make procurements in accordance with the GMP. Meanwhile, the Company established long-term
strategic partnerships with bulk material suppliers, and strengthened the management of supply
quality and cost control based on strict quality standards. The Company has established an internal
evaluation system and files of market prices so as to promptly acquire market information for
procurement through comparisons of quality and price.
3. Production
In terms of production, the Company adopts the principle of market demand-oriented approach
paying attention to real market demand. Specifically, the Sales Department of the Company
investigated market demands, made sales plans, and comprehensively considered factors such as
the product inventory quantity and capacity of production lines of the Company so as to determine
24
Joincare Pharmaceutical Group Annual Report 2023
the monthly production quantities and specifications. Moreover, the purchase orders of raw
materials are determined according to the production schedule and the inventory levels of raw
materials. The final production plans are issued upon approval of the management of the Company
and implemented by the Production Technology Department of the Company.
The Company has been carrying out production in strict accordance with the GMP. The Company
and its affiliates have established a sound quality management system and implemented the
qualified-person system. In terms of quality control, the Company has established a strict and sound
production quality assurance system, and is geared to international standards and subject to
international certification while in compliance with national standards. The Company conducts
annual GMP self-inspection, ISO9001 internal and external audits, and is subject to various external
audits. It actively pursued the internationally advanced GMP management, and implemented whole-
process quality control over supplier selection, audit, incoming material inspection, production
process, product release from factory, and market tracking. The system is running well.
4. Sales
(1) Drug formulation products
End customers of drug formulation products (chemical pharmaceuticals, biologics, traditional
Chinese medicine) of the Company are mainly hospitals, clinics, and retail pharmacies. In line with
the pharmaceutical industry practice and the sales model of most peers in the industry, the Company
has conducted sales of drug formulation products through drug distribution enterprises. The
Company carried out selection and centralized management of qualified drug distribution
enterprises (with Drug Supply Certificate, GSP Certification, etc.) according to their distribution
capability, market familiarity, financial strength, credit record, and operation scale. General sales
process: After end customers place purchase orders to distribution enterprises, drug distribution
enterprises will send those orders to the Company according to their inventories, distribution
agreements and conditions; then, the Group will deliver products to drug distribution enterprises
and do the revenue recognition.
(2) APIs and intermediates
Main target customers of APIs are large pharmaceutical manufacturers. The selling prices are
determined based on a set of integrated factors such as costs of production, inventory levels, industry
rivalry and market trend. Specific pricing method: The sales and marketing department conduct
weekly or bi-weekly meetings to analyze the current market conditions, the trends and drivers of
prices; the selling prices are determined based on a set of comprehensive factors such as costs of
production, inventory levels, industry rivalry and market conditions; the selling prices will be
effective once are reported by the managers of the sales department to our management team and
get approvals.
25
Joincare Pharmaceutical Group Annual Report 2023
Specific sales methods of APIs include: ① Domestic market: The Company directly signs product
sales contracts with large manufacturers to directly sell products to customers. Meanwhile, the
Company also sells products through distributors. ② Foreign market: The Company directly sells
products in the foreign market and in areas with high market and political risks, products are sold
through distributors. At present, products of the Company are mainly exported to over 60 countries
and regions in Asia, Europe, North America, and Africa.
(3) Diagnostic reagents and equipment
Diagnostic reagents and equipment sold by the Company both domestically manufactured and
imported. Main end customers are hospitals, centers for disease control and prevention, and health
departments. The Company mainly sells those products in combination with direct sales and sales
through drug distribution enterprises.
The Company has an experienced sales team responsible for the sales of diagnostic reagents and
equipment, with provision of marketing support for some drug distribution enterprises. The
Company carried out selection and centralized management of qualified drug distribution
enterprises (with Drug Supply Certificate, GSP Certification, etc.) according to their distribution
capability, market familiarity, financial strength, credit record, and operation scale.
(4) Health care products
The sales model of health care products is mainly distributor management model. Product
promotion, price control, and channel carding are managed and improved with the distributor
distribution channel and terminal coverage capability. At present, the Company has set up 25
provincial branches and maintained long-term partnership with distributors with better area
coverage capability for stable strategic alliance and common development. The Company has
cooperated with about 103 first-level/primary distributors in total, including 82 businesses in drug
distribution line and approximately 30 businesses in food distribution line with more than 400,000
subordinate secondary businesses and end user businesses in drug and food distribution lines.
Products are well managed and promoted through the tiered marketing channel. In addition to the
traditional distribution management model, the Company realizes synergetic development through
online channels. At present, the Company has set up official flagship stores on mainstream e-
commerce platforms such as Tmall(天猫), Jingdong（京东）, Douyin（抖音）, Kuaishou (快手)
and Pinduoduo (拼多多).
(III) Industry status of the Company
Through years of development, the Company has become an integrated pharmaceutical enterprise
covering multiple sectors including chemical pharmaceuticals, biologics, chemical APIs and
intermediates, traditional Chinese medicine, diagnostic reagents and equipment, health care
products. Chemical pharmaceuticals are the largest revenue generator of the Company, among
which gastroenterological products, anti-infection products and gonadotropic hormones products
26
Joincare Pharmaceutical Group Annual Report 2023
are traditional competitive products of the Company, with key products securing a long-standing
leading position in national drug formulation market segment. Respiratory and psychiatric products
have been the focus of the Company, with key products maintaining a strong sales growth
momentum.
During the Reporting Period, the Company, leveraging its robust R&D and production capabilities
and steady marketing presence, the Company ranked Top 10 in “2022 Annual Ranking of Top 100
Chinese Chemical Drug Enterprises”, and top 100 in “China's comprehensive strength in drug R&D
in 2023”.
(IV) Performance drivers during the Reporting Period
2023 marks a year of China’s economic recovery. Despite the tightening macroeconomic
environment including tightening industry regulation policy, the company remained focused on its
core business. Despite the adverse factors such as a decrease in the volume-based procurement price
of its key product Meropenem for injection and intensified competition in the APIs market, we
strengthened sales through professional, refined and compliant management. During the Reporting
Period, the contribution of sales revenues from key formulation products in key specialist areas,
especially in fields of respiratory and psychiatry, to overall revenues was continuously improved.
In terms of the health care products segment, the Company continued to upgrade the market strategy
of interpenetration and coordination between online and offline channels, and have established a
user-centric digital marketing system, leading to rapid growth in sales performance. At the same
time, the Company continues to increase its R&D expenditures. While strengthening its independent
R&D capabilities, the Company had introduced multiple innovative medicine projects through
external introductions and co-development, continuously reinforced its leading position in areas
such as respiratory and gastroenterology, and gradually expanded and upgraded its pipelines in areas
such as cardiovascular diseases and analgesia to consolidate the foundation for its overall innovation
and transformation.
IV. Analysis of core competitive strengths during the Reporting Period
√Applicable □N/A
1. Leading integrated pharmaceutical company under continuous innovation and
development in China
The Company is primarily engaged in the R&D, production and sale of pharmaceutical products
and health care products. The business scope of the Company covers chemical pharmaceuticals,
biologics, chemical APIs and intermediates, TCM drugs, diagnostic reagents and equipment, as well
as health care products, allowing the Company to establish competitive advantages across various
therapeutic areas such as respiratory, anti-infection, assisted reproduction, gastroenterology,
psychiatry, and tumor immunity. 1) Innovative R&D drives growth: The Company has developed
and launched a number of innovative medicine products and high-barrier complex formulation
27
Joincare Pharmaceutical Group Annual Report 2023
products, strengthening the Group’s product portfolio and drug candidates in the pipeline. 2) The
Company has first-tier commercialization ability, and its sales network covers all provinces in China
and over 80 overseas countries and regions in the world. The Company emphasizes scientific
promotion and evidence-based marketing. By building a professional marketing team, the Company
has established a comprehensive marketing system, and market education and brand building have
been deeply strengthened through digital marketing. Leveraging our comprehensive sales channels,
broad market coverage, leading digital marketing and brand awareness, the Company is able to sell
the products at scale in an efficient manner. 3) Cross-industry and multi-specialist innovative R&D
and coordinated development: On one hand, the Company actively adapts to the changes in the
pharmaceutical market and constantly adjusts its product strategy and R&D direction according to
policies and clinical needs. This will realize the continuous iteration and upgrade of the main
products. On the other hand, the Company fully utilizes external scientific research and commercial
resources, such as strategic collaboration with Chinese Academy of Sciences, Tencent Quantum
Lab and other scientific research institutes and innovative companies and invests in cutting-edge
biotechnology companies to expand the Company’s product portfolio and R&D pipeline, thus
realizing the Company’s sustainable development.
2. Strong R&D capabilities, diversified product portfolio and leading commercialization
capabilities
Focusing on innovative medicines and high-barrier complex formulation, the Company has formed
diversified product portfolio. With the huge clinical demand and high product quality, it has
established market competitive advantages in many pharmaceutical segments. The Company’s
chemical pharmaceuticals cover gastroenterology, assisted reproduction, anti-infection, respiratory,
psychiatry, tumor and other fields, among which alimentary tract proton pump inhibitor (PPI) drugs,
gonadorelin hormone drugs, and inhalation formulation for respiratory diseases have an
advantageous market position. Relying on APIs production, the Company’s core products, together
with our chemical APIs and intermediates, form an integrated and stable pharmaceutical industrial
chain of “APIs-formulations vertical integration”. Meanwhile, the Company actively develops
overseas markets, and our products are marketed and distributed worldwide, facilitating strategic
cooperation with many internationally renowned pharmaceutical companies. In addition, the
Company also has a number of TCM drugs and in vitro diagnostic reagent products and has
accumulated resources and extensive brand influence in healthcare products for many years.
3. Making breakthroughs in the key R&D and industrialization technologies of complex
formulation
The technology platform, which has been developed over the years in the field of innovative
medicines and high-barrier complex formulation, enables the Company to address the complex
process problems in the R&D and production of relevant drugs. Guided by clinical value, the
Company develops R&D projects with high short-term certainty and cutting-edge technologies with
28
Joincare Pharmaceutical Group Annual Report 2023
long-term growth potential (such as AI-driven drug molecular design, proteolysis targeted chimeric
(PROTAC), synthetic biology, gene-editing, cellular treatment, etc.). All in all, the Company’s
R&D system covers through-cycle of drug development and production. Based on the mature R&D
platform of innovative drugs and high-barrier complex formulations, the Company has designed
extensive pipeline in fields with significant clinical demand such as respiratory, gastroenterology,
assisted reproduction, psychiatry, and tumor.
In recent years, the company has continuously enhanced and strengthened its commercial expansion
efforts, adhering to our dual-drive strategy of innovative medicines and high-barrier complex
formulations. While focusing on independent innovation, we also continued to deepen cooperation
in the development and licensing introduction of core varieties, aligning with global advantageous
resources and cutting-edge technologies. This strategic initiative strengthens the company's
commercial and integration capabilities, accelerating the pace of the company's transformation into
an innovative pharmaceutical enterprise.
4. Stable management and R&D team with expertise, long-term vision and commitment to
social responsibility
The Company has a stable, visionary and experienced, results-oriented management team and an
outstanding talent team. Outstanding leaders are the key to the Company’s rapid development. The
founder of the Company has over 30 years of expertise in the pharmaceutical industry as well as a
global vision and a strategic mindset. With a deep industry insight, the founder has led us develop
platform technologies centered on high-barrier complex formulations, which has established leading
position of the Group with sustainable development in the broader healthcare industry. The senior
management team of the Company has over 20 years of industry experience on average, with an
average of more than 10 years of service in the Company, and has a thorough understanding of
market demand, industry development and growth opportunities. Each key R&D field of the
Company is led by industry-leading scientists and accompanied by an efficient R&D management
team. In addition, the Company has upheld the core value of “Putting People First, Valuing
Workmanship and Quality, Pursuing Innovation and Truth, Promoting Cooperation and Sharing”
and laid emphasis on talent team training to build a diversified reserve of talents with global vision,
advanced knowledge, strong implementation capability and sense of self-reliance. Driven by the
corporate culture of pursuing excellence, the talent team works diligently and conscientiously to
jointly contribute to the sustainable development of the enterprise through teamwork and
collaboration.
V. Overview of business operations during the Reporting Period
During the Reporting Period, the Company realized revenues of RMB16,646 million, representing
a year-on-year decrease of approximately 2.90%; a net profit attributable to shareholders of the
listed company of RMB1,443 million, representing a year-on-year decrease of approximately 3.99%,
and a net profit attributable to shareholders of the listed company after deducting the extraordinary
29
Joincare Pharmaceutical Group Annual Report 2023
gains or loss of RMB1,374 million, representing a year-on-year decrease of approximately 3.18%.
Business development of various segments of the Company is as follows:
(1) Livzon Group (excluding Livzon MAB)
As at the End of the Reporting Period, the Company directly and indirectly held 45.34% equity
interest in Livzon Group (000513.SZ, 01513.HK). During the Reporting Period, Livzon Group
(excluding Livzon MAB) realized revenues of RMB12,521 million, representing a year-on-year
increase of approximately 0.78%; and realized a net profit of approximately RMB1,130 million
attributable to shareholders of the Company.
During the Reporting Period, the formulation drug sector of Livzon Group was affected by multiple
factors such as price reduction in medical insurance and centralized rectification of the
pharmaceutical industry, resulting in a slight decline. The proportion and profitability of high-end
specialty APIs in the API segment steadily increased. The sales of its products in the key therapeutic
areas are as follows: Gastroenterology products realized revenues of RMB2,903 million,
representing a year-on-year decrease of approximately 15.50%; gonadotropic hormones products
realized revenues of RMB2,767 million, representing a year-on-year increase of approximately
6.80%; and psychiatry products realized revenues of RMB602 million, representing a year-on-year
increase of approximately 10.54%.
(2) Livzon MAB
As at the End of the Reporting Period, the equity interest held by the Company in Livzon MAB was
56.19%, and the amount affecting the Company's net profit attributable to the parent company for
the current period was approximately RMB-609 million.
Livzon MAB continued to focus on the fields such as autoimmune diseases, vaccines, oncology and
assisted reproduction. With the R&D projects gradually enter the production and commercialization
stage, the quality system improvement and product commercialization process of Livzon MAB were
also continuously accelerating. During the Reporting Period, the progress in R&D of key biological
products was set out as below:
Recombinant Human Choriogonadotropin alfa for Injection（注射用重组人绒促性素） was
approved for market launch and sales in 2021 as the first generic drug in China’s mainland. Through
actively conducting its work related to overseas registration, it has been approved for market launch
in Tajikistan and Indonesia and its launching application has been submitted in Uzbekistan, Pakistan,
Philippines and Nigeria. Tocilizumab Injection（托珠单抗注射液） has been approved for market
launch in early 2023. Its approved indications include rheumatoid arthritis, cytokine release
syndrome (CRS) and systemic juvenile idiopathic arthritis (sJIA). Following the emergency use of
Recombinant SARS-CoV-2 Fusion Protein Vaccine V-01（重组新型冠状病毒融合蛋白疫苗 V-
01), Recombinant SARS-COV-2 Bivalent (Original/Omicron XBB) Fusion Protein Vaccine (CHO
30
Joincare Pharmaceutical Group Annual Report 2023
Cell) （重组新型冠状病毒融合蛋白二价（原型株/Omicron XBB 变异株）疫苗 （CHO 细胞））
Vaccine was approved for emergency use in December 2023. Recombinant Human Follitropin Alfa
Solution for Injection（重组人促卵泡激素注射液）is in the phase III clinical trials, and more than
65% of the subjects have been enrolled as of the end of the Reporting Period; Recombinant Anti-
human IL-17A/F Humanized Monoclonal Antibody Injection（重组抗人 IL-17A/F 人源化单克隆
抗体注射液） officially launched the phase III clinical trial for psoriasis indication in August 2023,
which is the first IL-17 drug in China to initiate a head-to-head clinical study with Secukinumab
（司库奇尤）. In addition, the indication of ankylosing spondylitis indication declared by Beijing
Kanova, our partner, officially launched the phase Ⅲ clinical trial in September 2023. The launching
of pre-BLA for the conditional marketing of Lipustobart for Injection（注射用利普苏拜单抗）
(PD-1) has been submitted.
With the successive approvals for market launch of its products, Livzon MAB has enriched relevant
teams such as pharmacovigilance, production quality and production-sales connection, gradually
improved the GMP system and industrialization capabilities and enhanced the overall operational
capabilities.
(3) Joincare (excluding Livzon Group and Livzon MAB)
During the Reporting Period, Joincare (excluding Livzon Group and Livzon MAB) realized
revenues of RMB4,556 million, representing a year-on-year decrease of approximately 5.72%, and
realized a net profit attributable to shareholders of listed companies of RMB924 million,
representing a year-on-year decrease of approximately 0.55%. Joincare realized a net profit
attributable to shareholders of the listed company after deducting the extraordinary gains and losses
of RMB903 million, representing a year-on-year increase of approximately 4.56%. Key results of
the main business segments are as follows:
① Prescription medicines
During the Reporting Period, Joincare (excluding Livzon Group and Livzon MAB) realized sales
revenues of RMB1,988 million from prescription drug segment, representing a year-on-year
decrease of approximately 6.20%. Among which, the sales revenues and year-on-year change of
key therapeutic areas are as follows: the revenues generated from the field of respiratory totaled
RMB1,741 million, representing a year-on-year increase of 48.35%; the revenues generated from
the field of anti-infection totaled RMB2.24 million, representing a year-on-year decrease of 75.64%.
In 2023, the Company implemented the principle of “respecting talents and putting people first”,
and continuously expanded the sales team size of the national respiratory line and optimized the
team gradient construction by integrating internal and external resources and talents. By seizing the
opportunity that Levosalbutamol Hydrochloride Nebulizer Solution was listed in the National
Reimbursement Drug List and Tobramycin Inhalation Solution was the only approved inhalation
antibiotic in China, the Company further optimized its marketing promotion structure, and had its
31
Joincare Pharmaceutical Group Annual Report 2023
operation quality improved steadily. By the end of 2023, the Company’s respiratory formulation
products had covered more than 4,000 hospitals above grade II. The Company actively supported
and participated in regional and national academic conferences, helped to improve the scientific
research capabilities of experts, transformed the diagnosis and treatment concepts of clinicians,
consolidated the academic promotion foundation around innovative drugs, supported researchers in
clinical trials and large-scale post-market research, and assisted in publishing 7 medical papers.
Among them, the Phase III results about Tobramycin Inhalation Solution were internationally
recognized and published in CHEST, the top journal in the respiratory field. The Company
continued to promote the construction of a digital marketing platform and accelerated the marketing
process by digital means. With the help of the platform of “Respiratory Experts’ Views”, the
Company carried out corporate communication in all directions to enhance brand awareness and
influence. As at the end of the Reporting Period, the platform of “Respiratory Experts’ Views” has
gathered over 5000 respiratory experts, broadcast over 500 sessions of popular science live streams
on respiratory diseases, and received over 25 million views.
② APIs and intermediates
During the Reporting Period, Joincare (excluding Livzon Group and Livzon MAB) realized sale
revenues of RMB2,079 million from APIs and intermediates segment, representing a year-on-year
decrease of approximately 11.89%.
During the Reporting Period, in the API segment, Joincare adhered to the management concept of
“green production, cost reduction and efficiency enhancement”, focused on the transformation and
upgrading of production equipment, enhanced the establishment of the quality management system
and strengthened the construction of safety and environmental management, guaranteeing the steady
improvement in the production and yield of key products of the Company. In terms of marketing,
the terminal market demands for 7-ACA, a key product of the Company, was generally stable, and
the sales price has declined. The Company maintained its advantage position in market share by
strengthening the in-depth cooperation with strategic customers and actively expanding domestic
and international markets. Another key product, Meropenem Trihydrate, is facing challenges such
as intensified international market competition and pricing pressures. The Company had taken
active measures to maintain its existing market share, at the same time, the Company also actively
expanded its overseas business to carry out a number of applications for the registration of
Meropenem aseptic powder and crude product so as to enhance the Company's profitability.
Furthermore, the Company leveraged on its advantages of APIs - formulations vertical integration,
actively expanded the domestic API market. And it has established collaborations with several
domestic manufacturers to minimize the impacts of volume-based drug procurement.
In terms of the R&D of APIs, the Company continued to conduct in-depth research in the field of
synthetic biology and had achieved a series of results. In terms of Escherichia coli, the Company
successfully completed the construction of the first set of automatic adaptive continuous evolution
32
Joincare Pharmaceutical Group Annual Report 2023
platform in cooperation with Hamburg University of Technology in Germany. In terms of
filamentous fungi, the Company broke through the technical bottleneck, significantly improved the
positive rate of protoplast transformation and screening of filamentous fungi, and completed the
optimization of screening conditions for compound mutagenesis of Acremonium chrysogenum. In
terms of Saccharomyces cerevisiae, the Company cooperated with Technical University of
Denmark to build a platform for editing technology, gene assembly and large fragment plasmid
integration technology, breaking through the bottleneck of easily losing fragments during large
plasmid construction, and achieving the phased goal of heterologous synthesis of ACV tripeptides
and penicillin N in Saccharomyces cerevisiae. In terms of Streptomycetes, the Company completed
the development and accumulation of a series of key research technologies based on Streptomyces
protoplast transformation, gene overexpression, gene editing, site-directed mutation of key enzymes,
etc., and is currently undergoing the transformation of strains for producing Acarbose and
Doramectin. In terms of the construction of biocatalytic platform, the Company is building an
independent and controllable knowledge base, adopting the AlphaFold 2 algorithm to predict the
structure of key enzyme proteins on the CPC metabolic pathway, and applying the AI method of
natural product biosynthesis pathways to predict key genes of aromatic amino acid metabolites. By
the end of 2023, Joincare Research Institute had applied for a total of 14 national invention patents
(with 4 granted), 8 utility model patents (with 4 granted). Moreover, the Company obtained 1
software copyright and published 2 high-level academic papers.
③ Health care products and OTC drugs
During the Reporting Period, Joincare (excluding Livzon Group and Livzon MAB) realized
revenues of RMB453 million from health care products and OTC segment, representing a year-on-
year increase of approximately 46.31%.
During the Reporting Period, the Company built a set of DTC brand digital marketing system with
user operations as the core data to drive sales growth. In terms of content marketing, the Company
made a key layout of social media drivers with Douyin, Little Red Book and WeChat, cooperated
with many professional KOLs, and promoted brands and products through images, short videos,
live streaming and self-streaming, greatly upgrading brand exposure, continuously exporting health
science knowledge, optimizing and upgrading marketing links, and greatly enhancing AIPL
circulation efficiency. In terms of brand marketing, the Company conveyed scientific health and
wellness concepts and established a professional brand image and reputation by conducting popular
science education through authoritative media and industry experts; and based on good reputation
of the original brand, the Company’s brand renewal efficiency is obvious and higher than that of
new brands, and the penetration rate of the brand’s target audience is gradually increasing. In terms
of channel sales, it mainly strengthened channel transformation, enhanced online channel
undertaking, opened such flagship stores as Tmall, JD, Douyin and Little Red Book, reached
cooperation and implemented strategic agreements with Top 50 offline chain institutions, as well as
33
Joincare Pharmaceutical Group Annual Report 2023
vigorously developed offline food line channels. Under the condition of maintaining the original
sales model, online channels Tmall, JD.COM and Douyin are mainly laid out to improve the
penetration rate of channels, thus enhancing brand sales. In terms of organizational structure, it set
up a content marketing department by brand operation, and formed a team with diversified
backgrounds, international vision and rich practical experience in brand marketing so as to
strengthen the brand talent capacity.
(I) Analysis of principal business
1. Analysis of changes in items of income statement and cash flows statement
Unit: Yuan Currency: RMB
Amount for the same Change
Item Amount for the period
period of last year (%)
Revenues 16,646,350,349.72 17,142,753,068.82 -2.90
Operating costs 6,298,465,671.11 6,252,265,308.40 0.74
Selling expenses 4,434,442,281.05 4,950,802,456.16 -10.43
Administrative expenses 930,481,615.70 992,483,591.51 -6.25
Financial expenses -404,841,133.45 -352,447,424.62 N/A
R&D expenses 1,661,757,980.90 1,742,088,079.94 -4.61
Net cash flow from operating activities 3,928,909,609.73 3,977,705,139.29 -1.23
Net cash flow from investing activities -877,424,336.85 -2,252,167,188.62 N/A
Net cash flow from financing activities -1,927,493,522.28 566,122,659.80 -440.47
Reasons for changes in net cash flow from investing activities: Mainly due to the increase in cash
receipts from investment returns and the decrease in expenditures on purchasing large denomination
deposits during the reporting period.
Reasons for changes in net cash flow from financing activities: Mainly due to the increase in cash
outflows due to loan repayments, distribution of dividends, and share repurchases, as well as the
decrease in financing activities during the reporting period.
Details of material changes in business type, components or source of profits during the
current period
□Applicable √N/A
2. Analysis of revenues and costs
√Applicable □N/A
During the Reporting Period, the Company realized revenues of RMB16,646 million, representing
a year-on-year decrease of 2.90%; the operating costs totaled RMB6,298 million, representing a
year-on-year increase of 0.74%.
(1). Composition of principal businesses by industry, product, region and sales model
Unit: Yuan Currency: RMB
34
Joincare Pharmaceutical Group Annual Report 2023
Principal business by industry
YoY YoY
YoY change in
Gross profit change in change in
By industry Revenues Operating costs gross profit
margin (%) revenues operating
margin (%)
(%) costs
Pharmaceutical Decreased by
manufacturing 16,521,723,930.99 6,206,181,318.60 62.44 -2.89 0.74 1.35percentage
Industry points
Principal business by product
YoY YoY
YoY change in
Gross profit change in change in
By product Revenues Operating costs gross profit
margin (%) revenues operating
margin (%)
(%) costs
Decreased by
Chemical
8,714,333,568.23 1,838,766,252.49 78.90 -5.55 1.37 1.44 percentage
pharmaceuticals
points
Chemical APIs Decreased by
and 5,045,478,897.44 3,348,124,481.16 33.64 -3.50 -1.79 1.15 percentage
intermediates points
Traditional Increased by
Chinese 1,805,427,390.05 575,932,282.52 68.10 39.24 34.60 1.10 percentage
medicine points
Diagnostic Increased by
reagents and 658,966,438.70 256,124,411.27 61.13 -8.92 -27.37 9.87 percentage
equipment points
Increased by
Health care
195,865,865.05 71,643,900.63 63.42 61.56 55.00 1.55 percentage
products
points
Decreased by
Biologics 84,426,083.26 102,589,712.45 -21.51 -79.33 -3.95 95.37 percentage
points
Principal business by region
YoY YoY
YoY change in
Gross profit change in change in
By region Revenues Operating costs gross profit
margin (%) revenues operating
margin (%)
(%) costs
Decreased by
Domestic 13,938,078,133.85 4,471,521,161.40 67.92 -1.64 3.36 1.55 percentage
points
Decreased by
Overseas 2,583,645,797.14 1,734,660,157.20 32.86 -9.09 -5.42 2.60 percentage
points
Principal business by sales model
YoY YoY
YoY change in
Gross profit change in change in
By sales model Revenues Operating costs gross profit
margin (%) revenues operating
margin (%)
(%) costs
Decreased by
Channel sales 11,220,434,988.89 2,722,733,195.38 75.73 0.31 6.10 1.32 percentage
points
Decreased by
Direct sales 5,301,288,942.10 3,483,448,123.22 34.29 -9.03 -3.08 4.04 percentage
points
Explanations on composition of principal businesses by industry, product, region and sales
model
35
Joincare Pharmaceutical Group Annual Report 2023
During the Reporting Period, the Company’s principal businesses generated revenues of
RMB16,522 million, representing a year-on-year decrease of RMB491 million or 2.89%.
The company was affected by multiple factors such as price reduction in collection and global de-
stocking of APIs, and the company's overall revenue from principal businesses declined slightly.
Chemical pharmaceuticals achieved revenues of RMB8,714 million, representing a decrease of 5.55%
year-on-year. Among them, the sales revenues in the field of gastroenterology reached RMB2903
million, dropping by 15.50% year-on-year; the sales revenues in the field of gonadorelin hormones
amounted to RMB27.67 million, increasing by 6.80% year-on-year; the sales revenues in the field
of respiratory reached RMB1,741 million, a year-on-year increase of 48.35%; the sales revenues of
psychiatry products was RMB602 million, a year-on-year increase of 10.54%; the sales revenues in
the field of anti-infection was RMB5.10 million, dropping by 60.88% year-on-year. Chemical APIs
and intermediates achieved revenues of RMB5,045 million, a year-on-year decrease of 3.50%.
Traditional Chinese Medicine achieved revenues of RMB1,805 million, a year-on-year increase of
39.24%. Diagnostic reagents and equipment achieved revenues of RMB659 million, a year-on-year
decrease of 8.92%. Healthcare products achieved revenues of RMB196 million, a year-on-year
increase of 61.56%. Biological products achieved revenues of RMB84 million, a year-on-year
decrease of 79.33%.
(2). Analysis of production and sales
√Applicable □N/A
YoY
YoY YoY change in
Inventory change in
Main products Unit Production Sales change in Inventory
level production
sales (%) （%）
(%)
Leuprorelin
Acetate Ten thousand
186.34 186.22 - 22.61 22.57 -
Microspheres for boxes
Injection
Ilaprazole sodium Ten thousand
1,983.56 1,969.44 238.88 6.28 0.68 5.99
for injection boxes
Ilaprazole Enteric- Ten thousand
1,879.06 1,820.53 540.85 -24.90 -19.35 12.02
Coated Tablets boxes
7-ACA (including
Ton 3,011.97 3,108.39 6.08 -1.75 2.96 -94.07
D-7ACA)
Ten thousand
Shenqi Fuzheng
bottles/ Ten 1,043.26 1,006.72 76.34 46.13 42.40 13.76
Injection
thousand bags
Explanations on production and sales
In 2023, the company continued to strengthen evidence-based research on key products of TCM
formulations already launched. There was a focus on cultivating terminal markets including tertiary
hospitals, grassroots medical institutions, retail pharmacies, and e-commerce platforms while
continuously optimizing traditional distribution channels and structures of the end-user market.
36
Joincare Pharmaceutical Group Annual Report 2023
The sales volume of the Shenqi Fuzheng Injection continued to increase in the grassroots market,
resulting in an increase in both production and sales volume. The fluctuation in the inventory of 7-
ACA (including D-7ACA) was mainly influenced by the supply-demand relationship at the terminal.
(3). Performance of major procurement contracts and major sales contracts
□Applicable √N/A
(4). Cost analysis
Unit: Yuan
As a
As a percentage
percentage of total
Amount incurred in YoY
Cost Amount incurred in of total costs in the
By industry the same period of change
components the current period costs in the same
previous year (%)
current period of
period (%) previous
year (%)
Costs of
3,814,984,465.46 60.57 3,908,782,585.27 62.52 -2.40
materials
Labor costs 869,230,688.54 13.80 809,277,538.94 12.94 7.41
Pharmaceutical Manufacturing
manufacturing 1,496,213,350.61 23.76 1,684,532,284.52 26.94 -11.18
costs
Industry Depreciation 456,623,740.32 7.25 406,107,662.76 6.50 12.44
Others -339,777,290.85 -5.39 -559,185,005.37 -8.94 N/A
Subtotal 6,297,274,954.09 99.98 6,249,515,066.13 99.96 0.76
Costs of
126,265.53 0.00 512,284.05 0.01 -75.35
materials
Labor costs 933,523.43 0.01 1,757,712.56 0.03 -46.89
Service Manufacturing
industry 91,122.96 0.00 327,719.99 0.01 -72.19
costs
Depreciation 39,805.10 0.00 152,525.67 0.00 -73.90
Subtotal 1,190,717.02 0.02 2,750,242.27 0.04 -56.71
Costs of
3,815,110,730.99 60.57 3,909,294,869.32 62.53 -2.41
materials
Labor costs 870,164,211.97 13.82 811,035,251.51 12.97 7.29
Manufacturing
Total 1,496,304,473.57 23.76 1,684,860,004.51 26.95 -11.19
costs
Depreciation 456,663,545.42 7.25 406,260,188.43 6.50 12.41
Others -339,777,290.85 -5.39 -559,185,005.37 -8.94 N/A
Subtotal 6,298,465,671.11 100.00 6,252,265,308.40 100.00 0.74
As a
As a percentage
percentage of total
Amount incurred in YoY
Cost Amount incurred in of total costs in the
By product the same period of change
components the current period costs in the same
previous year (%)
current period of
period (%) previous
year (%)
Health care Costs of
58,832,542.11 0.93 36,089,962.70 0.58 63.02
products materials
37
Joincare Pharmaceutical Group Annual Report 2023
Labor costs 10,675,288.60 0.17 11,329,854.63 0.18 -5.78
Manufacturing
10,085,408.48 0.16 9,444,348.04 0.15 6.79
costs
Depreciation 4,035,742.61 0.06 5,463,682.37 0.09 -26.14
Others -11,985,081.17 -0.19 -16,104,826.72 -0.26 N/A
Subtotal 71,643,900.63 1.14 46,223,021.02 0.74 55.00
Costs of
3,738,329,801.68 59.35 3,841,254,506.51 61.44 -2.68
materials
Labor costs 856,996,739.54 13.61 795,400,898.83 12.72 7.74
Manufacturing
Pharmaceutical 1,422,660,060.12 22.59 1,620,338,814.98 25.92 -12.20
Products costs
Depreciation 449,880,221.02 7.14 400,238,957.27 6.40 12.40
Others -334,520,121.42 -5.31 -546,139,386.60 -8.74 N/A
Subtotal 6,133,346,700.94 97.38 6,111,093,791.00 97.74 0.36
Other information on cost analysis
Cost and variety of main medicinal herbs used in main TCMs
Variety of main Procurement
Main TCMs Supply and demand Influence of price fluctuation
medicinal herb model
The supply of Livzon Limin’s
Codonopsis Root and Astragalus Root
is relatively stable. Both medicinal
herbs are supplied by plantation bases
and external suppliers. Plantation Codonopsis Root: the supply
Base of Livzon Limin Pharmaceutical price fall compared with the
Manufacturing Factory (“Livzon same period last year due to
Supplied by
Shenqi Limin Base”) maintains safety stock natural disasters; Astragalus
Livzon Limin
Fuzheng Codonopsis Root of medicinal herbs, which ensures the Root: the supply maintained
Base and
Injection(参芪 and Astragalus Root supply quantity and stabilizes the relatively stable, and the
external
扶正注射液) supply price. Meanwhile, Limin supply price edged up due to
suppliers
signed annual demand-based supply the increase in processing
agreements with external suppliers costs, labor costs and other
who are obligated to stock up expenses.
according to Limin’s quality
requirements, so as to ensure
sufficient supply of herbs with stable
quality.
The overall supply of main raw The prices of some medicinal
medicinal herbs used in Anti-Viral herbs such as Fructus
Indigowoad Root, Granules was relatively stable in 2023 Forsythiae and Indigowoad
Fructus Forsythiae, due to the Company’s safety stock Root increased significantly
Anti-Viral Tendering
Anemarrhena, Acori strategy and the launch of emergency due to the surge in market
Granules, procurement,
graminei Rhizoma, procurement plans after the demand for Anti-Viral
Anti-Viral internally
Gypsum, Rhizoma assessment of risk trends, which Granules. In 2023, the
Granules supplied by
Phragmitis, ensured the production and supply. increase in prices of main raw
(Sugar-free), plantation base
Patchouli, Indigowoad Root, Acori Graminei medicinal herbs was well
Anti-Viral and external
Rehmanniae Radix, Rhizome, Anemarrhena, Patchouli, controlled compared with the
Syrup, Anti- suppliers
Radix Curcumae, Rehmanniae Radix and Radix same period of the previous
Viral Tablets
Dahurian Angelica Curcumae are supplied by plantation year due to the Company’s
Root bases and external suppliers; some safety stock strategy and the
wild medicinal herbs such as Acori launch of emergency
Graminei Rhizome have a certain procurement plans after the
38
Joincare Pharmaceutical Group Annual Report 2023
amount of safety stock to ensure assessment of risk trends,
basically stable supply and price. which ensured the production
and supply. The price of
Acori graminei Rhizoma
stayed relatively the same
benefiting from the strategic
inventory and the supply from
co-built base; purchase price
of Rehmanniae Radix fell in
2023 as the plantation area
was supplemented stimulated
by the high price in the
previous year; and price
changes of other varieties
were within controllable
range.
(5). Changes in consolidation scope due to equity change of major subsidiaries during the
Reporting Period
□Applicable √N/A
(6). Material changes or adjustments in business, products or services during the Reporting
Period
□Applicable √N/A
(7). Major customers of sales and major suppliers
A. Major customers of sales
√Applicable □N/A
Sales to the top 5 customers were RMB1,503 million, representing 9.03% of the total annual sales;
of which the sales to related parties were RMB0 million, representing 0.00% of the total annual
sales.
Sales to any individual customer in excess of 50% of the total, any new customer in the top 5
customers or heavy dependence on a few customers during the Reporting Period
□Applicable √N/A
B. Information on major suppliers
√Applicable □ N/A
Purchases from top 5 suppliers were RMB802 million, representing 16.98% of the total annual
purchase cost, of which the purchases from related parties were RMB268 million, representing 5.68%
of the total annual purchase cost.
Purchases from any individual supplier in excess of 50% of the total, any new supplier in top 5
suppliers or heavy dependence on a few suppliers during the Reporting Period.
□Applicable √N/A
39
Joincare Pharmaceutical Group Annual Report 2023
3. Expenses
√Applicable □ N/A
Unit: Yuan
YOY
Item 2023 2022 Explanations
Change(%)
Selling expenses 4,434,442,281.05 4,950,802,456.16 -10.43 No material change
Administrative
930,481,615.70 992,483,591.51 -6.25 No material change
expenses
Financial expenses -404,841,133.45 -352,447,424.62 N/A No material change
R&D expenses 1,661,757,980.90 1,742,088,079.94 -4.61 No material change
4. Investment in R&D
(1). Investment in R&D
√Applicable □ N/A
Unit: Yuan
Current expensed R&D expenditure 1,357,343,510.45
Current capitalized R&D expenditure 274,513,905.45
Total R&D expenditure 1,631,857,415.90
Total amount R&D expenditure as a percentage of Revenues (%) 9.80
Ratio of capitalized R&D expenditure (%) 16.82
(2). R&D Staff
√Applicable □ N/A
Number of R&D staff 1,740
Proportion of R&D staff to the total employees (%) 12.11
Education background of R&D staff
Education composition Number
PhD 61
Postgraduate 491
Bachelor 768
Junior college graduate 289
High school and below 131
Age composition of R&D staff
Age composition Number
Under 30 years old (exclusive) 767
30-40 years old (including 30 years old, excluding 40 years old) 717
40-50 years old (including 40 years old, excluding 50 years old) 209
50-60 years old (including 50 years old, excluding 60 years old) 47
Over 60 years old 0
(3). Explanations
□Applicable √ N/A
40
Joincare Pharmaceutical Group Annual Report 2023
(4). Reasons for and impact of the material change in the composition of R&D staff
personnel on future development of the
Company
□Applicable √ N/A
5. Cash flows
√Applicable □ N/A
Unit: Yuan
YOY Change
Item 2023 2022 Explanations
（%）
Net cash flow from
3,928,909,609.73 3,977,705,139.29 -1.23 No material change
operating activities
Mainly due to the increase in
cash receipts from investment
Net cash flow from returns and the decrease in
-877,424,336.85 -2,252,167,188.62 N/A
investing activities expenditures on purchasing
large denomination deposits
during the reporting period.
Mainly due to the increase in
cash outflows due to loan
repayments, distribution of
Net cash flow from dividends, and share
-1,927,493,522.28 566,122,659.80 -440.47
financing activities repurchases, as well as the
decrease in financing
activities during the reporting
period.
(II) Statement on material changes in profits arising from non-principal businesses
√Applicable □ N/A
Unit: Yuan
As a percentage Sustainable or
Item Amount Cause
of total profit not
Mainly due to changes in gains or losses of
Investment income 79,474,572.01 2.29% the associates and receipt of dividend No
payments.
Gains or losses from Mainly due to fluctuations in market value
-25,419,715.12 -0.73% No
changes in fair value of the securities investment held.
Losses of credit Mainly due to expected credit losses on
-16,846,468.56 -0.49% No
impairment accounts receivable.
Impairment loss of Mainly due to the impairment provision for
-312,369,926.37 -9.01% No
assets inventories.
Mainly due to income on disposal of
Non-operating income 7,980,415.72 0.23% wastes and the transfer without any No
payment.
Non-operating
48,990,788.10 1.41% Mainly due to donation expenses. No
expenses
Other income 259,061,799.00 7.48% Mainly due to government grants. Yes
(III) Analysis of assets and liabilities
√Applicable □ N/A
1. Status of assets and liabilities
41
Joincare Pharmaceutical Group Annual Report 2023
Unit: Yuan
The
Proportion proportion
of ending of ending
Change in
Ending balance of balance of Ending balance of balance of
Item amount Explanations
this period this period previous period previous
(%)
to the total period to
assets (%) the total
assets (%)
Mainly due to the
Non-current reclassification of
assets due large certificates of
406,376,425.44 1.12 54,048,611.11 0.15 651.87
within one deposit and time
year deposits maturing
within one year.
Mainly due to the
maturity proceeds
Other current
77,402,185.01 0.21 163,539,900.32 0.46 -52.67 from cash
assets
management
operations.
Mainly due to the
new leasing of
Investment
16,958,213.00 0.05 6,191,475.43 0.02 173.90 buildings business
properties
by subsidiaries
during the Period.
Mainly due to the
transfer of the
production lines of
the new factories
Construction and workshops of
531,059,118.06 1.46 811,300,068.96 2.27 -34.54
in progress the subsidiaries
which met the
conditions for
transfer into fixed
assets.
Mainly due to the
Financial changes in fair
liabilities held 86,817.12 0.00 755,634.43 0.00 -88.51 value of forward
for trading foreign exchange
contracts.
Mainly due to the
fact that part of the
contract payments
received in advance
Contract fulfilled the
159,082,637.65 0.44 292,977,730.74 0.82 -45.70
liabilities conditions for
revenue recognition
and were transferred
to revenue during
the Period.
Mainly due to the
payment of Medium
Employee to Long-term
benefits 399,466,473.91 1.10 573,010,571.46 1.60 -30.29 Business Partner
payable Share Ownership
Scheme provisioned
in the previous year.
42
Joincare Pharmaceutical Group Annual Report 2023
Non-current Mainly due to the
liabilities due transfer of long-
718,564,144.31 1.98 63,077,260.98 0.18 1,039.18
within one term borrowings
year due within one year.
Mainly due to the
Other current decrease in
51,087,001.83 0.14 101,276,714.35 0.28 -49.56
liabilities expected refunds
payable.
Mainly due to the
Lease transfer to lease
15,422,948.41 0.04 23,482,486.07 0.07 -34.32
liabilities payables maturing
within one year.
Mainly due to the
reduction in share
Capital reserve 1,601,720,087.71 4.41 2,343,693,215.99 6.56 -31.66 premium resulting
from stock
repurchases.
Mainly due to the
Treasury
- - 347,176,561.29 0.97 N/A cancellation of
shares
repurchased shares.
Mainly due to
Other changes in the fair
comprehensive -12,246,131.22 -0.03 4,704,473.53 0.01 -360.31 value of other
income equity instruments
investment.
2. Overseas assets
√Applicable □ N/A
(1) Asset size
Of which: Overseas assets were 51.93 (Unit: 100 million Currency: RMB), representing 14.28% of
the total assets.
(2) Statement on high proportion of overseas assets
□Applicable √ N/A
3. Restrictions on assets entitlements as at the end of the Reporting Period
√Applicable □ N/A
Unit: Yuan
Carrying value at the
Item Cause of restriction
end of the period
Letters of credit, bank acceptances and forward exchange
Other monetary funds 6,627,449.66
settlement deposits, etc.
Notes receivable 519,789,027.16 Notes pool business and pledge of notes receivable
Total 526,416,476.82
4. Others
□Applicable √ N/A
(IV) Analysis of industry-related business information
√Applicable □N/A
43
Joincare Pharmaceutical Group Annual Report 2023
According to the Guidelines for the Industry Statistics and Classification of Listed Companies
issued by the China Association for Public Companies, the Company is operating in the
pharmaceutical manufacturing industry (C27). Adhering to the mission of “For the health, For the
future” and the vision of “diligently make high-quality and innovative drugs”, the Company has
been committed to the pharmaceutical business and been strengthening R&D, production, marketing
and management of medical products, to strive to become a domestic leading integrated
pharmaceutical enterprise with capacity for independent innovation and international
competitiveness in terms of production, technology and management in the near future.
Analysis of business information on pharmaceutical manufacturing industry
1. Basic information on industry and main drugs (products)
(1). Basic information on industry
√Applicable □N/A
1. Influence of industry policies
The year 2023 marks the first year for fully implementing the spirit of the 20th CPC National
Congress, a critical year for comprehensively building a modern socialist country and marching
towards the second Centenary Goal, and the third year of the 14th Five-Year Plan. China has issued
a number of planning documents to make top-level plans for the development of pharmaceutical
industry inthe future. The major policies that had a significant impact on the Company are as follows:
① Revitalization and development of traditional Chinese medicine
In February 2023, the State Council issued the Notice on the Implementation Plan of Major Projects
for the Revitalization and Development of Traditional Chinese Medicine (《中医药振兴发展重大
工程实施方案的通知》), which further increases support for the development of traditional Chinese
medicine and strive to promote the revitalization and development of traditional Chinese medicine
during the 14th Five-Year Plan period. In April 2023, the National Health Commission issued the
Implementation Plan of Programs on Promoting the Culture of Traditional Chinese Medicine
During the 14th Five-Year Plan Period (《“十四五”中医药文化弘扬工程实施方案》), which
further defines the supporting measures and the division of work under the 14th Five-Year Plan for
the Development of Traditional Chinese Medicine (《“十四五”中医药发展规划》).
② Key Work Points of 2023 Healthy China Initiative
In March 2023, the Office for Promoting Healthy China Initiative and its member entities and other
relevant entities have formulated the Key Work Points of 2023 Healthy China Initiative (《健康中
国行动2023年工作要点》), with an aim to promote the implementation of all actions, ensure the
achievement of all tasks and goals as scheduled and protect the all-round and full-cycle health of
the public.
③ Adjustment of the catalog of medicines covered by medical insurance
44
Joincare Pharmaceutical Group Annual Report 2023
In December 2023, the National Healthcare Security Administration issued the National Drug
Catalog for Basic Medical Insurance, Work-Related Injury Insurance and Maternity Insurance
(2023) (《国家基本医疗保险、工伤保险和生育保险药品目录(2023年)》), effective from 1
January 2024. In this round of adjustment, a total of 126 drugs were added to the Catalog and a drug
was removed from the Catalog. A total of 143 drugs not included in the Catalog participated in
negotiations or bidding, of which 121 drugs succeeded. The negotiation success rate was 84.6% and
the average price reduction was 61.7%, which were basically the same as those in 2022.
④ Routine operation of volume-based procurement
Since 2018, the National Healthcare Security Administration has carried out nine batches of
centralized procurement of pharmaceuticals, which covers a total of 374 drugs with an average price
reduction of over 50%. China organized the centralized volume-based procurement of
pharmaceuticals in a routine and institutionalized manner, and the ninth batch of centralized drug
procurement has been conducted. While continuously exploring and optimizing the rules, China has
established a sound centralized procurement plan. In the future, the national volume-based
procurement will be refined to enhance the quality and efficiency of the whole process, and focus
on the refined management of centralized drug procurement especially in early volume reporting,
circulation and procurement, and clinical use.
⑤ Centralized rectification campaign of the pharmaceutical industry
In July 2023, the National Health Commission held a joint video conference with the Ministry of
Education, the Ministry of Public Security, the National Audit Office, the State-owned Assets
Supervision and Administration Commission of the State Council, the State Administration for
Market Regulation, the National Healthcare Security Administration, the National Administration
of Traditional Chinese Medicine, the National Disease Control and Prevention Administration and
the National Medical Products Administration, which arranged a one-year nation-wide centralized
rectification campaign to address corruption issues in the pharmaceutical industry. The centralized
rectification focused on six aspects: (i) the administrative departments in the pharmaceutical sector
which use power to seek for benefits; (ii) “key persons” and key positions in medical and health
institutions, and kickback-based sales of medicines, equipment and consumables; (iii) social
organizations under the management and guidance of the administrative departments in the
pharmaceutical sector which use the conveniences of work to seek profits; (iv) issues related to the
use of medical insurance funds; (v) pharmaceutical production and operation companies which
conduct illegal behaviors in the purchase and sales; and (vi) medical personnel who violate the Nine
Principles for Integrity-based Practices of Workers in Medical Institutions (《医疗机构工作人员
廉洁从业九项准则》). Through measures such as self-examination and self-correction, centralized
rectification, and overall rectification, China has conducted a systematic governance covering all
areas, the entire chain and full spectrum against prominent corruption issues in the pharmaceutical
industry, and has established and improved a series of long-term mechanisms to secure the effective
45
Joincare Pharmaceutical Group Annual Report 2023
results.
Response measures: The Company will take effective measures to cope with major changes in
policies of the pharmaceutical industry through early layout, transformation, and compliance, and
constantly improve its core competitive strength. Meanwhile, the Company will actively increase
the research, development and innovation of new products, drive development through R&D,
continuously optimize and adjust the product structure, strenuously apply for medical insurance
coverage, maintain the competitive sales of large varieties, strengthen the market development of
new and potential varieties, and promote sales to lower-tier markets, so as to expand sales scale, and
create more competitive advantages of products. The Company will also improve the production
quality management, standardize the safe and environmentally friendly production, further refine
the compliant management system and mechanism, operate in compliance with regulations, and
establish a more reasonable market-oriented system in order to establish its own advantageous
position and core competitiveness.
II. Basic information on the sector where the Company operates
The Company is primarily engaged in the R&D, production and sale of hundreds of varieties of
pharmaceutical products and health care products in areas such as chemical pharmaceuticals,
biologics, chemical active pharmaceutical ingredients (APIs), TCM, and health care products. Basic
information on the market niches in which the Company operates are follows:
Chemical pharmaceuticals: In recent years, influenced by policies regarding medical insurance
payment control, volume-based procurement and consistency evaluation, chemical pharmaceuticals
have recorded a slower growth in revenues and profit. The market of chemical pharmaceuticals is
relatively competitive as there are many domestic manufacturers. However, innovative drugs and
high-barrier formulations will become an industry trend and an important source of profits thanks
to low competitive pressure and continuous support from national policies. The Company's
chemical pharmaceuticals cover many therapeutic fields with competitive strengths in product
varieties, sales channels, end user groups and brand awareness. In the future, the Company will
speed up research and development, introduce new technologies, and accelerate the product
structure optimization and strategic planning to cope with the increasingly fierce market competition.
Biologics: Biologics include monoclonal antibodies, vaccines, recombinant therapeutic proteins and
other biological therapies. Globally, the development of biologics has been relatively late compared
to chemical pharmaceuticals products, and it is only in the last 40 years that they have entered the
large-scale industrialization stage. However, due to the safety, efficacy, and other clinical needs met
by biologics that chemical pharmaceuticals could not satisfy, the biologics industry has grown
rapidly in recent years, especially in emerging markets such as China, where the biologics industry
is growing at a much faster rate than the general pharmaceutical industry. China's biologics market
is still in a period of unstable segment structure, continued increase in unmet clinical needs, more
46
Joincare Pharmaceutical Group Annual Report 2023
frequent technology iteration, and rapid growth of emerging segments such as monoclonal
antibodies. LivzonBio is the primary biopharmaceutical R&D platform of the Company and
principally engages in the independent innovative R&D and commercialization of
biopharmaceuticals, including innovative mAbs (monoclonal antibodies), mAb biosimilars,
bispecific antibodies, antibody drug conjugates, CAR-T cell therapies, etc., with its products
covering multiple fields such as tumor, autoimmune disease, vaccine, etc.
Chemical APIs: At present, the Company has the following chemical APIs: cephalosporin series,
statin series, and carbapenem series among others. Restricted by heavy investment, long
construction period, high technical threshold and strict environmental protection requirements, the
bulk API market in China is relatively concentrated. However, overcapacity causes fierce
competition. To adapt to future competition, the Company gradually completed the transformation
and upgrading from bulk APIs to high-end characteristic APIs, from nonstandard market to
standardized market and from domestic market to international market. Meanwhile, in an effort to
further implement the Implementation Plan to Promote the High-quality Development of the API
Industry issued by the National Development and Reform Commission and the Ministry of Industry
and Information Technology in November 2021, the Company strengthened forward-looking
research layout to accelerate high-quality development of APIs under new background. Since
October 2020, the Company has focused on building a research and development platform in
synthetic biology with AI integrated to promote green, low-carbon transformation of the industry,
to give more added value to pharmaceutical intermediates and APIs, and to accelerate integration
into the global industrial chain and value chain.
Traditional Chinese medicine: In recent years, the traditional Chinese medicine has experienced
a sustained influx of favorable policies and refined regulatory frameworks. In terms of policies,
China increased its support for traditional Chinese medicine from the top-level design, and shifted
its policies from the overall long-term planning in the past to more specific guidance including
medical insurance payment, optimization of review and approval rules, and encouragement of
traditional Chinese medicine innovation. The 14th Five-Year Plan for the Development of
Traditional Chinese Medicine released in 2022 is the first five-year plan for traditional Chinese
medicine issued in the name of the State Council, further clarifying China’s determination to
develop traditional Chinese medicine. Since 2023, the traditional Chinese medicine industry also
benefited from a large number of major favorable policies, including the Special Provisions on the
Administration of Traditional Chinese Medicine Registration (《中药注册管理专门规定》) and
the Several Measures on Further Strengthening the Scientific Supervision of Traditional Chinese
Medicine to Promote the Inheritance, Innovation and Development of Traditional Chinese Medicine,
which provide a vast space for the development of the traditional Chinese medicine industry.
Traditional Chinese medicine stands as a cornerstone of the Company’s traditional strengths.
Flagship products such as Shenqi Fuzheng Injection and Anti-Viral Granules represent key
traditional Chinese medicines of the Company. In the future, the Company will make every effort
47
Joincare Pharmaceutical Group Annual Report 2023
to develop an innovative R&D platform for traditional Chinese medicine to further strengthen the
research and development of innovative traditional Chinese medicine products and continuously
diversify the product pipeline of the Company.
Diagnostic reagents and equipment: As China's healthcare industry develops gradually, in vitro
diagnostic reagents industry is seeing a bigger market but remains in primary stage compared with
developed countries such as European countries and America. With more product varieties and more
advanced technologies, in vitro diagnostic reagents are used in more scenarios, from traditional
hospital laboratories to third-party medical diagnostic institutions, physical examination centers,
families, and other primary healthcare institutions. More application scenarios make the demand for
different kinds of in vitro diagnostic reagents fully released, promoting rapid development of the
industry. Since its establishment, Livzon Diagnostics, controlled by Livzon Group (a holding
subsidiary of the Company), has been committed to the R&D, production and sales of diagnostic
reagents and equipment. After years of efforts and development, it has built a multi-faceted technical
platform that supports ELISA test, colloidal gold rapid test, chemiluminescence assay, multiplex
liquid-chip assay, and nucleic acid assay. It has strong market influence in such fields as respiratory
infection, infectious diseases, and drug concentration monitoring. Some of its products hold big
market shares in China.
Health care products: Driven by increasing public awareness of wellness, aging, consumption
upgrading and promotion of direct sales, health care industry has developed rapidly in recent years.
However, due to low technical threshold and high gross profit, the domestic market is highly
competitive with serious product homogeneity issues and low market concentration. The
Company’s well-known health care foods brands such as “Taita” (太太),“ Jingxin” (静心) and
“Eagle's” (鹰牌) deeply rooted in people's minds and have high market awareness. Faced with
intense market competition, while staying committed to traditional pharmaceutical chain channels,
the Company also actively expands online channels through strategic cooperation with new social
e-commerce sales platforms to drive sales growth. In addition, the Company actively prepares to
access to fields of functional food by leveraging its R&D and market strengths to enrich product
pipelines and enhance core competitiveness.
48
Joincare Pharmaceutical Group Annual Report 2023
(2). Basic information on main drugs (products)
√Applicable □N/A
Basic information on main drugs (products) by segment and therapeutic areas
√Applicable □N/A
Effective and New drug Included in
Protected expiration (product) the Catalog
Included
Main Name of drug Registration Prescription TCM date of patent launched of National
Segment Indications in NRDL
therapeutic area (product) Category drug or not or not (if right for during the Essential
or not
applicable) invention (if Reporting Drugs or
applicable) Period or not not
Leuprorelin
Chemical Gonadotropic Acetate Chemical Endometriosis, hysteromyoma, 2010.12.23-
Yes No No No Yes
pharmaceuticals hormones Microspheres drugs Class 6 breast cancer, etc. 2030.12.23
for Injection
Ilaprazole Peptic ulcer bleeding, and 2018-08-10-
Chemical Chemical
Gastroenterology Sodium for prevention of stress ulcer bleeding Yes No No No Yes
pharmaceuticals drugs Class 2 2038-08-10
Injection in severe patients
Ilaprazole Chemical
Chemical Duodenal ulcer and reflux 2006.03.24-
Gastroenterology Enteric-Coated drugs Yes No No No Yes
pharmaceuticals esophagitis 2026.03.24
Tablets Class 1.1
Enhancing the vital energy and
strengthening the body resistance It
is used for the treatment of mental
fatigue, lacking in strength, weak
Traditional
Traditional Shenqi breath, laziness to speak, 2005.04.13-
Chinese
Chinese Antitumor Fuzheng spontaneous perspiration and Yes No No No Yes
medicine 2025.04.13
medicine Injection dizziness caused by the deficiency
Class 2
of vital energy in lung and spleen;
the auxiliary treatment of patients
with lung or gastric cancer who
suffer from the above indications.
Note: The starting and expiration dates listed above refer to the corresponding term of patents of core products in each product category.
49
Joincare Pharmaceutical Group Annual Report 2023
Main drugs (products) newly added into and exited from the National Reimbursement Drug
List during the Reporting Period
√Applicable □N/A
Catalog of National National Reimbursement
Name of main products
Essential Drugs Drug List
Leuprorelin Acetate Microspheres for Injection Not included Included
Ilaprazole Sodium for Injection Not included Included
Ilaprazole Enteric-Coated Tablets Not included Included
Shenqi Fuzheng Injection Not included Included
Winning bids for main drugs in centralized drug procurement during the Reporting Period
√Applicable □N/A
Total actual
procurement
Name of main drugs Bid-winning price range volume by Unit
medical
institutions
Leuprorelin Acetate Microspheres for
RMB903.86-1295.9 199.80 Ten thousand boxes
Injection
Ilaprazole Sodium for Injection RMB71.00 2,139.12 Ten thousand boxes
Ilaprazole Enteric-Coated Tablets (6 tablets) RMB70.51-83.73 1,466.21 Ten thousand boxes
Ilaprazole Enteric-Coated Tablets (10 tablets) RMB156.30 133.91 Ten thousand boxes
Shenqi Fuzheng Injection RMB90.63-113.24 506.87 Ten thousand bottles
Explanations
√Applicable □N/A
① Data regarding total actual procurement volume by medical institutions are from IQVIA;
② The information disclosed is the bid-winning price of the issuer province and newly
implemented winning prices during the Reporting Period.
Operating data by therapeutic areas or main drug (products)
√Applicable □N/A
Unit: 10,000 Yuan Currency: RMB
YoY YoY Gross profit
YoY
change change margin of
change
Operating Operating Gross profit In in gross products in
Therapeutic area in
income costs margin (%) operating profit the same field
operating
income margin in the same
costs (%)
(%) (%) industry
Gastroenterology 290,319.98 33,307.79 88.53 -15.50 -29.15 2.21 78.70%
Gonadotropic
276,696.11 84,760.16 69.37 6.80 3.13 1.09 -
hormones
Respiratory 174,104.21 34,432.63 80.22 48.35 72.04 -2.72 88.66%
Psychiatry 60,226.32 3,344.57 94.45 10.54 17.54 -0.33 83.05%
Anti-infection 51,040.16 19,495.40 61.80 -60.88 -21.28 -19.21 46.46%
Explanations
√Applicable □N/A
① The gross profit margin of products in the field of gastroenterology is derived from that of the
50
Joincare Pharmaceutical Group Annual Report 2023
relevant industry in “Major products of metabolism and alimentary system” in Fosun Pharma's
2022 Annual Report.
② No comparable data on gross profit margin in the field of gonadotropic hormones has been
found.
③ The gross profit margin data of products in the field of the respiratory comes from that of
“respiratory system category” in 2022 Annual Report of Tianjin Tianyao Pharmaceuticals Co.,
Ltd.
④ The gross profit margin data of products in the psychiatric field comes from that of “psychiatric
category” in Nhwa Pharmaceutical's 2022 Annual Report.
⑤ The gross profit margin data of products in the field of the anti-infection comes from that of
“anti-infection category” in 2022 Annual Report of Tianjin Tianyao Pharmaceuticals Co., Ltd.
2. Drug (product) R&D of the Company
(1). Overview of R&D of the Company
√Applicable □N/A
During the Reporting Period, the total R&D investment of the Company was up to RMB1,632
million, accounting for 9.80% of its total revenues. The Company adhered to the two-wheel drive
strategy of “innovative drugs + high-barrier complex formulations”, and promoted the development
and commercialization of innovative technologies and products through independent research and
development, cooperative development and licensing introduction. As at the disclosure date of this
Report, the Company introduced a variety of innovative drugs to consolidate its existing competitive
advantages and enrich its product pipelines, among which the progress of main products are as
follows:
Major R&D Registration
No. Disease Field Indication(Tentative) R&D Progress
Project Classification
Used for patients aged 12 years and Phase III Clinical
Respiratory Chemical above with simple acute influenza trails, completed
1 TG-1000
system disease drugs Class 1 A and B infection but without enrollment in January
complications 2024
Used for relief (emergency) and
maintenance treatment of
Respiratory Chemical bronchospasm caused by chronic
2 DBM-1152A Phase I clinical trials
system disease drugs Class 1 obstructive pulmonary disease,
including chronic bronchitis and
emphysema
Respiratory Chemical
3 N91115 Asthma Phase I clinical trials
system disease drugs Class 1
Therapeutic
Respiratory biological 1. Asthma; 2. Moderate and severe Phase Ib clinical
4 QX008N
system disease products COPD trials
Class 1
Respiratory Therapeutic Used for treating respiratory
5 BA2101 Phase II clinical trials
system disease biological diseases such as asthma and COPD
51
Joincare Pharmaceutical Group Annual Report 2023
products
Class 1
Obtained approval
Chemical
6 Pain FZ008-145 Analgesia for clinical trials in
drugs Class 1
January 2024
Obtained approval
Digestive system Chemical
7 JP-1366 Reflux esophagitis for clinical trials in
disease drugs Class 1
February 2024
Used for preventing venous
Cardiovascular Chemical
8 HHT120 thromboembolism after a major Phase I clinical trials
disease drugs Class 1
orthopedic surgery
Chemical
9 Mental disease LS21031 Depression Phase I clinical trials
drugs Class 1
By the end of the Reporting Period, the Company had formed multi-location R&D institutions in
Shenzhen, Zhuhai, Shanghai, Guangzhou, etc. to achieve synergistic development of R&D centers.
And the Company had 1,740 R&D personnel, including 552 with a master’s degree or above. The
overall picture of R&D in various fields is as follows:
1) Chemical pharmaceuticals
①High-barrier complex formulations
Registration
No. Major R&D Project Dosage Form Project Progress
Classification
Formoterol Fumarate Inhalation
1 Chemical drugs Class 3 Launched
Inhalation Solution formulations
Filed application for launching and
Indacaterol Maleate Powder Inhalation
2 Chemical drugs Class 4 completed submission of required
for Inhalation formulations
supplementary materials
Salmeterol Xinafoate- Filed application for launching and
Inhalation
3 Fluticasone Propionate Chemical drugs Class 4 completed submission of required
formulations
Powder for Inhalation supplementary materials in January 2024
Fluticasone Propionate Inhalation
4 Chemical drugs Class 4 Filed application for launching
Inhalation Suspension formulations
Inhalation
5 XYP-001 Chemical drugs Class 2 Phase I clinical trials completed
formulations
1. Indications for prostate cancer launched;
and
Triptorelin Acetate Chemical drugs Classes Sustained-release
6 2. Endometriosis indication: Phase III
Microspheres for Injection 2.2 and 2.4 microspheres
clinical trials completed and application for
launching filed
Aripiprazole Microspheres for Sustained-release
7 Chemical drugs Class 2.2 Filed application for launching
Injection microspheres
Octreotide Acetate Sustained-release
8 Chemical drugs Class 4 BE Study
Microspheres for Injection microspheres
9 Leuprorelin Acetate Chemical drugs Class 4 Sustained-release BE Study
52
Joincare Pharmaceutical Group Annual Report 2023
Microspheres for Injection (3- microspheres
month sustained-release)
1. Prostate cancer: Phase I clinical trials
Alarelin Microspheres for Chemical drugs Classes Sustained-release completed; and
10
Injection 2.2 and 2.4 microspheres 2. Breast cancer and endometriosis: Clinical
trials approval obtained.
Triptorelin Pamoate Sustained-release
11 Chemical drugs Class 2.2 Preclinical
Microspheres for Injection microspheres
Long Chain Fat Emulsion
12 Chemical drugs Class 4 Fat emulsion Launched
Injection (OO)
Meloxicam Nanocrystal Completed PK-BE and obtained clinical
13 Chemical drugs Class 3 Nanocrystal
Injection approval
Goserelin Acetate Sustained- Sustained-release
14 Chemical drugs Class 4 Preclinical
release Implant implant
Ilaprazole Enteric-coated
15 Chemical drugs Class 2 Pellet Phase I clinical trails
Pellets
②Other key R&D projects in development
No. Major R&D Project Registration Classification Therapeutic Field Project Progress
1 Biapenem for Injection Chemical drugs Class 4 Anti-infection Launched
2 Voriconazole for Injection (0.2g) Chemical drugs Class 4 Anti-infection Launched
Ilaprazole Sodium for injection (new
3 Chemical drugs Class 2.4 Gastroenterology Launched
indication)
4 Blonanserin Tablets Chemical drugs Class 4 Psychiatry Launched
Quetiapine Hemifumarate Sustained-release
5 Chemical drugs Class 4 Psychiatry Launched
Tablets
Submitted an
Assisted
6 Cetrorelix Acetate for Injection (USA) ANDA application for
reproduction
registration
Filed application for
7 Voriconazole for Oral Suspension Chemical drugs Class 4 Anti-infection
launching
Filed application for
8 Rabeprazole Sodium Enteric-coated Tablets Chemical drugs Class 4 Gastroenterology
launching
Assisted Filed application for
9 Progesterone Injection Chemical drugs Class 3
reproduction launching
Magnesium Sulfate, Sodium Sulfate and
Filed application for
10 Potassium Sulfate Concentrate Oral Chemical drugs Class 4 Gastroenterology
launching
Solution
Filed application for
11 Tedizolid Phosphate for Injection Chemical drugs Class 4 Anti-infection
launching
12 Vonoprazan Fumarate Tablets Chemical drugs Class 4 Gastroenterology Process validation
13 Paliperidone Palmitate Injection Chemical drugs Class 4 Mentality BE Study
53
Joincare Pharmaceutical Group Annual Report 2023
14 Asenapine Transdermal Patch Chemical drugs Class 2.2 Mentality Phase I clinical trails
15 Ilaprazole Oral Suspension Chemical drugs Class 2.2 Gastroenterology Preclinical
16 Special project of the Joint Research Center Chemical drugs Class 1 Anti-tumor Preclinical
17 GWT1 inhibitor project Chemical drugs Class 1 Anti-infection Preclinical
2) Biologics
No. Major R&D Project Registration Classification Project Progress
Therapeutic biological
1 Tocilizumab Solution for Injection Launched
products Class 3.3
Recombinant SARS-COV-2 Bivalent
Preventive biological
2 (Original/Omicron XBB) Fusion Protein Approved for emergency use
products Class 1.1
Vaccine (CHO Cell)
Therapeutic biological Declared for conditional market launch
3 Lipustobart for Injection
products Class 1 (Pre-BLA)
1. Type II diabetes mellitus: Phase III
Therapeutic biological
4 Semaglutide Injection clinical trails; 2. Weight loss: Approved for
products Class 3.3
clinical trials in February 2024
Recombinant Anti-human IL-17A/F Humanized Therapeutic biological
5 Phase III clinical trails
Monoclonal Antibody Injection products Class 1
Recombinant Human Follitropin Alfa Solution Therapeutic biological
6 Phase III clinical trails
for Injection products Class 3.3
3) APIs and intermediates
No. Major R&D Project Project Purpose Project Progress
Establishment of genetic and screening
technology platform for Cephalosporium Technical transformation of Steadily increased in yield of Cephalosporin
1
acremonium and breeding of high-yield existing products C in industrial scale fermentation
Cephalosporin C strains
Technical transformation of
2 Breeding of high-yield strain of Demeclocycline Completed production scale validation
existing products
Development and breeding of a novel high-yield
Technical transformation of
3 strain of L-phenylalanine based on IBT Entered pilot and small-scale study validation
existing products
technology
Breeding of high-producing strains of Acarbose Technical transformation of
4 Completed production scale validation
based on system metabolic engineering existing products
Development and application of algorithms for Cooperated with Tencent Quantum
Technical transformation of
5 mining biosynthetic gene clusters (BGCs) based Laboratory to complete cooperative patent
existing products
on deep learning application
Construction of a computational
Technical transformation of
6 biology/bioinformatics platform for predicting Technology platform construction in progress
existing products
the structure and function of macromolecules
7 Biapenem APIs New product R&D Launched
54
Joincare Pharmaceutical Group Annual Report 2023
Completed submission of required
8 Caspofungin Acetate APIs New product R&D supplementary materials, and under
professional review
Completed submission of required
9 Formoterol Fumarate APIs New product R&D supplementary materials, and under
professional review
10 Meloxicam APIs New product R&D Under professional review
11 Cilastatin intermediates New product R&D Completed the pilot test
4) Traditional Chinese medicine
As at the end of the Reporting Period, there were 10 projects in development, among which four
products under “Class 3.1 of Ancient Classic Traditional Chinese Medicine Compound
Formulations” were undergoing compound formulation study, and the main progress was as follows:
Major R&D
No. Project Purpose Project Progress
Project
Used for treating the patients with rheumatoid arthritis, rheumatoid
Study on classic prescription
1 JDMF01 arthritis, hyperosteogeny, ankylosing spondylitis and other rheumatic
compound formulations
diseases
Used for treating the patients with vaginitis, cervical erosion and pelvic
Study on classic prescription
2 JDMF02 inflammation but with spleen deficiency, liver depression and damp
compound formulations
turbidity
Used for treating the patients with otogenic vertigo, hypertension,
Study on classic prescription
3 JDMF03 neurogenic vertigo epilepsy and facial paralysis, showing syndrome of
compound formulations
wind-phlegm invading upward
Used for treating the patients with pulmonary heart disease,
Study on classic prescription
4 JDMF04 arrhythmia, coronary heart disease, angina pectoris, rheumatic heart
compound formulations
disease, etc.
(2). Basic information on main R&D projects
√Applicable □N/A
R&D projects Protected
(including Name of drug Registration Prescription TCM or not
Indications R&D stage
projects subject (product) Category drug or not (if
to GCE) applicable)
It is indicated for maintenance
therapy of bronchiectasis to relieve
Indacaterol Indacaterol Maleate Application
Chemical symptoms in adults with chronic
Maleate Powder Powder for Yes No for
drugs Class 4 obstructive pulmonary disease
for Inhalation Inhalation registration
(COPD), including chronic
bronchitis and emphysema.
Salmeterol In combination (bronchodilators
Salmeterol
Xinafoate and and inhaled corticosteroids) for the
Xinafoate and Application
Fluticasone Chemical regular treatment of reversible
Fluticasone Yes No for
Propionate drugs Class 4 obstructive airways disease,
Propionate Powder registration
Powder for including asthma in adults and
for Inhalation
Inhalation children.
55
Joincare Pharmaceutical Group Annual Report 2023
For patients 12 years of age and
Chemical older with uncomplicated acute
TG-1000 TG-1000 Yes No Clinical trial
drugs Class 1 infection of simple influenza A or
B.
Chemical
For the treatment of Idiopathic
XYP-001 XYP-001 drugs Class Yes No Clinical trial
pulmonary fibrosis (IPF)
2.2; Class 2.4
For chronic obstructive pulmonary
disease (COPD), including relief
Chemical (emergency treatment) and
DBM-1152A DBM-1152A Yes No Clinical trial
drugs Class 1 maintenance therapy for
bronchospasm caused by chronic
bronchitis and emphysema.
Chemical
N91115 N91115 Asthma Yes No Clinical trial
drugs Class 1
Application
Chemical
JP-1366 JP-1366 Tablets Treatment of reflux esophagitis. Yes No for Clinical
drugs Class 1
trials
1. Type II Diabetes
2. It is used for the chronic weight
management in adult patients with 1.Clinical
an initial body mass index value of trials;
Therapeutic
30kg/m2 or above (obesity) or
Semaglutide Semaglutide biological 2. Approved
27kg/m2 or above (overweight) Yes No
Injection Injection product for clinical
and the presence of at least one
(Class 3.3)
weight-related complication (such trials.
as hypertension, dyslipidemia, 1.
fatty liver and obstructive sleep
apnea syndrome).
Recombinant
Novel Recombinant Novel
Coronavirus Coronavirus Fusion
Preventive Used for prevention of diseases
Fusion Protein Protein Bivalent
Biological caused by novel coronavirus Launched
Bivalent (Lintotype Yes No
products (SARS-CoV-2) infection (COVID- under EUA
(Lintotype strain/Omicron
Class 1.1 19).
strain/Omicron strain) Vaccine
strain) Vaccine (CHO cells)
(CHO cells)
Recombinant Anti-
Human IL-17A/F Therapeutic
LZM012(IL-17 Humanized biological Moderate to severe plaque
Yes No Clinical trial
A/F) Monoclonal product psoriasis
Antibody for (Class 1)
Injection
(3). Drugs (products) filed for regulatory approval and granted approval during the
Reporting Period
√Applicable □N/A
① Drugs (products) filed for regulatory approval during the Reporting Period
Registration
Name of drug Approval items Indications
Category
Salmeterol Xinafoate-
Chemical Application for Used for regular treatment of reversible obstructive
Fluticasone Propionate
drugs Class 4 market launch airway diseases through combination of drugs
Powder for Inhalation
56
Joincare Pharmaceutical Group Annual Report 2023
(bronchodilators and inhaled corticosteroids), including
asthma in adults and children.
This product is a broad-spectrum triazole antifungal drug,
which is indicated for the treatment of the following
fungal infections in adults and children aged 2 years and
above: 1. Invasive aspergillosis. 2. Candidemia in
patients with neutropenia. 3. Severe invasive infections
caused by fluconazole-resistance candida (including
Voriconazole for Oral Chemical Application for
monilia krusei). 4. Severe infections caused by
Suspension drugs Class 4 market launch
scedosporium and fusarium This product is mainly used
for the treatment of patients with progressive and
potentially life-threatening fungal infections, as well as
the prevention of invasive fungal infections in high-risk
patients undergoing allogeneic hematopoietic stem cell
transplantation (HSCT).
Aripiprazole Chemical
Application for
Microspheres for drugs Class Schizophrenia in adults.
market launch
Injection 2.2
Triptorelin Acetate Chemical
Application for
Microspheres for drugs Class Endometriosis.
market launch
Injection 2.4
Treatment of gastric ulcer, duodenal ulcer, marginal
Rabeprazole Sodium Chemical Application for ulcer, reflux esophagitis, and Zollinger-Ellison syndrome.
Enteric-coated Tablets drugs Class 4 market launch Auxiliary treatment to eradicate helicobacter pylori in
patients with gastric ulcer or duodenal ulcer.
This product is indicated for adults and are used for
Magnesium Sulfate,
intestinal cleaning before any operation that requires so
Sodium Sulfate and Chemical Application for
(such as operations that require intestinal visualization,
Potassium Sulfate drugs Class 4 market launch
including endoscopy, radiological examination and
Concentrate Oral Solution
surgery).
Tedizolid Phosphate for Chemical Application for Treatment of acute bacterial infections in skin and its soft
Injection drugs Class 4 market launch tissue.
This product acts on endometrium and can help conceive
Chemical Application for and maintain pregnancy. It is generally used for luteal
Progesterone Injection
drugs Class 3 market launch function supplementation in the treatment with assisted
reproductive technology.
Medical
Application for Treatment of tracheal stenosis caused by malignant
Tracheal stent devices Class
market launch lesions.
III
Therapeutic
Approval for
biological Recurrent or metastatic thymic carcinoma after failure of
Lipustobart for Injection conditional
product first-line chemotherapy.
market launch
(Class 1)
57
Joincare Pharmaceutical Group Annual Report 2023
This product can prevent premature ovulation in patients
Cetrorelix Acetate for
- ANDA with controlled ovarian stimulation during the treatment
Injection (USA)
with assisted reproductive technology.
It is used for the chronic weight management in adult
Therapeutic patients with an initial body mass index value of 30kg/m2
biological Application for or above (obesity) or 27kg/m2 or above (overweight) and
Semaglutide Injection
product Clinical trials the presence of at least one weight-related complication
(Class 3.3) (such as hypertension, dyslipidemia, fatty liver and
obstructive sleep apnea syndrome).
Chemical Application for
JP-1366 Tablets Treatment of reflux esophagitis.
drugs Class 1 Clinical trials
② Drugs (products) granted clinical approval during the Reporting Period
Registration
Name of drug Indications
Category
It is indicated for the management of moderate to severe pain in
adults, and can be used alone or in combination with non-
Meloxicam Nanocrystal Chemical drugs
NSAID analgesics. Due to the delayed onset of analgesia, it is
Injection Class 3
not recommended to use alone when a rapid onset of action is
required.
Alarelin Microspheres Chemical drugs
Estrogen receptor positive breast cancer during premenopause
for Injection Class 2.2 and 2.4
Alarelin Microspheres Chemical drugs
Endometriosis
for Injection Class 2.2
Asenapine Transdermal Chemical drugs
Treatment of schizophrenia in adults
Patch Class 2.2
Chemical drugs
Elagolix Sodium Tablets Treatment of moderate to severe pain related to endometriosis
Class 3
Recombinant Novel
Coronavirus Fusion Preventive
Protein Bivalent Biological Used for prevention of diseases caused by novel coronavirus
(Lintotype products Class (SARS-CoV-2) infection (COVID-19).
strain/Omicron strain) 1.1
Vaccine (CHO cells)
③ Drugs (products) granted registration approval during the Reporting Period
Registration
Name of drug Indications
classification
Indicated for the maintenance treatment of bronchoconstriction
Formoterol Fumarate Chemical drugs in patients with chronic obstructive pulmonary disease
Inhalation Solution Class 3 (COPD), including chronic bronchitis and emphysema. Used
twice a day (morning and evening) for long-term treatment.
It is indicated for the treatment of septicemia, pneumonia, lung
Chemical drugs abscess, acute bronchitis, acute exacerbation of chronic
Biapenem for Injection
Class 3 bronchitis, refractory urocystitis, pyelonephritis, peritonitis and
pelvic inflammation caused by sensitive bacteria.
It is indicated for patients with infeasible, insufficient or
contraindicated enteral nutrition to supplement fats through
Long Chain Fat Chemical drugs
parenteral nutrition. As a component of parenteral nutrition, it
Emulsion Injection (OO) Class 4
provides fats including refined olive oil and soybean oil
necessary for the human body.
58
Joincare Pharmaceutical Group Annual Report 2023
Ilaprazole Sodium for
Chemical drugs
Injection (New Prevention of stress ulcer bleeding in severe patients
Class 2.4
Indications)
Triptorelin Acetate
Chemical drugs Prostate cancer patients requiring androgen deprivation
Microspheres for
Class 2.2 therapy.
Injection
Therapeutic
biological 1. Rheumatoid arthritis (RA); 2. Systemic juvenile idiopathic
Tocilizumab Injection
product (Class arthritis (sJIA), and cytokine release syndrome (CRS)
3.3)
Chemical drugs
Blonanserin Tablets Schizophrenia.
Class 4
Quetiapine Fumarate
Chemical drugs This product is used to treat schizophrenia and paralepsy of
Sustained-release
Class 4 bipolar disorder.
Tablets
Treatment of invasive aspergillosis. Treatment of severe
invasive infections caused by fluconazole-resistance candida
Voriconazole for Chemical drugs (including monilia krusei) Treatment of severe infections
Injection Class 4 caused by scedosporium and fusarium This product is mainly
used for the treatment of immunodeficient patients with
progressive and potentially life-threatening fungal infections.
Recombinant Novel
Coronavirus Fusion
Preventive
Protein Bivalent
Biological Used for prevention of diseases caused by novel coronavirus
(Lintotype
products Class (SARS-CoV-2) infection (COVID-19).
strain/Omicron strain)
1.1
Vaccine (CHO cells)
(EUA)
1. Prevention and treatment of rejection reaction or graft-
versus-host reaction after allogeneic organ transplantation or
Cyclosporine Softgels
bone marrow transplantation. 2. Treatment of autoimmune
(under consistency Chemical drugs
diseases such as lupus nephritis and refractory nephrotic
evaluation)
syndrome undergoing ineffective treatment with other
immunosuppressive treatments.
Intravenous infusion of this product is indicated for infections
caused by methicillin-resistant staphylococcus aureus and
Vancomycin other bacteria: septicemia, infective endocarditis,
Hydrochloride for osteomyelitis, arthritis, burns, surgical trauma and other
Chemical drugs
Injection (under superficial secondary infections, pneumonia, lung abscess,
consistency evaluation) empyema, peritonitis and meningitis. It may be administered
orally for antibiotic-associated pseudomembranous colitis due
to clostridium difficile and staphylococcal enterocolitis.
Bismuth potassium
Used for gastric and duodenal ulcers, and chronic superficial
citrate capsules (under Chemical drugs
gastritis with helicobacter pylori infection.
consistency evaluation)
Medical devices Administer liquid medication to patients via inhalation by
Mesh nebulizer
Class II nebulization
(4). Cancellation of main R&D projects or the failure to obtain approval for drugs
(products) during the Reporting Period
□Applicable √N/A
(5). R&D accounting policy
√Applicable □N/A
59
Joincare Pharmaceutical Group Annual Report 2023
The research and development (R&D) expenses of our company consist of expenses directly related
to R&D activities, including salaries of R&D personnel, direct input costs, depreciation and
amortization of long-term assets, equipment debugging costs, amortization of intangible assets,
expenses for outsourcing research and development, clinical trial expenses, and other expenses.
Among these, the salaries of R&D personnel are allocated to R&D expenses based on project hours.
Equipment, production lines, and premises shared between R&D activities and other production
operations are allocated to R&D expenses based on the proportion of hours or area utilized.
Expenditures on an internal research and development project are classified into expenditures on
the research phase and expenditures on the development phase.
Expenditures on the research phase shall be recognized in profit or loss for the current period when
incurred.
Expenditures on the development phase will be capitalized only when all of the following conditions
are satisfied: it is technically feasible to finish the development of the intangible asset so that it will
be available for use or sale; the Company intends to finish the development of the intangible asset
and use or sell it; it can be demonstrated how the intangible asset will generate economic benefits,
including proving that the intangible assets or the products produced by it will have markets, or the
intangible assets for internal use will be useful; there are adequate technical, financial and other
resources to complete the development and the Company is able to use or sell the intangible assets;
and expenditures on the development phase attributable to the intangible assets can be reliably
measured. The development expenditures that do not satisfy the above conditions shall be
recognized in profit or loss for the current period.
Our research and development projects enter the development stage after meeting the above
conditions and forming the project through the technical and economic feasibility studies.
Capitalized expenditures on the development phase are shown as development expenditures on the
balance sheet and reclassified as intangible assets on the date the project meets the intended purpose.
Capitalization conditions for specific research and development projects are as follows:
① For research and development projects that are not required to obtain clinical approvals, the
period from the beginning of research and development to before the pilot phase is treated as the
research phase, and all expenditures shall be recognized in profit or loss for the current period when
incurred; the period from the pilot phase to the obtaining of production approvals is treated as the
development phase, and all expenditures shall be recognized as development expenditures and
reclassified as intangible assets after the obtaining of production approvals.
② For research and development projects that require clinical approval, the period from the
beginning of research and development to the obtaining of clinical approval is treated as the research
phase, and all expenditures incurred shall be recognized in profit or loss for the current period when
60
Joincare Pharmaceutical Group Annual Report 2023
incurred; the period from the obtaining of clinical approval to the obtaining of production approval
is treated as the development phase, and the expenditures shall be recognized as development
expenditures and reclassified as intangible assets after the obtaining of production approval.
③The purchase price of the purchased external technology or formula is recognized as development
expenditures, and subsequent research and development expenditures are accounted for in
accordance with ① and ② above.
④The Company reviews the latest research and development status of each project at the end of
each year and if the research and development project no longer qualifies for the development stage,
the corresponding development expenditure are recognized in profit or loss for the current period.
⑤Where it is impossible to differentiate the expenditures on the research phase and the expenditures
on the development phase, all the research and development expenditures are recognized in profit
or loss for the current period.
(6). R&D expenditures
Horizontal comparison
√Applicable □N/A
Unit: 10,000 Yuan Currency: RMB
Proportion of Ratio of
Proportion of
R&D capitalized R&D
Comparable peer R&D
R&D expenditures amount expenditures to expenditures
companies expenditures to
revenues (%) (%)
net assets (%)
Fosun Pharma 588,500.00 13.39 10.88 26.90
Kelun Pharma 181,489.48 9.60 10.75 1.09
CR Double-Crane 72,240.26 7.65 6.73 34.29
Humanwell Healthcare
113,397.67 5.08 6.32 14.74
(Group)
North China
60,909.32 5.80 9.78 64.32
Pharmaceutical
Average R&D expenditures in the same industry 203,307.35
Proportion of R&D expenditures to revenues during 9.80
the Reporting Period (%)
Proportion of R&D expenditures to net assets during 7.21
the Reporting Period (%)
Ratio of capitalized R&D expenditures during the 16.82
Reporting Period (%)
Notes: 1. The data regarding comparable companies listed above are from each company's 2022
annual report;
2. The average R&D expenditures in the same industry is the arithmetic average of the R&D
expenditures of five comparable companies listed above.
Statement on material changes in R&D expenditures and rationality of R&D expenditures
proportion and capitalization proportion
□Applicable √N/A
61
Joincare Pharmaceutical Group Annual Report 2023
Investment in major R&D projects
√Applicable □N/A
Unit: 10,000 Yuan Currency: RMB
Proportion of
R&D Expensed Capitalized
R&D YoY
R&D project expenditur R&D R&D
expenditures to change (%)
es amount expenditures expenditures
revenues (%)
Indacaterol Maleate Powder
488.52 - 488.52 0.03 -62.95
for Inhalation
Salmeterol Xinafoate and
Fluticasone Propionate 2,403.94 - 2,403.94 0.14 -20.98
Powder for Inhalation
TG-1000 6,783.83 2,313.62 4,470.21 0.41 -
XYP-001 1,230.89 322.45 908.44 0.07 -52.46
DBM-1152A 1,532.41 1,532.41 - 0.09 -
N91115 501.48 501.48 - 0.03 -
JP-1366 12,253.77 1,234.78 11,019.00 0.74 -
Semaglutide Injection 8,476.38 1,796.10 6,680.28 0.51 392.69
Recombinant Novel
Coronavirus Fusion Protein
Bivalent (Lintotype 8,125.85 8,125.85 - 0.49 -
strain/Omicron strain)
Vaccine (CHO cells)
LZM012(IL-17 A/F) 7,238.63 7,238.63 - 0.43 84.08
Notes:
The main reason for the quite significant YoY change in our R&D expenditure is that our R&D projects were in
different R&D stages during the Reporting Period, and certain projects mentioned above were acquired by the
company during the current reporting period.
3. Sales of drugs (products) of the Company
(1). Analysis of main sales model
√Applicable □N/A
Please refer to the “Overview on the businesses of the Company during the Reporting Period” in
this Chapter.
(2). Analysis of selling expenses
Components of selling expenses
√Applicable □N/A
Unit: 10,000 Yuan Currency: RMB
Amount incurred in the Proportion of amount incurred in the
Item
current period current period to total selling expenses (%)
Business promotion expenses 377,725.97 85.18
Employee compensation 50,204.04 11.32
Entertainment and travel
6,659.74 1.50
expenses
Business meeting expenses 2,716.72 0.61
Others 6,137.75 1.38
Total 443,444.23 100.00
Horizontal comparison
√Applicable □N/A
Unit: 10,000 Yuan Currency: RMB
62
Joincare Pharmaceutical Group Annual Report 2023
Proportion of selling expenses to
Comparable peer companies Selling expenses
revenues (%)
Fosun Pharma 917,117.61 20.87
Kelun Pharma 468,594.77 24.78
CR Double-Crane 265,604.45 28.12
Humanwell Healthcare (Group) 427,470.75 19.14
North China Pharmaceutica 184,406.86 17.56
Total selling expenses of the Company during the Reporting Period 443,444.23
Proportion of selling expenses to revenues during the Reporting
26.64
Period (%)
Note: The data regarding comparable companies listed above are from each company's 2022 annual report.
Statement on material changes in selling expenses and reasonableness of selling expenses
√Applicable □N/A
During the Reporting Period, the Company's selling expenses were RMB4,434.44 million,
accounting for 26.64% of revenues, representing a year-on-year decrease of 10.43%. Looking
forward, the Company will continue to deepen the reform of the marketing system to optimize sales
channels and increase the cost efficiency for high profitability.
4. Others
□Applicable √N/A
(V) Analysis of investments
Overall analysis of equity investments
√Applicable □N/A
During the Reporting Period, the Company carried out strategic investments in accordance with
our development plans as follow:
63
Joincare Pharmaceutical Group Annual Report 2022
1. Major equity investment
√Applicable □N/A
Unit: 10,000 Yuan Currency: RMB
Whether Litig
In the Item on the
the target is Percenta Impact of ation
Consolidation financial Source Investment Status as of Expected Disclosure Disclosure
Name of Principal primarily Investment Investment ge of Partner (if gain or loss invo
scope of the statement of period (if balance return (if date (if index (if
investee business engaged in method amount sharehold applicable for the lved
Company or (if funds any) sheet date any) any) any)
investment ing period or
not applicable)
business not
Engaged in
investment
activities with its
Wuhan Kangli own funds; asset
Health management Capital
Investment services invested contribution
Management Please see Please see
with its own New Own Livzon of RMB100
Co., Ltd. (武汉 Yes 100,000 67.20% Yes N/A Long term - -0.04 No Note 1 for Note 1 for
funds; corporate establishment funds Group thousand
details details
康丽健康投资 management; was
管理有限公 entrepreneurship completed
司) investment and
financing
advisory
services.
Engaged in
production of
veterinary
medicine;
operation of
Lijian veterinary
(Guangdong) medicine; import Capital
Animal and export of contribution
Healthcare goods and of Please see Please see
New Own Livzon
Co., Ltd. (丽健 technology and No 20,000 72.12% Yes N/A Long term RMB150.0 - -1,577.99 No Note 2 for Note 2 for
establishment funds Group
sale of 0 million details details
（广东）动物
disinfectors was
保健有限公 (excluding completed
司) dangerous
chemicals) and
animal health
products;
technical
advisory services
64
Joincare Pharmaceutical Group Annual Report 2022
on animal
breeding, etc.
General items:
research and
development of
industrial
enzymes;
research and
development of
fermentation
process
optimization
technology;
biological feed
research and
development
(except for the
items subject to
approval
Jiaozuo according to law, Capital
Joincare Bio business contribution
Technological activities shall be of
Capital Own
carried out No 20,000 100.00% Yes N/A N/A Long term RMB200.0 - 19,525.75 No N/A N/A
Co., Ltd.(焦作 injection funds
pursuant to the 0 million
健康元生物制
business license was
品有限公司) independently completed
according to law)
Licensed items:
pharmaceutical
production;
production of
feed additives
(for items subject
to approval
according to
laws, the relevant
operation
activities may be
carried out only
after approval by
relevant
authorities, and
the specific
65
Joincare Pharmaceutical Group Annual Report 2022
operation items
shall be subject
to approval
documents or
licenses by
relevant
authorities)
Total / / / 140,000.00 / / / / / / / - 17,947.72 / / /
Note 1: For details, please refer to the Announcement of Joincare Pharmaceutical Group Industry Co., Ltd. on the Establishment of the Joint Venture with Livzon Group, a Controlling
Subsidiary (Lin 2022-142) disclosed by the Company on 13 December 2022;
Note 2: For details, please refer to the Announcement on Investment in the Establishment of the Joint Venture with Joincare, the Controlling Shareholder and Connected Transaction disclosed
by Livzon Group (000513.SZ, 01513.HK) on 17 January 2023.
2. Major non-equity investment
□Applicable √N/A
3. Financial assets measured at fair value
√Applicable □N/A
Unit: Yuan Currency: RMB
Amount of
Gain or loss on Accumulated
Amount at the Impairment Amount of disposal /
change in fair change in fair Amount at the end
Type of assets beginning of the provision for purchase during redemption Other change
value for the value included in of the period
period the period the period during the
period equity
period
Shares 235,534,124.87 -24,381,075.99 -47,547,131.07 - 6,183,753.83 - - 169,789,671.64
Funds 688,053,816.62 3,298.53 -60,605,611.86 - - 20,271,628.35 - 607,179,874.94
Derivatives 5,432,511.57 -2,295,776.28 - - - - - 3,136,735.29
Others 373,954,090.97 585,021.31 53,565,146.76 - 30,000,000.00 27,978.31 3,279.44 458,076,280.73
Total 1,302,974,544.03 -26,088,532.43 -54,587,596.17 - 36,183,753.83 20,299,606.66 3,279.44 1,238,182,562.60
Information on investment in securities
√Applicable □N/A
66
Joincare Pharmaceutical Group Annual Report 2022
Unit: Yuan Currency: RMB
Carrying Gain or loss on Accumulated Amount of Carrying
Initial Amount of Profit or
Type of Securities Securities Source of amount at the change in fair change in fair purchase amount at the Accounting
investment disposal during loss for
securities code abbreviation fund beginning of the value for the value included during the end of the item
cost the period the period
period period in equity period period
Financial
Kunlun Own
Share 00135 4,243,647.64 4,975,513.90 1,404,274.90 - - - 260,579.14 6,379,788.80 assets held
Energy funds
for trading
Financial
Own
Fund 206001 Penghua Fund 150,000.00 934,289.94 3,298.53 - - - - 937,588.47 assets held
funds
for trading
Financial
Huadong Own
Share 000963 39,851.86 15,425,841.60 -1,760,128.08 - - - 95,587.48 13,665,713.52 assets held
Medicine funds
for trading
Beam Financial
Own
Share BEAM(US) Therapeutics, 31,117,151.47 82,218,236.97 -24,025,222.81 - - - - 58,193,014.16 assets held
funds
Inc. for trading
Elicio Other equity
Own
Share ELTX(US) Therapeutics, 35,363,302.05 34,823,014.36 - -27,002,953.43 - - - 7,820,060.93 instruments
funds
Inc. investment
Carisma Other equity
Own
Share CARM(US) Therapeutics, 38,807,266.00 34,821,295.50 - -26,098,003.75 6,183,753.83 - - 14,907,045.58 instruments
funds
Inc. investment
LLAI Other equity
LungLife Ai, Own
Share 58,837,745.24 9,615,483.94 - -4,010,721.79 - - - 5,604,762.15 instruments
（LME） Inc. funds
investment
Luzhu Other equity
Own
Share 02480 Biotech- 30,000,00- 53,654,738.60 - 9,564,547.90 - - - 63,219,286.50 instruments
funds
B investment
Financial
Own
Others - - 27,978.31 29,271.00 -1,292.69 - - 27,978.31 3,279.44 - assets held
funds
for trading
Total / / 198,586,942.57 / 236,497,685.81 -24,379,070.15 -47,547,131.07 6,183,753.83 27,978.31 359,446.06 170,727,260.11 /
Statement of investments in securities
□Applicable √N/A
67
Joincare Pharmaceutical Group Annual Report 2022
Information on investment in private equity fund
√Applicable □N/A
The Company had no new private equity funds invested during the reporting period. As at the end of the reporting period, the book balance of private equity funds
invested by the Company amounted to approximately RMB385 million.
Information on investment in derivatives
√Applicable □N/A
(1) Derivative investments for hedging purposes during the reporting period.
√Applicable □N/A
Unit: 10,000 Yuan
Percentage of
Carrying Gain or loss on Accumulated Amount of Amount of Carrying
investment amount to
Initial investment amount at the change in fair change in fair purchase disposal amount at the
Type of derivatives investment the net assets of the
amount beginning of value for the value included in during the during the end of the
Company at the end
the period period equity period period period
of the period(%)
Forward foreign exchange 223,365.24 46,113.94 -162.70 - 176,731.57 188,649.06 35,683.35 1.58
Total 223,365.24 46,113.94 -162.70 - 176,731.57 188,649.06 35,683.35 1.58
Explanation as to whether there has
been a material change in the
accounting policy and accounting
principles for the Company’s No material change
derivatives during the Reporting
Period as compared with the
previous reporting period
Explanation of actual gain or loss
The gain or loss realized during the Reporting Period was RMB-23.0238 million yuan.
during the Reporting Period
The company's foreign exchange derivative transactions are conducted around the actual foreign exchange receipts and payments of the company.
Explanation of hedging effect Adhering to the principle of exchange rate neutrality and based on specific operational activities, the company aims to mitigate adverse effects caused by
significant exchange rate fluctuations and avoid foreign exchange market risks.
Source of funds for derivatives
Own funds
investment
68
Joincare Pharmaceutical Group Annual Report 2022
To effectively manage the uncertainty of exchange rate fluctuations on assets denominated in foreign currency of the Company, foreign exchange forward
contracts and other financial derivatives are employed to lock relevant exchange rates for the purpose of hedging. The Company has formulated the
Management System for Financial Derivatives Trading (《金融衍生品交易业务管理制度》) in relation to the operation and control of foreign exchange
derivatives: 1. Market risk: the uncertainty of exchange rate fluctuations in the foreign exchange market has led to higher market risk in foreign exchange
forward business. Control measures: The Company’s foreign exchange forward business is entered into for hedging exchange rate risk associated with assets
denominated in US dollar and lock the future exchange settlement price of such assets. It is designed to be used as a hedging instrument. Such foreign
exchange derivatives shall not be used for speculative trading. The principle of prudence and conservation shall be observed so as to effectively prevent
market risk. 2. Operational risk: operational risk arises from imperfect internal process, improper operation, system failure and other factors. Control
measures: The Company has formulated the corresponding management measures, clearly defined the responsibilities of all parties, improved the review
and approval process and established supervisory mechanism, so as to effectively reduce operational risk. 3. Legal risk: The Company’s foreign exchange
forward business is subject to applicable laws and regulations, and shall clearly stipulate the relationship of rights and obligations with financial institutions.
Control measures: In addition to strengthening the knowledge of laws and regulations and market rules in the Company’s responsible department, the
Risk analysis of derivatives position Company’s legal department shall also strictly review various business contracts, agreements and other documents, specify the rights and obligations, and
held during the Reporting Period strengthen compliance inspection, so as to ensure that the Company’s investment and operation in derivatives have met the requirements of applicable laws
and explanation of control measures and regulations as well as the Company’s internal systems.
(including but not limited to market
In order to manage the uncertainty risk caused by price fluctuations of bulk commodities on the purchase cost of raw materials of the Company, financial
risk, liquidity risk, credit risk,
derivatives such as commodity futures contracts are employed to hedge raw materials. The Company has formulated the Internal Control System for
operational risk, legal risk, etc.)
Commodity Futures Hedging Business (《商品期货套期保值业务内部控制制度》) to standardize the management and risk control of commodity
futures derivatives: 1. Market risk: the uncertainty of price changes of bulk commodities has led to greater market risk in futures business. Control
measures: The Company’s futures hedging business shall not carry out speculative trading, the operation principle of prudence and conservation shall be
observed, the number of hedging transactions shall be strictly limited, such that it does not exceed the actual number of spot transactions, and the futures
position shall not exceed the spot volume for hedging purpose. 2. Operational risk: operational risk arises from imperfect internal process, improper
operation, system failure and other factors. Control measures: The Company has formulated the corresponding management system, clearly defined the
division of responsibilities and approval process, and established an improved supervisory mechanism, so as to effectively reduce operational risk through
risk control of business process, decision-making process and transaction process. 3. Legal risk: The Company’s commodity futures hedging business is
subject to applicable laws and regulations, and shall clearly stipulate the relationship of rights and obligations with financial institutions. Control
measures: In addition to strengthening the knowledge of laws and regulations and market rules in the Company’s responsible department, the Company’s
legal department shall also strictly review various business contracts, agreements and other documents, specify the rights and obligations, and strengthen
compliance inspection, so as to ensure that the Company’s investment and operation in derivatives have met the requirements of applicable laws and
regulations as well as the Company’s internal systems.
Change in market price or fair value
of the derivatives invested during
the Reporting Period, the specific
Gains and losses arising from change in fair value of the forward foreign exchange contracts, option contracts and commodity futures contracts during the
method, related assumptions and
Reporting Period were RMB-1.6270 million.
parameters used in the analysis of
the fair value of derivatives shall be
disclosed
Litigation involved (if applicable) Not applicable
69
Joincare Pharmaceutical Group Annual Report 2022
Disclosure date of the
announcement in relation to the
7 April 2023
approval of investment in
derivatives by the Board (if any)
Disclosure date of the
announcement in relation to the
approval of investment in Not applicable
derivatives by the general meeting
of shareholders (if any)
(2). Derivative investments for speculative purposes during the reporting period.
□Applicable √N/A
70
Joincare Pharmaceutical Group Annual Report 2023
4. Progress of Material Asset Restructurings of the Company during the Reporting Period
□Applicable √N/A
(VI) Sale of major assets and equity
□Applicable √N/A
(VII) Analysis of major controlled and invested companies
√Applicable □N/A
Unit: 10,000 Yuan
Nature of Registered Operating
Company Main products and services Total assets Net assets Revenues Net profit
business capital profit
R&D, production and sale of oral
liquids, tablets (hormone-
containing), aerosols (including
Taitai hormone-containing aerosols),
Industry 10,000 48,736.59 34,504.23 27,194.40 8,918.35 7,687.52
Pharmaceutical inhalation formulations (solution for
inhalation) (hormone-containing),
nasal sprays (hormone- containing),
and dietary supplements
Powders for injection (including
penicillin-containing powders),
tablets, hard capsules, APIs, sterile
APIs, inhalation formulations
Haibin Pharma Industry 70,000 163,228.18 107,840.72 99,227.74 15,457.17 15,037.88
(solution for inhalation), powders
for inhalation, pharmaceutical
excipients, R&D technical services,
and testing technical services
Manufacturing and sale of
pharmaceutical intermediates and
Xinxiang
Industry APIs (excluding proprietary Chinese 17,000 47,438.09 33,391.11 69,978.68 6,186.48 5,381.50
Haibin
medicine or TCM decoction pieces)
(excluding hazardous chemicals)
R&D, production, storage,
transportation and sale of chemical
APIs (including intermediates) and
Joincare Haibin Industry pharmaceuticals. Import and export 50,000 137,417.36 122,363.16 83,518.52 46,844.92 40,228.10
business and domestic trading
(excluding State controlled or
franchised goods)
Production and sale of self-produced
Health
Industry dietary supplements, TCM HKD7,317 14,545.40 10,124.80 4,620.46 1,124.22 772.06
Pharmaceutical
decoction pieces, and drug products
R&D of new pharmaceutical
products, dietary supplements,
medical devices, diagnostic
Shanghai reagents, and pharmaceutical
Industry 5,000 16,780.11 11,305.79 10,028.84 3,056.98 2,843.91
Frontier intermediates, and provision of
relevant technical consulting,
technical services and technology
transfer
R&D, production and sale of
pharmaceuticals, chemical APIs,
Jiaozuo
Industry biological APIs, pharmaceutical 70,000 179,139.15 128,261.93 147,394.06 22,898.14 20,173.56
Joincare
intermediates, and biological
products
Topsino Commerce Investment and trading HKD89,693 210,221.50 157,325.19 0.00 29,807.20 29,517.54
Drug R&D, production,
Livzon Group Industry 92,394 2,504,482.71 1,476,670.30 1,243,003.83 241,510.85 189,760.10
manufacturing and sale
Notes: 1. The companies listed above are companies where the Company directly or indirectly held 100% equity interest, exceptfor
Livzon Group and Shanghai Frontier; financial data thereof are data of individual accounting statements and that attributed toparent
companies; as there are transactions between subsidiaries or between a subsidiary and the Company, data of individual financial
statements are not separately analyzed.
2. For business conditions of Livzon Group, please refer to the 2023 Annual Report of Livzon Pharmaceutical Group Inc.
(VIII) Structured entities controlled by the Company
□ Applicable √N/A
VI. Discussion and analysis of the Company's future development
71
Joincare Pharmaceutical Group Annual Report 2023
(I) Industry landscape and trend
√Applicable □N/A
For details, please refer to the “Basic information on industry” in this chapter.
(II) Company's strategies for business development
√Applicable □N/A
Taking scientific and technological innovation as a strategic priority and executing our dual-drive
strategy of developing platforms of both innovative medicines and high-barrier complex
formulation, we have been evolving into a world-wide influential innovative pharmaceutical
enterprise paying great attention to people's livelihood and actively undertaking social
responsibilities. Over the years, the Company has been committed to developing itself in the
pharmaceutical field, and has grown into an integrated pharmaceutical enterprise covering multiple
areas including chemical pharmaceuticals, biologics, chemical APIs and intermediates, traditional
Chinese medicine, diagnostic reagents and equipment. In the future, the Company will continue to
increase R&D expenditures to improve its research and innovation capacity, accelerate the
optimization and adjustment of its product structure, fully leverage its existing market advantages,
and actively deepen the reform of the marketing system, to promote its sustainable and steady
business growth.
(III) Business plan
√Applicable □N/A
In 2023, Joincare made great efforts to overcome difficulties to seek development, concentrated on
improving quality and efficiency, and thus harvested all hard-won achievements. In 2024, a crucial
year to realize the objectives and tasks of China’s “14th Five-Year Plan”, the Company will
strengthen the two-wheel drive strategy of “innovative drugs + high-barrier complex formulations”,
accelerate the transformation to an innovative pharmaceutical enterprise with international
competitiveness, comprehensively enhance its own sustainable development capacity through
digital and intelligent new technologies and new models, actively respond to changes in industry
policies, as well as continuously deepen market promotion. The main focus of work for each
business segment of the Company is as follows:
1. R&D Center
In the government work report of the Second Session of the 14th National People’s Congress in
2024, the term “innovative drugs” was written into the government work report for the first time,
and the pharmaceutical-related areas of focus like promoting innovations in traditional Chinese
medicines and improving centralized procurement of drugs were also widely concerned. The
Company will continue to strengthen and improve its independent research and development system,
efficiently promote the R&D and clinical development progress of existing innovative drugs such
as TG-1000, DBM-1152A, FZ008-145 and JP-1366, as well as high-barrier complex formulations
such as Salmeterol Xinafoate-Fluticasone Propionate Powder for Inhalation and Meloxicam
Nanocrystal Injection around several advantageous fields including respiratory diseases,
Gastroenterology, psychiatry, assisted reproduction and anti-tumor, and build a differentiated
product pipeline layout. It will accelerate the construction of a R&D platform, fully push forward
the commercialization of these technical platforms for innovative drugs, inhalation formulations,
sustained-release microspheres, monoclonal antibodies, micro-nanocrystalline formulations, and
ensure continuous output of these products in its core advantage areas. Targeting core R&D talents,
it will introduce such talents through various channels to enrich its human resources, further
strengthen the construction of a talent pool, and maintain continuous technological innovations. In
the meantime, the Company will focus on advantageous areas, establish market-oriented thinking
of products, face unmet clinical needs, and pay constant attention to international cutting-edge
72
Joincare Pharmaceutical Group Annual Report 2023
technologies and product international layout opportunities. Through various means including
cooperative development and licensing, the Company has introduced more innovative drug projects
and improved its product combinations in such advantageous areas. As at the disclosure date of this
Report, the Company has completed the cooperative introduction of innovative drugs, i.e., QX008N
and BA2101. In the future, the Company will deepen international cooperation in respect of
innovative drugs and leverage its partnership with the International Finance Corporation (IFC) to
promote its internationalization strategy and achieve sustainable development.
2. Sales Center
The key tasks in prescription drug marketing of the Company are as follows: Firstly, continuously
reinforce the sales team, enhance combat capability of the team, establish a sound management
mechanism for sales personnel, and further optimize the performance evaluation system to ensure
smooth realization of the annual target. Secondly, further improve the cooperation mechanism,
strengthen the cooperation and coordination among these departments for marketing, medicine,
digital development, commerce, bidding, etc., support the sales function, integrate overall resources,
ensure accurate and efficient resource input, concentrate on the access of key products in key
hospitals, as well as give full play to the status of new national negotiation drugs including
Tobramycin Inhalation Solution and the policy advantages like “dual channels”, and open up “the
last mile” of drug negotiation and admission to improve drug accessibility and ensure drug supply.
Thirdly, optimize the compliance marketing system, further improve the compliance management
system, and upgrade the risk pre-warning and disposal mechanism and the sales accountability and
evaluation mechanism by regularly carrying out sales compliance trainings and cultural construction,
so as to improve the sales risk management level and thus escort steady progress in the future.
Fourthly, enhance the public awareness of chronic disease management through multi-channel
marketing and promotion. And meanwhile with the help of such platforms as “Respiratory Experts’
Views” and “Gastroenterology Experts’ Views”, carry out patient education activities online,
organize free clinical treatment to communities offline, as well as elevate patients’ management
level and awareness of chronic systemic diseases through double-line linkage medical services, thus
contributing to Health China 2030.
In terms of marketing and promotion of APIs and intermediates, pay equal attention to both
international and domestic markets. As to the international market, constantly deepen cooperation
with global strategic customers, explore market segments, actively develop customer resources,
maintain cooperative partnerships, give full play to the advantages of corporate brand, and form a
long-term, stable and win-win cooperation model with strategic partners; establish a good brand
reputation in the global market through close cooperation with international first-class enterprises;
and meanwhile keep a close eye on the changes in exchange rate and market conditions, and adjust
sales strategies in a timely manner. As to the domestic market, pay close attention to the development
trend of the industry, fully grasp the market opportunities such as national centralized procurement,
make overall plans, optimize cost and product quality, and achieve steady progress.
In terms of healthcare and OTC marketing, focus on brand promotion and user enhancement, build
a brand-driven business flow, organizational structure and talent system, further implement digital
marketing system, drive sustainable business growth by virtue of brand, constantly strengthen
“online + offline” collaborative linkage to drive offline channel sales, continuously promote
organizational structure reform, channel deep distribution and key chain cooperation through offline
channels, increasingly promote digital marketing system, off-site drainage and on-site linkage
through online channels based on market resources, as well as deeply embrace platform promotion
and holiday marketing, and promote online channel sales through platform promotion and holiday
gift boxes. In terms of content marketing, continuously expand the number of KOL cooperation,
break through the audiences from vertical to non-vertical KOL, and constantly expand brand
73
Joincare Pharmaceutical Group Annual Report 2023
exposure; as well as improve the closed loop in multi-channel stations, introduce self-streaming and
reach streaming, and perfect the efficiency of content marketing. In terms of brand marketing and
construction, cooperate deeply with offline channel chains, establish a trinity offline marketing
system of chain-regional market-users, make use of brands to drive offline marketing, widen
industry endorsement, deepen cooperation with industry associations and professional forums
together with official media, strengthen brand professionalism, as well as carry out corresponding
joint cooperation on platform promotion and holiday marketing to expand brand exposure and
further enhance brand sales. In terms of user operation, enhance the experience of users, provide
them with a professional and intimate service system from only just solving user problems to valuing
brand dimension, and attach importance to user experience. And meanwhile, optimize core business
flows, support business organization adjustment and elevate talent capabilities based on the new
growth model.
3. Production Center
Adhere to the transformation and upgrading towards intelligent manufacturing, apply digital and
information management monitoring and traceability approaches, and adopt lean production and
lean management ideas to improve product quality, reduce production costs and lower energy
consumption costs, thereby comprehensively enhancing product competitiveness; stick to safety
production, focus on product quality, continuously build a quality management system, carry out
risk control centered on product quality, make extensive inspections to raw and auxiliary materials,
production sites and production processes, identify safety production risks according to the six GMP
testing systems, continuously optimize the entire product production process by introducing green
synthesis technology and adopting synthetic biology technology, improve employee training system
to continuously enhance their professional skills and ensure uniform and stable product quality;
persist in cost reduction and efficiency increase, optimize production, improve system and
streamline management by introducing advanced technologies and equipment, and effectively
improve the levels of production and operation around cost reduction and efficiency increase; as
well as persevere in green development, continuously uphold and carry forward the concept of green,
healthy and sustainable production, upgrade environmental protection and quality standards and
requirements, set environmental goals, strengthen monitoring over energy consumption, pollutant
emissions and other environmental information during production and operation, and implement
energy-saving, emission reduction and green production in practice. And meanwhile actively
promote international certification of the Company’s products, make an advance layout by taking
advantage of the opportunity that China becomes a formal applicant for PIC/S, complete GMP
inspections subject to international standards, and promote the Company’s production and quality
management levels to align with international standards.
4. Functions and strategies
The key tasks in the functional areas of the Company are as follows: Firstly, further improve the
organizational structure and institutional setup of these subsidiaries under the Group,
comprehensively promote lean management, as well as reduce costs and increase efficiency.
Secondly, continuously value talents and systems, implement a target management system that
combines OKR and KPI, implement quarterly rolling dynamic tracking and adjustment, and require
all departments to cooperate closely and give full support to provide strong services and guarantees
for R&D, production and sales. Thirdly, continue to promote corporate cultural progress, and further
publicize corporate culture of the Group and its subsidiaries, so as to enhance cohesive and
centripetal forces. Fourthly, actively leverage the resource advantages of internal and external
business cooperation and invest in the layout and introduction of innovative products and
technologies to enhance the overall strategic layout. Fifthly, actively practice corporate social
responsibility, strive to enhance corporate governance level and expedite high-quality and
74
Joincare Pharmaceutical Group Annual Report 2023
sustainable development.
(IV) Potential risks
√ Applicable □ N/A
1. Risks of changes in industrial policies
The pharmaceutical manufacturing industry is significantly affected by changes in industrial
policies. The pharmaceutical industry will face great challenge in development in the future with
continuous deepening of medical reform, advancement of supply-side structural reform in the
industry, revision of Drug Administration Law, acceleration of consistency evaluation of generic
drugs, adjustment of the new edition of National Reimbursement Drug List, expansion of volume-
based procurement, centralized rectification of the pharmaceutical industry and other industrial
policies that have been successively launched. In November 2023, the Company’s key product
Levosalbutamol Hydrochloride Nebulizer Solution (盐酸左沙丁胺醇雾化吸入溶液) was selected
in the ninth batch of national volume-based drug procurement. This is expected to be implemented
in March 2024 and it is anticipated to have a significant impact on the sales price and market share
of this product.
Response measures: The Company will pay close attention to industry dynamics and reforms, cope
with major changes in policies of the pharmaceutical industry through early planning,
transformation and compliance, and further establish and improve its compliant operation
mechanism and system. It will actively strengthen new product R&D and innovation and constantly
improve its core competitive strengths. Meanwhile, the Company actively engages in the access to
the national reimbursement drug list and negotiation, and continue to increase the coverage of
hospitals and sales, to realize the objective of “price for quantity”, so as to reduce the impact of
price adjustment on the Company’s steady growth. The volume-based drug procurement is
becoming a regular practice. In the face of the volume-based drug procurement and the possible
impact on the business performance of the Company, the Company will continue to enhance its
innovative efforts, boost its competitive edge, and strive to ensure the stable operation of the
business. With the Company’s new high-barrier complex formulations, represented by inhalation
formulations, being launched on the market, commercialization will gradually enter a stable
contribution period. The Company’s product structure will be further optimized, and the reliance on
specific products will also gradually reduce. In the future, relying on combining independent R&D,
external introduction and cooperative development, the Company will continue to innovate and
develop clinically needed innovative drugs with substantial added value, as well as high-barrier
complex formulations. It will delve into products with market potential and technological barriers,
actively advance post-market evaluations for key products, and conduct consistency evaluations for
related products. The Company will continuously optimize its product portfolio and actively explore
and expanding into international markets to promote the sustained and steady development of sales
performance.
2. Market risk
With advancement of supply-side structural reform in the pharmaceutical manufacturing industry
and two invoice policy in circulation domain, pharmaceutical market structure is deeply changed.
With the gradual standardization and centralization of the market, competition in the pharmaceutical
industry becomes increasingly fierce. Affected by increasingly stricter drug regulation, policy-based
drug price reduction, price cutting during bidding, medical insurance premium control, and
minimum procurement commitment of the pharmaceutical industry in current stage, bid winning
price of drugs will be further lowered, competition among enterprises in the industry will be
intensified, and price war will occur frequently, thus the Company will be at the risk of drug price
reduction.
75
Joincare Pharmaceutical Group Annual Report 2023
Response measures: The Company will establish a more reasonable market system through strict
compliance operation so as to maintain its dominant position and core competitive strengths, and
ensure that it can achieve sustainable and steady development and improve its profitability by
reinforcing marketing. Meanwhile, the Company will offset the impact of product price reduction
by means of price supplement based on quantity, and optimize technical process and reduce
production costs through internal exploration and transformation. Moreover, the Company will
speed up the R&D and marketing of new products, spread risks of the Company while expanding
the range of existing products in segment markets, improve sales and form new profit growth point
by increasing product varieties in the future.
3. Risk of safety and environmental protection
The Company is an integrated pharmaceutical manufacturing enterprise. During production, it
implements relevant chemical synthesis process and uses a large number of acid and alkali and other
chemical components, which are inflammable, explosive, toxic, irritant and corrosive, and have
hidden hazards of fire, explosion and poisoning, posing certain risks to the production and operation
of the Company. As environmental protection policies and regulations have been constantly issued
in recent years, environmental protection standards have become more stringent, and the state has
strengthened its control over pollutants, risks of environmental protection of the Company are
increasing.
Response measures: The Company has always obeyed the safety work concept of “Putting People
First” and the guideline of “Safety First, Precaution Crucial and Comprehensive Treatment”. It will
strengthen the construction of safe production infrastructure and ensure a sound environment for
safe production of the Company through regular internal audit of safety and environment systems
as well as employee safety education and training. The Company will carry out discharge after
treatment and reaching standards in accordance with environmental protection provisions, actively
accept supervision and inspection of environmental protection authorities, and try to reduce
emission and increase expenditures in environmental protection by improving production process
and promptly updating environmental protection technology.
4. Risk in price and supply of raw materials
There is a larger fluctuation in the supply price of some raw materials of the Company due to
changes in material prices, especially the materials of traditional Chinese medicine, causing greater
volatility or rise in production costs of the Company. Meanwhile, the quantity and category of raw
material suppliers of the Company are various, thus quality of final products of the Company will
be directly affected by the selection of raw material suppliers and the guarantee and control of
quality of raw materials.
Response measures: In terms of selection of suppliers, the Company will conduct an open tendering
and bidding based on the principle of selecting qualified suppliers, strengthen audit of suppliers, and
eliminate the adulteration of adverse suppliers. The Quality Assurance Department and Supply
Department of the Company will directly conduct process control of products provided by suppliers
of key raw materials and carry out quality inspection and control of final products
5. Risk of R&D for new drugs
New drug R&D is characterized by high input, high risk and long period. The State has frequently
issued drug R&D related policies in recent years to further enhance approval work requirements of
new drugs for marketing, thus bringing certain risks for new drug R&D of the Company. Meanwhile,
promotion of drugs after marketing is affected by national regulations, industry policies, market
environment and competitive intensity, causing that income obtained after marketing of new drugs
cannot reach the expected income, making the Company at risk of product R&D.
76
Joincare Pharmaceutical Group Annual Report 2023
Response measures: The Company will focus on innovative medicines and high-barrier complex
formulation, pay attention to unmet clinical needs, and continuously invest in innovative research
and development. The Company will further improve the R&D and innovation systems, introduce
and develop high-end talents, proactively carry out cooperation and introduction of overseas
innovative medicines, strengthen market research and evaluation of varieties, reinforce the process
regulation and risk management of the initiation of R&D projects, and concentrate efforts and make
key breakthroughs in the R&D of core products. At the same time, the Group’s advantages in APIs
will be fully utilized to reinforce the integration of API and drug formulations to ensure the long-
term sustainable development of the Company.
(V) Others
□Applicable √N/A
VII. Information not disclosed according to guidelines due to inapplicability of the standard,
involving state secrets or trade secrets or other reasons, and notes on relevant reasons
□Applicable √N/A
77
Joincare Pharmaceutical Group Annual Report 2023
Chapter 4 Corporate Governance
I. Corporate Governance
√Applicable □N/A
The Company is in compliance with the corporate governance requirements applicable to it as a
PRC public company listed on the Shanghai Stock Exchange in all material aspects, including but
not limited to the Company Law, the Securities Law, the Guidelines for Corporate Governance of
Listed Companies, and the Rules Governing the Listing of Stocks on Shanghai Stock Exchange.
During the Reporting Period, the Company continued to improve its corporate governance structure,
strengthen information disclosure management and enhance investor relations management and
internal control to standardize the operation of the Company.
1. Shareholders and General Meetings
During the Reporting Period, 1 annual general meeting and 4 extraordinary general meetings were
held by the Company. The Company convened and held general meetings in strict compliance with
the Articles of Association, Rules of Procedure for the General Meetings and other relevant
regulations to ensure that resolutions can be made at general meetings based on fairness and
openness, thereby safeguarding the rights and interests of shareholders. In addition, the Company
made full use of modern information technology such as online voting to ensure that all shareholders,
particularly minority shareholders, can attend general meetings and exercise their rights to know
and participate in decision making in the most convenient and fastest way.
2. Controlling shareholders and the listed company
The Company is able to carry on its business and operations independently. In terms of business,
personnel, assets, organizations and finance, the Company performed management and accounting
independently from the controlling shareholders of the Company. The controlling shareholders of
the Company have exercised their rights and assumed their obligations in strict compliance with the
laws and regulations, and have never directly or indirectly interfered with the decision-making or
business activities of the Company without authorization of the general meeting. The Company has
formulated the Management Policy of Joincare Pharmaceutical Group Industry Co., Ltd. for
Preventing the Controlling Shareholders or De Facto Controller and Other Related Parties from
Appropriating Funds of the Company, and has established a long-term mechanism to prevent the
controlling shareholders or de facto controller and their related parties from using funds of the listed
company or damaging the interests of the listed company. During the Reporting Period, there was
no circumstance where the Company's controlling shareholders, de facto controller, and their related
parties embezzled assets of the Company or damaged the interests of the Company and minority
shareholders.
3. Directors and the Board
During the Reporting Period, the Company held 15 Board meetings in multiple ways, including on-
site meeting, voting through electronic means and the combination of on-site meeting and electronic
means, providing convenience for the attending directors. During the Reporting Period, the Board
of the Company performed its duties actively and effectively in strict compliance with the relevant
regulations, including the Company Law, the Articles of Association, and the Rules of Procedure
for the Board Meetings.
The Board of the Company comprises a total of 9 directors, including 4 independent directors who
are legal, financial and medical industries professionals and provide constructive advice for the
effective, standard governance and decision-making on major policies of the Company. Besides,
five special committees are set up under the Board of the Company, namely the Audit Committee,
78
Joincare Pharmaceutical Group Annual Report 2023
the Remuneration Committee, the Strategy Committee, the Nomination Committee, and the
Corporate Social Responsibility Committee. These committees assist the Board in performing its
decision-making and supervision functions and give full play to their expertise, so as to ensure the
legality, scientificity, and correctness of decisions made by the Board.
During the Reporting Period, the Company convened, held and voted at the board meetings in
accordance with the Rules of Procedure for the Board Meetings, and all directors of the Company
have attended meetings including the board meetings and general meetings in a conscientious,
responsible and honest manner, actively participated in relevant business training, familiarized
themselves with relevant laws and regulations, and clarified the rights, obligations and
responsibilities of directors.
4. Supervisors and the Supervisory Committee
During the Reporting Period, the Company held 10 meetings of the Supervisory Committee for
review of the periodic report, option exercise, adjustments to the projects of raised funds, and other
matters of the Company. The Supervisory Committee of the Company is comprised of three
supervisors, including one employee's representative. During the Reporting Period, the Supervisory
Committee of the Company performed its duties in accordance with the law, supervised the duty
performance of directors and senior management of the Company, carried out regular inspections
on the financial position of the Company, and focused on significant investments of the Company,
fully protecting the interests of the Company and all shareholders.
5. Performance evaluation and incentive mechanism for senior management
The appointment and dismissal of and reward and punishment for senior management of the
Company are performed in strict accordance with the relevant laws, regulations, and the Articles of
Association. The Company has established the selection, appointment and performance assessment
criteria and the remuneration decision-making procedure for the senior management. The
Nomination Committee of the Company provided appropriate candidates for directors and senior
management in accordance with the law, and submitted the list of candidates to the Board of the
Company for review. The Remuneration Committee of the Company, pursuant to the regulations
such as the Management Policy on the Remuneration and Performance Assessment of Senior
Management, determined the result of performance assessment of senior management based on the
completion of business objectives of the Company and work objectives of the senior management
in 2023. Based on the result of performance assessment, the performance bonus and remuneration
of senior management in 2023 were determined and submitted to the Board of the Company for
review and resolution.
6. Investor relations
The Company has always attached great importance to communication and exchange with investors.
The Board designated departments and personnel to manage information disclosure and investor
relations, enhance communication with minority shareholders, answer questions from shareholders
on the production, management and operation of the Company, and listen earnestly to the
suggestions and advice of shareholders on the strategy and development of the Company. Without
violating regulations, the Company satisfied to the maximum extent the information needs of
investors for the sustainable and healthy development of the Company.
7. Information disclosure and transparency
The Company disclosed information in a timely, accurate, authentic and complete manner in strict
compliance with the relevant regulations, including the Company Law, the Rules Governing the
Listing of Stocks on Shanghai Stock Exchange, the Articles of Association, and the Information
Disclosure Management Bylaws. The Company designated the Board Secretary to manage
information disclosure, receive visitors, answer questions consulted, contact shareholders, and
79
Joincare Pharmaceutical Group Annual Report 2023
provide investors with the information publicly disclosed by the Company. The Company is able to
disclose information in an authentic, accurate, complete and timely manner in accordance with the
laws, regulations, and the Articles of Association, and is able to ensure equal access to information
for all shareholders.
8. Stakeholders
The Company has fully respected the legitimate rights and interests of stakeholders, including banks,
other creditors, employees, consumers, suppliers and communities, and has extended
communication and cooperation with such stakeholders based on mutual benefit, so as to jointly
promote the sustained and healthy development of the Company and protect the interests of public
shareholders.
During the Reporting Period, the Company did not provide undisclosed information to its substantial
shareholders or de facto controller, and the substantial shareholders and de facto controller of the
Company did not interfere with the production, operation and management of the listed company.
Overall, no corporate governance irregularities were found.
The corporate governance of the Company complies with the Company Law and relevant
regulations issued by the CSRC. Achieving good corporate governance is a long journey, which
requires continuous improvement. The Company will continue to timely update and improve its
internal governance system in accordance with relevant regulations, discover and solve problems in
a timely manner, and strengthen internal management, so as to promote standard operation and
corporate governance as well as advance the steady and healthy development of the Company.
9. Establishment and implementation of insider registration management system for insider
information
The Resolution relating to Amendment of the Insider Registration Management System for Inside
Information of Joincare Pharmaceutical Group Industry Co., Ltd. was revised and approved at the
8th meeting of the 8th session of the Board of the Company, with a view to strengthening the
confidentiality of inside information, maintaining the principles of openness, fairness and justice for
the Company's information disclosure, and protecting the legitimate rights and interests of investors.
During the Reporting Period, the Board Office of the Company was responsible for the management
of inside information of the Company. It is stipulated that the documents and data reported and
transmitted externally and other information involving inside information and information
disclosure shall be reviewed and approved by the Board or the Board Secretary. When preparing
periodic reports and planning significant matters, the Company performed inside information
registration timely, and reminded the insiders by mail or phone not to deal with shares of the
Company during the sensitive period. Through self-inspection, it was found that there was no
circumstance where the insiders dealt with shares and derivatives using inside information of the
Company during the Reporting Period.
Whether there are any material deviations of the Company's corporate governance from laws,
administrative regulations and CSRC regulations on the governance of listed companies; If
any, the reasons should be explained.
□Applicable √N/A
II. Measures taken by the controlling shareholder and de facto controllers to ensure the
independence of the Company's assets, personnel, finance, organization, business, in addition
to solutions, work schedules and follow-up work plans adopted to enhance the independence
of the Company
□Applicable √N/A
80
Joincare Pharmaceutical Group Annual Report 2023
Engagement in the same or similar business as the Company by controlling shareholders, de facto
controllers and other units under their control, and the influence of horizontal competition or major
changes in horizontal competition on the Company, countermeasures taken, progress and follow-up
plan
□Applicable √N/A
III. General Meetings
Query index of
the designated
Meeting Date of Disclosure
website for Meeting resolution
session meeting date
publishing the
resolution
The Resolution on the Proposal on
Cancellation of Treasury Shares
2023 First
Previously Repurchased was
Extraordinary
19 May 2023 www.sse.com.cn 20 May 2023 considered and approved. See the
General
Announcement on Resolutions of 2023
Meeting
First Extraordinary General Meeting
(Lin 2023-056) for details.
Nine (9) resolutions were considered
and approved, including the 2022
Annual Work Report of the
Supervisory Committee, 2022 Annual
2022 Annual
Work Report of the Board of Directors
General 9 June 2023 www.sse.com.cn 10 June 2023
and 2022 Annual Financial Final
Meeting
Accounts Report. See the
Announcement on Resolutions of 2022
Annual General Meeting (Lin 2023-
061) for details.
The Resolution on the Proposal on the
Election of Mr. Yin Xiaoxing as an
2023 Second
Independent Director of the Company
Extraordinary 15 September 16 September
www.sse.com.cn was considered and approved. See the
General 2023 2023
Announcement on Resolutions of 2023
Meeting
Second Extraordinary General Meeting
(Lin 2023-100) for details.
Two Resolutions resolutions were
considered and approved, including the
Third Phase Ownership Scheme under
2023 Third
Medium to Long-term Business
Extraordinary 12 October 13 October
www.sse.com.cn Partner Share Ownership Scheme of
General 2023 2023
the Company (Draft) and its Summary.
Meeting
See the Announcement on Resolutions
of 2023 Third Extraordinary General
Meeting (Lin 2023-111) for details.
The Resolution on the Revise Certain
Clauses of the Independent Directors'
Working System and the Resolution on
2023 Fourth the Amend Certain Clauses of the
Extraordinary 8 December 9 December Articles of Association of the
www.sse.com.cn
General 2023 2023 Company were considered and
Meeting approved. See the Announcement on
Resolutions of 2023 Fourth
Extraordinary General Meeting (Lin
2023-136) for details.
Holders of preferred shares with resumed voting rights requesting to hold extraordinary
general meeting
□ Applicable √ N/A
Explanations of General Meetings
□ Applicable √ N/A
81
Joincare Pharmaceutical Group Annual Report 2023
IV. Information on directors, supervisors and senior management
(I) Changes in shareholding and remuneration of current directors, supervisors, and senior
management and those left the Company during the Reporting Period
√Applicable □N/A
Unit: shares
Total pre-tax
remuneration
Number Receive any
received
of shares Number remuneration
Change in from the
held at of shares Reason from any
Start date of End date of shareholding Company
Name Position (Note) Gender Age the held at for related party
the tenure the tenure during the during the
beginning the end of change of the
year Reporting
of the the year Company or
Period
year not
(RMB Ten
thousand)
28 August 27 August
Zhu Baoguo Chairman Male 62 334.47 No
2021 2024
Liu 28 August 27 August
Vice Chairman Female 55 436.96 No
Guangxia 2021 2024
28 August 27 August Equity
Yu Xiong Director, President Male 63 800,000 980,000 180,000 360.00 No
2021 2024 incentive
Director, Vice
Qiu 28 August 27 August
President, Chief Male 53 717,409 717,409 0 225.59 Yes
Qingfeng 2021 2024
Financial Officer
Director, Vice 28 August 27 August
Lin Nanqi Male 42 1,291,040 1,291,040 0 225.59 Yes
President 2021 2024
15
Yin Independent 27 August
Male 58 September 3.50 No
Xiaoxing Director 2024
2023
Independent 28 August 27 August
Huo Jing Female 48 12.00 No
Director 2021 2024
Independent 28 August 27 August
Qin Yezhi Male 50 12.00 No
Director 2021 2024
Independent 28 August 27 August
Peng Juan Female 60 12.00 No
Director 2021 2024
Cui Liguo 15
Independent 28 August
Male 54 September 8.50 No
（resigned） Director 2021
2023
Chairman of the
28 August 27 August
Yu Xiaoyun Supervisory Male 56 70.36 No
2021 2024
Committee
28 August 27 August
Peng Jinhua Supervisor Female 62 38,043 38,043 0 4.80 No
2021 2024
18 May 27 August
Xing Zhiwei Supervisor Male 38 111.51 No
2022 2024
8
Zhang 27 August
Vice President Male 41 September 201.56 No
Leiming 2024
2023
Vice President,
Zhao 28 August 27 August
Secretary to the Male 49 768,000 768,000 0 205.59 No
Fengguang 2021 2024
Board
Total / / / / / 3,614,492 3,794,492 180,000 / 2,224.43 /
Notes: 1. Mr. Zhu Baoguo serves as the chairman of Livzon Group, a controlled subsidiary of the Company; and
Mr. Yu Xiong and Mr. Qiu Qingfeng serve as non-executive directors of Livzon Group. The remuneration listed
above does not include the part paid by Livzon Group. Please refer to Livzon Group's 2023 Annual Report for
details.
Name Main work experience
Male, born in 1962, with a bachelor's degree. He was the director of Henan Xinxiang
Waterborne Resin Research Institute, vice chairman and general manager of Henan Feilong
Fine Chemical Products Co., Ltd., and had been the general manager and vice chairman of the
Zhu Baoguo Company since 1992. He is currently the chairman of the Company and the chairman of Livzon
Pharmaceutical Group Inc. Mr. Zhu Baoguo is a shareholder of Shenzhen Baiyeyuan
Investment Co., Ltd., a controlling shareholder of the Company, and is the de facto controller
of the Company.
Female, born in 1969, with a college degree. She was the manager of the Advertising
Department of CCTV International Corporation Shenzhen, deputy general manager and director
of the Company, and the vice chairman of Livzon Group. She is currently the vice chairman of
Liu Guangxia
the Company. Ms. Liu Guangxia is a shareholder of Shenzhen Baiyeyuan Investment Co., Ltd.,
a controlling shareholder of the Company, and is the spouse of Mr. Zhu Baoguo, the de facto
controller of the Company.
82
Joincare Pharmaceutical Group Annual Report 2023
Male, born in 1961, researcher. He graduated from the Department of Chemistry of Fudan
University with a bachelor of science degree in July 1984. In 1999, he received the special
government allowance from the State Council. In 2004, he studied at KU Leuven in Modern
Enterprise Management. From July 2005 to January 2006, he worked as a senior visiting scholar
at California State University, Northridge. Since 2016, he had been the vice president of the
Company. He serves currently as director and president of the Company, non-executive director
of Livzon Group, chairman of Shanghai Frontier and Haibin Pharma, independent director of
Sichuan Biokin Pharmaceutical Co., Ltd., director of Shanghai Huatai Investment Development
Co., Ltd., honorary director of Chinese Pharmaceutical Association, honorary chairman of
Yu Xiong Pharmaceutical Engineering Specialized Committee, honorary director of Shanghai Society of
Chemistry and Chemical Industry, and adjunct professor of East China University of Science
and Technology. He was formerly the vice president of China State Institute of Pharmaceutical
Industry, chemistry department director and vice president of Shanghai Institute of
Pharmaceutical Industry, chairman of Shanghai Techwell Biopharmaceutical Co., Ltd., legal
person of National Shanghai Center for New Drug Safety Evaluation and Research, and general
manager and chairman of Sinopharm Yangzhou VAC Biological Engineering Co., Ltd. He was
also the person in charge of the comprehensive new drug research and development platform
under the national key project of “new drug creation”(Shanghai Institute of Pharmaceutical
Industry) and the technical chief of rolling projects under the 12th Five-Year Plan.
Male, born in 1971, with an executive master of business administration degree from China
Europe International Business School, member of Chinese Institute of Certified Public
Accountants (non-practicing). He worked at Tianjin No.1 Machine Tool Works. Since 1996, he
Qiu Qingfeng had served successively as the finance personnel, finance supervisor, finance manager, deputy
general manager of the Company, and the general manager, board secretary, and president of
the Company. He is currently the director, vice president and chief financial officer of the
Company and a non-executive director of Livzon Pharmaceutical Group Inc.
Male, born in 1982, with a bachelor of engineering degree. He was formerly the workshop
supervisor of Chongqing Daxin Pharmaceutical Co., Ltd., the workshop manager, production
director and deputy general manager of Livzon Group Xinbeijiang Pharmaceutical
Lin Nanqi
Manufacturing Inc., and the general manager of Jiaozuo Joincare Bio Technological Co., Ltd.,
a wholly-owned subsidiary of the Company. He is currently the director and vice president of
the Company.
Male, born in 1966, with a doctoral degree. He used to be Dean of the School of Pharmacy and
Vice President of Xuzhou Medical University. He is currently a professor of Xuzhou Medical
University, a doctoral supervisor of pharmacology, Director of Jiangsu Key Laboratory of New
Drug Research and Clinical Pharmacy, and an independent director of Jiangsu Nhwa
Pharmaceutical Co., Ltd. Now, he is a member of the Teaching Steering Committee of
Pharmacy Specialty in Colleges and Universities of Ministry of Education, the Chairman of the
Steering Committee of Jiangsu Science Class 2 Postgraduate Education, the Vice Chairman of
Jiangsu Province Pharmacological Society, and the Chairman of the Preclinical Pharmacology
Yin Xiaoxing
Professional Committee of New Drugs of Jiangsu Province Pharmacological Society. He ever
presided over the national natural science fund of China and several natural science funds of
Jiangsu Province, published more than 90 papers as included in SCI as a correspondent author,
and applied for 12 patents and was authorized 4 patents as the first finisher. He successfully
constructed the undergraduate pharmacy program and pharmacy discipline system of Xuzhou
Medical University. And he is the head of clinical pharmacy major and pharmacy major in the
national first-class specialty construction points, and the head of the Clinical Pharmacology, a
national first-class course.
Female, born in 1976, with a bachelor's degree. She is a member of All China Lawyers
Association and Tencent Guangdong Real Estate Think Tank. She was a specially invited
lawyer by chinacourt.org, 9ask.cn, 66law.cn, Southern Metropolis Daily, and Shenzhen
Evening News. Since 2007, she has been the lawyer and partner of Guangdong Sun Law Firm.
Huo Jing She was a member of Real Estate Specialized Committee of Shenzhen Lawyers Association,
and served successively as permanent legal adviser to many companies, fully responsible for
the review of corporate legal affairs, drafting and amendment of economic contracts, and
issuance of legal opinions, with extensive litigation experience for various types of cases. She
is currently an independent director of the Company.
Male, born in 1974, with a bachelor's degree, a practicing member of Chinese Institute of
Certified Public Accountants and China Certified Tax Agents Association, and a non-practicing
member of China Certified Public Valuers Association. He successively served as auditor of
Qin Yezhi Shenzhen Zhengfeng Lifu Accounting Firm, partner of Shenzhen Jinzheng Accounting Firm,
and partner of Asia Pacific (Group) CPAs (Special General Partnership). From 2014 to date, he
has served as partner of China Shu Lun Pan Certified Public Accountants LLP. He is currently
an independent director of the Company.
Female, born in 1964, doctor and doctoral supervisor. From 1997 to date, she has been an
Peng Juan associate professor at the Department of Accounting of Antai College of Economics and
Management in Shanghai Jiao Tong University, covering research areas of digital finance, green
83
Joincare Pharmaceutical Group Annual Report 2023
finance, marketing audit, and corporate governance. She is currently an independent director of
the Company. She successively served as instructor at the Department of Accounting of School
of Economics and Management in Shanghai Maritime University, and director of Executive
Education Center of Antai College of Economics and Management in Shanghai Jiao Tong
University. She is currently the president and training supervisor of Shanghai Cost Research
Society of Shanghai Jiao Tong University, adviser of China Financial Cloud Institute, a member
of Behavioral Science Council, a member of Finance and Accounting Association of Shanghai
Jiao Tong University, and a member of Green Finance Center of Shanghai Environment and
Energy Exchange. She served concurrently as independent director of Shanghai Sunglow
Packaging Technology Co., Ltd. (stock code: 603499), Haitong Futures Co., Ltd. (stock code:
872595), and Shanghai Sunmi Technology Co., Ltd.
Male, born in 1968, with a bachelor's degree, and an MBA degree from University of
Greenwich. He is a senior engineer and high-level professional talent of Shenzhen. He worked
for Henan Institute of Traditional Chinese Medicine. From December 1992 to date, he has
Yu Xiaoyun served successively as technical manager of the Company, government affairs manager of
Institute of Traditional Chinese Medicine, and vice president of the Institute. He is currently the
adviser of the Institute and chairman of the Supervisory Committee of the Company, and also
a managing director of China Healthcare Association.
Female, born in 1962, with a college degree. She served as technical data processor at State-
owned 272nd Plant of Ministry of Nuclear Industry and accountant of the staff hospital of the
Plant, teacher of Hengyang Radio & TV University, and finance manager of Shenzhen New
Peng Jinhua Era Industrial City Industrial Co., Ltd. She joined the Company in March 1994, and served
successively as finance supervisor, manager of planning and finance department, manager of
finance department, manager of tax department, administration manager, and general manager
assistant. She is currently a supervisor of the Company.
Male, born in 1986. He graduated from Sichuan University majoring in light industry
biotechnology with a bachelor's degree. He currently serves as the deputy director of the Center
of the Production Management and a supervisor of the Company, the general manager and vice
president of the Company’s subsidiary Jiaozuo Joincare Bio Technological Co., Ltd. a director
and the general manager of the Company’s subsidiary Henan Province Joincare
Xing Zhiwei
Biopharmaceutical Research Institute Co., Ltd, the chairman of the Company’s subsidiary
Xinxiang Haibin Pharmaceutical Co., Ltd. and Jiaozuo Jianfeng Biotechnology Co., Ltd. He
served successively as workshop supervisor and workshop manager of Livzon Group
Xinbeijiang Pharmaceutical Manufacturing Inc., and workshop manager, production director
and deputy general manager of Jiaozuo Joincare Bio Technological Co., Ltd.
Male, born in 1983, Chinese nationality, without overseas permanent right of abode, and with
a bachelor of science degree. He is currently the vice president of the Company. And he used
Zhang to be the promotion specialist of the Marketing Department of Livzon Pharmaceutical Group
Leiming Inc., the provincial manager of Reproductive Products Sales Department, the provincial
manager of the Prescription Drug Division, the provincial general manager, the regional general
manager and the general manager of the Prescription Drug Division of the Company.
Male, born in 1975, with a bachelor of economics degree and master of science degree, member
of Jiusan Society. He was formerly the secretary to president of Shenyang Pharmaceutical
University, council secretary and office director of Shenzhen Research Center of Traditional
Chinese Medicine and Natural Products, and assistant to director of Chinese Medicine
Zhao
Laboratory of Research Institute of Tsinghua University in Shenzhen. Since August 2011, he
Fengguang
served successively as manager of project research and management department of the institute
of the Company, deputy head and project research director of the institute of the Group, and
director of the controlling subsidiary Shanghai Frontier. He is currently the vice president and
board secretary of the Company.
Explanations of other relevant information
√Applicable □N/A
1. On 23 August 2023, the Company received a written resignation report from Mr. Cui Liguo, an
independent director of the Company. According to the Measures for the Administration of
Independent Directors of Listed Companies, the tenure of independent directors shall not exceed six
years consecutively, so that Mr. Cui Liguo applied to resign as an independent director of the
Company and his relevant positions in the Nomination Committee, the Corporate Social
Responsibility Committee and the Strategy Committee.
On 23 August 2023, the Company held the 30th Meeting of the 8th Session of the Board, which
considered and approved the Proposal on Nominating Mr. Yin Xiaoxing as a Candidate for
84
Joincare Pharmaceutical Group Annual Report 2023
Independent Director of the Company. After the qualification review by the Nomination Committee
of the Board, the Board agreed to nominate Yin Xiaoxing a candidate for independent director of
the 8th Session of the Board, and submitted this proposal to the general meeting for consideration.
On 15 September 2023, the Company held the 2023 second extraordinary general meeting, which
considered and approved the Proposal on Nominating Mr. Yin Xiaoxing as a Candidate for
Independent Director of the Company, and elected Mr. Yin Xiaoxing as an independent director of
the Company for a term commencing from the date of consideration and approval at the general
meeting to the date of expiry of the tenure of the 8th Session of the Board.
2. On 8 September 2023, the Company held the 31st Meeting of the 8th Session of the Board, which
considered and approved the Proposal on Appointing Mr. Zhang Leiming as Vice President of the
Company. In order to further standardize and improve the prescription drug sales management
system of the Company and provide a strong guarantee for its long-term strategic development, and
after being nominated by the President of the Company and the qualification review by the
Nomination Committee of the Board, the Board approved the appointment of Mr. Zhang Leiming
as a vice president of the Company and will be fully responsible for the sales management of
prescription drugs of the Company for a term commencing from the date of vote and approval at the
Board meeting to the date of expiry of the term of the 8th Session of the Board.
(II) Posts held by current directors, supervisors, and senior management and those resigned
during the Reporting Period
1. Posts held at the corporate shareholders of the Company
√Applicable □N/A
End date
Start date of the
Name Corporate shareholder Posts held of the
tenure
tenure
Zhu Baoguo Baiyeyuan Chairman, General Manager 11 March 2014 /
Liu Guangxia Baiyeyuan Director 21 January 1999 /
Mr. Zhu Baoguo, Chairman of the Company, directly holds 90% of shares in Baiyeyuan, and
Ms. Liu Guangxia, Vice Chairman of the Company, directly holds 10% of shares in
Note
Baiyeyuan. Both of them are directors of Baiyeyuan, and Mr. Zhu Baoguo is the spouse of
Ms. Liu Guangxia.
2. Posts held at other entities
√Applicable □N/A
Start date of End date of
Name Other entities Posts held
the tenure the tenure
Shenzhen Federation of Industry and Honorary Vice
November 2014 /
Commerce President
Federation of Shenzhen Commerce Director April 2015 /
Council Member,
TNC Greater China Council of Advisors December 2012 /
Zhu Baoguo Secretary General
The Paradise International Foundation Director April 2015 /
China Entrepreneur Club Council Member April 2017 /
Central China Management Company
Independent Director May 2021 /
Limited
Shanghai Society of Chemistry and
Honorary Director October 2016 /
Chemical Industry
Shanghai Huatai Investment Development
Director May 2018 /
Co., Ltd.
East China University of Science and
Yu Xiong Adjunct Professor July 2019 /
Technology
Sichuan Biokin Pharmaceutical Co., Ltd. Independent Director September 2019 /
Pharmaceutical Engineering Specialized
Committee of Chinese Pharmaceutical Honorary Chairman November 2019 /
Association
85
Joincare Pharmaceutical Group Annual Report 2023
Chinese Pharmaceutical Association Honorary Director January 2022 /
February
Tianjin Tianyao Pharmaceuticals Co.,Ltd Independent Director March 2016
2023
Jiaozuo Jinguan Jiahua Electric Power
Director November 2015 /
Co., Ltd.
Qiu Qingfeng
Jiangsu Baining Yingchuang Medical
Director November 2020 /
Technology Co., Ltd.
Jiaozuo Jinguan Jiahua Electric Power
Lin Nanqi Director January 2022 /
Co., Ltd.
Professor, Doctoral
Xuzhou Medical University Supervisor of August 1988 /
Pharmacology
Jiangsu Key Laboratory of New Drug
Director September 2014 /
Research and Clinical Pharmacy
Jiangsu Nhwa Pharmaceutical Co., Ltd. Independent Director March 2022 /
Teaching Steering Committee for
Yin Xiaoxing Pharmacy Major in Higher Education Member August 2013 /
Institutions of the Ministry of Education
Science 2 Graduate Education Steering Chairman of the
November 2018 /
Committee of Jiangsu Province committee
Jiangsu Pharmacological Society Vice Chairman November 2008 /
Specialized Committee of Preclinical
Chairman of the
Pharmacology for New Drugs, Jiangsu November 2012 /
committee
Pharmacological Society
Huo Jing Guangdong Sun Law Firm Lawyer, Partner June 2007 /
China Shu Lun Pan Certified Public
Accountants LLP (Special General Partner July 2014 /
Qin Yezhi Partnership)
Shenzhen Yongpeng CTA Firm (Special
Partner September 2013 /
General Partnership)
Associate Professor of
Antai College of Economics and
Department of
Management of Shanghai Jiao Tong September 1997 /
Accounting, Doctoral
University
Supervisor
Haitong Futures Co., Ltd. Independent Director December 2023 /
Shanghai Sunglow Packaging Technology
Independent Director March 2022 /
Peng Juan Co., Ltd.
Shanghai Sunmi Technology Co., Ltd. Independent Director May 2022 /
Shanghai Jiaopeng Technology Co., Ltd. Supervisor July 2019 /
Shanghai Jiaoshang Digital Technology
General Manager December 2022 /
Co., Ltd.
Dynamiker Biotechnology (Tianjin) Co.,
Independent Director July 2020 July 2023
Ltd.
Shenzhen Science and Technology
Yu Xiaoyun Review Expert November 2022 /
Innovation Commission
Shenzhen Nanbei Shengying Industrial
Director July 2017
Development Co., Ltd.
Peng Jinhua
Shenzhen Xinfengfan Technology
Supervisor August 2005
Development Co., Ltd.
Description of
employment in Not applicable
other offices
(III) Remuneration of directors, supervisors and senior management
√Applicable □N/A
Decision-making The emolument of chairman and vice chairman of the Company shall follow the
procedure regarding Resolutions of the 2018 Second Extraordinary General Meeting of the Company, which
remuneration of is RMB3.25 million per year, with the individual income tax withheld and remitted by
directors, supervisors the Company in accordance with the relevant provisions of the tax laws. On 29 March
86
Joincare Pharmaceutical Group Annual Report 2023
and senior 2022 and 18 May 2022, the Company convened the ninth meeting of the eighth session
management of the Board of Directors and the 2021 Annual General Meeting, respectively, at which
the Resolution on Adjusting the Emolument of Independent Directors of the
Company(《关于调整公司独立董事津贴的议案》) was considered and approved, the
emolument of each independent director shall be adjusted to RMB10,000 (before tax)
from RMB9,000 (before tax) per month, with the individual income tax withheld and
remitted by the Company in accordance with the relevant provisions of the tax laws.
On 10 August 2021 and 28 August 2021, the Company convened the 39th meeting of
the seventh session of the Supervisory Committee and the 2021 Third Extraordinary
General Meeting, respectively, at which Resolution on Adjusting the Emolument of the
Supervisors of the Company(《关于调整公司监事津贴的议案》) was considered and
approved, the emolument of each supervisor shall be adjusted to RMB4,000 (before tax)
per month from RMB3,000 (before tax) per month, with the individual income tax
withheld and remitted by the Company in accordance with the relevant provisions of the
tax laws. During the Reporting Period, the remuneration received by supervisors is the
wage based on the wage system of the Company plus the emolument paid to them.
The remuneration of senior management of the Company shall follow the resolution of
the 52th meeting of the 6th session of the Board of the Company. The annual basic
remuneration of the president, vice president and other senior management members
during the term of office is RMB2.60 million, RMB1.35 million and RMB1.20 million,
respectively. In addition to the basic remuneration, pursuant to the regulations such as
the Management Policy on the Remuneration and Performance Assessment of Senior
Management (《高级管理人员薪酬及绩效考核管理制度》), individual assessment
shall be performed and performance-based bonuses shall be paid according to the
assessment result. In case of holding concurrent positions, the highest remuneration
among all positions shall prevail.
For the Company's directors who serve concurrently as a senior management member
of the Company, the remuneration received by them is equal to the wage paid according
to their position as a senior management member, and no directors’ emoluments are paid
by the Company.
On 29 January 2024, the Remuneration Committee under the Board of the Company
convened the 8th meeting of the 8th session of the Board, at which the Resolution on the
2023 Annual Performance Assessment Result and Remuneration Distribution of Senior
Management of the Company (《关于公司高级管理人员 2023 年度绩效考核结果及
薪酬分配的议案》) was considered and approved. It was agreed that the Company,
pursuant to the regulations such as the Management Policy on the Remuneration and
Performance Assessment of Senior Management, determined the 2023 annual
performance assessment result and annual remuneration of senior management based on
the completion of business objectives of the Company and work objectives of the senior
management in 2023. On 29 January 2024, the Board of the Company convened the 37th
meeting of the 8th session of the Board, at which the Resolution on Remuneration
Distribution of Senior Management for the year 2023 was considered and approved.
Except for fulfilling the job responsibilities of being directors, supervisors and senior
management of the Company, other remuneration paid for positions held in subsidiaries
shall be implemented according to the relevant remuneration system of the
corresponding subsidiaries.
Whether directors
abstaining from
discussions on their Yes
remuneration at the
Board
Details of On 29 January 2024, the Remuneration Committee under the Board of the Company
suggestions on convened the 8th meeting of the 8th session of the Board, at which the Resolution on the
remuneration matters 2023 Annual Performance Assessment Result and Remuneration Distribution of Senior
relating to directors, Management of the Company (《关于公司高级管理人员 2023 年度绩效考核结果及
supervisors and 薪酬分配的议案》) was considered and approved. It was agreed that the Company,
senior management pursuant to the regulations such as the Management Policy on the Remuneration and
by the Remuneration Performance Assessment of Senior Management, determined the 2023 annual
Committee or special performance assessment result and annual remuneration of senior management based on
meetings of the completion of business objectives of the Company and work objectives of the senior
independent directors management in 2023.
87
Joincare Pharmaceutical Group Annual Report 2023
Pursuant to the regulations such as the Management Policy on the Remuneration and
Performance Assessment of Senior Management, the result of performance assessment
Basis for determining
of senior management is determined based on the completion of business objectives of
remuneration of
the Company and work objectives of the senior management in 2023. Based on the result
directors, supervisors
of performance assessment, the performance bonus and remuneration of senior
and senior
management in 2023 were determined and submitted to be reviewed by the
management
Remuneration Committee under the Board who shall then submit it to the Board for
review and resolution.
Remuneration
actually paid to
As at the date of the Report, remuneration of directors, supervisors and senior
directors, supervisors
management has been fully paid.
and senior
management
Total remuneration
paid to all directors,
supervisors and
RMB22.2443 million.
senior management
as of the end of the
Reporting Period
(IV) Changes in directors, supervisors and senior management
√Applicable □N/A
Name Position Change Reason for change
Cui Liguo Independent Director Resigned The tenure has reached the six-year limit.
Nomination by the Board, and election at the general
Yin Xiaoxing Independent Director Elected
meeting
Zhang Leiming Vice President Appointed Appointment by the Board
(V) Statement on punishments imposed by securities regulatory authorities in the last three
years
□Applicable √N/A
(VI) Others
□Applicable √N/A
V. Board meetings held during the Reporting Period
Date of
Meeting session Meeting resolution
meeting
Considered and approved the Proposal on the 2022 Annual Performance Assessment
Result and Remuneration Distribution of Senior Management of the Company, the
Proposal on the Establishment of Anti-Corruption and Anti-Commercial Bribery
22nd Meeting of the 8th
2023-01-16 System, and the Proposal on the Establishment of Anti-Fraud System. See the
Session of the Board
Announcement on Resolutions of Joincare Pharmaceutical Group Industry Co., Ltd. at
the 22nd Meeting the 8th Session of the Board (Lin 2023-007) disclosed on 17 January
2023 for details.
Considered and approved nineteen (19) proposals, including the 2022 Annual Work
Report of the President, the 2022 Annual Work Report of the Board of Directors, the
2022 Final Account Report, the 2022 Annual Profit Distribution Plan and the 2022
23rd Meeting of the 8th
2023-04-07 Annual Report of Joincare Pharmaceutical Group Industry Co., Ltd. (Full Text and
Session of the Board
Summary). See the Announcement on Resolutions of Joincare Pharmaceutical Group
Industry Co., Ltd. at the 23rd Meeting the 8th Session of the Board (Lin 2023-030)
disclosed on 11 April 2023 for details.
24th Meeting of the 8th Considered and approved the 2023 First Quarterly Report of Joincare Pharmaceutical
2023-04-24
Session of the Board Group Industry Co., Ltd.
Considered and approved the Proposal on the Cancellation of Treasury Shares
Previously Repurchased, the Proposal on Convening the 2023 First Extraordinary
25th Meeting of the 8th
2023-04-28 General Meeting of the Company. See the Announcement on Resolutions of Joincare
Session of the Board
Pharmaceutical Group Industry Co., Ltd. at the 25th Meeting the 8th Session of the
Board (Lin 2023-043) disclosed on 29 April 2023 for details.
26th Meeting of the 8th Considered and approved the Proposal on Convening the 2022 Annual General
2023-05-17
Session of the Board Meeting of the Company
88
Joincare Pharmaceutical Group Annual Report 2023
27th Meeting of the 8th Considered and approved the Proposal on Adjusting the Exercise Price of the 2022
2023-07-21
Session of the Board Share Options Incentive Scheme of the Company
Considered and approved the Proposal on the Grant of Reserved Share Options to
Incentive Participants, the Proposal on the Cancellation of Certain Share Options
28th Meeting of the 8th
2023-08-11 Granted under the 2022 Share Options Incentive Scheme. See the Announcement on
Session of the Board
Resolutions of Joincare Pharmaceutical Group Industry Co., Ltd. at the 28th Meeting
the 8th Session of the Board (Lin 2023-076) disclosed on 12 August 2023 for details.
Considered and approved the Proposal on the Satisfaction of Exercise Conditions for
29th Meeting of the 8th
2023-08-18 the First Exercise Period of the First Grant under the 2022 Share Options Incentive
Session of the Board
Scheme.
Considered and approved the Proposal on Nominating Mr. Yin Xiaoxing as a
Candidate for Independent Director of the Company, the 2023 Interim Report of
Joincare Pharmaceutical Group Industry Co., Ltd. and its Summary, the Special Report
30th Meeting of the 8th of Joincare Pharmaceutical Group Industry Co., Ltd. on Deposit and Actual Use of
2023-08-23
Session of the Board Proceeds for the Half of 2023, and the Proposal on Convening the 2023 Second
Extraordinary General Meeting of the Company. See the Announcement on
Resolutions of Joincare Pharmaceutical Group Industry Co., Ltd. at the 30th Meeting
the 8th Session of the Board (Lin 2023-085) disclosed on 24 August 2023 for details.
31st Meeting of the 8th Considered and approved the Proposal on Appointing Mr. Zhang Leiming as Vice
2023-09-08
Session of the Board President of the Company
Considered and approved six proposals, including the Proposal on the Election of
Members of the Nomination Committee of the Board, the Proposal on the Election of
Members of the Strategy Committee of the Board, the Proposal on the Election of
32nd Meeting of the 8th Members of the Corporate Social Responsibility Committee of the Board, and the
2023-09-15
Session of the Board Proposal on the Election of the Chairman of the Nomination Committee of the Board.
See the Announcement on Resolutions of Joincare Pharmaceutical Group Industry Co.,
Ltd. at the 32nd Meeting the 8th Session of the Board (Lin 2023-101) disclosed on 16
September 2023 for details.
Considered and approved the Proposal on the Third Phase Ownership Scheme under
Medium to Long-term Business Partner Share Ownership Scheme of the Company
(Draft) and its Summary, the Proposal on the General Meeting for Granting Mandate
to the Board to Deal with Matters Related to the Third Phase Ownership Scheme under
33rd Meeting of the 8th
2023-09-21 Medium to Long-term Business Partner Share Ownership Scheme of the Company,
Session of the Board
and the Proposal on Convening the 2023 Third Extraordinary General Meeting of the
Company. See the Announcement on Resolutions of Joincare Pharmaceutical Group
Industry Co., Ltd. at the 33rd Meeting the 8th Session of the Board (Lin 2023-104)
disclosed on 22 September 2023 for details.
Considered and approved eight proposals, including the 2023 Q3 Report of Joincare
Pharmaceutical Group Industry Co., Ltd., the Proposal on the Establishment of the
System for Special Meetings of Independent Directors, the Proposal on the
Amendment to Certain Clauses of the Implementation Rules of the Audit Committee
34th Meeting of the 8th of the Board, the Proposal on the Amendment to Certain Clauses of the Implementation
2023-10-25
Session of the Board Rules of the Remuneration Committee of the Board, and the Proposal on the
Amendment to Certain Clauses of the Implementation Rules of the Strategy Committee
of the Board. See the Announcement on Resolutions of Joincare Pharmaceutical Group
Industry Co., Ltd. at the 34th Meeting the 8th Session of the Board (Lin 2023-114)
disclosed on 26 October 2023 for details.
Considered and approved the Proposal on the Capital Increase and Share Expansion of
the Controlling Grandson Company LivzonBio, and the Proposal on Convening the
35th Meeting of the 8th Fourth Third Extraordinary General Meeting of the Company. See the Announcement
2023-11-17
Session of the Board on Resolutions of Joincare Pharmaceutical Group Industry Co., Ltd. at the 35th
Meeting the 8th Session of the Board (Lin 2023-127) disclosed on 18 November 2023
for details.
Considered and approved the Proposal on Adjusting Certain Investment Content of
Investment Projects with Proceeds, the Proposal on Temporary Replenishment of
Working Capital with Idle Proceeds, the Proposal on the Establishment of the System
36th Meeting of the 8th of Joincare Pharmaceutical Group Industry Co., Ltd. for the Selection of Auditors, and
2023-12-28
Session of the Board the Proposal on Convening the 2024 First Extraordinary General Meeting of the
Company. See the Announcement on Resolutions of Joincare Pharmaceutical Group
Industry Co., Ltd. at the 36th Meeting the 8th Session of the Board (Lin 2023-143)
disclosed on 29 December 2023 for details.
VI. Performance of duties by directors
(1) Attendance by directors of the Board meetings and general meetings
89
Joincare Pharmaceutical Group Annual Report 2023
Attendance
Attendance of the Board meetings at general
meetings
Whether Number Whether
independ Number of Number of Number the director Number of
Name Numb
ent meetings the of meetings of has been attendances
er of
director director should meetings attended meetings absent at the
Abse
attend for the attended through attended from two general
nces
year in person electronic by proxy consecutiv meetings
means e meetings
Zhu
No 15 15 11 0 0 No 5
Baoguo
Liu
No 15 15 11 0 0 No 5
Guangxia
Yu Xiong No 15 15 11 0 0 No 5
Qiu
No 15 15 11 0 0 No 5
Qingfeng
Lin Nanqi No 15 15 11 0 0 No 5
Cui Liguo
Yes 10 10 7 0 0 No 3
(resigned)
Yin
Yes 5 5 4 0 0 No 2
Xiaoxing
Huo Jing Yes 15 15 11 0 0 No 5
Qin Yezhi Yes 15 15 11 0 0 No 5
Peng Juan Yes 15 15 11 0 0 No 5
Statement on absence from two consecutive meetings
□Applicable √N/A
Board meetings held during the year 15
In which: On-site meetings 4
Meetings held through electronic means 11
Meetings held both in the form of on-site meeting and through electronic
0
means
(2) Objections raised by directors to affairs of the Company
□Applicable √N/A
(3) Others
□Applicable √N/A
VII. Board committees
√Applicable □N/A
(1). Members of the Board committees
Committee name Member
Audit Committee Qin Yezhi, Huo Jing, Peng Juan
Remuneration Committee Huo Jing, Qin Yezhi, Peng Juan
Nomination Committee Yin Xiaoxing, Qiu Qingfeng, Huo Jing
Strategy Committee Zhu Baoguo, Yu Xiong, Qin Yezhi, Yin Xiaoxing, Peng Juan
Corporate Social Responsibility
Zhu Baoguo, Lin Nanqi, Yin Xiaoxing
(CSR) Committee
(2). Seven meetings were held by the Audit Committee during the Reporting Period
Important
Date of
Content opinion and
meeting
suggestion
Considered the 2022 Annual Financial Statements of Joincare Pharmaceutical
2023-02-03 Approved
Group Industry Co., Ltd. (Unaudited)
90
Joincare Pharmaceutical Group Annual Report 2023
Considered the Draft Audit Opinions for the 2022 Annual Financial
Approved
Statements of Joincare Pharmaceutical Group Industry Co., Ltd.
2023-03-24
Considered the Draft Audit Opinions for the 2022 Internal Control of Joincare
Approved
Pharmaceutical Group Industry Co., Ltd.
Considered the Audit Report for the 2022 Annual Financial Statements of the Approved
Company (Final)
Considered the Audit Report for the 2022 Internal Control of the Company Approved
(Final)
Considered the Summary Report on Audit Work for the Year 2022 from Grant Approved
Thornton (Special General Partnership)
Considered the Assessment Report of Joincare Pharmaceutical Group Industry Approved
Co., Ltd. on Internal Control for the Year 2022
2023-04-07
Considered the Proposal on the Appointment of Grant Thornton (Special Approved
General Partnership) as the Auditor of the Company for the Year 2023
Considered the Proposal on Daily Connected Transactions between the Approved
Controlling Subsidiaries Jiaozuo Joincare and Jinguan Electric Power
Considered the Proposal on the 2022 Annual Report of Joincare Approved
Pharmaceutical Group Industry Co., Ltd. (Full Text and Summary)
Considered the 2022 Report on Performance of Duties of the Audit Committee Approved
of the Board of Joincare Pharmaceutical Group Industry Co., Ltd.
Considered the 2023 Q1 Report of Joincare Pharmaceutical Group Industry Approved
2023-04-24
Co., Ltd.
Considered the 2023 Interim Report of Joincare Pharmaceutical Group
2023-08-23 Approved
Industry Co., Ltd.
Considered the 2023 Q3 Report of Joincare Pharmaceutical Group Industry
Approved
Co., Ltd.
2023-10-25
Considered the Proposal on the Establishment of the Comprehensive Risk
Approved
Management System of Joincare Pharmaceutical Group Industry Co., Ltd.
Considered the2023 Financial Statements and Internal Control Audit Proposal
2023-11-24 Approved
of Joincare Pharmaceutical Group Industry Co., Ltd.
(3). Four meetings were held by the Remuneration Committee during the Reporting Period
Important
Date of
Content opinion and
meeting
suggestion
Considered the Proposal on the 2022 Annual Performance Assessment Result
2023-01-16 Approved
and Remuneration Distribution of Senior Management of the Company
Considered the Proposal on the Grant of Reserved Share Options to Incentive
Approved
Participants
2023-08-11
Considered the Proposal on the Cancellation of Certain Share Options
Approved
Granted under the 2022 Share Options Incentive Scheme
Considered the Proposal on the Satisfaction of Exercise Conditions for the
2023-08-18 First Exercise Period of the First Grant under the 2022 Share Options Approved
Incentive Scheme.
Considered the Proposal on the Third Phase Ownership Scheme under
2023-09-21 Medium to Long-term Business Partner Share Ownership Scheme of the Approved
Company (Draft) and its Summary
(4). Four meetings were held by the Nomination Committee during the Reporting Period
Important
Date of
Content opinion and
meeting
suggestion
Considered the Proposal on the Establishment of the Board diversity Policy
2023-04-07 Approved
of Joincare Pharmaceutical Group Industry Co., Ltd.
Considered the Proposal on Nominating Mr. Yin Xiaoxing as a Candidate for
2023-08-23 Approved
Independent Director of the Company
Considered the Proposal on Nominating Mr. Zhang Leiming as vice president
2023-09-08 Approved
of the Company
Considered the Proposal on the Election of Members of the Nomination
2023-09-15 Approved
Committee of the Board
91
Joincare Pharmaceutical Group Annual Report 2023
(5). One meetings were held by the Strategy Committee during the Reporting Period
Important
Date of
Content opinion and
meeting
suggestion
Considered the Proposal on the Capital Increase and Share Expansion of the
2023-11-17 Approved
Controlling Grandson Company LivzonBio
(6). Two meetings were held by the Corporate Responsibility Committee during the Reporting
Period
Important
Date of
Content opinion and
meeting
suggestion
Considered the 2022 Corporate Social Responsibility Report of Joincare
Approved
Pharmaceutical Group Industry Co., Ltd.
Considered the Proposal on the Establishment of the Responsible Marketing
Approved
Policy of Joincare Pharmaceutical Group Industry Co., Ltd.
Considered the Proposal on the Establishment of the Diversity, Equality and
Approved
2023-04-07 Inclusiveness Policy of Joincare Pharmaceutical Group Industry Co., Ltd.
Considered the Proposal on the Establishment of the EHS Management
Approved
Policy of Joincare Pharmaceutical Group Industry Co., Ltd.
Considered the Proposal on the Establishment of the Code of Labor and
Employment and Conduct Ethics of Joincare Pharmaceutical Group Industry Approved
Co., Ltd.
Considered the Proposal on the Establishment of the Social Responsibility
Working Group for 2023 of Joincare Pharmaceutical Group Industry Co., Approved
Ltd.
Considered the Proposal on the Amendment to the Code of Labor and
Employment and Conduct Ethics of Joincare Pharmaceutical Group Industry Approved
2023-10-25
Co., Ltd.
Considered the Proposal on the Establishment of the Climate Change
Approved
Management System of Joincare Pharmaceutical Group Industry Co., Ltd.
Considered the Proposal on the Establishment of the Code of Conduct for
Approved
Suppliers of Joincare Pharmaceutical Group Industry Co., Ltd.
(7). Affairs subject to objection
□Applicable √N/A
VIII. Statement on risks of the Company identified by the Board of Supervisors
□Applicable √N/A
The Supervisory Committee had no objection to the matters under their supervision within the
reporting period.
IX. Employees of the parent company and major subsidiaries
(I) Employees
Number of active employees of the parent company 1,070
Number of active employees of major subsidiaries 13,295
Total number of employees 14,365
Number of retired employees for whom the parent company and
660
major subsidiaries need to pay certain expenses
Profession
Category Number
Production staff 8,426
Sales staff 2,607
Technical staff 2,241
Financial staff 258
Administrative staff 833
Total 14,365
Education background
Education background Number
PhD 66
92
Joincare Pharmaceutical Group Annual Report 2023
Postgraduate 726
Undergraduate 3,968
Junior college diploma 4,332
Others 5,273
Total 14,365
(II) Compensation policy
√Applicable □N/A
The Company implements scientific, reasonable and incentive-based compensation strategies.
Based on scientific analysis and assessment of the organizational structure and job responsibilities,
the Company determines the relative value of each position, and by combining the external market
compensation data and the ability of the Company to pay, the Company provides a reasonable
employee compensation package. Employee compensation consists of two parts: fixed income and
variable income. Variable income is linked to business results of the Company and individual
performance of employees. In this way, employees are encouraged to increase their enthusiasm and
motivation at work. Competitive compensation policies are adopted for talents in key positions and
those urgently needed in the market, so as to prevent loss of key talents and provide a talent pool
for the development of the Company.
(III) Training programs
√Applicable □N/A
In 2023, the Company continued to attach great importance to internal talent training. With multi-
level, diversified training systems and a combination of online and offline learning, the Company
organized and carried out new employee orientation training, employee on-the-job training, career-
based study for a master's or doctor's degree, training and team building. Meanwhile, the Company
encouraged employees to actively participate in external learning activities related to work,
facilitated the improvement of employee competence and team cohesion, and built talent teams.
(IV) Outsourced workers
□Applicable √N/A
X. Profit distribution proposal or proposal for capitalization of capital reserve
(I) Formulation, implementation or adjustment of cash dividend distribution policy
√Applicable □N/A
1. Cash dividend distribution policy and its formulation
To establish a scientific, consistent and stable decision-making and supervision mechanism for
dividends, and fully protect and safeguard the rights and interests of the majority of shareholders,
the Company formulated this cash dividend policy in accordance with the Regulatory Guidelines
for Listed Companies No. 3 - Distribution of Cash Dividends of Listed Companies released by the
CSRC (CSRC announcement [2022] No. 3) and the Regulatory Guideline for Self-regulation of
Listed Companies No. 1 - Standardized Operation released by Shanghai Stock Exchange and other
relevant documents and requirements, and in light of the reality of the Company, clarified the
formulation, decision-making and adjustment procedures for the policy in the Articles of
Association: If the Company is in a sound operating condition and its cash flow can meet the needs
of normal operation and long-term development, the Company shall actively implement the profit
distribution policy to provide reasonable returns to investors while taking into account the
sustainable development of the Company, in order to maintain the continuity and stability of the
policy. The profits may be distributed in cash, stocks, or combination thereof or in any other way
permitted by laws and regulations. Cash dividends are superior to stock dividends in the distribution
93
Joincare Pharmaceutical Group Annual Report 2023
of profits, and shall be adopted whenever the conditions are met. Unless otherwise provided for in
the Articles of Association, the profits distributed in cash shall not be less than 10% of the
distributable profits realized in the current year. The specific amount and proportion of cash
dividends for each year shall be determined by the Board of Directors of the Company in accordance
with relevant provisions and in light of the Company's current operating situation, and shall be
reported to the annual general meeting for deliberation and decision.
2. Implementation of cash dividend distribution policy in 2022
On 9 June 2023, the Company convened the 2022 Annual General Meeting, at which the Company's
Profit Distribution Plan for 2022 was considered and approved: a cash dividend of RMB1.80 (tax
inclusive) will be distributed to all shareholders for every 10 shares, based on the total share capital
of the Company on the equity registration date as determined for implementation of the Company's
profit distribution plan for 2022, minus the total number of shares in the Company's special
securities account for repurchase, with the remaining undistributed profits to be carried forward to
the following year. As of the end of this Reporting Period, the above cash dividends have been fully
distributed.
3. Profit distribution scheme for 2023
Based on the audit conducted by Grant Thornton (Special General Partnership), in 2023, the Parent
Company generated net profit of RMB1,241,411,898.00, 10% of which was contributed to the
statutory surplus reserve, namely RMB124,141,189.80, the remainder of which, together with
undistributed profits for the last year of RMB1,968,175,713.20 and gain on disposal of other equity
investments of RMB1,245,892.23, subtracting cash dividends for the last year of
RMB336,792,056.76, is the profits available for distribution to shareholders for the year of
RMB2,749,900,256.87. The Company plans to distribute cash dividends for the fiscal year 2023,
based on the total number of shares for dividend distribution, which is defined by the total shares of
Company on the equity registration date designated by the annual profit distribution plan. The
Company plans to distribute cash dividend of RMB1.80 (tax inclusive) for every 10 shares of to all
shareholders of the Company, and the remaining undistributed profits will be carried forward to the
following year.
4. Modification and adjustment of the cash dividend distribution policy during the Reporting
Period
The Company's cash dividend policy was not modified or adjusted during the Reporting Period.
(II) Special statement on cash dividend distribution policy
√Applicable □N/A
Whether it meets the requirements of the articles of association or the resolution of the general √Yes □No
meeting
Are there defined and clear distribution qualifications and proportions √Yes □No
Are there well-designed decision-making procedures and system √Yes □No
Have independent directors performed their duties and role properly √Yes □No
Whether the minority shareholders have the chance to fully express their opinions and demands
√Yes □No
and whether their legitimate rights and interests have been well protected
(III) If the Company made a profit during the Reporting Period and there's profit
distributable by the parent company to shareholders, but the Company does not propose to
distribute profits in cash, the Company shall explain the reason in detail, usage of the
undistributed profit and usage plan
□Applicable √N/A
94
Joincare Pharmaceutical Group Annual Report 2023
(IV) Profit distribution and conversion of capital reserve into share capital for the Reporting
Period
√Applicable □N/A
Unit: Yuan Currency: RMB
Number of bonus shares to be distributed for every ten shares (share) 0
Amount to be distributed for every ten shares (RMB) (tax inclusive) 1.80
Number of shares to be converted into share capital for every ten shares (share) 0
Amount of cash dividend (tax inclusive) 335,794,285.26
Net profit attributable to ordinary shareholders of the listed company in the
1,442,779,722.23
consolidated financial statement during the year of distribution
Percentage of the net profit attributable to ordinary shareholders of the listed
23.27
company in the consolidated financial statement (%)
Amount of repurchase of shares under cash offer included in cash dividend 475,382,587.14
Total amount of dividend (tax inclusive) 811,176,872.40
Total amount of dividend as a percentage of the net profit attributable to ordinary
56.22
shareholders of the listed company in the consolidated financial statement (%)
Note: The Company proposes to distribute cash dividend of RMB1.80 (tax inclusive) for every 10 shares to all
shareholders of the Company (except for those in the Share Repurchase Account of the Company). The cash
dividends proposed to be distributed for 2023 will be RMB335,794,285.26 (tax inclusive) based on the total share
capital of 1,865,523,807 shares as of 31 December 2023. The final and actual total distribution amount is calculated
based on the total shares entitled to participate in the equity distribution on the equity registration date for the
implementation of equity distribution.
XI Share incentive plan, employee share ownership scheme and other employee incentives of
the Company and their effect
(1) Matters related to equity incentive scheme have been disclosed have been disclosed in the
provisional announcements without progress or change in subsequent implementation
√Applicable □N/A
Overview Query index
On 21 July 2023, the Company held the 27th Meeting of
the 8th Session of the Board and the 22nd Meeting of the
See the Announcement on Adjusting the Exercise
8th Session of the Supervisory Committee, which
Price of the 2022 Share Options Incentive Scheme of
considered and approved the Proposal on Adjusting the
Joincare Pharmaceutical Group Industry Co., Ltd.
Exercise Price of the 2022 Share Options Incentive Scheme
(Lin 2023-072) disclosed by the Company on 22 July
of the Company. Due to profit distribution, the exercise
2023 for details.
price under the 2022 Share Options Incentive Scheme was
adjusted to RMB11.06 per share.
On 11 August 2023, the Company held the 28th Meeting of
the 8th Session of the Board and the 23rd Meeting of the See the Announcement on the Announcement on the
8th Session of the Supervisory Committee, which Grant of Reserved Share Options to Incentive
considered and approved the Proposal on the Grant of Participants of Joincare Pharmaceutical Group
Reserved Share Options to Incentive Participants and the Industry Co., Ltd. (Lin 2023-077) and the
Proposal on the Cancellation of Certain Share Options Announcement on the Cancellation of Certain Share
Granted under the 2022 Share Options Incentive Scheme. Options Granted under the 2022 Share Options
Accordingly, the Company agreed to grant 5,500,000 share Incentive Scheme of Joincare Pharmaceutical Group
options to 149 incentive participants at the price of Industry Co., Ltd. (Lin 2023-078) disclosed on 12
RMB11.06 per share. Due to the resignation of some August 2023, the Announcement on the Completion
incentive participants and other reasons, 2,370,000 share of the Cancellation of Certain Share Options of the
options granted under the first grant but not yet exercised Company Granted but Not Yet Exercised under the
by incentive participants were cancelled. 2022 Share Option Incentive Plan of Joincare
Upon review and confirmation by the Shanghai Branch of Pharmaceutical Group Industry Co., Ltd. (Lin 2023-
China Securities Depository and Clearing Corporation 081) disclosed on 19 August 2023 and other relevant
Limited, the said cancellation of 2,370,000 share options announcements disclosed by the Company for details.
was completed on 17 August 2023.
On 18 August 2023, the Company held the 29th Meeting of See the Announcement on the Satisfaction of Exercise
the 8th Session of the Board and the 24th Meeting of the Conditions for the First Exercise Period of the First
8th Session of the Supervisory Committee, which Grant under the 2022 Share Options Incentive
considered and approved the Proposal on the Satisfaction Scheme of Joincare Pharmaceutical Group Industry
of Exercise Conditions for the First Exercise Period of the Co., Ltd. (Lin 2023-082) disclosed by the Company
First Grant under the 2022 Share Options Incentive on 19 August 2023 for details.
95
Joincare Pharmaceutical Group Annual Report 2023
Scheme. Accordingly, the Board believes that 391
incentive participants under the first grant of the incentive
scheme have satisfied the substantive conditions for the
exercise of rights during the first exercise period, and
agrees to adopt the independent exercise model for this
exercise period. The number of options exercised in total
was 18,832,000.
The number of options exercised was 799,526 from 1 July See the Announcement on 2023 Q3 Independent
2023 to 30 September 2023. As at 30 September 2023, the Exercise Results of the 2022 Share Options Incentive
number of options cumulatively exercised and completing Scheme of Joincare Pharmaceutical Group Industry
share transfer registration under the first grant of the 2022 Co., Ltd. & Changes in Shares (Lin 2023-109)
Share Options Incentive Scheme of the Company was disclosed by the Company on 10 October 2023 for
799,526 shares. details.
On 21 September 2023, the Company held the Congress of
Workers and Staff, the 33rd Meeting of the 8th Session of
See the Announcement on the Third Phase Ownership
the Board and the 26th Meeting of the 8th Session of the
Scheme under Medium to Long-term Business
Supervisory Committee, which considered and approved
Partner Share Ownership Scheme of Joincare
the Proposal on the Third Phase Ownership Scheme under
Pharmaceutical Group Industry Co., Ltd. (Draft) and
Medium to Long-term Business Partner Share Ownership
its Summary disclosed by the Company on 22
Scheme of the Company (Draft) and its Summary and the
September 2023 and other relevant announcements,
Proposal on the General Meeting for Granting Mandate to
and the Announcement on Resolutions of the 2023
the Board to Deal with Matters Related to the Third Phase
Third Extraordinary General Meeting of Joincare
Ownership Scheme under Medium to Long-term Business
Pharmaceutical Group Industry Co., Ltd. (Lin 2023-
Partner Share Ownership Scheme of the Company. On 12
111) disclosed by the Company on 13 October 2023
October 2023, the Company held the 2023 Third
for details.
Extraordinary General Meeting, which considered and
approved the said proposals.
On 27 October 2023, the Company held the First Holders’
Meeting of the Third Phase Share Ownership Scheme of
Medium to Long-term Business Partners, which considered
and approved the Proposal on Establishing the See the Announcement on Resolutions of Joincare
Management Committee of the Third Phase Share Pharmaceutical Group Industry Co., Ltd. at the First
Ownership Scheme of the Company, the Proposal on Holders’ Meeting of the Third Phase Share
Electing Members of the Management Committee of the Ownership Scheme of Medium to Long-term
Third Phase Share Ownership Scheme and the Proposal on Business Partners (Lin 2023-119) disclosed by the
Authorizing the Management Committee of the Third Company on 28 October 2023 for details.
Phase Share Ownership Scheme of the Company to Handle
Matters Related to the Employee Share Ownership
Scheme.
As at 20 December 2023, the Third Phase Share Ownership
Scheme of the Company has purchased a total of 9,370,400
shares by way of secondary market centralized bidding
trading, representing 0.50% of the total share capital of the See the Announcement of Joincare Pharmaceutical
Company at that time, with a total turnover of Group Industry Co., Ltd. on Completing the Purchase
RMB115,443,300 (the difference between the actual of Shares for the Third Phase Share Ownership
transaction amount and the total amount of the employee Scheme under Medium to Long-term Business
share ownership scheme represents the interest generated Partner Share Ownership Scheme (Lin 2023-139)
from the holding of share funds) and an average transaction disclosed by the Company on 22 December 2023 for
price of approximately RMB12.32 per share. Then the details.
Company has completed the purchase of the underlying
shares for the Third Phase Share Ownership Scheme on the
secondary market.
The number of options exercised was 2,701,363 from 1 See the Announcement on 2023 Q4 Independent
October 2023 to 31 December 2023. As at 31 December Exercise Results of the 2022 Share Options Incentive
2023, the number of options cumulatively exercised and Scheme of Joincare Pharmaceutical Group Industry
completing share transfer registration under the first grant Co., Ltd. & Changes in Shares (Lin 2024-001)
of the 2022 Share Options Incentive Scheme of the disclosed by the Company on 3 January 2023 for
Company was 3,500,889 shares. details.
(2) Incentives not disclosed in the provisional announcements or with subsequent progress
Equity incentives
□Applicable √N/A
Others
□Applicable √N/A
96
Joincare Pharmaceutical Group Annual Report 2023
Employee share ownership scheme
□Applicable √N/A
Other incentive program
□Applicable √N/A
(3) Equity incentives granted to directors and senior management during the Reporting
Period
√Applicable □N/A
Unit: 10,000 shares
Number of Number
Number Market
Number newly Number of of
of share price at
of share granted exercisable exercised
Exercise price options the end of
options share options options
Name Title of share held at the
held at the options during the during
options(RMB) the end Reporting
beginning during the Reporting the
of the Period
of the year Reporting Period Reporting
period (RMB)
Period Period
Director,
Yu Xiong 80 0 32 18 11.06 62 12.43
President
Director,
Lin Nanqi Vice 80 0 32 0 11.06 80 12.43
President
Director,
Vice
President,
Qiu Qingfeng 60 0 24 0 11.06 60 12.43
Chief
Financial
Officer
Zhang Vice
45 0 18 0 11.06 45 12.43
Leiming President
Vice
Zhao President,
60 0 24 0 11.06 60 12.43
Fengguang Board
Secretary
Total / 325 0 130 18 / 307 /
(4) Performance assessment mechanism for senior management during the Reporting Period,
and the development and implementation of incentive scheme
√Applicable □N/A
According to the relevant provisions of the Company such as the Remuneration and Performance
Appraisal Management System for Senior Management, the plans on performance appraisal results
and remuneration of senior management for the year 2023 are set based on the completion of the
operation targets of the Company and the corresponding personal performance of each senior
management for the year 2023. The plans shall be submitted to the Board for review and approval.
During the Reporting Period, senior management of the Company faithfully performed their duties
in strict accordance with the Company Law, the Articles of Association and other relevant
regulations, actively implemented the relevant resolutions of the Company's General meetings and
the Board meetings, actively adjusted business plans under the guidance of the Board, continuously
strengthened internal control management, and strived to improve the Company's core
competitiveness.
XII. Development and implementation of internal controls during the Reporting Period
√Applicable □N/A
97
Joincare Pharmaceutical Group Annual Report 2023
During the Reporting Period, the Company carried out standard operation and risk control in strict
accordance with the laws and regulations in China and the internal control system of the Company.
The Company established a rigorous internal control management system, continued to optimize
and improve the internal control system by combining the industry characteristics and the actual
operation of the Company, enhanced its decision-making efficiency, and ensured the legal
compliance of business management and the security of corporate assets, facilitating the steady
implementation of strategies of the Company. Thanks to an effective internal control mechanism,
the Company can prevent, timely identify and correct any deviation in the operation and
management, and can reasonably ensure the security and integrity of corporate assets, as well as the
authenticity, accuracy and completeness of accounting information, safeguarding the interests of the
Company and all shareholders.
Based on the identification of material deficiencies of internal control of the Company, there was
no material deficiency or significant deficiency of internal control over financial reporting and non-
financial reporting in the Company for the year 2023. Through operation, analysis and evaluation
of the internal control system, the Company effectively prevented business management risks, and
promoted the achievement of internal control objectives. Looking ahead, the Company will continue
to improve the internal control system, standardize its implementation, strengthen the supervision
and inspection over internal control, and promote the healthy and sustainable development of the
Company. See the Risk Management and Internal Control Self-Assessment Report 2023 of Joincare
Pharmaceutical Industry Group Co., Ltd. disclosed by the Company on 3 April 2024 for details.
Statement on material loopholes in internal controls during the Reporting Period
□Applicable √N/A
XIII. Management and control of subsidiaries during the Reporting Period
√Applicable □N/A
The Company formulated relevant subsidiary management rules, such as the Detailed Rules for
Standardized Operation and Management of Subsidiaries, to strengthen internal control of wholly-
owned and majority-owned subsidiaries by specifying their governance structure, the management
of the Board, the general meetings and the Supervisory Committee, special transactions, legal
person's authorization and relevant issues, to improve the Company's overall operating efficiency
and risk control capability. During the Reporting Period, the Company exercised management and
control over its subsidiaries in accordance with the Company Law, the Articles of Association and
other relevant laws and regulations. First, it provided guidance for the subsidiaries as to how to
improve the corporate governance structure, and how to revise and improve the Articles of
Association and other relevant systems in accordance with relevant laws and regulations; second,
through internal training such as training on connected transactions, the Company urged subsidiaries
to report to the Company on connected transactions, external guarantee and other major matters in
advance; third, the Company updated the internal control manual and related materials, to improve
the internal control system, and strengthen implementation and enhance the effectiveness of internal
control.
XIV. Related information on internal control audit report
√Applicable □N/A
In accordance with relevant standards, guidelines and regulatory documents, and upon the approval
by the audit committee of the Board of Directors, the Board of Directors and the general meeting,
the Company engaged Grant Thornton China (special general partnership) to conduct internal
control audit in 2023. In accordance with the Basic Standards for Enterprise Internal Control and
the Application Guidelines for Enterprise Internal Control, Grant Thornton China conducted audit
98
Joincare Pharmaceutical Group Annual Report 2023
of the effectiveness of internal control over financial reporting of the Company and its subsidiaries
as of 31 December 2023, and issued a standard internal control audit report with unqualified opinion.
See the Internal Control Audit Report 2023 of Joincare Pharmaceutical Industry Group Co., Ltd.
disclosed by the Company on 3 April 2024 for details.
Disclosure of internal control auditor's report: Yes
Types of internal control auditor's opinion: Standard unqualified opinion
XV. Rectification of self-examined deviations in the Special Action for Governance of Listed
Companies
1. Optimization of the meeting convening methods of the Board of Directors and Special
Committees of the Board
Description: At present, the Board of Directors and the special committees mostly hold meetings
through electric means which is not conducive to full expression of opinions by directors.
Rectification measures: In order to ensure that directors can fully express their opinions, the
Company will increase the number of on-site meetings of the Board of Directors and its special
committees. In particular, on-site meetings or on-site + virtual means will be held for matters related
to major asset purchase or sale or major connected transactions in the future. In 2023, the Company
held 4 meeting through a combination of on-site + virtual means, accounted for 26.67% of the
number of all meetings, representing an increase of 22.32% over 2021.
2. Improvement of the audit institution selection and engagement review process
Description: The special self-inspection found that the Company engaged the audit institution based
on inquiry into public available information on its professional competence and integrity, without
consulting the record of integrity of the audit institution in the securities and futures market through
the China Securities Regulatory Commission in advance.
Rectification measures: From 2021, in addition to the inquiry into public available information, the
Company would, before selecting and engaging an audit institution, consult the records of integrity
of the audit institution and relevant certified public accountants to be engaged in the securities and
futures market as maintained by Shenzhen Securities Regulatory Bureau, to fully learn about its
practicing experience, professional competence and integrity.
XVI. Others
□Applicable √N/A
99
Joincare Pharmaceutical Group Annual Report 2023
Chapter 5 Environmental and Corporate Social Responsibility
I. Environmental information
If the environment protection mechanism was
Yes
established
Amount of funds invested in environment protection
10,330.01
during the Reporting Period (Unit: RMB0’000)
(I) Environmental issues of companies and their major subsidiaries belonging to key
pollutant discharging units as announced by the environmental protection department
√ Applicable □ N/A
1. Pollution discharge information
√ Applicable □ N/A
ⅰ Jiaozuo Joincare
Pollutant Total
Number Total
Name of Name of major Number of Discharge discharge amount of
Mode of of amount of Excessive
company or pollutants and discharge concentration standards discharge
discharge discharge discharge discharge
subsidiary specific pollutants outlets (mg/L) implemente approved
outlets (t/a)
d (mg/L) (t/a)
Chemical oxygen Master outlet in
Continuous 116.58 220 809.8 942.1 Nil
Jiaozuo demand sewage
1
Joincare Ammonia treatment
Continuous 14.9 35 102.2 105.3 Nil
nitrogen workshop
ⅱ Taitai Pharmaceutical
Pollutant Total
Name of major Number Total
Name of Number of Discharge discharge amount of
pollutants and Mode of of amount of Excessive
company or discharge concentratio standards discharge
specific discharge discharge discharge discharge
subsidiary outlets n (mg/L) implemented approved
pollutants outlets (t/a)
(mg/L) (t/a)
Chemical /
44.72 345 0.324 Nil
oxygen demand
Biochemical Master outlet in
sewage 6.18 150 0.0494 / Nil
oxygen demand Intermittent 1
treatment
Suspended /
Taitai workshop 7.5 250 0.061 Nil
solids
Pharmaceutical pH value 7.64 6～9 / / Nil
Sulfur dioxide 0.76 50 0.0112 / Nil
Discharge
Nitrogen oxide Intermittent 1 outlet of boiler 8.47 150 0.169 / Nil
Particulate exhaust gas /
14.47 20 0.398 Nil
matter
iii Haibin Pharma
Pollutant Total
Name of major Number Total
Name of Discharge discharge amount of
pollutants and Mode of of Number of discharge amount of Excessive
company or concentratio standards discharge
specific discharge discharge outlets discharge discharge
subsidiary n (mg/L) implemented approved
pollutants outlets (t/a)
(mg/L) (t/a)
Chemical
48.96 500 3.3 41.65 Nil
oxygen demand Master outlet in
Ammonia 1 sewage treatment
0.43 45 0.0292 3.7485 Nil
nitrogen workshop
Total nitrogen 3.16 70 0.213 5.831 Nil
Haibin
Total volatile Intermittent
Pharma Discharge outlet of
organic 1 1.7 100 0.010028 0.504 Nil
process exhaust gas
compounds
Discharge outlet of
Non-methane
1 exhaust gas in 3.3 60 0.2036 5.04 Nil
hydrocarbon
sewage station
100
Joincare Pharmaceutical Group Annual Report 2023
iv Xinxiang Haibin
Name of Pollutant Total
Number Total
Name of major Discharge discharge amount of
Mode of of Number of amount of Excessive
company or pollutants and concentration standards discharge
discharge discharge discharge outlets discharge discharge
subsidiary specific (mg/L) implemented approved
outlets (t/a)
pollutants (mg/L) (t/a)
Chemical
oxygen Master outlet in 96.8 220 13.120 13.2025 Nil
Xinxiang
demand Continuous 1 sewage treatment
Haibin
Ammonia workshop
6.212 35 0.842 1.5995 Nil
nitrogen
v Fuzhou Fuxing
Pollutant
Name of Total
Number Discharge discharge Total
Name of major amount of
Mode of of Number of discharge concentration standards amount of Excessive
company or pollutants (mg/L)/ implemented discharge
discharge discharge outlets discharge discharge
subsidiary and specific approved
outlets （mg/m3） (mg/L) / (t)
pollutants (t/a)
（mg/m3）
Chemical
oxygen
demand 14.51 100 19.40 102.19 Nil
The northwest side of
Intermittent 1
（COD） the factory
Ammonia
0.1735 15 0.232 10.22 Nil
nitrogen
SO2 1 RTO 6.91 200 0.791 2.6 Nil
Fuzhou NOx 1 RTO 8.196 200 0.938 2.6 Nil
Fuxing RTO, fermentation
workshop,
environmental friendly
Organized
sewage station,
VOCs 7 6.38 60 7.626 30.19 Nil
regulating pool,
Workshop 2 (East),
Workshop 2 (West),
QC department
Note: The discharge concentration represents the actual discharge concentration to the environment, and the
standards implemented represent the standards for discharge to the environment by Jiangyin Sewage Treatment Plant
（江阴污水处理厂）(i.e. COD ≤ 100 mg/L, ammonia nitrogen ≤ 15 mg/L), and the agreed standard for wastewater
discharge from Fuzhou Fuxing to Jiangyin Sewage Treatment Plant（江阴污水处理厂）shall be the standards for
discharge to the environment by Jiangyin Sewage Treatment Plant（江阴污水处理厂） (i.e. COD ≤ 500 mg/L,
ammonia nitrogen ≤60 mg/L, total phosphorus ≤ 8 mg/L, total nitrogen ≤ 70 mg/L, SS ≤ 400 mg/L). For the discharge
of non-methane total hydrocarbons, particulate matter, sulfur dioxide, and nitrogen oxides, the adopted standard was
the standard limits stipulated in the Emission Standard of Air Pollutants for Pharmaceutical Industry (《制药工业
大气污染物排放标准》)(GB 37823-2019).
vi Livzon Xinbeijiang
Name of Pollutant Total
Number Total
Name of major Number of Discharge discharge amount of
Mode of of amount of Excessive
company or pollutants and discharge concentration standards discharge
discharge discharge discharge discharge
subsidiary specific outlets (mg/L) implemented approved
outlets (t)
pollutants (mg/L) (t/a)
Chemical
oxygen Sewage 66.4 240 63.66 213.6 Nil
Livzon
demand Intermittent 1 treatment
Xinbeijiang
Ammonia workshop
4.9 70 4.73 24.5 Nil
nitrogen
Note: The discharge concentration represents the concentration of discharge into Qingyuan Henghe Sewage
Treatment Plant （清远横荷污水处理厂）, while the standard adopted for discharge represents the standard
stipulated in the pollutant discharge license of the company, i.e. COD ≤ 240 mg/L, ammonia nitrogen ≤ 70 mg/L.
The data was obtained from Qingyuan Environmental Protection Bureau. The boiler waste gas follows the Emission
Standard of Air Pollutants for Boilers (《锅炉大气污染物排放标准》) (DB 44/765-2019); the waste gas emission
from the workshops follows the Emission Standard of Air Pollutants for Pharmaceutical Industry (《制药工业大气
污染物排放标准》) (GB 37823-2019) and the Emission Standards for Odor Pollutants (《恶臭污染物排放标准》)
(GB 14554-93).
101
Joincare Pharmaceutical Group Annual Report 2023
vii Livzon Hecheng
Name of Pollutant Total Total
Number
Name of major Number of Discharge discharge amount amount of
Mode of of Excessive
company or pollutants and discharge concentration standards of discharge
discharge discharg discharge
subsidiary specific outlets (mg/L)/(mg/m3) implemented discharge approved
e outlets
pollutants (mg/L)/(mg/m3) (t) (t/a)
Chemical
oxygen 53.2 192 11.4 26.28 Nil
Wastewater
demand
Intermittent 1 treatment
Ammonia
station
nitrogen 2.9 40 0.613 5.48 Nil
(NH3-N)
Sulfur
3 Boiler room 3 50 0.101 / Nil
dioxide
Nitrogen
3 Boiler room 53 150 0.6646 / Nil
oxide
Livzon Smoke and
3 Boiler room 1.31 20 0.0235 / Nil
Hecheng dust
Hydrogen
Organized 7 Workshop 3.51 100 2.13 / Nil
chloride
continuous
Non-methane emission 7 Workshop 18.98 60 7.31 Nil
hydrocarbon
77.76
Non-methane
1 RTO 8.03 60 0.15 Nil
hydrocarbon
Nitrogen
1 RTO 5.5 200 1.01 / Nil
oxide
Sulfur
1 RTO 2.75 200 0.40 / Nil
dioxide
Notes: 1. The discharge concentration of pollutants in waste water represents the average concentration by online
monitoring from the master discharge outlet by the company into South District Sewage Treatment Plant, while the
standard adopted for discharge represents the standard stipulated in the pollutant discharge license of the company,
i.e. COD ≤192mg/L, ammonia nitrogen ≤40mg/L.
2. The discharge concentration of pollutants in the discharge outlet of waste gas represents the average
concentration detected by a qualified third party engaged, of which the boiler exhaust adopted the Emission Standard
of Air Pollutants for Boilers (《锅炉大气污染物排放标准》)(DB 44/765-2019) of Guangdong Province. The
workshop and wastewater treatment station emission complied with the Emission Standard of Air Pollutants for
Pharmaceutical Industry (《制药工业大气污染物排放标准》) (GB 37823-2019).
viii Gutian Fuxing
Name of Pollutant Total
Number
Name of major Number of Discharge discharge Total amount amount of
Mode of of Excessive
company or pollutants discharge concentration standards of discharge discharge
discharge discharge discharge
subsidiary and specific outlets (mg/L) implemented (t) approved
outlets
pollutants (mg/L) (t/a)
Chemical
oxygen Southeastern 43.276 120 7.78 108 Nil
Gutian
demand Continuous 1 part of the
Fuxing
Ammonia factory zone
8.236 35 1.54 31.5 Nil
nitrogen
Note: Wastewater discharge follows the Discharge Standard of Water Pollutants for Pharmaceutical Industry
Fermentation Products Category (《发酵类制药工业水污染物排放标准》) (GB21903-2008). The discharge
concentration represents the concentration of ultimate discharge into the environment, while the discharge standards
stipulated in the pollutant discharge license are COD ≤ 120 mg/L, ammonia nitrogen ≤ 35 mg/L.
ix Livzon Limin
Name of Pollutant Total
Number
Name of major Number of Discharge discharge Total amount amount of
Mode of of Excessive
company or pollutants and discharge concentratio standards of discharge discharge
discharge discharge discharge
subsidiary specific outlets n (mg/L) implemented (t) approved
outlets
pollutants (mg/L) (t/a)
Chemical
oxygen Wastewater 12.67 110 4.514 Nil Nil
Livzon
demand Intermittent 1 treatment
Limin
Ammonia station
0.2128 15 0.075 Nil Nil
nitrogen
Note: The production process of Limin Factory is required to comply with the Water Pollution Prevention and
Control Law of the PRC (《中华人民共和国水污染防治法》), the Air Pollution Prevention and Control Law of
the PRC (《中华人民共和国大气污染防治法》), the Solid Waste Pollution Prevention and Control Law of the
PRC (《中华人民共和国固体废物污染环境防治法》), the Integrated Wastewater Discharge Standard of the PRC
National Standard (《中华人民共和国国家标准污水综合排放标准》) (GB 8978-1996), the Emission Standard of
102
Joincare Pharmaceutical Group Annual Report 2023
Air Pollutants for Boiler (《锅炉大气污染物排放标准》) (GB 13271-2014), the Measures for Pollutant Discharge
Permitting Administration (TrialImplementation) (《排污许可管理办法（试行）》) and other laws, regulations
and industry standards. The wastewater of Limin Factory was discharged into Shaoguan Second Sewage Treatment
Plant（韶关市第二污水处理厂）and the standard adopted for pollutant discharge represented the standard stipulated
in the pollutant discharge license of the company, i.e. COD ≤ 110 mg/L, ammonia nitrogen ≤ 15 mg/L, while the
data detected by third party inspection firm was adopted as the discharge concentration.
x Livzon Pharmaceutical Factory
Name of Pollutant Total
Number
Name of major Number of Discharge discharge Total amount of
Mode of of Excessive
company or pollutants discharge concentration standards amount of discharge
discharge discharge discharge
subsidiary and specific outlets (mg/L) implemented discharge (t) approved
outlets
pollutants (mg/L) (t/a)
Chemical Sewage
Livzon
oxygen 1 treatment 18.69 120 2.21 Nil Nil
demand station
Pharmaceutical Intermittent
Sewage
Factory Ammonia
nitrogen
1 treatment 0.2 20 0.024 Nil Nil
station
Note: The discharge concentration of pollutants in the wastewater discharge outlet represents the average
concentration detected by a qualified third party engaged, by implementing the strictest of water pollutant discharge
concentration limits for newly-built enterprises of the Discharge Standard of Water Pollutants for Pharmaceutical
Industry Mixing/ Compounding and Formulation Category (《混装制剂类制药工业水污染物排放标准》 ) (GB
21908-2008), water pollutant discharge concentration limits for newly-built enterprises of the Discharge Standards
of Water Pollutants for Pharmaceutical Industry Bio-pharmaceutical Category (《生物工程类制药工业水污染物
排放标准》 ) (GB 21907- 2008), or the level 1 of phase II standard of Discharge Limits of Water Pollutants (《水
污染物排放限值》) (DB 44/26- 2001) of Guangdong Province.
xi Ningxia Pharmaceutical
Pollutant
Name of Total
Number Discharge discharge Total
Name of major Number of amount of
Mode of of concentrati standards amount of Excessive
company or pollutants and discharge discharge
discharge discharge on (mg/L) / implemented discharge discharge
subsidiary specific outlets approved
outlets (mg/m3) (mg/L) / (t)
pollutants (t/a)
(mg/m3)
Chemical Sewage
oxygen treatment 104.84 200 102.49 Nil Nil
demand workshop on
1
the north side
Ammonia
of the factory 0.61 25 0.6 Nil Nil
nitrogen
zone
Sulfur
67.28 200 29.52 156.816 Nil
dioxide Boiler
Ningxia Nitrogen workshop on
Continuous 1 138 200 60.55 156.816 Nil
Pharmaceutical oxide north side of
Particulate factory zone
6 30 2.52 23.522 Nil
matter
4 outlets for
fermentation, 3
Volatile
outlets for
organic 9 7.17 100 10.74 79.535 Nil
refinery and 2
compounds
outlets for
sewage
Notes: 1. The discharge concentration of wastewater represents the concentration of ultimate discharge to the
environmental protection control center of Ningxia Xin'an Technology Co., Ltd. (宁夏新安科技有限公司) (“Xin'an
Company”). The standard adopted for pollutant discharge was the standard stipulated in the pollutant discharge
license of the company and the amount of discharge was calculated by the amount received by Xin'an Company. In
respect of the total amount of approved discharge, since Ningxia Pharmaceutical adopted indirect discharge, the
local government of Ningxia cancelled the limitation of total discharge of chemical oxygen demand and ammonia
nitrogen of all indirect discharge enterprises, and the total amount index was directly allocated to sewage treatment
plants in the pharmaceutical industrial park established by the government after the renewal of the pollution
discharge license.
2. The air emission concentration of boilers represents the self-monitoring average concentration throughout
the year, the standard adopted for discharge was the emission limits of coal-fired boilers in Schedule 3 of
Emission Standard of Air Pollutants for Boiler (《锅炉大气污染物排放标准》) (GB 13271-2014) (sulfur
dioxide ≤ 200 mg/m3, nitrogen oxides ≤ 200 mg/m3, particulate matter ≤ 30 mg/m3) and Standard for Pollution
Control on Hazardous Waste Incineration (《危险废物焚烧污染物控制标准》) (GB18484-2020), and the
amount of sulfur dioxide, nitrogen oxides, and particulate matter was calculated by the amount indicated by
103
Joincare Pharmaceutical Group Annual Report 2023
online monitoring. The concentration of volatile organic compounds represents the concentration of ultimate
discharge to the environment (self-monitoring concentration), the adopted standard was the standard limits
stipulated in Schedule I of the Emission Standard of Air Pollutants for Pharmaceutical Industry (《制药工业
大气污染物排放标准》) (GB 37823-2019) and the amount of discharge was calculated by the amount of
waste gas emissions and the discharge concentration recorded by the monitoring report.
xii Jiaozuo Hecheng
Name of Pollutant Total
Number
Name of major Number of Discharge discharge Total amount of
Mode of of Excessive
company or pollutants and discharge concentratio standards amount of discharge
discharge discharge discharge
subsidiary specific outlets n (mg/L) implemented discharge (t) approved
outlets
pollutants (mg/L) (t/a)
Chemical
Master outlet in
oxygen 96.6 220 8.022 60.8 Nil
Jiaozuo industrial
demand Continuous 1
Hecheng wastewater
Ammonia
workshop 3.4 35 0.279 8.8 Nil
nitrogen
Note: The discharge concentration and the total amount of discharge represent the concentration and total amount of
ultimate discharge into the downstream sewage treatment plant, and the source is online monitoring data.
Replacement of hazardous waste signs and labels in pipelines follows the latest Technical Specification for Setting
Identification Signs of Hazardous Waste (《危险废物识别标志设置技术规范》).
xiii Shanghai Livzon
Name of Pollutant Total
Number Discharge
Name of major Number of discharge Total amount amount of
Mode of of concentration Excessive
company or pollutants discharge standards of discharge discharge
discharge discharge (mg/L)/(mg/ discharge
subsidiary and specific outlets implemented (t) approved
outlets m3)
pollutants (mg/L)/(mg/m3) (t/a)
Chemical
oxygen 40.1 500 4.93 6.1738 Nil
Master outlet
demand Intermittent 1
in the park
Ammonia
2.45 40 0.30 0.8747 Nil
nitrogen
Shanghai No. 5 and 6
Particulate
Livzon 2 outlets on the - - - - Nil
matter
Organized roof
intermittent No.1, 2, 3, 4,
Volatile
discharge 7, 8, 9 and 10
organic 8 3.41 60 0.28 0.88325 Nil
outlets on the
compounds
roof
Note: The discharge concentration was the average of monthly third-party monitoring data, and the amount of
discharge was the cumulative sum of monthly discharge. The discharge of VOCs and particulate matter were in
accordance with the Emission Standard of Air Pollutants for Pharmaceutical Industry (《制药工业大气污染物排
放标准》) (GB 37823- 2019), and the discharge of COD and ammonia nitrogen were implemented in accordance
with the Integrated Wastewater Discharge Standard ( 《污水综合排放标准》) (DB 31/199-2018). Air pollutants
discharge follows Emission Standard of Air Pollutants for Pharmaceutical Industry ( 《制药工业大气污染物排放
标准》) (DB31/310005-2021), Integrate Emission Standards of Air Pollutants (《大气污染物综合排放标准》)
(DB31/933-2015) and Emission Standards for Odor Pollutants (《恶臭（异味）污染物排放标准》) (DB31/1025-
2016). Water pollutant discharge follows the The Discharge Standard of Pollutants for Bio-Pharmaceutical Industry
(《生物制药行业污染物排放标准》) (DB31/373-2010). Shanghai Livzon was among other key pollutant discharge
units, but not among the key pollutant discharge units of water environment and atmospheric environment.
xiv Livzon MAB
Name of Pollutant Total
Number
Name of major Number of Discharge discharge Total amount of
Mode of of Excessive
company or pollutants and discharge concentratio standards amount of discharge
discharge discharge discharge
subsidiary specific outlets n (mg/L) implemented discharge (t) approved
outlets
pollutants (mg/L) (t/a)
Chemical Sewage
oxygen 1 treatment 18.69 120 2.57 Nil Nil
Livzon demand station
Intermittent
MAB Sewage
Ammonia
1 treatment 0.2 20 0.0261 Nil Nil
nitrogen
station
Note: The discharge concentration of pollutants in the wastewater discharge outlet represents the average
concentration detected by a qualified third party engaged, by implementing the strictest of water pollutant discharge
concentration limits for newly-built enterprises of the Discharge Standard of Water Pollutants for Pharmaceutical
104
Joincare Pharmaceutical Group Annual Report 2023
Industry Mixing/ Compounding and Formulation Category (《混装制剂类制药工业水污染物排放标准》) (GB
21908-2008), water pollutant discharge concentration limits for newly-built enterprises of the Discharge Standards
of Water Pollutants for Pharmaceutical Industry Bio-pharmaceutical Category (《生物工程类制药工业水污染物
排放标准》) (GB 21907- 2008), or the level 1 of phase II standard of Discharge Limits of Water Pollutants (《水
污染物排放限值》) (DB 44/26- 2001) of Guangdong Province.
xv Livzon Diagnostics
Name of Pollutant Total
Number Total
Name of major Number of Discharge discharge amount of
Mode of of amount of Excessive
company or pollutants and discharge concentratio standards discharge
discharge discharge discharge discharge
subsidiary specific outlets n (mg/L) implemented approved
outlets (t)
pollutants (mg/L) (t/a)
Chemical Sewage
oxygen 1 treatment 14 500 0.0419 Nil Nil
Livzon demand station
Intermittent
Diagnostics Sewage
Ammonia
1 treatment 0.09 Nil 0.00027 Nil Nil
nitrogen
station
Note: The sewage treated by Livzon Diagnostics was discharged into the South District Sewage Treatment Plant in
Zhuhai （珠海市南区水质净化厂） and the wastewater discharge was carried out in accordance with the Discharge
Limits of Water Pollutants of Guangdong Province Standards ( 广东省地方标准水污染物排放限值》 (DB 44/26-
2001).
2. Construction and operation of pollution preventive facilities
√ Applicable □ N/A
Name of company or
Construction and operation of pollution preventive facilities
subsidiary
Exhaust gas: The treatment process of “Three-level spray + mist eliminator + dry filter
+ adsorption concentrator + RCO” + “secondary alkali spray” was adopted for
fermentation exhaust gas. The treatment process of “bag type dust collector” was
adopted for proportioning process dust-laden exhaust gas. The treatment process of
“secondary alkali spray” was adopted for exhaust gas treatment facilities in wastewater
treatment station. The treatment process of “alkali adsorption” was adopted for process
acid waste gas. The treatment process of “tertiary finned condenser + bag type dust
collector + secondary alkali spray + RTO”/“-20 ℃ condensation + activated carbon
adsorption device (including regenerating device) + RTO”/“adsorption device
(including regenerating device) Jiaozuo Joincare + secondary alkali spray + biological
Jiaozuo Joincare uptake + secondary alkali spray”/“secondary alkali spray + biological uptake +
secondary alkali spray” was adopted for process organic exhaust gas. 15 discharge
outlets were constructed. All of them enable stable and up-to-standard discharge
through self-monitoring in 2023.
Wastewater: The treatment process of “regulating pool + hydrolysis acidification pool
+ UASB + (CASS + air flotation) / modified A/O + secondary settling tank +
coagulating sedimentation” was primarily adopted. Standard wastewater outlets were
set; online automatic monitoring control system was installed at outlets for real-time
monitoring of COD, ammonia nitrogen, total nitrogen, pH, fluorion and flow.
Wastewater treatment process sections can be stably operated. Moreover, wastewater
control factors can be stably emitted in compliance with the required standard.
No new environmental protection facility was set up, and all environmental protection
Taitai Pharmaceutical
facilities functioned properly.
No new pollution preventive facility was set up, and all pollution preventive facilities
Haibin Pharma
functioned properly and ensured up-to-standard discharge.
Wastewater: The wastewater treatment system with daily processing capacity of 600
tonnes through patented A/O process designed by East China University of Science
and Technology functioned properly in 2023. In April 2020, a set of MVR
concentration wastewater treatment plant was added and functioned properly in 2023.
In June 2022, a set of lift aerator system and a set of magnetic levitation blower were
added in the biochemical system, which have been functioning properly. A new
Xinxiang Haibin sewage anaerobic treatment system was built in 2021, which has been functioning
properly. In 2023, the company adopted the Fenton advanced sewage treatment system
to delete and select reagents and orthogonally test the ratio of each reagent, and
implemented a series of measures, such as adjusting the dosage and introducing new
reagent manufacturers, to ensure that the advanced wastewater treatment process can
operates stably and that the indicators of discharged wastewater meet the standards for
discharge.
105
Joincare Pharmaceutical Group Annual Report 2023
Exhaust gas: The 40000m/h regenerative oxidation exhaust gas treatment system
designed by Jiangsu Ruiding started operation on 2 November 2019 and is functioning
properly in 2023. After reconstruction of dry tail gas self-circulating process, the
activated carbon adsorption device for high concentration waste gas designed by
Beijing Rixin Daneng Technology Co., Ltd. has been functioning properly in 2023 and
solvent recovery amount was increased. After alkali spray and water spray, the exhaust
gas from biochemical aerobic process of wastewater treatment was emitted in
compliance with the required standard, and the equipment functioned properly
throughout 2023. A set of methylene chloride and tetrahydrofuran membrane recovery
system was added for high concentration exhaust gas treatment of the sixth workshop,
which has been functioning properly in 2023. A new methylene chloride membrane
recovery system was added to the third workshop and the system operates properly in
2023.
The company strictly complies with the “Three Simultaneous” system of
environmental protection by collecting and treating “Three Wastes (wastewater, waste
gas and solid waste)” according to requirements, and employs an advanced wastewater
treatment process known as “Regulating pool + Hydrolysis acidification tank +
Sequencing Batch Reactor Activated Sludge Process (SBR) and Cyclic Activated
Sludge System (CASS) + Air float”. After the wastewater from production has gone
through the above treatment process, all indicators are stable and satisfy the discharge
standard. After meeting the discharge standards, the wastewater is discharged to
Fuzhou Fuxing Jiangyin Sewage Treatment Plant operated by Fujian Huadong Water Treatment Co.,
Ltd.（福建华东水务有限公司）via sewage pipe network at the industrial park area
for further treatment. In 2022, the waste gas treatment facilities for Fenton pool and
regulating pool have been added, and the waste gas was treated by secondary spraying.
The RTO annual maintenance has been completed in the first half of 2023. In 2023,
the COD concentration was 5,628.7 mg/L, the ammonia nitrogen concentration was
225.5 mg/L; the COD concentration and ammonia nitrogen concentration discharged
into Jiangyin Sewage Treatment Plant（江阴污水处理厂）were 237.2 mg/L and 22.1
mg/L respectively.
The “Three Wastes” were collected and treated effectively in strict compliance with
the “Three Simultaneous” system. The sewage treatment facilities with an investment
amount of over RMB30 million have a designed processing capacity of 3,000 t/d and
adopt the treatment process of “Pre-treatment + Aerobic pool + Hydrolysis
acidification tank + SBR + Catalytic oxidation + Air float”. The effluent water quality
constantly met the standard; the COD concentration of the influent water in the
regulating pool was about 2000 mg/L, and the actual COD concentration discharged
after treatment was about 100 mg/L (the discharge standard is ≤ 240 mg/L), and the
COD treatment efficiency reached 95%. The waste gas emitted from sewage treatment
was treated using a biological deodorization box + 3-level high-efficiency sodium
hypochlorite and lye spray + 1-level alkali spray treatment process; the waste gas
emission constantly met the standard. For the organic waste gas, the refining workshop
Livzon Xinbeijiang adopts the most advanced RTO treatment process, which conveys the waste gas to the
RTO furnace chamber at about 800 C for high-temperature oxidation and completely
decomposes the volatile organic gases into CO2 and water. In 2023, the fourth round
of environmental protection improvement and renovation was carried out, including a
series of noise reduction measures such as installing sound-proof glass for the shutters
on the third floor of the fermentation department 2, adding an enclosure to the fan on
the roof of the refining workshop and enclosing the MVR and RTO areas with sound-
absorbing cotton panels. In addition, the pre-treatment wastewater pipeline of the
sewage station was sorted out, the original remaining waste pipelines were removed,
and new wastewater pipelines were sorted out and installed to effectively reduce the
leakage of wastewater; for the waste gas of the fermentation workshop 2, the first-level
waste gas spray tower was added to strengthen the treatment effect of fermentation
waste gas.
The “Three Wastes” were treated in a centralized and effective manner in strict
compliance with the “Three Simultaneous” system and the maintenance and
management of pollution prevention & treatment facilities were enhanced to ensure
that pollutant discharge was stable and in compliance with the required standard. For
wastewater, the treatment process of “pre-treatment of drainage from the production
Livzon Hecheng process + hydrolytic acidification + Upflow Anaerobic Sludge Bed (UASB) +
advanced oxidation + Cyclic Activated Sludge System (CASS) process + air
floatation/ozonation advanced treatment” was adopted. Treated sewage was
discharged into Zhuhai Leaguer Environmental Protection Co., Ltd.（珠海力合环保
有限公司） (water purification plant in the South District) through the municipal
sewage pipeline network. The waste gas was treated by spray tower, activated carbon
106
Joincare Pharmaceutical Group Annual Report 2023
adsorption, condensation, liquid nitrogen cryogenic, RTO and other comprehensive
treatment technologies to ensure all kinds of pollutants were effectively treated and
discharged in compliance with the standards.
At the same time when the enterprise started production, the “Three Wastes” were
collected and treated effectively in accordance with the requirements of the “Three
Simultaneous” system of environmental protection. This involves a designed sewage
treatment capacity of 1,200 t/d, adoption of the advanced “Anaerobic-Oxic activated
sludge process (A/O) + SBR + nitrogen removal by denitrification + Fenton
decolorizing + air flotation” wastewater treatment process, 6,000m of effective
reservoir capacity of the treatment system and more than 20 sets of treatment
equipment with 350 KW installed capacity to improve the water treatment process,
thus ensuring that all wastewater treatment indicators are stable and satisfy the
discharge standard. The COD concentration and ammonia nitrogen of untreated
Gutian Fuxing
wastewater were 2000 mg/L and 400 mg/L respectively; the COD concentration and
ammonia nitrogen were lowered to 43.276 mg/L and 8.236 mg/L after treatment, with
the removal rate as high as 97.8%. Treated sewage that reaches the grade II discharge
standard is directly discharged into Minjiang River. The hazardous waste of the
company is entrusted to qualified companies for compliant disposal according to the
requirements of environmental impact assessment and acceptance inspection opinions.
Two 4-tonne coal-fired boilers were eliminated and one 12-tonne biomass-fired
special boiler was replaced. The boiler exhaust treatment facilities were upgraded, with
the high-efficiency waste gas treatment facility of “SNCR denitrification + cyclone
dust removal + dry desulfurization + bag dust removal + wet desulfurization” adopted.
The “Three Simultaneous” system was strictly implemented by the company for the
treatment of “Three Wastes” by collecting and treating the “Three Wastes” effectively.
The original sewage treatment plant with an investment amount of over RMB13
million has a designed processing capacity of 1,500 t/d and adopts the treatment
process of “Pre-treatment + Hydrolysis acidification tank + Facultative tank + Aerobic
pool + Secondary sedimentation”, and the sewage after treatment was discharged into
Shaoguan Second Sewage Treatment Plant（韶关市第二污水处理厂） through the
municipal pipeline network. The key pollution indicators are chemical oxygen demand
and ammonia nitrogen; the concentrations at water inlets were 365.1 mg/L and 1.187
mg/L respectively in 2022, while the average discharge
Livzon Limin concentrations at water outlets were 12.67 mg/L and 0.2128 mg/L respectively, far
lower than the relevant limits stipulated in the pollutant discharge license and the
removal rates reached 93.45% and 54.08% respectively. In respect of waste gas
treatment, biomass boilers were all replaced by gas boilers. The technical
transformation project of the R&D center has installed waste gas treatment facilities
such as activated carbon adsorption and acid mist spray tower. The key pollution
indicators are sulfur dioxide, nitrogen oxides and particulate matter. The emission
concentrations were 0 mg/m 82.92 mg/mand 2.15 mg/mrespectively in 2023, far
lower than the relevant limits stipulated in the pollutant discharge license. In respect
of control of noise pollution, investment was made to construct noise segregation wall
to reduce noise pollution.
The “Three Wastes” were collected and treated effectively by the Pharmaceutical
Factory. For wastewater: an investment of over RMB10 million was made for phase I
and phase II sewage treatment station with a designed processing capacity of 1,000
t/d, which adopted the CASS process for phase I and the A/O process for phase II. The
indicator of treated wastewater was approximately 50% of the standard limit
requirement and the sewage after treatment was discharged into sewage treatment
Livzon plants through the municipal pipeline network. For waste gas: currently, the company
Pharmaceutical uses purchased steam and uses the boilers as backups, greatly reducing air emissions
Factory (sulfur dioxide, nitrogen oxides). The waste gas of the wastewater treatment stations
is treated by the biological deodorization tower, which is a combined odor treatment
equipment, divided into three areas: biochemical area, physicochemical area and
adsorption area. The biological deodorization in biochemical area mainly uses
microorganisms to deodorize, and the odorous substances are transformed through the
physiological metabolism of microorganisms, so that the target pollutants are
effectively decomposed and removed to achieve the purpose of waste gas treatment.
Through strict enforcement of the “Three Simultaneous” system, the “Three Wastes”
were collected and treated effectively. The designed total processing capacity of
sewage treatment was 7,500 m3/d (including one plant with capacity of 5,000 m3/d and
Ningxia one plant with capacity of 2,500 m3/d), and the actual total treatment amount was 2,800
Pharmaceutical m3/d. After the treated sewage had reached the standard stipulated on the pollutant
discharge licence, it would be discharged into Xin’an Company through the sewage
pipeline network in the industrial park. Waste gas treatment: 4 sets of fermentation and
2 sets of refining waste gas treatment adopt the treatment process of “sodium
107
Joincare Pharmaceutical Group Annual Report 2023
hypochlorite spray + water spray + two-way superoxide water spray + micro-nano
bubble spray”; 2 sets of waste water treatment tank odor collection and treatment
facilities adopt the treatment process of “three-level spray absorption (level 1: alkaline
water spray absorption + level 2: sodium hypochlorite spray absorption + level 3:
sulfuric acid spray absorption)”; 1 set of RTO (regenerative thermal oxidizer) waste
gas treatment facility adopts incineration method; 2 forty-ton circulating fluidized bed
boilers (one in operation and one on standby) were in normal operation, adopting the
treatment process of “bag dust removal + double alkali desulfurization + alkaline water
spraying and demisting”. General solid waste: slag and sludge were entrusted for
landfill disposal; styrene-acrylic slag is sold as organic fertilizer; styrene-acrylic
mother liquor was outsourced for recycling; styrene-acrylic spent activated carbon and
Lova waste activated carbon were sent to boilers for incineration. Hazardous waste:
mycophenolic acid and Dora waste slag are put into boilers for incineration; spent
activated carbon, waste and empty reagent bottles, waste packaging bags, etc. were all
entrusted to qualified companies for disposal. In 2023, the following pollution
prevention measures were mostly completed: 1. decommissioning the former
Xinbeijiang sewage treatment system to abate the source of malodorous gas
generation; 2. carrying out comprehensive cleaning and maintenance of the existing 9
sets (30 units) of waste gas treatment facilities spray tower; 3. replacing nearly 1,000
meters of DN300 external drainage pipes.
The “Three Wastes” were collected and treated effectively in strict compliance with
the “Three Simultaneous” system. The designed sewage treatment capacity was 3,000
t/d, the treatment process of “hydrolytic acidification tank + UASB + aerobic pool +
materialized treatment” was adopted, the treated sewage would be discharged into the
sewage treatment plant of Xiuwu Branch of Kangda Water Co., Ltd.（康达水务有限
公司修武分公司）through the municipal pipeline network. The sewage treatment
facilities were under normal operation with compliant discharge. In 2023, an operation
and maintenance contract in relation to online continuous monitoring system for water
quality was signed with Jiaozuo Lansheng Environmental Technology Service Co.,
Ltd.（焦作市蓝晟环保技术服务有限公司）. For waste gas: In 2023, dichloride
module equipment was added in the recycling section, and the waste gas was
discharged after being treated and the standard limit met; The waste gas generated
from technical process in the production zone would be collected and treated by
adopting two sets of processes of “spray + activated carbon + spray + RTO incineration
equipment” and “-20 Celsius condensation + dichloride module + spray + activated
Jiaozuo Hecheng carbon + spray + RTO incineration equipment” and then discharged after reaching the
required standard. Solid waste and hazardous waste would be stored in the hazardous
waste station constructed in compliance with the requirements of “Three Protections”
(protection against leaks, erosion and rain) according to the requirements under the
Guidelines for Standardized Management of Hazardous Waste in Henan Province
(Trial Implementation) 《河南省危险废物规范化管理工作指南（试行）》). In 2023,
hazardous waste disposal contracts were signed with qualified companies Anyang
Zhongdan Environmental Protection Technology Co.（安阳中丹环保科技有限公
司）, Luoyang Dezheng Waste Resources Recycling Co., Ltd.（洛阳德正废弃资源
再利用有限公司）and Qinyang BBMG Jidong Environmental Protection Technology
Co., Ltd.（沁阳金隅冀东环保科技有限公司）. In 2023, hazardous waste and other
general solid waste were disposed of in compliance with relevant requirements. In
January 2023, a self-monitoring and automatic monitoring equipment comparison
contract was signed with Henan Chenjie Inspection Technology Co., Ltd.（河南晨颉
检验技术有限公司）to regularly monitor the company’s discharge outlets.
The company designed and built a sewage treatment station with a processing capacity
of 200 m3/d in 2018. The company’s wastewater was treated by such sewage treatment
station and then entered the park’s sewage treatment station for secondary treatment,
and finally discharged into the municipal pipeline network. The company had the
hazardous waste station in compliance with the requirements of “Three Preventions”
to store hazardous waste and appointed a qualified company for compliant disposal.
The company’s main discharge outlets were treated with activated carbon adsorption
Shanghai Livzon
and filtration, and the activated carbon was replaced every half a year to ensure that
the air emission met the standards. In January 2022, the company demolished the solid
preparation workshop on the third floor and transformed it into a microsphere
workshop, and there is no particulate matter emission from the No. 5 and No. 6
discharge outlets accordingly. In order to meet the regulatory requirements under the
new environmental impact assessment (at least one emission reduction measure to be
replaced with a new one), the 4# exhaust stack was upgraded in March 2023, upgrading
108
Joincare Pharmaceutical Group Annual Report 2023
the secondary activated carbon adsorption equipment and the monitoring platform
processing equipment.
The “Three Simultaneous” system was strictly implemented by Livzon MAB for the
treatment of “Three Wastes” by collecting and treating the “Three Wastes” effectively.
For wastewater (relying on the wastewater treatment of Pharmaceutical Factory in the
park): an investment of over RMB10 million was made for phase I and phase II sewage
treatment station with designed processing capacity of 1,000 t/d, which adopted the
Livzon MAB CASS process for phase I and the A/O process for phase II, and the sewage after
treatment was discharged into sewage treatment plants through the municipal pipeline
network. For waste gas: currently, the company uses purchased steam and takes the
boilers as backups, greatly reducing air emissions. The waste gas of the wastewater
treatment stations is treated by a combination of first-level spray towers, Ultra Violet
(UV) photoion equipment and second-level spray towers.
The “Three Simultaneous” system was strictly implemented by Livzon Diagnostics.
The company has sewage treatment facilities, which started construction in 2017 and
were completed and passed the acceptance inspection for use in June 2018. The
treatment processes include sedimentation tanks, regulating tanks, anaerobic tanks,
Livzon Diagnostics contact oxidation, secondary settling tanks, etc. The sewage after being treated and
met the standard was discharged into the South District Sewage Treatment Plant in
Zhuhai （ 珠 海 市 南 区 水 质 净 化 厂 ） through the municipal sewage pipeline.
Hazardous waste and general industrial solid waste generated by Livzon Diagnostics
were entrusted to a qualified third-party company for disposal.
3. Environmental impact assessment of construction projects and other environmental
protection administrative licensing
√Applicable □N/A
Name of company or Environmental impact assessment of construction projects and other
subsidiary environmental protection administrative licensing
Jiaozuo Joincare was listed in the mandatory clean production directories on key
industries in 2023. Currently, the interim report review has been completed. Due to the
Jiaozuo Joincare
delay in the construction of high-cost projects, the clean production review and
acceptance is expected to complete by the end of March 2024.
The Environmental Impact Report for new products are currently under preparation and
Taitai Pharmaceutical
review.
No environmental impact assessment project was required in 2023; with strict
enforcement of the “Three Simultaneous” system in the production process and
implementation of the environmental protection measures required under the
Haibin Pharma
environmental impact assessment, the environmental protection facilities have been
functioning properly; and the change of pollutant discharge license was applied for and
obtained approval in December 2023.
Xinxiang Haibin No environmental impact assessment project was required in 2023.
The Environmental Impact Report on the Phase III High-end Antibiotics Project of
Livzon Group Fuzhou Fuxing Pharmaceutical Co., Ltd. (《丽珠集团福州福兴医药有
限公司三阶段高端抗生素项目环境影响报告书》) was approved on 23 August 2021.
The Environmental Impact Report on the Phase IV High-end Antibiotics Project of
Livzon Group Fuzhou Fuxing Pharmaceutical Co., Ltd.（丽珠集团福州福兴医药有限
公司四阶段高端抗生素项目环境影响报告书》) was approved on 12 October 2022.
In March 2023, the second phase, the third phase, the second stage and the third stage of
Fuzhou Fuxing environmental inspection have been completed. The company strictly implements the
“Three Simultaneous” system and takes environmental protection measures required for
environmental assessment, with the environmental protection facilities under normal
operation. Approval was granted for the application of a new national pollutant discharge
license on 27 December 2017 and the renewal of the national pollutant discharge license
was completed in December 2020. The company has been discharging pollutants in strict
compliance with the licensing and administrative requirements. The re-application for
the pollutant discharge license was completed in October 2023 with a validity period
from 8 October 2023 to 7 October 2028.
The Environmental Impact Report on Current Status of Projects of Livzon Group
Xinbeijiang Pharmaceutical Manufacturing Inc. (《丽珠集团新北江制药股份有限公
Livzon Xinbeijiang 司项目现状环境影响报告书》 was approved and filed on 6 December 2016; with strict
enforcement of the “Three Simultaneous” system and implementation of the
environmental protection measures required under the environmental impact
assessment, the environmental protection facilities have been functioning properly. The
109
Joincare Pharmaceutical Group Annual Report 2023
first application for a new national discharge permit was applied on 29 December 2017,
and the renewal of the discharge permit was processed on 29 December 2022, with a
validity period until 28 December 2027. The discharge permit for the new plant in
Shijiao was changed on 8 May 2023 and is valid until 7 May 2028.
The Environmental Impact Assessment Report on Current Status of the Product
Structure and Production Capacity Adjustment Project of Zhuhai FTZ Livzon Hecheng
Pharmaceutical Manufacturing Co., Ltd. (《珠海保税区丽珠合称制药有限公司产品
结构及产能调整项目现状环境影响评价报告》) was approved in December 2016. In
2021, the environmental impact assessment for expansion of 14 new products including
paliperidone palmitate（棕榈酸帕利哌酮）aripiprazole（阿立哌唑）bismuth potassium
citrate （ 枸 橼 酸 铋 钾 ） , i.e. the Environmental Impact Assessment Report on
Livzon Hecheng Technological Renovation and Expansion Project of Zhuhai FTZ Livzon Hecheng
Pharmaceutical Manufacturing Co., Ltd. (《珠海保税区丽珠合称制药有限公司技改
扩建项目环境影响评价报告》), passed the expert review, and obtained approval on 20
January 2022. The company strictly enforced the “Three Simultaneous” system and
implemented environmental protection measures as required under environmental
impact assessment with normal operation of the environmental protection facilities. In
2023, it was awarded the Green Factory by the Ministry of Industry and Information
Technology. In March 2022, the revision and filing of the emergency plan for
environmental emergencies was completed.
The company passed the environmental impact assessment on 30 June 1999 and the
inspection and acceptance upon completion of construction carried out by
Environmental Protection Bureau of Fujian Province on 5 June 2000. The company re-
prepared its post-environmental impact assessment report in 2019 and passed the
inspection and acceptance carried out by experts on 11 June 2019. The company strictly
enforced the “Three Simultaneous” system and implemented the environmental
Gutian Fuxing protection measures as required under environmental impact assessment, with normal
operation of the environmental protection facilities. In September 2022, the clean
production passed the on-site inspection and acceptance of the Ecology and Environment
Bureau, and in October 2022, it obtained the inspection and acceptance opinions of the
Ningde Environmental Protection Science Research Institute. The existing pollutant
discharge license was applied on 26 November 2020 with a validity period from 29
December 2020 to 28 December 2025.
The Environmental Impact Report on the Technological Reform Project for the R&D
Center of Livzon Group Limin Pharmaceutical Manufacturing Factory (《丽珠集团利
民制药厂研发中心技改项目环境影响报告表》) was approved on 6 December 2019.
A review expert meeting was held on 24 April 2021, and independent review was
completed. The Environmental Impact Report for Workshop II of Small-capacity
Injection (《小容量注射剂二车间项目环境影响报告表》) was approved on 23
November 2020. On 15 September 2021, a review expert meeting was held, and
independent review was completed. The national pollutant discharge license was
updated on 22 December 2023. The “Three Simultaneous” system was strictly enforced
Livzon Limin to implement the environmental protection measures required under the environmental
impact assessment, with normal operation of the environmental protection facilities. In
September 2022, Limin Pharmaceutical Manufacturing Factory passed the on-site
review on clean production by the expert group. In the future, it will continue to explore
the potential of energy conservation and emission reduction, establish and improve the
clean production mechanism and continuously enhance the level of clean production. It
was recognized as a green enterprise in the environmental credit rating by Shaoguan
Municipal Ecology and Environment Bureau consecutively from 2019 to 2022. The
pollutant discharge license was renewed in 2023 with a validity period from 22 October
2021 to 21 October 2026.
The Environmental Impact Report Form for the Newly-added Wet Granulation Line
Project P07 of Livzon Group Livzon Pharmaceutical Factory (《丽珠集团丽珠制药厂
P07 新增湿法制粒线项目环境影响报告表》 ) was approved on 18 May 2022.
Pharmaceutical Factory updated the pollutant discharge license in June 2022. The
Environmental Impact Report Form for New Boilers and Boiler Low-nitrogen
Transformation Project (《新增锅炉及锅炉低氮改造項目环境影响报告表》) was
Livzon Pharmaceutical
approved on 19 August 2022. The company will strictly enforce the “Three
Factory
Simultaneous” system to implement the environmental protection measures as required
by the environmental assessment. The Expansion Project for Production Line of
Lyophilized Powder Injection of Livzon Group Livzon Pharmaceutical Factory (《丽珠
集 团 丽 珠 制 药 厂 东 冻 干 粉 針 剂 生 产 线 扩 建 项 目 》 ) completed its independent
acceptance in June 2022, and the Small-capacity Workshop Construction Project of
Livzon Group Livzon Pharmaceutical Factory (《丽珠集团丽珠制药厂小容量车间建
110
Joincare Pharmaceutical Group Annual Report 2023
设项目》 completed its independent acceptance in August 2022. Livzon Pharmaceutical
Factory updated the pollutant discharge license in June 2022, with a validity period from
9 June 2022 to 8 June 2027. The Environmental Impact Report on the Construction
Project of Recombinant Human Follicle Stimulating Hormone Injection Pen Production
Line ( 重组人促卵泡素注射笔生产线建设项目环境影响報告书》 was approved on
11 July 2023. Pharmaceutical Factory updated the pollutant discharge permit in August
2023, which is valid from 18 August 2023 to 17 August 2028. The New Boilers and
Boiler Low-nitrogen Transformation Project of Livzon Group Livzon Pharmaceutical
Factory (《丽珠集团丽珠制药厂新增锅炉及锅炉低氮改造项目》 ) passed the
independent acceptance in December 2023.
The renewal application for the discharge license was completed in December 2020 and
the license is valid until 28 December 2025. The environmental protection inspection for
completion of doramectin expansion project was completed in March 2021. In
September 2021, expert review and government filing were completed for the
environmental impact evaluation of project work upon optimized disposal of the
company’s solid waste. The company applied to change its pollutant discharge permit
and passed the review of the Pingluo Branch of Shizuishan Municipal Ecology and
Environment Bureau in December 2021. In December 2022, the company passed the
identification of Shizuishan municipal green plant and prepared an environmental
impact assessment report on the increase of phenylalanine production capacity (currently
under review by experts). The company reported to the national pollution discharge
license management information platform (pollution discharge implementation report)
and the ecological environment statistics business system (enterprise environment
statistics report) quarterly. In 2022, the company also completed the second round of
Ningxia Pharmaceutical rectification of non-compliance under the supervision of central environmental
protection authorities, independent acceptance and government acceptance. The
company strictly enforced the “Three Simultaneous” system to implement the
environmentalprotection measures as required by environmental assessment, and the
environmental protection facilities were innormal operation. In 2023, the main
achievements were as follows: 1. the recognition of “Green Factory” at the Ningxia
Autonomous Region level was obtained; 2. The environmental compliance procedures
related to the use of phenylalaninemother liquor and concentrated waste liquid of
lovastatin as organic fertilizer raw materials were completed; 3. Theidentification of
hazardous waste such as sludge and lovastatin slag was completed; 4. The phenylalanine
productioncapacity increase project（苯丙产能增加项目）was completed and accepted
for environmental protection; 5. Theproject approval and environmental assessment
procedures for tryptophan and isoleucine project （ 色 氨 酸 异 亮 氨 酸 项 目 ） was
completed.
The Environmental Impact Assessment Report on Current Status of Jiaozuo Livzon
Hecheng Pharmaceutical Manufacturing Co., Ltd (《焦作丽珠合成制药有限公司现状
环境影响评估报告》) was approved and filed on 15 December2016, the “Three
Simultaneous” system was strictly enforced, the environmental protection measures as
required byenvironmental assessment were implemented and the environmental
protection facilities were in normal operation. Theapplication for the national pollutant
discharge license was completed in December 2020, the environmental protection
policies were strictly enforced and various management tasks were implemented. The
pollutant discharge license was changed in December 2023 and has now been submitted
to the Ecological Environment Bureau for review. In 2023, the “one enterprise, one
Jiaozuo Hecheng policy” plan for Jiaozuo Hecheng, a VOCs discharge enterprise, was formulated in
accordance with the Summer Ozone Pollution Prevention and Control Action Plan (《夏
季臭氧污染防治攻坚战行动方案》). In accordance with the Notice Requirements on
Conducting Special Enforcement Inspections for Enterprises in Volatile Organic
Compounds Industry (《省厅 2023 年关于开展涉挥发性有机物行业企业专项执法
检查的通知要求》) by provincial department in 2023, comprehensively self-inspection
VOCs inspections were carried out, a list of issues was compiled and active rectifications
were made. In March 2023, the current round of clean production audit work was kicked
off, and the final meeting was held on 4 January 2024, completing the clean production
audit.
The company passed the environmental assessment review of the Leuprorelin Acetate
Microspheres for Injection Industrialization Project (《注射用醋酸亮丙瑞林微球产业
化项目》) on 11 October 2010, obtained the approval for the Environmental Impact
Shanghai Livzon Report on Supporting Engineering and Laboratory Projects of Shanghai Livzon
Pharmaceutical Manufacturing Co., Ltd. (《上海丽珠制药有限公司配套工程及实验
室项目环境影响报告》 on 10 January 2020, and completed the construction and passed
the acceptance inspection in September 2020. The renovation of powder injection
111
Joincare Pharmaceutical Group Annual Report 2023
workshop 2 had completed in 2022, with the Environmental Impact Statement of
Construction Project (《建设项目环境影响报告表》) filed in October 2022 and the
Approval Opinion of Shanghai Pudong New Area Ecological Environment Bureau on
the Environmental Impact Statement of the Reconstruction and Expansion Project of
Shanghai Livzon Pharmaceutical Manufacturing Co., Ltd. (《上海市浦东新区生态环
境局关于上海丽珠制药有限公司改扩建項目环境影响报告告表的审批意见》)
obtained in March 2023. The company strictly implements the “Three Simultaneous”
system and takes environmental protection measures required for environmental
assessment, with the environmental protection facilities under normal operation. The
new Pollutant Discharge License was obtained on 30 May 2023 with a validity period
until 29 May 2028.
The Environmental Impact Assessment Report on the V01 Industrialization Project of
Livzon Group Livzon Pharmaceutical Factory (《关于丽珠集团丽珠制药厂 V01 产业
化项目环境影响评价报告书》) was approved in April 2021; the Environmental Impact
Report Form for the Expansion Preparation Line 3 of the Large-scale Production
Livzon MAB Capacity Building Project of Recombinant SARS-CoV-2 Fusion Protein Vaccine（重组
新型冠状病毒融合蛋白疫苗）was approved in March 2022. The company updated the
pollutant discharge permit in September 2023. The company strictly enforced the “Three
Simultaneous” system to implement the environmental protection measures as required
by environmental assessment.
Livzon Diagnostics prepared the Environmental Impact Report on Engineering and
Production Projects of the New Plant (《新厂工程及生产项目环境影响报告书》) in
2017, which was approved by Zhuhai Environmental Protection Bureau on 6 February
2018. The environmental protection acceptance inspection was completed in June 2018.
In 2020, according to the “Catalogue of Classified Management of Discharge Permit for
Stationary Pollution Sources” ( 固定污染源排污许可分类管理名录》 (2019 version)
Livzon Diagnostics and the Measures for Pollutant Discharge Permitting Administration (Trial
Implementation) (《排污许可管理办法（试行）》), the pollutant discharge license was
canceled and the pollutant discharge registration and filling were carried out. In 2023,
the Environmental Impact Report Form for Expansion Construction Project (《扩建设
项目环境影响报告表》) was prepared in 2023 and approved by Zhuhai Ecological
Environment Bureau in May 2023. Environmental acceptance was completed in
December 2023. Clean production certification was completed in 2023.
4. Environmental emergency contingency plan
√ Applicable □ N/A
Name of company
Environmental emergency contingency plan
or subsidiary
Revision of the environmental emergency contingency plan of Jiaozuo Joincare was completed
Jiaozuo Joincare in May 2022 and was filed with the Macun Branch of Ecology and Environment Bureau of
Jiaozuo City on 19 May 2022.
Taitai The environmental emergency contingency plan of Taitai Pharmaceutical completed review
Pharmaceutical and filing in July 2023.
The Environmental Emergency Contingency Plan was revised and filed (File No. 440308-
2024-0005-M) in 2023. Trainings and drills on emergency responses were provided for
Haibin Pharma employees to improve the capability of the Company for dealing with environmental
emergencies. In 2023, a total of five emergency drills for environmental emergencies were
held.
The Environmental Emergency Contingency Plan of Xinxiang Haibin Pharmaceutical Co.,
Xinxiang Haibin Ltd. was filed with the Ecology and Environment Bureau on 23 August 2022 (File No. 410771-
2022-006-M).
Pursuant to relevant provisions and requirements, the Environmental Emergency Contingency
Plan of Livzon Group Fuzhou Fuxing Pharmaceutical Co., Ltd. (《丽珠集团福州福兴医药
有限公司突发环境事件应急预案》) was prepared based on the principles of “Focus on
Prevention, Aim at Self-rescue, Centralized Command and Division of Responsibility（预防
Fuzhou Fuxing 为主、自救为主、统一指挥、分工负责）”, for which filing application was accepted on 15
April 2022 (File No.: 350181-2022-024-M).
After environmental emergency incidents occur, immediate, quick, effective and orderly
emergency rescue actions will be taken to control and prevent accidents and the spread of
contamination, protect the surrounding environment effectively and ensure the personal life
and property safety of all employees, the company and the nearby communities. In accordance
112
Joincare Pharmaceutical Group Annual Report 2023
with the contents and requirements of such plan, the company provides trainings and drills for
its employees to get them well-prepared for environmental emergency incidents, so that rescue
actions could be taken in a timely manner and incidents could be controlled effectively in a
short period of time in case of any environmental emergency incidents. In June 2023, a
comprehensive emergency fire drill for leakage accident in workshop 1 of the second phase
was conducted.
Based on the principles of “Focusing on Prevention, On-alert all the time; Management by
Classification, Response by Tiers; Cooperation among Departments, Responsibility by Levels;
Scientific Prevention and Efficient Disposal”, Livzon Xinbeijiang entered into the issued
Environmental Emergency Contingency Plan of Livzon Group Xinbeijiang Pharmaceutical
ManufacturingInc. (《丽珠集团新北江制药股份有限公司突发环境事件应急预案》) (File
No.: 441802-2021-0162-H) again on 30 September 2021, which was verified and filed by the
Livzon Xinbeijiang Qingyuan Municipal Ecology and Environment Bureau on 22 October 2021. Livzon
Xinbeijiang regularly carries out environmental factors and sources of hazards identification
training for safety and environmental management personnel of each department every year,
and regularly conducts drills on various emergency contingency plan. A company-level
environmental emergency contingency drill was conducted in June 2023, which improved the
operability thereof, enhanced the performance level of the emergency rescue staff,
responsiveness of the rescue team as well as coordination and collaboration of different tasks.
Pursuant to relevant provisions and requirements, the Environmental Emergency Contingency
Plan of Zhuhai FTZ Livzon Hecheng Pharmaceutical Manufacturing Co., Ltd. (《珠海保税
区丽珠合成制药有限公司突发环境事件应急预案》) was prepared based on the principles
of “Focus on Prevention, Aim at Self-rescue, Centralized Command, and Division of
Responsibility（预防为主、自救为主、统一指挥、分工负责）”, which has been approved
Livzon Hecheng for filing and formally announced with file reference number 440462-2019-001-M. Trainings
on emergency events and disposal measures were held regularly for employees to enable
implementation of safety measures in a timely, fast, effective and orderly manner to control
and prevent the worsening of condition and pollution when encountering any occurrence of
environmental emergency cases, so as to alleviate or eliminate the consequences effectively
and resume orderly production as soon as possible.
Pursuant to relevant provisions and requirements, the Environmental Emergency Contingency
Plan of Gutian Fuxing Pharmaceutical Co., Ltd. (《古田福兴医药有限公司突发环境事件应
急预案》) (File No.: 352200-2017-005-L) was prepared based on the principles of “Focus on
Prevention, aim at Self-rescue, Centralized Command and Division of Responsibility（预防
为主、自救为主、统一指挥、分工负责）”, which was approved in May 2017. The second
amendment of the contingency plan was made in June 2020, which passed expert review and
completed filing (File No.:350922-2020-002-M). The third amendment of the contingency
plan was made in June 2023, which passed expert review and completed filing (File No.:
350922-2023-012-M).
Gutian Fuxing
According to the plan, the company would conduct an emergency drill for sudden hydrochloric
acid leakage on 9 August 2023, and after environmental emergency incidents occur,
immediate, quick, effective and orderly emergency rescue actions can be taken to control and
prevent accidents and the spread of contamination, protect the surrounding environment
effectively and ensure the personal life and property safety of all employees, the company and
the nearby communities. In accordance with the contents and requirements of the plan, the
company provides trainings for its employees. The company is well-prepared for
environmental emergency incidents, so that rescue actions could be taken in a timely manner
and incidents could be controlled effectively in a short period of time in case of any
environmental emergency incidents.
The principles of occupational health and safety and the environment administrative system
were followed, including occupational protection to ensure health, risk control to ensure safety,
prevention and control of pollution to protect the environment, and compliance with discipline
and law for continuous improvement. Identification of environmental factors was performed
seriously and preventive measures were adopted for significant environmental factors, while
the governance of the “Three Wastes” was strengthened to enhance the ability of control over
the “Three Wastes” and ensure that the discharge of the “Three Wastes” had reached the
Livzon Limin discharge standards. The Environmental Emergency Contingency Plan of Livzon Group Limin
Pharmaceutical Manufacturing Factory (《丽珠集团利民制药厂突发环境事件应急预案》)
(File No.: 440203-2021-009-L) was prepared in accordance with the criteria of the
environmental management system and the occupational health and safety administrative
system. The plan was issued in May 2021. According to the requirements of the contingency
plan, an environmental accident emergency drill was conducted on 24 September 2021, and a
specific drill summary was made. Identification of environmental factors and sources of
hazards and drills for emergency were conducted internally in the company on a regular basis
113
Joincare Pharmaceutical Group Annual Report 2023
to improve the operability of the contingency plan, enhance the performance level of the
emergency rescue staff, responsiveness of the rescue team as well as coordination and
collaboration of different tasks.
Pursuant to relevant provisions, the Environmental Emergency Contingency Plan of Livzon
Group Livzon Pharmaceutical Factory (《丽珠集团丽珠制药厂突发环境事件应急预案》)
was updated by Pharmaceutical Factory in 2021, and has been approved for filing approval
and announced, with the filing number 440404-2021-0212-L. The Pharmaceutical Factory
conducted a special emergency response drill for hazardous waste leakage on 16 June 2023,
Livzon to train the emergency response team and enhance the emergency response and execution
Pharmaceutical abilities of the participants, further clarify the responsibilities and tasks of relevant personnel,
Factory improve the emergency linkage mechanism, improve the awareness of risk prevention and the
ability of self-rescue and mutual rescue. On 30 October 2023, an on-site emergency drill for
alcohol leakage and fire accidents was conducted. Through the drill, the emergency response
capabilities of the participants were enhanced, the responsibilities and tasks of the relevant
personnel were clarified, and the risk prevention awareness and self-rescue and mutual rescue
response capabilities were improved.
The “Environmental Emergency Contingency Plan of Livzon Group (Ningxia) Pharmaceutical
Manufacturing Co., Ltd.” (《丽珠集团（宁夏）制药有限公司突发环境事件应急预案》)
was verified, filed and issued in May 2019 (FileNo.: 640221-2019-005-II). Identification of
environmental factors and sources of hazards and drills for emergency were conducted
Ningxia internally in the company on a regular basis to improve the operability of the contingency plan,
Pharmaceutical enhance the performance level of the emergency rescue staff, and enhance the responsiveness
and coordination of the rescue team in terms of integrated coordination and collaboration
capabilities. The Environmental Emergency Contingency Plan was amended in May 2021, and
passed expert review and was reviewed by and filed with government environmental
department in August 2021 (File No.: 640221-2021-054-H).
The Environmental Emergency Contingency Plan of Jiaozuo Livzon Hecheng Pharmaceutical
Manufacturing Co., Ltd. (《焦作丽珠合成制药有限公司突发环境事件应急预案》) was
prepared in accordance with the relevant provisions and requirements and based on the
principles of “Focusing on Prevention, On-alert all the time; Management by Classification,
Response by Tiers, Cooperation among Departments, Responsibility by Levels; Scientific
Prevention and Efficient Disposal”. The contingency plan was approved for announcement
and filing in April 2021 (File No.: 4108042018005L). The Hazardous Waste Environmental
Pollution Emergency Contingency Plan of Jiaozuo Livzon Hecheng Pharmaceutical
Manufacturing Co., Ltd. (《焦作丽珠合成制药有限公司危险废物环境污染事故应急预
Jiaozuo Hecheng
案 》 ) was compiled and was approved for filing in January 2018. Identification of
environmental factors and sources of hazards and drills for emergency were conducted
internally in the company on a regular basis to improve the operability of the contingency plan,
enhance the performance level of the emergency rescue staff, and enhance the responsiveness
and coordination of the rescue team in terms of integrated coordination and collaboration
capabilities. In 2023, the company newly formulated the Environmental Protection
Assessment System (《环保考核制度》), Jiaozuo Livzon EHS Environmental Protection
Assessment System (《焦作丽珠 EHS 环保考核制度》) and Jiaozuo Livzon Potential Safety
Hazard Screening Responsibility System (《焦作丽珠隐患排查责任制度》).
In March 2022, the Environmental Emergency Contingency Plan of Shanghai Livzon
Pharmaceutical Manufacturing Co., Ltd. (《上海丽珠制药有限公司突发环境事件应急预
案》) (File No.: 02-310115-2022-108-L) was filed by the company. The company conducts
drills and reviews of the plan every year to improve its emergency response capabilities
Shanghai Livzon through regular training on the plan. On 22 May 2023, Shanghai Livzon completed the filing
and registration of the General Emergency Response Plan for Work Safety Incidents (《生产
安全事故综合应急预案》) (File No. :3101150000002023052200058), in order to improve
the emergency response capabilities for production safety accidents through training on the
emergency response plan.
Pursuant to relevant provisions, the Environmental Emergency Contingency Plan of Livzon
MAB ( 丽珠单抗突发环境事件应急预案》 was prepared by Livzon MAB in 2022. In April
Livzon MAB 2023, the company conducted an emergency drill for hazardous waste leakage in the hazardous
goods warehouse to enhance emergency response capabilities of staff, so as to alleviate or
eliminate the impact of the consequences.
In accordance with relevant regulations, Livzon Diagnostics carried out a risk assessment of
environmental emergencies and emergency resources survey in 2021, and prepared the
Environmental Emergency Contingency Plan of Zhuhai Livzon Diagnostics Inc. (《珠海丽珠
Livzon Diagnostics
试剂股份有限公司突发环境事件应急预案》) which was approved for filing and
announced. Regular training on emergency response and disposal measures was provided to
employees to equip them skills of executing safety measures timely, rapidly, effectively and
114
Joincare Pharmaceutical Group Annual Report 2023
orderly in environmental emergencies, in order to control and prevent the spread of risk and
pollution, reduce or eliminate the impact of the consequences, and resume the
production as soon as possible.
5. Environmental self-monitoring program
√ Applicable □N/A
Name of company or
Environmental self-monitoring program
subsidiary
As required by the self-monitoring program for pollutant discharge licenses, Jiaozuo Joincare
developed the 2023 self-monitoring program for wastewater and waste gas at the beginning of
the year, and carried out self-monitoring according to the program. Up to the end of the year,
Jiaozuo Joincare Jiaozuo Joincare has completed the self-monitoring for wastewater and waste gas for the year.
The company is a key enterprise in terms of soil monitoring, and has completed the annual soil
self-monitoring work in August 2023. All control factors are in line with the industrial land
control requirements.
Wastewater was monitored once a quarter; boiler exhaust gas and plant boundary noise were
monitored once a year; exhaust gases generated from technical process was monitored once
Taitai Pharmaceutical
half a year; online monitoring facilities of wastewater and boiler exhaust gas were additionally
installed and functioning well.
A third party is entrusted to conduct regular monitoring strictly in compliance with the relevant
national laws and regulations and local requirements and ensure the accuracy, validity and
authenticity of the monitoring data. Online wastewater monitoring equipment was installed
Haibin Pharma
and connected to environmental monitoring stations at municipal and district levels in
accordance with environmental monitoring technical standards. Data was promptly uploaded
on the national monitoring platform.
A self-monitoring program was prepared, the annual self-monitoring of exhaust gas,
Xinxiang Haibin wastewater and soil has been completed throughout the year in accordance with the pollutant
discharge license.
According to the relevant requirements of the Measures for Self-Monitoring and Information
Disclosure by Enterprises subject to Intensive Monitoring and Control of the State (Trial
Implementation) (《国家重点监控企业自行监测及信息公开办法（试行）》) and the Self-
monitoring Technology Guidelines for Pollution Sources–Pharmaceutical Industry
Fermentation Products Category (《排污单位自行监测技术指南发酵类制药工业》) (HJ
882-2017), the company has completed the establishment of the self-monitoring program
based on its own situation in a timely manner and made the program available to the public
after being examined by and filed with Fuqing Environment Protection Bureau and Fuzhou
Environment Protection Bureau. The analysis methods of the monitoring program comply with
Fuzhou Fuxing the national environmental monitoring technical standards and methods; the monitoring and
analysis instruments have been examined and calibrated in strict compliance with the relevant
national requirements; the automated monitoring equipment has been installed in accordance
with the requirement of environmental assessment technical standards, which are connected to
relevant environmental protection authorities and have passed the inspection and acceptance
of the relevant environmental protection authorities. The automated monitoring equipment has
been functioning properly and the monitoring information is accurate, valid and authentic. In
May and October 2023, the works on leakage detection and repair (LDAR) of volatile organic
compounds (VOCs) for the first and second half of the year were completed respectively.
Information publicity website: http://wryfb.fjemc.org.cn.
According to the relevant requirements of the Measures for Self-Monitoring and Information
Disclosure by Enterprises subject to Intensive Monitoring and Control of the State (Trial
Implementation) (《国家重点监控企业自行监测及信息公开办法（试行）》), the company
has completed the establishment of the self-monitoring program based on its own situation in
a timely manner and made the program available to the public after being examined by and
filed with Qingyuan Environment Protection Bureau. The analysis methods of the monitoring
program comply with the national environmental monitoring technical standards and methods;
the monitoring and analysis instruments have been examined and calibrated in strict
Livzon Xinbeijiang compliance with the relevant national requirements. The automated monitoring equipment
for wastewater (COD, ammonia nitrogen, pH, flow) and waste gas (non-methane
hydrocarbons) has been installed in accordance with the requirement of national regulations
and environmental assessment technical standards, and the connection between online
information and national development platform and Qingyuan municipal platform has been
completed. Online monitoring equipment for wastewater and waste gas has passed the
inspection and acceptance. The automated monitoring equipment has been functioning
properly and the monitoring information is accurate, valid and authentic. In accordance with
the requirements of the specification, a qualified third party is hired to conduct LDAR every
115
Joincare Pharmaceutical Group Annual Report 2023
six months for workshops that use VOCs emission. Xinbeijiang Pharma entrusts a qualified
professional third-party testing company to test the wastewater, waste gas and noise in the
plant area every year in accordance with the project and frequency requirements of the self-
monitoring program, and the test results in 2023 are up to standard.
Through self-monitoring, the requirements under the Technical Specification for Application
and Issuance of Pollutant Permit Pharmacy Industry–Active Pharmaceutical Ingredient
Manufacturing (《排污许可证申请与核发技术规范制药工业－原料药制造》) (HJ858.1-
2017) were strictly implemented, and the monitoring and analysis instruments were
examined and calibrated in strict compliance with relevant provisions. The automated
Livzon Hecheng monitoring equipment was installed in accordance with the requirements of environmental
assessment technical standards, while online monitoring equipment for non-methane
hydrocarbons, COD, ammonia nitrogen and pH level were installed and connected with the
national development platform as required. In 2022, a third party was entrusted to conduct
LDAR inspection, discharge outlet inspection, factory boundary noise monitoring and soil
inspection on a regular basis, and the inspection results were all up to the standard.
According to the relevant requirements of the Measures for Self-Monitoring and Information
Disclosure by Enterprises subject to Intensive Monitoring and Control of the State (Trial
Implementation) (《国家重点监控企业自行监测及信息公开办法（试行）》), the company
has completed the establishment of the self-monitoring program based on its own situation in
a timely manner and made the program available to the public after being examined by and
filed with Ningde Ecology and Environment Bureau and Ningde Gutian Ecology and
Environment Bureau. The analysis methods of the monitoring program comply with the
national environmental monitoring technical standards and methods; the monitoring and
analysis instruments have been examined and calibrated in strict compliance with the relevant
Gutian Fuxing national requirements; the automated monitoring equipment has been installed in accordance
with the requirements of environmental assessment technical standards, connected to the
network of competent environmental protection authorities and passed the acceptance
inspection conducted by the competent environmental protection authorities. The automated
monitoring equipment was sound, and the monitoring information was accurate, valid and
authentic. In May and October 2023, a qualified third party was engaged on two occasions to
complete the leakage detection and repair (LDAR) work of volatile organic compounds and
relevant reports were obtained. Soil and groundwater self-monitoring was completed in
November 2023. The monitoring results was recorded in the Qinqing service platform（亲清
服务平台）. Information publicity website: http://wryfb.fjemc.org.cn
An entity with national qualification on inspection was engaged to conduct monitoring strictly
in compliance with the relevant national laws and regulations and standards. By considering
its own specific conditions, the company appointed the inspection party to carry out water
pollutant detection monitoring every quarter, boiler waste gas monitoring every month and
R&D Center VOCs waste gas monitoring every six months, each time the monitoring would
be conducted strictly in compliance with the relevant national requirements to ensure the
Livzon Limin accuracy, validity and authenticity of the monitoring data. The online monitoring equipment
for COD and ammonia nitrogen in water passed the acceptance inspection and the equipment
was put into operation in January 2021, and it will perform monitoring every 2 hours. Data
should be completed and filed to the Pollutant Source Sharing Data Platform of the Shaoguan
Municipal Ecology and Environment Bureau on a timely basis, and the relevant data would be
announced to the public after being reviewed by the Shaoguan Municipal Ecology and
Environment Bureau.
Inspection party with national qualification on inspection was engaged to conduct monitoring
strictly in compliance with the relevant national laws and regulations and standards. By
considering its own specific conditions, the company appointed the inspection party to carry
Livzon Pharmaceutical out monitoring on wastewater and waste gas every month, each time the monitoring would be
Factory conducted strictly in compliance with the relevant national requirements to ensure the
accuracy, validity and authenticity of the monitoring data. The installation and commissioning
of the online sewage monitoring equipment was completed and it was put into use at the
beginning of 2021. All test indicators were normal in 2023.
The company formulated the self-monitoring program for 2022, which was reviewed by and
filed with Shizuishan Municipal Ecology and Environment Bureau. Monthly and quarterly
monitoring was carried out strictly in accordance with the requirements of the program, which
focused primarily on organized air emissions, air emissions from boilers, wastewater,
underground water, soil, diffusive environmental air, noise and recycled water TOC at plant
Ningxia Pharmaceutical boundary. The monitoring results would be announced to the public through the System of
National Pollution Sources Monitoring Information Management and Sharing (《全国污染源
监测数据管理与共享系統》) and the System of Self-monitoring Information Open Platform
for Enterprises in Shizuishan (《石嘴山市企业自行监测信息公开平台系統》). From
September 2023, in accordance with the requirements of the Environmental Protection Bureau,
the monthly detection of heavy metal pollution factors in the exhaust gas of hazardous waste
116
Joincare Pharmaceutical Group Annual Report 2023
from boiler incineration has been increased. The leakage detection and repair (LDAR) work
of volatile organic compounds was carried out. The automated monitoring equipment was
passed the inspection and acceptance conducted by the competent environmental protection
authority and connected to the network of the competent environmental protection authority.
The automated monitoring equipment was sound, and the monitoring data was accurate, valid
and authentic.
According to the relevant requirements of the Measures for Self-Monitoring and Information
Disclosure by Enterprises subject to Intensive Monitoring and Control of the State (Trial
Implementation) (《国家重点监控企业自行监测及信息公开办法（试行）》), the company
implemented and completed the self-monitoring program based on its own situation in a timely
manner and made the program available to the public after being examined by and filed with
relevant competent environmental protection authorities. The analysis methods of the
monitoring program comply with the national environmental monitoring technical standards
and methods. The monitoring and analysis instruments have been examined and calibrated in
strict compliance with the relevant national requirements. The leakage detection and repair
(LDAR) of volatile organic compounds was completed in November 2023. At the request of
Livzon Group, the leakage detection of natural gas pipelines was also carried out, and a test
Jiaozuo Hecheng
report was issued. The inspection of equipment and facilities such as solvent pipes and flanges
in the workshop was conducted and maintenance and rectification were carried out on the
places where there was leakage. According to the requirements of environmental testing
technical specifications, the company has installed online automatic sewage monitoring
equipment, and also installed online monitoring equipment for COD, ammonia nitrogen, pH
value, flow rate and total nitrogen, which were connected to the Guofa platform（国发平台）
as required. The company has installed non-methane hydrocarbon online monitoring
equipment for waste gas. The company carried out regular monitoring in strict compliance
with the requirements of the established self-testing scheme every year, which focused
primarily on organized emissions of waste gas, wastewater, diffusive environmental air and
noise at plant boundary.
In accordance with the relevant requirements of the Self-Monitoring Technology Guidelines
for Pollution Sources– General Rule (《排污单位自行监测技术指南总则》) (HJ 819-2017)
and the pollutant discharge license, the company organized self-monitoring and information
disclosure of the pollutants it has discharged, and formulated the self-monitoring program. In
2022, the company monitors main air emission outlets once a month, common discharge
Shanghai Livzon
outlets once half a year, noise once every quarter and wastewater once a month. The
monitoring items and frequency shall meet the requirements of the pollutant discharge license.
The other three enterprises in the park and the third-party sewage treatment company in the
park enter into an agreement to install an online monitoring comparator at the main discharge
outlet for effective monitoring of sewage discharge.
The company entrusted an agency with national testing qualifications to carry out monitoring
in strict compliance with relevant national laws, regulations and standards. By considering its
own specific conditions, the company entrusted the inspection party to carry out monitoring
Livzon MAB on wastewater and waste gas on a regular basis in accordance with the requirements of the
implementation plan of the pollutant discharge permit, and each time the monitoring was
conducted strictly in compliance with the relevant national requirements to ensure the
accuracy, validity and authenticity of the monitoring data.
Wastewater: An agency with national testing qualifications was entrusted to carry out
monitoring in strict compliance with relevant national laws, regulations and standards. The
testing agency conducts quarterly inspections on water quality indicators such as chemical
oxygen demand, ammonia nitrogen and suspended solids in strict accordance with the relevant
Livzon Diagnostics
national regulations to ensure the data collected from daily monitoring is accurate, valid, true,
and meets the emission standards. Waste gas and noise: An inspection of noise and waste gas
at the plant boundary is undertaken annually to ensure the monitoring data is accurate, valid,
true, and meets the emission standards.
6. Administrative penalties imposed for environmental issues during the Reporting Period
□ Applicable √ N/A
7. Other environmental information to be disclosed
√ Applicable □N/A
In January 2023, Jiaozuo Joincare disclosed its relevant environmental information in 2023
according to the requirements of the Measures for the Administration of the Law-based Disclosure
of Environmental Information by Enterprises (《企业环境信息依法披露管理办法》).
117
Joincare Pharmaceutical Group Annual Report 2023
The relevant environmental information was disclosed on the National Pollutant Discharge Permit
Management Information Platform the National Pollution Source Monitoring Data Management
and Sharing Platform. The annual environmental information disclosure report was prepared on the
Green Development Service Platform of the Department of Ecology and Environment of
Guangdong Province.
(II) Statement on environmental protection measures of companies except for key pollutant
discharge units
√ Applicable □N/A
The rest subsidiaries of the Company strictly implemented and obeyed the Environmental Protection
Law of the People’s Republic of China, Cleaner Production Law of the People’s Republic of China
and other environmental protection and safe production laws and regulations. They constantly
increased investment in environmental protection, continuously invested in energy conservation and
consumption reduction projects, actively promoted cleaner production, improved comprehensive
utilization efficiency of resources, and reduced and avoided pollutants so as to ensure mental and
physical health of employees and the coordinated and sustainable development of economic,
environmental and social benefits.
1. Administrative penalties imposed for environmental issues
□ Applicable √ N/A
2. Refer to other environmental information disclosed by key pollutant discharge units
□ Applicable √ N/A
3. Reason for non-disclosure of other relavant environmental information
□ Applicable √ N/A
(III) Relevant information contributing to ecological protection, pollution prevention and
control, and fulfillment of environmental responsibilities
√ Applicable □N/A
Name of company Relevant information contributing to ecological protection, pollution prevention and
or subsidiary control, and fulfillment of environmental responsibilities
LDAR leak detection and repair for the year 2023 was completed.
Self-monitoring of soil and groundwater, as well as detection and treatment of hidden hazards
Jiaozuo Joincare
for the year 2023 were completed.
Carbon emission verification for the year 2022 was completed.
The establishment of environmental safety standardization and the standardized management of
Taitai hazardous waste were carried out as required by the Municipal Department of Ecology and
Pharmaceutical
Environment.
The company carried out LDAR detection twice, to timely repair leakage points and reduce
Haibin Pharma
unorganized emission of VOCs.
The company carried out LDAR leak detection, submit environmental protection commitment
Xinxiang Haibin to the competent authority and purchased environmental pollution liability insurance for the
company.
1. The company conducted regular environmental monitoring and disclosed the monitoring
results in a timely manner; 2. The company has formulated an environmental protection plan to
define pollutant emission standards and related environmental protection measures, as well as
Joincare Haibin
an environmental emergency plan to respond to potential environmental accidents; 3. The
company implemented cleaner production; 4. The company strengthened the environmental
education for employees to increase their attention to environmental protection.
118
Joincare Pharmaceutical Group Annual Report 2023
Two rounds of LDAR detection and repair were completed to reduce unorganized emission of
VOCs; construction of phase II (Paromomycin, Telavancin, Pentostatin, Teicoplanin and
Kanamycin Monosulfate), phase III (Pasiniazid and Polymyxin B), stage II (Emodepside,
Dalbavancin and Moxidectin) and stage III (Afoxolaner, Fluralaner, Cyclosporine and
Selamectin) were completed and the acceptance inspection on environmental protection was
passed in 2023. The environmental credit evaluation was completed, and the company was rated
Fuzhou Fuxing
as an environmentally credible enterprise. The monthly and quarterly self-monitoring on waste
water, waste gas and noise was completed as required. The detection results met the emission
standards. The self-monitoring of soil and groundwater was completed. The annual maintenance
on the equipment for RTO exhaust was completed to ensure its safe operation and the emission
of exhaust gas within the emission standards. Qualified companies were engaged for the
compliant disposal of hazardous waste to reduce the risk of environmental pollution.
1. Two rounds of LDAR leak detection and repair were completed as required to reduce
unorganized emission of VOCs;
2. A series of noise control and improvement measures, such as installing soundproof glass in
the louvers on 3/F of Workshop II of Fermentation to block the fermentation and stirring noises
and using sound-absorbing cotton panels to surround the MVR to block the noise from the
operation of the MVR; other equipment with loud noises in the factory has been surrounded by
sound-absorbing cotton panels to reduce noise.
3. The company sorted out the pretreatment pipelines of the sewage station and reinstalled the
Livzon Xinbeijiang
pipelines to avoid wastewater leakage;
4. Each of the second refinery division and the second fermentation division added a waste gas
treatment spray tower to enhance the treatment of exhaust gas and reduce the emission of exhaust
gas pollutants.
5. The self-monitoring plan for the year was completed and the results of waste water, exhaust
gas and noise met the emission standards.
6. A qualified third party is entrusted to dispose of the waste in compliance with laws and
regulations, with the compliant disposal rate of 100%.
Four rounds of LDAR detection and repair were completed in 2023 to reduce unorganized
emission of VOCs; The installation and commissioning of the new equipment for RTO exhaust
was completed, and the equipment has put into use, so that one of the new and existing
equipment for RTO exhaust will be under use while the other will stand by to ensure its safe
operation and the emission of exhaust gas within the emission standards; replacement and
upgrading of treatment facilities for exhaust gases generated from technical processes of the
Livzon Hecheng
refining workshop and 103 workshop were completed; waste water treatment systems were
under stable operation and the discharge was within the emission standards; qualified units were
entrusted to treat hazardous waste with a compliant treatment rate of 100%. The self-monitoring
program was completed and environmental responsibilities were fulfilled as required. In 2023,
the company was rated as a green factory by the Ministry of Industry and Information
Technology.
Volatile organic matter leak detection and repair (LDAR) for 2023 was completed and a report
was obtained; cover and sealing were added to pools with high concentration and primary
sedimentation pools for sewage treatment and waste gas was collected and treated so as to avoid
odor emit; HV frame was replaced in the sewage treatment workshop; water content of sludge
was reduced; total volume of sludge was reduced; sludge generated was entrusted to qualified
units for treatment; the collection, recovery, treatment of VOCs were completed and online
monitoring facilities was installed and put into operation to reduce the random emission of
Gutian Fuxing
VOCs; and the entrusted testing of waste water, waste gas, soil and groundwater for 2023 was
completed, with the results showing they all met standards. The construction of the 12-tonne
biomass boiler and the upgrading and reconstruction of boiler tail gas treatment facilities were
completed. The efficient exhaust gas treatment facilities with “SNCR denitration + cyclone dust
removal + dry desulfurization + cloth bag dust removal + wet desulfurization” were adopted.
Hazardous waste was entrusted to qualified companies for compliant treatment to reduce the risk
of environmental pollution.
1. Pollutants were discharged according to the standards in the pollution discharge license and
Livzon Limin the annual self-monitoring of pollution discharge plan was formulated; a third-party
environmental detection company was entrusted to conduct regular environmental test on the
119
Joincare Pharmaceutical Group Annual Report 2023
factory. Test results showed that there was no excessive discharge for the period of January to
December 2023;
2. The measures on energy conservation and emission reduction were formulated according to
ESG objectives in 2023;
3. Facilities and equipment at waste water treatment stations were regularly maintained;
4. Post-treated waste water was used for watering flowers, trees and grass in the factory in three
lines. The recycling of waste water in 2023 was 2,392 tons;
5. Soil testing and underground water testing were carried out on hazardous waste warehouses
and the test results were in line with the standards;
6. Identification and updating of environmental factors were carried out in the whole factory. A
total of 4,304 environmental factors were identified, including 3,442 general environmental
factors and 862 key environmental factors;
7. Argumentation on the comprehensive use of waste alcohol was carried out and it will be
recycled and reused in waste water treatment stations to improve the treatment effect of waste
water. The fees on supplementing carbon resources at waste water treatment stations were
approximately RMB0.1482 million each year and the fees on the treatment of waste alcohol at
TCM workshops I, II and III were approximately RMB35.91 thousand. The savings in relevant
expenses were approximately RMB0.18411 million for the whole year.
Livzon Pharmaceutical Factory effectively collected and treated the “Three Wastes”. For
wastewater: an investment of over RMB10 million was made for phase I and phase II sewage
treatment station with a designed processing capacity of 1,000t/d, which adopted the CASS
process for phase I and the A/O process for phase II, and the indicators of treated sewage were
about 50% of standard limit, which was discharged through the municipal pipeline network into
Livzon sewage treatment plants. For waste gas: currently, the company uses purchased steam and takes
Pharmaceutical the boilers as backups, greatly reducing the emission of exhaust gas (sulfur dioxide and nitrogen
Factory oxides). The exhaust gas from the wastewater station is treated by a biological deodorization
tower, which is a combined odor treatment equipment and consists of three areas, namely
biochemical area, physical and chemical area and adsorption area. Biological deodorization in
the biochemical area mainly uses microorganisms to remove odor, where odorous substances
are transformed through the physiological metabolism of microorganisms. As such, the target
pollutants can be effectively decomposed and removed to achieve the control of exhaust gas.
I. Optimization and improvement of equipment and facilities: The company suspended the use
of the waste water treatment system of the former Xinbeijiang to reduce sources of odor gas;
conducted comprehensive washing and maintenance of the spraying towers of the current 9 sets
(30) exhaust gas treatment facilities; replaced DN300 drainage pipes with a length of nearly
1,000 meters; resealed the water-sealing groove of the cover plate of the sedimentation tank,
replaced the original fan with air collection volume of 3000m/h with a fan with air collection
volume of 10000m/h, and changed the DN80 collection pipes with DN200 ones; and added a
new set of waste gas collection facility in the mud press room, which include a 100-meter DN600
collection pipe, a fan with air collection volume of 35,000m/h and other supporting facilities.
II. Compliance procedures: The company obtained the recognition as a green factory from
Ningxia Hui Autonomous Region; obtained the rating as a “green card” enterprise in the
Ningxia appraisal on the environment and credit and enterprises in Ningxia Hui Autonomous Region for
Pharmaceutical
2023; obtained the honor of an outstanding enterprise in pollutants treatment in Pingluo county
in 2022; entrusted a third party to conduct repair, maintenance and operation of online
monitoring equipment on VOCs in the exhaust gas from the RTO; completed LDAR detection
and repair as required; and completed the standardized system reports relating to self-inspection,
environmental statistics, pollution discharge permits, and new sources of chemical substance
pollution. The company has completed: the environmental compliance procedures related to
phenylalanine mother liquor and lovastatin concentrated waste liquid as raw materials of organic
fertilizers; the hazardous waste identification of sludge and lovastatin bacteria residue; the
environmental acceptance upon completion for the phenylalanine production capacity expansion
project; and the project establishment and environmental impact assessment procedures for
tryptophan and isoleucine project.
The “Three Wastes” were collected and treated effectively in strict compliance with the “Three
Simultaneous” system. The designed sewage treatment capacity was 3,000t/d, the treatment
Jiaozuo Hecheng
process of “hydrolytic acidification tank + UASB + aerobic pool + materialized treatment” was
adopted, the treated wastewater would be discharged through the municipal pipeline network
120
Joincare Pharmaceutical Group Annual Report 2023
into the sewage treatment plant of Xiuwu Branch of Kangda Water Co., Ltd. (康达水务有限公
司修武分公司). The sewage treatment facilities were under normal operation with compliant
discharge. In 2023, an operation and maintenance contract in relation to online continuous
monitoring system for water quality was signed with Jiaozuo Lansheng Environmental
Technology Service Co., Ltd. (焦作市蓝晟环保技术服务有限公司). Exhaust gas: dichloro
film equipment was added in the recycling stage in 2023 and exhaust gas was emitted after
treatment and meeting the standards; two techniques, namely “spraying + activated carbon +
spraying + RTO incinerator equipment” and “-20℃ condensation + dichloro films + spraying +
activated carbon + spraying + RTO incinerator equipment”, were adopted to conduct collection
and treatment of exhaust gas from processes in production areas and achieve emission under
standards. Solid waste and hazardous waste would be stored in the hazardous waste station
constructed in compliance with the requirements of “Three Protections” (Lintection against
leaks, erosion and rain) according to the requirements under the (Pilot) Guidelines for
Standardized Management of Hazardous Waste in Henan Province (《河南省危险废物规范化
管理工作指南(试行)》 for hazardous waste. In 2023, the company entered into hazardous waste
disposal agreements with qualified companies including Anyang Zhongdan Environmental
Protection Technology Co., Ltd. (安阳中丹环保科技有限公司), Luoyang Dezheng Waste
Resources Recycling Co., Ltd. (洛阳德正废弃资源再利用有限公司) and Qinyang Jinyu
Jidong Environmental Protection Technology Co., Ltd. (沁阳金隅冀东环保科技有限公司). A
total of 14.38 tons of hazardous waste was generated in 2023. Other general solid waste was
disposed of in compliance with relevant requirements, with a total of 465.7 tons in 2023. In
January 2023, the company entered into a self-monitoring and automatic monitoring equipment
comparison contract with Henan Chenjie Inspection Technology Co., Ltd. (河南晨颉检验技术
有限公司) to monitor the discharge outlets of the Company on a regular basis. The Leak
Detection and Repair (LDAR) work was completed in November 2023. The leak detection for
natural gas pipeline was also conducted according to the requirements of Livzon Group, and a
qualified test report was issued.
The company has completed the Filing and Registration of the Contingency Plan for Emergent
Environmental Incidents; completed the VOCs emission reduction milestone of “one plan for
one factory” in accordance with the plan; discharged pollutants in strict accordance with the
Sewage Discharge Permit System obtained, formulated the annual emission self-monitoring
programme at the beginning of the year and implemented emission self-monitoring according to
the programme, and completed the annual implementation report of the emission permits without
any violations of laws or regulations. Meanwhile, we strengthened the daily supervision of the
operation of the waste gas treatment facilities and sewage treatment stations, and entrusted a
third party to test the emissions of waste gas and sewage every month to ensure the effective
Shanghai Livzon operation of the equipment and facilities. The company passed the on-site review of the Level 3
safety standardization by the expert group. The safety facilities, occupational disease protection
facilities and pollution prevention facilities of the “Preparation Line 3 and Assembly Line 2
Purification Plant and Utility System” project were designed, constructed and put into
production and use at the same time as the workshop renovation project. In order to reduce the
emission concentration of exhaust gas and reduce the emission of VOCs, double activated carbon
was added and installed to exhaust funnel 4 and it can reduce the emission concentration of
exhaust gas and reduce the emission of VOCs after one more treatment. Water purifiers were
replaced to improve the efficiency of making water with purifiers and effectively reduce
wastewater discharge.
The company entrusted a qualified third party CTI to test the waste water and waste gas
according to the requirements of the pollutant discharge license, and entrusted a qualified entity,
Dongjiang Environmental-protection Doumen Yongxingsheng Environmental-protection, Co.,
Ltd. of Dongjiang Environmental Protection (东江环保斗门永兴盛环保公司), to dispose of
hazardous wastes in accordance with the regulations, so as to reduce the risk of environmental
Livzon MAB
pollution. The company carried out the environmental impact assessment of the new workshop
according to the requirements of “Three Simultaneities” for construction of workshops newly
built, rebuilt and expanded. The production and R&D sewage was uniformly discharged into the
sewage station of Livzon Pharmaceutical Factory in Livzon Industrial Park for treatment and
discharge up to the standard.
121
Joincare Pharmaceutical Group Annual Report 2023
Waste water: an entity with national qualification on inspection was engaged to conduct
monitoring strictly in compliance with the relevant national laws and regulations and standards.
The testing party carried out routine environmental monitoring on chemical oxygen demand,
ammonia nitrogen, suspended solids and other indicators on water quality. The testing is carried
out on a quarterly basis with every monitoring strictly in compliance with the relevant national
requirements to ensure the accuracy, validity and authenticity of the monitoring data and meeting
Livzon Diagnostics the discharge standards.
Exhaust gas and noise: an entity was engaged to conducting testing on exhaust gas and noise at
the factory boundary each year and the monitoring data was accurate, valid and authentic and
met the emission standards.
Solid waste (including hazardous waste): Solid waste was collected in compliance with
regulations, and a qualified third party was engaged for disposal.
(IV) Measures Taken and Effects on Reducing Carbon Emissions During the Reporting
Period
Whether to take carbon reduction measures Yes
Equivalent of carbon emission reduction (unit: ton) 4,612.70
Types of carbon emission reduction measures (e.g. use of Use of "clean energy for power generation",
clean energy for power generation, use of carbon reduction adopt carbon emission reduction technologies in
technologies in production, research and development of production" and other measures, as detailed in
new products that contribute to carbon reduction, etc.) "Specific descriptions" below.
Specific descriptions
√ Applicable □N/A
Name of company or
Measures taken and effects on reducing carbon emissions during the Reporting Period
subsidiary
In 2023, Jiaozuo Joincare’s “4000m/d biogas treatment project”, a project under construction,
utilized the purified biogas, which was generated from the anaerobic work section of the
industrial wastewater workshop, as the incineration heat source of the RTO equipment, and the
project is expected to be put into operation in March 2024.
The total investment of the project is about RMB1.79 million. After the completion of the
Jiaozuo Joincare project, it can meet the heat source demand of two RTOs from Jiaozuo Joincare and Jiaozuo
Livzon. The consumption of natural gas for RTOs is about 1,000m/d. The remaining natural
gas will be used to burn hot water to replace steam, which can save 10.3m/d of steam. It is
expected that RMB1.507 million can be saved every year by using biogas instead of natural gas,
and RMB451,000 can be saved every year by using hot water instead of steam, totalling
RMB1.958 million can be saved every year.
1. Lighting facilities in the park were replaced with LED lamps in response to the call of the
municipal government;
Taitai Pharmaceutical
2. Employees were organized to learn energy conservation knowledge so as to achieve energy
conservation and emission reduction in routine work by turning off lamps and machines timely.
1. Replacing some motors with second-level energy-efficient motors can save 11.3 tons of
standard coal equivalent (tce) per year.
2. Retrofitting the ethylene glycol pump with a variable frequency drive (VFD) to control the
Haibin Pharma motor based on system pressure can reduce motor operating current by approximately 40%. This
leads to an annual energy saving of 72,000 kWh.
3. All newly purchased air conditioners are first-level energy-efficient models, contributing to
energy savings and emission reduction.
1. Solar street lamps were purchased, which are expected to save electricity of 2,1900 kWh per
Xinxiang Haibin year.
2. Screw vacuum pumps were purchased to replace reciprocating vacuum pumps.
1. The air compressor system was upgraded, with an investment amount of RMB638,000, which
Joincare Haibin can save electricity of 121,000kWh/year, reduce carbon emissions by 70.65tCO 2 every year, and
save RMB90,800 every year after the project is put into operation;
122
Joincare Pharmaceutical Group Annual Report 2023
2. A solar hot water system was built on the roof of the dormitory buildings, with an investment
amount of RMB168,000, which can save electricity of 443,000kWh/year, reduce carbon
emissions by 258.67tCO2 every year, and save RMB332,200 every year after the system put into
operation.
Used photovoltaic power generation to reduce power consumption; renovated high-energy
consuming pumps for energy conservation to effectively reduce energy consumption; replaced
with high-efficiency motor water pumps to save energy consumption; vigorously promoted
Fuzhou Fuxing
energy conservation and consumption reduction, and called on employees to realize the concept
of “turning off lights, air conditioners and computers before leaving office” during their daily
work.
Used photovoltaic power generation to reduce power consumption; used water kinetic energy
instead of electric motors to drive the cooling tower fans to reduce the electric energy
consumption while ensuring the cooling effect; used LED lights to reduce power consumption,
Livzon Xinbeijiang and raising employees’ awareness in power conservation and safety; promoted to set the
temperature of the air conditioner to not lower than 26 C; promoted green travels, encouraged
the use of public transportation when going out to work, and set up shuttle buses to transport
employees to and from work thereby reducing the use of private cars.
Maintained and updated chiller units to make more rational use of energy and saved electricity
consumption for production through more reasonable production scheduling by the production
department; used natural gas as fuel for canteens and boilers; replaced sewage treatment Roots
blowers in the environmental protection center with magnetic levitation blowers with an energy
saving rate of about 30%, saving about 0.21 million kWh of electricity consumption per year;
Livzon Hecheng replaced the ultra-low-nitrogen boiler has increased thermal efficiency by 10%, saved 10 cubic
meters of natural gas per ton of steam consumption, and reduced nitrogen oxide emissions by
80%; called on all employees of the factory to respond to electricity conservation, turn off lights
and air conditioners before leaving office, and limited the minimum temperature of air
conditioners; promoted green travel, encouraged the use of public transportation when going out
to work, and set up shuttle buses to transport employees to and from work.
Installed 4 air compressors with a capacity of 130 m3/min to replace the original air compressor
with high power consumption to reduce power consumption; replaced one chiller unit to reduce
electricity consumption; replaced a 100 m3/min air suspension blower and three 55 KW Roots
Gutian Fuxing
air compressors to reduce power consumption and on-site noise; called on all employees to “save
every drop of water, save every kilowatt of electricity”, so that the lights are turned off and the
equipment is powered off before leaving office.
1. Installed an online remote automatic data monitoring system in the boiler room to analyze and
judge the instantaneous flow rate monitoring of the flowmeter in the boiler room, checked
whether the steam traps and exhaust valves in the factory were in sound condition, and thereby
reduced the waste of steam. The average steam loss in the public pipelines of the factory was
15.6%. The steam loss was reduced to 11% via the relevant renovation of steam pipelines and it
was expected that 1,242 tons of steam could be saved thereby; 2. The steam pipelines in the
animal room of the research and development center were re-insulated and the steam traps were
remodeled to prevent the occurrence of long-time steam exhaust due to the failure of water
valves; 3. In the first and second traditional Chinese medicine extraction workshops, a total of
23 drainage devices were added to all condensate drainage pipelines with steam heating
Livzon Limin
equipment to realize automatic drainage and improve the utilization rate of steam. It was
expected that approximately 100 tons of steam could be saved thereby per year; in the first and
second traditional Chinese medicine extraction workshops, the cooling method of purified water
circulation system was changed from cooling by drinking water to cooling by recycled chilled
water in order to reduce the consumption of drinking water. It was expected that the consumption
of water could be thereby reduced by approximately 3,000 tons per year; 4. In the first traditional
Chinese medicine extraction workshop, the existing n-butanol recovery SOP was improved and
refined and the powder collection amount of Panax Notoginsenosides-XST was enhanced with
an aim to reduce the unit consumption of n-butanol. Based on a production of 20 batches per
year, approximately RMB24,800 could be saved per year.
Carried out low-nitrogen transformation for boilers to reduce nitrogen oxide emissions; reduced
Livzon
operation costs by combining the operation of refrigeration stations, and discontinued P06 large
Pharmaceutical
air compressor system when P06 workshop stopped production, and supplied individual
Factory
equipment with gas through small air compressors, which could save about 15,000 kWh of
123
Joincare Pharmaceutical Group Annual Report 2023
electricity and reduce energy consumption; regularly switched on and off the air conditioners in
QC, warehouses and other departments according to their needs, which could save about 700
kWh of electricity per day; further strengthened the energy-saving management of functional
departments, and advocated employees to turn off the lights during the lunch break, and
encouraged them to turn off the lights and shut down their computers when they leave their seats
and the office to save electricity.
The project of recovering waste heat from air compressors as heat source to heat water for
heating in winter was completed and would be put into operation in winter. It was expected that
5,000 tons of steam could be saved thereby; the high-efficiency and energy-saving
Ningxia
transformation of fermentation circulating water pump in workshop 103 was completed, saving
Pharmaceutical
1.00 million kWh of electricity annually; the recycling test of solid waste (slag, sludge) was
completed and solid waste would no longer be landfilled when relevant facilities were put into
use.
Collected and reused steam condense to reduce steam consumption, so as to reduce carbon
emissions; changed the packaging equipment to automatic packaging to improve production
efficiency; vigorously promoted energy saving and consumption reduction internally, called on
all employees to “save every drop of water, save every kilowatt of electricity”, and uniformly
managed the paint in the workshop to eliminate waste; installed additional mirrors behind the
Jiaozuo Hecheng steam pipeline drainage valves to observe whether there is steam loss; led the steam condense to
the production auxiliary system of the hot water tank and the crystallization tank to reduce the
use of steam; changed the lighting in the common areas of the workshop, corridors, etc. to
sound– or light-controlled switches and gradually replaced the workshop lighting with LED
lights; gradually replaced high energy consuming equipment and facilities in workshops with
low energy consuming or automated interlocking devices.
Further strengthened the daily energy-saving management according to the established energy-
saving plan, effectively improved the energy-saving awareness of employees through inspection,
publicity and other means, and cultivated good habit of saving water and electricity among
employees; optimized the peptide splicing process, increased the peptide splicing yield by more
than 10%, thus reducing the power consumption per unit of product; transformed the solid
preparation workshop into the powder injection workshop which produces less waste and
conserves electricity; while comfortable air conditioning unit (cooling) utilized the chilled water
Shanghai Livzon
unit in the power room, the
multi-expansion air conditioning unit was placed outdoors to use air cooling, saving cooling
capacity and reducing energy consumption. In order to reduce the air emission concentration and
VOCs emissions, double-stage activated carbon was installed to the No. 4 exhaust funnel. After
one more step of treatment, both the air emission concentration and the VOCs emissions could
be reduced. In order to improve the efficiency of pure water production, the pure water
equipment was replaced.
Formulated energy-saving and emission reduction measures in accordance with the ESG targets
of the Company and made reasonable use of recycled wastewater; introduced purchased steam
to reduce steam consumption effectively. Effectively improved the energy-saving awareness of
Livzon MAB employees through inspection, publicity and other means, and cultivated good habit of saving
water and electricity among employees; used LED lights to reduce electricity consumption, and
encouraged employees to turn off lights and computers to save electricity before leaving office.
Set up shuttle buses to transport employees to and from work.
Entrusted a third party to carry out routine monthly maintenance of sewage treatment facilities
to ensure that the wastewater treatment system was functioning properly. The water quality was
Livzon Diagnostics up to standard, and the discharge did not exceed the limit. Formulated an energy management
system to save energy and reduce emissions and strengthened daily energy-saving management
to improve the company’s performance in energy saving.
II. Work on Corporate Social Responsibility
(I) Whether to disclose separate corporate social responsibility report, sustainable
development report or ESG report
√Applicable □N/A
124
Joincare Pharmaceutical Group Annual Report 2023
The Company has separately disclosed its corporate social responsibility report. For details, please
refer to the 2023 Corporate Social Responsibility Report of Joincare Pharmaceutical Industry Group
Co., Ltd. disclosed by the Company on the website of Shanghai Stock Exchange (www.sse.com.cn)
on 3 April 2024 for details.
(II)Specific situation of work on corporate social responsibilities
√Applicable □N/A
External donation, public
Quantity/content Description
welfare
Mainly include investment in public welfare
projects for chronic diseases, industrial
Total investment (RMB’0,000) 2,598.46 assistance, earthquake relief, and nature
conservation.
Mainly include investment in earthquake relief
Including: Funds (RMB’0,000) 1,976.14 project.
Cash converted from materials Mainly include investment in public welfare
(RMB’0,000)
622.32 projects for chronic diseases.
Mainly include projects of low-income chronic
Number of beneficiary (person) 2,125 disease patients and industrial revitalization.
Specific description
√Applicable □N/A
The Company is striving to be an explorer in the healthcare industry and insisting on creating a
healthy life driven by technology. The Group pays great attention to its sustainable development,
and actively focuses on the internal regulatory environment and external policy guidance.
Considering China's 14th Five-Year Plan and the local government's development plan, the Group
has formulated a CSR strategy and goals adapting to its current business situation. Focusing on
“health”, the Group's CSR strategy aims to provide the whole society with high-quality, safe,
accessible and affordable medical products and services through the development of its principal
businesses, while improving the overall strength of the health industry. Meanwhile, the strategy is
committed to empowering employees and communities, emphasizing environmental protection and
promoting the overall health development in society.
The development of enterprises relies on society. Over the years, the Company has conscientiously
fulfilled its social responsibility, paid taxes according to law, supported social public welfare
projects, and actively assumed its social responsibility for building a harmonious society. At the
same time, the Group was actively creating social value. It realized net prot attributable to
shareholders of the listed company of RMB1,443 million, generated tax revenues for the
government of RMB1,866 million, paid RMB2,460 million in salary to employees, distributed
dividends and paid interest worth RMB1,615 million to banks and other creditors, donated funds
and goods totaling RMB25.9846 million to the society, and achieved a social contribution per share
of approximately RMB3.97 for the society in 2023.
For our performance of social responsibility, see the 2023 Corporate Social Responsibility Report
of Joincare Pharmaceutical Industry Group Co., Ltd. disclosed by the Company on the website of
Shanghai Stock Exchange (www.sse.com.cn) on 3 April 2024 for details.
III. Consolidation and expansion of achievements in poverty alleviation and rural
revitalization
Targeted Poverty Alleviation and Rural
Quantity/content Description
Revitalization Project
Total investment (RMB’0,000) 196.11 Public welfare projects for chronic
125
Joincare Pharmaceutical Group Annual Report 2023
diseases to help rural revitalization
Including: Funds (RMB’0,000) 113.00 Donation of rural revitalization
Cash converted from materials (RMB’0,000) 83.11 Donation of drugs for chronic diseases
Low-income patients with chronic
Number of beneficiary (person) 1,710
diseases
Forms of assistance (such as industrial
Poverty alleviation
poverty alleviation, vocational poverty
through industrial
alleviation, educational poverty alleviation,
development
etc. )
Specific description
√Applicable □N/A
1. Industrial revitalization
The Group fully implements the spirit of the important instructions put forward by the CPC Central
Committee and the General Secretary. In accordance with the relevant requirements, we have
established and implemented the plan of “Astragalus Root（黃芪）Industry Revitalization” and
adopted the model of “Company + Base” and “Company + Professional Cooperative”, encouraging
locals to cultivate and process astragalus root and develop the astragalus root industry with reference
to the local conditions to make it a pillar industry for poverty relief in the long-term. The Group will
explore the development of the featured astragalus root industry to achieve poverty elimination and
promote the construction of the “Chinese Medicine Ecological Base”.
“Astragalus Root（黄芪）Industry Revitalization” has been in place since 2017. Datong Livzon
Qiyuan Medicine Co., Ltd.（大同丽珠芪源药材有限公司）(“Datong Livzon”), a subsidiary of the
Company, has established its own planting bases in Hunyuan County of Datong City in Shanxi
Province and Zizhou County of Yulin City in Shaanxi Province, respectively, and in 2023, built
astragalus root planting bases together with 12 cooperatives in Hunyuan County, Tianzhen County
and Yanggao County of Datong City in Shanxi Province and Yulin District of Shaanxi Province,
covering an area of approximately 20,000 mu and supporting a total of 415 people, thereby
effectively promoting the economic development of the corresponding areas in Datong, Shanxi and
Yulin, Shaanxi.
During the Reporting Period, based on the national “rural revitalization strategy”, Datong Livzon
launched the “Joint Construction by Village and Enterprise” project in cooperation with the village
committee of Mazhuang Village, Guan’er Town, Hunyuan County, Datong City, Shanxi Province
to renovate and reconstruct the primary processing plant in the astragalus root planting base which
has met the requirements on the primary processing and storage of astragalus root. In addition,
Datong Livzon trained approximately 30 managers and planters of the co-built base in Zizhou
County, Yulin City, Shaanxi Province on the new version of GAP, conducted on-site technical
guidance and practical training on the traceability of traditional Chinese medicinal materials, and
assisted in the traceable preliminary land planning.
2. Rural Revitalization Inclusive Chronic Disease Prevention and Control Public Welfare
Project
In supporting consolidation and expansion of achievements in poverty alleviation and rural
revitalization and in order to respond positively to the call of national policy, Joincare have launched
“Inclusive Chronic Disease Prevention and Control Public Welfare Project (普惠慢病防治公益项
目)” program, which combines our own industrial advantages to provide tangible health benefits to
grassroots people. The program targets at common chronic diseases such as hypertension,
hyperlipidemia, cardiovascular and cerebrovascular diseases, and treatment drugs have been
donated to remote areas, including Pravastatin Capsules (普伐他汀钠胶囊), Amlodipine Besylate
126
Joincare Pharmaceutical Group Annual Report 2023
Capsules (苯磺酸氨氯地平胶囊), Valsartan Capsules (缬沙坦胶囊), and Isosorbide Bononitrate
Tablets ( 单硝酸异山梨酯片), which could be worth millions of RMB. These drugs can really help
alleviate the economic difficulties of low-income families arising from long-term medication and
mitigate chronic drug medication problems, further help patients with chronic diseases improve their
awareness of chronic disease prevention and health management, effectively prevent “reduced to or
returned to poverty due to disease”, and promote local development of rural revitalization.
Since late 2018 onwards, with the support of local government agencies and relevant authorities at
all levels, we have successfully carried out the “Inclusive Chronic Disease Prevention and Control
Public Welfare Project” in areas including Chaotian District of Guangyuan City, Songpan County
of the Autonomous Prefecture of Aba Zangs and Qiangs, Jinkouhe District of Leshan City, Jiange
County and Pingwu County in Sichuan Province, Hunyuan County, Guangling County and Lingqiu
County of Datong City in Shanxi Province, Dongxiang County, Tianzhu County, Linze County and
Shandan County in Gansu Province, Xianghai national nature reserve in Jilin Province, Chayu
County in Tibet Autonomous Region, Macun District of Jiaozuo City in Henan Province,
Huangshan District of Huangshan City in Anhui Province, Suining County of Hunan Province,
Fenyi County of Jiangxi Province, Kashgar City of Xinjiang Uygur Autonomous Region, Balinzuo
Banner and Tuoketuo County of Inner Mongolia, and Ziyuan County of Guangxi Province. In
recognition of our outstanding performance in supporting rural revitalization projects, Joincare was
honored with a number of awards, including the “Enterprises Contributing to Rural Revitalization”
in Typical Case Selection for 2023 CSR Competitiveness Responsibility (2023 “CSR 竞争力”责任
典型案例精选“乡村振兴贡献企业”), and the Excellent Rural Revitalization Practice Cases of
Listed Companies (上市公司乡村振兴优秀实践案例).
As at 31 December 2023, the project covered 8 provinces and 4 autonomous regions, including 23
remote areas requiring assistance, and helped more than 19,410 low-income people. In 2024, we
plan to donate medicines to Tibet, Hubei Province, Gansu Province, Anhui Province, Sichuan
Province and other regions.
3. Resilience to Natural Disasters
On 18 December 2023 at 23:59, a 6.2-magnitude earthquake struck Jishishan County in Linxia Hui
Autonomous Prefecture of Gansu Province, which caused a serious impact on the local economy
and society. When a disaster strikes in one location, help comes from all quarters. In the wake of
this earthquake, local governments and public welfare organizations paid high attention, responded
quickly to support earthquake-stricken areas and rallied necessary aid and support to residents in
the afflicted areas. On the morning of December 20, Joincare and its controlling subsidiary Livzon
Group donated relief funds and medical supplies with total value of RMB20 million to the disaster-
stricken areas through the Zhuhai Red Cross Society, including RMB10 million in cash and
medicines worth of RMB10 million. Our donations were used for emergency rescue operations,
living arrangements for disaster-stricken people, rescue team support, post-disaster reconstruction
and other related work.
127
Joincare Pharmaceutical Group Annual Report 2023
Chapter 6 Major Events
I. Fulfillment of undertakings
(I) Undertakings fulfilled during the Reporting Period or not yet fulfilled as of the
Reporting Period by the parties to the commitment such as de facto controllers,
shareholders, related parties, acquirers of the Company and the Company
√Applicable □N/A
Specific Next plan
Whether
Whether reasons for should be
commit
there is a failure in stated in
Commitment Commitment Commitment Time of Time limit of ment is
Subject time limit timely case of
background type content commitment commitment strictly
for fulfillment failure in
fulfilled
fulfillment shall be timely
in time
given fulfillment
Settlement of Please see
horizontal Baiyeyuan Note 1 for 30 April 2001 No Long-term Yes - -
competition details
Commitment
Baiyeyuan, de facto
related to initial
Settlement of controllers and Please see
public offering 10 January
horizon persons acting-in Note 2 for No Long-term Yes - -
2014
competition concert, and the details
Company
The date of
completion of
remedial
Please see
The Company and measures in
Others Note 3 for 8 March 2016 Yes Yes - -
de facto controllers connection with
details
the non-public
offering of
Livzon Group
Commitment The date of
related to completion of
seasoned Please see remedial
Baiyeyuan and the
offerings Others Note 4 for 11 May 2017 Yes measures in Yes - -
de facto controller
details connection with
rights issue of
Joincare
From the date
Please see of proceeds The date of
Others The Company Note 5 for for issuance of Yes completion of Yes - -
details the Rights use of proceeds
issue in place.
Other
commitments
Please see
made to the 17 December
Others The Company Note 6 for No Long-term Yes - -
minority 2008
details
shareholders of
the company
Note 1: Shenzhen Baiyeyuan Investment Co., Ltd., the controlling shareholder of the Company, undertook that it would not
be directly or indirectly engaged in or cause subsidiaries and branches under its control to be engaged in any business or
activity constituting horizontal competition with the Company after the founding of the Company, including but not limited
to the research, production and sales of any products that were the same as or similar to products under research, production
and sales of the Company, and was willing to undertake compensation responsibility for economic losses to the Company
arising from violation of the said commitment.
Note 2: Whereas the domestically listed foreign shares of Livzon Group, a controlled subsidiary of the Company, sought
listing on the Main Board of the Stock Exchange of Hong Kong Limited, in order to fully ensure smooth completion of the
said event and in compliance with relevant requirements of the Stock Exchange of Hong Kong Limited, the controlling
shareholders, de facto controller of the Company and the Company entered into relevant undertakings with Livzon Group
as follows: 1. The controlling shareholders, de facto controller and persons acting-in-concert of the Company, the Company
and its controlled subsidiaries except for Livzon Group did not or would not be, directly or indirectly, engaged in any
business that constituted competitive relation or potential competitive relation with drug research, development, production
and sale businesses (“Restricted Businesses”) of Livzon Group from time to time. For the avoidance of doubt, the scope of
128
Joincare Pharmaceutical Group Annual Report 2023
Restricted Businesses did not cover products that were researched, developed, manufactured and sold on the date of relevant
letter of undertaking by the controlling shareholders and de facto controller of the Company, the Company and its controlled
subsidiaries except for Livzon Group; 2. If any new business opportunity was found to constitute competitive relation with
Restricted Businesses, the controlling shareholders, de facto controllers and persons acting-in-concert of the Company, the
Company and its controlling subsidiaries except for Livzon Group would inform Livzon Group in written form immediately
and firstly provide Livzon Group with the business opportunity in accordance with reasonable and fair terms and conditions.
If Livzon Group gave up the business opportunity, the controlling shareholders and de facto controllers of the Company,
the Company and its controlled subsidiaries except for Livzon Group may accept the business opportunity in accordance
with the terms and conditions that were not superior to those offered to Livzon Group; 3. If assets and businesses that
directly or indirectly constituted competitive relation and potential competitive relation with Restricted Businesses were
intended to be transferred, sold, leased, licensed to use or otherwise transferred or allowed to use (these Sales and Transfers),
the controlling shareholders and de facto controllers of the Company, the Company and its controlled subsidiaries except
for Livzon Group would provide the right of first refusal for Livzon Group under the same condition. If Livzon Group gave
up the right of first refusal, the controlling shareholders, de facto controllers and persons acting-in-concert of the Company,
the Company and its controlled subsidiaries except for Livzon Group would carry out these Sales and Transfers to a third
party in accordance with main terms that were not superior to those offered to Livzon Group; 4. The controlling shareholders,
de facto controllers and persons acting-in-concert of the Company, the Company and its controlled subsidiaries except for
Livzon Group would not be engaged in or involved in any business that might damage the interests of Livzon Group and
other shareholders through the relation with shareholders of Livzon Group or the identity of shareholders of Livzon Group;
5. The controlling shareholders, de facto controllers and persons acting-in-concert of the Company, the Company and its
controlled subsidiaries except for Livzon Group would not or cause its contact persons (except for Livzon Group) to directly
or indirectly: (1) induce or attempt to induce any director, senior management or consultant of any member of Livzon Group
to terminate his/her employment with or to be an employee or consultant of Livzon Group at any time (whichever is
applicable), no matter if relevant acts of the person were against the Employment Contract or Consultancy Agreement (if
applicable); (2) Within three years after any person terminated to be the director, senior management or consultant of any
member of Livzon Group, employ the person who had or might have any confidentiality information or business secret in
relation to Restricted Businesses (except for the director, senior management or consultant of the Company and/or its
controlling subsidiaries except for Livzon Group on the date of issuance of relevant letter of undertaking); (3) Recruit or
lobby any person carrying out business in any member of Livzon Group, accept orders, or carry out business separately,
through any other person or as any person, firm, or manager, advisor, consultant, employee, agent or shareholder of any
company (competitor of any member of Livzon Group), or lobby or persuade the person making transaction with Livzon
Group or negotiating with Livzon Group on Restricted Businesses to terminate its transaction with Livzon Group or reduce
its normal business volume with Livzon Group, or ask for more favorable transaction terms to any member of Livzon Group.
6. The controlling shareholders, de facto controllers and persons acting-in-concert of the Company, the Company and its
controlled subsidiaries except for Livzon Group further undertook that: (1) They would allow and cause relevant contact
persons (except for Livzon Group) to allow independent directors of Livzon Group to review if the Company and its
controlled subsidiaries except for Livzon Group obeyed the Letter of Undertaking at least once a year; (2) They would
provide all the data required for annual review and implementation of the Letter of Undertaking for independent directors
of Livzon Group; (3) They would allow Livzon Group to disclose the decision on whether the controlling shareholders and
de facto controllers of the Company, the Company and its controlled subsidiaries except for Livzon Group obeyed and
implemented the Letter of Undertaking reviewed by independent directors of Livzon Group through the annual report or
announcement; (4) The controlling shareholders, de facto controllers and persons acting-in-concert of the Company, the
Company (and its controlled subsidiaries except for Livzon Group) would provide Livzon Group with the Letter of
Confirmation in relation to compliance with clauses of the Letter of Undertaking every year so as to be included in the
annual report of Livzon Group. 7. The controlling shareholders, de facto controllers and persons acting-in-concert of the
129
Joincare Pharmaceutical Group Annual Report 2023
Company, and the Company promise that they would bear corresponding legal responsibility and consequence arising from
violation of any clause by the Company (or the Company's controlled subsidiaries except for Livzon Group or its contact
persons), starting from the date of issuance of relevant letter of undertaking. 8. The said undertakings would terminate in
case of the following circumstances (whichever is earlier): (1) The controlling shareholders, de facto controllers and persons
acting-in-concert of the Company, the Company and any of its controlled subsidiaries were not the controlling
shareholders of Livzon Group anymore; (2) Livzon Group terminated the listing of its shares on the Hong Kong Stock
Exchange and other overseas stock exchanges (except that shares of Livzon Group stopped to be traded temporarily for any
reason).
Note 3: Do not interfere in the operation and management activities of Livzon Group or encroach on the interests of Livzon
Group.
Note 4: Pursuant to the Guiding Opinions on Matters Relating to the Dilution of Current Returns as a Result of Initial Public
Offering, Refinancing and Major Asset Restructuring (Announcement of CSRC [2015] No. 31), the company shall
undertake to adopt specific remedial measures relating to dilution of current returns as a result of the company's initial
public offering, refinancing of the listed company, or major asset restructuring and shall fulfill such undertaking. Pursuant
to relevant provisions of CSRC, Zhu Baoguo, the de facto controller of Shenzhen Baiyeyuan Investment Co., Ltd., a
controlling shareholder:1. Do not intervene in the operation and management activities or encroach on the interests of the
company; 2. If CSRC issued other new regulatory provisions on the remedial measures in relation to returns and the relevant
undertakings and the aforesaid undertakings did not conform to such provisions from the date of issuance of the undertaking
to the completion of IPO share allotment, the Company/the de facto controller would undertake to issue a supplemental
undertaking in accordance with the latest provisions of CSRC; 3. The Company/the de facto controller undertook to
practically take the remedial measures in relation to returns formulated by the company and fulfill the undertaking
concerning the remedial measures. In case of violation of the undertaking, causing losses to the company or investors, the
Company/the de facto controller was willing to assume compensation responsibilities to the company or investors in
accordance with law. In case of violation of the said undertakings or rejection to fulfill the said undertakings, as one of the
liability subjects relating to the remedial measures concerning returns, it was agreed that relevant punishment shall be
imposed on or relevant management measures shall be taken against the Company/the de facto controller by CSRC, the
SSE and other securities regulators in accordance with relevant provisions and rules set or issued by them.
Note 5: After the proceeds for issuance of allotment were in place, the Company would use them according to the disclosure
in the announcement, and carry out the policies, including deposit in special account, approval by specially-assigned person,
and special use of special funds in accordance with management measures for proceeds of the Company. The Board of the
Company would regularly check the progress of projects invested with proceeds, issue a special report on deposit and use
of proceeds, engage an accounting firm during the annual audit to issue a verification report on deposit and use of proceeds,
would be supervised by regulators and sponsors at any time, and would not make major investment, asset purchase or similar
financial investment though proceeds in disguise.
Note 6: (1) While transferring tradable shares subject to selling restrictions held by the company in Livzon Group, the
company shall strictly obey relevant provisions of Guidelines of Listed Companies on Transfer of Stock Shares Subject to
Selling Restrictions ([2008] No. 15); (2) If the Company had shares subject to selling restrictions held by it in Livzon Group
that were planned to be sold through the bid trading system of Shenzhen Stock Exchange and reduced more than 5% shares
within six months from the first share reduction, the Company would pass the Announcement on Sales disclosed by Livzon
Group within two trading days before the first share reduction.
(II) If the Company has made profit forecast on its assets or projects and the Reporting Period is
still within the profit forecast period, the Company shall give an explanation on why its assets or
projects achieved its profit forecast
130
Joincare Pharmaceutical Group Annual Report 2023
□Realized □Unrealized √N/A
(III) Fulfillment of performance covenant and its influence on goodwill impairment test
□Applicable √N/A
II. Information on Non-operating use of funds by controlling shareholders and other related parties
during the Reporting Period
□Applicable √N/A
III. Information on illegal guarantees
□Applicable √N/A
IV. The Board's statement on the “non-standard opinion auditor's report” issued by the
appointed accounting firm
□Applicable √N/A
V. Analysis and explanation from the Company on the reasons and impact of the change of
accounting policies, accounting estimates or correction on material accounting errors
(I) Analysis and explanation from the Company on the reasons and impact of the change of
accounting policies or accounting estimates
□Applicable √N/A
(II) Analysis and explanation from the Company on the reasons and impact of the correction on
material accounting errors
□Applicable √N/A
(III) Communication with former appointed accounting firm
□Applicable √N/A
(IV) Others
□Applicable √N/A
VI. Appointment and termination of appointment of accounting firm
Unit: 10,000 Yuan Currency: RMB
Current accounting firm
Name of domestic accounting firm Grant Thornton (Special General Partnership)
Remuneration for domestic accounting firm 128
Continuous years of auditing services provided by domestic
5
accounting firm
Name of certified public accountant (“CPA”) of domestic accounting
Wang Yuan(王远) and Wang Qilai（王其来）
firm
Continuous years of CPA audit services of domestic accounting firms 2 and 5
131
Joincare Pharmaceutical Group Annual Report 2023
Name Fee
Accounting firm for internal control audit Grant Thornton (Special General Partnership) 32
Statement on appointment and termination of appointment of accounting firm
□Applicable √N/A
Statement on re-engagement of accounting firm during the audit period
□Applicable √N/A
Explanation of reductions in audit fees of 20% or more (including 20%) compared to the previous
year
□Applicable √N/A
VII. Risk of delisting
(1) Reasons for delisting risk warning
□Applicable √N/A
(2) Countermeasures to be taken by the Company
□Applicable √N/A
(3) Risk of delisting and the reasons
□Applicable √N/A
VIII. Matters related to bankruptcy and reorganization
□Applicable √N/A
IX. Material litigation and arbitration
□The Company was involved in material litigation or arbitration in current year
√The Company was not involved in material litigation or arbitration in current year
X. Violations committed by the listed company and its directors, supervisors, senior management,
controlling shareholders and de facto controllers, punishments imposed and rectifications
□Applicable √N/A
XI. Credit standing of the Company and its controlling shareholders and de facto controllers during
the Reporting Period
□Applicable √N/A
XII. Material related-party transactions
(I) Related-party transactions in connection with day-to-day operation
1. Matters already disclosed in interim announcements about which no new information is available
√Applicable □N/A
132
Joincare Pharmaceutical Group Annual Report 2023
Overview Query index
Pursuant to the “Resolution on Connected Transactions in the
Ordinary Course of Business of the Majority-owned Subsidiaries
of Jiaozuo Joincare and Jinguan Electric Power” considered and
See the “Announcement on Resolutions
approved at the 23th Meeting of the 8th Session of the Board on 7
Considered and Approved at the 9th Meeting of
April 2023, Jiaozuo Joincare intended to purchase no more than
the 23th Session of the Board of Joincare
RMB280 million (inclusive) of steam and power from Jinguan
Pharmaceutical Group Industry Co., Ltd.” (Lin
Electric Power in 2023 so as to satisfy the demands of Jiaozuo
2023-030) and the “Announcement of Joincare
Joincare for steam and power in the process of production and
Pharmaceutical Group Industry Co., Ltd. on the
operation. The independent directors of the Company gave prior
Connected Transactions in the Ordinary Course of
approval opinions on the Resolution and gave opinions on the
Business of the Majority-owned Subsidiaries of
approval of the independent directors at the Board meeting.
Jiaozuo Joincare and Jinguan Electric Power” (Lin
2023-036) disclosed by the Company on 11 April
Both parties referred to the market price to fix a price of the said
2023 for details.
connected transactions. During the Reporting Period, the actual
amount of the said connected transactions was RMB268.2556
million.
2. Matters already disclosed in interim announcements about which new information is available
□Applicable √N/A
3. Matters not disclosed in interim announcements
□Applicable √N/A
(II) Related-party transactions involving acquisition or sale of assets or equity
1. Matters already disclosed in interim announcements about which no new information is available
□Applicable √N/A
2. Matters already disclosed in interim announcements about which new information is available
□Applicable √N/A
3. Matters not disclosed in interim announcements
□Applicable √N/A
4. Fulfillment of performance covenants (if any) during the Reporting Period
□Applicable √N/A
(III) Material related-party transactions involving joint external investment
1. Matters already disclosed in interim announcements about which no new information is available
□Applicable √N/A
2. Matters already disclosed in interim announcements about which new information is available
□Applicable √N/A
3. Matters not disclosed in interim announcements
□Applicable √N/A
(IV) Claims and debts with related parties
1. Matters already disclosed in interim announcements about which no new information is available
□Applicable √N/A
2. Matters already disclosed in interim announcements about which new information is available
□Applicable √N/A
3. Matters not disclosed in interim announcements
√Applicable □N/A
Unit: Yuan Currency: RMB
133
Joincare Pharmaceutical Group Annual Report 2023
Offer funds to related parties Receive funds from related parties
Amount Amount
Related party Relationship Opening Closing Opening Closing
incurred in the incurred in the
balance balance balance balance
current period current period
Guangdong Blue Treasure
Pharmaceutical Co., Ltd. (广东蓝 Others 5,388,984.29 4,759,249.23 10,148,233.52 117,760.00 960,838.23 1,078,598.23
宝制药有限公司)
Subsidiaries of Sichuan Healthy
Deer Hospital Management Co.,
Others 497,828.30 -63,405.50 434,422.80 20,947.89 234,512.04 255,459.93
Ltd. (四川健康阿鹿医院管理有
限公司之子公司)
Zhuhai Sanmed Gene Diagnostics
Ltd. (珠海市圣美基因检测科技 Others 101,526.98 81,557.66 183,084.64
有限公司)
Zhuhai Sanmed Biotech Inc. (珠
Others 211,200.00 0.00 211,200.00
海圣美生物诊断技术有限公司)
Shenzhen Youbao Technology
Co., Ltd. (深圳市有宝科技有限 Others 188,100.00 -188,100.00 0.00
公司)
Jiangsu Yiyingjia Medical
Technology Co., Ltd. (江苏一赢 Others 0.00 29,816.00 29,816.00
家医疗科技有限公司)
Feellife Health Inc. (深圳来福士 Associated
0.00 1,259,566.37 1,259,566.37
雾化医学有限公司) company
Zhongshan Renhe Health Product
Co., Ltd. (中山市仁和保健品有 Others 469,895.78 0.00 469,895.78
限公司)
Shenzhen Health Deer
Technology Co., Ltd.（深圳市健 Others 4,680.00 0.00 4,680.00
康阿鹿信息科技有限公司）
Jiaozuo Jinguan Jiahua Electric
Associated
Power Co., Ltd. (焦作金冠嘉华 75,724,913.57 -9,910,133.70 65,814,779.87
company
电力有限公司)
Total 82,587,128.92 -4,031,449.94 78,555,678.98 138,707.89 1,195,350.27 1,334,058.16
During the Reporting Period, the Company had normal operating fund transactions with connected
Cause for claims and debts with related parties
parties.
Impact of claims and debts with related parties The said credits and debts with connected persons are operating fund transactions; there was no non-
on the Company operating use of funds of the Company by shareholders and connected part.
(V) Financial business among the Company, related financial companies, financial companies
controlled by the Company, and related parties
□Applicable √N/A
(VI) Others
□Applicable √N/A
XIII. Material contracts and their fulfilments
(I) Trusteeship, contracting and lease
1. Trusteeship
□Applicable √N/A
2. Contracting
□Applicable √N/A
3. Lease
□Applicable √N/A
134
Joincare Pharmaceutical Group Annual Report 2023
(II) Guarantees
√Applicable □N/A
Unit: 10,000 Yuan Currency: RMB
Date of
Whether Guaranteed
Relation-ship between the guarantee
Guaranteed Effective Expiration Guarantee Fulfilled Overdue Overdue there's a for a
Guarantor guarantor and the listed Guaranteed party (signing Relationship
amount date date type or not or not amount counter- related
company date of
guarantee party or not
agreement)
Jinguan Electric Joint liability
Joincare Headquarter of the Company 2,045.01 2023-06-12 2023-06-12 2023-12-12 Yes No 0 Yes Yes Assoiate
Power guarantee
Jinguan Electric Joint liability
Joincare Headquarter of the Company 2,183.85 2023-06-12 2023-06-12 2023-12-12 Yes No 0 Yes Yes Assoiate
Power guarantee
Jinguan Electric Joint liability
Joincare Headquarter of the Company 2,000.00 2023-06-16 2023-06-16 2023-12-16 Yes No 0 Yes Yes Assoiate
Power guarantee
Jinguan Electric Joint liability
Joincare Headquarter of the Company 1,495.20 2023-07-24 2023-07-24 2024-07-19 No No 0 Yes Yes Assoiate
Power guarantee
Jinguan Electric Joint liability
Joincare Headquarter of the Company 1,532.64 2023-07-28 2023-07-28 2024-07-28 No No 0 Yes Yes Assoiate
Power guarantee
Jinguan Electric Joint liability
Joincare Headquarter of the Company 332.01 2023-08-10 2023-08-10 2024-08-09 No No 0 Yes Yes Assoiate
Power guarantee
Jinguan Electric Joint liability
Joincare Headquarter of the Company 1,000.00 2023-08-21 2023-08-21 2024-02-21 No No 0 Yes Yes Assoiate
Power guarantee
Jinguan Electric Joint liability
Joincare Headquarter of the Company 995.61 2023-08-21 2023-08-21 2024-02-21 No No 0 Yes Yes Assoiate
Power guarantee
135
Joincare Pharmaceutical Group Annual Report 2023
Jinguan Electric Joint liability
Joincare Headquarter of the Company 1,000.00 2023-08-21 2023-08-21 2024-02-21 No No 0 Yes Yes Assoiate
Power guarantee
Jinguan Electric Joint liability
Joincare Headquarter of the Company 456.21 2023-08-21 2023-08-21 2024-02-21 No No 0 Yes Yes Assoiate
Power guarantee
Jinguan Electric Joint liability
Joincare Headquarter of the Company 1,000.00 2023-08-28 2023-08-28 2024-02-28 No No 0 Yes Yes Assoiate
Power guarantee
Jinguan Electric Joint liability
Joincare Headquarter of the Company 867.00 2023-08-28 2023-08-28 2024-02-28 No No 0 Yes Yes Assoiate
Power guarantee
Jinguan Electric Joint liability
Joincare Headquarter of the Company 958.63 2023-09-11 2023-09-11 2024-03-11 No No 0 Yes Yes Assoiate
Power guarantee
Jinguan Electric Joint liability
Joincare Headquarter of the Company 4,000.00 2023-09-22 2023-09-22 2024-09-20 Yes No 0 Yes Yes Assoiate
Power guarantee
Jinguan Electric Joint liability
Joincare Headquarter of the Company 5,076.44 2023-10-16 2023-10-16 2024-10-15 No No 0 Yes Yes Assoiate
Power guarantee
Jinguan Electric Joint liability
Joincare Headquarter of the Company 5,123.00 2023-10-19 2023-10-19 2024-10-18 No No 0 Yes Yes Assoiate
Power guarantee
Jinguan Electric Joint liability
Joincare Headquarter of the Company 3,000.00 2023-11-09 2023-11-09 2024-08-15 No No 0 Yes Yes Assoiate
Power guarantee
Jinguan Electric Joint liability
Joincare Headquarter of the Company 2,790.00 2023-11-14 2023-11-14 2024-08-26 No No 0 Yes Yes Assoiate
Power guarantee
Jinguan Electric Joint liability
Joincare Headquarter of the Company 3,000.00 2023-11-24 2023-11-24 2024-11-22 No No 0 Yes Yes Assoiate
Power guarantee
136
Joincare Pharmaceutical Group Annual Report 2023
Jiaozuo Jinguan Electric Joint liability
Wholly-owned subsidiary 2,000.00 2023-12-06 2023-12-06 2024-12-06 No No 0 Yes Yes Assoiate
Joincare Power guarantee
Jinguan Electric Joint liability
Joincare Headquarter of the Company 3,100.00 2023-12-13 2023-12-13 2024-12-12 No No 0 Yes Yes Assoiate
Power guarantee
Jinguan Electric Joint liability
Joincare Headquarter of the Company 3,100.00 2023-12-19 2023-12-19 2024-12-18 No No 0 Yes Yes Assoiate
Power guarantee
Total guaranteed amount occurred during the Reporting Period (excluding guarantees to subsidiaries) 47,055.61
Total guaranteed amount as of the End of the Reporting Period (A) (excluding guarantees to subsidiaries) 40,826.75
Guarantee provided by the Company and its subsidiaries to subsidiaries
Total amount of guarantees to subsidiaries during the Reporting Period 252,256.21
Total amount of guarantees to subsidiaries as of the End of the Reporting Period (B) 303,465.01
Total guaranteed amount of the Company (including guarantees to subsidiaries)
Total guaranteed amount (A+B) 344,291.76
Percentage of total guaranteed amount in the Company's net assets (%) 15.21
In which:
Amount of guarantees provided to shareholders, de facto controllers and their related parties (C) 0
Amount of debt guarantee directly or indirectly provided to a guaranteed party with an asset-liability ratio exceeding
210,806.96
70% (D)
Portion of total guaranteed amount exceeding 50% of net assets (E) 0
Total guaranteed amount of the above three items (C+D+E) 210,806.96
Statement on the contingent joint liability that might be assumed in connection with outstanding guarantee N/A
The above connected guarantees are detailed in Note XI 5(3) to the Financial Statements of this
Statement on guarantees
report.
137
Joincare Pharmaceutical Group Annual Report 2023
(III) Entrusted cash asset management
1. Entrusted wealth management
(1) Overall situation of entrusted wealth management
□Applicable √N/A
Other information
□Applicable √N/A
(2) Single entrusted wealth management
□Applicable √N/A
Other information
□Applicable √N/A
(3) Provision for impairment of entrusted wealth management products
□Applicable √N/A
2. Entrusted loans
(1) Overall situation of entrusted loans
□Applicable √N/A
Other information
□Applicable √N/A
(2) Single entrusted loans
□Applicable √N/A
Other information
□Applicable √N/A
(3) Provision for impairment of entrusted loans
□Applicable √N/A
3. Other information
□Applicable √N/A
(IV) Other material contracts
□Applicable √N/A
138
Joincare Pharmaceutical Group Annual Report 2023
XIV．Progress of Proceeds Usage
√Applicable □N/A
(I) Overall Usage of Proceeds
√Applicable □N/A
Unit: 10,000 Yuan
Total Progress of
Including: investment cumulative Percentage of
Net amount of Investment Total amount
Sources Total Amount of Total amount of Adjusted total amount of investment as at investment
Paid-in time of proceeds after amount of proceeds
of amount of proceeds proceeds proceeds proceeds as at the end of the amount in the
proceeds deducting during the with change
proceeds proceeds from over- commitments commitments (1) the end of the Reporting year (%) (5) =
issuance expenses year (4) of usage
allotment Reporting Period (%) (3) (4)/(1)
Period (2) = (2)/(1)
Others 16 Octorber 2018 171,599.38 0.00 166,974.02 166,974.02 166,974.02 132,721.79 79.49 32,721.83 19.60 73,587.73
Others 26 September 2022 USD$9,204 0.00 USD$8,930.00 USD$8,930.00 USD$8,930.00 0.00 - 0.00 - N/A
(II) Details of Investment Projects with Proceeds
√Applicable □N/A
Unit: 10,000 Yuan
Progress of
Whether Total cumulative
Whether Date when
the investment
involving Total amount Adjusted total Investment investment the project
Sources proceeds amount of
Nature of any change Paid-in time of of proceeds investment amount as at the end reaches
Name of project of from proceeds as at of the
project in proceeds commitments amount of during the intended
proceeds over- the end of the
investment for project proceeds (1) year Reporting usable
allotment Reporting
direction Period (%) status
were used Period (2)
(3)＝(2)/(1)
Haibin Pharma Pingshan
Production and December
Pharmaceutical Industrialization Base No Others 16 October 2018 No 85,000.00 90,000.00 5,493.02 88,395.21 98.22
construction 2023
Project
January
New products R&D project R&D Yes Others 16 October 2018 No 54,587.73 54,587.73 20,238.37 28,270.77 51.79
2027
Haibin Pharma Pingshan
Production and January
Pharmaceutical Industrialization Base No Others 16 October 2018 No 16,000.00 16,000.00 6,358.94 11,533.74 72.09
construction 2024
Expansion Project
Information Platform Construction January
Others No Others 16 October 2018 No 3,000.00 3,000.00 631.51 1,135.79 37.86
Project 2025
Global R&D and Industrialization Plan R&D No Others 26 September 2022 No USD$6,251.00 USD$6,251.00 0.00 0.00 0.00 N/A
139
Joincare Pharmaceutical Group Annual Report 2023
Construction of global product sales
Production and
and after-sales network and service No Others 26 September 2022 No USD$893.00 USD$893.00 0.00 0.00 0.00 N/A
construction
system
Replenishment of working capital and Operation
No Others 26 September 2022 No USD$1,786.00 USD$1,786.00 0.00 0.00 0.00 N/A
other general corporate purposes management
(continued)
Whether the Specific reasons why Whether there was any
Whether the Benefits or R&D
investment progress investment progress Benefits generated significant change in the
Name of project project has been achievements achieved in the Surplus Balance
was in line with the fell short of scheduled during the year feasibility of project? If so,
completed project
planned progress plan please describe details.
Relevant respiratory
Haibin Pharma Pingshan Pharmaceutical
Yes Yes N/A 54,658.86 formulation products have No 285.38
Industrialization Base Project
started production and sales
New products R&D project No Yes N/A - - No -
Haibin Pharma Pingshan Pharmaceutical
No No Note - - No -
Industrialization Base Expansion Project
Information Platform Construction Project No Yes N/A - - No -
Global R&D and Industrialization Plan No Yes N/A - - No -
Construction of global product sales and
No Yes N/A - - No -
after-sales network and service system
Replenishment of working capital and
No Yes N/A - - No -
other general corporate purposes
Note: The project progress is affected by the delivery time of imported equipment purchases and the company's progress in registering new products under research, causing the progress of
investment has not met the planned schedule.
(III) Changes in or termination of investment of proceeds during the Reporting Period
√Applicable □N/A
Unit: Yuan Currency: RMB
Total investment
Name of Total amount of Name of Amount of proceeds used for
amount of proceeds Description of decision-making procedures and information
project before proceeds before project after Reasons for change/termination replenishing working capital
before disclosure
change change/termination change after change/termination
change/termination
In order to adapt to the latest research On 28 December 2023, the Company held the 36th Meeting of
and development status of the the 8th Session of the Board and the 28th Meeting of the 8th
New Company and enhance the efficiency Session of the Supervisory Committee, which considered and
New products products of proceeds usage, the Company approved the Proposal on Adjusting the Investment Content of
54,587.73 28,270.77 N/A
R&D project R&D added new innovative drugs for the Certain Projects Invested with Proceeds. See the Announcement
project respiratory system, analgesia and on Adjusting the Investment Content of Certain Projects
other aspects into its new product Invested with Proceeds of Joincare Pharmaceutical Group
research and development projects. Industry Co., Ltd. (No. 2023-144) for details.
140
Joincare Pharmaceutical Group Annual Report 2023
(IV) Other information on the usage of proceeds during the Reporting Period
1. Previous investment and replacement of projects invested with proceeds
√Applicable □N/A
Pursuant to the Proposal on Replacing Self-raised Funds Previously Invested in Projects with Proceeds
considered and approved at the 3rd Meeting of the 7th Session of the Board on 29 October 2018, it was
agreed that the Company could use the proceeds of RMB215.3282 million to replace self-raised funds
previously invested in projects. The replacement with proceeds did not exceed six months from the date
of payment of such proceeds, which complied with relevant laws and regulations, and did not affect the
normal progress of the projects invested with the proceeds. There was no disguised change in the
investment direction of proceeds, nor would it harm the interests of shareholders. Minsheng Securities Co.,
Ltd., the sponsor of the Company, has issued the Opinions on the Verification of Replacing Self-raised
Funds Previously Invested in Projects with Proceeds by Joincare Pharmaceutical Group Industry Co., Ltd.
The companies implementing such projects have completed the replacement of self-raised funds
previously invested in projects of RMB215.3282 million with the proceeds in December 2018.
2. Information on temporary replenishment of working capital with idle proceeds
√Applicable □N/A
(1) Pursuant to the Proposal on the Temporary Replenishment of Working Capital with Idle Proceeds
considered and approved at the 21st Meeting of the 8th Session of the Board and the 18th Meeting of the
8th Session of the Supervisory Committee of the Company on 29 December 2022, it was agreed that the
Company temporarily replenished the working capital with no more than RMB500 million of idle proceeds
from 1 January 2023 to 31 December 2023 so as to improve the use efficiency of proceeds and reduce
financial expenses of the Company. For details, please refer to the “Announcement on the Temporary
Replenishment of Working Capital with Certain Idle Proceeds of Joincare Pharmaceutical Group Industry
Co., Ltd.” (Lin 2022-146).
As at the end of 2023, the Company has recovered all idle proceeds of the company allocated for temporary
replenishment of working capital
(2) Pursuant to the Proposal on the Temporary Replenishment of Working Capital with Idle Proceeds
considered and approved at the 36th Meeting of the 8th Session of the Board and the 28th Meeting of the
8th Session of the Supervisory Committee of the Company on 28 December 2023, it was agreed that the
Company temporarily replenished the working capital with no more than RMB200 million of idle proceeds
from 1 January 2024 to 31 December 2024 so as to improve the use efficiency of proceeds and reduce
financial expenses of the Company. For details, please refer to the “Announcement on the Temporary
Replenishment of Working Capital with Certain Idle Proceeds of Joincare Pharmaceutical Group Industry
Co., Ltd.” (Lin 2023-145).
As at the disclosure date of this report, the balance of the Company’s idle proceeds of the company
allocated for temporary replenishment of working capitall was RMB200 million.
3. Cash management of idle proceeds and investment in relevant products
□Applicable √N/A
4. Information on using the proceeds from over-allotment to permanently replenish working
capital or repay bank loans
□Applicable √N/A
141
Joincare Pharmaceutical Group Annual Report 2023
5. Others
√Applicable □N/A
(1) Information on using bank acceptance bills to pay for projects invested with proceeds
Pursuant to the Proposal on the Payment of Projects Invested with Proceeds with Bank Acceptance Bills
and the Equal Replacement with Proceeds considered and approved at the 25th Meeting of the 7th Session
of the Board on 7 May 2020, it was agreed that during the implementation of projects invested with
proceeds, the Company could use bank acceptance bills (or endorsed transfer) to pay for the amount
relating to projects invested with the proceeds and could transfer an equal amount of capital from the
special account of proceeds to replenish working capital. For details, please refer to the “Announcement
on the Payment of Projects Invested with Proceeds with Bank Acceptance Bills and the Equal Replacement
with Proceeds of Joincare Pharmaceutical Group Industry Co., Ltd.” (Lin 2020-054).
As at 31 December 2023, the Company’s cumulative amount of bank acceptance bills used to pay for
projects invested with the proceeds was RMB188.3598 million, and the cumulative amount for the equal
replacement with the proceeds was RMB152.4169 million.
(2) Usage of Unutilized proceeds
The Haibin Pharma Pingshan Pharmaceutical Industrialization Base Project plans to use proceeds of
RMB900 million. As at 31 December 2023, the cumulative used proceeds were RMB883.9521 million,
and the acceptance bills remaining to be replaced were RMB4.7437 million, the unpaid balance was
RMB11.4584 million, and the unutilized proceeds were RMB2.8538 million (including interest income)
accounted for 0.32% of the committed investment amount for the project. For the funds required for the
replacement of bank accepted bills and the unpaid balance, the Company will continue to deposit it in the
special account of proceeds and make payment according to actual needs. For the unutilized proceeds
(including interest income, the specific amount shall be subject to actual use), Company will use it for the
Haibin Pharma Pingshan Pharmaceutical Industrialization Base Expansion Project. According to the
Regulatory Guideline for Self-regulation of Listed Companies No.1-Standardized Operation released by
Shanghai Stock Exchange, upon the completion of a single project invested with the proceeds, a listed
company may use the unutilized proceeds (including interest income) for other projects invested with the
proceeds only after the consideration and approval by the Board and the expressed consent from
independent directors, sponsors and he Supervisory Committee. The company shall publish an
announcement in a timely manner after the consideration and approval by the Board. If the unutilized
proceeds (including interest income) are less than RMB1 million or 5% of total proceeds commitments of
the project, the company may be exempted from the procedures set out in the preceding paragraph, and
shall disclose the usage of proceeds in its annual report.
XV. Other significant matters having significant influence on the value judgment and decisions of
investors
√Applicable □N/A
1. Matters about share cancellation and share repurchase
(1) Share Cancellation
On 10 February 2020, the Company held the twenty-first meeting of the seventh session of the Board of
Directors, at which it considered and approved proposals including the Proposal for the Repurchase of
Shares through Centralized Price Bidding; The Company planned to repurchase the shares of the Company
with its own funds through centralized price bidding with the total fund of not less than RMB150 million
(inclusive) and not more than RMB300 million (inclusive). The share repurchase price was not more than
142
Joincare Pharmaceutical Group Annual Report 2023
RMB15 per share (inclusive), and the repurchase period was set as not more than 12 months from the date
on which repurchase plan was considered and approved by the Board of Directors. The repurchased shares
shall be used for employee stock ownership plans and share incentive plans, with 40% of the repurchased
shares allocated to employee stock ownership plans and 60% allocated to share incentive plans.
The implementation of the share repurchase plan had been completed by the Company on 12 July 2020,
and 19,890,613 shares of the Company, accounting for 1.02% of the total share capital (1,947,537,633
shares) of the Company at that time, were repurchased through centralized price bidding. Pursuant to the
arrangement for use of repurchased shares mentioned above, on 4 August 2021, the Company transferred
2,430,800 shares previously repurchased and held in special securities account for repurchases to the
account of the Company for first phase ownership scheme by non-trading transfer. As of the end of 2022,
the number of shares previously repurchased and held in special securities account for repurchases is
17,459,813.
Pursuant to the relevant requirements of the Company Law (《公司法》), the Self-regulatory Guidelines
for the Companies Listed on the Shanghai Stock Exchange No.7–Repurchase of Shares (《上海证券交
易所上市公司自律监管指引第 7 号—回购股份》 and share repurchase plan of the Company, the shares
were repurchased for employee stock ownership plans and share incentives, and if the repurchased shares
are not fully utilized by the Company within 36 months after the completion of the share repurchase, the
unutilized shares repurchased shall be cancelled.
The twenty-fifth meeting of the eighth session of the Board of Directors and the first extraordinary general
meeting of 2023 were convened by the Company on 28 April 2023 and 19 May 2023, respectively, at
which the Resolution on the Cancellation of Treasury Shares Previously Repurchased was considered and
approved. As the three-year term for the share repurchase conducted by the Company in 2020 will expire
soon and the Company has no plan to use remaining shares held in special securities account for
repurchases for share incentive plans or employee stock ownership plans in the near future, it was agreed
that the Company should cancel the remaining 17,459,813 shares previously repurchased and held in
special securities account for repurchases.
On 4 July 2023, the aforesaid remaining shares and the special securities account for repurchase were
cancelled by the Shanghai Branch of China Securities Depository and Clearing Company Limited. Upon
the completion of the share cancellation, the total share capital of the Company changed from
1,929,189,374 shares to 1,911,729,561 shares.
(2) Share Repurchase
Pursuant to the Resolution on Share Repurchase Scheme by Way of Centralized Bidding Transactions and
other resolutions considered and approved at the 17th Meeting of the 8th Session of the Board and the
2022 Fourth Extraordinary General Meeting of the Company on 14 October 2022 and 18 November 2021,
it was approved that the Company repurchased company shares by way of centralized bidding transactions
with its own funds, and the repurchased shares will be used to reduce the registered capital; the total
amount of repurchase funds should be no less than RMB300 million (inclusive) and no more than RMB600
million (inclusive); the repurchase price should be no more than RMB16/share (inclusive); the repurchase
term should be from 18 November 2022 to 17 November 2023. For details, please refer to the
“Announcement of Joincare Pharmaceutical Group Industry Co., Ltd. on the Share Repurchase Scheme
by Way of Centralized Bidding Transactions” (Lin 2022- 121) and the “Repurchase Report of Joincare
Pharmaceutical Group Industry Co., Ltd. on Share Repurchase by Way of Centralized Bidding
Transactions” (Lin 2022-137).
On 14 December 2022, the Company initially repurchased 348,400 shares by way of centralized bidding
transactions, representing 0.02% of the total share capital of the Company. For details, please refer to the
“Announcement of Joincare Pharmaceutical Group Industry Co., Ltd. on Initial Share Repurchase by Way
143
Joincare Pharmaceutical Group Annual Report 2023
of Centralized Bidding Transactions” (Lin 2022-144).
As at 27 October 2023, the Company has repurchased a total of 49,706,643 shares by way of centralized
bidding transactions, representing 2.60% of total share capital (1,912,734,363 shares) of the Company,
with the total amount paid was RMB599,914,693.93 (including handling fee). Accordingly, the Company
has completed the repurchase. For details, please refer to the “Announcement of Joincare Pharmaceutical
Group Industry Co., Ltd. on Implementation Results of Share Repurchase and Share Changes” (Lin 2023-
120).
Upon application by the Company, the above shares were cancelled on 31 October 2023 at the Shanghai
Branch of China Securities Depository and Clearing Corporation Limited. Upon the completion of the
share cancellation, the total share capital of the Company changed from 1,912,734,363 shares to
1,863,027,720 shares.
2. GDRs of the Company issued and listed on the SIX Swiss Exchange
On 26 September 2022, the Company’s GDRs were listed on the SIX Swiss Exchange in an offering of
6,382,500 GDRs representing 63,825,000 underlying A shares, representing 3.31% of the Company’s total
share capital at that time, at an issue price of USD$14.42 per GDR, with the final gross proceeds of
approximately USD$92.04 million.
The lock-up restriction period for the redemption of the GDRs issued by the Company is from 26
September 2022 (Swiss time) to 23 January 2023 (Swiss time). As 23 January 2023 falls in the Chinese
New Year holiday, the transfer and settlement of A shares in relation to the cross-border conversion of
GDRs cannot proceed during the period from 23 January to 27 January 2023. In accordance with the
relevant regulations on stock connect, the GDRs with the expiry of the lock-up restriction period for the
redemption can be converted into A shares of the Company from 30 January 2023 (Beijing time). As of
the closing of the Shanghai Stock Exchange on 30 January 2023, the number of A shares of the Company
represented by the outstanding GDRs was less than 50% of the number of underlying A shares represented
by the GDRs actually issued by the Company as approved by the CSRC.
The proceeds from the Company’s issuance of GDRs, after deducting the issuance fees, are intended for
the business development and strategic investments of the Company, aimed at improving the Company's
capabilities of global research and development, industrialization and commercialization, thus further
deepening the international business presence and replenishing the working capitals of the Company. For
details about deposit and actual use of GDR proceeds in 2023, please refer to the Special Report of Joincare
Pharmaceutical Group Industry Co., Ltd. on Deposit and Actual Utilization of Proceeds for 2023 disclosed
by the Company on 3 April 2024.
3. Overall relocation and expansion project of Sichuan Guangda
On 6 March 2019, after review and approval by the Board of the Livzon Group, the controlling subsidiary
of the Company, considered and approved that Livzon Group entered into the Investment Agreement for
the “Overall Relocation and Expansion Project of Sichuan Guangda Pharmaceutical Manufacturing”(《四
川 光 大 制 药 整 体 搬 迁 调 迁 扩 建 项 目 投 资 协 议 书 》 ) (the “Investment Agreement”) and the
“Supplemental Agreement I with Sichuan Chengdu Pengzhou Municipal People's Government”(四川省
成都市彭州市人民政府). Pursuant to the Investment Agreement, the Livzon Group will inject capital of
RMB646 million for investment in construction of the overall relocation and expansion project (the
“Project”) of Sichuan Guangda, a wholly-owned subsidiary of the Company. Pursuant to the Supplemental
Agreement I, Pengzhou Municipal People's Government has agreed to pay a compensation for demolition
of RMB90 million and grant total incentive of not more than RMB125.8 million for the construction of
new plantsto the Company.
As at 31 December 2023, the total investment of the specific contracts entered into for the Project
144
Joincare Pharmaceutical Group Annual Report 2023
amounted to RMB548.5066 million, and the sum of subsidies received from government authorities at
various levels amounted to RMB174.4317 million. All construction work of the overall relocation and
expansion project have been completed and put into use on 12 July 2023.
4. Proposed Spin-Off and Listing of Livzon Diagnostics
On 10 November 2023, through comprehensively considering the changes in the capital market
environment, the Company’s own operating conditions and its future business strategy positioning and
making overall arrangements for business development and capital operation planning, the Board of the
Livzon considered and approved the termination of the preparation for the spin-off and listing of Livzon
Diagnostics on the ChiNext Board of the Shenzhen Stock Exchange (the “Termination of the Spin-off”),
and the application for listing of Livzon Diagnostics on the National Equities Exchange and Quotations
(NEEQ) (the “Proposed Spin-off on NEEQ”). After the listing, Livzon Diagnostics will seek listing on the
Beijing Stock Exchange as and when appropriate.
On 8 December 2023, the Livzon was notified by the Hong Kong Stock Exchange that the Listing
Committee of the Hong Kong Stock Exchange has agreed that the Company may proceed with the
Proposed Spin-off on NEEQ under Practice Note 15 of the Hong Kong Listing Rules and has agreed to
grant a waiver from strict compliance with the applicable requirements in relation to the assured
entitlement under paragraph 3(f) of Practice Note 15 of the Hong Kong Listing Rules in connection with
the Proposed Spin-off on NEEQ.
On 12 January 2024, the Termination of the Spin-off and the Proposed Spin-off on NEEQ were considered
and approved at the 2024 first extraordinary general meeting of the Livzon.
As at the disclosure date of the Report, Livzon Diagnostics has not submitted any other application or
filing to the National Equities Exchange and Quotations Co., Ltd. and the relevant regulatory authorities
of the PRC.
145
Joincare Pharmaceutical Group Annual Report 2023
Chapter 7 Changes in Equity and Shareholders
I. Changes in Share Capital
(I) Table of changes in shares
1. Table of changes in shares
Unit: shares
Before the current change Increase/decrease (+, -) due to the current change After the current change
Conversion
Issuance
Percentage Issuance of of capital Percentage
Number of bonus Others Subtotal Number
(%) new shares reserve to (%)
shares
share capital
I. Shares subject to
0 0 0 0 0 0 0 0 0
selling restrictions
1. Shares held by
state government
2. Shares held by
state-owned
entities
3. Shares held by
other domestic
holders
Of which: Shares
held by domestic
non-state-owned
entities
Shares held
by domestic
natural persons
4. Shares held by
foreign holders
Including: Shares
held by foreign
entities
Shares held
by foreign natural
persons
II. Shares without
1,929,189,374 100 3,500,889 -67,166,456 -63,665,567 1,865,523,807 100
selling restrictions
1. Ordinary shares
denominated in 1,929,189,374 100 3,500,889 -67,166,456 -63,665,567 1,865,523,807 100
Renminbi
2. Domestically
listed foreign
shares
3. Overseas listed
foreign shares
4. Others
III. Total number
1,929,189,374 100 3,500,889 -67,166,456 -63,665,567 1,865,523,807 100
of shares
2.Explanations on changes in shares
√Applicable □N/A
(1) The Cancellation of the Treasury Shares Previously Repurchased
The twenty-fifth meeting of the eighth session of the Board of Directors and the first extraordinary general
meeting of 2023 were convened by the Company on 28 April 2023 and 19 May 2023, respectively, at
which the Resolution on the Cancellation of Treasury Shares Previously Repurchased was considered and
approved. As the threeyear term for the share repurchase conducted by the Company in 2020 will expire
soon and the Company has no plan to use remaining shares held in special securities account for
repurchases for share incentive plans or employee stock ownership plans in the near future, it was agreed
146
Joincare Pharmaceutical Group Annual Report 2023
that the Company should cancel the remaining 17,459,813 shares previously repurchased and held in
special securities account for repurchases. The cancellation of shares was completed upon July 4, 2023.
(2) Share repurchase for cancellation
From 18 Novemmber 2022 to 17 November 2023, the Company expected to repurchase shares at a price
of no more than RMB16 per share (inclusive) (The company adjusted the upper limit of the repurchase
price to RMB15.82 per share after the Implementation of 2022 Profit Distribution) and the total amount
of repurchase funds shall be not less than RMB300 million (inclusive) and not more than RMB600 million
(inclusive). The repurchased shares will be used to reduce the Company's registered capital. The Company
has repurchased a total of 49,706,643 shares as of 27 October 2023, and cancelled such shares with the
Shanghai Branch of China Securities Depository and Clearing Corporation Limited on 31 October 2023.
(3) Exercise of Rights under Share Options Incentive Scheme
The number of share options for the First Exercise Period of the First Grant under the 2022 Share Options
Incentive Scheme of the Company was 18,832,000, with the exercise period from 5 September 2023 to 4
September 2024. As at 31 December 2023, during the exercise period of the first grant under the 2022
Share Options Incentive Scheme of the Company, the cumulative number of options completing share
transfer registration through voluntary exercise at the Shanghai Branch of China Securities Depository
and Clearing Corporation Limited was 3,500,889 shares.
3.The influence of changes in shares on financial indicators such as earnings per share and net assets
per share in the most recent year and the most recent Reporting Period (if applicable)
□Applicable √N/A
4.Other information disclosed as the Company deems necessary or required by the securities
regulatory authority
□Applicable √N/A
(II) Changes in shares subject to selling restrictions
□Applicable √N/A
II. Issuance and Listing of Securities
(I) Securities issued during the Reporting Period
□Applicable √N/A
Explanations on securities issuance during the Reporting Period (list separately bonds with different
interest rates during the duration):
□Applicable √N/A
(II) Changes in total number of shares, shareholding structure, and structure of assets and liabilities
of the Company
□Applicable √N/A
(III) Outstanding shares granted under the employee share ownership scheme
□Applicable √N/A
III. Information on Shareholders and the De Facto Controller
(I) Total number of shareholders
Total number of shareholders of ordinary shares as of the End of the
77,355
Reporting Period
Total number of shareholders of ordinary shares as of the end of the 78,332
147
Joincare Pharmaceutical Group Annual Report 2023
month immediately prior to the publish date of this annual report
Total number of holders of preferred shares with voting rights
0
restored as of the end of the reporting period (shareholder)
Total number of shareholders of preferred shares with voting rights
restored as at the end of the month immediately preceding the 0
disclosure date of the annual report (shareholder)
(II) Shares held by top 10 shareholders and top 10 holders of tradable shares (or shares without
selling restrictions) as of the End of the Reporting Period
Unit: shares
Shareholdings of the Top 10 shareholders
(excluding shares lent through refinancing business)
Number of Pledge, mark or lock-up
Change Number of shares
Name of shareholder (Full during the shares held at Percentage held Nature of
name) Reporting the end of the (%) subject to Share status Number shareholder
Period Period selling
restrictions
Shenzhen Baiyeyuan Domestic
Investment Co., Ltd.* (深圳市 17,380,900 895,653,653 48.01 0 Pledge 75,679,725 non-state-
百业源投资有限公司) owned entity
Hong Kong Securities Clearing
-31,744,461 81,511,706 4.37 0 Unknown Unknown
Company Limited
Foreign
Might Seasons Limited -21,557,735 35,929,699 1.93 0 Unknown
entity
Perseverance Asset
Management L.L.P–Gaoyi 16,201,348 17,161,348 0.92 0 Unknown Unknown
Xiaofeng No. 2 Zhixin Fund
China Foreign Economy and
Trade Trust Co., Ltd.–Foreign
Trust–Gaoyi Xiaofeng 15,717,148 16,677,148 0.89 0 Unknown Unknown
Hongyuan Collection Fund
Trust Plan
Huaxia Life Insurance Co., Ltd.
3,453,500 12,729,218 0.68 0 Unknown Unknown
-Proprietary
Abu Dhabi Investment Foreign
4,281,487 10,201,829 0.55 0 Unknown
Authority entity
CPIC Fund -China Pacific Life
Insurance Co., Ltd. -with-profit
insurance-CPIC Fund China
6,114,029 10,135,762 0.54 0 Unknown Unknown
Pacific Life Equity Relative
Income (Guaranteed Dividend)
single assets management plan
Joincare Pharmaceutical Group
Industry Co., Ltd. — the Third
Phase Ownership Scheme
9,370,400 9,370,400 0.50 0 Unknown Others
under Medium to Long-term
Business Partner Share
Ownership Scheme
Bank of Shanghai Co., Ltd.－
Yinhua CSI Innovative Drug
Industry Trading Open-end 4,780,100 8,458,496 0.45 0 Unknown Unknown
Index Securities Investment
Fund
Shareholdings of the Top 10 shareholders without selling restrictions
Number of tradable shares held Class and number of shares
Name of shareholder
without selling restrictions Class Number
148
Joincare Pharmaceutical Group Annual Report 2023
Shenzhen Baiyeyuan Investment Co., Ltd.* (深圳
895,653,653 Ordinary shares denominated in Renminbi 895,653,653
市百业源投资有限公司)
Hong Kong Securities Clearing Company Limited 81,511,706 Ordinary shares denominated in Renminbi 81,511,706
Might Seasons Limited 35,929,699 Ordinary shares denominated in Renminbi 35,929,699
Perseverance Asset Management L.L.P–Gaoyi
17,161,348 Ordinary shares denominated in Renminbi 17,161,348
Xiaofeng No. 2 Zhixin Fund
China Foreign Economy and Trade Trust Co.,
Ltd.–Foreign Trust–Gaoyi Xiaofeng Hongyuan 16,677,148 Ordinary shares denominated in Renminbi 16,677,148
Collection Fund Trust Plan
Huaxia Life Insurance Co., Ltd. -Proprietary 12,729,218 Ordinary shares denominated in Renminbi 12,729,218
Abu Dhabi Investment Authority 10,201,829 Ordinary shares denominated in Renminbi 10,201,829
CPIC Fund -China Pacific Life Insurance Co.,
Ltd. -with-profit insurance-CPIC Fund China
10,135,762 Ordinary shares denominated in Renminbi 10,135,762
Pacific Life Equity Relative Income (Guaranteed
Dividend) single assets management plan
Joincare Pharmaceutical Group Industry Co., Ltd.
— the Third Phase Ownership Scheme under
9,370,400 Ordinary shares denominated in Renminbi 9,370,400
Medium to Long-term Business Partner Share
Ownership Scheme
Bank of Shanghai Co., Ltd. － Yinhua CSI
Innovative Drug Industry Trading Open-end 8,458,496 Ordinary shares denominated in Renminbi 8,458,496
Index Securities Investment Fund
Notes on the special repurchase account among
Not applicable
the Top 10 shareholders
Description of the above shareholders involved in
entrustment/entrusted voting right and waiver of Not applicable
voting right
There was no connection or acting-in-concert relationship between Shenzhen Baiyeyuan Investment
Description of connection or acting-in-concert
Co., Ltd., a controlling shareholder of the Company, and other shareholders; whether there is connection
relationship of the above shareholders
or acting-in-concert relationship among other shareholders is unknown.
Explanation of Preferred Shareholders and Their
Holdings Following the Restoration of Voting Not applicable
Rights
Shares lent by the Top 10 shareholders by participating in the refinancing business
√Applicable □N/A
Unit: shares
Shares lent by the Top 10 shareholders by participating in the refinancing business
Number of shares lent
Number of shares lent through
Number of shares held in Number of shares held in through refinancing
refinancing business and not yet
ordinary and credit accounts at ordinary and credit accounts at business and not yet
Name of shareholder returned at the beginning of the
the beginning of the Period the end of the Period returned at the end of the
(Full name) Period
Period
Proportion Proportion Total Proportion
Total number Total number Total number Proportion (%)
(%) (%) number (%)
Shenzhen Baiyeyuan
Investment Co., Ltd.*
878,272,753 45.53 17,380,900 0.90 895,653,653 48.01 0 0
(深圳市百业源投资
有限公司)
Bank of Shanghai Co.,
Ltd.－Yinhua CSI
Innovative Drug
Industry Trading 3,678,396 0.19 542,600 0.03 8,458,496 0.45 10,000 0.001
Open-end Index
Securities Investment
Fund
Changes shareholdings of the Top 10 shareholders compared with the previous period
149
Joincare Pharmaceutical Group Annual Report 2023
√Applicable □N/A
Unit: shares
Changes shareholdings of the Top 10 shareholders compared with the end of the previous period
Number of shares held by shareholders
Number of shares lent through
in ordinary and credit accounts, and
New / withdrawn refinancing business and not
lent through refinancing business and
Name of shareholder (Full shareholdings yet returned at the end of the
not yet returned at the end of the
name) during the Period
Period
Reporting Period
Proportion
Total number Total number Proportion (%)
(%)
Perseverance Asset
Management L.L.P–Gaoyi New 0 0 17,161,348 0.92
Xiaofeng No. 2 Zhixin Fund
China Foreign Economy and
Trade Trust Co., Ltd.–Foreign
Trust–Gaoyi Xiaofeng New 0 0 16,677,148 0.89
Hongyuan Collection Fund
Trust Plan
CPIC Fund -China Pacific Life
Insurance Co., Ltd. -with-profit
insurance-CPIC Fund China
New 0 0 10,135,762 0.54
Pacific Life Equity Relative
Income (Guaranteed Dividend)
single assets management plan
Joincare Pharmaceutical Group
Industry Co., Ltd. — the Third
Phase Ownership Scheme
New 0 0 9,370,400 0.50
under Medium to Long-term
Business Partner Share
Ownership Scheme
Bank of Shanghai Co., Ltd.－
Yinhua CSI Innovative Drug
Industry Trading Open-end New 10,000 0.001 8,468,496 0.45
Index Securities Investment
Fund
Citibank, National Association withdrawn 0 0 230 0.00
Agricultural Bank of China
Limited –CSI 500 Exchange
withdrawn 1,509,200 0.08 6,564,974 0.35
Traded Index Securities
Investment Fund
He Zhong withdrawn 0 0 401,100 0.02
Joincare Pharmaceutical Group
Industry Co., Ltd. — the
Second Phase Ownership
withdrawn 0 0 6,275,372 0.34
Scheme under Medium to
Long-term Business Partner
Share Ownership Scheme
Bosera Funds Management
Co., Ltd.-419 portfolio of withdrawn 0 0 2,962,569 0.16
social security funds
Number of shares held by the Top 10 shareholders with selling restrictions and the description of
the selling restrictions
□Applicable √N/A
(III) Strategic investors or general legal persons who became top 10 shareholders as a result of
allotment of new shares
□Applicable √N/A
IV. Information on the Controlling Shareholder and the De Facto Controller
(I) Information on the Controlling shareholder
1. Legal person
√Applicable □N/A
Name Shenzhen Baiyeyuan Investment Co., Ltd.* (深圳市百业源投资有限公司)
Person in charge of the unit or legal Zhu Baoguo
150
Joincare Pharmaceutical Group Annual Report 2023
representative
Date of incorporation 21 January 1999
Investment in industry, domestic commerce, and material supply and
Principal business
marketing industry
Equity held in other domestic and Except for the daily trading of securities assets in the secondary market,
overseas listed companies during the Baiyeyuan did not hold or participate in the equity of other domestic and
Reporting Period overseas listed companies during the Reporting Period.
Others Not applicable
2.Natural person
□Applicable √N/A
3.Special statement if the Company does not have a controlling shareholder
□Applicable √N/A
4.Statement on changes in controlling shareholders during the Reporting Period
□Applicable √N/A
5.Block diagram describing controlling shareholders' ownership of and control over the Company
√Applicable □N/A
(II) Information on the de facto controller
1.Legal person
□Applicable √N/A
2.Natural person
√Applicable □N/A
Name Zhu Baoguo
Nationality China
Hold the right of residence in other countries
No
or regions or not
Main occupation and position Chairman of the Company and Livzon Group
Domestic and overseas listed companies Except for the Company and Livzon Group, Mr. Zhu Baoguo has never
controlled in the past 10 years controlled any other domestic and overseas listed companies
3.Special statement if the Company does not have a de facto controller
□Applicable √N/A
4.Statement on change of control of the Company during the Reporting Period
□Applicable √N/A
151
Joincare Pharmaceutical Group Annual Report 2023
5.Block diagram describing de facto controllers' ownership of and control over the Company
√Applicable □N/A
6.De facto controller controls the Company through trust or other asset management methods
□Applicable √N/A
(III) Other information on the controlling shareholder and the de facto controllers
□Applicable √N/A
V. Cumulative Number of Shares Pledged by Controlling Shareholders or the Largest Shareholder
of the Company and Their Persons Acting in Concert Accounts for More Than 80% of the Shares
Held by Them in the Company
□Applicable √N/A
VI. Other Corporate Shareholders Holding More Than 10% Shares
□Applicable √N/A
VII. Explanation on Restrictions on Share Selling
□Applicable √N/A
VIII. Information on Implementation of Share Repurchases Plans during the Reporting Period
√Applicable □N/A
Unit: 10,000 Yuan Currency: RMB
Name of share repurchase plan Plan on share repurchase by centralized bidding
Disclosure date of share repurchase plan 17 October 2022
Number of shares to be repurchased and its
0.97~1.95
percentage in total share capital (%)
Proposed repurchase amount 30,000~60,000
12 months after the date when the share repurchase plan is
Proposed repurchase period
approved at the general meeting
Purpose of repurchase To reduce registered capital of the Company
Repurchased number (shares) 49,706,643
Percentage of repurchased shares in the target shares
Not applicable
under share incentive scheme (%) (if any)
The progress of the Company's reduction of
Not applicable
repurchased shares by centralized bidding
152
Joincare Pharmaceutical Group Annual Report 2023
Chapter 8 Information on Preferred Shares
□Applicable √N/A
153
Joincare Pharmaceutical Group Annual Report 2023
Chapter 9 Information on Bonds
I. Corporate Bonds, Debentures and Debt Financing Instruments Issued by Non-Financial Entities
□Applicable √N/A
II. Convertible Corporate Bonds
□Applicable √N/A
154
Joincare Pharmaceutical Group Annual Report 2023
Chapter 10 Financial Statements
I Auditor’s report
√Applicable □N/A
GTCNSZ（2024）NO.442A006709
To all shareholders of Joincare Pharmaceutical Group Industry Co., Ltd.:
I. Auditor's Opinion
We have audited the financial statements of Joincare Pharmaceutical Group Industry Co., Ltd.
(健康元药业集团股份有限公司) (the “Group”), which comprise the Consolidated and
Company balance sheets as at 31 December 2023, and the Consolidated and Company income
statements, the Consolidated and Company cash flow statements, the Consolidated and
Company statements of changes in shareholders' equity for the year ended 2023, and notes to
the financial statements.
In our opinion, the accompanying financial statements present fairly, in all material respects,
the Consolidated and Company financial positions as at 31 December 2023, and their financial
performance and their cash flows for the year then ended in accordance with the requirements
of Accounting Standards for Business Enterprises.
II. Basis for Opinion
We conducted our audit in accordance with China Standards on Auditing. Our responsibilities
under those standards are further described in the Auditor's Responsibilities for the Audit of the
Financial Statements section of our report. We are independent of the Company and have
fulfilled our other ethical responsibilities in accordance with the China Code of Ethics for
Certified Public Accountants. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.
III. Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most
significance in our audit of the financial statements for the current year. These matters were
addressed in the context of our audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
(I) Revenue recognition
155
Joincare Pharmaceutical Group Annual Report 2023
For relevant disclosure, please refer to Note III. 29 and Note V. 43 to the financial
statements.
1. Description of the matter
The Group generated revenue from primary operation in year ended 31 December 2023
were RMB 16,521.72 million. We identified revenue recognition as a key audit matter due
to the materiality of revenue to the financial statements as a whole and the risk of material
misstatement as to the occurrence and accuracy for in the appropriate accounting period.
2. Addressed in the context of our audit
(1) We obtained an understanding of and assessed the Company management's design and
operating effectiveness of key internal controls over revenue recognition.
(2) We obtained the contracts signed between the Company and its customers and verified the
key terms of the contracts, such as shipment and acceptance, payment and settlement, exchange
and return policies.
(3) We inquired about the business registration information of the Company's customers and
asked relevant personnel of the Company in order to confirm whether there was an affiliated
relationship between the Company and its customers; obtained an understanding of the reasons
for customer changes and contract performance among others; counted and analyzed end sales
of products purchased by selected customers from the Company based on the business system
of the Company's directly connected customers.
(4) We obtained records of returns and exchanges in the Company's business system and
checked them to confirm whether there were significant abnormalities that affected revenue
recognition.
(5) We selected samples from sales transaction records in 2023 to check contracts, purchase
orders, shipping documents, transportation documents, bookkeeping vouchers, payment
records, and periodic reconciliation letters, and performed external confirmation procedures on
major customer sales and accounts receivable.
(6) We performed analytical procedures for the reasonableness on changes in revenue by
considering the product type and factors such as market trends, industry trends, business
expansion plan as well as market data collected by third-party consultants.
(7) We selected samples of revenue transactions around the balance sheet date, reviewed sales
contracts, purchase orders, shipping documents, transportation documents, and bookkeeping
vouchers, and evaluated whether revenues were recorded in the appropriate accounting period.
(II) Allowance for bad debts on accounts receivable
156
Joincare Pharmaceutical Group Annual Report 2023
For relevant disclosure, please refer to Note III. 10 and Note V. 4 to the financial statements
1. Description of the matter
As of 31 December 2022, the Group's closing balance of accounts receivable as reported in
the consolidated balance sheet was RMB2,779.25 million and the allowance for bad debts
was RMB 86.31 million which were material to the financial statements as a whole. The
management is required to apply significant accounting estimates and judgments in
assessing the expected recoverable amount of accounts receivable, which could have a
material impact on the financial statements if they were not collected on time or were not
recovered resulting in a bad debt loss. Therefore, we identified allowance for bad debts of
accounts receivable as a key audit matter.
2. Addressed in the context of our audit
(1) We obtained an understanding of and assessed the management's design and operating
effectiveness of key internal controls over the management of accounts receivable
(2) We obtained an understanding of the methodology and process of recognizing the
expected credit loss ratio and the key parameters and assumptions applied in the expected
credit loss model, including the method of assessing the customers' credit risk
characteristics for the grouping accounts receivable and the historical migration rate data
used in the expected loss ratio; evaluated whether the expected credit loss ratio was set by
taking into account and was appropriately adjusted for current economic conditions and
forward-looking information, and assessed the reasonableness of the estimate of the
allowance for bad debts.
(3) We obtained a schedule of allowance for bad debts on accounts receivable and checked
whether the calculation method was implemented in accordance with the policy for bad
debts; and recalculated the amount of allowance for bad debts to ensure its accuracy.
(4) We analysed the ratio of the closing balance of allowance for bad debts to accounts
receivable and compared the allowance for bad debts in the previous period to the actual
amount, and analyzed whether the allowance for bad debts on accounts receivable was
adequate.
(5) We evaluated the reasonableness of the allowance for bad debts by analyzing the aging
of accounts receivable and the reputation of customers, and performing audit procedures
such as audit confirmation and subsequent collection of receivables.
IV. Other Information
Management of the Company is responsible for the other information. The other information
157
Joincare Pharmaceutical Group Annual Report 2023
comprises the information included in the Company’s 2023 annual report, but does not include
the financial statements and our auditor's report thereon.
Our opinion on the financial statements does not cover the other information and we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the audit or otherwise appears to be
materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact. We have nothing to report in this
regard.
V. Responsibilities of Management and Those Charged with Governance for the Financial
Statements
Management of the Company is responsible for the preparation of the financial statements to
achieve fair presentation in accordance with Accounting Standards for Business Enterprises,
and for the design, implementation and maintenance of such internal control as management
determine is necessary to enable the preparation of the financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company's
ability to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless management either intend to liquidate
the Company or to cease operations, or have no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company's financial
reporting process.
VI. Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with auditing standards will always
detect a material misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of these financial statements.
158
Joincare Pharmaceutical Group Annual Report 2023
As part of an audit in accordance with auditing standards, we exercise professional judgment
and maintain professional skepticism throughout the audit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements, whether
due to fraud or error, design and perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of
not detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
(2) Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances.
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by management.
(4) Conclude on the appropriateness of the management’s use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Company's ability to
continue as a going concern. If we conclude that a material uncertainty exists, the auditing
standards require us to draw attention to users of the financial statements in our auditor's report
to the related disclosures in the financial statements or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of
our auditor's report. However, future events or conditions may cause the Company to cease to
continue as a going concern.
(5) Evaluate the overall presentation, structure and content of the financial statements, including
the disclosures, and whether the financial statements represent the underlying transactions and
events in a manner that achieves fair presentation.
(6) Obtain sufficient appropriate audit evidence regarding the financial information of the
entities or business activities within the Company to express an opinion on the financial
statements. We are responsible for the direction, supervision and performance of the group audit.
We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the
planned scope and timing of the audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with
relevant ethical requirements regarding independence, and to communicate with them all
relationships and other matters that may reasonably be thought to bear on our independence,
and where applicable, related safeguards.
159
Joincare Pharmaceutical Group Annual Report 2023
From the matters communicated with those charged with governance, we determine those
matters that were of most significance in the audit of the financial statements of the current
period and are therefore the key audit matters. We describe these matters in our auditor's report
unless law or regulation precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our report because
the adverse consequences of doing so would reasonably be expected to outweigh the public
interest benefits of such communication.
Grant Thornton（Special General Partnership） Certified Public Accountants Wang Yuan
(The partner in charge of the auditing service project)
Certified Public Accountants Wang Qilai
Beijing, China 2 April 2024
160
Joincare Pharmaceutical Group Annual Report 2023
II Financial statements
Consolidated Balance Sheet
December 31, 2023
Prepared by: Joincare Pharmaceutical Group Industry Co., Ltd.
Unit: Yuan Currency: RMB
Item Note December 31, 2023 December 31, 2022
Current assets:
Cash and bank balances Ⅴ.1 15,691,888,314.83 14,808,488,110.96
Financial assets held for trading Ⅴ.2 82,899,154.24 109,015,664.98
Notes receivable Ⅴ.3 1,941,200,568.00 1,959,985,016.85
Accounts receivable Ⅴ.4 2,692,941,866.24 3,103,758,850.15
Receivables financing
Prepayments Ⅴ.5 280,102,860.94 364,265,142.57
Other receivables Ⅴ.6 46,010,624.61 52,535,740.14
Including: Interests receivable
Dividends receivable
Inventories Ⅴ.7 2,655,808,391.09 2,561,869,999.57
Contract assets
Assets held-for-sale
Non-current assets due within one year Ⅴ.8 406,376,425.44 54,048,611.11
Other current assets Ⅴ.9 77,402,185.01 163,539,900.32
Total current assets 23,874,630,390.40 23,177,507,036.65
Non-current assets:
Debt investment
Other debt investment
Long-term receivables
Long-term equity investment Ⅴ.10 1,411,036,353.95 1,419,882,594.59
Other equity instrument investments Ⅴ.11 1,155,283,408.36 1,193,958,879.05
Other non-current financial assets
Investment properties Ⅴ.12 16,958,213.00 6,191,475.43
Fixed assets Ⅴ.13 5,664,352,555.97 5,265,200,110.91
Construction in progress Ⅴ.14 531,059,118.06 811,300,068.96
Productive biological assets
Oil and gas assets
Right-of-use assets Ⅴ.15 36,233,067.49 41,843,133.97
Intangible assets Ⅴ.16 683,337,333.73 802,115,125.75
Development cost Ⅴ.17 483,494,487.17 428,284,884.17
Goodwill Ⅴ.18 636,339,503.82 614,468,698.73
Long-term prepaid expenses Ⅴ.19 328,642,740.95 277,867,716.95
Deferred tax assets Ⅴ.20 579,534,830.15 540,037,823.56
Other non-current assets Ⅴ.21 957,224,255.77 1,156,772,182.99
Total non-current assets 12,483,495,868.42 12,557,922,695.06
Total assets 36,358,126,258.82 35,735,429,731.71
Current liabilities:
Short-term loans Ⅴ.23 2,076,159,347.22 2,126,050,615.06
Financial liabilities held for trading Ⅴ.24 86,817.12 755,634.43
Notes payable Ⅴ.24 1,469,148,287.38 1,635,906,989.22
Accounts payable Ⅴ.26 894,286,243.28 943,905,580.91
Receipts in advance
Contract liabilities Ⅴ.27 159,082,637.65 292,977,730.74
Employee benefits payable Ⅴ.28 399,466,473.91 573,010,571.46
Taxes payable Ⅴ.29 410,202,854.09 337,702,273.73
Other payables Ⅴ.30 3,682,604,038.73 3,680,334,360.88
Including: Interests payable
161
Joincare Pharmaceutical Group Annual Report 2023
Dividends payable 12,478,280.13 12,252,074.84
Liabilities held-for-sale
Non-current liabilities due within one year Ⅴ.31 718,564,144.31 63,077,260.98
Other current liabilities Ⅴ.32 51,087,001.83 101,276,714.35
Total current liabilities 9,860,687,845.52 9,754,997,731.76
Non-current liabilities:
Long-term loans Ⅴ.33 3,122,273,278.99 3,230,844,042.88
Bonds payable
Lease liabilities Ⅴ.34 15,422,948.41 23,482,486.07
Long-term payables
Long-term payroll payable
Estimated liabilities
Deferred income Ⅴ.35 370,179,550.82 384,537,267.55
Deferred tax liabilities Ⅴ.20 260,032,144.44 237,193,884.37
Other non-current liabilities Ⅴ.36 90,000,000.00 84,000,000.00
Total non-current liabilities 3,857,907,922.66 3,960,057,680.87
Total liabilities 13,718,595,768.18 13,715,055,412.63
Owner's equity (or shareholder's equity):
Share capital Ⅴ.37 1,865,523,807.00 1,929,189,374.00
Other equity instruments
Including: Preferred shares
Perpetual debts
Capital reserve Ⅴ.38 1,601,720,087.71 2,343,693,215.99
Less: Treasury shares Ⅴ.39 347,176,561.29
Other comprehensive income Ⅴ.40 -12,246,131.22 4,704,473.53
Special reserve
Surplus reserve Ⅴ.41 859,046,203.77 734,766,581.50
Undistributed profits Ⅴ.42 9,441,857,956.80 8,456,778,287.49
Total shareholders' equity attributable to
13,755,901,924.06 13,121,955,371.22
the parent
Minority shareholder's equity 8,883,628,566.58 8,898,418,947.86
Total owner's equity (or shareholder's
22,639,530,490.64 22,020,374,319.08
equity)
Total liabilities and owner's equity (or
36,358,126,258.82 35,735,429,731.71
shareholder's equity)
Person-in-charge of the Company: Person-in-charge of the Company’s Person-in-charge of the accounting
Zhu Baoguo accounting work: Qiu Qingfeng department: Qiu Qingfeng
162
Joincare Pharmaceutical Group Annual Report 2023
Balance Sheet of the Parent Company
December 31, 2023
Prepared by: Joincare Pharmaceutical Group Industry Co., Ltd.
Unit: Yuan Currency: RMB
Item Note December 31, 2022 December 31, 2021
Current assets:
Cash and bank balances 2,216,321,523.93 3,148,933,185.29
Financial assets held for trading
Notes receivable 191,417,091.37 249,617,024.89
Accounts receivable 315,179,282.98 291,630,857.74
Receivable financing
Prepayments 142,404,994.03 542,966,676.99
Other receivables 686,367,834.30 785,307,024.78
Including: Interest receivable
Dividends receivable 519,999,500.00 544,999,500.00
Inventories 88,930,104.82 63,656,837.97
Contract assets
Assets held-for-sale
Non-current assets due within one
406,376,425.44 54,048,611.11
year
Other current assets
Total current assets 4,046,997,256.87 5,136,160,218.77
Non-current assets:
Debt investment
Other debt investment
Long-term receivables
Long-term equity investment 3,748,495,719.02 3,524,184,512.63
Other equity instrument
161,234,048.68 141,562,064.27
investment
Other non-current financial assets
Investment properties 6,191,475.43 6,191,475.43
Fixed assets 44,824,960.31 46,410,672.12
Construction in progress 8,212,014.32 15,330,867.65
Productive biological assets
Oil and gas assets
Right-of-use assets 3,440,952.82 7,570,096.21
Intangible assets 39,456,409.04 20,154,211.97
Development cost 139,141,503.86 92,797,615.87
Goodwill
Long-term prepaid expenses 10,365,585.94 552,795.74
Deferred tax assets 97,251,604.00 89,978,336.18
Other non-current assets 641,144,559.34 815,024,705.98
Total non-current assets 4,899,758,832.76 4,759,757,354.05
Total assets 8,946,756,089.63 9,895,917,572.82
Current liabilities:
Short-term loans 200,149,722.22 100,091,666.67
Financial liabilities held for
trading
Notes payable 371,735,241.80 924,199,480.81
Accounts payable 91,377,730.30 257,832,649.19
Receipts in advance
Contract liabilities 10,456,371.81 53,648,681.36
163
Joincare Pharmaceutical Group Annual Report 2023
Employee benefits payable 43,877,751.41 139,895,738.09
Taxes payable 26,917,149.98 10,549,309.54
Other payables 460,037,009.32 1,303,649,356.48
Including: Interests payable
Dividends payable
Liabilities held-for-sale
Non-current liabilities due within
52,732,739.68 47,152,440.47
one year
Other current liabilities 1,308,875.01 3,007,795.91
Total current liabilities 1,258,592,591.53 2,840,027,118.52
Non-current liabilities:
Long-term loans 1,312,000,000.00 1,154,000,000.00
Bonds payable
Lease liabilities 3,729,020.22
Long-term payables
Long-term payroll payable
Estimated liabilities
Deferred income 11,109,600.00 20,534,000.00
Deferred tax liabilities 2,742,846.41 2,133,190.37
Other non-current liabilities
Total non-current liabilities 1,325,852,446.41 1,180,396,210.59
Total liabilities 2,584,445,037.94 4,020,423,329.11
Owner's equity (or shareholder's equity):
Share capital 1,865,523,807.00 1,929,189,374.00
Other equity instruments
Including: Preferred shares
Perpetual debts
Capital reserve 972,063,254.79 1,678,414,507.96
Less: Treasury shares 347,176,561.29
Other comprehensive income 4,379,477.64 726,576.72
Special reserve
Surplus reserve 770,444,255.39 646,164,633.12
Undistributed profits 2,749,900,256.87 1,968,175,713.20
Total owner's equity (or
6,362,311,051.69 5,875,494,243.71
shareholder's equity)
Total liabilities and owner's
6,362,311,051.69 5,875,494,243.71
equity (or shareholder's equity)
8,946,756,089.63 9,895,917,572.82
Person-in-charge of the Company: Person-in-charge of the Company’s Person-in-charge of the accounting
Zhu Baoguo accounting work: Qiu Qingfeng department: Qiu Qingfeng
164
Joincare Pharmaceutical Group Annual Report 2023
Consolidated Income Statement
From January to December, 2023
Unit: Yuan Currency: RMB
Item Note 2023 2022
I. Total revenues Ⅴ.43 16,646,350,349.72 17,142,753,068.82
Including: Operating revenues 16,646,350,349.72 17,142,753,068.82
II. Total operating costs 13,123,515,536.16 13,784,938,368.95
Including: Operating costs Ⅴ.43 6,298,465,671.11 6,252,265,308.40
Operating tax and surcharges Ⅴ.44 203,209,120.85 199,746,357.56
Selling expenses Ⅴ.45 4,434,442,281.05 4,950,802,456.16
Administrative expenses Ⅴ.46 930,481,615.70 992,483,591.51
R&D expenses Ⅴ.47 1,661,757,980.90 1,742,088,079.94
Financial expenses Ⅴ.48 -404,841,133.45 -352,447,424.62
Including: Interest expenses 146,728,005.05 139,016,104.44
Interest income 532,253,758.86 395,476,309.66
Add: Other income Ⅴ.49 259,061,799.00 289,868,006.44
Investmnet Income (“-” for loss) Ⅴ.50 79,474,572.01 55,973,114.29
Including: Income from
investments in associates and joint 72,794,071.40 70,577,657.04
ventures
Gains from derecognition of
financial assets at amortized cost
Gains from net exposure hedges
(“-” for loss)
Gains from changes in fair values
Ⅴ.51 -25,419,715.12 -76,262,989.83
(“-” for loss)
Losses of credit impairment (“-”
Ⅴ.52 -16,846,468.56 -4,123,743.37
for loss)
Impairment loss of assets (“-” for
Ⅴ.53 -312,369,926.37 -142,627,936.44
loss)
Gains from disposal of assets (“-”
Ⅴ.54 -169,901.01 -705,357.30
for loss)
III. Operating profit (“-” for loss) 3,506,565,173.51 3,479,935,793.66
Add: Non-operating income Ⅴ.55 7,980,415.72 8,229,847.57
Less: Non-operating expenses Ⅴ.56 48,990,788.10 32,060,686.06
IV. Total profit (“-” for loss) 3,465,554,801.13 3,456,104,955.17
Less: Income tax expenses Ⅴ.57 614,535,757.76 561,796,743.05
V. Net profit (“-” for loss) 2,851,019,043.37 2,894,308,212.12
(I) Classified by business continuity
1. Net profit from ongoing operation (“-”
2,851,019,043.37 2,894,308,212.12
for loss)
2. Net profit from discontinuing operation
(“-” for loss)
(II) Classified by ownership
1.Net profit attributable to shareholders of
1,442,779,722.23 1,502,777,133.76
the parent company (“-” for loss)
2.Profit and loss of minority shareholders
1,408,239,321.14 1,391,531,078.36
(“-” for loss)
VI. Other comprehensive income, net of
-35,859,587.07 74,606,735.39
tax
(I) Other comprehensive income
attributable to shareholders of the parent, -14,877,862.38 -683,072.44
net of tax
165
Joincare Pharmaceutical Group Annual Report 2023
1. Other comprehensive income that cannot
-28,328,225.75 -85,577,350.31
be reclassified into profit or loss
(1) Changes from remeasurement of
defined benefit plans
(2) Other comprehensive income that
cannot be reclassified into profit or loss 1,329,112.27 2,116,352.61
under the equity method
(3) Changes in fair value of investments in
-29,657,338.02 -87,693,702.91
other equity instruments
(4) Changes in fair value of the enterprise's
own credit risks
2. Other comprehensive income that will be
13,450,363.36 84,894,277.87
reclassified into profit or loss
(1) Other comprehensive income that can
be reclassified into profit or loss under the -79,651.80 236,421.59
equity method
(2) Changes in fair value of other debt
investments
(3) Amount of financial assets reclassified
into other comprehensive income
(4) Provision for credit impairment of other
debt investments
(5) Reserve for cash flow hedges
(6) Exchange differences on translation of
financial statements denominated in foreign 13,530,015.17 84,657,856.28
currencies
(7) Others
(II) Other comprehensive income
attributable to minority shareholders, net of -20,981,724.69 75,289,807.82
tax
VII. Total comprehensive income 2,815,159,456.30 2,968,914,947.51
(I) Total comprehensive income attributable
1,427,901,859.85 1,502,094,061.32
to owners of the parent company
(II) Total comprehensive income
1,387,257,596.45 1,466,820,886.18
attributable to minority shareholders
VIII. Earnings per share:
(I) Basic earnings per share (RMB/share) 0.7580 0.7934
(II) Diluted earnings per share (RMB/share) 0.7565 0.7922
Person-in-charge of the Company: Person-in-charge of the Company’s Person-in-charge of the accounting
Zhu Baoguo accounting work: Qiu Qingfeng department: Qiu Qingfeng
166
Joincare Pharmaceutical Group Annual Report 2023
Income Statement of the Parent Company
From January to December, 2023
Unit: Yuan Currency: RMB
Item Note 2023 2022
I. Operating Revenues 2,335,368,409.73 2,373,887,564.78
Less: Operating costs 1,296,620,002.79 1,612,899,011.80
Operating tax and surcharges 18,191,486.29 14,203,470.53
Selling expenses 778,265,785.76 645,474,076.69
Administrative expenses 106,160,726.99 195,475,435.39
R&D expenses 105,105,802.11 66,705,404.14
Financial expenses -85,925,210.70 -38,112,993.67
Including: Interest expenses 35,792,436.81 25,257,639.51
Interest income 112,494,303.53 70,313,743.55
Add: Other income 3,050,790.24 23,934,298.39
Investmnet Income (“-” for loss) 1,138,319,195.19 991,369,051.76
Including: Income from investments in associates and joint
771,206.39 1,326,243.55
ventures
Gains from derecognition of financial assets at
amortized cost
Gains from net exposure hedges (“-” for loss)
Gains from changes in fair values (“-” for loss)
Losses of credit impairment (“-” for loss) 893,429.71 1,856,898.77
Impairment loss of assets (“-” for loss) -154,249.81
Gains from disposal of assets (“-” for loss)
II. Operating profit (“-” for loss) 1,259,213,231.63 894,249,159.01
Add: Non-operating income 2,428,107.88 232,093.51
Less: Non-operating expenses 10,321,190.29 1,660,096.56
III. Total profit (“-” for loss) 1,251,320,149.22 892,821,155.96
Less: Income tax expenses 9,908,251.22 43,027,817.18
IV. Net profit (“-” for loss) 1,241,411,898.00 849,793,338.78
(1) Net profit from ongoing operation (“-” for loss) 1,241,411,898.00 849,793,338.78
(II) Net profit from discontinuing operation (“-” for loss)
V. Other comprehensive income, net of tax 3,738,341.88 -76,289,376.36
(I) Other comprehensive income not to be reclassified into
3,738,341.88 -76,289,376.36
profit and loss
1. Changes from remeasurement of defined benefit plans
2. Other comprehensive income that cannot be reclassified
into profit or loss under the equity method
3. Changes in fair value of investments in other equity
3,738,341.88 -76,289,376.36
instruments
4. Changes in fair value of the enterprise's own credit risks
(II). Other comprehensive income that will be reclassified
into profit and loss
1. Other comprehensive income that can be reclassified into
profit or loss under the equity method
2. Changes in fair value of other debt investments
(3) Amount of financial assets reclassified into other
comprehensive income
(4) Provision for credit impairment of other debt
investments
(5) Reserve for cash flow hedges
(6) Exchange differences on translation of financial
statements denominated in foreign currencies
167
Joincare Pharmaceutical Group Annual Report 2023
(7) Others
VI. Total comprehensive income 1,245,150,239.88 773,503,962.42
VII. Earnings per share:
(1) Basic earnings per share (RMB/share)
(2) Diluted earnings per share (RMB/share)
Person-in-charge of the Company: Person-in-charge of the Company’s Person-in-charge of the accounting
Zhu Baoguo accounting work: Qiu Qingfeng department: Qiu Qingfeng
168
Joincare Pharmaceutical Group Annual Report 2023
Consolidated Cash Flow Statement
From January to December, 2023
Unit: Yuan Currency: RMB
Item Note 2023 2022
I. Cash flow from operating activities:
Cash received from sales of goods and rendering of
18,384,911,273.46 18,615,546,255.83
services
Tax refunds received 194,255,179.28 247,896,245.67
Other cash received related to operating activities Ⅴ.58 886,837,372.89 683,645,734.39
Subtotal of cash inflow from operating activities 19,466,003,825.63 19,547,088,235.89
Cash paid for goods and services 6,082,140,644.68 5,728,697,037.48
Cash paid to and on behalf of employees 2,459,885,718.06 2,260,612,483.52
Payments of all types of taxes 1,865,755,412.23 1,668,389,310.43
Other cash paid related to operating activities Ⅴ.58 5,129,312,440.93 5,911,684,265.17
Subtotal of cash outflow in operating activities 15,537,094,215.90 15,569,383,096.60
Net cash flow from operating activities 3,928,909,609.73 3,977,705,139.29
II. Cash flow from investing activities:
Cash received from disposal of investment 487,573,781.32 270,997,751.54
Cash received from returns on investments 153,317,136.18 144,358,825.55
Net cash received from disposal of fixed assets,
15,304,216.61 3,096,825.59
intangible assets and other long-term assets
Net cash received from disposal of subsidiaries and
other business units
Other cash received related to investing activities Ⅴ.58 354,303,650.67 13,563,902.59
Subtotal of cash inflow from investing activities 1,010,498,784.78 432,017,305.27
Cash paid for purchase and construction of fixed
1,130,148,501.91 1,147,832,255.23
assets, intangible assets and other long-term assets
Cash paid to acquire investment 204,656,113.68 416,183,775.89
Net cash paid for acquisition of subsidiaries and other
22,461,951.59
business units
Other cash paid related to investing activities Ⅴ.58 530,656,554.45 1,120,168,462.77
Subtotal of cash outflow in investing activities 1,887,923,121.63 2,684,184,493.89
Net cash flow from investing activities -877,424,336.85 -2,252,167,188.62
III. Cash flow from financing activities:
Cash received from capital contribution 47,272,592.34 746,673,937.95
Including: Cash received from investment by minority
9,150,000.00 45,595,924.92
interests of subsidiaries
Cash received from borrowings 4,273,570,084.01 5,339,517,086.47
Other cash received related to financing activities 20,000,000.00 381,066,270.61
Subtotal of cash inflow from financing activities 4,340,842,676.35 6,467,257,295.03
Cash repayments of amounts borrowed 3,390,232,777.68 3,718,797,777.63
Cash payments for interest expenses and distribution
1,614,965,214.84 1,350,994,668.54
of dividends or profits
Including: Dividend paid to minority interests of
1,134,101,424.76 961,951,199.52
subsidiaries
Other cash payments related to financing activities Ⅴ.58 1,263,138,206.11 831,342,189.06
Subtotal of cash outflow in financing activities 6,268,336,198.63 5,901,134,635.23
Net cash flow from financing activities -1,927,493,522.28 566,122,659.80
IV. Effect of foreign exchange rate changes on cash
38,411,935.73 189,286,934.75
and cash equivalents
V. Net increase in cash and cash equivalents 1,162,403,686.33 2,480,947,545.22
Add: Opening balance of cash and cash equivalents 14,178,465,686.40 11,697,518,141.18
VI. Closing balance of cash and cash equivalents 15,340,869,372.73 14,178,465,686.40
Person-in-charge of the Company: Person-in-charge of the Company’s Person-in-charge of the accounting
Zhu Baoguo accounting work: Qiu Qingfeng department: Qiu Qingfeng
169
Joincare Pharmaceutical Group Annual Report 2023
Cash Flow Statement of Parent Company
From January to December, 2023
Unit: Yuan Currency: RMB
Item Note 2023 2022
I. Cash flow from operating activities:
Cash received from sales of goods and rendering of
2,465,414,605.44 3,146,093,806.02
services
Tax refunds received 82,831.63
Other cash received related to operating activities 1,795,031,283.74 2,960,613,006.52
Subtotal of cash inflow from operating activities 4,260,445,889.18 6,106,789,644.17
Cash paid for goods and services 1,716,324,045.92 1,901,562,593.41
Cash paid to and on behalf of employees 315,694,179.79 246,881,656.93
Payments of all types of taxes 140,037,429.22 103,904,304.93
Other cash paid related to operating activities 3,259,423,999.51 3,109,052,257.96
Subtotal of cash outflow in operating activities 5,431,479,654.44 5,361,400,813.23
Net cash flow from operating activities -1,171,033,765.26 745,388,830.94
II. Cash flow from investing activities:
Cash received from disposal of investment 16,009,870.78 270,997,751.54
Cash received from returns on investments 1,188,686,336.32 1,276,079,344.80
Net cash received from disposal of fixed assets,
1,618,089.69 21,000.00
intangible assets and other long-term assets
Net cash received from disposal of subsidiaries and
other business units
Other cash received related to investing activities 348,303,650.67 158,470.77
Subtotal of cash inflow from investing activities 1,554,617,947.46 1,547,256,567.11
Cash paid for purchase and construction of fixed
28,550,710.70 11,869,023.45
assets, intangible assets and other long-term assets
Cash paid to acquire investment 253,540,000.00 10,000,000.00
Net cash paid for acquisition of subsidiaries and other
business units
Other cash paid related to investing activities 200,000,000.00 1,084,392,104.38
Subtotal of cash outflow in investing activities 482,090,710.70 1,106,261,127.83
Net cash flow from investing activities 1,072,527,236.76 440,995,439.28
III. Cash flow from financing activities:
Cash received from capital contribution 38,122,592.34 701,078,013.03
Cash received from borrowings 500,000,000.00 1,500,000,000.00
Other cash received related to financing activities
Subtotal of cash inflow from financing activities 538,122,592.34 2,201,078,013.03
Cash repayments of amounts borrowed 236,000,000.00 854,000,000.00
Cash payments for interest expenses and distribution of
372,359,680.47 299,984,479.95
dividends or profits
Other cash payments related to financing activities 480,842,923.14 740,517,545.44
Subtotal of cash outflow in financing activities 1,089,202,603.61 1,894,502,025.39
Net cash flow from financing activities -551,080,011.27 306,575,987.64
IV. Effect of foreign exchange rate changes on cash
7,846,043.48 -5,804,971.77
and cash equivalents
V. Net increase in cash and cash equivalents -641,740,496.29 1,487,155,286.09
Add: Opening balance of cash and cash equivalents 2,858,062,020.22 1,370,906,734.13
VI. Closing balance of cash and cash equivalents 2,216,321,523.93 2,858,062,020.22
Person-in-charge of the Company: Person-in-charge of the Company’s Person-in-charge of the accounting
Zhu Baoguo accounting work: Qiu Qingfeng department: Qiu Qingfeng
170
Joincare Pharmaceutical Group Annual Report 2023
Consolidated Statement of Changes in Owner's Equity
From January to December, 2023
Unit: Yuan Currency: RMB
2023
Owner's equity attributable to the parent company
Item Minority
Total owner's equity
Other equity instruments Other General shareholder's equity
Less: Treasury Special Undistributed
Paid-up capital Capital reserve comprehensive Surplus reserve risk Subtotal
Preferred Perpetual shares reserve profits
Others income provision
share debts
I. Balance at the
end of previous 1,929,189,374.00 2,343,693,215.99 347,176,561.29 4,704,473.53 734,766,581.50 8,456,778,287.49 13,121,955,371.22 8,898,418,947.86 22,020,374,319.08
year
Add: Change of
accounting policies
Correction to
errors of the
previous period
Others
II. Balance in
1,929,189,374.00 2,343,693,215.99 347,176,561.29 4,704,473.53 734,766,581.50 8,456,778,287.49 13,121,955,371.22 8,898,418,947.86 22,020,374,319.08
beginning of year
III. Increase and
decrease of the
current year -63,665,567.00 -741,973,128.28 -347,176,561.29 -16,950,604.75 124,279,622.27 985,079,669.31 633,946,552.84 -14,790,381.28 619,156,171.56
(enter “-” for
decrease)
(I) Total
comprehensive -14,877,862.38 1,442,779,722.23 1,427,901,859.85 1,387,257,596.45 2,815,159,456.30
income
(II). Capital
contribution or
-63,665,567.00 -858,072,890.75 -347,176,561.29 -574,561,896.46 -175,500,041.15 -750,061,937.61
reduction from
shareholders
1. Capital
contribution from 3,500,889.00 35,218,943.34 38,719,832.34 9,150,000.00 47,869,832.34
shareholders
2. Capitals
invested by other
equity instrument
holders
3. Amount of
share-based
13,686,798.08 13,686,798.08 13,686,798.08
payment included
in owner's equity
4. Others -67,166,456.00 -906,978,632.17 -347,176,561.29 -626,968,526.88 -184,650,041.15 -811,618,568.03
(III). Profit
124,141,189.80 -460,933,246.56 -336,792,056.76 -1,134,091,995.09 -1,470,884,051.85
distribution
171
Joincare Pharmaceutical Group Annual Report 2023
1. Accrual of
124,141,189.80 -124,141,189.80
surplus reserve
2. Accrual of
general risk
provision
3. Amount
distributed to
-336,792,056.76 -336,792,056.76 -1,134,091,995.09 -1,470,884,051.85
owners (or
shareholders)
4. Others
(IV) Internal
carrying forward -2,072,742.37 138,432.47 3,233,193.64 1,298,883.74 2,420,773.91 3,719,657.65
of owner's equity
1. Capital reserve
transferred to
increase capital (or
share capital)
2. Surplus reserve
transferred to
increase capital (or
share capital)
3. Surplus reserve
compensating
losses
4. Retained
earnings carried
over from changes
in the defined
benefit plan
5. Retained
earnings carried
over from other -2,072,742.37 138,432.47 3,233,193.64 1,298,883.74 2,420,773.91 3,719,657.65
comprehensive
income
6. Others
(V) . Special
reserve
1. Accrual of the
current year
2. Amount utilized
in the current
period
(VI) . Others 116,099,762.47 116,099,762.47 -94,876,715.40 21,223,047.07
IV. Balance at
1,865,523,807.00 1,601,720,087.71 -12,246,131.22 859,046,203.77 9,441,857,956.80 13,755,901,924.06 8,883,628,566.58 22,639,530,490.64
end of year
172
Joincare Pharmaceutical Group Annual Report 2023
2022
Owner's equity attributable to the parent company
Item Other equity instruments Other General Minority
Less: Treasury Special Undistributed Total owner's equity
Paid-up capital Preferred Perpetual Capital reserve comprehensive Surplus reserve risk Subtotal shareholder's equity
Others shares reserve profits
share debts income provision
I. Balance at the
end of previous 1,907,727,908.00 2,265,357,311.92 222,644,454.50 5,387,545.97 640,821,179.08 7,223,644,166.22 11,820,293,656.69 8,359,317,322.63 20,179,610,979.32
year
Add: Change of
-46,332.61 -46,332.61 -19,161.62 -65,494.23
accounting policies
Correction to errors
of the previous
period
Others
II. Balance in
1,907,727,908.00 2,265,357,311.92 222,644,454.50 5,387,545.97 640,821,179.08 7,223,597,833.61 11,820,247,324.08 8,359,298,161.01 20,179,545,485.09
beginning of year
III. Increase and
decrease of the
current year 21,461,466.00 78,335,904.07 124,532,106.79 -683,072.44 93,945,402.42 1,233,180,453.88 1,301,708,047.14 539,120,786.85 1,840,828,833.99
(enter “-” for
decrease)
(I). Total
comprehensive -683,072.44 1,502,777,133.76 1,502,094,061.32 1,466,820,886.18 2,968,914,947.51
income
(II). Capital
contribution or
21,461,466.00 72,932,379.32 124,532,106.79 -30,138,261.47 -9,149,286.66 -39,287,548.13
reduction from
shareholders
1. Capital
contribution from 72,421,134.00 612,201,980.48 724,513,822.62 -39,890,708.14 22,487,013.47 -17,403,694.67
shareholders
2. Capitals invested
by other equity
instrument holders
3. Amount of share-
based payment
9,752,446.67 9,752,446.67 9,752,446.67
included in owner's
equity
4. Others -50,959,668.00 -549,022,047.83 -599,981,715.83 -31,636,300.13 -31,636,300.13
(III). Profit
84,973,195.80 -362,530,827.45 -277,557,631.65 -967,251,289.90 -1,244,808,921.55
distribution
1. Accrual of
84,973,195.80 -84,973,195.80
surplus reserve
2. Accrual of
general risk
provision
3. Amount
-277,557,631.65 -277,557,631.65 -967,251,289.90 -1,244,808,921.55
distributed to
173
Joincare Pharmaceutical Group Annual Report 2023
owners (or
shareholders)
4. Others
(IV) . Internal
carrying forward of 8,972,206.62 92,934,147.57 101,906,354.19 15,012,358.44 116,918,712.63
owner's equity
1. Capital reserve
transferred to
increase capital (or
share capital)
2. Surplus reserve
transferred to
increase capital (or
share capital)
3. Surplus reserve
compensating
losses
4. Retained
earnings carried
over from changes
in the defined
benefit plan
5. Retained
earnings carried
over from other 8,972,206.62 92,934,147.57 101,906,354.19 15,012,358.44 116,918,712.63
comprehensive
income
6. Others
(V) . Special
reserve
1. Accrual of the
current year
2. Amount utilized
in the current
period
(VI) . Others 5,403,524.75 5,403,524.75 33,688,118.79 39,091,643.54
IV. Balance at end
1,929,189,374.00 2,343,693,215.99 347,176,561.29 4,704,473.53 734,766,581.50 8,456,778,287.49 13,121,955,371.22 8,898,418,947.86 22,020,374,319.08
of year
Person-in-charge of the Company: Person-in-charge of the Company’s accounting work: Person-in-charge of the accounting department:
Zhu Baoguo Qiu Qingfeng Qiu Qingfeng
174
Joincare Pharmaceutical Group Annual Report 2023
Statement of Changes in Owner's Equity of the Parent Company
From January to December, 2023
Unit: Yuan Currency: RMB
2023
Other equity instruments Other
Item Special Total owner's
Paid-up capital Preferred Perpetual Capital reserve Less: Treasury shares comprehensive Surplus reserve Undistributed profits
Others reserve equity
share debts income
I. Balance at the end of previous year 1,929,189,374.00 1,678,414,507.96 347,176,561.29 726,576.72 646,164,633.12 1,968,175,713.20 5,875,494,243.71
Add: Change of accounting policies
Correction to errors of the previous period
Others
II. Balance in beginning of year 1,929,189,374.00 1,678,414,507.96 347,176,561.29 726,576.718 646,164,633.12 1,968,175,713.20 5,875,494,243.71
III. Increase and decrease of the current year (enter “-” for
-63,665,567.00 -706,351,253.17 -347,176,561.29 3,652,900.92 124,279,622.27 781,724,543.67 486,816,807.98
decrease)
(I). Total comprehensive income 3,738,341.88 1,241,411,898.00 1,245,150,239.88
(II) Capital contribution or reduction from shareholders -63,665,567.00 -706,351,253.17 -347,176,561.29 -422,840,258.88
1. Capital contribution from shareholders 3,500,889.00 35,218,943.34 38,719,832.34
2. Capitals invested by other equity instrument holders
3. Amount of share-based payment included in owner's
13,822,495.92 13,822,495.92
equity
4. Others -67,166,456.00 -755,392,692.43 -347,176,561.29 -475,382,587.14
(III). Profit distribution 124,141,189.80 -460,933,246.56 -336,792,056.76
1. Accrual of surplus reserve 124,141,189.80 -124,141,189.80
2. Amount distributed to owners (or shareholders) -336,792,056.76 -336,792,056.76
3. Others
(IV) . Internal carrying forward of owner's equity -85,440.960 138,432.47 1,245,892.23 1,298,883.74
1. Capital reserve transferred to increase capital (or share
capital)
2. Surplus reserve transferred to increase capital (or share
capital)
3. Surplus reserve compensating losses
4. Retained earnings carried over from changes in the
defined benefit plan
5. Retained earnings carried over from other
-85,440.960 138,432.47 1,245,892.23 1,298,883.74
comprehensive income
6. Others
(V) . Special reserve
1. Accrual of the current year
2. Amount utilized in the current period
(VI) . Others
IV. Balance at end of year 1,865,523,807.00 972,063,254.79 4,379,477.64 770,444,255.39 2,749,900,256.87 6,362,311,051.69
175
Joincare Pharmaceutical Group Annual Report 2023
2022
Other equity instruments Other
Item Less: Treasury Special Undistributed Total owner's
Paid-up capital Preferred Perpetual Capital reserve comprehensive Surplus reserve
Others shares reserve profits equity
share debts income
I. Balance at the end of previous year 1,907,727,908.00 1,605,482,128.64 222,644,454.50 77,015,953.08 552,219,230.70 1,400,174,178.18 5,319,974,944.10
Add: Change of accounting policies -10,835.91 -10,835.91
Correction to errors of the previous period
Others
II. Opening balance of the current year 1,907,727,908.00 1,605,482,128.64 222,644,454.50 77,015,953.08 552,219,230.70 1,400,163,342.27 5,319,964,108.19
III. Increase and decrease of the current year
21,461,466.00 72,932,379.32 124,532,106.79 -76,289,376.36 93,945,402.42 568,012,370.93 555,530,135.52
(enter “-” for decrease)
(I). Total comprehensive income -76,289,376.36 849,793,338.78 773,503,962.42
(II). Capital contribution or reduction from
21,461,466.00 72,932,379.32 124,532,106.79 -30,138,261.47
shareholders
1. Capital contribution from shareholders 72,421,134.00 612,201,980.48 724,513,822.62 -39,890,708.14
2. Capitals invested by other equity instrument
holders
3. Amount of share-based payment included in 9,752,446.67 9,752,446.67
owner's equity
4. Others -50,959,668.00 -549,022,047.83 -599,981,715.83
(III). Profit distribution 84,973,195.80 -362,530,827.45 -277,557,631.65
1. Accrual of surplus reserve 84,973,195.80 -84,973,195.80
2. Amount distributed to owners (or
-277,557,631.65 -277,557,631.65
shareholders)
3. Others
(IV) . Internal carrying forward of owner's
8,972,206.62 80,749,859.60 89,722,066.22
equity
1. Capital reserve transferred to increase capital
(or share capital)
2. Surplus reserve transferred to increase capital
(or share capital)
3. Surplus reserve compensating losses
4. Retained earnings carried over from changes
in the defined benefit plan
5. Retained earnings carried over from other
8,972,206.62 80,749,859.60 89,722,066.22
comprehensive income
6. Others
(V) Special reserve
1. Accrual of the current year
2. Amount utilized in the current period
(VI) Others
IV. Balance at end of year 1,929,189,374.00 1,678,414,507.96 347,176,561.29 726,576.72 646,164,633.12 1,968,175,713.20 5,875,494,243.71
Person-in-charge of the Company: Zhu Baoguo Person-in-charge of the Company’s accounting work: Person-in-charge of the accounting department:
Qiu Qingfeng Qiu Qingfeng
176
Joincare Pharmaceutical Group Annual Report 2023
Notes to the financial statements
I. Company Profile
Joincare Pharmaceutical Group Industry Co., Ltd. (hereinafter referred to as the "Company" or "the
Company"), formerly known as Shenzhen Aimier Food Co., Ltd. (深圳爱迷尔食品有限公司), was a
Sino-foreign joint venture officially established on 18 December 1992 with the approval from
Shenzhen Administration for Industry and Commerce.
On 24 November 1999, the Company was reorganized as a joint stock limited company.
On 6 February 2001, the Company was approved by the China Securities Regulatory Commission to
issue domestically listed shares (A shares) to the public. On 8 June 2001, shares of the Company were
listed and traded on Shanghai Stock Exchange.
As of 31 December 2023, the total share capital of the Company was RMB1,865,523,807 for a total
number of shares of 1,865,523,807 shares. The controlling shareholder of the Company is Shenzhen
Baiyeyuan Investment Co., Ltd. (深圳市百业源投资有限公司), and the ultimate controlling party is
Zhu Baoguo (朱保国).
The company is registered and headquartered in Jiankang Yuan Pharmaceutical Group Building, No.
17, Langshan Road, North District, High-tech Zone, Nanshan District, Shenzhen.
The Company is engaged in the pharmaceutical industry.
The Company and its subsidiaries primarily engaged in the R&D, production and sale of
pharmaceutical products and healthcare products, which covered drug preparation products, active
pharmaceutical ingredients (“APIs”) and intermediates, diagnostic reagents and equipment as well as
healthcare products.
These financial statements and the notes to the financial statements were approved by the 38th meeting
of the 8th session of the Board of Directors of the Company on 2 April 2024.
II. Basis of Preparation for the Financial Statements
The financial statements have been prepared in accordance with the Accounting Standards for
Business Enterprises issued by the Ministry of Finance and its application guidance, interpretations
and the other related provisions (collectively, the “Accounting Standards for Business Enterprises”).
In addition, the Company also discloses relevant financial information in accordance with the
Information Disclosure and Presentation Rules for Companies Offering Securities to the Public No.
15 – General Provisions on Financial Reporting (2023 Revision) issued by the China Securities
Regulatory Commission.
The financial statements have been prepared on the going-concern basis.
177
Joincare Pharmaceutical Group Annual Report 2023
The Company's accounting is measured on an accrual basis. Except for certain financial instruments,
the financial statements are generally measured at historical cost. Non-current assets held for sale are
stated at the lower of fair value less estimated selling costs and their original carrying amount if they
qualify as held for sale. In case of asset impairment, the Company shall make provisions for
impairment in accordance with applicable provisions.
III. Significant Accounting Policies and Accounting Estimates
The Company determines the capitalisation condition of R&D expenses and revenue recognition
policies on the basis of its production and operation characteristics. Details of accounting policies are
set out in Note III.22 and Note III.29.
1. Statement of compliance with the Accounting Standards for Business Enterprises
The financial statements comply with the Accounting Standards for Business Enterprises, which gave
a true and complete view of the consolidated and the Company's financial positions as at 31 December
2023, and the consolidated and the Company’s operating results and the consolidated and the
Company’s cash flows and other relevant information for the year ended 31 December 2023.
2. Accounting period
The fiscal year of the Company is from 1 January to 31 December in each calendar year.
3. Operating cycle
The Company’s operating cycle is 12 months.
4. Functional currency
The functional currency of the Company and its domestic subsidiaries is Renminbi (“RMB”).
Overseas subsidiaries of the Company usually recognise HK dollar, Macau dollar and US dollar as
their functional currencies according to the primary economic environment of which these subsidiaries
operate. The Company prepares its financial statements in RMB.
5. Determination and selection basis of materiality criteria
Item Materiality criteria
Material receivables subject to Individual debtor accounts for more than 5% of all types of
provision for bad debt individually receivables and the amount exceeds RMB50 million
Material receivables write-off in the Individual write-off amount accounts for more than 5% of all
period types of receivables and the amount exceeds RMB50 million
Budget investment amount for a single project accounts for
Material construction in progress more than 5‰ of consolidated total assets and the amount
exceeds RMB100 million
Individual contract liability aged over one year accounts for
Material contract liabilities aged over
more than 10% of consolidated total liabilities and the amount
one year
exceeds RMB50 million
Individual accounts payable/other payable aged over one year
Material accounts payable and other
accounts for more than 10% of total accounts payables/other
payables aged over one year
payables and the amount exceeds RMB50 million
One or both of the subsidiary's total assets, operating income,
Material non-wholly owned
net profit (or absolute value of loss) accounts for more than
subsidiaries
10% of the corresponding items in the consolidated financial
178
Joincare Pharmaceutical Group Annual Report 2023
statements
Closing balance of a single project accounts for more than
Material capitalized research and
10% of the closing balance of development expenditures and
development projects
the amount exceeds RMB100 million
Single investment activity accounts for more than 10% of the
Material investment activities total cash inflows or outflows related to investment activities
received or paid and the amount exceeds RMB100 million
Carrying amount of long-term equity investments in a single
investee accounts for more than 3% of the total consolidated
net assets and the amount exceeds RMB500 million, or
Material joint ventures or associates
investment profits and losses under the equity method of long-
term equity investment accounts for more than 10% of the
consolidated net profit
6. Accounting treatment for business combinations involving enterprises under common control
and business combinations involving enterprises not under common control
(1) Business combinations involving enterprises under common control
For the business combination involving entities under common control, the assets acquired and
liabilities assumed are measured based on their carrying amounts in the consolidated financial
statements of the ultimate controlling party as at the combination date. The difference between the
carrying amount of the consideration paid for the combination and the net assets acquired is adjusted
against share premium in the capital reserve, with any excess adjusted against retained earnings.
Business combination involving enterprises under common control and achieved in a number of
transactions
In the separate financial statements, the initial investment cost will be recognised at the carrying
amount of the Company's share in the combined party's net assets in the consolidated financial
statements of the ultimate controlling party on the date of combination. The difference between the
initial investment cost and the sum of the carrying amount of the investment held and the carrying
amount of consideration paid for the combination at the combination date is adjusted against share
premium in the capital reserve, with any excess adjusted against retained earnings.
In the consolidated financial statements, the assets acquired and liabilities assumed are measured based
on their carrying amounts in the consolidated financial statements of the ultimate controlling party as
at the combination date. The difference between sum of the carrying amount of the investment held
and the carrying amount of the consideration paid for the combination and the carrying amount of the
net assets acquired is adjusted against share premium in the capital reserve, with any excess adjusted
against retained earnings. For long-term equity investment held before the control over the combined
party is obtained, profit or loss, other comprehensive income and other changes to equity interest
attributable to the owners recognised from the later of the acquisition of the original equity interest
and the date when the combing party and the combined party are placed under common control until
the date of combination shall be offset against retained profit at the beginning of the period of the
comparative financial statements or profit or loss of the period respectively.
(2) Business combinations involving enterprises not under common control
For the business combinations involving enterprises not under common control, the combination cost
shall be the fair value of the assets transferred, liabilities incurred or assumed, and equity securities
179
Joincare Pharmaceutical Group Annual Report 2023
issued by the acquirer for acquisition of control in the acquiree on the acquisition date. The assets,
liabilities and contingent liabilities acquired or assumed on the date of acquisition are recognised at
fair value.
Where the combination cost exceeds the fair value of the acquiree's identifiable net assets in the
business combination, the difference is recognised as goodwill and is subsequently measured at cost
less accumulated impairment provisions. Where the combination cost is less than the fair value of the
acquiree's identifiable net assets in the business combination, the difference shall be included in profit
or loss for the period after review.
Business combination involving enterprises not under common control and achieved in a number of
transactions
In the separate financial statements, the initial cost of the investment is the sum of the carrying amount
of the acquiree's equity investment held before the acquisition date and the additional investment cost
on the acquisition date. In respect of the equity investment held prior to the acquisition date, other
comprehensive income will not be recognised using equity method on the acquisition date, and such
investment will be accounted for on the same accounting treatment as direct disposal of relevant asset
or liability by the investee at the time of disposal. Shareholder's equity recognised due to the changes
of other shareholder's equity other than the changes of net loss and profit, other comprehensive income
and profit distribution shall be transferred to profit or loss for current period when disposed. If the
equity investment held prior to the acquisition date is measured at fair value, the cumulative changes
in fair value recognised in other comprehensive income shall be transferred to retained earnings when
accounted for using cost method.
In the consolidated financial statements, the combination cost is the sum of consideration paid on the
acquisition date and fair value of the acquiree's equity held prior to the acquisition date. The equity of
the acquirees held before the acquisition date is re-measured at the fair value of the equity on the
acquisition date and the differences between the fair value and the carrying amount are recognised in
the income for the current period; in respect of any other comprehensive income attributable to the
equity interest in the acquiree held prior to the acquisition date and any changes of other shareholder's
equity shall be transferred to investment profit or loss for current period on the acquisition date, except
for the other comprehensive income arising from changes in net liabilities or net assets of defined
benefit plans remeasured by investees and other comprehensive income related to non-derivative
equity instrument investments designated at fair value through other comprehensive income.
(3) Transaction fees attribution during the combination
The intermediary and other relevant administrative expenses such as audit, legal and valuation
advisory for business combinations are recognised in profit or loss when incurred. Transaction costs
of equity or debt securities issued as the considerations of business combination are included in the
initial recognition amounts.
7. Basis in determination of control and preparation of the consolidated financial statements
(1) Basis in determination of control
The scope of consolidated financial statements is determined based on control. Control means the
Company has exposures or rights to variable returns from its involvement with the investee and the
ability to affect those returns through power over such investee. When changes in relevant facts and
circumstances lead to alterations in the elements involved in the definition of control, the Company
will conduct a reassessment.
In assessing whether to include structured entities within the consolidation scope, the company
180
Joincare Pharmaceutical Group Annual Report 2023
integrates all facts and circumstances, including evaluating the purpose and design of the structured
entity, identifying the types of variable returns, and assessing whether it bears some or all of the
variability of returns by participating in its related activities, to determine if control over the structured
entity exists.
(2) Method for preparation of the consolidated financial statements
The consolidated financial statements are based on the financial statements of the Company and its
subsidiaries, and are prepared by the Company in accordance with other relevant information. In
preparing the consolidation financial statements, the Company and its subsidiaries are required to
apply consistent accounting policy and accounting period, intra-group transactions and balances shall
be offset.
A subsidiary or a business acquired through a business combination involving entities under common
control in the reporting period shall be included in the scope of the consolidation of the Company from
the date when it is under control of the ultimate controlling party, and then its operating results and
cash flows will be included in the consolidated income statement and the consolidated cash flow
statement, respectively.
For a subsidiary or a business acquired through a business combination involving entities not under
common control in the reporting period, its income, expenses and profits are included in the
consolidated income statement, and its cash flows are included in the consolidated cash flow statement
from the acquisition date to the end of the reporting date.
The shareholders' equity of the subsidiaries that are not attributable to the Company shall be presented
under shareholders' equity in the consolidated balance sheet as minority interests. The portion of net
profit or loss of subsidiaries for the period attributable to minority interest is presented in the
consolidated income statement under the “profit or loss of minority interest”. When the amount of loss
attributable to the minority shareholders of a subsidiary exceeds the minority shareholders' portion of
the opening balance of owners' equity of the subsidiary, the excess amount shall be allocated against
minority interest.
(3) Purchase of the minority stake in the subsidiary
The difference between the long-term equity investments costs acquired by the purchase of minority
interests and the share of the net assets that the subsidiaries have to continue to calculate from the date
of purchase or the date of consolidation in proportion to the new shareholding ratio, and the difference
between the disposal of the equity investment without losing control over its subsidiary and the
disposal of the long-term equity investment corresponding to the share of the net assets of the
subsidiaries from the date of purchase or the date of consolidation, shall be adjusted to the capital
reserve (or share premium), if the capital reserve is not sufficient, any excess will be adjusted to
retained earnings.
(4) Treatment of loss of control of subsidiaries
Where the Company loses its control over the original subsidiary due to the disposal of some equity
investment or other reasons, the remaining equity is re-measured at its fair value on the date when the
Company loses its control. The difference between the sum of the consideration acquired due to the
disposal of the equity and the fair value of the remaining equity, and the Company's share in the sum
of carrying value of net assets of the original subsidiary and goodwill calculated on an ongoing basis
from the acquisition date based on the original shareholding proportion is recognised in the investment
income for the current period when the control is lost.
Other comprehensive income related to equity investments in the original subsidiary should be
181
Joincare Pharmaceutical Group Annual Report 2023
accounted for using the same basis as the direct disposal of related assets or liabilities of the original
subsidiary upon loss of control. Any equity changes related to the original subsidiary under the equity
method of accounting should be transferred to the profit or loss for the current period when control
ceases.
(5) Treatment of disposal through several transactions until the loss of control of subsidiaries
Where the Company disposes of the equity interests in the subsidiary through several transactions until
it loses control, and the transaction terms, conditions and economic effects satisfy one or several of
the following circumstances, such several transactions shall be deemed as a basket of transactions in
accounting treatment:
① Such transactions are entered into simultaneously or upon the consideration of the mutual impacts;
② No complete commercial result will be realised without such transactions as a whole;
③ The occurrence of one transaction depends on the occurrence of at least another transaction;
④ The result of an individual transaction is not economical, but it would be economical after taken
into account of other transactions in the series.
In the separate financial statements, where the Company disposes of the equity investment in the
subsidiary through several transactions until the loss of control, and such transactions are not regarded
as “a basket of transactions”, the carrying amount of the long-term equity investment involving each
disposal will be carried forward, with the difference between the disposal price and the carrying
amount of the long-term equity investment involving the disposal being accounted into the investment
incomes for the current period; where the transactions constitute “a basket of transactions”, the
difference between the consideration of each disposal and the carrying amount of the long-term equity
investment involving the disposal before the loss of the control, is recognised as the other
comprehensive income and will be carried forward to the profit or loss for the current period when the
control is lost.
In the consolidated financial statements, where the Company disposes of the equity investment in the
subsidiary through several transactions until the loss of control, the measurement of the remaining
equity interest and the accounting treatment of the losses and gains of the disposal will be made with
reference to the “Treatment of loss of control of subsidiaries” as described above. For the difference
between the consideration of each disposal before the loss of the control and the carrying amount of
the Company's share in the net assets involving the disposal of such subsidiary calculated on an on-
going basis from the acquisition date, the treatment will be made as follows:
① In case the transactions are “a basket of transactions”, such difference is recognised as the other
comprehensive income and will be carried forward to the profit or loss for the current period when the
control is lost.
② In case the transactions are not “a basket of transactions”, such difference is accounted into the
capital reserve (or share premium) as equity, and shall not be carried forward to the profit or loss for
the current period when the control is lost.
8. Classification of joint arrangement and accounting treatment for joint operation
A joint arrangement is an arrangement jointly controlled by two or more parties. The Company's joint
arrangement is classified into the joint operation and the joint venture.
(1) Joint operation
182
Joincare Pharmaceutical Group Annual Report 2023
A joint operation is a joint arrangement whereby the Company have rights and obligations to the
relevant assets and liabilities.
The Company recognises the following items in relation to its interest in a joint operation, and makes
corresponding accounting treatment in accordance with relevant accounting standards:
A. The solely-held assets, and the share of any assets held jointly;
B. The solely-assumed liabilities, and its share of any liabilities incurred jointly;
C. Its revenue from the sale of its share of the output arising from the joint operation;
D. Its share of the revenue from the sale of the output by the joint operation;
E. The solely-incurred expenses, including its share of any expenses incurred jointly.
(2) Joint ventures
A joint venture is a joint arrangement whereby the Company only entitled to the net assets of the
arrangements.
The Company's investment in joint ventures is accounted for using the equity method according to the
rules of the long-term equity investment.
9. Determination of cash and cash equivalents
Cash and cash equivalents of the Company include cash on hand, bank deposit readily available for
payment and those investments held by the Company that are short-term (normally due in three months
since the acquisition date), highly liquid, readily convertible into known amounts of cash and subject
to an insignificant risk of change in value.
10. Foreign currency transactions and translation of financial statements in foreign currency
(1) Foreign currency transactions
Foreign currency transactions incurred by the Company are translated to the functional currency at the
spot exchange rates on the date of the transactions upon initial recognition.
Monetary items denominated in foreign currencies are translated to functional currency at the spot
exchange rate on the balance sheet date. Exchange differences arising from the differences between
the spot exchange rate prevailing at the balance sheet date and those spot rates used on initial
recognition or at the previous balance sheet date are recognised in profit or loss for the current period;
non-monetary items denominated in foreign currencies that are measured at historical cost are
translated using the spot exchange rate on the transaction date. Non-monetary items denominated in
foreign currencies that are measured at fair value are translated using the spot exchange rate on the
date the fair value is determined; the resulting exchange differences between the amounts in functional
currency upon translation and in original functional currency are recognised in profit or loss for the
current period.
(2) Translation of financial statements in foreign currency
At the balance sheet date, when translating the foreign currency financial statements of overseas
subsidiaries, the assets and liabilities in the balance sheet are translated at the spot exchange rate at the
balance sheet date; all items except for “Retained earnings” of the shareholders' equity are translated
at the spot exchange rate on the transaction date.
The revenue and expenses in profit or loss are translated at the spot exchange rate on the transaction
date.
183
Joincare Pharmaceutical Group Annual Report 2023
All items in the statement of cash flows are translated at the spot exchange rate on the transaction date.
The effect of exchange difference on cash is adjusted and separately presented as “Effect of changes
in foreign exchange rates on cash and cash equivalents” in the cash flow statement.
The exchange differences arising from translation of the financial statements are presented as the
“other comprehensive income” in the shareholders' equity of the balance sheet.
When the Company disposes of the overseas operation and loses control, the differences arising from
the translation of the financial statements in foreign currency that have been presented under the
shareholders' equity in the balance sheet and involving such overseas operation are carried forward to
the profit or loss for the current period in whole or in the proportion of the disposal of the overseas
operation.
11. Financial instruments
Financial instruments are contracts creating financial assets of a party and financial liabilities or equity
instruments of other parties.
(1) Recognition and Derecognition of financial instruments
A financial asset or financial liability is recognised when the Company becomes one of the parties
under a financial instrument contract.
The financial assets will be derecognised if any of the following conditions is satisfied:
① The contractual right to receive the cash flow of the financial assets is terminated;
② The financial assets have been transferred and the transferred financial asset satisfies the following
conditions of derecognition.
If the current obligation of a financial liability (or a part thereof) has been discharged, the financial
liability (or that part of the financial liability) will be derecognised. When the Company (as the debtor)
and the lender have signed an agreement which uses a new financial liability to replace the existing
financial liability, and the contract terms of the new financial liability are substantially different with
the original financial liability, the original financial liability shall be de-recognised, and the new
financial liability shall be recognised at the same time.
The regular transactions of the financial assets are recognised and derecognised at the transaction date.
(2) Classification and measurement of financial assets
The Company classifies financial assets into three categories: financial assets at amortised cost;
financial assets at fair value through other comprehensive income; and financial assets at fair value
through profit or loss based on the business model for managing financial assets and their contractual
cash flow characteristics upon initial recognition.
Financial assets are initially recognized at fair value. For financial assets at fair value through profit
or loss, transaction costs are directly recognized in the profit or loss for the current period. For other
categories of financial assets, transaction costs are included in the initial recognition amount. Accounts
receivable arising from the sale of products or services, which do not include or consider a significant
financing component, are initially recognized at the expected amount to be received.
Financial assets at amortised cost
The Company shall classify financial assets that meet the following conditions and are not designated
as financial assets at fair value through profit or loss for the current period as financial assets measured
at amortised cost:
184
Joincare Pharmaceutical Group Annual Report 2023
The Company's business model for managing the financial assets is to collect contractual
cash flow;
The terms of the financial asset contract stipulate that the cash flow generated on a
specific date is only the payment for principal and interest accrued on the outstanding
principal.
After initial recognition, these financial assets are measured at amortised cost using the effective
interest method. Gains or losses arising from financial assets which are measured at amortised cost
and not part of any hedging relationship are included in the profit and loss of the current period upon
de-recognition, amortisation using the effective interest method, or impairments recognition.
Financial assets at fair value through other comprehensive income
The Company shall classify financial assets that meet the following conditions and are not designated
as financial assets measured at fair value through profit or loss for the current period as financial assets
measured at fair value through other comprehensive income
The Company's business model for managing the financial assets is both to collect
contractual cash flows and to sell the financial assets;
The terms of the financial asset contract stipulate that the cash flow generated on a
specific date is only the payment for principal and interest accrued on the outstanding
principal
After initial recognition, these financial assets are subsequently measured at fair value. Interest,
impairment losses or gains and exchange losses and gains calculated using the effective interest
method are recognised in profit or loss for the current period, while other gains or losses are recognised
in other comprehensive income. The cumulative profit or loss previously included in other
comprehensive income will be transferred to the profit or loss for the current period upon
derecognition of the financial assets.
Financial assets at fair value through profit or loss for the current period
In addition to the above financial assets which are measured at amortised cost or at fair value a through
other comprehensive income, the Company classifies all other financial assets as financial assets
measured at fair value through profit or loss for the current period. When initial recognition, in order
to eliminate or significantly reduce accounting mismatches, the Company irrevocably designates some
financial assets that should have been measured at amortised cost or at fair value through other
comprehensive income as financial assets at fair value through profit or loss for the current period.
After initial recognition, these financial assets are subsequently measured at fair value, and the profits
or losses (including interest and dividend income) generated from which are recognised in profit or
loss for the current period, unless the financial assets are part of the hedging relationship.
However, with respect to non-trading equity instrument investments, the Company may irrevocably
designate them as financial assets measured at fair value through other comprehensive income at initial
recognition. The designation is made on the basis of individual investment, and the relevant investment
conforms to the definition of equity instruments from the issuer's point of view.
After initial confirmation, financial assets are subsequently measured at fair value. Dividend income
that meets the requirements is recognised in profit and loss, and other gains or losses and changes in
fair value are recognised in other comprehensive gains. When derecognised, the accumulated gains or
losses previously recognised in other comprehensive gains are transferred from other comprehensive
gains to retained earnings.
The business model of managing financial assets refers to how the Company manages financial assets
185
Joincare Pharmaceutical Group Annual Report 2023
to generate cash flow. The business model decides whether the source of cash flow of financial assets
managed by the Company is to collect contract cash flow, sell financial assets or both of them. Based
on objective facts and the specific business objectives of financial assets management decided by key
managers, the Company determines the business model of financial assets management.
The Company evaluates the characteristics of the contract cash flow of financial assets to determine
whether the contract cash flow generated by the relevant financial assets on a specific date is only to
pay principal and interest based on the amount of unpaid principal. Among them, principal refers to
the fair value of financial assets at the time of initial confirmation; interest includes the consideration
of time value of money, credit risk related to the amount of unpaid principal in a specific period, and
other basic borrowing risks, costs and profits. In addition, the Company evaluates the terms and
conditions of the contracts that may lead to changes in the time distribution or amount of cash flow in
financial asset contracts to determine whether they meet the requirements of the above contract cash
flow's characteristics.
Only when the Company changes its business model of managing financial assets, all the financial
assets affected shall be reclassified on the first day of the first reporting period after the business model
changes, otherwise, financial assets shall not be reclassified after initial confirmation.
(3) Classification and measurement of financial liabilities
On initial recognition, the Company's financial liabilities are classified into financial liabilities at fair
value through profit or loss and financial liabilities at amortised cost. For financial liabilities not
classified as financial liabilities at fair value through profit or loss, the relevant transaction costs are
included in the initially recognised amount.
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and
financial liabilities designated at fair value through profit or loss upon initial recognition. Such
financial liabilities are subsequently measured at fair value, all gains and losses arising from changes
in fair value and dividend and interest expense relative to the financial liabilities are recognised in
profit or loss for the current period.
Financial liabilities at amortised cost
Other financial liabilities are subsequently measured at amortised cost using the effective interest
method; gains and losses arising from derecognition or amortisation is recognised in profit or loss for
the current period.
Distinction between financial liabilities and equity instruments
The financial liability is the liability that meets one of following criteria:
① Contractual obligation to deliver cash or other financial instruments to another entity.
② Under potential adverse condition, contractual obligation to exchange financial assets or financial
liabilities with other parties.
③ A contract that will or may be settled in the entity's own equity instruments and is a non-derivative
for which the entity is or may be obliged to deliver a variable number of the entity's own equity
instruments.
186
Joincare Pharmaceutical Group Annual Report 2023
④ A derivative that will or may be settled other than by the exchange of a fixed amount of cash or
another financial asset for a fixed number of the entity's own equity instruments.
An equity instrument is any contract that evidences a residual interest in the assets of an entity after
deducting all of its liabilities.
If the Company cannot unconditionally avoid fulfilling a contractual obligation by delivering cash or
other financial assets, the contractual obligation meets the definition of financial liability.
If a financial instrument must or are able to be settled by the Company's own equity instrument, the
Company should consider whether the Company's equity instrument as the settlement instrument is a
substitute of cash or other financial assets or the residual interest in the assets of the Company after
deducting all of its liabilities. If the former, the tool is the Company's financial liability; if the latter,
the tool is the equity instrument of the Company.
(4) Derivative financial instruments and embedded derivatives
The Company's derivative financial instruments include forward foreign exchange contracts, and are
initially measured at fair value on the date of the derivative contract signed and are subsequently
measured at fair value. A derivative with positive fair value shall be recognised as an asset, otherwise
that with negative fair value shall be recognised as a liability. Any profit or loss arising from changes
of fair value and not compliance with the accounting provision of hedge shall be recognised as profit
or loss for current period.
For the hybrid instrument which includes embedded derivatives, where the host contract is a financial
asset, requirements in relation to the classification of financial assets shall apply to the hybrid
instrument as a whole. Where the host contract is not a financial asset, and the hybrid instrument is
not measured at fair value and its changes are included in the profit and loss for the current period for
accounting purposes, there is no close relation between the embedded derivatives and the host contract
in terms of economic features and risks, and the instrument that has the same condition with the
embedded derivatives and exists independently meets the definition of derivatives, the embedded
derivatives shall be separated from the hybrid instrument and treated as a separate derivative financial
instrument. If it is unable to separately measure the embedded derivatives upon acquisition or on the
subsequent balance sheet date, the hybrid instrument shall be entirely designated as the financial assets
or financial liabilities measured at fair value and whose movements are included in the profit and loss
of the current period.
(5) Fair value of the financial instrument
The methods for determining the fair value of the financial assets or financial liabilities are set out in
Note III.12
(6) Impairment of financial assets
The following items are subject to impairment accounting and recognition of loss allowances based
on expected credit losses:
A. Financial assets measured at amortised cost;
B. Receivables and debt instrument investments that are measured at fair value through other
comprehensive income;
C. Contract assets as defined in the Accounting Standard for Business Enterprises No. 14 – Revenue;
D. Lease receivables;
187
Joincare Pharmaceutical Group Annual Report 2023
E. Financial guarantee contracts, except for those carried at fair value through profit or loss, those
which the transfer of financial assets does not satisfy the derecognition condition or those formed as a
result of continued involvement of the transferred financial assets.
Measurement of expected credit loss (ECLs)
The ECL is a weighted average of credit losses on financial instruments weighted at the risk of default.
Credit loss is the difference between all receivable contractual cash flows according to the contract
and all cash flows expected to be received by the Company discounted to present value at the original
effective interest rate, i.e. the present value of all cash shortfalls.
The Company takes into account reasonable and valid information on past events, current conditions
and forecasts of future economic conditions, with the risk of default as the weight, to calculate the
probabilistic weighted amount of the present value of the difference between the cash flow receivable
from contract and the expected cash flow to be received and recognise the expected credit loss.
The Company respectively measures the expected credit losses of financial instruments by different
stages. If the credit risk of the financial instrument does not increase significantly since the initial
recognition, it would be classified in Stage 1, the Company would measure loss allowance according
to the future 12-month expected credit losses. If the credit risk of a financial instrument has
significantly increased since the initial recognition but not yet credit-impaired, it would be classified
in Stage 2, the Company would measure loss allowance according to the lifetime expected credit losses
of that instrument. If the financial instrument has credit-impaired since the initial recognition, it would
be classified in Stage 3, and the Company would measure loss allowance according to the lifetime
expected credit losses of that instrument.
For financial instruments with lower credit risk on the balance sheet date, the Company assumes that
its credit risk has not increased significantly since the initial recognition, and measures loss allowance
according to the 12-month expected credit losses.
Lifetime ECLs are the ECLs that result from all possible default event over the expected life of a
financial instrument. Future 12-month ECLs are the portion of ECL that results from default events
on a financial instrument that are possible within the 12 months after the balance sheet date (or the
expected life of the instrument, if it is less than 12 months).
The maximum period considered when estimating ECLs is the maximum contractual period over
which the Company are exposed to credit risk (including the option to renew).
For the financial instruments classified in Stage 1 and Stage 2 and those with lower credit risk, the
Company would measure the interest income by the book balance (that is, without deduction for credit
allowance) and the effective interest rate. For financial instruments classified in Stage 3, the Company
would measure the interest income by the amortised cost (that is, book balance less impairment
allowance) and the effective interest rate.
For accounts receivable such as notes receivable, trade receivables, receivables financing, other
receivables, contract assets, etc., if the credit risk characteristics of a particular customer significantly
differ from those of other customers in the portfolio, or if there is a significant change in the credit risk
characteristics of that customer, the Company individually provides for credit loss for that receivable.
Apart from individually providing for credit loss for specific receivables, the Company divides
receivables into portfolios based on credit risk characteristics and calculates credit losses on a portfolio
basis.
Notes receivable, trade receivables and contract assets
For notes receivable, trade receivables and contract assets, regardless whether it has significant
188
Joincare Pharmaceutical Group Annual Report 2023
financing components or not, the Company has always measured its loss allowance at an amount equal
to lifetime expected credit losses.
If the expected credit losses of an individual financial asset or contract asset cannot be estimated at a
reasonable cost, the Company classifies notes receivable, trade receivables or contract assets into
portfolios based on credit risk characteristics, and measures expected credit losses on portfolios basis
to determine portfolios by the following basis:
A. Notes receivable
Bills receivable portfolio 1: Bank acceptance bills
Bills receivable portfolio 2: Commercial acceptance bills
B. Accounts receivables
Accounts receivables portfolio 1: Amount due from domestic customers
Accounts receivables portfolio 2: Amount due from overseas customers
Accounts receivables portfolio 3: Receivables of consolidated companies
Contract assets
Contract assets portfolio: Sale of products
For notes receivable or contract assets classified as portfolio, the Company measures expected credit
losses based on the risk exposures of default and lifetime expected credit losses rate with reference to
the historical credit loss experience, current situation and forecasts of future economic conditions.
For accounts receivables classified as portfolio, the Company measures expected credit losses through
preparing a table of concordance between the aging of trade receivables and lifetime expected credit
losses rate with reference to the historical credit loss experience, current situation and forecasts of
future economic conditions. The aging of accounts receivable is calculated from the date of recognition.
Other receivables
The Company classifies other receivables into certain portfolios based on credit risk characteristics,
and measures expected credit losses on portfolios basis to determine portfolios by the following basis:
Other receivables portfolio 1: Receivables of export tax refund
Other receivables portfolio 2: Receivables of deposits under guarantee and security deposits
and lease expenses
Other receivables portfolio 3: Other receivables
Other receivables portfolio 4: Receivables of consolidated companies
For other receivables classified as portfolio, the Company measures expected credit losses based on
the risk exposures of default and future 12-month or lifetime expected credit losses rate. For other
receivables categorized by aging, the aging is calculated from the date of recognition.
Long-term receivables
The Company's long-term receivables include finance lease receivables and equity transfer receivables.
The Company classifies finance lease receivables and equity transfer receivables into certain portfolios
based on credit risk characteristics, and measures expected credit losses on portfolios basis to
determine portfolios by the following basis:
A. Finance lease receivables
Portfolio of finance lease receivables: other receivables
189
Joincare Pharmaceutical Group Annual Report 2023
B. Other long-term receivables
Portfolio of other long-term receivables: equity transfer receivables
For finance lease receivables and equity transfer receivables, the Company measures expected credit
losses based on the risk exposures of default and lifetime expected credit losses rate with reference to
the historical credit loss experience, current situation and forecasts of future economic conditions.
For other receivables and long-term receivables other than finance lease receivables and equity transfer
receivables that are classified as portfolio, the Company measures expected credit losses based on the
risk exposures of default and future 12-month or lifetime expected credit losses rate.
Debt investments and other debt investments
For debt investments and other debt investments, the Company measures expected credit losses based
on the nature of investments, counterparties and various types of risk exposures and the risk exposures
of default and future 12-month or lifetime expected credit losses rate.
Assessment of significant increase in credit risk
By comparing the risk of default of financial instruments occurring on the balance sheet date and on
the initial recognition date, the Company determines the relative changes in risk of default over the
expected life of financial instruments and assesses whether the credit risk of financial instruments have
increased significantly since the initial recognition.
When determine whether credit risks have significantly increased since the initial recognition, the
Company considers information that is reasonable and supportable, including forward-looking
information that is available without undue cost or effort. The information considered by the Company
includes:
Failure to make payments of principal or interest on debtors' contractually due dates;
An actual or expected significant deterioration in a financial instrument's external or internal
credit rating (if any);
An actual or expected significant deterioration in the operating results of debtors;
Existing or forecast changes in the technological, market, economic or legal environment that
have significant adverse effect on the debtors' abilities to repay to the Company.
Depending on the nature of the financial instruments, the Company assesses whether credit risks have
significantly increased on either an individual financial instrument basis or a collective financial
instrument basis. When the assessment is performed on a collective financial instrument basis, the
Company can classify the financial instruments based on the shared credit risk characteristics, such as
past due information and credit risk ratings.
The Company determines that the credit risk on a financial instrument has increased significantly if it
is more than 30 days past due.
Credit-impaired financial assets
The Company assesses whether financial assets at amortised cost and debt investments measured at
fair value through other comprehensive income are credit-impaired at balance sheet date. A financial
asset is ‘credit-impaired' when one or more events that have an adverse impact on the estimated future
cash flows of the financial asset have occurred. Evidence that a financial asset is credit-impaired
includes the following observable information:
Significant financial difficulty of the issuer or debtor;
A breach of contract by debtor, such as a default or delinquency in interest or principal
payments;
190
Joincare Pharmaceutical Group Annual Report 2023
For economic or contractual reasons relating to the borrower's financial difficulty, the
Company having granted to the borrower a concession that would not otherwise consider;
It is probable that the borrower will enter bankruptcy or other financial reorganization;
The disappearance of an active market for that financial asset because of financial difficulties.
Presentation of allowance for ECL
The Company re-measures the ECLs on each balance sheet date to reflect changes in the financial
instruments' credit risk since initial recognition, and the increase or reversal of the loss provision
resulted therefrom is recognised as an impairment gain or loss in profit or loss. For financial assets
measured at amortised cost, the loss provision is offset against their carrying amounts in the balance
sheet. For debt investments at FVOCI, the Company recognises the loss provision in other
comprehensive income and does not deduct the carrying amount of the financial assets.
Write-off
The gross carrying amount of a financial asset is written off (either partially or in full) to the extent
that there is no realistic prospect of recovery. A write-off constitutes a derecognition event. This is
generally the case the Company determines that the debtor does not have assets or sources of income
that could generate sufficient cash flows to repay the amounts subject to the write-off. However,
financial assets that are written off could still be subject to enforcement activities in order to comply
with the Company's procedures for recovery of amounts due.
Subsequent recoveries of an asset that was previously written off are recognised as a reversal of
impairment in profit or loss in the period in which the recovery occurs.
(7) Transfer of financial assets
Transfer of financial assets refers to the transfer or delivery of financial assets to the other party (the
transferee) other than the issuer of financial assets.
The Company derecognises a financial asset only if it transfers substantially all the risks and rewards
of ownership of the financial asset to the transferee; the Company should not derecognise a financial
asset if it retains substantially all the risks and rewards of ownership of the financial asset.
The Company neither transfers nor retains substantially all the risks and rewards of ownership, shows
as the following circumstances: if the Company has forgone control over the financial assets,
derecognise the financial assets and verify the assets and liabilities; if the Company retains its control
of the financial asset, the financial asset is recognised to the extent of its continuing involvement in
the transferred financial asset and recognise an associated liability is recognised.
(8) Offsetting financial assets and financial liabilities
When the Company has the legal right to offset recognised financial assets and financial liabilities,
and the legal right can be executed at present, and the Company has a plan to settle the financial assets
and financial liabilities at the same time or at net amount, the financial assets and financial liabilities
can be presented on the balance sheet after offsetting. Except for the above circumstances, financial
assets and financial liabilities cannot be offset and shall be presented separately on the balance sheet.
12. Fair value measurement
The fair value is defined as the price that would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants at the measurement date.
The Company measures the relevant assets or liability at fair value supposing the orderly transaction
of asset selling or liability transferring incurring in a principal market of relevant assets or liabilities.
191
Joincare Pharmaceutical Group Annual Report 2023
In the absence of a principal market for the asset or liability, the Company assumes that the transaction
takes place at the most advantageous market of relevant asset or liability. A principal market (or the
most advantageous market) is the transaction market that the Company can enter into at measurement
date. The Company implements the hypothesis used by the market participants to realise the maximum
economic benefit in assets or liabilities pricing.
If there exists an active market for the financial assets or financial liabilities, the Company uses the
quotation on the active market as its fair value. For those in the absence of active market, the Company
uses valuation technique to recognise its fair value. However, under limited circumstances, the
Company may use all information about the results and operation of the investee obtained after the
date of initial recognition to determine whether cost represents fair value. Cost may represent the best
estimate of fair value of the relevant financial asset within the scope of distribution, and such cost
represents the appropriate estimate of fair value within the scope of distribution.
For non-financial assets measured at fair value, the Company should consider the capacity of the
market participants to put the assets into optimal use thus generating the economic benefit, or the
capacity to sell assets to other market participants who can put the assets into optimal use and generate
economic benefit.
The Company implements the valuation technique suitable for the current condition and supported by
enough available data and other information, gives priority in use of relevant observable inputs, only
the observable inputs cannot be obtained or impracticable before using unobservable inputs.
For the assets and liabilities measured or disclosed at fair value on financial statements, fair value
hierarchies are categorized into three levels as the lowest level input that is significant to the entire
fair value measurement: Level 1: inputs are quoted prices (unadjusted) in active markets for identical
assets and liabilities. Level 2: inputs are inputs other than quoted prices included within Level 1 that
are observable for the asset or liability, either directly or indirectly. Level 3: inputs are unobservable
inputs for the asset or liability.
At each balance sheet date, the Company re-evaluates the assets and liabilities recognised to be
measured at fair value on the financial statements to make sure whether conversion occurs between
fair value hierarchies.
13. Inventories
(1) Classification of inventories
The Company's inventories include raw materials, packaging materials, finished goods, work-in-
progress, low-value consumables, subcontracting materials, merchandise goods, consumable
biological assets and issued goods.
(2) Method of costing
The method of costing of the Company's inventories: Cost of finished goods are measured at planned
cost, and material cost differences are carried forward at the end of the period to adjust planned cost
to actual cost; other inventories are measured at actual cost on acquisition and raw materials received
are accounted for by the weighted-average method; low-value consumables and packaging materials
are amortised in full upon the use.
(3) Determination basis and provision method for decline in value of inventories
On the balance sheet date, the inventories are calculated at the lower of cost and the net realisable
value. When its net realizable value is lower than its cost, a provision for inventory impairment is
made
192
Joincare Pharmaceutical Group Annual Report 2023
The net realizable value is the estimated selling price of inventory minus the estimated costs to
complete, estimated selling expenses, and related taxes. In determining the net realizable value of
inventory, reliable evidence is used as a basis, while also considering the purpose of holding the
inventory and the impact of subsequent events after the balance sheet date.
Provision for inventory impairment is made on an item-by-item basis. For inventory with large
quantities and low unit prices, inventory impairment is provided based on inventory categories. For
inventory related to product lines produced and sold in the same region, with similar or identical final
uses or purposes, and difficult to measure separately from other items, inventory impairment is
combined.
On the balance sheet date, if the factors that previously impaired the value of inventory have
disappeared, the provision for inventory impairment is reversed within the originally provided amount.
(4) Inventory system
The Company maintains a perpetual inventory system.
(5) Amortisation methods of consumables and packaging materials
Low-value consumables and packaging materials of the Company are amortised in full when used.
14. Held for sale and discontinued operations
(1) Recognition and accounting treatment of non-current assets or the disposal group held for
sale
Non-current assets and disposal groups are classified as held for sale if the Company recovers its book
value mainly by selling (including the exchange of nonmonetary assets with commercial substance)
rather than continuing to use it.
The aforesaid non-current assets do not include investment property measured with the basis of fair
value; the biological assets measured with the basis of fair value less selling costs; the assets formed
by employee benefits; financial assets and the right arising from deferred income tax assets and
insurance contracts.
A disposal group is a group of assets to be disposed through sale or other means as a whole in a single
transaction, and liabilities directly associated with those assets that will be transferred in the
transaction. In certain circumstance, disposal groups include the goodwill obtained through business
combination.
Non-current assets and disposal groups that meet the following conditions are classified as held for
sale: according to the practice of disposing of this type of assets or disposal groups in a similar
transaction, a non-current asset or disposal group is available for immediate sale at its present condition;
the sale is likely to occur, that is, a decision has been made on a sale plan and a determined purchase
commitment is made, and the sale is expected to be completed within one year. Where the loss of
control over the subsidiaries is due to the sales of investment in subsidiaries, no matter whether the
Company retains part of the equity investment after selling or not, the investment in subsidiaries shall
be classified as held for sale in the separate financial statements when it satisfies the conditions for
category of held for sale; all assets and liabilities of subsidiaries shall be classified as held for sale in
the consolidated financial statements.
The difference between carrying amount of non-current assets or disposal groups classified as held for
sale and the net amount of fair value less selling costs shall be recognised as impairment loss on assets
upon initial measurement or when such noncurrent assets or disposal groups are remeasured at the
balance sheet date. For the amount of impairment loss on assets recognised in disposal groups, the
193
Joincare Pharmaceutical Group Annual Report 2023
carrying amount of disposal groups' goodwill shall be offset against first, and then offset against the
carrying amount of non-current assets according to the proportion of carrying amount of the individual
non-current assets in the disposal groups.
If on a subsequent balance sheet date, the net amount of the fair value of a held-for-sale disposal group
less its selling costs increases, the amount reduced previously shall be recovered, and reversed in the
asset impairment loss recognised on the noncurrent asset which is applicable to the measurement
requirements of Held-For-Sale Standards after the non-current asset is classified into held-for-sale
category. The reversed amount is credited to current profit or loss. The carrying value of goodwill
which has been offset cannot be reversed.
No depreciation or amortisation is provided for the non-current assets in the held-for-sale and the
assets in the disposal group held for sale. The interest on the liabilities and other costs in the disposal
group held for sale is recognised continuously. As far as all or part of investment in the associates and
joint ventures is concerned, for the part classified into the held-for-sale category, the accounting with
equity method shall be stopped, while the remaining part (which is not classified into the held for- sale
category) shall still be accounted for using the equity method. When the Company loses the significant
influence on the associates and joint venture due to the sale, the use of equity method shall be ceased.
When certain non-current asset or disposal group classified into the held-for-sale category no longer
meets the classification criteria for held-for-sale category, the Company shall stop classifying it into
the held-for-sale category and measure it according to the lower of the following two amounts:
① The carrying amount of the asset of disposal group before it was classified into the held-for-sale
category after being adjusted with the depreciation, amortisation or impairment that could have been
be recognised if it was not classified into the held-for-sale category;
② The recoverable amount.
(2) Determination of discontinued operation
Discontinued operation refers to the component meeting one of the following conditions that has been
disposed of by the Company or classified by the Company into the held-for-sale type and can be
identified separately:
① The component represents an independent principal business or a separate principal business place.
② The component is a part of the related plan for the contemplated disposal of an independent
principal business or a separate principal business place.
③ The component is a subsidiary acquired exclusively for the purpose of resale.
(3) Presentation
The Company presents the non-current assets held for sale and the assets in the disposal group held
for sale under “assets classified as held for sale”, and the liabilities in the disposal group held for sale
under “liabilities classified as held for sale” in the balance sheet.
The Company presents the profit and loss for continuing operation and profit and loss for discontinued
operation in the income statement, respectively. The impairment loss and reversal amount and disposal
profit and loss of the non-current assets held for sale or disposal group not meeting the definition of
discontinued operation will be presented as the profit and loss of continuing operation. The operating
profit and loss (such as impairment loss and reversal amount) and disposal profit and loss of the
discontinued operation will be presented as the profit and loss of the discontinued operation.
194
Joincare Pharmaceutical Group Annual Report 2023
The disposal group proposed for retirement rather than sale and meeting the condition about the
relevant component in the definition of the discontinued operation will be presented as discontinued
operation from the date of retirement.
For the discontinued operation reported in the current period, the information formerly presented as
profit and loss of continuing operation will be presented as the profit and loss of discontinued operation
for the comparable accounting period in the financial statement of the current period. If the
discontinued operation no longer meets the classification criteria for held for- sale category, the
information formerly presented as profit and loss of discontinued operation will be presented as the
profit and loss of continuing operation for the comparable accounting period in the financial statement
of the current period.
15. Long-term equity investment
The long-term equity investment includes the equity investment in the subsidiary, joint ventures and
associates. The investee over which the Company has significant influence is the associates of the
Company.
(1) Determination of initial investment cost
The long-term equity investment resulting from corporate merger: For the long-term equity investment
resulting from merger of companies under the same control, the carrying amount of the ownership
equity of the merged party obtained on the merger date presented in the consolidated financial
statement of the final controlling party will be used as the investment cost. For the long-term equity
investment resulting from merger of companies under different controls, the merger cost will be used
as the investment cost of the long-term equity investment.
The long-term equity investment obtained by other means: For the long-term equity investment
obtained by paying cash, the actually paid purchase price will be used as the initial investment cost.
For the long term equity investment obtained by issuing equity securities, the fair value of the issued
equity securities will be used as the initial investment cost.
(2) Subsequent measurement and recognition method of profit or loss
The investment in subsidiary will be accounted for using cost method, unless the investment meets the
criteria of held-for-sale category. The investment in associates and joint venture will be accounted with
equity method.
For the long-term equity investment accounted for using cost method, except for the price actually
paid upon the investment or the cash dividend or profit in the consideration that has been declared but
not released, the cash dividend or profit declared and distributed by the investee is recognised as the
investment income and recorded into the profit and loss for the current period.
For the long-term equity investment accounted for using equity method, the investment cost of the
long-term equity investment shall not be adjusted if the initial investment cost of the long-term equity
investment is higher than the Company's share in the fair value of the identifiable net value of the
investee at the time of investment; if the initial investment cost of the long-term equity investment is
lower than the Company's share in the fair value of the identifiable net value of the investee at the time
of investment, the carrying amount of the long-term equity investment will be adjusted, with the
difference recorded into the profit and loss for the current period of investment.
When accounted for using the equity method, return on investment and other comprehensive income
are recognised according to the share in the investee's realised net profit or loss and other
comprehensive income respectively, and the carrying amount of the long-term equity investment is
adjusted. The carrying amount of the long-term equity investment will be deducted according to the
195
Joincare Pharmaceutical Group Annual Report 2023
profit distribution declared by the investee or cash dividend attributable to the Company. The carrying
amount of long term equity investment will be adjusted for changes to equity interest attributable to
the owners of the investee other than net profit or loss, other comprehensive income and profit
distribution, and recorded into capital reserve (other capital reserve). The Company's share of the net
profit or loss of the investees will be recognised after adjustment of the net profit of the investees
according to the accounting policy and accounting period of the Company on the basis of fair value of
all identifiable assets of the investee on acquisition.
If the Company is able to exert significant influence or implement joint control (which does not
constitute control) on the investee through additional investment or other reason, the sum of the fair
value of the original equity plus the additional investment cost will be used as the initial investment
cost, which will be accounted for with equity method, on the conversion date. The difference between
the fair value of the original equity on the conversion date and its carrying amount, and the
accumulated change of fair value recorded into other comprehensive income will be transferred into
the profit and loss for the current period, which will be accounted for using equity method.
If an entity loses joint control or has no significant influence over investees due to the elimination of
parts of the equity investment, the surplus equity after disposal shall be recognised in accordance with
“Accounting Standards for Business Enterprises No. 22 – Recognition and Measurement of Financial
Instruments”, and the difference between fair value and carrying amount should be recognised as profit
or loss for current period. Other comprehensive income of original equity investment recognised under
equity method shall be recognised in accordance with the same foundation used by the investees when
dispose the relevant assets or liabilities directly in the termination of equity method. Other changes of
owners' equity related to the original equity investment shall be transferred into profit or loss for
current period.
If an entity loses control over investees due to the elimination of parts of the equity investment, the
surplus owners' equity that is able to implement joint control or have significant influence over
investees shall be measured at equity method and are deemed to be recognised under equity method
since the acquisition date. The surplus owners' equity that are unable to implement joint control or
have no significant influence over investees shall be processed in accordance with “Accounting
Standards for Business Enterprises No. 22 – Recognition and Measurement of Financial Instruments”,
and the difference between fair value and carrying amount at the day of loss of control shall be
recognised as profit or loss for current period.
If the shareholding ratio of the Company is reduced due to the increase of capital of other investors,
and thus the control is lost, but the joint control or significant influence can be exerted on the invested
entity, the Company should recognise net asset according to the new shareholding ratio. The difference
between the original book value of the long-term equity investment corresponding to the decrease in
the shareholding ratio should be included in the current profit and loss; then, according to the new
shareholding ratio, the equity method is used to adjust the investment.
The Company recognises the unrealised profit or loss of intra-transaction between the joint ventures
or associates that belongs to itself according to the proportion of the shares and recognises the
investment income or loss after offset. However, the loss arising from the unrealised intra-transaction
between the Company and investees, which belongs to the impairment loss of assets transferred,
cannot be offset.
(3) Basis of determining common control and significant influence on the investee
Joint control is the contractually agreed sharing of control over an arrangement under which the
decisions relating to any activity require the unanimous consent of the parties sharing control. In
determining whether there is a joint control, the first judge is to determine whether the relevant
196
Joincare Pharmaceutical Group Annual Report 2023
arrangement is controlled collectively by all the parties involved or the group of the parties involved.
Secondly, and then determine whether the decisions related to the basic operating activities should
require the unanimous consent of the parties involved. If the parties involved or the group of the parties
involved must act consistently to determine the relevant arrangement, it is considered that the parties
involved or the group of the parties involved control the arrangement. If two or more parties involve
in the collectively control of certain arrangement, it shall not be considered as joint control. Protection
of rights shall not be considered in determining whether there is joint control.
Significant influence refers to the power to participate in the decision making process for financial and
operational policies of the investees without control or common control over the formulation of such
policies. When determining whether it has significant influence over the investee, the influence of the
voting shares of the investee held by the investor directly and indirectly and the potential voting rights
held by the investor and other parties which are exercisable in the current period and converted to the
equity of the investee, including the warrants, share options and convertible bonds that are issued by
the investee and can be converted in the current period, shall be taken into account.
When the Company owns directly or indirectly through its subsidiaries more than 20% (including 20%)
but less than 50% of the voting shares of the investee, it is generally considered to have significant
influence over the investee, unless there is clear evidence that it cannot participate in the production
and operation decisions of the investee and does not have a significant influence under such
circumstances. When the Company owns less than 20% (excluding) of the voting shares of the investee,
it is generally not considered to have significant influence on the investee unless there is clear evidence
that it can participate in the production and operation decisions of the investee and have significant
influence under such circumstances.
(4) Held-for-sale equity investment
Refer to Note III. 14 for the relevant accounting treatment of the equity investment to joint ventures
or associates all or partially classified as assets held for sale.
The surplus equity investments that are not classified as assets held for sale shall be accounted for
using equity method.
The equity investment to joint ventures or associates already classified as held for sale no longer meets
the conditions of assets held for sale shall be adjusted retroactively using equity method from the date
of being classified as assets held for sale.
(5) Impairment test and impairment provision
Refer to note III. 23 for investment to subsidiaries, associates and joint ventures and the impairment
provision of assets.
16. Investment properties
Investment properties are properties held to earn rental or capital appreciation or both. The investment
properties of the Company include land use rights that have already been leased out, land use rights
that are held for the purpose of sale after capital appreciation, buildings that have already been leased
out, etc.
Investment properties of the Company are measured initially at cost upon acquisition, and subject to
depreciation or amortisation in the relevant periods according to the relevant provisions on fixed assets
or intangible assets.
The Company adopts the cost model for subsequent measurement of the investment properties. The
method for asset impairment provision is set out in note III. 23.
197
Joincare Pharmaceutical Group Annual Report 2023
The balance after the disposal income from the disposal, transfer, scrapping or destruction of the
investment properties deducts the book value and the relevant taxes shall be recorded into the profit
and loss for the current period.
17. Fixed asset
(1) Conditions for recognition of fixed assets
The Company's fixed assets represent the tangible assets held by the Company using in the production
of goods, rendering of services, rent and for operation and administrative purposes with useful life
over one year.
The fixed asset can be recognised only when the economic benefit related to the fixed asset is probable
to flow into the company and the cost of the fixed asset can be reliably measured.
The Company's fixed assets are initially measured at the actual cost at the time of acquisition.
(2) Method of depreciation
The Company adopts the straight-line method to provision for depreciation. Depreciation of fixed
assets begins when they reach the status of intended use, and ceases to be depreciated when they are
derecognized or classified as non-current assets held for sale. Without taking into account the provision
for impairment, the Company determines the annual depreciation rates of various types of fixed assets
according to the type of fixed assets, estimated useful life and estimated residual value as follows:
Category Useful years (year) Annual depreciation Residual rate %
Properties and Buildings 20 4.5%-4.75% 5%-10%
Machine and equipment 10 9%-9.5% 5%-10%
Transportation equipment 5 18%-19% 5%-10%
Electric equipment and others 5-10 18%-19% 5%-10%
Where, for the fixed assets for which depreciation provision is made, to determine the depreciation
rate, the accumulated amount of the fixed asset depreciation provision that has been made shall be
deducted.
(3) Refer to note III. 23 for the impairment testing and the impairment provision of fixed assets.
(4) Recognition basis, valuation and depreciation method of financial leased fixed assets
When the Company's leased fixed assets meet one or more of the following criteria, it is recognized
as finance leased fixed assets:
① At the expiration of the lease term, the ownership of the leased assets is transferred to the Company.
② The Company has the option to purchase leased assets. The agreed purchase price is expected to
be much lower than the fair value of the leased asset when the option is exercised. Therefore, it can be
reasonably determined that the Company will exercise this option on the lease start date.
③ Even if the ownership of the asset is not transferred, the lease term occupies most of the useful life
of the leased asset.
④ The present value of the Company's minimum lease payment on the lease start date is almost
equivalent to the fair value of the leased assets on the lease start date.
⑤The leased assets are of special nature, and only our company can use them if they don't undergo
major transformation.
198
Joincare Pharmaceutical Group Annual Report 2023
For fixed assets leased by finance leases, the lower of the fair value of the leased assets on the lease
start date and the present value of the minimum lease payment shall be the entry value. The minimum
lease payment is taken as the entry value of the long-term payable, and the difference is taken as the
unrecognized financing expense. In the process of lease negotiation and signing of the lease contract,
the initial direct costs attributable to the lease item, such as handling fees, attorney fees, travel expenses,
stamp duty, etc., are included in the value of the leased asset. The unrecognized financing costs shall
be amortized by the effective interest method during each period of the lease term.
The fixed assets acquired by finance lease adopt the same policy as self-owned fixed assets to calculate
the depreciation of leased assets. If it can be reasonably determined that the ownership of the leased
asset will be obtained at the end of the lease term, depreciation shall be accrued on the useful life of
the leased asset; if it cannot be reasonably determined that the ownership of the leased asset will be
obtained at the end of the lease term, depreciation is accrued in the shorter of the lease period and the
useful life of the leased asset.
(5) The Company reviews the useful life and estimated net residual value of fixed asset and the
depreciation method applied annually at each of the period end.
The useful lives of fixed asset are adjusted if their expected useful lives are different from the original
estimates; the estimated net residual values are adjusted if they are different from the original estimates.
(6) Overhaul costs
The overhaul costs occurred in regular inspection of f are recognised in the cost of property, plant and
equipment if there is undoubted evidence to confirm that they meet the recognition criteria of fixed
assets, otherwise, the overhaul costs are recognised in profit or loss for the current period. Property,
plant and equipment are depreciated during the intervals of the regular overhaul.
18. Construction in progress
Construction in progress is measured at actual cost. Actual cost comprises necessary project
expenditure incurred during construction, borrowing cost that are eligible for capitalisation and other
necessary cost incurred to bring the fixed assets ready for their intended use.
Basis for transferring construction in progress to fixed assets is as follows:
Category Basis for transferring construction in progress to fixed assets
(1) Main construction project and supporting works have been substantially completed. (2)
Construction works have met the predetermined design requirements, verified and accepted by survey,
design, construction, supervision, and other units. (3) Approved by fire safety, land administration, and
Buildings and urban planning departments. (4) If GMP certification is required, it must pass the GMP on-site
structures inspection and receive a GMP compliance inspection report. (5) For construction projects that have
reached the predetermined status of use but have not yet undergone final settlement, fixed assets are
transferred based on the estimated value according to the actual project cost from the date of reaching
the predetermined usable state.
Production and (1) The relevant equipment and other supporting facilities have been installed. (2) The equipment has
ancillary been debugged and can maintain normal and stable operation for a period of time. (3) The production
equipment equipment is capable of consistently producing qualified products for a period of time. (4) The
requiring equipment has been verified and accepted by the asset management personnel and users. (5) If GMP
installation and certification is required, it must pass the GMP on-site inspection and receive a GMP compliance
debugging inspection report.
199
Joincare Pharmaceutical Group Annual Report 2023
For provision for impairment of construction in progress, refer to note III. 23.
In the balance sheet, the ending balance of construction materials is presented under “construction in
progress”.
19. Borrowing costs
(1) Recognition principle of capitalisation of borrowing costs
For borrowing costs that are directly attributable to the acquisition, construction or production of a
qualifying asset, they shall be capitalised and included in the cost of related assets; other borrowing
costs are recognised as expenses and included in profit or loss when incurred. Capitalisation of such
borrowing costs can commence only when all of the following conditions are satisfied:
① Expenditures for the asset incurred, capital expenditure includes the expenditure in the form of
cash payment, transfer of non-cash assets or the interest bearing liabilities for the purpose of acquiring
or constructing assets eligible for capitalisation;
② Borrowing costs incurred;
③ Activities relating to the acquisition, construction or production of the asset that are necessary to
prepare the asset for its intended use or sale have commenced.
(2) Capitalisation period of borrowing costs
Capitalisation of such borrowing costs ceases when the qualifying assets being acquired, constructed
or produced become ready for their intended use or sale. The borrowing cost incurred after that is
recognised as an expense in the period in which they are incurred and included in profit or loss for the
current period.
Capitalisation of borrowing costs is suspended during periods in which the acquisition, construction
or production of a qualifying asset is interrupted abnormally and when the interruption is for a
continuous period of more than 3 months; the borrowing costs in the normally interrupted period
continue to capitalise.
(3) Calculation of the capitalisation rate and amount of borrowing costs
The interest expense of the specific borrowings incurred at the current period, deducting any interest
income earned from depositing the unused specific borrowings in bank or the investment income
arising from temporary investment, shall be capitalised. The capitalisation rate of the general
borrowing is determined by applying the weighted average effective interest rate of general
borrowings, to the weighted average of the excess amount of cumulative expenditures on the asset
over the amount of specific borrowings.
During the capitalisation period, exchange differences on foreign currency special borrowings shall
be capitalised; exchange differences on foreign currency special borrowings shall be recognised as
current profits or losses.
200
Joincare Pharmaceutical Group Annual Report 2023
20. Biological assets
(1) Determination of biological assets
Biological assets refer to assets comprising living animals and plants. No biological asset shall be
recognised unless it meets the conditions as follows simultaneously:
① An enterprise possesses or controls the biological asset as a result of past transaction or event;
② The economic benefits or service potential concerning this biological asset are likely to flow into
the enterprise;
③ The cost of this biological asset can be measured reliably.
(2) Classification of biological assets
The Company’s biological assets are consumable biological assets which include traditional Chinese
medical herbal plant species.
The consumable biological assets refer to the biological assets held for sale, or biological assets to be
harvested as agricultural products in the future, consisting of growing traditional Chinese medical
herbal plant species. The consumable biological asset is initially measured at cost. The cost of any
consumable biological assets by way of self-planting, self-cultivating, self-breading is the necessary
cost directly attributable to this asset prior to the harvest, consisting of borrowing costs that meet the
conditions of capitalisation. The subsequent expenses for the maintenance, protection and cultivation
of a consumable biological asset after the harvest shall be included in the current profits or loss.
The cost of a consumable biological asset shall, at the time of harvest or sale, be carried over at its
book value by the weighted average method.
(3) Impairment of biological assets
If the net realisable value of the consumable biological assets is lower than their carrying amount,
provision of impairment loss is made and recognised in the profit or loss for the current period as the
excess of the carrying amount over the net realisable value. If the factors affecting the impairment of
consumable biological assets no longer exist, the amount of write-down shall be resumed and shall be
reversed from the original provision for the impairment loss before being recognised in the profit or
loss for the current period.
21. Intangible assets
An intangible asset is an identifiable non-monetary asset without physical substance owned or
controlled by the Company. An intangible asset is recognised only when all of the following conditions
are satisfied: It is probable that the economic benefits associated with the intangible assets will flow
to the enterprise; The cost of the intangible asset can be reliably measured. Intangible assets are
initially measured at actual cost.
The Company's intangible assets include land use rights, patents and proprietary technologies,
software, trademark rights, etc.
201
Joincare Pharmaceutical Group Annual Report 2023
Intangible assets are initially measured at historical cost, and the Company shall make judgement to
determine the useful life of intangible assets upon acquisition. Intangible assets with finite useful life
are amortised in the profit or loss over the estimated useful life, using the method that reflects the
expected realisation of economic benefits associated with the asset, and if the expected realisation
cannot be reliably determined, it is amortised using the straight-line method. Intangible assets with
indefinite useful life is not amortised.
Amortisation of intangible assets with finite useful life is as follows:
Basis in determination
Category Useful life Amortisation method Note
of useful life
Land use rights 30 to 50 years Land use period Straight-line method
Patents and proprietary Shorter of estimated benefit period
1 to 10 years Straight-line method
technologies and patent validity period
software 2 to 10 years Estimated benefit period Straight-line method
Shorter of estimated benefit period
Trademark rights 5 years Straight-line method
and trademark validity period
other 10 years Estimated benefit period Straight-line method
The useful life for an intangible asset with a finite useful life and the method of amortisation are
reviewed at least once at the end of each financial year. If the useful life and amortisation method for
the intangible assets are different from the previous estimate, the change of amortisation is recognised
prospectively as the change of accounting estimate.
When the Company estimates an intangible asset can no longer bring future economic benefits to the
Company at the end of a period, the carrying amount in which should be reversed to profit or loss for
the current period.
Please refer to note III. 23 for the provision of impairment of intangible assets.
22. Research and development expenditures
The research and development (R&D) expenses of our company consist of expenses directly related
to R&D activities, including salaries of R&D personnel, direct input costs, depreciation and
amortization of long-term assets, equipment debugging costs, amortization of intangible assets,
expenses for outsourcing research and development, clinical trial expenses, and other expenses.
Among these, the salaries of R&D personnel are allocated to R&D expenses based on project hours.
Equipment, production lines, and premises shared between R&D activities and other production
operations are allocated to R&D expenses based on the proportion of hours or area utilized.
Expenditures on an internal research and development project are classified into expenditures on the
research phase and expenditures on the development phase.
Expenditures on the research phase shall be recognised in profit or loss for the current period when
incurred.
Expenditures on the development phase will be capitalised only when all of the following conditions
are satisfied: it is technically feasible to complete the intangible asset so that it will be available for
use or sale; the Company intends to complete the intangible asset and use or sell it; it can be
demonstrated how the intangible asset will generate economic benefits, including proving that the
intangible assets or the products produced by it will have markets, or the intangible assets for internal
202
Joincare Pharmaceutical Group Annual Report 2023
use will be useful; there are adequate technical, financial and other resources to complete the
development and the Company is able to use or sell the intangible assets; and expenditures on the
development phase attributable to the intangible assets can be reliably measured. The development
expenditures that do not satisfy the above conditions shall be recognised in profit or loss for the current
period.
Our research and development projects enter the development stage after meeting the above conditions
and forming the project through the technical and economic feasibility studies.
Capitalised expenditures on the development phase are shown as development expenditures on the
balance sheet and reclassified as intangible assets on the date the project meets the intended purpose.
Capitalisation conditions for specific research and development projects are as follows:
① For research and development projects that are not required to obtain clinical approvals, the
period from the beginning of research and development to the pilot phase is treated as the research
phase, and all expenditures shall be recognised in profit or loss for the current period when incurred;
the period from the pilot phase to the obtaining of production approvals is treated as the development
phase, and all expenditures shall be recognised as development expenditures and reclassified as
intangible assets after the obtaining of production approvals.
② For research and development projects that require clinical approval, the period from the
beginning of research and development to the obtaining of clinical approval is treated as the research
phase, and all expenditures incurred shall be recognised in profit or loss for the current period when
incurred; the period from the obtaining of clinical approval to the obtaining of production approval is
treated as the development phase, and the expenditures shall be recognised as development
expenditures and reclassified as intangible assets after the obtaining of production approval.
③ The purchase price of the purchased external technology or formula is recognized as development
expenditures, and subsequent research and development expenditures are accounted for in accordance
with ① and ② above.
④ The Company reviews the latest research and development status of each project at the end of
each year and if the research and development project no longer qualifies for the development stage,
the corresponding development expenditure are recognised in profit or loss for the current period.
⑤ Where it is impossible to differentiate the expenditures on the research phase and the expenditures
on the development phase, all the research and development expenditures are recognised in profit or
loss for the current period.
Please refer to note III.23 for the impairment testing methodology and impairment provision for
intangible assets.
23. Impairment of assets
203
Joincare Pharmaceutical Group Annual Report 2023
The impairment of subsidiaries, associates and joint ventures in the long-term equity investments,
investment properties subsequently measured at cost, fixed assets, construction in progress, right-of-
use assets, intangible assets, etc. (Excluding inventories, deferred income tax assets and financial
assets) are determined as follows:
At the balance sheet date, the Company determines whether there may be evidence of impairment, if
there is any, the Company will estimate the recoverable amount for impairment, and then test for
impairment. For goodwill arising from a business combination, intangible assets with indefinite useful
life and the intangible assets that have not yet ready for use are tested for impairment annually
regardless of whether such evidence exists.
The recoverable amount of an asset is determined by the higher amount of fair value deducting disposal
costs and net present value of future cash flows expected from the assets. The Company estimates the
recoverable amount based on individual asset; for individual asset which is difficult to estimate the
recoverable amount, the recoverable amount of the asset group is determined based on the asset group
involving the asset. The identification of the asset group is based on whether the cash flow generated
from the asset group is independent of the major cash inflows from other assets or asset groups.
When the asset or asset group’s recoverable amount is lower than its carrying amount, the Company
reduces its carrying amount to its recoverable amount, the reduced amount is included in profit or loss,
while the provision for impairment of assets is recognised.
In terms of impairment test of the goodwill, the carrying amount of the goodwill, arising from business
combination, shall be allocated to the related asset group in accordance with a reasonable basis at
acquisition date. Those that are difficult to be allocated to related assets shall be allocated to related
asset group. Related assets or assets group refer to those that can benefit from the synergies of business
combination and are not larger than the Company’s recognised reporting segment.
When there is an indication that the asset and asset group are prone to impair, the Company should
test for impairment for asset and asset group excluding goodwill and calculate the recoverable amount
and recognise the impairment loss accordingly. The Company should test for impairment for asset or
the asset group including goodwill and compare the asset or asset group’s recoverable amount with its
carrying amount, provision for impairment of assets shall be recognised when the recoverable amount
of assets is lower than its carrying amount.
Once impairment loss is recognised, it cannot be reversed in subsequent accounting periods.
24. Long-term deferred expenses
The Company’s long-term deferred expenses measured at cost actually incurred and evenly amortised
on straight-line basis over the expected beneficial period. For the long-term deferred expense items
that cannot benefit in subsequent accounting period, their amortised value is recognised through profit
or loss.
204
Joincare Pharmaceutical Group Annual Report 2023
25. Employee compensation
(1) The scope of employee compensation
Employee compensation are all forms of remuneration and compensation given by the Company in
exchange for service rendered by employees or the termination of employment. Employee
compensation include short-term employee compensation, post-employment benefits, termination
benefits and other long-term employee benefits. Employee compensation include benefits provided to
employees’ spouses, children, other dependants, survivors of the deceased employees or to other
beneficiaries.
According to liquidity, employment compensations are presented separately as “accrued payroll” item
and “long-term employment compensation payable” item in the balance sheet.
(2) Short-term employee compensation
During the accounting period in which the employees render the related services, wages, bonuses,
social security contributions (including medical insurance, injury insurance, maternity insurance, etc.)
and house funding are recognised as liability and included in the profit or loss for the current period
or related asset costs.
(3) Post-employment benefits
Post-employment benefit plans mainly include defined contribution plans. A defined contribution plan
refers to a post-employment benefit plan where the Company no longer bears further payment
obligations after depositing fixed costs into an independent fund. The Company is only involved in
Defined contribution plans.
Defined contribution plans include basic pension insurance and unemployment insurance.
During the accounting period in which the employees provide services, the amount payable calculated
based on the defined contribution plan is recognized as a liability and is either recorded in the profit
or loss of the current period or included in the cost of related assets.
(4) Termination benefits
The liability of employee compensation arising from termination benefits is recognised and included
in profit or loss for the current period in the earlier date of the followings: The Company cannot
unilaterally withdraw the offer of termination benefits because of an employment termination plan or
a curtailment proposal; the Company recognises costs or expenses related to the restructuring that
involves the payment of termination benefits.
For the implementation of the internal retirement plan for employees, the economic compensation
before the official retirement date is a termination benefit. The wage of and social insurance
contributions for the internally retired employee which would have incurred from the date on which
the employee cease rendering services to the Company to the scheduled retirement date will be
included in the profit or loss for the current period. Economic compensation after the official
retirement date (such as normal pension) should be treated as post-employment benefits.
205
Joincare Pharmaceutical Group Annual Report 2023
(5) Other long-term employee benefits
When other long-term employee benefits provided to the employees by the Company are satisfied the
conditions of a defined contribution plan, those benefits shall be accounted for in accordance with the
relevant provisions of the above defined contribution plans. When the benefits are satisfied the
conditions of a defined benefit plan, those benefits shall be accounted for in accordance with the
relevant provisions of the above defined benefit plans, except that the “change in remeasurement of
the net liability or net assets of the defined benefit plans” in the cost of the related employee
compensation shall be included in profit or loss for the current period or related asset costs.
26. Provision for liabilities
An obligation related to a contingency is recognised as a provision when all of the following conditions
are satisfied:
(1) The obligation is a present obligation of the Company;
(2) It is probable that an outflow of economic benefits will be required to settle the obligation;
(3) The amount of the obligation can be measured reliably.
Provisions are initially measured at the best estimate of the payment to settle the associated obligations
and consider the relevant risk, uncertainty and time value of money. If the impact of time value of
money is significant, the best estimate is determined as its present value of future cash outflow. The
Company reviews the carrying amount of provisions at the balance sheet date and adjusts the carrying
amount to reflect the best estimate.
If the expenses for clearing of provisions is fully or partially compensated by a third party, and the
compensated amount can be definitely received, it is recognised separately as asset. The compensated
amount recognised shall not be greater than the carrying amount of the liability recognised.
27. Share-based payment and equity instruments
(1) Accounting treatment of 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 order to obtain services from employees or other parties.
Share-based payment is classified into equity-settled share-based payment and cash-settled share-
based payment.
① Equity-settled share-based payment
Equity-settled share-based payment is measured at the fair value of the equity instruments granted to
employees. If vesting is conditional upon completion of services in the pending period or fulfilment
of performance conditions, at each balance sheet date during the pending period, based on the best
estimates of the number of vested equity instruments, the services received for the period are
recognised as the costs or expenses on a straight-line basis. Instruments which are vested immediately
upon the grant are included in relevant costs or expenses at the fair value of equity instruments on the
date of grant and capital reserves are increased accordingly.
206
Joincare Pharmaceutical Group Annual Report 2023
At each balance sheet date during the pending period, the Company makes the best estimate and
revises the number of equity instruments expected to be exercisable based on subsequent information
such as changes in the number of exercisable employees obtained from the latest available information.
The effect of the above estimates is recognised as the relevant cost or expense in the current period,
and capital surplus is adjusted accordingly.
For the equity instruments granted under an equity-settled share-based payment for services from other
parties, if the fair value of services received from other parties can be measured reliably, the fair value
of the equity instruments is measured at the fair value of services from other parties on the grant date;
if the fair value of services received from other parties cannot be measured reliably but the fair value
of the equity instruments can be measured reliably, the fair value of the equity instruments on the date
on which services are received shall be recognised as related costs or expenses, with a corresponding
increase in owners' equity.
② Cash-settled share-based payment
Cash-settled share-based payments are measured at the fair value of the liabilities (share-based or other
equity instrument-based) assumed by the Company. Instruments which are vested immediately upon
the grant are included in relevant costs or expenses at the fair value of liabilities assumed by the
Company on the date of grant and liabilities are increased accordingly. If vesting is conditional upon
completion of services in the pending period or fulfilment of performance conditions, at each balance
sheet date during the pending period, based on the best estimates of the vesting situation, the services
received for the period are recognised as the costs or expenses and corresponding liabilities at fair
value of the liabilities assumed by the Company.
At each balance sheet date and settlement date before the relevant liabilities are settled, the fair value
of liabilities is re-measured and the resulting changes are included in the profit and loss for the current
period.
(2) Accounting treatment for amendment and termination of share-based payments
When the Company modifies the share-based payment plan, and if such modification increases the
fair value of the equity instruments granted, the increase in services received will be recognised
accordingly following the increase in fair value of the equity instruments; if such modification
increases the number of equity instruments granted, the increase in fair value of the equity instruments
is recognised as a corresponding increase in service achieved. The increase in fair value of the equity
instruments refers to the difference in fair value on the date of modification before and after the
modification in respect of the equity instruments. If the modification reduces the total fair value of the
share-based payments or adopts any form that is unfavorable to employees to modify the terms and
conditions of the share-based payment plan, accounting treatment will be continued to be conducted
in respect of the services received and the modification will be deemed to have never occurred, unless
the Company had cancelled part or all of the equity instruments granted.
207
Joincare Pharmaceutical Group Annual Report 2023
During the pending period, if the equity instruments granted are cancelled (except for failure to meet
the non-market conditions of the vesting conditions), the Company will undertake an accelerated
vesting in respect of the cancelled equity instruments that had been granted, include the remaining
amount that shall be recognised during the pending period in the current profit and loss immediately
and recognise capital reserve accordingly. Where employees or other parties are permitted to choose
to fulfil non-vesting conditions but have not fulfilled during the pending period, the Company will
treat the granted equity instruments as cancelled.
(3) Accounting treatment for share-based payments involving the Company and the
shareholders or the de facto controller of the Company
For share-based payment transactions involving the Company and the shareholders or the de facto
controller of the Company, the settlement enterprise and the enterprise receiving services (one under
the Company while another external to the Company) shall follow the requirements below to conduct
accounting treatment in the Company’s consolidated financial statements:
①For settlement enterprises settling through their own equity instruments, such share-based payment
transaction will be treated as equity-settled share-based payment; except for this, such share-based
payment transaction will be treated as cash-settled share-based payment.
Where a settlement enterprise is an investor of an enterprise receiving services, the fair value of the
equity instruments on the date of grant or the fair value of the liabilities that shall be assumed are
recognised as long-term equity investment in the enterprise receiving services, at the same time, capital
reserve (other capital reserve) or liabilities are recognised.
② Where an enterprise receiving services has no settlement obligations or grants its own equity
instruments to employees, such share-based payment transaction will be treated as equity-settled
share-based payment; where an enterprise receiving services has settlement obligations and grants
equity instruments (other than its own) to employees, such share-based payment transaction will be
treated as cash-settled share-based payment.
For a share-based payment transaction occurring among enterprises under the Company where the
enterprise receiving services and the settlement enterprise are not the same enterprise, such share-
based payment transaction shall be recognised and measured in each of the respective financial
statements of the enterprise receiving services and the settlement enterprise by reference to the above
principles.
28. Preferred shares, perpetual bonds and other financial instruments
(1) Classification of financial liabilities and equity instruments
The Company classifies the financial instrument or its components as financial assets, financial
liabilities or equity instruments at the initial recognition based on the contract terms of the issued
financial instrument and the economic substance it reflects, instead of only in legal form, and combine
the definition of financial assets, financial liabilities and equity instruments.
208
Joincare Pharmaceutical Group Annual Report 2023
(2) Accounting treatment of preferred shares, perpetual bonds and other financial instruments
The financial instruments issued by the Company are initially recognised and measured in accordance
with the financial instrument standards; thereafter, interest or dividends are accrued or distributed on
each balance sheet date and processed in accordance with relevant specific accounting standards for
enterprises. That is, on the basis of the classification of the financial instrument issued, the accounting
treatment of interest expenses or dividend distributions of the instrument is determined. For financial
instruments classified as equity instruments, interest expenses or dividend distributions are treated as
profit distribution of the Company, and repurchases and cancellations are treated as changes in equity;
for financial instruments classified as financial liabilities, interest expenses or dividend distributions
are in principle treated according to borrowing costs, and gains or losses arising from repurchase or
redemption are credited to profit or loss for the current period.
The transaction costs such as charges and commissions incurred by the Company when issuing
financial instruments, if classified as debt instruments and measured at amortised cost, are included in
the initial measurement amount of the issued instrument; if classified as equity instruments, are
deducted from equity.
29. Revenue
(1) General principle
The Company shall recognise revenue when the Company satisfies the performance obligation of the
contract, that is, the customer obtains control of relevant goods or services.
When the contract contains two or more performance obligations, on the effective date of the contract,
the Company allocates the transaction price to each performance obligation based on the percentage
of respective unit price of a good or service guaranteed by each performance obligation, and the
revenue is measured according to the transaction price allocated to each performance obligation.
If one of the following conditions is fulfilled, the Company satisfies a performance obligation over
time; otherwise, it satisfies a performance obligation at a point in time:
① When the customer simultaneously receives and consumes the benefits provided by the Company
when the Company performs its obligations under the contract.
② When the customer is able to control the commodity in progress in the course of performance by
the Company under the contract.
③ The product produced by the Company under the contract is irreplaceable and the Company has
the right to payment for performance completed to date during the term of the contract.
For a performance obligation satisfied over time, the Company shall recognise revenue over time by
measuring the process towards complete satisfaction of the performance obligation. When the progress
of performance cannot be reasonably determined, if the costs incurred by the Company are expected
209
Joincare Pharmaceutical Group Annual Report 2023
to be recoverable, the revenue will be recognised to the extent of the costs incurred until the progress
of performance can be reasonably determined.
For a performance obligation satisfied at a point in time, the Company shall recognise revenue when
the customer obtains control of relevant goods or services. When determining whether the customer
has obtained control of the goods and services, the Company will consider the following indications:
① The Company has the current right to receive payment for the goods or services, which is when
the customers have the current payment obligations for the goods.
② The Company has transferred the legal title of the goods to the client, which is when the client
possesses the legal title of the goods.
③ The Company has transferred the physical possession of goods to the customer, which is when the
customer obtains physical possession of the goods.
④ The Company has transferred all of the substantial risks and rewards of ownership of the goods to
the customer, which is when the client obtains all of the substantial risks and rewards of ownership of
the goods to the customer.
⑤ When the customer has accepted the goods or services.
⑥ When other information indicates that the customer has obtained control of the goods.
A contract asset represents the Company’s right to consideration in exchange for goods or services
that it has transferred to a customer when that right is conditioned on factors other than passage of
time, for which the loss allowances for expected credit loss is recognised (see Note III.11(6) ). The
Company shall present any unconditional (i.e. if only the passage of time is required) rights to
consideration separately as a receivable. A contract liability is the Company’s obligation to transfer
goods or services to a customer for which the Company has received consideration (or the amount is
due) from the customer.
The contract assets and liabilities under the same contract shall be shown on a net basis. If the net
amount stated in debit balance, it will be presented under the items of “Contract assets” or “Other non-
current assets” according to its mobility; If the net amount stated in credit balance, it will be presented
under the items of “Contract liabilities” or “Other non-current liabilities” according to its mobility.
(2) Specific method
The Company enters into sales contracts with customers. Revenue from sales is recognised according
to the invoiced amount upon the delivery of goods to the designated carrier or purchaser according to
the orders received from customers; revenue from export sales is recognised mainly by adopting FOB
mode according to custom declaration upon making declaration for goods and completing the export
procedures.
The Company offers consistent credit terms to all types of customers, with no significant financing
210
Joincare Pharmaceutical Group Annual Report 2023
component involved.
The Company operates on a buyout sales model with distributors, and revenue recognition under the
distribution model is consistent with the direct sales model.
For sales with sales return provisions, revenue recognition is limited to the amount expected not to
result in significant returns based on the cumulative revenue recognized. The Company recognizes
liabilities based on the expected refund amount, while recognizing an asset for the expected value of
returned goods at the time of transfer, net of estimated costs (including the value impairment of
returned goods).
30. Contract costs
Contract costs are either the incremental costs of obtaining a contract with a customer or the costs to
fulfil a contract with a customer.
Incremental costs of obtaining a contract are those costs that the Company incurs to obtain a contract
with a customer that it would not have incurred if the contract had not been obtained e.g. an
incremental sales commission. The Company recognises as an asset the incremental costs of obtaining
a contract with a customer if it expects to recover those costs. Other costs of obtaining a contract are
expensed when incurred.
If the costs to fulfil a contract with a customer are not within the scope of inventories or other
accounting standards, the Company recognises an asset from the costs incurred to fulfil a contract only
if those costs meet all of the following criteria:
① The costs relate directly to an existing contract or to a specifically identifiable anticipated contract,
including direct labour, direct materials, allocations of overheads (or similar costs), costs that are
explicitly chargeable to the customer and other costs that are incurred only because the Company
entered into the contract;
② The costs generate or enhance resources of the Company that will be used in satisfying (or in
continuing to satisfy) performance obligations in the future;
③ The costs are expected to be recovered.
Assets recognised for the incremental costs of obtaining a contract and assets recognised for the costs
to fulfil a contract (the “assets related to contract costs”) are amortised on a systematic basis that is
consistent with the transfer to the customer of the goods or services to which the assets relate and
recognised in profit or loss for the current period.
The Company recognises an impairment loss in profit or loss to the extent that the carrying amount of
an asset related to contract costs exceeds:
① Remaining amount of consideration that the Company expects to receive in exchange for the goods
or services to which the asset relates;
211
Joincare Pharmaceutical Group Annual Report 2023
② The cost estimated to be happened for the transfer of related goods or services.
The costs of contract performance recognised as assets, if the amortisation period is less than one year
or a normal operating cycle upon the initial recognition, are presented as “Inventories” item, and if the
amortisation period is more than one year or a normal operating cycle upon the initial recognition, are
presented as “Other non-current assets” item.
The contract obtaining costs recognised as assets, if the amortisation period is less than one year or a
normal operating cycle upon the initial recognition, are presented as “Other current assets” item, and
if the amortisation period is more than one year or a normal operating cycle upon the initial recognition,
are presented as “Other non-current assets” item.
31. Government grants
A government grant shall be recognised only when the enterprise can comply with the conditions
attaching to the grant and the enterprise can receive the grant.
If a government grant is in the form of a transfer of a monetary asset, the item is measured at the
amount received. If a government grant is in the form of a transfer of a non-monetary asset, the item
is measured at fair value, when fair value is not reliably determinable, the item is measured at a
nominal amount of RMB1.
Government grant related to assets represents the government grant received for acquisition and
construction of long term assets, or forming long term assets in other ways. Except for these, all are
government grant related to income.
Regarding to the government grant not clearly defined in the official documents and can form long
term assets, the part of government grant which can be referred to the value of the assets is classified
as government grant related to assets and the remaining part is government grant related to income.
For the government grant that is difficult to distinguish, the entire government grant is classified as
government grant related to income.
The government grant related to assets is recognised as deferred income and would be transferred to
profit or loss in reasonable and systematic manner within the period of use of the relevant assets. The
government grant related to income which is used to compensate the relevant costs or losses incurred
should be recognised in the profit or loss for the current period; the government grant related to income
which is used to compensate the relevant costs or losses for the subsequent period is recognised as
deferred income and shall be recognised in profit or loss during the relevant cost or loss confirmation
period. Government grants measured in nominal terms are directly included in the profit or loss for
the current period. The Company has adopted a consistent approach to the same or similar government
grant business.
The government grants related to daily activities are recognised as other gains in accordance with the
substance of economic business. Government grants that are not related to daily activities are
212
Joincare Pharmaceutical Group Annual Report 2023
recognised as non-operating income and expenses.
If the recognised government grants need to be refunded, adjust the carrying amount of assets when
the carrying amount of assets is offset at the time of initial recognition; the balance of deferred income
is offset against the carrying amount of the balance of deferred income and the excess is recognised in
the profit or loss for the current period. Other circumstances, it is directly recognised in the profit or
loss for the current period.
32. Deferred tax assets and deferred tax liabilities
Income tax comprises of current tax and deferred tax. Current tax and deferred tax are recognized in
profit or loss except to the extent that they relate to transactions or items recognized directly in equity
and goodwill arising from a business combination.
Temporary differences arising from the difference between the carrying amount of an asset or liability
and its tax base are recognized as deferred tax using the balance sheet liability method.
All the taxable temporary differences are recognized as deferred tax liabilities except for those incurred
in the following transactions:
(1) Initial recognition of goodwill or initial recognition of an asset or liability in a transaction which
is neither a business combination nor affects accounting profit or taxable profit (or deductible loss)
when the transaction occurs;
(2) The taxable temporary differences associated with investments in subsidiaries, associates and
joint ventures, and The Company is able to control the timing of the reversal of the temporary
difference and it is probable that the temporary difference will not reverse in the foreseeable future.
The Company recognizes a deferred tax asset for the carry forward of deductible temporary
differences, deductible losses and tax credits to subsequent periods, to the extent that it is probable
that future taxable profits will be available against which the deductible temporary differences,
deductible losses and tax credits can be utilized, except for those incurred in the following transactions:
(1) The transaction is neither a business combination nor affects accounting profit or taxable profit
(or deductible loss) when the transaction occurs (Except for single transactions resulting in equal
temporary differences and deductible temporary differences arising from initially recognized assets
and liabilities);
(2) The deductible temporary differences associated with investments in subsidiaries, associates and
joint ventures, the corresponding deferred tax asset is recognized when both of the following
conditions are satisfied: it is probable that the temporary difference will reverse in the foreseeable
future and it is probable that taxable profits will be available in the future against which the temporary
difference can be utilized.
At the balance sheet date, deferred tax assets and deferred tax liabilities are measured at the tax rates
that are expected to apply to the period when the asset is realized or the liability is settled, and their
tax effect is reflected.
213
Joincare Pharmaceutical Group Annual Report 2023
At the balance sheet date, the Company reviews the carrying amount of a deferred tax asset. If it is
probable that sufficient taxable profits will not be available in future periods to allow the benefit of
the deferred tax asset to be utilized, the carrying amount of the deferred tax asset is reduced. Any such
reduction in amount is reversed when it becomes probable that sufficient taxable profits will be
available.
At the balance sheet date, deferred tax assets and deferred tax liabilities are presented as a net amount
after offsetting when they simultaneously meet the following conditions:
(1) The legal right exists for the tax-paying entity within the Company to settle current income tax
assets and current income tax liabilities on a net basis.
(2) Deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax
authority on the same tax-paying entity within the Company.
33. Leases
(1) Identification of leases
At the inception of a contract, the Company, as a lessee or lessor, assesses if the customer in a contract
has the right to obtain substantially all the economic benefits from use of the identified assets and the
right to direct the use of the identified assets in the period of use. The Company would identify that a
contract is a lease, or contains a lease if a party of the contract transfers the right to control the use of
one or more identified assets for a period of time in exchange for consideration.
(2) The Company as the lessee
At the inception of a lease, the Company recognises all its leases as the right-of-use assets and lease
liabilities, except for the short-term leases and the leases of low-value assets which are treated with a
simplified approach.
For the accounting policies on the right-of-use assets, please refer to Note III. 34.
Lease liabilities are initially measured based on the present value of outstanding lease payment at the
inception of a lease, discounted using the interest rate implicit in the lease or the incremental borrowing
rate. Lease payment include: fixed payments and in-substance fixed payments, less any lease
incentives (if there is a lease incentive); variable lease payment that are based on an index or a rate;
the exercise price of a purchase option if the lessee is reasonably certain to exercise that option;
payments of penalties for terminating the lease option, if the lease term reflects that the lessee will
exercise that option; and amounts expected to be payable under the guaranteed residual value provided
by the lessee. The Company shall subsequently calculate the interest expenses of lease liabilities over
the lease term at the fixed periodic interest rate, and include it into the profit or loss for the current
period. Variable lease payments not included in the measurement of lease liabilities are charged to
profit or loss in the period in which they actually arise.
214
Joincare Pharmaceutical Group Annual Report 2023
Short-term lease
Short-term lease refers to the lease that the lease term does not exceed 12 months from the inception
of a lease, and the lease that includes the option of purchase is not a short-term lease.
The Company recognises the amount of lease payments of short-term lease in the cost of the related
asset or the profit or loss for the current period, on a straight-line method over each period of the lease
term.
Leases of low-value assets
Leases of low value assets refer to lease of a single leased asset whose value is less than 40,000 yuan
when it is a brand-new asset.
The Company recognised the lease payments for the leases of low-value assets in the relevant asset
cost or the profit or loss for the current period on a straight-line basis over each period of the lease
term.
For leases of low value assets, the Company chooses to adopt the above simplified method according
to the specific situation of each lease.
(3) The Company as the lessor
When the Company is the lessor, the lease that substantially transfers all the risks and rewards related
to the ownership of assets is recognised as a finance lease, and leases other than finance leases are
recognised as operating leases.
Finance leases
In a financial lease, the Company uses the net investment in leases as the carrying amount of finance
lease receivables at the inception of a lease. The net investment in leases is the sum of the unguaranteed
residual value and the present value of the outstanding lease payment at the inception of a lease,
discounted using the interest rate implicit in the lease. The Company, as the lessor, calculates and
recognises the interest income over each period of the lease term at a fixed periodic interest rate.
Variable lease payments not included in the measurement of the lease liability, which are obtained by
the Company as a lessor, are recognised in profit or loss as incurred.
The termination of recognition and impairment of financial lease receivables is accounted for in
accordance with the provisions of “Accounting Standards for Business Enterprises No. 22 –
Recognition and Measurement of Financial Instrument” and “Accounting Standards for Business
Enterprises No. 23 – Transfer of Financial Assets”.
Operating leases
For the rental of operating leases, the Company recognises it in the profit or loss for the current period
on a straight- line basis over each period of the lease term. The initial direct cost incurred in connection
with an operating lease shall be capitalised and amortised on the same basis for recognition of rental
income during the lease term, and shall be included in instalments in the profit or loss for the current
period. The variable lease payment, which is obtained in connection with an operating lease and not
215
Joincare Pharmaceutical Group Annual Report 2023
included in the lease receivables, shall be included in the profit and loss for the current period when
they actually occur.
34. Right-of-use assets
(1) Recognition condition of right-of-use assets
The right-of-use assets of the Company are defined as the right of underlying assets in the lease term
for the Company as a lessee.
Right-of-use assets are initially measured at cost as at the commencement date of the lease, which
consists of: the amount of the initial measurement of the lease liability; any lease payments made at
or before the commencement date of the lease less any lease incentives received if any; initial direct
expenses incurred by the Company as a lessee; costs to be incurred by the Company as a lessee in
dismantling and removing a leased asset, restoring the site on which it is located or restoring the leased
assets to the condition required by the terms and conditions of the lease. The Company as a lessee
recognises and measures the costs of demolition and restoration according to “Accounting Standards
for Business Enterprises No.13 – Contingencies”, and subsequently adjusts for any remeasurement of
lease liability.
(2) Depreciation method of right-of-use assets
The Company calculates depreciation on a straight-line basis. Right-of-use assets in which the
Company as a lessee is reasonably certain to obtain ownership of the underlying leased assets at the
end of the lease term are depreciated over the remaining useful life. Otherwise, right-of-use assets are
depreciated over the shorter of the lease term and its remaining useful life.
(3) For methods of impairment testing and provision for impairment for right-of-use assets,
please refer to note III. 23.
35. Repurchase of shares
Prior to cancellation or transfer of shares repurchased, the Company recognises all expenditures
arising from share repurchase as cost of treasury shares in the treasury share account. Considerations
and transaction fee incurred from the repurchase of shares shall lead to the elimination of owners’
equity and does not recognise profit or loss when shares of the Company are repurchased, transferred
or cancelled.
The difference between the actual amount received and the carrying amount of the treasury stock are
recognised as capital reserve when the treasury stocks are transferred, if the capital reserve is not
sufficient to be offset, the excess amount shall be recognised to offset surplus reserve and undistributed
profit. When the treasury stocks are cancelled, the capital shall be eliminated according to the number
of shares and par value of cancellation shares, the difference between the actual amount received and
the carrying amount of the treasury stock are recognised as capital reserve, if the capital reserve is not
sufficient to be offset, the excess amount shall be recognised to offset surplus reserve and undistributed
profit.
216
Joincare Pharmaceutical Group Annual Report 2023
36. Significant accounting judgements and estimates
Significant accounting estimates and critical assumptions adopted by the Company are continually
evaluated based on historical experience and other factors, including expectations of future events that
are believed to be reasonable. The significant accounting estimates and critical assumptions that have
a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities
within the next accounting year are set out below:
(1) Classification of financial assets
Significant judgements involved in determining the classification of financial assets include analysis
of business mode and characteristics of the contractual cash flows.
Factors considered by the Company in determining the business model of financial assets management
for a group of financial assets include past experience on how financial asset’s performance is
evaluated and reported to key management personnel, how risks affecting the performance of financial
asset are assessed and managed and how managers of related businesses are compensated.
When assessing whether the contractual cash flows of financial assets are consistent with basic lending
arrangement, the Company adopts the following significant judgements: whether the time distribution
or amounts of the principal within the duration may change due to early repayment and other reasons;
whether the interest includes only the time value of money, credit risk, other basic lending risks and
the consideration for cost and profit. For example, the amounts of early repayment only reflect
principal unpaid, the interest based on principal unpaid and reasonable compensation paid for early
termination of a contract.
(2) Measurement of ECL for accounts receivables
The Company calculates ECL of accounts receivables according to their exposure at default and ECL
rate, and determines ECL rate based on probability of default and loss given default. When determining
ECL rate, the Company adopts data like historical credit loss experience in combination with current
situation and forward-looking information to adjust historical data. When considering forward-looking
information, the Company uses indicators including the risk of economic downturn, external market
environment, technology environment and changes on customer situation. The Company periodically
monitors and reviews assumptions relevant to the measurement of ECL.
(3) Impairment of non-current assets other than financial assets (other than goodwill)
On the balance sheet date, the Company assesses whether there are indications of impairment for non-
current assets other than financial assets. For intangible assets that have not yet reached the status of
use, impairment testing is conducted when there are indications of impairment, in addition to the
annual impairment test. For non-current assets other than financial assets, impairment testing is
conducted when there are indications that their carrying amounts may not be recoverable. Impairment
is recognized when the carrying amount of an asset or asset group exceeds the higher of its recoverable
217
Joincare Pharmaceutical Group Annual Report 2023
amount, which is the net amount of fair value less disposal costs and the present value of estimated
future cash flows. The net amount of fair value less disposal costs is determined by reference to the
selling price in similar assets in fair transactions or observable market prices, minus incremental costs
directly attributable to the asset disposal. In estimating the present value of future cash flows,
management estimates the expected future cash flows of the asset or asset group and selects an
appropriate discount rate to determine the present value of future cash flows.
(4) Impairment of goodwill
The Company evaluates whether goodwill is impaired at least once a year. This requires an estimate
of the value in use of the asset groups to which the goodwill is allocated. In estimating the value in
use, the Company needs to estimate the future cash flows generated from the asset groups and also to
choose an appropriate discount rate in order to calculate the present value of the future cash flows.
(5) Development costs
Determining the amounts to be capitalised requires the management to make assumptions regarding
the expected future cash flows generated from the relevant assets, discount rates to be applied and the
expected period of benefits.
(6) Deferred tax assets
The deferred income tax assets will be recognised for all unused tax losses to the extent that it is
probable that there will be sufficient taxable profits against which the loss is utilised. This requires the
management to exert numerous judgments to estimate the timing and amount of the future taxable
profits so as to determine the amount of deferred income tax assets to be recognised with reference to
the tax planning strategy.
(7) Revenue recognition
As stated in note III. 28, the Company makes the following significant accounting judgements and
estimates in terms of revenue recognition: identifying customer contracts; estimating the recoverability
of the considerations that are entitled to be obtained by transferring goods to customers; identifying
the performance obligation in the contract; estimating the variable consideration in the contract and
cumulative revenue recognised where it is highly probable that a significant reversal therein will not
occur when the relevant uncertainty is resolved; assessing whether there is a significant financing
component in the contract; estimating the individual selling price of the individual performance
obligation in the contract, etc. The Company makes judgments primarily based on historical
experiences and works. Changes in these significant judgments and estimates may have significant
impacts on the operating income, operating costs, and profit or loss of the current or subsequent periods.
(8) Determination of the fair value of unlisted equity investment
The fair value of unlisted equity investments represents the expected future cash flows discounted at
the prevailing discount rate of items with similar terms and risk characteristics. It requires the
218
Joincare Pharmaceutical Group Annual Report 2023
Company to estimate the expected future cash flows and discount rates, and therefore there is
uncertainty. Under limited circumstances, if the information used to determine the fair value is
insufficient, or the possible estimated amount of fair value is widely distributed, and cost represents
the best estimate of the fair value within such scope, the cost may represent an appropriate estimate of
the fair value within such distribution scope.
37. Changes in significant accounting policies and accounting estimates
① Interpretation No. 16 of Accounting Standards for Business Enterprises
The Ministry of Finance issued the Interpretation No. 16 of Accounting Standards for Business
Enterprises (Cai Kuai [2022] No. 31, hereinafter referred to as “Interpretation No. 16”) in November
2022.
Interpretation No. 16 stipulates that for individual transactions that are not business combinations and
do not affect either accounting profit or taxable income (or deductible losses) at the time of occurrence,
and where the initial recognition of assets and liabilities results in equal taxable temporary differences
and deductible temporary differences, the temporary differences arising from the initial recognition of
assets and liabilities should be separately recognized as deferred tax liabilities and deferred tax assets,
respectively, at the time of the transaction, in accordance with relevant provisions such as Accounting
Standards for Business Enterprises No. 18 - Income Taxes. For such transactions occurring between
the beginning of the earliest period reported in the financial statements and the effective date of this
interpretation, the Company adjusts the cumulative impact amount of the earliest period reported in
the financial statements, including retained earnings at the beginning of the earliest period and other
related items, in accordance with the aforementioned provisions. The aforementioned accounting
treatment becomes effective from 1 January 2023.
When the lease liabilities and right-of-use assets recognized by the Company in lease transactions
result in temporary differences and deductible temporary differences for tax purposes, adjustments
were made in accordance with the provisions of Interpretation No. 16.
The impact of implementing the above accounting policies on the consolidated balance sheet as of 31
December 2023 and the consolidated income statement for the year ended 2023 is as follows:
Item in consolidated balance sheet
Impact amount
(As at 31 December 2023)
Deferred tax assets 5,448,312.71
Deferred tax liabilities 5,281,690.30
Undistributed profits 149,007.43
Minority interests 17,614.98
Item in consolidated income statement
Impact amount
(For the year ended 31 December 2023)
Income tax expenses -20,001.00
Net profit attributable to shareholders of the
14,046.76
parent
Minority interests 5,954.24
The impact of implementing the above accounting policies on the consolidated balance sheet as of 31
December 2022 and the consolidated income statement for the year ended 31 December 2022 is as
219
Joincare Pharmaceutical Group Annual Report 2023
follows:
Item in consolidated balance sheet Adjustment After
Before adjustment
(As at 31 December 2022) amount adjustment
Deferred tax assets 533,861,743.26 6,176,080.30 540,037,823.56
Deferred tax liabilities 231,164,425.48 6,029,458.89 237,193,884.37
Undistributed profits 8,456,643,326.82 134,960.67 8,456,778,287.49
Minority interests 8,898,407,287.12 11,660.74 8,898,418,947.86
Item in consolidated income
statement Adjustment After
Before adjustment
(For the year ended 31 December amount adjustment
2022)
Income tax expenses 562,008,858.69 -212,115.64 561,796,743.05
Net profit attributable to
1,502,595,840.48 181,293.28 1,502,777,133.76
shareholders of the parent
Minority interests 1,391,500,256.00 30,822.36 1,391,531,078.36
The impact of implementing the above accounting policies on the consolidated balance sheet as of 1
January 2022 is as follows:
Item in consolidated balance sheet Adjustment After
Before adjustment
(As at 1 January 2022) amount adjustment
Deferred tax assets 552,542,866.71 8,197,790.11 560,740,656.82
Deferred tax liabilities 208,525,905.39 8,263,284.34 216,789,189.73
Undistributed profits 7,223,644,166.22 -46,332.61 7,223,597,833.61
Minority interests 8,359,317,322.63 -19,161.62 8,359,298,161.01
② Cumulative impact for the year by changes in accounting policies
Item begin affected Current year Prior year
Net assets in beginning of year -- -65,494.23
Including: Retained earnings -- -46,332.61
Net profit 20,001.00 212,115.64
Net assets at year end 166,622.41 146,621.41
Including: Retained earnings 149,007.43 134,960.67
(2) Changes in significant accounting estimates
None.
IV. Taxation
1. Major taxes and their tax rates
Tax category Tax basis Statutory tax rate %
Value-added tax Taxable revenue 3, 6 or 13
Urban maintenance and
Subject to turnover tax payable 1, 5 or7
construction tax
Education surcharge Subject to turnover tax payable 3
220
Joincare Pharmaceutical Group Annual Report 2023
Local education surcharge Subject to turnover tax payable Note 1
Enterprise income tax Subject to taxable profit Note 2
Note 1. The Company and its subsidiaries that are incorporated in Shenzhen and Zhuhai shall pay local
education surcharges that are charged as 2% of the turnover tax payable. Other subsidiaries shall pay
local education surcharges according to the tax rate as specified at their places of incorporation on the
basis of turnover tax payable.
Note 2. Enterprise income tax rate implementation is as follows:
Entity Income tax rate %
Hong Kong Health Pharmaceutical Industry Company Limited (香港健康药业
有限公司) , Livzon Pharmaceutical Biotechnology Co., Ltd. (丽珠医药生物科
16.5
技有限公司) , Lian (Hong Kong) Co., Ltd. (丽安香港有限公司) , Livzon
Biologics Hong Kong Limited (丽珠生物科技香港有限公司)
0 or 12 (Tax rate is 12%
where the taxable income
Companhia de Macau Carason Limitada (澳门嘉安信有限公司) , Li Zhu is MOP600,000 or more;
for those with taxable
(Macau) Limitada (丽珠(澳门) 有限公司) , Macau Livzon Traditional Chinese
income less than
Medicine Modern Technology Co., Ltd. (澳门丽珠中药现代化科技有限公司) MOP600,000, they are
exempted from income
taxes.)
The Company and Shenzhen Taitai Pharmaceutical Industry Co., Ltd. (深圳太太
药业有限公司) (Taitai Pharmaceutical) ) , Shenzhen Haibin Pharmaceutical Co.,
Ltd. (深圳市海滨制药有限公司) ) (Haibin Pharma) , Xinxiang Haibin
Pharmaceutical Co., Ltd.(Xinxiang Haibin) (新乡海滨药业有限公司(新乡海
滨) ) , Jiaozuo Joincare Bio Technological Co., Ltd. (焦作健康元生物制品有限
公司) (Jiaozuo Joincare) ) , Shanghai Frontier Health Pharmaceutical
Technology Co., Ltd. (上海方予健康医药科技有限公司)(Shanghai Frontier) ,
Guangzhou Joincare Respiratory Medicine Engineering Technology Co., Ltd.
(广州健康元呼吸药物工程技术有限公司) (Joincare Respiratory), Joincare
Haibin Pharmaceutical Co., Ltd. (健康元海滨药业有限公司)(Joincare
Haibin) ), Livzon Group and subsidiaries of Livzon Group, Livzon Group Limin
Pharmaceutical Manufacturing Factory (丽珠集团利民制药厂) , Livzon Group
Livzon Pharmaceutical Factory (丽珠制药厂) , Zhuhai FTZ Livzon Hecheng
15
Pharmaceutical Manufacturing Co., Ltd. (珠海保税区丽珠合成制药有限公
司) , Shanghai Livzon Pharmaceutical Manufacturing Co., Ltd. (上海丽珠制药
有限公司) , Livzon Group Xinbeijiang Pharmaceutical Manufacturing Inc. (丽
珠集团新北江制药股份有限公司) , Sichuan Guangda Pharmaceutical
Manufacturing Co., Ltd. (四川光大制药有限公司) , Zhuhai Livzon Diagnostics
Inc. (珠海丽珠试剂股份有限公司), Livzon Group Fuzhou Fuxing
Pharmaceutical Co., Ltd. (丽珠集团福州福兴医药有限公司) , Shanghai Livzon
Biotechnology Co., Ltd. (上海丽珠生物科技有限公司), Livzon Group
(Ningxia) Pharmaceutical Manufacturing Co., Ltd. (丽珠集团(宁夏) 制药有限
公司), Livzon MABPharm Inc. (珠海市丽珠单抗生物技术有限公司), Zhuhai
Lihe Medical Diagnostic Products Co., Ltd. (珠海丽禾医疗诊断产品有限公
司), Zhuhai Livzon Chinese Medicine Modern Technology Co., Ltd. (珠海市丽
珠中药现代化科技有限公司)
Livzon MAB Pharm (US) Inc. (丽珠单抗生物技术(美国) 有限公司) 21
17 or 24 (registered capital
of less than MYR 2.5
million, the tax rate is 17%
on the first profit less than
MYR 600,000; the
LIVZON BIOLOGICS (MALAYSIA) SDN. BHD.，
registered capital exceeds
MYR 2.5 million or the
profit exceeds MYR
600,000, the tax rate is
24%)
221
Joincare Pharmaceutical Group Annual Report 2023
Entity Income tax rate %
Health Investment Holdings Ltd, Joincare Pharmaceutical Group Industry
Co.,Ltd., Livzon International Ventures, Livzon International Ventures I, Livzon 0 (Note1)
International Ventures II
25 or enjoy preferential tax
Other subsidiaries policies for small and
micro-profit enterprises
Note 1. Companies registered in the British Virgin Islands and the Cayman Islands are not subject to
enterprise income tax.
2. Tax incentives and approval documents
(1) Preferential value added tax
In accordance with the Announcement on Value Added Tax on Biological Products Sold by
Pharmaceutical Operation Enterprises issued by the State Administration of Taxation (Announcement
of State Administration of Taxation 2012 No. 20) and the Notice of the Ministry of Finance, the
General Administration of Customs, the State Administration of Taxation and the State Drug
Administration on the Value-Added Tax Policies for Anti-Cancer Drugs (Caishui [2018] No. 47), the
biological products sold by the Company are subject to value added tax at 3% by the simple approach.
(2) Preferential enterprise income tax
The Company’s subsidiary Joincare Haibin (健康元海滨) has been eligible for preferential enterprise
income tax policies for high-tech enterprises for a duration of 3 years starting from 2021. The
Company and its subsidiaries Jiaozuo Joincare (焦作健康元) and Joincare Respiratory (健康元呼吸)
have been eligible for preferential enterprise income tax policies for high-tech enterprises for a
duration of 3 years starting from 2022. The Company’s subsidiaries Taitai Pharmaceutical (太太药
业), Haibin Pharma (海滨制药), Xinxiang Haibin (新乡海滨), and Shanghai Frontier (上海方予) are
eligible for preferential enterprise income tax policies for high-tech enterprises for a duration of 3
years starting from 2023. Livzon Group and its subsidiaries, including Livzon Group Limin
Pharmaceutical Manufacturing Factory (丽珠集团利民制药厂), Livzon Pharmaceutical Factory (丽
珠制药厂), Zhuhai FTZ Livzon Hecheng Pharmaceutical Manufacturing Co., Ltd. (珠海保税区丽珠
合成制药有限公司), Shanghai Livzon Pharmaceutical Manufacturing Co., Ltd. (上海丽珠制药有限
公司), and Sichuan Guangda Pharmaceutical Manufacturing Co., Ltd. (四川光大制药有限公司), are
eligible for preferential enterprise income tax policies for high-tech enterprises for a period of 3 years
starting from 2023. Livzon Group Fuzhou Fuxing Pharmaceutical Co., Ltd. (丽珠集团福州福兴医药
有限公司) has been officially recognized as a high-tech enterprise in the current period; Shanghai
Livzon Biotechnology Co., Ltd. (上海丽珠生物科技有限公司) has been eligible for preferential
enterprise income tax policies for high-tech enterprises for a duration of 3 years starting from 2021.
Livzon Group Xinbeijiang Pharmaceutical Manufacturing Inc. (丽珠集团新北江制药股份有限公
司), Zhuhai Livzon Diagnostics Inc. (珠海丽珠试剂股份有限公司), and Livzon MABPharm Inc. (珠
海市丽珠单抗生物技术有限公司) has been eligible preferential enterprise income tax policies for
high-tech enterprises for a duration of 3 years since 2022.
Livzon Group (Ningxia) Pharmaceutical Manufacturing Co., Ltd. (丽珠集团(宁夏) 制药有限公司)
has been verified to benefit from tax incentives for encouraged industries in the western region. The
above companies were subject to enterprise income tax rate of 15% for the period.
In accordance with Article 27 of the enterprise income tax Law of the People's Republic of China and
Article 86 of the Regulations for the Implementation of the enterprise income tax Law of the People's
222
Joincare Pharmaceutical Group Annual Report 2023
Republic of China, the business of planting Chinese herbal medicines engaged by the subsidiaries of
the Livzon, Datong Livzon Qiyuan Medicine Co., Ltd. (大同丽珠芪源药材有限公司) and Longxi
Livzon Shenyuan Medicine Co., Ltd. (陇西丽珠参源药材有限公司) are exempted from enterprise
income tax.
According to the "Notice of the Ministry of Finance and the State Administration of Taxation on the
Preferential Policies for enterprise income tax in the Hengqin Guangdong-Macao Deep Cooperation
Zone" (Cai Shui [2022] No. 19), enterprise income tax is levied at a reduced rate of 15% for qualified
industrial enterprises located in the Hengqin Guangdong-Macao Deep Cooperation Zone. The Livzon
Group’s subsidiaries, Zhuhai Lihe Medical Diagnostic Products Co., Ltd. (珠海丽禾医疗诊断产品
有限公司) and Zhuhai Livzon Chinese Medicine Modern Technology Co., Ltd. (珠海市丽珠中药现
代化科技有限公司) meet the relevant conditions and are subjected to 15% enterprise income tax rate
for the current period.
According to the preferential tax policies for small low-profit enterprises, the portion of annual taxable
income of a small low profit enterprise which does not exceed RMB1 million is subject to enterprise
income tax at a tax rate of 5%.
V. Notes to the items of consolidated financial statements
1. Cash and bank balances
Item 2023.12.31 2022.12.31
Cash on hand 355,538.62 231,883.95
Cash at bank 15,580,242,256.39 14,792,867,005.08
Other monetary funds 111,290,519.82 15,389,221.93
Total 15,691,888,314.83 14,808,488,110.96
Including: Total amount of money deposited
1,502,820,057.55 1,491,900,539.35
abroad
① Other monetary funds are mainly deposits for investments, deposits for letter of credit and bank
acceptance bills.
② Restricted funds relating to issuing letters of credit and bank acceptance bills in other monetary
funds were deducted from cash and cash equivalents in the cash flow statement. Apart from these
restricted funds, there is no other charge, pledge or lock up on the cash at bank balance that may limit
its use, is kept outside China and may have probable risks in its collection. Below are the details of
the use of restricted monetary funds:
Item 2023.12.31 2022.12.31
Deposits for letter of credit 602,957.38 444,032.37
Deposits for bank acceptance bills 4,965,960.88 947,255.39
Deposits for other business 1,058,531.40 1,120.00
Total 6,627,449.66 1,392,407.76
2. Financial assets held for trading
(1) Classification
223
Joincare Pharmaceutical Group Annual Report 2023
Item 2023.12.31 2022.12.31
Debt instruments investment 937,588.47 934,289.94
Equity instruments investment 78,238,516.48 102,648,863.47
Derivative financial assets 3,136,735.29 5,432,511.57
Bank wealth management products 586,314.00 0.00
Total 82,899,154.24 109,015,664.98
① The Company's investments in equity instruments and debt instruments for financial assets held
for trading at period end were listed for trading on Shenzhen Stock Exchange, Hong Kong Stock
Exchange and NASQAQ. The fair value was determined based on the closing price on the last trading
day in the Reporting Period.
② Derivative financial assets represent foreign currency forward contracts, futures contracts and
gains from unexpired contracts measured at fair value which were recognised as financial assets as at
the balance sheet date.
(2) No restrictive financial asset measured at fair value through profit or loss was included in
the closing balance.
(3) No hedging instruments in the closing balance and no hedging transactions have occurred
during the period.
3. Notes receivable
Category 2023.12.31 2022.12.31
Provision Provision
Carrying
Book balance for bad Book balance for bad Carrying amount
amount
debts debts
Bank
acceptance 1,941,200,568.00 0.00 1,941,200,568.00 1,959,985,016.85 0.00 1,959,985,016.85
bills
(1) Notes receivable pledged at year end
Category Amount pledged at year end
Bank acceptance bills 519,789,027.16
As at 31 December 2023, bank acceptance bills with carrying amount of RMB519,789,027.16 (31
December 2022: RMB469,659,266.19) have been used as pledge for opening of bills.
(2) Bills endorsed or discounted to other parties but not yet expired at balance sheet date
Amount derecognized Amount not derecognized
Category
at year end at year end
Bank acceptance bills not yet mature but
180,125,188.50 0.00
already endorsed
Bank acceptance bills not yet mature but
136,098,199.33 0.00
already discounted
Total 316,223,387.83 0.00
In the current period, the Company discounted bank acceptance bills of RMB385,575,297.99
(previous year: RMB1,190,002,804.98). Since the major risks and rewards such as interest rate risk
related to these bank acceptance bills have been transferred to the bank, the Company derecognizes
the discounted unexpired bank acceptance bills. Factoring expenses incurred was RMB2,042,497.83
(previous year: RMB6,363,472.30).
(3) There was no bills transferred into account receivables for non-performance by the issuer at
224
Joincare Pharmaceutical Group Annual Report 2023
balance sheet date of the period
(4) Disclosure by method of provision for bad debts
Category 2023.12.31 2022.12.31
Provision for bad
Book balance Provision for bad debts Book balance
debts
Carrying
Expected amount Expected Carrying amount
Ratio Ratio
Amount Amount credit loss rate Amount Amount credit loss
(%) (%)
(%) rate (%)
Provision for
bad debts on 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
individual item
Provision for
bad debts on 1,941,200,568.00 100.00 0.00 0.00 1,941,200,568.00 1,959,985,016.85 100.00 0.00 0.00 1,959,985,016.85
portfolio basis
Including:
Bank 1,941,200,568.00 100.00 0.00 0.00 1,941,200,568.00 1,959,985,016.85 100.00 0.00 0.00 1,959,985,016.85
acceptance bills
Total 1,941,200,568.00 100.00 0.00 0.00 1,941,200,568.00 1,959,985,016.85 100.00 0.00 0.00 1,959,985,016.85
Provision for bad debts on individual item:
None.
Provision for bad debts on portfolio basis:
Provision for bad debts on portfolio basis: Bank acceptance bills
2023.12.31 2022.12.31
Expected
Item Provision Expected Provision
credit
Notes receivable for bad credit loss Notes receivable for bad
loss rate
debts rate (%) debts
(%)
Within one year 1,941,200,568.00 1,959,985,016.85
(5) There was no accrual, recovery or reversal of provision for bad debts during the year.
(6) There was no write-off of notes receivable.
4. Accounts receivable
(1) by ageing
Ageing 2023.12.31 2022.12.31
Within one year 2,647,481,728.60 3,120,189,972.55
1 to 2 years (inclusive of 2 years) 101,092,502.23 23,444,432.08
2 to 3 years (inclusive of 3 years) 2,963,960.00 3,734,160.84
3 to 4 years (inclusive of 4 years) 3,083,562.86 12,774,996.94
4 to 5 years (inclusive of 5 years) 10,440,914.56 2,294,804.48
Over 5 years 14,187,114.03 13,796,669.97
Subtotal 2,779,249,782.28 3,176,235,036.86
Less: Provision for bad debts 86,307,916.04 72,476,186.71
Total 2,692,941,866.24 3,103,758,850.15
According to the credit policy of the Company, the Company usually grants a credit period ranging
from 30 to 90 days to its customers.
(2) Disclosure by method of provision for bad debts
225
Joincare Pharmaceutical Group Annual Report 2023
2023.12.31 2022.12.31
Category Book balance Provision for bad debts Book balance Provision for bad debts
Carrying Carrying
Expected amount Expected amount
Ratio Ratio
Amount Amount credit loss Amount Amount credit loss
(%) (%)
rate (%) rate (%)
Provision for
bad debts on 9,830,879.27 0.35 9,830,879.27 100.00 0.00 10,454,599.67 0.33 6,257,914.47 59.86 4,196,685.20
individual item
Including:
Receivables
from domestic 9,683,532.50 0.35 9,683,532.50 100.00 0.00 10,454,599.67 0.33 6,257,914.47 59.86 4,196,685.20
customers
Receivables
from overseas 147,346.77 0.01 147,346.77 100.00 0.00 0.00 0.00 0.00 0.00 0.00
customers
Provision for
bad debts on 2,769,418,903.01 99.65 76,477,036.77 2.76 2,692,941,866.24 3,165,780,437.19 99.67 66,218,272.24 2.09 3,099,562,164.95
portfolio basis
Including:
Receivables
from domestic 2,334,140,677.67 83.98 69,784,726.72 2.99 2,264,355,950.95 2,659,276,844.47 83.72 60,180,304.43 2.26 2,599,096,540.04
customers
Receivables
from overseas 435,278,225.34 15.66 6,692,310.05 1.54 428,585,915.29 506,503,592.72 15.95 6,037,967.81 1.19 500,465,624.91
customers
Total 2,779,249,782.28 100.00 86,307,916.04 3.11 2,692,941,866.24 3,176,235,036.86 100.00 72,476,186.71 2.28 3,103,758,850.15
Provision for bad debts on individual item:
Closing balance
Item
Provision for Expected credit
Book balance Reason of provision
bad debts loss rate (%)
Full amount is unlikely to be
Purchase of goods 9,830,879.27 9,830,879.27 100
recovered
Provision for bad debts on portfolio basis:
Provision for bad debts on portfolio basis: Receivables from domestic customers
Ageing 2023.12.31 2022.12.31
Expected Expected
Accounts Provision for Accounts Provision for
credit loss credit loss
receivable bad debts receivable bad debts
rate (%) rate (%)
Within one year 2,212,501,400.71 29,899,965.80 1.35 2,618,111,979.83 35,631,686.09 1.36
1 to 2 years
100,128,396.60 19,836,728.22 19.81 18,418,832.08 3,486,917.81 18.93
(inclusive of 2 years)
2 to 3 years
2,963,960.00 1,908,319.14 64.38 3,589,415.19 2,144,629.72 59.75
(inclusive of 3 years)
3 to 4 years
3,083,562.86 2,713,198.64 87.99 4,381,626.53 4,171,620.14 95.21
(inclusive of 4 years)
4 to 5 years
2,047,544.15 2,010,701.57 98.20 1,667,403.89 1,637,863.72 98.23
(inclusive of 5 years)
Over 5 years 13,415,813.35 13,415,813.35 100.00 13,107,586.95 13,107,586.95 100.00
Total 2,334,140,677.67 69,784,726.72 2.99 2,659,276,844.47 60,180,304.43 2.26
Provision for bad debts on portfolio basis: Receivables from overseas customers
Ageing 2023.12.31 2022.12.31
Provision Expected Expected
Accounts Accounts Provision for
for bad credit loss credit loss
receivable receivable bad debts
debts rate (%) rate (%)
Within one
434,314,119.71 6,498,350.54 1.50 506,503,592.72 6,037,967.81 1.19
year
226
Joincare Pharmaceutical Group Annual Report 2023
1-2 years 964,105.63 193,959.51 20.12 0.00 0.00 0.00
Total 435,278,225.34 6,692,310.05 1.54 506,503,592.72 6,037,967.81 1.19
(3) Accrual, recovery or reversal of bad debt provision during the year
Amount of provision for bad
Item
debts
Beginning balance 72,476,186.71
Provision for the year 17,085,116.32
Recovered or reversal in the year 0.00
Write-off in the year 3,256,934.52
Others 3,547.53
Closing balance 86,307,916.04
At 31 December 2023 and 31 December 2022, the Company had no overdue but not impaired accounts
receivable.
(4) Accounts receivable written-off during the year
Item Written-off amount
Actual written-off of accounts receivable 3,256,934.52
(5) Accounts receivable due from the top five debtors
As of 31 December 2023, the total amount of the top five debtors in closing balance is
RMB233,096,467.18, accounting for 8.39% of the total amount of closing balance of accounts
receivable, and the corresponding closing balance of provision for bad debts is total RMB2,772,860.14.
(6) There were no accounts receivable derecognized due to the transfer of financial assets in each
reporting period.
(7) There were no assets or liabilities formed by the continuing involvement of transferred
accounts receivables in each reporting period.
5. Prepayments
(1) Prepayments by ageing
Ageing 2023.12.31 2022.12.31
Amount Ratio % Amount Ratio %
Within one
261,832,941.82 93.48 343,457,382.98 94.29
year
1 to 2 years 9,471,130.48 3.38 16,867,695.41 4.63
2 to 3 years 6,936,952.00 2.48 948,519.54 0.26
Over 3 years 1,861,836.64 0.66 2,991,544.64 0.82
Total 280,102,860.94 100.00 364,265,142.57 100.00
(2) Prepayments due from the top five debtors:
As of 31 December 2023, the total amount of the top five prepayments in closing balance is
RMB90,657,673.53, accounting for 32.37% of the total amount of closing balance of prepayments.
6、Other receivables
227
Joincare Pharmaceutical Group Annual Report 2023
Item 2023.12.31 2022.12.31
Dividends receivable 0.00 0.00
Other receivables 46,010,624.61 52,535,740.14
Total 46,010,624.61 52,535,740.14
(1) Other receivables
① Disclosure by ageing
Ageing 2023.12.31 2022.12.31
Within one year 37,991,559.91 46,704,835.62
1 to 2 years 7,058,808.33 6,086,106.11
2 to 3 years 3,902,904.05 2,206,852.09
3 to 4 years 1,311,234.02 1,821,553.83
4 to 5 years 1,268,993.52 1,816,535.04
Over 5 years 30,945,575.08 32,171,819.98
Subtotal 82,479,074.91 90,807,702.67
Less: Provision for bad debts 36,468,450.30 38,271,962.53
Total 46,010,624.61 52,535,740.14
② Disclosure by nature
Item 2023.12.31 2022.12.31
Book Provision for Carrying Book Provision for Carrying
balance bad debts amount balance bad debts amount
Deposits
under
guarantee,
13,157,467.26 3,780,044.47 9,377,422.79 12,668,692.36 3,613,600.49 9,055,091.87
deposits and
lease
expenses
Reserved
fund and 20,493,420.45 1,338,678.06 19,154,742.39 25,494,468.62 2,952,756.24 22,541,712.38
advances
Related party
1,337,073.19 479,197.00 857,876.19 1,097,855.07 477,066.07 620,789.00
balances
External
entities 15,256,745.76 12,461,260.90 2,795,484.86 13,226,352.58 11,966,700.69 1,259,651.89
balances
Tax refund on
7,931,105.45 373,263.13 7,557,842.32 16,539,609.68 290,344.77 16,249,264.91
exports
Treasury
bonds and
16,954,735.37 16,954,735.37 0.00 17,968,386.04 17,968,386.04 0.00
security
deposits
Amounts of
exercised 597,240.00 0.00 597,240.00 0.00 0.00 0.00
options
Others 6,751,287.43 1,081,271.37 5,670,016.06 3,812,338.32 1,003,108.23 2,809,230.09
Total 82,479,074.91 36,468,450.30 46,010,624.61 90,807,702.67 38,271,962.53 52,535,740.14
③Information of provision for bad debts
As of 31 December 2023, provision for bad debts on those in first stage
Expected Provision for Carrying
Category Book balance Reason
credit loss bad debts amount
228
Joincare Pharmaceutical Group Annual Report 2023
rate in the
next 12
months (%)
Provision for bad debts on
597,240.00 0.00 0.00 597,240.00
individual item
Expected to be
Amounts of exercised options 597,240.00 0.00 0.00 597,240.00
recovered
Provision for bad debts on
0.00 0.00 0.00 0.00 --
portfolio basis
Total 597,240.00 0.00 0.00 597,240.00
As of 31 December 2023, provision for bad debts on those in second stage:
Expected
credit loss rate Provision for bad Carrying
Category Book balance Reason
for the debts amount
lifetime(%)
Provision for bad debts on
0.00 0.00 0.00 0.00 --
individual item
Provision for bad debts on
54,681,240.51 16.95 9,267,855.90 45,413,384.61
portfolio basis
Receivable of tax refund
7,931,105.45 4.71 373,263.13 7,557,842.32
on exports
Receivable of deposits
under guarantee, deposits 13,157,467.26 28.73 3,780,044.47 9,377,422.79
and lease expenses
Other receivables 33,592,667.80 15.23 5,114,548.30 28,478,119.50
Total 54,681,240.51 16.95 9,267,855.90 45,413,384.61
As of 31 December 2023, provision for bad debts on those in third stage:
Expected credit
Book Provision for Carrying
Category loss rate for the Reason
balance bad debts amount
lifetime(%)
Provision for bad debts on
27,200,594.40 100.00 27,200,594.40 0.00
individual item
Likelihood of
recovery is
Other receivables 27,200,594.40 100.00 27,200,594.40 0.00
expected to be
low
Provision for bad debts on
0.00 0.00 0.00 0.00 --
portfolio basis
Total 27,200,594.40 100.00 27,200,594.40 0.00
As of 31 December 2022, information of provision for bad debts:
As of 31 December 2022, there is no provision for bad debts on those in first stage.
As of 31 December 2022, Provision for bad debts on those in second stage:
Expected
credit loss rate Provision for bad Carrying
Category Book balance Reason
for the debts amount
lifetime(%)
Provision for bad debts on
0.00 0.00 0.00 0.00 --
individual item
Provision for bad debts on
62,329,598.16 15.71 9,793,858.02 52,535,740.14
portfolio basis
Receivable of tax refund
16,539,609.68 1.76 290,344.77 16,249,264.91
on exports
Receivable of deposits
under guarantee, deposits 12,668,692.36 28.52 3,613,600.49 9,055,091.87
and lease expenses
229
Joincare Pharmaceutical Group Annual Report 2023
Expected
credit loss rate Provision for bad Carrying
Category Book balance Reason
for the debts amount
lifetime(%)
Other receivables 33,121,296.12 17.78 5,889,912.76 27,231,383.36
Total 62,329,598.16 15.71 9,793,858.02 52,535,740.14
As of 31 December 2022, Provision for bad debts on those in third stage:
Expected credit
Book Provision for Carrying
Category loss rate for the Reason
balance bad debts amount
lifetime(%)
Provision for bad debts on
28,478,104.51 100.00 28,478,104.51 0.00
individual item
Likelihood of
recovery is
Other receivables 28,478,104.51 100.00 28,478,104.51 0.00
expected to be
low
Provision for bad debts on
0.00 0.00 0.00 0.00 --
portfolio basis
Total 28,478,104.51 100.00 28,478,104.51 0.00
④ Accrual, recovery or reversal of bad debt provision during the year
Provision for bad debts First stage Second stage Third stage Total
Expected credit
Expected Expected credit loss
loss for lifetime
credit loss for lifetime (no
(credit
within next 12 credit impairment
impairment has
months occurred)
occurred)
Beginning balance 0.00 9,793,858.02 28,478,104.51 38,271,962.53
Movement of beginning
balance during the period
--transfer to second stage 0.00 0.00 0.00 0.00
--transfer to third stage 0.00 -1,363,670.19 1,363,670.19 0.00
--Reverse to second stage 0.00 0.00 0.00 0.00
--Reverse to first stage 0.00 0.00 0.00 0.00
Provision for the year 0.00 801,402.91 0.00 801,402.91
Reversal in the year 0.00 0.00 1,040,050.67 1,040,050.67
Transfer in the year 0.00 0.00 0.00 0.00
Write-off in the year 0.00 0.00 1,601,129.63 1,601,129.63
Other movement 0.00 36,265.16 0.00 36,265.16
Closing balance 0.00 9,267,855.90 27,200,594.40 36,468,450.30
⑤Actual written-off of other receivables in the year
Item Written-off amount
Actual written-off of other receivables 1,601,129.63
⑥Other receivables due from the top five debtors
Closing Proportion to Closing
Name of entity Nature balance of Ageing total other balance of
other receivables provision for
230
Joincare Pharmaceutical Group Annual Report 2023
receivables (%) bad debts
Treasury
Hua Xia Securities Co., Ltd. (华夏证 bonds and
16,954,735.37 Over 5 years 20.56 16,954,735.37
券股份有限公司) security
deposits
Export tax Within 2
Export tax refunds receivable 7,931,105.45 9.62 373,263.13
refunds years
Guangzhou Galaxy Sunshine
Biological Products Co., Ltd. (广州 Borrowings 5,000,000.00 Over 5 years 6.06 5,000,000.00
银河阳光生物制品有限公司)
Suzhou Zhongnuo Import and Export
Co., Ltd. (苏州中诺进出口有限公 Security Within 3
2,000,000.00 2.42 368,000.00
deposits years
司)
Zhongnuo Pharmaceutical
Development (Suzhou) Co., Ltd. (中 Security Within 1
1,500,000.00 1.82 15,000.00
deposits year
诺医药发展(苏州) 有限公司)
Total 33,385,840.82 40.48 22,710,998.50
⑦ There were no other receivables derecognised due to the transfer of financial assets in each
reporting period.
⑧ There were no assets or liabilities formed by the continuing involvement of transferred other
receivables in the period.
7. Inventories
(1) Inventories by category
2023.12.31 2022.12.31
Item Provision for Provision for
Carrying Carrying
Book balance decline in Book balance decline in
amount amount
value value
Raw materials 718,552,382.00 70,207,573.94 648,344,808.06 642,893,858.16 37,543,320.41 605,350,537.75
Packaging
129,848,977.45 15,944,825.79 113,904,151.66 137,488,629.87 11,191,692.58 126,296,937.29
materials
Work-in-
progress and
769,971,425.39 101,298,495.05 668,672,930.34 649,362,917.78 65,482,989.52 583,879,928.26
Semi-finished
products
Low value
71,912,394.69 686,883.88 71,225,510.81 80,473,347.95 495,743.41 79,977,604.54
consumables
Finished goods 1,305,371,756.83 201,497,635.93 1,103,874,120.90 1,138,363,946.23 22,354,857.60 1,116,009,088.63
Subcontracting
processing 2,918,287.46 0.00 2,918,287.46 2,318,531.50 0.00 2,318,531.50
materials
Consumptive
biological 15,384,338.39 0.00 15,384,338.39 13,692,837.04 0.00 13,692,837.04
assets
Issued goods 31,484,243.47 0.00 31,484,243.47 34,344,534.56 0.00 34,344,534.56
Total 3,045,443,805.68 389,635,414.59 2,655,808,391.09 2,698,938,603.09 137,068,603.52 2,561,869,999.57
(2) Provision for decline in value of inventories
2022.12.31 Increase Decrease 2023.12.31
Item
Reversal or
Provision Others Others
written-off
Raw materials 37,543,320.41 43,346,261.83 0.00 10,682,008.30 0.00 70,207,573.94
231
Joincare Pharmaceutical Group Annual Report 2023
2022.12.31 Increase Decrease 2023.12.31
Item
Reversal or
Provision Others Others
written-off
Packaging materials 11,191,692.58 12,321,845.90 0.00 7,568,712.69 0.00 15,944,825.79
Work-in-progress and
Semi-finished 65,482,989.52 63,795,099.63 0.00 27,979,594.10 0.00 101,298,495.05
products
Low value
495,743.41 660,494.82 0.00 469,354.35 0.00 686,883.88
consumables
Finished goods 22,354,857.60 199,786,273.84 0.00 20,643,495.51 0.00 201,497,635.93
Total 137,068,603.52 319,909,976.02 0.00 67,343,164.95 0.00 389,635,414.59
Provision for decline in value of inventories (Continued)
Basis in determination of net recoverable Reason for reversal or written-off
Item amount/residual value and cost to be of provision for decline in value of
incurred inventories
Estimated selling price less estimated costs of Processing, sale of finished goods
Raw materials
completion, selling expenses and related taxes and discard
Estimated selling price less estimated costs of Processing, sale of finished goods
Packaging materials
completion, selling expenses and related taxes and discard
Work-in-progress and Estimated selling price less estimated costs of Processing of finished goods and
Semi-finished products completion, selling expenses and related taxes discard
Low value consumables Estimated selling price less the related taxes Used or discard
Estimated selling price less the estimated
Finished goods Sale and discard
selling expenses and related taxes
(3) There was no capitalization of borrowing costs in the balance of inventories at the end of the period.
8. Non-current assets due within one year
Item 2023.12.31 2022.12.31
Fixed deposits due within 1 year 406,376,425.44 54,048,611.11
Total 406,376,425.44 54,048,611.11
9. Other current assets
Item 2023.12.31 2022.12.31
Input VAT pending deduction /Input
63,118,496.24 35,679,462.66
tax pending for verification
Prepaid income tax 7,497,071.94 17,665,709.39
Cash management 0.00 92,815,738.44
Return cost receivable 6,536,364.62 12,043,428.52
Others 250,252.21 5,335,561.31
Total 77,402,185.01 163,539,900.32
232
Joincare Pharmaceutical Group Annual Report 2023
10. Long-term equity investment
Movement in the year
Beginning Closing
balance of Adjustment in Announced balance of
Investee 2022.12.31 Investment gain or Provision 2023.12.31
provision for Additions in Decrease in other Changes of distribution of provision for
impairment loss under equity for Others impairment
investment investment comprehensive other equity cash dividend
method impairment
income or profit
①Subsidiaries
Zhongshan Renhe Health
Products Co., Ltd. (中山市仁 6,337,823.35 6,337,823.35 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 6,337,823.35 6,337,823.35
和保健品有限公司)
Guangzhou Hiyeah Industry
Co., Ltd. (广州市喜悦实业 1,949,893.45 1,949,893.45 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1,949,893.45 1,949,893.45
有限公司)
Subtotal 8,287,716.80 8,287,716.80 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 8,287,716.80 8,287,716.80
②Associates
Livzon Medical Electronic
Equipment (Plant) Co., Ltd.
1,200,000.00 1,200,000.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1,200,000.00 1,200,000.00
(丽珠集团丽珠医用电子设
备有限公司)
Guangdong Blue Treasure
Pharmaceutical Co. Ltd. (广 93,084,766.28 0.00 0.00 0.00 14,642,835.53 0.00 0.00 0.00 0.00 0.00 107,727,601.81 0.00
东蓝宝制药有限公司)
Shenzhen City Youbao
Technology Co., Ltd. (深圳 1,496,595.40 0.00 0.00 0.00 67,618.97 0.00 0.00 0.00 0.00 0.00 1,564,214.37 0.00
市有宝科技有限公司)
AbCyte Therapeutics Inc. 13,767,260.06 0.00 0.00 0.00 -1,861,892.27 0.00 0.00 0.00 0.00 0.00 11,905,367.79 0.00
L&L Biopharma, Co. Ltd.
(上海健信生物医药科技有 13,903,676.49 0.00 0.00 0.00 -1,296,398.50 0.00 2,555,502.97 0.00 0.00 0.00 15,162,780.96 0.00
限公司)
Zhuhai Sanmed Biotech Inc.
(珠海圣美生物诊断技术有 61,291,769.61 0.00 0.00 0.00 -23,586,133.73 -191,973.74 1,006,182.46 0.00 0.00 0.00 38,519,844.60 0.00
限公司)
Aetio Biotheraphy, Inc. 16,034,314.68 0.00 0.00 0.00 -720,474.30 0.00 0.00 0.00 0.00 0.00 15,313,840.38 0.00
Jiangsu Atom Bioscience and
Pharmaceutical Co., Ltd. (江
92,803,409.42 0.00 0.00 0.00 -10,946,507.94 15,296.39 19,166,547.82 0.00 0.00 0.00 101,038,745.69 0.00
苏新元素医药科技有限公
司)
Tianjin Tongrentang Group
Co., Ltd. (天津同仁堂集团 726,580,281.08 0.00 0.00 0.00 88,716,019.75 2,948,132.06 0.00 112,640,000.00 0.00 0.00 705,604,432.89 0.00
股份有限公司)
233
Joincare Pharmaceutical Group Annual Report 2023
Movement in the year
Beginning Closing
balance of Adjustment in Announced balance of
Investee 2022.12.31 Investment gain or Provision 2023.12.31
provision for Additions in Decrease in other Changes of distribution of provision for
impairment loss under equity for Others impairment
investment investment comprehensive other equity cash dividend
method impairment
income or profit
Infinite Intelligence
Pharmaceutical Co. Ltd. (北 18,857,727.08 0.00 0.00 0.00 -1,287,249.07 0.00 0.00 0.00 0.00 0.00 17,570,478.01 0.00
京英飞智药科技有限公司)
Shenzhen Kangti Biomedical
Technology Co., Ltd. (深圳
6,000,000.00 0.00 4,000,000.00 0.00 -111,599.15 0.00 0.00 0.00 0.00 0.00 9,888,400.85 0.00
康体生物医药科技有限公
司)
Jiaozuo Jinguan Jiahua
Electric Power Co., Ltd. (焦 285,538,495.52 0.00 0.00 0.00 9,217,880.97 0.00 0.00 0.00 0.00 0.00 294,756,376.49 0.00
作金冠嘉华电力有限公司)
Ningbo Ningrong Biomedical
Co., Ltd. (宁波宁融生物医 27,179,209.51 0.00 0.00 0.00 606,175.12 0.00 0.00 0.00 0.00 0.00 27,785,384.63 0.00
药有限公司)
Feellife Health Inc. (深圳来
15,303,495.74 0.00 0.00 0.00 -1,528,078.93 0.00 0.00 0.00 0.00 0.00 13,775,416.81 0.00
福士雾化医学有限公司)
Jiangsu Baining Yingchuang
Medical Technology Co.,
28,732,381.11 0.00 0.00 0.00 1,365,081.78 0.00 0.00 0.00 0.00 0.00 30,097,462.89 0.00
Ltd. (江苏百宁盈创医疗科
技有限公司)
Shanghai Sheo
Pharmaceutical Technology
19,309,212.61 0.00 0.00 0.00 -598,944.86 0.00 0.00 0.00 0.00 0.00 18,710,267.75 0.00
Co., Ltd. (上海偕怡医药科
技有限公司)
Haisong Precision Parts
(Taicang) Co., Ltd. (海嵩精 0.00 0.00 1,500,000.00 0.00 115,738.03 0.00 0.00 0.00 0.00 0.00 1,615,738.03 0.00
密零部件(太仓) 有限公司)
Subtotal 1,421,082,594.59 1,200,000.00 5,500,000.00 0.00 72,794,071.40 2,771,454.71 22,728,233.25 112,640,000.00 0.00 0.00 1,412,236,353.95 1,200,000.00
Total 1,429,370,311.39 9,487,716.80 5,500,000.00 0.00 72,794,071.40 2,771,454.71 22,728,233.25 112,640,000.00 0.00 0.00 1,420,524,070.75 9,487,716.80
234
Joincare Pharmaceutical Group Annual Report 2023
11. Other equity instruments investment
Item 2023.12.31 2022.12.31 Reason for designation
Shanghai Yunfeng Xinchuang Equity Investment
57,858,983.79 67,935,704.36 Non-trading
Center (上海云锋新创股权投资中心)
Shanghai JingYi Investment Center (上海经颐投
73,365,064.89 73,616,359.91 Non-trading
资中心)
Qianhai Equity Investment Fund (前海股权投资
253,730,084.00 243,378,742.17 Non-trading
基金)
Apricot Forest, Inc (杏树林) 101,475,500.00 120,788,500.00 Non-trading
Chengdu Jinrui Jiye Biotechnology Co., Ltd. (成
20,000,000.00 0.00 Non-trading
都金瑞基业生物科技有限公司)
Beijing Shuobai Pharmaceutical Technology Co.,
10,000,000.00 0.00 Non-trading
Ltd. (北京硕佰医药科技有限责任公司)
Zhuhai China Resources Bank Co., Ltd. (珠海华
226,644,000.00 158,400,000.00 Non-trading
润银行股份有限公司)
GLOBAL HEALTH SCIENCE 205,217,490.01 271,980,388.15 Non-trading
Nextech V Oncology S.C.S., SICAV-SIF 15,837,395.11 23,996,121.32 Non-trading
Yizun Biopharmaceutics (Shanghai) Co., Ltd. (羿
35,147,356.03 30,513,209.27 Non-trading
尊生物医药(上海) 有限公司)
ELICIO THERAPEUTICS, INC. 7,820,060.93 34,823,014.36 Non-trading
CARISMA THERAPEUTICS, INC. 14,907,045.58 34,821,295.50 Non-trading
Beijing Luzhu Biotechnology Co., Ltd. (北京绿竹
63,219,286.50 53,654,738.60 Non-trading
生物技术股份有限公司)
Shanghai Keentai Biotechnology Co., Ltd. (上海
12,000,000.00 12,000,000.00 Non-trading
科恩泰生物医药科技有限公司)
Others 58,061,141.52 68,050,805.41 Non-trading
Total 1,155,283,408.36 1,193,958,879.05
As the above items are investments that the Company intends to hold for a long period of time for strategic
purposes, the Company designates them as financial assets measured at fair value through other
comprehensive income.
Continued:
Cumulative
Cumulative
Gains and losses gains and
gains and losses
recognized in Dividend losses that are
recognized in
other income transferred to Reason of
Item other
comprehensive recognised in retained derecognition
comprehensive
income for the the year earnings due
income at year
current period to
end
derecognition
Shanghai Yunfeng Xinchuang Equity Disposal of
Investment Center (上海云锋新创股权 2,445,163.17 2,937,256.61 0.00 94,149.27 partial
投资中心) investments
Disposal of
Shanghai JingYi Investment Center (上海
1,207,737.75 1,442,221.03 0.00 -8,708.31 partial
经颐投资中心) investments
Qianhai Equity Investment Fund (前海股
8,798,640.55 45,670,571.40 8,049,186.88 0.00 --
权投资基金)
Apricot Forest, Inc (杏树林) -14,484,750.00 -77,383,966.21 0.00 0.00 --
Chengdu Jinrui Jiye Biotechnology Co.,
0.00 0.00 0.00 0.00 --
Ltd. (成都金瑞基业生物科技有限公司)
Beijing Shuobai Pharmaceutical
0.00 0.00 0.00 0.00
Technology Co., Ltd. (北京硕佰医药科
235
Joincare Pharmaceutical Group Annual Report 2023
Cumulative
Cumulative
Gains and losses gains and
gains and losses
recognized in Dividend losses that are
recognized in
other income transferred to Reason of
Item other
comprehensive recognised in retained derecognition
comprehensive
income for the the year earnings due
income at year
current period to
end
derecognition
技有限责任公司)
Zhuhai China Resources Bank Co., Ltd.
58,007,400.00 128,620,504.00 0.00 0.00 --
(珠海华润银行股份有限公司)
Disposal of
GLOBAL HEALTH SCIENCE -56,708,740.55 10,494,235.28 17,709,895.19 4,408,075.32 partial
investments
Nextech V Oncology S.C.S., SICAV-SIF -8,158,726.21 -17,320,849.73 3,585,772.20 0.00 --
Yizun Biopharmaceutics (Shanghai) Co.,
1,916,103.83 2,199,036.10 0.00 0.00 --
Ltd. (羿尊生物医药(上海) 有限公司)
ELICIO THERAPEUTICS, INC. -27,002,953.43 -27,543,241.12 0.00 0.00 --
CARISMA THERAPEUTICS, INC. -26,098,003.75 -23,900,220.42 0.00 0.00 --
Beijing Luzhu Biotechnology Co., Ltd.
7,173,410.92 24,914,464.87 0.00 0.00 --
(北京绿竹生物技术股份有限公司)
Shanghai Keentai Biotechnology Co.,
Ltd. (上海科恩泰生物医药科技有限公 0.00 0.00 0.00 0.00 --
司)
Others -7,888,423.95 -17,046,345.77 0.00 0.00 --
Total -60,793,141.67 53,083,666.04 29,344,854.27 4,493,516.28 --
12. Investment properties
Housing and
Item Total
buildings
I. Book value
1.Beginning balance 61,914,754.28 61,914,754.28
2.Increase 17,727,141.51 17,727,141.51
(1) Transfer to fixed assets 17,727,141.51 17,727,141.51
3.Decrease 0.00 0.00
4.Closing balance 79,641,895.79 79,641,895.79
II. Accumulated depreciation and amortisation
1.Beginning balance 55,723,278.85 55,723,278.85
2.Increase 6,960,403.94 6,960,403.94
(1) Amortisation for the year 6,119,520.51 6,119,520.51
(2) Transfer to fixed assets 840,883.43 840,883.43
3.Decrease 0.00 0.00
4.Closing balance 62,683,682.79 62,683,682.79
III. Provision for impairment 0.00
1.Beginning balance 0.00 0.00
2.Increase 0.00 0.00
3. Decrease 0.00 0.00
4.Closing balance 0.00 0.00
IV. Carrying amount
236
Joincare Pharmaceutical Group Annual Report 2023
Housing and
Item Total
buildings
1.Carrying value at year end 16,958,213.00 16,958,213.00
2.Carrying value at beginning of year 6,191,475.43 6,191,475.43
13. Fixed assets
Item 2023.12.31 2022.12.31
Fixed assets 5,625,543,924.13 5,265,200,110.91
Fixed assets for disposal 38,808,631.84 0.00
Total 5,664,352,555.97 5,265,200,110.91
(1) Fixed assets
①Details of fixed assets
Electronic
Housing and Machinery and
Item Motor vehicles equipment and Total
buildings equipment
others
I. Book value:
1.Beginning balance 4,305,054,019.02 5,637,544,484.73 106,291,576.88 856,552,473.06 10,905,442,553.69
2.Increase 410,068,111.56 567,362,650.27 14,905,640.90 111,254,883.39 1,103,591,286.12
(1) Purchase 2,497,152.47 100,780,922.17 13,897,709.70 61,982,634.16 179,158,418.50
(2) Transfer from construction
407,570,959.09 466,581,728.10 0.00 44,062,722.98 918,215,410.17
in progress
(3) Changes in consolidation
0.00 0.00 805,832.74 5,193,524.57 5,999,357.31
scope
(3) Others 0.00 0.00 202,098.46 16,001.68 218,100.14
3.Decrease 70,100,002.95 64,743,468.33 8,487,076.65 36,919,826.81 180,250,374.74
(1) Disposal or scrap 52,372,861.44 64,743,468.33 8,487,076.65 36,919,826.81 162,523,233.23
（2）Transfer in investment
17,727,141.51 0.00 0.00 0.00 17,727,141.51
property
4.Closing balance 4,645,022,127.63 6,140,163,666.67 112,710,141.13 930,887,529.64 11,828,783,465.07
II. Accumulated depreciation - - - - -
1.Beginning balance 1,806,888,229.17 3,109,967,392.10 82,170,130.55 538,254,242.39 5,537,279,994.21
2.Increase 196,688,214.65 389,250,489.72 9,432,420.36 84,186,643.20 679,557,767.93
(1) Provision 196,688,214.65 389,250,489.72 8,640,079.24 80,227,938.47 674,806,722.08
(2) Changes in consolidation
0.00 0.00 592,421.62 3,942,703.05 4,535,124.67
scope
(3) Other increase 0.00 0.00 199,919.50 16,001.68 215,921.18
3.Decrease 27,129,847.67 48,452,036.07 6,264,872.94 33,661,796.83 115,508,553.51
(1) Disposal or scrap 21,010,327.16 48,452,036.07 6,264,872.94 33,661,796.83 109,389,033.00
（2）Transfer out investment
6,119,520.51 0.00 0.00 0.00 6,119,520.51
property
4.Closing balance 1,976,446,596.15 3,450,765,845.75 85,337,677.97 588,779,088.76 6,101,329,208.63
III. Provision for impairment - - - - -
237
Joincare Pharmaceutical Group Annual Report 2023
Electronic
Housing and Machinery and
Item Motor vehicles equipment and Total
buildings equipment
others
1.Beginning balance 26,474,491.83 57,549,501.09 0.00 18,938,455.65 102,962,448.57
2.Increase 0.00 488,174.14 78,034.30 3,658.84 569,867.28
(1) Provision 0.00 488,174.14 78,034.30 3,658.84 569,867.28
3.Decrease 37,854.00 1,396,058.26 78,034.30 110,036.98 1,621,983.54
(1) Disposal or scrap 37,854.00 1,396,058.26 78,034.30 110,036.98 1,621,983.54
4.Closing balance 26,436,637.83 56,641,616.97 0.00 18,832,077.51 101,910,332.31
IV. Carrying amount - - - - -
1. Carrying amount at year
2,642,138,893.65 2,632,756,203.95 27,372,463.16 323,276,363.37 5,625,543,924.13
end
2. Carrying value at
2,471,691,298.02 2,470,027,591.54 24,121,446.33 299,359,775.02 5,265,200,110.91
beginning of year
At the balance sheet date, the Company engaged appraisers to conduct impairment testing on
production equipment with low capacity utilization. When estimating the recoverable amount of the
cost input, an assets group associated with the production equipment was used to forecast the present
value of future cash flows. As tested, no impairment was identified in the assets groups.
The projected future cash flows of the assets group are determined based on the financial budget for
the expected useful life of the production equipment established by the management.
The main assumptions for impairment testing using the discounted future cash flow method are as
follows:
The calculation of the present value of projected future cash flows for the assets group adopts key
assumptions, including a 73.65% to 74.35% gross profit margin, revenue growth rates ranging from
0% to 5%, and a discount rate of 15.00% for cash flow discounting. These assumptions are determined
by the management based on historical performance and forecasts of market development.
②Fixed assets with temporary idle
Accumulated Provision for
Item Book value Carrying amount Note
depreciation impairment
Housing and buildings 17,882,426.27 12,738,313.16 1,981,043.82 3,163,069.29
Machinery and
121,187,759.61 86,414,982.29 22,188,236.19 12,584,541.13
equipment
Electronic equipment
1,180,809.48 912,649.11 125,010.98 143,149.39
and others
Total 140,250,995.36 100,065,944.56 24,294,290.99 15,890,759.81
③Fixed assets held under finance leases
Item Carrying amount
Housing and buildings 1,574,194.98
④Fixed assets without property certificate
Item Carrying amount Reasons for pending title certificate
Housing and buildings 157,449,537.68 Application in progress
(2) Fixed assets for disposal
238
Joincare Pharmaceutical Group Annual Report 2023
Closing balance of prior
Item Closing balance Reason for disposal
year
Relocation and expansion
project of Sichuan Guangda
38,808,631.84 Handover not completed yet
Pharmaceutical
Manufacturing
14. Construction in progress
Item 2023.12.31 2022.12.31
Construction in progress 530,594,323.07 810,835,273.97
Construction materials 464,794.99 464,794.99
Total 531,059,118.06 811,300,068.96
① Information of construction in progress
Item 2023.12.31 2022.12.31
Provision for Provision for
Book balance Net book value Book balance Net book value
impairment impairment
Haibin Pharma Pingshang
New Factory (深圳海滨坪 153,355,903.52 11,068,266.54 142,287,636.98 133,771,969.05 11,068,266.54 122,703,702.51
山新厂)
Guangda New Factory
0.00 0.00 0.00 360,963,893.27 0.00 360,963,893.27
Project (光大新厂项目)
Fuxing Company Phase I &
II Projects and others (福兴 0.00 0.00 0.00 38,842,449.73 0.00 38,842,449.73
公司一 二期项目及其他)
Project of Shijiao New
11,242,321.59 0.00 11,242,321.59 12,409,895.73 0.00 12,409,895.73
Factory (石角新厂项目)
Semaglutide project (司美项
53,876,039.98 0.00 53,876,039.98 0.00 0.00 0.00
目)
Pharmaceutical factory
100,095,507.68 0.00 100,095,507.68 70,972,186.23 0.00 70,972,186.23
workshop renovation project
Construction Project for
Microsphere Workshop
(including Gose) of Livzon
Group Livzon 0.00 0.00 0.00 39,976,590.91 0.00 39,976,590.91
Pharmaceutical Factory (丽
珠制药厂微球车间(含戈舍)
建设项目)
P06 Construction Project of
Livzon Group Livzon
Pharmaceutical Factory (丽 0.00 0.00 0.00 180,053.79 0.00 180,053.79
珠制药厂 P06 建设项目)
Project of lyophilized
powder injection workshop 0.00 0.00 0.00 1,157,559.47 0.00 1,157,559.47
(冻干粉针车间项目)
P04/P05 Construction
Project of Livzon Group
Livzon Pharmaceutical 1,710,588.82 0.00 1,710,588.82 1,560,960.52 0.00 1,560,960.52
Factory (丽珠制药厂
P04/P05 建设项目)
Livzon Group Livzon
Pharmaceutical Factory (丽 243,501.31 0.00 243,501.31 0.00 0.00 0.00
珠制药厂) P03 建设项目
Technology transformation
project for Microsphere
Phase II of Shanghai Livzon 0.00 0.00 0.00 34,677,843.69 0.00 34,677,843.69
(上海丽珠微球二期技改项
目)
239
Joincare Pharmaceutical Group Annual Report 2023
Item 2023.12.31 2022.12.31
Provision for Provision for
Book balance Net book value Book balance Net book value
impairment impairment
Jiaozuo new factory
relocation project (焦作新厂 67,116,236.97 0.00 67,116,236.97 0.00 0.00 0.00
迁建项目)
Others 154,191,830.20 169,340.46 154,022,489.74 127,559,478.58 169,340.46 127,390,138.12
Total 541,831,930.07 11,237,607.00 530,594,323.07 822,072,880.97 11,237,607.00 810,835,273.97
② Changes in significant construction in progress
Cumulati Including: Interest
Transfer to ve amount interest capitalisation
Name of Project 2022.12.31 Increase Other decrease 2023.12.31
fixed assets of interest capitalised rate for the
capitalised in the year year (%)
Haibin Pharma Pingshang
New Factory (深圳海滨坪山 133,771,969.05 145,212,282.64 98,024,548.46 27,603,799.71 0.00 0.00 0.00 153,355,903.52
新厂)
Guangda New Factory Project
360,963,893.27 145,275,853.14 506,239,746.41 0.00 0.00 0.00 0.00 0.00
(光大新厂项目)
Fuxing Company Phase I & II
Projects and others (福兴公司 38,842,449.73 20,306,789.09 44,523,939.89 14,625,298.93 0.00 0.00 0.00 0.00
一 二期项目及其他)
Project of Shijiao New
12,409,895.73 1,337,540.69 2,505,114.83 0.00 0.00 0.00 0.00 11,242,321.59
Factory (石角新厂项目)
Semaglutide project (司美项
0.00 88,742,101.07 34,866,061.09 0.00 0.00 0.00 0.00 53,876,039.98
目)
Pharmaceutical factory
70,972,186.23 95,834,059.18 66,710,737.73 0.00 0.00 0.00 0.00 100,095,507.68
workshop renovation project
Construction Project for
Microsphere Workshop
(including Gose) of Livzon
Group Livzon Pharmaceutical 39,976,590.91 0.00 39,976,590.91 0.00 0.00 0.00 0.00 0.00
Factory (丽珠制药厂微球车
间(含戈舍) 建设项目)
P06 Construction Project of
Livzon Group Livzon
Pharmaceutical Factory (丽珠 180,053.79 378,308.84 558,362.63 0.00 0.00 0.00 0.00 0.00
制药厂 P06 建设项目)
Project of lyophilized powder
injection workshop (冻干粉针 1,157,559.47 357,798.13 1,515,357.60 0.00 0.00 0.00 0.00 0.00
车间项目)
P04/P05 Construction Project
of Livzon Group Livzon
Pharmaceutical Factory (丽珠 1,560,960.52 149,628.30 0.00 0.00 0.00 0.00 0.00 1,710,588.82
制药厂 P04/P05 建设项目)
Livzon Group Livzon
Pharmaceutical Factory (丽珠 0.00 243,501.31 0.00 0.00 0.00 0.00 0.00 243,501.31
制药厂 P03 建设项目
Jiaozuo new factory
relocation project (焦作新厂 0.00 67,116,236.97 0.00 0.00 0.00 0.00 0.00 67,116,236.97
迁建项目)
Total 659,835,558.70 564,954,099.36 794,920,459.55 42,229,098.64 0.00 0.00 0.00 387,640,099.87
Changes in significant construction in progress (Continued)
Proportion of
Name of Project Budget cumulative input Progress % Source of fund
to budget %
Haibin Pharma Pingshang New Completion of Self-funding and funds
1,436,107,400.00 77.96
Factory (深圳海滨坪山新厂) some projects raised
Guangda New Factory Project (光大
536,882,000.00 99.88 100.00 Self-funding
新厂项目)
240
Joincare Pharmaceutical Group Annual Report 2023
Proportion of
Name of Project Budget cumulative input Progress % Source of fund
to budget %
Fuxing Company Phase I & II Projects
and others (福兴公司一 二期项目及 378,090,800.00 94.47 100.00 Self-funding
其他)
Project of Shijiao New Factory (石角 Self-funding and funds
377,005,000.00 90.27 90.00
新厂项目) raised
Semaglutide project (司美项目) 168,900,000.00 52.54 55.00 Self-funding
Pharmaceutical factory workshop
306,558,388.48 92.43 90.00 Self-funding
renovation project
Construction Project for Microsphere
Workshop (including Gose) of Livzon
Self-funding and funds
Group Livzon Pharmaceutical Factory 262,445,000.00 89.36 100.00
(丽珠制药厂微球车间(含戈舍) 建设 raised
项目)
P06 Construction Project of Livzon
Group Livzon Pharmaceutical Factory 117,710,000.00 95.34 100.00 Self-funding
(丽珠制药厂 P06 建设项目)
Project of lyophilized powder
Self-funding and funds
injection workshop (冻干粉针车间项 143,500,000.00 95.36 100.00
raised
目)
P04/P05 Construction Project of
Livzon Group Livzon Pharmaceutical
Factory (丽珠制药厂 P04/P05 建设项 126,880,000.00 1.35 1.00 Self-funding
目)
Livzon Group Livzon Pharmaceutical
106,033,900.00 0.23 Self-funding
Factory (丽珠制药厂 P03 建设项目
Jiaozuo new factory relocation project
184,261,900.00 36.42 35.00 Self-funding
(焦作新厂迁建项目)
Others 0.00 0.00 0.00 Self-funding
Total 4,144,374,388.48 -- -- --
Other decrease is mainly transferred to long-term deferred expenses.
15. Right-of-use assets
Item Housing and buildings Total
I. Book value:
1.Beginning balance 78,335,855.53 78,335,855.53
2.Increase 26,614,546.23 26,614,546.23
(1) Additions by lease in 26,614,546.23 26,614,546.23
3.Decrease 10,873,414.93 10,873,414.93
4. Closing balance 94,076,986.83 94,076,986.83
II. Accumulated depreciation
1.Beginning balance 36,492,721.56 36,492,721.56
2.Increase 31,907,046.92 31,907,046.92
(1) Provision 31,907,046.92 31,907,046.92
3.Decrease 10,555,849.14 10,555,849.14
4.Closing balance 57,843,919.34 57,843,919.34
241
Joincare Pharmaceutical Group Annual Report 2023
Item Housing and buildings Total
III. Provision for impairment
1.Beginning balance 0.00 0.00
2.Increase 0.00 0.00
3.Decrease 0.00 0.00
4.Closing balance 0.00 0.00
IV. Carrying amount
1. Carrying value at year
36,233,067.49 36,233,067.49
end
2. Carrying value at
41,843,133.97 41,843,133.97
beginning of year
As of 31 December 2023, the Company recognised lease expenses related to short-term leases and the
leases of low value assets of RMB7,030,100.
16. Intangible assets
(1) Details of intangible assets
Patents and
Trademark
Item Land use rights proprietary Software Others Total
rights
technologies
I. Book value
1.Beginning balance 442,251,561.19 1,015,955,570.54 93,252,884.14 62,769,716.98 10,985,294.53 1,625,215,027.38
2.Increase 2,220,284.85 220,712,363.81 4,828,301.45 0.00 0.00 227,760,950.11
(1) Purchase 2,220,284.85 1,833,600.00 4,828,301.45 0.00 0.00 8,882,186.30
(2) Internal research
0.00 218,878,763.81 0.00 0.00 0.00 218,878,763.81
and development
3.Decrease 0.00 5,524,303.12 3,051,359.93 0.00 0.00 8,575,663.05
(1) Disposals or
0.00 5,524,303.12 3,051,359.93 0.00 0.00 8,575,663.05
write-offs
4.Closing balance 444,471,846.04 1,231,143,631.23 95,029,825.66 62,769,716.98 10,985,294.53 1,844,400,314.44
II. Accumulated
amortisation
1.Beginning balance 132,119,481.74 542,409,896.29 63,402,361.15 62,765,668.27 6,682,720.82 807,380,128.27
2.Increase 9,338,295.55 325,075,396.30 11,026,049.11 471.72 1,098,529.45 346,538,742.13
(1) Provision 9,338,295.55 325,075,396.30 11,026,049.11 471.72 1,098,529.45 346,538,742.13
3.Decrease 0.00 5,524,303.12 3,051,359.93 0.00 0.00 8,575,663.05
(1) Disposals or
0.00 5,524,303.12 3,051,359.93 0.00 0.00 8,575,663.05
write-offs
4.Closing balance 141,457,777.29 861,960,989.47 71,377,050.33 62,766,139.99 7,781,250.27 1,145,343,207.35
III. Provision for
impairment
1.Beginning balance 981,826.94 14,737,946.42 0.00 0.00 0.00 15,719,773.36
2.Increase 0.00 0.00 0.00 0.00 0.00 0.00
(1) Provision 0.00 0.00 0.00 0.00 0.00 0.00
3.Decrease 0.00 0.00 0.00 0.00 0.00 0.00
242
Joincare Pharmaceutical Group Annual Report 2023
Patents and
Trademark
Item Land use rights proprietary Software Others Total
rights
technologies
4.Closing balance 981,826.94 14,737,946.42 0.00 0.00 0.00 15,719,773.36
IV. Carrying amount
1.Carrying amount at
302,032,241.81 354,444,695.34 23,652,775.33 3,576.99 3,204,044.26 683,337,333.73
year end
2.Carrying value at
309,150,252.51 458,807,727.83 29,850,522.99 4,048.71 4,302,573.71 802,115,125.75
beginning of year
As of 31 December 2023, intangible assets formed through internal research and development of the
Company account for 54.91% of the balance of intangible assets.
At the balance sheet date, the Company engaged an appraiser to conduct an impairment test on the
biological drug technology that was capitalized during the current period. When estimating the
recoverable amount of the cost input, an assets group related to the biological technology was used to
estimate the present value of future cash flows. As tested, no impairment was identified in this assets
group.
The projected future cash flows of the assets group are determined based on the financial budget for
the expected useful life of the biological drug technology established by management.
The main assumptions for impairment testing using the discounted future cash flow method are as
follows:
The calculation of the present value of projected future cash flows for the assets group related to the
biological technology utilized key assumptions of gross profit margins ranging from 80.65% to
81.94%, operating income growth rates ranging from 5.26% to 91.59%, and a discount rate of 15.00%
for cash flow discounting. These assumptions were determined by management based on historical
performance and forecasts of market development.
(2) Intangible assets pending for certificates of ownership
None.
(3) Intangible assets
The land use rights represent the state-owned land use rights obtained by the Company in accordance
with PRC laws in China, and the term of grant will be 50 years commencing from the date of obtaining
the land use rights
17. Development costs
2022.12.31 Increase Decrease 2023.12.31
Development costs 428,284,884.17 274,513,905.45 219,304,302.45 483,494,487.17
Specific details refer to Note VI Research and development expenditures.
18. Goodwill
(1) Book value of goodwill
Increase Decrease
Name of investee 2022.12.31 Formation by 2023.12.31
business Others Disposal Others
combination
Shanghai Livzon Pharmaceutical
2,045,990.12 0.00 0.00 0.00 0.00 2,045,990.12
Manufacturing Co., Ltd. (上海丽珠
243
Joincare Pharmaceutical Group Annual Report 2023
Increase Decrease
Name of investee 2022.12.31 Formation by 2023.12.31
business Others Disposal Others
combination
制药有限公司)
Zhuhai FTZ Livzon Hecheng
Pharmaceutical Manufacturing Co.,
3,492,752.58 0.00 0.00 0.00 0.00 3,492,752.58
Ltd. (珠海保税区丽珠合成制药有
限公司)
Sichuan Guangda Pharmaceutical
Manufacturing Co., Ltd. (四川光大 13,863,330.24 0.00 0.00 0.00 0.00 13,863,330.24
制药有限公司)
Livzon Group Xinbeijiang
Pharmaceutical Manufacturing Inc.
7,271,307.03 0.00 0.00 0.00 0.00 7,271,307.03
(丽珠集团新北江制药股份有限公
司)
Livzon Group Fuzhou Fuxing
Pharmaceutical Co., Ltd. (丽珠集团 46,926,155.25 0.00 0.00 0.00 0.00 46,926,155.25
福州福兴医药有限公司)
Livzon Group Livzon
Pharmaceutical Factory (丽珠制药 47,912,269.66 0.00 0.00 0.00 0.00 47,912,269.66
厂)
Livzon Group 395,306,126.41 0.00 0.00 0.00 0.00 395,306,126.41
Shenzhen Haibin Pharmaceutical
Co., Ltd. (深圳市海滨制药有限公 91,878,068.72 0.00 0.00 0.00 0.00 91,878,068.72
司)
Joincare Daily-Use & Health Care
Co., Ltd. (健康元日用保健品有限 1,610,047.91 0.00 0.00 0.00 0.00 1,610,047.91
公司)
Shenzhen Taitai Pharmaceutical
635,417.23 0.00 0.00 0.00 0.00 635,417.23
Co., Ltd. (深圳太太药业有限公司)
Health Pharmaceuticals (China)
Limited (健康药业(中国) 有限公 23,516,552.65 0.00 0.00 0.00 0.00 23,516,552.65
司)
Shenzhen Hiyeah Industry Co., Ltd
6,000,000.00 0.00 0.00 0.00 0.00 6,000,000.00
(深圳市喜悦实业有限公司)
Jiaozuo Joincare Bio Technological
Co., Ltd. (焦作健康元生物制品有 92,035.87 0.00 0.00 0.00 0.00 92,035.87
限公司)
Shanghai Zhongtuo Pharmaceutical
Technology Co., Ltd. (上海中拓医 0.00 21,870,805.09 0.00 0.00 0.00 21,870,805.09
药科技有限公司)
Total 640,550,053.67 21,870,805.09 0.00 0.00 0.00 662,420,858.76
(2) Provision for impairment of goodwill
Increase Decrease
Name of investee or matter
2022.12.31 2023.12.31
from which goodwill arose
Provision Others Disposal Others
Livzon Group Xinbeijiang
Pharmaceutical Manufacturing
7,271,307.03 0.00 0.00 0.00 0.00 7,271,307.03
Inc. (丽珠集团新北江制药股份
有限公司)
Livzon Group Fuzhou Fuxing
Pharmaceutical Co., Ltd. (丽珠集 11,200,000.00 0.00 0.00 0.00 0.00 11,200,000.00
团福州福兴医药有限公司)
Shenzhen Hiyeah Industry Co.,
6,000,000.00 0.00 0.00 0.00 0.00 6,000,000.00
Ltd (深圳市喜悦实业有限公司)
Joincare Daily-Use & Health
1,610,047.91 0.00 0.00 0.00 0.00 1,610,047.91
Care Co., Ltd. (健康元日用保健
244
Joincare Pharmaceutical Group Annual Report 2023
Increase Decrease
Name of investee or matter
2022.12.31 2023.12.31
from which goodwill arose
Provision Others Disposal Others
品有限公司)
Total 26,081,354.94 0.00 0.00 0.00 0.00 26,081,354.94
The goodwill of the Company arose from its business combination involving enterprises not under
common control.
On the balance sheet date, the Company conducts an impairment test on goodwill. When estimating
the recoverable amount of input costs, it uses a assets group related to goodwill to estimate the present
value of future cash flows.
The estimated future cash flow of asset groups is calculated according to the five-year financial budget
plan made by the management, the cash flows in the years beyond the five-year budget plan remain
stable.
Key assumptions of discounted future cash flow for goodwill impairment test are as follows:
For the calculation of estimated present value of future cash flow of the asset groups related to
goodwill of Livzon Group, key assumptions are a gross margin of 63.58%-63.74% and a business
revenue growth rate of 0~10.68% as well as a cash flow discount rate of 12.11%. The management
took into account historical conditions and predictions for future market development in making the
above assumptions.
For the calculation of estimated present value of future cash flow of the asset groups related to
goodwill of Shenzhen Haibin Pharmaceutical Co., Ltd. (深圳市海滨制药有限公司), key assumptions
are a gross margin of 36.41%-37.26% and a business revenue growth rate of 2.65%~3.28% as well as
a cash flow discount rate of 12.28%. The management took into account historical conditions and
predictions for future market development in making the above assumptions.
For the calculation of estimated present value of future cash flow of the asset groups related to
goodwill of Livzon Group Livzon Pharmaceutical Factory (丽珠制药厂), key assumptions are a gross
margin of 84.51%-85.77% and a business revenue growth rate of -0.32%~18.40% as well as a cash
flow discount rate of 14.72%. The management took into account historical conditions and predictions
for future market development in making the above assumptions.
For the calculation of estimated present value of future cash flow of the asset groups related to
goodwill of Fuzhou Fuxing Pharmaceutical Co., Ltd. (丽珠集团福州福兴医药有限公司), key
assumptions are a gross margin of 61.26%-63.22% and a business revenue growth rate of 0~5.17% as
well as a cash flow discount rate of 15.04%. The management took into account historical conditions
and predictions for future market development in making the above assumptions.
As tested, the management of the Company expects that no impairment provision is needed during
the period.
19. Long-term deferred expenses
Decrease
Item 2022.12.31 Increase 2023.12.31
Other
Amortization
decrease
Renovation costs of
32,404,898.26 11,841,332.37 8,943,822.37 0.00 35,302,408.26
offices
Renovation costs of
177,270,511.39 67,563,674.28 36,995,443.60 0.00 207,838,742.07
plants
245
Joincare Pharmaceutical Group Annual Report 2023
Others 68,192,307.30 48,028,490.43 30,583,946.83 135,260.28 85,501,590.62
Total 277,867,716.95 127,433,497.08 76,523,212.80 135,260.28 328,642,740.95
20. Deferred tax assets and deferred tax liabilities
(1) Deferred tax assets and deferred tax liabilities before offsetting
Item 2023.12.31 2022.12.31
Deductible or Deferred tax Deductible or Deferred tax
taxable timing assets or taxable timing assets or
differences liabilities differences liabilities
Deferred tax assets:
Provision for impairment of assets 343,045,560.65 53,742,321.13 336,502,793.26 51,790,732.85
Deductible difference arising from
1,023,821,672.31 154,078,627.18 965,912,234.46 145,014,131.32
accrued expenses
Deductible difference arising from
570,748,121.27 88,985,237.05 399,128,528.63 61,021,514.54
tax loss
Deferred income 351,168,477.14 52,689,271.55 329,970,021.95 49,511,503.29
Unrealised gains from intra-
557,959,823.99 83,860,590.27 694,726,037.62 104,182,311.29
company transactions
Changes in fair value of other
171,808,020.60 42,952,005.15 146,540,719.40 36,635,179.85
equity instruments
Deductible difference arising from
181,626,652.70 27,320,365.15 107,474,309.53 16,149,104.44
share incentive expenses
Changes in fair value of financial
6,788,598.30 1,118,844.82 7,298,819.37 1,234,418.76
assets held for trading
Lease liabilities 36,032,491.62 5,448,312.71 40,929,153.44 6,176,080.30
Other deductible temporary
461,922,553.15 69,339,255.14 455,485,646.11 68,322,846.92
difference
Total 3,704,921,971.73 579,534,830.15 3,483,968,263.77 540,037,823.56
Deferred tax liabilities:
Changes in fair value of financial
18,136,499.46 2,804,773.32 20,265,474.92 3,216,065.39
assets held for trading
Accelerated depreciation of fixed
1,168,361,877.72 176,372,768.51 1,094,571,545.41 167,757,444.03
assets
Changes in fair value of other
336,006,149.00 54,781,912.31 242,925,303.81 39,399,916.06
equity instruments
Unrealised gains from intra-
105,940,000.00 20,791,000.00 105,940,000.00 20,791,000.00
company transactions
Right-of-use assets 34,915,576.08 5,281,690.30 29,399,049.11 6,029,458.89
Total 1,663,360,102.26 260,032,144.44 1,493,101,373.25 237,193,884.37
(2) Deductible temporary differences and deductible tax losses of unrecognized deferred tax
assets
Item 2023.12.31 2022.12.31
Deductible temporary differences 708,195,629.77 239,109,485.46
Deductible tax loss 3,347,867,061.97 2,804,958,759.64
Total 4,056,062,691.74 3,044,068,245.10
（3）Deductible tax loss of unrecognized deferred income tax assets will expire in the following
year
246
Joincare Pharmaceutical Group Annual Report 2023
Year 2023.12.31 2022.12.31 Note
2023 0.00 182,300,762.40
2024 347,767,088.05 385,139,111.62
2025 411,145,375.34 253,044,280.36
2026 571,314,623.42 390,203,263.39
2027 756,928,429.68 1,485,158,186.92
2028 1,126,656,130.74 0.00
Thereafter 134,055,414.74 109,113,154.95
Total 3,347,867,061.97 2,804,958,759.64
21. Other non-current assets
Item 2023.12.31 2022.12.31
Fixed deposits and interest 639,386,083.31 812,562,286.58
VAT carry forward 3,338,552.19 3,338,552.19
Prepayment for acquisition of project
314,499,620.27 340,456,344.22
and equipment
Prepayment for acquisition of
0.00 415,000.00
technical know-how
Total 957,224,255.77 1,156,772,182.99
22. Ownership or using rights of assets subject to restriction
Item 2023.12.31 2022.12.31 Reason of restriction
Other cash and bank Deposits for letter of credit and bank acceptance
6,627,449.66 1,392,407.76
balances bills
Notes receivable 519,789,027.16 469,659,266.19 Acceptance bills and pledged notes receivable
Total 526,416,476.82 471,051,673.95
23. Short-term loans
(1) Short-term loans by category
Item 2023.12.31 2022.12.31
Unsecured loans 2,066,149,722.22 2,089,585,755.20
Guaranteed loans 10,009,625.00 36,464,859.86
Total 2,076,159,347.22 2,126,050,615.06
(2) The Company has no overdue short-term loans.
24. Financial liabilities held for trading
Item 2023.12.31 2022.12.31
Financial liabilities held for trading 86,817.12 755,634.43
Including:
Derivative financial liabilities 86,817.12 755,634.43
Total 86,817.12 755,634.43
Derivative financial liabilities represent foreign currency forward contracts. The loss from unexpired
247
Joincare Pharmaceutical Group Annual Report 2023
onerous contracts measured at fair value on balance sheet date was recognised as financial liabilities
held for trading.
25. Notes payable
Category 2023.12.31 2022.12.31
Bank acceptance bills 1,469,148,287.38 1,635,906,989.22
The Company has no overdue notes payable.
26. Accounts payable
Item 2023.12.31 2022.12.31
Within one year 725,938,902.30 815,158,453.21
Over 1 year 168,347,340.98 128,747,127.70
Total 894,286,243.28 943,905,580.91
(1) The aging of accounts payable is calculated from the date of entry
(2) No significant accounts payable aging over 1 year at the end of the period.
27. Contract liabilities
Item 2023.12.31 2022.12.31
Within one year 137,475,266.94 260,935,024.18
Over 1 year 21,607,370.71 32,042,706.56
Total 159,082,637.65 292,977,730.74
No significant contract liabilities with ageing for more than 1 year at the end of the period. The amount
of contract liabilities at beginning of the period recognised as revenue during the period is
RMB192,155,336.91.
28. Employee benefits payables
Item 2022.12.31 Increase Decrease 2023.12.31
Short-term employee benefits 571,143,205.10 2,089,445,950.71 2,262,734,417.03 397,854,738.78
Post-employment benefits -
584,624.36 164,554,519.87 164,810,151.10 328,993.13
Defined contribution plans
Termination benefits 1,282,742.00 7,128,897.88 7,128,897.88 1,282,742.00
Total 573,010,571.46 2,261,129,368.46 2,434,673,466.01 399,466,473.91
(1) Short-term employee benefits
Item 2022.12.31 Increase Decrease 2023.12.31
Salaries, bonus and allowances 375,067,929.19 1,873,976,365.83 1,858,591,416.63 390,452,878.39
Staff welfare 5,794,481.17 79,518,469.82 80,443,067.58 4,869,883.41
Social insurances 1,244,430.44 64,661,757.23 65,410,721.34 495,466.33
Including: 1. Medical insurance 1,153,030.82 57,856,336.25 58,621,836.12 387,530.95
2. Work injury insurance 51,322.84 4,323,739.25 4,300,052.27 75,009.82
248
Joincare Pharmaceutical Group Annual Report 2023
Item 2022.12.31 Increase Decrease 2023.12.31
3. Maternity insurance 40,076.78 2,481,681.73 2,488,832.95 32,925.56
Housing fund 2,223,574.48 64,170,716.07 64,780,041.91 1,614,248.64
Union funds and staff education 418,905.96 7,118,641.76 7,115,287.28 422,260.44
Shares ownership plan special
186,393,883.86 0.00 186,393,882.29 1.57
fund
Total 571,143,205.10 2,089,445,950.71 2,262,734,417.03 397,854,738.78
(2) Defined contribution plans
Item 2022.12.31 Increase Decrease 2023.12.31
Post-employment benefits 584,624.36 164,554,519.87 164,810,151.10 328,993.13
Including: 1. Basic pension
545,595.12 159,200,498.37 159,464,797.56 281,295.93
insurance
2. Unemployment
39,029.24 5,354,021.50 5,345,353.54 47,697.20
insurance
Total 584,624.36 164,554,519.87 164,810,151.10 328,993.13
The Company participates in pension insurance and unemployment insurance plans established by the
government in accordance with relevant requirements. According to the plans, the Company makes
contributions to these plans in accordance with relevant requirements of the local government. Save
for the above contributions, the Company no longer undertakes further payment obligation. The
corresponding cost is charged to the profit or loss for the current period or the cost of relevant assets
when it occurs.
29. Taxes payable
Taxes 2023.12.31 2022.12.31
Value-added tax 115,815,594.36 166,151,353.61
Urban maintenance and construction tax 10,479,696.08 14,374,197.97
Enterprise income tax 248,970,115.59 124,039,899.44
Property tax 10,102,159.56 7,992,927.81
Land use tax 3,551,644.81 2,847,286.45
Individual income Tax 8,704,470.10 7,524,584.67
Stamp duty 3,220,463.11 2,904,260.39
Education surcharge 6,963,481.73 9,613,697.69
Others 2,395,228.75 2,254,065.70
Total 410,202,854.09 337,702,273.73
30. Other payables
Item 2023.12.31 2022.12.31
Dividends payable 12,478,280.13 12,252,074.84
Other payables 3,670,125,758.60 3,668,082,286.04
Total 3,682,604,038.73 3,680,334,360.88
249
Joincare Pharmaceutical Group Annual Report 2023
(1) Dividends payable
Item 2023.12.31 2022.12.31
Common shares dividend 20,174.46 20,174.46
Qingyuan Xinbeijiang Enterprise (Group)
1,200,710.00 1,200,710.00
Company (清远新北江企业(集团)公司)
Other legal persons and individual shareholder of
6,709,282.62 6,682,964.50
subsidiaries
Internal staff shareholders of subsidiaries 4,548,113.05 4,348,225.88
Total 12,478,280.13 12,252,074.84
(2) Other payables
Item 2023.12.31 2022.12.31
Office expenses 83,598,827.70 69,513,003.38
Security deposits 81,936,094.18 89,750,329.22
Utility bill 43,286,467.16 28,378,759.70
Scientific research expenses 38,500,715.04 61,153,064.06
Business promotion expenses 3,229,954,810.39 3,240,077,659.74
Others 192,848,844.13 179,209,469.94
Total 3,670,125,758.60 3,668,082,286.04
The obligations of repurchasing restricted shares held by the directors, the senior management and
their spouses amounted RMB0.00 at period end.
At year end, there is no significant other payables aging over 1 year.
31. Non-current liabilities due within one year
Item 2023.12.31 2022.12.31
Lease liabilities due within one year 22,085,541.56 19,415,779.34
Long-term loans due within one year and interest 696,478,602.75 43,661,481.64
Total 718,564,144.31 63,077,260.98
32. Other current liabilities
Item 2023.12.31 2022.12.31
Output VAT pending for transfer 11,242,363.91 17,734,822.42
Payables for goods return 39,844,637.92 83,440,368.95
Others 0.00 101,522.98
Total 51,087,001.83 101,276,714.35
33. Long term loans
Range of Range of
Item 2023.12.31 2022.12.31
interest rate interest rate
Unsecured loans 1,626,187,359.91 2.15%-3.05% 1,475,974,398.32 2.45%-3.20%
Guaranteed loans 2,192,564,521.83 2.65%-3.60% 1,798,531,126.20 2.70%-3.60%
Subtotal 3,818,751,881.74 3,274,505,524.52
Less: Long-term loans due within
696,478,602.75 43,661,481.64
one year
Total 3,122,273,278.99 3,230,844,042.88
250
Joincare Pharmaceutical Group Annual Report 2023
34. Lease liabilities
Item 2023.12.31 2022.12.31
Lease payments payable 37,508,489.97 42,898,265.42
Less: Lease liabilities due within one year 22,085,541.56 19,415,779.35
Total 15,422,948.41 23,482,486.07
Interest expenses accrued on lease liabilities during the year 2023 was RMB2.81 million, which was
recorded in financial expenses-Interest expense.
35. Deferred income
Reason of
Item 2022.12.31 Increase Decrease 2023.12.31
formation
Government
384,537,267.55 81,090,429.36 95,448,146.09 370,179,550.82
grants
Government grants recorded as deferred income refer to Note VIII. Government grants.
36. Other non-current liabilities
Item 2023.12.31 2022.12.31
Relocation and expansion project of Sichuan
90,000,000.00 84,000,000.00
Guangda Pharmaceutical Manufacturing
37. Share capital
Item Movement in the year (+ or -)
Conversio
2022.12.31 2023.12.31
Issue of n from
Others Subtotal
new shares capital
reserve
I. Tradable shares subject to
selling restrictions
1. Domestic legal person shares 0 0 0 0 0 0
2. Domestic natural person
0 0 0 0 0 0
shares
3. Overseas legal person shares 0 0 0 0 0 0
Tradable shares subject to
0 0 0 0 0 0
selling restrictions in aggregate
II. Tradable shares
1. Ordinary shares
1,929,189,374 3,500,889 0 -67,166,456 -63,665,567 1,865,523,807
denominated in RMB
2. Foreign-invested stocks
0 0 0 0 0 0
listed overseas
Tradable shares in aggregate 1,929,189,374 3,500,889 0 -67,166,456 -63,665,567 1,865,523,807
III. Total number of shares 1,929,189,374 3,500,889 0 -67,166,456 -63,665,567 1,865,523,807
The increase of share capital in the year: Exercise of share options increased by 3,500,889 shares.
The reduction of share capital in this period is cancellation of repurchased shares.
38. Capital reserve
Item 2022.12.31 Increase Decrease 2023.12.31
251
Joincare Pharmaceutical Group Annual Report 2023
Capital premium 2,221,682,284.77 37,735,362.10 907,013,552.77 1,352,404,094.10
Other capital reserve 122,010,931.22 129,821,481.15 2,516,418.76 249,315,993.61
Total 2,343,693,215.99 167,556,843.25 909,529,971.53 1,601,720,087.71
The increase in capital premium was due to: 1. The exercise of share options for 3,500,889 shares
resulted in an increase in share premium of RMB35,218,943.34, and the corresponding recognition of
share-based compensation expense of RMB2,516,418.76, which was transferred from other capital
reserves to share premium.
The decrease in capital premium was due to: 1. After the exercise of share options, the difference
between the expense deductible for tax purposes and the expense previous accrued increased the
income tax payable by RMB34,920.60 in accordance with tax regulations, resulting in a corresponding
decrease in share premium; 2. The Company and its subsidiary Livzon Group repurchased shares,
resulting in a corresponding decrease in share premium of RMB906,978,632.17.
The increase in other capital reserve was due to: 1. The Company and its subsidiary Livzon Group
recognized share-based compensation expenses totalling RMB43,360,594.05; 2. The Company’s
subsidiary, Livzon Group, made non-proportional capital contribution to investees under equity
accounting method that led to change in shareholding ratio and other equity, the capital reserve is
increased by RMB12,823,027.01; 3. The subsidiary Livzon Group repurchased and cancelled shares,
causing changes in the Company's ownership percentage and other equity adjustments, resulting in an
increase in capital reserves of RMB73,637,860.09.
The decrease in other capital reserve was due to: Share incentive expense charged to capital premium
of RMB2,516,418.76.
39. Treasury shares
Item 2022.12.31 Increase Decrease 2023.12.31
Repurchase of shares due to Share Ownership
222,644,454.50 0.00 222,644,454.50 0.00
Scheme and Share Options Incentive Scheme
Repurchase of shares to be cancelled 124,532,106.79 475,382,587.14 599,914,693.93 0.00
Total 347,176,561.29 475,382,587.14 822,559,148.43 0.00
The increase in treasury stock for the period: The total amount of funds used by the company to
repurchase its A shares through centralized bidding transactions. The decrease in treasury stock for the
period: The cancellation of repurchased shares.
40. Other comprehensive income
Other comprehensive income attributable to the parent company in the balance sheet:
Beginning
Current year Closing balance
balance
Less: Included in
other comprehensive
Amount income in the
Item Beginning
attributable to previous period and
balance (4) =(1) +(2) -(3)
parent company transferred to
(1)
after tax(2) retained earnings in
the current
period(3)
I. Other comprehensive income not
reclassified into profit or loss 16,979,631.87 -28,328,225.75 2,072,742.37 -13,421,336.25
subsequently
1Other comprehensive income not
reclassified to profit or loss under 8,775,200.25 1,329,112.27 0.00 10,104,312.52
equity method
252
Joincare Pharmaceutical Group Annual Report 2023
Beginning
Current year Closing balance
balance
Less: Included in
other comprehensive
Amount income in the
Item Beginning
attributable to previous period and
balance (4) =(1) +(2) -(3)
parent company transferred to
(1)
after tax(2) retained earnings in
the current
period(3)
2.Changes in fair value of other
8,204,431.61 -29,657,338.02 2,072,742.37 -23,525,648.78
equity instrument investments
II. Other comprehensive income
that will be reclassified into profit -12,275,158.33 13,450,363.36 0.00 1,175,205.03
or loss subsequently
1.Other comprehensive income that
will be transferred to profit or loss 274,411.50 -79,651.80 0.00 194,759.70
under equity method
2.Translation difference of foreign
-12,549,569.84 13,530,015.17 0.00 980,445.33
currency financial statements
Total other comprehensive income 4,704,473.53 -14,877,862.38 2,072,742.37 -12,246,131.22
Other comprehensive income attributable to the parent company in income statement:
Current year
Less:
Less: Amount Amount
transferred
Item attributable to attributable to
Amount to profit or Less: Income
minority parent company
before tax(1) loss in tax expenses(3)
interests after after tax(5) =(1)
current
tax(4) -(2) -(3) -(4)
year(2)
I. Other comprehensive
income not reclassified into -47,130,870.01 0.00 9,080,248.76 -27,882,893.03 -28,328,225.75
profit or loss subsequently
1.Other comprehensive income
not reclassified to profit or loss 2,948,132.06 0.00 0.00 1,619,019.79 1,329,112.27
under equity method
2.Changes in fair value of
other equity instrument -50,079,002.07 0.00 9,080,248.76 -29,501,912.81 -29,657,338.02
investments
II. Other comprehensive
income that will be
20,351,531.70 0.00 0.00 6,901,168.34 13,450,363.36
reclassified into profit or loss
subsequently
1.Other comprehensive income
that will be transferred to profit -176,677.35 0.00 0.00 -97,025.55 -79,651.80
or loss under equity method
2.Translation difference of
foreign currency financial 20,528,209.05 0.00 0.00 6,998,193.88 13,530,015.17
statements
Total other comprehensive
-26,779,338.31 0.00 9,080,248.76 -20,981,724.69 -14,877,862.38
income
41. Surplus reserve
Item 2022.12.31 Increase Decrease 2023.12.31
Statutory surplus reserve 693,451,984.13 124,279,622.27 0.00 817,731,606.40
Discretionary surplus
40,210,642.44 0.00 0.00 40,210,642.44
reserve
Expansion reserve 1,103,954.93 0.00 0.00 1,103,954.93
Total 734,766,581.50 124,279,622.27 0.00 859,046,203.77
253
Joincare Pharmaceutical Group Annual Report 2023
42. Undistributed profits
(1) Movement of undistributed profits
Appropriatio
Item 2023 2022 n ratio
Retained earnings in previous period before
8,456,778,287.49 7,223,644,166.22 --
adjustments
Adjustments to opening balance of retained
0.00 -46,332.61 --
earnings (increase +, decrease -)
Opening balance of retained earnings after
8,456,778,287.49 7,223,597,833.61
adjustments
Add: Net profit attributable to parent company
1,442,779,722.23 1,502,777,133.76 --
for the current year
Gains from disposal of other equity
3,371,626.11 101,906,354.19 --
instruments investment
Less: Appropriation of statutory surplus
124,279,622.27 93,945,402.42 10%
reserve
Appropriation of discretionary surplus
0.00 0.00
reserve
Appropriation for dividends to ordinary
336,792,056.76 277,557,631.65
shares
Dividend to ordinary shares converted to
0.00 0.00
share capital
Closing balance of undistributed profits 9,441,857,956.80 8,456,778,287.49
(2) Profit distributions
Unit: RMB
Item 2023 2022
Dividends:
2022 year-end dividend (Note 2) 336,792,056.76 0.00
2021 year-end dividend (Note 3) -- 277,557,631.65
Dividends proposed after the balance sheet date:
2023 year-end dividend distribution (Note 1) 0.00 0.00
2022 year-end dividend distribution (Note 2) 336,792,056.76
Note 1: On 2 April 2024, the thirty-eighth meeting of the eighth board of directors of the Company
passed the 2023 annual profit distribution plan. A cash dividend of RMB1.80 (tax inclusive) for every
10 shares would be distributed to all shareholders based on the Company's total share capital on the
equity registration date determined by the implementation of the Company's 2023 annual profit
distribution plan. The remaining undistributed profits are carried forward for distribution in future
years.
Note 2: On 7 April 2023, the twenty-third meeting of the eighth board of directors of the Company
passed the 2022 annual profit distribution plan. A cash dividend of RMB1.80 (tax inclusive) for every
10 shares would be distributed to all shareholders based on the Company's total share capital, deducted
by the repurchased shares held in the Company's special securities account, on the equity registration
date determined by the implementation of the Company's 2022 annual profit distribution plan. The
remaining undistributed profits are carried forward for distribution in future years. The profit
distribution plan was approved by the shareholders' meeting on 9 June 2023, and was subsequently
paid.
Note 3: According to the "Profit Distribution Plan for 2021 of the Company" approved by the
Company's 2021 Annual General Meeting of Shareholders on 18 May 2022, the Company distributed
cash dividends to all shareholders, RMB0.15 per share, based on the 1,850,384,211 shares, which was
254
Joincare Pharmaceutical Group Annual Report 2023
calculated by the 1,912,540,667 issued shares registered in China Securities Depository and Clearing
Corporation Limited (Shenzhen Branch) on 29 June 2022 with deduction of 62,156,456 repurchased
shares held in repurchased account, the total amount was RMB277,557,631.65.
43. Operating income and operating cost
(1) Operating income and operating cost
Item 2023 2022
Revenue Cost Revenue Cost
Primary operations 16,521,723,930.99 6,206,181,318.60 17,012,733,738.86 6,160,330,584.19
Other operations 124,626,418.73 92,284,352.51 130,019,329.96 91,934,724.21
Total 16,646,350,349.72 6,298,465,671.11 17,142,753,068.82 6,252,265,308.40
(2) Disaggregate information of primary operating income
① Segregation by products
2023 2022
Item
Revenue Cost Revenue Cost
Primary operations:
Chemical
8,714,333,568.23 1,838,766,252.49 9,226,385,569.43 1,813,969,087.68
pharmaceuticals (化学
制剂)
Chemical active
pharmaceutical
ingredients (APIs) and 5,045,478,897.44 3,348,124,481.16 5,228,344,920.83 3,409,237,794.82
intermediates (化学原
料药及中间体)
Traditional Chinese
medicine (中药制剂) 1,805,427,390.05 575,932,282.52 1,296,583,761.24 427,894,665.07
Biological product (生
84,426,083.26 102,589,712.45 408,488,131.90 106,811,638.64
物制品)
Health care products
(保健食品) 195,865,865.05 71,643,900.63 121,235,545.22 46,223,021.02
Diagnostic reagents and
equipment (诊断试剂 658,966,438.70 256,124,411.27 723,535,115.00 352,636,503.06
及设备)
Others 17,225,688.26 13,000,278.08 8,160,695.24 3,557,873.90
Subtotal 16,521,723,930.99 6,206,181,318.60 17,012,733,738.86 6,160,330,584.19
Other operations:
Sales materials,
processing fees, etc 49,468,965.72 28,510,860.51 64,214,783.08 43,942,003.40
Rental fees 12,613,941.94 2,707,776.69 10,731,614.42 405,023.12
Others 62,543,511.07 61,065,715.31 55,072,932.46 47,587,697.69
Subtotal 124,626,418.73 92,284,352.51 130,019,329.96 91,934,724.21
Total 16,646,350,349.72 6,298,465,671.11 17,142,753,068.82 6,252,265,308.40
② Segregation by operating locations
255
Joincare Pharmaceutical Group Annual Report 2023
Item 2023 2022
Revenue Cost Revenue Cost
Domestic 13,938,078,133.85 4,471,521,161.40 14,170,771,017.92 4,326,229,111.25
Overseas 2,583,645,797.14 1,734,660,157.20 2,841,962,720.94 1,834,101,472.94
Total 16,521,723,930.99 6,206,181,318.60 17,012,733,738.86 6,160,330,584.19
③ Segregation by timing of revenue recognition
Item 2023 2022
Revenue Cost Revenue Cost
Primary operations:
Recognized at a point in
16,521,723,930.99 6,206,181,318.60 17,012,733,738.86 6,160,330,584.19
time
Other operations:
Recognized at a point in
112,012,476.79 89,576,575.82 119,287,715.54 91,529,701.09
time
Rental income 12,613,941.94 2,707,776.69 10,731,614.42 405,023.12
Total 16,646,350,349.72 6,298,465,671.11 17,142,753,068.82 6,252,265,308.40
④ Information of top five customers of business revenue
Total operating revenue from top five Proportion to primary operating income
Period
customers in the period (%)
2023 1,503,371,183.85 9.10
2022 1,524,490,064.48 8.96
⑤ Segregation by other operations
Item 2023 2022
Revenue Cost Revenue Cost
Sale of raw materials 39,304,960.58 17,822,121.67 47,190,775.25 31,174,586.16
Processing fees 376,599.27 1,558,660.40 5,995,904.44 2,546,785.48
Rental fees 12,613,941.94 2,707,776.69 10,731,614.42 405,023.12
Power fee 9,787,405.87 9,130,078.44 11,028,103.39 10,220,631.76
Others 62,543,511.07 61,065,715.31 55,072,932.46 47,587,697.69
Total 124,626,418.73 92,284,352.51 130,019,329.96 91,934,724.21
44. Taxes and surcharges
Item 2023 2022
Urban construction tax 84,322,355.47 86,745,317.20
Education surcharge 63,425,582.72 64,105,649.70
256
Joincare Pharmaceutical Group Annual Report 2023
Land use tax 10,778,058.26 10,656,172.45
Property tax 30,520,758.40 24,496,501.64
Stamp duty and others 14,162,366.00 13,742,716.57
Total 203,209,120.85 199,746,357.56
Note: The bases of calculations for major taxes and surcharges are set out in Note IV. Taxation.
45. Selling expenses
Item 2023 2022
Marketing and promotional expenses 3,777,259,678.16 4,372,087,623.70
Staff salaries 502,040,446.94 456,875,210.86
Entertainment and travel expenses 66,597,405.00 50,363,363.02
Conference fees 27,167,233.43 13,696,783.94
Others 61,377,517.52 57,779,474.64
Total 4,434,442,281.05 4,950,802,456.16
46. Administrative expenses
Item 2023 2022
Staff salaries 398,539,784.86 570,458,570.31
Depreciation and amortisation 135,294,893.83 113,223,517.86
Share incentive expenses 89,227,389.39 56,241,342.12
Advisory, consultancy and information
disclosure fees 26,477,761.47 22,074,505.08
Quality project expenses 51,398,582.85 29,400,960.89
Office, entertainment and travelling
expenses 72,905,062.42 59,419,007.80
Repair of utilities, transportation and
miscellaneous expenses 27,979,809.29 32,266,815.31
Recruitment and staff training expenses 9,004,540.26 10,962,130.33
Others 119,653,791.33 98,436,741.81
Total 930,481,615.70 992,483,591.51
47. Research and development expenses
Item 2023 2022
Material costs 292,431,042.37 290,480,597.96
Staff salaries 441,951,205.11 429,267,039.97
Share incentive expenses 1,185,242.87 835,636.96
Testing fees 327,359,553.83 491,741,656.46
Depreciation and amortisation 417,142,207.50 274,454,884.02
Outsourced R&D expenses 85,178,642.29 105,589,383.10
Others 96,510,086.93 149,718,881.47
Total 1,661,757,980.90 1,742,088,079.94
48. Financial expenses
257
Joincare Pharmaceutical Group Annual Report 2023
Item 2023 2022
Interest expense 146,728,005.05 139,016,104.44
Less: Interest income 532,253,758.86 395,476,309.66
Exchange gain or loss -27,248,744.90 -104,462,941.41
Bank charges and others 7,933,365.27 8,475,722.01
Total -404,841,133.45 -352,447,424.62
49. Other income
Related to assets/
Item 2023 2022
Related to income
Government grants 92,968,065.71 132,272,375.37 Related to assets
Government grants 140,090,341.40 154,570,556.96 Related to income
Handling fees for tax withholding 2,585,013.29 3,025,074.11
Tax refund on super-deduction 23,418,378.60 0.00
Total 259,061,799.00 289,868,006.44
For specific details on government grants, please refer to Note V. 62. Government grants. For specific
details on government grants as a non-recurring income, please refer to Note VII.1.
50. Investment income
Item 2023 2022
Long-term equity investments income under equity method 72,794,071.40 70,577,657.04
Investment income from disposal of long-term equity
0.00 4,242,404.46
investments
Investment income from financial assets held for trading during
356,166.62 306,526.30
the holding period
Dividend income from other equity instrument investments 29,344,854.27 18,713,637.23
Investment income from disposal of financial assets held for
-23,020,520.28 -37,867,110.74
trading
Total 79,474,572.01 55,973,114.29
Note 1. The breakdown of the investment income from the disposal of financial assets held for
trading:
Item 2023 2022
Investment in trading equity instruments - Equity investments 3,279.44 0.00
Derivatives that are not designated as hedges -23,023,799.72 -37,867,110.74
Including: Debt instruments investment -23,023,799.72 -37,867,110.74
Total -23,020,520.28 -37,867,110.74
51. Gains from changes in fair value
Source of gains from changes in fair value 2023 2022
Financial assets held for trading -26,088,532.43 -75,650,657.64
Including: Debt instruments investment 3,298.53 -5,873.00
Equity instruments investment -24,382,368.68 -73,700,967.89
Derivative financial assets -2,295,776.28 -1,943,816.75
Bank wealth management products 586,314.00 0.00
258
Joincare Pharmaceutical Group Annual Report 2023
Source of gains from changes in fair value 2023 2022
Financial liabilities held for trading 668,817.31 -612,332.19
Including: Derivative financial liabilities 668,817.31 -612,332.19
Total -25,419,715.12 -76,262,989.83
52. Credit impairment loss (”-” for loss)
Item 2023 2022
Bad debts of accounts receivable -17,085,116.32 -2,978,050.82
Bad debts of other receivables 238,647.76 -1,145,692.55
Total -16,846,468.56 -4,123,743.37
53. Assets impairment loss (”-” for loss)
Item 2023 2022
Decline in value of inventories -311,800,059.09 -120,646,933.39
Impairment loss of fixed assets -569,867.28 -186,548.38
Impairment loss of intangible assets 0.00 -3,207,819.01
Impairment loss of construction in progress 0.00 -11,068,266.54
Impairment loss of development costs 0.00 -7,518,369.12
Total -312,369,926.37 -142,627,936.44
54. Gains from disposal of assets
Item 2023 2022
Gain from disposal of fixed assets (“-” for Loss) -169,901.01 -705,357.30
Total -169,901.01 -705,357.30
55. Non-operating income
Amount included in
Item 2023 2022 non-recurring gains
and losses
Gains on destruction or retirement of
125,401.66 520,860.40 125,401.66
non-current assets
Income from scraps 2,131,053.05 2,478,956.98 2,131,053.05
Compensation income 589,186.01 542,762.41 589,186.01
Waiver of payables 2,618,232.49 2,671,703.10 2,618,232.49
Others 2,516,542.51 2,015,564.68 2,516,542.51
Total 7,980,415.72 8,229,847.57 7,980,415.72
56. Non-operating expenses
Amount included in non-
Item 2023 2022 recurring gains and
losses
Donation expenses 25,984,618.17 12,116,987.32 25,984,618.17
Loss on retirement of non-current assets 2,702,305.53 17,045,450.21 2,702,305.53
Others 20,303,864.40 2,898,248.53 20,303,864.40
Total 48,990,788.10 32,060,686.06 48,990,788.10
259
Joincare Pharmaceutical Group Annual Report 2023
57. Income tax expenses
(1) Details of income tax expenses
Item 2023 2022
Current income tax 640,259,675.23 489,730,614.81
Deferred income tax -25,723,917.47 72,066,128.24
Total 614,535,757.76 561,796,743.05
(2) Reconciliation between income tax expenses and accounting profits:
Item 2023 2022
Profit before tax 3,465,554,801.13 3,456,104,955.17
Income tax expenses calculated at legal/applicable tax rate 866,388,700.28 864,026,238.79
Effect of different tax rates applicable to subsidiaries -1,595,044.33 7,219,165.25
Effect of tax reduction and exemption -523,463,987.76 -608,357,224.56
Effect of non-deductible costs, expenses and losses 22,028,670.72 -1,550,467.76
Effect of deductible tax losses for which no deferred tax assets
were recognised in prior periods -2,104,712.06 -1,400,449.92
Effect of deductible tax losses or deductible temporary
differences for which no deferred tax asset was recognised in 222,732,931.76 237,204,163.65
the current period
Others 30,549,199.15 64,655,317.60
Income tax expenses 614,535,757.76 561,796,743.05
58. Notes to cash flows statement
(1) Other cash received relating to operating activities
Item 2023 2022
Government grants 219,203,190.38 239,196,300.96
Interest income 524,464,953.53 324,250,238.72
Recovery of employee loans 9,454,971.80 7,299,222.31
Security deposits 43,071,705.81 67,623,532.89
Compensation received 2,370,249.95 1,175,630.74
Current accounts and others 88,272,301.42 44,100,808.77
Total 886,837,372.89 683,645,734.39
(2) Other cash paid relating to operating activities
Item 2023 2022
Office Expenses 31,043,436.20 97,503,048.97
Travel expenses 54,229,198.42 30,372,654.60
Business entertainment expenses 81,720,679.62 69,811,587.72
Freight expenses 36,861,542.49 50,691,409.60
Conference fees 26,769,338.43 17,972,567.21
Agency and consulting services fees 40,368,390.25 35,039,742.74
R&D expenses 685,792,117.17 808,023,085.72
Bank charges 7,394,567.72 7,927,848.89
260
Joincare Pharmaceutical Group Annual Report 2023
Item 2023 2022
Business promotion expenses 3,824,876,120.39 4,634,065,689.94
Other expenses paid and current accounts 340,257,050.24 160,276,629.78
Total 5,129,312,440.93 5,911,684,265.17
(3) Cash received related to significant investment activities
Item 2023 2022
Fixed deposits 270,000,000.00 0.00
Cash management 191,536,624.91 0.00
Capital reduction 0.00 194,647,692.75
Tianjin Tongrentang dividend 112,640,000.00 111,980,000.00
Total 574,176,624.91 306,627,692.75
(4) Other cash received relating to investing activities
Item 2023 2022
Fixed deposits 347,290,000.00 0.00
Security deposits 0.00 7,405,431.82
Compensation for demolition 6,000,000.00 6,000,000.00
Collection of treasury bonds and security deposits 1,013,650.67 158,470.77
Total 354,303,650.67 13,563,902.59
(5) Cash paid relating to significant investing activities
Item 2023 2022
Haibin Pharma Pingshang New Factory (深圳海滨坪山新厂) 118,519,566.95 213,314,081.04
Guangda New Factory Project (光大新厂项目) 136,779,283.28 128,111,538.05
V01 Project 0.00 139,095,656.94
Fixed deposits 0.00 270,000,000.00
Total 255,298,850.23 750,521,276.03
(6) Other cash paid relating to investing activities
Item 2023 2022
Fixed deposits 500,000,000.00 1,084,392,104.38
Security deposits 1,382,411.40 5,755,128.00
Foreign exchange forward contract losses 29,274,143.05 30,021,080.39
Others 0.00 150.00
Total 530,656,554.45 1,120,168,462.77
(7) Other cash received relating to financing activities
Item 2023 2022
Collection and advance payment of individual income
0.00 347,182.11
tax
Discount of acceptance bills 20,000,000.00 380,719,088.50
261
Joincare Pharmaceutical Group Annual Report 2023
Total 20,000,000.00 381,066,270.61
(8) Other cash paid relating to financing activities
Item 2023 2022
Repurchase of shares 821,537,016.03 780,551,259.85
Discounted bills matured and redeemed 400,719,088.50 0.00
Rental payments 39,867,739.36 32,925,995.59
Collection and advance payment of individual income
14,362.22 1,237,210.80
tax
GDRs issuance fees 1,000,000.00 16,003,722.82
Others 624,000.00
Total 1,263,138,206.11 831,342,189.06
(9) Changes in liabilities arising from financing activities
Beginning
Item Cash movement Non-cash movement Closing balance
balance
Fair
Interest
Cash inflow Cash outflow value Others
accrued
change
Short-
term 2,126,050,615.06 2,696,000,000.00 2,770,048,974.14 24,326,923.40 0.00 -169,217.10 2,076,159,347.22
loans
Long
term 3,274,505,524.52 1,597,570,084.01 1,164,800,796.93 111,477,070.12 0.00 0.00 3,818,751,881.72
loans
Lease
42,898,265.41 0.00 34,878,856.92 2,796,820.91 0.00 26,692,260.58 37,508,489.98
liabilities
Total 5,443,454,404.99 4,293,570,084.01 3,969,728,627.99 138,600,814.43 0.00 26,523,043.48 5,932,419,718.92
59. Supplement to cash flow statement
(1) Supplement to cash flow statement
Supplement information 2023 2022
1. Reconciliation of net profit to cash flow from operating
activities:
Net profit 2,851,019,043.37 2,894,308,212.12
Add: Assets impairment loss 312,369,926.37 142,627,936.44
Credit impairment loss 16,846,468.56 4,123,743.37
Depreciation of fixed assets 675,647,605.51 615,224,869.47
Amortisation of right-of-use assets 31,907,046.92 32,367,074.98
Amortization of intangible assets 346,538,742.13 190,110,160.68
Long-term prepaid expenses amortization 76,523,212.80 58,054,847.07
Losses on disposal of fixed assets, intangible assets and other
169,901.01 705,357.30
long-term assets (Gain as in “-”)
Loss on retirement of fixed assets (Gain as in “-”) 2,576,903.87 16,524,589.81
Losses on changes in fair value (Gain as in “-”) 25,419,715.12 76,262,989.83
262
Joincare Pharmaceutical Group Annual Report 2023
Supplement information 2023 2022
Financial expenses (Gain as in “-”) 92,921,024.82 28,611,954.30
Investment losses (Gain as in “-”) -79,474,572.01 -55,973,114.29
Decrease in deferred tax assets (Increase as in “-”) -33,180,181.29 20,541,235.89
Increase in deferred tax liabilities (Decrease as in “-”) 7,456,263.82 51,409,862.83
Decrease in inventories (Increase as in “-”) -415,385,285.01 -604,732,283.55
Decrease in operating receivables (Increase as in “-”) 6,974,012,382.11 2,380,941,083.00
Increase in operating payables (Decrease as in “-”) -7,046,712,674.37 -1,924,536,232.01
Others 90,254,086.00 51,132,852.05
Net cash flows from operating activities 3,928,909,609.73 3,977,705,139.29
2.Significant investment or finance activities not involving cash:
Conversion of debt into capital 0.00 0.00
Convertible bonds mature within one year 0.00 0.00
Right-of-use assets newly added in the current period 26,614,546.23 0.00
3. Net increase / (decrease) in cash and cash equivalents:
Cash and bank balance as at end of year 15,340,869,372.73 14,178,465,686.40
Less: cash and bank balance at beginning of year 14,178,465,686.40 11,697,518,141.18
Add: cash equivalents at end of year 0.00 0.00
Less: cash equivalents at beginning of year 0.00 0.00
Net increase in cash and cash equivalents 1,162,403,686.33 2,480,947,545.22
(2) Net cash paid for acquisition of subsidiaries during the year
Item Current year
Cash and cash equivalents paid in current year for business combination happened in
22,500,000.00
current year
Including: Shanghai Zhongtuo Pharmaceutical Technology Co., Ltd. (上海中拓医药科
22,500,000.00
技有限公司)
Less: Cash and cash equivalents held by subsidiary at acquisition date 38,048.41
Including: Shanghai Zhongtuo Pharmaceutical Technology Co., Ltd. (上海中拓医药科
38,048.41
技有限公司)
Add: Cash and cash equivalents paid in current year for business combination happened
in previous years
Including: Shanghai Zhongtuo Pharmaceutical Technology Co., Ltd. (上海中拓医药科
技有限公司)
Net cash paid for acquisition of subsidiary 22,461,951.59
(3) Net cash received from disposal of subsidiaries during the year
None
(4) Details of cash and cash equivalents
Item 2023 2022
I. Cash 15,340,869,372.73 14,178,465,686.40
263
Joincare Pharmaceutical Group Annual Report 2023
Item 2023 2022
Including: Cash on hand 355,538.62 231,883.95
Cash at bank readily available for payment 15,235,850,763.95 14,164,236,988.28
Other monetary fund readily available for payment 104,663,070.16 13,996,814.17
II. Cash equivalents 0.00 0.00
Including: bonds investment mature within 3 months 0.00 0.00
III. Cash and cash equivalents as at closing balance 15,340,869,372.73 14,178,465,686.40
Cash and cash equivalents do not include any cash and cash equivalents that are restricted in use.
(5) Monetary funds not classified as cash and cash equivalents
Closing balance Reason for not classified as cash and cash
Item Closing balance
of prior year equivalents
Security deposits for bank
6,627,449.66 1,392,407.76 Frozen
acceptance bills
Accrued interest income 44,391,492.44 98,630,016.80 Accrued interest not yet received
Fixed deposits 300,000,000.00 530,000,000.00 Intended to be held until maturity
Total 351,018,942.10 630,022,424.56
60. Items in foreign currencies
Balance in foreign Equivalent RMB balance at
Item Conversion rate
currency at year end year end
Cash and bank balances
Including: HKD 1,004,532,223.21 0.90622 910,327,191.33
Euro 92,685.96 7.8592 728,437.51
USD 294,986,518.59 7.0827 2,089,301,015.24
MOP 6,263,135.03 0.8837 5,534,732.43
JPY 3,551,792.00 0.050213 178,346.13
GBP 1,690.10 9.0411 15,280.36
MYR 9,793.47 1.54154 15,097.03
Accounts receivable
Including: USD 19,537,428.76 7.0827 138,377,746.68
MOP 166,738.45 0.8837 147,346.77
Other receivables
Including: USD 7.0827
HKD 3,373,551.61 0.90622 3,057,179.94
MOP 179,548.00 0.8837 158,666.57
Accounts payable
Including: USD 370,452.19 7.0827 2,623,801.73
Euro 5,665.41 7.8592 44,525.59
JPY 420,856,761.37 0.050213 21,132,480.56
Other payables
Including: HKD 4,054,536.09 0.90622 3,674,301.69
USD 4,085,692.73 7.0827 28,937,735.90
264
Joincare Pharmaceutical Group Annual Report 2023
61. Leases
(1) As leasee
Item Current year
Short-term rental expenses 7,030,089.32
(2) As lessor
Operating leases
①Rental income
Item Current year
Rental income 12,613,941.94
② The total undiscounted lease payments to be received annually for the five years subsequent to the
balance sheet date, as well as the total undiscounted lease payments to be received for the remaining
years
Subsequent to balance sheet date Closing balance Closing balance of prior year
First year 8,399,755.50 9,221,839.88
Second year 4,141,314.40 4,469,018.03
Third year 939,324.00 2,135,386.60
Fourth year 252,000.00 394,179.00
Fifth year 252,000.00 252,000.00
Thereafter 1,554,000.00 1,806,000.00
Total 15,538,393.90 18,278,423.51
VI. Research and development expenditures
1. Research and development expenditures
Item Current year Prior year
Expenses amount Capitalised amount Expenses amount Capitalised amount
Material costs 292,431,042.37 27,267,774.25 290,480,597.96 14,545,786.50
Staff salaries 441,951,205.11 25,496,236.78 429,267,039.97 36,371,140.89
Testing fees 327,359,553.83 77,594,659.61 491,741,656.46 111,401,639.14
Depreciation and 417,142,207.50 7,197,468.44 274,454,884.02 4,515,100.25
amortisation
External purchase of 85,178,642.29 130,621,099.42 105,589,383.10 15,267,930.32
research projects
Others 97,695,329.80 6,336,666.95 150,554,518.43 21,061,744.06
Total 1,661,757,980.90 274,513,905.45 1,742,088,079.94 203,163,341.16
2. Development costs
Item Increase Decrease
Beginning Closing
Internal Recognized as
balance Other Recognized in balance
development intangible
increase profit or loss
costs assets
Chemical
pharmaceuticals 136,857,815.87 140,106,001.71 130,189,959.33 64,646,428.39 425,538.64 342,081,809.88
(化学制剂)
265
Joincare Pharmaceutical Group Annual Report 2023
Biologics 238,227,636.57 0.00 0.00 145,802,628.07 0.00 92,425,008.50
APIs and others 53,199,431.73 4,217,944.41 0.00 8,429,707.35 0.00 48,987,668.79
Total 428,284,884.17 144,323,946.12 130,189,959.33 218,878,763.81 425,538.64 483,494,487.17
Significant capitalized research and development projects
Expected
Specific basis
Estimated method of Commencement
for
Item Progress completion generating time of
capitalization
time economic capitalization
begin
benefits
Submitted
clinical trial Obtained
application clinical
Project JP1366 and received Marketing Clinical test approval and Project JP1366
notification of evaluated by
acceptance the company
from CDE
3. External purchase of research projects
JP1366 has completed phase III clinical trials in South Korea and submitted a listing application. It
was purchased during the period to undergo clinical trials managed by the Company. After evaluation
by the Company, it is determined that the future economic benefits of this project are likely to accrue
to the Company. Therefore, the purchase price is recognized as development expenses.
VII. Interest in other entities
1. Interests in subsidiaries
(1) Group structure
Type of Legal person Main operating Place of Business Shareholding %
Name of subsidiary Registered capital Acquisition method
subsidiaries category location registration nature
Direct Indirect
Topsino Industries Limited (天
Wholly-owned Limited
诚实业有限公司) (Topsino Hong Kong Hong Kong Commercial HKD896,933,973.00 100 Set-up by investment
subsidiary company
Industries)
Shenzhen Taitai Genomics Inc.
Wholly-owned Limited
Co., Ltd. (深圳太太基因工程 Shenzhen Shenzhen Industrial RMB50,000,000.00 75 25 Set-up by investment
subsidiary company
有限公司) (Taitai Genomics)
Shenzhen Taitai
Pharmaceutical Industry Co., Wholly-owned Limited
Shenzhen Shenzhen Industrial RMB100,000,000.00 100 Set-up by investment
Ltd. (深圳太太药业有限公司) subsidiary company
(Taitai Pharmaceutical) )
Health Investment Holdings
Wholly-owned Limited The British The British
Ltd. (Health Investment) (健康 Investment USD50,000.00 100 Set-up by investment
subsidiary company Virgin Islands Virgin Islands
投资公司)
Joincare Pharmaceutical Group Wholly-owned Limited The British The British
Investment USD 50,000.00 100 Set-up by investment
Industry Co.,Ltd.(BVI) * subsidiary company Virgin Islands Virgin Islands
Joincare Pharmaceutical Group
Wholly-owned Limited
Industry Co.,Ltd.(CAYMAN Cayman Islands Cayman Islands Investment USD 50,000.00 100 Set-up by investment
subsidiary company
ISLANDS)
Xinxiang Haibin
Pharmaceutical Co., Wholly-owned Limited
Henan Xinxiang Henan Xinxiang Industrial RMB170,000,000.00 100 Set-up by investment
Ltd.(Xinxiang Haibin) (新乡海 subsidiary company
滨药业有限公司(新乡海滨) )
Shenzhen Fenglei Electric
Power Investment Co., Ltd. Wholly-owned Limited
Shenzhen Shenzhen Investment RMB100,000,000.00 100 Set-up by investment
(深圳市风雷电力投资有限公 subsidiary company
司) (Fenglei Electric Power)
Jiaozuo Joincare Bio
Technological Co., Ltd.(焦作 Wholly-owned Limited
Henan Jiaozuo Henan Jiaozuo Industrial RMB700,000,000.00 75 25 Set-up by investment
健康元生物制品有限公司) subsidiary company
(Jiaozuo Joincare) )
266
Joincare Pharmaceutical Group Annual Report 2023
Type of Legal person Main operating Place of Business Shareholding %
Name of subsidiary Registered capital Acquisition method
subsidiaries category location registration nature
Direct Indirect
Shanghai Frontier Health
Pharmaceutical Technology
Limited
Co., Ltd. (上海方予健康医药 Subsidiaries Shanghai Shanghai Industrial RMB50,000,000.00 65 Set-up by investment
company
科技有限公司)(Shanghai
Frontier)
Shenzhen Taitai Biological
Technology Co., Ltd. (深圳太 Wholly-owned Limited
Shenzhen Shenzhen Industrial RMB5,000,000.00 100 Set-up by investment
太生物科技有限公司)(Taitai subsidiary company
Biological) )
Guangzhou Joincare
Respiratory Medicine
Engineering Technology Co., Limited
Ltd.(Joincare Respiratory) (广 Subsidiaries Guangzhou Guangzhou Industrial RMB10,000,000.00 26 Set-up by investment
company
州健康元呼吸药物工程技术
有限公司(健康元呼吸) )
Guangdong Taitai Forenstic
Test Institute (广东太太法医 Wholly-owned Other
Shenzhen Shenzhen Commercial RMB0.00 100 Set-up by investment
subsidiary organization
物证司法鉴定所(鉴定所) )
Joincare Haibin
Pharmaceutical Co., Ltd. (健康 Wholly-owned Limited
Shenzhen Shenzhen Industrial RMB500,000,000.00 25 75 Set-up by investment
元海滨药业有限公司 subsidiary company
(Joincare Haibin) )
Shenzhen Haibin Business
Pharmaceutical Co., Ltd. (深圳 Wholly-owned Limited combination not
Shenzhen Shenzhen Industrial RMB700,000,000.00 97.87 2.13
市海滨制药有限公司) ) subsidiary company under common
(Haibin Pharma) control
Joincare Daily-Use & Health Business
Care Co., Ltd. (健康元日用保 Wholly-owned Limited combination not
Shenzhen Shenzhen Commercial RMB25,000,000.00 80 20
健品有限公司) (Joincare subsidiary company under common
Daily-Use) control
Health Pharmaceuticals Business
Wholly-owned Limited combination not
(China) Limited (健康药业(中 Zhuhai Zhuhai Industrial HKD73,170,000.00 100
subsidiary company under common
国) 有限公司) (Health China)
control
Livzon Pharmaceutical Group Business
Inc. (丽珠医药集团股份有限 Joint-stock combination not
Subsidiaries Zhuhai Zhuhai Industrial RMB923,938,139.00 23.96 21.38
公司) (Livzon Group) *Note company under common
1 control
Hong Kong Health Business
Pharmaceutical Industry Wholly-owned Limited combination not
Hong Kong Hong Kong Investment HKD10,000.00 100
Company Limited (香港健康 subsidiary company under common
药业有限公司) control
Health Pharmaceutical Business
Wholly-owned Limited combination not
Industry Company Limited (健 Hong Kong Hong Kong Investment HKD10,000.00 100
subsidiary company under common
康药业有限公司)
control
Shenzhen Hiyeah Industry Co., Business
Wholly-owned Limited combination not
Ltd (深圳市喜悦实业有限 Shenzhen Shenzhen Commercial RMB178,000,000.00 97.58 2.42
subsidiary company under common
公司) (Shenzhen Hiyeah)
control
Guangzhou Hiyeah Industry Business
Wholly-owned Limited combination not
Co., Ltd. (广州市喜悦实业有 Guangzhou Guangzhou Industrial RMB3,000,000.00 100
subsidiary company under common
限公司)
control
Zhongshan Renhe Health Business
Wholly-owned Limited combination not
Products Co., Ltd. (中山市仁 Zhongshan Zhongshan Industrial RMB500,000.00 100
subsidiary company under common
和保健品有限公司)
control
Joincare (Guangdong) Special
medicine Food Co., Ltd. (健康
Wholly-owned Limited
元(广东) 特医食品有限公司) Shaoguan Shaoguan Industrial RMB20,000,000.00 100 Set-up by investment
subsidiary company
(Joincare Special medicine
Food)
Henan Joincare Biomedical
Research Institute Co., Ltd. (河 Limited
Subsidiaries Jiaozuo Jiaozuo Industrial RMB100,000,000.0 70.36 Set-up by investment
南省健康元生物医药研究院 company
有限公司)
Jiaozuo Jianfeng
Limited
Biotechnology Co., Ltd. (焦作 Subsidiaries Jiaozuo Jiaozuo Industrial RMB50,000,000.0 66.5 Set-up by investment
company
健风生物科技有限公司)
*Note 1: Livzon Group (丽珠集团) controls the subsidiaries in which this company holds equity
stakes
(1) On 30 March 2021, the Company’s subsidiary Shanghai Frontier Health Medical Technology Co.,
Ltd.( 上海方予健康医药科技有限公司) and Livzon Group (丽珠集团) established Shanghai Liyu
Biopharmaceutical Technology Co., Ltd (上海丽予生物医药技术有限责任公司). Livzon Group
holds 55% of the shares, while Shanghai Frontier Health Medical Technology Co., Ltd. holds 45%.
267
Joincare Pharmaceutical Group Annual Report 2023
(2) The Company and Livzon Group jointly established Li Jian (Guangdong) Animal Health Co., Ltd.
(丽健（广东）动物保健有限公司) on 1 February 2023. Livzon Group holds a 51% of the shares,
while the Company holds 49%.
(3) The Company and Joincare Pharmaceutical Group Co., Ltd. (健康元药业集团股份有限公司)
jointly established Wuhan Kangli Health Investment Management Co., Ltd. (武汉康丽健康投资管
理有限公司) on 8 February 2023. Livzon Group holds a 60% of the shares, while the Company holds
40%.
(4) Zhuhai Livzon Biotechnology Co., Ltd. (珠海市丽珠生物医药科技有限公司) is a subsidiary
within the scope of Livzon Group's consolidation. It was originally 100% indirectly held by Livzon
Group. Due to the restructuring of the shareholding structure of the subsidiary, Livzon Group holds
51% of its shares, the Company holds 33.07% of the shares, YF Pharmab Limited holds 8.43% of the
shares, and Hainan Lishengjuyuan Investment Partnership (Limited Partnership) (海南丽生聚源投资
合伙企业(有限合伙)) holds 7.50%.
Subsidiaries not included in the scope of consolidation in the current period:
Name of subsidiary Registered capital Actual investment Interest held
Guangzhou Hiyeah Industry Co., Ltd.
3,000,000.00 3,000,000.00 100%
(广州市喜悦实业有限公司)
Zhongshan Renhe Health Products Co.,
500,000.00 500,000.00 100%
Ltd. (中山市仁和保健品有限公司)
Guangzhou Hiyeah Industry Co., Ltd. ( 广 州 市 喜 悦 实 业 有 限 公 司 ), Zhongshan Renhe Health
Products Co., Ltd. (中山市仁和保健品有限公司) are wholly-owned subsidiaries of Shenzhen Hiyeah.
They entered the liquidation process in 2008, and has been out of business for many years, and
completed the tax cancellation procedures, so they were not included in the scope of the consolidated.
(2) Significant non-wholly owned subsidiaries
Profit or loss Balance of
Name of Shareholding of Dividend paid to
attributable to minority interests
subsidiary minority interest minority interest
minority interest at period end
Livzon
54.6638% 1,072,909,287.03 817,351,995.09 7,676,161,547.29
Group
(3) Principal financial information of significant non-wholly owned subsidiaries
Closing balance
Name of
subsidiary Non-current
Current assets Non-current assets Total assets Current liabilities Total liabilities
liabilities
Livzon
17,266,174,718.28 7,778,652,409.47 25,044,827,127.75 8,087,137,474.74 2,190,986,656.97 10,278,124,131.71
Group
Continued (1) :
Beginning balance
Name of
subsidiary Non-current Current Non-current
Current assets Total assets Total liabilities
assets liabilities liabilities
Livzon
16,987,297,040.38 7,880,872,377.25 24,868,169,417.63 7,396,664,920.29 2,535,220,197.95 9,931,885,118.24
Group
Continued (2) :
Current year Prior year
Name of
Total Cash flows from Total Cash flows from
subsidiary Operating Operating
Net profit comprehensive operating Net profit comprehensive operating
income income
income activities income activities
Livzon
12,430,038,325.82 1,897,601,012.24 1,860,486,123.97 3,248,934,191.80 12,629,579,047.66 1,955,577,382.63 2,084,884,890.22 2,772,671,295.03
Group
(4) Changes in share of owners' equity in subsidiaries and still controls the subsidiaries
None
268
Joincare Pharmaceutical Group Annual Report 2023
2. Business combination not under common control
The details of the business combination not under common control involving Livzon Group, a
subsidiary of the Company, for the current period are as follows:
(1) Business combination not under common control during the year
Acquiree’s Acquiree’s Acquiree’s
Acquisition Basis of income net profit cash flows
Cost of Share-
date of Acquisition Acquisition acquisition from from from
Acquiree equity holding
equity method date date acquisition acquisition acquisition
investment acquired %
investment determination date to date to year date to year
year end end end
Shanghai
Zhongtuo
Pharmaceutical Completed the
Technology Co., -
2023.3.6 25,000,000.00 100 Purchase 2023.3.6 asset transfer 671,698.11 34,974.17
Ltd. (上海中拓 2,155,445.77
process
医药科技有限
公司)
(2) Acquisition cost and goodwill
Shanghai Zhongtuo Pharmaceutical
Item Technology Co., Ltd. (上海中拓医药科技
有限公司) (Shanghai Zhongtuo)
Acquisition cost:
Cash 25,000,000.00
Total acquisition cost 25,000,000.00
Less: share of the fair value of the identifiable net assets acquired 3,129,194.91
Goodwill 21,870,805.09
(3) Identifiable assets and liabilities of the acquiree at the acquisition date
Shanghai Zhongtuo (上海中拓)
Item
Fair value Carrying amount
Assets:
Current assets 3,133,248.41 3,133,248.41
Non-current assets 1,454,117.80 1,454,117.80
Liabilities:
Current liabilities 1,458,171.30 1,458,171.30
Net assets 3,129,194.91 3,129,194.91
Less: Minority interests
Net assets acquired 3,129,194.91 3,129,194.91
The assets purchased from Shanghai Zhongtuo mainly include accounts receivable and fixed assets,
while liabilities mainly include accounts payable, employee salaries payable, and other payables. It is
anticipated that the fair value of these assets and liabilities will have minimal differences from their
carrying amount. Therefore, the fair value of identifiable assets and liabilities is determined based on
their carrying amount.
3. Changes in the scope of consolidation due to other reason
On 1 February 2023, the Company and Livzon Group jointly established Li Jian (Guangdong) Animal
Health Co., Ltd. (丽健(广东) 动物保健有限公司). The registered capital is RMB200 million, with
Livzon Group contributing RMB102 million, accounting for 51% of the registered capital, and the
Company contributing RMB98 million, accounting for 49% of the registered capital.
On 8 February 2023, the Company and Livzon Group jointly established Wuhan Kangli Health
Investment Management Co., Ltd. (武汉康丽健康投资管理有限公司). The registered capital is
RMB100 million, with Livzon Group contributing RMB60 million, accounting for 60% of the
registered capital, and the Company contributing RMB40 million, accounting for 40% of the
269
Joincare Pharmaceutical Group Annual Report 2023
registered capital.
On 13 April 2023, Livzon Group's subsidiary Zhuhai Livzon Chinese Medicine Modern Technology
Co., Ltd. ( 珠 海 市 丽 珠 中药 现 代 化 科 技有 限 公 司 ) and Livzon Group Limin Pharmaceutical
Manufacturing Factory (丽珠集团利民制药厂) jointly established Macau Livzon Chinese Medicine
Modern Technology Co., Ltd. (澳门丽珠中药现代化科技有限公司). The registered capital is MOP
100,000, with Zhuhai Livzon Chinese Medicine Modern Technology Co., Ltd. holding 70% of the
registered capital and Livzon Group Limin Pharmaceutical Manufacturing Factory holding 30% of
the registered capital.
On 5 July 2023, Livzon Group's subsidiary Zhuhai Livzon Chinese Medicine Modern Technology Co.,
Ltd. (珠海市丽珠中药现代化科技有限公司) and Guangxi Youtian Pharmaceutical Co., Ltd. (广西
有田药业有限公司) jointly established Linfen Lizhu Qiaoyuan Medicinal Materials Co., Ltd. (临汾
丽珠翘源药材有限公司). The registered capital is RMB5 million, with Zhuhai Livzon Chinese
Medicine Modern Technology Co., Ltd. holding 51% of the registered capital and Guangxi Youtian
Pharmaceutical Co., Ltd. holding 49% of the registered capital.
On 15 March 2023, Livzon Group's subsidiary Gongshan Lizhu Yaoyuan Technology Co., Ltd. (贡山
丽珠药源科技有限公司) was deregistered.
4. Interests in joint arrangement or associates
(1) Significant associates
Principal Shareholding (%) Accounting
Name of joint Place of Business
place of treatment of
ventures or associates registration nature
business Direct Indirect investment
Associates
Tianjin Tongrentang
Group Co., Ltd. (天津 Pharmaceutical Equity
Tianjin Tianjin 0.00 40
同仁堂集团股份有限 manufacturing method
公司)
(2) Main financial information of significant associates
Tianjin Tongrentang Group Co., Ltd. (天津同仁堂集团股份有限公司)
Tianjin Tongrentang Group Co., Ltd.
Item (天津同仁堂集团股份有限公司)
2023.12.31
Owners’ equity attributable to parent company 517,866,873.04
Share of net assets calculated based on shareholding ratio 207,146,749.21
Adjustments
Including: Goodwill 498,457,683.68
Carrying value of equity investment in associates 705,604,432.89
Fair value of publicly quoted equity investments
Continued:
Tianjin Tongrentang Group Co., Ltd. (天
Item 津同仁堂集团股份有限公司)
Current year
Operating income 1,118,218,327.43
Dividends received by the company from associates in the current
112,640,000.00
period
270
Joincare Pharmaceutical Group Annual Report 2023
The Company calculates the share of assets of associate based on the shareholding for the amount
attributable to the parent company in the consolidated financial statements. The amounts in the
consolidated financial statements of associates take into account the fair value of identifiable net assets
and liabilities of associates at the time of acquisition and the impact of unified accounting policies.
(3) Summary of financial information of other insignificant associates
Closing balance/ Beginning balance/
Item
Current year Prior year
Associates:
Total carrying amount of investment 705,431,921.06 407,763,817.99
The following amount are calculated on the basis
of shareholding ratio
Net profit -15,921,948.35 -11,360,486.63
Other comprehensive income -176,677.35 527,718.52
Total comprehensive income -16,098,625.70 -10,832,768.11
(4) Significant limitations on the ability of joint ventures or associates to transfer funds to the
Company
None.
VIII. Government grants
1. Government grants recorded as deferred income and measured at gross amount method
subsequently
Item
Related
presente
to assets/
Beginning Additions in Transfer to Other Closing d in
Projects with grants Category Related
balance the year profit or loss movement balance income
to
stateme
income
nt
Laboratory project of
respiratory system inhalation
preparation engineering Financial Other Related
1,885,450.00 0.00 1,616,100.00 0.00 269,350.00
laboratory project (呼吸系统 allocation income to assets
吸入制剂工程实验室项目)
Construction of a recycling
production base for
carbapenem products (碳青 Financial Other Related
3,625,000.00 0.00 0.00 0.00 3,625,000.00
allocation income to assets
霉烯类系列产品循环化生
产基地建设)
Construction of an integrated
production line for fully
automatic blister-type dry
powder inhalant micro-filling Financial Other Related
685,666.62 0.00 242,000.04 0.00 443,666.58
and winding (全自动泡罩型 allocation income to assets
干粉吸入剂微量灌封与卷
绕一体化生产线建设)
Shenzhen Sponge City
Construction Fund Reward Financial Other Related
(深圳市海绵城市建设资金 760,947.20 0.00 44,761.56 0.00 716,185.64
allocation income to assets
奖励)
Large-scale development
subsidy for new inhalation Financial Other Related
preparations (新型吸入制剂 1,680,000.00 0.00 0.00 0.00 1,680,000.00
allocation income to assets
规模化发展补助)
Central financial subsidy
Financial Other Related
funds for park recycling 0.00 2,323,496.00 2,131,544.40 0.00 191,951.60
allocation income to assets
transformation
Zhimu total sapogenin Financial Other Related
8,900,000.00 0.00 0.00 0.00 8,900,000.00
project (知母总皂甙元项目) allocation income to assets
271
Joincare Pharmaceutical Group Annual Report 2023
Glucocorticoid inhalation
suspension project (糖皮质 Financial Other Related
7,200,000.00 0.00 0.00 0.00 7,200,000.00
allocation income to assets
混悬液项目)
Financial allocation for small
molecule peptide projects (财 Financial Other Related
239,999.76 0.00 80,000.04 0.00 159,999.72
allocation income to assets
政拨款用于小分子肽项目)
Leulu total sterone project Financial Other Related
2,500,000.00 0.00 0.00 0.00 2,500,000.00
(漏芦总甾酮项目) allocation income to assets
R&D of active substances
with bone and joint repair
and health care functions(具 Financial Other Related
837,943.68 0.00 119,706.24 0.00 718,237.44
allocation income to assets
有 (骨关节修复与保健) 功
能的活性物质研发)
Key technology research and
development of budesonide
nebulized inhalation solution Financial Other Related
2,158,333.29 0.00 350,000.04 0.00 1,808,333.25
(布地奈德雾化吸入溶液关 allocation income to assets
键技术研发)
Project Subsidy of Marine
mollusk kinetic protein (海洋 Financial Other Related
4,278,000.00 0.00 884,400.00 0.00 3,393,600.00
软体动物动能蛋白项目补 allocation income to assets
助)
Development of key
technologies for new inhaled
preparations to treat Financial Other Related
idiopathic pulmonary fibrosis 0.00 1,000,000.00 0.00 0.00 1,000,000.00
allocation income to assets
(治疗特发性肺纤维化的新
型吸入制剂关键技术开发)
Development of key
technologies for new inhaled Financial Other Related
4,800,000.00 0.00 2,800,000.00 0.00 2,000,000.00
preparations to treat allocation income to assets
idiopathic pulmonary fibrosis
Research and development of
respiratory system drug and
clinical research technology
service platform project Financial Other Related
1,550,000.00 0.00 1,550,000.00 0.00 0.00
talent funding (呼吸系统药 allocation income to assets
物研发和临床研究技术服
务平台项目人才经费)
Science and technology help
the economy key special Financial Other Related
projects (科技助力经济重点 500,000.00 0.00 500,000.00 0.00 0.00
allocation income to assets
专项)
City Service Development Financial Other Related
800,000.00 0.00 0.00 0.00 800,000.00
Special (市服务发展专项) allocation income to assets
Financial Other Related
Patent funding (专利资助) 200,000.00 0.00 0.00 0.00 200,000.00
allocation income to assets
2020 Shanghai Professional
Technology Platform
Capacity Enhancement Financial Other Related
Project (2020 年度上海市专 1,000,000.00 0.00 1,000,000.00 0.00 0.00
allocation income to assets
业技术平台能力提升项目
立项)
high-growth small and micro
innovation enterprises (高成 Financial Other Related
400,000.00 0.00 0.00 0.00 400,000.00
allocation income to assets
长小微科创企业)
Technology giant (科技小巨 Financial Other Related
1,200,000.00 0.00 1,200,000.00 0.00 0.00
人) allocation income to assets
First application for
corporate postdoctoral
project research funding (首 Financial Other Related
120,000.00 0.00 0.00 0.00 120,000.00
allocation income to assets
次申请企业博士后项目研
究资助)
Related
Service industry Financial Other
0.00 2,000,000.00 0.00 0.00 2,000,000.00 to
specialization allocation income
income
Innovation Voucher (Jingjin
Filter Press Equipment) (创 Financial Other Related
153,332.75 0.00 80,000.04 0.00 73,332.71
allocation income to assets
新券(景津压滤设备) )
Return of land holding tax Financial Other Related
3,460,631.62 0.00 107,029.69 0.00 3,353,601.93
(土地使用税返还) allocation income to assets
272
Joincare Pharmaceutical Group Annual Report 2023
Xinxiang High-tech Project
Fund Support (新乡高新技 Financial Other Related
1,804,713.72 0.00 56,397.36 0.00 1,748,316.36
allocation income to assets
术项目资金扶持)
New inhalation drug
formulation creation project Financial Other Related
(新型吸入给药制剂创制项 20,908,374.88 0.00 1,840,212.60 0.00 19,068,162.28
allocation income to assets
目)
Subsidies for the
development of
pharmaceutical APIs industry Financial Other Related
39,522,162.26 0.00 1,219,192.68 0.00 38,302,969.58
(医药原料药行业发展支持 allocation income to assets
资金补助)
Atmospheric environmental
quality improvement subsidy Financial Other Related
funds (大气环境质量提升补 157,915.02 0.00 21,533.88 0.00 136,381.14
allocation income to assets
贴) 资金)
R&D and industrialization of
innovative Ilaprazole Series Financial Other Related
(艾普拉唑系列创新药物研 11,168,166.21 0.00 4,910,000.04 0.00 6,258,166.17
allocation income to assets
发及产业化)
Strategic emerging industries
in 2014 (sustained release Financial Other Related
microspheres) (2014 年战略 16,700,000.00 0.00 0.00 0.00 16,700,000.00
allocation income to assets
性新兴产业 (缓释微球) )
Fund for industrialization of
prolonged-action Financial Other Related
microsphere preparation (长 12,550,000.00 0.00 0.00 0.00 12,550,000.00
allocation income to assets
效微球制剂的产业化款项)
Construction project for
industrialization of
prolonged-action Financial Other Related
microsphere preparation 18,314,195.60 0.00 2,405,309.88 0.00 15,908,885.72
allocation income to assets
(phase I) (长效微球制剂产
业化建设项目 (一期工程) )
Pilot-scale enlargement and
industrialization of
prolonged-action injection Financial Other Related
microsphere products (长效 0.00 80,000.00 0.00 0.00 80,000.00
allocation income to assets
注射微球产品的中试放大
和产业化)
Project subsidy from the
Ministry of Industry and Financial Other Related
Information Technology (工 2,400,000.00 0.00 0.00 0.00 2,400,000.00
allocation income to assets
业和信息化部项目补助款)
Project subsidy from the
Ministry of Industry and Financial Other Related
Information Technology (工 1,135,750.00 0.00 231,000.00 0.00 904,750.00
allocation income to assets
业和信息化部项目补助款)
Construction of Drug
Conformity Evaluation
Research Center Platform (药 Financial Other Related
880,000.18 0.00 159,999.96 0.00 720,000.22
allocation income to assets
物一致性评价研究中心平
台建设)
Special funds for foreign
trade and economic Financial Other Related
0.00 32,232.48 0.00 0.00 32,232.48
development and port allocation income to assets
construction
R&D and Commercialisation
of Mouse Nerve Growth
Factor for Injection (注射用 Financial Other Related
29,485,857.65 0.00 10,560,089.28 0.00 18,925,768.37
allocation income to assets
鼠神经生长因子研发及产
业化)
Demonstration project on the
application of solar
photovoltaic architecture (太 Financial Other Related
1,353,499.35 0.00 1,102,000.08 0.00 251,499.27
allocation income to assets
阳能光电建筑应用示范项
目)
Subsidy for the Tender of
Technology Upgrade Project Financial Other Related
2,299,785.26 0.00 380,365.80 0.00 1,919,419.46
for PVC Soft Bag Supported allocation income to assets
by Provincial Finance
273
Joincare Pharmaceutical Group Annual Report 2023
Departments (省财政支持技
改招标项目补助金 PVC 软
袋)
Technical transformation
project of Shenqi Fuzheng
Injection with flexible bag Financial Other Related
11,852,941.22 0.00 3,352,941.00 0.00 8,500,000.22
(软袋(参芪扶正注射液) 技 allocation income to assets
改项目)
Provision for technology
transformation funds and Financial Other Related
subsequent grants (技术改造 4,329,992.36 0.00 1,129,563.36 0.00 3,200,429.00
allocation income to assets
资金拨款及事后补奖)
Provision for technology
transformation funds and Financial Other Related
subsequent grants (技术改造 5,576,302.33 292,300.88 1,783,368.48 0.00 4,085,234.73
allocation income to assets
资金拨款及事后补奖)
Electricity distribution
transformer performance
enhancement for energy- Financial Other Related
saving and emission 332,000.00 0.00 48,000.00 0.00 284,000.00
allocation income to assets
reduction projects (节能减排
项目)配电变压器能效提升)
R&D and industrialization
team of chemical drug liquid Financial Other Related
preparation (化药液体制剂 1,710,833.60 390,000.00 252,114.84 0.00 1,848,718.76
allocation income to assets
研发与产业化团队)
Innovation capacity building
of technology center
(antibody laboratory) (技术 Financial Other Related
4,288,140.60 0.00 445,755.36 0.00 3,842,385.24
allocation income to assets
中心创新能力建设 (抗体药
物实验室) )
Innovation capacity building
of technology center Related
(antibody laboratory) (技术 Financial Other
159,691.94 0.00 75,330.36 0.00 84,361.58 to
allocation income
中心创新能力建设 (抗体药 income
物实验室) )
Achievement transfer of
blood screening (BCI)
nucleic acid detection testing Financial Other Related
3,329,659.71 0.00 631,627.60 0.00 2,698,032.11
(血液筛查 (BCI) 核酸检测 allocation income to assets
试剂成果转化)
Technological upgrading and
transformation projects of
workshop for acarbose (APIs
for α-glucosidase inhibitor) Financial Other Related
357,142.96 0.00 107,142.84 0.00 250,000.12
(α-葡萄糖苷酶抑制剂类原 allocation income to assets
料药阿卡波糖生产车间工
艺升级技术改造项目)
Scientific technology award
and subsidy for technological Related
Financial Other
innovative project (科学技术 2,200,000.00 0.00 1,600,000.00 600,000.00 0.00 to
allocation income
income
奖及科技创新项目资助)
Zhuhai industrial enterprise
“cloud and platform” service Related
coupons supporting funds (珠 Financial Other
63,891.00 0.00 25,540.85 0.00 38,350.15 to
allocation income
海市工业企业 “云上平台” income
服务券支持资金)
Commissioner workstation Financial Other Related
25,000.00 0.00 25,000.00 0.00 0.00
(特派员工作站) allocation income to assets
Industrial revitalisation
supporting funds (产业振兴 Financial Other Related
1,287,500.01 0.00 1,008,000.01 0.00 279,500.00
allocation income to assets
扶持资金)
Government grant for
industrial transformation (工 Financial Other Related
108,333.83 0.00 108,333.83 0.00 0.00
allocation income to assets
业转型政府扶持资金)
New industrialization
development grant (新型工 Financial Other Related
5,035,866.34 560,000.00 349,999.67 0.00 5,245,866.67
allocation income to assets
业化发展奖金)
Policy fund for leading Financial Other Related
166,666.53 0.00 166,666.53 0.00 0.00
industrial enterprises loan allocation income to assets
274
Joincare Pharmaceutical Group Annual Report 2023
Interests (工业龙头企业贷
款贴息政策资金)
Supporting funds for five
advantageous industrial
clusters and one high-tech Financial Other Related
200,000.24 0.00 99,999.92 0.00 100,000.32
industry (五优一新扶持资 allocation income to assets
金)
Capital project for innovation
and entrepreneurship team Financial Other Related
funding program (创新创业 11,750,000.00 0.00 75,000.00 0.00 11,675,000.00
allocation income to assets
团队资助计划资金项目)
2020 Zhuhai City Innovation
and Entrepreneurship Team
(Nanocrystalline) (2020 年度 Financial Other Related
5,000,000.00 0.00 13,333.33 0.00 4,986,666.67
allocation income to assets
珠海市创新创业团队 (纳米
晶) )
Key projects of industrial
core and key technologies of
Zhuhai (Ryanodex) (珠海市 Financial Other Related
3,000,000.00 0.00 3,000,000.00 0.00 0.00
allocation income to assets
产业核心和关键技术攻关
方向项目 (丹曲林钠) )
Data-driven industrial chain
collaboration platform
demonstration project (数据 Financial Other Related
2,920,000.00 0.00 730,000.00 0.00 2,190,000.00
allocation income to assets
驱动的产业链协同平台示
范项目)
Fund for key projects of
industrial core and key
technologies of Zhuhai (2nd Financial Other Related
batch) (珠海市产业核心和 2,000,000.00 0.00 0.00 0.00 2,000,000.00
allocation income to assets
关键技术攻关方向项目资
金 (第二批) )
Innovative drug of Ilaprazole
sodium for injection (创新药 Financial Other Related
2,280,000.00 0.00 240,000.00 0.00 2,040,000.00
allocation income to assets
注射用艾普拉唑钠针剂)
Technological transformation
projects of new Cefuroxime Financial Other Related
(新型头孢粉针剂技术改造 1,533,100.00 0.00 0.00 0.00 1,533,100.00
allocation income to assets
项目)
Advanced Pharmaceutical
Manufacturing Internet Financial Other Related
Benchmarking Project (先进 585,000.00 0.00 90,000.00 0.00 495,000.00
allocation income to assets
药品制造互联网标杆项目)
Cleaner Production Audit Financial Other Related
170,000.12 0.00 9,999.96 0.00 160,000.16
Project (清洁生产审核项目) allocation income to assets
Financial Other Related
Green factory (绿色工厂) 1,001,666.75 0.00 129,999.96 0.00 871,666.79
allocation income to assets
HCG PROJECT
CONSTRUCTION (HCG 项 Financial Other Related
2,992,185.88 0.00 395,649.96 0.00 2,596,535.92
allocation income to assets
目建设)
Sewage treatment system
upgrade project (污水处理系 Financial Other Related
56,209.88 0.00 8,030.04 0.00 48,179.84
allocation income to assets
统升级改造项目)
R&D and industrialization of
Recombinant Human
Chorionic Gonadotropin for Financial Other Related
987,500.00 0.00 150,000.00 0.00 837,500.00
Injection (注射用重组人绒 allocation income to assets
促性素研发及产业化)
Development and
Industrialization of
Cyclosporin Self-emulsifying
Soft Capsules with High Financial Other Related
Technology Barriers (高技术 786,000.00 0.00 64,000.00 80,000.00 642,000.00
allocation income to assets
屛障的环孢素自乳化软胶
囊制剂的开发及产业化研
究)
Guangdong Provincial Key
Financial Other Related
Laboratory of Characteristic 941,666.69 300,000.00 119,999.96 0.00 1,121,666.73
allocation income to assets
Drug R&D Enterprises (广东
275
Joincare Pharmaceutical Group Annual Report 2023
省特色药物研发企业重点
实验室)
Subsidies for online
monitoring equipment and
installations of coalfired Financial Other Related
60,000.00 0.00 22,500.00 0.00 37,500.00
boilers (燃煤锅炉在线监控 allocation income to assets
设备装置补助) ) 资金)
Funds for joint R&D and
industrialization of integrated
platform for molecular Financial Other Related
diagnostics (集成一体化分 53,916.31 0.00 14,687.72 0.00 39,228.59
allocation income to assets
子诊断平台的合作研发及
产业化) ) 资金)
Project supporting fund for
the first batch of special
funds for scientific and
technological innovation in Financial Other Related
600,000.00 0.00 0.00 0.00 600,000.00
2019 (2019 年度第一批科技 allocation income to assets
创新专项资金立项配套资
助)
Provincial industrial
innovation (provincial
enterprise technology center) Financial Other Related
project in 2019 (2019 年度省 79,229.73 0.00 20,415.63 0.00 58,814.10
allocation income to assets
产业创新 (省级企业技术中
心) 项目)
Pre-appropriation of special
grants for industrialization of
diagnostic reagents for Financial Other Related
COVID-19 (新型冠状病毒 4,089,721.57 0.00 546,475.25 0.00 3,543,246.32
allocation income to assets
检测试剂产业化项目补助
金预拨)
P06 Industrialization Project Financial Other Related
0.00 2,812,400.00 23,436.67 0.00 2,788,963.33
( P06 产业化项目) allocation income to assets
Xiangzhou District
equipment purchase subsidy
supporting funds (Special
funds for epidemic Financial Other Related
9,150.21 0.00 2,179.92 0.00 6,970.29
prevention and control) (香 allocation income to assets
洲区采购设备补贴扶持资
金 (疫情防控专项资金)
Zhuhai innovation and
enterprising team and high-
level talent enterprising Financial Other Related
project Phase I funds (珠海 12,000,000.00 8,000,000.00 0.00 0.00 20,000,000.00
allocation income to assets
市创新创业团队和高层次
人才创业项目首期资金)
Overall relocation and
deployment expansion Financial Other Related
project (整体搬迁调迁扩建 50,000,000.00 30,000,000.00 2,345,325.00 0.00 77,654,675.00
allocation income to assets
项目)
Environmental protection
bureau RTO project special Financial Other Related
funds (环保局 RTO 项目资 159,999.92 0.00 20,000.04 0.00 139,999.88
allocation income to assets
金)
Structure-efficiency
optimization of marine
microorganisms and Related
Financial Other
evaluation of antitumor 99,209.17 0.00 99,209.17 0.00 0.00 to
allocation income
activity (海洋微生物构效优 income
化与抗肿瘤活性评价)
Fish maw (golden owl) R&D
and demonstration of key
technologies for the
development and utilization Related
Financial Other
of marine traditional Chinese 750,000.00 250,000.00 0.00 0.00 1,000,000.00 to
allocation income
medicine resources (鱼鳔(黄 income
金鮸) 海洋中药资源开发与
利用关键技术研发与示范)
2022 Special funds for the Financial Other Related
27,965,416.69 9,828,500.00 37,793,916.69 0.00 0.00
reconstruction of the allocation income to assets
276
Joincare Pharmaceutical Group Annual Report 2023
industrial base and the high-
quality development of the
manufacturing industry from
the central finance (2022 年
中央财政产业基础再造和
制造业高质量发展专项资
金)
Recombinant novel
coronavirus fusion protein
vaccine (V-01) large-scale
production capacity building Financial Other Related
0.00 22,921,500.00 1,671,359.41 0.00 21,250,140.59
project (重组新型冠状病毒 allocation income to assets
融合蛋白疫苗（V-01）规
模化生产能力建设项目)
National Science and
Technology Major Special
Project Subsidy Fund Financial Other Related
LZM009 (国家科技重大专 2,382,806.91 0.00 381,599.12 0.00 2,001,207.79
allocation income to assets
项项目后补助资金
LZM009)
Xiangzhou District actively
responds to the impact of the
epidemic and maintains
stability, innovation drives Financial Other Related
technology industry project 1,644,800.00 0.00 0.00 0.00 1,644,800.00
allocation income to assets
(香洲区积极应对和疫情影
响保稳创新驱动科技工业
分项)
Guangdong-Hong Kong-
Macao Science and
Technology Cooperation 0.00 300,000.00 0.00 0.00 300,000.00
Fund (粤港澳科技合作资
金)
Total 384,537,267.55 81,090,429.36 94,768,146.09 680,000.00 370,179,550.82
2. Government grants recognized in income for the year by gross method
Amount Amount Related to
Presented
recognised in recognised in assets/
Projects with grants Category in income
profit or loss in profit or loss in Related to
statement
prior year the year income
Financial Other Related to
Social security subsidy (社保补助) 226,308.66 191,422.91
allocation income income
Financial Other Related to
Job stabilization subsidy (稳岗补贴) 1,075,941.53 472,229.26
allocation income income
Financial Other Related to
Electricity subsidy (用电补助) 570,533.30 0.00
allocation income income
Financial Other Related to
Maternity benefits (生育津贴) 404,108.83 973,836.55
allocation income income
Export credit insurance subsidy (出口信保 Financial Other Related to
3,582,595.80 1,885,386.46
补贴) allocation income income
New inhalation drug formulation creation Financial Other Related to
53,637,825.12 1,840,212.60
project (新型吸入给药制剂创制项目) allocation income assets
Budesonide project acceptance transferred
Financial Other Related to
to other income (布地奈德项目验收转其 350,000.04 350,000.04
allocation income assets
他收益)
Special support for market access of drugs
and medical devices (药品和医疗器械市 Financial Other Related to
0.00 736,044.78
allocation income income
场准入专项扶持)
Enterprise R&D investment support plan Financial Other Related to
0.00 665,900.00
project (企业研发投入支持计划项目) allocation income income
Specialized, Special and New Enterprise
Financial Other Related to
Incentive Program (专精特新企业奖励项 1,200,000.00 1,100,000.00
allocation income income
目)
Incentive projects for industrial enterprises
to expand production and increase Financial Other Related to
1,650,000.00 3,160,000.00
allocation income income
efficiency (工业企业扩产增效奖励项目)
277
Joincare Pharmaceutical Group Annual Report 2023
Amount Amount Related to
Presented
recognised in recognised in assets/
Projects with grants Category in income
profit or loss in profit or loss in Related to
statement
prior year the year income
High-tech enterprise cultivation (高新技术 Financial Other Related to
1,000,000.00 320,000.00
企业培育) allocation income income
Labor subsidies during the Spring Festival Financial Other Related to
0.00 1,144,600.00
(春节期间用工补贴) allocation income income
Central financial subsidy funds for park
Financial Other Related to
recycling transformation (园区循环化改造 0.00 2,131,544.40
allocation income assets
中央财政补助资金)
Construction of an integrated production
line for fully automatic blister-type dry
powder inhalant micro-filling and winding Financial Other Related to
242,000.04 242,000.04
(全自动泡罩型干粉吸入剂微量灌封与卷 allocation income assets
绕一体化生产线建设)
Technological Innovation Project Support
Plan-Manufacturing Individual Champion Financial Other Related to
Award Project (技术创新项目扶持计划- 0.00 2,000,000.00
allocation income income
制造业单项冠军奖励项目)
Laboratory project of respiratory system
inhalation preparation engineering Financial Other Related to
laboratory project (呼吸系统吸入制剂工 1,616,100.00 1,616,100.00
allocation income assets
程实验室项目)
Funds allocated by the Ministry of Finance Financial Other Related to
1,219,192.68 1,219,192.68
(财政局拨付补助资金) allocation income assets
Financial Other Related to
Marine projects (海洋项目) 19,562,000.00 884,400.00
allocation income assets
Nanshan District Special Support Plan to
Promote High-Quality Development of
Life Science and Technology Related Financial Other Related to
0.00 1,000,000.00
Industries (南山区促进生命科技相关产 allocation income income
业高质量发展专项支持计划)
National Major Special Project Lipid
Injection Research Funds (国家重大专项 Financial Other Related to
500,000.00 0.00
allocation income assets
项目注射脂质研究经费)
Rewards for meeting industrial added value
growth standards (工业增加值增速达标奖 Financial Other Related to
2,091,724.88 0.00
allocation income income
励)
Funding for Industrial Carbon Peak Work
Pilot Demonstration Project (工业碳达峰 Financial Other Related to
700,000.00 150,000.00
allocation income income
工作试点示范项目资助款)
Freeze-dried raw material production line
project funding (冻干原料生产线项目资 Financial Other Related to
2,045,300.00 0.00
allocation income income
助经费)
Encourage industrial enterprises to expand
Financial Other Related to
production and increase efficiency project 620,000.00 0.00
allocation income income
funds (鼓励工业企业扩产增效项目经费)
Yantian District Industrial Development
Fund Energy Management System Financial Other Related to
Certification Funding (盐田区产业发发展 14,000.00 1,574,275.12
allocation income income
资金能源管理体系认证资助经费)
Science and technology help the economy
key special projects (科技助力经济重点专 Financial Other Related to
0.00 550,000.00
allocation income assets
项)
Shanghai municipal and Pudong New
Financial Other Related to
District Enterprise R&D institutions (上海 0.00 200,000.00
allocation income income
市级及浦东新区级企业研发机构)
Shanghai Technology Giants in 2022 (2022 Financial Other Related to
0.00 1,200,000.00
年上海市科技小巨人) allocation income assets
278
Joincare Pharmaceutical Group Annual Report 2023
Amount Amount Related to
Presented
recognised in recognised in assets/
Projects with grants Category in income
profit or loss in profit or loss in Related to
statement
prior year the year income
2020 Shanghai Professional Technology
Platform Capacity Enhancement Project Financial Other Related to
(2020 年度上海市专业技术平台能力提 0.00 1,000,000.00
allocation income assets
升项目立项)
Support growth technology companies (支 Financial Other Related to
0.00 650,000.00
持成长型科技企业) allocation income income
Shanghai Zhangjiang Special Fund (上海 Financial Other Related to
1,000,000.00 0.00
张江专项资金) allocation income income
Recognition and reward of high-tech Financial Other Related to
400,000.00 1,700,000.00
enterprises (高企认定奖励) allocation income income
2016 Guangju Talent Entrepreneurship
Leading Team Acceptance Payment (2016 Financial Other Related to
0.00 3,500,000.00
allocation income income
年广聚英才创业领军团队验收款)
Research and development of respiratory
system drug and clinical research
technology service platform project talent Financial Other Related to
0.00 1,500,000.00
funding (呼吸系统药物研发和临床研究 allocation income assets
技术服务平台项目人才经费)
Development of key technologies for new
inhaled preparations to treat idiopathic
pulmonary fibrosis (开发区财政局拨款创 Financial Other Related to
0.00 2,800,000.00
allocation income assets
业领军人才项目：药品吸入制剂共性共
建技术的研究)
Guangzhou Municipal Science and
Technology Bureau/2016 Talented
Entrepreneurship Leading Team (广州市科 Financial Other Related to
0.00 1,200,000.00
allocation income income
学技术局/2016 年广聚英才创业领军团
队)
Venue subsidy for leading entrepreneurial
teams in Guangzhou (广州市创业领军团 Financial Other Related to
500,000.00 0.00
allocation income income
队场地补贴)
Central government guides local science
and technology development funds in 2022 Financial Other Related to
400,000.00 0.00
allocation income income
(2022 年中央引导地方科技发展资金)
Funds to support business development (扶 Financial Other Related to
3,543,000.00 1,200,000.00
持企业发展资金) allocation income income
Grant Funding for Science and Technology Financial Other Related to
1,500,000.00 0.00
Projects (科技项目补助资金) allocation income income
Financial Other Related to
Government grants 1,400,000.00 0.00
allocation income income
2022 Shenzhen High-tech Zone Special
Fund Municipal Funding (2022 深圳高新 Financial Other Related to
750,000.00 0.00
allocation income income
区专项资金市级资助款)
In the first half of 2022, subsidies for
industrial assistance projects to help Financial Other Related to
enterprises bail out (2022 年上半年工业助 383,300.00 0.00
allocation income income
企纾困项目补助)
2022 Second quarter Incentive funds for
full production of designated industrial Financial Other Related to
enterprises (2022 年第二季度规上工业企 200,000.00 200,000.00
allocation income income
业满负荷生产奖励资金)
High-tech Zone Finance Bureau Special
funds for corporate R&D financial Financial Other Related to
subsidies in 2021 (高新区财政局 2021 年 320,000.00 280,000.00
allocation income income
企业研发财政补助专项资金)
High-tech Zone Finance Bureau 2022
Central Air Pollution Prevention and Financial Other Related to
Control Fund (高新区财政局 2022 年中央 750,000.00 1,250,000.00
allocation income income
大气污染防治资金)
279
Joincare Pharmaceutical Group Annual Report 2023
Amount Amount Related to
Presented
recognised in recognised in assets/
Projects with grants Category in income
profit or loss in profit or loss in Related to
statement
prior year the year income
2022 Industry Fund Funding (2022 产业基 Financial Other Related to
0.00 1,600,000.00
金资金) allocation income income
Government subsidies for special funds for
scientific and technological innovation-
Shenzhen Pingshan District Science and Financial Other Related to
Technology Innovation Bureau (科技创新 0.00 863,994.00
allocation income income
专项资金政府补助-深圳市坪山区科技创
新局)
2023 Economic Development Special
Funding Project (2023 年经济发展专项资 Financial Other Related to
0.00 2,422,500.00
allocation income income
金资助项目)
2022 Shenzhen High-tech Zone
Development Special Plan Technology
Enterprise Cultivation Project Subsidy Financial Other Related to
500,000.00 250,000.00
(2022 深圳高新区发展专项计划科技企 allocation income income
业培育项目补助)
Subsidy for the Pingshan District Funding
Project of the Central Guidance for Local
Science and Technology Development (中 Financial Other Related to
300,000.00 0.00
allocation income income
央引导地方科技发展专项坪山区资助项
目补助)
Financial Other Related to
R&D subsidy (研究开发费补助) 1,200,440.00 852,400.00
allocation income income
Research and development funds for new
drug for Class I Treatment of Necrosis
Factor in Human Tumour from Human Financial Other Related to
5,924,000.00 0.00
Source (I 类治疗用人源化抗人肿瘤坏死 allocation income income
因子 α 单克隆抗体新药的研制资金)
Government Subsidy for Long-acting
Financial Other Related to
Microspheres Major New Drug Creation 3,155,309.88 2,480,309.88
allocation income assets
(长效微球重大新药创制政府补助)
R&D and industrialization of innovative
Ilaprazole Series (艾普拉唑系列创新药物 Financial Other Related to
18,720,800.04 4,910,000.04
allocation income assets
研发及产业化)
Innovative drug of Ilaprazole sodium for Financial Other Related to
120,000.00 240,000.00
injection (创新药注射用艾普拉唑钠针剂) allocation income assets
Construction of Drug Conformity
Evaluation Research Center Platform (药物 Financial Other Related to
159,999.96 159,999.96
allocation income assets
一致性评价研究中心平台建设)
Conformity Evaluation Research of Quality
of Varieties such as Livzon Dele (丽珠得 Financial Other Related to
231,000.00 231,000.00
allocation income assets
乐等品种质量一致性评价研究)
HCG PROJECT CONSTRUCTION (HCG Financial Other Related to
395,649.96 395,649.96
项目建设) allocation income assets
Fiscal Subsidy and Operating Subsidy (财 Financial Other Related to
59,063,950.86 48,788,737.48
政补贴及经营运营补贴) allocation income income
R&D and Commercialisation of Mouse
Nerve Growth Factor for Injection (注射用 Financial Other Related to
10,560,089.28 10,560,089.28
allocation income assets
鼠神经生长因子研发及产业化)
Import discount and supporting funds (进 Financial Other Related to
500,000.00 0.00
口贴息及配套资金) allocation income income
Special funds for foreign trade and
Financial Other Related to
economic development (外经贸发展专项 1,809,479.00 2,688,891.30
allocation income income
资金)
Subsidy for the Tender of Technology
Upgrade Project for PVC Soft Bag
Supported by Provincial Finance Financial Other Related to
403,699.30 380,365.80
Departments (省财政支持技改招标项目 allocation income assets
补助金 PVC 软袋)
280
Joincare Pharmaceutical Group Annual Report 2023
Amount Amount Related to
Presented
recognised in recognised in assets/
Projects with grants Category in income
profit or loss in profit or loss in Related to
statement
prior year the year income
Technical transformation project of Shenqi
Financial Other Related to
Fuzheng Injection with flexible bag (软袋 3,823,529.40 3,352,941.00
allocation income assets
(参芪扶正注射液) 技改项目)
Demonstration project on the application of
solar photovoltaic architecture (太阳能光 Financial Other Related to
1,102,000.08 1,102,000.08
allocation income assets
电建筑应用示范项目)
Subsidies for high and new technology
enterprises and high and new technology Financial Other Related to
products (高新技术企业及高新技术产品 250,000.00 800,000.00
allocation income income
项目补贴)
Grants to high-growth technology
companies from Dazhangjiang project A04 Financial Other Related to
(大张江项目 A04 对高增长技术企业资 1,500,000.00 0.00
allocation income income
助款)
Small and medium enterprise market
development project funds (中小企业开拓 Financial Other Related to
90,000.00 2,000,000.00
allocation income income
市场项目资金)
Provision for technology transformation
funds and subsequent grants (技术改造资 Financial Other Related to
2,300,000.00 2,672,400.00
allocation income income
金拨款及事后补奖)
Provision for technology transformation
funds and subsequent grants (技术改造资 Financial Other Related to
2,543,679.56 2,515,113.36
allocation income assets
金拨款及事后补奖)
Technology transformation of recycling
system of Acarbose project (阿卡波糖糖回 Financial Other Related to
397,818.48 397,818.48
allocation income assets
收系统技术改造项目)
Scientific technology award and subsidy
for technological innovative project (科学 Financial Other Related to
2,663,400.00 3,025,300.57
allocation income income
技术奖及科技创新项目资助)
Scientific technology award and subsidy
for technological innovative project (科学 Financial Other Related to
0.00 3,000,000.00
allocation income assets
技术奖及科技创新项目资助)
Patent (Intellectual Property) Support Fund Financial Other Related to
548,500.00 1,156,001.57
(专利(知识产权) 资助资金) allocation income income
Reward Fund for Industry Growth and
Production Expansion (工业保值增长及增 Financial Other Related to
667,700.00 450,000.00
allocation income income
产奖励)
Industrial revitalisation supporting funds Financial Other Related to
1,158,000.00 1,008,000.00
(产业振兴扶持资金) allocation income assets
Industrial supporting funds (产业扶持资 Financial Other Related to
944,100.00 537,181.59
金) allocation income income
Supporting funds for five advantageous
Financial Other Related to
industrial clusters and one high-tech 99,999.96 362,499.81
allocation income assets
industry (五优一新扶持资金)
Employment Assurance and Re-
employment and Attraction to Graduates of
Tertiary Academic Institutions Subsidy (企 Financial Other Related to
5,949,048.90 1,327,871.54
allocation income income
业稳岗及再就业和吸纳高校毕业生补贴
款)
Enterprise Technology Center Innovation
Capacity Development (Antibody Financial Other Related to
Laboratory) (企业技术中心创新能力建设 514,338.20 445,755.36
allocation income assets
(抗体药物试验室) )
Enterprise Technology Center Innovation
Capacity Development (Antibody Financial Other Related to
Laboratory) (企业技术中心创新能力建设 6,747.52 75,330.36
allocation income income
(抗体药物试验室) )
281
Joincare Pharmaceutical Group Annual Report 2023
Amount Amount Related to
Presented
recognised in recognised in assets/
Projects with grants Category in income
profit or loss in profit or loss in Related to
statement
prior year the year income
Supporting subsidy for “Talents Plan” and
subsidy for talents introduction and Financial Other Related to
cultivation ( “人才计划”配套补贴及引才 583,774.23 726,000.00
allocation income income
育才补贴)
Integrating Informatization and Financial Other Related to
500,000.00 0.00
Industrialization Rewards (两化融合奖励) allocation income income
Incentive funds for expansion of export Financial Other Related to
456,300.00 103,939.00
scale (扩大出口规模奖励基金) allocation income income
Special funds for key leading enterprises in
Financial Other Related to
the 13th Five-Year Plan (2019) (十三五重 14,133,300.00 8,501,100.00
allocation income income
点领军企业专项资金 (2019 年)
Subsidies for work-based training (以工代 Financial Other Related to
395,000.00 135,100.00
训补贴) allocation income income
Subsidies for insurance fees (保险费用补 Financial Other Related to
609,243.30 38,100.00
贴) allocation income income
Special Funds for Promoting High-quality
Economic Development (促进经济高质量 Financial Other Related to
5,741,886.91 37,814,332.31
allocation income assets
发展专项资金)
Special Funds for Promoting High-quality
Economic Development (促进经济高质量 Financial Other Related to
11,578,756.00 14,383,162.43
allocation income income
发展专项资金)
Achievement transfer of blood screening
BCI nucleic acid detection testing (血液筛 Financial Other Related to
631,622.73 631,627.60
allocation income assets
查 BCI 核酸检测试剂成果转化)
COVID-19 emergency technology special
emergency fund and special grants for Financial Other Related to
industrialization (新冠应急科技攻关专项 26,694.08 2,217,834.66
allocation income assets
款及产业化项目补助金)
Hengqin Guangdong-Macao Deep
Financial Other Related to
Cooperation Zone Factory Rental Subsidy 690,024.00 0.00
allocation income income
(横琴粤澳深度合作区厂房租金补贴)
Zhuhai Investment Promotion Award (珠 Financial Other Related to
600,000.00 0.00
海市招商引资奖) allocation income income
National Science and Technology Major
Special Project Subsidy Fund LZM009 (国 Financial Other Related to
2,362,093.09 381,599.12
家科技重大专项项目后补助资金 allocation income assets
LZM009)
Data-driven industrial chain collaboration
platform demonstration project (数据驱动 Financial Other Related to
730,000.00 730,000.00
allocation income assets
的产业链协同平台示范项目)
Several Measures for Payment Enterprises
to Overcome Difficulties in Response to
the Novel Coronavirus Pneumonia Financial Other Related to
Epidemic-Financial Support Project Funds 381,000.00 0.00
allocation income income
(应对新型冠状病毒肺炎疫情支付企业共
渡难关的若干措施-金融支持项目资金)
Project funds for promoting the
development of the biomedical industry Financial Other Related to
7,665,180.00 17,885,420.00
allocation income income
(促进生物医药产业发展用途项目资金)
Application of artificial intelligence in
triptorelin long-acting microsphere Financial Other Related to
preparation (人工智能在曲普瑞林长效微 800,000.00 -479,813.48
allocation income income
球制剂中的应用)
Overall relocation and deployment
expansion project (整体搬迁调迁扩建项 Financial Other Related to
0.00 2,345,325.00
allocation income assets
目)
Financial Other Related to
Others 2,267,046.58 1,972,354.25
allocation income assets
282
Joincare Pharmaceutical Group Annual Report 2023
Amount Amount Related to
Presented
recognised in recognised in assets/
Projects with grants Category in income
profit or loss in profit or loss in Related to
statement
prior year the year income
Financial Other Related to
Others 5,633,800.15 3,733,029.96
allocation income income
Total 286,842,932.33 233,058,407.11
The above government subsidies mainly come from various government departments at the provincial
and municipal levels where the Company and its subsidiaries operate. These subsidies are provided by
departments such as the Development and Reform Commission, Finance Bureau, Commerce Bureau,
Science and Technology Bureau, Industry and Information Technology Bureau, Human Resources and
Social Security Bureau, and other relevant government departments. They are intended to support
projects related to enterprise operation, research and development, technological transformation,
technological innovation, export credit insurance, epidemic emergency response, and job stability.
(1) Government grants offsetting related costs using the net method
None.
(2) Government grants refunded in this year
Item Amount Reason
Scientific technology award and
subsidy for technological
innovative project (科学技术奖及 600,000.00 Project concluded
科技创新项目资助) ——扬帆计
划项目
IX. Risks Management of Financial Instruments
The major financial instruments of the Company include cash, notes receivable, accounts receivable,
other receivables, non-current assets due within one year, other current assets, financial assets held for
trading, other equity instrument investments, notes payable, accounts payable, other payables, short-
term borrowings, financial liabilities held for trading, non-current liabilities due within one year, long-
term borrowings and long-term payables. The details of these financial instruments are disclosed in
the respective notes. The financial risk of these financial instruments and financial management
policies used by the Company to minimize the risk are disclosed as below. The management of the
Company manages and monitors the exposure of these risks to ensure the above risks are controlled
in the limited range.
1. Management objectives and policies of risks
The operation activities of the Company are subject to various financial risks: market risks (mainly
including foreign exchange risks and interest rate risks), credit risks and liquidity risks. The Company
formulates an overall risk management plan with respect to the unforeseeability of the financial market
in order to minimise the potential adverse impacts on the financial performance of the Company.
(1) Foreign exchange risks
The Company conducts its operation primarily in China. Substantially all of the transactions were
denominated and settled in Renminbi. However, the Company still has certain imports and exports
businesses regarding APIs and diagnostic reagents that are settled in U.S. dollar, Euro and Japanese
Yen. The Company’s businesses outside China (mainly in Hong Kong, India, Europe) are settled in
Hong Kong dollars, U.S. dollar and Euro. In addition, the Company will have foreign currency loans
according to the operating needs. In respect of the above, the Company still exposes to certain foreign
exchange risks. Taking into account the foreign exchange risks acceptable by the Company, the
Company adopted Derivative instruments to control foreign exchange risk. However, as to the foreign
exchange risk in loans, the Company shall closely monitor the trend of the exchange rate of Renminbi,
283
Joincare Pharmaceutical Group Annual Report 2023
and timely adjust the extent of borrowings, so as to minimise its risks.Financial assets and liabilities
in foreign currencies held by the Company expressed in Renminbi are stated below:
①As of 31 December 2023
Unit: RMB 1,000
Item HKD USD EUR JPY GBP MOP MYR
Financial assets in
foreign currency -
5,534.7
Cash and bank balances 910,327.19 2,089,301.02 728.44 178.35 15.28 15.10
3
Financial assets held for
64,572.80 0.00 0.00 0.00 0.00 0.00 0.00
trading
Accounts receivable 0.00 138,377.75 0.00 0.00 0.00 147.35 0.00
Other receivables 3,057.18 0.00 0.00 0.00 0.00 158.67 0.00
Other equity instruments
345,535.96 0.00 0.00 0.00 0.00 0.00
investment
Other equity instruments
345,535.96 0.00 0.00 0.00 0.00 0.00 0.00
investment
5,840.7
Subtotal: 1,669,029.09 2,227,678.76 728.44 178.35 15.28 15.10
5
Financial liabilities in
0.00 0.00 0.00 0.00 0.00 0.00 0.00
foreign currency -
Accounts payable 0.00 2,623.80 44.53 21,132.48 0.00 0.00 0.00
Other payables 3,674.30 28,937.74 0.00 0.00 0.00 0.00 0.00
Subtotal: 3,674.30 31,561.54 44.53 21,132.48 0.00 0.00 0.00
②As of 31 December 2022
Unit: RMB 1,000
Item HKD USD EUR JPY GBP MOP CHF
Financial assets in foreign
currency -
Cash and bank balances 689,008.76 1,795,183.72 702.84 18,052.98 16.29 4,272.78 0.00
Financial assets held for
87,193.75 0.00 0.00 0.00 0.00 0.00 0.00
trading
Accounts receivable 0.00 498,180.41 0.00 0.00 0.00 1,097.96 0.00
Other receivables 2,849.00 0.15 0.00 0.00 0.00 504.53 0.00
Other current assets 0.00 92,815.74 0.00 0.00 0.00 0.00 0.00
Other equity instruments
524,464.51 0.00 0.00 0.00 0.00 0.00 0.00
investment
Subtotal: 1,303,516.02 2,386,180.02 702.84 18,052.98 16.29 5,875.27 0.00
Financial liabilities in
foreign currency -
Short-term loans 0.00 13,464.86 0.00 0.00 0.00 0.00
Accounts payable 0.00 3,569.18 42.05 14,627.29 0.00 0.00 141.89
Other payables 2,583.45 27,967.54 0.00 0.00 0.00 0.00 0.00
Subtotal: 2,583.45 45,001.58 42.05 14,627.29 0.00 0.00 141.89
As at 31 December 2023, in respect of the Company’s financial assets and liabilities denominated in
foreign currencies such as Hong Kong dollar, U.S. dollar, Euro, Japanese Yen and Macau dollar, should
the value of RMB appreciate or depreciate by 5% against foreign currencies such as Hong Kong dollar,
U.S. dollar, Euro, Japanese Yen and Macau dollar, and other factors remain unchanged, the Company
would be subject to an increase or decrease in profit of approximately RMB192.35 million (31
December 2022: approximately RMB182.60 million).
284
Joincare Pharmaceutical Group Annual Report 2023
(2) Interest rate risk
The Company’s exposures to interest rate risk are mainly arising from interest-bearing liabilities such
as bank borrowings. The interest rates are affected by the macro monetary policies of China, hence
the Company will face the risks arising from fluctuation of interest rates in the future.
The finance department of the head office of the Company continues to monitor the level of interest
rate of the Company. The rise in the interest rate will increase the cost of additional interest-bearing
liabilities and the interest expenses of the Company’s outstanding interest-bearing liabilities of which
the interests are calculated at floating rates, and impose material adverse impact on the financial results
of the Company. The management will make timely adjustment based on the updated market
conditions. The directors of the Company consider that the future changes in the interest rate will have
no material adverse impact on the operating results of the Company.
(3) Credit risk
Credit risk is primarily attributable to cash and cash equivalents, restricted funds, accounts receivables
and other receivables. In respect of cash at banks, they were placed at several banks with good
reputations, for which the credit risk was limited. In respect of receivables, the Company shall assess
the credit limit granted to customers for credit purpose. Moreover, as the customer base of the
Company is large, the credit risk on accounts receivables is not concentrated. In terms of bills
receivable settlement, external payments are settled with bills receivable with priority and most of the
remaining bills are high-quality bills with maturity within three months; thus none expected major
credit risk exits. In addition, the provision made on the impairment of accounts receivables and other
receivables are adequate to manage the credit risk.
Among the accounts receivables of the Company, the accounts receivable of the top five customers
accounted for 8.39% (31 December 2022: 11.98%); among the other receivables of the Company, the
other receivables of the top five customers accounted for 40.48% (31 December 2022: 46.23%).
(4) Liquidity risk
The Company adopts prudent liquidity risk management for the sufficient supply of monetary funds
and liquidity. It secures readily available credit loans from banks mainly by maintaining adequate
monetary funds and banking facilities. Apart from indirect financing from banks, a number of
financing channels were available, such as direct financing by inter-bank market including short-term
financing bills and medium-term financing bills, corporate bonds etc. These instruments can
effectively reduce the effects of scale of financing and the macro monetary policies of China on
indirect bank financing, which shall secure adequate funds in a flexible manner.
As at the date of the balance sheet, the contractual cash flows of financial assets and financial liabilities
are presented below by term of maturity:
①As of 31 December 2023
Over 5
Item Within a year 1-2 years 2-5 years Total
years
Financial assets:
Cash and bank balances 15,691,888,314.83 0.00 0.00 0.00 15,691,888,314.83
Financial assets held for
82,899,154.24 0.00 0.00 0.00 82,899,154.24
trading
Notes receivable 1,941,200,568.00 0.00 0.00 0.00 1,941,200,568.00
Accounts receivable 2,692,941,866.24 0.00 0.00 0.00 2,692,941,866.24
Other receivables 46,010,624.61 0.00 0.00 0.00 46,010,624.61
285
Joincare Pharmaceutical Group Annual Report 2023
Over 5
Item Within a year 1-2 years 2-5 years Total
years
Other current assets 6,536,364.62 0.00 0.00 0.00 6,536,364.62
Subtotal: 20,461,476,892.54 0.00 0.00 0.00 20,461,476,892.54
Financial liabilities:
Short-term loans 2,076,159,347.22 0.00 0.00 0.00 2,076,159,347.22
Financial liabilities held
86,817.12 0.00 0.00 0.00 86,817.12
for trading
Notes payable 1,469,148,287.38 0.00 0.00 0.00 1,469,148,287.38
Accounts payable 894,286,243.28 0.00 0.00 0.00 894,286,243.28
Other payables 3,682,604,038.73 0.00 0.00 0.00 3,682,604,038.73
Other current liabilities 39,844,637.92 0.00 0.00 0.00 39,844,637.92
Non-current liabilities
718,564,144.31 0.00 0.00 0.00 718,564,144.31
due within one year
Lease liabilities 0.00 11,783,457.28 3,639,491.13 0.00 15,422,948.41
Long term loans 0.00 2,288,854,277.01 833,419,001.98 0.00 3,122,273,278.99
Subtotal: 8,880,693,515.96 2,300,637,734.29 837,058,493.11 0.00 12,018,389,743.36
②As of 31 December 2022
Over 5
Item Within a year 1-2 years 2-5 years Total
years
Financial assets:
Cash and bank balances 14,808,488,110.96 0.00 0.00 0.00 14,808,488,110.96
Financial assets held for
109,015,664.98 0.00 0.00 0.00 109,015,664.98
trading
Notes receivable 1,959,985,016.85 0.00 0.00 0.00 1,959,985,016.85
Accounts receivable 3,103,758,850.15 0.00 0.00 0.00 3,103,758,850.15
Other receivables 52,535,740.14 0.00 0.00 0.00 52,535,740.14
Other current assets 104,859,166.96 0.00 0.00 0.00 104,859,166.96
Subtotal: 20,138,642,550.04 0.00 0.00 0.00 20,138,642,550.04
Financial liabilities:
Short-term loans 2,126,050,615.06 0.00 0.00 0.00 2,126,050,615.06
Financial liabilities held
755,634.43 0.00 0.00 0.00 755,634.43
for trading
Notes payable 1,635,906,989.22 0.00 0.00 0.00 1,635,906,989.22
Accounts payable 943,905,580.91 0.00 0.00 0.00 943,905,580.91
Other payables 3,680,334,360.88 0.00 0.00 0.00 3,680,334,360.88
Other current liabilities 83,541,891.93 0.00 0.00 0.00 83,541,891.93
Non-current liabilities
63,077,260.98 0.00 0.00 0.00 63,077,260.98
due within one year
Lease liabilities 0.00 14,509,839.81 8,972,646.26 0.00 23,482,486.07
Long term loans 0.00 907,182,927.81 2,323,661,115.07 0.00 3,230,844,042.88
Subtotal: 8,533,572,333.41 921,692,767.62 2,332,633,761.33 0.00 11,787,898,862.36
2. Capital management
The capital management policies are made to keep the continuous operation of the Company, to
enhance the return to shareholders, to benefit other stakeholders and to maintain the best capital
structure to minimize the cost of capital.
For the maintenance or adjustment of the capital structure, the Company might adjust financing
286
Joincare Pharmaceutical Group Annual Report 2023
method, the amount of dividends paid to shareholders, return capital to shareholders, issue new shares
and other equity instruments or make an asset disposal to reduce the liabilities.
The Company monitors the capital structure with gearing ratio (calculated by dividing total liabilities
by total assets). As of 31 December 2023, the Company’s gearing ratio is 37.73% (31 December 2022:
38.37%).
3. Transfer of financial assets
(1) Classification of transfer methods
Judgment basis
Transfer Nature of transferred Amount of transferred Termination of
for termination
method financial assets financial assets recognition
of recognition
The contractual
Transfer the right to
right to collect the
Endorsement receive the cash flow of Termination of
180,125,188.50 cash flow of the
of notes the financial asset to the confirmation
said financial asset
other party
is terminated.
The contractual
Transfer the right to
right to collect the
Notes receive the cash flow of Termination of
136,098,199.33 cash flow of the
discounting the financial asset to the confirmation
said financial asset
other party
is terminated.
Total 316,223,387.83
(2) Financial assets derecognized due to transfer
Gains or losses
Amount of
Project Transfer method related to
derecognition
derecognition
Notes receivable Endorsement of notes 180,125,188.50
Notes receivable Notes discounting 136,098,199.33
Total 316,223,387.83 --
In the current period, the Company discounted bank acceptance bills of RMB.99 385,575,297 (the
previous period: RMB1,190,002,804.98). As the main risks and rewards related to these bank notes,
such as interest rate risk, have been transferred to the banks, the Company derecognizes the discounted
undue bank notes. According to the discount agreement, if the bank notes are not accepted upon
maturity, the bank has the right to require the Company to pay off the outstanding balance. Therefore,
the Company continues to be involved in the discounted bank notes. As at 31 December 2023, the
undue bank notes discounted amounted to RMB0.33 136,098,199 (31 December 2022:
RMB422,899,944.56).
As at 31 December 2023, the carrying amount of the Company's undue bank notes endorsed to suppliers
in settlement of accounts payable was 180,125,188 RMB.50 (31 December 2022:
RMB542,620,475.62). There are no undue commercial notes endorsed to suppliers for settlement of
accounts payable (December 31, 2022: RMB 0.00). As of December 31, 2023, its maturity date is 1 to
6 months. According to the relevant provisions of the Negotiable Instruments Law, if the accepting
bank refuses to pay, its holder has the right to recourse against the Company (“continued involvement").
The Company considers that it has transferred substantially all of its risks and rewards and therefore
derecognizes the carrying amount of its and the related settled accounts payable. The maximum loss
and undiscounted cash flow of continuing involvement and repurchase are equal to its book value. The
Company considers that the continuing involvement in fair value is not material.
In 2023, the Company did not incur any gain or loss on the date of transfer of the Note. The Company
287
Joincare Pharmaceutical Group Annual Report 2023
has no current and accumulatively recognized income or expenses due to continuous involvement in
the derecognized financial assets. Endorsements occur roughly evenly in the current period.
(3) Financial assets transferred but not derecognized as a whole
None.
X. Fair value
The level in which fair value measurement is categorised is determined by the level of the fair value
hierarchy of the lowest level input that is significant to the entire fair value measurement. The levels
are defined as follows:
Level 1 inputs: unadjusted quoted prices in active markets that are observable at the measurement
date for identical assets or liabilities.
Level 2 inputs: inputs other than Level 1 inputs that are either directly or indirectly observable for
underlying assets or liabilities.
Level 3 inputs: inputs that are unobservable for underlying assets or liabilities.
(1) Items and amounts measured at fair value
As at 31 December 2023, the assets and liabilities measured at fair value are listed as follows
according to the above three levels:
Level 1 fair Level 2 fair
Level 3 fair value
Item value value Total
measurement
measurement measurement
I. Recurring fair value measurement
(1) Financial assets held for trading 79,176,104.95 3,723,049.29 0.00 82,899,154.24
1.debt instruments investment 937,588.47 0.00 0.00 937,588.47
2.equity instruments investment 78,238,516.48 0.00 0.00 78,238,516.48
3.Derivative financial assets 0.00 3,136,735.29 0.00 3,136,735.29
4.Financial products 0.00 586,314.00 586,314.00
(2) Other equity instruments investment 91,551,155.16 0.00 1,063,732,253.20 1,155,283,408.36
Total assets measured at fair value on a
170,727,260.11 3,723,049.29 1,063,732,253.20 1,238,182,562.60
recurring basis
(3) Financial liabilities held for trading
Derivative financial liabilities 0.00 86,817.12 0.00 86,817.12
Total liabilities measured at fair value on
0.00 86,817.12 0.00 86,817.12
a recurring basis
II. Non-recurring fair value measurement
Assets held-for-sale 0.00 0.00 0.00 0.00
Total assets measured at fair value on a
0.00 0.00 0.00 0.00
non-recurring basis
Total liabilities measured at fair value on
0.00 0.00 0.00 0.00
a non-recurring basis
During the year ended December 31, 2023, the Company's subsidiary Livzon Group held investments
in ELICIO THERAPEUTICS, INC. and Carisma Therapeutics, Inc., which were listed on the
NASDAQ stock exchange, and investments in Beijing Luzhu Biotechnology Co., Ltd. (北京绿竹生
物技术股份有限公司), which was listed on the Hong Kong Stock Exchange. As a result, the fair
288
Joincare Pharmaceutical Group Annual Report 2023
value measurement of these other equity instruments investments was reclassified from Level 3 to
Level 1. Except for the reclassification of the fair value measurement of the other equity instruments
investment, there were no transfers between Level 1 and Level 2 for the fair value measurement of
other financial assets and financial liabilities of the Company, nor were there any transfers into or out
of Level 3.
For financial instruments traded in active markets, the Company determines their fair value based on
their quoted market prices in the active market. The Company's trading debt instruments investments
and equity instruments investments are listed and traded in markets such as Shenzhen, Hong Kong, and
the United States. Their fair value is determined based on the closing prices on the last trading day of
the reporting period.
For financial instruments not traded in active markets, the Company uses valuation techniques to
determine their fair value. The valuation models primarily include discounted cash flow models and
market comparable company models. The inputs to valuation techniques mainly include risk-free rates,
benchmark interest rates, exchange rates, credit spreads, liquidity premiums, lack of liquidity discounts,
etc.
(2) Relevant information of level 2 fair value measurement
Fair value as at
Content Valuation techniques
2023.12.31
Calculated and determined based on the quoted forward
Derivative financial assets 3,136,735.29
exchange rate corresponding to the expiring contract
Derivative financial Calculated and determined based on the quoted forward
86,817.12
liabilities exchange rate corresponding to the expiring contract
Financial products 586,314.00 Bank quotation
(3) Quantitative information of important unobservable input values used in level 3 of fair value
measurement
Fair value as at
Content Valuation techniques
2023.12.31
Other equity instruments investment - Shanghai Yunfeng Xinchuang
57,858,983.79 Net assets
Equity Investment Center (上海云锋新创股权投资中心)
Other equity instruments investment - Shanghai JingYi Investment
73,365,064.89 Net assets
Center (上海经颐投资中心)
Other equity instruments investment - Qianhai Equity Investment
253,730,084.00 Net assets
Fund (前海股权投资基金)
Other equity instruments investment - Apricot Forest, Inc (杏树林) 101,475,500.00 Income method
Other equity instrument investments – China Resources Bank of
Zhuhai Co., Ltd. (Zhuhai China Resources Bank Co., Ltd. (珠海华润 226,644,000.00 Market method
银行股份有限公司) ) )
Other equity instrument investments - Yizun Biopharmaceutics
35,147,356.03 Market method
(Shanghai) Co., Ltd. (羿尊生物医药(上海) 有限公司) )
Other equity instrument investments - Zhuhai Medpha Biotechnology
Co., Ltd. (Zhuhai Medpha Biotechnology Co., Ltd. (珠海麦得发生物 32,099,443.70 Recent financing price
科技股份有限公司) ) )
Other equity instruments investment -享融(上海) 生物科技有限公
19,613,667.00 Recent financing price
司
Other equity instrument investments –GLOBAL HEALTH SCIENCE 205,217,490.01 Net assets
Other equity instrument investments –SCC VENTURE VI 2018-
233,268.67 Net assets
B,L.P.
Other equity instrument investments –Nextech V Oncology S.C.S.,
15,837,395.11 Net assets
SICAV-SIF
Other equity instrument investments -Others 42,510,000.00 Cost
XI. Related party and related party transactions
289
Joincare Pharmaceutical Group Annual Report 2023
1. Information of parent company
Place of Shareholding ratio
Name of parent Registered Voting right by
registrati Business nature by parent company
company capital parent company (%)
on (%)
Shenzhen Baiyeyuan Investment and
Investment Co., Ltd. establishment of industry,
Shenzhen domestic commerce, and 80,000,000.00 48.01 48.01
(深圳市百业源投资有
material supply and
限公司) marketing
The ultimate controller of the Company is Zhu Baoguo (朱保国).
(1) Registered capital of parent company and its changes
Name of other related parties 2022.12.31 Increase Decrease 2023.12.31
Shenzhen Baiyeyuan Investment
Co., Ltd. (深圳市百业源投资有限 80,000,000.00 0.00 0.00 80,000,000.00
公司)
(2) Shares of the company held by the parent company and its changes
Name of other related
2022.12.31 Ratio Increase Decrease 2023.12.31 Ratio
parties
Shenzhen Baiyeyuan
Investment Co., Ltd.
878,272,753.00 45.53% 17,380,900 0.00 895,653,653.00 48.01%
(深圳市百业源投资有
限公司)
On March 21, 2023, Shenzhen Baiyeyuan Investment Co., Ltd. (深圳市百业源投资有限公司)
returned 17,380,900 shares involved in the refinancing securities lending business.
2. Subsidiaries of the Company
Details of subsidiaries refer to Note VII. 1.
3. Joint venture and associates of the Company
Details of significant joint ventures or associates refer to Notes V.10 and VII. 4.
Other joint ventures or associates entered into transactions with the Company during the period, or
during the prior period with remaining closing balance were as follows:
Name of joint ventures and associates Relationship with the Company
Jiaozuo Jinguan Jiahua Electric Power Co., Ltd. (焦作金冠嘉华电力有限
Associates
公司)
Guangdong Blue Treasure Pharmaceutical Co. Ltd. (广东蓝宝制药有限公
Associates
司)
Shenzhen City Youbao Technology Co., Ltd. (深圳市有宝科技有限公司) Associates
AbCyte Therapeutics Inc. Associates
L&L Biopharma, Co. Ltd. (上海健信生物医药科技有限公司) Associates
Zhuhai Sanmed Biotech Inc. (珠海圣美生物诊断技术有限公司) Associates
Aetio Biotherapy Inc Associates
Jiangsu Atom Bioscience and Pharmaceutical Co., Ltd. (江苏新元素医药
Associates
科技有限公司)
Tianjin Tongrentang Group Co., Ltd. (天津同仁堂集团股份有限公司) Associates
Infinite Intelligence Pharmaceutical Co. Ltd. (北京英飞智药科技有限公
Associates
司)
Shenzhen Kangti Biomedical Technology Co., Ltd. (深圳康体生物医药科
Associates
技有限公司)
290
Joincare Pharmaceutical Group Annual Report 2023
Name of joint ventures and associates Relationship with the Company
Shanghai Sheo Pharmaceutical Technology Co., Ltd. (上海偕怡医药科技
Associates
有限公司)
Novastage Pharmaceuticals (Shenzhen) , Ltd. (新领医药技术(深圳) 有限
Associates
公司)
Feellife Health Inc. (深圳来福士雾化医学有限公司) Associates
Zhuhai Sanmed Gene Diagnostics Ltd. (珠海市圣美基因检测科技有限公
Entity controlled by an associate
司)
Zhuhai Hengqin Weisheng Precision Medicine Technology Co., Ltd. (珠海
Entity controlled by an associate
横琴维胜精准医学科技有限公司)
Note: Novastage Pharmaceuticals (Shenzhen)., Ltd. (新领医药技术(深圳) 有限公司) was an
associate of the Company in 2022.
4. Other related parties of the Company
Name of other related parties Relationship with the Company
Shenzhen Taitelixing Investment Development Co., Ltd.
Subsidiaries of the company’s ultimate actual controller
(深圳泰特力兴投资发展有限公司)
Zhuozhou Jingnan Yongle Golf Club Co., Ltd. (涿州京南 A company controlled by the Company’s parent
永乐高尔夫俱乐部有限公司) company
Shenzhen Healthy Deer Information Technology Co., Ltd.
An associate of the Company’s parent company
(深圳市健康阿鹿信息科技有限公司)
Sichuan Healthy Deer Hospital Management Co., Ltd. and
A subsidiary of an associate of the Company’s parent
its subsidiaries (四川健康阿鹿医院管理有限公司 and its
company
subsidiary )
Shenzhen Qianhai WeBank Co., Ltd. (深圳前海微众银行
An investee of the Company’s parent company
股份有限公司)
Beijing Shuobai Pharmaceutical Technology Co., Ltd. (北
An investee of the Company
京硕佰医药科技有限责任公司)
Zhuhai Medpha Biotechnology Co., Ltd. (珠海麦得发生
Company where Livzon Group supervisor is a director
物科技股份有限公司)
Zhuhai Xianghetai Investment Management Partnership
(Limited Partnership) (珠海祥和泰投资管理合伙企业(有 The executive of Livzon Group controls this entity
限合伙) )
Zhuhai Zhong Hui Yuan Investment Partnership (Limited
The director of Livzon Group controls this entity
Partnership) (珠海中汇源投资合伙企业(有限合伙)
Zhuhai Liying Investment Management Partnership
(Limited Partnership) (珠海丽英投资管理合伙企业(有限 The director of Livzon Group controls this entity
合伙) )
Jiangsu One Winner Medical Technology Co., Ltd. (江苏
The director of Livzon Group controls this entity
一赢家医疗科技有限公司)
Zhuhai Pu Xiaoying Enterprise Management Co., Ltd. (珠 Businesses controlled by close family members of
海市蒲小英企业管理有限公司) Livzon Group’s director
Directors, Supervisors and other senior management
Key management personnel
personnel
5. Related party transactions
(1) Purchase or sale with related parties
①Purchase of goods/receiving of services
Name of other related parties Current year Prior year
Guangdong Blue Treasure Pharmaceutical Co.
Raw materials 2,592,283.20 2,917,946.91
Ltd. (广东蓝宝制药有限公司)
Jiangsu One Winner Medical Technology Co.,
Ltd. (江苏一赢家医疗科技有限公司) and its Finished goods 2,669,251.00 2,687,051.40
subsidiary
291
Joincare Pharmaceutical Group Annual Report 2023
Name of other related parties Current year Prior year
Zhuhai Sanmed Biotech Inc. (珠海圣美生物诊断
Testing 0.00 137,358.49
技术有限公司)
Shenzhen City Youbao Technology Co., Ltd. (深
Modern service 1,005,433.00 2,083,948.00
圳市有宝科技有限公司)
Jiangsu One Winner Medical Technology Co.,
Ltd. (江苏一赢家医疗科技有限公司) and its Modern service 176,428.00 473,616.00
subsidiary
Infinite Intelligence Pharmaceutical Co. Ltd. (北 Research and
693,069.31 339,805.83
京英飞智药科技有限公司) development
Zhuhai Pu Xiaoying Enterprise Management Co.,
Modern service 0.00 249,975.00
Ltd. (珠海市蒲小英企业管理有限公司)
Shanghai Sheo Pharmaceutical Technology Co., Research and
0.00 18,867,924.60
Ltd. (上海偕怡医药科技有限公司) development
Beijing Shuobai Pharmaceutical Technology Co., Research and
15,000,000.00 0.00
Ltd. (北京硕佰医药科技有限责任公司) development
Feellife Health Inc. (深圳来福士雾化医学有限
Nebulizer 840,000.00 902,115.48
公司)
Jiaozuo Jinguan Jiahua Electric Power Co., Ltd. Electricity,
268,255,646.79 268,666,999.03
(焦作金冠嘉华电力有限公司) Steam
Total 291,232,111.30 297,326,740.74
②Sales of goods/rendering of services
Name of other related parties Current year Prior year
Finished products,
Guangdong Blue Treasure Pharmaceutical Co.
water, electricity 41,797,488.64 35,703,972.73
Ltd. (广东蓝宝制药有限公司)
and power
Zhuhai Sanmed Biotech Inc. (珠海圣美生物诊 Finished products,
643,038.26 592,356.49
断技术有限公司) power and others
Zhuhai Sanmed Gene Diagnostics Ltd. (珠海 Finished products,
648,316.60 1,435,666.13
市圣美基因检测科技有限公司) power and others
Subsidiary of Sichuan Health Alu Hospital
Finished products 2,957,156.52 3,036,532.62
Management Co., Ltd.
Jiangsu One Winner Medical Technology Co.,
Ltd. (江苏一赢家医疗科技有限公司) and Finished products 5,021.65 0.00
its subsidiary
Shenzhen Qianhai WeBank Co., Ltd. (深圳前
Finished products 4,786,115.64 0.00
海微众银行股份有限公司)
Tianjin Tongrentang Group Co., Ltd. (天津同
Modern service 566,037.74 0.00
仁堂集团股份有限公司)
Shanghai Sheo Pharmaceutical Technology Research and
0.00 3,960,000.00
Co., Ltd. (上海偕怡医药科技有限公司) development
Total 51,403,175.05 44,728,527.97
(2) Rental with related party
Type of assets Rental income in Rental income in
Name of lessee
leased current year prior year
Zhuhai Sanmed Biotech Inc. (珠海圣美生物诊
Building 2,171,444.85 2,226,299.00
断技术有限公司)
Zhuhai Sanmed Gene Diagnostics Ltd. (珠海市
Building 240,000.00 240,000.00
圣美基因检测科技有限公司)
Novastage Pharmaceuticals (Shenzhen) , Ltd. Buildings &
0.00 468,302.76
(新领医药技术(深圳) 有限公司) Equipment
Shenzhen Baiyeyuan Investment Co., Ltd. (深圳
Building 18,891.76 18,891.76
市百业源投资有限公司)
Shenzhen Taitelixing Investment Development
Building 18,720.00 18,720.00
Co., Ltd. (深圳泰特力兴投资发展有限公司)
Shenzhen Healthy Deer Information Technology
Building 17,174.32 17,174.32
Co., Ltd. (深圳市健康阿鹿信息科技有限公司)
292
Joincare Pharmaceutical Group Annual Report 2023
Type of assets Rental income in Rental income in
Name of lessee
leased current year prior year
Shenzhen City Youbao Technology Co., Ltd. (深
Building 17,174.32 17,174.32
圳市有宝科技有限公司)
Total 2,483,405.25 3,006,562.16
(3) Guarantee with related parties
① In order to ensure the stable development of production and operation of Jinguan Electric Power,
the Company and its controlling subsidiary Jiaozuo Joincare jointly provided a revolving guarantee
facility with balance of no more than RMB350 million (inclusive) for Jinguan Electric Power (specific
guarantors shall be specified in the guarantee contracts) according to “the Resolution on Providing
Loan Guarantee for Jinguan Electric Power by the Company and Its Controlling Subsidiary Jiaozuo
Joincare” considered and approved at the First Extraordinary General Meeting of the Company on 6
July 2016, with the guarantee period starting from the date when the resolution was considered and
approved to 31 December 2019. Pursuant to “the Resolution on Providing Loan Guarantee for Jinguan
Electric Power by the Company and Its Controlling Subsidiary Jiaozuo Joincare” considered and
approved at the 2017 Annual General Meeting of the Company on 22 May 2018, the Company and its
controlling subsidiary Jiaozuo Joincare jointly provided a revolving guarantee facility with balance of
no more than RMB350 million (inclusive) for Jinguan Electric Power (specific guarantors shall be
specified in the guarantee contracts), with the guarantee period starting from the date when the
resolution was considered and approved to 31 December 2022. In order to ensure the stable
development of production and operation of Jinguan Electric Power, the revolving guarantee facility
with balance of no more than RMB350 million (inclusive) for Jinguan Electric Power (specific
guarantors shall be specified in the guarantee contracts) considered and approved at the 2017 General
Meeting of the Company was changed to the revolving guarantee facility with balance of no more
than RMB450 million (inclusive) on 10 May 2019 due to the actual business needs of Jinguan Electric
Power, with the guarantee period starting from the date when the resolution was considered and
approved to 31 December 2022. On 18 May 2022, the "Proposal on the Company and its subsidiary
Jiaozuo Joincare in Providing Loan Guarantee for Jinguan Electric Power" was reviewed and approved
by the Company's 2021 annual general meeting, the Company and its subsidiary Jiaozuo Joincare
jointly provided a guarantee for Jinguan Electric Power on its revolving loans facility with a balance
of not more than RMB450 million (including RMB450 million) (the specific guarantor will be
specified in each guarantee contract), and the term is from the date of approval of this guarantee
proposal at the Company’s annual general meeting to 31 December 2025.
As at 31 December 2023, the Company provided Jinguan Electric Power (金冠电力) with guarantees
for loans of RMB408.27 million; of which RMB226.77 million in Shenzhen Branch of China
Everbright Bank, RMB700 million in Shenzhen Branch of Zheshang Bank, RMB91.50 million in
Shenzhen Branch of Nanyang Commercial Bank and RMB20 million in Jiaozuo Branch of China
CITIC Bank.
In order to ensure the safety of secured loans, Jinguan Electric Power provided counter guarantees for
the said guarantees provided by the Company and its subsidiary, Jiaozuo Joincare, based on its owned
assets, and undertook that it would unconditionally provide mutual guarantees for the Company or its
controlling subsidiary designated with total facility of no more than RMB450 million (inclusive)
whenever the Company deemed necessary.
② Another shareholder of Livzon MABPharm Inc. (珠海市丽珠单抗生物技术有限公司) – the
Company has issued a "Counter Guarantee Commitment", promising that it will share the joint and
several guarantee liability to the extent of 33.07% of the scope of guarantee responsibility in relation
to the guarantee provided to Livzon MABPharm Inc. (珠海市丽珠单抗生物技术有限公司), and the
293
Joincare Pharmaceutical Group Annual Report 2023
counter guarantee period will expire on the date when the Company's guarantee responsibility expiry.
③ Zhuhai Zhong Hui Yuan Investment Partnership (Limited Partnership) (珠海中汇源投资合伙企
业 ( 有 限 合 伙 ), being another shareholder of Livzon Group Xinbeijiang Pharmaceutical
Manufacturing Inc. ( 丽 珠 集 团 新 北 江 制 药 股 份 有 限 公 司 ) has issued a "Counter Guarantee
Commitment", promising that it will share the joint and several guarantee liability to the extent of
8.44% of the scope of guarantee responsibility incurred by Livzon Group in relation to the guarantee
provided to Livzon MABPharm Inc. ( 珠 海 市 丽珠单抗 生物技 术有 限公司 ), and the counter
guarantee period will expire on the date when Livzon Group's guarantee responsibility expiry.
(4) Asset transfer and debt restructuring between related parties
None.
(5) Remuneration to key management personnel
Unit: RMB ten thousand
For the year ended 31 December 2023
Director/ Wages
Social Housing Severance
Item Supervisor and Bonus Others Total
security fund pay
Allowance allowances
Directors:
Zhu Baoguo (朱保国) 325.00 0.00 6.59 2.88 0.00 0.00 0.00 334.47
Liu Guangxia (刘广
325.00 19.43 9.65 2.88 80.00 0.00 0.00 436.96
霞)
Yu Xiong (俞雄) 0.00 260.00 0.00 0.00 100.00 0.00 0.00 360.00
Qiu Qingfeng (邱庆
0.00 135.00 7.70 2.88 80.00 0.00 0.00 225.59
丰)
Lin Nanqi (林楠棋) 0.00 135.00 7.70 2.88 80.00 0.00 0.00 225.59
Huo Jing (霍静) 12.00 0.00 0.00 0.00 0.00 0.00 0.00 12.00
Qin Yezhi (覃业志) 12.00 0.00 0.00 0.00 0.00 0.00 0.00 12.00
Peng Juan (彭娟) 12.00 0.00 0.00 0.00 0.00 0.00 0.00 12.00
Yin Xiaoxing (印晓星) 3.50 0.00 0.00 0.00 0.00 0.00 0.00 3.50
Cui Liguo (崔利国) 8.50 0.00 0.00 0.00 0.00 0.00 0.00 8.50
Supervisors:
Yu Xiaoyun (余孝云) 4.80 38.16 7.21 2.25 17.95 0.00 0.00 70.36
Peng Jinhua (彭金花) 4.80 0.00 0.00 0.00 0.00 0.00 0.00 4.80
Xing Zhiwei (幸志伟) 4.80 57.77 6.85 2.09 40.00 0.00 0.00 111.51
Other senior
management:
Zhang Leiming (张雷
0.00 110.97 7.70 2.88 80.00 0.00 0.00 201.56
明)
Zhao Fenguang (赵凤
0.00 135.00 7.70 2.88 60.00 0.00 0.00 205.59
光)
Total 712.40 891.33 61.11 21.64 537.95 0.00 0.00 2,224.43
Note: Mr. Zhu Baoguo (朱保国) serves as the chairman of Livzon Group, a controlled subsidiary of
the Company; and Mr. Yu Xiong (俞雄) and Mr. Qiu Qingfeng (邱庆丰) serve as non-executive
directors of Livzon Group. Cui Liguo (崔利国) has resigned. The remuneration presented in above
does not include the portion paid by Livzon Group.
For the year ended 31 December 2022
294
Joincare Pharmaceutical Group Annual Report 2023
Director/
Wages and Social Housing Severance
Supervisor Bonus Others Total
allowances security fund pay
Allowance
Directors:
Zhu Baoguo (朱保
325.00 0.00 6.44 2.66 0.00 0.00 0.00 334.09
国)
Liu Guangxia (刘广
325.00 18.48 1.85 2.66 0.00 0.00 0.00 347.98
霞)
Yu Xiong (俞雄) 0.00 260.00 0.00 0.00 100.00 0.00 0.00 360.00
Qiu Qingfeng (邱庆
0.00 135.00 7.27 2.66 80.00 0.00 0.00 224.93
丰)
Lin Nanqi (林楠棋) 0.00 135.00 7.27 2.66 80.00 0.00 0.00 224.93
Cui Liguo (崔利国) 11.54 0.00 0.00 0.00 0.00 0.00 0.00 11.54
Huo Jing (霍静) 11.54 0.00 0.00 0.00 0.00 0.00 0.00 11.54
Qin Yezhi (覃业志) 11.54 0.00 0.00 0.00 0.00 0.00 0.00 11.54
Peng Juan (彭娟) 11.54 0.00 0.00 0.00 0.00 0.00 0.00 11.54
Supervisors:
Yu Xiaoyun (余孝
4.80 38.31 6.82 2.25 17.95 0.00 0.00 70.13
云)
Peng Jinhua (彭金花) 4.80 0.00 0.00 0.00 0.00 0.00 0.00 4.80
幸志伟 2.97 64.00 6.82 2.09 93.00 0.00 0.00 168.88
Xie Youguo(谢友国) 1.83 36.92 0.00 0.00 0.00 0.00 0.00 38.75
Other senior
management:
Zhao Fenguang (赵
0.00 135.00 7.27 2.66 45.00 0.00 0.00 189.93
凤光)
Total 710.57 822.71 43.75 17.61 415.95 0.00 0.00 2,010.58
Note: Mr. Zhu Baoguo (朱保国) serves as the chairman of Livzon Group, a controlled subsidiary of
the Company; and Mr. Yu Xiong (俞雄) and Mr. Qiu Qingfeng (邱庆丰) serve as non-executive
directors of Livzon Group. Xie Youguo (谢友国) has resigned. The remuneration presented in above
does not include the portion paid by Livzon Group.
(6) Other related party transactions
None.
6. Receivables and payables with related party
(1) Receivable from related parties
2023.12.31 2022.12.31
Item Related party Provision
Provision for
Book balance Book balance for bad
bad debts
debts
Accounts Guangdong Blue Treasure Pharmaceutical Co.
9,288,000.00 93,808.80 4,781,500.00 47,336.85
receivable Ltd. (广东蓝宝制药有限公司)
Accounts Zhuhai Sanmed Gene Diagnostics Ltd. (珠海市
180,820.75 1,844.37 85,731.98 840.17
receivable 圣美基因检测科技有限公司)
Subsidiary of Sichuan Health Alu Hospital
Accounts
Management Co., Ltd. (四川健康阿鹿医院管 434,422.80 87,318.98 497,828.30 103,325.48
receivable
理有限公司)
295
Joincare Pharmaceutical Group Annual Report 2023
2023.12.31 2022.12.31
Item Related party Provision
Provision for
Book balance Book balance for bad
bad debts
debts
Zhuhai Sanmed Biotech Inc. (珠海圣美生物诊
Prepayments 211,200.00 0.00 211,200.00 0.00
断技术有限公司)
Shenzhen City Youbao Technology Co., Ltd.
Prepayments 0.00 0.00 188,100.00 0.00
(深圳市有宝科技有限公司)
Jiangsu One Winner Medical Technology Co.,
Prepayments 29,816.00 0.00 0.00 0.00
Ltd. (江苏一赢家医疗科技有限公司)
Feellife Health Inc. (深圳来福士雾化医学有限
Prepayments 1,259,566.37 0.00 0.00 0.00
公司)
Jiaozuo Jinguan Jiahua Electric Power Co., Ltd.
Prepayments 65,814,779.87 0.00 75,724,913.57 0.00
(焦作金冠嘉华电力有限公司)
Other Guangdong Blue Treasure Pharmaceutical Co.
860,233.52 9,118.48 607,484.29 6,925.32
receivables Ltd. (广东蓝宝制药有限公司)
Other Zhuhai Sanmed Gene Diagnostics Ltd. (珠海市
2,263.89 52.75 15,795.00 170.59
receivables 圣美基因检测科技有限公司)
Other Zhongshan Renhe Health Products Co., Ltd. (中
469,895.78 469,895.78 469,895.78 469,895.78
receivables 山市仁和保健品有限公司)
Other Shenzhen Healthy Deer Information Technology
4,680.00 129.99 4,680.00 74.38
receivables Co., Ltd. (深圳市健康阿鹿信息科技有限公司)
(2) Payables to related party
Item Related party 2023.12.31 2022.12.31
Subsidiary of Sichuan Health Alu Hospital Management Co.,
Contract liabilities 255,459.93 12,011.72
Ltd. (四川健康阿鹿医院管理有限公司)
Guangdong Blue Treasure Pharmaceutical Co. Ltd. (广东蓝
Notes payable 883,200.00 0.00
宝制药有限公司)
Guangdong Blue Treasure Pharmaceutical Co. Ltd. (广东蓝
Accounts payable 195,398.23 117,760.00
宝制药有限公司)
Subsidiary of Sichuan Health Alu Hospital Management Co.,
Other payables 0.00 8,936.17
Ltd. (四川健康阿鹿医院管理有限公司)
XII. Share-based payments
1. Information about share-based payments
(1) The Company
A. On 29 August 2022, the Company held the third extraordinary general meeting of shareholders in
2022, and reviewed and approved the "Proposal on the Company's 2022 Share option Incentive Plan
(Draft) and its Summary", Proposal on the Company's 2022 Share option Incentive Plan
Implementation Appraisal Management Measures" and "Proposal on Requesting the Company's
Shareholders' Meeting to Authorize the Board of Directors to Handle Matters Related to Shares
Incentive". The Company held the 16th meeting of the eighth board of directors on 5 September 2022,
and reviewed and passed the "Proposal on First Time Granting Share options to Incentive Participants".
With 5 September 2022 as the grant date, 49.45 million share options were granted to 423 incentive
participants at a price of RMB11.24 per share. The date of completion and effective date of registration
of share options granted is 16 September 2022.
In 2022, the share option incentive plan initially granted 32 former incentive recipients (a total of 2.37
million options) had their options revoked due to their resignation and no longer meeting the incentive
conditions. Following the forfeiture, the number of share options initially granted under the Company's
2022 share option incentive plan was adjusted from 49.45 million to 47.08 million, and the number of
initial incentive recipients was adjusted from 423 to 391.
The exercise period of the options granted this time and the exercise time schedule for each period are
296
Joincare Pharmaceutical Group Annual Report 2023
shown in the following table:
Vesting period Vesting date Vesting ratio
From the first trading day 12 months after the first grant date to the
First vesting period 40%
last trading day within 24 months from the first grant date
From the first trading day 24 months after the first grant date to the
Second vesting period 30%
last trading day within 36 months from the first grant date
From the first trading day 36 months after the first grant date to the
Third vesting period 30%
last trading day within 48 months from the first grant date
Company-level performance appraisal requirements: The share options granted by this incentive plan
are subject to annual performance appraisal and vesting. To achieve the performance appraisal target
as the vesting condition for incentive participants, the annual performance appraisal targets for the first-
time grant are shown in the table below:
Vesting period Performance appraisal targets
Based on the net profit in 2021, the compound growth rate of net profit in 2022 shall not
First vesting period
be less than 15%;
Based on the net profit in 2021, the compound growth rate of net profit in 2023 shall not
Second vesting period
be less than 15%;
Based on the net profit in 2021, the compound growth rate of net profit in 2024 shall not
Third vesting period
be less than 15%.
The calculation of the above "net profit" and "net profit growth rate" indicators is based on the net
profit attributable to shareholders of listed company after deducting non-recurring gains and losses,
and excluding the impact of share-based payments in this incentive plan. If the Company fails to meet
the above-mentioned performance appraisal targets, all incentive participants whose share options are
exercisable in the year corresponding to the appraisal shall not be exercised and shall be canceled by
the Company.
B. On 11 August 2023, the Company convened the 28th meeting of the eighth board of directors to
deliberate and approve the "Proposal on Reserving Share Options for Incentive Recipients". The grant
date was set as 11 August 2023, and 5.5 million share options were granted to 149 incentive recipients
at a price of RMB11.06 per share. The registration completion date and effective date for this grant of
share options were 30 August 2023.
The exercise period of the options granted this time and the exercise time schedule for each period are
shown in the following table:
Vesting period Vesting date Vesting ratio
From the first trading day 12 months after the grant date of reserved
First vesting period of
options to the last trading day within 24 months from the first grant 50%
reserved options
date
From the first trading day 24 months after the grant date of reserved
Second vesting period
options to the last trading day within 36 months from the first grant 50%
of reserved options
date
Company-level performance appraisal requirements: The share options granted by this incentive plan
are subject to annual performance appraisal and vesting. To achieve the performance appraisal target
as the vesting condition for incentive participants, the annual performance appraisal targets for the
reserved grant are shown in the table below:
Vesting period Performance appraisal targets
First vesting period Based on the net profit in 2021, the compound growth rate of net profit in
of reserved options 2023 shall not be less than 15%;
Second vesting
Based on the net profit in 2021, the compound growth rate of net profit in
period of reserved
2024 shall not be less than 15%.
options
The calculation of the above "net profit" and "net profit growth rate" indicators is based on the net
297
Joincare Pharmaceutical Group Annual Report 2023
profit attributable to shareholders of listed company after deducting non-recurring gains and losses,
and excluding the impact of share-based payments in this incentive plan. If the Company fails to meet
the above-mentioned performance appraisal targets, all incentive participants whose share options are
exercisable in the year corresponding to the appraisal shall not be exercised and shall be canceled by
the Company.
C、Equity instruments granted are as follows:
Unit: 10,000
Grant in the year Exercised in the year Vested in the year Forfeited in the year
Grant recipients Quantit
Quantity Amount Quantity Amount Amount Quantity Amount
y
Sales personnel 168 175 1,027 16
Administrative
303 100 475 193
personnel
R&D personnel 79 76 382 28
Total 550 351 1,883 237
(2) The Company’s subsidiary Livzon Group
① Share options
A. On 14 October 2022, Livzon Group’s 2022 Second Extraordinary Shareholders’ Meeting, 2022
Second A-Share Class Shareholders’ Meeting and 2022 H-Share Class Shareholders’ Meeting reviewed
and approved the “Proposal on the Company's 2022 Share option Incentive Plan (Revised Draft) and
Its Summary", "Proposal on the company's 2022 Share option Incentive Plan Implementation Appraisal
Management Measures", "Proposal on submitting to the company's general meeting of shareholders to
authorize the board of directors to handle matters related to the 2022 share options incentive plan". On
7 November 2022, the 39th meeting of the 10th Board of Directors of Livzon Group reviewed and
approved the "Proposal on Matters Related to the First Time Grant of the 2022 Share option Incentive
Plan". With 7 November 2022 as the grant date, 17,973,500 share options were granted to 1,026
incentive participants at a price of RMB31.31 per A share. The date of completion and effective date
of registration of share options granted is 23 November 2022.
In 2022, the share option incentive plan initially granted share options to 25 former incentive recipients
(a total of 361,000 options), which were revoked due to their resignation and no longer meeting the
incentive conditions. Following the forfeiture, the number of share options initially granted under the
Livzon Group's 2022 share option incentive plan was adjusted from 17.9735 million to 17.6125 million,
and the number of initial incentive recipients was adjusted from 1,026 to 1,001.
The exercise period of the options granted this time and the exercise time schedule for each period are
shown in the following table:
Vesting period Vesting date Vesting ratio
From the first trading day 12 months after the completion
First vesting period of stock of the first time grant registration to the last trading day
40%
options granted for the first time within 24 months from the completion of the first time
grant registration
From the first trading day 24 months after the completion
Second vesting period of stock of the first time grant registration to the last trading day
30%
options granted for the first time within 36 months from the completion of the first time
grant registration
From the first trading day 36 months after the completion
Third vesting period of stock of the first time grant registration to the last trading day
30%
options granted for the first time within 48 months from the completion of the first time
grant registration
298
Joincare Pharmaceutical Group Annual Report 2023
Livzon Group performance appraisal requirements: The stock options granted by this incentive plan
are subject to annual performance appraisal and vesting during three fiscal years of the vesting period.
To achieve the performance appraisal target as the vesting condition for incentive participants, the
annual performance appraisal targets for the first-time grant are shown in the table below:
Vesting period Performance appraisal targets
First vesting period of stock options granted for Based on the net profit in 2021, the compound growth rate
the first time of net profit in 2022 shall not be less than 15%;
Second vesting period of stock options granted for Based on the net profit in 2021, the compound growth rate
the first time of net profit in 2023 shall not be less than 15%;
Third vesting period of stock options granted for Based on the net profit in 2021, the compound growth rate
the first time of net profit in 2024 shall not be less than 15%.
B. On 12 October 2023, Livzon Group convened the 4th meeting of the eleventh board of directors to
deliberate and approve the " Proposal on matters related to the planned reserved grant of share option
incentive plan in 2022". The grant date was set as 30 October 2023, and 2.0 million share options were
granted to 243 incentive recipients at a price of RMB36.26 per A share. The registration completion
date and effective date for this grant of share options were 28 November 2023.
The exercise period of the options granted this time and the exercise time schedule for each period are
shown in the following table:
Vesting period Vesting date Vesting ratio
From the first trading day 12 months after the grant date of
First vesting period of reserved
reserved options to the last trading day within 24 months 50%
options
from the first grant date
From the first trading day 24 months after the grant date of
Second vesting period of reserved
reserved options to the last trading day within 36 months 50%
options
from the first grant date
Livzon Group performance appraisal requirements: The stock options granted by this incentive plan
are subject to annual performance appraisal and vesting during two fiscal years of the vesting period.
To achieve the performance appraisal target as the vesting condition for incentive participants, the
annual performance appraisal targets for the first-time grant are shown in the table below:
Vesting period Performance appraisal targets
Based on the net profit in 2021, the compound growth rate
First vesting period of reserved options
of net profit in 2023 shall not be less than 15%;
Based on the net profit in 2021, the compound growth rate
Second vesting period of reserved options
of net profit in 2024 shall not be less than 15%.
② Other Shares incentive
Pursuant to “ the Resolution on the Disposal of Certain Equity of a Holding Subsidiary and Connected
Transaction” considered and approved at the 34th Meeting of the 9th Session of the Board of Livzon
Group on 8 November 2019, it was agreed that 9.5% equity interests (totally 8,382,100 shares) in
Zhuhai Livzon Diagnostics Inc. (珠海丽珠试剂股份有限公司) held by Livzon Group shall be
transferred to Zhuhai Liying Investment Management Partnership (Limited Partnership) (珠海丽英
投资管理合伙企业（有限合伙）) at the consideration of RMB21,122,892. Pursuant to the Assets
Appraisal Report on the Valuation of the Shareholders'. According to “Assets evaluation report of all
shareholders' equity value project of Zhuhai Livzon Diagnostics Inc. (珠海丽珠试剂股份有限公司)
involved in the proposed transfer of equity by Livzon Pharmaceutical Group Co., Ltd.”. (Huaya
Zhengxin Appraisal Report [2019] No. A02-0011), the valuation of all shareholders’ equity of Zhuhai
Livzon Diagnostics Inc. as at 30 June 2019 was RMB647.3075 million, and the above equity transfer
price was lower than its fair value, therefore it constitutes a share-based payment. The total share-
based payment of the transaction is RMB40.4017 million, which should be amortized within 5 years
according to the partnership agreement and share incentive expenses were recognised due to the share-
299
Joincare Pharmaceutical Group Annual Report 2023
based payment as a result of the change in the shareholding of the shareholders of Zhuhai Liying
Investment Management Partnership (Limited Partnership).
Pursuant to “the Resolution on the Implementation of Employee Equity Incentive Scheme by a
Holding Subsidiary” considered and approved at the 34th Meeting of the 9th Session of the Board of
Livzon Group on 8 November 2019, the total number of shares of new issuance by Zhuhai Livzon
Diagnostics Inc. for implementation of employee equity incentive scheme shall not be more than
4,643,839 shares, and the scheme participants shall contribute a total of RMB11,702,474.28 to directly
subscribe for the above shares or indirectly subscribe for the such shares through the holding of the
limited partnership shares of the employee shareholding platform. In December 2019, pursuant to the
Capital Increase Agreement of Zhuhai Livzon Diagnostics Inc., the total shares of Zhuhai Livzon
Diagnostics Inc. increased from 88,232,932 shares to 92,876,771 shares with par value of RMB1 per
share. The increased number of shares were subscribed for by Zhuhai Haoxun Enterprise Management
Consulting Partnership (Limited Partnership) (珠海豪汛企业管理咨询合伙企业（有限合伙）),
Zhuhai Yichen Enterprise Management Consulting Partnership (Limited Partnership) (珠海熠臣企业
管理咨询合伙企业（有限合伙）) and Zhuhai Qijing Enterprise Management Consulting Partnership
(Limited Partnership) (海启靖企业管理咨询合伙企业（有限合伙）) at the consideration of
RMB11,702,474. The subscription price is lower than the fair value, therefore it constitutes a share-
based payment. The total share-based payment of the transaction is RMB20,709,000, which should be
amortized within 5 years according to the Partnership Agreement, and share incentive expenses were
recognized due to the share-based payment as a result of the change in the shares/shareholding of the
shareholders or employee stock ownership platform of Zhuhai Livzon Diagnostics Inc.
On 31 August 2021, the general meeting of Livzon Bio considered and approved the Equity Incentive
Scheme of Zhuhai Livzon Biotechnology Co., Ltd. (珠海市麗珠生物醫藥科技有限公司), granting
66,666,667 restricted shares of Livzon Biologics to incentive participants, among which 42 million
shares were granted in the first batch and 24,666,667 shares were reserved. Incentive participants
indirectly subscribed for the above shares through the holding of the limited partnership shares of the
employee shareholding platform. The subscription price is lower than the fair value, therefore it
constitutes a share-based payment. The total share-based payment of the transaction is RMB33.6
million, which should be amortized during the lock-up period according to the Equity Incentive
Scheme of LivzonBio and the Grant Agreement and RMB7.84 million was amortized in the year ended
31 December 2023.
② Equity instruments granted are as follows:
Unit: 10,000
Exercised in the Forfeited in the
Grant in the year Vested in the year
year year
Grant recipients
Quantity Amount Quantity Amount Quantity Amount Quantity Amount
Sales personnel 29.80
Administrative personnel 140.65
R&D personnel 29.55
Total 200.00
300
Joincare Pharmaceutical Group Annual Report 2023
2. Equity-settled share-based payments
Method in determining the fair value of equity
Black-Scholes Model, market price
instruments at the date of grant
Risk-free interest rate (1.5%-2.75%), validity period (1-3
Important parameters of fair value of equity
years), historical stock price volatility (12.97%-17.12%),
instruments on grant date
dividend rate (1.12%-1.47%)
Basis in determining the quantity of exercisable Determined according to exercisable conditions and estimated
equity instruments attrition rate
Reason for significant difference of estimation
No significant differences
between current year and prior year
Accumulated amount recorded in capital
237,393,331.40
reserve for equity-settled share-based payments
3. Information on cash-settled share-based payments
None.
4. Information on share-based payments
Share-based compensation Share-based compensation
Grant recipients
expense settled in equity expense settled in cash
Middle and high-level managers and key
90,412,632.26 0.00
business personnel
XIII. Commitments and contingencies
1. Significant commitments
(1) Capital commitments
Capital commitments entered into but not recognized in
Closing balance Beginning balance
the financial statements
Commitments in relation to acquisition of long-term assets 522,447,456.93 455,161,816.72
Commitments in relation to external investment 13,000,000.00 12,000,000.00
Commitments in relation to research and development
683,619,716.31 0.00
expenditures
(2) Other commitments
None.
(3) Performance of previous commitments
The Company has duly performed the capital expenditure commitments and the operating lease
commitments and the other commitments as at 31 December 2023.
2. Contingencies
As at 31 December 2023, there was no other significant contingency required to be disclosed by the
Company.
XIV. Event after balance sheet date
1. Profit distribution
On 2 April 2024, the thirty-eighth meeting of the eighth Board of Directors of the Company passed
the 2023 profit distribution plan. Based on the Company's total share capital deducted by the
repurchased shares held in the Company's special securities account on the registration date
determined by the implementation of the Company's 2023 annual profit distribution plan, a cash bonus
of RMB1.80 (tax included) for every 10 shares will be distributed to all shareholders.
The above profit distribution plan needs to be submitted to the company's 2023 annual general meeting
of shareholders for consideration and approval.
301
Joincare Pharmaceutical Group Annual Report 2023
As of 2 April 2024, the Company has no other events that needed to be disclosed after the balance sheet
date.
XV. Other significant events
As of the balance sheet date, the Company does not have other important matter to be disclosed.
XVI. Notes to the significant financial statements item of the Parent Company
1. Notes receivable
Category 2023.12.31 2022.12.31
Provision Provision
Carrying Carrying
Book balance for bad Book balance for bad
amount amount
debts debts
Bank
acceptance 191,417,091.37 0.00 191,417,091.37 249,617,024.89 0.00 249,617,024.89
bills
Commercial
acceptance 0.00 0.00 0.00 0.00 0.00 0.00
bills
Total 191,417,091.37 0.00 191,417,091.37 249,617,024.89 0.00 249,617,024.89
(1) Notes receivable pledged at year end
Item Amount pledged at year end
Bank acceptance bills 99,070,424.71
(2) Bills endorsed or discounted to other parties but not yet expired at balance sheet date
Amount derecognized Amount not derecognized
Category
at year end at year end
Bank acceptance bills not yet mature
64,790,190.55 --
but already endorsed
Bank acceptance bills not yet mature
0.00 --
but already discounted
Total 64,790,190.55
(3) There was no bills transferred into account receivables for non-performance by the issuer at
balance sheet date of the period.
(4) Disclosure by method of provision for bad debts
Category 2023.12.31 2022.12.31
Provision for bad Provision for bad
Book balance Book balance
debts debts
Carrying Carrying
Expected amount Expected amount
Ratio Ratio
Amount Amount credit loss Amount Amount credit loss
(%) (%)
rate (%) rate (%)
Provision for bad debts
on individual item
Provision for bad debts
100.00 0.00 0.00 191,417,091.37 249,617,024.89 100.00 0.00 0.00 249,617,024.89
on portfolio basis 191,417,091.37
Including:
Bank acceptance bills 100.00 0.00 0.00 191,417,091.37 249,617,024.89 100.00 0.00 0.00 249,617,024.89
191,417,091.37
Total 100.00 0.00 0.00 191,417,091.37 249,617,024.89 100.00 0.00 0.00 249,617,024.89
191,417,091.37
302
Joincare Pharmaceutical Group Annual Report 2023
(5) There was no accrual, recovery or reversal of bad debt provision during the period
(6) There was no actual write-off of notes receivable in the period
2. Accounts receivable
(1) Disclosure by ageing
Ageing 2023.12.31 2022.12.31
Within one year 315,521,678.52 290,962,991.84
1 to 2 years (inclusive of 2 years) 2,252,749.01 2,684,445.48
2 to 3 years (inclusive of 3 years) 218,363.74 1,178,173.47
3 to 4 years (inclusive of 4 years) 1,136,271.11 641,804.42
4 to 5 years (inclusive of 5 years) 125,802.16 388,712.49
Over 5 years 8,102,724.93 7,754,530.87
Subtotal 327,357,589.47 303,610,658.57
Less: Provision for bad debts 12,178,306.49 11,979,800.83
Total 315,179,282.98 291,630,857.74
(2) Disclosure by method of provision for bad debts
2023.12.31 2022.12.31
Book balance Provision for bad debts Book balance Provision for bad debts
Category
Carrying Carrying
Expected Expected
Ratio amount Ratio amount
Amount Amount credit loss Amount Amount credit loss
(%) (%)
rate (%) rate (%)
Provision for bad
debts on 771,300.68 0.24 771,300.68 100.00 0.00 771,300.68 0.25 771,300.68 100.00 0.00
individual item
Including:
Receivables
from domestic 771,300.68 0.24 771,300.68 100.00 0.00 771,300.68 0.25 771,300.68 100.00 0.00
customers
Provision for bad
debts on portfolio 326,586,288.79 99.76 11,407,005.81 3.49 315,179,282.98 302,839,357.89 99.75 11,208,500.15 3.70 291,630,857.74
basis
Including:
Receivables
from domestic 326,586,288.79 99.76 11,407,005.81 3.49 315,179,282.98 302,839,357.89 99.75 11,208,500.15 3.70 291,630,857.74
customers
Total 327,357,589.47 100.00 12,178,306.49 3.72 315,179,282.98 303,610,658.57 100 11,979,800.83 3.95 291,630,857.74
Provision for bad debts on individual item:
Item 2023.12.31
Expected
Provision for bad
Book balance credit loss Reason of provision
debts
rate (%)
Likelihood of recovery is
Purchase of goods 771,300.68 771,300.68 100.00
expected to be low
Provision for bad debts on portfolio basis:
Provision for bad debts on portfolio basis: Receivables from domestic customers
Ageing 2023.12.31 2022.12.31
Expected Expected
Accounts Provision for Accounts Provision for
credit loss credit loss
receivable bad debts receivable bad debts
rate (%) rate (%)
Within one year 315,521,678.52 2,890,091.59 0.92 290,962,991.84 2,721,949.54 0.94
303
Joincare Pharmaceutical Group Annual Report 2023
1 to 2 years (inclusive of
2,252,749.01 182,328.02 8.09 2,684,445.48 282,436.48 10.52
2 years)
2 to 3 years (inclusive of
218,363.74 70,618.48 32.34 1,178,173.47 378,821.59 32.15
3 years)
3 to 4 years (inclusive of
1,136,271.11 832,171.89 73.24 641,804.42 474,608.03 73.95
4 years)
4 to 5 years (inclusive of
125,802.16 100,371.58 79.79 103,939.29 82,681.12 79.55
5 years)
Over 5 years 7,331,424.25 7,331,424.25 100.00 7,268,003.39 7,268,003.39 100.00
Subtotal 326,586,288.79 11,407,005.81 3.49 302,839,357.89 11,208,500.15 3.70
(3) Accrual, recovery or reversal of bad debt provision during the period
Amount of provision for bad debts
Beginning balance 11,979,800.83
Provision for the year 198,505.66
Recovered or reversal in the year 0.00
Write-off in the year 0.00
Closing balance 12,178,306.49
At 31 December 2023 and 31 December 2022, the Company had no overdue but not impaired accounts
receivable.
(4) No actual written-off of accounts receivable in this period.
(5) Accounts receivable due from the top five debtors
As of 31 December 2023, the total amount of the top five debtors in closing balance is
RMB72,504,751.65, accounting for 22.15% of the total amount of closing balance of accounts
receivable, and the corresponding closing balance of provision for bad debts is total RMB725,047.52.
(6) There were no accounts receivable derecognized due to the transfer of financial assets in each
reporting period.
(7) There were no assets or liabilities formed by the continuing involvement of transferred
accounts receivables in each reporting period.
3. Other receivables
Item 2023.12.31 2022.12.31
Dividends receivable 519,999,500.00 544,999,500.00
Other receivables 166,368,334.30 240,307,524.78
Total 686,367,834.30 785,307,024.78
(1) Dividends receivable
Item 2023.12.31 2022.12.31
Topsino 499,999,500.00 524,999,500.00
Fenglei Electric Power 20,000,000.00 20,000,000.00
Subtotal: 519,999,500.00 544,999,500.00
Less: Provision for bad debts 0.00 0.00
Total 519,999,500.00 544,999,500.00
304
Joincare Pharmaceutical Group Annual Report 2023
(2) Other receivables
① Disclosure by ageing
Item 2023.12.31 2022.12.31
Within one year 165,941,822.03 239,838,488.56
1 to 2 years 195,161.27 590,397.78
2 to 3 years 276,497.86 149,812.10
3 to 4 years 147,742.10 206,676.00
4 to 5 years 201,676.00 126,228.36
Over 5 years 18,223,163.69 19,105,586.00
Subtotal 184,986,062.95 260,017,188.80
Less: Provision for bad debts 18,617,728.65 19,709,664.02
Total 166,368,334.30 240,307,524.78
Disclosure by nature
Item 2023.12.31 2022.12.31
Provision for Carrying Provision for Carrying
Book balance Book balance
bad debts amount bad debts amount
Other
receivables
of each
company 162,423,627.30 0.00 162,423,627.30 238,041,400.41 0.00 238,041,400.41
within the
scope of
combination
Treasury
bonds and 16,954,735.37 16,954,735.37 0.00 17,968,386.04 17,968,386.04 0.00
security
deposits
External
entities 2,021,697.55 1,299,303.83 722,393.72 1,384,240.83 1,253,731.83 130,509.00
balances
Security 886,662.78 288,715.23 605,038.61 973,098.11 354,429.35 618,668.76
deposits
Amounts of
exercised 597,240.00 0.00 597,240.00 0.00 0.00 0.00
options
Others 2,102,099.95 74,974.22 2,020,034.67 1,650,063.41 133,116.80 1,516,946.61
Total 184,986,062.95 18,617,728.65 166,368,334.30 260,017,188.80 19,709,664.02 240,307,524.78
③ Information of provision for bad debts
At year end, provision for bad debts on those in first stage:
Expected credit
loss rate in the Provision for
Category Book balance Carrying amount Reason
next 12 months bad debts
(%)
Provision for bad debts on
0.00 0.00 0.00 0.00
individual item
Provision for bad debts on
163,020,867.30 0.00 0.00 163,020,867.30
portfolio basis
Amounts of exercised
597,240.00 0.00 0.00 597,240.00
options
Other receivables of each Expected to
162,423,627.30 0.00 0.00 162,423,627.30
company within the scope of be recovered
305
Joincare Pharmaceutical Group Annual Report 2023
Expected credit
loss rate in the Provision for
Category Book balance Carrying amount Reason
next 12 months bad debts
(%)
combination
Total 163,020,867.30 0.00 0.00 163,020,867.30
At year end, provision for bad debts on those in second stage:
Expected credit
Provision for Carrying
Category Book balance loss rate for the Reason
bad debts amount
lifetime(%)
Provision for bad debts on
individual item
Provision for bad debts on
5,010,460.28 33.19 1,662,993.28 3,347,467.00
portfolio basis
Receivable of deposits
under guarantee, deposits and 886,662.78 32.56 288,715.23 597,947.55
lease expenses
Other receivables 4,123,797.50 33.33 1,374,278.05 2,749,519.45
Total 5,010,460.28 33.19 1,662,993.28 3,347,467.00
At year end, provision for bad debts on those in third stage:
Expected credit
Book Provision for Carrying
Category loss rate for the Reason
balance bad debts amount
lifetime(%)
Provision for bad debts on 16,954,735.37 100.00 16,954,735.37 0.00
individual item
Likelihood of
Treasury bonds and security 16,954,735.37 100.00 16,954,735.37 0.00 recovery is
deposits expected to be
low
Provision for bad debts on 0.00 0.00 0.00 0.00 --
portfolio basis
Total 16,954,735.37 100.00 16,954,735.37 0.00
As of 31 December 2022, Information of provision for bad debts:
As of 31 December 2022, Provision for bad debts on those in first stage:
Expected credit
loss rate in the Provision for Carrying
Category Book balance Reason
next 12 months bad debts amount
(%)
Provision for bad debts on
0.00 0.00 0.00 0.00
individual item
Provision for bad debts on
238,041,400.41 0.00 0.00 238,041,400.41
portfolio basis
Other receivables of each
Expected to
company within the scope of 238,041,400.41 0.00 0.00 238,041,400.41
be recovered
combination
Total 238,041,400.41 0.00 0.00 238,041,400.41
As of 31 December 2022, Provision for bad debts on those in second stage:
Expected credit
Provision for Carrying
Category Book balance loss rate for the Reason
bad debts amount
lifetime(%)
Provision for bad debts on
0.00 0.00 0.00 0.00
individual item
Provision for bad debts on 4,007,402.35 43.45 1,741,277.98 2,266,124.37
portfolio basis
Receivable of deposits under 973,098.11 36.42 354,429.35 618,668.76
guarantee, deposits and lease
306
Joincare Pharmaceutical Group Annual Report 2023
expenses
Other receivables 3,034,304.24 45.71 1,386,848.63 1,647,455.61
Total 4,007,402.35 43.45 1,741,277.98 2,266,124.37
As of 31 December 2022, Provision for bad debts on those in third stage:
Expected credit
Book Provision for Carrying
Category loss rate for the Reason
balance bad debts amount
lifetime(%)
Provision for bad debts on 17,968,386.04 100.00 17,968,386.04 0.00
individual item
Likelihood of
Treasury bonds and security 17,968,386.04 100.00 17,968,386.04 0.00 recovery is
deposits expected to be
low
Provision for bad debts on 0.00 0.00 0.00 0.00 --
portfolio basis
Total 17,968,386.04 100.00 17,968,386.04 0.00
④Accrual, recovery or reversal of bad debt provision during the period
First stage Second stage Third stage Total
Expected credit Expected credit
Provision for bad debts Expected credit loss for lifetime loss for lifetime
loss within next (no credit (credit
12 months impairment impairment has
occurred) occurred)
Beginning balance 0.00 1,741,277.98 17,968,386.04 19,709,664.02
Movement of beginning
balance during the period
--transfer to second stage 0.00 0.00 0.00 0.00
--transfer to third stage 0.00 0.00 0.00 0.00
--Reverse to second stage 0.00 0.00 0.00 0.00
--Reverse to first stage 0.00 0.00 0.00 0.00
Provision for the year 0.00 -78,284.70 0.00 -78,284.70
Reversal in the year 0.00 0.00 1,013,650.67 1,013,650.67
Transfer in the year 0.00 0.00 0.00
Write-off in the year 0.00 0.00 0.00 0.00
Other movement 0.00 0.00 0.00 0.00
Closing balance 0.00 1,662,993.28 16,954,735.37 18,617,728.65
⑤ No actual written-off of other receivables in this period
⑥ Other receivables due from the top five debtors
Proportion to Closing
Closing balance
total other balance of
Name of entity Nature of other Ageing
receivables provision for
receivables
(%) bad debts
Shenzhen Fenglei Electric Power Other receivables of
Within one
Investment Co., Ltd. (深圳市风 each company
129,956,104.29 year, 3-4 70.25 0.00
within the scope of
雷电力投资有限公司) combination
years
Joincare (Guangdong) Special Other receivables of
medicine Food Co., Ltd. (健康元 each company Within 3
17,585,141.16 9.51 0.00
within the scope of years
(广东) 特医食品有限公司)
combination
Hua Xia Securities Co., Ltd. (华 Treasury bonds and Over 5
16,954,735.37 9.17 16,954,735.37
夏证券股份有限公司) security deposits years
307
Joincare Pharmaceutical Group Annual Report 2023
Proportion to Closing
Closing balance
total other balance of
Name of entity Nature of other Ageing
receivables provision for
receivables
(%) bad debts
Health Pharmaceuticals (China) Other receivables of
Limited (健康药业(中国) 有限 each company Within 2
12,320,869.27 6.66 0.00
within the scope of years
公司) 深圳分公司 combination
Shanghai Frontier Health Other receivables of
Pharmaceutical Technology Co., each company Within 3
Ltd. (上海方予健康医药科技有 5,040,076.35 2.72 0.00
within the scope of years
限公司) combination
Total 181,856,926.44 98.31 16,954,735.37
⑦ There were no other receivables derecognised due to the transfer of financial assets in each
reporting period.
⑧ There were no assets or liabilities formed by the continuing involvement of transferred other
receivables in the period.
4. Long-term equity investment
Item 2023.12.31 2022.12.31
Provision for Provision for
Book balance Carrying amount Book balance Carrying amount
impairment impairment
Investment in
3,676,678,312.11 7,010,047.91 3,669,668,264.20 3,453,138,312.11 7,010,047.91 3,446,128,264.20
subsidiaries
Investment in
78,827,454.82 0.00 78,827,454.82 78,056,248.43 0.00 78,056,248.43
associates
Total 3,755,505,766.93 7,010,047.91 3,748,495,719.02 3,531,194,560.54 7,010,047.91 3,524,184,512.63
(1) Investment in subsidiaries
Provision Closing
for balance of
Investee 2022.12.31 Increase Decrease 2023.12.31
impairment provision for
in the year impairment
Livzon Group 608,741,654.08 0.00 0.00 608,741,654.08 0.00 0.00
Haibin Pharma 783,054,186.38 0.00 0.00 783,054,186.38 0.00 0.00
Joincare Daily-Use 24,116,498.56 0.00 0.00 24,116,498.56 0.00 1,610,047.91
Topsino 813,552,689.31 0.00 0.00 813,552,689.31 0.00 0.00
Taitai Genomics 37,500,000.00 0.00 0.00 37,500,000.00 0.00 0.00
Taitai Pharmaceutical 105,939,709.72 0.00 0.00 105,939,709.72 0.00 0.00
Shenzhen Hiyeah 170,100,000.00 0.00 0.00 170,100,000.00 0.00 5,400,000.00
Fenglei Electric
100,763,433.06 0.00 0.00 100,763,433.06 0.00 0.00
Power
Jiaozuo Joincare 375,000,000.00 150,000,000.00 0.00 525,000,000.00 0.00 0.00
Shanghai Frontier 32,500,000.00 0.00 0.00 32,500,000.00 0.00 0.00
Taitai Biological 4,832,950.00 0.00 0.00 4,832,950.00 0.00 0.00
Joincare Haibin 100,000,000.00 0.00 0.00 100,000,000.00 0.00 0.00
Joincare Special
3,000,000.00 0.00 0.00 3,000,000.00 0.00 0.00
medicine Food
Livzon Biologics 294,037,191.00 0.00 0.00 294,037,191.00 0.00 0.00
Lijian (Guangdong)
Animal Health Co., 0.00 73,500,000.00 0.00 73,500,000.00 0.00 0.00
Ltd.
Wuhan Kangli Health
Investment 0.00 40,000.00 0.00 40,000.00 0.00 0.00
Management Co., Ltd.
Total 3,453,138,312.11 223,540,000.00 0.00 3,676,678,312.11 0.00 7,010,047.91
308
Joincare Pharmaceutical Group Annual Report 2023
(2) Investment in associates and joint ventures
Movement in the year
Investment Closing
Announced
income/loss Adjustment in balance of
Investee 2022.12.31 Changes distribution 2023.12.31
Additions in Decrease in recognized other Provision for provision for
of other of cash Others
investment investment under the comprehensive impairment impairment
equity dividend or
equity income
profit
method
Associates
Ningbo Ningrong
Biomedical Co., Ltd.
27,179,209.51 0.00 0.00 606,175.12 0.00 0.00 0.00 0.00 0.00 27,785,384.63 0.00
(宁波宁融生物医药
有限公司)
Feellife Health Inc.
(深圳来福士雾化医 12,402,324.22 0.00 0.00 -986,141.63 0.00 0.00 0.00 0.00 0.00 11,416,182.59 0.00
学有限公司)
Jiangsu Baining
Yingchuang Medical
Technology Co., Ltd. 28,732,381.11 0.00 0.00 1,365,081.78 0.00 0.00 0.00 0.00 0.00 30,097,462.89 0.00
(江苏百宁盈创医疗
科技有限公司)
Shanghai Sheo
Pharmaceutical
Technology Co., Ltd. 9,742,333.59 0.00 0.00 -213,908.88 0.00 0.00 0.00 0.00 0.00 9,528,424.71 0.00
(上海偕怡医药科技
有限公司)
Subtotal 78,056,248.43 0.00 0.00 771,206.39 0.00 0.00 0.00 0.00 0.00 78,827,454.82 0.00
309
Joincare Pharmaceutical Group Annual Report 2023
5. Operating income and operating cost
(1) Operating income and operating cost
Item 2023 2022
Revenue Cost Revenue Cost
Primary
2,309,792,979.65 1,280,944,324.62 2,318,838,433.60 1,570,518,398.66
operations
Other
25,575,430.08 15,675,678.17 55,049,131.18 42,380,613.14
operations
Total 2,335,368,409.73 1,296,620,002.79 2,373,887,564.78 1,612,899,011.80
(2) Disaggregate information of primary operating income
① Segregation by products
Item 2023 2022
Revenue Cost Revenue Cost
Chemical
pharmaceuticals 2,080,827,107.18 1,150,753,091.34 2,156,627,002.13 1,467,215,984.98
(化学药物)
Traditional
Chinese
60,534,652.54 35,184,583.04 42,843,606.38 24,726,803.46
medicine (中药
制剂)
Health care
products (保健 167,485,390.35 94,205,909.89 119,285,823.66 78,384,343.41
食品)
Others 945,829.58 800,740.35 82,001.43 191,266.81
Total 2,309,792,979.65 1,280,944,324.62 2,318,838,433.60 1,570,518,398.66
② Segregation by operating location
Item 2023 2022
Revenue Cost Revenue Cost
Domestic 2,309,519,252.93 1,280,859,972.72 2,318,555,876.08 1,570,367,026.33
Overseas 273,726.72 84,351.90 282,557.52 151,372.33
Total 2,309,792,979.65 1,280,944,324.62 2,318,838,433.60 1,570,518,398.66
③ Segregation by timing of revenue recognition
Item 2023 2022
Revenue Cost Revenue Cost
Commodities
(Recognized at a 2,309,792,979.65 1,280,944,324.62 2,318,838,433.60 1,570,518,398.66
point in time)
Total 2,309,792,979.65 1,280,944,324.62 2,318,838,433.60 1,570,518,398.66
(3) Disaggregate information of other operations
Item 2023 2022
Revenue Cost Revenue Cost
Processing fees 0.00 0.00 4,837,029.47 4,329,387.37
Rental fees 8,744,746.23 964,743.31 9,861,266.50 1,445,184.13
Technical services 2,933,967.45 766,177.99 27,233,207.55 23,946,403.27
310
Joincare Pharmaceutical Group Annual Report 2023
Others 13,896,716.40 13,944,756.87 13,117,627.66 12,659,638.37
Total 25,575,430.08 15,675,678.17 55,049,131.18 42,380,613.14
6. Investment income
Item 2023 2022
Long-term equity investments income under cost method 1,137,547,988.80 985,288,053.40
Long-term equity investments income under equity method 771,206.39 1,326,243.55
Investment income from disposal of long-term equity investments 0.00 4,242,404.46
Dividend income from other equity instrument investments 0.00 512,350.35
Total 1,138,319,195.19 991,369,051.76
XVII. Supplement information
1. Schedule of non-recurring gains or losses
Item 2023 2022
Gain or loss on disposal of non-current assets -169,901.01 -705,357.30
Government grants that are included in the profit and loss(except for
government grants that are closely related to the company’s normal
business operations and that meet the national policy requirements and 233,058,407.11 286,842,932.33
continue to enjoy a certain amount or quantitative basis according to
certain standards)
Except for the efficient hedging related to the Company’s normal
business, profit or loss from changes in fair value as generated from
financial assets and financial liabilities held for trading and gains from -48,440,235.41 -109,887,696.11
investment as a result of the disposal of financial assets and financial
liabilities held for trading and debt investments
Reversals of provision for impairment of accounts receivable with
1,013,650.67 158,470.77
individual impairment test
Other non-operating income and expenses other than the above -41,010,372.38 -23,830,838.49
Total amount of non-recurring items 144,451,548.98 152,577,511.20
Less: effects of income tax on non-recurring items 21,086,934.90 31,919,034.26
Less: Non-recurring items attributable to the minority shareholders (after
54,721,622.26 37,113,548.72
tax)
Non-recurring items attributable to the shareholders of the Company 68,642,991.82 83,544,928.22
2. Rate of return on net assets and earnings per share
For the year ended 31 December 2023
Profit in reporting period Weighted average Earnings per share
return on equity Basic earnings per Diluted earnings
(%) share per share
Net profit attributable to the shareholders of
the Company
11.00 0.7580 0.7565
Net profit attributable to ordinary
shareholders of the Company after 10.47 0.7219 0.7205
deducting non-recurring gains and losses
For the year ended 31 December 2022
Profit in reporting period Weighted average Earnings per share
return on equity
Basic earnings per Diluted earnings
(%)
share per share
311
Joincare Pharmaceutical Group Annual Report 2023
Net profit attributable to the shareholders
of the Company
12.23 0.7934 0.7922
Net profit attributable to ordinary
shareholders of the Company after 11.55 0.7493 0.7482
deducting non-recurring gains and losses
Joincare Pharmaceutical Group Industry Co., Ltd.
健康元药业集团股份有限公司
2 April 2024
312
