华东医药：2023年半年度报告（英文版）

2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 1 Huadong Medicine Co., Ltd. Semi-Annual Report 2023 August 16,2023 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 2 Section I. Important Declaration, Contents and Definitions The Board of Directors, Board of Supervisors, directors, supervisors and senior managers of Huadong Medicine Co., Ltd. (hereinafter referred to as the “Company”) hereby guarantee that the information presented in this semi-annual report is authentic, accurate and complete and free of any false records, misleading statements or material omissions, and shall undertake individual and joint legal liabilities. Lv Liang, the Company’s legal representative and the officer in charge of accounting, and Qiu Renbo, head of the Accounting Department (accounting supervisor) hereby declare and guarantee that the financial statements in this semi-annual report are authentic, accurate and complete. All directors have attended the board meeting to review this semi-annual report. The future plans, development strategies and other forward-looking statements in this semi-annual report shall not be considered as substantial commitment of the Company to investors. Investors and related parties should be fully aware of the risks, and understand the differences between plans, forecasts and commitments. The risks the Company faces in operation include industry policy and product price reduction risk, new drug R&D risk, investment and M&A risk, and exchange rate fluctuation risk. For details, please refer to “X. Potential risks and responses” in “Section III. Management Discussion and Analysis”. Therefore, investors are kindly reminded to pay attention to possible 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 3 investment risks. The Company does not plan to distribute cash dividends, no bonus share will be issued, and no capital reserve will be converted to increase the share capital. According to “Stock Listing Rules of the Shenzhen Stock Exchange”, if listed companies have both Chinese or other language version of public notice, they should ensure the content of both versions are the same. In the case of discrepancy, the original version in Chinese shall prevail. 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 4 Contents Section I. Important Declaration, Contents and Definitions ...............................................................................2 Section II. Company Profile and Key Financial Indicators .................................................................................9 Section IIIDiscussion and Analysis of the Management ....................................................................................13 Section IV. Corporate Governance .......................................................................................................................60 Section VEnvironmental and Social Responsibilities ........................................................................................63 Section VI. Important Matters .............................................................................................................................78 Section VII. Share Change and Shareholders .....................................................................................................98 Section VIII. Information on Preferred Shares ................................................................................................104 Section IX. Information on Bonds ......................................................................................................................105 Section X. Financial Report ................................................................................................................................106 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 5 Contents of Reference File I. Financial statements signed and stamped by the legal representative, the person in charge of accounting work, and the head of accounting institution (accounting manager). II. The original of all Company’s documents publicly disclosed in the press designated by CSRC during the reporting period and the original of announcements. 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 6 Definitions Term refers to Definition CSRC refers to China Securities Regulatory Commission SSE refers to Shenzhen Stock Exchange Huadong Medicine/the Company/our Company refers to Huadong Medicine Co., Ltd. CGE refers to China Grand Enterprises, Inc. Huadong Medicine Group refers to Hangzhou Huadong Medicine Group Co., Ltd. Zhongmei Huadong refers to Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. Jiangdong Company refers to Hangzhou Zhongmei Huadong Pharmaceutical Jiangdong Co., Ltd. Jiangsu Joyang Laboratories refers to Jiangsu Joyang Laboratories Xi’an Bohua refers to Huadong Medicine (Xi’an) Bohua Pharmaceutical Co., Ltd. Jiuyuan Gene refers to Hangzhou Jiuyuan Gene Engineering Co., Ltd. Doer Biologics refers to Zhejiang Doer Biologics Co., Ltd. Huadong Ningbo Company refers to Huadong Ningbo Medicine Co., Ltd. Chongqing Peg-Bio refers to Chongqing Peg-Bio Biopharm Co., Ltd. Qyuns Therapeutics refers to Qyuns Therapeutics Co., Ltd. Nuoling Bio refers to Nuoling Biomedical technology (Beijing) Co., Ltd. Grand Chanrong refers to Shanghai Grand Industrial and Financial Investment Management Co., Ltd. Hangzhou Gaotou refers to Hangzhou Hi-Tech Venture Capital Management Co., Ltd. Grand Huachuang refers to Beijing Grand Huachuang Investment Co., Ltd. Hangzhou Heda refers to Hangzhou Heda Industrial Fund Investment Co., Ltd. Pharmaceutical Industry Fund/Fuguang Hongxin refers to Hangzhou Fuguang Hongxin Equity Investment Partnership (Limited Partnership) Meihua Hi-Tech refers to Anhui Meihua Hi-Tech Pharmaceutical Co., Ltd. Wuhu Huaren refers to Wuhu Huaren Science and Technology Co., Ltd. Meiqi Health refers to Hubei Meiqi Health Technology Co., Ltd. Angel Group refers to Hubei Angel Biological Group Co., Ltd. CARsgen Therapeutics refers to CARsgen Therapeutics Holdings Limited NAUAnimal Pharmaceutical refers to Jiangsu NAUAnimal Pharmaceutical Co., Ltd. Takeda refers to Takeda Pharmaceuticals Company Ltd. Sinclair refers to Sinclair Pharma Limited vTv refers to vTv Therapeutics LLC R2 refers to R2 Technologies, Inc. MediBeacon refers to MediBeacon Inc. 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 7 ImmunoGen refers to ImmunoGen,Inc. Provention Bio refers to Provention Bio, Inc. RAPT refers to RAPTTherapeutics,Inc. Kylane refers to Kylane Laboratoires SA High Tech refers to High Technology Products, S.L.U. Exscientia refers to Exscientia Ltd. Heidelberg Pharma refers to Heidelberg Pharma AG Kiniksa refers to Kiniksa Pharmaceuticals (UK), Ltd. KiOmed refers to KiOmed Pharma SA Daewon refers to Daewon Pharmaceutical Co., Ltd. AKSO refers to AKSOBiopharmaceutical, Inc. Ashvattha refers to Ashvattha Therapeutic, Inc. SCOHIA refers to SCOHIAPHARMA, Inc. EMAAesthetics refers to EMAAesthetics Limited Julphar refers to Gulf Pharmaceutical Industries PJSC(JULPHAR) Arcutis refers to Arcutis Biotherapeutics, Inc. GMP refers to Good Manufacturing Practice cGMP refers to Current Good Manufacturing Practices GSP refers to Good Supply Practice BE refers to Bioequivalence CDE refers to Center for Drug Evaluation (of National Medical Products Administration) MAH refers to Marketing Authorization Holder FDA refers to (U.S.) Food and Drug Administration NMPA refers to National Medical Products Administration NHSA refers to National Healthcare Security Administration NDA refers to New Drug Application ANDA refers to Abbreviated New Drug Application (or Generic Drug Application) ICH refers to International Council for Harmonisation of Technical Requirements for Pharmaceuticals for Human Use IND refers to Investigational New Drug PK/PD refers to Pharmacokinetics/ pharmacodynamics CMC refers to Chemistry, Manufacturing and Control, mainly such pharmaceutical researches as manufacturing technology, impurity research, quality research, and stability research during drug research and development. CMO refers to Contract Manufacturing Organization, i.e. Providing such services as customized manufacturing of medical intermediates, APIs and pharmaceutical preparations entrusted by pharmaceutical 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 8 companies. CDMO refers to Contract Development and Manufacturing Organization, mainly including providing customized R&D and production services for multinational pharmaceutical companies and biotechnology companies, such as process R&D and preparation, process optimization, scale-up manufacturing, registration and verification batches manufacturing, and commercial manufacturing of medicines, especially innovative medicines. QA refers to Quality Assurance (department) ADC refers to Antibody-Drug Conjugates EBD refers to Energy Based Devices license-in refers to Product license introduction license-out refers to Product External License Authorization BD refers to Business Development EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization EHS refers to Environment, Health and Safety Management Systems MRCT refers to International Multi-center Clinical Trial OTC refers to Over The Counter, i.e. medicines published by the medical products administration under the State Council and purchased and used by consumers at their discretion without the prescription of practicing doctors or assistant practicing doctors. PFS refers to Progression-free survival Prescription Drugs refers to Drugs that require medical prescriptions issued by physicians to be bought and used Real World Research/Study, RWR/RWS refers to Real World Research/Study, RWR/RWS, refers to collect data related to patients in the real world environment (Real World Data), through analysis, acquiring the use value of medical products and clinical evidence of potential benefits or risks (Real World Evidence). 2022 Drug Catalog refers to Catalogue of Drugs for Basic National Medical Insurance/Employment Injury Insurance/Birth Insurance (2022) Reporting Period refers to From January 1,2023 to June 30,2023 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 9 Section II. Company Profile and Key Financial Indicators I. Company information Stock name (abbreviation) Huadong Medicine Stock code 000963 Stock listed on Shenzhen Stock Exchange Company name in Chinese华东医药股份有限公司Company name in Chinese (abbreviation, if any) 华东医药Company name in English (if any) HUADONGMEDICINECO., LTD Company name in English (abbreviation, if any) HUADONGMEDICINE Legal representative Lv Liang II. Contact persons and contact information Secretary of the Board of Directors Securities affairs representative Name Chen Bo Hu Shufen Contact address No.866 Moganshan Road, Hangzhou No.866 Moganshan Road, Hangzhou Tel.0571~899033000571~89903300 Fax 0571~899033000571~89903300 Email address hz000963@126.com hz000963@126.com III. Other information 1. Company’s contact information Whether there is any change in the Company’s registered address, office address, zip code, company website or company email address during the reporting period. Applicable □ N/A Registered address of the Company In June 2023, the registered address of the Company was altered from “Floor 9/10, Gate No.9,1, Building No.1, No. 468 Yan’an Road, Hangzhou, Zhejiang Province” to “Floor 4/7, No.439, Zhongshan North Road, Gongshu District, Hangzhou, Zhejiang Province”. The Company completed the industrial and commercial change registration, filing of articles of association and other formalities, and got the Business License issued by Market Supervision and Management Bureau of Zhejiang Province. Zip code of the registered address of the Company 310006 Office address of the Company No.866 Moganshan Road, Hangzhou, Zhejiang Province Zip code of the office address of the Company 310011 Official website Email address of the Company hz000963@126.com 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 10 Designated website inquiry date disclosed in the temporary announcement (if any) June 10,2023 Designated website inquiry index disclosed in the temporary announcement (if any) 2. Channels of disclosure and location of preparation Whether there is alteration in channels of disclosure and location of preparation □ Applicable N/A The website of the stock exchange, media and website for disclosing the semi-annual report, and the location of preparation of the Company’s semi-annual report have not changed during the reporting period. For details, please refer to the 2022 Annual Report. 3. Other information Changes of other related materials □ Applicable N/A IV. Key accounting data and financial indicators Whether the Company needs to perform a retroactive adjustment or restatement of previous accounting data □Yes No Current reporting period Same period last year Change of the current reporting period over the same period last year(%) Operating revenue (yuan) 20,385,344,288.8118,197,963,991.0112.02% Net profit attributable to shareholders of listed companies (yuan) 1,433,824,629.561,340,570,484.986.96% Net profit attributable to shareholders of listed companies after deducting non-recurring gains/losses (yuan) 1,427,487,870.971,271,839,179.6312.24% Net cash flow from operating activities (yuan) 2,021,743,748.65284,234,410.27611.29% Basic earnings per share (yuan/share) 0.81940.76616.96% Diluted earnings per share (yuan/share) 0.81900.76616.91% Weighted average return on equity (ROE) 7.43% 7.79% -0.36% End of the current reporting End of last year Change of the end of the current reporting period over the end of last year (%) Total assets (yuan) 32,956,000,216.0631,192,203,406.845.65% Net assets attributable to shareholders of listed companies (yuan) 19,532,395,598.1618,577,919,237.395.14% 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 11 The Company’s total share capital as of the trading day prior to disclosure: The Company’s total share capital as of the trading day prior to disclosure (share) 1,753,995,348.00 Fully diluted earnings per share based on the latest share capital: Paid preference dividends 0.00 Paid perpetual bond interest (yuan) 0.00 Fully diluted earnings per share based on the latest share capital (yuan/share) 0.8175 V. Differences in accounting data under domestic and overseas accounting standards 1. Differences in net profit and net assets disclosed in financial statements under international and Chinese accounting standards □ Applicable N/A There are no differences in net profit and net assets disclosed in financial statements under international and Chinese accounting standards during the reporting period. 2. Differences in net profit and net assets disclosed in financial statements under overseas and Chinese accounting standards □ Applicable N/A There are no differences in net profit and net assets disclosed in financial statements under overseas and Chinese accounting standards during the reporting period. VI. Items and amounts of non-recurring gains/losses Applicable □ N/A Unit: yuan Item Amount Explanation Gains/losses on disposal of non-current assets (including the written-off part of the accrued assets impairment reserve) -1,403,178.70 Government grants included in current gains/losses (excluding those closely related to daily business operation and distributed constantly in accordance with certain standard quota or quantity in line with national policies and regulations) 32,245,085.57 Mainly due to the confirmation of government grants for subsidiaries in the current period Gains/losses caused by fair value changes for holding financial assets for trading and financial liabilities for trading, and investment income for handling financial assets for trading, financial liabilities for trading and AFS securities, excluding hedging business related to operating activities -5,100,698.38 Other non-operating income and -8,253,167.53 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 12 expenditures except the aforesaid items Other profit and loss items that satisfy the definition of non-recurring profit and loss -7,873,330.91 Minus: Amount affected by income tax 3,070,663.74 Impact on minority interests (post-tax) 207,287.72 Total 6,336,758.59 Details of other items of gains/losses meet the definition of non-recurring gains/losses: □ Applicable N/A Details of other items of gains/losses meet the definition of non-recurring gains/losses. Explanation for recognizing an item listed as a non-recurring gain/loss in the Interpretative Announcement No.1 on Information Disclosure Criteria for Public Companies — Non-Recurring Profit/Loss as a recurring gain/loss □ Applicable N/A Explanation for recognizing an item listed as a non-recurring gain/loss in the Interpretative Announcement No.1 on Information Disclosure Criteria for Public Companies - Non-Recurring Profit/Loss as a recurring gain/loss. 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 13 Section IIIDiscussion and Analysis of the Management I. Main business of the company during the reporting period (1) Main businesses Founded in 1993 and headquartered in Hangzhou, Zhejiang Province, Huadong Medicine Co., Ltd. (stock code: 000963) was listed on Shenzhen Stock Exchange in December 1999. With its businesses covering the entire pharmaceutical industry chain thanks to over 30 years of vigorous development, the Company has now fostered four major business segments of pharmaceutical industry, pharmaceutical business, aesthetic medicine and industrial microbiology, and has been a large comprehensive listed pharmaceutical enterprise specialized in pharmaceutical R&D, production and marketing. Specialized in the R&D, production and marketing of specialized and chronic diseases, as well as special medicines for years, the Company has established complete pharmaceutical production and quality research systems, and fostered core product lines focusing on chronic nephrosis, transplantation immunity, internal secretion, digestive system and other fields. With multiple first-line clinical medicines with market advantages in China, the Company has made layout in R&D of innovative and high technology barrier generic medicines in three core therapeutic fields of oncology, endocrinology and autoimmunity through independent development, external introduction, project cooperation and by other means. The Company has continued to engage in international registration, international certification, consistency evaluation, etc. of products, with successive results achieved. Moreover, the Company has fostered the internationally-oriented pharmaceutical industry system, established and maintained R&D and project cooperation with multiple international innovative R&D enterprises. With regard to the pharmaceutical business, the Company has vigorously consolidated its foundation in Zhejiang Province and has been ranked among top 10 pharmaceutical business enterprises in China for consecutive years. To date, the Company has established 11 regional subsidiaries in Zhejiang Province, with its customers distributed in 11 cities and 90 districts, counties and county-level cities throughout Zhejiang Province. The Company has four business segments of Chinese & western medicine, medical apparatus, medicine materials and ginseng & antler, and health industry that cover the pharmaceutical wholesale & retailing, third-party medical logistics featuring cold chain, medical e-commerce, hospital value-added services and featured massive health industry. Further expanding the product agency and market development, the 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 14 Company has formed the whole industry chain from planting in bases to processing of prepared pieces, automatic decoction, own-brand functional products for its traditional Chinese medicine industry. As the leader of pharmaceutical business in Zhejiang Province, the Company has always focused on strengthening the policy affairs, reserve, distribution and marketing ability, established service platforms, and fostered the competitive advantages of regional enterprises to offer customers comprehensive solutions. In terms of aesthetic medicine, the Company has created a comprehensive and differentiated product matrix by following the strategy of “global operation layout and dual-circulation operation & development” with an international vision through forward-looking layout, and now ranks in the forefront of the industry in terms of product quantity and coverage. Specifically, over 20 products have been launched in China and abroad, and more than a dozen innovative global products are in development. Now, the Company is committed to becoming a global leading aesthetic medicine comprehensive solution provider by offering patients with more professional, efficient, comprehensive and safer integrated solutions through diversified combined therapy techniques that combine “noninvasive and micro-invasive”, “facial and body filling”, “products + technologies”, and “injection + energy source equipment”. Headquartered in UK, the Company’s wholly-owned subsidiary Sinclair is its global aesthetic medicine operation platform that has R&D centers in UK, the Netherlands, France, Switzerland, Spain and Israel, and production bases in the Netherlands, France, the U.S., Switzerland, Bulgaria and Israel. Promoting and marketing sustained-release microspheres for injection, hyaluronic acid, facial thread lifting and other products in global markets, Sinclair researches, develops and expands its energy-source aesthetic medicine apparatus businesses through its wholly-owned subsidiaries High Tech and Viora. As for the aesthetic medicine segment, the Company also has Sinclair (Shanghai), a wholly-owned subsidiary and its market operation platform in China, as well as R2 in the U.S. and Kylane in Switzerland, two overseas technical development type joint-stock subsidiaries. With profound industrial base and powerful industrial transformation ability thanks to over 40 years of development in the industrial microbiology sector, the Company has successfully developed and manufactured multiple types of microbiological medicines, and established the key technology system for R&D and production of microbiological products, ranking in the forefront of the industry in terms of scale and technological level of microbiological fermented products. Being market demand-oriented, R&D technology-driven and industrial resource-coordinative in the industrial microbiology segment, the Company has placed its focus on two business scenarios of application of synthetic biology technology system and innovative development of bio-pharmaceuticals, and has fostered differentiated product lines and business solutions in four major 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 15 fields of xRNA, featured APIs, massive health &biomaterials and animal health. The Company has also established the R&D clusters with Industrial Microbiology of Zhongmei Huadong, HIT Institute of Synthetic Biology, Huida Biotech, Hizyme Biotech and Perfect mRNA as the core, and seven industrial bases in Hangzhou Xiangfuqiao, Qiantang New Area, Jiangsu Joyang Laboratories, Magic Health, Twisun Hi-tech, Wuhu Huaren, and NAUAnimal Pharmaceutical. Moreover, the Company has set up the largest fermentation monomer plants in Zhejiang, formed the industry-leading microbiological medicine production ability and high-level R&D capacity that covers all stages of microbiological engineering technologies from strain construction, metabolic regulation, enzymatic catalysis, synthetic modification to separation and purification, and built a complete manufacturing system for R&D, pilot test, commercial production, engineering and public system guarantee of microbiological projects. To date, the Company has a total of over 230 R&D programs in the industrial microbiology sector. (2) Overview of the Company’s operations during the reporting period The global economic recovery faces continuous challenges due to accelerated changing international order in turmoil, dramatically adjusted geopolitical pattern, continuously accumulated risks in global financial sectors, multiple downside risks, and rising inflationary pressure since 2023. The year 2023 is the first year to practice the guiding principles of the 20th CPCNational Congress, and also a critical year to implement the “Fourteenth Five-year Plan”. In the face of tough external environment, China has resumed normalized operation in economy and society in full swing since the first half of 2023, witnessing upturn of national economy thanks to the efficient macro policies. The reform of the pharmaceutical industry in China has also been deepened, with diverse reform policies launched and implemented. The pharmaceutical industry still faces changes and challenges in diverse aspects such as policy regulation, structural reform, technological innovation, and intensified market competition, while it is continuously transformed driven by innovation. In the meantime, new bio-pharmaceutical technologies, continuously advancement of technological innovation, as well as rapid application of AI, big data and other new technologies in the pharmaceutical sector bring new opportunities for the transformation and development of the pharmaceutical industry. During the reporting period, the Company has steadily facilitated the innovative transformation and international development strategy, made concerted efforts to tide over diverse difficulties, and solidly promoted the innovation in scientific research, production and operation to a new level revolving around its annual operation plan and the seventh third-year plan. In the first half of 2023, the Company achieved the operating revenue of 20.385 billion yuan, up 12.02% year on year (up 13.23% year on year in the first quarter), and the net profit attributable to shareholders 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 16 of listed companies after deducting non-recurring gains/losses of 1.427 billion yuan, up 12.24% year on year (up 8.45% year on year in the first quarter). During the reporting period, after deducting the equity incentive expenses and the profits and losses of participating and holding R&D institutions, the Company achieved the net profit attributable to shareholders of listed companies after deducting non-recurring gains/losses of 1.656 billion yuan, up 20.61% year on year. The Company achieved the double-digit growth in both operating revenue and net profits for the first time since 2020 and witnessed favorable upturn of the overall operation, laying a solid foundation for fully attaining its annual work goals. During the reporting period, four major business segments of the Company, i.e. pharmaceutical industry, pharmaceutical business, aesthetic medicine and industrial microbiology, all achieved positive growth in business indicators, accelerating the release of the Company’s momentum in overall growth. As its operating revenue in the first quarter exceeded 10 billion yuan for the first time, the Company achieved a total operating revenue of 10.271 billion yuan in the second quarter, up 10.85% year on year. The net profit attributable to shareholders of listed companies after deducting non-recurring gains/losses was 670 million yuan, up 16.85% year on year. Specific operation of each business segment during the reporting period: 1. The production and operation of the pharmaceutical industry saw and kept positive trend During the reporting period, the Company’s core subsidiary Zhongmei Huadong witnessed positive growth as a whole and achieved the operating revenue (including CSO business) of 6.054 billion yuan, up 10.04% year on year, and the consolidated net profit after deducting net profits attributable to the parent company of 1.226 billion yuan, up 15.11% year on year. The net return on equity was 12.38%. During the reporting period, the Company has further consolidated its three core therapeutic fields of oncology, endocrinology and autoimmunity. In the first half of 2023, the Company’s key varieties of products maintained steady and rapid growth, and core products subject to national centralized procurement and medical insurance negotiations still maintained stable market share. In the meantime, the Company kept enriching its product lines through independent R&D and introduction of external products, and formed differentiated and innovative product lines that cover multiple indications and feature reasonable product echelon layout, becoming a leading enterprise in the field of endocrinology and autoimmunity in China. In the field of oncology, the Company kept enriching its pipelines around the key layout of ADC products and continued to maintain its dominant position in the field of ADC in China. During the reporting period, the Company’s 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 17 innovative R&D kept advancing in an orderly manner, with positive results achieved. Please refer to “(III) R&D situation” below in this section for details. During the reporting period, Hangzhou Zhongmei Huadong Pharmaceutical Service Corporation continued to build its multi-dimensional market access and professional promotion capabilities, strengthen the academic driving, stabilize the hospital markets, expand the out-of-hospital markets, strengthen the online markets, promote and optimize the construction of the regional marketing department and KA system, enhance the market coverage of grassroots terminals, and continuously promote the digital transformation of pharmaceutical services by taking the opportunity of its product strategic cooperation with RLD multinational pharmaceutical companies. During the reporting period, the Company’s production systems kept making innovative in production and operation modes and deepening the integrated management of production systems with “high quality and high efficiency” as its goal. While ensuring the market supply, the Company continued to promote the standardization construction of workshops and consolidate the basic management. In the meantime, it further deepened the implementation of lean production and actively promoted the reduction of production costs, witnessing continuous improvement in skill level and per capita labor efficiency of employees. Moreover, the quality compliance and GMP normalization management were further strengthened, and international registration and certification of products were advanced. During the reporting period, the Tacrolimus Capsules of Zhongmei Huadong was approved for marketing by the FDA, becoming another product of the Company that is approved following Pantoprazole Sodium for Injection, Acarbose Tablets and Daptomycin for Injection, China’s first Tacrolimus Preparation approved for marketing in the U.S. and an important achievement of the international strategy of the Company’s preparation products. 2. The industrial microbiology achieved good results in four fields The Company kept practicing the industrial microbiology development strategy, clarifying its strategic layout focusing on four major fields of xRNA, featured APIs & intermediates, massive health & biomaterials and animal health. In the meantime, the Company continuously enriched the product lines in four major strategic segments of high innovation, high technology barrier and high added-values and optimized its product structures through R&D. During the reporting period, the overall sales revenue of the Company’s industrial microbiology segment deducting that of specific commercial products businesses achieved a year-on-year increase of 27.47%. During the reporting period, the field of xRNA expanded the application market in China with low-cost and high-quality products, developed international businesses and created an efficient market service system. The field of featured APIs & intermediates gave full play to the advantages 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 18 of three technical platforms of synthetic biology, fermentation and enzyme engineering and maximized the production and manufacturing resources, making the Company an international, distinctive and differentiated API enterprise featuring highly active APIs. Focusing on such industrial orientations as bone health, brain health, antioxidation, personal care and aesthetic medicine, high barriers, and import substitution of injectable medicinal materials, the field of massive health & biomaterials created the automatic and standard industrial manufacturing system and stepped out of C-end product markets with the technical support from the HITInstitute of Synthetic Biology. In the field of animal health, the Company focused on three orientations of pet treatment, pet nutrition, and water nutrition and water environment, and endeavored to become a leader in China’s pet and aquatic animal health industry driven by R&D, led by markets and guaranteed by production. xRNA: In January 2023, the Company established Hangzhou Perfect mRNABiotechnology Co., Ltd. (hereinafter referred to as “Perfect mRNA”), which is mainly engaged in the development of raw materials of mRNA enzyme and molecular diagnostic enzyme, as well as mRNACDMO services, together with the upstream enzyme raw materials and downstream preparation services. Perfect mRNA comprised industrial collaboration with Anhui Meihua and Wuhu Huaren in the field of xRNA, further optimizing the whole-industrial chain layout of xRNA. Featured APIs & intermediates: The Company’s core subsidiaries Huida Biotech, Hizyme Biotech and Jiangsu Joyang Laboratories vigorously expanded international key customers, established the key customer service system, cultivated multiple new product lines, endeavored to develop ADC drug toxin raw materials and services, senior intermediates and other businesses, and gave full play to the advantages of industrial technologies of industrial microbiology, successfully building a favorable reputation of “high technology, high quality and high efficiency” in this field. Massive health & biomaterials: The Company’s core subsidiary Meiqi Health further strengthened its sales manpower in overseas markets, built the core dealers network, and put in place its channel layout in Asia Pacific, Europe, America, and China. It also set up the application service system to create market opportunities for the differentiation of application services. Animal health: Being optimistic about the development of animal health industry, the Company acquired Jiangsu NAUAnimal Pharmaceutical Co., Ltd. (herein after referred to as “NAUAnimal Pharmaceutical”) in April 2023, quickly setting foot in pet and aquatic animal health segments. In the field of animal health, the Company has reserved more than 10 varieties of high-end raw materials for pet health care, application and development of a variety of massive health raw materials in the field of animal health, and more than 10 potential opportunities for people-to-animal medicines, with a potential to realize integrated development of raw materials and 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 19 preparations in the future. NAUAnimal Pharmaceutical will become an important development platform for the Company’s animal health businesses in the field of industrial microbiology. The Company’s existing industrial ecological chain, R&D resources and financial guarantee will keep empowering and promoting the rapid development of NAUAnimal Pharmaceutical in the field of animal health. At present, the Company’s industrial microbiology field has set up an international marketing team with about 50 staff, forming a business structure featuring sales and market management system of the industrial microbiology headquarters + professional sales team of subsidiaries, further establishing an overseas localized marketing team and enhancing the ability to serve overseas customers. In the future, the industrial microbiology field will further increase the proportion of international business, with R&D, quality, service and regulatory registration as its main competitiveness, thus forming a competitive advantage in international businesses. 3. The pharmaceutical business kept a stable growth trend as a whole and continued to develop innovative businesses. During the reporting period, the Company’s pharmaceutical business segment kept consolidating its hospital markets and expanding out-of-hospital markets, and actively advanced its innovative businesses. The Company’s pharmaceutical business segment achieved the operating revenue of 13.631 billion yuan, up 11.19% year on year, and the net profit of 216 million yuan, up 9.14% year on year. Adhering to the development principle of “High Quality + High Efficiency”, the Company’s pharmaceutical business segment actively endeavored to build itself into an enterprise with leading position in scale, network and services for the high-quality development, with the core placed on “profits increase and costs reduction” for high-efficient development. In terms of traditional businesses, the Company continuously consolidated its presence in Zhejiang Province and endeavored to improve the quality and efficiency for high growth rate. For innovative businesses, the focus was placed on product agency, third-party logistics, pharmaceutical e-commerce, featured massive health and other fields. Focusing on its comprehensive abilities in policy affairs, marketing, distribution and reserve, the Company set up the service platform to provide upstream and downstream customers with personalized solutions, fostered the comprehensive competitive advantages as a regional enterprise, and formed its full-channel promotion ability. With regard to the traditional businesses, the Company always insisted on the service philosophy of “High Quality + Fast Speed”, cared about policies with significant impacts on the industry, made scientific prediction and optimized the layout, witnessing stable increase of the hospital market share and fast growth trend in out-of-hospital markets, and maintaining its leading 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 20 position in Zhejiang Province. As for the hospital market, the Company placed its focus on such key indicators as introduction of new products, hospital shares and order satisfaction rate, and converted value-added services like police affairs and pharmacy administration into productivity, occupying a leading position in the industry. In the field of medicinal materials, ginseng and antler, the Company further improved its sales networks throughout Zhejiang Province, assigned more personnel to the grassroots and expanded businesses in sub-markets by leveraging channels of its subsidiaries. Moreover, the Company further expanded its decoction businesses throughout Zhejiang and prepared for the expansion of Phase II of the Decoction Center relying on the advantages in automation. The out-of-hospital markets were further expanded, with more private hospitals, clinics and retail pharmacies covered. In the meantime, the Company continuously improved the profitability of its self-retail businesses, created a new retail mode in East China, expanded its service scope, imported more varieties, and made good preparations for introduction of prescriptions relying on its advantages of “platform + products + network”. Innovative businesses were further advanced and more efforts were made in innovative products, innovative logistics, innovative services, etc. to facilitate multi-warehouse linkage, integrate internal and external resources, and improve the overall efficiency of innovative businesses. The Company continued to expand its agency businesses, focus on specialized medical devices and enrich varieties of agent products. Moreover, the Company spared no effort to develop the tripartite businesses of the supply chain. To date, the operation level of Jinhua Warehouse has gradually approached that of Hangzhou Warehouse. The distribution tasks in areas not covered by Hangzhou Warehouse will be transferred to Jinhua Warehouse. Hangzhou Warehouse launches the expansion of its cold storage warehouse to fully develop the tripartite logistics of cold chain, further consolidate its trump card of “medicine cold chain” and strive for licenses for more products. Attaching equal importance to both “B2B+B2C”, the Company continued to upgrade the “Huadong Medicine Business Network” and actively operated self-operated flagship stores of major e-commerce platforms for better online sales. The Company launched and promoted the “Xuguanghe” series online, constantly enriching its massive health product matrix. During the reporting period, the Company’s pharmaceutical business segment actively fulfilled its social responsibilities, quickly responded to special situations, and established a complete set of emergency call plans. With the upstream and downstream pharmaceutical supply chain partners gathered, the segment actively practiced the idea of “seizing time is to save lives” to foster its own brands with social benefits, create economic benefits with brands, and promote the high-quality and high-efficiency development of the Company through innovation. 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 21 4. Overseas aesthetic medicine witnessed increased profits and aesthetic medicine in China saw rapid growth. During the reporting period, the Company’s aesthetic medicine segment witnessed rapid growth as a whole and achieved the total operating revenue of 1.224 billion yuan (excluding internal offsetting factors), up 36.40% year on year. Its wholly-owned subsidiary Sinclair actively overcame the negative impact of the slowing global economic growth and kept expanding the global aesthetic medicine market. During the reporting period, Sinclair achieved the sales revenue of 76.29 million pounds (about 669 million yuan), up 26.07% year on year, and the EBITDA of 12.6 million pounds, attaining the operating profit. In the second half of 2023, it is expected that Sinclair will maintain its growth trend as a whole and may see better performance as the global market is further expanded. As the aesthetic medicine market in China rebounded during the reporting period, Sinclair (Shanghai), the Company’s wholly-owned subsidiary in China, kept expanding and maintained its leading position in the regenerative aesthetic medicine market in compliance with relevant requirements according to the concept of “medicine first” with experience as the core. In the first half of 2023, Sinclair (Shanghai) achieved the cumulative operating revenue of 516 million yuan, up 90.66% year on year and marking the continuous improvement of its profitability. The Company’s aesthetic medicine business in China will maintain the favorable growth trend in the second half as the consumption market in China keeps rebounding. During the reporting period, the Company actively practiced the long-term vision of cultivating and building the world’s leading innovative aesthetic medicine enterprise, continued to steadily promote the strategy of dual-circulation development in and out of China, focused on the global high-end aesthetic medicine market, strengthened its brand building, and accelerated the integration of internal resources. To date, the Company has launched 36 high-end products in the field of “non-invasive + micro-invasive” aesthetic medicine worldwide, of which 24 have been marketed. The product portfolio covers non-surgical mainstream aesthetic medicine fields such as facial and whole-body filling, energy source skin management, and body shaping. In the meantime, the Company has formed integrated product clusters and ranks in forefront of the industry in terms of quantity of products and number of fields covered, with continuously improved international influence. With a professional marketing and promotion team comprised of about 300 talents, the Company’s aesthetic medicine segment has built its global aesthetic medicine marketing network with over 80 countries and regions covered. During the reporting period, the Company actively advanced the global registration of its aesthetic medicine products and simultaneously facilitated the registration and launching of 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 22 overseas products in China. Actively facilitating the registration for marketing in over 40 countries, Sinclair has had obtained marketing authorizations for 11 products in 19 countries during the reporting period. The Company also introduced and arranged multiple international innovative aesthetic medicine products for different body parts. KiOmed Skinbooster, a global innovative chitosan aesthetic medicine introduced by Sinclair from a Belgian company KiOmed Pharma SA (hereinafter referred to as “KiOmed”) is now under clinical trial and its overseas registration application is expected to be submitted in Q42023. Moreover, KiOmed is now developing multiple types of global innovative products for facial (KiOmed Moderate lines, KiOmed Volumizer) and lip (KiOmed Lips) filling. Sinclair actively promoted the registration and marketing of its core products in global key markets, and has now started relevant clinical work necessary for marketing Ellansé and MaiLi in the U.S. During the reporting period, the Company kept advancing the registration and launching of its core products in China. The Company’s V version and X version of poly-L-lactic acid (PLLA) collagen stimulant Lanluma obtained the approval from Hainan Medical Products Administration that Lanluma can be used in Bo’ao Lecheng International Medical Tourism Pilot Zone as an urgent imported medical device for clinical purpose. In February 2023, China’s first case of treatment with Lanluma was completed in ARSMO. In April 2023, Lanluma, a PLLA product of Sinclair, was awarded “The Best Injectable Body Filler” by the 2023 AMWC, which vividly showcases the authoritative recognition of Lanluma products and technologies by the international aesthetic medicine industry, as well as the great affirmation of Sinclair’s achievements in the high-end aesthetic medicine field. In addition, the Company is advancing the application for franchise rights of Silhouette and Ellansé series products in Bo’ao Lecheng International Medical Tourism Pilot Zone. Please see “(8) Progress of registration and marketing of aesthetic medicine products” in “(III) R&D situation” below in this section for the progress of registration of the Company’s other key aesthetic medicine products in China. 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 23 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 24 Figure: Key Aesthetic Medicine Products of Huadong Medicine 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 25 During the reporting period, Sinclair attended the IMCASConference in Paris, the world’s leading conference on dermatology and plastic surgery, attracting extensive attention for its product lines and new products launched. The on-site presentation of MaiLi products, the high-end HC series of Sinclair, attracted over 2,000 physicians in the main venue. Sinclair also devoted itself to offering high-quality training and education, kept enhancing its brand building, and continuously improved the industry influence and competitiveness through practical training and sharing of insights on industry leaders with Sinclair College, its education and training platform, as the carrier. In March 2023, Sinclair held a half-year “Focus on Excellence World Tour” through its affiliated Sinclair College. The “Focus on Excellence World Tour” will bring the best practice lectures, live demonstrations, insights of experts from global aesthetic medicine industry, and interactive Q&A exchanges for audiences eight international cities including Milan, Barcelona, So Paulo and Dubai, as well as Chinese cities like Beijing, Shanghai, Hangzhou, Shenzhen and Chengdu. Sinclair (Shanghai), the Company’s wholly-owned subsidiary and its aesthetic medicine business operating center in Chinese market, kept developing the high-end markets for aesthetic medicine injections. By the end of June 2023, Sinclair (Shanghai) has signed cooperation contracts with over 600 hospitals and trained over 1,100 certified physicians. Sinclair (Shanghai) also gives full play to the advantages of global experts’ medical resources through its official learning platform “Sinclair Education Vision” and keeps providing more rich, high-quality and innovative medical courses for Chinese physicians, thus making sure to provide patients with professional and efficient services. In the future, the Company’s aesthetic medicine segment will continue to focus on the high-end market of global aesthetic medicine to form an international aesthetic medicine business integrating R&D, manufacturing and marketing by upholding the strategy of “global operation layout and dual-circulation operation & development”. With its core subsidiary Sinclair as the global operation platform and integrating global technological and innovative resources, the Company has achieved the global operation layout for its aesthetic medicine segment and successively introduces “aesthetic medicine + biomedicine” products with great scientific connotation and huge market potential into China. Internationally, the Company empowers the rapid launching and commercialization of its superior international products relying on its great registration and marketing abilities in China and steadily expands its presence in China, thus fostering a new pattern features dual-circulation coordinated development and mutual promotion of domestic and international businesses. 4. BD cooperation In January 2023, the Company’s wholly-owned subsidiary Huadong Medicine (Hangzhou) Co., Ltd., signed an exclusive commercialization cooperation agreement with Kaixing Life Science and 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 26 Technology (Shanghai) Co., Ltd., a wholly-owned subsidiary of CARsgen Therapeutics Holdings Limited. Under the agreement, Huadong Medicine (Hangzhou) obtained the exclusive commercialization rights of Zevorcabtagene Autoleucel Injection (R&D code: CT053), a candidate product of fully human anti-autologous BCMA (B cell mature antigen) CAR-T used by Kaixing for the treatment of relapsed/refractory multiple myeloma. With great potential, Zevorcabtagene Autoleucel Injection will further enrich the Company’s product lines in the field of blood diseases, and will also share the expert network, research and clinical resources with existing key varieties of the Company in the field in terms of marketing, thus achieving mutual complementary, mutual development and effective collaboration. The Company will form multi-dimensional product lines of chemotherapy medicines, ADC products and CAR-T products in the field of neoplastic hematologic treatment after this transaction. Please refer to the Announcement on Signing an Exclusive Commercialization Cooperation Agreement for Products by a Wholly-owned Subsidiary (Announcement No.: 2023-004) disclosed by the Company on Cninfo ( for details. In March 2023, the Company intended to sign the Partnership Agreement of Hangzhou Capital Biomedical Achievements Transformation Fund (hereinafter referred to as the “Partnership Agreement”) with Hangzhou Jianheng Enterprise Management Co., Ltd., Hangzhou Industrial Investment Co., Ltd., Hangzhou Taikun Equity Investment Fund Partnership (Limited Partnership), Betta Pharmaceuticals Co., Ltd. and Hangzhou West Lake Industrial Fund Co., Ltd. to jointly invest in the establishment of Guoshun Jianheng Venture Capital Partnership (Limited Partnership) with a total subscribed capital of 210 million yuan, in a bid to further enrich the Company’s industrial investment ecosystem relying on the industrial management experience of business managers and resource advantages of other contributors by organically integrating government’s guidance fund and excellent pharmaceutical capitals. By contributing 40 million yuan (or a contribution ratio of 19.05%), the Company will be the limited partner (LP) of the Partnership. Please refer to the Announcement on Joint Investment with Professional Investment Institutions (Announcement No.: 2023-008) disclosed by the Company on Cninfo ( for details. In April 2023, the Company’s wholly-owned subsidiary Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. signed the Agreement on Equity Transfer and Capital Increase of Jiangsu NAUAnimal Pharmaceutical Co., Ltd. (hereinafter referred to as “NAUAnimal Pharmaceutical”), with NAUAnimal Pharmaceutical, natural person Zhai Zhongshu and Nanjing Jiuheng Pharmaceutical LP (Limited Partnership). Zhongmei Huadong will invest no more than 265,333,300 yuan in total and acquire 70% of the equity in NAUAnimal Pharmaceutical in the form of equity transfer and capital increase, becoming a controlling shareholder of the latter. This 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 27 acquisition of NAUAnimal Pharmaceutical further improved the industrial layout of the Company in industrial microbiology. NAUAnimal Pharmaceutical is at a stage of rapid growth. The average annual growth rate of sales revenue in the past three years has exceeded 50% and the preliminary construction has laid a solid foundation for its rapid development. After this transaction, NAU Animal Pharmaceutical will become an important platform for Huadong Medicine to develop its animal health business in industrial microbiology sector, while making full use of Huadong Medicine’s advantages in industrial ecological chain and financial support capabilities to achieve coordinated development in R&D, manufacturing, marketing, selling and other dimensions. Please refer to the Announcement on Acquisition of 70% Equity of Jiangsu NAUAnimal Pharmaceutical Co., Ltd. via Equity Transfer and Capital Increase (Announcement No.: 2023-024) disclosed by the Company on Cninfo ( for details. In August 2023, the Company’s wholly-owned subsidiary Zhongmei Huadong signed the Exclusive Product License Agreement with the American listed company Arcutis Biotherapeutics, Inc. (hereinafter referred to as “Arcutis”). According to the agreement, Zhongmei Huadong obtained the exclusive license of the globally innovative Roflumilast external preparations (including Roflumilast Cream ZORYVE and Roflumilast Foam ARQ-154) of Arcutis in Greater China (including Chinese mainland, Hong Kong, Macau and Taiwan Province) and Southeast Asia (Indonesia, Singapore, Philippines, Thailand, Myanmar, Brunei, Cambodia, Laos, Malaysia and Vietnam), including rights for development, registration, production and commercialization. Zhongmei Huadong will pay Arcutis a down payment of 30 million US dollars, a milestone payment of development, registration and sales with a maximum of 64.25 million US dollars, and a graded double-digit net sales commission. The introduction of ZORYVE cream and ARQ-154 will further supplement the Company’s product lines in the field of autoimmune and inflammatory skin diseases, and consolidate the its core competitiveness in the field of autoimmunity. Please refer to the Announcement on Signing an Exclusive Licensing Agreement for Products by a Wholly-owned Subsidiary (Announcement No.: 2023-061) disclosed by the Company on Cninfo ( for details. 5. ESG of the Company during the reporting period With regard to ESG, the Company has always adhered to the concept of sustainable development. Setting up a special ESGCommittee to coordinate the Company’s ESG work, the Company integrates the core theory of ESG with the enterprise development strategy and daily operation management, guides and makes innovation in various work with a scientific concept of social responsibility, upholds the idea of green production, actively responds to the “carbon neutrality and carbon peaking” goals, operates with integrity in strict accordance with laws, and 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 28 actively fulfills its social responsibilities. By virtue of its excellent ESG governance ability, the Company won the AA rating for ESG by CNIIndex of Shenzhen Stock Exchange and the A rating for ESG of WIND, and was awarded the 16th Top 100 Chinese Listed Companies in ESG by Securities Times, Panorama Network Excellent Social Responsibility Award, etc. 6. Awards during the reporting period During the reporting period, as the Company’s comprehensive competitive strength, efficient operation and governance, and value creation ability were recognized by the market, it won a number of awards and honors: The Company was included in Fortune China 500 for the 14th time and ranked 358th. It was selected in the list of “2022 Top 100 Pharmaceutical Industries in China” of MENET, reelected top 10 among “2022 Top 100 Pharmaceutical Enterprises in China”, and included in “2023 Top 100 Chinese Enterprises in Overall Strength of Pharmaceutical Research and Development”, “2023 Top 100 Chinese Enterprises in Chemical Drugs Research and Development” and “2023 Top 50 Chinese Enterprises in Biomedicine Research and Development” by YaoZH. In terms of investor relations management, the Company won numerous awards, including the Gold Award for Panoramic Investor Relations - “Outstanding IRCompany”, “Outstanding IRTeam”, “Best Corporate Communication Award”, “Best New Media Operation Award”, and the 14th Tianma Awards for Investor Relations of Chinese Listed Companies - “New Media Award”, etc. (III) R&D situation (1) Overall R&D situation During the reporting period, being “Scientific Research-based and Patient-centered”, the Company further devoted itself to the field of cancer and chronic disease treatment, continuously increased the R&D input, kept enriching the layout of innovative medicine R&D, enhanced the construction of innovative R&D ecology and technological platform, and actively advanced the progress of clinical trials, with multiple major staged achievements made. As of the date of the Report, the Company has a total of 82 pharmaceutical projects under development, including 51 innovative and biosimilar medicine projects. During the reporting period, the Company input 1.057 billion yuan in R&D in the pharmaceutical industry segment. Among them,668 million yuan were used as direct R&D expenditures, up 15.91% year on year. R&D tasks mainly include the following: 1) The Company continued to practice the new medicine R&D mode combining independent R&D + cooperative entrusted development + product License-in, track the latest international mechanism of medicine action and target, as well as the progress of clinical application research, 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 29 speed up the layout of innovative medicines and introduction of innovative medicine projects at home and abroad, clarify innovative, differentiated and iterative standards for initiation of projects, and strengthen the capabilities of independent innovation and R&D; 2) With “clinical value, pharmaco-economic value and commercial value” as the starting point, the Company laid out multiple categories of innovative products in fields of endocrinology, autoimmunity and oncology; 3) Focusing on clinical superior varieties and specialized medicines, the Company accelerated the R&D layout of high-tech barrier generic medicines and modified new medicines; 4) The Company established and fostered the industrial chain advantages of “APIs + preparations” for generic medicines, developed technical improvement and innovation of external preparations, and strengthened its market competitiveness; 5) The Company strengthened the comprehensive dynamic evaluation of varieties under development, strengthened the management of imported projects, especially clinical projects, accelerated the speed and quality of development of clinical projects, especially those under phase III clinical trials, and sped up the launching of innovative medicines; 6) The Company built its ADC global R&D ecology for win-win cooperation by fostering the Polypeptide differentiation innovative technology platform, immune disease antibody technology platform, microbiology fermentation cytotoxin technology platform, and innovative linker and coupling technology platform. (2) Innovative R&D strategy As for innovative medicines, the Company insisted on its differentiated R&D strategy with the focus placed on unsatisfied clinical needs of global patients, and gave priority to the layout of three key fields of fields of endocrinology, autoimmunity and oncology to become a leader in these fields. To date, the Company has formed 46 innovative product lines, with half of these products researched and developed independently. As its product lines are continuously enriched, the Company has constantly expanded its innovative medicine field to the R&D of multiple types of medicines including micromolecule medicines, polypeptides, ADCs, bispecific or multi-specific antibody medicines, as well as the exploration towards innovative therapies for diseases in the fields of endocrinology, autoimmunity and oncology. 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 30 (3) Progress of R&D of innovative medicines, innovative medical apparatuses and biosimilar medicines Oncology The Company endeavored to build the world’s leading platform for R&D of innovative cancer medicines and established more than 30 innovative antineoplastic medicines covering targeted micromolecule medicines, ADCs, antibodies, PROTAC, etc. through discovery, screening and verification of new targets in preliminary R&D of medicines. The world’s first-in-class ADC drug, ELAHERE, mirvetuximab soravtansine-gynx (R&D code: IMGN853, HDM2002), introduced by the Company from ImmunoGen in the U.S. has achieved the preset main end point for phase III single-arm clinical trial in China, with its pre-BLA submitted in March 2023. It is planned to submit the BLA in China in Q32023. It was included in the priority review by CDE in July 2023. In the meantime, ELAHERE was approved to be introduced in Hainan thanks to the “Pioneering in Pilot Zone” licensed medical apparatuses policies in Hainan Bo’ao Lecheng International Medical Tourism Pilot Zone, which is expected to help Chinese PROC patients with platinum-resistant ovarian epithelial cancer, fallopian tube cancer or primary peritoneal cancer who are folate receptor α (FRα) positive in time. In the future, the Company plans to participate in the international multi-center PSOC clinical research to advance its application in front-line treatment of ovarian cancer and support to use ELAHERE as the preferred medicine combination for treatment of ovarian cancer. Mefatinib Tablet, the Company’s first-class new medicine, was included as the variety for breakthrough treatment in May, which is used for treating advanced non-small cell lung cancer with rare EGFR mutations. Another ongoing phase III clinical trial for advanced non-squamous non-small cell lung cancer with EGFR-sensitive mutations has completed the phase III study of PFS events in July 2023. It is planned to submit an application for launching within 2023. HDM2005, an ADC product independently developed by the Company, has completed PCC confirmation in Q12023 and IND development is now in progress. It is planned to apply for clinical trial in within 2024. In the second half of 2023, two types of independent innovative products for tumors will receive PCC confirmation and enter the IND development. 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 31 Endocrinology The Company has created the world leading innovative medicine R&D development platform for diabetes with GLP-1 target as the core. To date, the Company has established eight products of GLP-1 and related targets that cover oral medicines, injections and other dosage forms, including long-acting and multi-target global innovative and biosimilar medicines. The Company will keep exploring innovative projects related to GLP-1 targets, expanding its coverage to such indications as weight loss, lipid reduction and NASH, and constantly develop innovative medicines with higher bioavailability and more clinical advantages. HDM1002 (micromolecule GLP-1 receptor stimulant), an innovative medicine for diabetic mellitus that is developed by the Company independently, has obtained approvals in the U.S. and China, with the administration of the first subject in the first in human (FIH) achieved in the beginning of June 2023. The IND application for obesity in China was submitted in June 2023. To date, there is no oral micromolecule GLP-1 receptor stimulant in the world. HDM1002 will further enrich the Company’s product lines in the field of endocrine therapy, accelerate the Company’s integration into the global innovative pharmaceutical industry, and further enhance its comprehensive competitiveness. HDM1005, a GLP-1R and GIPR long-acting polypeptide dual-target agonist independently developed by the Company, has entered the research stage of IND. To date, the project is smoothly advanced and it is expected to submit the IND application in early 2024. DR10624, a GLP-1R/GCGR/FGF21R target multiple agonist developed by the Company’s holding subsidiary Doer Biologics, completed its first subject administration in phase IMultiple Ascending Dose (MAD) clinical trial for the treatment of obesity in New Zealand in July 2023. DR10624’s IND application for weight management of overweight or obese people in China was approved in July 2023, IND application for diabetes indication in China was submitted in June 2023, and IND application for hypertriglyceridemia indication in China was submitted in August 2023. Liraglutide Injection has had its marketing authorization application for diabetes indications approved by NMPA in March 2023, and its marketing authorization application for obese or overweight applications was approved in July 2023. Semaglutide Injection has now completed the phase I clinical trial and reached the 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 32 equivalence study end point, with its phase III clinical study launched. Insulin Degludec Injection has now completed the phase I clinical trial and reached the equivalence study end point, with its phase III clinical study launched. Autoimmunity The Company has had over 10 varieties of biomedicines and micromolecule innovative products in the field of autoimmunity. The marketing authorization application of HDM3001 (QX001S), a biological similar of Ustekinumab (Stelara) for plaque psoriasis has been accepted by NMPA in August 2023. The IND application of HDM3002 (PRV-3279), an innovative medicine used for the treatment of systemic lupus erythematosus (SLE), has been approved by CDE in April 2023 and has been formally included in IIa phase MRCT (PREVAIL-2). Being listed as Overseas New Medicine in Urgent Need for Clinical Purpose (First Batch) by CDE, ARCALYST, a global innovative product introduced from Kiniksa in the U.S., is used for the treatment of Cryo-Pyrin-Associated Periodic Syndromes (CAPS). It is expected that its BLA for this application will be formally submitted in China in 2023. Moreover, the Company has submitted the Pre-BLA for recurrent pericarditis in China at the end of June 2023. The Company developed multiple new target and biological mechanism immune disease early projects, which are all smoothly advanced. In the second half of 2023, a type of independent innovative product for autoimmunity will receive PCC confirmation and enter the IND development. Innovative pharmaceutical apparatuses HD-NP-102 (Dynamic Monitoring System of Glomerular Filtration Rate and MB-102 Injection): The Dynamic Monitoring System of Glomerular Filtration Rate and MB-102 Injection jointly developed by the Company and MediBeacon, Inc of the U.S. can continuously measure the glomerular filtration rate (GFR) of patients with normal or impaired renal functions by non-invasive monitoring of the fluorescence emitted by MB-102 through intravenous injection. In July 2022, NMPA formally accepted the pharmaceutical apparatus registration application for the system and is now reviewing the application. The MB-102 injection (Relmapirazin) used in conjunction with this system is a global innovative medicine that completed the enrollment of all subjects for international multi-center phase III clinical trial in February 2023. The pre-NDA has 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 33 submitted in China in April 2023. The PMA has been submitted in the U.S. in June 2023, which has been accepted by FDA in July 2023. Pipeline Diagram of Main Innovative Medicines and Biosimilars as of the Date of the Report. 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 34 (4) Others tasks regarding Innovation R&D Rapidly expanding scientific research team The company has set up a full-chain efficient and hardworking core R&D team with international visions composed of 1,500 high-level developers of various levels, and has established a relatively sound R&D management system that covers the whole process of medicinal development from target research, early medicinal discovery, pre-clinical research, clinical trials to new medicine registration and marketing. The early R&D team carried out a lot of pre-researches on novel and cutting-edge targets, systematically studied from such aspects as target mechanism, phenotypic analysis and indication selection, and supported the selection of early development strategies with high-quality internal data, in a bid to advance the Company’s two major strategies of innovation and internationalization and keep pace with industrial development trend of advancement of targets. Since 2023, the Company has implemented the early exploratory project mechanism, sought gradual development and accelerated its innovation by piloting the cutting-edge targets and building platforms for popular fields, and placed its focus on three key fields of endocrinology, autoimmunity and oncology. The Company has launched 9 early exploratory projects in the first half of 2023, expecting to develop the first-in-class or best innovative medicines of the same type. The Company’s clinical R&D team has continued to explore the speed and coverage of innovation and break through the differentiated bottleneck in innovation in accordance with the orientation of high efficiency and high quality, endeavoring to achieve the leap-forward development of diversified innovation in clinical R&D. The R&D team has charged and supported clinical projects from such dimensions as clinical study, operation, registration and pharmaco-vigilance. In 2023, the Company is expected to submit the formal marketing authorization applications for at least 3 innovation projects. Advanced technical platforms The Company has built such medicinal R&D platforms as new target screening and verification platform, ADCR&D platform, CADD/AIDD platform and PROTAC technology platform, aiming at accelerating the promotion of numerous pipe lines with original innovation (first-in-class, best-in-class) or differentiated/iterative development values. Over the past 3 years, 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 35 the Company has obtained 6 PCC modular cumulatively and had 9 clinical applications approved with the support from these platforms. Among them, AI drug discovery & design (CADD/AIDD) platform is a key orientation currently valued by the Company, which strengthens the construction of computing power and algorithm system and intelligently process the data generated and accumulated in combination with the research progress of the industry. In the meantime, rich data on the properties of finished medicines accumulated by the Company lays the foundation for continuous optimization and iterative prediction model of the properties of finished medicines and greatly improves the R&D progress of several projects at different stages. At present, the platform is also expanding its application in the R&D of polypeptide, ADC, protein and nucleic acid medicines. To date, the platform has submitted about 30 patent applications and got about 2,000 compounds. Other innovation results as of the reporting period 1) Patent applications The Company’s Innovative Medicine Global R&DCenter attached great importance to the protection of intellectual property rights, valued the management of intellectual property rights in the whole life cycle of medicines and the formulation of patent strategies, and set up an intellectual property BP for the early warning, declaration and retention of patents in and out of China, thus improving the comprehensive competitiveness of its products. To date, the Center has claimed a total of over 80 patent applications, including 21 formal and PCT patent applications since its establishment. All these patents cover such aspects as structures, preparation processes, applications and formulations of new medicines. 2) Academic publications Since 2022, the innovative medicine team has published 9 innovative research results on journals/conferences. In 2023, the innovative medicine team published 5 papers in the fields of oncology and endocrinology at conferences or on journals, including KRASG12D-PROTAC research selected in the summary of 2023 WCLC (with an oral report made), oral GLP-1 micromolecule agonist HMD1002 selected in the summary of 2023 EASD (with an oral report made), targeted HPK1 micromolecule inhibitor research selected in the summary of 2023 CSCO, PROTAC research results targeting BTK published on RSCMedicinal Chemistry Journal, and 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 36 clinical study results of Mefatinib at the first-line treatment for NSCLC published on Cancer Communications. 3) Governmental subsidies To date, the Company’s Innovative Medicine Global R&DCenter has obtained approvals from the government for 12 projects (applications for 3 new projects submitted in 2023 and are under review), with the certified subsidies of 27.25 million yuan. The Company won the honor of “Pioneering Innovation Team” of Zhejiang Province in 2021 and obtained the fund under Zhejiang Province’s Pioneer Scientific and Technology Program for two consecutive years in 2021 and 2022. Meanwhile, HDM1002 and some other programs were all awarded prizes for scientific and technological projects at the provincial and/or municipal level. Mefatinib won the fund from the “Special Program for High-quality Development of Bio-pharmaceutical Industry in Hangzhou”. The Company’s Innovative Medicine Global R&DCenter has kept advancing the high efficiency and high quality work style of various team revolving around its scientific innovation and internationalization strategy to attract more high-end talents, successfully importing multiple “Hangzhou 115” overseas talents and experts. (5) Progress of development of major generic medicines The Company further clarified the focused and prioritized varieties of existing generic medicines under development by regularly organizing dynamic evaluation and analysis. As of the date of the Report, key varieties are as follows: S/NField Item Specification Latest Progress 1 Endocrinology Canagliflozin Tablets 0.1g,0.3g Approved to be launched by NMPA in January 2023 2 Endocrine Pioglitazone Hydrochloride and Metformin Hydrochloride Tablets 15/850mg Application for launching accepted in June 2022 and supplementary materials submitted in March 2023. 3 Immunity Tacrolimus Ointment 0.03%,0.1% Application for launching accepted in April 2022 and supplementary materials submitted in April 2023. 4 Immunity Tacrolimus Granules 1mg Application for launching submitted and accepted in January 2023. 5 Immunity Tacrolimus Sustained-release Capsules 5mg,1mg,0.5mg Application for launching of 5mg version submitted and accepted; Applications for launching of 1mg and 0.5mg versions submitted and accepted in February 2023. 6 Oncology Olaparib Tablets 100mg,150mg Application for launching submitted and accepted in October 2022. 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 37 7 Oncology Ibrutinib Capsules 140mg Process certification completed and BE test in progress. 8 Angiocarpy Macitentan Tablets 10mg Supplementary materials have been submitted. 9 Anti-infection Fusidic Acid Cream 15g: 0.3g Application for launching accepted in May 2023. 10 Easing pain Lornoxicam for Injection 8mg Application for launching submitted in August 2023. (6) Progress of international registration The Company has actively conducted its international registration tasks. As of the date of the Report, main progress is as follows: S/NField Item Remarks Latest Progress 1 Endocrinology Acarbose APIs Officially approved by India in June 2023. Supplementary materials for registration in Taiwan, China submitted in April and June 2023. 2 Immunity Tacrolimus Capsules 0.5mg,1mg,5mg Approved by FDA in the U.S. in April 2023. 3 Oncology Exatecan Mesylate Intermediate DMF application submitted in the U.S. in March 2023. 4 Anti-infection Mupirocin APIs Approved to be registered in India February 2023. 5 Anti-infection Caspofungin Acetate for Injection 50mg,70mg Supplementary materials for ANDA application (the U.S.) submitted in May 2022. 6 Anti-infection Polymyxin BSulfate APIs CEP application for Jiangdong Premise approved by EDQM in May 2023. Approved to be registered in India February 2023. 7 Anticoagulant Fondaparinux Sodium APIs Registration in Taiwan, China approved. DMF defect reply submitted in the U.S. in April 2023. 8 Anticoagulant Fondaparinux Sodium Injection 2.5 mg/0.5 mL,5 mg/0.4 mL,7.5 mg/0.6 mL,10 mg/0.8 mL Supplementary materials for ANDA application (the U.S.) submitted in August, October and December 2022, and February and May 2023. 9 Traditional Chinese Medicine Bailing Capsule 0.5g Registration of premise in Canada approved in May 2023. (7) Progress of consistency evaluation As of the date of the Report, the progress of consistency evaluation on quality and efficacy of Company’s generic medicines is as follows: S/NField Item Specification Latest Progress 1 Immunity Tacrolimus Capsules 1mg,0.5mg The notification of approval for supplementary application of consistency evaluation for 1mg specification obtained in July 2023. Application for consistency 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 38 evaluation of 0.5mg version submitted and accepted in February 2023. 2 Gastroenterology Pantoprazole Sodium Enteric Capsules 40mg The notification of approval for supplementary application of consistency evaluation obtained in May 2023. 3 Angiocarpy Indobufen Tablets 0.2g Application for consistency evaluation submitted and accepted in March 2023. 4 Angiocarpy Adenosine Injection 20ml:60mg, 30ml:90mg Application for consistency evaluation submitted and accepted in October 2022, and supplementary materials submitted in April 2023. (8) Progress of registration and launching of aesthetic medicine products in China S/NType Product Designation Purpose Latest Progress 1 Injections MaiLi Extreme Hyaluronic acid Facial filling Collection of curative effect indexes of all subjects for clinical trial in China completed in August 2023. 2 Injections MaiLi Precise Hyaluronic acid Facial filling Testing for registration in China completed and pre-clinical work under preparation. 3 Injections Ellansé-MFacial filling Enrollment of all subjects for clinical trial in China completed in March 2023 and follow-up in progress. 4 Injections Perfectha Diphasic hyaluronic acid Facial filling Preparing for registration in China. 5 Injections Lanluma V Poly-l-lactic Acid Facial filling Preparing for registration in China. 6 Energy source equipment Glacial Rx (F1) Removing benign pigmented lesions of skin, etc. Testing for registration in China and preparation of technical data in progress. 7 Energy source equipment V series products (V20, V30) Skin compactness, body and facial shaping, skin rejuvenation, depilation, etc. Testing for registration in China and preparation of technical data for V20 completed, and registration application expected to be submitted in Q32023. Registration of V30 in China in progress. 8 Energy source equipment Préime DermaFacial Facial skin management Commercial marketing achieved in European, American and other key aesthetic medicine markets successively in September 2022. Device attribute identification in progress in China; matching cosmetics approved for registration in December 2022. 9 Energy source equipment Reaction Body and facial shaping, skin compactness Re-launching in China completed in June 2023. (9) Progress of patents In recent years, the Company attached great importance to the protection of intellectual property and the commercialization and application of achievements, and the number of patent 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 39 applications and authorization were steadily increased. Over the years, the Company applied for 1,204 patents at home and abroad, including 426 authorized invention patents. Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd., the Company’s wholly-controlled subsidiary, is a national intellectual property demonstration enterprise. In November 2014, it passed the external audit of Zhongzhi (Beijing) Certification Co., Ltd., becoming one of the first 147 companies that passed the standards implementation certification and successfully passed the supervision and re-examination of the enterprise intellectual property management system in October 2022. During the reporting period, application and renewal of patents of the Company were progressed smoothly, with a total of 68 patent applications submitted, including 38 patents for invention. A total of 52 patents were granted. Patent type Increase during the reporting period Total quantity Number of patents applied for (unit) Number of patents received (unit) Number of patents applied for (unit) Number of patents received (unit) Invention patent 3822969426 Utility patent 3025201175 Appearance design patent 053430 Total 68521204631 Note: Data in the above table represent the statistical patent information of main subsidiaries engaging in the pharmaceutical industry, industrial microbiology and aesthetic medicine within the Company’s consolidated statements. II. Core competitiveness 1. Open innovative medicine R&D system and continuously improved innovation ability The Company has always attached great importance to innovative R&D and maintained great input in R&D. Being “Scientific Research-based and Patient-centered”, the Company has fostered a sound independent innovation system for R&D of medicines that covers the whole process from medicine discovery, pharmaceutical research, pre-clinical study and clinical study to industrial production, and set up its Global New Medicine R&DCenter after years of vigorous development, with “clinical value, pharmaco-economic value and commercial value” as the starting point. Focusing on three core therapeutic fields of oncology, endocrinology and autoimmunity, the Company has established in-depth strategic cooperation with leading pharmaceutical enterprises in and out of China through collaborative product development, equity investment or by other means, successfully building its global R&D ecosystem via introduction, fusion and innovation. In recent years, the Company kept expanding its differentiated in-depth layout in the field of ADC, 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 40 successively invested in Qyuns Therapeutics, an anti-body R&D and production company, Nuoling Biomedical Technology (Beijing) Co., Ltd., an ADC linker and coupling technology company, incubated Zhejiang Huida Biotech Co., Ltd. with full product lines for ADC drug toxin raw materials, and held shares of Doer Biologics, a multi-antibody platform R&D company. Moreover, the Company established cooperation with Heidelberg Pharma, a global emerging technology company in the field of ADC based in Germany, on equity investment and products, and organically integrating with its advanced ATAC (Antibody-Amanita Conjugate) technology platform. In the future, the Company will keep strengthening the construction of innovative platform and integration of resources, further expand the cooperation on new technology platforms based on the ADCGlobal R&DEcology of Huadong Medicine, and create a world-leading ADC independent R&D platform. Moreover, the Company keeps developing and has fostered differentiated innovative product lines that cover the full R&D cycle via independent R&D, external cooperation, license-in, etc. As of the date of the Report, the Company has reserved 51 types of innovative and biosimilar medicines under development, which cover oncology, endocrinology, autoimmunity and other fields. All these merits effectively empower the continuous initiation and launching of innovative products, offering impetuses for the medium- and long-term development. 2. Comprehensive ability in developing international businesses Vigorously advancing its internationalization, the Company has further strengthened its presence in global energy-source aesthetic medicine apparatuses market by acquiring 100% equity of High Tech and Viora. Meanwhile, the Company has also established product or equity cooperation with Akso, Kiniksa and Provention Bioin in the U.S., Heidelberg Pharma in Germany, etc. to complement and enrich the interests of commercial development of innovative medicines in and out of China. Efforts are made to facilitate the international registration of products, and all chemical raw medicines launched have obtained authorized certifications from FDA or EU. Our products such as Daptomycin for Injection, Acarbose Tablets and Pantoprazole Sodium for Injection have been approved by FDA, while some high-end industrial microbiological raw products enjoy strong international competitiveness. The Company never stops its pace in developing international logistics and purchase supplies to foster international purchasing abilities, and has been a part of global innovative medicine R&D industry chain by driving the constant improvement of its abilities in CMO/CDMO businesses. 3. Diverse product lines for specialized and chronic diseases, and comprehensive competitiveness in diabetes treatment and care Specialized in specialized and chronic diseases, as well as special medicines for years, the Company has fostered good brand effect and laid strong market foundation in such fields as chronic 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 41 nephrosis, transplantation immunity, internal secretion and digestive system, continuously keeping in the forefront of similar products in China in terms of market share. The Company has comprehensively laid out product lines of innovative and differentiated generic medicines for clinical mainstream therapeutic targets of diabetes, with over 20 types of products under development or put in commercial production. The Company has also achieved full coverage of clinical first-line immune-suppressive medicines and subsequent products in the field of organ transplantation. With the world’s first-in-class layout in three core therapeutic fields of oncology, endocrinology and autoimmunity, the Company has fostered multiple global innovative medicine layouts and R&D ecologies in the field of ADC medicines, forming differentiated advantages. 4. Comprehensive competitive advantages that cover multiple diseases in the field of autoimmunity In recent years, the Company has continuously made in-depth layout around the field of autoimmunity, introduced the world’s leading innovative technologies and products, and kept improving its own innovative R&D capabilities. To date, the Company has had over 10 varieties of biomedicines and micromolecule innovative products in the field of autoimmunity. In the meantime, the Company’s Innovative Medicine R&DCenter developed multiple new target and biological mechanism immune disease early projects, which are all smoothly advanced. In the field of autoimmunity, the indications of the Company’s existing and under-development products include transplant immunity, systemic lupus erythematosus, psoriasis, atopic dermatitis, seborrheic dermatitis, recurrent pericarditis, Cryopyrin-Associated Periodic Syndromes and other 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 42 diseases, covering such diseases as skin, rheumatism, cardiovascular, respiratory, and transplantation. The Company has become one of the pharmaceutical companies with comprehensive coverage in the field of autoimmunity in China. The Company established its external preparations R&D platform in the field of autoimmunity, steadily promoted the R&D innovation for external and complex preparations in combination with actual project practices platform, mainly the development of external liquores, ointments, gelling agents and creams, as well as improvement of the development ability of in vitro release and transdermal experiment method, ability in biochemical detection of biomedicine, level in impurity spectrum analysis and structure confirmation of APIs. To date, its holding subsidiary Huadong Medicine (Xi’an) Bohua Pharmaceutical Co., Ltd. has fostered three production lines for external preparations. 5. China’s leading professional pharmaceutical service team and extensive market network 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 43 In the pharmaceutical industry segment, the Company has fostered a professional pharmaceutical service and market development team. Coring at the clinical values and academic promotion, the team vigorously promotes the marketing mode that features the online integration of comprehensive hospitals, primary level medical institutions, retailing, third-party terminals and Internet, and has gradually formed multi-channel effective coverage and strong competitive advantages. As for pharmaceutical business, the Company has made its presence in Zhejiang market for years and boasts a complete business ecosystem with diverse categories of products and services, forming comprehensive competitive advantages in market access and coverage. Keeping improving its four core competencies of logistics, information, finance and operation, and offering such high-end value-added services as policy affairs, the Company has established business partnership with 90% mainstream pharmaceutical enterprises in and out of China, and covered all public medical institutions, key private medical institutions and retain pharmacies in Zhejiang Province, with a leading market share in Zhejiang Province and forefront ranking in the industry for consecutive years. In recent years, the Company has witnessed rapid development in innovative businesses such as products agency and market development, characteristic massive health industry, third-party medical logistics featuring cold chain and medical e-commerce and has formed complete cold chain logistics service system and ability at a leading level in China. 6. High-end international aesthetic medicine product lines that cover noninvasive and micro-invasive mainstream non-operative fields The Company successfully made its presence in the aesthetic medicine industry by acquiring Sinclair based in UK. Acquiring international energy-source aesthetic medicine apparatus enterprises High Tech and Viora in 2021 and 2022 respectively, Sinclair was granted the global distributorship (except for Germany and UK) of Préime Derma Facial Multi-functional facial skin management platform of EMAAesthetics, an Irish company, in May 2022. Covering all middle- and high-end markets of non-operative aesthetic medicine injections and energy-source aesthetic medicine apparatuses, the Company has now held global rights of multiple patented products in such fields as facial and body filling, facial cleansing, body shaping, catgut embedding, and energy-source apparatuses, and set up an international aesthetic medicine operation and BD team. The Company further integrates its R&D resources and competencies focusing on global high-end aesthetic medicine markets. The Company has successfully developed its international aesthetic medicine businesses that organically combine R&D, manufacturing and marketing, and established an international aesthetic medicine marketing network based on its six global R&D centers in UK, the Netherlands, France, Switzerland, Spain and Israel, as well as Sinclair’s six global production 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 44 bases in the Netherlands, France, the U.S., Switzerland, Bulgaria and Israel, with its products sold in over 80 countries and regions. To date, the Company has developed 36 types of international high-end “noninvasive and micro-invasive” aesthetic medicine products that cover facial and body filling, catgut embedding, skin management, body shaping, depilation, private repair and other non-operative mainstream aesthetic medicine fields. Specifically,24 types of these products have been launched in and out of China, and the other 12 types are “first-in-class” products under development. With comprehensive product clusters formed, the Company now ranks in the forefront of the industry in terms of product quantity and coverage. 7. Comprehensively improving the international competitiveness of the industrial microbiology segment based on solid R&D and industrial base With profound industrial base thanks to over 40 years of development in the industrial microbiology sector, the Company has successfully developed and manufactured multiple types of microbiological medicines, and established the key technology system for R&D and production of microbiological products, ranking in the forefront of the industry in terms of scale and technological level of microbiological fermented products. Being market demand-oriented, R&D technology-driven and industrial resource-coordinative in the industrial microbiology segment, the Company has fostered differentiated product lines and solutions. Since the establishment of the Industrial Microbiology Division, the Company has led the overall business development in the field of industrial microbiology, and formed a complete independent management system in operation, R&D, investment, human resources and marketing. In the industrial microbiology segment, the Company has also established the R&D clusters with Industrial Microbiology of Zhongmei Huadong, HITInstitute of Synthetic Biology, Huida Biotech, Hizyme Biotech and Perfect mRNA as the core, and seven industrial bases in Hangzhou Xiangfuqiao, Qiantang New Area, Jiangsu Joyang Laboratories, Magic Health, Twisun Hi-tech, Wuhu Huaren, and NAUAnimal Pharmaceutical. Moreover, the Company has set up the largest fermentation monomer plants in Zhejiang, formed the industry-leading microbiological medicine production ability and high-level R&D capacity that covers all stages of microbiological engineering technologies from strain construction, metabolic regulation, enzymatic catalysis, synthetic modification to separation and purification, and built a complete manufacturing system for R&D, pilot test, commercial production, engineering and public system guarantee of microbiological projects. In the industrial microbiology segment, the Company has initiated over 230 R&D projects, including 36 projects for xRNA (including 127 subprojects),44 projects for featured APIs& intermediates, and 28 projects for massive health & biomaterials, animal health, etc. By the end of June 2023, the Company had 121 patents in the field of industrial microbiology, and 88 patents 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 45 were under review. In terms of R&D, the Company’s industrial microbiology segment has been committed to forming an efficient R&D team with high-quality talents as the core. To date, there are over 300 R&D personnel, over 20% of whom have obtained their master and/or doctoral degrees. 8. Prudent and pragmatic operation style, and stable returns to shareholders Valuing innovation in management, the Company has always endeavored to satisfy the demands for market competition by improving the quality of its operation. As a result, the Company has achieved long-term steady development thanks to its high-quality products, excellent commercialization capability, compliant yet efficient marketing services, differentiated market positioning, innovative R&D layout, and complete talent planning. Over the past 23 years since it was listed, the Company has distributed dividends for 20 times with the cumulative amount of 5.593 billion yuan, which is well in excess of the 250 million yuan raised during IPO. The Company brings shareholders consistent and steady returns on investment. III. Main businesses Overview Refer to “I. Main Businesses of the Company during the Reporting Period” Year-on-year Changes in Major Financial Data Unit: yuan Current reporting period Same period last year Year-on-year percentage increase/decrease Reasons for changes Operating revenue 20,385,344,288.8118,197,963,991.0112.02% Operating cost 13,917,418,061.1112,243,374,078.1513.67% Sales expenses 3,083,786,005.033,032,965,177.951.68% Administrative expenses 721,477,862.62572,048,249.5526.12% Financial expenses 55,848,182.305,447,966.20925.12% Mainly due to the increase in net interest expenses Income tax expenses 345,279,440.91287,938,727.7219.91% R&D input 558,407,142.27566,596,381.67 -1.45% Net cash flow from operating activities 2,021,743,748.65284,234,410.27611.29% Mainly due to the increase in revenue in the current period and accelerated withdrawal of fund Net cash flow from investing activities -577,687,027.42 -995,224,437.7741.95% Mainly due to the decrease in investment in the current period Net cash flow from financing activities -926,491,607.55277,803,243.85 -433.51% Mainly due to the year-on-year increase in debt repayment in the current period 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 46 Net increase of cash and cash equivalents 526,515,832.72 -459,496,727.95214.59% Material changes in profit composition or profit sources during the reporting period □ Applicable N/A No material changes in profit composition or profit sources during the reporting period. (1) Composition of operating revenue Unit: yuan Current reporting period Same period last year Year-on-year percentage increase/decrease Amount Proportion in operating revenue Amount Proportion in operating revenue Total operating revenue 20,385,344,288.81100% 18,197,963,991.01100% 12.02% By sector Business 13,636,059,547.2866.89% 12,227,544,864.7767.19% 11.52% Manufacturing 6,155,987,802.0730.20% 5,728,897,548.6331.48% 7.46% Aesthetic medicine [Note: 1] 1,224,069,602.016.00% 897,380,506.254.93% 36.40% Including: International aesthetic medicine 668,946,339.963.28% 530,599,252.482.92% 26.07% Aesthetic medicine in China 646,500,104.353.17% 413,184,704.692.27% 56.47% Offset (inter-sectoral offset) -506,685,654.27 -519,490,722.47 By product By region Domestic sales 19,679,447,121.2496.54% 17,641,053,155.9996.94% 11.55% Overseas sales 705,897,167.573.46% 556,910,835.023.06% 26.75% [Note 1] The domestic aesthetic medicine business includes the income from the self-operated products of Sinclair (Shanghai), the income from the aesthetic medicine products of the Company’s pharmaceutical commercial agency and the income from the OTC weight-loss products of the Company. The statistical specification of the semi-annual of 2023 is consistent with that of the semi-annual of 2022. The operating revenue or profit accounts for more than 10% of the total by industry, product, or region Applicable □ N/A Unit: yuan Operating revenue Operating cost Gross profit rate Year-on-year percentage increase/decrease in operating revenue Year-on-year percentage increase/decrease in operating cost Year-on-year percentage increase/decrease in gross profit rate By sector Business 13,636,059,547.28 12,832,274,870.44 5.89% 11.52% 12.74% -1.02% Manufacturing 6,155,987,802.07 1,270,066,961.31 79.37% 7.46% 4.52% 0.58% By product By region Domestic sales 19,679,447,121.24 13,680,511,269.29 30.48% 11.55% 13.37% -1.11% 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 47 Overseas sales 705,897,167.57233,906,791.8266.86% 26.75% 32.87% -1.53% If the statistical specifications of the Company’s main business data have been adjusted during the reporting period, the Company’s main business data of the latest period should be adjusted according to the specifications at the end of the reporting period. □ Applicable N/A IV. Non-main businesses Applicable □ N/A Unit: yuan Amount Proportion in total profit Note on reasons Sustainable or not Investment gains -136,885,042.56 -7.67% Mainly due to long-term equity investment gains measured at equity method Gains and losses from changes in fair value -5,100,698.38 -0.29% Asset impairment losses -3,175,583.57 -0.18% Non-operating revenue 2,972,826.610.17% No Non-operating expenses 16,298,554.800.91% No Other income 34,813,373.701.95% Mainly due to the confirmation of government grants in the current period No Gains on asset disposal 3,519,820.080.20% No V. Assets and Liabilities 1. Major changes in asset composition Unit: yuan End of the current reporting period End of last year Change of proportion Note on major changes Amount Proportion in total assets Amount Proportion in total assets Monetary funds 4,393,835,953.54 13.33% 3,996,302,178.41 12.81% 0.52% Accounts receivable 7,396,011,322.70 22.44% 7,198,746,788.59 23.08% -0.64% Inventories 4,600,017,100.80 13.96% 4,495,483,328.54 14.41% -0.45% Investment real estate 13,174,524.110.04% 13,648,240.140.04% 0.00% Long-term equity investment 1,554,304,930.05 4.72% 1,659,076,538.78 5.32% -0.60% Fixed assets 3,882,268,169.12 11.78% 3,981,653,265.52 12.76% -0.98% 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 48 Construction in progress 995,490,666.093.02% 873,159,427.472.80% 0.22% Right-of-use assets 140,455,892.140.43% 166,505,297.170.53% -0.10% Short-term borrowings 1,052,194,176.07 3.19% 947,516,383.373.04% 0.15% Contract liabilities 125,334,375.520.38% 146,488,489.070.47% -0.09% Long-term borrowings 746,918,081.652.27% 1,051,457,747.44 3.37% -1.10% Mainly due to repayment of debt in the current period Lease liabilities 92,232,272.510.28% 84,610,324.980.27% 0.01% Other non-current assets 1,320,687,263.41 4.01% 1,037,279,933.15 3.33% 0.68% 2. Information about main overseas assets Applicable □ N/A Contents of assets Reasons Asset size Location Operation mode Control measures to ensure assets security Earnings position Proportion of overseas assets to the Company’s net assets Where there are significant impairment risk Sinclair Pharma Limited Equity acquisition 2,264,625,300 yuan United Kingdom Independent auditing Approval of decisions on major matters and daily financial supervision by the Board of Directors, and audit by external intermediaries Loss in the current period 11.22% No 3. Assets and liabilities measured at fair value Applicable □ N/A Unit: yuan Item Amount at the beginning of the period Gain/loss from fair value changes in the current period Accumulate d fair value changes recognized in equity Depreciation reserves withdrawn during the period Purchase amount in the current period Selling amount in the current period Other changes Amount at the end of the period Financial 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 49 assets 2. Derivative financial assets 29,907,470.68 - 5,100,698.3 8 24,806,772.30 4. Other equity instrument investments 360,910,87 6.41 - 808,768.81 1,114,211.6 6 51,794,250.00 2,051,811.6 5 4,145.32 409,848,69 1.27 Total 390,818,34 7.09 - 5,909,467.1 9 114,211.66 51,794,250.00 2,856,435.1 4 4,145.32 434,655,46 3.57 Financial liabilities 0.00 0.00 Other changes Changes in exchange rate Whether there are significant changes in the main asset measurement attribute of the Company during the reporting period. □Yes No 4. Limitation of asset rights at the end of the reporting period Item Ending book value Reasons for limitation Monetary funds 450,409,418.49 Certificate of deposit and cash deposit that cannot be withdrawn at any time Intangible assets 52,246,350.00 Land use rights mortgaged for bank loans Total 502,655,768.49 VI. Investment 1. Overview Applicable □ N/A Investment amount in the reporting period (yuan) Investment amount in the same period of last year (yuan) Percentage change 1,101,613,342.521,128,489,759.34 -2.38% 2. Significant equity investments acquired during the reporting period Applicable □ N/A Unit: yuan Name of invested company Main business Way of investment Investment amount Shareholding ratio Fund source Partner Term of investment Product type Progress as of the balance sheet Projected income Profit or loss of investment Involved in litigation or not Disclosure date (if any) Disclosure index (if any) 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 50 date in the current period Jiangsu NAU Animal Pharmaceutical Co., Ltd. R&D, production and sales of animal drugs and health care products Acquisition 265,3 33,30 0.00 70.00 % Equity funds None Long term Equity Payment of some equity transfer amount and equity capital increase amount according to the agreement - 586,7 13.83 [Note] No April 20, 2023 Cninfo (http://www.cninfo.com.cn) Hangzhou Guoshunjianheng Venture Capital Partnership (Limited Partnership) Venture capital investment (investment in unlisted companies only) Newly established 40,00 0,000.00 19.05 % Equity funds Hangzhou Jianheng Enterprise Management Co., Ltd., Hangzhou Industrial Investment Co., Ltd., Hangzhou Taikun Equity Investment Fund PartnLong term Equity Fund registration not completed and fund not contributed 0.00 No March 28, 2023 Cninfo (http://www.cninfo.com.cn) 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 51 ership (Limited Partnership), Betta Pharmaceuticals Co., Ltd., Hangzhou West Lake Industrial Fund Co., Ltd. Total -- -- 305,3 33,30 0.00 -- -- -- -- -- -- - 586,7 13.83 -- -- -- Note: For the acquisition project of NAUAnimal Pharmaceutical, non-operating special circumstances such as divestiture of transaction-related assets and disposal of transaction-related expenses occurred in Q22023, which are main reasons for book loss in the first half of 2023. 3. Significant non-equity investments in progress during the reporting period Applicable □ N/A Unit: yuan Item Way of investment Investment in fixed assets or not Industry involved in the investment project Investment amount during the reporting period Cumulative actual investment amount by the end of the reporting period Fund source Project progress Projected income Cumulative income realized by the end of the reporting period Reasons for not meeting the planned schedule and projected income Disclosure date (if any) Disclosure index (if any) Huadong Medicine Biomedical Science and TechnSelf-built project Y Pharmaceutical manufacturing 7,826,888.70 1,790,932,43 3.36 Equity funds 98.80 % 0.000.00 N/A March 9, 2017 Cninfo (http://ninfo.com.cn) 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 52 ology Park Project Phase II Huadong Medicine Life Science Industrial Park (Xiangfu south plot) project Self-built project Y Pharmaceutical R&D 61,553,130.9 3 330,32 9,801.21 Equity funds 90.68 % 0.000.00 N/A April 21, 2021 Cninfo (http://ninfo.com.cn) Total -- -- -- 69,380,019.6 3 2,121,262,23 4.57 -- -- 0.000.00 -- -- -- 4. Investment in financial assets (1) Securities Investment Applicable □ N/A Unit: yuan Type of stock Stock code Stock abbreviation Initial investment cost Accounting measurement model Book value at the beginning of the period Gain/loss from fair value changes in the current period Accumulate d fair value changes recognized in equity Purchase amount in the current period Selling amount in the current period Gain/loss during the reporting period Ending book value Accounting item Fund source Domestic and overseas stock RAPTRAPT 20,20 7,400.00 Fair value measurement 8,064,797.8 6 - 804,6 23.49 1,475,616.7 5 0.00 2,051,811.6 5 0.00 5,208,362.7 2 Other equity instrument investments Equity funds Total 20,20 7,400.00 -- 8,064,797.8 6 - 804,6 23.49 1,475,616.7 5 0.00 2,051,811.6 5 0.00 5,208,362.7 2 -- -- Note: Huadong Medicine Investment Holding (Hong Kong) Limited, a subsidiary of the Company, purchased 218,102 Series C-2 preferred shares of RAPTTherapeutics, Inc. in a total of 3 million US dollars in 2018. RAPTTherapeutics, Inc. was listed on NASDAQ exchange on October 30,2019 (stock code: RAPT). As of the end of the reporting period, Huadong Medicine Investment Holding (Hong Kong) Limited holds 39,500 shares in RAPT after it reduced its stake, accounting for 0.115% of the total shares of RAPTTherapeutics, Inc. 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 53 (2) Derivatives investment Applicable □ N/A Unit: Ten thousand yuan Name of derivatives investment operator Association Related party transaction Type of derivatives investment Initial derivatives investment amount Commencement date Termination date Investment amount at the beginning of the period Purchase amount during the reporting period Selling amount during the reporting period Provision of impairment reserve (if any) Investment amount at the end of the period Proportion of the investment amount at the end of the period in the net assets of the Company at the end of the reporting period Actual gain/loss during the reporting period Sinclair Pharma Limited Wholly-owned subsidiary No Currency swap 0.00 January 18, 2022 -- 2,990.75 0.000.000.00 2,480.68 0.12% - 510.0 7 Total 0.00 -- -- 2,990.75 0.000.000.00 2,480.68 0.12% - 510.0 7 Capital source of derivatives investment Equity or self-raised funds Litigation (if applicable) N/A Date of announcement of the Board of Directors on derivatives investment approval (if any) August 10,2022 Note on the risk analysis and control measures for derivatives holding during the reporting period (including but not limited to market risks, liquidity risks, credit risks, operational risks and legal risks) Risks: 1. Market risks: The interest rate, exchange rate and other prices on the market may fluctuate due to changed domestic and overseas economic policies and situations, thus changing the price of financial derivative instruments and causing losses. 2. Liquidity risks: Transactions fail to be completed due to the market lacking liquidity and counter-parties. 3. Operational risks: Trading financial derivative instruments requires experts who can deal with complexity, which may cause operational risks due to traders or managers thinking there is an error or system failure and out of control. 4. Contractual risks: Contracts on financial derivative business expire, some of which cannot be performed on time, and thus they are breached. 5. Legal risks: Relevant legal changes lead to a contract that is not in conformity with local laws, so that the contract cannot be performed, or contractual terms are omitted and unclear; or losses are caused to the Company due to the counter-party violating relevant laws and regulations, and thus the contract cannot be performed as required. 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 54 Measures: The Company and its wholly-controlled subsidiaries avoid speculation and arbitrage when trading financial derivatives, so that strict risk control will be employed during the execution of contracts concerning financial derivatives trading. 1. The Company strictly abides by prudent investment principles, selects prudent investment types, and makes investments within the amount approved by the Board of Directors. 2. The Company carefully selects counter-parties for trading, and only trades derivatives with financial institutions featuring robust operations, sound reputation and business license for financial derivative trading. The Company may resort to external professional investment and legal service institutions if necessary to provide consulting services for the Company’s financial derivative trading, as well as scientific and precise investment strategies and suggestions. 3. The Company has formulated the Management Rules for Securities Investment and Derivative Trading, setting detailed rules on the management, supervision and information closure related to the Company’s derivative trading principles, scope, decision-making authority and capital use, which can effectively prevent investment risks. Besides, the Company will strictly implement related management rules, assign special personnel to follow up on the progress of financial derivative trading. For instance, relevant measures shall be taken in time to control investment risks if there are risks that may affect the Company’s capital safety The Company’s audit department is in charge of monitoring and checking the execution of financial derivative trading and reporting to the Audit Committee of the Board of Directors. 4. The Company’s audit department is in charge of monitoring and checking the execution of financial derivative trading and reporting to the Audit Committee of the Board of Directors. In case of changing market prices or fair values of invested derivatives during the reporting period, the analysis of the derivatives’ fair values shall disclose the specific methods adopted, relevant assumptions and parameter settings. Please refer to “Disclosure of fair value” in the “Financial Report” for details when the derivatives are measured at fair value on the market. Note on accounting policies and specific principles of accounting concerning derivatives during the reporting period, and whether they change significantly when compared with that in the previous reporting period N/A Specific opinions of independent directors on the Company’s investments in derivatives and risk control The Company invests in derivatives for the avoidance of market fluctuation risks and hedging, which is closely associated with daily operation requirements. The Company has formulated the Management Rules for Securities Investment and Derivative Trading and enhanced trading risk management and control, which contributes to the avoidance and control of operational risks, improving the Company’s capability to withstand market risks. No loss is caused to the Company and all shareholders. 5. Use of raised funds □ Applicable N/A No such case during the reporting period. 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 55 VII. Major assets and equity sales 1. Major assets sales □ Applicable N/A No such case during the reporting period. 2. Major equity sales □ Applicable N/A VIII. Analysis of controlling and shareholding companies Applicable □ N/A Main subsidiaries and the shareholding companies that have an impact on the Company’s net profit of more than 10% Unit: yuan Company Name Company type Main business Registered capital Total assets Net assets Operating revenue Operating Profits Net profits Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. Subsidiary Production and management of Traditional Chinese and Western raw medicines and preparations, and health care products 872,308,13 0 14,501,992,385.70 9,752,573,8 49.66 5,918,597,5 84.28 1,361,020,8 37.61 1,181,491,3 52.18 Acquisition and disposal of subsidiaries during the reporting period Applicable □ N/A Company Name Methods of acquisition and disposal of subsidiaries during the reporting period Impact on the overall production, operation and performance Jiangsu NAUAnimal Pharmaceutical Co., Ltd. Equity acquisition, capital increase Industrial platform of industrial microbiology Huadong Medicine Dongyang Co., Ltd. Equity acquisition Expand the pharmaceutical business network coverage in Zhejiang Province Hangzhou Perfect mRNABiotechnology Co., Ltd. Newly established Technology innovation platform in the field of industrial microbiology and pharmaceuticals Information of major shareholding companies IXStructured entities controlled by the company □ Applicable N/A 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 56 X. Risks and countermeasures 1. Industry policy and market operation risks The healthy development of the pharmaceutical industry in China is inseparable from China’s supervision over the pharmaceutical industry. In recent years, policies have been continuously promoted, gradually standardized, normalized and systematized with the deepening of reforms in the medical and health care field. The external factors such as geopolitics and macroeconomic policies disturb the market and bring uncertainties to the pharmaceutical market in China, which poses new challenges to the production cost and profitability of the pharmaceutical industry. Besides, there is a risk of price reduction of new drug products. Countermeasures: the Company will pays close attention to China’s pharmaceutical policies and the industrial development trend, makes adjustments in time, increases investment in R&D, integrates independent R&D with external introduction, accelerates the layout of innovative varieties in the core treatment field, keeps enriching the product lines, and improves the core competitiveness. In the meantime, the Company reduces the production & operation risks through lean management, cost reduction, and benefit increase, and vigorously expands grassroots and self-funded markets to enlarge the market coverage. Great efforts are made to explore the fields of aesthetic medicine and industrial microbiology, constantly improve brand competitiveness, and create new profit points. 2. Risk in new drug R&D R&D of innovative drugs is a high-investment, high-risk, and long-term task. Generally, it takes a long time for a new product to be launched from R&D to pre-clinical research, clinical trials, application for registration, production approval, etc. It is always time-consuming and affected by such factors as national policies, market factors, and regulatory approval. In addition, the new drug R&D sets higher requirements for R&D personnel; the investment of manpower and early R&D expenses will put some pressure on the Company to achieve its current business objectives. Meanwhile, new medicines will be tested by the market demands after launching, resulting in the return on R&D investment less than expected. 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 57 Countermeasures: the Company will continue to optimize the innovation mechanism, constantly improve the scientific research, evaluation and decision-making system of new drugs, and strengthen the establishment of close ties with well-known R&D institutions at home and abroad. It will also focus on the core treatment field, continuously enrich and optimize the product lines through independent initiation and external introduction, and continuously improve the independent R&D strength to foster its own R&D ecosystem. The Company will continue to increase its introduction of high-level scientific research talents, strengthen the training and encouragement of internal core technicians, and cultivate a high-level innovative scientific research team that can support the whole cycle of innovative drugs R&D. 3. Risk in exchange rate fluctuation As the internationalization is further advanced, the Company increasingly develops international cooperation and exchanges, expands the sales network of aesthetic medicine in the world, and accelerates the development of its industrial microbiology segment, rising the proportion of foreign currency settlement business. There is uncertainty in exchange rate fluctuation affected by the complicated international political and economic situations. The fluctuation in exchange rate has a far-reaching and lasting impact on the Company, i.e. bringing good economic benefits but also affecting the cost and profit level. The fluctuation in exchange rate will affect the price of the Company’s export products and cause exchange gains and losses to the Company, thus directly affecting the Company’s assets, liabilities and income, further the operation ability, debt repayment ability and profitability. Countermeasures: the Company will pay close attention to the fluctuation in exchange rate, adjust our business countermeasures in time according to its own situation, and resolve the adverse effects; develop the exchange risk awareness, and improve the foreign exchange risk management system; strengthen the training of financial personnel’s professional skills and risk awareness, enhance the awareness of risk avoidance, and make good use of financial means to avoid exchange rate risks. 4. Risk in investment and merger 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 58 Foreign investment is one of the important ways of enterprise development. In recent years, the Company has continued to invest and do mergers and acquisitions in such fields as innovative medicines, aesthetic medicine and industrial microbiology, so as to form goodwill and realize the innovation and transformation development strategy. If the company acquired in the future faces the risk of performance fluctuation, there may be a risk of goodwill impairment, adversely affecting the Company’s current operation performance. At the same time, the post-investment management and business integration of the target company also put forward higher requirements for the management of the Company. Countermeasures: The Company will strive to comprehensively improve our capabilities in overall planning, management structure, financial management, overall operation and governance, and business integration; strengthen the resource sharing and synergy of acquired subsidiaries; regularly test the impairment of goodwill; and enhance comprehensive, scientific and timely post-investment management. XI. Registration form of receptions, including research, communication and interview, during the reporting period Reception date Reception address Reception method Type of visitor Reception object Main content of discussion and information provided Index of basic information of the research January 17, 2023 Conference Room of the Company Others Institution and individual CICC, TF Securities, Industrial Securities, CSC Financial, etc. Huadong Medicine & CARsgen Therapeutics Commercialization Project Exchange Please refer to the Record of Investor Relations Activities on January 17,2023 presented on the websites of irm.cninfo.com.cn and cninfo.com.cn for details. February 15 to 16,2023 Conference Room of the Company On-site survey Institution China Securities Cooperation, Zheshang Securities, etc. Investor communication Please refer to the Record of Investor Relations Activities on February 15 to 16,2023 presented on the websites of irm.cninfo.com.cn and cninfo.com.cn for details. May 2 to 3, 2023 Conference Room of the Company On-site survey Institution and individual Kaiyuan Securities, CCIC, GF Securities, Investor communication Please refer to the Record of Investor Relations Activities on March 2 to 3, 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 59 etc.2023 presented on the websites of irm.cninfo.com.cn and cninfo.com.cn for details. April 14, 2023 Conference Room of the Company Online meeting Institution and individual GF Securities, Haitong International, CCIC, etc. 2022 Annual Performance Exchange Meeting of Huadong Medicine Please refer to the Record of Investor Relations Activities on April 14,2023 presented on the websites of irm.cninfo.com.cn and cninfo.com.cn for details. April 21, 2023 Conference Room of the Company Online meeting Institution and individual Citic Securities, TF Securities, Haitong Securities, etc. 2023 Q1 Performance Exchange Meeting of Huadong Medicine Please refer to the Record of Investor Relations Activities on April 21,2023 presented on the websites of irm.cninfo.com.cn and cninfo.com.cn for details. May 8,2023 Conference Room of the Company On-site survey Institution and individual CICC, Citic Securities, etc. Activities of Investors’ Reception Day Please refer to the Record of Investor Relations Activities on May 8,2023 (Activities of Investors’ Reception Day) presented on the websites of irm.cninfo.com.cn and cninfo.com.cn for details. May 12, 2023 Conference Room of the Company Online meeting Institution and individual Institution and individual investors 2022 Annual and 2023 Q1 Online Performance Meeting of Huadong Medicine Please refer to the Record of Investor Relations Activities on May 12,2023 presented on the websites of irm.cninfo.com.cn and cninfo.com.cn for details. June 13, June 15 and June 16,2023 Conference Room of the Company On-site survey Institution Huatai Securities, China Life Assets, UBS Securities, etc. Investor communication Please refer to the Record of Investor Relations Activities on June 13,15 and 16,2023 presented on the websites of irm.cninfo.com.cn and cninfo.com.cn for details. 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 60 Section IV. Corporate Governance I. Annual and extraordinary general meetings held during the reporting period 1. Shareholders’ meetings in the reporting period Sessions Meeting type Proportion of investors present Convene date Disclosure date Meeting resolution 2022 Annual General Meeting Annual general meeting 61.65% May 8,2023 May 8,2023 Please refer to the Announcement of Resolutions of 2022 Annual General Meeting of Huadong Medicine (Announcement No.: 2023-033) on Cninfo (o.com.cn) for details. 2. Extraordinary general meetings convened at the request of preference shareholders with resumed voting rights: □ Applicable N/A II. Change of directors, supervisors and senior managers of the Company Applicable □ N/A Name Type Date Reasons Huang Jian Independent Director Elected May 8,2023 Additional Independent Director Yang Lan Independent Director Retirement at expiration of the term May 8,2023 Retirement at expiration of the term Niu Zhanqi Director Retired June 21,2023 Personal reasons III. Profit distribution and share capital increase by capital reserve conversion during the current reporting period □ Applicable N/A The Company does not plan to distribute cash dividends, no bonus share will be issued; and no capital reserve will be converted to increase the share capital in the first half of 2023. IV. Implementation of the Company’s equity incentive plan, employee stock ownership plan or other employee incentive measures Applicable □ N/A 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 61 1. Equity incentive (1) On August 31,2022, the Company convened the second meeting of the 10th Board of Directors and the 2nd meeting of the 10th Board of Supervisors, deliberating on and passing the Proposal on the Company’s 2022 Restricted Share Incentive Scheme (Draft) and Its Summary, the Proposal on Management Rules for the Implementation and Assessment of the Company’s 2022 Restricted Share Incentive Scheme, the Proposal on the Management Rules of the Company’s 2022 Restricted Share Incentive Scheme, and the Proposal on Applying to the General Meeting for Authorizing the Board of Directors to Handle Equity Incentive-related Matters. Independent directors expressed their independent opinions on whether this incentive scheme is conducive to the sustainable development of the Company and whether there is any situation that harms the interests of the Company and all shareholders. See the relevant announcement of the Company published on Cninfo ( on August 10,2022 for details. (2) On August 10, the Company disclosed the Announcement on Independent Directors Publicly Soliciting Proxy Voting Rights on Cninfo (). Mr. Wang Ruwei, Independent Director of the Company, commissioned by other independent directors publicly solicited proxy voting rights from all shareholders of the Company on proposals related to the 2022 Restricted Share Incentive Scheme reviewed on the 1st extraordinary general meeting in 2022 that was set to be convened on August 31,2022. (3) The Company announced publicly the list of the first batch of employees receiving the incentive from the restricted share incentive scheme on the Company’s intra-net from August 15 to 25,2022, which lasted for 10 days in total. As of the end of the announcement on August 25,2022, the Board of Supervisors did not receive any objection against these employees. On August 25,2022, the Company convened a session of the Board of Supervisors, during which the Verification Opinions and Announcement Note on the List of the First Batch of Employees Receiving the Incentive from the Company’s 2022 Restricted Share Incentive Scheme was reviewed and approved. On the same day, the Company disclosed the Board of Supervisors’ Verification Opinions and Announcement Note on the List of the First Batch of Employees Receiving the Incentive from the Company’s 2022 Restricted Share Incentive Scheme and a related announcement on . (4) On August 31,2022, the Company convened the first extraordinary general meeting in 2022. During the meeting, the Proposal on the Company’s 2022 Restricted Share Incentive Scheme (Draft) and Its Summary, the Proposal on Management Rules for the Implementation and Assessment of the Company’s 2022 Restricted Share Incentive Scheme, the Proposal on the Management Rules of the Company’s 2022 Restricted Share Incentive Scheme, and the Proposal on Applying to the General Meeting for Authorizing the Board of Directors to Handle Equity Incentive-related Matters were deliberated on and approved. On the same day, the Company disclosed on the Self-Inspection Report on Insiders and Incentive Receivers of the 2022 Restricted Share Incentive Scheme Purchasing and Selling the Company’s Shares and a related announcement. The incentive scheme was approved in the Company’s first extraordinary general meeting in 2022, and the Board of Directors was authorized to implement the restricted share incentive scheme and handle relevant matters according to laws and regulations. (5) On October 27,2022, the Company convened the fourth session of the tenth Board of Directors and the fifth session of the tenth Board of Supervisors. During these two sessions, the Proposal on Adjustments of the 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 62 Company’s 2022 Restricted Share Incentive Scheme, and the Proposal on Granting Restricted Shares to the First Batch of Employees Receiving Incentive from the 2022 Restricted Share Incentive Scheme were deliberated on and approved. The Company’s Board of Directors believed that conditions of the incentive scheme for granting restricted shares were fulfilled, and the Board of Supervisors re-verified the list of incentive receivers on the first grant date, and expressed opinions on the grant. The Company’s independent directors agreed on the above proposals. Lawyers and independent financial advisers prepared related reports. On October 28,2022, the Company disclosed a related announcement on . (6) On November 9,2022, the Company disclosed the Announcement on Completion of Registration of the First Grant of the Restricted Share Incentive Scheme in 2022. The Company completed the registration of the first grant of the restricted share incentive scheme in 2022, and the listing date of the granted restricted shares was November 15,2022. (7) On July 12,2023, the Company convened the twelfth session of the tenth Board of Directors and the eighth session of the tenth Board of Supervisors. During these two sessions, the Proposal on Adjustments of the Granted Price of the Company’s 2022 Restricted Share Incentive Scheme, and the Proposal on Granting Reserved Restricted Shares to the First Batch of Employees Receiving Incentive from the 2022 Restricted Share Incentive Scheme were deliberated on and approved. The Company’s Board of Directors believed that reserved conditions of the incentive scheme for granting restricted shares were fulfilled, and the Board of Supervisors re-verified the list of incentive receivers on the date of granting reserved shares, and expressed opinions on the grant. The Company’s independent directors agreed on the above proposals. Lawyers and independent financial advisers prepared related reports. On the same day, the Company disclosed a related announcement on . 2. Implementation of the employee stock ownership plan □ Applicable N/A 3. Other employee incentives □ Applicable N/A 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 63 Section VEnvironmental and Social Responsibilities I. Major Environmental Protection Issues Are the listed company and its subsidiaries belong to the key pollutant discharge units announced by the environmental protection department □Yes □No Relevant policies and industry standards for environmental protection Environmental Protection Law of the People’s Republic of China, Law of the People’s Republic of China on Water Pollution Prevention and Control, Law of the People’s Republic of China on Atmospheric Pollution Prevention and Control, Law of the People’s Republic of China on the Prevention and Control of Environmental Pollution by Solid Waste, Law of the People’s Republic of China on the Prevention and Control of Ambient Noise Pollution, Law of the People’s Republic of China on the Prevention and Control of Soil Pollution, Measures for the Administration of Pollutant Discharge Permits, Emission Standard of Air Pollutants for Pharmaceutical Industry (DB33/ 310005-2021), Discharge Standard of Pollutants for Bio-pharmaceutical Industry (DB 33/ 923-2014), Emission Standard for Industrial Enterprises Noise at Boundary (GB 12348-2008), Standard for Pollution Control on the Non-hazardous Industrial Solid Waste Storage and Landfill (GB 18599-2020), Standard for Pollution Control on Hazardous Waste Storage (GB 18597-2023), Technical Specification for Setting Identification Signs of Hazardous Waste (HJ 1276-2022), Integrated Wastewater Discharge Standard of Yellow River Basin in Shaanxi Province (DB 61/ 224-2018), Emission Limits of Water and Air Pollutants for Bio-pharmaceutical Industry (DB 32/ 3560-2019), Emission Standard of Air Pollutants for Pharmaceutical Industry (DB 32/4042-2021), Emission Standard of Air Pollutants for Pharmaceutical Industry (GB 37823-2019), Emission Standard of Volatile Organic Compounds for Chemical Industry (DB 32/3151-2016), Integrated Emission Standard of Air Pollutants (DB 32/4041-2021), Standard for Fugitive Emission of Volatile Organic Compounds (GB 37822-2019), Emission Standards for Odor Pollutants (GB 14554-93), Emission Limits of Water and Air Pollutants for Bio-Pharmaceutical Industry (DB 32/ 3560-2019), Wastewater Quality Standards for Discharge to Municipal Sewers (GB/T 31962-2015), Integrated Wastewater Discharge Standard (GB 8978-1996), Discharge Standard of Water Pollutants for Pharmaceutical Industry - Chemical Synthesis Products Category (GB 21904-2008), Discharge Standard of Pollutants for Bio-Pharmaceutical Industry (DB 31/373-2010), Technical Methods for Making Local Emission Standards of Air Pollutants (GB13201-1991), etc. Information on environmental protection-related administrative licensing All the construction projects of the Company were declared, constructed and accepted strictly according to the requirements, approved by EIA, and met the requirements for environmental impact assessment of construction projects. Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. re-applied for the Pollutant Emission Permit on June 20,2023, which is valid until June 19,2028. Hangzhou Zhongmei Huadong Pharmaceutical (Jiangdong) Co., Ltd. re-applied for the Pollutant Emission Permit on March 4,2023, which is valid until March 3,2028. In addition, Hangzhou Zhongmei Huadong 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 64 Pharmaceutical (Jiangdong) Co., Ltd. has obtained the EIA approval of Product Transfer and Expansion of Indobufen Tablets and Clarithromycin Tablets and Expansion and Transformation Project of Acarbose Chewable Tablets on April 25,2023, with the approval number of HHQEIABatch [2023] No.28; obtained the EIA approval of the Acceptance of EIARegistration Form for PulsecathiVAC2LAPIProduct Construction Project on July 18,2023, with the approval number of HHQEIABatch [2023] No.32. The Pollutant Emission Permit of Huadong Medicine (Xi’an) Bohua Pharmaceutical Co., Ltd. is valid from December 27,2020 to December 26,2025. In addition, Huadong Medicine (Xi’an) Bohua Pharmaceutical Co., Ltd. has obtained the EIA approval of the Transformation Project of Storage Tank Area of the Second Workshop of APIs within the reporting period, with the approval number of WHYF (2023) No.34. The Pollutant Emission Permit of Jiangsu Joyang Laboratories is valid from February 28,2022 to February 27,2027. The Pollutant Emission Permit of Wuhu Huaren Science and Technology Co., Ltd. is valid from February 26, 2021 to February 25,2024. Designation of Company or Subsidiary Category of main and particular pollutants Name of main and particular pollutants Discharge pattern Quantity of discharge outlet Distribution of discharge outlet Discharge concentration/intensity Executive pollutant discharge standard Total discharges Approved total discharges Excessive discharge Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. Water pollutant pH value Intermittent discharge 1 Main Entrance Moganshan Road, No.866 6.936-9 / / None Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. Water pollutant COD Intermittent discharge 1 Main Entrance Moganshan Road, No.866 39.85mg/l 500mg/l 3.26 tons (discharged to environment) 33.3 t/a None Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. Water pollutant Ammonia-nitrogen Intermittent discharge 1 Main Entrance Moganshan Road, No.866 1.18mg/l 35mg/l 0.047 tons (discharged to environment) 2.38 t/a None Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. Solid pollutant Hazardous solid waste Compliant disposal by entrusted qualified units 2 Within the factory at Moganshan Road, No.866 / / 406.55 tons / None Hangzhou Zhongmei Huadong PharmaceutiSolid pollutant General solid waste Compliant disposal by 2 Within the factory at / / 74.7 tons / None 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 65 cal Co., Ltd. entrusted qualified units Moganshan Road, No.866 Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. Air pollutant Nitric oxide Organized discharge 1 Roof of Boiler Room at Building 25 28mg/m3 50mg/m3 1.021 tons 17.7 t/a None Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. Air pollutant Sulfur dioxide Organized discharge 1 Roof of Boiler Room at Building 25 4mg/m3 20mg/m3 0.151 tons / None Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. Air pollutant Dust and fume Organized discharge 1 Roof of Boiler Room at Building 25 4.6mg/m3 10mg/m3 0.127 tons / None Hangzhou Zhongmei Huadong Pharmaceutical Jiangdong Co., Ltd. Wastewater COD Continuous discharge 1 Phase II Factory Area 100-350mg/L 500mg/L 152.502 0 tons(Nanotube discharge) 141.299 tons (discharged to environment) None Hangzhou Zhongmei Huadong Pharmaceutical Jiangdong Co., Ltd. Wastewater Ammonia-nitrogen Continuous discharge 1 Phase II Factory Area 0-25mg/L 35mg/L 1.8687 tons(Nanotube discharge) 7.066 tons (discharged to environment) None Hangzhou Zhongmei Huadong Pharmaceutical Jiangdong Co., Ltd. Exhaust gas Non-methane hydrocarbon Organized discharge 1 Phase II Factory Area 0-30mg/L 60mg/L 1.6654 tons 3.002 tons None Huadong Medicine (Xi’an) Bohua Pharmaceutical Co., Ltd. Water pollutant pH value Intermittent discharge 1 Beside National Highway 310, Liuye River, Huayin City 8.06-9 / / None Huadong Medicin e (Xi’an) Bohua Pharmaceutical Co., Ltd. Water pollutant COD Intermittent discharge 1 Beside National Highway 310, Liuye River, Huayin City 36.7mg/l 50mg/l 0.544 tons 3 tons None Huadong Water Ammo Intermitt 1 Beside 0.418mg 8mg/l 0.0050.48 None 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 66 Medicin e (Xi’an) Bohua Pharmaceutical Co., Ltd. pollutant nia-nitrogen ent discharge National Highway 310, Liuye River, Huayin City /l tons tons Huadong Medicine (Xi’an) Bohua Pharmaceutical Co., Ltd. Water pollutant Total nitrogen Intermittent discharge 1 Beside National Highway 310, Liuye River, Huayin City 11.5mg/l 15mg/l 0.167 tons / None Huadong Medicine (Xi’an) Bohua Pharmaceutical Co., Ltd. Solid pollutant Hazardous waste Compliant disposal by entrusted qualified units 3 Within the Company / / 158.19 tons / None Huadong Medicine (Xi’an) Bohua Pharmaceutical Co., Ltd. Air pollutant Volatile organic compounds Organized discharge 1 APIs Plant 1 / 60mg/m3 / / None Huadong Medicine (Xi’an) Bohua Pharmaceutical Co., Ltd. Air pollutant Hydrogen chloride Organized discharge 1 APIs Plant 1 / 30mg/m3 / / None Huadong Medicine (Xi’an) Bohua Pharmaceutical Co., Ltd. Air pollutant Ammonia (ammonia) Organized discharge 1 APIs Plant 1 / 20mg/m3 / / None Huadong Medicine (Xi’an) Bohua Pharmaceutical Co., Ltd. Air pollutant Hydrogen chloride Organized discharge 1 APIs Plant 2 / 30mg/m3 / / None Huadong Medicine (Xi’an) Bohua Pharmaceutical Co., Ltd. Air pollutant PM Organized discharge 1 APIs Plant 2 / 20mg/m3 / / None Huadong Medicine (Xi’an) Bohua PharmaceutiAir pollutant Ammonia (ammonia) Organized discharge 1 Sewage treatment station / 20mg/m3 / / None 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 67 cal Co., Ltd. Huadong Medicine (Xi’an) Bohua Pharmaceutical Co., Ltd. Air pollutant Hydrogen sulfide Organized discharge 1 Sewage treatment station / 5mg/m3 / / None Jiangsu Joyang Laboratories Water pollutant pH value Intermittent discharge 1 No.9, Haidu North Road 8.46-9 / / None Jiangsu Joyang Laboratories Water pollutant COD Intermittent discharge 1 No.9, Haidu North Road 329mg/l 500mg/l 12.19 tons 22.401 t/a None Jiangsu Joyang Laboratories Water pollutant Ammonia-nitrogen Intermittent discharge 1 No.9, Haidu North Road 6.44mg/l 35mg/l 0.238 tons 1.156 t/a None Jiangsu Joyang Laboratories Water pollutant Total nitrogen Intermittent discharge 1 No.9, Haidu North Road 8.95mg/l 45mg/l 0.331 tons 1.486 t/a None Jiangsu Joyang Laboratories Water pollutant Total phosphorus Intermittent discharge 1 No.9, Haidu North Road 0.84mg/l 8mg/l 0.03 tons 0.164 t/a None Jiangsu Joyang Laboratories Solid pollutant Hazardous solid waste Compliant disposal by entrusted qualified units / No.9, Haidu North Road / / 619.814 tons 3148.7 t/a None Jiangsu Joyang Laboratories Air pollutant PM Organized discharge 3 No.9, Haidu North Road 2.28mg/m3 60mg/Nm3 1.11 t/semi-annual 42.7409 t/a None Wuhu Huaren Science and Technology Co., Ltd. Water pollutant COD Intermittent discharge 1 At the east gate of the factory area 8mg/L 500mg/L 0.13t 0.2t No Wuhu Huaren Science and Technology Co., Ltd. Water pollutant Ammonia-nitrogen Intermittent discharge 1 At the east gate of the factory area 0.04mg/L 45mg/L 0.000505t 0.018t No Wuhu Huaren Science and Technology Co., Ltd. Water pollutant Suspended solids Intermittent discharge 1 At the east gate of the factory area 12mg/L 400mg/L 0.0214t / No Wuhu Huaren Science and Technology Water pollutant Total nitrogen Intermittent discharge 1 At the east gate of the factory 9.95mg/L 35mg/L 0.0172t / No 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 68 Co., Ltd. area Wuhu Huaren Science and Technology Co., Ltd. Water pollutant Total phosphorus Intermittent discharge 1 At the east gate of the factory area 0.051mg/L 0.001086t / No Wuhu Huaren Science and Technology Co., Ltd. Water pollutant Dichloromethane Intermittent discharge 1 At the east gate of the factory area 0.001mg/L 0.3mg/L 0.000002t / No Wuhu Huaren Science and Technology Co., Ltd. Water pollutant PH value Intermittent discharge 1 At the east gate of the factory area 7.1mg/L 6-9 / / No Wuhu Huaren Science and Technology Co., Ltd. Air pollutant Dichloromethane Organized discharge 1 In the middle of the factory area / 150 mg/Nm3 / / No Wuhu Huaren Science and Technology Co., Ltd. Air pollutant Methyl alcohol Organized discharge 1 In the middle of the factory area / 100 mg/Nm3 / / No Wuhu Huaren Science and Technology Co., Ltd. Air pollutant n-Ethane Organized discharge 1 In the middle of the factory area / 80mg/Nm3 / / No Wuhu Huaren Science and Technology Co., Ltd. Air pollutant Volatile organic compounds Organized discharge 1 In the middle of the factory area 4.85mg/Nm3 100 mg/Nm3 0.093t 9t No Wuhu Huaren Science and Technology Co., Ltd. Air pollutant Pyridine Organized discharge 1 In the middle of the factory area / 71.1 mg/Nm3 / / No Wuhu Huaren Science and Technology Co., Ltd. Air pollutant Ethyl alcohol Organized discharge 1 In the middle of the factory area / 317.7 mg/Nm3 / / No Wuhu Huaren Science and Technology Co., Ltd. Air pollutant Hydrogen chloride Organized discharge 1 In the middle of the factory area / 30mg/Nm3 / / No Wuhu Huaren Science and Technology Co., Ltd. Air pollutant Ethyl acetate Organized discharge 1 In the middle of the factory area / 150 mg/Nm3 / / No Wuhu Air Odor Unorgani / Around / 20mg/N / / No 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 69 Huaren Science and Technology Co., Ltd. pollutant concentration zed discharge the factory boundaries m3 Wuhu Huaren Science and Technology Co., Ltd. Air pollutant Methyl alcohol Unorganized discharge / Around the factory boundaries / 12mg/Nm3 / / No Wuhu Huaren Science and Technology Co., Ltd. Air pollutant Dichloromethane Unorganized discharge / Around the factory boundaries / 1.5mg/Nm3 / / No Wuhu Huaren Science and Technology Co., Ltd. Air pollutant Ethyl acetate Unorganized discharge / Around the factory boundaries / 0.5mg/Nm3 / / No Wuhu Huaren Science and Technology Co., Ltd. Air pollutant n-Hexane Unorganized discharge / Around the factory boundaries / 0.7 mg/Nm3 / / No Wuhu Huaren Science and Technology Co., Ltd. Air pollutant Hydrogen chloride Unorganized discharge / Around the factory boundaries / 0.2 mg/Nm3 / / No Wuhu Huaren Science and Technology Co., Ltd. Air pollutant Volatile organic compounds Unorganized discharge / Around the factory boundaries / 6mg/Nm3 / / No Pollutant treatment 1. Pollutant treatment of Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. (1) Wastewater Designation of pollution prevention and control facility Treatment process Treatment capacity Time when put into operation Operation condition Wastewater treatment system of old sewage treatment station Facultative + fluidized bed process Originally 600 t/d, and 800 t/d after technical improvement November 1993 Technical improvement in 2007 Demolished Wastewater treatment system of new sewage treatment station Facultative + CASS + steam flotation 2,200 t/d December 2001 Technical improvement in 2014 (adding IC and steam flotation) IC tower outage for demolition in 2022 Normal operation (2) Exhaust gas Designation of pollution prevention and control facility Treatment process Treatment capacity (CMH) Time when put into operation Operation condition DA010 (35#-1) Secondary water spraying + surface cooling + activated carbon adsorption and desorption 150002017 Demolished 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 70 DA011 (35#-2) Secondary water spraying 220002013 Demolished DA012 (40#-2) Activated carbon + horizontal spraying 60002019 Demolished DA013 (32#-1) Secondary alkaline water spraying 220002013 Demolished DA014 (36#-1) Secondary clean water spraying + surface cooling + low-temperature plasma + primary water spraying 270002017 Normal operation DA015 (40#-1) Secondary clean water spraying 24200 / Demolished DA016 (18#-1) Secondary water spraying + activated carbon + primary spraying 300002022 Normal operation DA017 (19#-1) Combustion tower / 2018 Demolished DA018 (19#-2) Combustion tower / 2018 Demolished DA019 (3#-1) Primary water spraying + photo-oxidation 20000+520002019 Normal operation DA020 (36#-2) Secondary water spraying + condensation + photo-oxidation + activated carbon + inorganic nano-catalysis + water spraying 100002019 Normal operation DA021 (16#-1) Primary water spraying + primary alkaline water spraying 120002012 Demolished DA022 (16#-2) Primary water spraying + primary vegetable oil water spraying 300002014 Demolished DA023 (27#-1) Condensation + primary alkaline water spraying + all-in-one machine + primary alkaline water spraying 150002009 Outage DA024 (33#-1) Secondary alkaline water spraying + condensing tank + shared primary alkaline water spraying 480002019 Demolished DA025 (32#-2) Bag dust removal + high efficiency filter / 2017 Demolished DA026 (34#-1) Secondary alkaline water spraying 540002008 Demolished DA027 (7#-1) Secondary alkaline water spraying 260002015 Normal operation DA028 (6#-1) Primary clean water spraying 122002016 Normal operation DA029 (18#-2) Secondary alkaline water spraying + photo-oxidation + activated carbon + primary alkaline water spraying 160002018 Demolished DA030 (18#-3) Primary clean water spraying + primary alkaline water spraying 50002017 Normal operation DA031 (25#-2) Low nitrogen combustion + high altitude emission 80002009 Low nitrogen transformation completed in December 2019 Normal operation DA032 (25#-1) Low nitrogen combustion + high altitude emission 80002009 Low nitrogen transformation completed in December 2019 Normal operation DA033 (1#-1) Oil fume purifier / / Normal operation DA034 (27#-2) Secondary water spraying + activated carbon adsorption and desorption 150002011 Outage DA035 (27#-3) Photo-oxidation + primary alkaline water spraying 223002016 Outage 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 71 DA036 (8#-1) Secondary water spraying 250002017 Normal operation DA037 (13#-1) Secondary water spraying + surface cooling + activated carbon adsorption and desorption 250002017 Normal operation DA038 (28#-1) Primary water spraying + photo-oxidation 220002011 Demolished DA039 (28#-2) Primary water spraying + photo-oxidation 480002011 Demolished DA040 (29#-1) Primary water spraying + primary alkaline water spraying 220002011 Demolished DA041 (33#-2) Primary water spraying 186002012 Demolished DA042 (10#-1) Primary clean water spraying 200002016 Normal operation DA043 (15#-1) Primary alkaline water spraying + photooxidation 250002018 Normal operation DA044 (43#-1) Primary alkaline water spraying + primary water spraying 450002014 Normal operation DA045 (46#-1) Primary clean water spraying 30002015 Normal operation DA046 (46#-2) Primary clean water spraying 250002015 Normal operation DA047 (46#-3) Primary clean water spraying 300002015 Normal operation DA048 (23#-1) Secondary water spraying 70002019 Normal operation (3) Solid wastes Designation of pollution prevention and control facility Treatment process Treatment capacity Time when put into operation Operation condition Hazardous waste warehouse Normative storage 160 tons March 2012 Normative storage, compliant disposal by entrusted qualified units Normative storage 240 tons March 2010 General solid waste storage yard Normative storage 7 tons March 2010 Normative storage, compliant disposal by entrusted qualified units Normative storage 30 tons June 2004 2. Pollutant treatment of Hangzhou Zhongmei Huadong Pharmaceutical (Jiangdong) Co., Ltd. (1) Wastewater Designation of pollution prevention and control facility Treatment process Treatment capacity Time when put into operation Operation condition Phase I sewage treatment station Primary sedimentation + EGSB + facultative + aerobic + advanced treatment 1500 t/d March 2016 Normal operation Phase II sewage treatment station EGSB + facultative + aerobic + advanced treatment 8500 t/d July 2019 Normal operation (2) Exhaust gas Designation of pollution prevention and control facility Treatment process Treatment capacity (CMH) Time when put into operation Operation condition DA001 Exhaust gas from fermenting east section Secondary alkaline spraying + photo-catalytic oxidation 45000 May 2016 Normal operation DA002 Exhaust gas from fermenting west section Secondary alkaline spraying + photo-catalytic oxidation 40000 May 2016 Normal operation 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 72 DA003 Exhaust gas from drying north section Secondary alkaline spraying 80000 May 2016 Normal operation DA004 Exhaust gas from sewage treatment station Secondary alkaline spraying 50000 May 2016 Normal operation DA006 Exhaust gas from batching section Primary alkaline spraying 10000 May 2016 Normal operation DA007 Exhaust gas from quality testing and R&D Primary alkaline spraying + photo-catalytic oxidation 20000 May 2016 Normal operation DA008 Exhaust gas from drying south section Secondary alkaline spraying 80000 May 2016 Normal operation DA010 Exhaust gas from plate-and-frame filter Secondary alkaline spraying + photo-catalytic oxidation 40000 May 2017 Normal operation DA011 Exhaust gas from drying cooling bin Secondary alkaline spraying 20000 May 2017 Normal operation DA012 Exhaust gas from drying 7m Primary alkaline spraying 20000 May 2016 Normal operation DA013 Exhaust gas from drying 18m Primary alkaline spraying 20000 May 2016 Normal operation DA014 Exhaust gas from tank area Activated carbon + alkaline spraying Few June 2019 Normal operation DA015 RTO exhaust gas Water spraying + RTO + alkaline spraying 100000 June 2019 Normal operation DA016 Exhaust gas from Vogely preparation Bag dust removal Few June 2019 Normal operation DA017 MP exhaust gas Photo-catalytic oxidation 44000 June 2019 Normal operation DA018 Exhaust gas from super-resistant fermentation Alkaline spraying + photo- catalytic oxidation + water spraying 20000 June 2019 Normal operation DA019 X8 exhaust gas Acid spraying + water spraying 6000 June 2019 Normal operation DA021 Exhaust gas from quality testing Alkaline spraying + photo- catalytic oxidation + water spraying 30000 June 2019 Normal operation DA022 Exhaust gas from AK refining hydrochloric acid Alkaline spraying + water spraying 10000 June 2019 Normal operation DA023 Exhaust gas I from spray drying Bag dust removal + water spraying Few June 2019 Normal operation DA024 Exhaust gas from AK fermenting north section Alkaline spraying + photo- catalytic oxidation + water spraying 90000 June 2019 Normal operation DA025 Exhaust gas from AK fermenting south section Alkaline spraying + photo- catalytic oxidation + water spraying 90000 June 2019 Normal operation DA026 Exhaust gas from Phase II sewage treatment station Alkaline spraying + water spraying 58000 June 2019 Normal operation DA027 Exhaust gas from center control Alkaline spraying + photo- catalytic oxidation + water spraying 8000 June 2019 Normal operation DA028 YT exhaust gas Alkaline spraying + water spraying 4000 June 2019 Normal operation DA029 Exhaust gas II from spray drying Bag dust removal + water spraying Few June 2019 Normal operation DA030 Exhaust gas from AK refining ethyl alcohol Alkaline spraying + water spraying 1000 June 2019 Normal operation 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 73 DA031 Exhaust gas from Bailing Tablets preparation Condensation + Secondary water spraying 20000 July 2022 Normal operation HDBL-FQ217 HDG solvent-containing exhaust gas Oxidation spraying + secondary alkaline spraying 2000 September 2022 Outage HDBL-FQ218 HDG odor exhaust gas Oxidation spraying + alkaline spraying 20000 September 2022 Outage (3) Solid wastes Designation of pollution prevention and control facility Treatment process Treatment capacity Time when put into operation Operation condition Hazardous waste warehouse Normative storage 10 tons March 2017 Normative storage, compliant disposal by entrusted qualified units Normative storage 200 tons May 2021 General solid waste storage yard Normative storage 20 tons March 2016 Normative storage, compliant disposal by entrusted qualified units Normative storage 15 tons March 2016 Normative storage 40 tons July 2019 Normative storage 30 tons July 2019 3. Pollutant treatment of Huadong Medicine (Xi ‘an) Bohua Pharmaceutical Co., Ltd. (1) Wastewater Designation of pollution prevention and control facility Treatment process Treatment capacity Time when put into operation Operation condition Wastewater treatment system of sewage treatment station Pretreatment + Fenton system + facultative + aerobic + MBR + carbon filtration 250 t/d July 2012 Normal operation (2) Exhaust gas Designation of pollution prevention and control facility Treatment process Time when put into operation Operation condition Exhaust gas treatment equipment for APIs Plant 1 Alkaline solution spraying + dry filter (filter cotton) + UV photolysis + activated carbon adsorption October 2020 Normal operation Exhaust gas treatment equipment for APIs Plant 2 Secondary alkaline solution spraying + dry filter + UV photolysis + activated carbon November 2019 Normal operation Exhaust gas treatment equipment for solid preparation Bag dust removal 2018 Normal operation (3) Solid wastes Designation of pollution prevention and control facility Treatment process Storage capacity Time when put into operation Operation condition Hazardous waste repository Normative storage 60 tons January 2012 Normative storage, compliant transfer and disposal by entrusted qualified units 4. Pollutant treatment of Jiangsu Joyang Laboratories (1) Wastewater 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 74 Designation of pollution prevention and control facility Treatment process Treatment capacity Time when put into operation Operation condition Wastewater treatment system of sewage treatment station Steam flotation tank + hydrolytic acidification + IC tower + UASB tank + A/O tank + O tank + secondary sedimentation tank 300 t/d December 2014 Normal operation (2) Exhaust gas Designation of pollution prevention and control facility Treatment process Treatment capacity (CMH) Time when put into operation Operation condition Exhaust gas treatment equipment for extracting section in Plant 101 Primary water spraying + water-gas separator + photo-catalytic oxidation + secondary activated carbon adsorption + 25m exhaust pipe high altitude emission 100002014 Normal operation Exhaust gas treatment equipment for fermentation section in Plant 101 Primary water spraying + water-gas separator + secondary activated carbon adsorption + 25m exhaust pipe high altitude emission 200002019 Normal operation Exhaust gas treatment equipment for drying section in Plant 101 Primary water spraying + water-gas separator + secondary activated carbon adsorption + 25m exhaust pipe high altitude emission 220002017 Normal operation Exhaust gas treatment equipment for batching section in Plant 101 Cyclone separator + primary water spray + 15m exhaust pipe high altitude emission 50002014 Normal operation Exhaust gas treatment equipment for fermentation sections in Plants 104/107/108 Primary water spraying + water-gas separator + secondary activated carbon adsorption + 25m exhaust pipe high altitude emission 750002021 Normal operation Exhaust gas treatment equipment for extracting section in Plant 104 Primary water spraying + water-gas separator + photo-catalytic oxidation + secondary activated carbon adsorption + 25m exhaust pipe high altitude emission 100002015 Normal operation Exhaust gas treatment equipment for batching sections in Plants 104/107/108 Cyclone separator + primary water spray + 15m exhaust pipe high altitude emission 50002015 Normal operation Exhaust gas treatment equipment for drying sections in Plants 104/107/108 Primary water spraying + water-gas separator + secondary activated carbon adsorption 200002015 Normal operation Exhaust gas treatment equipment for pretreatment tank and hazardous waste repository in Plant 103 and Plant 303 Primary water spraying + water-gas separator + photo-catalytic oxidation + secondary activated carbon adsorption + 25m exhaust pipe high altitude emission 400002019 Normal operation Exhaust gas treatment equipment for Plant 106 Primary water spraying + water-gas separator + photo-catalytic oxidation + secondary activated carbon adsorption + 25m exhaust pipe high altitude emission 100002015 Normal operation Exhaust gas treatment equipment for extracting section in Plant 107 Primary water spraying + water-gas separator + photo-catalytic oxidation + secondary activated carbon adsorption + 25m exhaust pipe high altitude emission 200002019 Normal operation Exhaust gas treatment equipment for extracting section in Plant 108 Primary water spraying + water-gas separator + photo-catalytic oxidation + secondary activated carbon adsorption + 25m exhaust pipe high altitude emission 400002019 Normal operation Exhaust gas treatment equipment for Plant 109 Primary water spraying +25m exhaust pipe high altitude emission 200002019 Normal operation 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 75 Exhaust gas treatment equipment for sewage treatment station 303 Primary water spraying + water-gas separator + photo-catalytic + 25m exhaust pipe high altitude emission 150002021 Normal operation Exhaust gas treatment equipment for Plant 103 Primary water spraying + water-gas separator + photo-catalytic oxidation + secondary activated carbon adsorption + 25m exhaust pipe high altitude emission 450002022 Normal operation Exhaust gas treatment equipment in laboratories Spraying + activated carbon adsorption 250002023 Normal operation (3) Solid wastes Designation of pollution prevention and control facility Treatment process Treatment capacity Time when put into operation Operation condition Hazardous waste warehouse Normative storage 300 tons October 2020 Normative storage, compliant disposal by entrusted qualified units Household garbage dumping site Normative storage 3 tons March 2015 Garbage disposal site in the east of the city 5. Pollutant treatment by Wuhu Huaren Science and Technology Co., Ltd. (1) Wastewater Designation of pollution prevention and control facility Treatment process Treatment capacity Time when put into operation Operation condition Sewage treatment station Chemical flocculation + bio-treatment 30t/d July 26,2020 Normal (2) Exhaust gas Designation of pollution prevention and control facility Treatment process Treatment capacity (CMH) Time when put into operation Operation condition Organic exhaust gas treatment facilities Activated carbon adsorption / 2016.11 Normal operation (3) Solid wastes Designation of pollution prevention and control facility Treatment process Treatment capacity Time when put into operation Operation condition Hazardous waste warehouse Disposal by qualified units 20 July 15,2022 Normal operation Emergency plan for sudden environmental events Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. has formulated, regularly modified and perfected the Emergency Plan for Sudden Environmental Events as required, with the record No. of 330105-2021-003-M. Hangzhou Zhongmei Huadong Pharmaceutical (Jiangdong) Co., Ltd. has modified and recorded the Emergency Plan for Sudden Environmental Events in 2022, with the record No. of 330114-2022-069-M. Huadong Medicine (Xi ‘an) Bohua Pharmaceutical Co., Ltd. has modified and perfected the Emergency Plan for Sudden Environmental Events as required in 2021, and recorded the Plan in Weinan Ecological Environment Bureau, with the record No. of 610582-2021-090-L. Jiangsu Joyang Laboratories has formulated the Emergency Plan for Sudden Environmental Events, which has been approved and recorded in June 2021, with the record No. of 320924–2021-039-M. Wuhu Huaren Science and Technology Co., Ltd. Has formulated and recorded the Emergency Plan for Sudden Environmental Events, with the record No. of 340203-2022-018-L. 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 76 Investment in environmental governance and protection, and the relevant information on paying environmental protection tax Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. invested 1,290,000 yuan in environmental governance and protection, and paid the environmental protection tax of 1,578.73 yuan. Hangzhou Zhongmei Huadong Pharmaceutical (Jiangdong) Co., Ltd. is not required to pay environmental protection tax according to relevant policies. Huadong Medicine (Xi’an) Bohua Pharmaceutical Co., Ltd. invested 945,300 yuan in environmental governance and protection, and paid the environmental protection tax of 833.21 yuan. Jiangsu Joyang Laboratories invested about 3,400,000 yuan in environmental governance and protection in the first half of 2023. Wuhu Huaren Science and Technology Co., Ltd. invested about 196,000 yuan in environmental governance and protection, and paid the environmental protection tax of 146.72 yuan in the first half of 2023. Environmental self-monitoring program Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. has formulated the Pollution Source Self-monitoring Program, registered the Program in the environmental protection department, and reported all the monitoring data as required. Hangzhou Zhongmei Huadong Pharmaceutical (Jiangdong) Co., Ltd. has formulated the entrusted monitoring plan according to the self-monitoring requirements in the Pollutant Emission Permit, and carried out daily, monthly, quarterly or annual entrusted monitoring according to the monitoring plan. Huadong Medicine (Xi ‘an) Bohua Pharmaceutical Co., Ltd. has formulated the Self-monitoring Program, registered the Program in the environmental protection department, and reported the monitoring data as required. Jiangsu Joyang Laboratories has formulated the Pollution Source Self-monitoring Program according to the relevant national environmental protection requirements, and reported daily monitoring data as required. Wuhu Huaren Science and Technology Co., Ltd. has formulated the entrusted monitoring plan according to the self-inspection requirements in the Pollutant Emission Permit, and carried out daily, monthly, quarterly or annual entrusted monitoring according to the monitoring plan. Administrative penalties for environmental issues during the reporting period No administrative penalties for environmental issues during the reporting period Other environmental information to be disclosed None Measures taken to reduce carbon emissions during the reporting period and corresponding effects Applicable □ N/A Hangzhou Zhongmei Huadong Pharmaceutical (Jiangdong) Co., Ltd. continued to use biogas to generate electricity, reducing the emissions of methane, hydrogen sulfide, and other pollutants, and continuously took lean measures in the plants to reduce pollutant emissions, such as saving water and reducing consumption. Jiangsu Joyang Laboratories made technical improvement for air-conditioning units and heat exchanger pipes and reduced direct steam discharge by combing the Company’s steam use points, expecting to save 150 tons of standard coal every year. Moreover, it adjusted the actual load and demand load by analyzing the power consumption of the Company, which saves the transformer capacity fee of 45,000 kW·h every month. Other environmental protection related information None 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 77 II. Social Responsibilities During the reporting period, the Company actively fulfilled its social responsibilities, quickly responded to special situations, and established a complete set of emergency call plans. With the upstream and downstream pharmaceutical supply chain partners gathered, the Company actively practiced the idea of “seizing time is to save lives” to foster its own brands with social benefits. The Company actively responded to the “Spring Breeze Action” with the theme of “Pooling Efforts of All Walks of Life to Help People with Urgent Needs” launched by Hangzhou. Aiming to satisfy the people in need for a better life, the “Spring Breeze Action” gathers pools the efforts of social forces to help the low-income groups and people in need accurately, which plays an important role in promoting the improvement of people’s livelihood and strengthening social governance. 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 78 Section VI. Important Matters I. Commitments made by interested parties such as the Company’s de facto controller, shareholders, related parties, acquirer(s), and the Company that are fulfilled during the reporting period or unfulfilled by the end of the reporting period □ Applicable N/A The Company does not have commitments made by interested parties such as the Company’s de facto controller, shareholders, related parties, acquirer(s), and the Company that are fulfilled during the reporting period or unfulfilled by the end of the reporting period. II. Controlling shareholders’ and related parties’ occupation of non-operating funds of the listed companies □ Applicable N/A No such case during the reporting period. III. External guarantees in violation of provisions □ Applicable N/A No such case during the reporting period. IV. Employment and dismissal of accounting firms Whether the semi-annual financial report has been audited □Yes No The Company’s semi-annual report is not audited. V. Explanation by the Board of Directors and the Board of Supervisors on the “nonstandard audit report” of the accounting firm during the current reporting period □ Applicable N/A VI. Explanation by the Board of Directors on the “nonstandard audit report” in the first half of 2023 □ Applicable N/A VII. Bankruptcy reorganization □ Applicable N/A The Company does not have related matters of bankruptcy reorganization during the reporting period. 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 79 VIII. Contentious matters Major litigations and arbitrations □ Applicable N/A The Company has no major litigations and arbitrations during the current reporting period. Other litigations and arbitrations Applicable □ N/A Basic of litigations (arbitrations) Amount involved (Ten thousand yuan) Whether an estimated liability is formed Litigation (arbitration) progress Litigation (arbitration) adjudication result and impact Execution of litigation (arbitration) judgments Disclosure date Disclosure index (if any) Summary of matters don’t satisfy the standards for major litigations (arbitrations) (domestic) 5220.04 No Some cases are under trials and some adjudications have come into force This summary of litigation s has no significant impact on the Company Some cases have been executed; some adjudicated cases are being executed; some are not adjudicated. Do not meet the disclosure standards for major litigations / Summary of matters don’t satisfy the standards for major litigations (arbitrations) (overseas) 121.6 No Under trails This summary of litigation s has no significant impact on the Company Cases are under trails and are to be adjudicated Do not meet the disclosure standards for major litigation / IX. Punishment and rectification □ Applicable N/A X. Integrity of the Company and its controlling shareholders and de facto controller □ Applicable N/A XI. Major related transactions 1. Transactions related to daily operations Applicable □ N/A Related party Association Type of related tranContent of related transaPricing principles for related transactioPrice of relateRelated transaction amouProportion in the amount of Approved transaction amouWhether it exceeds the approSettlement method of relateAvailable market prices Disclosure date Disclosure index (if any) 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 80 saction ction n d transaction nt (ten thousand yuan) similar transactions nt (ten thousand yuan) ved amount d transaction of similar transactions Penglai Nuokang Pharmaceutical Co. Ltd. Subsidiary of the Company’s controlling shareholder Drug purchase Drug purchase Market price determined by the Company’s related transaction decision-making process Market price 1,433.41 0.10% 3,300 No Cash, banker’s acceptance bill Market price April 14, 2023 Cninfo (http://www.Cninfo.com.cn) Changchun Leiyunshang Pharmaceutical Co., Ltd. Subsidiary of the Company’s controlling shareholder Drug purchase Drug purchase Market price determined by the Company’s related transaction decision-making process Market price 68.890.00% 0 Y Cash, banker’s acceptance bill Market price April 14, 2023 Cninfo (http://www.Cninfo.com.cn) Hangzhou Jiuyuan Gene Engineering Co., Ltd. Joint venture of the Company Drug purchase Drug purchase Market price determined by the Company’s related transaction decision-making process Market price 3,942.72 0.28% 7,600 No Cash, banker’s acceptance bill Market price April 14, 2023 Cninfo (http://www.Cninfo.com.cn) Grandpharma Huangshi Feiyun Pharmaceutical Co., Ltd. Subsidiary of the Company’s controlling shareholder Drug purchase Drug purchase Market price determined by the Company’s related transaction decision-making process Market price 7.770.00% 14,11 0 No Cash, banker’s acceptance bill Market price April 14, 2023 Cninfo (http://www.Cninfo.com.cn) Sichuan Yuanda Shuyang Pharmaceutical Co., Ltd. Subsidiary of the Company’s controlling sharehDrug purchase Drug purchase Market price determined by the Company’s related transaction Market price 1,5390.11% 4,000 No Cash, banker’s acceptance bill Market price April 14, 2023 Cninfo (http://www.Cninfo.com.cn) 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 81 older decision-making process Changshu Leiyunshang Pharmaceutical Co., Ltd. Subsidiary of the Company’s controlling shareholder Drug purchase Drug purchase Market price determined by the Company’s related transaction decision-making process Market price 69.420.00% 0 Y Cash, banker’s acceptance bill Market price April 14, 2023 Cninfo (http://www.Cninfo.com.cn) Xi’an Yuanda Detian Pharmaceutical Co., Ltd Subsidiary of the Company’s controlling shareholder Drug purchase Drug purchase Market price determined by the Company’s related transaction decision-making process Market price 148.6 1 0.01% 0 Y Cash, banker’s acceptance bill Market price April 14, 2023 Cninfo (http://www.Cninfo.com.cn) Leiyunshang Pharmaceutical Group Co. Ltd. Subsidiary of the Company’s controlling shareholder Drug purchase Drug purchase Market price determined by the Company’s related transaction decision-making process Market price 1,252.35 0.09% 3,200 No Cash, banker’s acceptance bill Market price April 14, 2023 Cninfo (http://www.Cninfo.com.cn) Hangzhou Grand Biologic Pharmaceutical Inc. Subsidiary of the Company’s controlling shareholder Drug purchase Drug purchase Market price determined by the Company’s related transaction decision-making process Market price 1,438.01 0.10% 2,800 No Cash, banker’s acceptance bill Market price April 14, 2023 Cninfo (http://www.Cninfo.com.cn) Guangdong Leiyunshang Pharmaceutical Co., Ltd. Subsidiary of the Company’s controlling shareholder Drug purchase Drug purchase Market price determined by the Company’s related transaction decision-making process Market price 121.90.01% 0 Y Cash, banker’s acceptance bill Market price April 14, 2023 Cninfo (http://www.Cninfo.com.cn) 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 82 Yunnan Leiyunshang Lixiang Pharmaceutical Co., Ltd. Subsidiary of the Company’s controlling shareholder Drug purchase Drug purchase Market price determined by the Company’s related transaction decision-making process Market price 948.6 5 0.07% 3,460 No Cash, banker’s acceptance bill Market price April 14, 2023 Cninfo (http://www.Cninfo.com.cn) Shenyang Yaoda Leiyunshang Pharmaceutical Co., Ltd. Subsidiary of the Company’s controlling shareholder Drug purchase Drug purchase Market price determined by the Company’s related transaction decision-making process Market price 272.9 4 0.02% 0 Y Cash, banker’s acceptance bill Market price April 14, 2023 Cninfo (http://www.Cninfo.com.cn) Xi’an Yuanda new Beilin Pharmaceutical Co., Ltd Subsidiary of the Company’s controlling shareholder Drug purchase Drug purchase Market price determined by the Company’s related transaction decision-making process Market price 159.8 5 0.01% 14,11 0 No Cash, banker’s acceptance bill Market price April 14, 2023 Cninfo (http://www.Cninfo.com.cn) Wuhan Grand Pharmaceutical Group Sales Co., Ltd. Subsidiary of the Company’s controlling shareholder Drug purchase Drug purchase Market price determined by the Company’s related transaction decision-making process Market price 1,276.07 0.09% 14,11 0 No Cash, banker’s acceptance bill Market price April 14, 2023 Cninfo (http://www.Cninfo.com.cn) Grandpharma (China) Co., Ltd. Subsidiary of the Company’s controlling shareholder Drug purchase Drug purchase Market price determined by the Company’s related transaction decision-making process Market price 3,443.28 0.25% 14,11 0 No Cash, banker’s acceptance bill Market price April 14, 2023 Cninfo (http://www.Cninfo.com.cn) Beijing Grand Johamu Subsidiary of the Drug purDrug purchase Market price determinMarket 2,165.98 0.16% 14,11 0 No Cash, banker’s Market price April 14, 2023 Cninfo (http:/2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 83 Pharmaceutical Co., Ltd. Company’s controlling shareholder chase ed by the Company’s related transaction decision-making process price acceptance bill /www.Cninfo.com.cn) Grand Life Science (Chongqing) Co., Ltd. Subsidiary of the Company’s controlling shareholder Drug purchase Drug purchase Market price determined by the Company’s related transaction decision-making process Market price 178.0 7 0.01% 0 Y Cash, banker’s acceptance bill Market price April 14, 2023 Cninfo (http://www.Cninfo.com.cn) Anhui Leiyunshang pharmaceutical Co., Ltd. Subsidiary of the Company’s controlling shareholder Drug purchase Drug purchase Market price determined by the Company’s related transaction decision-making process Market price 74.310.01% 0 Y Cash, banker’s acceptance bill Market price April 14, 2023 Cninfo (http://www.Cninfo.com.cn) Grand Life Science (Wuhan) Co., Ltd. Subsidiary of the Company’s controlling shareholder Drug purchase Drug purchase Market price determined by the Company’s related transaction decision-making process Market price 532.5 7 0.04% 1,000 No Cash, banker’s acceptance bill Market price April 14, 2023 Cninfo (http://www.Cninfo.com.cn) Liaoning Weibang Biopharmaceutical Co., Ltd. Subsidiary of the Company’s controlling shareholder Drug purchase Drug purchase Market price determined by the Company’s related transaction decision-making process Market price 20.620.00% 0 Y Cash, banker’s acceptance bill Market price April 14, 2023 Cninfo (http://www.Cninfo.com.cn) Grand Life Science (Liaoning) Co., Ltd. Subsidiary of the Company’s controDrug purchase Drug purchase Market price determined by the Company’s related Market price 982.4 4 0.07% 830 Y Cash, banker’s acceptance bill Market price April 14, 2023 Cninfo (http://www.Cninfo.com2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 84 lling shareholder transaction decision-making process .cn) Beijing Yuanda Chuangxin Property Management Co., Ltd. Subsidiary of the Company’s controlling shareholder Property management fee Property management fee Market price determined by the Company’s related transaction decision-making process Market price 23.860.00% 0 Y Cash, banker’s acceptance bill Market price April 14, 2023 Cninfo (http://www.Cninfo.com.cn) Hangzhou Jiuyuan Gene Engineering Co., Ltd. Joint venture of the Company Processing charge Processing charge Market price determined by the Company’s related transaction decision-making process Market price 812.50.06% 8,750 No Cash, banker’s acceptance bill Market price April 14, 2023 Cninfo (http://www.Cninfo.com.cn) Hangzhou Jiuyuan Gene Engineering Co., Ltd. Joint venture of the Company Technical service fee Technical service fee Market price determined by the Company’s related transaction decision-making process Market price 8000.06% 8,750 No Cash, banker’s acceptance bill Market price April 14, 2023 Cninfo (http://www.Cninfo.com.cn) Grand Bay Hotel View Chengdu Co., Ltd. Subsidiary of the Company’s controlling shareholder Conference fee Conference fee Market price determined by the Company’s related transaction decision-making process Market price 31.50.00% 0 Y Cash, banker’s acceptance bill Market price April 14, 2023 Cninfo (http://www.Cninfo.com.cn) Beijing Haiwan Banshan Hotel Management Co., Ltd. Subsidiary of the Company’s controlling shareholder Conference fee Conference fee Market price determined by the Company’s related transaction decision-Market price 70.00% 0 Y Cash, banker’s acceptance bill Market price April 14, 2023 Cninfo (http://www.Cninfo.com.cn) 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 85 making process Leiyunshang Pharmaceutical Group Co. Ltd. Subsidiary of the Company’s controlling shareholder Medicine sales Medicine sales Market price determined by the Company’s related transaction decision-making process Market price 28.720.00% 600 No Cash, banker’s acceptance bill Market price April 14, 2023 Cninfo (http://www.Cninfo.com.cn) Hangzhou Grand Biologic Pharmaceutical Inc. Subsidiary of the Company’s controlling shareholder Medicine sales Medicine sales Market price determined by the Company’s related transaction decision-making process Market price 81.080.00% 178 No Cash, banker’s acceptance bill Market price April 14, 2023 Cninfo (http://www.Cninfo.com.cn) Hangzhou Jiuyuan Gene Engineering Co., Ltd. Joint venture of the Company Medicine sales Medicine sales Market price determined by the Company’s related transaction decision-making process Market price 537.7 1 0.03% 500 Y Cash, banker’s acceptance bill Market price April 14, 2023 Cninfo (http://www.Cninfo.com.cn) Guangdong Leiyunshang Pharmaceutical Co., Ltd. Subsidiary of the Company’s controlling shareholder Medicine sales Medicine sales Market price determined by the Company’s related transaction decision-making process Market price 238.8 4 0.01% 0 Y Cash, banker’s acceptance bill Market price April 14, 2023 Cninfo (http://www.Cninfo.com.cn) Chongqing Peg-Bio Biopharm Co., Ltd. Joint venture of the Company Drug production and technical services Drug production and technical services Market price determined by the Company’s related transaction decision-making process Market price 223.6 2 0.01% 276 No Cash, banker’s acceptance bill Market price April 14, 2023 Cninfo (http://www.Cninfo.com.cn) 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 86 Xi’an Yuanda Detian Pharmaceutical Co., Ltd Subsidiary of the Company’s controlling shareholder Agent service fee Agent service fee Market price determined by the Company’s related transaction decision-making process Market price 93.580.00% 1,000 No Cash, banker’s acceptance bill Market price April 14, 2023 Cninfo (http://www.Cninfo.com.cn) Penglai Nuokang Pharmaceutical Co. Ltd. Subsidiary of the Company’s controlling shareholder Agent service fee Agent service fee Market price determined by the Company’s related transaction decision-making process Market price 61.920.00% 40 Y Cash, banker’s acceptance bill Market price April 14, 2023 Cninfo (http://www.Cninfo.com.cn) Beijing Grand Johamu Pharmaceutical Co., Ltd. Subsidiary of the Company’s controlling shareholder Technical service fee Technical service fee Market price determined by the Company’s related transaction decision-making process Market price 79.080.00% 0 Y Cash, banker’s acceptance bill Market price April 14, 2023 Cninfo (http://www.Cninfo.com.cn) Grandpharma (China) Co., Ltd. Subsidiary of the Company’s controlling shareholder Technical service fee Technical service fee Market price determined by the Company’s related transaction decision-making process Market price 0.750.00% 0 Y Cash, banker’s acceptance bill Market price April 14, 2023 Cninfo (http://www.Cninfo.com.cn) Hangzhou Grand Biologic Pharmaceutical Inc. Subsidiary of the Company’s controlling shareholder Technical services Technical services Market price determined by the Company’s related transaction decision-making process Market price 4.340.00% 0 Y Cash, banker’s acceptance bill Market price April 14, 2023 Cninfo (http://www.Cninfo.com.cn) Sichuan Yuanda Shuyang Subsidiary of the TransportaTransportation Market price determinMarket 5.510.00% 400 No Cash, banker’s Market price April 14, 2023 Cninfo (http:/2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 87 Pharmaceutical Co., Ltd. Company’s controlling shareholder tion and warehousing services and warehousing services ed by the Company’s related transaction decision-making process price acceptance bill /www.Cninfo.com.cn) Hangzhou Jiuyuan Gene Engineering Co., Ltd. Joint venture of the Company House leasing House leasing Market price determined by the Company’s related transaction decision-making process Market price 6.420.00% 6.42 No Cash, banker’s acceptance bill Market price April 14, 2023 Cninfo (http://www.Cninfo.com.cn) Bering Yanhuang Real Estate Co., Ltd. Subsidiary of the Company’s controlling shareholder House leasing House leasing Market price determined by the Company’s related transaction decision-making process Market price 30.320.00% 0 Y Cash, banker’s acceptance bill Market price April 14, 2023 Cninfo (http://www.Cninfo.com.cn) Total -- -- 23,14 3.61 -- 52,05 0.42 -- -- -- -- -- Details of bulk sales returns N/A Actual performance during the reporting period where the total amount of daily related transactions is estimated by category for the current period (if any) Actual amount occurred in daily transactions related to daily operations of the Company and its subsidiaries did not exceed the annual estimate during the reporting period. Reasons for the large difference between the transaction price and the market reference price (if applicable) N/A 2. Related transactions involving the acquisition or selling assets and equity □ Applicable N/A No such case during the reporting period. 3. Related transactions of joint external investment □ Applicable N/A No such case during the reporting period. 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 88 4. Associated claim and debt transactions □ Applicable N/A No such case during the reporting period. 5. Transactions with financial companies who are related parties of the Company □ Applicable N/A No deposit, loan, credit or other financial business between the Company and the related financial companies 6. Transactions between the financial companies controlled by the Company and the related parties □ Applicable N/A No deposit, loan, credit or other financial business between the financial companies controlled by the Company and the related parties. 7. Other major related transactions □ Applicable N/A No such case during the reporting period. XII. Major contracts and their fulfillment 1. Entrustment, contracting and leasing (1) Entrustment □ Applicable N/A No such case during the reporting period. (2) Contracting □ Applicable N/A No such case during the reporting period. (3) Leasing □ Applicable N/A No such case during the reporting period. 2. Important guarantees Applicable □ N/A Unit: Ten thousand yuan External guarantees of the Company and its subsidiaries (excluding guarantees for subsidiaries) Guaranteed party Disclosure date Guarantee Cap Actual date of Actual guaranteType of guarantee Collateral (if Counter guaranty Period of Fulfilled or not Guarantee for a 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 89 of the announcement related to the guarantee Cap occurrence ed amount any) (if any) guarantee related party or not The Company’s guarantees for its subsidiaries Guaranteed party Disclosure date of the announcement related to the guarantee Cap Guarantee Cap Actual date of occurrence Actual guaranteed amount Type of guarantee Collateral (if any) Counter guaranty (if any) Period of guarantee Fulfilled or not Guarantee for a related party or not Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. April 28,2022 85,000 October 12,2022 8,561.45 Joint and several liability guarantee Annually No No Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. April 14,2023 85,000 January 18,2023 17,419.4 4 Joint and several liability guarantee Annually No No Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. April 14,2023 85,000 January 30,2023 2,205.52 Joint and several liability guarantee Annually No No Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. April 14,2023 85,000 February 23,2023 2,466.02 Joint and several liability guarantee Annually No No Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. April 14,2023 85,000 February 24,2023 1,826.2 Joint and several liability guarantee Annually No No Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. April 14,2023 85,000 March 3, 2023 1,890.49 Joint and several liability guarantee Annually No No Hangzhou Zhongmei Huadong PharmaceApril 14,2023 85,000 March 22,2023 10,000 Joint and several liability guarantee Annually No No 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 90 utical Co., Ltd. Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. April 14,2023 85,000 March 24,2023 8,667.58 Joint and several liability guarantee Annually No No Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. April 14,2023 85,000 March 29,2023 1,098.71 Joint and several liability guarantee Annually No No Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. April 14,2023 85,000 April 25, 2023 17,229.4 Joint and several liability guarantee Annually No No Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. April 14,2023 85,000 April 26, 2023 11,227.0 1 Joint and several liability guarantee Annually No No Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. April 14,2023 85,000 May 12, 2023 788.55 Joint and several liability guarantee Annually No No Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. April 14,2023 85,000 May 26, 2023 8,904.02 Joint and several liability guarantee Annually No No Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. April 14,2023 85,000 May 30, 2023 4,381.65 Joint and several liability guarantee Annually No No Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. April 14,2023 85,000 June 16, 2023 3,127 Joint and several liability guarantee Annually No No Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. April 14,2023 85,000 June 25, 2023 10,000 Joint and several liability guarantee Annually No No Hangzhou April 85,000 June 30,6,234.09 Joint and Annuall No No 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 91 Zhongmei Huadong Pharmaceutical Co., Ltd. 14,20232023 several liability guarantee y Huadong Medicine Supply Chain Management (Jinhua) Co., Ltd. April 19,2019 20,000 Ten years Huadong Medicine (Xi’an) Bohua Pharmaceutical Co., Ltd. April 14,2023 5,000 Annually Huadong Medicine Ningbo Sales Co., Ltd. April 14,2023 16,000 Annually Huadong Medicine Huzhou Co., Ltd. April 14,2023 15,000 April 20, 2023 4,275 Joint and several liability guarantee Annually No No Huadong Medicine Shaoxing Co., Ltd. April 14,2023 19,000 February 13,2023 100 Joint and several liability guarantee Annually No No Huadong Medicine Shaoxing Co., Ltd. April 14,2023 19,000 March 31,2023 7,000 Joint and several liability guarantee Annually No No Huadong Medicine (Hangzhou) Biological Products Co., Ltd. April 14,2023 3,000 April 13, 2023 105.14 Joint and several liability guarantee Annually No No Huadong Medicine (Hangzhou) Biological Products Co., Ltd. April 14,2023 3,000 April 21, 2023 184.02 Joint and several liability guarantee Annually No No Huadong Medicine (Hangzhou) Biological Products April 14,2023 3,000 April 27, 2023 37.45 Joint and several liability guarantee Annually No No 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 92 Co., Ltd. Huadong Medicine (Hangzhou) Biological Products Co., Ltd. April 14,2023 3,000 May 19, 2023 20.3 Joint and several liability guarantee Annually No No Huadong Medicine (Hangzhou) Biological Products Co., Ltd. April 14,2023 3,000 June 13, 2023 293.6 Joint and several liability guarantee Annually No No Huadong Medicine (Hangzhou) Biological Products Co., Ltd. April 14,2023 3,000 June 16, 2023 54 Joint and several liability guarantee Annually No No Jiangsu Joyang Laboratories April 14,2023 7,000 Annually Huadong Medicine Wenzhou Co., Ltd. April 28,2022 24,000 July 12, 2022 1,000 Joint and several liability guarantee Annually No No Huadong Medicine Wenzhou Co., Ltd. April 28,2022 24,000 July 13, 2022 1,000 Joint and several liability guarantee Annually No No Huadong Medicine Wenzhou Co., Ltd. April 28,2022 24,000 August 4,2022 1,000 Joint and several liability guarantee Annually No No Huadong Medicine Wenzhou Co., Ltd. April 28,2022 24,000 August 5,2022 1,000 Joint and several liability guarantee Annually No No Huadong Medicine Wenzhou Co., Ltd. April 28,2022 24,000 August 24,2022 1,000 Joint and several liability guarantee Annually No No Huadong Medicine Wenzhou Co., Ltd. April 28,2022 24,000 September 13, 2022 1,000 Joint and several liability guarantee Annually No No Huadong Medicine Wenzhou Co., Ltd. April 28,2022 24,000 September 15, 2022 1,000 Joint and several liability guarantee Annually No No Huadong Medicine Wenzhou April 28,2022 24,000 October 14,2022 1,000 Joint and several liability Annually No No 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 93 Co., Ltd. guarantee Huadong Medicine Wenzhou Co., Ltd. April 28,2022 24,000 October 26,2022 1,000 Joint and several liability guarantee Annually No No Huadong Medicine Wenzhou Co., Ltd. April 28,2022 24,000 November 7, 2022 1,000 Joint and several liability guarantee Annually No No Huadong Medicine Wenzhou Co., Ltd. April 28,2022 24,000 November 9, 2022 1,000 Joint and several liability guarantee Annually No No Huadong Medicine Wenzhou Co., Ltd. April 28,2022 24,000 December 8, 2022 1,000 Joint and several liability guarantee Annually No No Huadong Medicine Wenzhou Co., Ltd. April 28,2022 24,000 December 9, 2022 1,000 Joint and several liability guarantee Annually No No Huadong Medicine Wenzhou Co., Ltd. April 14,2023 24,000 January 3,2023 1,000 Joint and several liability guarantee Annually No No Huadong Medicine Wenzhou Co., Ltd. April 14,2023 24,000 January 4,2023 1,000 Joint and several liability guarantee Annually No No Huadong Medicine Wenzhou Co., Ltd. April 14,2023 24,000 January 4,2023 990 Joint and several liability guarantee Annually No No Huadong Medicine Wenzhou Co., Ltd. April 14,2023 24,000 April 6, 2023 1,000 Joint and several liability guarantee Annually No No Huadong Medicine Wenzhou Co., Ltd. April 14,2023 24,000 April 7, 2023 1,000 Joint and several liability guarantee Annually No No Huadong Medicine Wenzhou Co., Ltd. April 14,2023 24,000 April 18, 2023 1,000 Joint and several liability guarantee Annually No No Huadong Medicine Wenzhou Co., Ltd. April 14,2023 24,000 April 21, 2023 1,210 Joint and several liability guarantee Annually No No Huadong Medicine Wenzhou Co., Ltd. April 14,2023 24,000 May 25, 2023 140 Joint and several liability guarantee Annually No No Huadong Medicine Wenzhou Co., Ltd. April 14,2023 24,000 June 21, 2023 616.78 Joint and several liability guarantee Annually No No 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 94 Huadong Medicine Wenzhou Co., Ltd. April 14,2023 24,000 June 27, 2023 35 Joint and several liability guarantee Annually No No Huadong Medicine Lishui Co., Ltd. April 14,2023 15,000 April 7, 2023 6,000 Joint and several liability guarantee Annually No No Huadong Medicine Daishan Co., Ltd. April 14,2023 2,600 Annually Huadong Medicine Cunde (Zhoushan) Co., Ltd. April 14,2023 9,900 Annually Hangzhou Zhongmei Huadong Pharmaceutical Jiangdong Co., Ltd. April 14,2023 40,000 January 19,2023 307.44 Joint and several liability guarantee Annually No No Hangzhou Zhongmei Huadong Pharmaceutical Jiangdong Co., Ltd. April 14,2023 40,000 March 27,2023 8,000 Joint and several liability guarantee Annually No No Hangzhou Huadong Pharmacy Chain Co., Ltd. April 14,2023 5,000 May 26, 2023 4,750 Joint and several liability guarantee Annually No No Huadong Medicine Jinhua Co., Ltd. April 14,2023 15,000 April 23, 2023 3,990 Joint and several liability guarantee Annually No No Anhui Meihua Hi-Tech Pharmaceutical Co., Ltd. April 14,2023 3,500 Annually Hubei Meiqi Health Technology Co., Ltd. April 14,2023 5,400 Annually Huadong Pharmaceutical (Hong Kong) InvestmenApril 14,2023 76,000 Annually 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 95 t Holding Co., Ltd. Sinclair Pharma Limited November 23, 2018 40,000 May 21, 2020 10,971.8 4 Joint and several liability guarantee Three years No No Sinclair Pharma Limited November 23, 2018 40,000 July 30, 2020 2,742.96 Joint and several liability guarantee Three years No No Sinclair Pharma Limited November 23, 2018 40,000 November 16, 2020 1,828.64 Joint and several liability guarantee Three years No No Sinclair Pharma Limited November 23, 2018 40,000 February 4,2021 2,742.96 Joint and several liability guarantee Three years No No Sinclair Pharma Limited September 17, 2020 12,591.15 March 30,2021 2,742.96 Joint and several liability guarantee Three years No No Sinclair Pharma Limited September 17, 2020 12,591.15 April 19, 2021 3,657.28 Joint and several liability guarantee Three years No No Sinclair Pharma Limited September 17, 2020 12,591.15 May 26, 2021 3,657.28 Joint and several liability guarantee Three years No No Sinclair Pharma Limited September 17, 2020 12,591.15 August 11,2021 1,828.64 Joint and several liability guarantee Three years No No Sinclair Pharma Limited September 17, 2020 12,591.15 September 14, 2021 1,828.64 Joint and several liability guarantee Three years No No Sinclair Pharma Limited July 16, 2021 38,305.3 January 13,2022 39,741.9 Joint and several liability guarantee Three years No No Sinclair Pharma Limited March 16,2021 14,845.8 April 8, 2021 15,754.2 Joint and several liability guarantee Three years No No Sinclair Pharma Limited March 16,2021 14,845.8 March 17,2021 15,754.2 Joint and several liability guarantee December 31, 2024 No No Sinclair Pharma Limited March 16,2021 31,695.78 Three years Sinclair Pharma Limited April 28,2022 58,600 Annually Sinclair April 65,000 Annuall 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 96 Pharma Limited 14,2023 y Total guarantee cap for subsidiaries approved during the reporting period (Bl) 411,400 Total guarantee amount for subsidiaries actually occurred during the reporting period (B2) 150,574.42 Total approved guarantee cap for subsidiaries at the end of the reporting period (B3) 736,438 Total actual guarantee balance for subsidiaries at the end of the reporting period (B4) 275,387.37 Subsidiaries guarantee for subsidiaries Guaranteed party Disclosure date of the announcement related to the guarantee Cap Guarantee Cap Actual date of occurrence Actual guaranteed amount Type of guarantee Collateral (if any) Counter guaranty (if any) Period of guarantee Fulfilled or not Guarantee for a related party or not Chongqing Peg-Bio Biopharm Co., Ltd. April 14,2023 4,800 0 Annually Y Total guarantee cap for subsidiaries approved during the reporting period (C1) 4,800 Total guarantee amount for subsidiaries actually occurred during the reporting period (C2) Total approved guarantee cap for subsidiaries at the end of the reporting period (C3) 4,800 Total actual guarantee balance for subsidiaries at the end of the reporting period (C4) Total amount of the Company’s guarantees (i.e. the sum of the above-mentioned 3 kinds of guarantees) Total guarantees cap approved during the reporting period (A1+B1+C1) 416,200 Total actual guarantee amount during the reporting period (A2+B2+C2) 150,574.42 Total approved guarantee cap at the end of the reporting period (A3+B3+C3) 741,238 Total actual guarantee balance at the end of the reporting period (A4+B4+C4) 275,387.37 Proportion of the actual guarantee amount (i.e. A4+B4+C4) in the Company’s net assets 14.10% Among them: Amount of debt guarantees provided directly or indirectly for the entities with a liability to asset ratio over 70% (E) 128,993.28 Total guarantee amount of the above-mentioned three kinds of guarantees 128,993.28 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 97 (D+E+F) Note on the specific circumstance if multiple methods are adopted for guarantees N/A 3. Entrusted wealth management □ Applicable N/A No such case during the reporting period. 4. Other significant contracts □ Applicable N/A No other significant contract during the reporting period. XIII. Other major events □ Applicable N/A No such case during the reporting period. XIV. Major events of subsidiaries Applicable □ N/A As of the release of this report, major assets had been disposed in the liquidation of Huadong Ningbo Medicine Co., Ltd. in the court. Some claims and accounts receivable are remained to be collected. The Company has arranged special personnel for participation and actively promoted the subsequent liquidation work. It is expected that this does not have any significant impact on the Company’s operating results. 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 98 Section VII. Share Change and Shareholders I. Changes in shares 1. Table of changes in shares Unit: Share Before the change Change in the period (+/-) After the change Quantity Ratio New shares Bonus shares Shares converted from capital reserve Others Sub-total Quantity Ratio I. Shares subject to conditional restriction 4,268,3000.24% 000004,268,3000.24% 1. Shares held by the state 00.00% 0000000.00% 2. Shares held by state-owned corporations 00.00% 0000000.00% 3. Shares held by other domestic investors 4,068,3000.23% 000004,068,3000.23% Including: Shares held by domestic corporations 00.00% 0000000.00% Shares held by domestic natural persons 4,068,3000.23% 000004,068,3000.23% 4. Shares held by overseas 200,0000.01% 00000200,0000.01% 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 99 investors Including: Shares held by overseas corporations 00.00% 0000000.00% Shares held by overseas natural persons 200,0000.01% 00000200,0000.01% II. Shares without restriction 1,749,727,048 99.76% 00000 1,749,727,048 99.76% 1. RMB common shares 1,749,727,048 99.76% 00000 1,749,727,048 99.76% 2. Domestically listed foreign shares 00.00% 0000000.00% 3. Foreign shares listed overseas 00.00% 0000000.00% 4. Others 00.00% 0000000.00% III. Total number of shares 1,753,995,348 100.00% 00000 1,753,995,348 100.00% Reasons for the changes in share capital □ Applicable N/A Approval for changes in share capital □ Applicable N/A Transfer of shares □ Applicable N/A Progress of share repurchase □ Applicable N/A Progress of reducing repurchased shares through centralized bidding □ Applicable N/A Effects of changes in share capital on the basic earnings per share, diluted earnings per share for the most recent year and the most recent period, the net assets per share attributable to the Company’s common shareholders and other financial indicators □ Applicable N/A Other disclosures the Company deems necessary or required by securities regulatory authorities 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 100 □ Applicable N/A 2. Changes in restricted shares □ Applicable N/A II. Issuance and listing of securities □ Applicable N/A III. Total number of shareholders and their shareholdings Unit: Share Total number of common shareholders at the end of the reporting period 74,378 Total number of preference shareholders with restoration of the voting rights at the end of the reporting period (if any) (see Note 8) 0 Particulars about common shareholders with a shareholding ratio over 5% or the top 10 common shareholders Name of Shareholder Nature of shareholder Shareholding ratio Total common shares not held at the end of the reporting period Changes in the reporting period Number of common shares held with trading restrictions Number of shares held without trading restriction Pledged or frozen Status Quantity China Grand Enterprises, Inc. Domestic non-state-owned corporation 41.67% 730,938,15 7 00 730,938,15 7 Pledged 131,630,00 0 Hangzhou Huadong Medicine Group Co., Ltd. State- owned corporation 16.42% 288,000,00 0 00 288,000,00 0 Hong Kong Securities Clearing Company Ltd. Overseas corporation 3.27% 57,408,0831,400,012057,408,083 Industrial and Commercial Bank of China Limited - China-Europe Healthcare Hybrid Securities Investment Fund Others 2.74% 48,004,441 -1,311,800048,004,441 China Securities Domestic non-state- 1.26% 22,186,8180022,186,818 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 101 Finance Co., owned corporation China Construction Bank Co., Ltd. - ICBC Credit Suisse Frontier Medical Equity Fund Others 1.00% 17,500,000 -2,500,078017,500,000 China Construction Bank Corporation - EFund CSI 300 Healthcare Exchange Traded Fund Others 0.72% 12,565,6325,530,600012,565,632 National Social Security Fund - Profile 0 Others 0.59% 10,380,8420010,380,842 National Social Security Fund - Profile 503 Others 0.48% 8,500,0002,500,00008,500,000 Industrial and Commercial Bank of China Limited - China-Europe Healthcare Innovation Stock Investment Fund Others 0.43% 7,461,104 -2,116,48007,461,104 Strategic investors or general corporations become the top 10 common shareholders due to the placement of new shares (if any) (see Note 3) N/A Explanation on associated relationships or concerted actions among the above-mentioned shareholders The Company does not know whether the above-mentioned shareholders are related parties or whether they are acting-in- concert parties with one another. 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 102 Description about above-mentioned shareholders’ entrusting/being entrusted with and waiving voting rights N/A Explanation of special account for repurchase among the top 10 shareholders (if any) (see Note 11) N/A Shareholding of the top 10 common shareholders without trading restrictions Name of Shareholder Number of common without restrictions held at the end of the reporting period Type of shares Type of shares Quantity China Grand Enterprises, Inc. 730,938,157 RMB common shares 730,938,15 7 Hangzhou Huadong Medicine Group Co., Ltd. 288,000,000 RMB common shares 288,000,00 0 Hong Kong Securities Clearing Company Ltd. 57,408,083 RMB common shares 57,408,083 Industrial and Commercial Bank of China Limited - China-Europe Healthcare Hybrid Securities Investment Fund 48,004,441 RMB common shares 48,004,441 China Securities Finance Co., 22,186,818 RMB common shares 22,186,818 China Construction Bank Co., Ltd. - ICBCCredit Suisse Frontier Medical Equity Fund 17,500,000 RMB common shares 17,500,000 China Construction Bank Corporation - EFund CSI 300 Healthcare Exchange Traded Fund 12,565,632 RMB common shares 12,565,632 National Social Security Fund - Profile 0 10,380,842 RMB common shares 10,380,842 National Social Security Fund - Profile 503 8,500,000 RMB common shares 8,500,000 Industrial and Commercial Bank of China Limited - China-Europe Healthcare Innovation Stock Investment Fund 7,461,104 RMB common shares 7,461,104 Description for affiliated relationship or concerted action among the top 10 The Company does not know whether the above-mentioned shareholders are related parties or whether they are acting-in- concert parties with one another. 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 103 shareholders holding common shares without trading restrictions and between the top 10 shareholders holding common shares without trading restrictions and the top 10 shareholders Description of the participation in margin trading business of the top 10 common shareholders (if any) (see Note 4) At the end of the reporting period, the Company had no shareholders holding its shares through margin trading and securities lending accounts among the top 10 common shareholders. Whether the Company’s Top 10 common shareholders or the Top 10 common shareholders without trading restriction have carried out any agreement to repurchase transaction during the reporting period □Yes No The Company’s top 10 common shareholders or the top 10 common shareholders without trading restrictions have not carried out any agreement to repurchase transaction during the reporting period. IV. Changes in shareholding of directors, supervisors and senior management members □ Applicable N/A The shareholding of directors, supervisors and senior management of the Company has not changed during the reporting period. Please refer to the 2022 Annual Report for details. V. Changes in holding shareholders or the de facto controller Change of the controlling shareholder during the reporting period □ Applicable N/A No such case during the reporting period. Change of the de facto controller during the reporting period □ Applicable N/A No such case during the reporting period. 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 104 Section VIII. Information on Preferred Shares □ Applicable N/A No such case during the reporting period. 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 105 Section IX. Information on Bonds □ Applicable N/A 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 106 Section X. Financial Report I. Audit report Whether the semi-annual report has been audited □Yes No The Company’s semi-annual financial report is not audited. II. Financial statements The unit of statements in the financial notes is: yuan. 1. Consolidated balance sheet Prepared by: Huadong Medicine Co., Ltd. June 30,2023 Unit: yuan Item June 30,2023 January 01,2023 Current assets: Monetary funds 4,393,835,953.543,996,302,178.41 Settlement reserve Lending funds Trading financial assets Derivative financial assets 24,806,772.3029,907,470.68 Notes receivable 8,424,980.99 Accounts receivable 7,396,011,322.707,198,746,788.59 Receivables financing 1,343,534,867.761,002,511,208.21 Prepayments 362,087,140.00500,083,953.14 Premiums receivable Reinsurance accounts receivable Reinsurance contract reserve receivable Other receivables 553,681,604.74283,710,955.63 Include: Interest receivable Dividend receivable 223,747.65223,747.65 Financial assets purchased for resale Inventories 4,600,017,100.804,495,483,328.54 Contract assets Assets held for sale Other non-current assets expiring within one year Other non-current assets 54,881,711.0152,692,618.78 Total current assets 18,728,856,472.8517,567,863,482.97 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 107 Non-current assets: Loans and prepayments issuance Debt investment Other debt investments Long-term receivables Long-term equity investment 1,554,304,930.051,659,076,538.78 Other equity instrument investments 409,848,691.27360,910,876.41 Other non-current financial assets Investment real estate 13,174,524.1113,648,240.14 Fixed assets 3,882,268,169.123,981,653,265.52 Construction in progress 995,490,666.09873,159,427.47 Productive biological assets Oil and gas assets Right-of-use assets 140,455,892.14166,505,297.17 Intangible assets 2,336,097,668.472,280,064,207.30 Development expenditure 774,096,145.13641,354,586.80 Goodwill 2,587,351,458.302,441,387,413.59 Long-term deferred expenses 20,981,527.1916,457,278.57 Deferred income tax assets 192,386,807.93152,842,858.97 Other non-current assets 1,320,687,263.411,037,279,933.15 Total non-current assets 14,227,143,743.2113,624,339,923.87 Total Assets 32,956,000,216.0631,192,203,406.84 Current liabilities: Short-term borrowings 1,052,194,176.07947,516,383.37 Borrowing from the central bank Borrowing from other banks and other financial institutions Trading financial liabilities 8,970,278.0414,841,896.97 Derivative financial liabilities Notes payable 1,728,257,564.681,029,409,686.81 Accounts payable 4,717,793,829.404,873,029,466.44 Advances from customers 1,869,073.271,154,243.42 Contract liabilities 125,334,375.52146,488,489.07 Financial assets sold for repurchase Deposits from customers and due from banks Receipts for buying and selling securities as proxy Receipts for underwriting securities as proxy Employee benefits payable 215,063,488.67256,883,423.68 Taxes payable 335,297,295.69429,457,804.81 Other payables 2,810,793,780.142,290,407,022.05 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 108 Include: Interests payable Dividend payable 224,219.6014,924,219.60 Handling fees and commissions payable Reinsurance accounts payable Liabilities held for sale Other non-current liabilities due within one year 349,680,396.42147,835,514.81 Other current liabilities 12,763,947.5115,788,164.30 Total current liabilities 11,358,018,205.4110,152,812,095.73 Non-current liabilities: Insurance policy reserve Long-term borrowings 746,918,081.651,051,457,747.44 Bonds payable Include: Preferred stock Perpetual bond Lease liabilities 92,232,272.5184,610,324.98 Long-term payables 91,008,860.30287,497,209.49 Long-term employee remuneration payable Estimated liabilities 41,068,049.2637,925,549.41 Deferred income 176,825,542.10126,123,512.71 Deferred income tax liabilities 193,669,206.28202,084,083.93 Other non-current liabilities 73,251,500.0073,251,500.00 Total non-current liabilities 1,414,973,512.101,862,949,927.96 Total liabilities 12,772,991,717.5112,015,762,023.69 Owners’ Equity: Share capital 1,753,995,348.001,753,995,348.00 Other equity instruments Include: Preferred stock Perpetual bond Capital reserves 2,407,928,799.632,377,887,246.39 Less: Treasury stock 104,645,000.00104,645,000.00 Other comprehensive income -91,570,465.50 -88,552,636.42 Special reserves Surplus reserves 1,151,441,705.281,151,213,039.48 General risk reserve Undistributed profit 14,415,245,210.7513,488,021,239.94 Total owners’ equity attributable to owner of the Company 19,532,395,598.1618,577,919,237.39 Minority interests 650,612,900.39598,522,145.76 Total owners’ equity 20,183,008,498.5519,176,441,383.15 Total liabilities & owners’ equity 32,956,000,216.0631,192,203,406.84 Legal representative: Lv Liang Person in charge of accounting: Lv Liang Person in charge of the Accounting Department: Qiu Renbo 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 109 2. Balance sheet of the parent company Unit: yuan Item June 30,2023 January 01,2023 Current assets: Monetary funds 3,035,047,307.022,486,399,844.96 Trading financial assets Derivative financial assets Notes receivable 8,424,980.99 Accounts receivable 4,080,636,027.164,224,944,294.54 Receivables financing 439,506,917.27157,097,728.09 Prepayments 99,551,906.14271,448,367.52 Other receivables 1,782,359,340.531,065,267,397.05 Include: Interest receivable Dividend receivable 400,000,000.00 Inventories 2,438,626,619.482,391,038,707.33 Contract assets Assets held for sale Other non-current assets expiring within one year Other non-current assets 417,032.05 Total current assets 11,876,145,149.6510,604,621,320.48 Non-current assets: Debt investment Other debt investments Long-term receivables Long-term equity investment 5,862,418,196.295,473,824,934.24 Other equity instrument investments 10,100,870.5610,100,870.56 Other non-current financial assets Investment real estate 6,959,994.947,193,111.26 Fixed assets 138,895,929.52144,023,222.94 Construction in progress 530,156.96824,024.88 Productive biological assets Oil and gas assets Right-of-use assets 2,084,255.603,631,025.07 Intangible assets 174,300,679.26188,198,218.40 Development expenditure Goodwill Long-term deferred expenses 77,379.81 Deferred income tax assets 58,469,297.9449,729,544.62 Other non-current assets 259,185,602.33346,564,596.26 Total non-current assets 6,512,944,983.406,224,166,928.04 Total Assets 18,389,090,133.0516,828,788,248.52 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 110 Current liabilities: Short-term borrowings 500,086,610.91431,081,029.52 Trading financial liabilities Derivative financial liabilities Notes payable 829,240,274.76629,281,486.95 Accounts payable 3,605,728,508.223,373,959,848.93 Advances from customers Contract liabilities 37,810,455.5046,097,912.05 Employee benefits payable 3,937,885.9210,063,669.60 Taxes payable 40,329,748.3286,458,570.85 Other payables 1,348,814,904.68949,611,806.93 Include: Interests payable Dividend payable 224,219.60224,219.60 Liabilities held for sale Other non-current liabilities due within one year 31,393,500.0033,427,007.32 Other current liabilities 4,889,117.735,830,680.38 Total current liabilities 6,402,231,006.045,565,812,012.53 Non-current liabilities: Long-term borrowings Bonds payable Include: Preferred stock Perpetual bond Lease liabilities 49,984.6659,030.94 Long-term payables Long-term employee benefits payable Estimated liabilities Deferred income 34,284,223.6535,567,161.11 Deferred income tax liabilities Other non-current liabilities 73,251,500.0073,251,500.00 Total non-current liabilities 107,585,708.31108,877,692.05 Total liabilities 6,509,816,714.355,674,689,704.58 Owners’ Equity: Share capital 1,753,995,348.001,753,995,348.00 Other equity instruments Include: Preferred stock Perpetual bond Capital reserves 2,302,867,706.562,276,383,543.02 Less: Treasury stock 104,645,000.00104,645,000.00 Other comprehensive income -129,129.44 -129,129.44 Special reserves Surplus reserves 1,229,068,798.921,229,068,798.92 Undistributed profit 6,698,115,694.665,999,424,983.44 Total owners’ equity 11,879,273,418.7011,154,098,543.94 Total liabilities & owners’ equity 18,389,090,133.0516,828,788,248.52 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 111 3. Consolidated income statement Unit: yuan Item Semi-Annual 2023 Semi-Annual 2022 I. Total operating revenue 20,385,344,288.8118,197,963,991.01 Including: Operating revenue 20,385,344,288.8118,197,963,991.01 Interests income Premiums earned Handling fees and commissions received II. Total operating cost 18,443,622,876.2416,516,515,436.25 Including: Operating cost 13,917,418,061.1112,243,374,078.15 Interest expenses Handling fees and commissions paid Surrender value Net payment of insurance claims Net appropriation of policy reserve Policy dividends paid Reinsurance expenses Business taxes and surcharges 106,685,622.9196,083,582.73 Sales expenses 3,083,786,005.033,032,965,177.95 Administrative expenses 721,477,862.62572,048,249.55 R&D expenses 558,407,142.27566,596,381.67 Financial expenses 55,848,182.305,447,966.20 Including: Interests expenses 55,401,149.6741,795,243.41 Interests income 33,022,555.8749,960,917.39 Add: Other income 34,813,373.7081,653,430.69 Investment income (Losses are indicated by “-”) -136,885,042.56 -53,479,017.66 Including: Investment gains (losses) in associated enterprise and joint-venture enterprise -120,429,152.98 -43,145,347.52 Gains on the derecognition of financial assets measured at amortized cost Gains on exchange (Losses are indicated by “-”) Gains on net exposure hedging (Losses are indicated by “-”) Gains from changes in fair values (Losses are indicated by “-”) -5,100,698.38 Credit impairment losses (Losses are indicated by “-”) -36,432,398.31 -71,965,559.59 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 112 Impairment gains (losses) of assets (Losses are indicated by “-”) -3,175,583.570.00 Asset disposal income (Losses are indicated by “-”) 3,519,820.088,506,580.12 III. Operating profit (Losses are indicated by “-”) 1,798,460,883.531,646,163,988.32 Add: Non-operating revenue 2,972,826.614,341,628.44 Less: Non-operating expenses 16,298,554.808,661,496.73 IV. Total profit (Total losses are indicated by “-”) 1,785,135,155.341,641,844,120.03 Less: Income tax expense 345,279,440.91287,938,727.72 V. Net profit (Net losses are indicated by “”) 1,439,855,714.431,353,905,392.31 (I) Classification by business continuity 1. Net profit from continuing operations (Net losses are indicated by “-”) 1,439,855,714.431,353,905,392.31 2. Net profit at terminational operation (Net losses are indicated by “-”) (II) Classification by attribution of ownership 1. Net profit attributable to shareholders of the parent company (Net losses are indicated by “-”) 1,433,824,629.561,340,570,484.98 2. Profit or loss attributable to minority shareholders (Net losses are indicated by “-”) 6,031,084.8713,334,907.33 VI. Other comprehensive income, net of income tax -8,889,448.01 -98,252,733.94 Other comprehensive income attributable to owners of the parent company, net of tax -8,889,448.01 -98,252,733.94 (I) Other comprehensive income that cannot be reclassified into gains/losses -808,768.81 -7,023,104.32 1. Changes in re-measurement on the defined benefit plan 2. Other comprehensive income that cannot be reclassified into gains/losses under equity method 3. Changes in fair value of other equity instrument investments -808,768.81 -7,023,104.32 4. Changes in fair value of credit risk of the enterprise 5. Others (II) Other comprehensive income to be reclassified into gains/losses -8,080,679.20 -91,229,629.62 1. Other comprehensive income that can be reclassified into gains/losses under equity method 2. Changes in fair value of other debt investments 3. Amount of financial assets 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 113 reclassified into other comprehensive income 4. Credit impairment reserve of other debt investments 5. Cash flow hedging reserve 6. Exchange differences from translation of foreign currency financial statements -8,080,679.20 -91,229,629.62 7. Others Net amount after tax of other comprehensive income attributable to minority shareholders VII. Total comprehensive income 1,430,966,266.421,255,652,658.37 Total comprehensive income attributable to owners of the parent company 1,424,935,181.551,242,317,751.04 Total comprehensive income attributable to minority shareholders 6,031,084.8713,334,907.33 VIII. Earnings per share (EPS): (I) Basic EPS 0.81940.7661 (II) Diluted EPS 0.81900.7661 As for business merger under the same control in the current period, the net profit generated by the merged party before was yuan, and that generated during the previous period was yuan. Legal representative: Lv Liang Person in charge of accounting: Lv Liang Person in charge of the Accounting Department: Qiu Renbo 4. Income statement of the parent company Unit: yuan Item Semi-Annual 2023 Semi-Annual 2022 I. Total operating revenue 11,079,388,260.419,908,981,203.23 Less: Total operating cost 10,420,679,546.079,247,554,807.79 Business taxes and surcharges 12,616,117.1014,000,999.79 Sales expenses 207,782,464.30227,664,922.41 Administrative expenses 96,229,619.6582,342,556.23 R&D expenses Financial expenses 4,055,926.11 -396,898.80 Including: Interests expenses 21,720,831.4627,507,061.68 Interests income 23,053,892.5532,303,808.77 Add: Other income 2,284,938.0812,314,150.33 Investment income (Losses are indicated by “-”) 1,023,821,754.371,013,355,132.27 Including: Investment gains (losses) in associated enterprise and joint-venture enterprise -10,790,429.82 -7,439,207.20 Gains on the derecognition of financial assets measured at amortized cost (Losses are indicated by “-”) Gains on net exposure hedging 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 114 (Losses are indicated by “-”) Gains from changes in fair values (Losses are indicated by “-”) Credit impairment losses (Losses are indicated by “-”) -54,688,951.13 -91,642,566.80 Impairment gains (losses) of assets (Losses are indicated by “-”) Asset disposal income (Losses are indicated by “-”) 3,543,591.917,341,180.70 II. Operating profit (Losses are indicated by “-”) 1,312,985,920.411,279,182,712.31 Add: Non-operating revenue 17,440.99669,874.31 Less: Non-operating expenses 1,518,858.463,286,049.77 III. Total profit (Total losses are indicated by “-”) 1,311,484,502.941,276,566,536.85 Less: Income tax expense 104,135,140.8088,593,758.11 IV. Net profit (Net losses are indicated by “”) 1,207,349,362.141,187,972,778.74 (I) Net profit from continuous operations (Net losses are indicated by “-”) 1,207,349,362.141,187,972,778.74 (II) Net profit from discontinued operations (Net losses are indicated by “”) V. Other comprehensive income, net of income tax (I) Other comprehensive income that cannot be reclassified into gains/losses 1. Changes in re-measurement on the defined benefit plan 2. Other comprehensive income that cannot be reclassified into gains/losses under equity method 3. Changes in fair value of other equity instrument investments 4. Changes in fair value of credit risk of the enterprise 5. Others (II) Other comprehensive income to be reclassified into gains/losses 1. Other comprehensive income that can be reclassified into gains/losses under equity method 2. Changes in fair value of other debt investments 3. Amount of financial assets reclassified into other comprehensive income 4. Credit impairment reserve of other debt investments 5. Cash flow hedging reserve 6. Exchange differences from translation of foreign currency financial 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 115 statements 7. Others VI. Total comprehensive income 1,207,349,362.141,187,972,778.74 VII. Earnings per share (EPS): (I) Basic EPS (II) Diluted EPS 5. Consolidated cash flow statement Unit: yuan Item Semi-Annual 2023 Semi-Annual 2022 I. Cash flows from operating activities: Cash received from the sale of goods and the rendering of services 22,512,508,261.5118,859,480,723.70 Net increase in customer deposits and due from banks Net increase in borrowing from the central bank Net increase in borrowing from other financial institutions Cash from the premium of the original insurance policy Net cash from reinsurance Net increase in deposits and investment of the insured Cash from interests, handling fees and commissions Net increase in borrowing from other banks and other financial institutions Net increase in funds for repurchase Net cash received for buying and selling securities as proxy Receipts of tax refund 13,105,796.4311,410,179.66 Other cash receipts in relation to operating activities 253,862,517.46264,979,395.43 Cash inflows from operating activities 22,779,476,575.4019,135,870,298.79 Cash payments for goods purchased and services received 14,322,943,161.9512,623,103,224.34 Net increase in customer loans and prepayments Net increase in deposits of central bank and due from banks Cash payments for original insurance claims Net increase in lending funds to other banks and other financial institutions Cash payments for interests, handling fees and commissions Cash payments for policy dividends Cash payments to and on behalf of employees 1,739,212,838.991,600,540,802.72 Payments of various types of taxes 1,395,137,423.201,824,842,188.89 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 116 Other cash payments in relation to operating activities 3,300,439,402.612,803,149,672.57 Cash outflows for operating activities 20,757,732,826.7518,851,635,888.52 Net cash flow from operating activities 2,021,743,748.65284,234,410.27 II. Cash flows from investing activities Cash receipts from recovery of investments Cash receipts from investment income 76,500,000.00900,000.00 Net cash receipts from disposal of fixed assets, intangible assets and other long-term assets 5,336,825.178,138,807.00 Net cash from disposal of subsidiaries and other business units Other cash receipts in relation to investing activities 148,464,580.630.00 Cash inflows from investing activities 230,301,405.809,038,807.00 Cash payments for purchase and construction of fixed assets, intangible assets and other long-term assets 597,637,675.13603,911,034.60 Cash payments for investment 52,794,250.0029,400,000.00 Net increase in pledge loans 0.00 Net cash paid for acquisition of subsidiaries and other business units 130,057,945.49270,952,210.17 Other cash payments in relation to investing activities 27,498,562.60100,000,000.00 Sub-total of cash outflows of investment activities 807,988,433.221,004,263,244.77 Net cash flow from investing activities -577,687,027.42 -995,224,437.77 III. Cash flows from financing activities: Cash receipts from absorbing investments 30,000,000.00 Including: Cash receipts from capital contributions from minority owners of subsidiaries 30,000,000.00 Cash receipts from borrowing 2,148,865,020.502,750,601,977.68 Other cash receipts in relation to financing activities 457,402,316.71248,207,838.55 Cash inflows from financing activities 2,606,267,337.213,028,809,816.23 Cash repayments of borrowings 2,557,868,542.482,144,574,467.10 Cash payments for distribution of dividends or profits or settlement of interest expenses 618,612,489.40585,723,656.08 Including: Dividends and profits paid by subsidiaries to minority shareholders 13,328,000.001,960,000.00 Other cash payments in relation to financing activities 356,277,912.8820,708,449.20 Cash outflows for financing activities 3,532,758,944.762,751,006,572.38 Net cash flow from financing activities -926,491,607.55277,803,243.85 IVEffect of foreign exchange rate changes on Cash and Cash Equivalents 8,950,719.04 -26,309,944.30 V. Net increase in cash and cash equivalents 526,515,832.72 -459,496,727.95 Add: Opening balance of cash and cash equivalents 3,416,910,702.333,580,140,638.17 VI. Closing balance of cash and cash equivalents 3,943,426,535.053,120,643,910.22 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 117 6. Cash flow statement of the parent company Unit: yuan Item Semi-Annual 2023 Semi-Annual 2022 I. Cash flows from operating activities: Cash received from the sale of goods and the rendering of services 12,114,913,125.109,993,053,097.54 Receipts of tax refund Other cash receipts in relation to operating activities 347,415,767.25322,420,601.02 Cash inflows from operating activities 12,462,328,892.3510,315,473,698.56 Cash payments for goods purchased and services received 11,092,284,263.739,590,776,506.25 Cash payments to and on behalf of employees 142,869,496.55157,221,560.98 Payments of various types of taxes 195,302,704.64436,406,580.06 Other cash payments in relation to operating activities 460,908,694.29257,469,024.63 Cash outflows for operating activities 11,891,365,159.2110,441,873,671.92 Net cash flow from operating activities 570,963,733.14 -126,399,973.36 II. Cash flows from investing activities Cash receipts from recovery of investments 50,059,838.75 Cash receipts from investment income 676,500,000.000.00 Net cash receipts from disposal of fixed assets, intangible assets and other long-term assets 5,172,908.535,936,300.00 Net cash from disposal of subsidiaries and other business units Other cash receipts in relation to investing activities 334,071,068.06245,102,300.59 Cash inflows from investing activities 1,015,743,976.59301,098,439.34 Cash payments for purchase and construction of fixed assets, intangible assets and other long-term assets 13,018,410.493,052,228.94 Cash payments for investment 360,565,000.0036,400,000.00 Net cash paid for acquisition of subsidiaries and other business units 10,000,000.00 Other cash payments in relation to investing activities 385,407,000.00433,741,844.00 Sub-total of cash outflows of investment activities 768,990,410.49473,194,072.94 Net cash flow from investing activities 246,753,566.10 -172,095,633.60 III. Cash flows from financing activities: Cash receipts from absorbing investments Cash receipts from borrowing 1,771,457,855.101,146,017,508.00 Other cash receipts in relation to financing activities 2,410,893,781.551,109,442,166.67 Cash inflows from financing activities 4,182,351,636.652,255,459,674.67 Cash repayments of borrowings 1,722,457,855.101,255,017,310.01 Cash payments for distribution of dividends or profits or settlement of interest expenses 573,738,738.44567,035,703.19 Other cash payments in relation to financing activities 1,950,457,429.10983,212,333.68 Cash outflows for financing activities 4,246,654,022.642,805,265,346.88 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 118 Net cash flow from financing activities -64,302,385.99 -549,805,672.21 IVEffect of foreign exchange rate changes on Cash and Cash Equivalents -138,375.85 V. Net increase in cash and cash equivalents 753,276,537.40 -848,301,279.17 Add: Opening balance of cash and cash equivalents 2,029,798,269.621,919,097,181.16 VI. Closing balance of cash and cash equivalents 2,783,074,807.021,070,795,901.99 7. Consolidated statement of changes in owners’ equity Amount in the current period Unit: yuan Item Semi-Annual 2023 Owners’ equity attributable to the parent company Minority interests Total owners’ equity Share capital Other equity instruments Capital reserves Less: Treasury stock Other comprehensive income Special reserves Surplus reserves General risk reserve Undistributed profit Others Sub-total Minority interest Perpetual bond Others I. Balance at the end of the period of the prior year 1,75 3,99 5,34 8.00 2,37 7,88 7,24 6.39 104,645,000.00 - 88,5 52,6 36.4 2 1,15 1,21 3,03 9.48 13,4 88,0 21,2 39.9 4 18,5 77,9 19,2 37.3 9 598,522,145.76 19,1 76,4 41,3 83.1 5 Add: Changes in accounting policies Error correction in the prior periods Consolidation of enterprises under common control Others II. Balance at the beginning of the period of the current year 1,75 3,99 5,34 8.00 2,37 7,88 7,24 6.39 104,645,000.00 - 88,5 52,6 36.4 2 1,15 1,21 3,03 9.48 13,4 88,0 21,2 39.9 4 18,5 77,9 19,2 37.3 9 598,522,145.76 19,1 76,4 41,3 83.1 5 III. Amount of change in 30,0 41,5 - 3,01 228,665.927,223,954,476,52,0 90,7 1,00 6,562023 Semi-Annual Report of Huadong Medicine Co., Ltd. 119 the current period (Decreases are indicated by “") 53.2 4 7,82 9.08 80970.81 360.77 54.6 3 7,11 5.40 (I) Total comprehensive income - 3,01 7,82 9.08 1,43 3,82 4,62 9.56 1,43 0,80 6,80 0.48 6,03 1,08 4.87 1,43 6,83 7,88 5.35 Capital contributed by owners and capital decreases 19,7 48,6 39.5 8 19,7 48,6 39.5 8 47,9 89,7 27.8 6 67,7 38,3 67.4 4 1. Common shares invested by owners 47,8 69,7 70.1 0 47,8 69,7 70.1 0 2. Capital invested by holders of other equity instruments 3. Amount of share-based payment included in owners’ equity 19,7 48,6 39.5 8 19,7 48,6 39.5 8 119,957.76 19,8 68,5 97.3 4 4. Others Profit distribution - 508,658,650.92 - 508,658,650.92 - 1,96 0,00 0.00 - 510,618,650.92 1. Withdrawal of surplus reserve 2. Provision of general risk reserve 3. Distribution to owners (or shareholders) - 508,658,650.92 - 508,658,650.92 - 1,96 0,00 0.00 - 510,618,650.92 4. Others Internal conversion of owners’ equity 228,665.80 2,05 7,99 2.17 2,28 6,65 7.97 2,28 6,65 7.97 1. Capital (or share capital) 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 120 increase from capital reserve conversion 2. Capital (or share capital) increase from surplus reserve conversion 3. Recovery of losses by surplus reserve 4. Retained earnings from transfer of changes in the defined benefit plan 5. Retained earnings from transfer of other comprehensive income 228,665.80 2,05 7,99 2.17 2,28 6,65 7.97 2,28 6,65 7.97 6. Others Special reserve 1. Withdrawal in the current period 2. Use in the current period (VI) Others 10,2 92,9 13.6 6 10,2 92,9 13.6 6 29,9 41.9 0 10,3 22,8 55.5 6 IV. Balance at the end of the current period 1,75 3,99 5,34 8.00 2,40 7,92 8,79 9.63 104,645,000.00 - 91,5 70,4 65.5 0 1,15 1,44 1,70 5.28 14,4 15,2 45,2 10.7 5 19,5 32,3 95,5 98.1 6 650,612,900.39 20,1 83,0 08,4 98.5 5 Amount in the prior year Unit: yuan Item Semi-Annual 2022 Owners’ equity attributable to the parent company Minority interests Total owners’ equiShare capiOther equity instruments Capital reseLess: TreaOther comSpecial reseSurplus reseGeneral risk UndistributeOthers Sub-total Min Perp Oth2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 121 tal ority interest etual bond ers rves sury stock prehensive income rves rves reserve d profit ty I. Balance at the end of the period of the prior year 1,74 9,80 9,54 8.00 2,22 9,86 8,31 2.11 0.00 - 47,7 68,2 25.8 0 1,02 1,67 0,68 7.31 0.00 11,6 25,7 94,0 01.4 6 16,5 79,3 74,3 23.0 8 361,944,682.60 16,9 41,3 19,0 05.6 8 Add: Changes in accounting policies Error correction in the prior periods Consolidation of enterprises under common control Others II. Balance at the beginning of the period of the current year 1,74 9,80 9,54 8.00 2,22 9,86 8,31 2.11 0.00 - 47,7 68,2 25.8 0 0.00 1,02 1,67 0,68 7.31 0.00 11,6 25,7 94,0 01.4 6 16,5 79,3 74,3 23.0 8 361,944,682.60 16,9 41,3 19,0 05.6 8 III. Amount of change in the current period (Decreases are indicated by “") 0.00 34,3 42,6 90.6 8 0.00 - 98,2 52,7 33.9 4 0.000.000.00 833,125,716.06 769,215,672.80 43,3 34,9 07.3 3 812,550,580.13 (I) Total comprehensive income - 98,2 52,7 33.9 4 1,34 0,57 0,48 4.98 1,24 2,31 7,75 1.04 13,3 34,9 07.3 3 1,25 5,65 2,65 8.37 Capital contributed by owners and capital decreases 30,0 00,0 00.0 0 30,0 00,0 00.0 0 1. Common shares invested by owners 30,0 00,0 00.0 0 30,0 00,0 00.0 0 2. Capital 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 122 invested by holders of other equity instruments 3. Amount of share-based payment included in owners’ equity 4. Others Profit distribution - 507,444,768.92 - 507,444,768.92 0.00 - 507,444,768.92 1. Withdrawal of surplus reserve 0.00 0.00 2. Provision of general risk reserve 0.00 3. Distribution to owners (or shareholders) - 507,444,768.92 - 507,444,768.92 - 507,444,768.92 4. Others Internal conversion of owners’ equity 1. Capital (or share capital) increase from capital reserve conversion 2. Capital (or share capital) increase from surplus reserve conversion 3. Recovery of losses by surplus reserve 4. Retained earnings from transfer of changes in the defined 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 123 benefit plan 5. Retained earnings from transfer of other comprehensive income 6. Others Special reserve 1. Withdrawal in the current period 2. Use in the current period (VI) Others 34,3 42,6 90.6 8 34,3 42,6 90.6 8 34,3 42,6 90.6 8 IV. Balance at the end of the current period 1,74 9,80 9,54 8.00 2,26 4,21 1,00 2.79 0.00 - 146,020,959.74 0.00 1,02 1,67 0,68 7.31 0.00 12,4 58,9 19,7 17.5 2 17,3 48,5 89,9 95.8 8 405,279,589.93 17,7 53,8 69,5 85.8 1 8. Statement of changes in owners’ equity of the parent company Amount in the current period Unit: yuan Item Semi-Annual 2023 Share capital Other equity instruments Capital reserves Less: Treasury stock Other comprehensive income Special reserves Surplus reserves Undistributed profit Others Total owners’ equity Minority interest Perpetual bond Others I. Balance at the end of the period of the prior year 1,753,995,3 48.00 2,276,383,5 43.02 104,6 45,00 0.00 - 129,1 29.44 1,229,068,7 98.92 5,999,424,9 83.44 11,154,098,5 43.94 Add: Changes in accounting policies Error correction in the prior periods Others 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 124 II. Balance at the beginning of the period of the current year 1,753,995,3 48.00 2,276,383,5 43.02 104,6 45,00 0.00 - 129,1 29.44 1,229,068,7 98.92 5,999,424,9 83.44 11,154,098,5 43.94 III. Amount of change in the current period (Decreases are indicated by “") 26,48 4,163.54 698,6 90,71 1.22 725,1 74,87 4.76 (I) Total comprehensive income 1,207,349,3 62.14 1,207,349,3 62.14 Capital contributed by owners and capital decreases 19,86 8,597.33 19,86 8,597.33 1. Common shares invested by owners 2. Capital invested by holders of other equity instruments 3. Amount of share-based payment included in owners’ equity 19,86 8,597.33 19,86 8,597.33 4. Others Profit distribution - 508,6 58,65 0.92 - 508,6 58,65 0.92 1. Withdrawal of surplus reserve 2. Distribution to owners (or shareholders) - 508,6 58,65 0.92 - 508,6 58,65 0.92 3. Others Internal conversion of owners’ 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 125 equity 1. Capital (or share capital) increase from capital reserve conversion 2. Capital (or share capital) increase from surplus reserve conversion 3. Recovery of losses by surplus reserve 4. Retained earnings from transfer of changes in the defined benefit plan 5. Retained earnings from transfer of other comprehensive income 6. Others Special reserve 1. Withdrawal in the current period 2. Use in the current period (VI) Others 6,615,566.2 1 6,615,566.2 1 IV. Balance at the end of the current period 1,753,995,3 48.00 2,302,867,7 06.56 104,6 45,00 0.00 - 129,1 29.44 1,229,068,7 98.92 6,698,115,6 94.66 11,879,273,4 18.70 Amount in the prior year Unit: yuan Item Semi-Annual 2022 Share capital Other equity instruments Capital reservLess: Treasury Other comprehensiSpecial reservSurplus reservUndistributed Others Total owners’ Minority Perpetual Others 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 126 interest bond es stock ve income es es profit equity I. Balance at the end of the period of the prior year 1,749,809,5 48.00 2,168,451,5 28.01 0.00 - 129,1 29.44 1,099,526,4 46.75 5,340,988,5 82.88 10,35 8,646,976.2 0 Add: Changes in accounting policies 0.00 Error correction in the prior periods 0.00 Others 0.00 II. Balance at the beginning of the period of the current year 1,749,809,5 48.00 2,168,451,5 28.01 0.00 - 129,1 29.44 1,099,526,4 46.75 5,340,988,5 82.88 10,35 8,646,976.2 0 III. Amount of change in the current period (Decreases are indicated by “-") 680,5 28,00 9.83 680,5 28,00 9.83 (I) Total comprehensive income 1,187,972,7 78.75 1,187,972,7 78.75 Capital contributed by owners and capital decreases 1. Common shares invested by owners 2. Capital invested by holders of other equity instruments 3. Amount of share-based payment included in owners’ equity 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 127 4. Others Profit distribution - 507,4 44,76 8.92 - 507,4 44,76 8.92 1. Withdrawal of surplus reserve 0.00 2. Distribution to owners (or shareholders) - 507,4 44,76 8.92 - 507,4 44,76 8.92 3. Others Internal conversion of owners’ equity 1. Capital (or share capital) increase from capital reserve conversion 2. Capital (or share capital) increase from surplus reserve conversion 3. Recovery of losses by surplus reserve 4. Retained earnings from transfer of changes in the defined benefit plan 5. Retained earnings from transfer of other comprehensive income 6. Others Special reserve 1. Withdrawal in the current period 2023 Semi-Annual Report of Huadong Medicine Co., Ltd. 128 2. Use in the current period (VI) Others 0.00 IV. Balance at the end of the current period 1,749,809,5 48.00 2,168,451,5 28.01 - 129,1 29.44 1,099,526,4 46.75 6,021,516,5 92.71 11,039,174,9 86.03 Huadong Medicine Co., Ltd. Chairman of the Board: Lv Liang August 16,2023 Section I. Important Declaration, Contents and Definitions Section II. Company Profile and Key Financial Indicators I. Company information II. Contact persons and contact information III. Other information 1. Company’s contact information 2. Channels of disclosure and location of preparation 3. Other information IV. Key accounting data and financial indicators V. Differences in accounting data under domestic and overseas accounting standards 1. Differences in net profit and net assets disclosed in financial statements under international and Chinese accounting standards 2. Differences in net profit and net assets disclosed in financial statements under overseas and Chinese accounting standards VI. Items and amounts of non-recurring gains/losses Section IIIDiscussion and Analysis of the Management I. Main business of the company during the reporting period II. Core competitiveness III. Main businesses IV. Non-main businesses V. Assets and Liabilities 1. Major changes in asset composition 2. Information about main overseas assets 3. Assets and liabilities measured at fair value 4. Limitation of asset rights at the end of the reporting period VI. Investment 1. Overview 2. Significant equity investments acquired during the reporting period 3. Significant non-equity investments in progress during the reporting period 4. Investment in financial assets (1) Securities Investment (2) Derivatives investment 5. Use of raised funds VII. Major assets and equity sales 1. Major assets sales 2. Major equity sales VIII. Analysis of controlling and shareholding companies IXStructured entities controlled by the company X. Risks and countermeasures XI. Registration form of receptions, including research, communication and interview, during the reporting period Section IV. Corporate Governance I. Annual and extraordinary general meetings held during the reporting period 1. Shareholders’ meetings in the reporting period 2. Extraordinary general meetings convened at the request of preference shareholders with resumed voting rights: II. Change of directors, supervisors and senior managers of the Company III. Profit distribution and share capital increase by capital reserve conversion during the current reporting period IV. Implementation of the Company’s equity incentive plan, employee stock ownership plan or other employee incentive measures 1. Equity incentive 2. Implementation of the employee stock ownership plan 3. Other employee incentives Section VEnvironmental and Social Responsibilities I. Major Environmental Protection Issues II. Social Responsibilities Section VI. Important Matters I. Commitments made by interested parties such as the Company’s de facto controller, shareholders, related parties, acquirer(s), and the Company that are fulfilled during the reporting period or unfulfilled by the end of the reporting period II. Controlling shareholders’ and related parties’ occupation of non-operating funds of the listed companies III. External guarantees in violation of provisions IV. Employment and dismissal of accounting firms V. Explanation by the Board of Directors and the Board of Supervisors on the “nonstandard audit report” of the accounting firm during the current reporting period VI. Explanation by the Board of Directors on the “nonstandard audit report” in the first half of 2023 VII. Bankruptcy reorganization VIII. Contentious matters IX. Punishment and rectification X. Integrity of the Company and its controlling shareholders and de facto controller XI. Major related transactions 1. Transactions related to daily operations 2. Related transactions involving the acquisition or selling assets and equity 3. Related transactions of joint external investment 4. Associated claim and debt transactions 5. Transactions with financial companies who are related parties of the Company 6. Transactions between the financial companies controlled by the Company and the related parties 7. Other major related transactions XII. Major contracts and their fulfillment 1. Entrustment, contracting and leasing (1) Entrustment (2) Contracting (3) Leasing 2. Important guarantees 3. Entrusted wealth management 4. Other significant contracts XIII. Other major events XIV. Major events of subsidiaries Section VII. Share Change and Shareholders I. Changes in shares 1. Table of changes in shares 2. Changes in restricted shares II. Issuance and listing of securities III. Total number of shareholders and their shareholdings IV. Changes in shareholding of directors, supervisors and senior management members V. Changes in holding shareholders or the de facto controller Section VIII. Information on Preferred Shares Section IX. Information on Bonds Section X. Financial Report I. Audit report II. Financial statements 1. Consolidated balance sheet 2. Balance sheet of the parent company 3. Consolidated income statement 4. Income statement of the parent company 5. Consolidated cash flow statement 6. Cash flow statement of the parent company 7. Consolidated statement of changes in owners’ equity 8. Statement of changes in owners’ equity of the parent company