2023 Annual Report
Company code:603939 Company abbreviation: Yifeng Pharmacy
Yifeng Pharmacy Chain Co., Ltd.
2023 Annual Report
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2023 Annual Report
Important Notes
I. The Board of Directors, Board of Supervisors, directors, supervisors and senior management
of the Company hereby guarantee that the contents are authentic, accurate, and complete,
without false records, misleading representations or material omissions in the Annual Report,
and shall take all the joint and several legal liabilities.
II. All the directors have attended the meeting of the Board of Directors.
III. Pan-China Certified Public Accountants (special general partnership) has issued a standard
unqualified audit report for the Company.
IV. Gao Yi, the Company’s responsible person, Deng Jianqin, responsible person in charge of
accounting work, and Guan Changfu, the accounting firm’s responsible person (accounting
superintendent) hereby declare and warrant that the financial report in the Annual Report is
authentic, accurate, and complete.
V. The profit distribution plan or the capital reserve capitalization plan for the Reporting
Period has been approved by the Board of Directors
In 2023, the Company achieved a net profit attributable to the parent company amounting to CN
1,411,985,024.41. After adding the undistributed profit from the beginning of 2023, which was CN
3,717,157,469.99, and deducting the statutory surplus reserve of CN66,216,102.98 extracted at the end
of the year, along with a dividend payout of CN 288,681,972.00 for 2023, the profit available for
distribution to shareholders totaled CN4,774,244,419.42.
The Company plans to distribute a cash dividend of CN 0.50 per share (tax included) to all
shareholders, based on the total share capital as recorded on the equity distribution date of 2023.
Additionally, it will increase the share capital by 0.20 shares per share from the capital reserve, without
issuing any bonus shares. The estimated cash dividend payout amounts to CN 505,289,898.50 (tax
included). It is expected that 202,115,959 shares will be issued for capital conversion. After the capital
conversion, the total share capital of the Company will increase to 1,212,695,756 shares. If the total
share capital of the Company changes due to matters such as share repurchases or cancellations related
to equity incentives from the date of approval of this plan by the Board of Directors to the
implementation of the equity distribution on the registration date, the Company will maintain the
distribution ratio (capital conversion) per share unchanged and make adjustments to the total distribution
(capital conversion) amount. The profit distribution plan above is subject to approval by the Company’s
shareholders at the general meeting before implementation.
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2023 Annual Report
VI. Risk statement on forward-looking statements
"√ Applicable" "□ Not applicable"
The forward-looking statements such as future plans and development strategies in the Annual
Report do not constitute a substantive commitment of the Company to investors. Investors should
therefore make rational investment based on an awareness of risk factors.
VII. Are there cases of non-operational fund occupancy by the controlling shareholder and other
related parties
No
VIII. Have there been any breaches of established decision-making procedures in providing
guarantees to external parties
No
IX. Has there been a situation where more than half of the directors cannot guarantee that the
Annual Report disclosed by the Company is authentic, accurate, and complete
No
X. Significant risk warnings
During the Reporting Period, no significant risks had a substantial impact on the Company’s
production and operation activities. The Company has extensively elaborated on potential risks in this
report. For more details, please refer to Subsection "Potential Risks" under Section 3 “Management
Discussion and Analysis”.
XI. Others
"√ Applicable""□ Not applicable"
If there is any discrepancy between the Chinese and English versions, the Chinese version shall pre
vail.
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2023 Annual Report
Contents
Section I. Explanation ......................................................................................................................... 5
Section II. Company Profile and Major Financial Indicators ............................................................... 6
Section III. Management Discussion and Analysis .............................................................................. 13
Section IV. Corporate Governance ...................................................................................................... 48
Section V. Environmental and Social Responsibility ......................................................................... 75
Section VI. Important matters .............................................................................................................. 77
Section VII. Changes in Shares and Shareholders............................................................................... 127
Section VIII. Preferred Share Related Information............................................................................... 134
Section IX. Relevant Situation of Bonds............................................................................................ 135
Section X. Financial Statements ....................................................................................................... 136
Accounting statements with the signatures and seals of the Company’s responsible
person, the responsible person in charge of accounting work, and the responsible
person of the accounting firm (accounting superintendent)
Contents of
The original copies of all documents and announcements publicly disclosed by the
Reference File
Company in the newspapers designated by the China Securities Regulatory
Commission (CSRC) during the Reporting Period, including Shanghai Securities
News, China Securities Journal, Securities Times, and Securities Daily
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2023 Annual Report
Section I. Explanation
I. Explanation
In this report, unless stated otherwise, the following terms shall be interpreted as follows:
Common terms and their definitions
The Means Yifeng Pharmacy Chain Co., Ltd.
Company,
Company,
and Yifeng
Pharmacy
Houxin Means Controlling shareholder of Ningbo Meishan Free Trade Port Area Houxin
Venture Capital Partnership (Limited Partnership)
Yizhifeng Means Ningbo Meishan Free Trade Port Area Yizhifeng Enterprise Management
Partnership (Limited Partnership), a shareholder of the Company
Yirentang Means Ningbo Meishan Free Trade Port Area Yirentang Enterprise Management
Partnership (Limited Partnership), a shareholder of the Company
CSRC Means China Securities Regulatory Commission
Company Means Company Law of the People's Republic of China
Law
Securities Means Securities Law of the People's Republic of China
Law
ERP Means Enterprise Resource Planning (ERP) is a type of enterprise management
software that integrates the management of material resources (material
flow), human resources (personnel flow), financial resources (financial
flow), and information resources (information flow).
O2O Means Online To Offline (O2O) integrates offline business opportunities with the
Internet, thus effectively making the Internet a platform for offline
transactions.
B2C Means Business To Customer (B2C) is an e-commerce model in which enterprises
directly sell their products or services to consumers. This type of
e-commerce typically relies on network retail.
CRM Means Customer Relationship Management (CRM) is a system that enterprises use
to manage relationship with their customers.
SAP Means Systems Applications and Products in Data Processing (SAP) is a software
used to manage solutions.
WMS Means Warehouse Management System (WMS) is a system used for warehouse
management.
MES Means Manufacturing Execution System (MES) is a system used for manufacturing
execution.
AGV Means Automated Guided Vehicle (AGV) refers to a vehicle used for material
handling and transportation with automated guide.
IQVIA Means It is a world-leading company merged by Quintiles and IMS Health, two
medical information service companies, and is committed to delivering
medical market information, and technical and service solutions.
GSP Means Good Supply Practice
During the Means January 1, 2023 to December 31, 2023
Reporting
Period and
within the
Reporting
period
CN, Means Chinese Yuan, Chinese Yuan 10,000
CN10,000
Shanghai Means www.sse.com.cn
Stock
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2023 Annual Report
Exchange
website
Section II. Company Profile and Major Financial Indicators
I. Company information
Chinese name Yifeng Pharmacy Chain Co., Ltd.
Chinese abbreviation Yifeng Pharmacy
English name Yifeng Pharmacy Chain Co., Ltd.
English abbreviation Yifeng Pharmacy
Legal representative Gao Yi
II. Contact person and contact information
Secretary of the Board of Directors Securities Affairs Representative
Name Fan Wei Luo Gongzhao
Address No.68, Jinzhou Avenue, Lugu High-tech Zone, No.68, Jinzhou Avenue, Lugu High-tech
Changsha City, Hunan Province Zone, Changsha City, Hunan Province
Tel. 0731-89953989 0731-89953989
Fax 0731-89953989 0731-89953989
E-mail ir@yfdyf.com ir@yfdyf.com
III. Basic information
Registered address No.2638, Renmin Road, Fuqiang Community, Baimahu
Subdistrict, Wuling District, Changde City, Hunan Province
Alteration of registered address None
Office address No.68, Jinzhou Avenue, Lugu High-tech Zone, Changsha
City, Hunan Province
Post code of office address 410000
Website www.yfdyf.cn
E-mail ir@yfdyf.com
IV. Information disclosure and storage location
The name and website of the media where the China Securities Journal, Securities Times, Shanghai
Company discloses the annual report Securities News, and Securities Daily
Website of the stock exchange to which the
http://www.sse.com.cn
Company’s Annual Report is disclosed
Place where the Company’s Annual Report is
Office of the Board of Directors
formulated
V. Company stock
Company stock
Stock type Stock exchange Stock abbreviation Stock code Stock abbreviation
before change
A share Shanghai Stock Yifeng Pharmacy 603939 /
Exchange
VI. Other related information
Accounting firm Name Pan-China Certified Public Accountants (special general
employed by the partnership)
Company (domestic) Office address Block B, China Resources Building, No.1366, Qianjiang
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2023 Annual Report
Road, Jianggan District, Hangzhou City, Zhejiang
Province
Names of
undersigned Wei Wujun and Jiang Fengfeng
accountants
VII. Main accounting data and financial indicators in recent three years
(I). Main accounting data
Unit:CN Currency:CNY
2022 Increase/ 2021
Main Decrease
accounting 2023 After Before over the After Before
data adjustment adjustment previous year adjustment adjustment
(%)
Operating 22,588,227, 19,886,395,83 19,886,395,83 15,326,305,26 15,326,305,26
13.59
revenue 402.22 5.95 5.95 6.09 6.09
Net profit
attributable
to
1,411,985,0 1,261,841,039 1,265,609,879 888,790,679.9 887,884,497.8
shareholder 11.90
24.41 .80 .99 9 5
s of the
listed
company
Net profit
attributable
to
shareholder
s of the
listed
1,361,512,5 1,227,426,490 1,230,293,584 860,353,756.4 858,719,649.0
company 10.92
89.23 .98 .85 7 9
after
deduction
of
non-recurri
ng profits
and losses
Net cash
flow from 4,623,740,7 3,920,267,304 3,920,267,304 2,149,969,972 2,149,969,972
17.94
operating 95.60 .15 .15 .35 .35
activities
Increase/
At the end of 2022 At the end of 2021
Decrease
At the end over the end
of 2023 After Before of the After Before
adjustment adjustment previous year adjustment adjustment
(%)
Net assets
attributable
to
9,804,432,4 8,553,215,869 8,556,078,527 7,482,212,247 7,481,306,065
shareholder 14.63
76.56 .87 .92 .62 .48
s of the
listed
Company
Total assets 24,136,539, 21,036,023,98 21,038,886,64 17,052,943,05 17,052,036,87
14.74
194.64 1.99 0.04 6.72 4.58
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2023 Annual Report
(II). Major financial indicators
2022 Increase/Decrease 2021
Major financial
2023 over the previous
indicators After Before After Before
adjustment adjustment year (%) adjustment adjustment
Basic earnings per
1.40 1.26 1.26 11.11 0.89 0.89
share (CN/share)
Diluted earnings
per share 1.40 1.25 1.26 12.00 0.89 0.89
(CN/share)
Basic earnings per
share with
non-recurring
1.35 1.22 1.22 10.66 0.86 0.86
profits and losses
deducted
(CN/share)
Weighted average
return on equity 15.44 15.78 15.82 -0.34 13.04 13.03
(%)
Weighted average
return on net assets
with non-recurring 14.89 15.35 15.38 -0.46 12.62 12.60
profits and losses
deducted (%)
Description of the Company’s main accounting data and financial indicators for the previous three years
at the end of the Reporting Period
"√ Applicable""□ Not applicable"
Reason for adjustment: Since January 1, 2023, the Company has adhered to the "Accounting
Treatment for Deferred Income Taxes Related to Assets and Liabilities Arising from Individual
Transactions that Are Not Subject to Initial Recognition Exemption," as outlined in Interpretation No. 16
of the Enterprise Accounting Standards issued by the Ministry of Finance. Accordingly, the financial
statements for the earliest reporting period have been adjusted to reflect this provision for applicable
individual transactions. This adjustment includes lease liabilities and right-of-use assets recognized
during this period due to these transactions, along with recognized disposal-related obligations and
corresponding assets that generate taxable and deductible temporary differences. The cumulative impact
amount has been adjusted in accordance with this provision and the provisions of Accounting Standards
for Enterprises No. 18—Income Taxes. This affects the retained earnings and other related financial
statement items as of the start of the earliest reporting period.
VIII. Differences in accounting data under domestic and foreign accounting standards
(I). Differences in net profits and net assets attributable to shareholders of the listed Company in
the financial statements disclosed under international accounting standards and that
disclosed under domestic accounting standards
"□ Applicable" "√ Not applicable"
(II). Differences in net profits and net assets attributable to shareholders of the listed Company in
the financial statements disclosed under overseas accounting standards and that disclosed
under domestic accounting standards
"□ Applicable""√ Not applicable"
(III). Explanation of differences in overseas and domestic accounting standards:
"□ Applicable""√ Not applicable"
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2023 Annual Report
IX. Quarter-based main financial indicators in 2023
Unit:CN Currency: CNY
Quarter 1 Quarter 2 Quarter 3 Quarter 4
(Jan - Mar) (Apr - Jun) (Jul - Sept) (Oct- Dec)
Operating revenue 5,266,053,201.98 5,440,509,806.07 5,181,484,438.58 6,700,179,955.59
Net profit
attributable to
336,477,177.44 368,676,376.22 294,030,212.68 412,801,258.07
shareholders of the
listed company
Net profits
attributable to
shareholders of the
listed Company 321,446,423.67 357,321,543.25 287,360,171.58 395,384,450.73
after deduction of
non-recurring
profits and losses
Net cash flow
from operating 1,288,846,164.43 118,886,600.05 1,474,159,094.77 1,741,848,936.35
activities
Description of differences between quarterly data and periodic report data disclosed
"□ Applicable" "√ Not applicable"
X. Non-recurring profit and loss items and amounts
"√ Applicable""□ Not applicable"
Unit: CN Currency: CNY
Non-recurring
Note (if
profit and loss Amount in 2023 Amount in 2022 Amount in 2021
applicable)
items
Profit and loss on
disposal of
non-current assets
(including the
29,092,610.09 12,763,439.78 5,416,507.68
write-off of
provision for
impairment of
assets)
Governmental
subsidies included
in the current
profits and losses
(excluding the
governmental
subsidies closely
relating to the
normal business 44,930,209.02 32,820,333.05 34,050,871.35
operations of the
Company,
conforming to
national policies
and regulations,
enjoyed in
accordance with a
certain standard,
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2023 Annual Report
and having a lasting
impact on the
profits and losses of
the Company)
Profits and losses
from changes in fair
value arising from
financial assets and
financial liabilities
held by
non-financial
institutions, and
profits and losses
13,074.67
from the disposal of
financial assets and
financial liabilities,
except for the
effective hedging
business related to
the normal business
operations of the
Company
Fund possession
cost collected from
the non-financial
institution and
included in the
current profits and
losses
Profits and losses
from entrusting
others to invest or
manage assets
Profits and losses
from external
entrusted loans
Losses of various
assets made due to
force majeure
factors, such as
natural disasters
Reversal of
impairment
reserves for the
receivables under
independent
impairment test
Gains arising from
the identifiable net
assets at fair value
of the investee at
the time of
acquisition when
the cost of
acquiring
investments in
subsidiaries, joint
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2023 Annual Report
ventures, and
associates is less
than the investment
amount
The current net
profits and losses of
a subsidiary from
the beginning of the
Reporting Period to
the date of
consolidation under
the same control.
Profits and losses
from non-monetary
asset exchange
Profits and losses
from debt
restructuring
Non-recurring
expenses incurred
by the enterprise
due to the cessation
of business
activities, such as
employee
relocation expenses
One-time impact on
the current profits
and losses due to
the adjustments of
tax, accounting, and
other laws and
regulations
Non-recurring
share-based
payment expenses
due to cancellation
or modification of
equity incentive
plan
For cash-settled
share-based
payments, profits
and losses arising
from changes in fair
value of employee
compensation
payable after the
vesting date
Profits and losses
arising from
changes in fair
value for
investment
properties measured
using the fair value
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2023 Annual Report
model for
subsequent
measurement
Profits from
transactions where
the transaction
price has an excess
or deficit compared
to fair value
Profits and losses
arising from
contingent items
unrelated to the
Company’s normal
business operations
Fees earned from
entrusted operations
Other
non-operating
revenue and
-5,060,038.31 2,172,359.49 471,195.18
expenditure in
addition to those
mentioned above
Other profit and
loss items
conforming to the
definition of
non-recurring
profits and losses
Less: Income tax 12,124,610.41 10,970,197.86
16,885,907.38
effect
Amount
affected by
1,617,512.91 1,216,973.09 531,452.83
minority equity
(after tax)
Total 50,472,435.18 34,414,548.82 28,436,923.52
The Company shall provide explanations for defining profits and losses not listed in the Explanatory
Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public -
Non-recurring Profits and Losses as non-recurring profits and losses with significant amounts, and
defining non-recurring profits and losses listed in this document as recurring profits and losses.
"√ Applicable""□ Not applicable"
Unit：CN Currency: CNY
Item Amount Reason
Investment income 24,958,558.90 Related to regular
operational activities
Impact of implementing the Explanatory Announcement No. 1 on Information Disclosure for
Companies Offering Their Securities to the Public - Non-recurring Profits and Losses (2023 Revision)
on non-recurring profits and losses for 2022
Item Amount
Net amount of non-recurring profits and losses attributable to the parent
35,316,295.14
company owners for 2022
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2023 Annual Report
Net amount of non-recurring profits and losses attributable to the parent
company owners for 2022 as per Explanatory Announcement No. 1 on
34,414,548.82
Information Disclosure for Companies Offering Their Securities to the Public -
Non-recurring Profits and Losses (2023 Revision)
Difference -901,746.32
Impact of implementing the Explanatory Announcement No. 1 on Information Disclosure for
Companies Offering Their Securities to the Public - Non-recurring Profits and Losses (2023 Revision)
on non-recurring profits and losses for 2021
Item Amount
Net amount of non-recurring profits and losses attributable to the parent
29,164,848.76
company owners for 2021
Net amount of non-recurring profits and losses attributable to the parent
company owners for 2021 as per Explanatory Announcement No. 1 on
28,436,923.52
Information Disclosure for Companies Offering Their Securities to the Public -
Non-recurring Profits and Losses (2023 Revision)
Difference -727,925.24
XI. Items measured by fair value
"√ Applicable""□ Not applicable"
Unit: CN Currency: CNY
Amount of impact on
Item name Opening balance Closing balance Current change
the current profit
Investment in other 327,379,600.00 432,225,200.00 104,845,600.00 17,084,000.00
equity instruments
Trading financial 50,045,139.45 1,630,720,887.94 1,580,675,748.49 24,958,558.90
assets
Receivables financing 1,784,671.86 11,889,888.58 10,105,216.72
Total 379,209,411.31 2,074,835,976.52 1,695,626,565.21 42,042,558.90
XII. Others
"□ Applicable""√ Not applicable"
Section III. Management Discussion and Analysis
I. Discussion and analysis of the Company’s operations
During the Reporting Period, the gradual implementation of policies that integrated designated
retail pharmacies into outpatient management significantly advanced healthcare reform of medical care,
government basical medical insurance (BMI) and pharmaceutical industry. Such integration accelerated
the separation of prescribing and dispensing while increasing the external flow of hospital prescriptions.
This highlighted the channel value of retail pharmacies in the external pharmaceutical market.
Concurrently, advancements in internet technology and enhancements in digital operational management
matured the integrated online-offline model of "new pharmaceutical retail." Moreover, with China's
ongoing GDP growth and an intensifying aging population, consumer healthcare expenditures and
demand for health management steadily rose, further expanding development opportunities for the
industry.
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2023 Annual Report
Over the past year, under the collective efforts of the Board of Directors, management team, and all
employees, the Company adhered to its "regional concentration and steady expansion" strategy
established at the beginning of the year. Through the "new openings + M&A + franchising" model for
store expansion, the Company achieved a net increase of 2,982 stores. By implementing a focused
product strategy and continually advancing the national optimal project, the Company refined its
differentiated strategically-focused product system, deepened manufacturer collaborations, and
continuously improved its supply chain and product category structure. The development of an
ecological new pharmaceutical retail system based on membership, big data, internet healthcare, and
health management allowed the Company to swiftly enhance its new media operations and content
management capabilities, bolstering store operations and ensuring stable company performance. By
establishing comprehensive digital connections from customers to the business, products, operations,
and marketing, the Company transitioned from product management to customer value management. By
reconstructing the human resources foundation and optimizing organizational structures, and integrating
online and offline in a differentiated hybrid talent development model, the corporate culture was deeply
embedded into the Company's training programs, continuously boosting organizational management
efficiency and cultural soft power.
1. Steadily growing operating results
During the Reporting Period, the Company maintained a steady increase in operating revenue and
operating profit. The Company generated operating revenue of CN22,588.2274 million, representing a
year-on-year growth of 13.59%. The net profit attributable to shareholders of the listed Company
reached CN1,411.9850 million, registering a year-on-year increase of 11.90%. The net profit
attributable to shareholders of the listed Company, with non-recurring profits and losses excluded, was
CN1,361.5126 million, up 10.92% year-on-year growth. The weighted average return on net assets was
15.44%, with earnings per share of CN1.40. As of December 31, 2023, the Company’s total assets
amounted to CN24,136.5392 million, representing an increase of 14.74% compared to
CN21,036.0240 million at the end of the previous year. The equity attributable to owners of the parent
company totaled CN9,804.4325 million, indicating a 14.63% increase compared to CN8,553.2159
million at the end of the previous year.
2. Basically achieving store expansion targets
During the Reporting Period, the Company pursued its "regional concentration and steady
expansion" strategy through the "new openings + M&A + franchising" model, deeply cultivating the
markets in South Central, East, and North China, and adding 3,196 stores, including 1,613 self-built
stores, 559 acquisitions, and 1,024 franchises. Additionally, during the Reporting Period, the Company
relocated 61 stores and closed 153 stores. As of the end of the Reporting Period, the total number of the
Company’s stores is 13,250 (including 2,986 franchise stores), registering a net increase of 2,982 stores
compared to the end of the previous period.
3. Continuing to advance the controllable premium strategy, and vigorously introducing product
varieties via centralized purchasing
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2023 Annual Report
During the Reporting Period, the Company continually optimized its product structure and supply
chain systems through a triple evaluation system assessing product quality and efficacy. By proactively
submitting products for inspection, reviewing efficacy, and evaluating cost-effectiveness, the Company
selected high-quality manufacturers as core suppliers. By the end of 2023, the Company had established
premium strategic partnerships with nearly 600 manufacturers, selecting over 1,800 varieties for
inclusion in the Company's strategically-focused product repository, thus establishing a more
comprehensive strategically-focused product system. The Company closely monitored national bulk
purchasing progress, vigorously introducing nationally procured items through manufacturer cooperation.
By the end of 2023, the Company managed over 98% of the items in the national procurement catalog,
accumulating more than 2,200 SKUs of nationally procured items.
4. Operating the new pharmaceutical retail system efficiently
During the Reporting Period, the Company continued to develop its ecological new pharmaceutical
retail system based on membership, big data, internet medical services, and health management. It
actively improved digital chronic disease management and online medical services, achieving significant
progress in deep member services. The capabilities in new media operations and content management
were rapidly enhanced, and the pharmaceutical e-commerce operations were progressively upgraded to a
group-level new pharmaceutical retail system. O2O operations launched direct-sale stores exceeding
9,000, with over 600 stores offering 24-hour delivery services. This covered all major cities offline and
rapidly extended to acquired and franchised project stores, leading the industry in picking efficiency,
delivery timeliness, order fulfillment rate, and personnel efficiency. Supported by the triple-engine
strategy of O2O, B2C and prescription circulation, relying on the Company’s regional concentration
strategy, intelligent supply chain system, and refined operation, the Company’s O2O and B2C business
achieved sales revenue of CN1,817.8471 million (tax excluded). It includes sales revenue from O2O
(franchise stores excluded) of CN1,398.7383 million and sales revenue from B2C of CN419.1092
million.
5. Undertaking hospital prescription outflow online and offline
Driven by national policies, the external flow of hospital prescriptions accelerated during the
Reporting Period. In response, the Company actively explored new models for comprehensively
receiving hospital prescription outflows through both online and offline channels.
In the offline domain, the Company has strategically located its stores near hospitals to actively
develop DTP specialized pharmacies, "dual-channel" BMI designated outlets, and pharmacies
specializing in chronic diseases and outpatient integrated management. This approach enhances
collaborations with relevant manufacturers and actively incorporates pharmaceuticals covered under the
government BMI scheme. As of the end of this Reporting Period, the Company operates 675 stores
within 100 meters of secondary and higher-level hospitals, 305 DTP specialized pharmacies, of which
246 are dual-channel government BMI outlets, and over 4,200 outpatient integrated management
pharmacies. The Company manages over 250 government BMI-negotiated pharmaceuticals and more
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2023 Annual Report
than 800 types of medications for external hospital prescriptions and has established deep partnerships
with over 150 specialized prescription drug suppliers.
In the online domain, the Company has established its electronic prescription transfer business
using a digital prescription service platform and a fulfillment delivery system. This system connects
public health services, government BMI authorities, hospitals, and leading national third-party internet
hospital platforms, streamlining the entire pharmaceutical production, wholesale, and logistics chain.
Leveraging existing hospital-adjacent stores and central warehouses, the Company has created a
closed-loop service system for chronic disease patients, integrating medical, patient, pharmaceutical, and
insurance services. It currently interfaces with more than ten provincial and municipal government BMI
and public health prescription transfer platforms, directly or indirectly managing prescription transfers
for over 100 tertiary hospitals and internet hospitals.
6. Making remarkable progress in digital transformation
Centered on the customer, the Company has established a fully digital linkage from customers to
industries involving personnel, medicines, and scenarios across all channels, progressively transitioning
from a product-oriented to a customer-oriented operation. During the Reporting Period, the Company
made significant digital advancements in areas such as membership, operations, merchandise, new retail,
and logistics:
In terms of membership, through refined member operations, channel development, and targeted
marketing activities, the Company has advanced its chronic disease and online medical services,
enhancing customer repurchase rates and effectively bolstering customer loyalty and reliance on
Yifeng's expertise using customer profiling. In terms of operations, by employing new technologies and
data capabilities to transform operations, the Company has deeply cultivated regional markets, enhanced
the in-store customer experience, and improved operational management efficiency. By empowering
frontline staff with an online applet, the Company achieves comprehensive online management of store
operations, marketing, data analysis, and salary performance, delivering precise professional services to
members, including medication inquiries, chronic disease management, and diagnostic testing;
In terms of merchandise, the Company focuses on creating the industry's most efficient and agile
digital merchandising system, achieving comprehensive online, digital, and intelligent transformation of
merchandise center operations, and significantly improving merchandise fill rate and inventory turnover
efficiency;
In terms of new retail, with an integrated approach, the Company fully supports the strategic
upgrade to "new retail + core retail", developing a series of digital products tailored to new retail
business scenarios, which have accelerated the digital transformation of its retail operations. The
Company's online market share has rapidly increased, maintaining industry-leading levels in picking
efficiency, delivery timeliness, order fulfillment, and workforce efficiency;
In terms of human resources, by delving into digitalization in HR, the Company has aligned with its
online, digital, and intelligent management strategies, achieving breakthroughs in recruitment,
contracting, performance, pay, promotion, scheduling, attendance, talent inventory, and development.
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In terms of finance, the Company has deeply integrated finance with business operations,
establishing a financial system that empowers business capabilities, ensuring high-quality financial
services and control during rapid expansion, and implementing multiple measures to reduce costs and
increase benefits. This integration has been facilitated by the automation and digitization of various
functions, including budgeting, cost management, reimbursements, ledger maintenance, sales
reconciliations, electronic invoicing, financial management, and leasing.
In terms of logistics, guided by data transparency, the Company has improved specific nodes in
warehouses and upgraded its digital logistics framework to manage all warehouse operations online.
Through developing its own TMS system, which includes dispatch management, freight calculation,
temperature and humidity monitoring, and turnover box management, the Company has successfully
implemented a full-process closed-loop management of logistics information, consistently increasing
delivery volumes and efficiency.
7. Enhancing the training system and professional service capabilities continuously
Continuously enhancing professional service capabilities remains a long-term driver of organic
growth within the Company's stores and a core competitive edge in achieving industry leadership.
During the Reporting Period, the Company's training department developed 65 new training modules
covering service philosophy, behavioral habits, professional skills, and pharmaceutical knowledge. It
conducted 132 offline training sessions, with an average of approximately 70 hours per employee.
Additionally, the Company prepared over 4,000 employees to participate in the national qualification
exam for licensed pharmacists, thereby building a reservoir of professional talent for future development.
Partnerships were established with nearly 30 universities nationwide to create "Yifeng classes" and build
talent cultivation and employment internship bases. The Company also conducted more than 20
corporate visits and employment expansion activities. Throughout the year, nearly 3,000 recent
graduates were recruited, earning recognition as a "Key Employer for University Graduates" by the
Education Department of Hunan Province. Concurrently, by developing and refining standardized
training materials and establishing dedicated and part-time lecturer teams at stores, the Company set up
training bases for new employees and store manager reserves, continuously advancing its "management
trainee" program and various training models that integrate online and offline approaches with a
credit-based assessment system. This initiative has led to continuous improvements in employees'
professional service capabilities, customer satisfaction, and repurchase rates, and has steadily advanced
its talent development framework.
II. Industry of the Company during the Reporting Period
With the ongoing advancement of the "Healthy China 2030" national strategy and reforms in the
healthcare and pharmaceutical systems, alongside consistent GDP growth, rising disposable incomes,
and increasing levels of social consumption, per capita healthcare spending by Chinese residents grew
annually, reaching CN2,460 in 2023, accounting for 9.2% of per capita consumer spending. Influenced
by multiple social factors such as the aging population, the three-child policy, urbanization, and
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population migration, the demand for medical resources has continually risen, enhancing the industry
expansion and societal value of retail pharmacies as a critical channel for pharmaceutical sales. Amid
market and policy influences, the retail pharmacy industry has continually optimized its network layout
and innovated its business models during the Reporting Period. Digital transformation, industry
integration, and the management and service capabilities of retail pharmacies have all seen significant
enhancements.
In October 2021, the Ministry of Commerce issued the "Guiding Opinions on Promoting the
High-Quality Development of the Pharmaceutical Distribution Industry During the 14th Five-Year Plan
Period". The document envisions that (1) five to ten specialized and diversified pharmaceutical retailers
with a revenue of more than CN50 billion will be nurtured by 2025; (2) the annual sales of the top 100
enterprises in the pharmaceutical retail industry will account for more than 65% of the total market value
of the pharmaceutical retail industry; and (3) pharmaceutical retail chain stores will account for nearly
70% of all stores.
In September 2022, the State Administration for Market Regulation released the "Measures for the
Supervision and Administration of Online Sale of Medicinal Products," further standardizing online
pharmaceutical sales and services on pharmaceutical online trading platforms. These regulations
clarified the management of online pharmaceutical sales, platform responsibilities, supervisory measures,
and legal liabilities, further standardizing online pharmaceutical circulation and promoting regulated
development and healthy competition within the industry.
In February 2023, the National Healthcare Security Administration issued the "Notice on Further
Integrating Designated Retail Pharmacies into the Outpatient Management Fund System." This
notification emphasized the importance of including designated retail pharmacies in outpatient fund
management, using the outpatient fund to expand medical and pharmaceutical service supply, and thus
releasing benefits of the reform of medicine and healthcare system. It urged government BMI authorities
at all levels to take effective measures to encourage eligible designated retail pharmacies to voluntarily
offer outpatient management services. The notification also specified improvements to the payment
policies for outpatient management at designated retail pharmacies and clarified supporting policies for
inclusion.
1. Increasing retail sales, and growing market share
According to statistics, over a decade from 2013 to 2022, the sales from China's three major
pharmaceutical terminals across six markets increased from CN1,089.4 billion to CN1,793.6 billion,
with a compound annual growth rate of 5.6%. The compound growth rates for public hospital terminals,
retail pharmacy terminals, and public primary healthcare institution terminals were 4.3%, 8.2%, and
7.4%, respectively. By the end of 2022, the market share of public hospital terminals was 61.8%, retail
pharmacy terminals 29%, and public primary healthcare institution terminals 9.2%. The market share of
retail pharmacy terminals has been on rise over the years.
2012-2022 Steadily Increasing Drug Retail Sales
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Total drug sales Growth GDP growth
amount/CN100 million rate rate
Ratios of Three Major Sales Channels
100%
9.4% 9.7% 10.0% 9.7% 9.6% 9.2%
80% 22.6% 22.9% 23.4% 26.3% 26.9% 29.0%
60%
40%
68.0% 67.4% 66.6% 64.0% 63.5% 61.8%
20%
0%
2017 2018 2019 2020 2021 2022
公立医院 零售药店 公立基层医疗 healthcare
hospital pharmacy institution
2. Increasing pharmacy chains and enhancing centralized development
Driven by industrial policies, capital involvement, and competitive dynamics, the rate of chain
operations and industry concentration in the retail pharmacy sector have continuously increased. As of
the end of 2022, there were a total of 623,300 retail pharmacies in China, with the rate of chain
operations rising to 57.76%. The market shares of the CR10, CR50, and CR100 retail pharmacies
increased to 30.91%, 44.95%, and 55.83%, respectively. Both national and regional leaders have
accelerated their integration efforts, positioning chain pharmacies as a mainstream development within
the industry.
Total Number of Pharmacies in China, and Changes in Pharmacy Chains
Number of single
Total number of Number of chain Number of chain
pharmacies/10,000
pharmacies/10,000 pharmacies/10,000 enterprises
Changes in Sales Amounts and Proportions of Top 10, 20, 50, and 100 Pharmacies
Sales amount of top 10 Sales amount of top 20 Sales amount of top 50
pharmacies/CN100 million pharmacies/CN100 million pharmacies/CN100 million
Sales amount of top 100 Proportion of top 10
pharmacies/CN100 million pharmacies
Sales amount of top 50 Proportion of top
pharmacies/CN100 million 100 pharmacies
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Proportion of top 20
pharmacies
Changes in Sales Growth Rate of Top 10, 20, 50, and 100 Pharmacies
Sales growth rate of top 10 Sales growth rate of top 20
pharmacies pharmacies
Sales growth rate of Sales growth rate of top
top 50 pharmacies 100 pharmacies
Additionally, according to data from IQVIA, the chain operation rate for pharmacies in the United
States rose from under 40% in 1990 to 90% in 2021, with the top three chains accounting for nearly 37%
of all pharmacies in the U.S. Compared with mature markets such as the U.S. and Japan, China’s
pharmaceutical retail sector is still at a relatively low level, and there is still much room for
development.
3. Periodic industrial characteristics
The pharmaceutical distribution industry is a critical sector vital to national and public welfare.
Since pharmaceutical consumption addresses basic human needs, it remains relatively unaffected by
macroeconomic fluctuations, demonstrating minimal economic cyclicality. Only a select few products
exhibit seasonal variations, primarily due to extreme weather conditions during the summer and winter
months. Compared to other sectors within general retail, the pharmaceutical retail industry exhibits
weaker economic cyclicality. However, due to the time-sensitivity, convenience, and regional variations
in consumer habits associated with pharmaceuticals, the industry displays distinct regional
characteristics. Enterprises boasting extensive store networks, standardized management, and robust
systematic replication capabilities enjoy significant competitive advantages in the market.
4. Position of the Company in the industry
The Company's primary business operations are concentrated in ten provinces and cities: Hunan,
Hubei, Shanghai, Jiangsu, Jiangxi, Zhejiang, Guangdong, Hebei, Beijing, and Tianjin. By the end of the
Reporting Period, it operated 13,250 chain pharmacies, including 2,986 franchise stores, within these
regions. This extensive network has secured significant regional competitive advantages and broad
recognition from investors, the public, and consumers. During this period, the Company received
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multiple accolades including "Top 100 Listed Companies on China's Main Board," "2023 Hurun China
Top 300," "2022-2023 Top 100 Most Valuable Pharmacies in China," "Top 10 Online Pharmaceutical
Retailers of 2023," "Top 100 Private Enterprises in Hunan of 2023," "China’s Most Promising Listed
Companies of 2023," "2023 Pharmaceutical Retail Profit Leader," second place in the "2023 Top 100
Competitive Pharmaceutical Retailers in China," and "Top 500 Service Enterprises in China of 2023," in
addition to receiving the "Golden Ginkgo Award" for the Most Socially Responsible Listed Company
and the highest brand value in the national pharmaceutical retail industry on the Hurun Most Valuable
China Brands.
III. Main business of the Company during the Reporting Period
(I) Overview of main business
The Company is one of the leading chain retail enterprises in the domestic pharmaceutical sector,
primarily engaged in the retail of pharmaceuticals, health products, medical devices, and other
health-related daily convenience items. Its subsidiary, Yifeng Pharmaceutical, acts as the internal
procurement platform for the Company, managing internal goods distribution, franchise distribution, and
a modest amount of external pharmaceutical wholesale. Another subsidiary, Hengxiutang
Pharmaceuticals Company, focuses on the R&D and production of Chinese medicinal slices, mainly to
satisfy the Company's internal needs.
During the Reporting Period, no significant changes occurred in the Company’s main business.
(II) Main operating modes
The Company’s main operating modes includes product procurement, logistics distribution,
warehouse management, and store sales. It is shown as follows:
Customer
零售
Retail
Execution of
门店 approved price
执行核定价格 Store Management Department
Product demand
商品需求 Distribution
management
Pricing of products Pricing of products via
Quality质量管理
via centralized localized purchasing
集采商品定价 地采商品定价
客户
Client Wholesale Distribution centers purchasing
Manufacturer/Wholes Subsidiary’s Product
生产商/批发商
aler
商品中心
Product Center 子公司商品部
Department
Localized
Centralized 地采订单
procurement order
procurement order
Yifeng Pharmacy’s Product Centralized
Subsidiary’s Product
益丰医药商品部
Department 集采
procurement 子公司商品部
Department
1. Procurement mode
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The Company has set up a Product Center responsible for aggregating the demand for products
purchased by all the stores in a centralized manner, coordinating subsidiaries’ procurement plans, and
formulating category assortment plans. The subsidiary’s Product Department is responsible for
aggregating the procurement requirements of all the Company’s stores, submitting centralized
procurement plans to the Company’s Product Center, managing localized purchasing needs, and
executing procurement. After understanding the store’s demands, product departments at different levels
perform tasks such as product evaluation, price inquiries, price comparisons, negotiations, and price
determination. They also engage in discussions with suppliers to formalize procurement contracts.
The Company’s procurement process is as follows:
Non-first-
非首营 Non-first-c
Seeking 地采品种子公
寻找供应商 Localized
Determination of purchased
purchased 商品部长审
Review by the
非首次
ooperation
suppliers procurement by
司采购
subsidiaries
品种
category
head of Product
核
Department supplier
供应商
供应商谈判
Negotiation
with suppliers
签定合同of
Signing
contract
拟定采购计划
Formulation of
procurement plan
确定
categories
First-purchased
采购 首营品种
category 首次
First-purchase
d category of
品类 Determination 首营资料
First-purc
供应商
first-cooperati 质管部审核
Review by Quality
确定供应商
of suppliers hased on supplier
Control Department
category 首品种
informatio
Non-firs
集采品种益丰 非首营
n Non-first-c
Centralized procurement t-purcha Review by
医药商品部the Negotiation
by Yifeng Pharmacy
医药采购
品种
sed
head of Drug
长审核
Product
ooperation
supplier
供应商谈判
with suppliers 签定合同of
Signing
contract
拟定采购计划
Formulation of
procurement plan
category Department 供应商
First-purchase
首营品种 首次
First-purchas
医药质管部
Review by Drug
d category ed category Quality Control
供应商
of 审核
Department
首营品种
first-cooperat
ion supplier
Review by 总裁/副总by
Review
商品评审
product evaluator 商品规划审
Review by product
planner 商品总监审
Review by product
supervisor president/vi
ce 裁审
president
质量总监审
Review by quality
supervisor
2. Warehouse management and logistics distribution
The Company has established the modern logistics centers in Hunan, Hubei, Jiangsu, Shanghai,
Jiangxi, Guangdong, and Hebei. Currently, the Company boasts advanced equipment, technologies, and
business management models in the logistics industry, including stereoscopic warehouses, automated
conveyor systems, automated sorting systems, AGV for order picking, Miniload for intelligent automatic
replenishment, electronic labeling systems, multi-level shuttles, crossbelts, robotic arms, wireless RF
picking, acceptance systems, and intelligent consolidation systems. These capabilities provide enhanced
support for digital operations of Yifeng’s supply chain. All products in the stores owned by the
Company are independently distributed by the logistics centers of the Company or its subsidiaries. The
Company’s robust distribution capabilities provide strong logistical support for its rapid expansion.
The logistics distribution process is as follows:
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2023 Annual Report
发
Delivery 核对
Order 验
供应商
Supplier 商品中心
Product Center check
Acceptance 仓库
Warehouse
货 订单 收
Procurement and
采购入库流程
warehousing process
Outbou
Accept
收货
Feedback
反馈 Distribution 出库
ance of on
配送中心
center
nd
验收
receipt 校正
improve
ment 复核
review
Store distribution
门店配送流程
process
POS SAP system WMS system
POS系统
system 请
Reque SAP系统 Quantity
数量 WMS系统 分拣 &
Sorting 装载
Loading &
门店 st for adjustment distribution transportation
运输
货
goods 校正 配货
Product 商品
Product
商品部
Department
selection
主配
3. Sales mode
(1) Retail
As of December 31, 2023, the Company owns a total of 13,250 chain drugstores (including 2,986
franchise stores) across ten provinces and municipalities in China, including Hunan, Hubei, Shanghai,
Jiangsu, Jiangxi, Zhejiang, Guangdong, Hebei, Beijing, and Tianjin. These stores offer customers a wide
range of products, including Western and Chinese patent medicine, traditional Chinese medicine herbal
pieces, medical devices, health supplements, personal care products, and daily convenience items related
to health.
The Company tailors product assortments for each store, formulating pricing mechanisms and
marketing strategies based on the competitive environment. Products are primarily procured and
distributed by the Company headquarters, with store pricing guided by headquarters directives. The
Company's operational system manages the entire process from goods procurement to sales and
inventory. Customers can pay for their purchases using cash, UnionPay cards, government BMI cards,
and various internet payment methods. All sales data are centrally uploaded to the Company's SAP
system to facilitate sales analysis and meet customer demands.
(2) Franchise distribution and wholesale business
Franchise distribution involves purchasing products from suppliers and then distributing them to the
franchised stores of the Company and its subsidiaries. The wholesale business involves the distribution
of entrusted products to third-party entities.
(3) Pharmaceutical e-commerce
To adapt to the rapid e-commerce development, the Company began to engage in e-commerce
business and established an e-commerce business group in 2013. Empowered by CRM and big data, the
Company has been seeking innovation in Internet healthcare and prescription circulation to create new
online and offline retail business models. The Company's online sales model primarily relies on its
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2023 Annual Report
logistics distribution centers and physical stores, operating a system where consumers place orders
online, with fulfillment handled by either the logistics centers or the physical stores.
IV. Core competitiveness analysis during the Reporting Period
"√ Applicable" "□ Not applicable"
1. Development strategy of regional concentration and steady expansion
During the Reporting Period, the Company adhered to the development strategy of “regional
concentration and steady expansion” and the operational policy of “key penetration and intensive
marketing”. By strategically establishing a reasonable layout of the scope and depth of store networks,
fostering a positive brand image, enhancing professional service capabilities, ensuring standardized
operations, continuously optimizing the supply chain and product portfolio, and upgrading the
membership management system, the Company has kept enhancing customer satisfaction and repeat
purchase rates, leading to a sustained growth in store sales revenue. While leveraging regional
competitive advantages, the Company has also improved its bargaining power through the growing
economies of scale and reduced logistics and operational costs. This has ensured the continuous growth
of profitability.
The strategy of “regional concentration” has enabled the Company to occupy regional markets
rapidly, achieve profits surpassing the industry average, and significantly increase its sales and profits.
As of December 31, 2023, the Company owned 13,250 chain drugstores in ten provinces and cities,
including Hunan, Hubei, Shanghai, Jiangsu, Jiangxi, Zhejiang, Guangdong, Hebei, Beijing, and Tianjin.
During the Reporting Period, the Company added 2,982 new stores, leading to a year-on-year increase of
13.59% in operating revenue and 11.90% in net profit attributable to shareholders of the listed Company.
2. An efficient and agile operating system and outstanding cross-province operations and chain
replication capabilities
The Company is one of the few companies in the industry whose major provincial subsidiaries are
all profitable. It presents prominent advantages in cross-regional store control, replication, and cultural
heritage. The Company has always prioritized refined, standardized, and systematic operations and
management. It has established a digital, connected, and intelligent system management platform that
covers six core operation systems: new store expansion, store operations, merchandise management,
information services, customer satisfaction, and performance assessment. With digital business handling
and the IT-enabled operational process, the Company has created an efficient and agile operating system,
which effectively supports it in cross-regional operations, rapid and efficient replication, and industry
merger and acquisition (M&A) and integration.
During the Reporting Period, the Company has witnessed continued improvements in its business
operations, management efficiency, and profitability through organizational structure optimization,
business process innovation, as well as business development empowered by digitalization. At the end of
the Reporting Period, the Company had a total of 13,250 stores, with a net increase of 2,982 for the year.
From 2018 to 2023, the number of the Company’s stores increased at a compound annual growth rate of
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2023 Annual Report
29.69%. Rapid and efficient chain replication and industry integration capabilities have rewarded the
Company with an increasingly mature store network and enhanced advantages in industry competition.
3. Mature proprietary brand category model and comprehensive training system
During the Reporting Period, the Company continuously advanced its controlled strategic focus of
certain products and its national optimal engineering system, enhanced and expanded a
strategically-focused product portfolio that includes proprietary brands, exclusive categories, and
categories developed in cooperation with manufacturers. By delivering high-quality, effective,
cost-efficient, and channel-controllable strategically-focused products to customers, the Company have
established a competitive barrier in the market and achieved differentiated competition compared to its
peers.
By strengthening specialized employee service training and conducting customer satisfaction
assessments, the Company has achieved a balance between profit growth and customer satisfaction.
Over 95% of the frontline employees in its stores are graduates in medicine and pharmacy. The
Company has established a robust employee training and talent development system. Throughout the
Reporting Period, on the foundation of a professional, credit-based curriculum, the Company created
corporate universities, including a Retail Academy and a Business School. These institutions encompass
a broad spectrum from talent cultivation to corporate management research, thus forging a sustainable
human resources framework. By partnering with educational institutions, the Company has deepened the
integration of industry and academia, standardized training materials, assembled dedicated and part-time
instructor teams at stores, and established training bases for new employees and prospective store
managers. This initiative has propelled the "management trainee" program and various training models
that blend online and offline elements with a credit-based evaluation system forward. As the Company
rapidly grows, the comprehensive employee training system ensures the ongoing improvement of
employees’ professional service capabilities and meets its increasing demand for human resources,
thereby serving as a long-term driver for endogenous growth.
4. Premium membership service system.
Based on business needs and market trends, the Company continuously upgrades the member
benefit system with customer-centric approaches. Through refined operations including the classification
and grading of members, the Company has created personalized and intelligent marketing and service
systems for its members. By leveraging information technology and Internet technology, the Company
has gradually realized centralized management functions, including efficient and intelligent management
of member information, integrated online and offline marketing, user health record management, and
online pharmacist consultation. By utilizing intelligent robots on the back end, the Company accurately
assigns specialized member service tasks to employees, aiming to enhance customer satisfaction and
improve word-of-mouth among customers. By offering free health checks and comprehensive
professional health services, along with methods such as medical records establishment, follow-ups,
tracking, assessment, and reexamination, the Company strives to improve medication adherence for
members with chronic diseases and comprehensive health management services throughout their life
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cycle. As of the end of the Reporting Period, the Company had a total of 87.1 million registered
members, marking a year-on-year increase of 23.21%, with sales to members constituting 77.4% of total
sales, an increase of 2.89% from the previous year. The Company's official public social media account
has attracted over 16.87 million followers.
5. “Fleet-type” store layout and unique location selection model
To cater to the population, market demand, and consumer characteristics of different regions, the
Company has established a network of stores covering different cities and business districts, as well as
formed a “fleet-type” store layout consisting of flagship stores, regional central stores, medium-sized
community stores, and small-sized community stores. Based on years of site selection experience and
big data analysis, the Company has developed a comprehensive “business district positioning method”
for store location selection. This involves analyzing the population, population density, and consumer
spending power and habits in new cities, pinpointing potential business districts, determining store types
and location ranges for prospective stores based on specific district characteristics, and employing a
sophisticated store selection model, a consumer flow testing system and a sales forecasting model to
finalize precise locations. By promoting and implementing the models above, the Company’s
capabilities in selecting new store locations and ensuring the quality of these new stores consistently
improve, and its brand penetration continues to strengthen.
6. Advanced digital operational management and efficient back-end support system.
The Company has set up a competent digital technology research and development (R&D) and
application team dedicated to creating customized digital and intelligent systems tailored to its
operational requirements. Through the use of various digital platforms such as the Yifeng Health App,
mini-programs, WeChat stores, WeChat official accounts, and precise member marketing, the Company
has continuously increased the number of orders and customers for offline stores. Additionally, by
offering convenient services such as Internet hospitals, public and private domains, prescription
platforms, remote consultations, and prepaid cards, it has enhanced user loyalty and corporate brand.
The online mini-program (Yidianzhang) has been used by frontline staff. The comprehensive
digitalization of frontline store operations management has enhanced operational efficiency and service
quality. Moreover, the implementation of a digitized product management system has enabled precise
and intelligent control of products and the supply chain, resulting in improved coordination efficiency.
Lastly, master data governance, big data platform, cloud-native technology platform, and CI/CD system
have further improved the efficiency of the internal digital transformation process, facilitating the
Company's agile response to market changes.
With the aid of the back-end shared digital infrastructure, the Company has achieved digital
capabilities, such as financial sharing, asset sharing, IT sharing, human resource sharing, and
administrative sharing, thus significantly improving the efficiency of back-end support collaboration and
service delivery. By enhancing warehouse operational efficiency and guiding precise improvements in
warehouse nodes with data transparency, the Company has refined its digital framework for logistics
operations. The Company has established and continuously upgraded seven modern logistics centers in
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Hunan, Hubei, Jiangsu, Shanghai, Jiangxi, Guangdong, and Hebei. Currently, the Company boasts
advanced equipment and technologies in the logistics industry, including stereoscopic warehouses,
automated conveyor systems, automated sorting systems, AGV for order picking, Miniload for
intelligent automatic replenishment, electronic labeling systems, multi-level shuttles, crossbelts, robotic
arms, wireless RF picking, acceptance systems, and intelligent consolidation systems. These capabilities
provide enhanced support for digital operations of Yifeng’s supply chain.
7. Outstanding corporate culture and mentor-based talent team
The Company places significant emphasis on the development of its corporate culture, embedding
it deeply within cooperate training and educational programs to continuously strengthen the Company's
cultural soft power. The Company upholds the core values of “customer first, results-oriented,
innovative efficiency, diligence & pragmatism, responsibility & cooperation, as well as growth & care”.
This fosters a team atmosphere of responsibility, cooperation, and transparent interpersonal relationships.
In addition to prioritizing customer value and maintaining a results-oriented approach, the Company
facilitates the personal career development and positive work experiences of its employees through its
robust training system and talent echelon construction. As a result, the Company has significantly
improved its executive capabilities and cohesion. Since its founding, middle-level and senior
management were appointed by the headquarters. After a period of mentorship, the Company gradually
transitioned to a localized talent approach, thus ensuring the inheritance and replication of the corporate
culture. Through the cultivation of a mentor-based talent team, employee career planning, and a
comprehensive training system, the Company has built a powerful talent pool, thereby meeting the
human resource demands of its rapid growth.
V. Operation status during the Reporting Period
During the Reporting Period, the Company maintained a steady increase in operating revenue and
operating profit. The Company generated operating revenue of CN22,588.2274 million, representing a
year-on-year growth of 13.59%. The net profit attributable to shareholders of the listed Company
reached CN1,411.9850 million, registering a year-on-year increase of 11.90%. The net profit
attributable to shareholders of the listed Company, with non-recurring profits and losses excluded, was
CN1,361.5126 million, up 10.92% year-on-year growth. The weighted average return on net assets was
15.44%, with earnings per share of CN1.40. As of December 31, 2023, the Company’s total assets
amounted to CN24,136.5392 million, representing an increase of 14.74% compared to
CN21,036.0240 million at the end of the previous year. The equity attributable to owners of the parent
company totaled CN9,804.4325 million, indicating a 14.63% increase compared to CN8,553.2159
million at the end of the previous year.
(I). Analysis of Main Business
1. Analysis of Changes in Income Statement and Cash Flow Statement Items
Unit: CN Currency: CNY
Item Amount in the current Amount in the same Percentage of
period period last year change (%)
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Operating revenue 22,588,227,402.22 19,886,395,835.95 13.59
Operating costs 13,957,598,854.74 12,025,564,042.05 16.07
Sales expense 5,487,450,160.02 4,878,272,940.17 12.49
Management expenses 962,424,859.48 904,060,660.30 6.46
Financial expenses 86,184,603.08 104,812,475.83 -17.77
R&D expenses 33,549,984.91 25,309,639.00 32.56
Net cash flow from operating 4,623,740,795.60 3,920,267,304.15 17.94
activities
Net cash flows from investing -2,980,321,075.21 -1,274,001,208.50 -133.93
activities
Net cash flow from financing -2,093,039,229.23 -1,655,266,933.76 -26.45
activities
Explanation of changes in operating revenue: The first is the year-on-year endogenous growth of
operating revenue of existing stores. The second is the continued expansion through new store openings,
industry M&A, as well as the development of franchise and distribution businesses.
Explanation of changes in operating costs: The main reason for the changes in operating costs is the
year-on-year growth in sales revenue.
Explanation of changes in sales expenses: This is mainly because the sales expense increased with the
operating revenue during the Reporting Period. In addition, the newly opened and acquired stores
experienced a period of cultivation or integration during which there were higher amortization costs and
promotional expenses. Furthermore, the development of new customers also further increased the sales
expense.
Explanation of changes in administrative expenses: First, the administrative expense increased with the
operating revenue during the Reporting Period. Second, there was an increase in amortization of costs
associated with equity incentives during the Reporting Period.
Explanation of changes in financial expenses: This is mainly due to increased interest income from
investments in fixed-rate financial products using idle funds.
Explanation of changes in R&D expenses: This is mainly due to the higher amortization amount after the
capitalization of R&D expenditure into intangible assets.
Explanation of changes in net cash flows from operating activities: This is mainly due to the increase in
the Company’s sales and the increase in settlement of notes payable.
Explanation of changes in net cash flows from investment activities: This is mainly due to the purchase
of more bank wealth management products in the current period.
Explanation of changes in net cash flows from financing activities: This is mainly due to higher
payments for store rent and shareholder dividends during the period.
Detailed description of any significant changes in business type, composition of profit or profit source of
the Company during the current period
"□ Applicable" "√ Not applicable"
2. Revenue and cost analysis
"□ Applicable""√ Not applicable"
(1). Main business by industry, product, region, and sales mode
Unit: CN Currency: CNY
Main business by industry
Operating
revenue Operating cost Gross profit
Gross
increase/ increase/decrease margin increase/
By profit
Operating revenue Operating costs decrease from the decrease from
industry margin
from the previous year the previous year
(%).
previous year (%) (%)
(%)
Retail 20,185,078,131.34 12,193,594,911.77 39.59 12.00 13.60 -0.85
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2023 Annual Report
Wholesale 1,892,484,367.32 1,715,306,468.77 9.36 39.23 39.39 -0.11
Total 22,077,562,498.66 13,908,901,380.54 37.00 13.91 16.25 -1.27
Main business by product
Operating
revenue Operating cost Gross profit
Gross
increase/ increase/decrease margin increase/
By profit
Operating revenue Operating costs decrease from the decrease from
product margin
from the previous year the previous year
(%).
previous year (%) (%)
(%)
Chinese 17,094,686,214.86 11,145,804,284.09 34.80 15.93 16.73 -0.45
and
Western
patent
medicine
Traditional 2,180,366,779.78 1,152,773,656.91 47.13 23.30 22.54 0.33
Chinese
medicine
Non-drug 2,802,509,504.03 1,610,323,439.54 42.54 -2.30 9.14 -6.02
Total 22,077,562,498.66 13,908,901,380.54 37.00 13.91 16.25 -1.27
Main business by region
Operating
Gross profit
revenue Operating cost
Gross margin
increase/ increase/decrease
profit increase/decrease
By region Operating revenue Operating costs decrease from the
margin from the
from the previous year
(%). previous year
previous year (%)
(%)
(%)
Central 10,379,720,621.51 6,388,491,769.01 38.45 17.44 18.96 -0.79
and South
China
East China 9,227,739,118.05 5,887,330,928.57 36.20 7.29 10.27 -1.72
North 2,470,102,759.10 1,633,078,682.96 33.89 27.14 30.07 -1.49
China
Total 22,077,562,498.66 13,908,901,380.54 37.00 13.91 16.25 -1.27
Explanation of the main business by industry, product, region and sales mode
By industry, the Company's main business is drug retail, which accounts for 91.43% of the revenue.
During the Reporting Period, the gross profit margin of the Company’s main business was 37.00%, a
decrease of 1.27% compared to the previous year. The primary reasons are an increase in the proportion
of wholesale revenue, which has decreased the overall gross profit margin, and a decline in the gross
profit margin of the retail business.
By category, the categories with the fastest-growing income include Chinese and Western patent
medicine and traditional Chinese medicine, with growth rates of 15.93% and 23.30%, respectively.
By region, the Central and South China covers Hunan, Hubei, and Guangdong; East China covers
Jiangsu, Shanghai, Zhejiang, and Jiangxi; and North China covers Hebei, Beijing, and Tianjin.
(2). Production and sales analysis table
"□ Applicable" "√ Not applicable"
(3). Performance of major procurement contracts and major sales contracts
"□ Applicable" "√ Not applicable"
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2023 Annual Report
(4). Cost analysis table
Unit:CN
By industry
Percentag
Proportio e of
Proportio n of the change of
n of the amount of the current
amount the same amount
Cost Amount for the Details
By Amount for the for the period of compared
compositio same period of the Descriptio
industry current period current the to the
n items previous year n
period to previous same
total cost year to period of
(%) total cost the
(%) previous
year
Retail Sales cost 12,193,594,911.7 87.67 10,733,898,814.9 89.71 13.60
7 0
Wholesale Sales cost 1,715,306,468.77 12.33 1,230,552,979.27 10.29 39.39
Total Sales cost 13,908,901,380.5 100.00 11,964,451,794.1 100.00 16.25
4 7
By product
Percentag
Proportio e of
Proportio n of the change of
n of the amount of the current
amount the same amount
Cost Amount for the Details
By Amount for the for the period of compared
compositio same period of the Descriptio
product current period current the to the
n items previous year n
period to previous same
total cost year to period of
(%) total cost the
(%) previous
year
Chinese Sales cost 11,145,804,284.0 80.13 9,548,232,660.40 79.81 16.73
and 9
Western
patent
medicine
Traditiona Sales cost 1,152,773,656.91 8.29 940,755,926.55 7.86 22.54
l Chinese
medicine
Non-drug Sales cost 1,610,323,439.54 11.58 1,475,463,207.22 12.33 9.14
Total Sales cost 13,908,901,380.5 100.00 11,964,451,794.1 100.00 16.25
4 7
Explanation of other situations in cost analysis
None
(5). Changes in the equity of major subsidiaries during the Reporting Period arising from
changes in the scope of consolidation
"□ Applicable" "√ Not applicable"
(6). Significant changes or adjustments to the Company’s business, products or services during
the reporting period
"□ Applicable" "√ Not applicable"
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2023 Annual Report
(7). Information regarding major customers and primary suppliers
A. Information regarding major customers
"√ Applicable" "□ Not applicable"
The sales amount from the top five customers totaled CN57,575,000,accounting for 0.25% of the total
annual sales. The sales amount of related parties from the top five customers was CN19,093,500
accounting for 0.08% of the total annual sales.
S/N Customer name Sales amount Percentage of annual sales
(CN10,000) (%)
1 Customer A 1,909.35 0.08
2 Customer B 1,221.18 0.05
3 Customer C 926.29 0.04
4 Customer D 862.30 0.04
5 Customer E 838.38 0.04
Total 5,757.50 0.25
During the Reporting Period, the sales to a single customer accounted for more than 50% of the total,
and there were cases where new customers are among the top 5 customers or there was a significant
dependence on a small number of customers.
"□ Applicable" "√ Not applicable"
B. Information regarding primary suppliers
"√ Applicable" "□ Not applicable"
The procurement amount from the top five suppliers totaled CN6,028,813,900, accounting for 43.12%
of the total annual procurement. The procurement amount from related parties of the top five suppliers
was CN0.00, accounting for0.00% of the total annual procurement.
S/N Supplier name Procurement amount Percentage of annual
(CN10,000) procurement amount (%)
1 Supplier A 194,318.60 13.90
2 Supplier B 153,338.21 10.97
3 Supplier C 146,731.30 10.49
4 Supplier D 64,362.13 4.60
5 Supplier E 44,131.15 3.16
Total 602,881.39 43.12
During the Reporting Period, the sales to a single supplier accounted for more than 50% of the total, and
there were cases where new suppliers are among the top 5 suppliers or there was a significant
dependence on a small number of suppliers.
"□ Applicable" "√ Not applicable"
Other explanations
None
3. Costs
"√ Applicable""□ Not applicable"
Item Amount incurred in the Amount incurred for the Percentage of change (%)
current period (CN previous period (CN
Sales expense 5,487,450,160.02 4,878,272,940.17 12.49
Management expenses 962,424,859.48 904,060,660.30 6.46
R&D expenses 33,549,984.91 25,309,639.00 32.56
Financial expenses 86,184,603.08 104,812,475.83 -17.77
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2023 Annual Report
The reasons for the changes in sales expenses: The increase is mainly due to the rise in selling expenses,
proportional to the growth in operating revenue.
。
The reasons for the changes in administrative expenses: First, the administrative expense increased with
the operating revenue during the Reporting Period. Second, there was an increase in amortization of
costs associated with equity incentives during the Reporting Period.
The reasons for the changes in R&D expenses: This is mainly due to the higher amortization amount
after the capitalization of R&D expenditure into intangible assets
The reasons for the changes in financial expenses: This is mainly due to increased interest income from
investments in fixed-rate financial products using idle funds.
4. R & D investment
(1).Details of R&D investment
"√ Applicable" "□ Not applicable"
Unit:CN
Expensed R&D investment in the current
19,439,582.87
period
Capitalized R&D investment in the current
33,193,214.40
period
Total R&D investment 52,632,797.27
Total R&D investment as a percentage of 0.23
operating revenue (%)
Share of capitalized R&D investment (%) 63.07
(2).Details of R&D personnel
"√ Applicable" "□ Not applicable"
Number of the Company’s R&D Personnel 340
Number of R&D personnel as a percentage of the Company’s
0.86
total workforce (%)
Educational Background of R&D Personnel
Academic Degree Number
Doctorate degree 0
Master’s degree 12
Undergraduate 216
College degree 112
High school and below 0
Age of R&D Personnel
Age Group Number
Under 30 (excluding 30) 103
30 – 40 (including 30 but excluding 40) 195
40 – 50 (including 40 but excluding 50) 38
50 – 60 (including 50 but excluding 60) 4
60 and above 0
(3).Description
"□ Applicable" "√ Not applicable"
(4).Reason(s) for major changes in the composition of R&D personnel and their impact on the
Company’s future development
"□ Applicable" "√ Not applicable"
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2023 Annual Report
5. Cash flow
"√ Applicable""□ Not applicable"
Item Amount incurred in the Amount incurred for the Percentage of change (%)
current period (CN previous period (CN
Net cash flow from
4,623,740,795.60 3,920,267,304.15 17.94
operating activities
Net cash flows from
-2,980,321,075.21 -1,274,001,208.50 -133.93
investing activities
Net cash flow from
-2,093,039,229.23 -1,655,266,933.76 -26.45
financing activities
Explanation of changes in net cash flows from operating activities: This is mainly due to the increase in
the Company’s sales and the increase in settlement of notes payable.
Explanation of changes in net cash flows from investing activities: This is mainly due to the purchase of
more bank wealth management products in the current period.
Explanation of changes in net cash flows from financing activities: This is mainly due to higher
payments for store rent and shareholder dividends during the period.
(II). Notes on major changes in profits due to non-principal business
"□ Applicable""√ Not applicable"
(III). Analysis of assets and liabilities
"√ Applicable" "□ Not applicable"
1. Assets and liabilities
Unit:CN
Change in
Current Prior
Current
Period’s Period’s
Period’s
Closing Closing
Current Period’s Prior Period’s Closing
Item name Balance as a Balance as a Description
Closing Balance Closing Balance Balance
Percentage of Percentage
over Prior
Total Assets of Total
Period
(%) Assets (%)
(%)
Primarily due to
an increase in
the purchase of
Trading
bank wealth
financial 1,630,720,887.94 6.76 50,045,139.45 0.24 3,158.50
management
assets
products with
idle funds in the
current period
Primarily due to
an increase in
Receivables
11,889,888.58 0.05 1,784,671.86 0.01 566.22 notes receivable
financing
in the current
period
Primarily due to
a decrease in
Prepayments 141,493,810.64 0.59 225,472,636.75 1.07 -37.25
prepayments
for procurement
Due to the
purchase of
Debt
154,167,777.78 0.64 0.00 0.00 100.00 three-year,
investments
high-value
fixed deposit
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2023 Annual Report
certificates
Due to
increased
investments in
Investment in
other equity
other equity 432,225,200.00 1.79 327,379,600.00 1.56 32.03
instruments and
instruments
year-end fair
value
adjustments
Due to disposal
Other
of some
non-current
1,010,000.00 0.00 1,460,000.00 0.01 -30.82 investments in
financial
the current
assets
period
Primarily due to
Other an increase in
non-current 30,269,025.79 0.13 7,230,498.45 0.03 318.63 prepaid
assets deposits for
equity transfers
Primarily due to
an increase in
Advance advance
15,959,550.59 0.07 6,078,020.28 0.03 162.58
receipts receipts for
subletting
properties
Primarily due to
increase in
Contract
80,166,931.03 0.33 60,685,079.13 0.29 32.10 advance
liabilities
receipts on
pre-paid cards
Due to
repayment of
Long-term
133,617,147.68 0.55 228,668,070.87 1.09 -41.57 some loans in
borrowings
the current the
period
Primarily due to
conversion of
Paid-in capital
capital reserves
(or share 1,010,579,797.00 4.19 721,704,930.00 3.43 40.03
to share capital
capital)
in the current
the period
Primarily due to
unlocking of
restricted stock,
recovering the
Treasury stock 42,238,481.15 0.17 77,410,952.00 0.37 -45.44
initially
confirmed
repurchase
obligations
Due to year-end
fair value
Other
changes in
comprehensive 21,416,709.49 0.09 -17,001,709.05 -0.08 225.97
other equity
income
instrument
investments
Due to an
Surplus increase in the
198,282,150.00 0.82 132,066,047.02 0.63 50.14
reserves statutory
surplus reserve
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2023 Annual Report
provisioned
from the net
profit growth of
the current
period
Other explanations
None
2. Overseas assets
"□ Applicable" "√ Not applicable"
3. Restrictions on major assets as of the end of the Reporting Period
"√ Applicable" "□ Not applicable"
Item Closing book value Reason for restriction
Monetary funds 1,096,521,187.18 Principal and interest of deposit to
bills of exchange
Monetary funds 30,283.77 Deposit to government platforms
Monetary funds 774,128.26 Judicially frozen funds
Debt investments 102,729,722.22 Large certificate of deposit
pledges
Total 1,200,055,321.43
4. Other explanations
"□ Applicable" "√ Not applicable"
(IV). Analysis of industry operational information
"□ Applicable" "√ Not applicable"
Analysis of operational information about the retail industry
1. Distribution of operating stores as of the end of the Reporting Period
"√ Applicable""□ Not applicable"
Stores in Self-owned Properties Stores in Leased Properties
Region Business Format Number of Floor Area Number of Floor Area
Stores (10,000 m2) Stores (10,000 m2)
Central
Pharmaceutical
and South 10 0.36 4,887 66.07
retail chain
China
Pharmaceutical
East China 1 0.035 3,797 57.30
retail chain
North Pharmaceutical
2 0.065 1,567 23.74
China retail chain
Total 13 0.46 10,251 147.11
2. Otherexplanations
"√ Applicable" "□ Not applicable"
(1) The Company’s store network during the Reporting Period
The Company adheres to the development strategy of “regional concentration and steady expansion”
and aims its market expansion at “consolidating the share in Central South, East, and North China while
expanding across the country”. Through the layout of “new openings + M&A + franchising” in the
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2023 Annual Report
above regions, it has formed a multi-tiered store network comprising flagship stores, regional central
stores, medium-sized community stores, and small-sized community stores. The Company has been
deeply engaged in the regional market and gained a leading position in the market through refined
operation and brand penetration. During the Reporting Period, the Company saw 2,982 new stores.
Unit: store
2023
Region Beginning
of the Net growth Closed Relocated End of the Period
Period
Central and
5,414 1,322 79 32 6,736
South China
East China 3,795 927 58 26 4,722
North China 1,059 733 16 3 1,792
Total 10,268 2,982 153 61 13,250
Note: During the Reporting Period, a total of 214 stores were closed or relocated, primarily due to location
optimization, renovation of old urban areas, and strategic adjustments, among other factors.
(2) Changes in the Company’s store network
As of December 31, 2023, the Company had a net increase of 9,639 stores compared to the end of
2018. Over the past five years, the Company’s stores have increased at a compound annual growth rate
of 29.69%. Details are as follows:
Unit: store
At the end of At the end of At the end of At the end of At the end of At the end of
Year
2018 2019 2020 2021 2022 2023
Central
and South 1,633 2,159 2,858 3,824 5,414 6,736
China
East China 1,482 2,035 2,456 3,194 3,795 4,722
North
496 558 677 791 1,059 1,792
China
Total 3,611 4,752 5,991 7,809 10,268 13,250
(3) Business of the Company’s direct-sale stores during the Reporting Period
As of December 31, 2023, the Company had 10,264 directly-managed stores. The business of the
direct-sale stores is as follows:
Average Daily Sales per
Number of Stores Store Operating Area Square Meter
Store Type (store) (m2) (tax included; CN/m2)
Flagship store 26 17,940 146.53
Regional central
95 33,253 70.95
store
Medium-sized
1,023
community store 194,280 60.18
Small-sized
9,120
community store 815,403 60.81
Total 10,264 1,060,875 61.06
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2023 Annual Report
Note: Average daily sales per square meter = Average daily operating revenue/Store operating area
Average daily operating revenue = Store’s annual operating revenue (tax included)/Store’s
business days
Operating area refers to the actual area of the store for business operations.
(4) Stores licensed for government BMI
As of December 31, 2023, 8,970 (87.39%) among the Company’s 10,264 direct-sale chain stores
had been licensed as BMI Designated Retail Pharmacies.
Percentage of
Number of Stores BMI Designated Retail
Region Government BMI
(store) Pharmacies (store)
Pharmacies
Central and South
4,897 4,505 92.00%
China
East China 3,798 3,229 85.02%
North China 1,569 1236 78.78%
Total 10,264 8,970 87.39%
(5) Online business operation
During the Reporting Period, relying on offline stores and members, the Company proceeded with
its new pharmaceutical retail system based on the ecosystems of omni-channel membership, online and
offline medical services, and whole-lifecycle health management. It also continued to empower the
M&A system and franchising system. Meanwhile, the new media operation and content operation
capabilities saw rapid improvement.
As of the end of the Reporting Period, the Company’s registered membership totaled 87.1 million,
and the Company’s WeChat official account had more than 16.87 million followers. O2O multi-channel
and multi-platform online direct-sale stores exceeded 9,000, covering all major cities in the presence of
the Company. Supported by the dual-engine strategy of O2O and B2C, relying on the Company’s
regional concentration strategy, intelligent supply chain system, and refined operation, the Company’s
Internet business achieved sales revenue of CN1,817.8471 million (tax excluded). It includes sales
revenue from O2O (franchise stores excluded) of CN1,398.7383 million and sales revenue from B2C
of CN419.1092 million.
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2023 Annual Report
(V). Analysis of investment status
Overall analysis of outbound equity investments
"√ Applicable" "□ Not applicable"
During the Reporting Period, the Company participated in 22 M&A investments within the industry,
successfully completing 19 of these transactions. Details are as follows:
(1) In November 2022, the Company’s holding subsidiary, Tangshan Xinxing Deshuntang
Pharmaceuticals Chain Co., Ltd., entered into the "Equity Transfer Agreement" with Yin Hui and other
individuals to acquire 100% equity of Tangshan Xinxing Deshengtang Pharmaceutical Co., Ltd. at a
price of CN113 million, which involved 54 stores and 8 clinics. The project’s equity delivery
procedures were completed in March 2023.
(2) In October 2022, the Company’s holding subsidiary, Shijiazhuang Xinxing, entered into the
"Equity Transfer Agreement" with Shang Yong and other individuals to acquire 70% equity of
Qinhuangdao Xinxing Minle Pharmaceuticals Chain Co., Ltd. at a price of CN63 million, which
involved 89 stores. The project’s equity delivery procedures were completed in March 2023.
(3) In December 2022, the Company entered into an asset acquisition framework agreement to be
assigned the assets and business of Longshan County Laobaixing New and Special Medicine Health
Pharmacy and other 10 pharmacies. The project’s asset delivery procedures were completed in February
2023, and the final asset acquisition price was CN6million.
(4) In February 2023, the Company’s wholly-owned subsidiary, Hubei Yifeng, entered into the
"Equity Transfer Agreement" with Li Qionghua and other individuals, to acquire 70% equity of
Guangshui Yifeng Kangji Pharmacy Chain Co., Ltd. at a price of CN8.54 million, which involved 11
stores. The project’s equity delivery procedures were completed in April 2023.
(5) In March 2023, the Company’s wholly-owned subsidiary, Jiangsu Yifeng, entered into an asset
acquisition framework agreement to be assigned the assets and business of 37 stores of Changzhou
Renmin Baixing Pharmacy Co., Ltd. The project’s asset delivery procedures were completed in June
2023, and the final asset acquisition price was CN35 million.
(6) In April 2023, the Company’s holding subsidiary, Ganxi Yifeng, entered into the "Equity
Transfer Agreement" with Chen Zhilin and other individuals, to acquire 60% equity of Yichun Yifeng
Pharmacy Chain Co., Ltd., at a price of CN24.6 million, which involved 30 stores. The project’s equity
delivery procedures were completed in July 2023.
(7) In May 2023, the Company’s holding subsidiary, Shijiazhuang Xinxing, entered into the
"Equity Transfer Agreement" with Wang Yunqiang and other individuals to acquire 80% equity of
Handan Xinxing Baixinkang Pharmaceuticals Chain Co., Ltd. at a price of CN23.344 million, which
involved 58 stores. The project’s equity delivery procedures were completed in August 2023.
(8) In May 2023, the Company’s wholly-owned subsidiary, Hubei Yifeng, entered into an asset
acquisition framework agreement to be assigned the assets and business of 64 pharmacies of Hubei
Zhonglian Pharmacy Co., Ltd. at a price not exceeding CN20 million. The delivery procedures of 41
pharmacies in the project were completed in July 2023, and these pharmacies were re-established upon
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2023 Annual Report
renewal of all business approval procedures. Zhonglian has not performed the framework agreement
completely yet, and both parties are still proceeding with this agreement.
(9) In June 2023, the Company’s holding subsidiary, Shijiazhuang Xinxing, entered into an asset
acquisition framework agreement to be assigned the assets and business of 39 stores of Xingtai Dongda
Pharmaceuticals Chain Co., Ltd. The project’s asset delivery procedures were completed in July 2023,
and the final asset acquisition price was CN26.32 million.
(10) In July 2023, the Company’s holding subsidiary, Shijiazhuang Xinxing, entered into the
"Equity Transfer Agreement" with Sun Shuzhi and other individuals to acquire 80% equity of Langfang
Xinxing Dekunyuan Pharmaceutical Retail Chain Co., Ltd. at a price of CN27.19 million, which
involved 69 stores. The project’s equity delivery procedures were completed in December 2023.
(11) In August 2023, the Company’s wholly-owned subsidiary, Jiangxi Yifeng, entered into the
"Equity Transfer Agreement" with Wang Yang and other individuals, to acquire 65% equity of Yingtan
Yifeng Pharmacy Chain Co., Ltd., at a price of CN19.5 million, which involved 29 stores. The
project’s equity delivery procedures were completed in October 2023.
(12) In August 2023, the Company’s holding subsidiary, Shijiazhuang Xinxing, entered into the
"Equity Transfer Agreement" with Wang Ruimin and other individuals to acquire 70% equity of Handan
Xinxing Huakang Pharmacy Chain Co., Ltd. at a price of CN52.5 million, which involved 50 stores.
The project’s equity delivery procedures were completed in December 2023.
(13) In September 2023, the Company’s holding subsidiary, Shijiazhuang Xinxing, entered into the
"Equity Transfer Agreement" with Zhang Weizhe and other individuals to acquire 70% equity of
Chengde Xinxing Baixing Pharmacy Chain Co., Ltd. at a price of CN30.24 million, which involved 20
stores. The project’s equity delivery procedures are still in progress.
(14) In September 2023, the Company’s holding subsidiary, Jingzhou Guangshengtang, entered
into an asset acquisition framework agreement to be assigned the assets and business of Jiangling
Miaoyuan Pharmacy and other 9 pharmacies. The project’s asset delivery procedures were completed in
October 2023, and the final asset acquisition price was CN6.88 million.
(15) In October 2023, the Company’s holding subsidiary, Shijiazhuang Xinxing, entered into the
"Equity Transfer Agreement" with Zhang Zhen and other individuals to acquire 70% equity of Chengde
Xinxing Xinyu Pharmacy Chain Co., Ltd. at a price of CN23.1 million, which involved 31 stores. The
project’s equity delivery procedures were completed in December 2023.
(16) In October 2023, the Company’s holding subsidiary, Shijiazhuang Xinxing, entered into the
"Equity Transfer Agreement" with Ma Limin and other individuals to acquire 70% equity of Pingquan
Xinxing Limin Pharmacy Chain Co., Ltd. at a price of CN36.96 million, which involved 55 stores. The
project’s equity delivery procedures were completed in January 2024.
(17) In November 2023, the Company’s holding subsidiary, Shijiazhuang Xinxing, entered into the
"Equity Transfer Agreement" with Wang Tao and other individuals to acquire 70% equity of Nangong
Xinxing Huakang Pharmacy Chain Co., Ltd. at a price of CN22.4 million, which involved 67 stores.
The project’s equity delivery procedures were completed in March 2024.
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2023 Annual Report
(18) In November 2023, the Company’s holding subsidiary, Wuxi Jiuzhou, entered into an asset
acquisition framework agreement to be assigned the assets and business of Wuxi Shenzhou Pharmacy
Co., Ltd. and other 3 pharmacies. The project’s asset delivery procedures were completed in January
2024, and the final asset acquisition price was CN11.5 million.
(19) In December 2023, the Company’s holding subsidiary, Shijiazhuang Xinxing, entered into the
"Equity Transfer Agreement" with Lu Dezhi and other individuals to acquire 70% equity of Handan
Xinxing Shengde Pharmacy Chain Co., Ltd. at a price of CN15.4 million, which involved 25 stores.
The project’s equity delivery procedures were completed in March 2024.
(20) In December 2023, the Company’s holding subsidiary, Shijiazhuang Xinxing, entered into the
"Equity Transfer Agreement" with Yuan Lijuan and other individuals to acquire 70% equity of Handan
(Yongnian District) Xinxing Wankang Pharmaceuticals Chain Co., Ltd. at a price of CN17.50 million,
which involved 15 stores. The project’s equity delivery procedures are still in progress.
(21) In December 2023, the Company’s holding subsidiary, Shijiazhuang Xinxing, entered into the
"Equity Transfer Agreement" with Qin Wei and other individuals to acquire 70% equity of Jize Renkang
Xinxing Pharmacy Chain Co., Ltd. at a price of CN5.39 million, which involved 15 stores. The
project’s equity delivery procedures were completed in March 2024.
(22) In December 2023, the Company’s holding subsidiary, Shijiazhuang Xinxing, entered into the
"Equity Transfer Agreement" with Tan Hong’en and other individuals to acquire 70% equity of Handan
Xinxing Kangheng Baixing Pharmaceuticals Chain Co., Ltd. at a price of CN16.1 million, which
involved 35 stores. The project’s equity delivery procedures are still in progress.
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1. Substantial equity investments
"□ Applicable" "√ Not applicable"
2. Substantial non-equity investments
"□ Applicable" "√ Not applicable"
3. Financial assets measured at fair value
"□ Applicable" "√ Not applicable"
Investments in securities
"□ Applicable" "√ Not applicable"
Investments in securities
"□ Applicable" "√ Not applicable"
Investments in private equity funds
"□ Applicable" "√ Not applicable"
Investments in derivatives
"□ Applicable" "√ Not applicable"
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4. Progress details of material asset restructuring and consolidation during the Reporting
Period
"□ Applicable" "√ Not applicable"
(VI). Material assets and equity sales
"□ Applicable" "√ Not applicable"
(VII). Analysis of major companies controlled or held by the Company
"√ Applicable" "□ Not applicable"
S/ Subsidiary Shareholdi Main Registered Total Net assets Operating Operating Net Profit
N ng (%) business Capital assets (CN10,0 Revenue Profit (CN10,0
(CN10,0 (CN10,0 00) (CN10,0 (CN10,0 00)
00) 00) 00) 00)
Yifeng Pharmaceuti
555,130.8 179,759.4 563,521.3
1 Pharmaceuti 100.00 cal 15,000.00 62,474.80 53,767.15
1 0 5
cal wholesale
Jiangsu Pharmaceuti 739,594.9 158,370.6 559,063.5
2 100.00 15,000.00 52,425.02 39,094.25
Yifeng cal retail 1 4 2
Note: The above major companies controlled or held by the Company include subsidiaries whose net
profit accounts for more than 10% of the Company’s total net profit.
The Company’s wholly-owned subsidiary, Yifeng Pharmaceuticals, wholly owns Hengxiutang
Pharmaceuticals Company;
The Company’s wholly-owned subsidiary, Jiangsu Yifeng, wholly owns Jiangsu Yifeng Medicine, Nantong Yifeng
Outpatient Clinic, and Wuyi Clinic Company, and controls Wuxi Jiuzhou Pharmaceuticals, Jiuzhou Pharmacy, Taizhou
Bao’ai, Rudong Yifeng, Wuxi Kangjian, Nanjing Zhilin, Xuzhou Enqi, Dongtai Kaixin Pharmaceuticals, and Yuehai
Tong’ankang.
(VIII). Structured entities controlled by the Company
"□ Applicable" "√ Not applicable"
VI. The Company’s discussion and analysis of its future development
(I). Industry landscape and trends
"√ Applicable" "□ Not applicable"
As policies for the reform of medical care, BMI and pharmaceutical industry are implemented and
rolled out, the structural adjustment of the pharmaceutical industry is facing substantial changes, and
industry trends are constantly changing, which is affected by multiple factors, such as an aging
population, advancement of Internet technology, and capital driving. These activities have contributed to
the continuous expansion of the healthcare and medical industry's overall scale. Moreover, the terminal
sales of retail pharmacies has accounted for a bigger share, along with more pharmacy chains. The
pharmaceutical industry has witnessed increasingly centralized development. The medicine retail
industry has ushered in a continuous expansion. Medicine retailing has increasingly distinguished itself
as being standardized, large-scale, specialized, and differentiated. The abilities to deliver professional
management services catering to the diverse health needs of consumers have been enhanced. Digital
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2023 Annual Report
transition and upgrading of businesses accelerated integration in the industry, and the service model of
“online + offline” whole-lifecycle health management has become new trends of the industry.
(1) Health expenditure has been rising year by year, and the health industry as a whole has been
expanding. According to the "Report on the Execution of the Central and Local Budgets for 2022 and
the Draft Budgets for 2023" issued by the National People's Congress, the total national general public
budget expenditure for 2023 is planned to be CN27.513 trillion, with health and wellness expenditures
accounting for 8.8%, totaling CN2.4211 trillion. According to the "Statistical Communiquéof the
People's Republic of China on the 2023 National Economic and Social Development" by the National
Bureau of Statistics of China, per capita healthcare expenditure among residents in 2023 was CN2,460,
accounting for 9.2% of total consumer spending and ranking fifth. By the end of 2023, the total number
of individuals enrolled in BMI nationwide reached 1,333.87 million, with 370.94 million covered under
employee BMI and 962.93 million under urban and rural residents' BMI; 249.07 million were enrolled in
maternity insurance.
(2) The healthcare reform oriented towards “separation of prescribing and dispensing” has brought
a new incremental market for the pharmaceutical retail industry. As the reform of medical care, BMI and
pharmaceutical industry is being rolled out, policies on public hospital reform, expense control of
government BMI, drug consistency evaluation, volume-based procurement, and Internet + medical care
have been introduced and implemented. The policy of including designated retail pharmacies in the
overall outpatient service management has been carried out widely. Hospital prescription outflow (from
public hospitals into pharmaceutical retail channel) is speeding up. The separation of prescribing and
dispensing starts gaining results, and the pharmaceutical retail industry has ushered in a new incremental
market.
(3) The industry is witnessing higher concentration driven by industrial policies and capital. The
"Guiding Opinions of the Ministry of Commerce on Promoting the High-Quality Development of the
Pharmaceutical Distribution Industry During the 14th Five-Year Plan Period" envisions that (1) five to
ten specialized and diversified pharmaceutical retailers with a revenue of more than CN50 billion will
be nurtured by 2025; (2) the annual sales of the top 100 enterprises in the pharmaceutical retail industry
will account for more than 65% of the total market value of the pharmaceutical retail industry; and (3)
pharmaceutical retail chain stores will account for nearly 70% of all stores. These Guiding Opinions
provide strong policy support for increasing concentration in China’s pharmaceutical retail industry.
(4) As the Internet Plus action plan is rolled out and cross-cover integration models are applied,
pharmaceutical distribution channels and development models have been continuously improved and
innovated. The new pharmaceutical retail model, which develops both online and offline, is led by
offline physical pharmacies and centered on big data and member management, bringing new vitality to
the industry. Retail pharmacies are actively pursuing specialized, digital, and intelligent transformation
pathways, broadening their service offerings to include health check-ups, chronic disease self-testing,
pharmaceutical services, and chronic disease management. They provide consultation services and
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2023 Annual Report
follow-up visits for patients requiring specialty medications, gradually transitioning from a commodity
sales-centered model to a consumer service-centered approach.
(II). The Company’s development strategy
"√ Applicable" "□ Not applicable"
The Company will carry forward the corporate mission of “enhancing Chinese people’s physical
and mental health” and focus on the core strategies of “professional services, controllable and
strategically focused products, new retail, focused expansion, efficient operation system, talent and
culture”. It focuses on Central South, East, and North China, while expanding in the national market. It
seeks new development space through business model innovation and increasing upstream and
downstream channels. The Company continues to improve its core competitiveness through building its
brand image, enhancing professional services, establishing a system of differentiated and
strategically-focused products, and implementing digital technology innovation. The Company employs
new concepts and new technologies to serve customers and empower stores and employees.By
consolidating the basic system of human resources and optimizing its organizational structure,it
improves its business efficiency and organizational efficiency. Through constructing a new model of
omni-channel whole-lifecycle health management services, the Company makes more substantial
contributions to people’s physical and mental health, and becomes a choice pharmacy worthy of
customers’ trust and confidence.
(III). Business plan
"√ Applicable" "□ Not applicable"
1. Store network expansion plan
Under the strategic framework of "regional concentration and steady expansion," the Company
continues to refine and extend its strategies through the synchronized development of "new openings +
M&A + franchising". By leveraging iterative site selection mechanisms (commercial area positioning
method), customer flow testing systems, and sales forecast models, the Company persistently enhances
the precision of store locations, improving the efficiency and quality of site selection. This approach
deepens and broadens the store network's coverage, achieving a rational and efficient store network
layout and steadily increasing regional market share and concentration.
2. Innovating the Company’s business model
The Company will continue innovating the online-offline-integrated efficient operating system for
expansion, operations, merchandises, manpower, and IT. The Company will create an industry-leading
new retail e-commerce business model and supply chain system; build an omni-channel membership
operation system and private domain operation system that are warm, professional, accurate, and
efficient; strengthen the establishment of the direct-sales franchise system; and comprehensively
innovate in the new business model of healthcare products and services.
3. Creating efficient merchandise category and supply chain management systems
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2023 Annual Report
By establishing a robust national optimal engineering system, the Company will continue to
optimize the structure of product categories, and introduce new products, ultimately establishing a
controllable and strategically focused product selection system that covers all categories, and features
differentiation. It will establish a management system of merchandise-led promotion and strengthen the
mechanism to remove inferior merchandises. Focusing on the planning system of product varieties, it
will adopt the full-cycle management of products. In addition, it will enhance the merchandise fill rate
and reduce inventory turnover to build efficient and intelligent category and supply chain management
systems.
4. Creating a human resources supply system that can be replicated at scale
To meet the demand of human resources for the Company's rapid development, the Company will
promote the corporate culture in every aspect, integrate cultural orientation in appointment and
incentives, and guide employees to be self-motivated. By reconstructing the human resources foundation,
optimizing organizational structures, embracing digital drive, and refining the compensation incentive
system, it will open up career paths for its employees. Through cultivating senior talents and building
talent teams, enhancing talent density, and optimizing the ecosystem for talent development, it strives to
create a human resources supply system that can be replicated at scale.
5. Creating an efficient digital system for quality services
Based on the store service model, the Company will build a digital pharmaceutical online operation
model that integrates people, merchandises, and venues to create a high-quality service network and
improve work efficiency. By applying digital means in new store expansion, M&A, and franchising, the
Company will complete the digitalization of the business of Yifeng Pharmaceuticals and Hengxiutang.
This move will open up the upstream and downstream chains of the pharmaceutical industry, provide
digital support for the construction of the pharmaceutical industry network, create an intelligent and
efficient e-commerce operation and medical prescription system, improve operational efficiency, and
reduce fulfillment costs.
(IV). Potential risks
"√ Applicable" "□ Not applicable"
1. Industry policy risk
The development of the pharmaceutical retail industry is regulated and affected by national policies.
As China’s administration standards for the pharmaceutical retail industry have been raised year by year,
business operations are facing higher requirements. As the new healthcare reform goes deeper, policies
such as the public hospital reform, public hospital zero drug market-ups, the two-invoice system, BMI
payment methods, and the reform of personal BMI accounts have been rolled out in full swing. At the
same time, industry regulation is increasingly stringent. If the Company’s business management and
internal operation system cannot be promptly adjusted against regulatory and industry policies, the
Company is likely to face business risks.
Responses: The Company will closely monitor changes in national policies and enhance the
understanding of industry guidelines. It will plan and respond in a forward-looking way. It will seize the
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2023 Annual Report
opportunities and rise to the challenges from changes in the industry by (1) adjusting its business and
management model, (2) upgrading its internal standardized governance, and (3) promoting professional
services among employees and innovating in merchandises and the business model.
2. Drug safety risks
Drug safety encompasses all stages of drug production, sales, distribution, and use, with potential
risks arising at any stage. The procurement of drugs from numerous manufacturers and wholesalers
presents a risk if the Company fails to promptly detect quality or safety issues. This could result in
liabilities and adversely affect the Company's brand reputation.
Response measures include continuously enhancing and strictly enforcing the Company's inventory
management systems and strengthening GSP quality management standards. Through proactive testing
and other measures, the Company intensifies the quality assessment and management of suppliers,
particularly for newly introduced products. The Company's quality management department consistently
bolsters training, coaching, inspection, and evaluation of store employees.
3. Risk of more intense market competition
China’s pharmaceutical retail industry is characterized by a low market concentration, and the
industry is highly competitive. In particular, in recent years, large-scale pharmacy chains in the industry
have expanded their marketing network to other regions through organic expansion and M&A. The
industry has seen higher market concentration, and the competition among retail pharmacies has become
fiercer. Some large national and regional chains are emerging. They are growing rapidly on the back of
their advantages in capital, brand, and supply chain management. At the same time, with the continuous
development of primary-level healthcare institutions, consumer groups that shop most on the Internet
and mobile terminals are gradually coming into being. Competition among retailers is becoming
increasingly fierce. Through the years, the Company has accumulated numerous consumers, marketing
channels, and upstream suppliers, gained high brand visibility and reputation, and achieved a leading
edge in the markets of Central South, East, and North China. However, with market changes and
intensified competition, it is a new challenge for the Company to further expand its market share and
profitability in its dominant regions.
Responses: First, the Company will continue to strengthen its advantage: refined, systematic and
digital management. Secondly, the Company will accelerate the expansion of its store network and
focused development through “new openings + M&A + franchising”. At the same time, the Company
will embrace market changes and innovate its business model. It will seek development both online and
offline through the trials and promotion of the online-offline-integrated new retail model. It will pilot
initiatives such as developing the new business format of health pharmacy through health management
services and business extension, so as to continuously improve the Company’s overall competitive
strength and maintain and expand its regional competitive advantages.
4. Risk of rapid expansion affecting short-term performance
The Company’s business is still concentrated in Central South, East, and North China. It may face
the risks of saturated markets and intensified competition in the proposed expansion regions. In
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2023 Annual Report
proposed expansion regions that are unsaturated, it may face the risk of declining average store sales
revenue as the regions are remote or have a small market or a poor business environment. In the future,
the Company intends to implement the development strategy of “expanding across the country.” In
expanding its business beyond Central South, East, and North China, it may face challenges in brand
promotion, marketing, store location, merchandise procurement, logistics, and distribution. There is
uncertainty as to whether the above business expansion can achieve the expected results. Moreover, in
the early stage of investment, the Company’s expenses in this regard may grow faster than revenue,
which may have a negative impact on the Company’s short-term financial performance.
Responses: Firstly, the Company will consolidate its basic capabilities to continue to improve its
systematic, standardized, intelligent, and refined management system and to enhance its control and
replication ability in cross-regional operations. Secondly, the Company will continue to improve store
profitability by optimizing the merchandise structure, reducing procurement costs, and innovating in the
business model. At the same time, the Company will develop appropriate business expansion plans
based on the scale of development to balance business expansion and current earnings growth.
5. Risk of acquired stores’ business failing expectations
Against the general trend of M&A in the industry, the Company has developed the expansion
strategy of “new openings + M&A + franchising”. The Company’s previous M&A projects have all
achieved performance expectations. Nevertheless, the profitability of M&A projects is affected by
multiple factors such as the policy environment, market demand, and operations. In the event of
significant adverse changes in policies, changes in the purchasing habits of consumers, or major adverse
events that cannot be resisted in the future, the acquired stores’ business may fail expectations, resulting
a risk of goodwill impairment, which will adversely affect the Company’s performance and cause losses
to all shareholders.
Responses: First, the Company will strengthen the audit and assessment of the M&A targets, and
strictly select M&A targets that present excellent qualifications and complement with the Company in
the market. Secondly, the Company will establish a professional M&A integration team to standardize
and streamline M&A integration and operational management in later stages. In this way, it will
seamlessly integrate the M&A target with the Company’s team culture, management system, and supply
chain system, and ensure the continuous improvement of the operating performance of the acquired
stores.
6. Risk of dilution of human resources as a result of the Company’s rapid development
A professional management team is one of the core elements of the Company’s sustainable, healthy,
and efficient operation. In the course of rapid development, if the Company fails to meet the needs of its
future rapid development in talent introduction and personnel training, or if there are failures in talent
appointment, pooling, or management leading to a loss of talent, it will adversely affect the Company’s
future expansion and business operations.
Responses: The Company will intensify its efforts in recruitment, talent pooling, and personnel
training. It will co-host the Yifeng Pharmacy Class with universities and colleges to meet the demand for
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2023 Annual Report
frontline professional workers at stores. It will launch the Management Trainee program to meet the
demand for middle and senior managers for the rapid development of the Company. It will improve its
employee career development channels and equity incentive mechanism to retain and attract experts. It
will improve the training system and nurture professionals and people with compound capabilities in
pharmacy, marketing, information, logistics, and management to meet the demand for human resources
for the Company’s rapid development.
(V). Others
"□ Applicable" "√ Not applicable"
VII. Information not disclosed by the Company as per the guidelines due to non-applicability of
the guidelines or for special reasons such as state secrets or trade secrets and the reasons
thereof
"□ Applicable" "√ Not applicable"
Section IV. Corporate Governance
I. Overview of corporate governance
"√ Applicable" "□ Not applicable"
During the Reporting Period, the Company regulated its operations by continuously improving its
corporate governance structure and internal control system in strict accordance with the Company Law,
the Securities Law, the Code of Corporate Governance of Listed Companies, the Rules Governing the
Listing of Stocks on Shanghai Stock Exchange, and other laws, regulations, and rules. The Company’s
General Meeting of Shareholders, Board of Directors, and Board of Supervisors operated against
standards, and its directors, supervisors, and senior management performed their duties diligently.
1. Shareholders and the General Meeting of Shareholders. During the Reporting Period, the
Company held 4 General Meetings of Shareholders, where voting was performed both on site and online.
The General Meetings of Shareholders were convened and held in strict accordance with the Articles of
Association and the Rules of Procedure for General Meeting of Shareholders, ensuring all shareholders’
legitimate rights and interests, in particular, to ensure that minority shareholders enjoy equal status and
fully exercise their rights. The Company takes shareholders’ visits and inquiries seriously and provides
them convenient access to information about the Company’s operations.
2. Controlling shareholders and the listed Company. The Company and its controlling shareholders
maintain independence in terms of personnel, assets, finance, institutions, and business. The Company’s
Board of Directors, Board of Supervisors, and internal control institutions operate independently. The
controlling shareholders observe rules and have not intervened directly or indirectly in the Company’s
decision-making or operating activities beyond the General Meeting of Shareholders.
3. Directors and the Board of Directors. The Company’s Board of Directors consists of 9 directors,
including 3 independent directors. It comprises an Audit Committee, a Strategy and Sustainable
Development Committee, a Remuneration and Appraisal Committee, and a Nomination Committee, all
of whose members are directors. The Company’s Board of Directors strictly observes the Company Law,
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2023 Annual Report
the Articles of Association, and the Rules of Procedure of the Board of Directors. The directors attend
the meetings of the Board of Directors and the General Meetings of Shareholders attentively and
responsibly. They are familiar with relevant laws and regulations; understand directors’ rights,
obligations, and responsibilities; and fulfill their duties, giving full play to the key role of directors in the
Company’s operations and management. During the Reporting Period, thirteen meetings of the Board of
Directors were convened.
4. Supervisors and the Board of Supervisors. The Company’s Board of Supervisors consists of 3
supervisors, one of whom is an employee representative supervisor. The Company’s Board of
Supervisors strictly observes the Company Law, the Articles of Association, and the Rules of Procedure
of the Board of Supervisors. It conscientiously fulfills its duties, acts responsibly to the shareholders, and
supervises the Company’s day-to-day operations, the directors and senior management’s conduct, the
legal compliance of the Company’s finance. During the Reporting Period, ten meetings of the Board of
Supervisors were convened.
5. Performance appraisal and incentive and restraint mechanism. The Company has established an
effective performance appraisal system and improved it. The Company has also developed a
compensation and performance appraisal management system and a fair and transparent incentive and
restraint mechanism for directors, supervisors, and senior management.
6. Information disclosure and investor relations management. The Company has developed an
Information Disclosure Management System and an Investor Relations Management System, and has set
up the Securities and Investment Department pursuant to the Rules Governing the Listing of Stocks on
Shanghai Stock Exchange. It fulfills its information disclosure obligations in accordance with the law
and ensures that its disclosure is timely, accurate, and complete, thus practically safeguarding minority
shareholders’ interests. The Company continuously improves its investor relations management and
enhances its communication with investors through various online and offline methods, such as
conducting performance briefings, hosting visits to listed companies, receiving shareholder visits, and
responding to shareholder inquiries over the phone.
Presence of significant differences between corporate governance and the law, administrative regulations,
and the CSRC’s regulations on the governance of listed companies; if yes, please specify the reason(s)
"□ Applicable""√ Not applicable"
II. Specific measures taken by the Company’s controlling shareholder and actual controller to
ensure the independence of the Company’s assets, personnel, finances, institutions, and
business, as well as solutions for the impact on the Company’s independence, their progress,
and subsequent work plans
"√ Applicable" "□ Not applicable"
The Company’s controlling shareholder, Ningbo Meishan Free Trade Port Area Houxin Venture
Capital Partnership (Limited Partnership), and its actual controller, Gao Yi, fulfill their obligations in
strict accordance with the Securities Law and other applicable laws and regulations and maintain their
independence in terms of assets, personnel, finance, institutions, and business.
(I) Asset independence
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2023 Annual Report
The Company possesses a complete operational management system and logistics facilities for its
business operations, legally owns or has the right to use assets related to its business operations
including land, properties, and equipment, and has independent merchandise procurement, distribution,
and sales systems. The ownership of assets of the Company and its controlling shareholder, actual
controller, and other related parties is clear. The Company has full control and dominance over all of its
assets. The Company does not have any funds or assets tied up by its shareholders, actual controller, and
other companies under their control.
(II) Personnel independence
The Company’s directors, supervisors, and senior management are all elected or appointed in strict
accordance with the procedures set out in the Company Law and the Articles of Association of the
Company. The Company’s President, Vice President, Assistant President, Chief Financial Officer,
Secretary of the Board of Directors, and other senior management are all working full-time at the
Company (including its subsidiaries) and receiving remuneration. None of them (1) holds positions other
than director and supervisor at the Company’s controlling shareholder, actual controller, and other
companies under their control; (2) receives remuneration from the Company’s controlling shareholder,
actual controller, and other companies under their control; or (3) serves at other companies with the
same or similar business as the Company. The Company’s financial personnel do not hold any part-time
jobs at the Company’s controlling shareholder, actual controller, and other companies under their
control.
The Company has an independent workforce and has established an independent labor relations,
personnel, and wage management system. The Company has signed labor contracts with all employees.
Its Human Resources Department is independently responsible for employees’ employment, assessment,
rewards, and penalties. The Company is independent from its controlling shareholder, actual controller,
and other companies under their control in employees’ social insurance and compensation, and manages
them in separate books.
(III) Financial independence
The Company has set up an independent Financial Department with full-time financial staff and
established an independent financial accounting system. It makes financial decisions independently and
has a standardized financial accounting system and a financial management system for its subsidiaries.
The Company pays taxes independently and opens independent bank accounts in accordance with the
law, and does not mix taxes or share bank accounts with its controlling shareholder, actual controller,
and other companies under their control. The Company has not provided guarantees for its controlling
shareholder, actual controller, and other companies under their control, and has no funds tied up by its
controlling shareholder, actual controller, and other companies under their control by way of borrowing,
repayment of debts, advancement of funds, or otherwise.
(IV) Institutional independence
The Company has established a complete corporate governance structure comprising the General
Meeting of Shareholders, the Board of Directors, the Board of Supervisors, and the management. The
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2023 Annual Report
Company has established independent and complete internal management institutions in line with its
status and needs in operations and development. It has defined the functions of each institution and
developed respective internal management and control systems. These institutions exercise their powers
and functions independently in accordance with the Articles of Association and the internal management
system. There is no superior-subordinate relationship between them and the Company’s controlling
shareholder, actual controller, and other companies under their control and their functional departments,
nor is there any institutional confusion or co-location.
(V) Business independence
The Company has an independent and complete business system, with every segment, including
procurement, logistics, distribution, and sales, independent from its controlling shareholders, actual
controllers, and other companies under their control. There is no horizontal competition and unfair
connected transactions.
The Company’s controlling shareholder, actual controller, and other entities under their control engaging
in the same or similar business as the Company, as well as the impact of horizontal competition or
significant changes in such competition on the Company, resolutions taken and their progress, and
subsequent resolving plans
"□ Applicable" "√ Not applicable"
III. Overview of the General Meeting of Shareholders
Disclosure
Query Index on the Designated
Date of Date of Resolution of
Session Publishing Website of the
convening Resolution the Meeting
Resolution
Publishing
1st Extraordinary 2023-3-13 Notice on the Resolution of the 2023-3-14 Details to be
General Meeting 1st Extraordinary General found in
of Shareholders Meeting of Shareholders in “Details of the
in 2023 2023 of Yifeng Pharmacy General
(2023-012) on the website of Meeting of
the Shanghai Stock Exchange Shareholders”
Annual General 2023-5-18 Notice on the Resolution of the 2023-5-19 Details to be
Meeting of Annual General Meeting of found in
Shareholders for Shareholders for 2022 of “Details of the
2022 Yifeng Pharmacy (2023-042) General
on the website of the Shanghai Meeting of
Stock Exchange Shareholders”
2nd Extraordinary 2023-7-17 Notice on the Resolution of the 2023-7-18 Details to be
General Meeting 2nd Extraordinary General found in
of Shareholders Meeting of Shareholders in “Details of the
in 2023 2023 of Yifeng Pharmacy General
(2023-057) on the website of Meeting of
the Shanghai Stock Exchange Shareholders”
3rd Extraordinary 2023-9-12 Notice on the Resolution of the 2023-9-13 Details to be
General Meeting 3rd Extraordinary General found in
of Shareholders Meeting of Shareholders in “Details of the
in 2023 2023 of Yifeng Pharmacy General
(2023-081) on the website of Meeting of
the Shanghai Stock Exchange Shareholders”
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2023 Annual Report
Extraordinary General Meeting of Shareholders requested by preferred shareholders whose voting rights
have been restored
"□ Applicable" "√ Not applicable"
Details of the General Meeting of Shareholders
"√ Applicable" "□ Not applicable"
1. The Company held the 1st Extraordinary General Meeting of Shareholders in 2023 on March 13,
2023. The meeting was attended by 30 shareholders and proxies, who held a total of 495,461,732 voting
shares, accounting for 68.6515% of the total number of valid voting shares. At the meeting, 3 proposals
were passed: (1) Proposal on the Feasibility Report on Issuing Convertible Corporate Bonds to
Unspecified Recipients, (2) Proposal to Request the General Meeting of Shareholders to Authorize the
Board of Directors to Handle Specific Matters Related to the Issuance of Convertible Corporate Bonds
to Unspecified Recipients, and (3) Proposal on Changing the Business Scope and Amending the Articles
of Association. Details can be found in the Notice on the Resolution of the 1st Extraordinary General
Meeting of Shareholders in 2023 (2023-012) disclosed at the Shanghai Stock Exchange on March 14,
2023.
2. The Company held the Annual General Meeting of Shareholders for 2021 on May 18, 2023. The
meeting was attended by 36 shareholders and proxies, who held a total of 487,281,753 voting shares,
accounting for 67.5181% of the total number of valid voting shares. At the meeting, 11 proposals were
deliberated and passed: (1) the Proposal on the Report of the Board of Directors for Year 2022, (2) the
Proposal on the Report of the Board of Supervisors for Year 2022, (3) the Proposal on the Annual
Report for Year 2022 and Its Summary, (4) the Proposal on the Report on the Financial Accounts for
Year 2022, (5) the Proposal on the Special Report on the UoP from the Company’s Previous
Fund-Raising (as of December 31, 2022), (6) the Proposal on Profit Distribution and Capital Reserve
Capitalization Plans, (7) the Proposal on Renewing the Current Accounting Firm for Year 2023, (8) the
Proposal on Renewing the Current Accounting Firm for Year 2022, (9) the Proposal on Providing
Guarantees for Subsidiaries’ Application for Bank Credits, (10) the Proposal on Revising the Articles of
Association, and (11) the Proposal on the Assurance Report on the Company’s Weighted Average
Returns on Net Assets and Non-recurring Profits and Losses in the Last Three Years,. Details can be
found in the Notice on the Resolution of the Annual General Meeting of Shareholders for 2022
(2023-042) disclosed at the Shanghai Stock Exchange on May 19, 2023.
3. The Company held the 2nd Extraordinary General Meeting of Shareholders in 2023 on July 17,
2023. The meeting was attended by 30 shareholders and proxies, who held a total of 690,087,865 voting
shares, accounting for 68.2993% of the total number of valid voting shares. At the meeting, 1 proposal
was passed: the Proposal on Amending the Articles of Association and Changing the Business
Registration. Details can be found in the Notice on the Resolution of the 2nd Extraordinary General
Meeting of Shareholders in 2023 (2023-057) disclosed at the Shanghai Stock Exchange on July 18,
2023.
4. The Company held the 3rd Extraordinary General Meeting of Shareholders in 2023 on
September 12, 2023. The meeting was attended by 20 shareholders and proxies, who held a total of
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2023 Annual Report
683,198,743 voting shares, accounting for 67.6245% of the total number of valid voting shares. At the
meeting, 4 proposals were passed: (1) Proposal on Extending the Validity Period of the Plan to Issue
Convertible Corporate Bonds to Unspecified Recipients, (2) Proposal to Request the General Meeting of
Shareholders to Extend the Authorization for the Board of Directors to Handle Matters Related to the
Issuance of Convertible Corporate Bonds to Unspecified Recipients, (3) Proposal on the Special Report
on the UoP from the Company's Previous Fund-Raising (as of June 30, 2023), and (4) Proposal on
Providing Guarantee for Subsidiary's Bank Credit Applications. Details can be found in the Notice on
the Resolution of the 3rd Extraordinary General Meeting of Shareholders in 2023 (2023-081) disclosed at
the Shanghai Stock Exchange on September 13, 2023.
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2023 Annual Report
IV. Details of directors, supervisors, and senior management
(I). Changes in shareholdings and remuneration of incumbent and outgoing directors, supervisors, and senior management during the Reporting Period
"√ Applicable" "□ Not applicable"
Unit: Share
Total Pre-tax
Remuneratio Whether
Number
n Received remuneratio
of Shares Number of
from the n was
Starting Held at Shares Increase/decreas Reason for the
Gende Ag Term end Company obtained
Name Position Date of the Held at the e in Shares Increase/decreas
r e date During the from the
Office Beginning End of the During the Year e
Reporting affiliates of
of the Year
Period the
Year
(CN10,000 Company
)
Gao Yi Chairman and Male 56 2021-3-2 84,215,04 117,901,05 33,686,016 Profit 287.00 No
President 9 0 6 distribution and
conversion of
capital reserve
into equity
capital
Gao Director Male 53 2021-3-2 0 0 0 140.00 No
Feng 9
Gao Director and Male 56 2021-3-2 120,000 168,000 48,000 Profit 252.99 No
Youchen Executive 9 distribution and
g President conversion of
capital reserve
into equity
capital
Xu Xin Director Femal 57 2021-3-2 0 0 0 0 No
e 9
Chai Director Male 55 2021-3-2 0 0 0 20.00 No
Mingang 9
Ye Director Male 51 2021-3-2 0 0 0 20.00 No
Weitao 9
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2023 Annual Report
Yan Independent Male 61 2021-3-2 0 0 0 12.00 No
Aimin Director 9
Wang Independent Femal 45 2021-3-2 0 0 0 12.00 No
Hongxia Director e 9
Yi Independent Male 48 2021-3-2 0 0 0 12.00 No
Languan Director 9
g
Chen Bin Chairman of Male 58 2021-3-2 0 0 0 0 No
the Board of 9
Supervisors
Liu Yi Supervisor Male 51 2021-3-2 0 0 0 10.00 No
9
Zhang Employee Male 29 2021-3-2 1,430 2,002 572 Profit 38.44 No
Enbo Representativ 9 distribution and
e Supervisor conversion of
capital reserve
into equity
capital
Wang Vice Male 39 2021-3-2 252,900 354,060 101,160 Profit 182.65 No
Fei President 9 distribution and
conversion of
capital reserve
into equity
capital
Wan Vice Femal 51 2023-4-2 30,000 94,850 64,850 Increase in 135.97 No
Xuemei President e 6 holdings on the
secondary
market; profit
distribution and
conversion of
capital reserve
into equity
capital; share
incentive grant
Zhang Vice Male 43 2022-7-2 100,000 140,000 40,000 Profit 156.11 No
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2023 Annual Report
Jia President 1 distribution and
conversion of
capital reserve
into equity
capital
Wang Vice Male 49 2021-3-2 358,000 501,200 143,200 Profit 216.62 No
Yonghui President 9 distribution and
conversion of
capital reserve
into equity
capital
Zhang Vice Male 51 2023-3-3 0 67,500 67,500 Share Incentive 186.96 No
Zhaoxu President 0 Grant
Tian Wei Vice Male 42 2021-3-2 2024-1-2 93,490 98,286 4,796 Share reduction, 179.16 No
President 9 9 profit
(off-office) distribution and
conversion of
capital reserve
into equity
capital
Xiao Vice Male 67 2021-3-2 172,750 212,300 39,550 Share reduction, 122.07 No
Zaixiang President 9 profit
distribution and
conversion of
capital reserve
into equity
capital
Yan Jun Associate Male 42 2023-5-1 72,000 83,000 11,000 Profit 118.30 No
President 8 distribution and
conversion of
capital reserve
into equity
capital; equity
incentive grant
Hu Associate Femal 43 2024-1-2 - - - - No
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2023 Annual Report
Jianxia President e 9
Fan Wei Secretary of Male 43 2021-3-2 30,000 42,000 12,000 Profit 83.71 No
the Board of 9 distribution and
Directors conversion of
capital reserve
into equity
capital
Deng Chief Femal 44 2021-3-2 85,540 119,756 34,216 Profit 102.04 No
Jianqin Financial e 9 distribution and
Officer conversion of
capital reserve
into equity
capital
/ / / / / 85,531,15 119,784,01 34,252,860 / 2,288.02 /
Total
0 0
Note: The total pre-tax remuneration received from the Company during the reporting period is the total remuneration received by directors, supervisors, and senior
management in their office during the Reporting Period.
Name Career Autobiography
Gao Yi Mr. Gao Yi, born in October 1968, is of Chinese nationality and has no permanent residency overseas. He holds a master’s degree in Business
Administration. He is a deputy to the 14th People’s Congress of Hunan Province and the founder of Yifeng Pharmacy, and currently serves as
Chairman and President of the Company. He previously served as Chairman of the Company’s first, second, and third Boards of Directors. He
has been recognized as a Meritorious Figure of China’s 40-Year Reform and Opening Up of the Pharmaceutical Industry, the Most Influential
Person in China’s Pharmacies in the Past Decade, one of China’s Top 10 Leaders in Chain Pharmacies, one of the 9th Hunan’s Top 10 Economic
Achievers, and one of the 10 Most Trusted Entrepreneurs in Hunan’s Pharmaceutical Industry.
Gao Feng Mr. Gao Feng, born in September 1971, is of Chinese nationality and has no permanent residency overseas. He holds a college degree and the
title of pharmacist. He previously served as Director of the Company’s first, second, and third Boards of Directors. He currently serves as
General Manager of Hunan Fenggao Industrial Investment Co., Ltd., Hunan Yifeng Pharmaceutical Holding Co., Ltd., and Director of the
Company.
Gao Mr. Gao Youcheng, born in February 1968, is of Chinese nationality and has no permanent residency overseas. He holds a master’s degree in
Youcheng Business Administration. He previously served as Manager, Deputy Secretary of the company’s CPC Committee, and Executive Deputy General
Manager of the Shanghai branch of Changde Native Products Corporation; Manager of Food Procurement at the headquarters and Deputy
General Manager of the Shopping Plaza of Better Life Commercial Chain Share Co., Ltd. He previously served as Director of the Company’s
first, second, and third Boards of Directors. He currently serves as Director and Executive President of the Company.
Xu Xin Ms. Xu Xin, born in January 1967, is a permanent resident of the Hong Kong SAR, China. She holds a bachelor’s degree. She currently serves as
57 / 329
2023 Annual Report
Director of Capital Today Group (HK) Limited, Capital Today River Partners Limited, Capital Today River GenPar, Ltd., and the Company.
Chai Mr. Chai Mingang, born in February 1969, is a Chinese national with the right of abode abroad. He holds a bachelor’s Degree in Economics from
Mingang Fudan University, a master’s degree in International Relations from the University of California, and a master’s degree in Business
Administration from the University of Chicago. He previously served as Global Partner and Head of Human Resource Consulting, China, at
Towers Perrin; Head of Human Resource Consulting, China, at Towers Watson; and Executive Vice President of Yonghui Superstores. He
currently serves as Partner and President of Shanghai Kaijie Enterprise Management Consulting Co., Ltd. and Director of the Company.
Ye Weitao Mr. Ye Weitao, born in January 1973, is a Chinese national with no permanent residency overseas. He graduated from the Pharmaceutical
Chemistry Program of Shanghai Medical University and received his EMBA from China Europe International Business School. He previously
served as sales manager at the OTC Department and national government affairs manager at Bayer (China) Co., Ltd.; national government affairs
manager at Aventis; Director of Government Affairs, Assistant to the President, and Vice President of Marketing of the Antibiotics Division of
Shanghai Pharmaceuticals Holding; and Partner of Shanghai Jianxin Healthcare Investment Management Co., Ltd. He currently serves as Vice
President of Shanghai Lansheng Resources Co., Ltd., Managing Partner of Shanghai Lize Investment Management Co., Ltd., and Director of the
Company.
Yan Aimin Mr. Yan Aimin, born in January 1963, is of Chinese nationality and has no permanent residency overseas. He holds a doctorate degree in
Management. He is a professor and doctoral advisor at the Business School of Central South University and Director/Chief Expert of the Human
Resources Research Center (National CTTI Think Tank) of Central South University. He previously served as lecturer at the Department of
Management Science and Engineering of Central South University of Industry, associate professor at the Business School of Central South
University, Independent Director of Hunan Qianjin Pharmaceutical Co., Ltd., and External Director of Hunan Gold Corporation Limited. He
currently serves as Level-2 professor and doctoral advisor at the Business School of Central South University, Director/Chief Expert of the
Human Resources Research Center (National CTTI Think Tank) of Central South University; Chairman of National Studies Public Welfare Fund,
Independent Director of Hunan Matsui New Materials Co., Ltd., Shanghai Hajime Advanced Material Technology Co., Ltd., and Guizhou Ensure
Pharmaceutical Co., Ltd.; and Independent Director of the Company.
Wang Ms. Wang Hongxia, born in July 1979, is of Chinese nationality and has no permanent residency overseas. She has a doctor's degree and holds the
Hongxia title of lawyer. She currently serves as associate professor and doctoral advisor at Central South University; Independent Director of Zhuzhou
Sunte EP & Energy Saving Co., Ltd., Shaoyang Victor Hydraulics Co., Ltd., and Hunan Guangxin Technology Co., Ltd.; and Independent
Director of the Company.
Yi Languang Mr. Yi Languang, born in December 1976, is of Chinese nationality and has no permanent residency overseas. He holds a doctorate degree in
Management Science and Engineering and the title of senior accountant. He previously served as Financial Director of a subsidiary of SANY
Heavy Industry Co., Ltd., Deputy General Manager and Chief Financial Officer of Sinopharm Group Hunan Co., Ltd., and the Head of the
Financial Management Headquarters of Jointown Pharmaceutical Group Co., Ltd. He currently serves as Executive Director and General
Manager of Hunan Zehua Private Equity Fund Management Co., Ltd. and Independent Director of the Company.
Chen Bin Mr. Chen Bin, born in September 1966, is of Chinese nationality and has no permanent residency overseas. He holds a college degree and the title
of pharmacist. He previously served as Director of Western Medicine Operations Department, Head of the Western Medicine Business Unit, and
Manager of Shimen County Herb Company in Hunan Province; and Development Director of the Company. He currently serves as Chairman of
the Company’s Board of Supervisors.
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2023 Annual Report
Liu Yi Mr. Liu Yi, born in October 1973, is of Chinese nationality and has no permanent residency overseas. He holds a doctorate degree in Economics.
He currently serves as professor and master’s supervisor at the School of Finance and Statistics of Hunan University, Director of the Big Data
Finance Research Center of Hunan University, and Supervisor of the Company.
Zhang Enbo Mr. Zhang Enbo, born in October 1995, is of Chinese nationality and has no permanent residency overseas. He holds a bachelor’s degree. She
became a member of the company in July 2017 and currently serve as Deputy Director of Strategic Implementation Management Office and
Employee Representative Supervisor.
Wang Fei Mr. Wang Fei, born in August 1985, is of Chinese nationality and has no permanent residency overseas. He holds a bachelor’s degree. He
previously served as regional manager and senior regional manager of Procter & Gamble (China) Sales Co., Ltd. and assistant to the Chairman of
the Company. He currently serves as Vice President of the Company.
Wan Xuemei Ms. Wan Xuemei, born in December 1973, is of Chinese nationality and has no permanent residency overseas. She holds a bachelor’s degree. She
previously served as Head of Quality Management Department and Commodity Department, and Deputy General Manager of Operations of
Jiangsu Yifeng Pharmacy Chain Co., Ltd., and General Manager of Jiangsu Yifeng Pharmaceutical Co., Ltd. He currently serves as Vice President
of the Company.
Zhang Jia Mr. Zhang Jia, born in November 1981, is of Chinese nationality and has no permanent residency overseas. He received his bachelor’s degree in
Electrical Engineering from Wuhan University and his master’s degree in International Marketing from the University of Leeds in the U.K. He
previously served as price manager of Walmart China’s Purchasing Department, Director of the Purchasing Department and Head of Skincare
Purchasing of Watsons China, CMO of You Sheng Pin Jian (Nanjing) Co., Ltd., and Vice President of Supply Chain of Guangzhou Dora
Technology Co., Ltd. (Fordeal). He currently serves as Vice President of the Company.
Wang Mr. Wang Yonghui, born in November 1975, is of Chinese nationality and has no permanent residency overseas. He holds a master’s degree in
Yonghui Management Science and Engineering and is a Chartered Global Management Accountant (CGMA). He previously served as internal auditor at
the Bank of Guangzhou, Financial Director of ABB (China) Co., Ltd., Financial Manager of ABB Xiamen Low Voltage Equipment Co., Ltd.,
Financial Director of ABB LV Installation Materials Co., Ltd. Beijing, CFO of Beijing Leader Harvest Electric Technologies Co., Ltd., and Vice
President of Finance and Commerce of Joy Global (China) Investment Co., Ltd. He currently serves as Vice President of the Company.
Zhang Mr. Zhang Zhaoxu, born in August 1973, is of Chinese nationality and has no permanent residency overseas. He holds a master’s degree in
Zhaoxu Management. He previously served as Director of Human Resources of Consumer Health Products Business in China at GSK CI, General
Manager of Human Resources of Urban Development Business Group of China Fortune Land Development Co.,Ltd., Vice President of Human
Resources of Inner Mongolia Mengniu Dairy (Group) Co., Ltd., and General Manager of Ruilei Hospital Management (Beijing) Co., Ltd. He
currently serves as Vice President of the Company.
Xiao Mr. Xiao Zaixiang, born in January 1957, is of Chinese nationality and has no permanent residency overseas. He holds a master’s degree and is a
Zaixiang senior engineer. He previously served as Director of the Security Division, Deputy Director of the Construction Department, Director of the
Property Management Department, Director of the Administrative Business Department, and Vice Chairman of the Labor Union of the Changsha
Municipal Bureau of Telecommunications; General Manager of Changsha Xinda Real Estate Development Co., Ltd.; Deputy Director of the
Security Division of the Hunan Provincial Post Bureau; Deputy General Manager of Hunan Xiangyou Jindun Anti Theft Alarm Network
Monitoring Co., Ltd.; and President of Hunan Copote Science Technology Co., Ltd. He currently serves as Vice President of the Company.
Yan Jun Mr. Yan Jun, born in April 1982, is of Chinese nationality and has no permanent residency overseas. He holds a bachelor’s degree in Computer
59 / 329
2023 Annual Report
Software. He previously served as a software development engineer of Augmentum, R&D Supervisor of Shanda Network, Supervisor of Quality
Control of Dianping.com, partner of Wuxi Otaku Game, Manager of Front-end Product, Manager of E-commerce Business, and Director of
Member Center of Kidswant Children Products Co., Ltd., as well as Director of Operation Center and Director of R&D Center of Haoxiangjia
Comfortable Intelligent Household Co., Ltd. He currently serves as General Manager of New Retail Business Group, Head of Digital Center, and
Associate President of the Company.
Hu Jianxia Ms. Hu Jianxia, born in December 1981, is of Chinese nationality, and has no permanent residency overseas. She holds a Bachelor's degree in
Pharmacy at Southwest University and is a pharmacist-in-charge. She previously served as Store Manager, Regional Manager, Department
Manager, Deputy General Manager of Operations, and Director of National Operations of the Company. She currently serves as Associate
President, and Head of Operations of National Regions of the Company.
Fan Wei Mr. Fan Wei, born in July 1981, is of Chinese nationality and has no permanent residency overseas. He holds a master’s degree. He previously
served as investor relations manager of ZTE Corporation, Director of the Investor Relations Office of Zoomlion Heavy Industry Science &
Technology Co., Ltd., machinery industry analyst of Zhongtai Securities Co., Ltd., and Deputy Director of Investor Relations of S.F. Holding Co.,
Ltd. He currently serves as Secretary of the Board of Directors of the Company.
Deng Jianqin Ms. Deng Jianqin, born in September 1980, is of Chinese nationality and has no permanent residency overseas. She holds a master’s degree. She
previously served as consultant, senior consultant, and manager at PricewaterhouseCoopers’ Beijing office; Head of Internal Control, China, at
Laureate Education, Inc.; Director of Internal Control and Chairwoman of the Board of Supervisors of Hunan International Economics
University, which is indirectly controlled by Laureate Education, Inc. She currently serves as CFO of the Company.
Other details
"□ Applicable""√ Not applicable"
60 / 329
2023 Annual Report
(II). Office of incumbent and outgoing directors, supervisors, and senior management during the
Reporting Period
1. Situation of work performance in shareholder entity
"□ Applicable""√ Not applicable"
2. Situation of work performance in other entities
"√ Applicable" "□ Not applicable"
Starting
Position held in Term end
Name Entity Date of
other entities date
Office
Gao Yi Hunan Fenggao Industrial Executive 2016-9-17
Investment Co., Ltd. Director
Gao Feng Hunan Fenggao Industrial General 2016-9-17
Investment Co., Ltd. Manager
Hunan Yaqi Hotel Management General
2021-6-24
Co., Ltd. Manager
Xu Xin Capital Today Group (HK) Limited Director 2022-12
Capital Today China Growth
Director 2005-11
Management, LTD.
Capital Today Partners Limited Director 2005-05
Capital Today China Growth
Director 2005-11 2024-02
GenPar, LTD.
Capital Today China Growth
Director 2020-01
Management II limited
CTG GENPAR II, LTD. Director 2009-12
CTG Evergreen Management
Director 2020-01
Limited
Capital Today Evergreen Genpar,
Director 2014-10
Ltd.
Capital Today River Management
Director 2018-10
Limited
Capital Today River Partner
Director 2018-10
Limited
Capital Today River GenPar, Ltd. Director 2018-09
WeEat Inc Director 2019-02
Xingsheng Preference Electronic
Director 2018-11
Business Limited
Double FS Inc. Director 2020-07
XYZ ROBOTICS GLOBAL INC. Director 2021-07
InterFocus Cayman Ltd. Director 2021-04
Yi Pin Sheng Xian (Cayman)
Director 2021-09
Limited
Shanghai Gaussian Automation
Director 2021-07
Technology Development Co., Ltd.
Dongguan Hairou Intelligent
Director 2021-08
Technology Limited
Shanghai Dr.Cheese Brand
Director 2022-01
Management Co., Ltd.
Shanghai Wanxiangheyi Cosmetics
Director 2022-02
Co., Ltd.
Honorary
Trustee of the
Nanjing University 2010
Board of
Trustees
China Venture Capital and Private Director 2006
61 / 329
2023 Annual Report
Equity Association
Chai Mingang Shanghai Kaijie Enterprise
President 2018-11-01
Management Consulting Co., Ltd.
Independent
Glodon Company Limited 2020-4-22
Director
Ye Weitao Shanghai Lize Investment Executive
2015-05-19
Management Co., Ltd. Director
Shanghai Lansheng Resources Co.,
Vice President 2016-10-01
Ltd.
Shanghai Shenyue Medical
Supervisor 2016-11-01
Instrument Co., Ltd.
Shanghai Jianxin Healthcare
Director 2020-08-25
Investment Management Co., Ltd.
Beijing Lidakang Technology Co.,
Director 2020-10-27
Ltd.
Shaanxi Kanghui Pharmaceutical Independent
2021-04-16
Co., Ltd. Director
Minova Pharmaceuticals Co., Ltd. Director 2022-09-29
Kunshan Yiteng Medical
Director 2023-03
Technology Co., Ltd.
Suzhou Rongsheng Medical
Director 2023-04
Technology Co., Ltd.
Shanghai Lize Investment Executive
2015-05-19
Management Co., Ltd. Director
Shanghai Lansheng Resources Co.,
Vice President 2016-10-01
Ltd.
Shanghai Shenyue Medical
Supervisor 2016-11-01
Instrument Co., Ltd.
Yan Aimin Level-2
professor and
Central South University 2008-09-01
doctoral
advisor
Hunan Matsui New Materials Co., Independent
2021-01-18
Ltd. Director
Shanghai Hajime Advanced Independent
2022-06-27
Material Technology Co., Ltd. Director
Guizhou Ensure Pharmaceutical Independent
2021-12-17
Co., Ltd. Director
Hunan Siase Electrician Industry
Director 2010-9-15
Co., Ltd.
Hunan Artec New Material Co.,
Director 2018-9-18
Ltd.
Wang Hongxia Associate
Central South University 2010-09-01
professor
Hunan Guangxin Technology Co., Independent
2020-08-04
Ltd. Director
Yi Languang Executive
Hunan Zehua Jingke Consulting Director and
2017-04-01
Co., Ltd. General
Manager
Executive
Hunan Zehua Private Equity Fund Director and
2017-04-01
Management Co., Ltd. General
Manager
Executive
Zehua Smart Technology Co., Ltd. 2019-5-15
Director and
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2023 Annual Report
General
Manager
Liu Yi Hunan University Professor 2000-04-20
Notes on the None
office at other
entities
(III). Remuneration of directors, supervisors, and senior management
"√ Applicable" "□ Not applicable"
Decision-making process for the The Remuneration and Appraisal Committee of the Company’s
remuneration of directors, Board of Directors is the management body to assess and determine
supervisors, and senior the remuneration of directors, supervisors, and senior management.
management The remuneration packages for directors and supervisors formulated
by the Remuneration and Appraisal Committee will be submitted to
the General Meeting of Shareholders for approval after being
approved by the Board of Directors. The remuneration packages for
senior management will be submitted directly to the Company’s
Board of Directors for approval.
Whether I should be evasive Yes
when the directors are discussing
my remuneration at the board of
directors
The detailed recommendations The remuneration/allowances of the Company's directors and
of Remuneration and Appraisal supervisors, as well as the remuneration of senior management, will
Committee or special meetings be deliberated and approved by the Company's Remuneration and
of independent directors on the Appraisal Committee.
remuneration of directors,
supervisors, and senior
management.
Basis of the remuneration of The remuneration/allowances of the Company's directors and
directors, supervisors, and senior supervisors will be approved by the shareholders' meeting: 1.
management Directors holding management positions in the Company will
receive remuneration based on their management positions without
receiving additional remuneration. The allowance standard for
independent directors is CN 120,000 each year (pre-tax) per
person, while the compensation standard for other directors
CN 200,000 each year (pre-tax) per person; 2. Supervisors serving
in the Company will have their remuneration standards determined
based on their specific titles and positions held in the Company, and
will no longer receive remuneration for their supervisory positions;
other supervisors will receive a supervisor allowance of
CN 100,000 per person each year.
The remuneration of senior management is deliberated and approved
by the Company's board of directors: The senior management is
based on an annual salary system, with the annual salary linked to
their responsibilities, risks, and business performance. 1. The
remuneration structure consists of basic annual salary and annual
performance salary. 2. The annual basic salary is determined based
on the grade, job responsibilities, and ability. It is proposed by the
Remuneration and Appraisal Committee of the Board of Directors to
the Company’s Board of Directors. 3. The annual performance
salary is determined based on the results and grades of an
assessment encompassing the annual salary standards, the
Company’s performance fulfillment, and the job performance
assessment. The assessment consists of composite indicators,
including the fulfillment of the Company’s business objectives,
63 / 329
2023 Annual Report
work safety, standardized operations, professional ethics,
confidentiality provisions, and corporate culture construction.
Actual payment of the Payment has been made as per relevant provisions and systems.
remuneration of directors,
supervisors, and senior
management
Total remuneration actually CN 22,880,200
received by all directors,
supervisors, and senior
management as of the end of the
Reporting Period
(IV). Changes in directors, supervisors and senior management officers of the Company
"√ Applicable" "□ Not applicable"
Name Position Change Reason for Change
Zhang Zhaoxu Vice President Appointment Newly appointed
Wan Xuemei Vice President Appointment Newly appointed
Tian Wei Vice President Off-office Resigned from the position of Vice
President due to personal reasons.
Yan Jun Associate Appointment Newly appointed
President
Hu Jianxia Associate Appointment Newly appointed
President
(V). Details of penalties imposed by securities regulators in the past three years
"□ Applicable""√ Not applicable"
(VI). Others
"□ Applicable" "√ Not applicable"
V. Meetings of the Board of Directors held during the Reporting Period
Date of
Session Resolution of the Meeting
convening
nd
22 meeting of the 2/23/2023 Please refer to the Announcement of the 22nd Meeting of the 4th
4th Board of Board of Directors (2023-003) disclosed on February 24, 2023 for
Directors details
23rd meeting of the 3/30/2023 Please refer to the Announcement of the 23rd Meeting of the 4th
4th Board of Board of Directors disclosed on March 31, 2023 (2023-013) for
Directors details
24 th meeting of the 4/26/2023 Please refer to the Announcement of the 24th Meeting of the 4th
th
4 Board of Board of Directors disclosed on April 28, 2023 (2023-020) for
Directors details
25th meeting of the 2023-5-8 Please refer to the Announcement of the 25th Meeting of the 4th
th
4 Board of Board of Directors (2023-037) disclosed on May 9, 2023 for
Directors details
26th meeting of the 2023-5-18 Please refer to the Announcement of the 26th Meeting of the 4th
th
4 Board of Board of Directors disclosed on May 19, 2023 (2023-044) for
Directors details
27th meeting of the 2023-6-29 Please refer to the Announcement of the 27th Meeting of the 4th
th
4 Board of Board of Directors disclosed on June 30, 2023 (2023-049) for
Directors details
28th meeting of the 2023-7-13 Please refer to the Announcement of the 28th Meeting of the 4th
4th Board of Board of Directors disclosed on July 15, 2023 (2023-056) for
Directors details
64 / 329
2023 Annual Report
29th meeting of the 2023-8-14 Please refer to the Announcement of the 29th Meeting of the 4th
4th Board of Board of Directors disclosed on August 15, 2023 (2023-062) for
Directors details
30th meeting of the 2023-8-27 Please refer to the Announcement of the 30th Meeting of the 4th
4th Board of Board of Directors disclosed on August 28, 2023 (2023-067) for
Directors details
31st meeting of the 2023-8-29 Please refer to the Announcement of the 31st Meeting of the 4th
4th Board of Board of Directors (2023-071) disclosed on August 30, 2023 for
Directors details
32nd meeting of the 2023-10-17 Please refer to the Announcement of the 32nd Meeting of the 4th
4th Board of Board of Directors disclosed on October 18, 2023 (2023-087) for
Directors details
33rd meeting of the 2023-10-30 Please refer to the Announcement of the 33rd Meeting of the 4th
4th Board of Board of Directors disclosed on October 31, 2023 (2023-093) for
Directors details
34th meeting of the 2023-11-9 Please refer to the Announcement of the 34th Meeting of the 4th
4th Board of Board of Directors disclosed on November 10, 2023 (2023-100)
Directors for details
VI. Performance of duties by directors
(I). Attendance of directors to the Board of Directors and the General Meeting of Shareholders
Attendanc
e at the
General
Attendance at the Board of Directors Meeting
of
Sharehold
ers
Numbe
r of the
Independe Board
Director
nt of
Name Not Number of
Director Directo
Attending General
rs Session Session Session Absen
in Person Meetings
Meetin Attend Attended by Attend ce
for Two of
gs ed in Corresponde ed by Sessio
Consecuti Sharehold
Requir Person nce Proxy n
ve ers
ed to
Sessions Attended
Attend
During
the
Year
Gao Yi No 13 13 6 0 0 No 4
Gao No 13 13 6 0 0 No 4
Feng
Gao No 13 13 6 0 0 No 4
Youche
ng
Xu Xin No 13 13 13 0 0 No 4
Chai No 13 13 12 0 0
Mingan No 4
g
Ye No 13 13 13 0 0 No 4
Weitao
65 / 329
2023 Annual Report
Yan No 13 13 12 0 0 No 4
Aimin
Wang No 13 13 12 0 0 No 4
Hongxi
a
Yi No 13 13 12 0 0 No 4
Langua
ng
Explanation for Not Attending in Person for Two Consecutive Sessions
"□ Applicable""√ Not applicable"
Number of the Board of Directors meetings during 13
the year
Among them, number of site meetings 0
Number of meetings via correspondence 6
Number of site meetings combined with 7
correspondence
(II). Directors’ dissent on the Company’s matters
"□ Applicable""√ Not applicable"
(III). Others
"□ Applicable" "√ Not applicable"
VII. Specialized committees under the Board of Directors
"√ Applicable" "□ Not applicable"
(I). Members of specialized committees under the Board of Directors
Type of committee Name of member
Audit Committee Yi Languang, Wang Hongxia, and Chai Mingang
Nominating Committee Wang Hongxia, Gao Yi, and Yi Languang
Remuneration and Appraisal
Yan Aiming, Gao Yi, and Yi Languang
Committee
Strategy and Sustainable
Gao Yi, Xu Xin, and Yan Aimin
Development Committee
(II). Three meetings convened by the Audit Committee during the Reporting Period
Other
Date of Important comments and suggestions
Conference content performance
convening proposed
of duties
2023-4-26 Deliberation of the 1、 Opinions on deliberation of the 2022 /
proposals related to the Annual Report and the 2023 Q1 Report: The
2022 Annual Report and preparation and review procedures of the
the 2023 Q1 Report, etc. Company's 2022 Annual Report and the
2023 Q1 Report comply with relevant laws,
regulations, articles of association, and
company rules and regulations; the content
and format of the report is consistent with
the regulations of China Securities
Regulatory Commission and Shanghai Stock
Exchange, and the content of the report is
authentic, accurate, and complete.
2、 Opinions on deliberation of the renewal
of accounting firms: Pan-China Certified
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2023 Annual Report
Public Accountants (special general
partnership) has been committed to
independent auditing standards and fulfilled
the responsibilities and obligations agreed
upon by both parties in the process of
auditing the financial reports and internal
controls of the Company. Pan-China
Certified Public Accountants (special general
partnership) complies with the relevant
regulations of China Securities Regulatory
Commission in terms of securities business
qualifications, and is able to independently,
objectively, fairly, and timely complete
various audit services agreed upon with the
Company.
2023-8-28 Deliberation of the The preparation and review procedures of /
proposals related to the the Company's 2023 Semi-annual Report
2023 Semi-annual Report, comply with relevant laws, regulations,
etc. articles of association, and company rules
and regulations; the content and format of
the report is consistent with the regulations
of China Securities Regulatory Commission
and Shanghai Stock Exchange, and the
content of the report is authentic, accurate,
and complete.
2023-10-30 Deliberation of the The preparation and review procedures of /
proposals related to the the Company's 2023 Q3 Report comply with
2023 Q3 Report, etc. relevant laws, regulations, articles of
association, and company rules and
regulations; the content and format of the
report is consistent with the regulations of
China Securities Regulatory Commission
and Shanghai Stock Exchange, and the
content of the report is authentic, accurate,
and complete.
2023-12-29 Deliberation of theIn-depth discussions were held on the 2023 /
proposals related to the audit plan and work priorities
audit plan in the 2023
Annual Report
(III).Three meetings convened by the Nominating Committee during the Reporting Period
Other
Date of Important comments and suggestions
Conference content performance
convening proposed
of duties
2023-3-30 Deliberation of the The personal resume, educational /
proposal for appointing background, and work experience of the
senior management senior management personnel to be
appointed, the corresponding knowledge
level and management capability,
qualification as a senior management
personnel in the Company.
2023-4-26 Deliberation of the The personal resume, educational /
proposals of the background, and work experience of the
Nominating Committee on senior management personnel to be
the work report in 2022 and appointed, the corresponding knowledge
recruitment of senior level and management capability,
management personnel qualification as a senior management
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2023 Annual Report
personnel in the Company.
2023-5-18 Deliberation of the The personal resume, educational /
proposal for appointing background, and work experience of the
senior management senior management personnel to be
appointed, the corresponding knowledge
level and management capability,
qualification as a senior management
personnel in the Company.
(IV). The Remuneration and Appraisal Committee held a meeting during the Reporting Period
Other
Date of Important comments and suggestions
Conference content performance
convening proposed
of duties
2023-4-26 Deliberation of the Opinions on deliberation of the remuneration /
proposals of Remuneration of senior management for the year 2022: The
and Appraisal Committee remuneration of senior management for the
on the work report in 2022 year 2022 complies with the relevant
and remuneration of senior remuneration policies and assessment
management for the Year standards of the Company, and is consistent
2022 with the actual conditions of the Company.
(V). One meeting convened by the Strategy Committee during the Reporting Period
Other
Date of Important comments and suggestions
Conference content performance
convening proposed
of duties
2023-4-26 Proposal on Deliberating / /
the Work Report of the
Strategy Committee for
2022
(VI). Dissent on relevant matters
"□ Applicable" "√ Not applicable"
VIII. Description of risks identified by the Board of Supervisors
"□ Applicable""√ Not applicable"
The Board of Supervisors had no objection to the supervision matters during the Reporting Period.
IX. The staff of the parent company and main subsidiaries at the end of the Reporting Period
(I). Staff
Number of on-the-job employees of the parent
9,920
company
Number of on-the-job employees of the main
29,732
subsidiaries
Total number of on-the-job employees 39,652
Number of retired employees for whom the parent
company and main subsidiaries need to bear 1,670
expenses
Specialty composition
Category of specialties Number of employees of specialties
Manufacturing personnel 254
Sales personnel 33,751
Technician 340
Financial personnel 423
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2023 Annual Report
Administrative personnel 3,470
Distribution personnel 1,414
Total 39,652
Educational level
Educational level category Number of employees
Doctorate degree 2
Master degree 108
Undergraduate 5,524
College degree 17,693
Technical secondary school 10,315
Others 6,010
Total 39,652
(II). Remuneration policy
"√ Applicable" "□ Not applicable"
The remuneration of the staff includes wages, bonuses, allowances, and five insurances & one fund
(endowment insurance, government BMI, unemployment insurance, industrial injury insurance,
maternity insurance and housing fund). The Company determines the total amount of remuneration
based on comprehensive factors such as development strategies, annual operation objectives, the ratio of
human resource cost to sales, the human resource market, as well as regional and industry salary levels.
At the end of each year, the Human Resources Department and the Finance Department jointly
formulate the annual total remuneration plan for the next year based on the staffing and corresponding
remuneration standards, as well as the KPI indicator. After preliminary review by the Director of Human
Resources and the Chief Financial Officer, it is submitted for review to the Vice President and
implemented upon approval by the President.
(III). Training plan
"√ Applicable" "□ Not applicable"
The Company focuses on building a talent team, fostering professional capabilities, and promoting
corporate culture. The Company also aims to build an outstanding team with a strong sense of mission,
belonging, and competency. A comprehensive system for talent planning, assessment, training,
mentoring, and talent career development has been put in place. By establishing a corporate university
and a layered training performance evaluation system, the Company ensures that all employees care
about and participate in training. Through ongoing improvement of training materials, credit-based
assessments, as well as combination of on-line and off-line training, the Company has comprehensively
implemented the training activities, thus effectively enhancing the skills and capabilities of all
employees and the soft power of the enterprise.
(IV). Labor outsourcing
"□ Applicable""√ Not applicable"
X. The profit distribution plan or the capital reserve capitalization plan
(I). Formulation, implementation, or adjustment of the cash dividend policy
"√ Applicable" "□ Not applicable"
1. Formulation and adjustment of the cash dividend policy
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2023 Annual Report
During the Reporting Period, the cash dividend policy remained unchanged. Details regarding the
profit distribution policy can be found in the relevant provisions of the Articles of Association. During
the Reporting Period, the Company strictly implemented the profit distribution plan in accordance with
the dividend policy. To further plan the profit distribution and matters related to cash dividends, the
Company further refines the decision-making procedures and mechanisms for profit distribution in the
Articles of Association. The aim is to reward shareholders and guide them to develop an awareness of
long-term and rational investment.
2. Execution of the cash dividend policy
During the Reporting Period, in accordance with the resolutions of the 2022 Annual General
Meeting of Shareholders held on May 18, 2023, the Articles of Association, and relevant regulations
such as the Regulatory Guidelines for Listed Companies No. 3 - Cash Dividends of Listed Companies
issued by the CSRC, the Company implemented the profit distribution plan for 2022. The Company
distributed profits based on the total share capital registered on the registration date for implementation
of the equity distribution in 2022. The Company distributed a cash dividend of CN0.40 (tax included)
to all shareholders per share. Additionally, the Company intends to distribute 0.40 shares per share held
by all shareholders via capital conversion, without offering bonus shares. A total of CN288,681,972.00
in cash dividends were distributed, with 288,681,972 shares converted.
3. Profit distribution in 2023
The Proposal on Profit Distribution in 2023 was reviewed and approved at the 39th meeting of the
4th Board of Directors on April 26, 2024. The Company plans to distribute a cash dividend of CN0.50
per share (tax included) to all shareholders, based on the total share capital as recorded on the equity
distribution date of 2023. Additionally, it will increase the share capital by 0.20 shares per share from
the capital reserve, without issuing any bonus shares. Should there be any changes in the Company's
total share capital between the date the Board approves this proposal and the equity distribution share
registration date, due to events such as share repurchases and cancellations under the stock incentive
plan, the Company will maintain the unchanged per-share distribution (bonus issue) ratio and
accordingly adjust the total distribution (bonus issue) amount. The proposal complies with the relevant
provisions of the Articles of Association, with clear and unambiguous dividend standards and
proportions. The proposal still requires approval at the 2023 Annual General Meeting of Shareholders.
In the process of formulating the 2023 profit distribution plan, the Company communicated with
minority shareholders through means such as answering calls from investors, public email, and online
platforms. Minority shareholders had sufficient opportunities to express their opinions and demands, and
their legitimate rights and interests are fully protected.
(II). Special explanation on cash dividend policy
"√ Applicable" "□ Not applicable"
Whether to comply with the provisions of the Articles of Association or the √Yes "□ No"
requirements of the general meeting’s resolutions
Whether the dividend criteria and ratio are clear and unambiguous √Yes "□ No"
Whether the relevant decision-making procedures and mechanisms are complete √Yes "□ No"
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2023 Annual Report
Whether the independent directors perform their duties and fulfill their due roles √Yes "□ No"
Whether the minority shareholders have the opportunity to fully express their √Yes "□ No"
opinions and demands, and whether their legitimate rights and interests are
adequately protected
(III). If the Company is profitable during the Reporting Period and the parent company has
positive profit available for distribution to shareholders but no cash dividend distribution
plan has been proposed, the Company shall disclose in detail the reasons as well as the
purpose and plan for the use of undistributed profits.
"□ Applicable""√ Not applicable"
(IV). Plan of profit distribution and conversion of capital reserves into share capital during the
Reporting Period
"√ Applicable" "□ Not applicable"
Unit: CN Currency: CNY
Bonus shares distributed per 10 shares (share) 0
Dividends per 10 shares (CN) (tax included) 5.00
Conversion amount per 10 shares (share) 2.00
Cash dividend amount (tax included) 505,289,898.50
Net profit attributable to ordinary shareholders of
the listed Company in the consolidated financial 1,411,985,024.41
statements for the year of distribution
Percentage of the net profit attributable to ordinary
shareholders of the listed Company in the 35.79
consolidated financial statements (%)
Amount of cash dividends for share repurchases in
0
cash
Total dividend amount (tax included) 505,289,898.50
Percentage of the total dividend amount to the net
profit attributable to ordinary shareholders of the
35.79
listed Company in the consolidated financial
statements (%)
XI. Implementation and impact of the Company’s equity incentive plans, employee stock
ownership plans, or other employee incentive measures
(I). The relevant incentive matters disclosed in interim announcements without further
developments or changes
"√ Applicable" "□ Not applicable"
Item description Search index
On August 29, 2023, the Proposal on the Reservation Grant For details, please refer to the
of Certain Equity to Restricted Stock Incentive Recipients Announcement on Granting Incentive
in 2022 was reviewed and approved at the 31st meetings of Recipients Reserved Certain Equity
the 4th Board of Directors and the 26th meetings of the 4th under the Restricted Share Incentive Plan
Board of Supervisors. After confirming that the conditions for 2022 (2023-075) )disclosed on
for the reservation grant under the incentive plan have been August 30,2023 and the Announcement
met, the Company granted a total of 402,165 restricted on the Results of Reservation Granting
shares at a price of CN18.95 per share on August 30, under the Restricted Share Incentive Plan
2023. Finally, 390,015 shares were granted to 39 incentive for 2022 (2023-092) disclosed on
recipients, with a registration date of October 25, 2023. October 27, 2023.
On October 17, 2023, the Proposal on the Accomplishment For details, please refer to the
of the Conditions for the Release of Restricted Shares for Announcement on the Accomplishment
the First Release Period of the First Grant under the of the Conditions for the Release of
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2023 Annual Report
Restricted Share Incentive Plan for 2022 was reviewed and Restricted Shares for the First Release
approved at the 32nd meeting of the 4th Board of Directors Period of the First Grant under the
and the 27th meeting of the 4th Board of Supervisors. The Restricted Share Incentive Plan for 2022
Company agreed to unlock a portion of the restricted and Listing of Shares (2023-089)
shares granted to 220 incentive recipients for the first time, disclosed on October 18, 2023
involving 2,062,480 shares (including the annual equity
distribution in 2022, with 4 shares distributed per 10 shares
via capital conversion).
(II). Incentives that have not been disclosed in interim announcements or have further
developments
Equity incentive
"□ Applicable""√ Not applicable"
Other explanations
"□ Applicable" "√ Not applicable"
Employee stock ownership plan
"□ Applicable" "√ Not applicable"
Other incentive measures
"□ Applicable" "√ Not applicable"
(III).Equity incentives granted to directors and senior management during the Reporting Period
"√ Applicable" "□ Not applicable"
Unit: Share
Number
Number Number
of
of of Market
restricted
restricted Grant restricted price at
shares
shares price of shares the end of
newly Locked Unlocked
Name Position held at restricted held at the
granted shares shares
the shares the end of Reporting
during
beginning (CN the Period
the
of the Reporting (CN
Reporting
year Period
Period
Wan Vice 42,000 47,250 18.95 21,000 68,250 40.04
68,250
Xuemei President
Zhang Vice 0 67,500 18.95 0 67,500 40.04
67,500
Zhaoxu President
Yan Associate 56,000 27,000 18.95 28,000 55,000 40.04
55,000
Jun President
Total / 98,000 141,750 / 49,000 190,750 190,750 /
Note: The number of restricted shares held at the beginning of the year is the number after the profit
distribution of 0.4 shares per share via conversion.
(IV). Evaluation mechanism for senior management during the Reporting Period, as well as the
establishment and implementation of incentive mechanisms
"√ Applicable" "□ Not applicable"
The Company has established and continuously improved the evaluation mechanism for senior
management. The Company has formulated the Management System for the Compensation and
Performance Appraisal of Directors, Supervisors, and Senior Management. The remuneration of senior
management is determined according to the following criteria:
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2023 Annual Report
(1) The remuneration is based on an annual salary system, with the annual salary linked to their
responsibilities, risks, and business performance.
(2) The remuneration structure consists of basic annual salary and annual performance salary.
(3) The annual basic salary is determined based on the grade, job responsibilities, and ability. It is
proposed by the Remuneration and Appraisal Committee of the Board of Directors to the Company’s
Board of Directors.
(4) The annual performance salary is determined based on the results and grades of an assessment
encompassing the annual salary standards, the Company’s performance fulfillment, and the job
performance assessment. The assessment consists of composite indicators, including the fulfillment of
the Company’s business objectives, work safety, standardized operations, professional ethics,
confidentiality provisions, and corporate culture construction.
The Remuneration and Appraisal Committee will conduct performance assessments of senior
management and formulate an annual compensation assessment plan based on their job performance.
XII. Construction and implementation of the internal control system during the Reporting Period
"√ Applicable" "□ Not applicable"
During the Reporting Period, the Company established a strict internal control management system
in strict accordance with the requirements of the CSRC, the Shanghai Stock Exchange, the Company
Law, the Articles of Association, and other relevant laws and regulations. Taking into account industry
characteristics and actual business operations, the Company continuously improved and refined its
internal control system to ensure its effective implementation. This has effectively enhanced the
Company’s standardized operation procedures, improved decision-making efficiency, ensured the legal
compliance of business operations and asset security, as well as facilitated the steady implementation of
the Company’s strategies.
The 2023 Internal Control Evaluation Report was approved at the 39th meeting of the 4th Board of
Directors. Based on the identification results of significant defects in the Company’s financial reports,
there were no significant defects in the internal control of the financial reports as of the benchmark date
of the internal control evaluation report The Company has ensured effective internal control over
financial reports in all significant aspects in accordance with the internal control standard system and
relevant regulations. Based on the identification results of significant defects in the Company’s
non-financial reports, there were no significant defects in the internal control of the non-financial reports
as of the benchmark date of the internal control evaluation report. The full text is available on the
Shanghai Stock Exchange website (www.sse.com.cn).
Details of significant defects in internal control identified during the Reporting Period
"□ Applicable""√ Not applicable"
XIII. Management and control of the subsidiaries during the Reporting Period
"√ Applicable" "□ Not applicable"
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2023 Annual Report
The Company has established the Subsidiary Management System. And all subsidiaries of the
Company have established a complete set of internal control systems and management mechanisms, so
as to ensure that all assets, operations, and strategic planning of the subsidiaries are effectively
monitored by the Company. The selection, appointment & removal, and assessment of key personnel in
each subsidiary are all managed and supervised by the Company.
XIV. Description of the internal control audit report
"√ Applicable" "□ Not applicable"
Details are available in the 2023 Annual Internal Control Audit Report, which is disclosed on the
same day as the 2023 Annual Report on the Shanghai Stock Exchange website (www.sse.com.cn).
Whether to disclose the internal control audit report:Yes
Type of internal control audit opinions for report:Standard unqualified opinions
XV. Self-inspection and rectification of issues found in the special campaign for governance of
listed companies
Not applicable
XVI. Others
"□ Applicable" "√ Not applicable"
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2023 Annual Report
Section V. Environmental and Social Responsibility
I. Major environmental issues
Whether to build mechanism related to No
environmental protection
Investment in environmental protection during the 0
Reporting Period (Unit: CN10,000)
(I). Environmental measures adopted by the Company and its subsidiaries listed as key pollutant
discharge units published by the environmental protection department
"□ Applicable" "√ Not applicable"
(II). Environmental measures adopted by the companies other than key pollutant discharge units
"√ Applicable" "□ Not applicable"
1. Administrative penalties due to environmental issues
"□ Applicable" "√ Not applicable"
2. Environmental information disclosed with reference to key pollutant discharge units
"√ Applicable" "□ Not applicable"
The Company is primarily engaged in drug retail and generates a small amount of pollutants such
as domestic wastewater, waste gases, and solid waste during operations. The Company's operation
activities do not involve high risk or heavy pollution. The main pollutants discharged during the
operations include production domestic wastewater, waste gases, domestic sewage, as well as expired or
damaged drugs and packaging materials The Company has purchased relevant treatment facilities and
equipment for the wastewater, gas gases, domestic sewage, and other pollutants generated during daily
production and operations.
The Company and its subsidiaries are not listed as key pollutant discharge units published by the
environmental protection department. During the Reporting Period, the Company and its subsidiaries
strictly implemented the national environmental protection policies, strictly adhered to the national
environmental protection laws and regulations, and did not engage in any environmental violations.
Moreover, the Company has not received any administrative penalties related to environmental
protection. The Company will continue to fulfill its corporate social responsibility and contribute to
environmental protection efforts.
3. The reason for not disclosing other environmental information
"□ Applicable" "√ Not applicable"
(III). Information regarding environmental protection, pollution control, and fulfillment of
environmental responsibilities
"□ Applicable" "√ Not applicable"
(IV). Measures taken to reduce carbon emissions during the reporting period and the effect thereof
Whether to take measures to reduce Yes
carbon emissions
Reduced emissions of carbon dioxide 1,387
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2023 Annual Report
equivalent (unit: ton)
Types of carbon reduction measures To set annual water & power conservation targets for office
(clean energy for power generation, areas; to improve the utilization rate of new energy vehicles
carbon reduction technologies in the in transportation logistics; to expand coverage of
production process, and R&D of new photovoltaic power generation project for distribution and
products that contribute to carbon warehousing
reduction, etc.).
Details
"□ Applicable" "√ Not applicable"
II. Social responsibility
(I). Whether to disclose a social responsibility report, sustainable development report, or ESG
report
"√ Applicable" "□ Not applicable"
Details are available in the 2023 Annual ESG Report, which is disclosed on the same day as the
2023 Annual Report on the Shanghai Stock Exchange website (www.sse.com.cn).
(II). Social responsibility work
"√ Applicable" "□ Not applicable"
External donations and public Quantity/content Description
welfare programs
Total investment (CN10,000) 609.16 Donation of cash and supplies
Including: Funds 87.00 Donation of cash
(CN10,000)
Supplies converted 522.16 Donation of supplies such as masks and
into cash (CN10,000) alcohol
Number of beneficiaries (person) -
Details
"□ Applicable" "√ Not applicable"
III. Details on enhancing and expanding the achievements of poverty alleviation and rural
revitalization
"□ Applicable" "√ Not applicable"
Details
"□ Applicable" "√ Not applicable"
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2023 Annual Report
Section VI. Important matters
I. Fulfillment of commitments
(I). Commitments fulfilled by the actual controller, shareholders, related parties, buyers, and the Company within the Reporting Period and commitments
not yet fulfilled by the end of the Reporting Period
"√ Applicable" "□ Not applicable"
Whether Reasons for Actions to
Whether to
to set a failing to be taken
Commitment Commitment Commitment Commitment Commitment Commitment strictly
deadline fulfill the after failing
background Type party Content time period fulfill the
for commitment, to fulfill the
commitment
fulfillment if any commitment
Resolution of Controlling As the controlling June 21, 2018 No Long term Yes
peer shareholder shareholder of Yifeng
competition Jikang Pharmacy, the company
Management irrevocably makes the
(formerly following commitments
known as (1) As of the signing date of
Houxin this commitment letter, the
Venture company has not made any
Capital) direct or indirect investments
in businesses that are similar
Commitments or identical to the operations
of Yifeng Pharmacy and its
related to
subsidiaries. There is no peer
significant competition or potential
asset competition with Yifeng
restructuring Pharmacy and its
subsidiaries.
(2) From the signing date of
this commitment letter:
① The company shall not
directly or indirectly invest in
businesses similar or identical
to the operations of Yifeng
Pharmacy and its
subsidiaries. It shall not
establish or acquire any
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2023 Annual Report
operators directly or
indirectly engaged in
businesses similar or identical
to the operations of Yifeng
Pharmacy and its
subsidiaries. In addition, the
company shall not assist any
individual or entity in
establishing, operating, or
developing any business,
enterprise, project, or other
commercial activities that
may directly or indirectly
compete for the operations of
Yifeng Pharmacy and its
subsidiaries in China or
abroad, to avoid creating
new, potentially direct or
indirect business competition
for Yifeng Pharmacy and its
subsidiaries.
② If Yifeng Pharmacy and
its subsidiaries further expand
their business scope, the
company and other operators
under its control shall not
compete for the expanded
operations of Yifeng
Pharmacy and its
subsidiaries. In the event of
competition for the expanded
operations of Yifeng
Pharmacy and its
subsidiaries, the company
and other operators under its
control shall either cease the
competitive business
operations or integrate the
competitive business into the
operations of Yifeng
Pharmacy and its
78 / 329
2023 Annual Report
subsidiaries, or transfer the
competitive business to a
third party with no affiliation,
thus avoiding peer
competition.
③ For new products and
new businesses
independently developed,
introduced, or jointly
developed by the company or
other companies under its
control and related to the
operations of Yifeng
Pharmacy and its
subsidiaries, Yifeng
Pharmacy and its subsidiaries
will have the priority for
grant and operation. ④ If
the company or other
companies under its control
intend to sell any other assets,
businesses, or rights related
to the operations of Yifeng
Pharmacy and its
subsidiaries, Yifeng
Pharmacy and its subsidiaries
shall have the priority for
purchase. The company
guarantees that the terms
provided to Yifeng Pharmacy
and its subsidiaries for the
sale or transfer of such assets
or businesses are not less
favorable than those offered
to any third party.
(3) The company confirms
that this commitment letter
aims to protect the rights and
interests of Yifeng Pharmacy
and all of its shareholders.
The company shall not utilize
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2023 Annual Report
its controlling relationship
with Yifeng Pharmacy to
conduct any operations that
would harm the rights and
interests of Yifeng Pharmacy
and its shareholders other
than the company.
(4) In the event of a violation
of any of the aforementioned
commitments, the company
shall take proactive measures
to eliminate peer competition
and is willing to bear any
direct or indirect economic
losses, claims, and additional
expenditure incurred by
Yifeng Pharmacy or its
shareholders other than the
company.
(5) The company confirms
that each commitment stated
in this commitment letter is
independently enforceable.
The invalidity or termination
of any commitment shall not
affect the validity of the other
commitments. The
aforementioned commitments
shall remain effective and
shall not be altered or
revoked during the period
when the company functions
as the controlling shareholder
of Yifeng Pharmacy and
within one year from the date
of transferring all shares.
This commitment letter shall
come into effect from the
date of the stamping
company’s official seal.
Resolution of Controlling As the controlling June 21, 2018 No Long term Yes
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2023 Annual Report
affiliated shareholder shareholder of Yifeng
transactions Yifeng Pharmacy, the company
Investment irrevocably makes the
(formerly following commitments
known as (I) The company and other
Houxin companies under its control,
Venture Yifeng Pharmacy excluded,
Capital) shall make every effort to
avoid engaging in affiliated
transactions with Yifeng
Pharmacy and its
subsidiaries. In cases where
such transactions are deemed
necessary and unavoidable,
they shall be conducted based
on the principles of fairness,
equity, and equal value.
Transaction prices shall be
determined based on the fair
prices recognized by the
market. Transaction approval
procedures and information
disclosure obligations shall
be fulfilled in accordance
with relevant laws,
regulations, normative
documents, and the
provisions of the Articles of
Association, to effectively
protect the interests of Yifeng
Pharmacy and its other
shareholders.
(II) The company guarantees
that it and other companies
under its control, apart from
Yifeng Pharmacy, strictly
comply with laws and
regulations, as well as the
regulatory documents of the
CSRC and the stock
exchanges, and the provisions
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2023 Annual Report
of Yifeng Pharmacy’s
Articles of Association and
the Affiliated Transaction
Management Measures. The
company shall not leverage
its shareholder status to seek
undue benefits or engage in
affiliated transactions that
could harm the interests of
Yifeng Pharmacy and its
other shareholders.
(III) In the event of a
violation of the
aforementioned commitments
and transactions with Yifeng
Pharmacy and its subsidiaries
resulting in losses to Yifeng
Pharmacy and its other
shareholders, the company
shall bear the responsibility
for compensation.
Others Controlling As the controlling June 21, 2018 No Long term Yes
shareholder shareholder of Yifeng
Jikang Pharmacy, the company
Management makes the following
(formerly commitments to ensure the
known as independence of Yifeng
Houxin Pharmacy:
Venture The company guarantees that
Capital) other companies under its
control maintain completely
independent operations from
Yifeng Pharmacy in terms of
assets, personnel, finances,
institutions, and businesses.
The company shall strictly
adhere to the relevant
regulations of the CSRC
regarding the independence
of listed companies and shall
not misuse its shareholder
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2023 Annual Report
status to violate Yifeng
Pharmacy’s standard
operating procedures,
interfere with Yifeng
Pharmacy’s business
decisions, or undermine the
legitimate rights and interests
of Yifeng Pharmacy and its
other shareholders.
Others Actual As the actual controller of June 21, 2018 No Long term Yes
company Yifeng Pharmacy, I
controller Gao irrevocably make the
Yi following commitments:
(1) As of the signing date of
this commitment letter, I have
not made any direct or
indirect investments in
businesses that are similar or
identical to the operations of
Yifeng Pharmacy and its
subsidiaries. There is no peer
competition or potential
competition with Yifeng
Pharmacy and its
subsidiaries.
(2) From the signing date of
this commitment letter:
① I shall not directly or
indirectly invest in businesses
similar or identical to the
operations of Yifeng
Pharmacy and its
subsidiaries. I shall not
establish or acquire any
operators directly or
indirectly engaged in
businesses similar or identical
to the operations of Yifeng
Pharmacy and its
subsidiaries. In addition, I
shall not assist any individual
83 / 329
2023 Annual Report
or entity in establishing,
operating, or developing any
business, enterprise, project,
or other commercial activities
that may directly or indirectly
compete for the operations of
Yifeng Pharmacy and its
subsidiaries in China or
abroad, to avoid creating
new, potentially direct or
indirect business competition
for Yifeng Pharmacy and its
subsidiaries.
② If Yifeng Pharmacy and
its subsidiaries further expand
their business scope, I and
other operators under my
control shall not compete for
the expanded operations of
Yifeng Pharmacy and its
subsidiaries. In the event of
competition for the expanded
operations of Yifeng
Pharmacy and its
subsidiaries, I and other
operators under my control
shall either cease the
competitive business
operations or integrate the
competitive business into the
operations of Yifeng
Pharmacy and its
subsidiaries, or transfer the
competitive business to a
third party with no affiliation,
thus avoiding peer
competition.
③ For new products and
new businesses
independently developed,
introduced, or jointly
84 / 329
2023 Annual Report
developed by me or other
companies under my control
and related to the operations
of Yifeng Pharmacy and its
subsidiaries, Yifeng
Pharmacy and its subsidiaries
will have the priority for
grant and operation.
④ If I or other companies
under my control intend to
sell any other assets,
businesses, or rights related
to the operations of Yifeng
Pharmacy and its
subsidiaries, Yifeng
Pharmacy and its subsidiaries
shall have the priority for
purchase. I shall guarantee
that the terms provided to
Yifeng Pharmacy and its
subsidiaries for the sale or
transfer of such assets or
businesses are not less
favorable than those offered
to any third party.
(3) I shall confirm that this
commitment letter aims to
protect the rights and
interests of Yifeng Pharmacy
and all of its shareholders. I
shall not utilize my
controlling relationship with
Yifeng Pharmacy to conduct
any operations that would
harm the rights and interests
of Yifeng Pharmacy and its
shareholders other than the
company.
(4) In the event of a violation
of any of the aforementioned
commitments, I shall take
85 / 329
2023 Annual Report
proactive measures to
eliminate peer competition
and am willing to bear any
direct or indirect economic
losses, claims, and additional
expenditure incurred by
Yifeng Pharmacy or its
shareholders other than me.
(5) I shall confirm that each
commitment stated in this
commitment letter is
independently enforceable.
The invalidity or termination
of any commitment shall not
affect the validity of the other
commitments. The
aforementioned commitments
shall remain effective and
shall not be altered or
revoked during the period
when I function as the actual
controller of Yifeng
Pharmacy and within one
year from the date of
transferring all shares
Resolution of Actual As the actual controller of June 21, 2018 No Long term Yes
affiliated company Yifeng Pharmacy, I
transactions controller Gao irrevocably make the
Yi following commitments:
(I) I and other companies
under my control, Yifeng
Pharmacy excluded, shall
make every effort to avoid
engaging in affiliated
transactions with Yifeng
Pharmacy and its
subsidiaries. In cases where
such transactions are deemed
necessary and unavoidable,
they shall be conducted based
on the principles of fairness,
86 / 329
2023 Annual Report
equity, and equal value.
Transaction prices shall be
determined based on the fair
prices recognized by the
market. Transaction approval
procedures and information
disclosure obligations shall
be fulfilled in accordance
with relevant laws,
regulations, normative
documents, and the
provisions of the Articles of
Association, to effectively
protect the interests of Yifeng
Pharmacy and its other
shareholders.
(II) I shall guarantee that I
and other companies under
my control, apart from
Yifeng Pharmacy, strictly
comply with laws and
regulations, as well as the
regulatory documents of the
CSRC and the stock
exchanges, and the provisions
of Yifeng Pharmacy’s
Articles of Association and
the Affiliated Transaction
Management Measures. I
shall not leverage the status
of actual controller to seek
undue benefits or engage in
affiliated transactions that
could harm the interests of
Yifeng Pharmacy and its
other shareholders.
(III) In the event of a
violation of the
aforementioned commitments
and transactions with Yifeng
Pharmacy and its subsidiaries
87 / 329
2023 Annual Report
resulting in losses to Yifeng
Pharmacy and its other
shareholders, I shall bear the
responsibility for
compensation.
Others Actual As the actual controller of June 21, 2018 No Long term Yes
company Yifeng Pharmacy, I
controller Gao irrevocably make the
Yi following commitments to
ensure the independence of
Yifeng Pharmacy:
I shall guarantee that I and
other companies under my
control maintain completely
independent operations from
Yifeng Pharmacy in terms of
assets, personnel, finances,
institutions, and businesses.
We shall strictly adhere to the
relevant regulations of the
CSRC regarding the
independence of listed
companies and shall not
misuse our shareholder status
to violate Yifeng Pharmacy’s
standard operating
procedures, interfere with
Yifeng Pharmacy’s business
decisions, or undermine the
legitimate rights and interests
of Yifeng Pharmacy and its
other shareholders.
Resolution of Actual To avoid potential peer From February No Long term Yes
peer controller Gao competition in the future, 17, 2015, it
Commitments competition Yi Gao Yi, as the actual shall be
controller of the Company, effective in the
related to the
and Gao Feng and Gao long term.
initial public Hongfa, as close relatives of
offering the actual controller,
representing themselves and
other companies they
88 / 329
2023 Annual Report
currently control or may
control in the future
respectively, have issued the
Letter of Commitment to
Avoiding Peer Competition.
They irrevocably make the
following commitments: (1)
As of the signing date of this
commitment letter, I have not
made any direct or indirect
investments in other
businesses similar or identical
to the issuer and its
subsidiaries. There is no peer
competition or potential
competition between me and
the issuer and its subsidiaries.
(2) From the signing date of
this commitment letter: ① I
shall not directly or indirectly
invest in businesses similar or
identical to the operations of
the issuer and its subsidiaries.
I shall not establish or acquire
any operators directly or
indirectly engaged in
businesses similar or identical
to the operations of the issuer
and its subsidiaries. In
addition, I shall not assist any
individual or entity in
establishing, operating, or
developing any business,
enterprise, project, or other
commercial activities that
may directly or indirectly
compete for the operations of
the issuer and its subsidiaries
in China or abroad, to avoid
creating new, potentially
direct or indirect business
89 / 329
2023 Annual Report
competition for the issuer and
its subsidiaries. ② If the
issuer and its subsidiaries
further expand their business
scope, I and other operators
under my control shall not
compete for the expanded
operations of the issuer and
its subsidiaries. In the event
of competition for the
expanded operations of the
issuer and its subsidiaries, I
and other operators under my
control shall either cease the
competitive business
operations or integrate the
competitive business into the
operations of the issuer and
its subsidiaries, or transfer the
competitive business to a
third party with no affiliation,
thus avoiding peer
competition. ③ For new
products and new businesses
independently developed,
introduced, or jointly
developed by me or other
companies under my control
and related to the operations
of the issuer and its
subsidiaries, the issuer and its
subsidiaries will have the
priority for grant and
operation. ④ If I or other
companies under my control
intend to sell any other assets,
businesses, or rights related
to the operations of the issuer
and its subsidiaries, the issuer
and its subsidiaries shall have
the priority for purchase. I
90 / 329
2023 Annual Report
shall guarantee that the terms
provided to the issuer and its
subsidiaries for the sale or
transfer of such assets or
businesses are not less
favorable than those offered
to any third party. (3) I shall
confirm that this commitment
letter aims to protect the
rights and interests of the
issuer and all of its
shareholders. I shall not
utilize my controlling
relationship with the issuer to
conduct any operations that
would harm the rights and
interests of the issuer and its
shareholders other than me.
(4) In the event of a violation
of any of the aforementioned
commitments, I shall take
proactive measures to
eliminate peer competition
and am willing to bear any
direct or indirect economic
losses, claims, and additional
expenditure incurred by the
issuer or its shareholders
other than me. (5) I shall
confirm that each
commitment stated in this
commitment letter is
independently enforceable.
The invalidity or termination
of any commitment shall not
affect the validity of the other
commitments. The
aforementioned commitments
shall remain effective and
shall not be altered or
revoked during the period
91 / 329
2023 Annual Report
when I function as the actual
controller of the issuer and
within one year from the date
of transferring all shares.
Resolution of Actual (I) As of the signing date of It shall be No Long term Yes
affiliated controller Gao this commitment letter, effective in the
transactions Yi except for those disclosed, long term.
there are no other significant
affiliated transactions
between me and the other
companies under my control
excluding the issuer and its
subsidiaries. (II) I and other
companies under my control,
the issuer excluded, shall
make every effort to avoid
engaging in affiliated
transactions with the issuer
and its subsidiaries. In cases
where such transactions are
deemed necessary and
unavoidable, they shall be
conducted based on the
principles of fairness, equity,
and equal value. Transaction
prices shall be determined
based on the fair prices
recognized by the market.
Transaction approval
procedures and information
disclosure obligations shall
be fulfilled in accordance
with relevant laws,
regulations, normative
documents, and the
provisions of the Articles of
Association, to effectively
protect the interests of the
issuer and its other
shareholders. (III) I shall
guarantee that I and other
92 / 329
2023 Annual Report
companies under my control,
apart from the issuer, strictly
comply with laws and
regulations, as well as the
regulatory documents of the
CSRC and the stock
exchanges, and the provisions
of the issuer’s Articles of
Association and the Affiliated
Transaction Management
Measures. I shall not leverage
the status of actual controller
to seek undue benefits or
engage in affiliated
transactions that could harm
the interests of the issuer and
its other shareholders. (IV) In
the event of a violation of the
aforementioned commitments
and transactions with the
issuer and its subsidiaries
resulting in losses to the
issuer and its other
shareholders, I shall bear the
responsibility for
compensation.
Resolution of Shareholder To avoid potential peer From February No Long term Yes
peer Yifeng competition in the future, the 17, 2015, it
competition Investment controlling shareholder of shall be
(formerly Yifeng Pharmacy, effective in the
known as representing the company and long term
Houxin other companies that it
Venture currently control or may
Capital) control in the future
respectively, has issued the
Letter of Commitment to
Avoiding Peer Competition.
They irrevocably make the
following commitments: (1)
As of the signing date of this
commitment letter, the
93 / 329
2023 Annual Report
company has not made any
direct or indirect investments
in other businesses similar or
identical to the issuer and its
subsidiaries. There is no peer
competition or potential
competition between the
company and the issuer and
its subsidiaries. (2) From the
signing date of this
commitment letter: ① The
company shall not directly or
indirectly invest in businesses
similar or identical to the
operations of the issuer and
its subsidiaries. The company
shall not establish or acquire
any operators directly or
indirectly engaged in
businesses similar or identical
to the operations of the issuer
and its subsidiaries. In
addition, the company shall
not assist any individual or
entity in establishing,
operating, or developing any
business, enterprise, project,
or other commercial activities
that may directly or indirectly
compete for the operations of
the issuer and its subsidiaries
in China or abroad, to avoid
creating new, potential direct
or indirect business
competition for the issuer and
its subsidiaries. ② If the
issuer and its subsidiaries
further expand their business
scope, the company and other
operators under its control
shall not compete for the
94 / 329
2023 Annual Report
expanded operations of the
issuer and its subsidiaries. In
the event of competition for
the expanded operations of
the issuer and its subsidiaries,
the company and other
operators under its control
shall either cease the
competitive business
operations or integrate the
competitive business into the
operations of the issuer and
its subsidiaries, or transfer the
competitive business to a
third party with no affiliation,
thus avoiding peer
competition. ③ For new
products and new businesses
independently developed,
introduced, or jointly
developed by the company or
other companies under its
control and related to the
operations of the issuer and
its subsidiaries, the issuer and
its subsidiaries will have the
priority for grant and
operation. ④ If the
company or other companies
under its control intend to sell
any other assets, businesses,
or rights related to the
operations of the issuer and
its subsidiaries, the issuer and
its subsidiaries shall have the
priority for purchase. The
company shall guarantee that
the terms provided to the
issuer and its subsidiaries for
the sale or transfer of such
assets or businesses are not
95 / 329
2023 Annual Report
less favorable than those
offered to any third party. (3)
The company shall confirm
that this commitment letter
aims to protect the rights and
interests of the issuer and all
of its shareholders. The
company shall not utilize its
controlling relationship with
the issuer to conduct any
operations that would harm
the rights and interests of the
issuer and its shareholders
other than the company. (4)
In the event of a violation of
any of the aforementioned
commitments, the company
shall take proactive measures
to eliminate peer competition
and is willing to bear any
direct or indirect economic
losses, claims, and additional
expenditure incurred by the
issuer or its shareholders
other than the company.(5)
The company shall confirm
that each commitment stated
in this commitment letter is
independently enforceable.
The invalidity or termination
of any commitment shall not
affect the validity of the other
commitments. The
aforementioned commitments
shall remain effective and
shall not be altered or
revoked during the period
when the company functions
as the controlling shareholder
of the issuer and within one
year from the date of
96 / 329
2023 Annual Report
transferring all shares.
Resolution of Shareholder (I) As of the signing date of It shall be No Long term Yes
affiliated Yifeng this commitment letter, effective in the
transactions Investment except for those disclosed, long term.
(formerly there are no other significant
known as affiliated transactions
Houxin between the company and the
Venture other companies under its
Capital) control excluding the issuer
and its subsidiaries. (II) The
company and other
companies under its control,
the issuer excluded, shall
make every effort to avoid
engaging in affiliated
transactions with the issuer
and its subsidiaries. In cases
where such transactions are
deemed necessary and
unavoidable, they shall be
conducted based on the
principles of fairness, equity,
and equal value. Transaction
prices shall be determined
based on the fair prices
recognized by the market.
Transaction approval
procedures and information
disclosure obligations shall
be fulfilled in accordance
with relevant laws,
regulations, normative
documents, and the
provisions of the Articles of
Association, to effectively
protect the interests of the
issuer and its other
shareholders. (III) The
company shall guarantee that
the company and other
companies under its control,
97 / 329
2023 Annual Report
apart from the issuer, strictly
comply with laws and
regulations, as well as the
regulatory documents of the
CSRC and the stock
exchanges, and the provisions
of the issuer’s Articles of
Association and the Affiliated
Transaction Management
Measures. The company shall
not leverage the status of
controlling shareholder to
seek undue benefits or
engage in affiliated
transactions that could harm
the interests of the issuer and
its other shareholders. (IV) In
the event of a violation of the
aforementioned commitments
and transactions with the
issuer and its subsidiaries
resulting in losses to the
issuer and its other
shareholders, the company
shall bear the responsibility
for compensation.
Others Actual If the Company and its It shall be No Long term Yes
company subsidiaries incur losses due effective in the
controller Gao to the failure to register the long term.
Yi and Yifeng lease for the property, I shall
Investment promptly and fully
(formerly compensate related
known as companies for the losses
Houxin incurred.
Venture
Capital)
Others Actual If the issuer (including It shall be No Long term Yes
company subsidiaries) is required effective in the
Controller Gao long term.
by any competent
Yi and
Shareholder authority to make up for
98 / 329
2023 Annual Report
Yifeng all or part of the unpaid
Investment social insurance
(formerly
premiums, housing
known as
Houxin provident funds, and/or is
Venture subject to any relevant
Capital) penalties or losses,
Jikang and Gao Yi shall
bear all the insurance
premiums, housing
provident funds,
penalties, and/or relevant
losses. In the event that
the issuer (including
subsidiaries) must make
the initial payment of
such expenses, timely
and full compensation
shall be provided to
ensure that the issuer
(including subsidiaries)
will not suffer any losses.
Restricted Actual Gao Yi, the actual controller Share lock-up No Long term Yes
shares controller of the Company, and his period:
Gao Yi close relatives Gao Hongfa 36 months
(Gao Yi’s father) and Gao from February
Feng (Gao Yi’s younger 17, 2015.
brother) have made the Share
following commitments: reduction
“Within thirty-six months period: Within
from the listing date of the two years after
Company's stock, I shall not the expiration
transfer or entrust others to of the lock-up
manage the shares of the period,
Company directly or the reduction
indirectly held by me and of shares shall
issued before public offering, not exceed
nor shall I allow the 15% of the
Company to repurchase the Company’s
99 / 329
2023 Annual Report
shares directly or indirectly total.
held by me and issued prior
to public offering. If I violate
the aforementioned
commitments or mandatory
legal provisions and reduce
my holdings of the
Company’s shares, I
undertake that the proceeds
from the improper reduction
of the Company’s shares will
belong to the Company. If I
fail to surrender the proceeds
from the improper reduction
to the Company, the
Company is entitled to
withhold from my cash
dividends an amount
equivalent to the proceeds
from the improper reduction
that I should have
surrendered to the
Company.”
Share reduction commitment:
Gao Yi, the actual controller
of the Company makes the
following commitment: “For
the shares held by me before
the initial public offering of
Yifeng Pharmacy Chain Co.,
Ltd., which are to be reduced
within two years after the
expiration of the lock-up
period, they shall not be sold
at a price lower than the
issuance price of the initial
public offerings. (Due to
factors such as cash dividend
distribution, bonus issue,
capital conversion, or new
share issuance, the exclusion
100 / 329
2023 Annual Report
of rights and dividends shall
be restored according to the
relevant regulations of the
stock exchange.) The number
of the Company’s shares to
be reduced annually shall not
exceed 15% of the number of
the Company’s shares held
by me at the end of the
previous year.
When reducing the shares
held by me, I shall notify the
Company in writing in
advance of my intention to
reduce shares and the
intended quantity of
reduction. The Company
shall promptly announce the
information. I may proceed
with the reduction of the
Company’s shares three
trading days after the
announcement.
If I violate the
aforementioned commitments
or mandatory legal provisions
and reduce my holdings of
the Company’s shares, I
undertake that the proceeds
(hereinafter referred to as the
improper proceeds) from the
improper reduction of the
Company’s shares will
belong to the company. If I
fail to surrender the proceeds
from the improper reduction
to the Company, the
Company is entitled to
withhold from my cash
dividends an amount
equivalent to the proceeds
101 / 329
2023 Annual Report
from the improper reduction
that I should have
surrendered to the Company."
Restricted Controlling Share lock-up commitments: Share lock-up No Long term Yes
shares shareholder “Within thirty-six months period: 36
Yifeng from the listing date of months from
Investment Yifeng’s stock, the company February 17,
(formerly shall not transfer or entrust 2015.
known as others to manage Yifeng’s Share
Houxin shares directly or indirectly reduction
Venture held by the company and period: Within
Capital) issued before public offering, two years after
nor shall the company the expiration
repurchase Yifeng’s shares of the lock-up
directly or indirectly held by period, the
itself and issued prior to reduction of
public offering.” shares shall
Share reduction commitment: not exceed
“Within two years after the 10% of the
expiration of the lock-up Company’s
period of Yifeng’s shares total.
held, the cumulative
reduction of shares shall not
exceed 10% of Yifeng’s total.
The price of the reduction
shall not be lower than the
issuance price of the
company’s initial public
offering (IPO). (In the event
of the company’s dividend
distribution, cash dividends,
bonus issue, and the
conversion of capital reserves
into share capital, and other
matters related to the
exclusion of rights and
dividends, the issuance price
shall be adjusted
proportionally for
comparison, collectively
referred to as the issuance
102 / 329
2023 Annual Report
price). If the closing price of
the company’s stock remains
below the issuance price for
20 consecutive trading days
within 6 months after the
company’s listing, or the
closing price of the stock is
lower than the issuance price
at the end of the 6-month
period after the company’s
listing, the lock-up period of
the shares held by the
company will be
automatically extended by 6
months.” During the
extended lock-up period, the
company shall not transfer or
entrust others to manage
Yifeng’ shares directly or
indirectly held by the
company and issued before
public offering, nor shall the
company repurchase Yifeng’s
shares directly or indirectly
held by itself and issued prior
to public offering.
Others Actual I hereby undertake not to From August No Long term Yes
controller Gao intervene in the Company’s 10, 2022, it
Yi operational management shall be
activities beyond my effective in the
authority and not to long term.
misappropriate the
Commitment Company‘s interests. I
related to undertake to fulfill the
refinancing relevant reimbursement
measures adopted by the
Company and any
commitments made by
myself in this regard. If I
violate these commitments
and cause losses to the
103 / 329
2023 Annual Report
Company or investors, I am
willing to bear the
corresponding legal
responsibilities in accordance
with the law.
The institution hereby No Long term Yes
undertakes not to intervene in
the Company’s operational
management activities
beyond its authority and not
to misappropriate the
Company's interests. The
institution undertakes to
Controlling fulfill the relevant From August
shareholder reimbursement measures 10, 2022, it
Others Houxin adopted by the Company and shall be
Venture any commitments made by effective in the
Capital the institution in this regard. long term.
If the institution violates
these commitments and
causes losses to the Company
or investors, the institution is
willing to bear the
corresponding legal
responsibilities in accordance
with the law.
(1) undertake not to From August No Long term Yes
gratuitously or unfairly 10, 2022, it
transfer benefits to other shall be
institutions or individuals, effective in the
nor to use other means to long term.
harm the interests of the
All directors Company; (2) undertake to
Others and senior restrain any behaviors related
management to job-related consumption;
(3) undertake not to use the
Company’s assets for
investment or consumption
activities unrelated to job
duties; (4) undertake that the
compensation system
104 / 329
2023 Annual Report
formulated by the Board of
Directors or the
Remuneration and Appraisal
Committee should be linked
to the implementation of the
reimbursement measures; (5)
If the Company launches an
equity incentive policy later, I
undertake that the announced
exercise conditions of the
Company’s equity shall be
linked to the implementation
of the reimbursement
measures; (6) From the date
of issuance of this
commitment to the
completion of the issuance of
convertible corporate bonds
to unspecified entities or
individuals, if the CSRC
issues new provisions
regarding the reimbursement
measures and the my
commitments, and the
commitments fail to meet the
relevant provisions of the
CSRC, I undertake to
released supplementary
commitments in accordance
with the latest regulations of
the CSRC at that time; (7) I
undertake to earnestly fulfill
the Company's relevant
reimbursement measures and
any commitments made by
myself in this regard. If I
violate these commitments
and cause losses to the
Company or investors, I am
willing to bear the
corresponding legal
105 / 329
2023 Annual Report
responsibilities to the
Company or investors in
accordance with the law.
1. The company will decide From No Long term Yes
whether to participate in the December 16,
subscription of the 2022, it shall
convertible corporate bonds be effective in
of Yifeng Pharmacy Chain the long term.
Co., Ltd. based on market
conditions and in accordance
with relevant laws and
regulations. 2. If the company
has reduced its holdings of
Yifeng’s shares or the issued
convertible corporate bonds
or has relevant reduction
plans within the first six
months prior to the first day
Controlling
of the issuance of the
shareholder
convertible bonds
Houxin
(announcement date of the
Ventural
prospectus), the company
Others Capital and its
undertakes not to participate
persons acting
in the subscription of the
in concert
convertible bonds and will
Yizhifeng and
not authorize other entities to
Yirentang
participate in the subscription
of the convertible bonds. 3. If
the company participates in
the subscription of Yifeng’s
convertible corporate bonds
and makes the subscription
successfully, the company
undertakes to strictly comply
with the requirements of
relevant laws and regulations
on short-term trading. The
company also undertakes not
to reduce its holdings of
Yifeng’s shares or the
subscribed convertible
106 / 329
2023 Annual Report
corporate bonds within six
months from the first day of
the issuance of the
convertible corporate bonds
(announcement date of the
prospectus) until the issuance
of the convertible corporate
bonds. 4. If the company fails
to fulfill the above
commitments regarding the
issuance of the convertible
corporate bonds, any income
derived from this will belong
to Yifeng Pharmacy Chain
Co., Ltd., and the company
will bear the legal
responsibilities arising
therefrom in accordance with
the law.
Others Directors, 1. I hereby decide whether to From No Long term Yes
supervisors, participate in the subscription December 16,
and senior of the convertible corporate 2022, it shall
management bonds of Yifeng Pharmacy be effective in
(excluding Chain Co., Ltd. based on the long term.
independent market conditions and in
directors, Xiao accordance with relevant
Zaixiang,Wan laws and regulations.
Xuemei and 2. If I have reduced my
Yan Jun). holdings of Yifeng’s shares
or the issued convertible
corporate bonds or has
relevant reduction plans
within the first six months
prior to the first day of the
issuance of the convertible
bonds (announcement date of
the prospectus), I undertake
not to participate in the
subscription of the
convertible bonds and will
not authorize other entities to
107 / 329
2023 Annual Report
participate in the subscription
of the convertible bonds.
3. If I participate in the
subscription of Yifeng’s
convertible corporate bonds
and make the subscription
successfully, I undertake to
strictly comply with the
requirements of relevant laws
and regulations on short-term
trading. I also undertake not
to reduce my holdings of
Yifeng’s shares or the
subscribed convertible
corporate bonds within six
months from the first day of
the issuance of the
convertible corporate bonds
(announcement date of the
prospectus) until the issuance
of the convertible corporate
bonds.
4. If I fail to fulfill the above
commitments regarding the
issuance of the convertible
corporate bonds, any
proceeds derived from this
will belong to the Company,
and I will bear the legal
responsibilities arising
therefrom in accordance with
the law.
Others Independent 1. I undertake not to From No Long term Yes
Director participate in the subscription December 16,
of the convertible corporate 2022, it shall
bonds issued by Yifeng be effective in
Pharmacy Chain Co., Ltd., the long term.
and will not authorize any
other entities to participate in
the subscription of the
convertible corporate bonds.
108 / 329
2023 Annual Report
2. My waiver of subscription
to the issuance of the
convertible corporate bonds
is a genuine expression of
intention. If I fail to fulfill the
above commitments
regarding the issuance of the
convertible bonds, any
income derived from this will
belong to the Company, and I
will bear the legal
responsibilities arising
therefrom in accordance with
the law.
Others Senior I am a senior management of From Tuesday, No Long term Yes
management Yifeng Pharmacy Chain Co., February 28,
Xiao Zaixiang Ltd. Given that I have 2023, it shall
reduced my holdings of the be effective in
Company’s shares or have the long term.
participated in the issuance of
convertible bonds or have
relevant reduction plans
within the six months before
the first day of the issuance
of convertible bonds to
unspecified entities or
individuals (hereinafter
referred to as “the Bonds”), I
undertake not to participate in
the subscription of the Bonds
in any form, nor will I
authorize any other entity to
participate in the subscription
of the Bonds. If I fail to fulfill
the aforementioned
commitments regarding the
issuance of the Bonds, any
proceeds derived from this
will belong to the Company.
If this results in losses to the
company, I will be liable to
109 / 329
2023 Annual Report
compensate the Company in
accordance with the law.
Others Senior 1. I undertake not to From May 15, No Long term Yes
management participate in the subscription 2023, it shall
personnel Wan of the Bonds in any form, nor be effective in
Xuemei and will I authorize any other the long term.
Yan Jun entity to participate in the
subscription of the Bonds,
within 6 months after the
latest sale of Yifeng
Pharmacy stocks or the
issuance of convertible
bonds. 2. If the first day of
the issuance of the
convertible bonds
(announcement date of the
prospectus) is beyond the 6
months after the latest sale of
Yifeng Pharmacy stocks, I
hereby decide whether to
participate in the subscription
of the convertible corporate
bonds of Yifeng Pharmacy
Chain Co., Ltd. based on
market conditions and in
accordance with relevant
laws and regulations. 3. If I
fail to fulfill the
aforementioned commitments
regarding the issuance of the
Bonds, any proceeds derived
from this will belong to
Yifeng Pharmacy. If this
results in losses to Yifeng
Pharmacy, I will be liable to
compensate the Company in
accordance with the law.
Others Senior 1. I undertake not to From January No Long term Yes
management participate in the subscription 29, 2024, it
personnel Hu of the Bonds in any form, nor shall be
Jianxia will I authorize any other effective in the
110 / 329
2023 Annual Report
entity to participate in the long term.
subscription of the Bonds,
within 6 months after the
latest sale of Yifeng
Pharmacy stocks or the
issuance of convertible
bonds. 2. If the first day of
the issuance of the
convertible bonds
(announcement date of the
prospectus) is beyond the 6
months after the latest sale of
Yifeng Pharmacy stocks, I
hereby decide whether to
participate in the subscription
of the convertible corporate
bonds of Yifeng Pharmacy
Chain Co., Ltd. based on
market conditions and in
accordance with relevant
laws and regulations. 3. If I
fail to fulfill the
aforementioned commitments
regarding the issuance of the
Bonds, any proceeds derived
from this will belong to
Yifeng Pharmacy. If this
results in losses to Yifeng
Pharmacy, I will be liable to
compensate the Company in
accordance with the law.
111 / 329
2023 Annual Report
(II). If there is a profit forecast for the Company's assets or projects, and they are still in the profit
forecast period during the reporting period, the Company shall
explain whether the assets or projects reach the original profit forecast and why.
"□ Reached" "□ Not reached" "√ Not applicable"
(III).The fulfillment of performance commitments and their impact on impairment test of goodwill
"□ Applicable" "√ Not applicable"
112 / 329
2023 Annual Report
II. The listed Company’s non-operating funds occupied by the controlling shareholders and their affiliated parties
"□ Applicable" "√ Not applicable"
III. Violation of guarantees
"□ Applicable" "√ Not applicable"
113 / 329
2023 Annual Report
IV. Description of the Board of Directors regarding the “Non-standard Opinion Audit Report”
from the accounting firm
"□ Applicable""√ Not applicable"
V. The Company’s analysis and description of changes in accounting policies, accounting
estimates or corrections of material accounting errors as well as relevant impacts
(I). The Company’s analysis and description of changes in accounting policies, accounting
estimates as well as relevant impacts
"√ Applicable" "□ Not applicable"
Since January 1, 2023, the Company has adhered to the "Accounting Treatment for Deferred
Income Taxes Related to Assets and Liabilities Arising from Individual Transactions that Are Not
Subject to Initial Recognition Exemption," as outlined in Interpretation No. 16 of the Enterprise
Accounting Standards issued by the Ministry of Finance. Accordingly, the financial statements for the
earliest reporting period have been adjusted to reflect this provision for applicable individual
transactions. This adjustment includes lease liabilities and right-of-use assets recognized during this
period due to these transactions, along with recognized disposal-related obligations and corresponding
assets that generate taxable and deductible temporary differences. The cumulative impact amount has
been adjusted in accordance with this provision and the provisions of Accounting Standards for
Enterprises No. 18 — Income Taxes. This affects the retained earnings and other related financial
statement items as of the start of the earliest reporting period. Details of these adjustments are presented
below.
Unit: CN Currency: CNY
Content and reasons for changes Affected financial statement items Impact amount
Detailed in other notes Balance Sheet as of December 31, 2022
Detailed in other notes -2,862,658.05
Deferred income tax assets
Detailed in other notes Undistributed Profits -2,862,658.05
Detailed in other notes Income Statement for 2022
Detailed in other notes Income tax expense -3,768,840.19
(II). The Company’s analysis and description of corrections of material accounting errors and
relevant impacts
"□ Applicable" "√ Not applicable"
(III). Communication with the former accounting firm
"□ Applicable" "√ Not applicable"
(IV). Examination & approval procedures and other information
"□ Applicable" "√ Not applicable"
114 / 329
2023 Annual Report
VI. Appointment and dismissal of accounting firms
Unit:CN Currency: CNY
Accounting firm currently employed
Name of domestic accounting firm Pan-China Certified Public Accountants (special
general partnership)
Remuneration for the domestic accounting firm 2,450,000.00
Consecutive years for the domestic accounting 13
firm to render audit services
Name of Certified Public Accountants of the Wei Wujun and Jiang Fengfeng
domestic accounting firm
Accumulated years for the Certified Public 2
Accountants of domestic accounting firm to
render audit services
Name Remuneration
Accounting firm for internal Pan-China Certified Public 550,000.00
control auditing Accountants (special general
partnership)
Appointment and dismissal of accounting firms
"√ Applicable" "□ Not applicable"
Upon the approval of the 2022 Annual General Meeting of Shareholders, it was agreed to reengage
Pan-China Certified Public Accountants (special general partnership) as the Company’s auditing agency
for the fiscal year of 2023.
Explanation of the change of accounting firms during the auditing period
"□ Applicable" "√ Not applicable"
Explanation on audit fees decreasing by more than 20% (including 20%) compared to the previous year
"□ Applicable" "√ Not applicable"
VII. Delisting risk analysis
(I). Reasons for delisting risk warning
"□ Applicable" "√ Not applicable"
(II). Countermeasures to be taken by the Company
"□ Applicable""√ Not applicable"
(III). Circumstances and reasons for termination of listing
"□ Applicable" "√ Not applicable"
VIII. Matters related to bankruptcy and reorganization
"□ Applicable""√ Not applicable"
IX. Major litigation and arbitration matters
"□ The Company had significant litigation or arbitration matters during the year."
"√ The Company had no significant litigation or arbitration matters during the year."
X. Suspected violations, punishment, and rectification of the listed Company, its Directors,
Supervisors, Senior Management, Controlling Shareholders and Actual controller
"□ Applicable""√ Not applicable"
115 / 329
2023 Annual Report
XI. Integrity status of the Company and its controlling shareholders and actual controller
"□ Applicable" "√ Not applicable"
XII. Significant connected transactions
(I). Affiliated transactions associated with day-to-day operations
1. Matters disclosed in interim announcements without further developments or changes
"□ Applicable""√ Not applicable"
2. Matters disclosed in interim announcements with further developments or changes
"□ Applicable" "√ Not applicable"
3. Matters not disclosed in interim announcements
"√ Applicable" "□ Not applicable"
Unit: CN10,000 Currency: CNY
Reasons
for the
great
differen
Proporti
Pricing Settlemen ce
Content Price of Amount on to the
Party to Transact Type of principle t method between
of affiliate of amount Mark
affiliated ion affiliated for of the
affiliated d affiliated of et
transacti relations transacti affiliated affiliated transacti
transacti transacti transacti similar Price
on hip on transactio transactio on price
on on ons transacti
n n and the
ons (%)
referenc
e price
in the
market
Jiuzhitan Others Commo Commo Transacti Market 11,324. 0.81 Bank / /
g and its affiliated dity dity and ons price 12 transfer/B
subsidiar persons purchase product should be ank
ies d purchase conducte acceptanc
d d based e bill
on the
principle
s of
fairness
and
impartiali
ty, and
pricing
should be
determin
ed in
accordan
ce with
national
policies
and
market
principle
s. In
principle,
116 / 329
2023 Annual Report
the price
should be
equivalen
t to that
of similar
products
purchase
d or sold
by a third
party
unrelated
to the
party
engaged
in the
transactio
n. It
should
not be
significa
ntly
higher or
lower
than the
average
market
price.
Jiuzhitan Others Selling Commo Transacti Market 1,918.0 0.08 Bank / /
g and its affiliated goods dity and ons price 4 transfer/B
subsidiar persons product should be ank
ies sold conducte acceptanc
d based e bill
on the
principle
s of
fairness
and
impartiali
ty, and
pricing
should be
determin
ed in
accordan
ce with
national
policies
and
market
principle
s. In
principle,
the price
should be
equivalen
t to that
of similar
117 / 329
2023 Annual Report
products
purchase
d or sold
by a third
party
unrelated
to the
party
engaged
in the
transactio
n. It
should
not be
significa
ntly
higher or
lower
than the
average
market
price.
/ / 13,242. / / /
Total
16
Details regarding the large-scale return of goods None
Description of affiliated transaction None
(II). Affiliated transactions of acquisition or sales of assets or equity
1. Matters disclosed in interim announcements without further developments or changes
"□ Applicable""√ Not applicable"
2. Matters disclosed in interim announcements with further developments or changes
"□ Applicable" "√ Not applicable"
3. Matters not disclosed in interim announcements
"□ Applicable""√ Not applicable"
4. If performance commitments are involved, the performance achieved during the Reporting
Period should be disclosed.
"□ Applicable" "√ Not applicable"
(III).Significant affiliated transactions for joint external investments
1. Matters disclosed in interim announcements without further developments or changes
"□ Applicable""√ Not applicable"
2. Matters disclosed in interim announcements with further developments or changes
"□ Applicable" "√ Not applicable"
3. Matters not disclosed in interim announcements
"□ Applicable""√ Not applicable"
118 / 329
2023 Annual Report
(IV). Affiliated transactions involving debt and credit
1. Matters disclosed in interim announcements without further developments or changes
"□ Applicable""√ Not applicable"
2. Matters disclosed in interim announcements with further developments or changes
"□ Applicable" "√ Not applicable"
3. Matters not disclosed in interim announcements
"□ Applicable""√ Not applicable"
(V). Financial transactions between the Company and affiliated financial companies, financial
companies under the Company’s control, and affiliated parties
"□ Applicable" "√ Not applicable"
(VI). Others
"□ Applicable" "√ Not applicable"
XIII. Significant contracts and their fulfillment
(I). Information about trusteeship, contracting, and lease
1. Trusteeship
"□ Applicable" "√ Not applicable"
2. Contracting
"□ Applicable" "√ Not applicable"
3. Lease
"□ Applicable" "√ Not applicable"
119 / 329
2023 Annual Report
(II). Guarantee
"√ Applicable" "□ Not applicable"
Unit: CN10,000 Currency: CNY
External guarantees of the Company (excluding guarantees to subsidiaries)
Date of
Relationsh
occurrenc Whether Whether
ip between Object Whether Amount
Amount e of Guarantee Guarante the the Associatio
the Type of of the of
Guarant Guarantee of guarantee Date of e fulfillme Counter-guarant affiliated n
guarantor guarante guarante guarante overdue
or d party guarante (Signing commenceme Date of nt is ee party is Relationsh
and the e e (if e is guarante
e date of nt maturity complete guarantee ip
listed any) overdue e
agreemen d d
Company
t)
Total amount of guarantees incurred during the Reporting Period 0
(excluding guarantees to subsidiaries)
Total amount of guarantee balance at the end of the Reporting Period 0
(A) (excluding guarantees to subsidiaries)
Guarantees of the Company and its subsidiaries to subsidiaries
Total amount of guarantees incurred to subsidiaries during the 136,000
Reporting Period
Total amount of guarantee balance to subsidiaries at the end of the 120,000
Reporting Period (B)
Total guarantees of the Company (excluding guarantees to subsidiaries)
Total amount of guarantees (A+B) 120,000
Ratio of total guarantees to the Company’s net assets (%) 11.49
Incl.:
Amount of guarantees to shareholders, actual controller, and their 0
affiliated parties (C)
The amount of debt guarantee provided directly or indirectly to 0
guaranteed parties with an asset-liability ratio exceeding 70% (D)
120 / 329
2023 Annual Report
The amount exceeding 50% of net assets in the total guarantee amount 0
(E)
Total amount of guarantee (C+D+E)
Description of possible joint liability for outstanding guarantees
Description of guarantee
(III). Entrusting others to execute any cash asset management
1. Entrusted financial management
(1) Overview of entrusted financial management
"√ Applicable" "□ Not applicable"
Unit: CN10,000 Currency: CNY
Type Source of funds Amount incurred Undue amount Overdue unrecovered amount
Wealth management Own funds 162,810 162,810 0
products of bank
Wealth management Own funds 40,000 0 0
products of securities
dealers
Others
"□ Applicable" "√ Not applicable"
(2) Individual entrusted financial management
"□ Applicable" "√ Not applicable"
Others
"□ Applicable" "√ Not applicable"
(3) Impairment provision for entrusted financial management
"□ Applicable" "√ Not applicable"
121 / 329
2023 Annual Report
2. Entrusted loan
(1) Overview of entrusted loan
"□ Applicable" "√ Not applicable"
Others
"□ Applicable" "√ Not applicable"
(2) Individual entrusted loan
"□ Applicable" "√ Not applicable"
Others
"□ Applicable" "√ Not applicable"
(3) Impairment provision for entrusted loan
"□ Applicable" "√ Not applicable"
3. Others
"□ Applicable" "√ Not applicable"
(IV). Other significant contracts
"□ Applicable" "√ Not applicable"
XIV. Description of progress in the use of raised funds
"√ Applicable" "□ Not applicable"
(I). Overall use of raised funds
"√ Applicable" "□ Not applicable"
Unit: CN10,000
In-place Including: Net amount Total Total Accumulative Accumulated Current The Total
Source of Total
time of Amount of of raised committed committed total amount investment year's proportion amount
raised amount of
raised over-raised funds after investment investment of raised progress by investment of of
funds raised funds
funds funds deduction amount of amount of funds by the the end of amount investment raised
122 / 329
2023 Annual Report
of issuance raised fund raised end of the the (4) amount funds
expenses funds after Reporting Reporting for this with
adjustment Period (2) Period (3) = year (%) change
(1) (2)/(1) (5) = of use
(4)/(1)
Issuance of
June 5,
convertible 158,100.90 0 156,464.67 158,100.90 156,464.67 156,142.94 99.79 27,296.91 17.45 32,663.54
2020
bonds
(II).Details of projects invested by raised funds
"√ Applicable" "□ Not applicable"
Unit: CN10,000
Wh
ethe
Accu
r The
Accu mulat
the specif Whether
Total mulat ed The
inv ic there has
Whet comm Total ive invest Wh benef
The est reaso been a
her itted invest total ment ethe its or
Invest date on me ns significa
invol invest ment amou progr r R&D
In-pla Whet ment which nt why Benef nt
ves ment amou nt of ess by the achie
Natur Sourc ce her to amou the pro the its change Surpl
chang amou nt of raised the proj veme
Item e of e of time use nt in project gres invest realiz in the us
ing nt of raised funds end ect nts
name projec raised of over-r the is s ment ed feasibilit amou
the raised funds by the of the has achie
t funds raised aised curre expecte mee progr this y of the nt
direct funds after end Repor bee ved
funds funds nt d to be ts ess year project.
ion of for adjust of the ting n in
year ready the does If so,
invest the ment Repor Perio clos this
for use pla not please
ment projec (1) ting d (%) ed proje
nne meet give the
t Perio (3) = ct
d the details
d (2) (2)/(1
sch plan
)
edu
le
The Operat Issuance
Not Not Not
Jaingsu ion & of June 5, 16,000.0 16,000.0 16,128. July 31,
No No 100.80 Yes Yes applica applic applica No 0
Yifeng develo converti 2020 0 0 77 2021
ble able ble
Pharmaceu pment ble
123 / 329
2023 Annual Report
tical bonds
Product
Intelligent
Sorting &
Processing
Project
The
Shanghai
Yifeng
Pharmaceu Issuance
Operat
tical of Not Not Not
ion & June 5, 13,000.0 21,363.5 21,629. Jun 30,
Product Yes converti No 4,616.22 101.25 Yes Yes applica applic applica No 0
develo 2020 0 4 90 2023
Intelligent ble ble able ble
pment
Sorting bonds
Center
Project
[Note 1]
Jiangxi
Yifeng
Issuance
Pharmaceu Operat
of Not Not Not
tical ion & June 5, 8,019.2 Jun 30,
No converti No 8,000.00 8,000.00 100.24 Yes Yes applica applic applica No 0
Industry develo 2020 6 2022
ble ble able ble
Park pment
bonds
Project
Phase I
Issuance
The New Operat
of Not
Chain ion & June 5, 68,085.0 68,085.0 22,680.6 67,153. Jan 31, -4,748 -22,96
Yes converti No 101.45 No Yes applica No
Pharmacy develo 2020 0 0 9 20 2024 .50 3.41
ble ble
Project pment
bonds
The Old
Issuance
Store Operat
of Not Not Not
Upgrade ion & June 5, 10,015.9 1,824.0 Jun 30,
Yes converti No 1,652.36 110.39 Yes Yes applica applic applica No 0
and develo 2020 0 7 2022
ble ble able ble
Renovatio pment
bonds
n Project
The Issuance
Digital of Not Not Not
June 5, 4,002.5 Mar 31,
Intelligent R&D No converti No 4,000.00 4,000.00 100.06 Yes Yes applica applic applica No 0
2020 4 2023
Manageme ble ble able ble
nt Platform bonds
124 / 329
2023 Annual Report
Project
Issuance
Replenish
of Not Not Not
ment of June 5, 39,000.0 37,363.7 37,385.
Others No converti No 100.06 Yes Yes applica applic applica No 0
working 2020 0 7 20
ble ble able ble
capital
bonds
[Note 1]: The Shanghai Yifeng Pharmaceutical Product Intelligent Sorting Center Project has adopted works such as replacement and reinforcement of basement load-bearing due to the
complex underground structure of the construction site, soft soil in the foundation pit, and increased difficulty in the work of foundation pit retaining piles. Besides, the newly added works
have also extended the project implementation, with an additional investment of CN 83.9837 million. "As a change in the "Old Store Upgrade and Renovation Project", CN 83.6354 million
was invested into the "Shanghai Yifeng Pharmaceutical Product Intelligent Sorting Center Project".
[Note 2]: As of the disclosure date of this report, the funds raised from the convertible corporate bonds issued by the Company in 2020 have been fully utilized. All
corresponding investment projects funded by these bonds have been finalized, and the special fundraising account will subsequently be closed. According to
Guidelines No. 1 of the Shanghai Stock Exchange for Self-Regulation of Listed Companies - Standard Operation, once all funded projects are completed, if the
residual funds (including interest income) amount to less than CN 5 million or less than 5% of the total raised funds, the need for procedures such as review by
board of directors, opinions from independent directors, assessments by board of supervisors, and endorsements by sponsoring institutions may be exempted.
(III). Changes or termination of projects invested by raised funds during the Reporting Period
"□ Applicable" "√ Not applicable"
125 / 329
2023 Annual Report
(IV). Other cases of the use of raised funds during the Reporting Period
1. Advance investment and replacement of projects invested by raised funds
"□ Applicable" "√ Not applicable"
2. Temporary replenishment of working capital with idle raised funds
"√ Applicable" "□ Not applicable"
The 24th meeting of the 4th Board of Directors was held on April 26, 2023, during which the Company deliberated and approved the Proposal on Using Idle
Proceeds from Convertible Bonds to Temporarily Supplement Liquidity. It was agreed that the Company should use the total amount of idle raised funds not
exceeding CN 210 million to temporarily supplement working capital. By December 31, 2023, the Company’s balance of temporary supplement of working capital
with idle raised funds was CN50 million.
3. Cash management of idle raised funds and investment in related products
"□ Applicable" "√ Not applicable"
4. Permanent replenishment of working capital or repayment of bank loans with over-raised funds
"□ Applicable" "√ Not applicable"
5. Others
"□ Applicable" "√ Not applicable"
XV. Description of other significant matters greatly affecting value judgment and investment decisions
"□ Applicable""√ Not applicable"
126 / 329
2023 Annual Report
Section VII. Changes in Shares and Shareholders
I. Changes in share capital
(I). Share change table
1. Share change table
Unit:Share
Before this change Increase or decrease in this change (+, -) After this change
Bo
Shares
Perce nu Perce
New converted
Quantity: ntage s Others Total Quantity: ntage
issue from reserved
(%) iss (%)
funds
ue
I. Shares with
trading
3,095,200 0.43 390,015 1,238,080 -2,259,600 -631,505 2,463,695 0.24
restriction
conditions
1. Shares
held by the
State
2. Shares
held by
state-owned
legal person
3. Shares
held by other
3,095,200 0.43 390,015 1,238,080 -2,259,600 -631,505 2,463,695 0.24
domestic
capital
Including:
Shares held
by domestic
non-state-ow
ned legal
person
Share
s held by
domestic 3,095,200 0.43 390,015 1,238,080 -2,259,600 -631,505 2,463,695 0.24
natural
person
4. Shares
held by
0
foreign
capital
Including:
Shares held
0
by foreign
legal person
Share
s held by
foreign 0
natural
person
II. Shares
718,609,730 99.57 287,443,892 2,062,480 289,506,372 1,008,116,102 99.76
without
127 / 329
2023 Annual Report
trading
restriction
conditions
1. CNY
common 718,609,730 99.57 287,443,892 2,062,480 289,506,372 1,008,116,102 99.76
share
2.
Domestically
0
listed foreign
shares
3. Overseas
listed foreign 0
shares
4. Others 0
III. Total
number of 721,704,930 100 390,015 288,681,972 -197,120 288,874,867 1,010,579,797 100
shares
2. Description of changes in shares
"√ Applicable" "□ Not applicable"
(1) The Proposal on Profit Distribution and Capital Reserve Capitalization Plans for the Year of
2022 was reviewed and approved at the 24th meeting of the 4th Board of Directors on April 26, 2023, and
the 2022 Annual General Meeting of Shareholders held on May 18, 2023. The capital conversion is
based on the total share capital. The Company intends to distribute 4 shares per 10 shares held by all
shareholders via capital conversion. After the distribution, the total share capital of the Company will
increase to 1,010,386,902 shares. The distribution plan was completed on June 7, 2023
(2) The 24th and 27th meetings of the 4th Board of Directors, held on April 26, 2023 and June 29,
2023, reviewed and approved the Proposal on Repurchase and Cancellation of Certain Restricted Shares
and the Proposal on Adjusting the Quantity and Price of Repurchase and Cancellation of Certain
Restricted Shares, canceled the repurchased 104,160 restricted stock shares, and changing the total share
capital to 1,010,282,742 shares.
(3) The 29th meeting of the 4th Board of Directors was held on August 14, 2023, during which the
Company deliberated and adopted the Proposal on the Second Repurchase and Cancellation of Certain
Restricted Shares under the Restricted Share Incentive Plan in 2022. The Company canceled the
repurchased 92,960 restricted stock shares. and changing the total share capital to 1,010,189,782 shares.
(4) The 31st meeting of the 4th Board of Directors was held on August 29, 2023, during which the
Company deliberated and adopted the Proposal on the Grant of Reserve Equity to under the Restricted
Share Incentive Plan in 2022. After confirming that the conditions for the initial grant have been met, the
Company granted the Incentive Recipients a total of 390,015 restricted shares, changing the total share
capital to 1,010,579,797 shares.
3. Effect of share changes on financial indicators such as earnings per share and net assets per
share for the latest year and the latest period
"√ Applicable" "□ Not applicable"
During the Reporting Period, the total number of the Company's shares increased by 288,874,867
due to the profit distribution and conversion of capital reserve into equity capital, the repurchase and
128 / 329
2023 Annual Report
cancellation of restricted shares and the granting of restricted shares. At the end of the Reporting Period,
the total share capital of the Company was 1,010,579,797 shares, with an earning per share of CN1.40
and a net asset per share of CN9.70.
4. Other contents deemed necessary by the Company or required to be disclosed by the
securities regulatory authorities
"□ Applicable" "√ Not applicable"
(II). Changes in restricted shares
"√ Applicable" "□ Not applicable"
Unit: Share
Number of
Number of Number of Number of
restricted
restricted restricted restricted
Name of shares Reasons for Date of
shares at the shares lifted shares at the
shareholder increased in Restriction lifting
beginning of in the end of the
the current
the year current year year
year
The first 3,095,200 2,062,480 1,040,960 2,073,680 Lock-up of October 23,
grant of the the first 2023
restricted grant of the
share restricted
incentive share
plan in 2022 incentive
plan in 2022
The 0 0 390,015 390,015 The
reservation reservation
grant of the grant of the
restricted restricted
share share
incentive incentive
plan in 2022 plan in 2022
Total 3,095,200 2,062,480 1,430,975 2,463,695 / /
II. Offering and listing of securities
(I). Securities issuance during the Reporting Period
"□ Applicable""√ Not applicable"
Description of securities issuance during the Reporting Period (For bonds with different interest rates
during the tenure, respectively):
"□ Applicable" "√ Not applicable"
(II). Description of changes in the Company’s total number of shares and shareholder structure,
and asset and liability structure
"□ Applicable" "√ Not applicable"
(III). Existing internal employee share
"□ Applicable""√ Not applicable"
III. Shareholders and actual controller(s)
(I). Total number of shareholders
Total number of common shareholders at the end of the Reporting Period 14,648
Total number of common shareholders as of the end of the previous 15,096
month before the disclosure date of the Annual Report
129 / 329
2023 Annual Report
Total number of preferred shareholders with restored voting rights at the 0
end of the Reporting Period
Total number of preferred shareholders with restored voting rights at the 0
end of the previous month before the disclosure date of the Annual
Report
(II). Shareholding of the top 10 shareholders and top 10 shareholders of circulating shares
(without trading restriction conditions) at the end of the Reporting Period
Unit: Share
Shareholding of the top 10 shareholders (not including the lending of shares through refinancing
business)
Number Pledge, tag or
Number of of shares freezing
Increase/Decrea shares held with
Name of
se during the at the end Percentag trading Shar Sharehold
shareholder
Reporting of the e (%) restrictio e Quantit er feature
(Full name)
Period Reporting n statu y:
Period condition s
s held
Ningbo
Meishan Free
Trade Port
Area Houxin
218,743,98
Venture 62,498,280 21.65 0 None Others
0
Capital
Partnership
(Limited
Partnership)
Hong Kong
Securities
167,741,35
Clearing 46,087,981 16.60 0 None Others
6
Company
Limited
Domestic
117,901,05
Gao Yi 33,686,016 11.67 0 None natural
6
person
CAPITAL
TODAY Foreign
INVESTMEN 27,745,536 97,109,376 9.61 0 None legal
T XV （HK） person
LIMITED
CAPITAL
TODAY Foreign
INVESTMEN 27,588,288 96,559,008 9.55 0 None legal
T XV （HK） person
LIMITED
Industrial and
Commercial
Bank of
China Limited
- Zhong Ou
9,587,277 19,602,714 1.94 0 None Others
Medical and
Health Hybrid
Securities
Investment
Fund
130 / 329
2023 Annual Report
Ningbo
Meishan Free
Trade Port
Area
Yizhifeng
3,022,091 10,577,318 1.05 0 None Others
Enterprise
Management
Partnership
(Limited
Partnership)
China
Construction
Bank Co., Ltd
- ICBC Credit
Suisse
Frontier 2,726,600 6,726,600 0.67 0 None Others
Medical
Equity
Securities
Investment
Fund
Hexie Health
Insurance Co.,
6,679,680 6,679,680 0.66 0 None Others
Ltd. —
Tradition
Domestic
Han
2,465,960 5,783,360 0.57 0 None natural
Hongchang
person
Shareholding of the top 10 shareholders without trading restriction conditions
Number of Type and quantity of shares
circulating shares
Name of shareholder without trading
Type Quantity:
restriction
conditions held
Ningbo Meishan Free Trade Port
CNY common
Area Houxin Venture Capital 218,743,980 218,743,980
share
Partnership (Limited Partnership)
Hong Kong Securities Clearing CNY common
167,741,356 167,741,356
Company Limited share
CNY common
Gao Yi 117,901,056 117,901,056
share
CAPITAL TODAY
CNY common
INVESTMENT XV （HK） 97,109,376 97,109,376
share
LIMITED
CAPITAL TODAY
CNY common
INVESTMENT XV （HK） 96,559,008 96,559,008
share
LIMITED
Industrial and Commercial Bank
of China Limited - Zhong Ou CNY common
19,602,714 19,602,714
Medical and Health Hybrid share
Securities Investment Fund
Ningbo Meishan Free Trade Port
Area Yizhifeng Enterprise CNY common
10,577,318 10,577,318
Management Partnership share
(Limited Partnership)
131 / 329
2023 Annual Report
China Construction Bank Co.,
Ltd - ICBC Credit Suisse CNY common
6,726,600 6,726,600
Frontier Medical Equity share
Securities Investment Fund
Hexie Health Insurance Co., Ltd. CNY common
6,679,680 6,679,680
— Tradition share
CNY common
Han Hongchang 5,783,360 5,783,360
share
Description of repurchase
accounts among the top 10 None
shareholders
Description of above-mentioned
shareholders’ involvement in
None
entrusting/being entrusted with
and waiving voting rights
Among the aforementioned shareholders, Houxin and Yizhifeng are
enterprises controlled by Mr. Gao Yi, the actual controller of the
Company. There is an affiliation between Gao Yi, Houxin, and
Yizhifeng. CAPITAL TODAY INVESTMENT XV (HK) LIMITED
Description of association or
and CAPITAL TODAY INVESTMENT XIV (HK) LIMITED are
concerted action of the
both controlled by Capital Today River Fund, L.P. There is an
above-mentioned shareholders
affiliation between CAPITAL TODAY INVESTMENT XV (HK)
LIMITED and CAPITAL TODAY INVESTMENT XIV (HK)
LIMITED. Description of unknown association or concerted action
of the above-mentioned shareholders
Description of preferred
shareholders with restored voting None
rights and number of shares held
Description of the top 10 shareholders participating in the lending of shares through refinancing business
"□ Applicable" "√ Not applicable"
The top ten shareholders have changed compared to the previous period
"□ Applicable" "√ Not applicable"
Number of shares held by the top 10 shareholders with trading restriction conditions and relevant
restriction conditions
"□ Applicable" "√ Not applicable"
(III). Situation (if any) where a strategic investor or general legal person becomes one of top 10
shareholders due to placement of new shares
"□ Applicable""√ Not applicable"
IV. Controlling shareholders and actual controller(s)
(I). Controlling shareholder
1 Legal person
"√ Applicable" "□ Not applicable"
Name Ningbo Meishan Free Trade Port Area Houxin Venture Capital
Partnership (Limited Partnership)
Peron in charge or legal Changsha Yizhikang Consulting Co., Ltd. (Appointed
representative Representative: Hu Zongliang)
Date of establishment Tuesday, September 12, 2006
Main business Venture capital (limited to unlisted companies)
Equity of other domestic and None
overseas listed companies via control
132 / 329
2023 Annual Report
and participation of the shareholder
during the Reporting Period
Other descriptions None
2 Natural person
"□ Applicable""√ Not applicable"
3 Special description of the absence of a controlling shareholder
"□ Applicable" "√ Not applicable"
4 Changes in controlling shareholders during the Reporting Period
"□ Applicable" "√ Not applicable"
5 Block diagram of the property rights and control relationship between the Company and the
controlling shareholder
"√ Applicable" "□ Not applicable"
Ningbo Meishan Free Trade Port Area
Houxin Venture Capital Partnership
(Limited Partnership)
Yifeng Pharmacy Chain Co., Ltd.
(II). Actual controller
1 Legal person
"□ Applicable""√ Not applicable"
2 Natural person
"√ Applicable" "□ Not applicable"
Name Gao Yi
Nationality Chinese
Whether to obtain residency in other countries No
or regions
Occupation and title Chairman and President
Domestically and overseas listed companies None
controlled over the past 10 years
3 The Company has no actual controllers
"□ Applicable" "√ Not applicable"
4 Changes in controlling rights during the Reporting Period
"□ Applicable" "√ Not applicable"
133 / 329
2023 Annual Report
5 Block diagram of the ownership and control relationship between the Company and the de
facto controller
"√ Applicable" "□ Not applicable"
Gao Yi
Changsha Yizhikang
Consulting Co., Ltd.
Ningbo Meishan Free Trade Port Ningbo Meishan Free Trade Port Area Ningbo Meishan Free Trade Port Area
Area Houxin Venture Capital Yizhifeng Enterprise Management Yirentang Enterprise Management
Partnership (Limited Partnership (Limited Partnership) Partnership (Limited Partnership)
Partnership)
Yifeng Pharmacy Chain Co., Ltd.
6 Control of the Company by the de facto controller through trust or other asset management
means
"□ Applicable" "√ Not applicable"
(III). Other information about controlling shareholders and actual controller
"□ Applicable" "√ Not applicable"
V. The cumulative number of shares pledged by the controlling shareholder or the largest
shareholder of the Company and its persons acting in concert reached 80% of the number of
shares held by them in the Company.
"□ Applicable" "√ Not applicable"
VI. Other corporate shareholders holding more than 10% of shares
"□ Applicable" "√ Not applicable"
VII. Restrictions on shareholding reduction
"□ Applicable""√ Not applicable"
VIII.Specific implementation of share repurchase during the Reporting Period
"□ Applicable" "√ Not applicable"
Section VIII. Preferred Share Related Information
"□ Applicable""√ Not applicable"
134 / 329
Section IX. Relevant Situation of Bonds
I. Corporate bonds, company bonds, and non-financial corporate debt financing
instruments
"□ Applicable" "√ Not applicable"
II. Convertible corporate bonds
"□ Applicable" "√ Not applicable"
135 / 329
Section X. Financial Statements
I. Audit report
Applicable Not Applicable
Auditor’s Report
PCCPAAR [2024] No.2-298
To the Shareholders of Yifeng Pharmacy Chain Co.,Ltd.:
I. Audit Opinion
We have audited the financial statements of Yifeng Pharmacy Chain Co., Ltd. (the
“Company”), which comprise the consolidated and parent company balance sheets as
at December 31, 2023, the consolidated and parent company income statements,
consolidated and parent company cash flow statements, and consolidated and parent
company statements of changes in equity for the year then ended, as well as notes to
financial statements.
In our opinion, the accompanying financial statements present fairly, in all material
respects, the financial position of the Company as at December 31, 2023, and its
financial performance and its cash flows for the year then ended in accordance with
China Accounting Standards for Business Enterprises.
II. Basis for Audit Opinion
We conducted our audit in accordance with China Standards on Auditing. Our
responsibilities under those standards are further described in the Certified Public
Accountant’s Responsibilities for the Audit of the Financial Statements section of our
report. We are independent of the Company in accordance with the China Code of
Ethics for Certified Public Accountants, and we have fulfilled other ethical
responsibilities. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.
136 / 329
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 of the current period. 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 express a separate opinion
on these matters.
(I) Revenue recognition
1. Key audit matters
Please refer to section III (XXIII), V (II) 1 and XV (I) 2of notes to the financial
statements for details.
The Company is mainly engaged in medical sales business. In 2023, the operating
revenue amounted to 22,588.23 million yuan, of which the operating revenue from
medical sales business was 19,275.05 million yuan, accounting for 85.33% of the total
operating revenue.
As operating revenue is the key performance indicators of the Company, there might
be inherent risks that the Company’s management (the “Management”) adopts
inappropriate revenue recognition to achieve specific goals or expectations. As the
inherent risk of misstatement is high, we have identified revenue recognition as a key
audit matter.
2. Responsive audit procedures
Our main audit procedures for revenue recognition are as follows:
(1) We obtained understandings of key internal controls related to revenue recognition,
assessed the design of these controls, determined whether they had been executed, and
tested the effectiveness of the operation;
(2) We checked sales contracts, obtained understandings of main contractual terms or
conditions, and assessed whether the revenue recognition method was appropriate;
(3) We performed analysis procedure on operating revenue and gross margin by
month, product, store, etc., so as to identify whether there are significant or abnormal
fluctuations and find out the reason;
137 / 329
(4) For revenue from pharmaceutical wholesale, we checked supporting documents
related to selected items, including sales contracts, orders, sales invoices, outbound
delivery orders, delivery notes, shipping documents, delivery receipts, etc.;
(5) We performed rationality analysis procedure on revenue from pharmaceutical
retail, including UPT and ATV, and checked businesses with their sales details,
payment records, accounting treatments, etc. to assess whether there are abnormal
sales;
(6) We cross-checked the data of information system, including drug retail business
management system and business processes of SAP information system;
(7) We checked bank transaction flows, bank statements, and reconciliation table for
outstanding accounts, and verified sales return records;
(8) We performed confirmation procedures on accounts receivable with large amount
(mainly from wholesale customers), revenue from promotional service fees and
wholesale business with large amount, and checked sales return records subsequent to
the balance sheet date;
(9) We performed cut-off tests to check whether the revenue was recognized in the
appropriate period; and
(10) We checked whether information related to operating revenue had been
presented appropriately in the financial statements.
(II) Impairment of goodwill
1. Key audit matters
Please refer to section III (XVIII) and V (I) 18 of notes to the financial statements for
details.
As of December 31, 2023, the cost of goodwill amounted to 4,612.85 million yuan,
with provision for impairment of 2.30 million yuan, and the carrying amount
amounted to 4,610.55 million yuan.
For asset group or asset group portfolio related to goodwill, the Management will
perform impairment test on goodwill together with related asset group or asset group
portfolio, and the recoverable amount of related asset group or asset group portfolio is
determined based on the estimated present value of future cash flows. As the amount
138 / 329
of goodwill is significant and impairment test involves significant judgment of the
Management, we have identified impairment of goodwill as a key audit matter.
2. Responsive audit procedures
Our main audit procedures for impairment of goodwill are as follows:
(1) We obtained understandings of key internal controls related to impairment of
goodwill, assessed the design of these controls, determined whether they had been
executed, and tested the effectiveness of the operation;
(2) We reviewed the outcome of the Management’s previous estimates on the present
value of future cash flows or their subsequent re-estimations;
(3) We assessed the competency, professional quality and objectivity of external
appraisers engaged by the Management;
(4) We assessed the appropriateness and consistency of impairment test method
adopted by the Management;
(5) We assessed the appropriateness of significant assumptions used in impairment
test and reviewed whether relevant assumptions were consistent with overall economy
environment, industry condition, management situation, historical experience,
operation plan, approved budget, meeting summary, assumptions used in other
accounting estimates and related assumptions used in other areas of business
activities;
(6) We assessed the appropriateness, relevance and reliability of data used by the
Management in the impairment test and reviewed the consistency of related
information in the impairment test;
(7) We tested whether the Management’s calculation of present value of estimated
future cash flows was accurate;
(8) We checked whether information related to impairment of goodwill had been
presented appropriately in the financial statements.
139 / 329
IV. Other Information
The Management is responsible for the other information. The other information
comprises the information included in the Company’s 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 the other information, we are required to report that fact. We have
nothing to report in this regard.
V. Responsibilities of the Management and Those Charged with Governance for the Financial
Statements
The Management is responsible for preparing and presenting fairly the financial
statements in accordance with China Accounting Standards for Business Enterprises,
as well as designing, implementing and maintaining internal control relevant to the
preparation of financial statements that are free from material misstatement, whether
due to fraud or error.
In preparing the financial statements, the 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 the
Management either intends to liquidate the Company or to cease operations, or has no
realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s
financial reporting process.
140 / 329
VI. Certified Public Accountant’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 China Standards on Auditing 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.
We exercise professional judgment and maintain professional skepticism throughout
the audit performed in accordance with China Standards on Auditing. We also:
(I) 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.
(II) Obtain an understanding of internal control relevant to the audit in order to design
audit procedures that are appropriate in the circumstances.
(III) Evaluate the appropriateness of accounting policies used and the reasonableness
of accounting estimates and related disclosures made by the Management.
(IV) 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, we are required to draw attention 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.
141 / 329
(V) Evaluate the overall presentation, structure and content of the financial statements,
and whether the financial statements represent the underlying transactions and events
in a manner that achieves fair presentation.
(VI) Obtain sufficient and 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 sole responsibility for our audit
opinion.
We communicate with those charged with governance regarding the planned audit
scope, time schedule and significant audit findings, including any deficiencies in
internal control of concern that we identify during our audit.
142 / 329
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.
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.
Pan-China Certified Public Accountants LLP Chinese Certified Public Accountant:
(Engagement Partner)
Hangzhou China Chinese Certified Public Accountant:
Date of Report: April, 26, 2024
The auditor’s report and the accompanying financial statements are English translations of the Chinese auditor’s
report and statutory financial statements prepared under accounting principles and practices generally accepted
in the People’s Republic of China. These financial statements are not intended to present the financial position
and financial performance and cash flows in accordance with accounting principles and practices generally
accepted in other countries and jurisdictions. In case the English version does not conform to the Chinese version,
the Chinese version prevails.
143 / 329
II. Financial statement
Consolidated Balance Sheet
December 31, 2023
Prepared by: Yifeng Pharmacy Chain Co.,Ltd. Unit: yuan
Note
Assets December 31, 2023 December 31, 2022
No.
Current assets:
Cash and bank balances VII. 1 3,565,905,738.81 4,112,519,204.66
Settlement funds
Loans to other banks
Held-for-trading financial assets VII. 2 1,630,720,887.94 50,045,139.45
Derivative financial assets VII. 3
Notes receivable VII. 4
Accounts receivable VII. 5 2,138,274,319.88 1,843,940,879.13
Receivables financing VII. 7 11,889,888.58 1,784,671.86
Advances paid VII. 8 141,493,810.64 225,472,636.75
Premiums receivable
Reinsurance accounts receivable
Reinsurance reserve receivable
Other receivables VII. 9 448,538,089.70 419,472,054.84
Including: Interests receivable
Dividends receivable
Financial assets under reverse repo
Inventories VII. 10 3,807,963,660.86 3,614,549,276.03
Contract assets VII. 6
Assets held for sale VII. 11
Non-current assets due within one year VII. 12
Other current assets VII. 13 384,124,342.84 310,439,549.32
Total current assets 12,128,910,739.25 10,578,223,412.04
Non-current assets:
Loans and advances
Debt investments VII. 14 154,167,777.78
Other debt investments VII. 15
Long-term receivables VII. 16
Long-term equity investments VII. 17 5,565,690.31 5,249,115.35
Other equity instrument investments VII. 18 432,225,200.00 327,379,600.00
Other non-current financial assets VII. 19 1,010,000.00 1,460,000.00
Investment property VII. 20
Fixed assets VII. 21 1,524,048,536.46 1,218,512,066.08
Construction in progress VII. 22 175,121,866.79 239,848,057.90
Productive biological assets VII. 23
Oil & gas assets VII. 24
144 / 329
Right-of-use assets VII. 25 3,965,884,425.82 3,433,622,232.34
Intangible assets VII. 26 470,972,498.88 478,199,532.34
Development expenditures 3,496,698.64 7,251,672.96
Goodwill VII. 27 4,610,549,279.24 4,187,923,745.35
Long-term prepayments VII. 28 495,647,138.93 423,440,650.85
Deferred tax assets VII. 29 138,670,316.75 127,683,398.33
Other non-current assets VII. 30 30,269,025.79 7,230,498.45
Total non-current assets 12,007,628,455.39 10,457,800,569.95
Total assets 24,136,539,194.64 21,036,023,981.99
Legal representative: Officer in charge of accounting: Head of accounting department:
145 / 329
Consolidated Balance Sheet (Continued)
December 31, 2023
Prepared by: Yifeng Pharmacy Chain Co.,Ltd. Unit: yuan
Note
Liabilities & Equity December 31, 2023 December 31, 2022
No.
Current liabilities:
Short-term borrowings VII. 32
Central bank loans
Loans from other banks
Held-for-trading financial liabilities VII. 33
Derivative financial liabilities VII. 34
Notes payable VII. 35 6,215,388,292.66 5,082,931,546.02
Accounts payable VII. 36 1,955,564,568.05 1,677,740,647.28
Advances received VII. 37 15,959,550.59 6,078,020.28
Contract liabilities VII. 38 80,166,931.03 60,685,079.13
Financial liabilities under repo
Absorbing deposit and interbank deposit
Deposits for agency security transaction
Deposits for agency security underwriting
Employee benefits payable VII. 39 463,733,610.00 505,211,513.30
Taxes and rates payable VII. 40 263,088,153.57 283,427,593.13
Other payables VII. 41 810,446,678.28 760,185,299.36
Handling fees and commissions payable
Reinsurance accounts payable
Liabilities held for sale VII. 42
Non-current liabilities due within one year VII. 43 1,458,466,797.74 1,277,799,825.50
Other current liabilities VII. 44 6,656,678.33 5,215,576.73
Total current liabilities 11,269,471,260.25 9,659,275,100.73
Non-current liabilities:
Insurance policy reserve
Long-term borrowings VII. 45 133,617,147.68 228,668,070.87
Bonds payable VII. 46
Including: Preferred shares
Perpetual bonds
Lease liabilities VII. 47 2,205,510,311.80 1,951,076,403.19
Long-term payables VII. 48
Long-term employee benefits payable VII. 49
Provisions VII. 50
Deferred income VII. 51 54,094,246.44 54,689,784.63
Deferred tax liabilities VII. 29 26,758,566.63 23,710,293.77
Other non-current liabilities VII. 52
146 / 329
Total non-current liabilities 2,419,980,272.55 2,258,144,552.46
Total liabilities 13,689,451,532.80 11,917,419,653.19
Equity:
Share capital VII. 53 1,010,579,797.00 721,704,930.00
Other equity instruments VII. 54
Including: Preferred shares
Perpetual bonds
Capital reserve VII. 55 3,842,147,881.80 4,076,700,083.91
Less: Treasury shares VII. 56 42,238,481.15 77,410,952.00
Other comprehensive income VII. 57 21,416,709.49 -17,001,709.05
Special reserve VII. 58
Surplus reserve VII. 59 198,282,150.00 132,066,047.02
General risk reserve
Undistributed profit VII. 60 4,774,244,419.42 3,717,157,469.99
Total equity attributable to the parent company 9,804,432,476.56 8,553,215,869.87
Non-controlling interest 642,655,185.28 565,388,458.93
Total equity 10,447,087,661.84 9,118,604,328.80
Total liabilities & equity 24,136,539,194.64 21,036,023,981.99
Legal representative: Officer in charge of accounting: Head of accounting department:
147 / 329
Balance Sheet of Parent Company
December 31, 2023
Prepared by: Yifeng Pharmacy Chain Co.,Ltd. Unit: yuan
Note
Assets December 31, 2023 December 31, 2022
No.
Current assets:
Cash and bank balances 2,589,345,354.69 2,865,759,276.87
Held-for-trading financial assets 972,143,189.04 50,045,139.45
Derivative financial assets
Notes receivable
Accounts receivable XIX. 1 487,341,632.68 344,639,433.59
Receivables financing
Advances paid 2,212,269,168.23 3,303,479,383.69
Other receivables XIX. 2 1,376,615,421.54 816,358,778.99
Including: Interests receivable 855,724.12
Dividends receivable 581,621,336.22 68,563,059.65
Inventories 480,579,869.08 495,427,259.49
Contract assets
Assets held for sale
Non-current assets due within one year
Other current assets 128,463,091.48 119,888,080.77
Total current assets 8,246,757,726.74 7,995,597,352.85
Non-current assets:
Debt investments 154,167,777.78
Other debt investments
Long-term receivables
Long-term equity investments XIX. 3 2,600,755,329.68 2,597,255,329.68
Other equity instrument investments
Other non-current financial assets
Investment property
Fixed assets 170,678,947.01 149,991,447.13
Construction in progress
Productive biological assets
Oil & gas assets
Right-of-use assets 869,222,301.66 784,552,311.43
Intangible assets 142,328,025.69 137,318,631.63
Development expenditures 3,496,698.64 4,626,957.17
Goodwill 405,394,296.50 399,394,296.50
Long-term prepayments 114,167,539.56 96,782,189.99
Deferred tax assets 13,867,342.16 14,748,536.60
Other non-current assets 2,213,162.21 2,903,917.65
Total non-current assets 4,476,291,420.89 4,187,573,617.78
148 / 329
Total assets 12,723,049,147.63 12,183,170,970.63
Legal representative: Officer in charge of accounting: Head of accounting department:
149 / 329
Balance Sheet of Parent Company (Continued)
December 31, 2023
Prepared by: Yifeng Pharmacy Chain Co.,Ltd. Unit: yuan
Note
Liabilities & Equity December 31, 2023 December 31, 2022
No.
Current liabilities:
Short-term borrowings
Held-for-trading financial liabilities
Derivative financial liabilities
Notes payable 5,387,925,216.92 5,043,026,204.10
Accounts payable 187,161,288.67 555,273.39
Advances received 1,155,174.30 873,707.70
Contract liabilities 10,965,578.24 7,783,991.05
Employee benefits payable 127,618,574.05 137,764,950.28
Taxes and rates payable 28,669,793.51 39,071,023.95
Other payables 455,998,486.77 875,799,337.72
Liabilities held for sale
Non-current liabilities due within one year 380,118,769.83 344,435,641.85
Other current liabilities 552,665.15 392,313.15
Total current liabilities 6,580,165,547.44 6,449,702,443.19
Non-current liabilities:
Long-term borrowings 133,617,147.68 228,668,070.87
Bonds payable
Including: Preferred shares
Perpetual bonds
Lease liabilities 488,787,821.39 438,009,237.81
Long-term payables
Long-term employee benefits payable
Provisions
Deferred income 20,892.80 23,504.40
Deferred tax liabilities
Other non-current liabilities
Total non-current liabilities 622,425,861.87 666,700,813.08
Total liabilities 7,202,591,409.31 7,116,403,256.27
Equity:
Share capital/Paid-in capital 1,010,579,797.00 721,704,930.00
Other equity instruments
Including: Preferred shares
Perpetual bonds
Capital reserve 3,840,152,133.25 4,083,988,504.95
Less: Treasury shares 42,238,481.15 77,410,952.00
150 / 329
Other comprehensive income
Special reserve
Surplus reserve 198,282,150.00 132,066,047.02
Undistributed profit 513,682,139.22 206,419,184.39
Total equity 5,520,457,738.32 5,066,767,714.36
Total liabilities & equity 12,723,049,147.63 12,183,170,970.63
Legal representative: Officer in charge of accounting: Head of accounting department:
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Consolidated Income Statement
January to December, 2023
Prepared by: Yifeng Pharmacy Chain Co.,Ltd. Unit: yuan
Note
Items 2023 2022
No.
I. Total operating revenue 22,588,227,402.22 19,886,395,835.95
Including: Operating revenue VII. 61 22,588,227,402.22 19,886,395,835.95
Interest income
Premiums earned
Revenue from handling fees and commissions
II. Total operating cost 20,616,597,464.58 18,008,275,241.10
Including: Operating cost VII. 61 13,957,598,854.74 12,025,564,042.05
Interest expenses
Handling fees and commissions
Surrender value
Net payment of insurance claims
Net provision of insurance policy reserve
Premium bonus expenditures
Reinsurance expenses
Taxes and surcharges VII. 62 89,389,002.35 70,255,483.75
Selling expenses VII. 63 5,487,450,160.02 4,878,272,940.17
Administrative expenses VII. 64 962,424,859.48 904,060,660.30
R&D expenses VII. 65 33,549,984.91 25,309,639.00
Financial expenses VII. 66 86,184,603.08 104,812,475.83
Including: Interest expenses 160,528,586.40 165,208,532.62
Interest income 93,286,397.47 73,208,764.18
Add: Other income VII. 67 76,134,913.66 43,861,162.79
Investment income (or less: losses) VII. 68 42,372,208.53 6,868,722.97
Including: Investment income from associates and joint ventures 316,574.96 -11,413.00
Gains from derecognition of financial assets at amortized cost
Gains on foreign exchange (or less: losses)
Gains on net exposure to hedging risk (or less: losses) VII. 69
Gains on changes in fair value (or less: losses) VII. 70
Credit impairment loss VII. 71 -4,537,333.68 -10,465,943.08
Assets impairment loss VII. 72 -72,633,545.68 -56,018,740.98
Gains on asset disposal (or less: losses) VII. 73 41,818,933.72 23,167,141.50
III. Operating profit (or less: losses) 2,054,785,114.19 1,885,532,938.05
Add: Non-operating revenue VII. 74 12,704,923.41 12,241,598.87
Less: Non-operating expenditures VII. 75 29,896,117.67 20,287,509.79
IV. Profit before tax (or less: total loss) 2,037,593,919.93 1,877,487,027.13
Less: Income tax expenses VII. 76 456,662,974.49 454,060,994.95
V. Net profit (or less: net loss) 1,580,930,945.44 1,423,426,032.18
152 / 329
(I) Categorized by the continuity of operations
1. Net profit from continuing operations (or less: net loss) 1,580,930,945.44 1,423,426,032.18
2. Net profit from discontinued operations (or less: net loss)
(II) Categorized by the portion of equity ownership
1. Net profit attributable to owners of parent company (or less: net loss) 1,411,985,024.41 1,261,841,039.80
2. Net profit attributable to non-controlling shareholders (or less: net loss) 168,945,921.03 161,584,992.38
VI. Other comprehensive income after tax VII. 77 38,418,418.54 -17,001,709.05
Items attributable to the owners of the parent company 38,418,418.54 -17,001,709.05
(I) Not to be reclassified subsequently to profit or loss 38,418,418.54 -17,001,709.05
1. Remeasurements of the net defined benefit plan
2. Items under equity method that will not be reclassified to profit or loss
3. Changes in fair value of other equity instrument investments 38,418,418.54 -17,001,709.05
4. Changes in fair value of own credit risk
5. Others
(II) To be reclassified subsequently to profit or loss
1. Items under equity method that may be reclassified to profit or loss
2. Changes in fair value of other debt investments
3. Profit or loss from reclassification of financial assets into other comprehensive income
4. Provision for credit impairment of other debt investments
5. Cash flow hedging reserve
6. Translation reserve
7. Others
Items attributable to non-controlling shareholders
VII. Total comprehensive income 1,619,349,363.98 1,406,424,323.13
Items attributable to the owners of the parent company 1,450,403,442.95 1,244,839,330.75
Items attributable to non-controlling shareholders 168,945,921.03 161,584,992.38
VIII. Earnings per share (EPS):
(I) Basic EPS (yuan per share) 1.40 1.26
(II) Diluted EPS (yuan per share) 1.40 1.25
Legal representative: Officer in charge of accounting: Head of accounting department:
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Income Statement of Parent Company
January to December, 2023
Prepared by: Yifeng Pharmacy Chain Co.,Ltd.
Unit: yuan
Note
Items 2023 2022
No.
I. Operating revenue XIX. 4 4,842,155,820.34 4,518,941,977.59
Less: Operating cost XIX. 4 3,089,767,071.53 2,770,356,220.02
Taxes and surcharges 14,020,761.78 11,783,739.38
Selling expenses 1,276,782,981.45 1,148,350,861.94
Administrative expenses 374,674,994.87 347,308,810.22
R&D expenses 13,982,978.42 14,487,756.37
Financial expenses -21,125,905.27 -1,401,909.73
Including: Interest expenses 40,682,565.32 47,988,472.23
Interest income 72,060,729.92 54,901,970.99
Add: Other income 14,475,454.01 10,149,594.62
Investment income (or less: losses) XIX. 5 600,876,424.57 71,027,846.34
Including: Investment income from associates and joint ventures
Gains from derecognition of financial assets at amortized cost
Gains on net exposure to hedging risk (or less: losses)
Gains on changes in fair value (or less: losses)
Credit impairment loss -3,813,565.50 -3,201,193.20
Assets impairment loss -10,494,191.46 -7,077,019.03
Gains on asset disposal (or less: losses) 5,131,144.70 2,934,769.69
II. Operating profit (or less: losses) 700,228,203.88 301,890,497.81
Add: Non-operating revenue 1,132,102.04 3,150,323.65
Less: Non-operating expenditures 10,705,794.40 8,408,883.38
III. Profit before tax (or less: total loss) 690,654,511.52 296,631,938.08
Less: Income tax expenses 28,493,481.71 60,491,990.43
IV. Net profit (or less: net loss) 662,161,029.81 236,139,947.65
(I) Net profit from continuing operations (or less: net loss) 662,161,029.81 236,139,947.65
(II) Net profit from discontinued operations (or less: net loss)
V. Other comprehensive income after tax
(I) Not to be reclassified subsequently to profit or loss
1. Remeasurements of the net defined benefit plan
2. Items under equity method that will not be reclassified to profit or loss
3. Changes in fair value of other equity instrument investments
4. Changes in fair value of own credit risk
5. Others
(II) To be reclassified subsequently to profit or loss
1. Items under equity method that may be reclassified to profit or loss
2. Changes in fair value of other debt investments
154 / 329
3. Profit or loss from reclassification of financial assets into other
comprehensive income
4. Provision for credit impairment of other debt investments
5. Cash flow hedging reserve
6. Translation reserve
7. Others
VI. Total comprehensive income 662,161,029.81 236,139,947.65
VII. Earnings per share (EPS):
(I) Basic EPS (yuan per share)
(II) Diluted EPS (yuan per share)
Legal representative: Officer in charge of accounting: Head of accounting department:
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Consolidated Cash Flow Statement
January to December, 2023
Prepared by: Yifeng Pharmacy Chain Co.,Ltd.
Unit: yuan
Note
Items 2023 2022
No.
I. Cash flows from operating activities:
Cash receipts from sale of goods or rendering of services 23,683,336,044.51 20,516,702,909.97
Net increase of client deposit and interbank deposit
Net increase of central bank loans
Net increase of loans from other financial institutions
Cash receipts from original insurance contract premium
Net cash receipts from reinsurance
Net increase of policy-holder deposit and investment
Cash receipts from interest, handling fees and commissions
Net increase of loans from others
Net increase of repurchase
Net cash receipts from agency security transaction
Receipts of tax refund
Other cash receipts related to operating activities VII. 78 450,020,711.44 159,890,326.70
Subtotal of cash inflows from operating activities 24,133,356,755.95 20,676,593,236.67
Cash payments for goods purchased and services received 13,337,334,333.88 11,459,225,603.79
Net increase of loans and advances to clients
Net increase of central bank deposit and interbank deposit
Cash payments for insurance indemnities of original insurance contracts
Net increase of loans to others
Cash payments for interest, handling fees and commissions
Cash payments for policy bonus
Cash paid to and on behalf of employees 3,661,988,972.50 3,089,512,042.29
Cash payments for taxes and rates 1,308,087,630.24 1,053,051,300.43
Other cash payments related to operating activities VII. 78 1,202,205,023.73 1,154,536,986.01
Subtotal of cash outflows from operating activities 19,509,615,960.35 16,756,325,932.52
Net cash flows from operating activities 4,623,740,795.60 3,920,267,304.15
II. Cash flows from investing activities:
Cash receipts from withdrawal of investments 450,000.00
Cash receipts from investment income 17,084,000.00
Net cash receipts from the disposal of fixed assets, intangible assets and other
15,780,909.19 9,027,812.92
long-term assets
Net cash receipts from the disposal of subsidiaries & other business units
Other cash receipts related to investing activities VII. 78 3,682,480,295.18 719,096,406.63
Subtotal of cash inflows from investing activities 3,715,795,204.37 728,124,219.55
Cash payments for the acquisition of fixed assets, intangible assets and other
739,924,631.96 587,505,758.95
long-term assets
Cash payments for investments 53,621,041.95 350,048,545.40
156 / 329
Note
Items 2023 2022
No.
Net increase of pledged borrowings
Net cash payments for the acquisition of subsidiaries & other business units 498,820,605.67 450,556,053.70
Other cash payments related to investing activities VII. 78 5,403,750,000.00 614,015,070.00
Subtotal of cash outflows from investing activities 6,696,116,279.58 2,002,125,428.05
Net cash flows from investing activities -2,980,321,075.21 -1,274,001,208.50
III. Cash flows from financing activities:
Cash receipts from absorbing investments 17,040,791.00 77,410,952.00
Including: Cash received by subsidiaries from non-controlling shareholders as
9,650,000.00
investments
Cash receipts from borrowings 80,000,000.00
Other cash receipts related to financing activities VII. 78
Subtotal of cash inflows from financing activities 17,040,791.00 157,410,952.00
Cash payments for the repayment of borrowings 84,359,893.40 131,693,919.80
Cash payments for distribution of dividends or profits and for interest expenses 416,763,539.36 316,214,007.36
Including: Cash paid by subsidiaries to non-controlling shareholders as
94,880,937.07 81,195,720.31
dividend or profit
Other cash payments related to financing activities VII. 78 1,608,956,587.47 1,364,769,958.60
Subtotal of cash outflows from financing activities 2,110,080,020.23 1,812,677,885.76
Net cash flows from financing activities -2,093,039,229.23 -1,655,266,933.76
IV. Effect of foreign exchange rate changes on cash and cash equivalents
V. Net increase in cash and cash equivalents -449,619,508.85 990,999,161.88
Add: Opening balance of cash and cash equivalents 2,918,199,648.45 1,927,200,486.57
VI. Closing balance of cash and cash equivalents 2,468,580,139.60 2,918,199,648.45
Legal representative: Officer in charge of accounting: Head of accounting department:
157 / 329
Cash Flow Statement of Parent Company
January to December, 2023
Prepared by: Yifeng Pharmacy Chain Co.,Ltd.
Unit: yuan
Note
Items 2023 2022
No.
I. Cash flows from operating activities:
Cash receipts from sale of goods and rendering of services 4,913,634,231.73 4,617,075,292.59
Receipts of tax refund
Other cash receipts related to operating activities 311,864,356.44 819,463,173.14
Subtotal of cash inflows from operating activities 5,225,498,588.17 5,436,538,465.73
Cash payments for goods purchased and services received 1,589,164,751.18 2,546,455,039.86
Cash paid to and on behalf of employees 919,703,595.62 788,150,846.88
Cash payments for taxes and rates 129,163,756.25 153,808,163.57
Other cash payments related to operating activities 830,703,798.67 539,825,433.56
Subtotal of cash outflows from operating activities 3,468,735,901.71 4,028,239,483.87
Net cash flows from operating activities 1,756,762,686.46 1,408,298,981.86
II. Cash flows from investing activities:
Cash receipts from withdrawal of investments
Cash receipts from investment income 72,230,797.25 21,593,455.34
Net cash receipts from the disposal of fixed assets, intangible
4,960,151.28 3,744,877.80
assets and other long-term assets
Net cash receipts from the disposal of subsidiaries & other
business units
Other cash receipts related to investing activities 2,398,465,799.26 719,383,062.88
Subtotal of cash inflows from investing activities 2,475,656,747.79 744,721,396.03
Cash payments for the acquisition of fixed assets, intangible assets
133,579,184.57 120,290,081.83
and other long-term assets
Cash payments for investments 630,000.00
Net cash payments for the acquisition of subsidiaries & other
30,346,303.14 239,790,000.00
business units
Other cash payments related to investing activities 3,460,000,000.00 610,000,000.00
Subtotal of cash outflows from investing activities 3,623,925,487.71 970,710,081.83
-1,148,268,739.9
Net cash flows from investing activities -225,988,685.80
2
III. Cash flows from financing activities:
Cash receipts from absorbing investments 7,390,791.00 77,410,952.00
Cash receipts from borrowings 80,000,000.00
Other cash receipts related to financing activities
Subtotal of cash inflows from financing activities 7,390,791.00 157,410,952.00
Cash payments for the repayment of borrowings 84,359,893.40 128,193,919.80
Cash payments for distribution of dividends or profits and for
300,267,449.66 233,650,614.00
interest expenses
Other cash payments related to financing activities 338,759,264.61 255,604,135.23
Subtotal of cash outflows from financing activities 723,386,607.67 617,448,669.03
Net cash flows from financing activities -715,995,816.67 -460,037,717.03
158 / 329
Note
Items 2023 2022
No.
IV. Effect of foreign exchange rate changes on cash and cash
equivalents
V. Net increase in cash and cash equivalents -107,501,870.13 722,272,579.02
Add: Opening balance of cash and cash equivalents 1,838,707,151.48 1,116,434,572.46
VI. Closing balance of cash and cash equivalents 1,731,205,281.35 1,838,707,151.49
Legal representative: Officer in charge of accounting: Head of accounting department:
159 / 329
Consolidated Statement of Changes in Shareholders’ Equity
January to December, 2023
Prepared by: Yifeng Pharmacy Chain Co.,Ltd.
Unit: yuan
2023
Equity attributable to parent company
Items Other equity instruments Other Non-controlling
Share capital/ Less: Special Surplus General Total equity
Capital reserve comprehensive Undistributed profit interest
Paid-in capital Preferred Perpetual Others Treasury shares reserve reserve risk reserve
shares bonds income
I. Balance at the end of prior year 721,704,930.00 4,076,700,083.91 77,410,952.00 -17,001,709.05 132,066,047.02 3,717,157,469.99 565,388,458.93 9,118,604,328.80
Add: Cumulative changes of accounting policies
Error correction of prior period
Business combination under common control
Others
II. Balance at the beginning of current year 721,704,930.00 4,076,700,083.91 77,410,952.00 -17,001,709.05 132,066,047.02 3,717,157,469.99 565,388,458.93 9,118,604,328.80
III. Current period increase (or less: decrease) 288,874,867.00 -234,552,202.11 -35,172,470.85 38,418,418.54 66,216,102.98 1,057,086,949.43 77,266,726.35 1,328,483,333.04
(I) Total comprehensive income 38,418,418.54 1,411,985,024.41 168,945,921.03 1,619,349,363.98
(II) Capital contributed or withdrawn by owners 192,895.00 44,845,600.30 -35,172,470.85 3,201,742.39 83,412,708.54
1. Ordinary shares contributed by owners 390,015.00 7,000,776.00 7,390,791.00 9,650,000.00 9,650,000.00
2. Capital contributed by holders of other equity
instruments
3. Amount of share-based payment included in
41,169,112.30 41,169,112.30
equity
4. Others -197,120.00 -3,324,288.00 -42,563,261.85 -6,448,257.61 32,593,596.24
(III) Profit distribution 9,284,169.59 66,216,102.98 -354,898,074.98 -94,880,937.07 -374,278,739.48
1. Appropriation of surplus reserve 66,216,102.98 -66,216,102.98
2. Appropriation of general risk reserve
3. Appropriation of profit to owners -288,681,972.00 -94,880,937.07 -383,562,909.07
4. Others 9,284,169.59 9,284,169.59
(IV) Internal carry-over within equity 288,681,972.00 -288,681,972.00
1. Transfer of capital reserve to capital 288,681,972.00 -288,681,972.00
2. Transfer of surplus reserve to capital
3. Surplus reserve to cover losses
4. Changes in defined benefit plan carried over to
retained earnings
5. Other comprehensive income carried over to
retained earnings
6. Others
(V) Special reserve
1. Current period appropriation
2. Current period use
(VI) Others
IV. Balance at the end of current period 1,010,579,797.00 3,842,147,881.80 42,238,481.15 21,416,709.49 198,282,150.00 4,774,244,419.42 642,655,185.28 10,447,087,661.84
Legal representative: Officer in charge of accounting: Head of accounting department:
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Consolidated Statement of Changes in Shareholders’ Equity (Continued)
January to December, 2023
Prepared by: Yifeng Pharmacy Chain Co.,Ltd.
Unit: yuan
2022
Equity attributable to parent company
Items Other equity instruments Other Non-controlling
Share capital/ Less: Special Surplus General risk Total equity
Capital reserve comprehensive Undistributed profit interest
Paid-in capital Preferred Perpetual Others Treasury shares reserve reserve reserve
shares bonds income
I. Balance at the end of prior year 718,765,340.00 3,988,243,959.41 27,762,448.00 108,480,125.50 2,693,579,088.57 383,241,933.05 7,864,547,998.53
Add: Cumulative changes of accounting policies 906,182.14 906,182.14
Error correction of prior period
Business combination under common control
Others
II. Balance at the beginning of current year 718,765,340.00 3,988,243,959.41 27,762,448.00 108,480,125.50 2,694,485,270.71 383,241,933.05 7,865,454,180.67
III. Current period increase (or less: decrease) 2,939,590.00 88,456,124.50 49,648,504.00 -17,001,709.05 23,585,921.52 1,022,672,199.28 182,146,525.88 1,253,150,148.13
(I) Total comprehensive income -17,001,709.05 1,261,841,039.80 161,584,992.38 1,406,424,323.13
(II) Capital contributed or withdrawn by owners 2,939,590.00 88,456,124.50 49,648,504.00 101,757,253.82 143,504,464.32
1. Ordinary shares contributed by owners 3,095,200.00 74,315,752.00 77,410,952.00
2. Capital contributed by holders of other equity
instruments
3. Amount of share-based payment included in
23,159,834.00 23,159,834.00
equity
4. Others -155,610.00 -9,019,461.50 -27,762,448.00 101,757,253.82 120,344,630.32
(III) Profit distribution 23,585,921.52 -239,168,840.52 -81,195,720.31 -296,778,639.31
1. Appropriation of surplus reserve 23,585,921.52 -23,585,921.52
2. Appropriation of general risk reserve
3. Appropriation of profit to owners -215,582,919.00 -81,195,720.31 -296,778,639.31
4. Others
(IV) Internal carry-over within equity
1. Transfer of capital reserve to capital
2. Transfer of surplus reserve to capital
161 / 329
2022
Equity attributable to parent company
Items Other equity instruments Other Non-controlling
Share capital/ Less: Special Surplus General risk Total equity
Capital reserve comprehensive Undistributed profit interest
Paid-in capital Preferred Perpetual Others Treasury shares reserve reserve reserve
shares bonds income
3. Surplus reserve to cover losses
4. Changes in defined benefit plan carried over to
retained earnings
5. Other comprehensive income carried over to
retained earnings
6. Others
(V) Special reserve
1. Current period appropriation
2. Current period use
(VI) Others
IV. Balance at the end of current period 721,704,930.00 4,076,700,083.91 77,410,952.00 -17,001,709.05 132,066,047.02 3,717,157,469.99 565,388,458.93 9,118,604,328.80
Legal representative: Officer in charge of accounting: Head of accounting department:
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Statement of Changes in Shareholders’ Equity of Parent Company
January to December, 2023
Prepared by: Yifeng Pharmacy Chain Co.,Ltd.
Unit: yuan
2023
Other equity instruments Other
Items Share capital/ Less: Treasury Special Undistributed
Paid-in capital Preferred Perpetual Other Capital reserve
shares
comprehensive
reserve
Surplus reserve
profit
Total equity
shares bonds s income
I. Balance at the end of prior year 721,704,930.00 4,083,988,504.95 77,410,952.00 132,066,047.02 206,419,184.39 5,066,767,714.36
Add: Cumulative changes of accounting policies
Error correction of prior period
Others
II. Balance at the beginning of current year 721,704,930.00 4,083,988,504.95 77,410,952.00 132,066,047.02 206,419,184.39 5,066,767,714.36
III. Current period increase (or less: decrease) 288,874,867.00 -243,836,371.70 -35,172,470.85 66,216,102.98 307,262,954.83 453,690,023.96
(I) Total comprehensive income 662,161,029.81 662,161,029.81
(II) Capital contributed or withdrawn by owners 192,895.00 44,845,600.30 -35,172,470.85 80,210,966.15
1. Ordinary shares contributed by owners 390,015.00 7,000,776.00 7,390,791.00
2. Capital contributed by holders of other equity
instruments
3. Amount of share-based payment included in
41,169,112.30 41,169,112.30
equity
4. Others -197,120.00 -3,324,288.00 -42,563,261.85 39,041,853.85
(III) Profit distribution 66,216,102.98 -354,898,074.98 -288,681,972.00
1. Appropriation of surplus reserve 66,216,102.98 -66,216,102.98
2. Appropriation of profit to owners -288,681,972.00 -288,681,972.00
3. Others
(IV) Internal carry-over within equity 288,681,972.00 -288,681,972.00
1. Transfer of capital reserve to capital 288,681,972.00 -288,681,972.00
2. Transfer of surplus reserve to capital
3. Surplus reserve to cover losses
4. Changes in defined benefit plan carried over to
retained earnings
5. Other comprehensive income carried over to
retained earnings
6. Others
(V) Special reserve
1. Current period appropriation
2. Current period use
(VI) Others
IV. Balance at the end of current period 1,010,579,797.00 3,840,152,133.25 42,238,481.15 198,282,150.00 513,682,139.22 5,520,457,738.32
Legal representative: Officer in charge of accounting: Head of accounting department:
163 / 329
Statement of Changes in Shareholders’ Equity of Parent Company (Continued)
January to December, 2023
Prepared by: Yifeng Pharmacy Chain Co.,Ltd.
Unit: yuan
Preceding period comparative
Other equity instruments Other
Items Share capital/ Less: Treasury Special Undistributed
Preferred Perpetual Others Capital reserve comprehensive Surplus reserve Total equity
Paid-in capital shares reserve profit
shares bonds income
I. Balance at the end of prior year 718,765,340.00 3,989,207,574.55 27,762,448.00 108,480,125.50 214,116,856.58 5,002,807,448.63
Add: Cumulative changes of accounting policies -4,668,779.32 -4,668,779.32
Error correction of prior period
Others
II. Balance at the beginning of current year 718,765,340.00 3,989,207,574.55 27,762,448.00 108,480,125.50 209,448,077.26 4,998,138,669.31
III. Current period increase (or less: decrease) 2,939,590.00 94,780,930.40 49,648,504.00 23,585,921.52 -3,028,892.87 68,629,045.05
(I) Total comprehensive income 236,139,947.65 236,139,947.65
(II) Capital contributed or withdrawn by owners 2,939,590.00 94,780,930.40 49,648,504.00 48,072,016.40
1. Ordinary shares contributed by owners 3,095,200.00 74,315,752.00 77,410,952.00
2. Capital contributed by holders of other equity
instruments
3. Amount of share-based payment included in equity 23,159,834.00 23,159,834.00
4. Others -155,610.00 -2,694,655.60 -27,762,448.00 24,912,182.40
(III) Profit distribution 23,585,921.52 -239,168,840.52 -215,582,919.00
1. Appropriation of surplus reserve 23,585,921.52 -23,585,921.52
2. Appropriation of profit to owners -215,582,919.00 -215,582,919.00
3. Others
(IV) Internal carry-over within equity
1. Transfer of capital reserve to capital
2. Transfer of surplus reserve to capital
3. Surplus reserve to cover losses
4. Changes in defined benefit plan carried over to
retained earnings
5. Other comprehensive income carried over to retained
earnings
6. Others
(V) Special reserve
1. Current period appropriation
2. Current period use
(VI) Others
IV. Balance at the end of current period 721,704,930.00 4,083,988,504.95 77,410,952.00 132,066,047.02 206,419,184.39 5,066,767,714.36
Legal representative: Officer in charge of accounting: Head of accounting department:
164 / 329
III Basic information of the Company
1. Company profile
Applicable Not Applicable
Yifeng Pharmacy Chain Co., Ltd. (the “Company”) was transformed from the former Hunan
Yifeng Pharmacy Pharmaceutical Chain Co., Ltd., which was jointly invested and established by
Hunan Yifeng Pharmaceutical Investment Management Co., Ltd. and Zhu Rong. Hunan Yifeng
Pharmacy Pharmaceutical Chain Co., Ltd. was registered at Changde Administration for Industry
and Commerce on June 20, 2008 and headquartered in Changsha City, Hunan Province. The
Company currently holds a business license with unified social credit code of
9143070067558223X2, with registered capital of 1,010,579,797.00 yuan, total share of
1,010,579,797 shares (each with par value of one yuan), of which, 2,463,695 shares are restricted
outstanding A shares, and 1,008,116,102 shares are unrestricted outstanding A shares. The
Company’s shares were listed on the Shanghai Stock Exchange on February 17, 2015.
The Company belongs to pharmaceutical retail industry and is mainly engaged in chain retail
business of drugs, health products, medical equipment, health-related convenience items, etc.
The financial statements were approved and authorized for issue by the 39th meeting of the fourth
session of the Board of Directors dated April 26, 2024.
IV. Preparation basis of the financial statements
1. Preparation basis
The financial statements have been prepared on the basis of going concern.
2. Assessment of the ability to continue as a going concern
Applicable Not Applicable
The Company has no events or conditions that may cast significant doubts upon the Company’s
ability to continue as a going concern within the 12 months after the balance sheet date.
V. Significant accounting policies and estimates
Important note:
Applicable Not Applicable
The Company has set up accounting policies and estimates on transactions or events such as
impairment of financial instruments, inventories, depreciation of fixed assets, construction in
progress, intangible assets, revenue recognition, etc., based on the Company’s actual production
and operation features.
1. Statement of compliance
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The financial statements have been prepared in accordance with the requirements of China
Accounting Standards for Business Enterprises (CASBEs), and present truly and completely the
financial position, financial performance and cash flows of the Company.
2. Accounting period
The accounting year of the Company runs from January 1 to December 31 under the Gregorian
calendar.
3. Operating cycle
Applicable Not Applicable
The Company has a relatively short operating cycle for its business, an asset or a liability is
classified as current if it is expected to be realized or due within 12 months.
4. Functional currency
The Company’s functional currency is Renminbi (RMB) Yuan.
5. Determination method and basis for selection of materiality
Applicable Not Applicable
The Company prepares and discloses financial statements in compliance with the principle of
materiality. The items disclosed in notes to the financial statements involving materiality
judgements, determination method and basis for selection of materiality are as follows:
Disclosed items involving Determination method and basis for
Note No.
materiality judgements selection of materiality
Advances paid with single amount in
Significant advances paid
excess of 0.3% of total assets are identified
with age over one year
as significant advances paid.
Other receivables with provision for bad
Significant other receivables debts made on an individual basis with
with provision for bad debts single amount in excess of 0.3% of total
made on an individual basis assets are identified as significant other
receivables.
Debt investments with single amount in
Significant debt investments excess of 0.3% of total assets are identified
as significant debt investments.
Construction in progress with single
Significant construction in amount in excess of 0.3% of total assets
VII 22
progress are identified as significant construction in
progress.
Accounts payable with single amount in
Significant accounts payable
excess of 0.3% of total assets are identified
with age over one year
as significant accounts payable.
Other payables with single amount in
Significant other payables
excess of 0.3% of total assets are identified
with age over one year
as significant other payables.
Significant advances Other payables with single amount in
received with age over one excess of 0.3% of total assets are identified
year or overdue as significant other payables.
Significant contract liabilities Contract liabilities with single amount in
with age over one year excess of 0.3% of total assets are identified
166 / 329
Disclosed items involving Determination method and basis for
Note No.
materiality judgements selection of materiality
as significant contract liabilities.
Cash flows from investing activities with
Significant cash flows from single amount in excess of 5% of total
investing activities assets are identified as significant cash
flows from investing activities.
Capitalized R&D projects with single
Significant capitalized R&D amount in excess of 0.3% of total assets
projects are identified as significant capitalized
R&D projects
Subsidiaries with total assets, total
revenue, profit before tax in excess of 10%
of the group’s total assets, total revenue,
Significant subsidiaries, not
V1 profit before tax in excess of 15% of the
wholly-owned subsidiaries
group’s revenue are identified as
significant subsidiaries and significant not
wholly-owned subsidiaries.
Joint ventures and associates with
investment income (or absolute value of
financial loss) in excess of 15% of the net
profit attributable to the parent company in
the consolidated financial statements, or
Significant joint ventures and
with the book value of long-term equity
associates
investments in associated enterprises
accounts in excess of 15% of the total
assets in the consolidated financial
statements of the company are identified
as significant joint ventures and associates.
Commitments with single amount in
Significant commitments XVI 1 excess of 0.3% of total assets are identified
as significant commitments.
Contingencies with single amount in
Significant contingencies XVII 1 excess of 0.3% of total assets are identified
as significant contingencies.
6. Accounting treatments of business combination under and not under common control
Applicable Not Applicable
1. Accounting treatment of business combination under common control
Assets and liabilities arising from business combination are measured at carrying amount of the
combined party included in the consolidated financial statements of the ultimate controlling party
at the combination date. Difference between carrying amount of the equity of the combined party
included in the consolidated financial statements of the ultimate controlling party and that of the
combination consideration or total par value of shares issued is adjusted to capital reserve, if the
balance of capital reserve is insufficient to offset, any excess is adjusted to retained earnings.
2. Accounting treatment of business combination not under common control
When combination cost is in excess of the fair value of identifiable net assets obtained from the
acquiree at the acquisition date, the excess is recognized as goodwill; otherwise, the fair value of
167 / 329
identifiable assets, liabilities and contingent liabilities, and the measurement of the combination
cost are reviewed, then the difference is recognized in profit or loss.
7. Judgement criteria for control and compilation method of consolidated financial
statements
Applicable Not Applicable
1. Judgement of control
An investor controls an investee if and only if the investor has all the following: (1) power over
the investee; (2) exposure, or rights, to variable returns from its involvement with the investee;
and (3) the ability to use its power over the investee to affect the amount of the investor’s returns.
2. Compilation method of consolidated financial statements
(1) The parent company brings all its controlled subsidiaries into the consolidation scope. The
consolidated financial statements are compiled by the parent company according to “CASBE 33 –
Consolidated Financial Statements”, based on relevant information and the financial statements of
the parent company and its subsidiaries.
8. Classification of joint arrangements and accounting treatment of joint operations
Applicable Not Applicable
1. Joint arrangements include joint operations and joint ventures.
2. When the Company is a joint operator of a joint operation, it recognizes the following items in
relation to its interest in a joint operation:
(1) its assets, including its share of any assets held jointly;
(2) its liabilities, including its share of any liabilities incurred jointly;
(3) its revenue from the sale of its share of the output arising from the joint operation;
(4) its share of the revenue from the sale of the assets by the joint operation; and
(5) its expenses, including its share of any expenses incurred jointly.
9. Recognition criteria of cash and cash equivalents
Cash as presented in cash flow statement refers to cash on hand and deposit on demand for
payment. Cash equivalents refer to short-term, highly liquid investments that can be readily
converted to cash and that are subject to an insignificant risk of changes in value.
10. Foreign currency translation
Applicable Not Applicable
Transactions denominated in foreign currency are translated into RMB yuan at the spot exchange
rate at the transaction date at initial recognition. At the balance sheet date, monetary items
denominated in foreign currency are translated at the spot exchange rate at the balance sheet date
168 / 329
with difference, except for those arising from the principal and interest of exclusive borrowings
eligible for capitalization, included in profit or loss; non-cash items carried at historical costs are
translated at the spot exchange rate at the transaction date, with the RMB amounts unchanged;
non-cash items carried at fair value in foreign currency are translated at the spot exchange rate at
the date when the fair value was determined, with difference included in profit or loss or other
comprehensive income.
2. Translation of financial statements measured in foreign currency
The assets and liabilities in the balance sheet are translated into RMB at the spot exchange rate at
the balance sheet date; the equity items, other than undistributed profit, are translated at the spot
exchange rate at the transaction date; the revenues and expenses in the income statement are
translated into RMB at the spot exchange rate at the transaction date. The difference arising from
the aforementioned foreign currency translation is included in other comprehensive income.
11. Financial instruments
Applicable Not Applicable
1. Classification of financial assets and financial liabilities
Financial assets are classified into the following three categories when initially recognized: (1)
financial assets at amortized cost; (2) financial assets at fair value through other comprehensive
income; (3) financial assets at fair value through profit or loss.
Financial liabilities are classified into the following four categories when initially recognized: (1)
financial liabilities at fair value through profit or loss; (2) financial liabilities that arise when a
transfer of a financial asset does not qualify for derecognition or when the continuing involvement
approach applies; (3) financial guarantee contracts not fall within the above categories (1) and (2),
and commitments to provide a loan at a below-market interest rate, which do not fall within the
above category (1); (4) financial liabilities at amortized cost.
2. Recognition criteria, measurement method and derecognition condition of financial assets and
financial liabilities
(1) Recognition criteria and measurement method of financial assets and financial liabilities
When the Company becomes a party to a financial instrument, it is recognized as a financial asset
or financial liability. The financial assets and financial liabilities initially recognized by the
Company are measured at fair value; for the financial assets and liabilities at fair value through
profit or loss, the transaction expenses thereof are directly included in profit or loss; for other
categories of financial assets and financial liabilities, the transaction expenses thereof are included
into the initially recognized amount. However, at initial recognition, for accounts receivable that
do not contain a significant financing component or in circumstances where the Company does not
consider the financing components in contracts within one year, they are measured at the
transaction price in accordance with “CASBE 14 – Revenues”.
169 / 329
(2) Subsequent measurement of financial assets
1) Financial assets measured at amortized cost
The Company measures its financial assets at the amortized costs using effective interest method.
Gains or losses on financial assets that are measured at amortized cost and are not part of hedging
relationships shall be included into profit or loss when the financial assets are derecognized,
reclassified, amortized using effective interest method or recognized with impairment loss.
2) Debt instrument investments at fair value through other comprehensive income
The Company measures its debt instrument investments at fair value. Interests, impairment gains
or losses, and gains and losses on foreign exchange that calculated using effective interest method
shall be included into profit or loss, while other gains or losses are included into other
comprehensive income. Accumulated gains or losses that initially recognized as other
comprehensive income should be transferred out into profit or loss when the financial assets are
derecognized.
3) Equity instrument investments at fair value through other comprehensive income
The Company measures its equity instrument investments at fair value. Dividends obtained (other
than those as part of investment cost recovery) shall be included into profit or loss, while other
gains or losses are included into other comprehensive income. Accumulated gains or losses that
initially recognized as other comprehensive income should be transferred out into retained
earnings when the financial assets are derecognized.
4) Financial assets at fair value through profit or loss
The Company measures its financial assets at fair value. Gains or losses arising from changes in
fair value (including interests and dividends) shall be included into profit or loss, except for
financial assets that are part of hedging relationships.
(3) Subsequent measurement of financial liabilities
1) Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include held-for-trading financial liabilities
(including derivatives that are liabilities) and financial liabilities designated as at fair value
through profit or loss. The Company measures such kind of liabilities at fair value. The amount of
changes in the fair value of the financial liabilities that are attributable to changes in the
Company’s own credit risk shall be included into other comprehensive income, unless such
treatment would create or enlarge accounting mismatches in profit or loss. Other gains or losses on
those financial liabilities (including interests, changes in fair value that are attributable to reasons
other than changes in the Company’s own credit risk) shall be included into profit or loss, except
for financial liabilities that are part of hedging relationships. Accumulated gains or losses that
originally recognized as other comprehensive income should be transferred out into retained
earnings when the financial liabilities are derecognized.
170 / 329
2) Financial liabilities that arise when a transfer of a financial asset does not qualify for
derecognition or when the continuing involvement approach applies
The Company measures its financial liabilities in accordance with “CASBE 23 – Transfer of
Financial Assets”.
3) Financial guarantee contracts not fall within the above categories 1) and 2), and commitments
to provide a loan at a below-market interest rate, which do not fall within the above category 1)
The Company measures its financial liabilities at the higher of: a. the amount of loss allowances in
accordance with impairment requirements of financial instruments; b. the amount initially
recognized less the amount of accumulated amortization recognized in accordance with “CASBE
14 – Revenues”.
4) Financial liabilities at amortized cost
The Company measures its financial liabilities at amortized cost using effective interest method.
Gains or losses on financial liabilities that are measured at amortized cost and are not part of
hedging relationships shall be included into profit or loss when the financial liabilities are
derecognized and amortized using effective interest method.
(4) Derecognition of financial assets and financial liabilities
1) Financial assets are derecognized when:
a. the contractual rights to the cash flows from the financial assets expire; or
b. the financial assets have been transferred and the transfer qualifies for derecognition in
accordance with “CASBE 23 – Transfer of Financial Assets”.
2) Only when the underlying present obligations of a financial liability are relieved totally or
partly may the financial liability be derecognized accordingly.
3. Recognition criteria and measurement method of financial assets transfer
Where the Company has transferred substantially all of the risks and rewards related to the
ownership of the financial asset, it derecognizes the financial asset, and any right or liability
arising from such transfer is recognized independently as an asset or a liability. If it retained
substantially all of the risks and rewards related to the ownership of the financial asset, it
continues recognizing the financial asset. Where the Company does not transfer or retain
substantially all of the risks and rewards related to the ownership of a financial asset, it is dealt
with according to the circumstances as follows respectively: (1) if the Company does not retain its
control over the financial asset, it derecognizes the financial asset, and any right or liability arising
from such transfer is recognized independently as an asset or a liability; (2) if the Company retains
its control over the financial asset, according to the extent of its continuing involvement in the
transferred financial asset, it recognizes the related financial asset and recognizes the relevant
liability accordingly.
171 / 329
If the transfer of an entire financial asset satisfies the conditions for derecognition, the difference
between the amounts of the following two items is included in profit or loss: (1) the carrying
amount of the transferred financial asset as of the date of derecognition; (2) the sum of
consideration received from the transfer of the financial asset, and the accumulative amount of the
changes of the fair value originally included in other comprehensive income proportionate to the
transferred financial asset (financial assets transferred refer to debt instrument investments at fair
value through other comprehensive income). If the transfer of financial asset partially satisfies the
conditions to derecognition, the entire carrying amount of the transferred financial asset is,
between the portion which is derecognized and the portion which is not, apportioned according to
their respective relative fair value, and the difference between the amounts of the following two
items is included into profit or loss: (1) the carrying amount of the portion which is derecognized;
(2) the sum of consideration of the portion which is derecognized, and the portion of the
accumulative amount of the changes in the fair value originally included in other comprehensive
income which is corresponding to the portion which is derecognized (financial assets transferred
refer to debt instrument investments at fair value through other comprehensive income).
4. Fair value determination method of financial assets and liabilities
The Company uses valuation techniques that are appropriate in the circumstances and for which
sufficient data and information are available to measure fair value. The inputs to valuation
techniques used to measure fair value are arranged in the following hierarchy and used
accordingly:
(1) Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities
that the Company can access at the measurement date;
(2) 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 2 inputs include: quoted prices for
similar assets or liabilities in active markets; quoted prices for identical or similar assets or
liabilities in markets that are not active; inputs other than quoted prices that are observable for the
asset or liability, for example, interest rates and yield curves observable at commonly quoted
intervals; market-corroborated inputs;
(3) Level 3 inputs are unobservable inputs for the asset or liability. Level 3 inputs include interest
rate that is not observable and cannot be corroborated by observable market data at commonly
quoted intervals, historical volatility, future cash flows to be paid to fulfill the disposal obligation
assumed in business combination, financial forecast developed using the Company’s own data,
etc.
5. Impairment of financial instruments
The Company, on the basis of expected credit loss, recognizes loss allowances of financial assets
at amortized cost, debt instrument investments at fair value through other comprehensive income,
contract assets, leases receivable, loan commitments other than financial liabilities at fair value
172 / 329
through profit or loss, financial guarantee contracts not belong to financial liabilities at fair value
through profit or loss or financial liabilities that arise when a transfer of a financial asset does not
qualify for derecognition or when the continuing involvement approach applies.
Expected credit losses refer to the weighted average of credit losses with the respective risks of a
default occurring as the weights. Credit loss refers to the difference between all contractual cash
flows that are due to the Company in accordance with the contract and all the cash flows that the
Company expects to receive (i.e. all cash shortfalls), discounted at the original effective interest
rate. Among which, purchased or originated credit-impaired financial assets are discounted at the
credit-adjusted effective interest rate.
At the balance sheet date, the Company shall only recognize the cumulative changes in the
lifetime expected credit losses since initial recognition as a loss allowance for purchased or
originated credit-impaired financial assets.
For leases receivable, and accounts receivable and contract assets resulting from transactions
regulated in “CASBE 14 – Revenues”, the Company chooses simplified approach to measure the
loss allowance at an amount equal to lifetime expected credit losses.
For accounts receivable and contract assets resulting from transactions regulated in “CASBE 14 –
Revenues”, the Company chooses simplified approach to measure the loss allowance at an amount
equal to lifetime expected credit losses.
For financial assets other than the above, on each balance sheet date, the Company shall assess
whether the credit risk on the financial instrument has increased significantly since initial
recognition. The Company shall measure the loss allowance for the financial instrument at an
amount equal to the lifetime expected credit losses if the credit risk on that financial instrument
has increased significantly since initial recognition; otherwise, the Company shall measure the
loss allowance for that financial instrument at an amount equal to 12-month expected credit loss.
Considering reasonable and supportable forward-looking information, the Company compares the
risk of a default occurring on the financial instrument as at the balance sheet date with the risk of a
default occurring on the financial instrument as at the date of initial recognition, so as to assess
whether the credit risk on the financial instrument has increased significantly since initial
recognition.
The Company may assume that the credit risk on a financial instrument has not increased
significantly since initial recognition if the financial instrument is determined to have relatively
low credit risk at the balance sheet date.
The Company shall estimate expected credit risk and measure expected credit losses on an
individual or a collective basis. When the Company adopts the collective basis, financial
instruments are grouped with similar credit risk features.
173 / 329
The Company shall remeasure expected credit loss on each balance sheet date, and increased or
reversed amounts of loss allowance arising therefrom shall be included into profit or loss as
impairment losses or gains. For a financial asset measured at amortized cost, the loss allowance
reduces the carrying amount of such financial asset presented in the balance sheet; for a debt
investment measured at fair value through other comprehensive income, the loss allowance shall
be recognized in other comprehensive income and shall not reduce the carrying amount of such
financial asset.
6. Offsetting financial assets and financial liabilities
Financial assets and financial liabilities are presented separately in the balance sheet and are not
offset. However, the Company offsets a financial asset and a financial liability and presents the net
amount in the balance sheet when, and only when, the Company: (1) currently has a legally
enforceable right to set off the recognized amounts; and (2) intends either to settle on a net basis,
or to realize the asset and settle the liability simultaneously.
For a transfer of a financial asset that does not qualify for derecognition, the Company does not
offset the transferred asset and the associated liability.
12. Notes receivable
Applicable Not Applicable
Recognition method and accounting treatment method for expected credit losses of notes
receivable
Applicable Not Applicable
Please refer to Note X, 11 “Financial instruments - Impairment of Financial Instruments”.
Categories and recognition method based on the credit risk characteristics
Applicable Not Applicable
Basis for determination Method for measuring
Items
of portfolio expected credit loss
Bank acceptance receivable Based on historical credit
Type of notes loss experience, the
Trade acceptance receivable current situation and the
Accounts receivable – Portfolio Medical insurance forecast of future
grouped with medical insurance payments with age within economic conditions, the
payments 12 months Company calculates
Accounts receivable – Portfolio expected credit loss
Related parties brought through exposure at
grouped with balances due from
into the consolidation default and lifetime
related parties within the consolidation
scope expected credit loss rate.
scope
Based on historical credit
loss experience, the
current situation and the
Accounts receivable – Portfolio
Ages forecast of future
grouped with ages
economic conditions, the
Company prepares the
comparison table of ages
174 / 329
Basis for determination Method for measuring
Items
of portfolio expected credit loss
and lifetime expected
credit loss rate of
accounts receivable, so as
to calculate expected
credit loss.
Security deposits for
Other receivables – Portfolio grouped Based on historical credit
operating and pretty cash
with security deposits receivable loss experience, the
excluding store petty cash
current situation and the
Medical insurance
Other receivables – Portfolio grouped forecast of future
reserves with age within
with medical insurance payments economic conditions, the
12 months
Company calculates
Other receivables – Portfolio grouped
Store petty cash expected credit loss
with store petty cash receivable
through exposure at
Other receivables – Portfolio grouped Related parties brought
default and lifetime
with balances due from related parties into the consolidation
expected credit loss rate.
within the consolidation scope scope
Based on historical credit
loss experience, the
Other receivables current situation and the
excluding pretty cash, forecast of future
security deposits, medical economic conditions, the
Other receivables – Portfolio grouped
insurance reserves, and Company calculates
with ages
balances due from related expected credit loss
parties within the through exposure at
consolidation scope default and 12-month or
lifetime expected credit
loss rate.
Calculation method of aging based on the combination of credit risk characteristics
grouped with ages
Applicable Not Applicable
Expected credit loss rate of Expected credit loss rate of
Ages
accounts receivable (%) other receivables (%)
Within 1 year (inclusive, the
5.00 5.00
same hereinafter)
1-2 years 10.00 10.00
2-3 years 20.00 20.00
3-4 years 30.00 30.00
4-5 years 50.00 50.00
Over 5 years 100.00 100.00
Recognition criteria with expected credit losses measured on an individual basis
Applicable Not Applicable
For receivables and contract assets whose credit risk is significantly different from that of
portfolios, the Company accrues expected credit losses on an individual basis.
13. Accounts receivable
Applicable Not Applicable
175 / 329
Recognition method and accounting treatment method for expected credit losses of accounts
receivable
Applicable Not Applicable
Please refer to Note X, 11 “Financial instruments - Impairment of Financial Instruments”.
Categories and recognition method based on the credit risk characteristics
Applicable Not Applicable
Please refer to Note X, 12 “Notes receivable”.
Calculation method of aging based on the combination of credit risk characteristics
grouped with ages
Applicable Not Applicable
Please refer to Note X, 12 “Notes receivable”.
Recognition criteria with expected credit losses measured on an individual basis
Applicable Not Applicable
Please refer to Note X, 12 “Notes receivable”.
14. Receivables financing
Applicable Not Applicable
Recognition method and accounting treatment method for expected credit losses of
receivables financing
Applicable Not Applicable
Please refer to Note X, 11 “Financial instruments - Impairment of Financial Instruments”.
Categories and recognition method based on the credit risk characteristics
Applicable Not Applicable
Please refer to Note X, 12 “Notes receivable”.
Calculation method of aging based on the combination of credit risk characteristics
grouped with ages
Applicable Not Applicable
Please refer to Note X, 12 “Notes receivable”.
Recognition criteria with expected credit losses measured on an individual basis
Applicable Not Applicable
Please refer to Note X, 12 “Notes receivable”.
15. Other receivables
Applicable Not Applicable
Recognition method and accounting treatment method for expected credit losses of other
receivables
176 / 329
Applicable Not Applicable
Please refer to Note X, 11 “Financial instruments - Impairment of Financial Instruments”.
Categories and recognition method based on the credit risk characteristics
Applicable Not Applicable
Please refer to Note X, 12 “Notes receivable”.
Calculation method of aging based on the combination of credit risk characteristics
grouped with ages
Applicable Not Applicable
Please refer to Note X, 12 “Notes receivable”.
Recognition criteria with expected credit losses measured on an individual basis
Applicable Not Applicable
Please refer to Note X, 12 “Notes receivable”.
16. Inventories
Applicable Not Applicable
Classification of inventories, accounting method for dispatching inventories, inventory
system, and amortization method of low-value consumables and packages
Applicable Not Applicable
1. Classification of inventories
Inventories include finished goods or goods held for sale in the ordinary course of business, work
in process in the process of production, materials, supplies etc. to be consumed in the production
process or in the rendering of services.
2. Accounting method for dispatching inventories:
Inventories dispatched from storage are accounted for with moving weighted average method.
3. Inventory system
Perpetual inventory method is adopted.
4. Amortization method of low-value consumables and packages
Low-value consumables are amortized with one-off method.
Basis for determining inventory depreciation reserves
Applicable Not Applicable
At the balance sheet date, inventories are measured at the lower of cost and net realizable value;
provisions for inventory write-down are made on the excess of its cost over the net realizable
value. The net realizable value of inventories held for sale is determined based on the amount of
the estimated selling price less the estimated selling expenses and relevant taxes and surcharges in
the ordinary course of business; the net realizable value of inventories to be processed is
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determined based on the amount of the estimated selling price less the estimated costs of
completion, selling expenses and relevant taxes and surcharges in the ordinary course of business;
at the balance sheet date, when only part of the same item of inventories have agreed price, their
net realizable value are determined separately and are compared with their costs to set the
provision for inventory write-down to be made or reversed.
Categories and basis for determination of portfolios with provision for inventory write-down
made on a collective basis and determination basis of net realizable value
Applicable Not Applicable
Calculation method and determination basis for net realizable value under portfolio
grouped with ages
Applicable Not Applicable
17. Contract assets
Applicable Not Applicable
Recognition method and criteria for contract assets
Applicable Not Applicable
The Company presents contract assets or contract liabilities in the balance sheet based on the
relationship between its performance obligations and customers’ payments. Contract assets and
contract liabilities under the same contract shall offset each other and be presented on a net basis.
The Company presents an unconditional right to consideration (i.e., only the passage of time is
required before the consideration is due) as a receivable, and presents a right to consideration in
exchange for goods that it has transferred to a customer (which is conditional on something other
than the passage of time) as a contract asset.
Recognition method and accounting treatment method for expected credit losses of contract
assets
Applicable Not Applicable
Categories and recognition method based on the credit risk characteristics
Applicable Not Applicable
Calculation method of aging based on the combination of credit risk characteristics
grouped with ages
Applicable Not Applicable
Recognition criteria with expected credit losses measured on an individual basis
Applicable Not Applicable
18. Non-current assets or disposal groups held for sale
Applicable Not Applicable
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Recognition criteria and accounting treatment of non-current assets or disposal groups held
for sale
Applicable Not Applicable
Recognition criteria and presentation method of discontinued operations
Applicable Not Applicable
19. Long-term equity investments
Applicable Not Applicable
1. Judgment of joint control and significant influence
Joint control is the contractually agreed sharing of control of an arrangement, which exists only
when decisions about the relevant activities require the unanimous consent of the parties sharing
control. Significant influence is the power to participate in the financial and operating policy
decisions of the investee but is not control or joint control of these policies.
2. Determination of investment cost
(1) For business combination under common control, if the consideration of the combining party
is that it makes payment in cash, transfers non-cash assets, assumes its liabilities or issues equity
securities, on the date of combination, it regards the share of the carrying amount of the equity of
the combined party included in the consolidated financial statements of the ultimate controlling
party as the initial cost of the investment. The difference between the initial cost of the long-term
equity investments and the carrying amount of the combination consideration paid or the par value
of shares issued offsets capital reserve; if the balance of capital reserve is insufficient to offset,
any excess is adjusted to retained earnings.
When long-term equity investments are obtained through business combination under common
control achieved in stages, the Company determines whether it is a “bundled transaction”. If it is a
“bundled transaction”, stages as a whole are considered as one transaction in accounting treatment.
If it is not a “bundled transaction”, on the date of combination, investment cost is initially
recognized at the share of the carrying amount of net assets of the combined party included the
consolidated financial statements of the ultimate controlling party. The difference between the
initial investment cost of long-term equity investments at the acquisition date and the carrying
amount of the previously held long-term equity investments plus the carrying amount of the
consideration paid for the newly acquired equity is adjusted to capital reserve; if the balance of
capital reserve is insufficient to offset, any excess is adjusted to retained earnings.
(2) For business combination not under common control, investment cost is initially recognized at
the acquisition-date fair value of considerations paid.
When long-term equity investments are obtained through business combination not under
common control achieved in stages, the Company determined whether they are stand-alone
financial statements or consolidated financial statements in accounting treatment:
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1) In the case of stand-alone financial statements, investment cost is initially recognized at the
carrying amount of the previously held long-term equity investments plus the carrying amount of
the consideration paid for the newly acquired equity.
2) In the case of consolidated financial statements, the Company determines whether it is a
“bundled transaction”. If it is a “bundled transaction”, stages as a whole are considered as one
transaction in accounting treatment. If it is not a “bundled transaction”, the carrying amount of the
acquirer’s previously held equity interest in the acquiree is remeasured at the acquisition-date fair
value, and the difference between the fair value and the carrying amount is recognized in
investment income; when the acquirer’s previously held equity interest in the acquiree involves
other comprehensive income under equity method, the related other comprehensive income is
reclassified as income for the acquisition period, excluding other comprehensive income arising
from changes in net liabilities or assets from remeasurement of defined benefit plan of the
acquiree.
(3) Long-term equity investments obtained through ways other than business combination: the
initial cost of a long-term equity investment obtained by making payment in cash is the purchase
cost which is actually paid; that obtained on the basis of issuing equity securities is the fair value
of the equity securities issued; that obtained through debt restructuring is determined according to
“CASBE 12 – Debt Restructuring”; and that obtained through non-cash assets exchange is
determined according to “CASBE 7 – Non-cash Assets Exchange”.
3. Subsequent measurement and recognition method of profit or loss
For a long-term equity investment with control relationship, it is accounted for with cost method;
for a long-term equity investment with joint control or significant influence relationship, it is
accounted for with equity method.
4. Disposal of a subsidiary in stages resulting in the Company’s loss of control
(1) Judgement principles of “bundled transaction”
For disposal of a subsidiary in stages resulting in the Company’s loss of control, the Company
determines whether it is a “bundled transaction” based on the agreement terms for each stage,
disposal consideration obtained separately, object of the equity sold, disposal method, disposal
time point, etc. If the terms, conditions and economic effect of each transaction meet one or more
of the following conditions, these transactions are usually considered as a “bundled transaction”:
1) these transactions are entered into at the same time or in contemplation of each other;
2) these transactions form a single transaction designed to achieve an overall commercial effect;
3) the occurrence of one transaction is dependent on the occurrence of at least one other
transaction; and
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4) one transaction considered on its own is not economically justified, but it is economically
justified when considered together with other transactions.
(2) Accounting treatments of non-bundled transactions
1) Stand-alone financial statements
The difference between the carrying amount of the disposed equity and the consideration obtained
thereof is recognized in profit or loss. If the disposal does not result in the Company’s loss of
significant influence or joint control, the remained equity is accounted for with equity method;
however, if the disposal results in the Company’s loss of control, joint control, or significant
influence, the remained equity is accounted for according to “CASBE 22 – Financial Instruments:
Recognition and Measurement”.
2) Consolidated financial statements
Before the Company’s loss of control, the difference between the disposal consideration and the
proportionate share of net assets in the disposed subsidiary from acquisition date or combination
date to the disposal date is adjusted to capital reserve (capital premium), if the balance of capital
reserve is insufficient to offset, any excess is adjusted to retained earnings.
When the Company loses control, the remained equity is remeasured at the loss-of-control-date
fair value. The aggregated value of disposal consideration and the fair value of the remained
equity, less the share of net assets in the disposed subsidiary held before the disposal from the
acquisition date or combination date to the disposal date is recognized in investment income in the
period when the Company loses control over such subsidiary, and meanwhile goodwill is offset
correspondingly. Other comprehensive income related to equity investments in former subsidiary
is reclassified as investment income upon the Company’s loss of control.
(3) Accounting treatment of bundled transaction
1) Stand-alone financial statements
Stages as a whole are considered as one transaction resulting in loss of control in accounting
treatment. However, before the Company loses control over a subsidiary, the difference between
the disposal consideration at each stage and the carrying amount of long-term equity investments
corresponding to the disposed investments is recognized as other comprehensive income at the
stand-alone financial statements and reclassified as profit or loss in the period when the Company
loses control over such subsidiary.
2) Consolidated financial statements
Stages as a whole are considered as one transaction resulting in loss of control in accounting
treatment. However, before the Company loses control over a subsidiary, the difference between
the disposal consideration at each stage and the proportionate share of net assets in the disposed
subsidiary is recognized as other comprehensive income at the consolidated financial statements
and reclassified as profit or loss in the period when the Company loses control over such
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subsidiary.
20. Investment property
Applicable Not Applicable
21. Fixed assets
1. Recognition principles of fixed assets
Applicable Not Applicable
Fixed assets are tangible assets held for use in the production of goods or rendering of services, for
rental to others, or for administrative purposes, and expected to be used during more than one
accounting year. Fixed assets are recognized if, and only if, it is probable that future economic
benefits associated with the assets will flow to the Company and the cost of the assets can be
measured reliably.
2. Depreciation method of different categories of fixed assets
Applicable Not Applicable
Annual
Depreciation Useful life Residual value
Categories depreciation rate
method (years) proportion (%)
(%)
Buildings and Straight-line
20-30 5 3.17-4.75
structures method
Straight-line
Machinery 10 5 9.50
method
Straight-line
Office equipment 5 5 19.00
method
Electronic Straight-line
3 5 31.67
equipment method
Straight-line
Transport facilities 10 5 9.50
method
22. Construction in progress
Applicable Not Applicable
1. Construction in progress is recognized if, and only if, it is probable that future economic
benefits associated with the item will flow to the Company, and the cost of the item can be
measured reliably. Construction in progress is measured at the actual cost incurred to reach its
designed usable conditions.
2. Construction in progress is transferred into fixed assets at its actual cost when it reaches the
designed usable conditions. When the auditing of the construction in progress was not finished
while reaching the designed usable conditions, it is transferred to fixed assets using estimated
value first, and then adjusted accordingly when the actual cost is settled, but the accumulated
depreciation is not to be adjusted retrospectively.
23. Borrowing costs
Applicable Not Applicable
1. Recognition principle of borrowing costs capitalization
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Where the borrowing costs incurred to the Company can be directly attributable to the acquisition
and construction or production of assets eligible for capitalization, it is capitalized and included in
the costs of relevant assets; other borrowing costs are recognized as expenses on the basis of the
actual amount incurred, and are included in profit or loss.
2. Borrowing costs capitalization period
(1) The borrowing costs are not capitalized unless the following requirements are all met: 1) the
asset disbursements have already incurred; 2) the borrowing costs have already incurred; and 3)
the acquisition and construction or production activities which are necessary to prepare the asset
for its intended use or sale have already started.
(2) Suspension of capitalization: where the acquisition and construction or production of a
qualified asset is interrupted abnormally and the interruption period lasts for more than 3 months,
the capitalization of the borrowing costs is suspended; the borrowing costs incurred during such
period are recognized as expenses, and are included in profit or loss, till the acquisition and
construction or production of the asset restarts.
(3) Ceasing of capitalization: when the qualified asset under acquisition and construction or
production is ready for the intended use or sale, the capitalization of the borrowing costs is ceased.
3. Capitalization rate and capitalized amount of borrowing costs
For borrowings exclusively for the acquisition and construction or production of assets eligible for
capitalization, the to-be-capitalized amount of interests is determined in light of the actual interest
expenses incurred (including amortization of premium or discount based on effective interest
method) of the special borrowings in the current period less the interest income on the unused
borrowings as a deposit in the bank or as a temporary investment; where a general borrowing is
used for the acquisition and construction or production of assets eligible for capitalization, the
Company calculates and determines the to-be-capitalized amount of interests on the general
borrowing by multiplying the weighted average asset disbursement of the part of the accumulative
asset disbursements less the general borrowing by the capitalization rate of the general borrowing
used.
24. Biological assets
Applicable Not Applicable
25. Oil and gas assets
Applicable Not Applicable
26. Intangible assets
(1) Useful life and its determination basis, estimation, amortization method, or review
procedures
Applicable Not Applicable
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1. Intangible assets include land use right, software, trademark, use right of pharmaceutical
licensing qualifications etc. The initial measurement of intangible assets is based on its cost.
2. For intangible assets with finite useful lives, their amortization amounts are amortized within
their useful lives systematically and reasonably, if it is unable to determine the expected
realization pattern reliably, intangible assets are amortized by the straight-line method with details
as follows:
Items Amortization period (years)
Land use right 40-50
Software 5-10
Trademark 5-10
Use right of pharmaceutical
10
licensing qualifications
(2) Permitted scope and accounting treatment of R&D costs
Applicable Not Applicable
(1) Personnel costs
Personnel costs include wages and salaries, basic endowment insurance premiums, basic medical
insurance premiums, unemployment insurance premiums, occupational injuries premiums,
maternity premiums and housing provident funds for the Company’s R&D personnel, as well as
labor costs for external R&D personnel.
(2) Direct input costs
Direct input costs refer to relevant expenses actually incurred by the Company for R&D activities.
(3) Depreciation and long-term prepayments
Depreciation refers to the depreciation of instruments, equipment and in-use buildings used for
R&D activities.
(4) Amortization of intangible assets
Amortization of intangible assets refer to the amortization of software, intellectual property, and
non-patented technology (proprietary technology, licenses, design and calculation methods, etc.)
used for R&D activities.
(5) Other expenses
Other expenses refer to expenses other than those mentioned above that are directly related to
R&D activities.
Expenditures on the research phase of an internal project are recognized as profit or loss when
they are incurred. An intangible asset arising from the development phase of an internal project is
recognized if the Company can demonstrate all of the followings: (1) the technical feasibility of
completing the intangible asset so that it will be available for use or sale; (2) its intention to
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complete the intangible asset and use or sell it; (3) how the intangible asset will generate probable
future economic benefits, among other things, the Company can demonstrate the existence of a
market for the output of the intangible asset or the intangible asset itself or, if it is to be used
internally, the usefulness of the intangible asset; (4) the availability of adequate technical,
financial and other resources to complete the development and to use or sell the intangible asset;
and (5) its ability to measure reliably the expenditure attributable to the intangible asset during its
development.
27. Impairment of part of long-term assets
Applicable Not Applicable
For long-term assets such as long-term equity investments, fixed assets, construction in progress,
right-of-use assets, intangible assets with finite useful lives, etc., if at the balance sheet date there
is indication of impairment, the recoverable amount is to be estimated. For goodwill recognized in
business combination and intangible assets with indefinite useful lives, no matter whether there is
indication of impairment, impairment test is performed annually. Impairment test on goodwill is
performed on related asset group or asset group portfolio.
When the recoverable amount of such long-term assets is lower than their carrying amount, the
difference is recognized as provision for assets impairment through profit or loss.
28. Long-term prepayments
Applicable Not Applicable
Long-term prepayments are expenses that have been recognized but with amortization period over
one year (excluding one year). They are recorded with actual cost, and evenly amortized within
the beneficiary period or stipulated period. If items of long-term prepayments fail to be beneficial
to the following accounting periods, residual values of such items are included in profit or loss.
29. Contract liabilities
Applicable Not Applicable
The Company presents an obligation to transfer goods to a customer for which the Company has
received consideration (or the amount is due) from the customer as a contract liability.
30. Employee benefits
(1). Accounting treatments of short-term employee benefits
Applicable Not Applicable
The Company recognizes, in the accounting period in which an employee provides service,
short-term employee benefits actually incurred as liabilities, with a corresponding charge to profit
or loss or the cost of a relevant asset.
(2). Accounting treatments of post-employment benefits
Applicable Not Applicable
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The Company classifies post-employment benefit plans as either defined contribution plans or
defined benefit plans.
(1) The Company recognizes in the accounting period in which an employee provides service the
contribution payable to a defined contribution plan as a liability, with a corresponding charge to
profit or loss or the cost of a relevant asset.
(2) Accounting treatment by the Company for defined benefit plan usually involves the following
steps:
1) In accordance with the projected unit credit method, using unbiased and mutually compatible
actuarial assumptions to estimate related demographic variables and financial variables, measure
the obligations under the defined benefit plan, and determine the periods to which the obligations
are attributed. Meanwhile, the Company discounts obligations under the defined benefit plan to
determine the present value of the defined benefit plan obligations and the current service cost;
2) When a defined benefit plan has assets, the Company recognizes the deficit or surplus by
deducting the fair value of defined benefit plan assets from the present value of the defined benefit
plan obligation as a net defined benefit plan liability or net defined benefit plan asset. When a
defined benefit plan has a surplus, the Company measures the net defined benefit plan asset at the
lower of the surplus in the defined benefit plan and the asset ceiling;
3) At the end of the period, the Company recognizes the following components of employee
benefits cost arising from defined benefit plan: a. service cost; b. net interest on the net defined
benefit plan liability (asset); and c. changes as a result of remeasurement of the net defined benefit
liability (asset). Item a and item b are recognized in profit or loss or the cost of a relevant asset.
Item c is recognized in other comprehensive income and is not to be reclassified subsequently to
profit or loss. However, the Company may transfer those amounts recognized in other
comprehensive income within equity.
(3). Accounting treatments of Termination benefits
Applicable Not Applicable
Termination benefits provided to employees are recognized as an employee benefit liability for
termination benefits, with a corresponding charge to profit or loss at the earlier of the following
dates: (1) when the Company cannot unilaterally withdraw the offer of termination benefits
because of an employment termination plan or a curtailment proposal; or (2) when the Company
recognizes cost or expenses related to a restructuring that involves the payment of termination
benefits.
(4). Accounting treatments of Other long-term employee benefits
Applicable Not Applicable
When other long-term employee benefits provided to the employees satisfied the conditions for
classifying as a defined contribution plan, those benefits are accounted for in accordance with the
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requirements relating to defined contribution plan, while other benefits are accounted for in
accordance with the requirements relating to defined benefit plan. The Company recognizes the
cost of employee benefits arising from other long-term employee benefits as the followings: (1)
service cost; (2) net interest on the net liability or net assets of other long-term employee benefits;
and (3) changes as a result of remeasurement of the net liability or net assets of other long-term
employee benefits. As a practical expedient, the net total of the aforesaid amounts is recognized in
profit or loss or included in the cost of a relevant asset.
31. Provisions
Applicable Not Applicable
1. Provisions are recognized when fulfilling the present obligations arising from contingencies
such as providing guarantee for other parties, litigation, products quality guarantee, onerous
contract, etc., may cause the outflow of the economic benefit and such obligations can be reliably
measured.
2. The initial measurement of provisions is based on the best estimated expenditures required in
fulfilling the present obligations, and its carrying amount is reviewed at the balance sheet date.
32. Share-based payment
Applicable Not Applicable
1. Types of share-based payment
Share-based payment consists of equity-settled share-based payment and cash-settled share-based
payment.
2. Accounting treatment for settlements, modifications and cancellations of share-based payment
plans
(1) Equity-settled share-based payment
For equity-settled share-based payment transaction with employees, if the equity instruments
granted vest immediately, the fair value of those equity instruments is measured at grant date and
recognized as transaction cost or expense, with a corresponding adjustment in capital reserve; if
the equity instruments granted do not vest until the counterparty completes a specified period of
service, at the balance sheet date within the vesting period, the fair value of those equity
instruments measured at grant date based on the best estimate of the number of equity instruments
expected to vest is recognized as transaction cost or expense, with a corresponding adjustment in
capital reserve.
For equity-settled share-based payment transaction with parties other than employees, if the fair
value of the services received can be measured reliably, the fair value is measured at the date the
Company receives the service; if the fair value of the services received cannot be measured
reliably, but that of equity instruments can be measured reliably, the fair value of the equity
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instruments granted measured at the date the Company receives the service is referred to, and
recognized as transaction cost or expense, with a corresponding increase in equity.
(2) Cash-settled share-based payment
For cash-settled share-based payment transactions with employees, if share appreciation rights
vest immediately, the fair value of the liability incurred as the acquisition of services is measured
at grant date and recognized as transaction cost or expense, with a corresponding increase in
liabilities; if share appreciation rights do not vest until the employees have completed a specified
period of service, the liability is measured, at each balance sheet date until settled, at the fair value
of the share appreciation rights measured at grant date based on the best estimate of the number of
share appreciation right expected to vest.
(3) Modifications and cancellations of share-based payment plan
If the modification increases the fair value of the equity instruments granted, the Company
includes the incremental fair value granted in the measurement of the amount recognized for
services received as consideration for the equity instruments granted; similarly, if the modification
increases the number of equity instruments granted, the Company includes the fair value of the
additional equity instruments granted, in the measurement of the amount recognized for services
received as consideration for the equity instruments granted; if the Company modifies the vesting
conditions in a manner that is beneficial to the employee, the Company takes the modified vesting
conditions into account.
If the modification reduces the fair value of the equity instruments granted, the Company does not
take into account that decrease in fair value and continue to measure the amount recognized for
services received as consideration for the equity instruments based on the grant date fair value of
the equity instruments granted; if the modification reduces the number of equity instruments
granted to an employee, that reduction is accounted for as a cancellation of that portion of the
grant; if the Company modifies the vesting conditions in a manner that is not beneficial to the
employee, the Company does not take the modified vesting conditions into account.
If the Company cancels or settles a grant of equity instruments during the vesting period (other
than that cancelled when the vesting conditions are not satisfied), the Company accounts for the
cancellation or settlement as an acceleration of vesting, and therefore recognizes immediately the
amount that otherwise would have been recognized for services received over the remainder of the
vesting period.
33. Other financial instruments such as preferred shares and perpetual bonds
Applicable Not Applicable
Pursuant to CASBEs on financial instruments and “Regulations on Accounting Treatments of
Perpetual Bonds” (Cai Kuai [2019] No. 2) issued by the Ministry of Finance, for financial
instruments such as convertible bonds etc., the Company classifies a financial instrument or its
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components at initial recognition as a financial asset or liability or equity instrument, based on
contract terms and economic essence it reveals instead of its legal form, combining with the
definitions of financial asset, liability and equity instrument.
At the balance sheet date, for a financial instrument classified as an equity instrument, its interest
expenditure or dividend distribution is treated as profit distribution, and share repurchase and
cancelation are treated as changes in equity; for a financial instrument classified as a financial
liability, its interest expenditure or dividend distribution is treated as borrowing expense, and gain
or loss on repurchase or redemption is included in profit or loss.
34. Revenue
(1). Disclosure of accounting policies adopted for revenue recognition and measurement
based on business types
Applicable Not Applicable
1. Revenue recognition principles
At contract inception, the Company shall assess the contracts and shall identify each performance
obligation in the contracts, and determine whether the performance obligation should be satisfied
over time or at a point in time.
The Company satisfies a performance obligation over time if one of the following criteria is met,
otherwise, the performance obligation is satisfied at a point in time: (1) the customer
simultaneously receives and consumes the economic benefits provided by the Company’s
performance as the Company performs; (2) the customer can control goods as they are created by
the Company’s performance; (3) goods created during the Company’s performance have
irreplaceable uses and the Company has an enforceable right to the payments for performance
completed to date during the whole contract period.
For each performance obligation satisfied over time, the Company shall recognize revenue over
time by measuring the progress towards complete satisfaction of that performance obligation. In
the circumstance that the progress cannot be measured reasonably, but the costs incurred in
satisfying the performance obligation are expected to be recovered, the Company shall recognize
revenue only to the extent of the costs incurred until it can reasonably measure the progress. For
each performance obligation satisfied at a point in time, the Company shall recognize revenue at
the time point that the customer obtains control of relevant goods or services. To determine
whether the customer has obtained control of goods, the Company shall consider the following
indications: (1) the Company has a present right to payments for the goods, i.e., the customer is
presently obliged to pay for the goods; (2) the Company has transferred the legal title of the goods
to the customer, i.e., the customer has legal title to the goods; (3) the Company has transferred
physical possession of the goods to the customer, i.e., the customer has physically possessed the
goods; (4) the Company has transferred significant risks and rewards of ownership of the goods to
the customer, i.e., the customer has obtained significant risks and rewards of ownership of the
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goods; (5) the customer has accepted the goods; (6) other evidence indicating the customer has
obtained control over the goods.
2. Revenue measurement principle
(1) Revenue is measured at the amount of the transaction price that is allocated to each
performance obligation. The transaction price is the amount of consideration to which the
Company expects to be entitled in exchange for transferring goods or services to a customer,
excluding amounts collected on behalf of third parties and those expected to be refunded to the
customer.
(2) If the consideration promised in a contract includes a variable amount, the Company shall
confirm the best estimate of variable consideration at expected value or the most likely amount.
However, the transaction price that includes the amount of variable consideration only to the
extent that it is high probable that a significant reversal in the amount of cumulative revenue
recognized will not occur when the uncertainty associated with the variable consideration is
subsequently resolved.
(3) In the circumstance that the contract contains a significant financing component, the Company
shall determine the transaction price based on the price that a customer would have paid for if the
customer had paid cash for obtaining control over those goods or services. The difference between
the transaction price and the amount of promised consideration is amortized under effective
interest method over contractual period. The effects of a significant financing component shall not
be considered if the Company expects, at the contract inception, that the period between when the
customer obtains control over goods or services and when the customer pays consideration will be
one year or less.
(4) For contracts containing two or more performance obligations, the Company shall determine
the stand-alone selling price at contract inception of the distinct good underlying each
performance obligation and allocate the transaction price to each performance obligation on a
relative stand-alone selling price basis.
3. Revenue recognition method
(1) Retail business
The Company’s pharmaceutical retail business is a performance obligation satisfied at a point in
time and revenue is recognized when retail stores sell products to the customers via cash payment
(including via bank card) or through medical insurance, and the Company has collected the
payments or has obtained bank receipts or medical insurance receipts.
(2) Wholesale business
Wholesale business is a performance obligation satisfied at a point in time, and main customers of
wholesale business are pharmaceutical commercial companies. Revenue is recognized when the
Company has delivered goods to the buyer as agreed by contract, has obtained delivery notes with
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signature of the buyer, and significant risks and rewards of ownership of the goods have been
transferred to the buyer.
(3) Rendering of promotional services
Rendering of promotional services is a performance obligation satisfied over time. Revenue from
rendering of promotional services is recognized when the Company has provided promotional
services and has obtained or highly probable to receive payments.
(2). Different revenue recognition methods and measurement techniques for similar
businesses involving different operating models
Applicable Not Applicable
35. Costs of obtaining a contract
Applicable Not Applicable
The Company presents contract assets or contract liabilities in the balance sheet based on the
relationship between its performance obligations and customers’ payments. Contract assets and
contract liabilities under the same contract shall offset each other and be presented on a net basis.
The Company presents an unconditional right to consideration (i.e., only the passage of time is
required before the consideration is due) as a receivable, and presents a right to consideration in
exchange for goods that it has transferred to a customer (which is conditional on something other
than the passage of time) as a contract asset.
The Company presents an obligation to transfer goods to a customer for which the Company has
received consideration (or the amount is due) from the customer as a contract liability.
36. Government grants
Applicable Not Applicable
1. Government grants shall be recognized if, and only if, the following conditions are all met: (1)
the Company will comply with the conditions attaching to the grants; (2) the grants will be
received. Monetary government grants are measured at the amount received or receivable.
Non-monetary government grants are measured at fair value, and can be measured at nominal
amount in the circumstance that fair value cannot be assessed.
2. Government grants related to assets
Government grants related to assets are government grants with which the Company purchases,
constructs or otherwise acquires long-term assets under requirements of government. In the
circumstances that there is no specific government requirement, the Company shall determine
based on the primary condition to acquire the grants, and government grants related to assets are
government grants whose primary condition is to construct or otherwise acquire long-term assets.
They offset carrying amount of relevant assets, or they are recognized as deferred income. If
recognized as deferred income, they are included in profit or loss on a systematic basis over the
191 / 329
useful lives of the relevant assets. Those measured at notional amount are directly included into
profit or loss. For assets sold, transferred, disposed or damaged within the useful lives, balance of
unamortized deferred income is transferred into profit or loss of the period in which the disposal
occurred.
3. Government grants related to income
Government grants related to income are government grants other than those related to assets. For
government grants that contain both parts related to assets and parts related to income, in which
those two parts are blurred, they are thus collectively classified as government grants related to
income. For government grants related to income used for compensating the related future cost,
expenses or losses, they are recognized as deferred income and included in profit or loss or used to
offset relevant cost during the period in which the relevant cost, expenses or losses are recognized;
for government grants related to income used for compensating the related cost, expenses or losses
incurred to the Company, they are directly included in profit or loss or used to offset relevant cost.
4. Government grants related to the ordinary course of business shall be included into other
income or used to offset relevant cost based on business nature, while those not related to the
ordinary course of business shall be included into non-operating revenue or expenditures.
37. Deferred tax assets/Deferred tax liabilities
Applicable Not Applicable
1. Deferred tax assets or deferred tax liabilities are calculated and recognized based on the
difference between the carrying amount and tax base of assets and liabilities (and the difference of
the carrying amount and tax base of items not recognized as assets and liabilities but with their tax
base being able to be determined according to tax laws) and in accordance with the tax rate
applicable to the period during which the assets are expected to be recovered or the liabilities are
expected to be settled.
2. A deferred tax asset is recognized to the extent of the amount of the taxable income, which is
most likely to obtain and which can be deducted from the deductible temporary difference. At the
balance sheet date, if there is any exact evidence that it is probable that future taxable income will
be available against which deductible temporary differences can be utilized, the deferred tax assets
unrecognized in prior periods are recognized.
3. At the balance sheet date, the carrying amount of deferred tax assets is reviewed. The carrying
amount of a deferred tax asset is reduced to the extent that it is no longer probable that sufficient
taxable income will be available to allow the benefit of the deferred tax asset to be utilized. Such
reduction is subsequently reversed to the extent that it becomes probable that sufficient taxable
income will be available.
4. The income tax and deferred tax for the period are treated as income tax expenses or income
through profit or loss, excluding those arising from the following circumstances: (1) business
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combination; and (2) the transactions or items directly recognized in equity.
5. Deferred tax assets and deferred tax liabilities shall offset each other and be presented on a net
basis when the following conditions are all met: (1) the Company has the legal right to settle off
current tax assets against current tax liabilities; (2) the deferred tax assets and the deferred tax
liabilities relate to income taxes levied by the same tax authority on either: 1) the same taxable
entity; or 2) different taxable entities which intend either to settle current tax liabilities and assets
on a net basis, or to realize the assets and settle the liabilities simultaneously, in each future period
in which significant amounts of deferred tax assets or liabilities are expected to be recovered or
settled.
38. Leases
Applicable Not Applicable
Basis for judgment and accounting treatment methods for simplified approach of short-term
leases and leases of low-value assets as a lessee.
Applicable Not Applicable
1. The Company as lessee
At the commencement date, the Company recognizes a lease that has a lease term of 12 months or
less as a short-term lease, which shall not contain a purchase option; the Company recognizes a
lease as a lease of a low-value asset if the underlying asset is of low value when it is new. If the
Company subleases an asset, or expects to sublease an asset, the head lease does not qualify as a
lease of a low-value asset.
For all short-term leases and leases of low-value assets, lease payments are recognized as cost or
profit or loss with straight-line method over the lease term.
Apart from the above-mentioned short-term leases and leases of low-value assets with simplified
approach, the Company recognizes right-of-use assets and lease liabilities at the commencement
date.
(1) Right-of-use assets
The right-of-use asset is measured at cost and the cost shall comprise: 1) the amount of the initial
measurement of the lease liabilities; 2) any lease payments made at or before the commencement
date, less any lease incentives received; 3) any initial direct costs incurred by the lessee; and 4) an
estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset,
restoring the site on which it is located or restoring the underlying asset to the condition required
by the terms and conditions of the lease.
The Company depreciates the right-of-use asset using the straight-line method. If it is reasonable
to be certain that the ownership of the underlying asset can be acquired by the end of the lease
term, the Company depreciates the right-of-use asset from the commencement date to the end of
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the useful life of the underlying asset. Otherwise, the Company depreciates the right-of-use asset
from the commencement date to the earlier of the end of the useful life of the right-of-use asset or
the end of the lease term.
(2) Lease liabilities
At the commencement date, the Company measures the lease liability at the present value of the
lease payments that are not paid at that date, discounted using the interest rate implicit in the lease.
If that rate cannot be readily determined, the Company’s incremental borrowing rate shall be used.
Unrecognized financing expenses, calculated at the difference between the lease payment and its
present value, are recognized as interest expenses over the lease term using the discount rate
which has been used to determine the present value of lease payment and included in profit or loss.
Variable lease payments not included in the measurement of lease liabilities are included in profit
or loss in the periods in which they are incurred.
After the commencement date, if there is a change in the following items: (a) actual fixed
payments; (b) amounts expected to be payable under residual value guarantees; (c) an index or a
rate used to determine lease payments; (d) assessment result or exercise of purchase option,
extension option or termination option, the Company remeasures the lease liability based on the
present value of lease payments after changes, and adjusts the carrying amount of the right-of-use
asset accordingly. If the carrying amount of the right-of-use asset is reduced to zero but there shall
be a further reduction in the lease liability, the remaining amount shall be recognized into profit or
loss.
Classification criteria and accounting treatment methods for leases as a lessor
Applicable Not Applicable
2. The Company as lessor
At the commencement date, the Company classifies a lease as a finance lease if it transfers
substantially all the risks and rewards incidental to ownership of an underlying asset. Otherwise, it
is classified as an operating lease.
(1) Operating lease
Lease receipts are recognized as lease income with straight-line method over the lease term. Initial
direct costs incurred shall be capitalized, amortized on the same basis as the recognition of lease
income, and included into profit or loss by installments. Variable lease payments related to
operating lease which are not included in the lease payment are charged as profit or loss in the
periods in which they are incurred.
(2) Finance lease
At the commencement date, the Company recognizes the finance lease payment receivable based
on the net investment in the lease (sum of the present value of unguaranteed residual value and
lease receipts that are not received at the commencement date, discounted by the interest rate
implicit in the lease), and derecognizes assets held under the finance lease. The Company
calculates and recognizes interest income using the interest rate implicit in the lease over the lease
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term.
Variable lease payments not included in the measurement of the net investment in the lease are
charged as profit or loss in the periods in which they are incurred.
39. Other significant accounting policies and estimates
Applicable Not Applicable
Accounting treatment related to share repurchase
When the Company repurchases its shares for the purpose of reducing its registered capital or
rewarding its employees, if the purchased shares are to be kept as treasury shares, the treasury
shares are recorded at the cash distributed to existing shareholders for repurchase; if the purchased
shares are to be retired, the difference between the total book value of shares retired and the cash
distributed to existing shareholders for repurchase is to reduce capital reserve, or retained earnings
when the capital reserve is not enough to reduce. If the Company repurchases vested equity
instruments in equity-settled share-based payment transactions with employees, cost of treasury
shares granted to employees and capital reserve (other capital reserve) accumulated within the
vesting period are to be written off on the payment made to employees, with a corresponding
adjustment in capital reserve (share premium).
40. Significant changes in accounting policies and estimates
(1). Changes in accounting policies
Applicable Not Applicable
Contexts and reasons of Financial statement items
Amounts affected
changes in accounting policies significantly affected
Items of balance sheet as at
Refer to Other remark
December 31, 2022
Refer to Other remark Deferred tax assets -2,862,658.05
Refer to Other remark Undistributed profit -2,862,658.05
Refer to Other remark Items of income statement of 2022
Refer to Other remark Income tax expenses -3,768,840.19
Other remark
The Company has adopted the regulations about accounting for deferred tax related to assets and
liabilities arising from a single transaction to which the initial recognition exemption does not
apply in the “Interpretation of China Accounting Standards for Business Enterprises No. 16”
issued by the Ministry of Finance since January 1, 2023, and makes adjustments on such single
transactions occurring between the beginning of the earliest comparative period and the first
adoption date accordingly. For taxable and deductible temporary differences associated with lease
liabilities and right-of-use assets, provisions associated with decommissioning obligations and
corresponding assets arising from such single transactions and presented at the beginning of the
earliest comparative period, the cumulative effect of initially applying such regulations shall be
195 / 329
adjusted into retained earnings or other related items at the beginning of the earliest comparative
period presented. Details on adjustments refer to the table above.
(2). Changes in accounting estimates
Applicable Not Applicable
(3). Financial statements involving adjustments at the beginning of the year of first
implementation first implemented new accounting standards or standard interpretations
from 2023
Applicable Not Applicable
41. Others
Applicable Not Applicable
VI. Taxes
1. Main taxes and tax rates
Main taxes and tax rates
Applicable Not Applicable
Taxes Tax bases Tax rates
Sales of western medicine and Chinese
13%
patent medicine, etc.
Sales of troche of Chinese traditional
9%,
medicine, etc.
Value-added tax (VAT) Sales of birth control necessities duty-free
Sales of biologics 3%
Sublease business 5%
Taxable services (promotional services, etc.) 6%
Income of small-scale taxpayers 3%, duty-free
For housing property levied on the basis of
price, housing property tax is levied at the rate
of 1.2% of the balance after deducting
Housing property tax 20%—30% of the cost; for housing property 1.2%；12%
levied on the basis of rent, housing property
tax is levied at the rate of 12% of lease
income.
Urban maintenance and
Turnover tax actually paid 7%、5%、1%
construction tax
Education surcharge Turnover tax actually paid 3%
Local education surcharge Turnover tax actually paid 2%
Enterprise income tax Taxable income 25%、20%、15%
Different enterprise income tax rates applicable to different taxpayers:
Applicable Not Applicable
Taxpayers Income tax rate
Hainan Yifeng Internet Hospital Co.,
15%
Ltd.
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Taxpayers Income tax rate
Hengxiutang Pharmaceutical Co., Ltd.
15%
(the “Hengxiutang Pharmaceutical”)
Eligible small enterprises with meager
20%
profit
Taxpayers other than the
25%
above-mentioned
2. Tax preferential policies
Applicable Not Applicable
1. VAT
(1) Pursuant to the “Announcement of the State Taxation Administration on Clarifying Policies for
VAT Reduction and Exemption of Small-scale VAT Taxpayers” (Announcement of the Ministry of
Finance and the State Taxation Administration [2023] No. 1), from January 1, 2023 to December
31, 2023, small-scale VAT taxpayers with monthly sales less than 100,000 yuan (inclusive) are
exempted from VAT; during the same period, the taxable sales income of small-scale VAT
taxpayers applicable to a VAT rate of 3% shall be levied at a reduced rate of 1%; projects with
VAT prepaid and applicable to a VAT rate of 3% shall be levied at a reduced rate of 1%. Taxpayers
in consumer services industry whose sales from providing consumer services account for more
than 50% of the total sales are allowed to deduct an extra 10% of VAT payable based on their
deductible input tax for the current period. The Company’s eligible small-scale VAT taxpayers
enjoy the above-mentioned VAT preferential policies.
(2) Pursuant to the “Announcement on Tax Policies to Further Support the Entrepreneurship and
Employment of Self-Employed Veterans” (Announcement of the Ministry of Finance, State
Taxation Administration, and Ministry of Veterans Affairs [2023] No. 14), from January 1, 2023 to
December 31, 2027, enterprises that recruit self-employed veterans, sign labor contracts with them
for a period of more than one year, and pay social insurance premiums in accordance with the law,
shall enjoy a deduction within the standard quota for VAT, urban maintenance and construction tax,
education surcharge, local education surcharge and enterprise income tax within three years based
on the actual number of employees, starting from the month when the labor contracts are signed
and social insurance premiums are paid. The Company’s eligible subsidiaries enjoy the
above-mentioned VAT preferential policies.
(3) Pursuant to the “Announcement on Tax Policies to Further Support the Entrepreneurship and
Employment of Key Groups” (Announcement of the Ministry of Finance, State Taxation
Administration, Ministry of Human Resources and Social Security, and Ministry of Agriculture
and Rural Affairs [2023] No. 15), from January 1, 2023 to December 31, 2027, enterprises that
recruit individuals who have been lifted out of poverty, as well as individuals who have been
registered as unemployed for more than half a year at public employment service agencies of the
human resources and social security departments and hold an “Employment and Entrepreneurship
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Certificate” or an “Unemployment Registration Certificate” (indicating “enterprise tax incentive
policy”), sign labor contracts with them for a period of more than one year, and pay social
insurance premiums in accordance with the law, shall enjoy a deduction within the standard quota
for VAT, urban maintenance and construction tax, education surcharge, local education surcharge,
and enterprise income tax within three years based on the actual number of employees, starting
from the month when the labor contracts are signed and social insurance premiums are paid. The
Company’s eligible subsidiaries enjoy the above-mentioned VAT preferential policies.
2. Urban maintenance and construction tax, education surcharge and local education surcharge
According to Article 2 of the “Announcement on Relevant Tax Policies to Further Support the
Development of Small Enterprises with Meager Profit and Individually-owned Businesses”
(Announcement of the Ministry of Finance and State Taxation Administration [2023] No. 12),
from January 1, 2023 to December 31, 2027, the resource tax (excluding water resource tax),
urban maintenance and construction tax, housing property tax, urban land use tax, stamp duty
(excluding stamp duty of securities transactions), farmland occupation tax, education surcharge
and local education surcharge shall be levied by half for small-scale VAT taxpayers, small
enterprises with meager profit and individually-owned businesses. The Company’s eligible
small-scale VAT taxpayers and small enterprises with meager profit enjoy the above preferential
policies.
3. Enterprise income tax
(1) Pursuant to the “Notice of the Ministry of Finance and the State Taxation Administration on
the Preferential Policies for Enterprise Income Tax in Hainan Free Trade Port” (Cai Shui [2020]
No. 31), enterprise income tax of encouraged industries enterprises registered and operating
substantively in Hainan Free Trade Port shall be levied at a reduced rate of 15%. Hainan Yifeng
Internet Hospital Co., Ltd., a subsidiary of the Company, belongs to the encouraged industry
enterprises and meets the relevant conditions, so it enjoys the above-mentioned preferential
policies for enterprise income tax, which was levied at a reduced rate of 15% in the current period.
(2) The Company’s sub-subsidiary, Hengxiutang Pharmaceutical, was accredited as a high-tech
enterprise by Department of Science and Technology of Hunan Province, Hunan Provincial
Department of Finance and Hunan Provincial Tax Service, STA, and obtained the high-tech
enterprise certificate numbered GR202243001098 on October 18, 2022, with a valid period of 3
years (2022-2024). The enterprise income tax of Hengxiutang Pharmaceutical was levied at a
reduced rate of 15% in the current period.
(3) Pursuant to the “Announcement on the further Implementation of Income Tax Preferential
Policies for Small Enterprises with Meager Profit and Individually-owned Businesses ”
(Announcement of the Ministry of Finance and the State Taxation Administration [2023] No. 12),
the enterprise income tax of small enterprises with meager profit for the portion of the taxable
198 / 329
income is levied at 20% based on 25% of that portion of income, which will continue to be
implemented until December 31, 2027. The Company’s eligible small enterprises with meager
profit enjoy the above-mentioned preferential policies for enterprise income tax in the current
period.
3. Others
Applicable Not Applicable
VII. Notes to items of consolidated financial statements
1. Cash and bank balances
Applicable Not Applicable
Items Closing balance December 31, 2022
Cash on hand 232,721.88 294,708.93
Cash in bank 2,469,121,545.98 2,917,904,939.52
Other cash and bank balances 1,096,551,470.95 1,194,319,556.21
Funds deposited in finance company
Total 3,565,905,738.81 4,112,519,204.66
Including: Deposited overseas
Other remarks:
Please refer to section VII 31 of notes to the financial statements for details on cash and bank
balances with restrictions
2. Held-for-trading financial assets
Applicable Not Applicable
December 31, Reasons and basis
Items Closing balance
2022 for designation
Financial assets classified as at
1,630,720,887.94 50,045,139.45 /
fair value through profit or loss
Including:
Wealth management products 1,630,720,887.94 50,045,139.45 /
Financial assets designated as at
fair value through profit or loss
Including:
Total 1,630,720,887.94 50,045,139.45 /
Other remarks
Applicable Not Applicable
3. Held-for-trading financial assets
199 / 329
Applicable Not Applicable
4. Notes receivable
(1) Details on categories
Applicable Not Applicable
(2) Pledged notes at the balance sheet date
Applicable Not Applicable
(3) Endorsed or discounted but undue notes at the balance sheet date
Applicable Not Applicable
(4) Details on categories of provision for bad debts
Applicable Not Applicable
Notes receivable with provision made on an individual basis
Applicable Not Applicable
Notes receivable with provision for bad debts made on a collective basis
Applicable Not Applicable
Provision for bad debts withdrawn based on the general model of expected credit losses
Applicable Not Applicable
Division basis for three stages and proportions of provision for bad debts
Applicable Not Applicable
Reasons for significant changes in carrying amount of notes receivable in the current period
Applicable Not Applicable
(5) Provision for bad debts
Applicable Not Applicable
Significant provisions collected or reversed
Applicable Not Applicable
Other remarks
None
(6) Notes receivable actually written off in the current period
Applicable Not Applicable
Significant notes receivable written off in the current period
Applicable Not Applicable
Remarks on notes receivable written off
200 / 329
Applicable Not Applicable
Other remarks
Applicable Not Applicable
5. Accounts receivable
(1) Age analysis
Applicable Not Applicable
Ages Closing balance Opening balance
Within 1 year 2,148,878,038.45 1,858,939,147.39
1-2 years 9,776,519.62 3,903,810.52
2-3 years 1,472,003.84 755,815.32
3-4 years 248,427.57 14,445.10
4-5 years 14,445.10 10.00
Over 5 years 111,803.48 111,793.48
Total 2,160,501,238.06 1,863,725,021.81
(2) Details on categories
Applicable Not Applicable
Closing balance
Categories Book balance Provision for bad debts
Provision Carrying amount
Amount % to total Amount
proportion (%)
Receivables with provision
2,160,501,238.06 100.00 22,226,918.18 1.03 2,138,274,319.88
made on a collective basis
Total 2,160,501,238.06 100.00 22,226,918.18 1.03 2,138,274,319.88
(Continued)
December 31, 2022
Categories Book balance Provision for bad debts
Provision Carrying amount
Amount % to total Amount
proportion (%)
Receivables with provision
1,863,725,021.81 100.00 19,784,142.68 1.06 1,843,940,879.13
made on a collective basis
Total 1,863,725,021.81 100.00 19,784,142.68 1.06 1,843,940,879.13
Accounts receivable with provision for bad debts made on an individual basis
Applicable Not Applicable
Accounts receivable with provision for bad debts made on a collective basis
Applicable Not Applicable
Closing balance
Items Provision for bad Provision proportion
Book balance
debts (%)
201 / 329
Closing balance
Items Provision for bad Provision proportion
Book balance
debts (%)
Portfolio grouped
Medical insurance 1,733,651,816.08
payments
Portfolio grouped with
426,849,421.98 22,226,918.18 5.21
ages
Subtotal 2,160,501,238.06 22,226,918.18 1.03
Explanation of provision for bad debts made on a collective basis
Applicable Not Applicable
Provision for bad debts withdrawn based on the general model of expected credit losses
Applicable Not Applicable
Division basis for three stages and proportions of provision for bad debts
None
Reasons for significant changes in carrying amount of accounts receivable in the current period
Applicable Not Applicable
(3) Changes in provision for bad debts
Applicable Not Applicable
Changes in provision for bad debts
Opening Closing
Items Reversa
balance Accrual Write-off Others balance
l
Receivables
with provision 19,784,14 2,175,577.9 482,802.4 22,226,9
750,000.00
made on a 2.68 0 0 18.18
collective basis
19,784,14 2,175,577.9 482,802.4 22,226,9
Total 750,000.00
2.68 0 0 18.18
Significant provisions collected or reversed
Applicable Not Applicable
Other remarks
None
(4) Accounts receivable written off in the current period
Applicable Not Applicable
Items Amount written off
Accounts receivable actually written off 482,802.40
Significant accounts receivable written off in the current period
Applicable Not Applicable
202 / 329
Remarks on accounts receivable written off
Applicable Not Applicable
(5) Details of the top 5 debtors with largest balances of accounts receivable and contract
assets
Applicable Not Applicable
Book balance of
Book balance of Book balance Proportion to
Accounts Provision
the total balance
Debtors accounts of contract for bad
receivable and of accounts
debts
receivable assets receivable (%)
contract assets
Wuhan Medical
171,850,149.76 171,850,149.76 7.95
Insurance Center
Wuxi Social
Insurance Fund
134,629,535.57 134,629,535.57 6.23
Management
Center
Changsha Medical
Security Service 113,711,988.43 113,711,988.43 5.26
Center
Ningjing Social
Insurance
77,745,085.21 77,745,085.21 3.60
Management
Center
Xuzhou Medical
Insurance Fund
73,549,723.44 73,549,723.44 3.40
Management
Center
Subtotal 571,486,482.41 571,486,482.41 26.44
Other remarks
None
Other remarks
Applicable Not Applicable
6. Contract assets
(1) Details
Applicable Not Applicable
(2) Reasons for significant changes in carrying amount of contract assets
Applicable Not Applicable
(3) Details on provision for impairment
Applicable Not Applicable
Contract assets with provision for impairment made on an individual basis
Applicable Not Applicable
Remarks on contract assets with provision for impairment made on an individual basis
Applicable Not Applicable
203 / 329
Contract assets with provision for impairment made on a collective basis
Applicable Not Applicable
Provision for bad debts withdrawn based on the general model of expected credit losses
Applicable Not Applicable
Division basis for stages and proportions of provision for bad debts
None
Reasons for significant changes in carrying amount of contract assets in the current period
Applicable Not Applicable
(4) Changes in provision for impairment
Applicable Not Applicable
Significant provisions collected or reversed
Applicable Not Applicable
Other remarks
None
(5) Contract assets actually written off in the current period
Applicable Not Applicable
Significant contract assets written off in the current period
Applicable Not Applicable
Remarks on contract assets written off
Applicable Not Applicable
Other remarks
Applicable Not Applicable
7. Receivables financing
(1) Details on categories
Applicable Not Applicable
Items Closing balance December 31, 2022
Bank acceptance 11,889,888.58 1,784,671.86
Total 11,889,888.58 1,784,671.86
(2) Pledged receivables financing at the balance sheet date
Applicable Not Applicable
(3) Endorsed or discounted but undue notes at the balance sheet date
Applicable Not Applicable
204 / 329
Items Closing balance derecognized
Bank acceptance 61,770,400.00
Subtotal 61,770,400.00
Due to the fact that the acceptor of bank acceptance is commercial bank, which is of high credit
level, there is very little possibility of failure in recoverability when it is due. Based on this fact,
the Company derecognized the endorsed or discounted bank acceptance. However, if any bank
acceptance is not recoverable when it is due, the Company still holds joint liability on such
acceptance, according to the China Commercial Instrument Law.
(4) Provision for impairment
Applicable Not Applicable
Closing balance
Accumulated provision
Cost
Categories for credit impairment
Carrying
Provision
amount
Amount % to total Amount proportion
(%)
Receivables with provision for
bad debts made on a collective 11,889,888.58 11,889,888.58
basis
Including: Bank acceptance 11,889,888.58 11,889,888.58
Total 11,889,888.58 11,889,888.58
(Continued)
December 31, 2022
Accumulated provision
Cost
Categories for credit impairment
Carrying
Provision
amount
Amount % to total Amount proportion
(%)
Receivables with provision for bad
1,784,671.86 1,784,671.86
debts made on a collective basis
Including: Bank acceptance 1,784,671.86 1,784,671.86
Total 1,784,671.86 1,784,671.86
Receivables financing with provision for bad debts made on an individual basis
Applicable Not Applicable
Remarks on receivables financing with provision for bad debts made on an individual basis
Applicable Not Applicable
Receivables financing with provision for bad debts made on a collective basis
Applicable Not Applicable
Provision for bad debts withdrawn based on the general model of expected credit losses
Applicable Not Applicable
Division basis for stages and proportions of provision for bad debts
205 / 329
None
Reasons for significant changes in carrying amount of receivables financing in the current period
Applicable Not Applicable
(5) Changes in provision for credit impairment
Applicable Not Applicable
Significant provisions collected or reversed
Applicable Not Applicable
Other remarks
None
(6) Receivables financing actually written off in the current period
Applicable Not Applicable
Significant receivables financing written off in the current period
Applicable Not Applicable
Remarks on receivables financing written off
Applicable Not Applicable
(7) Changes in receivables financing and its fair value
Applicable Not Applicable
(8) Other remarks
Applicable Not Applicable
8. Advances paid
(1) Age analysis
Applicable Not Applicable
Closing balance December 31, 2022
Ages
% to Provision for % to Provision for
Book balance Carrying amount Book balance Carrying amount
total impairment total impairment
Within 1 year 133,181,872.92 94.13 133,181,872.92 220,627,602.76 97.85 220,627,602.76
1-2 years 4,728,693.61 3.34 4,728,693.61 4,109,914.33 1.82 4,109,914.33
2-3 years 2,848,124.45 2.01 2,848,124.45 518,100.60 0.23 518,100.60
Over 3 years 735,119.66 0.52 735,119.66 217,019.06 0.10 217,019.06
Total 141,493,810.64 100.00 141,493,810.64 225,472,636.75 100.00 225,472,636.75
Reasons for unsettlement on advances paid with age over one year and significant amount
None
(2) Details of the top 5 debtors with largest balances
Applicable Not Applicable
206 / 329
Proportion to the total balance of
Debtors Book balance
advances paid (%)
Supplier F 14,964,323.34 10.58
Supplier G 10,404,676.69 7.35
Supplier H 9,400,238.14 6.64
Supplier I 7,142,726.84 5.05
Supplier J 5,867,883.75 4.15
Subtotal 47,779,848.76 33.77
Other remarks
Applicable Not Applicable
9. Other receivables
(1) Details
Applicable Not Applicable
Items Closing balance December 31, 2022
Interest receivable
Dividend receivable
Other receivables 448,538,089.70 419,472,054.84
Total 448,538,089.70 419,472,054.84
Other remarks
Applicable Not Applicable
Interest receivable
(1) Details
Applicable Not Applicable
(2) Significant overdue interest
Applicable Not Applicable
(3) Provision for bad debts
Applicable Not Applicable
Provision for bad debts made on an individual basis
Applicable Not Applicable
Explanation of Provision for bad debts made on an individual basis
Applicable Not Applicable
Provision for bad debts made on a collective basis
Applicable Not Applicable
(4) Provision for bad debts based on the general model of expected credit losses
207 / 329
Applicable Not Applicable
Division basis for stages and proportions of provision for bad debts
None
Reasons for significant changes in carrying amount of interest receivable in the current period
Applicable Not Applicable
(5) Changes in provision for bad debts
Applicable Not Applicable
Significant provisions collected or reversed
Applicable Not Applicable
Other remarks
None
(6) Interest receivable actually written off in the current period
Applicable Not Applicable
Significant interest receivable written off in the current period
Applicable Not Applicable
Remarks on interest receivable written off
Applicable Not Applicable
Other remarks
Applicable Not Applicable
Dividend receivable
(1) Dividend receivable
Applicable Not Applicable
(2) Significant balance with age over one year
Applicable Not Applicable
(3) Provision for bad debts
Applicable Not Applicable
Provision for bad debts made on an individual basis
Applicable Not Applicable
Explanation of Provision for bad debts made on an individual basis
Applicable Not Applicable
Provision for bad debts made on a collective basis
Applicable Not Applicable
208 / 329
(4) Provision for bad debts based on the general model of expected credit losses
Applicable Not Applicable
Division basis for stages and proportions of provision for bad debts
None
Reasons for significant changes in carrying amount of dividend receivable in the current period
Applicable Not Applicable
(5) Changes in provision for bad debts
Applicable Not Applicable
Significant provisions collected or reversed
Applicable Not Applicable
Other remarks
None
(6) Dividend receivable actually written off in the current period
Applicable Not Applicable
Significant dividend receivable written off in the current period
Applicable Not Applicable
Remarks on dividend receivable written off
Applicable Not Applicable
Other remarks
Applicable Not Applicable
Other receivables
(1) Age analysis
Applicable Not Applicable
Book balance on Decemb
Ages Closing book balance
er 31, 2022
Within 1 year 433,167,493.60 410,589,279.04
1-2 years 25,656,040.74 17,500,690.85
2-3 years 2,380,801.36 747,230.71
3-4 years 57,701.30 1,232,408.29
4-5 years 167,987.89 52,735.99
Over 5 years 4,830,633.52 4,801,002.17
Total 466,260,658.41 434,923,347.05
(2) Other receivables categorized by nature
Applicable Not Applicable
209 / 329
Book balance on December
Nature of receivables Closing book balance
31, 2022
Petty cash 10,627,234.05 9,787,465.96
Reserved fund of medicare payment 227,562,930.45 226,096,928.31
Security deposits 153,343,463.92 121,624,037.91
others 74,727,029.99 77,414,914.87
Total 466,260,658.41 434,923,347.05
(3) Changes in provision for bad debts
Applicable Not Applicable
Stage 1 Stage 2 Stage 3
Items 12month Lifetime expected Lifetime expected Total
expected credit credit losses (credit not credit losses (credit
losses impaired) impaired)
Opening balance 9,078,664.86 1,099,867.25 5,272,760.10 15,451,292.21
Opening balance in the
current period —— —— ——
--Transferred to stage 2 -2,565,604.07 2,565,604.07
--Transferred to stage 3 -476,160.27 476,160.27
Provision made in the
3,235,805.72 -623,706.98 -250,342.96 2,361,755.78
current period
Provision transferred by
business combination
Provision written off in the
90,479.28 90,479.28
current period
Closing balance 9,748,866.51 2,565,604.07 5,408,098.13
17,722,568.71
Division basis for stages and proportions of provision for bad debts:
Stage 1 is where credit risk of other receivables has not increased significantly since initial
recognition. Stage 2 is where credit risk of other receivables has increased significantly since
initial recognition, but such receivables are not considered credit-impaired. Stage 3 is where other
receivables are considered credit-impaired since initial recognition.
Items Stage 1 Stage 2 Stage 3 Total
Provision proportion (%) 2.25 10.00 72.72 3.80
Reasons for significant changes in carrying amount of other receivables in the current period
Applicable Not Applicable
Determination basis for provision for impairment made in the current period and whether credit
risk has increased significantly
Applicable Not Applicable
(4) Changes in provision for bad debts
Applicable Not Applicable
Significant provisions collected or reversed
210 / 329
Applicable Not Applicable
Other remarks
None
(5) Other receivables actually written off in the current period
Applicable Not Applicable
Items Amount written off
Other receivables actually written off 90,479.28
Significant other receivables written off in the current period
Applicable Not Applicable
Remarks on other receivables written off
Applicable Not Applicable
(6) Details of the top 5 debtors with largest balances
Applicable Not Applicable
Proportion to the
Nature of total balance of Provision for
Debtors Book balance Ages
receivables other receivables bad debts
(%)
Wuhan Medical Medical insurance Within 1
35,014,676.40 7.51
Insurance Center reserves year
Wuxi Social
Medical insurance Within 1
Insurance Fund 32,515,153.91 6.97
reserves year
Management Center
Equity transfer
Li Zhenguo 21,407,891.50 1-2 years 4.59 2,140,789.15
payment
Ningjing Social
Medical insurance Within 1
Insurance 16,262,431.92 3.49
reserves year
Management Center
Xuzhou Medical
Medical insurance Within 1
Insurance Fund 10,155,599.33 2.18
reserves year
Management Center
Subtotal 115,355,753.06 24.74 2,140,789.15
(7) Other receivables related to the centralized fund management
Applicable Not Applicable
Other remarks
Applicable Not Applicable
10. Inventories
(1) Details
Applicable Not Applicable
Closing balance December 31, 2022
Items Provision for Provision for
Carrying
Book balance write-down/ Book balance write-down/ Carrying amount
amount
impairment impairment
Goods on hand 3,728,652,379.58 19,185,978.09 3,709,466,401.49 3,579,370,459.75 16,775,948.33 3,562,594,511.42
211 / 329
Closing balance December 31, 2022
Items Provision for Provision for
Carrying
Book balance write-down/ Book balance write-down/ Carrying amount
amount
impairment impairment
Low-value consumables 21,823,998.08 21,823,998.08 20,429,336.91 20,429,336.91
Raw materials 58,267,454.66 58,267,454.66 24,639,891.30 24,639,891.30
Work in process 12,762,808.19 12,762,808.19 987,864.06 987,864.06
Packages 5,642,998.44 5,642,998.44 5,897,672.34 5,897,672.34
Costs to fulfill a
contract
Total 3,827,149,638.95 19,185,978.09 3,807,963,660.86 3,631,325,224.36 16,775,948.33 3,614,549,276.03
(2) Provision for inventory write-down/costs to fulfill a contract
Applicable Not Applicable
Increase Decrease
Opening Closing
Items Business Reversal or
balance Accrual Others balance
combination write-off
Goods on hand 16,775,948.33 72,633,545.68 70,223,515.92 19,185,978.09
Total 16,775,948.33 72,633,545.68 70,223,515.92 19,185,978.09
Reasons for the reversal or write-off of provision for inventory write-down
Applicable Not Applicable
Inventories with provision made on a collective basis
Applicable Not Applicable
Determination basis of inventories with provision made on a collective basis
Applicable Not Applicable
(3) Closing capitalized amount of borrowing cost and calculation criteria and basis of
capitalized amount
Applicable Not Applicable
(4) Costs to fulfill a contract
Applicable Not Applicable
Other remarks
Applicable Not Applicable
11. Assets held for sale
Applicable Not Applicable
12. Non-current assets due within one year
Applicable Not Applicable
Debt investments due within one year
Applicable Not Applicable
212 / 329
Other debt investments due within one year
Applicable Not Applicable
Other remarks on non-current assets due within one year
None
13. Other current assets
Applicable Not Applicable
Closing balance Opening balance
Items
Book balance Book balance
Amortized Housing rental tax 49,206,209.68 44,047,274.78
With-holdings on VAT of deducting
308,317,783.51 237,908,688.73
and certificating
Security deposits and interests of time
25,822,578.08
deposit
Others 26,600,349.65 2,661,007.73
Total 384,124,342.84 310,439,549.32
Other remarks
None
14. Debt investments
(1) Details
Applicable Not Applicable
Closing balance December 31, 2022
Items Provision for Book Provision for Carrying
Book balance Carrying amount
impairment balance impairment amount
Large-denomin
ation
Certificate of
51,438,055.56 51,438,055.56
Deposit of
Agricultural
Bank of China
Large-denomin
ation
Certificate of
Deposit of 51,438,055.56 51,438,055.56
Industrial and
Commercial
Bank of China
Large-denomin
ation
Certificate of
51,291,666.66 51,291,666.66
Deposit of
Agricultural
Bank of China
Total 154,167,777.78 154,167,777.78
Changes on provision for impairment of debt investments
Applicable Not Applicable
(2) Significant debt investments at the balance sheet date
213 / 329
Applicable Not Applicable
(3) Provision for impairment of debt investments
Applicable Not Applicable
Division basis for stages and proportions of provision for bad debts
None
Reasons for significant changes in carrying amount of debt investments in the current period
Applicable Not Applicable
Determination basis for provision for impairment made in the current period and whether credit
risk has increased significantly
Applicable Not Applicable
(4) Debt investments actually written off in the current period
Applicable Not Applicable
Significant debt investments written off in the current period
Applicable Not Applicable
Remarks on debt investments written off
Applicable Not Applicable
Other remarks
Applicable Not Applicable
15. Other debt investments
(1) Details
Applicable Not Applicable
Changes on provision for credit impairment of other debt investments
Applicable Not Applicable
(2) Significant other debt investments at the balance sheet date
Applicable Not Applicable
(3) Provision for credit impairment of other debt investments
Applicable Not Applicable
Division basis for stages and proportions of provision for bad debts
None
Reasons for significant changes in carrying amount of other debt investments in the current period
Applicable Not Applicable
Determination basis for provision for impairment made in the current period and whether credit
214 / 329
risk has increased significantly
Applicable Not Applicable
(4) Other debt investments actually written off in the current period
Applicable Not Applicable
Significant other debt investments written off in the current period
Applicable Not Applicable
Remarks on other debt investments written off
Applicable Not Applicable
Other remarks
Applicable Not Applicable
16. Long-term receivables
(1) Details
Applicable Not Applicable
(2) Details on categories of provision for bad debts
Applicable Not Applicable
Provision for bad debts made on an individual basis
Applicable Not Applicable
Explanation of Provision for bad debts made on an individual basis
Applicable Not Applicable
Provision for bad debts made on a collective basis
Applicable Not Applicable
(3) Provision for credit impairment of long-term receivables
Applicable Not Applicable
Division basis for stages and proportions of provision for bad debts
None
Reasons for significant changes in carrying amount of long-term receivables in the current period
Applicable Not Applicable
Determination basis for provision for impairment made in the current period and whether credit
risk has increased significantly
Applicable Not Applicable
(4) Changes in provision for bad debts
Applicable Not Applicable
215 / 329
Significant provisions collected or reversed
Applicable Not Applicable
Other remarks
None
(5) Long-term receivables actually written off in the current period
Applicable Not Applicable
Significant long-term receivables written off in the current period
Applicable Not Applicable
Remarks on long-term receivables written off
Applicable Not Applicable
Other remarks
Applicable Not Applicable
17. Long-term equity investments
(1) Details
Applicable Not Applicable
Increase/Decrease
Opening Investmen Investment income
Investees Investments Adjustment in other
balance ts recognized under
decreased comprehensive income
increased equity method
Joint ventures
Taizhou Yifeng
Baixingren
Pharmacy Chain Co., 5,249,115.35 316,574.96
Ltd. (the “Taizhou
Baixingren )
Total 5,249,115.35 316,574.96
(Continued)
Increase/Decrease Closing
balance of
Investees Changes in Cash dividend/ Profit Provision for Closing balance
Others provision for
other equity declared for distribution impairment impairment
Joint ventures
Taizhou
5,565,690.31
Baixingren
Total 5,565,690.31
(2) Impairment test on long-term equity investments
Applicable Not Applicable
Other remarks
None
Recoverable amount determined based on the fair value less costs of disposal
216 / 329
Applicable Not Applicable
Recoverable amount determined based on the present value of estimated future cash flows
Applicable Not Applicable
Reasons for the significant inconsistencies between aforementioned information and
information used in previous impairment tests or external information
Applicable Not Applicable
Reasons for the significant inconsistencies between information used in previous impairment
tests and actual performance
Applicable Not Applicable
Other remarks
None
18. Other equity instrument investments
(1) Details
Applicable Not Applicable
Increase/Decrease
Items Opening balance Gains or losses included into
Investments Investments
other comprehensive income Others
increased decreased
in the current period
Jiuzhitang Co., Ltd. 327,379,600.00 53,621,041.95 51,224,558.05
Total 327,379,600.00 53,621,041.95 51,224,558.05
(Continued)
Dividend income Accumulated gains or losses
Items Closing balance recognized in the current included into other comprehensive
period income at the end of the period
Jiuzhitang Co., Ltd. 432,225,200.00 17,084,000.00 28,555,612.65
Total 432,225,200.00 17,084,000.00 28,555,612.65
Reasons for equity instrument investments designated as at fair value through other
comprehensive income.
At the end of the period, the Company held 42,710,000 shares of Jiuzhitang Co., Ltd., with a
closing price of 10.12 yuan per share. As the item is a non-trading equity instrument, it is
designated as an equity instrument measured at fair value through other comprehensive income.
(2) Other equity instrument investments derecognized in the current period
Applicable Not Applicable
Other remarks
Applicable Not Applicable
19. Other non-current financial assets
217 / 329
Applicable Not Applicable
Items Closing balance December 31, 2022
Financial assets classified as at fair value
1,010,000.00 1,460,000.00
through profit or loss
Including: Equity instrument investments 1,010,000.00 1,460,000.00
Total 1,010,000.00 1,460,000.00
Other remarks
Applicable Not Applicable
20. Investment property
Measurement Model of Investment property
Applicable Not Applicable
(1) Investment property measured at cost
Applicable Not Applicable
21. Fixed assets
(1) Details
Applicable Not Applicable
Items Closing balance December 31, 2022
Fixed assets 1,524,048,536.46 1,218,512,066.08
Disposal of fixed assets
Total 1,524,048,536.46 1,218,512,066.08
Other remarks
Applicable Not Applicable
Fixed assets
(1) Details
Applicable Not Applicable
Buildings and Electronic Office Transport
Items Machinery Total
structures equipment equipment facilities
Cost
Opening balance 1,004,401,988.03 75,343,671.86 393,703,040.09 374,289,190.36 19,547,122.83 1,867,285,013.17
Increase 289,063,338.27 8,980,002.70 127,423,814.03 78,777,748.68 2,803,190.31 507,048,093.99
1) Acquisition 13,143,882.13 3,575,577.95 127,233,400.36 77,507,238.25 2,803,190.31 224,263,289.00
2) Transferred in from
275,919,456.14 5,404,424.75 121,103.67 1,267,476.99 282,712,461.55
construction in progress
3) Business
69,310.00 3,033.44 72,343.44
combination
Decrease 2,914,696.43 145,575.26 36,502,034.68 20,787,426.79 914,882.49 61,264,615.65
1) Disposal/ Scrapping 2,914,696.43 145,575.26 36,502,034.68 20,787,426.79 914,882.49 61,264,615.65
Closing balance 1,290,550,629.87 84,178,099.30 484,624,819.44 432,279,512.25 21,435,430.65 2,313,068,491.51
218 / 329
Buildings and Electronic Office Transport
Items Machinery Total
structures equipment equipment facilities
Accumulated depreciation
Opening balance 146,816,731.89 22,701,017.49 258,532,173.21 210,824,334.97 9,898,689.53 648,772,947.09
Increase 51,048,936.62 5,677,220.65 76,094,223.32 51,370,667.84 1,723,953.76 185,915,002.19
1) Accrual 51,048,936.62 5,677,220.65 76,094,223.32 51,370,667.84 1,723,953.76 185,915,002.19
2) Business
combination
Decrease 2,768,961.61 103,419.28 24,475,257.36 17,592,026.35 728,329.63 45,667,994.23
1) Disposal/ Scrapping 2,768,961.61 103,419.28 24,475,257.36 17,592,026.35 728,329.63 45,667,994.23
Closing balance 195,096,706.90 28,274,818.86 310,151,139.17 244,602,976.46 10,894,313.66 789,019,955.05
Carrying amount
Closing balance 1,095,453,922.97 55,903,280.44 174,473,680.27 187,676,535.79 10,541,116.99 1,524,048,536.46
Opening balance 857,585,256.14 52,642,654.37 135,170,866.88 163,464,855.39 9,648,433.30 1,218,512,066.08
(2) Fixed assets temporarily idle
Applicable Not Applicable
(3) Fixed assets leased out under operating leases
Applicable Not Applicable
Items Carrying amount
Buildings and structures 989,950.87
Subtotal 989,950.87
(4) Fixed assets with certificate of titles being unsettled
Applicable Not Applicable
Items Carrying amount Reasons for unsettlement
Jiangxi Yifeng Pharmaceutical
93,533,592.91 In progress
Factory
(5) Impairment test on fixed assets
Applicable Not Applicable
Other remarks
Applicable Not Applicable
Recoverable amount determined based on the fair value less costs of disposal
Applicable Not Applicable
Recoverable amount determined based on the present value of estimated future cash flows
Applicable Not Applicable
Reasons for the significant inconsistencies between aforementioned information and
information used in previous impairment tests or external information
Applicable Not Applicable
219 / 329
Reasons for the significant inconsistencies between information used in previous impairment
tests and actual performance
Applicable Not Applicable
Disposal of fixed assets
Applicable Not Applicable
22. Construction in progress
(1) Details
Applicable Not Applicable
Items Closing balance December 31, 2022
Construction in progress 175,121,866.79 239,848,057.90
Construction materials
Total 175,121,866.79 239,848,057.90
Other remarks
Applicable Not Applicable
Construction in progress
(1) Details
Applicable Not Applicable
Closing balance December 31, 2022
Projects
Provision for Provision for
Book balance Carrying amount Book balance Carrying amount
impairment impairment
Yifeng Health City 7,269,387.33 7,269,387.33 7,150,484.63 7,150,484.63
Jiangsu Yifeng
Medicine product
sorting and 694,303.96 694,303.96
processing project
(Phase I)
Jiangsu Yifeng
Medicine product
sorting and 974,245.05 974,245.05
processing project
(Phase II)
Shanghai Yifeng
Medicine Industry 179,823,716.99 179,823,716.99
Base
Second headquarters
project of Yifeng 19,680,975.01 19,680,975.01 10,843,213.07 10,843,213.07
Pharmacy
Hubei Yifeng
Medicine product
sorting and 126,910,848.73 126,910,848.73 41,336,339.25 41,336,339.25
processing center
(Phase I)
Expansion project of
Hebei Xinxing 19,083,829.78 19,083,829.78
Medicine warehouse
Other piecemeal
1,202,580.89 1,202,580.89
projects
Total 175,121,866.79 175,121,866.79 239,848,057.90 239,848,057.90
(2) Changes in significant projects
Applicable Not Applicable
220 / 329
Transferred to Transferred to
Projects Budgets Opening balance Increase Closing balance
fixed assets intangible assets
Hubei Yifeng Medicine
product sorting and 350,000,00
41,336,339.25 85,574,509.48 126,910,848.73
processing center 0.00
(Phase I)
350,000,00
Subtotal 41,336,339.25 85,574,509.48 126,910,848.73
0.00
(Continued)
Accumulated Completion Accumulated amount Amount of borrowing Annual
Projects input to budget percentage of borrowing cost cost capitalization in the capitalization Fund source
(%) (%) capitalization current period rate (%)
Hubei Yifeng
Medicine product
sorting and 36.26 40.00 Raised funds
processing center
(Phase I)
Subtotal 36.26 40.00
(3) Changes in provision for impairment
Applicable Not Applicable
(4) Impairment test on construction in progress
Applicable Not Applicable
Other remarks
Applicable Not Applicable
Recoverable amount determined based on the fair value less costs of disposal
Applicable Not Applicable
Recoverable amount determined based on the present value of estimated future cash flows
Applicable Not Applicable
Reasons for the significant inconsistencies between aforementioned information and
information used in previous impairment tests or external information
Applicable Not Applicable
Reasons for the significant inconsistencies between information used in previous impairment
tests and actual performance
Applicable Not Applicable
Other remarks
Applicable Not Applicable
Construction materials
(1) Details
Applicable Not Applicable
23. Productive biological assets
(1) Productive biological assets measured at cost
221 / 329
Applicable Not Applicable
(2) Impairment test on productive biological assets measured at cost
Applicable Not Applicable
Recoverable amount determined based on the fair value less costs of disposal
Applicable Not Applicable
Recoverable amount determined based on the present value of estimated future cash flows
Applicable Not Applicable
Reasons for the significant inconsistencies between aforementioned information and
information used in previous impairment tests or external information
Applicable Not Applicable
Reasons for the significant inconsistencies between information used in previous impairment
tests and actual performance
Applicable Not Applicable
(3) Productive biological assets based on the fair value
Applicable Not Applicable
Other remarks
Applicable Not Applicable
24. Oil and gas assets
(1) Details
Applicable Not Applicable
(2) Impairment test on oil and gas assets
Applicable Not Applicable
Other remarks
None
Recoverable amount determined based on the fair value less costs of disposal
Applicable Not Applicable
Recoverable amount determined based on the present value of estimated future cash flows
Applicable Not Applicable
Reasons for the significant inconsistencies between aforementioned information and
information used in previous impairment tests or external information
Applicable Not Applicable
Reasons for the significant inconsistencies between information used in previous impairment
222 / 329
tests and actual performance
Applicable Not Applicable
Other remarks
None
25. Right-of-use assets
(1) Details
Applicable Not Applicable
Items Buildings and structures Total
Cost
Opening balance 5,869,364,521.55 5,869,364,521.55
Increase 2,395,740,453.43 2,395,740,453.43
1) Leased in 2,395,740,453.43 2,395,740,453.43
Decrease 1,630,001,478.19 1,630,001,478.19
1) Early or Expired Termination 1,630,001,478.19 1,630,001,478.19
Closing balance 6,635,103,496.79 6,635,103,496.79
Accumulated depreciation
Opening balance 2,435,742,289.21 2,435,742,289.21
Increase 1,445,848,666.95 1,445,848,666.95
1) Accrual 1,445,848,666.95 1,445,848,666.95
Decrease 1,212,371,885.19 1,212,371,885.19
1) Early or Expired Termination 1,212,371,885.19 1,212,371,885.19
Closing balance 2,669,219,070.97 2,669,219,070.97
Carrying amount
Closing balance 3,965,884,425.82 3,965,884,425.82
Opening balance 3,433,622,232.34 3,433,622,232.34
(2) Impairment test on right-of-use assets
Applicable Not Applicable
Other remarks
None
Recoverable amount determined based on the fair value less costs of disposal
Applicable Not Applicable
Recoverable amount determined based on the present value of estimated future cash flows
Applicable Not Applicable
223 / 329
Reasons for the significant inconsistencies between aforementioned information and
information used in previous impairment tests or external information
Applicable Not Applicable
Reasons for the significant inconsistencies between information used in previous impairment
tests and actual performance
Applicable Not Applicable
Other remarks
None
26. Intangible assets
(1) Details
Applicable Not Applicable
Drug
Items Land use right Software Trademark Retailing Total
License
Cost
Opening balance 373,504,822.85 220,570,726.16 2,481,185.16 5,526,653.13 602,083,387.30
Increase 33,942,902.53 237,623.62 34,180,526.15
1) Acquisition 1,788,472.01 237,623.62 2,026,095.63
2) Internal research and
32,154,430.52 32,154,430.52
development
Decrease 16,030,821.54 16,030,821.54
1) Disposal 16,030,821.54 16,030,821.54
Closing balance 373,504,822.85 238,482,807.15 2,718,808.78 5,526,653.13 620,233,091.91
Accumulated amortization
Opening balance 44,495,690.98 75,726,998.78 1,547,601.67 2,113,563.53 123,883,854.96
Increase 11,363,697.26 20,537,356.87 139,141.98 552,665.32 32,592,861.43
1) Accrual 11,363,697.26 20,537,356.87 139,141.98 552,665.32 32,592,861.43
Decrease 7,216,123.36 7,216,123.36
1) Disposal 7,216,123.36 7,216,123.36
Closing balance 55,859,388.24 89,048,232.29 1,686,743.65 2,666,228.85 149,260,593.03
Carrying amount
Closing balance 317,645,434.61 149,434,574.86 1,032,065.13 2,860,424.28 470,972,498.88
Opening balance 329,009,131.87 144,843,727.38 933,583.49 3,413,089.60 478,199,532.34
At the balance sheet date, intangible assets formed through internal research and development
account for 27.25% of total closing balance of intangible assets.
(2) Land use right with certificate of titles being unsettled
Applicable Not Applicable
224 / 329
(3) Impairment test on intangible assets
Applicable Not Applicable
Other remarks
Applicable Not Applicable
Recoverable amount determined based on the fair value less costs of disposal
Applicable Not Applicable
Recoverable amount determined based on the present value of estimated future cash flows
Applicable Not Applicable
Reasons for the significant inconsistencies between aforementioned information and
information used in previous impairment tests or external information
Applicable Not Applicable
Reasons for the significant inconsistencies between information used in previous impairment
tests and actual performance
Applicable Not Applicable
Other remarks
Applicable Not Applicable
27. Goodwill
(1) Details
Applicable Not Applicable
Increase due to
Investees or events resulting in Decrease due
Opening balance business combination Closing balance
goodwill to disposal
in the current period
Xinxing Pharmacy 1,067,133,311.81 1,067,133,311.81
Business and assets of Wu’an
34,709,571.04 34,709,571.04
Kangjian Pharmacy
Business and assets of Xintai Yize
7,100,799.00 7,100,799.00
Pharmacy
Business and assets of Sunshine
5,337,759.80 5,337,759.80
Herbal Pharmacy
Business and assets of Cangzhou
1,431,138.00 1,431,138.00
Yihetang Pharmacy
Business and assets of Shijiazhuang
1,371,076.00 1,371,076.00
Cihao Pharmacy
Business and assets of Kangyide 1,297,370.00 1,297,370.00
Business and assets of Shijiazhuang
854,870.00 854,870.00
Zhongjing Pharmacy
Business and assets of Tangshan
564,475.00 564,475.00
Yuxiangyuan
Business and assets of Jishikang
546,662.00 546,662.00
Pharmacy
Business and assets of Sanhe
29,049,874.00 29,049,874.00
Herentang
Business and assets of Huabei
3,784,890.00 3,784,890.00
Weishikang Pharmacy
225 / 329
Increase due to
Investees or events resulting in Decrease due
Opening balance business combination Closing balance
goodwill to disposal
in the current period
Business and assets of Huawei
556,981.00 556,981.00
Pharmacy
Hengshui Hongda Hengkang
37,557,835.00 37,557,835.00
Pharmacy
Business and assets of Handan
29,163,341.00 29,163,341.00
Deyitang Pharmacy
Business and assets of Hebei
764,438.00 764,438.00
Kangletang Pharmacy
Hengshui Zhongkang Weimin
90,299,576.99 90,299,576.99
Pharmacy Co., Ltd.
Cangzhou Xinxing Wuzhou
22,200,000.00 22,200,000.00
Pharmacy Chain Co., Ltd.
Cangzhou Xinxing Jinyangguang
26,910,000.00 26,910,000.00
Pharmacy Chain Co., Ltd.
Xinxing Hebei 4,997,579.01 4,997,579.01
Tianjin Xianhe 7,900,000.00 7,900,000.00
Handan Xinxing 22,950,000.00 22,950,000.00
Tangshan Xinxing Deshuntang 107,100,000.00 107,100,000.00
Jiuzhou Medicine and Jiuzhou
158,100,000.00 158,100,000.00
Pharmacy
Shanghai Shanghong 125,494,951.53 125,494,951.53
Jiangsu Shimin 125,079,027.86 125,079,027.86
Jiangxi Tianshun 39,000,000.00 39,000,000.00
Xinyu Baihuikang 28,800,000.00 28,800,000.00
Taizhou Yifeng 29,090,846.10 29,090,846.10
Business and assets of Xinghua
6,500,000.00 6,500,000.00
Yishantang
Business and assets of Taizhou
53,063,086.35 53,063,086.35
Baixingren
Business and assets of Jiangsu
1,500,000.00 1,500,000.00
Yishu Medicine
Rudong Yifeng 24,058,466.53 24,058,466.53
Business and assets of Hunan
Xinbaikang Medicine Chain Co., 55,000,000.00 55,000,000.00
Ltd.
Business and assets of Liuyang
34,761,350.00 34,761,350.00
Tianshun Pharmacy
Business and assets of Hengyang
30,000,000.00 30,000,000.00
Dazhong Health Pharmacy
Business and assets of Qidong
14,351,615.00 14,351,615.00
Guoda Health Pharmacy
Guangshengtang 30,410,738.87 30,410,738.87
Business and assets of Jingzhou
8,506,023.00 8,506,023.00
Shashi Xinlianxin Pharmacy
Business and assets of Hubei
7,430,000.00 7,430,000.00
Zhongjie Medicine
Business and assets of Jianli
8,600,000.00 8,600,000.00
Tongze Pharmacy
Business and assets of Changsha
11,252,750.00 11,252,750.00
Qingyuantang Pharmacy
Business and assets of Jiangxi
21,568,983.00 21,568,983.00
Caisen
Business and assets of Nanxian
2,500,000.00 2,500,000.00
Shijikang Pharmacy
226 / 329
Increase due to
Investees or events resulting in Decrease due
Opening balance business combination Closing balance
goodwill to disposal
in the current period
Business and assets of Wuhan
13,826,081.00 13,826,081.00
Houdetang
Wuhan Longtai 65,216,667.52 65,216,667.52
Shaoguan Xiangqin 98,811,598.79 98,811,598.79
Yili Kangxin 66,966,216.62 66,966,216.62
Business and assets of Ningxiang
27,390,000.00 27,390,000.00
Jiuzhitang
Business and assets of Shuangfeng
3,660,000.00 3,660,000.00
Yongjitang
Business and assets of Lichuan
18,800,000.00 18,800,000.00
Tong’an
Business and assets of Xiaogan
12,380,000.00 12,380,000.00
Tiansheng
Business and assets of Guangfutang 25,722,500.50 25,722,500.50
Yangpu Yifeng 51,772,748.23 51,772,748.23
Putuo Yifeng 15,199,355.63 15,199,355.63
Suzhou Yuehai 72,409,550.90 72,409,550.90
Business and assets of Wuzhou
23,914,105.00 23,914,105.00
Pharmacy
Shanghai Buyi 24,592,341.70 24,592,341.70
Hubei Yifeng Pukang Pharmacy
33,477,084.46 33,477,084.46
Chain Co., Ltd.
Business and assets of Nantong
19,463,435.00 19,463,435.00
Zhongzhichen Pharmacy
Business and assets of Suqian
7,988,130.00 7,988,130.00
Dasheng Medicine
Business and assets of Guangyun
12,182,540.00 12,182,540.00
Kangsheng Pharmacy
Business and assets of Suqian
46,109,939.00 46,109,939.00
Jiujiu Medicine Supermarket
Business and assets of Suqian Jiahe
39,799,860.00 39,799,860.00
Medicine
Business and assets of Kaixin
24,466,578.00 24,466,578.00
Pharmacy
Jiankangren 60,518,524.51 60,518,524.51
Baicaotang 51,523,843.40 51,523,843.40
Huai’an Jisheng 39,466,506.83 39,466,506.83
Longshuntang 26,330,311.31 26,330,311.31
Nanjing Yifeng 29,599,720.61 29,599,720.61
Yueyang Yifeng 9,667,622.58 9,667,622.58
Jiyangtang 11,056,673.83 11,056,673.83
Sihong Shidai Medicine 37,390,726.94 37,390,726.94
Business and assets of Sihong
8,500,000.00 8,500,000.00
Yifeng Jizhou Pharmacy
Aierkang 30,930,301.86 30,930,301.86
Business and assets of Yueyang
8,300,000.00 8,300,000.00
Huarong Yikang Pharmacy
Business and assets of Changsha
10,150,000.00 10,150,000.00
Tailai Senyantang
227 / 329
Increase due to
Investees or events resulting in Decrease due
Opening balance business combination Closing balance
goodwill to disposal
in the current period
Xuzhou Enqi 23,400,000.00 23,400,000.00
Rudong Yifeng Bencao 39,991,285.36 39,991,285.36
Yuehai Yongxitang 29,820,868.69 29,820,868.69
Macheng Yifeng 15,549,776.06 15,549,776.06
Yifeng Luoshi Xiehe 27,950,000.00 27,950,000.00
Business and assets of Yongzhou
2,190,000.00 2,190,000.00
Daoxian Renrenkang Pharmacy
Pingjiang Yifeng 8,437,083.42 8,437,083.42
Business and assets of Zhuzhou
22,380,000.00 22,380,000.00
Zhengxiang Pharmacy
Business and assets of Hunan
Sinopharm Holdings Jiajiakang 18,000,000.00 18,000,000.00
Pharmacy
Business and assets of Jianhu
Renmin Pharmacy and Jianhu 17,000,000.00 17,000,000.00
Yuanshengtang Pharmacy
Fengxian Hengyuan 31,500,000.00 31,500,000.00
Dongtai Yifeng Kaixin Medicine
22,239,000.00 22,239,000.00
Co., Ltd.
Business and assets of Jiangsu
15,000,000.00 15,000,000.00
Wuwu Limin Medicine Chain Store
Suzhou Yifeng Yuehai
Tong’ankang Pharmacy Chain Co., 15,615,853.66 15,615,853.66
Ltd.
Yancheng Jinyuan 37,634,283.13 37,634,283.13
Xuzhou Yifeng 22,985,583.59 22,985,583.59
Business and assets of Sanhuaitang 7,000,000.00 7,000,000.00
Business and assets of Miluo
24,880,000.00 24,880,000.00
Tianheng Jirengtang Pharmacy
Business and assets of Zhuzhou
7,680,000.00 7,680,000.00
Shifeng Shunkang Pharmacy
Business and assets of Hunan
Zhongxin Pharmacy Retail Chain 13,800,000.00 13,800,000.00
Co., Ltd.
Business and assets of Xiangtan
Sishitang Pharmacy and
1,500,000.00 1,500,000.00
Chunxiaoyuan Traditional Chinese
Medicine Clinic
Business and assets of Hengyang
1,700,000.00 1,700,000.00
Jianyi, Kangrentang and Shiyitang
Business and assets of Leiyang
37,700,000.00 37,700,000.00
Siyanjing Pharmacy Co., Ltd.
Business and assets of Hunan
3,660,000.00 3,660,000.00
Dehai Pharmacy Co., Ltd.
Jiangxi Jianmin 70,200,000.00 70,200,000.00
Business and assets of Poyang
Hucheng Health Kaixinren 22,800,000.00 22,800,000.00
Pharmacy
Business and assets of Yushan
25,000,000.00 25,000,000.00
Baicaotang Pharmacy
Chibi Kanghua 26,378,913.74 26,378,913.74
Xishui Yifeng 25,845,000.00 25,845,000.00
228 / 329
Increase due to
Investees or events resulting in Decrease due
Opening balance business combination Closing balance
goodwill to disposal
in the current period
Wuhan Jianghan 28,352,879.88 28,352,879.88
Yidu Yifeng 11,576,250.00 11,576,250.00
Anlu Yifeng 13,999,970.12 13,999,970.12
Hubei Aierkang 3,687,486.07 3,687,486.07
Business and assets of Badong
15,300,000.00 15,300,000.00
Guoyaobu
Business and assets of Huanggang
2,300,000.00 2,300,000.00
Tongjitang Xishui stores
Business and assets of Suizhou
15,000,000.00 15,000,000.00
Haoyihao Pharmacy
Wuhan Haojiankang 31,071,780.29 31,071,780.29
Business and assets of Suizhou
1,500,000.00 1,500,000.00
Baixing Pharmacy
Business and assets of Hubei
1,300,000.00 1,300,000.00
Kanghua Pharmacy Chain Co., Ltd.
Jiuzhitang Medicine 102,064,935.48 102,064,935.48
Tangshan Xinxing Deshengtang 101,700,000.00 101,700,000.00
Qinhuangdao Xinxing Minle 56,700,000.00 56,700,000.00
Handan Xinxing Baixinkang 22,544,000.00 22,544,000.00
Shijiazhuang Yingqi Medical
1,399,867.03 1,399,867.03
Service
Handan Xinxing Huakang 47,250,000.00 47,250,000.00
Langfang Xinxing Dekunyuan 24,792,000.00 24,792,000.00
Chengde Xinxing Xinyu 21,000,000.00 21,000,000.00
Suzhou Xinqunzhong Clinic 4,499,666.86 4,499,666.86
Yichun Yifeng 22,500,000.00 22,500,000.00
Guangshui Yifeng Kangji 7,840,000.00 7,840,000.00
Yingtan Yifeng 18,200,000.00 18,200,000.00
Business and assets of Xingtai
Dongda Pharmaceutical Chain Co., 26,320,000.00 26,320,000.00
Ltd.
Business and assets of Changzhou
Renmin Baixing Pharmacy Co., 35,000,000.00 35,000,000.00
Ltd.
Business and assets of Jiangling
6,880,000.00 6,880,000.00
Miaoyuan Pharmacy
Business and assets of Hubei
Zhonglian Pharmacy Chain Co., 20,000,000.00 20,000,000.00
Ltd.
Business and assets of Longshan
Laobaixing Xinteyao Health 6,000,000.00 6,000,000.00
Pharmacy
Total 4,190,223,299.60 422,625,533.89 4,612,848,833.49
(2) Provision for impairment
Applicable Not Applicable
229 / 329
Investees or events Opening
Accrual Decrease Closing balance
resulting in goodwill balance
Shaoguan Xiangqin 2,299,554.25 2,299,554.25
Total 2,299,554.25 2,299,554.25
(3) Related information of asset groups or asset group portfolios which include goodwill
Applicable Not Applicable
Whether asset groups or asset
Composition of asset groups or Operating group portfolios are consistent
Asset groups or asset group portfolios asset group portfolios and its segment and with those at acquisition date/at
basis its basis goodwill impairment testing
date in previous years
Jiyangtang Operating long-term assets Hubei region Yes
Assets of Hengyang Dazhong Health
Operating long-term assets Hunan region Yes
Pharmacy
Assets of Jianhu Renmin Pharmacy and
Operating long-term assets Jiangsu region Yes
Jianhu Yuanshengtang Pharmacy
Jinzhou Pukang Operating long-term assets Hubei region Yes
Jiankangren Operating long-term assets Jiangsu region Yes
Assets of Lichuan Tong’an Operating long-term assets Hubei region Yes
Pingjiang Yifeng Operating long-term assets Hunan region Yes
Assets of Qidong Guoda Health
Operating long-term assets Hunan region Yes
Pharmacy
Macheng Yifeng Operating long-term assets Hubei region Yes
Asset groups of Dongtai Yifeng Operating long-term assets Jiangsu region No
Aierkang Operating long-term assets Hubei region Yes
Assets of Kaixin Pharmacy Operating long-term assets Jiangsu region Yes
Assets of Wuhan Houdetang Operating long-term assets Hubei region Yes
Wuhan Longtai Operating long-term assets Hubei region Yes
Nanjing Yifeng Operating long-term assets Jiangsu region Yes
Assets of Xiaogan Tiansheng Operating long-term assets Hubei region Yes
Assets of Suqian Jiujiu Medicine
Operating long-term assets Jiangsu region Yes
Supermarket
Assets of Guangfutang Operating long-term assets Hubei region Yes
Assets group portfolios of
Guangshengtang, Jingzhou Shashi
Operating long-term assets Hubei region No
Xinlianxin Pharmacy, Hubei Zhongjie
Medicine and Jianli Tongze Pharmacy
Assets of Huarong Yikang Pharmacy Operating long-term assets Hunan region Yes
Shanghai
Yangpu Yifeng Operating long-term assets Yes
region
Assets of Liuyang Tianshun Pharmacy Operating long-term assets Hunan region Yes
230 / 329
Whether asset groups or asset
Composition of asset groups or Operating group portfolios are consistent
Asset groups or asset group portfolios asset group portfolios and its segment and with those at acquisition date/at
basis its basis goodwill impairment testing
date in previous years
Rudong Yifeng Bencao Operating long-term assets Jiangsu region Yes
Assets of Nanxian Shijikang Pharmacy Operating long-term assets Hunan region Yes
Suzhou Yuehai and Suzhou
Operating long-term assets Jiangsu region No
Xinqunzhong Clinic
Assets of Ningxiang Jiuzhitang Operating long-term assets Hunan region Yes
Assets of Shuangfeng Yongjitang Operating long-term assets Hunan region Yes
Assets of Sihong Shidai Medicine and
Operating long-term assets Jiangsu region Yes
Sihong Yifeng Jizhou Pharmacy
Assets of Hunan Sinopharm Holdings
Operating long-term assets Hunan region Yes
Jiajiakang Pharmacy
Assets of Xinbaikang Pharmacy Operating long-term assets Hunan region Yes
Asset group portfolios of Taizhou
Yifeng, Xinghua Yishantang, Taizhou Operating long-term assets Jiangsu region Yes
Baixingren and Jiangsu Yishu Medicine
Yifeng Luoshi Xiehe and Yongzhou
Operating long-term assets Hunan region Yes
Daoxian Renrenkang Pharmacy
Yueyang Yifeng Operating long-term assets Hunan region Yes
Assets of Suqian Jiahe Medicine Operating long-term assets Jiangsu region Yes
Assets of Changsha Qingyuantang
Operating long-term assets Hunan region Yes
Pharmacy
Assets of Suqian Dasheng Medicine Operating long-term assets Jiangsu region Yes
Assets of Changsha Tailai Senyantang
Operating long-term assets Hunan region Yes
Pharmacy
Jiuzhou Medicine and Jiuzhou
Operating long-term assets Jiangsu region Yes
Pharmacy
Assets of Zhuzhou Zhengxiang
Operating long-term assets Hunan region Yes
Pharmacy
Guangdong
Shaoguan Xiangqin Operating long-term assets No
region
Huai’an Jisheng Operating long-term assets Jiangsu region Yes
Jiangsu Shimin Operating long-term assets Jiangsu region Yes
Asset group portfolios of Jiangxi
Operating long-term assets Jiangxi region No
Tianshun and Xinyu Baihuikang
Assets of Guangyun Kangsheng
Operating long-term assets Jiangsu region Yes
Pharmacy
Rudong Yifeng Operating long-term assets Jiangsu region Yes
Asset groups of Miluo Tianheng Operating long-term assets Hunan region No
Assets of Nantong Zhongzhichen Operating long-term assets Jiangsu region Yes
231 / 329
Whether asset groups or asset
Composition of asset groups or Operating group portfolios are consistent
Asset groups or asset group portfolios asset group portfolios and its segment and with those at acquisition date/at
basis its basis goodwill impairment testing
date in previous years
Pharmacy
Yuehai Yongxitang Operating long-term assets Jiangsu region Yes
Shanghai
Longshuntang Operating long-term assets Yes
region
Baicaotang Operating long-term assets Jiangsu region Yes
Asset groups of Xinkang Jianmin Operating long-term assets Jiangxi region No
Xuzhou Enqi Operating long-term assets Jiangsu region Yes
Asset groups of Anlu Yifeng Operating long-term assets Hubei region No
Assets of Jiangxi Caisen Operating long-term assets Jiangxi region Yes
Shanghai
Shanghai Buyi Operating long-term assets Yes
region
Shanghai
Putuo Yifeng Operating long-term assets Yes
region
Asset groups of Xinxing Chain Operating long-term assets Hebei region No
Shanghai
Shanghai Shanghong Operating long-term assets Yes
region
Shanghai
Assets of Wuzhou Pharmacy Operating long-term assets Yes
region
Jiuzhitang Medicine Operating long-term assets Hunan region Yes
Changes in composition of asset groups or asset group portfolios
Applicable Not Applicable
Asset groups or
Composition before Composition after
asset group Objective facts and basis for changes
changes changes
portfolios
The Company continues to strengthen the regional
integration of acquired assets, and newly acquired
projects are operated under a unified management
structure after the acquisition, with decisions and
allocations regarding sales, distribution, and human
resources made by the regional headquarters. In 2023,
Operating long-term
Operating long-term the Jiangsu regional headquarters newly acquired the
Asset groups of assets of asset
assets after acquiring assets of Changzhou Renmin stores, which, similar to
Dongtai Yifeng groups of Dongtai
Changzhou Renmin the asset groups such as the former Dongtai Yifeng, are
Yifeng
under the unified management of the regional
headquarters Jiangsu Yifeng in procurement,
distribution, sales and financial accounting. Therefore,
based on the management structure and the synergistic
effect of business combination, the goodwill is
allocated to the benefiting asset groups. Apart from the
232 / 329
Asset groups or
Composition before Composition after
asset group Objective facts and basis for changes
changes changes
portfolios
newly acquired assets, there are no changes in the
division of the former asset groups.
Assets group
portfolios of
In 2023, Guangshengtang acquired the assets of
Guangshengtang,
Operating long-term Jiangling Miaoyuan stores, and carries out unified
Jingzhou Shashi Operating long-term
assets of asset groups of management in sales, procurement, distribution, human
Xinlianxin assets of asset
Guangshengtang after resources, and finance. Therefore, based on the
Pharmacy, Hubei groups of
acquiring Jiangling management structure and the synergistic effect of
Zhongjie Guangshengtang
Miaoyuan business combination, the goodwill is allocated to the
Medicine and
benefiting asset groups.
Jianli Tongze
Pharmacy
In 2023, Suzhou Yuehai acquired relevant assets of
Operating long-term Xinqunzhong Clinic, relocated the clinic to Yuehai
Suzhou Yuehai Operating long-term
assets of asset groups of Pharmacy for business operation, and carries out
and assets of asset
Suzhou Yuehai after unified management in operations, distribution, and
Xinqunzhong groups of Suzhou
acquiring Xinqunzhong finance. Based on the management structure and the
Clinic Yuehai
Clinic synergistic effect of business combination, the goodwill
is allocated to the benefiting asset groups.
Due to the need for integrated management, in 2023, all
stores in asset group of Guangdong Zengcheng
Kangxin were transferred to Shaoguan Xiangqin, and
Assets and goodwill of
Operating long-term Shaoguan Xiangqin takes charge of unified
Shaoguan Xiangqin and
Shaoguan assets of asset management in sales, procurement, distribution, human
transferred-in former
Xiangqin groups of Shaoguan resources, and finance. The former legal entity of
Guangdong Zengcheng
Xiangqin Guangdong Zengcheng Kangxin is planned to be
Kangxin
cancelled. Based on the management structure and the
synergistic effect of business combination, the goodwill
is allocated to the benefiting asset groups.
In 2023, Jiangxi Tianshun acquired the equity of
Asset group
Operating long-term Operating long-term Yichun Yifeng, and carries out unified management in
portfolios of
assets of asset assets of asset groups of sales, procurement, distribution, human resources, and
Jiangxi Tianshun
groups of Jiangxi Jiangxi Tianshun after finance. Therefore, based on the management structure
and Xinyu
Tianshun acquiring Yichun Yifeng and the synergistic effect of business combination, the
Baihuikang
goodwill is allocated to the benefiting asset groups.
The Company continues to strengthen the regional
integration of acquired assets, and newly acquired
Operating long-term
Operating long-term projects are operated under a unified management
Asset groups of assets of asset
assets after acquiring structure after the acquisition, with decisions and
Miluo Tianheng groups of Miluo
Longshan Laobaixing allocations regarding sales, distribution, and human
Tianheng
resources made by the regional headquarters. In 2023,
the Hunan regional headquarters newly acquired the
233 / 329
Asset groups or
Composition before Composition after
asset group Objective facts and basis for changes
changes changes
portfolios
assets of Longshan Laobaixing, which, similar to the
asset groups such as the former Miluo Tianheng, are
under the unified management of the regional
headquarters Hunan Yifeng in procurement,
distribution, sales and financial accounting. Therefore,
based on the management structure and the synergistic
effect of business combination, the goodwill is
allocated to the benefiting asset groups. Apart from the
newly acquired assets, there are no changes in the
division of the former asset groups.
The Company continues to strengthen the regional
integration of acquired assets, and newly acquired
projects are operated under a unified management
structure after the acquisition, with decisions and
allocations regarding sales, distribution, and human
resources made by the regional headquarters. In 2023,
the Jiangxi regional headquarters newly acquired the
Operating long-term
Operating long-term assets of Yingtan Yifeng, which, similar to the asset
Asset groups of assets of asset
assets after acquiring groups such as the former Xinkang Jianmin, are under
Xinkang Jianmin groups of Xinkang
Yingtan Yifeng the unified management of the regional headquarters
Jianmin
Jiangxi Yifeng in procurement, distribution, sales and
financial accounting. Therefore, based on the
management structure and the synergistic effect of
business combination, the goodwill is allocated to the
benefiting asset groups. Apart from the newly acquired
assets, there are no changes in the division of the
former asset groups.
The Company continues to strengthen the regional
integration of acquired assets, and newly acquired
projects are operated under a unified management
structure after the acquisition, with decisions and
allocations regarding sales, distribution, and human
resources made by the regional headquarters. In 2023,
Operating long-term
Operating long-term the Hubei regional headquarters newly acquired the
Asset groups of assets of asset
assets after acquiring equtiy of Yifeng Kangji and the assets of Hubei
Anlu Yifeng groups of Anlu
Yifeng Kangji, etc. Zhonglian, which, similar to the asset groups such as
Yifeng
the former Anlu Yifeng, are under the unified
management of the regional headquarters Hubei Yifeng
in procurement, distribution, sales and financial
accounting. Therefore, based on the management
structure and the synergistic effect of business
combination, the goodwill is allocated to the benefiting
234 / 329
Asset groups or
Composition before Composition after
asset group Objective facts and basis for changes
changes changes
portfolios
asset groups. Apart from the newly acquired assets,
there are no changes in the division of the former asset
groups.
In 2023, Xinxing Chain acquired the equity of
Deshengtang, Langfang Xinxing, Chengde Xinxing,
Handan Huakang, and Qinhuangdao Minle, as well as
Operating long-term
Operating long-term the assets of Xingtai Dongda stores. Xinxing Chain, as
Asset groups of assets of assets of
assets of asset the regional headquarters, takes charge of unified
Xinxing Chain, Xinxing Chain after
groups of Xinxing management in sales, procurement, distribution, human
etc. acquiring the equity of
Chain resources, and finance. Based on the management
Qinhuangdao Minle, etc.
structure and the synergistic effect of business
combination, the goodwill is allocated to the benefiting
asset groups.
Other remarks
Applicable Not Applicable
(4) Specific method for determining recoverable amount
Recoverable amount determined based on the fair value less costs of disposal
Applicable Not Applicable
Recoverable amount determined based on the present value of estimated future cash flows
Applicable Not Applicable
Carrying amount of
asset groups or asset Recoverable Provision for
Items
group portfolios which amount impairment
include goodwill
Jiyangtang 17,160,059.51 42,500,000.00
Assets of Hengyang Dazhong
30,938,008.64 40,000,000.00
Health Pharmacy
Assets of Jianhu Renmin
Pharmacy and Jianhu 17,888,734.02 19,000,000.00
Yuanshengtang Pharmacy
Jinzhou Pukang 45,126,446.15 83,000,000.00
Jiankangren 128,665,877.44 197,000,000.00
Assets of Lichuan Tong’an 19,325,593.89 26,800,000.00
Pingjiang Yifeng 13,427,945.07 15,400,000.00
Assets of Qidong Guoda Health
15,214,191.22 32,000,000.00
Pharmacy
Macheng Yifeng 23,688,157.66 25,100,000.00
Asset groups of Dongtai Yifeng 267,727,753.00 369,000,000.00
235 / 329
Carrying amount of
asset groups or asset Recoverable Provision for
Items
group portfolios which amount impairment
include goodwill
Aierkang 41,764,423.49 122,000,000.00
Assets of Kaixin Pharmacy 24,591,879.95 39,300,000.00
Assets of Wuhan Houdetang 13,918,346.34 45,800,000.00
Wuhan Longtai 66,581,478.70 94,000,000.00
Nanjing Yifeng 31,328,909.28 65,000,000.00
Assets of Xiaogan Tiansheng 12,768,649.40 21,300,000.00
Assets of Suqian Jiujiu
47,224,137.56 83,000,000.00
Medicine Supermarket
Assets of Guangfutang 26,085,953.66 30,300,000.00
Assets group portfolios of
Guangshengtang, Jingzhou
Shashi Xinlianxin Pharmacy, 79,938,093.60 223,000,000.00
Hubei Zhongjie Medicine and
Jianli Tongze Pharmacy
Assets of Huarong Yikang
8,452,546.71 21,900,000.00
Pharmacy
Yangpu Yifeng 52,835,493.42 54,000,000.00
Assets of Liuyang Tianshun
37,183,257.02 90,000,000.00
Pharmacy
Rudong Yifeng Bencao 52,216,948.43 54,000,000.00
Assets of Nanxian Shijikang
2,567,133.55 10,200,000.00
Pharmacy
Suzhou Yuehai and
79,721,180.74 110,000,000.00
Xinqunzhong Clinic
Assets of Ningxiang Jiuzhitang 28,111,837.60 36,200,000.00
Assets of Shuangfeng
3,732,264.91 4,830,000.00
Yongjitang
Assets of Sihong Shidai
Medicine and Sihong Yifeng 79,081,470.13 87,000,000.00
Jizhou Pharmacy
Assets of Hunan Sinopharm
19,592,189.26 20,600,000.00
Holdings Jiajiakang Pharmacy
Assets of Xinbaikang Pharmacy 55,703,052.78 57,000,000.00
Asset group portfolios of
Taizhou Yifeng, Xinghua
118,345,458.20 201,000,000.00
Yishantang, Taizhou Baixingren
and Jiangsu Yishu Medicine
Yifeng Luoshi Xiehe and 50,661,755.44 52,200,000.00
236 / 329
Carrying amount of
asset groups or asset Recoverable Provision for
Items
group portfolios which amount impairment
include goodwill
Yongzhou Daoxian Renrenkang
Pharmacy
Yueyang Yifeng 16,119,804.37 29,500,000.00
Assets of Suqian Jiahe Medicine 40,448,874.82 41,600,000.00
Assets of Changsha
12,232,130.02 24,400,000.00
Qingyuantang Pharmacy
Assets of Suqian Dasheng
8,340,648.77 21,300,000.00
Medicine
Assets of Changsha Tailai
10,739,554.04 32,300,000.00
Senyantang Pharmacy
Jiuzhou Medicine and Jiuzhou
340,503,046.50 663,000,000.00
Pharmacy
Assets of Zhuzhou Zhengxiang
23,637,937.97 33,800,000.00
Pharmacy
Shaoguan Xiangqin 182,315,184.93 186,000,000.00
Huai’an Jisheng 84,731,153.75 91,000,000.00
Jiangsu Shimin 242,831,203.39 249,000,000.00
Asset group portfolios of
Jiangxi Tianshun and Xinyu 157,236,364.34 165,000,000.00
Baihuikang
Assets of Guangyun Kangsheng
12,346,550.48 17,500,000.00
Pharmacy
Rudong Yifeng 42,122,712.88 128,000,000.00
Asset groups of Miluo Tianheng 101,998,090.17 129,000,000.00
Assets of Nantong
19,701,747.35 59,000,000.00
Zhongzhichen Pharmacy
Yuehai Yongxitang 45,438,513.82 94,000,000.00
Longshuntang 52,308,403.83 53,800,000.00
Baicaotang 106,640,013.12 213,000,000.00
Asset groups of Xinkang
197,298,858.47 253,000,000.00
Jianmin
Xuzhou Enqi 39,081,174.58 194,000,000.00
Asset groups of Anlu Yifeng 278,833,534.22 470,000,000.00
Assets of Jiangxi Caisen 35,908,198.17 41,400,000.00
Shanghai Buyi 24,621,988.15 25,100,000.00
Putuo Yifeng 15,327,434.96 15,600,000.00
Asset groups of Xinxing Chain 2,190,001,317.58 2,523,000,000.00
237 / 329
Carrying amount of
asset groups or asset Recoverable Provision for
Items
group portfolios which amount impairment
include goodwill
Shanghai Shanghong 248,560,723.17 253,000,000.00
Assets of Wuzhou Pharmacy 24,015,193.78 50,500,000.00
Jiuzhitang Medicine 324,424,685.42 352,000,000.00
Items 6,389,334,269.82 8,781,230,000.00
(Continued)
Parameters including revenue growth Parameters including revenue growth
Forecast Discount rate and its
Items rate and gross margin for forecast period rate and gross margin for stable period
period determination basis
and their determination basis and their determination basis
During the stable period, the sales
From 2024 to 2028, the sales revenue revenue growth rate is expected to be
growth rate is expected to range from 2.00%; the gross margin is expected to
3.19% to 8.47%; the gross margin is be 34.25%; and the period expense rate 13.90%; the weighted
expected to range from 34.15% to is expected to be 24.27%. The average cost of capital
34.25%; and the period expense rate Company is expected to achieve a (WACC) is
Jiyangtang 5 years is expected to range from 24.17% to stable operating status by 2028. determined based on
24.81%, which are determined by the Therefore, the forecast period ends at the cost of equity
Company based on business the end of 2028, followed by a stable capital and the cost of
performance in previous years and period from 2029 onwards into the debt.
expectations for the future future perpetuity, during which the
development of the market industry. Company’s business performance will
maintain a stable level of cash earnings.
During the stable period, the sales
From 2024 to 2028, the sales revenue revenue growth rate is expected to be
growth rate is expected to range from 2.00%; the gross margin is expected to
3.00% to 11.61%; the gross margin is be 28.21%; and the period expense rate 13.90%; the weighted
expected to range from 28.21% to is expected to be 18.71%. The average cost of capital
Assets of Hengyang 28.21%; and the period expense rate Company is expected to achieve a (WACC) is
Dazhong Health 5 years is expected to range from 18.68% to stable operating status by 2028. determined based on
Pharmacy 18.81%, which are determined by the Therefore, the forecast period ends at the cost of equity
Company based on business the end of 2028, followed by a stable capital and the cost of
performance in previous years and period from 2029 onwards into the debt.
expectations for the future future perpetuity, during which the
development of the market industry. Company’s business performance will
maintain a stable level of cash earnings.
From 2024 to 2028, the sales revenue During the stable period, the sales 13.70%; the weighted
growth rate is expected to range from revenue growth rate is expected to be average cost of capital
Assets of Jianhu
3.00% to 10.35%; the gross margin is 2.00%; the gross margin is expected to (WACC) is
Renmin Pharmacy and
5 years expected to range from 34.25% to be 34.25%; and the period expense rate determined based on
Jianhu Yuanshengtang
34.25%; and the period expense rate is expected to be 24.50%. The the cost of equity
Pharmacy
is expected to range from 24.46% to Company is expected to achieve a capital and the cost of
24.57%, which are determined by the stable operating status by 2028. debt.
238 / 329
Parameters including revenue growth Parameters including revenue growth
Forecast Discount rate and its
Items rate and gross margin for forecast period rate and gross margin for stable period
period determination basis
and their determination basis and their determination basis
Company based on business Therefore, the forecast period ends at
performance in previous years and the end of 2028, followed by a stable
expectations for the future period from 2029 onwards into the
development of the market industry. future perpetuity, during which the
Company’s business performance will
maintain a stable level of cash earnings.
During the stable period, the sales
From 2024 to 2028, the sales revenue revenue growth rate is expected to be
growth rate is expected to range from 2.00%; the gross margin is expected to
-0.45% to 3.14%; the gross margin is be 37.77%; and the period expense rate 13.90%; the weighted
expected to range from 37.77% to is expected to be 25.14%. The average cost of capital
37.78%; and the period expense rate Company is expected to achieve a (WACC) is
Jinzhou Pukang 5 years is expected to range from 24.99% to stable operating status by 2028. determined based on
25.20%, which are determined by the Therefore, the forecast period ends at the cost of equity
Company based on business the end of 2028, followed by a stable capital and the cost of
performance in previous years and period from 2029 onwards into the debt.
expectations for the future future perpetuity, during which the
development of the market industry. Company’s business performance will
maintain a stable level of cash earnings.
During the stable period, the sales
From 2024 to 2028, the sales revenue revenue growth rate is expected to be
growth rate is expected to range from 2.00%; the gross margin is expected to
3.18% to 8.91%; the gross margin is be 39.59%; and the period expense rate 13.70%; the weighted
expected to range from 39.51% to is expected to be 30.31%. The average cost of capital
39.59%; and the period expense rate Company is expected to achieve a (WACC) is
Jiankangren 5 years is expected to range from 30.22% to stable operating status by 2028. determined based on
30.88%, which are determined by the Therefore, the forecast period ends at the cost of equity
Company based on business the end of 2028, followed by a stable capital and the cost of
performance in previous years and period from 2029 onwards into the debt.
expectations for the future future perpetuity, during which the
development of the market industry. Company’s business performance will
maintain a stable level of cash earnings.
From 2024 to 2028, the sales revenue During the stable period, the sales
growth rate is expected to range from revenue growth rate is expected to be
13.90%; the weighted
0.76% to 3.00%; the gross margin is 2.00%; the gross margin is expected to
average cost of capital
expected to range from 40.57% to be 40.57%; and the period expense rate
(WACC) is
Assets of Lichuan 40.57%; and the period expense rate is expected to be 32.53%. The
5 years determined based on
Tong’an is expected to range from 32.30% to Company is expected to achieve a
the cost of equity
32.53%, which are determined by the stable operating status by 2028.
capital and the cost of
Company based on business Therefore, the forecast period ends at
debt.
performance in previous years and the end of 2028, followed by a stable
expectations for the future period from 2029 onwards into the
239 / 329
Parameters including revenue growth Parameters including revenue growth
Forecast Discount rate and its
Items rate and gross margin for forecast period rate and gross margin for stable period
period determination basis
and their determination basis and their determination basis
development of the market industry. future perpetuity, during which the
Company’s business performance will
maintain a stable level of cash earnings.
During the stable period, the sales
From 2024 to 2028, the sales revenue revenue growth rate is expected to be
growth rate is expected to range from 2.00%; the gross margin is expected to
3.21% to 4.05%; the gross margin is be 38.20%; and the period expense rate 13.90%; the weighted
expected to range from 38.12% to is expected to be 30.71%. The average cost of capital
38.20%; and the period expense rate Company is expected to achieve a (WACC) is
Pingjiang Yifeng 5 years is expected to range from 30.61% to stable operating status by 2028. determined based on
31.22%, which are determined by the Therefore, the forecast period ends at the cost of equity
Company based on business the end of 2028, followed by a stable capital and the cost of
performance in previous years and period from 2029 onwards into the debt.
expectations for the future future perpetuity, during which the
development of the market industry. Company’s business performance will
maintain a stable level of cash earnings.
During the stable period, the sales
From 2024 to 2028, the sales revenue revenue growth rate is expected to be
growth rate is expected to range from 2.00%; the gross margin is expected to
3.00% to 4.59%; the gross margin is be 34.85%; and the period expense rate 13.90%; the weighted
expected to range from 34.85% to is expected to be 23.80%. The average cost of capital
Assets of Qidong 34.85%; and the period expense rate Company is expected to achieve a (WACC) is
Guoda Health 5 years is expected to range from 23.71% to stable operating status by 2028. determined based on
Pharmacy 23.92%, which are determined by the Therefore, the forecast period ends at the cost of equity
Company based on business the end of 2028, followed by a stable capital and the cost of
performance in previous years and period from 2029 onwards into the debt.
expectations for the future future perpetuity, during which the
development of the market industry. Company’s business performance will
maintain a stable level of cash earnings.
During the stable period, the sales
From 2024 to 2028, the sales revenue revenue growth rate is expected to be
growth rate is expected to range from 2.00%; the gross margin is expected to
3.17% to 9.69%; the gross margin is be 39.83%; and the period expense rate 13.90%; the weighted
expected to range from 39.83% to is expected to be 31.40%. The average cost of capital
39.87%; and the period expense rate Company is expected to achieve a (WACC) is
Macheng Yifeng 5 years is expected to range from 31.25% to stable operating status by 2028. determined based on
32.49%, which are determined by the Therefore, the forecast period ends at the cost of equity
Company based on business the end of 2028, followed by a stable capital and the cost of
performance in previous years and period from 2029 onwards into the debt.
expectations for the future future perpetuity, during which the
development of the market industry. Company’s business performance will
maintain a stable level of cash earnings.
240 / 329
Parameters including revenue growth Parameters including revenue growth
Forecast Discount rate and its
Items rate and gross margin for forecast period rate and gross margin for stable period
period determination basis
and their determination basis and their determination basis
During the stable period, the sales
From 2024 to 2028, the sales revenue revenue growth rate is expected to be
growth rate is expected to range from 2.00%; the gross margin is expected to
3.29% to 6.79%; the gross margin is be 33.86%; and the period expense rate 13.70%; the weighted
expected to range from 33.43% to is expected to be 24.01%. The average cost of capital
33.86%; and the period expense rate Company is expected to achieve a (WACC) is
Asset groups of
5 years is expected to range from 23.93% to stable operating status by 2028. determined based on
Dongtai Yifeng
24.80%, which are determined by the Therefore, the forecast period ends at the cost of equity
Company based on business the end of 2028, followed by a stable capital and the cost of
performance in previous years and period from 2029 onwards into the debt.
expectations for the future future perpetuity, during which the
development of the market industry. Company’s business performance will
maintain a stable level of cash earnings.
During the stable period, the sales
From 2024 to 2028, the sales revenue revenue growth rate is expected to be
growth rate is expected to range from 2.00%; the gross margin is expected to
3.02% to 9.26%; the gross margin is be 37.23%; and the period expense rate 13.90%; the weighted
expected to range from 37.21% to is expected to be 25.08%. The average cost of capital
37.23%; and the period expense rate Company is expected to achieve a (WACC) is
Aierkang 5 years is expected to range from 24.92% to stable operating status by 2028. determined based on
25.08%, which are determined by the Therefore, the forecast period ends at the cost of equity
Company based on business the end of 2028, followed by a stable capital and the cost of
performance in previous years and period from 2029 onwards into the debt.
expectations for the future future perpetuity, during which the
development of the market industry. Company’s business performance will
maintain a stable level of cash earnings.
During the stable period, the sales
From 2024 to 2028, the sales revenue revenue growth rate is expected to be
growth rate is expected to range from 2.00%; the gross margin is expected to
2.76% to 3.00%; the gross margin is be 32.90%; and the period expense rate 13.70%; the weighted
expected to range from 32.89% to is expected to be 23.74%. The average cost of capital
32.90%; and the period expense rate Company is expected to achieve a (WACC) is
Assets of Kaixin
5 years is expected to range from 23.73% to stable operating status by 2028. determined based on
Pharmacy
23.87%, which are determined by the Therefore, the forecast period ends at the cost of equity
Company based on business the end of 2028, followed by a stable capital and the cost of
performance in previous years and period from 2029 onwards into the debt.
expectations for the future future perpetuity, during which the
development of the market industry. Company’s business performance will
maintain a stable level of cash earnings.
From 2024 to 2028, the sales revenue During the stable period, the sales 13.90%; the weighted
Assets of Wuhan
5 years growth rate is expected to range from revenue growth rate is expected to be average cost of capital
Houdetang
3.00% to 4.96%; the gross margin is 2.00%; the gross margin is expected to (WACC) is
241 / 329
Parameters including revenue growth Parameters including revenue growth
Forecast Discount rate and its
Items rate and gross margin for forecast period rate and gross margin for stable period
period determination basis
and their determination basis and their determination basis
expected to range from 34.60% to be 34.60%; and the period expense rate determined based on
34.60%; and the period expense rate is expected to be 21.32%. The the cost of equity
is expected to range from 21.19% to Company is expected to achieve a capital and the cost of
21.32%, which are determined by the stable operating status by 2028. debt.
Company based on business Therefore, the forecast period ends at
performance in previous years and the end of 2028, followed by a stable
expectations for the future period from 2029 onwards into the
development of the market industry. future perpetuity, during which the
Company’s business performance will
maintain a stable level of cash earnings.
During the stable period, the sales
From 2024 to 2028, the sales revenue revenue growth rate is expected to be
growth rate is expected to range from 2.00%; the gross margin is expected to
3.02% to 7.85%; the gross margin is be 32.95%; and the period expense rate 13.90%; the weighted
expected to range from 32.95% to is expected to be 21.96%. The average cost of capital
33.04%; and the period expense rate Company is expected to achieve a (WACC) is
Wuhan Longtai 5 years is expected to range from 21.96% to stable operating status by 2028. determined based on
22.09%, which are determined by the Therefore, the forecast period ends at the cost of equity
Company based on business the end of 2028, followed by a stable capital and the cost of
performance in previous years and period from 2029 onwards into the debt.
expectations for the future future perpetuity, during which the
development of the market industry. Company’s business performance will
maintain a stable level of cash earnings.
During the stable period, the sales
From 2024 to 2028, the sales revenue revenue growth rate is expected to be
growth rate is expected to range from 2.00%; the gross margin is expected to
3.02% to 10.13%; the gross margin is be 34.45%; and the period expense rate 13.70%; the weighted
expected to range from 34.45% to is expected to be 27.07%. The average cost of capital
34.46%; and the period expense rate Company is expected to achieve a (WACC) is
Nanjing Yifeng 5 years is expected to range from 26.95% to stable operating status by 2028. determined based on
27.07%, which are determined by the Therefore, the forecast period ends at the cost of equity
Company based on business the end of 2028, followed by a stable capital and the cost of
performance in previous years and period from 2029 onwards into the debt.
expectations for the future future perpetuity, during which the
development of the market industry. Company’s business performance will
maintain a stable level of cash earnings.
From 2024 to 2028, the sales revenue During the stable period, the sales 13.90%; the weighted
growth rate is expected to range from revenue growth rate is expected to be average cost of capital
Assets of Xiaogan 3.00% to 16.25%; the gross margin is 2.00%; the gross margin is expected to (WACC) is
5 years
Tiansheng expected to range from 26.36% to be 26.36%; and the period expense rate determined based on
26.36%; and the period expense rate is expected to be 19.50%. The the cost of equity
is expected to range from 19.41% to Company is expected to achieve a capital and the cost of
242 / 329
Parameters including revenue growth Parameters including revenue growth
Forecast Discount rate and its
Items rate and gross margin for forecast period rate and gross margin for stable period
period determination basis
and their determination basis and their determination basis
19.62%, which are determined by the stable operating status by 2028. debt.
Company based on business Therefore, the forecast period ends at
performance in previous years and the end of 2028, followed by a stable
expectations for the future period from 2029 onwards into the
development of the market industry. future perpetuity, during which the
Company’s business performance will
maintain a stable level of cash earnings.
During the stable period, the sales
From 2024 to 2028, the sales revenue revenue growth rate is expected to be
growth rate is expected to range from 2.00%; the gross margin is expected to
-3.16% to 2.96%; the gross margin is be 35.51%; and the period expense rate 13.70%; the weighted
expected to range from 35.51% to is expected to be 25.71%. The average cost of capital
35.51%; and the period expense rate Company is expected to achieve a (WACC) is
Assets of Suqian Jiujiu
5 years is expected to range from 25.59% to stable operating status by 2028. determined based on
Medicine Supermarket
25.78%, which are determined by the Therefore, the forecast period ends at the cost of equity
Company based on business the end of 2028, followed by a stable capital and the cost of
performance in previous years and period from 2029 onwards into the debt.
expectations for the future future perpetuity, during which the
development of the market industry. Company’s business performance will
maintain a stable level of cash earnings.
During the stable period, the sales
From 2024 to 2028, the sales revenue revenue growth rate is expected to be
growth rate is expected to range from 2.00%; the gross margin is expected to
3.00% to 6.70%; the gross margin is be 36.08%; and the period expense rate 13.90%; the weighted
expected to range from 36.08% to is expected to be 24.64%. The average cost of capital
36.08%; and the period expense rate Company is expected to achieve a (WACC) is
Assets of Guangfutang 5 years is expected to range from 24.52% to stable operating status by 2028. determined based on
24.95%, which are determined by the Therefore, the forecast period ends at the cost of equity
Company based on business the end of 2028, followed by a stable capital and the cost of
performance in previous years and period from 2029 onwards into the debt.
expectations for the future future perpetuity, during which the
development of the market industry. Company’s business performance will
maintain a stable level of cash earnings.
From 2024 to 2028, the sales revenue During the stable period, the sales
Assets group portfolios growth rate is expected to range from revenue growth rate is expected to be 13.90%; the weighted
of Guangshengtang, 3.19% to 14.97%; the gross margin is 2.00%; the gross margin is expected to average cost of capital
Jingzhou Shashi expected to range from 34.17% to be 34.17%; and the period expense rate (WACC) is
Xinlianxin Pharmacy, 5 years 34.20%; and the period expense rate is expected to be 24.53%. The determined based on
Hubei Zhongjie is expected to range from 24.42% to Company is expected to achieve a the cost of equity
Medicine and Jianli 25.03%, which are determined by the stable operating status by 2028. capital and the cost of
Tongze Pharmacy Company based on business Therefore, the forecast period ends at debt.
performance in previous years and the end of 2028, followed by a stable
243 / 329
Parameters including revenue growth Parameters including revenue growth
Forecast Discount rate and its
Items rate and gross margin for forecast period rate and gross margin for stable period
period determination basis
and their determination basis and their determination basis
expectations for the future period from 2029 onwards into the
development of the market industry. future perpetuity, during which the
Company’s business performance will
maintain a stable level of cash earnings.
During the stable period, the sales
From 2024 to 2028, the sales revenue revenue growth rate is expected to be
growth rate is expected to range from 2.00%; the gross margin is expected to
-2.25% to 3.02%; the gross margin is be 36.63%; and the period expense rate 13.90%; the weighted
expected to range from 36.59% to is expected to be 21.68%. The average cost of capital
36.63%; and the period expense rate Company is expected to achieve a (WACC) is
Assets of Huarong
5 years is expected to range from 21.52% to stable operating status by 2028. determined based on
Yikang Pharmacy
21.68%, which are determined by the Therefore, the forecast period ends at the cost of equity
Company based on business the end of 2028, followed by a stable capital and the cost of
performance in previous years and period from 2029 onwards into the debt.
expectations for the future future perpetuity, during which the
development of the market industry. Company’s business performance will
maintain a stable level of cash earnings.
During the stable period, the sales
From 2024 to 2028, the sales revenue revenue growth rate is expected to be
growth rate is expected to range from 2.00%; the gross margin is expected to
1.46% to 4.94%; the gross margin is be 32.70%; and the period expense rate 13.90%; the weighted
expected to range from 32.69% to is expected to be 22.40%. The average cost of capital
32.70%; and the period expense rate Company is expected to achieve a (WACC) is
Yangpu Yifeng 5 years is expected to range from 22.39% to stable operating status by 2028. determined based on
23.28%, which are determined by the Therefore, the forecast period ends at the cost of equity
Company based on business the end of 2028, followed by a stable capital and the cost of
performance in previous years and period from 2029 onwards into the debt.
expectations for the future future perpetuity, during which the
development of the market industry. Company’s business performance will
maintain a stable level of cash earnings.
During the stable period, the sales
From 2024 to 2028, the sales revenue
revenue growth rate is expected to be
growth rate is expected to range from
2.00%; the gross margin is expected to
-1.59% to 3.03%; the gross margin is 13.90%; the weighted
be 39.17%; and the period expense rate
expected to range from 39.11% to average cost of capital
is expected to be 24.58%. The
39.17%; and the period expense rate (WACC) is
Assets of Liuyang Company is expected to achieve a
5 years is expected to range from 24.44% to determined based on
Tianshun Pharmacy stable operating status by 2028.
24.65%, which are determined by the the cost of equity
Therefore, the forecast period ends at
Company based on business capital and the cost of
the end of 2028, followed by a stable
performance in previous years and debt.
period from 2029 onwards into the
expectations for the future
future perpetuity, during which the
development of the market industry.
Company’s business performance will
244 / 329
Parameters including revenue growth Parameters including revenue growth
Forecast Discount rate and its
Items rate and gross margin for forecast period rate and gross margin for stable period
period determination basis
and their determination basis and their determination basis
maintain a stable level of cash earnings.
During the stable period, the sales
From 2024 to 2028, the sales revenue revenue growth rate is expected to be
growth rate is expected to range from 2.00%; the gross margin is expected to
3.05% to 3.33%; the gross margin is be 37.10%; and the period expense rate 13.70%; the weighted
expected to range from 37.08% to is expected to be 27.00%. The average cost of capital
37.10%; and the period expense rate Company is expected to achieve a (WACC) is
Rudong Yifeng Bencao 5 years is expected to range from 26.97% to stable operating status by 2028. determined based on
27.21%, which are determined by the Therefore, the forecast period ends at the cost of equity
Company based on business the end of 2028, followed by a stable capital and the cost of
performance in previous years and period from 2029 onwards into the debt.
expectations for the future future perpetuity, during which the
development of the market industry. Company’s business performance will
maintain a stable level of cash earnings.
During the stable period, the sales
From 2024 to 2028, the sales revenue revenue growth rate is expected to be
growth rate is expected to range from 2.00%; the gross margin is expected to
3.00% to 4.29%; the gross margin is be 41.30%; and the period expense rate 13.90%; the weighted
expected to range from 41.30% to is expected to be 26.72%. The average cost of capital
41.30%; and the period expense rate Company is expected to achieve a (WACC) is
Assets of Nanxian
5 years is expected to range from 26.54% to stable operating status by 2028. determined based on
Shijikang Pharmacy
26.72%, which are determined by the Therefore, the forecast period ends at the cost of equity
Company based on business the end of 2028, followed by a stable capital and the cost of
performance in previous years and period from 2029 onwards into the debt.
expectations for the future future perpetuity, during which the
development of the market industry. Company’s business performance will
maintain a stable level of cash earnings.
During the stable period, the sales
From 2024 to 2028, the sales revenue revenue growth rate is expected to be
growth rate is expected to range from 2.00%; the gross margin is expected to
0.64% to 4.77%; the gross margin is be 24.40%; and the period expense rate 13.70%, 13.90%; the
expected to range from 24.40% to is expected to be 12.01%. The weighted average cost
24.58%; and the period expense rate Company is expected to achieve a of capital (WACC) is
Suzhou Yuehai and
5 years is expected to range from 12.01% to stable operating status by 2028. determined based on
Xinqunzhong Clinic
12.20%, which are determined by the Therefore, the forecast period ends at the cost of equity
Company based on business the end of 2028, followed by a stable capital and the cost of
performance in previous years and period from 2029 onwards into the debt.
expectations for the future future perpetuity, during which the
development of the market industry. Company’s business performance will
maintain a stable level of cash earnings.
Assets of Ningxiang From 2024 to 2028, the sales revenue During the stable period, the sales 13.90%; the weighted
5 years
Jiuzhitang growth rate is expected to range from revenue growth rate is expected to be average cost of capital
245 / 329
Parameters including revenue growth Parameters including revenue growth
Forecast Discount rate and its
Items rate and gross margin for forecast period rate and gross margin for stable period
period determination basis
and their determination basis and their determination basis
-0.73% to 3.07%; the gross margin is 2.00%; the gross margin is expected to (WACC) is
expected to range from 34.38% to be 35.49%; and the period expense rate determined based on
35.49%; and the period expense rate is expected to be 22.26%. The the cost of equity
is expected to range from 22.08% to Company is expected to achieve a capital and the cost of
22.26%, which are determined by the stable operating status by 2028. debt.
Company based on business Therefore, the forecast period ends at
performance in previous years and the end of 2028, followed by a stable
expectations for the future period from 2029 onwards into the
development of the market industry. future perpetuity, during which the
Company’s business performance will
maintain a stable level of cash earnings.
During the stable period, the sales
From 2024 to 2028, the sales revenue revenue growth rate is expected to be
growth rate is expected to range from 2.00%; the gross margin is expected to
-4.15% to 3.00%; the gross margin is be 31.65%; and the period expense rate 13.90%; the weighted
expected to range from 31.65% to is expected to be 23.69%. The average cost of capital
31.65%; and the period expense rate Company is expected to achieve a (WACC) is
Assets of Shuangfeng
5 years is expected to range from 23.55% to stable operating status by 2028. determined based on
Yongjitang
23.77%, which are determined by the Therefore, the forecast period ends at the cost of equity
Company based on business the end of 2028, followed by a stable capital and the cost of
performance in previous years and period from 2029 onwards into the debt.
expectations for the future future perpetuity, during which the
development of the market industry. Company’s business performance will
maintain a stable level of cash earnings.
During the stable period, the sales
From 2024 to 2028, the sales revenue revenue growth rate is expected to be
growth rate is expected to range from 2.00%; the gross margin is expected to
3.24% to 4.17%; the gross margin is be 38.53%; and the period expense rate 13.70%; the weighted
expected to range from 38.38% to is expected to be 31.23%. The average cost of capital
Assets of Sihong Shidai
38.53%; and the period expense rate Company is expected to achieve a (WACC) is
Medicine and Sihong
5 years is expected to range from 31.17% to stable operating status by 2028. determined based on
Yifeng Jizhou
32.03%, which are determined by the Therefore, the forecast period ends at the cost of equity
Pharmacy
Company based on business the end of 2028, followed by a stable capital and the cost of
performance in previous years and period from 2029 onwards into the debt.
expectations for the future future perpetuity, during which the
development of the market industry. Company’s business performance will
maintain a stable level of cash earnings.
From 2024 to 2028, the sales revenue During the stable period, the sales 13.90%; the weighted
Assets of Hunan growth rate is expected to range from revenue growth rate is expected to be average cost of capital
Sinopharm Holdings 5 years -0.10% to 3.00%; the gross margin is 2.00%; the gross margin is expected to (WACC) is
Jiajiakang Pharmacy expected to range from 43.30% to be 43.30%; and the period expense rate determined based on
43.30%; and the period expense rate is expected to be 31.87%. The the cost of equity
246 / 329
Parameters including revenue growth Parameters including revenue growth
Forecast Discount rate and its
Items rate and gross margin for forecast period rate and gross margin for stable period
period determination basis
and their determination basis and their determination basis
is expected to range from 31.72% to Company is expected to achieve a capital and the cost of
31.97%, which are determined by the stable operating status by 2028. debt.
Company based on business Therefore, the forecast period ends at
performance in previous years and the end of 2028, followed by a stable
expectations for the future period from 2029 onwards into the
development of the market industry. future perpetuity, during which the
Company’s business performance will
maintain a stable level of cash earnings.
During the stable period, the sales
From 2024 to 2028, the sales revenue revenue growth rate is expected to be
growth rate is expected to range from 2.00%; the gross margin is expected to
4.86% to 9.71%; the gross margin is be 43.82%; and the period expense rate 13.90%; the weighted
expected to range from 42.24% to is expected to be 28.02%. The average cost of capital
43.90%; and the period expense rate Company is expected to achieve a (WACC) is
Assets of Xinbaikang
5 years is expected to range from 28.02% to stable operating status by 2028. determined based on
Pharmacy
31.66%, which are determined by the Therefore, the forecast period ends at the cost of equity
Company based on business the end of 2028, followed by a stable capital and the cost of
performance in previous years and period from 2029 onwards into the debt.
expectations for the future future perpetuity, during which the
development of the market industry. Company’s business performance will
maintain a stable level of cash earnings.
During the stable period, the sales
From 2024 to 2028, the sales revenue revenue growth rate is expected to be
growth rate is expected to range from 2.00%; the gross margin is expected to
3.20% to 4.12%; the gross margin is be 37.50%; and the period expense rate 13.70%; the weighted
Asset group portfolios
expected to range from 37.26% to is expected to be 28.40%. The average cost of capital
of Taizhou Yifeng,
37.50%; and the period expense rate Company is expected to achieve a (WACC) is
Xinghua Yishantang,
5 years is expected to range from 28.33% to stable operating status by 2028. determined based on
Taizhou Baixingren
28.81%, which are determined by the Therefore, the forecast period ends at the cost of equity
and Jiangsu Yishu
Company based on business the end of 2028, followed by a stable capital and the cost of
Medicine
performance in previous years and period from 2029 onwards into the debt.
expectations for the future future perpetuity, during which the
development of the market industry. Company’s business performance will
maintain a stable level of cash earnings.
From 2024 to 2028, the sales revenue During the stable period, the sales
13.90%; the weighted
growth rate is expected to range from revenue growth rate is expected to be
average cost of capital
3.00% to 5.00%; the gross margin is 2.00%; the gross margin is expected to
Yifeng Luoshi Xiehe (WACC) is
expected to range from 40.66% to be 40.84%; and the period expense rate
and Yongzhou Daoxian 5 years determined based on
40.85%; and the period expense rate is expected to be 32.42%. The
Renrenkang Pharmacy the cost of equity
is expected to range from 32.28% to Company is expected to achieve a
capital and the cost of
33.64%, which are determined by the stable operating status by 2028.
debt.
Company based on business Therefore, the forecast period ends at
247 / 329
Parameters including revenue growth Parameters including revenue growth
Forecast Discount rate and its
Items rate and gross margin for forecast period rate and gross margin for stable period
period determination basis
and their determination basis and their determination basis
performance in previous years and the end of 2028, followed by a stable
expectations for the future period from 2029 onwards into the
development of the market industry. future perpetuity, during which the
Company’s business performance will
maintain a stable level of cash earnings.
During the stable period, the sales
From 2024 to 2028, the sales revenue revenue growth rate is expected to be
growth rate is expected to range from 2.00%; the gross margin is expected to
3.26% to 4.57%; the gross margin is be 36.87%; and the period expense rate 13.90%; the weighted
expected to range from 36.81% to is expected to be 28.84%. The average cost of capital
36.87%; and the period expense rate Company is expected to achieve a (WACC) is
Yueyang Yifeng 5 years is expected to range from 28.73% to stable operating status by 2028. determined based on
29.31%, which are determined by the Therefore, the forecast period ends at the cost of equity
Company based on business the end of 2028, followed by a stable capital and the cost of
performance in previous years and period from 2029 onwards into the debt.
expectations for the future future perpetuity, during which the
development of the market industry. Company’s business performance will
maintain a stable level of cash earnings.
During the stable period, the sales
From 2024 to 2028, the sales revenue revenue growth rate is expected to be
growth rate is expected to range from 2.00%; the gross margin is expected to
-0.88% to 3.00%; the gross margin is be 22.94%; and the period expense rate 13.70%; the weighted
expected to range from 22.94% to is expected to be 18.19%. The average cost of capital
22.94%; and the period expense rate Company is expected to achieve a (WACC) is
Assets of Suqian Jiahe
5 years is expected to range from 18.05% to stable operating status by 2028. determined based on
Medicine
18.19%, which are determined by the Therefore, the forecast period ends at the cost of equity
Company based on business the end of 2028, followed by a stable capital and the cost of
performance in previous years and period from 2029 onwards into the debt.
expectations for the future future perpetuity, during which the
development of the market industry. Company’s business performance will
maintain a stable level of cash earnings.
From 2024 to 2028, the sales revenue During the stable period, the sales
growth rate is expected to range from revenue growth rate is expected to be
1.91% to 3.00%; the gross margin is 2.00%; the gross margin is expected to 13.90%; the weighted
expected to range from 36.10% to be 36.10%; and the period expense rate average cost of capital
Assets of Changsha 36.10%; and the period expense rate is expected to be 26.92%. The (WACC) is
Qingyuantang 5 years is expected to range from 26.71% to Company is expected to achieve a determined based on
Pharmacy 26.92%, which are determined by the stable operating status by 2028. the cost of equity
Company based on business Therefore, the forecast period ends at capital and the cost of
performance in previous years and the end of 2028, followed by a stable debt.
expectations for the future period from 2029 onwards into the
development of the market industry. future perpetuity, during which the
248 / 329
Parameters including revenue growth Parameters including revenue growth
Forecast Discount rate and its
Items rate and gross margin for forecast period rate and gross margin for stable period
period determination basis
and their determination basis and their determination basis
Company’s business performance will
maintain a stable level of cash earnings.
During the stable period, the sales
From 2024 to 2028, the sales revenue revenue growth rate is expected to be
growth rate is expected to range from 2.00%; the gross margin is expected to
-1.90% to 3.00%; the gross margin is be 32.72%; and the period expense rate 13.70%; the weighted
expected to range from 32.72% to is expected to be 24.16%. The average cost of capital
32.72%; and the period expense rate Company is expected to achieve a (WACC) is
Assets of Suqian
5 years is expected to range from 24.08% to stable operating status by 2028. determined based on
Dasheng Medicine
24.27%, which are determined by the Therefore, the forecast period ends at the cost of equity
Company based on business the end of 2028, followed by a stable capital and the cost of
performance in previous years and period from 2029 onwards into the debt.
expectations for the future future perpetuity, during which the
development of the market industry. Company’s business performance will
maintain a stable level of cash earnings.
During the stable period, the sales
From 2024 to 2028, the sales revenue revenue growth rate is expected to be
growth rate is expected to range from 2.00%; the gross margin is expected to
3.00% to 5.80%; the gross margin is be 36.74%; and the period expense rate 13.90%; the weighted
expected to range from 36.72% to is expected to be 24.48%. The average cost of capital
Assets of Changsha 36.74%; and the period expense rate Company is expected to achieve a (WACC) is
Tailai Senyantang 5 years is expected to range from 24.27% to stable operating status by 2028. determined based on
Pharmacy 24.48%, which are determined by the Therefore, the forecast period ends at the cost of equity
Company based on business the end of 2028, followed by a stable capital and the cost of
performance in previous years and period from 2029 onwards into the debt.
expectations for the future future perpetuity, during which the
development of the market industry. Company’s business performance will
maintain a stable level of cash earnings.
During the stable period, the sales
From 2024 to 2028, the sales revenue revenue growth rate is expected to be
growth rate is expected to range from 2.00%; the gross margin is expected to
2.21% to 3.81%; the gross margin is be 36.47%; and the period expense rate 13.70%; the weighted
expected to range from 36.41% to is expected to be 26.79%. The average cost of capital
36.47%; and the period expense rate Company is expected to achieve a (WACC) is
Jiuzhou Medicine and
5 years is expected to range from 26.73% to stable operating status by 2028. determined based on
Jiuzhou Pharmacy
27.30%, which are determined by the Therefore, the forecast period ends at the cost of equity
Company based on business the end of 2028, followed by a stable capital and the cost of
performance in previous years and period from 2029 onwards into the debt.
expectations for the future future perpetuity, during which the
development of the market industry. Company’s business performance will
maintain a stable level of cash earnings.
Assets of Zhuzhou 5 years From 2024 to 2028, the sales revenue During the stable period, the sales 13.90%; the weighted
249 / 329
Parameters including revenue growth Parameters including revenue growth
Forecast Discount rate and its
Items rate and gross margin for forecast period rate and gross margin for stable period
period determination basis
and their determination basis and their determination basis
Zhengxiang Pharmacy growth rate is expected to range from revenue growth rate is expected to be average cost of capital
-0.74% to 3.00%; the gross margin is 2.00%; the gross margin is expected to (WACC) is
expected to range from 33.07% to be 33.07%; and the period expense rate determined based on
33.07%; and the period expense rate is expected to be 23.34%. The the cost of equity
is expected to range from 23.18% to Company is expected to achieve a capital and the cost of
23.34%, which are determined by the stable operating status by 2028. debt.
Company based on business Therefore, the forecast period ends at
performance in previous years and the end of 2028, followed by a stable
expectations for the future period from 2029 onwards into the
development of the market industry. future perpetuity, during which the
Company’s business performance will
maintain a stable level of cash earnings.
During the stable period, the sales
From 2024 to 2028, the sales revenue revenue growth rate is expected to be
growth rate is expected to range from 2.00%; the gross margin is expected to
3.12% to 5.19%; the gross margin is be 37.47%; and the period expense rate 14.10%; the weighted
expected to range from 37.43% to is expected to be 31.66%. The average cost of capital
37.47%; and the period expense rate Company is expected to achieve a (WACC) is
Shaoguan Xiangqin 5 years is expected to range from 31.62% to stable operating status by 2028. determined based on
32.50%, which are determined by the Therefore, the forecast period ends at the cost of equity
Company based on business the end of 2028, followed by a stable capital and the cost of
performance in previous years and period from 2029 onwards into the debt.
expectations for the future future perpetuity, during which the
development of the market industry. Company’s business performance will
maintain a stable level of cash earnings.
During the stable period, the sales
From 2024 to 2028, the sales revenue revenue growth rate is expected to be
growth rate is expected to range from 2.00%; the gross margin is expected to
2.81% to 4.05%; the gross margin is be 38.41%; and the period expense rate 13.70%; the weighted
expected to range from 38.26% to is expected to be 30.23%. The average cost of capital
38.41%; and the period expense rate Company is expected to achieve a (WACC) is
Huai’an Jisheng 5 years is expected to range from 30.21% to stable operating status by 2028. determined based on
31.40%, which are determined by the Therefore, the forecast period ends at the cost of equity
Company based on business the end of 2028, followed by a stable capital and the cost of
performance in previous years and period from 2029 onwards into the debt.
expectations for the future future perpetuity, during which the
development of the market industry. Company’s business performance will
maintain a stable level of cash earnings.
From 2024 to 2028, the sales revenue During the stable period, the sales 13.70%; the weighted
growth rate is expected to range from revenue growth rate is expected to be average cost of capital
Jiangsu Shimin 5 years
-0.76% to 6.91%; the gross margin is 2.00%; the gross margin is expected to (WACC) is
expected to range from 34.98% to be 36.62%; and the period expense rate determined based on
250 / 329
Parameters including revenue growth Parameters including revenue growth
Forecast Discount rate and its
Items rate and gross margin for forecast period rate and gross margin for stable period
period determination basis
and their determination basis and their determination basis
36.62%; and the period expense rate is expected to be 21.59%. The the cost of equity
is expected to range from 21.59% to Company is expected to achieve a capital and the cost of
24.41%, which are determined by the stable operating status by 2028. debt.
Company based on business Therefore, the forecast period ends at
performance in previous years and the end of 2028, followed by a stable
expectations for the future period from 2029 onwards into the
development of the market industry. future perpetuity, during which the
Company’s business performance will
maintain a stable level of cash earnings.
During the stable period, the sales
From 2024 to 2028, the sales revenue revenue growth rate is expected to be
growth rate is expected to range from 2.00%; the gross margin is expected to
3.33% to 5.53%; the gross margin is be 37.34%; and the period expense rate 14.00%; the weighted
expected to range from 37.30% to is expected to be 31.86%. The average cost of capital
Asset group portfolios 37.40%; and the period expense rate Company is expected to achieve a (WACC) is
of Jiangxi Tianshun and 5 years is expected to range from 31.83% to stable operating status by 2028. determined based on
Xinyu Baihuikang 32.98%, which are determined by the Therefore, the forecast period ends at the cost of equity
Company based on business the end of 2028, followed by a stable capital and the cost of
performance in previous years and period from 2029 onwards into the debt.
expectations for the future future perpetuity, during which the
development of the market industry. Company’s business performance will
maintain a stable level of cash earnings.
During the stable period, the sales
From 2024 to 2028, the sales revenue revenue growth rate is expected to be
growth rate is expected to range from 2.00%; the gross margin is expected to
2.85% to 3.00%; the gross margin is be 37.11%; and the period expense rate 13.70%; the weighted
expected to range from 37.11% to is expected to be 28.64%. The average cost of capital
37.11%; and the period expense rate Company is expected to achieve a (WACC) is
Assets of Guangyun
5 years is expected to range from 28.39% to stable operating status by 2028. determined based on
Kangsheng Pharmacy
28.64%, which are determined by the Therefore, the forecast period ends at the cost of equity
Company based on business the end of 2028, followed by a stable capital and the cost of
performance in previous years and period from 2029 onwards into the debt.
expectations for the future future perpetuity, during which the
development of the market industry. Company’s business performance will
maintain a stable level of cash earnings.
From 2024 to 2028, the sales revenue During the stable period, the sales 13.70%; the weighted
growth rate is expected to range from revenue growth rate is expected to be average cost of capital
3.17% to 7.30%; the gross margin is 2.00%; the gross margin is expected to (WACC) is
Rudong Yifeng 5 years expected to range from 40.23% to be 40.32%; and the period expense rate determined based on
40.32%; and the period expense rate is expected to be 27.62%. The the cost of equity
is expected to range from 27.62% to Company is expected to achieve a capital and the cost of
28.33%, which are determined by the stable operating status by 2028. debt.
251 / 329
Parameters including revenue growth Parameters including revenue growth
Forecast Discount rate and its
Items rate and gross margin for forecast period rate and gross margin for stable period
period determination basis
and their determination basis and their determination basis
Company based on business Therefore, the forecast period ends at
performance in previous years and the end of 2028, followed by a stable
expectations for the future period from 2029 onwards into the
development of the market industry. future perpetuity, during which the
Company’s business performance will
maintain a stable level of cash earnings.
During the stable period, the sales
From 2024 to 2028, the sales revenue revenue growth rate is expected to be
growth rate is expected to range from 2.00%; the gross margin is expected to
3.01% to 4.63%; the gross margin is be 37.68%; and the period expense rate 14.00%; the weighted
expected to range from 37.65% to is expected to be 27.30%. The average cost of capital
37.68%; and the period expense rate Company is expected to achieve a (WACC) is
Asset groups of Miluo
5 years is expected to range from 27.07% to stable operating status by 2028. determined based on
Tianheng
27.51%, which are determined by the Therefore, the forecast period ends at the cost of equity
Company based on business the end of 2028, followed by a stable capital and the cost of
performance in previous years and period from 2029 onwards into the debt.
expectations for the future future perpetuity, during which the
development of the market industry. Company’s business performance will
maintain a stable level of cash earnings.
During the stable period, the sales
From 2024 to 2028, the sales revenue revenue growth rate is expected to be
growth rate is expected to range from 2.00%; the gross margin is expected to
3.00% to 7.66%; the gross margin is be 30.66%; and the period expense rate 13.70%; the weighted
expected to range from 30.66% to is expected to be 19.60%. The average cost of capital
Assets of Nantong 30.66%; and the period expense rate Company is expected to achieve a (WACC) is
Zhongzhichen 5 years is expected to range from 19.49% to stable operating status by 2028. determined based on
Pharmacy 19.68%, which are determined by the Therefore, the forecast period ends at the cost of equity
Company based on business the end of 2028, followed by a stable capital and the cost of
performance in previous years and period from 2029 onwards into the debt.
expectations for the future future perpetuity, during which the
development of the market industry. Company’s business performance will
maintain a stable level of cash earnings.
From 2024 to 2028, the sales revenue During the stable period, the sales
growth rate is expected to range from revenue growth rate is expected to be
13.70%; the weighted
3.19% to 5.76%; the gross margin is 2.00%; the gross margin is expected to
average cost of capital
expected to range from 40.69% to be 40.69%; and the period expense rate
(WACC) is
40.71%; and the period expense rate is expected to be 29.37%. The
Yuehai Yongxitang 5 years determined based on
is expected to range from 29.18% to Company is expected to achieve a
the cost of equity
29.55%, which are determined by the stable operating status by 2028.
capital and the cost of
Company based on business Therefore, the forecast period ends at
debt.
performance in previous years and the end of 2028, followed by a stable
expectations for the future period from 2029 onwards into the
252 / 329
Parameters including revenue growth Parameters including revenue growth
Forecast Discount rate and its
Items rate and gross margin for forecast period rate and gross margin for stable period
period determination basis
and their determination basis and their determination basis
development of the market industry. future perpetuity, during which the
Company’s business performance will
maintain a stable level of cash earnings.
During the stable period, the sales
From 2024 to 2028, the sales revenue revenue growth rate is expected to be
growth rate is expected to range from 2.00%; the gross margin is expected to
-1.24% to 8.04%; the gross margin is be 35.83%; and the period expense rate 13.90%; the weighted
expected to range from 35.83% to is expected to be 23.81%. The average cost of capital
35.88%; and the period expense rate Company is expected to achieve a (WACC) is
Longshuntang 5 years is expected to range from 23.79% to stable operating status by 2028. determined based on
25.06%, which are determined by the Therefore, the forecast period ends at the cost of equity
Company based on business the end of 2028, followed by a stable capital and the cost of
performance in previous years and period from 2029 onwards into the debt.
expectations for the future future perpetuity, during which the
development of the market industry. Company’s business performance will
maintain a stable level of cash earnings.
During the stable period, the sales
From 2024 to 2028, the sales revenue revenue growth rate is expected to be
growth rate is expected to range from 2.00%; the gross margin is expected to
2.93% to 3.11%; the gross margin is be 36.23%; and the period expense rate 13.70%; the weighted
expected to range from 36.18% to is expected to be 23.86%. The average cost of capital
36.23%; and the period expense rate Company is expected to achieve a (WACC) is
Baicaotang 5 years is expected to range from 23.81% to stable operating status by 2028. determined based on
24.33%, which are determined by the Therefore, the forecast period ends at the cost of equity
Company based on business the end of 2028, followed by a stable capital and the cost of
performance in previous years and period from 2029 onwards into the debt.
expectations for the future future perpetuity, during which the
development of the market industry. Company’s business performance will
maintain a stable level of cash earnings.
During the stable period, the sales
From 2024 to 2028, the sales revenue revenue growth rate is expected to be
growth rate is expected to range from 2.00%; the gross margin is expected to
3.35% to 6.72%; the gross margin is be 37.18%; and the period expense rate 14.10%; the weighted
expected to range from 37.03% to is expected to be 27.38%. The average cost of capital
37.18%; and the period expense rate Company is expected to achieve a (WACC) is
Asset groups of
5 years is expected to range from 27.24% to stable operating status by 2028. determined based on
Xinkang Jianmin
28.51%, which are determined by the Therefore, the forecast period ends at the cost of equity
Company based on business the end of 2028, followed by a stable capital and the cost of
performance in previous years and period from 2029 onwards into the debt.
expectations for the future future perpetuity, during which the
development of the market industry. Company’s business performance will
maintain a stable level of cash earnings.
253 / 329
Parameters including revenue growth Parameters including revenue growth
Forecast Discount rate and its
Items rate and gross margin for forecast period rate and gross margin for stable period
period determination basis
and their determination basis and their determination basis
During the stable period, the sales
From 2024 to 2028, the sales revenue revenue growth rate is expected to be
growth rate is expected to range from 2.00%; the gross margin is expected to
3.07% to 4.01%; the gross margin is be 38.42%; and the period expense rate 13.70%; the weighted
expected to range from 38.41% to is expected to be 22.45%. The average cost of capital
38.42%; and the period expense rate Company is expected to achieve a (WACC) is
Xuzhou Enqi 5 years is expected to range from 22.36% to stable operating status by 2028. determined based on
22.58%, which are determined by the Therefore, the forecast period ends at the cost of equity
Company based on business the end of 2028, followed by a stable capital and the cost of
performance in previous years and period from 2029 onwards into the debt.
expectations for the future future perpetuity, during which the
development of the market industry. Company’s business performance will
maintain a stable level of cash earnings.
During the stable period, the sales
From 2024 to 2028, the sales revenue revenue growth rate is expected to be
growth rate is expected to range from 2.00%; the gross margin is expected to
3.36% to 16.93%; the gross margin is be 37.13%; and the period expense rate 14.00%; the weighted
expected to range from 36.59% to is expected to be 26.70%. The average cost of capital
37.13%; and the period expense rate Company is expected to achieve a (WACC) is
Asset groups of Anlu
5 years is expected to range from 26.62% to stable operating status by 2028. determined based on
Yifeng
29.83%, which are determined by the Therefore, the forecast period ends at the cost of equity
Company based on business the end of 2028, followed by a stable capital and the cost of
performance in previous years and period from 2029 onwards into the debt.
expectations for the future future perpetuity, during which the
development of the market industry. Company’s business performance will
maintain a stable level of cash earnings.
During the stable period, the sales
From 2024 to 2028, the sales revenue revenue growth rate is expected to be
growth rate is expected to range from 2.00%; the gross margin is expected to
-8.11% to 3.00%; the gross margin is be 36.76%; and the period expense rate 14.00%; the weighted
expected to range from 36.76% to is expected to be 24.31%. The average cost of capital
36.76%; and the period expense rate Company is expected to achieve a (WACC) is
Assets of Jiangxi
5 years is expected to range from 24.31% to stable operating status by 2028. determined based on
Caisen
24.75%, which are determined by the Therefore, the forecast period ends at the cost of equity
Company based on business the end of 2028, followed by a stable capital and the cost of
performance in previous years and period from 2029 onwards into the debt.
expectations for the future future perpetuity, during which the
development of the market industry. Company’s business performance will
maintain a stable level of cash earnings.
From 2024 to 2028, the sales revenue During the stable period, the sales 13.90%; the weighted
Shanghai Buyi 5 years growth rate is expected to range from revenue growth rate is expected to be average cost of capital
3.10% to 13.26%; the gross margin is 2.00%; the gross margin is expected to (WACC) is
254 / 329
Parameters including revenue growth Parameters including revenue growth
Forecast Discount rate and its
Items rate and gross margin for forecast period rate and gross margin for stable period
period determination basis
and their determination basis and their determination basis
expected to range from 39.87% to be 39.90%; and the period expense rate determined based on
39.94%; and the period expense rate is expected to be 20.99%. The the cost of equity
is expected to range from 20.99% to Company is expected to achieve a capital and the cost of
22.67%, which are determined by the stable operating status by 2028. debt.
Company based on business Therefore, the forecast period ends at
performance in previous years and the end of 2028, followed by a stable
expectations for the future period from 2029 onwards into the
development of the market industry. future perpetuity, during which the
Company’s business performance will
maintain a stable level of cash earnings.
During the stable period, the sales
From 2024 to 2028, the sales revenue revenue growth rate is expected to be
growth rate is expected to range from 2.00%; the gross margin is expected to
-1.20% to 4.91%; the gross margin is be 34.76%; and the period expense rate 13.90%; the weighted
expected to range from 34.76% to is expected to be 26.11%. The average cost of capital
34.76%; and the period expense rate Company is expected to achieve a (WACC) is
Putuo Yifeng 5 years is expected to range from 26.11% to stable operating status by 2028. determined based on
27.46%, which are determined by the Therefore, the forecast period ends at the cost of equity
Company based on business the end of 2028, followed by a stable capital and the cost of
performance in previous years and period from 2029 onwards into the debt.
expectations for the future future perpetuity, during which the
development of the market industry. Company’s business performance will
maintain a stable level of cash earnings.
During the stable period, the sales
From 2024 to 2028, the sales revenue revenue growth rate is expected to be
growth rate is expected to range from 2.00%; the gross margin is expected to
3.62% to 7.95%; the gross margin is be 33.06%; and the period expense rate 13.70%; the weighted
expected to range from 32.83% to is expected to be 23.26%. The average cost of capital
33.06%; and the period expense rate Company is expected to achieve a (WACC) is
Asset groups of
5 years is expected to range from 23.26% to stable operating status by 2028. determined based on
Xinxing Chain
24.97%, which are determined by the Therefore, the forecast period ends at the cost of equity
Company based on business the end of 2028, followed by a stable capital and the cost of
performance in previous years and period from 2029 onwards into the debt.
expectations for the future future perpetuity, during which the
development of the market industry. Company’s business performance will
maintain a stable level of cash earnings.
From 2024 to 2028, the sales revenue During the stable period, the sales 13.90%; the weighted
growth rate is expected to range from revenue growth rate is expected to be average cost of capital
3.10% to 5.16%; the gross margin is 2.00%; the gross margin is expected to (WACC) is
Shanghai Shanghong 5 years
expected to range from 36.80% to be 36.81%; and the period expense rate determined based on
36.82%; and the period expense rate is expected to be 25.03%. The the cost of equity
is expected to range from 25.03% to Company is expected to achieve a capital and the cost of
255 / 329
Parameters including revenue growth Parameters including revenue growth
Forecast Discount rate and its
Items rate and gross margin for forecast period rate and gross margin for stable period
period determination basis
and their determination basis and their determination basis
25.78%, which are determined by the stable operating status by 2028. debt.
Company based on business Therefore, the forecast period ends at
performance in previous years and the end of 2028, followed by a stable
expectations for the future period from 2029 onwards into the
development of the market industry. future perpetuity, during which the
Company’s business performance will
maintain a stable level of cash earnings.
During the stable period, the sales
From 2024 to 2028, the sales revenue revenue growth rate is expected to be
growth rate is expected to range from 2.00%; the gross margin is expected to
1.11% to 4.98%; the gross margin is be 38.70%; and the period expense rate 13.90%; the weighted
expected to range from 38.70% to is expected to be 22.80%. The average cost of capital
38.71%; and the period expense rate Company is expected to achieve a (WACC) is
Assets of Wuzhou
5 years is expected to range from 22.80% to stable operating status by 2028. determined based on
Pharmacy
23.28%, which are determined by the Therefore, the forecast period ends at the cost of equity
Company based on business the end of 2028, followed by a stable capital and the cost of
performance in previous years and period from 2029 onwards into the debt.
expectations for the future future perpetuity, during which the
development of the market industry. Company’s business performance will
maintain a stable level of cash earnings.
During the stable period, the sales
From 2024 to 2028, the sales revenue revenue growth rate is expected to be
growth rate is expected to range from 2.00%; the gross margin is expected to
3.45% to 10.62%; the gross margin is be 27.00%; and the period expense rate 13.90%; the weighted
expected to range from 26.90% to is expected to be 22.18%. The average cost of capital
27.00%; and the period expense rate Company is expected to achieve a (WACC) is
Jiuzhitang Medicine 5 years is expected to range from 22.18% to stable operating status by 2028. determined based on
23.11%, which are determined by the Therefore, the forecast period ends at the cost of equity
Company based on business the end of 2028, followed by a stable capital and the cost of
performance in previous years and period from 2029 onwards into the debt.
expectations for the future future perpetuity, during which the
development of the market industry. Company’s business performance will
maintain a stable level of cash earnings.
Pursuant to the “Assessment Report on the Recoverable Value of Asset Group Portfolios Involved
in the Impairment Test of Goodwill Formed by the Acquisition of Equity and Store Assets
Proposed by Yifeng Pharmacy Chain Co., Ltd.” (Dong Zhou Ping Bao Zi [2024] No. 0957) issued
by Shanghai Dongzhou Asset Appraisal Co., Ltd. on April 20, 2024, which is engaged by the
Company, the recoverable amount of the above-mentioned asset groups or asset group portfolios
that include goodwill is higher than their carrying amount, which suggests that the Company’s
goodwill is not impaired.
256 / 329
Reasons for the significant inconsistencies between aforementioned information and information
used in previous impairment tests or external information
Applicable Not Applicable
Reasons for the significant inconsistencies between information used in previous impairment tests
and actual performance
Applicable Not Applicable
(5) Completion of performance commitment and its effect on goodwill impairment test
Performance commitment when goodwill formed and reporting period or previous reporting
period within performance commitment periods
Applicable Not Applicable
Other remarks
Applicable Not Applicable
28. Long-term prepayments
Applicable Not Applicable
Opening
Items Increase Amortization Other decreases Closing balance
balance
Renovation
367,847,507.32 234,230,466.91 156,917,118.18 2,467,703.12 442,693,152.93
costs
Store transfer
55,593,143.53 25,088,097.53 26,055,446.73 1,671,808.33 52,953,986.00
fees
Total 423,440,650.85 259,318,564.44 182,972,564.91 4,139,511.45 495,647,138.93
Other remarks
None
29. Deferred tax assets and deferred tax liabilities
(1) Deferred tax assets before offset
Applicable Not Applicable
Closing balance December 31, 2022
Items Deductible Deductible
Deferred tax Deferred tax
temporary temporary
assets assets
difference difference
Provision for
impairment of 59,127,821.57 14,685,991.11 52,011,383.22 12,978,754.52
assets
Unrealized
profit from
235,459,783.00 58,864,945.75 160,690,815.60 40,172,703.90
internal
transactions
Deductible
29,328,308.08 7,332,077.02 26,211,434.84 6,552,858.71
losses
Share-based
23,689,648.30 5,922,412.08 18,230,904.00 4,557,726.00
payment fees
Lease
4,173,343,988.97 1,043,335,997.25 3,664,638,707.73 916,159,676.94
Liabilities and
257 / 329
Closing balance December 31, 2022
Items Deductible Deductible
Deferred tax Deferred tax
temporary temporary
assets assets
difference difference
Advances paid
adjustion
Changes in fair
22,668,945.40 5,667,236.35
value
Total 4,520,949,549.92 1,130,141,423.21 3,944,452,190.79 986,088,956.42
(2) Deferred tax liabilities before offset
Applicable Not Applicable
Closing balance December 31, 2022
Items Taxable Taxable
Deferred tax Deferred tax
temporary temporary
liabilities liabilities
difference difference
Assets appraisal
appreciation due to
78,478,653.88 19,619,663.47 94,841,175.08 23,710,293.77
business combination not
under common control
Changes in fair value 28,555,612.65 7,138,903.16
Right-of-use assets
3,965,884,425.82 991,471,106.46 3,433,622,232.34 858,405,558.09
adjustion
Total 4,072,918,692.35 1,018,229,673.09 3,528,463,407.42 882,115,851.86
(3) Deferred tax assets or liabilities after offset
Applicable Not Applicable
Closing balance December 31, 2022
Deferred tax Deferred tax
Items Deferred tax Deferred tax
assets offset by assets offset by
assets/liabilities assets/liabilities
deferred tax deferred tax
after offset after offset
liabilities liabilities
Deferred tax assets 991,471,106.46 138,670,316.75 858,405,558.09 127,683,398.33
Deferred tax liabilities 991,471,106.46 26,758,566.63 858,405,558.09 23,710,293.77
(4) Details of unrecognized deferred tax assets
Applicable Not Applicable
Items Closing balance December 31, 2022
Deductible temporary difference 2,307,197.66 2,299,554.25
Deductible losses 265,106,483.95 209,786,601.13
Total 267,413,681.61 212,086,155.38
(5) Maturity years of deductible losses of unrecognized deferred tax assets
Applicable Not Applicable
Maturity years Closing balance December 31, 2022 Remarks
Year 2023 6,213,160.33
Year 2024 6,777,279.41 15,681,868.13
258 / 329
Maturity years Closing balance December 31, 2022 Remarks
Year 2025 15,268,901.76 16,284,165.83
Year 2026 66,990,035.41 69,925,034.79
Year 2027 99,245,366.98 101,682,372.05
Year 2028 76,824,900.39
Total 265,106,483.95 209,786,601.13
Other remarks
Applicable Not Applicable
30. Other non-current assets
Applicable Not Applicable
Items Closing balance December 31, 2022
Prepayments for Deposit of equity
18,650,000.00 4,015,070.00
transfer and Store acquisition
Prepayments for long-term assets 11,619,025.79 3,215,428.45
Total 30,269,025.79 7,230,498.45
Other remarks
None
31. Assets with title or use right restrictions
Applicable Not Applicable
Closing book Closing carrying Reasons for
Items Type of restrictions
balance amount restrictions
Cash and bank balances 1,097,325,599.21 1,097,325,599.21
Including: Principal of
Deposit for acceptance
deposits for acceptance 1,096,521,187.18 1,096,521,187.18 Deposits
bills
bills and its interest
Deposits for Deposit for
30,283.77 30,283.77 Deposits
government platforms government platforms
Judicial frozen
Cash in bank 774,128.26 774,128.26 Judicial frozen funds
funds
Pledged certificate of Pledged and
Debt investments 102,729,722.22 102,729,722.22
deposits frozen
Total 1,200,055,321.43 1,200,055,321.43
(Continued)
Opening book Opening carrying Type of Reasons for
Items
balance amount restrictions restrictions
Cash and bank
1,194,319,556.21 1,194,319,556.21
balances
Including:
Deposits for
Principal of deposits 1,194,319,556.21 1,194,319,556.21 Deposits
acceptance bills
for acceptance bills
Total 1,194,319,556.21 1,194,319,556.21
Other remarks
None
259 / 329
32. Short-term borrowings
(1) Categories of short-term borrowings
Applicable Not Applicable
(2) Overdue short-term borrowings
Applicable Not Applicable
Significant overdue short-term borrowings
Applicable Not Applicable
Other remarks
Applicable Not Applicable
33. Held-for-trading financial liabilities
Applicable Not Applicable
Other remarks
Applicable Not Applicable
34. Derivative financial liabilities
Applicable Not Applicable
35. Notes payable
(1) Details
Applicable Not Applicable
Items Closing balance December 31, 2022
Trade acceptance
Bank acceptance 6,215,388,292.66 5,082,931,546.02
Total 6,215,388,292.66 5,082,931,546.02
Notes payable due but unpaid totaled 0 yuan in the current period
36. Accounts payable
(1) Details
Applicable Not Applicable
Items Closing balance December 31, 2022
Payment for goods 1,955,564,568.05 1,677,740,647.28
Total 1,955,564,568.05 1,677,740,647.28
(2) Significant accounts payable with age over one year
Applicable Not Applicable
Other remarks
Applicable Not Applicable
260 / 329
37. Advances received
(1) Details
Applicable Not Applicable
Items Closing balance December 31, 2022
Rent charge 15,959,550.59 6,078,020.28
Total 15,959,550.59 6,078,020.28
(2) Significant advances received overdue or with age over one year
Applicable Not Applicable
(3) Reasons for significant changes in carrying amount of advances received in the current
period
Applicable Not Applicable
Other remarks
Applicable Not Applicable
38. Contract liabilities
(1) Details
Applicable Not Applicable
Items Closing balance December 31, 2022
Payment for goods 80,166,931.03 60,685,079.13
Total 80,166,931.03 60,685,079.13
(2) Significant contract liabilities with age over one year
Applicable Not Applicable
(3) Reasons for significant changes in the carrying amount of contract liabilities in the
current period
Applicable Not Applicable
Other remarks
Applicable Not Applicable
39. Employee benefits payable
(1) Details
Applicable Not Applicable
Business
Items Opening balance Increase Decrease Closing balance
combination
Short-term employee
502,091,494.84 3,327,971,439.38 19,313.98 3,368,974,032.36 461,108,215.84
benefits
Post-employment benefits -
3,120,018.46 283,502,661.25 283,997,285.55 2,625,394.16
defined contribution plan
Termination benefits 2,716,156.41 2,716,156.41
261 / 329
Business
Items Opening balance Increase Decrease Closing balance
combination
Total 505,211,513.30 3,614,190,257.04 19,313.98 3,655,687,474.32 463,733,610.00
(2) Details of short-term employee benefits
Applicable Not Applicable
Business
Items Opening balance Increase Decrease Closing balance
combination
Wage, bonus, allowance and
494,085,199.12 2,947,962,754.56 19,313.98 2,987,160,551.48 454,906,716.18
subsidy
Employee welfare fund 146,934,301.04 146,934,301.04
Social insurance premium 1,639,064.95 165,448,158.61 165,543,969.70 1,543,253.86
Including: Medicare premium 1,488,209.81 151,840,517.30 151,940,783.92 1,387,943.19
Occupational injuries
24,409.91 7,590,670.71 7,586,276.49 28,804.13
premium
Maternity premium 126,445.23 6,016,970.60 6,016,909.29 126,506.54
Housing provident fund 1,218,211.37 59,090,778.22 59,424,530.27 884,459.32
Trade union fund and employee
5,149,019.40 8,535,446.95 9,910,679.87 3,773,786.48
education fund
Short-term paid leave
Short-term profit sharing plan
Subtotal 502,091,494.84 3,327,971,439.38 19,313.98 3,368,974,032.36 461,108,215.84
(3) Details of defined contribution plan
Applicable Not Applicable
Opening Business Closing
Items Increase Decrease
balance combination balance
Basic endowment
3,008,715.33 272,603,610.19 273,097,153.23 2,515,172.29
insurance premium
Unemployment
111,303.13 10,899,051.06 10,900,132.32 110,221.87
insurance premium
Company annuity
payment
Subtotal 3,120,018.46 283,502,661.25 283,997,285.55 2,625,394.16
Other remarks
Applicable Not Applicable
40. Taxes and rates payable
Applicable Not Applicable
Items Closing balance December 31, 2022
VAT 69,779,575.85 74,241,847.97
Enterprise income tax 165,759,933.41 176,872,984.12
Individual income tax withheld for tax
11,382,301.79 17,702,027.25
authorities
Urban maintenance and construction tax 4,965,948.37 5,701,728.68
Stamp duty 5,419,343.01 2,588,532.43
262 / 329
Items Closing balance December 31, 2022
Housing property tax 920,459.64 882,378.65
Land use tax 1,171,426.83 1,171,212.38
Education surcharge 2,208,795.49 2,506,587.86
Local education surcharge 1,337,860.38 1,555,132.90
Others 142,508.80 205,160.89
Total 263,088,153.57 283,427,593.13
Other remarks
None
41. Other payables
(1) Details
Applicable Not Applicable
Itemns Closing balance December 31, 2022
Dividend payable 296,927.48 7,707,033.01
Other payables 810,149,750.80 752,478,266.35
Total 810,446,678.28 760,185,299.36
Other remarks
Applicable Not Applicable
(2) Interest payable
Details
Applicable Not Applicable
Significant interest payable overdue but unpaid
Applicable Not Applicable
Other remarks
Applicable Not Applicable
(3) Dividend payable
Details
Applicable Not Applicable
Items Closing balance December 31, 2022
Dividend payable - Xinyu Xianglian
Pharmaceutical Enterprise Management 7,707,033.01
Center (LP)
Dividend payable - Guo Hongwu 296,927.48
Subtotal 296,927.48 7,707,033.01
Other remarks, including significant dividend payable with age over one year
263 / 329
None
(4) Other payables
Details
Applicable Not Applicable
Items Closing balance December 31, 2022
Security deposits and quality guarantee
109,763,535.31 92,653,750.96
deposits
Payments for equipment and construction 37,825,417.59 66,015,404.83
Payments for equity transfer and store
221,460,641.53 256,908,249.80
acquisition
Repurchase obligation of restricted shares 42,161,726.90 78,022,427.47
House rental fees 64,754,297.97 10,484,218.90
Temporary receipts payable 12,239,913.96 64,232,999.54
Expenses to be paid 46,225,919.25 78,563,606.23
Others 275,718,298.29 105,597,608.62
Subtotal 810,149,750.80 752,478,266.35
Significant other payables with age over one year
Applicable Not Applicable
Other remarks
Applicable Not Applicable
42. Liabilities held for sale
Applicable Not Applicable
43. Non-current liabilities due within one year
Applicable Not Applicable
Items Closing balance December 31, 2022
Long-term borrowings due within one
103,484,354.30 92,923,245.47
year
Bonds payable due within one year
Long-term payables due within one year
Lease liabilities due within one year 1,354,982,443.44 1,184,876,580.03
Total 1,458,466,797.74 1,277,799,825.50
Other remarks
None
44. Other current liabilities
Details
Applicable Not Applicable
264 / 329
Items Closing balance December 31, 2022
Short-term bonds payable
Payables for returned goods
Output VAT to be recognized 6,656,678.33 5,215,576.73
Total 6,656,678.33 5,215,576.73
Current period movements
Applicable Not Applicable
Other remarks
Applicable Not Applicable
45. Long-term borrowings
(1) Categories of long-term borrowings
Applicable Not Applicable
Items Closing balance December 31, 2022
Pledged borrowings 133,617,147.68 228,668,070.87
Mortgaged borrowings
Guaranteed borrowings
Credit borrowings
Total 133,617,147.68 228,668,070.87
Remarks on categories of long-term borrowings:
None
(2) Analysis of long-term borrowings maturity dates
Applicable Not Applicable
Items Closing balance December 31, 2022
Due on demand or within one year 103,337,093.40 92,783,893.40
1-2 years 73,429,093.40 94,913,093.40
2-5 years 36,000,000.00 85,429,093.40
Over 5 years 24,000,000.00 48,000,000.00
Interest 335,315.18 465,236.14
Subtotal 237,101,501.98 321,591,316.34
Including: Long-term borrowings due
103,484,354.30 92,923,245.47
within one year
Long-term borrowings due more than
133,617,147.68 228,668,070.87
one year
In 2018, the Company borrowed 784,000,000.00 yuan from China Merchants Bank Co., Ltd.
Changsha Branch with a term of 7 years, pledging 91% of its equity in Xinxing Pharmacy as
guarantee. The closing balance of the principal is 122,858,186.80 yuan and the interest rate is
265 / 329
4.99%, which was reduced from 5.29% on August 10, 2022. In 2021, the Company borrowed
42,120,000.00 yuan from China Merchants Bank Co., Ltd. Changsha Branch with a term of 3
years, pledging 65% of equity in Jiangxi Jianmin held by Jiangxi Yifeng Pharmacy Chain Co., Ltd.
(the “Jiangxi Yifeng”) for guarantee. The closing balance of the principal is 37,908,000.00 yuan
and the interest rate is 4.29%. On August 29, 2022, the Company borrowed 80,000,000.00 yuan
from China Construction Bank Corporation Changde Branch with a term of 7 years, pledging 51%
of its equity in Jiuzhitang Medicine as guarantee. The closing balance of the principal is
76,000,000.00 yuan and the interest rate is 4.15%.
46. Bonds payable
(1) Bonds payable
Applicable Not Applicable
(2) Current period movements (not including other financial instruments such as preferred
shares/perpetual bonds classified as financial liabilities)
Applicable Not Applicable
(3) Remarks on convertible bonds
Applicable Not Applicable
Accounting treatment and judgement basis of convertible bonds
Applicable Not Applicable
(4) Other financial instruments classified as financial liabilities
Basic information of other financial instruments such as preferred shares or perpetual bonds
outstanding at the balance sheet date
Applicable Not Applicable
Current period movements of financial instruments such as preferred shares or perpetual bonds
outstanding at the balance sheet date
Applicable Not Applicable
Other remarks on financial instruments classified as financial liabilities
Applicable Not Applicable
Other remarks
Applicable Not Applicable
47. Lease liabilities
Applicable Not Applicable
Items Closing balance December 31, 2022
Unpaid lease payments 2,295,870,058.36 2,093,005,671.94
266 / 329
Items Closing balance December 31, 2022
Unrecognized financing expenses 90,359,746.56 141,929,268.75
Total 2,205,510,311.80 1,951,076,403.19
Other remarks
None
48. Long-term payables
Details
Applicable Not Applicable
Other remarks
Applicable Not Applicable
Long-term payables
(1) Categories of long-term payables
Applicable Not Applicable
Special payables
(1) Categories of special payables
Applicable Not Applicable
49. Long-term employee benefits payable
Applicable Not Applicable
(1) Details
Applicable Not Applicable
(2) Movements in defined benefit plan
Present value of obligations in defined benefit plan
Applicable Not Applicable
Plan assets
Applicable Not Applicable
Net defined benefit liability/asset
Applicable Not Applicable
Contents and risks of defined benefit plan, and effect on amount, timing and uncertainty of future
cash flows
Applicable Not Applicable
Significant actuarial assumption, reasonableness of the assumption and sensitive analysis on
defined benefit plan
Applicable Not Applicable
267 / 329
Other remarks
Applicable Not Applicable
50. Provisions
Applicable Not Applicable
51. Deferred income
Details
Applicable Not Applicable
Opening Business Closing Reasons for
Items Increase Decrease
balance combination balance balance
Government Government
54,666,280.23 592,926.59 54,073,353.64
grants grants
Unrealized
gains and
23,504.40 2,611.60 20,892.80 Finance lease
losses from
leaseback
Total 54,689,784.63 595,538.19 54,094,246.44
Other remarks
Applicable Not Applicable
52. Other non-current liabilities
Applicable Not Applicable
53. Share capital
Applicable Not Applicable
Movements
Opening
Items Reserve Closing balance
balance Issue of new Bonus
transferred to Others Subtotal
shares shares
shares
Total shares 721,704,930 390,015 288,681,972 -197,120 288,874,867 1,010,579,797
Other remarks
Pursuant to the “Plan on Profit Distribution and Conversion of Capital Reserve to Share Capital of
2022” deliberated and approved by the 24th meeting of the fourth session of the Board of Directors
on April 26, 2023, and the resolution of “Proposal of Plan on Profit Distribution and Conversion
of Capital Reserve to Share Capital of 2022” approved by the shareholders’ meeting of 2022 on
May 18, 2023, the Company distributed cash dividend of 0.40 yuan (tax inclusive) per share,
and increase 0.40 share per share to all shareholders by converting capital reserve, based on the
total share capital of 721,704,930 shares before the implementation of the plan. In total, cash
dividend of 288,681,972.00 yuan has been distributed, and 288,681,972 shares has been converted.
After the implementation of the plan, the share capital was increased by 288,681,972.00 yuan, and
the capital reserve (capital premium) was decreased by 288,681,972.00 yuan.
Pursuant to the “Proposal on Repurchase and Cancellation of Part of Restricted Shares”
268 / 329
deliberated and approved by the 24th meeting of the fourth session of the Board of Directors and
the 21st meeting of the fourth session of the Board of Supervisors on April 26, 2023, the Company
was agreed to repurchase and cancel 74,400 shares held by incentive objects who had resigned,
been downgraded, or failed to reach performance evaluation standards. Pursuant to the “Proposal
on Adjustment of Quantity and Price of Repurchase and Cancellation of Part of Restricted Shares”
deliberated and approved by the 27th meeting of the fourth session of the Board of Directors and
the 23rd meeting of the fourth session of the Board of Supervisors on June 29, 2023, the quantity
of restricted shares to be repurchased and cancelled was adjusted from 74,400 shares to 104,160
shares, and the price was adjusted from 25.01 yuan per share to 17.58 yuan per share. Pursuant to
the “Measures for the Administration of Equity Incentives for Listed Companies” and the
“Restricted Share Incentive Plan of Yifeng Pharmacy Chain Co., Ltd. of 2022”, the Company has
repurchased and canceled a total of 104,160 restricted shares that had been granted but the
unlocking conditions have not yet been met, with share capital decreased by 104,160.00 yuan and
capital reserve (share premium) decreased by 1,756,584.00 yuan.
Pursuant to the “Proposal on the Second Repurchase and Cancellation of Part of Restricted Shares
in Equity Incentive Plan of 2022” deliberated and approved by the 29th meeting of the fourth
session of the Board of Directors and the 24th meeting of the fourth session of the Board of
Supervisors on August 14, 2023, the Company was agreed to repurchase and cancel 92,960 shares
held by incentive objects who had resigned or been downgraded. Pursuant to the “Measures for
the Administration of Equity Incentives for Listed Companies” and the “Restricted Share
Incentive Plan of Yifeng Pharmacy Chain Co., Ltd. of 2022”, the Company has repurchased and
canceled a total of 92,960 restricted shares that had been granted but the unlocking conditions
have not yet been met, with share capital decreased by 92,960.00 yuan and capital reserve (share
premium) decreased by 1,567,704.00 yuan.
Pursuant to the “Proposal on Granting Reserved Equity to the Incentive Objects of Restricted
Shares Incentive Plan of 2022” deliberated and approved by the 31st meeting of the fourth session
of the Board of Directors and the 26th meeting of the fourth session of the Board of Supervisors
on August 29, 2023, the Company plans to grant 402,165 ordinary shares (A shares), each with
par value of one yuan, to a total of 42 incentive objects through targeted issuance, with a grant
price of 18.95 yuan per share. Since three incentive objects gave up restricted shares planned to be
granted by the Company, the actual number of incentive objects is 39, with a total of 390,015
shares being granted, and registered capital increased by 390,015.00 yuan. As of October 16, 2023,
the Company has received a total of 7,390,791.00 yuan from 39 incentive objects, among which,
390,015.00 yuan was included in share capital and 7,000,776.00 yuan was included in capital
reserve (share premium). The above-mentioned changes in registered capital had been verified by
Pan-China Certified Public Accountants LLP, and a Capital Verification Report (PCCPACVR
[2023] 2-31) was issued thereon.
269 / 329
54. Other equity instruments
(1) Basic information of other financial instruments such as preferred shares or perpetual
bonds outstanding as of the balance sheet date
Applicable Not Applicable
(2) Current period movements of financial instruments such as preferred shares or
perpetual bonds outstanding at the balance sheet date
Applicable Not Applicable
Information and reasons of Current period movements of financial instruments, accounting
treatment and judgement basis
Applicable Not Applicable
Other remarks
Applicable Not Applicable
55. Capital reserve
Applicable Not Applicable
Items Opening balance Increase Decrease Closing balance
Share/capital premium 3,991,354,684.91 17,220,485.92 292,941,800.33 3,715,633,370.50
Other capital reserve 85,345,399.00 41,169,112.30 126,514,511.30
Total 4,076,700,083.91 58,389,598.22 292,941,800.33 3,842,147,881.80
Other remarks, including current period movements and reasons of movement
1) Current increase of share premium: a. 7,000,776.00 yuan was due to grant of restricted shares,
please refer to section X(VII) of notes to the financial statements for details; b. 6,435,727.26 yuan
was due to the disposal of non-controlling interest of subsidiaries, please refer to section X(X)2
(2)of notes to the financial statements for details; and c. 3,783,982.66 yuan was due to changes in
equity (excluding net profit or loss) of the subsidiary Xinxing Pharmacy.
2) Current decrease of share premium: a. 288,681,972.00 yuan was due to conversion of capital
reserve to share capital, please refer tosectionX(VII) of notes to the financial statements for details;
b. 3,324,288.00 yuan was due to repurchase of restricted shares, please refer to section X(VII), of
notes to the financial statements for details; and c. 935,540.33 yuan was due to acquisition of
non-controlling interest of subsidiaries, please refer to section X(X)2(2) of notes to the financial
statements for details.
3) Other capital reserve current was increased by 41,169,112.30 yuan due to share-based payment
recognized from issuance of restricted shares in the current period.
56. Treasury shares
Applicable Not Applicable
270 / 329
Items Opening balance Increase Decrease Closing balance
Restricted shares 77,410,952.00 7,390,791.00 42,563,261.85 42,238,481.15
Total 77,410,952.00 7,390,791.00 42,563,261.85 42,238,481.15
Other remarks, including current period movements and reasons of movement
Current increase of treasury shares was due to recognition of issued restricted share repurchase
obligation in the current period, and current decrease of treasury shares was due to the reversal of
the unlocked restricted share repurchase obligation recognized before.
57. Other comprehensive income (OCI)
Applicable Not Applicable
Current period cumulative
Less: OCI
Net OCI after tax previously
recognized but
Items Opening balance Less: OCI transferred to Closing balance
previously
Current period Attributable to retained earnings in
recognized but Less: Income tax Attributable to
cumulative before non-controlling the current period
transferred to expenses parent company (attributable to
income tax shareholders
profit or loss in the parent company
current period after tax)
Items not to be reclassified
-17,001,709.05 51,224,558.05 12,806,139.51 38,418,418.54 21,416,709.49
subsequently to profit or loss
Including:Changes in fair value
of other equity instrument -17,001,709.05 51,224,558.05 12,806,139.51 38,418,418.54 21,416,709.49
investments
Total -17,001,709.05 51,224,558.05 12,806,139.51 38,418,418.54 21,416,709.49
Other remarks, including adjustments of initial recognition amount of hedging items from
effective portion of cash flow hedging profits and losses
None
58. Special reserve
Applicable Not Applicable
59. Surplus reserve
Applicable Not Applicable
Items Opening balance Increase Decrease Closing balance
Statutory surplus
132,066,047.02 66,216,102.98 198,282,150.00
reserve
Discretionary surplus
reserve
Reserve fund
Enterprise
development fund
Others
Total 132,066,047.02 66,216,102.98 198,282,150.00
Other remarks
Current increase is due the appropriation of surplus reserve at 10% of the net profit generated by
the parent company in the current period.
271 / 329
60. Undistributed profit
Applicable Not Applicable
Current period Preceding period
Items
cumulative comparative
Balance before adjustment at the end of
3,720,020,128.04 2,693,579,088.57
preceding period
Add: Increase due to adjustment (or less:
-2,862,658.05 906,182.14
decrease)
Opening balance after adjustment 3,717,157,469.99 2,694,485,270.71
Add: Net profit attributable to owners of the
1,411,985,024.41 1,261,841,039.80
parent company
Less: Appropriation of statutory surplus reserve 66,216,102.98 23,585,921.52
Dividend payable on ordinary shares 288,681,972.00 215,582,919.00
Closing balance 4,774,244,419.42 3,717,157,469.99
Other remarks
Pursuant to related requirements stipulated in the CASBEs, adjustments of -2,862,658.05 yuan are
made on opening balance of undistributed profit on retroactive basis.
61. Operating revenue/Operating cost
(1) Details of Operating revenue/Operating cost
Applicable Not Applicable
Current period cumulative Preceding period comparative
Items
Revenue Cost Revenue Cost
Main operations 22,077,562,498.66 13,908,901,380.54 19,381,778,677.11 11,964,451,794.17
Other operations 510,664,903.56 48,697,474.20 504,617,158.84 61,112,247.88
Total 22,588,227,402.22 13,957,598,854.74 19,886,395,835.95 12,025,564,042.05
(2) Breakdown of revenue
Applicable Not Applicable
Other remarks
Applicable Not Applicable
(3) Information related to performance obligations
Applicable Not Applicable
(4) Transaction price allocated to the remaining performance obligations
Applicable Not Applicable
(5) Significant changes in contracts or significant adjustments on transaction price
Applicable Not Applicable
Other remarks
None
272 / 329
62. Taxes and surcharges
Applicable Not Applicable
Items Current period cumulative Preceding period comparative
Urban maintenance and
35,465,407.90 28,306,929.39
construction tax
Education surcharge 15,674,596.23 12,541,119.79
Stamp duty 17,299,709.05 11,599,135.45
Local education surcharge 10,450,521.34 8,310,156.82
Housing property tax 7,838,151.74 6,792,490.80
Land use tax 2,630,372.52 2,607,832.17
Vehicle and vessel use tax 30,243.57 20,964.25
Others 76,855.08
Total 89,389,002.35 70,255,483.75
Other remarks
None
63. Selling expenses
Applicable Not Applicable
Items Current period cumulative Preceding period comparative
Employee benefits 2,809,254,666.69 2,544,910,435.32
House rent and property fees 1,514,364,484.71 1,336,577,503.80
Advertising promotion and
367,224,634.13 342,346,432.05
sales service fees
Amortization of long-term
181,370,295.07 145,330,103.25
prepayments
Utility bills 144,656,651.36 122,003,030.69
Freight expenses 126,062,967.65 120,778,550.92
Depreciation and amortization 135,291,410.84 101,280,370.67
Office expenses 76,911,445.10 71,745,221.99
Organization expenses 41,632,349.38 32,489,707.40
Transportation and business
41,539,549.10 29,113,617.40
travelling expenses
Others 49,141,705.99 31,697,966.68
Total 5,487,450,160.02 4,878,272,940.17
Other remarks
None
64. Administrative expenses
Applicable Not Applicable
Items Current period cumulative Preceding period comparative
273 / 329
Items Current period cumulative Preceding period comparative
Employee benefits 718,236,117.42 700,113,530.83
Depreciation 71,223,439.11 57,398,130.97
Business entertainment
54,370,528.07 53,748,498.67
expenses
Consulting service fees 47,202,303.94 49,681,200.06
Share-based payments 41,169,112.30 23,159,834.00
Amortization of intangible
18,550,693.80 10,464,335.57
assets
Amortization of low-value
5,823,383.73 3,358,650.27
consumables
Others 5,849,281.11 6,136,479.93
Total 962,424,859.48 904,060,660.30
Other remarks
None
65. R&D expenses
Applicable Not Applicable
Items Current period cumulative Preceding period comparative
Amortization of Intangible
14,110,402.04 14,650,300.67
assets
Material 13,798,816.73 4,953,504.31
Employee benefits 4,081,993.55 4,360,748.41
Depreciation 1,480,886.21 1,297,043.46
Others 77,886.38 48,042.15
Total 33,549,984.91 25,309,639.00
Other remarks
None
66. Financial expenses
Applicable Not Applicable
Items Current period cumulative Preceding period comparative
Interest expense 160,528,586.40 165,208,532.62
Less: Interest income 93,286,397.47 73,208,764.18
Financial institute charges 18,942,414.15 12,812,707.39
Total 86,184,603.08 104,812,475.83
Other remarks
None
67. Other income
274 / 329
Applicable Not Applicable
Preceding period
Items Current period cumulative
comparative
Government grants related to assets 401,359.91 417,913.24
Government grants related to income 43,933,681.43 32,290,672.58
Tax deduction and exemption for 25,856,801.13 9,950,248.55
small-scale taxpayer
Refund of handling fees for
2,602,921.20 1,202,328.42
withholding individual income tax
VAT deduction and exemption for
poverty alleviation personnel and 3,340,149.99
veterans
Total 76,134,913.66 43,861,162.79
Other remarks
None
68. Investment income
Applicable Not Applicable
Items Current period cumulative Preceding period comparative
Investment income from
long-term equity investments 316,574.96 -11,413.00
under equity method
Investment income from
Other equity instrument 17,084,000.00
investments
Investment income from
24,958,558.90 6,953,820.05
financial instruments
Including:Financial assets
classified as at fair value 24,958,558.90 6,953,820.05
through profit or loss
Investment income from
13,074.67 -73,684.08
disposal of subsidiaries
Total 42,372,208.53 6,868,722.97
Other remarks
None
69. Gains on net exposure to hedging risk
Applicable Not Applicable
70. Gains on changes in fair value
Applicable Not Applicable
71. Credit impairment loss
Applicable Not Applicable
Items Current period cumulative Preceding period comparative
275 / 329
Items Current period cumulative Preceding period comparative
Bad debts -4,537,333.68 -10,465,943.08
Total -4,537,333.68 -10,465,943.08
Other remarks
None
72. Assets impairment loss
Applicable Not Applicable
Items Current period cumulative Preceding period comparative
Inventory write-down loss -72,633,545.68 -56,018,740.98
Total -72,633,545.68 -56,018,740.98
Other remarks
None
73. Gains on asset disposal
Applicable Not Applicable
Amount included in
Current period Preceding period
Items non-recurring profit
cumulative comparative
or loss
Gains on disposal of fixed
1,460,232.34 2,825,230.77 1,460,232.34
assets
Gains on disposal of
40,358,701.38 20,341,910.73 40,358,701.38
Right-of-use assets
Total 41,818,933.72 23,167,141.50 41,818,933.72
Other remarks
None
74. Non-operating revenue
Details
Applicable Not Applicable
Amount included in
Current period Preceding period
Items non-recurring profit
cumulative comparative
or loss
Government grants [Note] 595,167.68 111,747.23 595,167.68
Compensation 1,385,890.73 909,588.31 1,385,890.73
Cash short and over 2,527,261.15 2,534,863.24 2,527,261.15
Exempted payments 1,109,567.13 805,134.58 1,109,567.13
Confiscatory income 1,475,505.71 1,430,741.72 1,475,505.71
Gains on scrapping of fixed
1,025,366.12 140,595.52 1,025,366.12
assets
Others 4,586,164.89 6,308,928.27 4,586,164.89
Total 12,704,923.41 12,241,598.87 12,704,923.41
276 / 329
Other remarks
Applicable Not Applicable
75. Non-operating expenditures
Applicable Not Applicable
Amount included in
Current period Preceding period
Items non-recurring profit
cumulative comparative
or loss
Donation expenditures 6,406,521.25 1,030,307.25 6,406,521.25
Penalty expenditures and
937,491.87 2,174,060.37 937,491.87
overdue fines
Compensation expenses 3,132,097.54 4,497,464.89 3,132,097.54
Losses on scrapping of
8,759,898.90 6,083,204.66 8,759,898.90
intangible assets
Losses on scrapping of fixed
4,991,790.85 4,387,408.50 4,991,790.85
assets
Others 5,668,317.26 2,115,064.12 5,668,317.26
Total 29,896,117.67 20,287,509.79 29,896,117.67
Other remarks
None
76. Income tax expenses
(1) Details
Applicable Not Applicable
Items Current period cumulative Preceding period comparative
Current period income tax
477,407,759.56 464,346,001.57
expenses
Deferred income tax expenses -20,744,785.07 -10,285,006.62
Total 456,662,974.49 454,060,994.95
(2) Reconciliation of accounting profit to income tax expenses
Applicable Not Applicable
Current period Preceding period
Items
cumulative comparative
Profit before tax 2,037,593,919.93 1,877,487,027.13
Income tax expenses based on tax rate applicable
509,398,479.98 469,371,756.78
to the parent company
Effect of different tax rate applicable to
-30,197,400.73 -19,171,090.19
subsidiaries
Effect of prior income tax reconciliation 882,422.20 -3,435,177.34
Effect of non-taxable income -141,277,682.11 -89,512,291.03
Effect of non-deductible costs, expenses and
99,646,125.92 74,736,164.44
losses
Effect of utilization of deductible losses not
-3,822,964.31 -1,593,274.92
previously recognized as deferred tax assets
277 / 329
Current period Preceding period
Items
cumulative comparative
Effect of deducible temporary differences or
deductible losses not recognized as deferred tax 22,033,993.54 23,664,907.21
assets in the current period
Income tax expenses 456,662,974.49 454,060,994.95
Other remarks
Applicable Not Applicable
77. Other comprehensive income
Applicable Not Applicable
Please refer to section VII 56 of notes to the financial statements for details.
78. Notes to items of the consolidated cash flow statement
(1) Cash flow related to operating activities
Other cash receipts related to operating activities
Applicable Not Applicable
Items Current period cumulative Preceding period comparative
Interest income 89,069,632.14 57,680,036.65
Government grants 44,337,282.43 32,290,672.58
Intercompany balances and
216,292,968.05 69,919,617.47
others
Deposits for notes 100,320,828.82
Total 450,020,711.44 159,890,326.70
Remarks on other cash receipts related to operating activities
None
Other cash payments related to operating activities
Applicable Not Applicable
Items Current period cumulative Preceding period comparative
Cash payments related to
986,561,162.17 750,174,527.13
selling expenses
Cash payments related to
113,245,496.85 109,566,178.66
administrative expenses
Cash payments related to
18,942,414.15 12,812,707.39
financial expenses
Deposits for notes 200,868,938.61
Intercompany balances and
83,455,950.56 81,114,634.22
others
Total 1,202,205,023.73 1,154,536,986.01
Remarks on other cash payments related to operating activities
None
278 / 329
(2) Cash flow related to investing activities
Significant cash receipts related to investing activities
Applicable Not Applicable
Significant cash payments related to investing activities
Applicable Not Applicable
Other cash receipts related to investing activities
Applicable Not Applicable
Items Current period cumulative Preceding period comparative
Redemption of wealth
management products and 3,660,000,000.00 710,000,000.00
structured deposits
Receipt of interest income on
wealth management products 22,480,295.18 9,096,406.63
and structured deposits
Total 3,682,480,295.18 719,096,406.63
Remarks on other cash receipts related to investing activities
None
Other cash payments related to investing activities
Applicable Not Applicable
Items Current period cumulative Preceding period comparative
Payments for acquisition of
wealth management products 5,388,100,000.00 610,000,000.00
and structured deposits
Prepaid payments for equity
15,650,000.00 4,015,070.00
transfer and store acquisition
Total 5,403,750,000.00 614,015,070.00
Remarks on other cash payments related to investing activities
None
(3) Cash flow related to financing activities
Other cash receipts related to financing activities
Applicable Not Applicable
Other cash payments related to financing activities
Applicable Not Applicable
Items Current period cumulative Preceding period comparative
Payments for issuance costs of
1,230,000.00
convertible bonds
Payments for interest arising
from repurchase of equity 45,677.44 129,873.11
incentive
279 / 329
Items Current period cumulative Preceding period comparative
Repurchase of restricted shares 3,521,408.00 2,850,265.60
Payments for house rent 1,602,759,502.03 1,351,559,819.89
Payments for acquisition of
1,400,000.00 10,230,000.00
non-controlling interest
Total 1,608,956,587.47 1,364,769,958.60
Remarks on other cash payments related to financing activities
None
Changes in liabilities related to financing activities
Applicable Not Applicable
Increase Decrease
Items Opening balance Changes Changes in Closing balance
Changes in non-cash Changes in cash
in cash non-cash
Long-term borrowings
(including long-term
321,591,316.34 335,315.18 84,825,129.54 237,101,501.98
borrowings due within
one year)
Lease liabilities (lease
liabilities due within one 3,135,952,983.22 2,027,299,274.05 1,602,759,502.03 3,560,492,755.24
year)
Subtotal 3,457,544,299.56 2,027,634,589.23 1,687,584,631.57 3,797,594,257.22
(4) Presentation of cash flows on a net basis
Applicable Not Applicable
(5) Significant activities not involving cash receipts and payments
Applicable Not Applicable
79. Supplementary information to the cash flow statement
(1) Supplementary information to the cash flow statement
Applicable Not Applicable
Current period Preceding period
Supplementary information
cumulative comparative
(1) Reconciliation of net profit to cash flows from
operating activities:
Net profit 1,580,930,945.44 1,423,426,032.18
Add: Provision for assets impairment 77,170,879.36 66,484,684.06
Depreciation of fixed assets, oil and gas assets,
185,915,002.19 159,652,438.40
productive biological assets
Depreciation of right-of-use assets 1,430,310,433.50 1,254,123,985.22
Amortization of intangible assets 32,592,861.43 27,324,571.55
Amortization of long-term prepayments 182,972,564.91 145,378,461.51
Losses on disposal of fixed assets, intangible
-41,818,933.72 -23,167,141.50
assets and other long-term assets (Less: gains)
Fixed assets retirement loss (Less: gains) 12,726,323.63 10,330,017.64
Losses on changes in fair value (Less: gains)
280 / 329
Current period Preceding period
Supplementary information
cumulative comparative
Financial expenses (Less: gains) 160,528,586.40 165,208,532.62
Investment losses (Less: gains) -42,372,208.53 -6,868,722.97
Decrease of deferred tax assets (Less: increase) -16,654,154.77 -13,495,711.37
Increase of deferred tax liabilities (Less:
-4,090,630.30 21,547,597.76
decrease)
Decrease of inventories (Less: increase) -261,544,910.25 -459,394,401.53
Decrease of operating receivables (Less:
-258,276,649.06 -1,013,307,787.54
increase)
Increase of operating payables (Less: decrease) 1,542,951,573.07 2,139,864,914.12
Others 42,399,112.30 23,159,834.00
Net cash flows from operating activities 4,623,740,795.60 3,920,267,304.15
(2) Significant investing and financing activities
not related to cash receipts and payments:
Conversion of debt into capital
Convertible bonds due within one year
Fixed assets leased in under finance leases
(3) Net changes in cash and cash equivalents:
Cash at the end of the period 2,468,580,139.60 2,918,199,648.45
Less: Cash at the beginning of the period 2,918,199,648.45 1,927,200,486.57
Add: Cash equivalents at the end of the period
Less: Cash equivalents at the beginning of the
period
Net increase of cash and cash equivalents -449,619,508.85 990,999,161.88
(2) Net cash payments for the acquisition of subsidiaries
Applicable Not Applicable
(3) Net cash receipt for the disposal of subsidiaries
Applicable Not Applicable
(4) Composition of cash and cash equivalents
Applicable Not Applicable
Items Closing balance December 31, 2022
1) Cash 2,468,580,139.60 2,918,199,648.45
Including: Cash on hand 232,721.88 294,708.93
Cash in bank on demand for payment 2,468,347,417.72 2,917,904,939.52
Other cash and bank balances on demand
for payment
2) Cash equivalents
Including: Bond investments maturing within three
months
281 / 329
Items Closing balance December 31, 2022
3) Cash and cash equivalents at the end of the period 2,468,580,139.60 2,918,199,648.45
Including: Cash and cash equivalents of parent
company or subsidiaries with use restrictions
(5) Cash and cash equivalents with use restrictions
Applicable Not Applicable
Reasons for use restrictions and for
considered as cash and cash
Items Closing balance
equivalents cash and cash
equivalents
Cash and bank balances 6,188,730.80 Raised Funds
Subtotal 6,188,730.80
(6) Cash and bank balances not considered as cash and cash equivalents
Applicable Not Applicable
Reasons for not considered as cash
Items Closing balance December 31, 2022
and cash equivalents
Cash and bank balances 1,097,325,599.21 1,194,319,556.21 Deposits and judicial frozen funds
Subtotal 1,097,325,599.21 1,194,319,556.21
Other remarks
Applicable Not Applicable
80. Notes to items of the consolidated statement of changes in equity
Remarks on other items of closing balance of previous year and changes in equity
Applicable Not Applicable
81. Monetary items in foreign currencies
(1) Monetary items in foreign currencies
Applicable Not Applicable
(2) Remarks on foreign operations, including significant foreign operating entities, main
operating place, functional currencies, basis for selection of functional currencies
Applicable Not Applicable
82. Leases
(1) The Company as lessee
Applicable Not Applicable
1) Please refer to section VII 25 of notes to the financial statements for details on right-of-use
assets.
2) Please refer to section V 38 of notes to the financial statements for details on the Company’s
accounting policies on short-term leases and leases for which the underlying asset is of low value.
The amounts of short-term leases and low-value asset leases included into profit or loss are 0
282 / 329
yuan:
3) Profit or loss and cash flows related to leases
Items Current period cumulative Preceding period comparative
Interest expenses on lease
134,822,305.16 137,226,599.48
liabilities
Income from subleasing
29,620,319.17 27,705,895.25
right-of-use assets
Total cash outflows related to
1,602,159,315.01 1,351,559,819.89
leases
Gains or losses arising from sale
5,700.00 2,611.60
and leaseback transactions
4) Please refer to section XII of notes to the financial statements for details on maturity analysis of
lease liabilities and related liquidity risk management.
Variable lease payments included in profit or loss but not included in the measurement of lease
liabilities
Applicable Not Applicable
Rent expenses on short-term leases and low-value asset leases
Applicable Not Applicable
Sale and leaseback transactions and judgement basis
Applicable Not Applicable
The total amounts of cash payment related to lease are 1,602,159,315.01 yuan.
(2) The Company as lessor
Operating lease
Applicable Not Applicable
Items Current period cumulative Preceding period comparative
Lease income 29,871,070.50 27,705,895.25
Finance lease
Applicable Not Applicable
Reconciliation of undiscounted lease payments to net investment in the lease
Applicable Not Applicable
Undiscounted lease payments to be received arising from non-cancellable leases based on the
lease contract signed with lessee
Applicable Not Applicable
Remaining years Closing balance December 31, 2022
Within 1 year 275,625.00 262,500.00
1-2 years 275,625.00 275,625.00
283 / 329
Remaining years Closing balance December 31, 2022
2-3 years 45,937.50 275,625.00
3-4 years 45,937.50
4-5 years
Total 597,187.50 859,687.50
(3) Recognition of profits and losses from finance lease sales as a manufacturer or dealer
Applicable Not Applicable
Other remarks
None
83. Others
Applicable Not Applicable
VIII. R&D costs
(1) R&D costs
Applicable Not Applicable
Items Current period cumulative Preceding period comparative
Amortization of intangible
14,110,402.04 14,650,300.67
assets
Direct materials 13,798,816.73 4,953,504.31
Employee benefits 37,275,207.95 39,856,302.96
Depreciation 1,480,886.21 1,297,043.46
Others 77,886.38 48,042.15
Total 66,743,199.31 60,805,193.55
Including: R&D costs to be
33,549,984.91 25,309,639.00
expensed
R&D costs to be capitalized 33,193,214.40 35,495,554.55
Other remarks
None
(2) Development expenditures
Applicable Not Applicable
Increase Decrease
Opening Internal Transferred out Closing
Items Recognized as
balance development Others into profit or balance
intangible assets
expenditures loss
Construction of
O2O Healthcare
7,251,672.96 33,193,214.40 32,154,430.52 4,793,758.20 3,496,698.64
Cloud Service
Platform
Total 7,251,672.96 33,193,214.40 32,154,430.52 4,793,758.20 3,496,698.64
284 / 329
Capitalization of important R&D projects
Applicable Not Applicable
Impairment of development expenditures
Applicable Not Applicable
Other remarks
None
(3) Important outsourced R&D projects in progress
Applicable Not Applicable
IX. Changes in the consolidation scope
1. Business combination not under common control
Applicable Not Applicable
(1) Business combination not under common control in the current period
Applicable Not Applicable
Proportion of
Equity acquisition Equity acquisition Equity acquisition
Acquirees equity acquired Acquisition date
date cost method
(%)
Tangshan Xinxing
March, 2023 113,000,000.00 100.00 Equity Transfer March, 2023
Deshengtang
Qinhuangdao Xinxing
March, 2023 63,000,000.00 70.00 Equity Transfer March, 2023
Minle
Handan Xinxing
August, 2023 23,344,000.00 80.00 Equity Transfer August, 2023
Baixinkang
Shijiazhuang Yingqi
September, 2023 1,400,000.00 70.00 Equity Transfer September, 2023
Medical Service
Handan Xinxing
December, 2023 52,500,000.00 70.00 Equity Transfer December, 2023
Huakang
Langfang Xinxing
December, 2023 27,192,000.00 80.00 Equity Transfer December, 2023
Dekunyuan
Chengde Xinxing
December, 2023 23,100,000.00 70.00 Equity Transfer December, 2023
Xinyu
Suzhou Xinqunzhong
December, 2023 4,500,000.00 90.00 Equity Transfer December, 2023
Clinic
Yichun Yifeng August, 2023 24,600,000.00 60.00 Equity Transfer August, 2023
Guangshui Yifeng
February, 2023 8,540,000.00 70.00 Equity Transfer February, 2023
Kangji
Yingtan Yifeng October, 2023 19,500,000.00 65.00 Equity Transfer October, 2023
(Continued)
Acquiree’s cash flows from acquisition date to period
Acquiree’s net
Acquiree’s income end
Determination basis profit from
Acquirees from acquisition
for acquisition date acquisition date Net inflows from Net inflows from Net inflows from
date to period end operating investing financing
to period end
activities activities activities
Tangshan Xinxing
Complete the 93,764,703.94 -6,119,043.70 -3,494,414.60 -1,426,611.65 4,974,914.65
Deshengtang
285 / 329
Acquiree’s cash flows from acquisition date to period
Acquiree’s net
Acquiree’s income end
Determination basis profit from
Acquirees from acquisition
for acquisition date acquisition date Net inflows from Net inflows from Net inflows from
date to period end operating investing financing
to period end
activities activities activities
Qinhuangdao Xinxing property
177,629,497.69 8,902,494.32 2,317,017.16 -593,393.34 -1,639,492.00
Minle handover
Handan Xinxing procedures and
23,228,121.12 -930,921.50 1,324,901.80 -943,490.04 -360,386.41
Baixinkang achieve
Shijiazhuang Yingqi substantial
383,972.95 100,732.80 -245,011.67 -2,961.98
Medical Service control over the
Handan Xinxing acquired party
11,373,553.75 167,668.94 -6,610,684.61 -347,397.17 6,999,767.10
Huakang
Langfang Xinxing
5,622,021.57 156,257.26 -2,273,326.34 -212,070.10 2,536,000.00
Dekunyuan
Chengde Xinxing
400,383.51 455,537.26 -2,894,707.12 2,979,312.78
Xinyu
Suzhou Xinqunzhong
-23,318.12 7,925.21
Clinic
Yichun Yifeng 18,232,068.26 -44,450.08 1,928,557.54 -2,438,347.55 1,227,015.00
Guangshui Yifeng
23,989,621.74 102,121.07 3,001,690.32 -1,101,050.81 -210,568.91
Kangji
Yingtan Yifeng 5,822,192.46 256,619.76 897,179.17 -1,410,204.82 1,177,740.00
(2) Combination costs and goodwill
Applicable Not Applicable
Handan Shijiazhuang
Tangshan Xinxing Qinhuangdao
Items Xinxing Yingqi Medical
Deshengtang Xinxing Minle
Baixinkang Service
Combination costs 113,000,000.00 63,000,000.00 23,344,000.00 1,400,000.00
Cash 113,000,000.00 63,000,000.00 23,344,000.00 1,400,000.00
Total combination costs 113,000,000.00 63,000,000.00 23,344,000.00 1,400,000.00
Less: Share of fair value of net
11,300,000.00 6,300,000.00 800,000.00 132.97
identifiable assets acquired
Goodwill 101,700,000.00 56,700,000.00 22,544,000.00 1,399,867.03
(Continued)
Langfang Suzhou
Handan Xinxing Chengde
Items Xinxing Xinqunzhong
Huakang Xinxing Xinyu
Dekunyuan Clinic
Combination costs 52,500,000.00 27,192,000.00 23,100,000.00 4,500,000.00
Cash 52,500,000.00 27,192,000.00 23,100,000.00 4,500,000.00
Total combination costs 52,500,000.00 27,192,000.00 23,100,000.00 4,500,000.00
Less: Share of fair value of net
5,250,000.00 2,400,000.00 2,100,000.00 333.14
identifiable assets acquired
Goodwill 47,250,000.00 24,792,000.00 21,000,000.00 4,499,666.86
(Continued)
286 / 329
Guangshui
Items Yichun Yifeng Yingtan Yifeng
Yifeng Kangji
Combination costs 24,600,000.00 8,540,000.00 19,500,000.00
Cash 24,600,000.00 8,540,000.00 19,500,000.00
Total combination costs 24,600,000.00 8,540,000.00 19,500,000.00
Less: Share of fair value of net
2,100,000.00 700,000.00 1,300,000.00
identifiable assets acquired
Goodwill 22,500,000.00 7,840,000.00 18,200,000.00
Determination method of fair value of combination costs, contingent considerations and their
movements
Applicable Not Applicable
Completion of performance commitment
Applicable Not Applicable
Main reasons for goodwill in large amount
Applicable Not Applicable
Large amounts of goodwill are formed by the difference between the combination costs and shares
of fair value of net identifiable assets acquired
Other remarks
In November 2022, the Company’s subsidiary Tangshan Xinxing Deshuntang, Bi Hongsheng, Yin
Hui, Yin Zhixue and Tangshan Deshengtang Medicine Chain Co., Ltd. signed the “Framework
Agreement on the Restructuring and Acquisition of Tangshan Deshengtang Medicine Chain Co.,
Ltd.”. Pursuant to the agreement, the third party which designated and actually controlled by Bi
Hongsheng, Yin Hui and Yin Zhixue contributed capital to set up Tangshan Xinxing Deshengtang
prior to January 31, 2023, and completed the injection of the entire business and related assets of
Tangshan Deshengtang Medicine Chain Co., Ltd. to Tangshan Xinxing Deshengtang prior to
March 31, 2023. After the injection of business and assets, the Company acquired 100.00% of
equity of Tangshan Deshengtang Medicine Chain Co., Ltd. held by Bi Hongsheng, Yin Hui, Yin
Zhixue and the designated third party at a consideration of 113.00 million yuan. The equity
transfer and registration in administration for market regulation had been completed in March
2023.
In October 2022, the Company’s subsidiary Xinxing Pharmacy, Shang Yong, Guo Tiezhu, Du
Keqiang, Xu Jihe, and Qinhuangdao Minle Medicine Chain Co., Ltd. signed the “Framework
Agreement on the Restructuring and Acquisition of Qinhuangdao Minle Medicine Chain Co.,
Ltd.”. Pursuant to the agreement, the third party which designated and actually controlled by
Shang Yong, Guo Tiezhu, Du Keqiang, and Xu Jihe contributed capital to set up Qinhuangdao
Xinxing Minle prior to November 30, 2022, and completed the injection of the entire business and
related assets of Qinhuangdao Minle Medicine Chain Co., Ltd. to Qinhuangdao Xinxing Minle
287 / 329
prior to February 28, 2023. After the injection of business and assets, the Company acquired 70.00%
of equity of Qinhuangdao Minle Medicine Chain Co., Ltd. held by Shang Yong, Guo Tiezhu, Du
Keqiang, Xu Jihe and the designated third party at a consideration of 63.00 million yuan. The
equity transfer and registration in administration for market regulation had been completed in
March 2023.
In May 2023, the Company’s subsidiary Xinxing Pharmacy, Wang Yunqiang, Cong Houmao, Fan
Kaimin, and Hebei Baixinkang Medicine Chain Co., Ltd. signed the “Framework Agreement on
the Restructuring and Acquisition of Hebei Baixinkang Medicine Chain Co., Ltd.”. Pursuant to the
agreement, the third party which designated and actually controlled by Wang Yunqiang, Cong
Houmao, and Fan Kaimin contributed capital to set up Handan Xinxing Baixinkang prior to June
30, 2023, and completed the injection of the entire business and related assets of Hebei
Baixinkang Medicine Chain Co., Ltd. to Handan Xinxing Baixinkang prior to July 31, 2023. After
the injection of business and assets, the Company acquired 80.00% of equity of Hebei Baixinkang
Medicine Chain Co., Ltd. held by Wang Yunqiang, Cong Houmao, Fan Kaimin and the
designated third party at the consideration of 23.34 million yuan. The equity transfer and
registration in administration for market regulation had been completed in August 2023.
In August 2023, the Company’s subsidiary Xinxing Pharmacy, Shijiazhuang Yingqi Pharmacy
Co., Ltd., and Shijiazhuang Yingqi Medical Service signed the “Framework Agreement on the
Equity Transfer of Shijiazhuang Yingqi Medical Service”. Pursuant to the agreement, Xinxing
Pharmacy acquired 70.00% of equity of Shijiazhuang Yingqi Medical Service at the consideration
of 1.40 million yuan. The equity transfer and registration in administration for market regulation
had been completed in September 2023.
In August 2023, the Company’s subsidiary Xinxing Pharmacy, Wang Ruimin, Feng Chunxiang,
Feng Xuefang, and Linzhang Huakang Pharmacy Chain Co., Ltd. signed the “Framework
Agreement on the Restructuring and Acquisition of Linzhang Huakang Pharmacy Chain Co.,
Ltd.”. Pursuant to the agreement, the third party which designated and actually controlled by
Wang Ruimin, Feng Chunxiang, and Feng Xuefang contributed capital to set up Handan Xinxing
Huakang prior to September 30, 2023, and completed the injection of the entire business and
related assets of Linzhang Huakang Pharmacy Chain Co., Ltd. to Handan Xinxing Huakang prior
to October 31, 2023. After the injection of business and assets, the Company acquired 70.00% of
equity of Linzhang Huakang Pharmacy Chain Co., Ltd. held by Wang Ruimin, Feng Chunxiang,
Feng Xuefang and the designated third party at the consideration of 52.50 million yuan. The
equity transfer and registration in administration for market regulation had been completed in
December 2023.
In July 2023, the Company’s subsidiary Xinxing Pharmacy, Sun Shuzhi and Langfang Dekunyuan
Pharmaceutical Retail Chain Co., Ltd. signed the “Framework Agreement on the Restructuring
and Acquisition of Langfang Dekunyuan Pharmaceutical Retail Chain Co., Ltd., Sun Shuzhi
288 / 329
Clinic in Southwest Street Village and The Third Clinic in Northwest Street Village, Shuyang
Town, Xianghe County”. Pursuant to the agreement, the third party which designated and actually
controlled by Sun Shuzhi contributed capital to set up Langfang Xinxing Dekunyuan prior to
September 20, 2023, and completed the injection of the entire business and related assets of
Langfang Dekunyuan Pharmaceutical Retail Chain Co., Ltd. to Langfang Xinxing Dekunyuan
prior to October 31, 2023. After the injection of business and assets, the Company acquired 80.00%
of equity of Langfang Dekunyuan Pharmaceutical Retail Chain Co., Ltd. held by Sun Shuzhi and
the designated third party at the consideration of 27.19 million yuan. The equity transfer and
registration in administration for market regulation had been completed in December 2023.
In October 2023, the Company’s subsidiary Xinxing Pharmacy, Zhang Zhen and Chengde Xinyu
Pharmacy Chain Co., Ltd. signed the “Framework Agreement on the Restructuring and
Acquisition of Chengde Xinyu Pharmacy Chain Co., Ltd.”. Pursuant to the agreement, the third
party which designated and actually controlled by Zhang Zhen contributed capital to set up
Chengde Xinxing Xinyu prior to December 31, 2023, and completed the injection of the entire
business and related assets of Chengde Xinyu Pharmacy Chain Co., Ltd. to Chengde Xinxing
Xinyu prior to February 28, 2024. After the injection of business and assets, the Company
acquired 100.00% of equity of Chengde Xinyu Pharmacy Chain Co., Ltd. held by Zhang Zhen and
the designated third party at the consideration of 23.10 million yuan. The equity transfer and
registration in administration for market regulation had been completed in December 2023.
In May 2023, the Company’s subsidiary Suzhou Yuehai, Zhang Xihong and Wang Yujuan signed
the “Framework Agreement on the Equity Transfer of Suzhou Xinqunzhong Clinic (General
Partnership)”. Pursuant to the agreement, Suzhou Yuehai acquired 90.00% of equity of Suzhou
Xinqunzhong Clinic at the consideration of 4.50 million yuan. The equity transfer and registration
in administration for market regulation had been completed in December 2023.
In April 2023, the Company’s subsidiary Jiangxi Ganxi Yifeng Pharmacy Chain Co., Ltd., Chen
Zhilin, Deng Shuihua and Yichun Laobaixing Medicine Chain Co., Ltd. signed the “Framework
Agreement on the Restructuring and Acquisition of Yichun Laobaixing Medicine Chain Co., Ltd.”.
Pursuant to the agreement, the third party which designated and actually controlled by Chen Zhilin
and Deng Shuihua contributed capital to set up Yichun Yifeng prior to May 31, 2023, and
completed the injection of the entire business and related assets of Yichun Laobaixing Medicine
Chain Co., Ltd. to Yichun Yifeng prior to July 31, 2023. After the injection of business and assets,
the Company acquired 60.00% of equity of Yichun Laobaixing Medicine Chain Co., Ltd. held by
Chen Zhilin, Deng Shuihua and the designated third party at the consideration of 24.60 million
yuan. The equity transfer and registration in administration for market regulation had been
completed in August 2023.
In February 2023, the Company’s subsidiary Hubei Yifeng Pharmacy Chain Co., Ltd., Li
Qionghua, Guangshui Yingshan Kangji Pharmacy General Store, Guangshui Yingshan Kangsheng
289 / 329
Pharmacy, Guangshui Kangji Pharmacy Aviation Road Store, Guangshui Yingshan Kangji
Pharmacy, Guangshui Yingshan Kangliji Pharmacy, Guangshui Kangsanji Pharmacy, Guangshui
Haoran Pharmacy, Guangshui Yingshan Kangji Pharmacy Sixian Road Store, Guangshui Yingshan
Kangji Pharmacy Zhenxiao Store, Guangshui Yingshan Kangji Pharmacy, and Guangshui
Yingshan Kanglishiji Pharmacy (hereinafter referred to as 11 pharmacies including Guangshui
Yingshan Kangji Pharmacy General Store) signed the “Framework Agreement on the
Restructuring and Acquisition of 11 Pharmacies Including Guangshui Yingshan Kangji Pharmacy
General Store”. Pursuant to the agreement, the third party which designated and actually
controlled by Li Qionghua contributed capital to set up Guangshui Yifeng Kangji prior to March
15, 2023, and completed the injection of the entire business and related assets of 11 pharmacies
including Guangshui Yingshan Kangji Pharmacy General Store to Guangshui Yifeng Kangji prior
to April 15, 2023. After the injection of business and assets, the Company acquired 70.00% of
equity of 11 pharmacies including Guangshui Yingshan Kangji Pharmacy General Store held by
Li Qionghua and the designated third party at the consideration of 7.84 million yuan and 70.00%
of approved net assets. The equity transfer and registration in administration for market regulation
had been completed in February 2023.
In February 2023, the Company’s subsidiary Jiangxi Yifeng, Wang Yang, Zhou Wei and Yingtan
Jiujiu Medicine Chain Co., Ltd. signed the “Framework Agreement on the Restructuring and
Acquisition of Yingtan Jiujiu Medicine Chain Co., Ltd.”. Pursuant to the agreement, the third
party which designated and actually controlled by Wang Yang and Zhou Wei contributed capital
to set up Yingtan Yifeng prior to September 20, 2023, and completed the injection of the entire
business and related assets of Yingtan Jiujiu Medicine Chain Co., Ltd. to Yingtan Yifeng prior to
October 31, 2023. After the injection of business and assets, the Company acquired 65.00% of
equity of Yingtan Jiujiu Medicine Chain Co., Ltd. held by Wang Yang, Zhou Wei and the
designated third party at the consideration of 18.20 million yuan and 65.00% of approved net
assets. The equity transfer and registration in administration for market regulation had been
completed in October 2023.
(3) Acquisition-date identifiable assets and liabilities of acquirees
Applicable Not Applicable
Tangshan Xinxing Deshengtang Qinhuangdao Xinxing Minle Handan Xinxing Baixinkang
Items
Acquisition-date Acquisition-date Acquisition-date Acquisition-date Acquisition-date Acquisition-date
fair value carrying amount fair value carrying amount fair value carrying amount
Assets 11,300,000.00 11,300,000.00 9,000,000.00 9,000,000.00 1,000,000.00 1,000,000.00
Cash and bank
balances
Accounts
receivable
Other receivables 11,300,000.00 11,300,000.00 9,000,000.00 9,000,000.00 1,000,000.00 1,000,000.00
Advances paid
Inventories
290 / 329
Tangshan Xinxing Deshengtang Qinhuangdao Xinxing Minle Handan Xinxing Baixinkang
Items
Acquisition-date Acquisition-date Acquisition-date Acquisition-date Acquisition-date Acquisition-date
fair value carrying amount fair value carrying amount fair value carrying amount
Fixed assets
Right-of-use assets
Intangible assets
Long-term
prepayments
Deferred tax assets
Other assets
Liabilities
Accounts payable
Advances received
Employee benefits
payable
Taxes and rates
payable
Other payables
Lease liabilities
Deferred tax
liabilities
Other liabilities
Net assets 11,300,000.00 11,300,000.00 9,000,000.00 9,000,000.00 1,000,000.00 1,000,000.00
Less: Non-controlling
2,700,000.00 2,700,000.00 200,000.00 200,000.00
interest
Net assets acquired 11,300,000.00 11,300,000.00 6,300,000.00 6,300,000.00 800,000.00 800,000.00
(Continued)
Shijiazhuang Yingqi Medical
Handan Xinxing Huakang Langfang Xinxing Dekunyuan
Service
Items
Acquisition-date Acquisition-date Acquisition-date Acquisition-date Acquisition-date Acquisition-date
fair value carrying amount fair value carrying amount fair value carrying amount
Assets 478,649.50 478,649.50 7,500,000.00 7,500,000.00 3,000,000.00 3,000,000.00
Cash and bank
300,000.00 300,000.00
balances
Accounts
23,810.32 23,810.32
receivable
Other receivables 24,167.81 24,167.81 7,500,000.00 7,500,000.00 3,000,000.00 3,000,000.00
Advances paid 100,511.55 100,511.55
Inventories 30,159.82 30,159.82
Fixed assets
Right-of-use assets
Intangible assets
Long-term
prepayments
Deferred tax assets
Other assets
Liabilities 478,459.55 478,459.55
291 / 329
Shijiazhuang Yingqi Medical
Handan Xinxing Huakang Langfang Xinxing Dekunyuan
Service
Items
Acquisition-date Acquisition-date Acquisition-date Acquisition-date Acquisition-date Acquisition-date
fair value carrying amount fair value carrying amount fair value carrying amount
Accounts payable
Advances received
Employee benefits
payable
Taxes and rates
payable
Other payables 478,459.55 478,459.55
Lease liabilities
Deferred tax
liabilities
Other liabilities
Net assets 189.95 189.95 7,500,000.00 7,500,000.00 3,000,000.00 3,000,000.00
Less: Non-controlling
56.99 56.99 2,250,000.00 2,250,000.00 600,000.00 600,000.00
interest
Net assets acquired 132.97 132.97 5,250,000.00 5,250,000.00 2,400,000.00 2,400,000.00
(Continued)
Chengde Xinxing Xinyu Suzhou Xinqunzhong Clinic Yichun Yifeng
Items
Acquisition-date Acquisition-date Acquisition-date Acquisition-date Acquisition-date Acquisition-date
fair value carrying amount fair value carrying amount fair value carrying amount
Assets 3,000,000.00 3,000,000.00 176,726.65 176,726.65 3,500,000.00 3,500,000.00
Cash and bank
93.51 93.51
balances
Accounts
50,452.42 50,452.42
receivable
Other receivables 3,000,000.00 3,000,000.00 3,500,000.00 3,500,000.00
Advances paid
Inventories 126,180.72 126,180.72
Fixed assets
Right-of-use assets
Intangible assets
Long-term
prepayments
Deferred tax assets
Other assets
Liabilities 176,356.49 176,356.49
Accounts payable
Advances received
Employee benefits
payable
Taxes and rates
payable
Other payables 176,356.49 176,356.49
Lease liabilities
Deferred tax
liabilities
292 / 329
Chengde Xinxing Xinyu Suzhou Xinqunzhong Clinic Yichun Yifeng
Items
Acquisition-date Acquisition-date Acquisition-date Acquisition-date Acquisition-date Acquisition-date
fair value carrying amount fair value carrying amount fair value carrying amount
Other liabilities
Net assets 3,000,000.00 3,000,000.00 370.16 370.16 3,500,000.00 3,500,000.00
Less: Non-controlling
900,000.00 900,000.00 37.02 37.02 1,400,000.00 1,400,000.00
interest
Net assets acquired 2,100,000.00 2,100,000.00 333.14 333.14 2,100,000.00 2,100,000.00
(Continued)
Guangshui Yifeng Kangji Yingtan Yifeng
Items
Acquisition-date Acquisition-date Acquisition-date Acquisition-date
fair value carrying amount fair value carrying amount
Assets 1,000,000.00 1,000,000.00 2,000,000.00 2,000,000.00
Cash and bank
balances
Accounts
receivable
Other receivables 1,000,000.00 1,000,000.00 2,000,000.00 2,000,000.00
Advances paid
Inventories
Fixed assets
Right-of-use assets
Intangible assets
Long-term
prepayments
Deferred tax assets
Other assets
Liabilities
Accounts payable
Advances received
Employee benefits
payable
Taxes and rates
payable
Other payables
Lease liabilities
Deferred tax
liabilities
Other liabilities
Net assets 1,000,000.00 1,000,000.00 2,000,000.00 2,000,000.00
Less: Non-controlling
300,000.00 300,000.00 700,000.00 700,000.00
interest
Net assets acquired 700,000.00 700,000.00 1,300,000.00 1,300,000.00
Fair value determination method on identifiable assets and liabilities
The fair value of identifiable assets and liabilities is determined based on “Market Value
Valuation Report on the Relevant Asset Groups of Tangshan Deshengtang Medicine Chain Co.,
293 / 329
Ltd. Involved in the Proposed Asset Acquisition of Tangshan Xinxing Deshuntang Pharmaceutical
Chain Co., Ltd., a Subsidiary of Yifeng Pharmacy Chain Co., Ltd.” (Dong Zhou Zi Bao Zi [2023]
No. 1567) and “Retrospective Valuation Report on the Market Value of the Relevant Asset
Groups of Hebei Baixinkang Medicine Chain Co., Ltd. Involved in the Asset Acquisition of
Shijiazhuang Xinxing Pharmacy Chain Co., Ltd., a Subsidiary of Yifeng Pharmacy Chain Co.,
Ltd.” (Dong Zhou Zi Bao Zi [2023] No. 2102) issued by Shanghai Dongzhou Asset Appraisal Co.,
Ltd.; “Value Consulting Report on the Operating Asset Groups of 89 Retail Pharmacies and 2
Clinics Owned by Qinhuangdao Minle Medicine Chain Co., Ltd. Proposed to be Acquired by
Shijiazhuang Xinxing Pharmacy Chain Co., Ltd.” (Jing Kun Ping Zi Zi [2023] No. 0103), “Value
Consulting Report on the Operating Asset Groups of 50 Retail Pharmacies Owned by Linzhang
Huakang Pharmacy Chain Co., Ltd. Proposed to be Acquired by Shijiazhuang Xinxing Pharmacy
Chain Co., Ltd.” (Jing Kun Ping Zi Zi [2023] No. 0156); “Value Consulting Report on the
Operating Asset Groups of 30 Retail Pharmacies of Yichun Laobaixing Medicine Chain Co., Ltd.
Owned by Chen Zhilin and Deng Shuihua Proposed to be Acquired by Jiangxi Ganxi Yifeng
Pharmacy Chain Co., Ltd.” (Jing Kun Ping Zi Zi [2023] No. 0154), “Value Consulting Report on
the Operating Asset Groups of 11 Retail Pharmacies Including Guangshui Yingshan Kangji
Pharmacy General Store Owned by Li Qionghua and Wang Haoran Proposed to be Acquired by
Hubei Yifeng Pharmacy Chain Co., Ltd.” (Jing Kun Ping Zi Zi [2023] No. 0083) and “Value
Consulting Report on the Operating Asset Groups of 29 Retail Pharmacies Owned by Yingtan
Jiujiu Medicine Chain Co., Ltd. Proposed to be Acquired by Jiangxi Yifeng Pharmacy Chain Co.,
Ltd.” (Jing Kun Ping Zi Zi [2023] No. 0163) issued by Beijing Kunyuan Zhicheng Asset
Appraisal Co., Ltd.
Contingent liabilities of acquirees assumed in business combination
None
Other remarks
None
(4) Gains/Losses on fair value remeasurement of equity held before the acquisition date
Whether there is a transaction that achieves corporate merger through multiple transactions step
by step and obtains control rights within the reporting period.
Applicable Not Applicable
(5) Combination costs or fair value of acquiree’s identifiable assets/liabilities failed to be
reasonably determined at the acquisition date or at the end of current period
Applicable Not Applicable
(6) Other remarks
Applicable Not Applicable
2. Business combination under common control
294 / 329
Applicable Not Applicable
3. Reverse acquisition
Applicable Not Applicable
4. Disposal of subsidiaries
One-time disposal leading to loss of control over a subsidiary
Applicable Not Applicable
Other remarks
Applicable Not Applicable
Disposal of subsidiaries in stages leading to loss of control in the current period
Applicable Not Applicable
Other remarks
Applicable Not Applicable
5. Changes in the consolidation scope due to other reasons
Remarks on changes in the consolidation scope due to other reasons
Applicable Not Applicable
1. Entities brought into the consolidation scope
Equity acquisition Equity acquisition Capital Holding proportion
Entities
method date contribution (%)
Hunan Yifeng Hengtai
Establishment February 2023 100.00% [Note 1]
Medicine Co., Ltd.
Shijiazhuang Yingqi
Establishment September 2023 70.00% [Note 2]
Internet Hospital Co., Ltd.
Wuxi Jiuzhou Traditional
Chinese Medicine Clinic Establishment August 2023 100.00% [Note 3]
Co., Ltd.
Changzhou Yifeng Chain
Establishment July 2023 100.00% [Note 4]
Pharmacy Co., Ltd.
Suqian Yifeng Chain
Establishment November 2023 100.00% [Note 5]
Pharmacy Co., Ltd.
Shanghai Yifeng
Longshuntang Traditional
Establishment January 2023 100.00% [Note 6]
Chinese Medicine Clinic
Co., Ltd.
Gao’an Yifeng Pharmacy
Establishment July 2023 100.00% [Note 7]
Chain Co., Ltd.
Yichun Yifeng Pharmacy
Establishment October 2023 60.00% [Note 8]
Chain Medical Co., Ltd.
Qinhuangdao Yifeng
Xinxing Pharmacy Chain Establishment June 2023 1,400,000.00 70.00% [Note 9]
Co., Ltd.
Baoding Xinxing
Pharmacy Chain Establishment June 2023 100.00% [Note 10]
Operating Co., Ltd.
Guangdong Yifeng
Xiangqin Pharmacy Establishment May 2023 100.00%
Medicine Chain Co., Ltd.
Guangzhou Yifeng Clinic
Establishment September 2023 100.00% [Note 11]
Co., Ltd.
295 / 329
Equity acquisition Equity acquisition Capital Holding proportion
Entities
method date contribution (%)
Hubei Yifeng Pharmacy
Establishment October 2023 100.00%
Chain Medical Co., Ltd.
Note 1: The Company holds 100% of equity of Hunan Yifeng Medicine, and Hunan Yifeng
Medicine holds 100% of the equity of Hunan Yifeng Hengtai Medicine Co., Ltd.
Note 2: The Company holds 91% of equity of Xinxing Pharmacy, Xinxing Pharmacy holds 70%
of equity of Shijiazhuang Yingqi Medical Service, and Shijiazhuang Yingqi Medical Service holds
70% of equity of Shijiazhuang Yingqi Internet Hospital Co., Ltd.
Note 3: The Company holds 100% of equity of Jiangsu Yifeng, Jiangsu Yifeng holds 51% of
equity of Jiuzhou Medicine, and Jiuzhou Medicine holds 100% of equity of Wuxi Jiuzhou
Traditional Chinese Medicine Clinic Co., Ltd.
Note 4: The Company holds 100% of equity of Jiangsu Yifeng, and Jiangsu Yifeng holds 100% of
equity of Changzhou Yifeng Chain Pharmacy Co., Ltd.
Note 5: The Company holds 100% of equity of Jiangsu Yifeng, and Jiangsu Yifeng holds 100% of
equity of Suqian Yifeng Chain Pharmacy Co., Ltd.
Note 6: The Company holds 93% of equity of Shanghai Yifeng, Shanghai Yifeng holds 51% of
equity of Longshuntang, and Longshuntang holds 100% of equity of Shanghai Yifeng
Longshuntang Traditional Chinese Medicine Clinic Co., Ltd.
Note 7: The Company holds 100% of equity of Jiangxi Yifeng, Jiangxi Yifeng holds 60% of equity
of Jiangxi Tianshun, Jiangxi Tianshun holds 100% of equity of Jiangxi Ganxi Yifeng Pharmacy
Chain Co., Ltd., and Jiangxi Ganxi Yifeng Pharmacy Chain Co., Ltd. holds 100% of equity of
Gao’an Yifeng Pharmacy Chain Co., Ltd.
Note 8: The Company holds 100% of equity of Jiangxi Yifeng, Jiangxi Yifeng holds 60% of equity
of Jiangxi Ganxi Yifeng Pharmacy Medicine Chain Co., Ltd., and Jiangxi Ganxi Yifeng Pharmacy
Medicine Chain Co., Ltd. holds 60% of equity of Yichun Yifeng Pharmacy Chain Medical Co.,
Ltd.
Note 9: The Company holds 91% of equity of Hebei Xinxing Pharmacy Chain Co., Ltd., Hebei
Xinxing Pharmacy Chain Co., Ltd. holds 70% of equity of Qinhuangdao Yifeng Xinxing
Pharmacy Chain Co., Ltd.
Note 10: The Company holds 91% of equity of Hebei Xinxing Pharmacy Chain Co., Ltd., Hebei
Xinxing Pharmacy Chain Co., Ltd. holds 100% of equity of Baoding Xinxing Pharmacy Chain
Operating Co., Ltd.
Note 11: The Company holds 100% of equity of Guangdong Yifeng Xiangqin Pharmacy Medicine
Chain Co., Ltd., Guangdong Yifeng Xiangqin Pharmacy Medicine Chain Co., Ltd. holds 100% of
296 / 329
equity of Guangzhou Yifeng Clinic Co., Ltd.
2. Entities excluded from the consolidation scope
Net profit from the
Equity disposal Equity disposal Disposal-date
Entities period beginning to the
method date net assets
disposal date
Xincheng Clinic of Rudong
Yifeng Bencao Pharmacy Chain Cancellation June 2023 -20,413.61
Co., Ltd.
Suzhou Zhongqiao Medicine
Cancellation August 2023 -901.98
Co., Ltd.
Suzhou Wujiang Beishe Dakang
Cancellation August 2023 -945.41
Pharmacy Co., Ltd.
Shanghai Yifeng Weimin
Cancellation May 2023 -43,574.52
Pharmacy Co., Ltd.
6. Other remarks
Applicable Not Applicable
V. Interest in other entities
1. Interest in subsidiaries
(1) Composition of the consolidation scope
Applicable Not Applicable
Main Registration Holding proportion (%)
Subsidiaries Place of Business Acquisition
operating capital((CN
registration nature Direct Indirect method
place 10,000))
Business
combination
Hunan Yifeng 100.00
Hunan 15,000.00 Changsha Business under
Medicine
common
control
Business
combination
Jiangsu Yifeng Jiangsu 15,000.00 Nanjing Business 100.00 under
common
control
Remarks on inconsistency between holding proportion and voting right proportion in subsidiaries
None
Basis for the control of an investee while holding its half or less than half voting rights, and the
non-control of an investee while holding its more than half voting rights
None
Basis for control of significant structured entities brought into the consolidation scope
None
Basis for determining an entity being acting as an agent or a principal
None
Other remarks
The Company has brought 123 subsidiaries including Xinxing Pharmacy, Jiangsu Yifeng
Pharmacy Chain Co., Ltd. (the “Jiangsu Yifeng”), Shanghai Yifeng Pharmacy Chain Co., Ltd. (the
297 / 329
“Shanghai Yifeng”), Jiangxi Yifeng, Hunan Yifeng Medicine Co., Ltd. (the “Hunan Yifeng
Medicine”), and Jiuzhitang Medicine into the consolidation scope.
(2) Significant not wholly-owned subsidiaries
Applicable Not Applicable
(3) Main financial information of significant not wholly-owned subsidiaries
Applicable Not Applicable
(4) Significant restriction on use of the group assets and liquidation of the group liabilities
Applicable Not Applicable
(5) Financial and other support provided for structured entities brought into the
consolidation scope
Applicable Not Applicable
Other remarks
Applicable Not Applicable
2. Transactions resulting in changes in subsidiaries’ equity but without losing control
Applicable Not Applicable
(1) Changes in subsidiaries’ equity
Applicable Not Applicable
Holding proportion Holding proportion
Subsidiaries Date of change
before change after change
Hebei Xinxing Pharmacy
September 2023 99.19% 91.00%
Chain Co., Ltd.
Pingjiang Yifeng May 2023 70.00% 80.00%
(2) Effect of transactions on non-controlling interest and equity attributable to parent
company
Applicable Not Applicable
Hebei Xinxing Pharmacy
Items Pingjiang Yifeng
Chain Co., Ltd.
Acquisition costs/Disposal
900,000.00 1,400,000.00
considerations
Cash 900,000.00 1,400,000.00
Total acquisition costs/ disposal
900,000.00 1,400,000.00
considerations
Less: Share in subsidiaries’ net assets
based on acquired/ disposed net assets -5,535,727.26 464,459.67
proportion
Balance 6,435,727.26 935,540.33
Including: Capital reserve adjusted 6,435,727.26 935,540.33
Other remarks
298 / 329
Applicable Not Applicable
3. Interest in joint ventures or associates
Applicable Not Applicable
(1). Significant joint ventures or associates
Applicable Not Applicable
(2). Main financial information of significant joint ventures
Applicable Not Applicable
(3). Main financial information of significant associates
Applicable Not Applicable
(4). Aggregated financial information of insignificant joint ventures and associates
Applicable Not Applicable
Closing balance/Current Opening balance/Preceding
Items
period cumulative period comparative
Joint ventures
Total carrying amount of investments 5,565,690.31 5,249,115.35
Proportionate shares in the following
items
Net profit 316,574.96 -11,413.00
Other comprehensive income
Total comprehensive income 316,574.96 -11,413.00
Other remarks
None
(5). Significant restrictions on remittance of fund from joint ventures or associates to the Company
Applicable Not Applicable
(6). Excess losses incurred by joint ventures or associates
Applicable Not Applicable
(7). Unrecognized commitments related to investments in joint ventures
Applicable Not Applicable
(8). Contingent liabilities related to investments in joint ventures or associates
Applicable Not Applicable
4. Significant joint operations
Applicable Not Applicable
5. Interest in unconsolidated structured entities
Remarks on unconsolidated structured entities
299 / 329
Applicable Not Applicable
6. Others
Applicable Not Applicable
XI. Government grants
1. Government grants recognized based on receivables
Applicable Not Applicable
Reasons for not receiving government grants receivable at the expected time point
Applicable Not Applicable
2. Liabilities related to government grants
Applicable Not Applicable
Amount included
Amount included
Items Opening balance Increase into non-operating
into other income
revenue
Deferred income 49,893,077.47 401,359.91
Deferred income 4,773,202.76 191,566.68
Subtotal 54,666,280.23 401,359.91 191,566.68
(Continued)
Amount Amount Related to
Other
Items offsetting offsetting Closing balance assets/Related to
changes
costs assets income
Deferred income 49,491,717.56 Related to assets
Deferred income 4,581,636.08 Related to assets
Subtotal 54,073,353.64
3. Government grants included into profit or loss
Applicable Not Applicable
Items Current period cumulative Preceding period comparative
Related to income 43,933,681.43 32,290,672.58
Related to assets 401,359.91 417,913.24
Other 595,167.68 111,747.23
Total 44,930,209.02 32,820,333.05
Other remarks
None
XII. Risks related to financial instruments
1. Financial instruments risks
Applicable Not Applicable
In risk management, the Company aims to seek the appropriate balance between the risks and
300 / 329
benefits from its use of financial instruments and to mitigate the adverse effects that the risks of
financial instruments have on the Company’s financial performance, so as to maximize the profits
of shareholders and other equity investors. Based on such risk management objectives, the
Company’s risk management policies are established to identify and analyze the risks faced by the
Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits
on a timely and reliable basis.
The Company has exposure to the following risks from its use of financial instruments, which
mainly include: credit risk, liquidity risk, and market risk. The Management has deliberated and
approved policies concerning such risks, and details are:
(I) Credit risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the
other party by failing to discharge an obligation.
1. Credit risk management practice
(1) Evaluation method of credit risk
At each balance sheet date, the Company assesses whether the credit risk on a financial instrument
has increased significantly since initial recognition. When assessing whether the credit risk has
increased significantly since initial recognition, the Company takes into account reasonable and
supportable information, which is available without undue cost or effort, including qualitative and
quantitative analysis based on historical data, external credit risk rating, and forward-looking
information. The Company determines the changes in default risk of financial instruments during
the estimated lifetime through comparison of the default risk at the balance sheet date and the
initial recognition date, on an individual basis or a collective basis.
The Company considers the credit risk on a financial instrument has increased significantly when
one or more of the following qualitative and quantitative standards are met:
1) Quantitative standard mainly relates to the scenario in which, at the balance sheet date, the
probability of default in the remaining lifetime has risen by more than a certain percentage
compared with the initial recognition;
2) Qualitative standard mainly relates to significant adverse changes in the debtor’s operation or
financial position, present or expected changes in technology, market, economy or legal
environment that will have significant adverse impact on the debtor’s repayment ability;
(2) Definition of default and credit-impaired assets
A financial instrument is defined as defaulted when one or more following events have occurred,
of which the standard is consistent with that for credit-impairment:
1) significant financial difficulty of the debtor;
2) a breach of binding clause of contract;
301 / 329
3) it is very likely that the debtor will enter bankruptcy or other financial reorganization;
4) the creditor of the debtor, for economic or contractual reasons relating to the debtor’s financial
difficulty, having granted to the debtor a concession(s) that the creditor would not otherwise
consider.
2. Measurement of expected credit losses
The key factors in the measurement of expected credit loss include the probability of default, loss
given default, and exposure to default risk. The Company develops a model of the probability of
default, loss given default, and exposure to default risk on the basis of quantitative analysis of
historical data (e.g. counterparty rating, guarantee measures and collateral type, payment method,
etc.) and forward-looking information.
3. Please refer to section V (I) 3 and 6 of notes to the financial statements for details on the
reconciliation table of opening balance and closing balance of provision for losses of financial
instrument.
4. Exposure to credit risk and concentration of credit risk
The Company’s credit risk is primarily attributable to cash and bank balances and receivables. In
order to control such risks, the Company has taken the following measures:
(1) Cash and bank balances
The Company deposits its bank balances and other cash and bank balances in financial institutions
with relatively high credit levels, hence, its credit risk is relatively low.
(2) Receivables
The Company performs credit assessment on customers using credit settlement on a regular basis.
The Company selects credible and well-reputed customers based on credit assessment result, and
conducts ongoing monitoring on balance of receivables, to avoid significant risks in bad debts.
As the Company’s credit risks fall into several business partners and customers, as of December 31
2023, 26.44% (December 31, 2022: 24.68%) of the total accounts receivable was due from the five
largest customers of the Company. The Company has no significant central credit risk.
The maximum amount of exposure to credit risk of the Company is the carrying amount of each
financial asset at the balance sheet.
(II) Liquidity risk
Liquidity risk is the risk that the Company may encounter deficiency of funds in meeting
obligations associated with cash or other financial assets settlement, which is possibly attributable
to failure in selling financial assets at fair value on a timely basis, or failure in collecting liabilities
from counterparties of contracts, or early redemption of debts, or failure in achieving estimated
cash flows.
302 / 329
In order to control such risk, the Company comprehensively utilizes financing tools such as notes
settlement, bank borrowings, etc. and adopts long-term and short-term financing methods to
optimize financing structures, and finally maintains a balance between financing sustainability and
flexibility. The Company has obtained credit limit from several commercial banks to meet
working capital requirements and expenditures.
Financial liabilities classified based on remaining time period till maturity
Closing balance
Items
Contract amount
Carrying amount Within 1 year 1-3 years Over 3 years
not yet discounted
Bank borrowings
(including due within 237,101,501.98 258,452,597.56 112,971,855.83 80,864,754.23 64,615,987.50
one year)
Notes payable 6,215,388,292.66 6,215,388,292.66 6,215,388,292.66
Accounts payable 1,955,564,568.05 1,955,564,568.05 1,955,564,568.05
Other payable 810,446,678.28 810,446,678.28 810,446,678.28
Lease liabilities
(including due within 3,560,492,755.24 3,785,968,727.53 1,490,098,669.17 2,248,097,941.31 47,772,117.05
one year)
Subtotal 12,778,993,796.21 13,025,820,864.08 10,584,470,063.99 2,328,962,695.54 112,388,104.55
(Continued)
December 31, 2022
Items
Contract amount
Carrying amount Within 1 year 1-3 years Over 3 years
not yet discounted
Bank borrowings
(including due within 321,591,316.34 356,980,381.47 106,731,200.12 104,309,543.98 145,939,637.37
one year)
Notes payable 5,082,931,546.02 5,082,931,546.02 5,082,931,546.02
Accounts payable 1,677,740,647.28 1,677,740,647.28 1,677,740,647.28
Other payable 760,185,299.36 760,185,299.36 760,185,299.36
Lease liabilities
(including due within 3,135,952,983.22 3,395,085,831.51 1,302,080,159.57 1,872,368,528.95 220,637,142.99
one year)
Subtotal 10,978,401,792.22 11,272,923,705.64 8,929,668,852.35 1,976,678,072.93 366,576,780.36
(III) Market risk
Market risk is the risk that the Company may encounter fluctuation in fair value or future cash
flows of financial instruments due to changes in market price. Market risk mainly includes interest
risk and foreign currency risk.
1. Interest risk
Interest risk is the risk that an enterprise may encounter fluctuation in fair value or future cash
flows of financial instruments due to changes in market interest. The Company’s fair value
interest risks arise from fixed-rate financial instruments, while the cash flow interest risks arise
from floating-rate financial instruments. The Company determines the proportion of fixed-rate
financial instruments and floating-rate financial instruments based on the market environment, and
maintains a proper financial instruments portfolio through regular review and monitoring.
303 / 329
2. Foreign currency risk
Foreign currency risk is the risk arising from changes in fair value or future cash flows of financial
instrument resulted from changes in exchange rate. The Company is mainly operated in mainland
China, whose main activities are denominated in RMB, hence, the Company bears insignificant
market risk arising from foreign exchange changes.
2. Hedging businesses
(1) Risk management of hedging businesses
Applicable Not Applicable
Other remarks
Applicable Not Applicable
(2) Conducting eligible hedging businesses and applying hedge accounting
Applicable Not Applicable
Other remarks
Applicable Not Applicable
(3) Reasons and effects of not applying hedge accounting
Applicable Not Applicable
Other remarks
Applicable Not Applicable
3. Financial assets transfer
(1) Basics condition of financial assets transfer
Applicable Not Applicable
(2) Financial assets derecognized due to transfer
Applicable Not Applicable
(3) Assets and liabilities arising from transferred but still involved financial assets
Applicable Not Applicable
Other remarks
Applicable Not Applicable
XIII. Fair value disclosure
1. Details of fair value of assets and liabilities at fair value at the balance sheet date
Applicable Not Applicable
Fair value as at the balance sheet date
Items Level 2 fair
Level 1 fair value Level 3 fair value
value Total
measurement measurement
measurement
304 / 329
Fair value as at the balance sheet date
Items Level 2 fair
Level 1 fair value Level 3 fair value
value Total
measurement measurement
measurement
Recurring fair value measurement
1. Held-for-trading financial
assets and other non-current 1,631,730,887.94 1,631,730,887.94
financial assets
Financial assets classified as at
1,631,730,887.94 1,631,730,887.94
fair value through profit or loss
Wealth management
1,630,720,887.94 1,630,720,887.94
products
Equity instrument
1,010,000.00 1,010,000.00
investments
2. Receivables financing 11,889,888.58 11,889,888.58
3. Other equity instrument
432,225,200.00 432,225,200.00
investments
Total assets at recurring fair value
432,225,200.00 1,643,620,776.52 2,075,845,976.52
measurement
2. Basis for determining level 1 fair value at recurring and non-recurring fair measurement
Applicable Not Applicable
Level 1 fair value at recurring and non-recurring fair measurement is determined based on the
closing price of the active market such as exchanges at the balance sheet date.
3. Qualitative and quantitative information of valuation technique(s) and key input(s) for
level 2 fair value at recurring and non-recurring fair value measurement
Applicable Not Applicable
4. Qualitative and quantitative information of valuation technique(s) and key input(s) for
level 3 fair value at recurring and non-recurring fair measurement
Applicable Not Applicable
As there is no significant change in the operating environment, operating situation and financial
position of investees, the Company takes investment cost as the reasonable estimate of the fair
value of equity instrument investments. The fair value of other equity instrument investments is
measured based on the public market quotation.
The Company regards capital-guaranteed floating-income wealth management products as
financial assets measured at fair value through profit or loss, and determines the fair value based
on principal plus the market value of expected earnings as of the balance sheet date using expected
cash flow model.
Due to the fact that the term of bank acceptance is relative short and the acceptor of bank
acceptance is commercial bank, which is of high credit level, there is very little possibility of
failure in recoverability when it is due. Based on this fact, the Company takes par value of bank
acceptances as the reasonable estimate of their fair value.
5. Items for level 3 recurring fair value measurement, a reconciliation from the opening
balances to the closing balances, and sensitive analysis on unobservable inputs
305 / 329
Applicable Not Applicable
6. Items at recurring fair value measurement with inter-level transfer, and reasons and
policies for determining inter-level transfer time
Applicable Not Applicable
7. Changes in valuation techniques in the current period and reasons for changes
Applicable Not Applicable
8. Fair value of financial assets and liabilities not at fair value
Applicable Not Applicable
9. Other
Applicable Not Applicable
XIV. Related party relationships and transactions
1. Parent company
Applicable Not Applicable
Registered Holding proportion Voting right
Place of Business
Parent company capital(CN over the Company proportion over the
registration nature
10,000) (%) Company (%)
Ningbo Meishan
Bonded Port Houxin
Venture Capital
Ningbo Investment 66,330.7289 21.65 21.65
Investment Partnership
Enterprise (Limited
Partnership)
Remarks on the parent company
None
The Company’s ultimate controlling party is Gao Yi.
Other remarks
None
2. Subsidiaries
Please refer to section X of notes to the financial statements for details on the Company’s
subsidiaries.
Applicable Not Applicable
3. Joint ventures and associates of the Company
Applicable Not Applicable
Details of other joint ventures or associates carrying out related party transactions with the
Company in the current period or in preceding period but with balance in the current period are as
follows:
Applicable Not Applicable
306 / 329
Other remarks
Applicable Not Applicable
4. Other related parties of the Company
Applicable Not Applicable
Related parties Relationships with the Company
Holding 49% of equity of
Jiuzhitang Co., Ltd. Jiuzhitang Medicine, which is a
subsidiary of the Company
Jiuzhitang Pharmaceutical
Subsidiary of Jiuzhitang Co., Ltd.
Trading Co., Ltd.
Hunan Siqi Biopharmaceutical
Subsidiary of Jiuzhitang Co., Ltd.
Co., Ltd.
Chengdu Jiuzhitang Jinding
Subsidiary of Jiuzhitang Co., Ltd.
Pharmaceutical Co., Ltd.
Hainan Jiuzhitang
Subsidiary of Jiuzhitang Co., Ltd.
Pharmaceutical Co., Ltd.
Mudanjiang Youbo
Subsidiary of Jiuzhitang Co., Ltd.
Pharmaceutical Co., Ltd.
Jiuzhitang (Hunan) Health
Subsidiary of Jiuzhitang Co., Ltd.
Management Co., Ltd.
Taizhou Baixingren Joint venture
Other remarks
None
5. Related party transactions
(1) Purchase and sale of goods, rendering and receiving of services
Purchase of goods and receiving of services
Applicable Not Applicable
Current period Preceding period
Related parties Content of transactions
cumulative comparative
Jiuzhitang Co., Ltd. Purchase of medicine 78,898,456.73 36,266,882.38
Purchase of utilities,
Jiuzhitang Co., Ltd. 668,776.99 716,508.06
etc.
Jiuzhitang Pharmaceutical
Purchase of medicine 27,125,278.46 11,284,071.60
Trading Co., Ltd.
Hunan Siqi
Purchase of medicine 1,406,627.30 2,052,604.92
Biopharmaceutical Co., Ltd.
Chengdu Jiuzhitang Jinding
Purchase of medicine 4,433,047.85 2,145,219.23
Pharmaceutical Co., Ltd.
Hainan Jiuzhitang
Purchase of medicine 695,787.60 845,414.16
Pharmaceutical Co., Ltd.
Jiuzhitang (Hunan) Health
Purchase of medicine 13,187.96
Management Co., Ltd.
307 / 329
Current period Preceding period
Related parties Content of transactions
cumulative comparative
Mudanjiang Youbo
Purchase of medicine 529,110.12
Pharmaceutical Co., Ltd.
Note: The proposal of "Confirmation of the ordinary course of related party transactions in 2022
and Forecast of the ordinary course of related party transactions in 2023" were approved by the
24th meeting of the forth session of the Board of Directors dated April 26, 2023. It was estimated
that the total procurement of goods from the related party, Jiuzhitang Co., Ltd. and its subsidiaries,
in 2023 will not exceed 150 million yuan. The actual amount occurred in 2023 did not exceed the
approved transaction quota.
Sale of goods and rendering of services
Applicable Not Applicable
Content of Current period Preceding period
Related parties
transactions cumulative comparative
Jiuzhitang Pharmaceutical
Sale of medicine 86,894.59 720,613.43
Trading Co., Ltd.
Jiuzhitang (Hunan) Health
Sale of medicine 19,093,516.03 10,870,296.16
Management Co., Ltd.
Remarks on purchase and sale of goods, rendering and receiving of services
Applicable Not Applicable
The above preceding period comparative of related party transactions of purchase and sale
between the Company, Jiuzhitang Co., Ltd., and its subsidiaries was the statistical data from June
to December 2022.
(2) Related party trust/contracting and consignation/outsourcing
The Company as the trustee or contractor
Applicable Not Applicable
Remarks on related party trust/contracting
Applicable Not Applicable
The Company as the trustor or contractee
Applicable Not Applicable
Remarks on related party consignation/outsourcing
Applicable Not Applicable
(3). Related party leases
The Company as the lessor
Applicable Not Applicable
The Company as the lessee
Applicable Not Applicable
308 / 329
Expenses for short-term leases and
leases of low-value assets with Variable lease payments not
simplified approach and variable included in the measurement of
Types of lease payments not included in the lease liabilities
Lessors assets measurement of lease liabilities
leased
Preceding Preceding
Current period Current period
period period
cumulative cumulative
comparative comparative
Buildings
Jiuzhitang
and
Co., Ltd.
structures
(Continued)
Increased principal of Interest expenses
Lease expenses paid
lease liabilities recognized
Types of
Lessors Preceding Current Preceding Current Preceding
assets leased Current
period period period period period
period
comparativ cumulati comparati cumulativ comparativ
cumulative
e ve ve e e
Jiuzhita
Buildings and
ng Co., 5,076,256.65 726,000.00 14,743.52 7,831.36 3,252,735.16
structures
Ltd.
Remarks on related party leases
Applicable Not Applicable
None
(4). Related party trust
The Company and its subsidiaries as guarantors
Applicable Not Applicable
The Company as the trustee
Applicable Not Applicable
Amount of Whether the
Commencement
Guarantors Financing banks borrowings Maturity date guarantee is
date
[Note] mature
China Merchants Bank Co.,
Gao Yi Ltd. Changsha Shaoshan 122,858,186.80 8/10/2018 8/10/2025 No
Road Sub-branch
309 / 329
Amount of Whether the
Commencement
Guarantors Financing banks borrowings Maturity date guarantee is
date
[Note] mature
China Merchants Bank Co.,
Gao Yi Ltd. Changsha Shaoshan 37,908,000.00 12/30/2021 12/30/2024 No
Road Sub-branch
China Construction Bank
Gao Yi Corporation Changde 947,227,331.62 8/1/2022 8/1/2029 No
Dingcheng Sub-branch
Remarks on related party trust
Applicable Not Applicable
The borrowings disclosed refer to the balance of merger and acquisition loan borrowings and the
amount of bank acceptance that have been issued but not yet matured before the new credit
contract takes effect.
(5). Call loans between related parties
Applicable Not Applicable
(6). Assets transfer and debt restructuring of the related parties
Applicable Not Applicable
(7). Key management’s emoluments
Applicable Not Applicable
Unit: Ten Thousand Yuan
Items Current period cumulative Preceding period comparative
Key management’s emoluments 2,288.02 1,984.27
(8). Other related party transactions
Applicable Not Applicable
None
6. Balances due to or from related parties
(1). Balances due from related parties
Applicable Not Applicable
Closing balance December 31, 2022
Items Related parties Provision for Provision for
Book balance Book balance
bad debts bad debts
Jiuzhitang (Hunan)
Accounts
Health Management Co., 711,768.78 35,588.44
receivable
Ltd.
Accounts Jiuzhitang Pharmaceutical
144,343.95 7,217.20
receivable Trading Co., Ltd.
Subtotal 711,768.78 35,588.44 144,343.95 7,217.20
(2). Balances due to related parties
Applicable Not Applicable
310 / 329
Items Related parties Closing balance December 31, 2022
Accounts
Jiuzhitang Co., Ltd. 3,780,845.69 6,132,854.56
payable
Accounts Jiuzhitang Pharmaceutical
604,238.60 5,715,711.24
payable Trading Co., Ltd.
Accounts Hunan Siqi Biopharmaceutical
571,892.00 1,136,507.89
payable Co., Ltd.
Accounts Chengdu Jiuzhitang Jinding
1,518,135.55 1,446,954.52
payable Pharmaceutical Co., Ltd.
Accounts Hainan Jiuzhitang
214,032.00 285,708.43
payable Pharmaceutical Co., Ltd.
Accounts Jiuzhitang (Hunan) Health
7,465.20
payable Management Co., Ltd.
Accounts Mudanjiang Youbo
576,730.00
payable Pharmaceutical Co., Ltd.
Subtotal 6,696,609.04 15,294,466.64
Other
Jiuzhitang Co., Ltd. 149,367.56 1,200.62
payables
Other
Taizhou Baixingren 10,797,825.21 11,622,268.64
payables
Subtotal 10,947,192.77 11,623,469.26
(3). Others
Applicable Not Applicable
7. Related party commitments
Applicable Not Applicable
8. Others
Applicable Not Applicable
XV. Share-based payment
1. Equity instruments
Applicable Not Applicable
Quantity and amount of equity instruments
Granted in the current Vested in the Expired in the current
Objects Unlocked in the current period
period current period period
Quantity Amount Quantity Amount Quantity Amount Quantity Amount
Management
390,015.00 7,390,791.00 2,062,480.00 36,844,732.00 197,120.00 3,521,408.00
personnel
Total 390,015.00 7,390,791.00 2,062,480.00 36,844,732.00 197,120.00 3,521,408.00
Share options and other equity instruments outstanding at the balance sheet date
Applicable Not Applicable
Other equity instruments
Share options outstanding
outstanding
Objects
Range of Remaining Range of Remaining
exercise prices contractual life exercise prices contractual life
Management personnel 17.58 8 months
311 / 329
Phase I: 7 months
Management personnel 18.95 Phase II: 19
months
Other remarks
(1) Details
On September 16, 2022, “Proposal on the First Grant of Restricted Shares to Incentive Objects of
the 2022 Restricted Share Incentive Plan” was deliberated and approved by the 18th meeting of the
fourth session of the Board of Directors and the 16th meeting of the fourth session of the Board of
Supervisors. It was confirmed that the conditions for the first grant had been met, and it was
decided to grant 3,132,000 restricted shares to 245 incentive objects at a price of 25.01 yuan per
share, with the grant date on September 16, 2022. During the process of capital verification upon
payment, the actual number of incentive objects granted by the Company changed from 245 to
241, and the actual number of restricted shares granted changed from 3,132,000 to 3,095,200
shares.
On August 29, 2023, “Proposal on Granting Reserved Equity to the Incentive Objects of
Restricted Shares Incentive Plan of 2022” was deliberated and approved by the 31st meeting of the
fourth session of the Board of Directors and the 26th meeting of the fourth session of the Board of
Supervisors. It was confirmed that the conditions for granting reserved equity under the incentive
plan had been met, and it was decided to grant 402,165 restricted shares to 42 incentive objects at
a price of 18.95 yuan per share, with the grant date on August 30, 2023.
(2) Arrangement of the restricted shares sale restriction period
The restricted shares sale restriction period for the restricted shares granted for the first time under
this incentive plan is 12 months and 24 months from the date of completion of the registration for
the first granted restricted shares. The unlocking period for the restricted shares granted for the
first time by the Company and the timing for each unlocking period are as shown in the following
table:
Proportion of the number of
Arrangements for restricted shares that can be
unlocking period Timing for unlocking period
unlocked to the total number of
restricted shares
From the first trading day after 12
months from the date of completion
The first unlocking of the first grant to the last trading 50%
period day within 24 months from the date
of completion of the first grant.
From the first trading day after 24
months from the date of completion
The second unlocking
of the first grant to the last trading 50%
period
day within 36 months from the date
of completion of the first grant.
The restricted shares sale restriction period for the reserved granted restricted shares under this
312 / 329
incentive plan is 12 months and 24 months from the date of completion of the registration for the
reserved granted restricted shares. The unlocking period for the restricted shares reserved granted
by the Company and the timing for each unlocking period are as shown in the following table:
Proportion of the number of
Arrangements for restricted shares that can be
Timing for unlocking period
unlocking period unlocked to the total number of
restricted shares
From the first trading day after 12
months from the date of completion
The first unlocking of the reserved grant to the last
50%
period trading day within 24 months from
the date of completion of the
reserved grant.
From the first trading day after 24
months from the date of completion
The second unlocking of the reserved grant to the last
50%
period trading day within 36 months from
the date of completion of the
reserved grant.
(3) Unlocking conditions
1) Requirements for performance evaluation
The restricted shares first granted under the incentive plan have an unlocking evaluation period of
two fiscal years from 2022 to 2023, with an evaluation conducted for each fiscal year. The
requirement for unlocking of restricted shares is the achievement of performance evaluation
targets.
The performance evaluation targets for each fiscal year of the restricted shares first granted are as
shown in the following table:
Unlocking periods Requirements for performance evaluation
Based on the net profit of 2021, the net profit of the Company in
The first unlocking period
2022 increases by no less than 20% compared to 2021.
The second unlocking Based on the net profit of 2021, the net profit of the Company in
period 2023 increases by no less than 45% compared to 2021.
The restricted shares reserved granted under the incentive plan have an unlocking evaluation
period of two fiscal years from 2023 to 2024, with an evaluation conducted for each fiscal year.
The requirement for unlocking of restricted shares is the achievement of performance evaluation
targets.
The performance evaluation targets for each fiscal year of the restricted shares reserved granted
are as shown in the following table:
Unlocking periods Requirements for performance evaluation
Based on the net profit of 2021, the net profit of the Company in
The first unlocking period
2023 increases by no less than 45% compared to 2021.
The second unlocking Based on the net profit of 2021, the net profit of the Company in
period 2024 increases by no less than 70% compared to 2021.
313 / 329
The aforementioned “net profit” refers to the net profit attributable to the owners of the parent
company. If the Company fails to meet the above performance evaluation targets, all restricted
shares of incentive objects that can be unlocked in the corresponding year of evaluation shall not
be unlocked, and shall be repurchased and cancelled by the Company. The repurchase price shall
be the grant price plus the interest on bank deposits for the corresponding period.
2) Requirements for individual performance evaluation
The Company conducts a comprehensive evaluation of the individual annual performance
categories for incentive objects, and the comprehensive evaluation results are shown in the
following table.
Evaluation results Standard Standard coefficient
Satisfactory Annual evaluation completion rate≥80% 1.0
Unsatisfactory Annual evaluation completion rate<80% 0
If the individual performance evaluation meets the unlocking conditions, the incentive object may
apply to unlock the restricted shares eligible for unlocking during that period in accordance with
the relevant provisions of the incentive plan based on the evaluation results. If the individual
performance evaluation fails to meet the unlocking conditions, the portion of restricted shares
eligible for unlocking in the current period for that incentive object shall be cancelled, and shall be
repurchased and cancelled by the Company at the grant price. If the conditions for obtaining and
exercising rights and interests granted to incentive objects are not met, the relevant rights and
interests shall not be deferred to the next period.
2. Equity-settled share-based payment
Applicable Not Applicable
Balance of the closing price on the
Determination method for grant-date fair value of
grant date and the exercise price of
equity instruments
the restricted shares
Based on the equity instruments
corresponding to the in-service
Determination method for the number of equity
incentive objects, the Company's
instruments expected to vest
performance, and individual
evaluation results.
Reasons for significant difference between the estimates
N/A
in the current period and preceding period
Capital reserve accumulated due to equity-settled
59,400,016.30
share-based payment
Other remarks
None
3. Cash-settled share-based payment
Applicable Not Applicable
314 / 329
4. Total share-based payments recognized in the current period
Applicable Not Applicable
Equity-settled share-based Cash-settled share-based
Objects
payment payment
Management personnel 41,169,112.30
Subtotal 41,169,112.30
Other remarks
None
5. Modifications and cancellations of share-based payment
Applicable Not Applicable
6. Others
Applicable Not Applicable
XVI. Commitments and contingencies
1. Significant commitments
Applicable Not Applicable
None
2. Significant contingencies
(1). Significant contingencies
Applicable Not Applicable
(2). Remarks on insignificant contingencies not been issued
Applicable Not Applicable
3. Others
Applicable Not Applicable
XVII. Events after the balance sheet date
1. Significant non-adjusting events
Applicable Not Applicable
2. Profit distribution after the balance sheet date
Applicable Not Applicable
Profit or dividend planned to be distributed 505,289,898.50
Profit or dividend approved to be distributed
Pursuant to the Proposal of Profit Distribution Plan of 2023 deliberated and approved by the 24th
meeting of the fourth session of the Board of Directors, based on the total share capital at the
equity registration date, the Company distributed cash dividend of 0.5 yuan (tax inclusive) per
315 / 329
share to all shareholders, and increased 0.2 share per share to all shareholders by converting
capital reserve, without issuing bonus shares.
If the company's total share capital changes due to repurchase and cancellation of equity incentive
shares between the date of approval of this proposal and the date of equity registration for the
implementation of equity distribution, the company will maintain the constant proportion of
distribution (additional issuance) per share and adjust the total amount of distribution (additional
issuance) accordingly.
This plan still should be deliberated and approved by the shareholders’ meeting.
3. Sales return
Applicable Not Applicable
4. Other remarks
Applicable Not Applicable
XVIII. Other significant events
1. Corrections of prior period errors
(1) Retroactive restatement method
Applicable Not Applicable
(2) Prospective application method
Applicable Not Applicable
2. Debt restructuring
Applicable Not Applicable
3. Assets exchange
(1). Non-cash assets exchange
Applicable Not Applicable
(2). Other assets exchange
Applicable Not Applicable
4. Annuity plan
Applicable Not Applicable
5. Discontinued operations
Applicable Not Applicable
6. Segment information
(1). Identification basis for reportable segments
Applicable Not Applicable
Reportable segments are identified according to the structure of the Company’s internal
316 / 329
organization, management requirements and internal reporting system, and based on industry
segments. Assessments are respectively performed on the operation performance of retail business
and wholesale business. Assets and liabilities shared by different segments are allocated among
segments proportionate to their respective sizes.
(2). Financial information of reportable segments
Applicable Not Applicable
Inter-segment
Items Retail business Wholesale business Total
offsetting
Operating revenue 20,185,078,131.34 5,254,841,654.57 -3,362,357,287.25 22,077,562,498.66
Operating cost 12,193,594,911.77 4,833,697,688.32 -3,118,391,219.55 13,908,901,380.54
Total assets 26,289,889,392.29 11,951,215,541.58 -14,104,565,739.23 24,136,539,194.64
Total liabilities 17,828,776,001.79 8,730,272,924.58 -12,869,597,393.57 13,689,451,532.80
(3). If the company does not have a reporting segment, or cannot disclose the total assets and
liabilities of each reporting segment, the reasons shall be stated
Applicable Not Applicable
(4). Other remarks
Applicable Not Applicable
7. Other significant transactions and events that may be influential for investors in
decision-making
Applicable Not Applicable
8. Others
Applicable Not Applicable
IXX. Notes to items of parent company financial statements
1. Accounts receivable
(1) Age analysis
Applicable Not Applicable
Ages Closing balance Opening balance
Within 1 year 492,921,964.50 347,746,087.10
1-2 years 220,567.54 122,332.98
2-3 years 8,613.29 3,250.00
3-4 years 2,717.49
Total 493,153,862.82 347,871,670.08
(2) Provision for bad debts
Applicable Not Applicable
Categories Closing balance
317 / 329
Book balance Provision for bad debts
Provision Carrying amount
Amount % to total Amount
proportion (%)
Receivables with provision
100.00 5,812,230.14 1.18 487,341,632.68
made on a collective basis 493,153,862.82
Total 493,153,862.82 100.00 5,812,230.14 1.18 487,341,632.68
(Continued)
December 31, 2022
Categories Book balance Provision for bad debts
Provision Carrying amount
Amount % to total Amount
proportion (%)
Receivables with provision
347,871,670.08 100.00 3,232,236.49 0.93 344,639,433.59
made on a collective basis
Total 347,871,670.08 100.00 3,232,236.49 0.93 344,639,433.59
Accounts receivable with provision made on an individual basis
Applicable Not Applicable
Accounts receivable with provision for bad debts made on a collective basis
Applicable Not Applicable
Closing balance
Items Provision for bad Provision proportion
Book balance
debts (%)
Portfolio grouped
Medical insurance 377,169,254.88
payments
Portfolio grouped with
115,984,607.94 5,812,230.14 5.01
ages
Subtotal 493,153,862.82 5,812,230.14 1.18
Remarks on accounts receivable with provision for bad debts made on a collective basis
Applicable Not Applicable
Provision for bad debts withdrawn based on the general model of expected credit losses
Applicable Not Applicable
Division basis for stages and proportions of provision for bad debts
None
Reasons for significant changes in carrying amount of accounts receivable in the current period
Applicable Not Applicable
(3) Changes in provision for bad debts
Applicable Not Applicable
Increase Decrease
Opening Closing
Items
balance balance
Accrual Recovery Others Reversal Write-off Others
318 / 329
Increase Decrease
Opening Closing
Items
balance balance
Accrual Recovery Others Reversal Write-off Others
Receivables with
provision made on a 3,232,236.49 2,579,993.65 5,812,230.14
collective basis
Total 3,232,236.49 2,579,993.65 5,812,230.14
Significant provisions collected or reversed
Applicable Not Applicable
Other remarks
None
(4) Accounts receivable written off
Applicable Not Applicable
Significant accounts receivable written off in the current period
Applicable Not Applicable
Remarks on accounts receivable written off
Applicable Not Applicable
(5) Details of the top 5 debtors with largest balances
Applicable Not Applicable
Proportion to the total
Provision for bad
Debtors Book balance balance of accounts
debts
receivable (%)
Changsha Medical Security
113,711,988.43 23.06
Affairs Center
Pukang (Hangzhou) Health
39,387,713.10 7.99
Technology Co., Ltd.
Hengyang Medical Security
20,540,716.47 4.17
Bureau
Youjia Jianbao Health
17,046,344.87 3.46
Technology (Beijing) Co., Ltd.
Zhuzhou Medical Security
14,034,736.26 2.85
Affairs Center
Subtotal 204,721,499.13 41.53
Other remarks
None
Others
Applicable Not Applicable
2. Other receivables
Applicable Not Applicable
Items Closing balance December 31, 2022
319 / 329
Items Closing balance December 31, 2022
Interest receivable 855,724.12
Dividend receivable 581,621,336.22 68,563,059.65
Other receivables 794,138,361.20 747,795,719.34
Total 1,376,615,421.54 816,358,778.99
Other remarks
Applicable Not Applicable
Interest receivable
(1) Classification of interest receivables
Applicable Not Applicable
Items Closing balance December 31, 2022
Interest receivable to Subsidiaries 855,724.12
Subtotal 855,724.12
(2) Significant overdue interest
Applicable Not Applicable
(3) Provision for bad debts
Applicable Not Applicable
Interest receivable with provision made on an individual basis
Applicable Not Applicable
Remark of interest receivable with provision made on an individual basis
Applicable Not Applicable
Interest receivable with provision made on a collective basis
Applicable Not Applicable
(4). Provision for bad debts withdrawn based on the general model of expected credit losses
Applicable Not Applicable
Division basis for stages and proportions of provision for bad debts
None
Reasons for significant changes in carrying amount of interest receivable in the current period
Applicable Not Applicable
Determination basis for provision for impairment made in the current period and whether credit
risk has increased significantly
Applicable Not Applicable
(5) Changes in provision for bad debts
320 / 329
Applicable Not Applicable
Significant interest receivable written off in the current period
Applicable Not Applicable
Other remarks
None
(6) Interest receivable actually written off
Applicable Not Applicable
Significant interest receivable written off in the current period
Applicable Not Applicable
Remarks on interest receivable written off
Applicable Not Applicable
Other remarks
None
Dividend receivable
(1) Dividend receivable
Applicable Not Applicable
Items Closing balance December 31, 2022
Dividend receivable to Subsidiaries 581,621,336.22 68,563,059.65
Subtotal 581,621,336.22 68,563,059.65
(2) Significant balance with age over one year
Applicable Not Applicable
(3) Provision for bad debts
Applicable Not Applicable
Dividend receivable with provision made on an individual basis
Applicable Not Applicable
Remark of dividend receivable with provision made on an individual basis
Applicable Not Applicable
Dividend receivable with provision made on a collective basis
Applicable Not Applicable
(4) Provision for bad debts withdrawn based on the general model of expected credit losses
Applicable Not Applicable
Division basis for stages and proportions of provision for bad debts
321 / 329
None
Reasons for significant changes in carrying amount of dividend receivable in the current period
Applicable Not Applicable
(5) Changes in provision for bad debts
Applicable Not Applicable
Significant provisions collected or reversed
Applicable Not Applicable
Other remarks
None
(6) Other receivables actually written off in the current period
Applicable Not Applicable
Significant other receivables written off in the current period
Applicable Not Applicable
Remarks on other receivables written off
Applicable Not Applicable
Other remarks
Applicable Not Applicable
Other receivables
(1) Age analysis
Book balance on Decemb
Ages Closing book balance
er 31, 2022
Within 1 year 773,113,789.41 743,523,819.55
1-2 years 24,253,860.37 6,309,834.01
2-3 years 337,612.88 352,444.22
3-4 years 62,048.83 5,000.00
4-5 years
Over 5 years
Total 797,767,311.49 750,191,097.78
(2) Other receivables categorized by nature
Applicable Not Applicable
Book balance on December
Nature of receivables Closing book balance
31, 2022
Security deposits 25,859,213.46 20,953,340.98
Medical insurance reserves 34,897,794.71 44,717,501.88
322 / 329
Book balance on December
Nature of receivables Closing book balance
31, 2022
Store petty cash 22,500.00 1,418,500.00
Balances due from related parties
712,667,149.76 656,935,539.17
within the consolidation scope
Others 24,320,653.56 26,166,215.75
Subtotal 797,767,311.49 750,191,097.78
(3) Changes in provision for bad debts
Applicable Not Applicable
Stage 1 Stage 2 Stage 3
Items 12month Lifetime expected Lifetime expected Subtotal
expected credit losses (credit not credit losses (credit
credit losses impaired) impaired)
Opening balance 2,316,577.24 78,801.20 2,395,378.44
Opening balance in the
current period —— —— ——
--Transferred to stage 2 -2,226,035.28 2,226,035.28
--Transferred to stage 3 -9,252.40 9,252.40
Provision made in the current
1,303,120.65 -69,548.80 1,233,571.85
period
Provision written off in the
current period
Closing balance 1,393,662.61 2,226,035.28 9,252.40 3,628,950.29
Division basis for stages and proportions of provision for bad debts:
Stage 1 is where credit risk of other receivables has not increased significantly since initial
recognition. Stage 2 is where credit risk of other receivables has increased significantly since
initial recognition, but such receivables are not considered credit-impaired. Stage 3 is where other
receivables are considered credit-impaired since initial recognition.
Items Stage 1 Stage 2 Stage 3 Total
Provision proportion (%) 0.18 9.18 2.74 0.45
Reasons for significant changes in carrying amount of other receivables in the current period
Applicable Not Applicable
Determination basis for provision for impairment made in the current period and whether credit
risk has increased significantly
Applicable Not Applicable
(4) Changes in provision for bad debts
Applicable Not Applicable
Increase Decrease
Opening Closing
Items Write-
balance Accrual Recovery Others Reversal Others balance
off
Receivables with
2,395,378.44 1,233,571.85 3,628,950.29
provision made on
323 / 329
Increase Decrease
Opening Closing
Items Write-
balance Accrual Recovery Others Reversal Others balance
off
a collective basis
Total 2,395,378.44 1,233,571.85 3,628,950.29
Significant provisions collected or reversed
Applicable Not Applicable
Other remarks
None
(5) Other receivables actually written off in the current period
Applicable Not Applicable
Significant other receivables written off in the current period
Applicable Not Applicable
Remarks on other receivables written off
Applicable Not Applicable
(6) Details of the top 5 debtors with largest balances
Applicable Not Applicable
Proportion to the
Nature of total balance of Provision for
Debtors Book balance Ages
receivables other receivables bad debts
(%)
Balances due from
Shanghai Yifeng
related parties Within 1
Pharmacy Medicine 210,918,526.58 26.44
within the year
Co., Ltd.
consolidation scope
Balances due from
related parties Within 1
Jiangxi Yifeng 127,009,205.90 15.92
within the year
consolidation scope
Balances due from
Hunan Yifeng
related parties Within 1
Pharmaceutical 104,576,074.80 13.11
within the year
Holding Co., Ltd.
consolidation scope
Balances due from
related parties Within 1
Guangshengtang 88,168,174.24 11.05
within the year
consolidation scope
Balances due from
related parties Within 1
Jiangsu Yifeng 61,365,026.16 7.69
within the year
consolidation scope
Subtotal 592,037,007.68 74.21
(7) Other receivables related to the centralized fund management
Applicable Not Applicable
Other remarks
Applicable Not Applicable
324 / 329
3. Long-term equity investments
Applicable Not Applicable
Closing balance December 31, 2022
Items
Provision for Provision for
Book balance Carrying amount Book balance Carrying amount
impairment impairment
Investments in
subsidiaries 2,600,755,329.68 2,600,755,329.68 2,597,255,329.68 2,597,255,329.68
Total 2,600,755,329.68 2,600,755,329.68 2,597,255,329.68 2,597,255,329.68
(1) Investments in subsidiaries
Applicable Not Applicable
Provision for impairment Closing balance of
Investees Opening balance Increase Decrease Closing balance made in the current provision for
period impairment
Jiangsu Yifeng 150,000,000.00 150,000,000.00
Shanghai Yifeng 4,650,000.00 4,650,000.00
Jiangxi Yifeng 50,000,000.00 50,000,000.00
Hubei Yifeng 50,000,000.00 50,000,000.00
Hunan Yifeng
150,750,000.00 150,750,000.00
Medicine
Hubei Yifeng
100,000,000.00 100,000,000.00
Medicine
Jiangxi Yifeng
100,000,000.00 100,000,000.00
Medicine
Wuhan Longtai 66,646,000.00 66,646,000.00
Shaoguan
109,000,000.00 109,000,000.00
Xiangqin
Guangshengtang 34,933,000.00 34,933,000.00
Yili Kangxin 66,000,000.00 66,000,000.00
Xinxing
1,444,786,329.68 1,444,786,329.68
Pharmacy
Yueyang Yifeng 11,690,000.00 11,690,000.00
Hebei Xinxing
Pharmacy Chain 9,100,000.00 9,100,000.00
Co., Ltd.
Yifeng Luoshi
28,600,000.00 28,600,000.00
Xiehe
Pingjiang
9,100,000.00 1,400,000.00 10,500,000.00
Yifeng
Tianjin Xianhe 8,000,000.00 100,000.00 8,100,000.00
Jiuzhitang
204,000,000.00 204,000,000.00
Medicine
Tianjin Yifeng
Pharmacy Chain 2,000,000.00 2,000,000.00
Co., Ltd.
Subtotal 2,597,255,329.68 3,500,000.00 2,600,755,329.68
(2) Investment in associates and joint ventures
Applicable Not Applicable
(3) Impairment testing of long-term equity investments
Applicable Not Applicable
325 / 329
Other remarks
None
Recoverable amount determined based on the fair value less costs of disposal
Applicable Not Applicable
Recoverable amount determined based on the present value of estimated future cash flows
Applicable Not Applicable
Reasons for the significant inconsistencies between aforementioned information and
information used in previous impairment tests or external information
Applicable Not Applicable
Reasons for the significant inconsistencies between information used in previous impairment
tests and actual performance
Applicable Not Applicable
4. Operating revenue/Operating cost
(1) Details
Applicable Not Applicable
Current period cumulative Preceding period comparative
Items
Revenue Cost Revenue Cost
Main operations 4,639,899,369.88 3,059,643,113.79 4,318,244,031.95 2,741,437,577.26
Other operations 202,256,450.46 30,123,957.74 200,697,945.64 28,918,642.76
Total 4,842,155,820.34 3,089,767,071.53 4,518,941,977.59 2,770,356,220.02
(2) Breakdown of revenue from contracts with customers by main categories
Applicable Not Applicable
Other remarks
Applicable Not Applicable
(3) Information related to performance obligations
Applicable Not Applicable
(4) Transaction price allocated to the remaining performance obligations
Applicable Not Applicable
(5) Significant changes in contracts or significant adjustments on transaction price
Applicable Not Applicable
Other remarks
None
5. Investment income
326 / 329
Applicable Not Applicable
Items Current period cumulative Preceding period comparative
Investment income from
long-term equity investments 585,289,073.82 64,074,026.29
under cost method
Investment income from
15,587,350.75 6,953,820.05
financial instruments
Including: Financial assets
classified as at fair value 15,587,350.75 6,953,820.05
through profit or loss
Total 600,876,424.57 71,027,846.34
Other remarks
None
XX. Other supplementary information
1. Non-recurring profit or loss
Applicable Not Applicable
Items Amount Remarks
Gains on disposal of non-current assets, including write-off
29,092,610.09
of provision for impairment
Government grants included in profit or loss (excluding
those closely related to operating activities of the
Company, satisfying government policies and regulations, 44,930,209.02
enjoyed based on certain standards, and continuously
affecting gains or losses of the Company)
Gains on changes in fair value of financial assets and
financial liabilities held by non-financial enterprises, and
gains from disposal of financial assets and financial 13,074.67
liabilities, excluding those arising from hedging business
related to operating activities
Fund possession charge from non-financial entities and
included in profit or loss
Gains on assets consigned to the third party for investment
or management
Gains on designated loans
Losses on assets incurred due to force majeure such as
natural disasters
Reversed provision for impairment of receivables based on
impairment testing on an individual basis
Gains on acquisition of subsidiaries, joint ventures and
associates due to the surplus of acquisition-date fair value
of net identifiable assets in acquiree over the acquisition
cost
Net profit on subsidiaries acquired through business
combination under common control from the beginning of
the period to the combination date
Gains on non-cash assets exchange
Gains on debt restructuring
One-off expenses incurred due to the discontinuation of
relevant operating activities, such as severance payments
327 / 329
Items Amount Remarks
One-off effects on profit or loss due to amendments of laws
and regulations on taxation, accounting, etc.
Share-based payments recognized at one time due to
cancellation or modification of equity incentive plan
Gains arising from changes in the fair value of employee
benefits payable after the vesting date for cash-settled
share-based payment
Gains on changes in fair value of investment properties
with subsequent measurement using the fair value model
Gains on transactions with unfair value
Contingent gains on non-operating activities
Management charges for consigned operations
Other non-operating revenue or expenditures -5,060,038.31
Other profit or loss satisfying the definition of
non-recurring profit or loss
Subtotal 68,975,855.47
Less: Enterprise income tax affected 16,885,907.38
Non-controlling interest affected (after tax) 1,617,512.91
Net non-recurring profit or loss attributable to shareholders
50,472,435.18
of the parent company
Remarks on the exception that the Company recognized non-recurring profit or loss as listed in
the “Interpretation Pronouncement on Information Disclosure Criteria for Public Companies No. 1
– Non-Recurring Profit or Loss (2023 Edition)” as recurring profit or loss based on relevant
definition and principle are as follows:
Applicable Not Applicable
Items Amount Reasons
Related to ordinary course of
Investment income 24,958,558.90
operating activities
Other remarks
Applicable Not Applicable
Effect on non-recurring profit or loss in 2022 due to implementation of “Interpretation
Pronouncement on Information Disclosure Criteria for Public Companies No. 1 – Non-Recurring
Profit or Loss (2023 Edition)”
Items Amount
Net non-recurring profit or loss attributable to the owner of the
35,316,295.14
parent company in 2022
Net non-recurring profit or loss attributable to the owner of the
parent company calculated based on the “Interpretation
Pronouncement on Information Disclosure Criteria for Public 34,414,548.82
Companies No. 1 – Non-Recurring Profit or Loss (2023
Edition)” in 2022
Difference -901,746.32
Effect on non-recurring profit or loss in 2021 due to implementation of “Interpretation
328 / 329
Pronouncement on Information Disclosure Criteria for Public Companies No. 1 – Non-Recurring
Profit or Loss (2023 Edition)”
Items Amount
Net non-recurring profit or loss attributable to the owner of the
29,164,848.76
parent company in 2022
Net non-recurring profit or loss attributable to the owner of the
parent company calculated based on the “Interpretation
Pronouncement on Information Disclosure Criteria for Public 28,436,923.52
Companies No. 1 – Non-Recurring Profit or Loss (2023
Edition)” in 2022
Difference -727,925.24
2. ROE and EPS
Applicable Not Applicable
Weighted average EPS (yuan/share)
Profit of the reporting period
ROE (%) Basic EPS Diluted EPS
Net profit attributable to
15.44 1.40 1.40
shareholders of ordinary shares
Net profit attributable to
shareholders of ordinary shares
14.89 1.35 1.35
after deducting non-recurring
profit or loss
3. Differences in accounting data under domestic and foreign accounting standards
Applicable Not Applicable
4. Others
Applicable Not Applicable
Chairman of the Board: Gao Yi
April 26, 2024
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